[Federal Register Volume 62, Number 224 (Thursday, November 20, 1997)]
[Rules and Regulations]
[Pages 61898-61906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30514]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 416 and 457
Pea Crop Insurance Regulations; and Common Crop Insurance
Regulations, Green Pea Crop Insurance Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes
specific crop provisions for the insurance of green peas. The
provisions will be used in conjunction with the Common Crop Insurance
Policy Basic Provisions, which contain standard terms and conditions
common to most crops. The intended effect of this action is to provide
policy changes to better meet the needs of the insured, separate green
peas and dry peas into separate crop insurance provisions, include the
current pea crop insurance regulations with the Common Crop Insurance
Policy for ease of use and consistency of terms, and to restrict the
effect of the current pea crop insurance regulations to the 1997 and
prior crop years.
EFFECTIVE DATES: December 22, 1997.
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 No. 12866
The Office of Management and Budget (OMB) has determined this rule
to be exempt for the purposes of Executive Order No. 12866, and,
therefore, this rule has not been reviewed by OMB.
Paperwork Reduction Act of 1995
Under the Paperwork Reduction Act of 1995 [44 U.S.C. chapter 35],
collections of information have been approved by the Office of
Management and Budget (OMB) under control number 0563-0053.
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
[[Page 61899]]
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 No. 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. The amount of work required of
insurance companies will not increase because the information used to
determine eligibility is already maintained at their office and the
other information required is already being gathered as a result of the
present policy. No additional actions are required as a result of this
action on the part of either the producer or the reinsured company.
Additionally, the regulation does not require any action on the part of
the small entities than is required on the part of the 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 No. 12372
This program is not subject to the provisions of Executive Order
No. 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 No. 12988
This final rule has been reviewed in accordance with Executive
Order No. 12988 on civil justice reforms. The provisions of this rule
will not have a retroactive effect prior to the effective date. 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 may be brought.
Environmental Evaluation
This action is not expected to have a significant 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
On Thursday, May 1, 1997, FCIC published a proposed rule in the
Federal Register at 62 FR 23680 to add to the Common Crop Insurance
Regulations (7 CFR part 457), a new section, 7 CFR 457.137, Green Pea
Crop Insurance Provisions. The new provisions will be effective for the
1998 and succeeding crop years. These provisions will replace and
supersede the current provisions for insuring green peas found at 7 CFR
part 416 (Pea Crop Insurance Regulations). FCIC also amends 7 CFR part
416 to limit its effect to the 1997 and prior crop years.
Following publication of the proposed rule, the public was afforded
30 days to submit written comments and opinions. A total of 58 comments
were received from an insurance service organization, a reinsured
company, a crop insurance agent, and a food corporation. The comments
received, and FCIC's responses are as follows:
Comment: An insurance service organization recommended that several
definitions common to most crops be put into the Basic Provisions.
Response: The Basic Provisions, which are currently in the
regulatory review process, will include definitions of commonly used
terms, and this rule will be revised to delete these definitions when
the Basic Provisions are published as a final rule.
Comment: An insurance service organization recommended that the
sentence in the definition of ``bypassed acreage'' that states
``Bypassed acreage upon which an indemnity is payable will be
considered to have a zero yield for Actual Production History (APH)
purposes'' be deleted since it is addressed elsewhere and does not
belong in the definition.
Response: FCIC has deleted the second sentence from, and revised,
the definition of bypassed acreage. Provisions have been added in
section 3 to explain bypassed acreage when determining approved yield.
Comment: An insurance service organization questioned whether dry
pea varieties were shell type or pod type peas.
Response: The definition of green peas specifies that it may be
shell or pod type. The definition of ``dry peas'' has been revised to
clarify the distinction between green and dry peas.
Comment: An insurance service organization recommended that the
definition of ``final planting date'' be revised to delete the phrase
``for the full production guarantee'' since the late planting
provisions are not applicable.
Response: The proposed recommendation has not been made because
late planting coverage will be available if allowed by the Special
Provisions and the producer provides written approval from the
processor by the acreage reporting date that it will accept the
production from the late planted acreage.
Comment: An insurance service organization and a reinsured company
expressed concern with the definition of ``good farming practices''
which makes reference to ``cultural practices generally in use in the
county * * * recognized by the Cooperative State Research, Education,
and Extension Service as compatible with agronomic and weather
conditions in the county.'' The commenters questioned whether cultural
practices that are not explicitly recognized (or possibly known) by the
Cooperative State Research, Education, and Extension Service might
exist. The commenters indicated that the term ``county'' in the
definition of ``good farming practice'' should be changed to ``area.''
The insurance service organization also recommended adding the word
``generally'' before ``recognized by the Cooperative State Research,
Education, and Extension Service * * *.''
Response: The Cooperative State Research, Education, and Extension
Service (CSREES) recognizes farming practices that are considered
acceptable for producing green peas. If a producer is following
practices currently not recognized as acceptable by the CSREES, such
recognition can be sought by interested parties. Use of the term
``generally'' will only create an ambiguity and make the definition
more difficult to administer. Although the cultural practices
recognized by the CSREES may only pertain to specific areas within a
county, the actuarial documents are on a county basis. Therefore, no
change has been made.
Comment: An insurance service organization questioned if the
definition
[[Page 61900]]
of ``peas'' was intended to include both ``dry'' and ``green'' peas.
Response: The definition of ``peas'' includes both green and dry
peas. The definition of ``peas'' has been revised to include green or
dry peas.
Comment: An insurance service organization recommended that the
definition of ``replanting'' be clarified by inserting ``green pea''
between the last two words (``successful'' and ``crop'') of the
sentence.
Response: To be consistent with language contained in the proposed
rule of the Basic Provisions, FCIC has revised the definition to
clarify that ``replanting'' is performing the cultural practices
necessary to prepare the land to replace the seed of the damaged or
destroyed crop and then replacing the seed in the insured acreage.
Comment: An insurance service organization recommended that section
2(c) of the proposed rule clarify whether optional units are available
if the processor contract stipulates the number of contracted acres, or
only if the contract does not specify an amount of production.
Response: FCIC agrees and has amended section 2(a) to clarify that
for processor contracts that stipulate a specific amount of production
to be delivered, the basic unit will consist of all acreage planted to
the insured crop in the county that will be used to fulfill the
processor contract, and optional units will not be established. The
language in section 2 has also been revised and reformatted to clearly
state the requirements for both the acreage based and production based
processor contracts.
Comment: An insurance service organization, a reinsured company, an
insurance agent, and a food corporation recommended that unit division
by green pea type remain as an option. The commenters stated that: (1)
Unit division by early, mid and late-season green peas is the only unit
division option available in many areas other than share or farm serial
number; (2) it would complicate loss adjustment if a claim on an early-
season variety had to be deferred until the late-season variety was
harvested; (3) productivity varies between types (as has been defined
as requiring a specific amount of heat units for maturity during a
normal growing season); and (4) growing early and late-season green
peas are two separate operations. The early-season green peas are
planted in April and early May and thrive on the cooler temperatures.
They are harvested in June and avoid the heat of early summer. This
early harvest allows the producer the option of planting a full season
crop after the peas are harvested. The early-season peas are lower
yielding and are priced less on processor contracts. Late-season green
peas are full season, higher yielding, and priced much higher to allow
the producer a return competitive with other full season crops.
Response: As new varieties of green peas have been developed and
the original types intermixed, it has become more and more difficult to
define the type of green pea into which a variety falls. Due to the
need for consistency among regions and crops, FCIC has determined to
delete units by type for early, mid, and late season green peas or by
planting date.
Comment: An insurance service organization and a reinsured company
questioned the distinction between ``shell'' and ``pod'' type peas and
questioned what would be accomplished by providing optional units by
shell or pod type peas. The commenter also asked how shell and pod type
peas will be identified.
Response: Shell type peas are defined as green peas that are
shelled prior to eating, canning, or freezing. Pod type peas are
defined as green peas intended to be eaten without shelling (e.g., snap
peas, snow peas, and Chinese peas). Pod type and shell type peas are
grown for a different purpose and a different market. Because of the
clear distinction between these types of peas, the provisions have been
amended to allow optional unit division for shell type and pod type
green peas.
Comment: An insurance service organization and a reinsured company
expressed concern that FSA has consolidated all land under the same
ownership into one Farm Serial Number wherever possible in the
Northeast states, which serves as a deterrent to the purchase of buy-up
coverage by the larger, successful producer.
Response: Depending on the processor contract terms, optional units
are available by section, section equivalent, FSA Farm Serial Number,
irrigated and non-irrigated practice, or by shell type and pod type
green peas.
Comment: An insurance service organization recommended revising
section 2(f)(1) of the proposed rule to read ``You must have provided
records by the production reporting date, which can be independently
verified, * * *.'' They stated that this would eliminate the potential
for misinterpretation that the policyholder qualifies for separate
optional units simply by listing them on the acreage report and having
records available at home.
Response: Producers do not have to provide records by the
production reporting date. Producers report production and acreage
information by the production reporting date and only provide records
which can be independently verified when requested by the insurance
provider. Therefore, no change has been made.
Comment: A reinsured company questioned whether verification of
production from an optional unit using ``measurement of stored
production,'' as specified in section 2(f)(3) of the proposed rule
applies to green peas.
Response: Green peas are not put into storage before processing.
Therefore, FCIC has removed this provision.
Comment: An insurance service organization recommended removal of
the opening phrase in section 2(f)(4)(ii) of the proposed rule that
states ``In addition to, or instead of, establishing optional units by
section, section equivalent or FSA Farm Serial Number, * * *'' since
section 2(f)(4) of the proposed rule specifies that ``Each optional
unit must meet one or more of the following criteria, * * *.''
Response: FCIC agrees and has revised section 2(b)(5) of the final
rule accordingly.
Comment: An insurance service organization questioned if the
standard language in section 3(a) of the proposed rule which allows the
producer to select only one price election for all the green peas in
the county insured under this policy unless the Special Provisions
provide different price elections by type, in which case the producer
may select one price election for each green pea type designated in the
Special Provisions, refers to the current early, mid, and late-season
types or to the shell and pod types specified in the proposed rule.
They also emphasized that the price election for green peas is a
percentage of the contract price. As some producers contract with more
than one processor, the contract prices may be different, and it would
not be possible to limit them to one ``price'' by type, only to one
``percentage.''
Response: FCIC agrees and has revised section 3(a) to specify
percentages.
Comment: An insurance service organization recommended that the
provision in section 3(b) of the proposed rule, that addressed the
weight of the shelled peas as the basis for loss adjustment
calculations, APH yields, and the guarantee, be moved to section
12(c)(2).
Response: FCIC believes that the provisions in section 3(b) of the
proposed rule are being misinterpreted. The harvesting equipment
removes the peas from the pods of shell type peas prior to delivery to
the processor. In addition, the APH yield and guarantee
[[Page 61901]]
are based on the yield after the tenderometer reading, grade factor, or
sieve size is taken into consideration. Therefore, section 3(b) of the
proposed rule has been deleted.
Comment: An insurance service organization stated that February 15
seems early for the cancellation and termination dates for Delaware and
Maryland. They stated that the date table has a March 15 sales closing
date for these states and questioned if the 1998 date would be a month
earlier and, if so, why.
Response: The sales closing date contained in the Special
Provisions for these states was February 15 for the 1996 and 1997 crop
years, not March 15. That date is set by statute. The cancellation and
termination dates for all crops are being changed to correspond with
the sales closing date. Therefore, no change has been made.
Comment: An insurance service organization stated that language in
section 6 requiring the producer to provide a copy of the processor
contract no later than the acreage reporting date could provide a
loophole by allowing producers to wait until acreage reporting time to
decide if they want coverage.
Response: There is no evidence that allowing the producer to
provide a copy of the processor contract as late as the acreage
reporting date has resulted in producers waiting to decide until the
acreage reporting date if they want coverage. Green pea producers
usually have a processor contract in-force by the final planting date.
The requirement to provide a copy of the processor contract with the
acreage report is convenient for the producer. Therefore, no change has
been made.
Comment: An insurance service organization questioned whether any
processor contract would allow interplanted green peas or green peas
planted into an established grass or legume. The commenter further
indicated that consideration should be given to inserting the language
in section 7(a)(4) of the proposed rule into the Basic Provisions.
Response: FCIC agrees that processing green peas has seldom, if
ever, been interplanted with another crop or planted into an
established grass or legume. However, production practices are
constantly evolving. FCIC chooses to retain the provisions of section
7(a)(3) of the final rule to accommodate such developments if they
should occur. In addition, the interplanted language is not consistent
among the crop policies and, therefore, will be retained in the crop
provisions.
Comment: An insurance service organization indicated that language
in section 7(b) that states ``You will be considered to have a share in
the insured crop if, under the processor contract, you retain
possession of the acreage on which the green peas are grown, * * *''
suggests that only a landlord would have a share in the insured crop.
The commenter questioned whether the provision in section 7(b) is
already covered in sections 7(a)(1) and (3) of the proposed rule.
Response: The language in section 7(b) was intended to cover
producers who have a crop share agreement, rent, or own acreage. The
word ``possession'' has been changed to ``control'' for clarification.
Section 7(a) specifies requirements for insurance coverage on the crop,
while section 7(b) specifies requirements for an insurable share in the
crop. Therefore, both provisions are necessary.
Comment: An insurance service organization and a reinsured company
questioned whether the provision in section 9(b), which states that the
insurance period ceases on the date sufficient production is harvested
to fulfill the producer's processor contract, conflicts with the
provision in section 12(a), that states ``We will determine your loss
on a unit basis.'' The commenters questioned whether production to
count from an appraisal prior to harvest would be included when
determining fulfillment of the processor contract. The insurance
service organization questioned whether the insured would know when
enough production is harvested to fulfill the processor contract. This
commenter asked if production exceeding the contracted amount is
considered production to count for APH or loss adjustment or whether
the processor settlement sheet is the only acceptable record. The
insurance service organization noted that the provisions in section
9(b) state ``* * * the insurance period ends when the production
delivered to the processor equals the amount of production stated in
the green pea contract.'' However, the commenter questioned whether
``delivered to'' is the same as ``accepted by'' the processor.
Response: Section 9(b) does not conflict with section 12(a). For
processor contracts based on a stated amount of production, FCIC is
only insuring the contract amount and the producer can only obtain
basic units by processor contract. Therefore, once the contract is
fulfilled, insurance ceases on the unit and there is no payable loss.
If the contract is not fulfilled and there is still unharvested
production, any insurable cause of loss is covered. With respect to the
issue of production from appraised acreage, such production will not
count toward fulfillment of the processor contract, although it may be
used to determine production to count for the unit or the producer's
approved yield if the acreage is not bypassed due to an insurable cause
of loss that renders such production unacceptable to the processor.
With respect to when the producer would know when the processor
contract was fulfilled, records are kept as production is delivered to
the processor. Therefore, the producer can determine when the contract
was fulfilled. All production from the unit, including any excess of
the amount stated in the contract, will be considered as production to
count when determining the producer's approved yield. For the purposes
of loss adjustment, the amount shown on the settlement sheet, plus any
appraised production that was not bypassed due to an insurable cause
that rendered the production unacceptable to the processor, will be
included as production to count. FCIC has revised section 9(b) to
clarify that insurance ceases when the contract is fulfilled if the
processor contract stipulates a specific amount of production.
Comment: An insurance service organization stated that September 15
is too early for the end of insurance coverage for dry peas and that
the change to September 30 must be incorporated into the dry pea
provisions as well.
Response: The dry pea and green pea provisions are now separate
provisions with different dates. The insured crop under these
provisions is green peas. If the green peas will be harvested as dry
peas, insurance coverage will end on September 30 but only if notice
was provided in accordance with section 11(d).
Comment: An insurance service organization stated that they
received one comment stating that the provision in section 10(a)(1)(ii)
of the proposed rule, which states that abnormally hot or cold
temperatures that result in bypassed acreage because an unexpected
number of acres over a large producing area are ready for harvest at
the same time, and the total production is beyond the normal capacity
of the processor to timely harvest or process, should be eliminated
because it provides a loophole that can easily be abused when the
processor has contracted too many acres.
Response: The comment does reveal an opportunity for an abuse.
Therefore, the provision has been clarified.
[[Page 61902]]
Comment: An insurance service organization questioned the provision
in section 10(a)(4), which states that insurance is provided against
``Plant disease on acreage not planted to peas the previous crop year *
* *.'' The commenter assumed this would apply even if a rotation
requirement was not specified in the Special Provisions.
Response: This provision has been revised to specify that insurance
coverage will be provided against plant disease on acreage not planted
to the peas the previous crop year unless provided for in the Special
Provisions or by written agreement, but not damage due to insufficient
or improper application of disease control measures.
Comment: An insurance service organization suggested changing the
wording in section 10(a)(8) to eliminate the reference to 10(a)(1)
through (7) and state ``Failure of the irrigation water supply, if due
to an insured cause of loss.''
Response: Referencing 10(a)(1) through (7) makes it clear that
failure of the irrigation water supply must be due to these specific
causes of loss. Therefore, no change has been made.
Comment: An insurance service organization questioned how the
provision in section 10(b)(1)(ii), which states that insurance coverage
is not provided if acreage is bypassed based on the availability of a
crop insurance payment, is to be enforced.
Response: The adjuster should be able to make this determination
based on various factors such as if a harvest pattern exists that
clearly indicates the processor is bypassing producers with crop
insurance coverage in favor of producers without crop insurance even
though the quality of the crop is similar. Language has been added to
state that an indemnity will be denied or have to be repaid if it is
determined that bypassed acreage was due to the availability of a crop
insurance payment.
Comment: An insurance service organization questioned a discrepancy
between section 9(b) of the proposed rule, which states that insurance
ceases on ``The date you harvested sufficient production to fulfill
your processor contract,'' and section 10(b)(5) of the proposed rule
which states that loss of production will not be insured if ``Due to
damage that occurs to unharvested production after you deliver the
production required by the processor contract.'' The commenter
indicated that this provision is not necessary since any damage
occurring after delivery would be outside the insurance period as
indicated in section 9(b).
Response: FCIC agrees with the insurance service organization and
has deleted section 10(b)(5).
Comment: An insurance service organization stated that the language
in section 11(c) does not address timely notice if damage is discovered
less than 15 days prior to harvest.
Response: FCIC has revised section 11(c) to clarify that an
immediate notice of loss is required if damage is discovered within 15
days prior to harvest or during harvest.
Comment: An insurance service organization stated that section
12(b), which explains how a claim is settled, is too wordy and
difficult to follow.
Response: This section has been revised to clarify the settlement
of claims calculation, including the addition of an example.
Comment: An insurance service organization indicated that payments
by the processor for bypassed acreage should be considered to have
value to count as is done with salvaged grains.
Response: There is nothing in this policy which precludes a
producer from obtaining any other form of insurance against losses as
long as such insurance is not under the Federal Crop Insurance Act.
Since the processor and producer contribute to the unharvested acreage
pool, such payment will not be considered when determining production
to count.
Comment: An insurance service organization stated that section
12(c)(1)(iii) of the proposed rule should not allow the insured to
defer settlement and wait for a later, generally lower, appraisal,
especially on crops that have a short ``shelf life.''
Response: A later appraisal will only be necessary if the company
and the insured do not agree on the appraisal or if the company
believes that the crop needs to be carried further. The producer must
continue to care for the crop. If the producer does not continue to
care for the crop, the original appraisal will be used. Therefore, no
change has been made.
Comment: A reinsured company and an insurance service organization
stated that section 12(c)(2) of the proposed rule which reads ``The
amount of such production will be determined by dividing the dollar
amount as required by the contract for the quality and quantity of the
peas delivered to the processor by the base contract price per pound;''
is difficult to understand.
Response: This provision which specifies the ``dollar amount as
required by the contract for the quality and quantity of the peas
delivered to the processor * * *'' accounts for variations in the
contract price for the tenderometer reading, grade factor, or sieve
size of the delivered peas. The language has been clarified.
Comment: An insurance service organization and a reinsured company
questioned if late and prevented planting provisions would be available
for green peas. A crop insurance agent and a food corporation stated
that late planting provisions should be available for green peas. Green
pea producers plant according to heat units to provide a planting and
harvesting schedule so that a processor can harvest uniformly during
the growing season. Current varieties planted late can tolerate higher
temperature extremes and do not pose unreasonable productivity risks
nor does it impact the processor's ability to timely harvest and
process the green peas. Producers need a good risk management program.
Response: A late planting period for green peas may be appropriate
for some growing areas. Therefore, section 13 is revised to provide a
late planting period if allowed by the Special Provisions and the
insured provides written approval from the processor by the acreage
reporting date that it will accept the production from the late planted
acreage. Prevented planting provisions will also be added if available
in the Basic Provisions.
Comment: An insurance service organization and a reinsured company
recommended removal of the requirement that written agreements be
renewed each year if there are no significant changes to the farming
operation. The insurance service organization stated that section 14(d)
should perhaps refer to the date specified in the agreement instead of
limiting the agreement for one year. An insurance service organization
recommended that section 14 be put into the Basic Provisions.
Response: Written agreements are intended to supplement policy
terms or permit insurance in unusual situations that require
modification of the otherwise standard insurance provisions. If such
practices continue year to year, they should be incorporated into the
policy or Special Provisions. It is important to minimize written
agreement exceptions to assure that the insured is well aware of the
specific terms of the policy. Therefore, no change will be made to the
requirement that written agreements be renewed each year. FCIC has
proposed that the Written Agreement provisions be included in the Basic
Provisions.
In addition to the changes described above, FCIC has made minor
editorial changes and has amended Green Pea Crop Insurance Provisions
as follows:
[[Page 61903]]
1. Amended and clarified the paragraph preceding section 1 to
include the Catastrophic Risk Protection Endorsement.
2. Section 1--Added a definition of ``approved yield,'' and amended
the definitions of ``base contract price,'' ``bypassed acreage,'' ``pod
type,'' ``processor,'' ``processor contract,'' ``replanting,'' and
``shell type'' for clarity. The definition of ``practical to replant''
is amended to clarify that it will not be considered practical to
replant unless the acreage can produce at least 75 percent of the
approved yield and the processor agrees in writing that it will accept
the production from the replanted acreage. The definition of
``processor contract'' is amended to clarify that multiple contracts
with the same processor that specify amounts of production will be
considered as a single processor contract unless the contracts are for
different types of green peas.
3. Section 2--Removed the reference to ``written agreement'' in
section 2(b) of the proposed rule and added ``written agreement'' in
section 2(b)(5) of the final rule to clarify which provisions may be
revised by written agreement.
4. Section 7--Removed section 7(a)(2) of the proposed rule. This
provision is not necessary since section 7(a)(3) of the proposed rule
stated that the green peas must be grown under, and in accordance with,
the requirements of a processor contract. If grown under a processor
contract, the green peas will be canned or frozen. Section 7(c) is
amended for clarity.
5. Section 9(a)(2)--Clarified that the insurance period ends when
the green peas should have been harvested but were not harvested.
6. Section 10--Amended section 10(a) for clarity. Section 10(b) is
reformatted and amended for clarity. Also, removed section 10(b)(3) of
the proposed rule which stated ``Due to green peas not being timely
harvested unless such delay in harvesting is solely and directly due to
an insured cause of loss;'' because it is unnecessary.
7. Section 11--Clarified that the insured must give notice of loss
within 3 days after the date harvest should have started if the acreage
will not be harvested. The insured must also provide documentation
stating why the acreage was bypassed.
8. Section 12--A new section 12(c)(3) of the final rule is added to
clarify that appraised production will include all harvested production
from any other insurable units that have been used to fill the
processor contract for a unit. Section 12(d) of the proposed rule is
deleted because of duplication with section 12(c)(2).
9. Section 14--Clarified that only terms of this policy that are
specifically designated for the use of written agreements may be
altered by written agreement if the listed conditions are met.
List of Subjects in 7 CFR Parts 416 and 457
Crop insurance, Green pea, Pea crop insurance regulations.
Final Rule
Accordingly, for the reasons set forth in the preamble, the Federal
Crop Insurance Corporation hereby amends 7 CFR parts 416 and 457, as
follows:
PART 416--PEA CROP INSURANCE REGULATIONS FOR THE 1986 THROUGH 1997
CROP YEARS
1. The authority citation for 7 CFR part 416 is revised to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
2. The part heading is revised to read as set forth above.
3. The subpart heading ``Subpart-Regulations for the 1986 and
Succeeding Crop Years'' is removed.
4. Section 416.7 is amended by revising the introductory text of
paragraph (d) to read as follows:
Sec. 416.7 The application and policy.
* * * * *
(d) The application is found at subpart D of part 400, General
Administrative Regulations (7 CFR 400.37, 400.38). The provisions of
the Pea Insurance Policy for the 1986 through 1997 crop years are as
follows:
* * * * *
PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE
1994 AND SUBSEQUENT CONTRACT YEARS
5. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
6. Section 457.137 is added to read as follows:
Sec. 457.137 Green pea crop insurance provisions.
The Green Pea Crop Insurance Provisions for the 1998 and succeeding
crop years are as follows:
FCIC policies:
UNITED STATES DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
Reinsured policies:
(Appropriate title for insurance provider)
Both FCIC and reinsured policies
Green Pea Crop Provisions
If a conflict exists among the policy provisions the order of
priority is as follows: (1) the Catastrophic Risk Endorsement, if
applicable; (2) the Special Provisions; (3) these Crop Provisions;
and (4) the Basic Provisions (Sec. 457.8) with (1) controlling (2),
etc.
1. Definitions.
Approved yield. The yield determined in accordance with 7 CFR
part 400, subpart G.
Base contract price. The price stipulated in the processor
contract for the tenderometer reading, grade factor, or sieve size
that is designated in the Special Provisions, if applicable, without
regard to discounts or incentives that may apply.
Bypassed acreage. Land on which production is ready for harvest
but the processor elects not to accept such production so it is not
harvested.
Combining (vining). Separating pods from the vines and, in the
case of shell peas, separating the peas from the pod for delivery to
the processor.
Days. Calendar days.
Dry peas. Green peas that have matured to the dry form for use
as food, feed, or seed.
FSA. The Farm Service Agency, an agency of the United States
Department of Agriculture, or a successor agency.
Final planting date. The date contained in the Special
Provisions for the insured crop by which the crop must initially be
planted in order to be insured for the full production guarantee.
Good farming practices. The cultural practices generally in use
in the county for the crop to make normal progress toward maturity
and produce at least the yield used to determine the production
guarantee and are those required by the green pea processor contract
with the processing company, and recognized by the Cooperative State
Research, Education, and Extension Service as compatible with
agronomic and weather conditions in the county.
Green peas. Shell type and pod type peas that are grown under a
processor contract to be canned or frozen and sold for human
consumption.
Harvest. Combining (vining) of the peas.
Interplanted. Acreage on which two or more crops are planted in
a manner that does not permit separate agronomic maintenance or
harvest of the insured crop.
Irrigated practice. A method of producing a crop by which water
is artificially applied during the growing season by appropriate
systems and at the proper times, with the intention of providing the
quantity of water needed to produce at least the yield used to
establish the irrigated production guarantee on the irrigated
acreage planted to the insured crop.
Nurse crop (companion crop). A crop planted into the same
acreage as another crop, that is intended to be harvested
separately, and which is planted to improve growing conditions for
the crop with which it is grown.
Peas. Green or dry peas.
Planted acreage. Land in which seed has been placed by a machine
appropriate for the insured crop and planting method, at the
[[Page 61904]]
correct depth, into a seedbed that has been properly prepared for
the planting method and production practice. Peas must initially be
placed in rows. Acreage planted in any other manner will not be
insurable unless otherwise provided by the Special Provisions or by
written agreement.
Pod type. Green peas genetically developed to be eaten without
shelling (e.g., snap peas, snow peas, and Chinese peas).
Practical to replant. In lieu of the definition of ``practical
to replant'' contained in section 1 of the Basic Provisions,
practical to replant is defined as our determination, after loss or
damage to the insured crop, based on factors including, but not
limited to, moisture availability, condition of the field, time to
crop maturity, and marketing window, that replanting the insured
crop will allow the crop to attain maturity prior to the calendar
date for the end of the insurance period. It will not be considered
practical to replant unless the replanted acreage can produce at
least 75 percent of the approved yield, and the processor agrees in
writing that it will accept the production from the replanted
acreage.
Price election. In lieu of the definition of ``Price election''
contained in section 1 of the Basic Provisions, price election is
defined as the price per pound stated in the processor contract
(contracted price) for the tenderometer reading, grade factor, or
sieve size contained in the Special Provisions.
Processor. Any business enterprise regularly engaged in canning
or freezing green peas for human consumption, that possesses all
licenses and permits for processing green peas required by the state
in which it operates, and that possesses facilities, or has
contractual access to such facilities, with enough equipment to
accept and process contracted green peas within a reasonable amount
of time after harvest.
Processor contract. A written agreement between the producer and
a processor, containing at a minimum:
(a) The producer's commitment to plant and grow green peas, and
to deliver the green pea production to the processor;
(b) The processor's commitment to purchase all the production
stated in the processor contract; and
(c) A base contract price.
Multiple contracts with the same processor that specify amounts
of production will be considered as a single processor contract
unless the contracts are for different types of green peas.
Production guarantee (per acre).--The number of pounds
determined by multiplying the approved actual production history
yield per acre by the coverage level percentage you elect. For shell
type peas, the weight will be determined after shelling.
Replanting. Performing the cultural practices necessary to
prepare the land to replace the seed of the damaged or destroyed
crop and then replacing the seed in the insured acreage.
Shell type. Green peas genetically developed to be shelled prior
to eating, canning or freezing.
Timely planted. Planted on or before the final planting date
designated in the Special Provisions for the insured crop in the
county.
Written Agreement. A written document that alters designated
terms of this policy in accordance with section 14.
2. Unit Division.
For processor contracts that stipulate:
(a) The amount of production to be delivered:
(1) In lieu of the definition of unit in section 1 of the Basic
Provisions, a basic unit will consist of all acreage planted to the
insured crop in the county that will be used to fulfill the
processor contract;
(2) There will be no more than one basic unit for each processor
contract;
(3) In accordance with section 12, all production from any basic
unit in excess of the amount under contract will be included as
production to count if such production is applied to any other basic
unit for which the contracted amount has not been fulfilled; and
(4) Optional units will not be established.
(b) The number of acres to be planted:
(1) Unless limited by the Special Provisions, a unit as defined
in section 1 of the Basic Provisions (basic unit) may be divided
into optional units if, for each optional unit, you meet all the
conditions of this section. Basic units may not be divided into
optional units on any basis other than as described in this section;
(2) If you do not comply fully with these provisions, we will
combine all optional units that are not in compliance with these
provisions into the basic unit from which they were formed. We will
combine the optional units at any time we discover that you have
failed to comply with these provisions. If failure to comply with
these provisions is determined to be inadvertent, and the optional
units are combined into a basic unit, that portion of the additional
premium paid for the optional units that have been combined will be
refunded to you;
(3) All optional units you selected for the crop year must be
identified on the acreage report for that crop year;
(4) The following requirements must be met for each optional
unit:
(i) You must have records, which can be independently verified,
of planted acreage and production for each optional unit for at
least the last crop year used to determine your production
guarantee;
(ii) You must plant the crop in a manner that results in a clear
and discernible break in the planting pattern at the boundaries of
each optional unit; and
(iii) You must maintain records of marketed production from each
optional unit maintained in such a manner that permits us to verify
the production from each optional unit, or the production from each
unit must be kept separate until loss adjustment is completed by us;
and
(5) Each optional unit must meet one or more of the following
criteria, as applicable, unless otherwise specified by written
agreement:
(i) Optional Units by Section, Section Equivalent, or FSA Farm
Serial Number: Optional units may be established if each optional
unit is located in a separate legally identified section. In the
absence of sections, we may consider parcels of land legally
identified by other methods of measure, such as Spanish grants, as
the equivalent of sections for unit purposes. In areas that have not
been surveyed using sections or their equivalent systems or in areas
where such systems exist but boundaries are not readily discernible,
each optional unit must be located in a separate farm identified by
a single FSA Farm Serial Number.
(ii) Optional Units on Acreage Including Both Irrigated and Non-
Irrigated Practices: Optional units may be based on irrigated
acreage and non-irrigated acreage if both are located in the same
section, section equivalent, or FSA Farm Serial Number. To qualify
as separate irrigated and non-irrigated optional units, the non-
irrigated acreage may not continue into the irrigated acreage in the
same rows or planting pattern. The irrigated acreage may not extend
beyond the point at which the irrigation system can deliver the
quantity of water needed to produce the yield on which the guarantee
is based, except the corners of a field in which a center-pivot
irrigation system is used will be considered as irrigated acreage if
separate acceptable records of production from the corners are not
provided. If the corners of a field in which a center-pivot
irrigation system is used do not qualify as a separate non-irrigated
optional unit, they will be a part of the unit containing the
irrigated acreage. Non-irrigated acreage that is not a part of a
field in which a center-pivot irrigation system is used may qualify
as a separate optional unit provided that all requirements of this
section are met.
(iii) Optional Units on Acreage Including Both Shell Type Green
Peas and Pod Type Green Peas: Optional units may be established
based on shell type green peas and pod type green peas. To qualify
as separate shell type and pod type optional units, the shell type
acreage may not continue into the pod type acreage in the same rows
or planting pattern.
3. Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities.
In addition to the requirements of section 3 of the Basic
Provisions:
(a) You may select only one price election for all the green
peas in the county insured under this policy unless the Special
Provisions provide different price elections by type. The percentage
of the maximum price election you choose for one type will be
applicable to all other types insured under this policy.
(b) The appraised production from bypassed acreage that could
have been accepted by the processor will be included when
determining your approved yield.
(c) Acreage that is bypassed because it was damaged by an
insurable cause of loss will be considered to have a zero yield when
determining your approved yield.
4. Contract Changes.
In accordance with section 4 of the Basic Provisions, the
contract change date is November 30 preceding the cancellation date.
5. Cancellation and Termination Dates.
In accordance with section 2 of the Basic Provisions, the
cancellation and termination dates are:
[[Page 61905]]
Cancellation and Termination
------------------------------------------------------------------------
State Dates
------------------------------------------------------------------------
Delaware and Maryland...................... Feb. 15.
All other states........................... Mar. 15.
------------------------------------------------------------------------
6. Report of Acreage.
In addition to the provisions of section 6 of the Basic
Provisions, you must provide a copy of all processor contracts to us
on or before the acreage reporting date.
7. Insured Crop.
(a) In accordance with section 8 of the Basic Provisions, the
crop insured will be all the shell type and pod type green peas in
the county for which a premium rate is provided by the actuarial
documents:
(1) In which you have a share;
(2) That are grown under, and in accordance with, the
requirements of a processor contract executed on or before the
acreage reporting date and are not excluded from the processor
contract at any time during the crop year; and
(3) That are not (unless allowed by the Special Provisions or by
written agreement):
(i) Interplanted with another crop;
(ii) Planted into an established grass or legume; or
(iii) Planted as a nurse crop.
(b) You will be considered to have a share in the insured crop
if, under the processor contract, you retain control of the acreage
on which the green peas are grown, you are at risk of loss, and the
processor contract provides for delivery of green peas under
specified conditions and at a stipulated base contract price.
(c) A commercial green pea producer who is also a processor may
establish an insurable interest if the following requirements are
met:
(1) The producer must comply with these Crop Provisions;
(2) Prior to the sales closing date, the Board of Directors or
officers of the processor must execute and adopt a resolution that
contains the same terms as an acceptable processor contract. Such
resolution will be considered a processor contract under this
policy; and
(3) Our inspection reveals that the processing facilities comply
with the definition of a processor contained in these Crop
Provisions.
8. Insurable Acreage.
In addition to the provisions of section 9 of the Basic
Provisions:
(a) Any acreage of the insured crop that is damaged before the
final planting date, to the extent that the majority of producers in
the area would normally not further care for the crop, must be
replanted unless we agree that it is not practical to replant; and
(b) We will not insure any acreage that does not meet the
rotation requirements, if applicable, contained in the Special
Provisions.
9. Insurance Period.
In lieu of the provisions contained in section 11 of the Basic
Provisions, regarding the end of the insurance period, insurance
ceases at the earlier of:
(a) The date the green peas:
(1) Were destroyed;
(2) Should have been harvested but were not harvested;
(3) Were abandoned; or
(4) Were harvested;
(b) The date you harvest sufficient production to fulfill your
processor contract if the processor contract stipulates a specific
amount of production to be delivered;
(c) Final adjustment of a loss; or
(d) September 15 of the calendar year in which the insured green
peas would normally be harvested; or
(e) September 30 of the calendar year in which the insured peas
would normally be harvested if you provide notice to us that the
insured crop will be harvested as dry peas (see section 11(d)).
10. Causes of Loss.
In accordance with the provisions of section 12 of the Basic
Provisions:
(a) Insurance is provided only against the following causes of
loss that occur during the insurance period:
(1) Adverse weather conditions, including:
(i) Excessive moisture that prevents harvesting equipment from
entering the field or that prevents the timely operation of
harvesting equipment; and
(ii) Abnormally hot or cold temperatures that cause an
unexpected number of acres over a large producing area to be ready
for harvest at the same time, affecting the timely harvest of a
large number of such acres or the processing of such production is
beyond the capacity of the processor, either of which causes the
acreage to be bypassed.
(2) Fire;
(3) Insects, but not damage due to insufficient or improper
application of pest control measures;
(4) Plant disease but only on acreage not planted to peas the
previous crop year. (In certain instances, contained in the Special
Provisions or in a written agreement, acreage planted to peas the
previous year may be covered. Damage due to insufficient or improper
application of disease control measures is not covered);
(5) Wildlife;
(6) Earthquake;
(7) Volcanic eruption; or
(8) Failure of the irrigation water supply, if due to a cause of
loss contained in section 10(a)(1) through (7) that occurs during
the insurance period.
(b) In addition to the causes of loss excluded by section 12 of
the Basic Provisions, we will not insure any loss of production due
to:
(1) Bypassed acreage because of:
(i) The breakdown or non-operation of equipment or facilities;
or
(ii) The availability of a crop insurance payment. We may deny
any indemnity immediately in such circumstance or, if an indemnity
has been paid, require you to repay it to us with interest at any
time acreage was bypassed due to the availability of a crop
insurance payment or;
(2) Your failure to follow the requirements contained in the
processor contract.
11. Duties In The Event of Damage or Loss.
In addition to the notices required by section 14 of the Basic
Provisions, you must give us notice:
(a) Not later than 48 hours after:
(1) Total destruction of the green peas on the unit; or
(2) Discontinuance of harvest on a unit on which unharvested
production remains.
(b) Within 3 days after the date harvest should have started on
any acreage that will not be harvested unless we have previously
released the acreage. You must also provide acceptable documentation
of the reason the acreage was bypassed. Failure to provide such
documentation will result in our determination that the acreage was
bypassed due to an uninsured cause of loss. If the crop will not be
harvested and you wish to destroy the crop, you must leave
representative samples of the unharvested crop for our inspection.
The samples must be at least 10 feet wide and extend the entire
length of each field in each unit. The samples must not be destroyed
until the earlier of our inspection or 15 days after notice is given
to us;
(c) At least 15 days prior to the beginning of harvest if you
intend to claim an indemnity on any unit, or immediately if damage
is discovered during the 15 day period or during harvest, so that we
may inspect any damaged production. If you fail to notify us and
such failure results in our inability to inspect the damaged
production, we will consider all such production to be undamaged and
include it as production to count. You are not required to delay
harvest; and
(d) Prior to the time the green peas would normally be harvested
if you intend to harvest the green peas as dry peas.
12. Settlement of Claim.
(a) We will determine your loss on a unit basis. In the event
you are unable to provide separate, acceptable production records:
(1) For any optional units, we will combine all optional units
for which such production records were not provided; or
(2) For any basic units, we will allocate any commingled
production to such units in proportion to our liability on the
harvested acreage for the units.
(b) In the event of loss or damage covered by this policy, we
will settle your claim by:
(1) Multiplying the insured acreage by its respective production
guarantee, by type if applicable;
(2) Multiplying each result of section 12(b)(1) by the
respective price election, by type if applicable;
(3) Totaling the results of section 12(b)(2) if there are more
than one type;
(4) Multiplying the total production to count (see section
12(c)), for each type if applicable, by its respective price
election;
(5) Totaling the results of section 12(b)(4) if there are more
than one type;
(6) Subtracting the results of section 12(b)(4) from the results
of section 12(b)(2) if there is only one type or subtracting the
results of section 12(b)(5) from the result of section 12(b)(3) if
there are more than one type; and
(7) Multiplying the result of section 12(b)(6) by your share.
For example:
You have a 100 percent share in 100 acres of shell type green
peas in the unit, with a guarantee of 4,000 pounds per acre and a
price election of $0.09 per pound. You are
[[Page 61906]]
only able to harvest 200,000 pounds. Your indemnity would be
calculated as follows:
(1) 100 acres x 4,000 pounds = 400,000 pounds guarantee;
(2) 400,000 pounds x $0.09 price election = $36,000.00 value of
guarantee;
(4) 200,000 pounds x $0.09 price election = $18,000.00 value of
production to count;
(6) $36,000.00 - $18,000.00 = $18,000.00 loss; and
(7) $18,000.00 x 100 percent = $18,000.00 indemnity payment.
You also have a 100 percent share in 100 acres of pod type green
peas in the same unit, with a guarantee of 5,000 pounds per acre and
a price election of $0.13 per pound. You are only able to harvest
450,000 pounds. Your total indemnity for both shell type and pod
type green peas would be calculated as follows:
(1) 100 acres x 4,000 pounds = 400,000 pounds guarantee for the
shell type, and 100 acres x 5,000 pounds = 500,000 pounds
guarantee for the pod type;
(2) 400,000 pounds guarantee x $0.09 price election = $36,000.00
value of guarantee for the shell type, and 500,000 pounds guarantee
x $0.13 price election = $65,000.00 value of guarantee for the pod
type;
(3) $36,000.00 + $65,000.00 = $101,000.00 total value of guarantee;
(4) 200,000 pounds x $0.09 price election = $18,000.00 value of
production to count for the shell type, and
450,000 pounds x $0.13 = $58,500.00 value of production to
count for the pod type;
(5) $18,000.00 + $58,500.00 = $76,500.00 total value of production
to count;
(6) $101,000.00 - $76,500.00 = $24,500.00 loss; and
(7) $24,500.00 loss x 100 percent = $24,500.00 indemnity payment.
(c) The total production to count, specified in pounds, from all
insurable acreage on the unit will include:
(1) All appraised production as follows:
(i) Not less than the production guarantee for acreage:
(A) That is abandoned;
(B) That is put to another use without our consent;
(C) That is damaged solely by uninsured causes or;
(D) For which you fail to provide production records that are
acceptable to us.
(ii) Production lost due to uninsured causes.
(iii) Production on acreage that is bypassed unless the acreage
was bypassed due to an insured cause of loss which resulted in
production which would not be acceptable under the terms of the
processor contract.
(iv) Potential production on insured acreage that you intend to
put to another use or abandon, if you and we agree on the appraised
amount of production. Upon such agreement, the insurance period for
that acreage will end when you put the acreage to another use or
abandon the crop. If agreement on the appraised amount of production
is not reached:
(A) If you do not elect to continue to care for the crop, we may
give you consent to put the acreage to another use if you agree to
leave intact, and provide sufficient care for, representative
samples of the crop in locations acceptable to us (The amount of
production to count for such acreage will be based on the harvested
production or appraisals from the samples at the time harvest should
have occurred. If you do not leave the required samples intact, or
fail to provide sufficient care for the samples, our appraisal made
prior to giving you consent to put the acreage to another use will
be used to determine the amount of production to count); or
(B) If you elect to continue to care for the crop, the amount of
production to count for the acreage will be the harvested
production, or our reappraisal if additional damage occurs and the
crop is not harvested.
(2) All harvested green pea production from the insurable
acreage. The amount of such production will be determined by
dividing the dollar amount paid, payable, or which should have been
paid under the terms of the processor contract for the quality and
quantity of the peas delivered to the processor by the base contract
price per pound;
(3) All harvested green pea production from any of your other
insurable units that have been used to fulfill your processor
contract for this unit; and
(4) All dry pea production from the insurable acreage if you
gave notice in accordance with section 11(d) for any acreage you
intended to harvest as dry peas. The harvested or appraised dry pea
production will be multiplied by 1.667 for shell types and 3.000 for
pod types to determine the green pea production equivalent. No
adjustment for quality deficiencies will be allowed for dry pea
production.
13. Late and Prevented Planting.
Late planting provisions are not applicable to green peas unless
allowed by the Special Provisions and you provide written approval
from the processor by the acreage reporting date that it will accept
the production from the late planted acres when it is expected to be
ready for harvest. Prevented planting coverage will be available if
contained in the Basic Provisions.
14. Written Agreement.
Terms of this policy that are specifically designated for the
use of written agreements may be altered by written agreement in
accordance with the following:
(a) You must apply in writing for each written agreement no
later than the sales closing date, except as provided in section
14(e);
(b) The application for a written agreement must contain all
variable terms of the contract between you and us that will be in
effect if the written agreement is not approved;
(c) If approved, the written agreement will include all variable
terms of the contract, including, but not limited to, crop type or
variety, the guarantee, premium rate, and price election;
(d) Each written agreement will only be valid for one year (if
the written agreement is not specifically renewed the following
year, insurance coverage for subsequent crop years will be in
accordance with the printed policy); and
(e) An application for a written agreement submitted after the
sales closing date may be approved if, after a physical inspection
of the acreage, it is determined that no loss has occurred and the
crop is insurable in accordance with the policy and written
agreement provisions.
Signed in Washington, D.C., on October 23, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-30514 Filed 11-19-97; 8:45 am]
BILLING CODE 3410-08-P
