[Federal Register Volume 71, Number 135 (Friday, July 14, 2006)]
[Proposed Rules]
[Pages 40194-40252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-5962]



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Part II





Department of Agriculture





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Federal Crop Insurance Corporation



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7 CFR Part 457



Common Crop Insurance Regulations, Basic Provisions; and Various Crop 
Insurance Provisions; Proposed Rule

  Federal Register / Vol. 71, No. 135 / Friday, July 14, 2006 / 
Proposed Rules  

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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AB96


Common Crop Insurance Regulations, Basic Provisions; and Various 
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, Basic Provisions, Small 
Grains Crop Insurance Provisions, Cotton Crop Insurance Provisions, 
Coarse Grains Crop Insurance Provisions, Malting Barley Crop Insurance 
Provisions, Rice Crop Insurance Provisions, and Canola and Rapeseed 
Crop Insurance Provisions to provide revenue protection and yield 
protection. FCIC also proposes to amend the Common Crop Insurance 
Regulations, Basic Provisions to incorporate changes resulting from 
input and recommendations by the prevented planting work group. The 
amended provisions will replace the Crop Revenue Coverage (CRC), Income 
Protection (IP), Indexed Income Protection (IIP), and the Revenue 
Assurance (RA) plans of insurance. The intended effect of this action 
is to offer producers a choice of revenue protection (protection 
against loss of revenue caused by low prices, low yields or a 
combination of both) or yield protection (protection for production 
losses only) within one Basic Provisions and the applicable Crop 
Provisions to reduce the amount of information producers must read to 
determine the best risk management tool for their operation and to 
improve the prevented planting and other provisions to better meet the 
needs of insured producers. The changes will apply for the 2009 and 
succeeding crop years.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business September 12, 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 September 12, 2006.

ADDRESSES: Interested persons are invited to submit comments, titled 
``Combination Basic and Crop Provisions'', by any of the following 
methods:
     By Mail to: Director, Product Administration and Standards 
Division, Risk Management Agency, United States Department of 
Agriculture, 6501 Beacon Drive, Stop 0812, Room 421, Kansas City, MO 
64133-4676.
     E-Mail: [email protected].
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the 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: For further information contact Louise 
Narber, Risk Management Specialist, Product Management, Product 
Administration and Standards Division, Risk Management Agency, at the 
Kansas City, MO, address listed above, telephone (816) 926-7730. For a 
copy of the Cost-Benefit Analysis, contact Leiann Nelson, Economist, at 
the office, address, and telephone number listed above.

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 at the 
Kansas City address listed above to interested persons. In summary, the 
analysis finds that changes in the rule will have positive potential 
benefits for producers and insurance providers. The PayGo impact of no 
longer providing revenue coverage for sunflowers is estimated at 
$36,814. This was calculated based on the lower rate from MPCI 
coverage, the higher administrative and operating subsidy percentage 
from MPCI coverage, a lower amount of premium subsidy paid due to the 
lower premium, and a small amount of lesser indemnity paid based on no 
losses due to the harvest price. The PayGo impact of changing the 
rapeseed price mechanism for revenue coverage is estimated at $5,233. 
This was calculated based on the lower rate from MPCI coverage, a lower 
amount of premium subsidy paid due to the lower premium, and a small 
amount of lesser indemnity paid. A misreporting information penalty was 
put into place in the 2005 crop year. This misreporting penalty was 
based on the APH yield and acres reported. The policy already held 
misreported acres and yields against the producer and when the 
misreporting factor was also applied to the indemnity, the penalty 
proved to be overly harsh. In addition, the penalty was difficult to 
determine and administer. The total indemnity withheld in 2005 due to 
the MIF penalty was slightly under $2.7 million and involved just over 
608 thousand acres. RMA is recommending that the MIF penalty be removed 
from the policy based on the following facts: (1) Penalties against 
misreporting continue in the policy and acres and yields that are 
misreported are held against the indemnity; and (2) Fraud against crop 
insurance is punishable by law.
    Combining yield protection (protection for production losses only) 
and revenue protection (protection against loss of revenue caused by 
low prices, low yields or a combination of both) within one Basic 
Provisions and the applicable Crop Provisions will minimize the 
quantity of documents needed to be included in the contract between the 
producer and the insurance provider. A producer benefits because he or 
she will not receive several copies of largely duplicative material as 
part of the insurance contracts for crops insured under different 
insurance plans. Approved insurance providers benefit because there is 
no need to maintain inventories of similar materials. Handling and 
mailing costs are reduced to the extent that duplication of Basic or 
Crop Provisions is eliminated. Benefits accrue due to avoided costs 
(resources employed for duplicative effort) which are intangible in 
nature. Certain avoided costs are the need to prepare and publish 
multiple copies of similar documents and the need to store and mail 
multiple copies of similar documents. These proposed changes will 
increase the efficiency of the approved insurance providers by 
eliminating the need to maintain and track separate forms and by 
eliminating the potential for providing an incorrect set of documents 
to an insured person by inadvertent error.
    Revisions to the prevented planting provisions will clarify certain 
terms and conditions to reduce fraud, waste, and abuse. Also, the 
prevented planting payment amount will not exceed the payment level for 
the crop that is prevented from being planted. Current provisions allow 
payment based on another crop when there are no remaining eligible 
acres for the crop that is prevented from being planted. Payment is 
currently based on the other crop. Proposed provisions allow eligible 
acres for another crop to be used but limit the payment amount to that 
associated with the crop that was prevented from being planted.

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    CRC, RA, IP and IIP plans of insurance currently use a market-price 
discovery method to determine prices. This rule proposes to use this 
same method for determining prices used for crops with both revenue 
protection and yield protection. The benefits of this action primarily 
accrue to FCIC, which will no longer be required to make two estimates 
of the respective market price for these crops. Approved insurance 
providers benefit because they no longer will be required to process 
multiple releases of the expected market price for a crop year. 
Producers also benefit because the price at which they may insure the 
crops included under yield protection should more closely approximate 
the market value of any loss in yield that is subject to an indemnity. 
There are essentially no direct costs for this change since the market-
price price discovery mechanism already exists and is in use for the 
insurance plans to be included in revenue protection. All required data 
are available and similar calculations are currently being made.
    Sunflowers, which are currently eligible for revenue-based 
coverage, will no longer be eligible under the proposed changes. Very 
few crop policies of sunflowers earned premium in 2003. Removal of this 
crop from eligibility is appropriate because the mechanism for price 
discovery does not adequately reflect either market value or changes in 
the market valuation during the period between planting and harvest.
    These changes will simplify administration of the crop insurance 
program, reduce the quantity of documents and electronic materials 
prepared and distributed, better define the terms of coverage, provide 
greater clarity, and reduce the potential for waste, fraud, and abuse.
    Many of the benefits and costs associated with the proposed rule 
cannot be quantified. The qualitative assessment indicates that the 
benefits outweigh the costs of the regulation.

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 recordkeeping 
requirements included in this rule have been submitted for approval to 
OMB. Please submit written comments to the Desk Officer for 
Agriculture, Office of Information and Regulatory Affairs, Office of 
Management and Budget (OMB), 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 rule.
    Comments are being solicited from the public concerning this 
proposed information collection and recordkeeping requirements. This 
outside input will help:
    (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 assumption 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.)
    Title: Common Crop Insurance Regulations, Basic Provisions; and 
Various Crop Insurance Provisions.
    Abstract: The Federal Crop Insurance Corporation (FCIC) proposes to 
amend the Common Crop Insurance Regulations, Basic Provisions, Small 
Grains Crop Insurance Provisions, Cotton Crop Insurance Provisions, 
Coarse Grains Crop Insurance Provisions, Malting Barley Crop Insurance 
Provisions, Rice Crop Insurance Provisions, and Canola and Rapeseed 
Crop Insurance Provisions to provide revenue protection and yield 
protection. The amended provisions will replace the Crop Revenue 
Coverage (CRC), Income Protection (IP), Indexed Income Protection 
(IIP), and Revenue Assurance (RA) plans of insurance. The intended 
effect of this action is to offer producers a choice of revenue 
protection (protection against loss of revenue caused by low prices, 
low yield or a combination of both) or yield protection (protection for 
production losses only) within one Basic Provisions and the applicable 
Crop Provisions to reduce the amount of information producers must read 
to determine the best risk management tool for their operation and to 
improve the prevented planting and other provisions to better meet the 
needs of insured producers. (The burden hours for reading the various 
policies to determine the best risk management tool for the producer's 
farming operation were not included in the current information 
collection burden hours. Burden hours for reading insurance documents 
are now included in the revised information collection package.)
    Purpose: To amend 7 CFR part 457.
    Burden Statement: The information collection requirements are 
necessary for administering the crop insurance program. Producers are 
required to report specific data when they apply for crop insurance and 
report acreage, yields, and notices of loss. Insurance companies accept 
applications, issue policies, establish and provide insurance coverage, 
compute liability, premium, subsidies, and losses, indemnify producers, 
and report specific data to FCIC, as required. Insurance agents market 
crop insurance and service the producer. This data is used to 
administer the Federal crop insurance program in accordance with the 
Federal Crop Insurance Act, as amended.
    Estimate of Burden: The public reporting burden for this collection 
of information is estimated to average 0.4 of an hour per response.
    Respondents: Producers and insurance companies reinsured by FCIC.
    Estimated Annual Number of Respondents: 1,248,281.
    Estimated Annual Number of Responses Per Respondent: 3.6.
    Estimated Annual Number of Responses: 4,551,705.
    Estimated Total Annual Burden Hours on Respondents: 1,866,457.

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,

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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. 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 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

1. History

a. APH
    The Actual Production History (APH) plan of insurance was developed 
by FCIC and provides protection only against reductions in yield and 
prevented planting. Beginning with the 1985 crop year, FCIC offered an 
individual yield coverage plan that was based on the actual production 
of the producer. Previous to that crop year, coverage was based on an 
area yield. The individual yield coverage plan required 3 years of 
records, building to a maximum of 10 years.
    In 1994, the Federal Crop Insurance Reform Act of 1994 legislated 
that insurance coverage be based on the producer's actual production 
history, with 4 years of records required to establish the initial APH 
and building to ten year historic yield record. Congress also mandated 
that producers without the requisite records would receive a 
transitional yield determined by FCIC until 4 years of records were 
reached.
    Under the APH program, each year of APH history is added together 
and averaged to determine the approved yield for the unit. If the 
producer's production for a crop year for the unit was less than the 
guarantee (the amount determined by multiplying the approved yield by 
the coverage level), the producer was eligible for an indemnity 
payment. For each insured crop, the expected market price at the time 
of harvest was set by FCIC and announced by the contract change date, 
which usually predated harvest by at least six to nine months depending 
on the crop. FCIC eventually revised the policy to allow for the 
announcement of an additional price before the sales closing date to 
allow FCIC to obtain additional information to more accurately estimate 
the harvest price. However, for each insured crop, only one market 
price is used to establish whether an indemnity is owed, except for 
certain crop types that have separate market prices per type. The APH 
program does not provide coverage for any change in the market price.
b. CRC
    The Federal Crop Insurance Reform Act of 1994 also created section 
508(h) of the Federal Crop Insurance Act (Act), which allows a person 
to submit to the FCIC Board of Directors (Board) other crop insurance 
policies, provisions of policies or premium rates. If the Board finds 
that the interests of the producers are adequately protected and that 
any premiums charged to the producers are actuarially appropriate, the 
submission is approved by the Board for reinsurance and for sale by 
approved insurance providers to producers at actuarially appropriate 
rates and under appropriate terms and conditions.
    American Agrisurance, Inc. (AmAg), the managing general agent for 
Redland Insurance Company (Redland), an approved insurance provider, 
developed and submitted their CRC policy to the Board under section 
508(h) of the Act, requesting reinsurance, administrative and operating 
expense subsidy, and premium subsidy beginning with the 1996 crop year. 
The policy provided protection against reductions in yield and changes 
in market price that occur during the insurance period. Eventually AmAg 
became the managing general agent for American Growers Insurance 
Company (American Growers) and continued to maintain CRC. In 2002, 
American Growers failed and AmAg determined it could not continue to 
maintain CRC. In December 2002, in accordance with section 522(b)(4)(C) 
of the Act, AmAg transferred the responsibility for CRC to FCIC.
    CRC built upon the APH plan of insurance by adding a price 
protection component that for the first time used the commodity 
exchanges, such as the Chicago Board of Trade, to establish the 
expected market price for the crop. Before the insurance period, the 
expected market price is established using futures contracts to 
determine the expected market price at the time of harvest. Toward the 
end of the insurance period, the futures contracts from the same 
commodity exchange are again used to determine the new expected market 
price at the time of harvest. In this manner, the expected market price 
at the time of harvest is calculated before the insurance period begins 
and again toward the end of the insurance period so that any change in 
the expected market price can be measured.

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    CRC protects against both increases and decreases in price. Before 
the insurance period, the market price is established using futures 
contracts to determine the expected market price at the time of 
harvest. Toward the end of the insurance period, futures contracts for 
the same commodity exchanges are used to establish a new market price 
at the time of harvest. This meant that if the expected market price 
decreased during the insurance period or the producer suffered a loss 
in yield, the producer would be indemnified if the change in 
combination of price and yield results in the value of the production 
to count being less than the value of the guarantee.
c. RA
    In 1995, the Iowa Farm Bill Study Team proposed RA. The idea was 
further developed by the Iowa Farm Bureau Federation and Farm Bureau 
Mutual Insurance Company (Farm Bureau) at the request of the Iowa Farm 
Bureau membership. RA was eventually owned and administered by American 
Farm Bureau Insurance Services, Inc. RA was submitted to the Board 
under section 508(h) of the Act and was first approved by the Board for 
the 1997 crop year. RA provided coverage against loss of production and 
a decrease in price. RA was later modified to allow producers the 
option of receiving coverage for both an increase and decrease in 
price.
    Farm Bureau continued to maintain RA through the 2004 crop year, 
the last year for which maintenance costs were reimbursable under 
section 522(b)(4)(B) of the Act. For the 2005 crop year, Farm Bureau 
transferred the responsibility for maintenance for RA to FCIC.
    RA built upon the APH plan of insurance by adding a price 
protection component that also used the commodity exchanges, such as 
the Chicago Board of Trade, to establish the expected market price for 
the crop. Before the insurance period, the market price is established 
using futures contracts to determine the expected market price at the 
time of harvest. Toward the end of the insurance period, futures 
contracts for the same commodity exchange are used to establish a new 
market price at the time of harvest. When it was first introduced, it 
only protected against decreases in price. This meant that if the 
expected market price decreased during the insurance period or the 
producer suffered a loss in yield, the producer would be indemnified if 
the change in combination of price and yield results in the value of 
the production to count being less than the value of the guarantee. 
Eventually RA was revised to allow producers to elect to purchase an 
option that would provide coverage in case the expected market price 
increased during the insurance period.
d. IP
    In the Federal Crop Insurance Reform Act of 1994, Congress enacted 
section 508(h)(6) of the Act, which authorized FCIC to provide coverage 
against a reduction in price or yield resulting from an insured cause. 
FCIC subsequently developed IP and made it available for the 1997 crop 
year.
    IP built upon the APH plan of insurance by adding a price 
protection component that also used the commodity exchanges, such as 
the Chicago Board of Trade, to establish the expected market price for 
the crop. Before the insurance period, the expected market price is 
established using futures contracts to determine price at the time of 
harvest. Toward the end of the insurance period, futures contracts from 
the same commodity exchange are again used to determine a new expected 
market price. IP only protects against decreases in price. This meant 
that if the expected market price decreased during the insurance period 
or the producer suffered a loss in yield, the producer would be 
indemnified if the change in combination of price and yield results in 
the value of the production to count being less than the value of the 
guarantee.
e. IIP
    Beginning with the 1999 crop year, an alternative version of IP, 
Indexed IP, was available on a limited basis. IIP is currently 
available for corn and soybeans. IIP is identical to regular IP with 
the exception of the method used to calculate the APH approved yield. 
If the producer has experienced several losses during the period during 
which the APH is calculated, the producer's approved yield averages are 
reduced and may not reflect the expected yield of the crop during 
normal growing conditions. Indexing producer yields alleviates this 
problem. The indexing process uses county data to moderate the effect 
of these successive loss years. The IIP yield is calculated by 
subtracting the average of the producer's reported yields at the 
enterprise unit level from the average of the county yields for the 
same years, and subtracting that difference from the county's expected 
yield for the current crop year. This pilot program may provide an 
improved yield guarantee for producers in areas that have experienced 
numerous significant losses in recent years.

2. Proposed Policy

    FCIC proposes to amend the Common Crop Insurance Regulations; Basic 
Provisions, Small Grains Crop Insurance Provisions, Cotton Crop 
Insurance Provisions, Coarse Grains Crop Insurance Provisions, Malting 
Barley Crop Insurance, Rice Crop Insurance Provisions, and Canola and 
Rapeseed Crop Insurance Provisions to provide both revenue protection 
and yield protection. Barley, canola and rapeseed, corn, cotton, grain 
sorghum, rice, soybeans, sunflowers, and wheat are currently insured 
under at least one of the CRC, IP, IIP, and RA plans of insurance as 
well as under the APH plan of insurance.
    FCIC also proposes that sunflowers will no longer have revenue 
protection due to the lack of consistent and appropriate price data. 
Sunflowers will only be insurable under APH coverage and a price 
election will be established by FCIC.
    FCIC is proposing that the best features of each of the above 
stated plans of insurance be combined into the revised Basic Provisions 
and applicable Crop Provisions. Under this proposal, for each insured 
crop for which revenue protection is available, producers must choose 
whether to insure the crop under the revenue protection provisions or 
the yield protection provisions. Revenue protection provides coverage 
against loss of revenue caused by low prices or low yields or a 
combination of both.
    If revenue protection is selected, the producer will receive 
protection against both the increase and decrease in price unless the 
producer elects the harvest price exclusion option, which eliminates 
coverage against an increase in price. If yield protection is selected 
by the producer, the producer will only receive coverage for production 
losses and not for any change in the expected market price.
    The proposed changes to the policy will give producers the ability 
to insure their yield risk or their revenue risk under one policy. 
However, revenue protection will not be available for all crops that 
are covered by the Basic Provisions. Revenue protection is proposed to 
be provided only for those crops that were previously covered by CRC 
and RA, except for sunflowers, in all counties where APH is available 
for such crops. The actuarial documents will reflect the crops and 
counties where revenue coverage under the proposed Basic Provisions and 
applicable Crop Provisions will be made available. Revenue protection 
may be made available for additional crops as appropriate. Producers 
who previously

[[Page 40198]]

had revenue coverage will automatically continue to have revenue 
protection under the revised policy absent notice from such producers 
that they are canceling the insurance coverage by the cancellation date 
or changing their coverage by the sales closing date.
    The purpose of this endeavor is to create one simple policy and 
remove the redundancies and excess documents that currently add 
unnecessary complexity to the program. CRC, RA, and the APH Common Crop 
Insurance Policy each have different Basic Provisions. The Common Crop 
Insurance Policy Basic Provisions is also used for IP and IIP. The 
various Basic Provisions and Crop Provisions for each of these plans of 
insurance contain many of the same or similar terms and conditions. The 
proposed Basic Provisions and applicable Crop Provisions will allow 
agents to more effectively assist producers in comparing the choices 
that are available because all the terms will be contained in one 
policy, actuarial documents, premium calculators, etc. This will 
significantly reduce the burdens on agents and insurance providers 
through less training and supporting documentation costs. Producers 
will have fewer documents to review when evaluating the best plan of 
insurance for their particular farming operations. The proposed Basic 
Provisions and applicable Crop Provisions will also improve program 
integrity by eliminating potential conflicts and the mistakes that can 
occur when individual plans of insurance are revised differently.

3. Existing Coverages and Proposed Changes

    Following is a summary of the relevant terms of the current plans 
of insurance and the proposed changes to such terms.
a. Coverage Levels
    Under APH, producers choose coverage levels ranging from 50 to 75 
percent (up to 85 percent depending on the crop and county) in 5 
percent increments. Catastrophic risk protection (CAT) coverage is 
available with a coverage level of 50 percent of the approved yield and 
55 percent of the expected market price, or a comparable coverage as 
determined by FCIC for policies with other than individual yield (For 
example, a dollar plan of insurance has coverage of 27.5 percent of an 
established dollar amount).
    Under CRC, producers choose the amount of revenue protection that 
meets their risk management needs by selecting a coverage level between 
50 and 75 percent (up to 85 percent depending on the crop and county) 
in 5 percent increments. Catastrophic risk protection coverage is not 
available.
    For IP and IIP, producers choose the amount of revenue protection 
that meets their risk management needs by selecting either CAT (based 
on 27.5 percent of the approved yield and 100 percent price election) 
or a coverage level between 50 and 75 percent (85 percent depending on 
the crop and location) in 5 percent increments.
    Under RA, producers choose the amount of revenue protection that 
meets their risk management needs by selecting a coverage level between 
65 and 85 percent for whole-farm and enterprise units and 65 to 75 
percent for basic and optional units (80 and 85 percent coverage is 
available where the APH plan of insurance allows 80 and 85 percent 
coverage, except for cotton). Catastrophic risk protection coverage is 
not available.
    Under the revised Basic Provisions and Crop Provisions, FCIC 
proposes to adopt the coverage levels ranging from 50 to 75 percent (up 
to 85 percent depending on the crop and county) in 5 percent 
increments. Catastrophic risk protection (CAT) coverage will be 
available for yield protection with a coverage level of 50 percent of 
the approved yield and 55 percent of the expected market price, or a 
comparable coverage as determined by FCIC (For example, 27.5 percent of 
the approved yield and 100 percent of the expected market price is a 
comparable coverage). CAT coverage will not be available for revenue 
protection.
    CAT coverage will not be available for revenue protection because 
CAT coverage is intended to be a nominal coverage provided in the event 
of catastrophic disasters. As such, producers do not pay premium and 
are only charged an administrative fee. Because CAT coverage is only 
intended to provide the most basic of protection, its options have 
always been severely limited, such as no written agreements, no 
optional units, no additional prevented planting coverage, no other 
optional coverages offered, etc. Since revenue protection is an 
additional option available to producers it would be inconsistent to 
allow such coverage to be available for CAT coverage.
b. Unit Structure
    Producers insured under the APH plan of insurance must insure all 
the acreage of the insured crop in the county in which they have an 
interest with the exception of high-risk land. Producers may exclude 
high-risk land from coverage or insure it at the CAT coverage level. 
Insured acreage may be divided into smaller acreage or units. Basic 
units are determined by share. For example, a producer who owns one 
field and rents another field in exchange for a share of the crop can 
have two basic units. However, if the same producer owned both fields 
or cash rented one of the fields, the producer would only be eligible 
for one basic unit.
    Basic units may generally be subdivided into optional units that 
are determined by boundaries (i.e., section, Farm Serial Numbers, non-
contiguous land, etc.) and/or production practice (i.e., irrigated, 
non-irrigated) and each proposed optional unit must be supported by 
separate historical records of planted acreage and yield. For some 
crops, basic units may also be combined into an enterprise unit, which 
means all acreage of the insured crop in the county in which the 
producer has an interest will be in one unit, regardless of share. 
There is a separate guarantee for each basic, optional or enterprise 
unit. A premium discount is available if the producer elects basic or 
enterprise units.
    Producers insuring under the CRC plan of insurance must also insure 
all the acreage of the insured crop in the county in which they have an 
interest. Insured acreage may be divided into smaller acreage or units. 
Like APH, basic units are determined by share. Like APH, basic units 
may be subdivided into optional units that are determined by boundaries 
(i.e., section, Farm Serial Numbers, non-contiguous land, etc.) and/or 
production practice (i.e., irrigated, non-irrigated) and each proposed 
optional unit must be supported by separate historical records of 
planted acreage and yield. Like APH, basic units may also be combined 
into an enterprise unit, which means all acreage of the insured crop in 
the county in which the producer has an interest will be in one unit. 
There is a separate revenue protection guarantee for each basic or 
optional unit. Basic or optional units comprising the enterprise unit 
retain separate final guarantees. A premium discount is available if 
the producer elects basic or enterprise units.
    Like APH and CRC, producers that insure under the RA plan of 
insurance must also insure all the acreage of the insured crop in the 
county in which they have an interest. Insured acreage may be divided 
into smaller acreage or units. Like APH and CRC, basic units are 
determined by share. Like APH and CRC, basic units may be subdivided 
into optional units that are determined by boundaries (i.e., section, 
Farm Serial Numbers, non-contiguous land, etc.)

[[Page 40199]]

and/or production practice (i.e., irrigated, non-irrigated) and each 
proposed optional unit must be supported by separate historical records 
of planted acreage and yield. Like APH and CRC, basic units may also be 
combined into an enterprise unit, which means all acreage of the 
insured crop in the county in which the producer has an interest will 
be insured in one unit. However, RA also offers whole-farm units, where 
all crops for which insurance is available is insured in one unit, 
except winter wheat.
    RA provides a premium discount if the producer elects a basic or an 
enterprise unit. An additional premium discount is available when the 
insured elects the whole-farm unit.
    With respect to IP and IIP, insurance is only provided for an 
enterprise unit. Whole-farm, basic and optional units are not 
available.
    Under the revised Basic Provisions and Crop Provisions, FCIC 
proposes to require that producers must insure all the acreage of the 
insured crop in the county in which they have an interest regardless of 
whether yield or revenue protection is selected. However, producers 
with yield or revenue protection may select from several unit 
structures: Basic, optional or enterprise units. However, producers 
with revenue protection may also select whole-farm units. Basic units 
are again determined by share.
    FCIC is proposing that basic units may be subdivided into optional 
units that are determined by boundaries (i.e., section, Farm Serial 
Numbers, non-contiguous land, etc.) and/or production practice (i.e., 
irrigated, non-irrigated) and each proposed optional unit must be 
supported by separate historical records of planted acreage and yield.
    FCIC is also proposing that an enterprise unit may be available for 
certain crops, as designated in the actuarial documents. The revised 
policy provides a premium discount if the producer elects a basic or 
enterprise unit.
    FCIC is also proposing to allow producers to obtain whole-farm 
units. The producer cannot selectively choose which crops to include 
under the whole-farm unit. The producer must include all insured crops 
for which revenue protection is available and in which the producer has 
a share, except winter barley and winter wheat, which may not be 
included in the whole-farm unit. Fall planted crops are excluded from 
the whole-farm unit because the different growing seasons make it 
impossible to establish the guarantee or premium that may be owed at 
the time of application because the information regarding the spring 
planted crops is not yet available. Further, producers with fall 
planted crops would have to wait until after harvest of all their 
spring planted crops before an indemnity could be paid. An additional 
premium discount is available when the producer elects the whole-farm 
unit.
c. Price Methodology
    As stated above, under the APH plan of insurance, there is a price 
election announced by FCIC for each insured crop or type. The price 
elections represent 100 percent of the expected market price. Price 
elections are determined by FCIC based on the best available data to 
estimate the expected market price at the time of harvest and are 
issued by the contract change date for each insured crop. In addition 
to the price election available on the contract change date, FCIC may 
provide an additional price election no later than 15 days prior to the 
crop's sales closing date. The additional price election will not be 
less than the price available on the contract change date and is 
intended to allow FCIC to update its available data so that the 
expected market price can more accurately reflect the expected market 
price the producer will receive at the time of harvest. Producers must 
elect the additional price election by the sales closing date. The 
producer can elect a percentage of this announced price. For example, 
the producer can elect to receive a price that is 80 percent of the 
price election announced by FCIC.
    Further, as stated above, under the CRC plan of insurance, the base 
price is 100 percent of the expected market price at the time of 
harvest but it is established prior to the attachment of insurance. The 
base price is used to establish the guarantee. The harvest price is 
also 100 percent of the expected market price at the time of harvest 
but is established just before the crop is normally harvested. The 
harvest price is used to calculate the value of the production to count 
and to recalculate the revenue guarantee when the harvest price exceeds 
the base price. The CRC base and harvest prices are an average of the 
commodity exchange daily settlement prices for the insured crop, 
futures contract or index, for the period specified in the Commodity 
Exchange Endorsement.
    As stated above, like CRC, RA uses two prices. The projected 
harvest price and the fall harvest price. The projected harvest price 
is 100 percent of the expected market price at the time of harvest 
established prior to the attachment of insurance and this price is used 
to set the guarantee. The fall harvest price is also 100 percent of the 
expected market price at the time of harvest established just before 
the crop is normally harvested and it is used to determine the value of 
the production to count. The RA projected harvest price and fall 
harvest price are an average of the commodity exchange daily settlement 
prices for the insured crop, futures contract or index, for the period 
specified in the Crop Provisions. Only protection against a reduction 
in price is built into the RA policy. To obtain protection in case the 
fall harvest price is greater than the projected harvest price, the 
producer must purchase the fall harvest price option for an additional 
premium.
    As stated above, IP and IIP use two prices to measure price 
fluctuation. The projected price establishes the revenue guarantee. The 
harvest price establishes the value of the production to count. IP and 
IIP prices are 100 percent of the average daily settlement price for 
the insured crop, futures contract or index, for the period specified 
in the Crop Provisions. IP and IIP only provide price protection if the 
harvest price is less than the projected price. They do not provide 
protection if the harvest price exceeds the projected price.
    For the revised Basic Provisions and Crop Provisions, for crops for 
which revenue protection is available, FCIC proposes to use the 
commodity exchanges to establish a projected price and a harvest price 
(the harvest price will only be used for crops with revenue 
protection). FCIC also proposes that the revised policy provide 
coverage for both an increase and decrease in price, unless the 
producer selects the harvest price exclusion option. Selection of the 
harvest price exclusion option will only provide protection against a 
decrease in the price. No matter whether the producer selects to insure 
against both an increase and decrease in price or selects the harvest 
price exclusion option, the harvest price will be used to value 
production to count.
    If the producer elects yield protection for a crop for which 
revenue protection is available, the projected price will be used to 
calculate the value of the production to count. For crops for which 
revenue protection is not available, expected market prices, amounts of 
insurance, and the value of the production to count, as applicable, 
will continue to be based on the price elections determined by FCIC in 
accordance with the applicable Crop Provisions.
    The price discovery methodology for crops with revenue protection 
available will be specified in the Commodity Exchange Price Provisions 
(CEPP). The

[[Page 40200]]

CEPP will include the information necessary to derive the projected 
price and the harvest price including the applicable commodity exchange 
and the relevant futures trading days, if applicable.
    FCIC proposes that the price discovery period end not less than 15 
days prior to the sales closing date and the projected price will be 
released within 5 days after the price determination period ends. This 
will allow FCIC to establish the most relevant price possible for the 
projected price. Therefore, the projected price will be available on 
the Actuarial Data Master (ADM) at least 10 days prior to the sales 
closing date.
    RMA proposes to add an informational tool to RMA's Web site that 
will accumulate revenue protection volatility factors and projected 
prices and harvest prices, as defined in the Commodity Exchange Price 
Provisions, during the price discovery period. While the values in the 
accumulator will only be estimates until the price discovery period 
expires, this informational tool will be useful for producers and 
agents to begin making informed decisions about the risk management 
alternatives as far in advance of sales closing dates as possible.
    FCIC is also proposing that if there is insufficient price 
information to set the projected price for a crop, the projected price 
will be determined by FCIC and no revenue protection will be available. 
In such case, producers who elected revenue protection will 
automatically have yield protection, unless the policy is cancelled by 
the cancellation date, and the projected price determined by FCIC will 
be used to establish the value of the guarantee and production to 
count. If there is sufficient price information to set the projected 
price for a crop for which revenue protection is offered but there is 
insufficient information to set the harvest price, the harvest price 
will be set equal to the projected price.
    For corn silage insured under revenue protection, FCIC is proposing 
that the harvest price be set equal to the projected price because corn 
silage is not traded under any commodity exchange and corn silage 
prices do not have a correlation to corn for grain or other crop prices 
that are established on a commodity exchange. The result of this action 
will allow the producer to insure both corn for silage and grain and 
may allow the producer to qualify for a whole-farm unit under revenue 
protection.
    For rapeseed insured under revenue protection, FCIC is also 
proposing that the harvest price will be set equal to the projected 
price because rapeseed is not traded under any commodity exchange and 
rapeseed prices no longer have a consistent correlation to canola 
prices that are established on a commodity exchange. The result of this 
action will allow the producer to insure both rapeseed and canola and 
may allow the producer to qualify for a whole-farm unit under revenue 
protection.
d. Guarantees
    Under the APH plan of insurance, the guarantee is determined by 
multiplying the approved yield by the coverage level selected by the 
producer.
    Under the CRC plan of insurance, the guarantee used to calculate 
premium and any replant payment and prevented planting payment is the 
approved yield times the coverage level times the base price. Since the 
policy is intended to cover both increases and decreases in price, to 
determine the guarantee for the purposes of establishing an indemnity, 
the higher of the base price or harvest price is used to establish the 
final guarantee.
    Under the RA plan of insurance, the revenue guarantee is determined 
by multiplying the approved yield times the coverage level times the 
projected harvest price. Unless the producer selects the fall harvest 
price option, this revenue guarantee will be used to calculate premium, 
and any replant payment and any prevented planting payment and 
indemnity. If the producer elects the fall harvest price option, the 
revenue guarantee is determined by multiplying the approved yield times 
the coverage level times the higher of the projected harvest price or 
the fall harvest price.
    Under the IP plan of insurance, the guarantee is determined by 
multiplying the coverage level times the approved yield times the 
projected price. Since IP only provides coverage for reductions in 
price, the same guarantee is always used to calculate premiums and 
losses.
    Under the IIP plan of insurance, the guarantee is the coverage 
level times the indexed approved yield (the producer's individual yield 
indexed against the county yield) times the projected price. Since IP 
only provides coverage for reductions in price, the same guarantee is 
always used to calculate premiums and replant payments, prevented 
planting payments and indemnities.
    For the revised Basic Provisions and Crop Provisions, FCIC proposes 
that, for crops for which revenue protection is available, if the 
producer selects revenue protection, the revenue guarantee used to 
calculate premium, replant payment and any prevented planting payment 
is the approved yield times the coverage level times the projected 
price. Since the policy will cover both increases and decreases in 
price, to determine the guarantee for the purposes of establishing an 
indemnity, the final revenue guarantee will be calculated by 
multiplying the approved yield times the coverage level times the 
higher of the projected price or harvest price, unless the harvest 
price exclusion option is selected. If the harvest price exclusion 
option is selected, the revenue guarantee used to calculate premium 
will be used to calculate any indemnity.
    If the producer selects yield protection, the guarantee for the 
purposes of establishing the premium and calculating any replanting 
payment, prevented planting payment, and indemnity will be based on the 
approved yield times the coverage level times the projected price.
    For crops for which revenue protection is not available, the 
guarantee for the purposes of establishing the premium and calculating 
any replanting payment, prevented planting payment, and indemnity will 
continue to be based on the price elections or amounts of insurance, if 
applicable, determined by FCIC.
e. Production to Count and Indemnities
    For APH, production to count is the amount of appraised and 
harvested production at the time of loss, adjusted for any quality 
losses, as applicable. Under the APH plan of insurance, an indemnity is 
calculated by subtracting the production to count from the production 
guarantee. If the production to count is less than the guarantee, an 
indemnity will be paid that is the difference between the guarantee and 
the production to count times the price election selected by the 
producer times the producer's share.
    For CRC, production to count is the amount of appraised and 
harvested production at the time of loss, adjusted for any quality 
losses, as applicable. Under the CRC plan of insurance, an indemnity is 
calculated by subtracting the value of the production to count 
(production to count times the harvest price) from the final guarantee 
and multiplying the result by the producer's share.
    For RA, production to count is the amount of appraised and 
harvested production at the time of loss, adjusted for any quality 
losses, as applicable. Under the RA plan of insurance, an indemnity is 
calculated by subtracting the value of production to count (production 
to count times the fall harvest price) from the revenue

[[Page 40201]]

guarantee and multiplying the result by the producer's share.
    For IP and IIP, production to count is the amount of appraised and 
harvested production at the time of loss, adjusted for any quality 
losses, as applicable. Under IP and IIP, the indemnity is calculated by 
subtracting the value of the production to count (total production to 
count times the harvest price) from the amount of protection and 
multiplying the result by the producer's share.
    For the revised Basic Provisions and Crop Provisions, FCIC proposes 
that for crops for which revenue protection is available and selected, 
production to count is the amount of appraised and harvested production 
at the time of loss, adjusted for any quality losses, as applicable. 
FCIC proposes that an indemnity is calculated by subtracting the value 
of the production to count (production to count times the harvest 
price) from the revenue protection guarantee, multiplied by the 
producer's share.
    FCIC proposes that for crops for which revenue protection is 
available but yield protection is selected, production to count is the 
amount of appraised and harvested production at the time of loss, 
adjusted for any quality losses, as applicable. Further, FCIC proposes 
that an indemnity is calculated by subtracting the value of the 
production to count (production to count times the projected price) 
from the yield protection guarantee. The yield protection guarantee is 
based on the projected price.
f. Rating and Premium Subsidy
    For APH, the premium is determined to be an amount necessary to 
cover the anticipated losses and a reasonable reserve. Premium covers 
only the anticipated losses associated with the loss of production. The 
premium subsidy is the portion of the total premium paid by the 
government and is in the amount established in section 508(e) of the 
Act.
    For CRC, the premium rate is determined by using the premium rate 
for the APH plan of insurance with an additional rate necessary to 
cover the anticipated losses associated with the risk that the harvest 
price will exceed the base price and guarantees will be adjusted when 
calculating losses. The premium subsidy is the portion of the total 
premium paid by the government and is in the amount established in 
section 508(e) of the Act.
    RA premium rates are calculated by a rating model incorporating the 
variability and correlation of yield and price. When the fall harvest 
price option is selected by the producer an additional premium rate is 
charged to cover the risk that the harvest price will exceed the 
projected price and guarantees will be adjusted when calculating 
losses. The premium subsidy is the portion of the total premium paid by 
the government and is in the amount established in section 508(e) of 
the Act.
    IP and IIP premium rates are calculated by a rating model 
incorporating the variability of yield and price. The premium subsidy 
is the portion of the total premium paid by the government and is in 
the amount established in section 508(e) of the Act.
    For the revised Basic Provisions and Crop Provisions, for revenue 
protection, premium rates are calculated by a rating model 
incorporating the variability and correlation of yield and price. For 
yield protection, premium rates are calculated the same as the APH 
policy. The premium subsidy is the portion of the total premium paid by 
the government and is in the amount established in section 508(e) of 
the Act.
g. Maximum Price Movement
    With respect to changes in the value of the commodity that can 
occur during the insurance period, some policies contained limitations 
on the amount of price change that would be covered under the policy. 
This restriction was added because some markets were volatile and there 
needed to be a mechanism to measure the risk for actuarially sound 
rating. For instance, if the base price was $4.30 for soybeans and the 
market price at the time of harvest was $8.00, if the maximum price 
movement allowed is $3.00, the harvest price would be $7.30.
    The maximum price movement was not applicable to APH because there 
is no revenue component to the coverage. Only yield risk is covered.
    For CRC, the maximum price movement allowed under the policy was 
$1.50 per bushel for corn and grain sorghum, $3.00 per bushel for 
soybeans, $2.00 per bushel for wheat, $0.05 per pound for rice, and 
$0.70 per pound for cotton.
    RA, IP and IIP did not contain a maximum price movement.
    For the revised Basic Provisions and Crop Provisions, FCIC proposes 
that the harvest price will not exceed 160 percent of the projected 
price. However, this percentage will be contained in the Commodity 
Exchange Price Provisions to permit an expedited adjustment if 
necessary. Any adjustments will be made prior to the contract change 
date.
h. Exclusions and Availability
    APH only provides protection against loss of yield due to a named 
insured peril. The hail and fire exclusion is available, which permits 
producers to exclude these perils from their APH policy and obtain 
private commercially available insurance. The premium rate for the APH 
policy is reduced to reflect the exclusion of these perils. Coverage 
may be precluded in certain instances, such as losses due to poor 
farming practices and other uninsured causes of loss such as 
negligence. High-risk land is eligible for coverage and written 
agreements are available. APH is available for most major commodities.
    The CRC policy provides insurance protection for unavoidable loss 
of revenue due to insured causes of loss, including market price 
changes. Coverage may be precluded in certain instances, such as losses 
due to poor farming practices and other uninsured causes of loss such 
as negligence. The hail and fire exclusion is not available. High-risk 
land is eligible for coverage and written agreements are available. CRC 
is currently available for wheat, rice, cotton, corn, grain sorghum, 
and soybeans in all counties where the APH program is available.
    The RA policy provides insurance protection for unavoidable loss of 
revenue due to insured causes of loss, including market price changes. 
Coverage may be precluded in certain instances, such as losses due to 
poor farming practices and other uninsured causes of loss such as 
negligence. The hail and fire exclusion is not available. High-risk 
land is eligible for coverage and written agreements are limited in 
availability. RA is currently available for wheat, canola and rapeseed, 
rice, cotton, corn, sunflowers, soybeans, barley and malting barley in 
selected states.
    The IP and IIP policies provide insurance protection for 
unavoidable loss of revenue due to insured causes of loss, including 
reduced market prices. Coverage may be precluded in certain instances, 
such as losses due to poor farming practices and other uninsured causes 
of loss such as negligence. The hail and fire exclusion is not 
available. High-risk land is not eligible for coverage and written 
agreements are not available. IP is currently available for wheat, 
cotton, corn, grain sorghum, soybeans, barley and malting barley in 
selected states. IIP is available for corn in Maryland, New York, North 
Carolina, and Pennsylvania and soybeans in Maryland and North Carolina.
    In the revised Basic Provisions and Crop Provisions, FCIC proposes 
to provide insurance protection for loss of

[[Page 40202]]

revenue due to loss of yield or changes in the market price resulting 
from insured causes of loss. Market price fluctuations will be presumed 
to be from insured causes of loss unless there is specific evidence 
that such fluctuation was caused by an uninsured cause of loss, such as 
quarantine or terrorist attack. Coverage may be precluded in certain 
instances, such as losses due to poor farming practices and other 
uninsured causes of loss such as negligence. The hail and fire 
exclusion is available. High-risk land is eligible for coverage and 
written agreements are also available. Revenue protection will be 
provided for those crops and counties where CRC, RA, IP and IIP were 
available, except for sunflowers.

4. Commodity Exchange Price Provisions

    FCIC proposes that the Commodity Exchange Price Provisions be 
available for public inspection on RMA's Web site at http://www.rma.usda.gov/, or a successor Web site, by the contract change date 
and will also be available in the agent's office. The Commodity 
Exchange Price Provisions will not be published in the Code of Federal 
Regulations. However, FCIC would like comments on the Commodity 
Exchange Price Provisions and, therefore, has included its text below.

Commodity Exchange Price Provisions of Insurance; 2006 and Succeeding 
Crop Years

1. Definitions

    Additional daily settlement price--Daily settlement prices for 
full active trading days based on the contract immediately prior and 
immediately following the appropriate commodity contract, or the 
contract immediately prior to the appropriate contract, provided the 
substitute contract(s) are within the same crop year. These prices 
are used to establish the projected and harvest price when at least 
8 average daily settlement prices are not available.
    Average daily settlement price--The sum of all daily settlement 
prices established on full active trading days, as specified in the 
applicable insured crop's projected price or harvest price 
definition, divided by the total number of full active trading days 
included in the sum. The average must include a minimum of 8 prices 
established on full active trading days. If there is not a minimum 
of 8 prices established on full active trading days for the 
applicable contract months specified for the insured crop in 
paragraph 3, additional daily settlement prices will be used to 
establish the average daily settlement price until there are 8 
prices established on full active trading days.
    CBOT--Chicago Board of Trade.
    CME--Chicago Mercantile Exchange.
    Full active trading day--Any day on which the relevant market is 
open during all regular trading hours for the relevant futures 
contract, and there are at least 25 open interest contracts on the 
relevant futures contract.
    Harvest Price--Defined in section 3.
    KCBT--Kansas City Board of Trade.
    MGE--Minneapolis Grain Exchange.
    National Agricultural Statistics Service (NASS)--An agency 
within USDA.
    NYBT--New York Board of Trade.
    Projected Price--Defined in section 3.
    USDA--United States Department of Agriculture.
    WCE--Winnipeg Commodity Exchange.

2. Price Determinations

    (a) In accordance with section 1 of the Common Crop Insurance 
Policy Basic Provisions, these Commodity Exchange Price Provisions 
specify how and when the projected price and harvest price will be 
determined by crop.
    (b) If revenue protection is available for the crop, average 
daily settlement prices will be used to determine:
    (1) The projected price and harvest price for insured crops for 
which revenue protection is selected; or
    (2) The projected price for insured crops for which yield 
protection is selected.
    (c) Additional daily settlement prices will be derived beginning 
with the latest date defined by the applicable projected price or 
harvest price definition not qualifying as a full active trading 
day.
    (d) RMA reserves the right to omit any daily settlement price or 
additional daily settlement price if market conditions are different 
than those used to rate or price revenue protection (For example, 
the trading hits the limits imposed by the Commodity Exchange).
    (e) For the projected price, if the average daily settlement 
price cannot be calculated by the procedures outlined in these price 
provisions, no revenue protection coverage will be available.
    (1) If revenue protection coverage is not available, notice will 
be provided on the Risk Management Agency Web site at http://www.rma.usda.gov/ by the date specified in the applicable projected 
price definition.
    (2) Yield protection may still be obtained for the crop by 
making application by the appropriate sales closing date or, for 
revenue protection policies that were in effect for the previous 
crop year, the coverage under such policy will automatically revert 
to yield protection. In such instances, the projected price will be 
established by RMA and released by the date specified in the 
applicable projected price definition.
    (f) Projected and harvest prices will not be used to establish 
the price election for those crops for which revenue protection is 
not available.

3. Projected Price/Harvest Price

    The following projected price and harvest price definitions by 
crop and sales closing date are defined in accordance with section 1 
of the Common Crop Insurance Policy Basic Provisions. Notice of 
price release will be provided on RMA's Web site at http://www.rma.usda.gov/ by the date specified in the projected price and 
harvest definitions listed below.

Barley (0091)

    For counties with insurable types having a September 30 sales 
closing date:
    Projected price--The pre-harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by .806, and rounded to the nearest 
whole cent. The projected price will be released by September 20 of 
the pre-harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by .806, and rounded to the nearest 
whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
BILLING CODE 3410-08-P

[[Page 40203]]

[GRAPHIC] [TIFF OMITTED] TP14JY06.000

Barley (0091)

    For counties with insurable types having an October 31 sales 
closing date:
    Projected price--The pre-harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by .806, and rounded to the nearest 
whole cent. The projected price will be released by October 21 of 
the pre-harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by .806, and rounded to the nearest 
whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.001

Barley (0091)

    For counties with insurable types having a March 15 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by .806, and rounded to the nearest 
whole cent. The projected price will be released by March 5 of the 
pre-harvest year. The projected price for Alaska is multiplied by 
the 10-year average of the ratio of NASS Alaska barley prices to 
NASS U.S. barley prices, and rounded to the nearest whole cent.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by .806, and rounded to the nearest 
whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price. The 
harvest price for Alaska is multiplied by the 10-year average of the 
ratio of NASS Alaska barley prices to NASS U.S. barley prices, and 
rounded to the nearest whole cent.

[[Page 40204]]

[GRAPHIC] [TIFF OMITTED] TP14JY06.002

Canola/Rapeseed (0015)

    For counties with insurable types having an August 31 sales 
closing date:

Canola

    Projected price--The pre-harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, divided by 
2,205. This factor converts the WCE price from Canadian dollars per 
metric ton to Canadian dollars per pound. To convert to U.S. 
dollars, multiply the Canadian price per pound by the August 2-16 
pre-harvest year's average daily settlement price for the CME June 
Canadian dollar futures contract for the harvest year, rounded to 
the nearest one-tenth of a cent. The projected price will be 
released by August 21 of the pre-harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, divided by 2,205. 
This factor converts the WCE price from Canadian dollars per metric 
ton to Canadian dollars per pound. To convert into U.S. dollars, 
multiply the Canadian price per pound by the May average daily 
settlement price for the CME June Canadian dollar futures contract 
for the harvest year, rounded to the nearest one-tenth of a cent. 
The harvest price will be released within 5 days following the end 
of the harvest price discovery period. In no case may the harvest 
price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.003

Rapeseed

    Rapeseed is not traded on any Commodity Exchange. However, 
revenue protection is still considered to be available and the 
projected and harvest prices will be established by FCIC in 
accordance with this CEPP. The result of this action will allow the 
producer to insure both canola and rapeseed under revenue 
protection. With both canola and rapeseed insured under revenue 
protection the producer may qualify for a whole-farm unit. However, 
rapeseed will not have the benefit of the projected price and the 
harvest price moving as the price on the Commodity Exchange moves 
for canola.
    Projected price--A price established by FCIC and released by 
June 30 of the pre-harvest year.
    Harvest price--A price set by FCIC that is equal to the 
projected price.

Canola/Rapeseed (0015)

    For counties with insurable types having a September 30 sales 
closing date:

Canola

    Projected price--The pre-harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, divided by 
2,205. This factor converts the WCE price from Canadian

[[Page 40205]]

dollars per metric ton to Canadian dollars per pound. To convert 
into U.S. dollars, multiply the Canadian price per pound by the 
September 1-15 pre-harvest year's average daily settlement price for 
the CME June Canadian dollar futures contract for the harvest year, 
rounded to the nearest one-tenth of a cent. The projected price will 
be released by September 20 of the pre-harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, divided by 2,205. 
This factor converts the WCE price from Canadian dollars per metric 
ton to Canadian dollars per pound. To convert into U.S. dollars, 
multiply the Canadian price per pound by the May average daily 
settlement price for the CME June Canadian dollar futures contract 
for the harvest year, rounded to the nearest one-tenth of a cent. 
The harvest price will be released within 5 days following the end 
of the harvest price discovery period. In no case may the harvest 
price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.004

Rapeseed

    Rapeseed is not traded on any Commodity Exchange. However, 
revenue protection is still considered to be available and the 
projected and harvest prices will be established by FCIC in 
accordance with this CEPP. The result of this action will allow the 
producer to insure both canola and rapeseed under revenue 
protection. With both canola and rapeseed insured under revenue 
protection the producer may qualify for a whole-farm unit. However, 
rapeseed will not have the benefit of the projected price and the 
harvest price moving as the price on the Commodity Exchange moves 
for canola.
    Projected price--A price established by FCIC and released by 
June 30 of the pre-harvest year.
    Harvest price--A price set by FCIC that is equal to the 
projected price.

Canola/Rapeseed (0015)

    For counties with insurable types having a March 15 sales 
closing date:

Canola

    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, divided by 
2,205. This factor converts the WCE price from Canadian dollars per 
metric ton to Canadian dollars per pound. To convert into U.S. 
dollars, multiply the Canadian price per pound by the February 14-28 
average daily settlement price for the harvest year's CME September 
Canadian dollar futures contract for the harvest year, rounded to 
the nearest one-tenth of a cent. The projected price will be 
released by March 5 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, divided by 2,205. 
This factor converts the WCE price from Canadian dollars per metric 
ton to Canadian dollars per pound. To convert into U.S. dollars, 
multiply the Canadian price per pound by the September average daily 
settlement price for the CME September Canadian dollar futures 
contract for the harvest year, rounded to the nearest one-tenth of a 
cent. The harvest price will be released within 5 days following the 
end of the harvest price discovery period. In no case may the 
harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.005

Rapeseed

    Rapeseed is not traded on any Commodity Exchange. However, 
revenue protection is still considered to be available and the 
projected and harvest prices will be established by FCIC in 
accordance with this CEPP. The result of this action will allow the 
producer to insure both canola and rapeseed under revenue 
protection. With both canola and rapeseed insured under revenue 
protection the producer may qualify for a whole-farm unit. However, 
rapeseed will not have the benefit of the projected price and the 
harvest price moving as the price on the Commodity Exchange moves 
for canola.
    Projected price--A price established by FCIC and released by 
June 30 of the pre-harvest year.
    Harvest price--A price set by FCIC that is equal to the 
projected price.

Corn (0041)

    For counties with insurable types having a January 31 sales 
closing date:

Grain Type

    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by January 
21 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.

[[Page 40206]]

[GRAPHIC] [TIFF OMITTED] TP14JY06.006

Silage Type

    Corn for silage is not traded on any Commodity Exchange. 
However, revenue protection is still considered to be available and 
the projected and harvest prices will be established by FCIC in 
accordance with this CEPP. The result of this action will allow the 
producer to insure both the silage and grain types of corn under 
revenue protection. With both types of corn insured under revenue 
protection the producer may qualify for a whole-farm unit. However, 
corn insured as silage will not have the benefit of the projected 
price and the harvest price moving as the price on the Commodity 
Exchange moves for corn for grain.
    Projected price--A price established by FCIC and released by 
November 30 of the pre-harvest year.
    Harvest price--A price set by FCIC that is equal to the 
projected price.

Corn (0041)

Grain Type

    For counties with insurable types having a February 15 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by February 
5 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.007

Silage Type

    Corn for silage is not traded on any Commodity Exchange. 
However, revenue protection is still considered to be available and 
the projected and harvest prices will be established by FCIC in 
accordance with this CEPP. The result of this action will allow the 
producer to insure both the silage and grain types of corn under 
revenue protection. With both types of corn insured under revenue 
protection the producer may qualify for a whole-farm unit. However, 
corn insured as silage will not have the benefit of the projected 
price and the harvest price moving as the price on the Commodity 
Exchange moves for corn for grain.
    Projected price--A price established by FCIC and released by 
November 30 of the pre-harvest year.
    Harvest price--A price set by FCIC that is equal to the 
projected price.

Corn (0041)

Grain Type

    For counties with insurable types having a February 28 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by February 
18 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.008

Silage Type

    Corn for silage is not traded on any Commodity Exchange. 
However, revenue protection is still considered to be available and 
the projected and harvest prices will be established by FCIC in 
accordance with this CEPP. The result of this action will allow the 
producer to insure both the silage and grain types of corn under 
revenue protection. With both types of corn insured under revenue 
protection the producer may qualify for a whole-farm unit. However, 
corn insured as silage will not have the benefit of the projected 
price and the harvest price moving as the price on the Commodity 
Exchange moves for corn for grain.
    Projected price-- A price established by FCIC and released by 
November 30 of the pre-harvest year.
    Harvest price--A price set by FCIC that is equal to the 
projected price.

[[Page 40207]]

Corn (0041)

Grain Type

    For counties with insurable types having a March 15 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by March 5 
of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.009

Silage Type

    Corn for silage is not traded on any Commodity Exchange. 
However, revenue protection is still considered to be available and 
the projected and harvest prices will be established by FCIC in 
accordance with this CEPP. The result of this action will allow the 
producer to insure both the silage and grain types of corn under 
revenue protection. With both types of corn insured under revenue 
protection the producer may qualify for a whole-farm unit. However, 
corn insured as silage will not have the benefit of the projected 
price and the harvest price moving as the price on the Commodity 
Exchange moves for corn for grain.
    Projected price--A price established by FCIC and released by 
November 30 of the pre-harvest year.
    Harvest price--A price set by FCIC that is equal to the 
projected price.

Cotton (0021)

    For counties with insurable types having a January 31 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by January 
21 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.

[[Page 40208]]

[GRAPHIC] [TIFF OMITTED] TP14JY06.010

Cotton (0021)

    For counties with insurable types having a February 28 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by February 
18 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.011

Cotton (0021)

    For counties with insurable types having a March 15 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by March 5 
of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price. 
[GRAPHIC] [TIFF OMITTED] TP14JY06.012

Grain Sorghum (0051)

    For counties with insurable types having a January 31 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by the price percentage relationship 
between grain sorghum and corn, as determined by RMA based on the 
harvest year's United States Department of Agriculture (USDA) 
January estimate of corn and grain sorghum prices, and rounded to 
the nearest whole cent. The projected price will be released by 
January 21 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by the price percentage relationship 
between grain sorghum and corn, as determined by RMA based on the 
harvest year's United States Department of Agriculture (USDA) 
January estimate of corn and grain sorghum prices, and rounded to 
the nearest whole cent. The harvest price will be released within 5 
days following the end of the harvest price discovery period. In no 
case may the harvest price exceed 160 percent of the projected 
price.

[[Page 40209]]

[GRAPHIC] [TIFF OMITTED] TP14JY06.013

Grain Sorghum (0051)

    For counties with insurable types having a February 15 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by the price percentage relationship 
between grain sorghum and corn, as determined by RMA based on the 
harvest year's United States Department of Agriculture (USDA) 
January estimate of corn and grain sorghum prices, and rounded to 
the nearest whole cent. The projected price will be released by 
February 5 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by the price percentage relationship 
between grain sorghum and corn, as determined by RMA based on the 
harvest year's United States Department of Agriculture (USDA) 
January estimate of corn and grain sorghum prices, and rounded to 
the nearest whole cent. The harvest price will be released within 5 
days following the end of the harvest price discovery period. In no 
case may the harvest price exceed 160 percent of the projected 
price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.014

Grain Sorghum (0051)

    For counties with insurable types having a February 28 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by the price percentage relationship 
between grain sorghum and corn, as determined by RMA based on the 
harvest year's United States Department of Agriculture (USDA) 
January estimate of corn and grain sorghum prices, and rounded to 
the nearest whole cent. The projected price will be released by 
February 18 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by the price percentage relationship 
between grain sorghum and corn, as determined by RMA based on the 
harvest year's United States Department of Agriculture (USDA) 
January estimate of corn and grain sorghum prices, and rounded to 
the nearest whole cent. The harvest price will be released within 5 
days following the end of the harvest price discovery period. In no 
case may the harvest price exceed 160 percent of the projected 
price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.015

Grain Sorghum (0051)

    For counties with insurable types having a March 15 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by the price percentage relationship 
between grain sorghum and corn, as determined by RMA based on the 
harvest year's United States Department of Agriculture (USDA) 
January estimate of corn and grain sorghum prices, and rounded to 
the nearest whole cent. The projected price will be released by 
March 5 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent, multiplied by the price percentage relationship 
between grain sorghum and corn, as determined by RMA based on the 
harvest year's United States Department of Agriculture (USDA) 
January estimate of corn and grain sorghum prices, and rounded to 
the nearest whole cent. The harvest price will be released within 5 
days following the end of the harvest price discovery period. In no 
case may the harvest price exceed 160 percent of the projected 
price.

[[Page 40210]]

[GRAPHIC] [TIFF OMITTED] TP14JY06.016

Rice (0018)

    For counties with insurable types having a January 31 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by January 
21 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.017

Rice (0018)

    For counties with insurable types having a February 15 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by February 
5 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.018

Rice (0018)

    For counties with insurable types having a February 28 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by February 
18 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.

[[Page 40211]]

[GRAPHIC] [TIFF OMITTED] TP14JY06.019

Soybeans (0081)

    For counties with insurable types having a January 31 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by January 
21 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.020

Soybeans (0081)

    For counties with insurable types having a February 28 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by February 
18 of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.021

Soybeans (0081)

    For counties with insurable types having a March 15 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by March 5 
of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.

[[Page 40212]]

[GRAPHIC] [TIFF OMITTED] TP14JY06.022

Wheat (0011)

    For counties with insurable types having a September 30 sales 
closing date:
    Projected price--The pre-harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by 
September 20 of the pre-harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.

[[Page 40213]]

[GRAPHIC] [TIFF OMITTED] TP14JY06.023

Wheat (0011)

    For counties with insurable types having an October 31 sales 
closing date:
    Projected price--The pre-harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by October 
21 of the pre-harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.024


[[Page 40214]]



Wheat (0011)

    For counties with insurable types having a March 15 sales 
closing date:
    Projected price--The harvest year's average daily settlement 
price for the projected price discovery period for the harvest 
year's futures contract, as shown in the table below, rounded to the 
nearest whole cent. The projected price will be released by March 5 
of the harvest year.
    Harvest price--The harvest year's average daily settlement price 
for the harvest price discovery period for the harvest year's 
futures contract, as shown in the table below, rounded to the 
nearest whole cent. The harvest price will be released within 5 days 
following the end of the harvest price discovery period. In no case 
may the harvest price exceed 160 percent of the projected price.
[GRAPHIC] [TIFF OMITTED] TP14JY06.025

5. Basis for Specific Changes to the Common Crop Insurance Policy Basic 
Provisions

    The proposed changes are as follows:
    (a) Section 457.8--FCIC proposes to revise Sec.  457.8 to add new 
paragraphs (c) through (f) to specify that the policy that the producer 
currently has will continue but under the newly revised terms contained 
in the Common Crop Insurance Policy Basic Provisions. This means that 
if insured producers previously had APH coverage under a crop that now 
has revenue protection available, those producers will receive yield 
protection at the percentage of price and level of coverage under their 
current elections, including any endorsements to the Crop Provisions 
that are in effect. This means that producers who are currently insured 
under CRC, RA, IP or IIP will continue to receive revenue protection, 
except for sunflowers, but it will now be under the Common Crop 
Insurance Policy Basic Provisions at the percentage of price and level 
of coverage under their current elections, including any endorsements 
to the Crop Provisions that are in effect. This also means that a 
producer who previously had coverage for a crop for which revenue 
protection is not available will continue with the same coverage, e.g. 
APH or amount of insurance.
    Nothing in these revisions precludes producers from canceling their 
crop insurance coverage or canceling options or endorsements currently 
in effect on or before the cancellation date contained in the Crop 
Provisions. Further, on or before the sales closing date, producers may 
change from yield protection to revenue protection or vice-versa, 
change their percentage of price, change their levels of coverage, or 
elect other available options to the Crop Provisions.
    If a producer currently has RA coverage without the Fall Harvest 
Price Option, that producer will automatically receive revenue 
protection with the harvest price exclusion option unless the producer 
elects to change coverage by the sales closing date. All current APH 
databases will be applicable to both yield and revenue protection.
    If a producer currently has the hail and fire exclusion option in 
effect under the current APH or amount of insurance coverage, that 
option will still be in effect for yield protection, yield coverage, or 
amount of insurance, unless the producer cancels such coverage. A 
producer who has revenue protection will now be eligible for the hail 
and fire exclusion option if the requirements are met.
    If a producer currently has a High-Risk Land Exclusion Option in 
effect and has CAT coverage on the high-risk land, the producer will 
continue to have the High-Risk Land Exclusion Option in effect and have 
CAT coverage on the high-risk land until it is canceled. If a producer 
has a properly executed Power of Attorney on file with the insurance 
provider that signed Power of Attorney is still in effect under the 
revised Common Crop Insurance Policy Basic Provisions until it is 
terminated. If the producer has a current written agreement in effect 
for the crop for multiple years, that same written agreement will still 
be in effect if the terms of the written agreement are still 
applicable, the conditions under which the written agreement was 
provided have not changed, and the policy remains with the same 
insurance provider.
    Also, FCIC proposes to add a reference to the ``Commodity Exchange 
Price Provisions, as applicable'' in the ``agreement to insure 
section'' to indicate order of precedence between it and the other 
policy documents;
    (b) Section 1--FCIC proposes to add definitions of ``Commodity 
Exchange Price Provisions (CEPP),'' ``harvest price,'' ``harvest price 
exclusion option,'' ``projected price,'' ``revenue protection,'' 
``revenue protection guarantee (per acre),'' ``yield protection,'' and 
``yield protection

[[Page 40215]]

guarantee (per acre)'' and revise the definitions of ``policy,'' and 
``price election'' so that revenue protection can be explained and 
incorporated into the Common Crop Insurance Policy Basic Provisions.
    FCIC also proposes to add a definition of ``Cooperative Extension 
System'' to clarify the persons who are actually the specialists in 
agronomy, who work in the field, and would be available to provide 
recommendations and opinions as agricultural experts. FCIC also 
proposes to add the definition of ``RMA's Web site'' so that it does 
not need to be defined and an address listed everywhere it is used. 
FCIC also proposes to add a definition of ``common land unit'' because 
such a unit of measure may be used when FCIC and the Farm Service 
Agency develop their common reporting system.
    FCIC also proposes to revise the definition of ``actuarial 
documents'' in response to the addition of the definition of RMA's Web 
site and to add the term ``price'' because it is also a policy 
provision that is included in the actuarial documents. FCIC also 
proposes to revise the definitions of ``agricultural experts'' and 
``organic agricultural industry'' to replace the reference to 
``Cooperative State Research, Education, and Extension Service'' with 
``Cooperative Extension System'' because the Cooperative State 
Research, Education, and Extension Service informed FCIC that it was 
not the agency that would provide the actual expertise. Such expertise 
will come from the field from persons associated with the Cooperative 
Extension System.
    FCIC proposes to revise the definition of ``assignment of 
indemnity'' to incorporate changes proposed in section 29 that allow 
assignments to be made only to legitimate creditors of the insured 
person. FCIC also proposes to revise the definition of ``average 
yield'' to clarify that adjustments made to actual yields include only 
those reductions to actual yields required by the policy. Other 
adjustments referenced in the definition of ``average yield'' have been 
removed because the average yield is a simple average of the actual 
numbers and these other adjustments are more properly included in the 
definition of ``approved yield.''
    FCIC also proposes to revise the definition of ``catastrophic risk 
protection'' to preclude producers who elect revenue protection to also 
obtain CAT coverage because revenue protection is considered an option 
and CAT policies are not eligible for optional coverage. FCIC also 
proposes to remove the language pertaining to the waiver of disaster 
assistance because the waiver is no longer being used by the Farm 
Service Agency.
    FCIC also proposes to revise the definition of ``claim for 
indemnity'' to remove the language regarding the timeframe by which 
claims must be submitted because this is a substantive provision that 
imposes a requirement on the producer. Further, this timeframe is not 
applicable to revenue policies. Therefore, this provision has been 
moved to section 14 of the revised Common Crop Insurance Policy Basic 
Provisions. FCIC also proposes to revise the definition of ``delinquent 
debt'' to specify that this term will be as defined in the 
ineligibility regulations published at 7 CFR part 400, subpart U. This 
will prevent any conflicts between the policy provisions and other 
applicable regulations.
    FCIC proposes to revise the definition of ``enterprise unit'' to 
remove the substantive provisions regarding basic and optional units 
and move them to section 34. FCIC proposes to revise the definition of 
``share'' to include the term ``insurable interest'' and add a 
definition of ``insurable interest,'' which is currently defined in 7 
CFR part 400, subpart T. FCIC also proposes to revise the definition of 
``prevented planting'' to restructure it and to add provisions 
clarifying that failure to plant because of lack of equipment or labor 
is not considered prevented planting because lack of equipment or labor 
are not insured causes of loss. Issues have arisen because such 
conditions may cause the producer to be unable to plant the crop. 
However, the failure to plant must be caused by an insured cause of 
loss specified in the Crop Provisions to be covered under the prevented 
planting provisions. The references to labor and equipment are not 
intended to suggest that other similar causes may be covered under the 
policy (e.g. inability to obtain seed). If not caused by an insured 
cause of loss, prevented planting is not covered.
    FCIC proposes to revise the definition of ``production report'' to 
clarify that the approved insurance provider may approve types of 
records not included in the definition in accordance with FCIC approved 
procedures.
    FCIC is proposing to revise the definition of ``substantial 
beneficial interest'' to clarify the reference to otherwise legally 
separate under state law. When originally drafted this provision was 
intended to cover those situations where the marriage was dissolving 
through legal separation or divorce and referred to legally separate 
under state law because different states may use different terms when 
the parties are separating. However, questions have arisen regarding 
whether other separate property laws, etc., may apply so FCIC is 
clarifying that the only state laws applicable are those regarding the 
dissolution of marriage.
    FCIC proposes to revise the definition of ``void'' because there 
may be other reasons why the policy is void other than as a result of 
concealment, fraud or misrepresentation. FCIC also proposes to revise 
the definition of ``whole-farm unit'' to remove the substantive 
provisions regarding the number of insured crops and percent of 
liability and move them to section 34;
    (c) Section 2--FCIC proposes to revise section 2(a) to specify that 
even though the policy is continuous, it may be revised each year 
provided such revision is done in accordance with section 4 of the 
Common Crop Insurance Policy Basic Provisions, which specifies the 
manner in which the policy may be revised. This change is being made to 
avoid any misperception that the continuous nature of the policy in any 
way inhibits FCIC's ability to revise the policy provisions.
    FCIC proposes to revise section 2(b) to specify that the producer's 
application must also include the producer's election of revenue 
protection or yield protection, as applicable, and the percentage of 
the price election or percentage of projected price and harvest price. 
This will facilitate the incorporation of revenue protection into the 
Common Crop Insurance Policy Basic Provisions. Also, FCIC proposes to 
revise the provisions to specify that incorrect SSN's or EIN's must be 
corrected before any insurance payment is made. If an incorrect number 
is not corrected for the insured producer before any insurance payment 
is made, no coverage will be provided for any crops listed on the 
application. If an incorrect number is not corrected for a person with 
a substantial beneficial interest in the insured producer, insurance 
coverage will be reduced by the percentage interest that person had in 
the insured producer, or, if the person is determined to be ineligible, 
no coverage will be provided. FCIC is also proposing to clarify the 
reduction in share that will occur if a spouse's identification number 
is not provided as a substantial beneficial interest because there have 
been questions regarding what the amount of share is presumed to be. 
FCIC has clarified that spouses are presumed to have a 50 percent share 
in the spouse's share.
    FCIC is also proposing to revise the provisions to specify that if 
the producer, or a person with a substantial beneficial interest in the 
producer is not

[[Page 40216]]

eligible to obtain a SSN, or if the producer is a person other than an 
individual and a person with a substantial interest in the producer is 
not eligible to obtain a SSN, the producer must request and receive an 
identification number for the purposes of the policy from the approved 
insurance provider (AIP). If an identification number is not requested 
by the producer and provided by the AIP, the amount of coverage for all 
crops on the application will be reduced proportionately by the 
percentage interest of that person. If the person is the named 
applicant and no identification was obtained, the policy will be void. 
This language was incorporated to clarify when a SSN, EIN, or 
identification number is needed for another person's interest in a crop 
and how to obtain an identification number.
    FCIC also proposes to revise section 2(g) to specify if a married 
insured dies, disappears, or is judicially declared incompetent the 
policy will automatically convert to the spouse's name and will 
continue to be in effect until the spouse cancels it. However, if a 
partner, member, shareholder, etc., dies, disappears, or is judicially 
declared incompetent more than 30 days before the sales closing date, 
the policy is automatically canceled as of the cancellation date and a 
new application must be submitted. If such occurrence occurs less than 
30 days before the sales closing date or after the sales closing date, 
the policy will continue in effect through the crop year, unless it is 
canceled by the producer by the cancellation date, and will be 
automatically canceled as of the cancellation date immediately 
following the end of the insurance period for the crop year. The 
provisions were changed so that in the event of a death, disappearance 
or judicially declared incompetence, the survivors would have at least 
30 days to obtain a new policy. There have been numerous situations 
where an insured spouse has died and the surviving spouse continues to 
provide the necessary information and later realizes that insurance 
coverage is not provided because insurance was not in the surviving 
spouse's name. With respect to entities, the death of a member of the 
entity changes the business relationship with respect to all matters 
and, therefore, they are accustomed to having to make such changes. 
However, there are situations where the death may occur near the sales 
closing date and there is insufficient time to change the name on the 
policy. For this reason, FCIC is proposing to allow the policy to 
continue in effect for the remainder of the crop year when such death, 
etc., occurs within 30 days of the sales closing date.
    Also, FCIC proposes to revise the provisions to specify that in the 
event any insured entity is dissolved before the sales closing date, 
the policy is automatically canceled by the cancellation date prior to 
the start of the insurance period. However, if it is dissolved on or 
after the sales closing date the policy will continue in effect through 
the crop year, unless canceled by the cancellation date, and be 
automatically canceled as of the cancellation date immediately 
following the end of the insurance period for the crop year. 
Dissolution is being treated differently than death, disappearance or 
incompetence because dissolution is controlled by the members of the 
entity. Therefore, they can control the timing of the dissolution to 
ensure sufficient time to cancel the existing policy and separately 
obtain insurance;
    (d) Section 3--FCIC proposes to revise section 3(b) to require 
producers to select the same protection, either yield protection or 
revenue protection, if available, for all acreage of the insured crop 
in the county unless one of the exceptions apply. This will protect 
program integrity by ensuring that producers are unable to manipulate 
the type of protection on their acreages to ensure the payment of an 
indemnity. FCIC also proposes to remove the language referring to crops 
of economic significance because as stated above, any requirement that 
the producer obtain crop insurance to be eligible for another USDA 
program benefit will be contained in such programs requirement, not the 
policy. A provision was also added to specify that high-risk land may 
be insured under a CAT policy and the other land may be insured under 
revenue protection. This is to avoid any confusion because revenue 
protection is not available for CAT policies.
    FCIC proposes to revise section 3(c) to clarify that the additional 
price election is only applicable to crops for which revenue protection 
is not available. FCIC also proposes to revise sections 3(c) and 3(d) 
to distinguish between crops for which revenue protection is available 
and those crops for which it is not regarding the ability to change 
elections from year to year. This will avoid any confusion. Further, 
for crops for which revenue coverage is available, provisions have been 
added to specify what prices will be used to calculate the guarantees, 
premium, prevented planting payments and replant payments, and value of 
the production to count.
    FCIC is proposing to revise section 3(e) to add provisions to 
clarify that production reports must be provided annually for multi-
year written agreements. This is consistent with the provisions that 
allow multi-year written agreements.
    FCIC is also proposing to amend section 3(f) to restructure it for 
readability and revise the consequences of misreporting information and 
not maintaining records. There has been confusion regarding these 
consequences and FCIC wanted it to be clear that misreporting 
information and failing to maintain records can both subject the 
producer to the misreporting provisions in section 6(g). FCIC is also 
proposing to permit the producer to correct misreported information by 
the production reporting date without sanctions. This will allow the 
correction of inadvertent errors. FCIC is also proposing to add 
provisions that clarify that any time the information used to compute 
the approved yield is incorrect, the approved insurance provider can 
correct the approved yield, correct the unit structure, or the producer 
can be subject to the misreporting provisions in section 6(g)(1). There 
have been situations where agents or producers have intentionally 
misreported production information and the policy needs to be very 
clear the approved yield must be corrected for the crop year and any 
subsequent crop years the production is in the producer's database, 
regardless of whether the record retention period has expired.
    FCIC is proposing to revise section 3(g) to add a new provision to 
allow the adjustment of the approved yield when there is no valid basis 
to support the approved yield. FCIC cannot anticipate every situation 
of why approved yields may be suspect. This provision is needed to 
address other potential situations that may arise. FCIC also proposes 
to remove provisions that specified a producer may be subject to fraud 
provisions if they do not have supporting records or can not provide a 
valid basis for an excessive yield. Current provisions clearly state 
the actions that will be taken, which are either the assignment of a 
yield in accordance with 7 CFR part 400, subpart G, or the assignment 
of average yields for the crop or the applicable transitional yield if 
the producer does not have other yields for the crop.
    FCIC is also proposing to add a new section 3(k) that will specify 
that revenue protection will not be available if there has been a news 
report, announcement, or other event that

[[Page 40217]]

occurs during or after trading hours that is believed by the Secretary 
of Agriculture or the Administrator of the Risk Management Agency that 
results in market conditions significantly different than those used to 
rate or price revenue protection. The use of commodity exchanges is 
relatively new and, therefore, the impacts of significant external 
events is not known so it cannot be quantified for the purposes of 
determining actuarially sound premium rates. However, as demonstrated 
by the first announced case of bovine spongiform encephalitis in this 
country, the commodity exchanges can respond significantly and quickly 
to such events. Given the magnitude of the possible losses, and the 
uncertainty surrounding the possible frequency of such events, the 
premium rate load for such losses could be high and make revenue 
protection unaffordable. FCIC has determined that it would better serve 
the crop insurance program to eliminate revenue coverage for such years 
than to make revenue coverage potentially unaffordable to producers in 
all years.
    FCIC is also proposing to add provisions that specify that in the 
event a projected price cannot be calculated, no revenue protection 
will be available, a projected price will be established by RMA, and 
producers who elected revenue protection will automatically have yield 
protection, unless the policy is canceled by the cancellation date. 
Without a means to calculate the applicable revenue prices, no coverage 
could be provided. However, to prevent voidance of the policy and to 
ensure the continuity of coverage, FCIC has elected to have the policy 
revert to yield coverage in the event the projected price cannot be 
determined. In the event that the fall harvest price cannot be 
calculated by the procedures outlined in the Commodity Exchange Price 
Provisions the harvest price will be set equal to the projected price. 
Premium rates will reflect this risk so no adjustment to the premium 
rates will be made if such action occurs;
    (e) Section 4(b)--FCIC proposes to revise the provisions to include 
the Commodity Exchange Price Provisions as information that may change 
and which can be viewed on RMA's Web site not later than the contract 
change date for the crop. Also, FCIC proposes to remove the reference 
to where RMA's Web site may be found since that information has been 
included in the definition of ``RMA's Web site'';
    (f) Section 6-FCIC proposes to revise section 6(c)(5) to clarify 
that the final date the acreage was planted on the unit must be 
reported on the acreage report for acreage that was planted by the 
final planting date. FCIC also proposes to require producers to report 
the date and the amount of acreage planted per day during the late 
planting period. There have been instances where producers have only 
reported one of the many dates the acreage was planted and failed to 
report acreage that may have been planted after the final planting 
date. This change will avoid this situation and ensure the approved 
insurance provider can accurately determine the appropriate coverage 
for all the acreage.
    FCIC proposes to revise section 6(d)(2) to clarify that, once 
prevented planting acreage is reported on the acreage report, the 
insured cannot change the insured crop or type that was reported as 
prevented from being planted even though the acreage reporting date may 
not have passed. However, the insured can revise the acreage report by 
the acreage reporting date to add additional acreage for the insured 
crop that is prevented from being planted. The current provisions were 
interpreted by some to mean that prevented planting acreage could not 
be added to the acreage report once any prevented planting acreage had 
been reported even though the acreage reporting date had not passed. 
This was not the intent of the provision.
    In redesignated section 6(d)(3), FCIC also proposes to revise 
provisions regarding acreage measurement requests by breaking the 
provisions into separate paragraphs to improve readability. FCIC also 
proposes to clarify that if a measurement is requested for only part of 
the acreage in a unit, that this specific acreage be separately 
identified on the acreage report. This is to eliminate the need to 
measure a whole unit if only part of the acreage needs to be measured. 
Further, this is to ensure that the waiver of the misreporting 
provisions only apply to the acreage for which a measurement was 
requested.
    FCIC also proposes to revise this paragraph to eliminate the 
conflict regarding whether a claim will be paid before the acreage 
measurement is received. There has been confusion regarding whether 
claims must be delayed pending the receipt of a measurement and FCIC 
has determined that such a delay would pose an undue financial hardship 
on the producer. However, after the measurement is received, if the 
acreage is found to be incorrect, the claim, and any premium owed, must 
be adjusted and any overpayments or underpayments must be paid by the 
producer or approved insurance provider. FCIC explored the possibility 
of allowing claims to be paid based on the acreage determined by the 
approved insurance provider and applying the misreporting provisions 
but determined that this would unfairly penalize farmers whose 
measurements have been delayed through no fault of their own. FCIC also 
explored the possibility of not applying the misreporting provisions 
but determined that this could lead to producers misreporting 
information with impunity even if they never really intended to obtain 
a measurement. FCIC also considered removing the acreage measurement 
provisions but determined that it met a critical need for some 
producers on acreage whose characteristics made it difficult to measure 
without sophisticated tools.
    FCIC is also proposing to revise the provisions regarding failure 
to provide the acreage measurement to require repayment of any claim 
amount paid for the unit. FCIC determined that it could not apply the 
sanction in section 6(g) because there is nothing to determine whether 
the information was incorrect. FCIC also considered denying the claim 
payment only on the acreage for which the measurement was requested but 
it is impossible to separate out the production guarantee and 
production to count for such acreage because these are reported on a 
unit basis. Because the approved insurance provider would not pay a 
claim on estimated acreage unless there was the expectation of 
receiving the correct information from the acreage measurement, there 
must be a sanction applied for the failure to provide the needed 
measurement. Since FCIC is unable to determine a different suitable 
sanction, it is proposing to require repayment of the claim but it is 
willing to consider alternatives.
    In section 6(g)(2), FCIC also proposes to delete the provisions 
regarding penalties for producers who misreport insurance liability in 
excess of 10 percent of the actual liability. FCIC has determined that 
the provision is not necessary because other existing provisions 
already provide the means to deal with information that is misreported. 
For example, if a producer under-reports acreage, the insurance 
liability is held to the amount reported, yet all production from the 
insurable acreage is counted against the production guarantee. If a 
producer over-reports acreage, then the insurance liability is held to 
what the insurance provider determines actually exists. Further, there 
is no incentive to over-report acreage because the producer must pay 
premium on the extra liability if there is no claim, and, if there is a 
claim, it should never be paid for the over-reported liability. The 
provision was initially implemented because it was thought the penalty 
would provide

[[Page 40218]]

an added incentive for correct reporting. However, comparison of data 
from a year in which the penalty was applicable and a year in which it 
was not applicable, suggests it did not improve reporting accuracy. 
Further, comments received by RMA have indicated the penalty is not in 
the best interest of the over-all program because it results in unduly 
harsh penalties to producers who simply make inadvertent errors. RMA 
will continue to track reporting error rates and, if the error rate is 
determined to be excessive, it will consider courses of action that may 
be taken to increase reporting accuracy. RMA welcomes any 
recommendations regarding alternatives that could be used to improve 
the accuracy of reported insurance information.
    FCIC also proposes to replace the provisions removed from section 
6(g)(2) with provisions indicating that if the share is misreported, 
the production guarantee and amount of insurance will not be revised 
but either the correct share or the reported share will be used to 
determine the indemnity depending on which is lower. This provision is 
necessary because the provisions in section 6(g)(1) provide for 
adjustment of the production guarantee or amount of insurance when 
liability is misreported. Share is not included in the computation of 
the production guarantee or amount in insurance. Instead, for the 
purposes of clarity, FCIC is simply specifying the consequences for 
misreporting on the premium and indemnity;
    (g) Section 7--FCIC proposes to revise section 7(c)(1) to specify 
the premium will be calculated by using either the projected price or 
the price election, as applicable due to the addition of revenue 
protection in the Basic Provisions. In section 7(d), FCIC also proposes 
to delete provisions indicating that the premium will be computed using 
the elected or assigned price election or amount of insurance. These 
provisions are not necessary because other provisions clearly state 
that the price used is the price applicable for the current crop year;
    (h) Section 8--FCIC proposes to revise section 8(b)(2) regarding 
written agreements for crops for which the information necessary for 
insurance is not included in the actuarial documents by providing 
separate provisions for crops for which revenue protection is and is 
not available;
    (i) Section 9--FCIC proposes to revise section 9(a) to add a new 
paragraph (2) that clarifies that if a crop has been planted in one of 
the three previous crop years, the acreage will still not be insurable 
if such crop is a cover, hay, or forage crop (except corn or sorghum 
silage). FCIC proposes to create exceptions to allow insurance where 
permitted by written agreement or the Crop Provisions or the crop to be 
insured on the acreage is a hay or forage crop. It does not make sense 
to preclude insurance for the acreage when the crop that was previously 
produced is the same crop for which insurance is being sought.
    FCIC also proposes to revise redesignated section 9(a)(3) and 
adding an exception for sorghum silage to be consistent with the change 
proposed in the new section 9(a)(2);
    (j) Section 10--In section 10(a), FCIC proposes to clarify that the 
person completing an application for insurance must have a share in the 
crop that will be insured. There have been situations where the 
producer may produce the crop but actually has no risk of loss. For 
example, the producer contracts with a processor who guarantees a fixed 
payment regardless of whether the crop is actually produced. In such 
case, if there are crop losses, such losses are borne by the processor, 
not the producer, and the producer would not have an insurable share. 
This change is putting the producer on notice that unless the producer 
has a risk of loss, insurance will not attach.
    FCIC is also proposing to revise section 10(a) to add provisions 
that would allow parents and children, spouses, or members of the same 
household to insure each other's share in the same manner as landlords 
and tenants because, as a practical matter, there is no difference in 
these situations. There are many instances where family members all 
farm together even though they have separate insurable interests and it 
would reduce the burden on all parties if such persons were allowed to 
insure under one contract. FCIC does not believe it would have any 
impact on program integrity by allowing one contract to insure all such 
shares.
    FCIC is also proposing to revise section 10(b) to clarify when the 
acreage or interest of the spouse, child or household member will be 
included in the insured's share under the policy. FCIC is clarifying 
that the acreage and share must be combined into one policy unless the 
spouse can demonstrate that he or she has a separate farming operation. 
Further, the acreage and share will be combined into one policy unless 
the child or member of the household can demonstrate they have a 
separate insurable interest. There has been confusion regarding when 
spouses, children, and household members are allowed to have separate 
policies because no guidance was provided in the policy. Further, there 
may be program vulnerabilities if spouses, children, or household 
members can insure separately because it could allow producers to 
increase their benefits over what they would be entitled to under the 
underlying policy because it would permit separate policies for 
irrigated and non-irrigated acreage or insuring high-risk land 
separately from low risk land. This clarification will ensure 
consistent application of the provisions and eliminate program 
vulnerabilities;
    (k) Section 12--FCIC proposes to add provisions to section 12(d) 
that would clarify coverage for the inability to prepare the land for 
irrigation using the producer's established irrigation method (e.g., 
furrow irrigation) if the inability is due to an insured cause of loss 
specified in the Crop Provisions. There have been situations where the 
producer has been unable to prepare the land for irrigation and it has 
been unclear whether the producer was eligible for a prevented planting 
payment or indemnity. FCIC has determined that this situation should be 
covered the same as failure or breakdown of the irrigation equipment or 
facilities because in each instance, an insurable cause of loss is 
causing the inability to properly irrigate the crop and it should not 
make a difference if the cause occurred before or after the 
installation of the irrigation equipment.
    FCIC also proposes to add a new section 12(g) to clarify that 
although price changes do not have to be caused by natural occurring 
events, they will not be covered if they are caused by the acts of 
third persons, such as terrorist attacks or chemical drift. FCIC also 
proposes to add provisions that would exclude such coverage for yield 
protection policies and policies where revenue protection is not 
available. Even though the Act requires losses to be due to natural 
disasters, when using the Commodity Exchange markets, it is difficult 
to determine the cause of the price change. To avoid imposing an 
impossible burden on producers to prove the cause of loss that caused 
the price change, FCIC determined it would be more appropriate to 
disallow coverage when the cause of the price change is known to be the 
act of a third person;
    (l) Section 13--FCIC proposes to add provisions to section 13(a) to 
specify if the crops to be replanted are in a whole-farm unit, the 20 
acres or 20 percent requirement is to be applied separately to each 
crop to be replanted in the whole-farm unit. To require the 20 acre and 
20 percent requirement to apply to the entire whole-farm unit could 
result in the payment of replant payments when only a fraction of each 
crop is

[[Page 40219]]

replanted. This would allow replant payments for the whole-farm unit 
that would not be permitted for any other type unit.
    FCIC also proposes to revise section 13(c) to have the actual costs 
of replant be the default amount but to allow this amount to be changed 
in the Crop Provisions or Special Provisions. FCIC is currently in the 
process of contracting a replant study to determine the appropriate 
costs of replanting. It is currently a significant burden for approved 
insurance providers and producers to provide the actual costs of 
replanting. If the study shows the amount of actual replant costs are 
consistently higher than the amounts specified in the Crop Provisions, 
then the Crop Provisions or Special Provisions can be revised to not 
require the actual cost to replant to be considered;
    (m) Section 14--Your Duties--FCIC proposes to restructure the 
section to improve readability and eliminate duplicate references. FCIC 
also proposes to add references to revenue protection throughout the 
section where appropriate to reflect this newly added coverage under 
the Common Crop Insurance Policy Basic Provisions. In redesignated 
section 14(b), FCIC proposes to revise the provisions to now require 
notice the earlier of within 72 hours after the discovery of damage or 
within 72 hours after the end of the insurance period, regardless of 
whether the producer has harvested the crop. This change is needed 
because there may be circumstances where the producer is unable to 
harvest the crop before the end of the insurance period or even 15 days 
after. In such case the producer may have no knowledge whether a loss 
has occurred. Therefore, it would have been impossible for the producer 
to timely give notice. Now producers will have to give notice not later 
than 72 hours after the end of the insurance period regardless of 
whether the producer knows whether there is damage. This will allow the 
approved insurance provider to timely make any necessary appraisals and 
determine any insurable damage.
    With respect to revenue protection, FCIC also proposes to add 
provisions requiring the producer give notice of expected revenue loss 
not later than 45 days after the latest date the last harvest price is 
released for any crop in the unit. This should provide sufficient time 
for the producer to discover the harvest price and provide notice. This 
date is needed because the harvest price may be released after the 
calendar date for the end of the insurance period.
    However, since revenue losses can be caused by loss of production, 
the producer with revenue protection must still comply with the 72 hour 
notice requirement pertaining to damage of the crop. Further, FCIC 
proposes that if the producer fails to comply with these production 
loss notice provisions, production losses will be considered due to an 
uninsured cause of loss unless the approved insurance provider is able 
to accurately determine the amount and cause of the loss. Timely notice 
of loss is required to allow the approved insurance provider to 
accurately determine not only the amount of production loss but the 
cause of loss. Late notices of loss can result in the approved 
insurance provider being unable to verify the claimed cause of loss. 
Therefore, these deadlines must be strictly enforced unless the 
approved insurance provider determines it has the ability to accurately 
determine the amount and cause of the loss. FCIC also proposes that if 
timely notice of a production loss is provided, notice of the revenue 
loss is not required because the approved insurance provider already 
will know of the potential loss.
    FCIC also proposes to restructure the consequences of failing to 
provide the requisite notice because the failure to comply with the 
notice provisions was previously contained in the same section as the 
consequences of failing to comply with other provisions in section 14, 
which had the capacity to lead to confusion. Now each subsection 
contains its own obligations and consequences for failing to fulfill 
those obligations.
    FCIC also proposes to add a provision placing the producer on 
notice of the consequences of failing to obtain the approved insurance 
providers consent before taking specific actions. The obligation is 
contained in the Common Crop Insurance Policy Basic Provisions but the 
consequences are contained in the Crop Provisions. This raises the 
possibility of an inadvertent conflict so FCIC has included a cross 
reference to provide greater clarity.
    FCIC proposes to revise the claims provisions so all requirements 
are together and add a provision that states for revenue protection 
that a claim for indemnity must be submitted declaring the amount of 
the producer's loss by the later of 60 days after the latest date the 
harvest price is released for any crop in the unit or 60 days after the 
latest end of the insurance period date for the unit, unless an 
extension is requested and granted by the approved insurance provider, 
to be consistent with the notice requirement for production loss 
claims.
    FCIC also proposes to revise the provisions to specify that the 
burden of proof is on the producer to prove that he or she has suffered 
an insurable cause of loss, that this insurable cause of loss damaged 
the crop, the cause and the loss occurred during the insurance period, 
and the extent of the damage. Failing to meet any of these requirements 
will result in denial of the claim;
    (n) Section 14--Our Duties--FCIC proposes to add provisions 
allowing preliminary indemnity payments to be made prior to the release 
of the harvest price if the producer has not elected the harvest price 
exclusion option. This will allow for the timely payment of claims and 
avoid any undue hardship that may result from the delay from the 
release of the harvest price. Because the policy protects against both 
price increases and declines and the production to count has already 
been established, there is no way that preliminary payments could 
result in overpayment. Therefore, program integrity will not be 
adversely affected;
    (o) Section 15--FCIC proposes to revise section (b)(1) to specify 
if the producer's claim was settled based on appraised production and 
the insured later harvested that acreage, if the insured fails to 
provide the harvested production records, the insured will be required 
to repay the indemnity. Current provisions require the producer to 
provide such records but do not state the consequences for failing to 
do so. FCIC also proposes to revise section (c) to remove the 
references to Form FCI-78 ``Request To Exclude Hail and Fire'' because 
that may not be the name on the form used to exclude hail and fire that 
is used by insurance providers;
    (p) Section 17--FCIC proposes to revise the provisions in section 
17(a)(1) to specify that prevented planting payments may be made only 
on insurable acreage. There have been questions in the past with 
respect to whether the provisions regarding insurable acreage applied 
to prevented planting acreage. This provision makes it clear that the 
insurable acreage provisions are applicable. FCIC also proposes to 
revise section 17(a)(3) for clarity.
    In section 17(b)(4), FCIC also proposes to clarify that prevented 
planting coverage levels cannot be increased if any cause of loss has 
occurred. The current provisions specify that prevented planting 
coverage cannot be increased if there has been a cause of loss that 
could or will prevent planting. FCIC has found that it may be 
impossible to make such determinations at the time the producer is 
seeking to

[[Page 40220]]

increase coverage because the approved insurance provider cannot 
predict whether the cause of loss really would cause prevented planting 
when other intervening events could change the outcome.
    In section 17(d), FCIC proposes to suggest possible resources that 
can be utilized by approved insurance providers and producers to 
determine whether the producer has a reasonable expectation of having 
adequate water to carry out an irrigated practice. The current policy 
provision imposes this requirement and many questions have arisen 
regarding what resources to use to make such determinations. Now 
approved insurance providers and producers will both know the sources 
of information so there can be consistent application of the 
requirement. FCIC also proposes to revise provisions regarding the time 
that a reasonable expectation regarding the adequate water will be 
determined because such determination is made on the final planting 
date or during the late planting period. This removed the potential 
conflict with section 17(d) (redesignated as section 17(d)(1)), which 
referred to ``on the final planting date.''
    In redesignated section 17(d)(1) and (d)(1)(ii) and new paragraph 
(d)(2), FCIC proposes to add references to the inability to prepare the 
land for irrigation using the producer's established irrigation method 
to be consistent with FCIC's proposed change in section 12 to add such 
inability as an insured cause of loss. As stated above, such inability 
is similar to the failure of the irrigation equipment or water supply 
and should be a covered peril under the policy.
    FCIC proposes to move provisions currently in section 17(a)(1) that 
specify failure to plant when other producers in the area were planting 
will result in denial of the prevented planting claim to new section 
17(d)(2). This change will result in the requirement only applying to 
causes of loss other than drought, failure of the irrigation water 
supply, failure of the irrigation equipment or facilities, or the 
inability to prepare land for irrigation. This change is proposed 
because under drought conditions some producers may plant in 
anticipation of receiving adequate precipitation, even though some 
producers do not plant. Producers should not be penalized because they 
elect not to take the risk.
    In section 17(e), FCIC proposes to eliminate the chart and 
restructure the provisions used to determine the number of crop acres 
that are eligible for a prevented planting payment to make them easier 
to read. In new section 17(e)(1)(i), FCIC proposes to clarify if the 
producer's APH database contains actual planted acreage in any of the 
four most recent crop years that producer will be considered to have 
planted. This makes it clear in cases where the specific producer did 
not actually plant acreage in any of the four most recent crop years 
but approved APH procedures allow that producer to use someone else's 
planted acres in his or her database, that producer will be considered 
to have planted and will not be eligible to submit an intended acreage 
report. This is to remove the ambiguity regarding the situation where 
producers may not have planted the acreage but acquired the acreage for 
the current crop year and 7 CFR part 400, subpart G authorizes the 
producer to use the history from that other acreage in his or her own 
APH database.
    Also, FCIC proposes to add provisions to section 17(e)(1) that 
would allow the producer to add or allow eligible irrigated prevented 
planting acres when a producer adds acreage to the farming operation 
that already contains irrigation facilities or the producer adds 
irrigation equipment to acreage that previously was non-irrigated. 
Under the current provisions, if the producer had no irrigated acreage 
the previous year, the producer was not eligible for prevented planting 
for an irrigated practice even if the producer had purchased or leased 
land with irrigation facilities. Further, there have been questions 
regarding whether producers could increase their eligible prevented 
planting acreage for an irrigated practice if the producer simply 
elected to add irrigation facilities to existing acreage. FCIC 
determined that there is no reason to deny prevented planting for the 
irrigated practice when the producer can demonstrate that the producer 
had the irrigation equipment available to irrigate all the acreage. 
However, the provisions that prorate the new irrigated land to the 
insurable crop will still be applicable. Further, the provision 
regarding the reasonable expectation of water will still apply and may 
limit the irrigated acreage eligible for prevented planting.
    In new section 17(e)(1)(ii), FCIC proposes to allow a producer to 
submit an intended acreage report after the sales closing date provided 
the intended report is submitted within 10 days after the new acreage 
is obtained and no cause of loss has occurred. This is to allow 
prevented planting coverage for acreage acquired after the sales 
closing date provided it would have been possible to plant the acreage 
using good farming practices and no cause of loss that may prevent 
planting has occurred at the time the producer acquired the acreage.
    In section 17(f)(1), FCIC proposes to clarify that the requirement 
that prevented planting acreage constitute at least 20 acres or 20 
percent of the insurable crop acreage in the unit applies on an 
individual crop basis when there is a whole-farm unit. This is 
consistent with proposed changes for a replanting payment when there is 
a whole-farm unit.
    In section 17(f)(4), FCIC proposes to remove provisions requiring 
the insured producer to provide information regarding prevented 
planting payments previously made to another producer because it is not 
always practical for an insured producer to access or obtain such 
records. FCIC also proposes to revise provisions regarding double-
cropping records so producers will be required to prove they have 
double cropped in past years when the second crop for which prevented 
planting is being claimed was grown. The current provisions require 
records of double cropping in past years when the first crop that was 
prevented from being planted was grown, even though it is the 
subsequent (second crop that is prevented from being planted) crops 
prevented planting eligibility that is being determined.
    In section 17(f)(6), FCIC proposes to clarify that cover or 
volunteer crops that are in place longer than twelve months prior to 
the final planting date for the insured crop will be considered to be a 
pasture or forage crop and will result in no prevented planting payment 
if such crop is still in place when planting of the insured crop would 
normally take place. The purpose of section 17(f)(6) was to preclude 
prevented planting payments for acreage where there is no indication 
the producer ever intended to plant the acreage. This change will 
remove the ambiguity regarding the period for which the crop must be in 
place to distinguish between cover crops and pasture or other forage 
crops.
    In section 17(f)(9), FCIC proposes to clarify the provisions that 
state that the producer is presumed to have adequate inputs to plant a 
crop if the producer has previously planted the crop. There have been 
instances where producers have claimed prevented planting when they had 
planted the crop the previous year but in the interim they have 
otherwise disposed of their necessary inputs, such as selling their 
equipment. There are questions whether the existing presumption would 
override the language requiring proof of the necessary inputs to allow 
the producer to collect a prevented planting payment. This change 
resolves those questions

[[Page 40221]]

and removed the presumption when there is evidence the producer would 
be unable or did not intend to plant the crop.
    In sections 17(h) and (h)(1), FCIC also proposes to add provisions 
indicating a prevented planting payment may not exceed the amount 
payable for the crop that was prevented from being planted when the 
crop has no remaining prevented planting eligible acres and another 
crop's eligible prevented planting acreage is used. Further, if a crop 
with a higher prevented planting payment is prevented from being 
planted, and the remaining base acres are for a crop with a lower 
prevented planting payment, the additional acres claimed for prevented 
planting for the crop with the higher prevented planting payment would 
be paid based on the crop with the lower prevented planting payment. 
This change is necessary to protect program integrity by not allowing 
the prevented planting payment to exceed the amount that would have 
been paid for the crop that was actually prevented from being planted. 
This will prevent producers from manipulating their claimed prevented 
planting acres to maximize a prevented planting payment when it is not 
supported by the planting history. The following examples illustrate 
the effect of the proposed change. A producer claims 200 acres of corn 
have been prevented from being planted. The producer has 100 acres 
eligible for corn prevented planting that would result in a payment of 
$40 per acre and 100 potato acres eligible for potato prevented 
planting that would result in a payment of $100 per acre. In such case, 
the producer will receive a prevented planting payment based on the 100 
eligible corn acres and the 100 eligible potato acreage but all 200 
acres will be paid at $40. In another example, a producer claims 300 
acres of potatoes have been prevented from being planted. The producer 
has 100 acres eligible for potato prevented planting that would result 
in a payment of $100 per acre, 100 acres eligible for corn prevented 
planting that would result in a payment of $40 per acre, and 100 acres 
eligible for wheat prevented planting that would result in a payment of 
$25 per acre. In such case, the producer will receive a prevented 
planting payment based on the 100 eligible potato acres at $100 per 
acre, the 100 eligible corn acreage at $40 per acre, and the 100 
eligible wheat acres at $25 per acre.
    In section 17(h)(2), FCIC also proposes to remove provisions 
indicating that no payment may be made on an irrigated basis when a 
non-irrigated crop is prevented from being planted. The intent of these 
provisions was to prevent producers from receiving prevented planting 
payments higher than the amount to which they were entitled based on 
the crop that was actually prevented from being planted. These 
provisions are no longer necessary because of the above stated proposed 
changes to limit the prevented planting payment.
    In section 17(i), FCIC proposes to restructure the provisions and 
include language related to the projected price for revenue policies. 
Without this language, it would be unclear what price would be used to 
calculate prevented planting payments;
    (q) Section 18--FCIC proposes to revise section 18(c) to specify 
that a projected price and harvest price as provided for in the 
Commodity Exchange Price Provisions, as applicable, or price election 
or amount of insurance, as applicable, must be included in the written 
agreement. The provision is also proposed to be revised to specify how 
prices are to be determined for crops for which revenue protection is 
not available, and for crops for which revenue protection is available 
and selected or yield protection is selected. A written agreement will 
not be approved by FCIC if an appropriate projected price, price 
election, or amount of insurance, as applicable, cannot be provided for 
the crop. This is to protect program integrity by preventing the over 
or under insurance of a crop when the appropriate price cannot be 
determined.
    FCIC also proposes to revise the provisions in section 18(e)(2)(i) 
to provide discretion when an inspection may be required because there 
are situations when the crop may not even have been planted when the 
inspection is to have occurred. FCIC also proposes to revise the 
provisions to recognize situations in which multiple appraisals may be 
required or the expiration date for the written agreement occurs before 
a required inspection. The proposed provisions require the producer to 
sign the written agreement on the day the first field is appraised or 
by the expiration date, which ever comes first.
    FCIC also proposes to revise section 18(e)(2)(ii) to include 
reference to the time a written agreement request must be submitted to 
insure a practice, type or variety where there are no actuarial 
documents for the practice, type or variety.
    FCIC proposes to revise section 18(f)(1)(iv) to include the common 
land unit number because such a unit of measure may be used when FCIC 
and the Farm Service Agency develop their common reporting system.
    FCIC proposes to revise section 18(f)(2)(i) by adding the 
requirement that the submitted APH form be signed by the producer 
because it is necessary the producer certify to the correctness of the 
information being provided. FCIC also proposes to add a new section 
18(g)(4) that will specify that written agreements will only be 
accepted if they are authorized by the policy. This will make it very 
clear that written agreement requests will only be accepted to modify 
those policy provisions that state that they may be modified by written 
agreement.
    FCIC also proposes to add a new section 18(o) to clarify that if an 
insured disagrees with any determination made by FCIC regarding a 
written agreement, the insured may obtain an administrative review in 
accordance with 7 CFR part 400, subpart J or appeal in accordance with 
7 CFR part 11, unless the insured failed to comply with the provisions 
contained in section 18(g) or section 18(i)(2) or (3). This provision 
is necessary because it was unclear what administrative appeal rights 
were available to the producer and under what circumstances the 
producer could exercise those rights;
    (r) Section 20--For FCIC Policies--FCIC proposes to revise the 
provisions in section 20(b)(1) to specify that any determination made 
by FCIC under section 18(g), section 18(i)(2) or (3), or section 
20(b)(2) is not subject to either administrative review under 7 CFR 
part 400, subpart J or appeal under 7 CFR part 11. This revision is 
necessary to eliminate any conflict between the provisions contained in 
section 18 and section 20 regarding which determinations made by FCIC 
are subject to administrative review or appeal.
    In redesignated section 20(d), FCIC proposes to revise the 
provisions to clarify that a producer does not have to exhaust 
reconsideration rights before filing suit. This change is to ensure 
consistency with section 508(a)(3)(B) of the Act. Statutorily, 
producers have the choice of seeking an informal administrative appeal 
or bringing suit;
    (s) Section 20--For Reinsured Policies--FCIC proposes to revise the 
provisions in section 20(d) to clarify a producer does not have to 
exhaust reconsideration rights before filing suit. This is to avoid any 
ambiguity regarding the effects of section 508(a)(3)(B) of the Act on 
whether producers are required to exhaust informal administrative 
appeals. The provisions are also changed so that all determinations 
regarding good farming practices will be made by FCIC. This change is 
made to ensure that the good farming practice

[[Page 40222]]

determination can only be reversed or modified during judicial review 
if the determination is arbitrary or capricious. Under the previous 
provisions, it was unclear who was making this determination but this 
proposed rule is making it clear that FCIC is making the determination 
that may be judicially appealed.
    FCIC proposes to revise the provisions of section 20(e) to specify 
that any determination made by FCIC under sections 18(n), 18(o) or 
20(d) is not subject to either administrative review under 7 CFR part 
400, subpart J or appeal under 7 CFR part 11. This revision is 
necessary to eliminate any conflict between the provisions contained in 
section 18 and section 20 regarding which determinations made by FCIC 
are subject to administrative review or appeal.
    FCIC also proposes to revise section 20(j) by removing the 
reference to FCIC's election to participate in the adjustment of a 
claim. Such language is not necessary because the right to appeal is 
based on whether FCIC modifies, revises or corrects the claim, not 
whether it elected to participate;
    (t) Section 21--FCIC proposes to revise section 21(b)(2) to clarify 
the example regarding the length of time production records must be 
kept. The new example clearly illustrates the situation in which a 
producer initially certifies several years of records and then 
certifies the most recent year's production records for the subsequent 
crop year. FCIC also proposes to add a new section 21(b)(3) to specify 
yields that are knowingly misreported may be adjusted, regardless of 
whether the record retention period has expired.
    (u) Section 28--FCIC proposes to revise the provisions by breaking 
them into paragraphs to improve readability. FCIC also proposes to 
revise the provisions to allow insurance coverage to be transferred 
when a person's share is transferred after the sales closing date, but 
before insurance attaches to a crop. There have been questions 
regarding the transfer of coverage before the crop has been planted and 
before coverage has attached. To clarify this situation, FCIC is 
proposing to allow the transfer of a right to coverage in this 
situation. The other provisions have been revised to be consistent with 
this proposed change. FCIC also proposes to clarify that coverage 
levels, approved yields and prices continue to apply to the transferred 
coverage and that no indemnity will exceed the liability otherwise owed 
under the policy. This is to prevent the transfer of coverage to be 
used as a means to increase liability or coverage under the policy. 
FCIC also proposes to clarify provisions regarding joint and several 
liability to limit such liability to the coverage that has been 
transferred. For example, a producer transfers coverage on 20 acres in 
a 100 acre unit. The transferee would only be jointly and severally 
liable for the premium on the 20 acres, not the whole unit;
    (v) Section 29--FCIC proposes to restructure section 29 to make the 
provisions more readable. FCIC also proposes to add provisions to limit 
the assignments to the producer's legitimate creditors because there 
have been instances where producers have assigned the indemnity to 
family members or other people to whom no money was owed. FCIC also 
proposes to require that all assignments must be provided to the 
approved insurance provider on their form and that only one assignment 
form will be accepted for each crop. FCIC also proposes to add 
provisions to make it clear that the approved insurance provider will 
not be liable for more than 100 percent of the indemnity that is owed 
under the policy. FCIC also proposes to add provisions that clarify 
that no liens will be honored unless there is an assignment of 
indemnity to the lienholder. There have been instances where 
lienholders without assignments have sought to enforce their liens 
against the approved insurance providers and have prevailed even though 
section 509 of the Act precludes liens on the indemnity before it is 
provided to the producer;
    (w) Section 30--FCIC proposes to remove the provisions in section 
30 and reserve the section because there are no instances where the 
producer would have a right of subrogation against a third person where 
the loss would be covered under the policy. The policy only covers 
naturally occurring events or changes in prices established through 
commodity markets, which cannot be caused by a third person. To be 
consistent with other policy provisions, in cases where a third person 
causes the loss, claims should be denied or if already paid, they 
should be repaid by the producer;
    (x) Section 34--FCIC proposes to clarify section 34(a)(1) by 
specifying the election for an enterprise or whole-farm unit must be 
made by the earliest sales closing date for any insured crop in the 
unit. The current provisions indicate the election must be made by the 
earliest sales closing date for the insured crops and questions have 
been raised whether this means only the insured crops in the unit or 
all insured crops. Since an enterprise unit is made up of only one crop 
in the county, its sales closing date will control regardless of 
whether another crop is produced on the farm with an earlier sales 
closing date. However, with respect to the whole-farm unit, the crop 
with the earliest sales closing date in the unit will control and the 
election for the whole-farm unit must be made at that time.
    FCIC also proposes to revise section 34(a)(2) to add the provisions 
that enterprise units must be comprised of one or more basic units in 
separate sections or section equivalents that were previously in the 
definition of enterprise units because such provisions were considered 
substantive in nature. FCIC also proposes to add a new paragraph (ii) 
that specifies that both winter and spring types of the same insured 
crop cannot be included in the same enterprise unit. Both spring and 
winter types cannot be included in the same enterprise unit because it 
would delay the payment of any claim until any losses could also be 
determined for the spring types. This would impose an undue hardship on 
producers. Further, spring and fall types have separate acreage 
reporting dates and prices. This would make it difficult to establish 
the revenue protection guarantees or premium until such information is 
available for the spring variety. Separate enterprise units are 
permitted for each type.
    FCIC also proposes to revise the requirement that producers provide 
records applicable to the basic or optional unit to make it clearer 
that separate records only need to be maintained if the producer 
intends to insure the acreage as an optional unit or basic unit in the 
following crop year.
    FCIC also proposes to remove the provisions in section 34(a)(2)(iv) 
because the revised provisions in section 34(a)(2) provide the only 
basis for enterprise units. Therefore, this language is redundant.
    FCIC also proposes to remove the statement that the discount 
contained in the actuarial documents will only apply to acreage in the 
enterprise unit that has been planted. This statement actually applies 
to basic, enterprise and whole-farm units and the provisions for all 
these unit structures need to reflect that the applicable discount only 
applies to planted acreage. Therefore, the provision is being moved to 
a newly added section 34(f). Discounts do not apply to prevented 
planted acreage because such acreage is considered separately from 
planted acreage, including the payment of indemnities.
    FCIC also proposes to include provisions requiring the producer to 
separately designate on the acreage report each basic unit and each 
section

[[Page 40223]]

or other means used to qualify for an enterprise unit. This requirement 
is necessary to determine if the acreage qualifies for the enterprise 
unit structure and to allow approved insurance providers to establish 
the basic unit structure in the event the producer does not qualify for 
the enterprise unit.
    In section 34(a)(3), FCIC proposes to remove the provision 
requiring producers to report the optional units on the acreage report. 
The number or type of optional units underlying the whole-farm unit was 
never applicable to the eligibility for a whole-farm unit. All that 
matters is the number of crops and their percentage relationship to the 
total liability for the whole-farm unit. Therefore, this provision adds 
unnecessary paperwork for the producer and agent. However, the 
requirement to designate each basic unit is retained to allow approved 
insurance providers to determine the appropriate basic units should it 
be determined that the producer does not qualify for a whole-farm unit.
    FCIC proposes to add provisions to specify a whole-farm unit must 
contain insurable planted acreage of at least two crops and at least 
two of the insured crops must each constitute 10 percent or more of the 
total liability of all insured crops in the whole-farm unit. These 
provisions were previously in the definition of whole-farm unit but 
since they are substantive, they are more appropriately included here. 
FCIC also proposes to add the provisions that preclude fall and winter 
types of the insured crop from being included in the whole-farm unit. 
The same timing issues apply to whole-farm units as are discussed above 
with enterprise units.
    FCIC also proposes to add an example for situations where the 
acreage is not eligible for a whole-farm unit and it is separated into 
the basic units.
    FCIC also proposes to revise provisions in section 34(c)(1) to 
allow land that is described by other means (such as metes and bounds) 
to qualify for optional units in accordance with FCIC approved 
procedures. Previously such acreage was only insurable by written 
agreement but FCIC has determined that it can establish procedures that 
will be easy to administer and applied in a fair and consistent manner; 
and
    (y) Section 35--FCIC proposes to restructure the provisions for 
clarity and add provisions specifying how to determine the amount of 
the actual loss for crops with and without revenue protection. The 
previous provisions referred to the fair market value of the insured 
commodity, the production records, and price elections. However, it did 
not explain how this information would be used, and fair market value 
is generally not a term that is used to determine the value of the crop 
before or after a loss. Therefore, FCIC has redrafted the provision to 
specify exactly how the actual amount of the loss is determined and how 
to calculate the value of the crop before and after a loss.
    FCIC also proposes to add a new section 35(d) that informs the 
producer that failure to obtain crop insurance may impact the 
producer's ability to obtain benefits under other USDA programs and the 
producer should contact any USDA agency from which the producer wishes 
to obtain benefits to determine eligibility requirements. The 
Agricultural Assistance Act of 2003 eliminated the permanent linkage 
between crop insurance payments and other farm program benefits. Now 
FSA will determine whether linkage applies based on the requirements of 
the farm programs.

6. Basis for Specific Changes to the Small Grains Crop Insurance 
Provisions

    The proposed changes are as follows:
    (a) Section 3--FCIC is proposing to add a new section 3(a) to 
specify that revenue protection is not available for the producers' 
oats, rye, flax, or buckwheat. Therefore, if the producer elects to 
insure such crops by the sales closing date, they will only be 
protected against a loss in yield. Those crops were previously insured 
only with APH. Since revenue protection is not available for these 
crops, they will continue to use price elections as specified in the 
new sections 3(a)(1) and (2). FCIC is also proposing to add a new 
section 3(b) to specify that, since revenue coverage is available for 
wheat and barley, the producer must elect to insure wheat or barley 
with either revenue protection or yield protection by the sales closing 
date. Wheat was previously insured under APH, CRC, RA and IP. Barley 
was previously insured under APH, RA and IP. FCIC is also proposing to 
correct the price references for wheat and barley to use projected 
price and harvest price. This is necessary because wheat and barley 
will no longer use price elections. If the producer elects yield 
protection, the price used to determine both the value of the 
production guarantee and the value of the production to count for 
indemnity purposes will be the projected price. If the producer elects 
revenue protection, the higher of the projected price or the harvest 
price is used to calculate the production guarantee, unless the harvest 
price exclusion option is selected, and the harvest price is used to 
value the production to count. FCIC is proposing to add a new section 
3(b)(2) to specify the projected price and harvest price for each type 
must have the same percentage relationship to the maximum projected 
price and harvest price. FCIC is also proposing to add a new section 
3(b)(3) to specify that in counties with both fall and spring sales 
closing dates for the insured crop: (1) If the producer does not have 
any insured fall planted acreage of the insured crop, the producer may 
change the coverage level, percent of projected price and harvest 
price, or elect revenue protection or yield protection until the spring 
sales closing date; or (2) if the producer has any insured fall planted 
acreage of the insured crop, the producer may not change the coverage 
level, percent of projected price and harvest price, or elect revenue 
protection or yield protection after the fall sales closing date. This 
provision would only affect wheat and barley because they are the only 
small grain crops that may be planted in the fall and have spring sales 
closing dates;
    (b) Section 5--FCIC is proposing to amend section 5 to specify: (1) 
All Nebraska counties for wheat except Box Butte, Dawes, and Sheridan 
will have a September 30 cancellation date and a September 30 
termination date; and (2) Box Butte, Dawes, and Sheridan counties, 
Nebraska, will have a September 30 cancellation date and a November 30 
termination date. This change is needed to make the dates for these 
three counties consistent with other counties where both winter and 
spring wheat are insured. FCIC is also proposing to change the wheat 
cancellation dates and termination dates for Roosevelt and Valley 
Counties, Montana, from September 30 and November 30 to March 15 and 
March 15, respectively. This change is needed because almost all wheat 
planted in these counties is spring wheat and it is no longer necessary 
to provide actuarial materials specifically for winter wheat;
    (c) Section 6--FCIC proposes to add a new paragraph (a)(5) to 
specify that buckwheat will be insured only if it is produced under a 
contract with a business enterprise equipped with facilities 
appropriate to handle and store buckwheat production and to specify the 
terms that must be included in the contract. This change is necessary 
to protect program integrity by ensuring there is a market for insured 
production before coverage is provided;
    (d) Section 7--FCIC is proposing to revise the introductory text in 
section 7 to be consistent with the format of other similar Crop 
Provisions. FCIC is also

[[Page 40224]]

proposing to revise subsection (a)(2) by dividing subparagraphs (iii) 
and (v) into clauses for clarity. FCIC is also proposing to replace 
``and price election'' with ``, projected price, and harvest price'' in 
both subparagraphs because these subparagraphs are only referring to 
barley and wheat, which may be insured under revenue protection so a 
price election is not applicable;
    (e) Section 8--FCIC is proposing to revise the introductory text of 
section 8 to be consistent with the format of other similar Crop 
Provisions. In section 8(h), FCIC is proposing to clarify that failure 
of the irrigation water supply that occurs during the insurance period 
is a covered cause of loss if such failure is due to a cause of loss 
specified in the Crop Provisions. Previously the provision only stated 
failure of the irrigation supply was covered and did not have any 
qualifiers, which could have been interpreted to extend beyond the 
named perils. Now the provision is consistent with other Crop 
Provisions and ensures that only named perils are covered under the 
policy. Also, FCIC is proposing to add a new section 8(i) that 
specifies that a decline in the harvest price below the projected price 
is an insured cause of loss to allow for revenue protection;
    (f) Section 9--FCIC is proposing to revise section 9(c) to specify 
that oats, flax, and buckwheat will use a ``price election'' and wheat 
and barley will use a ``projected price'' in the computation of any 
replant payment. FCIC also proposes to revise the format to make the 
provision easier to read;
    (g) Section 10--FCIC is proposing to revise section 10 to be 
consistent with the format of other similar Crop Provisions. FCIC is 
also proposing to revise section 10 to remove those provisions 
regarding representative samples that are now incorporated into section 
14 of the Common Crop Insurance Policy Basic Provisions;
    (h) Section 11--FCIC is proposing to revise section 11(b) regarding 
the method used to compute a claim to provide separate calculations for 
claims that are based on yield protection from those that are based on 
revenue protection and adding an example. This change is necessary 
because yield protection only measures the change in the production and 
values the production guarantee and production to count at the same 
projected price. However, revenue protection measures both the change 
in production and the change in price and different prices may be used 
to determine the value of the guarantee (i.e., higher of the projected 
or harvest price) and the production to count (i.e., the harvest 
price); and
    (i) Section 13--FCIC is proposing to remove the reference to 
limited level of coverage in section 13(b) since it is no longer 
applicable.

7. Basis for Specific Changes to the Cotton Crop Insurance Provisions

    The proposed changes are as follows:
    (a) Section 2--FCIC is proposing to add a new section 2(a) to 
specify that the producer must elect to insure cotton with either 
revenue protection or yield protection by the sales closing date. 
Cotton was previously insured under APH, CRC, RA, and IP. In 
redesignated section 2(b), FCIC is also proposing to correct the price 
references to use projected price and harvest price. This is necessary 
because cotton has revenue protection available so it will no longer 
use price elections. If the producer elects yield protection, the price 
used to determine both the value of the production guarantee and the 
value of the production to count for indemnity purposes will be the 
projected price. If the producer elects revenue protection, the higher 
of the projected price or the harvest price is used to calculate the 
revenue production guarantee, unless the harvest price exclusion option 
is selected, and the harvest price is used to value the production to 
count;
    (b) Sections 3, 4, 6, and 7--FCIC is proposing to revise the format 
of sections 3, 4, 6, and 7 to be consistent with other similar Crop 
Provisions. This will make the provisions easier to read;
    (c) Section 5--FCIC is proposing to revise the format to be 
consistent with other similar Crop Provisions. FCIC is also proposing 
to remove section 5(b)(5) and revise section 5(b)(4) to specify, unless 
allowed by the Special Provisions or by written agreement, cotton will 
not be insured if it is grown on acreage following a small grain crop 
or harvested hay crop in the same calendar year unless the acreage is 
irrigated. Previously, cotton grown on non-irrigated acreage following 
a small grain crop that had 50 percent or more of the small grain 
plants reach the heading stage was not insurable. However, this 
provision could not be administered effectively. In most instances, it 
is impossible to accurately determine if 50 percent of the plants reach 
the heading stage, especially if the small grains were grazed. The key 
issue is the availability of soil moisture for the cotton crop and it 
was determined that as a practical matter, there is insufficient soil 
moisture unless the crop is irrigated. In those instances where the 
producer feels there is sufficient moisture, the producer can seek a 
written agreement;
    (d) Section 8--FCIC is proposing to revise the format of section 8 
to be consistent with other similar Crop Provisions. In section 8(h), 
FCIC is also proposing to clarify that failure of the irrigation water 
supply that occurs during the insurance period is a covered cause of 
loss if such failure is due to a cause of loss specified in the Crop 
Provisions. Previously the provision referred to an unavoidable cause 
of loss, which could have been interpreted to extend coverage beyond 
the named perils. Now the provision is consistent with other Crop 
Provisions and ensures that only named perils are covered under the 
policy. Also, FCIC is proposing to add a new section 8(i) that 
specifies that a decline in the harvest price below the projected price 
is an insured cause of loss to allow coverage for revenue protection;
    (e) Section 9--FCIC is proposing to revise section 9 to be 
consistent with the format of other similar Crop Provisions. FCIC is 
also proposing to revise section 9(a)(2) by redesignating it as 9(b) 
and removing those provisions regarding representative samples that are 
now incorporated into section 14 of the Common Crop Insurance Policy 
Basic Provisions. FCIC is also proposing to remove section 9(b) and 
adding that provision to section 9(a);
    (f) Section 10--FCIC is proposing to revise section 10(a) to 
clarify that the required records of production to qualify for unit 
division must be acceptable to the approved insurance provider. This 
makes the provision consistent with section 10(a)(1), which refers to 
the consequences if acceptable records of production are not provided. 
Acceptable records are required because they must be of a type that 
would permit the approved insurance provider to independently verify 
the information. If the information cannot be verified, approved 
insurance providers have no way of knowing whether the production 
reported is accurate. FCIC is also proposing to revise section 10(b) 
regarding the method used to compute a claim to provide separate 
calculations for claims that are based on yield protection from those 
that are based on revenue protection and adding an example. This change 
is necessary because yield protection only measures the change in the 
production and values the production guarantee and production to count 
at the same projected price. However, revenue protection measures both 
the change in production and the change in price and different prices 
may be used to determine the value of the guarantee

[[Page 40225]]

(i.e., higher of the projected or harvest price) and the production to 
count (i.e., the harvest price). FCIC also proposes to revise section 
10(d) to change the percentage of price quotation ``B'' from 75 percent 
to 85 percent. Based on input from the cotton industry and insurance 
providers, FCIC determined that 85 percent of price quotation B more 
accurately reflects the correct threshold for quality adjustment 
eligibility. The Special Provisions for cotton have been used to 
establish the 85 percent threshold in all counties with a cotton 
program since the 2000 crop year. Also, FCIC proposes to revise section 
10(d) to remove the reference to the ``Daily Spot Cotton Quotation 
published by the USDA Agricultural Marketing Service'' and replace it 
with the ``Upland Cotton Warehouse Loan Rate published by FSA'' because 
the Upland Cotton Warehouse Loan Rate will provide producers, the crop 
insurance industry, and other interested parties with a more uniform 
pricing methodology for insurance coverage purposes; and
    (g) Section 11--Remove the reference to limited level of coverage 
since it is no longer applicable.

8. Basis for Specific Changes to the Coarse Grains Crop Insurance 
Provisions

    The proposed changes are as follows:
    (a) Section 1--FCIC proposes to revise the definition of ``planted 
acreage'' to specify that corn must be planted in rows far enough apart 
to permit mechanical cultivation only if the specific farming practice 
the producer uses requires mechanical cultivation to control weeds. In 
most cases, the current requirement that corn must be planted in rows 
far enough apart to permit mechanical cultivation is outdated because 
most corn producers who use conventional farming practices use 
herbicides or Round Up Ready Corn seed and then spray with Round Up 
herbicide to control weeds. Therefore, cultivation is no longer 
necessary. The definition will specifically require that producers 
plant corn in rows far enough apart to permit mechanical cultivation if 
mechanical cultivation is the required method of weed control for a 
particular farming practice utilized by a producer. For example, 
producers who use organic farming practices may need to cultivate 
between the corn rows to control weeds, since use of conventional 
herbicides for weed control and Round Up Ready Corn seed may be 
prohibited under the National Organic Program. FCIC is also proposing 
to revise the definition of ``production guarantee (per acre)'' by 
removing the phrase ``approved actual production history (APH) yield 
per acre, calculated in accordance with 7 CFR part 400, subpart G'' and 
replacing it with the term ``approved yield per acre.'' This change 
makes the definition consistent with the definition of ``production 
guarantee (per acre)'' contained in the Common Crop Insurance Policy 
Basic Provisions and removes the redundancy between the definitions. 
This is a technical matter and the actual meaning of the term is not 
changed;
    (b) Section 2--FCIC is proposing to add a new section 2(a) to 
specify that the producer must elect to insure corn, grain sorghum, or 
soybeans with either revenue protection or yield protection by the 
sales closing date. Corn planted for grain was previously insured under 
APH, CRC, IP, IIP, and RA. However, the current APH corn policy also 
covers corn silage. Since the current APH corn policy covers both corn 
grain and corn silage, FCIC proposes to allow corn silage to be covered 
under revenue protection even though corn silage is not traded on any 
Commodity Exchange. To accomplish this, the projected price for corn 
silage will be established by FCIC in accordance with the Commodity 
Exchange Price Provisions and the harvest price will be set equal to 
the projected price. With both types of corn insured under revenue 
protection, the producer may qualify for a whole-farm unit. However, 
corn insured as silage will not have the benefit of coverage for an 
increase or decrease in the expected market price. In redesignated 
sections 2(b) and (c), FCIC is also proposing to correct all price 
references to use projected price and harvest price. This is necessary 
because all the coarse grain crops have revenue protection available so 
they will no longer use price elections. If the producer elects yield 
protection, the price used to determine both the value of the 
production guarantee and the value of the production to count for 
indemnity purposes will be the projected price. If the producer elects 
revenue protection, the higher of the projected price or the harvest 
price is used to calculate the revenue production guarantee, unless the 
harvest price exclusion option is selected, and the harvest price is 
used to value the production to count. FCIC is also proposing to remove 
current section 2(b), which stated if a producer harvests the corn crop 
in a manner other than reported (e.g., reported grain but harvested 
silage) a price election for the harvested type would be assigned for 
the purpose of determining the dollar value of production to count for 
the type of production harvested. This provision is no longer necessary 
due to the change proposed in section 10 that specifies that if a 
producer intends to harvest in a manner other than reported, the 
producer must notify the approved insurance provider before harvest 
begins. This will allow the insurance provider to appraise the crop 
based on the type insured, rather than using the type harvested;
    (c) Section 3--FCIC is proposing to revise the format in section 3 
to be consistent with other similar Crop Provisions;
    (d) Section 4--FCIC is proposing to revise the cancellation and 
termination dates from January 15 to January 31 for corn and grain 
sorghum for certain Texas counties to be consistent with the changes 
required by the Consolidated Appropriations Act (H.R. 3194) for fiscal 
year 2000, which mandated that sales closing dates for any spring 
planted crop be not earlier than January 31. Also, FCIC is proposing to 
revise the cancellation and termination dates from February 15 to 
January 31 for soybeans for certain Texas counties because agronomic 
conditions in those counties allow producers to plant corn prior to the 
current February 15 date. To the maximum extent practical, sales 
closing, termination, and cancellation dates are usually the same date 
and set sufficiently ahead of time to prevent adverse selection from 
producers potentially having knowledge of growing conditions when they 
elect whether to continue their insurance coverage. Further, 
maintaining the same dates eliminates unnecessary administrative 
burdens on the approved insurance providers, agents and producers who 
have to track and comply with such dates;
    (e) Section 5--FCIC is proposing to revise section 5(b)(2) to 
specify that high oil corn blends containing mixtures of at least 90 
percent high yielding yellow dent female plants with high-oil male 
pollinator plants, or commercial varieties of high-protein hybrids are 
insurable. In the past, high oil or high protein corn was only 
insurable by written agreement because previous data suggested these 
varieties did not yield as high as insurable varieties. However, FCIC 
has reviewed data on newer seed varieties that have been developed and 
determined that the specified high oil and high protein corn varieties 
have comparable yields to other insured corn varieties and can be 
insured under the standard corn rates and coverage, without the need 
for a written agreement;
    (f) Section 7--FCIC is proposing to revise section 7 to be 
consistent with the format of other similar Crop Provisions.

[[Page 40226]]

Also, in section 7(b), FCIC proposes to revise the calendar date for 
the end of the insurance period for corn insured as silage from 
September 30 to October 20 for Connecticut, Delaware, Idaho, Maine, 
Maryland, Massachusetts, New Hampshire, New Jersey, New Mexico, New 
York, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, 
Washington and West Virginia. Crop insurance covers the crop for the 
period that it is in the field. Therefore, the end of the insurance 
period needs to correspond with the time harvest is normally completed, 
and most corn producers in the above listed states do not normally 
complete harvesting silage production until October 20. The other 
states in section 7(b) will have the same September 30 end of the 
insurance period;
    (g) Section 8--Revise to be consistent with the format of other 
similar Crop Provisions. In section 8(h), FCIC is also proposing to 
clarify that failure of the irrigation water supply that occurs during 
the insurance period is a covered cause of loss if such failure is due 
to a cause of loss specified in the Crop Provisions. Previously the 
provision referred to an unavoidable cause of loss, which could have 
been interpreted to extend coverage beyond the named perils. Now the 
provision is consistent with other Crop Provisions and ensures that 
only named perils are covered under the policy. Also, FCIC is proposing 
to add a new section 8(i) that specifies that a decline in the harvest 
price below the projected price is an insured cause of loss to allow 
coverage for revenue protection;
    (h) Section 9--FCIC is proposing to revise section 9 to be 
consistent with the format of other similar Crop Provisions. FCIC is 
also proposing to revise section 9(a) to make inapplicable the 
provisions in section 13 of the Common Crop Insurance Policy Basic 
Provisions that limit the amount of a replant payment to the producer's 
actual cost. FCIC has reviewed the costs associated with replanting the 
coarse grain crops and determined that only in rare instances were the 
actual costs less than the amount determined in accordance with section 
13 of the Common Crop Insurance Policy Basic Provisions. This meant 
there was a large administrative burden associated with obtaining 
receipts from the producer to prove costs with little effect on payment 
amounts. FCIC is currently in the process of contracting a replant 
study. Based on the results of the study, FCIC will propose to remove 
the limit of the producer's actual cost of replanting for other crops 
that the study shows the actual cost of replanting is rarely less than 
the maximum payment amount allowed by the Crop Provisions.
    FCIC is also proposing to remove section 9(c), which allows the 
person who incurs the total cost of replanting to receive a replanting 
payment based on the total shares insured when more than one person 
insures the crop on a share basis. To make the provision work, FCIC 
required that the two producers with a share in the crop be insured 
with the same approved insurance provider before the producer incurring 
all the costs could receive the replant payment. This was necessary to 
allow the approved insurance provider to track the payments to ensure 
that not more than 100 percent of the replant payment was paid out 
(e.g., the tenant received a 100 percent replant payment from one 
approved insurance provider and the landlord received a 50 percent 
replant payment from another approved insurance provider). FCIC also 
required that both producers insure with the same approved insurance 
provider to ensure that the approved insurance provider making the 100 
percent replant payment received 100 percent of the premium associated 
with replant payments (e.g. if producers with 50 percent shares insure 
with two approved insurance providers, each approved insurance provider 
would receive 50 percent of the premium associated with the replant 
payments). Subsequently, FCIC received complaints that this resulted in 
disparate treatment based on where the producers were insured because 
producers that insured with different approved insurance providers 
could not receive 100 percent of the replant payment even if they 
incurred 100 percent of the costs. FCIC has examined other means to 
allow the producer who incurs 100 percent of the replant costs to 
receive a 100 percent replant payment but has not found one that is 
administratively feasible. While FCIC has proposed to remove the 
provision, FCIC is seeking comments on alternative proposals that will 
allow FCIC to retain the provision and still address the concerns 
raised above.
    Also, FCIC is proposing to add a new section 9(d) stating that 
replanting payments will be calculated using the projected price and 
production guarantee for the crop type that is replanted and insured. 
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;
    (i) Section 10--FCIC is proposing to revise section 10 to be 
consistent with the format of other similar Crop Provisions. FCIC is 
also proposing to revise section 10(a) to remove those provisions 
regarding representative samples that are now incorporated into section 
14 of the Basic Provisions. Also, FCIC is proposing to revise section 
10(b)(1) to change the reference to ``not later than 15 days after the 
end of the insurance period'' to ``not later than 72 hours after the 
end of the insurance period'' to be consistent with the change proposed 
in redesignated section 14(b) of the Basic Provisions. FCIC is also 
proposing to revise section 10(b)(2) to specify that if the producer 
has a unit in which both silage and grain are insured with different 
ends of the insurance period, for the purposes of the provision 
contained in section 14 of the Common Crop Insurance Policy Basic 
Provisions, which requires claims for indemnities to be submitted not 
later than 60 days after the end of the insurance period, the end of 
the insurance period is the latest end of the insurance period for the 
unit. As currently drafted, this provision was intended to apply in 
those limited situations where there is more than one end of the 
insurance period applicable to the unit but it could be interpreted to 
eliminate all the requirements of section 14(c) of the Common Crop 
Insurance Policy Basic Provisions. The revision makes very clear the 
limited scope of the provision and leaves the rest of the provisions in 
section 14 of the Common Crop Insurance Policy Basic Provisions 
applicable to all other situations. FCIC is also proposing to add a new 
section 10(c) that specifies if the producer intends to harvest the 
crop in a manner other than as it was reported, the producer must 
notify the insurance provider before harvest begins. This is to address 
those situations where the producer insured the crop, and received a 
production guarantee and paid a premium, based on harvesting the crop 
as grain but the producer later elects to harvest the crop as silage, 
or vice versa. In order to ensure that the proper amount of production 
to count on the basis for which the crop was insured is assessed, the 
crop must be appraised before harvest. It is too difficult to convert 
silage production to grain production, or vice versa, after the crop is 
harvested. Therefore, this notice is

[[Page 40227]]

necessary so the approved insurance provider can properly appraise the 
crop;
    (j) Section 11--FCIC is proposing to revise section 11(a) to 
clarify that the required records of production to qualify for unit 
division must be acceptable to the approved insurance provider. This 
makes the provision consistent with section 11(a)(1), which refers to 
the consequences if acceptable records of production are not provided. 
Acceptable records are required because they must be of a type that 
would permit the approved insurance provider to independently verify 
the information. If the information cannot be verified, approved 
insurance providers have no way of knowing whether the production 
reported is accurate. FCIC is also proposing to revise section 11(b) 
regarding the method used to compute a claim to provide separate 
calculations for claims that are based on yield protection from those 
that are based on revenue protection and adding an example. This change 
is necessary because yield protection only measures the change in the 
production, and values the production guarantee and production to count 
at the same projected price. However, revenue protection measures both 
the change in production and the change in price, and different prices 
may be used to determine the value of the guarantee (i.e. higher of the 
projected or harvest price) and the production to count (i.e. the 
harvest price). Further, FCIC is proposing to add a provision in 
section 11(c) that specifies the total production will include not less 
than the production guarantee for the acreage if the producer fails to 
give notice before harvest begins if the corn will be harvested in a 
manner different than it was reported. This addition is necessary to 
provide the consequences if the producer fails to comply with the 
proposed notice provisions in section 10. If the insured fails to 
provide the required notice, the producer will receive the production 
guarantee as the production to count for the acreage for which such 
notice was required. This is consistent with the other provisions in 
section 11(c) where it is difficult or impossible to accurately 
determine the production to count. FCIC is also proposing to remove 
paragraph (d) because it is no longer necessary due to the new 
provisions proposed in section 10(c) that specify if an insured intends 
to harvest the crop in a manner other than as it was reported, the 
producer must notify the insurance provider so that appraisals can be 
made on the basis for which the crop is insured. FCIC is also proposing 
to revise the provisions in redesignated section 11(e)(2) to refer 
generically to the end of the insurance period instead of September 30 
as a result of the revised end of insurance period dates in section 
7(b); and
    (k) Section 12--Remove the reference to limited level of coverage 
since it is no longer applicable.

9. Basis for Specific Changes to the Malting Barley Crop Insurance 
Provisions

    The proposed changes are as follows:
    (a) Preamble--FCIC proposes to rename the endorsement as the 
``Small Grains Crop Insurance Malting Barley Price and Quality 
Endorsement'';
    (b) Section 1--FCIC proposes to move to section 1 the definitions 
previously contained in section 10. FCIC also proposes to delete the 
definition of ``APH'' because it is duplicative with the definition in 
the Common Crop Insurance Policy Basic Provisions. FCIC also proposes 
to delete the definition of ``unit'' because provisions regarding unit 
division are contained in section 6. FCIC proposes to revise the 
definition of ``approved malting variety'' to improve clarity. FCIC 
proposes to revise the definition of ``malting barley contract'' to 
separate the different requirements, improve clarity, and to change the 
term ``processed mash'' to ``malt extracts'' because the term ``malt 
extracts'' is more commonly used in the malting barley industry.
    FCIC is also proposing to revise the definition of ``objective 
test'' so protein content will be determined by procedures approved by 
the Federal Grain Inspection Service because the Federal Grain 
Inspection Service has developed testing standards for determining 
protein and since USDA standards are used for other quality 
determinations, it is appropriate to use USDA test standards for 
protein. The definition is also restructured to improve clarity. FCIC 
is also proposing to revise the definition of ``subjective test'' to 
restructure the definition to improve clarity.
    FCIC is also proposing to add a definition of ``additional value 
price'' because the term is used throughout the endorsement. FCIC is 
also proposing to add a definition of ``crop year'' to specify for APH 
purposes the term does not include any year when the crop was not 
planted or when the crop was prevented from being planted by an 
insurable cause. FCIC proposes to add a definition of ``malt extracts'' 
because the term is used in the definition of ``malting barley 
contract.'' FCIC is proposing to add a definition of ``malting barley 
price agreement'' to describe a production contract between a producer 
and a buyer other than a brewery or malster. The definitions of 
``brewery,'' ``contracted production,'' and ``licensed grain grader'' 
are the same as in the previous endorsement;
    (c) Section 2--FCIC is proposing to move to section 2 those 
provisions previously contained in the preamble in Options A and B;
    (d) Section 3--FCIC is proposing to move to section 3 those 
provisions regarding policies that must be in place before electing the 
endorsement previously contained in section 1;
    (e) Section 4--FCIC is proposing to move to section 4 those 
provisions regarding the selection of option A or B that were 
previously contained in section 2;
    (f) Section 5--FCIC is proposing to move to section 5 those 
provisions regarding insurable acreage that were previously contained 
in section 6. Also, FCIC proposes to clarify that acreage grown for 
seed production is not insurable under the endorsement;
    (g) Section 6--FCIC is proposing to revise section 6 to clarify how 
the acreage with different shares is to be reported on the acreage 
report and to provide an example because it was unclear how acreage 
with different shares was supposed to be reported;
    (h) Section 7--FCIC is proposing to move to section 7 those 
provisions regarding the selection of the additional value price that 
were previously contained in section 3;
    (i) Section 8--FCIC proposes to move to section 8 those provisions 
regarding premium computations that were previously contained in 
section 4. Also, FCIC is proposing to add provisions that require 
adjustment of premium rates based on production history. This is 
similar to other insured crops where the premium rate increases as the 
yield decreases and vice versa. This is because as the yield decreases, 
the risk of loss is greater, requiring higher premiums to cover such 
losses;
    (j) Section 9--FCIC proposes to move to section 9 those provisions 
regarding reporting requirements under the endorsement that were 
previously contained in section 5;
    (k) Section 10--FCIC proposes to move to section 10 those 
provisions regarding the ability to complete a claim before insured 
production is sold that were previously in section 7. FCIC also 
proposes to restructure provisions for clarity and readability. FCIC 
also proposes to revise the provisions to allow reopening of the claim 
when production is sold after May 31 of the year following harvest. 
Currently May 31 is the earliest date losses may be paid for unsold 
production that fails the

[[Page 40228]]

quality standards. However, FCIC has discovered that disposition of the 
crop may not be known before May 31. Therefore, the policy must contain 
provisions that allow for an adjustment based on a certification that 
the production will not be sold and if no certification is provided, no 
quality adjustment will be allowed. These provisions are similar to 
section 15 of the Common Crop Insurance Policy Basic Provisions, which 
allows an indemnity to be paid based on a certification that the crop 
will not be harvested and contains the consequences when it is;
    (l) Section 11--FCIC proposes to move to section 11 those 
provisions indicating that prevented planting coverage is not provided 
under the endorsement that were previously contained in section 8;
    (m) Section 12--FCIC proposes to move to section 12 those 
provisions regarding the commingling of production that were previously 
contained in section 9. FCIC has also revised the provision to make it 
clearer that if the production of malting barley and feed barley are 
commingled, the claim will be denied. This is because it would be 
difficult to impossible to separate the production once it has been 
commingled. If the production cannot be separated, there is no way to 
determine if the production to count were accurate;
    (n) Section 13--FCIC proposes to move to section 13 those 
provisions indicating how claims will be settled that were previously 
contained in section 5 of Options A and B. FCIC determined that there 
was no need for duplicate provisions. FCIC also proposes to revise the 
provisions to address situations in which more than one additional 
value price is applicable. There may be circumstances where the malting 
barley is covered by more than one malting barley contract or malting 
barley price agreement. Therefore, the endorsement needs to contain 
provisions regarding how claims will be determined if there are more 
than one additional value price;
    (o) Section 14--FCIC is proposing to move to section 14 those 
provisions regarding production to be counted when there is a claim 
that were previously contained in section 4 of Options A and B. FCIC 
determined that there was no need for duplicate provisions. In the new 
section 14(a)(1) (previously section 4(a)(1) of Options A and B), FCIC 
also proposes to clarify that production to be counted includes 
potential production on acreage that is put to another use. This 
production was previously omitted from the endorsement but since it is 
included when calculating production to count under the Small Grains 
Crop Provisions, it should be included as production to count in this 
endorsement. In section 14(a)(2)(i) (previously section 4(a)(2)(i) of 
Options A and B), FCIC is also proposing to revise the provisions to 
specify that the parts per million standards will be those set in the 
malting barley contract or malting barley price agreement, not those 
set by the Food and Drug Administration because the price the producer 
receives is paid based on the standards in such contracts or 
agreements. In section 14(a)(2)(ii) (previously section 4(a)(2)(ii) of 
Options A and B), FCIC also proposes to revise quality adjustment 
provisions to list sprout injury as a quality standard rather than 
sprout damage. New testing standards have been developed by USDA to 
determine sprout injury and most malting barley buyers now use sprout 
injury levels to determine whether grain can be accepted for malting 
purposes. FCIC also proposes to change the quality standard for protein 
for two-row malting barley from 14.0 percent to 13.5 percent to better 
reflect protein levels required by most buyers of two-row malting 
barley. In section 14(a)(3) (previously section 4(a)(3) of Options A 
and B), FCIC is also proposing to revise the provisions so that damaged 
production sold for any use at a price greater than the projected price 
will be production to count. This is to ensure that producers are not 
receiving indemnities when they have received the full value for the 
malting barley. Previous provisions did not consider production sold 
for seed or other higher value uses as production to count. In section 
14(b) (previously section 4(b) of Options A and B), FCIC is proposing 
to clarify how production to count will be determined when production 
is damaged and the additional value price is greater than the price 
received, to remove references to price elections because revenue 
protection is available for barley and to add examples. FCIC is also 
proposing to move to section 14(b)(2) those provisions regarding 
reconditioning previously contained in sections 4(c) of Options A and B 
and to allow the cost of reconditioning to be considered when adjusting 
the production to count because it failed the quality standards. 
Previously such production was considered separately but this added an 
unnecessary complication and burden on the approved insurance 
providers. FCIC is also proposing to move to sections 14(c) and (d) 
those provisions regarding when production to count will not be 
adjusted and the need for objective tests that were previously 
contained in sections 14(e) and (f) of Options A and B. These 
provisions have also been restructured for readability;
    (p) Section 1 (Option A)--FCIC proposes in section 1 to update the 
years used in the example that indicates what production records must 
be provided. FCIC has also restructured the provisions for readability. 
FCIC also proposes to add a new section 1(b) that specifies that the 
producer must provide a copy of a malting barley contract or price 
agreement by the acreage reporting date, if such document is to be used 
to determine the additional value price election. Option (B)-FCIC 
proposes to add provisions in section 1(a) that require the applicant/
insured to provide records of sales of malting barley and copies of 
malting barley contracts for at least the previous 4 years in the 
database. These records will be used to determine past success rates of 
malting barley production. These records will also be used to determine 
if a producer is eligible for coverage under Option B and to determine 
the premium producers must pay. If the producer had malting barley 
contracts in the four required years but does not provide them or the 
sales records, the producer will not be eligible for Option B. Further, 
the success rate will be used to determine a factor that will be 
applied to the premium;
    (q) Section 2 (Option A)--FCIC proposes in section 2 to clarify the 
manner in which the production guarantee per acre will be determined to 
clarify the manner in which the malting barley history will be 
determined. The provisions are also restructured for readability;
    (r) Section 3 (Options A and B)--FCIC proposes in section 3 to 
revise the provisions regarding the determination of the additional 
value price to include exactly how the amount will be determined when 
the producer elects a variable premium price option under a malting 
barley contract. Previously, section 3 simply contained the maximum 
additional value price but failed to state how it was to be determined. 
Option A--FCIC proposes to add provisions to allow the additional value 
price to be determined based on a contract price contained in a malting 
barley contract or price agreement. Also, FCIC proposes to add a 
provision indicating the additional value price election cannot exceed 
$1.25 per bushel because this amount is reflective of the maximum 
additional price received and there is a need to limit liability. 
Option B--FCIC proposes to change the maximum additional

[[Page 40229]]

value price election from $2.00 per bushel to $1.25 per bushel to be 
consistent with the current Income Protection Malting Barley 
Endorsement. Further, it was determined that $2.00 did not accurately 
reflect the added value; and
    (s) Section 4 (Options A and B)--FCIC proposes to move to section 4 
those provisions regarding the loss example that were previously 
contained in section 6 of Options A and B, to restructure the 
provisions for clarity, and to update the example to reflect other 
changes made to the endorsement.

10. Basis for Specific Changes to the Rice Crop Insurance Provisions

    The proposed changes are as follows:
    (a) Section 3--FCIC is proposing to add a new section 3(a) to 
specify that the producer must elect to insure rice with either revenue 
protection or yield protection by the sales closing date. Rice was 
previously insured under APH, CRC, and RA. In redesignated section 
3(b), FCIC is proposing to correct all price references to use 
projected price and harvest price. This is necessary because rice has 
revenue protection available so it will no longer use price elections. 
If the producer elects yield protection, the price used to determine 
both the value of the production guarantee and the value of the 
production to count for indemnity purposes will be the projected price. 
If the producer elects revenue protection, the higher of the projected 
price or the harvest price is used to calculate the revenue production 
guarantee, unless the harvest price exclusion option is selected, and 
the harvest price is used to value the production to count.
    FCIC is also proposing to add a new section 3(b)(1) to specify the 
producer must select the same percentage for both the projected price 
and the harvest price. FCIC also proposes to add a new section 3(b)(2) 
to specify the projected price and harvest price for each type must 
have the same percentage relationship to the maximum projected price 
and harvest price. These changes are consistent with other Crop 
Provisions that require the same percentage apply to the prices so that 
producers cannot adversely select the high price percentage for the 
projected price to maximize the guarantee and select a lower percentage 
for the harvest price to manufacture a loss, etc.;
    (b) Sections 4, 5, 7 and 8-FCIC is proposing to revise the format 
of sections 4, 5, 7 and 8 to be consistent with other similar Crop 
Provisions. This will make the provisions easier to read;
    (c) Section 6--FCIC is proposing to revise the format in section 6 
to be consistent with other similar Crop Provisions. FCIC is also 
proposing to add a provision that states that the premium rate may be 
provided by written agreement. Previously the premium rate could only 
be provided by the actuarial documents. Other similar Crop Provisions 
allow a premium rate to be provided by written agreement and there is 
no reason rice should not be treated the same;
    (d) Section 9--FCIC is proposing to revise section 9 to be 
consistent with the format of other similar Crop Provisions. Also, FCIC 
is proposing to add a new section 9(a)(9) that specifies that a decline 
in the harvest price below the projected price is an insured cause of 
loss to allow coverage for revenue protection;
    (e) Section 10--FCIC is proposing to revise section 10 to be 
consistent with the format of other similar Crop Provisions. FCIC is 
also proposing to revise section 10(a) to make inapplicable the 
provisions in section 13 of the Common Crop Insurance Policy Basic 
Provisions that limit the amount of a replant payment to the producer's 
actual cost. FCIC has reviewed the costs associated with replanting 
rice and determined that only in rare instances were the actual costs 
less than the amount determined in accordance with section 13 of the 
Common Crop Insurance Policy Basic provisions. This meant there was a 
large administrative burden associated with obtaining receipts from the 
producer to prove costs with little effect on payment amounts. FCIC is 
currently in the process of contracting a replant study. Based on the 
results of the study, FCIC will propose to remove the limit of the 
producer's actual cost of replanting for other crops if the study shows 
the actual cost of replanting is rarely less than the maximum payment 
amount allowed by the Crop Provisions;
    (f) Section 11--FCIC proposes to revise section 11 to be consistent 
with the format of other similar Crop Provisions. FCIC is also 
proposing to revise section 11 to remove those provisions regarding 
representative samples that are now incorporated into section 14 of the 
Common Crop Insurance Policy Basic Provisions;
    (g) Section 12--FCIC is proposing to revise section 12(a) to 
clarify that the required records of production to qualify for unit 
division must be acceptable to the approved insurance provider. This 
makes the provision consistent with section 12(a)(1), which refers to 
the consequences if acceptable records of production are not provided. 
Acceptable records are required because they must be of a type that 
would permit the approved insurance provider to independently verify 
the information. If the information cannot be verified, approved 
insurance providers have no way of knowing whether the production 
reported is accurate. FCIC is also proposing to revise section 12(b) 
regarding the method used to compute a claim to provide separate 
calculations for claims that are based on yield protection from those 
that are based on revenue protection and adding an example. This change 
is necessary because yield protection only measures the change in the 
production and values the production guarantee and production to count 
at the same projected price. However, revenue protection measures both 
the change in production and the change in price and different prices 
may be used to determine value of the guarantee (i.e. higher of the 
projected or harvest price) and the production to count (i.e. the 
harvest price); and
    (h) Section 13--FCIC is proposing to remove the reference to 
limited level of coverage since it is no longer applicable.

11. Basis for Specific Changes to the Canola and Rapeseed Crop 
Insurance Provisions

    The proposed changes are as follows:
    (a) Section 3--FCIC is proposing to add a new section 3(a) to 
specify that the producer must elect to insure canola and rapeseed with 
either revenue protection or yield protection by the sales closing 
date. Canola and rapeseed are currently insured under APH and RA. 
However, rapeseed prices no longer have a consistent correlation to 
canola prices that are established on a Commodity Exchange. Since 
canola and rapeseed are covered under the same policy, FCIC proposes to 
allow rapeseed to be covered under revenue protection even though it is 
not traded on any Commodity Exchange. To accomplish this, the projected 
price for rapeseed will be established by FCIC in accordance with the 
Commodity Exchange Price Provisions and the harvest price will be set 
equal to the projected price. With both canola and rapeseed insured 
under revenue protection, the producer may qualify for a whole-farm 
unit. However, rapeseed will not have the benefit of coverage against a 
change in the price.
    In redesignated section 3(b), FCIC is also proposing to correct all 
price references to use projected price and harvest price. This is 
necessary because both canola and rapeseed have revenue protection 
available so they will no longer use price elections. If the producer 
elects yield protection, the price used to determine both the value

[[Page 40230]]

of the production guarantee and the value of the production to count 
for indemnity purposes will be the projected price. If the producer 
elects revenue protection, the higher of the projected price or the 
harvest price is used to calculate the revenue production guarantee, 
unless the harvest price exclusion option is selected, and the harvest 
price is used to value the production to count.
    FCIC proposes to add a new section 3(b)(1) to specify the producer 
must select the same percentage for both the projected price and the 
harvest price. Also, FCIC proposes to add a new section 3(b)(2) to 
specify the projected price and harvest price for each type must have 
the same percentage relationship to the maximum projected price and 
harvest price. In some counties canola and rapeseed are treated as 
types and some counties may only insure canola or rapeseed. These 
changes are consistent with other Crop Provisions that require the same 
percentage apply to the prices so that producers cannot adversely 
select the high price percentage for the projected price to maximize 
the guarantee and select a lower percentage for the harvest price to 
manufacture a loss, etc.;
    (b) Section 6--FCIC is proposing to revise section 6 to restructure 
the formatting for readability. FCIC is also proposing to add a new 
subsection (b) to specify if the Special Provisions designate both fall 
and spring final planting dates, any fall canola or fall rapeseed that 
is damaged before the spring final planting date, to the extent that 
producers in the area would normally not further care for the crop, 
must be replanted to a fall type of the insured crop unless the 
approved insurance provider agrees that replanting is not practical. If 
it is not practical to replant to the fall type of canola or rapeseed 
but is practical to replant to a spring type, the producer must replant 
to a spring type to keep insurance based on the fall type in force. Any 
fall canola or fall rapeseed acreage that is replanted to a spring type 
of the same crop when it was practical to replant the fall type will be 
insured as the spring type and the production guarantee, premium, 
projected price, and harvest price applicable to the spring type will 
be used. These provisions are added because fall canola and rapeseed 
are being planted and insured in more counties and states and could 
potentially be insured in additional counties and states in the future;
    (c) Section 9--FCIC is proposing to revise section 9 to be 
consistent with the format of other similar Crop Provisions. In section 
9(h), FCIC is also proposing to clarify that failure of the irrigation 
water supply that occurs during the insurance period is a covered cause 
of loss if such failure is due to a cause of loss specified in the Crop 
Provisions. Also, FCIC is proposing to add a new section 9(i) that 
specifies that a decline in the harvest price below the projected price 
is an insured cause of loss to allow coverage for revenue protection;
    (d) Section 10--FCIC is proposing to revise section 10 to be 
consistent with the format of other similar Crop Provisions. FCIC is 
also proposing to revise section 10(a)(1) to make inapplicable the 
provisions in section 13 of the Common Crop Insurance Policy Basic 
Provisions that limit of the amount of a replant payment to the 
producer's actual cost. FCIC has reviewed the costs associated with 
replanting canola and rapeseed and determined that only in rare 
instances were the actual costs less than the amount determined in 
accordance with section 13 of the Common Crop Insurance Policy Basic 
Provisions. This meant there was a large administrative burden 
associated with obtaining receipts from the producer to prove costs 
with little effect on payment amounts. FCIC is currently in the process 
of contracting a replant study. Based on the results of the study, FCIC 
will propose to remove the limit of the producer's actual cost of 
replanting for other crops if the study shows the actual cost of 
replanting is rarely less than the maximum payment amount allowed by 
the Crop Provisions.
    FCIC also proposes to revise section 10(a) to allow a replanting 
payment when the amount of seed used is less than the amount normally 
used for initial seeding. The seeding rate of the replanted crop must 
be at a rate sufficient to achieve a total (undamaged and new seeding) 
plant population that will produce at least the yield used to determine 
the producer's production guarantee. Allowing this payment under such 
circumstances will provide a greater incentive to improve poor crop 
stands, thereby improving production levels and reducing claims. FCIC 
also proposes to add a new section 10(d) to specify that replanting 
payments will be calculated using the projected price and production 
guarantee for the crop type that is replanted and insured. 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;
    (e) Section 11--FCIC is proposing to revise section 11 to be 
consistent with the format of other similar Crop Provisions. FCIC is 
also proposing to revise section 11 to remove those provisions 
regarding representative samples that are now incorporated into section 
14 of the Common Crop Insurance Policy Basic Provisions;
    (f) Section 12--FCIC is proposing to revise section 12(a) to 
clarify that the required records of production to qualify for unit 
division must be acceptable to the approved insurance provider. This 
makes the provision consistent with section 12(a)(1), which refers to 
the consequences if acceptable records of production are not provided. 
Acceptable records are required because they must be of a type that 
would permit the approved insurance provider to independently verify 
the information. If the information cannot be verified, approved 
insurance providers have no way of knowing whether the production 
reported is accurate. FCIC is also proposing to revise section 12(b) 
regarding the method used to compute a claim to provide separate 
calculations for claims that are based on yield protection from those 
that are based on revenue protection. Also, FCIC proposes to add a new 
example, remove the previous example, and remove the provisions stating 
how a claim will be computed if the quality adjustment factors are not 
in the Special Provisions. The quality adjustment factors are currently 
in the Special Provisions for all counties where canola and rapeseed 
are insured; and
    (g) Section 14--Remove the reference to limited level of coverage 
since it is no longer applicable.

List of Subjects in 7 CFR Part 457

    Crop insurance, 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 effective for 
the 2009 and succeeding crop years to read as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

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


[[Page 40231]]


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

    2. Amend Sec.  457.8 as follows:
    A. Throughout Sec.  457.8, where they appear, remove the words 
``whole farm'' and add the phrase ``whole-farm'' in its place, and 
remove the acronym ``C.F.R.'' and add ``CFR'' in its place;
    B. Amend Sec.  457.8 to add new paragraphs (c) through (f), 
immediately before the Common Crop Insurance Policy, to read as 
follows:


Sec.  457.8  The application and policy.

* * * * *
    (c) If the producer had a Crop Revenue Coverage, Revenue Assurance, 
Income Protection, or Indexed Income Protection crop insurance policy 
in effect for the 2008 crop year and has not canceled such coverage in 
accordance with such policy, except for sunflowers, revenue protection 
will continue in effect under the Common Crop Insurance Policy Basic 
Provisions and no new application is required.
    (1) If the producer had revenue coverage under Crop Revenue 
Coverage, Income Protection, or Indexed Income Protection plans of 
insurance for the 2008 crop year, the producer will have revenue 
protection under the Common Crop Insurance Policy Basic Provisions in 
effect for the 2009 crop year at the same coverage level, and 
percentage of price, and applicable options and endorsements.
    (2) If the producer had revenue coverage under the Revenue 
Assurance plan of insurance for the 2008 crop year and:
    (i) The producer had the fall harvest price option, for the 2009 
crop year the producer will have revenue protection, under the Common 
Crop Insurance Policy Basic Provisions, based on the greater of the 
projected price or the harvest price, the same coverage level, 
percentage of price, and other applicable options or endorsements;
    (ii) The producer did not have the fall harvest price option, for 
the 2009 crop year the producer will have revenue protection, under the 
Common Crop Insurance Policy Basic Provisions, the harvest price 
exclusion option, the same coverage level, percentage of price, and 
other applicable options or endorsements; or
    (iii) If the producer had revenue coverage for sunflowers for the 
2008 crop year, the producer will have APH coverage for the 2009 crop 
year, unless the policy is canceled by the cancellation date.
    (3) If the producer has revenue protection under paragraphs (c)(1) 
or (2) of this section, the producer will be eligible for the hail and 
fire exclusion option if the requirements are met.
    (d) If the producer had APH coverage for a crop under the Common 
Crop Insurance Policy Basic Provisions for the 2008 crop year and that 
crop now has revenue protection available, the producer will have yield 
protection for the crop under the Common Crop Insurance Policy Basic 
Provisions in effect for the 2009 crop year at the same coverage level, 
and percentage of price, and applicable options or endorsements.
    (e) If the producer had coverage for a crop under the Common Crop 
Insurance Policy Basic Provisions for the 2008 crop year and that crop 
does not have revenue protection available for the 2009 crop year, the 
producer will continue with the same coverage (for example, APH or 
amount of insurance) until cancelled or terminated.
    (f) For any producer specified in paragraph (c) or (d) of this 
section:
    (1) Any coverage provided under paragraphs (c) through (e) of this 
section, may be changed by the producer in accordance with section 3 of 
the Common Crop Insurance Policy Basic Provisions or the producer may 
cancel such coverage in accordance with section 2 of the Common Crop 
Insurance Policy Basic Provisions.
    (2) If a producer has a properly executed Power of Attorney on file 
with the approved insurance provider, such Power of Attorney will 
remain in effect under the Common Crop Insurance Policy Basic 
Provisions until it is terminated.
    (3) If the producer has a current written agreement in effect for 
the crop for multiple crop years, such written agreement will remain in 
effect if the terms of the written agreement are still applicable, the 
conditions under which the written agreement was provided have not 
changed, and the policy remains with the same insurance provider.
* * * * *
    C. Amend the ``Agreement to Insure'' sections after the second 
paragraph of both the ``FCIC Policies'' and ``Reinsured Policies'' 
sections that precedes ``Terms and Conditions Basic Provisions'' of 
Sec.  457.8 as follows:

FCIC Policies

* * * * *
    AGREEMENT TO INSURE: In return for the payment of the premium, 
and subject to all of the provisions of this policy, we agree with 
you to provide the insurance as stated in this policy. If there is a 
conflict between the Act, the regulations published at 7 CFR chapter 
IV, and the procedures issued by us, the order of priority is as 
follows: (1) The Act; (2) the regulations; and (3) the procedures 
issued by us, with (1) controlling (2), etc. If there is a conflict 
between the policy provisions published at 7 CFR part 457 and the 
administrative regulations published at 7 CFR part 400, the policy 
provisions published at 7 CFR part 457 control. If a conflict exists 
among the policy provisions, the order of priority is: (1) The 
Catastrophic Risk Protection Endorsement, as applicable; (2) the 
Special Provisions; (3) the Commodity Exchange Price Provisions, as 
applicable; (4) the Crop Provisions; and (5) these Basic Provisions, 
with (1) controlling (2), etc.

Reinsured Policies

* * * * *
    AGREEMENT TO INSURE: In return for the payment of the premium, 
and subject to all of the provisions of this policy, we agree with 
you to provide the insurance as stated in this policy. If there is a 
conflict between the Act, the regulations published at 7 CFR chapter 
IV, and the procedures as issued by FCIC, the order of priority is 
as follows: (1) The Act; (2) the regulations; and (3) the procedures 
as issued by FCIC, with (1) controlling (2), etc. If there is a 
conflict between the policy provisions published at 7 CFR part 457 
and the administrative regulations published at 7 CFR part 400, the 
policy provisions published at 7 CFR part 457 control. If a conflict 
exists among the policy provisions, the order of priority is: (1) 
The Catastrophic Risk Protection Endorsement, as applicable; (2) the 
Special Provisions; (3) the Commodity Exchange Price Provisions, as 
applicable; (4) the Crop Provisions; and (5) these Basic Provisions, 
with (1) controlling (2), etc.

    D. Amend section 1 of Sec.  457.8 by adding definitions of 
``Commodity Exchange Price Provisions (CEPP),'' ``common land unit,'' 
``Cooperative Extension System,'' ``harvest price,'' ``harvest price 
exclusion option,'' ``insurable interest,'' ``projected price,'' 
``revenue protection,'' ``revenue protection guarantee (per acre),'' 
``RMA's Web site,'' ``yield protection,'' and ``yield protection 
guarantee (per acre),'' and revising the definitions of ``actuarial 
documents,'' ``agricultural experts,'' ``assignment of indemnity,'' 
``average yield,'' ``catastrophic risk protection,'' ``claim for 
indemnity,'' ``delinquent debt,'' ``enterprise unit,'' ``liability,'' 
``organic agricultural industry,'' ``policy,'' ``prevented planting,'' 
``price election,'' ``production report,'' ``share,'' ``substantial 
beneficial interest,'' ``void,'' and ``whole-farm unit.'' Also, place 
the definitions of ``Code of Federal Regulations (CFR)'' and 
``consent'' in alphabetical order.
    The revised and added text reads as follows:

    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 and which shows available coverage levels, 
information needed to determine amounts of insurance,

[[Page 40232]]

prices, premium rates, premium adjustment percentages, practices, 
particular types or varieties of the insurable crop, insurable 
acreage, and other related information regarding crop insurance in 
the county.
* * * * *
    Agricultural experts. Persons who are employed by the 
Cooperative Extension System or the agricultural departments of 
universities, or other persons approved by FCIC, whose research or 
occupation is related to the specific crop or practice for which 
such expertise is sought.
* * * * *
    Assignment of indemnity. A transfer of policy rights, made on 
our form, and effective when approved by us. It is the arrangement 
whereby you assign your right to an indemnity payment to any 
legitimate creditor of yours for the crop year.
    Average yield. The yield, calculated by totaling the yearly 
actual (including actual yields reduced in accordance with the 
policy), assigned, adjusted or unadjusted transitional yields and 
dividing the total by the number of yields contained in the 
database, prior to any yield adjustments.
* * * * *
    Catastrophic risk protection. The minimum level of coverage 
offered by FCIC that is required before you may qualify for certain 
other USDA program benefits. Catastrophic risk protection is not 
available with revenue protection.
* * * * *
    Claim for indemnity. A claim made on our form by you for damage 
or loss to an insured crop in accordance with section 14.
* * * * *
    Commodity Exchange Price Provisions (CEPP). A part of the policy 
that is used for all crops for which revenue protection is 
available, regardless of whether the producer elects revenue 
protection or yield protection for such crops. This document will 
include the information necessary to derive the projected price and 
the harvest price for the insured crop, as applicable.
    Common land unit. The smallest unit of land that has: a 
permanent, contiguous boundary; common land cover and land 
management; and common owner and common producer association.
* * * * *
    Cooperative Extension System. A nationwide network consisting of 
a state office located at each state's land-grant university, and 
local or regional offices. These offices are staffed by one or more 
agronomic experts, who work in cooperation with the Cooperative 
State Research, Education and Extension Service, and who provide 
information to agricultural producers and others.
* * * * *
    Delinquent debt. Has the same meaning as the term contained in 7 
CFR part 400, subpart U.
* * * * *
    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.
* * * * *
    Harvest price. A price determined in accordance with the 
Commodity Exchange Price Provisions and used to value production to 
count for revenue protection.
    Harvest price exclusion option. For revenue protection, an 
option that allows you to exclude the use of the harvest price in 
the determination of your revenue protection guarantee. This option 
is continuous unless canceled by the cancellation date.
* * * * *
    Insurable interest. The value of your interest in the crop that 
is at risk from an insurable cause of loss during the insurance 
period. The maximum indemnity payable to you may not exceed the 
indemnity due on your insurable interest at the time of loss.
* * * * *
    Liability. Your total amount of insurance, value of your 
production guarantee, or revenue protection guarantee for the unit 
determined in accordance with the claims provisions of the 
applicable Crop Provisions.
* * * * *
    Organic agricultural industry. Persons who are employed by the 
following organizations: Appropriate Technology Transfer for Rural 
Areas, Sustainable Agriculture Research and Education or the 
Cooperative Extension System, the agricultural departments of 
universities, or other persons approved by FCIC, whose research or 
occupation is related to the specific organic crop or practice for 
which such expertise is sought.
* * * * *
    Policy. The agreement between you and us to insure an 
agricultural commodity and consisting of the accepted application, 
these Basic Provisions, the Crop Provisions, the Special Provisions, 
the Commodity Exchange Price Provisions, if applicable, other 
applicable endorsements or options, the actuarial documents for the 
insured agricultural commodity, the Catastrophic Risk Protection 
Endorsement, if applicable, and the applicable regulations published 
in 7 CFR chapter IV. Insurance for each agricultural commodity in 
each county will constitute a separate policy.
* * * * *
    Prevented planting. Failure to plant the insured crop by the 
final planting date designated in the Special Provisions for the 
insured crop in the county, due to an insured cause of loss that is 
general to the surrounding area and that prevents other producers 
from planting acreage with similar characteristics. The failure to 
plant the insured crop within the late planting period may also be 
considered prevented planting if due to an insured cause of loss. 
Failure to plant because of uninsured causes, such as lack of proper 
equipment or labor to plant acreage, is not considered prevented 
planting.
    Price election. The amounts contained in the Special Provisions, 
or in an addendum thereto, that is the value per pound, bushel, ton, 
carton, or other applicable unit of measure for the purposes of 
determining premium and indemnity under the policy. A price election 
is not applicable for crops for which revenue protection is 
available.
* * * * *
    Production report. A written record showing your annual 
production and used by us to determine your yield for insurance 
purposes in accordance with section 3. The report contains yield 
information for previous years, including planted acreage and 
harvested production. This report must be supported by written 
verifiable records from a warehouseman or buyer of the insured crop 
or by measurement of farm-stored production, or by other records of 
production approved by us on an individual case basis in accordance 
with FCIC approved procedures.
* * * * *
    Projected price. A price determined in accordance with the 
Commodity Exchange Price Provisions and used for all crops for which 
revenue protection is available, regardless of whether you elect to 
obtain revenue protection or yield protection for such crops.
* * * * *
    Revenue protection. Insurance coverage that provides protection 
against production loss or price decline or increase or a 
combination of both. If the harvest price exclusion option is 
elected, the insurance coverage provides protection only against the 
production loss or price decline or a combination of both.
    Revenue protection guarantee (per acre). For revenue protection 
only, the production guarantee (per acre), times the greater of the 
projected price or the harvest price. If the harvest price exclusion 
option is elected, the production guarantee (per acre) is only 
multiplied by your projected price.
    RMA's Web site. A Web site hosted by RMA and located at http://www.rma.usda.gov/ or a successor Web site.
* * * * *
    Share. Your percentage of insurable interest in the insured crop 
as an owner, operator, or tenant at the time insurance attaches. 
However, only for the purpose of determining the amount of 
indemnity, your share will not exceed your share at the earlier of 
the time of loss or the beginning of harvest.
* * * * *
    Substantial beneficial interest. An interest held by any person 
of at least 10 percent in you. The spouse of any individual 
applicant or individual insured will be considered to have a 
substantial beneficial interest in the applicant or insured unless 
the spouses can prove they are legally separated or otherwise 
legally separate under the applicable state dissolution of marriage 
laws. Any child of an individual applicant or individual insured 
will not be considered to have a substantial beneficial interest in 
the applicant or insured unless the child has a separate legal 
interest in such person. For example, there are two partnerships 
that each have a 50 percent interest in you and each partnership is 
made up of two individuals, each with a 50 percent share in the 
partnership. In this case, each individual would be considered to 
have a 25 percent interest in you, and both the partnerships and the 
individuals would have a substantial beneficial interest in you (The 
spouses of the individuals would not be considered to have a 
substantial beneficial interest unless the spouse was one of the

[[Page 40233]]

individuals that made up the partnership). However, if each 
partnership is made up of six individuals with equal interests, then 
each would only have an 8.33 percent interest in you and although 
the partnership would still have a substantial beneficial interest 
in you, the individuals would not for the purposes of reporting in 
section 2.
* * * * *
    Void. When the policy is considered not to have existed for a 
crop year.
    Whole-farm unit. All insurable acreage of all the insured crops 
planted in the county in which you have a share on the date coverage 
begins for each crop for the crop year and for which the whole-farm 
unit structure is available.
* * * * *
    Yield protection. Insurance coverage that only provides 
protection against a production loss for crops for which revenue 
protection is available but was not elected.
    Yield protection guarantee (per acre). When yield protection is 
selected for a crop that has revenue protection available, the 
production guarantee times your projected price.
* * * * *
    E. Amend section 2 of Sec.  457.8 as follows:
    a. Amend paragraph (a) by adding at the end of the paragraph the 
following sentence ``In accordance with section 4, FCIC may change the 
coverage provided from year to year.'';
    b. Revise paragraph (b);
    c. Amend paragraph (e)(2) by removing ``14(c)'' and adding 
``14(e)'' in its place; and
    d. Revise paragraph (g).
    The revised text reads as follows:

    2. Life of Policy, Cancellation, and Termination.
* * * * *
    (b) Your application for insurance must contain your social 
security number (SSN) if you are an individual or employer 
identification number (EIN) if you are a person other than an 
individual, and all SSNs and EINs, as applicable, of all persons 
with a substantial beneficial interest in you; your election of 
revenue protection or yield protection, as applicable, coverage 
level, percentage of price election or percentage of projected price 
and harvest price, as applicable, crop, type, variety, or class, 
plan of insurance, and any other material information required on 
the application to insure the crop.
    (1) Your application will not be acceptable and no insurance 
will be provided if:
    (i) It does not contain your SSN, EIN or identification number;
    (ii) It contains an incorrect SSN, EIN or identification number 
for you, and such number is not corrected before any indemnity, 
replanting or prevented planting payment is made:
    (A) If the information is not corrected, you must repay any 
indemnity, prevented planting payment or replanting payment that may 
have been paid for any crop listed on the application;
    (B) If previously paid, the balance of any premium and any 
administrative fees will be returned to you, less 20 percent of the 
premium that would otherwise be due from you for such crops; and
    (C) If not previously paid, no premium or administrative fees 
will be due for such crops; or
    (iii) Any other information required in section 2(b) is not 
provided, except, if you fail to report the SSNs, EINs or 
identification numbers of persons with a substantial beneficial 
interest in you, the provisions in section 2(b)(2) will apply.
    (2) If the application does not contain the SSNs, EINs, or 
identification numbers of all persons with a substantial beneficial 
interest in you, you fail to revise your application in accordance 
with section 2(b)(4), or any reported SSNs, EINs or identification 
numbers of any persons with a substantial beneficial interest in you 
are incorrect and are not corrected before any indemnity, replanting 
or prevented planting payment is made, and:
    (i) Such persons are eligible for insurance, the amount of 
coverage for all crops included on this application will be reduced 
proportionately by the percentage interest in you of such persons 
(presumed to be 50 percent for spouses of individuals), you must 
repay the amount of indemnity, prevented planting payment or 
replanting payment that is proportionate to the interest of the 
persons whose SSN, EIN, or identification number was unreported or 
incorrect for such crops, and your premium will be reduced 
commensurately; or
    (ii) Such persons are not eligible for insurance, except as 
provided in section 2(b)(3), the policy is void and no indemnity, 
prevented planting payment or replanting payment will be owed for 
any crop included on this application, and you must repay any 
indemnity, prevented planting payment or replanting payment that may 
have been paid for such crops:
    (A) If previously paid, the balance of any premium and any 
administrative fees will be returned to you, less 20 percent of the 
premium that would otherwise be due from you for such crops; or
    (B) If not previously paid, no premium or administrative fees 
will be due for such crops.
    (3) The consequences described in section 2(b)(2)(ii) will not 
apply if you have included an ineligible person's SSN, EIN, or 
identification number on your application and do not include the 
ineligible person's share on the acreage report.
    (4) If any of the information regarding persons with a 
substantial beneficial interest changes during the crop year, you 
must revise your application by the next sales closing date 
applicable under your policy to reflect the correct information.
    (5) If you are an individual and you, or a person with a 
substantial beneficial interest in you, is not eligible to obtain a 
SSN, or if you are a person other than an individual and a person 
with a substantial beneficial interest in you is not eligible to 
obtain a SSN, you must request an identification number for the 
purposes of this policy from us.
    (i) An identification number will be provided only if you can 
demonstrate you or a person with a substantial beneficial interest 
in you is eligible to receive Federal benefits in accordance with 
the Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996.
    (ii) If an identification number cannot be provided for you in 
accordance with section 2(b)(5)(i), the policy will be void.
    (iii) If an identification number cannot be provided for any 
person with a substantial beneficial interest in you, the amount of 
coverage for all crops on the application will be reduced 
proportionately by the percentage interest of such person in you.
* * * * *
    (g) In cases where there has been a death, disappearance, 
judicially declared incompetence, or dissolution:
    (1) If any married insured individual dies, disappears, or is 
judicially declared incompetent, the named insured on the policy 
will automatically convert to the name of the spouse if:
    (i) The spouse was included on the policy as having a 
substantial beneficial interest in the named insured; and
    (ii) The spouse continues to have a share of the crop;
    (2) If any partner, member, shareholder, etc., of an insured 
entity dies, disappears, or is judicially declared incompetent and 
it automatically dissolves the entity and the death, disappearance 
or declaration occurs:
    (i) More than 30 days before the sales closing date, the policy 
is automatically canceled as of the cancellation date and a new 
application must be submitted; or
    (ii) Less than 30 days before the sales closing date, or after 
the sales closing date, the policy will continue in effect through 
the crop year and be automatically canceled as of the cancellation 
date immediately following the end of the insurance period for the 
crop year, unless canceled by the cancellation date prior to the 
start of the insurance period:
    (A) A new application for insurance must be submitted prior to 
the sales closing date for coverage for the subsequent crop year; 
and
    (B) Any indemnity will be paid to the person or persons 
determined to be beneficially entitled to the indemnity and such 
person or persons must comply with all policy provisions and pay the 
premium.
    (3) If any insured entity is dissolved for reasons other than 
those specified in section 2(g)(2):
    (i) Before the sales closing date, the policy is automatically 
canceled by the cancellation date prior to the start of the 
insurance period; or
    (ii) On or after the sales closing date, the policy will 
continue in effect through the crop year and be automatically 
canceled as of the cancellation date immediately following the end 
of the insurance period for the crop year, unless canceled by the 
cancellation date prior to the start of the insurance period.
    (A) A new application for insurance must be submitted prior to 
the sales closing date for the coverage for the subsequent crop 
year; and
    (B) Any indemnity will be paid in accordance with the terms of 
the policy and

[[Page 40234]]

the persons associated with the dissolved entity must comply with 
all policy provisions and pay the premium.

* * * * *
    F. Amend section 3 of Sec.  457.8 as follows:
    a. Revise paragraphs (b), (c), and (d);
    b. Amend the introductory text of paragraph (e) by adding the 
phrase ``, except as specified in section 18(f)(2)(i) to apply for a 
written agreement to establish insurability'' after the phrase ``in the 
Special Provisions'';
    c. Revise paragraph (f);
    d. Amend paragraph (g)(1) by removing the phrase ``, and you may be 
subject to provisions of section 27'';
    e. Amend paragraph (g)(2)(i) by removing the word ``and'' after the 
semicolon at the end;
    f. Amend paragraph (g)(2)(ii) by removing the word ``insured'' and 
adding the word ``insurable'' in its place and removing the word ``or'' 
at the end and adding the word ``and'' in its place;
    g. Add a new paragraph (g)(2)(iii); and
    h. Add a new paragraph (k).
    The revised and added text reads as follows:

    3. Insurance Guarantees, Coverage Levels, and Prices.

* * * * *
    (b) For all acreage of the insured crop in the county, you must 
select the same coverage, catastrophic risk protection or additional 
coverage (revenue protection is not available if you select 
catastrophic risk protection coverage), the same protection (amount 
of insurance, yield coverage for those crops for which revenue 
protection is not available, or yield protection or revenue 
protection, if available), and the same level of additional coverage 
unless one of the following applies:
    (1) The applicable Crop Provisions allow you the option to 
separately insure individual crop types or varieties. In this case, 
each individual type or variety insured by you will be subject to 
separate administrative fees. For example, if two grape varieties in 
California are insured under the Catastrophic Risk Protection 
Endorsement and two varieties are insured under an additional 
coverage policy, a separate administrative fee will be charged for 
each of the four varieties.
    (2) If you have additional coverage for the crop in the county 
and the acreage has been designated as ``high-risk'' by FCIC, you 
will be able to obtain a High-Risk Land Exclusion Option for the 
high-risk land under the additional coverage policy and insure the 
high-risk acreage under a separate Catastrophic Risk Protection 
Endorsement, provided that the Catastrophic Risk Protection 
Endorsement is obtained from the same insurance provider from which 
the additional coverage was obtained. If you have revenue protection 
and exclude high-risk land, the catastrophic risk protection 
coverage will be yield protection only for the excluded high-risk 
land.
    (c) For a crop for which revenue protection is not available:
    (1) In addition to the price election or amount of insurance 
available on the contract change date, we may provide an additional 
price election or amount of insurance no later than 15 days prior to 
the sales closing date.
    (i) You must select the additional price election or amount of 
insurance on or before the sales closing date for the insured crop.
    (ii) These additional price elections or amounts of insurance 
will not be less than those available on the contract change date.
    (iii) If you elect the additional price election or amount of 
insurance, any claim settlement and amount of premium will be based 
on your additional price election or amount of insurance.
    (2) You may change the coverage level or percentage of the 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.
    (i) The percentage of price election or amount of insurance 
selected by you times the price election or amount of insurance 
issued by FCIC is your price election or amount of insurance.
    (ii) Since the price election or amount of insurance may change 
each year, if you do not select a new percentage of the price 
election or amount of insurance on or before the sales closing date, 
we will assign a percentage of the price election or amount of 
insurance which bears the same relationship to the percentage of the 
price election or amount of insurance that was in effect for the 
preceding year (For example: If you selected 100 percent of the 
price election for the previous crop year and you do not select a 
new percentage of the price election for the current crop year, we 
will assign 100 percent of the price election for the current crop 
year).
    (d) For a crop for which revenue protection is available:
    (1) You may change your selection of revenue protection or yield 
protection and your coverage level or elect the harvest price 
exclusion option, if applicable, by giving written notice to us not 
later than the sales closing date for the insured crop;
    (2) The percentage of projected price and harvest price selected 
by you times the projected price and harvest price issued by FCIC is 
your projected price and your harvest price;
    (3) Since the projected price and harvest price may change each 
year, if you do not select a new percentage of those prices on or 
before the sales closing date, we will assign a percentage of those 
prices which bears the same relationship to the percentage of those 
prices that were in effect for the preceding year (For example: If 
you selected 100 percent of the projected price and harvest price 
for the previous crop year and you do not select a new percentage of 
those prices for the current crop year, we will assign 100 percent 
of those prices for the current crop year);
    (4) If revenue protection is not elected by you for a crop for 
which it is available, your projected price is used to compute the 
value of your production guarantee (per acre) and the value of the 
production to count; or
    (5) If revenue protection is elected for a crop for which it is 
available and the harvest price exclusion option is:
    (i) Not elected, your projected price is used to initially 
determine the revenue protection guarantee (per acre), and if the 
harvest price is greater than the projected price, the revenue 
protection guarantee (per acre) will be recomputed using your 
harvest price; or
    (ii) Elected, your projected price is used to compute your 
revenue protection guarantee (per acre); and
    (6) Your projected price is used to calculate your premium, any 
replanting payment, and any prevented planting payment.
* * * * *
    (f) It is your responsibility to accurately report all 
information that is used to determine your approved yield.
    (1) You must certify to the accuracy of this information on your 
production report.
    (2) If you fail to accurately report any information or if you 
do not provide any required records, you will be subject to the 
provisions regarding misreporting contained in section 6(g). 
However, the provisions contained in section 6(g) will not apply if 
the information is corrected on or before the production reporting 
date or we correct the information because the incorrect information 
was the result of our error or the error of someone from USDA.
    (3) If you do not have written verifiable records to support the 
information on your production report, you will receive an assigned 
yield in accordance with section 3(e)(1) and 7 CFR part 400, subpart 
G for those crop years for which you do not have such records.
    (4) At any time we discover you have misreported any material 
information used to determine your approved yield or your approved 
yield is not correct, the following actions may be taken:
    (i) We will correct your approved yield for the crop year such 
information is not correct and all subsequent crop years, as 
applicable;
    (ii) We will correct the unit structure, if necessary; and
    (iii) You will be subject to the provisions regarding 
misreporting contained in section 6(g)(1).
    (g) * * *
    (2) * * *
    (iii) We determine there is no valid basis to support the 
approved APH yield; or
* * * * *
    (k) For crops for which revenue protection is available:
    (1) If there has been a news report, announcement, or other 
event that occurs during or after trading hours that is believed by 
the Secretary of Agriculture, Administrator of the Risk Management 
Agency, or other designated staff of the Risk Management Agency that 
results in market conditions significantly different than those used 
to rate or price revenue protection:
    (i) If the announcement occurs before the projected price has 
been announced, but before the sales closing date, even if revenue 
protection was purchased prior to the announcement, you will receive 
the projected price established by FCIC, only yield protection will 
be available, and the premium will be for yield protection;

[[Page 40235]]

    (ii) If the announcement occurs after the projected price is 
released and before the sales closing date, sales for revenue 
protection will automatically cease as of the date of the 
announcement and only yield protection will be available subsequent 
to the announcement:
    (A) If you purchased revenue protection prior to the 
announcement, you will receive revenue protection and a harvest 
price will be calculated in accordance with the terms of the 
Commodity Exchange Price Provisions; or
    (B) If you purchased insurance coverage after the announcement, 
you will receive yield protection only and your projected price will 
be used to determine any guarantee and indemnity.
    (2) If the required data for establishing prices cannot be 
calculated in accordance with section 3 of the Commodity Exchange 
Price Provisions:
    (i) For the projected price, no revenue protection will be 
available.
    (A) If revenue protection is not available, notice will be 
provided on RMA's Web site by the date specified in the applicable 
projected price definition.
    (B) In such instances, the projected price will be established 
by RMA in accordance with section 2 of the Commodity Exchange Price 
Provisions and released by the date specified in the applicable 
projected price definition.
    (ii) For the harvest price, the harvest price will be set equal 
to the projected price. The premium amount will not be reduced if 
the required data for establishing the harvest price is not 
available.
    (3) If you have revenue protection in effect, and only yield 
protection is available for any year, you will automatically receive 
yield protection for that year unless you cancel your coverage by 
the cancellation date. Your coverage will automatically revert to 
revenue protection for the next year that revenue protection is 
available unless you cancel your coverage by the cancellation date.
* * * * *

    G. Amend section 4(b) of Sec.  457.8 by adding the phrase ``or the 
Commodity Exchange Price Provisions, if applicable'' after the phrase 
``price elections'' and removing the phrase ``the RMA Web site at 
http://www.rma.usda.gov/ or a successor Web site'' and adding the 
phrase ``RMA's Web site'' in its place;
    H. Amend section 6 of Sec.  457.8 as follows:
    a. Revise paragraph (c)(5);
    b. Revise paragraph (d)(2);
    c. Remove paragraph (d)(3) and redesignate paragraphs (d)(4), (5) 
and (6) as paragraphs (d)(3), (4) and (5), respectively;
    d. Revise redesignated paragraph (d)(3);
    e. Amend redesignated paragraph (d)(5) by removing the phrase 
``section 6(d)(1), (2), (4), or (5)'' and adding the phrase ``section 
6(d)(1), (2), or (3)'' in its place;
    f. Amend paragraph (g)(1) by removing the word ``If'' and adding 
the phrase ``Except as provided in section 6(g)(2), if'' in its place; 
and
    g. Revise paragraph (g)(2).
    The revised text reads as follows:

    6. Report of Acreage.
* * * * *
    (c) * * *
    (5) The date the insured crop was planted on the unit, which 
must include:
    (i) The last date the crop was planted for all acreage in the 
unit planted by the final planting date; and
    (ii) The date of planting and the amount of acreage planted per 
day for acreage planted during the late planting period.
    (d) * * *
    (2) For prevented planting acreage:
    (i) On or before the acreage reporting date, except as provided 
in section 6(d)(2)(iii), you can change any information on any 
initially submitted acreage report (For example, you can correct the 
reported share, add acreage of the insured crop that was prevented 
from being planted, etc.);
    (ii) After the acreage reporting date, you cannot revise any 
information on the acreage report (For example, if you have failed 
to report prevented planting acreage on or before the acreage 
reporting date, you cannot revise it after the acreage reporting 
date to include prevented planting acreage) but we will revise 
information that is clearly transposed or if you provide adequate 
evidence that we or someone from USDA have committed an error 
regarding the information on your acreage report; and
    (iii) You cannot revise your initially submitted acreage report 
at any time to change the insured crop, or type, that was reported 
as prevented from being planted;
    (3) You may request an acreage measurement prior to the acreage 
reporting date, and submit documentation of such request and an 
acreage report with estimated acreage by the acreage reporting date.
    (i) If an acreage measurement is only requested for a portion of 
the acreage within a unit, you must separately designate the acreage 
for which an acreage measurement has been requested;
    (ii) If an acreage measurement is not received by the time we 
receive a notice of loss, we will:
    (A) Measure the acreage and pay the claim based on our 
measurement; or
    (B) Charge premium and pay the claim based on the reported 
acreage and, once the acreage measurement is received, make any 
necessary adjustments to the premium, and any claim, based on the 
measurement (You may be required to pay additional premium or repay 
an overpaid indemnity); and
    (iii) If we charge premium and pay the claim in accordance with 
section 6(d)(3)(ii)(B) and you fail to provide the measurement to us 
by the termination date:
    (A) You will be required to repay any prevented planting 
payment, replant payment, or indemnity paid for the unit and premium 
will still be owed; and
    (B) We will no longer accept estimated acreage from you for any 
subsequent acreage report;
* * * * *
    (g) * * *
    (2) If your share is misreported and the share is:
    (i) Under-reported, any claim will be determined using the share 
you reported; or
    (ii) Over-reported, any claim will be determined using the share 
we determine to be correct.
* * * * *
    I. Amend section 7(c)(1) of Sec.  457.8 by adding the phrase ``or 
the projected price, as applicable,'' after the phrase ``price 
election,'';
    J. Amend section 7(d) of Sec.  457.8 by removing the first 
sentence;
    K. Revise section 8(b)(2) of Sec.  457.8 to read as follows:

    8. Insured Crop.
* * * * *
    (b) * * *
* * * * *
    (2) For which the information necessary for insurance (price 
election, if applicable, premium rate, etc.) is not included on the 
actuarial documents:
    (i) For crops for which revenue protection is not available, the 
necessary information may be provided by written agreement in 
accordance with section 18;
    (ii) For crops for which revenue protection is available in the 
state:
    (A) Revenue protection may be provided by written agreement if 
the Commodity Exchange Price Provisions provide for a projected 
price and harvest price for the state in which the written agreement 
will be applicable; or
    (B) Only yield protection will be provided by written agreement 
if the Commodity Exchange Price Provisions do not provide for a 
projected price and harvest price for the state in which the written 
agreement will be applicable.
* * * * *

    L. Amend section 9(a) of Sec.  457.8 as follows:
    a. Redesignate sections 9(a)(2) through (9) as sections 9(a)(3) 
through (10);
    b. Add a new section 9(a)(2);
    c. Amend redesignated section 9(a)(3) by adding the words ``or 
sorghum'' between the words ``corn'' and ``silage'; and
    d. Amend redesignated section 9(a)(10)(ii) by removing the phrase 
``section 9(a)(9)(i)(A)'' and adding ``section 9(a)(10)(i)(A)'' in its 
place.
    The added text reads as follows:

    9. Insurable Acreage.
    (a) * * *
    (2) On which the only crop that has been planted and harvested 
in one of the previous three crop years is a cover, hay, or forage 
crop, except corn or sorghum silage unless:
    (i) Allowed by the Crop Provisions or a written agreement; or
    (ii) The crop to be insured on the acreage is a hay or forage 
crop;
* * * * *
    M. Amend section 10 of Sec.  457.8 by revising paragraphs (a) 
and (b) to read as follows:

    10. Share Insured.

[[Page 40236]]

    (a) Insurance will attach only if the person completing the 
application has a share in the insured crop and will only attach to 
that person's share. Insurance will not extend to any other person 
having a share in the crop:
    (1) Unless the application clearly states the insurance is 
requested for an entity other than an individual (For example, a 
partnership or a joint venture); or
    (2) Unless the application clearly states you:
    (i) As landlord will insure your tenant's share;
    (ii) As tenant will insure your landlord's share; or
    (iii) As authorized in section 10(b):
    (A) As a spouse will insure your spouse's share;
    (B) As a parent will insure your child's share;
    (C) As a child will insure your parent's share; or
    (D) As a member of the household will insure the other household 
members' shares.
    (3) If you insure any of the shares under section 10(a)(2), you 
must provide evidence of the other party's approval (lease, power of 
attorney, etc.) and such evidence will be retained by us;
    (i) You also must clearly set forth the percentage shares of 
each person on the acreage report;
    (ii) For each landlord or tenant that is an individual, you must 
report the landlord's or tenant's social security number; and
    (iii) For each landlord or tenant that is a person other than an 
individual or for a trust administered by the Bureau of Indian 
Affairs, you must report each landlord's or tenant's social security 
number, employer identification number, or other identification 
number assigned for the purposes of this policy.
    (b) With respect to your share:
    (1) We will consider to be included in your share under your 
policy, any acreage or interest reported by or for:
    (i) Your spouse, unless such spouse can prove he/she has a 
separate farming operation, which includes, but is not limited to, 
separate land excluding transfers of acreage from one spouse to 
another, separate capital, separate equipment, separate inputs, 
separate accounting, separate maintenance of proceeds; or
    (ii) Your child or any member of your household, unless the 
child or other member of the household can demonstrate such person 
has a separate share in the crop; and
    (2) If it is determined that the spouse, child or other member 
of the household has a separate policy but does not have a separate 
farming operation or share of the crop, as applicable:
    (i) The spouse's policy will be void and will be determined in 
accordance with section 22(a); or
    (ii) The child or other member of the household's policy will be 
void; and
    (iii) No premium will be due and no indemnity will be paid for a 
policy that is voided in accordance with sections 10(b)(2)(i) and 
(ii).

* * * * *
    N. Amend section 12 of Sec.  457.8 as follows:
    a. Revise the introductory paragraph;
    b. Revise paragraph (d);
    c. Amend paragraph (e) by removing the word ``or'' after the 
semicolon;
    d. Amend paragraph (f) by removing the period at the end and 
replacing it with ``; or'; and
    e. Add a new paragraph (g).
    The revised and added text reads as follows:

    12. Causes of Loss.
    Except for protection against a change in price, the insurance 
provided is against only those unavoidable naturally occurring 
events specified in the Crop Provisions. For all policies, including 
those for which revenue protection is available, the following 
causes of loss are NOT covered:
* * * * *
    (d) Failure or breakdown of the irrigation equipment or 
facilities, or the inability to prepare the land for irrigation 
using your established irrigation method (e.g., furrow irrigation), 
unless the failure, breakdown or inability is due to a cause of loss 
specified in the Crop Provisions.
    (1) If damage is due to an insured cause, you must make all 
reasonable efforts to restore the equipment or facilities to proper 
working order within a reasonable amount of time unless we determine 
it is not practical to do so.
    (2) Cost will not be considered when determining whether it is 
practical to restore the equipment or facilities;
* * * * *
    (g) Any act by a third person that adversely affects the yield 
or price, such as terrorism, chemical drift, theft, etc.

    O. Amend section 13 of Sec.  457.8 as follows:
    a. Amend paragraph (a) of this section by adding a new sentence at 
the end; and
    b. Revise paragraph (c).
    The revised text reads as follows:

    13. Replanting Payment.
* * * * *
    (a) * * * If the crops to be replanted are in a whole-farm unit, 
the 20 acres or 20 percent requirement is to be applied separately 
to each crop to be replanted in the whole-farm unit.
* * * * *
    (c) The replanting payment per acre will be your actual cost for 
replanting, unless otherwise specified in the Crop Provisions or 
Special Provisions.
* * * * *
    P. Amend section 14 of Sec.  457.8 as follows:
    a. Revise the text under ``Your Duties''
    b. Under ``Our Duties'' redesignate paragraphs (a) through (d) as 
paragraphs (f) through (i); and
    c. Add a new paragraph (j) to the text under ``Our Duties''.
    The revised and added text reads as follows:

    14. Duties in the Event of Damage, Loss, Abandonment, 
Destruction, or Alternative Use of Crop or Acreage.
    Your Duties--
    (a) In the case of damage or a potential loss of production or 
revenue to any insured crop, you must protect the crop from further 
damage by providing sufficient care.
    (b) Notice provisions:
    (1) For a planted crop where there is damage or a potential loss 
of production or revenue, you must give us notice, by unit for each 
insured crop:
    (i) For crops for which revenue protection is not available and 
crops for which revenue protection is available but is not elected, 
the earlier of:
    (A) Within 72 hours of your initial discovery of damage or a 
potential loss of production; or
    (B) Within 72 hours after the end of the insurance period, even 
if you have not harvested the crop by the calendar date for the end 
of the insurance period;
    (ii) For crops for which revenue protection is elected:
    (A) The earlier of:
    (1) Within 72 hours of your initial discovery of damage or a 
potential loss of production; or
    (2) Within 72 hours after the end of the insurance period, even 
if you have not harvested the crop by the calendar date for the end 
of the insurance period; or
    (B) If notices are not required under section 14(b)(1)(ii)(A), 
not later than 45 days after the latest date the harvest price is 
released for any crop in the unit where there is a potential revenue 
loss;
    (2) In the event you are prevented from planting an insured crop 
which has prevented planting coverage, you must notify us within 72 
hours after:
    (i) 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
    (ii) You determine you will not be able to plant the insured 
crop within any applicable late planting period.
    (3) All notices required in this section that must be received 
by us within 72 hours may be made by telephone or in person to your 
crop insurance agent but must be confirmed in writing within 15 
days.
    (4) Failure to comply with these notice requirements will result 
in:
    (i) For failure to timely report production losses in accordance 
with sections 14(b)(1)(i) and 14(b)(1)(ii)(A) or prevented planting 
acreage in accordance with section 14(b)(2), any production loss or 
prevented planting will be considered due to an uninsured cause of 
loss for the acreage for which failure occurred, unless we determine 
that we have the ability to accurately determine the amount and 
cause of the loss; or
    (ii) For failure to timely report a revenue loss in accordance 
with section 14(b)(1)(ii)(B), denial of any indemnity due for the 
acreage for which such failure occurred (You will still be required 
to pay all premiums owed).
    (c) Representative samples:
    (1) If representative samples are required by the Crop 
Provisions, leave representative

[[Page 40237]]

samples intact of the unharvested crop if you report damage less 
than 15 days before the time you begin harvest or during harvest of 
the damaged unit.
    (2) The samples must be left intact until we inspect them or 
until 15 days after completion of harvest on the unit, whichever is 
earlier.
    (3) Unless otherwise specified in the Crop Provisions or Special 
Provisions, the samples of the crop in each field in the unit must 
be 10 feet wide and extend the entire length of the rows, if the 
crop is planted in rows, or if the crop is not planted in rows, the 
longest dimension of the field.
    (4) The period to retain representative samples may be extended 
if it is necessary to accurately determine the loss and you will be 
notified in writing of any such extension.
    (d) Consent:
    (1) You must obtain consent from us before, and notify us after 
you:
    (i) Destroy any of the insured crop that is not harvested;
    (ii) Put the insured crop to an alternative use;
    (iii) Put the acreage to another use; or
    (iv) Abandon any portion of the insured crop; and
    (2) We will not give consent for any of the actions in section 
14(d)(i) through (iv) if it is practical to replant the crop or 
until we have made an appraisal of the potential production of the 
crop.
    (3) Failure to obtain our consent will result in the assignment 
of an amount of production or value to count in accordance with the 
claims provisions of the applicable Crop Provisions.
    (e) Claims:
    (1) You must submit a claim for indemnity declaring the amount 
of your loss by the dates shown in section 14(e)(3) unless you 
request an extension in writing by the applicable date below and we 
agree to such extension. Extensions will only be granted if the 
amount of the loss cannot be determined within such time period 
because the information needed to determine the amount of the loss 
is not available.
    (2) Failure to timely submit a claim or provide the required 
information will result in no indemnity, prevented planting payment 
or replant payment (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).
    (3) Deadlines for submitting claims:
    (i) For crops covered by yield protection and for which revenue 
protection is not available, you must submit a claim for indemnity 
not later than 60 days after the end of the insurance period.
    (ii) For crops covered by revenue protection, you must submit a 
claim for indemnity by the later of 60 days after the latest date 
the harvest price is released for any crop in the unit or 60 days 
after the latest date for the end of the insurance period for the 
unit.
    (4) In order to receive an indemnity, or receive the rest of an 
indemnity in the case of acreage that is planted to a second crop, 
as applicable, the burden is on you to:
    (i) Provide:
    (A) A complete harvesting, production, and marketing record of 
each insured crop by unit including separate records showing the 
same information for production from any acreage not insured.
    (B) Records as indicated below if you insure any acreage that 
may be subject to an indemnity reduction as specified in section 
15(e)(2):
    (1) To qualify for the rest of the indemnity for the first 
insured crop, if there is a loss on the unit that includes acreage 
of the second crop, records of production for the acreage planted to 
the second crop must be kept separate from the production for the 
rest of the acreage in the unit (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);
    (2) If there is no loss on the unit that includes acreage of the 
second crop, no separate records need to be submitted for the second 
crop and you can receive the rest of the indemnity for the first 
insured crop.
    (C) Any other information we may require to settle the claim.
    (ii) Cooperate with us in the investigation or settlement of the 
claim, and, as often as we reasonably require:
    (A) Show us the damaged crop;
    (B) Allow us to remove samples of the insured crop; and
    (C) Provide us with records and documents we request and permit 
us to make copies.
    (iii) Establish:
    (A) The total production or value received for the insured crop 
on the unit;
    (B) That any loss of production or value occurred during the 
insurance period;
    (C) That the loss of production or value was directly caused by 
one or more of the insured causes specified in the Crop Provisions; 
and
    (D) That you have complied with all provisions of this policy.
    (iv) Upon our request, or that of any USDA employee authorized 
to conduct investigations of the crop insurance program, submit to 
an examination under oath.
    (5) Failure to meet any burden on you contained in section 
14(e)(4) will result in denial of the claim and any premium will 
still be owed for the crop year, unless another sanction is 
specified in this section.
    Our Duties--
* * * * *
    (j) For revenue protection, we may make preliminary indemnity 
payments for crop production losses prior to the release of the 
harvest price if you have not elected the harvest price exclusion 
option.
    (1) First, we may pay an initial indemnity based upon your 
projected price, in accordance with the applicable Crop Provisions 
provided that your production to count and share have been 
established; and
    (2) Second, after the harvest price is released, and if it is 
not equal to the projected price, we will recalculate the indemnity 
payment and pay any additional indemnity that may be due.

* * * * *
    Q. Amend section 15 of Sec.  457.8 as follows:
    a. Amend paragraph (b)(1) by adding the following phrase 
immediately before the semicolon ``(If you fail to provide such 
records, no indemnity will be paid and you will be required to return 
any previously paid indemnity for the unit that was based on an 
appraised amount of production.)''; and
    b. Revise paragraph (c) to read as follows:

    15. Production Included in Determining an Indemnity and Payment 
Reductions.
* * * * *
    (c) If you elect to exclude hail and fire as insured causes of 
loss and the insured crop is damaged by hail or fire, appraisals 
will be made as described in our form used to exclude hail and fire.

* * * * *
    R. Amend section 17 of Sec.  457.8 as follows:
    a. Revise paragraph (a)(1) introductory text;
    b. Amend paragraph (a)(2) by adding the word ``insurable'' after 
the word ``any'';
    c. Revise paragraph (a)(3);
    d. Revise paragraph (b)(4);
    e. Amend paragraph (c) by adding an ``s'' to the word ``section'' 
to make it plural and adding the phrase ``and 34(f)'' after ``15(f)'';
    f. Amend paragraph (d) by redesignating the introductory text as 
paragraph (1), redesignating paragraphs (1) and (2) as (i) and (ii) 
respectively, and adding a new introductory text;
    g. Revise redesignated paragraphs (d)(1) introductory text and 
(d)(1)(ii);
    h. Add a new paragraph (d)(2);
    i. Revise paragraph (e)(1);
    j. Amend paragraph (e)(2) by removing the words ``the table 
contained in'';
    k. Revise paragraph (f)(1) introductory text;
    l. Amend paragraph (f)(2) by removing the word ``a'' after the word 
``determine'' and adding the word ``the'' in its place;
    m. Amend paragraph (f)(3) by adding the word ``is'' after the 
phrase ``agency, or'';
    n. Revise paragraph (f)(4);
    o. Revise paragraph (f)(6);
    p. Revise paragraph (f)(9);
    q. Revise paragraph (f)(11);
    r. Revise paragraph (h); and
    s. Revise paragraph (i)(1).
    The revised and added text reads as follows:

    17. Prevented Planting
    (a) * * *
    (1) You are prevented from planting the insured crop on 
insurable acreage by an insured cause of loss that occurs:
* * * * *
    (3) You did not plant the insured crop during or after the late 
planting period.

[[Page 40238]]

Acreage planted to the insured crop during or after the late 
planting period is covered under the late planting provisions.
    (b) * * *
    (4) You may not increase your elected or assigned prevented 
planting coverage level for any crop year if a cause of loss has 
occurred during the prevented planting insurance period specified in 
section 17(a)(1)(i) or (ii) and prior to your request to change your 
prevented planting coverage level.
* * * * *
    (d) Prevented planting coverage will be provided against:
    (1) Drought, failure of the irrigation water supply, failure or 
breakdown of irrigation equipment or facilities, or the inability to 
prepare the land for irrigation using your established irrigation 
method, due to an insured cause of loss only if, on the final 
planting date (or within the late planting period if you elect to 
try to plant the crop):
* * * * *
    (ii) For irrigated acreage, due to an insured cause of loss, 
there is not a reasonable expectation of having adequate water to 
carry out an irrigated practice, irrigation equipment or facilities 
have failed or broken down, or you are unable to prepare the land 
for irrigation using your established irrigation method, as 
specified in section 12(d).
    (A) If you knew or had reason to know on the final planting date 
or during the late planting period that your water will be reduced, 
no reasonable expectation exists.
    (B) Available water resources will be verified using information 
from State Departments of Water Resources, U.S. Bureau of 
Reclamation, Natural Resources Conservation Service or other sources 
whose business includes collection of water data or regulation of 
water resources.
    (2) Causes other than drought, failure of the irrigation water 
supply, failure or breakdown of the irrigation equipment, or your 
inability to prepare the land for irrigation using your established 
irrigation method, provided the cause of loss is specified in the 
Crop Provisions. However, if it is possible for you to plant on or 
prior to the final planting date when other producers in the area 
are planting and you fail to plant, no prevented planting payment 
will be made.
    (e) * * *
    (1) The total number of acres eligible for prevented planting 
coverage for all crops cannot exceed the number of acres of cropland 
in your farming operation for the crop year, unless you are eligible 
for prevented planting coverage on double cropped acreage in 
accordance with section 17(f)(4). The eligible acres for each 
insured crop will be determined as follows:
    (i) If you have planted any crop in the county for which 
prevented planting insurance was available (you will be considered 
to have planted if your APH database contains actual planted acres) 
or have received a prevented planting insurance guarantee in any of 
the 4 most recent crop years, and the insured crop is not required 
to be contracted with a processor to be insured:
    (A) The number of eligible acres will be the maximum number of 
acres certified for APH purposes, or insured acres reported, for the 
crop in any one of the 4 most recent crop years (not including 
reported prevented planting acreage that was planted to a second 
crop unless you meet the double cropping requirements in section 
17(f)(4)) and not including prevented planting acreage for which 
payment is made based on another crop as described in section 17(h). 
For example, if payment for 100 acres of prevented planting corn is 
based on 50 acres of corn and 50 acres of soybeans, 50 acres of corn 
will be considered when determining eligible corn acres for 
subsequent years and 50 acres of soybeans will be considered when 
determining eligible soybean acres for subsequent years.
    (B) If you acquire additional land for the current crop year, 
the number of eligible acres determined in section 17(e)(1)(i) for a 
crop may be increased by multiplying it by the ratio of the total 
cropland acres that you are farming this year (if greater) to the 
total cropland acres that you farmed in the previous year, provided 
that:
    (1) You submit proof to us that you acquired additional acreage 
for the current crop year by any of the methods specified in section 
17(f)(12);
    (2) The additional acreage was acquired in time to plant it for 
the current crop year using good farming practices; and
    (3) No cause of loss has occurred at the time you acquire the 
acreage that may prevent planting (except acreage you lease the 
previous year and continue to lease in the current crop year).
    (C) If you add adequate irrigation facilities to your existing 
non-irrigated acreage or if you acquired additional land for the 
current crop year that has adequate irrigation facilities, the 
number of eligible acres determined in section 17(e)(1)(i) for 
irrigated acreage of a crop may be increased by multiplying it by 
the ratio of the total irrigated acres that you are farming this 
year (if greater) to the total irrigated acres that you farmed in 
the previous year, provided the conditions in sections 
17(e)(1)(i)(B)(1), (2) and (3) are met. If there were no irrigated 
acres in the previous year, the eligible irrigated acres for a crop 
will be limited to the lesser of the number of eligible non-
irrigated acres of the crop or the number of acres on which adequate 
irrigation facilities were added.
    (ii) If you have not planted any crop in the county for which 
prevented planting insurance was available or have not received a 
prevented planting insurance guarantee in any of the 4 most recent 
crop years, and the insured crop is not required to be contracted 
with a processor to be insured:
    (A) The number of eligible acres will be:
    (1) The number of acres specified on your intended acreage 
report, which must be submitted to us by the sales closing date for 
all crops you insure for the crop year and accepted by us; or
    (2) The number of acres specified on your intended acreage 
report, which must be submitted to us within 10 days of the time you 
obtain the acreage and that is accepted by us, if, on the sales 
closing date, you do not have any acreage in a county and you 
subsequently obtain acreage through a method described in section 
17(f)(12) in time to plant it using good farming practices.
    (B) The total number of acres listed on the intended acreage 
report may not exceed the number of acres of cropland in your 
farming operation at the time you submit the intended acreage 
report.
    (C) If you obtain additional acreage after we accept your 
intended acreage report, the number of acres determined in section 
17(e)(1)(ii)(A) may be increased in accordance with section 
17(e)(1)(i)(B) and (C).
    (D) Prevented planting coverage will not be provided for any 
acreage included on the intended acreage report or any increased 
amount of acreage determined in accordance with section 
17(e)(1)(ii)(C) if a cause of loss that may prevent planting 
occurred before the acreage was acquired, as determined by us.
    (iii) For any crop that must be contracted with a processor to 
be insured:
    (A) The number of eligible acres will be:
    (1) 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;
    (2) 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 
(for the purposes of establishing the number of prevented planting 
acres, any reductions applied to the transitional yield for failure 
to certify acreage and production for four prior years will not be 
used); or
    (3) Notwithstanding sections 17(e)(1)(iii)(A)(1) and (2), 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.
    (B) 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 will 
determine the number of eligible acres based on the number of acres 
or amount of production you had contracted in the county 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 will be based 
on the contract price in place for 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.
* * * * *
    (f) * * *
    (1) That does not constitute at least 20 acres or 20 percent of 
the insurable crop acreage in the unit, whichever is less (if the 
crop is in a whole-farm unit, the 20-acre or 20 percent requirement 
will be applied separately to each crop in the whole-farm unit). Any 
prevented planting acreage within

[[Page 40239]]

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 unless:
* * * * *
    (4) On which the insured crop is prevented from being planted, 
if you or any other person receives a prevented planting payment for 
any crop for the same acreage in the same crop year, excluding share 
arrangements, unless:
    (i) It is a practice that is generally recognized by 
agricultural experts or the organic agricultural industry in the 
area to plant the second crop for harvest following harvest of the 
first insured 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 second crop that was 
prevented from being planted (the crop that was prevented from being 
planted following another crop that was planted if qualifying under 
section 17(f)(5)(i)(A)) was planted, or show the applicable acreage 
was double cropped in at least two of the last four crop years in 
which the second crop that was prevented from being planted (the 
crop that was prevented from being planted following another crop 
that was planted if qualifying under section 17(f)(5)(i)(A)) 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);
* * * * *
    (6) For which planting history or conservation plans indicate 
that the acreage would have remained 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.
    (i) Cover or volunteer plants that are seeded, transplanted, or 
that volunteer more than 12 months prior to the final planting date 
for the insured crop that was prevented from being planted will be 
considered pasture or other forage crop that is in place (For 
example, the cover crop is planted 15 months prior to the final 
planting date and remains in place during the time the insured crop 
would normally be planted); and
    (ii) Cover or volunteer plants that are seeded, transplanted, or 
that volunteer less than 12 months prior to the final planting date 
for the insured crop that was prevented from being planted will not 
be considered pasture or other forage crop that is in place;
* * * * *
    (9) For which you cannot provide proof that you had the inputs 
available to plant and produce a crop with the expectation of at 
least producing the yield used to determine your production 
guarantee or amount of insurance.
    (i) Inputs include, but are not limited to, sufficient equipment 
and manpower necessary to plant and produce a crop with the 
expectation of at least producing the yield used to determine your 
production guarantee or amount of insurance.
    (ii) Evidence that you previously had planted the crop on the 
unit will be considered adequate proof unless:
    (A) There has been a substantial change in the availability of 
inputs since the crop was last planted;
    (B) You have insufficient inputs to plant the number of acres 
for which you are claiming prevented planting; or
    (C) Your planting practices or rotational requirements show that 
the acreage would have remained fallow or been planted to another 
crop;
* * * * *
    (11) Based on a crop type that you did not plant, or did not 
receive a prevented planting insurance guarantee for, in at least 
one of the four most recent crop years:
    (i) Types for which separate projected prices or price 
elections, as applicable, amounts of insurance, or production 
guarantees are available must be included in your APH database in at 
least one of the four most recent crop years (Crops for which the 
insurance guarantee is not based on APH must be reported on your 
acreage report in at least one of the four most recent crop years) 
except as allowed in section 17(e)(1)(ii) or (iii); and
    (ii) We will limit prevented planting payments based on a 
specific crop type to the number of acres allowed for that crop type 
as specified in sections 17(e) and (f); or
* * * * *
    (h) If you are prevented from planting a crop for which you do 
not have an adequate base of eligible prevented planting acreage, as 
determined in accordance with section 17(e)(1), your eligible 
prevented planting acreage will be based on the crops insured for 
the current crop year for which you have remaining eligible 
prevented planting acreage:
    (1) Your prevented planting payment will be based on the crop 
with the prevented planting payment most similar to the prevented 
planting payment that would have been made for the crop that was 
prevented from being planted:
    (i) For crops whose remaining eligible prevented planting 
acreage will result in a higher prevented planting payment than 
would be paid for the crop that was prevented from being planted:
    (A) The prevented planting payment will be determined by:
    (1) Dividing the prevented planting payment for the crop that 
was prevented from being planted by the prevented planting payment 
for the crop whose eligible acres are being used; and
    (2) Multiplying the result of section 17(h)(1)(i)(A)(1) by the 
prevented planting payment for the crop whose eligible acres are 
being used.
    (B) The premium amount will be determined by multiplying the 
premium for the crop whose eligible acres are being used by the 
result of section 17(h)(1)(i)(A)(1).
    (ii) For crops whose remaining eligible prevented planting 
acreage will result in a lower prevented planting payment than would 
be paid for the crop that was prevented from being planted, the 
prevented planting payment and the premium will be based on the crop 
whose eligible acres are being used.
    (2) For example, assume you were prevented from planting 200 
acres of corn and have 100 acres eligible for a corn prevented 
planting guarantee that would result in a payment of $40 per acre. 
You also had 50 acres of potato eligibility that would result in a 
$100 per acre payment and 90 acres of grain sorghum eligibility that 
would result in a $30 per acre payment. Your prevented planting 
coverage for the 200 acres would be based on 100 acres of corn ($40 
per acre), 90 acres of grain sorghum ($30 per acre), and 10 acres of 
potatoes ($40 per acre).
    (3) Prevented planting coverage will be allowed as specified in 
section 17(h) only if the crop that was prevented from being planted 
meets all the policy provisions, except for having an adequate base 
of eligible prevented planting acreage. Payment may be made based on 
crops other than those that were prevented from being planted even 
though other policy provisions, including but not limited to, 
processor contract and rotation requirements, have not been met for 
the crop whose eligible acres are being used.
    (4) An additional administrative fee will not be due as a result 
of using eligible prevented planting acreage as specified in section 
17(h).
* * * * *
    (i) * * *
    (1) Multiplying the prevented planting coverage level percentage 
you elected, or that is contained in the Crop Provisions if you did 
not elect a prevented planting coverage level percentage, by:
    (i) Your amount of insurance per acre; or
    (ii) The amount determined by:
    (A) For crops for which revenue protection is not available or 
an amount of insurance is not applicable, multiplying the production 
guarantee (per acre) for timely planted acreage of the insured crop 
(or type, if applicable) by your price election; or
    (B) For crops for which revenue protection is available, 
multiplying the production guarantee (per acre) for timely planted 
acreage of the insured crop (or type, if applicable) by your 
projected price;
* * * * *
    S. Amend section 18 of Sec.  457.8 as follows:
    a. Revise paragraph (c);
    b. Revise paragraph (e)(2)(i)(A);
    c. Amend paragraph (e)(2)(i)(B) by removing the phrase ``change a 
tobacco classification,'';
    d. Amend paragraph (e)(2)(ii) by adding the phrase ``or to insure a 
practice, type or variety where the actuarial documents in another 
county do not permit coverage'' before the semicolon at the end of the 
paragraph;
    e. Amend paragraph (f)(1)(ii) by adding the phrase ``in which the 
crop was planted'' between the phrases ``crop year'' and ``during the 
base period'';
    f. Revise paragraph (f)(1)(iv);
    g. Amend paragraph (f)(2)(i) by adding the phrase ``signed by you'' 
after the phrase ``A completed APH form'';

[[Page 40240]]

    h. Amend paragraph (g)(2) by removing the word ``or'' after the 
semicolon;
    i. Amend paragraph (g)(3) by adding the word ``or'' after the 
semicolon;
    j. Add a new paragraph (g)(4);
    k. Amend paragraph (i)(2) by removing the phrase ``sent to us'' and 
adding the word ``postmarked'' in its place;
    l. Amend paragraph (j) by removing the word ``Multiyear'' and 
adding the word ``Multi-year'' in its place;
    m. Amend paragraph (m) by removing the word ``and'' after the 
semicolon;
    n. Amend paragraph (n) by removing the period at the end of the 
current text, and adding the term ``; and'' in its place; and
    o. Add a new paragraph (o).
    The revised and added text reads as follows:

    18. Written Agreements
* * * * *
    (c) If approved by FCIC, the written agreement will include all 
variable terms of the contract, including, but not limited to, crop 
practice, type or variety, the guarantee (except for a written 
agreement in effect for more than one year) and premium rate or 
information needed to determine the guarantee and premium rate, and 
projected and harvest prices in accordance with the Commodity 
Exchange Price Provisions, price election or amount of insurance, as 
applicable. If the written agreement is for a:
    (1) County that has a price election stated in the actuarial 
documents, or an addendum thereto, for the crop, type, practice or 
variety, the written agreement will contain the price election 
stated in such actuarial documents for the crop, type or variety;
    (2) County that does not have price elections stated on the 
actuarial documents, or an addendum thereto, for the crop, type, 
practice or variety, the written agreement will contain a price 
election that does not exceed the price election contained in the 
actuarial documents for the county that is used to establish the 
other terms of the written agreement;
    (3) County for which revenue protection is not available for the 
crop but revenue protection is available in the state for the crop:
    (i) If yield protection is selected, the written agreement will 
contain the projected price, in accordance with the Commodity 
Exchange Price Provisions, for the state for the crop and no harvest 
price will be applicable; and
    (ii) If revenue protection is selected, the written agreement 
will contain the projected price, in accordance with the Commodity 
Exchange Price Provisions, for the state for the crop and the 
harvest price will be applicable;
    (4) County for which revenue protection is not available, and 
revenue protection is not available in the state for the crop, the 
written agreement is available for yield protection only and will 
contain the projected price from the nearest state for the crop; and
    (5) Crop and the projected price, in accordance with the 
Commodity Exchange Price Provisions, or price election, as 
applicable, determined in accordance with sections 18(c)(1) through 
(4) is not appropriate for the crop, the written agreement will not 
be approved;
* * * * *
    (e) * * *
    (2) * * *
    (i) * * *
    (A) Insure unrated land, except acreage that qualifies under 
section 9(a)(1), or an unrated practice, type or variety of a crop 
(Such written agreements may be approved only after inspection of 
the acreage by us, if required by FCIC, and the written agreement 
may only be approved by FCIC if the crop's potential is equal to or 
exceeds 90 percent of the yield used to determine your production 
guarantee or amount of insurance and you sign the agreement on the 
day the first field is appraised or by the expiration date, 
whichever comes first; or
* * * * *
    (f) * * *
    (1) * * *
    (iv) The legal description of the land (in areas where legal 
descriptions are available) and the FSA Farm Serial Number including 
tract and field or common land unit number, if available. The 
submission must also include an FSA aerial photograph, or field 
boundaries derived by a Geographic Information System or Global 
Positioning System, or other legible maps delineating field 
boundaries where you intend to plant the crop for which insurance is 
requested;
* * * * *
    (g) * * *
    (4) The request is not authorized by the policy;
* * * * *
    (o) If you disagree with any determination made by FCIC under 
section 18, you may obtain administrative review in accordance with 
7 CFR part 400, subpart J or appeal in accordance with 7 CFR part 
11, unless you have failed to comply with the provisions contained 
in section 18(g) or section 18(i)(2) or (3).
* * * * *
    T. Amend section 20 (For FCIC policies) of Sec.  457.8 as follows:
    a. Revise paragraph (b)(1);
    b. Revise paragraph (c); and
    c. Redesignate paragraphs (d) and (e) as paragraphs (e) and (f), 
respectively, and add a new paragraph (d).
    The revised and added text reads as follows:

    [For FCIC Policies]
    20. Appeal, Reconsideration, Administrative and Judicial Review.
* * * * *
    (b) * * *
    (1) Except for determinations specified in section 18(g), 
section 18(i)(2) or (3) or section 20(b)(2), obtain an 
administrative review in accordance with 7 CFR part 400, subpart J 
(administrative review) or appeal in accordance with 7 CFR part 11 
(appeal); or
* * * * *
    (c) If you fail to exhaust your right to appeal, you will not be 
able to resolve the dispute through judicial review.
    (d) You are not required to exhaust your right to 
reconsideration prior to seeking judicial review. If you do not 
request reconsideration and you elect to file suit, such suit must 
be brought in accordance with section 20(e)(2) and must be filed not 
later than one year after the date the determination regarding 
whether you used good farming practices was made.
* * * * *
    U. Amend section 20 (For reinsured policies) of Sec.  457.8 as 
follows:
    a. Revise paragraphs (d) and (e); and
    b. Amend paragraph (j) by removing the phrase ``elects to 
participate in the adjustment of your claim, or'' and by removing the 
comma after the phrase ``corrects your claim''.
    The revised text reads as follows:

    [For Reinsured Policies]
    20. Mediation, Arbitration, Appeal, Reconsideration, and 
Administrative and Judicial Review.
* * * * *
    (d) With respect to good farming practices:
    (1) We will make decisions regarding what constitutes a good 
farming practice and determinations of assigned production for 
uninsured causes for your failure to use good farming practices.
    (i) If you disagree with our decision of what constitutes a good 
farming practice, you must request a determination from FCIC of what 
constitutes a good farming practice before filing any suit against 
FCIC.
    (ii) If you disagree with our determination of the amount of 
assigned production, you must use the arbitration or mediation 
process contained in this section.
    (iii) You may not sue us for our decisions regarding whether 
good farming practices were used by you.
    (2) FCIC will make determinations regarding what constitutes a 
good farming practice. If you do not agree with any determination 
made by FCIC:
    (i) You may request reconsideration by FCIC of this 
determination in accordance with the reconsideration process 
established for this purpose and published at 7 CFR part 400, 
subpart J; or
    (ii) You may file suit against FCIC.
    (A) You are not required to request reconsideration from FCIC 
before filing suit.
    (B) Any suit must be brought against FCIC in the United States 
district court for the district in which the insured acreage is 
located.
    (C) Suit must be filed against FCIC not later than one year 
after the date:
    (1) Of the determination; or
    (2) Reconsideration is completed, if reconsideration was 
requested under section 20(d)(2)(i).
    (e) Except as provided in sections 18(n), 18(o), or 20(d), if 
you disagree with any other determination made by FCIC, you may 
obtain an administrative review in accordance with 7 CFR part 400, 
subpart J (administrative review) or appeal in accordance with 7 CFR 
part 11 (appeal). If you elect to bring suit

[[Page 40241]]

after completion of any appeal, such suit must be filed against FCIC 
not later than one year after the date of the decision rendered in 
such appeal. Under no circumstances can you recover any attorney 
fees or other expenses, or any punitive, compensatory or any other 
damages from FCIC.
* * * * *
    V. Amend section 21 of Sec.  457.8 as follows:
    a. Revise paragraph (b)(2); and
    b. Add a new paragraph (b)(3).
    The revised and added text reads as follows:

    21. Access to Insured Crop and Records, and Record Retention.
* * * * *
    (b) * * *
    (2) All records used to establish the amount of production you 
certified on your production reports used to compute your approved 
yield for three years after the calendar date for the end of the 
insurance period for the crop year for which you initially certified 
such records, unless such records have already been provided to us 
(For example, if you are a new insured and you certify 2005 through 
2008 crop year production records in 2009 to determine your approved 
yield for the 2009 crop year, you must retain all records from the 
2005 through 2008 crop years through the 2012 crop year. If you 
subsequently certify records of the 2009 crop year in 2010 to 
determine your approved yield for the 2010 crop year, you must 
retain the 2009 crop year records through the 2013 crop year and so 
forth for each subsequent year of production records certified.); 
and
    (3) If FCIC determines you or anyone assisting you knowingly 
misreported any information related to any yield you have certified, 
we may replace all yields in your APH we determine to be incorrect 
with the lesser of an assigned yield or the yield we determine is 
correct.
* * * * *
    W. Revise section 28 of Sec.  457.8 to read as follows:

    28. Transfer of Coverage and Right to Indemnity.
    If you sell or lease all or a part of your farming operation to 
a third party or enter into a relationship with another person to 
provide them a share of the insured crop after the sales closing 
date, you may transfer your coverage, or your right to coverage if 
coverage has not attached at the time of transfer, for your share in 
the insured crop if the transferee is eligible for crop insurance.
    (a) Your selection of revenue protection or yield protection, if 
revenue protection is available for the crop, approved yield, 
coverage level, and percentage of price or amount of insurance will 
apply to the insured crop for which coverage or the right to 
coverage is transferred.
    (b) No indemnity paid for any transferred coverage or right to 
coverage, will exceed the liability under your policy.
    (c) The transfer of coverage or the right to coverage must be on 
our form and will not be effective until approved by us in writing.
    (d) Both you and the transferee are jointly and severally liable 
for the payment of the premium and administrative fees owed for the 
coverage or right to coverage that has been transferred. For 
example, you transfer coverage on 20 acres in a 100 acre unit. The 
transferee would only be jointly and severally liable for the 
premium on the 20 acres, not the whole unit.
    (e) The transferee has all rights and responsibilities under 
this policy consistent with the transferee's interest.

    X. Revise section 29 of Sec.  457.8 to read as follows:

    29. Assignment of Indemnity.
    (a) You may assign your right to an indemnity for the crop year 
only to one or more of your creditors.
    (b) All assignments must be on our form and must be provided to 
us. We will only accept one assignment form for each crop.
    (c) We will not make any payment to a lienholder with a lien on 
an insured crop unless you have executed an assignment of indemnity 
to that lienholder.
    (d) Under no circumstances will we be liable for any amount 
greater than the amount of indemnity owed under the policy for any 
assignment of indemnity.
    (e) The assignee will have the right to submit all loss notices 
and forms as required by the policy.
    (f) If you have suffered a loss from an insurable cause and fail 
to file a claim for indemnity within the period specified in section 
14(e), the assignee may submit the claim for indemnity not later 
than 45 days after the period for filing a claim has expired. We 
will honor the terms of the assignment only if we can accurately 
determine the amount of the claim. However, no action will lie 
against us for failure to do so.
* * * * *
    Y. Remove and reserve section 30 of Sec.  457.8.
    Z. Amend section 34 of Sec.  457.8 as follows:
    a. Revise the heading;
    b. Amend paragraph (a)(1) by revising the first sentence;
    c. Revise paragraphs (a)(2) and (3);
    d. Revise paragraph (c)(1); and
    e. Add a new paragraph (f).
    The revised and added text reads as follows:

    34. Units.
    (a) * * *
    (1) You must make such election on or before the earliest sales 
closing date for the insured crops in the unit and report such unit 
structure to us in writing. * * *
* * * * *
    (2) For an enterprise unit:
    (i) To qualify, an enterprise unit must contain all of the 
insurable acreage of the same insured crop in:
    (A) One or more basic units that are located in two or more 
separate sections, section equivalents, FSA farm serial numbers, or 
units established by a written unit agreement, with at least some 
planted acreage of the insured crop in two or more separate 
sections, section equivalents, FSA farm serial numbers, or two or 
more separate units as established by a written unit agreement; or
    (B) Two or more optional units established by separate sections, 
section equivalents, or FSA farm serial numbers, or as established 
by a written unit agreement, with at least two optional units 
containing some planted acreage of the insured crop;
    (ii) Both a spring type and a winter or fall type of the same 
insured crop cannot be part of the same enterprise unit (e.g., you 
may have an enterprise unit for spring wheat and a separate 
enterprise unit for winter wheat);
    (iii) If you want to change your unit structure from enterprise 
units to basic or optional units in subsequent crop years, you must 
maintain separate records of acreage and production for such basic 
or optional units;
    (iv) If you do not comply with the production reporting 
provisions in section 3(e) for the enterprise unit, your yield for 
the enterprise unit will be determined in accordance with section 
3(e)(1);
    (v) You must separately designate on the acreage report each 
basic unit and each section or other basis in section 34(a)(2)(i) 
you used to qualify for an enterprise unit; and
    (vi) At any time we discover you do not qualify for an 
enterprise unit, we will assign the basic unit structure;
    (3) For a whole-farm unit:
    (i) To qualify:
    (A) All crops in the whole-farm unit eligible for revenue 
protection must be insured under revenue protection and with us;
    (B) A whole-farm unit must contain all of the insurable acreage 
planted to at least two crops eligible for revenue protection;
    (C) You will be required to pay separate administrative fees for 
each crop included in the whole-farm unit;
    (ii) At least two of the insured crops must each have planted 
acreage liability that constitutes 10 percent or more of the total 
planted acreage liability of all insured crops in the whole-farm 
unit;
    (iii) Winter or fall types of an insured crop, including, but 
not limited to, winter wheat, winter barley, and fall canola, cannot 
be included in a whole-farm unit;
    (iv) You must separately designate on the acreage report each 
basic unit for each crop in the whole-farm unit; and
    (v) At any time we discover you do not qualify for a whole-farm 
unit, we will assign the basic unit structure (e.g., if you elect a 
whole-farm unit, you plant corn and soybeans for which you have 
elected revenue protection and both crops planted acreage liability 
constitutes 10 percent or more of the total planted acreage 
liability and you plant canola for which you have elected yield 
protection even though revenue protection is available, you would 
not qualify for a whole-farm unit and the corn, soybeans and canola 
would be assigned basic units);
* * * * *
    (c) * * *
    (1) Optional units may be established if each optional unit is 
located in a separate section.
    (i) In the absence of sections, we may consider as the 
equivalent of sections for unit purposes:

[[Page 40242]]

    (A) Except as provided in section 34(c)(1)(i)(B), parcels of 
land legally identified by other methods of measure (For example, 
Spanish grants); or
    (B) Parcels of land that are grouped together that only have 
metes and bounds identifiers, in accordance with FCIC approved 
procedures.
    (ii) Each optional unit may be located in a separate Farm Serial 
Number if:
    (A) The area has not been surveyed using sections;
    (B) Section equivalents under section 34(c)(1)(i) are not 
available; or
    (C) In areas where boundaries are not readily discernible.
* * * * *
    (f) Any unit discounts contained in the actuarial documents will 
only apply to planted acreage in the applicable unit. A unit 
discount will not apply to any prevented planting acreage.

    AA. Amend section 35 of Sec.  457.8 as follows:
    a. Amend paragraph (a) by removing the misspelled word 
``anadditional'' and adding the phrase ``an additional'' in its place;
    b. Revise paragraph (b); and
    c. Add a new paragraph (d).
    The revised and added text reads as follows:

    35. Multiple Benefits.
* * * * *
    (b) The total amount received from all such sources may not 
exceed the amount of your actual loss. The amount of the actual loss 
is the difference between the total value of the insured crop before 
the loss and the total value of the insured crop after the loss.
    (1) For crops for which revenue protection is not available:
    (i) The total value of crops for which you have an approved 
yield before the loss is your approved yield times the highest price 
election for the crop;
    (ii) The total value of crops for which you have an approved 
yield after the loss is your production to count times the highest 
price election for the crop;
    (iii) If you have an amount of insurance, the total value before 
the loss is the highest amount of insurance available for the crop; 
and
    (iv) If you have an amount of insurance, the total value after 
the loss is the production to count times the price contained in the 
Crop Provisions for valuing production to count.
    (2) For crops for which revenue protection is available and:
    (i) You elect yield protection:
    (A) The total value of the crop before the loss is your approved 
yield times the highest projected price for the crop; and
    (B) The total value of the crop after the loss is your 
production to count times the highest projected price for the crop; 
or
    (ii) You elect revenue protection:
    (A) The total value of the crop before the loss is your approved 
yield times the higher of the highest projected or harvest price for 
the crop (If you have elected the harvest price exclusion option, 
the highest projected price for the crop will be used); and
    (B) The total value of the crop after the loss is your 
production to count times the highest harvest price for the crop.
* * * * *
    (d) Failure to obtain crop insurance may impact your ability to 
obtain benefits under other USDA programs. You should contact any 
USDA agency from which you wish to obtain benefits to determine 
eligibility requirements.
* * * * *
    3. Amend Sec.  457.101 as follows:
    A. Revise the introductory text of Sec.  457.101 to read as 
follows:


Sec.  457.101  Small grains crop insurance.

    The small grains crop insurance provisions for the 2009 and 
succeeding crop years are as follows:
* * * * *
    B. Revise section 3 of Sec.  457.101 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) Revenue protection is not available for your oats, rye, 
flax, or buckwheat. Therefore, if you elect to insure such crops by 
the sales closing date, they will only be protected against a loss 
in yield;
    (1) You may select only one price election for each crop of 
oats, rye, flax, or buckwheat in the county insured under this 
policy unless the Special Provisions provide different price 
elections by type, in which case each type must be insured using the 
price election for the respective type; and
    (2) The price election 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) Revenue protection is available for wheat and barley. 
Therefore, if you elect to insure your wheat or barley, you must 
elect to insure your wheat or barley with either revenue protection 
or yield protection by the sales closing date:
    (1) You must select the same percentage for both the projected 
price and the harvest price;
    (2) The projected price and harvest price for each type must 
have the same percentage relationship to the maximum projected price 
and harvest price. For example, if you choose 100 percent of the 
maximum projected price and harvest price for one type, you must 
also choose 100 percent of the maximum projected price and harvest 
price for all other types;
    (3) In counties with both fall and spring sales closing dates 
for the insured crop:
    (i) If you do not have any insured fall planted acreage of the 
insured crop, you may change your coverage level, percentage of 
projected price and harvest price, or elect revenue protection or 
yield protection until the spring sales closing date; or
    (ii) If you have any insured fall planted acreage of the insured 
crop, you may not change your coverage level, percentage of 
projected price and harvest price or elect revenue protection or 
yield protection after the fall sales closing date.
* * * * *
    C. Amend ``wheat'' under section 5 of Sec.  457.101 as follows:

    5. Cancellation and Termination Dates.
    The cancellation and termination dates are:

------------------------------------------------------------------------
     Crop, State and County        Cancellation date   Termination date
------------------------------------------------------------------------
WHEAT:
    All Colorado counties except  September 30......  September 30.
     Alamosa, Archuleta,
     Conejos, Costilla, Custer,
     Delta, Dolores, Eagle,
     Garfield, Grand, La Plata,
     Mesa, Moffat, Montezuma,
     Montrose, Ouray, Pitkin,
     Rio Blanco, Rio Grande,
     Routt, Saguache, and San
     Miguel; all Iowa counties
     except Plymouth, Cherokee,
     Buena Vista, Pocahontas,
     Humbolt, Wright, Franklin,
     Butler, Black Hawk,
     Buchanan, Delaware, Dubuque
     and all Iowa counties north
     thereof; all Nebraska
     counties except Box Butte,
     Dawes, and Sheridan; all
     Wisconsin counties except
     Buffalo, Trempealeau,
     Jackson, Wood, Portage,
     Waupaca, Outagamie, Brown,
     Kewaunee and all Wisconsin
     counties north thereof; all
     other states except Alaska,
     Arizona, California,
     Connecticut, Idaho, Maine,
     Massachusetts, Minnesota,
     Montana, Nevada, New
     Hampshire, New York, North
     Dakota, Oregon, Rhode
     Island, South Dakota, Utah,
     Vermont, Washington, and
     Wyoming.

[[Page 40243]]

 
    Del Norte, Humboldt, Lassen,  September 30......  November 30.
     Modoc, Plumas, Shasta,
     Siskiyou and Trinity
     Counties, California;
     Archuleta, Custer, Delta,
     Dolores, Eagle, Garfield,
     Grand, La Plata, Mesa,
     Moffat, Montezuma,
     Montrose, Ouray, Pitkin,
     Rio Blanco, Routt, and San
     Miguel Counties, Colorado;
     Connecticut; Idaho;
     Plymouth, Cherokee, Buena
     Vista, Pocahontas, Humbolt,
     Wright, Franklin, Butler,
     Black Hawk, Buchanan,
     Delaware, and Dubuque
     Counties, Iowa, and all
     Iowa counties north
     thereof; Massachusetts; all
     Montana counties except
     Daniels, Roosevelt,
     Sheridan, and Valley; Box
     Butte, Dawes, and Sheridan
     Counties, Nebraska; New
     York; Oregon; Rhode Island;
     all South Dakota counties
     except Corson, Walworth,
     Edmunds, Faulk, Spink,
     Beadle, Kingsbury, Miner,
     McCook, Turner, Yankton and
     all South Dakota counties
     north and east thereof;
     Washington; Buffalo,
     Trempealeau, Jackson, Wood,
     Portage, Waupaca,
     Outagamie, Brown and
     Kewaunee Counties,
     Wisconsin, and all
     Wisconsin counties north
     thereof; and all Wyoming
     counties except Big Horn,
     Fremont, Hot Springs, Park,
     and Washakie.
    Arizona; all California       October 31........  November 30.
     counties except Del Norte,
     Humboldt, Lassen, Modoc,
     Plumas, Shasta, Siskiyou
     and Trinity; Nevada; and
     Utah.
    Alaska; Alamosa, Conejos,     March 15..........  March 15.
     Costilla, Rio Grande and
     Saguache Counties,
     Colorado; Maine; Minnesota;
     Daniels, Roosevelt,
     Sheridan, and Valley
     Counties, Montana; New
     Hampshire; North Dakota;
     Corson, Walworth, Edmunds,
     Faulk, Spink, Beadle,
     Kingsbury, Miner, McCook,
     Turner, and Yankton
     Counties, South Dakota, and
     all South Dakota counties
     north and east thereof;
     Vermont; and Big Horn,
     Fremont, Hot Springs, Park,
     and Washakie Counties,
     Wyoming.
------------------------------------------------------------------------

* * * * *
    D. Amend section 6 of Sec.  457.101 by adding a new paragraph 
(a)(5) to read as follows:

    6. Insured Crop.
    (a) * * *
    (5) Buckwheat will be insured only if it is produced under a 
contract with a business enterprise equipped with facilities 
appropriate to handle and store buckwheat production. The contract 
must be executed by you and the business enterprise, in effect for 
the crop year, and a copy provided to us no later than the acreage 
reporting date. To be considered a contract, the executed document 
must contain:
    (i) A requirement that you plant, grow and deliver buckwheat to 
the business enterprise;
    (ii) The amount of production that will be accepted or a 
statement that all production from a specified number of acres will 
be accepted;
    (iii) The purchase price or a method to determine such price; 
and
    (iv) Other such terms that establish the obligations of each 
party to the contract.
* * * * *

    E. Amend section 7 of Sec.  457.101 as follows:
    a. Amend the introductory text by removing the phrases ``(Insurance 
Period)'', ``(Sec.  457.8)'', and ``(Sec.  457.102)''; and
    b. Revise paragraphs (a)(2)(iii) and (v) to read as follows:

    7. Insurance Period.
* * * * *
    (a) * * *
    (2) * * *
    (iii) Whenever the Special Provisions designate both fall and 
spring final planting dates:
    (A) Any winter barley or winter wheat that is damaged before the 
spring final planting date, to the extent that growers in the area 
would normally not further care for the crop, must be replanted to a 
winter type of the insured crop to maintain insurance based on the 
winter type unless we agree that replanting is not practical. If it 
is not practical to replant to the winter type of wheat or barley 
but is practical to replant to a spring type, you must replant to a 
spring type to keep your insurance based on the winter type in 
force.
    (B) Any winter barley or winter wheat acreage that is replanted 
to a spring type of the same crop when it was practical to replant 
the winter type will be insured as the spring type and the 
production guarantee, premium, projected price, and harvest price 
applicable to the spring type will be used. In this case, the 
acreage will be considered to be initially planted to the spring 
type.
    (C) Notwithstanding sections 7(a)(2)(iii)(A) and (B), if you 
have elected coverage under a barley or wheat winter coverage 
endorsement (if available in the county), insurance will be in 
accordance with the endorsement.
* * * * *
    (v) Whenever the Special Provisions designate only a spring 
final planting date, any acreage of fall planted barley or fall 
planted wheat is not insured unless you request such coverage on or 
before the spring sales closing date, and we agree in writing that 
the acreage has an adequate stand in the spring to produce the yield 
used to determine your production guarantee.

    (A) The fall planted barley or fall planted wheat will be 
insured as a spring type for the purpose of the production 
guarantee, premium, projected price, and harvest price.
    (B) Insurance will attach to such acreage on the date we 
determine an adequate stand exists or on the spring final planting 
date if we do not determine adequacy of the stand by the spring 
final planting date.
    (C) Any acreage of such fall planted barley or fall planted 
wheat that is damaged after it is accepted for insurance but before 
the spring final planting date, to the extent that growers in the 
area would normally not further care for the crop, must be replanted 
to a spring type of the insured crop unless we agree it is not 
practical to replant.
    (D) If fall planted acreage is not to be insured it must be 
recorded on the acreage report as uninsured fall planted acreage.
* * * * *
    F. Amend section 8 of Sec.  457.101 as follows:
    a. Remove the phrase ``(Causes of Loss)'' in the introductory text;
    b. Remove the word ``or'' at the end of paragraph (g);
    c. Revise paragraph (h); and
    d. Add a new paragraph (i).
    The revised and added text reads as follows:

    8. Causes of Loss.
* * * * *
    (h) Failure of the irrigation water supply due to a cause of 
loss specified in sections 8(a) through (g) that also occurs during 
the insurance period; or
    (i) For revenue protection, a decline in the harvest price below 
the projected price.
* * * * *
    G. Amend section 9 of Sec.  457.101 as follows:
    a. Revise paragraph (c);
    b. Amend the introductory text of paragraph (e) by adding the 
phrase ``or the projected price, as applicable,'' after the phrase 
``price election'' in the first sentence, removing the phrase ``price 
election'' and adding the phrase ``projected price'' in its place in 
the second sentence, and adding the phrase ``or projected price, as 
applicable,'' after the phrase ``price election'' in the fourth 
sentence; and
    c. Amend paragraph (e)(1) by adding the phrase ``or projected 
price, as applicable'' after the phrase ``price election''.
    The revised text reads as follows:

    9. Replanting Payments.
* * * * *
    (c) The maximum amount of the replanting payment per acre will 
be:

[[Page 40244]]

    (1) The lesser of 20 percent of the production guarantee or the 
number of bushels for the applicable crop specified below:
    (i) 2 bushels for flax or buckwheat;
    (ii) 4 bushels for wheat; or
    (iii) 5 bushels for barley or oats;
    (2) Multiplied by:
    (i) Your price election for: oats, flax or buckwheat; or
    (ii) Your projected price for wheat or barley; and
    (3) Multiplied by your share.
* * * * *
    H. Revise section 10 of Sec.  457.101 to read as follows:

    10. Duties in the Event of Damage or Loss.
    Representative samples are required in accordance with section 
14 of the Basic Provisions.
* * * * *
    I. Revise section 11(b) of Sec.  457.101 to read as follows:

    11. Settlement of Claim.
* * * * *
    (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 of each insured crop 
or type, as applicable by your respective:
    (i) Production guarantee (per acre) and your applicable:
    (A) Projected price for wheat or barley if you elected yield 
protection; or
    (B) Price election for oats, rye, flax, or buckwheat; or
    (ii) Revenue protection guarantee (per acre) if you elected 
revenue protection;
    (2) Totaling the results of section 11(b)(1)(i)(A) or (B), or 
section 11(b)(1)(ii), whichever is applicable;
    (3) Multiplying the production to count of each insured crop or 
type, as applicable, by your respective:
    (i) Projected price for wheat or barley if you elected yield 
protection;
    (ii) Price election for oats, rye, flax, or buckwheat; or
    (iii) Harvest price if you elected revenue protection;
    (4) Totaling the results of section 11(b)(3)(i), (ii), or (iii), 
whichever is applicable;
    (5) Subtracting the result of section 11(b)(4) from the result 
of section 11(b)(2); and
    (6) Multiplying the result of section 11(b)(5) by your share.
    For example:
    You have 100 percent share in 50 acres of wheat in the unit with 
a production guarantee (per acre) of 45 bushels, the projected price 
is $3.40, the harvest price is $3.45, and your production to count 
is 2,000 bushels.
    If you elected yield protection:
    (1) 50 acres x 45 bushel production guarantee x $3.40 projected 
price = $7,650.00 value of the production guarantee.
    (3) 2,000 bushel production to count x $3.40 projected price = 
$6,800.00 value of the production to count.
    (5) $7,650.00 - $6,800.00 = $850.00.
    (6) $850.00 x 1.000 share = $850.00 indemnity; or
    If you elected revenue protection:
    (1) 50 acres x (45 bushel production guarantee x $3.45 harvest 
price) = $7,762.50 revenue protection guarantee.
    (3) 2,000 bushel production to count x $3.45 harvest price = 
$6,900.00 value of the production to count.
    (5) $7,762.50 - $6,900.00 = $862.50.
    (6) $862.50 x 1.000 share = $863.00 indemnity.
* * * * *
    J. Amend section 13(b) of Sec.  457.101 by removing the phrase 
``limited or''.
    4. Amend Sec.  457.104 as follows:
    A. Revise the introductory text of Sec.  457.104 to read as 
follows:


Sec.  457.104  Cotton crop insurance provisions.

    The cotton crop insurance provisions for the 2009 and succeeding 
crop years are as follows:
* * * * *
    B. Revise section 2 of Sec.  457.104 to read as follows:

    2. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    (a) You must elect to insure your cotton with either revenue 
protection or yield protection by the sales closing date; and
    (b) In addition to the requirements of section 3 of the Basic 
Provisions, you must select the same percentage for both the 
projected price and the harvest price.
* * * * *
    C. Revise section 3 of Sec.  457.104 to read as follows:

    3. Contract Changes.
    In accordance with section 4 of the Basic Provisions, the 
contract change date is November 30 preceding the cancellation date.
* * * * *
    D. Amend section 4 of Sec.  457.104 by removing the phrases ``(Life 
of Policy, Cancellation and Termination)'' and ``(Sec.  457.8)'';

    E. Revise section 5 of Sec.  457.104 to read as follows:

    5. Insured Crop.
    In accordance with section 8 of the Basic Provisions, the crop 
insured will be all the cotton lint, in the county for which premium 
rates are provided by the actuarial documents:
    (a) In which you have a share; and
    (b) That is not (unless allowed by the Special Provisions or by 
written agreement):
    (1) Colored cotton lint;
    (2) Planted into an established grass or legume;
    (3) Interplanted with another spring planted crop; or
    (4) Grown on acreage following a small grain crop or harvested 
hay crop in the same calendar year unless the acreage is irrigated.
* * * * *
    F. Amend section 6 of Sec.  457.104 by removing the phrases 
``(Insurable Acreage)'' and ``(Sec.  457.8)'' in the introductory text;
    G. Amend section 7(b) of Sec.  457.104 by removing the phrases 
``(Insurance Period)'' and ``(Sec.  457.8)'' in the introductory text;
    H. Amend section 8 of Sec.  457.104 as follows:
    a. Remove the phrases ``(Causes of Loss)'' and ``(Sec.  457.8)'' in 
the introductory text;
    b. Remove the word ``or'' at the end of paragraph (g);
    c. Revise paragraph (h); and
    d. Add a new paragraph (i).
    The revised and added text reads as follows:

    8. Causes of Loss.
* * * * *
    (h) Failure of the irrigation water supply due to a cause of 
loss specified in sections 8(a) through (g) that also occurs during 
the insurance period; or
    (i) For revenue protection, a decline in the harvest price below 
the projected price.
* * * * *
    I. Revise section 9 of Sec.  457.104 to read as follows:

    9. Duties in the Event of Damage or Loss.
    (a) In addition to your duties under section 14 of the Basic 
Provisions, in the event of damage or loss, the cotton stalks must 
remain intact for our inspection. The stalks must not be destroyed, 
and required samples must not be harvested, until the earlier of our 
inspection or 15 days after harvest of the balance of the unit is 
completed and written notice of probable loss given to us.
    (b) Representative samples are required in accordance with 
section 14 of the Basic Provisions.
* * * * *
    J. Amend section 10 of Sec.  457.104 as follows:
    a. Revise paragraphs (a) and (b);
    b. Remove the word ``of'' after the phrase ``harvested production'' 
and add the word ``or'' in its place in paragraph (c)(1)(iv)(A);
    c. Remove the phrase ``seventy-five percent (75%)'' and add the 
phrase ``85 percent'' in its place in both places in paragraph (d); and
    d. Remove the phrase ``contained in the Daily Spot Cotton 
Quotations published by the USDA Agricultural Marketing Service'' and 
replace it with the phrase ``for the Upland Cotton Warehouse Loan Rate 
published by FSA'' in paragraph (d).
    The revised text reads as follows:

    10. 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 each unit.

[[Page 40245]]

    (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 your respective:
    (i) Production guarantee (per acre) and your applicable 
projected price if you elected yield protection; or
    (ii) Revenue protection guarantee (per acre) if you elected 
revenue protection;
    (2) Totaling the results of section 10(b)(1)(i) or 10(b)(1)(ii), 
whichever is applicable;
    (3) Multiplying the production to count by your:
    (i) Projected price if you elected yield protection; or
    (ii) Harvest price if you elected revenue protection;
    (4) Totaling the results of section 10(b)(3)(i) or 10(b)(3)(ii), 
whichever is applicable;
    (5) Subtracting the result of section 10(b)(4) from the result 
of section 10(b)(2); and
    (6) Multiplying the result of section 10(b)(5) by your share.
    For example:
    You have 100 percent share in 50 acres of cotton in the unit 
with a production guarantee (per acre) of 525 pounds, the projected 
price is $.65, the harvest price is $.70, and your production to 
count is 25,000 pounds.
    If you elected yield protection:
    (1) 50 acres x 525 pound production guarantee x $.65 projected 
price = $17,062.50 value of the production guarantee.
    (3) 25,000 pound production to count x $.65 projected price = 
$16,250.00 value of production to count.
    (5) $17,062.50--$16,250.00 = $812.50.
    (6) $812.50 x 1.000 share = $813.00 indemnity; or
    If you elected revenue protection:
    (1) 50 acres x (525 pound production guarantee x $.70 harvest 
price) = $18,375.00 revenue protection guarantee.
    (3) 25,000 pound production to count x $.70 harvest price = 
$17,500.00 value of the production to count.
    (5) $18,375.00--$17,500.00 = $875.00.
    (6) $875.00 x 1.000 share = $875.00 indemnity.
* * * * *
    K. Amend section 11(b) of Sec.  457.104 by removing the phrase 
``limited or''.
* * * * *
    5. Amend Sec.  457.113 as follows:
    A. Revise the introductory text of Sec.  457.113 to read as 
follows:


Sec.  457.113  Coarse grains crop insurance provisions.

    The coarse grains crop insurance provisions for the 2009 and 
succeeding crop years are as follows:
* * * * *
    B. Amend section 1 of Sec.  457.113 by revising the definition of 
``planted acreage'' and ``production guarantee (per acre)'' to read as 
follows:

    1. Definitions.
* * * * *
    Planted acreage. In addition to the definition contained in the 
Basic Provisions, coarse grains must initially be planted in rows 
(corn must be planted in rows far enough apart to permit mechanical 
cultivation if the specific farming practice you use requires 
mechanical cultivation to control weeds), unless otherwise provided 
by the Special Provisions, actuarial documents, or by written 
agreement.
    Production guarantee (per acre). In lieu of the definition 
contained in the Basic Provisions, the number of bushels (tons for 
corn insured as silage) determined by multiplying the approved yield 
per acre by the coverage level percentage you elect.
* * * * *
    C. Revise section 2 of Sec.  457.113 to read as follows:

    2. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) You must elect to insure your corn, grain sorghum, or 
soybeans with either revenue protection or yield protection by the 
sales closing date;
    (b) You must select the same percentage for both the projected 
price and the harvest price; and
    (c) For corn, the projected price and harvest price for grain 
and silage must have the same percentage relationship to the maximum 
projected price and harvest price offered by us for grain and 
silage. For example, if you choose 100 percent of the maximum grain 
projected price and harvest price and you also insure corn on a 
silage basis, you must choose 100 percent of the maximum silage 
projected price and harvest price.
* * * * *
    D. Revise section 3 of Sec.  457.113 to read as follows:

    3. Contract Changes.
    In accordance with section 4 of the Basic Provisions, the 
contract change date is November 30 preceding the cancellation date.
* * * * *
    E. Amend section 4 of Sec.  457.113 as follows:
    a. Amend the introductory text by removing the term ``(Sec.  
457.8)';
    b. Amend paragraph (a) by removing the date of ``January 15'' and 
adding ``January 31'' in its place; and
    c. Amend paragraph (b) by removing the date of ``February 15'' and 
adding ``January 31'' in its place.
    F. Amend section 5 of Sec.  457.113 as follows:
    a. Remove the phrases ``(Insured Crop)'' and ``(Sec.  457.8)'' in 
the introductory text of paragraph (a);
    b. Remove the word ``paragraph'' and add the word ``section'' in 
its place in paragraph (a)(3)(i);
    c. Remove the word ``subsection'' and add the word ``section'' in 
its place in both the introductory text of paragraph (b) and 
paragraph(b)(1);
    d. Revise the introductory text of paragraph (b)(2);
    e. Remove the phrase ``high-oil, high-protein,'' and add ``high-oil 
or high-protein (except as authorized in section 5(b)(2)),'' in its 
place in paragraph (b)(2)(i); and
    f. Remove the word ``subsection'' and add the word ``section'' in 
its place in both the introductory text of paragraph (d) and paragraph 
(e).
    The revised text reads as follows:

    5. Insured Crop.
* * * * *
    (b) * * *
    (2) Yellow dent or white corn, including mixed yellow and white, 
waxy or high-lysine corn, high-oil corn blends containing mixtures 
of at least 90 percent high yielding yellow dent female plants with 
high-oil male pollinator plants, or commercial varieties of high-
protein hybrids, and excluding:
* * * * *
    G. Amend section 7 of Sec.  457.113 as follows:
    a. Remove the word ``under'' and add the word ``of'' in its place 
and remove the phrases ``(Insurance Period)'' and ``(Sec.  457.8)'' in 
the introductory text; and
    b. Revise paragraph (b) to read as follows:

    7. Insurance Period.
* * * * *
    (b) For corn insured as silage:
    (1) Connecticut, Delaware, Idaho, Maine, Maryland, 
Massachusetts, New Hampshire, New Jersey, New Mexico, New York, 
Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, 
Washington, and West Virginia. October 20.
    (2) All other states. September 30.
* * * * *
    H. Amend section 8 of Sec.  457.113 as follows:
    a. Remove the phrases ``(Causes of Loss)'' and ``(Sec.  457.8)'' in 
the introductory text;
    b. Remove the word ``or'' at the end of paragraph (g);
    c. Revise paragraph (h); and
    d. Add a new paragraph (i).
    The revised and added text reads as follows:

    8. Causes of Loss.
* * * * *
    (h) Failure of the irrigation water supply due to a cause of 
loss specified in sections 8(a) through (g) that also occurs during 
the insurance period; or
    (i) For revenue protection, a decline in the harvest price below 
the projected price.
* * * * *
    I. Revise section 9 of Sec.  457.113 to read as follows:

    9. 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

[[Page 40246]]

payment will be determined in accordance with these Crop Provisions;
    (2) Except as specified in section 9(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.
    (b) The maximum amount of the replanting payment per acre will 
be the lesser of 20 percent of the production guarantee or the 
number of bushels (tons for corn insured as silage) for the 
applicable crop specified below, multiplied by your projected price, 
multiplied by your share:
    (1) 8 bushels for corn grain;
    (2) 1 ton for corn silage;
    (3) 7 bushels for grain sorghum; and
    (4) 3 bushels for soybeans.
    (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) If the acreage is replanted to an insured crop type that is 
different than the insured crop type originally planted on the 
acreage:
    (1) The production guarantee, premium, and projected price and 
harvest price will be adjusted based on the replanted type;
    (2) Replanting payments will be calculated using the projected 
price and production guarantee for the crop type that is replanted 
and insured; and
    (3) A revised acreage report will be required to reflect the 
replanted type, as applicable.

    J. Amend section 10 of Sec.  457.113 as follows:
    a. Revise paragraph (a);
    b. Revise the introductory text of paragraph (b)(1);
    c. Add the phrase ``Damage occurs'' at the beginning of the 
paragraph, remove the capital ``B'' in the word ``Before'' and add a 
lower case ``b'' in its place, and remove the phrase ``15 days'' and 
add the phrase ``72 hours'' in its place in paragraph (b)(1)(i);
    d. Remove the word ``If'' at the beginning of the sentence, remove 
the lower case ``d'' in the word ``damage'' and add a capital ``D'' in 
its place, remove the phrase ``15 days'' and add the phrase ``72 
hours'' in its place, and remove the period at the end and add ``; 
and'' in its place in paragraph (b)(1)(ii);
    e. Revise paragraph (b)(2); and
    f. Add a new paragraph (c).
    The revised and added text reads as follows:

    10. Duties in the Event of Damage or Loss.
    (a) Representative samples are required in accordance with 
section 14 of the Basic Provisions.
* * * * *
    (b) * * *
    (1) In lieu of the requirement contained in section 14 of the 
Basic Provisions to provide notice within 72 hours of your initial 
discovery of damage (but not later than 72 hours after the end of 
the insurance period), if:
* * * * *
    (2) If you have a unit that has more than one end of the 
insurance period (i.e., both silage and grain in the same unit), for 
the purposes of section 14 of the Basic Provisions with respect to 
the deadline to submit a claim, the end of the insurance period 
means the latest end of the insurance period applicable to the unit.
    (c) In lieu of any policy provision providing otherwise, if you 
intend to harvest any acreage in a manner other than as you reported 
it for coverage (e.g., you reported planting it to harvest as grain 
but will harvest the acreage for silage, or you reported planting it 
to harvest as silage but will harvest the acreage for grain), you 
must notify us of your intentions before harvest begins. Failure to 
timely provide notice will result in production to count determined 
in accordance with section 11(c)(1)(i)(E).

    K. Amend section 11 of Sec.  457.113 as follows:
    a. Revise paragraphs (a) and (b);
    b. Remove the phrase ``(tons for corn silage) (see subsection 
11(d))'' and add the phrase ``(tons for corn insured as silage)'' in 
its place in the introductory text in paragraph (c);
    c. Remove the word ``or'' at the end of paragraph (c)(1)(i)(C);
    d. Add the word ``or'' at the end of paragraph (c)(1)(i)(D);
    e. Add a new paragraph (c)(1)(i)(E);
    f. Remove the phrase ``subsection 11(e)'' and add the phrase 
``section 11(d)'' in its place in paragraph (c)(1)(iii);
    g. Remove the first sentence and add ``Potential production on 
insured acreage you intend to put to another use or abandon, if you and 
we agree on the appraised amount of production.'' in its place, remove 
the word ``if'' in the second sentence, and add the word ``when'' in 
its place in paragraph (c)(1)(iv);
    h. Remove paragraph (d) and redesignate paragraphs (e) through (g) 
as paragraphs (d) through (f), respectively;
    i. Remove the phrase ``or harvested'' in both places in the 
introductory text of redesignated paragraph (d) and remove the phrase 
``subsection 11(f)'' and add the phrase ``section 11(e)'' in its place;
    j. Remove the phrase ``paragraphs 11.(e)'' and add the phrase 
``sections 11(d)'' in its place in redesignated paragraph (d)(4);
    k. Remove the phrase ``or harvested'' in the introductory text of 
redesignated paragraph (e); and
    l. Remove the phrase ``September 30 of the crop year'' and add the 
phrase ``the calendar date for the end of the insurance period as 
specified in section 7(b)'' in its place in redesignated paragraph 
(e)(2).
    The revised and added text reads as follows:

    11. 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 each 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 of each insured crop 
or type, as applicable, by your respective:
    (i) Production guarantee (per acre) and your applicable 
projected price if you elected yield protection; or
    (ii) Revenue protection guarantee (per acre) if you elected 
revenue protection;
    (2) Totaling the results of section 11(b)(1)(i) or 11(b)(1)(ii), 
whichever is applicable;
    (3) Multiplying the production to count of each insured crop or 
type, as applicable, by your respective:
    (i) Projected price if you elected yield protection; or
    (ii) Harvest price if you elected revenue protection;
    (4) Totaling the results of section 11(b)(3)(i) or 11(b)(3)(ii), 
whichever is applicable;
    (5) Subtracting the result of section 11(b)(4) from the result 
of section 11(b)(2); and
    (6) Multiplying the result of section 11(b)(5) by your share.
    For example:
    You have 100 percent share in 50 acres of corn in the unit with 
a production guarantee (per acre) of 115 bushels, the projected 
price is $2.25, the harvest price is $2.20, and your production to 
count is 5,000 bushels.
    If you elected yield protection:
    (1) 50 acres x 115 bushel production guarantee x $2.25 projected 
price = $12,937.50 value of the production guarantee.
    (3) 5,000 bushel production to count x $2.25 projected price = 
$11,250.00 value of the production to count.
    (5) $12,937.50-$11,250.00 = $1,687.50.
    (6) $1,687.50 x 1.000 share = $1,688.00 indemnity; or
    If you elected revenue protection:
    (1) 50 acres x (115 bushel production guarantee x $2.25 
projected price) = $12,937.50 revenue protection guarantee.
    (3) 5,000 bushel production to count x $2.20 harvest price = 
$11,000.00 value of the production to count.
    (5) $12,937.50-$11,000.00 = $1,937.50.
    (6) $1,937.50 x 1.000 share = $1,938.00 indemnity.
    (c) * * *
    (1) * * *
    (i) * * *
    (E) For which you fail to give us notice before harvest begins 
if you report planting

[[Page 40247]]

the corn to harvest as grain but harvest it as silage or you report 
planting the corn to harvest as silage but harvest it as grain.
* * * * *
    L. Amend section 12 of Sec.  457.113 by removing the lower case 
``i'' in the word ``if'', at the beginning of the last sentence, and 
adding a capital ``I'' in its place and removing the phrase ``limited 
or'.
    6. Revise Sec.  457.118 to read as follows:


Sec.  457.118  Malting barley price and quality endorsement.

    The malting barley price and quality endorsement provisions for 
the 2009 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:
    Small Grains Crop Insurance Malting Barley Price and Quality 
Endorsement
    (This is a continuous endorsement. Refer to section 2 of the 
Basic Provisions.)
    In return for your payment of premium for the coverage contained 
herein, this endorsement will be attached to and made part of the 
Basic Provisions and Small Grains Crop Provisions, subject to the 
terms and conditions described herein.
    1. Definitions.
    Additional value price. The value per bushel determined in 
accordance with section 3 of Option A or section 3 of Option B, as 
applicable.
    Approved malting variety. A variety of barley specified in the 
Special Provisions.
    Brewery. A facility where malt beverages are commercially 
produced for human consumption.
    Contracted production. A quantity of barley the producer agrees 
to grow and deliver, and the buyer agrees to accept, under the terms 
of the malting barley contract.
    Crop year. In addition to the definition in the Basic Provisions 
and only for APH purposes under the terms of this endorsement, the 
period within which the crop is actually grown and designated by the 
calendar year in which the insured crop is normally harvested.
    Licensed grain grader. A person authorized by the U.S. 
Department of Agriculture to inspect and grade barley in accordance 
with the U.S. Standards for malt barley.
    Malting barley contract. An agreement in writing:
    (a) Between the producer and a brewery or a business enterprise 
that produces or sells malt or malt extract to a brewery, or a 
business enterprise owned by such brewery or business;
    (b) That specifies the amount of contracted production, the 
purchase price or a method to determine such price; and
    (c) That establishes the obligations of each party to the 
agreement.
    Malting barley price agreement. An agreement that meets all 
conditions required for a malting barley contract except that it is 
executed with a business enterprise that is not described in the 
definition of a malting barley contract, but that normally contracts 
to purchase malting barley production and has facilities appropriate 
to handle and store malting barley production.
    Malt extract. A substance made by adding warm water to ground 
malt, separating the liquid from the solid, and then condensing the 
liquid or evaporating it until only a powder remains.
    Objective test. A determination made by a qualified person using 
standardized equipment that is widely used in the malting industry 
that follows a procedure approved by the:
    (a) American Society of Brewing Chemists when determining 
percent germination;
    (b) Federal Grain Inspection Service when determining quality 
factors other than percent germination; or
    (c) Food and Drug Administration (FDA) when determining 
concentrations of mycotoxins or other substances or conditions 
identified by the FDA as being injurious to human or animal health.
    Subjective test. A determination:
    (a) Made by a person using olfactory, visual, touch or feel, 
masticatory, or other senses unless performed by a licensed grain 
grader; or
    (b) That uses non-standardized equipment; or
    (c) That does not follow a procedure approved by the American 
Society of Brewing Chemists, the Federal Grain Inspection Service, 
or the Food and Drug Administration.
    2. This endorsement provides coverage for malting barley 
production and quality losses at a price per bushel greater than 
that offered under the Small Grains Crop Provisions.
    3. You must have the Basic Provisions and the Small Grains Crop 
Insurance Provisions in force to elect to insure malting barley 
under this endorsement.
    4. You must elect either Option A or Option B on or before the 
sales closing date:
    (a) Failure to elect either Option A or Option B, or if you 
elect Option B but fail to have a malting barley contract in effect 
by the acreage reporting date, will result in no coverage under this 
endorsement for the applicable crop year;
    (b) If you elect coverage under Option A, and subsequently enter 
into a malting barley contract, your coverage will continue under 
the terms of Option A; and
    (c) Your election (Option A or B) will continue from year to 
year unless you cancel or change your election on or before the 
sales closing date.
    5. All acreage in the county planted to approved malting 
varieties that is insurable under the Small Grains Crop Provisions 
for feed barley and your elected Option will be insured under this 
endorsement, except any acreage on which you produce seed under the 
terms of the seed contract.
    6. In lieu of the definitions and provisions regarding units and 
unit division in the Basic Provisions and the Small Grains Crop 
Provisions, all approved malting barley acreage in the county that 
is insured under this endorsement will be considered as one unit 
regardless of whether such acreage is owned, rented for cash, or 
rented for a share of the crop. Your shares in the malting barley 
acreage insured under this endorsement must be designated separately 
on the acreage report. For example, if you have 100 percent share in 
50 acres and 75 percent share in 10 acres you must list the 50 acres 
separately from the 10 acres on your acreage report and include the 
percent share for each.
    7. You must select a percentage of the additional value price on 
or before the sales closing date. In the event that you choose a 
percentage of the additional value price, we will multiply that 
percentage by the additional value price specified in Options A or 
B, as applicable, to determine the additional value price that 
pertains to this endorsement.
    8. The additional premium amount for this coverage will be 
determined by multiplying your malting barley production guarantee 
(per acre) by your additional value price, by the premium rate, by 
the acreage planted to approved malting barley varieties, by your 
share at the time coverage begins. The premium rate you pay will be 
adjusted by a factor contained in the actuarial table based on your 
history of fulfilling the production specified in malting barley 
contracts in prior years, as applicable.
    9. In addition to the reporting requirements contained in 
section 6 of the Basic Provisions, you must provide all the 
information required by the Option you select.
    10. In accordance with section 14 of the Basic Provisions:
    (a) We will settle your claim within 30 days if:
    (1) All insured production meets the quality criteria specified 
in section 14(a)(2) of this endorsement; or
    (2) It grades U.S. No. 4 or worse in accordance with the grades 
and grade requirements for the subclasses six-rowed and two-rowed 
barley, or for the class barley in accordance with the Official 
United States Standards for Grain; and
    (3) It is not accepted by a buyer for malting purposes;
    (b) Whenever any production fails one or more of the quality 
criteria specified in section 14(a)(2) of this endorsement and 
grades U.S. No. 3 or better, we will not agree upon the amount of 
loss until the earlier of:
    (1) The date you sell, feed, donate, or otherwise utilize such 
production for any purpose; or
    (2) May 31 of the calendar year immediately following the 
calendar year in which the insured malting barley is normally 
harvested:
    (i) If disposition of the insured crop does not occur by May 31, 
we may complete your claim in accordance with this endorsement 
provided you certify, in writing, that the production will not be 
sold;
    (ii) If you do not provide such certification, we will complete 
your claim; however, no adjustment for quality deficiencies will be 
made and all remaining unsold insured production will be considered 
to have met the quality standards specified in this endorsement; and
    (iii) If you sell any production you previously certified would 
not be sold, you must notify us and we will adjust your claim as 
necessary.

[[Page 40248]]

    11. This endorsement for malting barley does not provide 
prevented planting coverage. Such coverage is only provided in 
accordance with the provisions of the Small Grains Crop Provisions 
for feed barley.
    12. Production from all acreage insured under this endorsement 
and any production of feed barley varieties must not be commingled 
prior to our making all determinations under section 14. Failure to 
keep production separate as required herein will result in denial of 
your claim for indemnity.
    13. In the event of loss or damage covered by this endorsement, 
we will settle your claim by:
    (a) Multiplying the insured acreage by your malting barley 
production guarantee (per acre) determined in accordance with 
section 2 of Option A or B, as applicable;
    (b) Multiplying the result in section 13(a) by your respective 
additional value price per bushel;
    (c) Multiplying the number of bushels of production to count 
determined in accordance with section 14 by your additional value 
price per bushel (If more than one additional value price is 
applicable, the highest additional value price will be used until 
the number of bushels covered at the higher additional value price 
is reached and the remainder of the production will be multiplied by 
the lower additional value price. For example, if variety A is grown 
under a malting barley price agreement and 1000 bushels of variety A 
are insured using an additional value price of $0.68 per bushel but 
only 500 bushels of variety A are produced, the 500 bushels would be 
valued at $0.68 per bushel and all other production of other 
varieties will be valued at the lower additional value price unless 
such production is acceptable under the terms of the malting barley 
price agreement, in which case 500 bushels of the other varieties 
would also be valued at $0.68 per bushel);
    (d) Subtracting the result of section 13(c) from the result in 
section 13(b); and
    (e) Multiplying the result of section 13(d) by your share.
    14. The amount of production to be counted against your malting 
barley production guarantee will be determined as follows:
    (a) Production to be counted will include all:
    (1) Appraised production determined in accordance with sections 
11(c)(1)(i), (ii) and (iv) of the Small Grains Crop Provisions;
    (2) Harvested production and unharvested production that meets, 
or would meet if properly handled, either the acceptable percentage 
or parts per million standard contained in any applicable malting 
barley contract or malting barley price agreement for protein, plump 
kernels, thin kernels, germination, blight damage, mold injury or 
damage, sprout injury, frost injury or damage, and mycotoxins or 
other substances or conditions identified by the Food and Drug 
Administration or other public health organizations of the United 
States as being injurious to human health, or the following quality 
standards, whichever is less stringent:

------------------------------------------------------------------------
                                   Six-rowed        Two-rowed malting
                                malting barley            barley
------------------------------------------------------------------------
Protein (dry basis)..........  14.0% maximum...  13.5% maximum
Plump kernels................  65.0% minimum...  75.0% minimum
Thin kernels.................  10.0% maximum...  10.0% maximum
Germination..................  95.0% minimum...  95.0% minimum
Blight damaged...............  4.0% maximum....  4.0% maximum
Injured by mold..............  5.0% maximum....  5.0% maximum
Mold damaged.................  0.4% maximum....  0.4% maximum
Injured by sprout............  1.0% maximum....  1.0% maximum
Injured by frost.............  5.0% maximum....  5.0% maximum
Frost damaged................  0.4% maximum....  0.4% maximum
Mycotoxins...................  2.0 ppm maximum.  2.0 ppm maximum
------------------------------------------------------------------------

    (3) Harvested production that does not meet the quality 
standards contained in section 14(a)(2), but is accepted by a buyer. 
If the price received is less than the total of the additional value 
price and the feed barley projected price announced by FCIC, the 
production to be counted may be reduced or the values used to settle 
the claim may be adjusted in accordance with sections 14(b), (c), 
and (d).
    (b) For the quantity of production that qualifies under section 
14(a)(3), the amount of production to count will be determined by:
    (1) Subtracting the barley projected price from the sale price 
per bushel of the damaged production;
    (2) Subtracting the weighted average cost per bushel for 
conditioning the production, if any, (not to exceed the discount you 
would have received had you sold the barley without conditioning, 
for example, if the price per bushel of the production without 
conditioning is $2.80 and the price for such production after 
conditioning is $2.90, the discount is $0.10 and the cost of 
conditioning can not exceed $0.10 per bushel) from the result of 
section 14(b)(1);
    (3) Dividing the result of section 14(b)(1) or (2), as 
applicable, by 100.0 percent of the additional value price (The 
weighted average additional value price will be used in the event 
more than one additional value price is applicable, for example, if 
1000 bushels of variety A are insured with an additional value price 
of $0.68 and 500 bushels are insured with an additional value price 
of $0.40, the weighted average additional value price would be 
$0.59); and
    (4) Multiplying the result of section 14(b)(3) (if less than 0.0 
or more than 1.000, no adjustment will be made) by the number of 
bushels of damaged production.
    (c) No reduction in the amount of production to count will be 
allowed for:
    (1) Moisture content;
    (2) Damage due to uninsured causes;
    (3) Costs or reduced value associated with drying, handling, 
processing, or quality factors other than those contained in section 
14(a)(2); or
    (4) Any other costs associated with normal handling and 
marketing of malting barley.
    (d) All grade and quality determinations must be based on the 
results of objective tests. No indemnity will be paid for any loss 
established by subjective tests. We may obtain one or more samples 
of the insured crop and have tests performed at an official grain 
inspection location established under the U.S. Grain Standards Act 
or laboratory of our choice to verify the results of any test. In 
the event of a conflict in the test results, our results will 
determine the amount of production to be counted.

Option A--(For Malting Barley Production, Regardless of Whether Grown 
Under a Malting Barley Contract or Price Agreement)

    1. To be eligible for coverage under this option:
    (a) You must provide us with acceptable records of your sales of 
malting barley and the number of acres planted to malting varieties 
for at least the four crop years in your APH database prior to the 
crop year immediately preceding the current crop year (for example, 
to determine your production guarantee for the 2009 crop year, 
records must be provided for the 2004 through the 2007 crop years, 
if malting barley varieties were planted in each of those crop 
years);
    (1) Failure to provide acceptable records or reports as required 
herein will make you ineligible for coverage under this endorsement; 
and
    (2) You must provide these records to us no later than the 
production reporting date specified in the Basic Provisions; and
    (b) If you produce malting barley under a malting barley 
contract or malting barley price agreement, you must provide us with 
a copy of your current crop year contract or agreement on or before 
the acreage reporting date if you want to base your additional value 
price election on such contract or price agreement. All terms and 
conditions of the contract or agreement, including the contract 
price or future contract price, must be

[[Page 40249]]

specified in the contract or agreement and be effective on or before 
the acreage reporting date.
    2. Your malting barley production guarantee (per acre) will be 
the lesser of:
    (a) The production guarantee (per acre) for feed barley for 
acreage planted to approved malting varieties calculated in 
accordance with the Basic Provisions; or
    (b) A yield per acre calculated by:
    (1) Dividing the number of bushels of malting barley sold each 
year by the number of acres planted to approved malting barley 
varieties in each respective year;
    (2) Adding the results of section 2(b)(1);
    (3) Dividing the result of section 2(b)(2) by the number of 
years approved malting barley varieties were planted; and
    (4) Multiplying the result of section 2(b)(3) by your coverage 
level.
    3. The additional value price per bushel will be determined as 
follows:
    (a) For production grown under a malting barley contract or a 
malting barley price agreement, the additional value price per 
bushel will be the following amount, as applicable:
    (1) The sale price per bushel established in the malting barley 
contract or malting barley price agreement (not including discounts 
or incentives that may apply) minus the projected price for barley;
    (2) The amount per bushel for malting barley (not including 
discounts or incentives that may apply) above a feed barley price 
that is determined at a later date, provided the method of 
determining the price is specified in the malting barley contract or 
malting barley price agreement; or
    (3) If your malting barley contract or malting barley price 
agreement has a variable price option, you must select a price or a 
method of determining a price that will be treated as the sale price 
and your additional value price per bushel will be calculated under 
section 3(a)(1) or (2), as applicable.
    (b) The additional value price per bushel designated in the 
actuarial documents will be used if:
    (1) Production is not grown under a malting barley contract or 
malting barley price agreement; or
    (2) The malting barley contract or malting barley price 
agreement is not provided to us by the acreage reporting date.
    (c) Under no circumstances will the additional value price 
exceed $1.25 per bushel.
    (d) The number of bushels eligible for coverage using an 
additional value price determined in section 3(a) will be the lesser 
of:
    (1) The amount determined by multiplying the number of acres 
planted to an approved malting barley variety by your malting barley 
production guarantee (per acre) determined in accordance with 
section 2; or
    (2) The amount determined by multiplying the number of bushels 
specified in the malting barley contract or malting barley price 
agreement by your coverage level.
    (e) Under no circumstances will the number of bushels determined 
in section 3(d) that will receive an additional value price 
determined in accordance with section 3(a) exceed the amount 
determined by multiplying 125.0 percent of the greatest number of 
acres that you certified for malting barley APH purposes in any crop 
year contained in your malting barley APH database by your malting 
barley production guarantee (per acre) determined in accordance with 
section 2. Any bushels in excess of this amount will be insured 
using the additional value price designated in the actuarial 
documents.
    4. Loss Example.
    In accordance with section 13, your loss will be calculated as 
follows:
    (a) Assume the following:
    (1) A producer has:
    (i) 400 acres of barley insured under the Small Grains Crop 
Provisions, of which 200 acres are planted to feed barley and 200 
acres are planted to an approved malting barley variety;
    (ii) 100 percent share;
    (iii) A feed barley approved yield of 55 bushels per acre;
    (iv) A malting barley approved yield, based on malting barley 
sales records and the number of acres planted to approved malting 
barley varieties, of 52 bushels per acre;
    (v) Selected the 75 percent coverage level; and
    (vi) A malting barley price agreement for the sale of 5,720 
bushels at $2.72 per bushel;
    (2) The projected price is $1.92 per bushel;
    (3) The additional value price per bushel from the actuarial 
documents is $0.40;
    (4) In accordance with section 3(a)(1), the additional value 
price per bushel for production grown under a malting barley price 
agreement is $0.80 ($2.72 malting barley price agreement price minus 
$1.92 projected price); and
    (5) The total production from the 200 acres of malting barley is 
7,250 bushels, all of which fails to meet the quality standards 
specified in section 14(a) and in the malting barley price 
agreement:
    (i) 4,750 bushels are sold for $2.31 per bushel; and
    (ii) After conditioning at a cost of $0.05 per bushel, an 
additional 2,500 bushels are sold for $2.20 per bushel;
    (b) The amount of insurance protection is determined as follows:
    (1) 4,290 bushels eligible for coverage using the additional 
value price from the malting barley price agreement [the lesser of 
4,290 bushels (5,720 bushels grown under a malting barley price 
agreement x .75 coverage level) or 7,800 bushels (200 acres planted 
to approved malting barley varieties x 39.0 bushel per acre (52 
bushels per acre malting barley approved yield x .75 coverage level) 
malting barley production guarantee)] x $0.80 additional value price 
= $3,432.00 amount of insurance protection for the bushels grown 
under the malting barley price agreement;
    (2) 3,510 bushels eligible for coverage using the additional 
value price from the actuarial documents (7,800 bushel total malting 
barley production guarantee - 4,290 bushels covered using the 
additional value price from the malting barley price agreement) x 
$0.40 additional value price = $1,404.00 amount of insurance 
protection for the bushels not grown under a malting barley price 
agreement; and
    (3) $3,432.00 + $1,404.00 = $4,836.00 total amount of insurance 
protection for the unit;
    (c) In accordance with section 14, the total amount of 
production to count is determined as follows:
    (1) Damaged production that is not reconditioned:
    (i) $2.31 price per bushel - $1.92 projected price = $0.39;
    (ii) $0.39 / $0.62 weighted average additional value price 
($4,836.00 total insurance protection / 7,800 bushel production 
guarantee = $0.62 weighted average additional value price) = 0.63; 
and
    (iii) 0.63 x 4,750 bushels of damaged production sold at $2.31 = 
2,993 bushels of production to count;
    (2) Damaged production that is reconditioned:
    (i) $2.20 price per bushel - $1.92 projected price = $0.28;
    (ii) $0.28 - $0.05 reconditioning cost = $0.23;
    (iii) $0.23 / $0.62 weighted average additional value price = 
$0.37; and
    (iv) 0.37 x 2,500 bushels of damaged production sold at $2.20 = 
925 bushels of production to count; and
    (3) Total production to count is 3,918 bushels (2,993 + 925);
    (d) The value of production to count is $3,134.00 (3,918 bushels 
x $0.80 additional value price (all production to count is valued at 
the higher additional value price since the amount of production to 
count did not exceed the number of bushels covered at the higher 
additional value price)); and
    (e) The indemnity amount is $1,702.00 ($4,836.00 total amount of 
insurance protection for the unit - $3,134.00 value of production to 
count).

Option B--(For Production Grown Under Malting Barley Contracts Only)

    1. To be eligible for coverage under this option:
    (a) On or before the sales closing date, you must provide 
acceptable records of acreage, sales of malting barley, and copies 
of malting barley contracts for at least the four crop years in your 
APH database prior to the crop year immediately preceding the 
current crop year. For example, for the 2009 crop year, production 
records and malting barley contracts must be provided for the 2004 
through the 2007 crop years, if malting barley varieties were 
planted in each of those crop years:
    (1) These records and malting barley contracts will be used to 
determine your average malting barley contract fulfillment rate and 
will impact eligibility for coverage under this endorsement or the 
premium you will pay.
    (2) If a malting barley contract was not in effect in any one of 
the years for which records are required, a default fulfillment rate 
of 75.0 percent will be assigned for the missing year. The average 
malting barley contract fulfillment rate will be determined by:
    (i) Dividing the number of malting barley bushels produced each 
year by the number of bushels under contract for the respective 
year;
    (ii) Summing the results of section 1(a)(2)(i); and

[[Page 40250]]

    (iii) Dividing the results of section 1(a)(2)(ii) by the number 
of years in the database.
    (b) On or before the acreage reporting date, you must provide us 
a copy of your malting barley contract for the current crop year:
    (1) All terms and conditions of the contract, including the 
contract price or method to determine the price, must be specified 
in the contract and be effective on or before the acreage reporting 
date;
    (2) If you fail to timely provide the contract, or any terms are 
omitted, we may elect to determine the relevant information 
necessary for insurance under Option B, or deny liability; and
    (3) Only contracted production or acreage is covered by Option 
B.
    2. Your malting barley production guarantee (per acre) will be 
the lesser of:
    (a) The production guarantee (per acre) for feed barley for 
acreage planted to approved malting barley varieties calculated in 
accordance with the Basic Provisions; or
    (b) A yield per acre calculated by:
    (1) Dividing the number of bushels of contracted production by 
the number of acres planted to approved malting varieties in the 
current crop year; and
    (2) Multiplying the result of section 2(b)(1) by the coverage 
level percentage you elected under the Small Grains Crop Provisions.
    3. The additional value price per bushel will be the following 
amount, as applicable:
    (a) The sale price per bushel established in the malting barley 
contract (without regard to discounts or incentives that may apply) 
minus the projected price for feed barley;
    (b) The amount per bushel for malting barley (not including 
discounts or incentives that may apply) above a feed barley price 
that is determined at a later date, provided the method of 
determining the price is specified in the malting barley contract; 
or
    (c) If your malting barley contract has a variable premium price 
option, you must select a price or a method of determining a price 
that will be treated as the sale price and your additional value 
price per bushel will be calculated under section 3(a) or (b), as 
applicable; and
    (d) Under no circumstances will the additional value price per 
bushel exceed $1.25 per bushel.
    4. Loss Example.
    In accordance with section 13, your loss will be calculated as 
follows:
    (a) Assume the following:
    (1) A producer has:
    (i) 400 acres of barley insured under the Small Grains Crop 
Provisions, of which 200 acres are planted to feed barley and 200 
acres are planted to an approved malting barley variety;
    (ii) 100 percent share;
    (iii) A feed barley approved yield of 55 bushels per acre;
    (iv) A malting barley approved yield, based on contracted 
production and the number of acres planted to approved malting 
barley varieties of 52 bushels per acre;
    (v) Selected the 75 percent coverage level; and
    (vi) A malting barley contract for the sale of 10,000 bushels of 
malting barley at $2.60 per bushel;
    (2) The projected price is $1.92 per bushel;
    (3) In accordance with section 3, the additional value price per 
bushel for production grown under the malting barley contract is 
$0.68 ($2.60 malting barley contract price minus $1.92 projected 
price); and
    (4) The total production from the 200 acres of malting barley is 
7,250 bushels, all of which fails to meet the quality standards 
specified in section 14(a) and in the malting barley contract:
    (i) 4,750 bushels are sold for $2.31 per bushel; and
    (ii) After conditioning at a cost of $0.05 per bushel, an 
additional 2,500 bushels are sold for $2.20 per bushel;
    (b) In accordance with section 2, the amount of insurance 
protection is determined as follows:
    (1) The lesser of 41.3 bushels per acre production guarantee for 
feed barley or 37.5 bushels per acre (10,000 bushels contracted / 
200 acres = 50.0 bushels per acre and 50.0 x 75 percent coverage 
level = 37.5);
    (2) 37.5 bushels per acre x 200 acres = 7,500 bushels total 
malting barley production guarantee; and
    (3) 7,500 bushels x $0.68 additional value price = $5,100.00 
total amount of insurance for the unit;
    (c) In accordance with section 14, the total amount of 
production to count is determined as follows:
    (1) Damaged production that is not reconditioned:
    (i) $2.31 price per bushel - $1.92 projected price = $0.39;
    (ii) $0.39 / $0.68 additional value price = 0.57; and
    (iii) 0.57 x 4,750 bushels of damaged production sold at $2.31 = 
2,708 bushels of production to count;
    (2) Damaged production that is reconditioned:
    (i) $2.20 price per bushel - $1.92 projected price = $0.28;
    (ii) $0.28 - $0.05 reconditioning cost = $0.23;
    (iii) $0.23 / $0.68 additional value price = 0.34; and
    (iv) 0.34 x 2,500 bushels of damaged production sold at $2.20 = 
850 bushels of production to count; and
    (3) Total production to count is 3,558 bushels (2,708 + 850);
    (d) The value of production to count is $2,419.00 (3,558 bushels 
x $0.68 additional value price); and
    (e) The indemnity amount is $2,681.00 ($5,100.00 total amount of 
insurance protection for the unit - $2,419.00 value of production to 
count).
* * * * *
    7. Amend Sec.  457.141 as follows:
    A. Revise the introductory text of Sec.  457.141 to read as 
follows:


Sec.  457.141  Rice crop insurance provisions.

    The rice crop insurance provisions for the 2009 and succeeding 
crop years are as follows:
* * * * *
    B. Revise section 3 of Sec.  457.141 to read as follows:

    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    (a) You must elect to insure your rice with either revenue 
protection or yield protection by the sales closing date.
    (b) In addition to the requirements of section 3 of the Basic 
Provisions:
    (1) You must select the same percentage for both the projected 
price and the harvest price; and
    (2) The projected price and harvest price for each type must 
have the same percentage relationship to the maximum projected price 
and harvest price. For example, if you choose 100 percent of the 
maximum projected price and harvest price for one type, you must 
also choose 100 percent of the maximum projected price and harvest 
price for all other types.
* * * * *
    C. Amend section 4 of Sec.  457.141 by removing the phrases 
``(Contract Changes)'' and ``(Sec.  457.8)'';
    D. Amend section 5 of Sec.  457.141 by removing the phrases ``(Life 
of Policy, Cancellation and Termination)'' and ``(Sec.  457.8)'';
    E. Amend section 6 of Sec.  457.141 by removing the phrases 
``(Insured Crop)'' and ``(Sec.  457.8)'' and adding the phrase ``or by 
written agreement'' at the end of the introductory text;
    F. Amend section 7 of Sec.  457.141 by removing the phrases 
``(Insurable Acreage)'' and ``(Sec.  457.8)'' in the introductory text;
    G. Amend section 8 of Sec.  457.141 by removing the phrases 
``(Insurance Period)'' and ``(Sec.  457.8)'';
    H. Amend section 9 of Sec.  457.141 as follows:
    a. Remove the phrases ``(Causes of Loss)'' and ``(Sec.  457.8)'' in 
the introductory text of paragraph (a);
    b. Remove the word ``or'' at the end of paragraph (a)(7); c. Remove 
the period at the end of paragraph (a)(8) and add ``; or'' in its 
place; and d. Add a new paragraph (a)(9) to read as follows:

    9. Causes of Loss.
* * * * *
    (a) * * *
    (9) For revenue protection, a decline in the harvest price below 
the projected price.
* * * * *
    I. Revise section 10 of Sec.  457.141 to read as follows:

    10. Replanting Payment.
    (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 10(a)(1), you must comply 
with all requirements regarding replanting payments contained in 
section 13 of the Basic Provisions;
    (3) The insured crop must be damaged by an insurable cause of 
loss to the extent that

[[Page 40251]]

the remaining stand will not produce at least 90 percent of the 
production guarantee for the acreage; and
    (4) The replanted crop must be seeded at a rate that is normal 
for initially planted rice (if new seed is planted at a reduced 
seeding rate into a partially damaged stand of rice, the acreage 
will not be eligible for a replanting payment).
    (b) The maximum amount of the replanting payment per acre will 
be the lesser of 20 percent of the production guarantee or 400 
pounds, multiplied by your projected price, multiplied by your 
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.

    J. Revise section 11 of Sec.  457.141 to read as follows:

    11. Duties in the Event of Damage or Loss.
    Representative samples are required in accordance with section 
14 of the Basic Provisions.

    K. Revise sections 12(a) and (b) of Sec.  457.141 to read as 
follows:

    12. 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 each 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 your respective:
    (i) Production guarantee (per acre) and your applicable 
projected price if you elected yield protection; or
    (ii) Revenue protection guarantee (per acre) if you elected 
revenue protection;
    (2) Totaling the results of section 12(b)(1)(i) or 12(b)(1)(ii), 
whichever is applicable;
    (3) Multiplying the production to count by your:
    (i) Projected price if you elected yield protection; or
    (ii) Harvest price if you elected revenue protection;
    (4) Totaling the results of section 12(b)(3)(i) or 12(b)(3)(ii), 
whichever is applicable;
    (5) Subtracting the result of section 12(b)(4) from the result 
of section 12(b)(2); and
    (6) Multiplying the result of section 12(b)(5) by your share.
    For example:
    You have 100 percent share in 50 acres of rice in the unit with 
a production guarantee (per acre) of 3,750 pounds, the projected 
price is $.0750, the harvest price is $.0700, and your production to 
count is 150,000 pounds.
    If you elected yield protection:
    (1) 50 acres x 3,750 pound production guarantee x $.0750 
projected price = $14,062.50 value of the production guarantee
    (3) 150,000 pound production to count x $.0750 projected price = 
$11,250.00 value of the production to count
    (5) $14,062.50-$11,250.00 = $2,812.50
    (6) $2,812.50 x 1.000 share = $2,813.00 indemnity; or
    If you elected revenue protection:
    (1) 50 acres x (3,750 pound production guarantee x $.0750 
projected price) = $14,062.50 revenue protection guarantee
    (3) 150,000 pound production to count x $.0700 harvest price = 
$10,500.00 value of the production to count
    (5) $14,062.50 - $10,500.00 = $3,562.50
    (6) $3,562.50 x 1.000 share = $3,563.00 indemnity.
* * * * *
    L. Amend section 13 of Sec.  457.141 by removing the phrase 
``limited or''.
    8. Amend Sec.  457.161 as follows:
    A. Revise the introductory text of Sec.  457.161 to read as 
follows:


Sec.  457.161  Canola and rapeseed crop insurance provisions.

    The canola and rapeseed crop insurance provisions for the 2009 and 
succeeding crop years are as follows:
* * * * *
    B. Revise section 3 of Sec.  457.161 to read as follows:

    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    (a) You must elect to insure your canola and rapeseed with 
either revenue protection or yield protection by the sales closing 
date.
    (b) In addition to the requirements of section 3 of the Basic 
Provisions:
    (1) You must select the same percentage for both the projected 
price and the harvest price; and
    (2) The percentage of the projected price and harvest price 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 projected price and harvest price 
for a specific type, you must also choose 100 percent of the maximum 
projected price and harvest price for all other types.
* * * * *
    C. Revise section 6 of Sec.  457.161 to read as follows:

    6. Insured Crop.
    (a) In accordance with section 8 of the Basic Provisions, the 
crop insured will be all the canola and rapeseed in the county for 
which a premium rate is provided by the actuarial table:
    (1) In which you have a share;
    (2) That are planted for harvest as seed; and
    (3) That are not, unless allowed by Special Provisions or by 
written agreement:
    (i) Interplanted with another crop; or
    (ii) Planted into an established grass or legume.
    (b) Whenever the Special Provisions designate both fall and 
spring final planting dates, any fall canola or fall rapeseed that 
is damaged before the spring final planting date, to the extent that 
growers in the area would normally not further care for the crop:
    (1) Must be replanted to a fall type of the insured crop unless 
we agree that replanting is not practical; or
    (2) Must be replanted to a spring type of the insured crop, if 
it is practical to replant to a spring type and is not practical to 
replant to the fall type, to keep your insurance based on the fall 
type in force; and
    (3) That is replanted to a spring type of the same crop when it 
was practical to replant the fall type:
    (i) Will be insured as the spring type;
    (ii) Will use the production guarantee, premium, projected 
price, and harvest price applicable to the spring type; and
    (iii) Will be considered to be initially planted to the spring 
type.
* * * * *

    D. Amend section 9 of Sec.  457.161 as follows:
    a. Remove the word ``or'' at the end of paragraph (g);
    b. Revise paragraph (h); and
    c. Add a new paragraph (i).
    The revised and added text reads as follows:

    9. Causes of Loss.
* * * * *
    (h) Failure of the irrigation water supply due to a cause of 
loss specified in sections 9(a) through (g) that also occurs during 
the insurance period; or
    (i) For revenue protection, a decline in the harvest price below 
the projected price.

    E. Revise section 10 of Sec.  457.161 to read as follows:

    10. Replanting Payment.
    (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 10(a)(1), you must comply 
with all requirements regarding replanting payments contained in 
section 13 of the Basic Provisions;
    (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
    (4) The replanted crop must be planted at a rate sufficient to 
achieve a total (undamaged and new seeding) plant population that 
will produce at least the yield used to determine your production 
guarantee.
    (b) The maximum amount of the replanting payment per acre will 
be the lesser of 20 percent of the production guarantee or 175 
pounds, multiplied by your projected price, multiplied by your 
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) If the acreage is replanted to a crop type that is different 
than the insured crop type originally planted on the acreage:

[[Page 40252]]

    (1) The production guarantee, premium, and projected price and 
harvest price will be adjusted based on the replanted type;
    (2) Replanting payments will be calculated using your projected 
price and production guarantee for the crop type that is replanted 
and insured; and
    (3) A revised acreage report will be required to reflect the 
replanted type, as applicable.

    F. Revise section 11 of Sec.  457.161 to read as follows:


    11. Duties in the Event of Damage or Loss.
    Representative samples are required in accordance with section 
14 of the Basic Provisions.

    G. Amend section 12 of Sec.  457.161 as follows:
    a. Revise paragraphs (a) and (b);
    b. Revise paragraph (d)(4); and
    c. Remove all of paragraph (e) except for the first sentence.
    The revised text reads as follows:

    12. 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 each 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 of each type, as 
applicable, by your respective:
    (i) Production guarantee (per acre) and your applicable 
projected price if you elected yield protection; or
    (ii) Revenue protection guarantee (per acre) if you elected 
revenue protection;
    (2) Totaling the results of section 12(b)(1)(i) or 12(b)(1)(ii), 
whichever is applicable;
    (3) Multiplying the production to count of each type, as 
applicable, by your respective:
    (i) Projected price if you elected yield protection; or
    (ii) Harvest price if you elected revenue protection;
    (4) Totaling the results of section 12(b)(3)(i) or 12(b)(3)(ii), 
whichever is applicable;
    (5) Subtracting the result of section 12(b)(4) from the result 
of section 12(b)(2); and
    (6) Multiplying the result of section 12(b)(5) by your share.
    For example:
    You have 100 percent share in 50 acres of canola in the unit 
with a production guarantee (per acre) of 650 pounds, the projected 
price is $.1220, the harvest price is $.1110, and your production to 
count is 31,000 pounds.
    If you elected yield protection:
    (1) 50 acres x 650 pound production guarantee x $.1220 projected 
price = $3,965.00 value of the production guarantee
    (3) 31,000 pound production to count x $.1220 projected price = 
$3,782.00 value of the production to count
    (5) $3,965.00 - $3,782.00 = $183.00
    (6) $183.00 x 1.000 share = $183.00 indemnity; or
    If you elected revenue protection:
    (1) 50 acres x (650 pound production guarantee x $.1220 
projected price) = $3,965.00 revenue protection guarantee
    (3) 31,000 pound production to count x $.1110 harvest price = 
$3,441.00 value of the production to count
    (5) $3,965.00 - $3,441.00 = $524.00
    (6) $524.00 x 1.000 share = $524.00 indemnity.
* * * * *
    (d) * * *
    (4) Canola production that is eligible for quality adjustment, 
as specified in sections 12(d)(2) and (3), will be reduced in 
accordance with the quality adjustment factors contained in the 
Special Provisions.
* * * * *

    H. Amend section 14 of Sec.  457.161 by removing the phrase 
``limited or''.

    Signed in Washington, DC, on June 28, 2006.
James Callan,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 06-5962 Filed 7-13-06; 8:45 am]
BILLING CODE 3410-08-C