[Federal Register Volume 71, Number 186 (Tuesday, September 26, 2006)]
[Rules and Regulations]
[Pages 55995-56000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-8146]



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 Rules and Regulations
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  Federal Register / Vol. 71, No. 186 / Tuesday, September 26, 2006 / 
Rules and Regulations  

[[Page 55995]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AB97


Common Crop Insurance Regulations; Peanut Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
amendments to the Peanut Crop Insurance Provisions. The intended effect 
of this action is to provide policy changes and clarify existing policy 
provisions to better meet the needs of the insured producers. The 
changes will apply for the 2007 and succeeding crop years.

DATES: Effective Date: October 26, 2006.

FOR FURTHER INFORMATION CONTACT: Gary Johnson, Risk Management 
Specialist, Product Management, 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, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

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

Paperwork Reduction Act of 1995

    Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 
35), the collections of information in this rule have been approved by 
OMB under control number 0563-0053 through November 30, 2007.

E-Government Act Compliance

    FCIC is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

Unfunded Mandates Reform Act of 1995

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

Executive Order 13132

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

Regulatory Flexibility Act

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

Federal Assistance Program

    This program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.450.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which require intergovernmental consultation with State and 
local officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988 on civil justice reform. The provisions of this rule will not 
have a retroactive effect. The provisions of this rule will preempt 
State and local laws to the extent such State and local laws are 
inconsistent herewith. With respect to any direct action taken by FCIC 
under the terms of the crop insurance policy, the administrative appeal 
provisions published at 7 CFR part 11 must be exhausted before any 
action for judicial review of any determination or action by FCIC may 
be brought.

Environmental Evaluation

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

Background

    On January 25, 2006, FCIC published a notice of proposed rulemaking 
in the Federal Register at 71 FR 4056-4061 to revise 7 CFR 457.134 
Peanut Crop Insurance Provisions. Following publication of the proposed 
rule, the public was afforded 60 days to submit written comments and 
opinions. A total of 12 sets of comments were received from reinsured 
companies, agents, trade associations, producers, an insurance

[[Page 55996]]

service organization and other interested parties. The comments 
received and FCIC's responses are as follows:
    Comment: An insurance service organization commented on the 
definition of ``base contract price'' by asking if the maximum amount 
of a base contract price will always be specified in the Special 
Provisions. The commenter asked if it will be a consistent value for 
all states and counties. The commenter also asked if this maximum 
amount is intended to be set high enough to reflect contracted values 
for organic peanuts (i.e., values as high as $0.45 per pound or $900.00 
per ton).
    Response: The maximum amount of the base contract price will not be 
in the Special Provisions, but rather a price factor will be specified 
in the Special Provisions, which will be used by multiplying such 
factor by the price election issued by FCIC, as applicable and by 
peanut type. FCIC anticipates providing a price factor that is 
consistent for all states and counties. The base contract price may or 
may not reflect the value of organic peanuts grown under contract.
    Comment: An insurance service organization suggested a definition 
of ``damaged production'' or ``damaged peanuts'' should be added 
otherwise many non-insurable defects could be allowed and non-insurable 
discounts could be subtracted from the value of the peanuts by a buyer 
to result in a value less than 85 percent of the applicable price 
election when determining quality loss adjustment.
    Response: The definition of ``damaged'' in the Basic Provisions 
requires that the peanuts be injured or deteriorated before they are 
considered damaged. Further, section 14(e) of the Peanut Crop 
Provisions requires the damage to be due to an insurable cause of loss 
before quality adjustment will apply. As always, it is the producer's 
burden to establish the insured cause of loss that caused the damage. 
If such burden cannot be met or such cause of loss would not likely 
cause the type of damage found, quality adjustment would not be 
applicable. In addition, the peanuts must be graded, which will 
establish whether they have been injured or deteriorated. These 
provisions should be sufficient to ensure that only peanuts injured or 
deteriorated by insured causes of loss are subject to quality 
adjustment and preclude the possibility that non-insurable defects or 
non-insurable discounts are covered. Therefore, no change has been 
made.
    Comment: Three trade associations and an approved insurance 
provider commented that requiring the peanut producers to include all 
of their peanut acres in an enterprise unit would impose undue 
hardship. The commenters state that the number of peanut producers is 
decreasing; however, their acreage is increasing because of not being 
limited by the quota program. The commenters also claim that peanut 
producers deal with multiple farm serial numbers and under the current 
peanut loan program, virtually every load of peanuts is placed under 
loan through the Farm Service Agency (FSA) peanut loan program. Each 
farm has potentially differing land or soils characteristics, disease 
patterns, and rainfall frequency. The commenters state that a peanut 
loan is not made to the producer if the yield varies substantially from 
the average peanut yield history for the county.
    Response: FCIC agrees with the commenters and has removed the 
provision that limits peanuts grown under contract to an enterprise 
unit. Basic and optional units for peanuts will be allowed on peanuts 
consistent with other Category B crops, unless limited by the Special 
Provisions.
    Comment: An insurance service organization commented the definition 
of ``harvest'' would be better defined as ``the completion of digging 
and threshing'' rather than ``removal from the field.'' The commenter 
asked if removal from the field has been a problem for peanuts as it 
has for cotton.
    Response: FCIC agrees that digging and threshing are part of the 
harvest process and should be included in the definition. However, 
referring to removal from the field in the definition will also allow 
harvest to remain an event that ends the insurance period. Previously, 
section 10(c) stated that ``removal of peanuts from the field'' 
replaced harvest as the event marking the end of the insurance period 
for the purposes of section 11 of the Basic Provisions, but this 
definition of harvest will make section 10(c) no longer necessary and 
it will be removed.
    Comment: An insurance service organization asked why the definition 
of ``inspection certificate and sales memorandum'' was deleted. The 
commenter states that the memorandum is referring to the Farm Service 
Agency (FSA)-1007 and asks whether this form is still being utilized by 
FSA and buyers.
    Response: The inspection certificate and sales memorandum were 
mainly used to obtain the ``value per pound,'' which was a term used in 
the loss adjustment process. However, value per pound is no longer used 
in the policy now that price elections have been established through 
the contract or by FCIC. Therefore, the inspection certificate and 
sales memorandum are no longer necessary to determine the terms of the 
policy but the documents can be used as supporting documentation for 
production reporting and loss adjustment purposes.
    Comment: An insurance service organization commented on the 
definition of ``price election'' and stated that it should be clearer 
that the base contract price in the sheller contract may be limited if 
it exceeds the maximum amount in the Special Provisions. This also 
could be clearer about the distinctions between peanuts not grown under 
a sheller contract and those grown under a sheller contract.
    Response: The definition of ``base contract price'' specifies that 
it is limited to an amount not greater than the price election times 
the price factor contained in the Special Provisions. Therefore, it is 
not necessary to reiterate this limitation in the definition of ``price 
election.'' Further, sections 3(a) and (b) of the Peanut Crop 
Provisions specify what price will be used when peanuts are grown under 
a sheller contract and not grown under a sheller contract. However, 
FCIC agrees the provisions could be clearer and has revised them 
accordingly.
    Comment: An insurance service organization commented on the 
definition of ``segregation I, II, or III'' and indicated the 
definition may still be used in the minimum quality and handling 
standards for domestic and imported peanuts in the United States and 
Farm Service Agency (FSA) Notice PS-521.
    Response: The definition of ``segregation I, II, or III'' peanuts 
was necessary because the price election was originally based on 
average Commodity Credit Corporation support price for these type of 
quota and non-quota peanuts. However, with the elimination of quotas, 
FCIC is now establishing the price elections or the base contract price 
is used. Therefore, the term ``segregation I, II, or III'' is no longer 
necessary to establish a term of the policy. However, the Notice PS-521 
may be used as supporting documentation for production reporting and 
loss adjustment purposes.
    Comment: An insurance service organization asked with respect to 
section 12(a)(1) whether the insured (tenant and/or landlord) has to 
incur replant expense to collect a replant payment under this policy.
    Response: Under these Crop Provisions, replant payments are made

[[Page 55997]]

based on share. Therefore, if the tenant and/or landlord have an 
insured share of the insured crop, they are entitled to receive a 
replant payment for their applicable share, regardless of whether they 
have incurred any expenses. Since all other obligations and payments 
under the policy are based on share, it seemed more equitable and less 
burdensome to make replant payments also on a share basis.
    Comment: An insurance service organization commented regarding 
section 12(b)(1) and asked what price election is used for a replant 
payment when the insured has multiple sheller contracts each with 
differing base contract prices and/or the insured also has peanuts 
insurable but not grown under a contract and the price election is the 
FCIC announced price.
    Response: If the producer did not elect the price election 
specified in the Special Provisions and there are different base 
contract prices and/or the insured also has insurable peanuts not grown 
under a contract, replanting payments will be valued using the price 
election elected by the insured for planted acreage in each unit, as 
applicable. For an example, if the insured has two sheller contracts 
and the first base contract price is $0.23 per pound for Runner type 
peanuts, then $0.23 per pound will be used for the value of any 
replanted Runner type peanut acreage. If the second base contract is 
priced $0.21 per pound for Spanish type peanuts, then $0.21 per pound 
will be used for the value of any replanted Spanish type peanut 
acreage. If there are two separate sheller contracts for the same type 
peanuts, for example two contracts for Runner type peanuts at $0.23 and 
$0.21, respectively, if the contracts apply to separate optional units, 
each respective price election will apply to each respective unit. If 
the peanuts under both contracts are insured in the same unit, then the 
replanted acreage will be prorated to each contract based on the number 
of acres needed to fulfill each contract (For example, if there are 20 
acres in the unit and 10 were replanted, the production guarantee per 
acre for the unit is 2,000 pounds per acre, and the contract for $0.23 
was for 25,000 pounds and the contract for $0.21 was for 15,000 pounds, 
then the acreage under the $0.23 contract constitutes 62.5 percent of 
the acreage in the unit (25,000/40,000) and the other contract 37.5 
percent of the acreage (15,000/40,000). Of the 10 acres replanted, 6.25 
(10 x .625) would be paid at the $0.23 price election and 3.75 (10 x 
.375) acres would be paid at the $0.21 price election). If the insured 
has peanuts not grown under a contract or the producer selects the 
price election specified in the Special Provisions, the replanting 
payments will be valued using the price election as specified in the 
Special Provisions. The provisions will be so clarified.
    Comment: An insurance service organization commented regarding 
section 15 and asked what price election will be used for prevented 
planting acres when the insured has multiple sheller contracts each 
with the contracts based on production and/or other peanuts are 
insurable without a sheller contract.
    Response: If the producer did not elect the price election 
specified in the Special Provisions and there are different base 
contract prices and/or the insured also has insurable peanuts not grown 
under a contract, the prevented planting payment will be based on the 
price election elected by the insured. For an example, if the insured 
has two sheller contracts and if the first base contract price is $0.23 
per pound for Runner type peanuts, then $0.23 per pound will be used 
for the value of any prevented planted Runner type peanut acreage. If 
the second base contract price is $0.21 per pound for Spanish type 
peanut, then $0.21 per pound will be used for the value of any 
prevented planted Spanish type peanut acreage. If there are two 
separate sheller contracts for the same type peanuts, for example two 
contracts for Runner type peanuts at $0.23 and $0.21, respectively, if 
the contracts apply to separate optional units, each respective price 
election will apply to each respective unit. If the peanuts under both 
contracts are insured in the same unit, then the prevented planting 
acreage will be prorated to each contract based on the number of acres 
needed to fulfill each contract (For example, if there are 20 acres in 
the unit and 10 were prevented from planting, the production guarantee 
per acre for the unit is 2,000 pounds per acre, and the contract for 
$0.23 was for 25,000 pounds and the contract for $0.21 was for 15,000 
pounds, then the acreage under the $0.23 contract constitutes 62.5 
percent of the acreage in the unit (25,000/40,000) and the other 
contract 37.5 percent of the acreage (15,000/40,000). Of the 10 acres 
prevented from planting, 6.25 (10 x .625) would be paid at the $0.23 
price election and 3.75 (10 x .375) acres would be paid at the $0.21 
price election). If the insured has peanuts not grown under a contract 
or the producer selects the price election specified in the Special 
Provisions, the prevented planting payments will be valued using the 
price election as specified in the Special Provisions. The provisions 
will be so clarified.
    Comment: An insurance service organization asked if the peanut 
program would be rated accordingly for the addition of the prevented 
planting insurance coverage.
    Response: FCIC will adjust premium rates to reflect the addition of 
prevented planting coverage.
    In addition to the changes described above, FCIC has made minor 
editorial changes and the following changes:
    1. Removed the paragraph immediately preceding section 1 which 
refers to the order of priority in the event of conflict. This same 
information is contained in the Basic Provisions. Therefore, it is 
duplicative and has been removed in the Crop Provisions.
    2. Revised the definition of ``marketing association'' to clarify 
it is a cooperative approved by the Secretary of Agriculture to 
administer payment programs for peanuts.
    3. Revised section 14(b)(1) to remove redundant language for 
clarification.

List of Subjects in 7 CFR Part 457

    Crop insurance, Peanut, Reporting and recordkeeping requirements.

Final Rule

0
Accordingly, as set forth in the preamble, the Federal Crop Insurance 
Corporation amends 7 CFR part 457, Common Crop Insurance Regulations, 
for the 2007 and succeeding crop years as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

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

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


0
2. Revise Sec.  457.134 to read as follows:


Sec.  457.134  Peanut Crop Insurance Provisions.

    The Peanut Crop Insurance Provisions for the 2007 and succeeding 
crop years are as follows:
    FCIC policies: United States Department of Agriculture, Federal 
Crop Insurance Corporation.
    Reinsured policies: (Appropriate title for insurance provider).
    Both FCIC and reinsured policies.
    Peanut Crop Insurance Provisions.

1. Definitions

    Base contract price. The price for farmers' stock peanuts 
stipulated in the sheller contract, without regard to discounts or 
incentives that may apply, not to exceed the price election times 
the price factor specified in the Special Provisions.
    Farmers' stock peanuts. Picked or threshed peanuts produced in 
the United States, which are not shelled, crushed, cleaned, or

[[Page 55998]]

otherwise changed (except for removal of foreign material, loose 
shelled kernels and excess moisture) from the condition in which 
peanuts are customarily marketed by producers.
    Green peanuts. Peanuts that are harvested and marketed prior to 
maturity without drying or removal of moisture either by natural or 
artificial means.
    Handler. A person who is a sheller, a buying point, a marketing 
association, or has a contract with a sheller or a marketing 
association to accept all of the peanuts marketed through the 
marketing association for the crop year. The handler acquires 
peanuts for resale, domestic consumption, processing, exportation, 
or crushing through a business involved in buying and selling 
peanuts or peanut products.
    Harvest. The completion of digging and threshing and removal of 
peanuts from the field.
    Marketing association. A cooperative approved by the Secretary 
of the United States Department of Agriculture to administer payment 
programs for peanuts.
    Planted acreage. In addition to the requirement in the 
definition in the Basic Provisions, peanuts must initially be 
planted in a row pattern which permits mechanical cultivation, or 
that allows the peanuts to be cared for in a manner recognized by 
agricultural experts as a good farming practice. Acreage planted in 
any other manner will not be insurable unless otherwise provided by 
the Special Provisions or by written agreement.
    Price election. In addition to the definition in the Basic 
Provisions, the price election for peanuts insured in accordance 
with a sheller contract will be the base contract price specified in 
the sheller contract.
    Price factor. The factor specified in the Special Provisions 
that places limits on the base contract price.
    Sheller. Any business enterprise regularly engaged in processing 
peanuts for human consumption; that possesses all licenses and 
permits for processing peanuts required by the state in which it 
operates; and that possesses facilities, or has contractual access 
to such facilities, with enough equipment to accept and process 
contracted peanuts within a reasonable amount of time after harvest.
    Sheller contract. A written agreement between the producer and a 
sheller, or the producer and a handler, containing at a minimum:
    (a) The producer's commitment to plant and grow peanuts, and to 
deliver the peanut production to the sheller or handler;
    (b) The sheller's or handler's commitment to purchase all the 
production stated in the sheller contract (an option to purchase is 
not a commitment); and
    (c) A base contract price.
    If the agreement fails to contain any of these terms, it will 
not be considered a sheller contract.

2. Unit Division

    In accordance with the Basic Provisions, basic and optional 
units are applicable, unless limited by the Special Provisions.

3. Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities

    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) The price election percentage you choose for peanuts which 
are not insured in accordance with a sheller contract (may also 
include peanuts in excess of the amount required to fulfill your 
sheller contract) and for peanuts insured in accordance with a 
sheller contract must have the same percentage relationship to the 
maximum price election offered by us for peanuts not insured in 
accordance with a sheller contract. For example, if you choose 100 
percent of the maximum price election for peanuts not insured in 
accordance with a sheller contract, you must also choose 100 percent 
of the applicable price election for peanuts insured in accordance 
with a sheller contract.
    (b) You may not insure more pounds of peanuts than your 
production guarantee (per acre) multiplied by the number of acres 
that will be planted to peanuts. For the purposes of determining the 
guarantee, premiums, indemnities, replant payments, and prevented 
planting payments:
    (1) Where all production of peanuts is grown under one or more 
sheller contracts, you may elect a price election to cover all 
insurable peanuts that is the base contract price contained in such 
sheller contracts or the price contained in the Special Provisions.
    (2) Where some peanuts are grown under one or more sheller 
contracts but some peanuts are not grown under a sheller contract, 
you may elect:
    (i) The price election contained in the Special Provisions to 
cover all insurable peanuts; or
    (ii) The price election using the base contract price for 
peanuts grown under a sheller contract and the price contained in 
the Special Provisions for peanuts not grown under a sheller 
contract.
    (3) Where none of the peanuts are grown under a sheller 
contract, the price election will be the price contained in the 
Special Provisions.
    (c) Any peanuts excluded from the sheller contract at any time 
during the crop year will be insured at the price election specified 
in the Special Provisions.

4. Contract Changes

    In accordance with section 4 of the Basic Provisions, the 
contract change date is November 30 preceding the cancellation date.

5. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are:

------------------------------------------------------------------------
            State and county                           Dates
------------------------------------------------------------------------
Jackson, Victoria, Golliad, Bee, Live     January 15.
 Oak, McMullen, La Salle, and Dimmit
 Counties, Texas and all Texas Counties
 lying south, thereof.
El Paso, Hudspeth, Culberson, Reeves,     February 28.
 Loving, Winkler, Ector, Upton, Reagan,
 Sterling, Coke, Tom Green, Concho,
 McCulloch, San Saba, Mills, Hamilton,
 Bosque, Johnson, Tarrant, Wise, Cooke
 Counties, Texas, and all Texas counties
 south and east thereof; and all other
 states, except New Mexico, Oklahoma,
 and Virginia.
New Mexico; Oklahoma; Virginia; and all   March 15.
 other Texas counties.
------------------------------------------------------------------------

6. Report of Acreage

    In addition to the requirements of section 6 of the Basic 
Provisions, you must provide a copy of all sheller contracts to us 
on or before the acreage reporting date if you wish to insure your 
peanuts in accordance with your sheller contract.

7. [Reserved]

8. Insured Crop

    (a) In accordance with section 8 of the Basic Provisions, the 
crop insured will be all the peanuts in the county for which a 
premium rate is provided by the actuarial documents:
    (1) In which you have a share;
    (2) That are planted for the purpose of marketing as farmers' 
stock peanuts;
    (3) That are a type of peanut designated in the Special 
Provisions as being insurable;
    (4) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Planted for the purpose of harvesting as green peanuts;
    (ii) Interplanted with another crop; or
    (iii) Planted into an established grass or legume; and
    (5) Whether or not the peanuts are grown in accordance with a 
sheller contract (if not grown in accordance with the sheller 
contract, the peanuts will be valued at the price election issued by 
FCIC for the purposes of determining the production guarantee, 
premium, and indemnity).
    (b) You will be considered to have a share in the insured crop 
if, under the sheller contract, you retain control of the acreage on 
which the peanuts are grown, you are at risk of a production loss, 
and the sheller contract provides for delivery of the peanuts to the 
sheller or handler and for a stipulated base contract price.
    (c) A peanut producer who is also a sheller or handler may 
establish an insurable interest if the following requirements are 
met:
    (1) The producer must comply with these Crop Provisions;
    (2) Prior to the sales closing date, the Board of Directors or 
officers of the sheller or handler must execute and adopt a 
resolution that contains the same terms as a sheller

[[Page 55999]]

contract. Such resolution will be considered a sheller contract 
under this policy; and
    (3) Our inspection reveals that the processing facilities comply 
with the definition of a sheller contained in these Crop Provisions.

9. Insurable Acreage

    In addition to the provisions of section 9 of the Basic 
Provisions:
    (a) Any acreage of the insured crop damaged before the final 
planting date, to the extent that the majority of producers in the 
area would normally not further care for the crop, must be replanted 
unless we agree that replanting is not practical.
    (b) We will not insure any acreage:
    (1) On which peanuts are grown using no-till or minimum tillage 
farming methods unless allowed by the Special Provisions or written 
agreement; or
    (2) Which does not meet the rotation requirements, if any, 
contained in the Special Provisions.

10. Insurance Period

    In accordance with the provisions of section 11 of the Basic 
Provisions, the calendar date for the end of the insurance period is 
the date immediately following planting as follows:
    (a) November 30 in all states except New Mexico, Oklahoma, and 
Texas; and
    (b) December 31 in New Mexico, Oklahoma, and Texas.

11. Causes of Loss

    In accordance with the provisions of section 12 of the Basic 
Provisions, insurance is provided only against the following causes 
of loss that occur during the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or 
improper application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if due to a cause of 
loss contained in section 11(a) through (g) that occurs during the 
insurance period.

12. Replanting Payments

    (a) A replanting payment is allowed as follows:
    (1) In lieu of provisions in section 13 of the Basic Provisions 
that limit the amount of a replant payment to the actual cost of 
replanting, the amount of any replanting payment will be determined 
in accordance with these Crop Provisions;
    (2) Except as specified in section 12(a)(1), you must comply 
with all requirements regarding replanting payments contained in 
section 13 of the Basic Provisions; and
    (3) The insured crop must be damaged by an insurable cause of 
loss to the extent that the remaining stand will not produce at 
least 90 percent of the production guarantee for the acreage and it 
is practical to replant.
    (b) The maximum amount of the replanting payment per acre will 
be the lesser of:
    (1) 20.0 percent of the production guarantee, multiplied by your 
price election, multiplied by your share; or
    (2) $80.00 multiplied by your insured share.
    (c) If there are different base contract prices or you also have 
insurable peanuts not grown under a contract:
    (1) If the sheller contracts are for different types of peanuts 
or one type of peanut is grown under a sheller contract and another 
is not, replanting payments will be valued using the price election 
elected by you for the planted acreage, as applicable (For an 
example, you have two sheller contracts and the base contract price 
is $0.23 per pound for Runner type peanuts, then $0.23 per pound 
will be used for the value of any replanted Runner type peanut 
acreage. If the base contract price is $0.21 per pound for Spanish 
type peanuts, then $0.21 per pound will be used for the value of any 
replanted Spanish type peanut acreage.
    (2) If the sheller contracts are for the same type of peanuts 
but they have different base contract prices:
    (i) If the peanuts under each sheller contract are insured in 
separate optional units, each respective price election from each 
sheller contract will apply to each respective unit; or
    (ii) If all or some of peanuts under both sheller contracts are 
insured in the same unit, then the replanted acreage will be 
prorated to each contract based on the number of acres needed to 
fulfill each contract (For example, if there are 20 acres in the 
unit and 10 were replanted, the production guarantee per acre for 
the unit is 2,000 pounds per acre, and the contract for $0.23 was 
for 25,000 pounds and the contract for $0.21 was for 15,000 pounds, 
then the acreage under the $0.23 contract constitutes 62.5 percent 
of the acreage in the unit (25,000/40,000) and the other sheller 
contract 37.5 percent of the acreage (15,000/40,000). Of the 10 
acres replanted, 6.25 acres (10 x .625) would be paid at the $0.23 
price election and 3.75 acres (10 x .375) would be paid at the $0.21 
price election).
    (3) If the peanuts are not grown under a contract, the 
replanting payments will be valued using the price election as 
specified in the Special Provisions. If the unit has peanuts grown 
under a sheller contract and peanuts not grown under a sheller 
contract, the replanted acreage must be prorated between the 
contract and non-contract acreage by determining the acreage grown 
under a contract and the remaining acreage in the unit (For example, 
if there are 20 acres in the unit and 10 were replanted, the 
production guarantee per acre for the unit is 2,000 pounds per acre, 
there is a sheller contract for $0.23 for 25,000 pounds, the 
remaining peanuts are not grown under a sheller contract, and the 
price election in the Special Provisions is for $0.20. The peanuts 
under the sheller contract constitute 62.5 percent (25,000/40,000) 
of the acreage in the unit and remaining peanuts constitute 37.5 
percent (40,000-25,000/40,000) of the acreage. Of the 10 acres 
replanted, 6.25 acres (10 x .625) would be paid with the liability 
based on the $0.23 price election and 3.75 acres (10 x .375) would 
be paid with the liability based on the $0.20 price election).
    (d) 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.
    (e) Replanting payments will be calculated using your price 
election and production guarantee for the crop type that is 
replanted and insured. A revised acreage report will be required to 
reflect the replanted type, if applicable.

13. Duties in the Event of Damage or Loss

    Representative samples are required in accordance with section 
14 of the Basic Provisions.

14. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event 
you are unable to provide records of production that are acceptable 
to us for any:
    (1) Optional unit, we will combine all optional units for which 
acceptable records of production were not provided; or
    (2) Basic unit, we will allocate any commingled production to 
such units in proportion to our liability for the harvested acreage 
for the unit.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim by:
    (1) Multiplying the number of insured acres by the respective 
production guarantee (per acre) for peanuts insured under a sheller 
contract or not insured under a sheller contract, as applicable;
    (2) Multiplying each result of section 14(b)(1) by the 
applicable price election for peanuts insured at the base contract 
price or the price election specified in the Special Provisions, as 
applicable;
    (3) Totaling the results of section 14(b)(2);
    (4) Multiplying the production to count by the respective price 
election (If you have one or more sheller contracts, we will value 
your production to count by using your highest price election first 
and will continue in decreasing order to your lowest price election 
based on the amount of peanuts insured at each price election);
    (5) Totaling the results of section 14(b)(4);
    (6) Subtracting the result of section 14(b)(5) from the result 
of section 14(b)(3); and
    (7) Multiplying the result in section 14(b)(6) by your share.
    Example 1 (without a sheller contract):
    You have 100 percent share in 25 acres of Valencia peanuts in 
the unit, with a production guarantee (per acre) of 2,000 pounds, 
the price election specified in the Special Provisions is $0.17 per 
pound, and your production to count is 43,000 pounds.
    (1) 25 acres x 2,000 pounds = 50,000 pound guarantee;
    (2) 50,000 pound guarantee x $0.17 price election specified in 
the Special Provisions = $8,500.00 guarantee;
    (3) 43,000 pounds of production to count x $0.17 price election 
specified in the Special Provisions = $7,310.00;
    (4) $8,500.00 guarantee-$7,310.00 = $1,190.00; and
    (5) $1,190.00 x 1.000 = $1,190.00; Indemnity = $1,190.00.
    Example 2 (with a sheller contract):
    You have 100 percent share in 25 acres of Valencia peanuts in 
the unit, with a

[[Page 56000]]

production guarantee (per acre) of 2,000 pounds. You have two 
sheller contracts, the first is for 25,000 pounds, price election 
(contract) is $0.23 per pound, and the second is for 10,000 pounds, 
price election (contract) is $0.21 per pound. The price election 
(non-contract) specified in the Special Provisions is $0.17 per 
pound, and your production to count is 43,000 pounds.
    (1) 25 acres x 2,000 pounds = 50,000 pound guarantee;
    (2) 25,000 pounds contracted x $0.23 price election (contract) = 
$5,750.00;
    10,000 pounds contracted x $0.21 price election (contract) = 
$2,100.00;
    50,000 pound guarantee-25,000 pounds contracted-10,000 pounds 
contracted = 15,000 pounds not contracted;
    15,000 pounds not contracted x $0.17 price election (non-
contract) specified in the Special Provisions = $2,550.00;
    (3) $5,750.00 + $2,100.00 + $2,550.00 = $10,400.00 guarantee;
    (4) 43,000 pounds of production to count:
    25,000 pounds contracted x $0.23 price election (contract) = 
$5,750.00;
    10,000 pounds contracted x $0.21 price election (contract) = 
$2,100.00;
    43,000 pounds of production to count-25,000 pounds contracted 
(at $0.23 per pound)-10,000 pounds contracted (at $0.21 per pound) = 
8,000 pounds;
    8,000 pounds x $0.17 price election (non-contract) specified in 
the Special Provisions = $1,360.00;
    (5) $5,750.00 + $2,100.00 + $1,360.00 = $9,210.00;
    (6) $10,400.00 guarantee-$9,210.00 = $1,190.00; and
    (7) $1,190.00 x 1.000 = $1,190.00;
    Indemnity = $1,190.00.
    (c) The total production to count (in pounds) from all insurable 
acreage on the unit will include all appraised and harvested 
production.
    (d) All appraised production will include:
    (1) Not less than the production guarantee for acreage:
    (i) That is abandoned;
    (ii) Put to another use without our consent;
    (iii) Damaged solely by uninsured causes; or
    (iv) For which you fail to provide production records that are 
acceptable to us.
    (2) Production lost due to uninsured causes;
    (3) Unharvested production (mature unharvested production may be 
adjusted for quality deficiencies and excess moisture in accordance 
with section 14(e));
    (4) Potential production on insured acreage that you intend to 
put to another use or abandon, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
the acreage will end when you put the acreage to another use or 
abandon the crop. If agreement on the appraised amount of production 
is not reached:
    (i) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to 
leave intact, and provide sufficient care for, representative 
samples of the crop in locations acceptable to us (The amount of 
production to count for such acreage will be based on the harvested 
production or appraisals from the samples at the time harvest should 
have occurred. If you do not leave the required samples intact, or 
fail to provide sufficient care for the samples, our appraisal made 
prior to giving you consent to put the acreage to another use will 
be used to determine the amount of production to count); or
    (ii) If you elect to continue to care for the crop, the amount 
of production to count for the acreage will be the harvested 
production, or our reappraisal if additional damage occurs and the 
crop is not harvested; and
    (5) All harvested production from the insurable acreage.
    (e) Mature peanuts may be adjusted for quality when production 
has been damaged by an insured cause of loss.
    (1) To enable us to determine the number of pounds, price per 
pound, and the quality of production for any peanuts that qualify 
for quality adjustment, we must be given the opportunity to have 
such peanuts inspected and graded before you dispose of them.
    (2) If you dispose of any production without giving us the 
opportunity to have the peanuts inspected and graded, the gross 
weight of such production will be used in determining total 
production to count unless you submit a marketing record 
satisfactory to us which clearly shows the number of pounds, price 
per pound, and quality of such peanuts.
    (3) Such production to count will be reduced if the price per 
pound received for damaged peanuts is less than 85 percent of the 
price election by:
    (i) Dividing the price per pound for the damaged peanuts, as 
determined by us in accordance with section 14(e)(1), received for 
the insured type of peanuts by the applicable price election; and
    (ii) Multiplying this result by the number of pounds of such 
production.

15. Prevented Planting

    (a) Your prevented planting coverage will be 50 percent of your 
production guarantee for timely planted acreage. If you have 
additional levels of coverage, as specified in 7 CFR part 400, 
subpart T, and pay an additional premium, you may increase your 
prevented planting coverage to a level specified in the actuarial 
documents.
    (b) In addition to the provisions of section 17(i) of the Basic 
Provisions, if there are different base contract prices or you also 
have insurable peanuts not grown under a contract:
    (1) If the sheller contracts are for different types of peanuts 
or one type of peanut is grown under a sheller contract and another 
is not, the liability will be determined using the price election 
elected by you for planted acreage, as applicable (For an example, 
you have two sheller contracts and the base contract price is $0.23 
per pound for Runner type peanuts, then $0.23 per pound will be used 
for the value of any prevented planting Runner type peanut acreage. 
If the base contract price is $0.21 per pound for Spanish type 
peanuts, then $0.21 per pound will be used for the value of any 
prevented planting Spanish type peanut acreage.
    (2) If the sheller contracts are for the same type of peanuts 
but they have different base contract prices:
    (i) If the peanuts grown under each sheller contract are insured 
in separate optional units, the liability will be determined using 
each respective price election for the prevented planting acreage in 
each respective unit; or
    (ii) If all or some of the peanuts grown under the sheller 
contracts are insured in the same unit, then the liability for each 
contract must be determined separately using the respective price 
election and the number of eligible prevented planting acres to 
which the liability applies and will be determined by prorating 
prevented planting acreage to each contract based on the number of 
acres needed to fulfill each contract (For example, if there are 20 
acres in the unit and 10 were prevented from planting, the 
production guarantee per acre for the unit is 2,000 pounds per acre, 
and the contract for $0.23 was for 25,000 pounds and the contract 
for $0.21 was for 15,000 pounds, then the acreage under the $0.23 
contract constitutes 62.5 percent (25,000/40,000) of the acreage in 
the unit and the other contract 37.5 percent (15,000/40,000) of the 
acreage. Of the 10 acres prevented from planting, 6.25 acres (10 x 
.625) would be paid with the liability based on the $0.23 price 
election and 3.75 acres (10 x .375) would be paid with the liability 
based on the $0.21 price election).
    (3) If the peanuts are not grown under a contract, the liability 
for such peanuts will be based on the price election as specified in 
the Special Provisions. If the unit has peanuts grown under a 
sheller contract and peanuts not grown under a sheller contract, the 
eligible prevented planting acreage must be determined by 
determining the acreage grown under a contract and the remaining 
acreage in the unit (For example, if there are 20 acres in the unit 
and 10 were prevented from planting, the production guarantee per 
acre for the unit is 2,000 pounds per acre, there is a sheller 
contract for $0.23 for 25,000 pounds, the remaining peanuts are not 
grown under a sheller contract, and the price election in the 
Special Provisions is for $0.20. The peanuts under the sheller 
contract constitute 62.5 percent (25,000/40,000) of the acreage in 
the unit and remaining peanuts constitute 37.5 percent (40,000-
25,000/40,000) of the acreage. Of the 10 acres prevented from 
planting, 6.25 acres (10 x .625) would be paid with the liability 
based on the $0.23 price election and 3.75 acres (10 x .375) would 
be paid with the liability based on the $0.20 price election).

    Signed in Washington, DC, on September 18, 2006.
Eldon Gould,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 06-8146 Filed 9-25-06; 8:45 am]
BILLING CODE 3410-08-P