[Federal Register Volume 67, Number 134 (Friday, July 12, 2002)]
[Rules and Regulations]
[Pages 46093-46096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16680]



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  Federal Register / Vol. 67, No. 134 / Friday, July 12, 2002 / Rules 
and Regulations  

[[Page 46093]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457


Common Crop Insurance Regulations; Sugarcane Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes crop 
provisions for the insurance of sugarcane. The intended effect of this 
action is to provide policy changes to better meet the needs of the 
insured. The changes will apply for the 2003 and subsequent crop years.

EFFECTIVE DATE: This rule is effective August 12, 2002.

FOR FURTHER INFORMATION CONTACT: Arden Routh, Risk Management 
Specialist, Product Development Division, Federal Crop Insurance 
Corporation, United States Department of Agriculture, 6501 Beacon 
Drive, Kansas City, MO 64133, 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 in this rule have been approved by 
OMB under control number 0563-0053 through April 30, 2004.

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 13132

    The policy contained in this rule does not have any substantial 
direct effect on states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on state and local 
governments. 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. Additionally, the regulation does 
not require any greater action on the part of small entities than is 
required on the part of large entities. The amount of work required of 
the insurance companies will not increase because the information 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. 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 requires 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

    On October 18, 2000, FCIC published a notice of proposed rulemaking 
in the Federal Register at 65 FR 62311-62313 to revise 7 CFR 457.116 
Sugarcane Crop Insurance Provisions, effective for the 2002 and 
succeeding crop years.
    Following publication of the proposed rule the public was afforded 
60 days to submit written comments and opinions. A total of 18 comments 
were received from two reinsured companies and a trade association. The 
comments received and FCIC's responses are as follows:
    Comment. A comment from a trade association stated that the 
language in section 5(b)(1) is not clear as to which year's production 
guarantee will be used to determine if the sugarcane is damaged to the 
extent that it is uninsurable. The commenter also asked who will make 
the determination that such sugarcane will not produce the production 
guarantee. The commenter recommended clarifying this section by stating 
that we will not insure a field of sugarcane that did not produce the 
production guarantee the previous year.
    Response. FCIC disagrees with the commenter's recommended change to 
section 5(b)(1). Adoption would render the sugarcane uninsurable any 
time an indemnity is paid the previous year even if the sugarcane has 
recovered. However, FCIC has clarified that

[[Page 46094]]

sugarcane damaged the previous crop year will not be insurable for the 
current crop year if the sugarcane is unable to produce the yield used 
to establish the production guarantee for the unit. This clarification 
is consistent with other crop policies. Company loss adjusters must 
inspect damaged sugarcane prior to the dates listed in section 7(a)(3) 
or (4), to determine if such sugarcane is insurable.
    Comment. A trade association and an approved insurance provider 
questioned what age limitations (number of years) will be applicable in 
section 5(b)(2)?
    Response. The age limitation by sugarcane variety, if applicable, 
will be listed in the Sugarcane Special Provisions. A general example 
of such a statement would be ``Sugarcane variety LCP 85-384 will not be 
insurable the sixth year after the initial planting of the sugarcane.''
    Comment. An approved insurance provider objected to adding an age 
limitation on insurable sugarcane in section 5(b)(2). The commenter 
said the age is not the key variable in the yield but rather care and 
cultural practices determine yields.
    Response. Research shows that sugarcane production decreases with 
the age of a sugarcane stand and at some point the sugarcane will be 
unable to produce the yield used to establish the production guarantee. 
It would violate the principals of insurance to insure a crop that has 
no expectations of producing the production guarantee. Therefore, no 
change has been made.
    Comment. A trade association recommended that approved insurance 
providers be given the ability to review the age limitations that will 
be contained in the Special Provisions prior to issuance of the Special 
Provisions. This would allow them the opportunity to suggest any 
changes to these provisions.
    Response. The Risk Management Agency Regional Offices will work 
with all appropriate parties to obtain the information to determine the 
appropriate age limitations. Any comments will be considered during the 
process.
    Comment. A trade association and an approved insurance provider 
recommended that FCIC list in the Sugarcane Loss Adjustment Standards 
Handbook the new and old varieties of sugarcane currently being grown. 
The commenters also stated that current producers are obtaining good 
yields on some varieties of sugarcane for up to six years and nearly 
all varieties for up to four years.
    Response. The list of insurable sugarcane must also be available to 
producers. Therefore, the Sugarcane Special Provisions, which are 
issued annually, will contain a list of insurable sugarcane varieties 
and their age limitations. FCIC will examine the yields of the 
varieties of sugarcane when setting the age limitations.
    Comment. A trade association and an approved insurance provider 
commented about the language in section 5(b)(2) as some producers may 
have sugarcane that exceeds the age limitation for insurance but the 
producers prefer to continue to keep such sugarcane under production. 
In addition, the commenters asked if a producer must request coverage 
by written agreement to continue to insure such sugarcane.
    Response. Coverage for sugarcane that has exceeded the age 
limitation may be provided if the producer requests that such sugarcane 
be insured and the insurance provider agrees in writing to insure such 
acreage. Agreements in writing must not be provided unless the producer 
can show that the crop has the expectation of producing at least the 
yield used to establish the production guarantee.
    Comment. A trade association stated that although limiting the age 
at which sugarcane can be insured may eliminate the need for performing 
stand appraisals, there will still be the need for some type of 
appraisal if the producer requests insurance of such sugarcane by 
written agreement.
    Response. FCIC agrees there is a need for an appraisal method to 
determine the insurability of sugarcane that has exceeded the age 
limitation. The appraisal method will be described in the Sugarcane 
Loss Adjustment Standards Handbook, which is posted on FCIC's website 
at: www.rma.usda.gov.
    Comment. A trade association asked if the dates in sections 7(a)(3) 
and (4) are needed if insurance coverage is not allowed on sugarcane 
that was damaged the previous year. Also, if a written agreement is 
allowed, language should be provided to state that a field inspection 
is or is not required.
    Response. Sugarcane damaged the previous year may be insurable if 
it is able to produce the yield used to establish the production 
guarantee for the current crop year. The dates specified in sections 
7(a)(3) and (4) are the dates when insurance will attach to such 
sugarcane. Language has been added to section 5(b)(2) to specify that 
an appraisal is needed to determine whether the sugarcane is able to 
produce the yield used to establish the production guarantee for the 
current crop year.
    Comment. A trade association asked if the proposed language in 
section 7(b)(2) means that a subsequent year's coverage for a sugarcane 
crop in all other states except Louisiana could begin prior to the end 
of the previous year's insurance period of April 30.
    Response. FCIC has revised section 7(b)(2) to specify the later of 
April 15, or 30 days following harvest of the previous crop for stubble 
cane. This will allow time for an appraisal before insurance attaches.
    Comment. A trade association recommended clarifying the language in 
section 9(a)(2) to state that sugarcane cut for seed without an 
appraisal will be considered as destroyed without consent and not less 
than the production guarantee will be considered as production to 
count. The commenter also requested clarification as to what production 
will be used to update the actual production history database for the 
following year for such acreage.
    Response. FCIC agrees that not more than the production guarantee 
should be assigned as production to count and has revised the provision 
accordingly. This is consistent with section 10(c)(1)(i)(B). For actual 
production history purposes, the number of acres of sugarcane destroyed 
without consent will be counted in the total acreage for the unit, but 
the production to count for such acreage will be zero.
    Comment. Two comments were received, one from a trade association 
and one from an approved insurance provider regarding section 9(a)(2) 
that a producer knows which acreage is going to be planted or 
replanted, but may not know which acreage will be cut for seed.
    Response. Producers should certainly know before they harvest the 
crop, which acres are going to be harvested for seed. The 15 day 
requirement is needed to allow the approved insurance provider time to 
appraise the acreage. Therefore, no change has been made.
    Comment. A trade association commented on the addition of language 
in section 9(a)(2) that requires an appraisal of sugarcane that will be 
cut for seed, even though there may not be a loss on the sugarcane. 
This will result in additional expense to the companies.
    Response. The current Sugarcane Crop Provisions in section 9(a)(2) 
requires the producer to give at least 15 days notice prior to cutting 
sugarcane for seed and after such notice the sugarcane will be 
appraised for its sugar potential. Section 9(a)(3), requires a producer 
to request an appraisal if any time during the crop year sugarcane 
acreage cut for seed will not produce at least the production 
guarantee. If an

[[Page 46095]]

appraisal is not requested the production to count for such acreage 
will be the production guarantee. No additional expenses will be 
incurred by approved insurance providers, because this is currently a 
requirement in the policy. Therefore, no change has been made.
    Comment. A trade association recommended for consistency that the 
same production guarantee be used in the settlement of claim examples 
in section 10.
    Response. FCIC agrees with the comment and has clarified the 
settlement of claim examples by using the term production guarantee, 
where applicable, and the same number of pounds for the production 
guarantee.
    In addition to the changes described above, FCIC has made the 
following changes:
    1. Added language in section 7(a)(1) to clarify when insurance 
attaches for plant cane.
    2. Clarified that the language in section 9(a)(3) refers to 
sugarcane cut for seed.
    3. Replaced the term ``approved yield'' with ``production 
guarantee'' in section 9(a)(2) to be consistent with section 
10(c)(1)(i)(B) of the current Sugarcane Crop Provisions and also in 
section 9(a)(3) to be consistent with section 10(c)(1)(iv) of this 
final rule.

List of Subjects in 7 CFR Part 457

    Crop insurance, Sugarcane, reporting and recordkeeping 
requirements.

Final Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends the Common Crop Insurance Regulations (7 
CFR part 457) for the 2003 and succeeding crop years 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(1), 1506(p).


    2. Amend 457.116 as follows:
    a. Revise the first sentence of the introductory text;
    b. In the crop insurance provisions:
    i. In Section 1, revise the definition of ``sugarcane'';
    ii. Revise sections 3, 5, 6, and 7;
    iii. Revise section 9(a) introductory text and 9(a)(2), and add 
section 9(a)(3);
    iv. Add 2 examples following section 10(b)(4);
    v. Remove section 10(c)(1)(iv);
    vi. Redesignate sections 10(c)(1)(v) and (c)(1)(vi) as sections 
10(c)(1)(iv) and (c)(1)(v), respectively; and
    vii. Revise newly designated sections 10(c)(1)(iv) and (c)(1)(v) 
introductory text.
    The revisions and additions read as follows:


Sec. 457.116  Sugarcane crop insurance provisions.

    The Sugarcane Crop Insurance Provisions for the 2003 and succeeding 
crop years are as follows:
* * * * *

    1. Definitions.
* * * * *
    Sugarcane. The grass, Saccharum officinarum, that is grown to 
produce sugar.
* * * * *
    3. Contract Changes.
    In accordance with section 4 of the Basic Provisions 
(Sec. 457.8), the contract change date is June 30 preceding the 
cancellation date.
* * * * *
    5. Insured Crop.
    (a) In accordance with section 8 of the Basic Provisions 
(Sec. 457.8), the crop insured will be all the sugarcane in the 
county for which a premium rate is provided by the actuarial 
documents:
    (1) In which you have a share;
    (2) That is grown for processing for sugar or for seed; and
    (3) That is not interplanted with another crop, unless allowed 
by a written agreement.
    (b) In addition to the crop listed as not insured in section 
8(b) of the Basic Provisions (Sec. 457.8), we will not insure any 
sugarcane:
    (1) That was damaged the previous crop year to the extent the 
sugarcane is unable to produce the yield used to establish the 
production guarantee for the unit for the current crop year; or
    (2) That exceeds the age limitations (by variety, if applicable) 
contained in the Special Provisions , unless we agree in writing to 
insure such acreage. An agreement in writing will not be provided 
unless, after an appraisal, we determine that the crop is able to 
produce at least the yield used to establish the production 
guarantee for the unit for the current crop year.
    6. Insurable Acreage.
    Section 9(a)(3) of the Basic Provisions (Sec. 457.8), is not 
applicable to the Sugarcane Crop Insurance Provisions.
    7. Insurance Period.
    (a) In addition to the provisions of section 11 of the Basic 
Provisions (Sec. 457.8), insurance attaches:
    (1) On the later of the day we accept your application or at the 
time of planting for plant cane;
    (2) On the first day following harvest of the previous crop for 
stubble cane except as contained in sections 7(a)(3) and (4);
    (3) On the later of April 15 or 30 days following harvest of the 
previous crop for stubble cane damaged during the previous crop year 
in all states (except Louisiana); and
    (4) On the later of April 30 or 30 days following harvest of the 
previous crop for stubble cane damaged during the previous crop year 
in Louisiana.
    (b) In accordance with the provisions of section 11 of the Basic 
Provisions (Sec. 457.8), the calendar date for the end of the 
insurance period is:
    (1) January 31 in Louisiana; and
    (2) April 30 in all other states.
* * * * *
    9. Duties in the Event of Damage or Loss or Cutting the 
Sugarcane for Seed.
    (a) In addition to your duties under section 14 of the Basic 
Provisions (Sec. 457.8), in the event of damage or loss:
    (1) * * *
    (2) You must give us notice at least 15 days before you begin 
cutting any sugarcane for seed. Your notice must include the unit 
number and the number of acres you intend to harvest as seed. 
Failure to give us timely notice will cause the acreage cut for seed 
to be considered as put to another use without consent. The 
production to count for such acreage will not be less than the 
production guarantee.
    (3) You must request an appraisal if any time during the crop 
year sugarcane acreage cut for seed will not produce at least the 
production guarantee so we can determine the production to count. If 
you do not request an appraisal, the production to count for such 
acreage will be the production guarantee.
* * * * *
    10. Settlement of Claim.
* * * * *
    (b) * * *
    (4) * * *
    Example 1: Assume you have a 100 percent share in a unit of 100 
acres of sugarcane, an approved yield of 6,000 pounds of raw sugar 
per acre, a coverage election of 65 percent, and a price election of 
$0.12 a pound. The production guarantee would be 3,900 pounds of raw 
sugar per acre (6,000  x  65%). Further assume that you are only 
able to harvest 200,000 pounds of raw sugar because the unit was 
damaged by an insurable cause of loss. Your indemnity would be 
calculated as follows:
    (1) 100 acres  x  3,900 pound production guarantee = 390,000 
pound production guarantee;
    (2) 390,000 pound production guarantee-200,000 pounds harvested 
production = 190,000 pound production loss;
    (3) 190,000 pound production loss  x  $0.12 price election = 
$22,800 loss; and
    (4) $22,800 loss  x  100 percent share = $22,800 indemnity 
payment.
    Example 2: Assume the same set of facts. Also, assume that you 
cut 20 acres of this unit for seed without giving notice that you 
were cutting this acreage for seed and that you are only able to 
harvest 200,000 pounds from the remaining 80 acres. Your indemnity 
would be calculated as follows:
    (1) 100 acres  x  3,900 pound production guarantee = 390,000 
pound production guarantee;
    (2) 390,000 pound production guarantee-278,000 (200,000 pounds 
harvested production + 78,000 pounds production for putting acreage 
to another use without consent, (20 acres  x  3,900 pound production 
guarantee per acre)) = 112,000 pound production loss;

[[Page 46096]]

    (3) 112,000 pound production loss  x  $0.12 price election = 
$13,440 loss; and
    (4) $13,440 loss  x  100 percent share = $13,440 indemnity 
payment.
    (c) * * *
    (1) * * *
    (iv) Potential production on insured acreage harvested for seed 
(see section 9(a)(3));
    (v) Potential production on insured acreage you want to put to 
another use or you wish to abandon and no longer care for, if you 
and we agree on the appraised amount of production. Upon such 
agreement, the insurance period for that acreage will end if you put 
the acreage to another use or abandon the crop. If agreement on the 
appraised amount of production is not reached:
* * * * *

    Signed in Washington, DC, on June 26, 2002.
Ross J. Davidson, Jr.,
Administrator, Federal Crop Insurance Corporation.
[FR Doc. 02-16680 Filed 7-11-02; 8:45 am]
BILLING CODE 3410-08-P