98-26257. Common Crop Insurance Regulations; Cotton and ELS Cotton Crop Insurance Provisions  

  • [Federal Register Volume 63, Number 189 (Wednesday, September 30, 1998)]
    [Proposed Rules]
    [Pages 52198-52200]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 98-26257]
    
    
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    DEPARTMENT OF AGRICULTURE
    
    Federal Crop Insurance Corporation
    
    7 CFR Part 457
    
    RIN 0563-AB62
    
    
    Common Crop Insurance Regulations; Cotton and ELS Cotton Crop 
    Insurance Provisions
    
    AGENCY: Federal Crop Insurance Corporation, USDA.
    
    ACTION: Proposed rule.
    
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    SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to 
    amend the Cotton Crop Insurance Provisions and the Extra Long Staple 
    (ELS) Cotton Crop Insurance Provisions for the 1999 and succeeding crop 
    years to: Provide a replant payment if the insured crop is damaged by 
    excess moisture, hail, or blowing sand or soil and is replanted; revise 
    the quality adjustment formula used to calculate the amount of 
    production to count for cotton and ELS cotton; and provide a prevented 
    planting coverage level of 50 percent of the insured's production 
    guarantee for timely planted acreage. The intended effect of this 
    action is to create a policy that best meets the needs of the insured.
    
    DATES: Written comments and opinions on this proposed rule will be 
    accepted until close of business October 13, 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, U.S. 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: For further information and a copy of 
    the cost-benefit analysis to the Common Crop Insurance Regulations; 
    Cotton and ELS Cotton Crop Insurance Provisions, contact Stephen Hoy, 
    Insurance Management Specialist, Research and Development, Product 
    Development Division, Federal Crop Insurance Corporation, at the Kansas 
    City, MO, address listed above, telephone (816) 926-7730.
    
    SUPPLEMENTARY INFORMATION:
    
    Executive Order 12866
    
        The Office of Management and Budget (OMB) has determined this 
    proposed rule to be significant and, therefore, has been reviewed by 
    OMB.
    
    Cost-Benefit Analysis
    
        A Cost-Benefit Analysis has been completed and is available to 
    interested persons at the Kansas City address listed above. In summary, 
    the analysis finds that the proposed rule makes major changes to the 
    Cotton and ELS Cotton Crop Insurance Provisions which would benefit 
    producers by increasing existing Multiple-Peril Crop Insurance 
    coverage. Specifically, the rule: (1) Provides a replant payment for 
    cotton and ELS cotton damaged or destroyed by excess moisture, hail, or 
    blowing sand or soil; (2) modifies the quality adjustment procedure 
    used when mature white cotton or mature ELS cotton has been damaged by 
    insured causes; and (3) increases the prevented planting coverage 
    payment rate to 50 percent for cotton and ELS cotton.
        These proposed changes are expected to add $36 to $43 million to 
    aggregate losses and premiums. Producer premium subsidies and 
    administrative subsidies are proportions of the actuarially based 
    premiums; thus increases in premiums lead to increases in outlays for 
    subsidies. The total increase in Government outlays due to provisions 
    of this regulation, including the full effect of prevented planting 
    coverage, is expected to be $32 to $38 million. About $21 to $25 
    million would be for producer premium subsidies, $8 to $10 million for 
    administrative subsidies, and about $3 million for underwriting costs.
    
    Paperwork Reduction Act of 1995
    
        The provisions contained in this rule contain information 
    collections that require clearance by the Office of Management and 
    Budget (OMB).
        This rule proposes to amend the information collection requirements 
    previously approved by OMB under OMB control number 0563-0053 through 
    October 31, 2000. This rule provides a replant payment if the insured 
    crop is damaged by excess moisture, hail, or blowing sand or soil and 
    is replanted. Information will need to be collected with respect to the 
    number of acres replanted in order to calculate a replant payment. In 
    addition, the proposed rule revises the provision used to determine the 
    amount of production to count for cotton and ELS cotton that is 
    eligible for quality adjustment, and proposes a prevented planting 
    coverage of 50 percent for cotton and ELS cotton for 1999 and 
    subsequent crop years. All of the forms cleared under OMB control 
    number 0563-0053 represent the minimum information necessary to 
    determine eligibility and losses qualifying for a payment due to cotton 
    and ELS cotton coverage.
        Due to the necessity of implementing the rule beginning with the 
    1999 crop year, the Agency has requested emergency clearance of the 
    information collections associated with this rule from OMB by September 
    8, 1998. A Federal Register notice soliciting public comment in 
    conjunction with a regular information collection approval package
    
    [[Page 52199]]
    
    was published in the Federal Register on September 25, 1998.
    
    Unfunded Mandates Reform Act of 1995
    
        Title II of the Unfunded Mandates Reform 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 the 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 
    the UMRA.
    
    Executive Order 12612
    
        It has been determined under section 6(a) of Executive Order No. 
    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. New provisions included in this 
    rule will not impact small entities to a greater extent than large 
    entities. All producers, regardless of size, are eligible for the 
    replant payment and will be required to report the number of acres 
    replanted and the cause of loss. The amount of work required of the 
    insurance companies delivering and servicing these policies will 
    increase somewhat from the amount of work currently required. However, 
    insurance providers will be compensated for any increase because 
    additional premium will be charged for the expanded coverage, and 
    insurance providers are compensated through a percentage of the net 
    book premium. 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 proposed 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 against FCIC for 
    judicial review 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.
    
    National Performance Review
    
        This regulatory action is being taken as part of the National 
    Performance Review Initiative to eliminate unnecessary or duplicative 
    regulations and improve those that remain in force.
    
    Background
    
        FCIC proposes to amend the Common Crop Insurance Regulations (7 CFR 
    part 457) by revising 7 CFR 457.104 and 7 CFR 457.105 effective for the 
    1999 and succeeding crop years. The principal changes to the provisions 
    for insuring cotton and ELS cotton are as follows:
        1. Section 9--Add a new section 9 to provide a replant payment for 
    cotton and ELS cotton damaged by excess moisture, hail, or blowing sand 
    or soil to the extent that the remaining stand will not produce at 
    least 90 percent of the production guarantee for the acreage and it is 
    practical to replant (sections that succeed the new replant payment 
    section are renumbered to accommodate this change). The current Cotton 
    Crop Provisions and ELS Cotton Crop Provisions do not provide a replant 
    payment if the crop is damaged to the extent that replanting is 
    necessary. Concerns were expressed to FCIC that the absence of a 
    replant payment for cotton, which requires the producer to replant the 
    crop without compensation, is inconsistent with other major 
    commodities. Failure to replant means that insurance does not attach.
        Replanting coverage will be limited to crop damage caused by excess 
    moisture, hail, or blowing sand or soil. While these are not the only 
    natural perils that cause cotton to be replanted, they are perils that 
    often cause replanting in the cotton growing areas. Planting during or 
    after a dry period (sometimes termed ``dusting-in'') may result in the 
    need to replant if the cotton seed does not germinate; however, this 
    practice will not be covered under the replant provision. Limiting 
    replant payments to excess moisture, hail, and blowing sand or soil 
    will have a lesser impact on premium rate increases than what may 
    result if additional perils that occur with greater frequency, such as 
    dry weather, were included. This proposed rule provides meaningful 
    replanting coverage for cotton producers while maintaining a sound 
    insurance program, particularly in areas where ``dusting-in'' is a 
    common practice.
        2. Section 11--Change the adjustment for quality when mature white 
    cotton or mature ELS cotton has been damaged by insured causes. The 
    current provisions specify that the quality adjustment factor is 
    calculated using 75 percent of the price quotation for the applicable 
    growth area for cotton of the color and leaf grade, staple length, and 
    micronaire reading (for ELS cotton the grade, staple length, and 
    micronaire reading) contained in the Special Provisions for this 
    purpose (price quotation ``B''). This rule revises the quality 
    adjustment factor by using 100 percent of the price quotation ``B.'' 
    Using 100 percent of price quotation ``B'' to calculate the quality 
    adjustment factor for cotton and ELS cotton makes the production to 
    count calculation comparable to most other crops that have adjustments 
    for quality. The requirement that price quotation ``A'' must be less 
    than 75 percent of price quotation ``B'' to be eligible for quality 
    adjustment is not changed. In addition, ELS cotton price quotations 
    ``A'' and ``B'' will be determined from the Daily Spot Cotton Quotation 
    rather than the Weekly Cotton Market Review to more accurately reflect 
    the value of ELS cotton production.
        3. Section 12 of the Cotton Crop Provisions and section 13 of the 
    ELS Cotton Crop Provisions--Change the prevented planting coverage to 
    50 percent of the insured's production guarantee for timely planted 
    acreage. Prevented planting coverage is designed to reimburse producers 
    for the costs incurred during the preplant period if the intended crop 
    cannot be planted. FCIC relied on an analysis performed by the Economic 
    Research Service (ERS) as the basis for establishing 45 percent as the 
    prevented planting coverage rate for cotton and ELS cotton for the 1998 
    crop year.
    
    [[Page 52200]]
    
        Concerns were expressed to FCIC that the prevented planting 
    percentage for cotton is not comparable to other crops even though pre-
    planting costs per acre for cotton are similar to other crops, such as 
    corn; therefore, the prevented planting percentage should be increased. 
    However, policy compatibility is not relevant to the amount offered. 
    The only question is the sufficiency of the payment for the purpose 
    stated. Concerns were also expressed that the price election used to 
    determine the recommended prevented planting percentage in the ERS 
    study was not reflective of the actual price election for cotton in 
    past years. After further analyses using updated price elections, FCIC 
    determined that a prevented planting coverage level of 50 percent of 
    the insured's production guarantee for timely planted acreage could be 
    offered for cotton beginning with the 1999 crop year. If the insured 
    has limited or additional levels of coverage and pays an additional 
    premium, the prevented planting coverage level may be increased to 55 
    or 60 percent.
        This policy will be rated appropriately for the coverage provided.
    
    List of Subjects in 7 CFR Part 457
    
        Crop insurance, Cotton, ELS cotton.
    
    Proposed Rule
    
        Accordingly, as set forth in the preamble, the Federal Crop 
    Insurance Corporation, proposes to amend 7 CFR part 457 as follows:
    
    PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE 
    1998 AND SUBSEQUENT CROP YEARS
    
        1. The authority citation for 7 CFR part 457 continues to read as 
    follows:
    
        Authority: 7 U.S.C. 1506(1), 1506(p).
    
        2. In Sec. 457.104 redesignate sections 9 through 11 of the 
    insurance provisions as 10 through 12, add a new section 9, and revise 
    redesignated sections 11(d) and 12(b) to read as follows:
    
    
    Sec. 457.104  Cotton Crop Insurance Provisions.
    
    * * * * *
    
    9. Replanting Payments
    
        (a) In accordance with section 13 of the Basic Provisions, a 
    replanting payment is allowed if the insured crop is damaged by 
    excess moisture, hail, or blowing sand or soil to the extent that 
    the remaining stand will not produce at least 90 percent of the 
    production guarantee for the acreage and it is practical to replant.
        (b) The maximum amount of the replanting payment for the unit 
    will be the lesser of:
        (1) Twenty dollars ($20.00) per acre multiplied by the number of 
    acres replanted, multiplied by your insured share; or
        (2) Ten percent (10%) of the production guarantee per acre 
    multiplied by your price election, multiplied by the number of acres 
    replanted, multiplied by your insured share.
        (c) When the cotton is replanted using a practice or type that 
    is uninsurable as an original planting, the liability for the unit 
    will be reduced by the amount of the replanting payment. The premium 
    amount will not be reduced.
    * * * * *
    
    11. Settlement of Claim
    
    * * * * *
        (d) Mature white cotton may be adjusted for quality when 
    production has been damaged by insured causes. Unless otherwise 
    provided by the Special Provisions, such production to count will be 
    reduced if the price quotation for cotton of like quality (price 
    quotation ``A'') for the applicable growth area is less than 75 
    percent of price quotation ``B.'' Price quotation ``B'' is defined 
    as the price quotation for the applicable growth area for cotton of 
    the color and leaf grade, staple length, and micronaire reading 
    designated in the Special Provisions for this purpose. Price 
    quotations ``A'' and ``B'' will be the price quotations contained in 
    the Daily Spot Cotton Quotations published by the USDA Agricultural 
    Marketing Service on the date the last bale from the unit is 
    classed. If not available on the date the last bale was classed, the 
    price quotations will be determined on the date the last bale from 
    the unit was delivered to the warehouse, as shown on the insured's 
    account summary obtained from the gin. If eligible for quality 
    adjustment, the amount of production to be counted will be 
    determined by multiplying the number of pounds of production 
    eligible for such adjustment by the factor derived from dividing 
    price quotation ``A'' by price quotation ``B.''
    * * * * *
    
    12. Prevented Planting
    
    * * * * *
        (b) Your prevented planting coverage will be 50 percent of your 
    production guarantee for timely planted acreage. If you have limited 
    or additional levels of coverage, as specified in 7 CFR part 400, 
    subpart T, and pay an additional premium, you may increase your 
    prevented planting coverage to a level specified in the actuarial 
    documents.
    
        3. In Sec. 457.105 redesignate sections 9 through 12 of the 
    insurance provisions as 10 through 13, add a new section 9, and revise 
    redesignated sections 11(d) and 13(b) to read as follows:
    
    
    Sec. 457.105  ELS Cotton Crop Insurance Provisions.
    
    * * * * *
    
    9. Replanting Payments
    
        (a) In accordance with section 13 of the Basic Provisions, a 
    replanting payment is allowed if the insured crop is damaged by 
    excess moisture, hail, or blowing sand or soil to the extent that 
    the remaining stand will not produce at least 90 percent of the 
    production guarantee for the acreage, and it is practical to 
    replant.
        (b) The maximum amount of the replanting payment for the unit 
    will be the lesser of:
        (1) Twenty dollars ($20.00) per acre multiplied by the number of 
    acres replanted, multiplied by your insured share; or
        (2) Ten percent (10%) of the production guarantee per acre 
    multiplied by your price election, multiplied by the number of acres 
    replanted, multiplied by your insured share.
        (c) When the cotton is replanted using a practice or type that 
    is uninsurable as an original planting, the liability for the unit 
    will be reduced by the amount of the replanting payment. The premium 
    amount will not be reduced.
    * * * * *
    
    11. Settlement of Claim
    
    * * * * *
        (d) Mature ELS cotton production may be adjusted for quality 
    when production has been damaged by insured causes. Unless otherwise 
    provided by the Special Provisions, such production to count will be 
    reduced if the price quotation for ELS cotton of like quality (price 
    quotation ``A'') for the applicable growth area is less than 75 
    percent of price quotation ``B.'' Price quotation ``B'' is defined 
    as the price quotation for the applicable growth area for ELS cotton 
    grade, staple length, and micronaire reading designated in the 
    Special Provisions for this purpose. Price quotations ``A'' and 
    ``B'' will be the price quotations contained in the Daily Spot 
    Cotton Quotations published by the USDA Agricultural Marketing 
    Service on the date the last bale from the unit is classed. If not 
    available on the date the last bale was classed, the price 
    quotations will be determined on the date the last bale from the 
    unit was delivered to the warehouse, as shown on the insured's 
    account summary obtained from the gin. If eligible for quality 
    adjustment, the amount of production to be counted will be 
    determined by multiplying the number of pounds of production 
    eligible for such adjustment by the factor derived from dividing 
    price quotation ``A'' by price quotation ``B.''
    * * * * *
    
    13. Prevented Planting
    
    * * * * *
        (b) Your prevented planting coverage will be 50 percent of your 
    production guarantee for timely planted acreage. If you have limited 
    or additional levels of coverage, as specified in 7 CFR part 400, 
    subpart T, and pay an additional premium, you may increase your 
    prevented planting coverage to a level specified in the actuarial 
    documents.
    
        Signed in Washington, DC, on September 28, 1998.
    Kenneth D. Ackerman,
    Manager, Federal Crop Insurance Corporation.
    [FR Doc. 98-26257 Filed 9-28-98; 1:51 pm]
    BILLING CODE 3410-08-P
    
    
    

Document Information

Published:
09/30/1998
Department:
Federal Crop Insurance Corporation
Entry Type:
Proposed Rule
Action:
Proposed rule.
Document Number:
98-26257
Dates:
Written comments and opinions on this proposed rule will be accepted until close of business October 13, 1998, and will be considered when the rule is to be made final.
Pages:
52198-52200 (3 pages)
RINs:
0563-AB62: Common Crop Insurance Regulations; Cotton and ELS Cotton Crop Insurance Provisions
RIN Links:
https://www.federalregister.gov/regulations/0563-AB62/common-crop-insurance-regulations-cotton-and-els-cotton-crop-insurance-provisions
PDF File:
98-26257.pdf
CFR: (2)
7 CFR 457.104
7 CFR 457.105