[Federal Register Volume 62, Number 100 (Friday, May 23, 1997)]
[Rules and Regulations]
[Pages 28308-28314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13656]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457


General Crop Insurance Regulations, Rice Endorsement; and Common 
Crop Insurance Regulations, Rice Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
specific crop provisions for the insurance of rice. 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 Rice 
Endorsement with the Common Crop Insurance Policy for ease of use and 
consistency of terms, and to restrict the effect of the current Rice 
Endorsement to the 1997 and prior crop years.

EFFECTIVE DATE: June 23, 1997.

FOR FURTHER INFORMATION CONTACT: Linda Williams, Insurance Management 
Specialist, Research and Development, Product Development Division, 
Federal Crop Insurance Corporation, United States Department of 
Agriculture, 9435 Holmes Road, Kansas City, MO 64131, telephone (816) 
926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    The Office of Management and Budget (OMB) has determined this rule 
to be exempt for the purposes of Executive Order 12866, and therefore, 
this rule has not been reviewed by OMB.

Paperwork Reduction Act of 1995

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

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 12612

    It has been determined under section 6(a) of Executive Order No. 
12612, Federalism, that this rule does not have sufficient federalism 
implications to warrant the preparation of a Federalism Assessment. The 
provisions contained in this rule will not have a substantial direct 
effect on states or their political subdivisions, or on the 
distribution of power and responsibilities among the various levels of 
government.

Regulatory Flexibility Act

    This regulation will not have a significant impact on a substantial 
number of small entities. New provisions included in this rule will not 
impact small entities to a greater extent than large entities. Under 
the current regulations, a producer is required to complete an 
application and acreage report. If the crop is damaged or destroyed, 
the insured is required to give notice of loss and provide the 
necessary information to complete a claim for indemnity.
    The insured must also annually certify to the previous years 
production if adequate records are available to support the 
certification. The producer must maintain the production records to 
support the certified information for at least three years. This 
regulation does not alter those requirements.
    The amount of work required of the insurance companies delivering 
and servicing these policies will not increase significantly from the 
amount of work currently required. This rule does not have any greater 
or lesser impact on the producer. Therefore, this action is determined 
to be exempt from the provisions of the Regulatory Flexibility Act (5 
U.S.C. 605), and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

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

Executive Order 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 12988

    This final rule has been reviewed in accordance with Executive 
Order 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.

[[Page 28309]]

Background

    On Wednesday, January 29, 1997, FCIC published a proposed rule in 
the Federal Register at 62 FR 4194-4200 to add to the Common Crop 
Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.141, 
Rice Crop Insurance Provisions. The new provisions will be effective 
for the 1998 and succeeding crop years. These provisions will replace 
and supercede the current provisions for insuring rice found at 7 CFR 
401.120 (Rice Endorsement). FCIC also amends 7 CFR part 401.120 to 
limit its effect to the 1997 and prior crop years.
    Following publication of the proposed rule, the public was afforded 
60 days to submit written comments and opinions. A total of 14 comments 
were received from the crop insurance industry. The comments received 
and FCIC's responses, are as follows:
    Comment: One comment from the crop insurance industry recommended 
adding the words ``and quality'' after the word ``quantity'' in the 
definition of ``Irrigated practice.''
    Response: Water quality is an important issue. However, since no 
standards or procedures have been developed to measure water quality 
for insurance purposes, quality cannot be included in the definition. 
Therefore, no change will be made.
    Comment: One comment received from the crop insurance industry 
recommended combining the definitions of ``irrigated practice'' and 
``flood irrigation.'' The only crop provision reference to ``irrigated 
practice'' is in the definition of ``flood irrigated.'' The commenter 
suggested as an alternative, add ``An irrigated practice commonly used* 
* *'' to the definition of ``flood irrigation.''
    Response: FCIC agrees with the comment and has revised the 
definition of flood irrigation to reference the term irrigated 
practice.
    Comment: One comment received from the crop insurance industry 
recommended changing the definition of ``production guarantee'' by 
referring to ``your approved APH yield.'' The commenter stated the 
current provision implies there is only one APH yield.
    Response: There is only one APH yield for each unit. Therefore, no 
change will be made.
    Comment: Two comments from the crop insurance industry stated that 
the definition of ``replanting'' is confusing and awkward. One of the 
commenters recommended revising the definition to specify ``* * 
*growing a successful rice crop.''
    Response: FCIC agrees that the definition was confusing and has 
amended the definition of replanting for clarification.
    Comment: The crop insurance industry recommended that FCIC provide 
the statements contained in the Special Provisions at the time the crop 
provisions are published as proposed rule. The commenter suggested that 
it would be helpful to review the Special Provisions statement 
regarding the rotation requirements referred to in section 7.
    Response: The Special Provisions contain those policy terms which 
are specific to a county. These are not included in FCIC's regulatory 
process because publication of each county and each crop would be 
voluminous. Further, the information contained in the Special 
Provisions is not developed until after the Crop Provisions become a 
final rule. The statements are released with the filing of actuarial 
documents for the insured crop. Therefore, no change will be made.
    Comment: One comment received from the crop insurance industry 
recommended revising the cause of loss in section 9(a)(1) to state 
``adverse weather conditions (except drought).'' This change would 
conform FCIC's crop provisions to the current NCIS-716 provisions.

Response: FCIC agrees and will amend the provision accordingly.

    Comment: One comment received from the crop insurance industry 
stated that the crop provisions should not allow the insured to defer 
settlement of a claim for indemnity as provided in section 
12(c)(1)(iv). The commenter stated deferring settlement and waiting for 
a later appraisal usually results in a lower amount of appraised 
production.
    Response: A later appraisal will only be necessary if the insurance 
provider agrees that such an appraisal would result in a more accurate 
determination and if the producer continues to care for the crop. If 
the producer does not care for the crop, the original appraisal will be 
used. Therefore, no change will be made to these provisions.
    Comment: The crop insurance industry recommended that the 
provisions contained in section 13(d)(1)(iii)(B) regarding prevented 
planting coverage for a substitute crop be eliminated.
    Response: FCIC intends to address this issue for all crops with 
prevented planting coverage and is currently working on a regulation 
that will propose substantive changes in this coverage. Therefore, no 
changes will be made to these rice crop provisions.
    Comment: One comment from the crop insurance industry questioned if 
the provisions contained in section 13(d)(5)(iii)(D) were intended to 
be less restrictive by changing the double-cropping requirement to 
state ``* * *in each of the last 4 years in which the insured crop was 
grown on the acreage.'' The commenter suggested this change should be 
included in the summary of changes so that agents and producers were 
aware of the change.
    Response: The proposed language allows additional acreage to be 
considered ``double-cropped.'' The previous provisions require eight 
crops to have been produced on the same acreage in the previous four 
years to qualify for double-cropped acreage. The intent of this change 
is to recognize rotation practices used for double-cropped acreage.
    Comment: One comment from the crop insurance industry suggested 
combining the provisions in section 14(c) with the provisions in 14(a).
    Response: Approval of written agreements requested after the sales 
closing date is the exception, not the rule. Therefore, these 
provisions should be kept separate and no changes have been made.
    Comment: Three comments from the crop insurance industry 
recommended the requirement for a written agreement to be renewed each 
year be removed. Terms of the agreement should be continuous if no 
substantive changes occur from one year to the next. One commenter 
stated that limiting written agreements to one year only increases 
administrative cost and allows the opportunity for misunderstanding and 
error.
    Response: Written agreements are intended to permit insurance 
coverage in unusual or previously unknown situations. If the situation 
continues year to year, it should be incorporated into the policy or 
Special Provisions. It is important to minimize exceptions to assure 
that the insured is well aware of the specific terms of the policy. 
Therefore, no change will be made.

List of Subjects in 7 CFR Parts 401 and 457

    Crop insurance, Rice endorsement, Rice.

Final Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby amends 7 CFR parts 401 and 457 
effective for the 1998 and succeeding crop years to read as follows:

[[Page 28310]]

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(1), 1506(p).

    2. The introductory text of Sec. 401.120 is revised to read as 
follows:


Sec. 401.120  Rice endorsement.

    The provisions of the Rice Crop Insurance Endorsement for the 1988 
through the 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), 1506(p).

    Section 457.141 is added to read as follows:


Sec. 457.141  Rice crop insurance provisions.

    The Rice Crop Insurance Provisions for the 1998 and succeeding crop 
years are as follows:

    FCIC policies:

United States Department of Agriculture

Federal Crop Insurance Corporation

    Reinsured policies:

(Appropriate title for insurance provider)

    Both FCIC and reinsured policies:

Rice 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

    Days. Calendar days.
    FSA. The Farm Service Agency, an agency of the United States 
Department of Agriculture, or a successor agency.
    Final planting date. The date contained in the Special 
Provisions for the insured crop by which the crop must initially be 
planted in order to be insured for the full production guarantee.
    Flood irrigation. An irrigated practice commonly used for rice 
production whereby the planted acreage is intentionally covered with 
water that is maintained at a uniform and shallow depth throughout 
the growing season.
    Good farming practices. The cultural practices generally in use 
in the county for the crop to make normal progress toward maturity 
and produce at least the yield used to determine the production 
guarantee, and are those recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Harvest. Combining or threshing the rice for grain. A crop that 
is swathed prior to combining is not considered harvested.
    Irrigated practice. A method of producing a crop by which water 
is artificially applied during the growing season by appropriate 
systems and at the proper times, with the intention of providing the 
quantity of water needed to produce at least the yield used to 
establish the irrigated production guarantee on the irrigated 
acreage planted to the insured crop.
    Late planted. Acreage planted to the insured crop during the 
late planting period.
    Late planting period. The period that begins the day after the 
final planting date for the insured crop and ends 25 days after the 
final planting date.
    Local market price. The cash price per pound for the U.S. No. 3 
grade of rough rice offered by buyers in the area in which you 
normally market the rice. Factors not associated with grading under 
the United States Standards for Rice including, but not limited to, 
protein and oil content or milling quality will not be considered.
    Planted. The uniform placement of an adequate amount of rice 
seed into a prepared seedbed by one of the following methods:
    (a) Drill seeding--Using a grain drill to incorporate the seed 
to a proper soil depth;
    (b) Broadcast seeding--Distributing seed evenly onto the surface 
of an un-flooded seedbed followed by either timely mechanical 
incorporation of the seed to a proper soil depth in the seedbed or 
flushing the seedbed with water; or
    (c) Broadcast seeding into a controlled flood--Distributing the 
rice seed onto a prepared seedbed that has been intentionally 
covered to a proper depth by water. The water must be free of 
movement and be completely contained on the acreage by properly 
constructed levees and gates.
    Acreage seeded in any other manner will not be insurable unless 
otherwise provided by the Special Provisions or by written 
agreement.
    Practical to replant. In lieu of the definition of ``Practical 
to replant'' contained in section 1 of the Basic Provisions 
(Sec. 457.8), practical to replant is defined as our determination, 
after loss or damage to the insured crop, based on factors, 
including but not limited to moisture availability, marketing 
windows, condition of the field, and time to crop maturity, 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 end of the 
late planting period unless replanting is generally occurring in the 
area.
    Prevented planting. Inability to plant the insured crop with 
proper equipment by the final planting date designated in the 
Special Provisions for the insured crop in the county or the end of 
the late planting period. You must have been unable to plant the 
insured crop due to an insured cause of loss that has prevented the 
majority of producers in the surrounding area from planting the same 
crop.
    Production guarantee (per acre). The number of pounds determined 
by multiplying the approved Actual Production History (APH) yield 
per acre by the coverage level percentage you elect.
    Replanting. Performing the cultural practices necessary to 
replace the rice seed and then replacing the rice seed in the 
insured acreage with the expectation of growing a rice crop that 
will at least produce the approved APH yield.
    Saline water. Water that contains a concentration of salt 
sufficient to cause damage to the insured crop.
    Second crop rice. The regrowth of a stand of rice following 
harvest of the initially insured rice crop that can be harvested in 
the same crop year.
    Swathed. Severance of the stem and grain head from the ground 
without removal of the rice kernels from the plant and placing in a 
windrow.
    Timely planted. Planted on or before the final planting date 
designated in the Special Provisions for the insured crop in the 
county.
    Total milling yield. Rice production consisting of heads, second 
heads, screenings, and brewer's rice as defined by the official 
United States Standards for Rice.
    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 if, for each 
optional unit, you meet all the conditions of this section.
    (b) Basic units may not be divided into optional units on any 
basis including, but not limited to, production practice, type, 
variety, and planting period, other than as described in this 
section.
    (c) If you do not comply fully with these provisions, we will 
combine all optional units that are not in compliance with these 
provisions into the basic unit from which they were formed. We will 
combine the optional units at any time we discover that you have 
failed to comply with these provisions. If failure to comply with 
these provisions is determined to be inadvertent, and the optional 
units are combined into a basic unit, that portion of the additional 
premium paid for the optional units that have been combined will be 
refunded to you.
    (d) All optional units you selected for the crop year must be 
identified on the acreage report for that crop year.
    (e) The following requirements must be met for each optional 
unit:
    (1) You must have records, which can be independently verified, 
of planted acreage and production for each optional unit for at 
least the last crop year used to determine your production 
guarantee;
    (2) You must plant the crop in a manner that results in a clear 
and discernable break in the planting pattern at the boundaries of 
each optional unit;
    (3) You must have records of marketed production or measurement 
of stored production from each optional unit maintained in such a 
manner that permits us to verify the production from each optional

[[Page 28311]]

unit, or the production from each unit must be kept separate until 
loss adjustment is completed by us; and
    (4) Each optional unit must be located in a separate legally 
identified section. In the absence of sections, we may consider 
parcels of land legally identified by other methods of measure 
including, but not limited to Spanish grants, railroad surveys, 
leagues, labors, or Virginia Military Lands, as the equivalent of 
sections for unit purposes. In areas that have not been surveyed 
using the systems identified above, or another system approved by 
us, or in areas where such systems exist but boundaries are not 
readily discernable, each optional unit must be located in a 
separate farm identified by a single FSA Farm Serial Number unless 
otherwise specified by a written agreement.

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

    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 rice in the county insured under this policy 
unless the Special Provisions provide different price elections by 
type, in which case you may select one price election for each rice 
type designated in the Special Provisions. The price elections you 
choose for each type must have the same percentage relationship to 
the maximum price offered by us for each type. For example, if you 
choose 100 percent of the maximum price election for one type, you 
must also choose 100 percent of the maximum price election for all 
other types.

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:

------------------------------------------------------------------------
                                            Cancellation and termination
             State and county                           date            
------------------------------------------------------------------------
Jackson, Victoria, Goliad, Bee, Live Oak,  January 15.                  
 McMullen, La Salle, and Dimmit Counties,                               
 Texas; and all Texas counties south                                    
 thereof.                                                               
Florida..................................  February 15.                 
All other Texas counties and all other     February 28.                 
 states.                                                                
------------------------------------------------------------------------

6. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all the rice in 
the county for which a premium rate is provided by the actuarial 
table:
    (a) In which you have a share;
    (b) That is planted for harvest as grain;
    (c) That is flood irrigated; and
    (d) That is not wild rice.

7. Insurable Acreage

    In addition to the provisions of section 9 (Insurable Acreage) 
of the Basic Provisions (Sec. 457.8):
    (a) We will not insure any acreage planted to rice:
    (1) The preceding crop year unless allowed by the Special 
Provisions; or
    (2) That does not meet the rotation requirements shown in the 
Special Provisions; and
    (b) Any acreage of the insured crop damaged before the final 
planting date, to the extent that producers in the area would 
normally not further care for the crop, must be replanted unless we 
agree that it is not practical to replant.

8. Insurance Period

    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 October 31 immediately following 
planting.

9. 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 (except drought);
    (2) Fire;
    (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 in 
section 12 (Causes of Loss) of the Basic Provisions (Sec. 457.8), we 
will not insure against any loss of production due to the 
application of saline water.

10. Replanting Payment

    (a) A replanting payment for rice is allowed as follows:
    (1) You must comply with all requirements regarding replanting 
payments contained under section 13 (Replanting Payment) of the 
Basic Provisions (Sec. 457.8);
    (2) The rice must be damaged by an insurable cause of loss to 
the extent that the remaining stand will not produce at least 90 
percent of the production guarantee for the acreage; and
    (3) The replanted rice must be seeded at a rate that is normal 
for initially planted rice (if new seed is planted at a reduced 
seeding rate into a partially damaged stand of rice, the acreage 
will not be eligible for a replanting payment).
    (b) In accordance with the provisions of section 13 (Replanting 
Payment) of the Basic Provisions (Sec. 457.8), the maximum amount of 
the replanting payment per acre will be the lesser of 20 percent of 
the production guarantee or 400 pounds, multiplied by your price 
election, multiplied by your insured share.
    (c) When rice is replanted using a practice that is uninsurable 
for an original planting, the liability for the unit will be reduced 
by the amount of the replanting payment. The premium amount will not 
be reduced.

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), the 
representative samples of the unharvested crop must be at least 10 
feet wide and extend the entire length of each field in the unit. 
The samples must not be harvested or destroyed until the earlier of 
our inspection or 15 days after harvest of the balance of the unit 
is completed.

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 units, we will combine all optional units 
for which such production records were not provided; or
    (2) For any basic units, we will allocate any commingled 
production to such units in proportion to our liability on the 
harvested acreage for the units.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim on any unit by:
    (1) Multiplying the insured acreage by its respective production 
guarantee by type, if applicable;
    (2) Multiplying each result in section 12(b)(1) by the 
respective price election by type, if applicable;
    (3) Totaling the results of section 12(b)(2);
    (4) Multiplying the total production to be counted by type, if 
applicable, (see section 12(c) through (e)) by the respective price 
election;
    (5) Totaling the results of section 12(b)(4);
    (6) Subtracting the result of section 12(b)(5) from the result 
of section 12(b)(3); and
    (7) Multiplying the result of section 12(b)(6) by your share.
    (c) The total production to count (in pounds) from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide acceptable production records;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production may 
be adjusted for quality deficiencies and excess moisture in 
accordance with section 12(d));
    (iv) 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 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 
give you consent to put

[[Page 28312]]

the acreage to another use if you agree to leave intact, and provide 
sufficient care for, representative samples of the crop in locations 
acceptable to us (The amount of production to count for such acreage 
will be based on the harvested production or appraisals from the 
samples at the time harvest should have occurred. If you do not 
leave the required samples intact, or you fail to provide sufficient 
care for the samples, our appraisal made prior to giving you consent 
to put the acreage to another use will be used to determine the 
amount of production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested 
production, or our reappraisal if additional damage occurs and the 
crop is not harvested; and
    (2) All harvested production from the insurable acreage, 
including any production from a second rice crop harvested in the 
same crop year.
    (d) Mature rough rice may be adjusted for excess moisture and 
quality deficiencies. If moisture adjustment is applicable, it will 
be made prior to any adjustment for quality.
    (1) Production will be reduced by 0.12 percent for each 0.1 
percentage point of moisture in excess of 12 percent. We may obtain 
samples of the production to determine the moisture content.
    (2) Production will be eligible for quality adjustment if:
    (i) Deficiencies in quality, in accordance with the Official 
United States Standards for Rice, result in rice not meeting the 
grade requirements for U.S. No. 3 (grades U.S. No. 4 or worse) 
because of red rice, chalky kernels or damaged kernels;
    (ii) The rice has a total milling yield of less than 68 pounds 
per hundredweight;
    (iii) The whole kernel weight is less than 55 pounds per 
hundredweight of milled rice for medium and short grain varieties;
    (iv) The whole kernel weight is less than 48 pounds per 
hundredweight of milled rice for long grain varieties; or
    (v) Substances or conditions are present that are identified by 
the Food and Drug Administration or other public health 
organizations of the United States as being injurious to human or 
animal health.
    (3) Quality will be a factor in determining your loss only if:
    (i) The deficiencies, substances, or conditions specified in 
section 12(d)(2) resulted from a cause of loss against which 
insurance is provided under these crop provisions and which occurs 
within the insurance period;
    (ii) The deficiencies, substances, or conditions specified in 
section 12(d)(2) result in a net price for the damaged production 
that is less than the local market price;
    (iii) All determinations of these deficiencies, substances, or 
conditions specified in section 12(d)(2) are made using samples of 
the production obtained by us or by a disinterested third party 
approved by us; and
    (iv) The samples are analyzed by a grader licensed to grade rice 
under the authority of the United States Agriculture Marketing Act 
or the United States Warehouse Act with regard to deficiencies in 
quality, or by a laboratory approved by us with regard to substances 
or conditions injurious to human or animal health. Notwithstanding 
the preceding sentence, test weight for quality adjustment purposes 
may be determined by our loss adjuster.
    (4) Rice production that is eligible for quality adjustment, as 
specified in sections 12(d)(2) and (3), will be reduced as follows:
    (i) In accordance with quality adjustment factors contained in 
the Special Provisions; or
    (ii) If quality adjustment factors are not contained in the 
Special Provisions, as follows:
    (A) The market price of the qualifying damaged production and 
the local market price will be determined on the earlier of the date 
such quality adjusted production is sold or the date of final 
inspection for the unit. The price for the qualifying damaged 
production will be the market price for the local area to the extent 
feasible. Discounts used to establish the net price of the damaged 
production will be limited to those that are usual, customary, and 
reasonable. The price will not be reduced for:
    (1) Moisture content;
    (2) Damage due to uninsured causes; or
    (3) Drying, handling, processing, or any other costs associated 
with normal harvesting, handling, and marketing of the rice; except, 
if the price of the damaged production can be increased by 
conditioning, we may reduce the price of the production after it has 
been conditioned by the cost of conditioning but not lower than the 
value of the production before conditioning,
    (We may obtain prices from any buyer of our choice. If we obtain 
prices from one or more buyers located outside your local market 
area, we will reduce such prices by the additional costs required to 
deliver the rice to those buyers.);
    (B) The value of the damaged or conditioned production will be 
divided by the local market price to determine the quality 
adjustment factor; and
    (C) The number of pounds remaining after any reduction due to 
excessive moisture (the moisture-adjusted gross pounds (if 
appropriate)) of the damaged or conditioned production will then be 
multiplied by the quality adjustment factor to determine the net 
production to count.
    (e) Any production harvested from plants growing in the insured 
crop may be counted as production of the insured crop on a weight 
basis.

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 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 production guarantees. 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) If you were prevented from planting, you must provide 
written notice to us not later than the acreage reporting date.
    (c) Late Planting
    (1) For rice acreage planted during the late planting period, 
the production guarantee for each acre will be reduced for each day 
planted after the final planting date by:
    (i) One percent (1%) per day for the 1st through the 10th day; 
and
    (ii) Two percent (2%) 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 rice continues after the final planting date, 
or you are prevented from planting during the late planting period, 
the acreage reporting date will be the later of:
    (i) The acreage reporting date contained in the Special 
Provisions for the insured crop; or
    (ii) Five (5) days after the end of the late planting period.
    (d) Prevented Planting (Including Planting After the Late 
Planting Period)
    (1) If you were prevented from timely planting rice, you may 
elect:
    (i) To plant rice during the late planting period. The 
production guarantee 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 production guarantee 
for such acreage will be thirty-five percent (35%) of the production 
guarantee for timely planted acres. For example, if your production 
guarantee for timely planted acreage is 2,000 pounds per acre, your 
prevented planting production guarantee would be 700 pounds per acre 
(2,000 pounds multiplied by 0.35). If you elect to plant the insured 
crop after the late planting period, production to count for such 
acreage will be determined in accordance with sections 12 (c) 
through (e); or
    (iii) Not to plant the intended crop but plant a substitute crop 
for harvest, in which case:
    (A) No prevented planting production guarantee will be provided 
for such acreage if the substitute crop is planted on or before the 
10th day following the final planting date for the insured crop; or
    (B) A production guarantee equal to 17.5 percent of the 
production guarantee for timely planted acres will be provided for 
such acreage, if the substitute crop is planted after the 10th day 
following the final planting date for the insured crop. If you 
elected the Catastrophic Risk Protection Endorsement or excluded 
this coverage, and plant a substitute crop, no prevented planting 
coverage will be provided. For example, if your production guarantee 
for timely planted acreage is 2,000 pounds per acre, your prevented 
planting production guarantee would be 350 pounds

[[Page 28313]]

per acre (2,000 pounds multiplied by 0.175). You may elect to 
exclude prevented planting coverage when a substitute crop is 
planted for harvest and receive a reduction in the applicable 
premium rate. If you wish to exclude this coverage, you must so 
indicate, on or before the sales closing date, on your application 
or on a form approved by us. Your election to exclude this coverage 
will remain in effect from year to year unless you notify us in 
writing on our form by the applicable sales closing date for the 
crop year for which you wish to include this coverage. All acreage 
of the crop insured under this policy will be subject to this 
exclusion.
    (2) Production guarantees for timely, late, and prevented 
planting acreage within a unit will be combined to determine the 
production guarantee for the unit. For example, assume you insure 
one unit in which you have a 100 percent share. The unit consists of 
150 acres, of which 50 acres were planted timely, 50 acres were 
planted 7 days after the final planting date (late planted), and 50 
acres were not planted but are eligible for a prevented planting 
production guarantee. The production guarantee for the unit will be 
computed as follows:
    (i) For the timely planted acreage, multiply the per acre 
production guarantee for timely planted acreage by the 50 acres 
planted timely;
    (ii) For the late planted acreage, multiply the per acre 
production guarantee for timely planted acreage by 93 percent and 
multiply the result by the 50 acres planted late; and
    (iii) For prevented planting acreage, multiply the per acre 
production guarantee for timely planted acreage by:
    (A) Thirty-five percent (35%) and multiply the result by the 50 
acres you were prevented from planting, if the acreage is eligible 
for prevented planting coverage, and if the acreage is left idle for 
the crop year, or if a cover crop is planted not for harvest. 
Prevented planting compensation hereunder will not be denied because 
the cover crop is hayed or grazed; or
    (B) Seventeen and five tenths percent (17.5%) 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 production guarantee for timely planted acreage by the 150 
acres in the unit.
    (3) You must have the inputs available to plant and produce the 
intended crop with the expectation of at least producing the 
production guarantee. Proof that these inputs were available may be 
required.
    (4) In addition to the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), the insurance period 
for prevented planting coverage begins:
    (i) On the sales closing date contained in the Special 
Provisions for the insured crop in the county for the crop year the 
application for insurance is accepted; or
    (ii) For any subsequent crop year, on the sales closing date for 
the insured crop in the county for the previous crop year, provided 
continuous coverage has been in effect since that date. For example, 
if you make application and purchase insurance for rice for the 1998 
crop year, prevented planting coverage will begin on the 1998 sales 
closing date for rice in the county. If the rice coverage remains in 
effect 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 FSA base acreage for the insured crop, including acres 
that could be flexed from another crop, if applicable;
    (B) The number of acres planted to rice on the FSA Farm Serial 
Number during the previous crop year; or
    (C) One-hundred percent of the simple average of the number of 
acres planted to rice during the crop years that you certified to 
determine your yield.
    (iii) A prevented planting production guarantee will not be 
provided for any acreage:
    (A) That does not constitute at least 20 acres or 20 percent of 
the acreage in the unit, whichever is less (Acreage that is less 
than 20 acres or 20 percent of the acreage in the unit will be 
presumed to have been intended to be planted to the insured crop 
planted in the unit, unless you can show that you had the inputs 
available before the final planting date to plant and produce 
another insured crop on the acreage);
    (B) For which the actuarial table does not designate a premium 
rate unless a written agreement designates such premium rate;
    (C) Used for conservation purposes or intended to be left 
unplanted under any program administered by the United States 
Department of Agriculture;
    (D) On which another crop is prevented from being planted, if 
you have already received a prevented planting indemnity, guarantee 
or amount of insurance for the same acreage in the same crop year, 
unless you provide adequate records of acreage and production 
showing that the acreage was double-cropped in each of the last 4 
years in which the insured crop was grown on the acreage;
    (E) On 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 13(d)(2)(iii)(A) or a 
substitute crop allowed in section 13(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 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.
    (iv) For the purpose of determining eligible acreage for 
prevented planting coverage, acreage for all units will be combined 
and be reduced by the number of rice 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 rice on one optional unit and 40 acres 
rice on the second optional unit, your prevented planting eligible 
acreage would be reduced to zero (i.e., 100 acres eligible for 
prevented planting coverage minus 100 acres planted equals zero).
    (6) In accordance with the provisions of section 6 (Report of 
Acreage) of the Basic Provisions (Sec. 457.8), you must report by 
unit any insurable acreage that you were prevented from planting. 
This report must be submitted on or before the acreage reporting 
date. For the purpose of determining acreage eligible for a 
prevented planting production guarantee, the total amount of 
prevented planting and planted acres cannot exceed the maximum 
number of acres eligible for prevented planting coverage. Any 
acreage you report in excess of the number of acres eligible for 
prevented planting coverage, or that exceeds the number of eligible 
acres physically located in a unit, will be deleted from your 
acreage report.

[[Page 28314]]

14. Written Agreements

    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 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 19, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-13656 Filed 5-22-97; 8:45 am]
BILLING CODE 3401-08-P