[Federal Register Volume 62, Number 115 (Monday, June 16, 1997)]
[Proposed Rules]
[Pages 32544-32548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15715]


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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. 115 / Monday, June 16, 1997 / 
Proposed Rules  

[[Page 32544]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457


Tobacco (Guaranteed Plan) Endorsement; and Common Crop Insurance 
Regulations, Guaranteed 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 guaranteed 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 (guaranteed plan) endorsement with the Common Crop 
Insurance Policy for ease of use and consistency of terms, and to 
restrict the effect of the current tobacco (guaranteed plan) 
endorsement to the 1997 and prior crop years.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business July 16, 1997 and will be considered 
when the rule is to be made final.

ADDRESSES: Interested persons are invited to submit written comments to 
the Director, Product Development Division, 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, Product Development Division, 
Federal Crop Insurance Corporation, at the Kansas City, MO, address 
listed above, 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 purpose of Executive Order 12866, and, therefore, 
this rule has not been reviewed by OMB.

Paperwork Reduction Act of 1995

    The amendments set forth in this proposed rule contains information 
collection that requires 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 guaranteed 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 1,755,000 
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 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 32545]]

production records to support the certification 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 
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 12988

    This proposed rule has been reviewed in accordance with Executive 
Order No. 12988 on civil justice reform. 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 457.136, Guaranteed 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 guaranteed tobacco found at 7 CFR 
401.129 (Tobacco (Guaranteed Plan) Endorsement). FCIC also proposes to 
amend 7 CFR 401.129 to limit its effect to the 1997 and prior crop 
years. This rule makes minor editorial and format changes to improve 
the Tobacco (Guaranteed Plan) Endorsement's compatibility with the 
Common Crop Insurance Policy. In addition, FCIC is proposing 
substantive changes in the provisions for insuring guaranteed 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,'' 
``approved yield,'' ``average value per pound,'' ``carryover tobacco,'' 
``days,'' ``discount variety,'' ``FSA,'' ``fair market value,'' ``final 
planting date,'' ``good farming practices,'' ``harvest,'' ``irrigated 
practice,'' ``planted acreage,'' ``practical to replant,'' ``priming,'' 
``production guarantee,'' ``replanting,'' ``season average market 
price,'' ``support price per pound,'' ``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 must be cut from each acre 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(b)--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 sales closing or cancellation date to permit the insured to make 
informed insurance decisions.
    5. Section 5--Change the cancellation and termination dates to 
March 15. This conforms to the required movement of the spring planted 
crop sales closing dates 30 days earlier by the Federal Crop Insurance 
Reform Act of 1994.
    6. Section 7(d)--Clarify that any acreage damaged prior to the 
final planting date must be replanted unless replanting is not 
practical to replant.
    7. Section 9 (c) and (d)--Clarify that insects and plant disease 
are insurable causes of loss, but not if damage was due to insufficient 
or improper application of pest or disease control measures.
    8. Section 10(a)--Require the producer to leave, until the earlier 
of insurer's inspection or 15 days after harvest, representative 
samples of each unharvested tobacco types of at least 5 feet wide, 
(instead of 10 feet wide) the entire length of each field in the unit. 
The smaller sample size is reasonable given the small acreage 
allotments of tobacco.
    9. Section 11(d)--Clarify that quality adjustment for mature 
tobacco damaged by insurable causes and yielding an average value per 
pound less than the market price will be based on USDA Official 
Standard Grades for the insured type.
    10. Section 11(h)--Require that once the insurance provider agrees 
that any current year's or carryover tobacco has no market value, the 
insured must destroy it. This 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 that having no value must be destroyed.
    11. Section 12--Provide insurance coverage by written agreement. 
FCIC has a long standing policy of permitting certain modifications of 
insurance contracts 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.
    Good cause is shown to allow 30 days for comments after this rule 
is published in the Federal Register. This rule improves guaranteed 
tobacco crop insurance coverage and brings it under the Common Crop 
Insurance Policy Provisions for consistency among policies. Although, 
the contract change date is December 31, 1997, the final rule must be 
published by July 7, 1997. Publication is required by this date to 
achieve revision and timely distribution of the actuarial documents 
thereby allowing the reinsured companies and insureds sufficient time 
to implement the new provisions. Therefore, public interest requires 
the agency to act immediately to make these provisions available for 
the 1988 crop year.

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List of Subjects in 7 CFR Parts 401 and 457

    Crop insurance, Guaranteed tobacco, Tobacco (guaranteed plan) 
endorsement.

Proposed Rule

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

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

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

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

    2. Section 401.129 introductory paragraph is revised to read as 
follows:


Sec. 401.129  Tobacco (guaranteed plan) endorsement.

    The provisions of the Tobacco (Guaranteed Plan) Endorsement for the 
1990 through the 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 457.136 is added to read as follows:


Sec. 457.136  Guaranteed tobacco crop insurance provisions.

    The Guaranteed Tobacco Crop Provisions for the 1998 and succeeding 
crop years are follows:

    FCIC policies:

UNITED STATES DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

    Reinsured policies

(Appropriate title for insurance provider)

    Both FCIC and reinsured policies:

Guaranteed Tobacco Crop Provisions

    If a conflict exists between 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

    Adequate stand. A population of live plants per unit of acreage 
which will produce at least the yield used to establish your 
production guarantee.
    Approved yield. The yield calculated in accordance with 7 CFR 
part 400, subpart G.
    Average value. The total value of all production harvested from 
the unit divided by the harvested pounds.
    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.
    Days. Calendar days.
    Discount variety. Tobacco defined as such under the provisions 
of the United States Department of Agriculture tobacco price support 
program.
    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 a market other than an auction 
warehouse.
    Final planting date. The date contained in the Special 
Provisions for the insured crop by which the crop must initially be 
planted in order to be insured for the full production guarantee.
    Good farming practices. The cultural practices generally in use 
in the county for the crop to make normal progress toward maturity 
and produce at least the yield used to determine the production 
guarantee, and are those recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Harvest. Cutting or priming and removing all insured tobacco 
from the field in which it was grown.
    Hydroponic plants. Seedlings grown in liquid nutrient solutions.
    Market price:
    (a) For types 11, 12, 13, 14, 21, 22, 23, 31, 35, 36, 37, 42, 
44, 54, and 55 the following price is:
    (1) The support price per pound for the insured type of tobacco 
as announced by the USDA for its tobacco price support program or;
    (2) If for any crop year a tobacco price support program is not 
in effect, the current year's season average market price, if 
available; if not available, the previous year's season average 
market price for the applicable insured type tobacco grown in the 
area.
    (b) For types 32, 41, 51, 52, and 61, the current year's season 
average market price, if available; if not available, the previous 
year's season average market price for the applicable insured type 
of tobacco grown 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.
    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.
    Priming. A method of harvesting tobacco by picking the leaves 
from the stalk as they mature.
    Production guarantee (per acre). Either the number of pounds of 
tobacco for the tobacco type and classification shown on the county 
actuarial table or the approved yield, as provided in the Special 
Provisions, multiplied by the coverage level percentage you elect.
    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.
    Season average market price. The average price paid by buyers 
for a tobacco type for all days tobacco sales occur at public 
markets during the tobacco sales season in the area in which the 
farm is located.
    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.
    USDA. United States Department of Agriculture.
    Written agreement. A written document that alters designated 
terms of this policy in accordance with section 12.

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), 
will be further divided into basic units by type of tobacco. Basic 
units 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 premium 
paid for the purpose of electing optional units will be refunded to 
you for the units combined.
    (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 provided records, by the production reporting 
date, 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

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in the planting pattern at the boundaries of each optional unit;
    (3) For each crop year, records of marketed production or 
measurement of stored production from each optional unit must be 
maintained in such manner that permits us to verify the production 
from each optional unit, or the production from each unit must be 
kept separate until loss adjustment is completed by us; and
    (4) Each optional unit must be located in a separate farm 
identified by a FSA Farm Serial Number.

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

    In addition to the requirements of section 3(c) (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) 
of the Basic Provisions (Sec. 457.8):
    (a) You must select only one price election and coverage level 
for each guaranteed tobacco type designated in the Special 
Provisions that you elect to insure.
    (b) You may 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 classification published in the actuarial 
table. If we require you to file an annual production report, you 
must do so in accordance with section 3(c) (Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities) of the 
Basic Provisions (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. Report of Acreage

    In addition to the requirements of section 6 (Report of Acreage) 
of the Basic Provisions (Sec. 457.8), you must report any carryover 
tobacco from previous years on the acreage report.

6. 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.

7. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be one or more of the 
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.

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 provided in definition of 
``planted acreage'' in section 1 of the these crop provisions, 
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 unit (except for curing, 
grading, packing, or immediate delivery to the tobacco warehouse); 
or
    (d) The calendar date for the end of the insurance period, which 
is:
    (1) Types 11 and 12--November 30;
    (2) Type 13--October 31;
    (3) Type 14--October 15;
    (4) Types 31 & 36--February 28;
    (5) Types 21, 35 and 37--March 15;
    (6) Types 22 and 23--April 15;
    (7) Type 32--May 15;
    (8) All other types--April 30.

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, unless proper measures to control wildlife have 
not been taken;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of irrigation water supply, if caused by an insured 
peril that occurs during the insurance period.

11. Duties In The Event of Damage or Loss

    (a) In accordance with the requirements of section 14 (Duties in 
the Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), 
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.
    (b) If tobacco types 11, 12, 13, or 14 are insured and you have 
filed a notice of damage, you also must leave all tobacco stalks and 
stubble intact for our inspection. The stalks and stubble must not 
be destroyed until we give you written consent to do so or until 30 
days after the end of the insurance period whichever is earlier.

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 by:
    (1) Multiplying the insured acreage by its respective production 
guarantee;
    (2) Multiplying each result in section 11(b)(1) by the 
respective price election;
    (3) Subtracting the value of the total production to be counted 
from section 11(c) from the total in section 11(b)(2); and
    (4) Multiplying the result of section 11(b)(3) by your share.
    (c) The value of the total production to count (pounds of 
production 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 production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) That is damaged solely by uninsured causes;
    (D) For which you fail to provide acceptable production records; 
or
    (E) Of types 11, 12, 13, or 14 when the stalks and stubble have 
been destroyed without our consent;
    (ii) Production lost due to uninsured causes;
    (iii) Potential production on insured acreage that you intend to 
put to another use or abandon with our consent, 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 the acreage to another use if you agree to 
leave intact, and provide sufficient care for, representative 
samples of the crop in locations acceptable to us (The amount of 
production to count for such acreage will be based on the harvested 
production or appraisals from the samples at the time harvest should 
have occurred. If you do not leave the required samples intact, or 
fail to provide sufficient care for the samples, our appraisal made 
prior to giving you consent to put the acreage to another use will 
be used to determine the amount of production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested 
production, or our reappraisal if additional damage occurs and the 
crop is not harvested; and
    (2) All harvested production from insurable acreage.
    (d) Mature tobacco production that is damaged by insurable 
causes will be adjusted for quality based on the USDA Official 
Standard Grades for the insured type if it has an average value per 
pound less than the market price in the following manner:
    (1) Dividing the average value of the damaged harvested 
production by the market price;
    (2) Multiplying the result in section 11(d)(1) (not to exceed 
1.0) by the number of pounds of damaged harvested tobacco; and

[[Page 32548]]

    (3) Multiplying the product by your price election.
    If no market price has been established for the grade of the 
damaged tobacco, its value will be determined by reducing the lowest 
market price available by 20 percent for each grade that the 
production falls below the grade for which the lowest price is 
available.
    (e) To enable us to determine the fair market value of tobacco 
not sold through auction warehouses, we must be given the 
opportunity to inspect such tobacco before it is sold, contracted to 
be sold, or otherwise disposed of; failure to provide us the 
opportunity to inspect such tobacco may result in rejection of any 
claim for indemnity.
    (f) If the best offer you receive for any such tobacco is 
considered by us to be inadequate, we may obtain additional offers 
on your behalf.
    (g) 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 include it as production to count.

13. Written Agreements

    Terms of this policy that 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 
12(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 June 10, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation
[FR Doc. 97-15715 Filed 6-13-97; 8:45 am]
BILLING CODE 3410-08-P