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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes

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.

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

be accepted until close of business March 31, 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 March 31, 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: Linda Williams, 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 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

The amendments set forth in this proposed rule contains information

collections that require clearance by Office of Management and Budget

(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; Rice 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 rice 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.

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 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

[[Page 4195]]

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 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 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 Sec. 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 Sec. 401.120 (Rice

Endorsement). FCIC also proposes to amend Sec. 401.120 to limit its

effect to the 1997 and prior crop years. FCIC will later publish a

regulation to remove and reserve Sec. 401.120.

This rule makes minor editorial and format changes to improve the

Rice Endorsement's compatibility with the Common Crop Insurance Policy.

In addition, FCIC is proposing substantive changes in the provisions

for insuring rice as follows:

1. Section 1--Add definitions for the terms ``FSA,'' ``flood

irrigation,'' ``good farming practices,'' ``irrigated practice,''

``local market price,'' ``practical to replant,'' ``saline water,''

``swathed,'' ``total milling yield'' and ``written agreement'' for

clarification. The definition of ``harvest'' has been amended for

clarification.

2. Section 4--Change the contract change date to November 30 for

all counties to maintain an adequate time period between this date and

the revised cancellation dates (see item 3 below).

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

February 28 in states and counties that currently have March 31 and

April 15 dates, to February 15 in states and counties that currently

have March 15 dates, and to January 15 in states and counties that

currently have February 15 dates. These changes are made to standardize

the cancellation and termination dates with the sales closing dates

which were amended to comply with the requirement of the Federal Crop

Insurance Reform Act of 1994 that spring planted crop sales closing

dates be moved ahead by 30 days.

4. Section 6--Current provisions for rice that state that any

acreage destroyed to comply with United States Department of

Agriculture programs will not be insured have been deleted from the

proposed rice crop provisions. Under those provisions insurance was

provided on a crop until it was destroyed without any premium being

paid.

5. Section 6(c)--Add a provision that requires the insured crop to

be flood irrigated. Current regulations only require the rice crop be

irrigated. This change will insure that adequate water covers the crop

during the growing season.

6. Section 6(d)--Add a provision which makes wild rice uninsurable.

The current regulation is mute regarding wild rice, but coverage has

never been intended for wild rice.

7. Section 7--Add a provision which makes acreage uninsurable if it

does not meet the rotation requirements contained in the Special

Provisions, or if it was planted to rice the preceding crop year unless

otherwise allowed by the Special Provisions. Also added a provision

which states that any acreage of the insured crop damaged prior to the

final planting date must be replanted unless the insurer agrees that

replanting is not practical.

8. Section 10(a)(3)--Clarify that replanted rice must be seeded at

a rate that is normal for initially planted rice to be eligible to

receive a replanting payment.

9. Section 10(c)--Reduce the liability for a unit by the amount of

any replanting payment, when rice is replanted using a practice that

was originally uninsurable. The current rice provisions are mute

regarding this issue. This addition is consistent with the replant

provisions under the same circumstances for other crops.

10. Sections 12(d)(1) and (2)--Add provisions to permit an insured

to be eligible for both moisture and quality adjustments to be

consistent with other crop policies which offer moisture and quality

adjustments.

11. Section 12(d)(4)--Allow the use of a standard quality

adjustment if provided in the Special Provisions. The use of such a

standard simplifies the loss adjustment process and assures consistent

adjustment for insureds with quality related losses.

12. Section 14--Adds 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 the

procedures for and duration of written agreements.

List of Subjects in 7 CFR Parts 401 and 457

Crop insurance, Rice, Rice endorsement.

Proposed Rule

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:

[[Page 4196]]

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), 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).

4. 7 CFR part 457 is amended by adding a new Sec. 457.141 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:

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.

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--A method of irrigation 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.

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

Department of Agriculture, 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.

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 twenty-five (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 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 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 successful crop.

Saline water--Water that contains a concentration of salt that

causes 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 or if a

written agreement to such division exists.

(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

unit, or the production from each unit must be kept separate until

loss adjustment is completed by us; and

[[Page 4197]]

(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.

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 replanting is not practical.

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;

(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 replant 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 twenty 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 total of section 12(b)(5) from the total 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 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

[[Page 4198]]

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 twelve 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 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 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 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 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 seventeen and five tenths

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 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

[[Page 4199]]

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 seven (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 ninety-three

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 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 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 twenty percent

of the acreage in the unit, whichever is less (Acreage that is less

than 20 acres or twenty 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 4200]]

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 January 21, 1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 97-2041 Filed 1-28-97; 8:45 am]

BILLING CODE BILLING CODE 3410-FA-P