[Federal Register Volume 74, Number 113 (Monday, June 15, 2009)]
[Rules and Regulations]
[Pages 28154-28156]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-13937]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AC23


Common Crop Insurance Regulations, Basic Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Interim rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) amends the 
Common Crop Insurance Regulations, Basic Provisions to revise 
enterprise unit provisions to protect the program from potential abuse 
as a result of the increased premium subsidies for enterprise and whole 
farm units provided by the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill).

DATES: This rule is effective June 15, 2009. Written comments and 
opinions on this rule will be accepted until the close of business 
August 14, 2009 and will be considered when the rule is to be made 
final.

ADDRESSES: Interested persons are invited to submit comments, titled 
``Enterprise Unit Interim Rule'', by any of the following methods:
     By Mail to: Director, Product Administration and Standards 
Division, Risk Management Agency, United States Department of 
Agriculture, Beacon Facility--Mail Stop 0812, Room 421, P.O. Box 
419205, Kansas City, MO 64141-6205.
     By Express Mail to: Director, Product Administration and 
Standards Division, Risk Management Agency, United States Department of 
Agriculture, Beacon Facility, Stop 0812, 9240 Troost Avenue, Kansas 
City, MO 64131-3055.
     E-Mail: [email protected].
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    A copy of each response will be available for public inspection and 
copying from 7 a.m. to 4:30 p.m., CST, Monday through Friday, except 
holidays, at 6501 Beacon Drive, Stop 0812, Room 421, Kansas City, MO 
64133-4676.

FOR FURTHER INFORMATION CONTACT: Erin Albright, Risk Management 
Specialist,

[[Page 28155]]

Product Management, Product Administration and Standards Division, Risk 
Management Agency, United States Department of Agriculture, Beacon 
Facility, Stop 0812, Room 421, P.O. Box 419205, Kansas City, MO 64141-
6205, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

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

Paperwork Reduction Act of 1995

    Pursuant to the 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 March 
31, 2012.

E-Government Act Compliance

    FCIC is committed to complying with the E-Government Act of 2002, 
to promote the use of the Internet and other information technologies 
to provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

Unfunded Mandates Reform Act of 1995

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

Executive Order 13132

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

Regulatory Flexibility Act

    FCIC certifies that this regulation will not have a significant 
economic impact on a substantial number of small entities. Program 
requirements for the Federal crop insurance program are the same for 
all producers regardless of the size of their farming operation. For 
instance, all producers are required to submit an application and 
acreage report to establish their insurance guarantees and compute 
premium amounts, 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 (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 against FCIC for judicial review may be brought.

Environmental Evaluation

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

Background

    On May 22, 2008, the 2008 Farm Bill was enacted. Section 12011 of 
the 2008 Farm Bill amended section 508(e) of the Federal Crop Insurance 
Act (7 U.S.C. 1508(e)) to allow producers who elect whole-farm or 
enterprise units to receive, to the maximum extent practicable, the 
same dollar amount of premium subsidy that would have otherwise been 
paid if they had elected a basic or optional unit for the crop.
    The increased subsidy amount provides a much larger incentive than 
in the past to qualify for an enterprise unit. The increased incentive 
may lead to unintended consequences when producers change planting 
intentions solely for the purpose of qualifying for the larger subsidy. 
To qualify for an enterprise unit, current provisions require a 
producer to plant some acreage in two or more sections, FSA farm serial 
numbers, or other means of land measurement. There is no requirement 
stating a minimum number of acres that must be planted in more than one 
section, FSA farm serial number, etc., to qualify for an enterprise 
unit. This leaves the program vulnerable to producers who will plant 
only a small amount of acreage in an additional section, FSA farm 
serial number, etc. solely for the purpose of qualifying for an 
enterprise unit and the increased subsidy. FCIC has received questions 
and anecdotal information and has seen blogs on agricultural forums 
indicating that some insured producers are contemplating taking these 
actions.
    The new subsidy amounts are intended only for producers who are 
willing to combine optional or basic units, not for those who 
manipulate unit structures solely to benefit from the higher subsidy. 
For this reason, FCIC is revising the definition of ``enterprise unit'' 
in the Basic Provisions to specify at least two of the sections, 
section equivalents, FSA farm serial numbers, or units established by 
written agreement must each have planted acreage that constitutes at 
least the lesser of 20 acres or 20 percent of the insured crop acreage 
in the enterprise unit. The lesser of 20 acres or 20 percent is 
consistent with other provisions in the policy that require a minimum 
amount of acreage to qualify for certain other coverage (for example, a 
replanting payment may be made when the number of acres replanted is at 
least the lesser of 20 acres or 20 percent of the insured planted 
acreage in a unit). This change is necessary to protect

[[Page 28156]]

program integrity by ensuring that producers are unable to manipulate 
their unit structure by making slight changes in their farming 
operation to gain additional benefits from the increased subsidy.
    The amendments in this rule are applicable for the 2010 and 
succeeding crop years for all crops with a 2010 crop year contract 
change date on or after the effective date of this rule and for the 
2011 and succeeding crop years for all crops with a 2010 crop year 
contract change date prior to the effective date of this rule.
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. Good cause to make the rule effective upon 
publication in the Federal Register exists when the 30 day delay in the 
effective date is impracticable, unnecessary, or contrary to the public 
interest.
    With respect to the provisions of this rule, it would adversely 
affect program integrity to delay its implementation. If FCIC is 
required to delay the implementation of this rule 30 days after the 
date it is published, the provisions of this rule could not be 
implemented until the next crop year for those crops having a contract 
change date prior to the effective date of this publication. Because a 
delay in the effective date of this rule is contrary to the public 
interest, good cause exists to make these policy changes effective upon 
publication in the Federal Register.

List of Subjects in 7 CFR Part 457

    Crop insurance, Reporting and recordkeeping requirements.

Interim Rule

0
Accordingly, as set forth in the preamble, the Federal Crop Insurance 
Corporation amends 7 CFR part 457 as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

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

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


0
2. In Sec.  457.8, paragraph (b) is amended by revising the definition 
of ``Enterprise unit.''
    The revised text reads as follows:


Sec.  457.8  The application and policy.

* * * * *
    (b) * * *
    1. Definitions.
* * * * *
    Enterprise unit. All insurable acreage of the insured crop in the 
county in which you have a share on the date coverage begins for the 
crop year.
    (1) To qualify, an enterprise unit must contain all of the 
insurable acreage of the same insured crop in:
    (i) One or more basic units that are located in two or more 
separate sections, section equivalents, FSA farm serial numbers, or 
units established by written agreement; or
    (ii) Two or more optional units established by separate sections, 
section equivalents, FSA farm serial numbers, or as established by 
written agreement; and
    (2) At least two of the sections, section equivalents, FSA farm 
serial numbers, or units established by written agreement making up the 
basic or optional units in paragraph (1) of this definition must each 
have planted acreage that constitutes at least the lesser of 20 acres 
or 20 percent of the insured crop acreage in the enterprise unit.
* * * * *

    Signed in Washington, DC, on June 5, 2009.
William J. Murphy,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. E9-13937 Filed 6-12-09; 8:45 am]
BILLING CODE 3410-08-P