Common Crop Insurance Regulations, Basic Provisions

AGENCY:

Federal Crop Insurance Corporation, USDA.

ACTION:

Interim rule.

SUMMARY:

The Federal Crop Insurance Corporation (FCIC) amends the Common Crop Insurance Regulations, Basic Provisions (Basic Provisions) to conform to the requirements of section 780 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2006 (2006 Appropriations Act) regarding written agreements and the use of similar agricultural commodities.

EFFECTIVE DATES:

This rule is effective November 25, 2005. Written comments and opinions on this rule will be accepted until the close of business January 30, 2006 and will be considered when the rule is to be made final.

ADDRESSES:

Interested persons are invited to submit written comments to the Director, Product Development Division, Risk Management Agency, United States Department of Agriculture, 6501 Beacon Drive, Stop 0812, Room 421, Kansas City, MO 64133-4676. Comments titled “Basic Provisions Interim Rule” may be sent via the Internet to DirectorPDD@rm.fcic.usda.gov, or the Federal eRulemaking Portal: http://www.regulations.gov/. Follow the online instructions for submitting comments. A copy of each response will be available for public inspection and copying from 7 a.m. to 4:30 p.m., c.s.t., Monday through Friday, except holidays, at the above address.

FOR FURTHER INFORMATION CONTACT:

For further information contact Erin Reid, Risk Management Specialist, Research and Development, Product Development Division, Risk Management Agency, at the Kansas City, MO, address listed above, telephone (816) 926-6321.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be nonsignificant for the purposes of Executive Order 12866 and, therefore, it has not been reviewed by the Office of Management and Budget (OMB).

Paperwork Reduction Act of 1995

Pursuant to the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by OMB under control number 0563-0053 through November 30, 2007.

Government Paperwork Elimination Act (GPEA) Compliance

FCIC is committed to compliance with the GPEA, which requires Government agencies, in general, to provide the public with the option of submitting information or transacting business electronically to the maximum extent possible. FCIC requires that all reinsured companies be in compliance with the Freedom to E-File Act and section 508 of the Rehabilitation Act.

Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

Executive Order 13132

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

Regulatory Flexibility Act

FCIC certifies that this regulation will not have a significant economic impact on a substantial number of small entities. Written agreement requirements for the Federal crop insurance program are the same for all producers regardless of the size of their operations. For instance, all producers requesting this type of written agreement must submit actual yields for at least the most recent three crops years in which the crop was planted during the base period. Any producer who did not produce the crop for at least three years, for which the written agreement is requested, must submit actual yields for a similar crop, or a combination of actual yields for the crop and a similar crop in the county for which the written agreement is being requested. Whether a producer has 10 acres or 100 acres there is no difference in the kind of information required for requesting a written agreement. 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 change helps ensure that small entities are given the same opportunities as large entities to manage their risks through the use of crop insurance. A Regulatory Flexibility Analysis has not been prepared since this regulation does not have an impact on small entities, and, therefore, this regulation is exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 605).

Federal Assistance Program

This program is listed in the Catalog of Federal Domestic Assistance under No. 10.450.

Executive Order 12372

This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. See the Notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115, June 24, 1983.

Executive Order 12988

This interim rule has been reviewed in accordance with Executive Order 12988 on civil justice reform. The provisions of this rule will not have a retroactive effect. The provisions of this rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith. With respect to any direct action taken by FCIC or to require the insurance provider to take specific action under the terms of the crop insurance policy, the administrative appeal provisions published at 7 CFR part 11 must be exhausted before any action against FCIC for judicial review may be brought.

Environmental Evaluation

This action is not expected to have a significant economic impact on the quality of the human environment, health, or safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.

Background

Section 508(a)(4)(B) of the Federal Crop Insurance Act (Act) involves areas in the United States where crop insurance is not available for a particular commodity and authorizes FCIC to offer to enter into a written agreement with producers in such areas if the producer has actuarially sound data relating to the production by the producer of the commodity and the data is acceptable to FCIC. FCIC interpreted this provision to mean producers would have to provide verifiable records of actual yields of the crop to be insured for the last three years the crop was grown and incorporated this requirement into the Basic Provisions.

Section 780 of the 2006 Appropriations Act amended section 508(a)(4)(B) to allow FCIC to offer to enter into a written agreement with producers in such areas if the producer has actuarially sound data relating to the production by the producer of a similar commodity and the data is acceptable to FCIC. To incorporate this change into the policy, FCIC must revise those provisions of the Basic Provisions that limit records of actual yields to the commodity to be insured to allow records of yields for similar commodities to be used in underwriting written agreements.

Specifically, FCIC is amending section 18(f)(2)(i) of the Basic Provisions to differentiate between when the producer has records of production for the crop to be insured under the written agreement and when the producer has records of a similar crop or a combination of records for a similar crop and records of the same crop that will be insured. FCIC is adding provisions that specify that to be considered a crop that is similar to the crop for which a written agreement is being requested, it must fit into one of a broad grouping of crops the producer has grown in the past (e.g. row crops, tree crops, vine crops, bush crops, etc.) and the agronomic and risk factors must be sufficiently similar to allow FCIC to properly determine whether there is a risk that program integrity may be impaired by the use of the records of the other commodity (for example, could it lead to over insurance of the crop for which a written agreement is sought) and whether an actuarially sound premium rate can be determined that will cover the anticipated losses and a reasonable reserve for the crop for which a written agreement is being sought.

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. The changes in this rule are statutorily mandated.

With respect to the provisions of this rule, it would be contrary to the public interest to delay its implementation. Further, such changes regarding written agreements for producers in areas of the United States where crop insurance is not available for a particular commodity are in the public interest. This is because the changes will allow a producer to submit records of a crop that is similar to the crop for which insurance is being requested, and expand the availability of insurance for a producer who may not have previously qualified.

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 next crop year for those crops having a contract change date prior to the effective date of this publication. This would mean that 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

• Crop insurance
• Reporting and recordkeeping requirements

Interim Rule

Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation amends 7 CFR part 457 effective for the 2006 and succeeding crop years for all crops with a contract change date on or after the effective date of this rule and for the 2007 and succeeding crop years for all crops with a contract change date prior to the effective date of this rule, 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. Amend § 457.8, as follows:

(a) Revise section 18(f)(2)(i); and

(b) Revise section 18(f)(2)(ii).

The revised sections read as follows:

18. Written Agreements

(f) * * *

(2) * *  *

(i) A completed APH form (except for policies that do not require APH) based on verifiable records of actual yields for:

(A) The crop and county for which the written agreement is being requested (the actual yields do not necessarily have to be from the same physical acreage for which you are requesting a written agreement) for at least the most recent three crop years in which the crop was planted during the base period; or

(B) A similar crop in the county, or a combination of actual yields for a similar crop in the county and the crop in the county for which the written agreement is being requested if you have not produced the crop for which the written agreement is being requested for at least three crop years.

(1) To be considered a similar crop to the crop for which a written agreement is being requested, such crop must:

(i) Be included in the same category of crops, e.g., row crops (including, but not limited to, small grains, coarse grains, and oil seed crops), vegetable crops grown in rows, tree crops, vine crops, bush crops, etc., as defined by FCIC;

(ii) Have substantially the same growing season (i.e., normally planted around the same dates and harvested around the same dates);

(iii) Require comparable agronomic conditions (e.g., comparable water, soil, etc. needs); and

(iv) Be subject to substantially the same risks (frequency and severity of loss would be expected to be comparable from the same cause of loss);

(2) The actual yields for the similar crop do not necessarily have to be from the same physical acreage for which you are requesting a written agreement;

(ii) Acceptable production records for at least the most recent three crop years in which the crop or a similar crop was planted;