[Federal Register Volume 61, Number 39 (Tuesday, February 27, 1996)]
[Rules and Regulations]
[Pages 7193-7206]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4411]



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 Rules and Regulations
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  Federal Register / Vol. 61, No. 39 /  Tuesday, February 27, 1996 / 
Rules and Regulations  

[[Page 7193]]


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: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (``FCIC'') hereby 
revises and makes final its regulations 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 
that, in most respects, is comparable to the catastrophic risk 
protection program offered to producers of insurable crops.

EFFECTIVE DATE: February 22, 1996.

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, Regulatory and Procedural Development Staff, U.S. 
Department of Agriculture, Washington, D.C. 20250. Telephone (202) 720-
0713.

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Departmental Regulation 1512-1

    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'').

Regulatory Impact Analysis

    A Regulatory Impact Analysis has been completed and is available to 
interested persons at the address listed above. In summary, the 
analysis finds that the final NAP rule incorporates three significant 
changes when compared with the interim rule. First, the final NAP rule 
defines an ``area'' for NAP triggering purposes as at least 320,000 
acres, at least $80 million crop value, or the county, as determined by 
the Manager, FCIC. The interim rule used only the 320,000-acre and $80 
million value mechanisms. Second, the final rule allows different types 
or varieties of a crop or commodity to be treated as separate eligible 
crops. Previously, all types and varieties were treated as a single 
eligible crop. Third, the interim rule only provided NAP coverage for 
seeded forage crops. The final rule expands NAP coverage to include 
both seeded and native forage, except on state and Federal lands where 
NAP coverage is restricted to seeded forage.
    Increasing the choices for defining NAP areas by adding a ``county-
level'' option, providing greater flexibility in the definition of a 
crop, providing coverage for both seeded and native forage, and 
including the retroactivity provisions will increase NAP outlays. Some 
offset is provided by language that requires a five-producer minimum in 
the definition of a NAP area. The expected annual outlays under these 
regulations are about $95 million to $145 million, averaging $120 
million. The cost associated with the forage issue depends on the 
future of the Livestock Feed Program, as discussed in the analysis.
    Although expected to result in higher Federal outlays, these 
changes are designed to improve the equity in NAP payments among 
growers. Experience in 1995 and interim rule comments indicate that 
various areas and crop types would not receive NAP payments under the 
interim rule, despite significant losses. In addition, some producers 
may not have received payments due to perils that were omitted from the 
crop insurance policy.
    The improvements in equity are associated with changes in 
administrative costs. Program administration will likely be easier for 
FSA offices with the county designation added to the list of area 
definition options. However, additional administrative costs will be 
associated with the determination of losses by crop type, as well as 
the determination of losses qualifying for payment due to NAP coverage 
of both seeded and native forage.

Paperwork Reduction Act of 1995

    This final rule amends the information collection requirements 
previously approved by OMB under OMB control number 0563-0016 through 
May 31, 1998. This rule increases the producer (respondent) audience 
participation due to increased availability for NAP assistance for 
seeded and native forage. This coverage excludes native forage on any 
federal or state owned lands, and any crops for which insurance is 
available in the county, that is affected by natural disaster and is 
not insurable under the producer's crop insurance policy. All of the 
forms cleared under OMB control number 0563-0016 represent the required 
forms to determine eligibility and losses qualifying for payment due to 
NAP coverage.
    Revised reporting estimates and requirements for usage of OMB 
control number 0563-0016 will be submitted to OMB for approval under 
the provisions of 44 U.S.C. 35. Public comments are due by April 22, 
1996.
    The title of this information collection is ``Noninsured Crop 
Disaster Assistance Program, Claim For Indemnity, Field Inspection And 
Appraisal Requirements.'' The information requested is required for 
proper administration of the Noninsured Crop Disaster Assistance 
Program. The burden for the NAP Program is reported on an as needed 
basis when disaster situations arise. The reporting burden for this 
collection of information is estimated to average 42 minutes per 
response for each of the 8.5 responses from approximately 15,172,500 
respondents. The total annual burden on the public for this information 
collection is 10,620,750 hours.
    The comment period for information collections under the Paperwork 
Act of 1995 continues through April 22, 1996. Comments are requested on 
the 

[[Page 7194]]
following aspects of the Information Collection: (a) Whether the 
proposed collection of information is necessary for the proper 
performance of the functions of the agency, including whether the 
information shall have practical utility; (b) the accuracy of the 
agency's estimate of the burden of the proposed collection of 
information; (c) ways to enhance the quality, utility, and clarity of 
the information to be collected; and (d) ways to minimize the burden of 
the collection of information on respondents, including through the use 
of automated collection techniques or other forms of information 
technology.
    Comments should be submitted to the Desk Officer for Agriculture, 
Office of Information and Regulatory Affairs, Office of Management and 
Budget (OMB), Washington, D.C. 20503 and to Bonnie Hart, Advisory and 
Corporate Operations Staff, Regulatory Review Group, Farm Service 
Agency, U.S. Department of Agriculture, Washington, D.C. 20250. Copies 
of the information collection may be obtained from Bonnie Hart at the 
above address. Telephone (202) 690-2857.

Executive Order 12612

    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.

Regulatory Flexibility Act

    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, 
determine the number of acres planted, and determine the 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.

Federal Assistance Program

    This program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.450.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372 which require intergovernmental consultation with state and local 
officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order 12778

    The Office of the General Counsel has determined that these 
regulations meet the applicable standards provided in sections 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 
published at 7 CFR part 780 and 7 CFR part 11, must be exhausted before 
any judicial action may be brought regarding the provisions of this 
regulation. The provisions of this rule that are not more restrictive 
than the interim rule will be effective retroactive to May 18, 1995, 
the date of publication of the interim rule. The provision in 
Sec. 404.13 regarding the requirement that an ``area'' consist of a 
minimum of five producers before it can be approved is not effective 
retroactively.

Environmental Evaluation

    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.

National Performance Review

    This regulatory action is being taken as part of the National 
Performance Review program to eliminate unnecessary or duplicative 
regulations and improve those that remain in force.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Pub. L. 
104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, FCIC 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, or tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. When such a statement is needed for a rule, section 205 of 
the UMRA generally requires FCIC to identify and consider a reasonable 
number of regulatory alternatives and adopt the least costly, more 
cost-effective or least burdensome alternative that achieves the 
objectives of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, and tribal 
governments or the private sector. Thus, this rule is not subject to 
the requirements of sections 202 and 205 of the UMRA.

Background

    On October 13, 1994, the Federal Crop Insurance Act was amended by 
the Federal Crop Insurance Reform Act of 1994 (``Act''). This 
regulation provides the provisions necessary to carry out the 
noninsured crop disaster assistance program (``NAP'') requirements of 
the Act. NAP replaces the Disaster Payment Program (7 CFR part 1477) 
and the Tree Assistance Program (7 CFR part 1478).
    On May 18, 1995, FCIC published an interim rule in the Federal 
Register at 60 FR 26669 to add provisions to implement NAP. Following 
publication of that interim rule, the public was afforded 60 days to 
submit written comments, data, and opinions. On August 7, 1995, FCIC 
extended the comment period for the NAP regulations to August 18, 1995 
(60 FR 40055). The comments received and FCIC responses are as follows:
    Comment: Sec. 404.5(b) Thirty-six comments received from state FSA 
offices recommended that section 404.5(b) be amended to allow the 
Administrator of FSA to review and approve or disapprove the state FSA 
committee recommendation of area eligibility.
    Response: The Act specifies that FCIC will make determinations of 
area eligibility. The provision will not be changed.
    Comment: Sec. 404.5(c) Thirty-six comments received from state FSA 
offices recommended that section 404.5(c) be amended to allow county 
and State FSA committees to establish yields and prices.
    Response: The Act specifies that FCIC shall establish yields and 
prices. The provision will not be changed.
    Comment: Sec. 404.7(e) Five comments, two from trade associations 
and three from other interested parties, were received suggesting that 
the definition of ``Aquacultural species'' contained in section 
404.7(e) be changed to allow aquaculture on lands that are not 

[[Page 7195]]
privately owned or in waters that are not a ``controlled environment.'' 
One comment from an interested party requested clarification of 
``private property in water in a controlled environment'' stating that 
fish are grown for human consumption in privately owned net pens 
(property) in sea water which is controlled by the net pens but owned 
by the nation or state. The state leases the bedlands under the cages 
to the private operator so that the cages can be set in place and 
moored. FCIC was urged to reconsider the proposed definition to 
explicitly allow caged fish and shellfish operations on state leased 
lands and waters.
    Response: The definition provides for coverage of aquaculture that 
is produced in a controlled aquacultural environment. A controlled 
environment may include net pens on leased lands provided that the 
lease vests in the lessee all the rights and benefits of ownership of 
the leased land and does not merely provide a license to gather the 
aquacultural species found in the pen. Therefore, the provision will 
not be changed.
    Comment: Sec. 404.7(e) Two comments were received, one from a state 
government office and one from a trade association, stating that the 
definition of ``Aquacultural species'' excludes ornamental fish and 
aquatic plant industries from the NAP. The state government official 
recommended that section 404.7(e) be changed to include nonfood farm-
raised fish and aquatic plants.
    Response: The Act limits NAP to crops produced for food or fiber. 
The provision will not be changed.
    Comment: Sec. 404.7(l) Four comments received from trade 
associations stated that many floricultural, nursery, turfgrass sod, 
and tree crops are produced in ``crop years'' ranging over several 
``calendar years.'' The trade associations suggested that the 
definition of ``crop year'' contained in section 404.7(l) be amended to 
clarify that losses occurring in a given calendar year will be covered 
even though the plant may not be harvested (or be ready to harvest) 
during that given year.
    Response: The definition has been modified to clarify and explain 
how crops produced over multiple calendar years will be eligible for 
NAP.
    Comment: Sec. 404.7(n) Four comments received from trade 
associations requested clarification of the definition of ``Eligible 
crop'' contained in section 404.7(n) which states in part that ``In the 
case of a crop that historically has multiple plantings in the same 
crop year that are planted or are prevented from being planted on the 
same or different acreage will be considered different crops for 
determining NAP payments. This does not apply to a replacement crop.'' 
The trade associations stated that it is their interpretation that this 
provision is to provide that a loss is ineligible for NAP coverage even 
if the grower harvests other plantings in the same year.
    Response: The definition has been modified to clarify that each 
planting of a crop with multiple plantings in the same crop year will 
be considered as a separate crop eligible for NAP payments.
    Comment: Sec. 404.7(p) One comment received from an USDA agency 
suggested that the definition of ``FCIC'' contained in section 404.7(p) 
be changed to reflect FCIC as a separate and distinct corporate entity.
    Response: By definition, FCIC is a separate and distinct corporate 
entity. Therefore, no change is required.
    Comment: Sec. 404.7(q) One comment received from a trade 
association suggested that the definition of ``good farming practices'' 
contained in section 404.7(q) be changed to include alternative farming 
practices and innovations that are supported by research or practice 
appropriate to the type of farming undertaken.
    Response: The definition allows alternative farming practices and 
innovations that are supported by data from the Cooperative State 
Research, Education, and Extension Service (CSREES). Therefore, no 
change is required.
    Comment: Sec. 404.7(r) and (ee) One comment was received from a 
state FSA office regarding the definitions for ``Harvested'' which 
excludes harvest by grazing except for ``Seeded pasture'' which is 
limited to ``an annual crop intended for use as grazing only by 
domestic animals,'' contained in sections 404.7(r) and 404.7(ee), 
respectively. The state FSA official expressed concern that these 
definitions exclude nearly all forage crops harvested by grazing. The 
state FSA official suggested that eligibility for noninsured crop 
disaster assistance be based on crop yields and losses, not the method 
of harvest, and that grazing not be excluded from the ``Harvest'' 
definition.
    Response: With respect to the definition of ``Harvested,'' the 
intent is to define the term to include only those means of removing 
the crop that result in costs being incurred by the producer. Section 
404.9(c) authorizes FCIC to reduce the NAP payment as a result of costs 
not incurred by the producer, such as harvesting. Because grazing does 
not result in a cost to the producer, it is not considered as 
``harvested''. With respect to the definition of ``Seeded pasture,'' 
FCIC has changed the term to ``Forage'' to include both seeded and 
native forage crops that are harvested or grazed. Grazed forage will be 
eligible for NAP payments at reduced rates. Forage is defined as land 
covered with grass or other vegetation, produced under such range 
management practices as are necessary to sustain sufficient quality and 
quantity of grass or vegetation each year to be suitable for grazing or 
mechanical harvest to feed livestock in a commercial operation. NAP 
coverage for forage on any Federal or state owned lands is restricted 
to seeded forage.
    Comment: Sec. 404.7(r) One comment received from a congressional 
office stated that the definition of ``Harvested'' contained in section 
404.7(r) is silent on disaster assistance to producers of crops that 
are harvested over multiple years and recommended a provision be added 
to embrace disaster assistance for crops harvested over multiple years.
    Response: The paragraph has been modified to clarify when crops 
produced and harvested over multiple years are considered harvested.
    Comment: Sec. 404.7(v) Two comments received from aquaculture 
producers recommended that the NAP provisions cover loss of fish due to 
storms causing low pressure and heaving, hot humidity; cloudy weather 
causing low oxygen; high temperatures causing loss of appetite; drought 
causing water evaporation and stale water; diseases; and failure of 
equipment or down power lines due to lightening, storms, or wind 
stopping the aeration of oxygen.
    Response: To qualify for NAP assistance, the Act provides that 
losses of the noninsured commodity be attributable to drought, flood, 
or other natural disaster, as determined by the Secretary. The 
definition of natural disaster has been modified to include eligible 
crop losses that may be attributable to damaging weather or adverse 
natural occurrences and related conditions.
    Comment: Sec. 404.7(y) Two comments were received regarding the 
definition of ``Prevented planting'' contained in section 404.7(y) as 
follows:
    (1) One comment received from a USDA state office requested 
clarification of the definition of ``Prevented planting'' contained in 
section 404.7(y) which states in part, ``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.'' The state government 
official suggested that section 404.7(y) be 

[[Page 7196]]
amended to specify whether a natural disaster that occurred in one year 
and carried over into the next year will receive NAP coverage.
    (2) One comment received from a trade association stated that the 
requirement that ``most producers in the surrounding area must have 
also been unable to plant the eligible crop in order for a producer to 
be eligible for a NAP payment'' may impose an additional requirement 
not supported by the Act especially when a producer is otherwise 
eligible for NAP benefits and can show that planting was not feasible 
due to a natural disaster. The trade association suggested that this 
requirement be deleted from the definition of ``Prevented planting.''
    Response: The definition has been modified to allow for the 
coverage of prevented planting when the cause of the prevented planting 
occurred after the final planting date of the previous crop year and 
before the final planting date of the crop year for which a NAP payment 
is requested. For crops with multiple plantings in 1 crop year, the 
cause of the prevented planting must occur after the planting of the 
previous planting period and before the final planting date of the 
current planting period. Further the paragraph has been amended to 
eliminate the requirement that most producers in the surrounding area 
must have also been unable to plant the eligible crop or other crops 
during the same planting period in order for a producer to be eligible 
for a prevented planting payment.
    Comment: Sec. 404.9(c) Five comments were received regarding 
section 404.9(c) which specifies that ``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'' as follows:
    (1) Four comments received from trade associations suggested 
section 404.9(c) be clarified by providing the criteria to be used in 
determining potential reductions in the NAP payment rate for costs not 
incurred by the producer as a result of the crop acreage being 
prevented from planting or planted but not harvested The trade 
associations also suggested that the regulations specify the person or 
office ultimately responsible for making the NAP payment rate reduction 
determinations as it relates specifically to specialty crops.
    (2) One comment received from a USDA agency suggested that the rule 
include specifics for calculating the adjustment in the NAP payment 
rate and that the method used be similar to those included in the 1994 
ad hoc disaster program.
    Response: The Act requires the development of a payment rate for a 
crop that is produced with a significant and variable harvesting 
expense that takes into consideration the stage of the crop at the time 
of loss; for example, not planted, planted but not harvested, or 
harvested. Because of all the variations that exist between crops, it 
is not possible to list all the factors that affect the costs 
associated with producing all crops. FCIC will approve all variable 
payment factors whether applicable to specialty or other crops. The 
method used in determining payments under the 1994 ad hoc disaster 
program will be taken into consideration.
    Comment: Sec. 404.11(a) Fifty-four comments, one from a 
congressional office, fourteen from producers, one from a trade 
association, one from a county FSA committee, one from a state FSA 
committee, and thirty-six from state FSA offices, were received 
requesting section 404.11(a) be changed to allow NAP benefits for seed 
crops, specifically grass, clover, alfalfa and legume seed crops and 
any other crop grown commercially for seed. The one comment received 
from the state FSA committee stated that legislation does not 
specifically exclude seed crops which are ultimately used for the 
production of crops for human consumption or livestock feed and, 
therefore, should be added to the list of crops eligible for NAP 
benefits.
    Response: The Act specifies that the term ``eligible crop'' will 
include each commercial crop or other agricultural commodity (except 
livestock) that is produced for food or fiber. Seed crops are not 
produced for food or fiber. Further, the Act specifically included the 
exceptions to the food or fiber requirement. Crops not specifically 
included in the exception are not eligible for NAP. The provision will 
not be changed.
    Comment: Sec. 404.11(a) One comment received from a producer 
suggested that section 404.11(a) be changed to allow NAP payments by 
crop type rather than treating as a single eligible crop all types and 
varieties of a crop. This producer stated that the farmer who raises 
several types of a crop, as opposed to a farmer who raises only one 
type, may not qualify for a NAP payment if one type does not meet the 
50 percent individual loss requirement. The producer also questioned 
whether crops such as tomatoes, basil, or flowers grown in a greenhouse 
would be eligible for NAP because pumpkins used for decoration are not 
covered by NAP, but flowers are, and whether indian corn, strawberry 
corn, or blue corn are eligible crops under the NAP. The producer 
recommended all crops and corn grown outside be eligible for NAP 
payment.
    Response: The paragraph has been revised to allow FCIC to treat 
different types and varieties of a crop or commodity as separate 
eligible crops provided they have significantly different prices or 
yields. The determination of whether a crop is eligible for NAP 
payments is not based on whether a crop is grown indoors or outdoors. 
The Act specified that crops grown for food or fiber, or included on 
the list of exceptions, are eligible regardless of where grown. This 
provision will not be changed.
    Comment: Sec. 404.11(a)(3) One comment received from a timber 
producer requested section 404.11(a)(3) be changed to include walnut 
trees planted for timber purposes as a crop eligible for NAP benefits.
    Response: FCIC cannot expand the list of crops eligible for NAP 
payments beyond those crops designated by the Act. The provision will 
not be changed.
    Comment: Sec. 404.11(a) One comment was received from a FSA 
district director regarding sections which specify that eligible crops 
are those crops grown for food and fiber and then lists additional 
crops such as floriculture, ornamental nursery crops, Christmas trees, 
turfgrass sod, and industrial crops as eligible crops for NAP benefits. 
The FSA district director suggested that all of the exceptions to the 
crops produced for food or fiber be deleted or the provisions be 
broadened to include all crops produced for commercial purposes.
    Response: The named crops, in addition to crops produced for food 
or fiber, are specified by the Act and, therefore, must be included. 
Further, the list of named crops cannot be expanded beyond those 
specified in the Act.
    Comment: Sec. 404.11(b)(3) One comment was received from a USDA 
agency regarding section 404.11(b)(3) which provides for NAP payments 
in the case of delayed plantings caused by a natural disaster. The USDA 
agency official states that since the Act provides ``that an eligible 
crop means each commercial crop or other agricultural commodity (except 
livestock) for which the Catastrophic Risk Protection (CAT) Plan of 
Insurance is not available, and that is produced for food or fiber,'' 
there are no statutory exceptions. The USDA agency official recommends 
that if a crop is insurable under CAT, there should be no exceptions to 
cover losses from delayed plantings for NAP crops.
    Response: The commentator may have misinterpreted the provision. A 
crop 

[[Page 7197]]
that is not insurable under CAT because the natural disaster causing 
the damage was not an insurable cause of loss under CAT may be covered 
for the natural disaster under NAP, provided that all the other 
eligibility requirements are satisfied.
    Comment: Sec. 404.11(b)(6) Four comments were received from trade 
associations requesting FCIC to clarify the exemption contained in 
section 404.11(b)(3). The trade associations stated that the Clean 
Water Act and the swampbuster provisions provide exemptions from many 
of the features of current wetlands policy that affect agriculture. 
Perennial specialty crops were excluded from exemption resulting in 
discrimination against a large segment of American agriculture without 
any environmental benefit or preservation of wetlands. To avoid a 
similar situation, the trade associations requested the FCIC to clarify 
the exemption contained in this section to ensure past problems are not 
repeated and that specialty crops are not inappropriately excluded from 
NAP benefits.
    Response: The regulations at section 12.5 of this title, 
incorporated into this rule by reference, contain the exceptions 
authorized by the Secretary for all USDA programs. It would be 
inappropriate for a clarification of section 12.5 to appear in this 
rule.
    Comment: Sec. 404.13 Sixty-three comments, fifteen from producers, 
three from trade associations, three from state government offices, two 
from congressional offices, one from a county FSA office, one from a 
county FSA committee, one from a state FSA committee, one from a 
district director, and thirty-six from state FSA offices, were received 
regarding section 404.13 which 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 and other interrelated 
provisions contained in section 404.19.
    (1) Fifteen comments received from producers, two from trade 
associations, three from state government offices, one from a 
congressional office, one from a county FSA office, one from a county 
FSA committee, one from a state FSA committee, one from a district 
director, and thirty-six from state FSA offices stated that the minimum 
area requirement (320,000 acres or $80 million value) contained in 
section 404.13 coupled with the 35 percent area-wide yield loss 
requirement contained in section 404.19(c) is excessively large.
    (2) One comment received from a producer recommended elimination of 
the area stating that if a small farm is wiped out by hail damage and 
the 35 percent area loss does not trigger, the farmer could possibly 
lose 100 percent of his crop with no compensation. One FSA district 
director stated that a producer would not be covered under the NAP for 
crop losses resulting from isolated storms such as hailstorms or 
thunderstorms. The FSA district director also stated that NAP 
discriminates against producers of noninsured crops because of the 
unavailability of insurance coverage in some states.
    (3) Thirty-six comments received from state FSA offices recommended 
elimination of the area if statutorily permissible. If not statutorily 
permissible, the state FSA offices recommended the county FSA committee 
with state FSA committee concurrence be given the authority to 
delineate an area (with no minimum acreage) based on the agriculture in 
the county and the natural disaster affected area. One of the state FSA 
offices recommended using certain towns in determining the disaster 
area and states and suggested that ``no disaster be smaller than a 
single town and none larger than where the disaster actually 
occurred.'' Another state FSA office stated that the 35 percent area 
loss requirement is not comparable to the catastrophic level of 
protection and recommended a smaller minimum area size or elimination 
of the area and reconsideration of the 35 percent area loss 
requirement.
    (4) One comment received from a producer recommended the regional 
FSA office define an area.
    (5) One comment received from a producer recommended that FSA 
committees decide if there is a payable loss.
    (6) Three comments received from state government officials, one 
from a county FSA office, and one from a state FSA committee 
recommended the area be modified to provide assistance to localized 
areas that cannot meet the minimum area and area eligibility 
requirements.
    (7) One comment received from a county FSA committee recommended 
the NAP be administered more like the CAT whereby eligibility is on an 
individual unit basis.
    (8) One comment received from a trade association stated that the 
current provisions for defining an ``area'' are too burdensome. The 
trade association suggested the ``area'' be defined as a county with 
added exceptions to address situations wherein part of one county and 
part of another county could constitute an ``area.''
    (9) One comment received from a congressional office stated that 
producers should not be denied coverage because an insufficient number 
of producers in the vicinity suffered similar losses. The comment 
suggested that section 404.13(d) be changed to allow eligibility for 
NAP benefits to be determined by local circumstances defined by the 
county FSA committee so as not to use acreage to deny NAP coverage for 
small diversified agricultural operations.
    Response: The Act requires the average yield in the ``area'' be 
reduced by at least 35 percent before a crop is eligible for NAP 
payments. An area cannot be defined as a farm or town and comply with 
the intent of NAP, which is to provide protection against widespread 
disasters, not individual losses. The requirement that there be an area 
affected by a disaster and the amount of loss cannot be changed 
administratively. However, in response to comments received, the 
provision will be amended for clarity and changed to include ``county'' 
as an option when defining the area. In order to maintain program 
consistency, FCIC will continue to determine the expected area yield, 
the approved yields, and approve the ``area'' designation. To ensure 
program integrity, this section is also being amended to require that 
an approved area within the United States consist of a minimum of five 
producers of crops for which the area is designated.
    Comment: Sec. 404.15(b) One comment received from a trade 
association suggested section 404.15(b) be expanded to include special 
yield determination examples for organic and nonorganic and sustainable 
and traditional farming practices.
    Response: FCIC is authorized to make yield adjustments based on 
different farming practices, which would include organic and 
nonorganic. Irrigated and nonirrigated are merely used as examples. 
However, the provision will be revised to avoid the perception that 
only irrigated and nonirrigated practices shall be considered.
    Comment: Sec. 404.15(d) One comment was received from a state 
government official regarding section 404.15(d) which states in part 
that ``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.'' The state government official states 
that to require the submission of 4 consecutive years production for 
producers who may have had a disaster in 2 consecutive years is not 
fair. The state government official recommended 

[[Page 7198]]
that section 404.15(d) be amended to allow a producer who has more than 
4 consecutive years of production records on noninsured crops to submit 
production records for any 4 of those years.
    Response: The Act requires that approved yields be based on the 
producers actual production history over a period of at least the 
previous 4 consecutive years of production records and not more than 10 
consecutive years of production records. Producers can only use 
assigned yields when records are not available. If the producer has had 
a disaster, production records will be available. Therefore, this 
provision will not be changed.
    Comment: Sec. 404.15(g) Three comments were received regarding 
section 404.15(g) as follows:
    (1) One comment received from a producer recommended section 
404.15(g) be amended to allow the FSA committee to determine the 
production records a producer must submit.
    (2) One comment received from a trade association recommended 
section 404.15(g) be amended to include some intent to defraud or 
deceive when assessing criminal and civil actions against the producer 
for failure to provide adequate records.
    (3) One comment was received from a state FSA committee 
recommending that section 404.15(g)(2) be changed to delete for use as 
adequate records ``contemporaneous measurements, truck scale tickets, 
contemporaneous diaries, etc.'' Justification for this change was that 
such production information is not an adequate record for use in yield 
determination, is not verifiable, and makes administering the program 
more difficult. The state FSA committee suggested that unless the 
producer can provide verifiable production evidence, this production 
information not be considered as an adequate record for use in yield 
determination.
    Response: Producers are not required to submit a specific type of 
record. The rule simply provides examples of record that may be 
considered acceptable to FCIC for the purposes of substantiating claims 
for NAP payments or yield certification. FCIC will consider all 
available sources of information including recommendations from county 
and state FSA committees; however, FCIC will make the determination as 
to whether the documentation provided is adequate. The applicable 
criminal and civil sanctions have an intentional or wilful requirement 
with respect to the providing of false or inaccurate information, 
including a false claim that records exist. In response to the 
comments, the paragraph has been revised to require the producers to 
submit records that are acceptable to FCIC. If the information is not 
reliable or verifiable, the records will not be considered acceptable. 
No other change to the provision will be made.
    Comment: Sec. 404.17(b)(6) One comment was received from a producer 
recommending section 404.17(b)(6) be changed to require the producer to 
report planting dates only for those crops planted after the final 
acreage reporting date and to allow the county FSA committee to 
determine whether a producer planted late.
    Response: It has been determined that if the acreage report does 
not contain a certification as to the date the crop being reported was 
planted, it will be difficult to determine if the crop was planted 
after the final acreage reporting date or final planting date 
established for insurance purposes. Information as to the date of 
planting should be readily available when the acreage report for the 
crop is filed. Accordingly, the paragraph is not changed.
    Comment: Sec. 404.17(b)(8) One comment was received from a producer 
recommending section 404.17(b)(8) be changed to allow a producer to 
prove yields at the application for NAP benefits date rather than at 
acreage reporting date.
    Response: Because NAP payments are based on the actual production 
history of the producer, it is necessary to require producers to 
annually report the acreage and production of crops. Further, such 
information will be used to develop insurance products for those crops 
for which insurance is currently not available. Producers unable to 
provide adequate documentation of their yield will have a yield 
assigned in accordance with section 519 of the Act.
    Comment: Two comments from trade associations were received 
regarding section 404.19(a). The comments are as follows:
    (1) One comment received from a trade association suggested section 
404.19(a) address the standards the Secretary will use in determining 
the natural disasters eligible for NAP payments. The trade association 
raises this issue in light of complaints that sustainable and 
alternative practices have been treated unfairly in the past.
    (2) One comment received from a trade association suggested section 
404.19(a)(3) address the standards that will be used to exclude NAP 
assistance for the failure of the producer to follow good farming 
practices. According to the trade association sustainable and 
alternative agricultural practices are frequently and erroneously 
labeled as not ``good farming practices'' simply because they may be 
different from the traditional approach in the area. The trade 
association suggested section 404.19(a)(3) provide specificity on this 
point and provide producers with guidance as to what evidence they 
should present in order to show that their alternative methods were 
appropriate.
    Response: The definition of ``natural disaster'' has been clarified 
to include both weather related and other natural occurrences or their 
consequences which may cause or accelerate the destruction or 
deterioration of a crop. Further, the definition of ``good farming 
practices'' allows alternative farming practices and innovations that 
are supported by data from the Cooperative State Research, Education, 
and Extension Service (CSREES). Therefore, a change is not required.
    Comment: Sec. 404.19(c)(1) Six comments, five from trade 
associations and one from a state FSA committee, were received 
regarding section 404.19(c)(1) which specifies that ``The quantity will 
not be reduced for any quality consideration unless a zero value is 
established.'' One trade association recommended section 404.19(c)(1) 
be changed to include quality adjustment for hay crops in the disaster 
calculation for NAP payment. Four trade associations recommended FCIC 
develop a more flexible approach that focuses on the value of the 
damaged but not ``dead'' crop and whether the crop will be marketable 
in the future at a reasonable price. The state FSA committee 
recommended the same quality loss guidelines provided under CAT be also 
available to producers under the NAP.
    Response: Many of the crops eligible for quality adjustments under 
the crop insurance program have generally accepted grades and standards 
upon which to base such adjustments. There are no such generally 
accepted grades and standards for most NAP crops. Therefore, no change 
is made.
    Comment: Seven comments, one from a state government official, one 
from a producer, one from a FSA district director, and four from trade 
associations, were received regarding section 404.19(c)(2). The 
comments are as follows:
    (1) One comment was received from a state government official 
regarding section 404.19(c)(2) which states that ``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.'' The state government 

[[Page 7199]]
official recommended the provision be changed to specify the percentage 
of guarantee that will be paid to a producer. The state government 
official suggested the guarantee be specified at a rate of not less 
than 65 percent for producers who are prevented entirely from planting 
a crop.
    (2) Two comments, one from a producer and one from an FSA district 
director, were received regarding section 404.19(c)(2)(A) which states 
that ``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.'' The producer requested FCIC reconsideration of this provision 
in light of crop rotations and the planting of other crops. The FSA 
district director stated the provision discriminates against producers 
of noninsured crops because a producer of an insured crop is not 
subject to this restriction.
    (3) Four comments were received from trade associations regarding 
section 404.19(2)(D)(i) which specifies that NAP payments for prevented 
planting will not be available for ``tree crops and other perennials.'' 
The trade associations stated it is arbitrary and capricious to exclude 
turfgrass sod, floricultural, and ornamental nursery crops as 
perennials ineligible for NAP prevented planting. Because many of these 
crops can be produced in a period ranging from a few months to several 
years, depending upon the area of the country and a wide variety of 
agronomic considerations, the trade associations suggested a more 
flexible approach be developed by FCIC.
    Response: Section 519(d)(1) of the Act limits the production 
eligible for payment to less than 50 percent of the producer's approved 
yield. Section 404.23 is added to specify how losses will be paid to 
producers eligible for prevented planting or reduced yield NAP 
payments. In Sec. 404.19, paragraphs (c)(2) (A), (B), and (C) have been 
deleted and acreage which was prevented from planting due to a natural 
disaster, and the producer can prove was intended to be planted, may be 
eligible for NAP payments. Tree crops and perennials may be eligible 
for prevented planting NAP payments provided the producer can prove 
adequate resources were available, or on order, to plant, grow, and 
harvest the crop, if applicable.
    Comment: Sec. 404.21(a). Two comments, one from a state FSA 
committee and one from a trade association were received regarding 
section 404.21(a) which specifies that ``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.'' The state FSA committee 
stated that the 15-day notification is too limiting and suggested the 
provision be changed to allow for a 30- or 45-day notification period. 
The trade association also stated that the 15-day notice of damage was 
too restrictive.
    Response: The time period for providing notice of loss is 
comparable to the insurance requirement and allows for timely 
inspection of the damaged crop, if necessary. Longer time periods may 
make it difficult to accurately assess the extent of the damage and 
prevent the producer from destroying the crop and putting the acreage 
to another use.
    Comment: Sec. 404.27(a). One comment received from a state 
government official suggested that section 404.27(a) be amended by 
replacing the words ``erroneously represented'' with the words 
``knowingly misrepresented''. Justification for this change was that 
the provision implies that a farmer who unwittingly benefited from 
another's action could face cruel and unduly harsh penalties due to 
acts of which he or she was totally unaware.
    Response: The paragraph has been clarified to replace ``erroneously 
represented'' with ``misrepresented.'' Further, the paragraph has been 
revised to require that producers ``knowingly'' adopt, participate, or 
benefit from a scheme or device to conform to the requirement of the 
Act.
    Comment: Sec. 404.27(c)(2). One comment received from a trade 
association suggested section 404.27(c)(2) be amended to include the 
``knowing'' or ``intentional'' submission of false information.
    Response: Since section 404.27(a) has already been revised to 
require a ``knowing'' adoption, participation, or benefiting from the 
scheme or device, a change is not required here.
    Comment: Sec. 404.29(a). One comment received by a trade 
association suggested section 404.29(a) include a provision to provide 
for refund of monies by the producer as a result of an FCIC error and 
that such provision not require the producer to pay interest or pay the 
money back ``on demand.'' The trade association suggested that after a 
set period of time FCIC should not be allowed to recompute and correct 
its own mistakes and should within that set period of time establish an 
equitable repayment schedule agreed upon by the parties involved.
    Response: There is a statute of limitation that governs the period 
within which FCIC can bring an action to recover funds that are owed to 
it. Further, since NAP is a government funded program, payments cannot 
be made or retained that are not authorized by law.
    Comment: Sec. 404.33. Two comments, one from a state government 
official and one from a trade association, were received regarding 
section 404.33 as follows:
    (1) One comment from a state government official suggested that 
this section be amended by removing the words ``The appeal, 
reconsideration, or review of all determinations made under this part . 
. .'' and inserting in its place the words ``Any determination made by 
the agency, which the producer believes to be adverse to his or her 
participation in the program, can be appealed, reconsidered, or 
reviewed by the agency.'' The state government official also suggested 
that the words ``must be in accordance with part 780 of this title or 
the regulations promulgated by the National Appeals Division, whichever 
is applicable'' be replaced with a new paragraph to read as follows:
    ``All appeals will be heard under the new regulations that are 
published for the National Appeals Division, including the right of a 
producer to participate in mediation with the agency. If the appeal is 
in a state with a certified mediation program, then the agency must 
notify the producer in writing, of his or her right to mediation.''
    (2) One comment received from a trade association suggested this 
section include appeal rights through the National Appeals Division on 
whether the designation of an area is appealable. The trade association 
also suggested that these regulations provide more specific guidance in 
keeping with the National Appeals Division regulations particularly 
notice provisions, timeframes, and any informal appeal options.
    Response: Since the National Appeals Division has specific 
jurisdictional requirements, no change is necessary. Further, the Act 
requires that informal appeal processes in effect on the date of its 
enactment remain in effect and producers are provided their choice of 
forums. Mediation is available under 7 CFR part 780. Rules of general 
applicability are not appealable and the area designation is a rule of 
general applicability. Since the notice, timeframe, and informal appeal 
options 

[[Page 7200]]
are specifically stated in the referenced part and regulation, it would 
be redundant to include them here.
    Comment: One comment received from an USDA agency recommended that 
participation in the NAP be linked to other price support, production 
adjustment, conservation programs, and the CAT program. Justification 
for this change was to provide equitable treatment to all producers and 
to be consistent with the Act which requires the FCIC to establish a 
NAP program to provide coverage equivalent to the CAT program.
    Response: The Agency determined that it would not require linkage 
between CAT and NAP unless specifically required by the Act.
    Comment: One comment received from a USDA agency recommended an 
administrative fee similar to the CAT program be charged producers 
prior to the time they receive benefits under the NAP. Justification 
for this charge was to ensure fair and equitable treatment of all 
producers and to help cover administrative costs for delivering the 
program.
    Response: The comment cannot be implemented because the Act does 
not authorize collection of fees from NAP producers.
    Comment: One comment received from a USDA agency suggested that a 
producer should have a history of growing the crop in order to receive 
NAP benefits. Justification for this change was to ensure that a 
producer has the knowledge, expertise, and intent to produce the crop.
    Response: This suggestion would have the affect of penalizing new 
producers. FSA's operating procedure delegates to the county committees 
the responsibility of determining that good farming practices were used 
in producing the crop. If good farming practices were not used or the 
producer cannot prove that a crop was intended for planting, the 
producer is ineligible for NAP payments.
    Comment: One comment received from a USDA agency recommended limits 
be placed on producers from receiving NAP benefits on acreages that 
substantially increased over the previous year's planting. 
Justification for this change was to help prevent producers from 
significantly expanding planted acres on certain crops on the basis of 
the NAP benefits available.
    Response: The Act does not provide for limiting NAP benefits if a 
producer increases acreage of a crop. The Act only limits the use of 
assigned yields when the crop acreage in the county has significantly 
increased from previous years.
    Comment: One comment received from a trade association stated that 
since producers must file annual acreage reports it is imperative that 
they be notified on the availability of NAP. The trade association 
suggested post-disaster sign-up for the first few years of this 
program.
    Response: The Act requires producers to annually provide records of 
previous years acreage, yield, and production. Further, producers are 
required to file acreage reports showing the current crop years planted 
and prevented planted acreage. These requirements cannot be changed. 
Under the Act, producers are not required to submit an application for 
payment until the application deadline, which occurs after the loss has 
occurred.
    With the exception of a few minor editorial or technical 
corrections, other changes made by FCIC are as follows:
    (1) Removed the reference to the definitions for actual yield, 
adjusted yield, and replacement crop at Sec. 404.7(b), (c), and (dd) 
because those terms are not relevant to this program;
    (2) Removed the reference to the definition for master yield at 
Sec. 404.7(u) because there are no master yields under NAP;
    (3) Added a definition for CAT, FSA, NASS; and NAP in Sec. 404.7 
for clarity;
    (4) Added a definition for ornamental nursery crop at Sec. 404.7 to 
clarify which nursery crops are covered;
    (5) Added a provision to Sec. 404.11 which makes NAP assistance 
available for any crop for which insurance is available in the county, 
that is affected by natural disaster that is not insurable under the 
producer's crop insurance policy for clarity even though such coverage 
was available under the interim rule;
    (6) Revised Sec. 404.13 for clarity, added ``county'' as an option 
for area designations, and require a minimum number of producers for 
NAP areas within the United States;
    (7) Added Sec. 404.23 to clarify how NAP payments are calculated 
and redesignated the remaining sections accordingly.
    Good cause is shown to make this rule effective upon public filing 
with the Federal Register, and without the 30-day period required by 
the Administrative Procedure Act. The interim rule implemented the NAP 
requirements mandated by the amendments to the Federal Crop Insurance 
Act by the Federal Crop Insurance Reform Act of 1994. This final rule 
needs expedited implementation in order to facilitate the processing of 
pending applications for NAP benefits. Therefore, good cause is shown 
to make this rule effective in less than 30 days after publication.

List of Subjects in 7 CFR Part 404

    Agricultural commodities, Disaster assistance, Reporting and 
recordkeeping requirements.

Final Rule

    Accordingly, 7 CFR Part 404 is revised 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  Payments for reduced yield and prevented planting.
404.25  Multiple benefits.
404.27  Payment and income limitations.
404.29  Misrepresentation, scheme and device, and fraud.
404.31  Refunds to the Corporation.
404.33  Cumulative liability.
404.35  Appeals.
404.37  Exemption from levy.
404.39  Estates, trusts, and minors.
404.41  Death, incompetence, or disappearance.
404.43  OMB control numbers.

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


Sec. 404.1  General statement.

    The Federal Crop Insurance Act, as amended by the Federal Crop 
Insurance Reform Act of 1994, requires the Federal Crop Insurance 
Corporation to implement a noninsured crop disaster assistance program 
to provide eligible producers of eligible crops with protection 
comparable to the catastrophic risk protection plan of crop insurance. 
NAP is designed to help reduce production risks faced by producers of 
crops for which Federal crop insurance under the Act is not available. 
NAP will reduce financial losses that occur when natural disasters 
cause a catastrophic loss of production or prevented planting of an 
eligible crop. Payment eligibility is based on an expected yield for 
the area and the producer's approved yield based on actual production 
history, or a transitional yield if sufficient production records are 
not available. Production for both the applicable area expected yield 
and the individual 

[[Page 7201]]
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, acreage, or cause of loss for 
which CAT 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 Farm Service Agency, or other 
local USDA offices as designated by FCIC.
    (b) The state FSA 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 must be approved by 
FCIC.
    (c) FCIC will determine all yields and prices under this part.
    (d) No delegation herein to a state or county FSA 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 FSA committee.


Sec. 404.7  Definitions.

    Act--The Federal Crop Insurance Act as amended. (7 U.S.C. 1501 et 
seq.)
    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       
------------------------------------------------------------------------

    APH--Actual production history.
    Approved yield--An APH yield calculated and approved by FCIC, used 
to determine any NAP payment in accordance with 7 CFR part 400, subpart 
G.
    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.
    Area--The geographic region recommended by the state FSA committee, 
and approved by FCIC in accordance with Sec. 404.13, where a natural 
disaster has occurred which may qualify producers in the area for NAP 
payments.
    Assigned yield--A yield assigned for a crop year in the base 
period, in accordance with 7 CFR part 400, subpart G, if the producer 
does not file an acceptable production report by the production 
reporting date.
    Average market price--The price, or dollar equivalent on an 
appropriate basis; for example, pound, bushel, ton, 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.
    CAT--A catastrophic risk protection plan of insurance offered by 
FCIC authorized under section 508(b) of the Act and 7 CFR part 402.
    CCC--The Commodity Credit Corporation.
    County expected yield--The eligible crop yield established by the 
State FSA committee and approved by FCIC for the county. Such yield 
information may be obtained from NASS, CSREES, credible nongovernmental 
studies, yields in similar areas, and similar reference material. For 
planted annual crops, such yield will be based on the acreage planted 
for harvest.
    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. For crops harvested over two calendar years, the 
crop year will be the calendar year in which the majority of the crop 
would have been harvested. For crops grown over more than two calendar 
years, each year in the growing period will be considered as a separate 
crop year designated by the calendar year in which the crop sustained a 
loss. For crops for which CAT is available, the crop year will be as 
defined by CAT.
    CSREES--The Cooperative State Research, Education, and Extension 
Service.
    Eligible crop--An agricultural commodity for which CAT is not 
available and which is commercially produced for food or fiber as 
specified in this part. Eligible crop shall also include floricultural, 
ornamental nursery, and Christmas tree crops, turfgrass sod, and 
industrial crops. In the case of a crop that historically has multiple 
plantings in the same crop year that are planted or are prevented from 
being planted, each planting may be considered a different crop for 
determining NAP payments. In the case of a crop that has different 
varieties or types, each variety or type may be considered a separate 
crop for determining NAP payments, if FCIC determines there is a 
significant difference in price or yield between the varieties or 
types.
    Expected area yield--The eligible crop yield established and 
approved by FCIC for the geographic area.
    Forage--Land covered with grass or other vegetation, produced under 
such range management practices as are necessary to sustain sufficient 
quality and quantity of grass or vegetation each year to be suitable 
for grazing or mechanical harvest to feed livestock in a commercial 
operation. NAP benefits for forage produced on any Federal or state 
owned lands are available only for seeded forage.
    FCIC--The Federal Crop Insurance Corporation, a wholly owned 
Government corporation within the Farm Service Agency (FSA), United 
States Department of Agriculture.
    FSA--Formerly the Consolidated Farm Service Agency; now the Farm 
Service Agency of the United States Department of Agriculture.
    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.
    Harvested--A single harvest crop is considered harvested when the 
producer has, by hand or mechanically, removed the crop from the field. 
Crops with multiple harvests in one year or harvested over multiple 
years are considered harvested when the producer has, by hand or 
mechanically, removed at least one mature crop 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 for 

[[Page 7202]]
the purpose of determining a payment rate factor.)
    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.
    Local office--The FSA office or other USDA office designated by 
FCIC.
    NASS--The National Agricultural Statistics Service, an agency of 
the United States Department of Agriculture.
    Native forage--Grass or other vegetation occurring naturally 
without seeding.
    Natural disaster--Means damaging weather, including but not limited 
to drought, hail, excessive moisture, freeze, tornado, hurricane, 
excessive wind, or any combination thereof; or adverse natural 
occurrence such as earthquake, flood, or volcanic eruption; or related 
condition, including but not limited to heat, insect infestation, or 
disease, which occurs as a result of an adverse natural occurrence or 
damaging weather occurring prior to or during harvest that directly 
causes, accelerates, or exacerbates the destruction or deterioration of 
an eligible crop, as determined by the Secretary.
    NAP--The noninsured crop disaster assistance program.
    Operator--The person who is in general control of the farming 
operation on the farm during the crop year.
    Ornamental nursery crop--A decorative plant grown in a container or 
controlled environment for commercial sale.
    Person--A person as defined in 7 CFR part 1497, subpart B.
    Prevented planting--The inability to plant a crop with proper 
equipment during the planting period for the crop or commodity. A 
producer must prove that the producer intended to plant the eligible 
crop and that such crop could not be planted due to natural disaster 
reasonably related to the basis for the area designation under 
Sec. 404.13, as determined by the FCIC Manager. The natural disaster 
that caused the prevented planting must have occurred after the final 
planting date for the previous crop year and before the final planting 
date for the crop year in which a request for NAP payment was made. For 
crops with multiple plantings in a single crop year and one crop has 
been harvested, the natural disaster must occur, after the harvest of 
the harvested crop and before the end of the planting period for the 
next planting of the crop.
    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.
    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 FCIC 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. 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.
    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.
    Reseeded or replanted crop--The same crop planted on the same 
acreage after the first planting of the crop has failed.
    Seeded forage--Acreage which is mechanically seeded with grasses or 
other vegetation at regular intervals, at least every 7 years, in 
accordance with good farming practices.
    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.
    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. (See APH).
    Unit--For the noninsured crop disaster assistance program, all 
acreage of the eligible crop in the county for the crop year:
    (1) In which the person has 100 percent 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 50 percent of the producer's approved yield for the 
eligible crop payable at 60 percent 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 50 
percent of the producer's approved yield for the eligible crop payable 
at 55 percent 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.
    (e) Each producer's NAP payment will be based on the producer's 
share of the eligible crop.


Sec. 404.11  Eligibility.

    Eligible crops under this part will be any commercial agricultural 
crop, commodity, or acreage of a commodity grown for food or fiber for 
which CAT is not available under 7 CFR part 402 unless excluded by 
paragraph (b) of this section. Different types or varieties of a crop 
or commodity may be treated as a separate eligible crop, if FCIC 
determines there is a significant difference in price or yield.
    (a) NAP payments will be made available for:
    (1) Any commercial crop grown for food;
    (2) Any commercial crop planted and grown for livestock 
consumption, 

[[Page 7203]]
including but not limited to grain and forage crops;
    (3) Any commercial crop grown for fiber, excluding trees grown for 
wood, paper, or pulp products;
    (4) Any commercially produced aquacultural species;
    (5) Floriculture crops;
    (6) Ornamental nursery crops;
    (7) Christmas tree crops;
    (8) Turfgrass sod;
    (9) Industrial crops; and
    (10) Any crop, for which crop insurance under the Act is available 
in the county, that is affected by a natural disaster that is not 
insurable under the producer's crop insurance policy.
    (b) NAP payments will not be available:
    (1) For losses of livestock or their by-products;
    (2) To any person who has qualifying gross revenues in excess of $2 
million;
    (3) For any acreage in any area for any crop for which CAT is 
available, unless the loss was caused by a natural disaster that is not 
covered under CAT and all other eligibility requirements for NAP are 
satisfied;
    (4) To any person who, in accordance with chapter VII of 7 CFR and 
section 1764 of the Food Security Act of 1985, has been convicted under 
Federal or state law of planting, cultivating, growing, producing, 
harvesting or storing a controlled substance in any applicable 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.

    (a) For the purposes of this part, acreage affected by a natural 
disaster, or any adjustment thereto, will be included in the area 
recommended by the state FSA committee and submitted to FCIC for 
approval, regardless of whether the commodity produced on the affected 
acreage suffered a loss.
    (b) Except for eligible areas identified in paragraph (f) of this 
section, an approved area shall include at least five producers of 
crops on separate and distinct farms for which the area has been 
approved for the payment of NAP benefits. Notwithstanding this 
provision, FCIC may approve an area having fewer than five producers if 
the Manager determines that such area will suffer significant economic 
consequences as a result of the disaster.
    (c) An area may be designated as follows:
    (1) A county;
    (2) Aggregated acreage that is at least 320,000 acres; or
    (3) Aggregated acreage with not less than $80 million average value 
for all crops produced annually.
    (d) If the aggregated acreage affected by the natural disaster does 
not meet the minimum requirement specified in paragraph (c)(2) or (3) 
of this section, the aggregated acreage will be expanded by adding 
acres from around the affected acreage, until the minimum requirement 
is met.
    (e) The area may not be defined in any manner that intentionally 
includes or excludes producers or crops.
    (f) In lieu of the paragraph (a) and (c) of this section, for 
eligible areas outside the United States, the area shall include 10 or 
more producers of the crop. Notwithstanding this provision, FCIC may 
approve an area outside the 50 United States having fewer than 10 
producers of the crop for which the area is requested if the Manager 
determines that such area will suffer significant economic consequences 
as a result of the disaster.


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 approved yield data. For planted annual crops, such 
yields will be based on the acreage planted for harvest.
    (b) FCIC may make county yield adjustments taking into 
consideration different yield variations due to different farming 
practices in the county such as: irrigated, nonirrigated, organic, 
nonorganic; different types and varieties of a crop; and intended use.
    (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; or
    (2) If the approved area encompasses portions of a county 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:
    (i) The cultural practices, including the age of the planting or 
plantings, are different from those used to establish the yield.
    (ii) 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, as established by FCIC, reported and 
certified of that producer for that eligible crop.
    (f) If a producer receives an assigned yield for a year of natural 
disaster because production records were not submitted by the 
production reporting deadline, the producer will be ineligible to 
receive an assigned yield for the year of the next natural disaster 
unless adequate production records for the eligible crop from the 
previous one or more years, as applicable, 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 on a random or targeted 
basis and require those selected to provide records acceptable to FCIC 
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 certification must be supported by records acceptable 
to FCIC. Failure to produce records acceptable to FCIC will result in 
FCIC establishing the yield in accordance with APH and 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 

[[Page 7204]]
out at 7 CFR part 400, subpart R may be imposed for false 
certification. Records acceptable to FCIC 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 provided the records are 
reliable or verifiable; 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, and contemporaneous diaries, provided the records are reliable 
or verifiable.
    (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 NAP payments are 
being sought.
    (ii) 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 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 FSA county executive director, with concurrence of the FSA 
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 FCIC 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 all of the following 
information:
    (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 FSA farm serial numbers;
    (4) The crop, practice, and intended use;
    (5) All persons sharing in the crop (including 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, if the person wishes to receive any 
payment under the Act);
    (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 may 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 30 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 a natural disaster as 
defined at Sec. 404.7.
    (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, if an easement exists on the acreage 
affected for the containment or release of the water;
    (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 65 percent of the expected area yield. Once this area, 
and all other, eligibility requirements have 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 50 percent of the approved yield for 
the crop due to natural disaster reasonably related to the basis for 
the area designation under Sec. 404.13, as determined by the FCIC 
Manager, factored for the share of the producer for the crop. 
Production from the entire unit will be used to determine whether the 
producer qualifies for a NAP payment. 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 35 percent of the total eligible 
acreage intended for planting to the eligible crop. Producers must have 
intended to plant the crop and prove that they were prevented from 
planting the crop due to natural disaster reasonably related to the 
basis for the area designation under Sec. 404.13 and the producer may 
be required to prove that such producer had the resources available to 
plant, grow, and harvest the crop, as applicable.
    (d) NAP payments for prevented planting will not be available for:
    (1) Tree crops and other perennials, unless the producer can prove 
resources were available to plant, grow, and harvest the crop, as 
applicable;
    (2) Land which planting history or conservation plans indicate 
would remain fallow for crop rotation purposes; or
    (3) Land used for conservation purposes or intended to be or 
considered to have been left unplanted under any program administered 
by USDA.


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 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 recognizable damage to the crop. 
For the 1995 crop year only, the notice must be filed within the later 
of July 3, 1995, 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 

[[Page 7205]]
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 first acreage 
reporting date for the crop in the crop year immediately following the 
crop year in which the loss occurred.
    (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 an 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) Payments 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  Payments for reduced yields and prevented planting.

    In the event that the area loss requirement has been satisfied for 
the crop and either:
    (a) The producer has sustained a loss in yield in excess of 50 
percent of the producer's approved yield established for the crop the 
NAP low yield payment will be determined by:
    (1) Multiplying the producer's approved yield by the total eligible 
acreage planted to the eligible crop;
    (2) Multiplying the product of paragraph (a)(1) of this section by 
50 percent;
    (3) Subtracting the total production from the total eligible 
acreage from the result in paragraph (a)(2) of this section;
    (4) Multiplying the product of paragraph (a)(3) of this section by 
the producer's share of the eligible crop;
    (5) Multiplying the result of paragraph (a)(4) of this section by 
the applicable payment factor in accordance with Sec. 404.9(c);
    (6) Multiplying the result in paragraph (a)(5) of this section by :
    (i) For the 1995 through 1998 crop years, 60 percent of the average 
market price, as determined by FCIC, or any comparable coverage, as 
determined by FCIC: or
    (ii) For the 1999 and subsequent years, 55 percent of the average 
market price, as determined by FCIC, or any comparable coverage, as 
determined by FCIC; or
    (b) The producer has been unable to plant at least 35 percent of 
the acreage intended for the eligible crop, the NAP payment will be 
determined by:
    (1) Multiplying the producer's acreage intended to be planted to 
the eligible crop by 35 percent;
    (2) Subtracting the result in (b)(1) of this section from the 
number of eligible prevented planting acres as determined in 
Sec. 404.19 (c) (2);
    (3) Multiplying the result of (b)(2) of this section by the 
producer's share of the eligible crop;
    (4) Multiplying the producer's approved yield by the result of 
(b)(3) of this section;
    (5) Multiplying the result of (b)(4) of this section by the 
approved prevented planting payment factor in accordance with 
Sec. 404.9(c);
    (6) Multiplying the result of (b)(5) of this section by:
    (i) For the 1995 through 1998 crop years, 60 percent of the average 
market price, as determined by FCIC, or any comparable coverage, as 
determined by FCIC: or
    (ii) For the 1999 and subsequent years, 55 percent of the average 
market price, as determined by FCIC, or any comparable coverage, as 
determined by FCIC.


Sec. 404.25  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. 404.27  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 for a crop year 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 is approved 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. 404.29  Misrepresentation, scheme and device, and fraud.

    (a) If FCIC determines that any producer has misrepresented any 
fact or has knowingly adopted, participated in, or benefitted 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 or administrative 
sanctions as authorized by section 506(n) of the Federal Crop Insurance 
Act, as amended 

[[Page 7206]]
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 
FSA committee; or
    (3) Creating fictitious entities for the purpose of concealing the 
interest of a person in the farming operation.


Sec. 404.31  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 
Sec. 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. 404.33  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 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 on the unit receiving payments under this part 
will be jointly and severally liable to repay any unearned NAP 
payments.


Sec. 404.35  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.


Sec. 404.37  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. 404.39  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. 404.41  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. 404.43  OMB control numbers.

    These regulations amend the information collection requirements 
previously approved by the Office of Management and Budget (``OMB'') 
under OMB control number 0563-0016.

    Done in Washington, D.C., on February 22, 1996.
Suzette M. Dittrich,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-4411 Filed 2-22-96; 3:00 pm]
BILLING CODE 3410-FA-P