[Federal Register Volume 59, Number 39 (Monday, February 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4230]


[Federal Register: February 28, 1994]


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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation

7 CFR Part 457


General Crop Insurance Regulations; Small Grains Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) hereby adopts 
regulations for specific crop provisions to insure Small Grains (wheat, 
barley, flax, oats, and rye), and options for increased coverage on 
Winter Wheat and Malting Barley. This rule consolidates the provisions 
for insuring small grains into one policy and provides for late 
planting, prevented planting, and wheat winter coverage.

EFFECTIVE DATE: March 30, 1994.

FOR FURTHER INFORMATION CONTACT:
Mari L. Dunleavy, Regulatory and Procedural Development, Federal Crop 
Insurance Corporation, U.S. Department of Agriculture, Washington, DC 
20250, telephone (202) 254-8314.

SUPPLEMENTARY INFORMATION: This action has been reviewed under USDA 
procedures established by Departmental Regulation 1512-1. This action 
constitutes a review as to the need, currency, clarity, and 
effectiveness of these regulations under those procedures. The sunset 
review date established for these regulations is July 1, 1998.
    Kenneth D. Ackerman, Manager, FCIC, has determined that this action 
is in conformance with Executive Order 12866 and is not a ``significant 
regulatory action.'' Based on information compiled by the Department, 
it has been determined that this final rule: (1) Would not adversely 
affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local, or tribal governments or communities; (2) 
would not create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency; (3) would not alter the 
budgetary impact of entitlement, grants, user fees or loan programs or 
rights and obligations of recipients thereof; and (4) would not raise 
novel legal or policy issues arising out of legal mandates, the 
President's priorities, or principles set forth in Executive Order 
12866.
    In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C. 
3501 et seq.), the information collection or record-keeping 
requirements included in this final rule have been submitted for 
approval to the Office of Management and Budget.
    This action will not have a significant impact on a substantial 
number of small businesses. The insurance companies delivering these 
policies will not increase the amount of work required over the 
previous policy delivery. In fact, the combination of a number of 
previously independent policies into one policy should reduce confusion 
and increase efficiency. Therefore, this action is determined to be 
exempt from the provisions of the Regulatory Flexibility Act and no 
Regulatory Flexibility Analysis was prepared.
    This program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.450.
    This program is not subject to the provisions of Executive Order 
12372 which requires 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.
    This action is not expected to have any significant impact on the 
quality of the human environment, health, and safety. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is needed.
    The small grains crop provisions were developed to provide one 
policy form for insuring wheat, barley, flax, oats, and rye. Using one 
policy for these five crops will: (1) Substantially reduce paperwork by 
issuing one policy form rather than the five separate policies 
previously used; (2) substantially reduce the number of crop handbooks 
and administrative procedures because separate handbooks and procedures 
will no longer be required for each of the small grain crops; (3) 
reduce the time involved to amend or revise the Provisions by 
eliminating repetitious review processes; and (4) continue to allow 
insureds the flexibility to elect any of the five small grain crops 
they wish to insure.
    By separate rule, FCIC will remove and reserve the present sections 
for these crop endorsements.
    On Thursday, June 10, 1993, FCIC published a notice of proposed 
rulemaking in the Federal Register at 58 FR 32458 proposing to revise 
the Common Crop Insurance Regulations by adding new provisions for 
oats, wheat, winter wheat, flax, barley, malting barley, and rye crop 
insurance.
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments, data, and opinions. Comments were 
received from various representatives of farm and commodity groups, the 
crop insurance industry, and FCIC. The comments received and FCIC 
responses are as follows:
    Comment: Six comments suggested that the Crop Provisions should be 
delayed until after the 1994 crop year because:
    (1) Timeliness--Implementation of this program for the 1994 crop 
would cause confusion and disruption because companies had insufficient 
time for training and marketing of the program to agents and insureds;
    (2) Program Integrity--The effect upon the overall public 
acceptance and program integrity will be negative as a result of the 
inevitable service problems associated with ``rushing'' a program of 
such national scale; and
    (3) Changes--To a large degree, most of the proposed provisions are 
positive and will improve the program; however, by delaying 
implementation until the 1985 crop year specific provisions can be 
studied.
    Response: FCIC delayed implementation until the 1995 crop year.
    Comment: Two comments suggested the proposed Small Grains Crop 
Provisions undergo a pilot test in two to three county groupings 
located in (1) a predominantly spring wheat only area, (2) a winter 
wheat only area, and (3) an area having significant acreage of both 
winter and spring wheat. The comments stated that this approach would 
avoid undue risk of adverse effects to a wheat program currently 
working well for thousands of policyholders. An additional comment 
recommended that the proposal be tabled for further study and 
discussion to give all parties sufficient time to adequately assess the 
effects of the proposed changes.
    Response: The Small Grains Crop Provisions permit farmers to choose 
the same or nearly the same coverage as currently offered. FCIC does 
not anticipate significant problems with the proposed provisions, and 
sees no need to create a pilot program to test effectiveness.
    Comment: Two comments recommended that the term ``initially 
planted'' be defined for the purposes of unit division. Current farming 
practices are such that more than one use/interpretation of this term 
is possible. Another comment recommended that ``initially planted'' be 
defined as ``the first occurrence of planting the crop to the acreage 
for the crop year''.
    Response: FCIC agrees that the term ``initially planted'' should be 
defined and has done so.
    Comment: One comment stated that the definition of ``practical to 
replant'' contained in the Common Crop Insurance Policy conflicts with 
the Small Grains Crop Provisions. The Common Crop Insurance Policy 
indicates it is practical to replant until 20 days after the final 
planting date. The Small Grains Crop Provisions indicate that any 
acreage of the insured crop damaged before the final planting date must 
be replanted unless FCIC agrees that replanting is not practical. It 
was recommended that a definition of ``practical to replant'' be added 
to the Small Grains Crop Provisions that will override the definition 
contained in the Common Crop Insurance Policy.
    Response: The comment misapplies the definition of ``practical to 
replant'' in the Common Policy. That policy does not indicate that it 
is practical to replant until 20 days after the final planting date 
but, to the contrary, states that it is not practical to replant after 
that date. The provisions do not conflict. A new definition has not 
been added due to this comment. However, a new definition has been 
added that is compatible with the new 25 day late planting period.
    Comment: One comment noted that the definition of ``swathed'' 
indicates that a wheat crop that has been cut but not placed in 
windrows is considered ``swathed.'' The comment suggested rewording the 
definition to require that the crop be placed in a windrow.
    Response: FCIC agrees with the comment and has appropriately 
modified the definition.
    Comment: One comment stated that the wording in the unit division 
section has significantly changed as has the unit division wording in 
the ``draft'' 1994 Crop Insurance Handbook (CIH). The comment 
recommended corresponding policy language with that in the CIH.
    Response: Language contained in the Crop Insurance Handbook is 
interpretive and procedural in nature. The Crop Insurance Handbook 
details unit division for various crops, and is intended for use by 
insurers and their agents to interpret the crop provisions. In the 
event of conflict the provisions control. The Small Grains Crop 
Provisions outline the unit structure for small grains in a concise 
manner and are controlling.
    Comment: One comment disagreed with requiring insureds to furnish 
records for each optional unit for at least the last crop year the unit 
was planted. According to current procedure, ``in order for optional 
units to apply, the insured must have provided production reports for 
the most recent year in the base period which support the optional 
units proposed by the insured.'' The comment asserts that unless all 
optional units are planted every year, the new policy could require an 
insured to furnish records for several years to qualify for optional 
units. This places an increased burden on all producers, particularly 
on those practicing crop rotation. The comment recommended revising the 
provision to ``You must have verifiable records of production for at 
least the last crop year used to determine your production guarantee.''
    Response: FCIC agrees with the comment and has modified the 
provision with language similar to that recommended.
    Comment: A comment inquired if the process of raising the planter 
for a few feet and then resuming planting, or leaving a space unplanted 
is sufficient for a ``clear and discernible break in the planting 
pattern''. The comment suggested further clarification of the term, 
``clear and discernible break in the planting pattern''.
    Response: Requirements for separate units have been met if the 
break in the planting pattern is adequate to allow measurement of 
individual insurance units, and allow separate harvest of the units. 
The terms are self explanatory. Whether a break exists depends on 
whether these functions can occur. No changes in policy language are 
needed to clarify boundary requirements.
    Comment: Four comments supported initially planted spring wheat 
being treated as a separate unit. Each comment also indicated that 
there should not be a mandatory replant provision for damaged winter 
wheat. One of the four comments indicated that any premium increase 
caused by the separate optional units for spring and winter wheat 
should be minimal.
    Response: Separate optional units for initially planted winter and 
spring wheat are allowed by this regulation, although farmers who elect 
this choice will forgo the premium discount for maintaining a single 
unit. These terms are consistent with those terms given to a producer 
who elects to plant spring and winter wheat into separate sections.
    The Wheat Winter Coverage Endorsement provides optional coverage 
for those growers who may not wish to replant damaged winter wheat. 
However, the Basic Policy requires that crops damaged prior to the 
final planting date be replanted when practical. This requirement helps 
FCIC maintain lower premium rates.
    Comment: Some comments were in disagreement with the provision 
allowing insureds to select optional units for initially planted winter 
wheat and initially planted spring wheat for the following reasons:
    a. Currently, production from winter wheat acreage often off-sets 
losses on spring wheat acreage. Allowing optional units by type can 
only increase the loss ratio in those areas where both winter and 
spring types wheat are planted and insured. To increase risk exposure 
by allowing winter and spring wheat units when other changes are 
concurrently being implemented in the program to decrease the loss 
ratio seems to create a conflict.
    b. There is no appreciable difference in harvesting and marketing 
the soft white winter wheat and the soft white spring wheat grown in 
the northwest. Although a yield difference does exist between the two 
types of wheat, yield differences also exist for many other crop 
practices and types not allowed separate optional units.
    c. If optional units are allowed by type, a significant increase in 
losses could result. According to information from some member 
companies who have analyzed prior year losses by type, loss ratios for 
wheat would have been substantially higher if winter and spring wheat 
could have been insured as a separate optional units.
    d. One organization had not received any requests for optional 
units by type from companies, agents, or insureds, and therefore did 
not see the need for the provision.
    Other comments provided the following observations and inquiries:
    a. Will the cost of the options in provisions governing Unit 
Division be prohibitive?
    b. Production of spring wheat and winter wheat is commingled more 
often than not.
    c. Allowing winter and spring optional units may significantly 
increase risk. FCIC should analyze winter and spring statistics to 
determine if an additional rate should be charged.
    d. The provision allowing optional units for initially planted 
Winter Wheat and initially planted Spring Wheat will permit growers who 
have insufficient acreage to plant in separate sections and declare 
separate optional units. Large producers will also be able to declare 
separate optional units, and the net effect will increase the number of 
wheat units. This may have a negative effect on FCIC's loss ratio. The 
provision will also increase the paperwork burden of the already 
overburdened claims adjuster.
    e. Changes or adjustments to the program should be sensitive to 
rating adequacy and reduction of excess of loss ratios. Some of the 
provisions of the program contradict these goals. For instance, 
analyses by companies and industry trade associations do not support 
the notion that no additional rate is required for optional units by 
type. As proposed, optional units by type can only be justified as a 
marketing tool in some areas of the country.
    Response: Separate units for winter and spring wheat have been 
requested by grower groups in Washington, Idaho, and Oregon. FCIC 
agrees that farmers should have the opportunity to designate initially 
planted spring and winter wheat as separate optional units because they 
are planted several months apart and are normally harvested separately. 
FCIC also agrees that soft white wheat types may be marketed together. 
However, there are substantial price penalties for commingling 
production of spring and winter wheat of other types.
    FCIC has analyzed types of wheat reported by unit for the states in 
which both winter and spring types are insured. An average of only 7 
percent of all units in these states reported both winter and spring 
types within the same unit. The majority, or 93 percent of all units, 
reported only a single type within the unit. These results suggest that 
most farmers already manage their land in a manner that permits them to 
put the winter and spring types into separate optional units. This is 
accomplished by planting the types within different legally defined 
sections of land. Thus, FCIC believes that the potential for increases 
in the number of optional units is not substantial. Most farmers who 
have enough land and who wish to designate separate optional units 
already do so.
    Farmers who designate separate optional units by type within the 
same section will forgo the premium discount that is currently allowed 
if a basic unit is not separated into optional units. Thus, farmers who 
elect to designate units by type of wheat within the section will pay 
more premium than a farmer who elects to retain all acreage within a 
basic unit.
    The comments concerning additional paperwork are overstated. 
Farmers already are required to report separately any acreage planted 
to the spring and winter types within section because different premium 
rates, insurance guarantees, or both, apply to such acreage. The only 
difference in the acreage report under the new provision is that two 
distinct unit numbers will be used by the insurer rather than one as at 
present. Farmers will be required to report the production of the two 
types separately, which they already may do in many cases. FCIC cannot 
estimate the number of cases in which a new report may be required. The 
former wheat endorsement required only that insured persons report the 
total production of all the insurable crop produced on the unit. If a 
farmer elects to report only total production under the present 
arrangements, the accuracy of the guarantees for the types is reduced 
because the insurer must allocate the production in some manner to 
establish a guarantee by type. If farmers who now report the combined 
production of the two types within section do designate separate 
optional units, the change may enhance the precision of guarantees for 
the separate types, thereby benefiting the insurer. If the farmer 
already reports production of the two types separately, there will be 
no change in the paperwork required.
    Insured persons who wish to take advantage of the opportunity to 
designate separate optional units within a section must comply with all 
other requirements for unit division. Thus, if a producer commingles 
production of the winter and spring types, separate optional units may 
not be elected. If a producer plants spring wheat into a failed winter 
stand, separate optional units may not be elected. If planting patterns 
do not permit separate identification of the acreage, optional units 
may not be elected. If a producer wishes to reduce the premium paid for 
the insurance, he or she can elect to retain all the acreage in a basic 
unit. The new provisions do not mandate separate optional units.
    Finally, much of the research about units referenced in the 
comments relates to size of acreage, not specifically to unit division. 
Results of such research suggests that small farmers should pay higher 
premiums than large farmers because small acreage may have higher 
losses on average. Although the issues is related, FCIC believes that 
the issues should be treated separately. If it is ultimately 
demonstrated that small acreage should be subject to a surcharge due to 
actuarial considerations, the surcharge should be assessed against 
small acreage regardless of whether these result from small farming 
operations or from unit division.
    In summary, FCIC does not find these comments persuasive.
    Comment: One comment took issue with winter wheat vs. spring wheat 
Transitional Yields (T-yields) and factors in many Pacific Northwest 
counties. The comment suggested that the uncoupling of winter wheat and 
spring wheat into separate units be preceded by a major rework of T-
yield factors to prevent potential over-payments on spring wheat units.
    Response: FCIC agrees that T-yields should reflect any significant 
differences in yields. Evaluations will be performed and any necessary 
changes will be made as soon as practicable. However, those changes 
will not require a change in this rule.
    Comment: The last paragraph under section 2. (Unit Division) 
indicates that optional units not in compliance with the provisions of 
the section will be combined into the basic unit from which they were 
formed. A comment suggested that this language be clarified to separate 
this combination from that which occurs at loss time if production is 
commingled between optional units. The comment recommended the 
following language: ``If you do not comply fully with these conditions, 
we will combine all optional units which are not established in 
compliance with this section into the basic unit from which they were 
formed.''
    Response: FCIC agrees with the comment and has modified the 
provision as recommended.
    Comment: One comment suggested that Harding and Perkins counties, 
South Dakota, be added to the list of wheat counties that have an April 
15 cancellation and termination date. Statistics indicate that over 80 
percent of the wheat in these counties is initially planted spring 
wheat. In order to maintain the line of counties which separates the 
April 15 counties from counties with earlier dates, Harding and Perkins 
counties should be listed with the other South Dakota counties with the 
April 15 date.
    Response: FCIC agrees with the comment and has modified the 
provision as recommended.
    Comment: Four comments agreed with changing the wheat sales closing 
and cancellation dates for Idaho, Oregon, and Washington from October 
31, to September 30. However, they recommended the dates not be changed 
until the 1995 crop year due to the late publication of the proposed 
rule. One of the four comments indicated the change would cause the 
production reporting date to occur at an earlier date. In some areas of 
the Northwest, harvest may not be completed by that new production 
reporting date.
    Response: The effective date of these regulations has been 
postponed until the 1995 crop year, therefore, the wheat sales closing 
and cancellation dates for Idaho, Oregon, and Washington from October 
31 to September 30 has been postponed to 1995. FCIC will take action to 
change the production reporting date if problems occur.
    Comment: One comment stated that the change of the wheat sales 
closing and cancellation dates from October 31 to September 30 for 
Idaho, Oregon, and Washington is favorable and inquired as to the 
reason that Nevada and Utah remain at the 10/31 date.
    Response: FCIC changed the sales closing and cancellation in Idaho, 
Oregon, and Washington due to an allegation that the previous dates 
posed a potential for adverse selection. FCIC has not received any 
comments or recommendations regarding the dates in Nevada or Utah. It 
is FCIC's intent to allow the maximum sales period possible as long as 
program integrity is not compromised. FCIC will not change the proposed 
rule.
    Comment: A comment recommended that the cancellation and 
termination dates be changed from April 15 to February 28 for barley 
and oats in all Pacific Northwest states.
    Response: FCIC plans an overall assessment of program dates for all 
crops. The recommendation will be considered in that review.
    Comment: A comment recommended moving the cancellation and 
termination dates from the Crop Provisions to the Special Provisions. 
The comment suggested that any information specific to a state, county 
or group of counties be located in the Special Provisions where the 
appropriate parties have access to it.
    Response: These dates must remain in the Common Crop Insurance 
Policy due to the requirements of Sec. 457.8. However, FCIC will 
consider also placing them in the Special Provisions.
    Comment: One comment stated that as proposed, policy language in 
subsection 6.(a) could lead the reader to believe that the insured has 
the option of insuring only a portion of their insurable acreage.
    Response: FCIC agrees that this language should be clarified. The 
provision has been modified to indicate the crop insured is each small 
grain the producer elects to insure, that is grown in the county on 
insurable acreage, and for which premium rates are provided by the 
actuarial table.
    Comment: One comment recommended requiring that requests for 
written agreements be received by FCIC within 15 days of the acreage 
reporting date and that the requirement be added to section 6. Insured 
Crop.
    Response: The Crop Insurance Handbook now indicates that these 
types of written agreements must be sent to FCIC, and be postmarked no 
later than 15 days after the acreage reporting date. Since reinsured 
insurance contracts are between the reinsured company and the insured, 
the contract should not contain obligations that exist between FCIC and 
the reinsured company. Therefore, language indicating that requests 
must be received by FCIC within 15 days of the acreage reporting date 
will not be included in the crop provisions.
    Comment: Three comments were received regarding the provision that 
allows the insured to designate wheat acreage that will be destroyed 
before harvest as uninsurable acreage, or acreage eligible for a 
reduced premium rate. The comments suggested that applicability of the 
provisions not be limited to wheat, and that the reduced premium rate 
should only be provided in counties where early destruction of crops 
has been a problem.
    Response: FCIC agrees that applicability of the provisions should 
not be limited to wheat. Only acreage intended to be harvested for 
grain qualifies as an insurable crop. Therefore, if it is known at the 
acreage reporting date that the acreage will be destroyed, it is not 
insurable. The provision that allows an insured to designate only wheat 
acreage as uninsurable acreage has been changed to apply to all covered 
crops. The provision that provides for a reduced premium rate if 
acreage is destroyed by a certain date, has been changed so that it 
applies only in those counties for which such a reduced rate is 
included on the actuarial table. This change will allow FCIC to provide 
a ``short rate'' only in areas where small grain crops are most 
commonly used for multiple purposes, e.g., grazing and harvest for 
grain.
    Comment: One comment questioned the benefit of using the under-
reported premium factor as opposed to current procedure whereby 
production from unreported acreage is counted against the guarantee for 
reported acreage, or the acreage report is revised if acreage is over-
reported.
    Response: Current procedure is not altered if under-reported 
acreage is the only problem. The under-reported premium factor reduces 
the guarantee when share, practice, type, or other material information 
is under-reported.
    Comment: One comment noted that it is extremely important that 
shifting liability procedure be reinstated. Acreage is reported by unit 
and the insurance company requires the insured to indicate on the 
acreage report the acreage he plans to destroy, however, insureds often 
do not know at acreage report time exactly which acres will be 
destroyed. Therefore, the company is asking for information that is 
often unknown at the time the acreage report is filed. Shifting 
liability procedure is an equitable method of addressing the situation.
    Response: If an insured indicates that acreage will be destroyed 
and then does not destroy the acreage, the unit will be subject to the 
under-reporting provisions of subsection 6.(f) of the Common Crop 
Insurance Policy (Sec. 457.8).
    Comment: Two comments indicated that the wheat provision will allow 
any insured producer whose wheat sustains early damage to destroy any 
remaining wheat, pay a reduced premium rate, and receive a full 
indemnity. The comments suggested that the provision should be changed 
to prohibit this practice, and to require the insured to notify the 
insurer prior to destroying any insured wheat.
    Response: FCIC agrees that the reduced premium should apply only 
when there is no insurable damage. FCIC also agrees that the insured 
should notify the insurer prior to and after destruction of any acreage 
of the insured crop. This notification will allow the insurer to make 
any necessary inspections and adjustments to the Acreage Report. The 
provision has been revised accordingly.
    Comment: Two comments indicated that the provisions for destroyed 
acreage are difficult to assess without seeing the proposed prorata 
premium charges, or the deadlines which will be designated in the 
Special Provisions. The comments asked if the expense reimbursement to 
reinsured companies for acreage destroyed by the deadline in the 
Special Provisions would be calculated using the total premium or the 
reduced premium.
    Response: Premium rates for destroyed acreage will vary in 
accordance with the probability of loss in individual geographic areas. 
If insurable damage occurs prior to the crop being destroyed by the 
grower, the loss will be processed in the normal manner and 100 percent 
of the premium will be due. Expense reimbursement will also be 
calculated on this basis. If the insured destroys the acreage by the 
date designated in the Special Provisions and does not claim insurable 
damage on such acreage, the reduced rate will be used to determine the 
premium and the reduced premium will be used to determine the expense 
reimbursement.
    Comment: One comment recommended that if the terms of the Late 
Planting Agreement Option are added to the Small Grains Policy, an 
option should be allowed for insureds to decline this coverage. The 
comment supported giving insureds the opportunity to make a management 
decision on whether their late planted acreage has coverage.
    Response: Provisions for late planting coverage have been added to 
these provisions in order to provide more complete coverage for 
insureds. If insureds are allowed to opt out of the coverage it may 
result in adverse selection against the insurer. When agronomic 
conditions are good many insureds would tend to opt out of the 
coverage, but if growing conditions are poor, insureds would tend to 
keep the coverage.
    Comment: One comment inquired about the lack of availability of the 
late planting option for late planted winter wheat. The comment pointed 
out that the option is available for both fall and spring planted 
barley, and suggested that it be available for winter wheat.
    Response: FCIC has received comments indicating that the wheat 
final planting dates are now set as late as it is normally practical to 
plant. The additional planting period allowed by the Late Planting 
Agreement Option (LPAO) permits planting too late in the year to expect 
production equal to or in excess of the insurance guarantee provided by 
the Option. Although coverage similar to that provided by the current 
LPAO will no longer be available, coverage for winter wheat planted 
after the final planting date will be available under the prevented 
planting provisions (section 12). FCIC received no comments opposed to 
removing the LPAO for winter wheat.
    Comment: One comment recommended changing the wording in subsection 
6.(d) to: ``If you do not select one of the options for alternate 
coverage, you agree that in counties for which the special provisions 
designate both a fall final planting date and a spring final planting 
date, any damage to fall planted wheat which occurs between the fall 
final planting date and the spring final planting date due to any cause 
is not insured.''
    Response: Subsection 6.(d) (renumbered as 6.(c) in this final rule) 
is intended solely to inform the insured of the availability of the 
Wheat Winter Coverage Endorsement. Section 7 (Insurance Period) clearly 
indicates the coverage limitations for fall planted wheat in counties 
with both fall and spring final planting dates. Additional language in 
subsection 6.(d) is not necessary.
    Comment: A comment suggested that FCIC provide a deadline for 
selecting Option A or B under the Winter Coverage Option.
    Response: The sales closing date will be the last date an insured 
can select either Option A or B under the Winter Coverage Option. FCIC 
agrees that the Option should indicate this date and has revised it 
accordingly.
    Comment: One comment stated that if wheat insurance attaches at 
different times depending on which style of insurance a grower has 
purchased, it will lead to administrative problems. The comment 
suggested that insurance on wheat attach on the day the acreage is 
planted or the date the application is accepted--whichever is later.
    Response: The insurance provisions attach on the later of the date 
the application is accepted or the date the crop is planted. This does 
not vary based on the insurance options chosen by the insured.
    Comment: One comment indicated concern that the replant provision 
could be interpreted to mean that a crop that had sustained 1% damage 
before the final planting date must be replanted. The comment 
recommended ``damage'' be defined to mean damaged to the extent that 
the crop will not be further cared for, will not be harvested, or will 
be abandoned.
    Response: FCIC agrees that the amount of damage should be 
clarified. Language has been added clarifying that any acreage damaged 
to the extent that growers in the area would not further care for the 
crop must be replanted unless replanting is not practical. The same 
change has been made to similar provisions for barley and wheat acreage 
(subparagraphs 7.(a)(2)(ii), 7.(a)(2)(iii), and 7.(a)(2)(iv)).
    Comment: One comment stated that clarification is needed regarding 
the definition of ``practical to replant.''
    Response: FCIC agrees with the comment and has clarified the 
definition. The new definition clarifies that it is practical to 
replant if it is ``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, etc., that 
a replanting of the insured crop will attain maturity in the remainder 
of the crop year.''
    Comment: A comment inquired as to the practicality of replanting 
wheat before the fall planting date.
    Response: Replanting wheat before the fall final planting date is 
considered practical if certain conditions are met.
    Comment: Three comments suggested that coverage limitations 
applicable to winter wheat also apply to winter barley. One of the 
comments also inquired if the requirement that a written request be 
made to insure fall planted wheat in counties with only a spring final 
planting date would result in extra paperwork.
    Response: FCIC agrees that the limitations that apply to wheat 
should also apply to barley. The provisions have been modified 
accordingly. A written request to insure the fall planted acreage will 
serve to notify the insurer that a crop inspection is necessary in the 
spring to determine whether or not an adequate stand exists in the 
spring.
    Comment: One comment noted that the provisions of section 7 
specifically state that spring wheat damaged prior to the spring final 
planting date must be reseeded. The comment recommended that specific 
wording be added to state that damaged fall wheat must be reseeded 
prior to the fall final planting date and that no replanting payment 
applies.
    Response: FCIC agrees that this clarification should be made. The 
provisions have been modified to state that any acreage damaged prior 
to the fall final planting date must be replanted to winter wheat 
unless FCIC agrees it is not practical. Paragraph 9.(a)(4) clearly 
indicates that a replanting payment for damage occurring prior to the 
fall final planting date is not allowed. Therefore, language regarding 
replanting payments was not added.
    Comment: The following questions regarding winter wheat were 
submitted:
    a. When winter wheat is planted in a county that has only a spring 
final planting date, will the winter wheat be insured using the spring 
wheat yield or will the RSO set a winter wheat yield on the written 
agreement?
    b. Will the winter wheat production be considered spring wheat for 
APH purposes or must winter wheat APH yield be established?
    c. What production guarantee is used to determine if the winter 
wheat has an adequate stand?
    Response: The provision that applies to these questions is 
unchanged from the present wheat endorsement. Actuarial tables for the 
counties in question do not designate a wheat type. When a type is not 
designated, the guarantee is based on wheat production without regard 
to the type. This guarantee is used for APH purposes and is also used 
to determine whether or not an adequate stand exists.
    Comment: For winter wheat in counties that only have a spring final 
planting date, the policy states that insurance will attach on the 
earlier of the spring final planting date or the date the insurer 
agrees to accept the acreage. The policy also requires insureds 
planting winter wheat in these counties to request insurance for winter 
planted wheat. One comment suggested that because the insurer must 
inspect the crop to determine if an adequate stand exists, insurance 
should attach when the insurer agrees to accept liability (not on the 
spring final planting date). The comment suggested that the applicable 
sentence in subparagraph 7.(a)(2)(v) should be revised to read as 
follows: ``* * * Insurance will attach to acreage having an adequate 
stand on the date we agree to accept the acreage for insurance.''
    Response: The policy language was written to set a specific date by 
which the insurer must accept liability. The language requires insurers 
to inspect acreage in a timely manner so that the insured can be 
advised about the coverage level prior to the spring final planting 
date. No changes have been made in the provisions.
    Comment: Under the winter coverage endorsement, FCIC is giving 
producers two additional coverage options for losses on winter wheat 
that is damaged prior to the spring final planting date. A Montana 
producer expressed concern that the new provisions may change the 
current basic winter wheat coverage and premium levels.
    Response: The basic coverage under the wheat provisions is similar 
to the existing wheat endorsement. The changes (primarily replanting 
payments in certain instances) may have a small impact on the rate 
charged for the base coverage. The new basic policy (without the Wheat 
Winter Coverage Endorsement) clearly states that winter wheat damaged 
prior to the spring final planting date must be replanted in counties 
with both winter and spring final planting dates.
    Comment: One comment recommended that the calendar dates for the 
end of the insurance period be moved to the Special Provisions. The 
comment also indicated that it is incorrect to state that the end of 
the insurance period is ``October 31 following planting in all other 
states'' because, in many states, the crop is planted prior to October 
31.
    Response: FCIC agrees that language regarding the end of the 
insurance period is incorrect and has made appropriate corrections. The 
Common Crop Insurance Policy (Sec. 457.8), to which the Small Grains 
Crop Provisions attaches, requires that the calendar date for the end 
of the insurance period be indicated in the crop provisions. FCIC will 
consider placing this date in the Special Provisions at a later date.
    Comment: One comment expressed concern that the provisions 
pertaining to sufficient or improper application of insect or disease 
control measures could lead FCIC towards micro-management. The comment 
also indicated that an over-zealous appraiser could unjustly claim that 
a producer did not use the right timing, kind of pesticide, or the 
equipment for application.
    Response: Language indicates that crop damage caused by insects or 
disease is covered unless the damage is due to insufficient or improper 
application of control measures. It has always been the loss adjustor's 
responsibility to determine if good farming practices are carried out 
by the producer. This responsibility includes determining if cultural 
practices necessary to control insects and disease are followed. The 
new language does not change current loss adjustment procedures, or 
give loss adjustors the latitude to require unreasonable control 
measures. The language is intended to clearly advise insureds that they 
are expected to take control measures that typically would be used in 
the area.
    Comment: One comment recommended adding the following language 
under failure of water supply as an insured cause of loss: ``(water 
source and means for supplying irrigation water, without regard to 
equipment or facilities). This includes the water source, dams, canals, 
ditches, pipelines, etc., necessary to supply water for movement from 
the source to the acreage but does not include any irrigation equipment 
or facilities.''
    Response: Failure of the irrigation water supply during the 
insurance period is a covered cause of loss. The ``supply'' includes 
several items not included in the recommendation, e.g., aquifers, 
precipitation, etc. Also covered are off-farm irrigation facilities and 
equipment used by water regulators and suppliers. The recommended 
language would not provide coverage when such facilities failed. 
Language in the proposed rule will remain unchanged.
    Comment: One comment inquired if the provision concerning wheat 
replant payments includes replant payments for winter wheat as well as 
spring wheat.
    Response: The provisions provide a replant payment for winter wheat 
in counties with both a fall and spring final planting date, only if 
the winter wheat is damaged after the fall final planting date. A 
replant payment is also provided to replant spring wheat in counties 
with a spring final planting date.
    Comment: Five comments were received opposing paying replant 
payments for wheat. The comments stated that: (a) Insureds have not 
requested replant payments for spring wheat; (b) insureds are currently 
replanting or ``sweetening'' stands at their own minimal expense; (c) 
replant payments for spring wheat will not reduce indemnity payments 
because insureds already replant at their own expense; (d) the cost of 
replanting wheat is much less than other spring crops; (e) unnecessary 
increased loss adjustment expense will result; (f) if FCIC persists 
with implementation of this proposal, provisions addressing these 
increased expenses should be made; (g) without a commensurate increase 
in rates, adding a replant payment has the net effect of increasing the 
loss ratio; (h) this provision will tremendously impact the loss 
adjustment expense; (i) the replant provisions are extremely hard to 
react to on a timely basis and very expensive to administer; and (j) 
replants on row crops are normally confined to smaller areas with fewer 
miles to travel. The same is not applicable to other small grains.
    Response: The intended effects of replanting payments are to: (1) 
Provide coverage requested by wheat growers; (2) provide reimbursement 
to insureds for replanting expenses; (3) reduce indemnities by 
encouraging replacement of damaged or destroyed crops; and (4) provide 
equity among the various crops. FCIC understands that administrative 
costs will be associated with this coverage, however, replant payments 
are a loss control mechanism and may outweigh any additional 
administrative costs. Comments received did not establish findings that 
all damaged acreage is presently replanted in the absence of a payment.
    Comment: One comment recommended revising language concerning wheat 
replant payments to specify that damage must be due to an insurable 
cause of loss in order for a replay payment to be made.
    Response: FCIC agrees with the comment and has revised the language 
accordingly.
    Comment: The provisions require that wheat be damaged to the extent 
that the remaining stand will not produce at least 90 percent of the 
production guarantee for the unit to qualify for a replant payment. One 
comment stated that these provisions conflict with the winter coverage 
options because the options indicate a replant payment can be made on a 
portion of a unit. The comment recommended changing the language to 
allow a replant payment if the remaining stand will not produce at 
least 90 percent of the production guarantee for the acreage as opposed 
to the unit.
    Comment: FCIC agrees that changing the language as recommended 
makes replanting payment provisions consistent between the Basic Policy 
and Winter Wheat Coverage Endorsement. Changes have been made 
accordingly.
    Comment: The provisions do not include any limitation regarding the 
date an insured can replant and be eligible for a replanting payment. 
One comment recommended adding a provision requiring that acreage be 
replanted within 25 days after the spring final planting date to remain 
eligible for a replant payment. The comment also recommended clarifying 
if ``sweetening'' is considered replanting.
    Response: FCIC agrees that replanting should take place within 25 
days after the spring final planting date and has added appropriate 
language. The provision has been changed to indicate that planting new 
seed into an existing damaged stand at a reduced seeding rate will not 
be considered replanting.
    Comment: One comment stated that the replant payment provisions do 
not indicate the consequences when wheat is replanted using a practice 
that is uninsurable for an original planting. The comment recommended 
the following language be added to clearly indicate what happens in 
such a situation: ``When wheat is replanted using a practice that is 
uninsurable for an original planting, the liability for the unit will 
be reduced by the amount of the replanting payment. The premium amount 
will be based on the original liability.''
    Response: FCIC agrees with the comment and has added the language 
as recommended.
    Comment: One comment recommended that replant payments apply onto 
wheat. In addition, the comment recommended clarification that no 
replant payment for barley, oats, rye or flax will be provided.
    Response: The provisions already clearly state that a replant 
payment is allowed only for wheat. Further clarification is not 
necessary. After loss experience with wheat replanting payments is 
analyzed, replanting payment coverage may be extended to barley, oats, 
rye and flax.
    Comment: One comment inquired why the number of days a 
representative sample must be left unharvested has been changed from 15 
to 30.
    Response: The provisions have been revised to require that 
representative samples be left until the earlier time the insurer gives 
consent to destroy the samples or 15 days after harvest.
    Comment: One comment stated that the proposed provisions do not 
link the time notice is given with the requirement to leave 
representative samples of the insured crop. In addition, the provisions 
do not clearly indicate that a sample is required for each field in the 
unit. The comment recommended that there be some indication that the 
requirements in this provision are in addition to the insured's duties 
contained in the Common Crop Insurance Policy. The comment also 
recommended that the following language be used: ``In addition to your 
duties contained under section 14 of the Common Crop Insurance Policy 
(Sec. 457.8), if you initially discover damage to any insured crop 
within 15 days of, or during harvest, you must leave representative 
samples of the unharvested crop for our inspection. The samples must be 
at least 10 feet wide and the entire length of each field in the unit, 
and must not be harvested or destroyed until the earlier of our 
inspection or 30 days after harvest is completed on the unit.''
    Response: FCIC agrees with the comment and has changed the 
provisions as recommended with the exception of the 30 day requirement.
    Comment: One comment inquired about the intent of the provisions 
under the heading, ``Duties in the Event of Damage or loss.''
    Response: This provision requires that representative samples be 
left when notice of damage is given within 15 days of, or during 
harvest. It does not apply only when the producer is going to destroy 
the acreage. The intent of this provision is to enable the loss 
adjustor to have a reasonable amount of time to inspect a portion of 
the undisturbed crop and determine the extent of insurable damage. 
After the crop is harvested it can be extremely difficult to accurately 
determine the extent of insurable damage.
    Comment: One comment suggested clarifying the provisions under 
section 11, ``Settlement of Claim'', by indicating that mixed grains 
will be graded based on a sample of the insured (predominant) grain.
    Response: According to current procedure, mixed grains may be 
quality adjusted if the predominant grain is separable from other 
grains in the mix. Additionally, the predominant grain must meet policy 
requirements for quality adjustment. This is a procedural matter and 
will remain in loss adjustment procedure handbooks.
    Comment: Two comments recommended that the provisions be revised to 
state that only those optional units on which production is commingled 
will be combined. As proposed, the provisions require that all optional 
units within a basic unit be combined when production is commingled 
between any optional units.
    Response: FCIC agrees with the comment and has revised the 
provisions accordingly.
    Comment: One comment stated that language under section 11, 
``Settlement of Claim'', is misleading because it indicates that ``All 
appraised production which is: Not less than the production guarantee 
will be counted for acreage that is abandoned * * *'' This could lead 
the reader to believe that only appraised production in excess of the 
production guarantee will be counted. The comment recommended revising 
the language as follows: ``All appraised production as follows: Not 
less than the production guarantee for acreage which is abandoned * * 
*.''
    Response: FCIC agrees with the comment and has revised the language 
as recommended.
    Comment: One comment suggested that ``appraised production'' be 
defined in the policy. The comment also inquired if FCIC intends to 
include definitions of ``appraised production,'' ``harvested 
production'' and ``uninsured causes'' in the small grains policy?
    Response: The term ``appraised production'' is defined in the 
provisions. ``Harvested production'' and ``uninsured causes'' are 
definitive terms and do not require specific definitions.
    Comment: One comment suggested clarifying the provisions under 
section 11, ``Settlement of Claim'', by revising the language to read 
as follows: ``(i) not less than the production guarantee for: (a) 
acreage which is abandoned, (b) put to another use without our consent, 
(c) damaged solely by uninsured causes, or (d) for which you fail to 
provide records of production that are acceptable to us.''
    Response: FCIC agrees that separating the items in the language 
makes it easier to read and revisions have been made accordingly.
    Comment: One comment recommended that the provisions under section 
11, ``Settlement of Claim'', be revised to allow adjusting production 
for both (1) moisture exceeding the requirements in the policy and (2) 
quality deficiencies exceeding the grade requirements stated in the 
policy for each small grain crop. The comment also recommended that an 
adjustment for moisture should be addressed using moisture charts in 
the handbook.
    Response: FCIC agrees with the comment and has revised the 
provisions so that adjustments for moisture and quality are determined 
separately.
    Comment: One comment inquired if individuals licensed under the 
United States Warehouse Act are qualified to determine grade due to 
damaged kernels, shrunken or broken kernels, defects, sound barley, 
thin barley, sound oats, etc. The comment also inquired if tests for 
vomitoxin by state university labs and commercial labs licensed by the 
state will continue to be acceptable.
    Response: Grain graders licensed under the United States Warehouse 
Act are authorized to inspect, weigh, and grade grain for the purposes 
of warehouse receipts. Ability to grade grain varies considerably. When 
grade problems exist and elevator personnel are unable to adequately 
establish the quality, samples are generally sent to Federal Grain 
Inspection Service (FGIS) for a grade determination. FGIS has the 
authority to make final grade determinations. Insurers who are 
uncomfortable with grade determinations made by individuals licensed 
under the United States Warehouse Act should send samples to FGIS for 
final grade determination. Specialized tests, such as tests for 
vomitoxin, must be performed by a qualified laboratory. Language 
specifying that specialized tests must be performed by a laboratory 
approved by the insurer has been added to the provisions.
    Comment: One comment recommended clarifying the definition of 
``local market price''.
    Response: FCIC agrees that the definition should be clarified and 
has done so.
    Comment: Two comments recommended changing the term ``final 
inspection'' under section 11, ``Statement of Claim'', to either: 
``final settlement'' or ``the date the loss is adjusted.''
    Response: The date of the final inspection is used to determine 
values used in quality adjustment. This is the date the claim is 
completed. Changing the term to either of the above suggestions does 
not significantly clarify the provision.
    Comment: One comment recommended revising the provisions concerning 
quality adjustment under section 11, ``Statement of Claim'', to the 
following: ``The value we use for the damaged production will reflect 
only reduction in value to the requirements outlined in 11(d). It will 
not reflect any reduction in value due to moisture content, uninsured 
causes, charges for drying, handling or processing or any other 
reduction.''
    Response: FCIC agrees with the comment and has revised the language 
accordingly.
    Comment: One comment expressed concern over FCIC's option to 
utilize prices of outside markets as opposed to local markets to 
establish the value for local grain.
    Response: This provision allows insurers to seek higher prices for 
damaged grain which may result in the insured receiving compensation 
from a buyer rather than from an insurance indemnity. This provision 
should help reduce indemnities and keep premiums lower.
    Comment: One comment suggested requiring damaged grain with zero 
value be destroyed prior to paying any indemnity.
    Response: Once a loss adjuster determines a crop has no value it 
should remain the insured's choice how to handle its disposition. Loss 
adjustors are trained to make accurate evaluations of crop potential 
and any determinations made by them should be accepted by the insurer. 
The suggested language has not been added.
    Comment: One comment recommended that a provision be added to 
clarify that any discount used to establish the net price of damaged 
production be usual, customary, and reasonable.
    Response: FCIC agrees with the comment and has revised the 
provision accordingly.
    Comment: One comment recommended revising paragraph 11.(d)(3) 
regarding moisture reduction to read as follows: ``Production eligible 
for moisture adjustment will be reduced by .12 percent for each .1 
percentage point of moisture in excess of * * *.''
    Response: FCIC agrees with the comment and has revised the 
paragraph accordingly.
    Comment: Four comments indicated that it is difficult to assess 
provisions of the Winter Coverage Endorsement without knowing the 
premium rates. One of the comments points out that dissatisfaction 
would occur with the Endorsement when premium rates are published. The 
author of another comment expressed concern that the proposed Options 
may erode the affordable value of the insurance product in counties 
currently covered by the Winter Coverage Option/Fall Seeded 
Endorsement. If Option B is priced too high, it may cause a migration 
of business to the less expensive Option A or the basic endorsement. 
The result would be less significant protection, on an affordable 
basis, and an overall devaluation of the effectiveness of the insurance 
product in counties that currently have the Winter Coverage Option.
    Response: Final rate determinations cannot be made until the 
endorsement provisions are finalized. Any premium rate changes will 
reflect the coverage provided by regulations published in this final 
rule. Adequate time will be allowed to inform insureds of coverage and 
rate changes, and for insureds to make choices regarding their 
insurance protection.
    Comment: Three comments stated that it will be necessary to provide 
extra training to insurance agents before they sell the Winter Coverage 
Endorsement.
    Response: FCIC agrees that it is imperative to properly train 
insurance agents regarding program changes. Adequate training will be 
provided prior to implementing program changes contained in the new 
Winter Coverage Endorsement.
    Comment: One comment stated that ``conservation compliance 
requirements are encouraging more intensive rotational systems. 
Producers throughout South Dakota are opting to use both Spring wheat 
and Winter wheat within their rotational systems. Unfortunately for 
many producers, they are unable to buy winter wheat coverage in a large 
portion of the state.'' The comment suggested that serious 
consideration be given to allowing insurance coverage for both wheats 
on a state wide basis.
    Response: The Wheat Winter Coverage Endorsement will be available 
in all South Dakota counties that currently have both fall and spring 
final planting dates. Research is being done by FCIC to determine if 
the Endorsement should be available in other counties. Expanded 
availability will depend on the outcome of this research.
    Comment: One comment submitted the following questions: If an 
insured chooses to destroy damaged acreage covered by the Wheat Winter 
Coverage Endorsement, can they destroy only damaged acres, or do they 
have to destroy all the remaining acres in the unit? Is spring wheat 
insurable on acres indemnified under Winter Wheat Option A? Will the 
insured qualify for a replant payment on those acres?
    Response: The insured may destroy only the damaged acres on the 
unit and qualify for coverage as long as at least 20 acres or 20 
percent of the acreage in the unit does not have an adequate stand to 
produce at least 90 percent of the production guarantee for the 
acreage. Under Option A, an insured may choose to have the acreage 
appraised, destroy damaged winter wheat, or plant spring wheat on the 
acreage and insure it separately. If the insured chooses to accept an 
appraisal of the remaining potential, a replant payment is not allowed, 
even if the acreage is replanted to spring wheat.
    Comment: One comment recommended adding the following to the last 
sentence in paragraph 3 of the Winter Coverage Endorsement: ``* * * 
unless we agree in writing that it is practical to replant after the 
spring final planting date.''
    Response: The provisions of paragraph 3 do not prevent a replant 
payment for acreage replanted after the spring final planting date. It 
is not necessary to extend coverage after the period covered by the 
Winter Coverage Endorsement.
    Comment: One comment stated that the word ``damage,'' used in the 
Winter Coverage Endorsement, can be interpreted to mean that a crop 
which has suffered one percent damage can either be replanted, carried 
to harvest or destroyed. The comment recommended that ``damage'' be 
qualified to mean damaged to the extent that the crop does not have the 
potential to produce the yield used to determine the production 
guarantee, will not be further cared for, will not be harvested or will 
be abandoned.
    Response: Coverage under both Options A and B is limited to 
situations in which at least 20 acres or 20 percent of the acreage in 
the unit, whichever is less, is damaged to the extent that it does not 
have an adequate stand to produce at least 90 percent of the production 
guarantee for the acreage (see first paragraphs under Options A and B).
    Comment: Two comments indicated that since one of the choices the 
insured has under the Winter Coverage Option is to replant to spring 
wheat, the notice of damage should be required by the spring final 
planting date. The deadline for notice of loss under the current Fall-
Winter Coverage Option is the spring final planting date.
    Response: FCIC agrees that notice of damage under the Endorsement 
should be provided by the spring final planting date. The provisions 
have been revised accordingly.
    Comment: Eight comments were received regarding coverage 
limitations under Option A of the Wheat Winter Coverage Endorsement. 
The comments stated that limiting coverage for damaged wheat to 30 
percent of the production guarantee, after the time period covered by 
the Endorsement, is inappropriate. A crop carried on after the winter 
coverage period would have a potential much greater than 30 percent of 
the production guarantee. Two of the comments recommended allowing 
coverage to remain at the full production guarantee when the insured 
continues to care for the crop. One comment recommended allowing 
coverage to remain in place at the actual crop potential.
    Response: Option A limited coverage to 30 percent of the production 
guarantee even if the insured elected to carry the damaged wheat to 
harvest. FCIC has revised Option A to allow coverage to continue based 
on the full guarantee if the production potential on the spring final 
planting date is such that growers in the area continue to maintain the 
crop.
    Comment: The author of one comment submitted the following 
questions: Under Option A of the Wheat Winter Coverage Endorsement, is 
70 percent of the production guarantee levied against total production 
on damaged acres only? What if there is winter damage and the insurer 
was not informed until after harvest?
    Response: Option A clearly indicates that the amount of production 
to count will not be less than 70 percent of the production guarantee 
for the damaged acreage. If notice of damage is not given in accordance 
with policy provisions, and such lack of notice interferes with 
determination of covered damage, a claim may not be payable for the 
unit.
    Comment: One comment outlined concerns that the coverage under 
Option A will not be sufficient to cover production costs incurred 
before the crop must be destroyed. The comment also inquired about the 
actual premium costs.
    Response: Option A of the Wheat Winter Coverage Endorsement is 
designed as a lower cost alternative to the full coverage of Option B. 
Although full production costs may not be covered, there is a 
significant increase in coverage over the base policy which does not 
provide protection unless the crop is replanted. Rate determinations 
cannot be made until the Endorsement provisions are finalized. The 
premium rates for Option A will reflect the coverage provided by 
regulations published in this final rule.
    Comment: One comment recommended adding language to the Wheat 
Winter Coverage Endorsement that would state that when damaged winter 
wheat is replanted to spring wheat, the spring wheat will have the 
winter wheat guarantee.
    Response: FCIC agrees that clarification is needed and has revised 
the language accordingly.
    Comment: Two comments were received regarding the provisions in the 
Wheat Winter Coverage Endorsement that allow an insured to destroy 
damaged wheat acreage, replant the acreage to spring wheat, and 
consider such replanted acreage as a separate crop. One comment 
indicated that the endorsement may cause program abuse by encouraging 
an insured to gamble and seed winter wheat if he is normally a spring 
wheat producer. If there is not a good stand in the spring, the insured 
could destroy the crop, collect an indemnity, and plant spring wheat as 
is normally done. The second comment indicated that the provision will 
cause FCIC to insure two different crops of wheat on the same acreage 
during one crop year, which could cause a myriad of administrative 
problems.
    Response: As written, both Option A and B allow an insured to 
destroy damaged winter wheat, receive any applicable indemnity payment, 
and then replant to spring wheat. The spring wheat can then be insured 
separately for a separate premium. If the insured is forced to include 
acreage replanted to spring wheat as part of the winter unit, a 
significant coverage provided by the options is eliminated. FCIC does 
not anticipate the administrative difficulties will be unmanageable.
    Comment: The following question was submitted: ``Under Option A, if 
damaged winter wheat is replanted to spring wheat, does the harvested 
spring wheat production count against the winter wheat unit production 
guarantee?''
    Response: Yes.
    Comment: The following question was submitted: ``Does the winter 
wheat guarantee continue on the replanted spring wheat crop under 
paragraph b of Option B.''
    Response: Yes.
    Comment: One comment stated that Option B provides better coverage 
than Option A and will be more attractive to insureds. The comment 
found no appreciable differences between the new Option B and former 
Winter Coverage Option for wheat.
    Response: Option B is not similar to the current Winter Coverage 
Endorsement. Option B allows spring wheat (planted to replace damaged 
winter wheat) to be treated as a separate crop. The current Endorsement 
requires that spring wheat in this situation be a part of the winter 
wheat unit. This new choice provides more comprehensive coverage than 
the current Endorsement.
    Comment: One comment inquired if FCIC is aware of the 
recommendations from the meeting of the Montana Committee and the 
Billings RSO regarding clarification of the Malting Barley Option.
    Response: FCIC has considered and incorporated the recommendations 
of the Billings Regional Service Office and the Montana Committee. The 
recommendations were to: (1) Include a clearer definition of the entity 
(i.e., a brewery or business that makes or sells malt or processed mash 
to a brewery) contracting with the insured to produce malting barley; 
and (2) clearly state that the insurer's liability under the Option is 
limited to the lesser of the number of contracted bushels or the 
production guarantee.
    Comment: One comment inquired if malting barley basic units can be 
divided into optional units by section/ASCS FSN and/or irrigated/non-
irrigated acreage. The comment stated that if this division is 
possible, paragraph 4 of the Malting Barley Option needs to be revised 
to refer to the Small Grains Crop Provisions, not the Basic Provisions.
    Response: Paragraph 4 of the Malting Barley Option refers to the 
``Basic Policy,'' not the ``Basic Provisions.'' The ``Basic Policy'' 
includes all provisions applicable to small grains (both the Common 
Crop Insurance Policy, and the Small Grains Crop Provisions). Revision 
is not necessary.
    Comment: A comment recommended that the approved malting barley 
varieties be specified in the Special Provisions.
    Response: FCIC agrees with the comment and has specified the 
varieties in the Special Provisions.
    Comment: A comment suggested that the ``date of the final 
inspection for the unit'' be clarified.
    Response: The date of the final inspection is the date that the 
loss adjustor completes the claim.
    Comment: One comment recommended that the Malting Barley Option be 
revised to allow adjusting production for both (1) moisture exceeding 
the requirements in the policy and (2) exceeding the grade requirements 
stated in the Option.
    Response: FCIC agrees with the comment and has modified the 
paragraphs so that adjustments for moisture and quality are determined 
separately.
    During the interim between publication of the Small Grains Crop 
Provisions as a proposed rule and preparation of this final rule, 
provisions providing coverage for Late and Prevented Planting were 
added to the current Wheat Endorsement (Sec. 401.101), Barley 
Endorsement (Sec. 401.103), and Oat Endorsement (Sec. 401.105). These 
provisions for Late and Prevented Planting Coverage, which were 
published in the Federal Register on December 22, 1993, have been 
incorporated into this final rule to continue the coverage provided by 
the current endorsements for barley, oats, and wheat, and to provide 
the same coverage benefits to those insuring flax or rye. In addition, 
FCIC has determined that revised language is needed in subparagraph 
11.(c)(1)(iv) regarding acreage an insured wants to put to another use 
prior to harvest. These provisions now allow an insured to destroy such 
acreage when an appraisal amount is not agreed upon, if the insured 
agrees to leave representative samples of the crop in place. The 
samples will be used to later determine the amount of production to 
count.
    Accordingly, the rule, ``General Crop Insurance Regulations; Small 
Grains Crop Insurance Provisions'' published at 58 FR 32458 as revised 
as set out below is hereby adopted as final rule.

List of Subjects in 7 CFR Part 457

    Crop insurance; Barley, Flax, Malting barley, Oats, Rye, Wheat, 
Winter wheat.

Final Rule

    Accordingly, pursuant to the authority contained in the Federal 
Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.), the Federal 
Crop Insurance Corporation hereby amends the Common Crop Insurance 
Regulations (7 CFR part 457), effective for the 1995 and succeeding 
crop years, in the following instances:
    1. The authority citation for 7 CFR part 457 continues to read as 
follows:

    Authority: 7 U.S.C. 1506, 1516.

    2. 7 CFR Part 457 is amended by revising the heading; by adding and 
reserving Secs. 457.9 through 457.100; and by adding Secs. 457.101 
Small Grains Crop Provisions, 457.102 Wheat Crop Insurance Winter 
Coverage Endorsement, and 457.103 Malting Barley Option to read as 
follows:

PART 457--COMMON CROP INSURANCE; REGULATIONS FOR THE 1994 AND 
SUBSEQUENT CONTRACT YEARS

* * * * *


Sec. 457.9-457.100  [Reserved]


Sec. 457.101  Small Grains Crop Insurance.

    The Small Grains Crop Insurance provisions for the 1995 and 
succeeding crop years are as follows:

United States Department of Agriculture

Federal Crop Insurance Corporation

Small Grains Crop Provisions

    If a conflict exists between the Common Crop Insurance Policy 
(Sec. 457.8) and the Special Provisions, the Special Provisions will 
control. If a conflict exists between these Crop Provisions and the 
Special Provisions, the Special Provisions will control.

1. Definitions

    (a) Adequate stand--A population of live plants per unit of 
acreage which will produce at least the yield used to establish your 
production guarantee.
    (b) Days--Calendar days.
    (c) Final planting date--The date contained in the Special 
Provisions by which the insured crop must initially be planted in 
order to be insured for the full production guarantee.
    (d) Good farming practices--The cultural practices necessary for 
the insured crop to make usual and normal progress toward maturity 
and which can be expected to produce at least the yield used to 
determine the production guarantee. Good farming practices are 
generally those in use in the county for production of the insured 
crop and are recognized by the Cooperative Extension Service as 
compatible with agronomic and weather conditions in the area.
    (e) Harvest--Combining or threshing the insured crop for grain 
or cutting for hay or silage on any acreage. A crop which is swathed 
prior to combining is not considered harvested.
    (f) Initially planted--The first occurrence of planting the 
insured crop on insurable acreage for the crop year.
    (g) 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.
    (h) 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 production guarantee on the irrigated acreage 
planted to the insured crop.
    (i) Late planted--Acreage planted during the late planting 
period.
    (j) Late planting period--(not applicable for fall-planted 
wheat)--The period that begins the day after the final planting date 
for the insured crop and ends twenty-five (25) days after the final 
planting date.
    (k) Latest final planting date--
    (1) The final planting date for spring-planted acreage in all 
counties for which the Special Provisions designate a final planting 
date for spring-planted acreage only;
    (2) The final planting date for fall-planted acreage in all 
counties for which the Special Provisions designate a final planting 
date for fall-planted acreage only; or
    (3) The final planting date for spring-planted acreage in all 
counties for which the Special Provisions designate final planting 
dates for both spring-planted and fall-planted acreage.
    (l) Local market price--The cash grain price per bushel for the 
U.S. No. 2 grade of the insured crop offered by buyers in the area 
in which you normally market the insured crop. The local market 
price will reflect the maximum limits of quality deficiencies 
allowable for the U.S. No. 2 grade of the insured crop. Factors not 
associated with grading under the Official United States Standards 
for Grain, including but not limited to protein, oil or moisture 
content, or milling quality will not be considered.
    (m) Nurse crop (companion crop)--A crop planted into the same 
acreage as another crop, that is intended to be harvested 
separately, and which is planted to improve growing conditions for 
the crop with which it is grown.
    (n) 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 which has been properly prepared for 
the planting method and production practice. Except for flax, land 
on which seed is initially spread onto the soil surface by any 
method and subsequently is mechanically incorporated into the soil 
in a timely manner and at the proper depth will be considered 
planted. Flax seed must initially be placed in rows to be considered 
planted.
    (o) Practical to replant--(subsection 1.(ff) of the Common Crop 
Insurance Policy (Sec. 457.8) does not apply to small grains.) 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, etc., that a 
replanting of the insured crop will attain maturity in the remainder 
of the crop year. It will not be considered practical to replant 
after the end of the late planting period or the final planting date 
if a late planting period is not applicable (see section 7) except 
that it may be determined practical to replant after the end of the 
late planting period or the final plant date if such procedure is 
generally occurring in the area.
    (p) Prevented planting--Inabiltiy to plant the insured crop with 
proper equipment by:
    (1) The latest final planting date for the insured crop in the 
county; or
    (2) 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 is general in the area (i.e., most 
producers in the surrounding area are unable to plant due to similar 
insurable causes) and that occurs between the sales closing date and 
the latest final planting date for the insured crop in the county or 
within the late planting period.
    (q) Production guarantee--The number of bushels determined by 
multiplying the approved yield per acre by the coverage level 
percentage you elect.
    (r) Replanting--Performing the cultural practices necessary to 
replace seed for the insured crop, and replacing the seed in the 
insured acreage with the expectation of growing a successful crop.
    (s) Small grains--Wheat, barley, oats, rye, and flax.
    (t) Swathed--Severance of the stem and grain head from the 
ground without removal of the seed from the head and placing into a 
windrow.
    (u) Timely planted--Planted on or before the final planting date 
designated in the Special Provisions.

2. Unit Division

    Unless limited by the Special Provisions, a unit as defined in 
subsection 1.(tt) of the Common Crop Insurance policy (Sec. 457.8) 
may be divided into optional units if, for each optional unit you 
claim, all the conditions of subsections 2.(a), (b), and (c), and 
the conditions of paragraph 2.(d)(1), (d)(2, or (d)(3) are met, or 
if we agree to such division in writing. Optional units must be 
established at the time you file your report of acreage for each 
crop year.
    (a) You must have verifiable records of planted acreage and 
production for each optional unit for at least the last crop year 
used to determine your production guarantee.
    (b) You must plant the crop in a manner which results in a clear 
and discernable break in the planting pattern at the boundaries of 
each optional unit.
    (c) You must have measurements of stored production or market 
production from each optional unit in a manner that permits us to 
verify the production from the optional unit.
    (d) Each optional unit must meet one or more of the following:
    (1) Optional Units by Section, Section Equivalent, or ASCS Farm 
Serial Number: Optional units may be established if each optional 
unit is located in a separate 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. In areas which 
have not been surveyed using the systems identified above or another 
system approved by us, and in areas where boundaries are not readily 
discernable, each optional unit must be located in separate ASCS 
Farm Serial Number.
    (2) Optional Units on Acreage Including Both Irrigated and Non-
Irrigated Practices: In addition to or instead of establishing 
optional units by section, section equivalent, or ASCS Farm Serial 
Number, optional units may be established if each optional unit 
contains only irrigated acreage or only non-irrigated acreage. 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 your guarantee is based. You must plant, 
cultivate, fertilize, or otherwise care for the irrigated acreage 
and the non-irrigated acreage in an appropriate manner.
    (3) Optional Units by Initially Planted Winter Wheat or 
Initially Planted Spring Wheat: For wheat only, in addition to or 
instead of establishing optional units by section, section 
equivalent, or ASCS Farm Serial Number as described in paragraph 
2.(d)(1) or by irrigated and non-irrigated practices as described in 
paragraph 2.(d)(2), optional units maybe established if each 
optional unit contains only initially planted winter wheat or only 
initially planted spring wheat. Optional units may be established in 
this manner only in counties having both fall and spring final 
planting dates as designated by the Special Provisions.
    Basic units may not be divided into optional units on any basis 
(production practice, type, variety, planting period, etc.) other 
than as described under this section. If you do not comply fully 
with these conditions, we will combine all optional units which are 
not established in compliance with these provisions into the basic 
unit from which they were formed. We may do this at any time we 
discover that you have failed to comply with these conditions. If 
failure to comply with these provisions is determined to be 
inadvertent, and if the optional units are combined, the premium 
paid for electing optional units will be refunded to you.

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

    In addition to the requirements under section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for determining Indemnities) 
of the Common Crop Insurance Policy (Sec. 457.8) you may select only 
one price election for each crop insured under this policy in the 
county.

4. Contract Changes

    The contract change date is December 31 preceding the 
cancellation date for counties with an April 15 cancellation date 
and June 30 preceding the cancellation date for all other counties 
(see the provisions under section 4. (Contract changes) in the 
Common Crop Insurance Policy Sec. 457.8).

5. Cancellation and Termination Dates

    The cancellation and termination dates are: 

------------------------------------------------------------------------
   Crop, state and county       Cancellation date     Termination date  
------------------------------------------------------------------------
Wheat:                                                                  
    All Colorado counties     September 30          September 30.       
     except Alamosa,                                                    
     Archuleta, Conejos,                                                
     Costilla, Custer,                                                  
     Delta, Dolores, Eagle,                                             
     Garfield, Grand, La                                                
     Plata, Mesa, Moffat,                                               
     Montezuma, Montrose,                                               
     Ouray, Pitkin, Rio                                                 
     Blanco, Rio Grande,                                                
     Routt, Saguache, and                                               
     San Miguel Counties;                                               
     all Iowa Counties                                                  
     except Plymouth,                                                   
     Cherokee, Buena Vista,                                             
     Pocahontas, Humbolt,                                               
     Wright, Franklin,                                                  
     Butler, Black Hawk,                                                
     Buchanan, Delaware, and                                            
     Dubuque Counties and                                               
     all Iowa counties north                                            
     thereof; all Wisconsin                                             
     Counties except                                                    
     Trempealeau, Jackson,                                              
     Wood, Portage, Waupaca,                                            
     Outagamie, Brown, and                                              
     Kewaunee Counties and                                              
     all Wisconsin counties                                             
     north and west thereof;                                            
     and all other states                                               
     except Alaska, Arizona,                                            
     California,                                                        
     Connecticut, Idaho,                                                
     Maine, Massachusetts,                                              
     Minnesota, Montana,                                                
     Nevada, New Hampshire,                                             
     New York, North Dakota,                                            
     Oregon, Rhode Island,                                              
     South Dakota, Utah,                                                
     Vermont, Washington,                                               
     and Wyoming.                                                       
    Archuleta, Custer,        September 30          November 30.        
     Delta, Dolores, Eagle,                                             
     Garfield, Grand, La                                                
     Plata, Mesa, Moffat,                                               
     Montezuma, Montrose,                                               
     Ouray, Pitkin, Rio                                                 
     Blanco, Routt, and San                                             
     Miguel Counties,                                                   
     Colorado; Connecticut;                                             
     Idaho; Plymouth,                                                   
     Cherokee, Buena Vista,                                             
     Pocahontas, Humboldt,                                              
     Wright, Franklin,                                                  
     Butler, Black Hawk,                                                
     Buchanan, Delaware, and                                            
     Dubuque Counties, Iowa,                                            
     and all Iowa counties                                              
     north thereof;                                                     
     Massachusetts; all                                                 
     Montana counties except                                            
     Daniels, Roosevelt,                                                
     Sheridan, and Valley                                               
     Counties; New York;                                                
     Oregon; Rhode Island;                                              
     all South Dakota                                                   
     counties except                                                    
     Harding, Perkins,                                                  
     Corson, Walworth,                                                  
     Edmonds, Faulk, Spink,                                             
     Beadle, Jerauld,                                                   
     Aurora, Douglas, and                                               
     Bon Homme Counties and                                             
     all South Dakota                                                   
     counties north and east                                            
     thereof; Washington;                                               
     and all Wyoming                                                    
     counties except Big                                                
     Horn, Fremont, Hot                                                 
     Springs, Park, and                                                 
     Washakie Counties.                                                 
    Matanuska-Susitna         October 31            November 30.        
     County, Alaska;                                                    
     Arizona; California;                                               
     Nevada; and Utah.                                                  
    All Alaska Counties       April 15              April 15.           
     except Matanuska-                                                  
     Susitna County;                                                    
     Alamosa, Conejos,                                                  
     Costilla, Rio Grande,                                              
     and Saguache Counties,                                             
     Colorado; Maine;                                                   
     Minnesota; Daniels,                                                
     Roosevelt, Sheridan,                                               
     and Valley Counties,                                               
     Montana; New Hampshire;                                            
     North Dakota; Harding,                                             
     Perkins, Corson,                                                   
     Walworth, Edmunds,                                                 
     Faulk, Spink, Beadle,                                              
     Jerauld, Aurora,                                                   
     Douglas, and Bon Homme                                             
     Counties, South Dakota,                                            
     and all South Dakota                                               
     counties north and east                                            
     thereof; Vermont;                                                  
     Trempealeau, Jackson,                                              
     Wood, Portage, Waupaca,                                            
     Outagamie, Brown, and                                              
     Kewaunee Counties,                                                 
     Wisconsin, and all                                                 
     Wisconsin counties                                                 
     north and west thereof;                                            
     Big Horn, Fremont, Hot                                             
     Springs, Park, and                                                 
     Washakie Counties,                                                 
     Wyoming.                                                           
Barley:                                                                 
    All New Mexico counties   September 30          September 30.       
     except Taos County;                                                
     Oklahoma, Missouri,                                                
     Illinois, Indiana,                                                 
     Ohio, Pennsylvania, New                                            
     Jersey, and all states                                             
     south and east thereof.                                            
    Kit Carson, Lincoln,      September 30          November 30.        
     Elbert, El Paso,                                                   
     Pueblo, Las Animas                                                 
     Counties, Colorado and                                             
     all Colorado Counties                                              
     south and east thereof;                                            
     Connecticut; Kansas;                                               
     Massachusetts; and New                                             
     York.                                                              
    Arizona; California; and  October 31            November 30.        
     Clark and Nye Counties,                                            
     Nevada.                                                            
    All Colorado counties     April 15              April 15.           
     except Kit Carson,                                                 
     Lincoln, Elbert, El                                                
     Paso, Pueblo, and Las                                              
     Animas Counties and all                                            
     Colorado counties south                                            
     and east thereof; all                                              
     Nevada counties except                                             
     Clark and Nye Counties;                                            
     Taos County, New                                                   
     Mexico; and all other                                              
     states except: Arizona,                                            
     California,                                                        
     Connecticut, Kansas,                                               
     Massachusetts, New                                                 
     York; and (except)                                                 
     Oklahoma, Missouri,                                                
     Illinois, Indiana,                                                 
     Ohio, Pennsylvania, and                                            
     New Jersey and all                                                 
     states south and east                                              
     thereof.                                                           
Oats:                                                                   
    Alabama; Arkansas;        September 30          September 30.       
     Florida; Georgia;                                                  
     Louisiana; Mississippi;                                            
     All New Mexico counties                                            
     except Taos County;                                                
     North Carolina;                                                    
     Oklahoma; South                                                    
     Carolina; Tennessee;                                               
     Texas; and Patrick,                                                
     Franklin, Pittsylvania,                                            
     Campbell, Appomattox,                                              
     Fluvanna, Buckingham,                                              
     Louisa, Spotsylvania,                                              
     Caroline, Essex, and                                               
     Westmoreland Counties,                                             
     Virginia, and all                                                  
     Virginia counties east                                             
     thereof.                                                           
    Arizona; All California   October 31            October 31.         
     counties except Del                                                
     Norte, Humboldt,                                                   
     Lassen, Modoc, Plumas,                                             
     Shasta, Siskiyou and                                               
     Trinity Counties.                                                  
    Del Norte, Humbolt,       April 15              April 15.           
     Lassen, Modoc, Plumas,                                             
     Shasta, Siskiyou, and                                              
     Trinity Counties,                                                  
     California; Taos                                                   
     County, New Mexico; all                                            
     Virginia counties                                                  
     except Patrick,                                                    
     Franklin, Pittsylvania,                                            
     Campbell, Attomattox,                                              
     Fluvanna, Buckingham,                                              
     Louisa, Spotsylvania,                                              
     Caroline, Essex, and                                               
     Westmoreland Counties                                              
     and all Virginia                                                   
     counties east thereof;                                             
     and all other except                                               
     Alabama, Arizona,                                                  
     Arkansas, Florida,                                                 
     Georgia, Louisiana,                                                
     Mississippi, North                                                 
     Carolina, Oklahoma,                                                
     South Carolina,                                                    
     Tennessee, and Texas.                                              
Rye:                                                                    
    All states..............  September 30          September 30.       
Flax:                                                                   
    All states..............  April 15              April 15.           
------------------------------------------------------------------------

6. Insured Crop

    (a) The crop insured will be each small grain you elect to 
insure, that is grown in the county on insurable acreage, and for 
which premium rates are provided by the actuarial table:
    (1) In which you have a share;
    (2) That is planted for harvest as grain (a grain mixture in 
which barley or oats is the predominate grain may also be insured if 
allowed by the Barley or Oat Special Provisions, or if we agree in 
writing to insure such mixture. The crop insured will be the grain 
which is predominate in the mixture. The production from such 
mixture will be considered as the predominate grain on a weight 
basis);
    (3) That is not:
    (i) Interplanted with another crop except as allowed in 
paragraph 6.(a)(2);
    (ii) Planted into an established grass or legume; or
    (iii) Planted as a nurse crop, unless planted as a nurse crop 
for new forage seeding, but only if seeded at a normal rate and 
intended for harvest as grain.
    (4) We may agree, in writing, to insure a crop prohibited under 
paragraph 6.(a)(3) if you so request. Your request to insure such 
crop must be in writing, and submitted to your agent not later than 
15 days after the acreage reporting date.
    (b) If you anticipate destroying any acreage prior to harvest 
you:
    (1) May report all planted acreage when you report your acreage 
for the crop year and specify any acreage to be destroyed as 
uninsurable acreage. (By doing so, no coverage will be considered to 
have attached on the specified acreage and no premium will be due 
for such acreage. If you do not destroy such acreage, you will be 
subject to the under-reporting provisions contained in subsection 
6.(f) of the Common Crop Insurance Policy (Sec. 457.8)); or
    (2) If the actuarial table provides a reduced premium rate for 
acreage destroyed by a date designated in the Special Provisions, 
you may report all planted acreage as insurable when you report your 
acreage for the crop year. Premium will be due on all the acreage. 
Your premium amount will be reduced by the amount shown on the 
Actuarial Table for any acreage you destroy prior to a date 
designated in the Special Provisions if you do not claim an 
indemnity on such acreage. In accordance with subsection 14.(b) of 
the Common Crop Insurance Policy (Sec. 457.8), you must obtain our 
consent before and give us notice after you destroy any of the 
insured crop so your acreage report can be revised to make you 
eligible for this reduction in premium.
    (c) In counties for which the Wheat Special Provisions designate 
both fall and spring final planting dates, you may elect a winter 
coverage endorsement for wheat. This endorsement provides two 
options for alternative coverage for wheat that is damaged between 
the fall final planting date and the spring final planting date. 
Coverage under the endorsement will be effective only if you 
designate the coverage option you elect by executing the endorsement 
by the sales closing date for winter wheat in the county.

7. Insurance Period

    In lieu of the requirements under section 11 (Insurance Period) 
of the Common Crop Insurance Policy (Sec. 457.8), and subject to any 
provisions provided by the Wheat crop insurance winter coverage 
endorsement (Sec. 457.102) if you have elected such endorsement, the 
insurance period is as follows:
    (a) Insurance attaches on each unit or part thereof on the later 
of the date we accept your application or the date the insured crop 
is planted.
    (1) For oats, rye and flax, the following limitations apply:
    (i) The acreage must be planted on or before the final planting 
date designated in the Special Provisions for the insured crop 
except as allowed in subsection 12.(c).
    (ii) Any acreage of the insured crop damaged before the final 
planting date, to the extent that growers in the area would normally 
not further care for the crop, must be replanted unless we agree 
that replanting is not practical (see subsection 1.(o)).
    (2) For barley and wheat, the following limitations apply:
    (i) The acreage must be planted on or before the final planting 
date designated in the Special Provisions for the type (winter or 
spring) except as allowed in subsection 12.(c).
    (ii) Whenever the Special Provisions designate only a fall final 
planting date, any acreage of winter barley or wheat damaged before 
such final planting date, to the extent that growers in the area 
would normally not further care for the crop, must be replanted to a 
winter type of the insured crop unless we agree that replanting is 
not practical.
    (iii) Whenever the Special Provisions designate both fall and 
spring final planting dates, winter barley or wheat planted on or 
before the final planting date which is damaged:
    (A) Before the fall planting final planting date, to the extent 
that growers in the area would normally not further care for the 
crop, must be replanted to a winter type of the insured crop unless 
we agree that replanting is not practical.
    (B) On or after the fall final planting date, but before the 
spring final planting date, to the extent that growers in the area 
would normally not further care for the crop, must be replanted to 
an appropriate variety of the insured crop unless we agree that 
replanting is not practical.
    If you have elected coverage under one of the available wheat 
winter coverage options available in the county, the insurance 
period for wheat will be in accordance with the selected options.
    (iv) Whenever the Special Provisions designate a spring final 
planting date, any acreage of spring barley or wheat damaged before 
such final planting date, to the extent that growers in the area 
would normally not further care for the crop, must be replanted to a 
spring type of the insured crop unless we agree that replanting is 
not practical.
    (v) Whenever the Special Provisions designate only a spring 
final planting date, any acreage of fall planted barley or wheat is 
not insured unless you request such coverage and we agree in writing 
that the acreage has an adequate stand in the spring to produce the 
yield used to determine your production guarantee. Insurance will 
then attach to acreage having an adequate stand on the earlier of 
the spring final planting date or the date we agree to accept the 
acreage for insurance. If such fall planted acreage is not to be 
insured it must be recorded on the acreage report as an uninsured 
fall planted crop.
    (b) Insurance ends on each unit at the earliest of:
    (1) Total destruction of the insured crop on the unit;
    (2) Harvest of the unit;
    (3) Final adjustment of a loss on the unit;
    (4) September 25 following planting in Alaska, or October 31 of 
the calendar year in which the crop is normally harvested in all 
other states; or
    (5) Abandonment of the crop on the unit.

8. Causes of Loss

    In addition to the provisions under section 12 (Causes of Loss) 
of the Common Crop Insurance Policy, any loss covered by this policy 
must occur within the insurance period.
    The specific causes of loss for small grains are:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage allowed because of insufficient or 
improper application of pest control measures;
    (d) Plant disease, but not damage allowed because of 
insufficient or improper application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply.

9. Replanting Payments

    (a) A replant payment for wheat only is allowed as follows:
    (1) You comply with all requirements regarding replanting 
payments contained under section 13 (Replanting Payment) of the 
Common Crop Insurance Policy and in any winter coverage endorsement 
for which you are eligible and which you have elected;
    (2) The wheat must be damaged by an insurable cause of loss to 
the extent that the remaining stand will not produce at least 90 
percent of the production guarantee for the acreage;
    (3) The acreage must have been initially planted to spring wheat 
in those counties with only a spring final planting date;
    (4) The damage must occur after the fall final planting date in 
those counties where both a fall and spring final planting date are 
designated;
    (5) Replanting must take place not later than 25 days after the 
spring final planting date; and
    (6) The replant wheat must be seeded at a rate that is normal 
for initially planted wheat (if new seed is planted at a reduced 
seeding rate into a partially damaged stand of wheat, the acreage 
will not be eligible for a replanting payment).
    (b) No replanting payment will be made for acreage initially 
planted to winter wheat in any county for which the Special 
Provisions contain only a fall final planting date.
    (c) In accordance with subsection 13.(c) of the Common Crop 
Insurance Policy (Sec. 457.8), the maximum amount of the replanting 
payment per acre will be the lesser of 20 percent (20%) of the 
production guarantee or 3 bushels, multiplied by your price election 
multiplied by your share.
    (d) When wheat is replanted using a practice that is uninsurable 
for an original planting, the liability for the unit will be reduced 
by the amount of the replanting payment. The premium amount will not 
be reduced.

10. Duties in the Event of Damage or Loss

    In addition to your duties under section 14 of the Common Crop 
Insurance Policy (Sec. 457.8), if you initially discover damage to 
any insured crop within 15 days of, or during harvest, you must 
leave representative samples of the unharvested crop for our 
inspection. The samples must be at least 10 feet wide and the entire 
length of each field in the unit, and 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.

11. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event 
you are unable to provide records of production that are acceptable 
to us for any:
    (1) Optional unit, we will combine all optional units for which 
acceptable records of production were not provided; or for any
    (2) Basic unit, we will allocate any commingled production to 
such units in proportion to our liability on the harvested acreage 
for each unit.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim by:
    (1) Multiplying the insured acreage by the production guarantee;
    (2) Subtracting from this the total production to count;
    (3) Multiplying the remainder by your price election; and
    (4) Multiplying this result by your share.
    (c) The total production (bushels) to count from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) Which is abandoned;
    (B) Put to another use without our consent;
    (C) Damaged solely by uninsured causes; or
    (D) For which you fail to provide records of production that are 
acceptable to us;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production may 
be adjusted for quality deficiencies and excess moisture in 
accordance with subsection 11.(d));
    (iv) Potential production on insured acreage you want to put to 
another use or you wish to abandon and no longer care for, if you 
and we agree on the appraised amount of production. Upon such 
agreement, the insurance period for that acreage will end if you put 
the acreage to another use or abandon the crop. If:
    (A) Agreement on the appraised amount of production is not 
reached, you may elect to continue to care for the crop, or we will 
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 
you fail to provide sufficient care for the samples, our appraisal 
made prior to giving you consent to put the acreage to another use 
will be used to determine the amount of production to count.
    (B) You elect to continue to care for the crop, we will 
determine the amount of production to count for the acreage using 
the harvested production, or our reappraisal if additional damage 
occurs and the crop is not harvested.
    (2) All harvested production from the insurable acreage.
    (d) Mature wheat, barley, oat, and rye production may be 
adjusted for excess moisture and quality deficiencies. Flax 
production may be adjusted for quality deficiencies only.
    (1) Production will be reduced by .12 percent for each .1 
percentage point of moisture in excess of:
    (i) 13.5 percent for wheat;
    (ii) 14.5 percent for barley;
    (iii) 14.0 percent for oats; and
    (iv) 16.0 for rye.
    We may obtain samples of the production to determine the 
moisture content.
    (2) Production will be eligible for quality adjustment if:
    (i) Deficiencies in quality, in accordance with the Official 
United States Standards for Grain, result in:
    (A) Wheat not meeting the grade requirements for U.S. No. 4 
(grades U.S. No. 5 or worse) because of test weight, total damaged 
kernels (excluding heat damage), shrunken or broken kernels, or 
defects (excluding foreign material and heat damage), or grading 
garlicky, light smutty, smutty or ergoty;
    (B) Barley not meeting the grade requirements for U.S. No. 4 
(grades U.S. No. 5 or worse) because of test weight, percentage of 
sound barley, damaged kernels, thin barley, or black barley, or 
grading smutty, garlicky, or ergoty;
    (C) Oats not meeting the grade requirements for U.S. No. 4 
(grade U.S. sample grade) because of test weight or percentage of 
sound oats, or grading smutty, garlicky, or ergoty;
    (D) Rye not meeting the grade requirements for U.S. No. 3 
(grades U.S. No. 4 or worse) because of test weight, percent damaged 
kernels or thin rye, or grading smutty, garlicky, or ergoty;
    (E) Flaxseed not meeting the grade requirements for U.S. No. 2 
(grades U.S. sample grade) due to damaged kernels; or
    (ii) Substances or conditions are present, including mycotoxins, 
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;
    (ii) The deficiencies, substances, or conditions result in a net 
price for the damaged grain that is less than the local market price 
of U.S. No. 2 production;
    (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 grain grader licensed under 
the authority of the United States Grain Standards 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 one loss adjustor.
    (4) Production of small grains that is eligible for quality 
adjustment, as specified in paragraphs 11.(d) (2) and (3), will be 
reduced as follows:
    (i) The market price of the qualifying damaged production and 
the local market price will be the prices on the earlier of the date 
such quality adjusted production is sold or the date of final 
inspection for the unit. The price for the qualifying damaged 
production will be the market price for the local area to the extent 
feasible. Discounts used to establish the net price of the damaged 
production will be limited to those which are usual, customary, and 
reasonable. Any reduction in price due to the following factors will 
not be accepted:
    (A) Moisture content;
    (B) Damage due to uninsured causes; or
    (C) Drying, handling, processing, or any other costs associated 
with normal harvesting, handling, and marketing of the grain; 
except, if the price of the damaged production can be increased by 
conditioning, we may reduce the price of the production after it has 
been conditioned by the cost of conditioning but not lower than the 
value of the production before conditioning. We may obtain prices 
from any buyer of our choice. If we obtain prices from one or more 
buyers located outside your local market area, we will reduce such 
prices by the additional costs required to deliver the production to 
those buyers.
    (ii) The value of the damaged or conditioned production will be 
divided by the local market price to determine the quality 
adjustment factor.
    (iii) The number of bushels remaining after any reduction due to 
excessive moisture (the moisture-adjusted gross bushels (if 
appropriate)) of the damaged or conditioned production will then be 
multiplied by the quality adjustment factor to determine the net 
production to count.
    (e) Any production harvested from plants growing in the insured 
crop may be counted as production of the insured crop on a weight 
basis.

12. Late Planting and Prevented Planting

    (a) In lieu of paragraph 8.(b)(2) and subsection 1.(aa) of the 
Common Crop Insurance Policy (Sec. 457.8), insurance will be 
provided for acreage planted to the insured crop during the late 
planting period (see subsection (c)), and acreage you were prevented 
from planting (see subsection (d)). These coverages provide reduced 
production guarantees. The reduced guarantees will be combined with 
the production guarantee for timely planted acreage for each unit. 
The premium amount for late planted acreage and eligible prevented 
planting acreage will be the same as that for timely planting 
acreage. If the amount of premium you are required to pay (gross 
premium less our subsidy) for late planting 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). 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 are unplanted and eligible for prevented 
planting coverage. To calculate the amount of any indemnity which 
may be due to you, the production guarantee for the unit will be 
computed as follows:
    (1) For timely planted acreage, multiply the per acre production 
guarantee for timely planted acreage by the 50 acres planted timely;
    (2) For late planted acreage, multiply the per acre production 
guarantee for timely planted acreage by 93 percent (0.93) and 
multiply the result by the 50 acres planted late; and
    (3) For prevented planting acreage, multiply the per acre 
production guarantee for timely planted acreage by 50 percent (0.50) 
and multiply the result by the 50 acres eligible for prevented 
planting coverage.
    The total of the three calculations will be the production 
guarantee for the unit. Your premium will be based on the result of 
multiplying the per acre production guarantee for timely planted 
acreage by the 150 acres in the unit.
    (b) You must provide written notice to us if you were prevented 
from planting (see subsection 1.(p)). This notice must be given not 
later than three (3) days after:
    (1) The final planting date if you have unplanted acreage that 
may be eligible for prevented planting coverage; and
    (2) The date you stop planting within the late planting period 
on any unit that may have acreage eligible for prevented planting 
coverage.
    (c) Late Planting:
    (1) For spring-planted wheat acreage in counties for which the 
Special Provisions designate a spring final planting date, and all 
barley, flax, oat, and rye acreage which is planted after the final 
planting date but on or before 25 days after the final planting 
date, the production guarantee for each acre will be reduced for 
each day planted after the final planting date by:
    (i) One percent (.01) for the first through the tenth day; and
    (ii) Two percent (.02) for the eleventh through the twenty-fifth 
day.
    (2) In addition to the requirements of section 6 (Report of 
Acreage) of the Common Crop Insurance Policy (Sec. 457.8), you must 
report the dates the acreage is planted within the late planting 
period.
    (3) If planting of the insured crop 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; or
    (ii) Five (5) days after the end of the late planting period.
    (d) Prevented Planting (Including Planting After the Late 
Planting Period)
    (1) If you were prevented from planting the insured crop (see 
subsection 1.(p)), you may elect:
    (i) To plant the insured crop during the late planting period 
(The production guarantee for such acreage will be determined in 
accordance with paragraph 12.(c)(1));
    (ii) Not to plant this acreage to any crop that is intended for 
harvest in the same crop year (The production guarantee for such 
acreage which is eligible for prevented planting coverage will be 50 
percent (50%) of the production guarantee for timely planted acres. 
In counties for which the Special Provisions designates a spring 
final planting date, the prevented planting guarantee will be based 
on your approved yield for spring-planted acreage of the insured 
crop. For example, if your production guarantee for timely planted 
acreage is 30 bushels per acre, your prevented planting production 
guarantee would be equivalent to 15 bushels per acre (30 bushels 
multiplied by 0.50). This subparagraph does not prohibit the 
preparation and care of the acreage for conservation practices, such 
as planting a cover crop, as long as such crop is not intended for 
harvest); or
    (iii) To plant the insured crop after the late planting period 
(The production guarantee for such acreage will be 50 percent (50%) 
of the production guarantee for timely planted acres. For example, 
if your production guarantee for timely planted acreage is 30 
bushels per acre, your prevented planting production guarantee would 
be equivalent to 15 bushels per acre (30 bushels times 0.50). 
Production to count for such acreage will be determined in 
accordance with subsections 11.(c) through (e)).
    (2) In addition to the provisions under section 11 (Insurance 
Period), of the Common Crop Insurance Policy (Sec. 457.8) the 
beginning of the insurance period for prevented coverage is the 
sales closing date designated in the Special Provisions for the 
insured crop in the county.
    (3) Unless we agree in writing, prior to the sales closing date, 
the acreage to which prevented planting coverage applies will be 
limited as follows:
    (i) Eligible acreage will not exceed the greater of:
    (A) The number of acres planted to the insured crop on each ASCS 
Farm Serial Number during the previous crop year (adjusted for any 
reconstitution which may have occurred prior to the sales closing 
date);
    (B) The ASCS base acreage for the insured crop reduced by any 
acreage reduction applicable to the farm under any program 
administered by the United States Department of Agriculture; or
    (C) One hundred percent (100%) of the simple average of the 
number of acres planted to the insured crop during the crop years 
that were used to determine your yield;
    Unless we agree in writing, prior to the sales closing date, to 
approve acreage exceeding this limit.
    (ii) Acreage intended to be planted under an irrigated practice 
will be limited to the number of acres properly prepared to carry 
out an irrigated practice.
    (iii) A prevented planting production guarantee will not be 
provided for:
    (A) Any acreage that does not constitute at least 20 acres or 20 
percent (20%) of the acres in the unit, whichever is less;
    (B) Land for which the actuarial table does not designate a 
premium rate unless you submit a written request for coverage for 
such acreage prior to the sales closing date for the insured crop in 
the county and we provide a written insurance offer for such 
acreage;
    (C) Land used for conservation purposes or intended to be or 
considered to have been left unplanted under any program 
administered by the United States Department of Agriculture;
    (D) Land on which any crop, other than the insured crop, has 
been planted and is intended for harvest, or has been harvested in 
the same crop year; or
    (E) Land which planting history or conservation plans indicate 
would remain fallow for crop rotation purposes.
    (iv) For the purpose of determining eligible acreage for 
prevented planting coverage, acreage for all units will be combined 
and reduced by the number of acres of the insured crop that are 
timely planted and late planted. For example, assume you have 100 
acres eligible for prevented planting coverage in which you have a 
100 percent (100%) share. The acreage is located in a single ASCS 
Farm Serial Number which you insure as two separate optional units 
consisting of 50 acres each. If you planted 60 acres of the insured 
crop on one optional unit and 40 acres of the insured crop 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). If you report more 
acreage of the insured crop under this contract than is eligible for 
prevented planting coverage, we will allocate the eligible acreage 
to insured units based on the number of prevented planting acres and 
share you report for each unit.
    (4) When the ASCS Farm Serial Number covers more than one unit, 
or a unit consists of more than one ASCS Farm Serial Number, the 
covered acres will be pro-rated based on the number of acres in each 
unit or ASCS Farm Serial Number that could have been planted to the 
insured crop in the current crop year.
    (5) In accordance with the provisions of section 6 (Report of 
Acreage) of the Common Crop Insurance Policy (Sec. 457.8), you must 
report any insurable acreage you were prevented from planting. This 
report must be submitted on or before the acreage reporting date for 
spring-planted acreage of the insured crop in counties for which the 
Special Provisions designates a spring final planting date, or the 
acreage reporting date for fall-planted acreage of the insured crop 
in counties for which the Special Provisions designates a fall final 
planting date only, even though you may elect to plant the acreage 
after the late planting period. Any acreage you report as eligible 
for prevented planting coverage which is not eligible will be 
deleted from prevented planting coverage.


Sec. 457.102  Wheat crop insurance winter coverage endorsement.

United States Department of Agriculture

Federal Crop Insurance Corporation

Wheat Crop Insurance Winter Coverage Endorsement

(This is a Continuous Endorsement)

    (a) In return for payment of the additional premium designated 
in the Actuarial Table, this endorsement is attached to and made 
part of your Small Grains Crop Provisions subject to the terms and 
conditions described herein.
    (b) This endorsement is available only in counties for which the 
Special Provisions designate both a fall final planting date and a 
spring final planting date.
    (c) This endorsement modifies the provisions of sections 7 and 
11 of the Small Grains Crop Insurance policy (Sec. 457.101).
    (1) You must have a Small Grains Crop Insurance policy in force 
and elect to insure wheat under that policy.
    (2) You may select either Option A or Option B. Failure to 
select either Option A or Option B means that you have rejected both 
Options and this endorsement would be void.
    (3) Insurance Period. Coverage under this endorsement begins on 
the later of the date we accept your application for coverage or on 
the fall final planting date designated in the Special Provisions. 
Coverage ends on the spring final planting date designated in the 
Special Provisions.
    (4) The provisions under section 14 of the Common Crop Insurance 
Policy (Sec. 457.8) are amended to require that all notices of 
damage must be provided to us by the spring final planting date 
designated in the Special Provisions.

Option A (30 Percent Coverage and Acreage Release)

    Whenever any winter wheat is damaged during the insurance period 
(see section 3, above), and at least 20 acres or 20 percent of the 
acreage in the unit, whichever is less, does not have an adequate 
stand to produce at least 90 percent of the production guarantee for 
the acreage, you may take any one of the following actions:
    (a) Destroy the remaining crop on such acreage. By doing so, you 
agree to accept an amount of production to count against the unit 
production guarantee equal to 70 percent of the production guarantee 
for the damaged acreage, or an appraisal determined in accordance 
with paragraph 11.(c)(1) of the Small Grains Crop Insurance 
Provisions (Sec. 457.101) if such an appraisal results in a greater 
amount of production. This amount will be considered production to 
count in determining any final indemnity on the unit and will be 
used to settle your claim as described in the provisions under 
section 11. (Settlement of Claim) of the Small Grains Crop Insurance 
Provisions (Sec. 457.101). You may use such acreage for any purpose, 
including planting and separately insuring any other crop. If you 
elect to utilize such acreage for the production of spring wheat, 
you must:
    (1) Plant the spring wheat in a manner which results in a clear 
and discernible break in the planting pattern at the boundary 
between it and any remaining winter wheat; and
    (2) Store or market the production from such acreage in a manner 
which permits us to verify the amount of spring wheat production 
separately from any winter wheat production.
    In the event you are unable to provide records of production 
that are acceptable to us, the spring wheat acreage will be 
considered to be a part of the original winter wheat unit. If you 
elected to insure the spring wheat acreage as a separate optional 
unit, any premium amount for such acreage will be considered earned 
and payable to us.
    (b) Continue to care for the damaged crop. By doing so, coverage 
will continue under the terms of the Common Crop Insurance Policy 
(Sec. 457.8), the Small Grains Crop Insurance Provisions 
(Sec. 457.101), and this Option.
    (c) Replant the acreage to an appropriate variety of wheat, if 
it is practical, and receive a replanting payment in accordance with 
the terms of section 9. (Replanting Payments) of the Small Grains 
Crop Provisions (Sec. 457.101). By doing so, coverage will continue 
under the terms of the Common Crop Insurance Policy (Sec. 457.8), 
the Small Grains Crop Insurance Provisions (Sec. 457.101), and this 
Option, and the production guarantee for winter wheat will remain in 
effect.

Option B (With Full Winter Damage Coverage)

    Whenever any winter wheat is damaged during the insurance period 
and at least 20 acres or 20 percent of the acreage in the unit, 
whichever is less, does not have an adequate stand to produce at 
least 90 percent of the production guarantee for the acreage, you 
may, at your option, take one of the following actions:
    (a) Continue to care for the damaged crop. By doing so, coverage 
will continue under the terms of the Common Crop Insurance Policy 
(Sec. 457.8), the Small Grains Crop Insurance Provisions 
(Sec. 457.101), and this Option.
    (b) Replant the acreage to an appropriate variety of wheat, if 
it is practical, and receive a replanting payment in accordance with 
the terms of section 9. (Replanting Payments) of the Small Grains 
Crop Provisions (Sec. 457.101). By doing so, coverage will continue 
under the terms of the Common Crop Insurance Policy (Sec. 457.8), 
the Small Grains Crop Insurance Provisions (Sec. 457.101), and this 
Option, and the production guarantee for winter wheat will remain in 
effect.
    (c) Accept our appraisal of the crop on the damaged acreage as 
production to count against the production guarantee for the damaged 
acreage, destroy the remaining crop on such acreage, and be eligible 
for any indemnity due under the terms of the Common Crop Insurance 
Policy (Sec. 457.8) and the Small Grains Crop Provisions 
(Sec. 457.101). The appraisal will be considered production to count 
in determining any final indemnity on the unit and will be used to 
settle your claim as described in the provisions of section 11. 
(Settlement of Claim) of the Small Grains Crop Insurance Provisions 
(Sec. 457.101). You may use such acreage for any purpose, including 
planting and separately insuring any other crop. If you elect to 
utilize such acreage for the production of spring wheat, you must:
    (1) Plant the spring wheat in a manner which results in a clear 
and discernable break in the planting pattern at the boundary 
between it and any remaining winter wheat; and
    (2) Store or market the production from such acreage in a manner 
which permits us to verify the amount of spring wheat production 
separately from any winter wheat production.
    In the event you are unable to provide records of production 
that are acceptable to us, the spring wheat acreage will be 
considered to be a part of the original winter wheat unit. If you 
elected to insure the spring wheat acreage as a separate optional 
unit, any premium amount for such acreage will be considered earned 
and payable to us.


Sec. 457.103  Malting barley option.

    The Malting Barley Option Provisions for the 1995 and succeeding 
crop years are as follows:

United States Department of Agriculture

Federal Crop Insurance Corporation

Small Grains Crop Insurance Malting Barley Endorsement

(This is a continuous Endorsement. Refer to section 2 of the Common 
Crop Insurance Policy)

    In return for payment of the additional premium designated in 
the actuarial table, it is hereby agreed that the Common Crop 
Insurance Policy (Sec. 457.8) and Small Grains Crop Provisions 
(Sec. 457.101) are amended to incorporate the following terms and 
conditions:
    (a) This Endorsement must be submitted to us on or before the 
final date for accepting applications for the initial crop year in 
which you wish to insure your malting barley acreage under this 
Option.
    (b) You must have a Common Crop Insurance Policy (Sec. 457.8) 
and a Small Grains Crop Insurance policy (Sec. 457.101) in force and 
elect to insure barley under those policies.
    (c) You must provide:
    (1) Acceptable records of the sale of malting barley for malting 
purposes for three of the previous five crop years by the production 
reporting date; and
    (2) Before the acreage reporting date, written contract with a 
brewery or business that makes or sells malt or processed mash to a 
brewery, which states the quantity contracted and purchase price or 
method for determining such price by the acreage reporting date. Our 
liability under this Option will be limited to the lesser of the 
number of contracted bushels or your production guarantee.
    (d) All barley acreage in the county planted to an approved 
malting variety in which you have a share will be insured under this 
Endorsement. All barley acreage of any non-malting variety will be 
insured under the terms of the Small Grains Endorsement. Malting 
barley and basic barley acreage will be separate basic units. 
Further unit division may be allowed in accordance with the Common 
Crop Insurance Policy.
    (e) Your price election will be provided by the actuarial table.
    (f) In lieu of subparagraphs 11.(d)(2)(i)(B) and 11.(d)(1)(ii) 
of the Small Grains Crop Provisions:
    (1) Mature malting barley production will be reduced .12 percent 
for each one tenth (.1) percentage point of moisture in excess of 
13.0 percent; and
    (2) Mature malting barley production, which due to insurable 
causes, is not accepted by a buyer of malting barley and will not 
meet the applicable standards for two-rowed or six-rowed malting 
barley will be adjusted by:
    (i) Dividing the value per bushel for the insured malting barley 
by the price election for malting barley; and
    (ii) Multiplying the result not to exceed one (1.0) by the 
number of bushels of such barley.
    (3) All grade determination must be made by a grader licensed to 
inspect barley under the United States Grain Standards Act using 
samples obtained by a licensed sampler or our loss adjuster. Any 
production which is not sampled and graded as provided by this 
section will be considered as malting barley meeting the applicable 
standards.
    (g) As used in the Endorsement:
    (1) Applicable standards--For two-rowed and six-rowed malting 
barley are defined in the Official United States Standards for 
barley.
    (2) Approved malting variety--The varieties specified in the 
Special Provisions.
    (3) Brewery--A facility where malt liquors are commercially 
produced for human consumption.
    (4) Value per bushel means:
    (i) The local market price of U.S. No. 2 barley (basic barley) 
if the insure mature malting barley production, due to insurable 
causes, grades U.S. No. 4 or better and does not grade smutty, 
garlicky, or ergoty; or
    (ii) The local market price of basic barley of the same quality 
as the insured malting barley, if the malting barley does not grade 
better than U.S. No. 5.
    The prices used for this adjustment will be the prices on the 
earlier of the date such quality-adjusted barley is sold or the date 
of final inspection for the unit.

    Done in Washington, DC, on February 16, 1994.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 94-4230 Filed 2-25-94; 8:45 am]
BILLING CODE 3410-08-M