[Federal Register Volume 61, Number 251 (Monday, December 30, 1996)]
[Proposed Rules]
[Pages 68674-68681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-33069]


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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation

7 CFR Parts 401 and 457

RIN 0563-AB03


Hybrid Sorghum Seed Endorsement; and Common Crop Insurance 
Regulations, Hybrid Sorghum Seed Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes 
specific crop provisions for the insurance of hybrid sorghum seed. 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, include the 
current Hybrid Sorghum Seed Endorsement with the Common Crop Insurance 
Policy for ease of use and consistency of terms, and to restrict the 
effect of the current Hybrid Sorghum Seed Endorsement to the 1997 and 
prior crop years.

DATES: Written comments, data, and opinions on this proposed rule will 
be accepted until close of business February 28, 1997 and will be 
considered when the rule is to be made final. The comment period for 
information collections under the Paperwork Reduction Act of 1995 
continues through February 28, 1997.

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

FOR FURTHER INFORMATION CONTACT: Ron Nesheim, Program Analyst, Research 
and Development Division, Product Development Branch, Federal Crop 
Insurance Corporation, at the Kansas City, MO, address listed above, 
telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866

    The Office of Management and Budget (OMB) has determined this rule 
to be exempt for the purposes of Executive Order No. 12866, and, 
therefore, this rule has not been reviewed by OMB.

Paperwork Reduction Act of 1995

    The title of this information collection is ``Catastrophic Risk 
Protection Plan and Related Requirements including, Common Crop 
Insurance Regulations; Hybrid Sorghum Seed Crop Insurance Provisions.'' 
The information to be collected includes a crop insurance application 
and an acreage report. Information collected from the application and 
acreage report is electronically submitted to FCIC by the reinsured 
companies. Potential respondents to this information collection are 
producers of hybrid sorghum seed that are eligible for Federal crop 
insurance.
    The information requested is necessary for the reinsured companies 
and FCIC to provide insurance and reinsurance, determine eligibility, 
determine the correct parties to the agreement or contract, determine 
and collect premiums or other monetary amounts, and pay benefits.
    All information is reported annually. The reporting burden for this 
collection of information is estimated to average 16.9 minutes per 
response for each of the 3.6 responses from approximately 1,755,015 
respondents. The total annual burden on the public for this information 
collection is 2,676,932 hours.
    FCIC is requesting comments on the following: (a) whether the 
proposed collection of information is necessary for the proper 
performance of the functions of the agency, including whether the 
information shall have practical utility; (b) the accuracy of the 
agency's estimate of the burden of the proposed collection of 
information; (c) ways to enhance the quality, utility, and clarity of 
the information to be collected; and (d) ways to minimize the burden of 
the collection of information on respondents, including through the use 
of automated collection techniques or other forms of information 
gathering technology.
    Comments regarding paperwork reduction should be submitted to the 
Desk Officer for Agriculture, Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, D.C. 20503.

[[Page 68675]]

    The Office of Management and Budget (OMB) is required to make a 
decision concerning the collections of information contained in these 
proposed regulations between 30 and 60 days after submission to OMB. 
Therefore, a comment to OMB is best assured of having full effect if 
OMB receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the proposed regulation.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates 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) 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 
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 producer 
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 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 published at 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.

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.

Background

    FCIC proposes to add to the Common Crop Insurance Regulations (7 
CFR part 457), a new section, 7 CFR 457.112, Hybrid Sorghum Seed Crop 
Insurance Provisions. The new provisions will be effective for the 1998 
and succeeding crop years. These provisions will replace and supersede 
the current provisions for insuring hybrid sorghum seed found at 7 CFR 
401.109 (Hybrid Sorghum Seed Endorsement). FCIC also proposes to amend 
7 CFR 401.109 to limit its effect to the 1997 and prior crop years. 
FCIC will later publish a regulation to remove section 401.109 and 
reserve that section.
    This rule makes minor editorial and format changes to improve the 
Hybrid Sorghum Seed Endorsement's compatibility with the Common Crop 
Insurance Policy. In addition, FCIC is proposing substantive changes in 
the provisions for insuring hybrid sorghum seed as follows:
    1. Section 1--Add definitions for the terms ``adjusted yield,'' 
``approved yield,'' ``bushel,'' ``certified seed test,'' ``county 
yield,'' ``FSA,'' ``field run,'' ``good farming practices,'' ``hybrid 
sorghum seed processor contract,'' ``insurable interest,'' 
``interplanted,'' ``local market price,'' ``minimum guaranteed 
payment,'' ``non-seed amount,'' ``planted acreage,'' ``planting 
pattern,'' ``practical to replant,'' ``sample,'' ``seed amount,'' 
``seed production,'' and ``written agreement'' for clarification.
    2. Section 2--Unit division provisions are amended to include 
producer's reporting responsibilities to qualify for optional units. 
Also, clarifies that optional units are available if the hybrid sorghum 
seed processor contract specifies that it is a specific number of acres 
that are under contract and not a specified amount of production.
    3. Section 4--Change the contract change date to November 30 in 
order to maintain an adequate time period between the contract change 
date and the revised cancellation date.
    4. Section 5--Change the cancellation and termination dates to 
March 15. This change is necessary to standardize the cancellation and 
termination dates with the sales closing dates, which were changed to 
30 days earlier for spring planted crops to comply with the 
requirements of the Federal Crop Insurance Reform Act of 1994.
    5. Section 6--Require the producer to certify that a hybrid sorghum 
seed processor contract has been executed and certify the amount of any 
minimum guaranteed payment from the seed company. Certification of a 
hybrid seed processor contract on or before the acreage reporting date 
is needed to establish the insurability of the crop before a loss is 
likely and ensures a market for the crop. The producer must also 
certify any minimum guaranteed payment under the contract because a 
minimum guaranteed payment will affect insurance premium and the amount 
of indemnity.
    6. Section 7(c)--Specify conditions under which a seed producer who 
is also a seed company can establish an insurable interest in the 
insured crop. There is an inherent conflict of interest when the 
producer is also the processor

[[Page 68676]]

who will provide the records of the producer. These conditions are 
needed to ensure the eligibility of the processor for crop insurance.
    7. Section 8(c)--Clarify that any acreage damaged prior to the 
final planting date must be replanted unless it is not practical to 
replant.
    8. Section 11(a)--Clarify the size of representative crop samples 
required when damage is discovered.
    9. Section 14--Add provisions for providing insurance coverage by 
written agreement. FCIC has a long standing policy of permitting 
certain modifications of the insurance contract by written agreement 
for some policies. This amendment allows FCIC to tailor the policy to a 
specific insured in certain instances. The new section will cover 
application for, and duration of, written agreements.

List of Subjects in 7 CFR 401 and 457

    Hybrid sorghum seed endorsement, Crop insurance, Hybrid sorghum 
seed.

Proposed Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby proposes to amend 7 CFR parts 401 and 
457 as follows:

PART 401--GENERAL CROP INSURANCE REGULATIONS--REGULATIONS FOR THE 
1988 AND SUBSEQUENT CONTRACT YEARS

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

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

    2. Section 401.109 introductory paragraph is revised to read as 
follows:


Sec. 401.109 Hybrid sorghum seed endorsement

    The provisions of the Hybrid Sorghum Seed Endorsement for the 1988 
through 1997 crop years are as follows:
* * * * *

PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE 
1994 AND SUBSEQUENT CONTRACT YEARS

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

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

     4. Section 457.112 is added to read as follows:


Sec. 457.112 Hybrid Sorghum Seed Crop Insurance Provisions

    The Hybrid Sorghum Seed Crop Insurance Provisions for the 1998 and 
succeeding crop years are as follows:
    FCIC policies:

Department of Agriculture

Federal Crop Insurance Corporation

    Reinsured policies:

(Appropriate title for insurance provider)
    Both FCIC and reinsured policies:

Hybrid Sorghum Seed 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

    Adjusted yield--The yield per acre that results from multiplying 
the approved yield by the coverage level percentage.
    Amount of insurance per acre--The number of dollars determined by 
multiplying the county yield for the coverage level you select by the 
price election you select, and subtracting any minimum guaranteed 
payment. If the minimum guaranteed payment is stated in a unit of 
measure other than dollars, it will be converted to a dollar amount by 
multiplying the number of bushels guaranteed by the price election you 
selected.
    Approved yield--The yield per acre that a specific type or variety 
is expected to produce determined from yield records provided by the 
seed company or other acceptable information.
    Bushel--Fifty-six pounds avoirdupois of the insured crop.
    Certified seed test--A warm germination test performed according to 
specifications of the ``Rules for Testing Seeds'' of the Association of 
Official Seed Analysts.
    Commercial hybrid sorghum seed--The offspring produced by crossing 
a male and female parent plant, each having a different genetic 
character. This offspring is the product intended for use by an 
agricultural producer to produce a commercial field sorghum crop for 
grain or forage.
    County yield--A yield contained in the Actuarial Table that is used 
to calculate your amount of insurance.
    Days--Calendar days.
    Dollar value per bushel--The value determined by dividing your 
amount of insurance for timely planted acreage by the adjusted yield.
    FSA--The Farm Service Agency, an agency of the United States 
Department of Agriculture, or a successor agency.
    Female parent plants--Sorghum plants that are grown for the purpose 
of producing commercial hybrid sorghum seed and have had their stamens 
removed.
    Field run--Commercial hybrid sorghum seed production before it has 
been processed or screened.
    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 amount of insurance per acre.
    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 amount of insurance, 
or are required by the hybrid sorghum seed processor contract and 
recognized by the Cooperative State Research, Education, and Extension 
Service as compatible with agronomic and weather conditions in the 
county.
    Harvest--Combining, threshing or picking of the female parent 
plants to obtain commercial hybrid sorghum seed.
    Hybrid sorghum seed processor contract--A written agreement between 
the hybrid sorghum seed crop producer and a seed company containing, at 
a minimum:
    (a) The producer's promise to plant and grow male and female parent 
plants, and to deliver all commercial hybrid sorghum seed produced from 
such plants to the seed company;
    (b) The seed company's promise to purchase all the commercial 
hybrid sorghum seed produced by the producer; and
    (c) Either a fixed price per unit of measure (bushels, 
hundredweight, etc.) of the commercial hybrid sorghum seed or a formula 
to determine the value of such seed. Any formula for establishing the 
value must be based on data provided by a public third party that 
establishes or provides pricing information to the general public, 
based on prices paid in the open market (e.g., commodity futures 
exchanges) to be acceptable for the purpose of this policy.
    Inadequate germination--Germination of less than 80 percent of the 
commercial hybrid sorghum seed as determined by using a certified seed 
test on clean seed.
    Insurable interest--Your share of the financial loss that occurs in 
the event seed production is reduced by a cause of loss defined under 
this crop insurance contract.
    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.

[[Page 68677]]

    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 amount of insurance 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 25 days after the 
final planting date.
    Local market price--The cash price offered by buyers in the area 
for any production from the female parent plants that is not considered 
commercial hybrid sorghum seed under the terms of this policy.
    Male parent plants--Sorghum plants grown for the purpose of 
pollinating female parent plants.
    Minimum guaranteed payment--A minimum amount (usually stated in 
dollars or bushels) specified in your hybrid sorghum seed processor 
contract that will be paid or credited to you by the seed company 
regardless of the quantity of seed produced.
    Non-seed amount--The dollar amount obtained by multiplying the 
number of bushels of non-seed production to count by the local market 
price determined on the earlier of the date the non-seed production is 
sold or the date of final inspection for the unit.
    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. The insured crop must be planted in 
rows wide enough to permit mechanical cultivation. Acreage planted in 
any other manner will not be insurable unless otherwise provided by the 
Special Provisions or by written agreement.
    Planting pattern--The arrangement of the rows of the male and 
female parent plants in a field. An example of a planting pattern is 
four consecutive rows of female parent plants, two consecutive rows of 
male parent plants.
    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 field, time to crop maturity, 
and marketing window, that replanting the insured crop will allow the 
crop to adequately pollinate and attain maturity prior to the calendar 
date for the end of the insurance period. It will not be considered 
practical to replant after the end of the late planting period unless 
replanting is generally occurring in the area. Determination of 
practical to replant will take into consideration the planting dates 
specified in the hybrid sorghum seed processor contract in accordance 
with section 8(c).
    Prevented planting--Inability to plant:
    (a) The female parent plant seed with proper equipment by:
    (1) The final planting date designated in the Special Provisions 
for the insured crop in the county; or
    (2) The end of the late planting period; or
    (b) The male parent plant seed with proper equipment at a time 
sufficient to assure adequate pollination of the female parent plants 
in accordance with the production management practices of the seed 
company. You must have been unable to plant the female or male parent 
plant seed due to an insured cause of loss that has prevented the 
majority of producers in the surrounding area from planting the same 
crop.
    Sample--For the purpose of the certified seed test, at least 3 
pounds of field run sorghum seed for each type or variety of commercial 
hybrid sorghum seed grown on the unit.
    Seed amount--The dollar amount obtained by multiplying the number 
of bushels of seed production to count for each type or variety of 
commercial hybrid sorghum seed grown on the unit by the applicable 
dollar value per bushel for that type or variety, and totaling the 
products of each type or variety.
    Seed company--A corporation that possesses all licenses for 
marketing commercial hybrid sorghum seed required by the state in which 
it is domiciled or operates, and which possesses or has contracted 
facilities with enough storage and drying capacity to accept and 
process the insured crop within a reasonable amount of time after 
harvest.
    Seed production--All seed produced by female parent plants with a 
germination rate of at least 80 percent, as determined by a certified 
seed test.
    Timely planted--Planted on or before the final planting date 
designated in the Special Provisions for the insured crop in the 
county.
    Type--Grain sorghum, forage sorghum, or sorghum sudan parent 
plants.
    Variety--The name, number or code assigned to a specific genetic 
cross by the seed company or the Special Provisions for the insured 
crop in the county.
    Written agreement--A written document that alters designated terms 
of this policy in accordance with section 14.

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), (basic 
unit) may be divided into optional units only if, for each optional 
unit, you meet all the conditions of this section or if a written 
agreement to such division exists.
    (b) Optional units are available if the hybrid sorghum seed 
processor contract specifies that it is a specific number of acres that 
are under contract and not a specified amount of production.
    (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 may 
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 amount of insurance.
    (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 be kept separate until loss 
adjustment is completed by us; and
    (4) Each optional unit must meet one or more of the following 
criteria, as applicable:
     Optional Units by Section, Section Equivalent, or FSA Farm Serial 
Number: Optional units may be established if

[[Page 68678]]

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 unique FSA Farm Serial 
Number.

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 hybrid sorghum seed in the county insured under 
this policy unless the Special Provisions provide different price 
elections by type or variety, in which case you may elect one price 
election for each hybrid sorghum seed type or variety designated in the 
Special Provisions. The price elections you choose for each type or 
variety must have the same percentage relationship to the maximum price 
offered by us for each type or variety. For example, if you choose 100 
percent of the maximum price election for one specific type or variety, 
you must also choose 100 percent of the maximum price election for all 
other types or varieties.
    (b) The production reporting requirements contained in section 3 
(Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities) of the Basic Provisions (Sec. 457.8) are not applicable to 
this contract.

4. Contract Changes

    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is November 30 
preceding the cancellation date.

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 March 15.

 6. Report of Acreage

    In addition to the requirements of section 6 (Report of Acreage) of 
the Basic Provisions (Sec. 457.8), you must:
    (a) Report, by type and variety, the location and insurable acreage 
of the insured crop;
    (b) Report any acreage that is uninsured, including that portion of 
the total acreage occupied by male parent plants; and
    (c) Certify that you have a hybrid sorghum seed processor contract 
and, if applicable, report the amount of any minimum guaranteed 
payment.

 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 female parent 
plants in the county for which a premium rate is provided by the 
actuarial table:
     (1) In which you have a share;
    (2) That are grown under a hybrid sorghum seed processor contract 
executed before the acreage reporting date;
    (3) That are planted for harvest as commercial hybrid sorghum seed 
in accordance with the requirements of the hybrid sorghum seed 
processor contract; and
    (4) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Planted with a mixture of female and male parent seed in the 
same row;
    (ii) Planted for any purpose other than for commercial hybrid 
sorghum seed;
    (iii) Interplanted with another crop; or
    (iv) Planted into an established grass or legume.
    (b) An instrument in the form of a ``lease'' under which you retain 
control of the acreage on which the insured crop is grown and that 
provides for delivery of the crop under substantially the same terms as 
a hybrid sorghum seed processor contract will be treated as a contract 
under which you have an insurable interest in the crop.
    (c) A commercial hybrid sorghum seed producer who is also a 
commercial hybrid sorghum seed company may be able to establish an 
insurable interest if the following requirements are met:
    (1) The seed company must be a corporation and have an insurable 
interest in the hybrid sorghum seed crop;
    (2) The Board of Directors of the seed company must have instituted 
a corporate resolution that sets forth essentially the same terms as a 
hybrid sorghum seed processor contract. Such corporate resolution will 
be considered a contract under the terms of the hybrid sorghum seed 
crop insurance policy;
    (3) Sales records for at least the previous years' seed production 
must be provided to confirm that the seed company has produced and sold 
seed. If such records are not available, the crop may only be insured 
under the Coarse Grains Crop Provisions; and
    (4) Our inspection of the storage and drying facilities determines 
that they satisfy the requirements for a seed company.

8. Insurable Acreage

    In addition to the provisions of section 9 (Insurable Acreage) of 
the Basic Provisions (Sec. 457.8), we will not insure any acreage:
    (a) Planted and occupied exclusively by male parent plants;
    (b) Not in compliance with the rotation requirements contained in 
the Special Provisions or, if applicable, required by the hybrid 
sorghum seed processor contract; or
    (c) Of the insured crop damaged before the final planting date, to 
the extent that the remaining stand will not produce at least 90 
percent of the adjusted yield, unless such acreage is replanted or we 
agree that it is not practical to replant. If we determine that it is 
practical to replant and the seed company will not extend the planting 
date stipulated in the hybrid sorghum seed processor contract, we will 
delete the affected acreage from your report of acreage, and that 
acreage will not be insured under these crop provisions.

9. Insurance Period

    (a) In addition to the provisions of section 11 (Insurance Period) 
of the Basic Provisions (Sec. 457.8), insurance attaches after:
    (1) The female parent plant seed is completely planted in 
accordance with the hybrid sorghum seed processor contract and the 
production practices of the seed company, on or before the final 
planting date designated in the Hybrid Sorghum Seed Special Provisions, 
except as allowed in section 13(c); and
    (2) The male parent plant seed is completely planted in accordance 
with production practices for the variety being produced.
    (b) 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 the November 30 immediately following 
planting.

10. Causes of Loss

    (a) 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 during the insurance 
period:
    (1) Adverse weather conditions;
    (2) Fire;

[[Page 68679]]

    (3) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (4) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (5) Wildlife;
    (6) Earthquake;
    (7) Volcanic eruption; or
    (8) Failure of the irrigation water supply, if caused by an insured 
peril that occurs during the insurance period.
    (b) In addition to the causes of loss not insured against under 
section 12 (Causes of Loss) of the Basic Provisions (Sec. 457.8), we 
will not insure against any loss of production due to:
    (1) The use of unadapted, incompatible, or genetically deficient 
male or female parent plant seed;
    (2) Frost or freeze after the date set by the Special Provisions;
    (3) Failure to follow the requirements stated in the hybrid sorghum 
seed processor contract or production management practices of the seed 
company;
    (4) Inadequate germination, even if it's the result of an insured 
cause of loss, unless you have provided adequate notice under section 
11(b)(1) and the crop is inspected and the loss is appraised by us 
before harvest is completed; or
    (5) Failure to plant the male parent plant seed at a time or in a 
manner sufficient to assure adequate pollination of the female parent 
plants, unless you are prevented from planting the male parent plant 
seed.

11. Duties in the Event of Damage or Loss

    (a) In accordance with the requirements of section 14 (Duties in 
the Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), the 
representative samples of the unharvested crop must be at least one 
complete planting pattern of the male and female parent plant rows 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.
    (b) In addition to your duties under section 14 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8):
    (1) You must give us notice of probable loss at least 15 days 
before the beginning of harvest if you anticipate inadequate 
germination on any unit; and
    (2) You must provide a completed copy of your hybrid sorghum seed 
processor contract.

12. 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 such 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) You will not receive an indemnity payment on a unit if the seed 
company refuses to provide us with records we require to determine the 
dollar value per bushel of production for each variety.
    (c) 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 amount of 
insurance per acre;
    (2) Subtracting the total of the production to count for the seed 
amount and the non-seed amount from the result of section 12(c)(1); and
    (3) Multiplying the result of section 12(c)(2) by your share.
    (d) The total production (bushels) to count from all insurable 
acreage on the unit will include all seed and non-seed production as 
specified in section (e) through (g) below.
    (e) Production to be counted as seed production will include:
    (1) All appraised production as follows:
    (i) Not less than the adjusted yield 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;
    (ii) Production lost due to uninsured causes;
    (iii) Mature unharvested production with a germination rate of at 
least 80 percent of the commercial hybrid sorghum seed as determined by 
a certified seed test. Any such production may be adjusted in 
accordance with section 12(g);
    (iv) Immature appraised production;
    (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 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) Harvested production that you deliver as commercial hybrid 
sorghum seed to the seed company stated in your hybrid sorghum seed 
processor contract, regardless of quality, unless the production has 
inadequate germination.
    (f) Production to be counted as non-seed production will include 
all harvested or mature appraised production that does not qualify as 
seed production to count as specified in section 12(e). Any such 
production may be adjusted in accordance with section 12(g).
    (g) For the purpose of determining the quantity of mature 
production:
    (1) Commercial hybrid sorghum seed production will be:
    (i) Increased 0.12 percent for each 0.1 percentage point of 
moisture below 13.0 percent; or
    (ii) Decreased 0.12 percent for each 0.1 percentage point of 
moisture in excess of 13.0 percent.
    (2) When records of commercial hybrid sorghum seed production 
provided by the seed company have been adjusted to a basis of 13.0 
percent moisture and 56 pound avoirdupois bushels, section 12(g)(1) 
above will not apply to harvested production. In such cases, records of 
the seed company used for determining the next years approved yield 
will also be used to determine the amount of production to count: 
provided, such production records are calculated on the same basis as 
that used to determine the approved yield.

13. Late Planting 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

[[Page 68680]]

Late Planting Agreement Option, insurance will be provided for acreage 
planted to the insured crop during the late planting period (see 
section 13(c)), and acreage you were prevented from planting (see 
section 13(d)). These coverages provide reduced amounts of insurance. 
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 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 hybrid sorghum seed acreage planted during the late 
planting period, the amount of insurance for each acre will be reduced 
for each day planted after the final planting date by:
    (i) One percent per day for the 1st through the 10th day; and
    (ii) Two percent per day 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 hybrid sorghum seed 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 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 hybrid sorghum seed, 
you may elect:
    (i) To plant hybrid sorghum seed during the late planting period. 
The amount of insurance for such acreage will be determined in 
accordance with section 13(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 amount of insurance for such 
acreage will be 50 percent of the amount of insurance for timely 
planted acres. For example, if your amount of insurance for timely 
planted acreage is $200 per acre, your prevented planting amount of 
insurance would be $100 per acre ($200 multiplied by 0.50). 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 12; or
    (iii) Not to plant the intended crop but plant a substitute crop 
for harvest, in which case:
    (A) No prevented planting amount of insurance 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) An amount of insurance equal to 25 percent of the amount of 
insurance 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 amount of insurance for timely planted 
acreage is $200 per acre, your prevented planting amount of insurance 
would be $50 per acre ($200 multiplied by 0.25). 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) Amounts of insurance for timely, late, and prevented planting 
acreage within a unit will be combined to determine the amount of 
insurance for the unit. For example, assume you insure one unit in 
which you have a 100 percent share. The unit consists of 185 acres of 
the same type and variety of which 150 acres are occupied by the female 
parent plants. (The acreage occupied by the male parent plants (35 
acres) is not insurable, and is not eligible for coverage under this 
section.) 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 amount of insurance. The amount of insurance for 
the unit will be computed as follows:
    (i) For the timely planted acreage, multiply the per acre amount of 
insurance for timely planted acreage by the 50 acres planted timely;
    (ii) For the late planted acreage, multiply the per acre amount of 
insurance 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 per acre amount 
of insurance for timely planted acreage by:
    (A) Fifty 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) Twenty-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 you elect to plant a substitute crop for 
harvest after the 10th day following the final planting date for the 
insured crop. (This paragraph (B) is not applicable, and prevented 
planting coverage is not available under these crop provisions, if you 
elected the Catastrophic Risk Protection Endorsement or you elected to 
exclude prevented planting coverage when a substitute crop is planted 
(see section 13(d)(1)(iii)).
    Your premium will be based on the result of multiplying the per 
acre amount of insurance 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 approved 
yield. 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 hybrid sorghum seed for 
the 1998 crop year, prevented planting coverage will begin on the 1998 
sales closing date for hybrid sorghum seed in the county. If the hybrid 
sorghum seed coverage remains in effect

[[Page 68681]]

for the 1999 crop year (is not terminated or canceled during or after 
the 1998 crop year), prevented planting coverage for the 1999 crop year 
began on the 1998 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) If you participate in any program administered by the United 
States Department of Agriculture that limits the number of acres that 
may be planted for the crop year, the acreage eligible for prevented 
planting coverage will not exceed the total acreage permitted to be 
planted to the insured crop.
    (ii) If you do not participate in any program administered by the 
United States Department of Agriculture that limits the number of acres 
that may be planted, and unless we agree in writing on or before the 
sales closing date, eligible acreage will not exceed the greater of:
    (A) The number of acres planted to the hybrid sorghum seed on the 
FSA Farm Serial Number during the previous crop year; or
    (B) One-hundred percent of the simple average of the number of 
acres planted to hybrid sorghum seed during the crop years that you 
certified to determine your yield.
    (iii) 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.
    (iv) A prevented planting amount of insurance 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 in which the 
insured crop was grown on the acreage;
    (E) which the insured crop is prevented from being planted, if any 
other crop is 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 (d)(2)(iii)(A) of this section, or a 
substitute crop allowed in section (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 in which the insured crop 
was grown on the insured acreage;
    (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.
    (v) 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 hybrid sorghum seed 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 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 hybrid sorghum seed on one optional unit and 40 
acres of hybrid sorghum seed 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 
amount of insurance, 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.

14. Written Agreement

    Designated terms of this policy may be altered by written agreement 
in accordance with the following:
    (a) You must apply in writing for each written agreement no later 
than the sales closing date, except as provided in section 14(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); and
    (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, D.C., on December 20, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-33069 Filed 12-27-96; 8:45 am]
BILLING CODE 3410-FA-P