E6-21033. Common Crop Insurance Regulations; Nursery Crop Insurance Provisions

AGENCY:

Federal Crop Insurance Corporation, USDA.

ACTION:

Final rule.

SUMMARY:

The Federal Crop Insurance Corporation (FCIC) finalizes the Common Crop Insurance Regulations, Nursery Crop Insurance Provisions by amending the definition of “liners.” FCIC also finalizes the Nursery Peak Inventory Endorsement to clarify that the peak amount of insurance is limited to 200 percent of the amount of insurance established under the Nursery Crop Insurance Provisions. The amendments will be applicable to the 2008 and succeeding crop years.

DATES:

Effective date: This rule is effective January 11, 2007.

Applicability: This rule is applicable to the 2008 and succeeding crop years.

FOR FURTHER INFORMATION CONTACT:

For further information, contact Claire Elsea, Economist, Product Management, Product Administration and Standards Division, Risk Management Agency, 6501 Beacon Dr., Stop 0812, Room 421, Kansas City, MO, 64118, telephone [phone].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be not-significant for the purposes of Executive Order 12866 and, therefore, it has not been reviewed by OMB.

Paperwork Reduction Act of 1995

Pursuant to 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 November 30, 2007.

E-Government Act Compliance

FCIC is committed to complying with the E-Government Act, 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), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule contains no Federal mandates (under the regulatory provisions of title II of UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

Executive Order 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, or a notice of loss and production information to determine 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 small entities are given the same opportunities 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 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 preempts 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 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, and safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.

Background

This rule finalizes proposed changes made to 7 CFR 457.162 (Nursery Crop Insurance Provisions) and 7 CFR 457.163 (Nursery Peak Inventory Endorsement) that were published by FCIC on September 1, 2006, as a notice of proposed rulemaking in the Federal Register at 71 FR 52013-52014. In the Nursery Crop Provisions, FCIC proposed to amend the definition of “liners” to remove language that specifies an established root system for a liner plant must reach the sides of the container and removed language regarding the firm root ball. These changes were necessary because liners are also known as starter plants, which often have not developed a root system that reaches the sides of the containers. In the Nursery Peak Inventory Endorsement, FCIC proposed to amend provisions to clarify that the maximum increase in the amount of insurance under the Nursery Peak Inventory Endorsement is limited to twice the amount of insurance under the Nursery Crop Insurance Provisions. As currently written in the Nursery Peak Inventory Endorsement, the peak amount of insurance is limited to 200 percent of the basic unit value. This means that if a basic unit value is $50 the producer could increase the peak amount of insurance to $100 (200 percent of $50 basic unit value), which is a four fold increase in liability. FCIC never intended to allow such an increase. It meant to only allow increases up to twice the amount of insurance under the policy, not on a per unit basis.

The public was afforded 60 days to submit written comments after the regulation was published in the Federal Register. One comment was received from three commenters. The commenters were a reinsured company, an insurance services organization and a grower association. The comment received and FCIC's response are as follows:

Comment: All three commenters stated they are in agreement with the proposed changes. One commenter also commends FCIC's willingness to move forward with the amendment to the definition of “liners.” The commenter states the current language has been an obstacle for most liner producers from purchasing nursery crop insurance policies. Another commenter agrees the amendment to the policy provisions is necessary and a major improvement to the nursery program.

Response: FCIC agrees the changes to the Peak Inventory Endorsement and the definition of “liners” in the Nursery Crop Insurance Provisions will provide a better risk management tool to nursery producers.

List of Subjects in 7 CFR Part 457

• Crop insurance
• Nursery
• Reporting and recordkeeping requirements

Final Rule

Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation amends 7 CFR part 457 the Common Crop Insurance Regulations, for the 2008 and succeeding crop years, 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(l), 1506(p).

2. Revise the definition of “liners” in section 1 of § 457.162 to read as follows:

§ 457.162

Nursery crop insurance provisions.

* * * * *

1. Definitions.

* * * * *

Liners. Plants produced in standard nursery containers that are equal to or greater than 1 inch in diameter (including trays containing 200 or fewer individual cells, unless specifically provided by the Special Provisions) but less than 3 inches in diameter at the widest point of the container or cell interior, have an established root system, and meet all other conditions specified in the Special Provisions.

* * * * *

3. Revise paragraph 7 of § 457.163 to read as follows:

§ 457.163

Nursery peak inventory endorsement.

* * * * *

7. Liability Limit.

The peak amount of insurance is limited to 200 percent of the amount of insurance established under the Nursery Crop Insurance Provisions.

Signed in Washington, DC, on November 30, 2006.

Eldon Gould,

Manager, Federal Crop Insurance Corporation.