Hybrid Sorghum Seed Endorsement; and Common Crop Insurance Regulations, Hybrid Sorghum Seed Crop Insurance Provisions

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457

RIN 0563-AB03

Hybrid Sorghum Seed Endorsement; and Common Crop Insurance

Regulations, Hybrid Sorghum Seed Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes

specific crop provisions for the insurance of hybrid sorghum seed. The

provisions will be used in conjunction with the Common Crop Insurance

Policy Basic Provisions, which contain standard terms and conditions

common to most crops. The intended effect of this action is to provide

policy changes to better meet the needs of the insured, include the

current Hybrid Sorghum Seed Endorsement with the Common Crop Insurance

Policy for ease of use and consistency of terms, and to restrict the

effect of the current Hybrid Sorghum Seed Endorsement to the 1997 and

prior crop years.

DATES: Written comments, data, and opinions on this proposed rule will

be accepted until close of business February 28, 1997 and will be

considered when the rule is to be made final. The comment period for

information collections under the Paperwork Reduction Act of 1995

continues through February 28, 1997.

ADDRESSES: Interested persons are invited to submit written comments to

the Chief, Product Development Branch, Federal Crop Insurance

Corporation, United States Department of Agriculture, 9435 Holmes Road,

Kansas City, MO 64131. Written comments will be available for public

inspection and copying in room 0324, South Building, United States

Department of Agriculture, 14th and Independence Avenue, S.W.,

Washington, D.C., 8:15 a.m. to 4:45 p.m, est, Monday through Friday,

except holidays.

FOR FURTHER INFORMATION CONTACT: Ron Nesheim, Program Analyst, Research

and Development Division, Product Development Branch, Federal Crop

Insurance Corporation, at the Kansas City, MO, address listed above,

telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866

The Office of Management and Budget (OMB) has determined this rule

to be exempt for the purposes of Executive Order No. 12866, and,

therefore, this rule has not been reviewed by OMB.

Paperwork Reduction Act of 1995

The title of this information collection is ``Catastrophic Risk

Protection Plan and Related Requirements including, Common Crop

Insurance Regulations; Hybrid Sorghum Seed Crop Insurance Provisions.''

The information to be collected includes a crop insurance application

and an acreage report. Information collected from the application and

acreage report is electronically submitted to FCIC by the reinsured

companies. Potential respondents to this information collection are

producers of hybrid sorghum seed that are eligible for Federal crop

insurance.

The information requested is necessary for the reinsured companies

and FCIC to provide insurance and reinsurance, determine eligibility,

determine the correct parties to the agreement or contract, determine

and collect premiums or other monetary amounts, and pay benefits.

All information is reported annually. The reporting burden for this

collection of information is estimated to average 16.9 minutes per

response for each of the 3.6 responses from approximately 1,755,015

respondents. The total annual burden on the public for this information

collection is 2,676,932 hours.

FCIC is requesting comments on the following: (a) whether the

proposed collection of information is necessary for the proper

performance of the functions of the agency, including whether the

information shall have practical utility; (b) the accuracy of the

agency's estimate of the burden of the proposed collection of

information; (c) ways to enhance the quality, utility, and clarity of

the information to be collected; and (d) ways to minimize the burden of

the collection of information on respondents, including through the use

of automated collection techniques or other forms of information

gathering technology.

Comments regarding paperwork reduction should be submitted to the

Desk Officer for Agriculture, Office of Information and Regulatory

Affairs, Office of Management and Budget, Washington, D.C. 20503.

[[Page 68675]]

The Office of Management and Budget (OMB) is required to make a

decision concerning the collections of information contained in these

proposed regulations between 30 and 60 days after submission to OMB.

Therefore, a comment to OMB is best assured of having full effect if

OMB receives it within 30 days of publication. This does not affect the

deadline for the public to comment on the proposed regulation.

Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public

Law 104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on state, local, and tribal

governments and the private sector. This rule contains no Federal

mandates (under the regulatory provisions of title II of the UMRA) for

state, local, and tribal governments or the private sector. Thus, this

rule is not subject to the requirements of sections 202 and 205 of the

UMRA.

Executive Order No. 12612

It has been determined under section 6(a) of Executive Order No.

12612, Federalism, that this rule does not have sufficient federalism

implications to warrant the preparation of a Federalism Assessment. The

provisions 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.

Regulatory Flexibility Act

This regulation will not have a significant impact on a substantial

number of small entities. New provisions included in this rule will not

impact small entities to a greater extent than large entities. Under

the current regulations, a producer is required to complete an

application and acreage report. If the crop is damaged or destroyed,

the insured is required to give notice of loss and provide the

necessary information to complete a claim for indemnity. The producer

must also annually certify to the previous years production if adequate

records are available to support the certification. The producer must

maintain the production records to support the certified information

for at least three years. This regulation does not alter those

requirements. The amount of work required of the insurance companies

delivering and servicing these policies will not increase significantly

from the amount of work currently required. This rule does not have any

greater or lesser impact on the producer. Therefore, this action is

determined to be exempt from the provisions of the Regulatory

Flexibility Act (5 U.S.C. 605), and no Regulatory Flexibility Analysis

was prepared.

Federal Assistance Program

This program is listed in the Catalog of Federal Domestic

Assistance under No. 10.450.

Executive Order No. 12372

This program is not subject to the provisions of Executive Order

No. 12372, which require intergovernmental consultation with state and

local officials. See the Notice related to 7 CFR part 3015, subpart V,

published at 48 FR 29115, June 24, 1983.

Executive Order No. 12778

The Office of the General Counsel has determined that these

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

and 2(b)(2) of Executive Order No. 12778. The provisions of this rule

will not have a retroactive effect prior to the effective date. The

provisions of this rule will preempt state and local laws to the extent

such state and local laws are inconsistent herewith. The administrative

appeal provisions published at 7 CFR parts 11 and 780 must be exhausted

before any action for judicial review may be brought.

Environmental Evaluation

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

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

neither an Environmental Assessment nor an Environmental Impact

Statement is needed.

National Performance Review

This regulatory action is being taken as part of the National

Performance Review Initiative to eliminate unnecessary or duplicative

regulations and improve those that remain in force.

Background

FCIC proposes to add to the Common Crop Insurance Regulations (7

CFR part 457), a new section, 7 CFR 457.112, Hybrid Sorghum Seed Crop

Insurance Provisions. The new provisions will be effective for the 1998

and succeeding crop years. These provisions will replace and supersede

the current provisions for insuring hybrid sorghum seed found at 7 CFR

401.109 (Hybrid Sorghum Seed Endorsement). FCIC also proposes to amend

7 CFR 401.109 to limit its effect to the 1997 and prior crop years.

FCIC will later publish a regulation to remove section 401.109 and

reserve that section.

This rule makes minor editorial and format changes to improve the

Hybrid Sorghum Seed Endorsement's compatibility with the Common Crop

Insurance Policy. In addition, FCIC is proposing substantive changes in

the provisions for insuring hybrid sorghum seed as follows:

1. Section 1--Add definitions for the terms ``adjusted yield,''

``approved yield,'' ``bushel,'' ``certified seed test,'' ``county

yield,'' ``FSA,'' ``field run,'' ``good farming practices,'' ``hybrid

sorghum seed processor contract,'' ``insurable interest,''

``interplanted,'' ``local market price,'' ``minimum guaranteed

payment,'' ``non-seed amount,'' ``planted acreage,'' ``planting

pattern,'' ``practical to replant,'' ``sample,'' ``seed amount,''

``seed production,'' and ``written agreement'' for clarification.

2. Section 2--Unit division provisions are amended to include

producer's reporting responsibilities to qualify for optional units.

Also, clarifies that optional units are available if the hybrid sorghum

seed processor contract specifies that it is a specific number of acres

that are under contract and not a specified amount of production.

3. Section 4--Change the contract change date to November 30 in

order to maintain an adequate time period between the contract change

date and the revised cancellation date.

4. Section 5--Change the cancellation and termination dates to

March 15. This change is necessary to standardize the cancellation and

termination dates with the sales closing dates, which were changed to

30 days earlier for spring planted crops to comply with the

requirements of the Federal Crop Insurance Reform Act of 1994.

5. Section 6--Require the producer to certify that a hybrid sorghum

seed processor contract has been executed and certify the amount of any

minimum guaranteed payment from the seed company. Certification of a

hybrid seed processor contract on or before the acreage reporting date

is needed to establish the insurability of the crop before a loss is

likely and ensures a market for the crop. The producer must also

certify any minimum guaranteed payment under the contract because a

minimum guaranteed payment will affect insurance premium and the amount

of indemnity.

6. Section 7(c)--Specify conditions under which a seed producer who

is also a seed company can establish an insurable interest in the

insured crop. There is an inherent conflict of interest when the

producer is also the processor

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who will provide the records of the producer. These conditions are

needed to ensure the eligibility of the processor for crop insurance.

7. Section 8(c)--Clarify that any acreage damaged prior to the

final planting date must be replanted unless it is not practical to

replant.

8. Section 11(a)--Clarify the size of representative crop samples

required when damage is discovered.

9. Section 14--Add provisions for providing insurance coverage by

written agreement. FCIC has a long standing policy of permitting

certain modifications of the insurance contract by written agreement

for some policies. This amendment allows FCIC to tailor the policy to a

specific insured in certain instances. The new section will cover

application for, and duration of, written agreements.

List of Subjects in 7 CFR 401 and 457

Hybrid sorghum seed endorsement, Crop insurance, Hybrid sorghum

seed.

Proposed Rule

Accordingly, for the reasons set forth in the preamble, the Federal

Crop Insurance Corporation hereby proposes to amend 7 CFR parts 401 and

457 as follows:

PART 401--GENERAL CROP INSURANCE REGULATIONS--REGULATIONS FOR THE

1988 AND SUBSEQUENT CONTRACT YEARS

1. The authority citation for 7 CFR part 401 continues to read as

follows:

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

2. Section 401.109 introductory paragraph is revised to read as

follows:

Sec. 401.109 Hybrid sorghum seed endorsement

The provisions of the Hybrid Sorghum Seed Endorsement for the 1988

through 1997 crop years are as follows:

* * * * *

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

1994 AND SUBSEQUENT CONTRACT YEARS

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

follows:

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

4. Section 457.112 is added to read as follows:

Sec. 457.112 Hybrid Sorghum Seed Crop Insurance Provisions

The Hybrid Sorghum Seed Crop Insurance Provisions for the 1998 and

succeeding crop years are as follows:

FCIC policies:

Department of Agriculture

Federal Crop Insurance Corporation

Reinsured policies:

(Appropriate title for insurance provider)

Both FCIC and reinsured policies:

Hybrid Sorghum Seed 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

Adjusted yield--The yield per acre that results from multiplying

the approved yield by the coverage level percentage.

Amount of insurance per acre--The number of dollars determined by

multiplying the county yield for the coverage level you select by the

price election you select, and subtracting any minimum guaranteed

payment. If the minimum guaranteed payment is stated in a unit of

measure other than dollars, it will be converted to a dollar amount by

multiplying the number of bushels guaranteed by the price election you

selected.

Approved yield--The yield per acre that a specific type or variety

is expected to produce determined from yield records provided by the

seed company or other acceptable information.

Bushel--Fifty-six pounds avoirdupois of the insured crop.

Certified seed test--A warm germination test performed according to

specifications of the ``Rules for Testing Seeds'' of the Association of

Official Seed Analysts.

Commercial hybrid sorghum seed--The offspring produced by crossing

a male and female parent plant, each having a different genetic

character. This offspring is the product intended for use by an

agricultural producer to produce a commercial field sorghum crop for

grain or forage.

County yield--A yield contained in the Actuarial Table that is used

to calculate your amount of insurance.

Days--Calendar days.

Dollar value per bushel--The value determined by dividing your

amount of insurance for timely planted acreage by the adjusted yield.

FSA--The Farm Service Agency, an agency of the United States

Department of Agriculture, or a successor agency.

Female parent plants--Sorghum plants that are grown for the purpose

of producing commercial hybrid sorghum seed and have had their stamens

removed.

Field run--Commercial hybrid sorghum seed production before it has

been processed or screened.

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 amount of insurance per acre.

Good farming practices--The cultural practices generally in use in

the county for the crop to make normal progress toward maturity and

produce at least the yield used to determine the amount of insurance,

or are required by the hybrid sorghum seed processor contract and

recognized by the Cooperative State Research, Education, and Extension

Service as compatible with agronomic and weather conditions in the

county.

Harvest--Combining, threshing or picking of the female parent

plants to obtain commercial hybrid sorghum seed.

Hybrid sorghum seed processor contract--A written agreement between

the hybrid sorghum seed crop producer and a seed company containing, at

a minimum:

(a) The producer's promise to plant and grow male and female parent

plants, and to deliver all commercial hybrid sorghum seed produced from

such plants to the seed company;

(b) The seed company's promise to purchase all the commercial

hybrid sorghum seed produced by the producer; and

(c) Either a fixed price per unit of measure (bushels,

hundredweight, etc.) of the commercial hybrid sorghum seed or a formula

to determine the value of such seed. Any formula for establishing the

value must be based on data provided by a public third party that

establishes or provides pricing information to the general public,

based on prices paid in the open market (e.g., commodity futures

exchanges) to be acceptable for the purpose of this policy.

Inadequate germination--Germination of less than 80 percent of the

commercial hybrid sorghum seed as determined by using a certified seed

test on clean seed.

Insurable interest--Your share of the financial loss that occurs in

the event seed production is reduced by a cause of loss defined under

this crop insurance contract.

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.

[[Page 68677]]

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 amount of insurance on the irrigated acreage planted to the

insured crop.

Late planted--Acreage planted to the insured crop during the late

planting period.

Late planting period--The period that begins the day after the

final planting date for the insured crop and ends 25 days after the

final planting date.

Local market price--The cash price offered by buyers in the area

for any production from the female parent plants that is not considered

commercial hybrid sorghum seed under the terms of this policy.

Male parent plants--Sorghum plants grown for the purpose of

pollinating female parent plants.

Minimum guaranteed payment--A minimum amount (usually stated in

dollars or bushels) specified in your hybrid sorghum seed processor

contract that will be paid or credited to you by the seed company

regardless of the quantity of seed produced.

Non-seed amount--The dollar amount obtained by multiplying the

number of bushels of non-seed production to count by the local market

price determined on the earlier of the date the non-seed production is

sold or the date of final inspection for the unit.

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 that has been properly prepared for the planting

method and production practice. The insured crop must be planted in

rows wide enough to permit mechanical cultivation. Acreage planted in

any other manner will not be insurable unless otherwise provided by the

Special Provisions or by written agreement.

Planting pattern--The arrangement of the rows of the male and

female parent plants in a field. An example of a planting pattern is

four consecutive rows of female parent plants, two consecutive rows of

male parent plants.

Practical to replant--In lieu of the definition of ``Practical to

replant'' contained in section 1 of the Basic Provisions (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 field, time to crop maturity,

and marketing window, that replanting the insured crop will allow the

crop to adequately pollinate and 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. Determination of

practical to replant will take into consideration the planting dates

specified in the hybrid sorghum seed processor contract in accordance

with section 8(c).

Prevented planting--Inability to plant:

(a) The female parent plant seed 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; or

(b) The male parent plant seed with proper equipment at a time

sufficient to assure adequate pollination of the female parent plants

in accordance with the production management practices of the seed

company. You must have been unable to plant the female or male parent

plant seed due to an insured cause of loss that has prevented the

majority of producers in the surrounding area from planting the same

crop.

Sample--For the purpose of the certified seed test, at least 3

pounds of field run sorghum seed for each type or variety of commercial

hybrid sorghum seed grown on the unit.

Seed amount--The dollar amount obtained by multiplying the number

of bushels of seed production to count for each type or variety of

commercial hybrid sorghum seed grown on the unit by the applicable

dollar value per bushel for that type or variety, and totaling the

products of each type or variety.

Seed company--A corporation that possesses all licenses for

marketing commercial hybrid sorghum seed required by the state in which

it is domiciled or operates, and which possesses or has contracted

facilities with enough storage and drying capacity to accept and

process the insured crop within a reasonable amount of time after

harvest.

Seed production--All seed produced by female parent plants with a

germination rate of at least 80 percent, as determined by a certified

seed test.

Timely planted--Planted on or before the final planting date

designated in the Special Provisions for the insured crop in the

county.

Type--Grain sorghum, forage sorghum, or sorghum sudan parent

plants.

Variety--The name, number or code assigned to a specific genetic

cross by the seed company or the Special Provisions for the insured

crop in the county.

Written agreement--A written document that alters designated terms

of this policy in accordance with section 14.

2. Unit Division

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

section 1 (Definitions) of the Basic Provisions (Sec. 457.8), (basic

unit) may be divided into optional units only if, for each optional

unit, you meet all the conditions of this section or if a written

agreement to such division exists.

(b) Optional units are available if the hybrid sorghum seed

processor contract specifies that it is a specific number of acres that

are under contract and not a specified amount of production.

(c) If you do not comply fully with these provisions, we will

combine all optional units that 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 into a basic unit, that portion of the additional premium paid

for the optional units that have been combined will be refunded to you.

(d) All optional units you selected for the crop year must be

identified on the acreage report for that crop year.

(e) The following requirements must be met for each optional unit:

(1) 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 amount of insurance.

(2) You must plant the crop in a manner that results in a clear and

discernable break in the planting pattern at the boundaries of each

optional unit;

(3) You must have records of marketed production or measurement of

stored 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 loss

adjustment is completed by us; and

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

criteria, as applicable:

Optional Units by Section, Section Equivalent, or FSA Farm Serial

Number: Optional units may be established if

[[Page 68678]]

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 that

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 unique FSA Farm Serial

Number.

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 hybrid sorghum seed in the county insured under

this policy unless the Special Provisions provide different price

elections by type or variety, in which case you may elect one price

election for each hybrid sorghum seed type or variety designated in the

Special Provisions. The price elections you choose for each type or

variety must have the same percentage relationship to the maximum price

offered by us for each type or variety. For example, if you choose 100

percent of the maximum price election for one specific type or variety,

you must also choose 100 percent of the maximum price election for all

other types or varieties.

(b) The production reporting requirements contained in section 3

(Insurance Guarantees, Coverage Levels, and Prices for Determining

Indemnities) of the Basic Provisions (Sec. 457.8) are not applicable to

this contract.

4. Contract Changes

In accordance with section 4 (Contract Changes) of the Basic

Provisions (Sec. 457.8), the contract change date is November 30

preceding the cancellation date.

5. Cancellation and Termination Dates

In accordance with section 2 (Life of Policy, Cancellation, and

Termination) of the Basic Provisions (Sec. 457.8), the cancellation and

termination dates are March 15.

6. Report of Acreage

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

the Basic Provisions (Sec. 457.8), you must:

(a) Report, by type and variety, the location and insurable acreage

of the insured crop;

(b) Report any acreage that is uninsured, including that portion of

the total acreage occupied by male parent plants; and

(c) Certify that you have a hybrid sorghum seed processor contract

and, if applicable, report the amount of any minimum guaranteed

payment.

7. Insured Crop

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

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

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

actuarial table:

(1) In which you have a share;

(2) That are grown under a hybrid sorghum seed processor contract

executed before the acreage reporting date;

(3) That are planted for harvest as commercial hybrid sorghum seed

in accordance with the requirements of the hybrid sorghum seed

processor contract; and

(4) That are not (unless allowed by the Special Provisions or by

written agreement):

(i) Planted with a mixture of female and male parent seed in the

same row;

(ii) Planted for any purpose other than for commercial hybrid

sorghum seed;

(iii) Interplanted with another crop; or

(iv) Planted into an established grass or legume.

(b) An instrument in the form of a ``lease'' under which you retain

control of the acreage on which the insured crop is grown and that

provides for delivery of the crop under substantially the same terms as

a hybrid sorghum seed processor contract will be treated as a contract

under which you have an insurable interest in the crop.

(c) A commercial hybrid sorghum seed producer who is also a

commercial hybrid sorghum seed company may be able to establish an

insurable interest if the following requirements are met:

(1) The seed company must be a corporation and have an insurable

interest in the hybrid sorghum seed crop;

(2) The Board of Directors of the seed company must have instituted

a corporate resolution that sets forth essentially the same terms as a

hybrid sorghum seed processor contract. Such corporate resolution will

be considered a contract under the terms of the hybrid sorghum seed

crop insurance policy;

(3) Sales records for at least the previous years' seed production

must be provided to confirm that the seed company has produced and sold

seed. If such records are not available, the crop may only be insured

under the Coarse Grains Crop Provisions; and

(4) Our inspection of the storage and drying facilities determines

that they satisfy the requirements for a seed company.

8. Insurable Acreage

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

the Basic Provisions (Sec. 457.8), we will not insure any acreage:

(a) Planted and occupied exclusively by male parent plants;

(b) Not in compliance with the rotation requirements contained in

the Special Provisions or, if applicable, required by the hybrid

sorghum seed processor contract; or

(c) Of the insured crop damaged before the final planting date, to

the extent that the remaining stand will not produce at least 90

percent of the adjusted yield, unless such acreage is replanted or we

agree that it is not practical to replant. If we determine that it is

practical to replant and the seed company will not extend the planting

date stipulated in the hybrid sorghum seed processor contract, we will

delete the affected acreage from your report of acreage, and that

acreage will not be insured under these crop provisions.

9. Insurance Period

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

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

(1) The female parent plant seed is completely planted in

accordance with the hybrid sorghum seed processor contract and the

production practices of the seed company, on or before the final

planting date designated in the Hybrid Sorghum Seed Special Provisions,

except as allowed in section 13(c); and

(2) The male parent plant seed is completely planted in accordance

with production practices for the variety being produced.

(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 the November 30 immediately following

planting.

10. Causes of Loss

(a) 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 during the insurance

period:

(1) Adverse weather conditions;

(2) Fire;

[[Page 68679]]

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

application of pest control measures;

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

application of disease control measures;

(5) Wildlife;

(6) Earthquake;

(7) Volcanic eruption; or

(8) Failure of the irrigation water supply, if caused by an insured

peril that occurs during the insurance period.

(b) In addition to the causes of loss not insured against under

section 12 (Causes of Loss) of the Basic Provisions (Sec. 457.8), we

will not insure against any loss of production due to:

(1) The use of unadapted, incompatible, or genetically deficient

male or female parent plant seed;

(2) Frost or freeze after the date set by the Special Provisions;

(3) Failure to follow the requirements stated in the hybrid sorghum

seed processor contract or production management practices of the seed

company;

(4) Inadequate germination, even if it's the result of an insured

cause of loss, unless you have provided adequate notice under section

11(b)(1) and the crop is inspected and the loss is appraised by us

before harvest is completed; or

(5) Failure to plant the male parent plant seed at a time or in a

manner sufficient to assure adequate pollination of the female parent

plants, unless you are prevented from planting the male parent plant

seed.

11. Duties in the Event of Damage or Loss

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

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

representative samples of the unharvested crop must be at least one

complete planting pattern of the male and female parent plant rows and

extend the entire length of each field in the unit. The samples must

not be harvested or destroyed until the earlier of our inspection or 15

days after harvest of the balance of the unit is completed.

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

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

(1) You must give us notice of probable loss at least 15 days

before the beginning of harvest if you anticipate inadequate

germination on any unit; and

(2) You must provide a completed copy of your hybrid sorghum seed

processor contract.

12. Settlement of Claim

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

are unable to provide separate acceptable production records:

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

which such production records 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) You will not receive an indemnity payment on a unit if the seed

company refuses to provide us with records we require to determine the

dollar value per bushel of production for each variety.

(c) 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 its respective amount of

insurance per acre;

(2) Subtracting the total of the production to count for the seed

amount and the non-seed amount from the result of section 12(c)(1); and

(3) Multiplying the result of section 12(c)(2) by your share.

(d) The total production (bushels) to count from all insurable

acreage on the unit will include all seed and non-seed production as

specified in section (e) through (g) below.

(e) Production to be counted as seed production will include:

(1) All appraised production as follows:

(i) Not less than the adjusted yield for acreage:

(A) That is abandoned;

(B) Put to another use without our consent;

(C) That is damaged solely by uninsured causes; or

(D) For which you fail to provide acceptable production records;

(ii) Production lost due to uninsured causes;

(iii) Mature unharvested production with a germination rate of at

least 80 percent of the commercial hybrid sorghum seed as determined by

a certified seed test. Any such production may be adjusted in

accordance with section 12(g);

(iv) Immature appraised production;

(v) Potential production on insured acreage that you intend to put

to another use or abandon, if you and we agree on the appraised amount

of production. Upon such agreement, the insurance period for that

acreage will end 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 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) Harvested production that you deliver as commercial hybrid

sorghum seed to the seed company stated in your hybrid sorghum seed

processor contract, regardless of quality, unless the production has

inadequate germination.

(f) Production to be counted as non-seed production will include

all harvested or mature appraised production that does not qualify as

seed production to count as specified in section 12(e). Any such

production may be adjusted in accordance with section 12(g).

(g) For the purpose of determining the quantity of mature

production:

(1) Commercial hybrid sorghum seed production will be:

(i) Increased 0.12 percent for each 0.1 percentage point of

moisture below 13.0 percent; or

(ii) Decreased 0.12 percent for each 0.1 percentage point of

moisture in excess of 13.0 percent.

(2) When records of commercial hybrid sorghum seed production

provided by the seed company have been adjusted to a basis of 13.0

percent moisture and 56 pound avoirdupois bushels, section 12(g)(1)

above will not apply to harvested production. In such cases, records of

the seed company used for determining the next years approved yield

will also be used to determine the amount of production to count:

provided, such production records are calculated on the same basis as

that used to determine the approved yield.

13. Late Planting and Prevented Planting

(a) In lieu of provisions contained in the Basic Provisions

(Sec. 457.8) regarding acreage initially planted after the final

planting date and the applicability of a

[[Page 68680]]

Late Planting Agreement Option, insurance will be provided for acreage

planted to the insured crop during the late planting period (see

section 13(c)), and acreage you were prevented from planting (see

section 13(d)). These coverages provide reduced amounts of insurance.

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.

(b) You must provide written notice to us not later than the

acreage reporting date if you were prevented from planting.

(c) Late Planting

(1) For hybrid sorghum seed acreage planted during the late

planting period, the amount of insurance for each acre will be reduced

for each day planted after the final planting date by:

(i) One percent per day for the 1st through the 10th day; and

(ii) Two percent per day for the 11th through the 25th day.

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

Acreage) of the Basic Provisions (Sec. 457.8), you must report the

dates the acreage is planted within the late planting period.

(3) If planting of hybrid sorghum seed 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

for the insured crop; or

(ii) Five 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 timely planting hybrid sorghum seed,

you may elect:

(i) To plant hybrid sorghum seed during the late planting period.

The amount of insurance for such acreage will be determined in

accordance with section 13(c)(1);

(ii) Not to plant this acreage to any crop except a cover crop not

for harvest. You may also elect to plant the insured crop after the

late planting period. In either case, the amount of insurance for such

acreage will be 50 percent of the amount of insurance for timely

planted acres. For example, if your amount of insurance for timely

planted acreage is $200 per acre, your prevented planting amount of

insurance would be $100 per acre ($200 multiplied by 0.50). If you

elect to plant the insured crop after the late planting period,

production to count for such acreage will be determined in accordance

with section 12; or

(iii) Not to plant the intended crop but plant a substitute crop

for harvest, in which case:

(A) No prevented planting amount of insurance will be provided for

such acreage if the substitute crop is planted on or before the 10th

day following the final planting date for the insured crop; or

(B) An amount of insurance equal to 25 percent of the amount of

insurance for timely planted acres will be provided for such acreage,

if the substitute crop is planted after the 10th day following the

final planting date for the insured crop. If you elected the

Catastrophic Risk Protection Endorsement or excluded this coverage, and

plant a substitute crop, no prevented planting coverage will be

provided. For example, if your amount of insurance for timely planted

acreage is $200 per acre, your prevented planting amount of insurance

would be $50 per acre ($200 multiplied by 0.25). You may elect to

exclude prevented planting coverage when a substitute crop is planted

for harvest and receive a reduction in the applicable premium rate. If

you wish to exclude this coverage, you must so indicate, on or before

the sales closing date, on your application or on a form approved by

us. Your election to exclude this coverage will remain in effect from

year to year unless you notify us in writing on our form by the

applicable sales closing date for the crop year for which you wish to

include this coverage. All acreage of the crop insured under this

policy will be subject to this exclusion.

(2) Amounts of insurance for timely, late, and prevented planting

acreage within a unit will be combined to determine the amount of

insurance for the unit. For example, assume you insure one unit in

which you have a 100 percent share. The unit consists of 185 acres of

the same type and variety of which 150 acres are occupied by the female

parent plants. (The acreage occupied by the male parent plants (35

acres) is not insurable, and is not eligible for coverage under this

section.) 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 were not planted but are eligible for

a prevented planting amount of insurance. The amount of insurance for

the unit will be computed as follows:

(i) For the timely planted acreage, multiply the per acre amount of

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

(ii) For the late planted acreage, multiply the per acre amount of

insurance for timely planted acreage by 93 percent and multiply the

result by the 50 acres planted late; and

(iii) For prevented planting acreage, multiply the per acre amount

of insurance for timely planted acreage by:

(A) Fifty percent and multiply the result by the 50 acres you were

prevented from planting, if the acreage is eligible for prevented

planting coverage, and if the acreage is left idle for the crop year,

or if a cover crop is planted not for harvest. Prevented planting

compensation hereunder will not be denied because the cover crop is

hayed or grazed; or

(B) Twenty-five percent and multiply the result by the 50 acres you

were prevented from planting, if the acreage is eligible for prevented

planting coverage, and if you elect to plant a substitute crop for

harvest after the 10th day following the final planting date for the

insured crop. (This paragraph (B) is not applicable, and prevented

planting coverage is not available under these crop provisions, if you

elected the Catastrophic Risk Protection Endorsement or you elected to

exclude prevented planting coverage when a substitute crop is planted

(see section 13(d)(1)(iii)).

Your premium will be based on the result of multiplying the per

acre amount of insurance for timely planted acreage by the 150 acres in

the unit.

(3) You must have the inputs available to plant and produce the

intended crop with the expectation of at least producing the approved

yield. Proof that these inputs were available may be required.

(4) In addition to the provisions of section 11 (Insurance Period)

of the Basic Provisions (Sec. 457.8), the insurance period for

prevented planting coverage begins:

(i) On the sales closing date contained in the Special Provisions

for the insured crop in the county for the crop year the application

for insurance is accepted; or

(ii) For any subsequent crop year, on the sales closing date for

the insured crop in the county for the previous crop year, provided

continuous coverage has been in effect since that date. For example: If

you make application and purchase insurance for hybrid sorghum seed for

the 1998 crop year, prevented planting coverage will begin on the 1998

sales closing date for hybrid sorghum seed in the county. If the hybrid

sorghum seed coverage remains in effect

[[Page 68681]]

for the 1999 crop year (is not terminated or canceled during or after

the 1998 crop year), prevented planting coverage for the 1999 crop year

began on the 1998 sales closing date. Cancellation for the purpose of

transferring the policy to a different insurance provider when there is

no lapse in coverage will not be considered terminated or canceled

coverage for the purpose of the preceding sentence.

(5) The acreage to which prevented planting coverage applies will

not exceed the total eligible acreage on all FSA Farm Serial Numbers in

which you have a share, adjusted for any reconstitution that may have

occurred on or before the sales closing date. Eligible acreage for each

FSA Farm Serial Number is determined as follows:

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

States Department of Agriculture that limits the number of acres that

may be planted for the crop year, the acreage eligible for prevented

planting coverage will not exceed the total acreage permitted to be

planted to the insured crop.

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

United States Department of Agriculture that limits the number of acres

that may be planted, and unless we agree in writing on or before the

sales closing date, eligible acreage will not exceed the greater of:

(A) The number of acres planted to the hybrid sorghum seed on the

FSA Farm Serial Number during the previous crop year; or

(B) One-hundred percent of the simple average of the number of

acres planted to hybrid sorghum seed during the crop years that you

certified to determine your yield.

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

will be limited to the number of acres for which you had adequate

irrigation facilities prior to the insured cause of loss which

prevented you from planting.

(iv) A prevented planting amount of insurance will not be provided

for any acreage:

(A) That does not constitute at least 20 acres or 20 percent of the

acreage in the unit, whichever is less (Acreage that is less than 20

acres or 20 percent of the acreage in the unit will be presumed to have

been intended to be planted to the insured crop planted in the unit,

unless you can show that you had the inputs available before the final

planting date to plant and produce another insured crop on the

acreage);

(B) For which the actuarial table does not designate a premium rate

unless a written agreement designates such premium rate;

(C) Used for conservation purposes or intended to be left unplanted

under any program administered by the United States Department of

Agriculture;

(D) On which another crop is prevented from being planted, if you

have already received a prevented planting indemnity, guarantee, or

amount of insurance for the same acreage in the same crop year, unless

you provide adequate records of acreage and production showing that the

acreage was double-cropped in each of the last 4 years in which the

insured crop was grown on the acreage;

(E) which the insured crop is prevented from being planted, if any

other crop is planted and fails, or is planted and harvested, hayed or

grazed on the same acreage in the same crop year, (other than a cover

crop as specified in section (d)(2)(iii)(A) of this section, or a

substitute crop allowed in section (d)(2)(iii)(B), unless you provide

adequate records of acreage and production showing that the acreage was

double-cropped in each of the last 4 years in which the insured crop

was grown on the insured acreage;

(F) When coverage is provided under the Catastrophic Risk

Protection Endorsement if you plant another crop for harvest on any

acreage you were prevented from planting in the same crop year, even if

you have a history of double-cropping. If you have a Catastrophic Risk

Protection Endorsement and receive a prevented planting indemnity,

guarantee, or amount of insurance for a crop and are prevented from

planting another crop on the same acreage, you may only receive the

prevented planting indemnity, guarantee, or amount of insurance for the

crop on which the prevented planting indemnity, guarantee, or amount of

insurance is received; or

(G) For which planting history or conservation plans indicate that

the acreage would have remained 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 be

reduced by the number of hybrid sorghum seed acres timely planted and

late planted. For example, assume you have 100 acres eligible for

prevented planting coverage in which you have a 100 percent share. The

acreage is located in a single FSA Farm Serial Number which you insure

as two separate optional units consisting of 50 acres each. If you

planted 60 acres of hybrid sorghum seed on one optional unit and 40

acres of hybrid sorghum seed on the second optional unit, your

prevented planting eligible acreage would be reduced to zero (i.e.,100

acres eligible for prevented planting coverage minus 100 acres planted

equals zero).

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

Acreage) of the Basic Provisions (Sec. 457.8), you must report by unit

any insurable acreage that you were prevented from planting. This

report must be submitted on or before the acreage reporting date. For

the purpose of determining acreage eligible for a prevented planting

amount of insurance, the total amount of prevented planting and planted

acres cannot exceed the maximum number of acres eligible for prevented

planting coverage. Any acreage you report in excess of the number of

acres eligible for prevented planting coverage, or that exceeds the

number of eligible acres physically located in a unit, will be deleted

from your acreage report.

14. Written Agreement

Designated terms of this policy may be altered by written agreement

in accordance with the following:

(a) You must apply in writing for each written agreement no later

than the sales closing date, except as provided in section 14(e);

(b) The application for a written agreement must contain all

variable terms of the contract between you and us that will be in

effect if the written agreement is not approved;

(c) If approved, the written agreement will include all variable

terms of the contract, including, but not limited to, crop type or

variety, the guarantee, premium rate, and price election;

(d) Each written agreement will only be valid for one year (If the

written agreement is not specifically renewed the following year,

insurance coverage for subsequent crop years will be in accordance with

the printed policy); and

(e) An application for a written agreement submitted after the

sales closing date may be approved if, after a physical inspection of

the acreage, it is determined that no loss has occurred and the crop is

insurable in accordance with the policy and written agreement

provisions.

Signed in Washington, D.C., on December 20, 1996.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 96-33069 Filed 12-27-96; 8:45 am]

BILLING CODE 3410-FA-P