[Federal Register Volume 64, Number 144 (Wednesday, July 28, 1999)]
[Rules and Regulations]
[Pages 40738-40740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19014]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 400 and 402

RIN 0563-AB68


General Administrative Regulations, Subpart U; and Catastrophic 
Risk Protection Endorsement; Regulations for the 1999 and Subsequent 
Reinsurance Years

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the 
General Administrative Regulations, subpart U--Ineligibility for 
Programs Under the Federal Crop Insurance Act (7 CFR part 400, subpart 
U) and the Catastrophic Risk Protection Endorsement (7 CFR part 402) to 
implement the statutory mandates of the Agricultural Research, 
Extension, and Education Reform Act of 1998 (1998 Research Act) and the 
Agriculture, Rural Development, Food and Drug Administration and 
Related Agencies Appropriations Act, 1999 (1999 Appropriations Act) 
enacted on October 19, 1998.

EFFECTIVE DATE: This rule is effective September 27, 1999.

FOR FURTHER INFORMATION CONTACT: Louise Narber, 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 significant for the purposes of 
Executive Order 12866 and, therefore, has been reviewed by the Office 
of Management and Budget (OMB).

Paperwork Reduction Act of 1995

    Under the provisions of the Paperwork Reduction Act of 1995 (44 
U.S.C. chapter 35), the collections of information for this rule have 
been previously approved by OMB under control number 0563-0053 through 
April 30, 2001. This rule was amended to implement the statutory 
mandates of the 1998 Research Act which changed the administrative fee 
for CAT coverage from $50 per crop per county, not to exceed $200 per 
county, or $600 for all counties in which the producer elected to 
obtain limited coverage, to $60 per crop per county. The amendments set 
forth in this rule do not revise the content or alter the frequency of 
reporting for any of the forms or information collections cleared under 
the above-referenced docket.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. This rule contains no Federal 
mandates (under the regulatory provisions of title II of 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 regulation does not require 
any more action on the part of the 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.

[[Page 40739]]

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 or an Environmental Impact 
Statement is needed.

Background

    This rule finalizes revisions to part 400, subpart U and part 402 
mandated by the 1998 Research Act, enacted June 23, 1998, and the 1999 
Appropriations Act enacted on October 19, 1998. On Thursday, July 30, 
1998, FCIC published an interim rule in the Federal Register at 63 FR 
40630-40632 to amend subpart U and the Catastrophic Risk Protection 
Endorsement to implement the statutory mandates of the 1998 Research 
Act, which requires the provisions be implemented for the 1999 and 
subsequent reinsurance years. The 1999 Appropriations Act enacted after 
the publication of the interim rule waives the administrative fee of 10 
percent of the premium that was enacted in the 1998 Research Act for 
the 1999 and subsequent reinsurance years. Changes in this rule, not 
made effective by the interim rule, are not in effect until the 
effective date of this rule.
    Following publication of the interim rule, the public was afforded 
60 days to submit written comments. A total of 8 comments was received 
from an insurance company and an insurance service organization. The 
comments received and FCIC's responses are as follows:
    Comment: An insurance service organization stated that private 
carriers are expected to complete forms, issue policies, adjust losses, 
audit policies, and now reprogram the computer systems to handle the 
change in the Basic Provisions procedures and perform the billing 
function for CAT policies in exchange for minimal reimbursement. The 
insurance service organization suggested that FCIC, through the 
Standard Reinsurance Agreement, allow companies to retain 50 percent of 
the fees, including flat fees or percentages based on premium 
computations.
    Response: The 1998 Research Act specifies all administrative fees 
shall be deposited in the crop insurance fund to be available for the 
programs and activities of FCIC and specifically prohibits use of this 
fund to compensate insurance providers or agents for the delivery of 
services. Therefore, no change has been made.
    Comment: An insurance service organization suggested the 
definitions for ``additional coverage,'' ``administrative fee,'' 
``catastrophic risk protection,'' ``limited coverage,'' and ``limited 
resource farmer'' be deleted from the Catastrophic Risk Protection 
Endorsement since they are being added to the Basic Provisions. The 
insurance service organization suggested if they were not eliminated 
they should be revised to match those definitions in the Basic 
Provisions, unless additional information is needed in the Catastrophic 
Risk Protection Endorsement.
    Response: FCIC has deleted the definitions for ``additional 
coverage,'' ``administrative fee,'' ``catastrophic risk protection,'' 
``limited coverage,'' and ``limited resource farmer'' from the 
Catastrophic Risk Protection Endorsement and moved them to the Basic 
Provisions.
    Comment: An insurance company and an insurance service organization 
stated the regulation references 10 percent of the premium subsidy and 
the law refers to this as 10 percent of the imputed premium. They asked 
if there was a reason for the difference in the wording. They stated 
the industry is now accustomed to the idea of ``imputed premium.''
    Response: The 1998 Research Act refers to 10 percent of the 
premium. Section 6(b)(1) of the Catastrophic Risk Protection 
Endorsement refers to 10 percent of the premium subsidy because all of 
the CAT premium is subsidized by the Federal Government. However, this 
provision has been revised to remove all reference to 10 percent of the 
premium as required by the 1999 Appropriations Act.
    Comment: An insurance company and an insurance service organization 
stated it was their understanding that for nursery, the billing date is 
at the beginning of the coverage period and this presumably would be 
the fee due date. The nursery program requires periodic inventory 
updates, thus the premium could vary depending on the inventory. They 
asked if the fee continually adjusts through the year depending on 
inventory and the corresponding imputed premium when the fee is 10 
percent of the imputed premium.
    Response: For the old nursery policy, the administrative fees will 
be paid with the premium. If there are more than one premium due dates, 
the administrative fee must be paid by the final due date. Since the 
provision regarding the administrative fee of 10 percent of the premium 
has been removed, inventory adjustments are no longer an issue.
    Comment: An insurance company and an insurance service organization 
stated the pecan program is a two year coverage module. They asked 
whether a CAT pecan policy that has been in effect for one year under 
the previous administrative fee structure would keep that fee or if the 
new fees specified in section 7(b)(1) of the Catastrophic Risk 
Protection Endorsement apply for the second year.
    Response: Since the pecan policy is a two year coverage module and 
the first year's sales closing date was prior to the effective date of 
this regulation, the administrative fee that applied for the 1998 crop 
year will also apply for the 1999 crop year.
    In addition to these changes, the administrative fee for 
catastrophic coverage has been changed due to the 1999 Appropriations 
Act. The administrative fee for catastrophic coverage for each crop in 
the county has been changed from $10 plus the greater of either $50 or 
10 percent of the premium subsidy to $60 per crop per county. Also, due 
to the Appropriations Act, paragraph 9(b) of the Catastrophic Risk 
Protection Endorsement has been revised to state that producers 
eligible for CAT coverage are also eligible for emergency loans.

List of Subjects in 7 CFR Parts 400 and 402

    Administrative practice and procedure, Catastrophic risk protection 
endorsement, Claims, Crop insurance, Fraud, Insurance provisions, 
Reporting and recordkeeping requirements.

[[Page 40740]]

Final Rule

    Accordingly, as set forth in the preamble, the interim rule 
amending 7 CFR parts 400 and 402, published on July 30, 1998 at 63 FR 
40630, is adopted as final with the following changes:

PART 402--CATASTROPHIC RISK PROTECTION ENDORSEMENT; REGULATIONS FOR 
THE 1999 AND SUBSEQUENT REINSURANCE YEARS

    1. The authority citation for 7 CFR part 402 continues to read as 
follows:

    Authority: 7 U.S.C. 1506(1), 1506(p).


Sec. 402.4  [Amended]

    2. Amend Sec. 402.4 as follows:
    a. Remove the definitions of ``additional coverage,'' 
``administrative fee,'' ``catastrophic risk protection,'' ``limited 
coverage,'' and ``limited resource farmer'' in Section 1.
    b. Revise Section 6 paragraph (b)(1).
    c. Revise Section 9 paragraph (b). The revisions to Sec. 402.4 read 
as follows:


Sec. 402.4  Catastrophic Risk Protection Endorsement Provisions.

    6. Annual Premium and Administrative Fees.
* * * * *
    (b) *  *  *
    (1) The administrative fee owed for each crop in the county is $60.
* * * * *
    9. Claim for Indemnity.
* * * * *
    (b) If you are eligible to receive an indemnity under this 
endorsement and benefits compensating you for the same loss under any 
other USDA program, you must elect the program from which you wish to 
receive benefits. Only one payment or program benefit is allowed. 
However, if other USDA program benefits are not available until after 
you filed a claim for indemnity, you may refund the total amount of the 
indemnity and receive the other program benefit. Notwithstanding the 
first sentence of this subsection, farm ownership, operating, and 
emergency loans may be obtained from the USDA in addition to an 
indemnity under this endorsement.
* * * * *

    Signed in Washington, DC, on July 20, 1999.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 99-19014 Filed 7-27-99; 8:45 am]
BILLING CODE 3410-08-P