[Federal Register Volume 62, Number 10 (Wednesday, January 15, 1997)]
[Proposed Rules]
[Pages 2052-2055]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1016]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 400

RIN 0563-AB26


General Administrative Regulations; Collection and Storage of 
Social Security Account Numbers and Employer Identification Numbers

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The regulations contained in this subpart are issued pursuant 
to the Federal Crop Insurance Act, as amended (FCIA) (7 U.S.C. 1501 et 
seq.). The intended effect of this revision is to comply with the 
statutory mandate that requires the collection of Social Security 
Number (SSN) and Employer Identification Number (EIN) information of 
participating agents, loss adjusters, and policyholders and to 
establish the procedures to be used by the Federal Crop Insurance 
Corporation (FCIC) and insurance providers in the collection, use, and 
storage of documents containing SSN or EIN information.

DATES: Written comments, data, and opinions on this proposed rule will 
be accepted until close of business March 17, 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 March 17, 1997.

ADDRESSES: Written comments, data, and opinions on this proposed rule 
should be sent to the Director, Product Development Division, Risk 
Management Agency (RMA), United States Department of Agriculture 
(USDA), 9435 Holmes Road, Kansas City, MO 64131, telephone (816) 926-
7730. Written comments will be available for public inspection and 
copying in room 0324, South Building, USDA, 14th and Independence 
Avenue, SW., Washington, DC., 8:15 a.m.--4:45 p.m., est, Monday through 
Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: For further information, contact Bill 
Smith, Supervisory Insurance Management Specialist, Research and 
Development, Product Development Division, RMA, at the Kansas City, MO 
address listed above, telephone (816) 926-7743.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This action has been reviewed under USDA procedures established by 
Executive Order 12866. This action constitutes a review as to the need, 
currency, clarity, and effectiveness of these regulations under those 
procedures.
    This rule has been determined to be not significant for the 
purposes of Executive Order 12866, and, therefore, has been reviewed by 
the Office of Management and Budget (OMB).

Paperwork Reduction Act of 1995

    The information collection requirements contained in these 
regulations have been submitted to OMB for their approval under section 
3507(j) of the Paperwork Reduction Act of 1995. This proposed rule will 
amend the information collection requirements under OMB number 0563-
0047, through November 30, 1999. The FCIC will be amending the 
information collection to adjust the estimated reporting hours and seek 
a valid approval for 3 years under section 3507(d) of the Act.
    Revised reporting estimates and requirements for usage of OMB 
control number 0563-0047 will be submitted to OMB for approval under 
the provisions of 44 U.S.C. chapter 35. Public comments are due by 
March 17, 1997.
    The title of this information collection is ``Social Security 
Number (SSN) and Employer Identification Number (EIN) Reporting Form.'' 
Collection of the SSN and the EIN is required by section 506 of the 
FCIA (7 U.S.C. 1506). The FCIA requires the collection of SSN and EIN 
information of policyholders, participating agents, and loss adjusters 
and sets forth the procedures to be used by FCIC and insurance 
providers in the collection, use, and storage of documents containing 
SSN and EIN information. The primary use of the SSN and EIN under this 
proposed rule will be to correctly identify the participant, and any 
other person with an interest in the policyholder's operation of at 
least 10%, as a policyholder within the systems maintained by FCIC.
    The information requested is necessary to for the insurance 
providers and FCIC to provide insurance and reinsurance, determine 
eligibility, determine the correct parties to the agreement or 
contract, determine and collect premiums, and pay indemnities. Failure 
to furnish this number will result in rejection of or substantial 
reduction in any claim for indemnity, ineligibility for insurance, and 
a unilateral determination of the amount of premium due.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to be 15 minutes per response.
    Respondents: Policyholders and those with a substantial beneficial 
interest in the policyholder or any person having any interest in the 
policyholder and receiving separate benefits under another USDA program 
as a direct result of such interest.
    Estimated Number of Respondents: 2,032,800.
    Estimated Number of Responses per Respondent: 1 per year.
    Estimated Total Burden Hours: 508,200.
    The comment period for information collections under the Paperwork 
Reduction Act of 1995 continues 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 of Agriculture, Office of Information and Regulatory 
Affairs,

[[Page 2053]]

Office of Management and Budget (OMB), Washington, D.C. 20503.
    The Office of Management and Budget (OMB) is required to make a 
decision concerning the collection 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 its 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. Under section 202 of the UMRA, FCIC 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with Federal mandates that may 
result in expenditures to State, local, or tribal governments, in the 
aggregate, or to the private sector, of $100 million or more in any 1 
year. When such a statement is needed for a rule, section 205 of the 
UMRA generally requires FCIC to identify and consider a reasonable 
number of regulatory alternatives and adopt the least costly, more 
cost-effective or least burdensome alternative that achieves the 
objectives of the rule.
    This rule contains no Federal mandate (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 12612

    It has been determined under section 6(a) of Executive Order 12612, 
Federalism, that this rule does not have sufficient Federalism 
implications to warrant the preparation of a Federalism Assessment. The 
policies and procedures contained in this rule will not have a 
substantial direct effect on States or their political subdivisions, or 
on the distribution of power and responsibilities among the various 
levels of Government.

Regulatory Flexibility Act

    This regulation will not have a significant impact on a substantial 
number of small entities. The action does not increase the paperwork 
burden on the insured producer or the reinsured company. The program is 
strictly voluntary. This regulation requires only that the participant 
provide the SSN or EIN. This regulation does not require or impose any 
requirement on the delivery agent or company that is not already 
required by the Privacy Act of 1974 (5 U.S.C. 552a). 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 12372

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

Executive Order 12778

    The Office of General Counsel has determined that these regulations 
meet the applicable standards provided in sections 2(a) and 2(b)(2) of 
Executive Order 12778. The provisions of this rule will preempt State 
and local laws to the extent such State and local laws are inconsistent 
herewith. The administrative appeal provisions published at 7 CFR part 
11 must be exhausted before action for judicial review may be brought.

Environmental Evaluation

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

Background

    The Federal crop insurance program is delivered to producers 
through local FSA offices and reinsured companies (insurance 
providers). Section 506 of the FCIA requires producers, agents, and 
loss adjusters to provide SSNs or EINs as a condition of eligibility to 
participate in the Federal crop insurance program and for identifying 
producers, agents, and loss adjusters who are high risk for actuarial 
purposes. However, current regulations only require SSNs or EINs of 
applicants, policyholders, and persons with a substantial beneficial 
interest (SBI) in the policyholder. All relevant sections have been 
revised to include agents and loss adjusters.
    Further, this amendment revises for clarification the definitions 
of ``applicant,'' ``authorized person,'' ``disposition of records,'' 
``FCIC,'' ``past officers and employees,'' ``policyholder,'' 
``retrieval of records,'' ``safeguards,'' ``storage,'' ``substantial 
beneficial interest,'' and ``system of records,'' and adds definitions 
for ``Act,'' ``FSA,'' ``insurance provider,'' and ``person.'' The 
definitions of ``access,'' ``agency sales and service contractor,'' 
``ASCS,'' ``collection,'' ``FCI Act,'' ``government contract 
employees,'' ``private insurance company,'' and ``restricted access'' 
have been deleted.
    This statute also requires that any person with an SBI in a 
policyholder, or who has any interest in the policyholder and will 
receive separate benefits under another USDA program, to provide their 
SSN or EIN and clarifies that any person using an EIN for an individual 
policy must also provide that person's SSN as an SBI on that policy.
    The amendment revises Sec. 400.403, Required System of Records, to 
remove the 30 day implementation requirement, and revises section 
400.406 to remove redundancies.

List of Subjects in 7 CFR Part 400

    Crop insurance; General Administrative Regulations.

Proposed Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby proposes to amend 7 CFR part 400, 
subpart Q as follows:

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

Subpart Q--Collection and Storage of Social Security Account 
Numbers and Employer Identification Numbers

    1. The authority citation for 7 CFR part 400, subpart Q, is revised 
to read as follows:

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

    2. Sections 400.401 (a), (b)(1), (2), (3) and (4) are revised to 
read as follows:


Sec. 400.401  Basis, purpose, and applicability.

    (a) The regulations contained in this subpart are issued pursuant 
to the Act to prescribe procedures for the collection, use, and 
confidentiality of Social Security Numbers (SSN) and Employer 
Identification Numbers (EIN) and related records.
    (b) * * *
    (1) All holders of crop insurance policies issued by FCIC under the 
Act and sold and serviced by local FSA offices.
    (2) All holders of crop insurance policies sold by insurance 
providers and

[[Page 2054]]

all insurance providers, their contractors and subcontractors, 
including past and present officers and employees of such companies, 
their contractors and subcontractors.
    (3) Any agent, general agent, or company, or any past or present 
officer, employee, contractor or subcontractor of such agent, general 
agent, or company under contract to FCIC or an insurance provider for 
loss adjustment or any other purpose related to the crop insurance 
programs insured or reinsured by FCIC; and
    (4) All past and present officers, employees, elected officials, 
contractors, and subcontractors of FCIC and FSA.
    3. Section 400.402, is amended to remove all paragraph 
designations; remove the definitions of ``access,'' ``agency sales and 
service contractor,'' ``ASCS,'' ``collection,'' ``FCI Act,'' 
``government contract employees,'' ``private insurance company,'' and 
``restricted access;'' revise the definitions of ``applicant,'' 
``authorized person,'' ``disposition of records,'' ``FCIC,'' ``past 
officers and employees,'' ``policyholder,'' ``retrieval of records,'' 
``safeguards,'' ``storage,'' ``substantial beneficial interest,'' and 
``system of records;'' and add the definitions of ``Act,'' ``FSA,'' 
``insurance provider,'' and ``person'' to read as follows:


Sec. 400.402  Definitions.

    Act--The Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et 
seq.).
    Applicant--A person who has submitted an application for crop 
insurance coverage under the Act.
    Authorized person--Any current or past officer, employee, elected 
official, general agent, contractor, or loss adjuster of FCIC, the 
insurance provider, or any other government agency whose duties require 
access to administer the Act.
    Disposition of records--The act of removing and disposing of 
records containing a participant's SSN or EIN by FCIC, or the insurance 
provider.
    FCIC--The Federal Crop Insurance Corporation of the United States 
Department of Agriculture or any successor agency.
    FSA--The Farm Service Agency of the United States Department of 
Agriculture or any successor agency.
    Insurance provider--A private insurance company approved by FCIC, 
or a local FSA office providing crop insurance coverage to producers 
participating in any program administered under the Act.
    Past officers and employees--Any officer or employee of FCIC or the 
insurance provider who leaves the employ of FCIC or the insurance 
provider subsequent to the effective date of this rule.
    Person--An individual, partnership, association, corporation, 
estate, trust, or other legal entity, and whenever applicable, a state, 
political subdivision, or an agency of a state.
    Policyholder--An applicant whose application for insurance under 
the crop insurance program has been accepted by FCIC or the insurance 
provider.
    Retrieval of records--Retrieval of a person's records by that 
person's SSN or EIN, or name.
    Safeguards--Methods of security to be employed by FCIC or the 
insurance provider to protect a participant's SSN or EIN from unlawful 
disclosure and access.
* * * * *
    Storage--The secured storing of records kept by FCIC or the 
insurance provider on computer disks or drives, computer printouts, 
magnetic tape, index cards, microfiche, microfilm, etc.
    Substantial beneficial interest--Any person having an interest of 
at least 10 percent in the applicant or policyholder.
    System of records--Records established and maintained by FCIC or 
the insurance provider containing SSN or EIN data, name, address, city 
and State, applicable policy numbers, and other information related to 
multiple peril crop insurance policies as required by FCIC, from which 
information is retrieved by a personal identifier including, but not 
limited to the SSN, EIN, or name.
    4. Section 400.403 is revised to read as follows:


Sec. 400.403  Required system of records.

    Insurance providers are required to implement a system of records 
for obtaining, using, and storing documents containing SSN or EIN data 
before they accept or receive any applications for insurance. This data 
should include: name; address; city and state; SSN or EIN; and policy 
numbers which have been used by FCIC or the insurance provider.
    5. Section 400.404 is revised to read as follows:


Sec. 400.404  Policyholder responsibilities.

    (a) The policyholder or applicant for crop insurance must provide a 
correct SSN or EIN to FCIC or the insurance provider to be eligible for 
insurance. The SSN or EIN will be used by FCIC and the insurance 
provider in:
    (1) Determining the correct parties to the agreement or contract;
    (2) Collecting premiums or other amounts due FCIC or the insurance 
provider;
    (3) Determining the amount of indemnities;
    (4) Establishing actuarial data on an individual policyholder 
basis; and
    (5) Determining eligibility for crop insurance program 
participation or other United States Department of Agriculture 
benefits.
    (b) If the policyholder or applicant for crop insurance does not 
provide the correct SSN or EIN on the application and other forms where 
such SSN or EIN is required, FCIC or the reinsured company shall reject 
the application.
    (c) The policyholder or applicant is required to provide to FCIC or 
the insurance provider, the name and SSN or EIN of any individual or 
other entity:
    (1) holding or acquiring a substantial beneficial interest in such 
policyholder or applicant; or
    (2) having any interest in the policyholder or applicant and 
receiving separate benefits under another United States Department of 
Agriculture program as a direct result of such interest.
    (d) If a policyholder or applicant is using an EIN for a policy in 
an individual person's name, the SSN of the policyholder or applicant 
must also be provided.


Sec. 400.405 through 400.412 [Redesignated as Secs. 400.406 through 
400.413]

    6. Sections 400.405 through 400.412 are redesignated as sections 
Secs. 400.406 through 400.413, respectively. The redesignations are as 
follows:

------------------------------------------------------------------------
                Old section                          New section        
------------------------------------------------------------------------
400.405...................................  400.406                     
400.406...................................  400.407                     
400.407...................................  400.408                     
400.408...................................  400.409                     
400.409...................................  400.410                     
400.410...................................  400.411                     
400.411...................................  400.412                     
400.412...................................  400.413                     
------------------------------------------------------------------------

    7. Section 400.405 is added to read as follows:


Sec. 400.405  Agent and loss adjuster responsibilities

    (a) The agent or loss adjuster shall provide his or her correct SSN 
to FCIC or the insurance provider, whichever is applicable, to be 
eligible to participate in the crop insurance program. The SSN will be 
used by FCIC and the insurance provider in establishing a database for 
the purposes of:
    (1) Identifying agents and loss adjusters on an individual basis;
    (2) Evaluating agents and loss adjusters to determine level of 
performance;
    (3) Determining eligibility for program participation; and

[[Page 2055]]

    (4) Collection of any amount which may be owed by the agent and 
loss adjuster to the United States.
    (b) If the loss adjuster contracting with FCIC to participate in 
the crop insurance program does not provide the correct SSN on forms or 
contracts where such SSN is required, the loss adjuster's contract will 
be cancelled effective on the date of refusal and the loss adjuster 
will be subject to suspension and debarment in accordance with the 
suspension and debarment regulations of the United States Department of 
Agriculture.
    (c) If the agent or loss adjuster contracting with an insurance 
provider, who is also a private insurance company, to participate in 
the crop insurance program does not provide the correct SSN on forms or 
contracts where such SSN is required, the premium subsidy payable under 
the Standard Reinsurance Agreement, or any other reinsurance agreement, 
will not be paid on those policies lacking the correct SSN.
    8. Redesignated Sec. 400.406 is revised to read as follows:


Sec. 400.406  Insurance provider responsibilities.

    The insurance provider is required to collect and record the SSN or 
EIN on each application or on any other form required by FCIC.
    9. Redesignated Sec. 400.407 is revised to read as follows:


400.407  Restricted access.

    The Manager, other officer, or employee of FCIC or an authorized 
person may have access to the SSNs and EINs obtained pursuant to this 
subpart, only for the purpose of establishing and maintaining a system 
of records necessary for the effective administration of the Act.
    10. Redesignated Sec. 400.408 is revised to read as follows:


Sec. 400.408  Safeguards and storage.

    Records must be maintained in secured storage with proper 
safeguards sufficient to enforce the restricted access provisions of 
this subpart.
    11. Redesignated Sec. 400.411 is amended by revising the 
introductory text and paragraph (a) to read as follows:


Sec. 400.411  Obtaining personal records.

    Policyholders, agents, and loss adjusters in the crop insurance 
program will be able to review and correct their records as provided by 
the Privacy Act. Records may be requested by:
    (a) Mailing a signed written request to the headquarters office of 
FCIC; the FCIC Regional Service Office, or the insurance provider; or
* * * * *
    12. Redesignated 400.412 is revised to read as follows:


Sec. 400.412  Record retention.

    (a) FCIC or the insurance provider will retain all records of 
policyholders for a period of not less than 3 years from the date of 
final action on a policy for the crop year, unless further maintenance 
of specific records is requested by FCIC. Final actions on insurance 
policies include conclusion of insurance events, such as the latest of 
termination of the policy, completion of loss adjustment, or 
satisfaction of claim.
    (b) The statute of limitations for FCIC contract claims may permit 
litigation to be instituted after the period of record retention. 
Destruction of records prior to the expiration of the statute of 
limitations will not provide a defense to any action by FCIC against 
any private insurance company.
    13. Redesignated Sec. 400.413 is revised to read as follow:


Sec. 400.413  OMB control numbers.

    The collecting of information requirements in this subpart has been 
approved by the Office of Management and Budget and assigned OMB 
control number 0563-0047.

    Signed in Washington, DC., January 10, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-1016 Filed 1-14-97; 8:45 am]
BILLING CODE 3410-FA-P