[Federal Register Volume 71, Number 221 (Thursday, November 16, 2006)]
[Proposed Rules]
[Pages 66698-66702]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-19320]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AC04


Common Crop Insurance Regulations; Mustard Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to add 
to 7 CFR part 457 a new Sec.  457.168 that provides insurance for 
mustard. The provisions will be used in conjunction with the Common 
Crop Insurance Policy Basic Provisions, which contain standard terms 
and conditions common to most crops. The intended effect of this action 
is to convert the mustard pilot crop insurance program to a permanent 
insurance program effective for the 2008 and succeeding crop years.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business January 16, 2007 and will be 
considered when the rule is to be made final. The comment period for 
information collections under the Paperwork Reduction Act of 1995 must 
be received on or before January 16, 2007.

ADDRESSES: Interested persons are invited to submit written comments, 
titled ``Mustard 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 7:00 a.m. to 4:30 p.m., c.s.t., Monday through Friday, 
except holidays, at the above address.

FOR FURTHER INFORMATION CONTACT: John McDonald, Risk Management 
Specialist, Deputy Administrator for Product

[[Page 66699]]

Management, Product Administration and Standards Division, Risk 
Management Agency, at the Kansas City, MO, address listed above, 
telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
rule is not significant for the purpose of Executive Order 12866 and, 
therefore, has not been reviewed by 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 proposed rule have been 
approved by OMB under control number 0563-0057 through June 30, 2006.

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 puposes.

Unfunded Mandates Reform Act of 1995

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

Executive Order 13132

    It has been determined under section 1(a) of Executive Order No. 
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 this regulation will not have a significant 
economical 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 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 
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 No. 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 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 or 7 CFR part 400, subpart J, for 
the informal administrative review process of good farming practices, 
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 impact on the 
quality of the human environment, health, and safety. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is needed.

Background

    FCIC offered the pilot crop insurance program for mustard beginning 
with the 1999 crop year in selected counties in the state of North 
Dakota. For the 2005 crop year, the mustard program was expanded to 
selected counties in the states of Montana, Idaho, Oregon and 
Washington. For the 2005 crop year, 2,149 policies were sold with 
29,674 acres insured under the pilot mustard program.
    FCIC intends to convert the mustard pilot crop insurance program to 
a permanent crop insurance program beginning with the 2008 crop year. 
To effectuate this, FCIC proposes to amend the Common Crop Insurance 
regulations (7 CFR part 457) by adding a new section Sec.  457.168, 
Mustard Crop Insurance Provisions. These provisions will replace and 
supersede the current unpublished pilot mustard crop provisions.

List of Subjects in 7 CFR Part 457

    Crop insurance, Mustard, 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, Common Crop 
Insurance Regulations, for the 2008 and succeeding crop years as 
follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

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

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

    2. Section 457.168 is added to read as follows:


Sec.  457.168  Mustard crop insurance provisions.

    The Mustard Crop Insurance Provisions for the 2008 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: Mustard Crop Insurance Provisions

1. Definitions
    Base contract price. The price per pound (U.S. dollars) stipulated 
in the processor contract (without regard to discounts or incentives) 
that will be used to determine your price election.
    Harvest. Combining or threshing for seed. A crop that is swathed 
prior to combining is not considered harvested.

[[Page 66700]]

    Mustard. A crop of the family Cruciferae, genus and species Sinapis 
alba (also called Brassica hirta or Brassica alba) or Brassica juncea.
    Planted acreage. In addition to the definition contained in the 
Basic Provisions, mustard seed must be planted in rows. Acreage planted 
in any other manner will not be insurable unless otherwise provided by 
the Special Provisions, actuarial documents, or by written agreement.
    Processor. Any business enterprise regularly engaged in buying and 
processing mustard, that possesses all licenses and permits for 
processing mustard 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 mustard within a 
reasonable amount of time after harvest.
    Processor contract. A written agreement between the producer and a 
processor, containing at a minimum:
    (a) The producer's commitment to plant and grow mustard of the 
types specified in the Special Provisions and to deliver the production 
to the processor;
    (b) The processor's commitment to purchase all the production 
stated in the processor contract; and
    (c) A base contract price.
    Salvage price. The cash price per pound (U.S. dollars) for mustard 
that qualifies for quality adjustment in accordance with section 13 of 
these Crop Provisions.
    Swathed. Severance of the stem and seed pods from the ground and 
placing into windrows without removal of the seed from the pod.
    Type. A category of mustard identified as a type in the Special 
Provisions.
2. Unit Division
    In addition to the requirements of section 34 of the Basic 
Provisions, optional units may also be established by type, if 
designated on the Special Provisions.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities
    (a) In addition to the requirements of section 3 of the Basic 
Provisions, you may select only one price election percentage for all 
the mustard in the county insured under this policy unless the Special 
Provisions allow different price elections by type.
    (b) If price elections are allowed by type, you can select one 
price election for each type designated in the Special Provisions. The 
price elections you choose must have the same percentage relationship 
to the base contract price (maximum price) offered for each type. For 
example, if you choose 100 percent of the maximum price for a specific 
type, you must also choose 100 percent of the maximum price for all 
other types.
    (c) If there are multiple base contract prices within the same 
unit, each will be considered a separate price election which will be 
multiplied by the number of acres under applicable processor contract 
(For processor contracts that stipulates the amount of production to be 
delivered, the number of acres is determined by dividing the amount of 
production to be delivered by the approved yield). These amounts will 
be totaled to determine the premium, liability, and indemnity for the 
unit.
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 March 15.
6. Report of Acreage
    In addition to the provisions in section 6 of the Basic Provisions, 
you must provide a copy of all processor contracts to us on or before 
the acreage reporting date.
7. Insured Crop
    (a) In accordance with section 8 of the Basic Provisions, the crop 
insured will be all mustard in the county for which a premium rate is 
provided by the actuarial table:
    (1) In which you have a share;
    (2) That is planted for harvest as seed;
    (3) That is grown under, and in accordance with, the requirements 
of a processor contract executed on or before the acreage reporting 
date and is not excluded from the processor contract at any time during 
the crop year; and
    (4) That is not, unless allowed by the Special Provisions or by 
written agreement:
    (i) Interplanted with another crop;
    (ii) Planted into an established grass or legume; or
    (iii) Planted following the harvest of any other crop in the same 
crop year.
    (b) You will be considered to have a share in the insured crop if, 
under the processor contract, you retain control of the acres on which 
the mustard is grown, your income from the insured crop is dependent on 
the amount of production delivered, and the processor contract provides 
for delivery of the mustard under specified conditions and at a 
stipulated base contract price.
    (c) A commercial mustard producer who is also a processor 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 processor must execute and adopt a resolution that 
contains the same terms as an acceptable processor contract. Such 
resolution will be considered a processor contract under this policy; 
and
    (3) Our inspection reveals that the processing facilities comply 
with the definition of a processor contained in these Crop Provisions.
8. Insurable Acreage
    In addition to the provisions of section 9 of the Basic Provisions:
    (a) Any acreage of the insured crop that is damaged before the 
final planting date, to the extent that a majority of producers in the 
area would not normally further care for the crop, must be replanted 
unless we agree that it is not practical to replant.
    (b) We will not insure any acreage that does not meet the rotation 
requirements, if applicable, contained in the Special Provisions.
    (c) The maximum insurable acreage will be determined by the acreage 
amount stated in the processor contract(s), if applicable.
9. Insurance Period
    In accordance with the provisions of section 11 of the Basic 
Provisions, the end of the insurance period is October 31 of the 
calendar year in which the crop is normally harvested unless otherwise 
stated in the Special Provisions.
10. 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 which 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; and
    (h) Failure of the irrigation water supply, if applicable, caused 
by a cause

[[Page 66701]]

of loss specified in section 10(a) through (g) that occurs during the 
insurance period.
11. Replanting Payment
    (a) In accordance with section 13 of the Basic Provisions, a 
replanting payment is allowed if the insured crop is 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 or we require you to replant in 
accordance with section 8(a).
    (b) The maximum amount of the replanting payment per acre will be 
the lesser of 20 percent of the production guarantee (per acre) or 175 
pounds, multiplied by the price election applicable to the acreage to 
be replanted, multiplied by your insured share.
    (c) When the mustard is replanted using a practice that is 
uninsurable as an original planting, the liability for the unit will be 
reduced by the amount of the replanting payment that is attributable to 
your share. The premium amount will not be reduced.
12. Duties in the Event of Damage or Loss
    In accordance with the requirements of section 14 of the Basic 
Provisions, the representative samples of the unharvested crop that we 
may require must be at least 10 feet wide and extend the entire length 
of each field in the unit. The samples must not be harvested or 
destroyed until the earlier of our inspection or 15 days after harvest 
of the balance of the unit is completed.
13. Settlement of Claim
    (a) We will determine your loss on a unit basis.
    (1) In the event you are unable to provide separate acceptable 
production records:
    (i) For any optional units, we will combine all optional units for 
which acceptable production records were not provided; or
    (ii) For any basic units, we will allocate any commingled 
production to such units in proportion to our liability on the 
harvested acreage for the units. For any processor contract that 
stipulates the amount of production to be delivered, and not 
withstanding the provisions of this section or any unit division 
provisions contained in the Basic Provisions or these Crop Provisions:
    (2) No indemnity will be paid for any loss of production on any 
unit if you produce sufficient production to fulfill the processor 
contracts forming the basis for the guarantee;
    (i) Production in excess of the guarantee from a unit will be 
included as production to count for the purposes of section 13(b)(4) 
for any unit where the amount of production to count is less than the 
guarantee for such unit until the production to count equals the 
guarantee for the unit; and
    (ii) Once all production in excess of the guarantee for a unit is 
allocated to units where the amount of production to count is less than 
the guarantee for such unit, an indemnity will be determined for those 
units where the adjusted production to count remains is less than the 
guarantee in accordance with section 13(b).
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the insured acreage of each mustard type, if 
applicable, by its respective production guarantee (per acre);
    (2) Multiplying each result in section 13(b)(1) by the respective 
price election for each type, if applicable;
    (3) Totaling the results in section 13(b)(2);
    (4) Multiplying the production to be counted for each type, if 
applicable (see section 13(c)), by its respective price election (If 
you have multiple processor contracts with varying base contract prices 
within the same unit, 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 production insured 
at each price election);
    (5) Totaling the results in section 13(b)(4);
    (6) Subtracting the total in section 13(b)(5) from the total in 
section 13(b)(3); and
    (7) Multiplying the result in section 13(b)(6) by your share.

    Example  1 (with one price election for the unit):
    You have 100 percent share in 20 acres of mustard in a unit with 
a 650 pound production guarantee (per acre) and a price election of 
$0.15 per pound. Due to insurable causes, you are only able to 
harvest 10,000 pounds and there is no appraised production.
    Your indemnity would be calculated as follows:
    (1) 20 acres x 650 pounds = 13,000 pounds guarantee;
    (2) 13,000 pounds x $0.15 price election = $1,950 value of 
guarantee;
    (3) $1,950 total value of guarantee;
    (4) 10,000 pounds x $0.15 price election = $1,500 value of 
production to count;
    (5) $1,500 total value of production to count;
    (6) $1,950 - $1,500 = $450 loss; and
    (7) $450 x 100 percent = $450 indemnity payment.
    Example  2 (with two price elections for the same 
unit):
    You have 100 percent share in 20 acres of mustard in a unit with 
650 pound production guarantee (per acre), 10 acres with a price 
election of $0.15 per pound, and 10 acres with a price election of 
$0.10 per pound, due to insurable causes you are only able to 
harvest 8500 pounds and there is no appraised production. Your 
indemnity would be calculated as follows:
    (1) 10 acres x 650 pounds = 6500 pounds guarantee x $0.15 price 
election = $975 value guarantee;
    (2) 10 acres x 650 pounds = 6500 pounds guarantee x $0.10 price 
election = $650 value guarantee;
    (3) $975 + $650 = $1,625 total value guarantee;
    (4) 6500 pounds production x $ 0.15 price election (higher price 
election) = $975 value of production to count;
    (5) 2000 pounds production x $0.10 price election (lower price 
election) = $200 value of production to count;
    (6) $975 + $200 = $1,175 total value of production to count;
    (7) $1,625 total value guarantee - $1,175 total value of 
production to count = $450 loss; and
    (8) $450 x 100 percent = $450 indemnity payment.
    (c) The total production to count (in pounds) from all insurable 
acreage in the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee (per acre) for 
acreage:
    (A) That is abandoned;
    (B) That is put to another use without our consent;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide acceptable production records;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production may 
be adjusted for quality deficiencies and excess moisture in 
accordance with section 13(d)); and
    (iv) 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 
that 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:
    (A) 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 
you 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

[[Page 66702]]

to determine the amount of production to count.); or
    (B) 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
    (2) All harvested production from the insurable acreage.
    (3) Any other uninsurable mustard production that is delivered 
to fulfill the processor contract.
    (d) Mature mustard may be adjusted for excess moisture and 
quality deficiencies. If moisture adjustment is applicable, it will 
be made prior to any adjustment for quality.
    (1) Mustard production will be reduced by 0.12 percent for each 
0.1 percentage point of moisture in excess of 10.0 percent. We may 
obtain samples of the production to determine the moisture content.
    (2) Mustard production will be eligible for quality adjustment 
only if:
    (i) Deficiencies in quality result in the mustard not meeting 
the requirements for acceptance under the processor contract because 
of damaged seeds (excluding heat damage), or a musty, sour, or 
commercially objectionable foreign odor; or
    (ii) Substances or conditions are present that are identified by 
the Food and Drug Administration or other public health 
organizations of the United States as being injurious to human or 
animal health.
    (3) Quality will be a factor in determining your loss in mustard 
production only if:
    (i) The deficiencies, substances, or conditions specified in 
section 13(d)(2) resulted from a cause of loss specified in section 
10 that occurs within the insurance period;
    (ii) The deficiencies, substances, or conditions specified in 
section 13(d)(2) result in a salvage price less than the base 
contract price;
    (iii) All determinations of these deficiencies, substances, or 
conditions specified in section 13(d)(2) are made using samples of 
the production obtained by us or by a disinterested third party 
approved by us; and
    (iv) The samples are analyzed by a grader in accordance with the 
Directive for Inspection of Mustard Seed, provided by the Federal 
Grain Inspection Service or such other directive or standards that 
may be issued by FCIC.
    (4) Mustard production that is eligible for quality adjustment, 
as specified in sections 13(d)(2) and (3), will be reduced by 
multiplying the quality adjustment factors contained in the Special 
Provisions (or the quality adjustment factors determined by dividing 
the salvage price by the base contract price (not to exceed 1.000) 
if the quality adjustment factors are not contained in the Special 
Provisions) by the number of pounds remaining after any reduction 
due to excessive moisture (the moisture-adjusted gross pounds) of 
the damaged or conditioned production.
    (i) The salvage price will be determined at the earlier of the 
date such quality adjusted production is sold or the date of final 
inspection for the unit subject to the following conditions:
    (A) Discounts used to establish the salvage price will be 
limited to those that are usual, customary, and reasonable.
    (B) The salvage price will not include any reductions for:
    (1) Moisture content;
    (2) Damage due to uninsured causes;
    (3) Drying, handling, processing, or any other costs associated 
with normal harvesting, handling, and marketing of the mustard; 
except, if the salvage price can be increased by conditioning, we 
may reduce the salvage price, after the production has been 
conditioned, by the cost of conditioning but not lower than the 
salvage price before conditioning; and
    (ii) We may obtain salvage prices from any buyer of our choice. 
If we obtain salvage prices from one or more buyers located outside 
your local market area, we will reduce such price by the additional 
costs required to deliver the mustard to those buyers.
    (iii) Factors not associated with grading under the Directive 
for Inspection of Mustard Seed, provided by the Federal Grain 
Inspection Service or such other directive or standards that may be 
issued by FCIC including, but not limited to, protein and oil will 
not be considered.
    (e) Any production harvested from plants growing in the insured 
crop may be counted as production of the insured crop on an 
unadjusted weight basis.
14. Late Planting
    In lieu of section 16(a) of the Basic Provisions, the production 
guarantee (per acre) for each acre planted to the insured crop during 
the late planting period will be reduced by 1 percent per day for each 
day planted after the final planting date, unless otherwise specified 
in the Special Provisions.
15. Prevented Planting
    In addition to the provisions contained in section 17 of the Basic 
Provisions, your prevented planting coverage will be 60 percent of your 
production guarantee (per acre) for timely planted acreage. If you have 
limited or 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 the levels specified in the actuarial 
documents.

    Signed in Washington, DC, on November 7, 2006.
Eldon Gould,
Manager, Federal Crop Insurance Corporation.
 [FR Doc. E6-19320 Filed 11-15-06; 8:45 am]
BILLING CODE 3410-08-P