Common Crop Insurance Regulations; Sugarcane Crop Insurance Provisions

SUMMARY: The Federal Crop Insurance Corporation (``FCIC'') hereby

adopts regulations for specific crop provisions to insure sugarcane.

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 sugarcane from the Sugarcane Crop Insurance

Regulations (7 CFR 401.133) to the Common Crop Insurance Policy

(Sec. 457.8) for ease of use by the public and conformance among policy

terms.

EFFECTIVE DATE: May 12, 1995.

FOR FURTHER INFORMATION CONTACT: Diana Moslak, Federal Crop Insurance

Corporation, U.S. Department of Agriculture, Washington, DC 20250.

Telephone (202) 254-8314.

SUPPLEMENTARY INFORMATION: This action has been reviewed under United

States Department of Agriculture (``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 February 1, 2000.

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

purposes of Executive Order 12866, and therefore, has not been 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 contained in these regulations (7 CFR part 457) have been

previously approved by OMB and assigned OMB No. 0563-0016.

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 a

substantial direct effect on states or their political subdivisions, or

on the distribution of power and responsibilities among the various

levels of government.

This regulation will not have a significant impact on a substantial

number of small entities. This action does not require any additional

reporting burden on the insured farmer and the reinsured company.

Therefore, this action is determined to be exempt from the provisions

of the Regulatory Flexibility Act (5 U.S.C. 605) and no Regulatory

Flexibility Analysis was prepared.

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 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.

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 12778. 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 or promulgated by the

National Appeals Division 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, FCIC will amend 7 CFR 401.133 to restrict the

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

this rule will be effective and later remove that section.

On Tuesday, February 21, 1995, FCIC published a proposed rule in

the Federal Register at 60 FR 9629 proposing to revise the Common Crop

Insurance Regulations by adding new provisions for sugarcane 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: One comment received from an insurance association

recommended deleting subsection 3.(b) so that sugarcane production

reporting would include the most recent crop year, the same as other

crops. The ``lag year'' procedure now followed for sugarcane occurs

because production records are not available by the production

reporting date. The comment noted that procedure permits updating the

Actual Production History (APH) records with a ``temporary yield'' when

an insured is unable to complete harvesting the crop or production

records are unavailable from the processor. Using the ``temporary

yield'' for the most recent crop year for sugarcane would eliminate the

need for the ``lag year'' and special procedure for sugarcane in the

1995 Crop Insurance Handbook.

Response: Subsection 3.(b) allows producers to delay reporting

production for one year because the actual production amount for

sugarcane normally is not known until after the production reporting

date for all other crops. The ``Temporary Yield'' procedure is intended

to be a measure used in extreme circumstances, not as a routine event.

Using ``temporary yields'' for reporting sugarcane production would

result in additional paperwork to revise the APH once actual records

are available. Therefore, FCIC finds that the recommendation would

increase rather than reduce paperwork, and is not adopting the comment.

Comment: One comment received from an insurance association

questioned the language and intent of subparagraph 8.(a)(3)(ii). Was it

the intent of the new language to change the date on which insurance

attaches on second year stubble cane in Louisiana? [[Page 25602]] The

current provision states that coverage begins on the later of April 15

or 30 days after harvest after the second crop year of stubble cane.

The proposed policy stated that coverage would begin on the later of

April 15 or 30 days after harvest for the second crop year. If there is

no intent to change this provision, it is recommended that the words

``of stubble cane'' be added to subparagraph 8.(a)(3)(ii).

Response: FCIC agrees with the comment and has amended paragraph

8.(a)(3)(ii) accordingly.

Comment: One comment received from an insurance association

recommended that paragraph 11.(c)(1) be revised to count the appraisal

of sugarcane cut for seed.

Response: FCIC agrees with the comment and has amended paragraph

11.(c)(1) accordingly.

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

FCIC has made the following changes:

1. The definition of ``crop year'' has been amended by deleting

references made to the length of the insurance period. This language

duplicated a portion of the provisions contained in section 8

(Insurance Period).

2. Paragraph 10.(a)(2) of the proposed crop provisions indicated

that if notice to cut sugarcane for seed was not given, that an

appraisal equal to the production guarantee would be made. Acreage cut

for seed normally produces the highest yield of any acreage in the

unit. Therefore, FCIC has changed the appraisal amount for such acreage

to the APH yield.

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

Sugarcane Crop Insurance Provisions'' published at 60 FR 9629 as

revised and as set out below is hereby adopted as a final rule.

List of Subjects in 7 CFR Part 457

Crop insurance; Sugarcane.

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 1996 and succeeding

crop years, as follows:

PART 457--[AMENDED]

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

follows:

Authority: 7 U.S.C. 1506(l).

2. 7 CFR part 457 is amended by adding Sec. 457.116 to read as

follows:

Sec. 457.116 Sugarcane crop insurance provisions.

The Sugarcane Crop Insurance Provisions for the 1996 and succeeding

crop years are as follows:

UNITED STATES DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

Sugarcane Crop Provisions

If a conflict exists among the Basic Provisions (Sec. 457.8),

these crop provisions, and the Special Provisions, the Special

Provisions will control these crop provisions and the Basic

Provisions; and these crop provisions will control the Basic

Provisions.

1. Definitions

(a) Crop year--The period within which the insured sugarcane is

normally grown and designated by the calendar year in which the

harvest of sugarcane normally begins in the county.

(b) CFSA--Consolidated Farm Service Agency (previously the

Agricultural Stabilization and Conservation Service).

(c) 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 the Cooperative

Extension Service as compatible with agronomic and weather

conditions in the area.

(d) Harvest--Cutting and removing the mature sugarcane from the

field.

(e) 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.

(f) 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.

(g) Local market price--The price per pound for raw sugar

offered by buyers in the area in which you normally market the

sugarcane.

(h) Plant cane--The insured crop which grows from seed planted

for the crop year.

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

multiplying the approved yield per acre by the coverage level

percentage you elect.

(j) Stubble cane--The insured crop which grows from the stubble

of sugarcane that was harvested the previous crop year.

(k) Sugarcane--means either plant cane or stubble cane.

(l) 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

contained in the written agreement. Notwithstanding the sales

closing date restrictions contained herein, in specific instances a

written agreement may be applied for after the sales closing date,

and approved if, after physical inspection of the acreage, it is

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

guaranteed yield. 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 Basic Provisions (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. Basic units may not be divided into optional units

on any basis including, but not limited to, production practice,

type, variety, and planting period other than as described under

this section. 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 basic 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 is determined to be inadvertent, and the optional

units are combined, that portion of the premium paid for the purpose

of electing optional units will be refunded to you pro rata for the

units combined. 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 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.

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

production from each optional unit maintained in such a manner that

permits us to verify the production from each optional unit or the

production from each 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

Consolidated Farm Service Agency (``CFSA'') 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 as the 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 discernible, each optional unit must

be located in a separate [[Page 25603]] farm identified by a single

CFSA 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 CFSA Farm Serial

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

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

equivalent or CFSA 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 may not continue into non-irrigated acreage

in the same rows or planting pattern. Non-irrigated corners of a

field in which a center-pivot irrigation system exists that do not

qualify as a separate optional unit will be a part of the irrigated

unit; however, other non-irrigated acreage within the unit being

divided may qualify as a separate optional unit provided all

requirements of this section are met.

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

Indemnities

(a) In addition to the requirements of section 3 (Insurance

Guarantees, Coverage Levels, and Prices for Determining Indemnities)

of the Basic Provisions (Sec. 457.8), you may select only one price

election for all the sugarcane in the county insured under this

policy.

(b) Instead of reporting your sugarcane production for the

previous crop year as required by subsection 3.(c) of the Basic

Provisions (Sec. 457.8), there is a lag period of one year and you

are required to report production from two crop years previously,

e.g., 1994 crop year production must be reported by the required

date for the 1996 crop year.

4. Contract Changes

The contract change date is June 30 preceding the cancellation

date (see the provisions of section 4 (Contract Changes) of the

Basic Provisions (Sec. 457.8)).

5. Cancellation and Termination Dates

In accordance with subsection 2.(f) of the Basic Provisions

(Sec. 457.8), the cancellation and termination dates are September

30.

6. Insured Crop

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

Provisions (Sec. 457.8), the crop insured will be all the sugarcane

in the county for which a premium rate is provided by the actuarial

table:

(a) In which you have a share;

(b) That is grown for processing for sugar or for seed; and

(c) That is not interplanted with another crop, unless a written

agreement allows otherwise.

7. Insurable Acreage

Paragraph 9.(a)(3) of the Basic Provisions (Sec. 457.8) is not

applicable to the Sugarcane Crop Provisions.

8. Insurance Period

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

Period) of the Basic Provisions (Sec. 457.8), insurance attaches:

(1) At the time of planting for plant cane unless we agree in

writing to a later date;

(2) On the first day following harvest of the previous crop for

stubble cane except as set out in paragraph 8.(a)(3);

(3) On the later of April 15 or 30 days following harvest of the

previous crop for stubble cane:

(i) Damaged during the previous crop year in all states

(includes Louisiana); and

(ii) In Louisiana, after the second harvest from stubble cane.

(b) In accordance with the provisions of section 11 (Insurance

Period) of the Basic Provisions (Sec. 457.8) the calendar date for

the end of the insurance period is:

(1) January 31 in Louisiana; and

(2) April 30 in all other states.

9. Causes of Loss

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

of the Basic Provisions (Sec. 457.8), insurance is provided only

against the following causes of loss that 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 measures;

(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 or Cutting the Sugarcane for

Seed

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

Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), in

the event of damage or loss:

(1) All sugarcane stubble must remain intact for our inspection;

and

(2) You must give us notice at least 15 days before you begin

cutting any sugarcane for seed. Your notice must include the unit

number and the number of acres you intend to harvest as seed. After

we receive such notice we will appraise the sugarcane for its sugar

potential. If you do not give us this notice, the production to

count for such acreage will be your approved yield.

(b) In accordance with the requirements of section 14 (Duties in

the Event of Damage or Loss) of the Basic Provisions (Sec. 457.8),

if you initially discover damage to any insured crop within 15 days

of, or during harvest, you must leave representative samples of the

unharvested crop for our inspection. The representative samples of

the unharvested crop must be at least 10 feet wide and extend the

entire length of each field in the unit. The stubble must not be

destroyed and the 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.

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 of sugar) 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 sugarcane stubble is destroyed within 15 days

after harvest is completed without our consent;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production;

(iv) The difference between the production guarantee and the

appraised production for acreage that has an inadequate stand. An

appraisal for an inadequate stand will be made if the product of the

number of stalks per acre multiplied by two and further multiplied

by the percentage of sugar contained in the Special Provisions for

this purpose does not equal the per-acre production guarantee; and

(v) Potential production on insured acreage harvested for seed

(see paragraph 10.(a)(2));

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

another use or you wish to abandon and 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 or appraisals from the samples at the time harvest should

have occurred. If you do not leave the required samples intact, or

you fail to provide sufficient care for the samples, our appraisal

made prior to giving you consent to put the acreage to another use

will be used to determine the amount of production to count.); or

(B) If you elect to continue to care for the crop, the amount of

production to count for the acreage will be the harvested

production, or our reappraisal if additional damage occurs and the

crop is not harvested; and

(2) All harvested production from insurable acreage. Final

records of sugar [[Page 25604]] production will be used to determine

the amount of production to count. Preliminary mill estimates will

not be used.

(d) Harvested sugarcane may be adjusted for low quality if it is

damaged by one or more freezes occurring within the insurance period

to the extent that it cannot be processed for sugar by the boiling

house operation. The amount of production to count for such

sugarcane will be determined by dividing the dollar value of the

damaged production by the local market price per pound for raw

sugar. The prices used for this adjustment will be determined on the

earlier of the date such quality-adjusted production is sold or the

date of final inspection for the unit.

Done in Washington, DC, on May 3, 1995.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 95-11780 Filed 5-11-95; 8:45 am]

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