[Federal Register Volume 63, Number 110 (Tuesday, June 9, 1998)]
[Rules and Regulations]
[Pages 31331-31337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15302]



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 Rules and Regulations
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  Federal Register / Vol. 63, No. 110 / Tuesday, June 9, 1998 / Rules 
and Regulations  

[[Page 31331]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 425 and 457

RIN 0563-AA85


Peanut Crop Insurance Regulations; and Common Crop Insurance 
Regulations, Peanut 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 peanuts. 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 
peanut crop insurance regulations with the Common Crop Insurance Policy 
for ease of use and consistency of terms, and restrict the effect of 
the current peanut crop insurance regulations to the 1998 and prior 
crop years.

EFFECTIVE DATE: July 9, 1998.

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) 
926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be exempt for the purpose of 
Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget (OMB).

Paperwork Reduction Act of 1995

    Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C., chapter 
35), the collections of information for this rule have been approved by 
the Office of Management and Budget (OMB) under control number 0563-
0053 through October 31, 2000.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
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 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. New provisions included in this 
rule will not impact small entities to a greater extent than large 
entities. Under the current regulations, a producer is required to 
complete an application and acreage report. If the crop is damaged or 
destroyed, the producer is required to give notice of loss and provide 
the necessary information to complete a claim for indemnity.
    The producer must also annually certify to the previous years 
production if adequate records are available to support the 
certification. The producer must maintain the production records to 
support the certified information for at least three years. This 
regulation does not alter those requirements.
    The amount of work required of the insurance companies delivering 
and servicing these policies will not increase significantly from the 
amount of work currently required. No additional actions are required 
as a result of this rule on the part of either the insured or the 
insurance companies. This rule does not have any greater or lesser 
impact on the producer. Therefore, this action is determined to be 
exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 
605), and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

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

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
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 rule has been reviewed in accordance with Executive Order 
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 exhausted before any action for judicial 
review of any determination made by FCIC 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 notice of proposed rule 
making, in the Federal Register at 62 FR 23685 to add to the Common 
Crop Insurance Regulations (7 CFR part 457),

[[Page 31332]]

new section, 7 CFR 457.134, Peanut Crop Insurance Provisions. The new 
provisions will be effective for the 1999 and succeeding crop years. 
These provisions will replace and supersede the current provisions for 
insuring peanuts found at 7 CFR part 425 (Peanut Crop Insurance 
Regulations). FCIC also amends 7 CFR part 425 to limit its effect to 
the 1998 and prior crop years.
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments and opinions. A total of 204 
comments were received from the National Crop Insurance Peanut Advisory 
Committee, Peanut Growers Cooperative Marketing Association, National 
Peanut Growers Group, Agricultural Commodity Commission for Peanuts, 
State Peanut Growers Association, Production Farm Credit Association, 
reinsured companies, and an insurance service organization. The 
comments received and FCIC's responses are as follows:
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
revising the definition of ``average price per pound'' to delete the 
words ``and insured,'' in part 1 and delete the words ``all non-quota'' 
and ``and insured,'' in part 2.
    Response: FCIC has amended the definition accordingly.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization expressed 
concerns 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 exist 
that are not necessarily recognized (or possibly known) by the 
Cooperative State Research, Education, and Extension Service. The 
commenters also indicated that the term ``county'' in the definition of 
``good farming practices'' should be changed to ``area.''
    Response: The Cooperative State Research, Education, and Extension 
Service (CSREES) recognizes farming practices that are considered 
acceptable for producing peanuts. If a producer is following practices 
currently not recognized as acceptable by the CSREES, such recognition 
can be sought by interested parties. Although the cultural practices 
recognized by the CSREES may only pertain to specific areas within a 
county, the actuarial documents are on a county basis. Therefore, no 
change has been made. However, the definition of ``good farming 
practices'' has been removed from these Crop Provisions and is now 
contained in the Basic Provisions.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
deleting the second sentence of the definition of ``green peanuts,'' 
because not all producers who grow green peanuts market them 
exclusively as boiled peanuts.
    Response: FCIC has amended the definition accordingly.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
deleting ``marketing window'' from the definition of ``practical to 
replant.'' The commenters indicated that peanuts are unlike other 
crops, such as processor and fresh market crops, where the producer 
only has a certain amount of time to market the crop. The commenters 
stated that the ability to contract peanuts with a sheller guarantees a 
market for the crop.
    Response: The concept of a ``marketing window'' is most applicable 
to processor and fresh market crops, and FCIC recognizes that peanuts 
are unlike these crops. However, Sec. 508(j)(4) of the Federal Crop 
Insurance Act mandates that marketing windows be considered in 
determining whether it is feasible to require replanting during a crop 
year. The definition of ``practical to replant'' has been moved to the 
Basic Provisions.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
adding a definition for ``farm yield,'' rewrite the term ``farm 
yield,'' or perhaps change to ``yield established by the actuarial 
table'' in the definition of ``production guarantee.'' Commenters 
indicated that since peanuts are based on a producer listing, and not 
the producer's actual production history (APH), the term ``production 
guarantee'' is inappropriate. A producer's classification (guarantee) 
is determined by combining history from all farms in which he has grown 
peanuts in the county.
    Response: FCIC has revised the definition of ``production 
guarantee'' to read ``* * * yield per acre contained in the actuarial 
documents or the approved yield * * *''
    Comment: An insurance service organization recommended deleting 
from the definition of ``quota peanuts,'' the phrase, ``marketed for 
domestic edible use, seed, or other related uses.'' Under the current 
peanut policy, peanuts that are not eligible to be marketed for 
domestic edible use or seed could be valued as quota. For example: if 
peanuts grade segregation III, the remaining production from the farm 
serial number (FSN) is not sufficient to satisfy the quota, and the 
producer signs a waiver, the peanuts will be subject to a quality 
adjustment against the support price. However, those peanuts would not 
meet the definition of ``quota peanuts'' in the proposed rule.
    Response: FCIC has amended the definition for ``quota peanuts'' 
accordingly.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
that the definition of ``replanting'' be modified to include a 
requirement that replanted peanuts be planted in rows wide enough apart 
to permit cultivation and harvest in the same manner as the initially 
planted peanuts. Commenters indicated that broadcast or drilled peanuts 
are not acceptable methods of planting (or replanting) because such 
methods do not permit mechanical cultivation or allow digging the crop.
    Response: Section 12(b) of these Crop Provisions clearly states the 
consequences of improperly replanting the crop. If the peanuts are 
replanted using a practice that is uninsurable as an original planting, 
the liability for the unit will be reduced by the amount of the 
replanting payment, with no reduction in the premium owed. Further, 
section 14(e)(1)(v), has been revised to specify that any production 
from the improperly replanted acreage will count against the remaining 
liability for the unit.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
revision in the proposed definition of ``value per pound'' because the 
definition is incomplete and somewhat vague.
    Response: FCIC has revised the definition for clarification.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
the current unit structure remain based on the FSN unit. Commenters 
suggested that more optional units will increase the loss ratio. It 
will be necessary to add procedures to show how to split the quota of 
one FSN between separate basic units by share and to show what 
verifiable records are required to support optional units and how those 
records must be maintained because the APH program is not applicable 
for

[[Page 31333]]

peanuts. Also, the commenters indicated that if a producer commingles 
production now, the company apportions the production between the 
units, whereas under the proposed rule, the insured will lose units 
with commingled production at loss time.
    Response: FCIC understands the complexity of the substantive change 
toward converting units by FSN to a basic unit by share and optional 
unit by FSN. The procedure to split the quota for basic units should be 
no more difficult than any other crop permitting basic units. Further, 
the producer receives records when production is delivered. The 
delivered production and records must be maintained separately or the 
producer will not qualify for optional units. Although FCIC and the 
reinsured companies may be precluded from obtaining the producer's 
production records from the Farm Service Agency, nothing precludes the 
producer from providing such records as a condition of insurance. FCIC 
is charged to maintain an actuarially sound program and one that is 
consistent with provisions of other crop policies. The premium charged 
will reflect any additional risks associated with basic and optional 
units. Therefore, no changes will be considered until such information 
is provided.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
that section 3(c) be revised to incorporate the current producer 
listing process for peanuts, and remove any references to ``annual 
production reports'' and ``establish an approved yield.'' It was also 
suggested that section 3(c) be deleted.
    Response: Section 3(c) only requires an annual production report 
when stated in the Special Provisions. The current method of 
establishing yields will continue in these Crop Provisions. However, 
the peanut price support program could be discontinued or modified and 
in such an event, an alternative method for establishing production 
guarantees may be needed. Therefore, no change has been made.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
the contract change date be revised in section 4 from November 30 to 
October 31 because of the short time frame between the contract change 
date and sales closing date. The commenters indicated that with the 
changing of sales closing dates, actuarial documents are needed earlier 
to allow sales agents time to make quotes and proposals to producers 
and lenders, especially since more producers are making loan 
applications before the end of the year. Also, the November 30 contract 
change date does not allow adequate time for companies to determine 
changes, develop training materials, train agents, advise carryover 
insureds of changes and sell to potential insureds.
    Response: November 30 has always been the contract change date for 
all counties that do not have an April 15 cancellation date under the 
present peanut provisions. The proposed rule simply changed the 
contract change date from December 31 to November 30 for all remaining 
counties to maintain the same time period between the contract change 
date and the revised cancellation dates and to achieve consistency with 
other annual crop insurance policies. This time frame has proven to be 
adequate to allow the necessary preparation for the sale of these 
policies. Therefore, no change has been made.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
the cancellation and termination date for Virginia to be changed to 
March 15. Commenters indicated that these dates were originally April 
15 and not February 28.
    Response: FCIC has revised the cancellation and termination date 
for Virginia accordingly.
    Comment: An insurance service organization stated that the current 
peanut policy establishes units by FSN, so reporting the effective 
marketing quota by FSN on the acreage report made sense. The proposed 
rule changes unit structure, but it does not address the resulting 
complications of the unit requirement for reporting acreage in the new 
peanut Crop Provisions.
    Response: In addition to the requirements of section 6 of the Basic 
Provisions, the insured is required to report the effective marketing 
quota, if any, that is applicable to each unit for the current crop 
year. This would include all basic and optional units. FCIC has revised 
the provision to require the reporting of the effective poundage 
marketing quota for each basic and optional unit.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
section 7(e) be revised to read ``multiplying the result of section 
7(d) by your share at the time coverage begins.'' The commenters 
indicated that this will be consistent with section 7 of the Basic 
Provisions and clarifies when premium is earned. Also, the commenters 
recommended that a new section 7(f) be added to read as follows: 
``multiplying the result of section 7(e) times any premium adjustment 
percentage that may apply.'' This is needed for those policies that 
continue to qualify for a premium discount or qualify for the hail and 
fire exclusion reduction.
    Response: FCIC has amended the provisions accordingly.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
changing the word ``harvested'' to ``planted'' in section 8(b) so that 
it reflects the planted peanuts with the intent of harvesting farmers' 
stock peanuts. The commenters also recommended that section 8(d)(1) be 
amended to state that if a crop is harvested for use as green peanuts, 
such peanuts are insured and premium is earned and due. If the intent 
is to harvest green peanuts, then the acreage should not be insurable. 
Insurable acreage must be established at the time coverage attaches 
(when planted), not at harvest.
    Response: Section 8(b) already requires that the peanuts be planted 
as farmers' stock peanuts. Therefore, no change has been made. FCIC 
agrees with the recommendation to amend section 8(d)(1) to only exclude 
coverage for peanuts planted for the purpose of harvesting as green 
peanuts.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
that section 9(b)(1) be rewritten as follows: ``On which peanuts are 
grown using no-till or minimum tillage farming methods, unless a 
written agreement allows otherwise or as provided on the Special 
Provisions.'' The commenters indicated that the reference to the 
Special Provisions will allow for adding a statement if needed, making 
written agreements for these practices unnecessary. This would reduce 
paperwork caused by having to request a written agreement for each 
individual case. The commenter also suggested that section 9(b)(2) be 
deleted. The commenters stated that there are no rotation requirements 
for peanuts. If requirements are established in the future, the 
requirements could be added either to the Special Provisions or by 
endorsement.
    Response: FCIC has amended section 9(b)(1) accordingly. However, 
there are peanut types and in different areas of production where it is 
essential that peanuts be rotated with other crops in order to insure 
continuous successful

[[Page 31334]]

production. Therefore, no change has been made in the rotation 
provision.
    Comment: A reinsured company and an insurance service organization 
questioned the reference to ``removed from the field'' in section 
10(b). The commenters asked whether coverage continues after the 
peanuts are threshed or harvested but still in the field. The current 
provision had the wording ``threshed or removed from the field.'' The 
commenters suggested only the words, ``threshed or harvested'' be 
referenced and the words, ``removed from the field'' be deleted.
    Response: Peanuts may be left in the field for a short period time 
after combining or threshing for the purpose of drying. These Crop 
Provisions provide coverage on such peanuts until they are removed from 
the field for shelling, storing, and processing. Therefore, no change 
has been made.
    Comment: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
that FCIC: (1) keep the current minimum requirement of 10 acres or 10 
percent of the unit to qualify for a replanting payment by adding that 
information to section 12; (2) add the words ``multiplied by the number 
of acres and by your insured share'' to section 12(a)(2)(i); and (3) 
delete section 12(a)(2)(iii), thereby making the replanting payment per 
acre the lesser of $80.00 or actual cost multiplied by the producer's 
share. Commenters indicated that producers incur the same cost to 
replant whether quota or non-quota acreage is being replanted. Since 
peanuts must be planted in rows to allow proper cultivation and harvest 
practices, the commenters recommended that section 12(b), which 
requires replanting in rows far enough apart to cultivate, be deleted.
    Response: The increase in the requirement from the lesser of 10 
percent or 10 acres to 20 percent or 20 acres is consistent with other 
crop provisions. This revision, coupled with the change in the amount 
of replant payment, simplifies the program and does not significantly 
affect the insured. Previous analyses of replant payments paid in major 
peanut producing states showed that a small amount of peanut acreage 
was replanted. FCIC has revised section 12(a)(2)(i) accordingly. 
Inclusion of section 12(a)(2)(iii) is consistent with other annual 
crops that have replant payments, plus it maintains an equitable 
payment for replanted acreage. Section 12(b) is necessary to ensure 
that the insured properly replants the crop. Further, this provision is 
consistent with other annual crops that have replanting provisions. 
Therefore, no changes have been made.
    Comments: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
deleting the provision addressing combining optional units in section 
14(a)(1).
    Response: FCIC is maintaining the requirement that the producer 
keep separate records by unit. If a producer fails to maintain separate 
production records there is no way to authenticate the reported 
production to count for each optional unit. Since production to count 
cannot be accurately determined, the optional units must be combined. 
Therefore, no change has been made.
    Comments: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommend 
that the Farm Service Agency (FSA) procedures that allow producers to 
make ``fall'' transfers of their farm quota to another farm or producer 
be revised. Commenters also recommended that sections 14(b)(1), (2), 
and (3) should be revised because it adversely affects acreage 
reporting and claims processing.
    Response: FCIC cannot require another agency to revise its 
provisions. However, FCIC will share the commenter's recommendation 
regarding the revision of FSA procedure with FSA. To assure there is 
not an indemnity paid for quota that is later transferred from one farm 
to another farm or another producer, the provisions must limit the 
effective poundage marketing quota for each unit to reflect such 
transfers. Therefore, no change has been made.
    Comments: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
that the peanut quota pounds indemnified by insurance be removed from 
the quota pounds of the FSN at the FSA office. The commenters indicated 
that this recommendation is to prevent insureds from collecting an 
insurance indemnity and then collecting an additional benefit by 
selling or transferring those quota pounds to another farm or producer.
    Response: Sections 14(b)(1), (2), and (3) of these Crop Provisions 
should ensure that insureds are not collecting an insurance indemnity 
and then collecting an additional benefit by selling or transferring 
their quota pounds to another farm or producer. Therefore, no change 
has been made. However, FCIC will share this recommendation with FSA.
    Comments: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization states that 
the calculation in 14(c) is cumbersome and makes a difference in how 
production is counted against the guarantee. Commenters indicated that 
the calculation uses Segregation II and III production and that 
production would be counted against the non-quota guarantee, but 
current procedure counts all production against quota first. This new 
calculation results in a different indemnity payment than current 
procedure.
    Response: The commenters are correct that all production does not 
count against the quota first. This policy calculates the value of all 
production and subtracts it from the value of the quota and non-quota 
peanut guarantees. If Segregation II and III peanut production are not 
eligible to be valued and insured as quota peanut production, it would 
be unequitable to count such production against the quota guarantee. 
Therefore, no change has been made.
    Comments: An insurance service organization commented that the 
language in section 14(c)(5) suggests that the peanut crop provision is 
a ``dollar'' policy rather than ``guaranteed'' production policy. The 
commenter suggested revising the following: ``pounds production to 
count subtracted from pounds guaranteed multiplied by the quota price 
election and non-quota price election.''
    Response: This policy does not insure a specific dollar amount. 
However, since there are more than one type of peanuts insured, the 
value of the guarantee and production to count for each type is 
calculated separately to ensure that the correct price is applied to 
the specific type. Therefore, no change has been made.
    Comments: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization suggest that 
unharvested production should not be adjusted for quality. Commenters 
indicated that quality adjustment should be restricted to mature 
harvested production. Comments were made that United States Department 
of Agriculture (USDA) inspectors do not accept unharvested samples for 
grading purposes. Furthermore, it should be made clear that all 
appraised production will be counted as quota as current procedure 
requires.
    Response: Producers should not be required to incur the costs 
associated with harvest just to receive a quality adjustment when there 
is no dispute that the production has been damaged. These Crop 
Provisions are consistent with other crops that have quality adjustment 
provisions. As stated above, appraised production of non-quota

[[Page 31335]]

peanuts will count against the value of the quota if there is 
insufficient quota peanuts since the total value of all production to 
count is subtracted from the total value of the quota and non-quota 
guarantees. Therefore, no change has been made.
    Comments: Three producer groups, a lending institution, two 
reinsured companies, and an insurance service organization recommended 
that section 14(d)(2)(iv) be revised to not allow the insured to defer 
settlement of a claim and wait for a later, generally lower, appraisal, 
especially on crops that have a short ``shelf life.''
    Response: This provision allows deferment of a claim only if the 
insurance provider and the insured do not agree on the appraisal or if 
the insurance provider believes that the crop needs to be further cared 
for. The insured must continue to care for the entire crop. If the 
insured does not provide sufficient care for the crop, the original 
appraisal will be used. Therefore, no change has been made.
    Comments: An insurance service organization and a reinsured company 
suggest that the requirement for a written agreement to be renewed each 
year should be removed in section 15(d). Terms of the agreement should 
be stated in the agreement to fit the particular situation for the 
policy, or if no substantive changes occur from one year to the next, 
allow the written agreement to be continuous.
    Response: Written agreements are intended to supplement policy 
terms or permit insurance in unusual situations that require 
modification of the otherwise standard insurance provisions. If the 
condition creating need for a written agreement continues from year to 
year, it should be incorporated into the policy or the Special 
Provisions. FCIC has moved the written agreement provisions to the 
Basic Provisions but no change has been made.
    Comments: Four producer groups, a lending institution, and two 
reinsured companies ask: (1) whether the Late Planting Agreement Option 
is still available; and (2) why late and prevented planting language 
provisions were not included as they have been in other crops.
    Response: The Late Planting Agreement Option is no longer 
available. The late and prevented planting provisions in the Basic 
Provisions will apply.
    In addition to the changes indicated above, FCIC has made the 
following changes:
    1. Section 1. Definitions--Deleted the definitions of ``days'', 
``final planting date,'' ``FSA,'' ``good farming practices,'' 
``interplanted,'' ``irrigated practice,'' ``practical to replant,'' 
``replanting,'' ``timely planted,'' ``USDA,'' and ``written agreement'' 
since their definitions have been moved to the Basic Provisions. 
Revised the definition of ``planted acreage'' to remove those 
provisions that have been moved to the Basic Provisions and added the 
definition of ``approved yield'' for clarification. Deleted the 
definition of ``harvest'' because language was added in section 10(c) 
of these crop provisions and section 11 of the Basic Provisions to mark 
the end of the insurance period for peanuts.
    2. Section 2--Delete those provisions that have been moved to the 
Basic Provisions.
    3. Section 14--Added a note to inform policyholders with the 
Catastrophic Risk Protection level of coverage on the limitation of 
multiple benefits for the same crop loss.

List of Subjects in 7 CFR Parts 425 and 457

    Crop insurance, Peanuts, Reporting and record keeping requirements.

Final Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby amends 7 CFR parts 425 and 457, as 
follows:

PART 425--PEANUT CROP INSURANCE REGULATIONS FOR THE 1993 THROUGH 
1998 CROP YEARS

    1. The authority citation for 7 CFR part 425 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. Subpart heading ``Subpart--Regulations for the 1993 and 
Succeeding Crop Years'' is removed.
    4. Section 425.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:


Sec. 425.7  The application and policy.

* * * * *
    (d) The application for the 1993 and succeeding crop years is found 
at subpart D of part 400-General Administrative Regulations (7 CFR 
400.37, 400.38). The provisions of the Peanut Insurance Policy for the 
1993 through 1998 crop years are as follows:
* * * * *

PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE 
1998 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 457.134 is added to read as follows:


Sec. 457.134  Peanut crop insurance provisions.

    The Peanut Crop Insurance Provisions for the 1999 and succeeding 
crop years are as follows:

    FCIC policies:

United States Department of Agriculture

Federal Crop Insurance Corporation

    Reinsured policies:

(Appropriate title for insurance provider)

    Both FCIC and reinsured policies:

Peanut Crop Insurance 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.
    Approved yield. The yield calculated in accordance with 7 CFR 
part 400, subpart G, if required by section 3(c) of these 
provisions.
    Average price per pound:
    (1) The average CCC support price per pound, by type, for 
Segregation I peanuts and Segregation II and III peanuts eligible to 
be valued as quota peanuts; or
    (2) The highest non-quota price election contained in the 
Special Provisions for all Segregation I, II, and III peanuts not 
eligible to be valued as quota peanuts.
    Average support price per pound. The average price per pound for 
each type of quota peanuts announced by the USDA under the peanut 
price support program.
    CCC. Commodity Credit Corporation, a wholly owned government 
corporation within USDA.
    County. In addition to the definition contained in the Basic 
Provisions, ``county'' also includes any land identified by a FSA 
farm serial number for such county but physically located in another 
county.
    Effective poundage marketing quota. The number of pounds 
reported on the acreage report as eligible for the average support 
price per pound (including transfers of quota peanuts from one farm 
serial number to another farm serial number), not to exceed the 
Marketing Quota established by FSA for the farm serial number.
    Farmers' stock peanuts. Peanuts customarily marketed by 
producers, produced in the United States, and which are not shelled, 
crushed, cleaned, or otherwise changed (except for removal of 
foreign material, loose shelled kernels, and excess moisture) from 
the condition in which peanuts are harvested.

[[Page 31336]]

    Green peanuts. Peanuts that are harvested and marketed prior to 
maturity without drying or removal of moisture either by natural or 
artificial means.
    Inspection certificate and sales memorandum. A USDA form that 
records the inspection grading results and marketing record for the 
net weight of peanuts delivered to a buyer.
    Non-quota peanuts. Peanuts other than quota peanuts.
    Planted acreage. In addition to the requirement in the 
definition in the Basic Provisions, peanuts must initially be 
planted in rows wide 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.
    Production guarantee (per acre). In addition to the definition 
of ``production guarantee (per acre)'' in the Basic Provisions, the 
production guarantee (per acre) is the number of pounds determined 
by multiplying the yield per acre contained in the actuarial 
documents or the approved yield multiplied by the coverage level 
percentage you elect.
    Quota peanuts. Peanuts that are eligible to be valued at the 
average support price per pound.
    Segregation I, II, or III. Grades designated and defined for 
peanuts by the Agricultural Marketing Service of USDA.
    Value per pound. A price determined by USDA as shown on the USDA 
``Inspection Certificate and Sales Memorandum'' or other value 
accepted by us.
    2. Unit Division.
    (a) In lieu of the provisions in section 34 of the Basic 
Provisions that permit optional unit by section, section equivalent, 
irrigated or non-irrigated acreage, each optional unit must be 
located in a separate farm identified by a single FSA Farm Serial 
Number.
    (b) We may reject or modify any FSA reconstitution for the 
purpose of the unit definition, if we determine the reconstitution 
was done in whole or in part to defeat the purpose of the Federal 
crop insurance program or to gain a disproportionate advantage under 
this policy.
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) The price elections you choose for the quota and non-quota 
peanuts must have the same percentage relationship to the maximum 
price election offered by us for quota and non-quota peanuts. For 
example, if you choose 100 percent of the maximum quota peanut price 
election, you must also choose 100 percent of the maximum non-quota 
election.
    (b) The maximum pounds that may be insured at the quota price 
election are the lesser of :
    (1) The effective poundage marketing quota; or
    (2) The insured acreage multiplied by the production guarantee. 
If the insured acres multiplied by the production guarantee exceeds 
the effective poundage marketing quota, the difference will be 
insured at the non-quota peanut price election.
    (c) You may be required to file an annual production report to 
us, if required by the Special Provisions, to establish an approved 
yield in lieu of the yield published in the actuarial documents. If 
we require you to file an annual production report, you must do so 
in accordance with section 3(c) of the Basic Provisions.
    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:

                      Cancellation and Termination                      
------------------------------------------------------------------------
                State and county                          Dates         
------------------------------------------------------------------------
Jackson, Victoria, Golliad, Bee, Live Oak,       January 15             
 Mullen, La Salle, and Dimmit Counties, Texas                           
 and all Texas Counties lying south thereof.                            
El Paso, Hudspeth, Culberson, Reeves, Loving,    February 28            
 Winkler, Ector, Upton, Reagan, Sterling, Coke,                         
 Tom Green, Concho, McCulloch, San Saba, Mills,                         
 Hamilton, Bosque, Johnson, Tarrant, Wise,                              
 Cooke Counties, Texas, and all Texas counties                          
 south and east thereof; and all other states.                          
New Mexico; Oklahoma; Virginia; and all other    March 15               
 Texas counties.                                                        
------------------------------------------------------------------------

    6. Report of Acreage.
    In addition to the requirements of section 6 of the Basic 
Provisions, you must report the effective poundage marketing quota, 
if any, that is applicable to each basic and optional unit for the 
current crop year.
    7. Annual Premium
    In lieu of the premium amount determinations contained in 
section 7(c) of the Basic Provisions, the annual premium will be 
determined by:
    (a) Multiplying the insured effective poundage marketing quota 
by the price election for quota peanuts;
    (b) Multiplying the insured pounds of non-quota peanuts by the 
price election for non-quota peanuts;
    (c) Totaling the results of section 7(a) and 7(b);
    (d) Multiplying the total of section 7(c) by the applicable 
premium rate stated in the actuarial documents;
    (e) Multiplying the result of section 7(d) by your share at the 
time coverage begins; and
    (f) Multiplying the result of section 7(e) by any premium 
adjustment percentages that may apply.
    8. Insured Crop
    In accordance with section 8 of the Basic Provisions, the crop 
insured will be all the peanuts in the county for which a premium 
rate is provided by the actuarial documents:
    (a) In which you have a share;
    (b) That are planted for the purpose of marketing as farmers' 
stock peanuts;
    (c) That are a type of peanut designated in the Special 
Provisions as being insurable; and
    (d) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (1) Planted for the purpose of harvesting as green peanuts;
    (2) Interplanted with another crop; or
    (3) Planted into an established grass or legume.
    9. Insurable Acreage
    In addition to the provisions of section 9 of the Basic 
Provisions:
    (a) Any acreage of the insured crop 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 replanting is not practical.
    (b) We will not insure any acreage:
    (1) On which peanuts are grown using no-till or minimum tillage 
farming methods unless allowed by the Special Provisions or written 
agreement; or
    (2) Which does not meet the rotation requirements, if any, 
contained in the Special Provisions.
    10. Insurance Period
    In accordance with the provisions of section 11 of the Basic 
Provisions, the calendar date for the end of the insurance period is 
the date immediately following planting as follows:
    (a) November 30 in all states except New Mexico, Oklahoma, and 
Texas; and
    (b) December 31 in New Mexico, Oklahoma, and Texas.
    (c) ``Removal of peanuts from the field'' replaces ``harvest'' 
as an event marking the end of the insurance period in section 11 of 
the Basic Provisions.
    11. 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 that occur during the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or 
improper application of disease control measures;

[[Page 31337]]

    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if due to a cause of 
loss contained in section 11(a) through (g) that occurs during the 
insurance period.
    12. Replanting Payments
    (a) In accordance with section 13 of the Basic Provisions:
    (1) A replanting payment is allowed if the crop is damaged by an 
insurable cause of loss to the extent that the remaining stand will 
not produce at least 90 percent of the production guarantee for the 
acreage and it is practical to replant.
    (2) The maximum amount of the replanting payment for the unit 
will be the lesser of :
    (i) Eighty dollars ($80.00) per acre multiplied by the number of 
acres replanted and multiplied by your insured share;
    (ii) The actual cost of replanting per acre multiplied by the 
number of acres replanted and multiplied by your insured share; or
    (iii) Twenty percent (20%) of the production guarantee 
multiplied by your quota price election, multiplied by the number of 
acres replanted, and multiplied by your insured share.
    (b) When peanuts are replanted using a practice that is 
uninsurable as an original planting, the liability for the unit will 
be reduced by the amount of the replanting payment. The premium 
amount will not be reduced.
    13. 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 crop, the samples must not be 
harvested or destroyed until our inspection.
    14. 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; and
    (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) When settling your claim, the effective poundage marketing 
quota, if any, for each unit will be limited to the lesser of:
    (1) The amount of the effective poundage marketing quota 
reported on the acreage report;
    (2) The amount of the FSA effective poundage marketing quota; or
    (3) The amount determined at the final settlement of your claim.
    (c) In the event of loss or damage covered by this policy, we 
will settle your claim by:
    (1) Multiplying the insured acreage for the unit by the 
production guarantee per acre, by type if applicable;
    (2) Subtracting the insured effective poundage marketing quota 
from the result of section 14(c)(1) to determine the amount of 
insured non-quota peanuts;
    (3) Multiplying the insured effective poundage marketing quota 
and the result of section 14(c)(2) by the respective price election 
by type, if applicable, for quota and non-quota peanuts, 
respectively;
    (4) Totaling the results of section 14(c)(3) (This amount will 
be the same as (3) if there is only one type);
    (5) Multiply the production to count for quota and non-quota 
peanuts (see section 14(d)), for each type if applicable, by the 
respective price elections;
    (6) Totaling the results of section 14(c)(5) (This amount will 
be the same as (5) if there is only one type);
    (7) Subtracting the result of section 14(c)(6) from section 
14(c)(4); and
    (8) Multiplying the result in section 14(b)(7) and section 
14(b)(8) by your share.
    For example:
    You have 100 percent share in 25 acres of Valencia peanuts in 
the unit, with a 2000 pounds per acre guarantee, an effective 
poundage marketing quota of 40,000 pounds, and a price election of 
$0.34 per pound for quota and $0.15 per pounds for non-quota. You 
are able to harvest 43,000 pounds in which 40,000 pounds are quota 
segregation I and 3,000 pounds are non-quota segregation II and III 
due to quality adjustment. Your indemnity would be calculated as 
follows:
    (1) 25 acres  x  2,000 pounds per acre = 50,000 pounds 
guarantee;
    (2) 50,000 pounds guarantee -40,000 pounds of effective 
marketing quota = 10,000 pounds of non-quota guarantee;
    (3) 40,000 pounds  x  $.34 price election for quota = $13,600.00 
value of guarantee; 10,000 pounds  x  $.15 price election for non-
quota = $1,500.00 value of guarantee;
    (4) $13,600.00 + $1,500.00 = $15,100.00 total of value of 
guarantee;
    (5) 40,000 pounds of quota production to count  x  .34 = 
$13,600.00 quota value of production to count;
    3,000 pounds of non-quota production to count  x  .15 = $450.00 
non-quota value of production to count;
    (6) $13,600.00 + $450.00 = $14,050.00 total value of production 
to count;
    (8) $15,100.00 total value guarantee -$14,050.00 total value of 
production to count = $1,050.00 loss; and
    (9) $1,050.00 value of loss  x  100 percent = $1,050.00 
indemnity payment.
    (d) The total production to count (in pounds) from all insurable 
acreage on the unit will include all appraised and harvested 
production.
    (e) All appraised production will include:
    (1) Not less than the production guarantee for acreage:
    (i) That is abandoned;
    (ii) Put to another use without our consent;
    (iii) Damaged solely by uninsured causes; or
    (iv) For which you fail to provide production records that are 
acceptable to us; or
    (v) Not replanted as required by this policy.
    (2) Production lost due to uninsured causes;
    (3) Unharvested production (mature unharvested production may be 
adjusted for quality deficiencies and excess moisture in accordance 
with section 14(f)); and
    (4) 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:
    (i) 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
    (ii) 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
    (5) All harvested production from the insurable acreage.
    (f) Mature peanut production that is damaged by insurable causes 
and for which the value per pound is less than the average support 
price per pound for the type will be adjusted by:
    (1) Dividing the value per pound for the insured type of peanuts 
by the applicable average price per pound; and
    (2) Multiplying this result by the number of pounds of such 
production.
    (g) To enable us to determine the net weight and quality of 
production of any peanuts for which an ``Inspection Certificate and 
Sales Memorandum'' has not been issued, we must be given the 
opportunity to have such peanuts inspected and graded before you 
dispose of them. If you dispose of any production without giving us 
the opportunity to have the peanuts inspected and graded, the gross 
weight of such production will be used in determining total 
production to count unless you submit a marketing record 
satisfactory to us which clearly shows the net weight and quality of 
such peanuts.

(Note: In accordance with the Federal Crop Insurance Act, in the 
event of a crop loss, policyholders with the Catastrophic Risk 
Protection level of coverage must elect to either receive benefits 
under these Crop Provisions or if applicable, the Commodity Credit 
Corporation Quota Loan Pool Regulations.)

    Signed in Washington, D.C., on June 3, 1998.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 98-15302 Filed 6-8-98; 8:45 am]
BILLING CODE 3410-08-P