[Federal Register Volume 62, Number 210 (Thursday, October 30, 1997)]
[Rules and Regulations]
[Pages 58621-58628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28771]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 210 / Thursday, October 30, 1997 / 
Rules and Regulations  

[[Page 58621]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457


General Crop Insurance Regulations, Canning and Processing Bean 
Endorsement; and Common Crop Insurance Regulations, Processing Bean 
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 processing beans. 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 canning and processing bean crop insurance endorsement with the 
Common Crop Insurance Policy for ease of use and consistency of terms, 
and to restrict the effect of the current canning and processing bean 
crop insurance endorsement to the 1997 and prior crop years.

EFFECTIVE DATE: December 1, 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, 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 and opinions on information 
collection requirements currently being reviewed by OMB pursuant to the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) under OMB 
control number 0563-0053. 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 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 will not increase because the information used to 
determine eligibility is already maintained at their office and the 
other information required is already being gathered as a result of the 
present policy. No additional actions are required as a result of this 
action on the part of either the producer or the reinsured company. 
Additionally, the regulation does not require any action on the part of 
the small entities than is required on the part of the large entities. 
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 final 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 Thursday, May 1, 1997, FCIC published a proposed rule in the 
Federal Register at 62 FR 23675 to add to the Common Crop Insurance 
Regulations (7 CFR part 457), a new section, 7 CFR 457.155, Processing 
Bean 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 processing beans 
found at 7 CFR 401.118 (Canning and Processing Bean Endorsement). FCIC 
also amends 7 CFR

[[Page 58622]]

401.118 to limit its effect to the 1997 and prior crop years.
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments and opinions. A total of 27 comments 
were received from a reinsured company and an insurance service 
organization. The comments received, and FCIC's responses, are as 
follows:
    Comment: An insurance service organization recommended that several 
definitions common to most crops be put into the Basic Provisions.
    Response: The Basic Provisions, which are currently in the 
regulatory review process, will include definitions of commonly used 
terms, and this rule will be revised to delete these definitions when 
the Basic Provisions are published as a final rule.
    Comment: An insurance service organization recommended that the 
sentence in the definition of ``bypassed acreage'' that states 
``Bypassed acreage upon which an indemnity is payable will be 
considered to have a zero yield for Actual Production History (APH) 
purposes'' be deleted since it is addressed elsewhere and does not 
belong in the definition.
    Response: FCIC has deleted the second sentence from, and revised, 
the definition of bypassed acreage. Provisions have been added in 
section 3 to explain bypassed acreage when determining approved yield.
    Comment: An insurance service organization and a reinsured company 
expressed concern with the definition of ``good farming practices'' 
which makes reference to ``cultural practices generally in use in the 
county * * * recognized by the Cooperative State Research, Education, 
and Extension Service as compatible with agronomic and weather 
conditions in the county.'' The commenters questioned whether cultural 
practices that are not explicitly recognized (or possibly known) by the 
Cooperative State Research, Education, and Extension Service might 
exist. The commenters indicated that the term ``county'' in the 
definition of ``good farming practice'' should be changed to ``area.'' 
The insurance service organization also recommended adding the word 
``generally'' before ``recognized by the Cooperative State Research, 
Education, and Extension Service * * *.''
    Response: The Cooperative State Research, Education, and Extension 
Service (CSREES) recognizes farming practices that are considered 
acceptable for producing processing beans. If a producer is following 
practices currently not recognized as acceptable by the CSREES, such 
recognition can be sought by interested parties. Use of the term 
``generally'' will only create an ambiguity and make the definition 
more difficult to administer. Although the cultural practices 
recognized by the CSREES may only pertain to specific areas within a 
county, the actuarial documents are on a county basis. Therefore, no 
change has been made.
    Comment: An insurance service organization recommended that the 
definition of ``replanting'' be clarified by inserting ``processing 
beans'' between the last two words (``successful'' and ``crop'') of the 
sentence.
    Response: To be consistent with language contained in the proposed 
rule of the Basic Provisions, FCIC has revised the definition to 
clarify that ``replanting'' is performing the cultural practices 
necessary to prepare the land to replace the seed of the damaged or 
destroyed crop and then replacing the seed in the insured acreage.
    Comment: An insurance service organization recommended that section 
2(c) clarify whether optional units are available if the processor 
contract stipulates the number of contracted acres, or only if the 
contract does not specify an amount of production.
    Response: FCIC agrees and has amended section 2(a) to clarify that 
for processor contracts that stipulate a specific amount of production 
to be delivered, the basic unit will consist of all acreage planted to 
the insured crop in the county that will be used to fulfill the 
processor contract, and optional units will not be established. The 
language in section 2 has also been revised and reformatted to clearly 
state the requirements for both the acreage based and production based 
processor contracts.
    Comment: A reinsured company and an insurance service organization 
asked if, in section 2(f)(3) of the proposed rule, measurement of 
stored production is applicable to processing beans.
    Response: Processing beans are not put into storage before 
processing. Therefore, FCIC has removed this provision.
    Comment: An insurance service organization recommended removal of 
the opening phrase in section 2(f)(4)(ii) of the proposed rule that 
states ``In addition to, or instead of, establishing optional units by 
section, section equivalent, or FSA Farm Serial Number, * * *'' since 
section 2(f)(4) of the proposed rule specifies that ``Each optional 
unit must meet one or more of the following criteria, * * *.''
    Response: FCIC agrees and has revised section 2(b)(5) of the final 
rule accordingly.
    Comment: An insurance service organization suggested that section 3 
should be part of the Basic Provisions since it appears to be standard 
language in most crop provisions.
    Response: The requirement that the price election (for each type, 
varietal group, etc.) have the same percentage relationship to the 
maximum price does not apply to all crop policies. FCIC considered this 
suggestion when it revised the Basic Provisions. Section 3(a) is 
revised to clarify that the percentage of the maximum price election 
the insured chooses for one type will be applicable to all other types 
insured under this policy.
    Comment: An insurance service organization stated that section 6, 
which requires the insured to provide a copy of the processor contract 
no later than the acreage reporting date, could provide a loophole by 
allowing producers to wait until acreage reporting time to decide if 
they want to have coverage.
    Response: There is no evidence that allowing the producer to 
provide a copy of the processor contract as late as the acreage 
reporting date has resulted in producers waiting to decide until the 
acreage reporting date if they want coverage. Processing bean producers 
usually have a processor contract in-force by the final planting date. 
The requirement to provide a copy of the processor contract with the 
acreage report is convenient for the producer. Therefore, no change has 
been made.
    Comment: An insurance service organization questioned whether any 
processor contract would allow interplanted processing beans or 
processing beans planted into an established grass or legume. The 
commenter further indicated that consideration should be given to 
inserting the language in section 7(a)(4) of the proposed rule into the 
Basic Provisions.
    Response: FCIC agrees that processing beans have seldom, if ever, 
been interplanted with another crop or planted into an established 
grass or legume. However, production practices are constantly evolving. 
FCIC chooses to retain the provisions of section 7(a)(3) of the final 
rule to accommodate such developments if they should occur. In 
addition, the interplanted language is not consistent among the crop 
policies and, therefore, will be retained in the crop provisions.
    Comment: An insurance service organization indicated that language 
in section 7(b) that states ``You will be considered to have a share in 
the insured crop if, under the processor contract, you retain 
possession of the

[[Page 58623]]

acreage on which the processing beans are grown, * * *'' suggests that 
only a landlord would have a share in the insured crop. The commenter 
questioned whether the provision in section 7(b) is already covered in 
sections 7(a)(1) and (3).
    Response: The language in section 7(b) was intended to cover 
producers who have a crop share agreement, rent, or own acreage. The 
word ``possession'' has been changed to ``control'' for clarification. 
Section 7(a) specifies requirements for insurance, while section 7(b) 
specifies requirements for a share in the crop. Therefore, both 
provisions are necessary.
    Comment: A reinsured company and an insurance service organization 
questioned whether section 9(b), which states that the insurance period 
ceases on the date you harvested sufficient production to fulfill your 
processor contract, conflicts with section 12(a) that states, ``We will 
determine your loss on a unit basis.'' The commenters questioned 
whether production to count from an appraisal prior to harvest would be 
included when determining fulfillment of the processor contract. The 
insurance service organization also questioned if the insured would 
know when enough production is harvested to fulfill the processor 
contract. This commenter asked if production in excess of the 
contracted amount is considered production to count for APH or loss 
adjustment or whether the processor settlement sheet is an acceptable 
record. The insurance service organization noted that the provisions in 
section 9(b) state ``* * * the insurance period ends when the 
production delivered to the processor equals the amount of production 
stated in the processor contract.'' However, the commenter questioned 
whether ``delivered to'' is the same as ``accepted by'' the processor.
    Response: Section 9(b) does not conflict with section 12(a). For 
processor contracts based on a stated amount of production, FCIC is 
only insuring the contract amount and the producer can only obtain 
basic units by processor contract. Therefore, once the contract is 
fulfilled, insurance ceases on the unit and there is no payable loss. 
If the contract is not fulfilled and there is still unharvested 
production, any insurable cause of loss is covered. With respect to the 
issue of production from appraised acreage, such production will not 
count toward fulfillment of the processor contract, although it may be 
used to determine production to count for the unit or the producer's 
approved yield if the acreage is not bypassed due to an insurable cause 
of loss that renders such production unacceptable to the processor. 
With respect to when the producer would know when the processor 
contract was fulfilled, records are kept as production is delivered to 
the processor. Therefore, the producer can determine when the contract 
was fulfilled. All production from the unit, including any excess of 
the amount stated in the contract, will be considered as production to 
count when determining the producer's approved yield. For the purposes 
of loss adjustment, the amount shown on the settlement sheet, plus any 
appraised production that was not bypassed due to an insurable cause 
that rendered the production unacceptable to the processor, will be 
included as production to count. FCIC has revised section 9(b) to 
clarify that insurance ceases when the contract is fulfilled if the 
processor contract stipulates a specific amount of production.
    Comment: An insurance service organization questioned the provision 
in section 10(a)(4), which states that insurance is provided against 
``Plant disease on acreage not planted to the processing beans the 
previous crop year, * * * '' The commenter assumed this would apply 
even if a rotation requirement was not specified in the Special 
Provisions.
    Response: This provision has been revised to specify that insurance 
coverage will be provided against plant disease on acreage not planted 
to processing beans the previous crop year, unless provided for in the 
Special Provisions or by written agreement, but not damage due to 
insufficient or improper application of disease control measures.
    Comment: An insurance service organization suggested changing the 
wording in section 10(a)(8) to eliminate reference to 10(a)(1) through 
(7) because the causes of loss have been identified.
    Response: Referencing 10(a)(1) through (7) makes it clear that 
failure of the irrigation water supply must be due to these specific 
causes of loss. Therefore, no change has been made.
    Comment: An insurance service organization questioned how to 
determine or enforce the provision in section 10(b) which states that 
insurance coverage is not provided if acreage is bypassed based on ``* 
* * the availability of a crop insurance payment.''
    Response: The adjuster should be able to make this determination 
based on factors such as a harvest pattern exists that clearly 
indicates the processor is bypassing producers with crop insurance 
coverage in favor of producers without crop insurance, even though the 
quality of the crop is similar. Language has been added to state that 
an indemnity will be denied or have to be repaid if it is determined 
that the bypassed acreage was due to the availability of a crop 
insurance payment.
    Comment: An insurance service organization questioned a need for 
section 9(b) of the proposed rule, which states that the insurance 
period ends on ``The date you harvested sufficient production to 
fulfill your processor contract,'' because section 10(b)(5) of the 
proposed rule states that loss of production will not be insured if it 
is ``Due to damage that occurs to unharvested production after you 
deliver the production required by the processor contract.'' The 
commenter indicated that this provision is not necessary since any 
damage occurring after delivery would be outside the insurance period, 
as indicated in section 9(b).
    Response: FCIC agrees and section 10(b)(5) has been deleted.
    Comment: An insurance service organization stated that the language 
in section 11(c) does not address timely notice if damage is discovered 
less than 15 days prior to harvest.
    Response: FCIC agrees and has revised section 11(c) to clarify that 
an immediate notice of loss is required if damage is discovered within 
15 days prior to harvest or during harvest.
    Comment: An insurance service organization stated that section 
12(b), which explains how a claim is settled, is too wordy and 
difficult to follow.
    Response: This section has been revised to clarify the settlement 
of claims calculation, including the addition of an example.
    Comment: An insurance service organization suggested that bypassed 
acreage payments by the processor be considered to have some value to 
count as with salvage grains.
    Response: There is nothing in this policy which precludes a 
producer from obtaining any other form of insurance against losses as 
long as such insurance is not under the Federal Crop Insurance Act. 
Since the producer contributes to the unharvested acreage pool, such 
payment will not be considered when determining production to count.
    Comment: An insurance service organization asked if section 
12(c)(1)(i)(E) of the proposed rule permits bypassed acreage to be 
appraised as production to count.
    Response: FCIC has removed section 12(c)(1)(i)(E) of the proposed 
rule and added section 12(c)(1)(iii) of the final rule to clarify that 
production to count includes appraised production on

[[Page 58624]]

acreage that is bypassed unless the acreage was bypassed due to a cause 
of loss which would not be acceptable under the terms of the processor 
contract.
    Comment: An insurance service organization stated that section 
12(c)(1)(iii) of the proposed rule 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 and if the producer continues to care for the crop. If 
the producer does not continue to care for the crop, the original 
appraisal will be used. Therefore, no change has been made.
    Comment: A reinsured company and an insurance service organization 
asked if there will be any provisions for late or prevented planting.
    Response: FCIC agrees that a late planting period for processing 
beans may be appropriate for some growing areas. Therefore, section 13 
is revised to provide a late planting period if allowed by the Special 
Provisions and the insured provides written approval from the processor 
by the acreage reporting date that it will accept the production from 
the late planted acreage. Prevented planting provision has also been 
added if available in the Basic Provisions.
    Comment: A reinsured company and an insurance service organization 
suggested that written agreements should not be limited to one year. If 
no substantive changes occur from one year to the next, allow the 
written agreement to be continuous.
    Response: Written agreements are intended to supplement policy 
terms or permit insurance in unusual situations that require 
modification of the otherwise standard insurance provisions. If such 
practices continue year to year, they should be incorporated into the 
policy or Special Provisions. It is important to minimize written 
agreement exceptions to assure that the insured is well aware of the 
specific terms of the policy. Therefore, no change has been made to the 
requirement that written agreements be renewed each year. FCIC has 
proposed that the Written Agreement provisions be included in the Basic 
Provisions.
    In addition to the changes described above, FCIC has made the 
following minor editorial changes and has amended the following 
Processing Bean Crop Insurance Provisions:
    1. Amended and clarified the paragraph preceding section 1 to 
include the Catastrophic Risk Protection Endorsement.
    2. Amended the definitions of ``base contract price,'' ``bypassed 
acreage,'' ``processor,'' and ``processor contract'' for clarification. 
The definition of ``practical to replant'' is amended to clarify that 
it will not be considered practical to replant unless the acreage can 
produce at least 75 percent of the approved yield and the processor 
agrees in writing that it will accept the production from the replanted 
acreage. The definition of ``processor contract'' is amended to clarify 
that multiple contracts with the same processor that specify amounts of 
production will be considered as a single processor contract unless the 
contracts are for different types of processing beans. Added the 
definitions of ``approved yield,'' ``processing beans,'' and ``type.'' 
A definition of ``broker'' is added and pertinent sections of the 
policy have been revised to accommodate those producers who have a 
broker as an intermediary with a processor.
    3. Section 2--Removed the provision in section 2(a) of the proposed 
rule that allowed for establishment of a basic unit by snap type beans 
or lima type beans, if provided for in the Special Provisions. Section 
2(b)(5)(C) of the final rule is added to provide optional units by 
processing bean type. This change makes the provision consistent with 
other crop provisions offering optional units by type. In addition, the 
reference to ``written agreement'' was removed from section 2(b) of the 
proposed rule and was added to section 2(b)(5) of the final rule to 
clarify which provision may be revised by written agreement.
    4. Section 7--Removed section 7(a)(2) of the proposed rule. This 
provision is not necessary since section 7(a)(3) of the proposed rule 
stated that the processing beans must be grown under, and in accordance 
with, the requirements of a processor contract. If grown under a 
processor contract, the processing beans will be canned or frozen. 
Section 7(c) is amended for clarity.
    5. Section 9--Changed the end of insurance to October 5 for all 
processing beans in the states of Idaho, Oregon, and Washington. 
Section 9(a)(2) is amended to clarify that the insurance period ends 
when the crop should have been harvested but was not harvested. Also, 
the word ``fresh'' has been removed from sections 9(d)(3), (4) and (5) 
because these Crop Provisions are not applicable to fresh market crops.
    6. Section 10--Amended section 10(a) for clarity. Section 10(b) is 
reformatted and amended for clarity. Also, removed section 10(b)(3) of 
the proposed rule which stated ``Due to processing beans not being 
timely harvested unless such delay in harvesting is solely and directly 
due to an insured cause of loss;'' because it is unnecessary.
    7. Section 11--Clarified that the insured must give notice of loss 
within 3 days after the date harvest should have started if the acreage 
will not be harvested. The insured must also provide documentation 
stating why the acreage is bypassed.
    8. Section 12--A new section 12(c)(3) of the final rule is added to 
clarify that appraised production will include all harvested production 
from any other insurable units that have been used to fill the 
processor contract for a unit. Section 12(d) of the proposed rule is 
deleted because of duplication with section 12(c)(2).
    9. Section 14--Clarified that only terms of this policy that are 
specifically designated for the use of written agreements may be 
altered by written agreement if the listed conditions are met.

List of Subjects in 7 CFR Parts 401 and 457

    Crop insurance, Canning and processing beans, Canning and 
processing bean endorsement.

Final Rule

    Accordingly, for 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. The introductory text of Sec. 401.118 is revised to read as 
follows:


Sec. 401.118  Canning and processing bean endorsement.

    The provisions of the Canning and Processing Bean Endorsement for 
the 1988 through 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).

    4. Section 457.155 is added to read as follows:

[[Page 58625]]

Sec. 457.155  Processing bean crop insurance provisions.

    The Processing Bean 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:

Processing Bean Crop Provisions

    If a conflict exists among the policy provisions the order of 
priority is as follows: (1) the Catastrophic Risk Endorsement, if 
applicable; (2) the Special Provisions; (3) these Crop Provisions; 
and (4) the Basic Provisions (Sec. 457.8) with (1) controlling (2), 
etc.

1. Definitions

    Approved yield. Your yield determined in accordance with 7 CFR 
part 400 subpart G.
    Base contract price. The price stipulated in the processor 
contract for the grade factor or sieve size that is designated in 
the Special Provisions, if applicable, without regard to discounts 
or incentives that may apply.
    Broker. A business enterprise that has all the licenses and 
permits required by the state in which it operates, and has a long 
term agreement in writing with a processor to purchase and deliver 
processing beans.
    Bypassed acreage. Land on which production is ready for harvest 
but the processor elects not to accept such production so it is not 
harvested.
    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 required by the bean processor contract with 
the processing company, and recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Harvest. The mechanical picking of bean pods from the vines.
    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.
    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. Processing beans must 
initially be placed in rows far enough apart to permit mechanical 
cultivation. Acreage planted 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, 
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 unless the replanted acreage can produce at 
least 75 percent of the approved yield, and the processor agrees in 
writing that it will accept the production from the replanted 
acreage.
    Processing beans. Lima, snap, or other bean types identified in 
the Special Provisions that are grown under a processor contract to 
be canned or frozen and sold for human consumption.
    Processor. Any business enterprise regularly engaged in canning 
or freezing processing beans for human consumption, that possesses 
all licenses and permits for processing beans required by the state 
in which it operates, and that possesses facilities, or has 
contractual access to such facilities, with enough equipment to 
accept and process the contracted beans within a reasonable amount 
of time after harvest.
    Processor contract. A written agreement between the producer and 
a processor, or between the producer and a broker, containing at a 
minimum:
    (a) The producer's commitment to plant and grow processing 
beans, and to deliver the bean production to the processor or 
broker;
    (b) The processor's, or broker's, commitment to purchase all the 
production stated in the processor contract; and
    (c) A base contract price.
    Multiple contracts with the same processor that specify amounts 
of production will be considered as a single processor contract 
unless the contracts are for different types of processing beans.
    Production guarantee (per acre). The number of tons determined 
by multiplying the approved actual production history yield per acre 
by the coverage level percentage you elect.
    Replanting. Performing the cultural practices necessary to 
prepare the land to replace the seed of the damaged or destroyed 
crop and then replacing the seed in the insured acreage.
    Timely planted. Planted on or before the final planting date 
designated in the Special Provisions for the insured crop in the 
county.
    Ton. Two thousand (2,000) pounds avoirdupois.
    Type. A category of processing beans identified as a type in the 
Special Provisions.
    Written agreement. A written document that alters designated 
terms of this policy in accordance with section 14.

2. Unit Division

    For processor contracts that stipulate:
    (a) The amount of production to be delivered:
    (1) In lieu of the definition of unit in section 1 of the Basic 
Provisions, a basic unit will consist of all acreage planted to the 
insured crop in the county that will be used to fulfill the 
processor contract;
    (2) There will be no more than one basic unit for each processor 
contract;
    (3) In accordance with section 12, all production from any basic 
unit in excess of the amount under contract will be included as 
production to count if such production is applied to any other basic 
unit for which the contracted amount has not been fulfilled; and
    (4) Optional units will not be established.
    (b) The number of acres to be planted:
    (1) Unless limited by the Special Provisions, a unit as defined 
in section 1 of the Basic Provisions (basic unit) may be divided 
into optional units if, for each optional unit, you meet all the 
conditions of this section. Basic units may not be divided into 
optional units on any basis other than as described in this section;
    (2) 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;
    (3) All optional units you selected for the crop year must be 
identified on the acreage report for that crop year;
    (4) The following requirements must be met for each optional 
unit:
    (i) 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;
    (ii) 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; and
    (iii) You must maintain records of marketed production from each 
optional unit 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
    (5) 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, such

[[Page 58626]]

as Spanish grants, as the equivalent of sections for unit purposes. 
In areas that have not been surveyed using sections or their 
equivalent systems 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 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.
    (iii) Optional Units by Types: Optional units may be established 
by type. To qualify as separate optional units, the acreage of one 
type may not continue into the acreage of another type in the same 
rows or planting pattern.

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

    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) You may select only one price election for all the 
processing beans in the county insured under this policy unless the 
Special Provisions provide different price elections by type. The 
percentage of the maximum price elections you choose for one type 
will be applicable to all other types insured under this policy.
    (b) The appraised production from bypassed acreage that could 
have been accepted by the processor will be included when 
determining your approved yield.
    (c) Acreage that is bypassed because it was damaged by an 
insurable cause of loss will be considered to have a zero yield when 
determining your approved yield.

4. Contract Changes

    In accordance with section 4 of the Basic Provisions, the 
contract change date is November 30 preceding the cancellation date.

5. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are March 15.

6. Report of Acreage

    In addition to the provisions of section 6 of the Basic 
Provisions, you must provide a copy of all processor contracts to us 
on or before the acreage reporting date.

7. Insured Crop

    (a) In accordance with section 8 of the Basic Provisions, the 
crop insured will be all the processing beans in the county for 
which a premium rate is provided by the actuarial table:
    (1) In which you have a share;
    (2) That are grown under, and in accordance with, the 
requirements of a processor contract executed on or before the 
acreage reporting date and are not excluded from the processor 
contract at any time during the crop year; and
    (3) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Interplanted with another crop; or
    (ii) Planted into an established grass or legume.
    (b) You will be considered to have a share in the insured crop 
if, under the processor contract, you retain control of the acreage 
on which the processing beans are grown, you are at risk of loss, 
and the processor contract provides for delivery of the processing 
beans under specified conditions and at a stipulated base contract 
price.
    (c) A commercial processing bean producer who is also a 
processor or broker may establish an insurable interest if the 
following requirements are met:
    (1) The producer must comply with these Crop Provisions;
    (2) Prior to the sales closing date, the Board of Directors or 
officers of the processor or the broker must execute and adopt a 
resolution that contains the same terms as an acceptable processor 
contract. Such resolution will be considered a processor contract 
under this policy; and
    (3) Our inspection reveals that the processing facilities comply 
with the definition of a processor contained in these Crop 
Provisions.

8. Insurable Acreage

    In addition to the provisions of section 9 of the Basic 
Provisions:
    (a) Any acreage of the insured crop that is 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, must be 
replanted unless we agree that it is not practical to replant; and
    (b) We will not insure acreage that does not meet any rotation 
requirements, if applicable, contained in the Special Provisions.

9. Insurance Period

    In lieu of the provisions contained in section 11 of the Basic 
Provisions, regarding the end of the insurance period, insurance 
ceases at the earlier of:
    (a) The date the processing beans:
    (1) Were destroyed;
    (2) Should have been harvested but were not harvested;
    (3) Were abandoned; or
    (4) Were harvested;
    (b) The date you harvest sufficient production to fulfill your 
processor contract if the processor contract stipulates a specific 
amount of production to be delivered;
    (c) Final adjustment of a loss; or
    (d) The date shown below for the end of the insurance period in 
the calendar year in which the processing beans would normally be 
harvested, unless otherwise agreed to in writing, as follows:
    (1) October 30 for all processing beans in the state of 
Arkansas;
    (2) October 15 for all processing beans in the states of 
Delaware, Maryland, and New Jersey;
    (3) October 5 for all processing beans in the states of Idaho, 
Oregon, and Washington;
    (4) September 30 for snap beans in the state of New York;
    (5) September 20 for snap beans in all other states; or
    (6) October 5 for lima beans in all other states.

10. Causes of Loss

    In accordance with the provisions of section 12 of the Basic 
Provisions:
    (a) Insurance is provided only against the following causes of 
loss that occur during the insurance period:
    (1) Adverse weather conditions, including:
    (i) Excessive moisture that prevents the harvesting equipment 
from entering the field or that prevents the timely operation of 
harvesting equipment; and
    (ii) Abnormally hot or cold temperatures that cause an 
unexpected number of acres over a large producing area to be ready 
for harvest at the same time, affecting the timely harvest of a 
large number of such acres or the processing of such production is 
beyond the capacity of the processor, either of which causes the 
acreage to be bypassed.
    (2) Fire;
    (3) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (4) Plant disease on acreage not planted to processing beans the 
previous crop year. (In certain instances, contained in the Special 
Provisions or in a written agreement, acreage planted to processing 
beans the previous year may be covered. Damage due to insufficient 
or improper application of disease control measures is not covered);
    (5) Wildlife;
    (6) Earthquake;
    (7) Volcanic eruption; or
    (8) Failure of the irrigation water supply, if due to a cause of 
loss contained in section 10 (a)(1) through (7) that occurs during 
the insurance period.
    (b) In addition to the causes of loss excluded in section 12 of 
the Basic Provisions, we will not insure any loss of production due 
to:
    (1) Bypassed acreage because of:
    (i) The breakdown or non-operation of equipment or facilities; 
or
    (ii) The availability of a crop insurance payment. We may deny 
any indemnity immediately in such circumstance or, if an indemnity 
has been paid, require you to repay it to us with interest at any 
time acreage was bypassed due to the availability of a crop 
insurance payment; or
    (2) Your failure to follow the requirements contained in the 
processor contract.

[[Page 58627]]

11. Duties In The Event of Damage or Loss

    In addition to the notice required by section 14 of the Basic 
Provisions, you must give us notice:
    (a) Not later than 48 hours after:
    (1) Total destruction of the processing beans on the unit; or
    (2) Discontinuance of harvest on a unit on which unharvested 
production remains.
    (b) Within 3 days after the date harvest should have started on 
any acreage that will not be harvested unless we have previously 
released the acreage. You must also provide acceptable documentation 
of the reason the acreage was bypassed. Failure to provide such 
documentation will result in our determination that the acreage was 
bypassed due to an uninsured cause of loss. If the crop will not be 
harvested and you wish to destroy the crop, you must leave 
representative samples of the unharvested crop for our inspection. 
The samples must be at least 10 feet wide and extend the entire 
length of each field in each unit. The samples must not be destroyed 
until the earlier of our inspection or 15 days after notice is given 
to us; and
    (c) At least 15 days prior to the beginning of harvest if you 
intend to claim an indemnity on any unit, or immediately if damage 
is discovered during the 15 day period or during harvest. If you 
fail to notify us and such failure results in our inability to 
inspect the damaged production, we will consider all such production 
to be undamaged and include it as production to count. You are not 
required to delay harvest.

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, by type if applicable;
    (2) Multiplying each result of section 12(b)(1) by the 
respective price election, by type if applicable;
    (3) Totaling the results of section 12(b)(2) if there are more 
than one type;
    (4) Multiplying the total production to count (see section 
12(c)), for each type if applicable, by its respective price 
election;
    (5) Totaling the results of section 12(b)(4) if there are more 
than one type;
    (6) Subtracting the results of section 12(b)(4) from the results 
of section 12(b)(2) if there is only one type or subtracting the 
results of section 12(b)(5) from the result of section 12(b)(3) if 
there are more than one type; and
    (7) Multiplying the result of section 12(b)(6) by your share.
    For example:
    You have a 100 percent share in 100 acres of snap type 
processing beans in the unit, with a guarantee of 3.0 tons per acre 
and a price election of $110.00 per ton. You are only able to 
harvest 200 tons. Your indemnity would be calculated as follows:

(1) 100 acres  x  3.0 tons = 300 tons guarantee;
(2) 300 tons  x  $110.00 price election = $33,000.00 value of 
guarantee;
(3) 200 tons  x  $110.00 price election = $22,000.00 value of 
production to count;
(4) $33,000.00 - $22,000.00 = $11,000.00 loss; and
(5) $11,000.00  x  100 percent = $11,000.00 indemnity payment.
    You also have a 100 percent share in 100 acres of lima type 
processing beans in the same unit, with a guarantee of 1.0 ton per 
acre and a price election of $225.00 per ton. You are only able to 
harvest 75 tons. Your total indemnity for both snap and lima types 
processing beans would be calculated as follows:

(1) 100 acres  x  3.0 tons = 300 tons guarantee for the snap type, 
and 100 acres  x  1.0 ton = 100 tons guarantee for the lima type;
(2) 300 tons  x  $110.00 price election = $33,000.00 value of 
guarantee for the snap type, and 100 tons  x  $225.00 price election 
= $22,500.00 value of guarantee for the lima type;
(3) $33,000.00 + $22,500.00 = $55,500.00 total value of guarantee;
(4) 200 tons  x  $110.00 price election = $22,000.00 value of 
production to count for the snap type, and 75 tons  x  $225.00 price 
election = $16,875.00 value of production to count for the lima 
type;
(5) $22,000.00 + $16,875.00 = $38,875.00 total value of production 
to count;
(6) $55,500.00 - $38,875.00 = $16,625.00 loss; and
(7) $16,625.00 loss  x  100 percent = $16,625.00 indemnity payment.

    (c) The total production to count, specified in tons, 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) That is put to another use without our consent;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide production records that are 
acceptable to us.
    (ii) Production lost due to uninsured causes.
    (iii) Production on acreage that is bypassed unless the acreage 
was bypassed due to an insured cause of loss which resulted in 
production which would not be acceptable under the terms of the 
processor contract.
    (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.
    (2) All harvested processing bean production from the insurable 
acreage. The amount of such production will be:
    (i) The usable tons of processing beans shown on the processor 
settlement sheet, if available; or
    (ii) Determined by dividing the dollar amount paid, payable, or 
which should have been paid under the terms of the processor 
contract for the quality and quantity of beans to be delivered to 
the processor by the base contract price per ton; and
    (3) All harvested processing bean production from any other 
insurable units that have been used to fulfill your processor 
contract for this unit.

13. Late and Prevented Planting

    Late planting provisions are not applicable to processing beans 
unless allowed by the Special Provisions and you provide written 
approval from the processor by the acreage reporting date that it 
will accept the production from the late planted acres when it is 
expected to be ready for harvest. Prevented planting insurance will 
be available if contained in the Basic Provisions.

14. Written Agreement

    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 
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 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.


[[Page 58628]]


    Signed in Washington, D.C., on October 27, 1997.
Suzette M. Dittrich,
Deputy Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-28771 Filed 10-29-97; 8:45 am]
BILLING CODE 3410-08-P