[Federal Register Volume 60, Number 233 (Tuesday, December 5, 1995)]
[Rules and Regulations]
[Pages 62189-62190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29570]



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 Rules and Regulations
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  Federal Register / Vol. 60, No. 233 / Tuesday, December 5, 1995 / 
Rules and Regulations  

[[Page 62189]]


DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 401

RIN 0563-AB29


General Crop Insurance Regulations; Florida Citrus Endorsement

AGENCY: Federal Crop Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (``FCIC'') hereby 
amends the Florida Citrus Endorsement that supplements the General Crop 
Insurance Policy. The intended effect of this rule is to require that 
the insured crop unit suffer at least a fifty percent (50%) average 
percent of damage before an indemnity would be due for any catastrophic 
risk protection policy.

EFFECTIVE DATE: December 5, 1995.

FOR FURTHER INFORMATION CONTACT: Diana Moslak, Regulatory and 
Procedural Development Staff, 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 ``exempt'' for the purposes of 
Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget (``OMB'').
    The information collection requirements contained in these 
regulations (7 CFR part 401) were previously approved by OMB pursuant 
to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35) under OMB 
control numbers 0563-0003, 0563-0014, and 0563-0016. The amendments set 
forth in this rule do not revise the content or alter the frequency of 
reporting for any of the forms cleared under the above mentioned 
dockets. The public reporting burden for the collection of information 
is estimated to range from 10 to 90 minutes per response, including the 
time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
the collection of information.
    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 
policies and procedures 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. This action neither increases nor decreases 
the paperwork burden on the insured and the reinsured company. 
Therefore, this action is determined to be exempt from the provisions 
of the Regulatory Flexibility Act (5 U.S.C. 605) and no Regulatory 
Flexibility Analysis was prepared.
    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. The administrative appeal 
provisions promulgated by the National Appeals Division under Pub. L. 
No. 103-354 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.

Background

    On Tuesday, June 6, 1995, FCIC published an interim rule in the 
Federal Register at 60 FR 29749, to amend the Florida Citrus 
Endorsement by revising the Catastrophic Risk Protection (CAT) loss 
adjustment provisions contained in section 9 of the endorsement.
    Following publication of the interim rule, the public was afforded 
60 days to submit written comments, data, and opinions. The comments 
received and FCIC responses are as follows:
    Comment: One comment received from an insurance company maintains 
that the rule is incomplete because it only addresses the loss 
adjustment deductible aspect of the program and does not address the 
dollar amount of insurance.
    Response: FCIC revised Section 9 (Claim for Indemnity) because the 
language did not conform with the requirements of Section 508(b) of the 
Federal Crop Insurance Reform Act (Act) of 1994 which states that CAT 
shall offer a producer coverage for a 50 percent loss of yield. Under 
the Florida Citrus Endorsement, loss payments began once the damage 
exceeded 10 percent. FCIC added language to bring Section 9 in 
compliance with the Act. This language only addresses the 50 percent 
deductible. The dollar amount of insurance for CAT coverage, as 
determined by FCIC, is stipulated in the actuarial table. Therefore, 
FCIC has addressed the dollar amount of insurance for CAT coverage and 
the formula used to determine CAT coverage indemnities will not be 
changed.
    Comment: One comment received from an insurance company stated that 
the rule was not necessary because the same result could be achieved by 
multiplying the maximum value FCIC assigns to a given variety of citrus 
by 50%, then multiplying this product by 60%.
    Response: FCIC disagrees with the comment. The determination of an 
appropriate CAT dollar amount of 

[[Page 62190]]
insurance is a separate issue from establishing the amount of loss that 
must be sustained before an indemnity is due.
    Comment: One comment received from an insurance company suggested 
that the Act specifically addresses CAT coverage for production based 
programs but leaves discretion as to how to apply CAT to dollar amount 
of insurance crops.
    Response: The Act stipulates that CAT coverage shall offer a 
producer coverage for a 50 percent loss in yield on an individual 
basis, indemnified at 60 percent of the expected market price, or 
comparable coverage (as determined by the Corporation). For dollar 
amount of insurance crops like Florida Citrus, the CAT dollar amount of 
insurance is stated in the actuarial table. The 50% loss threshold for 
CAT is not discretionary and applies to dollar amount of insurance 
crops.
    Comment: One comment received from an insurance company suggested 
that changing the loss calculation for CAT represents a material change 
in the program and essentially creates a second Florida Citrus program.
    Response: Changing the Florida Citrus CAT loss calculation did not 
create another program. CAT coverage was a new insurance coverage level 
that was required to be implemented by the Act. The change explains how 
CAT losses will be calculated.
    Comment: One comment received from an insurance company stated 
their belief that CAT payment values are far short of 60% of the market 
value called for in the Act. Consequently, loss guidelines which result 
in a CAT producer being indemnified once they have sustained a loss 
greater than 10% helped to compensate for the insufficient CAT dollar 
amount of coverage.
    Response: FCIC believes that it would be inappropriate to 
compensate for a perceived insufficient dollar amount of coverage by 
manipulating loss calculations, since it would violate crop loss 
guidelines established in the Act.
    Comment: One comment received from an insurance company suggested 
that the rule change would not reduce paperwork nor simplify the 
program and could cost more money to administer since agents would have 
two quoting systems.
    Response: FCIC disagrees with this comment. The rule change is not 
expected to either increase or decrease paperwork. The change does not 
create two quoting systems, it only informs the CAT policyholder how a 
claim for indemnity is calculated for this new coverage level.
    Comment: One comment received from an insurance company suggested 
that the rule will spread confusion and bad will among their growers 
and creates additional work for companies and agents who are already 
``undercompensated'' for CAT.
    Response: The Act mandates guidelines for implementing CAT coverage 
and FCIC does not have the liberty to deviate from the guidelines. 
Therefore, Florida citrus producers with CAT policies will be treated 
the same as CAT policyholders of other crops.
    Comment: One comment received from an insurance company stated that 
while they believed the rule change was required to bring the program 
in compliance with legislation, the change was made well after the 
April 15, 1995 contract change date, and thus it was inappropriate to 
implement it for the 1996 crop year.
    Response: FCIC's position is that CAT was implemented when the 
interim rules, Catastrophic Risk Protection Endorsement and Subpart T-
Regulations for Implementation, were published in the Federal Register 
on January 6, 1995. The Florida Citrus interim rule was a continuation 
of implementing CAT. Implementing legislation (the Act) takes 
precedence over a crop policy's contract change date.
    Comment: One comment received from an insurance company stated that 
the only changes allowable after the April 15, 1995 contract change 
date would be a liberalization which would benefit the policyholders, 
as described in section 11 of the General Provisions of the MPCI 
Policy. Furthermore a 500% increase in the CAT policy deductible does 
not qualify as a liberalization.
    Response: Implementing legislation takes precedence over a crop 
policy's contract change date. CAT insureds who sustain a complete loss 
of their Florida citrus can realize 100% of their CAT coverage, while 
under the previous loss calculation, based on 10% deductible, they 
would have received only 90% of their CAT coverage.

List of Subjects in 7 CFR Part 401

    Crop insurance, Florida citrus.

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 adopts as a final rule, the interim rule 
as published at 60 FR 29749 on June 6, 1995.

    Done in Washington, DC, on November 29, 1995.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 95-29570 Filed 12-4-95; 8:45 am]
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