[Federal Register Volume 62, Number 153 (Friday, August 8, 1997)]
[Rules and Regulations]
[Pages 42647-42651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20914]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules 
and Regulations  

[[Page 42647]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457

RIN 0563-AA79


General Crop Insurance Regulations, Safflower Seed Crop Insurance 
Endorsement; and Common Crop Insurance Regulations, Safflower 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 safflower. 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 safflower 
seed crop endorsement under the Common Crop Insurance Policy for ease 
of use and consistency of terms, and to restrict the effect of the 
current safflower seed crop endorsement to the 1997 and prior crop 
years.

EFFECTIVE DATE: August 8, 1997.

FOR FURTHER INFORMATION CONTACT: Ron Nesheim, 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 No. 12866

    The Office of Management and Budget (OMB) has determined this rule 
to be exempt for the purposes of Executive Order No. 12866, and 
therefore, 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 comments and opinions on information collection 
requirements currently being reviewed by OMB under OMB control number 
0563-0053 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) of 
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 economic impact on a 
substantial number of small entities. The amount of work required of 
insurance companies should not increase because the information used to 
determine eligibility is already maintained at their office. The amount 
of work required of insurance companies may actually be reduced because 
verification with FCIC of a producer's compliance with the controlled 
substance regulations, currently done manually, will be automated. 
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 rule has been reviewed in accordance with Executive Order No. 
12988 on civil justice reforms. 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

    On Friday, April 11, 1997, FCIC published a proposed rule in the 
Federal Register at 62 FR 17758 to add to the Common Crop Insurance 
Regulations (7 CFR part 457) a new section, 7 CFR 457.125, Safflower 
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 safflower found at 7 CFR 
401.123 (Safflower Seed Crop Endorsement). FCIC also amends 7 CFR 
401.123 to limit its effect to the 1997 and prior crop years.
    Following publication of the proposed rule, the public was afforded 
30 days to

[[Page 42648]]

submit written comments, data, and opinions. A total of 13 comments 
were received from the reinsured companies and an insurance service 
organization. The comments received, and FCIC's responses, are as 
follows:
    Comment: A reinsured company asked why no late planting period or 
prevented planting language was put in the policy. The reinsured 
company asked whether the old Late Planting Agreement Option must still 
be signed.
    Response: The Late Planting Agreement Option, found under 7 CFR 
Sec. 401.123 that is currently applicable to safflower provisions, will 
no longer apply. FCIC intends to revise the Late and Prevented Planting 
provisions for the 1998 crop year. Until the revised rule is published, 
FCIC will add the Late and Prevented Planting provisions, in effect for 
other crops, to safflower.
    Comment: An insurance service organization suggested that in the 
definitions of ``final planting date'' and ``good farming practices,'' 
the term ``production guarantee'' be replaced by ``average yield,'' or 
``insured's average yield'' (also in provision 2(e)(1)).
    Response: The terms ``average yield'' or ``insured's average 
yield'' would not be accurate because the insured's approved yield is 
multiplied by the coverage level selected to determine the production 
guarantee. Good farming practices and final planting date require that 
the crop be able to produce the yield, not the production guarantee. 
Therefore, no change has been made.
    Comment: A reinsured company and an insurance service organization 
expressed a concern that the provision in the definition of ``good 
farming practices'' stating that, ``recognized by the Cooperative State 
Research, Education and Extension Service as compatible * * *'' there 
may be accepted practices not so recognized. They also asked that if 
this cannot be dropped, it would at least help to say ``generally 
recognized * * *''.
    Response: FCIC believes that the Cooperative State Research, 
Education, and Extension Service (CSREES) recognizes farming practices 
that are considered acceptable for producing safflower. If a producer 
is following practices currently not recognized as acceptable by the 
CSREES, there is no reason why such recognition cannot be sought by 
interested parties. CSREES pertains only to specific areas within a 
county. No change has been made.
    Comment: A reinsured company suggested that in the definition of 
``irrigated practice,'' the words ``and quality'' be added after the 
words ``* * * providing the quantity.''
    Response: FCIC disagrees. There are no clear criteria regarding the 
quality of water necessary to produce a crop. The highly variable 
factors involved would make such criteria difficult to develop and 
administer. The provisions regarding good farming practices can be 
applied in situations in which the insured person failed to exercise 
due care and diligence. Therefore, no change has been made.
    Comment: An insurance service organization stated that in the 
definition of ``practical to replant,'' the addition of marketing 
window in several recent proposed rules seems to be applicable to 
processor and fresh market crops. It does not appear to be a 
consideration for replanting crops like safflower.
    Response: FCIC agrees that the concept is most applicable to 
processor and fresh market crops. However, the Federal Crop Insurance 
Act has mandated that insurance providers consider marketing window, 
when determining whether it is practical to replant. Therefore, no 
change has been made.
    Comment: An insurance service organization suggested that ``value 
per pound of damaged safflower'' be changed to read ``value per pound'' 
since the definition refers to ``damaged safflower.''
    Response: FCIC agrees and has made the change.
    Comment: An insurance service organization questioned if it is 
necessary to include all the language in section 3 (Insurance 
Guarantees, Coverage Levels, and Prices) if there are no prices by 
type. Since this appears to be standard language for most of the recent 
proposed rule crop provisions, perhaps it should be in the Basic 
Provisions instead.
    Response: While many crops allow separate prices, by type, not all 
require the same percentage relationship. The provision is included in 
safflower to provide correct coverage as different types are developed. 
Therefore, no change has been made.
    Comment: An insurance service organization stated that some 
policies allow the entire replanting payment to be paid to the person 
incurring the entire expense (usually the tenant) when the landlord and 
tenant are insured with the same company, but no such language is in 
this proposed rule.
    Response: It is true that a few Crop Provisions allow the entire 
replanting payment to be paid to the person incurring the entire 
expense (usually the tenant) when the landlord and tenant are insured 
with the same company. However, because of the difficulties of 
administering this provision, it is being discontinued as Crop 
Provisions are revised. Therefore, no change has been made.
    Comment: An insurance service organization suggested that section 
12(c)(1)(iv)(A) of the policy should not allow the insured to defer 
settlement and wait for a later, generally lower, appraisal, especially 
on crops that have a short ``shelf life.''
    Response: A later appraisal will be necessary only if the insurance 
provider agrees that such an appraisal would result in a more accurate 
determination of production to count 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: An insurance service organization stated that section 
12(d)(3)(ii) refers to ``net price;'' section 12(d)(4)(ii)(A) refers to 
``value per pound;'' and section 12(d)(4)(ii)(B) refers to ``price per 
pound.'' All three seem to mean the same thing. Since ``value per 
pound'' is defined in the policy, they suggested using it in each item.
    Response: FCIC agrees and has made those changes.
    Comment: An insurance service organization suggested that in 
section 12(d)(4) (i) & (ii), ``qualifying adjustment factor 
provisions'' be revised to read ``quality adjustment factors'' in item 
(i), and ``quality adjustment factor provisions'' to ``quality 
adjustment factors'' in item (ii).
    Response: FCIC agrees and has made the changes.
    Comment: An insurance service organization suggested that in 
section 12(d)(4)(ii)(A), ``local market price of undamaged safflower'' 
be amended to read ``local market price.''
    Response: FCIC agrees and has made the change.
    Comment: An insurance service organization and a reinsured company 
suggested that written agreements should not be limited to one year. 
Written unit agreements are continuous unless there are significant 
changes in the farming operation. Some others should also be this way.
    Response: Written agreements are intended to change policy terms or 
permit insurance in unusual or previously unknown situations. If such 
practices continue year to year, they should be incorporated into the 
policy or Special Provisions. It is important to keep non-uniform 
exceptions to the minimum and to ensure that the insured is well aware 
of the specific terms of the policy. Therefore, no change has been 
made.

[[Page 42649]]

    In addition to the changes described above, FCIC has made minor 
editorial changes and has amended the following provisions:
    1. The preamble is revised to refer to the Catastrophic Risk 
Protection Endorsement for the purpose of clarification.
    2. In section 2, the authority to vary the unit structure has been 
clarified that only the optional unit guideline, specified in section 
2(e)(4) may be revised by written agreement.
    3. Section 9(e) has been amended to clarify that wildlife is an 
insured cause of loss, unless proper measures to control wildlife have 
not been taken to be consistent with other policies.
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. This rule improves the safflower crop insurance 
coverage and brings it under the Common Crop Insurance Policy Basic 
Provisions for consistency among policies. The earliest contract change 
date that can be met for the 1998 crop year is August 31, 1997, and the 
final rule must be published as soon as possible. It is, therefore, 
imperative that these provisions be made final so that reinsured 
companies may have sufficient time to implement these changes. 
Therefore, public interest requires the agency to make the rules 
effective upon publication.

List of Subjects in 7 CFR Parts 401 and 457

    Crop insurance, Safflower seed.

Final Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby amends 7 CFR Parts 401 and 457 as 
follows:

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

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

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

    2. In Sec. 401.123, the introductory paragraph is revised to read 
as follows:


Sec. 401.123  Safflower seed crop endorsement.

    The provisions of the Safflower Seed Crop Insurance Endorsement for 
the 1988 through the 1997 crop year.
* * * * *
    3. Section 401.8 is amended by revising the introductory text of 
paragraph (d) to read as follows:
* * * * *


Sec. 401.8  The application and policy.

* * * * *
    (d) The application for the 1988 and succeeding crop years is found 
at subpart D of part 400, General Administrative Regulations (7 CFR 
400.37 and 400.38). The provisions of the Safflower Insurance Policy 
for the 1988 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(l), 1506(p).

    5. Section 457.125 is added to read as follows:


Sec. 457.125  Safflower crop insurance provisions.

    The Safflower 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:

Safflower Crop Insurance Provisions

    If a conflict exists among the Basic Provisions (Sec. 457.8), 
these Crop Provisions, the Special Provisions, and the Catastrophic 
Risk Protection Endorsement, if applicable, the Special Provisions 
will control these Crop Provisions and the Basic Provisions; and 
these Crop Provisions will control the Basic Provisions. The 
Catastrophic Risk Protection Endorsement, if applicable, will 
control all 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.
    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. Collecting the safflower seed by combining or 
threshing.
    Interplanted. Acreage on which two or more crops are planted in 
a manner that does not permit separate agronomic maintenance or 
harvest of the insured crop.
    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.
    Local market price. The cash price per pound for undamaged 
safflower (test weight of 35 pounds per bushel or higher and seed 
damage less than 25 percent) offered by buyers.
    Nurse crop (companion crop). A crop planted into the same 
acreage as another crop, that is intended to be harvested 
separately, and which is planted to improve growing conditions for 
the crop with which it is grown.
    Planted acreage. Land in which seed has been placed by a machine 
appropriate for the insured crop and planting method, at the correct 
depth, into a seedbed that has been properly prepared for the 
planting method and production practice. Safflower must initially be 
planted in rows. Acreage planted in any other manner will not be 
insurable unless otherwise provided by the Special Provisions or by 
written agreement.
    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 end of the late planting 
period unless replanting is generally occurring in the area.
    Production guarantee (per acre). The number of pounds determined 
by multiplying the approved APH yield per acre by the coverage level 
percentage you elect.
    Replanting. Performing the cultural practices necessary to 
replace the safflower seed, including preparing the land and then 
replacing the safflower seed in the insured acreage with the 
expectation of producing at least the yield used to determine the 
production guarantee.
    Value per pound. The cash price per pound for damaged safflower 
(test weight below 35 pounds per bushel, seed damage in excess of 25 
percent, or both).
    Written agreement. A written document that alters designated 
terms of this policy in accordance with section 13.

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) (a 
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 other than as described in this section.

[[Page 42650]]

    (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) For each crop year, records of marketed production or 
measurement of stored production from each optional unit must be 
maintained in such a manner that permits us to verify the production 
from each optional unit, or the production from each unit must be 
kept separate until loss adjustment is completed by us; and
    (4) Each optional unit must meet one or more of the following 
criteria, as applicable, unless otherwise specified by written 
agreement:
    (i) Optional Units by Section, Section Equivalent, or FSA Farm 
Serial Number: Optional units may be established if each optional 
unit is located in a separate legally identified section. In the 
absence of sections, we may consider parcels of land legally 
identified by other methods of measure including, but not limited to 
Spanish grants, railroad surveys, leagues, labors, or Virginia 
Military Lands, as the equivalent of sections for unit purposes. In 
areas that have not been surveyed using the systems identified 
above, or another system approved by us, or in areas where such 
systems exist but boundaries are not readily discernable, each 
optional unit must be located in a separate farm identified by a 
single FSA Farm Serial Number.
    (ii) Optional Units on Acreage Including Both Irrigated and Non-
irrigated Practices: Optional units may be based on irrigated 
acreage and non-irrigated acreage (in those counties where ``non-
irrigated'' practice is allowed in the actuarial table) if both are 
located in the same section, section equivalent, or FSA Farm Serial 
Number. To qualify as separate irrigated and non-irrigated optional 
units, the non-irrigated acreage may not continue into the irrigated 
acreage in the same rows or planting pattern. The irrigated acreage 
may not extend beyond the point at which the irrigation system can 
deliver the quantity of water needed to produce the yield on which 
the guarantee is based, except the corners of a field in which a 
center-pivot irrigation system is used will be considered as 
irrigated acreage if separate acceptable records of production from 
the corners are not provided. If the corners of a field in which a 
center-pivot irrigation system is used do not qualify as a separate 
non-irrigated optional unit, they will be a part of the unit 
containing the irrigated acreage. Non-irrigated acreage that is not 
a part of a field in which a center-pivot irrigation system is used 
may qualify as a separate optional unit provided that all other 
requirements of this section are met.

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 safflower 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 safflower 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 August 31 
preceding the cancellation date for California, and December 31 
preceding the cancellation date for all other states.

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                                dates             
------------------------------------------------------------------------
California.............................  December 31.                   
All other states.......................  March 15.                      
------------------------------------------------------------------------

6. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all safflower 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 safflower seed;
    (c) That is not (unless allowed by the Special Provisions or by 
written agreement):
    (1) Interplanted with another crop; or
    (2) Planted into an established grass or legume.

7. Insurable Acreage

    In addition to the provisions of section 9 (Insurable Acreage) 
of the Basic Provisions (Sec. 457.8), we will not insure:
    (a) Safflower planted on land on which safflower, sunflower 
seed, any variety of dry beans, soybeans, mustard, rapeseed, or 
lentils were grown the preceding crop year, unless other rotation 
requirements are specified in the Special Provisions or we agree in 
writing to insure such acreage; or
    (b) Any acreage of safflower 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 the crop is replanted 
or 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

    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 the irrigation water supply, if caused by an 
insured cause of loss that occurs during the insurance period.

10. Replanting Payment

    (a) In accordance with section 13 (Replanting Payment) of the 
Basic Provisions (Sec. 457.8), a replanting payment is allowed if 
the crop is 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 it is practical to replant.
    (b) The maximum amount of the replanting payment per acre will 
be the lesser of 20 percent of the production guarantee or 160 
pounds, multiplied by your price election, multiplied by your 
insured share.
    (c) When safflower is replanted using a practice that is 
uninsurable as an original planting, the liability on 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 unit, we will combine all optional units 
for which such production records were not provided; or

[[Page 42651]]

    (2) For any basic unit, we will allocate any commingled 
production to such units in proportion to our liability on the 
harvested acreage for the unit.
    (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 12(b)(1) by the 
respective price election;
    (3) Totaling the results in section 12(b)(2);
    (4) Multiplying the total production to be counted of each type 
if applicable, (see section 12(c)) by the respective price election;
    (5) Totaling the results in section 12(b)(4);
    (6) Subtracting the results from the total in section 12(b)(5) 
from the results in section 12(b)(3); and
    (7) Multiplying the result in 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 per acre for the 
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)); and
    (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 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 the insurable acreage.
    (d) Mature safflower 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 8 percent. We may obtain 
samples of the production to determine the moisture content.
    (2) Production will be eligible for quality adjustment if such 
production:
    (i) Has a test weight below 35 pounds per bushel;
    (ii) Has seed damage in excess of 25 percent; or
    (iii) Contains substances or conditions 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 resulted from a 
cause of loss against which insurance is provided under these crop 
provisions and that occurred within the insurance period;
    (ii) The deficiencies, substances, or conditions result in a 
value per pound that is less than the local market price;
    (iii) All determinations of these deficiencies, substances, or 
conditions 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 
safflower under the authority of the Agricultural 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. Test weight for 
quality adjustment purposes may be determined by our loss adjuster.
    (4) Safflower 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 the quality adjustment factors contained 
in the Special Provisions; or
    (ii) If quality adjustment factors are not contained in the 
Special Provisions:
    (A) By determining the value per pound and the local market 
price on the earlier of the date such quality adjusted production is 
sold or the date of final inspection for the unit. Discounts used to 
establish the value per pound will be limited to those which are 
usual, customary, and reasonable. The value per pound 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 safflower. We may 
obtain values per pound from any buyer of our choice. If we obtain 
values per pound from one or more buyers located outside your local 
market area, we will reduce such values per pound by the additional 
costs required to deliver the production to those buyers.
    (B) Divide the value per pound by the local market price to 
determine the quality adjustment factor; and
    (C) Multiply the adjustment factor by the number of pounds of 
the damaged production remaining after any reduction due to 
excessive moisture to determine the net production to count.
    (e) Any production harvested from other plants growing in the 
insured crop may be counted as production of the insured crop on a 
weight basis.

3. Written Agreement

    Terms of this policy which are specifically designated for the 
use of written agreement 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 by us, 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 August 4, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-20914 Filed 8-7-97; 8:45 am]
BILLING CODE 3410-08-P