[Federal Register Volume 62, Number 92 (Tuesday, May 13, 1997)]
[Proposed Rules]
[Pages 26248-26252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12436]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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  Federal Register / Vol. 62, No. 92 / Tuesday, May 13, 1997 / Proposed 
Rules  

[[Page 26248]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 435 and 457


Tobacco (Quota Plan) Crop Insurance Regulations; and Common Crop 
Insurance Regulations; Quota Tobacco 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 quota tobacco. 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 tobacco (quota plan) crop insurance regulations with the Common 
Crop Insurance Policy for ease of use and consistency of terms, and to 
restrict the effect of the current tobacco (quota plan) crop insurance 
regulation to the 1997 and prior crop years.

EFFECTIVE DATES: Written comments and opinions on this proposed rule 
will be accepted until close of business June 12, 1997 and will be 
considered when the rule is to be made final.

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.

FOR FURTHER INFORMATION CONTACT: Gary Johnson, Insurance Management 
Specialist, Research and Development Division, Product Development 
Branch, FCIC, at the Kansas City, MO, address listed above, telephone 
(816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866

    The Office of Management and Budget 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 amendments set forth in this proposed rule do not contain 
additional information collections that require clearance by OMB under 
the provisions of 44 U.S.C. chapter 35.
    The title of this information collection is ``Multiple Peril Crop 
Insurance.'' The information to be collected includes a crop insurance 
application and 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 quota tobacco 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.
    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 insured 
must also annually certify to the previous years production if adequate 
records are available to support the certification. The producer must 
maintain the

[[Page 26249]]

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. 12988

    This proposed rule has been reviewed in accordance with Executive 
Order No. 12988. 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 part 11 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 457.156, Quota Tobacco 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 quota tobacco found at 7 CFR part 
435 Tobacco (Quota Plan). FCIC also proposes to amend 7 CFR part 435 to 
limit its effect to the 1997 and prior crop years. FCIC also proposes 
to amend 7 CFR part 435 to limit its effect to the 1997 and prior crop 
years.
    This rule makes minor editorial and format changes to improve the 
Tobacco (Quota Plan) Crop Insurance Regulation's compatibility with the 
Common Crop Insurance Policy. In addition, FCIC is proposing 
substantive changes in the provisions for insuring quota tobacco as 
follows:
    1. The Late Planting Agreement Option (LPAO) has been discontinued 
because the final planting date is late enough to allow anyone with 
tobacco plants to timely transplant them and the reduction in guarantee 
under the LPAO is not sufficient to cover the increased risks of a 
shorter growing season.
    2. Section 1--Add definitions for terms ``adequate stand,'' 
``amount of insurance,'' ``approved yield,'' ``days,'' ``discount 
variety,'' ``FSA,'' ``fair market value,'' ``final planting date,'' 
``good farming practices,'' ``insured poundage quota,'' ``irrigated 
practice,'' ``planted acreage,'' ``pound,'' ``practical to replant,'' 
``production guarantee,'' ``replanting,'' ``tobacco bed,'' ``USDA,'' 
and ``written agreement'' for clarification. The definition of 
``harvest'' was revised to remove the requirement that 20 percent of 
the production guarantee per acre for the unit of the tobacco had to be 
cut per acre from the unit in order for the unit to be considered 
harvested. Since the harvest incentive of 35 percent of the guarantee 
has been deleted, this provision is no longer necessary. Added the 
definition of ``hydroponic plants'' to identify seedlings grown in a 
liquid nutrient solution.
    3. Section 3--Delete the six cents per pound warehouse charge 
deduction for the purpose of determining the amount of insurance. This 
provides the producer the full value of the tobacco sold without the 
warehouse charge. It also allows the use of gross sales to establish 
the value of production to count without the warehouse charge 
deduction. Allow the use of actual production history to determine the 
approved yield for insurance purposes. The most accurate determination 
of the yield for the unit uses insured's records of production.
    4. Section 4--Change the contract date from December 31 to November 
30 in order to maintain an adequate time period between this date and 
the earliest cancellation date.
    5. Section 5--Change the cancellation and termination dates from 
April 15 to March 15. This conforms to a statutory change that moved 
spring planted crop sales closing dates 30 days earlier.
    6. Section 6(a)--Clarify that insurance coverage will only apply to 
the effective poundage marketing quota as defined in these regulations.
    7. Section 6(b)(c)--Require that a copy of any written lease 
agreement between the landlord and tenant be provided to the insurance 
provider. This will allow the farm's effective poundage marketing quota 
to be distributed between two or more insureds based on a written lease 
agreement between the landlord and the insured. This provision was 
added because the present method of distributing the farm's effective 
marketing quota between two or more insureds does not provide equitable 
treatment for all insureds.
    8. Section 8(d)--Clarify that any acreage damaged prior to the 
final planting date must be replanted unless replanting is not 
practical.
    9. Section 10(c)(d)--Clarify that insects and plant disease are 
insurable causes of loss, but they are not insurable causes of loss if 
damage was due to insufficient or improper application of pest or 
disease control measures.
    10. Section 12(g)--Add a provision for a requirement that once the 
insurance provider agrees that any current year's or carryover tobacco 
has no market value, the insured must destroy it. This provision 
eliminates the adjustment of next year's quota when the crop is still 
saleable at the time of the loss. It also eliminates the opportunity to 
falsely report carryover and current year's tobacco as of no value to 
increase indemnity payments. This provision is consistent with FSA's 
requirement that tobacco having no value must be destroyed.
    11. Section 13--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 the 
procedures for and duration of written agreements.

List of Subjects in 7 CFR Parts 435 and 457

    Crop insurance, Quota tobacco, Tobacco (quota plan) crop insurance 
regulations. Proposed Rule

    Accordingly, for reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby proposes to amend 7 CFR parts 435 and 
457, as follows:

[[Page 26250]]

PART 435--TOBACCO (QUOTA PLAN) CROP INSURANCE REGULATIONS FOR THE 
1985 AND SUBSEQUENT CONTRACT YEARS

    1. The authority citation for 7 CFR part 435 continues to read as 
follows:

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

    2. The part heading is revised to read as set forth above.
    3. The subpart heading ``Subpart--Regulations for the 1985 through 
1997 Crop Years'' is removed.
    4. Section 435.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:
* * * * *
    (d) The application for the 1985 and subsequent crop years is found 
at subpart D of part 400--General Administrative Regulations (7 CFR 
400.37, 400.38). The provisions of the Tobacco (Quota Plan) Insurance 
Policy for the 1985 through 1997 crop years are as follows:
* * * * *

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

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

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

    5. Section 457.156 is added to read as follows:


Sec. 457.156  Quota tobacco crop insurance provisions.

    The Quota Tobacco Crop 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:

Quota Tobacco 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

    Amount of insurance. The dollar amount determined by multiplying 
the insured poundage quota by the current year's support price.
    Approved yield. The yield calculated in accordance with 7 CFR 
part 400, subpart G.
    Carryover tobacco. Any tobacco produced on the FSA Farm Serial 
Number in previous years that remained unsold at the end of the most 
recent marketing year.
    County. In lieu of the provisions of section 1 (Definitions) of 
the Basic Provisions (Sec. 457.8), county is defined as the county 
or other political subdivision of a state shown on your accepted 
application including any land identified by an FSA Farm Serial 
Number for such county but physically located in another county.
    Days. Calendar days.
    Discount variety. Tobacco defined as such under the provisions 
of the United States Department of Agriculture tobacco price support 
program.
    Effective poundage marketing quota. The farm marketing quota as 
established and recorded by the FSA office for the county plus any 
additional poundage you intend to produce for each unit in that crop 
year, minus the amount of any carryover tobacco.
    FSA. The Farm Service Agency, an agency of the United States 
Department of Agriculture, or a successor agency.
    Fair market value. The current year's tobacco growing season 
average price for the applicable type of tobacco obtained from the 
sale of the tobacco through market other than an auction warehouse.
    Farm yield. The yield per acre used by FSA to establish the 
effective poundage marketing quota for a FSA Farm Serial Number, 
unless we have established a yield for that FSA Farm Serial Number 
in the actuarial table.
    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 amount of 
insurance, and are those recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Harvest. Cutting and removing all insured tobacco from the field 
in which it was grown.
    Hydroponic plants. Seedlings grown in liquid nutrient solutions.
    Insured poundage quota. The lesser of:
    (1) the product (in pounds) obtained by multiplying the 
effective poundage marketing quota for the FSA Farm Serial Number by 
your selected coverage level; or
    (2) the farm yield or approved yield, as applicable multiplied 
by the insured acres and by your selected coverage level.
    Market price. The previous years' season average price published 
by National Agricultural Statistics Service for the applicable type 
of tobacco in the area.
    Marketing year. The marketing year published by National 
Agricultural Statistics Service for the applicable type of tobacco 
in the area.
    Planted acreage. Land in which tobacco seedlings, including 
hydroponic plants, have been transplanted by hand or machine from 
the tobacco bed to the field.
    Pound. Sixteen ounces avoirdupois.
    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 after the final planting date.
    Replanting. Performing the cultural practices necessary to 
replace the tobacco plant, and then replacing the tobacco plant in 
the insured acreage with the expectation of growing a successful 
crop.
    Support price. The average price per pound for the type of 
tobacco as announced by the USDA under its tobacco price support 
program.
    Tobacco bed. An area protected from adverse weather, in which 
tobacco seeds are sown and seedlings are grown until transplanted 
into the tobacco field by hand or machine.
    Unit. In lien of the provision of section 1 (Definition) of the 
Basic Provisions (Sec. 457.8), a unit is all insurable acreage of an 
insurable type of tobacco in the county in which you have an insured 
share on the date of planting for the crop year and which is 
identified by a single FSA Farm Serial Number at the time insurance 
first attaches under these provisions for the crop year.
    USDA. United States Department of Agriculture.
    Written agreement. A written document that alters designated 
terms of this policy in accordance with section 13.

2. Unit Division

    A unit will be determined in accordance with the definition of 
unit contained in section 1 of these Crop Provisions and may not be 
subdivided on any basis, unless specified by the Special Provisions.

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

    In lieu of section 3(c) (Insurance Guarantees, Coverage Levels, 
and Prices for Determining Indemnities) of the Basic Provisions 
(Sec. 457.8), you will only be required to file an annual production 
report to us if required by the Special Provisions to establish an 
approved yield in lieu of the farm yield or yield shown by us on the 
actuarial table. If required by the Special Provisions, you must 
file an annual production report in accordance with section 3(c) 
(Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities) of the Common Crop Insurance Policy (Sec. 457.8).

4. Contract Changes.

    In accordance with section 4 (Contract Changes) in 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):

[[Page 26251]]

    (a) You must report the effective poundage marketing quota, any 
additional poundage that you intend to produce for each unit in the 
crop year, and the quantity of carryover tobacco on hand at the time 
the acreage report is submitted. Once submitted, you may not revise 
the acreage report.
    (b) You must provide a copy of any written lease agreement 
between you and any landlord or tenant showing the amount of the 
effective poundage marketing quota allocated to you. The total 
amount of the effective poundage marketing quota allocated to all 
persons holding a share may not differ from the effective poundage 
marketing quota designation made to FSA. The written lease agreement 
must:
    (1) Identify all other persons sharing in the effective poundage 
marketing quota; and
    (2) Be submitted to your local office by the acreage reporting 
date.
    (c) In the event of a loss, if the written lease agreement has 
been submitted timely, we will distribute the effective poundage 
marketing quota in accordance with the terms of the written lease 
agreement. If the written lease agreement is not submitted timely, 
we will prorate the effective poundage marketing quota across the 
FSA Farm Serial Number to all insured and uninsured persons based on 
planted acres within the FSA Farm Serial Number.

7. Insured Crop

    (a) In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be one or more of 
tobacco types designated in the Special Provisions, in which you 
have a share, that you elect to insure, and for which a premium rate 
is provided by the actuarial table.
    (b) The effective poundage marketing quota may not include any 
tobacco that would be subject to a marketing quota penalty under 
USDA Tobacco Marketing Quota Regulations.
    (c) Unless otherwise provided by the actuarial table, for any 
crop year in which USDA does not promulgate Tobacco Marketing Quota 
Regulations, the effective poundage marketing quota will be the 
pounds obtained by multiplying the applicable approved yield per 
acre by the lower of the reported or insured acreage on the unit.

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 to a discount variety;
    (b) Planted to a tobacco type for which no premium rate is 
provided by the actuarial table;
    (c) Planted in any manner other than as provided in the 
definition of ``planted acreage'' in section 1 of these Crop 
Provisions (Such acreage is not insurable unless otherwise provided 
by the Special Provisions or by written agreement); or
    (d) Damaged before the final planting date to the extent that 
the majority of producers in the area would normally not further 
care for the crop, unless such crop is replanted or we agree that 
replanting is not practical.

9. Insurance Period

    In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), insurance ceases the 
earliest of:
    (a) Destruction of the tobacco;
    (b) Weighing-in at the tobacco warehouse;
    (c) Removal of the tobacco from the field where grown except for 
curing, grading, packing, or immediate delivery to the tobacco 
warehouse; or
    (d) The February 28 immediately following the normal harvest 
period.

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 during 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. 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), any 
representative samples we may require of each unharvested tobacco 
type must be at least 5 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.

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, 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 by:
    (1) Multiplying the insured poundage quota by the current year's 
support price;
    (2) Subtracting the value of the total production to be counted 
in (see section 12(c)) from the amount of insurance in section 
12(b)(1); and
    (3) Multiplying the result in section 12(b)(2) by your share;
    (c) The value of the total production to count (pounds of 
production that is appraised or harvested multiplied by the 
applicable price) for all insurable acreage on the unit will 
include:
    (1) All appraised production as follows:
    (i) Not less than the amount of insurance per insured acre for 
the unit for any 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) Potential production on unharvested insured acreage that 
you intend to put to another use with our consent, if you and we 
agree on the appraised amount of production multiplied by the 
current year's support price. Upon such agreement, the insurance 
period for that acreage will end when 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 
consent to allow you 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 multiplied by the current year's support 
price 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 multiplied by the 
current year's support price); 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 multiplied by the current year's 
support price if additional damage occurs and the crop is not 
harvested;
    (iv) If a current year's support price is not in effect, 
appraised production will be valued at the market price;
    (2) All harvested production from insurable acreage multiplied 
by:
    (i) Gross sale receipts for the tobacco sold on a warehouse 
floor;
    (ii) Fair market value for tobacco sold other than on the 
warehouse floor; and
    (iii) Fair market value for tobacco not sold.
    (d) Mature tobacco production that is damaged by insurable 
causes will be adjusted for quality, based on the USDA Official 
Standard Grades, Burley Tobacco, U.S. Type 31, and will receive a 
price based on the following:
    (1) Gross sale receipts for the tobacco sold on a warehouse 
floor;
    (2) Fair market value for tobacco sold other than on the 
warehouse floor; and
    (3) Fair market value for tobacco not sold.
    (e) Production that is damaged by uninsurable causes will not be 
adjusted for quality, but will receive a price based on the current 
year's support price.
    (f) To enable us to determine the fair market value of tobacco 
not sold through auction warehouses, you must give us the 
opportunity to inspect such tobacco before it is sold, contracted to 
be sold, or otherwise disposed; failure to provide us the 
opportunity to inspect such tobacco may result in rejection of any 
claim for indemnity.
    (g) If we consider the best offer you receive for such tobacco 
to be inadequate, we may obtain additional offers on your behalf.
    (h) Once we agree that any carryover or current year's tobacco 
has no market value due to insured causes, you must destroy it. If 
you refuse to destroy the tobacco with no value, we will determine 
the value and count it as production to count.

[[Page 26252]]

13. Written Agreements

    Terms of this policy which are specifically designated for the 
use of written agreements 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 
13(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 May 7, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-12436 Filed 5-12-97; 8:45 am]
BILLING CODE 3410-08-P