[Federal Register Volume 68, Number 146 (Wednesday, July 30, 2003)]
[Proposed Rules]
[Pages 44668-44672]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19344]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 68, No. 146 / Wednesday, July 30, 2003 / 
Proposed Rules  

[[Page 44668]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AB76


Common Crop Insurance Regulations; Blueberry Crop Insurance 
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 add 
to 7 CFR part 457 a new Sec.  457.166 that provides for the insurance 
of Blueberries. The provisions will be used in conjunction with the 
Common Crop Insurance Policy Basic Provisions (Basic Provisions), which 
contain standard terms and conditions common to most crops. The 
intended effect of this action is to convert the blueberry pilot crop 
insurance program to a permanent insurance program administered by FCIC 
for the 2005 and succeeding crop years. In this rule the Risk 
Management Agency (RMA) particularly calls attention to, and solicits 
comments on the provisions contained in section 5, Cancellation and 
Termination Dates, and Section 7, Insurance Period, that were modified 
to accommodate year-round insurance coverage for blueberries.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business September 29, 2003 and will be 
considered when the rule is to be made final. The comment period for 
information collections under the Paperwork Reduction Act of 1995 
continues through September 29, 2003.

ADDRESSES: Interested persons are invited to submit written comments to 
the Director, Product Development Division, Federal Crop Insurance 
Corporation, United States Department of Agriculture, 6501 Beacon 
Drive, Stop 0812, Room 421, Kansas City, MO 64133. Comments titled 
``Blueberry Crop Insurance Provisions'' may be sent via the Internet to 
``[email protected].'' A copy of each response will be 
available for public inspection and copying from 7 a.m. to 4:30 p.m., 
CST Monday through Friday, except holidays, at the above address.

FOR FURTHER INFORMATION CONTACT: William Klein, Risk Management 
Specialist, Research and Development, Product Development Division, 
Federal Crop Insurance Corporation, at the Kansas City, MO address 
listed above, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be Not-Significant for the purpose 
of Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget (OMB).

Paperwork Reduction Act of 1995

    Under the provisions of the Paperwork Reduction Act of 1995 (44 
U.S.C. chapter 35), the collections of information for this rule have 
been previously approved by OMB under control number 0563-0053 through 
February 28, 2005.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 
establishes requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local, and tribal governments and 
the private sector. This rule contains no Federal mandates (under the 
regulatory provisions of title II of the UMRA) for State, local, and 
tribal governments or the private sector. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 13132

    The provisions contained in this rule will not have a substantial 
direct effect on States, the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Therefore, no 
consultation with States is required.

Regulatory Flexibility Act

    This regulation will not have a significant economic impact on a 
substantial number of small entities. The availability of insurance for 
the current population of blueberry entities is limited to selected 
counties in nine pilot states that have significant blueberry 
production. New provisions included in this rule will not impact small 
entities to a greater extent than large entities. Under the Basic 
Provisions, every producer is required to complete an application and 
acreage report. If the crop is damaged or destroyed, the insured is 
required to give notice of loss and provide the necessary information 
to complete a claim for indemnity. This proposed rule does not alter 
those requirements. The amount of work required of 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 requires intergovernmental consultation with State and 
local officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order 12988

    This proposed rule has been reviewed in accordance with Executive 
Order 12988 on civil justice reform. The provisions of this rule will 
not have a retroactive effect. The provisions of this rule will preempt 
State and local laws to the extent such State and local laws are 
inconsistent herewith. The administrative appeal provisions published 
at 7 CFR part 11 must be exhausted before any action for judicial 
review may be brought.

Environmental Evaluation

    This action is not expected to have a significant economic impact 
on the quality of the human environment, health, and safety. Therefore, 
neither an Environmental Assessment nor an

[[Page 44669]]

Environmental Impact Statement is needed.

Background

    FCIC offered a pilot crop insurance program for blueberries 
beginning with the 1995 crop year in selected counties in Michigan, 
Mississippi, New Jersey, and North Carolina. In 1997 the pilot program 
was expanded to include two counties with lowbush blueberries in Maine, 
and in 1999 it was expanded to include five additional North Carolina 
counties. It was expanded to selected counties in Alabama, Florida, 
Georgia, and South Carolina for the 2000 crop year. For the 2002 crop 
year, blueberry crop insurance is available in selected counties in 
Alabama, Florida, Georgia, Maine, Michigan, Mississippi, New Jersey, 
North Carolina, and South Carolina.
    The pilot program has provided a valuable risk management tool and 
has favorable insurance experience since the pilot program was 
initiated. The combined loss ratio from 1995 through the 2001 crop year 
has been approximately .40. The highest loss ratio for the pilot 
program was in 1996, at .77. Loss ratios for the other years of the 
pilot program were significantly lower, at .64 and below. The major 
causes of loss (accounting for approximately 76 percent of indemnities 
paid) from 1995 through 2001 were hail, freeze, frost, drought, and 
insufficient chilling hours.
    FCIC has decided to convert the blueberry pilot program a permanent 
crop insurance program beginning with the 2005 crop year. To effectuate 
this conversion, FCIC proposes to add to the Common Crop Insurance 
Regulations (7 CFR part 457), a new section, 7 CFR 457.166, Blueberry 
Crop Insurance Provisions effective for the 2005 and succeeding crop 
years. The blueberry pilot program is an actual production history 
(APH) insurance plan of multiple peril crop insurance. Insurance is 
provided against the standard causes of loss such as adverse weather, 
fire, etc., insufficient chilling hours to effectively break dormancy, 
and loss of quality. Unit division is limited to basic units, unless 
otherwise specified in the Special Provisions of Insurance. The Special 
Provisions allow optional units by type for the rabbiteye and highbush 
types in Alabama, Florida, Georgia, North Carolina, and South Carolina.
    The overall participation rate has been approximately 56 percent. 
The number of policies earning premiums increased 77 percent from 1995 
to 2001. Under the blueberry pilot crop insurance program, 2,291 
policies and approximately 151,000 acres were insured for the 1995 
through 2001 crop years.
    During the pilot program, modifications were made to improve the 
loss adjustment procedures. Policy language was also added to 
accommodate insuring lowbush blueberry varieties, after the first two 
Maine counties with lowbush blueberries were added to the pilot program 
in 1997.
    As a result of the pilot program experience and program reviews, 
several changes have been made to the pilot program and are 
incorporated in this proposed rule. The most significant changes are as 
follows: (1) Modified provisions to increase the number of days for 
insurance to attach from 10 to 20 days to allow time for companies to 
complete inspections; (2) added provisions to eliminate any lapse in 
insurance coverage between crop years to ensure that all insurable 
perils are covered; (3) added provisions to specify that if the insured 
policy is canceled or terminated for any crop year after insurance 
attached for that crop year, but on or before the cancellation and 
termination dates, whichever is later, then insurance will not be 
considered to have attached for that year and no premium, 
administrative fee, or indemnity will be due; (4) added provisions to 
clarify that an insurance provider may not cancel an insured's policy 
when an insured cause of loss has occurred after insurance attached, 
but prior to the cancellation and termination date; (5) added a 
provision that notifies the insured that they may be required to 
harvest a sample that the insurance provider selects for appraisal 
purposes to simplify the loss adjustment process; (6) added quality 
adjustment provisions for determining production to count for mature 
blueberries, harvested or unharvested, that have been damaged to the 
extent the blueberries cannot be sold for fresh or processing (If 
damaged blueberry production is sold, the production to count is 
determined by dividing the price received for the damaged blueberries 
by the applicable price election and multiplying that factor by the 
production sold); (7) added provisions to reduce the indemnity for 
affected acreage in a unit by the percentage of premium reduction 
specified in the Special Provisions for frost protection equipment if 
the insurance provider determines that the frost protection equipment 
was not properly utilized or not correctly reported.
    The proposed provisions will be effective for the 2005 and 
succeeding crop years. These provisions will replace and supersede the 
current unpublished provisions that insure blueberries under pilot 
program status.

List of Subjects in 7 CFR Part 457

    Crop insurance, Blueberry, Reporting and recordkeeping 
requirements.

Proposed Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation proposes to amend 7 CFR part 457 as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

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

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

    2. Section 457.166 is added to read as follows:


Sec.  457.166  Blueberry crop insurance provisions.

    The Blueberry Crop Insurance Provisions for the 2005 and succeeding 
crop years are as follows:

FCIC policies:
UNITED STATES DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation

Reinsured policies:
(Appropriate title for insurance provider)

Both FCIC and reinsured policies:
Blueberry crop insurance provisions
    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) the Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.
1. Definitions
    Blueberry production--All mature harvested and appraised 
blueberries, excluding plant material and unsound blueberries 
eliminated during the inspection process by either wash or dry-line 
methods or field appraised in an equivalent manner, usually referred to 
as first net weight.
    Direct marketing--Sale of the insured crop directly to consumers 
without the intervention of an intermediary such as a wholesaler, 
retailer, packer, processor, shipper or buyer. Examples of direct 
marketing include selling through an on-farm or roadside stand, 
farmer's market, or permitting the general public to enter the field 
for the purpose of picking the crop.
    Dry-line--A process by which the blueberries are run across a 
``sorting

[[Page 44670]]

belt'' to allow for plant material to be blown off, the blueberries to 
be sized, and unsound blueberries to be removed mechanically by the 
belt or by hand.
    Harvest--Picking mature blueberries from the bushes either by hand 
or machine.
    Mechanical damage--Damage to the blueberries caused by machinery or 
tools.
    Pound--Sixteen ounces avoirdupois.
    Production guarantee (per acre)--The number of pounds determined by 
multiplying the approved yield per acre by the coverage level 
percentage you elect.
    Prune--A cultural practice performed to increase blueberry 
production as follows:
    (a) For lowbush blueberries, a process by which the acreage is 
either burned or mowed; and
    (b) For all other blueberries, a process by which parts of the bush 
are cut off or the bush is cut back.
    Unsound blueberries--Blueberry fruit that is not considered as 
blueberry production because it is undersized, immature, soft, 
overripe, damaged by insects, wildlife, disease, or mechanically 
damaged to the extent that the fruit is not marketable.
2. Unit Division
    Notwithstanding section 34 of the Basic Provisions, blueberry 
acreage is limited to basic units as defined in section 1 of the Basic 
Provisions, unless otherwise specified in the Special Provisions.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities
    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) You may select only one price election for each blueberry type 
designated in the Special Provisions. The price elections you choose 
for each type must have the same percentage relationship to the maximum 
price offered by us for each type. For example, if you choose 100 
percent of the maximum price election for one type, you must also 
choose 100 percent of the maximum price election for all other types.
    (b) You must report (by type if applicable) by the production 
reporting date designated in section 3 of the Basic Provisions:
    (1) For all types of blueberries: any damage; removal of bushes; 
change in practices, or any other circumstance that may reduce the 
expected yield below the yield upon which the insurance guarantee is 
based, and the number of affected acres; and
    (2) For highbush and rabbiteye blueberry types:
    (i) The number of bearing bushes on insurable and uninsurable 
acreage; and
    (ii) The age of the bushes and the planting pattern.
    (c) We will reduce the yield used to establish your production 
guarantee as necessary, based on our estimate of the effect of the 
following: removal of bushes; damage to bushes; changes in practices; 
and any other circumstance that may affect the yield potential of the 
insured crop. If you fail to notify us of any circumstance that may 
reduce your yields from previous levels, we will reduce your production 
guarantee as necessary at any time we become aware of the circumstance.
    (d) You may not increase your elected or assigned coverage level or 
the ratio of your price election to the maximum price election we offer 
for the next year if a cause of loss that could or would reduce the 
yield of the insured crop is evident prior to the time you request the 
increase.
4. Contract Changes
    In accordance with section 4 of the Basic Provisions, the contract 
change date is August 31 preceding the cancellation date.
5. Cancellation and Termination Dates
    (a) In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are November 20.
    (b) If your blueberry policy is canceled or terminated by us for 
any crop year, in accordance with the terms of the policy, after 
insurance attached for that crop year, but on or before the 
cancellation and termination dates, whichever is later, insurance will 
not be considered to have attached for that crop year and no premium, 
administrative fee, or indemnity will be due for such crop year.
    (c) We may not cancel your policy when an insured cause of loss has 
occurred after insurance attached, but prior to the cancellation date. 
However your policy can be terminated if a cause for termination 
contained in sections 2 or 27 of the Basic Provisions exists.
6. Insured Crop
    (a) In accordance with section 8 of the Basic Provisions, the crop 
insured will be all the blueberries in the county for which a premium 
rate is provided in the actuarial documents:
    (1) In which you have a share;
    (2) That are grown on bush varieties that:
    (i) Were commercially available when the bushes were set out; and
    (ii) Are varieties adapted to the area of the following types:
    (A) Highbush blueberries;
    (B) Lowbush blueberries;
    (C) Rabbiteye blueberries; or
    (D) Other blueberry types listed on the Special Provisions.
    (3) Are produced on bushes that have reached the minimum insurable 
age or have produced the minimum yield per acre designated in the 
Special Provisions; and
    (4) If inspected, are considered acceptable by us.
    (b) Lowbush blueberry plants must be pruned every other year to be 
eligible for insurance.
7. Insurance Period
    (a) In accordance with the provisions of section 11 of the Basic 
Provisions:
    (1) For the year of application, coverage begins on November 21 of 
the calendar year prior to the year the insured crop normally blooms, 
except that, if your application is received by us after November 1, 
insurance will attach on the twentieth day after your properly 
completed application is received in our local office, unless we 
inspect the acreage during the 20 day period and determine that it does 
not meet insurability requirements. You must provide any information 
that we require for the crop or to determine the condition of the 
blueberry acreage.
    (2) For each crop year subsequent to the year of application, that 
the policy remains continuously in force, coverage begins on the day 
immediately following the end of the insurance period for the prior 
crop year. Policy cancellation that results solely from transferring an 
existing policy to a different insurance provider for a subsequent crop 
year will not be considered a break in continuous coverage.
    (3) The calendar date for the end of insurance period for each crop 
year is, September 30 for Michigan and September 15 for all other 
states.
    (4) Cancellation and termination provisions that pertain to the 
period after insurance has attached, but prior to the cancellation and 
termination date, are contained in section 5 of these crop provisions.
    (b) In addition to the provisions of section 11 of the Basic 
Provisions:
    (1) If you acquire an insurable share in any insurable acreage 
after coverage begins but on or before the acreage reporting date for 
the crop year, and after an inspection we consider the acreage 
acceptable, insurance will be considered to have attached to such 
acreage on the calendar date for the beginning of the insurance period. 
There will be no coverage of any

[[Page 44671]]

insurable interest acquired after the acreage reporting date.
    (2) If you relinquish your insurable share on any insurable acreage 
of blueberries on or before the acreage reporting date for the crop 
year, and the acreage was insured by you the previous crop year, 
insurance will not be considered to have attached to, and no premium or 
indemnity will be due for such acreage for that crop year unless:
    (i) A transfer of coverage and right to an indemnity, or a similar 
form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.
8. Causes of Loss
    (a) In accordance with the provisions of section 12 of the Basic 
Provisions, insurance is provided only against the following causes of 
loss that occur during the insurance period:
    (1) Adverse weather conditions;
    (2) Fire, unless weeds and other forms of undergrowth have not been 
controlled or pruning debris has not been removed from the unit;
    (3) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (4) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (5) Earthquake;
    (6) Volcanic eruption;
    (7) An insufficient number of chilling hours to effectively break 
dormancy;
    (8) Wildlife, unless appropriate control measures have not been 
taken; and
    (9) Failure of the irrigation water supply, if caused by a cause of 
loss specified in this section that occurs during the insurance period.
    (b) In addition to the causes of loss excluded in section 12 of the 
Basic Provisions, we will not insure against damage or loss of 
production due to:
    (1) Failure to install and maintain a proper drainage system;
    (2) Failure to harvest in a timely manner;
    (3) Inability to market the blueberries for any reason other than 
actual physical damage to the blueberries from an insurable cause 
specified in this section (For example, we will not pay you an 
indemnity if you are unable to market due to quarantine, boycott, or 
refusal of any person to accept production); or
    (4) Mechanical damage in excess of that normally experienced for 
mechanically harvested blueberries for the current crop year.
9. Duties in the Event of Damage or Loss
    In addition to the requirements of section 14 of the Basic 
Provisions, the following will apply:
    (a) You must notify us:
    (1) Within 3 days of the date harvest should have started if the 
crop will not be harvested.
    (2) Within 24 hours if any cause of loss occurs within 15 days of 
harvest, or when the blueberries are mature and ready for harvest or 
during harvest, so we can inspect the insured acreage.
    (3) Within 24 hours if any cause of loss occurs during harvest, and 
you do not intend to complete harvesting of the crop, so that we can 
inspect the acreage.
    (4) At least 15 days before any production from any unit will be 
sold by direct marketing. We will conduct an appraisal that will be 
used to determine your production to count sold by direct marketing. If 
damage occurs after this appraisal, we will conduct an additional 
appraisal. These appraisals, and any acceptable records provided by 
you, will be used to determine your production to count. Failure to 
give timely notice that production will be sold by direct marketing 
will result in an appraised amount of production to count that is not 
less than the production guarantee per acre if such failure results in 
our inability to make the required appraisal.
    (5) At least 15 days prior to the beginning of harvest if you 
intend to claim an indemnity on any unit, as a result of previously 
reported damage, so that we may inspect the damaged production.
    (b) You must not sell or dispose of the damaged crop until after we 
have given you written consent to do so. If you fail to meet the 
requirements of this section, and such failure results in our inability 
to inspect the damaged production, all such production will be 
considered undamaged and included as production to count.
    (c) You may be required to harvest a sample, selected by us, to be 
used for appraisal purposes.
10. Settlement of Claim
    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide acceptable production records for any basic unit, 
we will allocate any commingled production to such units in proportion 
to our liability on the harvested acreage for each unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the insured acreage for each type, if applicable, 
by its respective production guarantee;
    (2) Multiplying each result in section 10(b)(1) by the respective 
price election, by type if applicable;
    (3) Totaling the results in section 10(b)(2) if there is more than 
one type;
    (4) Multiplying the total production to count for each blueberry 
type, if applicable, by the respective price election;
    (5) Totaling the results in section 10(b)(4), if there is more than 
one type;
    (6) Subtracting the result in section 10(b)(5) from the result in 
section 10(b)(3); and
    (7) Multiplying the result in section 10(b)(6) by your share.
Example
    You have 100 percent share in 25 acres of highbush blueberries with 
a production guarantee of 4,000 pounds per acre and a price election of 
$.45 per pound. You are only able to harvest 62,500 total pounds 
because adverse weather reduced the yield. Your indemnity would be 
calculated as follows:
    (1) 25 acres x 4,000 pound production guarantee/acre = 100,000 
pound total production guarantee;
    (2) 100,000 pounds x $.45 price election = $45,000 guarantee;
    (3) One type only, so same as (2) above $45,000;
    (4) 62,500 pounds production to count x $.45 price election = 
$28,125 value of production to count;
    (5) One type only, so same as (4) above $28,125;
    (6) $45,000 - $28,125 = $16,875 loss; and
    (7) $16,875 x 100 percent share = $16,875 indemnity payment.
End of Example
    (c) The total production to count (in pounds) from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) That is sold by direct marketing if you fail to meet the 
requirements contained in section 9;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide production records;
    (ii) Production lost due to uninsured causes; and
    (iii) Potential production on insured acreage that you intend to 
abandon or no longer care for, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
that acreage will end. If you do not agree with our appraisal, we may

[[Page 44672]]

defer the claim only if you agree to continue to care for the crop. We 
will then make another appraisal when you notify us of further damage 
or that harvest is general in the area unless you harvest the crop, in 
which case we will use the harvested production. If you do not continue 
to care for the crop, our appraisal made prior to deferring the claim 
will be used to determine the production to count; and
    (2) All harvested production from the insurable acreage.
    (3) If mature blueberries, harvested or unharvested, are damaged by 
an insurable cause of loss specified in section 8 of these Crop 
Provisions, to the extent that the blueberries can not be sold as fresh 
or processed blueberries, and the percent of damage to the blueberries 
exceeds that shown in the Special Provisions for the type, production 
to count for the unit or portion of a unit will be as follows:
    (i) The damaged blueberries will not be counted for that acreage if 
the blueberries are not sold; and
    (ii) The production to count for damaged blueberries that are sold 
will be adjusted by dividing the price received for the damaged 
blueberries by the applicable price election and multiplying the 
resulting factor times the pounds sold.
    (4) If we determine that frost protection equipment, as shown on 
your accepted application was not properly utilized, the indemnity for 
the affected acreage in the unit will be reduced by the percentage 
reduction allowed for frost protection equipment as specified in the 
Special Provisions. You must, at our request, provide us records by 
date for each period the frost protection equipment was used.
11. Late and Prevented Planting
    The late and prevented planting provisions in the Basic Provisions 
are not applicable.
12. Written Agreements
    The written agreement provisions in the Basic Provisions are not 
applicable, unless provided otherwise in the Special Provisions.

    Signed in Washington, DC, on July 23, 2003.
Ross J. Davidson Jr.,
Administrator, Federal Crop Insurance Corporation.
[FR Doc. 03-19344 Filed 7-29-03; 8:45 am]
BILLING CODE 3410-08-P