Common Crop Insurance Regulations, Dry Bean Crop Insurance Provisions; and Dry Bean Crop Insurance Regulations

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes

specific crop provisions for the insurance of dry beans. 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 dry bean

crop insurance regulation with the Common Crop Insurance Policy for

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

current dry bean crop insurance regulation to the 1996 and prior crop

years.

EFFECTIVE DATE: February 11, 1997.

FOR FURTHER INFORMATION CONTACT: Arden Routh, Program Analyst, 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 No. 12866

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

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

therefore, 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, data, and opinions on information

collection requirements previously approved by OMB under OMB control

number 0563-0003 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 No. 12612

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

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

implications to warrant the preparation of a Federalism Assessment. The

provisions contained in this rule will not have a substantial direct

effect on States or their political subdivisions, or on the

distribution of power and responsibilities among the various levels of

government.

Regulatory Flexibility Act

This regulation will not have a significant impact on a substantial

number of small entities. The effect of this regulation on small

entities will be no greater than on larger entities. Under the current

regulations, a producer is required to complete an application and an

acreage report. If the crop is damaged or destroyed, the insured is

required to give notice of loss and provide the necessary information

to complete a claim for indemnity.

The insured must also annually certify to the previous years

production if adequate records are available to support the

certification. The producer must maintain the production records to

support the certified information for at least three years. This

regulation does not alter those requirements.

The amount of work required of the insurance companies delivering

and servicing these policies will not increase significantly from the

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

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

to be exempt from the provisions of the Regulatory Flexibility Act (5

U.S.C. 605), and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

This program is listed in the Catalog of Federal Domestic

Assistance under No. 10.450.

Executive Order No. 12372

This program is not subject to the provisions of Executive Order

No. 12372, which require intergovernmental consultation with State and

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

published at 48 FR 29115, June 24, 1983.

Executive Order No. 12778

The Office of the General Counsel has determined that these

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

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

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

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

such State and local laws are inconsistent herewith. The administrative

appeal provisions published at 7 CFR 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.

Background

On Tuesday, November 26, 1996, FCIC published a proposed rule in

the Federal Register at 61 FR 60049-60057 to add to the Common Crop

Insurance Regulations (7 CFR part 457) a new section, 7 CFR 457.150,

Dry Bean Crop Provisions. The new provisions will be

[[Page 6100]]

effective for the 1997 and succeeding crop years. These provisions will

replace and supersede the current provisions for insuring dry beans

found at 7 CFR part 433 (Dry Bean Crop Insurance Regulations). FCIC

also amends 7 CFR part 433 to limit its effect to the 1996 and prior

crop years. FCIC will later publish a regulation to remove and reserve

part 433.

Following publication of the proposed rule, the public was afforded

30 days to submit written comments, data, and opinions. A total of 80

comments were received from the crop insurance industry and FCIC. The

comments received, and FCIC's responses, are as follows:

Comment: The crop insurance industry questioned if consideration

had ever been given to having two bean polices, one for contract seed

beans and one for dry beans. It would be easier for policyholders to

have crop provisions that address only the kind of beans they are

insuring.

Response: FCIC will consider this option for a future rule.

However, there is not sufficient time to divide this policy for the

1997 crop year. Therefore, no change has been made.

Comment: The crop insurance industry recommended defining

``properly handled.''

Response: The requirements for handling seed beans are contained in

the seed bean processor contract. Therefore, it would be difficult for

FCIC to define ``properly handled'' due to the differing requirements

of seed bean companies. However, FCIC will amend the definition of

``actual value'' to clarify that production must be handled in

accordance with requirements contained in the seed bean processor

contract.

Comment: The crop insurance industry recommended that the

definition of ``Base price'' be amended to exclude any bonus offered

when the germination percentage is above the minimum required by the

seed contract.

Response: FCIC agrees with the comment and has amended the

definition accordingly.

Comment: The crop insurance industry expressed confusion with the

definitions of ``beans,'' ``dry beans,'' and ``contract seed beans.''

The definition of ``contract seed beans,'' is also covered by the ``dry

beans'' definition which makes the definition of ``beans'' seem

redundant. The commenter questions if the definition for ``dry beans''

needs to include the intended use of the production.

Response: Throughout these provisions the term ``beans'' applies to

both dry beans and contract seed beans. The term ``dry beans'' includes

all classes of beans included in The United States Standards for Beans.

The term ``contract seed beans'' distinguishes dry beans grown under a

contract for the specific purpose of producing seed for a subsequent

crop year. The definition of ``dry beans'' was changed to exclude

contract seed beans.

Comment: The crop insurance industry agreed that the definition for

``county'' should be deleted in these provisions so that the definition

in the Basic Provisions will be effective. The commenter emphasized

that if these provisions are approved for the 1997 crop year, these

changes and subsequent procedures need to be issued soon enough for

companies to provide training to their agents, rearrange APH data bases

for units that previously included land in another county, and to allow

policyholders to decide whether to insure any land in another county in

which they have an interest.

Response: FCIC will provide instructions for changing the data

bases for units that previously included land in another county. These

instructions will be made available at the time the policy is released.

FCIC does not anticipate that a large number of producers farm in more

than one county and, therefore, does not expect a large number of data

base revisions to be necessary.

Comment: The crop insurance industry was concerned with the

definition of ``Good farming practices,'' which makes reference to

``generally recognized by the Cooperative Extension Service.'' The

commenters indicated that there are areas or situations where good,

accepted farming practices may not necessarily be recognized by the

Extension Service.

Response: FCIC has removed the word ``generally'' from this part of

the definition. However, the Cooperative State Research, Education, and

Extension Service recognizes most farming practices that are considered

acceptable for producing beans. The use of practices not recognized as

acceptable by the Cooperative State Research, Education, and Extension

Service provides no standards by which to measure performance.

Comment: 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 has been made.

Comment: A representative of FCIC recommended changing the second

sentence in the definition of ``local market price'' to ``Moisture and

factors * * *'' and delete ``such as moisture content.''

Response: FCIC agrees with the comment and has amended the

definition accordingly.

Comment: The crop insurance industry recommended changing the

definition of ``net price'' to read, ``The dollar value of dry bean

production received or that could have been received * * *''

Response: FCIC agrees with comment and has amended the definition

accordingly.

Comment: One comment received from the insurance industry

recommended changing the definition of ``pick'' to consider defects

based on the original grade of the beans.

Response: Dockage does not include defects to the beans and,

therefore, should not be included in any calculation of the pick, which

applies only to defects of the beans. Therefore, no change has been

made.

Comment: The crop insurance industry recommended adding a final

sentence to the definition of ``prevented planting,'' which would

require the insured to have past history of the bean type which the

insured is declaring as being prevented from being planted.

Response: FCIC cannot penalize new producers of a bean type, who

can prove that they had the inputs available to plant that particular

bean type, by denying them prevented planting coverage. Therefore, no

change has been made.

Comment: A representative of FCIC recommended replacing the

reference to ``Special Provisions'' in the definition of ``Production

guarantee (per acre)'' with ``Actuarial Table,'' since the adjustment

factors are in the Actuarial Table and not the Special Provisions.

Response: FCIC agrees with the comment and has amended the

definition accordingly.

Comment: The crop insurance industry questioned if the term

``production guarantee'' applies only to dry beans and if the term

``amount of insurance'' is used only for contract seed beans. If so, it

would be helpful to identify dry beans in the definition of

``production guarantee'' and include a definition for ``amount of

insurance'' for contract seed beans.

Response: The term ``production guarantee'' applies to both dry

beans and contract seed beans. The amount of insurance for contract

seed beans is

[[Page 6101]]

obtained by using the production guarantee per acre for each contract

seed bean variety in the unit, as provided in section 3(b) of these

provisions. Therefore, no change has been made.

Comment: The crop insurance industry recommended changing the

definition of ``Replanting.'' The commenter indicated that the wording

``* * * replace the bean seed and then replacing the bean seed * * *''

is confusing and awkward.

Response: FCIC agrees with the comment and will clarify the

definition accordingly. Comment: The crop insurance industry and a

representative of FCIC indicated that the definition of ``Seed

company'' should not limit the seed company to only being a

corporation.

Response: FCIC agrees with the comments and has amended the

definition.

Comment: The crop insurance industry questioned if the term

``type'' applies only to dry edible beans. If so, the definition should

be clarified.

Response: For the purpose of establishing insurability of the crop,

FCIC's Special Provisions identify classes of all beans as types.

Contract seed beans are a specific type under a seed bean processor

contract.

Comment: The crop insurance industry recommended clarifying the

language of section 2(a) of the proposed rule by substituting language

similar to that contained in section 2(a) of the Sugar Beet Crop

Provisions. The wording of this section would be ``Unless limited by

the Special Provisions, a unit (basic unit) as defined in section 1

(Definitions) of the Basic Provisions (Sec. 457.8), may be divided * *

*''

Response: FCIC agrees with the comment and has amended section 2(a)

of the proposed rule to indicate that a unit as defined in the Basic

Provisions is a basic unit.

Comment: A comment from the crop insurance industry asked the

following: (1) Are optional units available by type or variety for

contract seed beans; (2) if an insured has a processor contract for one

seed variety and another processor contract for another seed variety,

would each variety be eligible for a separate unit; and (3) if the

contract specifies an amount of production rather than the number of

acres, are optional units available?

Response: Optional units are only available for contract seed beans

if the contract specifies a number of acres under contract and all

acreage under the seed bean processor contract will be included in the

optional unit. There are no separate optional units by type for

contract seed beans. Optional units are not available for contract seed

beans if the seed bean processor contract specifies an amount of

production. Section 2 has been amended to clarify the available

optional units for contract seed beans.

Comment: The crop insurance industry recommended that section 2(c)

of the proposed rule be clarified to indicate that it affects only

optional units by section and irrigated or non-irrigated practices and

does not authorize separate optional units for different types of seed

beans.

Response: Types of contract seed beans do not qualify for optional

units. Optional units by type, section, or irrigation practice are

available for contract seed beans if the seed bean processor contract

specifies the number of acres under contract. The provisions in section

2 have been amended accordingly.

Comment: Representatives of FCIC questioned the need for the

provisions contained in section 2(c) of the proposed rule, since the

definitions of ``base price,'' ``contract seed beans,'' and ``seed bean

processor contract,'' specify that acreage is not eligible to be

insured as seed beans if the total production is not contracted. The

commenter recommended deleting section 2(c) of the proposed rule.

Response: Section 2(c) of the proposed rule is necessary to protect

the integrity of the program. The insured production is determined

based on the number of acres under contract. If FCIC allows optional

units when the contract only specifies an amount of production, this

amount of production is prorated over the optional units to determine

the per unit amount of insurance. If the value of the production from

any unit is less than the amount of insurance for that unit, an

indemnity is paid, even though the insured may have fulfilled all

obligations under the contract from production in other units. This

will result in FCIC insuring amounts in excess of that under contract,

which would adversely affect the actuarial soundness of the program.

Comment: The crop insurance industry and a representative of FCIC

recommended clarifying the last sentence of section 2(d) of the

proposed rule. The commenter believes that the current wording may lead

the insured to believe that premium may be refunded any time optional

units are combined. Premium is refunded when there are no optional

units within a basic unit. One of the comments recommended changing the

provisions to read as follows: ``If failure to comply with the

provisions is determined to be inadvertent and if all of the optional

units within a basic unit are combined, that portion of the premium

paid for the purpose of electing optional units will be refunded to

you.''

Response: FCIC agrees with the comment and has amended the

provision in redesignated section 2(e).

Comment: A representative of FCIC recommended clarifying the

language in section 2(e) of the proposed rule to indicate that optional

units not planted in the current crop year need not be identified on

the acreage report.

Response: FCIC has clarified this provision in redesignated section

2(f) to indicate that only those optional units established for the

specific crop year need be identified on the acreage report.

Comment: The insurance industry indicated that provisions in

section 2(f)(4)(i) of the proposed rule authorize optional units by

type for dry beans. The commenter questioned if optional units by bean

type are available for contract seed beans, since the definition of

``bean'' suggests it applies to all types of dry beans. This language

needs to be more clearly distinguished. The commenter recommended that

contract seed beans and other dry beans should be handled as separate

basic units since procedures will be more complicated under these

provisions. Production of one type would count against the guarantee of

another type if insured as one basic unit, which creates difficulties.

The commenter also questioned if the premium rates are being adjusted

to reflect the change from basic to optional units by type (will the

premium rates be 10-11 percent higher than last year's premium rates)?

Policyholders must be provided the necessary information and advance

time to decide how to accommodate the extra costs and requirements

involved.

Response: Optional units by type are only applicable to dry beans

and the provision has been amended for clarification. Contract seed

beans qualify as a basic unit. If the policyholder elects to obtain

optional units, the premium rates will be adjusted to reflect any

additional risk of loss. Any changes in the insurance coverage,

including premium rates, will be available on or before the contract

change date. This should provide the policyholder with ample time to

make their business decisions. The provisions in section 2 have been

amended accordingly.

Comment: The crop insurance industry and a representative of FCIC

questioned if the language in section 2(f)(4)(ii) of the proposed rule

should be amended to read ``In addition to, or instead of * * *'' or if

that phrase

[[Page 6102]]

should be omitted since the possibility of ``besides or instead'' is

covered by the statement in section 2(f)(4) of the proposed rule that

``one or more'' of these criteria must be met for each optional unit.

Response: FCIC agrees that the phrase ``In addition to, or instead

of'' should be incorporated into the first sentence of redesignated

section 2(g)(4)(ii), and has modified this provision accordingly.

Comment: The crop insurance industry had the following comments

regarding the provisions in section 3(a). The provisions allow

different price election percentages by dry bean type, which is not

consistent with other crop provisions unless each type is treated as a

separate crop. Based on the provisions of section 3(a), one comment

questioned the change that no longer allows dry bean basic units by

type. The comment indicated that if different price election

percentages are allowed, each type should continue to be a separate

basic unit. One of the comments questioned if other crops will be

changed to permit different price percentages within the same basic

unit and how the computer edits will handle these situations.

Response: Producers can elect optional units for different types of

dry beans. However, in those cases where multiple types are in a single

unit, FCIC has provided producers the flexibility to select a different

percentage of the maximum price election for each type. The costs to

produce different types of dry beans can vary considerably as can the

economic significance of each to the producer. It may be necessary for

some insurance providers to reprogram computer systems to allow this

variation in price election percentages.

Comment: The crop insurance industry questioned the new requirement

that the producer submit a copy of the seed bean processor contract at

acreage reporting time. What would happen if an acreage report is

received without a copy of the processor contract? This requirement

could lead to policyholders waiting until acreage reporting time to

decide if they want to insure the crop as contract seed beans.

Response: FCIC has always required the seed bean processor contract

to be executed on or before the acreage reporting date. Now, FCIC

requires the insured to submit a copy of the contract no later than

that date in order to ensure that such contract exists, prior to any

likely loss. Thus, there is no greater effect upon the producer's

decision as to how to insure the beans. If a copy of the contract is

not provided at the time acreage is reported, the beans may be

insurable as dry beans, but not as contract seed beans.

Comment: The crop insurance industry questioned the language of

section 7(a)(2)(i), which references dry beans. The commenter explained

that the definition of ``dry beans'' seems to include both dry edible

beans and contract seed beans instead of distinguishing between the

two.

Response: Contract seed beans are defined separately from dry beans

so that they may be identified and treated differently in several

sections of the policy, including price election determination, unit

division, insured crop, and loss calculations. FCIC agrees that some

contract seed beans would qualify under the definition of dry beans.

Therefore, FCIC has amended the definition of dry beans to exclude

contract seed beans.

Comment: A representative of FCIC stated that section 7(a)(3) of

the proposed rule is not necessary because section 8(b)(4) of the Basic

Provisions states that we do not insure volunteer crops.

Response: FCIC agrees and has deleted this provision and renumbered

the remaining provisions.

Comment: The crop insurance industry questioned the reference to

other ``types of beans'' in section 7(c) and whether it applies only to

dry edible beans or if it also applies to contract seed beans.

Response: The reference to other ``types of beans'' in section 7(c)

applies to classes of dry beans not listed as a type of dry beans in

the Special Provisions. Section 7(c) has been amended to specify ``dry

beans.''

Comment: The crop insurance industry recommended putting a period

at the end of section 8(a) and deleting the word ``or.'' As written,

this provisions could be misunderstood to mean that as long as the

rotation requirements are met, the insured would not have to replant

even if practical, or vice versa. Presumably, each of the statements in

section 8 (a) and (b) stand alone.

Response: The use of ``or'' has the effect of making these stand

alone requirements as written, if the insured fails to comply with

either requirement, the acreage would be uninsurable. Therefore, no

change will be made.

Comment: The crop insurance industry asked the following questions:

(1) Whether dry bean acreage that is replanted to another bean type

would be insured as a separate optional unit, and if so, would there be

an additional premium charged; (2) how the actual production history

(APH) yield for the following year would be affected; and (3) whether

the guarantee will be based on the type of dry bean originally planted

or the type of dry bean that was replanted. They also had the following

recommendations: (1) keep the original guarantee for acreage that is

replanted to another bean type; (2) that no additional premium be

charged for the new optional unit; (3) that the APH form be updated

based on the replanted type; and (4) by adding a sentence stating ``If

the crop is replanted, the price of the replanted type will determine

your price election.''

Response: The guarantee and premium must be based on the actual

production capability and risks associated with the type planted and

produced to maintain the actuarial soundness of the program. Optional

unit division will be available for the replanted type in accordance

with the provisions of section 2. Production from the replanted acreage

will be used to update APH records for the type replanted. The original

planted type will not be included in the APH data base for that

particular year. Section 11(d) has been added to specify that the

guarantee and premium amount for the replanted acreage will be based on

the replanted type when acreage is replanted to a different insurable

type. No premium will be due for the original type when acreage is

replanted to a different type.

Comment: The crop insurance industry questioned if replanting

payments are available for contract seed bean varieties.

Response: Provisions in section 11 allow a replanting payment for

``the bean crop'' which includes both dry beans and contract seed

beans.

Comment: The crop insurance industry indicated that language in

section 13(b) is not as clear as in other crop provisions. The comment

recommended that the provisions start as 13(b)(1) ``For each dry bean

type:'' followed by sub-items for the calculations in (1)-(3); then

section 13(b)(2) would be ``For each contract seed bean variety:'' etc.

Response: The provisions were written in this format to demonstrate

how to settle a claim when both dry beans and contract seed beans are

insured in one unit. If a unit contains only contract seed beans or

only dry beans the provisions that pertain to the kinds of beans that

are not in the unit are disregarded. Therefore, no change has been

made.

Comment: The crop insurance industry recommended revising section

13(c)(1)(i) to read ``Multiply the actual value received, actual value

at time of adjustment, or base price per pound, whichever is greater,

by the price election percentage you selected; and''

[[Page 6103]]

Response: Adding the suggested language would be redundant with the

language contained in the definition of ``actual value.'' In addition,

not all insurance providers require that the insured select a

percentage. Therefore, no change has been made.

Comment: The crop insurance industry recommended adding the word

``harvestable'' to section 13(d)(1) so that it would read, ``All

appraised harvestable production as follows:''

Response: When making an appraisal, the loss adjuster considers

whether the crop can be harvested. Therefore, no change has been made.

Comment: The crop insurance industry recommended clarifying section

13(d)(1)(i)(D). It is not necessary to use the word ``acceptable''

twice in this section.

Response: FCIC agrees with the comments and has amended the

provision accordingly.

Comment: The crop insurance industry questioned whether the

reference in section 13(d)(1)(iii), to ``dry beans'' excludes contract

seed beans.

Response: The provisions allow adjustment for quality deficiencies

and excess moisture for mature unharvested dry beans only.

Comment: The crop insurance industry recommended that section

13(d)(1)(iv) be revised as follows: (1) Add the phrase ``harvestable

beans'' to section 13(d)(1)(iv)(A) which would make the section read:

``* * * (The amount of production to count for such acreage will be

based on the harvested production or appraisals of harvestable beans

from the samples at the time harvest should have occurred * * *'' (2)

Add the phrase ``of harvestable beans'' to section 13(d)(1)(iv)(B),

which would make this section read: ``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 of harvestable beans if

additional damage occurs and the crop is not harvested; and'' The

comment also questioned the advisability of ``leaving representative

samples'' when agreement on the appraised amount of production can not

be reached. The commenter recommended the use of Arbitration (section

17 of the Basic Provisions) as the preferable process when agreement on

the appraised amount of production can not be reached.

Response: The ability to harvest the crop is considered when making

appraisals of the crop. Representative samples are the most accurate

method available to determine an accurate representation of production

when the parties disagree on the amount of appraised production and it

allows the insured to put most of the acreage to another use. If it is

not practical to leave representative samples the insurance provider

does not have to require such samples be left. Therefore, no change has

been made.

Comment: The crop insurance industry recommended changing the order

of the last two sentences of section 13(e) so the exclusion of these

adjustments for contract seed beans does not interrupt the information

that applies to dry edible beans.

Response: FCIC agrees with the comment and has amended the

provision accordingly.

Comment: A representative of FCIC recommended deleting any

reduction in the amount of production to count due to ``pick'' since it

is not a term used in ``The United States Standards for Beans'' upon

which quality adjustment is based. The reason for an excessive amount

of ``pick'' in the beans (other than damage) is generally due to

farming or cultural practices. ``Pick'' is normally controllable by the

producer. ``Pick'' charts are never the same two years in a row and

different charts are used each year by different bean dealers. ``Pick''

is driven by the market and supply and demand, depending on the size of

the crop in a given area. The commenter further stated that numerous

studies have been made on whether ``pick'' should be used as a

reduction of production to count, and each time it has been determined

that it is not feasible.

Response: ``Pick'' currently is used for quality adjustment

procedures in certain areas and has been found to be an acceptable

method to establish quality. It is defined in the rule. Therefore, no

change has been made.

Comment: The crop insurance industry recommended adding the phrase:

``and the beans are to be sold at time of adjustment or sold based on

the original grade;'' at the end of both sections 13(e)(2) (i) and

(ii).

Response: Neither FCIC nor the insurance provider can require the

insured to sell the production at the time of adjustment as a condition

of obtaining quality adjustment. Quality adjustments are applied at the

time of loss adjustment. Any further damage, whether the crop is sold

or not, is not covered. Therefore, no change has been made.

Comment; The crop insurance industry questioned if it was necessary

to say both ``damaged'' and ``badly damaged'' in section 13(e)(2)(ii).

The commenter recommended just the term ``damage'' should suffice.

Response: The provisions are consistent with different degrees of

damage defined in ``The United States Standards for Beans.'' Therefore,

no change has been made.

Comment: The crop insurance industry stated that dry beans are

rarely stored in most states. The adjuster would be required to obtain

a sample of the beans prior to or during harvest. Most samples of beans

are provided by the facility storing or purchasing the beans. It is

therefore unlikely that they are a ``disinterested third party,'' as

stated in section 13(e)(3)(iii). The commenter recommended that the

language be revised to include the ``place of storage or sale if the

company feels the sample is consistent with the quality of beans in the

surrounding area.''

Response: All samples must be obtained by disinterested third

parties to assure that such samples are genuinely representative of the

total production. If the insurance provider believes the samples were

not obtained in this manner, or that they are not representative, they

should not accept the results. Therefore, no change has been made.

Comment: The crop insurance industry recommended adding the phrase

``based on the applicable grade or pick which the production is to be

sold or sold at time of adjustment;'' at the end of section

13(e)(4)(i).

Response: As stated above, the insurance provider cannot require

the sale of the production at the time of loss adjustment or at any

other time. The amount of loss, including any quality adjustments, are

made at the time of loss adjustment and any subsequent damage is not

covered, so the time of sale should not affect this determination.

Therefore, no change has been made.

Comment: The crop insurance industry stated that conversion factors

adopted for several crops have provided the industry with consistent

quality adjustment, generally unaffected by the marketplace, and

questions whether FCIC intends to establish conversion charts for all

states in which dry beans are insurable.

Response: FCIC agrees that studies should be made to determine if

similar conversion charts for dry beans can be developed. Until this

can be further analyzed, no change will be made.

Comment: The crop insurance industry: (1) Recommended adding

``based on the applicable grade or pick for the production which you

will receive * * *'' at the end of the first sentence and after the

word ``production'' in the second sentence of section 13(e)(4)(ii)(A);

and (2)

[[Page 6104]]

questioned whether the current year's maximum price election for the

type should be used when a processor refuses to quote a No. 2 price.

Response: The price should be determined based on the quality and

quantity of the production as it was originally delivered and the

provisions clearly indicate that the value of the damaged production is

used in this calculation. Therefore, the recommended change has not

been made. Further, the current year's maximum price election is used

only when a local market price is not available. A local market price

may be established using price quotes from usual marketing outlets in

the area. Refusal of one processor to quote a price does not

automatically mean a local market price is not available.

Comment: One comment received from the crop insurance industry

recommended adding ``(to include trading tare for grade to obtain a

higher grade and price),'' after the word ``processing'' in section

13(e)(4)(ii)(A)(3).

Response: FCIC agrees with the comment and has amended the

provisions accordingly.

Comment: The crop insurance industry recommended that late and

prevented planting coverage should not be provided on crops grown under

contract with a processor. The processor determines what the producer

does if the insured crop is not planted during the normal planting

period.

Response: The inclusion of late and prevented planting is

appropriate for contract seed beans. As the comment indicates, the

processor may or may not allow planting within the late planting

period. Congress has determined that marketing windows should be a

factor in determining whether a crop has been prevented from planting.

The contracted planting period, and intended harvest period, is

considered as a marketing window. However, if planting is allowed under

the contract, and the crop can reach maturity, coverage should be

provided. Therefore, no change has been made.

Comment: The crop insurance industry recommended adding the phrase

``to a type for which you have history'' after the word ``planted'' in

section 14(c)(1).

Response: Changing the provision to require past history of the

bean type would prevent a new producer from obtaining late planting

coverage or diversifying their production. To protect the integrity of

the program, the insurance provider should require the producer to

prove that the producer had the inputs available to plant the new bean

type. Therefore, no change has been made.

Comment: The crop insurance industry recommended adding the phrase

``type for which you have history'' after the words ``insured crop'' in

the second and last sentences of section 14(d)(1)(ii) and at the end of

the first sentence of section 14(d)(1)(iii)(B).

Response: Changing the provision as suggested would prevent a new

producer from having late or prevented planting coverage or

diversifying their production. Therefore, no changes has been made.

Comment: The crop insurance industry and a representative of FCIC

recommended eliminating late and prevented planting provisions that

reference participating in a USDA program that limits acreage planted,

compliance with conservation plans, and base acreage. These do not

apply.

Response: FCIC agrees that acreage limiting programs and base

acreage do not apply to dry beans and has amended the appropriate

provisions. However, conservation plans may allow the insurance

provider to verify an intent to produce or not produce the crop.

Therefore, provisions regarding the use of conservation plans have not

been changed.

Comment: The crop insurance industry and a representative of FCIC

asked whether the prevented planting coverage available when a

substitute crop is planted will be dropped, or at least revised, for

all affected crops for the 1997 crop year, and whether it is possible

to remove (or revise) redesignated sections 14(d)(1)(iii)(B) and

14(d)(2)(iii)(B).

Response: The provisions that allow a prevented planting guarantee

when a substitute crop is planted are under review for all affected

crops for the 1998 crop year. Any changes will be made in a separate

rule for all affected crop provisions. No change will be made in these

provisions to maintain consistency with prevented planting provisions

for other crops.

Comment: The crop insurance industry questioned if the provisions

in section 14(d)(4)(ii) apply to dry beans only since ``dry beans'' are

referenced, or if this carryover prevented planting coverage would be

different for contract seed beans due to the requirement that they are

to be grown under a contract with a processor.

Response: The Federal Crop Insurance Act requires the insurance

period for prevented planting to begin on the sales closing date for

the previous crop year if coverage has been continuous. Therefore, this

``tail coverage'' would apply if any beans, including contract seed

beans, were insured previously. This provision has been clarified by

replacing the term ``dry beans'' with the term ``beans.''

Comment: The crop insurance industry recommended limiting the

number of contract seed bean acres eligible for prevented planting to

the number of acres that are under the processor contract for the crop

year.

Response: FCIC agrees with the comment and has amended the

provisions in section 14(d)(5)(iv)(A) to limit the number of acres

eligible for prevented planting to those specified in the seed bean

processor contract or the number needed to produce the contracted

production based on the APH yield for the acreage.

Comment: The crop insurance industry asked whether the language

contained in section 14(d)(5)(iv)(E) regarding double-cropping would be

liberalized or if proof that the acreage has a history of double-

cropping in each of the last four years would still be required. The

comment recommended changing the words ``* * * the acreage has a

history * * *'' to ``* * * the farm has a history * * *''

Response: The recommended change would allow double benefits on an

entire farm even though a very small number of acres may have been

double-cropped in the past. Therefore, no change has been made.

Comment: The crop insurance industry recommended revising section

14(d)(5)(v) if the current language allows use of total acreage from

both dry edible beans and contract seed beans for determining eligible

prevented planting acreage. The proposed provision could result in a

prevented planting payment for more than the acreage under contract for

contract seed beans.

Response: FCIC has revised section 14(d)(5)(iv)(A) to limit the

number acres of contract seed beans that are eligible for prevented

planting to the number of acres under contract in the current year.

Comment: The crop insurance industry suggested combining the

provisions contained in section 15(e) with the provisions in section

15(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.

Comment: The crop insurance industry recommended that the

requirement for a written agreement to be renewed each year be removed.

Terms of the agreement should be stated in the agreement to fit the

particular situation for the policy, or if no substantive changes occur

from one year

[[Page 6105]]

to the next, allow the written agreement to be continuous.

Response: Written agreements are intended to change policy terms or

permit insurance in unusual situations where such changes will not

increase risk. If such practices continue year to year, they 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.

In addition to the changes described above, FCIC has made the

following changes to the Dry Bean Provisions:

1. Section 1--Amended the definition of ``practical to replant'' to

specify that it will not be considered practical to replant contract

seed beans unless production from the replanted acreage can be

delivered under the terms of the seed bean processor contract.

2. Section 14(d)(3)-Clarified that the insured must have possessed

the inputs to plant and produce the insured crop.

3. Revised part 433 to restrict its effect to the 1996 and prior

crop years.

Good cause is shown to make this rule effective upon publication in

the Federal Register. This rule improves the dry bean insurance

coverage and brings it under the Common Crop Insurance Policy Basic

Provisions for consistency among policies. The earliest contract change

date that can be met for the 1997 crop year is February 15, 1997. It is

therefore imperative that these provisions be made final before that

date so that the reinsured companies and insureds may have sufficient

time to implement these changes. Therefore, public interest requires

the agency to act immediately to make these provisions available for

the 1997 crop year.

List of Subjects in 7 CFR Parts 433 and 457

Crop insurance, Dry bean crop insurance regulations, Dry bean.

Final Rule

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

Crop Insurance Corporation hereby amends 7 CFR parts 433 and 457 as

follows:

PART 433--DRY BEAN CROP INSURANCE REGULATIONS

1. The authority citation for 7 CFR part 433 continues to read as

follows:

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

2. The subpart heading preceding Sec. 433.1 is revised to read as

follows:

Subpart--Regulations for the 1986 Through 1996 Crop Years

3. Section 433.7 is amended by revising the introductory text of

paragraph (d) to read as follows:

Sec. 433.7 The application and policy.

* * * * *

(d) The application for the 1986 and succeeding crop years is found

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

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

the 1986 through 1996 crop years are as follows:

* * * * *

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

1994 AND SUBSEQUENT CONTRACT YEARS

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

follows:

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

5. Section 457.150 is added to read as follows:

Sec. 457.150 Dry bean crop insurance provisions.

The Dry Bean Crop Insurance Provisions for the 1997 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:

Dry Bean 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

Actual value--The dollar value received, or that could be

received, for contract seed beans under a seed bean processor

contract if the contract seed bean production is properly handled in

accordance with the requirements of such contract.

Base price--The price per pound (excluding any discounts or

incentives that may apply) that is stated in the seed bean processor

contract and that will be paid to the producer for at least 50

percent of the total production under contract with the seed

company.

Beans--Dry beans and contract seed beans.

Combining--A harvesting process that uses a machine to separate

the beans from the pods and other vegetative matter and place the

beans into a temporary storage receptacle.

Contract seed beans--Dry beans grown under the terms of a seed

bean processor contract for the purpose of producing seed to be used

for producing dry beans or vegetable beans in a future crop year.

Days--Calendar days.

Dry beans--The crop defined by The United States Standards for

Beans excluding contract seed beans.

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.

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 the beans. Beans which are swathed or knifed

prior to combining are not considered harvested.

Interplanted--Acreage on which two or more crops are planted in

a manner that does not permit separate agronomic maintenance or

harvest of the insured crop.

Irrigated practice--A method of producing a crop by which water

is artificially applied during the growing season by appropriate

systems and at the proper times, with the intention of providing the

quantity of water needed to produce at least the yield used to

establish the irrigated production guarantee on the irrigated

acreage planted to the insured crop.

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 hundredweight for the

U.S. No. 2 grade of dry beans of the insured type offered by buyers

in the area in which you normally market the dry beans. Moisture

content and factors not associated with grading under the United

States Standards for Beans will not be considered in establishing

this price.

Net price--The dollar value of dry bean production received, or

that could have been received, after reductions in value due to

insurable causes of loss.

Pick--The percentage, on a weight basis, of defects including

splits, damaged (including discolored) beans, contrasting types, and

foreign material that remains in the dry beans after dockage has

been removed by the proper use of screens or sieves.

Planted acreage--Land in which seed has been placed by a machine

appropriate for the insured crop and planting method, at the correct

depth, into a seedbed that has been properly prepared for the

planting method and production practice. Beans must initially be

planted in rows far enough apart to permit cultivation to be

considered planted. Acreage planted in any other manner will not be

insurable unless otherwise provided by the Special Provisions or by

written agreement.

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

to replant'' contained

[[Page 6106]]

in section 1 of the Basic Provisions (Sec. 457.8), practical to

replant is defined as our determination, after loss or damage to the

insured crop, based on factors, including but not limited to

moisture availability, condition of the field, time to crop

maturity, and marketing window, that replanting the insured crop

will allow the crop to attain maturity prior to the calendar date

for the end of the insurance period. It will not be considered

practical to replant after the end of the late planting period

unless replanting is generally occurring in the area. For contract

seed beans, it will not be considered practical to replant unless

production from the replanted acreage can be delivered under the

terms of the seed bean processor contract or the seed company agrees

to accept such production.

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 yield per acre by the coverage level

percentage you elect, and multiplying the result by any applicable

adjustment factor specified in the Actuarial Table.

Replanting--Performing the cultural practices necessary to

prepare the land to replace the bean seed and then replacing the

bean seed in the insured acreage with the expectation of growing a

successful crop.

Seed bean processor contract--A written agreement between the

contract seed bean producer and the seed company, containing at a

minimum:

(a) The contract seed bean producer's promise to plant and grow

one or more specific varieties of contract seed beans, and deliver

the production from those varieties to the seed company;

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

stated in the contract; and

(c) A base price, or a method to determine such price based on

published independent information, that will be paid to the contract

seed bean producer for the production stated in the contract.

Seed company--Any business enterprise regularly engaged in the

processing of seed beans, that possesses all licenses and permits

for marketing seed beans required by the State in which it operates,

and that possesses or has contracted for facilities, with enough

drying, screening and bagging or packaging equipment to accept and

process the seed beans within a reasonable amount of time after

harvest.

Swathing or knifing--Severance of the bean plant from the

ground, including the pods and beans, and placing them into

windrows.

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

designated in the Special Provisions for the insured crop in the

county.

Type--A category of beans identified as a type in the Special

Provisions.

Written agreement--A written document that alters designated

terms of this policy in accordance with section 15.

2. Unit Division

(a) In addition to section 1 (Definitions) of the Basic

Provisions (Sec. 457.8), (basic unit) all acreage of contract seed

beans qualifies as a separate basic unit. For production based seed

bean processor contracts, the unit will consist of all the acreage

needed to produce the amount of production under contract, based on

the actual production history of the acreage. For acreage based seed

bean processor contracts, the unit will consist of all acreage

specified in the contract.

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

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

(basic unit) and section 2(a) of these crop provisions, 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.

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

basis including, but not limited to, production practice, variety,

and planting period, other than as described in this section.

(d) Contract seed beans may only qualify for optional units as

specified in section 2(g) of these Crop Provisions if the seed bean

processor contract specifies the number of acres under contract.

Contract seed beans produced under a seed bean processor contract

that specifies only an amount of production are not eligible for

optional units.

(e) 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.

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

identified on the acreage report for that crop year.

(g) 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

(4) Subject to section 2(d) each optional unit must meet one or

more of the following criteria, as applicable:

(i) Optional Units by bean type: A separate optional unit may be

established for each bean type shown in the Special Provisions.

(ii) Optional Units by Section, Section Equivalent, or FSA Farm

Serial Number: In addition to, or instead of, establishing optional

units by type, optional units may be established if each optional

unit is located in a separate legally identified section. In the

absence of sections, we may consider parcels of land legally

identified by other methods of measure including, but not limited to

Spanish grants, railroad surveys, leagues, labors, or Virginia

Military Lands, as the equivalent of sections for unit purposes. In

areas 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.

(iii) Optional Units on Acreage Including Both Irrigated and

Non-irrigated Practices: In addition to, or instead of, establishing

optional units by type, section, section equivalent, or FSA Farm

Serial Number, optional units may be based on irrigated acreage or

non-irrigated acreage if both are located in the same section,

section equivalent, or FSA Farm Serial Number. To qualify as

separate irrigated and non-irrigated optional units, the non-

irrigated acreage may not continue into the irrigated acreage in the

same rows or planting pattern. The irrigated acreage may not extend

beyond the point at which your irrigation system can deliver the

quantity of water needed to produce the yield on which the guarantee

is based, except the corners of a field in which a center-pivot

irrigation system is used will be considered as irrigated acreage if

separate acceptable records of production from the corners are not

provided. If the corners of a field in which a center-pivot

irrigation system is used do not qualify as a separate non-irrigated

optional unit, they will be a part of the unit containing the

irrigated acreage. However, non-irrigated acreage that is not a part

of a field in which a center-pivot irrigation system is used may

qualify as a separate optional unit provided that all requirements

of this section are met.

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

Indemnities

(a) In addition to the requirements of section 3(b) (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 dry beans 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 dry bean type designated in the Special Provisions. The

price elections you choose for each type are not required to 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 may also choose 75 percent of the

maximum price election for another type.

(b) For contract seed beans only, the dollar amount of insurance

is obtained by multiplying the production guarantee per

[[Page 6107]]

acre for each variety in the unit by the insured acreage of that

variety, times the applicable base price, and times the price

election percentage you selected. The total of these results will be

the amount of insurance for contract seed beans in the unit.

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:

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

State and county Cancellation and termination dates

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

California............................................ February 28.

All other States...................................... March 15.

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

6. Report of Acreage

For contract seed beans only, in addition to the requirements of

section 6 (Report of Acreage) of the Basic Provisions (Sec. 457.8),

you must submit a copy of the seed bean processor contract on or

before the acreage reporting date.

7. Insured Crop

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

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

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

table:

(1) In which you have a share;

(2) That are planted for harvest as:

(i) Dry beans; or

(ii) If applicable, contract seed beans, if the seed bean

processor contract is executed on or before the acreage reporting

date; and

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

written agreement):

(i) Interplanted with another crop; or

(ii) Planted into an established grass or legume.

(b) For contract seed beans only:

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

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

that provides for delivery of the crop under substantially the same

terms as a seed bean processor contract may be treated as a contract

under which you have an insurable interest in the crop; and

(2) We will not insure any acreage of contract seed beans

produced by a seed company.

(c) In addition to the types of dry beans designated in the

Special Provisions, we will insure other types if:

(1) The type you intend to plant has been demonstrated to be

adapted to the area. Evidence of adaptability must include:

(i) Results of test plots for 2 years and recommendations by a

university or seed company; or

(ii) Two years of production reports that indicate your

experience producing the type in your production area;

(2) You submit on or before the sales closing date your

production reports and prices received, or the test plot results,

and evidence of market potential, including the price buyers are

willing to pay for the type; and

(3) Both parties (you and us) enter into a written agreement

allowing insurance on the type in accordance with section 15.

(d) Any acreage of beans that is destroyed and replanted to a

different insurable type of beans will be considered insured acreage

in accordance with section 11.

8. 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 that does not meet the

rotation requirements contained in the Special Provisions; or

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

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

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

unless we agree that replanting is not practical. We will not

require you to replant if it is not practical to replant to the same

type of beans as originally planted.

9. 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 the date immediately following

planting as follows:

(a) October 15 in Oklahoma, New Mexico, and Texas;

(b) November 15 in California; and

(c) October 31 in all other States.

10. Causes of Loss

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

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

against the following causes of loss that occur during the insurance

period:

(a) Adverse weather conditions;

(b) Fire;

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

application of pest control measures;

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

improper application of disease control measures;

(e) Wildlife;

(f) Earthquake;

(g) Volcanic eruption; or

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

insured peril that occurs during the insurance period.

11. Replanting Payments

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

Basic Provisions (Sec. 457.8), a replanting payment is allowed if

the bean crop is damaged by an insurable cause of loss to the extent

that the remaining stand will not produce at least 90 percent of the

production guarantee for the acreage and it is practical to replant.

(b) The maximum amount of the replanting payment per acre will

be the lesser of 10 percent of the production guarantee for the type

to be replanted or 120 pounds multiplied by your price election for

the type to be replanted and by your insured share.

(c) When beans are replanted using a practice that is

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

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

amount will not be reduced.

(d) The guarantee and premium for acreage replanted to a

different insurable type will be based on the replanted type and

will be calculated in accordance with sections 3 (Insurance

Guarantees, Coverage Levels, and Prices for Determining Indemnities)

and 7 (Annual Premium) of the Basic Provisions (Sec. 457.8) and

section 3 of these Crop Provisions.

12. 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),

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.

13. 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 unit.

(b) In the event of loss or damage to your bean crop covered by

this policy, we will settle your claim by:

(1) Multiplying the insured acreage of each dry bean type by its

respective production guarantee;

(2) Multiplying each result in section 13(b)(1) by the

respective price election for each insured type;

(3) Totaling the results in section 13(b)(2);

(4) Multiplying the insured acreage of each contract seed bean

type by its respective production guarantee;

(5 ) Multiplying each result in section 13(b)(4) by the

applicable base price;

(6) Multiplying each result in section 13(b)(5) by your selected

price election percentage;

(7) Totaling the results in section 13(b)(6);

(8) Totaling the results in section 13(b)(3) and section

13(b)(6);

[[Page 6108]]

(9) Multiplying the total production to be counted of each dry

bean type if applicable, (see section 13(d)) by the respective price

election;

(10) Totaling the value of all contract seed bean production

(see section 13(c));

(11) Totaling the results in section 13(b)(9) and section

13(b)(10);

(12) Subtracting the total in section 13(b)(11) from the total

in section 13(b)(8); and

(13) Multiplying the result by your share.

(c) The value of contract seed bean production to count for each

type in the unit will be determined as follows:

(1) For production meeting the minimum quality requirements

contained in the seed bean processor contract and for production

that does not meet such requirements due to uninsured causes:

(i) Multiplying the actual value or base price per pound,

whichever is greater, by the price election percentage you selected;

and

(ii) Multiplying the result by the number of pounds of such

production.

(2) For production not meeting the minimum quality requirements

contained in the seed bean processor contract due to insurable

causes:

(i) Multiplying the actual value by the price election

percentage you selected; and

(ii) Multiplying the result by the number of pounds of such

production.

(d) The total bean 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 per acre for acreage:

(A) That is abandoned;

(B) That is put to another use without our consent;

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

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

acceptable to us;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production (mature unharvested production of

dry beans may be adjusted for quality deficiencies and excess

moisture in accordance with section 13(e)); and

(iv) Potential production on insured acreage that you intend to

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

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

that acreage will end when you put the acreage to another use or

abandon the crop. If agreement on the appraised amount of production

is not reached:

(A) If you do not elect to continue to care for the crop, we may

give you consent to put the acreage to another use if you agree to

leave intact, and provide sufficient care for, representative

samples of the crop in locations acceptable to us (The amount of

production to count for such acreage will be based on the harvested

production or appraisals from the samples at the time harvest should

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

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

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

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

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

production to count for the acreage will be the harvested

production, or our reappraisal if additional damage occurs and the

crop is not harvested; and

(2) All harvested production from the insurable acreage.

(e) Mature dry bean production to count may be adjusted for

excess moisture and quality deficiencies. If moisture adjustment is

applicable, it will be made prior to any adjustment for quality.

Adjustment for excess moisture and quality deficiencies will not be

applicable to contract seed beans.

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

percentage point of moisture in excess of 18 percent. We may obtain

samples of the production to determine the moisture content.

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

(i) A pick is designated in the Special Provisions and the pick

of the damaged production exceeds this designation; or

(ii) A pick is not designated in the Special Provisions and

deficiencies in quality, in accordance with the United States

Standards for Beans, result in dry beans not meeting the grade

requirements for U.S. No. 2 (grades U.S. No. 3 or worse) because the

beans are damaged or badly damaged; or

(iii) 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 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 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 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 dry

beans under the authority of the United States Agricultural

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. (Test weight for quality adjustment purposes may be

determined by our loss adjuster.)

(4) Dry bean production that is eligible for quality adjustment,

as specified in sections 13(e) (2) and (3), will be reduced:

(i) If a conversion factor is designated by the Special

Provisions, by multiplying the number of pounds of eligible

production by the conversion factor designated in the Special

Provisions for the applicable grade or pick; or

(ii) If a conversion factor is not designated by 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. If a local market price is not available

for the insured crop year, the current years' maximum price election

available for the applicable type will be used. The price for the

qualifying damaged production will be the market price for the local

area to the extent feasible. 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 dry beans to those buyers.

Discounts used to establish the net price of the damaged production

will be limited to those that are usual, customary, and reasonable.

The price of the damaged production will not be reduced for:

(1) Moisture content;

(2) Damage due to uninsured causes; or

(3) Drying, handling, processing, including trading tare for

grade to obtain a higher grade and price, or any other costs

associated with normal harvesting, handling, and marketing of the

dry beans; 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;

(B) The value per pound 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.

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

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

basis.

14. 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 14(c)),

and acreage you were prevented from planting (see section 14(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. If the amount

of premium you are required to pay (gross premium less our subsidy)

for late planted acreage or prevented planting acreage exceeds the

liability on such acreage, coverage for those acres will not be

provided, no premium will be due, and no indemnity will be paid for

such acreage.

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

acreage reporting date if you were prevented from planting.

(c) Late Planting

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

the production guarantee or

[[Page 6109]]

amount of insurance for each acre will be reduced for each day

planted after the final planting date by:

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

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

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

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

dates the acreage is planted within the late planting period.

(3) If planting of beans 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 beans, you may

elect:

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

production guarantee or amount of insurance for such acreage will be

determined in accordance with section 14(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

or amount of insurance for such acreage will be 50 percent of the

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

production guarantee for timely planted acreage is 1,500 pounds per

acre, your prevented planting production guarantee would be 750

pounds per acre (1,500 pounds multiplied by 0.50). If you elect to

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

count for such acreage will be determined in accordance with section

13; 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 25 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 30 bushels per acre, your prevented

planting production guarantee would be 7.5 bushels per acre (30

bushels multiplied by 0.25). You may elect to exclude prevented

planting coverage when a substitute crop is planted for harvest and

receive a reduction in the applicable premium rate. If you wish to

exclude this coverage, you must so indicate, on or before the sales

closing date, on your application or on a form approved by us. Your

election to exclude this coverage will remain in effect from year to

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

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

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

will be subject to this exclusion.

(2) 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 or amount of insurance. The production

guarantee for the unit will be computed as follows:

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

production guarantee or amount of insurance for timely planted

acreage by the 50 acres planted timely;

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

production guarantee or amount of insurance for timely planted

acreage by 93 percent and multiply the result by the 50 acres

planted late; and

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

production guarantee or amount of insurance for timely planted

acreage by:

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

were prevented from planting, if the acreage is eligible for

prevented planting coverage, and if the acreage is left idle for the

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

planting compensation hereunder will not be denied because the cover

crop is hayed or grazed; or

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

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

prevented planting coverage, and if you elect to plant a substitute

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

date for the insured crop. (This paragraph (B) is not applicable,

and prevented planting coverage is not available under these crop

provisions, if you elected the Catastrophic Risk Protection

Endorsement or you elected to exclude prevented planting coverage

when a substitute crop is planted (see section 14(d)(1)(iii)). Your

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

production guarantee or amount of insurance for timely planted

acreage by the 150 acres in the unit.

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

intended crop with the expectation of at least producing the

production guarantee or amount of insurance. 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 beans for the

1997 crop year, prevented planting coverage will begin on the 1997

sales closing date for beans in the county. If the bean coverage

remains in effect for the 1998 crop year (is not terminated or

canceled during or after the 1997 crop year), prevented planting

coverage for the 1998 crop year began on the 1997 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) The number of acres planted to beans on the FSA Farm Serial

Number during the previous crop year; or

(ii) One hundred percent of the simple average of the number of

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

determine your yield.

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

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

irrigation facilities prior to the insured cause of loss which

prevented you from planting.

(iv) A prevented planting production guarantee or amount of

insurance will not be provided for any acreage:

(A) Of contracted seed beans in excess of the number of acres

required to be grown in the current crop year under a seed bean

processor contract executed on or before the acreage reporting date,

or the number of acres needed to produce the amount of contracted

production, based on the APH yield for the acreage.

(B) 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);

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

rate unless a written agreement designates such premium rate;

(D) Used for conservation purposes or intended to be left

unplanted under any program administered by the United States

Department of Agriculture;

(E) 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;

(F) On which the insured crop is prevented from being planted,

if any other crop is

[[Page 6110]]

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 14 (d)(2)(iii)(A), or a substitute crop allowed

in section 14 (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;

(G) 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

(H) For which planting history or conservation plans indicate

that the acreage would have remained fallow for crop rotation

purposes.

(v) For the purpose of determining eligible acreage for

prevented planting coverage, acreage for all units will be combined

and be reduced by the number of bean 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 beans on one optional unit and 40 acres

of beans 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.

15. Written Agreements.

Designated terms of this policy may be altered by written

agreement in accordance with the following:

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

later than the sales closing date, except as provided in section

15(e);

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

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

effect if the written agreement is not approved;

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

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

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

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

the written agreement is not specifically renewed the following

year, insurance coverage for subsequent crop years will be in

accordance with the printed policy); and

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

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

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

crop is insurable in accordance with the policy and written

agreement provisions.

Signed in Washington, D.C., on February 6, 1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 97-3327 Filed 2-10-97; 8:45 am]

BILLING CODE 3410-FA-P