[Federal Register Volume 61, Number 224 (Tuesday, November 19, 1996)]
[Rules and Regulations]
[Pages 58769-58779]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29560]



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 Rules and Regulations
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  Federal Register / Vol. 61, No. 224 / Tuesday, November 19, 1996 / 
Rules and Regulations  

[[Page 58769]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AB55


Common Crop Insurance Regulations; Sugar Beet Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
specific crop provisions for the insurance of sugar beets. The 
provisions will be used in conjunction with the Common Crop Insurance 
Policy Basic Provisions, which contain standard terms and conditions 
common to most crops. The intended effect of this action is to provide 
policy changes to better meet the needs of the insured and combine the 
current Sugar Beet Crop Insurance Regulations with the Common Crop 
Insurance Policy for ease of use and consistency of terms.

EFFECTIVE DATE: November 19, 1996.

FOR FURTHER INFORMATION CONTACT: Arden Routh, Program Analyst, Research 
and Development Division, Product Development Branch, Federal Crop 
Insurance Corporation, United States Department of Agriculture, 9435 
Holmes Road, Kansas City, MO 64131, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866

    This action has been reviewed under United States Department of 
Agriculture (USDA) procedures established by Executive Order No. 12866. 
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 February 1, 2001.
    This rule has been determined to be not significant for the 
purposes of Executive Order No. 12866 and, therefore, has not been 
reviewed by the Office of Management and Budget (OMB).

Paperwork Reduction Act of 1995

    Following publication of the proposed rule, the public was afforded 
60 days to submit written comments, data, and opinions on information 
collection requirements previously approved by OMB under OMB control 
number 0563-0003 through September 30, 1998. No public comments were 
received.

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. This rule contains no Federal 
mandates (under the regulatory provisions of Title II of the UMRA) of 
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 
implications 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. New provisions included in this rule will not 
impact small entities to a greater extent than large entities. Under 
the current regulations, a producer is required to complete an 
application and acreage report. 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 
must also annually certify to the previous years production if adequate 
records are available to support the certification. The producer must 
maintain the production records to support the certified information 
for at least three years. This regulation does not alter those 
requirements. The amount of work required of the insurance companies 
delivering and servicing these policies will not increase significantly 
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 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 published at 7 CFR parts 11 and 780 must be exhausted 
before 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.

National Performance Review

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

[[Page 58770]]

Background

    On Friday, May 31, 1996, FCIC published a proposed rule in the 
Federal Register at 61 FR 27315-27321 to add to the Common Crop 
Insurance Regulations (7 CFR part 457) a new section, 7 CFR 
Sec. 457.109, Sugar Beet Crop Provisions. The new provisions will be 
effective for the 1997 and succeeding crop years in all States except 
Arizona and California, and for the 1998 and succeeding crop years in 
Arizona and California. These provisions will replace and supersede the 
current provisions for insuring sugar beets found at 7 CFR part 430 
(Sugar Beet Crop Insurance Regulations). By separate rule, FCIC will 
restrict the effects of the Sugar Beet Crop Insurance Regulations 
through the 1996 and prior crop years and later remove that part. 
Following publication of that proposed rule, the public was afforded 30 
days to submit written comments, data, and opinions. A total of 72 
comments were received from the crop insurance industry, sugar beet 
grower associations, and FCIC. The comments received, and FCIC's 
responses are as follows:
    Comment: Two comments received from the crop insurance industry had 
a concern with the definition of ``Good farming practices,'' which 
makes reference to ``generally recognized by the Cooperative Extension 
Service.'' The comment indicated that the term ``generally'' would 
allow the use of unrecognized practices.
    Response: FCIC agrees with the comment and has amended the 
definition accordingly.
    Comment: One comment received from an FCIC Regional Service Office 
(RSO) recommended changing the definition of ``Harvest'' to read, 
``means the completion of topping and lifting of sugar beets in the 
field.'' The commenter does not believe that removal of sugar beets 
from the field should be a condition to be considered harvested. If 
required, it would lengthen the insurance period and allow producers to 
pile beets in the field and expose the insurer to unintended risks.
    Response: FCIC agrees with the comment and has amended the 
definition accordingly.
    Comment: Two comments received from the crop insurance industry 
recommended adding the words ``and quality'' after the word 
``quantity'' in the definition of ``Irrigated practice.''
    Response: FCIC agrees that water quality is an important issue. 
However, since no standards or procedures have been developed to 
measure water quality for insurance purposes, FCIC has elected not to 
include quality in the definition. Therefore, no change will be made.
    Comment: Two comments received from RSOs recommended removing or 
changing provisions pertaining to late planting. One of the commenters 
recommended changing the definition of ``Late planting period'' to 
read, ``The period that begins the day after the final planting date 
for the insured crop and ends 25 days after the final planting date, 
unless otherwise provided by the Special Provisions.'' The commenters 
added that: 1) the length of the late planting period should be 
determined by the RSO by crop, by county, depending on the length of 
the growing season, etc.; and 2) a blanket 25 days for all crops is not 
appropriate for an actuarially sound program.
    Response: County by county determinations of the appropriate length 
of the late planting period would necessitate a substantial amount of 
additional paperwork and procedure. For a majority of the counties, the 
25 day late planting period is appropriate to permit the crop to mature 
before the end of the insurance period. There is no evidence that 
insureds are abusing the current 25 day period. Therefore, no change 
will be made.
    Comment: One comment received from the crop insurance industry 
recommended adding a definition for ``raw sugar'' since this term is 
used in the definition of ``local market price'' and elsewhere in the 
crop provisions.
    Response: FCIC agrees with the comment and has added a definition 
for ``raw sugar.''
    Comment: One comment received from a sugar beet growers group 
concerned ``Local market price.'' The commenter believes that the 
guarantee should not be established using the local market price 
because it may be vulnerable to fluctuation caused by market demand.
    Response: FCIC believes that the commenter misinterpreted the 
provisions. The local market price is used to determine the production 
to count for sugar beets eligible for a quality adjustment. The local 
market price is not used to determine the insurance guarantee.
    Comment: One comment received from an RSO recommended adding 
language indicating that it will not be considered practical to replant 
unless production for the replanted acreage can be delivered under the 
terms of the processor contract.
    Response: FCIC agrees with the comment and has amended the 
definition accordingly.
    Comment: Five comments, two from the crop insurance industry and 
three from FCIC RSOs, did not agree that the definition of 
``Processor'' should limit processors to being only corporations and 
the language contained in redesignated section 7(b) (1) and (2), that 
requires a processor to be a corporation.
    Response: FCIC agrees with the comments and has amended the 
definition and provisions accordingly.
    Comment: Two comments received from the crop insurance industry 
concerned the definition of ``Replanting.'' The comments questioned the 
need to break this into two steps and recommended that FCIC consider 
something like the definition in the 1986-CHIAA 707: ``Performing the 
cultural practices necessary to replant insured acreage to sugar 
beets.''
    Response: The suggested language would unnecessarily create an 
ambiguity because the cultural practices will always include the 
preparation of the land and planting the sugar beet seed into the 
insured acreage. Therefore, no change will be made.
    Comment: One comment received from the crop insurance industry 
recommended adding a definition for RMA-Risk Management Agency.
    Response: These regulations are published under the authority of 
the Federal Crop Insurance Act, which created FCIC and gave it the 
authority to offer this crop insurance program. As a result, the term 
FCIC rather than Risk Management Agency is used appropriately 
throughout these regulations. Therefore, no change will be made.
    Comment: Two comments received, one from an FCIC RSO and one from 
the insurance industry, recommended clarifying the second to the last 
sentence of the first paragraph of redesignated section 2(c). The 
current wording may lead the insured to believe that premium may be 
refunded any time optional units are combined. That is not true. 
Premium is refunded only if there are no optional units within a basic 
unit. One of the comments recommended changing the provisions to read 
as follows: ``If failure to comply with these provisions is determined 
to be inadvertent and if all of the optional units within a basic unit 
are combined, that portion of the premium paid for the purpose of 
electing optional units will be refunded to you.''
    Response: FCIC agrees with the comment and has amended the 
provisions accordingly.
    Comment: One comment received from the insurance industry 
questioned why all optional units must be identified on the acreage 
report for each crop year. They asked if this reporting

[[Page 58771]]

is by crop or also by practice, type, and variety. Listing every 
possible combination for every crop on a policy could test the limits 
on the number of policy lines allowed.
    Response: FCIC has clarified this provision to indicate that only 
those optional units selected for the specific crop year need be 
identified on the acreage report.
    Comment: One comment received from the insurance industry indicated 
that provisions in section 2(a)(1) requiring verifiable records ``for 
at least the last crop year used to determine your production 
guarantee'' could cause confusion. The commenter asked whether this is 
the ``APH'' or the ``policy'' crop year because the reference to the 
last year used to determine the guarantee suggests it is the APH crop 
year. The comment questions whether this means that an insured cannot 
qualify for any optional units without certifying as many years as 
necessary to come up with one year of actual history for every 
potential unit database. A record of zero acres planted is an 
acceptable production report for maintaining continuity, but is not 
``counted'' as a year of actual records when calculating the approved 
APH yield.
    Response: The APH is based on the actual production of the producer 
for each crop year in which a crop is produced up to a maximum of 10 
crop years. It is not required that a crop be insured for its 
production to be included in the APH data base. To qualify for optional 
units, the insured must have production records, by optional unit, for 
at least the last year the crop was actually produced. FCIC believes 
the provision is clearly stated and has not made changes.
    Comment: One comment received from the insurance industry indicated 
that the requirement to have verifiable records of planted acreage and 
production for each optional unit for at least the last crop year used 
to determine your production guarantee might be seen as a contradiction 
of the rotation requirements for sugar beets. These requirements do not 
allow sugar beets to be planted on the same acreage as the previous 
year.
    Response: The proposed provisions do not require sugar beets to be 
grown on the same acreage in successive crop years. Only those crop 
years in which the crop was actually produced are included in the data 
base. The year the crop was not produced would not be considered as the 
last crop year used to determine the guarantee. Therefore, no changes 
have been made.
    Comment: One comment received from the insurance industry 
concerning section 2(b)(2) recommended deleting ``In addition to, or 
instead of, establishing optional units by section, section equivalent, 
or FSA Farm Serial Number,'' and beginning the section with ``Optional 
units may be based on irrigated * * *'' Item 2(b) begins by saying one 
or more of (1) and (2) may apply.
    Response: It is the intent of FCIC to allow optional units for 
irrigated and non-irrigated practices within an optional unit based on 
section, section equivalent, or FSA Farm Serial Number. Therefore, no 
change will be made.
    Comment: One comment received from an RSO recommended the language 
in section 3(b)(1) be changed to read ``First stage, with a guarantee 
of 60 percent (60%) of the final stage guarantee, extends from planting 
until:''
    Response: FCIC agrees with the comment and has amended the 
provision accordingly.
    Comment: Five comments received, four from the insurance industry 
and one from a sugar beet growers group, recommended that the first 
stage guarantee should be eliminated, except possibly in California and 
other areas where the practice of thinning still exists. References to 
``July 1,'' ``thinning'' or ``90 days'' cause more problems than they 
solve in other sugar beet areas where early season input costs are no 
longer greater than those incurred later in the season. It is the 
commenters understanding that machine or hand thinning is no longer a 
common practice in many sugar beet areas. Stage production guarantees 
were initially established when thinning was an expensive process. The 
reduction in guarantee for first stage only adds to the losses the 
producer incurs due to adverse weather conditions. Removal of the stage 
guarantee would likely result in increased premium costs.
    Response: This would be a significant change which could result in 
higher premiums, therefore, an additional comment period would be 
required to allow interested parties to consider the effects of this 
change and any increase in the costs of insurance. No change will be 
made to the present rule; however, it will be considered in any future 
change to these provisions.
    Comment: One comment received from the insurance industry 
concerning section 3, Insurance Guarantees, Coverage Levels, and 
Prices, recommended the language be changed to ``* * * select only one 
price percentage * * *'' it would not then be necessary to say so much 
for crops with different maximum prices by type.
    Response: Methods used to select price elections vary between 
insurance providers. While some require selecting of a percentage, 
others require selection a specific dollar amount. The suggested change 
will not work in all circumstances. Therefore, no change will be made.
    Comment: Three comments received, two from RSOs and one from a 
sugar beet growers group, concerned the cancellation and termination 
date. One commenter stated that the language in the Background section 
of the preamble printed in the proposed rule stated that the 
cancellation and termination dates for all States except Arizona and 
California were changed to March 15 but the dates contained in section 
5 of the proposed Sugar Beet Crop Provisions were February 28. The 
commenter believed the correct date should be March 15. Another 
commenter advised that the cancellation and termination dates (February 
28) are too early because contracting of acreage by the processor has 
not been completed.
    Response: The language in the Background section concerning the 
cancellation and termination dates being changed from April 15 to March 
15 for all States except Arizona and California is correct. The correct 
cancellation and termination dates for these States are March 15. FCIC 
corrected section 5 accordingly.
    Comment: Two comments received from the insurance industry asked if 
the sales closing date will match the cancellation and termination 
dates contained in section 5. The commenters suggested that the 
cancellation and sales closing dates should match, and that the date 
should be March 15.
    Response: The sales closing dates and the cancellation dates will 
match and, as stated above, the cancellation date has been changed to 
March 15 in most States.
    Comment: One comment received from an RSO recommended adding 
provisions to indicate that the premium is based on the final stage 
production guarantee.
    Response: FCIC agrees with the comment and has added a new section 
6.
    Comment: One comment received from the insurance industry 
recommended that FCIC consider whether redesignated section 7(a)(3) 
should specify that the processor contract show the insured's name. 
This may reduce the potential for abuse by persons without insurable 
interests.
    Response: Processor contracts may not always indicate the name of 
all persons who have an insurable interest

[[Page 58772]]

in the acreage. In many cases a contract is held by a producer, but 
such contract also covers the share of one or more landlords. While it 
is imperative that an insurable interest be established, FCIC does not 
feel that the name on the processor contract is an adequate indicator 
of an insurable interest. Therefore, no change has been made.
    Comment: One comment received from the insurance industry 
questioned the language contained in redesignated section 7(a)(4)(i) 
regarding acreage interplanted with another crop. The commenter stated 
that ``In some areas it is a common practice to plant a small grain 
crop on sugar beet ground, let it grow to 6-8 inches, kill it off with 
a chemical and then plant the sugar beets. The small grain residue 
serves as protection from both wind and cold damage to the beet 
seedlings. This should be considered a good farming practice and 
possibly addressed in this section. The commenter recalled a FCIC 
memorandum being issued a few years ago allowing the practice.
    Response: The scenario presented in the comment would constitute 
sequential planting, not interplanting. The definition of 
``interplanted'' requires the two crops be planted in a manner that 
does not permit separate agronomic maintenance or harvest of the 
insured crop. In the case presented, the small grain crop would not 
inhibit the maintenance or harvest of the sugar beets. Therefore, this 
practice is not prohibited.
    Comment: One comment received from the insurance industry expressed 
concern regarding requirements for processor sales records contained in 
redesignated section 7(b)(3). An insurance provider cannot require an 
insured to provide copies of sales records for production owned by 
other parties.
    Response: There is no need to provide the records from other 
persons. This provision only applies when a processor is also a sugar 
beet producer. All that is required is the records of the processor's 
sales to prove that it produced sugar the previous year. The provision 
has been amended to specify that it is the sales records of the 
processor showing the amount produced for the previous year that must 
be provided.
    Comment: One comment received from the insurance industry 
questioned the requirement in redesignated section 7(b)(3) for 
companies to inspect the processing facilities. The comment expressed 
concern over the additional expenses incurred for the inspection 
process.
    Response: An inspection of the processing facilities is necessary 
to verify that a producer who claims also to be a processor has 
facilities or access to facilities with adequate equipment to accept 
and process sugar beets in a reasonable amount of time after harvest. 
FCIC does not anticipate a large number of inspections will be 
necessary. Therefore, the extra expense should be minimal. No change 
will be made.
    Comment: One comment received from an RSO recommended changing the 
language in redesignated section 8(a)(1) to read, ``the preceding crop 
year, unless otherwise specified in the Special Provisions for the 
county.'' The Special Provisions take precedence over these provisions; 
however, the policy statement of ``preceding crop year'' is a change 
for most States. The commenter stated that it would not hurt to remind 
insureds to refer to the Special Provisions.
    Response: FCIC agrees with the comment and has amended the 
provision accordingly.
    Comment: One comment received from the insurance industry states 
that redesignated sections 8(a) (1) and (3) seem to overlap. The 
commenter asked whether the requirement that sugar beets cannot have 
been planted on the same acreage the preceding crop year is covered by 
the rotation requirements in the Special Provisions. The commenter 
states that unless there are areas with no Special Provisions, item (1) 
seems to be an unnecessary repetition.
    Response: There are areas with Special Provisions that do not 
contain rotation requirements and the provisions in redesignated 
section 8(a)(1) apply to these areas. Redesignated section 8(a)(3) 
applies to counties that may have other rotation requirements. 
Therefore, no change will be made.
    Comment: One comment received from the insurance industry states 
that redesignated section 8(a)(2) appears to conflict with redesignated 
section 10(d) and request that redesignated section 8(a)(2) be 
rewritten to add ``or controlled as prescribed by University 
Extension'' to reduce the times a written agreement would have to be 
requested and processed.
    Response: Redesignated section 10(d) does not conflict with 
redesignated section 8(a)(2). Redesignated section 8(a)(2) specifies 
that acreage is not insurable the following crop year after the acreage 
has been affected by rhizomania. Redesignated section 10(d) provides 
that disease is not an insurable cause of loss in the current crop year 
if caused by insufficient or improper application of disease control 
measures. Therefore, no change will be made.
    Comment: Two comments received from RSOs recommended changing the 
language of redesignated section 8(a)(2) to read: ``In any crop year 
following the discovery of rhizomania on the acreage unless a written 
agreement or the Special Provisions allows otherwise; or.'' The sugar 
beet industry is rapidly developing rhizomania tolerant varieties. The 
commenters state that this revision will allow for insurance to attach 
when specified in the Special Provisions and avoid the need of a costly 
written agreement and allow for CAT level protection. This practice 
will only be included in the Special Provisions if there are available 
rhizomania tolerant varieties adapted to the area that exhibit adequate 
yields.
    Response: FCIC agrees with the comment and has amended the section 
accordingly.
    Comment: One comment received from a grower group indicated that 
there may be situations where replanting could occur in a location 
different than that originally planted. This may occur when it is not 
practical to replant in the same field, township or county. 
Consideration for replanting payments should be made in this 
circumstance.
    Response: FCIC agrees that this concept should be studied. However, 
no procedure or provisions have been developed or proposed to 
accomplish the recommended change. FCIC will consider this 
recommendation for future use. Therefore, no change will be made.
    Comment: One comment received from a sugar beet growers group 
recommended changing the calendar date for the end of insurance period 
to December 15 for North Dakota and Minnesota because sugar beets can 
be harvested after November 15. They are concerned that producers may 
file unnecessary claims to protect their interests. The commenter also 
states that production data is only available after November 15, 
therefore, the December 15 deadline would be more appropriate. They 
claim that supporting documentation is available for this change.
    Response: FCIC understands that harvest may occur after November 15 
in some exceptional years. However, virtually all sugar beets are 
harvested prior to this date. Extending the date for some exceptional 
years would adversely affect premium rates. Therefore, no change is 
necessary.
    Comment: One comment received from an RSO recommended changing the 
language redesignated section 11(b) to specify ``the lesser of 10% of 
the final stage production guarantee or 1 ton, multiplied by your price 
election, multiplied by your share.''

[[Page 58773]]

    Response: FCIC agrees with the comment and has amended redesignated 
section 11(b) accordingly.
    Comment: One comment received from the insurance industry 
questioned why a tenant is not allowed to receive the landlord's share 
of the allowable replant payment if both are insured with the same 
company at a coverage level greater than CAT. Provisions allowing this 
are included in the Coarse Grains Crop Provisions (section 10(c)), and 
the commenter states that it should be applicable to sugar beets as 
well.
    Response: FCIC has reevaluated this provision due to comments 
received on other regulations and determined that the provision is not 
equitable to all insureds. Specifically if a landlord and tenant are 
insured with one company, the provisions apply, but if the landlord and 
tenant are insured with different companies, the provisions do not 
apply. Therefore, no change will be made. Crop provisions containing 
these terms will be amended to eliminate them.
    Comment: One comment received from a sugar beet growers group 
concerned redesignated section 12(b). The commenter recommended that 
the sugar beet processor contract include the terminology ``Maximum 
Plantable Acreage.'' The term ``plantable acres'' may differ from 
contracted acres.
    Response: FCIC cannot require that such terminology be added to the 
processor contract. FCIC only requires that such contract be binding on 
the parties with respect to the production and purchase of a stated 
amount and a fixed price. The actual terms of the processor contract 
are established between the processor and the grower. Therefore, no 
change will be made.
    Comment: One comment received from an RSO recommended changing 
redesignated section 13(c)(1) to read ``Multiplying the insured acreage 
by its respective production guarantee''.
    Response: FCIC agrees with comment and has amended redesignated 
section 13(b) accordingly.
    Comment: One comment received from an RSO recommended changing 
redesignated section 13(c)(1)(iii) to read: ``Unharvested production 
(unharvested sugar beets which have not reached the earliest delivery 
date designated by the processor's harvest schedule for the area will 
not be adjusted for quality deficiencies) * * *'' Current loss 
adjustment procedure distinguishes appraisal techniques based on crop 
maturity. Immature beets are appraised by percentage stand. Mature 
beets are appraised by weight. This proposed revision would allow 
samples to be submitted to the processor for determination of the 
percentage of sugar and to allow a more accurate appraisal of crop 
value. Samples submitted to the processor will also confirm whether or 
not beets are damaged and whether redesignated section 13(d) or 
redesignated section 13(e) is applicable.
    Response: FCIC agrees with the substance of the comment and has 
amended the provisions accordingly.
    Comment: One comment received from an RSO recommended changing 
redesignated section 13(d) to read: ``Any unharvested appraised 
production which has matured (reached the earliest delivery date 
designated by the processor's harvest schedule for the area) or 
harvested production of sugar beets acceptable according to the sugar 
beet processor contract or corporate resolution will be converted to 
standardized tons by:'' The commenter states that this revision 
incorporates the recommendation for redesignated section 13(d)(iii), 
and clarifies when the percent sugar adjustment is used.
    Response: FCIC disagrees with the comment. The provisions in 
redesignated section 13(d) are intended for both harvested and 
unharvested production that is appraised after the earliest delivery 
date that the processor accepts harvested production and that meet the 
minimum acceptable standards contained in the processor contract. This 
provision will be clarified accordingly.
    Comment: One comment received from the insurance industry 
recommended changing provisions in redesignated section 13(d)(2) that 
requires the percentage of sugar to be determined for each load at the 
time of delivery. Normal practice is to test every other load, because 
it has been discovered that the sugar percentage does not vary much 
between loads. Processors should not have to change this accepted 
practice to satisfy this policy requirement.
    Response: FCIC agrees with the comment and has amended the 
provisions to conform with industry practices.
    Comment: One comment received from an RSO recommended changing 
redesignated section 13(e) to read: ``Any unharvested appraised 
production which has matured (sugar beets which have reached the 
earliest delivery date designated by the processor's harvest schedule 
for the area) or harvested production of sugar beets that does not meet 
the minimum acceptable conditions specified in the sugar beet processor 
contract or corporate resolution due to insurable causes will be 
converted to standardized tons by:'' The revision incorporates the 
recommendation for redesignated section 13(c)(iii), and clarifies the 
specific conditions of the crop for which production to count is 
adjusted according to this subsection.
    Response: FCIC disagrees with the comment. The provisions in 
redesignated section 13(e) are intended for both harvested and 
unharvested production that is appraised after the earliest delivery 
dated that the processor accepts harvested production and that does not 
meet the minimum acceptable standards contained in the processor 
contract. This provision will be clarified accordingly.
    Comment: One comment received from an RSO recommended changing 
redesignated section 13(e) to read: ``Production that does not meet the 
minimum acceptable standards contained in the sugar beet processor 
contract or corporate resolution (damaged sugar beets) will be 
converted to standardized tons by:'' Redesignated section 13(e)(1) 
refers to ``damaged sugar beets.'' Without adding the clarification of 
damaged beets to redesignated section 13(e), there may be (and has been 
in the past) some confusion.
    Response: FCIC agrees with the comment and has amended the section 
accordingly.
    Comment: One comment received from an FCIC RSO recommended changing 
the language ``the insured crop'' to ``sugar beets'' in redesignated 
section 14, Late and Prevented Planting.
    Response: Since the insured crop clearly is sugar beets, and the 
term is used in other provisions, no change will be made.
    Comment: One comment received from an RSO recommended eliminating 
late and prevented planting provisions that reference participating in 
a USDA program that limits acreage planted, compliance with 
conservation plans, and base acreage. These do not apply.
    Response: FCIC agrees that acreage limiting programs and base 
acreage do not apply to sugar beets and has amended the appropriate 
provisions. However, conservation plans may allow the insurance 
provider to verify an intent to produce or not produce the crop. 
Therefore, provisions regarding the use of conservation plans have not 
been changed.
    Comment: One comment received from an RSO recommended adding a 
statement to the prevented planting provisions to assure compliance 
with rotation requirements contained in the Special provisions when 
determining eligible prevented planting acreage.
    Response: FCIC does not believe the recommended change is 
necessary. It would be duplicative since the Insured

[[Page 58774]]

Crop section already contains this requirement. Therefore, no change 
will be made.
    Comment: Three comments received from the insurance industry 
recommended limiting the number of acres eligible for prevented 
planting to the number of acres that are under the processor contract 
for the crop year.
    Response: FCIC agrees with comment and has amended language to 
limit the number of acres eligible for prevented planting to the number 
of acres under the processor contract or the number of acres needed to 
produce the amount of contracted production based on the APH yield for 
the acreage.
    Comment: One comment received from the insurance industry 
recommended that a written release be required from the processor 
before a prevented planting guarantee is provided.
    Response: FCIC cannot require such a release for the purposes of 
the insurance contract since the processor contract is executed between 
the processor and the producer. If the producer meets the requirements 
for a prevented planting payment under this policy, the payment will be 
made regardless of whether the processor releases the acreage.
    Comment: One comment received from the insurance industry 
recommended that late and prevented planting coverage should not be 
provided on crops grown under contract with a processor. The processor 
determines what the producer does if the insured crop is not planted 
during the normal planting period.
    Response: FCIC believes that the inclusion of late and prevented 
planting provisions is appropriate for sugar beets. As the comment 
indicates, the processor may or may not allow planting within the late 
planting period. If planting is allowed under the contract, and the 
crop can reach maturity, coverage should be provided. Therefore, no 
change will be made.
    Comment: Three comments received, two from the insurance industry 
and one from an RSO, asked whether the prevented planting coverage 
available when a substitute crop is planted will be dropped, or at 
least revised, for all affected crops for the 1997 crop year, and 
whether it is possible to remove (or revise) redesignated section 
14(d)(1)(iii)(B) and 14(d)(2)(iii)(B).
    Response: Consideration is being given to removal of prevented 
planting provisions that allow a substitute crop for all affected crops 
for the 1998 crop year. Necessary changes will be made in a separate 
rule for these and any other affected crop provisions. Therefore, no 
change will be made.
    Comment: One comment received from the insurance industry 
recommended that the requirement for a written agreement to be renewed 
each year should be removed. Terms of the agreement should be stated in 
the agreement to fit the particular situation for the policy, or if no 
substantive changes occur from one year to the next, allow the written 
agreement to be continuous.
    Response: Written agreements are intended to change policy terms or 
permit insurance in unusual situations where such changes will not 
increase risk. If such practices continue year to year, they should be 
incorporated into the policy or Special Provisions. It is important to 
keep non-uniform exceptions to the minimum and to insure that the 
insured is well aware of the specific terms of the policy. Therefore, 
no change will be made.
    Comment: One comment received from the insurance industry 
recommended that the policy language concerning written agreements 
should not be so detailed, but should be handled in procedure. The 
commenter suggested that redesignated sections 15 (a) and (c) should 
not be so specific as to the sales closing date, especially when it is 
possible to request some written agreements until the acreage reporting 
date. If these items are kept, the commenter suggests combining both 
sections into redesignated section 15(a) instead of having two separate 
items.
    Response: FCIC disagrees with the comment. To prevent the practice 
of delaying the purchase of insurance until a loss is more probable, 
most written agreements must be requested by the sales closing date. It 
is only rare circumstances when an insured can request a written 
agreement after the sales closing date. FCIC believes the current 
format clearly states the necessary requirements for a written 
agreement. Written agreements are the exceptions, not the rule and 
their use must be strictly controlled. Therefore, no change will be 
made.
    Comment: One comment received from an RSO recommended deleting 
paragraph (b) of redesignated section 15. A request for a written 
agreement is really a Request for Actuarial Change. If it is not 
approved, all contract provisions will remain in effect as before. The 
commenter receives requests for actuarial change for many situations 
and the requirement as outlined in part (b) seems cumbersome and 
unwarranted.
    Response: This requirement is necessary to ensure that the producer 
will be aware of the terms of his insurance in case the request for 
written agreement is denied. Therefore, no change will be made.
    In addition to the changes described above, FCIC has made the 
following changes to the Sugar Beet Provisions:
    1. Moved Arizona from section 3(b)(1)(i) to section 3(b)(1)(ii) 
because production practices in Arizona are more similar to Central and 
Southern California than Northern California and other States.
    2. Section 7(a)(3)--Added provisions to clarify that sugar beets 
are not insurable if excluded from the processor contract at anytime 
during the crop year.
    3. Section 9--Added a provision to clarify that the insurance 
period ends when the production delivered to the processor equals the 
production stated in the sugar beet processor contract.
    4. Section 13(b)--Clarified the calculations used to settle the 
claim.
    5. Section 14(d)--Clarified that the production guarantee for 
prevented planting will be based on the final stage guarantee.
    6. Section 14(d)(4)(ii)--Clarified when prevented planting coverage 
begins to include the 1997 crop year.
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. This rule improves the sugar beet insurance 
coverage and brings it under the Common Crop Insurance Policy Basic 
Provisions for consistency among policies. The earliest contract change 
date that can be met for the 1997 crop year is November 30, 1996. It is 
therefore imperative that these provisions be made final before that 
date so that the reinsured companies and insureds may have sufficient 
time to implement these changes. Therefore, public interest requires 
the agency to act immediately to make these provisions available for 
the 1997 crop year.

List of Subjects in 7 CFR Part 457

    Crop insurance, Sugar beets.

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 Common Crop Insurance Regulations, (7 CFR 
part 457), effective for the 1997 and succeeding crop years in all 
States except Arizona and California and for the 1998 and succeeding 
crop years in Arizona and California, to read as follows:

PART 457--[AMENDED]

    1. The authority citation for 7 CFR part 457 continues to read as 
follows:


[[Page 58775]]


    Authority: 7 U.S.C. 1506(1), 1506(p).

    2. 7 CFR part 457 is amended by adding a new Sec. 457.109 to read 
as follows:


Sec. 457.109  Sugar Beet Crop Insurance Provisions.

    The Sugar Beet Crop Insurance Provisions for the 1997 and 
succeeding crop years are as follows:

FCIC Policies

United States Department of Agriculture

Federal Crop Insurance Corporation

Reinsured policies

(Appropriate title for insurance provider)

Both FCIC and Reinsured Policies

Sugar Beet Crop Provisions

    If a conflict exists among the Basic Provisions (Sec. 457.8), 
these Crop Provisions, and the Special Provisions; the Special 
Provisions will control these Crop Provisions and the Basic 
Provisions; and these Crop Provisions will control the Basic 
Provisions.

1. Definitions

    Crop year--In Imperial, Lassen, Modoc, Shasta and Siskiyou 
counties, California and all other States, the period within which 
the sugar beets are normally grown, which is designated by the 
calendar year in which the sugar beets are normally harvested. In 
all other California counties, the period from planting until the 
applicable date for the end of the insurance period which is 
designated by:
    (a) The calendar year in which planted if planted on or before 
July 15; or
    (b) The following calendar year if planted after July 15.
    Days--Calendar days.
    FSA--Farm Service Agency of the United States Department of 
Agriculture, or a successor agency.
    Final planting date--The date contained in the Special 
Provisions for the insured crop by which the crop must initially be 
planted in order to be insured for the full production guarantee.
    Good farming practices--The cultural practices generally in use 
in the county for the crop to make normal progress toward maturity 
and produce at least the yield used to determine the production 
guarantee and are those recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Harvest--Topping and lifting of sugar beets in the field.
    Initially planted--The first occurrence that land is considered 
as planted acreage for the crop year.
    Interplanted--Acreage on which two or more crops are planted in 
a manner that does not permit separate agronomic maintenance or 
harvest of the insured crop.
    Irrigated practice--A method of producing a crop by which water 
is artificially applied during the growing season by appropriate 
systems and at the proper times, with the intention of providing the 
quantity of water needed to produce at least the yield used to 
establish the irrigated production guarantee on the irrigated 
acreage planted to the insured crop.
    Late planted--Acreage planted to the insured crop during the 
late planting period.
    Late planting period--The period that begins the day after the 
final planting date for the insured crop and ends twenty-five (25) 
days after the final planting date.
    Local market price--The price per pound for raw sugar offered by 
buyers in the area in which you normally market the sugar beets.
    Planted acreage--Land in which seed has been placed by a machine 
appropriate for the insured crop and planting method, at the correct 
depth, into a seedbed that has been properly prepared for the 
planting method and production practice. Sugar beets must initially 
be planted in rows to be considered planted. Acreage planted in any 
other manner will not be insurable unless otherwise provided by the 
Special Provisions or by written agreement.
    Practical to replant--In lieu of the definition of ``Practical 
to replant'' contained in section 1 of the Basic Provisions 
(Sec. 457.8), practical to replant is defined as our determination, 
after loss or damage to the insured crop, based on factors, 
including but not limited to moisture availability, condition of the 
field, time to crop maturity, and marketing window, that replanting 
the insured crop will allow the crop to attain maturity prior to the 
calendar date for the end of the insurance period. It will not be 
considered practical to replant if production from the replanted 
acreage cannot be delivered under the terms of the processor 
contract, or 30 days after the initial planting date for all 
counties where a late planting period is not applicable, unless 
replanting is generally occurring in the area.
    Prevented planting--Inability to plant the insured crop with 
proper equipment by the final planting date designated in the 
Special Provisions for the insured crop in the county or the end of 
the late planting period. You must have been unable to plant the 
insured crop due to an insured cause of loss that has prevented the 
majority of producers in the surrounding area from planting the same 
crop.
    Processor--Any business enterprise regularly engaged in 
processing sugar beets for sugar that possesses all licenses and 
permits for processing sugar beets required by the State in which it 
operates, and that possesses facilities, or has contractual access 
to such facilities, with enough equipment to accept and process the 
contracted sugar beets within a reasonable amount of time after 
harvest.
    Production guarantee (per acre):
    (a) First stage production guarantee--The final stage production 
guarantee multiplied by 60 percent.
    (b) Final stage production guarantee--The number of tons 
determined by multiplying the approved yield per acre by the 
coverage level percentage you elect.
    Raw sugar--Sugar that has not been extracted from the sugar 
beet.
    Replanting--Performing the cultural practices necessary to 
replace the sugar beet seed and then replacing the sugar beet seed 
in the insured acreage with the expectation of growing a successful 
crop.
    Standardized ton--A ton of sugar beets containing the percentage 
of raw sugar specified in the Special Provisions.
    Sugar beet processor contract--A written contract between the 
producer and the processor, containing at a minimum:
    (1) The producer's commitment to plant and grow sugar beets, and 
to deliver the sugar beet production to the processor;
    (2) The processor's commitment to purchase the production stated 
in the contract; and
    (3) A price or formula for a price based on third party data 
that will be paid to the producer for the production stated in the 
contract.
    Thinning--The process of removing, either by machine or hand, a 
portion of the sugar beet plants to attain a desired plant 
population.
    Timely planted--Planted on or before the final planting date 
designated in the Special Provisions for the insured crop in the 
county.
    Ton--Two thousand (2,000) pounds avoirdupois.
    Written agreement--A written document that alters designated 
terms of this policy in accordance with section 15.

2. Unit Division

    (a) Unless limited by the Special Provisions, a unit as defined 
in section 1 (Definitions) of the Basic Provisions (Sec. 457.8), a 
basic unit may be divided into optional units if, for each optional 
unit, you meet all the conditions of this section or if a written 
agreement to such division exists.
    (b) Basic units may not be divided into optional units on any 
basis including, but not limited to, production practice, type, 
variety, and planting period other than as described in this 
section.
    (c) If you do not comply fully with these provisions, we will 
combine all optional units that are not in compliance with these 
provisions into the basic unit from which they were formed. We will 
combine the optional units at any time we discover that you have 
failed to comply with these provisions. If failure to comply with 
these provisions is determined to be inadvertent, and the optional 
units are combined into a basic unit, that portion of the additional 
premium paid for the optional units that have been combined will be 
refunded to you.
    (d) All optional units you selected for the crop year must be 
identified on the acreage report for that crop year.
    (e) The following requirements must be met for each optional 
unit:
    (1) You must have records, which can be independently verified, 
of planted acreage and production for each optional unit for at 
least the last crop year used to determine your production 
guarantee;
    (2) You must plant the crop in a manner that results in a clear 
and discernable break in the planting pattern at the boundaries of 
each optional unit;
    (3) You must have records of marketed production or measurement 
of stored production from each optional unit maintained in such a 
manner that permits us to verify the production from each optional 
unit, or the production from each unit must

[[Page 58776]]

be kept separate until loss adjustment is completed by us;
    (4) The sugar beet processor contract provides that the 
processor will accept all the production from the number of acres 
designated in the contract (Acreage insured under a sugar beet 
processor contract which provides that the processor will accept a 
designated amount of production will not be eligible for optional 
units).
    (5) Each optional unit must meet one or more of the following 
criteria, as applicable:
    (i) Optional Units by Section, Section Equivalent, or FSA Farm 
Serial Number: Optional units may be established if each optional 
unit is located in a separate legally identified Section. In the 
absence of Sections, we may consider parcels of land legally 
identified by other methods of measure including, but not limited to 
Spanish grants, railroad surveys, leagues, labors, or Virginia 
Military Lands, as the equivalent of Sections for unit purposes. In 
areas that have not been surveyed using the systems identified 
above, or another system approved by us, or in areas where such 
systems exist but boundaries are not readily discernable, each 
optional unit must be located in a separate farm identified by a 
single FSA Farm Serial Number.
    (ii) Optional Units on Acreage Including Both Irrigated and Non-
Irrigated Practices: In addition to, or instead of, establishing 
optional units by Section, section equivalent, or FSA Farm Serial 
Number, optional units may be based on irrigated acreage or non-
irrigated acreage if both are located in the same Section, section 
equivalent, or FSA Farm Serial Number. To qualify as separate 
irrigated and non-irrigated optional units, the non-irrigated 
acreage may not continue into the irrigated acreage in the same rows 
or planting pattern. The irrigated acreage may not extend beyond the 
point at which the irrigation system can deliver the quantity of 
water needed to produce the yield on which the guarantee is based. 
However, the corners of a field in which a center-pivot irrigation 
system is used will be considered as irrigated acreage if separate 
acceptable records of production from the corners are not provided. 
If the corners of a field in which a center-pivot irrigation system 
is used do not qualify as a separate non-irrigated optional unit, 
they will be a part of the unit containing the irrigated acreage. 
However, non-irrigated acreage that is not a part of a field in 
which a center-pivot irrigation system is used may qualify as a 
separate optional unit provided that all requirements of this 
section are met.

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

    (a) In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) 
of the Basic Provisions (Sec. 457.8), you may select only one price 
election for all the sugar beets in the county insured under this 
policy.
    (b) The production guarantees are progressive by stages, and 
increase at specified intervals to the final stage. The stages are:
    (1) First stage, with a guarantee of 60 percent (60%) of the 
final stage production guarantee, extends from planting until:
    (i) July 1 in Lassen, Modoc, Shasta and Siskiyou counties, 
California and all other States except Arizona; and
    (ii) The earlier of thinning or 90 days after planting in 
Arizona and all other California counties.
    (2) Final stage, with a guarantee of 100 percent (100%) of the 
final stage production guarantee, applies to all insured sugar beets 
that complete the first stage.
    (c) The production guarantee will be expressed in standardized 
tons.
    (d) Any acreage of sugar beets damaged in the first stage to the 
extent that growers in the area would not normally further care for 
the sugar beets will be deemed to have been destroyed, even though 
you may continue to care for it. The production guarantee for such 
acreage will not exceed the first stage production guarantee.

4. Contract Changes

    In accordance with the provisions of section 4 (Contract 
Changes) of the Basic Provisions (Sec. 457.8), the contract change 
date is April 30 preceding the cancellation date for counties with a 
July 15 or August 31 cancellation date and November 30 preceding the 
cancellation date for all other counties.

5. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation 
and termination dates are:

                                                                        
------------------------------------------------------------------------
        State and County          Cancellation date    Termination date 
------------------------------------------------------------------------
Arizona; and Imperial County,    August 31..........  August 31.        
 California.                                                            
All California counties, except  July 15............  November 30.      
 Imperial, Lassen, Modoc,                                               
 Shasta and Siskiyou.                                                   
All Other States, and Lassen,    March 15...........  March 15.         
 Modoc, Shasta and Siskiyou                                             
 Counties, California.                                                  
------------------------------------------------------------------------

6. Annual Premium

    In lieu of the premium computation method contained in section 7 
(Annual Premium) of the Basic Provisions (Sec. 457.8), the annual 
premium amount is computed by multiplying the final stage production 
guarantee by the price election, the premium rate, the insured 
acreage, your share at the time of planting, and any applicable 
premium adjustment factors contained in the Actuarial Table.

7. Insured Crop

    (a) In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all the sugar 
beets in the county for which a premium rate is provided by the 
Actuarial Table:
    (1) In which you have a share;
    (2) That are planted for harvest as sugar beets;
    (3) That are grown under a sugar beet processor contract 
executed before the acreage reporting date and are not excluded from 
the processor contract at any time during the crop year; and
    (4) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Interplanted with another crop;
    (ii) Planted into an established grass or legume; or
    (iii) Planted prior to submitting a properly completed 
application.
    (b) Sugar beet growers who are also processors may establish an 
insurable interest if they meet the following requirements:
    (1) The processor must meet the definition of a ``processor'' in 
section 1 of these crop provisions and have a valid insurable 
interest in the sugar beet crop;
    (2) The Board of Directors or officers of the processor must 
have duly promulgated a resolution that sets forth essentially the 
same terms as a sugar beet processor contract. Such resolution will 
be considered a sugar beet processing contract under the terms of 
the sugar beet crop insurance policy;
    (3) The sales records of the processor showing the amount of 
sugar produced the previous year must be supplied to us to confirm 
the processor has produced and sold sugar in the past; and
    (4) Our inspection of the processing facilities determines that 
they conform to the definition of processor contained in section 1 
of these crop provisions.

8. Insurable Acreage

    In addition to the provisions of section 9 (Insurable Acreage) 
of the Basic Provisions (Sec. 457.8):
    (a) We will not insure any acreage planted to sugar beets:
    (1) The preceding crop year, unless otherwise specified in the 
Special Provisions for the county;
    (2) In any crop year following the discovery of rhizomania on 
the acreage, unless allowed by the Special Provisions or by written 
agreement; or
    (3) That does not meet the rotation requirements shown in the 
Special Provisions;
    (b) Any acreage of the insured crop damaged before the final 
planting date, (or within 30 days of initial planting for those 
counties without a final planting date) to the extent that growers 
in the area would normally not further care for the crop, must be 
replanted unless we agree that replanting is not practical.

9. Insurance Period

    (a) In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), the calendar date for 
the end of the insurance period is:
    (1) July 15 in Arizona and in Imperial County, California;
    (2) The last day of the 12th month after the insured crop was 
initially planted in all

[[Page 58777]]

California counties except Imperial, Lassen, Modoc, Shasta and 
Siskiyou;
    (3) October 31 in Lassen, Modoc, Shasta and Siskiyou Counties, 
California, and in Klamath County, Oregon;
    (4) November 25 in Ohio;
    (5) December 31 in New Mexico and Texas; and
    (6) November 15 in all other States and counties.
    (b) In addition to the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), regarding the end of 
the insurance period, the insurance period ends for all units when 
the production delivered to the processor equals the amount of 
production stated in the sugar beet processor contract.

10. Causes of Loss

    In accordance with the provisions of section 12 (Causes of Loss) 
of the Basic Provisions (Sec. 457.8), insurance is provided only 
against the following causes of loss that occur within the insurance 
period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or 
improper application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if caused by an 
insured peril that occurs during the insurance period.

11. Replanting Payments

    (a) In accordance with section 13 (Replanting Payment) of the 
Basic Provisions (Sec. 457.8), a replanting payment is allowed if 
the crop is damaged by an insurable cause of loss to the extent that 
the remaining stand will not produce at least 90 percent (90%) of 
the final stage production guarantee for the acreage and it is 
practical to replant.
    (b) The maximum amount of the replanting payment per acre will 
be the lesser of 10 percent (10%) of the final stage production 
guarantee or one ton, multiplied by your price election, multiplied 
by your insured share.
    (c) When sugar beets are replanted using a practice that is 
uninsurable for an original planting, our liability on the unit will 
be reduced by the amount of the replanting payment. The premium 
amount will not be reduced.

12. Duties In The Event of Damage or Loss

    In accordance with the requirements of section 14 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8):
    (a) Representative samples of the unharvested crop must be at 
least 10 feet wide and extend the entire length of each field in the 
unit. The samples must not be harvested or destroyed until the 
earlier of our inspection or 15 days after harvest of the balance of 
the unit is completed; and
    (b) You must provide a copy of your sugar beet processor 
contract or corporate resolution if you are the processor.

13. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event 
you are unable to provide separate acceptable production records:
    (1) For any optional unit, we will combine all optional units 
for which acceptable production records were not provided; or
    (2) For any basic unit, we will allocate any commingled 
production to such units in proportion to our liability on the 
harvested acreage for each unit.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim on any unit by:
    (1) Multiplying the insured acreage by its respective production 
guarantee;
    (2) Subtracting the total production to count from the result in 
paragraph (b)(1);
    (3) Multiplying the result of paragraph (b)(2) by your price 
election; and
    (4) Multiplying the result of paragraph (b)(3) by your share.
    (c) The total production to count (in standardized tons) from 
all insurable acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide acceptable production records 
that are acceptable to us;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (unharvested production that is 
appraised prior to the earliest delivery date that the processor 
accepts harvested production will not be eligible for a conversion 
to standardized tons in accordance with section 13 (d) and (e));
    (iv) Only appraised production in excess of the difference 
between the first and final stage production guarantee for acreage 
that does not qualify for the final stage guarantee will be counted, 
except that all production from acreage subject to section 13(c)(1) 
(i) and (ii) will be counted; and
    (v) Potential production on insured acreage that you intend to 
put to another use or abandon, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
that acreage will end if you put the acreage to another use or 
abandon the crop. If agreement on the appraised amount of production 
is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to 
leave intact, and provide sufficient care for, representative 
samples of the crop in locations acceptable to us (The amount of 
production to count for such acreage will be based on the harvested 
production or appraisals from the samples at the time harvest should 
have occurred. If you do not leave the required samples intact, or 
you fail to provide sufficient care for the samples, our appraisal 
made prior to giving you consent to put the acreage to another use 
will be used to determine the amount of production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested 
production, or our reappraisal if additional damage occurs and the 
crop is not harvested; and
    (2) All harvested production from the insurable acreage.
    (d) Harvested production or unharvested production that is 
appraised after the earliest delivery date that the processor 
accepts harvested production and that meets the minimum acceptable 
standards contained in the sugar beet processor contract or 
corporate resolution will be converted to standardized tons by:
    (1) Dividing the average percentage of raw sugar in such sugar 
beets by the raw sugar content percentage shown in the Special 
Provisions; and
    (2) Multiplying the result (rounded to three places) by the 
number of tons of such sugar beets.
    The average percentage of raw sugar will be determined from 
tests performed by the processor at the time of delivery. If 
individual tests of raw sugar content are not made at the time of 
delivery, the average percent of raw sugar may be based on the 
results of previous tests performed by the processor during the crop 
year if it is determined that such results are representative of the 
total production. If not representative, the average percent of raw 
sugar will equal the raw sugar content percent shown in the Special 
Provisions.
    (e) Harvested production or unharvested production that is 
appraised after the earliest delivery date that the processor 
accepts harvested production and that does not meet the minimum 
acceptable standards contained in the sugar beet processor contract 
due to an insured peril will be converted to standardized tons by:
    (1) Dividing the gross dollar value of all of the damaged sugar 
beets on the unit (including the value of cooperative stock, 
patronage refunds, etc.) by the local market price per pound on the 
earlier of the date such production is sold or the date of final 
inspection for the unit;
    (2) Dividing that result by 2,000; and
    (3) Dividing that result by the county average raw sugar factor 
contained in the Special Provisions for this purpose.
    For example, assume that the total dollar value of the damaged 
sugar beets is $6,000.00; the local market price is $0.10; and the 
county average raw sugar factor is 0.15. The amount of production to 
count would be calculated as follows: 
(($6,000.00$0.10)2,000)0.15=200 tons.

14. Late and Prevented Planting

    (a) In lieu of provisions contained in the Basic Provisions 
(Sec. 457.8) regarding acreage initially planted after the final 
planting date and the applicability of a Late Planting Agreement 
Option, insurance will be provided for acreage planted to the 
insured crop during the late planting period (see section 14(c)), 
and acreage you were prevented from planting (see section 14(d)). 
These coverages provide reduced production guarantees and are 
applicable in all counties except California counties with a July 15 
cancellation date. The premium amount for late planted acreage and 
eligible prevented planting acreage will be the same as that for 
timely planted acreage. If the amount of

[[Page 58778]]

premium you are required to pay (gross premium less our subsidy) for 
late planted acreage or prevented planting acreage exceeds the 
liability on such acreage: coverage for those acres will not be 
provided; no premium will be due; and no indemnity will be paid for 
such acreage.
    (b) You must provide written notice to us not later than the 
acreage reporting date if you were prevented from planting.
    (c) Late planting.
    (1) For sugar beet acreage planted during the late planting 
period, the production guarantee for the applicable stage for each 
acre will be reduced for each day planted after the final planting 
date by:
    (i) One percent (1%) for the 1st through the 10th day; and
    (ii) Two percent (2%) for the 11th through the 25th day.
    (2) In addition to the requirements of section 6 (Report of 
Acreage) of the Basic Provisions (Sec. 457.8), you must report the 
dates the acreage is planted within the late planting period.
    (3) If planting of sugar beets continues after the final 
planting date, or you are prevented from planting during the late 
planting period, the acreage reporting date will be the later of:
    (i) The acreage reporting date contained in the Special 
Provisions for the insured crop; or
    (ii) Five (5) days after the end of the late planting period.
    (d) Prevented Planting (Including Planting After the Late 
Planting Period)
    (1) If you were prevented from timely planting sugar beets, you 
may elect:
     (i) To plant sugar beets during the late planting period. The 
production guarantee for such acreage will be determined in 
accordance with section 14(c)(1);
    (ii) Not to plant this acreage to any crop except a cover crop 
not for harvest. You may also elect to plant the insured crop after 
the late planting period. In either case, the production guarantee 
for such acreage will be 35 percent of the final stage production 
guarantee for timely planted acres. For example, if your final stage 
production guarantee for timely planted acreage is 20.0 tons per 
acre, your prevented planting production guarantee would be 7.0 tons 
per acre (20.0 tons multiplied by 0.35). If you elect to plant the 
insured crop after the late planting period, production to count for 
such acreage will be determined in accordance with section 13; or
    (iii) Not to plant the intended crop but plant a substitute crop 
for harvest, in which case:
    (A) No prevented planting production guarantee will be provided 
for such acreage if the substitute crop is planted on or before the 
10th day following the final planting date for the insured crop; or
    (B) A production guarantee equal to 17.5 percent of the final 
stage production guarantee for timely planted acres will be provided 
for such acreage, if the substitute crop is planted after the 10th 
day following the final planting date for the insured crop. If you 
elected the Catastrophic Risk Protection Endorsement or excluded 
this coverage, and plant a substitute crop, no prevented planting 
coverage will be provided. For example, if your final stage 
production guarantee for timely planted acreage is 20.0 tons per 
acre, your prevented planting production guarantee would be 3.5 tons 
per acre (20.0 ton multiplied by 0.175). You may elect to exclude 
prevented planting coverage when a substitute crop is planted for 
harvest and receive a reduction in the applicable premium rate. If 
you wish to exclude this coverage, you must so indicate, on or 
before the sales closing date, on your application or on a form 
approved by us. Your election to exclude this coverage will remain 
in effect from year to year unless you notify us in writing on our 
form by the applicable sales closing date for the crop year for 
which you wish to include this coverage. All acreage of the crop 
insured under this policy will be subject to this exclusion.
    (2) Production guarantees for timely, late, and prevented 
planting acreage within a unit will be combined to determine the 
production guarantee for the unit. For example, assume you insure 1 
unit in which you have a 100 percent share. The unit consists of 150 
acres, of which 50 acres were planted timely, 50 acres were planted 
7 days after the final planting date (late planted), and 50 acres 
were not planted but are eligible for a prevented planting 
production guarantee. The production guarantee for the unit will be 
computed as follows:
    (i) For the timely planted acreage, multiply the per acre 
production guarantee for timely planted acreage by the 50 acres 
planted timely;
    (ii) For the late planted acreage, multiply the per acre 
production guarantee for timely planted acreage by 93 percent and 
multiply the result by the 50 acres planted late; and
    (iii) For prevented planting acreage, multiply the final stage 
per acre production guarantee for timely planted acreage by:
    (A) Thirty five percent and multiply the result by the 50 acres 
you were prevented from planting, if the acreage is eligible for 
prevented planting coverage, and if the acreage is left idle for the 
crop year, or if a cover crop is planted not for harvest. Prevented 
planting compensation hereunder will not be denied because the cover 
crop is hayed or grazed; or
    (B) Seventeen and one-half percent and multiply the result by 
the 50 acres you were prevented from planting, if the acreage is 
eligible for prevented planting coverage, and if you elect to plant 
a substitute crop for harvest after the 10th day following the final 
planting date for the insured crop. (This subparagraph (B) is not 
applicable, and prevented planting coverage is not available 
hereunder, if you elected the Catastrophic Risk Protection 
Endorsement or you elected to exclude prevented planting coverage 
when a substitute crop is planted (see section 14(d)(1)(iii)).)
    Your premium will be based on the result of multiplying the per 
acre production guarantee for timely planted acreage by the 150 
acres in the unit.
    (3) You must have the inputs available to plant and produce the 
intended crop with the expectation of at least producing the 
production guarantee. Proof that these inputs were available may be 
required.
    (4) In addition to the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), the insurance period 
for prevented planting coverage begins:
    (i) On the sales closing date contained in the Special 
Provisions for the insured crop in the county for the crop year the 
application for insurance is accepted; or
    (ii) For any subsequent crop year, on the sales closing date for 
the insured crop in the county for the previous crop year, provided 
continuous coverage has been in effect since that date. For example: 
If you make application and purchase insurance for sugar beets for 
the 1997 crop year, prevented planting coverage will begin on the 
1997 sales closing date for sugar beets in the county. If the sugar 
beet coverage remains in effect for the 1998 crop year (is not 
terminated or canceled during or after the 1997 crop year), 
prevented planting coverage for the 1998 crop year began on the 1997 
sales closing date. Cancellation for the purpose of transferring the 
policy to a different insurance provider when there is no lapse in 
coverage will not be considered terminated or canceled coverage for 
the purpose of the preceding sentence.
    (5) The acreage to which prevented planting coverage applies 
will not exceed the total eligible acreage on all FSA Farm Serial 
Numbers in which you have a share, adjusted for any reconstitution 
that may have occurred on or before the sales closing date. Eligible 
acreage for each FSA Farm Serial Number is determined as follows:
    (i) Eligible acreage will not exceed the number of acres 
required to be grown in the current crop year under a contract 
executed with a processor prior to the acreage reporting date or the 
number of acres needed to produce the amount of contracted 
production based on the APH yield for the acreage.
    (ii) Acreage intended to be planted under an irrigated practice 
will be limited to the number of acres for which you had adequate 
irrigation facilities prior to the insured cause of loss which 
prevented you from planting.
    (iii) A prevented planting production guarantee will not be 
provided for any acreage:
    (A) That does not constitute at least 20 acres or 20 percent of 
the acreage in the unit, whichever is less (Acreage that is less 
than 20 acres or 20 percent of the acreage in the unit will be 
presumed to have been intended to be planted to the insured crop 
planted in the unit, unless you can show that you had the inputs 
available before the final planting date to plant and produce 
another insured crop on the acreage);
    (B) For which the actuarial table does not designate a premium 
rate unless a written agreement designates such premium rate;
    (C) Used for conservation purposes or intended to be left 
unplanted under any program administered by the United States 
Department of Agriculture;
    (D) On which another crop is prevented from being planted, if 
you have already received a prevented planting indemnity, guarantee 
or amount of insurance for the same acreage in the same crop year, 
unless you provide adequate records of acreage and production 
showing that the acreage was double-cropped in each of the last 4 
years;
    (E) On which the insured crop is prevented from being planted, 
if any other crop is

[[Page 58779]]

planted and fails, or is planted and harvested, hayed or grazed on 
the same acreage in the same crop year, (other than a cover crop as 
specified in section 14(d)(2)(iii)(A), or a substitute crop allowed 
in section 14 (d)(2)(iii)(B), unless you provide adequate records of 
acreage and production showing that the acreage was double-cropped 
in each of the last 4 years;
    (F) When coverage is provided under the Catastrophic Risk 
Protection Endorsement if you plant another crop for harvest on any 
acreage you were prevented from planting in the same crop year, even 
if you have a history of double-cropping. If you have a Catastrophic 
Risk Protection Endorsement and receive a prevented planting 
indemnity, guarantee, or amount of insurance for a crop and are 
prevented from planting another crop on the same acreage, you may 
only receive the prevented planting indemnity, guarantee, or amount 
of insurance for the crop on which the prevented planting indemnity, 
guarantee, or amount of insurance is received; or
    (G) For which planting history or conservation plans indicate 
that the acreage would have remained fallow for crop rotation 
purposes.
    (iv) For the purpose of determining eligible acreage for 
prevented planting coverage, acreage for all units will be combined 
and be reduced by the number of sugar beet acres timely planted and 
late planted. For example, assume you have 100 acres eligible for 
prevented planting coverage in which you have a 100 percent (100%) 
share. The acreage is located in a single FSA Farm Serial Number 
which you insure as two separate optional units consisting of 50 
acres each. If you planted 60 acres of sugar beets on one optional 
unit and 40 acres of sugar beets on the second optional unit, your 
prevented planting eligible acreage would be reduced to zero (i.e., 
100 acres eligible for prevented planting coverage minus 100 acres 
planted equals zero).
    (6) In accordance with the provisions of section 6 (Report of 
Acreage) of the Basic Provisions (Sec. 457.8), you must report by 
unit any insurable acreage that you were prevented from planting. 
This report must be submitted on or before the acreage reporting 
date. For the purpose of determining acreage eligible for a 
prevented planting production guarantee, the total amount of 
prevented planting and planted acres cannot exceed the maximum 
number of acres eligible for prevented planting coverage. Any 
acreage you report in excess of the number of acres eligible for 
prevented planting coverage, or that exceeds the number of eligible 
acres physically located in a unit, will be deleted from your 
acreage report.

15. Written Agreements

    Designated terms of this policy may be altered by written 
agreement. The following conditions will apply:
    (a) You must apply in writing for each written agreement no 
later than the sales closing date, except as provided in section 
15(e).
    (b) The application for a written agreement must contain all 
variable terms of the contract between you and us that will be in 
effect if the written agreement is not approved;
    (c) If approved, the written agreement will include all variable 
terms of the contract, including, but not limited to, crop type or 
variety, the guarantee, premium rate, and price election.
    (d) Each written agreement will only be valid for one year. If 
the written agreement is not specifically renewed the following 
year, insurance coverage for subsequent crop years will be in 
accordance with the printed policy.
    (e) An application for a written agreement submitted after the 
sales closing date may be approved if, after a physical inspection 
of the acreage, it is determined that no loss has occurred and the 
crop is insurable in accordance with the policy and written 
agreement provisions.

    Signed in Washington, DC, on November 13, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-29560 Filed 11-18-96; 8:45 am]
BILLING CODE 3410-FA-P