[Federal Register Volume 71, Number 16 (Wednesday, January 25, 2006)]
[Proposed Rules]
[Pages 4056-4061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-855]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AB97


Common Crop Insurance Regulations, Peanut 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 
amend the Common Crop Insurance Regulations, Peanut Crop Insurance 
Provisions to remove all references to quota and non-quota peanuts and 
add provisions that will allow coverage for peanuts whether or not they 
are under contract with a sheller to better meet the needs of insured 
producers. The changes will apply for the 2007 and succeeding crop 
years.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business March 27, 2006 and will be considered 
when the rule is to be made final. Comments on information collection 
under the Paperwork Reduction Act of 1995 must be received on or before 
March 27, 2006.

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 ``Peanut Crop 
Provisions'' may be sent via the Internet to 
[email protected], or the Federal eRulemaking Portal: http://www.regulations.gov/. Follow the online instructions for submitting 
comments. A copy of each response will be available for public 
inspection and copying from 7 a.m. to 4:30 p.m., c.s.t., Monday through 
Friday, except holidays, at the above address.

FOR FURTHER INFORMATION CONTACT: Gary Johnson, Risk 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 not significant for the 
purposes of Executive Order 12866 and, therefore, it has been reviewed 
by the Office of Management and Budget (OMB).

Paperwork Reduction Act of 1995

    Pursuant to the provisions of 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 
November 30, 2007.

Government Paperwork Elimination Act (GPEA) Compliance

    FCIC is committed to compliance with the GPEA, which requires 
Government agencies, in general, to provide the public with the option 
of submitting information or transacting business electronically to the 
maximum extent possible. FCIC requires that all reinsured companies be 
in compliance with the Freedom to E-File Act and section 508 of the 
Rehabilitation Act.

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

    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, and all producers are required to submit a notice of 
loss and production information to determine the amount of an indemnity 
payment in the event of an insured cause of crop loss.

[[Page 4057]]

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 that small entities 
are given the same opportunities as large entities 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 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. With respect to any direct action taken by FCIC 
or to require the insurance provider to take specific action 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 against FCIC 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, or safety. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is needed.

Background

    FCIC proposes to amend the Common Crop Insurance Regulations; 
Peanut Crop Insurance Provisions to remove all references to quota and 
non-quota peanuts because the Farm Security and Rural Investment Act of 
2002 eliminated the peanut quota program as administered by the Farm 
Service Agency (FSA). FCIC anticipated that quotas could be eliminated 
years ago and previously included provisions that permitted guarantees 
to be based on the actual production history of the producer. This has 
allowed the program to operate since 2002. However, reference to quotas 
in the pricing methodology and other provisions has caused some 
confusion that will be eliminated when references are removed.
    The proposed changes are as follows:
    Section 1--Definitions--Add definitions for ``base contract 
price,'' ``handler,'' ``harvest,'' ``marketing association,'' ``price 
election,'' ``sheller,'' and ``sheller contract'' since these terms are 
required to provide insurance under a sheller contract. To the maximum 
extent practicable, these definitions will be given the same meaning as 
similar terms in other insured contracted crops. Revise the definition 
of ``farmers' stock peanuts'' to specifically state farmer stock 
peanuts have to be picked and threshed. Revise the definition of 
``planted acreage'' to recognize peanuts are sometimes planted with two 
rows close together followed by a space wide enough to permit 
mechanical cultivation followed by two rows planted close together. 
This revision allows peanut producers to cultivate their peanuts in a 
manner recognized by agriculture experts as a good farming practice. 
Remove the definitions of ``approved yield,'' ``county,'' and 
``production guarantee (per acre)'' because these definitions will now 
be the same as the definitions in the Basic Provisions. Remove the 
definitions of ``average price per pound,'' ``average support price per 
pound,'' ``CCC,'' ``effective poundage marketing quota,'' ``inspection 
certificate and sales memorandum,'' ``non-quota peanuts,'' ``quota 
peanuts,'' ``segregation I, II, or III,'' and ``value per pound'' 
because the elimination of the peanut quotas make these definitions no 
longer applicable to the Crop Provisions.
    Section 2--Revise section 2 to specify that if the producer insures 
any peanuts in accordance with a sheller contract all of the producer's 
peanut acreage in the county will be considered one enterprise unit. It 
is possible for producers to have several sheller contracts with 
different prices. Requiring that all peanut acreage in the county be 
included in one enterprise unit prevents the producer from shifting 
production from a unit with a higher price to a unit with a lower price 
in order to create or increase an indemnity. The producer must report 
all applicable information separately by sheller contract on the 
acreage report and any claim forms. However, the information for each 
contract will be aggregated to obtain the total information for the 
unit. This requirement for reporting separately, and aggregating for 
the unit, is also necessary if the producer has both peanuts under a 
sheller contract and non-contract peanuts in the same unit.
    Regardless of whether the peanuts are covered by a sheller 
contract, if the producer elects to insure all of the peanuts in the 
county using the price election provided by FCIC, the producer will be 
eligible for unit division (optional, basic, or enterprise) in 
accordance with section 34 the Basic Provisions if the requirements for 
such units are met.
    Section 3--Remove the references to quota and non-quota peanuts, 
quota price elections, and the effective poundage marketing quota 
throughout the section. FCIC is also proposing to now cover peanuts 
under contract with a sheller at the contract price. Currently, there 
is only one price election announced by FCIC that is applicable to all 
peanuts but many producers claim to receive a higher price for their 
peanuts under contract with shellers. These provisions will permit 
producers to insure their peanuts at the contract prices if all other 
conditions in the policy are met. Producers will still have the option 
to insure their peanuts that are not covered by a sheller contract 
under the FCIC announced price election. Further, even if the peanuts 
are covered by a sheller contract, the producer can still elect to 
insure them using the price election announced by FCIC.
    In section 3(a), FCIC also proposes to revise the provisions to 
specify that the price election percentage the producer chooses for 
peanuts not insured using the sheller contract price (which also 
includes peanuts in excess of the amount required to fulfill the 
producer's sheller contract) and for peanuts insured using the sheller 
contract price must have the same percentage relationship to the 
maximum price election offered by the FCIC. For example, if the 
producer elects a 100 percent price election percentage for peanuts 
insured at the contract price, the producer must also elect a 100 
percent price election percent for peanuts insured using FCIC's 
announced price election.
    FCIC is proposing to revise a new section 3(b) to specify that 
producers who are insuring contracted peanuts cannot insure more pounds 
of peanuts than the production guarantee (per acre)

[[Page 4058]]

multiplied by the number of acres that will be planted to peanuts. 
Provisions are also added that specify that production under a sheller 
contract equal to or less than the production guarantee will be valued 
by using the price election computed from the base contract price 
stated in the sheller contract. If the producer did not contract for 
the total production guarantee, any loss more than the amount stated in 
the sheller contract will be valued using the price election provided 
by FCIC. These provisions are necessary to prevent the producer from 
over insuring his peanuts by producing more than are under contract and 
insuring all the peanuts produced at the contract price.
    FCIC is proposing to remove the current section 3(c) because all 
producers will now be required to file an annual production report. The 
previous provisions states producers may be required to annually report 
production but since they now must report, and such reporting will be 
in accordance with section 3 of the Basic Provisions, there is no 
reason to have a separate report in these Crop Provisions. Removal of 
these provisions will result in a default to the requirements of 
section 3 of the Basic Provisions.
    FCIC is proposing to add a new section 3(c) to specify that any 
peanuts excluded from the sheller contract at any time during the crop 
year will be insured at the price election announced by FCIC. Again, 
this provision is necessary to prevent the over insurance of the 
peanuts by valuing them at a contract price when they are no longer 
under contract.
    Section 6--Remove the provisions regarding reporting the effective 
poundage marketing quota because it is no longer applicable and 
replacing them with provisions that require that a copy of all peanut 
sheller contracts must be provided to the insurance provider on or 
before the acreage reporting date if the producer wishes to insure the 
peanuts in accordance with the sheller contract. This will permit 
approved insurance providers to properly determine the production 
guarantees and premium owed.
    Section 7--Remove and reserve this section because the elimination 
of the quotas will permit annual premium to be calculated in accordance 
with the provisions in the Basic Provisions.
    Section 8--Restructure the section and add a new section 8(a)(5) to 
specify peanuts may be insured whether or not they are grown in 
accordance with a sheller contract. The policy allows insurance for 
both, the only issue is the value of the peanuts. The provision will 
specify that if the peanuts are not grown in accordance with the 
sheller contract, they will be valued at the price election announced 
by FCIC. This will prevent peanuts that do not qualify for the contract 
price from being insured at such price.
    FCIC also proposes to add a new section 8(b) specifying when the 
producer will be considered to have a share in the insured crop. To be 
insured, the producer must have a risk of loss in the crop. However, 
there may be contracts where a set payment under the contract is 
guaranteed by the sheller and the sheller bears the entire risk of crop 
loss. In such circumstances, the producer would not have an insurable 
interest. This is consistent with other contracted crops.
    FCIC also proposes to add a new section 8(c) that specifies that a 
peanut producer who is also a sheller or handler may establish an 
insurable interest if specified requirements are met. Since the sheller 
controls the contract price and the records of production to count, it 
is possible for such producers to manipulate losses. As a result, FCIC 
requires specific conditions to be met before producers who are 
shellers can insure the crop. This is consistent with other contracted 
crops.
    Section 12--Restructure the section. FCIC also proposes to revise 
the provisions to make the statement in the Basic Provisions 
ineffective that states the replanting payment per acre will be limited 
to the producers actual cost for replanting and remove such references 
from section 12. The actual costs associated with replanting peanuts 
have increased over the years and seldom, if ever, would the actual 
cost be less than the maximum amount allowed in the Crop Provisions. 
However, it is very burdensome for the approved insurance providers to 
collect the records of the actual costs. Since such records are seldom 
ever used, there is no longer the need impose this burden on the 
approved insurance provider. This change should have little effect on 
the replant payment amounts. FCIC is also proposing to add a new 
section 12(d) to specify replanting payments will be calculated using 
the applicable price election and production guarantee for the crop 
type that is replanted and insured. A revised acreage report will also 
be required to reflect the replanted type, if applicable. There have 
been instances where producers have replanted a different insured crop 
type that has different yields and prices than the type originally 
planted. This could result in the crop being over-insured or under-
insured if the production guarantee and prices were based on the crop 
type originally planted. Instead, FCIC has proposed to add provisions 
to ensure that the production guarantee and replanting payment are 
based on the yield and prices for the type that is replanted. A revised 
acreage report will be required to reflect the replanted type, as 
applicable.
    Section 13--FCIC proposes to revise to remove those provisions that 
are now included in section 14 of the Basic Provisions.
    Section 14--FCIC is proposing to remove section 14(b) because it 
pertains to marketing quotas, which have been eliminated rendering the 
provisions moot. FCIC also proposes to revise and restructure section 
14(b) to remove all references to quotas and instead, allow a 
distinction to be made between peanuts insured under a sheller contract 
and the contract price and those that are insured at the FCIC announced 
price election. Further, FCIC proposes to add provisions that specify 
the priority given for the contract price to the production to count 
when there is more than one sheller contract. The production to count 
will be valued using the highest price election first and will continue 
in decreasing order to the lowest price election based on the amount or 
peanuts insured at each price election. These provisions are necessary 
to prevent the producer from over insuring their peanuts by producing 
more peanuts than are under contract and insuring all the peanuts 
produced at the contract price. FCIC also proposes to revise the 
computations to take into consideration the different values of peanuts 
depending on whether they are under contract or not. To the extent the 
producer is unable to fulfill the sheller contract, the value of such 
lost peanuts will be based on the contracted price. The value of 
peanuts lost over and above the contracted amount will be valued at the 
FCIC announced price.
    Section 15--FCIC proposes to add a new provision to provide 
prevented planting coverage. Previously these provisions were in the 
Special Provisions and are being moved to the Crop Provisions to be 
consistent with other crops that have prevented planting provisions.

List of Subjects in 7 CFR Part 457

    Crop insurance, Peanuts, 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 to read as 
follows:

[[Page 4059]]

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. Revise the introductory text of Sec.  457.134 to read as 
follows:


Sec.  457.134  Peanut crop insurance provisions.

    The peanut crop insurance provisions for the 2007 and succeeding 
crop years are as follows:
* * * * *
    3. Amend section 1 of Sec.  457.134 by adding definitions for 
``base contract price,'' ``enterprise unit,'' ``handler,'' ``harvest,'' 
``marketing associations,'' ``price election,'' ``sheller'' and 
``sheller contract'', revising definitions of ``farmers' stock 
peanuts'' and ``planted acreage'', and removing definitions of 
``approved yield,'' ``average price per pound,'' ``average support 
price per pound,'' ``CCC,'' ``county,'' ``effective poundage marketing 
quota,'' ``inspection certificate and sales memorandum,'' ``non-quota 
peanuts,'' ``production guarantee (per acre),'' ``quota peanuts,'' 
``segregation I, II, or III,'' and ``value per pound'' to read as 
follows:
    1. Definitions
    Base contract price. The price for farmers' stock peanuts 
stipulated in the sheller contract, without regard to discounts or 
incentives that may apply; not to exceed the maximum amount specified 
in the Special Provisions.
* * * * *
    Enterprise unit. If you do not insure any peanuts in accordance 
with a sheller contract, an enterprise unit is in accordance with 
section 34 and the definition of ``enterprise unit'' in section 1 of 
the Basic Provisions. However, if you insure any peanuts in accordance 
with a sheller contract, in lieu of the definition of ``enterprise 
unit'' in section 1 of the Basic Provisions, an enterprise unit will be 
all insurable acreage of the peanuts in the county in which you have a 
share on the date coverage begins for the crop year.
    Farmers' stock peanuts. Picked or threshed peanuts produced in the 
United States which are not shelled, crushed, cleaned, or otherwise 
changed (except for removal of foreign material, loose shelled kernels 
and excess moisture) from the condition in which peanuts are 
customarily marketed by producers.
* * * * *
    Handler. A person who is a sheller, a buying point, a marketing 
association, or has a contract with a sheller or a marketing 
association to accept all of the peanuts marketed through the marketing 
association for the crop year. The handler acquires peanuts for resale, 
domestic consumption, processing, exportation, or crushing through a 
business involved in buying and selling peanuts or peanut products.
    Harvest. Removal of peanuts from the field.
    Marketing association. A cooperative approved by the Secretary to 
issue payment programs for peanuts.
    Planted acreage. In addition to the requirement in the definition 
in the Basic Provisions, peanuts must initially be planted in a row 
pattern which permits mechanical cultivation or in a manner that allows 
the peanuts to be cared for in a manner recognized by agriculture 
experts as a good farming practice. Acreage planted in any other manner 
will not be insurable unless otherwise provided by the Special 
Provisions or by written agreement.
    Price election. In addition to the definition in the Basic 
Provisions, the price election for peanuts insured in accordance with a 
sheller contract will be the percentage you elect multiplied by the 
base contract price specified in the sheller contract.
    Sheller. Any business enterprise regularly engaged in processing 
peanuts for human consumption, that possesses all licenses and permits 
for processing peanuts required by the state in which it operates, and 
that possesses facilities, or has contractual access to such 
facilities, with enough equipment to accept and process contracted 
peanuts within a reasonable amount of time after harvest.
    Sheller contract. A written agreement between the producer and a 
sheller, or between the producer and a handler, containing at a 
minimum:
    (a) The producer's commitment to plant and grow peanuts, and to 
deliver the peanut production to the sheller or handler;
    (b) The sheller's or handler's commitment to purchase all the 
production stated in the sheller contract (an option to purchase is not 
a commitment); and
    (c) A base contract price.


If the agreement fails to contain any of these terms, it will not be 
considered a sheller contract.
    4. Revise section 2 of Sec.  457.134 to read as follows:
    2. Unit Division
    (a) If you insure any acreage in the county in accordance with one 
or more sheller contracts, you are only eligible for an enterprise unit 
on all insurable acreage of peanuts in the county.
    (b) If you insure all acreage in the county under the price 
election announced by FCIC in accordance with the Basic Provisions, you 
may elect to insure your peanut acreage in the county as:
    (1) An enterprise unit; or
    (2) Any other unit structure you may qualify for under section 34 
of the Basic Provisions.
    5. Revise section 3 of Sec.  457.134 to read as follows:
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities
    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) The price election percentage you choose for peanuts which are 
not insured in accordance with a sheller contract (may also include 
peanuts in excess of the amount required to fulfill your sheller 
contract) and for peanuts insured in accordance with a sheller contract 
must have the same percentage relationship to the maximum price 
election offered by us for peanuts not insured in accordance with a 
sheller contract. For example, if you choose 100 percent of the maximum 
price election for peanuts not insured in accordance with a sheller 
contract, you must also choose 100 percent of the applicable price 
election for peanuts insured in accordance with a sheller contract.
    (b) You may insure your peanuts in accordance with a sheller 
contract, however, you may not insure for more pounds of peanuts than 
your production guarantee (per acre) multiplied by the number of acres 
that will be planted to peanuts.
    (1) Any loss of production equal to or less than your production 
guarantee (per acre) will be valued by using the price election 
computed from the base contract price stated in your sheller contract.
    (2) If you do not contract for your total production guarantee any 
loss above the amount stated in the contract will be valued based on 
the price election issued by FCIC.
    (c) Any peanuts excluded from the sheller contract at any time 
during the crop year will be insured at the price election issued by 
FCIC and elected by you.
    6. Revise section 6 of Sec.  457.134 to read as follows:
    6. Report of Acreage
    In addition to the requirements of section 6 of the Basic 
Provisions, you must provide a copy of all sheller contracts to us on 
or before the acreage reporting date if you wish to insure your peanuts 
in accordance with your sheller contract.

[[Page 4060]]

    7. Remove and reserve section 7 of Sec.  457.134.
    8. Revise section 8 of Sec.  457.134 to read as follows:
    8. Insured Crop
    (a) In accordance with section 8 of the Basic Provisions, the crop 
insured will be all the peanuts in the county for which a premium rate 
is provided by the actuarial documents:
    (1) In which you have a share;
    (2) That are planted for the purpose of marketing as farmers' stock 
peanuts;
    (3) That are a type of peanut designated in the Special Provisions 
as being insurable;
    (4) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Planted for the purpose of harvesting as green peanuts;
    (ii) Interplanted with another crop; or
    (iii) Planted into an established grass or legume; and
    (5) Whether or not the peanuts are grown in accordance with a 
sheller contract (if not grown in accordance with the sheller contract, 
the peanuts will be valued at the price election issued by FCIC for the 
purposes of determining the production guarantee, premium, and 
indemnity).
    (b) You will be considered to have a share in the insured crop if, 
under the sheller contract, you retain control of the acreage on which 
the peanuts are grown, you are at risk of a production loss, and the 
sheller contract provides for delivery of the peanuts to the sheller or 
handler and for a stipulated base contract price.
    (c) A peanut producer who is also a sheller or handler may 
establish an insurable interest if the following requirements are met:
    (1) The producer must comply with these Crop Provisions;
    (2) Prior to the sales closing date, the Board of Directors or 
officers of the sheller or the handler must execute and adopt a 
resolution that contains the same terms as a sheller contract. Such 
resolution will be considered a sheller contract under this policy; and
    (3) Our inspection reveals that the processing facilities comply 
with the definition of a sheller contained in these Crop Provisions.
    9. Revise section 12 of Sec.  457.134 to read as follows:
    12. Replanting Payments
    (a) A replanting payment is allowed as follows:
    (1) In lieu of provisions in section 13 of the Basic Provisions 
that limit the amount of a replant payment to the actual cost of 
replanting, the amount of any replanting payment will be determined in 
accordance with these Crop Provisions;
    (2) Except as specified in section 12(a)(1), you must comply with 
all requirements regarding replanting payments contained in section 13 
of the Basic Provisions; and
    (3) The insured crop must be damaged by an insurable cause of loss 
to the extent that the remaining stand will not produce at least 90 
percent of the production guarantee for the acreage and it is practical 
to replant.
    (b) The maximum amount of the replanting payment per acre will be 
the lesser of:
    (1) 20.0 percent of the production guarantee, multiplied by your 
price election, multiplied by your share; or
    (2) $80.00 multiplied by your insured share.
    (c) When the crop is replanted using a practice that is uninsurable 
for an original planting, the liability on the unit will be reduced by 
the amount of the replanting payment. The premium amount will not be 
reduced.
    (d) Replanting payments will be calculated using your price 
election and production guarantee for the crop type that is replanted 
and insured. A revised acreage report will be required to reflect the 
replanted type, if applicable.
    10. Revise section 13 of Sec.  457.134 to read as follows:
    13. Duties in the Event of Damage or Loss
    Representative samples are required in accordance with section 14 
of the Basic Provisions.
    11. Amend section 14 of Sec.  457.134 as follows:
    a. Remove paragraphs (b) and (g), redesignate paragraphs (c) 
through (f) as subsections (b) through (e) respectively;
    b. Revise paragraph (a) and newly redesignated paragraph (b);
    c. Amend newly redesignated paragraph (d)(3) by removing ``(f)'' 
and adding ``(e)'' in its place;
    d. Revise newly redesignated paragraph (e); and
    e. Remove the note at the end of section 14.
    The revised and added text reads as follows:
    14. Settlement of Claim
    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide records of production that are acceptable to us 
for any:
    (1) Optional unit, we will combine all optional units for which 
acceptable records of production were not provided; or
    (2) Basic unit, we will allocate any commingled production to such 
units in proportion to our liability on the harvested acreage for the 
unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the number of insured acres by the respective 
production guarantee (per acre) for peanuts insured under a sheller 
contract at the base contract price and for peanuts not insured under a 
sheller contract or you have elected the FCIC issued price election, as 
applicable;
    (2) Multiplying each result of section 14(b)(1) by the applicable 
price election for peanuts insured at the base contract price or the 
price election issued by FCIC, as applicable;
    (3) Totaling the results of section 14(b)(2);
    (4) Multiplying the production to be counted by the respective 
price election (If you have one or more sheller contracts, we will 
value your production to count by using your highest price election 
first and will continue in decreasing order to your lowest price 
election based on the amount or peanuts insured at each price 
election);
    (5) Totaling the results of section 14(b)(4);
    (6) Subtracting the result of section 14(b)(5) from the result of 
section 14(b)(3); and
    (7) Multiplying the result in section 14(b)(6) by your share.
    Example  1 (without a sheller contract):
    You have 100 percent share in 25 acres of Valencia peanuts in the 
unit, with a production guarantee (per acre) of 2,000 pounds, the price 
election is $0.17 per pound, and your production to be counted is 
43,000 pounds.
    (1) 25 acres x 2,000 pounds = 50,000 pound guarantee;
    (2) 50,000 pound guarantee x $0.17 price election = $8,500.00 
guarantee;
    (4) 43,000 pounds of production to be counted x $0.17 price 
election = $7,310.00;
    (5) $8,500.00 guarantee -$7,310.00 = $1,190.00; and
    (6) $1,190.00 x 1.000 = $1,190.00; Indemnity = $1,190.00.
    Example  2 (with a sheller contract):
    You have 100 percent share in 25 acres of Valencia peanuts in the 
unit, with a production guarantee (per acre) of 2,000 pounds. You have 
two sheller contracts, the first is for 25,000 pounds, price election 
(contract) is $0.23 per pound, and the second is for 10,000 pounds, 
price election (contract) is $0.21 per pound. The price election (non-
contract) is $0.17 per pound, and your production to be counted is 
43,000 pounds.
    (1) 25 acres x 2,000 pounds = 50,000 pound guarantee;
    (2) 25,000 pounds contracted x $0.23 price election (contract) = 
$5,750.00; 10,000 pounds contracted x $0.21 price

[[Page 4061]]

election (contract) = $2,100.00; 50,000 pound guarantee -25,000 pounds 
contracted -10,000 pounds contracted = 15,000 pounds not contracted; 
15,000 pounds not contracted x $0.17 price election (non-contract) = 
$2,550.00;
    (3) $5,750.00 + $2,100.00 + $2,550.00 = $10,400.00 guarantee;
    (4) 43,000 pounds of production to be counted: 25,000 pounds 
contracted x $0.23 price election (contract) = $5,750.00; 10,000 pounds 
contracted x $0.21 price election (contract) = $2,100.00; 43,000 pounds 
of production to be counted -25,000 pounds contracted (at $0.23 per 
pound) -10,000 pounds contracted (at $0.21 per pound) = 8,000 pounds; 
8,000 pounds x $0.17 price election (non-contract) = $1,360.00;
    (5) $5,750.00 + $2,100.00 + $1,360.00 = $9,210.00;
    (6) $10,400.00 guarantee - $9,210.00 = $1,190.00; and
    (7) $1,190.00 x 1.000 = $1,190.00; Indemnity = $1,190.00.
* * * * *
    (e) Mature peanuts may be adjusted for quality when production has 
been damaged by insurable causes.
    (1) To enable us to determine the number of pounds, price per 
pound, and the quality of production for any peanuts that qualify for 
quality adjustment, we must be given the opportunity to have such 
peanuts inspected and graded before you dispose of them.
    (2) If you dispose of any production without giving us the 
opportunity to have the peanuts inspected and graded, the gross weight 
of such production will be used in determining total production to 
count unless you submit a marketing record satisfactory to us which 
clearly shows the number of pounds, price per pounds, and quality of 
such peanuts.
    (3) Such production to count will be reduced if the price per pound 
received for damaged peanuts is less than 85 percent of the applicable 
price election by:
    (i) Dividing the price per pound, as determined by us in accordance 
with section 14(e)(1), received for the insured type of peanuts by the 
applicable price election; and
    (ii) Multiplying this result by the number of pounds of such 
production.
    12. Add a new section 15 of Sec.  457.134 to read as follows:
    15. Prevented Planting
    Your prevented planting coverage will be 50 percent of your 
production guarantee for timely planted acreage. If you have additional 
levels of coverage, as specified in 7 CFR part 400, subpart T, and pay 
an additional premium, you may increase your prevented planting 
coverage to a level specified in the actuarial documents.
* * * * *

    Signed in Washington, DC, on January 17, 2006.
Eldon Gould,
Manager, Federal Crop Insurance Corporation.
[FR Doc. E6-855 Filed 1-24-06; 8:45 am]
BILLING CODE 3410-08-P