[Federal Register Volume 60, Number 96 (Thursday, May 18, 1995)]
[Rules and Regulations]
[Pages 26668-26676]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12292]
=======================================================================
-----------------------------------------------------------------------
[[Page 26669]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 404
RIN 0563-AB13
Noninsured Crop Disaster Assistance Program
AGENCY: Federal Crop Insurance Corporation.
ACTION: Interim rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Crop Insurance Corporation (``FCIC'') hereby adds
a new part 404 to chapter IV of title 7 of the Code of Federal
Regulations (``CFR''). The intended effect of this interim rule is to
provide a noninsured crop disaster assistance program (``NAP'') to
protect producers of crops for which insurance is not available. NAP
provides a level of protection in most respects comparable to the
catastrophic risk protection plan of insurance offered to producers on
certain crops.
DATES: This rule is effective January 1, 1995. Written comments, data,
and opinions on this rule will be accepted until close of business July
17, 1995 and will be considered when the rule is to be made final.
ADDRESSES: Written comments, data, and opinion on this interim rule
should be sent to Diana Moslak, Regulatory and Procedural Development
Staff, Federal Crop Insurance Corporation, USDA, Washington, D.C.
20250. Hand or messenger delivery may be made to Suite 500, 2101 L
Street, N.W., Washington D.C. Written comments will be available for
public inspection and copying in the Office of the Manager, 2101 L
Street, N.W., 5th Floor, Washington, D.C., during regular business
hours, Monday through Friday.
FOR FURTHER INFORMATION CONTACT: For further information and a copy of
the Regulatory Impact Analysis to the Noninsured Crop Disaster
Assistance Program, contact Diana Moslak, Federal Crop Insurance
Corporation, U.S. Department of Agriculture, Washington, D.C. 20250.
Telephone (202) 254-8314.
SUPPLEMENTARY INFORMATION: This action has been reviewed under United
States Department of Agriculture (``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 May 1, 2000.
This rule has been determined to be ``significant'' for the
purposes of Executive Order 12866, and therefore, has been reviewed by
the Office of Management and Budget (``OMB'').
A Regulatory Impact Analysis has been completed and is available to
interested persons at the address listed above. In summary, the
analysis finds that crop insurance reform is expected to result in net
positive benefits to producers, taxpayers, and society. The impact on
individual producers compared to payments under ad hoc disaster
programs depends primarily on the farm's actual yield or yield assigned
by the FCIC, market prices, and any adjustments for variable marketing
or production costs. However, reform is expected to result in less
volatility of producers' incomes and decrease the risk of no income due
to adverse weather events. Rural communities and farmers will benefit
from the advanced knowledge that payments will be made in times of
catastrophic yield losses. The Government and taxpayers will benefit
from a single disaster protection program and consequently reduced
Federal outlays. Although producers will have an added burden to make
application and report yields and acreage, the benefits in terms of
greater risk protection and reduced potential for program fraud or
abuse outweigh the costs.
The provisions set forth in this interim rule will contain
information collections that require clearance by the Office of
Management and Budget (OMB) pursuant to the Paperwork Reduction Act of
1980 (44 U.S.C. 3501 et seq.). Due to the necessity of implementing the
rule immediately, the agency has requested clearance of this
information collection from OMB. The public reporting burden for the
information collections that would be required for compliance with
these regulations is estimated to average 42 minutes per response
including the time for reviewing instructions, searching existing data
sources, gathering and maintaining data needed, and completing and
reviewing the collection of information. Comments on the information
collection may be sent to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Room 10202, NEOB, Washington,
D.C. 20503. Attention: Desk Officer for USDA.
It has been determined under section 6(a) of Executive Order 12612,
Federalism, that this rule does not have sufficient federalism
implication to warrant the preparation of a Federalism Assessment. The
provisions contained in this rule will not have a substantial direct
effect on states or their political subdivisions, or on the
distribution of power and responsibilities among the various levels of
government.
This regulation will not have a significant impact on a substantial
number of small entities. Most producers will be able to certify to
their historical production levels at the time of application based on
existing records, or they may elect to base their initial coverage on
transitional or assigned yields. The amount of data collected from
applicants will only be that needed to establish an acceptable yield,
and determine the number of acres planted, and eligibility of the
producer, crop and acreage. The information required and time of
collection is statutory. Therefore, this action is determined to be
exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C.
Sec. 605) 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 require intergovernmental consultation with state and local
officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
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 12778. The provisions of this rule will
preempt state and local laws to the extent such state and local laws
are inconsistent herewith. Before any judicial action may be brought
regarding the provisions of this regulation, the National Appeal
Division administrative appeal procedures must be exhausted. The
provisions of this rule are to be given retroactive effect to January
1, 1995.
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.
This interim rule implements programs mandated by the amendments to
the Federal Crop Insurance Act by the Federal Crop Insurance Reform Act
of 1994. Those amendments required that the statutory changes be
implemented for the 1995 crop year. Many of the final planting dates or
risk periods for crops for which insurance is not available have passed
or will soon pass. Planting decisions for 1995 crops have been or will
shortly be made and it is necessary that producers, lenders, and
suppliers know the parameters and requirements of the program.
Disasters in 1995 subject [[Page 26670]] to the Act may have occurred.
Therefore, it is impractical and contrary to the public interest to
publish this rule for notice and comment prior to making the rule
effective. However, comments are solicited for 60 days after the date
of publication in the Federal Register and will be considered by FCIC
before this rule is made final.
On October 13, 1994, the amendments to the Federal Crop Insurance
Act, made by the Federal Crop Insurance Reform Act of 1994, were
effective. This regulation will provide the provisions to carry out the
noninsured crop disaster assistance program requirements of the Reform
Act. The Noninsured Crop Disaster Assistance Program will replace the
provisions of the Disaster Payment Program (7 CFR part 1477) and the
provisions of the Tree Assistance Program (7 CFR part 1478). By
separate rule, the Consolidated Farm Service Agency (``CFSA'') will
amend these regulations to restrict the crop years of application to
those prior to the crop year for which this rule will be effective and
later remove those parts.
Background
Upon publication of 7 CFR part 404, this regulation will provide
noninsured crop disaster assistance through the USDA and will replace
ad hoc disaster assistance. The provisions of the noninsured crop
disaster assistance program are as follows:
1. Section 404.9, paragraph (a)--Provides that producers who are
eligible to receive NAP payments for crop years 1995 through 1998 will
receive coverage against a covered loss greater than fifty percent
(50%) of the approved yield for the eligible crop payable at sixty
percent (60%) of the average market price for the crop.
2. Section 404.9, paragraph (b)--Provides that producers who are
eligible to receive NAP payments after crop year 1998 will receive
coverage against a covered loss greater than fifty percent (50%) of the
approved yield for the eligible crop payable at fifty-five percent
(55%) of the average market price for the crop.
3. Section 404.11, paragraph (a)--Specifies that eligible crops
will be commercial crops or other agricultural commodities (except
livestock), grown for food or fiber and will also include
floricultural, ornamental nursery, Christmas tree crops, turfgrass sod,
industrial crops, and aquacultural species.
4. Section 404.13--Specifies the minimum ``area'' of 320,000 acres
or a geographical area with a minimum average value of at least $80
million for all crops produced annually.
5. Section 404.13, paragraph (d)--Allows for an area determination
to be ten or more producers of the crop in those eligible areas outside
the United States.
6. Section 404.15--Provides that yields will be established by the
FCIC for the purposes of providing NAP payments. Yields may be
established by using the actual production history of the producer over
a prescribed period, or if there is inadequate documentation to
calculate the actual production history, generally in accordance with 7
CFR part 400, subpart G. The FCIC will ensure that the NAP payments
accurately reflect significant yield variations due to different
farming practices, such as between irrigated and non-irrigated acreage.
7. Section 404.15, paragraph (h)--Specifies that producers with
contracts for guaranteed payments for production will have their
harvested production adjusted upward to reflect the amount of the
contract payment.
8. Section 404.15, paragraph (i)--A producer who produces a crop in
a county where the acreage of the crop for the county has increased by
more than 100 percent over any year in the preceding seven years may
not use an assigned yield unless:
(a) The planted acreage of the producer for the crop has been
inspected prior to the loss by a third party acceptable to the FCIC; or
(b) The CFSA County Executive Director and the CFSA State Executive
Director recommend an exemption to FCIC for approval. FCIC will limit
use of assigned yields to one loss year.
9. Section 404.17--Provides for the filing of an annual acreage
report by the producer for each eligible crop at the local office to be
eligible for NAP payments. For each year, producers must report their
current year's acreage and the previous year's crop production history.
10. Section 404.19, paragraphs (a) and (b)--Specifies that to
qualify for NAP payments, any loss or prevented planting of the
eligible crop must be due to drought, flood, or other natural disaster,
as determined by the Secretary. NAP payments will not cover losses due
to neglect or malfeasance of the producer, or the failure of the
producer to reseed or replant to the same crop in those areas and under
such circumstances where it is customary to reseed or replant, or the
failure of the producer to follow good farming practices.
11. Section 404.19, paragraph (c)--Specifies that a producer of an
eligible crop will not receive NAP payments for loss in production or
prevented planting unless the projected average or actual yield for the
crop in an area falls below 65 percent of the expected area yield
established by FCIC. Once the area eligibility requirement has been
satisfied, the total quantity of the eligible crop that the producer is
able to harvest on the unit must be less than 50 percent of the
approved yield. FCIC will make a payment for the difference between the
determined yield and 50 percent of the producer's approved yield. Once
the area eligibility requirement has been met, a producer of an
eligible crop may receive NAP payments for prevented planting if the
producer is prevented from planting more than 35 percent of the
acreage. Intended acreage may be verified using records of historical
acreage planted to the eligible crop.
12. Section 404.21, paragraph (a)--Provides for notice of damage or
loss at the local office within 15 calendar days after the occurrence
of the prevented planting or damage to the crop to be eligible for NAP
payments. With the exception for the 1995 crop year, in which case, the
notice must be filed within the later of 45 days after this rule is
published in the Federal Register or 15 days after the occurrence of
the prevented planting or damage to the crop.
13. Section 404.21, paragraph (b)--Requires the producer to make an
application for payment at the local office before the deadline set by
FCIC.
14. Section 404.23--Specifies that if the producer is eligible to
receive NAP payments and is also eligible to receive benefits for the
same loss under other USDA programs, the producer must elect the
program from which to receive benefits.
15. Section 404.25--Specifies that the total amount of payments
that a person may receive annually under this title will not exceed
$100,000. A producer with qualifying gross revenues of $2 million or
more may not receive NAP payments.
16. Section 404.27--Specifies that if a producer conceals or
misrepresents any material fact, commits fraud, or participates in a
scheme or device, the producer will not be eligible to receive any
payments applicable to that crop year and could be subject to penalties
specified in the Act.
List of Subjects in 7 CFR Part 404
Agricultural commodities, Disaster assistance, Reporting and
recordkeeping requirements.
Interim Rule
For the reasons set out in the preamble, a new part 404 is added to
[[Page 26671]] chapter IV of title 7 of the CFR, to read as follows:
PART 404--NONINSURED CROP DISASTER ASSISTANCE PROGRAM--REGULATIONS
FOR THE 1995 AND SUCCEEDING CROP YEARS
Sec.
404.1 General statement.
404.3 Applicability.
404.5 Administration.
404.7 Definitions.
404.9 Coverage.
404.11 Eligibility.
404.13 Area.
404.15 Yield determinations.
404.17 Acreage report.
404.19 Loss requirements.
404.21 Application for payment and notice of loss.
404.23 Multiple benefits.
404.25 Payment and income limitations.
404.27 Misrepresentation, scheme and device, and fraud.
404.29 Refunds to the corporation.
404.31 Cumulative liability.
404.33 Appeals.
404.35 Exemption from levy.
404.37 Estates, trusts, and minors.
404.39 Death, incompetence, or disappearance.
404.41 OMB control numbers.
Authority: 7 U.S.C. 1506(l).
Sec. 404.1 General statement.
The Federal Crop Insurance Act, as amended by the Federal Crop
Insurance Reform Act of 1994 (the ``Act''), requires the Federal Crop
Insurance Corporation (FCIC) to implement a noninsured crop disaster
assistance program (NAP) to provide eligible producers of eligible
crops with protection somewhat comparable to the catastrophic risk
protection plan of insurance. NAP is designed to help reduce production
risks faced by producers of uninsurable crops. NAP will reduce
financial losses that occur when natural disasters cause a loss of
production or prevented planting of an eligible crop. Payment
eligibility is based on an expected yield for the area and an approved
yield for an individual producer unit based on actual production
history or a transitional yield, if sufficient actual production
records are not available. Production for both the applicable area
expected yield and the individual producer approved yield for the unit
must fall below specified percentages in order to be eligible for
payments under this part.
Sec. 404.3 Applicability.
The provisions contained in this part are applicable to each
eligible producer and each eligible crop and acreage for which
catastrophic risk protection coverage is not otherwise available.
Sec. 404.5 Administration.
(a) The NAP program will be administered under the general
supervision of the FCIC, and will be carried out through state and
county committees and offices of the CFSA, or other local USDA offices
if designated by FCIC.
(b) The state CFSA committee will, in accordance with this part,
recommend the geographical size and shape of the area where a natural
disaster has occurred, and whether the area eligibility requirement has
been satisfied. The recommendation of eligibility will be submitted to
FCIC for review and approval or disapproval.
(c) FCIC will determine all yields and prices under this part.
(d) No delegation herein to a state or county CFSA committee will
preclude the FCIC Manager from determining any question arising under
NAP or from reversing or modifying any determination made by a state or
county CFSA committee.
Sec. 404.7 Definitions.
(a) Actual production history. Refer to 7 CFR part 400, subpart G,
except that the terms of subpart G will read as follows when referring
to NAP:
------------------------------------------------------------------------
Insurance terms NAP terms
------------------------------------------------------------------------
Agent.............................. Local office representative.
Claim.............................. Application for payment.
Claim for indemnity................ Application for payment.
Indemnity payment.................. NAP payment.
Insurable acreage.................. Eligible acreage.
Insurable cause.................... Natural disaster.
Insurable crop..................... Eligible crop.
Insurance company.................. Provider.
Insurance purposes................. NAP purposes.
Insured............................ Eligible producer.
Insured producer................... Eligible producer.
Uninsurable acreage................ Ineligible acreage.
Uninsurable production............. Ineligible production.
Uninsured cause of loss appraisal.. Assigned production.
Uninsured production............... Ineligible production.
------------------------------------------------------------------------
(b) Actual yield. The yield per acre for a crop year calculated
from production records or NAP payments in accordance with 7 CFR part
400, subpart G.
(c) Adjusted yield. The transitional yield reduced by the
applicable percentage for lack of adequate records in accordance with 7
CFR part 400, subpart G.
(d) Approved yield. A yield calculated and approved by the
verifier, used to determine any NAP payment in accordance with 7 CFR
part 400, subpart G.
(e) Aquacultural species. Any species of aquatic organism grown as
food for human consumption or fish raised as feed for fish that are
consumed by humans, and which is propagated and reared in an aquatic
medium by a commercial operator on private property in water in a
controlled environment.
(f) Area. The geographic region recommended by the state CFSA
committee, and approved by FCIC in accordance with Sec. 404.13 of this
part, where a natural disaster has occurred which may qualify producers
in the geographic area for NAP payments.
(g) Assigned yield. A yield assigned for a crop year in the base
period if the producer does not file an acceptable production report by
the production reporting date in accordance with 7 CFR part 400,
subpart G. Assigned yields are used in the same manner as actual yields
when calculating APH. An assigned yield may not be used for a
production report in a disaster year.
(h) Average market price. The price or dollar equivalent on an
appropriate basis; i.e., bushel, ton, etc., for an eligible crop
established by FCIC for determining NAP payments. Such price will be on
a harvested basis without the inclusion of transportation, storage,
processing, packing, marketing or other post-harvest expenses and will
be based, in part, on historical data.
(i) CCC. The Commodity Credit Corporation.
(j) CFSA. The Consolidated Farm Service Agency of the United States
Department of Agriculture.
(k) County expected yield. The eligible crop yield established by
FCIC for the county. Such yield information may be obtained from the
National Agricultural Statistics Service (NASS), CSREES, credible
nongovernmental studies, and yields in similar areas. For planted
annual crops, such yield will be based on the acreage planted for
harvest.
(l) Crop year. The period of time within which the crop is normally
grown and designated by the calendar year in which the crop is normally
harvested in the area.
(m) CSREES. The Cooperative State Research, Education, and
Extension Service.
(n) Eligible crop. An agricultural commodity including all types
and varieties or acreage of a commodity for which insurance is not
available under any FCIC insurance program and which is commercially
produced for food or fiber as specified in this part. Eligible crop
shall also include floricultural, ornamental nursery, Christmas tree,
turfgrass sod, industrial crops, and aquacultural species. In the case
of a crop that historically has multiple plantings in the same crop
year that are planted or are prevented from being
[[Page 26672]] planted on the same or different acreage will be
considered different crops for determining NAP payments. This does not
apply to a replacement crop.
(o) Expected area yield. The eligible crop yield established and
approved by FCIC for the geographic area.
(p) FCIC. The Federal Crop Insurance Corporation, a wholly owned
Government Corporation within the Consolidated Farm Service Agency,
United States Department of Agriculture.
(q) Good farming practices. The cultural practices generally used
in the area for the crop to make normal progress toward maturity and
produce at least the individual unit approved yield. The practices are
normally those recognized by CSREES as compatible with agronomic and
weather conditions in the area.
(r) Harvested. A single harvest crop is considered harvested when
the producer has, by hand or mechanically, removed the crop from the
field. A multiple harvest crop is considered harvested when the
producer has, by hand or mechanically, removed at least one harvesting
from the field. The crop is considered harvested once it is taken off
the field and placed in a truck or other conveyance. (Exceptions: Hay
is considered harvested when in the bale, whether removed from the
field or not. Grazing is not considered harvesting except for seeded
pasture.)
(s) Livestock. Any farm or other animal excluding aquacultural
species and, including but not limited to domestic avian, ruminant,
equine, and swine species grown or maintained for any purpose.
(t) Local office. The CFSA office or other USDA office designated
by FCIC.
(u) Master yields. Approved APH yields, for certain crops and
counties as designated by the FCIC, used to determine any NAP payment
in accordance with 7 CFR part 400, subpart G.
(v) Natural disaster. Means damaging weather, including but not
limited to drought, hail, flood, excessive moisture, freeze, tornado,
hurricane, or excessive wind, or any combination thereof; or other
adverse natural occurrence, including but not limited to earthquake,
volcanic eruption, heat, locust infestation; or that directly causes,
accelerates, or exacerbates the destruction or deterioration of an
eligible crop.
(w) Operator. The person who is in general control of the farming
operation on the farm during the crop year.
(x) Person. A person as defined in 7 CFR part 1497, subpart B.
(y) Prevented planting. The inability to plant a crop with proper
equipment during the planting period for the crop or commodity. A
producer must have been unable to plant the eligible crop due to a
natural disaster that prevented most producers in the surrounding area
from planting such crop during the same planting period. The natural
disaster that caused the prevented planting may occur prior to the
planting period for the crop in the area, but must not occur earlier
than the planting period for such crop the prior crop year.
(z) Producer. A person who, as owner, landlord, tenant, or
sharecropper, is entitled to share in the production from the eligible
commodity or in the proceeds thereof.
(aa) Production report. A written record showing the commodity's
annual production and used to determine the producer's yield for NAP
purposes. The report contains yield history by unit, if applicable,
including planted acreage for annual crops, eligible acreage for
perennial crops, and harvested and appraised production for the
previous crop years. This report must be supported by verifiable
written records, measurement of farm-stored production, or by other
records of production approved by FCIC on an individual basis.
Information contained in an application for payment is considered a
production report for the unit for the crop year for which the
application was filed.
(bb) Qualifying gross revenues means:
(1) With respect to a person who receives more than 50 percent of
such person's gross income from farming, ranching, and forestry
operations, the annual gross income for the calendar year from such
operations; and
(2) With respect to a person who receives 50 percent or less of
such person's gross income from farming, ranching, and forestry
operations, the person's total gross income from all sources.
(cc) Reseeded or replanted crop. The same crop planted on the same
acreage after the first planting of the crop has failed.
(dd) Replacement crop. A different crop planted on the same acreage
after the failure of the first crop, excluding reseeded or replanted
crops.
(ee) Seeded pasture. Acreage which is seeded on cropland, as
defined in 7 CFR part 719, to an annual crop intended for use as
grazing only by domestic animals.
(ff) Share. The producer's percentage of interest in the eligible
crop as an owner, operator, or tenant at the beginning of the crop
year. For the purposes of determining eligibility for NAP payments, the
producer's share will not exceed the producer's share at the earlier of
the time of loss or the beginning of harvest. Acreage or interest
attributed to a spouse, child, or member of the same household may be
considered part of the producer's share unless considered a separate
person.
(gg) Transitional NAP yield (``T'' Yield). An estimated yield based
on the county expected yield adjusted for individual producers as
determined by FCIC. The T-yield will be used in the approved yield
calculation process when less than four consecutive crop years of
actual or assigned yields are available.
(hh) Unit. For the noninsured crop disaster assistance program, all
acreage of the eligible crop in the county on the date coverage begins
for the crop year:
(1) In which the person has one-hundred percent (100%) crop share;
or
(2) Which is owned by one person and operated by another person on
a share basis.
(Example: If, in addition to the land the person owns, the person
rents land from five landlords, three on a crop share basis and two
on a cash basis, the person would be entitled to four units, one
unit for each crop share lease and one unit which includes the two
cash leases and the land owned by the person.) Land rented for cash,
a fixed commodity payment, or any consideration other than a share
in the crop on such land will be considered as owned by the lessee.
No unit other than that stated herein will be permitted.
Sec. 404.9 Coverage.
(a) Producers who are eligible to receive NAP payments for crop
years 1995 through 1998 will receive coverage against loss in yield
greater than fifty percent (50%) of the producer's approved yield for
the eligible crop payable at sixty percent (60%) of the established
average market price for the crop.
(b) Producers who are eligible to receive NAP payments after crop
year 1998 will receive coverage against loss in yield greater than
fifty percent (50%) of the producer's approved yield for the eligible
crop payable at fifty-five percent (55%) of the established average
market price for the crop.
(c) FCIC will adjust the NAP payment rate for crops that are
produced with significant and variable expenses that are not incurred
because the crop acreage was prevented from being planted or planted
but not harvested.
(d) NAP payments will be determined by unit based on the production
of all acreage of that crop (planted and eligible prevented from being
planted) in the unit. [[Page 26673]]
(e) Each producer's NAP payment will be based on the producer's
share of the eligible crop.
Sec. 404.11 Eligibility.
(a) Eligible crops under this part will be any commercial
agricultural crop, commodity, or acreage of a commodity grown for food
or fiber for which the catastrophic risk protection plan of insurance
is not available in the area under 7 CFR part 402 unless excluded in
paragraph (b) of this section. All types and varieties of a crop or
commodity will be treated as a single eligible crop. NAP benefits will
be made available for:
(1) Any commercial crop grown for human consumption;
(2) Any commercial crop planted and grown for livestock
consumption, including but not limited to grain and forage crops and
seeded pasture;
(3) Any commercial crop grown for fiber, excluding trees grown for
wood, paper, or pulp products;
(4) Any commercially produced aquacultural species;
(5) Floriculture;
(6) Ornamental nursery crops;
(7) Christmas trees;
(8) Turfgrass sod; and
(9) Industrial crops.
(b) NAP payments will not be available for:
(1) Losses of livestock or their by-products;
(2) Any person who has qualifying gross revenues in excess of $2
million;
(3) Any acreage in any area for any crop for which the catastrophic
risk protection plan of insurance under 7 CFR part 402 is available or
would have been available had the crop been timely planted in
accordance with 7 CFR part 402 unless the delay in planting was caused
by a natural disaster;
(4) Any person who has violated chapter XII and section 1764 of the
Food Security Act of 1985 by being convicted under Federal or state law
of planting, cultivating, growing, producing, harvesting or storing a
controlled substance in any crop year;
(5) Producing an agricultural commodity in any crop year on a field
on which highly erodible land is predominant, unless the person is
exempt under the provisions of Sec. 12.5 of this title; or
(6) Producing an agricultural commodity in any crop year on
converted wetland, unless the person is exempt under the provisions of
Sec. 12.5 of this title.
(c) Any tenant, landlord, or producer on the unit separate from the
person determined to be ineligible under this provision will remain
eligible for NAP payments for their share of the crop unless such
tenant, landlord, or producer on the unit is:
(1) Also convicted of planting, cultivating, growing, producing,
harvesting or storing a controlled substance;
(2) Also in violation of chapter XII of the Food Security Act of
1985 and the regulations issued thereunder; or
(3) Otherwise determined by FCIC to be ineligible for NAP payments.
Sec. 404.13 Area.
For the purposes of this part, all acreage affected by a natural
disaster, or any adjustment thereto, will be included in the area
recommended by the state CFSA committee and submitted to FCIC for
approval, regardless of whether the commodity produced on the affected
acreage suffered a loss. The minimum area will be 320,000 acres or a
geographical area with not less than an $80 million average value for
all crops produced annually. The minimum area will be determined as
follows:
(a) The shape of the area will be contiguous and will correspond to
the shape of the natural disaster to the maximum extent possible. If
the acreage affected by the natural disaster is less than the number of
acres needed to meet the area size requirement and does not meet the
$80 million value requirement, the state CFSA committee will add acres
equally from all surrounding cropland including undamaged acres until
the minimum size is met.
(b) If the acreage affected by the natural disaster is not
contiguous:
(1) The area will include all acreage that has been affected by the
same natural disaster within the area.
(2) The acreage included in the area will be contiguous taking into
consideration geological breaks (identifiable variations in topography
such as mountain ranges and rivers).
(3) If the distance between affected acreages is so distant that it
is not practical to include all of the acreage within the area, the
acreage may be divided into separate areas.
(c) The area may not be defined in any manner that arbitrarily
includes or excludes producers or cropland.
(d) In lieu of paragraphs (a) and (b) of this section, for eligible
areas outside the United States, the area shall include ten or more
producers of the crop.
(e) If a part of a contiguous unit is affected by a disaster, the
whole contiguous unit will need not be included in the determination of
the area. However, the whole unit will be used to determine if the
producer suffered a loss.
Sec. 404.15 Yield determinations.
(a) FCIC will establish expected area yields for eligible crops for
each county or area for which the NAP is available, using available
information, which may include, but is not limited to, NASS data,
CSREES records, credible nongovernment studies, yields in similar
areas, and reported APH data.
(b) FCIC may make county yield adjustments taking into
consideration different yield variations due to different farming
practices in the county such as irrigated and nonirrigated acreage.
(c) In establishing expected area yields for eligible crops:
(1) If the approved area corresponds to a single county, the
expected area yield will be the yield established by FCIC for that
county, including any adjustments permitted by this section;
(2) If the approved area encompasses portions of or more than one
county, the expected area yield will be the weighted average of the
yields established by FCIC for those counties in the area, including
any adjustments permitted by this section.
(3) FCIC may adjust expected area yields if:
(A) The cultural practices, including the age of the planting or
plantings, are different from those used to establish the yield.
(B) The expected area yield established on a state or county level
is determined to be incorrect for the area.
(d) FCIC will establish approved yields for purposes of providing
assistance under this part. Approved yields for the eligible crop will
be based on the producer's actual production history in accordance with
the provisions of 7 CFR part 400, subpart G.
(e) The approved yield established for the producer for the year in
which the NAP payments are offered will be equal to the average of the
consecutive crop year yields reported and certified of that producer
for that eligible crop.
(f) If a producer receives an assigned yield for a year of natural
disaster, the producer will be ineligible to receive an assigned yield
for any subsequent year disaster unless adequate production records for
the eligible crop from the previous one or more years are provided to
the local office. The producer shall receive a zero yield for those
years the producer is ineligible to receive an assigned yield.
(g) FCIC will select certain producers and require those selected
to provide adequate records to support the information provided.
Producers may also be required to support the yield certification at
the time of loss adjustment or on post-audit. Each
[[Page 26674]] certification must be supported by adequate records.
Failure to produce adequate records may subject the producer to
criminal and civil false claims actions under various Federal statutes
as well as refund of any amount received. In addition, sanctions as set
out at 7 CFR part 400, subpart R may be imposed for false
certification. Adequate records may include:
(1) Commercial receipts, settlement sheets, warehouse ledger
sheets, or load summaries if the eligible crop was sold or otherwise
disposed of through commercial channels; and
(2) Such documentary evidence as is necessary in order to verify
the information provided by the producer if the eligible crop has been
sold, fed to livestock, or otherwise disposed of other than through
commercial channels such as contemporaneous measurements, truck scale
tickets, contemporaneous diaries, etc.
(h) Any producer who has a contract to receive a guaranteed payment
for production, as opposed to delivery, of an eligible crop will have
the production adjusted upward by the amount of the production
corresponding to the amount of the contract payment received.
(i)(1) Producers will not be eligible to receive an assigned yield
if the acreage of the crop in a county for the crop year has increased
by more than 100 percent over any year in the preceding seven crop
years, unless:
(i) The producer provides adequate records of production costs,
acres planted, and yield for the crop year for which benefits are being
sought.
(ii) If FCIC determines that the records provided under this
paragraph are inadequate, FCIC may require proof that the eligible crop
could have been marketed at a reasonable price had the crop been
harvested.
(2) The provisions of paragraph (i)(1) of this section will not
apply if:
(i) The crop has been inspected prior to the occurrence of a loss
by a third party acceptable to FCIC; or
(ii) The CFSA County Executive Director, with concurrence of the
CFSA State Director, makes a recommendation for an exemption from the
requirements and such recommendation is approved by FCIC.
Sec. 404.17 Acreage report.
(a) Producers must file one or more acreage reports annually at the
local office no later than the date specified by the Corporation for
each crop the producer will want made eligible for the NAP program. The
acreage report may be filed by the farm operator. Any producer will be
bound by the acreage report filed by the farm operator unless the
producer files a separate acreage report prior to the acreage reporting
date.
(b) That acreage report must include:
(1) All acreage in the county of the eligible crop (for each
planting in the event of multiple planting) in which the producer has a
share;
(2) The producer's share at the time of planting or the beginning
of the crop year;
(3) The CFSA farm serial numbers;
(4) The crop and practice;
(5) All persons sharing in the crop (the identity of any person
having a substantial beneficial interest in the crop (refer to 7 CFR
part 400, subpart Q) and the person's employer identification number or
social security number);
(6) The date the crop was planted;
(7) Acreage prevented from being planted; and
(8) Production from the previous crop year. (For example: The
producer reported the crop acreage planted in 1995. The producer must
then report the 1995 production for that acreage by the 1996 acreage
reporting date for the crop.)
(c) A person's failure to submit the required information by the
designated acreage reporting dates shall result in the denial of NAP
payments. If there is a change of ownership, operation, or share within
the farming operation after the acreage reporting date, the local
office must be notified not later than thirty calendar days after the
change and proof of the change must be provided in order to maintain
eligibility for payments under this part.
Sec. 404.19 Loss requirements.
(a) To qualify for payment under this part, the loss or prevented
planting of the eligible crop must be due to drought, flood, or other
natural disaster as determined by the Secretary.
(b) NAP assistance will not cover losses due to:
(1) The neglect or malfeasance of the producer;
(2) The failure of the producer to reseed or replant to the same
crop in the county where it is customary to reseed or replant;
(3) The failure of the producer to follow good farming practices
for the commodity and practice;
(4) Water contained or released by any governmental, public, or
private dam or reservoir project;
(5) Failure or breakdown of irrigation equipment or facilities; or
(6) Except for tree crops and perennials, inadequate irrigation
resources at the beginning of the crop year.
(c) A producer of an eligible crop will not receive NAP payments
unless the projected average or actual yield for the crop, or an
equivalent measurement if yield information is not available, in the
area falls below sixty-five percent (65%) of the expected area yield.
Once this area eligibility requirement has been satisfied:
(1) A reduced yield NAP payment will be made to a producer if the
total quantity of the eligible crop that the producer is able to
harvest on the unit is less than fifty percent (50%) of the individual
unit approved yield for the crop, factored for the share of the
producer for the crop. Production from the entire unit will be used to
determine the individual loss. The quantity will not be reduced for any
quality consideration unless a zero value is established.
(2) A prevented planting NAP payment will be made if the producer
is prevented from planting more than thirty-five percent (35%) of the
total eligible acreage intended for planting to the eligible crop.
(A) Eligible crop acreage will not exceed 100% of the simple
average of the number of acres planted to the crop by the producer in
the loss area during the years used to determine the approved yield,
unless FCIC has previously agreed in writing to approve acreage
exceeding this limit.
(B) The percentage of the acreage that is prevented from being
planted will be determined by dividing the producer's prevented planted
acreage within the loss area by the producer's total acreage intended
to be planted in the loss area. The acreage intended to be planted may
be verified using records of historical acreage.
(C) For the purposes of determining eligible acreage for prevented
planting payment, all eligible acreage of the crop within the loss area
will be reduced by the number of acres of the crop planted within the
loss area. In the event one or more crops are eligible for a prevented
planting payment in the same crop year, and there is acreage planted to
another crop in excess of such crop eligible acreage, such excess
acreage will be prorated to the crops eligible for prevented planting
on the basis of such crop's eligible acreages.
(D) NAP payments for prevented planting will not be available for:
(i) tree crops and other perennials;
(ii) land which planting history or conservation plans indicate
would remain fallow for crop rotation purposes;
(iii) land used for conservation purposes or intended to be or
considered to have been left unplanted [[Page 26675]] under any program
administered by USDA; or
(iv) land planted with a replacement crop.
Sec. 404.21 Application for payment and notice of loss.
(a) Any person with a share in the eligible crop who would be
entitled to a NAP payment must make application and provide a notice of
damage or loss within 15 calendar days after the occurrence of the
prevented planting (the end of the planting period) or damage to the
crop. For the 1995 crop year only, the notice must be filed within the
later of 45 days after this rule is published in the Federal Register
or 15 days after the occurrence of the prevented planting or damage to
the crop. The notice must be filed at the local office serving the area
where the producer's unit is located. The farm operator may provide the
notice for all producers with an interest in the crop. All producers on
a farm will be bound by the operator's filing or failure to file the
application for payment unless the individual producers elect to timely
file their notice.
(b) Applications for NAP payments must be filed on our form by the
applicant with the local office no later than the application deadline.
(1) If the producer chooses not to harvest the crop, all eligible
acres and crop units for which the producer intends to make an
application for payment must be left intact until the units have been
appraised or released by a FCIC loss adjuster.
(2) If the producer harvests the crop, the producer must provide
such documentary evidence of crop production as FCIC may require which
may include leaving representative samples of the crop for inspection.
(c) Failure to make timely application or to supply the required
documentary evidence shall result in the denial of NAP payments.
(d) Benefits under this part may be assigned by the eligible
producer only on our form and such assignment is effective only when
approved by FCIC. Failure of FCIC to make payment in accordance with
such assignment will not give rise to any liability on the part of FCIC
to the assignee.
Sec. 404.23 Multiple benefits.
(a) If a producer is eligible to receive NAP payments under this
part and benefits under any other program administered by the Secretary
for the same crop loss, the producer must choose whether to receive the
other program benefits or NAP payments. The producer is not eligible
for both. Such election does not relieve the producer from the
requirements of making a production and acreage report.
(b) Applicable programs include, but are not limited to, the
Emergency Livestock Feed Assistance Program and any other program
determined by FCIC to compensate the producer for the same crop loss.
Sec. 404.25 Payment and income limitations.
NAP payments made to eligible producers are subject to the
following provisions:
(a) For the purpose of making such payments, the term ``producer''
will be considered to mean the term ``person'' as determined in
accordance with 7 CFR part 1497, subpart B.
(b) No person shall receive payments under this part in excess of
$100,000.
(c) A person who has qualifying gross revenues in excess of $2
million for the previous calendar year shall not be eligible to receive
NAP payments under this part.
(d) Simple interest on payments to the producer which are delayed
will be computed on the net payments ultimately found to be due, from
and including the 61st day after the latter of the date the producer
signs, dates, and submits a properly completed application for payment
on the designated form, the date disputed applications are adjudicated,
or the date the area trigger is established for NAP payments. Interest
will be paid unless the reason for failure to timely pay is due to the
producer's failure to provide information or other material necessary
for the computation or payment. The interest rate will be that
established by the Secretary of the Treasury under section 12 of the
Contract Disputes Act of 1978 (41 U.S.C. 611), and published in the
Federal Register semiannually on or about January 1 and July 1 of each
year and may vary with each publication.
Sec. 404.27 Misrepresentation, scheme and device, and fraud.
(a) If FCIC determines that any producer has erroneously
represented any fact or has adopted, participated in, or benefited
from, any scheme or device that has the effect of defeating, or is
designed to defeat the purpose of this part, such producer will not be
eligible to receive any payments applicable to the crop year for which
the scheme or device was adopted.
(b) If any misrepresentation, scheme or device, or practice has
been employed for the purpose of causing FCIC to make a payment which
FCIC otherwise would not make under this part:
(1) FCIC will withhold all or part of the payment that would
otherwise be due.
(2) All amounts paid by FCIC to any such producer, applicable to
the crop year in which the offense occurred, must be refunded to FCIC
together with interest and other amounts as determined in accordance
with this part.
(3) FCIC may impose such other penalties as authorized by section
506(n) of the Federal Crop Insurance Act, as amended or available under
7 CFR part 400, subpart R.
(c) Scheme and device may include, but is not limited to:
(1) Concealing any information having a bearing on the application
of the rules of this part;
(2) Submitting false information to the FCIC or any county or state
CFSA committee; or
(3) Creating fictitious entities for the purpose of concealing the
interest of a person in the farming operation.
Sec. 404.29 Refunds to the corporation.
(a) In the event that there is a failure to comply with any term,
requirement, or condition for payment made in accordance with this
part, or the payment was established as a result of erroneous
information provided by any person, or was erroneously computed, all
such payments or overpayments will be refunded to FCIC on demand,
together with interest.
(b) Interest will accrue in accordance with the provisions of 7 CFR
1403.9.
(c) Interest on any amount due the FCIC found to have been received
by the producer as a result of fraud, misrepresentation, scheme or
device, or presenting a false application for payment will start on the
date the producer received the payment.
(d) Recovery of delinquent debts and set off will be in accordance
with 7 CFR part 1403.
(e) If FCIC determines it is necessary to contract with a
collection agency or to employ an attorney to assist in collection, the
producer will pay all the expenses of collection.
(f) All amounts paid will be applied first to the payment of
expense of collection, second to the reduction of any penalties which
may have been assessed, then to the reduction of accrued interest, then
to the reduction of the principal balance.
Sec. 404.31 Cumulative liability.
(a) The liability of any producer for any payment or refunds, which
is determined in accordance with this part to be due to FCIC, will be
in addition to any other liability of such producer
[[Page 26676]] under any civil or criminal fraud statute or any other
statute or provision of law including, but not limited to, 18 U.S.C.
286, 287, 371, 641, 1001; 1014, and 31 U.S.C. 3729.
(b) All producers receiving payments under this part will be
jointly and severally liable to repay any unearned NAP payments.
Sec. 404.33 Appeals.
The appeal, reconsideration, or review of all determinations made
under this part, except the designation of an area for which there is
no appeal rights because it is determined a rule of general
applicability, must be in accordance with part 780 of this title or the
regulations promulgated by the National Appeals Division, whichever is
applicable.
Sec. 404.35 Exemption from levy.
Any payment that is due any person under this part will be made
without regard to questions of title under state law and without regard
to any attachment, levy, garnishment, or any other legal process
against the crop, and the proceeds thereof, which may be asserted by
any creditor, except statutory liens of the United States.
Sec. 404.37 Estates, trusts, and minors.
(a) Program documents executed by persons legally authorized to
represent estates or trusts will be accepted only if such person
furnishes evidence of the authority to execute such documents.
(b) A minor who is otherwise eligible will be eligible for NAP
payments under this part only if such person meets one of the following
requirements:
(1) The minor establishes that the right of majority has been
conferred on the minor by court proceedings or by statute;
(2) A guardian has been appointed to manage the minor's property
and the applicable program documents are executed by the guardian; or
(3) A bond is furnished under which the surety guarantees any loss
incurred for which the minor would be liable had the minor been an
adult.
Sec. 404.39 Death, incompetence, or disappearance.
In the case of death, incompetence or disappearance, of any person
who is eligible to receive NAP payments in accordance with this part,
such payments will be disbursed in accordance with part 707 of this
title.
Sec. 404.41 OMB control numbers.
The provisions set forth in this interim rule contain information
collection that require clearance by the Office of Management and
Budget (``OMB'') under the Paperwork Reduction Act of 1980 (44 U.S.C.
3501 et seq.). Previous information collection requirements have been
approved under OMB control numbers 0560-0004, 0563-0007, 0563-0016, and
0563-0036. The new information collection requirements have been
submitted to OMB for approval under OMB control number 0563-0016 and
are not effective until approved by OMB.
Done in Washington, DC, on May 15, 1995.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 95-12292 Filed 5-15-95; 4:29 pm]
BILLING CODE 3410-08-P