[Federal Register Volume 63, Number 146 (Thursday, July 30, 1998)]
[Rules and Regulations]
[Pages 40632-40635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20353]
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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; and Various Crop Insurance Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Interim rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) amends subpart T
in the General Administrative Regulations and the Common Crop Insurance
Regulations, Basic Provisions, to conform with the statutory mandates
of the Agricultural Research, Extension, and Education Reform Act of
1998 (1998 Research Act) and to move those provisions that are terms of
insurance from subpart T into the Basic Provisions. In this rule, FCIC
will also remove those provisions of subpart T that have been moved to
the Basic Provisions.
EFFECTIVE DATE: This rule is effective July 1, 1998. Written comments
and opinions on this rule will be accepted until the close of business
September 28, 1998, and will be considered when the rule is to be made
final.
ADDRESSES: Interested persons are invited to submit written comments to
the Director, Product Development Division, Federal Crop Insurance
Corporation, United States Department of Agriculture, 9435 Holmes Road,
Kansas City, MO 64131. A copy of each response will be available for
public inspection and copying from 7:00 a.m. to 4:30 p.m., CDT, Monday
through Friday, except holidays, at the above address.
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 economically significant for
the purposes of Executive Order 12866 and, therefore, has been reviewed
by the Office of Management and Budget (OMB).
This action amends FCIC's regulations in accordance with the 1998
Research Act. This rule is being published on an emergency basis so
that affected producers have the opportunity to make timely decisions
regarding their insurance plans for the 1999 crop year for crops with
sales closing dates subsequent to the enactment of the 1998 Research
Act. The 1998 Research Act was signed by the President on June 23,
1998. The first sales closing date subsequent to the date of signing is
July 31, 1998, for raisins in California. This emergency situation
makes timely compliance with sections 6 (3)(B)(ii) and (3)(C) of
Executive Order 12866 impractical due to the short time to make this
rule effective prior to that sales closing date. FCIC will complete the
required cost-benefit analysis within 90 days of the publication of
this rule in the Federal Register and will make such analysis available
to the public.
Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L.
104-121, 5 U.S.C. Secs. 801-808)
This rule has been designated by the Office of Information and
Regulatory Affairs, OMB, as a major rule under the Small Business
Regulatory Enforcement Fairness Act of 1996 (Small Business Act).
However, section 808 of the Small Business Act exempts a rule from the
60 day delay in effectiveness of a rule where an agency for good cause
finds that notice and public procedure are impracticable, unnecessary,
or contrary to the public interest. The Administrator of the Risk
Management Agency (RMA) has determined that there is good cause for
making this rule effective less than 60 days after submission of the
rule to each House of Congress and to the Comptroller General because a
delay would be contrary to the public interest.
There are producers affected by this rule that must make critical
risk management decisions and the deadline for the first 1999 crop year
decisions is less than 60 days from the July 1, 1998, effective date of
the 1998 Research Act. A delay in the effective date of this rule will
create instability and inequity within the program as producers attempt
to determine whether they are affected and it will create separate
classes of producers who are subjected to the increased administrative
fees and those who are not.
Further, RMA was required to revise the Standard Reinsurance
Agreement before the July 1, 1998, start of the 1999 reinsurance year
to implement the provisions of the 1998 Research Act. If this rule is
delayed, it will create
[[Page 40633]]
administrative problems for the 1999 reinsurance year because the
reinsured companies will be subject to the provisions of the 1998
Research Act but some of their insureds will not.
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 the Office of Management and Budget (OMB)
under control number 0563-0053 through October 31, 2000. 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 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 interim rule implements revisions to these parts mandated by
the Federal Crop Insurance Act, as amended by the 1998 Research Act,
enacted June 23, 1998. The 1998 Research Act requires the provisions be
implemented for the 1999 and subsequent reinsurance years. Crop
insurance policies with a sales closing date prior to the effective
date of this rule will not be affected by these provisions until the
2000 reinsurance year. Crop insurance policies with a sales closing
date after the effective date of this rule will have revised
administrative fees. Since the changes to the policy made by this rule
are required by statute, it is impractical and contrary to the public
interest to publish this rule for notice and comment prior to making
the rule effective. However, comments are solicited for 60 days after
the date of publication in the Federal Register and will be considered
by FCIC before this rule is made final.
FCIC amends subpart T by deleting the provisions regarding
available coverage, administrative fees, and election of benefits that
are being incorporated into the Basic Provisions.
FCIC amends the Basic Provisions as follows:
1. Section 1 is amended to add definitions of the terms
``additional coverage,'' ``administrative fee,'' ``catastrophic risk
protection,'' ``Catastrophic Risk Protection Endorsement,'' ``limited
coverage,'' and ``limited resource farmer'' for clarity.
2. Section 2 is amended to incorporate the provisions from subpart
T regarding the termination of a policy when a producer fails to pay
administrative fees when they are due and revising the provisions in
accordance with the 1998 Research Act.
3. Section 3 is amended to incorporate the provisions from subpart
T involving the coverage available for catastrophic risk protection,
limited and additional coverage levels.
4. Section 7 is amended to incorporate provisions from subpart T
involving administrative fees that must be paid for limited and
additional coverage policies and revising the amounts of such fees in
accordance with the 1998 Research Act.
5. Section 15 is amended to incorporate the provisions from subpart
T involving the reduction of an indemnity to reflect costs not incurred
by the producer.
6. A new section 35 is added to incorporate provisions from subpart
T that provide options that are available to insureds when they are
eligible for benefits under their crop insurance policy and another
USDA program for the same loss.
List of Subjects in 7 CFR Parts 400 and 457
Crop insurance, Administrative practice and procedure, Claims,
Reporting and record keeping requirements; Common Crop Insurance
Regulations; Basic Provisions; and Various Crop Insurance Provisions.
Interim Rule
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation amends 7 CFR parts 400 and 457 as follows:
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(1), 1506(p).
2. The subpart heading for subpart T is revised as set forth above.
3. In Sec. 400.651, revise the definition of ``administrative fee''
to read as follows:
Sec. 400.651 Definitions.
* * * * *
[[Page 40634]]
Administrative fee. An amount the producer must pay for
catastrophic, limited, and additional coverage each crop year on a per
crop and county basis as specified in the Basic Provisions or the
Catastrophic Risk Protection Endorsement.
* * * * *
4. Remove sections 400.655 and 400.656 and redesignate
Secs. 400.657 through 400.659 as Secs. 400.655 through 400.657.
PART 457--COMMON CROP INSURANCE REGULATIONS
5. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
6. In Sec. 457.8, amend the policy as follows:
A. Amend section 1 to add the definitions of ``additional
coverage,'' ``administrative fee,'' ``catastrophic risk protection,''
``Catastrophic Risk Protection Endorsement,'' ``limited coverage,'' and
``limited resource farmer'' to read as follows:
Sec. 457.8 The application and policy.
* * * * *
Common Crop Insurance Policy
* * * * *
1. * * *
Additional coverage. Plans of crop insurance providing a level
of coverage equal to or greater than 65 percent of the approved
yield indemnified at 100 percent of the expected market price, or a
comparable coverage as established by FCIC.
Administrative fee. An amount the producer 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 a person may qualify for
certain other USDA program benefits unless the producer executes a
waiver of any eligibility for emergency crop loss assistance in
connection with the crop.
Catastrophic Risk Protection Endorsement. The part of the crop
insurance policy that contains provisions of insurance that are
specific to catastrophic risk protection.
* * * * *
Limited coverage. Plans of insurance offering coverage that is
equal to or greater than 50 percent of the approved yield
indemnified at 100 percent of the expected market price, or a
comparable coverage as established by FCIC, but less than 65 percent
of the approved yield indemnified at 100 percent of the expected
market price, or a comparable coverage as established by FCIC.
Limited resource farmer. A producer or operator of a farm, 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. Notwithstanding the previous
sentence, a producer on a farm or farms of 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, will be
considered a limited resource farmer.
B. Amend section 2 by adding a new subsection (i) and revising
sections 2(e) introductory text and 2(e)(1) to read as follows:
* * * * *
(e) If any amount due, including administrative fees or premium,
is not paid on or before the termination date for the crop for which
such amount is due:
(1) For a policy with unpaid administrative fees or premium, the
policy will terminate effective on the termination date immediately
subsequent to the billing date for the crop year;
* * * * *
(i) When obtaining catastrophic, limited, or additional
coverage, a producer 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.
C. Amend section 3 by adding new subsections (f), (g), and (h) to
read as follows:
* * * * *
(f) The producer 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 policy allows the producer the option to
separately insure individual crop types or varieties. In this case,
each individual type or variety insured by the producer 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 the producer executes a waiver of
any eligibility for emergency crop loss assistance in connection
with the crop.
(2) The producer with limited or additional coverage for the
crop in the county has acreage that has been designated as ``high
risk'' by FCIC. Such producers 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.
(g) Hail and fire coverage may be excluded from the covered
causes of loss for a crop policy only if additional coverage is
selected.
(h) Any person may sign any document relative to crop insurance
coverage on behalf of any other person covered by such a policy,
provided that the person has a properly executed power of attorney
or such other legally sufficient document authorizing such person to
sign.
D. Amend section 7 by revising the heading and adding a new
subsection (e) to read as follows:
* * * * *
7. Annual Premium and Administrative Fees.
* * * * *
(e) In addition to the premium charged:
(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 the
producer has elected to obtain limited coverage.
(2) If you elect additional coverage, you must pay an
administrative fee of $20 per crop for each crop year in which crop
insurance coverage remains in effect.
(3) The administrative fee must be paid no later than the time
that premium is due.
(4) Payment of an administrative fee will not be required if the
insured files a bona fide zero acreage report on or before the
acreage reporting date for the crop. Any producer who falsely files
a zero acreage report may be subject to criminal and administrative
sanctions.
(5) The administrative fee for limited coverage will be waived
if you qualify as a limited resource farmer.
(6) The administrative fee for additional coverage is not
refundable, is not subject to any limits, and may not be waived.
(7) Failure to pay the administrative fees when due may make you
ineligible for certain other USDA benefits.
E. Amend section 15 by adding a new subsection (d) to read as
follows:
* * * * *
(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 the producer as a result of not planting, caring for, or
harvesting the crop. Indemnities paid for acreage prevented from
planting 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.
F. Add a new section 35 to read as follows:
* * * * *
35. Multiple Benefits.
(a) If you are eligible to receive an indemnity under a limited
or additional coverage plan of insurance and are also eligible to
receive benefits for the same loss under any other USDA program, you
may receive benefits under both programs, unless specifically
limited by the crop insurance contract or by law.
[[Page 40635]]
(b) The total amount received from all such sources may not
exceed the amount of your actual loss. The total amount of the
actual loss is the difference between the fair market value of the
insured commodity before and after the loss, based on your
production records and the highest price election or amount of
insurance available for the crop.
(c) FSA will determine and pay the additional amount due you for
any applicable USDA program after first considering the amount of
any crop insurance indemnity.
(d) Farm ownership and operating loans may be obtained from USDA
in addition to crop insurance indemnities.
* * * * *
Signed in Washington, D.C., on July 24, 1998.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 98-20353 Filed 7-27-98; 5:10 pm]
BILLING CODE 3410-08-P
