[Federal Register Volume 65, Number 127 (Friday, June 30, 2000)]
[Rules and Regulations]
[Pages 40483-40486]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16583]



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 Rules and Regulations
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  Federal Register / Vol. 65, No. 127 / Friday, June 30, 2000 / Rules 
and Regulations  

[[Page 40483]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 402, 407, and 457

RIN 0563-AB81


Catastrophic Risk Protection Endorsement; Regulations for the 
1999 and Subsequent Reinsurance Years; Group Risk Plan of Insurance 
Regulations for the 2000 and Succeeding Crop Years, and the Common Crop 
Insurance Regulations; Basic Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Interim rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Crop Insurance Corporation (FCIC) amends the 
Catastrophic Risk Protection Endorsement (7 CFR part 402), the Group 
Risk Plan of Insurance Regulations (7 CFR part 407), and the Common 
Crop Insurance Regulations, Basic Provisions (7 CFR part 457) to revise 
those provisions affected by the changes in the administrative fees and 
subsidies and the substitution of yields in the producer's actual 
production history mandated by the Agricultural Risk Protection Act of 
2000.

EFFECTIVE DATE: This rule is effective June 28, 2000. Written comments 
and opinions on this rule will be accepted until the close of business 
August 29, 2000 and will be considered when the rule is to be made 
final.

ADDRESSES: Interested persons are invited to submit written comments to 
the Director, Product Development Division, Federal Crop Insurance 
Corporation, United States Department of Agriculture, 6501 Beacon 
Drive, Stop 0812, Room 421, Kansas City, MO.
    Comments titled ``Administrative Fees Due to Legislation'' may be 
sent via the Internet to [email protected]. A copy of each 
response will be available for public inspection and copying from 7:00 
a.m. to 4:30 p.m., CDT, Monday through Friday, except holidays, at the 
above address.

FOR FURTHER INFORMATION CONTACT: For further information and a copy of 
the Cost Benefit Analysis, contact Louise Narber, Insurance Management 
Specialist, Research and Development, Product Development Division, 
Federal Crop Insurance Corporation, at the Kansas City, MO, address 
listed above, 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, is subject to review by the 
Office of Management and Budget (OMB).

Cost Benefit Analysis

    In accordance with section 6(a)(3)(D) of Executive Order 12866, the 
Office of Information and Regulatory Affairs, OMB, has been notified 
Congress has specified that the changes made by this rule are to be 
effective for the 2001 crop year and that to make this rule effective 
for the 2001 crop year fall planted crops, this rule must be published 
by the June 30, 2000, contract change date. A preliminary Cost-Benefit 
Analysis has been done and is available to interested parties at the 
Kansas City address above. In summary, the Cost Benefit Analysis found 
that the benefits provided outweigh associated costs. The crop 
insurance policy changes contained in this rule are required under the 
Agricultural Risk Protection Act of 2000. The analysis finds that the 
increases in the administrative fees for the catastrophic risk 
protection level of coverage from $60 per crop per county to $100 per 
crop per county, for additional coverage from $20 per crop per county 
to $30 per crop per county, and for limited coverage from $50 per crop 
per county, not to exceed $200 per county, and $600 for all counties, 
to $30 per crop per county with no limits may modestly increase the 
costs to producers but they will also reduce the overall costs of the 
program to taxpayers. The analysis also finds that giving producers the 
option of replacing certain yields in their actual production history 
(APH) with 60 percent of the transitional yield for the county will 
result in greater coverage for producers that have been hardest hit by 
disasters. Based on the cost benefit analysis and the requirements of 
the Agricultural Risk Protection Act of 2000, FCIC finds this 
regulation is in the best interest of the overall crop insurance 
program.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule has been designated by the Office of Information and 
Regulatory Affairs, OMB, as a major rule under the Small Business 
Regulatory Enforcement Fairness Act of 1996 (Small Business Act). 
Pursuant to section 808(2), the Manager of FCIC has determined that 
there is good cause for making this rule effective less than 60 days 
after submission of the rule to each House of Congress and to the 
Comptroller General. Congress has specified that the changes made by 
this rule are to be effective for the 2001 crop year. To be effective 
for 2001 crop year fall planted crops, the changes must be effective by 
the June 30, 2000, contract change date. Failure to implement this rule 
by the June 30 contract change date will result in the disparate 
treatment of producers with 2001 crop year crops. Therefore, delay of 
the implementation of this rule to comply with the notice and public 
procedure requirements of the Small Business Act would be contrary to 
the public interest.

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. 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) 
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.

[[Page 40484]]

Therefore, this rule is not subject to the requirements of sections 202 
and 205 of UMRA.

Executive Order 13132

    The provisions contained in this rule will not have a substantial 
direct effect on States, the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Therefore, 
consultation with the States is not required.

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.

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.

Background

    This interim rule implements the changes to the crop insurance 
policies mandated by the Agricultural Risk Protection Act of 2000. The 
Agricultural Risk Protection Act of 2000 requires the provisions to be 
implemented for the 2001 and subsequent crop years. Crop insurance 
policies with a contract change date prior to the effective date of 
this rule will not be affected by these provisions. Crop insurance 
policies with a contract change date on or after the effective date of 
this rule will receive insurance under the terms of their policy as 
revised by this rule. Since the changes to the policy made by this rule 
are required by statute, and the changes must be made by the June 30, 
2000, contract change date to be fully implemented for the 2001 crop 
year, it is contrary to the public interest to publish this rule for 
notice and comment prior to making the rule effective. However, 
comments are solicited for 60 days after the date of publication in the 
Federal Register and will be considered by FCIC before this rule is 
made final.
    1. FCIC amends the Catastrophic Risk Protection Endorsement to 
revise the definition of ``approved yield'' to allow for the 
substitution of 60 percent of the transitional yield, change the 
administrative fee from $60 to $100, revise the requirement that the 
producer pay the administrative fee, and remove all references to 
limited coverage because, as a result of changes to the subsidy levels 
and administrative fee, there is no longer a distinction between 
limited and additional coverage.
    2. FCIC amends the Group Risk Plan of Insurance Basic Provisions to 
remove all references to limited coverage because, as a result of 
changes to the subsidy levels and administrative fee, there is no 
longer a distinction between limited and additional coverage; revise 
the definition of ``additional coverage'' to incorporate limited 
coverage; change the administrative fee from $60 to $100 for 
catastrophic risk protection coverage, remove all references to 
administrative fees for limited coverage, change the administrative fee 
from $20 to $30 for all coverages in excess of catastrophic risk 
protection; and revise the requirement that the producer pay the 
administrative fee.
    3. FCIC amends the Common Crop Insurance Regulations, Basic 
Provisions to remove all references to limited coverage because, as a 
result of changes to the subsidy levels and administrative fee, there 
is no longer a distinction between limited and additional coverage; 
revise the definition of ``additional coverage'' to incorporate limited 
coverage and the definition of ``approved yield'' to allow for the 
substitution of 60 percent of the transitional yield; remove all 
references to administrative fees for limited coverage, and change the 
administrative fee from $20 to $30 for all coverages in excess of 
catastrophic risk protection; and revise the requirement that the 
producer pay the administrative fee.

List of Subjects in 7 CFR Parts 402, 407, and 457

    Catastrophic risk protection endorsement, Insurance provisions.

Interim Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends 7 CFR parts 402, 407, and 457 as follows:

PART 402--CATASTROPHIC RISK PROTECTION ENDORSEMENT

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


    Authority: 7 U.S.C. 1506(1), 1506(p).
    2. Amend part 402 to revise the part heading as set forth above;
    3. Amend Sec. 402.4 as follows:
    a. Revise the introductory text of the Catastrophic Risk Protection 
Endorsement;
    b. Amend section 1 of the Catastrophic Risk Protection Endorsement 
by revising the definition of ``approved yield;''
    c. Amend section 6 of the Catastrophic Risk Protection Endorsement 
to revise the introductory text of paragraph (b) and paragraph (b)(1);
    d. Amend section 7(a) of the Catastrophic Risk Protection 
Endorsement by deleting the words ``limited or'' from the first and 
last sentence and removing the phrase ``unless the maximum 
administrative fee would be exceeded'' from the last sentence.


Sec. 402.4  Catastrophic Risk Protection Endorsement Provisions.

    The Catastrophic Risk Protection Endorsement Provisions for the 
2001 and succeeding crop years are as follows:
* * * * *
    1. Definitions
* * * * *
    Approved yield. The amount of production per acre computed in 
accordance with FCIC's actual production history program (7 CFR part 
400, subpart G) or for crops not included under 7 CFR part 400, subpart 
G, the yield used to determine the guarantee in accordance with the 
Crop Provisions or the Special Provisions, and any adjustments elected 
in

[[Page 40485]]

accordance with section 36 of the Basic Provisions.
* * * * *
    6. Annual Premium and Administrative Fees
* * * * *
    (b) In return for catastrophic risk protection coverage, you must 
pay an administrative fee to the insurance provider within 30 days 
after you have been billed by us, unless otherwise specified in 7 CFR 
part 400 (You will be billed by the date stated in the Special 
Provisions);
    (1) The administrative fee owed is $100 for each crop in the 
county.
* * * * *

PART 407--GROUP RISK PLAN OF INSURANCE REGULATIONS FOR THE 2001 AND 
SUCCEEDING CROP YEARS

    1. The authority citation for 7 CFR part 407 continues to read as 
follows:

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

    2. Amend part 407 to revise the part heading as set forth above;
    3. Amend Sec. 407.9 as follows:
    a. Revise the introductory text;
    b. Amend the seventh introductory paragraph of Group Risk Plan 
Common Policy by removing the words, ``limited or'';
    c. Revise the definition of ``additional coverage'' in section 1 of 
the ``Group Risk Plan of Insurance Basic Provisions'';
    d. Amend section 1 of the Group Risk Plan of Insurance Basic 
Provisions by removing the definition of ``limited coverage'';
    e. Amend section 1 of the Group Risk Plan of Insurance Basic 
Provisions by removing the phrase ``as limited and maximum amounts per 
acre'' from the definition of ``subsidy'';
    f. Amend section 4(a) of the Group Risk Plan of Insurance Basic 
Provisions by removing the words ``limited and'' from the second 
sentence.
    g. Amend section 5(a) of the Group Risk Plan of Insurance Basic 
Provisions by removing the words ``limited and'' from the second 
sentence.
    h. Revise the introductory text of section 8(a) and paragraph 
8(a)(1) of the Group Risk Plan of Insurance Basic Provisions;
    i. Revise sections 8(b) and (c) of the Group Risk Plan of Insurance 
Basic Provisions;
    j. Amend section 8(d) of the Group Risk Plan of Insurance Basic 
Provisions by removing the words ``limited and'';
    k. Amend section 8(e) of the Group Risk Plan of Insurance Basic 
Provisions by removing '', limited,''; and
    l. Amend the example (after section 20 of the Group Risk Plan of 
Insurance Basic Provisions) by removing the last sentence of the first 
paragraph and the word ``limited'' from the second sentence of the 
third paragraph.
    The revised paragraphs read as follows:


Sec. 407.9  Group risk plan common policy.

    The provisions of the Group Risk Plan Common Policy for the 2001 
and succeeding crop years are as follows:
* * * * *
Group Risk Plan of Insurance Basic Provisions
    1. Definitions.
* * * * *
    Additional coverage. For GRP, an amount of protection greater than 
catastrophic risk protection. The protection is on a per acre basis as 
specified in the actuarial documents for the crop, practice, and type.
* * * * *
    8. Administrative Fees and Annual Premium
    (a) If you obtain a catastrophic risk protection GRP policy, you 
will pay an administrative fee, unless otherwise specified in 7 CFR 
part 400:
    (1) Of $100 per crop per county;
* * * * *
    (b) If you obtain an additional coverage GRP policy, you will pay 
an administrative fee:
    (1) Of $30 per crop per county;
    (2) Payable to the insurance provider on the billing date for the 
crop.
    (c) Limited resource farmers as defined in 7 CFR 457.8 may apply 
for a waiver of administrative fees.
* * * * *

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(1), 1506(p).

    2. Amend Sec. 457.8 in the Common Crop Insurance Policy under Terms 
and Conditions, Basic Provisions to:
    a. Revise the definitions of ``Additional coverage'' and ``Approved 
yield'' in section 1 of the Basic Provisions;
    b. Amend section 1 of the Basic Provisions by deleting, 
``limited,'' from the definition of ``administrative fee'';
    c. Amend section 1 of the Basic Provisions by deleting the 
definition of ``Limited coverage'';
    d. Amend section 2(i) of the Basic Provisions by deleting, `` 
limited,'';
    e. Amend the introductory text of section 3(f) of the Basic 
Provisions by deleting, ``limited'';
    f. Amend section 3(f)(1) of the Basic Provisions by removing ``a 
limited coverage policy'' and adding in its place ``an additional 
coverage policy'';
    g. Amend section 3(f)(2) of the Basic Provisions by removing 
``limited or'' (three times) and revising ``policies'' to read 
``policy'';
    h. Revise section 7(e)(1) of the Basic Provisions;
    i. Remove sections 7(e)(2) and 7 (e)(6) of the Basic Provisions and 
redesignate paragraphs (e)(3) through (5) as (e)(2) through (4).
    j. Amend redesignated section 7(e)(4) of the Basic Provisions by 
removing the phrase ``for limited coverage'';
    k. Amend section 17(g) of the Basic Provisions by replacing ``a 
limited or'' with ``an''; and
    l. Amend section 35(a) of the Basic Provisions by replacing ``a 
limited or'' with ``an''.
    m. Add a new section 36 of the Basic Provisions.
    The revised and added paragraphs read as follows:


Sec. 457.8  The application and policy.

* * * * *
Terms and Conditions
Basic Provisions
    1. Definitions.
* * * * *
    Additional coverage. A level of coverage greater than catastrophic 
risk protection.
* * * * *
    Approved yield. The actual production history (APH) yield 
determined in accordance with 7 CFR part 400, subpart G, including any 
adjustments elected under section 36.
* * * * *
    7. Annual Premium and Administrative Fees
* * * * *
    (e) *-*-*
    (1) You, unless otherwise authorized in 7 CFR part 400, must pay an 
administrative fee each crop year of $30 per crop per county for all 
levels of coverage in excess of catastrophic risk protection.
* * * * *
    36. Substitution of Yields.
    You may elect to exclude actual yields used to calculate the APH 
yield that are less than 60 percent of the applicable transitional 
yield (T-yield), as defined in 7 CFR 400.52. Each excluded actual yield 
will be replaced with a yield equal to 60 percent of the applicable T-
yield for the county. The replacement yields will be used in the same 
manner as actual yields for the purpose of calculating the APH yield. 
Premium rates for approved yields that are adjusted under this section 
will be

[[Page 40486]]

based on the producer's yield prior to replacing the actual yields or 
such other basis as determined appropriate by FCIC.

    Signed in Washington, D.C., on June 27, 2000.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 00-16583 Filed 6-28-00; 10:03 am]
BILLING CODE 3410-08-P