Group Risk Plan of Insurance

Federal RegisterJun 7, 1999

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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 407

RIN 0563-AB06

Group Risk Plan of Insurance

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the

Group Risk Plan of Insurance Common Policy Basic Provisions and Crop

Provisions for Barley, Corn, Cotton, Forage, Sorghum, Peanuts,

Soybeans, and Wheat, to add regulations to provide for the operation of

an alternative risk management tool to be known as the Group Risk Plan

of Insurance (GRP). This plan will insure against the widespread loss

of production of certain crops in a county. It is intended primarily

for use by those producers whose yields tend to follow the county

average yield. GRP pays only when the average yield of the entire

county drops below the expected county yield for the insured crop as

set by FCIC. Payment is based on the percentage of decline in a county

or area wide yield below the insured's trigger yield. The insured need

not have a loss to collect an indemnity. Alternately, the insured may

have a loss and not collect an indemnity.

EFFECTIVE DATE: July 7, 1999.

FOR FURTHER INFORMATION CONTACT: William Klein, Insurance Management

Specialist, Research and Development, Product Development Division,

Federal Crop Insurance Corporation, United States Department of

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

926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

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

to be significant for the purposes of Executive Order 12866 and,

therefore, has been reviewed by OMB.

Cost-Benefit Analysis

A Cost-Benefit Analysis has been completed and is available to

interested persons at the address listed above. In summary, the

analysis finds that the expected benefits of this action outweighs the

costs. Clarification of the provisions and administrative changes that

simplify program operations will benefit producers, FCIC, and insurance

providers.

Paperwork Reduction Act of 1995

Under the provisions of the Paperwork Reduction Act of 1995 (44

U.S.C. chapter 35), the collections of information in this rule have

previously been approved by the Office of Management and Budget (OMB)

under control number 0563-0053 through April 30, 2001. This rule will

replace the pilot Group Risk Plan of Insurance Common Policy Basic

Provisions and the crop provisions for Barley, Corn, Cotton, Forage,

Sorghum, Peanuts, Soybeans, and Wheat. Therefore, the amendment set

forth in this rule does not revise the content or alter the frequency

of the information collection cleared under the above referenced

docket.

Unfunded Mandates Reform Act of 1995

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

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 UMRA) for

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State, local, and tribal governments or the private sector. Therefore,

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

UMRA.

Executive Order 12612

It has been determined under section 6(a) of Executive Order 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 GRP

program, an insured is required to complete an application and an

acreage report. Neither a notice of loss nor a claim for indemnity are

required, since a loss is based on the county average yield falling

below the expected county yield.

The amount of work required of the insurance companies and

representatives of FCIC delivering and servicing these policies will

not increase from the amount of work currently required to deliver

previous policies to which this regulation applies. In fact, this

action reduces the paperwork burden and there is a lessor impact on the

insured and the reinsured company because the yield is based on

National Agricultural Statistics Service (NASS) yields rather than

individual insured's yields. Therefore, this action is determined to be

exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C.

605) and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

This program is listed in the Catalog of Federal Domestic

Assistance under No. 10.450.

Executive Order 12372

This program is not subject to the provisions of Executive Order

12372 which require intergovernmental consultation with State and local

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

published at 48 FR 29115, June 24, 1983.

Executive Order 12988

This rule had been reviewed in accordance with Executive Order

12988 on civil justice reform. The provisions of this rule will not

have a retroactive effect. 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 action for judicial review of

any determination made by FCIC 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, October 8, 1996, FCIC published a proposed rule in the

Federal Register at 61 FR 52717-52727 to add a new part 407 to chapter

IV of title 7 of the Code of Federal Regulations, Group Risk Plan of

Insurance Common Policy Basic Provisions and Crop Provisions for

Barley, Corn, Cotton, Forage, Sorghum, Peanuts, Soybeans, and Wheat.

The new provisions will be effective for the 2000 and succeeding crop

years for the Group Risk Plan of Insurance Common Policy Basic

Provisions and Crop Provisions for Barley, Corn, Cotton, Forage,

Sorghum, Peanuts, Soybeans, and Wheat Crop Provisions. These provisions

will replace the pilot program provisions currently in effect for the

1999 crop year.

Following publication of the proposed rule, the public was afforded

45 days to submit written comments and opinions. A total of 45 comments

were received from reinsured companies, an insurance service

organization, and a producer. The comments received and FCIC's

responses are as follows:

Comment: One commenter from a reinsured company recommended that

GRP either remain a pilot program for further evaluation ``since it has

not yet shown itself to be a success'' or that it be eliminated. The

commenter cited no participation for GRP barley, minimal participation

for GRP cotton, sorghum, peanuts, and wheat, and moderate interest in

corn and soybeans, particularly in the Midwestern states of Iowa,

Indiana, Minnesota, and Wisconsin. The commenter further noted that

participation had decreased for both corn and soybeans between 1995 and

1996, but did acknowledge that participation in forage production had

increased.

Response: While participation may be low for specific GRP programs

in some areas, net acres insured grew by 32 percent and total premium

grew 40 percent between 1995 and 1996. Wheat acreage, for example,

increased by 300 percent and total wheat premium increased 370 percent.

These statistics indicate a growing GRP program rather than one in

decline. FCIC believes that participation can be significantly

increased by additional changes. First, if CAT coverage is extended to

all GRP crops, significant increases in participation, similar to what

occurred with GRP forage in 1997, could occur. Secondly, there is

evidence that agents have received limited information about the

product. At recent meetings sponsored by the National Association of

Professional Agents in Iowa and Minnesota, and attended by FCIC

personnel, numerous agents stated that they had not been informed of

the benefits of the GRP program. FCIC expects increased participation

in GRP insurance programs in the future due to increased publicity,

increased agent and producer awareness of the product, and perhaps

expansion of CAT coverage. Therefore, FCIC will proceed with GRP as a

risk management tool.

Comment: A reinsured company commented that CAT coverage and

expansion of the Crop Revenue Coverage (CRC) and Income Protection (IP)

programs may attract producers that might otherwise be interested in

GRP. Secondly, expanding GRP only adds to the confusion introduced by

several plans of coverage and adds expenses at a time when it is

imperative to simplify and reduce expenses.

Response: New crop insurance programs, which includes Revenue

Insurance, are providing necessary new risk management protection for

producers, since no single insurance product meets the needs of all

producers. Further, offering a variety of insurance products should

significantly increase participation. Also, expanding GRP should not

add to the confusion, add more expenses, or increase complexity. In

fact, of all the insurance products available, GRP is the simplest,

least costly to administer, and provides potentially greater protection

for producers at a significantly reduced premium.

Comment: An insurance service organization questioned the need for

the language in Sec. 407.2 (b) which states that the contract ``* * *

may be offered directly to producers through agents of the Farm Service

Agency (FSA).''

[[Page 30216]]

Response: The provision actually states that the contract may be

offered ``directly to producers through agents of the United States

Department of Agriculture.'' This language is required as a fall back

position if coverage in some areas is not available through the private

sector.

Comment: An insurance service organization questioned language in

Sec. 407.2(c) that prohibits more than one insurance policy for a

person on the same crop, county and crop year, unless approved in

writing by FCIC. The commenter asks whether ``insurance policy'' refers

to GRP, or to other multiple peril crop insurance policies (MPCI) as

well, and if so, under what circumstances would multiple policies be

acceptable.

Response: This provision applies to all federally approved crop

insurance policies including MPCI and GRP. Since both the MPCI policy

and the GRP policy require that all acreage of the insured crop in the

county be insured under the same policy (except high risk land) the

producer is prohibited from obtaining both MPCI coverage and GRP

coverage on the same crop in the county.

Comment: An insurance service organization asked if a reinsured

company representative is included in the language in Secs. 407.6(a)(1)

and (a)(2)(i) ``an agent or employee of the Corporation.''

Response: This provision was intended to distinguish between agents

and employees of FCIC and agents and employees of the reinsured

company. For clarification, FCIC has amended the language in the

sections cited above from ``agent or employee of the Corporation'' to

``a representative of a reinsured company or FCIC.''

Comment: One commenter from an insurance service organization

recommended moving the last phrase of Sec. 407.6(a)(2)(iii), ``* * *

such insured shall be granted relief the same as if otherwise entitled

thereto,'' to a separate finishing paragraph (a)(3) and moving

``whenever'' from Sec. 407.6(a) to the beginning of Sec. 407.6(a)(1).

Response: FCIC agrees that the above cited phrase is clearer as a

separate paragraph and has accordingly redesignated it as

Sec. 407.6(a)(3). The word ``whenever'' applies to all the conditions

and, therefore, must remain at Sec. 407.6(a).

Comment: One commenter from an insurance service organization

expressed concern that the language in Sec. 407.6 (b) and (c) does not

appear to provide a level playing field since reinsured companies are

held liable for unauthorized acts of their agents, but apparently no

one pays for FCIC agent errors except the taxpayers.

Response: Under the terms of the Standard Reinsurance Agreement,

reinsured companies are responsible for any error or omission on the

part of their agents, loss adjusters, or other contractors. This

provision simply ensures that such responsibility is not waived by this

rule. The Government's oversight bodies ensure that FCIC's employees or

agents are held accountable for their acts of omission.

Comment: One commenter from an insurance service organization

expressed concern over the apparent contradiction between Secs. 407.6

and 407.7. Section 407.6(c) indicates that companies may grant relief

based on arbitration, but Sec. 407.7 states that any exceptions under

Sec. 407.6 will be ``at the sole discretion of the Corporation.''

Response: The language in Sec. 407.7 is not intended to involve

FCIC in the arbitration process between the company and insureds.

However, arbitration may not change the terms of the contract.

Therefore the language, ``at the sole discretion of the Corporation,''

remains in Sec. 407.7.

Comment: An insurance service organization commented that using the

term ``person'' in Sec. 407.8 (a), instead of ``entity'' to include

more than individuals can lead to confusion. They believe the term

could suggest that no group entities may be insured.

Response: The term ``person'' is defined in the Common Crop

Insurance Policy, Group Risk Plan of Insurance Common Policy, and other

policies insured by or approved by the Corporation. It appropriately

encompasses an individual, a partnership, an association, a

corporation, an estate, a trust, or other legal entity. Therefore, no

change has been made in the term or its use.

Comment: An insurance service organization recommended simplifying

the language in the last sentence in Sec. 407.8(a) as follows: ``The

application must be submitted to the insurance provider on or before

the applicable sales closing date on file in the insurance provider's

local office.''

Response: FCIC agrees with the recommendation and has modified the

language accordingly.

Comment: One comment from an insurance service organization

addressed extension of sales closing dates and cessation of sales due

to adverse conditions. The commenter expressed concern over the

timeliness of such notification and the vehicle by which it would be

made.

Response: The Manager of FCIC has the authority to extend fall

sales closing dates, and suspend sales under Sec. 407.8 (b). Once a

decision is made, electronic notification will be made to companies as

soon as possible. In addition, FCIC will place a notice of the extended

date in the Federal Register. Therefore, the provisions in

Sec. 407.8(b) will remain.

Comment: Several comments were received from insurance service

organizations questioning the name, inclusion, and use of the GRP

Disclaimer. One commenter suggested renaming the form, ``Acknowledgment

of Differences'' because ``disclaimer'' suggested the need to bring

flaws to the policyholder's attention. Another suggested removing the

disclaimer or using one generic form. This commenter explained that

Sec. 407.8(c) was too detailed, that the disclaimer was not part of the

application, and that GRP will no longer be a pilot program or ``new

and different.'' Another commenter questioned why the disclaimer was

not listed as part of the policy in Sec. 407.9.

Response: FCIC agrees that the name, ``Acknowledgment of

Differences,'' is more positive and has changed the form name

accordingly. FCIC disagrees, however, that the form reference should be

removed from Sec. 407.8(c). A single generic disclaimer, as suggested,

is provided as an exhibit in the revised crop year GRP procedure. The

form is needed for clarity. GRP is different from other insurance

programs in that an indemnity is triggered by a loss in the county and

not by an individual's loss. It is imperative that insureds understand

that they can sustain a loss on their crop and still not be indemnified

if the county loss does not trigger an indemnity. This acknowledgment

is not part of the policy as described in Sec. 407.9. It does not add

to or vary the terms of the policy. It merely highlights for the

insured how the GRP risk management tool differs from traditional crop

insurance. Therefore, the suggestion to list the disclaimer as part of

the policy has not been adopted.

Comment: An insurance service organization asked whether the

Proposed Rule for 1998 GRP Barley and Wheat crop provisions contains

the same language as those currently in effect for the 1997 crop year.

If the language is the same, they questioned whether the 1997 crop

provisions would remain in effect for the 1998 crop year, or would new

1998 provisions be issued.

Response: On October 8, 1996, when GRP was published as a proposed

rule, these crop provisions contained the same language as the 1997 GRP

Barley and Wheat pilot program crop

[[Page 30217]]

provisions sent out prior to June 30, 1997. The 1997 GRP Barley and

Wheat pilot program crop provisions remain in effect for the 1998 and

1999 crop years because the June 30 contract change date passed prior

to final rule publication. Consequently, these Crop Provisions, set out

in this final rule, will be effective for the 2000 crop year and will

be issued following final rule publication. These Crop Provisions

include language changes from the 1999 crop provisions under the pilot

program.

Comment: An insurance service organization noted that the opening

reference in Sec. 407.9 incorrectly cites Provision 16 as containing

continuous policy language rather than Provision 19.

Response: FCIC acknowledges the reference error. Based on

additional edits to these provisions, the reference now correctly cites

section 18.

Comment: An insurance service organization commented that the

language in Sec. 407.9 in the 3rd paragraph under ``both policies''

which states, ``You may select any dollar amount * * * by the acreage

reporting date,'' could be misunderstood by insureds to mean that this

choice may be made at acreage reporting time. They noted that this

information is more clearly provided in the sixth paragraph and asked

whether it is necessary that the language be included in both places.

Response: FCIC believes that both references to acreage planted by

the acreage reporting date are necessary. FCIC has clarified paragraph

3 to specify that the selection of the dollar amount of protection must

occur by the sales closing date and that this protection will be

provided for each acre of the crop planted on or before the acreage

reporting date and shown on the acreage report.

Comment: An insurance service organization recommended that FCIC

modify the definition for the term ``Cancellation date'' from ``prior

to that date'' to ``on or before that date'' since it is possible to

cancel a policy on the cancellation date.

Response: FCIC agrees with the recommendation and has modified the

definition accordingly.

Comment: An insurance service organization recommended that the

term ``insurance provider'' be expanded to include FSA. This makes the

policy language clearer and less wordy by eliminating the need to keep

referring to ``companies or FSA offices''.

Response: In the future FSA is not expected to deliver crop

insurance, and will only be used as a fall back if the private sector

cannot deliver the program in an area. Based on this contingency

``FSA'' has been added to the definition of ``insurance provider.''

Comment: An insurance service organization expressed concern about

language in section 3(b) of the GRP Basic Provisions which specifies

that only acreage planted to the insured crop on or before the acreage

reporting date will be insured. They are concerned about how insurance

providers will verify the acreage.

Response: Companies are required to use the same procedures

currently used to verify acreage planted on or before the final

planting date under other insurance plans.

Comment: An insurance service organization commented that the

language in section 3(d) of the GRP Basic Provisions, ``* * * we will

not insure acreage where the insured failed to follow good farming

practices'' is not necessary. They pointed out that good farming

practices are not a ``moral hazard'' for GRP since losses are

determined from the county average rather than an individual yield.

Response: Section 508(a)(3)(c) of the Federal Crop Insurance Act,

as amended (Act), provides that failure to follow good farming

practices will result in the acreage not being insurable. This

provision applies to all policies insured or reinsured by FCIC. No

change will be made in this provision.

Comment: An insurance service organization asked whether the CAT

level of coverage referenced in section 4 of the GRP Basic Provisions

and elsewhere, and currently available only for GRP forage, would be

made available on all GRP crops.

Response: There are no plans to expand CAT coverage to other GRP

crop programs for the 1999 crop year. However, the Manager of FCIC has

the authority to expand CAT coverage for any or all of the other seven

GRP crops.

Comment: An insurance service organization recommended modifying

the language in section 7(a) of the GRP Basic Provisions to refer to

``net acreage'' instead of ``all acreage'' in which you have a share,

or rearrange the various factors so it does not seem to refer to your

share in the application.

Response: The insured is required to report all acreage of each

insured crop in the county, both insurable and not insured, on or

before the acreage reporting date shown in the Special Provisions.

Therefore, FCIC has not modified this language. To prevent possible

confusion of ``share in the application,'' FCIC has moved the phrase

``in which you have a share'' to after ``for each insured crop.''

Comment: One commenter from an insurance service organization

questioned whether it mattered if acreage was planted by the acreage

reporting date, as required in section 7(a), since a GRP loss is

triggered by the county yield.

Response: The crop must be planted before acreage can be accurately

reported. Therefore, to protect the integrity of the program, this

provision has not been changed.

Comment: An insurance service organization noted that section 8 of

the GRP Basic Provisions, items (a)-(c), address the administrative

fees and when they are due. They asked whether this provision should

state that CAT and limited fees are due the first year even if zero

acres are reported.

Response: The Agricultural Research, Extension, and Education

Reform Act of 1998 was passed subsequent to the comment,. This Act

provided that the administrative fee will be due on the billing date.

Payment of an administrative fee will not be required if a bona fide

zero acreage report is filed on or before the acreage reporting date

for the crop, as specified in paragraph 8(e).

Comment: An insurance service organization noted that section 8(d)

of the GRP Basic Provisions addresses premium for limited and

additional coverage levels, and asked whether there should be some

reference to the subsidy equaling the imputed premium for CAT policies.

Response: FCIC does not believe adding imputed premium language is

necessary and may in fact add detail that would only serve to confuse

GRP policyholders.

Comment: An insurance service organization pointed out that

sections 8(f) and (g) of the GRP Basic Provisions address delinquency

and termination for non-payment of premium and asks whether there

should also be some reference in this section to the consequences of

failure to pay the administrative fees timely.

Response: FCIC agrees with the recommended change and has added new

provisions in sections 8(g) and (h).

Comment: An insurance service organization expressed concern that

the language in the proposed GRP Corn Crop Provisions provided that

sweet corn, popcorn, and hybrid seed corn may be insured through a

``written agreement'' rather than through an ``agreement in writing.''

Written agreements, referenced in section 9, have more rules and

regulations and generally must be submitted to the RSO for approval.

Companies would object to no longer having the authority to

[[Page 30218]]

approve the insuring of different kinds of corn. Response: FCIC

disagrees with the recommendation of replacing the language ``written

agreement'' with ``agreement in writing'' in the GRP Corn Crop

Provisions because an ``agreement in writing'' alters the contract, but

does not have the contractual structure and guidelines of a formal

``written agreement.'' FCIC does agree that the written agreement

requirement in both the GRP Corn and Sorghum Crop Provisions need not

require Regional Service Office (RSO) approval. Therefore, while FCIC

will leave the ``written agreement'' language in the crop provisions,

it will provide in procedure that a written agreement for adding other

types of GRP corn or sorghum to the contract be pre-approved by FCIC so

that companies will be able to approve these written agreements without

RSO approval.

Comment: An insurance service organization asked what GRP policy

provisions would be subject to change by written agreement. For

example, the current GRP handbook states that only land physically

located in the insured county is insurable. The commenter questioned

whether it will now be possible to insure land across the county line

in the same manner as MPCI (APH) policies. The commenter also asks

whether such agreements require RSO approval.

Response: All requirements that may be revised by written agreement

will specifically be provided in the provision for such requirement in

the Group Risk Plan Common Policy or the Crop Provision. Section 3 of

the proposed GRP Basic Provisions provides that, ``Crops grown on

acreage located in another county must be reported and insured

separately.'' There are no plans at this time to alter that requirement

by written agreement. Delegation of authority for approving written

agreements is set out in FCIC procedure.

Comment: An insurance service organization commented that

underwriting details do not belong in the policy but need to be

resolved before the new policies are approved and issued. They

expressed concern that the written agreement provisions may add to the

administrative paperwork and that new GRP procedures should allow

written agreements to be approved by the companies to the extent

possible.

Response: FCIC's goal is to address underwriting details in

procedure. The program must remain clean and relatively simple to

administer. Written agreements are only used to temporarily deviate

from the terms of the policy and should not pose any greater burden

than for any other policy. Section 9 of the GRP Basic Provisions,

therefore, has not been amended to allow reinsured companies to approve

written agreements.

Comment: An insurance service organization recommended that

language be added to section 13 of the GRP Basic Provisions to make it

similar to the MPCI (APH) Basic Provisions which require that all

policies be voided when more than one policy that insures the same

interest is discovered, unless the duplication is determined to be

inadvertent.

Response: FCIC agrees with the recommendations and has modified

section 13 to make it more consistent with the provisions in the MPCI

(APH) Basic Provisions. A provision has also been added to provide the

insurance provider with recourse in the event that an insured obtained

the multiple policies intentionally.

Comment: One commenter from an insurance service organization

questioned why section 15 of the GRP Basic Provisions still refers to

the Food Security Act of 1985 since producers are no longer required to

be in compliance with the Sodbuster/Swampbuster provisions of the Act.

Response: While producers are no longer required to be in

compliance with the Sodbuster/Swampbuster provisions of the Food

Security Act, the Controlled Substance provisions still apply.

Therefore, no change will be made.

Comment: An insurance service organization questioned the wisdom of

listing specific legislation in section 15 of the GRP Basic Provisions

because the references become outdated when the legislation is revised

or repealed.

Response: If one or more of the cited Acts were to be modified or

repealed, the insured person may no longer be in violation. Therefore,

FCIC does not believe that references to specific legislation poses any

problem and has not deleted the references.

Comment: An insurance service organization questioned the reasons

for minor differences in the first three and last two paragraphs of

section 15 of the GRP Basic Provisions. The commenter also questioned

whether they could be made to match exactly, with the exception of ``up

to 30 percent'' in FCIC item (b).

Response: FCIC agrees with comment and has eliminated the minor

differences in these paragraphs.

Comment: An insurance service organization noted that the title of

section 17 ``Determinations'' of the GRP Basic Provisions is

appropriate for the FCIC policy, but recommended that FCIC change the

title to ``Arbitration'' for reinsured policies, consistent with the

1995-NCIS 700B Basic Provisions.

Response: FCIC believes that the section title ``Determinations''

is appropriate for both FCIC and reinsured policies. FCIC has clarified

that all determinations under reinsured policies will be made by the

companies, and that disputes are resolved by means of arbitration.

Accordingly, FCIC will not change the title of this section but has

redesignated it section 16.

Comment: Two recommendations from an insurance service organization

involved modification of provisions in Sec. 407.12(2)(d) of the GRP

Cotton crop provisions. Because of lack of punctuation, it appeared to

read that only colored lint cotton planted into an established grass or

legume is uninsurable rather than all cotton planted in this manner.

The industry believes that the provisions would be clearer if formatted

like the MPCI (APH) cotton policies. They also asked that colored lint

cotton, for example, be made insurable by written agreement.

Response: FCIC agrees and has reformatted section 2(d) based on the

MPCI cotton policies and has provided for insurability of colored lint

cotton and other types by written agreement or when authorized by the

Special Provisions.

Comment: One commenter from an insurance service organization

expressed concern that cotton payment yields are determined

substantially later than other crops.

Response: The cotton payment yields are determined later than a

number of other GRP crops because final yields cannot be determined

until the cotton is ginned. While an earlier announcement of the cotton

payment yields is desirable, the logistics of the cotton industry

preclude it.

Comment: An insurance service organization recommended modifying

the definition of harvest in the Group Risk Plan for Forage to read,

``Removal of the forage from the field, and/or rotational grazing,''

rather than simply, ``and rotational grazing,'' to allow for those who

do one or the other but not both.

Response: FCIC disagrees with the recommendation. The present

language ``Removal of the forage from the field and rotational

grazing'' already allows for an insured who does one or the other but

not both. Therefore, no change has been made.

Comment: An insurance service organization recommended that the

Program Dates table in the Group Risk Plan for Peanuts be modified by

changing the phrase, ``and all other states,'' in the second group of

counties

[[Page 30219]]

and states to read, ``and all other states except New Mexico and

Oklahoma.'' This change is necessary because these two states have a

March 15 cancellation and termination date and, therefore, belong in

the third grouping.

Response: FCIC agrees with the comment and has revised the table

accordingly.

Comment: An individual who is both an agriculture lender and

producer commented that he did not favor the Group Risk Plan of

Insurance because of weather variability, the many differences among

producers within a county, the fact that all producers could obtain the

same amount of insurance, and that the county had to trigger before a

loss was due. CRC, on the other hand, allows a good proven producer to

insure a crop for more than a poor producer and cover both price and

yield risk.

Response: FCIC recognizes that some insurance products fit some

individual's needs better than other products. The per acre premium for

CRC insurance is considerably greater than for GRP coverage. While CRC

works well for the commenter, neighboring producers whose yields trend

with the county may find that GRP meets their insuring needs and is a

better buy for the coverage provided.

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

contract change date for the Forage Group Risk Plan forward from June

30 to August 31. This change was based on the availability of NASS

yield data. The term ``Actuarial Table'' was replaced with ``actuarial

documents,'' for clarity and for consistency with the MPCI Common

Policy. The term ``Protection per acre'' was replaced with ``Maximum

protection per acre'' for clarity. FCIC added the following

definitions: ``additional coverage,'' ``agreement in writing,''

``catastrophic risk protection,'' ``dollar amount of protection per

acre,'' ``good farming practices,'' ``limited coverage,'' and ``MPCI,''

to section 1 for clarification.

In addition, FCIC has made the following editorial changes to the

Group Risk Plan of Insurance Basic Provisions:

1. Section 407.8(c)(4)(ii)--Modified to recognize that an MPCI

policy may or may not be available to a producer for certain crops and

counties in their region.

2. Section 407.9--Added Risk Management Agency (RMA) to the last

sentence in the first paragraph of Sec. 407.9. The additional language

recognizes establishment of the Risk Management Agency on October 1,

1996.

List of Subjects in 7 CFR Part 407

Crop Insurance, Group Risk Plan, Barley, Corn, Cotton, Forage,

Peanuts, Sorghum, Soybean, Wheat.

Final Rule

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

Crop Insurance Corporation adds 7 CFR part 407 to read as follows:

PART 407--GROUP RISK PLAN OF INSURANCE REGULATIONS FOR THE 2000 AND

SUCCEEDING CROP YEARS

Sec.

407.1 Applicability.

407.2 Availability of Federal crop insurance.

407.3 Premium rates, amounts of protection, and coverage levels.

407.4 OMB control numbers.

407.5 Creditors.

407.6 Good faith reliance on misrepresentation.

407.7 The contract.

407.8 The application and policy.

407.9 Group risk plan common policy.

407.10 Group risk plan for barley.

407.11 Group risk plan for corn.

407.12 Group risk plan for cotton.

407.13 Group risk plan for forage.

407.14 Group risk plan for peanuts.

407.15 Group risk plan for sorghum.

407.16 Group risk plan for soybean.

407.17 Group risk plan for wheat.

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

Sec. 407.1 Applicability.

The provisions of this part are applicable only to those crops and

crop years for which a Crop Provision is contained in this part.

Sec. 407.2 Availability of Federal crop insurance.

(a) Insurance shall be offered under the provisions of this part on

the insured crop in counties within the limits prescribed by and in

accordance with the provisions of the Federal Crop Insurance Act, (7

U.S.C. 1501 et seq.) (the Act). The crops and counties shall be

designated by the Manager of the Federal Crop Insurance Corporation

(FCIC) from those approved by the Board of Directors of FCIC.

(b) The insurance will be offered through companies reinsured by

FCIC under the same terms and conditions as the contract contained in

this part. These contracts are clearly identified as being reinsured by

FCIC. Additionally, the contract contained in this part may be offered

directly to producers through agents of the United States Department of

Agriculture. Those contracts are specifically identified as being

offered by FCIC.

issued or reinsured by FCIC on the same crop for the same crop year, in

the same county, unless specifically approved in writing by FCIC.

(d) If a person has more than one contract under the Act

outstanding on the same crop for the same crop year, in the same

county, that have not been properly approved by FCIC, all such

contracts shall be voided for that crop year and the person will be

liable for the premium on all contracts, unless the person can show to

the satisfaction of FCIC that the multiple contracts of insurance were

inadvertent and without the fault of the person.

(e) If the unapproved multiple contracts of insurance are shown to

be inadvertent, and without the fault of the insured, the contract with

the earliest application will be valid and all other contracts on that

crop in the county for that crop year will be canceled. No liability

for indemnity or premium will attach to the contracts so canceled.

(f) The person must repay all amounts received in violation of this

section with interest at the rate contained in the contract (see

Sec. 407.8, paragraph 21).

(g) A person whose contract with FCIC or with a company reinsured

by FCIC under the Act has been terminated because of violation of the

terms of the contract is not eligible to obtain crop insurance under

the Act with FCIC or with a company reinsured by FCIC unless the person

can show that the termination was improper and should not result in

subsequent ineligibility.

(h) All applicants for insurance under the Act must advise the

insurance provider, in writing at the time of application, of any

previous applications for insurance or contracts of insurance under the

Act within the last 5 years and the present status of any such

applications or insurance.

Sec. 407.3 Premium rates, amounts of protection, and coverage levels.

(a) The Manager of FCIC shall establish premium rates, amounts of

protection, and coverage levels for the insured crop that will be

included in the actuarial documents on file in the insurance provider's

office. Premium rates, amounts of protection, and coverage levels may

be changed from year to year.

(b) At the time the application for insurance is made, the person

must elect an amount of protection and a coverage level from among

those contained in the actuarial documents for the crop year.

Sec. 407.4 OMB control numbers.

The information collection activity associated with this rule has

been

[[Page 30220]]

previously approved by the Office of Management and Budget (OMB) under

control number 0563-0053.

Sec. 407.5 Creditors.

An interest of a person in an insured crop existing by virtue of a

lien, mortgage, garnishment, levy, execution, bankruptcy, involuntary

transfer or other similar interest shall not entitle the holder of the

interest to any benefit under the contract.

Sec. 407.6 Good faith reliance on misrepresentation.

(a) Notwithstanding any other provision of the crop insurance

contract, an insured shall be granted relief to the extent of the

insured's detrimental reliance or the extent of the policy benefits,

whichever is less, under the following conditions:

(1) The person has entered into a contract of crop insurance under

this part;

(2) A representative of FCIC made a misrepresentation or other

erroneous action or advice;

(3) Such error concerned provisions of the insurance contract not

contained in the Group Risk Plan of Insurance Basic Provisions, the

Crop Provisions, the Federal Crop Insurance Act, or the regulations

contained in this chapter;

(4) As a result of the error, the insured:

(i) Is indebted for additional premiums; or

(ii) Has suffered a loss to a crop which is not insured or for

which the person is not entitled to an indemnity because of failure to

comply with the terms of the insurance contract, but which the person

believed to be insured, or believed the terms of the insurance contract

to have been complied with or waived; and

(5) The Manager finds that:

(i) A representative of FCIC made such misrepresentation or took

other erroneous action or gave erroneous advice;

(ii) The person reasonably and in good faith relied on such

misrepresentation, erroneous action or advice to the person's

detriment; and

(iii) To require the payment of the additional premiums or to deny

such person's entitlement to the indemnity would not be fair and

equitable.

(b) For FCIC Policies only, requests for relief under this section

must be submitted to FCIC in writing. FCIC's reviewing officers must

refer such application for relief to the Manager of FCIC for

determination as to whether to grant relief. FCIC's reviewing officers

do not have authority to grant relief under this section.

section must be submitted to the reinsured company in writing. The

reinsured companies shall use arbitration, in accordance with the rules

of the American Arbitration Association, under contracts for insurance

issued by them under the Act to grant relief under the same terms and

conditions as contained in this section or may establish procedures to

administratively handle relief in accordance with this section.

Granting relief under this section does not absolve the reinsured

company from liability to FCIC for unauthorized acts of its agents.

Sec. 407.7 The contract.

The insurance contract shall become effective upon the acceptance

by FCIC or the reinsured company of a complete, duly executed

application for insurance on a form prescribed or approved by FCIC. The

contract shall consist of the accepted application, Group Risk Plan of

Insurance Basic Provisions, Crop Provisions, Special Provisions,

Actuarial Table, and any amendments, endorsements, or options thereto.

Changes made in the contract shall not affect its continuity from year

to year. Except as may be allowed under Sec. 407.6, and at the sole

discretion of the Corporation, no indemnity shall be paid unless the

person complies with all terms and conditions of the contract. The

forms required under this part and by the contract are available at the

office of the insurance provider, or the local FSA office, if

applicable.

Sec. 407.8 The application and policy.

(a) Application for insurance, on a form prescribed or approved by

FCIC, must be made by any person who wishes to participate in the

program in order to cover such person's share in the insured crop as

landlord, owner-operator, tenant, or other crop ownership interest. No

other person's interest in the crop may be insured under the

application. The application must be submitted to the insurance

provider on or before the applicable sales closing date on file in the

insurance provider's local office.

(b) FCIC or the reinsured company may reject or no longer accept

applications upon the FCIC's determination that the insurance risk is

excessive. The Manager of the Corporation is authorized in any crop

year to extend the sales closing date for submitting applications for

fall planted crops, unless prohibited by law, upon determining that the

probability and severity of claims will not increase because of the

extension, by placing the extended date on file in the insurance

provider's office and publishing a notice in the Federal Register. If

adverse conditions should develop during the extended period, the

Corporation will require the insurance provider to immediately

discontinue acceptance of applications.

traditional Multiple Peril Crop Insurance, persons who purchase the

Group Risk Plan and their crop insurance agents will be required to

execute an ``Acknowledgment of Differences'' that explains that the

terms and conditions of the Group Risk Plan are different from

traditional crop insurance in that:

(1) The Group Risk Plan indemnity payment, if any, will be made

after the Group Risk Plan premium is received;

(2) A person may have a low yield on his or her individual farm and

not receive a payment under Group Risk Plan; and

(3) A person may not have any loss of production and still collect

under the policy if a loss of production is general in the area.

(4) By executing the ``Acknowledgment of Differences,'' the insured

certifies that:

(i) He or she understands the terms of the Group Risk Plan;

(ii) An MPCI policy may be available in the county; and

(iii) Both a Group Risk Plan and a MPCI Plan cannot be purchased on

the same crop by the same insured in the same county.

Sec. 407.9 Group risk plan common policy.

The provisions of the Group Risk Plan Common Policy for the 2000

and succeeding crop years are as follows:

[FCIC policies]

Department of Agriculture

Federal Crop Insurance Corporation

Group Risk Plan Common Policy

[Reinsured policies]

(Appropriate title for insurance provider)

(This is a continuous policy. Refer to Section 18.)

[FCIC policies]

This insurance policy establishes a risk management program

developed by the Federal Crop Insurance Corporation (FCIC), an

agency of the United States Government, under the authority of the

Federal Crop Insurance Act (Act), as amended (7 U.S.C. 1501 et

seq.). All terms of the policy and rights and responsibilities of

the parties hereto are subject to the Act and all regulations under

the Act published in 7 CFR chapter IV. The provisions of this policy

may not be waived or varied in any way by the crop insurance

representative, or any other representative or employee of FCIC, the

Risk

[[Page 30221]]

Management Agency (RMA) or the Farm Service Agency (FSA). In the

event that the company cannot pay a loss, the claim will be settled

in accordance with the provisions of the policy and paid by FCIC. No

state guarantee fund will be liable to pay the loss.

Throughout this policy, ``you'' and ``your'' refer to the person

shown on the accepted application and ``we,'' ``us,'' and ``our''

refer to the Federal Crop Insurance Corporation. Unless the context

indicates otherwise, the use of the plural form of a word includes

the singular use and the singular form of the word includes the

plural.

[Reinsured policies]

This insurance policy establishes a risk management program

created by the Federal Crop Insurance Corporation (FCIC), an agency

of the United States Government, under the authority of the Federal

Crop Insurance Act (Act), as amended (7 U. S. C. 1501 et seq.).

This insurance policy is reinsured by FCIC under the provisions

of the Act. All terms of the policy and rights and responsibilities

of the parties are subject to the Act and all regulations under the

Act published in 7 CFR chapter IV, and may not be waived or varied

in any way by the crop insurance representative, any other

representative or employee of the company, any representative or

employee of FCIC, the Risk Management Agency, or the Farm Service

Agency (FSA). All provisions of State and local law in conflict with

the provisions of this policy as published in 7 CFR part 407 are

preempted and the provisions of such part will control.

Throughout this policy, ``you'' and ``your'' refer to the person

shown on the accepted application and ``we,'' ``us,'' and ``our''

refer to the reinsured company issuing this policy. Unless the

context indicates otherwise, the use of the plural form of a word

includes the singular use and the singular form of the word includes

the plural.

[Both policies]

The Group Risk Plan of Insurance (GRP) is designed as a risk

management tool to insure against widespread loss of production of

the insured crop in a county. It is primarily intended for use by

those producers whose farm yields tend to follow the average county

yield. It is possible for you to have a low yield on the acreage

that you insure and still not receive a payment under this plan.

For limited or additional coverage you may select any percent

coverage level shown on the actuarial documents. Multiplying your

coverage level percent by the expected county yield shown on the

actuarial documents gives your trigger yield. If the payment yield

that FCIC publishes for the insured crop year falls below your

trigger yield, you will receive a payment.

On or before the sales closing date, you may select any dollar

amount of protection between 60 and 100 percent (except for

Catastrophic Risk Protection (CAT) which is 55 percent) of the

maximum protection per acre shown on the actuarial documents. This

protection will be provided for each acre of the crop planted by the

acreage reporting date and shown on your acreage report (unless

otherwise provided in the crop provisions) in which you have a

share.

In accordance with the Act, FCIC will pay a portion of your

premium, as published in the actuarial documents. The premium rates,

practices, types, maximum protection per acre, and maximum subsidy

per acre are also shown on the actuarial documents.

FCIC will issue the payment yield in the calendar year following

the crop year insured. This yield will be the official estimated

yield published by the National Agricultural Statistics Service

(NASS). You will be paid if the payment yield falls below your

trigger yield. The amount of your payment per net insured acre will

be calculated by subtracting the payment yield from the trigger

yield, dividing that quantity by the trigger yield, and multiplying

that result by your protection per acre for each net acre that you

have insured.

To be eligible to participate in the Group Risk Plan of

Insurance for any crop in any county, and to receive an indemnity

thereunder, you must have an insurable interest in an insured crop

that is planted in the county shown on the approved application. The

crop must be planted for harvest and be reported to us by the

acreage reporting date. You may only purchase coverage under the

Group Risk Plan of Insurance on your net acres of the insured crop.

The insurance contract shall become effective upon the

acceptance by us of a duly executed application for insurance on our

form. Acceptance occurs when we issue a Summary of Protection to

you. The policy shall consist of the accepted application, Group

Risk Plan of Insurance Common Policy Basic Provisions, Crop

Provisions, Special Provisions, actuarial documents, and any

amendments, endorsements, or options.

Agreement To Insure

In return for your payment of the premium and your compliance

with all applicable provisions, we agree to provide risk protection

as stated in this policy. If a conflict exists among the policy

provisions, the order of priority is as follows: (1) The

Catastrophic Risk Protection Endorsement, if applicable; (2) the

Special Provisions; (3) the Crop Provisions; and (4) the Group Risk

Plan Basic Provisions, with (1) controlling (2), etc.

Terms and Conditions

Group Risk Plan of Insurance Basic Provisions

1. Definitions

Acreage report. A report required by section 7 of these Basic

Provisions that contains, in addition to other information, your

report of your share of all acreage of an insured crop in the

county, whether insurable or not insurable.

Acreage reporting date. The date contained in the Special

Provisions by which you must submit your acreage report in order to

be eligible for Group Risk Insurance.

Act. Federal Crop Insurance Act, (7 U.S.C. 1501 et seq.).

Actuarial documents. The material for the crop year which is

available for public inspection in your insurance provider's local

office, and which shows the maximum protection per acre, expected

county yield, coverage levels, premium rates, practices, program

dates, and other related information regarding crop insurance in the

county.

Additional coverage. For GRP, an amount of protection greater

than or equal to: 80 percent of the expected county yield

indemnified at 95 percent of the maximum amount of protection (80/

95); or 85 percent of the expected county yield indemnified at 90

percent of the maximum amount of protection (85/90); or 90 percent

of the expected county yield indemnified at 85 percent of the of the

maximum amount of protection (90/85). The protection is on a per

acre basis as specified in the actuarial documents for the crop,

practice, and type.

Billing date. The date, contained in the actuarial documents, by

which we will bill you for the premium and administrative fee on the

insured crop.

Cancellation date. The calendar date specified in the Crop

Provisions on which insurance for the next crop year will

automatically renew unless the policy is canceled in writing by

either you or us or terminated in accordance with policy terms.

Catastrophic risk protection. The minimum level of coverage

offered by FCIC. For GRP, an amount of protection equal to 65

percent of the expected county yield indemnified at 55 percent of

the maximum protection per acre specified in the actuarial documents

for the crop, practice, and type.

County. Any county, parish, or other political subdivision of a

state shown on your accepted application.

Crop practice. The combination of inputs such as fertilizer,

herbicide, and pesticide, and operations such as planting,

cultivation, and irrigation, used to produce the insured crop. The

insurable practices are contained in the actuarial documents.

Crop Provisions. The part of the policy that contains the

specific provisions of insurance for each insured crop.

Crop year. The period of time within which the insured crop is

normally grown and designated by the calendar year in which the crop

is normally harvested.

Dollar amount of protection per acre. The percentage of coverage

selected by you multiplied by the maximum protection per acre

specified in the actuarial documents for the crop, practice, and

type. The dollar amount of protection per acre is shown on your

Summary of Protection.

Expected county yield. The yield contained in the actuarial

documents, on which your coverage for the crop year is based. This

yield is determined using historical NASS county average yields, as

adjusted by FCIC.

FCIC. The Federal Crop Insurance Corporation, a wholly owned

corporation within USDA.

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 are those recognized by the Cooperative State Research,

Education, and Extension Service as compatible with agronomic and

weather conditions in the county.

GRP. Group Risk Plan of Insurance.

Insurance provider. The FSA or a private insurance company

approved by FCIC which

[[Page 30222]]

provides crop insurance coverage to producers participating in any

Federal crop insurance program administered under the Act.

Limited coverage. For GRP an amount of protection greater than

or equal to 70 percent of the expected county yield indemnified at

60 percent of the maximum amount of protection (70/60) and less than

80/95, 85/90, and 90/85.

Maximum protection per acre. The highest amount of protection

specified in the actuarial documents.

MPCI. Multiple peril crop insurance, an insurance product based

on an individual yield or amount of insurance.

NASS. National Agricultural Statistics Service, an agency within

USDA, or its successor, that publishes the official United States

Government yield estimates.

Net acres. The planted acreage of the insured crop multiplied by

your share.

Payment yield. The yield determined by FCIC based on NASS yields

for each insurable crop's type and practice, as adjusted by FCIC,

and used to determine whether an indemnity will be due.

Person. An individual, partnership, association, corporation,

estate, trust, or other legal entity, and wherever applicable, a

state or a political subdivision or agency of a state.

Sales closing date. The date contained in the Special Provisions

by which an application must be filed. The last date by which you

may change your crop insurance coverage for a crop year.

Share. Your percentage of interest in the insured crop, as an

owner, operator, or tenant at the time insurance attaches. Premium

will be determined on your share as of the acreage reporting date.

However, only for the purpose of determining the amount of

indemnity, your share will not exceed your share at the acreage

reporting date or on the date of harvest, whichever is less.

Special provisions. The part of the policy that contains

specific provisions of insurance for each crop that may vary by

geographic area.

Subsidy. The portion of your premium, shown on the actuarial

documents as limited and maximum amounts per acre, that FCIC will

pay in accordance with the Act.

Summary of protection. Our statement to you of the crop insured,

dollar amount of protection per acre, premiums, and other

information obtained from your accepted application, acreage report,

and the actuarial documents.

Termination date. The calendar date contained in the Crop

Provisions upon which insurance ceases to be in effect because of

nonpayment of any amount due us under the policy, including premium

and administrative fees.

Trigger yield. The result of multiplying the expected county

yield by the coverage level percentage chosen by you. When the

payment yield falls below the trigger yield, an indemnity is due.

Type. Plants of the insured crop having common traits or

characteristics that distinguish them as a group or class, and which

are designated in the actuarial documents.

USDA. United States Department of Agriculture.

2. Insured Crop

The insured crop will be the crop shown on your accepted

application, as specified in the applicable Crop Provisions, and

must be grown on insurable acres.

3. Insured and Insurable Acreage

(a) The insurable acreage is all of the acreage of the insured

crop for which premium rates are provided by the actuarial documents

and in which you have a share and which is in the county listed in

your accepted application. The dollar amount of protection per acre,

amount of premium, and indemnity will be calculated separately for

each county, type, and practice.

(b) Only the acreage seeded to the insured crop on or before the

acreage reporting date (unless otherwise provided in the Crop

Provisions) and physically located in the county listed on your

accepted application will be insured. Crops grown on acreage

physically located in another county must be reported and insured

separately.

crop was destroyed or put to another use during the insurance period

for the purpose of conforming with, or obtaining a payment under,

any other program administered by the USDA.

(d) We will not insure any acreage where you have failed to

follow good farming practices for the insured crop.

4. Policy Protection

(a) For catastrophic risk protection GRP policies, the dollar

amount of protection per acre will be 55 percent of the maximum

protection per acre specified on the actuarial documents for each

insured crop, practice, and type. For limited and additional

coverage GRP policies, you may select any dollar amount of

protection from 60 percent through 100 percent of the maximum

protection per acre shown on the actuarial documents for the crop,

practice, and type.

(b) The dollar amount of protection per acre, multiplied by your

net insured acreage, is your policy protection for each insured

crop, practice, and type specified in the actuarial documents.

determinations for the county will be conclusively presumed to be

accurate.

5. Coverage Levels

(a) For catastrophic risk protection GRP policies, the coverage

level is shown on the actuarial documents for each insured crop,

practice, and type. For limited and additional coverage GRP

policies, you may select any percentage of coverage shown on the

actuarial documents for the crop, practice, and type.

(b) Your coverage level multiplied by the expected county yield

shown on the actuarial documents is your trigger yield. If the

payment yield published by FCIC for the insured crop, practice, and

type for the insured crop year falls below your trigger yield, you

will receive an indemnity payment.

for each insured crop on or before the sales closing date. Changes

must be in writing and received by us by the sales closing date.

6. Payment Calculation Factor

Your payment calculation factor will be ((your trigger

yield-payment yield) your trigger yield) for the purposes

of calculating an indemnity payment.

7. Report of Acreage and Share

(a) You must report on our form all acreage for each insured

crop in which you have a share (insurable and not insured) by

practice and type specified in the actuarial documents in each

county listed on your accepted application. This report must be

submitted each year on or before the acreage reporting date for the

insured crop contained in the actuarial documents. If you do not

submit an acreage report by the acreage reporting date, we will

determine your acreage and share or deny liability on the policy.

(b) We will not insure any acreage of the insured crop planted

after the acreage reporting date, unless otherwise provided in the

Crop Provisions.

reported on the acreage report or the acreage determined by us to be

accurate.

(d) The payment of an indemnity will be based on your insurable

acreage on the acreage reporting date.

(e) If you misrepresent or omit any information, we will revise

the premium or liability or both for each insured crop in the

county, by type and practice, to the amount we determine to be

correct.

(f) You may insure only your share of the crop, which includes

any share of your spouse and dependent children unless it is

demonstrated to our satisfaction, prior to the sales closing date,

that you and your spouse maintain completely separate farming

operations and that each spouse is the operator of his or her own

separate operation. Any commingling of any part of the operations

will cause shares of you and your spouse to be combined.

8. Administrative Fees and Annual Premium

(a) If you obtain a catastrophic risk protection GRP policy you

will pay an administrative fee:

(1) Of $60 per crop per county;

(2) Payable to the insurance provider on the billing date for

the crop.

(b) If you obtain a limited coverage GRP policy, you will pay an

administrative fee under the same terms and conditions as the

premium for the policy:

(1) Of $50 per crop per county;

(2) Not to exceed $200 per county;

(3) Up to a maximum of $600 per producer.

(4) Limited resource farmers as defined at 7 CFR 457.8 may apply

for a waiver of administrative fees for the limited coverage policy.

pay an administrative fee:

(1) Of $20 per crop per county;

(2) Payable under the same terms and conditions as the premium

for the policy.

(d) For limited and additional coverage GRP policies, your

premium is determined by multiplying your policy protection by the

premium rate per hundred dollars of protection for your coverage

level contained

[[Page 30223]]

in the actuarial documents, by 0.01, and subtracting the applicable

subsidy.

(e) For catastrophic risk protection, limited, and additional

coverage GRP policies, payment of an administrative fee will not be

required if you file a bona fide zero acreage report on or before

the acreage reporting date for the crop (if you falsely file a zero

acreage report you may be subject to criminal and administrative

sanctions).

(f) The annual premium is earned and payable at the time the

insured crop is planted. For each insured crop, you will be billed

for premium and the administrative fee by the billing date specified

in the Special Provisions. Premium, administrative fee, and any

other amount owed us is due on the billing date and interest will

accrue if the premium, administrative fee, or any other amount owed

is not received by us before the first day of the month following

the premium billing date.

(g) The premium, administrative fee, and any other amount due,

plus any accrued interest, will be considered delinquent if it is

not paid on or before the termination date specified in the Crop

Provisions. This may affect your eligibility for benefits under

other USDA programs. A debt for any crop insured with us under the

authority of the Act will be deducted from any indemnity due you for

this or any other crop insured with us.

(h) Failure to pay the premium and any administrative fee due,

plus any accrued interest and penalties, by the termination date

will make you ineligible for any crop insurance under the Act for

subsequent crop years until the sales closing date after the date

the debt, including interest and penalties, is paid or satisfactory

arrangements acceptable to us for such payment are made.

9. Written Agreements

Terms of this policy which are specifically designated for the

use of written agreements 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;

(b) The application for 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;

variable terms of the contract, including, but not limited to, crop

type or variety, the protection per acre, premium rate, and price

election; and

(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.

10. Access to Insured Crop and Record Retention

We may examine the insured crop and any records relating to the

crop and this insurance at any location where such crop or such

records may be found or maintained, as often as we reasonably

require. Records relating to the planting of the insured crop and

your net acres must be retained for three years after the end of the

crop year or three years after the date of payment of the final

indemnity, whichever is later. We may extend the record retention

period beyond three years by notifying you of such extension in

writing. Failure to maintain such records will, at our option,

result in cancellation of the policy or a determination that no

indemnity is due.

11. Transfer of Coverage and Right to Indemnity

If you transfer any part of your share during the crop year, you

may transfer your coverage rights, if the transferee is eligible for

crop insurance. We will not be liable for any more than the

liability determined in accordance with your policy that existed

before the transfer occurred. The transfer of coverage rights must

be on our form and will not be effective until approved by us in

writing. Both you and the transferee are jointly and severally

liable for payment of the premium. The transferee has all rights and

responsibilities under this policy consistent with the transferee's

interest.

12. Assignment of Indemnity

You may assign to another person your right to an indemnity for

the crop year. The assignment must be on our form and will not be

effective until approved in writing by us.

13. Other Insurance

You may not obtain any other crop insurance issued under the

authority of the Act on your share of the insured crop. If we

determine that more than one policy on your share is intentional,

you may be subject to the sanctions authorized under this policy,

the Act, or any other applicable statute. If we determine that the

violation was not intentional, the policy with the earliest date of

application will be in force and all other policies will be void.

Nothing in this paragraph prevents you from obtaining other

insurance not issued under the Act.

14. Legal Action Against Us

(a) You may not bring legal action against us unless you have

complied with all of the policy provisions.

(b) If you do take legal action against us, you must do so

within 12 months of the date of denial of a claim. Suit must be

brought in accordance with the provisions of 7 U.S.C. 1508(j).

other), attorney's fees, or other charges is limited or excluded by

this contract or by Federal Regulations.

[FCIC policy]

15. Restrictions, Limitations, and Amounts Due Us

(a) We may restrict the amount of acreage we will insure to the

amount allowed under any acreage limitation program established by

USDA.

(b) Violation of Federal statutes including, but not limited to,

the Act; the controlled substance provisions of the Food Security

Act of 1985; the Food, Agriculture, Conservation, and Trade Act of

1990; and the Omnibus Budget Reconciliation Act of 1993, and any

regulation promulgated thereunder, will result in cancellation,

termination, or voidance of your crop insurance contract. We will

recover any and all monies paid to you or received by you during

your period of ineligibility, and your premium will be refunded,

less an amount for expenses and handling not to exceed 20 percent of

the premium paid or to be paid by you.

the policy protection specified in section 4 of this policy. Under

no circumstances will we be liable for the payment of damages

(compensatory, punitive, or other), attorney's fees, or other

charges in connection with any claim for indemnity, whether we

approve or disapprove such indemnity.

(d) We will pay simple interest computed on the net indemnity

ultimately found to be due by us or determined by a final judgment

of a court of competent jurisdiction or a final administrative

determination from, and including, the 61st day after the date we

receive the NASS county yield estimates for the insured crop year.

Interest will be paid only if the reason for our failure to timely

pay is not due to your failure to provide information or other

material necessary for the computation or payment of the indemnity.

The interest rate will be that established by the Secretary of the

Treasury under section 12 of the Contract Disputes Act of 1978 (41

U.S.C. 611 et seq.), and published in the Federal Register.

(e) Any amount illegally or erroneously paid to you or that is

owed to us but is delinquent may be recovered by us through offset

by deducting it from any loan or payment due you under any Act of

Congress or program administered by any United States Government

Agency, or by other collection action.

(f) Interest will accrue at the rate not to exceed 1.25 percent

simple interest per calendar month, or any part thereof, on any

unpaid premium or administrative fee balance. For the purpose of

premium and administrative fee amounts due us, interest will begin

to accrue on the first day of the month following the premium

billing date specified in the Special Provisions.

(g) For the purpose of any other amounts due us, such as

repayment of indemnities found not to have been earned:

(1) Interest will start to accrue on the date that notice is

issued to you for the collection of the unearned amount;

(2) Amounts found due under this paragraph will not be charged

interest if payment is made in full within 30 days of issuance of

the notice by us;

(3) The amount will be considered delinquent if not paid within

30 days of the date the notice is issued by us;

(4) Penalties and interest will be charged in accordance with 31

U.S.C. 3717 and 4 CFR part 102; and

(5) The penalty for accounts more than 90 days delinquent is an

additional 6 percent per annum.

(h) Interest on any amount due us found to have been received by

you because of fraud, misrepresentation, or presentation by you of a

false claim will start on the date you received the amount with the

additional 6 percent penalty beginning on the 31st day after the

notice of amount due is issued to you. This interest is in addition

to any other amount found to be due under any other Federal criminal

or civil statute.

[[Page 30224]]

(i) If we determine that it is necessary to contract with a

collection agency, refer the debt to governmental collection

centers, the Department of Treasury Offset Program, or to employ an

attorney to assist in collection, you agree to pay all of the

expenses of collection.

(j) All amounts paid by you will be applied first to expenses of

collection if any, second to reduction of any penalties which may

have been assessed, then to reduction of accrued interest, and

finally, to reduction of the principal balance.

[Reinsured policy]