[Federal Register Volume 67, Number 181 (Wednesday, September 18, 2002)]
[Proposed Rules]
[Pages 58912-58933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-23667]



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Part IV





Department of Agriculture





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Federal Crop Insurance Corporation



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7 CFR Parts 400, 407 and 457



General Administrative Regulations, Subpart T--Federal Crop Insurance 
Reform, Insurance Implementation, Regulations for the 1999 and 
Subsequent Reinsurance Years; Group Risk Plan of Insurance Regulations 
for the 2001 and Succeeding Crop Years; and the Common Crop Insurance 
Regulations, Basic Provisions; Proposed Rule

  Federal Register / Vol. 67, No. 181 / Wednesday, September 18, 2002 / 
Proposed Rules  

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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 400, 407 and 457

RIN 0563-AB85


General Administrative Regulations, Subpart T--Federal Crop 
Insurance Reform, Insurance Implementation, Regulations for the 1999 
and Subsequent Reinsurance Years; Group Risk Plan of Insurance 
Regulations for the 2001 and Succeeding Crop Years; and the Common Crop 
Insurance Regulations, Basic Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to 
amend subpart T in the General Administrative Regulations (7 CFR part 
400, subpart T); the Group Risk Plan of Insurance Regulations (7 CFR 
part 407); and the Common Crop Insurance Regulations, Basic Provisions 
(7 CFR part 457). The intended effect of this action is to make 
revisions mandated by the Federal Crop Insurance Act (Act), as amended 
by the Agricultural Risk Protection Act of 2000 (ARPA), and to make 
other changes and clarify existing policy provisions to better meet the 
needs of the insured.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business October 18, 2002 and will be 
considered when the rule is to be made final. Comments on the 
information collection requirements must be received on or before 
November 18, 2002.

ADDRESSES: Interested persons are invited to submit written comments to 
the Director, Product Development Division, Risk Management Agency, 
United States Department of Agriculture, 6501 Beacon Drive, Stop 0812, 
Room 421, Kansas City, MO 64133-4676. Comments titled ``Basic 
Provisions'' may also 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 or a copy of 
the Cost-Benefit Analysis, contact Janice Nuckolls, Insurance 
Management Specialist, Research and Development, Product Development 
Division, Risk Management Agency, 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, it has been reviewed by the 
Office of Management and Budget (OMB).

Cost-Benefit Analysis

    A Cost-Benefit Analysis has been completed and is available to 
interested persons at the Kansas City address listed above. In summary, 
the analysis finds that changes in the rule will have positive 
potential benefits for insureds who do not engage in program abuse. The 
liberalized prevented planting provisions will be beneficial to two 
groups of producers. One group is made up of those who, under current 
provisions, would forgo the full prevented planting payment on a first 
crop in order to plant a second crop. Under the proposed rule, such 
producers will receive a reduced prevented planting payment to at least 
partially compensate for pre-planting costs incurred on the first crop. 
The second group will be made up of producers who change planting 
decisions and plant a second crop that would not have been planted 
under current provisions. In taking this action, these individuals will 
reveal that they perceive a positive economic benefit relative to the 
options offered them by current provisions. Effects of the prevented 
planting provisions on total program-wide prevented planting payments 
and the cost of insurance are indefinite. Whether those payments and 
costs increase or decrease and the magnitude of any such change will 
depend on the proportion of reduced prevented planting payments made 
under the proposed rule that are taken by producers who would have 
taken a full versus zero payment under current provisions. Double 
insurance provisions of the proposed rule reduce the incentive for 
program abuse that is perceived to have occurred under current 
provisions. New sanctions for failure to report required information or 
for misreporting material information should also reduce program abuse. 
Over time, if program abuse is decreased, premium reductions may 
result. Such reductions would be beneficial to producers who do not 
abuse the program. However, because the amount of abuse that currently 
occurs cannot be measured with existing data, immediate rate 
adjustments are not appropriate. Rather, such adjustments should be 
made when adequate loss experience is available to support actuarial 
calculations that satisfy appropriate credibility standards.

Paperwork Reduction Act of 1995

    In accordance with section 3507(j) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501), the information collection and record keeping 
requirements included in the proposed rule have been submitted for 
approval to the Office of Management and Budget (OMB). Please send your 
written comments to the Office of Information and Regulatory Affairs, 
OMB, Attention: Desk Officer for RMA, Washington, DC 20503. A comment 
to OMB is best assured of having its full effect if OMB receives it 
within 30 days of publication of this proposed rule.
    We are soliciting comments from the public concerning our proposed 
information collection and record keeping requirements. We need this 
outside input to help us:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information has practical utility;
    (2) Evaluate the accuracy of our estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond (such as through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g. permitting electronic 
submission responses.)
    The collections of information for this rule revise the Multiple 
Peril Crop Insurance Collections of Information 0563-0053, which expire 
February 28, 2005.
    Title: Multiple Peril Crop Insurance (Common Crop Insurance 
Regulations, Basic Provisions and GRP).
    Abstract: This rule amends the existing General Administrative 
Regulations, 7 CFR part 400, subpart T--Federal Crop Insurance Reform, 
Insurance Implementation; Group Risk Plan of Insurance Regulations, 7 
CFR part 407, and the Common Crop Insurance Regulations, 7 CFR part 
457.
    Subpart T is revised to remove reference to the term ``limited 
coverage'' and to revise the definition of ``approved yield'' in 
conformance with the amendments to the Act.

[[Page 58913]]

    The Group Risk Plan of Insurance Regulations are revised to: (1) 
Clarify which policy is in effect when a producer inadvertently has 
more than one policy in effect; (2) clarify that procedures and 
handbooks established by FCIC will be used to administer the policy and 
if there is a conflict between these documents and the terms of the 
policy, Act or regulations, the terms of the policy, Act or regulations 
will control; (3) add and revise definitions and provisions for 
clarification and as needed to implement the amendments to the Act; (4) 
add new sanctions for misreporting acreage information; (5) add 
provisions to require insurance be under one policy when the same 
people are involved in multiple farming operations or are in the same 
family or household; (6) consolidate the provisions in the policy 
regarding the effect of failure to timely pay premium or administrative 
fees, allow voidance to the beginning of the crop year when a person 
fails to make payments under the terms of a payment agreement, and 
specify that premium must be paid by the termination date even if a 
claim is outstanding, and that failure to do so will result in 
termination and ineligibility in accordance with the terms of the 
policy; (7) allow a written agreement to remain in place for up to four 
years unless conditions under which it was issued change; (8) clarify 
that any USDA employee has access to the farm or records for the 
purpose of compliance efforts; (9) add provisions allowing review of 
loss determinations when there is an issue of whether or not ``good 
farming practices'' were followed; (10) delete provisions that allowed 
arbitration to resolve disputes between insurance providers and 
producers; (11) clarify provisions regarding collection of information 
on the application and require social security numbers for all persons 
having a substantial beneficial interest in the insured crop; (12) 
clarify that contract changes are effective when filed with the Office 
of the Federal Register and that they will be published on the RMA 
website; and (13) implement revisions to the Act regarding indemnities 
and premiums for multiple crops planted on the same acreage in a crop 
year.
    The Common Crop Insurance Regulations are revised to: (1) Clarify 
which policy is in effect when a producer inadvertently has more than 
one policy in effect; (2) remove ``good faith and reliance on 
misrepresentation'' provisions. (3) Clarify that procedures and 
handbooks established by FCIC will be used to administer the policy and 
if there is a conflict between these documents and the terms of the 
policy, Act or regulations, the terms of the policy, Act or regulations 
will control; (4) add definitions and provisions needed to insure 
acreage grown under an organic farming practice; (5) add definitions 
and provisions needed to implement provisions contained in the Federal 
Crop Insurance Act regarding multiple crops on the same acreage in the 
same crop year; (6) clarify provisions regarding collection of 
information on the application and require social security numbers for 
all persons having a substantial beneficial interest in the insured 
crop; (7) specify that premium must be paid by the termination date 
even if a claim is outstanding, and that failure to do so will result 
in termination and ineligibility in accordance with the terms of the 
policy; (8) allow retroactive policy voidance when a person fails to 
make payments under the terms of a payment agreement; (9) add a 
requirement to provide supporting records of past production history 
when a claim is filed, and add sanctions when actual production history 
(APH) information has been misreported and results in a yield more than 
five percent different than the correct yield; (10) allow revision when 
reported yields are inconsistent with APH yields for other units or 
that are based in whole or in part on an amount of acreage less than 25 
percent of the current acreage in the unit; (11) delete provisions 
allowing liberalization of policy provisions; (12) prohibit revision of 
prevented planting acreage reports after submission unless approved by 
the insurance provider; (13) add sanctions for misreporting information 
on the acreage report; (14) specify premium must be paid by the 
termination date even if a claim is outstanding, and that failure to do 
so will result in termination and ineligibility in accordance with the 
terms of the policy; (15) specify that acreage that has not been 
planted and harvested in one of the last three crop years will not be 
insured unless it was not planted in at least two of the previous three 
crop years to comply with a USDA program; (16) remove provision that 
allows insurance on acreage that has been prevented from being planted 
in the last 3 crop years; (17) add provisions to require insurance be 
under one policy when the same people are involved in multiple farming 
operations or are in the same family or household; (18) prohibit 
insurance for damage resulting from water contained or released on any 
acreage on which there is a water easement; (19) add provisions to 
allow coverage for losses resulting from failure of irrigation 
facilities if failure is due to an insured cause; (20) require earlier 
notice of prevented planting; (21) restrict the amount of a prevented 
planting payment when acreage is hayed, grazed or otherwise harvested 
for animal feed prior to the calendar date for the end of the insurance 
period; (22) prohibit prevented planting coverage for any acreage on 
which any pasture or other forage crop is in place on the final 
planting date; (23) add provisions to allow a producer who has not 
grown a crop in a certain county and who obtains acreage in that county 
after the sales closing date to submit an intended acreage report 
within 10 days after acreage is obtained; (24) add provisions that will 
not allow a prevented planting benefit when a producer does not have 
remaining eligible acreage for the insured crop or remaining eligible 
non-irrigated acreage of another crop; (25) allow a written agreement 
to remain in place for more than one year unless conditions under which 
it was issued change, and require that the producer have at least four 
years of supporting records when requesting insurance for a crop, type, 
variety or practice not insurable in a county;
    (26) add provisions allowing review of loss determinations when 
there is an issue of whether or not ``good farming practices'' were 
followed; (27) delete provisions that allowed arbitration to resolve 
disputes between insurance providers and producers; (28) specify that, 
if the producer received compensation from another party for a loss, 
the amount received from them, not to exceed the amount of indemnity, 
must be repaid to the insurance provider; (29) allow separate irrigated 
and non-irrigated units when borders can be discerned by changes in 
plant populations; (30) allow unit division for acreage grown under an 
organic farming practice; and (31) require producers to elect 
substitution of low APH yields on or before the sales closing date.
    Purpose: The purpose of this proposed rule is to add provisions 
mandated by the Agricultural Risk Protection Act of 2000, and make 
other changes and clarify existing policy provisions to better meet the 
needs of the insured and the insurance company.
    Burden statement: The information that FCIC collects will be used 
in offering crop insurance coverage, determining program eligibility, 
establishing a production guarantee, calculating losses qualifying for 
a payment, combating fraud, waste, and abuse, etc. The burden hours 
have increased because FCIC assumes more producers will obtain crop 
insurance

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coverage to help protect their investments against risk and producers 
will be required to provide more documentation and records and notify 
the insurance provider more often.
    Estimate of Burden: We estimate that it will take producers, a loss 
adjuster, and an insurance agent an average of 1 hour to provide the 
required information.
    Respondents: Producers and insurance providers including their 
agents.
    Estimated annual number of respondents: 1,310,527.
    Estimated annual number of responses per respondent: 2.9.
    Estimated annual number of responses: 3,818,865.
    Estimated total annual burden on respondents: The total public 
burden for this proposed rule is estimated at 1,406,285 hours.
    Record keeping requirements: FCIC requires production records to be 
kept for all years of the producer's actual production history. 
However, these records are retained as part of the normal business 
practice and FCIC's requirement does not place additional burden on 
insured producers. Therefore, FCIC is not estimating burden related to 
this record keeping requirement.

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 UMRA.

Executive Order 13132

    It has been determined under section 1(a) of Executive Order 13132, 
Federalism, that this rule does not have sufficient implications to 
warrant consultation with the States. The provisions contained in this 
rule will not have a substantial direct effect on States, or on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.

Regulatory Flexibility Act

    This regulation will not have a significant 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. 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. 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. With respect to any action taken by FCIC under 
the terms of the crop insurance policy, the administrative appeal 
provisions published at 7 CFR part 11 must be exhausted before any 
action against FCIC for judicial review 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.

Background

    FCIC proposes to amend the General Administrative Regulations, 
subpart T-Federal Crop Insurance Reform, Insurance Implementation, the 
Group Risk Plan of Insurance Regulations, and the Common Crop Insurance 
Regulations; Basic Provisions to implement program changes mandated by 
the Act, as amended by ARPA, and make other changes and clarify 
existing policy provisions to better meet the needs of the insured. 
Five significant changes are addressed by this rule: (1) Provisions are 
added to implement sections of ARPA that place limits on multiple 
insurance benefits in a single crop year. The provisions provide for 
insurance payment reductions when two crops are planted on the same 
acreage in the same crop year and both sustain insurable losses; (2) 
Prevented planting provisions are modified in accordance with the 
provisions of ARPA to allow a second crop to be planted when the first 
crop is prevented from being planted. In this case, the prevented 
planting payment will be reduced by 65.0 percent; (3) Several 
provisions regarding program integrity are addressed. These include new 
tolerances for misreporting of information (e.g., a 5.0 percent error 
tolerance for acreage and yield reporting). In addition, a new sanction 
is added when any person with a substantial beneficial interest in an 
insured crop does not provide a social security or employer 
identification number. This new sanction will eliminate program 
vulnerability caused by persons changing entity names to avoid 
ineligibility or changing previously used production history; (4) 
Provisions allowing arbitration to be used to settle contract disputes 
are removed. Arbitration has been determined by some to be too 
expensive. In addition, arbitration was intended to resolve any dispute 
involving acreage determinations, approved yield calculations, 
determinations of production to count, or other factual determinations. 
However, in practice, it has been used to resolve all policy disputes, 
including policy interpretation; and (5) Provisions allowing insurance 
for organically grown crops are added. The provisions of ARPA direct 
RMA to include organic farming practices as ``good farming practices,'' 
thereby making such crops insurable. The proposed changes are as 
follows:
    1. FCIC proposes to amend subpart T to remove all references to 
limited coverage and revise the definition of additional coverage 
because there is no longer any practical distinction between limited 
and additional coverage. The definition of ``approved yield'' is 
revised to allow for adjustments in yields authorized by section 
508(g)(4) of the Act.
    2. FCIC proposes to amend the Group Risk Plan of Insurance 
Regulations (7 CFR part 407) as follows:
    (a) Section 407.2(d) and (e)--Combine and specify that when a 
person applies for both a Catastrophic Risk Protection policy and an 
additional coverage policy for the same crop in the same county for the 
same crop year, and the person can demonstrate that multiple contracts 
of insurance were not the person's fault, the additional coverage 
policy will be in effect and the Catastrophic Risk Protection policy 
will

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be canceled if: both policies are insured with the same insurance 
provider; or the policies are insured with different insurance 
providers and both insurance providers agree. Also specify that if both 
policies are additional coverage policies or both are Catastrophic Risk 
Protection policies, the policy with the earliest date of application 
will be in force, unless both policies are with the same insurance 
provider and the insurance provider agrees otherwise or both policies 
are with different insurance providers and both insurance providers 
agree otherwise;
    (b) Section 407.6--Remove the ``good faith reliance on 
misrepresentation'' provisions because of the confusion surrounding the 
applicability of these provisions and to avoid the perception that FCIC 
was waiving the protection against the applicability of estoppel 
afforded it and permitting employees to bind FCIC with their errors;
    (c) Section 407.9--Amend the first paragraph in the headings of 
both the ``FCIC policies'' and ``Reinsured policies'' sections to add a 
provision indicating procedures (including handbooks, manuals, and 
directives) issued by FCIC will be applied when administering the 
policy. This change allows introduction of procedures into arbitration 
and appeal proceedings. Also remove the provisions in the first 
paragraph in the ``FCIC policies'' section that indicates if the 
company cannot pay a loss it will be paid by FCIC and that no state 
guarantee fund will be liable to pay the loss, and place those 
provisions in the second paragraph in the ``Reinsured policies'' 
section. These provisions only apply to reinsured policies. In the 
third paragraph under the heading of ``Both policies'', change the 55 
percent reference for Catastrophic Risk Protection coverage to 45 
percent. Also revise the following sections in Sec.  407.9:
    Section 1--Definitions--Add definitions of ``agricultural 
commodity'' and ``cover crop,'' for clarification as these terms are 
used in the provisions. Also add definitions of ``double-crop,'' 
``first crop'' and ``second crop'' because they are used in the 
provisions that limit multiple insurance payments on the same acreage 
in the same crop year. Also add the definition of ``sustainable farming 
practice'' and revise the definition of ``good farming practices'' to 
include sustainable and organic farming practices to incorporate the 
changes made to the Act by ARPA and specify that if producers use 
farming practices that are not commonly used in the area, they should 
contact their crop insurance provider to determine if such practice is 
insurable. Revise the definition of ``catastrophic risk protection'' to 
specify that coverage is equal to 65 percent of the expected county 
yield indemnified at 55 percent of the maximum protection per acre 
specified in the actuarial documents to comply with the requirements of 
the Federal Crop Insurance Act. Also revise the definition of 
``actuarial documents'' to clarify that the information needed to 
determine the premium rate is contained in the actuarial documents and 
to add the RMA website address as a location of where the actuarial 
documents can be found. Add a definition of ``substantial beneficial 
interest'' to clarify the amount of interest needed and the status of 
spouses;
    Section 3--Add provisions indicating an insured can elect not to 
insure acreage of a second crop when there is an insurable loss for 
planted acreage of a first crop, and to limit insurance on the third or 
subsequent crop on the same acreage for the same crop year. Delete 
provisions in section 3(d) because they have been combined with 
provisions contained in section 3(c);
    Section 7--Clarify that it is the producer's responsibility to 
accurately report all information and add new sanctions for 
misreporting acreage report information. Since the operation of the 
program is dependant on accurate reporting by producers, stronger 
sanctions are imposed to ensure that producers completely and 
accurately report material information. Revise the provisions to 
require insurance under one policy when the same people are involved in 
multiple farming operations or are in the same family or household. 
This will improve program integrity by preventing producers from 
forming multiple entities with the intent to insure acreage under 
separate policies to gain a disproportionate advantage;
    Section 8--Add provisions that specify that, if the amount of 
premium and administrative fee the producer is required to pay for any 
acreage exceeds the liability for the acreage, coverage for those acres 
will not be provided;
    Section 9--Revise provisions to allow certain written agreements to 
remain in place for more than one crop year. Add provisions indicating 
that supporting records for at least four years must be provided when a 
request is made to insure a crop, type, variety or practice that is not 
insurable in the county to ensure that the crop, type, variety, or 
practice can be used successfully before providing insurance;
    Section 10--Add provisions to allow any USDA employee to have 
access to the insured crop and any records pertaining to the insurance 
because of the changes in the Act that enhances the compliance efforts 
by involving other USDA agencies. Provisions are added indicating that 
failure to retain required records will result in no indemnity being 
due and premium still being owed because the need for records are an 
integral part of the policy because eligibility and premium and 
indemnities are based on such records. Without these records, program 
integrity cannot be maintained;
    Section 13--Add provisions indicating which policy remains in force 
when a producer inadvertently obtains two policies on the same crop in 
the same county for the same crop year;
    Section 14--Clarify that a producer may not recover attorneys fees 
or other charges, or any punitive, compensatory or any other damages 
except contractual damages, except as authorized in 7 CFR 
400.352(b)(4);
    Section 15--Revise provisions in both the FCIC policies and 
Reinsured policies by removing provisions regarding payment of 
compensatory, punitive or other damages, attorneys fees, or other 
charges because this language is clarified in section 14(c);
    Section 16--Add provisions allowing review of loss determinations 
regarding ``good farming practices'' to comply with section 508(a)(3) 
of the Act. Delete the provisions regarding arbitration. Arbitration 
was intended to be an inexpensive alternative to the administrative 
appeals process that was available to producers that were directly 
insured by FCIC. FCIC has received numerous complaints from producers 
and the insurance companies regarding the arbitration process. One 
complaint is that arbitration is no longer inexpensive. Filing fees of 
up to $7,500 have been required to seek arbitration. Another problem 
that has been identified is what constitutes a ``factual 
determination.'' While a factual determination was intended to resolve 
matters involving acreage determinations, approved yield calculations, 
determinations of production to count, etc., it has been used to handle 
all disputes under the policy, including policy interpretation. 
Further, there have been numerous instances where state law has been 
applied even though state law is preempted by the Act, the policy, and 
the regulations. Other complaints have to do with the fact that many 
producers fail to file for arbitration before filing a judicial appeal, 
inconsistent decisions that have been rendered, and the potential for 
producers and insurance companies to abuse the system. Further, FCIC 
discovered that arbitration has been binding on the parties. Binding

[[Page 58916]]

arbitration is inconsistent with section 508(j) of the Act, which gives 
producers the right to file judicial appeals within one year of the 
denial of the claim. Given that arbitration no longer serves the 
purpose for which it is intended, FCIC has elected to remove the 
process from the policy and permit producers to resolve disputes 
through the judicial process;
    Section 18--Revise the effect of failing to provide the social 
security numbers of persons with substantial beneficial interests or if 
persons with substantial beneficial interests are ineligible to 
eliminate the program vulnerability caused by changing the identity of 
insureds. Also require that all entities with at least a 10 percent 
interest in the insured or applicant provide the social security 
numbers of all persons with an interest in the entity. Consolidate 
provisions regarding the effect of failure to timely pay premium or 
administrative fees, allow voidance effective at the beginning of the 
crop year when a person fails to make payments under the terms of a 
payment agreement, and specify that premium must be paid by the 
termination date even if a claim is outstanding, and that failure to do 
so will result in termination and ineligibility in accordance with the 
terms of the policy;
    Section 19--Clarify that policy changes will be posted on the RMA 
website or filed with the Office of the Federal Register by the 
contract change date and that such changes are available from the 
producer's local crop insurance provider; and
    Section 21--Add a new section that specifies the amount of an 
insurance payment reduction when multiple crops are planted on the same 
acreage in the same crop year. This section also specifies the amount 
of premium reduction when an insurance payment is reduced. These 
changes are made to comply with the provisions of the Act that limit 
multiple crop insurance payments.
    3. FCIC proposes to amend the Common Crop Insurance Regulations (7 
CFR part 457) as follows:
    (a) Section 457.2(d)--Revise to specify that when a person applies 
for both a Catastrophic Risk Protection policy and an additional 
coverage policy for the same crop in the same county for the same crop 
year, and the person can demonstrate that multiple contracts of 
insurance were without the fault of the person, the additional coverage 
policy will be in effect and the Catastrophic Risk Protection policy 
will be canceled if: both policies are insured with the same insurance 
provider; or the policies are insured with different insurance 
providers and both insurance providers agree. Also specify that if both 
policies are additional coverage policies or both are Catastrophic Risk 
Protection policies, the policy with the earliest date of application 
will be in force, unless both policies are with the same insurance 
provider and the insurance provider agrees otherwise or both are with 
different insurance providers and both insurance providers agree 
otherwise;
    (b) Section 457.6--Delete the ``good faith and reliance on 
misrepresentation'' provisions contained in that section because of the 
confusion surrounding the applicability of those provisions and to 
avoid the perception that FCIC was waiving the protection against the 
applicability of estoppel against it and permitting employees to bind 
FCIC with their errors;
    (c) Section 457.8--Change the preamble to make it clear that FCIC 
issued procedures (including handbooks, manuals, and directives) will 
be used in the administration of the policy unless they are in conflict 
with the provisions of the policy, the Act, or the regulations. Also 
revise the following sections in Sec.  457.8:
    Section 1 (Additions)--Add definitions of ``annual crop'' and 
``perennial crop'' to distinguish the difference between them. Add 
definition of ``average yield'' to distinguish the difference between 
it and the approved yield. Add definition of ``border'' since that term 
has been added in the section 34 to recognize different planting 
patterns or plant densities as borders for unit division. Add 
definitions of ``buffer zone,'' ``certified organic acreage,'' 
``certifying agent,'' ``organic farming practice,'' ``organic plan,'' 
``organic standards,'' ``prohibited substance,'' ``sustainable farming 
practice'' and ``transitional acreage'' because they are used in the 
provisions to comply with the Act that considers scientifically sound 
sustainable and organic farming practices to be recognized good farming 
practices. Add the definitions of ``double-crop,'' ``first crop'' and 
``second crop'' because they are used in provisions which limit 
multiple insurance payments in compliance with the requirements of the 
Act. Add the definitions of ``cover crop,'' ``disinterested third 
party,'' and ``liability'' for clarification since they are used in 
other provisions. Add the definition of ``Secretary'' because it is 
used in the definition of certifying agent.
    Section 1 (Deletions)--Delete the definitions of ``loss, notice 
of'' and ``damage, notice of'' because these terms are not needed since 
section 14 contains provisions regarding these notices.
    Section 1 (Revisions)--Revise the definition of ``actuarial 
documents'' to clarify that the information needed to determine the 
premium rate is contained in the actuarial documents and on RMA's 
website. Revise the definition of ``agricultural commodity'' to clarify 
that it is any crop or other commodity produced, regardless of whether 
or not it is insurable. Revise the definition of ``contract change 
date'' for clarification. Revise the definition of ``crop year'' to 
specify that this definition may be modified by the Crop Provisions. 
Revise the definition of ``delinquent account'' to include 
administrative fees and interest on amounts due. Revise the definition 
of ``earliest planting date'' to clarify that it applies only to the 
replanting provisions of the policy. Revise the definition of 
``enterprise unit'' to clarify that acreage making up the unit must be 
planted acreage (acreage that is prevented from being planted will not 
be used to meet eligibility requirements for an enterprise unit). 
Revise the definition of ``field'' to clarify that separate crops or 
planting patterns do not create separate fields. Revise the definition 
of ``good farming practices'' to include sustainable farming practices. 
Revise the definition of ``non-contiguous'' to specify that only tracts 
separated by different land ownership will qualify as non-contiguous 
units. Revise the definition of ``practical to replant'' to specify the 
cost of seed or plants will not be considered. Revise the definition of 
``prevented planting'' by specifying that it must be due to excess 
moisture or because weather conditions are such that the seed would not 
be expected to germinate or produce a crop. Also moved current language 
contained in the definition of prevented planting, regarding the 
insured cause of loss that prevented planting must be general in the 
surrounding area and must have prevented other producers from planting 
acreage with similar characteristics, to the prevented planting 
provisions contained in section 17. Revise the definition of ``price 
election'' to indicate the price election may be contained in a written 
agreement. Revise the definition of ``replanting'' to remove the 
requirement that replacing the seed or plants of the same crop would 
result in the expectation of producing at least the yield used to 
determine the production guarantee. This change will allow insurance 
providers to determine that it is practical to replant after the final 
planting date if other producers in the

[[Page 58917]]

area are also replanting, even though replanting after the final 
planting date could produce yields less than the yields used to 
determine the production guarantee. Specify that the same seeds or 
plants must be placed in the same insured acreage to be considered 
replanting. Revise the definition of ``substantial beneficial 
interest'' to clarify the status of spouses. Revise the definition of 
``whole farm unit'' to clarify that the acreage making up the unit must 
be planted to two or more insured crops and that acreage that is 
prevented from being planted will not be used to qualify for a whole 
farm unit. Require that all crops for which the whole farm unit 
structure is available must be included in the whole farm unit, and 
that no one crop can constitute more than 75 percent of the total 
liability of all insured crops in the whole farm unit. Also require 
that all crops in the whole farm unit must be insured under the same 
plan of insurance and with the same insurance provider;
    Section 2--Revise the provisions regarding the failure to provide 
social security numbers of persons with a substantial beneficial 
interest or if persons with a substantial beneficial interest are 
ineligible to eliminate the vulnerability caused by changing the 
identity of insureds. Also require that all entities with at least a 10 
percent interest in the insured or applicant provide the social 
security numbers of all individuals with an interest in the entity. 
Clarify provisions regarding when ineligibility occurs when the 
producer fails to make a scheduled payment under a payment agreement 
and that all premium and administrative fees must still be paid by the 
termination date even if a claim is still outstanding. This is to 
eliminate the confusion regarding whether producers are ineligible if 
they fail to pay the premium or administrative fees by the termination 
date. References to the nonstandard classification have been removed 
because the system is no longer in use;
    Section 3--Add provisions indicating that coverage cannot be 
increased if a cause of loss that could result in an insured loss is 
present at the time the increase is requested. Also add a provision to 
require the producer to submit previous crop years records of 
production in any year that a claim is made if such records have not 
previously been provided. A sanction is added when a corrected yield is 
lower than 95 percent of the original yield. This change is necessary 
to protect the integrity of the crop insurance program because the 
operation of the program relies heavily on the accurate reporting by 
producers. A tolerance of 5 percent is included to be consistent with 
tolerances in other aspects of the program. However, the receipt of 
complete and accurate information is crucial to the program. Clarify 
that yields may also be adjusted if they are inconsistent with other 
similarly situated units unless the producer can demonstrate a physical 
basis for the discrepancy (e.g., hail or other insured causes, etc.), 
or if a small amount of acreage is used to establish the yield 
(representative samples cannot be used to establish yields except when 
representative samples are used to calculate any indemnity). Given the 
ease in which production can be shifted to create losses or to increase 
approved yields, the policy must provide a mechanism to allow 
correction when the surrounding yields show that the reported yields 
are not accurate, unless the producer can show that there is a physical 
reason for the difference in yields. Add provisions stating that an 
assigned yield will be used to calculate the approved yield for the 
first crop when a second crop is planted after the first crop is 
prevented from being planted. This change is made to conform with 
section 508A(c)(3) of the Act;
    Section 4--Clarify that contract changes will be filed with the 
Office of the Federal Register or placed on RMA's website by the 
contract change date and will be available from the local crop 
insurance provider;
    Section 5--Delete the liberalization provisions because they 
conflict with the preamble to the Basic Provisions;
    Section 6--Add provisions indicating that insureds cannot revise 
the acreage report without consent after reporting any prevented 
planting acreage. Clarify that it is the producer's responsibility to 
accurately report all information and add new sanctions for 
misreporting acreage report information. Since the operation of the 
program is dependent on accurate reporting by producers, stronger 
sanctions are imposed to ensure that producers completely and 
accurately report material information;
    Section 7--Clarify that the information needed to calculate the 
premium and premium adjustments are in the actuarial documents since 
the rates themselves may no longer be included in the actuarial 
documents. Add provisions stating that coverage will not be provided if 
the amount of premium and administrative fee the producer is required 
to pay exceeds the liability for the acreage;
    Section 8--Clarify that the crop is not insurable if the 
information needed to insure it is not in the actuarial documents, or 
if the crop is grown using a farming practice or is a type, class or 
variety that is not adapted to the area. Add provisions stating that a 
farming practice, type, class, or variety that is not established or 
widely used in an area may not be considered a good farming practice. 
This change is made to ensure that determinations of insurability are 
consistent with good farming practices;
    Section 9--Change provisions to allow insurance on acreage when it 
has not been planted in the previous three crop years if the producer 
can show that the acreage was not planted in at least 2 of those years 
to comply with another USDA program, or when the acreage constitutes 5 
percent or less of the planted acreage in the unit. This is to clarify 
the number of years that the acreage can not be planted to comply with 
another USDA program and to avoid the uninsurability of acreage when a 
deminimus amount of acreage is uninsurable. Add provisions indicating 
that coverage will not be provided for acreage on which the insured 
crop is damaged unless the crop is replanted when practical in a timely 
manner. Add provisions to allow producers to elect not to insure a crop 
planted after a first crop to avoid reductions to a first crop 
indemnity when there is a loss on the second crop. Add provisions to 
prohibit insurance for any crop following a second crop unless the 
producer provides records proving that a third crop has been produced 
and harvested in the past;
    Section 10--Change provisions to require insurance under one policy 
when the same people are involved in multiple farming operations or are 
in the same family or household. This will improve program integrity by 
preventing producers from forming multiple entities with the intent to 
insure acreage under separate policies to gain a disproportionate 
advantage;
    Section 12--Revise the insurable cause of loss provisions to 
indicate that all insurable causes of loss must be due to acts of 
nature, except cases in which the policy specifically covers loss of 
revenue due to reduced prices in the marketplace. Change provisions to 
prohibit payments for losses due to water released from levee systems, 
dams, or reservoir projects on any acreage on which there is a water 
easement. This change prevents payments on acreage that is flooded 
frequently and where consideration has been received for the right to 
flood land. Add provisions to allow coverage for losses caused by 
failure of irrigation facilities or equipment if the failure is

[[Page 58918]]

due to an insured cause of loss. Add a provision to exclude causes of 
loss where the damage does not manifest until the crop is placed in 
storage unless expressly authorized by the Crop Provisions because of 
the problems associated with notice and determining losses after the 
production has been commingled;
    Section 14--Revise the section heading to refer to situations in 
which a producer abandons, destroys, or puts the insured crop or 
acreage to an alternative use. This change is made to clarify that this 
section also includes duties in situations other than when there is 
crop damage or loss. Remove provisions that allow producers to file 
late notices of loss. This change will prevent late notices of loss and 
improve accuracy of loss adjustment. Add provisions regarding leaving 
representative samples of the unharvested crop so that provisions 
applicable to most annual crops can be removed from the Crop Provisions 
as they are revised. Add provisions to allow a time extension to submit 
a claim for indemnity to allow for situations in which determinations 
necessary to finalize a claim cannot be made within 60 days. Add a 72 
hour notice requirement for prevented planting to permit the reinsured 
company to verify the cause of the prevented planting. Add provisions 
requiring separate records to be maintained for acreage subject to the 
indemnity reductions because a second crop is planted on the acreage in 
order to implement changes required by section 508A of the Act. Add a 
provision indicating a claim will be denied if the producer fails to 
comply with the conditions of this section. Add provisions allowing the 
payment of claims to be delayed until the amount of production can be 
determined from the acreage on which a second crop was planted, 
completion of the administrative review regarding good farming 
practices, or the investigation of a past or present claim by USDA;
    Section 15--Clarify the ``appraised production'' provisions by 
specifying that appraisals are only used when the acreage will not be 
harvested and if the acreage is later harvested, that production must 
be reported. If the harvested production exceeds the appraised 
production, the indemnity will be adjusted in order to protect program 
integrity by preventing the overpayment of losses. Add provisions 
regarding the consequences of planting a second crop on acreage where 
the first crop had failed or was prevented from being planted in 
conformance with section 508A of the Act. Add a provision requiring the 
producer to show proof of the destruction of a crop if such destruction 
is required by the Government prior to collecting an indemnity to 
ensure that producers are not receiving an indemnity based on such 
destruction when no destruction occurred;
    Section 17--Clarify the prevented planting provisions to specify 
that the producer must have been prevented from planting during the 
whole planting season, not just the last few days to protect program 
integrity by avoiding paying claims to producers who had the ability to 
timely plant the crop and elected not to do so until it was too late. 
Clarify the terms ``surrounding area'' and ``acreage with similar 
characteristics''. Clarify that the premium for prevented planted 
acreage will be the same as for planted acreage unless reduced in 
accordance with section 15(f) pertaining to second crops. Clarify that 
uninsured acreage cannot be used to determine the number of acres 
eligible for prevented planting. Add provisions to allow a producer who 
has not grown a crop in a certain county and who obtains acreage in 
that county after the sales closing date to submit an intended acreage 
report within 10 days after acreage is obtained. No cause that will or 
could prevent planting can be evident at the time the acreage is 
obtained. This change will allow a producer to establish eligible 
prevented planting acres for acreage obtained after the sales closing 
date. Revise provisions to clarify that the minimum acres or production 
specified in a processor contract is used when calculating the number 
of acres eligible for prevented planting. Modify the requirement to 
call prevented planting acreage the same crop that is in the field when 
it is clear the crop intended for the remainder of the field would not 
have been the same because of rotation requirements or processor 
contract requirements. Clarify that prevented planting acres are 
limited to the number of acres for which the producer is required to 
pay either cash or share rent when acreage is leased. This change will 
prevent payment on acreage in which a producer has no financial 
interest. Revise provisions containing requirements for double-cropped 
acreage, and to allow a prevented planting payment for a first crop 
when a second crop is planted after the late planting period for the 
first crop. This change is made to conform to section 508A of the Act. 
Add provisions that prohibit a payment if any pasture or forage crop is 
in place on the acreage during the time that planting of the insured 
crop generally occurs in the area. Add provisions that prohibit a 
payment for any acreage if at the time the acreage is obtained, a cause 
of loss has occurred that will or could prevent planting. Add a 
provision to specify that administrative fees will not be charged for 
the crop upon which the prevented planting acreage is based, if 
switching the prevented planting crop results in an extra 
administrative fee the producer would not have been required to pay had 
the acreage not been switched to the other crop. Also added a provision 
to specify that if a producer is prevented from planting a non-
irrigated crop and the producer does not have any remaining eligible 
prevented planting acreage for that crop and also does not have any 
other remaining eligible prevented planting acres for any other crop 
under a non-irrigated practice, no prevented planting payment will be 
made. These changes are made to improve program integrity;
    Section 18--Revise provisions to allow written agreements to remain 
in place for more than one crop year provided the conditions under 
which it was issued remain constant. Revise the provisions to allow 
application for a written agreement after the sales closing date, if 
submitted in accordance with FCIC approved procedure. Add provisions 
indicating that supporting records for at least four years must be 
provided when a request is made to insure a crop, type, variety or 
practice that is not insurable in the county to allow for a 
determination of proper yields and to ensure that the crop, type, 
variety, or practice can be used successfully before providing 
insurance. This will eliminate the possibility of buying losses;
    Section 20 (for both FCIC policies and reinsured policies)--Add 
provisions allowing review of loss determinations regarding ``good 
farming practices'' to comply with section 508(a)(3) of the Act. Delete 
the provisions regarding arbitration. Arbitration was intended to be an 
inexpensive alternative to the administrative appeals process that was 
available to producers that were directly insured by FCIC. FCIC has 
received numerous complaints from producers and the insurance companies 
regarding the arbitration process. One complaint is that arbitration is 
no longer inexpensive. Filing fees of up to $7,500 have been required 
to seek arbitration. Another problem that has been identified is what 
constitutes a ``factual determination.'' While a factual determination 
was intended to resolve matters involving acreage determinations, 
approved yield calculations, determinations of production to count, 
etc., it has been

[[Page 58919]]

used to handle all disputes under the policy, including policy 
interpretation. Further, there have been numerous instances where state 
law has been applied even though state law is preempted by the Act, the 
policy, and the regulations. Other complaints have to do with the fact 
that many producers fail to file for arbitration before filing a 
judicial appeal, inconsistent decisions that have been rendered, and 
the potential for producers and insurance companies to abuse the 
system. Further, FCIC discovered that arbitration has been binding on 
the parties. Binding arbitration is inconsistent with section 508(j) of 
the Act, which gives producers the right to file judicial appeals 
within one year of the denial of the claim. Given that arbitration no 
longer serves the purpose for which it is intended, FCIC has elected to 
remove the process from the policy and permit producers to resolve 
disputes through the judicial process;
    Section 21--Add provisions to allow any USDA employee to have 
access to the farm and records pertaining to the insurance because of 
the changes in the Act that enhances the compliance efforts by 
involving other USDA agencies. Provisions are added to clarify that 
records used to establish the basis of a replant payment must be 
maintained for 3 years. Clarify that the record retention requirements 
also apply to records used to establish the insurance guarantee. 
Provisions are added indicating that failure to retain required records 
will result in no indemnity or replant or prevented planting payment 
being due and premium still being owed because the need for records are 
an integral part of the policy because eligibility and the guarantees, 
premium and indemnities are based on such records. Without these 
records, program integrity cannot be maintained;
    Section 22--Add provisions indicating which policy remains in force 
when a producer inadvertently obtains two policies on the same crop in 
the same county for the same crop year;
    Section 24--Add provisions indicating when interest begins to 
accrue on unpaid administrative fees and revise provisions to allow 
amounts owed to FCIC to be collected by administrative offset;
    Section 30--Specify that if an insured receives any funds from 
someone else, the insured must repay the insurance provider the amount 
received from them, not to exceed the amount of indemnity paid to the 
insured;
    Section 34--Clarify the provisions regarding the reporting 
requirements for enterprise units. Add provisions indicating the basic 
unit structure will be applied if a producer elects a whole farm unit 
but does not qualify for it. Revise the provisions to remove the 
requirement to have a discernible break in the planting pattern at the 
boundaries between optional units and to require only that a clear and 
discernible border be maintained between optional units. This change 
eliminates the undue burden on producers to change their planting 
patterns between optional units such as between irrigated and non-
irrigated acreage around a center pivot and now allows the producer to 
use other means, such as plowing bare strips, to separate the acreage. 
Revise the provisions regarding the record keeping requirements to 
qualify for optional units to clarify that even though producers must 
maintain records by optional units to qualify for such unit structure 
in the next crop year, approved yields will still be based on four 
years of production history as required by the Act. Add provisions to 
allow separate optional units for acreage insured under an organic 
farming practice;
    Section 36--Revise provisions to specify that one or more actual 
yields used to calculate the actual production history yield that are 
less than 60 percent of the transitional yield due to drought, flood or 
other act of nature, may be replaced with a yield equal to 60 percent 
of the transitional yield that was applicable for the crop year in 
which the replacement occurs, if the producer elects such option by the 
sales closing date for the insured crop. Current provisions do not 
specify this option had to be elected by the sales closing date, nor do 
they specify that the producer can elect to have any one or all such 
yields replaced; and
    Section 37--Add provisions allowing insurance for crops grown using 
organic farming practices. This change is made to comply with 
provisions contained in ARPA that require organic farming practices to 
be considered good farming practices. Current regulations provide 
coverage for organic farming practices only if approved by written 
agreement. This is because crop insurance premium rates and insurance 
guarantees have been established based on conventional farming 
practices. Written agreements are used to provide a premium rate and 
insurance guarantee appropriate for the risks involved with organic 
farming practices.
    Under current regulations, if a producer utilizes organic farming 
practices and does not have an approved written agreement, the producer 
will be insured under a conventional farming practice. Therefore, if an 
organic producer did not have an approved written agreement and 
suffered a loss, but the loss could have been avoided by using 
conventional farming practices, such loss would not be covered. 
However, if a producer had an approved written agreement, any loss of 
production would be covered if the loss was a result of an insured 
cause, provided the producer followed the approved organic farming 
practices.
    The proposed regulations provide the terms and conditions under 
which crops grown using organic farming practices would be insured. 
Written agreements would no longer be necessary under the proposed 
regulations for crops grown organically in counties for which the 
actuarial documents designate a premium rate for organic farming 
practices.
    4. FCIC is also soliciting comments regarding the definition of 
``limited resource farmer'' contained in section 1 of the Common Crop 
Insurance Regulations, Basic Provisions (7 CFR 457.8). FCIC understands 
the following definition is being considered for use by other USDA 
agencies:
    ``A Limited Resource Farmer/Producer has one or more of the 
following characteristics:
    (a) Total operator household income is under $20,000; total farm 
assets are under $150,000; and annual gross sales are under $100,000.
    (b) Total gross household net income, for both farm and non-farm, 
is 75 percent or less of the median household income level for the 
state or county of residence, as determined by State Conservationist.''
    Any comments regarding this definition and its effect on the crop 
insurance program are welcome.

List of Subjects in 7 CFR Parts 400, 407, and 457

    Administrative practice and procedure, Claims, Crop insurance, 
Fraud, Reporting and recordkeeping requirements.

Proposed Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation proposes to amend 7 CFR part 400, 7 CFR part 407, 
and 7 CFR part 457 effective for the 2003 and succeeding crop years for 
all crops with a contract change date of November 30, 2002 or later, to 
read as follows:

PART 400-GENERAL ADMINISTRATIVE REGULATIONS

    1. The authority citation for 7 CFR part 400 continues to read as 
follows:


[[Page 58920]]


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

Subpart T--Federal Crop Insurance Reform, Insurance Implementation

    2. Revise the heading of subpart T to read as set forth above.


Sec.  400.650  [Amended]

    3. In Sec.  400.650, remove ``limited coverage'' from the second 
sentence.
    4. In Sec.  400.651:
    a. Revise the definitions of ``additional coverage'' and ``approved 
yield'';
    b. Remove ``limited,'' from the definition of ``administrative 
fee''; and
    c. Remove the definition of ``limited coverage''.
    The revisions read as follows:


Sec.  400.651  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 
adjustment elected by the producer in accordance with the applicable 
crop insurance policy.
* * * * *


Sec.  400.652  [Amended]

    5. In Sec.  400.652:
    a. Remove ``,limited,'' from paragraph (a);
    b. Remove the words ``Limited and'' from paragraph (b) and 
capitalize the first letter in the word ``additional''; and
    c. Remove the words ``limited and'' from paragraph (d).


Sec.  400.654  [Amended]

    6. In Sec.  400.654:
    a. Remove ``,limited'' from paragraph (a);
    b. Remove the words ``limited or'' from paragraph (c)(6); and
    c. Remove ``,limited,'' from paragraph (d).

PART 407--GROUP RISK PLAN OF INSURANCE REGULATIONS FOR THE 2003 AND 
SUCCEEDING CROP YEARS

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

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

    8. Amend part 407 by revising the part heading as set forth above.
    9. Amend Sec.  407.2 by:
    a. Removing paragraphs (d) and (e), adding a new paragraph (d) and 
redesignating paragraphs (f) through (h) as paragraphs (e) through (g) 
respectively; and
    b. Amend newly designated paragraph (e) by replacing the phrase 
``Sec.  407.8, paragraph 21'' with the phrase ``Sec.  407.9, paragraph 
15''.
    The revision reads as follows:


Sec.  407.2  Availability of Federal crop insurance.

* * * * *
    (d)(1) Except as specified in paragraph (c) of this section, if a 
person has more than one contract under the Act that provides coverage 
for the same loss on the same crop for the same crop year in the same 
county, all such contracts shall be voided for that crop year and the 
person will be liable for the premium on all contracts, unless the 
person can show to the satisfaction of the Corporation that the 
multiple contracts of insurance were without the fault of the person. 
If the multiple contracts of insurance are shown to be without the 
fault of the person and:
    (i) One contract is an additional coverage policy and the other 
contract is a Catastrophic Risk Protection policy, the additional 
coverage policy will apply if both policies are with the same insurance 
provider, or if not, both insurance providers agree, and the 
Catastrophic Risk Protection policy will be canceled (If the insurance 
providers do not agree, the policy with the earliest date of 
application will be in force and the other contract will be canceled); 
or
    (ii) Both contracts are additional coverage policies or both are 
Catastrophic Risk Protection policies, the contract with the earliest 
signature date on the application will be valid and the other contract 
on that crop in the county for that crop year will be canceled, unless 
both policies are with the same insurance provider and the insurance 
provider agrees otherwise or both policies are with different insurance 
providers and both insurance providers agree otherwise.
    (2) No liability for indemnity or premium will attach to the 
contracts canceled as specified in paragraphs (d) (1)(i) and (ii) of 
this section.
* * * * *


Sec.  407.6  [Removed and reserved]

    10. Remove and reserve Sec.  407.6.


Sec.  407.7  [Amended]

    11. Amend Sec.  407.7 by removing the words ``Except as may be 
allowed under Sec.  407.6, and at the sole discretion of the 
Corporation,'' and capitalizing the first letter in the word ``no'' in 
the fourth sentence;
    12. Amend Sec.  407.9, as follows:
    a1. Revise the introductory text of the section;
    a2. Revise the first paragraph of both the ``FCIC policies'' and 
``Reinsured policies'' sections, and revise the second paragraph in the 
heading of the ``Reinsured policies'' section;
    b. Amend the third paragraph in the headings of the ``Both 
Policies'' section by replacing the number ``55'' with the number 
``45'';
    c. Amend section 1--Definitions--by adding definitions of 
``agricultural commodity,'' ``cover crop,'' ``double-crop,'' ``first 
crop,'' ``second crop,'' ``substantial beneficial interest,'' and 
``sustainable farming practice'' and revising the definitions of 
``actuarial documents,'' and ``good farming practices.'' Also replace 
the number ``55'' with the number ``45'' in the definition of 
``catastrophic risk protection'';
    d. Revise section 3(c);
    e. Delete section 3(d);
    f. Amend section 4(a) by replacing the number ``55'' with the 
number ``45'';
    g. Amend section 7(a) by deleting the last sentence;
    h. Delete section 7(c) and redesignate sections 3(d) and (e) as 
sections 3(c) and (d), respectively;
    i. Revise redesignated sections 7(c) and (d);
    j. Add new sections 7(e) and (g) and add and reserve section 7(f);
    k. Amend section 8 by deleting subsections (g) and (h) and adding a 
new subsection (g);
    l. Revise sections 9(c) and (d) and add sections 9(e) and (f);
    m. Revise section 10;
    n. Revise section 13;
    o. Revise section 14(c);
    p. Amend section 15(c) by deleting the second sentences in both the 
FCIC and the Reinsured policy versions;
    q. Revise section 16;
    r. Revise section 18(b);
    s. Revise sections 18(e) introductory text, (e)(1), (e)(3), (e)(5) 
through (e)(7), and (e)(9) and (e)(10) and add subsection (e)(11);
    t. Revise section 19(b); and
    u. Add a new section 21 between the first paragraph of section 20 
and the example immediately following that paragraph.
    The revised and added sections read as follows:


Sec.  407.9  Group risk plan common policy.

    The provisions of the Group Risk Plan Common Policy for the 2003 
and succeeding crop years are as follows:
* * * * *

[FCIC policies]

    This insurance policy establishes a risk management program 
developed by the Federal Crop Insurance Corporation (FCIC), an 
agency of the United States Government, under the authority of the 
Federal Crop Insurance Act (Act), as amended (7 U.S.C.

[[Page 58921]]

1501 et seq.). All terms of the policy and rights and 
responsibilities of the parties thereto are subject to the Act and 
all regulations under the Act published in 7 CFR chapter IV. The 
provisions of this policy may not be waived or varied in any way by 
the crop insurance provider, an agent or any other agent or employee 
of the crop insurance provider, FCIC, the Risk Management Agency 
(RMA) or the Farm Service Agency (FSA). Procedures (including 
handbooks, manuals, and directives) issued by us and published on 
the RMA Web site at http://www.rma.usda.gov/ or a successor Web site 
will be used in the administration of this policy. If there is a 
conflict between the provisions of your policy, the Federal Crop 
Insurance Act (Act), or the regulations published at 7 CFR chapter 
IV and the procedures issued by us, the terms of your policy, the 
Act, or such regulations control. All provisions of state and local 
laws in conflict with the provisions of this policy as published at 
7 CFR part 407 are preempted and the provisions of this policy 
control.
* * * * *

[Reinsured policies]

    This insurance policy establishes a risk management program 
developed by the Federal Crop Insurance Corporation (FCIC), an 
agency of the United States Government, under the authority of the 
Federal Crop Insurance Act (Act), as amended (7 U.S.C. 1501 et 
seq.).
    This insurance policy is reinsured by FCIC under the provisions 
of the Act. All terms of the policy and rights and responsibilities 
of the parties are subject to the Act and all regulations under the 
Act published in 7 CFR chapter IV. The provisions of this policy may 
not be waived or varied in any way by the crop insurance provider, 
an agent or any other agent or employee of the crop insurance 
provider, FCIC, the Risk Management Agency (RMA) or the Farm Service 
Agency (FSA). Procedures (including handbooks, manuals, and 
directives) issued by FCIC and published on the RMA Web site at 
http://www.rma.usda.gov/ or a successor Web site will be used in the 
administration of this policy. If there is a conflict between the 
provisions of your policy, the Federal Crop Insurance Act (Act), or 
the regulations published at 7 CFR chapter IV and the procedures 
issued by FCIC, the terms of your policy, the Act, or such 
regulations control. All provisions of State and local law in 
conflict with the provisions of this policy as published in 7 CFR 
part 407 are preempted and the provisions of such part will control. 
In the event that we cannot pay a loss, the claim will be settled in 
accordance with the provisions of the policy and paid by FCIC. No 
state guarantee fund will be liable to pay the loss.
* * * * *
    1. Definitions.
* * * * *
    Actuarial documents. The material for the crop year which is 
available for public inspection in your insurance provider's local 
office and published on RMA's Web site at http://www.rma.usda.gov/ 
or a successor Web site, and which shows the maximum protection per 
acre, expected county yield, coverage levels, information needed to 
determine the premium rates, practices, program dates, and other 
related information regarding crop insurance in the county.
* * * * *
    Agricultural commodity. Any crop or other commodity produced, 
regardless of whether or not it is insurable.
* * * * *
    Cover crop. A crop that is commonly planted in the area for 
erosion control or green manure and is generally left in place for 
one growing season.
* * * * *
    Double-crop. The practice of producing two or more crops for 
harvest on the same acreage in the same crop year.
* * * * *
    First crop. With respect to a single crop year and any specific 
crop acreage, the first instance that an agricultural commodity is 
planted for harvest or prevented from being planted and is insured 
under the authority of the Act. For example, if winter wheat that is 
not insured is planted on acreage that is later planted to soybeans 
that are insured, the first crop would be soybeans. If the winter 
wheat was insured, it would be the first crop.
* * * * *
    Good farming practices. The farming practices that are commonly 
used in the area where the crop is produced, including sustainable 
farming practices, that are recognized by FCIC to be necessary for 
the crop to make normal progress toward maturity and to be 
compatible with the agronomic and weather conditions in the area. 
For crops grown under an organic practice, the farming practices 
approved by a private organization or government agency that 
certifies organic products in accordance with 7 CFR part 205 and is 
accredited in accordance with the requirements of the Federal 
Organic Food Production Act of 1990. If you use a farming practice 
not commonly used in the area, you should contact us to determine if 
such practice is insurable.
* * * * *
    Second crop. With respect to a single crop year, any 
agricultural commodity that is planted immediately following a first 
crop on the same acreage. The second crop may be the same or a 
different agricultural commodity as the first crop, except the term 
does not extend to a replanting of a first crop when it is required 
by the policy. A cover crop, planted after a first crop, that is 
hayed, grazed or harvested will be considered a second crop.
* * * * *
    Substantial beneficial interest. An interest held by any person 
of at least 10 percent in the applicant or insured. All spouses and 
children that reside in the same household will be considered to 
have a substantial beneficial interest in the applicant or insured 
unless the spouse or children can prove that the acreage farmed by 
the applicant or insured is a totally separate farming operation in 
accordance with FCIC issued procedure and that the spouse or 
children derive no benefit from the farming operation of the insured 
or applicant.
* * * * *
    Sustainable farming practice. A system or process for producing 
an agricultural commodity recognized by the Natural Resources 
Conservation Service (NRCS) or a successor agency as likely to 
conserve or enhance natural resources and the environment.
* * * * *
    3. Insured and Insurable Acreage.
* * * * *
    (c) We will not insure any acreage:
    (1) Where the crop was destroyed or put to another use during 
the crop year for the purpose of conforming with, or obtaining a 
payment under, any other program administered by the USDA;
    (2) Where you have failed to follow good farming practices for 
the insured crop (If any farming practice is not established or 
widely used in the area, it may not be considered a good farming 
practice);
    (3) Of a second crop if you elect not to insure such acreage 
when there is an insurable loss for planted acreage of a first crop 
and you intend to collect an unreduced indemnity for the first crop 
acreage in accordance with section 21 (You must make the election 
not to insure acreage of a second crop on or before the acreage 
reporting date for the second crop and you must report the crop 
acreage that will not be insured by the applicable acreage reporting 
date); or
    (4) Of a crop that is planted following a second crop or 
following an insured crop that is prevented from being planted after 
a first crop, unless it is an established practice in the area to 
plant three or more crops for harvest on the same acreage in the 
same crop year, and additional coverage insurance provided under the 
authority of the Act is offered for the third or subsequent crop in 
the same crop year. Insurance will only be provided for a third or 
subsequent crop as follows:
    (i) You must provide records acceptable to us that show:
    (A) You have produced and harvested the insured crop as a third 
or later crop on the same acreage in the same crop year in at least 
two of the last four years in which you produced the insured crop; 
or
    (B) The applicable acreage has had three or more crops produced 
and harvested on it in at least two of the last four years in which 
the insured crop was grown on it; and
    (ii) The amount of insurable acreage will not exceed 100 percent 
of the greatest number of acres for which you provide the records 
required in section 3(c)(4)(i)(A) or (B).
* * * * *
    7. Report of Acreage and Share.
* * * * *
    (c) The premium amount and payment of an indemnity will be based 
on your insurable acreage on the acreage reporting date subject to 
section 7(d).
    (d) You should verify all information on the acreage report 
prior to submitting it to us. If you report information that results 
in an amount of policy protection 95.0 to 105.0 percent of the 
corrected policy protection

[[Page 58922]]

amount for the crop, any indemnity will be based on the corrected 
policy protection amount. If the information you reported results in 
an amount of policy protection less than 95.0 percent or greater 
than 105.0 percent of the corrected policy protection amount for the 
crop, no indemnity will be due. Even though there is no indemnity 
due, you will still be required to pay the premium due under the 
policy for the crop. The premium amount used for this purpose will 
be based on the corrected policy protection amount.
    (e) If we discover that you have incorrectly reported any 
information on the acreage report for any crop year, you may be 
required to provide documentation in subsequent crop years that 
substantiates your report of acreage for those crop years, 
including, but not limited to, an acreage measurement service at 
your own expense.
    (f) [Reserved]
    (g) We will include in your share or under your policy for any 
insured crop, any acreage or interest held by a corporation, 
partnership, association, or other legal entity in which you have a 
share if the other shareholders, stakeholders, or persons affiliated 
with the corporation, partnership, association, or other legal 
entity are all members of your family or household or are the same 
persons that are the shareholders, stakeholders, or persons 
affiliated with the other corporation, partnership, association, or 
other legal entity in which you are a shareholder, stakeholder or 
otherwise affiliated. For example, if you are in one partnership 
with John Doe and Jane Doe that insures 100 acres and you enter a 
different partnership with John Doe and Jane Doe, that rents another 
100 acres, all 200 acres must be insured under the original 
partnership policy.
    8. Administrative Fees and Annual Premium.
* * * * *
    (g) If the amount of premium (gross premium less premium subsidy 
paid on your behalf by FCIC) and administrative fee you are required 
to pay for any acreage exceeds the amount of policy protection for 
the acreage, coverage for those acres will not be provided (no 
premium or administrative fee will be due and no indemnity will be 
paid for such acreage).
    9. Written Agreements.
* * * * *
    (c) If approved, the written agreement will include all variable 
terms of the contract, including, but not limited to, crop practice, 
type or variety, the yield or other basis used to determine the 
protection per acre, premium rate or information needed to determine 
the premium rate, and price election;
    (d) Each written agreement will only be valid for the number of 
crop years specified in the written agreement, not to exceed four 
years, or as long as the conditions under which the agreement was 
issued exist, whichever time period ends first (Such conditions 
include, but are not limited to, farming practices used, legal 
description of the acreage, practice, types or varieties produced, 
etc. If any condition changes, you must notify us immediately, the 
written agreement will no longer be effective, and you must request 
a new written agreement. Failure to immediately notify us of changed 
conditions will result in denial of liability under the terms of the 
written agreement. If a written agreement is not specifically 
renewed after it expires, insurance coverage for subsequent years 
will be in accordance with the printed policy);
    (e) For a crop, type, variety or practice that is not insurable 
in the county, you must provide at least four years of records to 
support the change you are requesting (If you do not have at least 
four years of records to support the requested change, your request 
for a written agreement will be denied); and
    (f) Any written agreement will be denied if FCIC determines the 
risk is excessive.
    10. Access to Insured Crop and Record Retention.
    (a) We, and any employee of USDA, or our employee, agent or loss 
adjuster have the right to examine the insured crop and any records 
relating to the crop and this insurance at any location where such 
crop or records may be found or maintained, as often as required. 
Records pertaining to the planting of the insured crop and your net 
acres must be retained for a period of three years after the end of 
the crop year or three years after the date of final payment of the 
indemnity, whichever is later.
    (b) We may extend the record retention period beyond three years 
by notifying you of such extension in writing.
    (c) Failure to allow access to the crop or records, or failure 
to maintain records will result in a determination that no indemnity 
is due. Even though no indemnity is due, you will still be required 
to pay the premium due under the policy.
* * * * *
    13. Other Insurance.
    Nothing in this section prevents you from obtaining other 
insurance not issued under the authority of the Act. However, unless 
specifically required by policy provisions, you must not obtain any 
other crop insurance issued under the authority of the Act on your 
share of the insured crop. If you cannot demonstrate that you did 
not intend to have more than one policy in effect, you may be 
subject to the sanctions authorized under this policy, the Act, or 
any other applicable statute. If you can demonstrate that you did 
not intend to have more than one policy in effect, and:
    (a) One is an additional coverage policy and the other is a 
Catastrophic Risk Protection policy:
    (1) The additional coverage policy will apply if both are with 
the same insurance provider, or if not, both insurance providers 
agree; or
    (2) The policy with the earliest date of application will be in 
force if both insurance providers do not agree; or
    (b) Both are additional coverage policies or both are 
Catastrophic Risk Protection policies, the policy with the earliest 
date of application will be in force and the other policy will be 
void unless both policies are with:
    (1) The same insurance provider and the insurance provider 
agrees otherwise; or
    (2) Different insurance providers and both insurance providers 
agree otherwise.
    14. Legal Action Against Us.
* * * * *
    (c) You may not recover any attorneys fees or other charges, or 
any punitive, compensatory or any other damages except contractual 
damages, except as authorized in 7 CFR 400.352(b)(4).
* * * * *

[FCIC policy]

    16. Determinations.
    (a) All determinations required by the policy will be made by 
us. If you disagree with our determinations, you may:
    (1) Except as provided in section 16(a)(2), obtain 
reconsideration of or appeal those determinations in accordance with 
appeal provisions published at 7 CFR part 11; or
    (2) Request a reconsideration of our loss determination 
regarding good farming practices in accordance with the review 
process established for this purpose and published at 7 CFR part 
400, subpart J.
    (b) In any appeal or reconsideration, the terms of this policy, 
the Act, and the regulations published at 7 CFR chapter IV are 
binding and any state or local laws that are in conflict with the 
terms of the policy, the Act, and the regulations are preempted.

[Reinsured policy]

    16. Determinations.
    (a) Except as provided in section 16(d), you may appeal any 
determination made by FCIC in accordance with appeal provisions 
published at 7 CFR part 11.
    (b) No award determined by appeal or administrative 
reconsideration can exceed the amount of liability established or 
which should have been established under the policy.
    (c) In any appeal proceeding or reconsideration, the terms of 
this policy, the Act, and the regulations published at 7 CFR chapter 
IV are binding and any state or local laws that are in conflict with 
the terms of the policy, the Act, and the regulations are preempted.
    (d) If you do not agree with any loss determination made 
regarding good farming practices, you may request reconsideration of 
this determination in accordance with the review process established 
for this purpose and published at 7 CFR part 400, subpart J.
* * * * *
    18. Life of Policy, Cancellation, and Termination.
* * * * *
    (b) Your application for insurance must contain all the 
information required by us to insure the crop.
    (1) Applications that do not contain all social security numbers 
and employer identification numbers of the applicant and all social 
security numbers of individuals with a substantial beneficial 
interest in the applicant and shares, as applicable, coverage level, 
price election, crop, type, variety, or class, plan of insurance, 
and any other material information required to insure the crop, are 
not acceptable.
    (2) If an entity has an interest of 10 percent or more in the 
insured or applicant, the social security number of all individuals 
with an interest in the entity must be provided.

[[Page 58923]]

    (3) Notwithstanding any provision contained in 7 CFR part 400, 
subpart U, if we discover that a person with a substantial 
beneficial interest has failed to provide a social security number 
or if a person with a substantial beneficial interest in the insured 
crop is ineligible:
    (i) For the year of application, the application will not be 
accepted for the insured crop for which the social security numbers 
were not provided or the person was ineligible; or
    (ii) For any crop year after the year of application, no 
indemnity will be due for the insured crop for which the social 
security numbers were not provided or the person was ineligible. 
Even though no indemnity is due, you will still be required to pay 
20 percent of the premium due under the policy to offset costs 
incurred by us in the service of this policy. If previously paid, 
the balance of the premium will be returned. No administrative fee 
will be due for such crops.
* * * * *
    (e) The premium, administrative fee, and any other amount due, 
plus any accrued interest, will be considered delinquent if it is 
not paid on or before the termination date specified in the Crop 
Provisions or the date contained in a notice to you of overpayment 
or any payment agreement. Termination may affect your eligibility 
for benefits under other USDA programs. Any amount due to us for any 
crop insured by us under the authority of the Act will be deducted 
from any indemnity due you for this or any other crop insured with 
us. All administrative fees and related interest are owed to FCIC 
and failure to timely pay such fees when due may also subject you to 
other administrative offsets. If any premium, administrative fee, 
and any other amount due, plus any accrued interest, is not paid on 
or before the termination date for the crop on which the amount is 
due:
    (1) For a policy with unpaid administrative fees, premium or 
related interest, the policy will terminate effective on the 
termination date immediately subsequent to the billing date for the 
crop year;
* * * * *
    (3) Ineligibility will be effective on:
    (i) The date that a policy was terminated for the crop for which 
you failed to pay premium, an administrative fee, and any related 
interest owed;
    (ii) The payment date contained in any notification of 
indebtedness for any overpaid indemnity, if you fail to pay the 
amount owed by such due date; or
    (iii) The termination date for the crop year prior to the crop 
year in which a scheduled payment is due under a payment agreement 
if you fail to pay the amount owed by any payment date in such 
payment agreement;
* * * * *
    (5) A crop policy already in effect at the time you become 
ineligible will not be terminated until the termination date for 
that crop policy (If you are ineligible, you may not obtain any crop 
insurance under the Act until payment is made in full, you execute 
an agreement to repay the debt and make payments in accordance with 
the agreement, or you file a petition to have your debts discharged 
in bankruptcy. Dismissal of the bankruptcy petition before discharge 
will void all policies in effect retroactive to the date you were 
originally determined ineligible to participate and any indemnities 
paid subsequent to that date must be repaid);
    (6) If you execute an agreement to pay the debt and fail to make 
any scheduled payment, all of your policies will be terminated 
effective on the termination date for the crop year prior to the 
crop year in which you failed to make the scheduled payment and no 
indemnity will be due for that year (You will no longer be eligible 
to obtain crop insurance by execution of an agreement to pay the 
debt. You will be ineligible for crop insurance until the debt is 
paid in full or you file a petition to discharge the debt in 
bankruptcy. Dismissal of the bankruptcy petition before discharge 
will void all policies in effect retroactive to the date you were 
originally determined ineligible to participate and any indemnities 
paid subsequent to that date must be repaid);
    (7) Once the policy is terminated, it cannot be reinstated for 
the current crop year unless the termination was in error because 
you did not owe any amounts or you paid the amounts owed on or 
before the termination date;
* * * * *
    (9) If we deduct the amount due from an indemnity owed to you, 
the date of payment for the purpose of determining your eligibility 
will be the date that you and we sign the claim for indemnity (If 
the claim for indemnity is not signed by you and us by the 
termination date or if the claim amount does not satisfy the debt, 
all amounts owed must still be paid by the termination date or the 
policy will be terminated and you will not be eligible for insurance 
in accordance with this paragraph).
    (10) For example, if crop A, with a termination date of October 
31, 2001, and crop B, with a termination date of March 15, 2002, are 
insured and you do not pay the premium for crop A by the termination 
date, you are ineligible for crop insurance as of October 31, 2001, 
and crop A's policy is terminated as of that date. Crop B's policy 
is terminated as of March 15, 2002. If you enter an agreement to 
repay the debt on April 25, 2002, the earliest date by which you can 
obtain crop insurance for crop A is to apply for crop insurance by 
the October 31, 2002, sales closing date and for crop B is to apply 
for crop insurance by the March 15, 2003, sales closing date. If you 
fail to make a payment which was scheduled to be made on April 1, 
2003, your policy will terminate as of October 31, 2002, for crop A, 
and March 15, 2003, for crop B, and no indemnity will be due for 
that crop year for either crop. You will not be eligible to apply 
for crop insurance for any crop until after the debt is paid in full 
or you file a petition to discharge the debt in bankruptcy.
    (11) If you are determined to be ineligible under section 18(e), 
all persons with a substantial beneficial interest in you are also 
ineligible until you become eligible again.
    19. Contract Changes.
* * * * *
    (b) Any changes in policy provisions, expected county yields, 
maximum amounts of protection, premium rates, and program dates will 
be posted on the RMA Web site at http://www.rma.usda.gov/ or a 
successor website or filed with the Office of the Federal Register 
not later than the contract change date contained in the Crop 
Provisions. This information will be available to you from your 
local crop insurance provider.
* * * * *
    21. Indemnity and Premium Limitations.
    (a) With respect to acreage where you are due a total or partial 
loss for your first crop in the crop year, except in the case of 
double cropping described in section 21(c):
    (1) You may elect to not plant or to plant and not insure a 
second crop on the same acreage for harvest in the same crop year 
and collect an indemnity payment that is equal to 100 percent of the 
insurable loss for the first crop; or
    (2) You may elect to plant and insure a second crop on the same 
acreage for harvest in the same crop year and:
    (i) Collect an indemnity payment that is 35 percent of the 
insurable loss for the first crop;
    (ii) Be responsible for a premium for the first crop that is 
commensurate with the amount of the indemnity paid for the first 
crop; and
    (iii) If the second crop does not suffer an insurable loss:
    (A) Collect an indemnity payment for the other 65 percent of 
insurable loss that was not previously paid under section 
21(a)(2)(i); and
    (B) Be responsible for the remainder of the premium for the 
first crop that you did not pay under section 21(a)(2)(ii).
    (b) The reduction in the amount of indemnity and premium 
specified in section 21(a)(2)(i) and (ii) will apply even if another 
person plants the second crop on any acreage where the first crop 
was planted. The reduction will also apply if a volunteer crop is 
harvested or a cover crop is hayed, grazed, or otherwise harvested. 
In the event you receive cash rent for any acreage on which you had 
a partial or total loss to a first crop, any indemnity you receive 
for the first crop will be limited to 35 percent of the insurable 
loss for the first crop, regardless of whether or not a second crop 
is planted or a second crop suffers an insurable loss and your 
premium will be commensurate with the amount of indemnity paid. This 
reduction will not apply if the double-cropping requirements 
described in section 21(c) have been met.
    (c) You may receive a full indemnity for a first crop when a 
second crop is planted on the same acreage in the same crop year, 
regardless of whether or not the second crop is insured or sustains 
an insurable loss, if each of the following conditions are met:
    (1) It is an established practice in the area to plant at least 
two crops for harvest in the same crop year;
    (2) The second or more crops are customarily planted after the 
first crop for harvest on the same acreage in the same crop year in 
the area;
    (3) Additional coverage insurance under the authority of the Act 
is available on the two or more crops that are double-cropped; and
    (4) You provide records acceptable to us of acreage and 
production that show you have

[[Page 58924]]

double-cropped acreage in at least two of the last four crop years 
in which the first crop was planted, or that show the applicable 
acreage was double-cropped in at least two of the last four crop 
years in which the first crop was grown on it.
    (d) The receipt of a full indemnity on both crops that are 
double-cropped is limited to the number of acres for which you can 
demonstrate you have double-cropped or that have been historically 
double-cropped as specified in section 21(c).
* * * * *

PART 457--COMMON CROP INSURANCE REGULATIONS

    13. The authority citation for 7 CFR part 457 continues to read as 
follows:

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

    14. Revise Sec.  457.2(d) to read as follows:


Sec.  457.2  Availability of Federal crop insurance.

* * * * *
    (d)(1) Except as specified in paragraph (c) of this section, if a 
person has more than one contract under the Act that provides coverage 
for the same loss on the same crop for the same crop year in the same 
county, all such contracts shall be voided for that crop year and the 
person will be liable for the premium on all contracts, unless the 
person can show to the satisfaction of the Corporation that the 
multiple contracts of insurance were without the fault of the person. 
If the multiple contracts of insurance are shown to be without the 
fault of the person and:
    (i) One contract is an additional coverage policy and the other 
contract is a Catastrophic Risk Protection policy, the additional 
coverage policy will apply if both policies are with the same insurance 
provider, or if not, both insurance providers agree, and the 
Catastrophic Risk Protection policy will be canceled (If the insurance 
providers do not agree, the policy with the earliest date of 
application will be in force and the other contract will be canceled); 
or
    (ii) Both contracts are additional coverage policies or both are 
Catastrophic Risk Protection policies, the contract with the earliest 
signature date on the application will be valid and the other contract 
on that crop in the county for that crop year will be canceled, unless 
both policies are with the same insurance provider and the insurance 
provider agrees otherwise or both policies are with different insurance 
providers and both insurance providers agree otherwise.
    (2) No liability for indemnity or premium will attach to the 
contracts canceled as specified in paragraphs (d)(1)(i) and (ii) of 
this section.
* * * * *


Sec.  457.6  [Removed and reserved]

    15. Remove and reserve Sec.  457.6.
    16. Amend Sec.  457.8, Common Crop Insurance Policy Basic 
Provisions, as follows:
    a. Revise the first paragraph of both the ``FCIC Policies'' and 
``Reinsured Policies'' sections that precede the Basic Provisions Terms 
and Conditions;
    b. Amend section 1 by adding definitions for ``annual crop,'' 
``average yield,'' ``border,'' ``buffer zone,'' ``certified organic 
acreage,'' ``certifying agent,'' ``cover crop,'' ``disinterested third 
party,'' ``double-crop,'' ``first crop,'' ``liability,'' ``organic 
farming practice,'' ``organic plan,'' ``organic standards,'' 
``perennial crop,'' ``prohibited substance,'' ``second crop,'' 
``Secretary,'' ``sustainable farming practice'' and ``transitional 
acreage.'' Further amend section 1 to delete the definitions of ``loss, 
notice of'' and ``damage, notice of.'' Also amend section 1 to revise 
the definitions of ``actuarial documents,'' ``agricultural commodity,'' 
``contract change date,'' ``crop year,'' ``delinquent account,'' 
``earliest planting date,'' ``enterprise unit,'' ``field,'' ``good 
farming practices,'' ``non-contiguous,'' ``practical to replant,'' 
``prevented planting,'' ``price election,'' ``replanting,'' 
``substantial beneficial interest,'' and ``whole farm unit.''
    c. Revise section 2(b);
    d. Revise section 2(e) introductory text;
    e. Revise section 2(e)(3);
    f. Revise section 2(e)(5);
    g. Revise section 2(e)(6);
    h. Revise section 2(e)(7);
    i. Revise section 2(e)(9);
    j. Revise section 2(e)(10);
    k. Add a new section 2(e)(11);
    l. Revise section 3(b);
    m. Revise section 3(d);
    n. Redesignate sections 3(e) through (h) as sections 3(g) through 
(j), respectively and add new sections 3(e) and (f);
    o. Amend the last sentence in redesignated section 3(g) by 
inserting a comma ``,'' after the word insurance;
    p. Revise redesignated section 3(i);
    q. Revise section 4(b);
    r. Remove and reserve section 5;
    s. Revise section 6(d);
    t. Amend section 6(e) by replacing ``6(g)'' with ``6(f)'';
    u. Revise sections 6(f) and (g);
    v. Revise sections 7(a), (b) and (d);
    w. Delete sections 7(e)(5) and (6) and redesignate section 7(e)(7) 
as section 7(e)(5);
    x. Add section 7(f);
    y. Revise sections 8(b)(1) and (2);
    z. Revise sections 9(a)(1) introductory text and 9(a)(1)(i)(A);
    aa. Amend section 9(a)(1)(i)(B) by deleting the word ``soybean'' 
and replacing it with the word ``soybeans'' and adding the word ``or'' 
after the semicolon;
    bb. Remove section 9(a)(1)(i)(C) and redesignate section 
9(a)(1)(i)(D) as section 9(a)(1)(i)(C).
    cc. Amend section 9(a)(1)(ii) by deleting `` or'' at the end of the 
text;
    dd. Amend section 9(a)(1) by redesignating section 9(a)(1)(iii) as 
section 9(a)(1)(iv) and adding a new section 9(a)(1)(iii);
    ee. Amend section 9(a) by redesignating sections 9(a)(3) through 
9(a)(6) as sections 9(a)(4) through 9(a)(7), respectively and adding a 
new section 9(a)(3);
    ff. Revise redesignated section 9(a)(4);
    gg. Amend redesignated section 9(a)(6) by deleting ``or'' at the 
end of the text;
    hh. Amend redesignated section 9(a)(7) by deleting the period ``.'' 
at the end of the text and replacing it with a semicolon ``;'';
    ii. Amend section 9(a) by adding new sections 9(a)(8) and (9);
    jj. Amend section 10(a)(2) by adding two new sentences at the end, 
``For each landlord that is an individual, you must report the 
landlord's social security number. For each landlord that is an entity 
other than an individual or for a trust administered by the Bureau of 
Indian Affairs, you must report each landlord's social security number 
or employer identification number.'';
    kk. Revise section 10(b);
    ll. Amend section 12 by revising the introductory text and sections 
12(c) and (d) and adding a new section 12(f);
    mm. Amend section 12(e) by replacing the period at the end with ``; 
or'';
    nn. Amend section 14 by revising the section heading, revising 
(Your Duties) sections 14(a) introductory text, 14(a)(2) and (3), 
14(c), and 14(d), redesignating section 14(f) as 14(g) and adding 
sections 14(f) and 14(h);
    oo. Amend section 14 (Our Duties) by revising sections 14(a)(1) and 
(2), redesignating section 14(a)(3) as 14(a)(4), and adding a new 
section 14(a)(3);
    pp. Amend section 14 (Our Duties) by deleting section 14(d);
    qq. Amend section 15 by revising the section heading, revising 
section 15(b), deleting section 15(e), and adding new sections 15(e) 
through (j);
    rr. Amend section 16(b)(3) by adding the word ``insured'' between 
the words ``from'' and ``acreage'';

[[Page 58925]]

    ss. Revise section 17(a)(1) introductory text;
    tt. Revise section 17(c);
    uu. Amend section 17(d)(1) by deleting the word ``and'' in the 
first sentence and replacing it with the word ``or'';
    vv. Amend section 17(d)(2) by replacing the word ``probability'' 
with the word ``expectation'';
    ww. Amend section 17(e)(1) by deleting ``or (5)'' at the end of the 
first sentence;
    xx. Amend the first sentence of section 17(e)(1)(i)(A) by replacing 
the words ``reported for insurance'' with ``insured acres reported'', 
replacing the words ``substitute crop other than an approved cover'' 
with ``second crop,'' and adding ``unless you meet the double-cropping 
requirements in section 17(f)(4)'' before the closing parentheses;
    yy. Amend section 17(e)(1)(i)(B) by adding the following new 
sentences between the current second and third sentence: ``If, on the 
sales closing date, you do not have any acreage in a county and you 
subsequently obtain acreage in accordance with the conditions in 
section 17(e)(1)(i)(A), you must submit your intended acreage report 
within 10 days of the time you obtain the acreage. The new acreage will 
not be eligible for prevented planting if a cause of loss has occurred 
that could prevent planting at the time the acreage was obtained.'';
    zz. Revise section 17(e)(1)(ii)(A);
    aaa. Revise sections 17(f)(1) through (5);
    bbb. Delete current section 17(f)(6) and redesignate sections 
17(f)(7) through (12) as 17(f)(6) through (11) respectively;
    ccc. Revise redesignated section 17(f)(6);
    ddd. Amend redesignated section 17(f)(10) by deleting the word 
``or'' at the end of that subsection;
    eee. Amend redesignated section 17(f)(11) by replacing the period 
at the end of that section with ``; or'';
    fff. Add a new section 17(f)(12);
    ggg. Amend section 17(h) by adding the following sentence between 
the current first and second sentence, ``Administrative fees will not 
be charged for a crop if switching the prevented planting crop acreage 
in accordance with this section results in an extra administrative fee 
that you would not have been required to pay had the acreage not been 
switched to the other crop.'';
    hhh. Amend section 17(h)(2) by adding the following sentence at the 
end of the current text, ``However, if you were prevented from planting 
any non-irrigated crop acreage and you do not have any remaining 
eligible acreage for that crop and you do not have any other crop 
remaining with eligible acres under a non-irrigated practice, no 
prevented planting payment will be made for the acreage.'';
    iii. Amend section 18 by revising sections 18(c) through (e) and 
adding sections 18(f) and (g);
    jjj. Revise section 20. Appeals (For FCIC policies);
    kkk. Revise section 20. Arbitration (For reinsured policies);
    lll. Revise section 21;
    mmm. Revise section 22(a);
    nnn. Revise section 24(b) (For FCIC policies);
    ooo. Revise sections 24(a) and (e) (For reinsured policies);
    ppp. Revise section 25(c);
    qqq. Amend section 26 by deleting the words ``Payment and'' in the 
section heading, deleting section 26(a) and removing the subsection (b) 
designation;
    rrr. Amend section 30 by adding the following sentence between the 
first and second sentence, ``If you receive any funds from someone 
else, you must repay us the amount you received from us, not to exceed 
the amount of indemnity paid to you.'';
    sss. Revise section 34(a)(2)(iii);
    ttt. Amend section 34(a)(3)(i) by deleting ``and'' at the end of 
the text;
    uuu. Amend section 34(a)(3)(ii) by deleting the period at the end 
of the text and replacing it with ``; and'';
    vvv. Revise section 34(a)(3) by adding section 34(a)(3)(iii);
    www. Amend sections 34(b)(1) and (3);
    xxx. Amend section 34(c)(1) by deleting `` and'' at the end of the 
text;
    yyy. Revise section 34(c)(2);
    zzz. Amend section 34(c) by adding section 34(c)(3);
    aaaa. Revise section 36; and
    bbbb. Add a new section 37.
    The revised and added sections read as follows:


Sec.  457.8  The application and policy.

* * * * *

[FCIC Policies]

    This is an insurance policy issued by the Federal Crop Insurance 
Corporation (FCIC), a United States government agency. The 
provisions of the policy are published in the Federal Register and 
codified at 7 CFR chapter IV under the Federal Register Act (44 
U.S.C. 1501 et seq.), and may not be waived or varied in any way by 
the crop insurance provider, an agent or any other agent or employee 
of the crop insurance provider, FCIC, the Risk Management Agency 
(RMA) or the Farm Service Agency (FSA). Procedures (including 
handbooks, manuals, and directives) issued by us and published on 
the RMA Web site at http://www.rma.usda.gov/ or a successor website 
will be used in the administration of this policy. If there is a 
conflict between the provisions of your policy, the Federal Crop 
Insurance Act (Act), or the regulations published at 7 CFR chapter 
IV and the procedures issued by us, the terms of your policy, the 
Act, or such regulations control.
* * * * *

[Reinsured Policies]

    This insurance policy is reinsured by the Federal Crop Insurance 
Corporation (FCIC) under the provisions of the Federal Crop 
Insurance Act (Act) (7 U.S.C. 1501 et seq.). All provisions of the 
policy and rights and responsibilities of the parties are 
specifically subject to the Act. The provisions of the policy are 
published in the Federal Register and codified at 7 CFR chapter IV 
under the Federal Register Act (44 U.S.C. 1501 et seq.), and may not 
be waived or varied in any way by the crop insurance provider, an 
agent or any other agent or employee of the crop insurance provider, 
FCIC, the Risk Management Agency (RMA) or the Farm Service Agency 
(FSA). Procedures (including handbooks, manuals, and directives) 
issued by FCIC and published on the RMA Web site at http://www.rma.usda.gov/ or a successor website will be used in the 
administration of this policy. If there is a conflict between the 
provisions of your policy, the Federal Crop Insurance Act (Act), or 
the regulations published at 7 CFR chapter IV and the procedures 
issued by FCIC, the terms of your policy, the Act, or such 
regulations control. In the event that we cannot pay your loss, your 
claim will be settled in accordance with the provisions of this 
policy and paid by FCIC. No state guarantee fund will be liable for 
your loss.
* * * * *

Terms and Conditions

Basic Provisions

    1. Definitions.
* * * * *
    Actuarial documents. The material for the crop year which is 
available for public inspection in your agent's office and published 
on RMA's Web site at http://www.rma.usda.gov/ or a successor 
website, and which shows the amounts of insurance or production 
guarantees, coverage levels, information needed to determine premium 
rates, premium adjustment percentages, practices, types, insurable 
acreage, and other related information regarding crop insurance in 
the county.
* * * * *
    Agricultural commodity. Any crop or other commodity produced, 
regardless of whether or not it is insurable.
    Annual crop. An agricultural commodity that normally must be 
planted each year.
* * * * *
    Average yield. The actual production history (APH) yield 
determined in accordance with 7 CFR part 400, subpart G, excluding 
any adjustments elected by you under section 36.
* * * * *
    Border. A readily identifiable distinction between two areas of 
land (e.g., different

[[Page 58926]]

planting patterns or plant densities, or area where no crop is 
planted, etc.).
    Buffer zone. A parcel of land that separates agricultural 
commodities grown under organic practices from agricultural 
commodities grown under non-organic practices, and which is 
sufficient in size, as specified in your organic plan, to prevent 
the possibility of unintended contact by prohibited substances or 
organisms.
* * * * *
    Certified organic acreage. Acreage in the certified organic 
farming operation that has been certified by a certifying agent as 
conforming to organic standards in accordance with 7 CFR part 205.
    Certifying agent. A private or governmental entity accredited by 
the Secretary, for the purpose of certifying a production, 
processing or handling operation as organic.
* * * * *
    Contract change date. The calendar date by which changes to 
policy provisions will be made in accordance with section 4.
* * * * *
    Cover crop. A crop that is commonly planted in the area for 
erosion control or green manure and is generally left in place for 
one growing season.
* * * * *
    Crop year. The period within which the insured crop is normally 
grown, regardless of whether or not it is actually grown, and 
designated by the calendar year in which the insured crop is 
normally harvested, unless otherwise specified in the Crop 
Provisions.
* * * * *
    Delinquent account. Any account you have with us in which 
administrative fees or premiums, and interest on those amounts, is 
not paid by the termination date specified in the Crop Provisions, 
or any other amounts due us, such as indemnities found not to have 
been earned, and the interest on such amounts, which are not paid 
within 30 days of our mailing or other delivery of notification to 
you of the amount due.
    Disinterested third party. A person or entity that does not have 
any financial or other interest in the insured such as a familial or 
other personal relationship.
    Double-crop. The practice of producing two or more crops for 
harvest on the same acreage in the same crop year.
    Earliest planting date. A calendar date contained in the Special 
Provisions that defines the earliest date you may plant an insured 
agricultural commodity and qualify for a replanting payment if such 
payments are authorized by the Crop Provisions.
* * * * *
    Enterprise unit. All insurable acreage of the insured crop in 
the county in which you have a share on the date coverage begins for 
the crop year. An enterprise unit must consist of planted acreage of 
the same insured crop in:
    (1) Two or more basic units that are located in two or more 
separate sections, section equivalents, or FSA farm serial numbers; 
or
    (2) Two or more optional units established by separate sections, 
section equivalents, or FSA farm serial numbers.
    Field. All acreage of tillable land within a natural or 
artificial boundary (e.g., roads, waterways, fences, etc.). 
Different planting patterns or planting different crops do not 
create separate fields.
* * * * *
    First crop. With respect to a single crop year and any specific 
acreage, the first instance that an agricultural commodity is 
planted for harvest or prevented from being planted and is insured 
under the authority of the Act. For example, if winter wheat that is 
not insured is planted on acreage that is later planted to soybeans 
that are insured, the first crop would be soybeans. If the winter 
wheat was insured, it would be the first crop.
* * * * *
    Good farming practices. The farming practices that are commonly 
used in the area where the crop is produced, including sustainable 
farming practices, that are recognized by FCIC to be necessary for 
the crop to make normal progress toward maturity, produce at least 
the yield used to determine the production guarantee or amount of 
insurance, and be compatible with the agronomic and weather 
conditions in the area. If you use a farming practice not commonly 
used in the area, you should contact us to determine if such 
practice is insurable.
* * * * *
    Liability. The dollar amount of insurance coverage used in the 
premium computation for the applicable crop.
* * * * *
    Non-contiguous. Acreage farmed by you that is separated from 
other acreage that is farmed by you by land that is neither owned by 
you nor rented by you for cash or a crop share, except that acreage 
farmed by you that is only separated by a public or private right-
of-way, waterway, or an irrigation canal will be considered as 
contiguous.
    Organic farming practice. A system of plant production practices 
approved by a certifying agent in accordance with 7 CFR part 205.
    Organic plan. A written plan that describes the organic farming 
practices that you and a certifying agent agree upon annually or at 
such other times as prescribed by the certifying agent.
    Organic standards. Standards in accordance with the Organic 
Foods Production Act of 1990 (7 U.S.C. 6501 et seq.) and 7 CFR part 
205.
    Perennial crop. An agricultural commodity that normally does not 
have to be planted each year.
* * * * *
    Practical to replant. Our determination, after loss or damage to 
the insured crop, based on all factors, including, but not limited 
to moisture availability, marketing window, condition of the field, 
and time to crop maturity, that replanting the insured crop will 
allow the crop to attain maturity prior to the calendar date for the 
end of the insurance period. It will not be considered practical to 
replant after the end of the late planting period, or the final 
planting date if no late planting period is applicable, unless 
replanting is generally occurring in the area. It will be considered 
to be practical to replant regardless of the cost or availability of 
seed or plants.
* * * * *
    Prevented planting. The inability to plant the insured crop by 
the final planting date due to excess moisture or because weather 
conditions are such that the seed would not be expected to germinate 
or produce a crop. You may also be eligible for a prevented planting 
payment if you are unable to plant the insured crop with the proper 
equipment within the late planting period.
    Price election. The amounts contained in the Special Provisions 
or an addendum thereto, or in a written agreement if a price 
election is not provided in the Special Provisions or addendum 
thereto, to be used for computing the value per pound, bushel, ton, 
carton, or other applicable unit of measure for the purposes of 
determining premium and indemnity under the policy.
* * * * *
    Prohibited substance. Any biological, chemical, or other agent 
that is prohibited from use or is not provided for use in the 
organic standards for use on any certified organic, organic, 
transitional or buffer zone acreage.
    Replanting. Performing the cultural practices necessary to 
prepare the land to replace the seed or plants of the damaged or 
destroyed insured crop and then replacing the seed or plants of the 
same crop in the same insured acreage.
* * * * *
    Second crop. With respect to a single crop year, any 
agricultural commodity that is planted immediately following a first 
crop on the same acreage. The second crop may be the same or a 
different agricultural commodity as the first crop, except the term 
does not extend to a replanting of a first crop when it is required 
by the policy. A cover crop, planted after a first crop, that is 
hayed, grazed or harvested will be considered a second crop.
    Secretary. The Secretary of Agriculture, USDA.
* * * * *
    Substantial beneficial interest. An interest held by any person 
of at least 10 percent in the applicant or insured. All spouses and 
children that reside in the same household will be considered to 
have a substantial beneficial interest in the applicant or insured 
unless the spouse or children can prove that the acreage farmed by 
the applicant or insured is a totally separate farming operation in 
accordance with FCIC issued procedure and that the spouse or 
children derive no benefit from the farming operation of the insured 
or applicant.
* * * * *
    Sustainable farming practice. A system or process for producing 
an agricultural commodity recognized by the Natural Resources 
Conservation Service (NRCS) or a successor agency as likely to 
conserve or enhance natural resources and the environment.
* * * * *
    Transitional acreage. Acreage on which organic farming practices 
are being followed

[[Page 58927]]

but that does not yet qualify to be designated as organic acreage.
* * * * *
    Whole farm unit. All insurable acreage of two or more insured 
crops planted in the county in which you have a share on the date 
coverage begins for each crop for the crop year. All crops for which 
the whole farm unit structure is available must be included in the 
whole farm unit. No one insured crop can constitute more than 75.0 
percent of the total liability of all insured crops in the whole 
farm unit, and all crops in the unit must be insured under the same 
plan of insurance and with the same insurance provider.
* * * * *
    2. Life of Policy, Cancellation, and Termination.
* * * * *
    (b) Your application for insurance must contain all the 
information required by us to insure the crop.
    (1) Applications that do not contain all social security numbers 
and employer identification numbers of the applicant and all social 
security numbers of individuals with a substantial beneficial 
interest in the applicant and shares, as applicable, coverage level, 
price election, crop, type, variety, or class, plan of insurance, 
and any other material information required to insure the crop, are 
not acceptable.
    (2) If an entity has an interest of 10 percent or more in the 
insured or applicant, the social security number of all individuals 
with an interest in the entity must be provided.
    (3) Notwithstanding any provision contained in 7 CFR part 400, 
subpart U, if we discover that a person with a substantial 
beneficial interest has failed to provide a social security number 
or if a person with a substantial beneficial interest in the insured 
crop is ineligible:
    (i) For the year of application, the application will not be 
accepted for the insured crop for which the social security numbers 
were not provided or the person was ineligible; or
    (ii) For any crop year after the year of application, no 
indemnity will be due for the insured crop for which the social 
security numbers were not provided or the person was ineligible. 
Even though no indemnity is due, you will still be required to pay 
20 percent of the premium due under the policy to offset costs 
incurred by us in the service of this policy. If previously paid, 
the balance of the premium will be returned. No administrative fee 
will be due for such crops.
* * * * *
    (e) The premium, administrative fee, and any other amount due, 
plus any accrued interest, will be considered delinquent if it is 
not paid on or before the termination date specified in the Crop 
Provisions or the date contained in a notice to you of overpayment 
or any payment agreement. Termination may affect your eligibility 
for benefits under other USDA programs. Any amount due to us for any 
crop insured by us under the authority of the Act will be deducted 
from any indemnity due you for this or any other crop insured with 
us. All administrative fees and related interest are owed to FCIC 
and failure to timely pay such fees when due may also subject you to 
other administrative offsets. If any premium, administrative fee, 
and any other amount due, plus any accrued interest, is not paid on 
or before the termination date for the crop on which the amount is 
due:
* * * * *
    (3) Ineligibility will be effective on:
    (i) The date that a policy was terminated for the crop for which 
you failed to pay premium, an administrative fee, and any related 
interest owed;
    (ii) The payment date contained in any notification of 
indebtedness for any overpaid indemnity, if you fail to pay the 
amount owed by such due date; or
    (iii) The termination date for the crop year prior to the crop 
year in which a scheduled payment is due under a payment agreement 
if you fail to pay the amount owed by any payment date in such 
payment agreement;
* * * * *
    (5) A crop policy already in effect at the time you become 
ineligible will not be terminated until the termination date for 
that crop policy (If you are ineligible, you may not obtain any crop 
insurance under the Act until payment is made in full, you execute 
an agreement to repay the debt and make payments in accordance with 
the agreement, or you file a petition to have your debts discharged 
in bankruptcy. Dismissal of the bankruptcy petition before discharge 
will void all policies in effect retroactive to the date you were 
originally determined ineligible to participate and any indemnities 
paid subsequent to that date must be repaid);
    (6) If you execute an agreement to pay the debt and fail to make 
any scheduled payment, all of your policies will be terminated 
effective on the termination date for the crop year prior to the 
crop year in which you failed to make the scheduled payment and no 
indemnity, replanting payment or prevented planting payment will be 
due for that year (You will no longer be eligible to obtain crop 
insurance by execution of an agreement to pay the debt. You will be 
ineligible for crop insurance until the debt is paid in full or you 
file a petition to discharge the debt in bankruptcy. Dismissal of 
the bankruptcy petition before discharge will void all policies in 
effect retroactive to the date you were originally determined 
ineligible to participate and any payments and indemnities paid 
subsequent to that date must be repaid);
    (7) Once the policy is terminated, it cannot be reinstated for 
the current crop year unless the termination was in error because 
you did not owe any amounts or you paid the amounts owed on or 
before the termination date;
* * * * *
    (9) If we deduct the amount due from an indemnity or prevented 
planting payment owed to you, the date of payment for the purpose of 
determining your eligibility will be the date that you and we sign 
the claim for indemnity (If the claim for indemnity is not signed by 
you and us by the termination date or if the claim amount does not 
satisfy the debt, all amounts owed must still be paid by the 
termination date or the policy will be terminated and you will not 
be eligible for insurance in accordance with this paragraph).
    (10) For example, if crop A, with a termination date of October 
31, 2001, and crop B, with a termination date of March 15, 2002, are 
insured and you do not pay the premium for crop A by the termination 
date, you are ineligible for crop insurance as of October 31, 2001, 
and crop A's policy is terminated as of that date. Crop B's policy 
is terminated as of March 15, 2002. If you enter an agreement to 
repay the debt on April 25, 2002, the earliest date by which you can 
obtain crop insurance for crop A is to apply for crop insurance by 
the October 31, 2002, sales closing date and for crop B is to apply 
for crop insurance by the March 15, 2003, sales closing date. If you 
fail to make a payment that was scheduled to be made on April 1, 
2003, your policy will terminate as of October 31, 2002, for crop A, 
and March 15, 2003, for crop B, and no indemnity or prevented 
planting payment will be due for that crop year for either crop. You 
will not be eligible to apply for crop insurance for any crop until 
after the debt is paid in full or you file a petition to discharge 
the debt in bankruptcy.
    (11) If you are determined to be ineligible under section 2(e), 
all persons with a substantial beneficial interest in you are also 
ineligible until you become eligible again.
* * * * *
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
* * * * *
    (b) You may select only one coverage level from among those 
offered by us for each insured crop. You may change the coverage 
level, price election, or amount of insurance for the following crop 
year by giving written notice to us not later than the sales closing 
date for the insured crop. However, you may not increase your 
coverage level or your price election if a cause of loss that could 
or would result in an insured loss has occurred prior to the time 
you request the increase. Since the price election or amount of 
insurance may change each year, if you do not select a new price 
election or amount of insurance on or before the sales closing date, 
we will assign a price election or amount of insurance which bears 
the same relationship to the price election schedule as the price 
election or amount of insurance that was in effect for the preceding 
year. (For example: If you selected a 100 percent price election for 
the previous crop year and you do not select a new price election 
for the current crop year, we will assign a 100 percent price 
election for the current crop year.)
* * * * *
    (d) It is your responsibility to accurately report all 
information that is used to determine your average yield. You may 
certify this information on your production report. However, if you 
file a claim for any unit, you must provide written verifiable 
records for that unit for at least the three most recent crop years 
of your production history to support the information you have 
certified (if the yields for the three years are not correct, we 
will require records for all years of your production history for 
the loss unit). If you misreport any material information used to 
determine your approved yield, we will:

[[Page 58928]]

    (1) Correct the unit structure, if necessary;
    (2) Retain the average yield for the current crop year if the 
information you reported results in an average yield lower than the 
correct yield or not greater than 105 percent of the correct yield; 
or
    (3) Deny the claim for indemnity or replanting or prevented 
planting payment on the unit for which the information was 
misreported, if the information you reported results in an average 
yield greater than 105 percent of the correct yield. Even though 
there is no indemnity or replanting or prevented planting payment 
due, you will still be required to pay the premium due under the 
policy for the unit. The premium amount used for this purpose will 
be based on the corrected average yield.
    (e) We will revise your approved yield when:
    (1) The approved yield for the unit is inconsistent with other 
units of the insured crop in your farming operation, surrounding 
farms with acreage with similar characteristics and farming 
practices, or other persons in which you have a share, unless you 
provide evidence that will account for the discrepancy in the 
production of such units (The inconsistent yield will be revised to 
an amount that is consistent with other units in your farming 
operation, surrounding farms with acreage with similar 
characteristics and farming practices, or units of other persons in 
which you have a share);
    (2) The production reported (appraised or harvested) for the 
unit is obtained from an average number of acres that is less than 
25 percent of the current acreage in the unit (Representative 
samples will not be used to establish the average yield except when 
representative samples are used to calculate any indemnity paid to 
you); or
    (3) You change your farming practice within a unit during a 
growing season or between crop years (For example, you have actual 
production history for a non-irrigated crop, but you decide to 
partially irrigate the crop).
    (f) If you elect to plant a second crop on acreage where the 
first crop was prevented from being planted, you will receive a 
yield equal to 60 percent of the actual production history (APH) 
yield for the first crop to calculate your average yield for 
subsequent crop years (not applicable to crops if the APH is not the 
basis for the insurance guarantee). If the unit contains both 
prevented planted and planted acreage of the same crop, the yield 
for the unit will be determined by:
    (1) Multiplying the number of insured prevented planting acres 
by its respective yield determined in accordance with this 
subsection;
    (2) Adding the totals from section 3(f)(1) to the amount of 
appraised or harvested production for all of the insured planted 
acreage; and
    (3) Dividing the total in section 3(f)(2) by the total number of 
acres in the unit.
* * * * *
    (i) Hail and fire coverage may be excluded from the covered 
causes of loss for an insured crop only if you select additional 
coverage of not less than 65 percent of the approved yield 
indemnified at the 100 percent price election, or a comparable 
coverage as established by FCIC.
* * * * *
    4. Contract Changes.
* * * * *
    (b) Any changes in policy provisions, amounts of insurance, 
premium rates, program dates, and price elections (except as 
specified in section 3) will be posted on the RMA Web site at http://www.rma.usda.gov/ or a successor website or filed with the Office 
of the Federal Register not later than the contract change date 
contained in the Crop Provisions. This information will be available 
to you from your local crop insurance provider.
* * * * *
    5. [Reserved]
    6. Report of Acreage.
* * * * *
    (d) You may not revise your acreage report for any planted 
acreage after the acreage reporting date without our consent. If you 
report any prevented planting acreage, you cannot revise such 
acreage after the report is initially submitted to us without our 
consent.
* * * * *
    (f) You should verify all information on the acreage report 
prior to submitting it to us. If you:
    (1) Report information that results in a liability amount 95.0 
to 105.0 percent of the corrected liability for a unit, any 
indemnity, replanting or prevented planting payment will be based on 
the corrected liability; or
    (2) Fail to report any unit, or you report information that 
results in a liability amount for the unit lower than 95.0 percent 
or higher than 105.0 percent of the corrected amount, no indemnity, 
replanting or prevented planting payment will be paid. Even though 
there is no indemnity or replanting or prevented planting payment 
due, you will still be required to pay the premium due under the 
policy for the unit. The premium amount used for this purpose will 
be based on the corrected liability.
    (g) If we discover that you have incorrectly reported any 
information on the acreage report for any crop year, you may be 
required to provide documentation in subsequent crop years that 
substantiates your report of acreage for those crop years, 
including, but not limited to, an acreage measurement service at 
your own expense.
* * * * *
    7. Annual Premium and Administrative Fees.
    (a) The annual premium is earned and payable at the time 
coverage begins. You will be billed for the premium and 
administrative fee not earlier than the premium billing date 
specified in the Special Provisions.
    (b) Any premium or administrative fees owed by you may be offset 
from an indemnity or prevented planting payment due you in 
accordance with section 2(e).
* * * * *
    (d) The premium will be computed using the price election or 
amount of insurance you elect or that we assign in accordance with 
section 3(b). The information needed to determine the premium rate 
and any premium adjustment percentages that may apply are contained 
in the actuarial documents or an approved written agreement.
* * * * *
    (f) If the amount of premium (gross premium less premium subsidy 
paid on your behalf by FCIC) and administrative fee you are required 
to pay for any acreage exceeds the liability for the acreage, 
coverage for those acres will not be provided (no premium or 
administrative fee will be due and no indemnity will be paid for 
such acreage).
    8. Insured Crop.
* * * * *
    (b) * * *
    (1) If the information necessary to insure the crop or a 
specific practice, type, class, or variety of it (price election, 
premium rate information, yields, etc.) is not included in the 
actuarial documents or in a written agreement (A written agreement 
may be used to provide a premium rate other than that specified in 
the actuarial documents for high risk land only);
    (2) Grown using a practice or a type, class or variety that is 
not adapted to the area or is expressly excluded by the 
policy (Just because a farming practice, type, class, or variety is 
not excluded by the policy does not mean that it is insurable. If 
any farming practice, type, class, or variety is not established or 
widely used in the area, it may not be considered a good farming 
practice);
* * * * *
    9. Insurable Acreage.
    (a) * * *
    (1) That has not been planted and harvested within one of the 
three previous crop years unless you can show that:
    (i) * * *
    (A) In at least 2 of the previous 3 crop years to comply with 
any other USDA program;
* * * * *
    (iii) Such acreage constitutes 5 percent or less of the insured 
planted acreage in the unit; or
* * * * *
    (3) For which the actuarial documents do not provide the 
information necessary to determine the premium rate, unless 
insurance is allowed by a written agreement;
    (4) On which the insured crop is damaged and it is practical to 
replant the insured crop, but the insured crop is not replanted as 
soon as it is practical to do so;
* * * * *
    (8) Of a second crop if you elect not to insure such acreage 
when there is an insurable loss for planted acreage of a first crop 
and you intend to collect an unreduced indemnity for the first crop 
acreage in accordance with section 15 (You must make the election 
not to insure acreage of a second crop at the time the first crop 
acreage is released by us and you must report the crop acreage that 
will not be insured by the applicable acreage reporting date); or
    (9) Of a crop that is planted following a second crop or 
following an insured crop that is prevented from being planted after 
a first crop, unless it is an established practice in the area to 
plant three or more crops for harvest on the same acreage in the 
same crop year, and additional coverage insurance

[[Page 58929]]

provided under the authority of the Act is offered for the third or 
subsequent crop in the same crop year. Insurance will only be 
provided for a third or subsequent crop as follows:
    (i) You must provide records acceptable to us that show:
    (A) You have produced and harvested the insured crop as a third 
or later crop on the same acreage in the same crop year in at least 
two of the last four years in which you produced the insured crop; 
or
    (B) The applicable acreage has had three or more crops produced 
and harvested on it in at least two of the last four years in which 
the insured crop was grown on it; and
    (ii) The amount of insurable acreage will not exceed 100 percent 
of the greatest number of acres for which you provide the records 
required in section 9(a)(9)(i)(A) or (B).
* * * * *
    10. Share Insured.
* * * * *
    (b) We will include in your share or under your policy for any 
insured crop, any acreage or interest:
    (1) Reported by or for your spouse, child, or any member of your 
household, unless you can prove that the acreage farmed by your 
spouse, child, or any member of your household is a totally separate 
farming operation in accordance with FCIC approved procedures; or
    (2) Held by a corporation, partnership, association, or other 
legal entity in which you have a share if the other shareholders, 
stakeholders, or persons affiliated with the corporation, 
partnership, association, or other legal entity are all members of 
your family or household or are the same persons that are the 
shareholders, stakeholders, or persons affiliated with the other 
corporation, partnership, association, or other legal entity in 
which you are a shareholder, stakeholder or otherwise affiliated. 
For example, if you are in one partnership with John Doe and Jane 
Doe that insures 100 acres and you enter a different partnership 
with John Doe and Jane Doe, that rents another 100 acres, all 200 
acres must be insured under the original partnership policy.
* * * * *
    12. Causes of Loss.
    The insurance provided is against only unavoidable loss directly 
caused by specific causes of loss contained in the Crop Provisions. 
All specified causes of loss, except where the Crop Provisions 
specifically cover loss of revenue due to a reduced price in the 
marketplace, must be due to a natural disaster. All other causes of 
loss, including but not limited to the following, are NOT covered:
* * * * *
    (c) Water contained by structures designed to channel or contain 
water such as levee systems, dams, or reservoir projects on any 
acreage, or water released from such structures on any acreage on 
which there is a water easement;
    (d) Failure or breakdown of the irrigation equipment or 
facilities unless the failure or breakdown is due to a cause of loss 
specified in the Crop Provisions (If damage is due to an insured 
cause, you must make all reasonable efforts to restore the equipment 
or facilities to proper working order in a timely manner unless we 
determine it is not practical to do so);
* * * * *
    (f) Any cause of loss that occurs during the insurance period 
but the damage is not discoverable until after the crop is placed in 
storage, unless expressly authorized in the Crop Provisions.
* * * * *
    14. Duties in the Event of Damage, Loss, Abandonment, 
Destruction, or Alternative Use of Crop or Acreage.
    Your Duties--
    (a) In case there has been a cause of loss that may have 
affected the amount of production or quality of the insured crop, 
you must:
* * * * *
    (2) Give us notice, by unit for each insured crop, within 72 
hours after the occurrence of the cause of loss (For continuing 
causes of loss such as drought or excess moisture, you must give us 
notice within 72 hours of your initial discovery that the crop may 
have suffered any damage);
    (3) If provided for in the Crop Provisions, leave representative 
samples intact of the unharvested crop if you report damage within 
15 days of the time you begin harvest of the damaged unit (The 
samples must be left intact until we inspect them or until 15 days 
after completion of harvest on the unit, whichever is earlier. 
Unless specified otherwise in the Crop Provisions or Special 
Provisions, the samples must be 10 feet wide and extend the entire 
length of each field in the unit. The period to retain 
representative samples may be extended if it is necessary to 
accurately determine the loss. You will be notified in writing of 
any such extension);
* * * * *
    (c) In addition to complying with the other notice requirements, 
you must submit a claim for indemnity declaring the amount of your 
loss not later than 60 days after the end of the insurance period 
unless you request an extension in writing and we agree to such 
extension. The claim for indemnity must include all information we 
require to settle the claim.
    (d) You must:
    (1) Provide a complete harvesting and marketing record of each 
insured crop by unit including separate records showing the same 
information for production from any acreage not insured (In 
addition, if you insure any acreage that may be subject to an 
indemnity reduction as specified in section 15(e), you must provide 
separate records of production from such acreage for all insured 
crops planted on the acreage. For example, if you have an insurable 
loss on 10 acres of wheat and subsequently plant cotton on the same 
10 acres, you must provide records of the wheat and cotton 
production on the 10 acres separate from any other wheat and cotton 
production that may be planted in the same unit. If you fail to 
provide such records, we will allocate the production of each crop 
to the acreage in proportion to our liability for the acreage); and
    (2) Upon our request, or that of any USDA employee, submit to an 
examination under oath.
* * * * *
    (f) In the event you are prevented from planting an insured crop 
which has prevented planting coverage, you must notify us within 72 
hours after:
    (1) The final planting date, if you do not intend to plant the 
insured crop during the late planting period or if a late planting 
period is not applicable; or
    (2) You determine you will not be able to plant the insured crop 
within any applicable late planting period.
* * * * *
    (h) Failure to comply in a timely manner with all the 
requirements of this section will result in denial of your claim for 
indemnity or prevented planting or replant payment for the acreage 
in which failure occurred. Even though no indemnity or other payment 
is due, you will still be required to pay the premium due under the 
policy for the unit.
    Our Duties--
    (a) * * *
    (1) We reach agreement with you, including establishment of the 
amount of production or the value of any production from acreage on 
which a second crop is planted:
    (2) Completion of arbitration, reconsideration of determinations 
regarding good farming practices or any other appeal that results in 
an award in your favor, unless we exercise our right to appeal such 
decision;
    (3) Completion of any investigation by the USDA of your current 
or any past claim for indemnity if no evidence of wrongdoing has 
been found (If any evidence of wrongdoing has been discovered, the 
amount of any indemnity overpayment as a result of such wrongdoing 
may be offset from any indemnity owed to you); or
* * * * *
    15. Production Included in Determining an Indemnity and Payment 
Reductions.
* * * * *
    (b) Appraised production will be used to calculate your claim 
only if you are not going to harvest your acreage. Such appraisals 
may be conducted after the end of the insurance period. If your 
claim is based on appraised production and you later decide to 
harvest the acreage, you must provide us with the amount of 
harvested production. Claims will be adjusted if the harvested 
production exceeds the appraised production and you will be required 
to repay any overpaid indemnity.
* * * * *
    (e) With respect to acreage where you have suffered a total or 
partial loss to your first crop in the crop year, except in the case 
of double cropping described in section 15(h):
    (1) You may elect to not plant or to plant and not insure a 
second crop on the same acreage for harvest in the same crop year 
and collect an indemnity payment that is equal to 100 percent of the 
insurable loss for the first crop; or
    (2) You may elect to plant and insure a second crop on the same 
acreage for harvest in the same crop year and:

[[Page 58930]]

    (i) Collect an indemnity payment that is 35 percent of the 
insurable loss for the first crop;
    (ii) Be responsible for a premium for the first crop that is 
commensurate with the amount of the indemnity paid for the first 
crop; and
    (iii) If the second crop does not suffer an insurable loss:
    (A) Collect an indemnity payment for the other 65 percent of 
insurable loss that was not previously paid under section 
15(e)(2)(i); and
    (B) Be responsible for the remainder of the premium for the 
first crop that you did not pay under section 15(e)(2)(ii).
    (f) With respect to acreage where you were prevented from 
planting the first crop in the crop year, except in the case of 
double cropping described in section 15(h):
    (1) If a second crop is not planted on the same acreage for 
harvest in the same crop year you may collect a prevented planting 
payment that is equal to 100 percent of the prevented planting 
payment for the acreage for the first crop; or
    (2) If a second crop is planted on the same acreage for harvest 
in the same crop year and:
    (i) Provided that the second crop is not planted on or before 
the final planting date or during the late planting period (as 
applicable) for the first crop, you may collect a prevented planting 
payment that is 35 percent of the prevented planting payment for the 
first crop; and
    (ii) Be responsible for a premium for the first crop that is 
commensurate with the amount of the indemnity paid for the first 
crop.
    (g) The reduction in the amount of indemnity or prevented 
planting payment and premium specified in sections 15(e)(2)(i) and 
(ii) and 15(f)(2)(i) and (ii) will apply even if another person 
plants the second crop on any acreage where the first crop was 
planted or was prevented from being planted, as applicable. The 
reduction in the amount of indemnity or prevented planting payment 
will also apply if a volunteer crop is harvested from the same 
acreage in the same crop year, or if a cover crop is grazed, hayed, 
or otherwise harvested. In the event you receive cash rent for any 
acreage on which you were prevented from planting or had a partial 
or total loss to a first crop, any indemnity or prevented planting 
payment you receive for the first crop will be limited to 35 percent 
of the insurable loss or prevented planting payment for the first 
crop, regardless of whether or not a second crop is planted or a 
second crop suffers an insurable loss and your premium will be 
commensurate with the amount of indemnity or prevented planting 
payment paid. This reduction will not apply if the double-cropping 
requirements described in subsection (h) have been met.
    (h) You may receive a full indemnity, or a full prevented 
planting payment for a first crop when a second crop is planted on 
the same acreage in the same crop year, regardless of whether or not 
the second crop is insured or sustains an insurable loss, if each of 
the following conditions are met:
    (1) It is an established practice in the area to plant two or 
more crops for harvest in the same crop year;
    (2) The second or more crops are customarily planted after the 
first crop for harvest on the same acreage in the same crop year in 
the area;
    (3) Additional coverage insurance offered under the authority of 
the Act is available in the county on the two or more crops that are 
double-cropped;
    (4) You provide records acceptable to us of acreage and 
production that show you have double cropped acreage in at least two 
of the last four crop years in which the first crop was planted, or 
that show the applicable acreage was double-cropped in at least two 
of the last four crop years in which the first crop was grown on it; 
and
    (5) In the case of prevented planting, the second crop is not 
planted on or prior to the final planting date or, if applicable, 
the end of the late planting period for the first crop.
    (i) The receipt of a full indemnity or prevented planting 
payment on both crops that are double-cropped is limited to the 
number of acres for which you can demonstrate you have double-
cropped or that have been historically double-cropped as specified 
in section 15(h).
    (j) If any Federal or State agency requires destruction of any 
insured crop production because it contains levels of substances or 
has conditions that are injurious to human or animal health in 
excess of the maximum amounts allowed by the Food and Drug 
Administration, other public health organizations of the United 
States or agency of the applicable State, you must certify that such 
production has been destroyed prior to receiving an indemnity 
payment. Failure to destroy the crop production will result in you 
having to repay any indemnity paid and you may be subject to 
administrative sanctions in accordance with section 515(h) of the 
Act and 7 CFR part 400, subpart R, and any applicable civil or 
criminal sanctions.
* * * * *
    17. Prevented Planting.
    (a) * * *
    (1) You were prevented from planting the insured crop due to an 
insured cause of loss that is general in the surrounding area and 
generally prevents other producers from planting acreage with 
similar characteristics (Failure to plant at any time on or before 
the final planting date when other producers in the area with 
acreage with similar characteristics are planting will result in the 
denial of the prevented planting claim provided that such planting 
constitutes a good farming practice. The surrounding area includes 
all acreage that has experienced the insured cause of loss and 
acreage with similar characteristics means acreage with similar 
geography, topography, soil types, and the same weather conditions 
and exposure) and occurs:
* * * * *
    (c) The premium amount for acreage that is prevented from being 
planted will be the same as that for timely planted acreage except 
as specified in section 15(f).
* * * * *
    (e) * * *
    (1) * * *
    (ii) * * *
    (A) The number of acres of the crop specified in the processor 
contract, if the contract specifies a number of acres contracted for 
the crop year; or the result of dividing the quantity of production 
stated in the processor contract by your approved yield, if the 
processor contract specifies a quantity of production that will be 
accepted. If a minimum number of acres or amount of production is 
specified in the processor contract, this amount will be used to 
determine the eligible acres. If a processor cancels or does not 
provide contracts, or reduces the contracted acreage or production 
from what would have otherwise been allowed, solely because the 
acreage was prevented from being planted due to an insured cause of 
loss, we may elect to determine the number of acres eligible based 
on the number of acres or amount of production you had contracted in 
the county in the previous crop year. If you did not have a 
processor contract in place for the previous crop year, you will not 
have any eligible prevented planting acreage for the applicable 
processor crop. The total eligible prevented planting acres in all 
counties cannot exceed the total number of acres or amount of 
production contracted in all counties in the previous crop year. If 
the applicable crop provisions require that the price election be 
based on a contract price, and a contract is not in force for the 
current year, the price election may be based on the contract price 
in place for the previous crop year.
* * * * *
    (f) * * *
    (1) That does not constitute at least 20 acres or 20 percent of 
the insurable crop acreage in the unit, whichever is less (Any 
prevented planting acreage within a field that contains planted 
acreage will be considered to be acreage of the same crop, type, and 
practice that is planted in the field except that the prevented 
planting acreage may be considered to be acreage of a crop, type, 
and practice other than that which is planted in the field, if the 
acreage that was prevented from being planted constitutes at least 
20 acres or 20 percent of the total insurable acreage in the field 
and you produced both crops, crop types, or followed both practices 
in the same field in the same crop year within any one of the 4 most 
recent crop years, or if it is clear that the insured crop planted 
in the field would not have been planted on the prevented planting 
acreage because rotation requirements would not be met or because 
you had planted the total number of acres specified in the processor 
contract);
    (2) For which the actuarial documents do not provide the 
information needed to determine a premium rate unless a written 
agreement designates such premium rate;
    (3) Used for conservation purposes, intended to be left 
unplanted under any program administered by the USDA or other 
government agency, or is required to be left unharvested under the 
terms of the lease or any other agreement (The number of acres 
eligible for prevented planting will be limited to the number of 
acres specified in the lease for which you are required to pay 
either cash or share rent);
    (4) On which the insured crop is prevented from being planted, 
if you or any other person receives a prevented planting

[[Page 58931]]

payment for any crop for the same acreage in the same crop year, 
excluding share arrangements, unless:
    (i) It is an established practice in the area to plant the 
second crop for harvest following harvest of the first crop, and 
additional coverage insurance offered under the authority of the Act 
is available in the county for both crops in the same crop year;
    (ii) You provide records acceptable to us of acreage and 
production that show you have double-cropped acreage in at least two 
of the last four crop years in which the first crop was planted, or 
that show the applicable acreage was double-cropped in at least two 
of the last four crop years in which the first crop was grown on it; 
and
    (iii) The amount of acreage you are double-cropping in the 
current crop year does not exceed the number of acres for which you 
provide the records required in section 17(f)(4)(ii);
    (5) On which the insured crop is prevented from being planted, 
if any crop, is planted or a volunteer crop is harvested by you or 
any other person on the same acreage:
    (i) Within the late planting period for the insured first crop, 
or on or before the final planting date if a late planting period is 
not applicable; or
    (ii) On or before the final planting date for the insured crop 
unless you meet the double cropping requirements in section 
17(f)(4), or the crop planted was a cover crop that was not hayed, 
grazed or otherwise harvested, or unless allowed by the Special 
Provisions.
    (6) For which planting history or conservation plans indicate 
that the acreage would remain fallow for crop rotation purposes or 
on which any pasture or other forage crop is in place on the acreage 
during the time that planting of the insured crop generally occurs 
in the area;
* * * * *
    (12) If, at the time you lease, buy, or otherwise acquire the 
acreage or the time the acreage becomes available to you for 
planting or you request insurance for the acreage, a cause of loss 
has occurred that will or could prevent planting.
* * * * *
    18. Written Agreements.
* * * * *
    (c) If approved, the written agreement will include all variable 
terms of the contract, including, but not limited to, crop practice, 
type or variety, the guarantee, premium rate or information needed 
to determine the premium rate, and price election;
    (d) Each written agreement will only be valid for the number of 
crop years specified in the written agreement, not to exceed four 
years, or as long as the conditions under which the agreement was 
issued exist, whichever time period ends first (Such conditions 
include, but are not limited to, farming practices used, legal 
description of the acreage, types or varieties produced, etc. If any 
condition changes, you must notify us immediately, the written 
agreement will no longer be effective, and you must request a new 
written agreement. Failure to immediately notify us of changed 
conditions will result in denial of liability under the terms of the 
written agreement. If a written agreement is not specifically 
renewed after it expires, insurance coverage for subsequent years 
will be in accordance with the printed policy);
    (e) An application for a written agreement submitted after the 
sales closing date may be approved if you demonstrate your physical 
inability to apply prior to the sales closing date, or it is 
submitted in accordance with FCIC approved written agreement 
procedures published on the RMA Web site at http://www.rma.usda.gov/ 
or a successor website and, after inspection of the acreage by us, 
it is determined that no loss has occurred on planted acreage or no 
cause of loss that could prevent planting has occurred and the crop 
is insurable in accordance with the policy and written agreement 
provisions;
    (f) For a crop, type, variety or practice that is not insurable 
in the county, you must provide at least four years of records to 
support the change you are requesting (If you do not have at least 
four years of records to support the requested change, your request 
for a written agreement will be denied); and
    (g) Any written agreement will be denied if FCIC determines the 
risk is excessive.
* * * * *

[For FCIC policies]

    20. Appeals and Administrative Review.
    (a) All determinations required by the policy will be made by 
us. If you disagree with our determinations, you may:
    (1) Except as provided in section 20(a)(2), obtain 
reconsideration of or appeal those determinations in accordance with 
appeal provisions published at 7 CFR part 11; or
    (2) Request a reconsideration of our loss determination 
regarding good farming practices in accordance with the review 
process established for this purpose and published at 7 CFR part 
400, subpart J.
    (b) In any appeal proceeding or reconsideration, the terms of 
this policy, the Act, and the regulations published at 7 CFR chapter 
IV are binding and any state or local laws that are in conflict with 
the terms of the policy, the Act, and the regulations are preempted. 
[For reinsured policies]
    20. Appeals and Administrative Review.
    (a) Except as provided in section 20(d), you may appeal any 
determination made by FCIC in accordance with appeal provisions 
published at 7 CFR part 11.
    (b) No award determined by appeal or administrative 
reconsideration can exceed the amount of liability established or 
which should have been established under the policy.
    (c) In any appeal proceeding or reconsideration, the terms of 
this policy, the Act, and the regulations published at 7 CFR chapter 
IV are binding and any state or local laws that are in conflict with 
the terms of the policy, the Act, and the regulations are preempted.
    (d) If you do not agree with any loss determination made 
regarding good farming practices, you may request reconsideration of 
this determination in accordance with the review process established 
for this purpose and published at 7 CFR part 400, subpart J.
    Section 21. Access to Insured Crop and Records, and Record 
Retention.
    (a) We, and any employee of USDA have the right to examine the 
insured crop and all records related to planting, replanting, 
inputs, production, harvesting, and disposition of the insured crop 
as often as we reasonably require during the record retention 
period.
    (b) For three years after the end of the crop year, you must 
retain, and provide upon our request, or the request of any employee 
of USDA:
    (1) Complete records of the planting, replanting, inputs, 
production, harvesting, and disposition of the insured crop on each 
unit (This requirement also applies to all such records for acreage 
that is not insured); and
    (2) All records used to establish the amount of production you 
certified on your production reports used to compute your approved 
yield unless such records have already been provided to us (For 
example, if your approved yield for the 2003 crop year was based on 
production records you certified for the 1997 through 2002 crop 
years, you must maintain all such records through the 2006 crop 
year, unless such records have already been provided to us).
    (c) We may extend the record retention period beyond three years 
by notifying you of such extension in writing.
    (d) By signing the application for insurance under the authority 
of the Act or by continuing insurance for which you have previously 
applied, you authorize us or USDA, or any person acting for us or 
USDA, to obtain records relating to the planting, replanting, 
inputs, production, harvesting, and disposition of the insured crop 
from any person who may have custody of such records, including but 
not limited to, FSA offices, banks, warehouses, gins, cooperatives, 
marketing associations, and accountants. You must assist in 
obtaining all records we or any employee of USDA request from third 
parties.
    (e) Failure to keep and maintain the records, provide access to 
the insured crop or authorize access to the records maintained by 
third parties will result in:
    (1) For failure to keep separate records for optional units, but 
all other policy requirements are met, combination of the optional 
units into the basic units; or
    (2) In all other cases, a determination that no indemnity or 
prevented planting or replant payment is due. Even though no 
indemnity or other payment is due, you will still be required to pay 
the premium due under the policy for the unit.
    22. Other Insurance.
    (a) Other Like Insurance--Nothing in this section prevents you 
from obtaining other insurance not issued under the authority of the 
Act. However, unless specifically required by policy provisions, you 
must not obtain any other crop insurance issued under the authority 
of the Act on your share of the insured crop. If you cannot 
demonstrate that you did not intend to have more than one policy in 
effect, you may be subject to the sanctions authorized under this 
policy, the Act, or any other applicable statute. If you can 
demonstrate that you did not intend to have more than one policy in 
effect, and:
    (1) One is an additional coverage policy and the other is a 
Catastrophic Risk Protection policy:

[[Page 58932]]

    (i) The additional coverage policy will apply if both are with 
the same insurance provider or, if not, both insurance providers 
agree; or
    (ii) The policy with the earliest date of application will be in 
force if both insurance providers do not agree; or
    (2) Both are additional coverage policies or both are 
Catastrophic Risk Protection policies, the policy with the earliest 
date of application will be in force and the other policy will be 
void, unless both policies are with:
    (i) The same insurance provider and the insurance provider 
agrees otherwise; or
    (ii) Different insurance providers and both insurance providers 
agree otherwise.
* * * * *

[For FCIC policies]

    24. Amounts Due Us.
* * * * *
    (b) Interest will accrue at the rate of 1.25 percent simple 
interest per calendar month, or any part thereof, on any unpaid 
premium amount or administrative fee due us. With respect to any 
premiums or administrative fees owed, interest will start to accrue 
on the first day of the month following the premium billing date 
specified in the Special Provisions.
* * * * *

[For reinsured policies]

    24. Amounts Due Us.
    (a) Interest will accrue at the rate of 1.25 percent simple 
interest per calendar month, or any portion thereof, on any unpaid 
amount due us. For the purpose of premium amounts or administrative 
fees due us, the interest will start to accrue on the first day of 
the month following the premium billing date specified in the 
Special Provisions. We will collect any unpaid amounts or premium 
and any interest owed thereon. Administrative fees are owed to FCIC 
and FCIC will collect any unpaid administrative fees and any 
interest owed thereon.
* * * * *
    (e) Amounts owed by you may be collected in part through 
administrative offset from payments you receive from United States 
government agencies in accordance with 31 U.S.C. chapter 37.
    25. Legal Action Against Us.
* * * * *
    (c) You may not recover any attorneys fees or other charges, or 
any punitive, compensatory or any other damages except contractual 
damages, except as authorized in 7 CFR 400.352(b)(4).
* * * * *
    34. Unit Division.
    (a) * * *
    (2) * * *
    (iii) You must comply with all reporting requirements for the 
enterprise unit (While separate records of acreage and production 
for basic or optional units must be maintained, if you want to 
change your unit structure in subsequent crop years, it is not 
required to qualify for an enterprise unit);
* * * * *
    (3) * * *
    (iii) If you do not qualify for a whole farm unit when the 
acreage is reported, we will assign the basic unit structure.
* * * * *
    (b) * * *
    (1) You must maintain a clear and discernible border between 
each optional unit (Such border must remain clear and discernible 
throughout the entire growing season);
* * * * *
    (3) You have records, that are acceptable to us, for at least 
the previous crop year for all optional and basic units that you 
will report in the current crop year (You may be required to produce 
the records for all units for the previous crop year);
* * * * *
    (c) * * *
    (2) In addition to, or instead of, establishing optional units 
by section, section equivalent or FSA farm serial number, optional 
units may be based on irrigated and non-irrigated acreage (To 
qualify as separate irrigated and non-irrigated optional units, 
there must be a clear and discernable border between the irrigated 
and non-irrigated acreage. The irrigated acreage may not extend 
beyond the point at which the irrigation system can deliver the 
quantity of water needed to produce the yield on which the guarantee 
is based, except the corners of a field in which a center-pivot 
irrigation system is used may be considered as irrigated acreage if 
the corners of a field in which a center-pivot irrigation system is 
used do not qualify as a separate non-irrigated optional unit. In 
this case, production from both practices will be used to determine 
your approved yield); and
    (3) In addition to, or instead of, establishing optional units 
by section, section equivalent or FSA farm serial number, or 
irrigated and non-irrigated acreage, separate optional units may be 
established for acreage of the insured crop grown and insured under 
an organic farming practice. To qualify as a separate optional unit, 
there must be a clear and discernable border between the acreage 
insured using an organic farming practice and other acreage of the 
insured crop. Certified organic, organic, transitional and buffer 
zone acreages do not individually qualify as separate units. (See 
section 37 for additional provisions regarding acreage insured under 
an organic farming practice).
* * * * *
    36. Substitution of Yields.
    (a) When you have actual yields in your production history that, 
due to insured causes of loss, are less than 60 percent of the 
applicable transitional yield (T-Yield), as defined in 7 CFR 400.52, 
you may elect to exclude one or more of any such yields.
    (b) Such election must be made on or before the sales closing 
date for the insured crop and the election will remain in effect for 
succeeding years.
    (c) Each excluded actual yield will be replaced with a yield 
equal to 60 percent of the T-yield that is applicable in the county 
for the crop year in which the yield is being replaced (For example, 
if you elect to exclude your 1998 yield, the T-yield in effect for 
the 1998 crop year in the county will be used. If you also elect to 
exclude your 2002 yield, the T-yield in effect for the 2002 crop 
year in the county will be used). The replacement yields will be 
used in the same manner as actual yields for the purpose of 
calculating the approved yield.
    (d) Once you have elected to exclude an actual yield from the 
database, the replacement yield will remain in effect until such 
time as that crop year is no longer included in the database.
    (e) Premium rates for approved yields that are adjusted under 
this section will be based on your yield prior to replacing the 
actual yields or such other basis as determined appropriate by FCIC 
to cover the increased risk associated with the substitution of 
higher yields.
    37. Organic Farming Practices.
    (a) In accordance with section 8(b)(2), insurance will not be 
provided for any crop grown using an organic farming practice, 
unless the information needed to determine a premium rate for an 
organic farming practice is specified on the actuarial table, or 
insurance is allowed by a written agreement.
    (b) If insurance is provided for an organic farming practice as 
specified in section 37(a), only the following acreage will be 
insured under such practice:
    (1) Certified organic acreage;
    (2) Transitional acreage that is being converted to certified 
organic acreage in accordance with an organic plan; and
    (3) Buffer zone acreage.
    (c) On the date you report your acreage, you must have:
    (1) For certified organic acreage, a written certification in 
effect from a certifying agent indicating the name of the entity 
certified, effective date of certification, certificate number, 
types of commodities certified, and name and address of the 
certifying agent (A certificate issued to a tenant may be used to 
qualify a landlord or other similar arrangement);
    (2) For transitional acreage, a certificate as described in 
section 37(c)(1), or written documentation from a certifying agent 
indicating that an organic plan is in effect for the acreage; and
    (3) Records from the certifying agent showing the specific 
location of each field of certified organic, transitional, buffer 
zone, and acreage not maintained under organic management.
    (d) If you claim a loss on any acreage insured under an organic 
farming practice, you must provide us with copies of the records 
required in section 37(c).
    (e) If any acreage qualifies as certified organic or 
transitional acreage on the date you report such acreage, and such 
certification is subsequently revoked by the certifying agent, or 
the certifying agent no longer considers the acreage as transitional 
acreage for the remainder of the crop year, that acreage will remain 
insured under the reported practice for which it qualified at the 
time the acreage was reported. Any loss due to failure to comply 
with organic standards will be considered an uninsured cause of 
loss.
    (f) In addition to the applicable definition of ``good farming 
practices'', organic farming practices will be considered to be good

[[Page 58933]]

farming practices if they are those specified in the organic plan.
    (g) Contamination by application or drift of prohibited 
substances onto land on which crops are grown using organic farming 
practices will not be an insured peril on any certified organic, 
transitional or buffer zone acreage.
    (h) In addition to the provisions contained in section 17(f), 
prevented planting coverage will not be provided for any acreage 
based on an organic farming practice in excess of the number of 
acres that will be grown under an organic farming practice and shown 
as such in the records required in section 37(c).
    (i) In lieu of the provisions contained in section 17(f)(1) that 
specify prevented planting acreage within a field that contains 
planted acreage will be considered to be acreage of the same 
practice that is planted in the field, prevented planting acreage 
will be considered as organic practice acreage if it is identified 
as certified organic, transitional, or buffer zone acreage in the 
organic plan.

    Signed in Washington, DC, on September 12, 2002.
Ross J. Davidson, Jr.,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 02-23667 Filed 9-13-02; 10:00 am]
BILLING CODE 3410-08-P