[Federal Register Volume 62, Number 119 (Friday, June 20, 1997)]
[Proposed Rules]
[Pages 33575-33579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16232]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 400
RIN 0563-AB07
General Administrative Regulations; Insurance Coverage by Written
Agreement
AGENCY: Federal Crop Insurance Corporation.
ACTION: Proposed rule.
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SUMMARY: The regulations contained in this subpart are issued pursuant
to the Federal Crop Insurance Act, as amended, to prescribe the
procedures for offering insurance coverage by written agreement and are
applicable to limited and additional coverage policies insured or
reinsured by the Federal Crop Insurance Corporation (FCIC).
DATES: Written comments and opinions on this proposed rule will be
accepted until close of business August 19, 1997 and will be considered
when the rule is to be made final.
ADDRESSES: Written comments on this proposed rule should be sent to the
Chief, Product Development Branch, Federal Crop Insurance Corporation,
United States Department of Agriculture, 9435 Holmes Road, Kansas City,
MO 64131.
FOR FURTHER INFORMATION CONTACT: For further information, contact Bill
Smith, Supervisory Program Analyst, Research and Development Division,
Product Development Branch, FCIC, at the Kansas City, MO address listed
above, telephone (816) 926-7743.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
The Office of Management and Budget (OMB) has determined this rule
to be significant for the purposes of Executive Order 12866 and,
therefore, this rule has been reviewed by OMB.
Cost-Benefit Analysis
A Cost-Benefit Analysis has been completed and is available to
interested persons at the address listed above. In summary, the
analysis finds that producers will benefit from this regulation because
a greater number of producers will be able to obtain insurance coverage
to meet their risk
[[Page 33576]]
management needs. The benefit to producers on obtaining insurance
coverage not otherwise available outweighs the associated cost.
Paperwork Reduction Act of 1995
The information collection requirements contained in these
regulations are being reviewed by OMB pursuant to the Paperwork
Reduction Act of 1995 (44 U.S.C. chapter 35) under OMB control number
0563-0053. The written agreements are described in the background.
The title of this information collection is ``Multiple Peril Crop
Insurance.''
The burden associated with the written agreement is estimated at 20
minutes per response from approximately 23,597 respondents each year
for a total number of 7,865 hours.
The information requested is necessary to for the insurance
providers and FCIC to provide insurance and reinsurance, determine
eligibility, determine the correct parties to the agreement or
contract, determine and collect premiums, and pay indemnities. Failure
to furnish this number will result in rejection of or substantial
reduction in any claim for indemnity, ineligibility for insurance, and
a unilateral determination of the amount of premium due.
FCIC is requesting comments for the following: (a) Whether the
proposed collection of information is necessary for the proper
performance of the functions of the agency, including whether the
information shall have practical utility; (b) the accuracy of the
agency's estimate of the burden of the proposed collection of
information; (c) ways to enhance the quality, utility, and clarity of
the information to be collected; and (d) ways to minimize the burden of
the collection of information on respondents, including through the use
of automated collection techniques or other forms or information
gathering technology.
Comments regarding paperwork reduction should be submitted to the
Desk Officer for Agriculture, Office of Information and Regulatory
Affairs, Office of Management and Budget, Washington, D.C. 20503.
OMB is required to make a decision concerning the collections of
information contained in these proposed regulations between 30 and 60
days after submission to OMB. Therefore, a comment to OMB is best
assured of having full effect if OMB receives it within 30 days of
publication. This does not affect the deadline for the public to
comment on the proposed regulation.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.
L. 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. Under section 202 of the UMRA, FCIC
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, or tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. When such a statement is needed for a rule, section 205 of
the UMRA generally requires FCIC to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, more
cost-effective or least burdensome alternative that achieves the
objectives of the rule.
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. Thus, 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
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.
Regulatory Flexibility Act
This regulation will not have a significant impact on a substantial
number of small entities. Therefore, this action is determined to be
exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C.
605) and no Regulatory Flexibility Analysis was prepared.
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which require intergovernmental consultation with State and
local officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12778
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
published at 7 CFR part 11 must be exhausted before action for judicial
review may be brought.
Environmental Evaluation
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
FCIC publishes actuarial tables which exclude certain land, farming
practices, crop classes or types from insurability since the associated
risk does not conform to general methods of establishing insurance
yields and rates employed by FCIC. This proposed rule provides the
regulatory authority for FCIC to make insurance offers on any insurable
crops in counties where insurance coverage is not provided for the
crop, crop type, land, or farming practice and to allow written
agreements to amend specified terms of insurance. This authority
provides a risk management tool to the greatest number of producers in
a cost-effective manner and is fair to the participants yet does not
expose FCIC to excessive insurance risk. Authority for reinsured
companies to issue and approve written agreements designated by FCIC is
provided.
List of Subjects in 7 CFR Part 400
Crop insurance.
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation proposes to add a new subpart S to 7 CFR part
400, as follows:
PART 400--GENERAL ADMINISTRATIVE REGULATIONS
Subpart S--Insurance Coverage by Written Agreement
Sec.
400.511 Basis and applicability.
400.512 OMB control numbers.
400.513 Definitions.
400.514 Availability of written agreements.
[[Page 33577]]
400.515 Qualifications for written agreements to provide insurance
for insurable crops in counties without an actuarial table.
400.516 Qualifications for written agreements in counties with
actuarial tables.
400.517 Responsibilities.
400.518 Issuance and approval of written agreements by a reinsured
company.
Authority: 7 U.S.C. 1506(1), 1506(p).
Subpart S--Insurance Coverage by Written Agreement
Sec. 400.511 Basis and applicability.
The regulations contained in this subpart are issued pursuant to
the Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.) to
prescribe the rules and criteria for offering insurance coverage by
written agreement and are applicable to limited and additional coverage
policies insured or reinsured by FCIC.
Sec. 400.512 OMB control numbers.
The collecting of information requirements in this subpart has been
approved by the Office of Management and Budget and assigned OMB
control numbers 0563-0053.
Sec. 400.513 Definitions.
Acreage reporting date. The date contained in the Special
Provisions by which the insured is required to submit an acreage
report.
APH form. An FCI-19A Actual Production History (APH) or FCIC
approved company form which is used to report the yield history of the
insurance unit for the purpose of calculating the approved insurance
yield.
Actual yield. Refer to 7 CFR part 400, subpart G.
Actuarial table. The forms and related material for the crop year
approved by FCIC, which are available to the public, and show premium
rates, practices, price elections, levels of coverage, production
guarantees, amounts of insurance, special provisions, insurable and
uninsurable acreage, insurance program dates, and other related
information for a crop program in a county.
Applicant. The named person as shown on the application submitted
to a reinsured company or FSA office. This term does not extend to any
other person having a share or interest in the crop unless specifically
indicated on the application.
Approved APH yield. Refer to 7 CFR part 400, subpart G.
Assigned yield. Refer to 7 CFR part 400, subpart G.
Base period. Refer to 7 CFR part 400, subpart G.
CCC. The Commodity Credit Corporation, a wholly owned corporation
within the United States Department of Agriculture.
CCC program crop. Barley, corn, cotton, ELS cotton, grain sorghum,
oats, rice, and wheat. These regulations also include hybrid corn seed,
hybrid sorghum seed, and soybeans.
Crop year. Refer to 7 CFR part 400, subpart G.
Days. Calendar days.
Expiration date. The date established in the written agreement by
which it must be accepted by the applicant or insured.
FCIC. The Federal Crop Insurance Corporation, a wholly owned
corporation within the United States Department of Agriculture.
FSA. The Farm Service Agency (formerly the Agricultural
Stabilization and Conservation Service).
FSA program yield. For barley, corn, cotton, ELS cotton, grain
sorghum, oats, rice, and wheat, the yield established by the FSA county
committee or proven from production records for individual farms by FSA
farm serial number (FSN). Generally, these yields are provided on an
ASCS-156EZ, ASCS-423, ASCS-424 or ASCS-476 form or their successor
forms. Historical Weighted Yields (HWY) shown on these forms are not
considered program yields and are not used for APH purposes.
Insured. The named person as shown on the application for insurance
which has been accepted by a reinsured company or FSA office. This term
does not extend to any other person having a share or interest in the
crop unless specifically indicated on the accepted application.
Local producing area. An area in a county without an actuarial
table that has similar production capabilities, cropping practices and
conditions and which borders a county with an actuarial table for the
subject crop.
Marketing outlet. A place where the crop is bought and sold.
Nonprogram crop. Includes all crops that are not defined as CCC
program crops and for which an insurance policy is established by FCIC.
Production guarantee. The quantity determined by multiplying the
approved yield per acre times the coverage level percentage elected.
Production report. Refer to 7 CFR part 400, subpart G.
Reference county. The county, designated in the written agreement,
used to obtain the information normally provided in the actuarial table
for the county where the insured is farming.
Reference state. The state, designated on the written agreement,
used to obtain the information normally provided in the actuarial table
for the county where the insured is farming.
Request for actuarial change form. An FCI-5 or FCIC approved
company form that provides information required by the FCIC to evaluate
requests for written agreements.
Sales closing date. The date designated in the Special Provisions
on which sales for each crop year ceases. For the purposes of requests
for written agreements in counties without an actuarial table, the
sales closing date will be the applicable crop cancellation date in the
policy or Special Provisions for the area where the county is located.
Special Provisions. A document which displays specific information
concerning the county crop program including, but not limited to,
administrative dates (sales closing date, final planting date, acreage
reporting date, and billing date) and statements pertaining to
insurance coverage, price elections, and amounts of insurance.
Transitional yield (T-yield). Refer to 7 CFR part 400, subpart G.
Verifiable records. Refer to 7 CFR part 400, subpart G.
Verifier. Refer to 7 CFR part 400, subpart G.
Viable markets. An outlet for the production of the crop that is
located within a reasonable distance and capable of accepting the
volume that is reasonably expected to be produced from the insured
acreage.
Sec. 400.514 Availability of written agreements.
For limited and additional coverage policies, FCIC authorizes the
use of written agreements for insurable crops for the following
purposes:
(a) To provide insurance coverage for insurable crops in counties
without a published actuarial table;
(b) To assign actuarial classifications if such classifications are
not provided, or amend actuarial classifications contained in the
actuarial documents if information is provided in a request for
reconsideration of the published classification which would
substantially change the classification;
(c) To provide insurance coverage for farming practices for which a
premium rate is not included in the actuarial table;
(d) To provide insurance coverage for crop classes, types, or
varieties for which a premium rate is not included in the actuarial
table or Special Provisions;
(e) To provide insurance for acreage designated as unrated or
unclassified by the actuarial table;
(f) To provide alternative methods of unit division on an
individual basis
[[Page 33578]]
when geographic features or good farming practices make it impossible
for the insured to conform to optional unit division guidelines;
(g) To insure overage stands of forage provided an acceptable stand
exists;
(h) To insure portions of fields which extend across a county line
when the exact location of the county line is not determinable;
(i) To amend the terms of insurance provided in the insurance
policy when specifically permitted by the policy;
(j) To offer alternative rates and or coverages based on a request
for reconsideration of actuarial classifications assigned to land which
is designated as high risk by the actuarial table;
(k) To amend or remove Nonstandard Classification System (NCS) as a
result of an appeal determination or error in assignment of such
classifications; or
(l) To amend other actuarial classifications as a result of appeal
determinations.
Sec. 400.515 Qualifications for written agreements to provide
insurance for insurable crops in counties without an actuarial table.
(a) FCIC is authorized to provide insurance coverage by written
agreement for insurable crops, at its own discretion and upon its sole
determination that:
(1) Adequate information is available to develop an actuarially
sound premium rate and insurance coverage;
(2) The crop, including practice, type, and variety, is suited and
adapted to the prevalent conditions in the county including, but not
limited to, soils, topography, climate, rainfall, length of growing
season, and other such considerations, with reasonable production
risks;
(3) The crop is commercially grown in the county;
(4) All required information is received by the specified
deadlines; and
(5) All other criteria outlined in this subpart are satisfied.
(b) FCIC will deny any request that does not meet the requirements
of these regulations, or which involves a crop that:
(1) Is not insurable;
(2) FCIC does not have adequate data to establish actuarially sound
premium rates and insurance coverage;
(3) Is not commercially grown in the county; or
(4) FCIC cannot determine that viable markets are available.
(c) A Request for Actuarial Change Form must be submitted to an
agent of a reinsured company or the FSA office by the applicant no
later than the sales closing date and must include the following:
(1) A completed APH form based on verifiable records of actual
yields for at least the most recent three consecutive crop years during
the base period: (If the producer expands the farming operation across
a county or state line into a local producing area, FCIC may consider
existing production reports from the current crop production to be
sufficient);
(2) The dates the applicant and other growers in the area normally
plant and harvest the crop;
(3) The name and location of, and approximate distance to, the
location at which the crop will be marketed by the applicant;
(4) A copy of the ASCS-156EZ, ASCS-423, ASCS-424, or ASCS-476 forms
(or successor forms) providing notice of crop acreage bases, program
yields, allotments or quotas for the acreage on which insurance is
requested, if applicable; and
(5) The legal description of the land and FSA aerial photographs or
maps delineating field boundaries where the applicant intends to plant
the crop for which insurance is requested.
(d) If FCIC authorizes a written agreement, the written agreement
will include:
(1) Transitional yields or factors, APH yields, classifications or
any other basis of insurance coverage as appropriate for the crop;
(2) The premium rate;
(3) The reference state and county for determining the Special
Provisions, if applicable;
(4) Terms and conditions including any exceptions to the Special
Provisions of the reference state and county;
(5) The expiration date; and
(6) Other necessary administrative statements as determined by
FCIC.
Sec. 400.516 Qualifications for written agreements in counties with
actuarial tables.
(a) FCIC is authorized to provide written agreements for such
purposes as noted in Sec. 400.514 (b)(1) at its own discretion and upon
its determination that:
(1) Adequate information is available to develop an actuarially
sound premium rate and insurance coverage;
(2) The requested insurance or variation to the terms of insurance
represents practices, types, varieties, or other conditions which are
suited and adapted to the prevalent production practices of the county
and able to produce the yield upon which the insurance guarantee would
be based;
(3) All required information is received by the specified
deadlines; and
(4) All other criteria outlined in this subpart are satisfied.
(b) FCIC will deny requests that do not meet the requirements of
this subpart or which:
(1) FCIC does not have available data to establish actuarially
sound premium rates and insurance coverage;
(2) The requested change to the terms of insurance does not conform
to sound insurance principles as determined by FCIC;
(3) FCIC determines the risk is excessive;
(4) The requested change would result in an insignificant variation
from the terms established by the policy or actuarial table as
determined by FCIC; or
(5) The requested change to the terms of insurance are prohibited
by the Federal Crop Insurance Act, applicable laws and regulations, or
by the insurance policy or not specifically authorized by the
regulations or policy.
(c) If a request for written agreement is denied, an authorized
written agreement is not executed by the expiration date, the written
agreement is rejected or the written agreement is not approved, the
original terms of the insured's contract will remain in force. The
request must specify that the original terms of the contract are
effective if any of these actions apply.
(d) A Request for Actuarial Change Form must be submitted to an
agent of a reinsured company or the FSA office by the applicant or
insured no later than the sales closing date and must include:
(1) A copy of the most recent APH forms;
(2) A copy of the ASCS-156EZ, ASCS-423, ASCS-424, or ASCS-476 (OMB
control number 0560-0092) forms (or successor forms) providing notice
of crop acreage bases, program yields, allotments and quotas for the
acreage on which insurance is requested, if applicable;
(3) The legal description of the land and FSA aerial photographs
or, legible maps delineating field boundaries where the acreage is
planted or intended to be planted to the crop for which insurance is
requested or requested to be amended;
(4) Evidence of adaptability if the request is to provide insurance
for practices, types or varieties that are not designated as insurable
or are specifically excluded from insurability by the Special
Provisions;
(5) A copy of the contract between the wildlife management agency
and the insured if the request is to insure land contained in a
wildlife protection or management area;
[[Page 33579]]
(6) The full scientific and common name of the plant, hardiness
zone, and number of years that the nursery has been growing the plant,
if the request is to insure nursery crops not listed on the ``Nursery
Eligible Plant Listing'';
(7) A report of prices received for a specific class (type) of dry
beans and either two years of university test plot data and
recommendations or two years of seed company data supplemented by
university data, if the request is to insure a class (type) of dry
beans which is not designated as insurable by the actuarial table. If
university or seed company data is not available, then two years of
production data for the requested class and prices received must be
provided; and
(8) A statement that the original terms of the contract that will
be in effect if the written agreement is denied.
(e) If FCIC authorizes a written agreement, all variations to the
contract will be specified in the written agreement, including:
(1) The actuarial document, form, term or condition amended by the
agreement;
(2) Applicable transitional yield or factor, APH yield, and
classifications or any other basis for coverage for the crop;
(3) Applicable premium rate;
(4) The terms and conditions of the agreement;
(5) The expiration date; and
(6) Other necessary administrative statements as determined by
FCIC.
(f) In unusual situations FCIC may, at its discretion, provide or
amend insurance coverage by written agreements for requests submitted
after the sales closing date if the insured was unaware of the
condition requiring a written agreement. In addition to the
requirements contained in this section, the following apply:
(1) Such requests should be submitted when the need for a written
agreement is discovered, but must be submitted to the agent or the FSA
office by the insured no later than the acreage reporting date.
(2) FCIC will require a growing season inspection if the written
agreement establishes insurability and if the crop has been planted at
the time that the written agreement terms are presented to the insured.
FCIC will not approve any insurance if the inspection does not
determine that the crop has the expectancy of making at least ninety
percent (90%) of the yield per acre used to determine the production
guarantee or amount of insurance. Insurance liability will be assumed
as of the date of the inspection if the agreement is given final
approval by FCIC.
(3) No prevented planting liability will be established for
requests submitted after the sales closing date.
Sec. 400.517 Responsibilities.
A final decision authorizing a written agreement will be made by
FCIC within 30 days of receipt of all required information. A written
agreement or letter of rejection will be provided to the reinsured
company or FSA office by FCIC.
(a) A reinsured company or FSA may issue the written agreement on
the form provided by FCIC or use its own form with FCIC authorized
language, which must include the authorized expiration date. If the
agreement is accepted by the applicant or insured, the company will
provide a copy of the agreement to the insured, the agent, and FCIC.
The FSA office will provide a copy of the accepted agreement to the
insured and FCIC. If the agreement is not accepted by the applicant or
the insured by the expiration date, a copy will be returned to FCIC
with the rejection noted. The reinsured company will provide to FCIC a
copy of any agreement it does not approve.
(b) FCIC will provide final approval of written agreements
requested after the sales closing date, as provided in Sec. 400.516(f),
and any written agreement for an FSA applicant or insured.
(c) The written agreement offer is valid until the expiration date
unless the crop is damaged, as provided in Sec. 400.516(f)(2), prior to
acceptance by the applicant or insured.
(d) The applicant or insured may reject a written agreement if FCIC
determines the approved offer differs from the original request made by
the applicant or insured.
(e) The approved written agreement is valid only for the crop year
shown in the agreement.
(f) FCIC may authorize a reinsured company or FSA to reissue a
written agreement from year to year provided no substantial changes are
made to the farming operation, actual production reports are properly
provided, and the agreement is in place prior to the sales closing
date. All required elements of written agreements must be contained in
subsequent agreements.
Sec. 400.518 Issuance and approval of written agreements by a
reinsured company.
FCIC may permit a reinsured company to issue and approve written
agreements designated by FCIC, in accordance with the requirements
contained in this subpart.
Signed in Washington, D.C., on June 16, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-16232 Filed 6-19-97; 8:45 am]
BILLING CODE 3410-08-P
