Peanut Crop Insurance Regulations; and Common Crop Insurance Regulations, Peanut Crop Insurance Provisions

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 425 and 457

Peanut Crop Insurance Regulations; and Common Crop Insurance

Regulations, Peanut 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 peanuts. 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 peanut

crop insurance regulations with the Common Crop Insurance Policy for

ease of use and consistency of terms, and restrict the effect of the

current peanut crop insurance regulations to the 1997 and prior crop

years.

[[Page 23686]]

DATES: Written comments on this proposed rule will be accepted until

close of business June 2, 1997 and will be considered when the rule is

to be made final.

ADDRESSES: Interested persons are invited to submit written comments to

the Director, Product Development Division, Federal Crop Insurance

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

Kansas City, MO 64131.

FOR FURTHER INFORMATION CONTACT: Gary Johnson, Insurance Management

Specialist, Research and Development Division, Product Development

Division, 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 purpose of Executive Order No. 12866 and,

therefore, this rule has not been reviewed by OMB.

Paperwork Reduction Act of 1995

The amendments set forth in this proposed rule contain information

collections that require clearance by OMB under the provisions of 44

U.S.C. chapter 35.

The title of this information collection is ``Catastrophic Risk

Protection Plan and Related Requirements including, Common Crop

Insurance Regulations; Peanut 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 peanuts that are eligible for Federal crop insurance.

The information requested is necessary for the insurance company

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.

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

implication 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 insured

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. 12988

This proposed rule has been reviewed under Executive Order 12988.

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 part

11 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.

[[Page 23687]]

Background

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

CFR part 457), a new section, 7 CFR 457.134, Peanut 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 peanuts found at 7 CFR part 425 (Peanut

Crop Insurance Regulations). FCIC also proposes to amend 7 CFR part 425

to limit its effect to the 1997 and prior crop years.

This rule makes minor editorial and format changes to improve the

Peanut Crop Insurance Regulations compatibility with the Common Crop

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

the provisions for insuring peanuts as follows:

1. Section 1--Add definitions for ``CCC'', ``farmer's stock

peanuts,'' ``final planting date,'' ``FSA,'' ``good farming

practices,'' ``green peanuts,'' ``Inspection Certificate and Sales

Memorandum,'' ``interplanted,'' ``irrigated practice,'' ``non-quota

peanuts,'' ``planted acreage,'' ``practical to replant,'' ``production

guarantee (per acre),'' ``quota peanuts,'' ``Segregation I, II, and

III,'' ``timely planted,'' ``USDA,'' and ``written agreement,'' for

clarification purposes. Amend the definition of ``county'' contained in

the Basic Provisions (Sec. 457.8) to include any land identified by an

FSA farm serial number for such county but physically located in

another county.

2. Section 2--Define basic units in which the insured has 100

percent share or which are owned by one person and operated by another

specific person on a share basis; and for optional units by FSA Farm

Serial Number. Current provisions define basic units by FSA Farm Serial

Number. This change is consistent with provisions of other crop

policies, and will increase premium cost for some producers.

3. Section 3(a)--Clarify that the insured may select one price

election for quota peanuts and non-quota peanuts; however, the price

election the insured chooses must have the same relationship to the

maximum price offered by the insurance provider. This will help

simplify the administration of the program.

4. Section 3(b)--Limit the use of the quota price election to the

lesser of the insured effective poundage marketing quota or the insured

acreage multiplied by the production guarantee. If the insured acres

multiplied by the production guarantee exceeds the insured effective

poundage marketing quota, the difference will be insured at the non-

quota peanut price election.

5. Section 3(c)--Allows the use of actual production history to

determine the yield for insurance purposes. Guarantees are based on

production records and not necessarily on sales or quota records. In

some instances the yields may be the same. Therefore, the proper use

for yield under the program is the insured's records of production.

6. Section 4--The contract change date has been changed to November

30 for all counties to maintain an adequate time period between this

date and the revised cancellation dates.

7. Section 5--All cancellation and termination dates have been

moved 30 days earlier than currently established by 7 CFR part 425. In

most crop policies, including peanuts, the cancellation and termination

date correspond to the sales closing date. This change is necessary to

conform with the requirement of the Federal Crop Insurance Reform Act

of 1994 to move spring planted crop sales closing dates 30 days

earlier.

8. Section 7--Clarify the method used to determine the annual

premium for peanuts.

9. Section 8(d)--Clarify that peanuts intended to be harvested for

use as green peanuts are not insurable.

10. Section 9(a)(1)--Acreage grown using no-till or minimum tillage

farming methods is uninsurable unless allowed by a written agreement.

Although no-till and minimum tillage farming methods are recognized as

acceptable farming practices by the Cooperative State Research,

Education and Extension Service for other annual crops, the methods are

not acceptable for growing peanuts. The methods delay peanuts from

maturing on time resulting in a yield that is less than the yield used

to determine the production guarantee.

11. Section 10--The end of insurance period has been changed from

November 30 to December 31 in Duval and LaSalle counties, Texas. This

change makes the date consistent in all Texas counties.

12. Section 11--Clarify that insufficient or improper application

of pest or disease control measures are not an insured cause of loss.

13. Section 12(b)--Clarify the maximum replanting payment amount

for peanuts.

14. Section 14(c)--Clarify how the settlement of a claim will be

determined on any unit when the producer has both quota and non-quota

peanuts.

15. Section 15--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 will extend this practice to peanuts

and will allow FCIC to tailor the policy to a specific insured in

certain instances. The new section will cover the application for, and

duration of, written agreements.

Good cause is shown to allow 30 days for comments after this rule

is published in the Federal Register. This rule improves peanut crop

insurance coverage and brings it under the Common Crop Insurance Policy

Provisions for consistency among policies. Although, the contract

change date is December 31, 1997, the final rule must be published by

July 7, 1997. Publication is required by this date to achieve revision

and timely distribution of the actuarial documents thereby allowing the

reinsured companies and insureds sufficient time to implement the new

provisions. Therefore, public interest requires the agency to act

immediately to make these provisions available for the 1998 crop year.

List of Subjects in 7 CFR Parts 425 and 457

Crop insurance, Reporting and recordkeeping requirements, Peanuts.

Proposed Rule

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

Crop Insurance Corporation hereby proposes to amend 7 CFR parts 425 and

457, as follows:

PART 425--PEANUT CROP INSURANCE REGULATIONS FOR THE 1993 THROUGH

1997 CROP YEARS

1. The authority citation for 7 CFR part 425 is revised to read as

follows:

Authority: 7 U.S.C. 1506(1), 1506(p).

2. The part heading is revised to read as set forth above.

3. Subpart heading ``Subpart--Regulations for the 1993 and

Succeeding Crop Years'' is removed.

Sec. 425.7 [Amended]

4. Section 425.7 is amended by revising the introductory text of

paragraph (d) to read as follows:

* * * * *

(d) The application for the 1993 and succeeding crop years is found

at subpart D of part 400--General Administrative Regulations (7 CFR

400.37, 400.38). The provisions of the Peanut Insurance Policy for the

1993 through 1997 crop years are as follows:

* * * * *

[[Page 23688]]

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

1994 AND SUBSEQUENT CONTRACT YEARS

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

follows:

Authority: 7 U.S.C. 1506(1), 1506(p).

5. Section 457.134 is added to read as follows:

Sec. 457.134 Peanut crop insurance provisions.

The Peanut 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:

Peanut 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.

Average price per pound:

(1) The average CCC support price per pound, by type, for

Segregation I peanuts and Segregation II and III peanuts eligible to

be valued and insured as quota peanuts; or

(2) The highest non-quota price election contained in the

Special Provisions for all non-quota and Segregation II and III

peanuts not eligible to be valued and insured as quota peanuts.

Average support price per pound. The average price per pound for

each type of quota peanuts announced by the USDA under the peanut

price support program.

CCC. Commodity Credit Corporation, a wholly owned government

corporation within USDA.

County. In addition to the definition contained in the Basic

Provisions (Sec. 457.8), ``county'' also includes any land

identified by an FSA farm serial number for such county but

physically located in another county.

Days. Calendar days.

Effective poundage marketing quota. The number of pounds

reported on the acreage report as eligible for the average support

price per pound, not to exceed the Marketing Quota established by

FSA for the farm serial number.

Farmers' stock peanuts. Peanuts customarily marketed by

producers, produced in the United States, and which are not shelled,

crushed, cleaned, or otherwise changed (except for removal of

foreign material, loose shelled kernels, and excess moisture) from

the condition in which peanuts are harvested.

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.

FSA. Farm Service Agency, an agency of USDA or a successor

agency.

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 production

guarantee, and are those recognized by the Cooperative State

Research, Education, and Extension Service as compatible with

agronomic and weather conditions in the county.

Green peanuts. Peanuts that are harvested and marketed prior to

maturity without drying or removal of moisture either by natural or

artificial means. They are marketed for human consumption

exclusively as boiled peanuts (freshly dug, unshelled peanuts that

have been boiled in salt water).

Harvest. Combining or threshing of peanuts. Digging of peanuts

prior to combining or threshing is not considered harvesting.

Inspection Certificate and Sales Memorandum. A USDA form that

records the inspection grading results and marketing record for the

net weight of peanuts delivered to a buyer.

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.

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.

Non-quota peanuts. Peanuts other than quota peanuts.

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. Peanuts must initially 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.

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 the

field, time to crop maturity, and marketing window, that replanting

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.

Production guarantee (per acre). The number of pounds determined

by multiplying the farm yield per acre by the coverage level

percentage you elect.

Quota peanuts. Peanuts that are marketed for domestic edible

use, seed, or other related uses, which are eligible to be valued at

the average support price per pound.

Replanting. Performing the cultural practices necessary to

replace the peanut seed and then replacing the peanut seed in the

insured acreage with the expectation of growing a successful crop.

Segregation I, II, or III. Grades designated and defined for

peanuts by the Agricultural Marketing Service of USDA.

Timely planted. Planted on or before the final planting date

designated in the Special Provisions for the insured crop in the

county.

USDA. The United States Department of Agriculture.

Value per pound. A price determined by USDA as shown on the USDA

``Inspection Certificate and Sales Memorandum'' or other record

accepted by us.

Written agreement. A written document that alters designated

terms of this policy in accordance with section 15.

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 if, for each

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

written agreement to such division exists.

(b) Basic units may not be divided into optional units on any

basis other than as described in this section.

(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 will

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,

or planted acreage and production for each optional unit for at

least the last crop year used to determine your production

guarantee.

(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) For each crop year, records of marketed production or

measurement of stored production from each optional unit must be

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 be located in a separate farm

identified by a single FSA Farm Serial Number.

(f) We may reject or modify any FSA reconstitution for the

purpose of the unit definition, if we determine the reconstitution

was done in whole or in part to defeat the purpose of the Federal

crop insurance

[[Page 23689]]

program or to gain a disproportionate advantage under this policy.

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 Basic Provisions (Sec. 457.8):

(a) The price elections you choose for the quota and non-quota

peanuts must have the same percentage relationship to the maximum

price election offered by us for quota and non-quota peanuts. For

example, if you choose 100 percent of the maximum quota peanut price

election, you must also choose 100 percent of the maximum non-quota

election.

(b) The maximum pounds that may be insured at the quota price

election are the lesser of:

(1) The effective poundage marketing quota; or

(2) The insured acreage multiplied by the production guarantee.

If the insured acres multiplied by the production guarantee exceeds

the effective poundage marketing quota, the difference will be

insured at the non-quota peanut price election.

(c) You may be required to file an annual production report to

us, if required by the Special Provisions, to establish an approved

yield in lieu of the approved yield published in the actuarial

table. If we require you to file an annual production report, you

must do so in accordance to section 3(c) (Insurance Guarantees,

Coverage Levels, and Prices for Determining Indemnities) of the

Common Crop Insurance Policy (Sec. 457.8).

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:

Cancellation and Termination

State, County, and Dates

Jackson, Victoria, Golliad, Bee, Live Oak, Mullen, La Salle, and

Dimmit Counties, Texas and all Texas Counties lying south thereof.--

January 15

El Paso, Hudspeth, Culberson, Reeves, Loving, Winkler, Ector, Upton,

Reagan, Sterling, Coke, Tom Green, Concho, McCulloch, San Saba,

Mills, Hamilton, Bosque, Johnson, Tarrant, Wise, Cooke Counties,

Texas, and all Texas counties south and east thereof; and all other

states.--February 28

New Mexico; Oklahoma; and all other Texas counties.--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 report the effective

poundage marketing quota, if any, that is applicable to each unit

for the current crop year.

7. Annual Premium

In lieu of the premium amount determinations contained in

section 7(c) (Annual Premium) of the Basic Provisions (Sec. 457.8),

the annual premium will be determined by:

(a) Multiplying the insured effective poundage marketing quota

by the price election for quota peanuts;

(b) Multiplying the insured pounds of non-quota peanuts by the

price election for non-quota peanuts;

(c) Totaling the results of section 7(a) and 7(b);

(d) Multiplying the total of section 7(c) by the applicable

premium rate stated in the actuarial table; and

(e) Multiplying the result of section 7(d) by your share.

8. Insured Crop

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

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

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

table:

(a) In which you have a share;

(b) That are planted for the purpose of marketing as farmers'

stock peanuts;

(c) That are a type of peanut designated in the Special

Provisions as being insurable; and

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

written agreement):

(1) Harvested for use as green peanuts;

(2) Interplanted with another crop; or

(3) Planted into an established grass or legume.

9. Insurable Acreage

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

of the Basic Provisions (Sec. 457.8):

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

planting date, to the extent that the majority of growers in the

area would normally not further care for the crop, must be replanted

unless we agree that replanting is not practical.

(b) We will not insure any acreage:

(1) On which peanuts are grown using no-till or minimum tillage

farming methods unless a written agreement allows otherwise; or

(2) Which does not meet the rotation requirements contained in

the Special Provisions.

10. Insurance Period

(a) 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 date immediately following

planting as follows:

(1) November 30 in all states except New Mexico, Oklahoma, and

Texas; and

(2) December 31 in New Mexico, Oklahoma, and Texas.

(b) In addition to the events contained in section 11 (Insurance

Period) of the Basic Provisions (Sec. 457.8) the insurance period

ends when the peanuts are removed from the field.

11. 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 during 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 caused by an

insured peril that occurs during the insurance period.

12. Replanting Payments

(a) In accordance with section 13 (Replanting Payments) of the

Basic Provisions (Sec. 457.8):

(1) A replanting payment is allowed if the crop is damaged by an

insurable cause of loss to the extent that the remaining stand will

not produce at least 90 percent of the production guarantee for the

acreage and it is practical to replant.

(2) The maximum amount of the replanting payment for the unit

will be the lesser of:

(i) Eighty dollars ($80.00) per acre; or

(ii) The actual cost of replanting per acre multiplied by the

number of acres replanted and by your insured share; or

(iii) Twenty-percent of the production guarantee multiplied by

your price election, multiplied by the number of acres replanted,

multiplied by your insured share.

(b) When peanuts are replanted using a practice that is

uninsurable as an original planting, the liability for the unit will

be reduced by the amount of the replanting payment. The premium

amount will not be reduced.

13. Duties In The Event of Damage or Loss

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 10

feet wide 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.

14. 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 units, we will combine all optional units

for which such production records were not provided; or

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

production to such units in proportion to our liability on the

harvested acreage for the units.

(b) When settling your claim, the effective poundage marketing

quota for each unit will be limited to the lesser of:

(1) The amount of quota reported on the acreage report; or

(2) The amount of the FSA effective poundage marketing quota

minus fall transfers of the FSA effective poundage marketing quota

to another FSA Farm Serial Number; or

[[Page 23690]]

(3) The amount determined at the final settlement of your claim.

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

will settle your claim by:

(1) Multiplying the insured acreage for the unit by the

production guarantee per acre;

(2) Subtract the insured effective poundage marketing quota from

the result of section 14(c)(1) to determine the insured non-quota

peanuts;

(3) Multiply the insured quota and non-quota peanuts by their

respective price election for quota and/or non-quota peanuts;

(4) Total the results of section 14(c)(3);

(5) Multiply the quota and non-quota production to count (see

section 14(d)) by their respective price election for quota and/or

non-quota peanuts;

(6) Total the results of section 14(c)(5);

(7) Subtract the result of section 14(c)(6) from section

14(c)(4); and

(8) Multiply the result by your share.

(d) The total production to count (in pounds) from all insurable

acreage on the unit will include:

(1) All appraised and harvested production.

(2) All appraised production will include:

(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; or

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

acceptable to us;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production (mature unharvested production may

be adjusted for quality deficiencies and excess moisture in

accordance with section 14(e)); and

(iv) 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 when 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

(3) All harvested production from the insurable acreage.

(e) Mature peanut production that is damaged by insurable causes

and for which the value per pound is less than the average support

price per pound for the type will be adjusted by:

(1) Dividing the value per pound for the insured types of

peanuts by the applicable average price per pound; and

(2) Multiplying this result by the number of pounds of such

production.

(f) To enable us to determine the net weight and quality of

production of any peanuts for which a ``Inspection Certificate and

Sales Memorandum'' has not been issued, we must be given the

opportunity to have such peanuts inspected and graded before you

dispose of them. If you dispose of any production without giving us

the opportunity to have the peanuts inspected and graded, the gross

weight of such production will be used in determining total

production to count unless you submit a marketing record

satisfactory to us which clearly shows the net weight and quality of

such peanuts.

15. Written Agreements

Designated terms of this policy may be altered by written

agreement in accordance with the following:

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

the sales closing date, except as provided in section 15(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 by us, 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 provisions.

Signed in Washington, D.C., on April 25, 1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 97-11249 Filed 4-30-97; 8:45 am]

BILLING CODE 3410-FA-P