[Federal Register Volume 64, Number 144 (Wednesday, July 28, 1999)]
[Rules and Regulations]
[Pages 40740-40743]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19013]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 400 and 457
RIN 0563-AB67
General Administrative Regulations, Subpart T--Federal Crop
Insurance Reform, Insurance Implementation; Regulations for the 1999
and Subsequent Reinsurance Years; and the Common Crop Insurance
Regulations; Basic Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes
subpart T in the General Administrative Regulations (7 CFR part 400,
subpart T) and the Common Crop Insurance Regulations, Basic Provisions
(7 CFR 457.8), to implement the statutory mandates of the Agricultural
Research, Extension, and Education Reform Act of 1998 (1998 Research
Act) and 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 additional coverage from $10 per crop to $20 per crop. The
amendments set forth in this rule do not revise the content or alter
the frequency of reporting for any of the forms or information
collections cleared under the above-referenced docket.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. This rule contains no Federal
mandates (under the regulatory provisions of title II of UMRA) for
State, local, and tribal governments or the private sector. Therefore,
this rule is not subject to the requirements of sections 202 and 205 of
UMRA.
Executive Order 12612
It has been determined under section 6(a) of Executive Order 12612,
Federalism, that this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
provisions contained in this rule will not have a substantial direct
effect on States or their political subdivisions or on the distribution
of power and responsibilities among the various levels of government.
Regulatory Flexibility Act
This regulation will not have a significant economic impact on a
substantial number of small entities. The regulation does not require
any more action on the part of the small entities than is required on
the part of large entities. Therefore, this action is determined to be
exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C.
605) and no Regulatory Flexibility Analysis was prepared.
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372 which require intergovernmental consultation with State and local
officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988 on civil justice reform. The provisions of this rule will not
have a retroactive effect. The provisions of this rule will preempt
State and local laws to the extent such State and local laws are
inconsistent herewith. The administrative appeal provisions
[[Page 40741]]
published at 7 CFR part 11 must be exhausted before any action for
judicial review of any determination made by FCIC may be brought.
Environmental Evaluation
This action is not expected to have a significant economic impact
on the quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
Background
This rule finalizes revisions to subpart T and the Basic Provisions
mandated by the 1998 Research Act, enacted June 23, 1998, and
subsequently amended by 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 40632-40635 to amend subpart T and the
Basic Provisions to implement the statutory mandates of the 1998
Research Act, which required the provisions be implemented for the 1999
and subsequent reinsurance years. The 1999 Appropriations Act, which
was enacted after 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 18 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 company and an insurance service organization
suggested the word ``expected'' be replaced with the word ``projected''
in the definitions of ``additional coverage'' and ``limited coverage''
in the Basic Provisions since that is the word used when market price
elections are announced.
Response: Sections 508(b), (c), (d), and (e) of the Federal Crop
Insurance Act all refer to the phrase ``expected market price'' and the
regulations, procedures, and clarifications were written accordingly.
When market price elections are announced, FCIC will also use the term
``expected market price.'' Therefore, no change has been made.
Comment: An insurance service organization suggested revising the
definition of ``limited resource farmer'' in the Basic Provisions by
removing the words ``notwithstanding the previous sentence'' and adding
two parts such as ``A producer or operator of a farm or farms:
(a) With an annual gross income * * * each of the prior two years;
or
(b) Of less than 25 acres * * * does not exceed $20,000.''
Response: This definition of ``limited resource farmer'' is more
clear. Therefore, this definition will be added to the Basic Provisions
and the definition removed from Subpart T .
Comment: An insurance company and an insurance service organization
suggested that exceptions for: (1) a producer who grows hybrid seed
corn or hybrid sorghum seed with different companies; and (2) when the
crop provisions allow for a crop to be insured at different levels and
at multiple prices, should be added to section 3(f) of the Basic
Provisions since this section identifies exceptions to the requirement
that the producer must obtain the same level of coverage for all
acreage of the crop in the county. The insurance service organization
also suggested deleting the example of California grape varieties which
only deals with one crop in one state.
Response: The Basic Provisions are intended to provide the terms
that are general to all policies. Exceptions are provided in the Crop
Provisions, which take precedence over the Basic Provisions. The Hybrid
Sorghum Seed Crop Provisions and the Hybrid Seed Corn Crop Provisions
have the exception to allow any of the insured crop under contract with
different seed companies to be insured under separate policies with
different insurance providers provided all acreage of the insured crop
in the county is insured. Likewise, those Crop Provisions that allow
the crop to be insured at different levels and multiple prices will
also contain the exception to the Basic Provisions. The example of two
grape varieties insured under CAT coverage and two varieties insured
under limited coverage in California, which specifies that separate
administrative fees will be due for each of the four varieties, adds
clarity even though it is only for one crop in one state. Therefore, no
change has been made.
Comment: An insurance company and an insurance service organization
suggested the entire administrative fee for nursery be collected at one
time and not at three different dates since 40 percent of the premium
is due at the time of application, with the balance due at two other
times during the year. They asked if section 7(e)(3) of the Basic
Provisions should specify when the administrative fee is due since it
is not accurate for nursery as written.
Response: With respect to section 7(e)(3) of the Basic Provisions,
these provisions are intended to apply to all crops and the premium due
date is not the same for each crop. Therefore, a fixed date cannot be
included here. The new Nursery Crop Provisions (99-073), which are
effective for the 1999 and succeeding crop years, will only have one
premium due date specified in the Special Provisions, and this will be
the date that all premium and administrative fees are due. For the 1999
crop year, for the old Nursery Crop Insurance Provisions (96-056), all
administrative fees must be paid by the third billing date, which is
not inconsistent with the Basic Provisions. This policy will not be
effective after the 1999 crop year. Therefore, no change has been made.
Comment: An insurance service organization suggested revising
section 7(e)(5) of the Basic Provisions to read ``The administrative
fee for limited coverage will be waived if you request it and qualify
as a limited resource farmer.''
Response: FCIC has made the requested change.
Comment: An insurance company and an insurance service organization
asked if the phrase ``is not refundable'' should be deleted from
section 7(e)(6) of the Basic Provisions since the administrative fee
for additional coverage is not due until the premium is due, and this
provision for CAT coverage was removed from the CAT provisions after
the fee due date was changed.
Response: FCIC has removed the phrase.
Comment: An insurance company and an insurance service organization
questioned what is meant by section 35(b) of the Basic Provisions and
how it will be implemented, who will make the determination and the
timing of the determination. They also asked if this provision should
be added to the Crop Provisions instead of the Basic Provisions since
not all crops have other USDA programs. They stated that section 35(c)
of the Basic Provisions implies that crop insurance indemnity payments
would always be done prior to any USDA payment. They asked if insurance
companies would be in a position to determine the additional USDA
amount due if non-crop insurance USDA benefits are distributed through
the crop insurance delivery system. They do not think this will always
be the case, which would add confusion and could reduce the perceived
value of crop insurance to policyholders. The company also stated that
it appears that due to the producers
[[Page 40742]]
decision to purchase crop insurance other free benefits could be
limited or reduced and this situation should be avoided.
Response: Section 508(n) of the Act specifies that a producer who
purchases limited or additional coverage may also receive assistance
for the same crop loss under other programs administered by the
Secretary, except the amount received for the loss under the limited or
additional coverage together with the amount received under the other
programs may not exceed the amount of the actual loss of the producer.
Section 35(b) of the Basic Provisions specifies how to determine the
amount of the actual loss. Since a producer pays for crop insurance
coverage, the indemnity will always be paid in accordance with the
terms and conditions of the policy. FSA will determine and pay any
additional amount due or collect any overpayment if such benefits are
paid prior to the payment of any indemnity regardless of how such
benefits are delivered. These provisions are only needed in the Basic
Provisions. Therefore, no change has been made.
In addition to the changes described above, FCIC has made a few
minor editorial changes.
List of Subjects in 7 CFR Parts 400 and 457 `
Administrative practice and procedure, Basic Provisions, Claims,
Common Crop Insurance Regulations, Crop insurance, Reporting and record
keeping requirements.
Final Rule
Accordingly, as set forth in the preamble, the interim rule
amending 7 CFR parts 400 and 457, published on July 30, 1998, at 63 FR
40632, is adopted as final with the following changes:
PART 400--GENERAL ADMINISTRATIVE REGULATIONS
Subpart T--Federal Crop Insurance Reform, Insurance Implementation;
Regulations for the 1999 and Subsequent Reinsurance Years
1. The authority citation for 7 CFR part 400 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
Sec. 400.651 [Amended]
2. Amend Sec. 400.651 by removing the definition of ``limited
resource farmer.''
3. Amend the definition of ``linkage requirement,'' in
Sec. 400.651, the introductory text of Sec. 400.653, and
Secs. 400.653(a), 400.654(b) and (c)(4) by removing the section
designation of ``Sec. 400.657'' and adding in its place the section
designation of ``Sec. 400.655.''
PART 457--COMMON CROP INSURANCE REGULATIONS
4. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
Sec. 457.8 [Amended]
5. Amend Sec. 457.8 as follows:
a. Revise the definitions of ``administrative fee,'' ``catastrophic
risk protection'' and ``limited resource farmer'' in Section 1 of the
Basic Provisions.
b. Revise Section 2 paragraph (i) of the Basic Provisions.
c. Revise Section 3 paragraph (f) of the Basic Provisions.
d. Revise Section 7 paragraphs (e)(1), (4), (5), and (6) of the
Basic Provisions.
e. Revise Section 15 paragraph (d) of the Basic Provisions.
f. Remove Section 35 paragraph (d) of the Basic Provisions. The
revisions to Sec. 457.8 read as follows:
Sec. 457.8 The application and policy.
* * * * *
1. Definitions.
* * * * *
Administrative fee. An amount you must pay for catastrophic risk
protection, limited, and additional coverage for each crop year as
specified in section 7 and the Catastrophic Risk Protection
Endorsement.
* * * * *
Catastrophic risk protection. The minimum level of coverage offered
by FCIC that is required before you may qualify for certain other USDA
program benefits unless you execute a waiver of any eligibility for
emergency crop loss assistance in connection with the crop.
* * * * *
Limited resource farmer. A producer or operator of a farm:
(a) With an annual gross income of $20,000 or less derived from all
sources, including income from a spouse or other members of the
household, for each of the prior two years; or
(b) With less than 25 acres aggregated for all crops, where a
majority of the producer's gross income is derived from such farm or
farms, but the producer's gross income from farming operations does not
exceed $20,000.
* * * * *
2. Life of Policy, Cancellation, and Termination.
* * * * *
(i) When obtaining catastrophic, limited, or additional coverage,
you must provide information regarding crop insurance coverage on any
crop previously obtained at any other local FSA office or from an
approved insurance provider, including the date such insurance was
obtained and the amount of the administrative fee.
* * * * *
3. Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities.
* * * * *
(f) You must obtain the same level of coverage (catastrophic risk
protection, limited or additional) for all acreage of the crop in the
county unless one of the following applies:
(1) The applicable Crop Provisions allow you the option to
separately insure individual crop types or varieties. In this case,
each individual type or variety insured by you will be subject to
separate administrative fees. For example, if two grape varieties in
California are insured under the Catastrophic Risk Protection
Endorsement and two varieties are insured under a limited coverage
policy, a separate administrative fee will be charged for each of the
four varieties. Although insurance may be elected by type or variety in
these instances, failure to insure a type or variety that is of
economic significance may result in the denial of other farm program
benefits unless you execute a waiver of any eligibility for emergency
crop loss assistance in connection with the crop.
(2) If you have limited or additional coverage for the crop in the
county and the acreage has been designated as ``high risk'' by FCIC,
you will be able to obtain a High Risk Land Exclusion Option for the
high risk land under the limited or additional coverage policies and
insure the high risk acreage under a separate Catastrophic Risk
Protection Endorsement, provided that the Catastrophic Risk Protection
Endorsement is obtained from the same insurance provider from which the
limited or additional coverage was obtained.
* * * * *
7. Annual Premium and Administrative Fees.
(e) * * *
(1) If you elect limited coverage, you must pay an administrative
fee each crop year of $50 per crop per county, not to exceed $200 per
county, or $600 for all counties in which you elected to obtain limited
coverage.
* * * * *
(4) Payment of an administrative fee will not be required if you
file a bona fide zero acreage report on or before the acreage reporting
date for the crop. If you falsely file a zero acreage report you
[[Page 40743]]
may be subject to criminal and administrative sanctions.
(5) The administrative fee for limited coverage will be waived if
you request it and you qualify as a limited resource farmer.
(6) The administrative fee for additional coverage is not subject
to any limits and may not be waived.
* * * * *
15. Production Included in Determining Indemnities.
* * * * *
(d) The amount of an indemnity that may be determined under the
applicable provisions of your crop policy may be reduced by an amount,
determined in accordance with the Crop Provisions or Special
Provisions, to reflect out-of-pocket expenses that were not incurred by
you as a result of not planting, caring for, or harvesting the crop.
Indemnities paid for acreage prevented from being planted will be based
on a reduced guarantee as provided for in the crop policy and will not
be further reduced to reflect expenses not incurred.
* * * * *
Signed in Washington, DC, on July 20, 1999.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 99-19013 Filed 7-27-99; 8:45 am]
BILLING CODE 3410-08-P
