[Federal Register Volume 72, Number 209 (Tuesday, October 30, 2007)]
[Rules and Regulations]
[Pages 61273-61288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-21238]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AC05


Common Crop Insurance Regulations; Potato Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
amendments to the Common Crop Insurance Regulations; Northern Potato 
Crop Insurance Provisions, Northern Potato Crop Insurance Quality 
Endorsement, Northern Potato Crop Insurance Processing Quality 
Endorsement, Potato Crop Insurance Certified Seed Endorsement, Northern 
Potato Crop Insurance Storage Coverage Endorsement, and the Central and 
Southern Potato 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 insureds, and to reduce 
vulnerability to fraud, waste, and abuse. The changes will apply for 
the 2008 and succeeding crop years for the Northern Potato Crop 
Insurance Provisions, Northern Potato Crop Insurance Quality 
Endorsement, Northern Potato Crop Insurance Processing Quality 
Endorsement, Potato Crop Insurance Certified Seed Endorsement, and the 
Northern Potato Crop Insurance Storage Coverage Endorsement. The 
Central and Southern Potato Crop Insurance Provisions changes will 
apply for the 2009 and succeeding crop years.

EFFECTIVE DATE: This rule is effective November 29, 2007.

FOR FURTHER INFORMATION CONTACT: Elizabeth Lopez, Risk Management 
Specialist, Product Management, Product Administration and Standards 
Division, Risk Management Agency, United States Department of 
Agriculture, Beacon Facility, Stop 0812, Room 421, PO Box 419205, 
Kansas City, MO 64141-6205, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

[[Page 61274]]

Executive Order 12866

    This Office of Management and Budget (OMB) has determined that this 
rule is non significant for the purpose of Executive Order 12866 and, 
therefore, it has not been reviewed by OMB.

Paperwork Reduction Act of 1995

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

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 
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 1,000 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 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 for judicial review of any determination or action by FCIC 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

    On July 28, 2006, FCIC published a notice of proposed rulemaking in 
the Federal Register at 71 FR 42761-42770 to revise 7 CFR 457.142 
Northern Potato Crop Insurance Provisions, 457.143 Northern Potato Crop 
Insurance Quality Endorsement, 457.144 Northern Potato Crop Insurance 
Processing Quality Endorsement, 457.145 Potato Crop Insurance Certified 
Seed Endorsement, 457.146 Northern Potato Crop Insurance Storage 
Coverage Endorsement, and 457.147 Central and Southern Potato Crop 
Insurance Provisions. Following publication of the proposed rule, the 
public was afforded 60 days to submit written comments and opinions.
    A total of 91 comments were received from 5 commenters. The 
commenters were reinsured companies, an agent, a trade association, an 
insurance service organization, and other interested parties. The 
comments received and FCIC's responses are as follows:

Northern Potato Crop Insurance Provisions

    Comment: A few commenters stated that the proposed addition of 
Kansas, San Juan county, NM; and ``* * * any other states or counties 
if allowed by the Special Provisions'' to the list of counties/states 
that use the Northern Potato Insurance Crop Provisions appears to be an 
incorporation of present policy rather than an actual change since the 
2006 Special Provisions for Kansas and San Juan County already refers 
to coverage under the Northern Potato Crop Insurance Provisions. The 
commenters stated that with the addition of the text ``and any other 
states or counties if allowed by the Special Provisions'', it will need 
to be made clear in the Special Provisions whether the specific state 
and county is covered under the Northern Potato Crop Insurance 
Provisions or the Central and Southern Provisions.
    Response: The commenters are correct that insurance in Kansas and 
San Juan County, New Mexico was previously allowed by the Special 
Provisions and this merely codifies their inclusion. Since Kansas is 
now included under these provisions, a calendar date for the end of the 
insurance period must be added. After additional review, it was 
determined that due to the agronomic conditions in the state, the end 
of the insurance period date needed to be changed from the date 
published in proposed rule. Once this final rule is published, any 
additional states or counties to be included under the Northern Potato 
Crop Insurance Provisions will be specified in the Special Provisions 
of the applicable state and counties.
    Comment: A few commenters stated that the new language in the 
proposed definition of ``grade inspection,'' that states ``produced or 
sold for'' should be

[[Page 61275]]

revised to ``produced for''. The commenters stated that in the Pacific 
Northwest, some growers grow potatoes for the open market and the 
potatoes may be produced for a different purpose for which they are 
sold. For example, they may be intending to grow for fresh, but they 
may change their minds if the processor is paying a better price. Other 
growers may be intending to go processing, but they do not have a 
processor contract, and they divert their potatoes to the fresh market 
if the quality and price is good. The commenters stated that this 
language does not have a big impact on the basic policy, since the 
basic policy only covers soft rot damage and freeze damage, which is 
the same for fresh or processing potatoes. However, it does have a big 
impact on the Quality Endorsement. The producer must select their 
quality option based on the intended use of the crop. The commenters 
stated that their intended use should be the basis for grading the 
crop, not the use for which they are sold. If the fresh potatoes are 
damaged, they will most likely be sold for processing. The commenters 
stated that to prevent abuse, the Quality Endorsement should state that 
producers who are intending to grow for the processing market as of the 
acreage reporting date are not allowed to purchase the fresh grades 
under the Quality Endorsement. The commenters agreed with the proposal 
to distinguish between the different grading standards, but recommend 
that, instead of explaining what the U.S. Standards are in this 
definition, a separate definition for ``U.S. Standards'' or ``U.S. 
Standards for Grades of Potatoes'' be created. Within this definition, 
it also would appear appropriate to include ``intended to be produced * 
* * '' This is because the producer is now required to inform the 
insurance provider of the insured's intention prior to any grade 
inspection that would include one made for an appraisal.
    Response: The commenter is correct that the definition of ``grade 
inspection'' should state, ``produced for'' and has made this change. 
Producers should not be penalized for attempting to mitigate their 
losses by selling their damaged potatoes in the processing market. 
However, the commenter is also correct that something needs to be done 
to prevent producers who intend to sell their crop for processing from 
purchasing the fresh market option in order to increase their 
indemnity. Therefore, producers who are growing potatoes for processing 
or chipping should not be allowed to purchase protection under the 
fresh market standards and FCIC has revised section 10 of the Northern 
Potato Crop Insurance Quality Endorsement accordingly. There is no need 
to provide a separate definition of ``U.S. Standards'' or ``U.S. 
Standards for Grades of Potatoes''. The term ``grade inspection'' does 
not contain a definition of U.S. Standards or U.S. Standards for Grades 
of potatoes. It only provides a reference so the reader will know which 
standard is applicable. Because those standards may change, it would 
not be appropriate to include them in this rule.
    Comment: A few commenters recommended optional units to be allowed 
by type as well as by the divisions allowed in the Basic Provisions in 
the Unit Division section. A commenter stated that since the production 
for each potato type (red, white, etc.) is stored and sold separately, 
the proposed rule would apply quality adjustment according to the final 
use of the potato production. The commenter stated that this proposal 
might require further study before implementation because of the effect 
it might have on the premium rates (if optional units are added by type 
but are not elected by the insured, the basic unit discount would 
apply). A commenter stated that currently production for each type is 
stored and sold separately. Each type has a separate end use, for 
example, reds are used for table stock and whites are used for 
chipping, and production records for each type are being kept separate. 
The commenter stated that the new proposed rule is also adding language 
for quality adjustments being made on final use of the potato. It only 
seems appropriate to allow the insured to have separate units based on 
each type that is listed in their respective Special Provisions.
    Response: Since no changes to the Unit Division section were 
proposed, the proposed changes would be substantive in nature and the 
public was not provided an opportunity to comment on the recommended 
changes, the recommendations cannot be incorporated in the final rule. 
No change has been made.
    Comment: A few commenters had concerns regarding the increasing of 
the percentage of the price election from 80 percent to 90 percent for 
unharvested acreage in proposed section 2(b). The commenters stated 
that FCIC originally included cost percentages for only 5 states. As 
most of the 5 states insure potatoes grown under irrigation, which 
would result in harvest costs being a lesser percentage of the total, 
due to the increased costs for irrigation, the commenters questioned 
whether these percentages reflect all areas of potato insurability. The 
commenters recommended the percentage remain at 80 percent.
    Response: This program change recognizes reduced input costs for 
unharvested production. Costs of production budgets represent the best 
available method for determining input costs. FCIC reviewed all data 
available including irrigated and non-irrigated cost of production 
budgets. The harvest costs were calculated as a percent of total costs 
and 10 percent represents the average cost for harvesting. No change 
has been made.
    Comment: A few commenters to proposed section 2(b) referenced the 
RMA Informational Memorandum issued 1-13-00, which clarified situations 
where the insured would not qualify for 100 percent of the price 
election even though the potato acreage met the definition of 
harvested, and recommended adding clarification to the policy 
provisions.
    Response: Although the informational memorandum has expired, FCIC 
agrees with the commenter and has included information provided in the 
memorandum into section 2(c). The provision is revised to state that 
potatoes that are lifted to the soil surface but are not removed from 
the field for will still receive the reduced price election for 
unharvested acreage. The provision also clarifies cases in which 
potatoes are damaged to the extent producers in the area would not 
normally further care for the production by clearly stating the reduced 
price election will apply even if the producer elects to continue to 
care for the crop.
    Comment: A comment was also received regarding section 2(c), 
expressing concern with the text ``will be deemed to have been 
destroyed''. The commenter stated that in addition to the Northern 
Potato Crop Insurance Provisions, this same phrase is found in the Crop 
Provisions for: Central and Southern Potatoes; Onions; Sugar Beets; 
Sweet Corn (Fresh Market); Tomatoes (Fresh Market); Tomatoes (Fresh 
Market--GPP); and Tomatoes (Processing). The commenter stated that 
currently FCIC has advised this means, ``No production will be counted 
against such acreage'' and that this would hold true even if such 
acreage was later harvested. The commenter stated that this is contrary 
to section 11(e) of these Crop Provisions, which states: ``All 
harvested production from the insurable acreage * * *'' is included as 
the total production to count for the unit. This should apply equally 
as well to the

[[Page 61276]]

amount of the appraised production determined during an appraisal for 
unharvested acreage. The commenter asked that this text be revised and 
clarified so all parties understand this provision with the same 
meaning and apply it equitably.
    Response: While FCIC has not proposed any changes to section 2(c), 
revisions are necessary to conform to the changes made in section 2(b). 
FCIC has revised section 2(c) to clarify that the reduced price 
election for unharvested acreage applies when producers in the area 
would not normally continue to care for the crop, even if the producer 
elects to continue such care and has deleted the phrase ``deemed to be 
destroyed''. FCIC will clarify other Crop Provisions containing the 
``deemed to be destroyed'' language when proposed revisions are made. 
When appraisals are required or when there is harvested production, any 
appraised or harvested production must be counted, regardless of 
whether the reduced price election is applicable.
    Comment: A commenter recommended removing section 2(c) and allowing 
section 11 to take order of precedence. If a loss is paid on acreage 
and the insured later harvests those acres, the loss should be reworked 
to include the production sold from those acres.
    Response: Section 2(c) is necessary to clarify situations in which 
the reduced price election applies. As stated in the response above, 
FCIC has removed the provision relating to the crop having been deemed 
destroyed and any production to count must be determined in accordance 
with applicable policy provisions.
    Comment: A few commenters recommended that section 9 be clarified 
to indicate, ``Fire due to lightning'' (as in the draft Tobacco Crop 
Provisions Proposed Rule) or ``Fire due to natural causes'' is covered 
(at least until the ``Combo'' Basic Provisions are issued with the 
clarification that all insured perils must be naturally occurring).
    Response: FCIC has not proposed any changes to section 9. Further, 
section 12 of the Basic Provisions already clearly states all causes of 
loss listed in the Crop Provisions must be due to a naturally occurring 
event. No change has been made.
    Comment: A few commenters requested that proposed section 
11(d)(1)(iv) be revised to read as follows: ``Unharvested production, 
including unharvested production on insured acreage that you intend to 
put to another use or abandon, or acreage damaged by insurable causes * 
* *''. This ties the intended use of both ``put to another'' and 
``abandon'' together.
    Response: FCIC has revised section 11(d)(1)(iv) accordingly.
    Comment: A few commenters stated that under proposed section 
11(e)(2), they fully agree potatoes should be sampled for quality at 
the end of the insurance period if the Storage Coverage Endorsement is 
not in effect. If the Storage Coverage Endorsement is in effect, the 
samples must be obtained within 60 days of the end of the insurance 
period. However, insurance providers often have little control over 
when the actual grading is completed because state/federal graders do 
the actual grading of the samples. The commenters stated that it is 
possible with a wide spread loss situation, the state/federal graders 
would not be able to complete the grading within 21 days of sampling, 
and the growers should not be penalized if this is the case. The 
commenters stated that there should be some flexibility built into this 
21-day grading period.
    Response: The proposed policy for 1998 included a 7-day grading 
period. The comments received for that proposed rule requested a longer 
time-period. FCIC granted a 21-day time-period in final rule. The 
longer time-period was provided to give flexibility to complete the 
grading process. In addition, since the provision added to the policy 
in 1998, FCIC is not aware of any instances where the 21-day grading 
period has proven to be inadequate as a result of wide-spread losses. 
No change has been made.
    Comment: A few commenters stated that under proposed section 
11(e)(3) it does not make sense for the basic policy to state, ``Prior 
to any quality adjustment, you notify us of the intended use of the 
potatoes so the applicable United States Standards will be applied.'' 
The standards that apply should be based on the quality option the 
grower purchased.
    Response: In some cases, it may not be evident which standards 
should apply based on the options a producer purchased. A producer who 
purchased the Northern Potato Crop Insurance Quality Option may grow 
for the processing french fry market, and another producer who elected 
the same endorsement may grow for the chipping market. In order to 
apply the proper standard, a producer must notify the insurance 
provider of the intended use. No change has been made.
    Comment: A few commenters stated the phrase, ``Prior to any quality 
adjustment, you must notify us of the intended use * * *'' in proposed 
section 11(e)(3) makes it sound as though the insured is the one doing 
the quality adjustment. The commenters also recommended changing ``* * 
* the applicable United States Standards will be applied'' to ``* * * 
the appropriate United States Standards will be applied'' to avoid 
having ``applicable'' and ``applied'' in the same phrase, or 
alternatively, ``* * * the United States Standards will be applied 
according to the definition of ``grade inspection''.
    Response: The commenter is correct that the term ``applicable'' 
should be changed to ``appropriate'' and has revised the provision 
accordingly. FCIC is not sure how the provision indicates the producer 
is performing quality adjustment. The provision only specifies the time 
frame by which the producer must provide notice of the intended use of 
the potatoes so the appropriate grading standards can be used. The 
definition of ``grade inspection'' makes it clear who will be 
conducting the quality adjustment.
    Comment: A few commenters requested section 11(f) be revised to 
state: ``Potato production to count that is eligible for quality 
adjustment * * *'' The change should be made in section 11(f) since the 
first two phrases in proposed section 11(g) and section 11(f) are 
identical otherwise.
    Response: FCIC agrees with the commenters. Although not in proposed 
rule, this is simply a conforming amendment required for section 11(f) 
to be consistent with the changes in proposed section 11(g) since both 
provisions were otherwise identical.
    Comment: A few commenters requested that, under proposed sections 
11(g)(1) and (2), FCIC consider if the various references in these 
subsections to ``(60 days after the end of insurance period if the 
Northern Potato Crop Insurance Storage Coverage Endorsement is 
applicable)'' and two references to ``(61 or more days * * *)'' could 
be moved to the Storage Coverage Endorsement. That endorsement has the 
different deadline and is of interest only to those who take that 
endorsement. The commenters stated that the remaining provisions in the 
Northern Potato Crop Insurance Provisions would be easier to read 
without these parenthetical interjections. Also, it would help to be 
consistent in referring either to ``the end of insurance period'' or 
``the end of the insurance period'' throughout.
    Response: Proposed section 11(g) provides the manner in which 
quality adjustment will be conducted under the policy. The Northern 
Potato Crop Insurance Storage Coverage Endorsement does not change this 
calculation. It only adjusts the time frame. Therefore, if FCIC were to

[[Page 61277]]

remove the parentheticals, it would have to repeat the calculations in 
each of the applicable endorsements which would increase their 
complexity and could result in potential conflicts. FCIC agrees that 
the references to the end of the insurance period should be the same 
and has changed the references throughout the Crop Provisions and 
Endorsements to specify the ``end of the insurance period.''
    Comment: A few commenters asked what is meant by the statement ``* 
* * Dividing the price that is received, or will be received * * *'' in 
proposed section 11(g)(2)(i)(A). Oftentimes the crop is put into 
storage and it will be up to ten months before the crop is sold. The 
commenters asked whether this means the insurance provider should hold 
the claim open until the crop is actually sold. The commenters stated 
that, with the volatility inherent in potato pricing, insurance 
providers cannot be expected to know what price will be received 10 
months after harvest, and they cannot use a local market price because 
that price will not reflect the damage of the specific insured's crop. 
If insurance providers wait until the potatoes are pulled out of 
storage and sold, it will be almost impossible to correlate production 
in the cellar with sold production as there will be shrinkage and rot 
showing up in storage and the packing shed or processor will likely 
blend between units before providing price and production information. 
The commenters stated that the language that states the amount of 
production will be the greater of the amount determined off the charts 
or the salvage value based on the price that will be received will be 
impossible to administer.
    Response: There have been problems in the past where the actual 
amount of production sold exceeded the amount of production used to 
determine the claim. FCIC has a responsibility to ensure that producers 
only receive the amount of indemnity to which they are entitled. Since 
the amount of production to count is adjusted based on the price 
received for the damaged production, the insurance provider must 
establish the value of the damaged production based on the sales 
records when the crop is sold. However, the use of the phrase ``will be 
received'' allows adjustment if the producer and purchaser can agree on 
a price even if the purchaser has not paid for the crop yet. This will 
minimize any delays in the loss adjustment process. FCIC understands 
the amount of production sold and the amount in storage at the end of 
the insurance period may not be the same because there will be some 
production loss resulting from shrinkage, etc. However, the loss will 
be based on the amount of production determined in accordance with 
section 11. The sales records will only be used to establish the price 
of damaged production for the purposes of quality adjustment.
    Comment: A commenter stated that the potato industry and grower 
groups have concerns with proposed section 11(g)(2)(ii) because 
combining the charts is difficult or possibly not workable due to the 
dramatic difference in the causation and temporal impacts of damage 
from events as different as freeze and rot. The commenter stated that 
it was not able to determine the effect of this change on coverage as 
there are different types of damages and the proposed chart, which 
details the changes and damages, is not published with this proposed 
rule. The commenter asked for an opportunity for discussion with FCIC 
regarding a single chart to handle these issues.
    Response: FCIC combined the adjustments for tuber rot and freeze 
damage to adequately reflect the value lost due to soft rot and freeze 
and to ease the administration of the quality adjustment provisions. 
The adjustment factors were included in proposed section 
11(g)(2)(ii)(A) so any interested party could determine the effects of 
the changes on coverage. FCIC has determined that although the causes 
are dissimilar, the amount of damage and effect of the damage is 
sufficiently similar that it made sense to combine these causes into 
one table to ease the administration of the policy, especially in cases 
where both causes of loss may have occurred.
    Comment: A commenter stated: that the current policy allows 
producers the opportunity to market potatoes even when a qualifying 
loss exists. The producer is allowed to accept 85 percent of the 
indemnity and continue to market the crop. This has been a positive 
aspect to growers motivated to perform in the market and positive to 
FCIC by reducing the percent of indemnity paid. The commenter states 
that the proposed changes would remove the capability of a grower to 
market the production while receiving a smaller indemnity. The 
commenter stated that the cost of the program will increase as 
producers maximize their indemnity and destroy the production. The 
production to count will decrease, as will their APH and therefore 
their ability to properly insure in the future. The commenter also 
stated that the proposed rule creates timeline limitations that may be 
unrealistic to the grower's normal market channels and delivery period.
    Response: In some cases, under current quality adjustment 
provisions, producers sold more production than the amount used to 
determine the production to count. For example, the previous provision 
provided that only 15 percent of production would be production to 
count when 10.4 percent of the production had tuber rot and production 
was retained by the producer for more than 60 days after the end of the 
insurance period. This represented a vulnerability in the program 
because FCIC only has the authority to pay for actual production 
losses. In cases where only 15 percent of production is production to 
count, the resulting indemnity payment represents a significant loss of 
the crop. If the producer is also able to market the same production 
for fair market value, the producer is receiving both an indemnity 
payment and market value on the same production. In order to reduce 
this vulnerability, a change has to be made in the policy provisions 
for quality adjustment procedures. Now producers will be paid an 
indemnity based on the actual production to count determined from the 
price received for sold production or the price agreed to between the 
producer and the purchaser for production to be sold in the future 
instead of the assignment of a set amount of production to count. FCIC 
is unaware of any timeline limitations caused by this change. Producers 
may still market their crop at any time.
    Comment: A few commenters commented on the prevented planting 
provisions in section 13. The commenters stated that they recommend 
eliminating the option to increase prevented planting coverage levels 
(in the second sentence) and that FCIC review the amount that is being 
paid for prevented planting purposes. The commenters stated that the 25 
percent payment rate may be excessive for potatoes. The commenters 
stated that if this sentence is retained, the reference to ``* * * 
limited or additional coverage * * * should be updated to ``* * * 
additional coverage * * *''
    Response: Since no changes to this section were proposed to section 
13, the recommended changes would be substantive in nature and the 
public was not provided an opportunity to comment on the recommended 
changes, the recommendations cannot be incorporated in the final rule. 
No change has been made.

Northern Potato Crop Insurance Quality Endorsement

    Comment: A few commenters recommended removing the references to 
different deadlines in proposed

[[Page 61278]]

sections 5(a)(1) and (2) and sections 6(a) and (b), if the Storage 
Coverage Endorsement is elected in accordance with the comments 
provided to proposed sections 11(g)(1) and (2) of the Northern Potato 
Crop Insurance Provisions.
    Response: As stated above in response to the same suggestion for 
proposed sections 11(g)(1) and (2) of the Northern Potato Crop 
Insurance Provisions, this change would add complexity to the Northern 
Potato Crop Insurance Storage Coverage Endorsement and would not 
improve clarity. No change has been made.
    Comment: A few commenters recommended FCIC minimize the repeated 
phrases in proposed section 5(a)(1) and in equivalent subsections of 
the Northern Potato Crop Provisions. The commenters recommend stating 
``For potatoes for which a price is agreed upon between you and a 
buyer, or that are delivered to a buyer with 21 days * * *''. 
Additional comments were received regarding proposed section 
5(a)(2)(i)(A). The commenters indicated if a price has not been agreed 
upon, it will not be possible for insurance providers to know what 
price ``will be received'' unless they wait to finalize the claim until 
the production has been sold.
    Response: As stated above, it would be more confusing and add more 
complexity to the Northern Potato Crop Insurance Quality Endorsement if 
the provisions were moved. As stated above, claims will have to remain 
open until production is sold or a price is agreed upon between the 
producer and the purchaser. No change has been made.

Northern Potato Crop Insurance Processing Quality Endorsement

    Comment: A few commenters recommended removal of the proposed 
definition of ``percentage factor'' since it is also included in the 
Northern Potato Crop Insurance Quality Endorsement. Proposed section 
2(a) states that this endorsement also requires that the Northern 
Potato Crop Insurance Quality Endorsement be in effect. Therefore, 
there is no need to have this definition in the Northern Potato Crop 
Insurance Processing Quality Endorsement as well.
    Response: To avoid any potential conflicts, there should only be 
one definition of a term in the policy documents unless exceptions are 
being made. However, to enable the producer to locate the definition, 
FCIC is including a cross reference to the definition in the Northern 
Potato Quality Endorsement.
    Comment: A commenter inquired about proposed section 2(b)(1), which 
requires a copy of the processor contract to be submitted on or before 
the acreage reporting date. The commenter is concerned the contract may 
not be immediately available so as to comply with this provision. In 
recent years, contract negotiations have continued into the planting 
season as a tactic to force growers into completing the negotiation 
process. Therefore, the commenter states that there is a need for a 
flexible time line for providing the contract to FCIC.
    Response: Since the acreage reporting date is well after the final 
planting date, most contracts should be executed by the acreage 
reporting date. Additionally, since insurance under the Northern Potato 
Crop Insurance Processing Quality Endorsement is only provided for 
acreage grown under contract, the producer must know by the acreage 
reporting date the acres that can be reported for insurance under the 
endorsement. No change has been made.
    Comment: A commenter asked about proposed section 5(b), which 
states that the number of acres insured under the endorsement will not 
exceed the actual number of acres planted to the potato types needed to 
fulfill the contract. However, proposed section 5(a) states all 
production of this type of potato must be covered. The commenter stated 
that excluding a small percentage of the production, as in proposed 
section 5(b), is contradictory to proposed section 5(a). As matter of 
production efficiency growers will generally complete the planting of a 
tract of land, particularly under irrigated conditions, which may 
create an uninsured portion of the field/crop. Processors generally 
purchase the ``overrun'' production from these small portions of the 
crop. The commenter stated that making them ineligible to be covered 
based on contract volume will reduce participation under the 
endorsement, reduce premium, and may worsen the loss ratio for this 
endorsement.
    Response: FCIC has revised the provision to indicate all acreage 
will be insurable unless the number of acres planted exceeds the amount 
necessary to fulfill the contract. In that case, the excess amount of 
acres will be insured under the Northern Potato Crop Insurance Quality 
Endorsement. FCIC expects the number of acres not covered under the 
processing endorsement will be minimal and will not impact program 
participation. Additionally, the acres not covered under the processing 
endorsement will still be covered under the quality endorsement.
    Comment: A commenter expressed concern in proposed section 6(a) 
regarding the requirement for production to be rejected by the 
processor. The commenter stated the problem that potatoes cannot be 
adjusted for quality if the potatoes are not rejected and there are 
occasions where the quality deficiencies (i.e., specific gravity, fry 
color and sugar ends, and other internal quality problems) result in a 
reduction of the contract price the grower receives from the buyer, not 
rejection. As a result, some growers are being docked by the buyer for 
these deficiencies but cannot receive an indemnity payment. The 
requirement for a letter of rejection from the processor is not fair 
and essentially denies the farmer his/her right of ownership of the 
potatoes and the right to receive indemnity payments from the policy.
    Response: FCIC has clarified section 6 of the Northern Potato Crop 
Insurance Processing Quality Endorsement to state potatoes valued less 
than the maximum price election because they do not meet the quality 
standards in the endorsement may qualify for quality adjustment. FCIC 
has also separated out the provisions that determine the circumstances 
that must occur before the potatoes are eligible for a quality 
adjustment from the actual quality standards and added a new section 7 
for clarity and ease of reading. Now the provisions will allow quality 
adjustment for potatoes that have been rejected by the processor as 
well as those that have been discounted below the base contract price 
(and valued less than the maximum price election) because they do not 
meet any of the standards in redesignated sections 7(a) through (d).
    Comment: A few commenters recommended including a definition for 
``rejected'' under section 1 because most processors have a sliding 
scale for pricing that includes bonuses for premium quality and 
reductions for less than premium quality. For example, even though the 
processor payment is based on number two grade, the contract may 
provide for a bonus if there are greater than 40 percent number one 
grade potatoes, and they may reduce the base price if there are less 
than 40 percent number one potatoes in the lot. The commenters stated 
that there is confusion about whether to use the salvage value if the 
potatoes receive less than the base price. The commenters stated that 
FCIC has provided clarification on this issue, and the adjustment only 
kicks in when the potatoes are rejected. To be considered rejected, the 
potatoes must be below the minimum standards, and the growers

[[Page 61279]]

must be released from their contract. The commenters state that the 
clarification provided by FCIC needs to be incorporated into the 
policy. Oftentimes the processor will reject the potatoes for being 
below the minimum standards in the contract and then buy them back. 
This is an acceptable practice and the adjustment should apply since 
the potatoes are released and a new contract is negotiated. The 
commenters recommended ``rejected'' be defined as not acceptable based 
on the minimum standards in the contract.
    Response: Clarification is needed with respect to production to 
count for potatoes failing to meet the quality standards. To address 
this issue, FCIC has revised the language to remove the reference to 
rejection and include adjustments to production to count when potatoes 
are valued less than the maximum price election for failure to meet the 
quality standards in redesignated section 7.
    Comment: A few commenters stated proposed sections 6(a) and (b) are 
so lengthy they are difficult to follow. A thorough revision could be 
difficult and time-consuming, but a few small changes might help 
somewhat. The commenters recommended removing some of the multiple 
references to ``the production to count * * * will be determined'' and 
similar phrases. In addition, proposed sections 6(a)(1) and (2) could 
begin ``If a price. * * *'' instead of ``For potatoes for which a 
price. * * *''
    Response: FCIC has revised the proposed provision to eliminate 
duplication. The proposed sections 6(a) and (b) have been separated 
into redesignated sections 6, 7 and 8 to make them easier to read and 
to reduce redundancy. Clarifications have also been made in 
redesignated sections 8(a) and (b) to make them easier to read.
    Comment: A few commenters objected to the language in proposed 
section 6(a)(2)(i)(A) referring to the ``price that is received, or 
will be received.'' The commenters state that the old language is 
preferable. The old language said if a price is not received or agreed 
upon in writing, production to count will be determined in accordance 
with the Northern Potato Crop Insurance Quality Endorsement. The 
commenters stated that this new language is really confusing (see 
comments above for section 11(g)(2)(i)(A) of the Northern Potato Crop 
Provision).
    Response: As stated above, claims cannot be finalized until after a 
price has been determined for damaged production. The provision states 
``received'' or ``will be received'' because a price may have been 
settled on, but the actual financial transaction may not yet have taken 
place. In cases where there is no price received and there is no agreed 
upon price, the claim must remain open until the price is known.
    Comment: A few commented on proposed sections 6 and 7, regarding 
the possibility of moving the references to different deadlines if the 
Northern Potato Crop Insurance Storage Endorsement is elected. The 
commenter referred to the comments provided to proposed sections 
11(g)(1) and (2) of the Northern Potato Crop Provisions and proposed 
section 5(a)(1) and (2) and 6(a) and (b) of the Northern Potato Crop 
Insurance Quality Endorsement.
    Response: As stated above, moving the deadlines will not improve 
clarity and will add complexity to the other endorsements. No change 
has been made.
    Comment: A few commented regarding proposed section 8 (redesignated 
section 9) and asked FCIC to consider moving instructions for 
determining any quality adjustment to section 6 or possibly put into a 
definition of ``U.S. Standards,'' as suggested for the Northern Potato 
Crop Provisions above. Proposed section 8 states (redesignated section 
9) ``all quality determinations must be based upon a grade inspection 
using the United States Standards for Grades of Potatoes for Processing 
or Chipping.''
    Response: It is not practical to put the definition of such 
standards because they are not determined by FCIC and the policy must 
be able to quickly adjust to any changes made to the standards by the 
applicable government agency. Therefore, the policy contains a 
reference to the standards that are used. However, redesignated section 
9 has been changed to include United States Standards for Grades of 
Potatoes for Processing or the United States Standards for Grades of 
Potatoes for Chipping.
    Comment: A few commented regarding proposed section 9 (redesignated 
section 10). The commenters question whether the changes are necessary 
and asked if the statements in the actuarial documents also will be 
revised to ``U.S. No. 1 grade'' and ``U.S. No. 2 grade''. This same 
change was not made in section 10 of the Northern Potato Crop Insurance 
Quality Endorsement.
    Response: FCIC made changes for clarification purposes and will 
make the same changes in the section 10 of the Northern Potato Crop 
Insurance Quality Endorsement, as well as the actuarial documents.

Potato Crop Insurance Certified Seed Endorsement

    Comment: A few commenters had concerns with provision proposed in 
section 1 that stated ``Any additional premium paid for coverage under 
the Northern Potato Storage Coverage Endorsement will not apply to the 
additional coverage provided under the terms of this endorsement''. The 
commenters are concerned that while the Background explanation in the 
proposed rule makes it clear the Northern Potato Crop Insurance 
Certified Seed Endorsement extends the time-period to discover damage 
beyond harvest that results from a cause of loss that occurred during 
the insurance period, the actual endorsement does not make this clear. 
The commenters point out that section 8 stated, ``Nothing herein 
extends the insurance period beyond the time period specified in 
section 8 of the Northern Potato Crop Provisions and section 11 of the 
Basic Provisions.'' The commenters also stated that there should be 
something in the Northern Potato Crop Insurance Certified Seed 
Endorsement that overrides section 14(c) of the Basic Provisions, which 
states you must submit a claim for indemnity declaring the amount of 
your loss not later than 60 days after the end of the insurance period 
unless you request an extension in writing. The commenters stated that 
the section references in redesignated sections 4 and 7 needs to be 
revised as well.
    Response: Although notification of failure to make certified seed 
can occur after the end of the insurance period, the damage and insured 
cause of loss must occur within the insurance period. FCIC has revised 
the provision to make it clear that the insurance period under this 
endorsement has not been extended. The section references in 
redesignated sections 4 and 7 should be corrected and FCIC has done so. 
Redesignated section 8 was also revised to clarify the time-period for 
the producer to submit any claim.

Northern Potato Storage Coverage Endorsement

    Comment: A commenter requested that sub-lethal freeze become an 
insurable cause of loss under the Northern Potato Crop Insurance 
Storage Coverage Endorsement. The commenter further stated that freeze 
should be covered in storage. Sub-lethal freezing does not show up 
during harvest, and can be confused with soft rot by graders who are 
grading potatoes under the storage coverage. The commenter recommends 
the freeze damage that was

[[Page 61280]]

not apparent at harvest, but becomes apparent in storage be covered 
under the Northern Potato Crop Insurance Storage Coverage Endorsement 
and the storage coverage rates increased accordingly to cover this 
risk.
    Response: Freeze damage that occurs in the field is apparent at 
harvest and there is no need to extend discovery period for freeze. 
According to industry experts sub lethal freeze can also be detected at 
harvest. If the tuber is cut open, it will brown much faster than a 
tuber that is not damaged. Therefore, to the extent this damage can be 
detected at harvest it would be covered as freeze damage. No change has 
been made.
    Comment: A few commenters had concerns with proposed section 
5(c)(2) and recommended allowing some flexibility regarding the 21-day 
grading period because it is possible state or federal graders will not 
be able to complete grading within this time period.
    Response: The proposed policy for 1998 included a 7-day time-
period. In response to requests at that time to extend the time-period, 
a 21-day period was granted. The longer time-period was provided to 
give flexibility to complete the grading process. Since it is unlikely 
that all of the sampling will take place at the same time, the grading 
time-period of 21 days should not be a hindrance. In addition, FCIC is 
not aware of any problems with the grading time-period and, therefore, 
does not see a need to extend the time allotment. No change has been 
made.
    Comment: A few commenters were in favor of reducing the storage 
period. Proposed sections 11(g)(1) and (2) of the Northern Potato Crop 
Insurance Provisions, and the Northern Potato Crop Insurance Storage 
Coverage Endorsement require samples to be obtained within 60 days of 
the end of insurance period. However, FCIC notes on page 42764 of the 
Proposed Rule that, ``several potato industry experts state that 
virtually all damage that occurs within the insurance period will 
become apparent within 45 days after production is harvested''. Based 
on this, the commenters recommended the time-period be reduced from the 
current 60 days to 45 days.
    Response: While FCIC has revised the provision to be more clear, 
FCIC has not proposed to revise the 60-day period for discovery of 
damage that occurred during the insurance period. Since a change in the 
discovery period would be a substantive change and the public was not 
provided an opportunity to comment, FCIC cannot make the recommended 
change.
    Comment: A comment was received stating that FCIC is incorrect when 
it concluded that no extension of the 60 day storage coverage period 
was necessary because ``several potato industry experts state virtually 
all damage that occurs within the covered insurance period will become 
apparent within 45 days after production is harvested.'' The commenter 
stated that the findings from this review actually present the contrary 
result and are exactly why the coverage is needed. Problems occur in 
storage that are caused by problems that occurred in the field that may 
be unrecognizable at harvest. With today's improved technology and 
storage capabilities, field problems may not display themselves until a 
later time. Differences in production, storage, and management cannot 
ensure that virtually all damage will become apparent within 45 days of 
harvest. It is impossible to predict with 100 percent certainty how 
each crop will react when put into storage.
    Response: It is possible that it may take longer than 45 days to 
discover all possible damage that occurred during the insurance period. 
FCIC did not propose to reduce the period to 45 days for this reason. 
At the request of producers, RMA reviewed the storage coverage issue in 
detail and determined the current provision of the 60-day discovery 
period is sufficient. FCIC did not discover any evidence of any damage 
that cannot be discovered within the current 60 day period. No change 
has been made.

Central and Southern Potato Crop Insurance Provisions

    Comment: A few commenters stated that with the addition of the text 
``and any other states or counties if allowed by the Special 
Provisions'', it will need to be made clear in the Special Provisions 
whether the specific state and county is covered under the Central and 
Southern Potato Crop Insurance Provisions.
    Response: Once the final rule is published, any additional states 
or counties to be included under the Central and Southern Potato Crop 
Insurance Provisions will be specified in the appropriate Special 
Provisions.
    Comment: A commenter provided the same comments they did to the 
Northern Potato Insurance Crop Provisions regarding the definition of 
``grade inspection'', ``unit division'', the increase in price election 
from 80 percent to 90 percent for unharvested acreage, and naturally 
occurring causes of loss.
    Response: FCIC reiterates its responses here and to the extent that 
it has made changes in the Northern Potato Crop Insurance Provisions, 
the same changes will be made to the Central and Southern Potato Crop 
Insurance Provisions.
    Comment: A few commented regarding proposed section 4(c). The 
commenters did not think it is necessary to add a fourth contract 
change date for the states and counties covered under the Central and 
Southern Potato Crop Insurance Provisions. Even if a fifth 
cancellation/termination date is deemed necessary, as proposed in 
section 5, the states with the new January 31 cancellation/termination 
date could stay under the September 30 contract change date, with the 
states/counties with a cancellation/termination date of November 30 or 
December 31.
    Response: The commenter is correct and the states and counties 
covered under the cancellation and termination date of January 31 will 
remain under the September 30 contract change date.
    Comment: A few commenters stated that they do not think that the 
states of Delaware, Maryland, New Jersey, North Carolina and Virginia 
need to have a cancellation/termination date of January 31, but should 
continue to be included under the December 31 date.
    Response: This change was requested from interested parties who 
felt that January 31 would more accurately reflect the growing 
conditions in those areas. FCIC reviewed the request and determined 
that the January 31 date was more appropriate.
    Comment: A few commenters had concerns with proposed section 
10(b)(1). The commenters asked FCIC to consider revising the last 
phrase from ``* * * occurs after potatoes have been placed in storage'' 
to ``* * * occurs or becomes evident in storage'' to match the earlier 
phrase and to match the Northern Potato Crop Insurance Provisions.
    Response: FCIC changed the provision accordingly.
    Comment: A comment was received regarding section 12(d)(1)(iv). The 
commenter stated it appears there should be reference made to section 
12(e) within this section because unharvested, appraised production is 
also determined based on section 12(e).
    Response: FCIC is not clear what is meant by this comment. 
Reference is already made to section 12(e) in section 12(d)(1)(iv). No 
change has been made.
    Comment: A few commenters had concern regarding section 
12(d)(1)(iv)-(v). The commenter asked if these provisions should be 
revised as proposed in the Northern Potato Crop

[[Page 61281]]

Insurance Provisions (i.e., reworded and combined into one).
    Response: Both the Northern Potato Crop Insurance Provisions and 
the Central and Southern Potato Crop Insurance Provisions should have 
the consistent language where it is appropriate and feasible to do so. 
Section 12(d)(iv) will be revised and section 12(d)(v) will be deleted 
in the Central and Southern Potato Crop Insurance Provisions to be 
consistent with the language in the Northern Potato Crop Insurance 
Provisions.
    Comment: A comment was received regarding section 12(d)(2). The 
commenter indicated the language in this subsection is not the same as 
in the Northern Potato Crop Provisions and recommended that one or both 
be revised to match. The Central/Southern Crop Insurance Provisions 
state ``All harvested production from the insurable acreage determined 
in accordance with section 12(e)(1).'' However, the Northern Crop 
Insurance Provisions state ``All harvested production from the 
insurable acreage (the amount of production prior to the sorting or 
discarding of any production).''
    Response: This provision cannot be made consistent. In the Central 
and Southern Potato Crop Insurance Provisions, only ``marketable lots'' 
of potatoes are included as production to count. In the Northern Potato 
Crop Insurance Provisions, all harvested production is counted but can 
be adjusted for quality deficiencies. No change has been made.
    Comment: A comment was received regarding the first paragraph of 
proposed section 12(e). The commenter recommended removing the phrase 
``With the exception of production with external defects''. This 
sentence currently gives the impression that this section does not 
pertain to those potatoes that have external defects, which is not 
accurate. Also, as the proposed rule reads, this section is not 
specific as to how internal defect determinations are made. The 
commenters recommend changing proposed section 12(e)(6)(ii) to read 
``Does not meet the standards of grading U.S. No. 2 or better on a 
field run sample due to internal defects; or''. The commenter believes 
this change would clarify how samples are to be taken to determine 
quality when internal defects are in question.
    Response: Clarification is needed regarding production with 
external defects. The provisions have been revised to clarify how such 
production will be handled for claims purposes. Further, section 12(e) 
specifically requires adjustments to be based on grade inspections, 
which determine the manner in which samples are to be taken. Therefore, 
the recommended change is not necessary.
    Comment: A comment was received regarding proposed section 
12(e)(1). The commenter disagreed with the revised text and recommend 
retaining the provision currently being used. The revised text now 
allows a determination of practical to separate production for 
unharvested production. This should not be allowed as unharvested 
production can always be separated.
    Response: Only those potatoes not grading U.S. No. 2 due to 
external defects are eligible for an adjustment. It does not matter 
whether the acreage is harvested or not. Further, the determination of 
whether it is practical to separate production is not dependent upon 
whether production is harvested or unharvested. The ability to separate 
production depends on the kind of damage that occurred and the method 
available to separate the damaged production. No change has been made.
    Comment: A question was asked regarding proposed section 12(e)(3). 
The commenter asked if there is any concern in the situation where a 
grade inspection must be made for unharvested, appraised production, 
the insured will always state his/her intended use will be the use that 
provides the most favorable grading standards for the insured. The 
producer will not be harvesting the production and the true intended 
use will not be known.
    Response: There is some concern the producer may specify the most 
favorable standard. However, given the fact a standard must be used to 
grade the potatoes, a standard must be identified. Every attempt should 
be made to use the most appropriate standard. For example, the type of 
potato produced could determine the standard used. If the type is for 
multiple uses and there is concern about which standard to apply, the 
insurance provider can ask for previous records and make a 
determination based on previous production history. The provision has 
been revised accordingly. FCIC has also similarly revised the Northern 
Potato Crop Insurance Provisions.
    Comment: A comment was received regarding proposed section 
12(e)(3). The commenter suggested the text requiring the insured to 
indicate the intended use prior to a grade inspection included in 
section 11 (Duties in the Event of Damage or Loss).
    Response: The placement of the provision under section 11, Duties 
in the Event of a Loss, does not substantially improve or clarify the 
provision. No change has been made.
    Comment: A few commented regarding the prevented planting 
provisions. The commenters recommend eliminating the option to increase 
prevented planting coverage levels (in the second sentence), as well as 
reviewing the amount that is being paid for prevented planting purposes 
(the 25 percent payment rate may be excessive for potatoes). However, 
if this sentence is retained, the reference to ``* * * limited or 
additional coverage * * *'' should be updated to ``* * * additional 
coverage * * *''
    Response: Since no changes to this section were proposed, the 
recommended changes are substantive in nature, and the public was not 
provided an opportunity to comment on the recommended changes, the 
recommendations cannot be incorporated in the final rule. No change has 
been made.
    In addition to the changes described above, FCIC has made minor 
editorial changes and the following changes:
    1. In all policies, standardized the references to the ``Northern 
Potato Crop Provisions,'' ``Northern Potato Quality Endorsement,'' 
``Northern Potato Processing Quality Endorsement,'' ``Potato Certified 
Seed Endorsement,'' and ``Northern Potato Storage Coverage 
Endorsement.''

Northern Potato Crop Insurance Provisions (Sec.  457.142)

    1. Revise the definition of ``grade inspection'' to include a 
standard ``for all other potatoes, The United States for Grades of 
Potatoes'' and to include the ``United States Standards of Potatoes for 
Seed''. This change is needed to recognize the separate U.S. quality 
standard for grading seed potatoes.
    2. Revise the end of the insurance period in Kansas to October 25.

Potato Crop Insurance Certified Seed Endorsement (Sec.  457.145)

    1. Corrected the citation in redesignated section 3 by replacing 
the number 5 with the number 4.
    2. Amend redesignated section 4 by adding paragraphs (a) and (b). 
These provisions were inadvertently omitted in the previous version.

Central and Southern Potato Crop Insurance Provisions (Sec.  457.147)

    1. Correct the spelling of ``Gains'' to Gaines County, Texas in 
section 9(e).
    2. Amend section 9 by revising paragraphs (a) through (e) and 
adding a new paragraph (f) to change the end of insurance dates for 
North Carolina and Virginia. Requests were received from

[[Page 61282]]

state agriculture agencies and state extension personnel to extend the 
end of the insurance period in these states. According to industry 
experts, changes in cultural practices have extended harvesting past 
the current dates. Therefore, certain varieties will require the 
extension of the end of the insurance period so adequate insurance 
protection can be offered. Although this information was received after 
the proposed rule was published, this change would give the producers 
sufficient time to complete harvest without going beyond the insurance 
period.

List of Subjects in 7 CFR Part 457

    Crop insurance, Potatoes, Reporting and recordkeeping requirements.

Final Rule

0
Accordingly, as set forth in the preamble, the Federal Crop Insurance 
Corporation amends 7 CFR part 457 effective for the 2008 and succeeding 
crop years for the Northern Potato Crop Insurance Provisions, Northern 
Potato Crop Insurance Quality Endorsement, Northern Potato Crop 
Insurance Processing Quality Endorsement, Potato Crop Insurance 
Certified Seed Endorsement, and the Northern Potato Crop Insurance 
Storage Coverage Endorsement. The Central and Southern Potato Crop 
Insurance Provisions changes will apply for the 2009 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(1), 1506(p).


0
2. Amend Sec.  457.142 as follows:
0
a. Revise the introductory text;
0
b. Remove the paragraph regarding document priority immediately 
preceding section 1 and revise the remaining paragraph below the 
heading ``Northern Potato Crop Provisions'' and before section 1;
0
c. Amend section 1 by revising the definitions of ``Certified seed'' 
and ``Grade inspection'', adding the definition of ``Potato certified 
seed program'', and removing the definitions of ``Processor contract'' 
and ``Reduction percentage'';
0
d. Amend section 2 by revising paragraphs (b) and (c);
0
e. Amend section 8 by revising paragraphs (d) and (e), and adding a new 
paragraph(f); and
0
f. Amend section 11 as follows:
0
A. Revise paragraph (b)(7);
0
B. Remove paragraph (d)(1)(iv), redesignate paragraph (d)(1)(v) as 
(d)(1)(iv) and revise newly redesignated paragraph (d)(1)(iv) 
introductory text;
0
C. Revise paragraph (e)(2);
0
D. Add new paragraph (e)(3);
0
E. Revise paragraph (f);
0
F. Revise paragraph (g); and
0
G. Remove paragraph (h).
    The added and revised text reads as follows:


Sec.  457.142  Northern potato crop insurance provisions.

    The Northern Potato Crop Insurance Provisions for the 2008 and 
succeeding crop years are as follows:
* * * * *
    These provisions will be applicable in: Alaska; Humboldt, Modoc, 
and Siskiyou Counties, California; Colorado; Connecticut; Idaho; 
Indiana; Iowa; Kansas; Maine; Massachusetts; Michigan; Minnesota; 
Montana; Nebraska; Nevada; San Juan County, New Mexico; New York; North 
Dakota; Ohio; Oregon; Pennsylvania; Rhode Island; South Dakota; Utah; 
Washington; Wisconsin; and Wyoming; and any other states or counties if 
allowed by the Special Provisions.
* * * * *
1. Definitions
* * * * *
    Certified seed. Potatoes that were entered into the potato 
certified seed program and that meet all requirements for production to 
be used to produce a seed crop for the next crop year or a potato crop 
for harvest for commercial uses in the next crop year.
* * * * *
    Grade inspection. An inspection in which samples of production are 
obtained by us, or a party approved by us, prior to the sale, storage, 
or disposal of any lot of potatoes, or any portion of a lot and the 
potatoes are evaluated and quality (grade) determinations are made by 
us, a laboratory approved by us, or a potato grader licensed or 
certified by the applicable State or the United States Department of 
Agriculture, in accordance with the United States Standards for Grades 
of Potatoes. The United States standards used to determine the quality 
(grade) deficiencies will be: For potatoes produced for chipping, the 
United States Standards for Grades of Potatoes for Chipping; for 
potatoes produced for processing, the United States Standards for 
Grades of Potatoes for Processing; for potatoes produced for seed, the 
United States Standards for Grades of Seed Potatoes; and for all other 
potatoes, the United States Standards for Grades of Potatoes. The 
quantity and number of samples required will be determined in 
accordance with procedure issued by FCIC.
* * * * *
    Potato certified seed program. The state program administered by a 
public agency responsible for the seed certification process within the 
state in which the seed is produced.
* * * * *
2. Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities
* * * * *
    (b) If the production from any acreage of the insured crop is not 
harvested, the price used to determine your indemnity will be 90 
percent of your price election. This requirement is not applicable to 
the certified seed endorsement price election.
    (c) The price election for unharvested acreage will apply to any 
acreage of potatoes damaged to the extent that similarly situated 
producers in the area would not normally care for the potatoes even if 
you choose to continue to care for or harvest them. Potatoes that are 
lifted to the soil surface and not removed from the field will also 
receive the price election for unharvested acreage.
* * * * *
8. Insurance Period
* * * * *
    (d) October 20 in Maine;
    (e) October 25 in Kansas; and
    (f) October 31 in Humboldt, Modoc, and Siskiyou Counties, 
California; Connecticut; Idaho; Massachusetts; San Juan County, New 
Mexico; New York; Ohio; Oregon; Pennsylvania; Rhode Island; and 
Washington.
* * * * *
11. Settlement of Claim
* * * * *
    (b) * * *
    (7) Multiplying the result of section 11(b)(6) by your share.
    For example:
    You have a 100 percent share in 100 harvested acres of potatoes in 
the unit, with a guarantee of 150 hundredweight per acre and a price 
election of $4.00 per hundredweight. You are only able to harvest 
10,000 hundredweight. Your indemnity would be calculated as follows:
    (1) 100 acres x 150 hundredweight = 15,000 hundredweight guarantee;
    (2) 15,000 hundredweight x $4.00 price election = $60,000.00 value 
of guarantee;
    (4) 10,000 hundredweight x $4.00 price election = $40,000.00 value 
of production to count;

[[Page 61283]]

    (6) $60,000.00 - $40,000.00 = $20,000.00 loss; and
    (7) $20,000.00 x 100 percent = $20,000.00 indemnity payment.
    You also have a 100 percent share in 100 unharvested acres of 
potatoes in the same unit, with a guarantee of 150 hundredweight per 
acre and a price election of $3.60 per hundredweight. (The price 
election for unharvested acreage is 90.0 percent of your elected price 
election ($4.00 x 0.90 = $3.60.)) This unharvested acreage was 
appraised at 35 hundredweight per acre for a total of 3500 
hundredweight as production to count. Your total indemnity for the 
harvested and unharvested acreage would be calculated as follows:
    (1) 100 acres x 150 hundredweight = 15,000 hundredweight guarantee 
for the harvested acreage, and
    100 acres x 150 hundredweight = 15,000 hundredweight guarantee for 
the unharvested acreage;
    (2) 15,000 hundredweight guarantee x $4.00 price election = 
$60,000.00 value of guarantee for the harvested acreage, and
    15,000 hundredweight guarantee x $3.60 price election = $54,000.00 
value of guarantee for the unharvested acreage;
    (3) $60,000.00 + $54,000.00 = $114,000.00 total value of guarantee;
    (4) 10,000 hundredweight x $4.00 price election = $40,000.00 value 
of production to count for the harvested acreage, and 3500 
hundredweight x $3.60 = $12,600.00 value of production to count for the 
unharvested acreage;
    (5) $40,000.00 + $12,600.00 = $52,600.00 total value of production 
to count;
    (6) $114,000.00 - $52,600.00 = $61,400.00 loss; and
    (7) $61,400.00 loss x 100 percent = $61,400.00 indemnity payment.
* * * * *
    (d) * * *
    (1) * * *
    (iv) Unharvested production, including unharvested production on 
insured acreage you intend to put to another use or abandon, or acreage 
damaged by insurable causes and for which you cease to provide further 
care, 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 cease providing care for the crop. 
This unharvested production may be adjusted in accordance with sections 
11(e), (f), and (g); and the value of all unharvested production will 
be calculated using the reduced price election determined in section 
2(b). If agreement on the appraised amount of production is not 
reached:
* * * * *
    (e) * * *
    (2) A grade inspection is completed no later than 21 days after the 
end of the insurance period (if the Northern Potato Storage Coverage 
Endorsement is applicable, samples must be obtained within 60 days 
after the end of the insurance period and quality (grade) 
determinations must be completed with 21 days of sampling); and
    (3) Prior to any grade inspection, you must notify us of the 
intended use of the potatoes so the appropriate United States standards 
will be applied (We may request previous sales records to verify your 
claimed intended use or base the intended use on the type of potato 
grown if such potatoes are not usually grown for the intended use you 
reported).
    (f) Potato production to count that is eligible for quality 
adjustment, as specified in section 11(e), with 5 percent damage or 
less (by weight) will be adjusted 0.1 percent for each 0.1 percent of 
damage through 5.0 percent.
    (g) Potato production to count that is eligible for quality 
adjustment, as specified in section 11(e), with 5.1 percent damage or 
more (by weight) will be determined as follows:
    (1) If a price is agreed upon between you and a buyer within 21 
days (60 days if the Northern Potato Storage Coverage endorsement is 
applicable), after the end of the insurance period, or the production 
is delivered to a buyer within 21 days (60 days if the Northern Potato 
Storage Coverage Endorsement is applicable), after the end of the 
insurance period, the amount of production will be determined by:
    (i) Dividing the price per hundredweight received or that will be 
received by the highest price election designated in the Special 
Provisions or addendum thereto for the insured potato type (if the 
production is sold for a price lower than the value appropriate to and 
representative of the local market, we will determine the value of the 
production based on the price you could have received in the local 
market); and
    (ii) Multiplying the result (not to exceed 1.0) by the number of 
hundredweight of sold or to be sold production (We may verify this 
after the production has actually been sold); or
    (2) If a price is not agreed upon between you and a buyer and the 
production is not delivered within 21 days (60 days if the Northern 
Storage Coverage Endorsement is applicable) after the end of the 
insurance period, and that remain in storage 22 or more days (61 or 
more days if the Northern Potato Storage Coverage Endorsement is 
applicable), after the end of the insurance period, the amount of 
production will be the greater of:
    (i) The amount determined by:
    (A) Dividing the price per hundredweight that is received, or will 
be received after the end of the applicable insurance period, by the 
highest price election designated in the Special Provisions or addendum 
thereto for the insured potato type (if the production is sold for a 
price lower than the value appropriate to and representative of the 
local market, we will determine the value of the production based on 
the price you could have received in the local market); and
    (B) Multiplying the result of section 11(g)(2)(i)(A) (not to exceed 
1.0) by the number of hundredweight of sold or to be sold production 
(We may verify this after the production has actually been sold); or
    (ii) The amount of production determined by:
    (A) Reducing any harvested or appraised production:
    (1) By 0.1 percent for each 0.1 percent damage through 5.0 percent;
    (2) By 0.5 percent for each 0.1 percent of damage from 5.1 percent 
through 6.0 percent;
    (3) By 1.0 percent for each 0.1 percent of damage from 6.1 through 
13.5 percent; or
    (B) Including 15 percent of the production when damage is in excess 
of 13.5 percent.
    (iii) For any production discarded:
    (A) Within 21 days (60 days if the Northern Potato Storage Coverage 
Endorsement is applicable), after the end of the insurance period, the 
amount of production to count will be:
    (1) Zero if we determine the production could not have been sold; 
or
    (2) Determined in accordance with section 11(g)(2)(ii) if we 
determine the production could have been sold; or
    (B) Later than 21 days (60 days if the Northern Potato Storage 
Coverage Endorsement is applicable), after the end of the insurance 
period, the amount of production to count will be adjusted in 
accordance with section 11(g)(2)(ii).
* * * * *

0
3. Amend Sec.  457.143 as follows:
0
a. Revise introductory text;
0
b. Remove section 9 and redesignate sections 5 through 8 as 7 through 
10;
0
c. Redesignate sections 1 through 4, as sections 2 through 5, and add 
new section 1;
0
d. Revise redesignated section 5;
0
e. Add new section 6; and
0
f. Revise redesignated section 10.

[[Page 61284]]

    The revised and added text read as follows:


Sec.  457.143  Northern potato crop insurance--quality endorsement.

    The Northern Potato Crop Insurance Quality Endorsement Provisions 
for the 2008 and succeeding crop years are as follows:
* * * * *
1. Definitions
    Percentage factor. The historical average percentage of potatoes 
grading U.S. No. 2 or better, by type, determined from your records. If 
at least 4 continuous years of records are available, the percentage 
factor will be the simple average of the available records not to 
exceed 10 years. If less than 4 years of records are available, the 
percentage factor will be determined based on a combination of your 
records and the percentage factor contained in the Special Provisions 
so that such a combination would be the functional equivalent of 4 
years of records.
* * * * *
    5. We will adjust the production to count determined in accordance 
with section 15 of the Basic Provisions and section 11 of the Northern 
Potato Crop Provisions for potatoes that do not meet U.S. No. 2 grade 
requirements from unharvested acreage or harvested acreage that is 
stored or is marketed after a grade inspection due to:
    (a) Internal defects as long as the number of potatoes with such 
defects are in excess of the tolerances allowed for the U.S. No. 2 
grade potatoes on a lot basis and are not separable from undamaged 
production using methods used by the packers or processors to whom you 
normally deliver your potato production as follows:
    (1) If a price is agreed upon between you and a buyer within 21 
days (60 days if the Northern Potato Storage Coverage Endorsement is 
applicable) after the end of the insurance period, or the production is 
delivered to a buyer within 21 days (60 days if the Northern Potato 
Storage Coverage Endorsement is applicable) after the end of the 
insurance period, the amount of production will be determined by 
(adjustment under section 5(a)(1) or 5(a)(2)(i) will not be performed 
if it already has been performed under the terms of section 11(g) of 
the Northern Potato Crop Provisions):
    (i) Dividing the price received or that will be received per 
hundredweight by the highest price election designated in the Special 
Provisions or addendum thereto for the insured potato type (if the 
production is sold for a price lower than the value appropriate to and 
representative of the local market, we will determine the value of the 
production based on the price you could have received in the local 
market); and
    (ii) Multiplying the result (not to exceed 1.0) by the number of 
hundredweight of sold or to be sold production (We may verify this 
after the production has actually been sold); or
    (2) If a price is not agreed upon between you and a buyer and the 
production is not delivered within 21 days (60 days if the Northern 
Potato Storage Coverage Endorsement is applicable) after the end of the 
insurance period, and the potatoes remain in storage 22 or more days 
(61 or more days if the Northern Potato Storage Coverage Endorsement is 
applicable), after the end of the insurance period, the amount of 
production will be the greater of:
    (i) The amount of production determined by:
    (A) Dividing the price per hundredweight that is received, or will 
be received after the end of the applicable insurance period, by the 
highest price election designated in the Special Provisions or addendum 
thereto for the insured potato type (if the production is sold for a 
price lower than the value appropriate to and representative of the 
local market, we will determine the value of the production based on 
the price you could have received in the local market); and
    (B) Multiplying the result of section 5(a)(2)(i)(A) (not to exceed 
1.0) by the number of hundredweight of sold or to be sold production 
(We may verify this after the production has actually been sold); or
    (ii) The amount of production determined as follows:
    (A) The combined weight of sampled potatoes grading U.S. No. 2 or 
better (the amount of potatoes grading U.S. No. 2 will be based on a 
grade inspection completed no later than 21 days after the end of the 
insurance period (if the Northern Potato Storage Coverage Endorsement 
is applicable), samples must be obtained within 60 days after the end 
of the insurance period and a grade inspection completed within 21 days 
of sampling) and are damaged by freeze or tuber rot will be divided by 
the total sample weight;
    (B) The percentage determined in section 5(a)(2)(ii)(A) will be 
divided by the applicable percentage factor; and
    (C) The result of section 5(a)(2)(ii)(B) will be multiplied by the 
amount of production to count determined in accordance with section 15 
of the Basic Provisions and section 11 of the Northern Potato Crop 
Provisions.
    (b) Factors other than those specified in section 5(a), in 
accordance with section 5(a)(2)(ii).
    6. For any production that qualifies for adjustment in accordance 
with section 5(a) and that is discarded:
    (a) Within 21 days (60 days if the Northern Potato Storage Coverage 
Endorsement is applicable), after the end of the insurance period, the 
amount of production to count will be:
    (1) Zero if we determine the production could not have been sold; 
or
    (2) Determined in accordance with section 5(a)(2)(ii) if we 
determine the production could have been sold; or
    (b) Later than 21 days (60 days if the Northern Potato Storage 
Coverage Endorsement is applicable), after the end of the insurance 
period, the amount of production to count will be adjusted in 
accordance with section 5(a)(2)(ii).
* * * * *
    10. The actuarial documents may provide ``U.S. No. 1 grade'' in 
place of ``U.S. No. 2 grade'' as used in this endorsement.
    (a) If both U.S. No.1 and U.S. No. 2 grades are available in the 
actuarial documents, you may elect U.S. No. 1 or 2 grade by potato type 
or group, if separate types or groups are specified in the Special 
Provisions.
    (b) If both fresh and processing types are specified in the 
actuarial documents, you cannot elect the fresh type for any potatoes 
grown for processing or chipping.

0
4. Revise Sec.  457.144 to read as follows:


Sec.  457.144  Northern potato crop insurance--processing quality 
endorsement.

    The Northern Potato Crop Insurance Processing Quality Endorsement 
Provisions for the 2008 and succeeding crop years are as follows:
1. Definitions
    Broker. Any business enterprise regularly engaged in the buying and 
selling of processing potatoes, that possesses all licenses and permits 
as required by the state in which it operates, and when required, has 
the necessary facilities or the contractual access to such facilities, 
with enough equipment to accept and transfer processing potatoes to the 
broker within a reasonable amount of time after harvest or the typical 
storage period.
    Percentage factor. The term as defined in the Northern Potato 
Quality Endorsement.
    Processor. Any business enterprise regularly engaged in processing 
potatoes for human consumption, that possesses all licenses and permits 
for processing potatoes required by the state in which

[[Page 61285]]

it operates, and that possesses facilities, or has contractual access 
to such facilities, with enough equipment to accept and process 
processing potatoes grown under a processing contract within a 
reasonable amount of time after harvest or the typical storage period.
    Processor contract. A written agreement between the producer and 
processor, or between a producer and a broker, containing at a minimum:
    (a) The producer's commitment to plant and grow processing 
potatoes, and to deliver the potato production to the processor or 
broker;
    (b) The processor's or broker's commitment to purchase all the 
production stated in the processing contract; and
    (c) A price or pricing mechanism to determine the value of 
delivered production.
    2. To be eligible for coverage under this endorsement, you must 
have a:
    (a) Northern Potato Quality Endorsement in place and elect this 
endorsement on or before the sales closing date for the initial crop 
year in which you wish to insure your potatoes under this endorsement:
    (1) Cancellation of your Northern Potato Quality Endorsement will 
automatically result in cancellation of this endorsement;
    (2) This endorsement may be canceled by either you or us for any 
succeeding crop year by giving written notice to the other party on or 
before the cancellation date: and
    (b) Processor contract executed with a processor or broker for the 
potato types insured under this endorsement that is applicable for the 
crop year:
    (1) A copy of the processor contract must be submitted to us on or 
before the acreage reporting date for potatoes; and
    (2) Failure to timely provide the processor contract will result in 
no coverage under this endorsement and coverage will be provided only 
under the terms of the Northern Potato Crop Provisions and Northern 
Potato Quality Endorsement.
    3. In return for payment of the additional premium designated in 
the actuarial documents, this endorsement is attached to and made part 
of your Northern Potato Crop Provisions and Northern Potato Quality 
Endorsement subject to the terms and conditions described herein. In 
the event of a conflict between the Northern Potato Crop Provisions or 
Northern Potato Quality Endorsement and this endorsement, this 
endorsement will control.
    4. All terms of the Northern Potato Quality Endorsement not 
modified by this endorsement will be applicable to acreage covered 
under this endorsement.
    5. If you elect this endorsement, all insurable acreage of 
production under contract with the processor or broker must be insured 
under this endorsement; however:
    (a) When the processor contract requires the processor or broker to 
purchase a stated amount of production, rather than all of the 
production from a stated number of acres, the insurable acres will be 
determined by dividing the stated amount of production by the approved 
yield for the acreage; and
    (b) The number of acres insured under this endorsement will not 
exceed the actual number of acres planted to the potato types needed to 
fulfill the contract.
    6. Potato lots may be adjusted in accordance with section 8 if such 
potatoes:
    (a) Fail to meet the standards in section 7(a), (b), (c), or (d), 
or a standard contained in the processor contract, for the same quality 
factors specified in section 7(a), (b), (c), or (d), if such standard 
is less stringent;
    (b) Have a value less than the maximum price election; and
    (c) Fail to meet the applicable standards and are not separable 
from undamaged production using methods used by processors to whom you 
normally deliver your potato production.
    7. To qualify for a quality reduction under this endorsement, the 
potatoes must:
    (a) Fail to meet the applicable U.S. No. 2 grade requirements due 
to internal defects as long as the number of potatoes with such defects 
are in excess of the tolerance allowed for U.S. No. 2 grade potatoes;
    (b) Have a specific gravity lower than 1.074;
    (c) Have a fry color of No. 3 or darker due to either sugar 
exceeding 10 percent or sugar ends exceeding 19 percent; or
    (d) Have an Agtron rating lower than 58.
    8. In lieu of the provisions contained in section 5 of the Northern 
Potato Quality Endorsement, production to count determined in 
accordance with section 15 of the Basic Provisions and section 11 of 
the Northern Potato Crop Provisions, from unharvested acreage or 
harvested acreage that is stored or is marketed after a grade 
inspection determined in section 10, will be adjusted in accordance 
with sections 8(a) or 8(b), whichever is applicable, (adjustment under 
section 8(a) or 8(b)(1) will not be performed if it already has been 
performed under the terms of section 11(g) of the Northern Potato Crop 
Provisions):
    (a) If a price is agreed upon between you and a buyer within 21 
days (60 days if the Northern Potato Storage Coverage Endorsement is 
applicable) after the end of the insurance period, or the production is 
delivered to a buyer within 21 days (60 days if the Northern Potato 
Storage Coverage Endorsement is applicable), after the end of the 
insurance period, the amount of production will be determined by:
    (1) Dividing the price per hundredweight received or that will be 
received by the highest price election designated in the Special 
Provisions or addendum thereto for the insured potato type (If the 
production is sold for a price lower than the value appropriate to and 
representative of the local market, we will determine the value of the 
production based on the price you could have received in the local 
market); and
    (2) Multiplying the result of section 8(a)(1) (not to exceed 1.0) 
by the number of hundredweight of sold or to be sold production (We may 
verify this after the production has actually been sold); or
    (b) If a price is not agreed upon between you and a buyer and the 
production is not delivered within 21 days (60 days if the Northern 
Potato Storage Coverage Endorsement is applicable), after the end of 
the insurance period, and the production remains in storage 22 or more 
days (61 or more days if the Northern Potato Storage Coverage 
Endorsement is applicable), after the end of the insurance period, the 
amount of production will be the greater of:
    (1) The amount of production determined by:
    (i) Dividing the price per hundredweight that is received, or that 
will later be received after the end of the applicable insurance 
period, by the highest price election designated in the Special 
Provisions or addendum thereto for the insured potato type (if the 
production is sold for a price lower than the value appropriate to and 
representative of the local market, we will determine the value of the 
production based on the price you could have received in the local 
market); and
    (ii) Multiplying the result of section 8(b)(1)(i) (not to exceed 
1.0) by the number of hundredweight of sold or to be sold production 
(We may verify this after the production has actually been sold); or
    (2) The amount of production determined as follows:
    (i) The combined weight of sampled potatoes that grade U.S. No. 2 
or better (the amount of potatoes grading U.S. No. 2 or better will be 
based on a grade

[[Page 61286]]

inspection completed no later than 21 days after the end of the 
insurance period, if the Northern Potato Storage Coverage Endorsement 
is applicable; samples must be obtained within 60 days after the end of 
the insurance period and grade inspection completed within 21 days of 
sampling) and are damaged by freeze or tuber rot will be divided by the 
total sample weight;
    (A) The percentage determined in section 8(b)(2)(i) will be divided 
by the applicable percentage factor; and
    (B) The result of section 8(b)(2)(i)(A) will be multiplied by the 
amount of production to count determined in accordance with section 15 
of the Basic Provisions and section 11 of the Northern Potato Crop 
Provisions.
    (c) The production to count for potatoes that have a value less 
than the maximum price election due to factors other than those 
specified in section 7 will be adjusted in accordance with section 
8(b)(2).
    9. For any production that qualifies for adjustment in accordance 
with section 7 and that is discarded:
    (a) Within 21 days (60 days if the Northern Potato Storage Coverage 
Endorsement is applicable), after the end of the insurance period, the 
amount of production to count will be:
    (1) Zero if we determine the production could not have been sold; 
or
    (2) Determined in accordance with section 8(b)(2) if we determine 
the production could have been sold; or
    (b) Later than 21 days (60 days if the Northern Potato Storage 
Coverage Endorsement is applicable), after the end of the insurance 
period, the amount of production to count will be adjusted in 
accordance with section 8(b)(2).
    10. All quality determinations must be based upon a grade 
inspection using the United States Standards for Grades of Potatoes for 
Processing or the United States Standards for Grades of Potatoes for 
Chipping.
    11. The actuarial documents may provide ``U.S. No. 1 grade'' in 
place of ``U.S. No. 2 grade'' as used in this endorsement. If both U.S. 
No. 1 and 2 grades are available in the actuarial documents, you may 
elect U.S. No. 1 or 2 grade by potato type or group, if separate types 
or groups are specified in the Special Provisions.

0
5. Amend Sec.  457.145 as follows:
0
a. Revise the introductory text;
0
b. Revise section 1;
0
c. Remove section 2, and redesignate sections 3 through 11 as 2 through 
10;
0
d. Amend redesignated section 3 by removing the number ``5'' and 
replacing it with the number ``4'';
0
e. Amend redesignated section 4 by adding paragraphs 4(a) and 4(b);
0
f. Revise redesignated section 6;
0
g. Amend redesignated section 7 by removing the number ``8'' and 
replacing it with the number ``7'' each time it appears;
0
h. Revise redesignated section 8; and
0
i. Revise redesignated section 10.
    The revised text reads as follows:


Sec.  457.145  Potato crop insurance--certified seed endorsement.

    The Potato Crop Insurance Certified Seed Endorsement Provisions for 
the 2008 and succeeding crop years are as follows:
* * * * *
    1. In return for payment of the additional premium designated in 
the actuarial documents, this endorsement is attached to and made part 
of your Northern Potato Crop Provisions subject to the terms and 
conditions described herein. In accordance with section 8, since your 
insurance period is not extended in this endorsement, any additional 
premium paid for coverage under the Northern Potato Storage Coverage 
Endorsement will not apply to the additional coverage provided under 
the terms of this endorsement. In the event of a conflict between the 
Northern Potato Crop Provisions and this endorsement, this endorsement 
will control.
* * * * *
    4. * * *
    (a) Multiply the average number of your acres entered into and 
passing certification in the potato certified seed program the 3 
previous calendar years by 1.25 and divide this result by the number of 
acres grown by you for certified seed in the current crop year; and
    (b) Multiply the result of section 4(a) (not to exceed 1.0) by the 
production guarantee for certified seed for the current crop year.
* * * * *
    6. All potatoes insured for certified seed production must be 
produced and managed in accordance with the regulations, standards, 
practices, and procedures required for certification under the potato 
certified seed program. Any production that does not qualify as 
certified seed because of varietal mixing or your failure to meet any 
requirements under the potato certified seed program will be considered 
as lost due to uninsured causes.
* * * * *
    8. You must notify us of any loss under this endorsement not later 
than 14 days after you receive notice from the state certification 
agency that any acreage or production has failed certification. Nothing 
herein extends the insurance period beyond the time period specified in 
section 8 of the Northern Potato Crop Provisions and section 11 of the 
Basic Provisions. In lieu of the provisions in section 14(c) of the 
Basic Provisions specifying that any claim for indemnity must be filed 
not later than 60 days after the end of the insurance period, your 
claim for indemnity must be filed by the later of:
    (a) Sixty (60) days after the end of the insurance period; or
    (b) Thirty (30) days after you receive notice from the state 
certifying agency that production has failed certification.
* * * * *
    10. Failure to meet any requirements for seed to be used to produce 
a subsequent seed crop will not be covered. All the production that 
meets requirements for certified seed used to produce a commercial crop 
will be included in production to count.

0
6. Amend Sec.  457.146 as follows:
0
a. Revise the introductory text; and
0
b. Amend section 5 by revising the introductory text, revising 
paragraphs (a)(3) and (c) and removing paragraph (d).
    The revised text reads as follows:


Sec.  457.146  Northern potato crop insurance--storage coverage 
endorsement.

    The Northern Potato Crop Insurance Storage Coverage Endorsement 
Provisions for the 2008 and succeeding crop years are as follows:
* * * * *
    5. In lieu of section 9(b)(1) of the Northern Potato Crop 
Provisions, the extended coverage provided by this endorsement will be 
applicable but only if:
    (a) * * *
    (3) The potatoes damaged by an insurance cause of loss fail to meet 
any of the following standards or a less stringent standard for the 
same quality factors specified below, contained in the processor 
contract, if applicable, (this coverage is applicable only to 
production covered under the Northern Potato Processing Quality 
Endorsement):
    (i) A specific gravity lower than 1.074;
    (ii) A fry color of No. 3 or darker due to either sugar exceeding 
10 percent or sugar ends exceeding 19 percent; or
    (iii) An Agtron rating lower than 58.
* * * * *
    (b) * * *
    (c) The percentage of production with any of the quality 
deficiencies specified in section 5(a) is determined based on samples 
obtained no later than 60 days after the end of the insurance period 
and the potatoes are evaluated and quality (grade) determinations are 
made

[[Page 61287]]

by us, a laboratory approved by us, a potato grader licensed or 
certified by the applicable State or the United States Department of 
Agriculture, or us, in accordance with the United States Standards for 
Grades of Potatoes:
    (1) Samples of damaged production must be obtained by us or a party 
approved by us prior to the sale or disposal of any lot of potatoes; 
and
    (2) If production is not sold or disposed of within 60 days after 
the end of the insurance period, samples must be obtained within 60 
days after the end of the insurance period and a quality (grade) 
determination must be completed within 21 days of sampling.
* * * * *
0
7. Amend Sec.  457.147 as follows:
0
a. Revise the introductory text;
0
b. Remove the paragraph regarding document priority immediately 
preceding section 1 and revise the remaining paragraph below the 
heading ``Central and Southern Potato Crop Provisions'' and before 
section 1;
0
c. Amend section 1 by revising the definition of ``Certified seed'' and 
``Grade inspection'', and adding a new definition for ``Potato 
certified seed program'';
0
d. Amend section 3 by revising paragraphs (b) and (c);
0
e. Amend section 4 by revising paragraph (b);
0
f. Revise section 5;
0
g. Revise section 9;
0
h. Amend section 10 by revising paragraph (b)(1); and
0
i. Amend section 12 as follows:
0
A. Revise paragraph (b)(7);
0
B. Remove paragraph (d)(1)(iv), redesignate paragraph (d)(1)(v) as 
(d)(1)(iv) and revise newly redesignated paragraph (d)(1)(iv) 
introductory text; and
0
C. Revise paragraph (e) in its entirety.
    The added and revised text read as follows:


Sec.  457.147  Central and Southern potato crop insurance provisions.

    The Central and Southern Potato Crop Insurance Provisions for the 
2009 and succeeding crop years are as follows:
* * * * *
    These provisions will be applicable in Alabama; Arizona; all 
California counties except Humboldt, Modoc, and Siskiyou; Delaware; 
Florida; Georgia; Maryland; Missouri; New Jersey; all New Mexico 
counties except San Juan; North Carolina; Oklahoma; Texas; and 
Virginia; and other states or counties if allowed by the Special 
Provisions.
* * * * *
1. Definitions
* * * * *
    Certified seed. Potatoes that were entered into the potato 
certified seed program and that meet all requirements for production to 
be used to produce a seed crop for the next crop year or a potato crop 
for harvest for commercial uses in the next crop year.
* * * * *
    Grade inspection. An inspection in which samples of production are 
obtained by us, or a party approved by us, prior to the sale, storage, 
or disposal of any lot of potatoes, or any portion of a lot and the 
potatoes are evaluated and quality (grade) determinations are made by 
us, a laboratory approved by us, or a potato grader licensed or 
certified by the applicable State or the United States Department of 
Agriculture, in accordance with the United States Standards for Grades 
of Potatoes. The United States standards used to determine the quality 
(grade) deficiencies will be: For potatoes produced for chipping, the 
United States Standards for Grades of Potatoes for Chipping; for 
potatoes produced for processing, the United States Standards for 
Grades of Potatoes for Processing; for potatoes produced for seed, the 
United States Standards for Grades of Seed Potatoes; and for all other 
potatoes, the United States Standards for Grades of Potatoes. The 
quantity and number of samples required will be determined in 
accordance with procedure issued by FCIC.
* * * * *
    Potato certified seed program. The state program administered by a 
public agency responsible for the seed certification process within the 
state in which the seed is produced.
* * * * *
3. Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities
* * * * *
    (b) If the production from any acreage of the insured crop is not 
harvested, the price used to determine your indemnity will be 90 
percent of your price election.
    (c) The price election for unharvested acreage will apply to any 
acreage of potatoes damaged to the extent that similarly situated 
producers in the area would not normally care for the potatoes even if 
you choose to continue to care for or harvest them. Potatoes that are 
lifted to the soil surface and not removed from the field will also 
receive the price election for unharvested acreage.
* * * * *
4. Contract Changes
* * * * *
    (b) September 30 preceding the cancellation date for counties with 
a November 30, December 31, or January 31 cancellation date; and
* * * * *
5. Cancellation and Termination Dates
    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are:

------------------------------------------------------------------------
           State and county                          Dates
------------------------------------------------------------------------
Pinellas, Hillsborough, Polk,          September 30.
 Osceola, and Brevard Counties,
 Florida, and all Florida counties
 lying south thereof.
Arizona; all California counties; and  November 30.
 all Texas counties except Bailey,
 Castro, Dallam, Deaf Smith, Floyd,
 Gaines, Hale, Hartley, Haskell,
 Knox, Lamb, Parmer, Swisher, and
 Yoakum.
Alabama; Georgia; Missouri; and All    December 31.
 Florida Counties except Pinellas,
 Hillsborough, Polk, Osceola, and
 Brevard Counties, Florida, and all
 Florida counties to the south
 thereof.
Delaware; Maryland; New Jersey; North  January 31.
 Carolina; and Virginia.
Oklahoma; and Haskell and Knox         February 28.
 Counties, Texas.
Bailey, Castro, Dallam, Deaf Smith,    March 15.
 Floyd, Gaines, Hale, Hartley, Lamb,
 Parmer, Swisher, and Yoakum
 counties, Texas; and all New Mexico
 counties except San Juan County.
------------------------------------------------------------------------

* * * * *
9. 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 (exceptions, if any, 
for specific counties, varieties or types are contained in the Special 
Provisions):
    (a) July 15 in Missouri; and all Texas counties except Bailey, 
Castro, Dallam, Deaf Smith, Floyd, Gaines, Hale, Haskell, Hartley, 
Knox, Lamb, Parmer, Swisher, and Yoakum.

[[Page 61288]]

    (b) July 25 in Arizona.
    (c) August 15 in North Carolina; Oklahoma; and Haskell and Knox 
Counties, Texas.
    (d) August 31 in Virginia.
    (e) In Alabama; California; Florida; and Georgia; the dates 
established by the Special Provisions for each planting period; and
    (f) October 15 in Bailey, Castro, Dallam, Deaf Smith, Floyd, 
Gaines, Hale, Hartley, Lamb, Parmer, Swisher, and Yoakum Counties, 
Texas; Delaware; Maryland; New Jersey; and all counties in New Mexico 
except San Juan.
10. Cause of Loss
* * * * *
    (b) * * *
    (1) Damage that occurs or becomes evident after the end of the 
insurance period, including, but not limited to, damage that occurs or 
becomes evident in storage; or
* * * * *
12. Settlement of Claim
* * * * *
    (b) * * *
    (7) Multiplying the result of section 12(b)(6) by your share.
    For example: You have a 100 percent share in 100 harvested acres of 
potatoes in the unit, with a guarantee of 150 hundredweight per acre 
and a price election of $4.00 per hundredweight. You are only able to 
harvest 10,000 hundredweight. Your indemnity would be calculated as 
follows:
    (1) 100 acres x 150 hundredweight = 15,000 hundredweight guarantee;
    (2) 15,000 hundredweight x $4.00 price election = $60,000.00 value 
of guarantee;
    (4) 10,000 hundredweight x $4.00 price election = $40,000.00 value 
of production to count;
    (5) $60,000.00 - $40,000.00 = $20,000.00 loss; and
    (6) $20,000.00 x 100 percent = $20,000.00 indemnity payment.
    You also have a 100 percent share in 100 unharvested acres of 
potatoes in the same unit, with a guarantee of 150 hundredweight per 
acre and a price election of $3.60 per hundredweight. (The price 
election for unharvested acreage is 90.0 percent of your elected price 
election ($4.00 x 0.90 = $3.60.)) This unharvested acreage was 
appraised at 35 hundredweight per acre for a total of 3500 
hundredweight as production to count. Your total indemnity for the 
harvested and unharvested acreage would be calculated as follows:
    (1) 100 acres x 150 hundredweight = 15,000 hundredweight guarantee 
for the harvested acreage, and
    100 acres x 150 hundredweight = 15,000 hundredweight guarantee for 
the unharvested acreage;
    (2) 15,000 hundredweight guarantee x $4.00 price election = 
$60,000.00 value of guarantee for the harvested acreage, and
    15,000 hundredweight guarantee x $3.60 price election = $54,000.00 
value of guarantee for the unharvested acreage;
    (3) $60,000.00 + $54,000.00 = $114,000.00 total value of guarantee;
    (4) 10,000 hundredweight x $4.00 price election = $40,000.00 value 
of production to count for the harvested acreage, and 3500 
hundredweight x $3.60 = $12,600.00 value of production to count for the 
unharvested acreage;
    (5) $40,000.00 + $12,600.00 = $52,600.00 total value of production 
to count;
    (6) $114,000.00 - $52,600.00 = $61,400.00 loss; and
    (7) $61,400.00 loss x 100 percent = $61,400.00 indemnity payment.
* * * * *
    (d) * * *
    (1) * * *
    (iv) Unharvested production, including unharvested production on 
insured acreage you intend to put to another use or abandon, or acreage 
damaged by insurable causes and for which you cease to provide further 
care, 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 cease providing care for the crop. 
This unharvested production may be adjusted in accordance with sections 
12(e), and the value of all unharvested production will be calculated 
using the reduced price election determined in section 3(b). If 
agreement on the appraised amount of production is not reached:
* * * * *
    (e) Only marketable lots of mature potatoes will be production to 
count for loss adjustment purposes, except for production specified in 
12(e)(1):
    (1) Production not meeting the standards for grading U.S. No. 2 due 
to external defects will be determined on an individual basis for all 
harvested and unharvested potatoes if we determine it is or would be 
practical to separate the damaged production;
    (2) All determinations must be based upon a grade inspection; and
    (3) Prior to any grade inspection, you must notify us of the 
intended use of the potatoes so the appropriate United States Standard 
will be applied (We may request previous sales records to verify your 
claimed intended use or base the intended use on the type of potato 
grown if such potatoes are not usually grown for the intended use you 
reported).
    (4) Marketable lots of potatoes will include any lot of potatoes 
that is:
    (i) Stored;
    (ii) Sold as seed;
    (iii) Sold for human consumption; or
    (iv) Harvested and not sold or that is appraised if such lots meet 
the standards for grading U.S. No. 2 grade or better on a sample basis.
    (5) Marketable lots will also include any potatoes that we 
determine:
    (i) Could have been sold for seed or human consumption in the 
general marketing area;
    (ii) Were not sold as a result of uninsured causes including, but 
not limited to, failure to meet chipper or processor standards for fry 
color or specific gravity; or
    (iii) Were disposed of without our prior written consent and such 
disposition prevented our determination of marketability.
    (6) Unless included in section 12(e)(4) or (5), a potato lot will 
not be considered marketable if, due to insurable causes of damage, it:
    (i) Is partially damaged, and is salvageable only for starch, 
alcohol, or livestock feed;
    (ii) Does not meet the standards for grading U.S. No. 2 grade or 
better due to internal defects; or
    (iii) Does not meet the standards for grading U.S. No. 2 grade or 
better due to external defects, and it is not practical to separate the 
damaged production.
* * * * *

    Signed in Washington, DC on October 23, 2007.
Eldon Gould,
Manager, Federal Crop Insurance Corporation.
[FR Doc. E7-21238 Filed 10-29-07; 8:45 am]
BILLING CODE 3410-08-P