[Federal Register Volume 59, Number 186 (Tuesday, September 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-23833]


  Federal Register / Vol. 59, No. 186 / Tuesday, September 27, 1994 /
  
[[Page Unknown]]

[Federal Register: September 27, 1994]


                                                   VOL. 59, NO. 186

                                        Tuesday, September 27, 1994

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

 

Common Crop Insurance Regulations; Cotton Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) hereby adopts 
regulations for specific crop provisions to insure cotton. These 
provisions will supplement the Common Crop Insurance Policy 
(Sec. 457.8) which contains standard terms and conditions common to 
most crops. The intended effect of this rule is to move specific crop 
provisions for insuring cotton from the General Crop Insurance Policy 
(Sec. 401.8) to the Common Crop Insurance Policy (Sec. 457.8) for ease 
of use by the public and conformance among policy terms.

EFFECTIVE DATE: October 27, 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 Executive Order 12866 and 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 
March 1, 1999.
    This rule has been determined to be ``not significant'' for 
purposes of Executive Order 12866, and therefore has not reviewed by 
the Office of Management and Budget (OMB).
    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 rule are found in 7 CFR part 400, subpart 
H.
    It has been determined under section 6(a) of Executive Order 12612, 
Federalism, that this rule does not have sufficient federalism 
implications to warrant the preparation of a federalism assessment. The 
policies and procedures contained in this rule will not have 
substantial direct effects on states or their political subdivisions, 
or on the distribution of power and responsibilities among the various 
levels of government.
    This action will not have a significant impact on a substantial 
number of small entities. The amount of work required of the insurance 
companies delivering these policies will not increase from the amount 
required to deliver previous policies. 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.
    The Office of the General Counsel has determined that these 
regulations meet the applicable standards provided in subsections 2(a) 
and 2(b)(2) of Executive Order 12788. The provisions of this rule will 
preempt state and local laws to the extent such state and local laws 
are inconsistent herewith. The administrative appeal provisions located 
at 7 CFR part 400, subpart J must be exhausted before judicial action 
may be brought.
    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.
    By separate rule, 7 CFR 401.119 will be amended to restrict the 
crop years of application to those prior to the crop year for which 
this rule will be effective. FCIC will terminate the provisions of the 
present policy at the end of the crop year and remove and reserve the 
cotton endorsement contained in 7 CFR 401.119.
    On Tuesday, May 31, 1994, FCIC published a notice of proposed 
rulemaking in the Federal Register at 59 FR 28022 proposing to revise 
the Common Crop Insurance Regulations by adding new provisions for 
cotton crop insurance.
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments, data, and opinions. The comments 
received and FCIC responses are as follows:
    Comment: Two comments suggested that the crop provisions should not 
be implemented for the 1995 crop year because:
    (1) Crop insurance reform will require many policy changes. 
Implementation of these crop provisions should be tabled until reform 
decisions are reached because impacts on policy terms are not yet 
clear. Delaying common policy implementation until it can be 
implemented in an orderly fashion should be beneficial to everyone 
concerned; and
    (2) The Common Crop Insurance Policy should be thoroughly reviewed 
and revised as needed before any additional crop provisions are 
implemented under it.
    Response: Program changes necessary to comply with crop insurance 
reform will have the same effects on either the existing cotton policy 
or these Cotton Crop Provisions. Any necessary changes can be made to 
the Cotton Crop Provisions as easily as they can be made to the 
existing policy. FCIC has recently completed a review of the Common 
Crop Insurance Policy Basic Provisions (Sec. 457.8). Any necessary 
changes required to be made to the Basic Provisions as a result of 
reform will be required whether or not the Cotton Crop Provisions have 
been implemented. Therefore, FCIC does not find it necessary to delay 
implementation for either of the reasons stated in the comments.
    Comment: One comment questioned requirements contained in the 
definition of ``Practical to replant.'' This definition indicated that 
the replanted acreage must have the potential to produce at least 
ninety percent (90%) of the production guarantee. The late planting 
provisions provide production guarantees much lower than the ninety 
percent (90%) potential requirement contained in the definition even 
though the late planted and replanted crop may be planted at the same 
time. The comment recommended removing the production potential 
requirement from the definition of ``practical to replant.''
    Response: FCIC agrees that the production potential required by the 
definition of ``practical to replant'' and the production guarantee for 
late planted acreage may be inconsistent depending on the time of 
planting. Acreage initially planted twenty-five (25) days after the 
final planting date would have a production guarantee equal to sixty 
percent (60%) of the guarantee for timely planted acreage, while the 
definition of ``practical to replant'' would require acreage replanted 
at the same time to have a production potential equal to ninety percent 
(90%) of the production guarantee. However, expected yield does have an 
effect on whether it is practical to replant. The ninety percent (90%) 
production potential requirement has been removed from the definition 
of ``practical to replant.'' However, the expected yield must be 
sufficient to cover production costs and must be at a level that 
growers in the area would normally care for and harvest.
    Comment: One comment recommended changing the term ``approved 
yield'' to ``approved APH yield'' in the definition of ``Production 
guarantee'' to correspond with terminology in underwriting procedure.
    Response: Underwriting procedure contains several methods which may 
be used to determine approved yields. These include the use of yields 
which may not represent actual production history (APH). Using the term 
``APH'' could be misleading to readers not familiar with administrative 
procedures, and, therefore, will not be used in the crop insurance 
policy.
    Comment: Three comments disagreed with the definition of ``Written 
agreement''. This definition required written agreements to be 
requested at least 15 days prior to the sales closing date.
    (1) One comment recommended keeping the current deadlines for 
written agreements as specified in procedures. These procedures require 
that requests be made not later than 15 days after the acreage 
reporting date for most types of written agreements. Setting a deadline 
15 days prior to the sales closing date will either force insureds to 
submit requests for written agreements they may not need, or result in 
uninsurable acreage if requests are not made for all possible 
situations. Unnecessary requests will increase paperwork for the 
insured, agent, FCIC Regional Service Office and company. The comment 
also recommended deleting the last sentence of the definition, which 
required written agreements to contain all variable terms including, 
but not limited to, crop variety, guarantee, premium and price 
election. The comment indicated it was not necessary to include this 
information on every written agreement because many written agreements 
do not alter these items.
    (2) One comment recommended keeping the deadline of 15 days after 
the acreage reporting date because there are many instances when it is 
not known that a written agreement is necessary until the acreage is 
reported. The comment stated that the change would be an unreasonable 
requirement and would create difficulties since the sales closing dates 
will be 30 days earlier than in prior years.
    (3) One comment stated that it is hard to understand why the 
written agreement deadline is 15 days prior to the time a producer has 
to purchase coverage, and that a more appropriate date should be 
established. The comment also stated that the sales closing dates are 
not listed in the proposed crop provisions. If these are the same date 
as the cancellation and termination date, the policy should so 
indicate.
    Response: The proposed definition was intended to require that 
requests for written agreements be made far enough ahead of the sales 
closing date to allow the insurer to make the offer, and for the 
insured to accept the offer, by the sales closing date. Since the 
insurance policy is a written contract, both parties must have a 
meeting of the minds before the contract is valid. The terms and 
conditions of the policy must be known by the final date for 
establishing the insurance contract. In this program, the final date is 
the sales closing date. FCIC has determined that some situations may 
allow written agreements at other times. FCIC is preparing proposed 
written agreement regulations which will specify when written 
agreements must be completed. Until these regulations have been 
published, the written agreement must be completed by the sales closing 
date, or, in specific instances, a written agreement may be requested 
or approved after the sales closing date if the crop is physically 
inspected and a determination made that the crop has an expectancy of 
making the guaranteed yield. No prevented planting liability will be 
established as a result of any request submitted after the sales 
closing date. FCIC does not agree that the final sentence should be 
deleted. Specifying all variable terms in the written agreement is 
necessary to assure a clear understanding of the terms in effect.
    Although the sales closing dates normally will be the same as the 
cancellation and termination dates this is not always the case. 
Therefore, the sales closing dates will not be included in the crop 
provisions. Federal regulations authorize the Manager of FCIC to extend 
the sales closing date in any county upon the Manager's determination 
that no adverse selection will result during the extended period. The 
extended date is placed on file in the applicable service offices and a 
notice is placed in the Federal Register. If the sales closing dates 
were contained in the crop provisions, the crop provisions would need 
to be amended each time a sales closing date is extended.
    Comment: One comment stated that unit division language contained 
in subsection 2.(b) should allow for situations in which the insured 
creates a discernible break via some tillage operation. The proposed 
provision states that the insured must plant the crop in a manner that 
results in a clear and discernible break in the planting pattern at the 
boundaries of each optional unit. There is no required method of 
creating a boundary as long as a discernible break is provided.
    Response: The intent of the policy language is to allow separate 
optional units if acreage is farmed separately. Farming separately 
includes planting separately and keeping separate records of inputs, 
production, etc. Creating a boundary after the crop is planted by means 
of a tillage operation along a section line may or may not meet the 
policy requirement of planting the crop in a manner that results in a 
clear and discernible break at the units boundary. FCIC believes the 
present language clearly sets out the requirements for unit division.
    Comment: Two comments were received regarding the changes in the 
cancellation and termination dates.
    (1) One comment stated the assumption that since cancellation and 
termination dates were changed, that the sales closing dates will be 
changed to align with the new cancellation and termination dates.
    (2) One comment expressed the concern that an earlier cancellation 
date would decrease the amount of time available for producers to make 
decisions regarding their insurance coverage.
    Response: The sales closing dates, as contained in the Special 
Provisions, will be changed generally to be the same as, but no later 
than, the new cancellation and termination dates. Earlier cancellation 
and sales closing dates are intended to reduce the possibility that a 
producer's decision to cancel or purchase insurance is based on 
favorable or unfavorable growing conditions. FCIC expects this change 
to have favorable impact on insurance experience. Favorable results 
will be considered when calculating future premium rates.
    Comment: One comment stated that section 6 (Insured Crop) indicates 
that colored cotton will be insurable under the cotton crop provisions. 
However, the introductory information in the Federal Register indicates 
the FCIC Regional Service Offices will issue production guarantees for 
colored cotton via written agreement until adequate actual production 
history is available for individual policyholders. The comment 
recommended that language to this effect be added to the policy, either 
in section 3 of the crop provisions or in the special provisions. The 
comment asked if the Crop Insurance Handbook will be revised to state 
that insureds must keep production history separate for colored cotton, 
what constitutes ``adequate production history,'' and what information 
must be sent in with the request for a written agreement.
    Response: FCIC's research indicates that the production potential 
for some colored cottons is significantly less than white upland cotton 
and that the value may be significantly higher. Insufficient data are 
currently available to establish production guarantees, prices, quality 
adjustment methods, etc. for colored cottons. Because data are 
insufficient, FCIC believes that colored cotton should be insurable 
only with a written agreement. Therefore, the provisions in section 6 
(Insured Crop) have been changed accordingly. When requesting a written 
agreement, the insured should submit any available production history, 
the number of acres intended for planting in the current crop year, and 
other information normally required when requesting insurance for an 
uninsurable crop type. The Crop Insurance Handbook will be revised to 
indicate specific requirements as soon as it is practical to do so.
    Comment: Two comments were received regarding the elimination of 
provisions that provided coverage while cotton stored in modules 
remains in the field.
    (1) One comment stated that changing the end of the insurance 
period from ``removal from the field'' to ``harvest'' creates some 
concerns which need to be addressed. Specifically, the comment asks how 
quality will be accurately determined for cotton stored in modules when 
the modules may be stored in the field for a significant period of 
time?
    (2) One comment opposed the removal of coverage for modules stored 
in the field. The comment stated that: (a) Large amounts of cotton are 
stored in modules and that the practice allows for timely and efficient 
harvest of the crop; (b) losses do not occur frequently once cotton is 
moduled, but there is some risk of weather-related loss until the 
modules are removed from the field; and (c) continuing the practice of 
insurance coverage until removal from the field would be consistent 
with recent ad hoc disaster rulings that deemed weather-damaged, field 
stored modules eligible for assistance.
    Response: Upon further review, FCIC has determined that coverage 
for modules stored in the field should be provided. Approximately 
seventy percent (70%) of the U.S. crop is stored in modules until 
ginning can take place, and cotton stored in modules is not as 
susceptible to loss as cotton remaining on the stalk. The provisions in 
section 8 (Insurance Period) have been revised accordingly.
    Comment: One comment recommended either revising or deleting 
provisions that allow the insured to leave representative samples if 
they disagree with the insurer's appraisal. In the event the provision 
cannot be deleted, the comment recommended changing the provision so 
that the insurer can decide when using representative samples is 
appropriate. In many situations, samples are more susceptible to loss 
and do not accurately represent what the entire unit would have 
produced.
    Response: FCIC agrees that there are situations in which it may not 
be reasonable to leave representative strips from which production to 
count would ultimately be determined. The samples could be more 
vulnerable to damage than an entire field, or the insurer may be 
confident that the appraisal made accurately reflects production 
potential. However, the entire provision should not be removed. The 
provision has been changed to allow the insurer to determine those 
situations in which it is reasonable to leave representative samples to 
determine the amount of production to be counted. In cases where it is 
necessary to defer determinations the insured must be advised how 
production to count will ultimately be determined and the consequences 
of failure to leave or care for the samples.
    Comment: One comment recommended that language in subsection 12.(b) 
be changed to require only one notice for prevented planting acreage 
rather than requiring notice three days after the final planting date 
and three days after the date the insured stops planting within the 
late planting period.
    Response: The crop provisions provide two distinct periods during 
which the insured may be prevented from planting (i.e., by the final 
planting date and during the late planting period). The notice 
requirement allows the insurer the opportunity to verify that the 
acreage could not have been planted during such periods. FCIC agrees 
that an insured should only be required to give one notice if it is 
sufficient to cover all acreage for prevented planting purposes. 
Subsection 12.(b) has been modified to clarify that written notice must 
be given not later than three days after the final planting date for 
acreage the insured was prevented from planting by the final planting 
date, and not later than three days after the date the insured 
discovers that planting will not be possible if the insured was not 
prevented from planting such acreage by the final planting date but was 
prevented from planting such acreage during the late planting period.
    Comment: One comment indicated that the proposed provisions in 
paragraph 12.(d)(3) will allow an insured to request a written 
agreement for prevented planting coverage for acreage exceeding the 
policy limitations, and to subsequently enroll in a USDA program that 
allows less acreage to be planted. The comment recommended revising the 
paragraph to limit eligible acreage to the amount allowed by any 
applicable USDA program, regardless of when the insured enrolls in such 
program or any previously approved written agreement.
    Response: FCIC agrees that, if the farm is enrolled in an USDA 
program that limits the number of acres planted, acreage in excess of 
the amount allowed under an USDA program should not be eligible for 
prevented planting coverage. Paragraph 12.(d)(3) has been amended 
accordingly.
    Comment: One comment recommended that language be added to 
paragraph 12.(d)(3) to allow prevented planting coverage by written 
agreement for acreage added to the insured's farming operation after 
the sales closing date.
    Response: The insurance period for prevented planting coverage 
begins on the sales closing date. Allowing additional coverage to 
attach after the beginning of this period would likely result in 
coverage being requested primarily when conditions are favorable for a 
prevented planting indemnity. This adverse selection should be avoided 
to help maintain an actuarially sound program and to keep premium rates 
from rising to cover such losses. The definition of ``written 
agreement'' has been amended to specifically disallow any prevented 
planting liability as a result of any request submitted after the sales 
closing date.
    In addition to the changes indicated in the responses to comments, 
FCIC has determined that:
    1. The definition of skip-row should reference United States 
Department of Agriculture qualification requirements for skip-row 
patterns. These requirements are used to determine the land area that 
is considered to be planted to cotton.
    2. Provisions in section 6 (Insured Crop) are modified to allow 
coverage on crops planted into an established grass or legume in 
certain instances. The increased emphasis on Highly Erodible Land 
Conservation had made conservation tillage and no-till more acceptable.
    3. New small grain and cotton varieties that mature earlier than 
previously available varieties make ``double cropping'' more practical. 
However, in areas where soil moisture may be depleted by the first crop 
planted, this practice may not be feasible or may result in 
significantly more risk to the insurer. To allow insurance for this 
practice, yet limit the insurer's vulnerability in areas where ``double 
cropping'' may not be practical, section 6 of the crop provisions have 
been modified to allow insurance for ``double cropped'' cotton only if 
allowed by a written agreement or the Special Provisions.
    Accordingly, the rule, ``Common Crop Insurance Regulations; Cotton 
Crop Insurance Provisions'' published at 59 FR 28022 as revised as set 
out below is hereby adopted as final rule.

List of Subjects in 7 CFR Part 457

    Crop Insurance; Cotton.

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:

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

    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 as set forth 
above and by adding Sec. 457.104 Cotton Crop Provisions to read as 
follows:


Sec. 457.104  Cotton Crop Insurance Provisions.

    The Cotton Crop Insurance Provisions for the 1995 and succeeding 
crop years are as follows:

UNITED STATES DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

Cotton Crop Provisions

    If a conflict exists among the Common Crop Insurance Policy 
(Sec. 457.8), these crop provisions, and the Special Provisions, the 
Special Provisions will control these crop provisions and the common 
policy and these crop provisions will control the common policy.

1. Definitions

    (a) Cotton--Varieties identified as American Upland Cotton.
    (b) Days--Calendar days.
    (c) Final planting date--The date contained in the Special 
Provisions for the insured crop by which the crop must initially be 
planted in order to be insured for the full production guarantee.
    (d) Good farming practices--The cultural practices generally in 
use in the county for the insured crop to make normal progress 
toward maturity and produce at least the yield used to determine the 
production guarantee and are those recognized by Cooperative 
Extension Service as compatible with agronomic and weather 
conditions in the area.
    (e) Growth area--A geographic area designated by the Secretary 
of Agriculture for the purpose of reporting cotton prices.
    (f) Harvest--The removal of the seed cotton from the open cotton 
boll, or the severance of the open cotton boll from the stalk by 
either manual or mechanical means.
    (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 irrigated production guarantee on the 
irrigated acreage planted to the insured crop.
    (i) Late planted--Acreage planted to cotton during the late 
planting period.
    (j) Late planting period--The period that begins the day after 
the final planting date for the insured crop and ends twenty-five 
(25) days after the final planting date.
    (k) Mature cotton--Cotton that can be harvested either manually 
or mechanically.
    (l) 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. Cotton must be planted 
in rows to be considered planted. Planting in any other manner will 
be considered as a failure to follow recognized good farming 
practices and any loss of production will not be insured unless 
otherwise provided by the special provisions or by written agreement 
to insure such crop. The yield conversion factor normally applied to 
non-irrigated skip-row cotton acreage will not be used if the land 
between the rows of cotton is planted to any crop.
    (m) Practical to replant--In lieu of subsection 1.(ff) of the 
Common Crop Insurance Policy (Sec. 457.8) practical to replant is 
defined as our determination, after loss or damage to the insured 
crop, based on factors including, but not limited to moisture 
availability, condition of the field, and time to crop maturity, 
that replanting to the insured crop will allow the crop to attain 
maturity prior to the calendar date for the end of the insurance 
period. It will not be considered practical to replant after the end 
of the late planting period unless replanting is generally occurring 
in the area.
    (n) Prevented planting--Inability to plant the insured crop with 
proper equipment by:
    (1) The final planting date designated in the Special Provisions 
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 has prevented most producers in the 
surrounding area from planting due to similar insurable causes. The 
insured cause of prevented planting must occur between the sales 
closing date and the final planting date for the insured crop in the 
county or within the late planting period.
    (o) Production guarantee--The number of pounds determined by 
multiplying the approved yield per acre by any applicable yield 
conversion factor for non-irrigated skip-row planting patterns, and 
multiplying the result by the coverage level percentage you elect.
    (p) Replanting--Performing the cultural practices necessary to 
replace the cotton seed, and replacing the seed in the insured 
acreage with the expectation of growing a successful crop.
    (q) Skip-row--A planting pattern that:
    (1) Consists of alternating rows of cotton and fallow land or 
land planted to another crop the previous fall; and
    (2) Qualifies as a skip-row planting pattern as defined by the 
ASCS or successor agency.
    (r) Timely planted--Planted on or before the final planting date 
designated in the Special Provisions for the insured crop in the 
county.
    (s) Written agreement--Designated terms of this policy may be 
altered by written agreement. Each agreement must be applied for by 
the insured in writing no later than the sales closing date and is 
valid for one year only. If not specifically renewed the following 
year, continuous insurance will be in accordance with the printed 
policy. All variable terms including, but not limited to, crop 
variety, guarantee, premium rate and price election must be set out 
in the written agreement. In specific instances a written agreement 
may be applied for after the sales closing date and approved if, 
after a physical inspection of the acreage, there is a determination 
that the crop has the expectancy of making at least the guaranteed 
yield. However, no prevented planting liability will be established 
as a result of any request submitted after the sales closing date. 
All applications for written agreements as submitted by the insured 
must contain all variable terms of the contract between the company 
and the insured that will be in effect if the written agreement is 
disapproved.

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 
meet all the conditions of this section or if a written agreement to 
such division exists. All optional units must be reflected on the 
acreage report for each crop year.
    (a) You must have records, which can be independently verified, 
of planted acreage and production for each optional unit for at 
least the last crop year used to determine your production 
guarantee.
    (b) You must plan the crop in a manner that results in a clear 
and discernable break in the planting pattern at the boundaries of 
each optional unit.
    (c) You must have records of measurement of stored or marketed 
production from each optional unit maintained in such a manner that 
we can verify the production from each optional unit or the 
production from each optional unit must be kept separate until after 
loss adjustment under the policy is completed.
    (d) Each optional unit must meet one or more of the following 
criteria as applicable;
    (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 legally identified Section. In the 
absence of Sections, we may consider parcels of land legally 
identified by other methods of measure including, but not limited 
to: Spanish grants, railroad surveys, leagues, labors, or Virginia 
Military Lands an equivalent of Sections for unit purposes. In areas 
which have not been surveyed using the systems identified above, or 
another system approved by us, or in areas where such systems exist 
but boundaries are not readily discernable, each optional unit must 
be located in a separate farm identified by a single 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 based or irrigated acreage or non-
irrigated acreage if both are located in the same Section, section 
equivalent, or ASCS Farm Serial Number. 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 and you may not continue into non-irrigated 
acreage in the same rows or planting pattern. You must plant, 
cultivate, fertilize, or otherwise care for the irrigated acreage in 
accordance with recognized good irrigated farming practices.
    Basic units may not be divided into optional units on any basis 
including, but not limited to: Production practice, type, variety, 
or planting period, other than as described above. If you do not 
comply fully with these provisions, we will combine all optional 
units which are not in compliance with these provisions into the 
unit from which they were formed. We may combine the optional units 
at any time we discover that you have failed to comply with these 
provisions. If failure to comply with these provisions on all 
optional units is determined to be inadvertent, and the optional 
units are combined, premium paid for the purpose of electing 
optional units will be refunded to you.

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

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

4. Contract Changes

    The contract change date is November 30 preceding the 
cancellation date (see the provisions of section 4 (Contract 
Changes) of the Common Crop Insurance Policy (Sec. 457.8)).

5. Cancellation and Termination Dates

    In accordance with subsection 2. (f) of the Common Crop 
Insurance Policy (Sec. 457.8), the cancellation and termination 
dates are:

------------------------------------------------------------------------
                                                        Cancellation and
                   State and county                        termination  
                                                              dates     
------------------------------------------------------------------------
Val Verde, Edwards, Kerr, Kendall, Bexar, Wilson,       February 15     
 Karnes, Goliad, Victoria, and Jackson Counties,                        
 Texas, and all Texas counties lying south thereof.                     
Alabama; Arizona; Arkansas; California; Florida;        February 28     
 Georgia; Louisiana; Mississippi; Nevada; North                         
 Carolina; South Carolina; El Paso, Hudspeth,                           
 Culberson, Reeves, Loving, Winkler, Ector, Upton,                      
 Reagon, Sterling, Coke, Tom Green, Concho, McCulloch,                  
 San Saba, Mills, Hamilton, Bosque, Johnson, Tarrant,                   
 Wise, and Cooke Counties, Texas, and all Texas                         
 counties lying south and east thereof to and                           
 including Terrell, Crocket, Sutton, Kimble,                            
 Gillespie, Blanco, Comal, Guadalupe, Gonzales, De                      
 Witt, Lavaca, Colorado, Wharton, and Matagorda                         
 Counties, Texas.                                                       
All other Texas counties and all other states.........  March 15        
------------------------------------------------------------------------

6. Insured Crop

    In accordance with section 8 (Insured Crop) of the Common Crop 
Insurance Policy (Sec. 457.8), the crop insured will be all the 
cotton lint, in the county for which premium rates are provided by 
the actuarial table:
    (a) In which you have a share; and
    (b) That is not (unless allowed by the Special Provisions or by 
written agreement):
    (1) Colored cotton lint;
    (2) Planted into an established grass or legume;
    (3) Interplanted with another spring planted crop;
    (4) Grown on acreage from which a hay crop was harvested in the 
same calendar year unless the acreage is irrigated; or
    (5) Grown on acreage on which a small grain crop reached the 
heading stage in the same calendar year unless the acreage is 
irrigated or adequate measures are taken to terminate the small 
grain crop prior to heading and less than fifty percent (50%) of the 
small grain plants reach the heading stage.

7. Insurable Acreage

    In addition to the provisions of section 9 (Insurable Acreage) 
of the Common Crop Insurance Policy (Sec. 457.8):
    (a) The acreage insured will be only the land occupied by the 
rows of cotton when a skip row planting pattern is utilized; and
    (b) Any acreage of the insured crop damaged before the final 
planting date, to the extent that the remaining stand will not 
produce at least ninety percent (90%) of the production guarantee, 
must be replanted unless we agree that replanting is not practical 
(see subsection 1.(m)).

8. Insurance Period

    (a) In lieu of subsection 11.(b) of the Common Crop Insurance 
Policy (Sec. 457.8) (Harvest of the unit), insurance will end upon 
the removal of the cotton from the field.
    (b) In accordance with the provisions under section 11 
(Insurance Period) of the Common Crop Insurance Policy (Sec. 457.8), 
the calendar date for the end of the insurance period is the date 
immediately following planting as follows:
    (1) September 30 in Val Verde, Edwards, Kerr, Kendall, Bexar, 
Wilson, Karnes, Goliad, Victoria, and Jackson Counties, Texas, and 
all Texas counties lying south thereof;
    (2) January 31 in Arizona, California, New Mexico, Oklahoma, and 
all other Texas counties; and
    (3) December 31 in all other states.

9. Causes of Loss

    In accordance with the provisions of section 12 (Causes of Loss) 
of the Common Crop Insurance Policy (Sec. 457.8), insurance is 
provided only against the following causes of loss which occur 
within the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or 
improper application of disease control meaures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if applicable, due 
to an unavoidable cause of loss occurring within the insurance 
period.

10. Duties in the Event of Damage or Loss

    (a) In addition to your duties under section 14 (Duties in the 
Event of Damage or Loss) of the Common Crop Insurance Policy 
(Sec. 457.8), in the event of damage or loss:
    (1) The cotton stalks must remain intact for our inspection; and
    (2) If you initially discover damage to the insured crop within 
15 days of harvest, or during harvest, you must leave representative 
samples of the unharvested crop in the field for our inspection. The 
samples must be at least 10 feet wide and extend the entire length 
of each field in the unit.
    (b) The stalks must not be destroyed, and required samples must 
not be harvested, until the earlier of our inspection or 15 days 
after harvest of the balance of the unit is completed and written 
notice of probable loss given to us.

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:
    (1) For any optional unit, we will combine all optional units 
for which acceptable records of production were not provided; or
    (2) For any 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 on any unit 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 (pounds) 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) That is abandoned;
    (B) Put to another use without our consent;
    (C) Damaged solely by uninsured causes;
    (D) For which you fail to provide records of production that are 
acceptable to us; or
    (E) On which the cotton stalks are destroyed, in violation of 
section 10;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production of 
white cotton may be adjusted for quality deficiencies in accordance 
with subsection 11.(d)); and
    (iv) Potential production on insured acreage you want to put to 
another use or you wish to abandon or 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 agreement on the 
appraised amount of production is not reached:
    (A) If you do not elect to continue to care for the crop we may 
give you consent to put the acreage to another use if you agree to 
leave intact, and provide sufficient care for, representative 
samples of the crop in locations acceptable to us (The amount of 
production to count for such acreage will be based on the harvested 
production of appraisals from the samples at the time harvest should 
have occurred. If you do not leave the required samples intact, or 
you fail to provide sufficient care for the samples, our appraisal 
made prior to giving you consent to put the acreage to another use 
will be used to determine the amount of production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested 
production, or our reappraisal if additional damage occurs and the 
crop is not harvested; and
    (2) All harvested production from the insurable acreage, 
including any mature cotton retrieved from the ground.
    (d) Mature white cotton may be adjusted for quality when 
production has been damaged by insured causes. Such production to 
count will be reduced if the price quotation for cotton of like 
quality (price quotation ``A'') for the applicable growth area is 
less than seventy-five percent (75%) of price quotation ``B.'' Price 
quotation ``B'' is defined as the price quotation for the applicable 
growth area for cotton of the color and leaf grade, staple length, 
and micronaire reading designated in the Special Provisions for this 
purpose. Price quotations ``A'' and ``B'' will be the price 
quotations contained in the Daily Spot Cotton Quotations published 
by the USDA Agricultural Marketing Service on the date the last bale 
from the unit is classed. If the date the last bale classed is not 
available, the price quotations will be determined on the date the 
last bale from the unit is delivered to the warehouse, as shown on 
the producer's account summary obtained from the gin. If eligible 
for adjustment, the amount of production to be counted will be 
determined by multiplying the number of pounds of such production by 
the factor derived from dividing price quotation ``A'' by seventy-
five percent (75%) of price quotation ``B.''
    (e) Colored cotton lint will not be eligible for quality 
adjustment.

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 planted 
acreage. If the amount of premium you are required to pay (gross 
premium less our subsidy) for late planted acreage or prevented 
planting acreage exceeds the liability on such acreage, coverage for 
those acres will not be provided (no premium will be due and no 
indemnity will be paid for such acreage). (For example, assume you 
insure one unit in which you have a 100 percent (100%) 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 ninety-three 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 thirty-five 
percent (0.35) 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 per acre 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.(n)). This notice must be given not 
later than three days after:
    (1) The final planting date for acreage you were prevented from 
planting by the final planting date if you have unplanted acreage 
that may be eligible for prevented planting coverage; and
    (2) The date you discover that planting will not be possible 
within the late planting period for acreage that may be eligible for 
prevented planting coverage if you were not prevented from planting 
such acreage by the final planting date, but were prevented from 
planting such acreage during the late planting period.
    (c) Late Planting
    (1) For cotton acreage 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 cotton 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 cotton (see subsection 
1.(n)), you may elect:
    (i) To plant cotton 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 will be thirty-five percent (0.35) of the production 
guarantee for timely planted acres. For example, if your production 
guarantee for timely planted acreage is 700 pounds per acre, your 
prevented planting production guarantee would be equivalent to 245 
pounds per acre (700 pounds multiplied by 0.35). 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 cotton after the late planting period, (the 
production guarantee for such acreage will be thirty-five percent 
(0.35) of the production guarantee for timely planted acres. For 
example, if your production guarantee for timely planted acreage is 
700 pounds per acre, your prevented planting production guarantee 
would be equivalent to 245 pounds per acre (700 pounds multiplied by 
0.35). Production to count for such acreage will be determined in 
accordance with subsections 11.(c) and (d)).
    (2) In addition to the provisions of section 11 (Insurance 
Period) of the Common Crop Insurance Policy (Sec. 457.8), the 
insurance period for prevented planting coverage begins on the sales 
closing date contained in the Special Provisions for the insured 
crop in the county.
    (3) The acreage to which prevented planting coverage applies 
will be limited as follows:
    (i) If you participate in any program administered by the United 
States Department of Agriculture for the crop year which limits the 
number of acres that may be planted, prevented planting acreage will 
not exceed the ASCS base acreage for the insured crop, reduced by 
any acreage reduction applicable to the farm under such program.
    (ii) If you do not participate in any program administered by 
the United States Department of Agriculture which limits the number 
of acres that may be planted, unless a written agreement exists to 
the contrary, eligible acreage will not exceed the greater of:
    (A) The ASCS base acreage for the insured crop, if applicable;
    (B) The number of acres planted to cotton 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); or
    (C) One hundred percent (100%) of the simple average of the 
number of acres planted to cotton during the crop years that were 
used to determine your yield.
    (iii) 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.
    (iv) 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 a written agreement is in place designating such 
premium rate;
    (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 cotton, 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.
    (v) For the purpose of determining eligible acreage for 
prevented planting coverage, acreage for all units will be combined 
and reduced by the number of cotton acres timely planted after the 
final planting date. (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 cotton on 
one optional unit and 40 acres of cotton on the second optional 
unit, your prevented planting eligible acreage would be reduced to 
zero. (100 acres eligible for prevented planting coverage minus 100 
acres planted equals zero). If you report more cotton acreage 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 your 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 
cotton in the 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, 
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.

    Done in Washington, DC on September 13, 1994.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 94-23833 Filed 9-26-94; 8:45 am]
BILLING CODE 3410-08-M