[Federal Register Volume 62, Number 239 (Friday, December 12, 1997)]
[Rules and Regulations]
[Pages 65338-65344]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32493]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 437 and 457


Sweet Corn Insurance Regulations; and Common Crop Insurance 
Regulations, Processing Sweet Corn 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 sweet corn. 
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 sweet corn crop insurance regulations with the 
Common Crop Insurance Policy for ease of use and consistency of terms, 
and to restrict the effect of the current sweet corn crop insurance 
regulations to the 1997 and prior crop years.

DATES: Effective December 12, 1997.

FOR FURTHER INFORMATION CONTACT: Stephen Hoy, 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

    Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), 
those collections of information have been approved by the Office of 
Management and Budget (OMB) under control number 0563-0053.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 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. Therefore, 
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 reform. The provisions of this rule 
will not have a retroactive effect. 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

[[Page 65339]]

exhausted before action against FCIC 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 23690-23695 to add to the Common Crop 
Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.154, 
Processing Sweet Corn 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 sweet corn found at 7 CFR part 437 (Sweet Corn Crop Insurance 
Regulations). FCIC also amends 7 CFR part 437 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, data, and opinions. A total of 30 
comments were received from an insurance service organization, a 
reinsured company, and a crop insurance agent. 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 include definitions of commonly used 
terms, and we have revised this rule to remove the definitions of 
``approved yield,'' ``days,'' ``FSA,'' ``final planting date,'' 
``interplanted,'' ``irrigated practice,'' ``production guarantee (per 
acre),'' ``replanting,'' ``timely planted,'' and ``written agreement.'' 
The definition of ``planted acreage'' is amended to remove language 
that is contained in the Basic Provisions.
    Comment: An insurance service organization recommended that the 
sentence in the definition of ``bypassed acreage'' that states 
``Bypassed acreage on 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, as unnecessary, the second sentence of 
the definition of bypassed acreage. A provision addressing when acreage 
will be considered to have a zero yield for APH purposes is included in 
section 3 (Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities).
    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 sweet corn. If a producer is following 
practices currently not recognized as acceptable by 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 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 ``sweet corn'' 
between the last two words (``successful'' and ``crop'') of the 
sentence.
    Response: This definition is contained in the Basic Provisions, and 
is, therefore, removed from these crop provisions.
    Comment: An insurance service organization recommended that section 
2(b) of the proposed rule 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 to specify that for 
processor contracts that stipulate a specific amount of production to 
be delivered, the basic unit will consist of all the acreage planted to 
the insured crop in the county that will be used to fulfill contracts 
with each processor, and optional units will not be established for 
production based processor contracts. 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. In 
addition, language in this section that is common with other crop 
provisions has been removed since it is contained in the Basic 
Provisions.
    Comment: An insurance service organization questioned whether 
verification of production from an optional unit using ``measurement of 
stored production,'' as specified in section 2(e)(3) of the proposed 
rule applies to processing sweet corn.
    Response: Sweet corn is 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(e)(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(e)(4) of the proposed rule specifies that ``Each optional 
unit must meet one or more of the following criteria, * * *''
    Response: The unit division provisions for any processor contract 
that stipulates the number of acres to be planted have been removed 
from these provisions, since the provisions are contained in the Basic 
Provisions.
    Comment: An insurance service organization stated that the language 
in section 3(a), which provides guidelines for selection of price 
elections, should be moved to the Basic 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. Therefore, section 3 
should not be part of the Basic Provisions.
    Comment: An insurance service organization questioned whether the 
sentence ``Any other measured production will be converted to an 
unhusked ear weight equivalent'' is needed in section 3(b) since it is 
stated in section 12(c)(2).
    Response: Section 3(b) addresses the insurance guarantee while 
section

[[Page 65340]]

12(c)(2) addresses production to count. The provisions clarify that 
both are expressed as unhusked ear weight, and any other measured 
production will be converted to unhusked ear weight. Therefore, no 
change has been made.
    Comment: An insurance service organization stated that requiring 
the producer 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 
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. Sweet corn 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 sweet corn or sweet corn 
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 sweet corn has 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 acreage on which the sweet corn is 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) of the proposed rule.
    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 coverage on the crop, 
while section 7(b) specifies requirements for an insurable share in the 
crop. Therefore, both provisions are necessary.
    Comment: An insurance service organization and a reinsured company 
questioned whether the provision in section 9(b), which states that the 
insurance period ceases on the date sufficient production is harvested 
to fulfill the producer's processor contract, conflicts with the 
provision in 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 questioned whether the insured would know when enough 
production is harvested to fulfill the processor contract. This 
commenter asked if production exceeding the contracted amount is 
considered production to count for APH or loss adjustment or whether 
the processor settlement sheet is the only acceptable record. The 
insurance service organization suggested 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 sweet corn contract.'' However, the commenter also 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 a 
basic unit 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 will 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 whether the producer will know when the processor 
contract is fulfilled, records are kept as production is delivered to 
the processor. Therefore, the producer can determine when the contract 
is 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 sweet corn the previous crop 
year * * *.'' The commenter assumed this would apply even if a rotation 
requirement was not specified in the Special Provisions.
    Response: FCIC agrees that if a rotation requirement is not 
specified in the Special Provisions, insurance coverage should be 
provided against plant disease if sweet corn was planted the previous 
crop year. Section 10(a)(4) has been revised accordingly.
    Comment: An insurance service organization suggested changing the 
wording in section 10(a)(8) to eliminate the reference to 10(a)(1) 
through (7) and state ``Failure of the irrigation water supply, if due 
to an insured cause of loss.''
    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 the 
provision in section 10(b)(1)(ii), which states that insurance coverage 
is not provided if acreage is bypassed based on the availability of a 
crop insurance payment, is to be enforced.
    Response: The adjuster should be able to make this determination 
based on various factors such as if 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 bypassed acreage was due to the availability of a crop 
insurance payment.
    Comment: An insurance service organization questioned a discrepancy 
between section 9(b) of the proposed rule, which states that insurance 
ceases on ``The date you harvest sufficient production to fulfill your 
processor

[[Page 65341]]

contract,'' and section 10(b)(5) of the proposed rule, which states 
that loss of production will not be insured if ``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 has deleted section 10(b)(5).
    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 indicated that payments 
by the processor for bypassed acreage should be considered to have 
value to count as is done with salvaged 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 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 only be necessary if the company 
and the insured do not agree on the appraisal or if the company 
believes that the crop needs to be carried further. The producer must 
continue to care for the crop in accordance with recognized good 
farming practices 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: An insurance service organization commented on section 
12(c)(2) of the proposed rule which includes the statement ``* * * 
production will be determined by dividing the dollar amount as required 
by the contract for the quality and quantity of sweet corn delivered to 
the processor by the base contract price per ton.'' The commenter did 
not oppose this method but requested to know why it was used to 
determine production to count.
    Response: FCIC has revised section 12(c)(2) to specify that 
production to count of harvested sweet corn should be determined from 
the usable tons specified on the processor settlement sheet. In 
addition, FCIC has amended the language in section 12(c) to clarify 
that, in the absence of a processor settlement sheet, production to 
count is determined by dividing the dollar amount paid, payable, or 
which should have been paid under the terms of the processor contract 
for the quantity of sweet corn delivered to the processor by the base 
contract price per ton. Since premiums or discounts for quality are not 
normally included in processor contracts for sweet corn, the term 
``quality'' was removed from this provision.
    Comment: A crop insurance agent stated that late planting 
provisions should be available for processing sweet corn since some 
sweet corn is planted late in most years. The insurance agent stated 
that late planting provisions will not affect the processor's ability 
to timely harvest and process the sweet corn. A reinsured company asked 
if provisions will be available for late and prevented planting. An 
insurance service organization expressed support for eliminating the 
late planting option and asked if prevented planting would be 
available.
    Response: FCIC agrees that a late planting period for processing 
sweet corn 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 if the producer provides written approval 
from the processor by the acreage reporting date that it will accept 
the production from the late planted acreage. Section 14 provides a 
prevented planting coverage of 40 percent of the producers production 
guarantee for timely planted acreage. If the producer has limited or 
additional coverage and pays an additional premium, the prevented 
planting coverage may be increased to the levels specified in the 
actuarial documents.
    Comment: An insurance service organization and a reinsured company 
recommended removal of the requirement that written agreements be 
renewed each year if there are no significant changes to the farming 
operation. The insurance service organization stated that section 14(d) 
should perhaps refer to the date specified in the agreement instead of 
limiting the agreement for one year. An insurance service organization 
recommended that section 14 be put into the Basic Provisions.
    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 will be made to the 
requirement that written agreements be renewed each year. The written 
agreement provisions are contained in the Basic Provisions and, 
therefore, have been removed from these crop provisions.
    In addition to the changes described above, FCIC has made minor 
editorial changes and has amended the following Processing Sweet Corn 
Provisions:
    1. Amended and clarified the paragraph preceding section 1 to 
include the Catastrophic Risk Protection Endorsement.
    2. Section 1--Amended the definitions of ``base contract price,'' 
``bypassed acreage,'' and ``processor'' for clarity. 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. This provision 
guards against the situation where a loss is claimed under one 
contract, but a surplus is grown under the other contract for the same 
crop. The definition of ``usable tons'' is amended to clarify that the 
amount includes the quantity of sweet corn for which the producer is 
compensated or should have been compensated by the processor.
    3. Section 3(b)--Clarified that the insurance guarantee per acre is 
expressed as tons of unhusked ear weight.
    4. Section 3(c)--Added a provision to clarify that appraised 
production on bypassed acreage that is not bypassed due to an insurable 
cause of loss will be

[[Page 65342]]

considered when determining the producer's approved yield.
    5. Section 7--Removed section 7(a)(2) in the proposed rule. This 
provision is not necessary since section 7(a)(3) of the proposed rule 
stated that the sweet corn must be grown under, and in accordance with, 
the requirements of a processor contract. If grown under a processor 
contract, the sweet corn will be canned or frozen. Section 7(c) is 
amended for clarity.
    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. Assuming the acreage is not intentionally bypassed, 
FCIC believes that processors make sound harvesting decisions based on 
the condition and economic value of the crop as a whole. Therefore, 
FCIC believes that section 10(b)(3) is unnecessary and adds no value to 
these provisions.
    7. Section 11(b)--Clarified that the insured must give a notice of 
loss within 3 days after the date harvest should have started if the 
acreage will not be harvested unless the acreage was previously 
released. The insured must also provide documentation stating why the 
acreage was bypassed.
    8. Section 12--Deleted section 12(c)(1)(i)(E) of the proposed rule, 
and inserted amended language as a new section 12(c)(1)(iii) of the 
final rule to clarify when appraised production will include production 
on bypassed acreage. 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).
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. This rule improves the processing sweet corn 
insurance coverage and brings it under the Common Crop Insurance Policy 
Basic Provisions for consistency among policies. The contract change 
date for the 1998 crop year is December 31, 1997. It is, therefore, 
imperative that these provisions be made final before that date so that 
the reinsured companies and insureds may have sufficient time to 
implement the new provisions. Therefore, public interest requires the 
agency to act immediately to make these provisions available for the 
1998 crop year.

List of Subjects in 7 CFR Parts 437 and 457

    Crop insurance, Processing sweet corn, Sweet corn crop insurance 
regulations.

Final Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby amends 7 CFR parts 437 and 457, as 
follows:

PART 437--SWEET CORN CROP INSURANCE REGULATIONS FOR THE 1985 
THROUGH 1997 CROP YEARS

    1. The authority citation for 7 CFR part 437 is revised to read as 
follows:

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

    2. The part heading is revised to read as set forth above.
    3. The subpart heading ``Subpart-Regulations for the 1985 and 
Succeeding Crop Years'' is removed.
    4. Section 437.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:


Sec. 437.7  The application and policy.

* * * * *
    (d) The application is found at subpart D of part 400, General 
Administrative Regulations (7 CFR 400.37, 400.38). The provisions of 
the Sweet Corn Insurance Policy for the 1985 through 1997 crop years 
are as follows:

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

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

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

    6. Section 457.154 is added to read as follows:


Sec. 457.154  Processing sweet corn crop insurance provisions.

    The Processing Sweet Corn Crop Insurance Provisions for the 1998 
and succeeding crop years are as follows:
    FCIC policies:

Department of Agriculture

Federal Crop Insurance Corporation

    Reinsured policies:

(Appropriate title for insurance provider)
    Both FCIC and reinsured policies:

Processing Sweet Corn Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) the Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these 
Crop Provisions; and (4) the Basic Provisions with (1) controlling 
(2), etc.
    1. Definitions.
    Base contract price. The price stipulated on the processor 
contract without regard to discounts or incentives that may apply.
    Bypassed acreage. Land on which production is ready for harvest 
but the processor elects not to accept such production so it is not 
harvested.
    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 sweet corn 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 removal of the ears from the stalks for the purpose 
of delivery to the processor.
    Planted acreage. In addition to the definition contained in the 
Basic Provisions, sweet corn 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.
    Processor. Any business enterprise regularly engaged in canning 
or freezing processing sweet corn for human consumption, that 
possesses all licenses and permits for processing sweet corn 
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 contracted processing sweet 
corn within a reasonable amount of time after harvest.
    Processor contract. A written agreement between the producer and 
a processor, containing at a minimum:
    (a) The producer's commitment to plant and grow sweet corn, and 
to deliver the sweet corn production to the processor;
    (b) The processor'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.
    Ton. Two thousand (2,000) pounds avoirdupois.

[[Page 65343]]

    Unhusked ear weight. Weight of the seed-bearing spike of sweet 
corn including the membranous or green outer envelope.
    Usable tons. The quantity of sweet corn for which the producer 
is compensated or should have been compensated by the processor.
    2. Unit Division.
    (a) For processor contracts that stipulate the amount of 
production to be delivered:
    (1) In lieu of the definition contained in 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 contracts with each 
processor;
    (i) There will be no more than one basic unit for all production 
contracted with each processor contract;
    (ii) 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
    (2) Provisions in the Basic Provisions that allow optional units 
by section, section equivalent, or FSA farm serial number and by 
irrigated and non-irrigated practices are not applicable.
    (b) For any processor contract that stipulates the number of 
acres to be planted, the provisions contained in section 34 of the 
Basic Provisions will apply.
    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 sweet corn 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 insurance guarantee per acre is expressed as tons of 
unhusked ear weight. Any other measured production will be converted 
to an unhusked ear weight equivalent.
    (c) The appraised production from bypassed acreage that could 
have been accepted by the processor will be included when 
determining your approved yield.
    (d) 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 sweet corn in the county for 
which a premium rate is provided by the actuarial documents:
    (1) In which you have a share;
    (2) That is grown under, and in accordance with, the 
requirements of a processor contract executed on or before the 
acreage reporting date and not excluded from the processor contract 
at any time during the crop year; and
    (3) That is 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 sweet corn is grown, you are at risk of loss, and the 
processor contract provides for delivery of sweet corn under 
specified conditions and at a stipulated base contract price.
    (c) A commercial sweet corn producer who is also a processor 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 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 any acreage that does not meet the 
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 sweet corn:
    (1) Was destroyed;
    (2) Should have been harvested but was not harvested;
    (3) Was abandoned; or
    (4) Was 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) Unless otherwise agreed to in writing, the calendar date for 
the end of the insurance period in which the sweet corn would 
normally be harvested as follows:
    (1) September 30 in Malheur County, Oregon, all Idaho counties, 
and all Iowa counties;
    (2) October 20 in all other Oregon counties, and in all 
Washington counties; or
    (3) September 20 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 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, but not damage due to insufficient or 
improper application of disease control measures or as otherwise 
limited by the Special Provisions;
    (5) Wildlife;
    (6) Earthquake;
    (7) Volcanic eruption; or
    (8) Failure of the irrigation water supply, if due to a cause of 
loss listed 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.
    11. Duties In The Event of Damage or Loss.
    In addition to the requirements of section 14 of the Basic 
Provisions, you must give us notice:
    (a) Not later than 48 hours after:
    (1) Total destruction of the sweet corn 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

[[Page 65344]]

    (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, so that we 
may inspect any damaged production. 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 type A processing 
sweet corn in the unit, with a guarantee of 3.0 tons per acre and a 
price election of $50.00 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 $50.00 price election=$15,000.00 value of guarantee;
(4) 200 tons x $50.00 price election=$10,000.00 value of production 
to count;
(6) $15,000.00-$10,000.00=$5,000.00 loss;
(7) $5,000.00 x 100 percent=$5,000.00 indemnity payment.

    You also have a 100 percent share in 100 acres of type B 
processing sweet corn in the same unit, with a guarantee of 4.0 tons 
per acre and a price election of $45.00 per ton. You are only able 
to harvest 350 tons. Your total indemnity for both types A and B 
would be calculated as follows:

(1) 100 acres x 3.0 tons=300 tons guarantee for type A, and
    100 acres x 4.0 tons=400 tons guarantee for type B;
(2) 300 tons x $50.00 price election=$15,000.00 value of guarantee 
for type A, and
    400 tons x $45.00 price election=$18,000.00 value of guarantee 
for type B;
(3) $15,000.00 + $18,000.00=$33,000.00 total value of guarantee;
(4) 200 tons x $50.00 price election=$10,000.00 value of production 
to count for type A, and
    350 tons x $45.00 price election=$15,750.00 value of production 
to count for type B;
(5) $10,000.00+$15,750.00=$25,750.00 total value of production to 
count;
(6) $33,000.00-$25,750.00=$7,250.00 loss;
(7) $7,250.00 loss x 100 percent=$7,250.00 indemnity payment.

    (c) The total production to count, specified in tons of unhusked 
ear weight, 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 sweet corn production from the 
insurable acreage. The amount of such production will be:
    (i) The usable tons of processing sweet corn 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 quantity of the sweet corn delivered to the 
processor by the base contract price per ton; and
    (3) All harvested processing sweet corn production from any 
other insurable units that have been used to fulfill your processor 
contract for this unit.
    The total production to count will be expressed as an unhusked 
ear weight. Any other measure of production will be converted to an 
unhusked ear weight equivalent.
    13. Late Planting.
    A late planting period is not applicable to processing sweet 
corn 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.
    14. Prevented Planting.
    Your prevented planting coverage will be 40 percent of your 
production guarantee for timely planted acreage. If you have limited 
or additional levels of coverage, as specified in 7 CFR part 400, 
subpart T, and pay an additional premium, you may increase your 
prevented planting coverage to the levels specified in the actuarial 
documents.

    Signed in Washington, D.C., on December 5, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-32493 Filed 12-11-97; 8:45 am]
BILLING CODE 3410-08-P