General Administrative Regulations; Actual Production History (APH) Coverage Program

SUMMARY: The Federal Crop Insurance Corporation (FCIC) hereby issues

regulations to provide a method for determining insurance coverage

based on Actual Production History (APH). An approved APH yield, when

multiplied by a percentage of an elected coverage level and price per

commodity unit, results in a dollar amount of insurance coverage per

acre. This rule is being promulgated in accordance with the

requirements of the Federal Crop Insurance Act, as amended.

EFFECTIVE DATE: October 19, 1994.

FOR FURTHER INFORMATION CONTACT:

Mari Dunleavy, Regulatory Specialist, Regulatory and Procedural

Development, Federal Crop Insurance Corporation, U.S. Department of

Agriculture, Washington, DC 20250, telephone (202) 254-8314.

SUPPLEMENTARY INFORMATION: This action has been reviewed under USDA

procedures established by Executive Order 12866, and Departmental

Regulation No. 1512-1. This action constitutes a review as to the need,

currency, clarity, and effectiveness of these regulations under those

procedures. The sunset review date established for these regulations is

September 1, 1999.

This rule has been determined to be not-significant for purposes of

Executive Order 12866, and therefore, exempt from OMB review and has

not been reviewed by the Office of Management and Budget (OMB).

This action does not have a significant effect on a substantial

number of small entities. It imposes no added burden on the insured

farmer or on the private insurance company serving as the delivery

agent. APH has been the basis for computing insurance guarantees under

the Federal Crop Insurance Program, on an ad hoc basis for over eight

years and has its genesis in the Individual Yield Coverage Plan (7 CFR

400.15-400.21). This rule codifies procedure which is already

effective. Therefore, this action is exempt from the provisions of the

Regulatory Flexibility Act and no Regulatory Flexibility Analysis was

prepared.

The program is listed in the Catalog of Domestic Assistance under

No. 10.450.

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.

This action is not expected to have any significant impact on the

quality of the human environment, health, and safety. Therefore,

neither an Environmental Assessment or an Environmental Impact

Statement is needed.

The collection requirement for this regulation is form number FCI-

19A (APH Production Reporting Form) and has been previously approved by

the OMB under the provisions of 44 U.S.C. 3501 et seq., the Paperwork

Reduction Act of 1980. The control number for the APH Production

Reporting Form is OMB #0563-0029. See 7 CFR part 400, subpart H.

It has been determined under section 6(a) of Executive Order 12612,

Federalism, that this proposal does not have sufficient federalism

implications to warrant the preparation of a Federalism Assessment. The

policies and procedures contained in this rule will not have

substantial direct effects on states or their political subdivisions,

or on the distribution of power and responsibilities among the various

levels of government.

This rule has been reviewed in accordance with Executive Order

12778. The provisions of this rule are not retroactive and will preempt

State and local laws to the extent such State and local laws are

inconsistent. The administrative appeal provisions, located at 7 CFR

part 400, subpart J, must be exhausted before judicial action may be

brought for actions taken under these proceedings.

Background

The Federal Crop Insurance Act, as amended by the Omnibus Budget

Reconciliation Act of 1993 (Pub. L. 103-66), requires the establishment

of a plan and the publication of regulations for the use of the

producer's actual production history to determine yield coverage. FCIC

has used such a plan on an ad hoc basis for a number of years.

An approved actual production history (APH) yield, multiplied by a

percentage of an elected coverage level and price per commodity unit,

provides the dollar amount of insurance coverage per acre. If the

insured does not submit production records for insurance purposes, 65

percent of an FCIC estimated yield (transitional or determined yield)

is the default approved APH yield. The FCIC estimated yield, after

applicable adjustment, is used in conjunction with actual production

records to compute the approved APH yield when less than four years of

actual production records are available.

On October 14, 1993, the FCIC published in the Federal Register at

58 FR 53150 proposed regulations outlining the provisions for the APH

plan. The FCIC requested and received comments from the public

regarding the proposal.

The comments and their responses are grouped according to subject,

area of concern, and by subpart of the proposed regulation.

1. General Comments, Differences Compared to 1994 APH Program

Comments: Several comments pointed out that the new producer, crop

year, and base period definitions differ from FCIC approved procedures

implemented for the 1994 crop year. The comments requested that the

regulation be changed to agree with those APH procedures if it is to be

effective for the 1994 crop year. They indicated that these changes

will drastically affect computer programming, computer edits, FCIC data

reporting requirements, etc. If the regulation is not changed and is to

be effective for the 1994 crop year, they requested that the comment

period be reopened to provide an opportunity to review the impact of

these changes.

Response: There are differences between the regulation published

for comment and the APH procedures used for the 1994 crop year. The

differences are minor but, if implemented for the 1994 crop year, the

regulation would have major impacts on the current program. Fall and

spring seeded crop policies have been sold, production reports filed,

and approved APH yields calculated, processed, and submitted to FCIC

based on procedures implemented in July 1993.

For these reasons, the regulation, with minor changes, will be

implemented effective for the 1995 crop year.

2. Coverage and Participation

Comment: Twenty comments stated that the APH program will reduce

insurance protection to many farmers, decrease farmer participation,

and increase future demand for free disaster payments. The comments

suggested that FCIC encourage participation by offering higher levels

of protection to producers.

Comment: One comment noted that 65 percent of the transitional

yield will be used when a producer does not furnish any previous yield

data. The comment suggested that FCIC change this percentage to 80

percent.

Comment: Section 400.54(b)--the proposed reduction of transitional

or determined yields by the stated 80 percent for maintaining one year

of actual records and 90 percent for maintaining two years of actual

records is inadequate to serve as an incentive for insureds to report

all four years of actual production in relationship to the 65 percent

reduction for no records. Also, there does not appear to be a penalty

for maintaining only three years of actual records. A greater penalty

is needed for not maintaining less than four years of records.

Comment: One comment suggested that if a producer applying for

Federal crop insurance coverage has no previous production records (an

example of this would be production of the alternative crop Kenaf,

where very little production history exists), that individual should be

able to receive crop insurance coverage for the entire crop. The only

way to accomplish this is to raise the transfer yield to 100 percent,

as opposed to 65 percent. The comment also recommended that an option

be provided to allow producers to purchase additional coverage for

crops having no previous production records.

Comment: One comment urged FCIC to exclude those losses resulting

from catastrophic events in the loss ratio determination.

Response: The Federal Crop Insurance Act, as amended, requires FCIC

to take actions as necessary to improve actuarial soundness of the

multiple peril crop insurance program. FCIC is mandated to achieve an

overall loss ratio, within certain parameters, of not greater than 1.10

by October 1, 1995. FCIC's research using existing insureds' APH data

indicates insureds with no records of production (or one or two years

of records) are paid disproportionate losses compared to insureds who

have provided three or more years of production records. Further

analyses by FCIC using modified APH procedures and existing insureds'

APH data, indicates that 65 percent of the transitional or determined

yield (hereafter referred to as T-Yield in FCIC's responses) is an

appropriate percentage to attain the required loss ratio for persons

who have not submitted records. Independent analyses from a private

insurance association support these findings.

Insureds who have provided three or four years of records have

lower loss costs and do not require the use of reduced T-Yields.

Modifications to APH are not intended to reduce insurance protection to

farmers, rather the intent is to base yields more fully on actual

yields and to rely less on T-Yields. APH procedures allow ample

opportunity for producers who have not raised insurable crops (and

therefore have not had the opportunity to establish records) to qualify

for APH yields greater than 65 percent of the T-Yield through use of

new producer, added land, and new practice procedures.

Producers are encouraged to provide as many years of actual yields

as possible. Above average yields will reduce the impact of low yields.

If actual yields reported are higher than the T-Yield, modified APH

procedures allow a better opportunity for increased insurance yields as

compared to previous APH procedures.

FCIC is not able to provide APH yields higher than the insured's

average yields without adversely affecting FCIC loss ratio and

financial accountability. FCIC has researched options that provide

coverage based on yields higher than the insured's APH yield or the

yield history available for the crop on a county basis. This analysis

indicates that a significant increase in premium rates is required to

make such a program actuarially sound. FCIC will retain the APH

structure as proposed.

3. Section 400.50 Availability of APH Program

Comment: The last sentence of Sec. 400.50 states, ``Except when in

conflict with this subpart, all provisions of the applicable crop

insurance contract for these crops apply.'' Concern was expressed that

this regulation may override the terms and conditions in current crop

filings. The commentor indicated that policy language should not be

superseded by any other published regulations since policyholders

receive copies of policy provisions but do not receive Federal

regulations.

Response: Federal regulations have the force and effect of law and

all have constructive notice of the provisions. As a practical matter

we are not aware of any provision of the published policies in conflict

with these regulations. As crop insurance policies which base

production guarantees on APH yields are revised, those provisions

relating to APH will be changed in accordance with the final APH

regulation. Reinsured companies furnish policyholder's letters that

describe changes to each crop insurance contract. These letters also

suggested that insureds contact their agents for a full explanation of

the changes and once so advised, insureds then can make informed crop

insurance decisions. Copies of these letters should be provided by the

insurer to all affected policyholders.

4. Added Land (Purchased or Leased)

Comment: One comment stated concern that, under the proposed

regulation, the producer is not eligible to transfer his or her skill

and history to new land purchased or leased. It was suggested that a

producer's history be taken into account when calculating coverage

under a crop insurance policy.

Response: The regulation provides general rules while allowing

flexibility for program details to be provided in procedures. Added

land procedures for APH yield determinations are available that provide

insureds the opportunity to establish approved APH yields higher than

65 percent of the T-Yield when new land is purchased or leased. FCIC

has added a new paragraph to Sec. 400.54(b) consistent with those

procedures which allow yields for added land that are more comparable

to approved APH yields determined from acreage with records.

5. Databases Used To Calculate the APH Yield

Comment: One comment noted that a four year history does not

provide a balanced history in which an agent can accurately calculate a

producer's coverage. A one or two year drought would severely affect a

producer's history. A ten year history would provide more stability.

Comment: One comment suggested that the base period be a minimum of

five years. Four years are not sufficient. Approved yields may

fluctuate tremendously from year to year. The schedule for the

percentage of the T-Yield used, based upon the years records provided,

should be as follows: zero years--80 percent; one year--85 percent; two

years--90 percent; three years--95 percent; four years--100 percent;

and five or more years the T-Yield is not used.

Comment: One comment noted that in Sec. 400.54(h), ``FCIC may use

any production reports available under the provisions of any crop

insurance contract, whether continuous or not (emphasis added), which

involve the interests of the insured person in determining the approved

APH yield.'' Current APH procedures allow new insureds (including

insureds with a break in continuity of insurance coverage of at least

one year) to certify one or more crop years to establish the APH yield.

Since processing has already begun, implementation of yields that are

not continuous will impose major difficulties. In accordance with the

proposed definition of crop year, this could require companies to

maintain yield history indefinitely (for example, a farmer may have had

a policy five years ago with production history going back 30 or 40

years to accumulate 10 crop years).

Response: The level at which the reduced T-Yield has been set for

zero, one, or two years of records was established to offset

disproportionate losses as compared to insureds who have provided more

years of actual records. Using higher levels of T-Yields is contrary to

that objective. The modified APH program encourages the insured to

provide actual records by using reduced T-Yields if the insured

provides less than four years of actual yields.

The proposed regulation does not limit insureds to providing only

four years of actual yield. In fact, continuous records up to ten years

must be used if available. The more years of records used, the less the

effect fewer actual yields have. Insureds may submit one to ten years

of continuous crop years of actual yields to be used in the APH yield

calculation.

With data automation and reporting changes, actual yields will be

retained until the database contains ten crop years of actual yields.

There is no need to expand the database to include calendar years that

are not used to calculate the APH yield. Data processing changes can be

accomplished for the 1995 crop year.

6. Why a Federal Regulation?

Comment: One comment requested justification as to FCIC publishing

in the Federal Register a program (APH) that has already been

implemented by FCIC approved procedures. The comment went on to state

that, as introduced in the mid 1980's the APH program did not have its

procedures published in the Federal Register. By implementing the

program as a regulation, the comment stated that FCIC is limiting its

ability to administer the APH program as changes can no longer be

handled administratively. Any changes will be required to be published

in the Federal Register prior to implementation.

Response: The regulation provides a foundation on which the APH

program and procedures will be based. The regulation will strengthen

FCIC's and reinsured companies' ability to defend the procedures used

to determine APH yields if reconsideration, appeal, or litigation

proceedings relating to APH are pursued by insureds. The previous

unpublished procedures were not effective unless the insureds received

actual notice of program changes prior to the contract change date.

7. Base Period Section 440.51(g) and Crop Year Section 400.51(i)

Comment: Sec. 400.51(g), (i)--Three objections to the definition of

crop year and base period were stated. The base period is defined at 10

consecutive crop years. Crop year is defined as any year in which the

crop is planted. Under the regulation, the base period is no longer 10

consecutive crop years beginning with the most recent year, but would

vary from each crop and policy, and possibly from each database within

a policy. It is conceivable that a database may contain land planted to

the insured crop every other year, in such case, the base period could

stretch back 20 calendar years to obtain 10 crop years.

Response: Crop year as defined, benefits producers who rotate

different crops, rotate the same crop on different units, or who only

occasionally plant the insured crop. For example, if an insured has

three consecutive crop years of actual records on a unit: 1984, 1988,

and 1993, by using crop year as defined in the regulation, all three

actual yields will be retained in the database for the 1995 crop year.

If the crop is not planted in 1994, 100 percent of the T-Yield will be

used as the fourth yield when calculating the APH yield. The more years

of experience in the database, the more reliable a yield determination

can be made. Requiring only 10 consecutive calendar years of records

may result in a yield determination which does not adequately reflect

the farm history.

Comment: A comment was received recommending deleting the last

sentence of Sec. 400.51 (i) which states, ``If the insured is prevented

from planting all of his acreage in the county due to flood and does

not plant for harvest any other crop, FCIC will assign a yield for that

year.''

Response: FCIC agrees with this comment and has deleted the last

sentence accordingly.

8. Section 400.51(m) New Producer Definition

Comment: Several comments noted that the definition of new producer

is different in the rule than the definition implemented by the ad hoc

procedures for 1994 fall crop year. The definition in the procedures

defines a new producer as a ``person who has not been actively engaged

in farming for a share of the insured crop's production in the county

for more than two years.'' The rule defines the new producer as ``a

person who has not been actively engaged in farming for a share of a

crop for more than two years.'' The rule deals with individuals who are

new to farming while procedures deal with individuals who are new to

producing the crop they wish to insure. If the proposed definition of a

``new producer'' goes into effect, very few producers will qualify as a

new producer.

Response: FCIC agrees that this definition may be too restrictive.

For example, a producer who has never raised corn would NOT be

considered a ``new producer'' for corn if he or she has raised another

crop (wheat for example) for more than two crop years. Under the

proposed regulation this producer's insurance yield for corn would be

restricted to 65 percent of the T-Yield because records are not

available for corn. A producer who has no farming experience at all

would fare much better, because as a ``new producer'' he or she will

qualify for an insurance yield based on 100 percent of the T-Yield (for

all insured crops). After further evaluation, FCIC agrees that the

``new producer'' provisions should apply to new producers of an insured

crop regardless of their production of other crops.

9. Section 400.51 Definitions

Comment: Several comments recommended technical corrections of

definitions as follows:

1. Actual Yield and Production Report--reference is made to

``insurable acres for perennial crops'' instead of ``planted acres.''

2. Approved APH Yield--the database may not always contain four

consecutive crop years (actual yields). The definition needs clarity

that the total of the yields is divided by the number of years with

yields. (Also see comments to definition of ``Crop Year.'')

3. Assigned Yield--suggest changing ``considered'' to ``handled in

the same manner as.''

4. Master Yield--indicate its availability is limited to certain

crops and counties designated by FCIC.

5. Production Report--remove ``by us'' in the first sentence.

Rewrite to include the possibility that production may be reported for

more than the one (most recent) crop year.

Response: FCIC agrees with these comments and has revised the

definitions accordingly.

10. Section 400.52 Reporting and Record Requirements

Comment: One comment suggested that the language in

Sec. 400.52(b)(1), regarding inaccurate reporting or failure to retain

acceptable records, be changed from ``may result'' or ``may be'' to

``shall be'' to eliminate any implicit option. The penalty for not

having or retaining acceptable records should be the combining of farm

units and the recalculation of the APH yield.

Response: Basic farm units must be provided irrespective of APH

records. Optional farm units are a further subdivision of basic units

and must meet separate record requirements stated in the crop policy to

qualify as separate optional units. Recalculation of the APH yield will

not always result in a lower APH yield. However, if inaccurately

reported or acceptable records are not retained for either basic or

optional units, APH yields will be recalculated. FCIC has made changes

to the regulation to address this concern that are consistent with the

crop insurance policies.

Comment: Section 400.52(b)(4)--This provision states that the

policy may be canceled and subject to false claims penalties if the

production history is not accurate. Section 400.52 (a)(3) indicates it

is acceptable not to provide complete production reports since assigned

yields are an acceptable means to maintain continuity of yield data on

file. A comment suggested that Sec. 400.52 (a)(3) and (b)(4) are in

conflict with Sec. 400.52(b)(1).

Response: FCIC does not agree that a conflict exists. However, FCIC

has clarified these provisions to more accurately reflect their intent.

Section 400.52(a)(3) allows FCIC to use previously reported production

history to calculate APH yields, if the insured does not file annual

production reports as required by the policy. Section 400.52(b)(1)

specifies that inaccurate reporting or failure to maintain acceptable

supporting records will result in the combining of optional units and

recalculation of the APH yield. Section 400.52(b)(4) is a separate

action that may be taken if an insured misrepresents or fraudulently

reports APH information.

11. Section 400.53 Submission and Accuracy of Production Reports

Comment: One comment suggested deleting Sec. 400.53(e) since it

essentially duplicates the provisions of Sec. 400.53(a).

Response: FCIC agrees with this comment and has changed the

provision accordingly.

12. Section 400.54 Qualification for Actual Production History

Coverage Program

Comment: Section 400.54(a)--One comment suggested that the first

sentence be revised because production reports for the four most recent

crop years are not required to qualify for APH. The comment also

suggested revising the last sentence because of the possibility of zero

planted years. The comment suggested employing ``. . . will occur in

the database when there are less than four actual/assigned yields in

the database.''

Response: FCIC agrees with these suggestions and has made the

appropriate changes.

Comment: One comment noted that in Sec. 400.54(a) the term ``will

be updated'' suggests that production reports are mandatory each

subsequent crop year. The comment suggested that the regulation address

the possibility that coverage may be based on 65 percent of the T/D

yield without yearly production reports.

A comment also stated that records are not mandatory, as indicated

in Sec. 400.54(b), and that insureds may have approved APH yields based

on 65 percent of the T/D-Yield if acceptable records are not available

or not provided. The comment also stated that yields from claims will

not be used (as indicated in Sec. 400.51(n)), if an insured elects not

to provide records and have the APH yield based on 65 percent of the T/

D Yield (also applies to Sec. 400.54(d)).

Response: FCIC implemented procedures for modified APH for the 1994

crop year intending to allow producers the option of basing production

guarantees on 65 percent of the T-Yield without requiring records. Not

requiring records in subsequent crop years had been criticized because

the use of loss records is perceived to be mandatory for APH purposes.

It is also viewed as not encouraging insureds to provide records.

FCIC agrees that use of loss records should be required for APH

purposes. Actual yields determined from claims for indemnities will be

used when calculating APH yields for the 1995 and succeeding crop

years. Calculation of APH yields based on 65 percent of the T-Yield

without records will be allowed only for the initial crop year of

insurance. Records will be required for subsequent crop years.

Comment: Section 400.54(d)--One comment suggested deleting the

phrase ``to compute an approved APH yield'' because it is not required

to have an actual yield for the most recent crop year to calculate an

approved APH yield. The comment also suggested deleting the phrase ``at

discretion of FCIC.''

Response: FCIC does not agree with the suggestion to delete ``to

compute an approved APH yield'' because the phrase relates to providing

actual yields (production records) in order to qualify for optional

units. However, the language has been clarified to reflect this intent.

FCIC does not agree that ``at discretion of FCIC'' should be

removed. This provision allows FCIC a degree of flexibility concerning

the impact of loss records (e.g., FCIC may need to lessen the impact a

loss record has on APH yields for a catastrophic year).

Comment: Secion 400.54(e)--One comment suggested deleting

provisions (1), (2), and (3), because the provisions are more

applicable to procedures. If not deleted, the comment suggested

inclusion of the definition ``FCIC RSO Determined Yield'' and

clarification that provisions (1), (2), and (3) apply only to category

C perennial crops, not just item (3). The comment further suggested

deleting any reference to T-yield tables in (1).

Response: FCIC does not agree that Sec. 400.54(e) (1), (2), and (3)

of the rule should be deleted. These provisions allow additional

flexibility for those situations listed. For example, T-Yields are not

published for all crops or for all counties. Therefore, the rule must

allow an alternative method to calculate approved APH yields when T-

Yields are not available. For this reason, the reference to T-Yields

should not be deleted. These provisions allow FCIC to continue APH

procedures implemented for the 1994 crop year that are consistent with

procedures used in previous crop years. The term ``FCIC RSO Determined

Yield'' is not used in the rule, so consequently, the term need not be

defined.

Comment: Section 400.54(g)--One comment suggested the following

rewrite of the last sentence to improve clarity: ``Master Yields are

based on production history from all acreage of the crop in which the

insured has an interest in the county.'' Another comment noted that the

rule consistently requires that the producer provide four years of

records in order to qualify for a Master Yield. This requirement has

hampered new sales of crop insurance which use the Master Yield

concept. Master Yields may vary drastically between landlord and tenant

on the same piece of ground due to the fact that a producer's yield is

calculated using records from all farms. The comment suggested that

FCIC work with the industry to resolve these problems.

Response: FCIC agrees with these comments and has made the

necessary changes. Regarding the concerns about Master Yields, FCIC

will not change the four-year record requirement because APH is also

available on Master Yield crops. FCIC also will base Master Yields on

the operator's records. By calculating Master Yields from the

operator's records, the same APH yield will be provided for both the

landlord and tenant. FCIC has implemented the Master Yield changes for

the 1994 crop year.

Comment: Section 400.54(h)--One comment suggested that the phrase

``whether continuous or not'' was misleading, considering the previous

emphasis on maintaining continuity of production reports. The comment

further made the following observations. If entering a yield is

intended to allow use of history prior to the break in continuity of

production reports, it should be so clarified. If intended to allow

prior history regardless of a break in continuity of insurance,

entering a yield will impose major difficulties. In conjunction with

the revision in crop year definition, this could require companies to

maintain yield history indefinitely. For example, a farmer many have

had a policy five years ago but production history may have to go back

30 or 40 calendar years to accumulate 10 crop years of actual yields.

Response: This provision does not affect the continuity

requirements applicable to annual production reports provided by the

insured. However, it does allow FCIC to use production history on file

prior to a break in continuity of insurance coverage. FCIC reserves the

latitude of implementing this provision by issuing procedures outlining

records identification (tracking) methods to correctly assign such

production. FCIC recently implemented a policyholder tracking system

based on social security/employee identification numbers and may

implement this provision in the future. Use of this procedure keeps an

insured who may have had a low APH yield from canceling insurance for

one year in order to achieve a fresh start, and thus, gain a higher

yield.

List of Subjects in 7 CFR Part 400

Actual Production History Coverage Plan, Crop Insurance.

Final Rule

Accordingly, pursuant to the authority contained in the Federal

Crop Insurance Act, as amended by the Omnibus Budget Reconciliation Act

of 1993, the Federal Crop Insurance Corporation hereby amends 7 CFR

part 400 by adding a new subpart to read as follows:

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

Subpart G--Actual Production History

Sec.

400.51 Availability of actual production history program.

400.52 Definitions.

400.53 Yield certification and acceptability.

400.54 Submission and accuracy of production reports.

400.55 Qualifications for actual production history coverage

program.

400.56 Administrative appeal exhaustion.

400.57 OMB control numbers.

Subpart G--Actual Production History

Authority: 7 U.S.C. 1506, 1516.

Sec. 400.51 Availability of actual production history program.

An Actual Production History (APH) Coverage Program is offered

under the provisions contained in the following regulations:

7 CFR 401.110--Almond Endorsement

7 CFR part 405--Apple Crop Insurance

7 CFR 401.118--Canning and Processing Bean Endorsement

7 CFR part 409--Arizona-California Citrus Crop Insurance

7 CFR 401.127--Cranberry Endorsement

7 CFR part 433--Dry Beans Crop Insurance

7 CFR 401.116--Flaxseed Endorsement

7 CFR part 415--Forage Production Corp Insurance

7 CFR 401.130--Grape Endorsement

7 CFR part 455--Macadamia Nut Crop Insurance

7 CFR 401.126--Onion Endorsement

7 CFR part 447--Popcorn Crop Insurance

7 CFR part 403--Peach Crop Insurance

7 CFR 401.140--Pear Endorsement

7 CFR part 416--Pea Crop Insurance

7 CFR 401.146--Fresh Plum Endorsement

7 CFR part 422--Potato Crop Insurance

7 CFR part 450--Prune Crop Insurance

7 CFR 401.123--Safflower Seed Endorsement

7 CFR 401.133--Sugarcane Endorsement

7 CFR part 430--Sugar Beet Crop Insurance

7 CFR 401.124--Sunflower Seed Endorsement

7 CFR part 437--Sweet Corn Crop Insurance

7 CFR part 441--Table Grape Crop Insurance

7 CFR 401.129--Guaranteed Tobacco Endorsement

7 CFR 401.114--Canning and Processing Tomato Endorsement

7 CFR part 454--Guaranteed Production Plan of Fresh Market Tomato

7 CFR part 446--Walnut Crop Insurance

7 CFR part 457--Common Crop Insurance Regulations; and all special

provisions thereto unless specifically excluded by the special

provisions.

The APH program operates within limits prescribed by, and in

accordance with, the provisions of the Federal Crop Insurance Act, as

amended (7 U.S.C. 1501 et seq.), only on those crops identified in this

section in those areas where the Actuarial Table provides coverage.

Except when in conflict with this subpart, all provisions of the

applicable crop insurance contract for these crops apply.

Sec. 400.52 Definitions.

In addition to the definitions contained in the crop insurance

contract, the following definitions apply for the purposes of the APH

Coverage Program:

(a) APH--Actual Production History.

(b) Actual yield--The yield per acre for a crop year calculated

from the production records or claims for indemnities. The actual yield

is determined by dividing total production (which includes harvested

and appraised production) by planted acres for annual crops or by

insurable acres for perennial crops.

(c) Adjusted yield--The transitional or determined yield reduced by

the applicable percentage for lack of records. The adjusted yield will

equal 65 percent of the transitional or determined yield, if no

producer records are submitted; 80 percent, if records for one year are

submitted; and 90 percent, if two years of records are submitted.

(d) Appraised production--Production determined by the Agricultural

Stabilization and Conservation Service (ASCS), the FCIC, or a company

reinsured by the FCIC, that was unharvested but which reflected the

crop's yield potential at the time of the appraisal. For the purpose of

APH ``appraised production'' specifically excludes production lost due

to uninsurable causes.

(e) Approved APH yield--A yield, calculated and approved by the

verifier, used to determine the production guarantee and determined by

the sum of the yearly actual, assigned, and adjusted or unadjusted

transitional or determined yields divided by the number of yields

contained in the database. The database may contain up to 10

consecutive crop years of actual and or assigned yields. At least four

yields will always exist in the database.

(f) Assigned yield--A yield assigned by FCIC in accordance with the

crop insurance contract, if the insured does not file production

reports as required by the crop insurance contract. Assigned yields are

used in the same manner as actual yields when calculating APH yields

except for purposes of the Nonstandard Classification System (NCS).

(g) Base period--Ten consecutive crop years (except peaches, which

have a five-year base period) immediately preceding the crop year

defined in the insurance contract for which the approved APH yield is

being established (except for sugarcane, which begins the calendar year

preceding the immediate previous crop year defined in the insurance

contract).

(h) Continuous production reports--Reports submitted by a producer

for each crop year that the unit was planted to the crop and for the

most recent crop year in the base period.

(i) Crop year--Defined in the crop insurance contract, however, for

APH purposes the term does not include any year when the crop was not

planted or when the crop was prevented from being planted by an

insurable cause. For example, if an insured plants acreage in a county

to wheat one year, that year is a crop year in accordance with the

policy definition. If the land is summerfallowed the next calendar

year, that calendar year is not a crop year for the purpose of APH.

(j) Database--A minimum of four years up to a maximum of ten crop

years of production data used to calculate the approved APH yield.

(k) Determined yield (D-yield)--An estimated year for certain

crops, which can be determined by multiplying an average yield for the

crop (attained by using data available from The National Agricultural

Statistics Service (NASS) or comparable sources) by a percentage

established by the FCIC for each county.

(l) Master yields--Approved APH yields, for certain crops and

counties as initially designated by the FCIC, based on a minimum of

four crop years of production records for a crop within a county.

(m) New producer--A person who has not been actively engaged in

farming for a share of the production of the insured crop for more than

two crop years.

(n) Production report--A written record showing the insured crop's

annual production and used to determine the insured's yield for

insurance purposes. The report contains yield history by unit, if

applicable, including planted acreage for annual crops, insurable

acreage for perennial crops, and harvested and appraised production for

the previous crop years. This report must be supported by written

verifiable records, measurement of farm stored production, or by other

records of production approved by FCIC on an individual basis.

Information contained in a claim for indemnity is considered a

production report for the crop year for which the claim was filed.

(o) Production Reporting Date (PRD)--The PRD is contained in the

crop insurance contract and is the last date production reports will be

accepted for inclusion in the database for the current crop year.

(p) Transitional yield (T-Yield)--An estimated yield, for certain

crops, generally determined by multiplying the ASCS program yield by a

percentage determined by the FCIC for each county and provided on the

actuarial table to be used in the APH yield calculation process when

less than four consecutive crop years of actual or assigned yields are

available.

(q) Verifiable records--Contemporaneous records of acreage and

production provided by the insured, which may be verified by FCIC

through an independent source, and which are used to substantiate the

acreage and production that have been reported on the production

report.

(r) Verifier--A person authorized by the FCIC to calculate approved

APH yields.

(s) Yield variance tables--Tables for certain crops that indicate

unacceptable yield variations and yield trends which will require

determination of the APH yield by the FCIC.

Sec. 400.53 Yield certification and acceptability.

(a) Production reports must be provided to the crop insurance agent

no later than the production reporting date for the crop insured.

(1) Production reports must provide an accurate account of planted

acreage for annual crops or insurable acres for perennial crops, as

well as harvested and appraised production by unit.

(2) The insured must certify the accuracy of the information.

(3) Production reported for more than one crop year must be

continuous. A year in which no acreage was planted to the crop on a

unit or no acreage was planted to a practice, type, or variety

requiring an APH yield will not be considered a break in continuity.

Assigned yields, at the discretion of the FCIC, may be used to maintain

continuity of yield data of file. Production on uninsured (for those

years a crop insurance policy under the Federal Crop Insurance Act is

in effect) or uninsurable acreage (for other years of the period) will

not be used to determine APH yield unless production from such acreage

is commingled with production from insured or insurable acreage.

(b) Production reports and supporting records are subject to audit

or review to verify the accuracy of the information certified.

Production and supporting records may be reviewed and verified if a

claim for indemnity is submitted on the insured crop. The reported

yield is subject to revision, if needed, so that the claim conforms to

the records submitted at that time.

(1) Inaccurate production reports or failure to retain acceptable

records shall result in the verifier combining optional farm units and

recomputing the approved APH yield. These actions shall be taken at any

time after reporting or record discrepancies are identified and may

result in reduction of the approved APH yield for any calendar year.

(2) Records must be provided by the insured at the time of an

audit, review, or as otherwise requested, to verify that the acreage

and production certified are accurate. Records of any other person

having shares in the insured crop, which are used by the insured to

establish the approved APH yield, must also be provided upon request.

(3) In the event acreage or production data certified by two or

more persons sharing in the crop on the same acreage is different, the

verifier shall, at the verifier's discretion, determine which acreage

and production data, if any, will be used to determine the approved APH

yield. If the correct acreage and production cannot be determined, the

data submitted will be considered unacceptable by the verifier for APH

purposes.

(4) Failure of the producer to report acreage and production

completely and accurately may result in voidance of the crop insurance

contract, as well as criminal or civil false claims penalties pursuant

to applicable Federal criminal or civil statutes.

Sec. 400.54 Submission and accuracy of production reports.

(a) The insured is solely responsible for the timely submission and

certification of accurate, complete production reports to the agent.

Production reports must be provided for all planted units.

(b) Records may be requested by the FCIC, or an insurance company

reinsured by the FCIC, or by anyone acting on behalf of the FCIC or the

insurance company. The insured must provide such records upon request.

(c) The agent will explain the APH Program to insureds and

prospective insureds. When necessary, the agent will assist the insured

in preparation of production reports. The agent will determine the

adjusted or unadjusted transitional or determined yields in accordance

with Sec. 400.54(b). The agent will review the production reports and

forward them to the verifier, along with any requested and required

supporting records for determination of an approved APH yield.

(d) The verifier will determine if the certified production reports

are acceptable and calculate the approved APH yield.

Sec. 400.55 Qualification for actual production history coverage

program.

(a) The approved APH yield is calculated from a database containing

a minimum of four yields and will be updated each subsequent crop year.

The database may contain a maximum of the 10 most recent crop years and

may include actual, assigned, and adjusted or unadjusted T or D-Yields.

T or D-Yields, adjusted or unadjusted, will only occur in the database

when there are less than four years of actual and/or assigned yields.

(b) The insured may be required to provide production records to

determine the approved APH yield, if production records for the most

recent crop year are available. If acceptable records of actual

production are provided, the records must be continuous and contain at

least the most recent crop year's actual yield.

(1) If no acceptable production records are available, the approved

APH yield is the adjusted T or D-Yield (65 percent of T or D-Yield).

(2) If acceptable production records containing information for

only the most recent crop year are provided, the three T or D-Yields

adjusted by 80 percent will be used to complete the minimum database

and calculate the approved APH yield.

(3) If acceptable production records containing information for

only the two most recent crop years are provided, the two T or D-Yields

adjusted by 90 percent and the two actual yields will be used to

complete the database and calculate the approved APH yield.

(4) If acceptable production records containing information for

only the three most recent crop years are provided, the three actual

yields and one unadjusted T or D-Yield are used to complete the

database and calculate the approved APH yield.

(5) When the database contains four or more (up to ten) continuous

actual yields, the approved APH yield is a simple average of the actual

yields.

(6) New producers may have their approved APH yields based on

unadjusted T or D-Yields or a combination of actual and unadjusted T or

D-Yields.

(7) Producers who add land or new practice, types and varieties to

their farming operations and who do not have available records for the

added land, practice, types or varieties may have approved APH yields

for the added land, practice, types or varieties that are based on

adjusted or unadjusted T or D-Yields as determined by FCIC.

(8) If the producer's crop is destroyed or if it produces a low

actual yield due to insured causes of loss, the resulting average yield

may qualify for catastrophic yield adjustment according to FCIC

guidelines. APH yields qualifying for catastrophic yield adjustment may

be adjusted to mitigate the effect of catastrophic years. Premium rates

for approved APH yields, which are adjusted for catastrophic years, may

be based on the producer's APH average yield prior to the catastrophic

adjustment or such other basis as determined appropriate by FCIC.

(c) If no insurable acreage of the insured crop is planted for a

year, a production report indicating zero planted acreage will maintain

the continuity of production reports for APH record purposes and that

calendar year will not be included in the APH yield calculations.

(d) Actual yields calculated from the claim for indemnity will be

entered in the database. The resulting average yield will be used to

determine the premium rate and approved APH yield, at the discretion of

FCIC.

(e) Optional units are not available to an insured who does not

provide acceptable production reports for at least the most recent crop

year with which to calculate an approved APH yield.

(f) FCIC may determine approved APH yields for designated crops in

the following situations:

(1) If less than four years of yield history is certified and T or

D-Yields are not provided in the actuarial documents,

(2) If actual yield exceed tolerances specified in yield variance

tables, and

(3) For perennial crops:

(i) If significant upward or downward yield trends are indicated;

(ii) If tree or vine damage, or cultural practices will reduce the

production level;

(iii) if more than two percent of the trees or vines have been

removed within the last two years; or

(iv) If yield trends are evident and yields greater than the

average yield are requested by the insured.

(g) APH yields will not be approved the first insurance year on

perennial crops until an inspection acceptable to FCIC has been

performed and the acreage is accepted for insurance purposes in

accordance with the crop insurance contract.

(h) APH Master Yields may be established whenever crop rotation

requirements and land leasing practices limit the yield history

available. FCIC will establish crops and locations for which Master

Yields are available. To qualify, the producer must have at least four

recent continuous crop years' annual production reports and must

certify the authenticity of the production reports of the insured crop.

Master Yields are based on acreage and production history from all

acreage of the insured crop in the county in which the operator has

shared in the crop's production.

(i) FCIC may use any production report available under the

provisions of any crop insurance contract, whether continuous or not,

involving the interests of the person's insured crops in determining

the approved APH yield.

Sec. 400.56 Administrative appeal exhaustion.

The insured may appeal the approved APH yield in accordance with

the procedures contained in 7 CFR part 400, subpart J. Administrative

remedies through the appeal process must be exhausted prior to any

action for judicial review. The approved APH yield determined as a

result of the appeal process will be the yield applicable to the crop

year.

Sec. 400.57 OMB control numbers.

OMB control numbers are contained in 7 CFR part 400, subpart H.

Done in Washington, D.C., on September 8, 1994.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 94-23035 Filed 9-16-94; 8:45 am]

BILLING CODE 3410-08-M