[Federal Register Volume 69, Number 209 (Friday, October 29, 2004)]
[Rules and Regulations]
[Pages 63041-63043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24177]


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

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AB93


Common Crop Insurance Regulations; Peanut Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
amendments to the Peanut Crop Insurance Provisions. The intended 
effects of this action are to provide policy changes and clarify 
existing policy provisions to better meet the needs of the insured and 
to restrict the effect of the current Peanut Crop Insurance Regulations 
to the 2004 and prior crop years.

EFFECTIVE DATE: November 29, 2004.

FOR FURTHER INFORMATION CONTACT: Gary Johnson, Risk Management, 
Specialist, Research and Development, Product Development Division, 
Risk Management Agency, United States Department of Agriculture, 6501 
Beacon Drive, Stop 0812, Room 421, Kansas City, MO 64133-4676, 
telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be non-significant for the 
purposes of Executive Order 12866 and, therefore, it has not been 
reviewed by the Office of Management and Budget (OMB).

Paperwork Reduction Act of 1995

    Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 
35), the collections of information in this rule have been approved by 
OMB under control number 0563-0053 through 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 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

[[Page 63042]]

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

    FCIC certifies that this regulation will not have a significant 
economic impact on a substantial number of small entities. Program 
requirements for the Federal crop insurance program are the same for 
all producers regardless of the size of their farming operation. For 
instance, all producers are required to submit an application and 
acreage report to establish their insurance guarantees and compute 
premium amounts, or a notice of loss and production information to 
determine an indemnity payment in the event of an insured cause of crop 
loss. Whether a producer has 10 acres or 1000 acres, there is no 
difference in the kind of information collected. To ensure crop 
insurance is available to small entities, the Federal Crop Insurance 
Act authorizes FCIC to waive collection of administrative fees from 
limited resource farmers. FCIC believes this waiver helps to ensure 
small entities are given the same opportunities to manage their risks 
through the use of crop insurance. A Regulatory Flexibility Analysis 
has not been prepared since this regulation does not have an impact on 
small entities, and, therefore, this regulation is exempt from the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 605).

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 direct action taken by FCIC 
under the terms of the crop insurance policy, the administrative appeal 
provisions published at 7 CFR part 11 and 7 CFR part 400, subpart J for 
the informal administrative review process of good farming practices, 
as applicable, must be exhausted before any action for judicial review 
of any determination or action by FCIC 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

    On May 17, 2004, FCIC published a notice of proposed rulemaking in 
the Federal Register at 69 FR 27864-27865 to revise 7 CFR 457.134 
Peanut Crop Insurance Provisions. Following publication of the proposed 
rule, the public was afforded 30 days to submit written comments and 
opinions. Comments were received from reinsured companies, agents, 
trade associations, producers, and insurance service organization and 
other interested parties. The comments received and FCIC's responses 
are as follows:
    Comment: A total of 30 commenters recommended that FCIC should 
allow optional units for peanuts to be established in accordance with 
section 34 of the Common Crop Insurance Policy Basic Provisions (Basic 
Provisions).
    Response: FCIC agrees and has made the change accordingly.
    Comment: An insurance service organization suggested that actual 
production history (APH) procedures should be revised in accordance 
with how existing units by farm serial number (FSN) can be converted to 
a section or section equivalent basis, in areas where that is 
appropriate. The commenter asks if peanut databases that still contain 
the ``F'' classification yield from the APH conversion process will be 
allowed to retain the yield in the new section databases that were part 
of the FSN for which that classification was established.
    Response: FCIC revised the APH procedures in the Crop Insurance 
Handbook (CIH) effective for the 2003 crop year when peanuts were 
converted to a Category B APH crop. Classification ``F'' yields that 
were used to establish approved APH yields were removed by adding an 
actual or assigned yield to the affected databases for the 2003 crop 
year. In subsequent crop years, this process will continue until all 
classification yields in the database have been replaced by actual or 
assigned yields. Databases will be updated using acceptable production 
records under standard APH procedures.
    Comment: An insurance service organization commented to the 
proposed rule that to allow optional units for peanuts in accordance 
with the Basic Provisions would not result in imposing optional units 
by section in parts of the country, such as some southeastern States. 
The southeastern States have optional units by FSN for other Category B 
crops. In those areas, the proposed rule would allow optional units by 
irrigated and non-irrigated practices as well as by FSN.
    Response: FCIC agrees that in those states without sections, 
optional units will be by FSN or irrigated and non-irrigated practices.
    Comment: An insurance service organization asked if FCIC has any 
estimates by State on how the number of optional units are affected so 
rates can be adjusted accordingly.
    Response: An analysis of the number of potential optional units 
that may be generated by the proposed rule change was completed. FCIC 
will apply the rate surcharge for optional units as administered for 
other Category B crops in the applicable States. A study is being 
conducted regarding the premium rates for optional units to determine 
the appropriate rates and such rates will be applied to peanuts.
    Comment: A total of 30 comments supported modifying the Peanut Crop 
Provisions to provide for a price election for peanuts based on a 
contract price for those peanuts that are grown under contract. 
However, an insurance service organization opposed insuring peanuts at 
a contract price election. The insurance service organization comment 
indicated many years ago a contract price was used to establish the 
price election for non-quota peanuts. Those contracts did not enforce 
delivery, which then resulted in some buying points being too generous. 
Peanuts do not have to be grown under contract to be insured. Allowing 
for a contract price would in effect establish two prices for peanuts 
similar to the quota/non-quota system. The pounds per acre grown under 
contract would have one price and those that are not grown under 
contract would default to the price established in the actuarial 
documents. Other insured crops such as corn, soybeans, and wheat can 
also be contracted at set prices without this type of price option 
available.
    Response: FCIC only requested public comment regarding the 
feasibility and possible approaches for insuring peanuts at a contract 
price. FCIC will consider all the comments when it looks at the 
feasibility of allowing a price

[[Page 63043]]

election by contract price. However, until such evaluation is complete, 
no changes will be made to the Peanut Crop Provisions.

List of Subjects in 7 CFR Part 457

    Crop insurance, Peanut, reporting and recordkeeping requirements.

Final Rule

0
Accordingly, as set forth in the preamble, the Federal Crop Insurance 
Corporation proposes to amend 7 CFR part 457, Common Crop Insurance 
Regulations, for the 2005 and succeeding crop years as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

0
1. The authority citation for 7 CFR part 457 continues to read as 
follows:

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


0
2. Amend Sec.  457.134 as follows:
0
a. Remove and reserve section 2 under the heading ``Peanut Crop 
Insurance Provisions.''
0
b. Revise the introductory text to read as follows:


Sec.  457.134  Peanut crop insurance provisions.

* * * * *
    The peanut crop insurance provisions for the 2005 and succeeding 
crop years are as follows:
* * * * *

    Signed in Washington, DC, on October 25, 2004.
Ross J. Davidson, Jr.,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 04-24177 Filed 10-28-04; 8:45 am]
BILLING CODE 3410-08-P