[Federal Register Volume 61, Number 145 (Friday, July 26, 1996)]
[Rules and Regulations]
[Pages 39048-39050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18616]


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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation.

7 CFR Part 401

RIN 0563-AB60


General Crop Insurance Regulations, General Crop Insurance Policy

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Interim rule and request for comments.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) amends the 
General Crop Insurance Regulations, General Crop Insurance Policy 
located at 7 CFR part 401. The intended effect of this interim rule is 
to remove restrictions mandated by the Food Security Act of

[[Page 39049]]

1985 that preclude eligibility for crop insurance for any person who in 
any crop year produces an agricultural commodity on a field which is 
classified as predominantly highly erodible land (sodbuster provision) 
or converted wetland (swampbuster provision). The Federal Agriculture 
Improvement and Reform Act of 1996 (the 1996 Act) amends the crop 
insurance restrictions, so producers who are in violation of the 
sodbuster/swampbuster provisions will be eligible for crop insurance 
coverage on or after July 3, 1996.

DATES: Effective date: July 3, 1996.
    Comment date. Written comments, data, and opinions on this rule 
will be accepted until close of business September 23, 1996.

ADDRESSES: Interested persons are invited to submit written comments to 
the Chief, Product Development Branch, Federal Crop Insurance 
Corporation, United States Department of Agriculture (USDA), 9435 
Holmes Road, Kansas City, MO 64131. Written comments will be available 
for public inspection and copying in room 0324, South Building, USDA, 
14th and Independence Avenue, SW., Washington, DC, 8:15 a.m.-4:45 p.m., 
Monday through Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: Stephen Hoy, Program Analyst, Research 
and Development Division, Product Development Branch, FCIC, at the 
Kansas City, MO, address listed above, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866 and Departmental Regulation 1512-1

    This action has been reviewed under USDA procedures established by 
Executive Order No. 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 June 30, 2001.
    This rule has been determined to be significant for the purposes of 
Executive Order No. 12866 and therefore has been reviewed by the Office 
of Management and Budget (OMB).

Cost-Benefit Analysis

    A Cost-Benefit Analysis has been completed and is available to 
interested persons at the address listed above. In summary, the 
analysis finds that the removal of sanctions affecting a producer's 
eligibility for Federal crop insurance as specified in the sodbuster 
and swampbuster provisions will result in two types of costs. First, 
environmental costs, in some cases, will be incurred as the elimination 
of crop insurance from the list of denied benefits reduces the 
sanctions associated with violating sodbuster/swampbuster provisions. 
Second, if acres affected by the sodbuster/swampbuster provisions are 
increasingly planted and insured, the costs to the Federal Crop 
Insurance Corporation will rise. The environmental and Federal costs 
associated with elimination of crop insurance as a sodbuster/
swampbuster sanction are, however, largely unknown.
    Environmental costs will depend on the extent farmers produce 
insurable crops (or alter practices or structures) on sodbuster/
swampbuster acreage when such activity would not otherwise occur. Many 
variables will affect a producer's decision, including the amount of 
land affected by sodbuster/swampbuster relative to the producer's total 
acreage receiving benefits, expected prices and yields, the loss of 
USDA benefits (other than crop insurance), expected crop insurance 
benefits, and the expected environmental impact.
    Federal costs associated with the elimination of crop insurance as 
a sodbuster/swampbuster sanction are unknown because the number of 
producers who will violate sodbuster/swampbuster provisions, and insure 
crops produced on their farms, is impossible to judge. The actual 
realized cost will depend to a large extent on FCIC's appropriately 
rating sodbuster and swampbuster acreage that is planted and insured. 
Between $500,000 and $1 million in crop insurance benefits were denied 
annually due to sodbuster/swampbuster violations in recent years. 
Benefits of a similar magnitude to the recent denials will probably be 
paid in future years.

Paperwork Reduction Act of 1995

    In accordance with the Paperwork Reduction Act of 1995, the 
information collection requirements contained in these regulations have 
been previously approved by OMB control numbers 0563-0003, 0563-0016 
and 0560-0004. Copies of the information collections may be obtained 
from Bonnie Hart, USDA, FSA, Advisory and Corporate Operations Staff, 
Regulatory Review Group, P.O. Box 2415, Ag Box 0572, Washington, D.C. 
20013-2415, 8:15 a.m.-4:45 p.m., Monday through Friday, except 
holidays, telephone (202) 690-2857.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Public 
Law 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 of State, local, or tribal governments, in the 
aggregate, or to the private sector, of $100 million or more in any 
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.

Executive Order No. 12612

    It has been determined under section 6(a) of Executive Order No. 
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. Under the current regulations, a producer is 
required to complete a crop insurance acreage report, an insurance 
application and a continuous contract. If the crop is damaged or 
destroyed, the insured is required to give notice of loss and provide 
the necessary information to complete a claim for indemnity. The 
insured may use actual records of production or receive a transitional 
yield which does not require the maintenance of production records. If 
the insured elects to use actual records of acreage and production as 
the basis for the production guarantee, the insured must report this 
information on a yearly basis. This regulation does not alter those 
requirements. Therefore, the amount of work required of the

[[Page 39050]]

insurance companies and Farm Service Agency (FSA) offices delivering 
and servicing these policies will not increase from the amount of work 
currently required. This rule does not have any greater or lesser 
impact on the producer. Therefore, this action is determined to be 
exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 
605), and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

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

Executive Order No. 12372

    This program is not subject to the provisions of Executive Order 
No. 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 No. 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 No. 12778. The provisions of this rule will 
not have a retroactive effect prior to the effective date. 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 in 7 CFR parts 11 and 780 must be exhausted before 
any action for judicial review may be brought.

Environmental Evaluation

    This action is not expected to have a significant impact on the 
quality of the human environment, health, and safety. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is needed.

Background

    This final rule amends section 2(j) in the General Crop Insurance 
Policy (7 CFR 401.8) as mandated by the Federal Agriculture Improvement 
and Reform Act of 1996. The 1996 Act removes the sodbuster/swampbuster 
restrictions of Title XII of the Food Security Act of 1985 (Public Law 
99-198) which preclude eligibility for crop insurance under the Federal 
Crop Insurance Act (7 U.S.C. 1501 et seq.), to any person who in any 
crop year produces an agricultural commodity on highly erodible land or 
converted wetland. On or after of July 3, 1996, a person who produces 
an agricultural commodity on a field which is classified as 
predominantly highly erodible land or a converted wetland may apply for 
crop insurance if the sales closing date for the crop has not passed. 
Until the effective date, crop insurance policyholders must remain in 
compliance with the sodbuster/swampbuster provisions. Since these 
provisions are mandated by statute and planting decisions for the 1996 
crop year have been or will shortly be made, it is impracticle and 
contrary to the public interest to publish this rule for notice and 
comment prior to making the rule effective. However, comments are 
solicited for 60 days after the date of filing with the Federal 
Register and will be considered by FCIC before this rule is made final.

List of Subjects in 7 CFR Part 401

    Crop insurance, General crop insurance policy.

Final Rule

    Pursuant to the authority contained in the Federal Crop Insurance 
Act, as amended (7 U.S.C. 1501 et seq.), the Federal Crop Insurance 
Corporation hereby amends the General Crop Insurance Policy in 7 CFR 
part 401, effective July 3, 1996, to read as follows:

PART 401--[AMENDED]

    1. The authority citation for 7 CFR part 401 continues to read as 
follows:

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

    2. 7 CFR part 401.8 is amended by revising section 2j. of the 
General Crop Insurance Policy to read as follows:


Sec. 401.8  The application and policy.

* * * * *
General Crop Insurance Policy
* * * * *
    2. Crop, Acreage, and Share Insured
* * * * *
    j. Although your violation of a number of federal statutes 
including the Federal Crop Insurance Act may cause cancellation, 
termination, or voidance of your insurance contract, you are 
specifically directed to the provisions of Title XII of the Food 
Security Act of 1985 (Public Law 99-198) and the regulations 
promulgated thereunder, generally referred to as the controlled 
substance provisions. Your insurance policy will be cancelled if you 
are determined to be in violation of these provisions. We will 
recover any and all monies paid to you or received by you and your 
premium will be refunded.
* * * * * * *
    Signed in Washington, DC, on July 16, 1996.
Suzette M. Dittrich,
Deputy Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-18616 Filed 7-25-96; 8:45 am]
BILLING CODE 3410-FA-P