2010-29250. Common Crop Insurance Regulations; Extra Long Staple Cotton Crop Provisions

AGENCY:

Federal Crop Insurance Corporation, USDA.

ACTION:

Proposed rule with request for comments.

SUMMARY:

The Federal Crop Insurance Corporation (FCIC) proposes to amend the Common Crop Insurance Regulations, Extra Long Staple Cotton Crop Insurance Provisions to remove all references to the Daily Spot Cotton Quotation and replace the reference with the National Average Loan Rate published by the Farm Service Agency (FSA), to incorporate a current Special Provisions statement into the Crop Provisions, and to make the Extra Long Staple Cotton Crop Insurance Provisions consistent with the Upland Cotton Crop Insurance Provisions. The intended effect of this action is to provide policy changes, to clarify existing policy provisions to better meet the needs of the producers, and to reduce vulnerability to program fraud, waste, and abuse. The changes will apply for the 2012 and succeeding crop years.

DATES:

Written comments and opinions on this proposed rule will be accepted until close of business January 18, 2011 and will be considered when the rule is to be made final.

ADDRESSES:

Interested persons are invited to submit written comments, titled “Extra Long Staple Cotton Crop Provisions,” by any of the following methods:

• By Mail to: Director, Product Administration and Standards Division, Risk Management Agency, United States Department of Agriculture, Beacon Facility, Stop 0812, Room 421, P.O. Box 419205, Kansas City, MO 64141-6205.
• By Express Mail to: Director, Product Administration and Standards Division, Risk Management Agency, United States Department of Agriculture, Beacon Facility, Stop 0812, 9240 Troost Avenue, Kansas City, MO 64131-3055.
• E-mail: [e-mail].
• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

A copy of each response will be available for public inspection and copying from 7 a.m. to 4:30 p.m., CST, Monday through Friday, except holidays, at the above address.

FOR FURTHER INFORMATION CONTACT:

Claire White, Economist, Product Management, Product Administration and Standards Division, Risk Management Agency, at the Kansas City, MO, address listed above, telephone [phone].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

The Office of Management and Budget (OMB) has determined that this rule is non-significant for the purpose of Executive Order 12866 and, therefore, it has not been reviewed by OMB.

Paperwork Reduction Act of 1995

Pursuant to the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by OMB under control number 0563-0053 through March 31, 2012.

E-Government Act Compliance

FCIC is committed to complying with the E-Government Act of 2002, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 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 UMRA.

Executive Order 13132

It has been determined under section 1(a) of Executive Order 13132, Federalism, that this rule does not have sufficient implications to warrant consultation with the States. The provisions contained in this rule will not have a substantial direct effect on States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

Regulatory Flexibility Act

FCIC certifies that this regulation will not have a significant economic impact on a substantial number of small entities. Program requirements for the Federal crop insurance program are the same for all producers regardless of the size of their farming operation. For instance, all producers are required to submit an application and acreage report to establish their insurance guarantees and compute premium amounts, and all producers are required to submit a notice of loss and production information to determine the amount of an indemnity payment in the event of an insured cause of crop loss. Whether a producer has 10 acres or 1000 acres, there is no difference in the kind of information collected. To ensure crop insurance is available to small entities, the Federal Crop Insurance Act authorizes FCIC to waive collection of administrative fees from limited resource farmers. FCIC believes this waiver helps to ensure that small entities are given the same opportunities as large entities to manage their risks through the use of crop insurance. A Regulatory Flexibility Analysis has not been prepared since this regulation does not have an impact on small entities, and therefore, this regulation is exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 605).

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. With respect to any direct action taken by FCIC or action by FCIC to require the insurance provider to take specific action under the terms of the crop insurance policy, 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, or safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.

Background

FCIC proposes to revise 7 CFR part 457, Common Crop Insurance Regulations, by revising § 457.105 (Extra Long Staple Cotton Crop Insurance Provisions). Requests have been made for changes to improve the coverage offered, address program integrity issues, and simplify program administration. The provisions will be effective for the 2012 and succeeding crop years.

The proposed changes to § 457.105 are as follows:

1. FCIC proposes to remove the paragraph immediately preceding section 1 which refers to the order of priority in the event of a conflict. This same information is contained in the Basic Provisions. Therefore, it is duplicative and should be removed in the Crop Provisions.

2. Section 10—FCIC proposes to revise the format of section 10(d) to make the provisions easier to read.

FCIC proposes to remove in section 10(d) all references to the Daily Spot Cotton Quotation and related language and replace it with a reference to the Extra Long Staple Cotton National Average Loan Rate determined by FSA. The Daily Spot Cotton Quotation is a price published daily, whereas the Extra Long Staple Cotton National Average Loan Rate is a price published annually. Because the Daily Spot Cotton Quotation values change daily, this method was time-consuming, cumbersome, and burdensome for cotton producers and loss adjusters. For this reason, FCIC is proposing to utilize the Extra Long Staple Cotton National Average Loan Rate for quality adjustment purposes. This same change was made to the Upland Cotton Crop Insurance Provisions beginning with the 2011 crop year. This change makes the Extra Long Staple and Upland Cotton Crop Provisions consistent.

FCIC also proposes to change the percentage of Price B from 75 percent to 85 percent in sections 10(d) and 10(d)(3). This does not change the existing terms of the policy because the change was already implemented in the Special Provisions. FCIC is proposing to move the provision to the Crop Provisions because the change is being implemented in all areas where ELS cotton is available.

FCIC proposes to remove in section 10(f) all references to the Daily Spot Cotton Quotation and replace it with a reference to the Upland Cotton National Average Loan Rate and the Extra Long Staple Cotton National Average Loan Rate determined by FSA. FCIC also proposes to remove the language regarding the price quotations contained in the Daily Spot Cotton Quotations published on the date the last bale from the unit is classed and the language regarding price quotations being unavailable. The Daily Spot Cotton Quotation is a price published daily, whereas the Extra Long Staple Cotton National Average Loan Rate is a price published annually. Therefore, it is not necessary to include information regarding specific dates upon which it will be based.

List of Subjects in 7 CFR Part 457

• Crop insurance
• Extra long staple cotton
• Reporting and recordkeeping requirements

Proposed Rule

Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation proposes to amend 7 CFR part 457 effective for the 2012 and succeeding crop years to read as follows:

PART 457—COMMON CROP INSURANCE REGULATIONS

1. The authority citation for 7 CFR part 457 continues to read as follows:

Authority: 7 U.S.C. 1506(1), 1506(o). 2. Amend § 457.105 as follows: a. Amend the introductory text by removing “1998” and adding “2012” in its place; b. Remove the undesignated paragraph immediately preceding section 1. c. Amend section 10 by: i. Revising section 10(d); and ii. Revising section 10(f). The revisions read as follows:

§ 457.105

Extra long staple cotton crop insurance provisions.

* * * * *

10. Settlement of Claim.

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(d) Mature ELS cotton production may be adjusted for quality when production has been damaged by insured causes. Such production to count will be reduced if Price A is less than 85 percent of Price B.

(1) Price B is defined as the Extra Long Staple Cotton National Average Loan Rate determined by FSA, or as specified in the Special Provisions.

(2) Price A is defined as the loan value per pound for the bale determined in accordance with the FSA Schedule of Premiums and Discounts for the applicable crop year, or as specified in the Special Provisions.

(3) If eligible for quality adjustment, the amount of production to be counted will be determined by multiplying the number of pounds of such production by the factor derived from dividing Price A by 85 percent of Price B.

* * * * *

(f) Any AUP cotton harvested or appraised from acreage originally planted to ELS cotton in the same growing season will be reduced by the factor obtained by dividing the price per pound for AUP cotton by the price per pound for ELS cotton. The prices used for AUP and ELS cotton will be calculated using the Upland Cotton National Average Loan Rate and the Extra Long Staple Cotton National Average Loan Rate determined by FSA, or as specified in the Special Provisions.

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Signed in Washington, DC, on November 15, 2010.

William J. Murphy,

Manager, Federal Crop Insurance Corporation.