[Federal Register Volume 64, Number 89 (Monday, May 10, 1999)]
[Rules and Regulations]
[Pages 24931-24933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11595]



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 Rules and Regulations
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  Federal Register / Vol. 64, No. 89 / Monday, May 10, 1999 / Rules and 
Regulations  

[[Page 24931]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457


Common Crop Insurance Regulations; Grape 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 grapes. The intended 
effect of this action is to provide policy changes to better meet the 
needs of the insured by adding provisions that allow grape producers in 
Idaho, Oregon, and Washington to select one price election and one 
coverage level for each varietal group specified in the Special 
Provisions and provide year-round coverage in California, Idaho, 
Mississippi, Oregon, Texas, and Washington for insureds with no break 
in coverage from the prior crop year to be effective for the 2000 and 
subsequent crop year.

EFFECTIVE DATE: June 9, 1999.

FOR FURTHER INFORMATION CONTACT: Stephen Hoy, Insurance Management 
Specialist, 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 purposes 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 in this rule have been approved by 
the Office of Management and Budget (OMB) under control number 0563-
0053 through April 30, 2001.

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 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 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. The amount of work required of 
the insurance companies will not increase because the information used 
to determine eligibility must already be collected under the present 
policy. No additional work is required as a result of this action on 
the part of either the insured or the insurance companies. 
Additionally, the regulation does not require any action on the part of 
small entities than is required on the part of large entities. 
Therefore, this action is determined to be exempt from the provisions 
of the Regulatory Flexibility Act (5 U.S.C. 605) and no Regulatory 
Flexibility Analysis was prepared.

Federal Assistance Program

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

Executive Order 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 economic 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 duplicate 
regulations and improve those that remain in force.

Background

    On Wednesday, September 2, 1998, FCIC published a notice of 
proposed rulemaking in the Federal Register at 63 FR 46706-46708 to 
revise 7 CFR 457.138, Grape Crop Insurance Provisions, effective for 
the 2000 and succeeding crop years.
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments and opinions. A total of six 
comments were received from an insurance service organization, two 
reinsured companies, a producer association, and a representative of a 
producer association. The producer association and one reinsured 
company concurred with the proposed changes

[[Page 24932]]

made to the regulation. The comments received and FCIC's responses are 
as follows:
    Comment: An insurance service organization suggested issuing an 
amendatory endorsement, rather than reissuing the entire Grape Crop 
Provisions, to minimize cost for companies that provide insurance for 
grapes.
    Response: The crop insurance policy is contractual in nature and 
the subject matter is complicated and difficult to read and understand. 
Use of an amendatory endorsement attached to a complicated policy, part 
of which is no longer in effect, may cause confusion and 
misunderstanding. This is especially true if a major change, such as a 
provision for year-round coverage, is made to the policy. FCIC has been 
attempting to construct crop insurance policies that are easier to 
understand by using common terms, provisions, and policy format. 
Reissuing a complete policy when major changes are made is necessary to 
achieve this goal.
    Comment: A reinsured company questioned whether rates will reflect 
the increased exposure resulting from the extended coverage and 
suggested that they should.
    Response: FCIC will determine if the extended insurance period 
results in additional risk not reflected in the current premium rate 
structure for grapes. Premium rates will be adjusted to reflect any 
increased risk.
    Comment: A reinsured company suggested that an insured would have 
nothing to lose by applying for increased coverage prior to the sales 
closing date but following a cause of loss that could or would reduce 
the yield of the insured crop. The commenter questioned how the 
provision will be administered and objected to the proposed changes if 
expenses for delivery of the program will increase. The commenter also 
questioned when coverage would begin for a newly written policy.
    Response: Under the terms of the policy, if the potential exists 
for grape yields to be affected, the coverage level or ratio of the 
price election to the maximum price election cannot be increased by the 
insured. All grape producers are required to annually complete a 
worksheet to certify if damage (e.g., disease, hail, freeze) occurred 
to the vines or if cultural practices used will reduce the insured's 
crop production from previous levels. Agents will also be able to 
access weather and crop information; therefore, insurance providers 
should be able to determine if damage exists.
    The extended period of coverage for grapes is during the period of 
dormancy when the risk of loss is generally low, especially in 
California where winter damage is minimal. FCIC believes that 
occurrences of insured causes of loss during the extended period of 
coverage will be infrequent; therefore, expenses resulting from 
administration of the additional coverage should be minimal. Coverage 
for new insureds will not attach until the day following the sales 
closing date unless the application is received on or within 8 days 
prior to the sales closing date. Insurance will then attach on the 10th 
day after the properly completed application is received in the crop 
insurance provider's office, unless the acreage is inspected during the 
10 day period and does not meet insurability requirements. For existing 
policies, coverage will begin with the 2000 crop year and will not 
provide coverage retroactively to cover the uninsured period in the 
1999 crop year.
    Comment: A representative of a producer association recommended 
that, in addition to the proposed changes, sections 2 and 3 of the 
Grape Crop Provisions be revised to permit grape producers in the State 
of Oregon to: (1) Establish basic units by variety; (2) establish 
optional units only if each optional unit is located on non-contiguous 
land, unless otherwise allowed by written agreement; (3) select only 
one price election and coverage level for each grape variety in the 
county specified in the Special Provisions; and (4) apply for a written 
agreement to establish a price election if the Special Provisions do 
not provide a price election for a specific variety that is insured.
    Response: Revising the Grape Crop Provisions to provide coverage by 
variety in the State of Oregon requires extensive, detailed production 
and price information data on the varieties produced. This coverage is 
available in California because detailed data is available by crush 
district from the California Department of Food and Agriculture. FCIC 
is revising the Grape Crop Provisions to allow grape producers in 
Idaho, Oregon, and Washington to select one coverage level and one 
price election for each varietal group designated in the Special 
Provisions because it has obtained sufficient data. Currently, FCIC has 
access to only limited statewide data from the National Agriculture and 
Statistic Service on grape varieties produced in Oregon. Additional 
data on grape variety production, acreage, price, and critical 
temperatures in each county or district are necessary to provide 
coverage and price elections based on grape varieties in Oregon. If 
data are available, FCIC will work with grape producers in Oregon and 
other states to determine if different coverage and price elections can 
be provided by grape variety.
    In addition to the changes described above and minor editorial 
changes, FCIC has made the following change to the Grape Crop 
Provisions:
    Section 3--Amended section 3(f) of the proposed rule for 
clarification. The phrase ``after coverage begins'' that followed ``* * 
* you may not increase your elected or assigned coverage level or the 
ratio of your price election to the maximum price election we offer. * 
* *'' was removed. The phrase is unnecessary and may cause confusion.

List of Subjects in 7 CFR Part 457

    Crop insurance, Grape.

Final Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends the Common Crop Insurance Regulations (7 
CFR part 457) by amending 7 CFR 457.138, for the 2000 and succeeding 
crop years, to read as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

    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 457.138 is revised by amending the introductory text to 
read as follows:


Sec. 457.138  Grape crop insurance provisions.

    The grape crop insurance provisions for the 2000 and succeeding 
crop years are as follows:
* * * * *
    3. In Sec. 457.138, sections 3(b) and 3(c) are revised and a new 
section 3(f) is added at the end of section 3 to read as follows:
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
* * * * *
    (b) In Idaho, Oregon, and Washington, you may select only one price 
election and coverage level for each grape varietal group specified in 
the Special Provisions.
    (c) In all states except California, Idaho, Oregon, and Washington, 
you may select only one price election and coverage level for all the 
grapes in the county insured under this policy unless the Special 
Provisions provide different price elections by varietal group, in 
which case you may select one price

[[Page 24933]]

election for each varietal group designated in the Special Provisions. 
The price elections you choose for each varietal group must have the 
same percentage relationship to the maximum price offered by us for 
each varietal group. For example, if you choose 100 percent of the 
maximum price election for one varietal group, you must also choose 100 
percent of the maximum price election for all other varietal groups.
* * * * *
    (f) In California, Idaho, Mississippi, Oregon, Texas, and 
Washington, you may not increase your elected or assigned coverage 
level or the ratio of your price election to the maximum price election 
we offer if a cause of loss that could or would reduce the yield of the 
insured crop is evident prior to the time that you request the 
increase.
    4. In Sec. 457.138, section 9(a)(2) is redesignated as 9(a)(3) and 
a new section 9(a)(2) is added to read as follows:
    9. Insurance Period.
    (a) * * *
    (1) * * *
    (2) In California, Idaho, Mississippi, Oregon, Texas, and 
Washington, for each subsequent crop year that the policy remains 
continuously in force, coverage begins on the day immediately following 
the end of the insurance period for the prior crop year. Policy 
cancellation that results solely from transferring to a different 
insurance provider for a subsequent crop year will not be considered a 
break in continuous coverage.
* * * * *
    Signed in Washington, DC on April 6, 1999.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 99-11595 Filed 5-7-99; 8:45 am]
BILLING CODE 3410-08-P