Common Crop Insurance Regulations; Cotton Crop Insurance Provisions

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

regulations for specific crop provisions to insure cotton. These

provisions will supplement the Common Crop Insurance Policy

(Sec. 457.8) which contains standard terms and conditions common to

most crops. The intended effect of this rule is to move specific crop

provisions for insuring cotton from the General Crop Insurance Policy

(Sec. 401.8) to the Common Crop Insurance Policy (Sec. 457.8) for ease

of use by the public and conformance among policy terms.

EFFECTIVE DATE: October 27, 1994.

FOR FURTHER INFORMATION CONTACT:

Mari L. Dunleavy, 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 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

March 1, 1999.

This rule has been determined to be ``not significant'' for

purposes of Executive Order 12866, and therefore has not reviewed by

the Office of Management and Budget (OMB).

In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.

3501 et seq.), the information collection or record-keeping

requirements included in this rule are found in 7 CFR part 400, subpart

H.

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

Federalism, that this rule 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 action will not have a significant impact on a substantial

number of small entities. The amount of work required of the insurance

companies delivering these policies will not increase from the amount

required to deliver previous policies. Therefore, this action is

determined to be exempt from the provisions of the Regulatory

Flexibility Act and no Regulatory Flexibility Analysis was prepared.

This program is listed in the Catalog of Federal Domestic

Assistance under No. 10.450.

This program is not subject to the provisions of Executive Order

12372 which requires 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.

The Office of the General Counsel has determined that these

regulations meet the applicable standards provided in subsections 2(a)

and 2(b)(2) of Executive Order 12788. 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 located

at 7 CFR part 400, subpart J must be exhausted before judicial action

may be brought.

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 nor an Environmental Impact

Statement is needed.

By separate rule, 7 CFR 401.119 will be amended to restrict the

crop years of application to those prior to the crop year for which

this rule will be effective. FCIC will terminate the provisions of the

present policy at the end of the crop year and remove and reserve the

cotton endorsement contained in 7 CFR 401.119.

On Tuesday, May 31, 1994, FCIC published a notice of proposed

rulemaking in the Federal Register at 59 FR 28022 proposing to revise

the Common Crop Insurance Regulations by adding new provisions for

cotton crop insurance.

Following publication of the proposed rule, the public was afforded

30 days to submit written comments, data, and opinions. The comments

received and FCIC responses are as follows:

Comment: Two comments suggested that the crop provisions should not

be implemented for the 1995 crop year because:

(1) Crop insurance reform will require many policy changes.

Implementation of these crop provisions should be tabled until reform

decisions are reached because impacts on policy terms are not yet

clear. Delaying common policy implementation until it can be

implemented in an orderly fashion should be beneficial to everyone

concerned; and

(2) The Common Crop Insurance Policy should be thoroughly reviewed

and revised as needed before any additional crop provisions are

implemented under it.

Response: Program changes necessary to comply with crop insurance

reform will have the same effects on either the existing cotton policy

or these Cotton Crop Provisions. Any necessary changes can be made to

the Cotton Crop Provisions as easily as they can be made to the

existing policy. FCIC has recently completed a review of the Common

Crop Insurance Policy Basic Provisions (Sec. 457.8). Any necessary

changes required to be made to the Basic Provisions as a result of

reform will be required whether or not the Cotton Crop Provisions have

been implemented. Therefore, FCIC does not find it necessary to delay

implementation for either of the reasons stated in the comments.

Comment: One comment questioned requirements contained in the

definition of ``Practical to replant.'' This definition indicated that

the replanted acreage must have the potential to produce at least

ninety percent (90%) of the production guarantee. The late planting

provisions provide production guarantees much lower than the ninety

percent (90%) potential requirement contained in the definition even

though the late planted and replanted crop may be planted at the same

time. The comment recommended removing the production potential

requirement from the definition of ``practical to replant.''

Response: FCIC agrees that the production potential required by the

definition of ``practical to replant'' and the production guarantee for

late planted acreage may be inconsistent depending on the time of

planting. Acreage initially planted twenty-five (25) days after the

final planting date would have a production guarantee equal to sixty

percent (60%) of the guarantee for timely planted acreage, while the

definition of ``practical to replant'' would require acreage replanted

at the same time to have a production potential equal to ninety percent

(90%) of the production guarantee. However, expected yield does have an

effect on whether it is practical to replant. The ninety percent (90%)

production potential requirement has been removed from the definition

of ``practical to replant.'' However, the expected yield must be

sufficient to cover production costs and must be at a level that

growers in the area would normally care for and harvest.

Comment: One comment recommended changing the term ``approved

yield'' to ``approved APH yield'' in the definition of ``Production

guarantee'' to correspond with terminology in underwriting procedure.

Response: Underwriting procedure contains several methods which may

be used to determine approved yields. These include the use of yields

which may not represent actual production history (APH). Using the term

``APH'' could be misleading to readers not familiar with administrative

procedures, and, therefore, will not be used in the crop insurance

policy.

Comment: Three comments disagreed with the definition of ``Written

agreement''. This definition required written agreements to be

requested at least 15 days prior to the sales closing date.

(1) One comment recommended keeping the current deadlines for

written agreements as specified in procedures. These procedures require

that requests be made not later than 15 days after the acreage

reporting date for most types of written agreements. Setting a deadline

15 days prior to the sales closing date will either force insureds to

submit requests for written agreements they may not need, or result in

uninsurable acreage if requests are not made for all possible

situations. Unnecessary requests will increase paperwork for the

insured, agent, FCIC Regional Service Office and company. The comment

also recommended deleting the last sentence of the definition, which

required written agreements to contain all variable terms including,

but not limited to, crop variety, guarantee, premium and price

election. The comment indicated it was not necessary to include this

information on every written agreement because many written agreements

do not alter these items.

(2) One comment recommended keeping the deadline of 15 days after

the acreage reporting date because there are many instances when it is

not known that a written agreement is necessary until the acreage is

reported. The comment stated that the change would be an unreasonable

requirement and would create difficulties since the sales closing dates

will be 30 days earlier than in prior years.

(3) One comment stated that it is hard to understand why the

written agreement deadline is 15 days prior to the time a producer has

to purchase coverage, and that a more appropriate date should be

established. The comment also stated that the sales closing dates are

not listed in the proposed crop provisions. If these are the same date

as the cancellation and termination date, the policy should so

indicate.

Response: The proposed definition was intended to require that

requests for written agreements be made far enough ahead of the sales

closing date to allow the insurer to make the offer, and for the

insured to accept the offer, by the sales closing date. Since the

insurance policy is a written contract, both parties must have a

meeting of the minds before the contract is valid. The terms and

conditions of the policy must be known by the final date for

establishing the insurance contract. In this program, the final date is

the sales closing date. FCIC has determined that some situations may

allow written agreements at other times. FCIC is preparing proposed

written agreement regulations which will specify when written

agreements must be completed. Until these regulations have been

published, the written agreement must be completed by the sales closing

date, or, in specific instances, a written agreement may be requested

or approved after the sales closing date if the crop is physically

inspected and a determination made that the crop has an expectancy of

making the guaranteed yield. No prevented planting liability will be

established as a result of any request submitted after the sales

closing date. FCIC does not agree that the final sentence should be

deleted. Specifying all variable terms in the written agreement is

necessary to assure a clear understanding of the terms in effect.

Although the sales closing dates normally will be the same as the

cancellation and termination dates this is not always the case.

Therefore, the sales closing dates will not be included in the crop

provisions. Federal regulations authorize the Manager of FCIC to extend

the sales closing date in any county upon the Manager's determination

that no adverse selection will result during the extended period. The

extended date is placed on file in the applicable service offices and a

notice is placed in the Federal Register. If the sales closing dates

were contained in the crop provisions, the crop provisions would need

to be amended each time a sales closing date is extended.

Comment: One comment stated that unit division language contained

in subsection 2.(b) should allow for situations in which the insured

creates a discernible break via some tillage operation. The proposed

provision states that the insured must plant the crop in a manner that

results in a clear and discernible break in the planting pattern at the

boundaries of each optional unit. There is no required method of

creating a boundary as long as a discernible break is provided.

Response: The intent of the policy language is to allow separate

optional units if acreage is farmed separately. Farming separately

includes planting separately and keeping separate records of inputs,

production, etc. Creating a boundary after the crop is planted by means

of a tillage operation along a section line may or may not meet the

policy requirement of planting the crop in a manner that results in a

clear and discernible break at the units boundary. FCIC believes the

present language clearly sets out the requirements for unit division.

Comment: Two comments were received regarding the changes in the

cancellation and termination dates.

(1) One comment stated the assumption that since cancellation and

termination dates were changed, that the sales closing dates will be

changed to align with the new cancellation and termination dates.

(2) One comment expressed the concern that an earlier cancellation

date would decrease the amount of time available for producers to make

decisions regarding their insurance coverage.

Response: The sales closing dates, as contained in the Special

Provisions, will be changed generally to be the same as, but no later

than, the new cancellation and termination dates. Earlier cancellation

and sales closing dates are intended to reduce the possibility that a

producer's decision to cancel or purchase insurance is based on

favorable or unfavorable growing conditions. FCIC expects this change

to have favorable impact on insurance experience. Favorable results

will be considered when calculating future premium rates.

Comment: One comment stated that section 6 (Insured Crop) indicates

that colored cotton will be insurable under the cotton crop provisions.

However, the introductory information in the Federal Register indicates

the FCIC Regional Service Offices will issue production guarantees for

colored cotton via written agreement until adequate actual production

history is available for individual policyholders. The comment

recommended that language to this effect be added to the policy, either

in section 3 of the crop provisions or in the special provisions. The

comment asked if the Crop Insurance Handbook will be revised to state

that insureds must keep production history separate for colored cotton,

what constitutes ``adequate production history,'' and what information

must be sent in with the request for a written agreement.

Response: FCIC's research indicates that the production potential

for some colored cottons is significantly less than white upland cotton

and that the value may be significantly higher. Insufficient data are

currently available to establish production guarantees, prices, quality

adjustment methods, etc. for colored cottons. Because data are

insufficient, FCIC believes that colored cotton should be insurable

only with a written agreement. Therefore, the provisions in section 6

(Insured Crop) have been changed accordingly. When requesting a written

agreement, the insured should submit any available production history,

the number of acres intended for planting in the current crop year, and

other information normally required when requesting insurance for an

uninsurable crop type. The Crop Insurance Handbook will be revised to

indicate specific requirements as soon as it is practical to do so.

Comment: Two comments were received regarding the elimination of

provisions that provided coverage while cotton stored in modules

remains in the field.

(1) One comment stated that changing the end of the insurance

period from ``removal from the field'' to ``harvest'' creates some

concerns which need to be addressed. Specifically, the comment asks how

quality will be accurately determined for cotton stored in modules when

the modules may be stored in the field for a significant period of

time?

(2) One comment opposed the removal of coverage for modules stored

in the field. The comment stated that: (a) Large amounts of cotton are

stored in modules and that the practice allows for timely and efficient

harvest of the crop; (b) losses do not occur frequently once cotton is

moduled, but there is some risk of weather-related loss until the

modules are removed from the field; and (c) continuing the practice of

insurance coverage until removal from the field would be consistent

with recent ad hoc disaster rulings that deemed weather-damaged, field

stored modules eligible for assistance.

Response: Upon further review, FCIC has determined that coverage

for modules stored in the field should be provided. Approximately

seventy percent (70%) of the U.S. crop is stored in modules until

ginning can take place, and cotton stored in modules is not as

susceptible to loss as cotton remaining on the stalk. The provisions in

section 8 (Insurance Period) have been revised accordingly.

Comment: One comment recommended either revising or deleting

provisions that allow the insured to leave representative samples if

they disagree with the insurer's appraisal. In the event the provision

cannot be deleted, the comment recommended changing the provision so

that the insurer can decide when using representative samples is

appropriate. In many situations, samples are more susceptible to loss

and do not accurately represent what the entire unit would have

produced.

Response: FCIC agrees that there are situations in which it may not

be reasonable to leave representative strips from which production to

count would ultimately be determined. The samples could be more

vulnerable to damage than an entire field, or the insurer may be

confident that the appraisal made accurately reflects production

potential. However, the entire provision should not be removed. The

provision has been changed to allow the insurer to determine those

situations in which it is reasonable to leave representative samples to

determine the amount of production to be counted. In cases where it is

necessary to defer determinations the insured must be advised how

production to count will ultimately be determined and the consequences

of failure to leave or care for the samples.

Comment: One comment recommended that language in subsection 12.(b)

be changed to require only one notice for prevented planting acreage

rather than requiring notice three days after the final planting date

and three days after the date the insured stops planting within the

late planting period.

Response: The crop provisions provide two distinct periods during

which the insured may be prevented from planting (i.e., by the final

planting date and during the late planting period). The notice

requirement allows the insurer the opportunity to verify that the

acreage could not have been planted during such periods. FCIC agrees

that an insured should only be required to give one notice if it is

sufficient to cover all acreage for prevented planting purposes.

Subsection 12.(b) has been modified to clarify that written notice must

be given not later than three days after the final planting date for

acreage the insured was prevented from planting by the final planting

date, and not later than three days after the date the insured

discovers that planting will not be possible if the insured was not

prevented from planting such acreage by the final planting date but was

prevented from planting such acreage during the late planting period.

Comment: One comment indicated that the proposed provisions in

paragraph 12.(d)(3) will allow an insured to request a written

agreement for prevented planting coverage for acreage exceeding the

policy limitations, and to subsequently enroll in a USDA program that

allows less acreage to be planted. The comment recommended revising the

paragraph to limit eligible acreage to the amount allowed by any

applicable USDA program, regardless of when the insured enrolls in such

program or any previously approved written agreement.

Response: FCIC agrees that, if the farm is enrolled in an USDA

program that limits the number of acres planted, acreage in excess of

the amount allowed under an USDA program should not be eligible for

prevented planting coverage. Paragraph 12.(d)(3) has been amended

accordingly.

Comment: One comment recommended that language be added to

paragraph 12.(d)(3) to allow prevented planting coverage by written

agreement for acreage added to the insured's farming operation after

the sales closing date.

Response: The insurance period for prevented planting coverage

begins on the sales closing date. Allowing additional coverage to

attach after the beginning of this period would likely result in

coverage being requested primarily when conditions are favorable for a

prevented planting indemnity. This adverse selection should be avoided

to help maintain an actuarially sound program and to keep premium rates

from rising to cover such losses. The definition of ``written

agreement'' has been amended to specifically disallow any prevented

planting liability as a result of any request submitted after the sales

closing date.

In addition to the changes indicated in the responses to comments,

FCIC has determined that:

1. The definition of skip-row should reference United States

Department of Agriculture qualification requirements for skip-row

patterns. These requirements are used to determine the land area that

is considered to be planted to cotton.

2. Provisions in section 6 (Insured Crop) are modified to allow

coverage on crops planted into an established grass or legume in

certain instances. The increased emphasis on Highly Erodible Land

Conservation had made conservation tillage and no-till more acceptable.

3. New small grain and cotton varieties that mature earlier than

previously available varieties make ``double cropping'' more practical.

However, in areas where soil moisture may be depleted by the first crop

planted, this practice may not be feasible or may result in

significantly more risk to the insurer. To allow insurance for this

practice, yet limit the insurer's vulnerability in areas where ``double

cropping'' may not be practical, section 6 of the crop provisions have

been modified to allow insurance for ``double cropped'' cotton only if

allowed by a written agreement or the Special Provisions.

Accordingly, the rule, ``Common Crop Insurance Regulations; Cotton

Crop Insurance Provisions'' published at 59 FR 28022 as revised as set

out below is hereby adopted as final rule.

List of Subjects in 7 CFR Part 457

Crop Insurance; Cotton.

Final Rule

Accordingly, pursuant to the authority contained in the Federal

Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.), the Federal

Crop Insurance Corporation hereby amends the Common Crop Insurance

Regulations (7 CFR part 457), effective for the 1995 and succeeding

crop years, in the following instances:

PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE

1994 AND SUBSEQUENT CONTRACT YEARS

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

follows:

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

2. 7 CFR part 457 is amended by revising the heading as set forth

above and by adding Sec. 457.104 Cotton Crop Provisions to read as

follows:

Sec. 457.104 Cotton Crop Insurance Provisions.

The Cotton Crop Insurance Provisions for the 1995 and succeeding

crop years are as follows:

UNITED STATES DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

Cotton Crop Provisions

If a conflict exists among the Common Crop Insurance Policy

(Sec. 457.8), these crop provisions, and the Special Provisions, the

Special Provisions will control these crop provisions and the common

policy and these crop provisions will control the common policy.

1. Definitions

(a) Cotton--Varieties identified as American Upland Cotton.

(b) Days--Calendar days.

(c) Final planting date--The date contained in the Special

Provisions for the insured crop by which the crop must initially be

planted in order to be insured for the full production guarantee.

(d) Good farming practices--The cultural practices generally in

use in the county for the insured crop to make normal progress

toward maturity and produce at least the yield used to determine the

production guarantee and are those recognized by Cooperative

Extension Service as compatible with agronomic and weather

conditions in the area.

(e) Growth area--A geographic area designated by the Secretary

of Agriculture for the purpose of reporting cotton prices.

(f) Harvest--The removal of the seed cotton from the open cotton

boll, or the severance of the open cotton boll from the stalk by

either manual or mechanical means.

(g) Interplanted--Acreage on which two or more crops are planted

in a manner that does not permit separate agronomic maintenance or

harvest of the insured crop.

(h) Irrigated practice--A method of producing a crop by which

water is artificially applied during the growing season by

appropriate systems, and at the proper times, with the intention of

providing the quantity of water needed to produce at least the yield

used to establish the irrigated production guarantee on the

irrigated acreage planted to the insured crop.

(i) Late planted--Acreage planted to cotton during the late

planting period.

(j) Late planting period--The period that begins the day after

the final planting date for the insured crop and ends twenty-five

(25) days after the final planting date.

(k) Mature cotton--Cotton that can be harvested either manually

or mechanically.

(l) Planted acreage--Land in which seed has been placed by a

machine appropriate for the insured crop and planting method, at the

correct depth, into a seedbed which has been properly prepared for

the planting method and production practice. Cotton must be planted

in rows to be considered planted. Planting in any other manner will

be considered as a failure to follow recognized good farming

practices and any loss of production will not be insured unless

otherwise provided by the special provisions or by written agreement

to insure such crop. The yield conversion factor normally applied to

non-irrigated skip-row cotton acreage will not be used if the land

between the rows of cotton is planted to any crop.

(m) Practical to replant--In lieu of subsection 1.(ff) of the

Common Crop Insurance Policy (Sec. 457.8) practical to replant is

defined as our determination, after loss or damage to the insured

crop, based on factors including, but not limited to moisture

availability, condition of the field, and time to crop maturity,

that replanting to the insured crop will allow the crop to attain

maturity prior to the calendar date for the end of the insurance

period. It will not be considered practical to replant after the end

of the late planting period unless replanting is generally occurring

in the area.

(n) Prevented planting--Inability to plant the insured crop with

proper equipment by:

(1) The final planting date designated in the Special Provisions

for the insured crop in the county; or

(2) The end of the late planting period.

You must have been unable to plant the insured crop due to an

insured cause of loss that has prevented most producers in the

surrounding area from planting due to similar insurable causes. The

insured cause of prevented planting must occur between the sales

closing date and the final planting date for the insured crop in the

county or within the late planting period.

(o) Production guarantee--The number of pounds determined by

multiplying the approved yield per acre by any applicable yield

conversion factor for non-irrigated skip-row planting patterns, and

multiplying the result by the coverage level percentage you elect.

(p) Replanting--Performing the cultural practices necessary to

replace the cotton seed, and replacing the seed in the insured

acreage with the expectation of growing a successful crop.

(q) Skip-row--A planting pattern that:

(1) Consists of alternating rows of cotton and fallow land or

land planted to another crop the previous fall; and

(2) Qualifies as a skip-row planting pattern as defined by the

ASCS or successor agency.

(r) Timely planted--Planted on or before the final planting date

designated in the Special Provisions for the insured crop in the

county.

(s) Written agreement--Designated terms of this policy may be

altered by written agreement. Each agreement must be applied for by

the insured in writing no later than the sales closing date and is

valid for one year only. If not specifically renewed the following

year, continuous insurance will be in accordance with the printed

policy. All variable terms including, but not limited to, crop

variety, guarantee, premium rate and price election must be set out

in the written agreement. In specific instances a written agreement

may be applied for after the sales closing date and approved if,

after a physical inspection of the acreage, there is a determination

that the crop has the expectancy of making at least the guaranteed

yield. However, no prevented planting liability will be established

as a result of any request submitted after the sales closing date.

All applications for written agreements as submitted by the insured

must contain all variable terms of the contract between the company

and the insured that will be in effect if the written agreement is

disapproved.

2. Unit Division

Unless limited by the Special Provisions, a unit as defined in

subsection 1.(tt) of the Common Crop Insurance Policy (Sec. 457.8),

may be divided into optional units if, for each optional unit you

meet all the conditions of this section or if a written agreement to

such division exists. All optional units must be reflected on the

acreage report for each crop year.

(a) You must have records, which can be independently verified,

of planted acreage and production for each optional unit for at

least the last crop year used to determine your production

guarantee.

(b) You must plan the crop in a manner that results in a clear

and discernable break in the planting pattern at the boundaries of

each optional unit.

(c) You must have records of measurement of stored or marketed

production from each optional unit maintained in such a manner that

we can verify the production from each optional unit or the

production from each optional unit must be kept separate until after

loss adjustment under the policy is completed.

(d) Each optional unit must meet one or more of the following

criteria as applicable;

(1) Optional Units by Section, Section Equivalent, or ASCS Farm

Serial Number: Optional units may be established if each optional

unit is located in a separate legally identified Section. In the

absence of Sections, we may consider parcels of land legally

identified by other methods of measure including, but not limited

to: Spanish grants, railroad surveys, leagues, labors, or Virginia

Military Lands an equivalent of Sections for unit purposes. In areas

which have not been surveyed using the systems identified above, or

another system approved by us, or in areas where such systems exist

but boundaries are not readily discernable, each optional unit must

be located in a separate farm identified by a single ASCS Farm

Serial Number.

(2) Optional Units on Acreage Including Both Irrigated and Non-

irrigated Practices: In addition to or instead of establishing

optional units by Section, section equivalent, or ASCS Farm Serial

Number, optional units may be based or irrigated acreage or non-

irrigated acreage if both are located in the same Section, section

equivalent, or ASCS Farm Serial Number. The irrigated acreage may

not extend beyond the point at which your irrigation system can

deliver the quantity of water needed to produce the yield on which

your guarantee is based and you may not continue into non-irrigated

acreage in the same rows or planting pattern. You must plant,

cultivate, fertilize, or otherwise care for the irrigated acreage in

accordance with recognized good irrigated farming practices.

Basic units may not be divided into optional units on any basis

including, but not limited to: Production practice, type, variety,

or planting period, other than as described above. If you do not

comply fully with these provisions, we will combine all optional

units which are not in compliance with these provisions into the

unit from which they were formed. We may combine the optional units

at any time we discover that you have failed to comply with these

provisions. If failure to comply with these provisions on all

optional units is determined to be inadvertent, and the optional

units are combined, premium paid for the purpose of electing

optional units will be refunded to you.

3. Insurance Guarantees, Coverage Levels, and Prices for Determining

Indemnities

In addition to the requirements of section 3 (Insurance

Guarantees, Coverage Levels, and Prices for Determining Indemnities)

of the Common Crop Insurance Policy (Sec. 457.8), you may select

only one price election for all cotton in the county insured under

this policy.

4. Contract Changes

The contract change date is November 30 preceding the

cancellation date (see the provisions of section 4 (Contract

Changes) of the Common Crop Insurance Policy (Sec. 457.8)).

5. Cancellation and Termination Dates

In accordance with subsection 2. (f) of the Common Crop

Insurance Policy (Sec. 457.8), the cancellation and termination

dates are:

------------------------------------------------------------------------

Cancellation and

State and county termination

dates

------------------------------------------------------------------------

Val Verde, Edwards, Kerr, Kendall, Bexar, Wilson, February 15

Karnes, Goliad, Victoria, and Jackson Counties,

Texas, and all Texas counties lying south thereof.

Alabama; Arizona; Arkansas; California; Florida; February 28

Georgia; Louisiana; Mississippi; Nevada; North

Carolina; South Carolina; El Paso, Hudspeth,

Culberson, Reeves, Loving, Winkler, Ector, Upton,

Reagon, Sterling, Coke, Tom Green, Concho, McCulloch,

San Saba, Mills, Hamilton, Bosque, Johnson, Tarrant,

Wise, and Cooke Counties, Texas, and all Texas

counties lying south and east thereof to and

including Terrell, Crocket, Sutton, Kimble,

Gillespie, Blanco, Comal, Guadalupe, Gonzales, De

Witt, Lavaca, Colorado, Wharton, and Matagorda

Counties, Texas.

All other Texas counties and all other states......... March 15

------------------------------------------------------------------------

6. Insured Crop

In accordance with section 8 (Insured Crop) of the Common Crop

Insurance Policy (Sec. 457.8), the crop insured will be all the

cotton lint, in the county for which premium rates are provided by

the actuarial table:

(a) In which you have a share; and

(b) That is not (unless allowed by the Special Provisions or by

written agreement):

(1) Colored cotton lint;

(2) Planted into an established grass or legume;

(3) Interplanted with another spring planted crop;

(4) Grown on acreage from which a hay crop was harvested in the

same calendar year unless the acreage is irrigated; or

(5) Grown on acreage on which a small grain crop reached the

heading stage in the same calendar year unless the acreage is

irrigated or adequate measures are taken to terminate the small

grain crop prior to heading and less than fifty percent (50%) of the

small grain plants reach the heading stage.

7. Insurable Acreage

In addition to the provisions of section 9 (Insurable Acreage)

of the Common Crop Insurance Policy (Sec. 457.8):

(a) The acreage insured will be only the land occupied by the

rows of cotton when a skip row planting pattern is utilized; and

(b) Any acreage of the insured crop damaged before the final

planting date, to the extent that the remaining stand will not

produce at least ninety percent (90%) of the production guarantee,

must be replanted unless we agree that replanting is not practical

(see subsection 1.(m)).

8. Insurance Period

(a) In lieu of subsection 11.(b) of the Common Crop Insurance

Policy (Sec. 457.8) (Harvest of the unit), insurance will end upon

the removal of the cotton from the field.

(b) In accordance with the provisions under section 11

(Insurance Period) of the Common Crop Insurance Policy (Sec. 457.8),

the calendar date for the end of the insurance period is the date

immediately following planting as follows:

(1) September 30 in Val Verde, Edwards, Kerr, Kendall, Bexar,

Wilson, Karnes, Goliad, Victoria, and Jackson Counties, Texas, and

all Texas counties lying south thereof;

(2) January 31 in Arizona, California, New Mexico, Oklahoma, and

all other Texas counties; and

(3) December 31 in all other states.

9. Causes of Loss

In accordance with the provisions of section 12 (Causes of Loss)

of the Common Crop Insurance Policy (Sec. 457.8), insurance is

provided only against the following causes of loss which occur

within the insurance period:

(a) Adverse weather conditions;

(b) Fire;

(c) Insects, but not damage due to insufficient or improper

application of pest control measures;

(d) Plant disease, but not damage due to insufficient or

improper application of disease control meaures;

(e) Wildlife;

(f) Earthquake;

(g) Volcanic eruption; or

(h) Failure of the irrigation water supply, if applicable, due

to an unavoidable cause of loss occurring within the insurance

period.

10. Duties in the Event of Damage or Loss

(a) In addition to your duties under section 14 (Duties in the

Event of Damage or Loss) of the Common Crop Insurance Policy

(Sec. 457.8), in the event of damage or loss:

(1) The cotton stalks must remain intact for our inspection; and

(2) If you initially discover damage to the insured crop within

15 days of harvest, or during harvest, you must leave representative

samples of the unharvested crop in the field for our inspection. The

samples must be at least 10 feet wide and extend the entire length

of each field in the unit.

(b) The stalks must not be destroyed, and required samples must

not be harvested, until the earlier of our inspection or 15 days

after harvest of the balance of the unit is completed and written

notice of probable loss given to us.

11. Settlement of Claim

(a) We will determine your loss on a unit basis. In the event

you are unable to provide records of production:

(1) For any optional unit, we will combine all optional units

for which acceptable records of production were not provided; or

(2) For any basic unit, we will allocate any commingled

production to such units in proportion to our liability on the

harvested acreage for each unit.

(b) In the event of loss or damage covered by this policy, we

will settle your claim on any unit by:

(1) Multiplying the insured acreage by the production guarantee;

(2) Subtracting from this the total production to count;

(3) Multiplying the remainder by your price election; and

(4) Multiplying this result by your share.

(c) The total production (pounds) to count from all insurable

acreage on the unit will include:

(1) All appraised production as follows:

(i) Not less than the production guarantee for acreage;

(A) That is abandoned;

(B) Put to another use without our consent;

(C) Damaged solely by uninsured causes;

(D) For which you fail to provide records of production that are

acceptable to us; or

(E) On which the cotton stalks are destroyed, in violation of

section 10;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production (mature unharvested production of

white cotton may be adjusted for quality deficiencies in accordance

with subsection 11.(d)); and

(iv) Potential production on insured acreage you want to put to

another use or you wish to abandon or no longer care for, if you and

we agree on the appraised amount of production. Upon such agreement,

the insurance period for that acreage will end if 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 of 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

(2) All harvested production from the insurable acreage,

including any mature cotton retrieved from the ground.

(d) Mature white cotton may be adjusted for quality when

production has been damaged by insured causes. Such production to

count will be reduced if the price quotation for cotton of like

quality (price quotation ``A'') for the applicable growth area is

less than seventy-five percent (75%) of price quotation ``B.'' Price

quotation ``B'' is defined as the price quotation for the applicable

growth area for cotton of the color and leaf grade, staple length,

and micronaire reading designated in the Special Provisions for this

purpose. Price quotations ``A'' and ``B'' will be the price

quotations contained in the Daily Spot Cotton Quotations published

by the USDA Agricultural Marketing Service on the date the last bale

from the unit is classed. If the date the last bale classed is not

available, the price quotations will be determined on the date the

last bale from the unit is delivered to the warehouse, as shown on

the producer's account summary obtained from the gin. If eligible

for adjustment, the amount of production to be counted will be

determined by multiplying the number of pounds of such production by

the factor derived from dividing price quotation ``A'' by seventy-

five percent (75%) of price quotation ``B.''

(e) Colored cotton lint will not be eligible for quality

adjustment.

12. Late Planting and Prevented Planting

(a) In lieu of paragraph 8.(b)(2) and subsection 1.(aa) of the

Common Crop Insurance Policy (Sec. 457.8), insurance will be

provided for acreage planted to the insured crop during the late

planting period (see subsection (c)), and acreage you were prevented

from planting (see subsection (d)). These coverages provide reduced

production guarantees. The reduced guarantees will be combined with

the production guarantee for timely planted acreage for each unit.

The premium amount for late planted acreage and eligible prevented

planting acreage will be the same as that for timely planted

acreage. If the amount of premium you are required to pay (gross

premium less our subsidy) for late planted acreage or prevented

planting acreage exceeds the liability on such acreage, coverage for

those acres will not be provided (no premium will be due and no

indemnity will be paid for such acreage). (For example, assume you

insure one unit in which you have a 100 percent (100%) share. The

unit consists of 150 acres, of which 50 acres were planted timely,

50 acres were planted 7 days after the final planting date (late

planted), and 50 acres are unplanted and eligible for prevented

planting coverage. To calculate the amount of any indemnity which

may be due to you, the production guarantee for the unit will be

computed as follows:

(1) For timely planted acreage, multiply the per acre production

guarantee for timely planted acreage by the 50 acres planted timely;

(2) For late planted acreage, multiply the per acre production

guarantee for timely planted acreage by ninety-three percent (0.93)

and multiply the result by the 50 acres planted late; and

(3) For prevented planting acreage, multiply the per acre

production guarantee for timely planted acreage by thirty-five

percent (0.35) and multiply the result by the 50 acres eligible for

prevented planting coverage.

The total of the three calculations will be the production

guarantee for the unit. Your premium will be based on the result of

multiplying the per acre production guarantee per acre for timely

planted acreage by the 150 acres in the unit.)

(b) You must provide written notice to us if you were prevented

from planting (see subsection 1.(n)). This notice must be given not

later than three days after:

(1) The final planting date for acreage you were prevented from

planting by the final planting date if you have unplanted acreage

that may be eligible for prevented planting coverage; and

(2) The date you discover that planting will not be possible

within the late planting period for acreage that may be eligible for

prevented planting coverage if you were not prevented from planting

such acreage by the final planting date, but were prevented from

planting such acreage during the late planting period.

(c) Late Planting

(1) For cotton acreage planted after the final planting date but

on or before 25 days after the final planting date, the production

guarantee for each acre will be reduced for each day planted after

the final planting date by:

(i) One percent (.01) for the first through the tenth day; and

(ii) Two percent (.02) for the eleventh through the twenty-fifth

day.

(2) In addition to the requirements of section 6 (Report of

Acreage) of the Common Crop Insurance Policy (Sec. 457.8), you must

report the dates the acreage is planted within the late planting

period.

(3) If planting of cotton continues after the final planting

date, or you are prevented from planting during the late planting

period, the acreage reporting date will be the later of:

(i) The acreage reporting date contained in the Special

Provisions; or

(ii) Five (5) days after the end of the late planting period.

(d) Prevented Planting (Including Planting After the Late

Planting Period)

(1) If you were prevented from planting cotton (see subsection

1.(n)), you may elect:

(i) To plant cotton during the late planting period (The

production guarantee for such acreage will be determined in

accordance with paragraph 12.(c)(1));

(ii) Not to plant this acreage to any crop that is intended for

harvest in the same crop year, (the production guarantee for such

acreage will be thirty-five percent (0.35) of the production

guarantee for timely planted acres. For example, if your production

guarantee for timely planted acreage is 700 pounds per acre, your

prevented planting production guarantee would be equivalent to 245

pounds per acre (700 pounds multiplied by 0.35). This subparagraph

does not prohibit the preparation and care of the acreage for

conservation practices, such as planting a cover crop, as long as

such crop is not intended for harvest.); or

(iii) To plant cotton after the late planting period, (the

production guarantee for such acreage will be thirty-five percent

(0.35) of the production guarantee for timely planted acres. For

example, if your production guarantee for timely planted acreage is

700 pounds per acre, your prevented planting production guarantee

would be equivalent to 245 pounds per acre (700 pounds multiplied by

0.35). Production to count for such acreage will be determined in

accordance with subsections 11.(c) and (d)).

(2) In addition to the provisions of section 11 (Insurance

Period) of the Common Crop Insurance Policy (Sec. 457.8), the

insurance period for prevented planting coverage begins on the sales

closing date contained in the Special Provisions for the insured

crop in the county.

(3) The acreage to which prevented planting coverage applies

will be limited as follows:

(i) If you participate in any program administered by the United

States Department of Agriculture for the crop year which limits the

number of acres that may be planted, prevented planting acreage will

not exceed the ASCS base acreage for the insured crop, reduced by

any acreage reduction applicable to the farm under such program.

(ii) If you do not participate in any program administered by

the United States Department of Agriculture which limits the number

of acres that may be planted, unless a written agreement exists to

the contrary, eligible acreage will not exceed the greater of:

(A) The ASCS base acreage for the insured crop, if applicable;

(B) The number of acres planted to cotton on each ASCS Farm

Serial Number during the previous crop year (adjusted for any

reconstitution which may have occurred prior to the sales closing

date); or

(C) One hundred percent (100%) of the simple average of the

number of acres planted to cotton during the crop years that were

used to determine your yield.

(iii) Acreage intended to be planted under an irrigated practice

will be limited to the number of acres properly prepared to carry

out an irrigated practice.

(iv) A prevented planting production guarantee will not be

provided for:

(A) Any acreage that does not constitute at least 20 acres or 20

percent (20%) of the acres in the unit, whichever is less;

(B) Land for which the actuarial table does not designate a

premium rate unless a written agreement is in place designating such

premium rate;

(C) Land used for conservation purposes or intended to be or

considered to have been left unplanted under any program

administered by the United States Department of Agriculture;

(D) Land on which any crop, other than cotton, has been planted

and is intended for harvest, or has been harvested in the same crop

year; or

(E) Land which planting history or conservation plans indicate

would remain fallow for crop rotation purposes.

(v) For the purpose of determining eligible acreage for

prevented planting coverage, acreage for all units will be combined

and reduced by the number of cotton acres timely planted after the

final planting date. (For example, assume you have 100 acres

eligible for prevented planting coverage in which you have a 100

percent (100%) share. The acreage is located in a single ASCS Farm

Serial Number which you insure as two separate optional units

consisting of 50 acres each. If you planted 60 acres of cotton on

one optional unit and 40 acres of cotton on the second optional

unit, your prevented planting eligible acreage would be reduced to

zero. (100 acres eligible for prevented planting coverage minus 100

acres planted equals zero). If you report more cotton acreage under

this contract than is eligible for prevented planting coverage, we

will allocate the eligible acreage to insured units based on the

number of prevented planting acres and share your report for each

unit.)

(4) When the ASCS Farm Serial Number covers more than one unit,

or a unit consists of more than one ASCS Farm Serial Number, the

covered acres will be pro-rated based on the number of acres in each

unit or ASCS Farm Serial Number that could have been planted to

cotton in the crop year.

(5) In accordance with the provisions of section 6 (Report of

Acreage) of the Common Crop Insurance Policy (Sec. 457.8), you must

report any insurable acreage you were prevented from planting. This

report must be submitted on or before the acreage reporting date,

even though you may elect to plant the acreage after the late

planting period. Any acreage you report as eligible for prevented

planting coverage which is not eligible will be deleted from

prevented planting coverage.

Done in Washington, DC on September 13, 1994.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 94-23833 Filed 9-26-94; 8:45 am]

BILLING CODE 3410-08-M