[Federal Register Volume 62, Number 242 (Wednesday, December 17, 1997)]
[Rules and Regulations]
[Pages 65991-65999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32848]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 242 / Wednesday, December 17, 1997 / 
Rules and Regulations  

[[Page 65991]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457


Common Crop Insurance Regulations; Canola and Rapeseed 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 canola and rapeseed. 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 convert 
the canola and rapeseed pilot insurance program to a permanent 
insurance program.

EFFECTIVE DATE: This rule is effective December 17, 1997.

FOR FURTHER INFORMATION CONTACT: Gary Johnson, 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) 
926-3826.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    The Office of Management and Budget (OMB) has determined this rule 
to be not significant for the purposes of Executive Order 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 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 regulation does not impose 
any burden on small entities than is required on the part of large 
entities. The amount of work required of insurance companies will not 
increase because the information to determine eligibility is already 
maintained in their office and the other required information is 
already being collected under the pilot program. No additional actions 
are required as a result of this rule on the part of the producer or 
the insurance companies. All producers must provide the same 
information regardless of size, including an application, acreage 
report, and notice of loss, if applicable. Therefore, this action is 
determined to be exempt from the provisions of the Regulatory 
Flexibility Act (5 U.S.C. 605), and no Regulatory Flexibility Analysis 
was prepared.

Federal Assistance Program

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

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which require intergovernmental consultation with State and 
local officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order 12988

    This final rule has been reviewed in accordance with Executive 
Order No. 12988 on civil justice reform. The provisions of this rule 
will not have 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 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, September 18, 1997, FCIC published a proposed rule in 
the Federal Register at 62 FR 48956 to add to the Common Crop Insurance 
Regulations (7 CFR part 457), a new section, 7 CFR 457.161, Canola and 
Rapeseed Crop Provisions. The new provisions will be effective for the 
1998 and succeeding crop years for canola and rapeseed with a November 
30 contract change date and 1999 and succeeding crop years for canola 
and rapeseed with a June 30 contract change date. These provisions will 
replace and supersede the current unpublished pilot provisions for 
insuring canola and rapeseed.
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments and opinions. A total of 80 comments 
were received from an insurance service organization, reinsured 
companies, a national

[[Page 65992]]

commodity group, a regional commodity group, state commodity groups, a 
state extension service, a seed company, a State Department of 
Agriculture director and producers. The comments received and FCIC's 
responses are as follows:
    Comment: An insurance company commented that it is impossible to 
comment on the accuracy of differences in the late planted period and 
associated guarantee reduction from location to location as mentioned 
in the Background section, because the Special Provisions are not 
available for review.
    Response: It is difficult to comment on the potential differences 
in the late planting period and associated guarantee reduction when the 
commenter does not have the Special Provisions. FCIC has determined 
that the variance for dates and guarantee reductions is needed to 
address the normal variability of planting conditions, weather 
influences, and crop response to late planting on a county-by-county 
basis. The dates and guarantee reduction percentages are subject to 
change by the contract change date each year. Any inaccuracies can be 
addressed at that time. No change has been made.
    Comment: A regional commodity group requested specific counties and 
states to be covered by the canola and rapeseed insurance program. 
These counties were not a part of the original pilot area.
    Response: When the canola and rapeseed Crop Provisions are 
published as final rule, insurance will be available when counties are 
added through the expansion process used for other permanent crop 
insurance programs. This process is outlined in the procedure ``General 
Guidelines and Criteria for Submitting Multiple and Individual County 
Crop Program Expansion Requests,'' dated May 9, 1996. A copy can be 
obtained by contacting the Deputy Administrator, Insurance Services 
Division, Risk Management Agency, 1400 Independence Avenue S.W., 
Washington, D.C. 20250-0801, telephone (202) 690-4494.
    Comment: Grower associations, Extension specialists, a State 
Agriculture Department, a seed company, and producers submitted 
comments requesting that the pilot program be converted to a permanent 
program as soon as possible to allow for canola expansion into counties 
where canola and rapeseed insurance protection is not available.
    Response: This rule converts the pilot program to a permanent 
program.
    Comment: An insurance service organization recommended that the 
conversion of the canola and rapeseed pilot program to a permanent crop 
insurance program be deferred until the 1999 crop year since it is 
preferable for changes to be effective the same year for fall and 
spring.
    Response: Many requests and comments have been received to expand 
the canola and rapeseed insurance program. Deferring the canola and 
rapeseed pilot program conversion until the 1999 crop year would delay 
the expansion of the canola and rapeseed insurance coverage to 
additional counties. Since the majority of canola and rapeseed 
producers are in counties with a March 15 sales closing date, 
converting the pilot program for 1998 spring crops will allow FCIC to 
meet its goal of converting the pilot program to a permanent program 
for most producing areas for the 1998 crop year.
    Comment: A reinsured company suggested that the definition and 
references to ``FSA'' be deleted since there is no need for reliance on 
FSA information in the crop insurance program.
    Response: FSA farm serial numbers are required to qualify for 
optional unit division in certain crop policies. In certain situations, 
FSA information may be used in the crop insurance program whether 
required or not. FCIC does not believe that such definitions 
``mandate'' such use. No change has been made.
    Comment: A reinsured company and an insurance service organization 
commented on the definition of ``good farming practices.'' The 
commenters questioned whether cultural practices exist that are not 
necessarily recognized or known by the Cooperative State Research, 
Education and Extension Service (CSREES). In addition it was suggested 
that the term ``county'' in the definition of ``good farming 
practices'' should be changed to ``area.''
    Response: FCIC believes that the CSREES recognizes farming 
practices that are considered acceptable for canola and rapeseed. If a 
producer is following practices currently not recognized as acceptable 
by CSREES, there is no reason why such recognition cannot be sought by 
any interested party. The term ``area'' is less clear than the term 
``county'' and would tend to make determinations more subjective in 
nature. Further, the actuarial documents are on a county basis. No 
change has been made.
    Comment: A reinsured company recommended that in the definition of 
``irrigated practice'' the words ``and quality'' be inserted after the 
word ``quantity.''
    Response: FCIC agrees that water quality is an important issue. 
However, since no standards or procedures have been developed to 
measure water quality for insurance purposes, quality cannot be 
included in the definition. No change has been made.
    Comment: An insurance service organization suggested various 
editorial changes, including the updating of certain definitions which 
the commenter indicated were generic and would be updated in the Basic 
Provisions. In addition, it was suggested that the definition of 
``FSA'' be changed either by including the phrase ``an agency of the 
USDA'' in parentheses, or by inserting a comma before that phrase. The 
commenter also suggested revising the definition of ``practical to 
replant,'' by deleting the phrase ``of `Practical to replant'.''
    Response: All generic terms have been moved to the Basic 
Provisions, and any changes will be made in that rule.
    Comment: A reinsured company recommended that in the definition of 
``late planted'' the word ``initially'' be added between the words 
``acreage'' and ``planted.''
    Response: FCIC has revised the definition of ``late planted'' in 
the Basic Provisions to include the word ``initially.''
    Comment: A reinsured company and an insurance service organization 
commented on the definition of ``practical to replant.'' A question was 
raised whether ``marketing window'' is appropriate for this crop. In 
addition, comments were made whether such items as ``moisture 
availability, condition of the field, marketing window and time to crop 
maturity'' are subjective and add unnecessary complexity to the 
program.
    Response: The concept of a ``marketing window'' is most applicable 
to processor and fresh market crops and recognizes that canola and 
rapeseed are unlike these crops. However, the Federal Crop Insurance 
Act mandates that marketing windows be considered in determining if it 
is practical to replant the insured crop. Factors such as moisture 
availability and condition of the field are necessary to determine 
whether the conditions are acceptable for the producer to produce and 
harvest the crop before the end of the insurance period. No change has 
been made.
    Comment: An insurance service organization questioned the use of 
the term ``price of damaged production.'' The commenter indicated the 
term is used several times in section 12, and questioned whether this 
definition adds anything beyond the ``local market price'' definition.

[[Page 65993]]

    Response: The term price of damaged production is different from 
the local market price. The price of damaged production is used for 
quality adjustment if the canola production does not meet the U.S. No. 
2 grade canola. No change has been made.
    Comment: An insurance service organization suggested that 
clarification needs to be made to the current definition of 
``replanting'' to ensure that the crop is replanted to the same crop as 
originally planted.
    Response: FCIC has revised the definition of ``replanting'' in the 
Basic Provisions to specify replacing the seed or plants of the same 
crop in the insured acreage.
    Comment: An insurance service organization suggested to remove the 
language describing when a crop must be replanted from section 7(a) for 
simplification.
    Response: It is necessary to retain the language in section 7(a) of 
these Crop Provisions since acreage not replanted when it is practical 
to replant is uninsurable. FCIC has revised the condition when the crop 
must be replanted.
    Comment: An insurance service organization questioned language 
regarding differences in conditions for replanting. Section 7(a) refers 
to insurable acreage ``damaged before the final planting date, to the 
extent that the majority of growers in the area would normally not 
further care for the crop,'' while the replanting payment section 10(a) 
says ``damaged by an insurable cause of loss to the extent that the 
remaining stand will not produce at least 90 percent of the production 
guarantee.''
    Response: FCIC has made the two provisions consistent.
    Comment: An insurance service organization suggested deleting 
``if'' at the beginning of the last phrase in section 10(a).
    Response: FCIC has simplified the provision and made it consistent 
with other practical to replant provisions.
    Comment: An insurance service organization recommended the 
reference in section 11 to the 10-foot-wide strip in each field should 
be more specific. One sample would not be adequate in large fields. The 
number of strips needed will depend on the size of the field.
    Response: The Basic Provisions and Crop Provisions use the plural 
term ``samples'' to allow the insurance provider the discretion to 
require more than one 10-foot-wide strip if it is necessary to obtain a 
more accurate appraisal of production. No change has been made.
    Comment: An insurance service organization recommended a chart be 
developed and used for quality adjustment for industrial oil types and 
non-industrial types (similar to those in the coarse grains loss 
adjustment handbook) instead of settling claims based on prices 
obtained from buyers as stated in section 12(4)(ii)(D)(3).
    Response: This section has been redesignated as section 
12(d)(5)(ii)(C) in these crop provisions. FCIC agrees that there may be 
an alternative method to determine quality adjustment. However, the 
information needed to develop a chart for quality adjustment is 
presently not available. No change has been made.
    Comment: An insurance company stated that section 12(d) of these 
Crop Provisions should be corrected from ``Mature canola and rapeseed 
may be adjusted for excess moisture and quality'' to ``mature canola 
may be adjusted for excess moisture and quality deficiencies. Mature 
rapeseed may be adjusted for excess moisture only.'' Rapeseed will not 
be adjusted for quality.
    Response: FCIC has revised the Crop Provisions accordingly.
    Comment: An insurance service organization commented that the 
calculation sequence in section 12 is difficult to follow because it is 
so wordy and it seems unnecessary to refer to the previous item by 
number as if it were on another page.
    Response: Since some of the calculations involved are not performed 
in sequential order, it is necessary to refer to specific section 
numbers. Removal of the references would make the provisions less 
clear. No change has been made.
    Comment: An insurance service organization received one comment 
stating that the policy should not allow the insured to defer 
settlement and wait for a later, generally lower appraisal.
    Response: The provision in section 12(c)(1)(iv) allows deferment of 
a claim only if the insurance provider agrees that representative 
samples are necessary to more accurately determine the appraised amount 
of production and the insured agrees to care for the sample. If the 
insured does not provide sufficient care for the sample, the insurance 
provider may use the original appraisal. No change has been made.
    Comment: A reinsured company commented that it appears that 
sections 13 and 14 are copied verbatim, except for one cited item 
addressing the percentage reduction for late planting, and that these 
sections were left out of other recently published Crop Provisions in 
anticipation of approval of the new Basic Provisions. The commenter 
questioned the difference with canola and rapeseed and how the 
subsequent removal of the sections would be accomplished. The commenter 
also questioned whether the comments made to the proposed Basic 
Provisions will be incorporated into the Basic Provisions Final Rule.
    Response: The new Basic Provisions will be effective for the 1998 
crop year for crops with a contract change date of November 30 or 
December 31 or later. Therefore, FCIC removed all common late planting 
and prevented planting provisions from these Crop Provisions. Sections 
13 and 14 contain language that is necessary to recognize the 
differences in the late and prevented planting provisions for canola 
and rapeseed (as has been done for other crops). Those comments made to 
the proposed Basic Provisions deemed appropriate by FCIC have been 
incorporated into the Basic Provisions Final Rule.
    Comment: An insurance service organization commented that sections 
13(a)(1) and (2) of the proposed rule continue the current reductions 
for late-planted acreage, and are inconsistent with the Basic 
Provisions Proposed Rule, which listed a 1 percent reduction for each 
of the 25 days in the late planting period. The commenter noted that if 
the Special Provisions will vary by county, it would be better if the 
Crop Provisions matched the Basic Provisions. The commenter stated that 
different late planting periods determined by the Special Provisions is 
acceptable, if input from local people is considered in determining the 
late planting period, then the late planting period probably should not 
be 25 days for most crops in the northern states. The commenter 
questioned whether the current late planting provisions will apply if 
the new Basic Provisions Final Rule is not approved in time to be 
effective for the 1998 crop year for canola and rapeseed.
    Response: FCIC has revised section 13 of these Crop Provisions to 
indicate that in lieu of section 16(a) of the Basic Provisions, the 
production guarantee for each acre planted to the insured crop during 
the late planting period will be reduced by 1 percent per day for each 
day planted after the final planting date unless otherwise specified in 
the Special Provisions. The new Basic Provisions are effective 
beginning the 1998 crop year, in those counties with a November 30 
contract change date listed in the revised canola and rapeseed Crop 
Provisions. The current (1997 crop year) late planting and prevented 
planting provisions apply to all other counties.

[[Page 65994]]

    Comment: An insurance service organization questioned whether it is 
necessary in sections 13(a) and (b) to include ``amount of insurance'' 
(in addition to ``production guarantee'') for this APH crop. The 
commenter also questioned whether section 13(a) should read ``by each 
day planted'' or ``for each day planted.''
    Response: Sections 13(a) and (b) have been moved to the Basic 
Provisions and, therefore, will need to include ``amount of insurance'' 
in addition to ``production guarantee.'' FCIC has revised the phrase 
from ``by each day planted'' to ``for each day planted'' in section 16 
of the Basic Provisions.
    Comment: A reinsured company commented that section 13 reinforces 
that ``practical to replant'' must be defined as the time period 
running through the late planting period.
    Response: While section 13, now section 16 of the Basic Provisions, 
allows the time period to run through the late planting period, it is 
not required. Factors other than time must also be considered. Based on 
a consideration of all the factors, it is possible to determine that it 
is practical to replant only before the final planting date, during the 
late planting period or after the late planting period if replanting is 
generally occurring in the area.
    Comment: An insurance service organization commented that section 
13(a)(3), as written, does not flow from the lead-in sentence in 
section 13(a).
    Response: The Crop Provisions and Basic Provisions have been 
revised to correct any such problem.
    Comment: An insurance service organization commented that section 
13(b) is confusing because it states that acreage planted after the 
late planting period will have the same guarantee as acreage that is 
prevented from being planted, and then adds that it must have been 
prevented from being planted by an insurable cause of loss occurring 
within the insurance period. The commenter pointed out that such 
acreage was planted and, therefore, was not prevented from being 
planted. Rather, it was prevented from being planted timely or within 
the late planting period.
    Response: This comment was also received during the proposed rule 
comment period for the Basic Provisions. Section 16(b)(2) of the Basic 
Provisions has been revised to indicate that planting on such acreage 
must have been prevented by the final planting date or during the late 
planting period by an insurable cause occurring within the insurance 
period for prevented planting coverage.
    Comment: An insurance service organization suggested changing 
section 13(c) to read ``during the late planting period'' in both 
sentences rather than ``after the final planting date'' since this 
section deals only with late-planted acreage and not prevented planting 
as well.
    Response: FCIC has revised section 16(c) of the Basic Provisions to 
state that the premium amount for insurable acreage specified in 
sections 16 (a) or (b) will be the same as that for timely planted 
acreage.
    Comment: An insurance service organization commented that because 
section 14 is in the canola and rapeseed proposed rule Crop Provisions 
only until they are incorporated into the new Basic Provisions, the 
``Prevented planting'' definition should be included in the Crop 
Provisions.
    Response: Since all common provisions, including definitions, have 
been incorporated into the Basic Provisions, there is no need to repeat 
the definition in this rule. No change has been made.
    Comment: An insurance service organization recommended that FCIC 
consider reversing phrases in section 14(a)(1)(i) to match the order in 
(ii), or vice versa. The commenter is recommending that section 
14(a)(1)(i) begin with ``For the crop year the application for 
insurance is accepted.''
    Response: The different order in these two sections facilitates 
readability and comprehension. No change has been made in the 
corresponding sections 17(a)(1)(i) and (ii) in the Basic Provisions.
    Comment: An insurance service organization recommended that FCIC 
consider changing section 14(a)(1)(ii) to ``...since that date 
(cancellation for the purpose of transferring the policy...will not be 
considered a break in continuity for this purpose); and.''
    Response: This change would not significantly add to the 
understanding of the statement. No changes have been made in the 
corresponding section 17(a)(1)(ii) in the Basic Provisions.
    Comment: An insurance service organization commented that section 
14(b) seems to suggest that insureds who have chosen additional levels 
of coverage may select a different additional level for prevented 
planting. The commenter also questioned whether the Special Provisions 
will state which prevented planting level will apply by default if one 
is not specifically elected, and asked which level would be in the Crop 
Provisions.
    Response: Insureds who have chosen additional levels of coverage 
may, in fact, select a different level for prevented planting. Section 
17(b) of the Basic Provisions now specifies that the actuarial 
documents may contain additional levels of prevented planting coverage 
the insured may purchase. If the insured does not purchase one of those 
additional levels by the sales closing date, or the insured has a 
Catastrophic Risk Protection Endorsement, the insured will receive the 
prevented planting coverage specified in these Crop Provisions.
    Comment: An insurance service organization commented that section 
14(d)(2) seems to suggest that insureds may choose to claim prevented 
planting on irrigated acreage instead of planting non-irrigated 
acreage. The commenter added that section 14(d)(2) seems to contradict 
section 9(b) of the current Basic Provisions, which states that ``only 
that acreage for which you have adequate facilities and water, at the 
time coverage begins' can be reported and insured as irrigated. They 
also questioned whether carryover insureds could qualify for prevented 
planting payments based on an irrigated guarantee even though 
facilities or sufficient water did not exist at the time the crop 
should have been planted.
    Response: To qualify for a prevented planting claim on irrigated 
acreage, the acreage must still meet all the requirements for irrigated 
acreage. Section 14(d)(2), now section 17(d)(2) of the revised Basic 
Provisions, does not contradict section 9(b) of the Basic Provisions 
since all it does is specify the date by which the acreage must qualify 
as irrigated to qualify for a prevented planting claim on irrigated 
acreage.
    Comment: An insurance service organization commented on the 
organization of the table in section 14(e)(1). The commenter suggested 
combining portions of the table and other editorial changes which were 
also suggested for the table in the Basic Provisions.
    Response: FCIC has revised portions of the table and made other 
editorial changes in section 17(e)(1) of the Basic Provisions.
    Comment: An insurance service organization commented that there 
should be no written agreements for prevented planting acreage, and 
that an insured who has not raised a crop should not be able to have 
prevented planting acres of that crop on any ground. A reinsured 
company indicated it was not interested in more written agreements. 
However, it appeared that may be the only way to provide coverage in 
many cases.
    Response: Based on the comments received on both the Basic 
Provisions and the Crop Provisions, FCIC has

[[Page 65995]]

determined that it is appropriate to delete references to ``written 
agreements'' in section 17(e) of the Basic Provisions, and to allow the 
use of an intended acreage report in certain instances as long as 
specified conditions are met.
    Comment: A reinsured company commented that the word ``base'' 
should be deleted in all instances in section 14(e).
    Response: This comment was also received on the Basic Provisions 
and the word ``base'' has been deleted from section 17 of the Basic 
Provisions.
    Comment: A reinsured company commented that it presumed the 
determination of eligible acres in the table in section 14(e)(1) is 
done on a county basis.
    Response: This comment was also received on the Basic Provisions 
and FCIC responded that eligible acres are determined on a county and 
crop basis.
    Comment: A reinsured company commented on the determination of 
eligible acres for prevented planting in section 14(e)(1). The 
commenter stated that using the planted and prevented planting acres 
for the last four years will not be difficult for carryover policies. 
However, it will be a significant problem for transferred policies, as 
the prevented planting acres will not be a part of the APH record that 
is transferred. The commenter questioned how FCIC proposes that this 
information will be known by the company for a policy it gains by 
transfer.
    Response: When policies are obtained by transfer, reinsured 
companies can obtain previous years' records of prevented planting 
acres from the insured, the ceding company, or the FCIC policyholder 
tracking system.
    Comment: A reinsured company questioned the impact and 
acceptability of intended acreage reports concerning eligible prevented 
planting acres in section 14(e)(1). The commenter questioned the 
guidelines for approval of written agreements, and who has the 
authority to approve or disapprove such agreements. The company also 
questioned if, since the request for written agreement must be made on 
or before the sales closing date, all land added after the sales 
closing date by the insured is ineligible for prevented planting.
    Response: The Basic Provisions have been amended so that a written 
agreement is no longer required to establish eligible acreage. Instead, 
intended acreage reports will be used. However, the reinsured company 
will be required to verify that the acreage reported does not exceed 
the number of acres of cropland in the producer's farming operation at 
the time the intended acreage report is submitted. The reinsured 
company will have the authority to accept or reject any intended 
acreage report based on standards approved by FCIC. This provision has 
also been revised to allow the number of acres determined to be 
eligible for prevented planting coverage to be increased if after the 
sales closing date specified conditions are met. Provisions in this 
section also allow producers who, in any of the four most recent crop 
years, have not produced any crop for which insurance was available, to 
establish eligible acres.
    Comment: An insurance service organization commented that section 
14(e)(3) says that the total number of acres requested for all crops 
cannot exceed the number of acres of cropland in the insured's farming 
operation for the crop year, and probably needs to allow for double-
cropping, as in 14(f)(5).
    Response: This provision, now located in section 17(e)(1) of the 
Basic Provisions, is revised to account for double cropped acreage.
    Comment: An insurance service organization commented that section 
14(e)(4) does not allow for land added after the sales closing date, or 
for business being conducted up to the last day of the sales period. 
The commenter also suggested that ``us'' be changed to ``your agent'' 
(or at least verify that ``us'' includes agents as well as the company 
underwriting office).
    Response: These provisions, now included in section 17(e)(1)(i) of 
the Basic Provisions, have been revised to allow an increase in 
eligible prevented planting acres if the producer submits proof that 
additional acreage was purchased, leased, or released from any USDA 
program in time to plant it for the insured crop year and no cause of 
loss that will or could prevent planting is evident at the time the 
acreage is purchased, leased, or released from the USDA program. The 
term ``us'' refers to the company as provided in the section before the 
``Agreement to insure'' in the Basic Provisions, and includes agents 
representing the company. No change has been made.
    Comment: An insurance service organization questioned if section 
14(f)(1) is intended to be a change from current language that allows 
prevented planting coverage for acreage less than 20 acres or 20 
percent as long as the insured can show ``inputs'' were available.
    Response: This change in what is now section 17(f) of the Basic 
Provisions, is intentional. FCIC requires the acreage to be contiguous 
to reduce prevented planting payments for small portions of fields that 
are wet in most years although planting occasionally may be possible.
    Comment: A reinsured company suggested that in section 14(f)(1) the 
phrase ``whichever is less'' be changed to read ``whichever is larger'' 
and also suggested that the term ``insurable crop acreage in the unit'' 
be defined.
    Response: The phrase ``whichever is less'' is appropriate. There is 
no reason to define the phrase ``insurable crop acreage in the unit'' 
since units, insured crop, and insured acreage are defined elsewhere in 
the policy. No change has been made.
    Comment: An insurance service organization recommended that 
sections 14(f) (4) and (5) be revised to spell out the numeral ``4'' in 
the phrases ``the last 4 years.''
    Response: This change does not significantly add to the 
understanding of these sections. No change has been made.
    Comment: An insurance service organization questioned whether 
prevented planting acreage of either crop in a double-cropping history 
will maintain or break the continuity of the double-cropping history.
    Response: Prevented planting acreage of either crop in a double-
cropping history will not break the continuity of the double-cropping 
history. Sections 17(f)(4) and (5) of the Basic Provisions specify the 
last 4 years in which the insured crop was grown on the acreage.
    Comment: A reinsured company commented on the provisions in section 
14(f)(5). Although the commenter agreed with the concept, they 
questioned how a company would know if any crop from which a benefit is 
derived under any program administered by the USDA is planted and 
fails. The company also suggested modifying the sentence from may be 
hayed or grazed ``* * * after the final planting date for the insured 
crop * * *'' to ``* * * 60 days after the final planting date for the 
insured crop * * *''.
    Response: Insurance providers must question insureds to determine 
if any crop was planted for the crop year on the acreage being claimed 
for prevented planting. Producers should not be denied grazing or 
haying benefits for 60 days after being prevented from planting. In 
many instances, cover crops are grown until preparation for planting 
occurs in the spring. If the producer was unable to remove the cover 
crop and plant a crop, such a cover crop could be hayed or grazed soon 
after the final planting date and a prevented planting payment would 
still be owed.

[[Page 65996]]

    Comment: A reinsured company questioned how the insurer will know 
if a cash lease payment is also received for use of the same acreage in 
the same crop year as specified in section 14(f)(6), particularly if 
the cash lease payment is made after the prevented planting payment has 
already been made by the company.
    Response: Insurance providers must question insureds to determine 
if a cash lease payment is, or will be, received for the acreage being 
claimed for prevented planting. Insureds who claim prevented planting 
on acreage they have or will cash lease would be misrepresenting a 
material fact and could be subject to civil and criminal false claim 
penalties.
    Comment: A reinsured company stated that it did not disagree with 
the concept of section 14(f)(7) but that the provision is inconsistent 
with freedom to farm and is unenforceable.
    Response: This section, now section 17(f)(7) of the Basic 
Provisions, indicates that prevented planting coverage will not be 
provided for any acreage for which planting history or conservation 
plans indicate that the acreage would have remained fallow for crop 
rotation purposes. This provision is necessary to protect the integrity 
of the program. FCIC is charged with establishing an actuarially sound 
insurance program, and relying upon ``intentions,'' without evidence to 
support such intentions is not an appropriate manner of achieving 
actuarial soundness. For example, if half the acreage in a farm has 
remained fallow every other year for the past ten years to maintain a 
summerfallow rotation, this is ample evidence that this is a normal 
practice. If such patterns exist, this provision is easier to 
administer than if the reinsured companies were forced to determine 
whether the producer actually intended to plant a crop. Since coverage 
for prevented planting now begins on the previous crop year's sales 
closing date for carry-over policies, producers could decide to claim 
an intent to plant acreage where the cause occurred months earlier in 
order to profit from the insurance program when they never intended to 
plant a crop. While the denial of prevented planting coverage may 
occasionally adversely affect some producers who genuinely intended to 
plant a crop, the inability to prove intent to plant and the need to 
protect the integrity of the program require FCIC to retain the 
provision. No change has been made.
    Comment: An insurance service organization commented that section 
14(f)(8) is unnecessary because it has been covered in 14(e).
    Response: FCIC has separated the provisions of section 14(f)(8) 
into two separate provisions in section 17 of the Basic Provisions, and 
does not feel that either provision has been covered in section 14(e). 
No change has been made.
    Comment: An insurance service organization commented that section 
14(f)(9) has been added and might not be necessary if 14(f)(1) were 
changed to require ``proof of inputs'' available to plant and produce a 
crop. A reinsured company stated that they did not disagree with the 
concept of section 14(f)(9) but that it is an unenforceable provision. 
The company asked if capital on hand was considered proof that inputs 
were available.
    Response: Since the prevented planting period could begin on the 
sales closing date for the previous crop year, many producers could 
know that they would be prevented from planting prior to the sales 
closing date and planting period. These producers would be in a 
position to claim the intent to plant higher valued crops than they 
normally plant. FCIC has revised the provision to clarify that proof of 
inputs is only necessary where there is a deviation from normal 
planting practices. For example, if the producer has rotated crops 
between corn and soybeans in alternate years and this was the year the 
rotational pattern showed that corn would normally be planted, the 
reinsured company does not need to determine whether the insured had 
sufficient inputs, if the producer seeks a prevented planting payment 
for corn. However, if the producer seeks a prevented planting payment 
for soybeans, the reinsured company would be required to determine 
whether the producer has sufficient inputs. Capital on hand would not 
be considered proof of inputs. If the producer could not produce 
receipts for seed, fertilizer, herbicides, etc., the lease of equipment 
or labor, or specific land preparation, it will be presumed that the 
crop usually planted by the producer was the crop that the producer 
intended to plant. While this provision may preclude a producer from 
receiving benefits for a crop that he or she genuinely intended to 
plant, the producer would still be eligible for a benefit on the crop 
usually planted and the need to protect program integrity outweighs its 
disadvantages. Since this situation should be rare, it should not 
impose an undue burden on the reinsured company.
    Comment: A reinsured company stated that section 14(f)(11) is 
contrary to the freedom to farm concept. The company also questioned 
how the insurer would know if the crop was planted in one of the last 
four years.
    Response: This section is now section 17(f)(12) of the Basic 
Provisions. The company should ask the insured if the crop was planted 
and this information can be verified from FCIC. This provision is 
intended to protect program integrity and avoid the problems associated 
with determining producer intent. FCIC has created an exception for new 
producers that qualify for coverage under section 17(e)(1)(i)(B).
    Comment: An insurance service organization commented that the first 
sentence of section 14(f)(11) excludes prevented planting coverage on 
any crop types that have not been planted in at least one of the four 
most recent years. The commenter stated that the second sentence 
specifies that this refers to types requiring separate guarantees, 
amounts of insurance or price elections, and then says there must be an 
APH database or acreage must have been reported in one of the last four 
years. The commenter feels this suggests that, to get prevented 
planting coverage, the insured can set up an APH database for a type 
even if the insured has no actual history on it, and they recommended 
rewording the language if that is not the intent.
    Response: Section 14(f)(11), now section 17(f)(12) of the Basic 
Provisions, still requires that the crop be planted in at least one of 
the four most recent years. The second sentence just specifies the 
conditions under which the crops must also be included in the APH 
database or reported on the acreage report. No change has been made.
    Comment: Reinsured companies and an insurance service organization 
commented on the following provisions of section 15: (1) There are 
legitimate reasons for written agreements to be valid for more than one 
year, especially if no substantive changes occur from one year to the 
next. Limiting written agreements to one year only increases 
administrative cost, complexity and opportunity for misunderstanding 
and error, and flies in the face of efforts to simplify the program and 
reduce its administrative expense; (2) Written agreements should be 
effective for more than one year because: (a) There is already an 
exception since written agreements to establish units are continuous 
(unless the farming operation changes significantly); (b) FCIC does not 
often incorporate the written agreements into the actuarial documents 
within one year; and (c) FCIC's legal counsel objects to the concept of 
written agreements, which purportedly allows exceptions for those ``in 
the know'' while others may not be aware the possibility exists; (3) 
The commenters questioned whether these

[[Page 65997]]

provisions will be revised to simplify renewals; (4) The policy should 
require the insured to pay the cost of inspections necessary to obtain 
a written agreement because, in many instances there is no economic 
reason or incentive for a company to pursue such agreements; (5) 
Sections 15(a) and (e) should be combined since both deal with 
deadlines for written agreement requests. (The response to this comment 
in prior final rules has been that the sales closing date is intended 
to be the deadline with only limited exceptions. However, 7 of the 13 
written agreement types listed in the 1998 Crop Insurance Handbook 
allow requests at acreage reporting time and one allows the request 
after acreage reporting. Of the 6 types with a sales closing date 
deadline, 4 are specific cases of a practice or type not listed in the 
actuarial, which is curious since the general type of unrated practice, 
type or variety can be requested at acreage reporting time. So, the 
exceptions seem to outnumber the rule. Many of the situations calling 
for written agreements do not become apparent until the acreage report 
is received. Therefore, the commenter again suggests this provision 
might be less misleading if the acreage reporting date exception noted 
in (e) were incorporated into (a)); (6) Provisions in section 15 that 
specify timing and content of the FCI-2 written agreement should not be 
part of the insurance policy. (New insureds would not have this 
information until it is too late to request a written agreement. This 
should have been reviewed by the insurance agent prior to acceptance of 
the application or issuance of the crop insurance policy.); and (7) 
Some of the written agreement provisions need to be carefully 
considered and compared to current procedures and comments to the 
Written Agreement proposed rule before the deadlines and annual status 
of written agreements are mandated in the Basic Provisions.
    Response: The written agreement section was moved to section 18 of 
the Basic Provisions. The following responses address the questions by 
referencing changes made to the written agreement section of the Basic 
Provisions. Written agreements are intended to change policy terms or 
permit insurance in unusual situations. If such practices continue year 
to year, they should be incorporated into the policy or Special 
Provisions. It is important to keep non-uniform exceptions to a minimum 
and to ensure that the insured is well aware of the specific terms of 
the policy. There will no longer be exceptions to the timing or 
duration of written agreements except as provided in section 18. The 
provisions have been amended to indicate that written agreements may be 
submitted after the sales closing date only if the producer 
demonstrates that he or she was physically unable to apply prior to the 
sales closing date or in accordance with any regulation which may be 
promulgated under 7 CFR part 400. FCIC will be more vigilant in 
incorporating changes to the policy made by written agreement into the 
actuarial documents.
    FCIC does not believe that a producer should bear the cost 
associated with any inspection done for the purposes of a written 
agreement. Such costs are a part of servicing the policy and, 
therefore, are already compensated by the expense reimbursement under 
the Standard Reinsurance Agreement.
    In addition to the changes described above and minor editorial 
changes, FCIC has made the following changes to these Crop Provisions:
    1. Section 1--Removed alphabetic paragraph designations and 
definitions of ``days,'' ``final planting date,'' ``FSA,'' ``good 
farming practices,'' ``interplanted,'' ``irrigated practice,'' ``late 
planted,'' ``late planting period,'' ``practical to replant,'' 
production guarantee,'' ``replanting,'' ``timely planted,'' and 
``written agreement,'' and revised the definition of ``planted 
acreage'' for clarification.
    2. Section 2--Revised to remove all provisions that were moved to 
the Basic Provisions.
    3. Section 9(e)--Revised to add wildlife as a cause of loss to be 
consistent with other insurable crops.
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. This rule provides prevented planting coverage 
under the Basic Provisions. This rule must be effective prior to the 
contract change date for which these revised prevented planting 
provisions are effective. 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 Part 457

    Crop insurance, Canola and rapeseed crop provisions.

Final Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends 7 CFR part 457 as follows:

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

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

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

    2. Section 457.161 is added to read as follows:


Sec. 457.161  Canola and rapeseed crop insurance provisions.

    The Canola and Rapeseed 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:

Canola and Rapeseed 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.
    Canola. A crop of the genus Brassica as defined in accordance 
with the Official United States Standards for Grain--Subpart C--U.S. 
Standards for Canola.
    Harvest. Combining or threshing for seed. A crop that is swathed 
prior to combining is not considered harvested.
    Local market price (Canola). The cash price per pound for U.S. 
No. 2 grade canola that reflects the maximum limits of quality 
deficiencies allowable for the U.S. No. 2 grade canola.
    Planted acreage. In addition to the definition contained in the 
Basic Provisions, land on which seed is initially spread onto the 
soil surface by any method and subsequently is mechanically 
incorporated into the soil in a timely manner and at the proper 
depth will be considered planted. Acreage planted in any other 
manner will not be insurable unless otherwise provided by the 
Special Provisions, actuarial documents, or by written agreement.
    Price of damaged production. The cash price per pound available 
if the production were sold for canola that qualifies for quality 
adjustment in accordance with section 12 of these crop provisions.
    Rapeseed. A crop of the genus Brassica that contains at least 30 
percent of an industrial type of oil as shown on the Special 
Provisions and that is measured on a basis free from foreign 
material.
    Swathed. Severance of the stem and seed pods from the ground and 
placing into windrows without removal of the seed from the pod.
    2. Unit Division.
    In addition to optional units by section, section equivalent or 
FSA farm serial number and by irrigated and non-irrigated practices,

[[Page 65998]]

optional units may be by type if the type is designated on the 
Special Provisions.
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    In addition to the requirements of section 3 of the Basic 
Provisions, you may select only one price election for all the 
canola and rapeseed in the county insured under this policy unless 
the Special Provisions provide different price elections by type, in 
which case you may select one price election for each canola and 
rapeseed type designated in the Special Provisions. The price 
elections you choose for each type must have the same percentage 
relationship to the maximum price offered by us for each type. For 
example, if you choose 100 percent of the maximum price election for 
a specific type, you must also choose 100 percent of the maximum 
price election for all other types.
    4. Contract Changes.
    In accordance with section 4 of the Basic Provisions, the 
contract change date is November 30 preceding the cancellation date 
for counties with a March 15 cancellation date, and June 30 
preceding the cancellation date for all other counties.
    5. Cancellation and Termination Dates.
    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are:

------------------------------------------------------------------------
                                                   Cancellation and     
              State and county                    Termination dates     
------------------------------------------------------------------------
All counties in Georgia....................  Sept. 30.                  
All other counties without fall planted      Mar. 15.                   
 types specified on the actuarial table.                                
All other counties with fall planted types   Aug. 31.                   
 specified on the actuarial table.                                      
------------------------------------------------------------------------

    6. Insured Crop.
    In accordance with section 8 of the Basic Provisions, the crop 
insured will be all canola and rapeseed in the county for which a 
premium rate is provided by the actuarial table:
    (a) In which you have a share;
    (b) That is planted for harvest as seed; and
    (c) That is not, unless allowed by Special Provisions or by 
written agreement:
    (1) Interplanted with another crop; or
    (2) Planted into an established grass or legume.
    7. Insurable Acreage.
    In addition to the provisions of section 9 of the Basic 
Provisions,
    (a) Any acreage of the insured crop that is damaged before the 
final planting date, to the extent that most producers producing 
crops on similarly situated acreage in the area would not normally 
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 contained in the Special Provisions.
    8. Insurance Period.
    In accordance with the provisions of section 11 of the Basic 
Provisions, the end of the insurance period is October 31 of the 
calendar year in which the crop is normally harvested.
    9. Causes of Loss.
    In accordance with the provisions of section 12 of the Basic 
Provisions, insurance is provided only against the following causes 
of loss which occur during the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or 
improper application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if applicable, 
caused by an insured cause of loss that occurs during the insurance 
period.
    10. Replanting Payment.
    (a) In accordance with section 13 of the Basic Provisions, a 
replanting payment is allowed if the insured crop is damaged by an 
insurable cause of loss to the extent that most producers producing 
the crop on similarly situated acreage in the area, would not 
continue to care for the crop and it is practical to replant.
    (b) The maximum amount of the replanting payment per acre will 
be the lesser of 20 percent of the production guarantee or 175 
pounds, multiplied by your price election, multiplied by your 
insured share.
    (c) When the canola or rapeseed is replanted using a practice or 
type that is uninsurable as an original planting, the liability for 
the unit will be reduced by the amount of the replanting payment 
that is attributable to your share. The premium amount will not be 
reduced.
    11. Duties in the Event of Damage or Loss.
    In accordance with the requirements of section 14 of the Basic 
Provisions, the representative samples of the unharvested crop that 
we may require must be at least 10 feet wide and extend the entire 
length of each field in the unit. If you intend to put the acreage 
to another use or not harvest the acreage, the samples must not be 
harvested or destroyed until our inspection.
    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 acceptable production records were not provided; or
    (2) For any basic units, we will allocate any commingled 
production to such units in proportion to our liability on the 
harvested acreage for the units.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim by:
    (1) Multiplying the insured acreage by its respective production 
guarantee;
    (2) Multiplying each result in section 12(b)(1) by the 
respective price election for each type, if applicable;
    (3) If there are more than one type, totaling the results in 
section 12(b)(2);
    (4) Multiplying the total production to be counted of each type, 
if applicable, (see section 12(c)) by the respective price election;
    (5) If there are more than one type, totaling the results in 
section 12(b)(4);
    (6) If there are more than one type, subtracting the total in 
section 12(b)(5) from the total in section 12(b)(3);
    (7) If there is only one type, subtracting the total in section 
12(b)(4) from the total in section 12(b)(2); and
    (8) Multiplying the result in section 12(b)(6) and 12(b)(7), as 
applicable, by your share.
    (c) The total production to count (pounds) from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) That is abandoned;
    (B) 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 acceptable production records;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production may 
be adjusted for quality deficiencies and excess moisture in 
accordance with section 12(d)); and
    (iv) Potential production on insured acreage that you intend to 
put to another use or abandon, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
that acreage will end when you put the acreage to another use or 
abandon the crop. If agreement on the appraised amount of production 
is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to 
leave intact, and provide sufficient care for, representative 
samples of the crop in locations acceptable to us (The amount of 
production to count for such acreage will be based on the harvested 
production or appraisals from the samples at the time harvest should 
have occurred. If you do not leave the required samples intact, or 
you fail to provide sufficient care for the samples, our appraisal 
made prior to giving you consent to put the acreage to another use 
will be used to determine the amount of production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested 
production, or our reappraisal if additional damage occurs and the 
crop is not harvested; and
    (2) All harvested production from the insurable acreage.
    (d) Mature canola may be adjusted for excess moisture and 
quality deficiencies. Mature rapeseed may be adjusted for excess 
moisture only. If moisture adjustment is applicable, it will be made 
prior to any adjustment for quality.
    (1) Canola and rapeseed production will be reduced by 0.12 
percent for each 0.1 percentage point of moisture in excess of 8.5 
percent. We must be permitted to obtain samples of the production to 
determine the moisture content.
    (2) Canola production will be eligible for quality adjustment 
if:

[[Page 65999]]

    (i) Deficiencies in quality, in accordance with the Official 
United States Standards for Grain, result in the canola not meeting 
the grade requirements for U.S. No. 3 or better (U.S. Sample grade) 
because of kernel damage (excluding heat damage), or a musty, sour, 
or commercially objectionable foreign odor; or
    (ii) Substances or conditions are present that are identified by 
the Food and Drug Administration or other public health 
organizations of the United States as being injurious to human or 
animal health.
    (3) Quality will be a factor in determining your loss in canola 
production only if:
    (i) The deficiencies, substances, or conditions resulted from a 
cause of loss against which insurance is provided under these Crop 
Provisions and which occurs within the insurance period;
    (ii) The deficiencies, substances, or conditions result in a net 
price for the damaged production that is less than the local market 
price;
    (iii) All determinations of these deficiencies, substances, or 
conditions are made using samples of the production obtained by us 
or by a disinterested third party approved by us; and
    (iv) The samples are analyzed by a grader licensed to grade 
canola under the authority of the United States Grain Standards Act 
or the United States Warehouse Act with regard to deficiencies in 
quality, or by a laboratory approved by us with regard to substances 
or conditions injurious to human or animal health.
    (4) Canola production that is eligible for quality adjustment, 
as specified in sections 12(d)(2) and (3), will be reduced:
    (i) In accordance with the quality adjustment factors contained 
in the Special Provisions; or
    (ii) As follows if quality adjustment factors are not contained 
in the Special Provisions:
    (A) Divide the price of damaged production by the local market 
price to determine the quality adjustment factor.
    (B) The number of pounds remaining after any reduction due to 
excessive moisture (the moisture-adjusted gross pounds) of the 
damaged or conditioned production will then be multiplied by the 
quality adjustment factor to determine the net production to count.
    (5) For canola, the price of damaged production and the local 
market price will be determined at the earlier of the date such 
quality adjusted production is sold or the date of final inspection 
for the unit subject to the following conditions:
    (i) Discounts used to establish the price of damaged production 
will be limited to those that are usual, customary, and reasonable.
    (ii) The price of damaged production will not be reduced for:
    (A) Moisture content;
    (B) Damage due to uninsured causes;
    (C) Drying, handling, processing, or any other costs associated 
with normal harvesting, handling, and marketing of the canola; 
except, if the price of damaged production can be increased by 
conditioning, we may reduce the price of damaged production after 
the production has been conditioned by the cost of conditioning but 
not lower than the price of damaged production before conditioning. 
We may obtain prices of damaged production from any buyer of our 
choice. If we obtain prices of damaged production from one or more 
buyers located outside your local market area, we will reduce such 
price of damaged production by the additional costs required to 
deliver the canola to those buyers; or
    (D) Erucic acid or glucosinolates in excess of the amount 
allowed under the definition of canola contained in the Official 
United States Standards for Grain; and
    (iii) Factors not associated with grading under the Official 
United States Standards for Grain including, but not limited to 
protein and oil, will not be considered.
    (e) Any production harvested from plants growing in the insured 
crop may be counted as production of the insured crop on an 
unadjusted weight basis.
    For example:
    You have 100 percent share in 25 acres of Fall Oleic Canola in a 
unit with a 650 pound production guarantee and a price election of 
$0.11 per pound. You are only able to harvest 14,700 pounds and 
there is no appraised production. Your indemnity would be calculated 
as follows:

(1) 25 acres x 650 pounds = 16,250 pounds of Fall Oleic Canola;
(2) 16,250 pounds x $0.11 price election = $1,788 value of guarantee 
for Fall Oleic Canola;
(3) 14,700 pounds x $0.11 price election = $1,617 total value of 
production to count for Fall Oleic Canola;
(4) $1,788 value of guarantee-$1,617 value of production to count = 
$171 value of loss; and
(5) $171 value of loss x 100 percent = $171 indemnity payment.

    You also have a 100 percent share in 50 acres of Fall High 
Erucic Rapeseed in the same unit with a production guarantee of 750 
pounds per acre and a price election of $0.15 per pound. You are 
only able to harvest 14,000 pounds and there is no appraised 
production. Your total indemnity for both Fall Oleic Canola and Fall 
High Erucic Rapeseed would be calculated as follows:

(1) 25 acres x 650 pounds = 16,250 pounds guarantee for the Fall 
Oleic Canola, and
    50 acres x 750 pounds = 37,500 pounds guarantee for the Fall 
High Erucic Rapeseed;
(2) 16,250 pounds guarantee x $0.11 price election = $1,788 value of 
the guarantee for the Fall Oleic Canola, and
    37,500 pounds guarantee x $0.15 price election = $5,625 value of 
the guarantee for the Fall High Erucic Rapeseed;
(3) $1,788 + $5,625 = $7,413 total value of the guarantees;
(4) 14,700 pound x $0.11 price election = $1,617 value of production 
to count for the Fall Oleic Canola, and
    14,000 pounds x $0.15 price election = $2,100 value of 
production to count for the Fall High Erucic Rapeseed;
(5) $1,617 + $2,100 = $3,717 total value of production to count;
(6) $7,413 value of guarantee-$3,717 value of production = $3,696 
loss; and
(7) $3,696 value of loss x 100 percent = $3,696 indemnity payment.

    13. Late Planting.
    In lieu of section 16(a) of the Basic Provisions, the production 
guarantee for each acre planted to the insured crop during the late 
planting period will be reduced by 1 percent per day for each day 
planted after the final planting date unless otherwise specified in 
the Special Provisions.
    14. Prevented Planting.
    In addition to the provisions contained in section 17 of the 
Basic Provisions, your prevented planting coverage will be 60 
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 11, 1997.
Suzette Dittrich,
Deputy Manager,
Federal Crop Insurance Corporation.
[FR Doc. 97-32848 Filed 12-16-97; 8:45 am]
BILLING CODE 3410-08-P