General Crop Insurance Regulations, Rice Endorsement; and Common Crop Insurance Regulations, Rice Crop Insurance Provisions

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457

General Crop Insurance Regulations, Rice Endorsement; and Common

Crop Insurance Regulations, Rice Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes

specific crop provisions for the insurance of rice. 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 Rice

Endorsement with the Common Crop Insurance Policy for ease of use and

consistency of terms, and to restrict the effect of the current Rice

Endorsement to the 1997 and prior crop years.

EFFECTIVE DATE: June 23, 1997.

FOR FURTHER INFORMATION CONTACT: Linda Williams, Insurance Management

Specialist, Research and Development, Product Development Division,

Federal Crop Insurance Corporation, United States Department of

Agriculture, 9435 Holmes Road, Kansas City, MO 64131, telephone (816)

926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

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

to be exempt for the purposes of Executive Order 12866, and therefore,

this rule has not been reviewed by OMB.

Paperwork Reduction Act of 1995

Following publication of the proposed rule, the public was afforded

60 days to submit written comments on information collection

requirements previously approved by OMB under OMB control number 0563-

003 through September 30, 1998. No public comments were received.

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 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 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 12372

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.

Executive Order 12988

This final rule has been reviewed in accordance with 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 28309]]

Background

On Wednesday, January 29, 1997, FCIC published a proposed rule in

the Federal Register at 62 FR 4194-4200 to add to the Common Crop

Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.141,

Rice Crop Insurance Provisions. The new provisions will be effective

for the 1998 and succeeding crop years. These provisions will replace

and supercede the current provisions for insuring rice found at 7 CFR

401.120 (Rice Endorsement). FCIC also amends 7 CFR part 401.120 to

limit its effect to the 1997 and prior crop years.

Following publication of the proposed rule, the public was afforded

60 days to submit written comments and opinions. A total of 14 comments

were received from the crop insurance industry. The comments received

and FCIC's responses, are as follows:

Comment: One comment from the crop insurance industry recommended

adding the words ``and quality'' after the word ``quantity'' in the

definition of ``Irrigated practice.''

Response: Water quality is an important issue. However, since no

standards or procedures have been developed to measure water quality

for insurance purposes, quality cannot be included in the definition.

Therefore, no change will be made.

Comment: One comment received from the crop insurance industry

recommended combining the definitions of ``irrigated practice'' and

``flood irrigation.'' The only crop provision reference to ``irrigated

practice'' is in the definition of ``flood irrigated.'' The commenter

suggested as an alternative, add ``An irrigated practice commonly used*

* *'' to the definition of ``flood irrigation.''

Response: FCIC agrees with the comment and has revised the

definition of flood irrigation to reference the term irrigated

practice.

Comment: One comment received from the crop insurance industry

recommended changing the definition of ``production guarantee'' by

referring to ``your approved APH yield.'' The commenter stated the

current provision implies there is only one APH yield.

Response: There is only one APH yield for each unit. Therefore, no

change will be made.

Comment: Two comments from the crop insurance industry stated that

the definition of ``replanting'' is confusing and awkward. One of the

commenters recommended revising the definition to specify ``* *

*growing a successful rice crop.''

Response: FCIC agrees that the definition was confusing and has

amended the definition of replanting for clarification.

Comment: The crop insurance industry recommended that FCIC provide

the statements contained in the Special Provisions at the time the crop

provisions are published as proposed rule. The commenter suggested that

it would be helpful to review the Special Provisions statement

regarding the rotation requirements referred to in section 7.

Response: The Special Provisions contain those policy terms which

are specific to a county. These are not included in FCIC's regulatory

process because publication of each county and each crop would be

voluminous. Further, the information contained in the Special

Provisions is not developed until after the Crop Provisions become a

final rule. The statements are released with the filing of actuarial

documents for the insured crop. Therefore, no change will be made.

Comment: One comment received from the crop insurance industry

recommended revising the cause of loss in section 9(a)(1) to state

``adverse weather conditions (except drought).'' This change would

conform FCIC's crop provisions to the current NCIS-716 provisions.

Response: FCIC agrees and will amend the provision accordingly.

Comment: One comment received from the crop insurance industry

stated that the crop provisions should not allow the insured to defer

settlement of a claim for indemnity as provided in section

12(c)(1)(iv). The commenter stated deferring settlement and waiting for

a later appraisal usually results in a lower amount of appraised

production.

Response: A later appraisal will only be necessary if the insurance

provider agrees that such an appraisal would result in a more accurate

determination and if the producer continues to care for the crop. If

the producer does not care for the crop, the original appraisal will be

used. Therefore, no change will be made to these provisions.

Comment: The crop insurance industry recommended that the

provisions contained in section 13(d)(1)(iii)(B) regarding prevented

planting coverage for a substitute crop be eliminated.

Response: FCIC intends to address this issue for all crops with

prevented planting coverage and is currently working on a regulation

that will propose substantive changes in this coverage. Therefore, no

changes will be made to these rice crop provisions.

Comment: One comment from the crop insurance industry questioned if

the provisions contained in section 13(d)(5)(iii)(D) were intended to

be less restrictive by changing the double-cropping requirement to

state ``* * *in each of the last 4 years in which the insured crop was

grown on the acreage.'' The commenter suggested this change should be

included in the summary of changes so that agents and producers were

aware of the change.

Response: The proposed language allows additional acreage to be

considered ``double-cropped.'' The previous provisions require eight

crops to have been produced on the same acreage in the previous four

years to qualify for double-cropped acreage. The intent of this change

is to recognize rotation practices used for double-cropped acreage.

Comment: One comment from the crop insurance industry suggested

combining the provisions in section 14(c) with the provisions in 14(a).

Response: Approval of written agreements requested after the sales

closing date is the exception, not the rule. Therefore, these

provisions should be kept separate and no changes have been made.

Comment: Three comments from the crop insurance industry

recommended the requirement for a written agreement to be renewed each

year be removed. Terms of the agreement should be continuous if no

substantive changes occur from one year to the next. One commenter

stated that limiting written agreements to one year only increases

administrative cost and allows the opportunity for misunderstanding and

error.

Response: Written agreements are intended to permit insurance

coverage in unusual or previously unknown situations. If the situation

continues year to year, it should be incorporated into the policy or

Special Provisions. It is important to minimize exceptions to assure

that the insured is well aware of the specific terms of the policy.

Therefore, no change will be made.

List of Subjects in 7 CFR Parts 401 and 457

Crop insurance, Rice endorsement, Rice.

Final Rule

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

Crop Insurance Corporation hereby amends 7 CFR parts 401 and 457

effective for the 1998 and succeeding crop years to read as follows:

[[Page 28310]]

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(1), 1506(p).

2. The introductory text of Sec. 401.120 is revised to read as

follows:

Sec. 401.120 Rice endorsement.

The provisions of the Rice Crop Insurance Endorsement for the 1988

through the 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), 1506(p).

Section 457.141 is added to read as follows:

Sec. 457.141 Rice crop insurance provisions.

The Rice Crop Insurance Provisions for the 1998 and succeeding crop

years are as follows:

FCIC policies:

United States Department of Agriculture

Federal Crop Insurance Corporation

Reinsured policies:

(Appropriate title for insurance provider)

Both FCIC and reinsured policies:

Rice 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

Days. Calendar days.

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

Department of Agriculture, or a successor agency.

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.

Flood irrigation. An irrigated practice commonly used for rice

production whereby the planted acreage is intentionally covered with

water that is maintained at a uniform and shallow depth throughout

the growing season.

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.

Harvest. Combining or threshing the rice for grain. A crop that

is swathed prior to combining is not considered harvested.

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.

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 per pound for the U.S. No. 3

grade of rough rice offered by buyers in the area in which you

normally market the rice. Factors not associated with grading under

the United States Standards for Rice including, but not limited to,

protein and oil content or milling quality will not be considered.

Planted. The uniform placement of an adequate amount of rice

seed into a prepared seedbed by one of the following methods:

(a) Drill seeding--Using a grain drill to incorporate the seed

to a proper soil depth;

(b) Broadcast seeding--Distributing seed evenly onto the surface

of an un-flooded seedbed followed by either timely mechanical

incorporation of the seed to a proper soil depth in the seedbed or

flushing the seedbed with water; or

(c) Broadcast seeding into a controlled flood--Distributing the

rice seed onto a prepared seedbed that has been intentionally

covered to a proper depth by water. The water must be free of

movement and be completely contained on the acreage by properly

constructed levees and gates.

Acreage seeded 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, marketing

windows, condition of the field, and time to crop maturity, 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.

Prevented planting. Inability to plant the insured crop with

proper equipment by the final planting date designated in the

Special Provisions for the insured crop in the county or the end of

the late planting period. You must have been unable to plant the

insured crop due to an insured cause of loss that has prevented the

majority of producers in the surrounding area from planting the same

crop.

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

by multiplying the approved Actual Production History (APH) yield

per acre by the coverage level percentage you elect.

Replanting. Performing the cultural practices necessary to

replace the rice seed and then replacing the rice seed in the

insured acreage with the expectation of growing a rice crop that

will at least produce the approved APH yield.

Saline water. Water that contains a concentration of salt

sufficient to cause damage to the insured crop.

Second crop rice. The regrowth of a stand of rice following

harvest of the initially insured rice crop that can be harvested in

the same crop year.

Swathed. Severance of the stem and grain head from the ground

without removal of the rice kernels from the plant and placing in a

windrow.

Timely planted. Planted on or before the final planting date

designated in the Special Provisions for the insured crop in the

county.

Total milling yield. Rice production consisting of heads, second

heads, screenings, and brewer's rice as defined by the official

United States Standards for Rice.

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 if, for each

optional unit, you meet all the conditions of this section.

(b) 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 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,

of 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) 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

[[Page 28311]]

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 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 single FSA Farm Serial Number unless

otherwise specified by a written agreement.

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), you may select only one price

election for all the rice in the county insured under this policy

unless the Special Provisions provide different price elections by

type, in which case you may select one price election for each rice

type designated in the Special Provisions. The price elections you

choose for each type must have the same percentage relationship to

the maximum price offered by us for each type. For example, if you

choose 100 percent of the maximum price election for one type, you

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

other types.

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 and county date

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

Jackson, Victoria, Goliad, Bee, Live Oak, January 15.

McMullen, La Salle, and Dimmit Counties,

Texas; and all Texas counties south

thereof.

Florida.................................. February 15.

All other Texas counties and all other February 28.

states.

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

6. Insured Crop

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

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

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

table:

(a) In which you have a share;

(b) That is planted for harvest as grain;

(c) That is flood irrigated; and

(d) That is not wild rice.

7. Insurable Acreage

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

of the Basic Provisions (Sec. 457.8):

(a) We will not insure any acreage planted to rice:

(1) The preceding crop year unless allowed by the Special

Provisions; or

(2) That does not meet the rotation requirements shown in the

Special Provisions; and

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

planting date, to the extent that producers in the area would

normally not further care for the crop, must be replanted unless we

agree that it is not practical to replant.

8. Insurance Period

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 October 31 immediately following

planting.

9. 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 (except drought);

(2) Fire;

(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 in

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

will not insure against any loss of production due to the

application of saline water.

10. Replanting Payment

(a) A replanting payment for rice is allowed as follows:

(1) You must comply with all requirements regarding replanting

payments contained under section 13 (Replanting Payment) of the

Basic Provisions (Sec. 457.8);

(2) The rice must be 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

(3) The replanted rice must be seeded at a rate that is normal

for initially planted rice (if new seed is planted at a reduced

seeding rate into a partially damaged stand of rice, the acreage

will not be eligible for a replanting payment).

(b) In accordance with the provisions of section 13 (Replanting

Payment) of the Basic Provisions (Sec. 457.8), the maximum amount of

the replanting payment per acre will be the lesser of 20 percent of

the production guarantee or 400 pounds, multiplied by your price

election, multiplied by your insured share.

(c) When rice is replanted using a practice that is uninsurable

for 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.

11. 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.

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 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) 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 production

guarantee by type, if applicable;

(2) Multiplying each result in section 12(b)(1) by the

respective price election by type, if applicable;

(3) Totaling the results of section 12(b)(2);

(4) Multiplying the total production to be counted by type, if

applicable, (see section 12(c) through (e)) by the respective price

election;

(5) Totaling the results of section 12(b)(4);

(6) Subtracting the result of section 12(b)(5) from the result

of section 12(b)(3); and

(7) Multiplying the result of section 12(b)(6) by your share.

(c) The total production to count (in pounds) 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) 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) Unharvested production (mature unharvested production may

be adjusted for quality deficiencies and excess moisture in

accordance with section 12(d));

(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

[[Page 28312]]

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 the insurable acreage,

including any production from a second rice crop harvested in the

same crop year.

(d) Mature rough rice may be adjusted for excess moisture and

quality deficiencies. If moisture adjustment is applicable, it will

be made prior to any adjustment for quality.

(1) Production will be reduced by 0.12 percent for each 0.1

percentage point of moisture in excess of 12 percent. We may obtain

samples of the production to determine the moisture content.

(2) Production will be eligible for quality adjustment if:

(i) Deficiencies in quality, in accordance with the Official

United States Standards for Rice, result in rice not meeting the

grade requirements for U.S. No. 3 (grades U.S. No. 4 or worse)

because of red rice, chalky kernels or damaged kernels;

(ii) The rice has a total milling yield of less than 68 pounds

per hundredweight;

(iii) The whole kernel weight is less than 55 pounds per

hundredweight of milled rice for medium and short grain varieties;

(iv) The whole kernel weight is less than 48 pounds per

hundredweight of milled rice for long grain varieties; or

(v) Substances or conditions are present that are identified by

the Food and Drug Administration or other public health

organizations of the United States as being injurious to human or

animal health.

(3) Quality will be a factor in determining your loss only if:

(i) The deficiencies, substances, or conditions specified in

section 12(d)(2) resulted from a cause of loss against which

insurance is provided under these crop provisions and which occurs

within the insurance period;

(ii) The deficiencies, substances, or conditions specified in

section 12(d)(2) result in a net price for the damaged production

that is less than the local market price;

(iii) All determinations of these deficiencies, substances, or

conditions specified in section 12(d)(2) are made using samples of

the production obtained by us or by a disinterested third party

approved by us; and

(iv) The samples are analyzed by a grader licensed to grade rice

under the authority of the United States Agriculture Marketing Act

or the United States Warehouse Act with regard to deficiencies in

quality, or by a laboratory approved by us with regard to substances

or conditions injurious to human or animal health. Notwithstanding

the preceding sentence, test weight for quality adjustment purposes

may be determined by our loss adjuster.

(4) Rice production that is eligible for quality adjustment, as

specified in sections 12(d)(2) and (3), will be reduced as follows:

(i) In accordance with quality adjustment factors contained in

the Special Provisions; or

(ii) If quality adjustment factors are not contained in the

Special Provisions, as follows:

(A) The market price of the qualifying damaged production and

the local market price will be determined on the earlier of the date

such quality adjusted production is sold or the date of final

inspection for the unit. The price for the qualifying damaged

production will be the market price for the local area to the extent

feasible. Discounts used to establish the net price of the damaged

production will be limited to those that are usual, customary, and

reasonable. The price will not be reduced for:

(1) Moisture content;

(2) Damage due to uninsured causes; or

(3) Drying, handling, processing, or any other costs associated

with normal harvesting, handling, and marketing of the rice; except,

if the price of the damaged production can be increased by

conditioning, we may reduce the price of the production after it has

been conditioned by the cost of conditioning but not lower than the

value of the production before conditioning,

(We may obtain prices from any buyer of our choice. If we obtain

prices from one or more buyers located outside your local market

area, we will reduce such prices by the additional costs required to

deliver the rice to those buyers.);

(B) The value of the damaged or conditioned production will be

divided by the local market price to determine the quality

adjustment factor; and

(C) The number of pounds remaining after any reduction due to

excessive moisture (the moisture-adjusted gross pounds (if

appropriate)) of the damaged or conditioned production will then be

multiplied by the quality adjustment factor to determine the net

production to count.

(e) Any production harvested from plants growing in the insured

crop may be counted as production of the insured crop on a weight

basis.

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 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 production guarantees. 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) If you were prevented from planting, you must provide

written notice to us not later than the acreage reporting date.

(c) Late Planting

(1) For rice acreage planted during the late planting period,

the production guarantee for each acre will be reduced for each day

planted after the final planting date by:

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

and

(ii) Two percent (2%) 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 rice 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 (5) days after the end of the late planting period.

(d) Prevented Planting (Including Planting After the Late

Planting Period)

(1) If you were prevented from timely planting rice, you may

elect:

(i) To plant rice during the late planting period. The

production guarantee 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 production guarantee

for such acreage will be thirty-five percent (35%) of the production

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

guarantee for timely planted acreage is 2,000 pounds per acre, your

prevented planting production guarantee would be 700 pounds per acre

(2,000 pounds multiplied by 0.35). 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 sections 12 (c)

through (e); or

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

for harvest, in which case:

(A) No prevented planting production guarantee 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) A production guarantee equal to 17.5 percent of the

production guarantee 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 production guarantee

for timely planted acreage is 2,000 pounds per acre, your prevented

planting production guarantee would be 350 pounds

[[Page 28313]]

per acre (2,000 pounds multiplied by 0.175). 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) Production guarantees for timely, late, and prevented

planting acreage within a unit will be combined to determine the

production guarantee for the unit. For example, assume you insure

one unit in which you have a 100 percent share. The unit consists of

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

planted 7 days after the final planting date (late planted), and 50

acres were not planted but are eligible for a prevented planting

production guarantee. The production guarantee for the unit will be

computed as follows:

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

production guarantee for timely planted acreage by the 50 acres

planted timely;

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

production guarantee 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

production guarantee for timely planted acreage by:

(A) Thirty-five percent (35%) 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) Seventeen and five tenths percent (17.5%) 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 production guarantee 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

production guarantee. 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 rice for the 1998

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

closing date for rice in the county. If the rice coverage remains in

effect 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 FSA base acreage for the insured crop, including acres

that could be flexed from another crop, if applicable;

(B) The number of acres planted to rice on the FSA Farm Serial

Number during the previous crop year; or

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

acres planted to rice during the crop years that you certified to

determine your yield.

(iii) A prevented planting production guarantee 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) On 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 13(d)(2)(iii)(A) or a

substitute crop allowed in section 13(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 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.

(iv) 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 rice 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 rice on one optional unit and 40 acres

rice 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 production guarantee, 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.

[[Page 28314]]

14. 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 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 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 May 19, 1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 97-13656 Filed 5-22-97; 8:45 am]

BILLING CODE 3401-08-P