[Federal Register: June 9, 2003 (Volume 68, Number 110)]
[Rules and Regulations]
[Page 34261-34272]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jn03-1]
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Rules and Regulations
Federal Register
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[[Page 34261]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
RIN 0563-AB63
Common Crop Insurance Regulations; Small Grains Crop Insurance
Provisions and Wheat Crop Insurance Winter Coverage Endorsement
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes
amendments to the Small Grains Crop Insurance Provisions and the Wheat
Crop Insurance Winter Coverage Endorsement. The intended effects of
this action are to add provisions for the insurance of Khorasan and
buckwheat, include additional insurance benefits, clarify existing
policy provisions to better meet the needs of the insured, improve
actuarial soundness, and restrict the effect of the current Small
Grains Crop Insurance Provisions and the Wheat Crop Insurance Winter
Coverage Endorsement to the 2003 and prior crop years.
EFFECTIVE DATE: June 4, 2003.
FOR FURTHER INFORMATION CONTACT: Rob Coultis, Insurance Management
Specialist, Research and Development, Product Development Division,
Federal Crop Insurance Corporation, United States Department of
Agriculture, 6501 Beacon Drive, Kansas City, MO 64133, telephone (816)
926-7730.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be significant for the purposes of
Executive Order 12866 and, therefore, it has been reviewed by the
Office of Management and Budget (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 the effect of proposed changes on crop insurance
payments is expected to be small. The greatest impacts are expected
from: (1) Increasing the amount of replant payments for wheat and
providing replant payments for crops that have not had them in the
past; and (2) changes to the winter coverage endorsement.
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 February 28, 2005.
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
This regulation will not have a significant 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. The
amount of work required of the insurance companies delivering and
servicing these policies will not increase significantly from the
amount of work currently required. Therefore, this action is determined
to be exempt from the provisions of the Regulatory Flexibility Act (5
U.S.C. 605), and no Regulatory Flexibility Analysis was prepared.
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which require intergovernmental consultation with State and
local officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988 on civil justice reform. The provisions of this rule will not
have a retroactive effect. The provisions of this rule will preempt
State and local laws to the extent such State and local laws are
inconsistent herewith. The administrative appeal provisions published
at 7 CFR part 11 must be exhausted before any action against FCIC 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.
Background
On April 20, 2000, FCIC published a notice of proposed rulemaking
in the Federal Register at 65 FR 21144-21151 to revise 7 CFR 457.101
Small Grains Crop Insurance and section 457.102 Wheat Crop Insurance
Winter Coverage Endorsement. Following publication of the proposed rule
the public was afforded 60 days to submit written comments and
opinions. A total of 82 comments were received from reinsured
companies, and grower and trade associations. The comments received and
responses are as follows:
Comment. Two reinsured companies stated these revised provisions
are being proposed for the 2002 crop year rather than the 2001 crop
year as referenced in
[[Page 34262]]
the proposed rule. It is also understood some provisions of the
Agricultural Risk Protection Act of 2000 (ARPA) will impact the
proposed policy, and these legislated items are not reflected in the
proposed rule.
Response. The new provisions will be effective beginning with the
2004 crop year, provided this final rule is made effective prior to the
applicable contract change date. The provisions of ARPA affect most
crops. Therefore, most policy provisions affected by ARPA are contained
in the Basic Provisions of the Common Crop Insurance Policy (Sec.
457.8). However, ARPA provisions regarding insurance for more than one
crop grown on the same acreage in the same crop year do require
clarification as they pertain to the winter coverage endorsement.
Accordingly, section 10 has been added to the Wheat Winter Coverage
Endorsement.
Comment. Two reinsured companies were concerned the definition of
``Prevented planting'' seems to be in conflict with section
7(a)(2)(iii), which allows a winter wheat insured to elect to destroy
all winter wheat acreage damaged to the extent that replanting is
necessary and receive 15 percent of the winter wheat guarantee, rather
than replanting to spring wheat. The commenters contend that the grower
who was originally prevented from planting winter wheat should be
allowed the same option, such as 15 percent of the winter wheat
guarantee. The commenters ask that if the insured elects to destroy the
acreage in return for 15 percent of the winter wheat guarantee, whether
that acreage can be planted to spring wheat and insured. Two reinsured
companies recommended that section 9(f) be removed from these
provisions because it provides a disincentive to add optional coverage
provided by the winter coverage endorsement. They state that if the
producer wants the type of coverage offered by the endorsement, they
should purchase such coverage. They also state that the proposed
coverage gives the producer an incentive to ``buy down.'' The companies
argue that this provision also adds unnecessary complexity, increases
company expense and in some cases will result in an unhappy insured if
the payment is nil or negligible. They state that the insured should be
required to replant as specified in the current provisions and, if they
do not replant, no premium is owed and no loss is payable. A grower
association was also concerned with section 9(f) because full premium
would be charged for only 15 percent coverage. Another reinsured
company stated they had received different degrees of opposition to the
proposed provisions in this section. The company stated that in the
past this acreage would be deleted from the acreage report and no
premium would be due. They further stated this concept would detract
from sales of Options A or B, at least in South Dakota, and they were
not sure there is an advantage in the proposed change.
Response. The proposed provisions were not in conflict. To qualify
for a prevented planting payment, planting must be prevented until the
spring final planting date. Similarly, the ``15 percent benefit'' in
section 9(f) for winter wheat would not be provided if the insured
planted spring wheat following a failed winter wheat crop. When acreage
is replanted to spring wheat, a replant payment may be provided and
insurance would continue based on the guarantee, premium, and price
election applicable to the winter type. Although the proposed
provisions are not in conflict, FCIC does agree that the proposed
provisions would have: (1) Provided a disincentive to purchase full
protection of winter wheat offered under the Wheat or Barley Winter
Coverage Endorsement; (2) provided only a small benefit in exchange for
full premium; and (3) increased program complexity. Therefore, the
proposed provisions in section 9(f) have not been included in this
final rule.
Comment. A growers association and four producers recommended hull-
less barley be insurable under the Small Grains Crop Provisions. A
growers association also questioned if hull-less oats were included or
excluded from coverage.
Response. FCIC agrees that hull-less barley should be insurable.
The Federal Grain Inspection Service (FGIS) has issued a directive
providing instructions for determining quality factors for hull-less
barley. This provides the means to adjust production to count when
there is a loss due to low quality. FCIC and insurance providers have
also received requests to insure hull-less oats, and a FGIS directive
similar to that prepared for hull-less barley has been completed for
hull-less oats. Therefore, the definition of ``small grains'' and
section 11(d)(2) has been revised to include provisions for both hull-
less barley and hull-less oats.
Comment. A reinsured company recommended that since the issue of
grazing has been a hot topic in the past year, the definition of
``harvest'' be changed to include producers who harvest their small
grain by grazing the acreage.
Response. In some areas it is common to allow animals to graze
wheat acreage in the fall through the early spring and then to remove
the animals to allow the wheat to mature and produce a grain crop. In
these cases, it would be confusing to include ``grazing'' in the
definition of ``harvest'' since the actual grain harvest would occur
much later than the time the acreage was grazed. However, FCIC agrees
wheat that is grazed instead of being harvested for grain should be
considered ``harvested'' for the purpose of determining insurable
acreage under the provisions of section 9(a)(1) of the Basic
Provisions. That provision will be amended accordingly.
Comment. A reinsured company accepts the addition of Khorasan (a
variety of wheat) and buckwheat to these provisions as long as FCIC
provides detailed, well researched handbook procedures for adjusting
these crops. Also, appraisal procedures must be accurate and based on
university tested methods.
Response. FCIC will not issue actuarial materials for Khorasan or
buckwheat unless appropriate loss adjustment procedures can be issued
in a timely manner. Insurance programs for these crops will become
available only after county actuarial materials are released.
Comment. A reinsured company asked if buckwheat would be considered
a pilot crop program. The commenter also asked what studies have been
undertaken (including draft loss procedures) that are generally done
for a new (pilot) crop.
Response. The insurance program for buckwheat is not considered to
be a pilot program since the regulatory process is being used to
implement it. A report on the feasibility of insuring buckwheat was
completed by the Economic Research Service (ERS). The report provides
significant detail regarding uses, varieties, supply, demand, prices,
environmental requirements, cultural practices, risks, etc. Loss
procedures have not yet been developed. As stated above, insurance will
not be made available for buckwheat until the loss procedure has been
developed and provided to the reinsured companies. However, the
feasibility report suggests procedures used for buckwheat will be very
similar to those currently in use for other small grains.
Comment. A reinsured company is concerned with including
``buckwheat'' in the Small Grains provisions. The term ``small grains''
usually refers to annual cool season grass species grown for grain that
is milled into flour, used for cattle feed or used for production of
malt. Flax has been included in this group even though it is a
broadleaf crop
[[Page 34263]]
because it is similar to the other small grains that are grown.
Generally, buckwheat does not follow the same growth habit or
management system as other small grains. Buckwheat is a warm season
broadleaf crop with recommended planting dates of late May and June.
Buckwheat is very frost sensitive in all stages of development.
Fertilization of buckwheat is basically the same as for other small
grains except the level of nitrogen is usually kept low because of crop
lodging. Buckwheat is indeterminate in flowering habit; it will start
flowering approximately four to five weeks after emergence and continue
until frost. Buckwheat is so sensitive to many stress factors it is
hard to predict a yield. Currently there are no herbicides approved for
buckwheat production. Buckwheat is sensitive to herbicide residues from
dinitroanalines (triflurilin, ethafluralin), atrazine, and
sulfonylureas (Glean, Ally). The major use of buckwheat is for making
flour for soba noodles or as a pancake mix.
Response. The determination of which policy to add a crop to is
based on which policy contains the terms that best cover the risk.
Buckwheat is being added to the Small Grains policy because most
provisions applicable to wheat, barley and other small grains can also
be applied to buckwheat. Buckwheat is also generally produced by
growers who already have a Small Grains Crop Insurance Policy in force.
Therefore, it will be possible to use one policy document for these
growers instead of two. Combining the crops into one policy document
when possible reduces paperwork, administrative costs, etc. The
difference in the growth and management systems will be reflected in
the good farming practices for the crop and, therefore, covered under
the policy.
Comment. The president of Kamut International, Ltd., requested
references to ``Kamut'' be replaced with the name ``Khorasan,'' which
is the common name for Triticum Turanicum. ``Kamut'' is not a variety
of wheat but rather a registered trademark owned by Kamut
International, Ltd. Also, plant classification specialists have
recently shown that Khorasan should be classified as T. Turanicum
rather than T. polonicum.
Response. FCIC agrees with the suggestions and has revised the
provisions accordingly.
Comment. A grower association was concerned with the language in
the definition of ``Prevented planting.'' The definition does not allow
a prevented planting payment for winter wheat if a producer is able to
plant spring wheat. Given the yield superiority of winter vs. spring
varieties, this provision adversely affects producers who are prevented
from planting winter wheat. A possible solution to the problem would be
to insure spring wheat and winter wheat separately.
Response. The Wheat Winter Coverage Endorsement does provide
separate insurance for spring wheat when it is planted to replace
damaged winter wheat and separate insurance units are allowed for
initially planted spring and winter wheat in certain counties. In the
future it may be possible to add provisions to the endorsement to
provide separate prevented planting coverage for winter wheat. However,
a change like this, which would impact a large number of producers and
acreage, cannot be made without being published in a proposed rule for
public comment.
Comment. A reinsured company recommended changing the definition of
``Local market price'' to the Commodity Credit Corporation (CCC) price
established by the Farm Service Agency (FSA) county office, and
removing the reference to ``local market price'' for a loss standard.
Response. FCIC believes the comment recommends changing quality
adjustment procedures by using the ``posted county price'' that is
available in FSA county offices rather than the ``local market price.''
The posted county price has been used in the past. However, damaged
grain can have reductions in value in the local market greater than the
posted county price. This resulted in zero production to count even
though the production still had value and was sold. FCIC stopped using
the posted county price because of this program vulnerability. FCIC has
not discovered a means to eliminate this program vulnerability if it
again uses the posted county price. Therefore, no change has been made.
Comment. Two reinsured companies asked if premium rates will be
adjusted to address the increased risk by allowing separate optional
units for durum and club wheat.
Response. FCIC will review the adequacy of premium rates for all
changes made by this rule, including optional units for durum and club
wheat and ensure that all risks are covered by the premium.
Comment. A grower association commented that while durum wheat
coverage is available as an optional unit, there are no specific
provisions for durum wheat. The market price for durum is different
than the predominant white wheat market, and the same terms for durum
wheat in other areas of the country should be available for the
northwest. The association recommends these provisions should allow a
specific durum price election, coverage level, and national
availability in counties where durum is produced or is being
introduced. Furthermore, separate price elections and coverage levels
should be established for hard red spring wheat, hard white wheat, and
club wheat.
Response. Language has been added to the Small Grains Crop
Provisions to provide for separate units and price elections for durum
and club wheat if these wheat types and prices are designated in
Special Provisions. Expansion of the durum type and establishing
separate price elections and coverage levels for certain types of wheat
will be considered by FCIC in the future based on availability of data,
program interest, and underwriting issues. FCIC lacks the information
at this time so no change can be made in this rule. FCIC has added
language to clarify that fall planted durum wheat may be a separate
unit from spring planted durum wheat and that fall planted club wheat
may be a separate unit from spring planted club wheat provided the
Special Provisions specify both fall and spring types of the applicable
wheat type.
Comment. A reinsured company recommended allowing optional units
for durum wheat when it is listed as a separate insurable type. This
would simplify administration of the actual production history (APH),
since durum wheat producers raise, store, and market durum wheat
separate from spring wheat.
Response. The proposed rule and this final rule allow optional
units for durum wheat when it is designated as a separate type in the
Special Provisions. Therefore, no change needs to be made.
Comment. A reinsured company agreed optional units for durum and
club wheat will be an improvement but that quality factors for durum
(milling) should be addressed.
Response. FCIC understands certain quality requirements for durum
wheat are not covered by the current Small Grains Crop Insurance
Policy. A method of providing insurance coverage for these quality
requirements has not yet been developed. Section 508(m) of the Federal
Crop Insurance Act requires FCIC to contract with a qualified person to
review quality loss adjustment procedures to determine if they
accurately reflect local quality discounts. FCIC has executed the
contract and after the results have been analyzed, FCIC will determine
if coverage for these quality requirements is feasible. If feasible,
FCIC will review
[[Page 34264]]
the policy at that time. However, no change will be made in this rule.
Comment. FCIC requires all wheat in a given county to be insured
under the contract. A grower association advises as a result of this
requirement many producers do not purchase wheat insurance. The
association recommends allowing selection of different coverage levels
and price elections by FSA farm serial number, by irrigated and non-
irrigated practice, and by type and class of wheat. Other grower
associations recommended allowing different price election percentages
or coverage levels for summer-fallow, continuous cropping, and direct
seeded acreage.
Response. These recommendations would constitute significant
changes to the proposed rule and would be a departure from insurance
provisions used in other crop insurance policies. Therefore, the
suggested changes cannot be made in this rule. Additionally, sufficient
data has not been established or provided to effectively support
separate insurance coverage by FSA farm serial number, practice, or
wheat type or class. However, these changes would appear to add
significant program vulnerabilities due to shifting of production and
other manipulation of yields.
Comment. A reinsured company asked whether durum wheat, which has a
separate type code and price election in the county actuarial
documents, can be insured as regular spring wheat or must it be
separately insured at the higher durum price. The commenter also asks
if everything is reported as spring wheat and it is discovered at loss
time that some of the wheat is durum, whether the policy has to be
revised to reflect the higher durum price and if liability would be
increased at that point in time. The commenter also asked about being
able to duplicate the APH records for durum wheat at that time. The
commenter suggested that section 3(a) be clarified to address how these
situations are to be handled.
Response. The provision has been revised to clarify that if a durum
wheat price election is provided, it must be used to insure durum
wheat. When a durum wheat type is misreported as spring wheat, the
provisions contained in section 6 of the Basic Provisions regarding
misreporting will apply. The APH for durum wheat must be based on
production records for durum wheat or a T-Yield for durum wheat.
Comment. A reinsured company is concerned with the language in
section 3(b) which allows the insured to change coverage levels or
price elections by the spring sales closing date ``only if they do not
have any fall-planted acreage of the insured crop.'' The company asked
whether this applies if there is any fall-planted acreage, or only if
there is insured fall-planted acreage (for example, the insured has
some fall-planted acreage but it is an uninsured practice/type or not
intended for harvest as grain.)
Response. The provision is intended to prevent changes in coverage
levels or price elections in the spring only if there is insured fall
planted acreage. Section 3(b) has been clarified accordingly.
Comment. A growers association was concerned with the insurability
of acreage on which Conservation Reserve Program (CRP) contracts are
expiring. In some cases, only a summer fallow practice is insurable and
the acreage cannot be insured the first year unless the producer takes
an early out with a reduction in the final payment from CRP, or summer
fallows the ground the first year out of CRP. The growers association
requests FCIC and FSA work together to resolve this dilemma so
producers in these counties can have insurance. This could be
accomplished by permitting producers in these counties to obtain an
early release from the CRP contract in order to meet the criteria to
classify this ground as summer fallow.
Response. FCIC cannot comment on possible CRP program changes since
FSA administers that program and would be required to make any
modifications or exceptions to it. However, FCIC is willing to work
with interested parties to help coordinate program benefits. Although a
premium rate is not published for continuous cropped acreage in some
counties, insurance may still be obtained for the practice if the
producer requests a written agreement through the producer's insurance
provider. If approved, the written agreement would provide a premium
rate for continuous cropped acreage.
Comment. A growers association recommended FSA and FCIC allow the
regional office the ability to change final planting dates when
agronomic conditions are such that many farmers cannot complete
planting by the final planting date of the policy.
Response. The final planting date is a part of the crop insurance
contract and changing the final planting date after the contract change
date would violate the terms of the crop insurance policy and the
agreement FCIC has with insurance providers. Regional Offices can
recommend changes to final planting dates if program integrity would
not be adversely impacted but must do so prior to the applicable
contract change date for it to be considered for that crop year. A late
planting period is provided for most crops so producers who plant late
may still have insurance coverage.
Comment. A grower association stated that wheat producers insured
under the multiple peril crop insurance policy (MPCI), the Income
Protection (IP) policy or the Crop Revenue Coverage (CRC) policy have a
final planting date of December 31 to February 15, which is seldom
applicable and diminishes the value of the replant provision of the
policy. The association recommends all final planting dates be
established on a county-by-county basis at the earliest practical date
for the Pacific Northwest.
Response. The replant provision referred to in the comment has
recently been amended in the Income Protection policy provisions to
address this concern. The provisions in section 9(a)(5) also address
this issue by providing that damage must occur after the fall final
planting date for acreage covered under the winter coverage endorsement
(the ``earlier'' or first fall final planting date in counties with two
fall final planting dates). Changes made to the MPCI Small Grains Crop
Insurance Policy will also be made to the CRC wheat policy.
Comment. A growers association recommended RMA provide winter
damage protection for fall planted barley. Having no winter coverage
and the mandatory replant provisions are a disincentive to plant winter
barley.
Response. RMA agrees that winter coverage for barley should be
provided and has modified the winter coverage endorsement to include
barley. This optional coverage will be available only if the county
actuarial table provides an additional premium rate factor for it.
Comment. Two reinsured companies recommended changing the section
reference in section 7(a)(2)(iii) from 9(e) to 9(f).
Response. As stated above, section 9(f), and the reference to it,
has been removed in this final rule.
Comment. A grower association is concerned with section
7(a)(2)(iii) which requires producers to replant fall-planted barley or
wheat that is damaged prior to the spring final planting date with a
winter type of the crop if practical. Mandatory replanting requirements
reduce flexibility for producers who may want to destroy the crop and
replant a spring type of the crop. This section also provides that
damaged wheat acreage can be put to another use and an indemnity will
be paid, but does not describe what alternative uses are permitted.
Response. Producers are free to plant a spring type of the crop
after the fall
[[Page 34265]]
type has failed if they choose. The requirement to replant the fall
type if practical only applies if the producer wants to maintain the
fall planted crop production guarantee. So, if it is not practical to
replant to a fall type and the producer replants a spring type,
insurance will remain in force based on the production guarantee for
the fall type. If a producer does not replant a fall type when it is
practical to do so and plants a spring type on the acreage, insurance
will still be provided based on a spring type production guarantee.
Section 7(a)(2)(iii) has been clarified to distinguish when the
producer will have insurance based on spring or fall types in replant
situations. Since section 9(f) has been removed from this rule for the
reasons stated above, the provisions regarding a benefit when damaged
acreage is put to another use have also been removed in this final
rule.
Comment. Two reinsured companies recommended that section
7(a)(2)(v) be clarified to indicate that fall barley or fall wheat that
has an adequate stand in the spring will be insurable as spring barley
or spring wheat.
Response. FCIC agrees and has revised the provisions accordingly.
Comment. A growers association recommended allowing the winter
wheat guarantee to apply to initially planted spring wheat when
cropland has been summer fallowed for one year and agronomic conditions
are such that the winter wheat crop cannot be seeded.
Response. Current provisions do not allow the winter wheat
guarantee to apply on acreage that is initially planted to spring wheat
under any circumstance. This is because there are different yields and
premiums associated with spring and winter wheat. To allow spring
planted wheat to be insured as fall planted wheat would adversely
affect program integrity. Allowing spring planted wheat to be insured
as fall planted wheat when it has been replanted after a failed winter
wheat crop is permitted because insurance has already attached to the
winter wheat crop and replanting to the spring crop is a means to
mitigate the damages associated with the failed winter wheat crop.
Therefore, no change has been made.
Comment. A reinsured company recommended Virginia be included with
the states that have a July 31 end of insurance date. The commenter
stated that FCIC should consider using the same date for states such as
Oklahoma, Missouri and Kansas. Another reinsured company recommended
that the end of insurance date for small grains in Kansas should be
reviewed because October 15 is not an appropriate date for the end of
insurance since harvest is generally completed by August 1.
Response. Since a proposal to change the end of the insurance
period for Virginia was not included in the proposed rule, and the
public was not given the opportunity to comment, the recommended change
cannot be adopted in this final rule.
Comment. Two reinsured companies are concerned that replant
payments for barley, oats, flax and buckwheat will add additional loss
adjustment expenses for reinsured companies. Another reinsured company
commented that allowing companies to pay the amount of replant payment
specified in the policy without requiring calculation of actual
expenses will save time in working replant claims and will be more
suitable for self-certification procedures. Another reinsured company
commented that allowing replant payments for all small grains will
provide consistency in the Small Grains provisions, should not have a
large impact on the loss payments and will benefit producers who need
to replant. An insurance association also supported the proposed
change.
Response. FCIC agrees reinsured companies may incur some additional
expenses. However, FCIC has taken steps to reduce loss adjustment
expenses for small grains by no longer requiring insurance providers to
calculate the actual cost of replanting. This means that there is not
expected to be any significant net increase in costs to the reinsured
companies. Therefore, no change has been made.
Comment. A reinsured company asked whether or not fall planted
wheat accepted for insurance in a county with only a spring planted
practice would qualify for a replant payment.
Response. Fall planted wheat in a county with only a spring final
planting date would not qualify for a replant payment. Section 9(a)(4)
states that ``the acreage must have been initially planted to a spring
type of the insured crop in those counties with only a spring final
planting date.''
Comment. A reinsured company recommended increasing the policy
replant payment limits to four bushels for wheat since three bushels or
$9.45 hardly covers labor costs. The company also advised that the five
bushel replant payment limit on oats does not seem worthwhile for the
producer.
Response. Provisions in both the proposed and final rules use four
bushels when calculating the amount of a replant payment for wheat.
Replant payments are not intended to cover all the costs associated
with replanting. They are intended to defray a portion of the costs and
are set at a level which will provide assistance but not significantly
increase the premium. Therefore, no changes have been made.
Comment. Two reinsured companies were concerned with the provisions
in section 9(a)(6) which allow a replanting payment when less seed is
replanted than the original planting, as long as the resulting stand
will produce the guarantee. The companies asked if this will require
additional inspections and more expense to the company. A growers
association also did not agree with the revision to allow a replanting
payment when the amount of seed used is less than the amount normally
used for the initial seeding.
Response. The replanted crop must be seeded at a rate sufficient to
produce the approved APH yield not just the guarantee. Therefore, for
crops that have totally failed, the amount of seed that was originally
planted to produce the APH yield must be used. It is only when some of
the crop still exists that reduced seeding rates can be used. Providing
replant payments under these circumstances will provide a greater
incentive to improve poor crop stands, thereby improving production
levels and reducing claims. There are also agronomic benefits
associated with improving a crop stand in this manner. Plants with
established root systems are allowed to remain in place and can provide
protection to newly seeded plants. Insurance providers may have to
perform additional inspections and may incur some additional expenses.
However, the benefits associated with reduced claims should outweigh
the costs. Therefore, no change has been made.
Comment. Two reinsured companies asked whether a specific number of
bushels is used to determine the maximum replant payment for rye and
Khorasan or will 20 percent of the guarantee be used.
Response. Insurance for rye is available only in counties with
``fall only'' final planting dates. Therefore, in accordance with
section 9(b), replant payments are not available for rye. As stated in
section 1, Khorasan is considered to be a spring wheat for the purposes
of this policy. Therefore, the replant payment is based on four
bushels--the amount applicable to all types of wheat.
Comment. Two reinsured companies recommended allowing disinterested
grain handling facilities to determine test weight and moisture of the
grain.
Response. The Farm Security and Rural Investment Act of 2002 (2002
Farm Bill) specifies qualifications for persons allowed to determine
grain
[[Page 34266]]
quality for crop insurance purposes. Section 11(d)(3) of the Crop
Provisions has been amended in accordance with the provisions of the
2002 Farm Bill. Therefore, no change has been made.
Comment. Two reinsured companies recommended, for quality
adjustment purposes, that the test weight for oats be changed to 32
pounds per bushel in the Special Provisions to be more in line with
current market requirements.
Response. Section 508(m) of the Act requires FCIC to contract with
a qualified person to review quality loss adjustment procedures to
determine if such procedures accurately reflect local quality
discounts. Based on recommendations, FCIC may revise quality adjustment
provisions for oats and other grain crops. Until recommendations are
analyzed, FCIC does not have sufficient information to make the
requested change. Therefore, no change has been made.
Comment. A grower group commented RMA is proposing changes to the
Settlement of Claim section to allow adjustment for excess moisture
before any adjustment for quality deficiencies. They asked if
production would also be adjusted in the case of a drought.
Response. The provisions of section 11(d) apply when any insured
production is damaged due to any insured cause of loss, including
drought. The proposed changes just set the order in which such
adjustment will occur, with moisture adjustment, if applicable,
occurring before any other adjustments.
Comment. Two reinsured companies do not agree with the quality
adjustment procedures which allow a local elevator to determine the
salvage price for low quality grain. This process will result in
indemnity differences for similar grain from area to area and may
increase loss adjustment expenses as adjusters canvas local elevators
for the highest salvage bid price.
Response. FCIC has not found reliable data on which discount
factors for extremely low quality grain can be based. Therefore,
quality adjustment methods based on the value of the damaged grain will
continue to be used when grain is of such low quality that discount
factors for it are not contained in the Special Provisions. No changes
have been made.
Comment. A grower association asked whether the definition of
``heat damaged kernels'' is the same as used by the Grain Inspection,
Packer and Stockyards Administration (GIPSA), for consistency and lack
of confusion, or whether RMA has a different definition. The provisions
in section 11(d)(2)(i)(A-E) specify that ``heat damaged kernels'' will
not be considered to be damaged.
Response. The definition of ``heat damage'' is the same as that
used in the Official United States Standards for Grain. Section
11(d)(2)(i) has been clarified to reflect this.
Comment. A grower association recommended that FCIC continue to
review quality loss adjustment factors for barley. Market losses from
weather-related quality degradation generally far exceed those
permitted under current quality loss adjustment provisions.
Response. As stated above, FCIC has contracted to conduct a review
of the quality loss adjustment procedures. Once the review is completed
and fully analyzed, FCIC will make appropriate changes to the quality
loss adjustment factors.
Comment. A reinsured company asked if the provisions in section
11(d)(2)(iii) mean that the test weight for durum wheat will start at
54.0 pounds when the test weight normally starts at 50.9 pounds for
durum wheat?
Response. Under the existing quality provisions, durum wheat
quality adjustment for test weight begins when the test weight falls
below 54.0 pounds. Therefore, this rule is not a change from the
previous provisions. The language in this rule simply provides that the
same quality adjustment threshold applies to Khorasan. Provisions have
been added to clarify that quality adjustment discount factors for U.S.
grades specified in the Special Provisions will also apply to Khorasan
at the same levels applicable to durum wheat. The same clarification
has been made for hull-less barley and hull-less oats.
Comment. A reinsured company recommended that quality adjustment
factors for durum wheat (milling) should be addressed. Low quality on
durum has a more adverse effect on marketing than on regular wheat.
Response. FCIC understands discounts for low quality durum wheat
are significant. As stated above, FCIC has contracted for a review of
the quality loss adjustment procedures. Once the review and FCIC's
analysis is completed, FCIC will revise that procedure as appropriate.
However, no change is being made to this rule.
Comment. A reinsured company asked if the proposed provisions in
section 11(d)(4) replace all of the current provisions in section
11(d)(4)(i)-(iii) or just the sentence in (4).
Response. The proposed revision will replace sections 11(d)(4)(i),
(ii) and (iii).
Comment. A reinsured company agreed late planting provisions should
apply to winter wheat. However, the company is concerned with how the
time period for late planting will be determined and what the reduction
percentage will be. The company recommends the reduction be not less
than the prevented planting reduction percentage. In addition, two
companies stated that in previous policies, winter wheat in counties
with only a fall final planting date did not have a late planting
period or replanting payments as the final planting dates were so late.
The companies asked whether under the current proposed changes, the
final planting dates will be revised to earlier dates and what will be
the length of the late planting period for winter wheat.
Response. The late planting period reduction is already provided in
section 16 of the Basic Provisions of the Common Crop Insurance Policy.
This rule simply makes it applicable to certain winter wheat. The
length of the late planting period or the final planting date for
certain winter wheat will be adjusted in the Special Provisions where
necessary. Therefore, no change has been made.
Comment. A grower's association recommended prevented planting
payments be based on winter wheat guarantees when producers are
prevented from planting in the fall and also cannot plant in the
spring.
Response. Since a proposal to change the basis of prevented
planting payments was not included in the proposed rule, and the public
was not given the opportunity to comment, the recommended change cannot
be adopted in this final rule.
Comment. Two reinsured companies asked if companies would have an
opportunity to review and comment on any significant changes to the
Special Provisions.
Response. FCIC does not anticipate significant changes to the
Special Provisions as a result of this rule. Special provisions vary
from county to county due to differing rotation requirements, planting
dates, etc. This results in large numbers of documents being generated
each year, sometimes within short time frames. Due to these time
restrictions and the large number of documents involved, it is not
practical to provide a comment period for the Special Provisions.
Comment. A growers association recommended products that represent
significant product revisions should be in place and available to
agents and growers 90 days prior to sales closing dates. The sales
closing date for fall planted wheat in the Pacific Northwest is
September 30. Program prices are futures based and are not established
until mid-September leaving farmers
[[Page 34267]]
with little time to evaluate policy options. For this reason, two
grower associations recommended a later sales closing date than
September 30 be established for winter wheat in the Pacific Northwest.
Seeding starts in September and ends in October. One association
recommended an October 31 sales closing date but would accept an
October 15 sales closing date. Another recommended the sales closing
date be changed to 30 days after price release or October 31.
Response. All policy changes must be made by the contract change
date, which is at least 90 days prior to the sales closing date. All
price elections are also released prior to the sales closing date.
Moving the sales closing date 30 days later, when planting is almost
complete, would result in adverse selection as producers would have
additional knowledge of growing conditions at that point. Therefore, no
change has been made.
Comment. A growers association recommended making the increased
premium subsidy permanent after the 2000 crop year.
Response. Section 508(e) of the Act provides for increased
subsidies that are applicable each year unless Congress acts to reduce
them. Therefore, no change has been made.
Comment. A growers association recommended keeping Option A and
Option B at the current percentages rather than the proposed
percentages. A reinsured company also disagreed with the changes to
Option A and Option B as these changes will not be popular with the
insureds. The company does not know of any change to Option A that
would make insureds select this option. It states that reducing the
coverage for Option B is a mistake since companies, Congress and
special interest groups have worked hard to improve coverage for
farmers, not decrease coverage. The company also stated that, in the
past, Option B with the MPCI policy has worked well for insureds and
the insureds believe they have a positive coverage. Another reinsured
company supported the change of Option B coverage from 100 percent to
70 percent because it believed the coverage provided by the option was
too lucrative and that it was abused. This company also stated that by
reducing Option B and increasing Option A the coverage becomes similar
and that it might reduce confusion by offering a single option.
Response. FCIC agrees it is confusing to have two options and that
option A has not been popular with producers. Therefore Option A has
been removed from the final rule. FCIC also agrees with the comments
that recommend retaining 100 percent coverage under Option B (now the
only option) and has revised the proposed provisions accordingly. One
hundred percent coverage is being retained to keep a more meaningful
level of coverage in place, particularly when the indemnity for the
first crop, winter wheat, may be reduced if a second crop is planted.
Comment. Two reinsured companies recommended that the coverage
under Option A and B be provided when 20 percent of the insured planted
acreage in the unit is damaged rather than the current requirement of
20 acres or 20 percent of the acreage in the unit. They state that this
change will be consistent with language in the replanting payment
section of the Basic Provisions.
Response. FCIC agrees that the replant provision in the Basic
Provisions of the Common Crop Insurance Policy refers to at least the
lesser of 20 acres or 20 percent of the insured planted acreage in the
unit. The provision has been revised to be consistent with this
requirement.
Comment. Two reinsured companies recommended the sentence ``You may
use such acreage for any purpose, including planting and separately
insuring any other crop.'' in both Option A and B, be clarified. If an
insured plants back to barley, and barley was not on the policy, and it
is past the sales closing date, it could not be insured. Likewise if
barley was on the policy already, such acreage would have to be insured
per the terms of the policy.
Response. FCIC agrees and has clarified the language accordingly.
Comment. A grower association commented that under the proposed
winter coverage endorsement all winter wheat acreage must be insured,
which reduces flexibility of producers who may wish to have the
endorsement for one tract of land but not for another. The association
recommended additional endorsements be made available at the option of
the producer for additional premium.
Response. This change would allow insureds to select insurance on
acreage with a higher likelihood of loss. This adverse selection could
reduce program integrity and adversely impact premium rates for all
producers. Therefore, no change has been made.
Comment. A grower association recommended since Option A provides
for a coverage increase and an increase in premium, then with coverage
being reduced under Option B, the premium should also be reduced.
Response. The coverage level under Option B (now the only option)
has not changed. However, FCIC does review all premium rates
periodically, and may revise those applicable to the winter coverage
endorsement based on those reviews. Option A of the endorsement has
been removed for the reasons stated above.
Comment. A reinsured company recommended making the Wheat Crop
Insurance Winter Coverage Endorsement a part of the Small Grains Crop
Provisions to be elected on the application or policy change form as
with other crop options or endorsements.
Response. The Wheat Crop Insurance Winter Coverage Endorsement is
used only in counties for which the Special Provisions designate both
fall and spring final planting dates. Making the Wheat Crop Insurance
Winter Coverage Endorsement a part of the Small Grains Crop Provisions
would increase the amount of paper sent to all producers who have the
Small Grains Crop Provisions and might result in confusion for those in
counties in which the endorsement is not available. Therefore, no
change has been made.
Comment. A reinsured company asked that if an insured has selected
Option B and elects to destroy the winter wheat and then replant to
spring wheat, whether will it be mandatory for the insured to insure
the spring wheat. Another reinsured company agrees with the change that
requires spring wheat to be insured after winter wheat has been
destroyed rather than having an option to do so.
Response. The proposed provisions did require the spring wheat to
be insured. However, due to the provisions of the Act that reduce
indemnities for a first crop when a second crop is planted and has a
loss on the same acreage in the same crop year, FCIC has elected to
return to previous provisions that allowed producers to elect whether
or not they wanted insurance for the spring wheat. Section 11(c) has
been amended accordingly.
In addition to the changes described above, FCIC has made the
following changes:
1. Revised the definition of ``local market price'' to specify
quality levels for Khorasan, hull-less barley, hull-less oats and
buckwheat, and to specify the applicable subclasses for durum and hard
red spring wheat.
2. Changed the cancellation date for wheat from October 31 to
September 30 in Del Norte, Humboldt, Lassen, Modoc, Plumas, Shasta,
Siskiyou, and Trinity Counties, California. This change makes program
dates consistent between these Northern California counties and Oregon,
which has similar agronomic conditions.
[[Page 34268]]
3. Changed the October 31 cancellation date and November 30
termination date for barley to March 15 in Del Norte, Humboldt, Lassen,
Modoc, Plumas, Shasta, Siskiyou, and Trinity Counties, California. This
change makes program dates consistent between these Northern California
counties and Oregon, which has similar agronomic conditions.
4. Revised section 11(d)(2)(ii) to base the level at which
buckwheat production can be quality adjusted on a certain grade rather
than specific quality factors. This change is made to allow quality
adjustment at levels appropriate for the crop type (large or small
seed) and to avoid the need for revision if grading standards should
change.
Good cause is shown to make this rule effective upon filing for
public inspection at the Office of the Federal Register. Good cause to
make the rule effective upon filing at the Office of the Federal
Register exists when the 30 day delay in the effective date is
impracticable, unnecessary, or contrary to the public interest.
With respect to the provisions of this rule, it would be contrary
to the public interest to delay implementation of improved insurance
benefits until the 2005 crop year. The public interest is served by
improving the insurance product as follows: (1) Providing insurance for
producers of hull-less barley, hull-less oats, and Khorasan. Insurance
coverage for these crop types is not available under the current Small
Grains Crop Provisions; (2) increasing insurance flexibility by
providing for separate insurance units for durum and club wheat; (3)
moving the contract change date earlier to provide a greater amount of
time between the contract change date and the sales closing date to
allow producers more time to make insurance decisions; (4) changing
program dates to provide coverage for winter wheat in certain counties
where coverage for winter wheat is not currently provided; (5) adding
replanting payment benefits for barley, oats and flax and increasing
the replanting payment amount for wheat. Replanting payments help
defray costs incurred by producers who have to replant their crops
under the terms of these provisions; (6) allowing winter protection for
fall planted barley which is not provided for under current provisions;
and (7) improving clarity of the insurance policy.
If FCIC is required to delay the implementation of this rule 30
days after the date it is published, the provisions of this rule could
not be implemented until the 2005 crop year. This would mean the
affected producers would be without the benefits described above for an
additional year.
For the reasons stated above, good cause exists to make these
policy changes effective upon filing with the Office of the Federal
Register.
List of Subjects in 7 CFR Part 457
Barley, Buckwheat, Crop insurance, Flax, Oats, Rye, Wheat.
Final Rule
0
Accordingly, as set forth in the preamble, the Federal Crop Insurance
Corporation amends 7 CFR part 457 for the 2004 and succeeding crop
years as follows:
PART 457--COMMON CROP INSURANCE REGULATIONS
0
1. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l) and 1506(p).
0
2. Amend the crop insurance provisions in Sec. 457.101 as follows:
0
a. Revise the introductory text;
0
b. Amend section 1 of the crop provisions by adding a definition for
``Khorasan'' and revising the definitions of ``local market price,''
``prevented planting'' and ``small grains;''
0
c. Revise section 2;
0
d. Revise section 3;
0
e. Revise section 4;
0
f. Revise section 5;
0
g. Delete the period before the parenthetical phrase in section
6(b)(1);
0
h. Revise section 6(c);
0
i. Revise section 6(b)(2) and add section 6(d);
0
j. Revise the introductory text of section 7;
0
k. Revise sections 7(a)(1) introductory text, 7(a)(2)(iii), 7(a)(2)(v)
and 7(b)(4);
0
1. Revise section 9;
0
m. Revise sections 11(b), 11(c)(1)(iv) and 11(d); and
0
n. Revise section 12, all to read as follows:
Sec. 457.101 Small Grains Crop Insurance.
The small grains crop insurance provisions for the 2004 and
succeeding crop years are as follows:
* * * * *
1. Definitions
* * * * *
Khorasan. The common name for a variety of wheat (Triticum
turanicum) that is marketed under trademarks such as Kamut. Khorasan
is considered to be spring wheat for the purposes of this policy.
* * * * *
Local market price. The cash grain price per bushel for the
applicable quality level indicated below and offered by buyers in
the area in which you normally market the insured crop. The local
market price will reflect the maximum limits of quality deficiencies
allowable for the applicable quality level indicated below. Factors
not associated with the specified quality levels, including but not
limited to protein, oil or moisture content, or milling quality will
not be considered.
(1) U.S. No. 2 for Wheat (subclass hard amber durum for durum
wheat and subclass northern spring for hard red spring wheat),
except Khorasan; barley (including hull-less barley); oats
(including hull-less oats); rye; and flax.
(2) The quality factor levels required for durum wheat to grade
U.S. No. 2 for Khorasan.
(3) No. 2 grade buckwheat determined in accordance with the
applicable state grading standards.
* * * * *
Prevented planting. In lieu of the definition contained in the
Basic Provisions, failure to plant the insured crop with proper
equipment by the latest final planting date designated in the
Special Provisions for the insured crop in the county. You may also
be eligible for a prevented planting payment if you failed to plant
the insured crop with the proper equipment within the applicable
late planting period following the latest final planting date. You
must have been prevented from planting the insured crop due to an
insured cause of loss that is general in the surrounding area and
that prevents other producers from planting acreage with similar
characteristics.
* * * * *
Small grains. Wheat, including only common wheat (Triticum
aestivum), club wheat (T. compactum), durum wheat (T. durum) and
Khorasan (T. turanicum); barley (Hordeum vulgare), including hull-
less barley and excluding black barley; oats (Avena sativa, and A.
byzantina), and hull-less oats (A. Nuda); rye (Secale cereale); flax
(Linum usitatissimum); and buckwheat (Fagopyrum esculentum).
* * * * *
2. Unit Division
In addition to the requirements of section 34(b) of the Basic
Provisions, for wheat only, in addition to, or instead of,
establishing optional units by section, section equivalent or FSA
farm serial number and by irrigated and non-irrigated practices,
optional units may be established if each optional unit contains
only initially planted winter wheat, only initially planted spring
wheat, only initially planted club wheat or only initially planted
durum wheat. Separate optional units for initially planted winter
wheat and initially planted spring wheat may be established only in
counties having both winter and spring type final planting dates as
designated in the Special Provisions. A separate optional unit for
club wheat may be established only in counties for which the Special
Provisions designate club wheat as a wheat type (separate optional
units may be established for initially planted winter club and
initially planted spring club wheat if the Special Provisions
specify both as wheat types). A separate optional unit for durum
wheat may be established only in counties for which the Special
Provisions designate
[[Page 34269]]
durum wheat as a separate wheat type (separate optional units may be
established for initially planted winter durum wheat and initially
planted spring durum wheat if the Special Provisions specify both as
wheat types).
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
(a) In addition to the requirements of section 3 of the Basic
Provisions, you may select only one price election for each crop in
the county insured under this policy unless the Special Provisions
provide different price elections by type, in which case each type
must be insured using the price election for the respective type.
The price elections you choose for each type must have the same
percentage relationship to the maximum price offered by us for each
type. For example, if you choose 100 percent of the maximum price
election for one type, you must also choose 100 percent of the
maximum price election for all other types.
(b) In addition to the requirements of section 3 of the Basic
Provisions, in counties with both fall and spring sales closing
dates for the insured crop, you may only change your coverage level
or price election until the spring sales closing date if you do not
have any insured fall planted acreage of the insured crop. If you
have any insured fall planted acreage of the insured crop, you may
not change your coverage level or price election after the fall
sales closing date.
4. Contract Changes
In accordance with section 4 of the Basic Provisions, the
contract change date is November 30 preceding the cancellation date
for counties with a March 15 cancellation date and June 30 preceding
the cancellation date for all other counties.
5. Cancellation and Termination Dates
The cancellation and termination dates are:
----------------------------------------------------------------------------------------------------------------
Crop, state and county Cancellation date Termination date
----------------------------------------------------------------------------------------------------------------
Wheat:
All Colorado counties except September 30........................ September 30.
Alamosa, Archuleta, Conejos,
Costilla, Custer, Delta, Dolores,
Eagle, Garfield, Grand, La Plata,
Mesa, Moffat, Montezuma, Montrose,
Ouray, Pitkin, Rio Blanco, Rio
Grande, Routt, Saguache, and San
Miguel; all Iowa counties except
Plymouth, Cherokee, Buena Vista,
Pocahontas, Humbolt, Wright,
Franklin, Butler, Black Hawk,
Buchanan, Delaware, Dubuque and all
Iowa counties north thereof; all
Wisconsin counties except Buffalo,
Trempealeau, Jackson, Wood,
Portage, Waupaca, Outagamie, Brown,
Kewaunee and all Wisconsin counties
north thereof; all other states
except Alaska, Arizona, California,
Connecticut, Idaho, Maine,
Massachusetts, Minnesota, Montana,
Nevada, New Hampshire, New York,
North Dakota, Oregon, Rhode Island,
South Dakota, Utah, Vermont,
Washington, and Wyoming.
Del Norte, Humboldt, Lassen, Modoc, September 30........................ November 30.
Plumas, Shasta, Siskiyou and
Trinity Counties, California;
Archuleta, Custer, Delta, Dolores,
Eagle, Garfield, Grand, La Plata,
Mesa, Moffat, Montezuma, Montrose,
Ouray, Pitkin, Rio Blanco, Routt
and San Miguel Counties, Colorado;
Connecticut; Idaho; Plymouth,
Cherokee, Buena Vista, Pocahontas,
Humbolt, Wright, Franklin, Butler,
Black Hawk, Buchanan, Delaware and
Dubuque Counties, Iowa, and all
Iowa counties north thereof;
Massachusetts; all Montana counties
except Daniels and Sheridan; New
York; Oregon; Rhode Island; all
South Dakota counties except
Corson, Walworth, Edmunds, Faulk,
Spink, Beadle, Kingsbury, Miner,
McCook, Turner, Yankton and all
South Dakota counties north and
east thereof; Washington; Buffalo,
Trempealeau, Jackson, Wood,
Portage, Waupaca, Outagamie, Brown
and Kewaunee Counties, Wisconsin,
and all Wisconsin counties north
thereof; all Wyoming counties
except Big Horn, Fremont, Hot
Springs, Park, and Washakie.
Arizona; all California counties October 31.......................... November 30.
except Del Norte, Humboldt, Lassen,
Modoc, Plumas, Shasta, Siskiyou and
Trinity; Nevada; and Utah.
Alaska; Alamosa, Conejos, Costilla, March 15............................ March 15.
Rio Grande and Saguache Counties,
Colorado; Maine; Minnesota; Daniels
and Sheridan Counties, Montana; New
Hampshire; North Dakota; Corson,
Walworth, Edmunds, Faulk, Spink,
Beadle, Kingsbury, Miner, McCook,
Turner, and Yankton Counties, South
Dakota, and all South Dakota
counties north and east thereof;
Vermont; and Big Horn, Fremont, Hot
Springs, Park, and Washakie
Counties, Wyoming.
Barley:
All New Mexico counties except Taos; September 30........................ September 30.
Texas, Oklahoma, Missouri,
Illinois, Indiana, Ohio,
Pennsylvania, New Jersey and all
states south and east thereof.
Kit Carson, Lincoln, Elbert, El September 30........................ November 30.
Paso, Pueblo and Las Animas
Counties, Colorado, and all
Colorado counties south and east
thereof; Connecticut; Kansas;
Massachusetts; New York; and Rhode
Island.
Arizona; all California counties October 31.......................... November 30.
except Del Norte, Humboldt, Lassen,
Modoc, Plumas, Shasta, Siskiyou and
Trinity; Clark, Humboldt, Nye and
Pershing Counties, Nevada; and Box
Elder, Millard and Utah Counties,
Utah.
Del Norte, Humboldt, Lassen, Modoc, March 15............................ March 15.
Plumas, Shasta, Siskiyou and
Trinity Counties, California; All
Colorado counties except Kit
Carson, Lincoln, Elbert, El Paso,
Pueblo and Las Animas, and all
Colorado counties south and east
thereof; all Nevada counties except
Clark, Humboldt, Nye and Pershing;
Taos County, New Mexico; all Utah
counties except Box Elder, Millard
and Utah; and all other states
except Arizona, and (except) Texas,
Oklahoma, Missouri, Illinois,
Indiana, Ohio, Pennsylvania, New
Jersey and all states south and
east thereof.
Oats:
Alabama; Arkansas; Florida; Georgia; September 30........................ September 30.
Louisiana; Mississippi; All New
Mexico counties except Taos County;
North Carolina; Oklahoma; South
Carolina; Tennessee; Texas; and
Patrick, Franklin, Pittsylvania,
Campbell, Appomattox, Fluvanna,
Buckingham, Louisa, Spotsylvania,
Caroline, Essex, and Westmoreland
Counties, Virginia, and all
Virginia counties east thereof.
Arizona; All California counties October 31.......................... October 31.
except Del Norte, Humboldt, Lassen,
Modoc, Plumas, Shasta, Siskiyou and
Trinity.
Del Norte, Humbolt, Lassen, Modoc, March 15............................ March 15.
Plumas, Shasta, Siskiyou, and
Trinity Counties, California; Taos
County, New Mexico; all Virginia
counties except Patrick, Franklin,
Pittsylvania, Campbell, Attomattox,
Fluvanna, Buckingham, Louisa,
Spotsylvania, Caroline, Essex, and
Westmoreland, and all Virginia
counties east thereof; and all
other states except Alabama,
Arizona, Arkansas, Florida,
Georgia, Louisiana, Mississippi,
North Carolina, Oklahoma, South
Carolina, Tennessee, and Texas.
Rye:
[[Page 34270]]
All states.......................... September 30........................ September 30.
Flax:
All states.......................... March 15............................ March 15.
Buckwheat:
All states.......................... March 15............................ March 15.
----------------------------------------------------------------------------------------------------------------
6. Insured Crop
* * * * *
(b) * * *
(2) May report all planted acreage as insurable when you report
your acreage for the crop year. Premium will be due on all the
acreage except as set forth herein. If the Special Provisions allow
a reduced premium amount for acreage intentionally destroyed prior
to harvest, you may qualify for such reduction only if you notify us
in writing on or before the date designated in the Special
Provisions of the intended destruction, and do not claim an
indemnity on the acreage. No premium reduction will be allowed if
the required notice is not given or if you claim an indemnity for
the acreage. Upon receiving timely notice, insurance coverage on the
acreage you do not intend to harvest will cease and we will revise
your acreage report to indicate the applicable reduction in premium.
If you do not destroy the crop as intended, you will be subject to
the under-reporting provisions contained in section 6 of the Basic
Provisions.
(c) In counties for which the actuarial table provides premium
rates for the Wheat or Barley Winter Coverage Endorsement (7 CFR
457.102), additional coverage is available for wheat or barley
damaged between the time coverage begins and the spring final
planting date. Coverage under the endorsement is effective only if
you qualify under the terms of the endorsement and you execute the
endorsement by the sales closing date.
(d) In counties for which the actuarial table provides premium
rates for malting barley coverage, an endorsement is available (7
CFR 457.118) that provides additional insurance protection for
malting barley. This endorsement provides coverage for producers who
grow malting barley under contract and for those who do not have a
contract. Coverage under the endorsement is effective only if you
qualify under the terms of the endorsement and you execute the
endorsement by the sales closing date.
7. Insurance Period
In lieu of the requirements under section 11 (Insurance Period)
of the Basic Provisions (Sec. 457.8), and subject to any provisions
provided by the Wheat or Barley Winter Coverage Endorsement (Sec.
457.102) if you have elected such endorsement, the insurance period
is as follows:
(a) * * *
(1) For oats, rye, flax and buckwheat, the following limitations
apply:
* * * * *
(2) * * *
(iii) Whenever the Special Provisions designate both fall and
spring final planting dates, any winter barley or winter wheat that
is damaged before the spring final planting date, to the extent that
growers in the area would normally not further care for the crop,
must be replanted to a winter type of the insured crop to maintain
insurance based on the winter type unless we agree that replanting
is not practical. If it is not practical to replant to the winter
type of wheat or barley but is practical to replant to a spring
type, you must replant to a spring type to keep your insurance based
on the winter type in force. Any winter barley or winter wheat
acreage that is replanted to a spring type of the same crop when it
was practical to replant the winter type will be insured as the
spring type and the production guarantee, premium and price election
applicable to the spring type will be used. In this case, the
acreage will be considered to be initially planted to the spring
type. If you have elected coverage under a barley or wheat winter
coverage endorsement (if available in the county), insurance will be
in accordance with the option.
* * * * *
(v) Whenever the Special Provisions designate only a spring
final planting date, any acreage of fall planted barley or fall
planted wheat is not insured unless you request such coverage on or
before the spring sales closing date, and we agree in writing that
the acreage has an adequate stand in the spring to produce the yield
used to determine your production guarantee. The fall planted barley
or fall planted wheat will be insured as a spring type for the
purpose of the production guarantee, premium and price election.
Insurance will attach to such acreage on the date we determine an
adequate stand exists or on the spring final planting date if we do
not determine adequacy of the stand by the spring final planting
date. Any acreage of such fall planted barley or fall planted wheat
that is damaged after it is accepted for insurance but before the
spring final planting date, to the extent that growers in the area
would normally not further care for the crop, must be replanted to a
spring type of the insured crop unless we agree it is not practical
to replant. If fall planted acreage is not to be insured it must be
recorded on the acreage report as uninsured fall planted acreage.
(b) * * *
(4) The following applicable date of the calendar year in which
the crop is normally harvested:
(i) September 25 following planting in Alaska;
(ii) July 31 in Alabama, Arizona, Arkansas, Connecticut,
Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland,
Mississippi, New Jersey, North Carolina, South Carolina and
Tennessee; or
(iii) October 31 in all other states; or
* * * * *
9. Replanting Payments
(a) A replanting payment is allowed as follows:
(1) In lieu of provisions in section 13 of the Basic Provisions
that limit the amount of a replant payment to the actual cost of
replanting, the amount of any replanting payment will be determined
in accordance with these crop provisions;
(2) You must comply with all requirements regarding replanting
payments contained in section 13 of the Basic Provisions (except as
allowed in section 9(a)(1)) and in any winter coverage endorsement
for which you are eligible and which you have elected;
(3) The insured crop must be damaged by an insurable cause of
loss to the extent that the remaining stand will not produce at
least 90 percent of the production guarantee for the acreage;
(4) The acreage must have been initially planted to a spring
type of the insured crop in those counties with only a spring final
planting date;
(5) Damage must occur after the fall final planting date in
those counties where both a fall and spring final planting date are
designated (If the Special Provisions provide more than one fall
final planting date, the fall final planting date applicable to
policies with the Wheat or Barley Winter Coverage Endorsement will
be used for this purpose, regardless of whether or not the
endorsement is actually in effect.); and
(6) The replanted crop must be seeded at a rate sufficient to
achieve a total (undamaged and new seeding) plant population that
will produce at least the yield used to determine your production
guarantee.
(b) No replanting payment will be made for acreage initially
planted to a winter type of the insured crop (including rye) in any
county for which the Special Provisions contain only a fall final
planting date (including final planting dates in December, January
and February).
(c) The maximum amount of the replanting payment per acre will
be the lesser of 20.0 percent of the production guarantee or the
number of bushels for the applicable crop specified below,
multiplied by your price election and your share:
(1) 2 bushels for flax or buckwheat;
(2) 4 bushels for wheat; or
(3) 5 bushels for barley or oats.
(d) When the crop is replanted using a practice that is
uninsurable for an original planting, the liability on the unit will
be reduced by the amount of the replanting payment. The premium
amount will not be reduced.
(e) Replanting payments will be calculated using the price
election and production guarantee for the crop type that is
replanted and insured. For example, if damaged spring
[[Page 34271]]
wheat is replanted to durum wheat, the price election applicable to
durum wheat will be used to calculate any replanting payment that
may be due. A revised acreage report will be required to reflect the
replanted type. Notwithstanding the previous two sentences, the
following will have a replanting payment based on the guarantee and
price election for the crop type initially planted:
(1) Any damaged winter crop type that is replanted to a spring
crop type, but that retains insurance based on the winter crop type
guarantee and price election; and
(2) Any acreage replanted at a reduced seeding rate into a
partially damaged stand of the insured crop.
* * * * *
11. Settlement of Claim
* * * * *
(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;
(2) Multiplying each result in section 11(b)(1) by the
respective price election;
(3) Totaling the results of section 11(b)(2);
(4) Multiplying the total production to be counted of each type,
if applicable (see sections 11(c), (d), and (e)), by the respective
price election;
(5) Totaling the results of section 11(b)(4);
(6) Subtracting the result of section 11(b)(5) from the result
in section 11(b)(3); and
(7) Multiplying the result of section 11(b)(6) by your share.
(c) * * *
(1) * * *
(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
you 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; and
* * * * *
(d) Mature wheat, barley, oat, rye, and buckwheat production may
be adjusted for excess moisture and quality deficiencies. Flax
production may be adjusted for quality deficiencies only. If a
moisture adjustment is applicable, it will be made prior to any
adjustment for quality.
(1) Production will be reduced by .12 percent for each .1
percentage point of moisture in excess of:
(i) 13.5 percent for wheat;
(ii) 14.5 percent for barley;
(iii) 14.0 percent for oats; and
(iv) 16.0 percent for rye and buckwheat.
We may obtain samples of the production to determine the
moisture content.
(2) Production will be eligible for quality adjustment if:
(i) Deficiencies in quality, in accordance with the Official
United States Standards for Grain including the definition of terms
used in section 11(d), result in:
(A) Wheat, except Khorasan, not meeting the grade requirements
for U.S. No. 4 (grades U.S. No. 5 or worse) because of test weight;
total damaged kernels (heat-damaged kernels will not be considered
to be damaged); shrunken or broken kernels; defects (foreign
material and heat damage will not be considered to be defects); a
musty, sour, or commercially objectionable foreign odor (except smut
odor); or grading garlicky, light smutty, smutty or ergoty;
(B) Barley, except hull-less barley, not meeting the grade
requirements for U.S. No. 4 (grades U.S. No. 5 or worse) because of
test weight; percentage of sound barley (heat-damaged kernels will
be considered to be sound barley); damaged kernels (heat-damaged
kernels will not be considered to be damaged); thin barley; black
barley; a musty, sour, or commercially objectionable foreign odor
(except smut or garlic odor); or grading blighted, smutty, garlicky
or ergoty;
(C) Oats, except hull-less oats, not meeting the grade
requirements for U.S. No. 4 (grade U.S. sample grade) because of
test weight; percentage of sound oats (heat-damaged kernels will be
considered to be sound oats); a musty, sour, or commercially
objectionable foreign odor (except smut or garlic odor); or grading
smutty, thin, garlicky or ergoty;
(D) Rye not meeting the grade requirements for U.S. No. 3
(grades U.S. No. 4 or worse) because of test weight; percent damaged
kernels (heat-damaged kernels will not be considered to be damaged);
thin rye; a musty, sour, or commercially objectionable foreign odor
(except smut or garlic odor); or grading light smutty, smutty, light
garlicky, garlicky, or ergoty;
(E) Flaxseed not meeting the grade requirements for U.S. No. 2
(grades U.S. sample grade) due to test weight; damaged kernels
(heat-damaged kernels will not be considered to be damaged); or a
musty, sour, or commercially objectionable foreign odor (except smut
or garlic odor);
(ii) Deficiencies in the quality of buckwheat, determined in
accordance with applicable state grading standards, result in it not
meeting No. 3 grade requirements due to test weight; a musty, sour
or commercially objectionable foreign odor (except smut or garlic
odor); or grading garlicky, smutty or ergoty if such grades are
provided for by the applicable state grading standards;
(iii) Quality factors for Khorasan fall below the levels
contained in the Official United States Standards for Grain that
cause durum wheat to grade less than U.S. No. 4. For example, if
durum wheat grades less than U.S. No. 4 when its test weight falls
below 54.0 pounds per bushel, Khorasan would be eligible for quality
adjustment if its test weight falls below 54.0 pounds per bushel.
The same quality factors considered for quality adjustment of durum
wheat will be applicable and determination of deficiencies will be
made in accordance with the Federal Grain Inspection Service
directive that establishes procedures for quality factor analysis of
Khorasan seed. Quality adjustment discount factors for U.S. grades
specified in the Special Provisions will also apply to Khorasan at
the same levels applicable to durum wheat;
(iv) Quality factors for hull-less barley fall below the levels
contained in the Official United States Standards for Grain that
cause barley to grade less than U.S. No. 4. For example, if barley
grades less than U.S. No. 4 when its test weight falls below 40.0
pounds per bushel, hull-less barley would be eligible for quality
adjustment if its test weight falls below 40.0 pounds per bushel.
The same quality factors considered for quality adjustment of barley
will be applicable and determination of deficiencies will be made in
accordance with the Federal Grain Inspection Service directive that
establishes procedures for quality factor analysis of hull-less
barley. Quality adjustment discount factors for U.S. grades
specified in the Special Provisions will also apply to hull-less
barley at the same levels applicable to barley;
(v) Quality factors for hull-less oats fall below the levels
contained in the Official United States Standards for Grain that
cause oats to grade less than U.S. No. 4. For example, if oats grade
less than U.S. No. 4 when its test weight falls below 27.0 pounds
per bushel, hull-less oats would be eligible for quality adjustment
if the test weight falls below 27.0 pounds per bushel. The same
quality factors considered for quality adjustment of oats will be
applicable and determination of deficiencies will be made in
accordance with the Federal Grain Inspection Service directive that
establishes procedures for quality factor analysis of hull-less
oats. Quality adjustment discount factors for U.S. grades specified
in the Special Provisions will also apply to hull-less oats at the
same levels applicable to oats; or
(vi) Substances or conditions are present, including mycotoxins,
that are identified by the Food and Drug Administration or other
public health organizations of the United States as being injurious
to human or animal health.
(3) Quality will be a factor in determining your loss only if:
(i) The deficiencies, substances, or conditions resulted from a
cause of loss against which insurance is provided under these crop
provisions;
(ii) All determinations of these deficiencies, substances, or
conditions are made using samples of the production obtained by us
or by a disinterested third party approved by us;
(iii) With regard to deficiencies in quality (except test
weight, which may be determined by our loss adjustor), the samples
are analyzed by:
(A) A grain grader licensed under the United States Grain
Standards Act or the United States Warehouse Act;
[[Page 34272]]
(B) A grain grader licensed under State law and employed by a
warehouse operator who has a commodity storage agreement with the
Commodity Credit Corporation; or
(C) A grain grader not licensed under State law, but who is
employed by a warehouse operator who has a commodity storage
agreement with the Commodity Credit Corporation and is in compliance
with State law regarding warehouses; and
(iv) With regard to substances or conditions injurious to human
or animal health, the samples are analyzed by a laboratory approved
by us.
(4) Small grain production that is eligible for quality
adjustment, as specified in sections 11(d)(2) and (3), will be
reduced by the quality adjustment factor contained in the Special
Provisions.
* * * * *
12. Late Planting
A late planting period is applicable to small grains, except to
any barley or wheat acreage covered under the terms of the Wheat or
Barley Winter Coverage Endorsement. Barley or wheat covered under
the terms of the Winter Coverage Endorsement must be planted on or
prior to the applicable final planting date specified in the Special
Provisions. In counties having one fall final planting date for
acreage covered under the Wheat or Barley Winter Coverage
Endorsement and another fall final planting date for acreage not
covered under the endorsement, the fall late planting period will
begin after the final planting date for acreage not covered under
the endorsement.
* * * * *
0
3. Amend the crop insurance endorsement contained in Sec. 457.102 as
follows:
0
a. Revise the section title; and
0
b. Revise the endorsement, all to read as follows:
Sec. 457.102 Wheat or barley winter coverage endorsement.
United States Department of Agriculture
Federal Crop Insurance Corporation
Wheat or Barley Winter Coverage Endorsement
(This is a continuous endorsement)
1. In return for payment of the additional premium designated in
the actuarial documents, this endorsement is attached to and made
part of the Small Grains Crop Provisions subject to the terms and
conditions described herein.
2. This endorsement is available only in counties for which the
Special Provisions for the insured crop designate both a fall final
planting date and a spring final planting date, and for which the
actuarial documents provide a premium rate for this coverage.
3. You must have a Small Grains Crop Insurance Policy in force
and elect to insure barley or wheat under that policy.
4. You must select this coverage, by crop, on your application
for insurance. Failure to do so means you have rejected this
coverage for both wheat and barley and this endorsement is void.
5. In addition to the requirements of section 34(b) of the Basic
Provisions and section 2 of the Small Grains Crop Provisions,
optional units may be established for barley if each optional unit
contains only initially planted winter barley or only initially
planted spring barley.
6. If you elect this endorsement for winter barley, the contract
change, cancellation, and termination dates applicable to wheat in
the county will be applicable to all your spring and winter barley.
7. Coverage under this endorsement begins on the later of the
date we accept your application for coverage or on the fall final
planting date designated in the Special Provisions. Coverage ends on
the spring final planting date designated in the Special Provisions.
8. The provisions of section 14 of the Basic Provisions are
amended to require that all notices of damage be provided to us by
the spring final planting date designated in the Special Provisions.
9. All eligible acreage of each crop covered under this
endorsement must be insured.
10. The amount of any indemnity paid under the terms of this
endorsement will be subject to any reduction specified in the Basic
Provisions for multiple crop benefits in the same crop year.
11. Whenever any winter wheat or barley is damaged during the
insurance period and at least 20 acres or 20 percent of the insured
planted acreage in the unit, whichever is less, does not have an
adequate stand to produce at least 90 percent of the production
guarantee for the acreage, you may, at your option, take one of the
following actions:
(a) Continue to care for the damaged crop. By doing so, coverage
will continue under the terms of the Basic Provisions, the Small
Grains Crop Insurance Provisions and this endorsement.
(b) Replant the acreage to an appropriate variety of the insured
crop, if it is practical, and receive a replanting payment in
accordance with the terms of section 9 (Replanting Payments) of the
Small Grains Crop Insurance Provisions. By doing so, coverage will
continue under the terms of the Basic Provisions, the Small Grains
Crop Insurance Provisions and this endorsement, and the production
guarantee for winter wheat or barley will remain in effect.
(c) Destroy the remaining crop on such acreage. By doing so, you
agree to accept an appraised amount of production determined in
accordance with section 11(c)(1) of the Small Grains Crop Insurance
Provisions to count against the unit production guarantee. This
amount will be considered production to count in determining any
final indemnity on the unit and will be used to settle your claim as
described in section 11 (Settlement of Claim) of the Small Grains
Crop Insurance Provisions. You may use such acreage for any purpose,
including planting and separately insuring any other crop if such
insurance is available. If you elect to plant and elect to insure a
spring type of the same crop (you must elect whether or not you want
insurance on the spring type of the same crop at the time we release
the winter type acreage), you must pay additional premium for the
insurance. Such acreage will be insured in accordance with the
policy provisions that are applicable to acreage that is initially
planted to a spring type of the insured crop, and you must:
(1) Plant the spring type in a manner which results in a clear
and discernable break in the planting pattern at the boundary
between it and any remaining acreage of the winter type; and
(2) Store or market the production in a manner which permits us
to verify the amount of spring type production separately from any
winter type production. In the event you are unable to provide
records of production that are acceptable to us, the spring type
acreage will be considered to be a part of the original winter type
unit.
Signed in Washington, DC, on June 3, 2003.
Ross J. Davidson, Jr.,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 03-14413 Filed 6-4-03; 2:15 pm]
BILLING CODE 3410-08-P