[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2009 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

          7


          Parts 400 to 699

                         Revised as of January 1, 2009


          Agriculture
          



________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2009
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

[[Page ii]]

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[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 7:
    Subtitle B--Regulations of the Department of Agriculture 
      (Continued)
          Chapter IV--Federal Crop Insurance Corporation, 
          Department of Agriculture                                  5
          Chapter V--Agricultural Research Service, Department 
          of Agriculture                                           393
          Chapter VI--Natural Resources Conservation Service, 
          Department of Agriculture                                437
  Finding Aids:
      Table of CFR Titles and Chapters........................     601
      Alphabetical List of Agencies Appearing in the CFR......     621
      List of CFR Sections Affected...........................     631

[[Page iv]]





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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 7 CFR 400.27 refers 
                       to title 7, part 400, 
                       section 27.

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

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2009), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
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Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
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inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
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1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
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INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
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to materials already published elsewhere. For an incorporation to be 
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This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
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20408, or call 202-741-6010.

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This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
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the revision dates of the 50 CFR titles.

[[Page vii]]


REPUBLICATION OF MATERIAL

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    Raymond A. Mosley,
    Director,
    Office of the Federal Register.
    January 1, 2009.







[[Page ix]]



                               THIS TITLE

    Title 7--Agriculture is composed of fifteen volumes. The parts in 
these volumes are arranged in the following order: parts 1-26, 27-52, 
53-209, 210-299, 300-399, 400-699, 700-899, 900-999, 1000-1199, 1200-
1599, 1600-1759, 1760-1939, 1940-1949, 1950-1999, and part 2000 to end. 
The contents of these volumes represent all current regulations codified 
under this title of the CFR as of January 1, 2009.

    The Food and Nutrition Service current regulations in the volume 
containing parts 210-299, include the Child Nutrition Programs and the 
Food Stamp Program. The regulations of the Federal Crop Insurance 
Corporation are found in the volume containing parts 400-699.

    All marketing agreements and orders for fruits, vegetables and nuts 
appear in the one volume containing parts 900-999. All marketing 
agreements and orders for milk appear in the volume containing parts 
1000-1199.

    For this volume, Rob Sheehan was Chief Editor. The Code of Federal 
Regulations publication program is under the direction of Michael L. 
White, assisted by Ann Worley.


[[Page 1]]



                          TITLE 7--AGRICULTURE




                  (This book contains parts 400 to 699)

  --------------------------------------------------------------------
                                                                    Part

  SUBTITLE B--Regulations of the Department of Agriculture (Continued)

chapter iv--Federal Crop Insurance Corporation, Department 
  of Agriculture............................................         400

chapter v--Agricultural Research Service, Department of 
  Agriculture...............................................         500

chapter vi--Natural Resources Conservation Service, 
  Department of Agriculture.................................         600

[[Page 3]]

  Subtitle B--Regulations of the Department of Agriculture (Continued)

[[Page 5]]



     CHAPTER IV--FEDERAL CROP INSURANCE CORPORATION, DEPARTMENT OF 
                               AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
400             General administrative regulations..........           7
401

[Reserved]

402             Catastrophic Risk Protection Endorsement....          86
403-406

[Reserved]

407             Group risk plan of insurance regulations....          89
408-411

[Reserved]

412             Public information--Freedom of information..         113
413-456

[Reserved]

457             Common crop insurance regulations...........         114
458

[Reserved]

[[Page 7]]



PART 400_GENERAL ADMINISTRATIVE REGULATIONS--Table of Contents




Subparts A-B [Reserved]

      Subpart C_General Administrative Regulations; Mutual Consent 
                              Cancellation

Sec.
400.27 Applicability.
400.28 Mutual consent criteria.
400.29-400.36 [Reserved]

Subparts D-E [Reserved]

 Subpart F_Food Security Act of 1985, Implementation; Denial of Benefits

400.45 Applicability.
400.46 Definitions.
400.47 Denial of crop insurance.
400.48 Protection of interests of tenants, landlords or producers.
400.49-400.50 [Reserved]

                   Subpart G_Actual Production History

400.51 Availability of actual production history program.
400.52 Definitions.
400.53 Yield certification and acceptability.
400.54 Submission and accuracy of production reports.
400.55 Qualifications for actual production history coverage program.
400.56 Administrative appeal exhaustion.
400.57 [Reserved]

   Subpart H_Information Collection Requirements Under the Paperwork 
                   Reduction Act; OMB Control Numbers

400.65-400.66 [Reserved]

Subpart I [Reserved]

                       Subpart J_Appeal Procedure

400.90 Definitions.
400.91 Applicability.
400.92 Appeals.
400.93 Administrative review.
400.94 Mediation.
400.95 Time limitations for filing and responding to requests for 
          administrative review.
400.96 Judicial review.
400.97 Reservations of authority.
400.98 Reconsideration process.

 Subpart K_Debt Management_Regulations for the 1986 and Succeeding Crop 
                                  Years

400.115 Purpose.
400.116 Definitions.
400.117 Determination of delinquency.
400.118 Demand for payment.
400.119 Notice to debtor; credit reporting agency.
400.120 Subsequent disclosure and verification.
400.121 Information disclosure limitations.
400.122 Attempts to locate debtor.
400.123 Request for review of the indebtedness.
400.124 Disclosure to credit reporting agencies.
400.125 Notice to debtor, collection agency.
400.126 Referral of delinquent debts to contract collection agencies.
400.127 [Reserved]
400.128 Definitions.
400.129 Salary offset.
400.130 Notice requirements before offset.
400.131 Request for a hearing and result if an employee fails to meet 
          deadlines.
400.132 Hearings.
400.133 Written decision following a hearing.
400.134 Review of FCIC record related to the debt.
400.135 Written agreement to repay debt as an alternative to salary 
          offset.
400.136 Procedures for salary offset; when deductions may begin.
400.137 Procedures for salary offset; types of collection.
400.138 Procedures for salary offset; methods of collection.
400.139 Nonwaiver of rights.
400.140 Refunds.
400.141 Internal Revenue Service (IRS) Tax Refund Offset.
400.142 Past-due legally enforceable debt eligible for refund offset.

Subpart L_Reinsurance Agreement_Standards for Approval; Regulations for 
                the 1997 and Subsequent Reinsurance Years

400.161 Definitions.
400.162 Qualification ratios.
400.163 Applicability.
400.164 Availability of the Standard Reinsurance Agreement.
400.165 Eligibility for Standard Reinsurance Agreements.
400.166 Obligations of the Corporation.
400.167 Limitations on Corporation's obligations.
400.168 Obligations of participating insurance company.
400.169 Disputes.
400.170 General qualifications.
400.171 Qualifying when a state does not require that an Annual 
          Statutory Financial Statement be filed.
400.172 Qualifying with less than two of the required ratios or ten of 
          the analytical ratios meeting the specified requirements.
400.173 [Reserved]

[[Page 8]]

400.174 Notification of deviation from financial standards.
400.175 Revocation and non-acceptance.
400.176 State action preemptions.
400.177 [Reserved]

   Subpart M_Agency Sales and Service Contract_Standards for Approval

400.201 Applicability of standards.
400.202 Definitions.
400.203 Financial statement and certification.
400.204 Notification of deviation from standards.
400.205 Denial or termination of contract and administrative 
          reassignment of business.
400.206 Financial qualifications for acceptability.
400.207 Representative licensing and certification.
400.208 Term of the contract.
400.209 Electronic transmission and receiving system.
400.210 [Reserved]

Subpart N [Reserved]

 Subpart O_Non-Standard Underwriting Classification System Regulations 
                 for the 1991 and Succeeding Crop Years

400.301 Basic, purpose, and applicability.
400.302 Definitions.
400.303 Initial selection criteria.
400.304 Nonstandard Classification determinations.
400.305 Assignment of Nonstandard Classifications.
400.306 Spouses and minor children.
400.307 Discontinuance of participation.
400.308 Notice of Nonstandard Classification.
400.309 Requests for reconsideration.

           Subpart P_Preemption of State Laws and Regulations

400.351 Basis and applicability.
400.352 State and local laws and regulations preempted.

Subpart Q_General Administrative Regulations; Collection and Storage of 
   Social Security Account Numbers and Employer Identification Numbers

400.401 Basis and purpose and applicability.
400.402 Definitions.
400.403 Required system of records.
400.404 Policyholder responsibilities.
400.405 Agent and loss adjuster responsibilities.
400.406 Insurance provider responsibilities.
400.407 Restricted access.
400.408 Safeguards and storage.
400.409 Unauthorized disclosure.
400.410 Penalties.
400.411 Obtaining personal records.
400.412 Record retention.
400.413 [Reserved]

                           Subpart R_Sanctions

400.451 General.
400.452 Definitions.
400.453 Exhaustion of administrative remedies.
400.454 Civil penalties.
400.455 Governmentwide debarment and suspension (procurement).
400.456 Governmentwide debarment and suspension (nonprocurement).
400.457 Program Fraud Civil Remedies Act.
400.458 Scheme or device.
400.459 Indebtedness.
400.460-400.500 [Reserved]

Subpart S [Reserved]

    Subpart T_Federal Crop Insurance Reform, Insurance Implementation

400.650 Purpose.
400.651 Definitions.
400.652 Insurance availability.
400.653 Determining crops of economic significance.
400.654 Application and acreage report.
400.655 Eligibility for other program benefits.
400.656-400.657 [Reserved]

 Subpart U_Ineligibility for Programs Under the Federal Crop Insurance 
                                   Act

400.675 Purpose.
400.676 [Reserved]
400.677 Definitions.
400.678 Applicability.
400.679 Criteria for ineligibility.
400.680 Determination and notification of ineligibility.
400.681 Effect of ineligibility.
400.682 Criteria for reinstatement of eligibility.
400.683 Administration and maintenance.

   Subpart V_Submission of Policies, Provisions of Policies, Rates of 
                  Premium, and Premium Reduction Plans

400.700 Basis, purpose, and applicability.
400.701 Definitions.
400.702 Confidentiality of submission and duration of confidentiality.
400.703 Timing of submission.
400.704 Type of submission.
400.705 Contents required for a new submission or changes to a 
          previously approved submission.
400.706 Review of submission.
400.707 Presentation to the Board for approval or disapproval.

[[Page 9]]

400.708 Approved submission.
400.709 Roles and responsibilities.
400.710 Preemption and premium taxation.
400.711 Right of review, modification, and the withdrawal of 
          reinsurance.
400.712 Research and development reimbursement, maintenance 
          reimbursement, and user fees.
400.713 Non-reinsured supplemental (NRS) policy.
400.714 Requests for the opportunity to offer a premium discount.
400.715 Limitations and prohibitions.
400.716 Contents of the request for the opportunity to offer a premium 
          discount.
400.717 New approved insurance providers.
400.718 RMA Review
400.719 Terms and conditions for the Premium Reduction Plan.
400.720 Standards for approval of a premium discount.
400.721 Determinations and reconsiderations.
400.722 Consumer complaints.

Subpart W [Reserved]

    Subpart X_Interpretations of Statutory and Regulatory Provisions

400.765 Basis and applicability.
400.766 Definitions.
400.767 Requester obligations.
400.768 FCIC obligations.

Subparts A-B [Reserved]



      Subpart C_General Administrative Regulations; Mutual Consent 
                              Cancellation

    Authority: 40 U.S.C. 121, 41 U.S.C. 421.

    Source: 57 FR 56438, Nov. 30, 1992, unless otherwise noted.



Sec. 400.27  Applicability.

    Notwithstanding any provisions of the crop insurance policy to the 
contrary, the mutual consent provision contained herein shall be 
applicable to all new crop insurance policies issued by the Federal Crop 
Insurance Corporation (7 CFR part 401 et seq.), or by a company 
reinsured by the Federal Crop Insurance Corporation, effective for the 
applicable crop year only if those policies meet the requirements of 
Sec. 400.28 of this subpart and if the crop insured is the same as the 
crop for which a disaster payment application (CCC 441) was filed for 
the previous crop year.

[58 FR 67304, Dec. 21, 1993]



Sec. 400.28  Mutual consent criteria.

    (a) An insured may request policy cancellation for the crop year for 
which the insured filed a CCC 441 for the applicable crop year if 
written documentation is provided, signed by an authorized Agricultural 
Stabilization and Conservation Service official, certifying the 
cancellation is based on one of the following conditions:
    (1) Insurance was not a condition of eligibility for disaster 
payment, based on one or more of the statutory criteria; or
    (2) the producer withdrew his application for disaster payments with 
prejudice or it was rejected by Commodity Credit Corporation;
    (b) Cancellation requests must be received in writing no later than 
three weeks after the date:
    (1) The disaster payment check is issued; or
    (2) The producer is notified that an application for disaster 
payment has been rejected; or
    (3) The producer withdraws from the disaster payment program.
    (c) Carryover policies are not available for mutual consent 
cancellation. Crop insurance applications dated before the disaster 
cancellation date (available in the insureds' service office) are not 
eligible for mutual consent cancellations.

[57 FR 56438, Nov. 30, 1992, as amended at 58 FR 67304, Dec. 21, 1993]



Sec. Sec. 400.29-400.36  [Reserved]

Subparts D-E [Reserved]



 Subpart F_Food Security Act of 1985, Implementation; Denial of Benefits

    Authority: Secs. 1506, 1516, Pub. L. 75-430, 52 Stat. 73, 77, as 
amended (7 U.S.C. 1501 et seq.); sec. 1244, Pub. L. 99-198.

    Source: 52 FR 19128, May 21, 1987, unless otherwise noted.

[[Page 10]]



Sec. 400.45  Applicability.

    (a) The regulations in this subpart implement Chapter XII and 
section 1764 of the Food Security Act of 1985 (Pub. L. 99-198) (the Act) 
requiring the denial of crop insurance to persons who are determined to 
have performed certain practices prohibited by the Act or who have 
violated certain federal or State statutes or the regulations 
implementing the Act. The provisions of this subpart are applicable to 
all crop insurance policies written by the Federal Crop Insurance 
Corporation (the Corporation) or reinsured by the Corporation.
    (b) The provisions of this subpart will be effective for the crop 
and crop year immediately following the first crop cancellation date 
occurring after the effective date of the Act for all crop policies 
reinsured by FCIC, and for all policies and regulations for crop 
insurance issued by FCIC.



Sec. 400.46  Definitions.

    For the purpose of this regulation and in addition to the 
definitions included at 7 CFR 12.2, the following definitions are 
applicable:
    (a) Controlled substance means any prohibited drug-producing plants 
including, but not limited to, cacti of the genus lophophora, coca 
bushes (erythroxylum coca), marijuana (cannabis satiua), opium poppies 
(papauer somniferum), and other drug-producing plants, the planting and 
harvesting of which is prohibited by Federal or State law.
    (b) Person means any producer, tenant, or landlord, insured under a 
policy of crop insurance issued by FCIC, or by a multi-peril insurance 
company whose crop insurance policy is reinsured by FCIC.
    (c) State means each of the fifty States, the District of Columbia, 
the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United 
States, American Samoa, the Commonwealth of the Northern Mariana 
Islands, or the Trust Territory of the Pacific.
    (d) The Act means the Food Security Act of 1985 (Pub. L. 99-198).



Sec. 400.47  Denial of crop insurance.

    (a) Any person convicted under Federal or State law of planting, 
cultivating, growing, producing, harvesting or storing a controlled 
substance in any crop year will be ineligible for crop insurance during 
that crop year and the four succeeding crop years.
    (1) The insurance of such person insured by FCIC who found to be 
ineligible under paragraph (a) of this section will be null and void, 
and any indemnity paid on such insurance must be returned in full to 
FCIC. Any premium paid for insurance coverage declared null and void 
will be returned, less a reasonable amount for expenses and handling not 
to exceed 20 percent of the premium paid.
    (2) The application and policy of insurance will be voided, or the 
person will be removed from the policy and the policyholder share 
reduced in accordance with 7 CFR 400.681(b), when any person becomes 
ineligible for crop insurance under the provisions of paragraph (a) of 
this section. To obtain crop insurance coverage following the period of 
ineligibility, the person must submit a new application for crop 
insurance.
    (b) Any insurance written by a multi-peril crop insurance company to 
any person who is ineligible under the provisions of this subpart is not 
eligible for reinsurance under the Corporation's standard reinsurance 
agreement. Any premium subsidy and expense allowance or loss paid by the 
Corporation because of such agreement will be immediately refunded to 
the Corporation. Notwithstanding any other provision of law, policies 
written by multi-peril crop insurance companies to any person ineligible 
under the provisions of this subpart are null and void. Premium paid for 
such policies will be refunded to the person applying for insurance, 
less a reasonable amount for expenses and handling not to exceed 20 
percent of the premium paid, and no indemnity will be paid unless the 
multi-peril company expressly agrees to continue such policy in effect 
without FCIC reinsurance. However, if the reinsured company follows the 
procedure of the Corporation and the requirements of the regulations, 
reinsurance will continue to be provided under the reinsurance agreement 
on the policy unless it is shown that the agent or company

[[Page 11]]

had knowledge of facts which would indicate ineligibility on the part of 
the insured and failed to act on that knowledge.
    (c) FCIC employees or contractors are required to report all 
suspected cases of violation of the Act or the regulations to the 
appropriate agency for a determination of violation. Benefits shall not 
be paid in such cases pending a determination from the appropriate 
agency.
    (d) Notwithstanding any other provision of this subpart, any crop 
insurance policy where insurance attached to a crop prior to August 15, 
1986, will continue in effect for that crop until the next termination 
date following August 15, 1986.

[52 FR 19128, May 21, 1987, as amended at 58 FR 17945, Apr. 7, 1993; 61 
FR 38058, July 23, 1996; 65 FR 29942, May 10, 2000]



Sec. 400.48  Protection of interests of tenants, landlords or producers.

    Any tenant, landlord or producer on the farm separate from the 
person declared ineligible for crop insurance under the provisions of 
Sec. 400.47 of this part, will remain eligible for crop insurance on 
their insurable share in the crop, unless such tenant, landlord, or 
producer on the farm is:
    (a) Also convicted of planting, cultivating, growing, producing, or 
storing a controlled substance;
    (b) Otherwise determined by FCIC to be ineligible for crop 
insurance.

[52 FR 19128, May 21, 1987, as amended at 61 FR 38058, July 23, 1996]



Sec. Sec. 400.49-400.50  [Reserved]



                   Subpart G_Actual Production History

    Authority: 7 U.S.C. 1506, 1516.

    Source: 59 FR 47787, Sept. 19, 1994, unless otherwise noted.



Sec. 400.51  Availability of actual production history program.

    An Actual Production History (APH) Coverage Program is offered under 
the provisions contained in the following regulations:

7 CFR part 457--Common Crop Insurance Regulations; and all special 
provisions thereto unless specifically excluded by the special 
provisions.

    The APH program operates within limits prescribed by, and in 
accordance with, the provisions of the Federal Crop Insurance Act, as 
amended (7 U.S.C. 1501 et seq.), only on those crops identified in this 
section in those areas where the Actuarial Table provides coverage. 
Except when in conflict with this subpart, all provisions of the 
applicable crop insurance contract for these crops apply.

[59 FR 47787, Sept. 19, 1994, as amended at 69 FR 9520, Mar. 1, 2004]



Sec. 400.52  Definitions.

    In addition to the definitions contained in the crop insurance 
contract, the following definitions apply for the purposes of the APH 
Coverage Program:
    (a) APH--Actual Production History.
    (b) Actual yield--The yield per acre for a crop year calculated from 
the production records or claims for indemnities. The actual yield is 
determined by dividing total production (which includes harvested and 
appraised production) by planted acres for annual crops or by insurable 
acres for perennial crops.
    (c) Adjusted yield--The transitional or determined yield reduced by 
the applicable percentage for lack of records. The adjusted yield will 
equal 65 percent of the transitional or determined yield, if no producer 
records are submitted; 80 percent, if records for one year are 
submitted; and 90 percent, if two years of records are submitted.
    (d) Appraised production--Production determined by the Agricultural 
Stabilization and Conservation Service (ASCS), the FCIC, or a company 
reinsured by the FCIC, that was unharvested but which reflected the 
crop's yield potential at the time of the appraisal. For the purpose of 
APH ``appraised production'' specifically excludes production lost due 
to uninsurable causes.
    (e) Approved APH yield--A yield, calculated and approved by the 
verifier, used to determine the production guarantee and determined by 
the sum of the yearly actual, assigned, and adjusted or unadjusted 
transitional or determined yields divided by the number

[[Page 12]]

of yields contained in the database. The database may contain up to 10 
consecutive crop years of actual and or assigned yields. At least four 
yields will always exist in the database.
    (f) Assigned yield--A yield assigned by FCIC in accordance with the 
crop insurance contract, if the insured does not file production reports 
as required by the crop insurance contract. Assigned yields are used in 
the same manner as actual yields when calculating APH yields except for 
purposes of the Nonstandard Classification System (NCS).
    (g) Base period--Ten consecutive crop years (except peaches, which 
have a five-year base period) immediately preceding the crop year 
defined in the insurance contract for which the approved APH yield is 
being established (except for sugarcane, which begins the calendar year 
preceding the immediate previous crop year defined in the insurance 
contract).
    (h) Continuous production reports--Reports submitted by a producer 
for each crop year that the unit was planted to the crop and for the 
most recent crop year in the base period.
    (i) Crop year--Defined in the crop insurance contract, however, for 
APH purposes the term does not include any year when the crop was not 
planted or when the crop was prevented from being planted by an 
insurable cause. For example, if an insured plants acreage in a county 
to wheat one year, that year is a crop year in accordance with the 
policy definition. If the land is summerfallowed the next calendar year, 
that calendar year is not a crop year for the purpose of APH.
    (j) Database--A minimum of four years up to a maximum of ten crop 
years of production data used to calculate the approved APH yield.
    (k) Determined yield (D-yield)--An estimated year for certain crops, 
which can be determined by multiplying an average yield for the crop 
(attained by using data available from The National Agricultural 
Statistics Service (NASS) or comparable sources) by a percentage 
established by the FCIC for each county.
    (l) Master yields--Approved APH yields, for certain crops and 
counties as initially designated by the FCIC, based on a minimum of four 
crop years of production records for a crop within a county.
    (m) New producer--A person who has not been actively engaged in 
farming for a share of the production of the insured crop for more than 
two crop years.
    (n) Production report--A written record showing the insured crop's 
annual production and used to determine the insured's yield for 
insurance purposes. The report contains yield history by unit, if 
applicable, including planted acreage for annual crops, insurable 
acreage for perennial crops, and harvested and appraised production for 
the previous crop years. This report must be supported by written 
verifiable records, measurement of farm stored production, or by other 
records of production approved by FCIC on an individual basis. 
Information contained in a claim for indemnity is considered a 
production report for the crop year for which the claim was filed.
    (o) Production Reporting Date (PRD)--The PRD is contained in the 
crop insurance contract and is the last date production reports will be 
accepted for inclusion in the database for the current crop year.
    (p) Transitional yield (T-Yield)--An estimated yield, for certain 
crops, generally determined by multiplying the ASCS program yield by a 
percentage determined by the FCIC for each county and provided on the 
actuarial table to be used in the APH yield calculation process when 
less than four consecutive crop years of actual or assigned yields are 
available.
    (q) Verifiable records--Contemporaneous records of acreage and 
production provided by the insured, which may be verified by FCIC 
through an independent source, and which are used to substantiate the 
acreage and production that have been reported on the production report.
    (r) Verifier--A person authorized by the FCIC to calculate approved 
APH yields.
    (s) Yield variance tables--Tables for certain crops that indicate 
unacceptable yield variations and yield trends which will require 
determination of the APH yield by the FCIC.

[[Page 13]]



Sec. 400.53  Yield certification and acceptability.

    (a) Production reports must be provided to the crop insurance agent 
no later than the production reporting date for the crop insured.
    (1) Production reports must provide an accurate account of planted 
acreage for annual crops or insurable acres for perennial crops, as well 
as harvested and appraised production by unit.
    (2) The insured must certify the accuracy of the information.
    (3) Production reported for more than one crop year must be 
continuous. A year in which no acreage was planted to the crop on a unit 
or no acreage was planted to a practice, type, or variety requiring an 
APH yield will not be considered a break in continuity. Assigned yields, 
at the discretion of the FCIC, may be used to maintain continuity of 
yield data of file. Production on uninsured (for those years a crop 
insurance policy under the Federal Crop Insurance Act is in effect) or 
uninsurable acreage (for other years of the period) will not be used to 
determine APH yield unless production from such acreage is commingled 
with production from insured or insurable acreage.
    (b) Production reports and supporting records are subject to audit 
or review to verify the accuracy of the information certified. 
Production and supporting records may be reviewed and verified if a 
claim for indemnity is submitted on the insured crop. The reported yield 
is subject to revision, if needed, so that the claim conforms to the 
records submitted at that time.
    (1) Inaccurate production reports or failure to retain acceptable 
records shall result in the verifier combining optional farm units and 
recomputing the approved APH yield. These actions shall be taken at any 
time after reporting or record discrepancies are identified and may 
result in reduction of the approved APH yield for any calendar year.
    (2) Records must be provided by the insured at the time of an audit, 
review, or as otherwise requested, to verify that the acreage and 
production certified are accurate. Records of any other person having 
shares in the insured crop, which are used by the insured to establish 
the approved APH yield, must also be provided upon request.
    (3) In the event acreage or production data certified by two or more 
persons sharing in the crop on the same acreage is different, the 
verifier shall, at the verifier's discretion, determine which acreage 
and production data, if any, will be used to determine the approved APH 
yield. If the correct acreage and production cannot be determined, the 
data submitted will be considered unacceptable by the verifier for APH 
purposes.
    (4) Failure of the producer to report acreage and production 
completely and accurately may result in voidance of the crop insurance 
contract, as well as criminal or civil false claims penalties pursuant 
to applicable Federal criminal or civil statutes.



Sec. 400.54  Submission and accuracy of production reports.

    (a) The insured is solely responsible for the timely submission and 
certification of accurate, complete production reports to the agent. 
Production reports must be provided for all planted units.
    (b) Records may be requested by the FCIC, or an insurance company 
reinsured by the FCIC, or by anyone acting on behalf of the FCIC or the 
insurance company. The insured must provide such records upon request.
    (c) The agent will explain the APH Program to insureds and 
prospective insureds. When necessary, the agent will assist the insured 
in preparation of production reports. The agent will determine the 
adjusted or unadjusted transitional or determined yields in accordance 
with Sec. 400.54(b). The agent will review the production reports and 
forward them to the verifier, along with any requested and required 
supporting records for determination of an approved APH yield.
    (d) The verifier will determine if the certified production reports 
are acceptable and calculate the approved APH yield.



Sec. 400.55  Qualification for actual production history coverage program.

    (a) The approved APH yield is calculated from a database containing 
a

[[Page 14]]

minimum of four yields and will be updated each subsequent crop year. 
The database may contain a maximum of the 10 most recent crop years and 
may include actual, assigned, and adjusted or unadjusted T or D-Yields. 
T or D-Yields, adjusted or unadjusted, will only occur in the database 
when there are less than four years of actual and/or assigned yields.
    (b) The insured may be required to provide production records to 
determine the approved APH yield, if production records for the most 
recent crop year are available. If acceptable records of actual 
production are provided, the records must be continuous and contain at 
least the most recent crop year's actual yield.
    (1) If no acceptable production records are available, the approved 
APH yield is the adjusted T or D-Yield (65 percent of T or D-Yield).
    (2) If acceptable production records containing information for only 
the most recent crop year are provided, the three T or D-Yields adjusted 
by 80 percent will be used to complete the minimum database and 
calculate the approved APH yield.
    (3) If acceptable production records containing information for only 
the two most recent crop years are provided, the two T or D-Yields 
adjusted by 90 percent and the two actual yields will be used to 
complete the database and calculate the approved APH yield.
    (4) If acceptable production records containing information for only 
the three most recent crop years are provided, the three actual yields 
and one unadjusted T or D-Yield are used to complete the database and 
calculate the approved APH yield.
    (5) When the database contains four or more (up to ten) continuous 
actual yields, the approved APH yield is a simple average of the actual 
yields.
    (6) New producers may have their approved APH yields based on 
unadjusted T or D-Yields or a combination of actual and unadjusted T or 
D-Yields.
    (7) Producers who add land or new practice, types and varieties to 
their farming operations and who do not have available records for the 
added land, practice, types or varieties may have approved APH yields 
for the added land, practice, types or varieties that are based on 
adjusted or unadjusted T or D-Yields as determined by FCIC.
    (8) If the producer's crop is destroyed or if it produces a low 
actual yield due to insured causes of loss, the resulting average yield 
may qualify for catastrophic yield adjustment according to FCIC 
guidelines. APH yields qualifying for catastrophic yield adjustment may 
be adjusted to mitigate the effect of catastrophic years. Premium rates 
for approved APH yields, which are adjusted for catastrophic years, may 
be based on the producer's APH average yield prior to the catastrophic 
adjustment or such other basis as determined appropriate by FCIC.
    (c) If no insurable acreage of the insured crop is planted for a 
year, a production report indicating zero planted acreage will maintain 
the continuity of production reports for APH record purposes and that 
calendar year will not be included in the APH yield calculations.
    (d) Actual yields calculated from the claim for indemnity will be 
entered in the database. The resulting average yield will be used to 
determine the premium rate and approved APH yield, at the discretion of 
FCIC.
    (e) Optional units are not available to an insured who does not 
provide acceptable production reports for at least the most recent crop 
year with which to calculate an approved APH yield.
    (f) FCIC may determine approved APH yields for designated crops in 
the following situations:
    (1) If less than four years of yield history is certified and T or 
D-Yields are not provided in the actuarial documents,
    (2) If actual yield exceed tolerances specified in yield variance 
tables, and
    (3) For perennial crops:
    (i) If significant upward or downward yield trends are indicated;
    (ii) If tree or vine damage, or cultural practices will reduce the 
production level;
    (iii) if more than two percent of the trees or vines have been 
removed within the last two years; or
    (iv) If yield trends are evident and yields greater than the average 
yield are requested by the insured.

[[Page 15]]

    (g) APH yields will not be approved the first insurance year on 
perennial crops until an inspection acceptable to FCIC has been 
performed and the acreage is accepted for insurance purposes in 
accordance with the crop insurance contract.
    (h) APH Master Yields may be established whenever crop rotation 
requirements and land leasing practices limit the yield history 
available. FCIC will establish crops and locations for which Master 
Yields are available. To qualify, the producer must have at least four 
recent continuous crop years' annual production reports and must certify 
the authenticity of the production reports of the insured crop. Master 
Yields are based on acreage and production history from all acreage of 
the insured crop in the county in which the operator has shared in the 
crop's production.
    (i) FCIC may use any production report available under the 
provisions of any crop insurance contract, whether continuous or not, 
involving the interests of the person's insured crops in determining the 
approved APH yield.



Sec. 400.56  Administrative appeal exhaustion.

    The insured may appeal the approved APH yield in accordance with the 
procedures contained in 7 CFR part 400, subpart J. Administrative 
remedies through the appeal process must be exhausted prior to any 
action for judicial review. The approved APH yield determined as a 
result of the appeal process will be the yield applicable to the crop 
year.



Sec. 400.57  [Reserved]



   Subpart H_Information Collection Requirements Under the Paperwork 
                   Reduction Act; OMB Control Numbers

    Authority: 5 U.S.C. 1320, Pub. L. 96-511 (44 U.S.C., chapter 35).

    Source: 56 FR 49390, Sept. 30, 1991, unless otherwise noted.



Sec. 400.65-400.66  [Reserved]

Subpart I [Reserved]



                       Subpart J_Appeal Procedure

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

    Source: 67 FR 13251, Mar. 22, 2002, unless otherwise noted.



Sec. 400.90  Definitions.

    Act. The Federal Crop Insurance Act (7 U.S.C. 1501-1524).
    Administrative review. A review within the Department of Agriculture 
of an adverse decision.
    Adverse decision. A decision by an employee or Director of the 
Agency that is adverse to the participant. The term includes the denial 
of program benefits, written agreements, eligibility, etc. that results 
in the participant receiving less funds than the participant believes 
should have been paid or not receiving a benefit to which the 
participant believes he or she was entitled.
    Agency. RMA or FCIC, including the RSO, FOSD or any other division 
within the Agency with decision making authority.
    Appellant. Any participant who appeals or requests mediation of an 
adverse decision of the Agency in accordance with this subpart. Unless 
otherwise specified in this subpart, the term ``appellant'' includes an 
authorized representative.
    Authorized representative. Any person, whether or not an attorney, 
who has obtained a Privacy Act waiver and is authorized in writing by a 
participant to act for the participant in the administrative review, 
mediation, or appeal process.
    Certified State. A State with a mediation program, approved by the 
Secretary, that meets the requirements of 7 CFR part 1946, subpart A, or 
a successor regulation.
    FCIC. The Federal Crop Insurance Corporation, a wholly owned 
Government corporation within USDA.
    FOSD. The Fiscal Operations and Systems Division established by the 
Agency for the purpose of making determinations of indebtedness for 
policies insured by FCIC and for determining ineligibility for policies 
both insured and reinsured by FCIC.
    FSA. The Farm Service Agency, an agency within USDA, or its 
successor agency.

[[Page 16]]

    Good farming practices. For agricultural commodities insured under 
the terms contained in 7 CFR part 457 and all other crop insurance 
policies authorized under the Act, except as provided herein, means the 
good farming practices as defined at 7 CFR 457.8. For agricultural 
commodities insured under the terms contained in 7 CFR part 407, means 
the good farming practices as defined at 7 CFR 407.9.
    Insured. An individual or entity that has applied for crop insurance 
or who holds a crop insurance policy that was in effect for the previous 
crop year and continues to be in effect for the current crop year.
    Mediation. A process in which a trained, impartial, neutral third 
party (the mediator), meets with the disputing parties, facilitates 
discussions, and works with the parties to mutually resolve their 
disputes, narrow areas of disagreement, and improve communication.
    NAD. The USDA National Appeals Division. See 7 CFR part 11.
    Non-certified State. A State that is not approved by the Secretary 
of Agriculture to participate in the USDA Mediation Program under 7 CFR 
part 1946, subpart A, or its successor regulation.
    Participant. An individual or entity that has applied for crop 
insurance or who holds a valid crop insurance policy that was in effect 
for the previous crop year and continues to be in effect for the current 
crop year. The term does not include individuals or entities whose 
claims arise under the programs excluded in the definition of 
participant published at 7 CFR 11.1.
    Reinsured company. A private insurance company, including its 
agents, that has been approved and reinsured by FCIC to provide 
insurance to participants.
    Reviewing authority. A person assigned the responsibility by the 
Agency of making a decision on a request for administrative review by 
the participant in accordance with this subpart.
    RMA. The Risk Management Agency, an agency within USDA, or its 
successor agency.
    RSO. The Regional Service Office established by the Agency for the 
purpose of providing program and underwriting services for private 
insurance companies reinsured by FCIC under the Act and for FCIC 
insurance contracts delivered through FSA offices.
    Secretary. The Secretary of Agriculture.
    USDA. United States Department of Agriculture.

[67 FR 13251, Mar. 22, 2002, as amended at 68 FR 37720, June 25, 2003]



Sec. 400.91  Applicability.

    (a) This subpart applies to:
    (1) Adverse decisions made by personnel of the Agency with respect 
to:
    (i) Contracts of insurance insured by FCIC; and
    (ii) Contracts of insurance of private insurance companies and 
reinsured by FCIC under the provisions of the Act.
    (2) Determinations of good farming practices made by personnel of 
the Agency or the reinsured company (see Sec. 400.98).
    (b) This subpart is not applicable to any decision:
    (1) Made by the Agency with respect to any matter arising under the 
terms of the Standard Reinsurance Agreement with the reinsured company; 
or
    (2) Made by any private insurance company with respect to any 
contract of insurance issued to any producer by the private insurance 
company and reinsured by FCIC under the provisions of the Act, except 
for determinations of good farming practices specified in Sec. 
400.91(a)(2).
    (c) With respect to matters identified in Sec. 400.91(a)(1), 
participants may request an administrative review, mediation, or appeal 
of adverse decisions by the Agency made with respect to:
    (1) Denial of participation in the crop insurance program;
    (2) Compliance with terms and conditions of insurance;
    (3) Issuance of payments or other program benefits to a participant 
in the crop insurance program; and
    (4) Issuance of payments or other benefits to an individual or 
entity who is not a participant in the crop insurance program.
    (d) Only a participant may seek an administrative review or 
mediation under this subpart, as applicable.

[67 FR 13251, Mar. 22, 2002, as amended at 68 FR 37720, June 25, 2003]

[[Page 17]]



Sec. 400.92  Appeals.

    (a) Except for determinations of good farming practices, nothing in 
this subpart prohibits a participant from filing an appeal of an adverse 
decision directly with NAD in accordance with part 11 of this title 
without first requesting administrative review or mediation under this 
subpart.
    (b) If the participant has timely requested administrative review or 
mediation, the participant may not participate in a NAD hearing until 
such administrative review or mediation is concluded. The time for 
appeal to NAD is suspended from the date of receipt of a request for 
administrative review or mediation until the conclusion of the 
administrative review or mediation. The participant will have only the 
remaining time to appeal to NAD after the conclusion of the 
administrative review or mediation.

[67 FR 13251, Mar. 22, 2002, as amended at 68 FR 37720, June 25, 2003]



Sec. 400.93  Administrative review.

    (a) With respect to adverse decisions, an appellant may seek one 
administrative review or seek mediation under Sec. 400.94, but not 
both.
    (b) If the appellant seeks an administrative review, the appellant 
must file a written request for administrative review with the reviewing 
authority in accordance with Sec. 400.95. The written request must 
state the basis upon which the appellant relies to show that:
    (1) The decision was not proper and not made in accordance with 
applicable program regulations and procedures; or
    (2) All material facts were not properly considered in such 
decision.
    (c) The reviewing authority will issue a written decision that will 
not be subject to further administrative review by the Agency.

[67 FR 13251, Mar. 22, 2002, as amended at 68 FR 37720, June 25, 2003]



Sec. 400.94  Mediation.

    For adverse decisions only:
    (a) Appellants have the right to seek mediation or other forms of 
alternative dispute resolution instead of an administrative review under 
Sec. 400.93.
    (b) All requests for mediation under this subpart must be made after 
issuance of the adverse decision by the Agency and before the appellant 
has a NAD hearing on the adverse decision.
    (c) An appellant who chooses mediation must request mediation not 
later than 30 calendar days from receipt of the written notice of the 
adverse decision. A request for mediation will be considered to have 
been ``filed'' when personally delivered in writing to the appropriate 
decision maker or when the properly addressed request, postage paid, is 
postmarked.
    (d) An appellant will have any balance of the days remaining in the 
30-day period to appeal to NAD if mediation is concluded without 
resolution. If a new adverse decision that raises new matters or relies 
on different grounds is issued as a result of mediation, the participant 
will have a new 30-day period for appeals to NAD.
    (e) An appellant is responsible for contacting the Certified State 
Mediation Program in States where such mediation program exists. The 
State mediation program will make all arrangements for the mediation 
process. A list of Certified State Mediation Programs is available at 
http://www.act.fcic.usda.gov.
    (f) An appellant is responsible for making all necessary contacts to 
arrange for mediation in non-certified States or in certified States 
that are not currently offering mediation on the subject in dispute. An 
appellant needing mediation in States without a certified mediation 
program may request mediation by contacting the RSO, which will provide 
the participant with a list of acceptable mediators.
    (g) An appellant may only mediate an adverse decision once.
    (h) If the dispute is not completely resolved in mediation, the 
adverse decision that was the subject of the mediation remains in effect 
and becomes the adverse decision that is appealable to NAD.
    (i) If the adverse decision is modified as a result of the mediation 
process, the modified decision becomes the new adverse decision for 
appeal to NAD.

[[Page 18]]



Sec. 400.95  Time limitations for filing and responding to requests for 

administrative review.

    (a) A request for administrative review must be filed within 30 days 
of receipt of written notice of the adverse decision. A request for an 
administrative review will be considered to have been ``filed'' when 
personally delivered in writing to the appropriate decision maker or 
when the properly addressed request, postage paid, is postmarked.
    (b) Notwithstanding paragraph (a) of this section, an untimely 
request for administrative review may be accepted and acted upon if the 
participant can demonstrate a physical inability to timely file the 
request for administrative review.

[67 FR 13251, Mar. 22, 2002, as amended at 68 FR 37720, June 25, 2003]



Sec. 400.96  Judicial review.

    Except as provided in Sec. 400.98, with respect to adverse 
determinations:
    (a) A participant must exhaust administrative remedies before 
seeking judicial review of an adverse decision. This requires the 
participant to appeal an Agency adverse decision to NAD in accordance 
with 7 CFR part 11 prior to seeking judicial review of the adverse 
decision.
    (b) If the adverse decision involves a matter determined by the 
Agency to be not appealable, the appellant must request a determination 
of non-appealability from the Director of NAD, and appeal the adverse 
decision to NAD if the Director determines that it is appealable, prior 
to seeking judicial review.
    (c) A participant with a contract of insurance reinsured by the 
Agency may bring suit against the Agency if the suit involves an adverse 
action in a United States district court after exhaustion of 
administrative remedies as provided in this section. Nothing in this 
section can be construed to create privity of contract between the 
Agency and a participant.

[67 FR 13251, Mar. 22, 2002, as amended at 68 FR 37720, June 25, 2003]



Sec. 400.97  Reservations of authority.

    (a) Representatives of the Agency may correct all errors in entering 
data on program contracts and other program documents, and the results 
of computations or calculations made pursuant to the contract.
    (b) Nothing contained in this subpart precludes the Secretary, the 
Manager of FCIC, or the Administrator of RMA, or a designee, from 
determining at any time any question arising under the programs within 
their respective authority or from reversing or modifying any adverse 
decision.



Sec. 400.98  Reconsideration process.

    (a) This reconsideration process only applies to determinations of 
good farming practices under Sec. 400.91(a)(2).
    (b) There is no appeal to NAD of determinations or reconsideration 
decisions regarding good farming practices.
    (c) Only reconsideration is available for determinations of good 
farming practices. Mediation is not available for determinations of good 
farming practices.
    (d) If the insured seeks reconsideration, the insured must file a 
written request for reconsideration to the following: USDA/RMA/Deputy 
Administrator for Insurance Services/Stop 0805, 1400 Independence Avenue 
SW., Washington, DC 20250-0801.
    (1) A request for reconsideration must be filed within 30 days of 
receipt of written notice of the determination regarding good farming 
practices. A request for reconsideration will be considered to have been 
``filed'' when personally delivered in writing to FCIC or when the 
properly addressed request, postage paid, is postmarked.
    (2) Notwithstanding paragraph (d)(1) of this section, an untimely 
request for reconsideration may be accepted and acted upon if the 
insured can demonstrate a physical inability to timely file the request 
for reconsideration.
    (3) The written request must state the basis upon which the insured 
relies to show that:
    (i) The decision was not proper and not made in accordance with 
applicable program regulations and procedures; or
    (ii) All material facts were not properly considered in such 
decision.
    (e) With respect to determinations of good farming practices, the 
insured is

[[Page 19]]

not required to exhaust the administrative remedies in 7 CFR part 11 
before bringing suit against FCIC in a United States district court. 
However, regardless of whether the Agency or the reinsured company makes 
the determination, the insured must seek reconsideration under Sec. 
400.98 before bringing suit against FCIC in a United States District 
Court. The insured cannot file suit against the reinsured company for 
determinations of good farming practices.
    (f) Any reconsideration decision by the Agency regarding good 
farming practices shall not be reversed or modified as a result of 
judicial review unless the reconsideration decision is found to be 
arbitrary or capricious.

[68 FR 37720, June 25, 2003]



 Subpart K_Debt Management_Regulations for the 1986 and Succeeding Crop 
                                  Years

    Authority: Secs. 506, 516, Pub. L. 75-430, 52 Stat. 73, 77, as 
amended (7 U.S.C. 1506, 1516).

    Source: 51 FR 17316, May 12, 1986, unless otherwise noted.



Sec. 400.115  Purpose.

    This subpart sets forth procedures that will be followed, and the 
rights afforded to debtors, in connection with the reporting by the 
Federal Crop Insurance Corporation (FCIC) to credit reporting agencies 
of information with respect to current and delinquent debts owed to 
FCIC, and in connection with referral of delinquent debts to contract 
collection agencies.



Sec. 400.116  Definitions.

    (a) Credit reporting agency means (1) a reporting agency as defined 
at 4 CFR 102.5(a), or (2) any entity which has entered into an agreement 
with USDA concerning the referral of credit information.
    (b) Collection agency means a private debt collection contractor 
under Federal Supply Schedule contract with the General Services 
Administration (GSA) for professional debt collection services.
    (c) Comptroller means the employee of FCIC filling that position or 
the person designated by the Comptroller to perform that function.
    (d) Debt and claim are deemed synonymous and are used 
interchangeably herein. The debt or claim is an amount of money which 
has been determined by an appropriate agency official to be owed to FCIC 
by any individual, organization or entity, except another Federal 
agency; State, local or foreign government or agencies thereof; Indian 
tribal governments; or other public institutions.


The debt or claim may have arisen from overpayment, premium non-payment, 
interest, penalties, reclamations resulting from payments under good 
faith reliance provisions, or other causes.
    (e) Delinquent debt means (1) any debt owed to FCIC that has not 
been paid by the termination date specified in the applicable contract 
of insurance, or other due date for payment contained in any other 
agreement, or notification of indebtedness, and (2) any overdue amount 
owed to FCIC by a debtor which is the subject of an installment payment 
agreement which the debtor has failed to satisfy under the terms of such 
agreement.
    (f) System of records means a group of any records under the control 
of FCIC from which information is retrieved by the name of the 
individual by some identifying number, symbol, or other identification 
assigned to the individual.
    (g) Request for review means that request submitted to FCIC by a 
debtor for a review of the facts resulting in the determination of 
indebtedness to FCIC. FCIC allows 45 days for such request and any 
request submitted within that period is considered a timely request.



Sec. 400.117  Determination of delinquency.

    Prior to disclosing information about a debt to a credit reporting 
agency in accordance with this subpart, the FCIC claims official, 
designated as the Comptroller, FCIC, or the designee of the Comptroller 
who has jurisdiction over the claim, shall review the claim and 
determine that the claim is valid and overdue.

[[Page 20]]



Sec. 400.118  Demand for payment.

    The Comptroller who is responsible for carrying out the provisions 
of this subpart with respect to the debt shall send to the debtor 
appropriate written demands for payment in terms which inform the debtor 
of the consequences of failure to make payment, in accordance with 
guidelines established by the Manager, FCIC, the Federal Claims 
Collection Standards at 4 CFR 102.2, or the contract between the General 
Services Administration (GSA) and the collection agency.



Sec. 400.119  Notice to debtor; credit reporting agency.

    (a) In accordance with guidelines established by the Manager, FCIC, 
the Comptroller who is responsible for disclosure of information with 
respect to delinquent debts to a credit reporting agency shall send 
written notice to the delinquent debtors that FCIC intends to disclose 
credit information to a credit reporting agency on a regular basis. In 
addition, delinquent debtors are to be informed:
    (1) Of the basis for the indebtedness;
    (2) That the payment is overdue;
    (3) That FCIC intends to disclose to a credit reporting agency that 
the debtor is responsible for the debt and with respect to an 
individual, that such disclosure shall be made not less than 60 days 
after notification to such debtor;
    (4) Of the specific information intended to be disclosed to the 
credit reporting agency;
    (5) Of the rights of such debtor to a full explanation of the claim 
and to dispute any information in the system of records of FCIC 
concerning the claim;
    (6) Of the debtor's right to administrative appeal or review with 
respect to the claim and how such review shall be obtained; and
    (7) Of the date after which the information will be reported to the 
credit reporting agency.
    (b) The content and standards for demand letters and notices sent 
under this section shall be consistent with the Federal Claims 
Collection Standards at 4 CFR 102.2.



Sec. 400.120  Subsequent disclosure and verification.

    (a) FCIC shall promptly notify each credit reporting agency to which 
the original disclosure of debt information was made of any substantial 
change in the condition or amount of the claim. A substantial change in 
condition may include, but is not limited to, notice of death, cessation 
of business, or relocation of the debtor. A substantial change in the 
amount may include, but is not limited to, payments received, additional 
amounts due, or offsets made with respect to the debt.
    (b) FCIC shall promptly verify or correct, as appropriate, 
information about the claim or request of such credit reporting agency 
for verification of any or all information so disclosed. The records of 
the debtor shall reflect any correction resulting from such request.
    (c) FCIC shall obtain satisfactory assurances from each reporting 
agency to which information will be provided that the agency is in 
compliance with the provisions of all laws and regulations of the United 
States relating to providing credit information.



Sec. 400.121  Information disclosure limitations.

    FCIC shall limit delinquent debt information disclosed to credit 
reporting agencies to:
    (a) The name, address, taxpayer identification number, and other 
information necessary to establish the identity of the debtor;
    (b) The amount, status, and history of the claim; and
    (c) The FCIC program under which the claim arose.



Sec. 400.122  Attempts to locate debtor.

    Before disclosing delinquent debt information to a credit reporting 
agency, FCIC shall take reasonable action to locate a debtor for whom 
FCIC does not have a current address in order to send the notification 
in accordance with Sec. 400.119 of this subpart.



Sec. 400.123  Request for review of the indebtedness.

    (a) Before disclosing delinquent debt information to a credit 
reporting agency, FCIC shall, upon request of the debtor, provide for a 
review of the

[[Page 21]]

claim, including an opportunity for reconsideration of the initial 
decision concerning the existence or amount of the claim, in accordance 
with applicable administrative appeal procedures.
    (b) Upon receipt of a timely request for review, FCIC shall suspend 
its schedule for disclosure of delinquent debt information to a credit 
reporting agency until such time as a final decision is made on the 
request.
    (c) Upon completion of the review, the reviewing office shall 
transmit to the debtor a written notification of the decision. If 
appropriate, notification shall inform the debtor of the scheduled date 
on or after which information concerning the debt will be provided to 
the credit reporting agency. The notification shall, if appropriate, 
also indicate any changes in the information to be disclosed to the 
extent such information differs from that provided in the initial 
notification.



Sec. 400.124  Disclosure to credit reporting agencies.

    (a) In accordance with guidelines established by the Manager, FCIC, 
the Comptroller or designated manager of the systems of records shall 
disclose to credit reporting agencies the information specified in Sec. 
400.121.
    (b) Disclosure of information to credit reporting agencies shall be 
made on or after the date specified in Sec. Sec. 400.119(a)(3) and 
400.125 and shall be comprised of the information set forth in the 
initial determination or any modification thereof.
    (c) This section shall not apply to disclosure of delinquent debts 
when:
    (1) The debtor has agreed to a repayment agreement for such debt and 
such agreement is still valid; or
    (2) The debtor has filed for review of the debt and the reviewing 
official or designee has not issued a decision on the review.



Sec. 400.125  Notice to debtor, collection agency.

    FCIC shall provide 30 days written notice to the debtor, mailed to 
the debtor's last known address, of FCIC's intent to forward the debt to 
a collection agency for further collection action.



Sec. 400.126  Referral of delinquent debts to contract collection agencies.

    (a) FCIC shall use the services of a contract collection agency 
which has entered into a contract with the General Services 
Administration to recover debts owed to FCIC.
    (b) If FCIC's collection efforts have been unsuccessful on a 
delinquent debt, and the delinquent debt remains unpaid, FCIC may refer 
the debt to a contract collection agency for collection.
    (c) FCIC shall retain the authority to resolve disputes, compromise 
claims, suspend or terminate collection action, and refer the matter for 
litigation.



Sec. 400.127  [Reserved]



Sec. 400.128  Definitions.

    (a) Agency means (1) An Executive Agency as defined by 5 U.S.C. 105, 
the United States Postal Service, and the United States Postal Rate 
Commission, or (2) A Military Department, as defined by section 102 of 
Title 5 U.S.C.
    (b) Debt means:
    (1) An amount owed to the United States from sources including, but 
not limited to, insured or guaranteed loans, fees, leases, insurance 
premiums, interest (except where prohibited by law), rents, royalties, 
services, sale of real or personal property, overpayments, penalties, 
damages, fines and forfeitures (except those arising under the Uniform 
Code of Military Justice).
    (2) An amount owed to the United States by an employee for pecuniary 
losses where the employee has been determined to be liable because of 
such employee's negligent, willful, unauthorized or illegal acts, 
including but not limited to:
    (i) Theft, misuse, or loss of Government funds;
    (ii) False claims for services and travel reimbursement;
    (iii) Illegal, unauthorized obligations and expenditures of 
Government appropriations;
    (iv) Using or authorizing the use of Government owned or leased 
equipment, facilities, supplies and services for other than official or 
approved purposes;
    (v) Lost, stolen, damaged, or destroyed Government property;

[[Page 22]]

    (vi) Erroneous entries on accounting records or reports; and
    (vii) Deliberate failure to provide physical security and control 
procedures for accountable officers, if such failure is determined to be 
the proximate cause for a loss of Government funds.
    (c) Department or USDA means the United States Department of 
Agriculture.
    (d) Disposable salary (pay) means any pay due an employee which 
remains after required deductions for Federal, State and local income 
taxes; Social Security taxes, including Medicare taxes; Federal 
retirement programs; premiums for life and health insurance benefits; 
and such other deductions as may be required by law to be withheld.
    (e) Employee means a current employee of an agency, including a 
current member of the Armed Forces or a Reserve of the Armed Forces.
    (f) FCIC Official means the Manager, or the Manager's designee.
    (g) Hearing Officer means an Administrative Law Judge of the 
Department of Agriculture or another person not under the control of the 
USDA, designated by the FCIC Official to review the determination of the 
alleged debt.
    (h) Salary Offset means a deduction of a debt due the U.S. by 
deduction from the disposable salary of an employee without the 
employee's consent.
    (i) Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt owed by an employee as permitted or required by 5 
U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C. 716, 5 U.S.C. 8346(b), or any 
other law.

[53 FR 3, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.129  Salary offset.

    (a) Debt collection by salary offset is feasible if: the cost to the 
Government of collection by salary offset does not exceed the amount of 
the debt; there are no legal restrictions to the debt, such as the 
debtor being under the jurisdiction of a bankruptcy court or the 
expiration of a statute of limitations; or, other such legal 
restrictions. The Debt Collection Act permits collections of debts by 
offset for claims that have not been outstanding for more than 10 years.
    (b) The salary offset provisions contained herein provide procedures 
which must be followed before FCIC may request another Federal agency to 
offset any amount from the debtor's salary. Decisions made under the 
provisions of this section are not appealable under the provisions of 
the Appeal Regulations in part 400, subpart J of this title.
    (c) These regulations will not apply to any case where collection of 
a debt by salary offset is explicitly provided for by another statue as 
noted by the Comptroller General in 64 Comp. Gen. 142 (1984), including 
5 U.S.C. 5512(a), 5 U.S.C. 5513, 5 U.S.C. 5522(a) (1), 5 U.S.C. 5705 (1) 
and (2), and 5 U.S.C. 5724(f).
    (d) Salary offset may be used by FCIC to collect debts which arise 
from delinquent FCIC premium payments or delinquent repayment plans and 
other debts arising from, but not limited to, such sources as program 
theft, embezzlement, fraud, salary overpayments, underwithholding of any 
amounts due and payable for life and health insurance, advance travel 
payments, overpaid indemnities, and any amount owed by present or former 
employees from loss of federal funds through negligence and other 
matters. The debt does not have to be reduced to judgment and does not 
have to be covered by a security instrument.
    (e) FCIC may use salary offset against one of its employees who is 
indebted to another agency if requested to do so by that agency. Salary 
offset will not be initiated until after other servicing options 
available to the requesting agency have been utilized, and due process 
has been afforded to the FCIC employee. When salary offset is utilized, 
payment for the debt will be deducted from the employee's salary and 
sent directly to the creditor agency. Not more than fifteen percent 
(15%) of the employee's disposable salary can be offset in any one pay 
period, unless the employee agrees in writing to the deduction of a 
larger amount.
    (f) When FCIC is owed a debt by an employee of another agency, the 
other agency shall not initiate the requested offset until FCIC provides 
the agency with a written certification that the debtor owes FCIC a debt 
(including the amount and basis of the debt and the due date of the 
payment), and that

[[Page 23]]

FCIC has complied with Department regulations. If a repayment schedule 
is elected by the employee, interest will be charged in accordance with 
Departmental Regulation 2520-1, Interest Rate on Delinquent Debts; USDA 
Debt Collection Regulations in 7 CFR part 3; and 4 CFR 102.13.
    (g) For the purposes of this section, the Manager, FCIC, or the 
Manager's designee, is delegated authority to:
    (1) Certify to the debtor's employing agency that the debt exists 
and the amount of the debt or delinquent balance;
    (2) Certify that, with respect to debt collection, the procedures 
and regulations of FCIC and the Department have been complied with; and
    (3) Request that salary offset be initiated by the debtor's 
employing agency.

[53 FR 3, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.130  Notice requirements before offset.

    Salary offset will not be made unless the employee receives 30 
calendar days written notice. The notice of intent to offset salary 
(notice of intent) will state:
    (a) That FCIC has reviewed the records relating to the debt and has 
determined that the debt is owed, and has verified the amount of the 
debt, and the facts giving rise to the debt;
    (b) That FCIC intends to deduct an amount not to exceed 15% of the 
employees current disposable salary until the debt and all accumulated 
interest are paid in full;
    (c) The amount, frequency, approximate beginning date, and duration 
of the intended deductions;
    (d) An explanation of the requirements concerning interest, 
penalties, and administrative costs, including a statement that these 
assessments will be made unless waived in accordance with 31 U.S.C. 3717 
and 7 CFR 3.34;
    (e) That FCIC's records concerning the debt are available to the 
employee for inspection and that the employee may request a copy of such 
records;
    (f) That the employee has a right to voluntarily enter into a 
written agreement with FCIC for a repayment schedule with FCIC, which 
may be different from that proposed by FCIC, if the terms of the 
repayment agreement are agreed to by FCIC;
    (g) That the employee has the right to a hearing conducted by an 
Administrative Law Judge of USDA, or a hearing official not under the 
control of USDA, concerning the determination of the debt, the amount of 
the debt, or the percentage of disposable salary to be deducted each pay 
period, if the petition for a hearing is filed by the employee as 
prescribed by FCIC;
    (h) The method and time period allowable for a petition for a 
hearing;
    (i) That the timely filing of a hearing petition will stay the 
offset collection proceedings;
    (j) That a final decision on the hearing will be issued at the 
earliest practical date, but not later than 60 calendar days after the 
filing of the petition, unless the employee requests, and the hearing 
officer grants, a delay in the proceedings;
    (k) That any knowingly false or frivolous statement, representation, 
or evidence may subject the employee to:
    (1) Disciplinary procedures appropriate under 5 U.S.C. Chapter 75, 5 
CFR part 752, or any other applicable Statutes or regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable statutory authority: or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, or 
any other applicable statutory authority;
    (l) Any other rights or remedies available to the employee under any 
statute or regulations governing the program for which collection is 
being made;
    (m) That the employee may request waiver of salary overpayment under 
applicable statutory authority (5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C 
716, or 5 U.S.C 8346(b)), or may request waiver in the case of general 
debts and if waiver is available under any statutory provision 
pertaining to the particular debt being collected. The employee may 
question the amount or validity of the salary overpayment or general 
debt by submitting a claim to the Comptroller General in accordance with 
General Accounting Officer procedure.
    (n) That amounts paid on or deducted for the debt which are later 
waived or

[[Page 24]]

found not to be owed to the United States will be promptly refunded to 
the employee, unless there are applicable contractual or statutory 
provisions to the contrary; and
    (o) The name and address of an official of FCIC to whom the employee 
should direct any communication with respect to the debt.

[53 FR 4, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.131  Request for a hearing and result if an employee fails to meet 

deadlines.

    (a) Except as provided in paragraph (c) of this section, an employee 
must file a petition for hearing that is received by the FCIC Official 
not later than 30 calendar days from the date of the notice of intent to 
collect a debt by salary offset, if the employee wants a hearing 
concerning:
    (1) The existence or amount of the debt; or
    (2) The FCIC Official's proposed offset schedule, including the 
percentage of deduction.
    (b) The petition must be signed by the employee and should clearly 
identify and explain with reasonable specificity and brevity the facts, 
evidence and witnesses which the employee believes support the his or 
her position. If the employee objects to the percentage of disposable 
salary to be deducted from each check, the petition should state the 
objection and the reasons for it.
    (c) If the employee files a petition for hearing later than the 30 
days provided in paragraph (a) of this section, the FCIC Official may 
accept the petition if the employee is able to show that the delay 
caused by conditions beyond his or her control, or because the employee 
failed to received the notice of the filing deadline (unless the 
employee has actual notice of the deadline).
    (d) An employee will not be granted a hearing and will have his or 
her disposable salary offset in accordance with the FCIC Official's 
announced schedule if the employee:
    (1) Fails to file a petition for hearing as set forth in this 
subsection; or
    (2) Is scheduled to appear and fails to appear at the hearing.

[53 FR 4, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.132  Hearings.

    (a) If an employee timely files a petition for a hearing, the FCIC 
Official will select the date, time, and location for the hearing.
    (b) The hearing shall be conducted by an appropriately designated 
Hearing Official.
    (c) Rules of evidence shall not be observed, but the hearing officer 
will consider all evidence that he or she determines to be relevant to 
the debt that is the subject of the hearing, and weigh all such evidence 
accordingly, given all the facts and circumstances surrounding the debt.
    (d) The burden of proof with respect to the existence of the debt 
rests with FCIC.
    (e) The employee requesting the hearing shall bear the ultimate 
burden of proof.
    (f) The evidence presented by the employee must prove that no debt 
exists, or cast sufficient doubt such that reasonable minds could differ 
as to the existence of the debt.

[53 FR 5, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.133  Written decision following a hearing.

    (a) At the conclusion of the hearing, a written decision will be 
provided which will include:
    (1) A statement of the facts presented at the hearing supporting the 
nature and origin of the alleged debt and those presented to refute the 
debt;
    (2) The hearing officer's analysis, findings, and conclusions, 
considering all the evidence presented and the respective burdens of the 
parties, in light of the hearing;
    (3) The amount and validity of the alleged debt determined as a 
result of the hearing;
    (4) The payment schedule (including the percentage of disposable 
salary), if applicable; and

[[Page 25]]

    (5) The determination of the amount of the debt at this hearing is 
the final agency action on this matter.

[53 FR 5, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.134  Review of FCIC record related to the debt.

    An employee who intends to inspect or copy FCIC records related to 
the debt must send a letter to the FCIC official (designated in the 
notice of intent) stating his or her intentions. The letter must be 
received by the FCIC official within 30 calender days of the date of the 
notice of intent. In response to the timely notice submitted by the 
debtor, the FCIC official will notify the employee of the location and 
time when the employee may inspect and copy FCIC records related to the 
debt.

[53 FR 5, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.135  Written agreement to repay debt as an alternative to salary 

offset.

    The employee may propose, in response to a notice of intent, a 
written agreement to repay the debt as an alternative to salary offset. 
The proposed written agreement to repay the debt must be received by the 
FCIC official within 30 calendar days of the date of the notice of 
intent. The FCIC official will notify the employee whether the 
employee's proposed written agreement for repayment is acceptable. The 
FCIC official may accept a repayment agreement instead of proceeding by 
offset. In making this determination, the FCIC official will balance the 
FCIC interest in collecting the debt against hardship to the employee. 
If the debt is delinquent and the employee has not disputed its 
existence or amount, the FCIC official will accept a repayment 
agreement, instead of offset, for good cause such as, if the employee 
establishes that offset would result in undue financial hardship, or 
would be against equity and good conscience.

[53 FR 5, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.136  Procedures for salary offset; when deductions may begin.

    (a) Deductions to liquidate an employee's debt will be made by the 
method and in the amount outlined in the Notice of Intent to collect 
from the employee's salary, as provided for in Sec. 400.130.
    (b) If the employee files a petition for a hearing before the 
expiration of the period provided for in Sec. 400.130, then deductions 
will begin after the hearing officer has provided the employee with a 
final written decision in favor of FCIC.
    (c) If an employee retires or resigns before collection of the 
amount of the indebtedness is completed, the remaining indebtedness will 
be collected in accordance with procedures for administrative offset.

[53 FR 5, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.137  Procedures for salary offset; types of collection.

    A debt will be collected in a lump-sum or in installments. 
Collection will be by lump-sum collection unless the employee is 
financially unable to pay in one lump-sum, or if the amount of the debt 
exceeds 15 percent of the disposable pay for an ordinary pay period. In 
these cases, deduction will be by installments as set forth in Sec. 
400.138.

[53 FR 5, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.138  Procedures for salary offset; methods of collection.

    (a) General. A debt will be collected by deductions at officially-
established pay intervals from an employee's current pay account, unless 
the employee and the hearing official agree to alternative arrangements 
for repayment under Sec. 400.135.
    (b) Installment deductions. Installment deductions will be made over 
a period not greater than the anticipated period of employment. The size 
and frequency of the installment deductions will bear a reasonable 
relation to the size of the debt and the employee's ability to pay. If 
possible, the installment payment will be sufficient in size and 
frequency to liquidate the debt in no more than three years. Installment 
payments of

[[Page 26]]

less than $25.00 per pay period, or $50.00 per month, will be accepted 
only in the most unusual circumstances.

[53 FR 5, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.139  Nonwaiver of rights.

    So long as there are no statutory or contractual provisions to the 
contrary, no employee payment (or all or portion of a debt) collected 
under these regulations will be interpreted as a waiver of any rights 
that the employee may have under the provisions of 5 U.S.C. 5514.

[53 FR 5, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.140  Refunds.

    FCIC will promptly refund to the appropriate individual amounts 
offset under these regulations when:
    (a) A debt is waived or otherwise found not owing to the United 
States (unless expressly prohibited by statute or regulation); or
    (b) FCIC is directed by an administrative or judicial order to 
refund amounts deducted from an employee's current pay.

[53 FR 5, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.141  Internal Revenue Service (IRS) Tax Refund Offset.

    Under the provisions of 31 U.S.C. 3720A, the (IRS) may be requested 
to collect a legally enforceable debt owing to any Federal agency by 
offset against a taxpayer's Federal income tax refund. This section 
provides policies and procedures to implement IRS tax refund offsets in 
accordance with the provisions set forth in Sec. 301.6402-6T of 26 CFR 
chapter I.
    (a) Any person who is indebted to the Federal Crop Insurance 
Corporation (FCIC) is entitled to the extent of FCIC's administrative 
due process including review and appeal of the debt under the Appeal 
Regulations in 7 CFR part 400, subpart J.
    (b) If, after such administrative due process is exhausted, the debt 
is still outstanding with no other means of collection, the debtor will 
be notified by letter of FCIC's intention to refer such debt to the IRS 
for collection by tax refund offset. The notification letter will inform 
the debtor that their account is delinquent and that IRS will be 
requested to reduce the amount of any tax refund check due the debtor by 
the amount of the deliquency. The debtor will be given 60 days in which 
to write to the Manager, FCIC, providing written evidence that the debt 
is not legally enforceable. FCIC will refer the debt to IRS for 
collection by offset after the 60-day period if no response is received 
from the debtor. Decisions made under the provisions of this section are 
not appealable under the provisions of the Appeal Regulations in 7 CFR 
part 400, subpart J.
    (c) If the debtor has requested a review, and has provided written 
evidence that the debt is not legally enforceable, the Manager, with the 
assistance of the Office of General Counsel, USDA, will review the 
debtor's reasons for believing that the debt is not legally enforceable. 
The debtor will then be notified of the results of the review.
    (d) FCIC will notify IRS of those accounts against which offset 
action is to be taken.
    (e) If, during the period of review, the debtor pays the debt in 
full, the collection of the debt by tax refund offset procedure will be 
halted. Changes in debtor status that eliminate the debtor from IRS 
offset will be reported to IRS by FCIC and the debtor's refund will not 
be offset.
    (f) Amounts offset for delinquent debt which are later found to be 
not owed to FCIC, will be promptly refunded.
    (g) Debtors will not be subject to IRS offset for any of the 
following reasons:
    (1) Debtors who are discharged in bankruptcy or who are under the 
jurisdiction of a bankruptcy court;
    (2) Debtors who are employed by the Federal Government;
    (3) Debtors whose cases are in suspense because of actions pending 
by or taken by FCIC;
    (4) Debtors who have not provided a Social Security Number (SSN) and 
no SSN can be obtained;
    (5) Debtors whose indebtedness is less than $25;
    (6) Debtors whose account is more than ten (10) years delinquent; 
except in the case of a judgment debt; or

[[Page 27]]

    (7) Debtors whose account has not been first reported to a consumer 
credit reporting agency.

[53 FR 5, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Sec. 400.142  Past-due legally enforceable debt eligible for refund offset.

    For purposes of this section, a past-due, legally enforceable debt 
which may be referred by FCIC to IRS for offset is a debt which:
    (a) Except in the case of a judgement debt, has been delinquent for 
at least three months but has not been delinquent for more than 10 years 
at the time the offset is made;
    (b) Cannot be currently collected pursuant to the salary offset 
provisions of 5 U.S.C. 5514(a)(1);
    (c) Is ineligible for administrative offset under 31 U.S.C. 3716(a) 
by reason of 31 U.S.C. 3716(c)(2), or cannot be collected by 
administrative offset under 31 U.S.C. 3716(a) by the referring agency 
against amounts payable to the debtor by the referring agency;
    (d) With respect to which the agency has given the employee at least 
60 days to present evidence that all or part of the debt is not past-due 
or legally enforceable, has considered evidence presented by such 
employee, and has determined that an amount of such debt is past-due and 
legally enforceable;
    (e) Has been disclosed by FCIC to a consumer reporting agency as 
authorized by 31 U.S.C. 3711(f), in the case of a debt to be referred to 
IRS after June 30, 1986;
    (f) With respect to which that FCIC has notified, or has made a 
reasonable attempt to notify, the employee that:
    (1) The debt is past due; and
    (2) Unless repaid within 60 days thereafter, will be referred to IRS 
for offset against any overpayment of tax; and
    (3) Which is at least $25.00.

[53 FR 6, Jan. 4, 1988, and 53 FR 10527, Apr. 1, 1988]



Subpart L_Reinsurance Agreement_Standards for Approval; Regulations for 
                the 1997 and Subsequent Reinsurance Years

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

    Source: 52 FR 17543, May 11, 1987, unless otherwise noted. 
Redesignated at 53 FR 3, Jan. 4, 1988, and further redesignated at 53 FR 
10527, Apr. 1, 1988.



Sec. 400.161  Definitions.

    In addition to the terms defined in the Standard Reinsurance 
Agreement, the following terms as used in this rule are defined to mean:
    (a) Annual Statutory Financial Statement means the annual financial 
statement of an insurer prepared in accordance with Statutory Accounting 
Principles and submitted to the state insurance department if required 
by any state in which the insurer is licensed.
    (b) Company means the company reinsured by FCIC or apply to FCIC for 
a Standard Reinsurance Agreement.
    (c) Corporation means the Federal Crop Insurance Corporation.
    (d) FCIC means the Federal crop Insurance Corporation.
    (e) Financial statement means any documentation submitted by a 
company as required by this subpart.
    (f) Guaranty fund assessments means the state administered program 
utilized by some state insurance regulatory agencies to obtain funds 
with which to discharge unfunded obligations of insurance companies 
licensed to do business in that state.
    (g) Insurer means an insurance company that is licensed or admitted 
as such in any State, Territory, or Possession of the United States.
    (h) MPUL means the maximum possible underwriting loss that an 
insurer can sustain on policies it intends to reinsure with FCIC, after 
adjusting for the effect of any reinsurance agreement with FCIC, and any 
outside reinsurance agreements, as evaluated by FCIC.
    (i) Obligations mean crop or indemnity for crop loss on policies 
reinsured under the Standard Reinsurance Agreement.

[[Page 28]]

    (j) Plan of operation means a statment submitted to FCIC each year 
in which a reinsured or a prospective reinsured specifies the 
reinsurance options it wishes to use, its marketing plan, and similar 
information as required by the Corporation.
    (k) Quarterly Statutory Financial Statement means the quarterly 
financial statement of an insurer prepared in accordance with Statutory 
Accounting Principles and submitted to the state insurance department if 
required by any state in which the insurer is licensed.
    (l) Reinsurance agreement means an agreement between two parties by 
which an insurer cedes to a reinsurer certain liabilities arising from 
the insurer's sale of insurance policies.
    (m) Reinsured means the insurer which is a party to the Standard 
Reinsurance Agreement with FCIC.
    (n) Standard Reinsurance Agreement (Agreement) means the reinsurance 
agreement between the reinsured and FCIC.

[52 FR 17543, May 11, 1987. Redesignated at 53 FR 3, Jan. 4, 1988, and 
53 FR 10527, Apr. 1, 1988, as amended at 57 FR 34666, Aug. 6, 1992; 60 
FR 57903, Nov. 24, 1995]



Sec. 400.162  Qualification ratios.

    The sixteen qualification ratios include:
    (a) Eleven National Association of Insurance Commissioner's (NAIC's) 
Insurance Regulatory Information System (IRIS) ratios found in 
Sec. Sec. 400.170(d)(1)(ii) and 400.170(d)(2) (i), (ii), (iii), (vi), 
(vii), (ix), (xi), (xii), (xiii), and (xiv) and referenced in ``Using 
the NAIC Insurance Regulatory Information System'' distributed by NAIC, 
120 West 12th St., Kansas City, MO 64105-1925;
    (b) Three ratios used by A.M. Best Company found in Sec. 
400.170(d)(2) (v), (viii), and (x) and referenced in Best's Key Rating 
Guide, A.M. Best, Ambest Road, Oldwick, N.J. 08858-0700;
    (c) One ratio found in Sec. 400.170(d)(1)(i) is calculated the same 
as the Gross Premium to Surplus IRIS ratio, with Gross Premium adjusted 
to exclude the MPCI premium assumed by FCIC; and
    (d) One ratio found in Sec. 400.170(d)(2)(iv) which is formulated 
by FCIC and is calculated the same as the One-Year Change to Surplus 
IRIS ratio but for a two-year period.

[60 FR 57903, Nov. 24, 1995]



Sec. 400.163  Applicability.

    The standards contained herein shall be applicable to insurers who 
apply for or enter into a Standard Reinsurance Agreement effective for 
the 1997 and subsequent reinsurance years or who continue with a prior 
years Standard Reinsurance Agreement into the 1997 and subsequent 
reinsurance years.

[60 FR 57903, Nov. 24, 1995]



Sec. 400.164  Availability of the Standard Reinsurance Agreement.

    Federal Crop Insurance Corporation will offer Standard Reinsurance 
Agreements to eligible Companies under which the Corporation will 
reinsure policies which the Companies issue to producers of agricultural 
commodities. The Standard Reinsurance Agreement will be consistent with 
the requirements of the Federal Crop Insurance Act, as amended, and 
provisions of the regulations of the Corporation found at chapter IV of 
title 7 of the Code of Federal Regulations.



Sec. 400.165  Eligibility for Standard Reinsurance Agreements.

    A Company will be eligible to participate in an Agreement if the 
Corporation determines the Company meets the standards and reporting 
requirements of this subpart.



Sec. 400.166  Obligations of the Corporation.

    The Agreement will include the following among the obligations of 
the Corporation.
    (a) The Corporation will reinsure policies written on terms, 
including premium rates, approved by the Corporation, on crops and in 
areas approved by the Corporation, and in accordance with the provisions 
of the Federal Crop Insurance Act, as amended, and the provisions of 
these regulations.
    (b) The Corporation will pay a portion of each producer's premium on 
the policies reinsured under the Agreement, as authorized by the Federal 
Crop Insurance Act, as amended.

[[Page 29]]

    (c) The Corporation will assume all obligations for unpaid losses on 
policies reinsured under the Agreement in the event any company 
reinsured under the Agreement is unable to fulfill its obligations to 
any holder of a Multiple Peril Crop Insurance Policy reinsured by the 
Corporation by reason of a directive or order issued by any State 
Department of Insurance, State Commissioner of Insurance, any court of 
law having competent jurisdiction or any other similar authority of any 
jurisdiction to which the Company is subject.
    (d) Each policy reinsured by the Corporation must be clearly 
identified by including in bold face or large type the following 
statement as item number 1 in its General Provisions:
This insurance policy is reinsured by the Federal Crop Insurance 
Corporation under the provisions of the Federal Crop Insurance Act, as 
amended (the Act) (7 U.S.C. 1501 et seq.), and all terms of the policy 
and rights and responsibilities of the parties are specifically subject 
to the Act and the regulations under the Act published in chapter IV of 
7 CFR.



Sec. 400.167  Limitations on Corporation's obligations.

    The Agreement will include the following among the limitations on 
the obligations of the Corporation.
    (a) The Corporation may, at any time, suspend its obligation to 
accept additional liability from the Company by providing written notice 
to that effect.
    (b) The obligations of the Corporation under the Agreement are 
contingent upon the availability of appropriations.
    (c) The Corporation will not reinsure any policy sold by the Company 
to a producer after the date Company receives notice that the 
Corporation has determined that the producer is ineligible to receive 
Federal Crop Insurance.



Sec. 400.168  Obligations of participating insurance company.

    The Agreement will include the following among the obligations of 
the Company.
    (a) The Company shall follow all applicable Corporation procedures 
in its administration of the crop insurance policies reinsured.
    (b) The Company shall make available to all eligible producers in 
the areas designated in its plan of operations as approved by the 
Corporation:
    (1) The crop insurance plans for the crops designated in its plan of 
operation in those counties within a State, or a portion of a State, 
where the Secretary of Agriculture has determined that insurance is 
available through local offices of the United States Department of 
Agriculture; and
    (2) Catastrophic risk protection, limited, and additional coverage 
plans of insurance for all crops, for which such insurance is made 
available by the Corporation, in all counties within a state, or a 
portion of State, where the Secretary of Agriculture has determined that 
insurance is no longer available through local offices of the United 
States Department of Agriculture.
    (c) The Company shall provide the Corporation, on forms approved by 
the Corporation all information that the Corporation may deem relevant 
in the administration of the Agreement, including a list of all 
applicants determined to be ineligible for crop insurance coverage and 
all insured producers cancelled or terminated from insurance, along with 
the reason for such action, the crop program, and the amount of coverage 
for each.
    (d) The Company shall utilize only loss adjustment procedures and 
methods that are approved by the Corporation.
    (e) The Company shall sell the policies covered under the Agreement 
through licensed agents or brokers who have successfully completed a 
training course approved by the Corporation.
    (f) The Company shall not discriminate against any employee, 
applicant for employment, insured or applicant for insurance because of 
race, color, religion, sex age, handicap, or national origin.

[52 FR 17543, May 11, 1987. Redesignated at 53 FR 3, Jan. 4, 1988, and 
53 FR 10527, Apr. 1, 1988, as amended at 61 FR 34368, July 2, 1996; 61 
FR 65153, Dec. 11, 1996]



Sec. 400.169  Disputes.

    (a) If the company believes that the Corporation has taken an action 
that

[[Page 30]]

is not in accordance with the provisions of the Standard Reinsurance 
Agreement or any reinsurance agreement with FCIC, except compliance 
issues, it may request the Deputy Administrator of Insurance Services to 
make a final administrative determination addressing the disputed 
action. The Deputy Administrator of Insurance Services will render the 
final administrative determination of the Corporation with respect to 
the applicable actions. All requests for a final administrative 
determination must be in writing and submitted within 45 days after 
receipt after the disputed action.
    (b) With respect to compliance matters, the Compliance Field Office 
renders an initial finding, permits the company to respond, and then 
issues a final finding. If the company believes that the Compliance 
Field Office's final finding is not in accordance with the applicable 
laws, regulations, custom or practice of the insurance industry, or FCIC 
approved policy and procedure, it may request, the Deputy Administrator 
of Compliance to make a final administrative determination addressing 
the disputed final finding. The Deputy Administrator of Compliance will 
render the final administrative determination of the Corporation with 
respect to these issues. All requests for a final administrative 
determination must be in writing and submitted within 45 days after 
receipt of the final finding.
    (c) A company may also request reconsideration by the Deputy 
Administrator of Insurance Services of a decision of the Corporation 
rendered under any Corporation bulletin or directive which bulletin or 
directive does not interpret, explain, or restrict the terms of the 
reinsurance agreement. The company, if it disputes the Corporation's 
determination, must request a reconsideration of that determination in 
writing, within 45 days of the receipt of the determination. Such 
determinations will not be appealable to the Civilian Board of Contract 
Appeals.
    (d) Appealable final administrative determinations of the 
Corporation under paragraph (a) or (b) of this section may be appealed 
to the Civilian Board of Contract Appeals in accordance with 48 CFR part 
6102.

[65 FR 3782, Jan. 25, 2000, as amended at 72 FR 31438, June 7, 2007]



Sec. 400.170  General qualifications.

    To qualify initially or thereafter for a Standard Reinsurance 
Agreement with FCIC, an insurer must:
    (a) Be licensed or admitted in any state, territory, or possession 
of the United States;
    (b) Be licensed or admitted, or use as a policy-issuing Company an 
insurer that is licensed or admitted, in each state from which the 
insurer will cede policies to FCIC for reinsurance;
    (c) Have surplus, as reported in its most recent Annual or Quarterly 
Statutory Financial Statement, that is at least equal to the MPUL for 
the company's estimated retained premium proposed to be reinsured, 
multiplied by the appropriate Minimum Surplus Factor found in the 
Minimum Surplus Table. For the purposes of the Minimum Surplus Table, an 
insurer is considered to issue policies in a state if at least two and 
one-half percent (2.5%) of all its reinsured retained premium is written 
in that state;

                          Minimum Surplus Table
------------------------------------------------------------------------
                                                               Minimum
                                                               surplus
 Number of states in which a company issues FCIC-reinsured      factor
                          policies                           (multiplied
                                                               by MPUL)
------------------------------------------------------------------------
1 through 10...............................................          2.5
11 or more.................................................          2.0
------------------------------------------------------------------------

    (d) Have and meet the ratio requirements of the Gross Premium to 
Surplus and Net Premium to Surplus required ratios and at least ten of 
the fourteen analytical ratios in this section based on the most recent 
Annual Statutory Financial Statement, or comply with Sec. 400.172:

------------------------------------------------------------------------
                   Ratio                          Ratio requirement
------------------------------------------------------------------------
(1) Required:
    (i) Gross Premium to Surplus..........  Less than 900%.
    (ii) Net Premium to Surplus...........  Less than 300%.
(2) Analytical:
    (i) Two-Year Overall Operating Ratio..  Less than 100%.
    (ii) Agents' Balances to Surplus......  Less than 40%.

[[Page 31]]

 
    (iii) One-Year Change in Surplus......  Greater than -10% and less
                                             than 50%.
    (iv) Two-Year Change in Surplus.......  Greater than -10%.
    (v) Combined Ratio After Policyholder   Less than 115%.
     Dividends.
    (vi) Change in Writing................  Greater than -33% and less
                                             than 33%.
    (vii) Surplus Aid to Surplus..........  Less than 15%.
    (viii) Quick Liquidity................  Greater than 20%.
    (ix) Liabilities to Liquid Asset......  Less than 105%.
    (x) Return on Surplus.................  Greater than -5%.
    (xi) Investment Yield.................  Greater than 4.5% and less
                                             than 10%.
    (xii) One-Year Reserve Development to   Less than 20%.
     Surplus.
    (xiii) Two-Year Reserve Development to  Less than 20%.
     Surplus.
    (xiv) Estimated Current Reserve         Less than 25%.
     Deficiency to Surplus.
------------------------------------------------------------------------

    (e) Submit to FCIC all of the following statements:
    (1) Annual and Quarterly Statutory Financial Statements;
    (2) Statutory Management Discussion & Analysis;
    (3) Most recent State Insurance Department Examination Report;
    (4) Actuarial Opinion of Reserves;
    (5) Annual Audited Financial Report; and
    (6) Any other appropriate financial information or explanation of 
IRIS ratio discrepancies as determined by the company or as requested by 
FCIC.

[60 FR 57903, Nov. 24, 1995]



Sec. 400.171  Qualifying when a state does not require that an Annual 

Statutory Financial Statement be filed.

    An insurer exempt by the insurance department of the states where 
they are licensed from filing an Annual Statutory Financial Statement 
must, in addition to the requirements of Sec. 400.170 (a), (b), (c) and 
(d), submit an Annual Statutory Financial Statement audited by a 
Certified Public Accountant in accordance with generally accepted 
auditing standards, which if not exempted, would have been filed with 
the insurance department of any state in which it is licensed.

[60 FR 57904, Nov. 24, 1995]



Sec. 400.172  Qualifying with less than two of the required ratios or ten of 

the analytical ratios meeting the specified requirements.

    An insurer with less than two of the required ratios or ten of the 
analytical ratios meeting the specified requirements in Sec. 400.170(d) 
may qualify if, in addition to the requirements of Sec. 400.170 (a), 
(b), (c) and (e), the insurer:
    (a) Submits a financial management plan acceptable to FCIC to 
eliminate each deficiency indicated by the ratios, or an acceptable 
explanation why a failed ratio does not accurately represent the 
insurer's insurance operations; or
    (b) Has a binding agreement with another insurer that qualifies such 
insurer under this subpart to assume financial responsibility in the 
event of the reinsured company's failure to meet its obligations on FCIC 
reinsured policies.

[60 FR 57904, Nov. 24, 1995]



Sec. 400.173  [Reserved]



Sec. 400.174  Notification of deviation from financial standards.

    An insurer must immediately advise FCIC if it deviates from 
compliance with any of the requirements of this chapter. FCIC may 
require the insurer to update its financial statements during the year. 
FCIC may terminate the reinsurance agreement if the Company is out of 
compliance with the requirements of this chapter.

[52 FR 17543, May 11, 1987. Redesignated at 53 FR 3, Jan. 4, 1988, and 
53 FR 10527, Apr. 1, 1988, as amended at 60 FR 57904, Nov. 24, 1995]



Sec. 400.175  Revocation and non-acceptance.

    (a) FCIC will deny reinsurance to any insurer or will terminate any 
existing reinsurance agreement if any false or misleading statement is 
made in the financial statements or any other document submitted by the 
insurer in connection with its qualification for FCIC reinsurance.
    (b) No policy issued by an insurer subsequent to revocation of a 
reinsurance agreement will be reinsured by FCIC. Policies in effect at 
the time of revocation will continue to be reinsured by FCIC for the 
balance of the

[[Page 32]]

crop year then in effect for the applicable crop. However, if materially 
false information is made to the Corporation and that information 
directly affects the ability of the Company to perform under the 
Agreement, or if the Company commits any fraudulent or criminal act in 
relation to the Standard Reinsurance Agreement or any policy reinsured 
under the Agreement, FCIC may require that the Company transfer the 
servicing and contractual right to all business in effect and reinsured 
by the Corporation to the Corporation.

[52 FR 17543, May 11, 1987. Redesignated at 53 FR 3, Jan. 4, 1988, and 
53 FR 10527, Apr. 1, 1988, as amended at 60 FR 57904, Nov. 24, 1995]



Sec. 400.176  State action preemptions.

    (a) No policyholder shall have recourse to any state guaranty fund 
or similar state administered program for crop or premium losses 
reinsured under such Standard Reinsurance Agreement. No assessments for 
such State funds or programs shall be computed or levied on companies 
for or on account of any premiums payable on policies of Multiple Peril 
Crop Insurance reinsured by the Corporation.
    (b) No policy of insurance reinsured by the Corporation and no 
claim, settlement, or adjustment action with respect to any such policy 
shall provide a basis for a claim of punitive or compensatory damages or 
an award of attorney fees or other costs against the Company issuing 
such policy, unless a determination is obtained from the Corporation 
that the Company, its employee, agent or loss adjuster failed to comply 
with the terms of the policy or procedures issued by the Corporation and 
such failure resulted in the insured receiving a payment in an amount 
that is less than the amount to which the insured was entitled.

[52 FR 17543, May 11, 1987. Redesignated at 53 FR 3, Jan. 4, 1988, and 
53 FR 10527, Apr. 1, 1988, as amended at 69 FR 48730, Aug. 10, 2004]



Sec. 400.177  [Reserved]



   Subpart M_Agency Sales and Service Contract_Standards for Approval

    Authority: 7 U.S.C. 1506, 1516.

    Source: 53 FR 24015, June 27, 1988, unless otherwise noted.



Sec. 400.201  Applicability of standards.

    Federal Crop Insurance Corporation will offer an Agency Sales and 
Service Contract (the Contract) to private entities meeting the 
requirements set forth in this subpart under which the Corporation will 
insure producers of agricultural commodities. The Contract will be 
consistent with the requirements of the Federal Crop Insurance Act, as 
amended, and the provisions of the regulations of the Corporation found 
at chapter IV of title 7 of the Code of Federal Regulations. The 
Standards contained herein are required for an entity to be a contractor 
under the Contract.



Sec. 400.202  Definitions.

    For the purpose of these Standards:
    (a) Agency Sales and Service Contract or the Contract means the 
written agreement between the Federal Crop Insurance Corporation 
(Corporation) and a private entity (Contractor) for the purpose of 
selling and servicing Federal Crop Insurance policies and includes, but 
is not limited to, the following:
    (1) The Agency Sales and Service Contract;
    (2) Any Appendix to the Agency Sales and Service Contract issued by 
the Corporation;
    (3) The annual approved Plan or Operation; and
    (4) Any amendment adopted by the parties.
    (b) BELL 208B (or compatible) modem--means a modem meeting the 
standards developed by BELL Laboratories for dial-up, half-duplex, 4800 
or 9600 bits per second (bps) transmission of data utilizing 3780 (or 
2780) protocol.
    (c) Contract, the see Agency Sales and Service Contract.
    (d) Contractor's electronic system (system) means the data 
processing hardware and software, data communications hardware and 
software, and printers utilized with the system.
    (e) CPA means a Certified Public Accountant who is licensed as such 
by the State in which the CPA practices.

[[Page 33]]

    (f) CPA Audit means a professional examination conducted by a CPA in 
accordance with generally accepted auditing standards of a Financial 
Statement on the basis of which the CPA expresses an independent 
professional opinion respecting the fairness of presentation of the 
Financial Statement.
    (g) Current Assets means cash and other assets that are reasonably 
expected to be realized in cash or sold or consumed during the normal 
operation cycle of the business or within one year if the operation 
cycle is shorter than one year.
    (h) Current Liabilities means those liabilities expected to be 
satisfied by either the use of assets classified as current in the same 
balance sheet, or the creation of other current liabilities, or those 
expected to be satisfied within a relatively short period of time, 
usually one year.
    (i) Financial Statement means the documents submitted to the 
Corporation by a private entity which portray the financial information 
of the entity. The financial statement must be prepared in accordance 
with Generally Accepted Accounting Principles (GAAP) and reflect the 
financial position in the Statement of Financial Condition or Balance 
Sheet; and the result of operations in the Statement of Profit and Loss 
or Income Statement.
    (j) Processing representative means a person or organization 
designated by the Contractor to be responsible for data entry and 
electronic transmission of data contained on crop insurance documents.
    (k) Sales means new applications and renewals of FCIC policies.
    (l) Suspended Data Notice means a notification of a temporary stop 
or delay in the processing of data transmitted to the Corporation by the 
Contractor because the same is incomplete, non-processable, obsolete, or 
erroneous.
    (m) 3780 protocol--means the data communications protocol (standard) 
that is a binary synchronous communications (BSC), International 
Business Systems (IBM)-defined, byte controlled communications protocol, 
using control characters and synchronized transmission of binary coded 
data.



Sec. 400.203  Financial statement and certification.

    (a) An entity desiring to become or continue as a contractor shall 
submit to the Corporation a financial statement which is as of a date 
not more than eighteen (18) months prior to the date of submission.
    (b) The financial statement submitted shall be audited by a CPA (CPA 
Audit); or if a CPA audited financial statement is not available, the 
statement submitted to the Corporation must be accompanied by a 
certification of:
    (1) The owner, if the business entity is a sole proprietorship; or
    (2) At least one of the general partners, if the business entity is 
a partnership; or
    (3) The Chief Executive Officer and Treasurer, if the business 
entity is a Corporation, that said statement fairly represents the 
financial condition of the entity on the date of such certification to 
the Corporation. If the financial statement as certified by the Chief 
Executive Officer and Treasurer, partner, or owner is submitted, a CPA 
audited financial statement must be submitted if subsequently available.



Sec. 400.204  Notification of deviation from standards.

    A Contractor shall advise the Corporation immediately if the 
Contractor deviates from the requirements of these standards. The 
Corporation may require the Contractor to show compliance with these 
standards during the contract year if the Corporation determines that 
such submission is necessary. If the Corporation determines that the 
deviation is temporary, the Corporation may grant a temporary waiver 
pending compliance within a specified period of time. A waiver of any 
provision of these standards will not be granted to an applicant for a 
contract.



Sec. 400.205  Denial or termination of contract and administrative 

reassignment of business.

    Non-compliance with these standards will result in:
    (a) The denial of a Contract; or
    (b) Termination of an existing Contract.

[[Page 34]]

    In the event of denial or termination of the Contract, all crop 
insurance policies of the Corporation sold by the Contractor and all 
business pertaining thereto may be assumed by the Corporation and may be 
administratively reassigned by the Corporation to another Contractor.



Sec. 400.206  Financial qualifications for acceptability.

    The financial statement of an entity must show total allowable 
assets in excess of liabilities and the ability of the entity to meet 
current liabilities by the use of current assets.



Sec. 400.207  Representative licensing and certification.

    (a) A Contractor must maintain twenty-five (25) licensed and 
certified Contractor Representatives.
    (b) A Contractor's Representative who solicits, sells and services 
FCIC policies or represents the Contractor in solicitation, sales or 
service of such policies must hold a license as issued by the State or 
States in which the policies are issued, which license authorizes the 
sales of insurance in any one or more of the following lines:
    (1) Multiple peril crop insurance;
    (2) Crop hail insurance;
    (3) Casualty insurance;
    (4) Property insurance;
    (5) Liability insurance; or
    (6) Fire insurance and allied lines.
    The Contractor must submit evidence, satisfactory to the 
Corporation, verifying the type of State license held by each 
Representative and the date of expiration of each license.
    (c) A Contractor's Representative must have achieved certification 
by the Corporation for each crop upon which the Representative sells and 
services insurance.



Sec. 400.208  Term of the contract.

    (a) The term of the Contract shall commence on July 1 or when 
signed. The contract will continue from year to year with an annual 
renewal date of July 1 for each succeeding year unless the Corporation 
or the Contractor gives at least ninety (90) days advance notice in 
writing to the other party that the contract is not to be renewed. Any 
breach of the contract, or failure to comply with these Standards, by 
the Contractor, may result in termination of the contract by the 
Corporation upon written notice of termination to the Contractor. That 
termination will be effective thirty (30) days after mailing of the 
notice and termination to the Contractor.
    (b) A Contractor who elects to continue under the Contract for a 
subsequent year must, prior to the month of June, submit a completed 
Plan of Operation which includes the Certifications as required by Sec. 
400.203 of this subpart. The Contractor may not perform under the 
contract until the Plan of Operation is approved by the Corporation.



Sec. 400.209  Electronic transmission and receiving system.

    Any Contractor under the Contract is required to:
    (a) Adopt a plan for the purpose of transmitting and receiving 
electronically, information to and from the Corporation concerning the 
original executed crop insurance documents;
    (b) Maintain an electronic system which must be tested and approved 
by the Corporation;
    (c) Maintain Corporation approval of the electronic system as a 
condition to the electronic transmission and reception of data by the 
Contractor;
    (d) Utilize the Corporation approved automated data processing and 
electronic data transmission capabilities to process crop insurance 
documents as required herein; and
    (e) Establish and maintain the electronic equipment and computer 
software program capability to:
    (1) Receive and store actuarial data electronically via 
telecommunications utilizing 3780 protocol and utilizing a BELL 208B or 
compatible modem at 4800 bits per second (bps);
    (2) Enter and store information from original crop insurance 
documents into electronic format;
    (3) Verify electronically stored information recorded from crop 
insurance documents with electronically stored actuarial information;
    (4) Compute and print the data elements in the Summary of 
Protection;

[[Page 35]]

    (5) Transmit crop insurance data electronically, via 3780 protocol 
utilizing a BELL 208B or compatible modem at 4800 bps;
    (6) Receive electronic acknowledgements, error messages, and other 
data via 3780 protocol utilizing a BELL 208B or compatible modem at 4800 
bps, and relate error messages to original crop insurance documents; and
    (7) Store backup data and physical documents.

    (The Corporation may approve other compatible specifications if 
accepted by the Corporation and if requested by the Contractor)



Sec. 400.210  [Reserved]

Subpart N [Reserved]



 Subpart O_Non-Standard Underwriting Classification System Regulations 
                 for the 1991 and Succeeding Crop Years

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

    Source: 55 FR 32595, Aug. 10, 1990, unless otherwise noted.



Sec. 400.301  Basis, purpose, and applicability.

    The regulations contained in this subpart are issued pursuant to the 
Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.), to 
prescribe the procedures for nonstandard determinations and the 
assignment of assigned yields or premium rates in conformance with the 
intent of section 508 of the Act (7 U.S.C. 1508). These regulations are 
applicable to all policies of insurance insured or reinsured by the 
Corporation under the Act and on those policies where the insurance 
coverage or indemnities are based on determinations applicable to the 
individual insured. These regulations will not be applicable to any 
policy where the amount of coverage or indemnities are based on the 
experience of the area.

[62 FR 22876, Apr. 28, 1997]



Sec. 400.302  Definitions.

    Act--means Federal Crop Insurance Act as amended (7 U.S.C. 1501 et 
seq.).
    Actively engaged in farming means a person who, in return for a 
share of profits and losses, makes a contribution to the production of 
an insurable crop in the form of capital, equipment, land, personal 
labor, or personal management.
    Actual Yield--means total harvested production of a crop divided by 
the number of acres on which the crop was planted. For insured acres, 
actual yield is the total production to count as defined in the 
insurance policy, divided by insured acres.
    Assigned yield--means units of crop production per acre 
administratively assigned by the Corporation for the purpose of 
determining insurance coverage.
    Corporation--means the Federal Crop Insurance Corporation.
    Cumulative earned premium rate--is the total premium earned for all 
years in the base period, divided by the total liability for all years 
in the base period with the result expressed as a percentage.
    Cumulative loss ratio--means the ratio of total indemnities to total 
earned premiums during the base period expressed as a decimal.
    Earned premium means premium earned (both the amount subsidized and 
the amount paid by the producer, but excluding any amount of the subsidy 
attributed to the operating and administrative expenses of the insurance 
provider) for a crop under a policy insured or reinsured by the 
Corporation.
    Earned premium rate--means premium earned divided by liability and 
expressed as a percentage.
    Entity--means a person as defined in this subpart other than an 
individual.
    Indemnified loss means a loss applicable for the policy for any year 
during the NCS base period for which the total indemnity exceeds the 
total earned premium. If the person has insurance for the crop in more 
than one county for any crop year, indemnities and premiums will be 
accumulated for all counties for each crop year to determine an 
indemnified loss.
    Insurance experience means earned premiums, indemnities paid (but 
not including replant payments), and other

[[Page 36]]

data for the crop (after applicable adjustments), resulting from all of 
the insured's crop insurance policies insured or reinsured by the 
Corporation for one or more crop years and will include all information 
from all counties in which the person was insured.
    Loss ratio--means the ratio of indemnity to earned premium expressed 
as a decimal.
    NCS means nonstandard classification system.
    NCS base period means the 10 consecutive crop years (as defined in 
the crop policy) ending 2 crop years prior to the crop year in which the 
NCS classification becomes effective for all crops, except those 
specified on the Special Provisions. For these excepted crops, the NCS 
base period means the 10 consecutive crop years ending 3 crop years 
prior to the crop year in which the NCS classification becomes 
effective. For example: An NCS classification effective for the 1996 
crop year against a producer of citrus production in Arizona, 
California, and Texas, or sugarcane would have a NCS base period that 
includes the 1984 through 1993 crop years. An NCS classification 
effective for the 1996 crop year against a producer of all other crops 
would have a NCS base period that includes the 1985 through 1994 crop 
years.
    Person--means an individual, partnership, association, corporation, 
estate, trust, or other legal entity, and whenever applicable, a State 
or a political subdivision, or agency of a state.
    Substantial beneficial interest--means an interest of 10 percent or 
more. In determining whether such an interest equals at least 10 
percent, all interests which are owned directly or indirectly through 
such means as ownership of shares in a corporation which owns the 
interest will be taken into consideration.

[55 FR 32595, Aug. 10, 1990, as amended at 62 FR 22876, Apr. 28, 1997]



Sec. 400.303  Initial selection criteria.

    (a) Nonstandard classification procedures in this subpart initially 
apply when all of the following insurance experience criteria (including 
any applicable adjustment in Sec. 400.303(d)) for the crop have been 
met:
    (1) Three (3) or more indemnified losses during the NCS base period;
    (2) Cumulative indemnities in the NCS base period that exceed 
cumulative premiums during the same period by at least $500;
    (3) The result of dividing the number of indemnified losses during 
the NCS base period by the number of years premium is earned for that 
period equals .30 or greater; and
    (4) Either of the following apply:
    (i) The natural logarithm of the cumulative earned premium rate 
multiplied by the square root of the cumulative loss ratio equals 2.00 
or greater; or
    (ii) Five (5) or more indemnified losses have occurred during the 
NCS base period and the cumulative loss ratio equals or exceeds 1.50.
    (b) The minimum standards provided in paragraphs (a) (2), (3), and 
(4) of this section may be increased in a specific county if that 
county's overall insurance experience for the crop is substantially 
different from the insurance experience for which the criteria was 
determined. The increased standard will apply until the conditions 
requiring the increase no longer apply. Any change in the standards will 
be contained in the Special Provisions for the crop.
    (c) Selection criteria may be applied on the basis of insurance 
experience of a person, insured acreage, or the combination of both.
    (1) Insurance experience of a person will include:
    (i) Insurance experience of the person;
    (ii) Insurance experience of other insured entitites in which the 
person had substantial beneficial interest if the person was actively 
engaged in farming of the insured crop by virtue of the person's 
interest in those insured entities;
    (iii) Insurance experience of a spouse and minor children if the 
person is an individual and the spouse and minor children are considered 
the same as the individual under Sec. 400.306.
    (2) Insurance experience of insured acreage includes all insurance 
experience during the base period resulting from the production of the 
insured crop on the acreage.

[[Page 37]]

    (3) Where insurance experience is based on a combination of person 
and insured acreage, the insurance experience will include the 
experience of the person as defined in paragraph (b) of this section (1) 
only on the specific insured acreage during the base period.
    (d) Insurance experience for the crop will be adjusted, by county 
and crop year, to discount the effect of indemnities caused by 
widespread adverse growing conditions. Adjustments are determined as 
follows:
    (1) Determine the average yield for the county using the annual 
county crop yields for the previous 20 crop years, unless such data is 
not available;
    (2) Determine the normal variability in the average yield for the 
county, expressed as the standard deviation;
    (3) Subtract the result of Sec. 400.303(d)(2) from Sec. 
400.303(d)(1);
    (4) Divide the annual crop yield for the county for each crop year 
in the NCS base period by the result of Sec. 400.303(d)(3), the result 
of which may not exceed 1.0;
    (5) Subtract the result of Sec. 400.303(d)(4) for each crop year 
from 1.0;
    (6) Multiply the result of Sec. 400.303(d)(5) by the liability for 
the crop year; and
    (7) Subtract the result of Sec. 400.303(d)(6) from any indemnity 
for that crop year.
    (e) FCIC may substitute the crop yields of a comparable crop in 
determining Sec. 400.303(d) (1) and (2), or may adjust the average 
yield or the measurement of normal variability for the county crop, or 
any combination thereof, to account for trends or unusual variations in 
production of the county crop or if the availability of yield and loss 
data for the county crop is limited. Information about how these 
determinations are made is available by submitting a request to the FCIC 
Regional Service Office for the producer's area. Alternate methods of 
determining the effects of adverse growing conditions on insurance 
experience may be implemented by FCIC if allowed in the Special 
Provisions.

[55 FR 32595, Aug. 10, 1990, as amended at 62 FR 22876, Apr. 28, 1997]



Sec. 400.304  Nonstandard Classification determinations.

    (a) Nonstandard Classification determinations can affect a change in 
assigned yields, premium rates, or both from those otherwise prescribed 
by the insurance actuarial tables.
    (b) Changes of assigned yields based on insurance experience of 
insured acreage (or of a person on specific insured acreage) will be 
based on the simple average of available actual yields from the insured 
acreage during the base period.
    (c) Changes of assigned yields based on insurance experience of a 
person without regard to any specific insured acreage will be determined 
by an assigned yield factor calculated by multiplying excess loss cost 
ratio by loss frequency and subtracting that product from 1.00 where:
    (1) Excess loss cost ratio is total indemnities divided by total 
liabilities for all years of insurance experience in the base period and 
the result of which is then reduced by the cumulative earned premium 
rate, expressed as a decimal, and
    (2) Loss frequency is the number of crop years in which an indemnity 
was paid divided by the number of crop years in which premiums were 
earned during the base period.
    (d) Changes of premium rates will be made to reflect premium rates 
that would have resulted in insurance experience during the base period 
with a loss ratio of 1.00 but:
    (1) A higher loss ratio than 1.00 may be used for premium rate 
determinations provided that the higher loss ratio is applied uniformly 
in a county; and
    (2) If a Nonstandard Classification change has been made to current 
assigned yields, insurance experience during the base period will be 
adjusted to reflect the affects of changed assigned yields before 
changes of premium rates are calculated based on that experience.
    (e) Once selection criteria have been met in any year, Nonstandard 
Classification adjustments will be made from year to year until no 
further changes are necessary in assigned yields or premium rates under 
the conditions set forth in Sec. 400.304(f). In determining

[[Page 38]]

whether further changes are necessary, the eligibility criteria will be 
recomputed each subsequent year using the premium rates and yields which 
would have been applicable had this part not been in effect.
    (f) Nonstandard Classification changes will not be made that:
    (1) Increase assigned yields or decrease premium rates from those 
otherwise assigned by the actuarial tables, or
    (2) Result in less than a 10 percent decrease in assigned yields or 
less than a 10 percent increase in premium rates from those otherwise 
assigned by the actuarial tables.



Sec. 400.305  Assignment of Nonstandard Classifications.

    (a) Assignment of a Nonstandard Classification of assigned yields, 
assigned yield factors, or premium rates shall be made on forms approved 
by the Corporation and included in the actuarial tables for the county.
    (b) Nonstandard classification assignment will be made each year, 
for the year identified on the assignment forms, and are not subject to 
change under the provisions of this subpart by the Corporation for that 
year when included in the actuarial tables for the county, except as a 
result of a request for reconsideration as provided in section 400.309, 
or as the result of appeals under 7 CFR part 11.
    (c) A nonstandard classification may be assigned to identified 
insurable acreage; a person; or to a combination of person and 
identified acreage for a crop or crop practice, type, variety, or crop 
option or amendment whereby:
    (1) Classifications assigned to identified insurable acreage apply 
to all acres of the insured crop grown on the identified acreage;
    (2) Classifications assigned to a person apply to all insurable 
acres of the insured crop on which the person and any entity in which 
the person has substantial beneficial interest is actively engaged in 
farming; and
    (3) Classifications assigned to a combination of a person and 
identified insurable acreage will only apply to those acres of the 
insured crop grown on the identified acreage on which the named person 
is actively engaged in producing such crop.

[55 FR 32595, Aug. 10, 1990, as amended at 62 FR 22877, Apr. 28, 1997]



Sec. 400.306  Spouses and minor children.

    (a) The spouse and minor children of an individual are considered to 
be the same as the individual for purposes of this subpart except that:
    (1) The spouse who was actively engaged in farming in a separate 
farming operation prior to their marriage will be a separate person with 
respect to that separate farming operation so long as that operation 
remains separate and distinct from any farming operation conducted by 
the other spouse;
    (2) A minor child who is actively engaged in farming in a separate 
farming operation will be a separate person with respect to that 
separate farming operation if:
    (i) The parent or other entity in which the parent has a substantial 
beneficial interest does not have any interest in the minor's separate 
farming operation or in any production from such operation;
    (ii) The minor has established and maintains a separate household 
from the parent;
    (iii) The minor personally carries out the farming activities with 
respect to the minor's farming operation; and
    (iv) The minor establishes separate accounting and recordkeeping for 
the minor's farming operation.
    (b) An individual shall be considered to be a minor until the age of 
18 is reached. Court proceedings conferring majority on an individual 
under 18 years of age will not change such individual's status as a 
minor.



Sec. 400.307  Discontinuance of participation.

    If the person has discontinued participation in the crop insurance 
program, the person will still be included on the NCS list in the county 
until the person has discontinued participation as a policyholder or a 
person with a substantial beneficial interest in a policyholder for at 
least 10 consecutive crop years. The most recent nonstandard 
classification assigned will be continued from year to year until 
participation has been renewed for at least

[[Page 39]]

one crop year and at least three years of insurance experience have 
occurred in the current base period. A nonstandard classification will 
no longer be applicable to the person or the person on identified 
acreage if the Corporation determines the person is deceased.

[62 FR 22877, Apr. 28, 1997]



Sec. 400.308  Notice of Nonstandard Classification.

    (a) The Corporation will give written notice to all persons to whom 
a Nonstandard Classification will be assigned. The notice will give the 
Nonstandard Classification and the person's rights and responsibilities 
according to this subpart.
    (b) The person, upon receiving notice from the Corporation, will be 
responsible for giving notice of the Nonstandard Classification to any 
other person with an insurable interest affected by the classification. 
The person will give notice to any other affected person:
    (1) Prior to the sales closing date if the other affected person has 
an established insurable interest at the time the classified person is 
notified by the Corporation; or
    (2) Prior to the Classified person's establishing an insurable 
interest of another person that will be affected by the classification.



Sec. 400.309  Requests for reconsideration.

    (a) Any person to be assigned a nonstandard classification under 
this subpart will be notified of and allowed not less that 30 days from 
the date notice is received to request reconsideration before the 
nonstandard classification becomes effective. The request will be 
considered to have been made when received, in writing, by the 
Corporation.
    (b) Upon receipt of a timely request for reconsideration from the 
person to whom the classification will be assigned, the Corporation 
will:
    (1) Review all information supplied by, and respond to all questions 
raised by the individual, or
    (2) In the absence of information and questions, review insurance 
experience and determinations for compliance with this subpart and 
report review results to the individual requesting reconsideration.
    (c) Upon review of a request for reconsideration, the classification 
to be assigned will be corrected for:
    (1) Errors and omissions in insurance experience;
    (2) Incorrect calculations under procedures in this subpart, and
    (3) Typographical errors.
    (d) If the review finds no cause for change, the classification will 
be assigned and placed on file in the actuarial tables for the county.
    (e) Any person not satisfied by a determination of the Corporation 
upon reconsideration may further appeal under the provisions of 7 CFR 
part 11.

[55 FR 32595, Aug. 10, 1990, as amended at 62 FR 22877, Apr. 28, 1997]



           Subpart P_Preemption of State Laws and Regulations

    Authority: 7 U.S.C. 1506, 1516.

    Source: 55 FR 23069, June 6, 1990, unless otherwise noted.



Sec. 400.351  Basis and applicability.

    The regulations contained in this subpart are issued pursuant to the 
Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.) (the 
Act), to prescribe the procedures for Federal preemption of State laws 
and regulations not consistent with the purpose, intent, or authority of 
the Act. These regulations are applicable to all policies of insurance, 
insured or reinsured by the Corporation, contracts, agreements, or 
actions authorized by the Act and entered into or issued by FCIC.



Sec. 400.352  State and local laws and regulations preempted.

    (a) No State or local governmental body or non-governmental body 
shall have the authority to promulgate rules or regulations, pass laws, 
or issue policies or decisions that directly or indirectly affect or 
govern agreements, contracts, or actions authorized by this part unless 
such authority is specifically authorized by this part or by the 
Corporation.
    (b) The following is a non-inclusive list of examples of actions 
that State or local governmental entities or non-

[[Page 40]]

governmental entities are specifically prohibited from taking against 
the Corporation or any party that is acting pursuant to this part. Such 
entities may not:
    (1) Impose or enforce liens, garnishments, or other similar actions 
against proceeds obtained, or payments issued in accordance with the 
Federal Crop Insurance Act, these regulations, or contracts or 
agreements entered into pursuant to these regulations;
    (2) Tax premiums associated with policies issued hereunder;
    (3) Exercise approval authority over policies issued;
    (4) Levy fines, judgments, punitive damages, compensatory damages, 
or judgments for attorney fees or other costs against companies, 
employees of companies including agents and loss adjustors, or Federal 
employees arising out of actions or inactions on the part of such 
individuals and entities authorized or required under the Federal Crop 
Insurance Act, the regulations, any contract or agreement authorized by 
the Federal Crop Insurance Act or by regulations, or procedures issued 
by the Corporation (Nothing herein precludes such damages being imposed 
against the company if a determination is obtained from FCIC that the 
company, its employee, agent or loss adjuster failed to comply with the 
terms of the policy or procedures issued by FCIC and such failure 
resulted in the insured receiving a payment in an amount that is less 
than the amount to which the insured was entitled); or
    (5) Assess any tax, fee, or amount for the funding or maintenance of 
any State or local insolvency pool or other similar fund.
    The preceding list does not limit the scope or meaning of paragraph 
(a) of this section.

[55 FR 23069, June 6, 1990, as amended at 69 FR 48730, Aug. 10, 2004]



Subpart Q_General Administrative Regulations; Collection and Storage of 

   Social Security Account Numbers and Employer Identification Numbers

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

    Source: 57 FR 46297, Oct. 8, 1992, unless otherwise noted.



Sec. 400.401  Basis and purpose and applicability.

    (a) The regulations contained in this subpart are issued pursuant to 
the Act to prescribe procedures for the collection, use, and 
confidentiality of Social Security Numbers (SSN) and Employer 
Identification Numbers (EIN) and related records.
    (b) These regulations are applicable to:
    (1) All holders of crop insurance policies issued by FCIC under the 
Act and sold and serviced by local FSA offices.
    (2) All holders of crop insurance policies sold by insurance 
providers and all insurance providers, their contractors and 
subcontractors, including past and present officers and employees of 
such companies, their contractors and subcontractors.
    (3) Any agent, general agent, or company, or any past or present 
officer, employee, contractor or subcontractor of such agent, general 
agent, or company under contract to FCIC or an insurance provider for 
loss adjustment or any other purpose related to the crop insurance 
programs insured or reinsured by FCIC; and
    (4) All past and present officers, employees, elected officials, 
contractors, and subcontractors of FCIC and FSA.

[57 FR 46297, Oct. 8, 1992, as amended at 62 FR 28608, May 27, 1997]



Sec. 400.402  Definitions.

    Act--The Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et 
seq.).
    Applicant--A person who has submitted an application for crop 
insurance coverage under the Act.
    Authorized person--Any current or past officer, employee, elected 
official, general agent, contractor, or loss adjuster of FCIC, the 
insurance provider, or any other government agency whose duties require 
access to administer the Act.
    Disposition of records--The act of removing and disposing of records 
containing a participant's SSN or EIN by FCIC, or the insurance 
provider.

[[Page 41]]

    FCIC--The Federal Crop Insurance Corporation of the United States 
Department of Agriculture or any successor agency.
    FSA--The Farm Service Agency of the United States Department of 
Agriculture, or a successor agency.
    Insurance provider--A private insurance company approved by FCIC, or 
a local FSA office providing crop insurance coverage to producers 
participating in any program administered under the Act.
    Past officers and employees--Any officer or employee of FCIC or the 
insurance provider who leaves the employ of FCIC or the insurance 
provider subsequent to the effective date of this rule.
    Person--An individual, partnership, association, corporation, 
estate, trust, or other legal entity, and whenever applicable, a state, 
political subdivision, or an agency of a state.
    Policyholder--An applicant whose application for insurance under the 
crop insurance program has been accepted by FCIC or the insurance 
provider.
    Retrieval of records--Retrieval of a person's records by that 
person's SSN or EIN, or name.
    Safeguards--Methods of security to be employed by FCIC or the 
insurance provider to protect a participant's SSN or EIN from unlawful 
disclosure and access.
    Storage--The secured storing of records kept by FCIC or the 
insurance provider on computer disks or drives, computer printouts, 
magnetic tape, index cards, microfiche, microfilm, etc.
    Substantial beneficial interest--Any person having an interest of at 
least 10 percent in the applicant or policyholder.
    System of records--Records established and maintained by FCIC or the 
insurance provider containing SSN or EIN data, name, address, city and 
State, applicable policy numbers, and other information related to 
multiple peril crop insurance policies as required by FCIC, from which 
information is retrieved by a personal identifier including, but not 
limited to the SSN, EIN, or name.

[62 FR 28608, May 27, 1997]



Sec. 400.403  Required system of records.

    Insurance providers are required to implement a system of records 
for obtaining, using, and storing documents containing SSN or EIN data 
before they accept or receive any applications for insurance. This data 
should include: name; address; city and state; SSN or EIN; and policy 
numbers which have been used by FCIC or the insurance provider.

[62 FR 28608, May 27, 1997]



Sec. 400.404  Policyholder responsibilities.

    (a) The policyholder or applicant for crop insurance must provide a 
correct SSN or EIN to FCIC or the insurance provider to be eligible for 
insurance. The SSN or EIN will be used by FCIC and the insurance 
provider in:
    (1) Determining the correct parties to the agreement or contract;
    (2) Collecting premiums or other amounts due FCIC or the insurance 
provider;
    (3) Determining the amount of indemnities;
    (4) Establishing actuarial data on an individual policyholder basis; 
and
    (5) Determining eligibility for crop insurance program participation 
or other United States Department of Agriculture benefits.
    (b) If the policyholder or applicant for crop insurance does not 
provide the correct SSN or EIN on the application and other forms where 
such SSN or EIN is required, FCIC or the reinsured company shall reject 
the application.
    (c) The policyholder or applicant is required to provide to FCIC or 
the insurance provider, the name and SSN or EIN of any individual or 
other entity:
    (1) holding or acquiring a substantial beneficial interest in such 
policyholder or applicant; or
    (2) having any interest in the policyholder or applicant and 
receiving separate benefits under another United States Department of 
Agriculture program as a direct result of such interest.
    (d) If a policyholder or applicant is using an EIN for a policy in 
an individual person's name, the SSN of the policyholder or applicant 
must also be provided.

[62 FR 28608, May 27, 1997]

[[Page 42]]



Sec. 400.405  Agent and loss adjuster responsibilities.

    (a) The agent or loss adjuster shall provide his or her correct SSN 
to FCIC or the insurance provider, whichever is applicable, to be 
eligible to participate in the crop insurance program. The SSN will be 
used by FCIC and the insurance provider in establishing a database for 
the purposes of:
    (1) Identifying agents and loss adjusters on an individual basis;
    (2) Evaluating agents and loss adjusters to determine level of 
performance;
    (3) Determining eligibility for program participation; and
    (4) Collection of any amount which may be owed by the agent and loss 
adjuster to the United States.
    (b) If the loss adjuster contracting with FCIC to participate in the 
crop insurance program does not provide his or her correct SSN on forms 
or contracts where such SSN is required, the loss adjuster's contract 
will be cancelled effective on the date of refusal and the loss adjuster 
will be subject to suspension and debarment in accordance with the 
suspension and debarment regulations of the United States Department of 
Agriculture.
    (c) If the agent or loss adjuster contracting with an insurance 
provider, who is also a private insurance company, to participate in the 
crop insurance program does not provide his or her correct SSN on forms 
or contracts where such SSN is required, the premium subsidy payable for 
administrative and operating expenses under the Standard Reinsurance 
Agreement, or any other reinsurance agreement, will not be paid on those 
policies lacking the correct SSN.

[62 FR 28609, May 27, 1997]



Sec. 400.406  Insurance provider responsibilities.

    The insurance provider is required to collect and record the SSN or 
EIN on each application or on any other form required by FCIC.

[62 FR 28609, May 27, 1997]



Sec. 400.407  Restricted access.

    The Manager, other officer, or employee of FCIC or an authorized 
person may have access to the SSNs and EINs obtained pursuant to this 
subpart, only for the purpose of establishing and maintaining a system 
of records necessary for the effective administration of the Act.

[62 FR 28609, May 27, 1997]



Sec. 400.408  Safeguards and storage.

    Records must be maintained in secured storage with proper safeguards 
sufficient to enforce the restricted access provisions of this subpart.

[62 FR 28609, May 27, 1997]



Sec. 400.409  Unauthorized disclosure.

    Anyone having access to the records identifying a participant's SSN 
or EIN will abide by the provisions of section 205(c)(2)(C) of the 
Social Security Act (42 U.S.C. 405(c)(2)(C), and section 6109(f), 
Internal Revenue Code of 1986 (26 U.S.C. 6109(f) and the Privacy Act of 
1974 (5 U.S.C. 552a). All records are confidential, and are not to be 
disclosed to unauthorized personnel.

[57 FR 46297, Oct. 8, 1992. Redesignated at 62 FR 28608, May 27, 1997]



Sec. 400.410  Penalties.

    Unauthorized disclosure of SSN's or EIN's by any person may subject 
that person, and the person soliciting the unauthorized disclosure, to 
civil or criminal sanctions imposed under various Federal statutes, 
including 26 U.S.C. 7613, 5 U.S.C. 552a, and 42 U.S.C. 408.

[57 FR 46297, Oct. 8, 1992. Redesignated at 62 FR 28608, May 27, 1997]



Sec. 400.411  Obtaining personal records.

    Policyholders, agents, and loss adjusters in the crop insurance 
program will be able to review and correct their records as provided by 
the Privacy Act. Records may be requested by:
    (a) Mailing a signed written request to the headquarters office of 
FCIC; the FCIC Regional Service Office, or the insurance provider; or
    (b) Making a personal visit to the above mentioned establishments 
and showing valid identification.

[57 FR 46297, Oct. 8, 1992. Redesignated and amended at 62 FR 28608, 
28609, May 27, 1997]

[[Page 43]]



Sec. 400.412  Record retention.

    (a) FCIC or the insurance provider will retain all records of 
policyholders for a period of not less than 3 years from the date of 
final action on a policy for the crop year, unless further maintenance 
of specific records is requested by FCIC. Final actions on insurance 
policies include conclusion of insurance events, such as the latest of 
termination of the policy, completion of loss adjustment, or 
satisfaction of claim.
    (b) The statute of limitations for FCIC contract claims may permit 
litigation to be instituted after the period of record retention. 
Destruction of records prior to the expiration of the statute of 
limitations will not provide a defense to any action by FCIC against any 
private insurance company.

[62 FR 28609, May 27, 1997]



Sec. 400.413  [Reserved]



                           Subpart R_Sanctions

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

    Source: 58 FR 53110, Oct. 14, 1993, unless otherwise noted.

    Effective Date Note: At 73 FR 76887, Dec. 18, 2008, the authority 
citation and heading to subpart R were revised, effective January 20, 
2009. For the convenience of the user, the revised text is set forth as 
follows:



          Subpart R_Administrative Remedies for Non-Compliance

    Authority: 7 U.S.C. 1506(l), 1506(o), and 7 U.S.C. 1515(h)



Sec. 400.451  General.

    (a) The Federal Crop Insurance Corporation (FCIC) has implemented a 
system of sanctions to prevent waste, fraud, and abuse within its 
programs and insurance delivery systems. Such sanctions include civil 
penalties and disqualification from the crop insurance program under the 
Federal Crop Insurance Act, 7 U.S.C. 1506(m); government wide debarment 
and suspension; and civil penalties and assessments under the Program 
Fraud Civil Remedies Act, 31 U.S.C. 3801--31 U.S.C. 3812.
    (b) The provisions of this subpart apply to all contracts and 
agreements to which FCIC is a party unless otherwise specifically 
provided for in this subpart, including those in which FCIC provides 
administrative expense reimbursement, premium subsidy, or reinsurance 
benefits.
    (c) The provisions of this subpart are in addition to any other 
sanctions specifically provided in applicable contracts and agreements.
    (d) This subpart is applicable to any act or omission by any 
affected party after October 14, 1993.

    Effective Date Note: At 73 FR 76887, Dec. 18, 2008, Sec. 400.451 
was revised, effective January 20, 2009. For the convenience of the 
user, the revised text is set forth as follows:



Sec. 400.451  General.

    (a) FCIC has implemented a system of administrative remedies in its 
efforts to ensure program compliance and prevent fraud, waste, and abuse 
within the Federal crop insurance program. Such remedies include civil 
fines and disqualifications under the authority of section 515(h) of the 
Act (7 U.S.C. 1515(h)); government-wide suspension and debarment under 
the authority of 48 CFR part 9, 48 CFR part 409, and 7 CFR part 3017; 
and civil fines and assessments under the authority of the Program Fraud 
Civil Remedies Act (31 U.S.C. 3801-3812).
    (b) The provisions of this subpart apply to all participants in the 
Federal crop insurance program, including but not limited to producers, 
agents, loss adjusters, approved insurance providers and their employees 
or contractors, as well as any other persons who may provide information 
to a program participant and meet the elements for imposition of one or 
more administrative remedies contained in this subpart.
    (c) Any remedial action taken pursuant to this subpart is in 
addition to any other actions specifically provided in applicable crop 
insurance policies, contracts, reinsurance agreements, or other 
applicable statutes and regulations.
    (d) This rule is applicable to any violation occurring on and after 
January 20, 2009.
    (e) The purpose of the remedial actions authorized in this subpart 
are for the protection of the public interest from potential harm from 
persons who have abused the Federal crop insurance program, maintaining 
program integrity, and fostering public confidence in the program.



Sec. 400.452  Definitions.

    For purposes of this subpart, a person means an individual, 
partnership, association, corporation, estate, trust, or

[[Page 44]]

other business enterprise or legal entity, and wherever applicable, a 
state, a political subdivision of a state, or any agency thereof.

    Effective Date Note: At 73 FR 76887, Dec. 18, 2008, Sec. 400.452 
was revised, effective January 20, 2009. For the convenience of the 
user, the revised text is set forth as follows:



Sec. 400.452  Definitions.

    For purposes of this subpart:
    Act. Has the same meaning as the term in section 1 of the Common 
Crop Insurance Policy Basic Provisions (7 CFR 457.8).
    Affiliate. Persons are affiliates of each other if, directly or 
indirectly, either one controls or has the power to control the other, 
or, a third person controls or has the power to control both. Indicia of 
control include, but are not limited to: interlocking management or 
ownership, identity of interests among family members, shared facilities 
and equipment, common use of employees, or a business entity organized 
following the disqualification, suspension or debarment of a person 
which has the same or similar management, ownership, or principal 
employees as the disqualified, suspended, debarred, ineligible, or 
voluntarily excluded person.
    Agency. The person authorized by an approved insurance provider, or 
its designee, to sell and service a crop insurance policy under the 
Federal crop insurance program.
    Agent. Has the same meaning as the term in 7 CFR 400.701.
    Agricultural commodity. Has the same meaning as the term in section 
1 of the Common Crop Insurance Policy Basic Provisions (7 CFR 457.8).
    Approved insurance provider. Has the same meaning as the term in 7 
CFR 400.701.
    Benefit. Any advantage, preference, privilege, or favorable 
consideration a person receives from another person in exchange for 
certain acts or considerations. A benefit may be monetary or non-
monetary.
    FCIC. Has the same meaning as the term in 7 CFR 400.701.
    Key employee. Any person with primary management or supervisory 
responsibilities or who has the ability to direct activities or make 
decisions regarding the crop insurance program.
    Knows or has reason to know. When a person, with respect to a claim 
or statement:
    (1)(i) Has actual knowledge that the claim or statement is false, 
fictitious, or fraudulent;
    (ii) Acts in deliberate ignorance of the truth or falsity of the 
claim or statement; or
    (iii) Acts in reckless disregard of the truth or falsity of the 
claim or statement; and
    (2) No proof of specific intent is required.
    Managing general agent. Has the same meaning as the term in 7 CFR 
400.701.
    Material. A violation that causes or has the potential to cause a 
monetary loss to the crop insurance program or it adversely affects 
program integrity, including but not limited to potential harm to the 
program's reputation or allowing persons to be eligible for benefits 
they would not otherwise be entitled.
    Participant. Any person who obtains any benefit that is derived in 
whole or in part from funds paid by FCIC to the approved insurance 
provider or premium paid by the producer. Participants include but are 
not limited to producers, agents, loss adjusters, agencies, managing 
general agencies, approved insurance providers, and any person 
associated with the approved insurance provider through employment, 
contract, or agreement.
    Person. An individual, partnership, association, corporation, 
estate, trust or other legal entity, any affiliate or principal thereof, 
and whenever applicable, a State or political subdivision or agency of a 
State. ``Person'' does not include the United States Government or any 
of its agencies.
    Policy. Has the same meaning as the term in section 1 of the Common 
Crop Insurance Policy Basic Provisions (7 CFR 457.8).
    Preponderance of the evidence. Proof by information that, when 
compared with the opposing evidence, leads to the conclusion that the 
fact at issue is probably more true than not.
    Principal. A person who is an officer, director, owner, partner, key 
employee, or other person within an entity with primary management or 
supervisory responsibilities over the entity's federal crop insurance 
activities; or a person who has a critical influence on or substantive 
control over the federal crop insurance activities of the entity.
    Producer. A person engaged in producing an agricultural commodity 
for a share of the insured crop, or the proceeds thereof.
    Provides. Means to make available, supply or furnish with. The term 
includes any transmission of the information from one person to another 
person. For example, a producer writes information on forms and gives it 
to the agent and the agent transmits that information to the insurance 
provider. In both instances, the information is ``provided'' for the 
purpose of this rule.
    Reinsurance agreement. Has the same meaning as the term in 7 CFR 
400.161, except that such agreement is only between FCIC and the 
approved insurance provider.
    Requirement of FCIC. Includes, but is not limited to, formal 
communications, such as a regulation, procedure, policy provision, 
reinsurance agreement, memorandum, bulletin, handbook, manual, finding, 
directive, or letter, signed or issued by a person authorized by FCIC to 
provide such communication on behalf of FCIC, that requires a

[[Page 45]]

particular participant or group of participants to take a specific 
action or to cease and desist from a taking a specific action (e-mails 
will not be considered formal communications although they may be used 
to transmit a formal communication). Formal communications that contain 
a remedy in such communication in the event of a violation of its terms 
and conditions will not be considered a requirement of FCIC unless such 
violation arises to the level where remedial action is appropriate. (For 
example, multiple violations of the same provision in separate policies 
or procedures or multiple violations of different provisions in the same 
policy or procedure.)
    Violation. Each act or omission by a person that satisfies all 
required elements for the imposition of a disqualification or a civil 
fine contained in Sec. 400.454.
    Willful and intentional. To provide false or inaccurate information 
with the knowledge that the information is false or inaccurate at the 
time the information is provided; the failure to correct the false or 
inaccurate information when its nature becomes known to the person who 
made it; or to commit an act or omission with the knowledge that the act 
or omission is not in compliance with a ``requirement of FCIC'' at the 
time the act or omission occurred. No showing of malicious intent is 
necessary.



Sec. 400.453  Exhaustion of administrative remedies.

    All administrative remedies contained herein or incorporated herein 
by reference must be exhausted before Judicial Review in the United 
States Courts may be sought, unless review is specifically required by 
statute.



Sec. 400.454  Civil penalties.

    (a) Any person who willfully and intentionally provides any 
materially false or inaccurate information to FCIC or to any approved 
insurance provider reinsured by FCIC with respect to an insurance plan 
or policy issued under the authority of the Federal Crop Insurance Act, 
as amended, (7 U.S.C. 1501 et seq.) may be subject to a civil fine of up 
to an amount specified in Sec. 3.91(b)(7) of this title and 
disqualification from participation in:
    (1) The catastrophic risk protection plan of insurance and the 
noninsured crop disaster assistance program for a period not to exceed 
two (2) years; or
    (2) Any plan of insurance providing protection in excess of that 
provided under the catastrophic risk protection plan of insurance for a 
period not to exceed ten (10) years.
    (b) FCIC may make the payment of a civil penalty under this section 
a prior condition for the issuance, renewal, restoration, or continuing 
validity of any crop insurance policy or other approval.
    (c) FCIC may compromise, modify, settle, collect, or remit with or 
without conditions, any civil penalty which is subject to imposition or 
which has been imposed under this section whenever it considers it to be 
appropriate or advisable.
    (d) If a director, officer, or agent of a corporation provides false 
or inaccurate information, they may be separately subject to the fine 
specified in paragraph (a) of this section without regard to any 
penalties to which the corporation may be subject.
    (e) The liability of any person for any penalty under this subpart 
or any related charges arising in connection therewith shall be in 
addition to any other liability of such person under any civil or 
criminal fraud statute or any other statute or provision of law.
    (f) Proceedings under this Sec. 400.454 will be in accordance with 
subpart H of 7 CFR part 1, ``Rules of Practice Governing Formal 
Adjudicatory Proceedings Instituted by the Secretary under Various 
Statutes,'' by which the Manager, FCIC, shall initiate proceedings by 
filing a complaint with the Hearing Clerk, United States Department of 
Agriculture.

[58 FR 53110, Oct. 14, 1993, as amended at 60 FR 37323, July 20, 1995; 
62 FR 40928, July 31, 1997]

    Effective Date Note: At 73 FR 76888, Dec. 18, 2008, Sec. 400.454 
was revised, effective January 20, 2009. For the convenience of the 
user, the revised text is set forth as follows:



Sec. 400.454  Disqualification and civil fines.

    (a) Before any disqualification or civil fine is imposed, FCIC will 
provide the affected participants and other persons with notice and an 
opportunity for a hearing on the record in accordance with 7 CFR part 1, 
subpart H.
    (1) Proceedings will be initiated when the Manager of FCIC files a 
complaint with the Hearing Clerk, United States Department of 
Agriculture.
    (2) Disqualifications become effective:
    (i) On the date specified in the order issued by the Administrative 
Law Judge or Judicial

[[Page 46]]

Officer, as applicable, or if no date is specified in the order, the 
date that the order was issued.
    (ii) With respect to a settlement agreement with FCIC, the date 
contained in the settlement agreement or, if no date is specified, the 
date that such agreement is executed by FCIC.
    (3) Disqualification and civil fines may only be imposed if a 
preponderance of the evidence shows that the participant or other person 
has met the standards contained in Sec. 400.454(b). FCIC has the burden 
of proving that the standards in Sec. 400.454(b) have been met.
    (4) Disqualification and civil fines may be imposed regardless of 
whether FCIC or the approved insurance provider has suffered any 
monetary losses. However, if there is no monetary loss, disqualification 
will only be imposed if the violation is material in accordance with 
Sec. 400.454(c).
    (b) Disqualification and civil fines may be imposed on any 
participant or person who willfully and intentionally:
    (1) Provides any false or inaccurate information to FCIC or to any 
approved insurance provider with respect to a policy or plan of 
insurance authorized under the Act either through action or omission to 
act when there is knowledge that false or inaccurate information is or 
will be provided; or
    (2) Fails to comply with a requirement of FCIC.
    (c) When imposing any disqualification or civil fine:
    (1) The gravity of the violation must be considered when 
determining:
    (i) Whether to disqualify a participant or other person;
    (ii) The amount of time that a participant or other person should be 
disqualified;
    (iii) Whether to impose a civil fine; and
    (iv) The amount of a civil fine that should be imposed.
    (2) The gravity of the violation includes consideration of whether 
the violation was material and if it was material:
    (i) The number or frequency of incidents or duration of the 
violation;
    (ii) Whether there is a pattern or prior history of violation;
    (iii) Whether and to what extent the person planned, initiated, or 
carried out the violation;
    (iv) Whether the person has accepted responsibility for the 
violation and recognizes the seriousness of the misconduct that led to 
the cause for disqualification or civil fine;
    (v) Whether the person has paid all civil and administrative 
liabilities for the violation;
    (vi) Whether the person has cooperated fully with FCIC (In 
determining the extent of cooperation, FCIC may consider when the 
cooperation began and whether the person disclosed all pertinent 
information known to that person at the time);
    (vii) Whether the violation was pervasive within the organization;
    (viii) The kind of positions held by the persons involved in the 
violation;
    (ix) Whether the organization took prompt, appropriate corrective 
action or remedial measures, such as establishing ethics training and 
implementing programs to prevent recurrence;
    (x) Whether the principals of the organization tolerated the 
offense;
    (xi) Whether the person brought the violation to the attention of 
FCIC in a timely manner;
    (xii) Whether the organization had effective standards of conduct 
and internal control systems in place at the time the violation 
occurred;
    (xiii) Whether the organization has taken appropriate disciplinary 
action against the persons responsible for the violation;
    (xiv) Whether the organization had adequate time to eliminate the 
violation that led to the cause for disqualification or civil fine;
    (xv) Other factors that are appropriate to the circumstances of a 
particular case.
    (3) The maximum term of disqualification and civil fines will be 
imposed against:
    (i) Participants and other persons, except insurance providers who:
    (A) Commit multiple violations in the same crop year or over several 
crop years; or
    (B) Commit a single violation but such violation results in an 
overpayment of more than $100,000;
    (ii) Approved insurance providers who:
    (A) Commit a single violation resulting in an overpayment in excess 
of $100,000; and
    (B) Commit multiple acts of violations resulting in an overpayment 
in excess of $500,000; and
    (iii) Any participant or person who commits such other action or 
omission of so serious a nature that imposition of the maximum is 
appropriate.
    (d) With respect to the imputing of conduct:
    (1) The conduct of any officer, director, shareholder, partner, 
employee, or other individual associated with an organization, in 
violation of Sec. 400.454(b) may be imputed to that organization when 
such conduct occurred in connection with the individual's performance of 
duties for or on behalf of that organization, or with the organization's 
knowledge, approval or acquiescence. The organization's acceptance of 
the benefits derived from the violation is evidence of knowledge, 
approval or acquiescence.
    (2) The conduct of any organization in violation of Sec. 400.454(b) 
may be imputed to an individual, or from one individual to another

[[Page 47]]

individual, if the individual to whom the improper conduct is imputed 
either participated in, knows, or had reason to know of such conduct.
    (3) The conduct of one organization in violation of Sec. 400.454(b) 
may be imputed to another organization when such conduct occurred in 
connection with a partnership, joint venture, joint application, 
association or similar arrangement, or when the organization to whom the 
improper conduct is imputed has the power to direct, manage, control or 
influence the activities of the organization responsible for the 
improper conduct. Acceptance of the benefits derived from the conduct is 
evidence of knowledge, approval or acquiescence.
    (4) If such conduct is imputed, the person to whom the conduct is 
imputed to may be subject to the same disqualification and civil fines 
as the person from whom the conduct is imputed. The factors contained in 
Sec. 400.454(c)(2) will be taken into consideration with respect to the 
person to whom the conduct is being imputed.
    (e) With respect to disqualifications:
    (1) If a person is disqualified and that person is a:
    (i) Producer, the producer will be precluded from receiving any 
monetary or non-monetary benefit provided under all of the following 
authorities, or their successors:
    (A) The Act;
    (B) The Farm Security and Rural Investment Act of 2002 (7 U.S.C. 
7333 et seq.) or any successor statute;
    (C) The Agricultural Act of 1949 (7 U.S.C. 1421 et seq.) or any 
successor statute;
    (D) The Commodity Credit Corporation Charter Act (15 U.S.C. 714 et 
seq.) or any successor statute;
    (E) The Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.) 
or any successor statute;
    (F) Title XII of the Food Security Act of 1985 (16 U.S.C. 3801 et 
seq.) or any successor statute;
    (G) The Consolidated Farm and Rural Development Act (7 U.S.C. 1921, 
et seq.) or any successor statute; and
    (H) Any federal law that provides assistance to the producer of an 
agricultural commodity affected by a crop loss or decline in the prices 
of agricultural commodities.
    (ii) Participant or other person, other than a producer, such 
participant or person will be precluded from participating in any way in 
the Federal crop insurance program and receiving any monetary or non-
monetary benefit under the Act.
    (2) With respect to the term of disqualification:
    (i) The minimum term will be not less than one year from the 
effective date determined in Sec. 400.454(a)(2);
    (ii) The maximum term will be not more than five years from the 
effective date determined in Sec. 400.454(a)(2); and
    (iii) Disqualification is to be imposed only in one-year increments, 
up to the maximum five years.
    (3) Once a disqualification becomes final, the name, address, and 
other identifying information of the participant or other person shall 
be entered into the Ineligible Tracking System (ITS) maintained by FCIC 
in accordance with 7 CFR part 400, subpart U, and this information along 
with a list of the programs that the person is disqualified from shall 
be promptly reported to the General Services Administration for listing 
in the Excluded Parties List System (EPLS) in accordance with 7 CFR part 
3017, subpart E.
    (i) It is a participant's responsibility to periodically review the 
ITS and EPLS to determine those participants and other persons who have 
been disqualified.
    (ii) No participant may conduct business with a disqualified 
participant or other person if such business directly relates to the 
Federal crop insurance program, or if, through the business 
relationship, the disqualified participant or other person will derive 
any monetary or non-monetary benefit from a program administered under 
the Act.
    (iii) If a participant or other person does business with a 
disqualified participant or other person, such participant may be 
subject to disqualification under this section.
    (iv) Continuing to make payments to a disqualified person to fulfill 
pre-existing contractual or statutory obligations after the business 
relationship is terminated will not be considered as doing business with 
a disqualified person unless such payment is used as a means to 
circumvent the disqualification process.
    (f) With respect to civil fines:
    (1) A civil fine may be imposed for each violation.
    (2) The amount of such civil fine shall not exceed the greater of:
    (i) The amount of monetary gain, or value of the benefit, obtained 
as a result of the false or inaccurate information provided, or the 
amount obtained as a result of noncompliance with a requirement of FCIC; 
or
    (ii) $10,000.
    (3) Civil fines are debts owed to FCIC.
    (i) A civil fine that is either imposed under with this subpart, or 
agreed to through an executed settlement agreement with FCIC, must be 
paid by the specified due date. If the due date is not specified in the 
order issued by the Administrative Law Judge or Judicial Officer, as 
applicable, or the settlement agreement, it shall be 30 days after the 
date the order was issued or the settlement agreement signed by FCIC.
    (ii) Any civil fine imposed under this section is in addition to any 
debt that may be owed to FCIC or to any approved insurance

[[Page 48]]

provider, such an overpaid indemnity, underpaid premium, or other 
amounts owed.
    (iii) FCIC, in its sole discretion, may reduce or otherwise settle 
any civil fine imposed under this section whenever it considers it 
appropriate or in the best interest of the USDA.
    (4) The ineligibility procedures established in 7 CFR part 400, 
subpart U are not applicable to ineligibility determinations made under 
this section for nonpayment of civil fines.
    (5) If a civil fine has been imposed and the person has not made 
timely payment for the total amount due, the person is ineligible to 
participate in the Federal crop insurance program until the amount due 
is paid in full.
    (g) With respect to any person that has been disqualified or is 
otherwise ineligible due to non-payment of civil fines in accordance 
with Sec. 400.454(f):
    (1) With respect to producers:
    (i) All existing insurance policies will automatically terminate as 
of the next termination date that occurs during the period of 
disqualification and while the civil fine remains unpaid;
    (ii) No new policies can be purchased, and no current policies can 
be renewed, between the date that the producer is disqualified and the 
date that the disqualification ends; and
    (iii) New application for insurance cannot be made for any 
agricultural commodity until the next sales closing date after the 
period of disqualification has ended and the civil fine is paid in full.
    (2) With respect to all other persons:
    (i) Such person may not be involved in any function related to the 
Federal crop insurance program during the disqualification or 
ineligibility period (including the sale, service, adjustment, data 
transmission or storage, reinsurance, etc. of any crop insurance policy) 
or receive any monetary or non-monetary benefit from a program 
administered under the Act.
    (ii) If the person is an agent or insurance agency, the producers 
may cancel their policies sold and serviced by the disqualified agent 
and rewrite the policy with another agent. If the producer does not 
cancel and rewrite the policy with another agent, the approved insurance 
provider must assign the policies to a different agent or agency to 
service during the period of disqualification or ineligibility. Policies 
that have been assigned to another agent or agency by the insurance 
provider will revert back to the disqualified agent or agency after the 
period of disqualification has ended provided all civil fines are paid 
in full and the producer does not cancel and rewrite the policy with a 
different agent or agency;
    (iii) If the person is an approved insurance provider, the approved 
insurance provider shall not sell, or authorize to be sold, any new 
policies or may not renew, or authorize the renewal of, existing 
policies, as determined by FCIC, during the period of disqualification 
or ineligibility. Nothing in this provision affects the approved 
insurance provider's responsibilities with respect to the service of 
existing policies.
    (h) Imposition of disqualification or a civil fine under this 
section is in addition to any other administrative or legal remedies 
available under this section or other applicable law including, but not 
limited to, debarment and suspension.



Sec. 400.455  Governmentwide debarment and suspension (procurement).

    (a) This section prescribes the terms and conditions under which 
persons or business entities may be debarred or suspended by FCIC from 
contracting with the Federal government.
    (b) This section is in accordance with 48 CFR part 9, subpart 9.4 
and 48 CFR part 409, subpart 409.4 and shall be applicable to all FCIC 
debarment and suspension proceedings undertaken pursuant to the Federal 
Acquisition Regulations, except that the authority to debar or suspend 
is reserved to the Manager, FCIC, or the Manager's designee.
    (c) Any individual or entity suspended or debarred under the 
provisions of 48 CFR part 9, subpart 9.4 will not be eligible to 
contract with FCIC or be employed by or contract with any insurance 
company that sells or adjusts FCIC's crop insurance contracts or which 
company's crop insurance contracts are reinsured by FCIC. FCIC may waive 
this provision if it is satisfied that the insurance company has taken 
sufficient action to insure that the suspended or debarred entity or 
individual will not be involved, in any way, with FCIC or FCIC reinsured 
crop insurance contracts.

    Effective Date Note: At 73 FR 76890, Dec. 18, 2008, Sec. 400.455 
was revised, effective January 20, 2009. For the convenience of the 
user, the revised text is set forth as follows:



Sec. 400.455  Governmentwide debarment and suspension (procurement).

    (a) For all transactions undertaken pursuant to the Federal 
Acquisition Regulations, FCIC will proceed under 48 CFR part 9, subpart 
9.4 or 48 CFR part 409 when taking action to suspend or debar persons 
involved in such transactions, except that the authority to suspend or 
debar under these provisions will be reserved to the Manager of FCIC, or 
the Manager's designee.

[[Page 49]]

    (b) Any person suspended or debarred under the provisions of 48 CFR 
part 9, subpart 9.4 or 48 CFR part 409 will not be eligible to contract 
with FCIC or the Risk Management Agency and will not be eligible to 
participate in or receive any benefit from any program under the Act 
during the period of ineligibility. This includes, but is not limited 
to, being employed by or contracting with any approved insurance 
provider that sells, services, or adjusts policies offered under the 
authority of the Act. FCIC may waive this provision if it is satisfied 
that the person who employs the suspended or debarred person has taken 
sufficient action to ensure that the suspended or debarred person will 
not be involved, in any way, with FCIC or receive any benefit from any 
program under the Act.



Sec. 400.456  Governmentwide debarment and suspension (nonprocurement).

    (a) This section prescribes the terms and conditions under which 
individuals or entities may be debarred or suspended by FCIC from 
participation in Federal assistance and benefits under Federal programs 
and activities.
    (b) This section, in accordance with 7 CFR part 3017, shall be 
applicable to all FCIC debarment and suspension proceedings other than 
those undertaken pursuant to the Federal Acquisition Regulations.
    (c) Proceedings under this section are not applicable to 
determinations of eligibility under the provisions of the crop insurance 
contracts or determinations to be made under 7 CFR 400.454.
    (d) The Manager, FCIC, shall be the debarring and suspending 
official for all debarment or suspension proceedings undertaken by FCIC 
under the provisions of 7 CFR part 3017.

    Effective Date Note: At 73 FR 76890, Dec. 18, 2008, Sec. 400.456 
was revised, effective January 20, 2009. For the convenience of the 
user, the revised text is set forth as follows:



Sec. 400.456  Governmentwide debarment and suspension (nonprocurement).

    (a) FCIC will proceed under 7 CFR part 3017 when taking action to 
suspend or debar persons involved in non-procurement transactions.
    (b) Any person suspended or debarred under the provisions of 7 CFR 
part 3017, will not be eligible to contract with FCIC or the Risk 
Management Agency and will not be eligible to participate in or receive 
any benefit from any program under the Act during the period of 
ineligibility. This includes, but is not limited to, being employed by 
or contracting with any approved insurance provider, or its contractors, 
that sell, service, or adjust policies either insured or reinsured by 
FCIC. FCIC may waive this provision if it is satisfied that the approved 
insurance provider or contractors have taken sufficient action to ensure 
that the suspended or debarred person will not be involved in any way 
with the Federal crop insurance program or receive any benefit from any 
program under the Act.
    (c) The Manager, FCIC, shall be the debarring and suspending 
official for all debarment or suspension proceedings undertaken by FCIC 
under the provisions of 7 CFR part 3017.



Sec. 400.457  Program Fraud Civil Remedies Act.

    (a) This section is in accordance with the Program Fraud Civil 
Remedies Act of 1986 (31 U.S.C. 3801-U.S.C. 3831) which provides for 
civil penalties and assessments against persons who make, submit, or 
present, or cause to be made, submitted, or presented, false, 
fictitious, or fraudulent claims or written statements to Federal 
authorities or to their agents.
    (b) Proceedings under this section will be in accordance with 
subpart L of 7 CFR part 1, ``Procedures Related to Administrative 
Hearings Under the Program Fraud Civil Remedies Act of 1986.''
    (c) The Director, Appeals and Litigation Staff, FCIC, or the 
Director's designee, is authorized to serve as Agency Fraud Claims 
Officer for the purpose of implementing the requirements of this 
section.

    Effective Date Note: At 73 FR 76891, Dec. 18, 2008, Sec. 400.457 
was amended by adding paragraph (d), effective January 20, 2009. For the 
convenience of the user, the added text is set forth as follows:



Sec. 400.457  Program Fraud Civil Remedies Act.

                                * * * * *

    (d) Civil penalties and assessments imposed pursuant to this section 
are in addition to any other remedies that may be prescribed by law or 
imposed under this subpart.

[[Page 50]]



Sec. 400.458  Scheme or device.

    (a) In addition to the penalties specified in this part, if a person 
has knowingly adopted a material scheme or device to obtain catastrophic 
risk protection, other plans of insurance coverage, or noninsured 
assistance benefits to which the person is not entitled, has evaded the 
provisions of the Federal Crop Insurance Act, or has acted with the 
purpose of evading the provisions of the Federal Crop Insurance Act, the 
person shall be ineligible to receive any and all benefits applicable to 
any crop year for which the scheme or device was adopted.
    (b) A scheme or device may include, but is not limited to, creating 
or using another entity, or concealing or providing false information 
with respect to your interest in the policyholder, to evade:
    (1) Suspension, debarment, or disqualification from participation in 
the program;
    (2) The assignment of the nonstandard classification system; or
    (3) Ineligibility for a delinquent debt owed to FCIC or the 
insurance company.

[60 FR 37324, July 20, 1995]

    Effective Date Note: At 73 FR 76891, Dec. 18, 2008, Sec. 400.458 
was amended by removing paragraph (b)(2), adding an ``or'' at the end of 
paragraph (b)(1), and by redesignating paragraph (b)(3) as (b)(2), 
effective January 20, 2009.



Sec. 400.459  Indebtedness.

    Any person who owes a debt to FCIC, or an approved insurance 
provider, arising from any program administered under the Act, and that 
debt is delinquent, will be ineligible to participate in all such 
programs until the debt is paid in full or the person enters into an 
agreement, acceptable to FCIC or the approved insurance provider, to 
repay the debt. If the person provides adequate evidence to demonstrate 
that the amount of debt is in dispute, the person's application will be 
accepted or their insurance will remain in effect, but no indemnity 
payment will be made, until the disputed issue is resolved between that 
person and FCIC or the approved insurance provider through the available 
appeal process.

[60 FR 51321, Oct. 2, 1995]

    Effective Date Note: At 73 FR 76891, Dec. 18, 2008, Sec. 400.459 
was removed, effective January 20, 2009.



Sec. Sec. 400.460-400.500  [Reserved]

Subpart S [Reserved]



    Subpart T_Federal Crop Insurance Reform, Insurance Implementation

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

    Source: 61 FR 42975, Aug. 20, 1996, unless otherwise noted.



Sec. 400.650  Purpose.

    The Reform Act requires FCIC to implement a crop insurance program 
that offers several levels of insurance coverage for producers. These 
levels of protection include catastrophic risk protection, and 
additional coverage insurance. This subpart provides notice of the 
availability of these crop insurance options and establishes provisions 
and requirements for implementation of the insurance provisions of the 
Reform Act.

[61 FR 42975, Aug. 20, 1996, as amended at 68 FR 37721, June 25, 2003]



Sec. 400.651  Definitions.

    Act. The Federal Crop Insurance Act, as amended (7 U.S.C. Sec. Sec. 
1501 et seq.).
    Additional coverage. A level of coverage greater than catastrophic 
risk protection.
    Administrative fee. An amount the producer must pay for 
catastrophic, and additional coverage each crop year on a per crop and 
county basis as specified in the Basic Provisions or the Catastrophic 
Risk Protection Endorsement.
    Approved insurance provider. A private insurance company, including 
its agents, that has been approved and reinsured by FCIC to provide 
insurance coverage to producers participating in the Federal crop 
insurance program.

[[Page 51]]

    Approved yield. The actual production history (APH) yield, 
calculated and approved by the verifier, used to determine the 
production guarantee by summing the yearly actual, assigned, adjusted or 
unadjusted transitional yields and dividing the sum by the number of 
yields contained in the database, which will always contain at least 
four yields. The database may contain up to 10 consecutive crop years of 
actual or assigned yields. The approved yield may have yield adjustments 
elected under applicable policy provisions, or other limitations 
according to FCIC approved procedures applied when calculating the 
approved yield.
    Catastrophic risk protection. The minimum level of coverage offered 
by FCIC which is required before a person may qualify for certain other 
USDA program benefits unless the producer executes a waiver of any 
eligibility for emergency crop loss assistance in connection with the 
crop. For the 1995 through 1998 crop years, such coverage will offer 
protection equal to fifty percent (50%) of the approved yield 
indemnified at sixty percent (60%) of the expected market price, or a 
comparable coverage as established by FCIC. For the 1999 and subsequent 
crop years, such coverage will offer protection equal to fifty percent 
(50%) of the approved yield indemnified at fifty-five percent (55%) of 
the expected market price, or a comparable coverage as established by 
FCIC.
    Catastrophic Risk Protection Endorsement. The part of the crop 
insurance policy that contains provisions of insurance that are specific 
to catastrophic risk protection.
    Crop of economic significance. A crop that has either contributed in 
the previous crop year, or is expected to contribute in the current crop 
year, ten percent (10%) or more of the total expected value of the 
producer's share of all crops grown in the county. However, a crop will 
not be considered a crop of economic significance if the expected 
liability under the Catastrophic Risk Protection Endorsement is equal to 
or less than the administrative fee required for the crop.
    Expected market price. (price election) The price per unit of 
production (or other basis as determined by FCIC) anticipated during the 
period the insured crop normally is marketed by producers. This price 
will be set by FCIC before the sales closing date for the crop. The 
expected market price may be less than the actual price paid by buyers 
if such price typically includes remuneration for significant amounts of 
post-production expenses such as conditioning, culling, sorting, 
packing, etc.
    FCIC. The Federal Crop Insurance Corporation, a wholly owned 
Government Corporation within USDA.
    FSA. The Farm Service Agency, an agency of the United States 
Department of Agriculture or any successor agency.
    Insurable interest. The value of the producer's interest in the crop 
that is at risk from an insurable cause of loss during the insurance 
period. The maximum indemnity payable to the producer may not exceed the 
indemnity due on the producer's insurable interest at the time of loss.
    Intended crop. A crop stated on the application as submitted on or 
before the sales closing date for the crop which the producer intended 
to plant in the crop year for which application is made.
    Linkage requirement. The legal requirement that a producer must 
obtain at least catastrophic risk protection coverage for any crop of 
economic significance as a condition of receiving benefits for such crop 
from certain other USDA programs in accordance with Sec. 400.655, 
unless the producer executes a waiver of any eligibility for emergency 
crop loss assistance in connection with the crop.
    Person. An individual, partnership, association, corporation, 
estate, trust, or other legal entity, and wherever applicable, a state 
or a political subdivision or agency of a state.
    Reform Act. The Federal Crop Insurance Reform Act of 1994, Public 
Law 103-354.
    Secretary. The Secretary of the United States Department of 
Agriculture.
    Substitute crop. An alternative crop whose sales closing date has 
passed and

[[Page 52]]

that is planted on acreage that is prevented from being planted to an 
intended crop or where an intended crop is planted and fails.
    Zero acreage report. An acreage report filed by the producer that 
certifies that the producer does not have a share in the crop for that 
crop year.

[61 FR 42975, Aug. 20, 1996, as amended at 63 FR 40634, July 30, 1998; 
64 FR 40742, July 28, 1999; 68 FR 37721, June 25, 2003]



Sec. 400.652  Insurance availability.

    (a) If sufficient actuarial data are available, FCIC will offer 
catastrophic risk protection, and additional coverage plans of insurance 
to indemnify persons for FCIC insured or reinsured crop loss due to loss 
of yield or prevented planting, if the crop loss or prevented planting 
is due to an insured cause of loss specified in the applicable crop 
insurance policy.
    (b) Catastrophic risk protection coverage may be offered through 
approved insurance providers and through local offices of the Farm 
Service Agency specified by the Secretary. Additional coverage will only 
be offered through approved insurance providers unless there is not a 
sufficient number of approved insurance providers that offer such 
insurance within a service area.
    (c) A person must obtain at least catastrophic risk protection for 
the crop on all insurable acreage in the county in which the person has 
a share on or before the sales closing date designated by FCIC for the 
crop in the county in order to satisfy the linkage requirements unless 
the producer executes a waiver of any eligibility for emergency crop 
loss assistance in connection with the crop.
    (d) For additional coverage, in areas where insurance is not 
available for a particular agricultural commodity that is insurable 
elsewhere, FCIC may enter into a written agreement with a person to 
insure the commodity, provided that the person has actuarially sound 
data relating to the production of the commodity that is acceptable to 
FCIC and that such written agreement is specifically allowed by the crop 
insurance regulations applicable to the crop.
    (e) Failure to comply with all provisions of the policy constitutes 
a breach of contract and may result in ineligibility for certain other 
farm program benefits for that crop year and any benefit already 
received must be refunded. If a producer breaches the insurance 
contract, the execution of a waiver of eligibility for emergency crop 
loss assistance will not be effective for the crop year in which the 
breech occurred.

[61 FR 42975, Aug. 20, 1996, as amended at 68 FR 37721, June 25, 2003]



Sec. 400.653  Determining crops of economic significance.

    To be eligible for certain other program benefits under Sec. 
400.655 the following conditions will apply with respect to crops of 
economic significance if the producer does not execute a waiver of any 
eligibility for emergency crop loss assistance in connection with the 
crop.
    (a) If a producer planted a crop of economic significance in the 
preceding crop year, and does not intend to plant the same crop in the 
present crop year, the producer does not have to obtain insurance 
coverage or execute a waiver of any eligibility for emergency crop loss 
assistance in connection with the crop in the present crop year to 
comply with the linkage requirements. However, if the producer later 
decides to plant that crop, the producer will be unable to obtain 
insurance after the sales closing date and must execute a waiver of any 
eligibility for emergency crop loss assistance in connection with the 
crop to be eligible for benefits as specified in Sec. 400.655. Failure 
to execute such a waiver will require the producer to refund any 
benefits already received under a program specified in Sec. 400.655.
    (b) The producer is initially responsible to determine the crops of 
economic significance in the county. The insurance provider may assist 
the producer in making these initial determinations. However, these 
determinations will not be binding on the insurance provider. To 
determine the percentage value of each crop:
    (1) Multiply the acres planted to the crop times the producer's 
share, times the approved yield, and times the price;
    (2) Add the values of all crops grown by the producer (in the 
county); and

[[Page 53]]

    (3) Divide the value of the specific crop by the result of paragraph 
(b)(2).
    (c) The producer may use the type of price, such as the current 
local market price, futures price, established price, highest amount of 
insurance, etc., for the price when calculating the value of each crop, 
provided that the producer uses the same type of price for all crops in 
the county.
    (d) The producer may be required to justify the calculation and 
provide adequate records to enable the insurance provider to verify 
whether a crop is of economic significance.

[61 FR 42975, Aug. 20, 1996, as amended at 64 FR 40742, July 28, 1999]



Sec. 400.654  Application and acreage report.

    (a) To participate in catastrophic risk protection, or additional 
coverage plans of insurance, a producer must submit an application for 
insurance on or before the applicable sales closing date.
    (b) In order to remain eligible for certain farm programs, as 
specified in Sec. 400.655, a producer must obtain at least catastrophic 
risk protection on all crops of economic significance, if catastrophic 
risk protection is available in the county, unless the producer executes 
a waiver of any eligibility for emergency crop loss assistance in 
connection with the crop.
    (c) Notwithstanding the requirements of Sec. 400.654(a) that 
applications for insurance be submitted on or before the applicable 
sales closing date, FCIC may permit a producer to insure crops other 
than those specified on the application under the following conditions:
    (1) The producer must be unable to plant the intended crop or it is 
not practical to replant a failed crop before the final planting date. 
FCIC will take into consideration marketing windows when determining 
whether it was not practical to replant.
    (2) Conditions must exist to warrant allowing a producer to insure 
crops other than the intended crop.
    (3) The producer must submit an application for the substitute crop 
on or before the acreage reporting date for the substitute crop and pay 
any applicable administrative fee. A producer may not substitute a crop 
that the producer planted in the preceding crop year unless that crop 
was listed on a timely filed application for the current crop year.
    (4) If the producer plants a substitute crop that is a crop of 
economic significance, the producer must obtain CAT coverage, if 
available, to comply with the linkage requirements specified in Sec. 
400.655. The producer may not substitute a crop under this provision if 
the producer has signed or intends to sign a waiver for emergency crop 
loss assistance for the crop year.
    (5) The substitute crop must be planted on or before the final 
planting date or within the late planting period, if applicable, for the 
substitute crop.
    (6) Under no circumstances may a producer submit an application for 
additional coverage after the sales closing date for the substitute 
crop.
    (d) For all coverages, including catastrophic risk protection, and 
additional coverages, the producer must file a signed acreage report on 
or before the acreage reporting date. Any person may sign any document 
relative to crop insurance coverage on behalf of any other person 
covered by such a policy, provided that the person has a properly 
executed power of attorney or other legally sufficient document 
authorizing such person to sign.
    (e) Under catastrophic risk protection, unless the other person with 
an insurable interest in the crop objects in writing prior to the 
acreage reporting date and provides a signed acreage report on their own 
behalf an operator may sign the acreage report for all other persons 
with an insurable interest in the crop without a power of attorney. All 
persons with an insurable interest in the crop, and for whom the 
operator purports to sign and represent, are bound by the information 
contained in that acreage report.

[61 FR 42975, Aug. 20, 1996, as amended at 64 FR 40742, July 28, 1999; 
68 FR 37721, June 25, 2003]



Sec. 400.655  Eligibility for other program benefits.

    The producer must obtain at least catastrophic coverage for each 
crop of economic significance in the county in which the producer has an 
insurable share, if insurance is available in the

[[Page 54]]

county for the crop, unless the producer executes a waiver of any 
eligibility for emergency crop loss assistance in connection with the 
crop, to be eligible for:
    (a) Benefits under the Agricultural Market Transition Act;
    (b) Loans or any other USDA provided farm credit, including: 
guaranteed and direct farm ownership loans, operating loans, and 
emergency loans under the Consolidated Farm and Rural Development Act 
provided after October 13, 1994; and
    (c) Benefits under the Conservation Reserve Program derived from any 
new or amended application or contract executed after October 13, 1994.

[61 FR 42975, Aug. 20, 1996. Redesignated at 63 FR 40634, July 30, 1998]



Sec. Sec. 400.656-400.657  [Reserved]



 Subpart U_Ineligibility for Programs Under the Federal Crop Insurance 
                                   Act

    Authority: 7 U.S.C. 1506(1), 1506(p).

    Source: 62 FR 42042, Aug. 5, 1997, unless otherwise noted.



Sec. 400.675  Purpose.

    This rule prescribes conditions under which a person may be 
determined to be ineligible to participate in any program administered 
by FCIC under the Federal Crop Insurance Act, as amended. This rule also 
establishes the criteria for reinstatement of eligibility.



Sec. 400.676  [Reserved]



Sec. 400.677  Definitions.

    Act. The Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et 
seq.).
    Actively engaged in farming. Means a person who, in return for a 
share of profits and losses, makes a contribution to the production of 
an insurable crop in the form of capital, equipment, land, personal 
labor, or personal management.
    Applicant. A person who has submitted an application for crop 
insurance coverage under the Act.
    Authorized person. Any current or past officer, employee, elected 
official, general agent, agent, contractor, or loss adjuster of FCIC, 
the insurance provider, or any other government agency whose duties 
require access to the Ineligible Tracking System to administer the Act.
    CAT. The catastrophic risk protection plan of insurance.
    Controlled substance. Any prohibited drug-producing plants 
including, but not limited to, cacti of the genus (lophophora), coca 
bushes (erythroxylum coca), marijuana (cannabis sativa), opium poppies 
(papaver somniferum), and other drug-producing plants, the planting and 
harvesting of which is prohibited by Federal or state law.
    Debt. An amount of money which has been determined by an appropriate 
agency official to be owed, by any person, to FCIC or an insurance 
provider under any program administered under the Act based on evidence 
submitted by the insurance provider. The debt may have arisen from an 
overpayment, premium or administrative fee nonpayment, interest, 
penalties, or other causes.
    Debtor. A person who owes a debt and that debt is delinquent.
    Delinquent debt. Any debt owed to FCIC or the insurance provider, 
that arises under any program administered under the authority of the 
Act, that has not been paid by the termination date specified in the 
applicable contract of insurance, or other due date for payment 
contained in any other agreement or notification of indebtedness, or any 
overdue debt owed to FCIC or the insurance provider which is the subject 
of a scheduled installment payment agreement which the debtor has failed 
to satisfy under the terms of such agreement. Such debt may include any 
accrued interest, penalty, and administrative charges for which demand 
for repayment has been made, or unpaid premium including any accrued 
interest, penalty and administrative charges (7 CFR 400.116). A 
delinquent debt does not include debts discharged in bankruptcy and 
other debts which are legally barred from collection.
    EIN. An Employer Identification Number as required under section 
6109 of the Internal Revenue Code of 1986.

[[Page 55]]

    FCIC. The Federal Crop Insurance Corporation, a wholly owned 
government corporation within the United States Department of 
Agriculture.
    FSA. The Farm Service Agency or a successor agency.
    Ineligible person. A person who is denied participation in any 
program administered by FCIC under the Act.
    Insurance provider. A reinsured company or FSA providing crop 
insurance coverage to producers participating in any Federal crop 
insurance program administered under the Act.
    Minor. Any person under 18 years of age. Court proceedings 
conferring majority on an individual under 18 years of age will result 
in such persons no longer being considered as a minor.
    Person. An individual, partnership, association, corporation, 
estate, trust, or other legal entity, and wherever applicable, a State, 
political subdivision, or an agency of a State.
    Policyholder. An applicant whose properly completed application for 
insurance under the crop insurance program has been accepted by FCIC or 
an insurance provider.
    Reinsurance agreement. An agreement between two parties by which an 
insurer cedes to a reinsurer certain liabilities arising from the 
insurer's sale of insurance policies.
    Reinsured company. A private insurance company having a Standard 
Reinsurance Agreement, or other reinsurance agreement, with FCIC, whose 
crop insurance policies are approved and reinsured by FCIC.
    Scheduled installment payment agreement. An agreement between a 
person and FCIC or the insurance provider to satisfy financial 
obligations of the person under conditions which modify the terms of the 
original debt.
    Settlement. An agreement between a person and FCIC or the insurance 
provider to resolve a dispute arising from a debt or other 
administrative determination.
    SSN. An individual's Social Security Number as required under 
section 6109 of the Internal Revenue Code of 1986.
    Standard Reinsurance Agreement (SRA). The primary reinsurance 
agreement between the reinsured company and FCIC.
    Substantial beneficial interest. An interest held by any person of 
at least 10 percent or more in the applicant or policyholder.
    System of records. Records established and maintained by FCIC and 
FSA containing SSN or EIN data, name, address, city and State, 
applicable policy numbers, and other information related to Federal crop 
programs as required by FCIC, from which information is retrieved by a 
personal identifier including the SSN, EIN, name, or other unique 
identifier of a person.

[62 FR 42042, Aug. 5, 1997, as amended at 63 FR 40631, July 30, 1998]



Sec. 400.678  Applicability.

    This subpart applies to any program administered by FCIC under the 
Act, including:
    (a) The catastrophic risk protection plan of insurance;
    (b) The limited and additional coverage plans of insurance as 
authorized under sections 508(c) and 508(m) of the Act; and
    (c) Private insurance products authorized under section 508(h) of 
the Act and reinsured by FCIC.



Sec. 400.679  Criteria for ineligibility.

    Any person may be determined to be ineligible to participate in any 
program administered by FCIC under the authority of the Act, if the 
person meets one or more of the following criteria:
    (a) Has a delinquent debt on a crop insurance policy, issued or 
reinsured by FCIC, or any delinquent debt due FCIC under the Act. Any 
person with a delinquent debt owed to FCIC or to the insurance provider 
shall be ineligible to participate in any program administered under the 
authority of the Act. Such determinations will be in accordance with 7 
CFR 400.459. The existence and delinquency of the debt must be 
verifiable.
    (b) Has violated the controlled substance (7 CFR part 718) 
provisions of the Food Security Act of 1985, as amended. Any person who 
violates the controlled substance provisions of the Food Security Act of 
1985, as amended, shall be ineligible to participate in any program 
administered under the Act.

[[Page 56]]

    (c) Has been disqualified under section 506(n) of the Act and 7 CFR 
part 400, subpart R. Any person who is disqualified in any 
administrative proceeding shall be ineligible to participate in any 
program administered under the Act. Ineligibility determinations 
resulting from administrative proceedings will not be stayed pending 
review. However, reversal of the determination will date back to the 
time of determination.



Sec. 400.680  Determination and notification of ineligibility.

    (a) The insurance provider must send a written notice of the debt to 
the person, including the time frame in which the debt must be paid, and 
provide the person with a meaningful opportunity to contest the amount 
or existence of the debt. After the insurance provider has evaluated the 
person's response, if any, and determined that the debt is owed and 
delinquent, the insurance provider should submit the documentation 
establishing the existence and amount of the debt to FCIC, including any 
response by the person.
    (b) If an insurance provider or any other authorized person has 
evidence that a person meets any other criteria set forth in Sec. 
400.679, they must submit the evidence to FCIC.
    (c) After FCIC verifies that the person has met one or more of the 
criteria stated in Sec. 400.679, FCIC will issue a Notice of 
Ineligibility and mail such notice to the person's last known address 
and to the insurance provider.
    (d) The Notice of Ineligibility will state the criteria upon which 
the determination of ineligibility has been based, a brief statement of 
the facts to support the determination, the time period of 
ineligibility, and the persons right to an appeal of the ineligibility 
determination.
    (e) Within 30 days of receiving the Notice of Ineligibility, any 
person receiving such a notice may appeal the determination of 
ineligibility to the National Appeals Division in accordance with 7 CFR 
part 11.
    (f) If the person appeals the determination of ineligibility to the 
National Appeals Division, the insurance provider will be notified and 
provided with an opportunity to participate in the proceeding if 
permitted by 7 CFR part 11.



Sec. 400.681  Effect of ineligibility.

    (a) The period of ineligibility will be effective:
    (1) For ineligibility as a result of a delinquent debt, the date the 
debt has been determined to be delinquent until the debt has been paid 
in full, discharged in bankruptcy, or the person has executed a 
scheduled installment payment agreement;
    (2) For ineligibility as a result of a violation of the controlled 
substance provisions of the Food Security Act of 1985, at the beginning 
of the crop year in which the producer was convicted and the four 
subsequent consecutive crop years; and
    (3) For ineligibility as a result of a disqualification under 
section 506(n) of the Act, the date that the Administrative Law Judge 
signs the order disqualifying the person until the period specified in 
the order of disqualification has expired.
    (b) Once the person has been determined to be ineligible:
    (1) All policies in which the ineligible person is the sole insured 
will be void for the period specified in Sec. 400.681(a);
    (2) If the ineligible person is a general partnership, all partners 
will be individually ineligible and any policy in which a partner has a 
100 percent interest will be void for the period specified in Sec. 
400.681(a). The partnership and all partners will be removed from any 
policy in which they have a substantial beneficial interest, and the 
policyholder share under the policies will be reduced commensurate with 
the ineligible person's share;
    (3) If the applicant or policyholder is a corporation, partnership, 
or other business entity, and an ineligible person has a substantial 
beneficial interest in the applicant or policyholder, the application 
may be accepted or existing policies remain in effect, although the 
ineligible person will be removed from the policies and the policyholder 
share under the policies will be reduced commensurate with the 
ineligible person's share;
    (4) If the applicant or policyholder is a corporation, partnership, 
or other business entity that was created to

[[Page 57]]

conceal the interest of a person in the farming operation or to evade 
the ineligibility determination of a person with a substantial 
beneficial interest in the applicant or policyholder, the corporation, 
partnership or other business entity will be disregarded, the individual 
shareholders or partners will be personally responsible, and any 
shareholder or partner that is ineligible will be removed from the 
policy and the policyholder share under the policies will be reduced 
commensurate with the ineligible person's share;
    (5) Any indemnities or payments made on a voided policy, or on the 
portion of the policy reduced because of ineligibility, will be declared 
overpayments and must be repaid; and
    (6) If the policy is voided, all producer paid premiums may be 
refunded, or if an ineligible person is removed from a policy, the 
portion of the producer paid premium commensurate with the ineligible 
person's share may be refunded, less a reasonable amount for expense and 
handling in accordance with 7 CFR 400.47.
    (c) The spouse and minor children of an individual are considered to 
be the same as the individual for purposes of this subpart except that:
    (1) The spouse who was actively engaged in farming in a separate 
farming operation will be a separate person with respect to that 
separate farming operation so long as that operation remains separate 
and distinct from any farming operation conducted by the other spouse 
(Transfers of interest in a farming operation from one spouse to another 
will not be considered as a separate farming operation.);
    (2) A minor child who is actively engaged in farming in a separate 
farming operation will be a separate person with respect to that 
separate farming operation if:
    (i) The parent or other entity in which the parent has a substantial 
beneficial interest does not have any interest in the minor's separate 
farming operation or in any production from such operation;
    (ii) The minor has established and maintains a separate household 
from the parent;
    (iii) The minor personally carries out the farming activities with 
respect to the minor's farming operation; and
    (iv) The minor establishes separate accounting and record keeping 
for the minor's farming operation.



Sec. 400.682  Criteria for reinstatement of eligibility.

    A person who has been determined ineligible may have eligibility 
reinstated as follows:
    (a) A delinquent debt owed on a crop insurance policy insured or 
reinsured by FCIC or any delinquent debt due FCIC. Eligibility may be 
reinstated after the debt is paid in full or discharged in bankruptcy, 
or the person has executed a scheduled installment payment agreement 
accepted by FCIC or the insurance provider. Eligibility may be 
reinstated as of the date the debt is paid, the date the agreement is 
accepted, or the date the debt is discharged in bankruptcy.
    (b) Violations of the controlled substance provisions of the Food 
Security Act of 1985, as amended. Eligibility may be reinstated after 
the period of ineligibility stated in Sec. 400.681 has expired.
    (c) Disqualification under section 506(n) of the Act. Eligibility 
may be reinstated when the period of disqualification determined in the 
administrative proceedings has expired and payment of all penalties and 
overpayments have been completed.
    (d) Timing of reinstatement of eligibility. After eligibility has 
been reinstated, the person must complete a new application for crop 
insurance coverage on or before the applicable sales closing date. If 
the date of reinstatement of eligibility occurs after the applicable 
sales closing date for the crop year, the person may not participate 
until the following crop year. If the National Appeals Division 
determines that the person should not have been placed on the Ineligible 
Tracking System, reinstatement will be effective at the beginning of the 
crop year for which the producer was listed on the Ineligible Tracking 
System and the person will be entitled to all applicable benefits under 
the policy.

[[Page 58]]



Sec. 400.683  Administration and maintenance.

    (a) Ineligible producer data will be maintained in a system of 
records in accordance with the Privacy Act, 5 U.S.C. 552a.
    (1) The Ineligible Tracking System is a record of all persons who 
have been determined to be ineligible for participation in any program 
pursuant to this subpart. This system contains identifying information 
of the ineligible person including, but not limited to, name, address, 
telephone number, SSN or EIN, reason for ineligibility, and time period 
for ineligibility.
    (2) Information in the Ineligible Tracking System may be used by 
Federal agencies, FCIC employees, contractors, and reinsured companies 
and their personnel who require such information in the performance of 
their duties in connection with any program administered under the Act. 
The information may be furnished to other users including, but not 
limited to, FCIC contracted agencies; credit reporting agencies and 
collection agencies; in response to judicial orders in the course of 
litigation; and other users as may be appropriate or required by law or 
regulation. The individual information will be made available in the 
form of various reports and notices produced from the Ineligible 
Tracking System, based on valid requests.
    (3) Supporting documentation regarding the determination of 
ineligibility and reinstatement of eligibility will be maintained by 
FCIC and FSA, or its contractors, reinsured companies, and Federal and 
State agencies. This documentation will be maintained consistent with 
the electronic information contained within the Ineligible Tracking 
System.
    (b) Information may be entered into the Ineligible Tracking System 
by FCIC or FSA personnel.
    (c) All persons applying for or renewing crop insurance contracts 
issued or reinsured by FCIC will be subject to validation of their 
eligibility status against the Ineligible Tracking System. Applications 
or benefits approved and accepted are considered approved or accepted 
subject to review of eligibility status in accordance with this subpart.



   Subpart V_Submission of Policies, Provisions of Policies, Rates of 
                  Premium, and Premium Reduction Plans

    Authority: 7 U.S.C. 1506(1), 1506(p).

    Source: 66 FR 47951, Sept. 17, 2001, unless otherwise noted.



Sec. 400.700  Basis, purpose, and applicability.

    (a) This subpart establishes guidelines for the submission of 
policies, plans of insurance, and rates of premium to the Board as 
authorized under section 508(h) of the Act and for nonreinsured 
supplemental policies in accordance with the SRA, and the roles and 
responsibilities of FCIC and the applicant. It also specifies the 
procedures for requesting reimbursement for research and development 
costs, and maintenance costs for products and the approval process.
    (b) The purpose of the premium reduction plan is to foster 
competition in the crop insurance program, thereby providing producers 
with an opportunity to receive a premium discount, as authorized in 
section 508(e)(3) of the Act. RMA has sought to accomplish this purpose, 
while still maintaining the financial stability of the delivery system 
and the integrity of the crop insurance program, by implementing a 
premium reduction plan where approved insurance providers participate in 
the premium reduction plan by requesting the opportunity to offer a 
premium discount and later requesting approval from RMA to pay a premium 
discount if the insurance provider has achieved an efficiency based on 
the actual savings it has attained through the reinsurance year.
    (1) Since the payment of any premium discount is determined based on 
actual reported cost information for the reinsurance year, and must be 
approved by RMA, the disclosure to policyholders of the amount of the 
premium discount and the payment of the premium discount will not occur 
until after the close of any given reinsurance year.
    (2) This premium reduction plan substantially limits the burden on 
approved insurance providers and RMA

[[Page 59]]

and provides for flexibility for approved insurance providers to choose 
the States in which they will offer premium discounts and vary the 
amount of premium discount between States.
    (3) Under the premium reduction plan, the payment and amount of 
premium discounts cannot be guaranteed, or identified as to amount or 
certainty of payment, in advance of the sale of an eligible crop 
insurance contract. However, producers will have the potential to 
receive monetary assistance in defraying the costs of their future 
premium.

[66 FR 47951, Sept. 17, 2001, as amended at 70 FR 41918, July 20, 2005; 
70 FR 44235, Aug. 2, 2005]



Sec. 400.701  Definitions.

    Act. The Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et 
seq.)
    Actuarial documents. The material for the crop or insurance year 
which is available for public inspection in your agent's office and 
published on RMA's website at http://www.rma.usda.gov/, or a successor 
website, and which shows available coverage levels, information needed 
to determine premium rates, premium adjustment percentages, practices, 
particular types or varieties of the insurable crop or agricultural 
commodity, insurable acreage or commodities, and other related 
information regarding crop insurance or other risk management plans of 
insurance in the county or state.
    Actuarially appropriate. Premium rates expected to cover anticipated 
losses and a reasonable reserve based on valid reasoning, an examination 
of available risk data, which for new products may be scarce but must 
still be of sufficient quality and quantity to reasonably determine the 
anticipated losses, or thorough knowledge or experience of the expected 
value of future costs associated with the risk to be transferred.
    Administrative and Operating (A&O) costs. The costs of the approved 
insurance provider, and any MGA and TPA, which are directly related to 
the delivery, loss adjustment and administration of the Federal crop 
insurance program. Costs associated with the sale or service of 
catastrophic risk protection (CAT) eligible crop insurance contracts in 
an amount equal to the loss adjustment expense subsidy for CAT eligible 
crop insurance contracts, ceding commission received for ceding any 
portion of the risk associated with any eligible crop insurance contract 
authorized under the authority of the Act with a reinsurer, and payments 
for the purchase of reinsurance and related credits are not considered 
as A&O costs.
    Administrative and Operating (A&O) subsidy. The subsidy for the 
administrative and operating expenses authorized by the Act and paid by 
FCIC on behalf of the producer to the approved insurance provider. Loss 
adjustment expense reimbursement paid by FCIC for CAT eligible crop 
insurance contracts, and any ceding commission received for ceding any 
portion of the risk associated with any eligible crop insurance contract 
authorized under the authority of the Act with a reinsurer are not 
considered as A&O subsidy.
    Agent. An individual licensed by the State in which an eligible crop 
insurance contract is sold and serviced for the reinsurance year, and 
who is employed by, or under contract with, the approved insurance 
provider, or its designee, to sell and service such eligible crop 
insurance contracts.
    Applicant. Any person or entity that submits a policy, plan of 
insurance, provisions of a policy or plan of insurance, or rates of 
premium to the Board for approval under section 508(h) of the Act.
    Approved insurance provider. A private insurance company that has 
been approved by FCIC to provide insurance coverage to producers 
participating in programs authorized by the Act.
    Approved procedures. The applicable handbooks, manuals, memoranda, 
bulletins or other directives issued by RMA or the Board. For purposes 
of Sec. Sec. 400.714 through 400.722 only, approved procedures include 
all provisions of the SRA.
    Board. The Board of Directors of FCIC.
    Compensation. The total amount of any guaranteed salary or payment, 
commission, or anything that has a quantifiable value or benefit that is 
not contingent on the existence of an underwriting gain of the approved 
insurance provider, including, but not

[[Page 60]]

limited to, the payment of health or life insurance, deferred 
compensation (including qualified and unqualified), finders fees, 
retainers, trip or travel expenses, dues or other membership fees, the 
use of vehicles, office space, equipment, staff or administrative 
support paid by the approved insurance provider or its contractor either 
directly or indirectly through a third party. Payments conditioned upon 
something other than the underwriting gains of the approved insurance 
provider are considered as compensation, such as bonuses or other 
conditional payments or commission based upon whether an agent timely 
turns in applications, production reports or acreage reports, etc. A 
profit sharing arrangement will be considered compensation unless and 
only to the extent that:
    (1) Such profit sharing arrangement contains a provision that would 
require a pro rata reduction in the amount or percentage of profit 
contained in such arrangement if the total amount of underwriting gain 
paid by FCIC for the applicable reinsurance year is not sufficient to 
cover the amount or percentage of profit; or
    (2) At least one of the required triggers for the payment under the 
profit sharing arrangement is that the approved insurance provider 
receives from FCIC an underwriting gain for its whole book of Federally 
reinsured crop insurance business for the applicable reinsurance year.
    Complete submission. A submission determined by the Board to contain 
all necessary and appropriate documentation in accordance with Sec. 
400.705 and is of sufficient quality to conduct a meaningful review.
    Complexity. Complexity takes into consideration such factors as 
originality, the number and type of factual determinations necessary to 
establish insurable interest, evaluate risk, and determine whether an 
indemnity is payable, the number of commodities and areas to which the 
product is applicable, the rating methodology, the number of risks 
covered, unique policy provisions or endorsements, the delivery process 
of the submission, and the process of creating rules, policy terms and 
conditions, underwriting procedures, rating methodologies, 
administrative and operating procedures, and supporting materials.
    Development. The process of drafting rules, new policy provisions, 
pricing and rating methodologies, administrative and operating 
procedures, systems and software, supporting materials, and 
documentation necessary to create and implement a proposed policy or 
coverage.
    Disinterested third party. A person who does not have any familial 
relationship (parents, brothers, sisters, children, spouse, 
grandchildren, aunts, uncles, nieces, nephews, first cousins, or 
grandparents, related by blood, adoption or marriage, are considered to 
have a familial relationship) with anyone employed or contracted by the 
applicant or who will not benefit financially from the approval of the 
submission.
    Efficiency. Monetary savings realized when the approved insurance 
provider's A&O costs are less than the amount of the A&O subsidy paid by 
FCIC. If the approved insurance provider is reducing agent compensation 
as a means to achieve an efficiency, not all of the efficiency can come 
from such reduction in agent compensation. Efficiency does not include 
any actual or projected underwriting gain earned from the SRA, private 
reinsurance revenues or expenses, or any investment returns on the 
approved insurance provider's reserves.
    Eligible crop insurance contract. An insurance contract for an 
agricultural commodity authorized by the Act and approved by FCIC, with 
terms and conditions in effect as of the applicable contract change 
date, which is sold and serviced consistent with the Act, FCIC 
regulations, and approved procedures having a sales closing date within 
the reinsurance year, and with an eligible producer.
    Eligible producer. A person who has an insurable interest in an 
agricultural commodity, who has not been determined ineligible to 
participate in the Federal crop insurance program, and who possesses a 
United States issued social security number (SSN), employer 
identification number (EIN), or such other identification as required by 
RMA.

[[Page 61]]

    Endorsement. A document that amends a policy reinsured under the Act 
in a manner that supplements or amends the insurance coverage provided 
by that policy.
    FCIC. The Federal Crop Insurance Corporation, a wholly owned 
government corporation within USDA.
    Maintenance. For the purposes of this subpart only, the process of 
continual support and improvement, as needed, for a policy or plan of 
insurance, including the periodic review of setting prices, updating 
premium rates or the rating methodology, updating or modifying policy 
terms and conditions, and any other actions necessary to provide 
adequate and meaningful protection for producers, ensure actuarial 
soundness, or to respond to statutory or regulatory changes.
    Maintenance costs. Specific expenses associated with the maintenance 
of a policy during the maintenance period.
    Maintenance period. A period of time that begins on the date the 
Board approves the submission for maintenance and ends on the date that 
is not more than four reinsurance years after such approval.
    Manager. The Manager of FCIC.
    Managing General Agent (MGA). An entity that meets the definition of 
managing general agent under the laws of the State in which such entity 
is incorporated and in every other State in which it operates, or in the 
absence of such State law or regulation, meets the definition of a 
managing general agent or agency in the National Association of 
Insurance Commissioners Managing General Agents Act, or successor Act.
    Marketable. A determination by the Board that a sufficient number of 
producers will purchase the product and approved insurance providers 
will sell the product to make it economical, based on credible evidence 
provided by the applicant and any other relevant information.
    Marketing plan. A detailed, written plan that identifies, at a 
minimum, the expected number of potential buyers, premium, liability, a 
prescribed insurance year cycle, the data upon which such information is 
based, such data may include, but is not limited to, focus group 
results, market research studies, qualitative market estimates, effects 
upon the delivery system or ancillary participants, correspondence from 
producers expressing the need for such policy or plan of insurance, 
responses from a reasonable representative cross-section of producers to 
be effected by the policy or plan of insurance demonstrating the number 
of producers likely interested in purchasing the product, and a 
commitment from at least one approved insurance provider to sell and 
support such a policy or plan of insurance.
    Multiple peril crop insurance (MPCI). All insurance policies 
reinsured by FCIC that offers coverage for loss of production, loss of 
revenue, or both.
    National Agricultural Statistics Service (NASS). An agency of the 
United States Department of Agriculture, or a successor agency.
    Nonreinsured supplemental policy (NRS). A policy, endorsement or 
other risk management tool that is not reinsured under the Act, or has 
not been submitted to FCIC under section 508(h) of the Act, that offers 
additional coverage, other than loss related to hail, to a policy or 
plan of insurance that is reinsured by FCIC.
    Non-significant changes. Minor changes to the policy or plan of 
insurance, such as technical corrections, that do not affect the rating 
or pricing methodologies, the amount of subsidy owed, the amount or type 
of coverage, the interests of producers, FCIC's reinsurance risk, or any 
condition that does not affect liability or the amount of loss to be 
paid under the policy. Statutory or regulatory requirements are included 
in this category regardless of impact.
    Plan of insurance. A class of policies, such as MPCI or Group Risk 
Plan of Insurance, that offers a specific type of coverage to one or 
more agricultural commodities.
    Plan of Operations. The documents and information the approved 
insurance provider must submit in accordance with section IV.F.2. and 
Appendix II of the SRA and applicable approved procedures.
    Policy. A contract for insurance that includes an accepted 
application, Basic Provisions, applicable Commodity Provisions, other 
applicable options and endorsements, the Special Provisions,

[[Page 62]]

related materials, and the applicable regulations published in 7 CFR 
chapter IV.
    Premium discount. A payment made by the approved insurance provider 
to the policyholder to help defray the cost of premium, in an amount 
equal to the dollar amount or corresponding percentage of net book 
premium approved by RMA, as authorized by section 508(e)(3) of the Act.
    Profit sharing arrangement. An arrangement to make a payment to an 
employee, agent, loss adjuster or other contractor conditioned upon 
whether the approved insurance provider receives an underwriting gain on 
the crop insurance business. Payments made to commercial reinsurers or 
ceding commissions paid to the approved insurance provider for the 
reinsurance year for the crop insurance book of business are not 
considered as profit sharing arrangements for the purposes of 
determining A&O costs or A&O subsidy.
    Reduction in service. When the approved insurance provider, agent 
and loss adjuster, or any other contractor or employee of the approved 
insurance provider that assists in or provides any service for a 
Federally reinsured eligible crop insurance contract, sells, services or 
administers such eligible crop insurance contracts at a level of service 
less than that required under all applicable regulations and approved 
procedures. A violation of a provision in an approved procedure will be 
considered to be a reduction in service.
    Rate of premium. The dollar amount per insured unit or percentage 
rate per dollar of liability that is needed to pay anticipated losses 
and provide a reasonable reserve.
    Related material. The actuarial documents for the insured 
agricultural commodity and any underwriting or loss adjustment manual, 
handbook, form or other information needed to administer the policy.
    Research. For the purposes of development, the gathering of 
information related to: Producer needs and interests; the marketability 
of the policy or plan of insurance; the appropriate policy terms, 
premium rates, price elections, administrative and operating procedures, 
supporting materials, and the documentation, systems and software 
necessary to implement a policy or plan of insurance. Gathering of 
information to determine whether it is feasible to expand a policy or 
plan of insurance to a new area or to cover a new commodity under the 
same policy terms and conditions, price, and premium rates is not 
considered research.
    Research and development costs. Specific expenses incurred and 
directly related to the research and development of a submission, as 
initially approved by the Board.
    Risk Management Agency (RMA). An agency of USDA responsible for the 
administration of all programs authorized under the Act and other 
authorities.
    Risk subsidy. The portion of the approved premium paid by FCIC on 
behalf of the insured person.
    Sales closing date. The final calendar date on which an approved 
insurance provider may accept an application by a producer for 
insurance.
    Secretary. The Secretary of the United States Department of 
Agriculture.
    Significant change. Any change to the policy or plan of insurance 
that may affect the rating and pricing methodologies, the amount of 
subsidy owed, the amount of coverage, the interests of producers, FCIC's 
reinsurance risk, or any condition that may affect liability or the 
amount of loss to be paid under the policy.
    Special Provisions. The part of the policy that contains specific 
provisions of insurance for each insured commodity that may vary by 
geographic area.
    Standard Reinsurance Agreement (SRA). The reinsurance agreement 
between FCIC and the approved insurance provider, under which the 
approved insurance provider is authorized to sell and service the 
eligible crop insurance contracts for which the premium discount is 
proposed. All references to the SRA will also include any other 
reinsurance agreements entered into with FCIC, including the Livestock 
Price Reinsurance Agreement, unless otherwise stated in such reinsurance 
agreement.
    Submission. A policy, plan of insurance, provision of a policy or 
plan of

[[Page 63]]

insurance, or rates of premium provided by an applicant to FCIC in 
accordance with the requirements of this subpart.
    Third Party Administrator (TPA). A person or organization that 
processes claims or performs other administrative services and holds 
licenses, as applicable, in States in which services are provided with 
respect to the Federal crop insurance business in accordance with a 
service contract or an affiliate or any other type of relationship.
    Underwriting gain. For the purposes of the premium reduction plan, 
the amount of gains paid under section II.B.10. of the SRA less any 
amounts paid from such gains, including but not limited to payments to 
commercial reinsurers, taxes, licensing fees, payments to parent 
companies or subsidiaries, etc., and any costs incurred by the approved 
insurance provider in excess of the A&O subsidy related to the delivery, 
service, loss adjustment and administration of the Federal crop 
insurance program.
    Unfair discrimination. An approved insurance provider's 
implementation of the premium reduction plan will be considered unfairly 
discriminatory to a producer if the availability of eligible crop 
insurance contracts sold under the premium reduction plan, or the 
percentage of net book premium upon which the premium discount is paid, 
is based on the loss history of the producer, the amount of premium 
earned under the eligible crop insurance contract, the producer's size 
of the operation or number of acres to be insured, or precludes in any 
manner producers from participating in the premium reduction plan in a 
State where an approved insurance provider is eligible for the 
opportunity to offer a premium reduction plan.
    USDA. The United States Department of Agriculture.
    User fees. Fees, approved by the Board, that can be charged to 
approved insurance providers for use of a policy or plan of insurance.

[66 FR 47951, Sept. 17, 2001, as amended at 70 FR 41918, July 20, 2005; 
70 FR 44235, Aug. 2, 2005]



Sec. 400.702  Confidentiality of submission and duration of confidentiality.

    (a) Prior to approval by the Board, any submission made to the Board 
under section 508(h) of the Act, including any information generated 
from the submission, will be considered confidential commercial or 
financial information for purposes of 5 U.S.C. 552(b)(4) and will not be 
released by FCIC to the public, unless the applicant authorizes such 
release in writing.
    (b) Once the Board approves a submission, all information provided 
with the submission, or generated in the approval process, may be 
released to the public, including any mathematical modeling and data, 
unless it remains confidential business information under 5 U.S.C. 
552(b).
    (c) Any submission disapproved by the Board will remain confidential 
commercial or financial information in accordance with 5 U.S.C. 552(b) 
and no information related to such submission will be released by FCIC 
unless authorized in writing by the applicant.
    (d) In the submission, the applicant must state if the name of the 
submission may be used in Board documents including but not limited to 
the agenda, minutes, and Board memoranda. The applicant cannot use false 
names to mislead the public regarding the nature of the submission. If 
permission is not given to use the name of the submission, the 
submission will simply be referred to as a ``Section 508(h) 
submission.''

[66 FR 47951, Sept. 17, 2001, as amended at 70 FR 44236, Aug. 2, 2005]



Sec. 400.703  Timing of submission.

    (a) A submission may only be provided to FCIC, in either a hard copy 
or electronic format, during the first 5 business days of January, 
April, July, and October.
    (b) Any submission not provided within the first 5 business days of 
a month stated in paragraph (a) of this section, will be considered to 
have been provided the next month stated in paragraph (a). For example, 
if an applicant provides a submission on January 10, it will be 
considered to have been received on April 1.

[[Page 64]]

    (c) Any submission must be provided to the Deputy Administrator, 
Research and Development (or any successor), Risk Management Agency, 
6501 Beacon Drive, Stop 0812, Kansas City, MO 64133-4676, not later than 
240 days prior to the earliest proposed sales closing date to be 
considered for sale in the requested crop year.
    (d) The Board, or RMA if authorized by the Board, shall determine 
when sales can begin for a submission approved by the Board.

[70 FR 44236, Aug. 2, 2005]



Sec. 400.704  Type of submission.

    (a) An applicant may submit to the Board in accordance with Sec. 
400.705:
    (1) A policy or plan of insurance not currently reinsured by FCIC;
    (2) One or more proposed revisions to a policy or plan of insurance 
authorized under the Act; or
    (3) Rates of premium for any policy or plan of insurance authorized 
under the Act.
    (b) An applicant must submit to the Board any significant change to 
a previously approved submission prior to making the change.



Sec. 400.705  Contents required for a new submission or changes to a 

previously approved submission.

    (a) A complete submission must contain the following material, as 
applicable, in the order given, in a three ring binder, with a table of 
contents, page numbers, and section dividers clearly labeling each 
section or in an electronic format that when printed will be an exact 
duplicate of the information that would have been found in the three-
ring binder with the exception of section dividers.
    (1) If a hard copy of the submission is provided, it must include 
six identical copies provided to the Deputy Administrator, Research and 
Development (or successor), Risk Management Agency, 6501 Beacon Drive, 
Stop 0812, Kansas City, MO 64133-4676, and one identical copy of the 
submission provided to the Administrator, Risk Management Agency, 1400 
Independence Ave., Stop 0801, Room 3053 South Building, Washington, DC 
20250-0801.
    (2) Electronic submissions must be sent to the Deputy Administrator, 
Research and Development (or successor) at 
DeputyAdministrator@rma.usda.gov and the Administrator at 
Administrator@rma.usda.gov.
    (b) The first section will contain general information, including, 
as applicable:
    (1) The applicant's name, address or primary business location, 
phone number, and e-mail address;
    (2) The type of submission (see Sec. 400.704);
    (3) A statement of whether the applicant is requesting:
    (i) Reinsurance, which includes risk subsidy and A&O subsidy;
    (ii) Reimbursement for research and development costs, as 
applicable; or
    (iii) Reimbursement for maintenance costs, as applicable;
    (4) The proposed agricultural commodities, including types, 
varieties, and practices covered by the submission;
    (5) The crop and reinsurance years in which the submission is 
proposed to be available for purchase by producers;
    (6) The proposed sales closing date, if applicable, or if not 
applicable, the earliest date the applicant expects to release the 
product to the public;
    (7) The proposed duration and scope of the plan of insurance;
    (8) A marketing plan;
    (9) Any known or anticipated future expansion plans;
    (10) Identification, including names, addresses, telephone numbers, 
and e-mail addresses, of the persons responsible for:
    (i) Addressing questions regarding the policy, underwriting rules, 
loss adjustment procedures, rate and price methodologies, data 
processing and record-keeping requirements, and any other questions that 
may arise in administering the program after it is approved; and
    (ii) Annual reviews to ensure compliance with all requirements of 
the Act, this subpart, and any agreements executed between the applicant 
and FCIC; and
    (11) A statement of whether the submission will be filed with the 
applicable office responsible for regulating insurance in each state 
proposed for insurance coverage, and if not, reasons

[[Page 65]]

why the submission will not be filed for review.
    (c) The second section must contain the benefits of the plan, 
including, as applicable, a statement about the plan that demonstrates:
    (1) How the submission offers coverage or other benefits not 
currently available from existing public and private programs;
    (2) The projected demand for the submission, which must be supported 
by information from market research, producers or producer groups, 
agents, lending institutions, and other interested parties that provide 
verifiable evidence of demand; and
    (3) How the submission meets public policy goals and objectives 
consistent with the Act and other laws, as well as policy goals 
supported by USDA and the Federal Government.
    (d) Except as provided in this section, the third section must 
contain the policy, including, as applicable:
    (1) If the submission involves a new insurance policy or plan of 
insurance:
    (i) All applicable policy provisions; and
    (ii) A list and description of any additional coverage that may be 
elected by the insured, including how such coverage may be obtained; and
    (2) If the submission involves a change to a previously approved 
policy, plan of insurance, or rates of premium, the proposed revisions, 
rationale for each change, data and analysis supporting each change, the 
impact of each change, and the impact of all changes in aggregate.
    (e) The fourth section must contain the information related to the 
marketing of the policy or plan of insurance, including, as applicable:
    (1) A list of counties and states where the submission is proposed 
to be offered;
    (2) The amount of commodity (acres, head, board feet, etc.), the 
amount of production, and the value of each agricultural commodity 
proposed to be covered in each proposed county and state;
    (3) The expected liability and premium for each proposed county and 
state;
    (4) If available, any insurance experience for each year and in each 
proposed county and state in which the policy has been previously 
offered for sale including an evaluation of the policy's performance 
and, if data are available, a comparison with other similar insurance 
policies reinsured under the Act;
    (5) Focus group results;
    (6) Market research studies;
    (7) Qualitative market estimates;
    (8) Affects upon the delivery system or ancillary participants;
    (9) Correspondence from producers expressing the need for such 
policy or plan of insurance;
    (10) Responses from a reasonable representative cross-section of 
producers to be affected by the policy or plan of insurance; and
    (11) Commitment in writing from at least one approved insurance 
provider to sell and support the policy or plan of insurance.
    (f) The fifth section must contain the information related to the 
underwriting and loss adjustment of the submission, including as 
applicable:
    (1) Detailed rules for determining insurance eligibility, including 
all producer reporting requirements;
    (2) Relevant dates, if not included in the proposed policy;
    (3) Detailed examples of the data and calculations needed to 
establish the insurance guarantee, liability, and premium per acre or 
other unit of measure, including worksheets that provide the 
calculations in sufficient detail and in the same order as presented in 
the policy to allow verification that the premiums charged for the 
coverage are consistent with policy provisions;
    (4) Detailed examples of calculations used to determine indemnity 
payments for all probable situations where a partial or total loss may 
occur;
    (5) A detailed description of the causes of loss covered by the 
policy or plan of insurance and any causes of loss excluded;
    (6) Any statements to be included in the actuarial documents; and
    (7) The loss adjustment standards handbook for the policy or plan of 
insurance that includes:
    (i) A table of contents and introduction;
    (ii) A section containing abbreviations, acronyms, and definitions;

[[Page 66]]

    (iii) A section containing insurance contract information 
(insurability requirements; crop provisions not applicable to 
catastrophic risk protection; specific unit division guidelines, if 
applicable; notice of damage or loss provisions; quality adjustment 
provisions; etc);
    (iv) A section that thoroughly explains appraisal methods, if 
applicable;
    (v) Illustrative samples of all the applicable forms needed for 
insuring and adjusting losses in regards to the product plus detailed 
instructions for their use and completion;
    (vi) Instructions, examples of calculations, and loss adjustment 
procedures that are necessary to establish the amounts of coverage and 
loss;
    (vii) A section containing any special coverage information (i.e., 
replanting, tree replacement or rehabilitation, prevented planting, 
etc.), as applicable; and
    (viii) A section containing all applicable reference material (i.e., 
minimum sample requirements, row width factors, etc.).
    (g) The sixth section must contain information related to prices and 
rates of premium, including, as applicable:
    (1) A list of all assumptions made in the premium rating and 
commodity pricing methodologies, and the basis for these assumptions;
    (2) A detailed description of the pricing and rating methodologies, 
including supporting documentation, all mathematical formulas, 
equations, and data sources used in determining rates and prices and an 
explanation of premium components that detail how rates were determined 
for each component, that demonstrate the rate is appropriate;
    (3) An example of both a rate calculation and a price calculation;
    (4) A discussion of the applicant's objective evaluation of the 
reliability of the data;
    (5) An analysis of the results of simulations or modeling showing 
the performance of proposed rates and commodity prices, as applicable, 
based on one or more of the following (Such simulations must use all 
years of experience available to the applicant);
    (i) A recalculation of total premium and losses compared to a 
similar or comparable insurance plan offered under the authority of the 
Act with modifications, as needed, to represent the components of the 
submission;
    (ii) A simulation based on the probability distributions used to 
develop the rates and commodity prices, as applicable, including 
sensitivity tests that demonstrate price or yield extremes, and the 
impact of inappropriate assumptions; or
    (iii) Any other comparable simulation that provides results 
indicating both aggregate and individual performance of the submission 
under various scenarios depicting good and poor actuarial experience; 
and
    (6) A simulation of expected losses capturing both a probable loss 
and a total loss.
    (h) The seventh section must contain an evaluation and certification 
from a disinterested third party who is an accredited associate or 
fellow of the Casualty Actuarial Society, or other similarly qualified 
professional, who certifies the submission is actuarially appropriate 
and consistent with appropriate insurance principles and practices.
    (i) The eighth section must contain all forms applicable to the 
submission, including:
    (1) An application for insurance and procedures for accepting the 
application; and
    (2) All applicable policy forms, instructions and procedures that 
are necessary to establish the amounts of coverage or loss.
    (j) The ninth section must contain the following:
    (1) A statement specifying sales will not commence for any new or 
revised submission until at least 60 days after all policy provisions 
and related material are released to the public by RMA, unless otherwise 
specified by the Board;
    (2) An explanation of any provision of the policy not authorized 
under the Act and identification of the portion of the rate of premium 
due to these provisions;
    (3) Agent and loss adjuster training plans; and

[[Page 67]]

    (4) A certification from the applicant's legal counsel that the 
submission meets and complies with all requirements of the Act, 
applicable regulations, and any reinsurance agreement.
    (k) The tenth section must contain a written plan, including 
specifications and details for the systems and software development 
necessary for the implementation of the submission, if applicable, and 
the documents that demonstrate the submitter has the capability and 
resources to develop systems that comply in all respects with the 
standards established for processing and acceptance of data by the FCIC 
Data Acceptance System, or successor system, unless otherwise authorized 
by FCIC. Unless otherwise determined by FCIC, the applicant must consult 
with FCIC to determine whether their submission can be implemented and 
administered through the current system;
    (1) If FCIC approves the submission and determines that its system 
has the capacity to implement and administer the submission, the 
applicant must provide acceptable computer requirements, code and 
software, consistent with that used by FCIC, to facilitate the 
acceptance of producer applications and all related data;
    (2) If FCIC approves the submission and determines that its system 
lacks the capacity to implement and administer the submission, the 
applicant must provide acceptable computer systems, requirements, code 
and software necessary to implement and administer the policy or plan of 
insurance;
    (3) Any computer systems, requirements, code and software must be 
consistent with that used by FCIC and comply with the standards 
established in Appendix III, or any successor document, of the Standard 
Reinsurance Agreement or other reinsurance agreement as specified by 
FCIC; and
    (4) These requirements are available from the Risk Management 
Agency, 6501 Beacon Drive, Stop 0812, Kansas City, MO, 64133-4676 or on 
RMA's Web site at http://www.rma.usda.gov/data/#m13, or a successor 
website.
    (l) The eleventh section must contain a training package. The 
training package must include a thorough discussion, explanations, 
written exercises, and examples covering the following topics:
    (1) Basic and catastrophic risk protection policy provisions;
    (2) The commodity provisions and any endorsements;
    (3) Underwriting under the underwriting guide;
    (4) Eligibility requirements;
    (5) Guarantee, indemnity, and premium calculations;
    (6) Special Provisions of Insurance;
    (7) Actuarial documents;
    (8) Loss adjustment under the loss adjustment standards handbook;
    (9) Applicable additions to the Crop Insurance Handbook (CIH); and
    (10) Applicable additions to the Loss Adjustment Manual (LAM).
    (m) The twelfth section submitted on separate pages and in 
accordance with Sec. 400.712 must specify:
    (1) On one page, the total estimated amount that will be requested 
for reimbursement of research and development costs (for new products 
only) or the estimated amount for maintenance costs for the year for 
which the submission will be effective (for products that are within the 
maintenance period); and
    (2) On another page, a comprehensive estimate of maintenance costs 
for each future year of the maintenance period and the basis for which 
such maintenance costs will be incurred, including, but not limited to:
    (i) Any anticipated expansion;
    (ii) The generation of rates, Special Provisions, underwriting 
rules, etc;
    (iii) The determination of prices; and
    (iv) Any other costs that the applicant anticipates will be 
requested for reimbursement.
    (n) The thirteenth section must contain executed certification 
statements in accordance with the following:
    (1) ``{Applicant's Name{time}  hereby claim that the amounts set 
forth in this section and Sec. 400.712 are correct and due and owing to 
{Applicant's Name{time}  by FCIC under the Federal Crop Insurance Act''; 
and
    (2) ``{Applicant's Name{time}  understands that, in addition to 
criminal fines and imprisonment, the submission of false or fraudulent 
statements or claims

[[Page 68]]

may result in civil and administrative sanctions.''

[70 FR 44236, Aug. 2, 2005]



Sec. 400.706  Review of submission.

    (a) Prior to providing the submission to the Board to determine 
whether it is a complete submission, RMA will:
    (1) Review the submission to determine if all necessary and 
appropriate documentation is included in accordance with Sec. 400.705;
    (2) Review the submission to determine whether the submission is of 
sufficient quality to conduct a meaningful review;
    (3) Inform the applicant of the information RMA deems necessary for 
the submission to comply with paragraphs (a)(1) and (2) of this section; 
and
    (4) Forward the submission and the results of RMA's initial review 
to the Board.
    (b) Upon the Board's receipt of the submission, the Board will:
    (1) Determine if the submission is a complete submission (The date 
the Board votes to contract with independent reviewers is the date the 
submission is deemed to be a complete submission for the start of the 
120 day time-period for approval);
    (2) Forward the complete submission to at least five independent 
persons with underwriting or actuarial experience to review the 
submission:
    (i) Of the five reviewers, no more than one will be employed by the 
Federal Government, and none may be employed by any approved insurance 
provider or their representative; and
    (ii) The reviewers will each provide their assessment of whether the 
submission protects the interest of agricultural producers and 
taxpayers, is actuarially appropriate, follows appropriate insurance 
principles, meets the requirements of the Act, does not contain 
excessive risks, follows sound, reasonable, and appropriate underwriting 
principles, as well as other items the Board may deem necessary;
    (3) Return to the applicant any submission the Board determines is 
not a complete submission, and provide documentation to the applicant 
explaining such. If the submission is resubmitted at a later date, it 
will be considered a new submission;
    (4) For all complete submissions:
    (i) Request review of the submission by RMA to provide its 
assessment of whether:
    (A) The submission protects the interests of agricultural producers 
and taxpayers, is actuarially appropriate, follows appropriate insurance 
principles, meets the requirements of the Act, does not contain 
excessive risks, is consistent with USDA's public policy goals, does not 
increase or shift risk to any other FCIC reinsured policy, offers 
coverage that is similar to another policy or plan of insurance and if 
the producer would further benefit from the submission and can be 
administered and delivered efficiently and effectively;
    (B) The marketing plan is reasonable;
    (C) RMA has the resources to consider, implement, and administer the 
submission; and
    (D) The requested amount of government reinsurance, risk subsidy, 
and administrative and operating subsidies is reasonable and appropriate 
for the type of coverage provided by the policy submission; and
    (ii) Seek review from the Office of the General Counsel (OGC) to 
determine if the submission conforms to the requirements of the Act and 
all applicable Federal regulations.
    (c) All comments and evaluations will be provided to the Board by a 
date determined by the Board to allow the Board adequate time for 
review.
    (d) The Board will consider all comments, evaluations, and 
recommendations in its review process. Prior to making a decision, the 
Board may request additional information from RMA, OGC, the independent 
reviewers, or the applicant.
    (e) An applicant may request, at any time, a time delay before the 
Board provides a notice of intent to disapprove the submission. The 
Board is not required to agree to such an extension.
    (1) Any requested time delay will not be limited in the length of 
time or the number of delays. However, delays may make implementation of 
the submission for the targeted crop year impractical or impossible.
    (2) The time period during which the Board must make a decision to 
approve

[[Page 69]]

or disapprove shall be extended commensurately with any time delay 
requested by the applicant.
    (3) If the Board agrees to an extension of time, the Board and the 
applicant must agree to a time period in which the Board must make its 
decision to approve or disapprove after the expiration of any requested 
time delay.
    (f) The applicant may withdraw a submission or a portion of a 
submission at any time by written request to the Board. A withdrawn 
submission that is resubmitted will result in the submission being 
deemed a new submission for the purpose of determining the amount of 
time that the Board must act on such submission.
    (g) The Board will render a decision to approve the submission with 
or without revision or give notice of intent to disapprove within 90 
days after the date the submission is considered complete by the Board 
in accordance with paragraph (b)(1) of this section, unless the 
applicant and Board agree to a time delay in accordance with paragraph 
(e) of this section.
    (h) The Board may disapprove a submission if it determines that:
    (1) The interests of producers and taxpayers are not protected, 
including but not limited to:
    (i) The submission does not provide adequate coverage or treats 
producers disparately;
    (ii) The applicant has not presented sufficient documentation that 
the submission is marketable;
    (iii) Coverage would be similar to another policy or plan of 
insurance and the producer would not further benefit from the 
submission; or
    (iv) The resources of FCIC or RMA are not sufficient to support the 
review and implementation of the product;
    (2) The premium rates are not actuarially appropriate;
    (3) The submission does not conform to sound insurance and 
underwriting principles;
    (4) The risks associated with the submission are excessive or it 
increases or shifts risk to any other FCIC reinsured policy;
    (5) The submission does not meet the requirements of the Act or is 
not in accordance with USDA's public policy goals; or
    (6) There is insufficient time before the submission would become 
effective under section 508(h) of the Act for the Board to make an 
informed decision with respect to whether the interests of producers are 
protected, the premium rates are actuarially appropriate, or the risks 
associated with the submission are excessive;
    (i) If the Board intends to disapprove the submission, the applicant 
will be notified in writing at least 30 days prior to the Board taking 
such action. The Board will provide the applicant with a written 
explanation for the intent to disapprove the submission.
    (j) After written notice of intent to disapprove all or part of a 
submission has been provided by the Board, the applicant must provide 
written notice to the Board not later than 30 days after the Board 
provided such notice, if the submission will be modified. Except as 
provided in paragraph (j)(3) of this section, the applicant must also 
include an anticipated date that the modification will be provided to 
the Board. If the applicant does not respond within the 30-day period, 
the Board will send the applicant a letter stating the submission is 
disapproved.
    (1) If the modification is in direct response to reviewer comments, 
the Board may act on the modification immediately or seek further review 
within the 30-day time period allowed.
    (2) The Board will approve or disapprove a modified submission not 
later than 30 days after receiving a modified submission from the 
applicant, unless the applicant and the Board agree to a time delay. If 
a time delay is agreed upon, the time period during which the Board must 
act on the modified submission will not be in effect during the delay.
    (3) The Board will disapprove a modified submission if:
    (i) All causes for disapproval stated by the Board in its 
notification of intent to disapprove the submission are not 
satisfactorily addressed;
    (ii) Insufficient time is available for review of the modified 
submission to determine whether all causes for disapproval have been 
satisfactorily addressed; or

[[Page 70]]

    (iii) Modification is so substantial that the Board determines that 
additional independent review is required and a time delay can not be 
agreed upon to allow for such review.
    (k) A submission will be disapproved if the applicant does not 
present a modification of the submission to the Board on the date the 
applicant anticipated presenting the modification or does not request an 
additional time delay.
    (l) If the Board fails to take action on a new submission within the 
prescribed 90-day period in paragraph (g) of this section, or within the 
time period in accordance with paragraph (e)(3) of this section after 
receiving the revised submission, such submission will be deemed 
approved by the Board for the initial reinsurance year designated for 
the submission. The Board must approve the submission for it to be 
available for any subsequent reinsurance year.

[70 FR 44238, Aug. 2, 2005]



Sec. 400.707  Presentation to the Board for approval or disapproval.

    (a) The Board will inform the applicant of the date, time, and place 
of the Board meeting.
    (b) The applicant will be given the opportunity and is encouraged to 
present the submission to the Board in person. The applicant must 
confirm, in writing, whether the applicant will present the submission 
to the Board.
    (c) If the applicant elects, at any time, not to present the 
submission to the Board, the Board will make its decision based on the 
submission and the reviews provided in accordance with Sec. 400.706(b).

[66 FR 47951, Sept. 17, 2001, as amended at 70 FR 44239, Aug. 2, 2005]



Sec. 400.708  Approved submission.

    (a) After a submission is approved by the Board, and prior to it 
being made available for sale to producers, the following items, as 
applicable, must be completed:
    (1) If FCIC requires, an agreement between the applicant and FCIC 
that specifies:
    (i) The responsibilities of each with respect to the implementation, 
delivery and oversight of the submission; and
    (ii) That the property rights to the submission automatically 
transfers to FCIC if the applicant elects not to maintain the submission 
and FCIC has paid any amounts under Sec. 400.712.
    (2) A reinsurance agreement if terms and conditions differ from the 
available existing reinsurance agreements.
    (b) A submission approved by the Board under this subpart will be 
made available to all approved insurance providers under the same 
reinsurance and subsidy terms and conditions as received by the 
applicant.
    (c) Any solicitation, sales, marketing, or advertising of the 
approved submission by the applicant before FCIC has made the submission 
and related materials available to all interested parties through its 
official issuance system will result in the denial of reinsurance, risk 
subsidy, and A&O subsidy for those policies affected.

[66 FR 47951, Sept. 17, 2001, as amended at 70 FR 44239, Aug. 2, 2005]



Sec. 400.709  Roles and responsibilities.

    (a) With respect to the applicant:
    (1) The applicant is responsible for:
    (i) Preparing and ensuring that all policy documents, rates of 
premium, and supporting materials, including actuarial documents, are 
submitted to FCIC in the form approved by the Board;
    (ii) Annually updating and providing maintenance changes no later 
than 180 days prior to the earliest contract change date for the 
commodity in all counties or states in which the policy or plan of 
insurance is sold, unless FCIC assumes maintenance of the product;
    (iii) Addressing responses to procedural issues, questions, problems 
or clarifications in regard to a policy or plan of insurance (all such 
resolutions will be communicated to all approved insurance providers 
through FCIC's official issuance system); and
    (iv) Annually reviewing the policy's performance and providing a 
report on the policy's performance to the Board by each anniversary date 
of when the product was first available to be purchased by the public;

[[Page 71]]

    (2) Only the applicant may make changes to the policy, plan of 
insurance, or rates of premium approved by the Board (Any changes, both 
non-significant and significant, must be submitted to FCIC no later than 
180 days prior to the earliest contract change date for the commodity in 
all counties or states in which the policy of plan of insurance is sold. 
Significant changes must be submitted to the Board for review in 
accordance with this subpart and will be considered as a new 
submission);
    (3) Except as provided in paragraph (a)(4) of this section, the 
applicant is solely liable for any mistakes, errors, or flaws in the 
submitted policy, plan of insurance, their related materials, or the 
rates of premium that have been approved by the Board unless the policy 
or plan of insurance is transferred to FCIC. The applicant remains 
liable for any mistakes, errors, or flaws that occurred prior to 
transfer of the policy or plan of insurance to FCIC;
    (4) If the mistake, error, or flaw in the policy, plan of insurance, 
their related materials, or the rates of premium is discovered not less 
than 45 days prior to the cancellation or termination date for the 
policy or plan of insurance, the applicant may request in writing that 
FCIC withdraw the approved policy, plan of insurance, or rates of 
premium:
    (i) Such request must state the discovered mistake, error, or flaw 
in the policy, plan of insurance, or rates of premium, and the expected 
impact on the program; and
    (ii) For all timely received requests for withdrawal, no liability 
will attach to such policies, plans of insurance, or rates of premium 
that have been withdrawn and no producer, approved insurance provider or 
any other person will have a right of action against the applicant; and
    (5) Notwithstanding the policy provisions regarding cancellation, 
any policy, plan of insurance, or rates of premium that have been 
withdrawn by the applicant in accordance with paragraph (a)(4) of this 
section is deemed canceled and applications deemed not accepted as of 
the date that FCIC publishes the notice of withdrawal on its website at 
www.rma.usda.gov; and
    (i) Approved insurance providers will be notified in writing by FCIC 
that the policy, plan of insurance, or premium rates have been 
withdrawn; and
    (ii) Producers will have the option of selecting any other policy or 
plan of insurance authorized under the Act that is available in the area 
by the sales closing date for such policy or plan of insurance; and
    (6) Failure of the applicant to perform the applicant's 
responsibilities may result in the denial of reinsurance for the policy 
or plan of insurance.
    (b) With respect to FCIC:
    (1) FCIC is responsible for:
    (i) Conducting the best review of the submission possible in the 
time allowed;
    (ii) Ensuring that all approved insurance providers receive the 
approved policy or plan of insurance, and related material, for sale to 
producers in a timely manner (All such information shall be communicated 
to all approved insurance providers through FCIC's official issuance 
system);
    (iii) Ensuring that all approved insurance providers receive 
reinsurance under the same terms and conditions as the applicant 
(approved insurance providers should contact FCIC to obtain and execute 
a copy of the reinsurance agreement) if required; and
    (iv) Reviewing the activities of approved insurance providers, 
agents, loss adjusters, and producers to ensure that they are in 
accordance with the terms of the policy or plan of insurance, the 
reinsurance agreement, and all applicable procedures;
    (2) The Board may limit the availability of coverage, for any 
product developed under the authority of the Act and this regulation, on 
any farm or in any county or area;
    (3) FCIC will not be liable for any mistakes, errors, or flaws in 
the policy, plan of insurance, their related materials, or the rates of 
premium and no cause of action will exist against FCIC as a result of 
such mistake, error, or flaw in a submission submitted under this 
subpart;
    (4) If at any time prior to the cancellation date, FCIC discovers 
there is a mistake, error, or flaw in the policy, plan of insurance, 
their related materials, or the rates of premium, or any

[[Page 72]]

other reason for denial of reinsurance contained in Sec. 400.706(h) 
exists, FCIC will deny reinsurance to such policy or plan of insurance. 
If reinsurance is denied, a written notice of the denial of reinsurance 
will be provided to the approved insurance providers;
    (5) If reinsurance is denied under paragraph (b)(4) of this section, 
the approved insurance provider will have the option of:
    (i) Selling and servicing the policy or plan of insurance at its own 
risk and without any subsidy; or
    (ii) Canceling the policy or plan of insurance in accordance with 
its terms; and
    (6) After maintenance of the policy or plan of insurance is 
transferred to FCIC, FCIC will be liable for any mistakes, errors, or 
flaws that occur after the date the policy or plan of insurance was 
transferred.

[70 FR 44239, Aug. 2, 2005]



Sec. 400.710  Preemption and premium taxation.

    A policy or plan of insurance that is approved by the Board for FCIC 
reinsurance is preempted from state and local taxation.



Sec. 400.711  Right of review, modification, and the withdrawal of 

reinsurance.

    At any time after approval, the Board may review any policy, plan of 
insurance, related material, and rates of premium approved under this 
subpart and request additional information to determine whether the 
policy, plan of insurance, related material, and rates of premium comply 
with statutory or regulatory changes or court orders, are still 
actuarially appropriate, and protect program integrity and the interests 
of producers. The Board will notify the applicant of any problem or 
issue that may arise and allow the applicant an opportunity to make any 
needed change. The Board may deny reinsurance for the applicable policy, 
plan of insurance or rate of premium if the applicant:
    (a) Fails to perform the responsibilities stated under Sec. 
400.709(a); or
    (b) Does not satisfactorily provide materials or resolve any issue 
so that necessary changes can be made prior to the earliest contract 
change date.

[70 FR 44240, Aug. 2, 2005]



Sec. 400.712  Research and development reimbursement, maintenance 

reimbursement, and user fees.

    (a) For submissions approved by the Board for reinsurance under 
section 508(h) of the Act:
    (1) If it is determined to be marketable by the Board, the 
submission may be eligible for a one-time payment of research and 
development costs and reimbursement of maintenance costs for up to four 
reinsurance years, as determined by the Board, after the date such costs 
have been approved by the Board.
    (2) Reimbursement of research and development costs or maintenance 
costs will be considered as payment in full by FCIC for the submission.
    (3) If the applicant elects at any time not to continue to maintain 
the submission, it will automatically become the property of FCIC and 
the applicant will no longer have any property rights to the submission.
    (b) For submissions submitted to the Board for reinsurance after 
publication of the interim rule on September 17, 2001, an estimated 
amount of the total cost for reimbursement of research and development 
costs and maintenance costs must be included with the original 
submission to the Board in accordance with this section. These estimates 
will be used by FCIC to evaluate if the interests of producers are 
protected and to track potential expenditures and will not provide a 
basis for making any reimbursements under this section. Documentation of 
actual costs allowed under this section will be used to determine any 
reimbursement.
    (c) To be eligible for any reimbursement under this section, FCIC 
must determine that a submission is marketable.
    (d) To be considered for reimbursement of:
    (1) Research and development costs, the total of the amount 
requested, and all supporting documentation, must be submitted to FCIC 
by electronic method or by hard copy and received by FCIC by August 1 
immediately following the date the submission was

[[Page 73]]

first available to be purchased by producers;
    (2) Maintenance costs, the total of the amount requested, and all 
supporting documentation, must be submitted to FCIC by electronic method 
or by hard copy and received by FCIC by August 1 of each year of the 
maintenance period;
    (3) The procedure and time-frame in paragraphs (d)(1) or (2) of this 
section, as applicable, must be followed or research and development 
costs and maintenance costs may not be reimbursed; and
    (4) Given the limitation on funds, regardless of when the request is 
received, no payment will be made prior to September 15 of the 
applicable fiscal year.
    (e) There are limited funds available on an annual fiscal year basis 
as contained in the Act. Therefore, requests for reimbursement will not 
be considered in the order in which they are received. Consistent with 
paragraphs (f), (g), (h), and (k) of this section, if all applicants' 
requests for reimbursement of research and development costs and 
maintenance costs in any fiscal year:
    (1) Do not exceed the maximum amount authorized by law, the 
applicants may receive the full amount of reimbursement authorized under 
these paragraphs; and
    (2) Exceed the amount authorized by law, each applicant's 
reimbursement will be determined by dividing the total amount of each 
individual applicants' reimbursable costs authorized in paragraphs (f), 
(g), (h), and (k) of this section by the total amount of the aggregate 
of all applicants' reimbursable costs authorized in paragraphs (f), (g), 
(h), and (k) of this section for that year and multiplying the result by 
the amount of reimbursement authorized under the Act.
    (f) The amount of reimbursement for research and development costs, 
will be determined based on the amount of reimbursement authorized under 
paragraph (e) of this section, adjusted for the complexity of the 
policy, plan of insurance, or rates of premium, as determined by FCIC, 
and the size of the area in which the policy, plan of insurance, or 
rates of premium may be offered.
    (1) Policies or plans of insurance that offer new and innovative 
coverages that are not currently available will be eligible for a higher 
reimbursement than policies or plans of insurance that are, or have 
components that are, based on existing policies or plans of insurance.
    (2) Policies or plans of insurance that offer new premium rating or 
market price methodologies will be eligible for a higher reimbursement 
than policies or plans of insurance that use existing premium rating or 
market price methodologies.
    (3) Policies or plans of insurance that cover new commodities that 
are not otherwise covered by crop insurance or that offer innovative 
coverage and original policy language will be eligible for a higher 
reimbursement than policies or plans of insurance for commodities for 
which insurance is currently available.
    (4) Policies or plans of insurance that may be offered for sale 
nationwide or in large geographical regions will be eligible for higher 
reimbursement than those that are applicable to only a few counties or 
states or a small geographical region.
    (5) Any reimbursement under this subpart will be scored as follows:
    (i) Complexity scores:
    (A) Basic or Common Provisions:
    (1) Uses existing policies or plans of insurance: 0.05
    (2) Contains modifications to existing policies or plans of 
insurance: 0.10
    (3) Original (See paragraph (f)(3) of this section): 0.20
    (B) Commodity Provisions and Special Provisions:
    (1) Uses existing policies or plans of insurance: 0.05
    (2) Contains modifications to existing policies or plans of 
insurance: 0.10
    (3) Original (See paragraph (f)(3) of this section): 0.20
    (C) Market prices:
    (1) Uses existing policies or plans of insurance: 0.05
    (2) Contains modifications to existing policies or plans of 
insurance: 0.10
    (3) Original (See paragraph (f)(3) of this section): 0.20
    (D) Rates of Premium:
    (1) Uses existing policies or plans of insurance: 0.05

[[Page 74]]

    (2) Contains modifications to existing policies or plans of 
insurance: 0.10
    (3) Original (See paragraph (f)(3) of this section): 0.20
    (E) Underwriting:
    (1) Uses existing policies or plans of insurance: 0.05
    (2) Contains modifications to existing policies or plans of 
insurance: 0.10
    (3) Original (See paragraph (f)(3) of this section): 0.20
    (ii) Geographic scope scores:
    (A) Potential national availability: 0.10
    (B) Potential county, state or regional availability: 0.05
    (6) Policies or plans of insurance that receive a summed total score 
for both complexity and geographic scope that is:
    (i) Equal to or greater than 0.6 may receive the full amount of 
reimbursement approved by the Board under paragraph (g) of this section;
    (ii) Greater than 0.25 but lower than 0.60 will receive a 
reimbursement that is not greater than 75 percent of the full amount of 
reimbursement approved by the Board under paragraph (g) of this section; 
and
    (iii) Equal to or less than 0.25 will receive a reimbursement that 
is not greater than 50 percent of the full amount of reimbursement 
approved by the Board under paragraph (g) of this section.
    (g) For those submissions submitted to the Board for approval after 
September 17, 2001, research and development costs must be supported by 
itemized statements and supporting documentation (copies of contracts, 
billing statements, time sheets, travel vouchers, accounting ledgers, 
etc.). Actual costs submitted will be examined for reasonableness and 
may be adjusted at the sole discretion of the Board.
    (1) Allowable research and development expense items (directly 
related to research and development of the submission only) may include 
the following:
    (i) Straight-time hourly wage, exclusive of bonuses, overtime pay, 
or shift differentials (One line per employee, include job title, total 
hours, and total dollars. Compensation amounts will be compared with the 
Occupational Employment Statistics Survey (published each January by the 
U.S. Department of Labor, Bureau of Labor Statistics) or other 
substantial wage information as deemed appropriate by the Board);
    (ii) Benefit cost per employee (Benefit costs are considered 
overhead and will be compared with the Employment Cost Index Annual 
Employer Cost Survey published each March by the U.S. Department of 
Labor, Bureau of Labor Statistics); and
    (iii) Contracted expenses if fully disclosed, documented, and:
    (A) The applicant provides a copy of the contract, billing 
statements, accounting records, etc;
    (B) The applicant provides the relationship, if any, between the 
applicant and the contractor, such as parent company, subsidiary, etc. 
(Reimbursement may be limited or denied if the contractor is closely 
associated to the applicant so that they could be considered as one and 
the same, such as a separate entity being created by the applicant to 
conduct research and development);
    (C) The applicant provides any and all other involvement of the 
contractor with the applicant, such as being a director, officer, 
employee, etc., or having common directors, officers, employers, 
employees, etc. (Reimbursement may be reduced or denied if the 
contractor is paid a salary or other compensation from the applicant 
based on this other involvement); and
    (D) The contracted expenses are broken out by line item (including 
all persons who make up the contracted party who had a substantive 
involvement in the development of the submission), such as:
    (1) Individual names;
    (2) Rate of pay;
    (3) Hours allocated to the submission;
    (4) Benefit rate; and
    (5) Overhead;
    (iv) Professional fees if fully disclosed, documented, and:
    (A) The applicant provides the job title, straight-time hourly wage, 
total hours, and total dollars;
    (B) The applicant provides the relationship, if any, between the 
applicant and the professional, such as parent company, subsidiary, etc. 
(Reimbursement may be limited or denied if the contractor is closely 
associated to the

[[Page 75]]

applicant so that they could be considered as one and the same, such as 
a separate entity being created by the applicant to conduct research and 
development);
    (C) The applicant provides any other involvement of the professional 
with the applicant, such as being a director, officer, employee, etc., 
or having common directors, officers, employers, employees, etc. 
(Reimbursement may be reduced or denied if the contractor is paid a 
salary or other compensation from the applicant based on this other 
involvement); and
    (D) The professional fees are broken out by line item (including all 
persons who make up the professional party who had a substantive 
involvement in the development of the submission), such as;
    (1) Individual names;
    (2) Rate of pay;
    (3) Hours allocated to the submission;
    (4) Benefit rate; and
    (5) Overhead;
    (v) Travel and transportation (One line per event, include the job 
title, destination, purpose of travel, lodging cost, mileage, air or 
other identified transportation costs, food and miscellaneous expenses, 
other costs, and the total cost);
    (vi) Software and computer programming developed specifically to 
determine appropriate rates, prices, or coverage amounts (Identify the 
item, include the purpose, and provide receipts or contract or straight-
time hourly wage, hours, and total cost.) Software developed to send or 
receive data between the producer, agent, approved insurance provider or 
RMA or such other similar software may not be included as an allowable 
cost); and
    (vii) Miscellaneous expenses such as postage, telephone, express 
mail, and printing (Identify the item, cost per unit, number of items, 
and total dollars); and
    (2) The following expenses are specifically not eligible for 
research and development and maintenance cost reimbursement:
    (i) Copyright or patent fees;
    (ii) Training costs;
    (iii) State filing fees and expenses;
    (iv) Normal ongoing administrative expenses;
    (v) Paid or incurred losses;
    (vi) Loss adjustment expenses;
    (vii) Sales commission;
    (viii) Marketing costs;
    (ix) Indirect overhead costs;
    (x) Lobbying costs;
    (xi) Product or applicant liability resulting from the research, 
development, preparation or marketing of the policy;
    (xii) Copyright infringement claims resulting from the research, 
development, preparation or marketing of the policy;
    (xiii) Costs of making program changes as a result of any mistakes, 
errors or flaws in the policy or plan of insurance; and
    (xiv) Costs associated with building rents or space allocation.
    (h) Requests for reimbursement of maintenance costs for submissions 
approved after September 17, 2001, must be supported by itemized 
statements and supporting documentary evidence for each reinsurance year 
in the maintenance period. Actual costs submitted will be examined for 
reasonableness and may be adjusted at the sole discretion of the Board. 
Maintenance costs for the following activities may be reimbursed:
    (1) Expansion of the original submission into additional counties or 
states;
    (2) Non-significant changes to the policy and any related material;
    (3) Non-significant or significant changes to the policy as 
necessary to protect program integrity or as required by Congress; and
    (4) Any other activity that qualifies as maintenance.
    (i) If the applicant does not reasonably demonstrate that the 
submission meets the marketing plan or does not follow the criteria set 
forth in this regulation, the product may be withdrawn at the discretion 
of the Board and no further maintenance reimbursement will be paid.
    (j) Not later than six months prior to the end of the last 
reinsurance year in which a maintenance reimbursement will be paid, as 
approved by the Board, the applicant must notify FCIC regarding its 
election of the treatment of the policy or plan of insurance for 
subsequent reinsurance years.

[[Page 76]]

    (1) The applicant must notify FCIC whether it intends to:
    (i) Continue to maintain the policy or plan of insurance and charge 
approved insurance providers a user fee to cover maintenance expenses 
for all policies earning premium. It is the sole responsibility of the 
applicant to collect such fees from the approved insurance providers and 
any indebtedness for such fees must be resolved by the applicant and 
approved insurance provider. Applicants may request that FCIC provide 
the number of policies sold by each approved insurance provider. Such 
information will be provided not later than 90 days after such request 
is made or not later than 90 days after the requisite information has 
been provided to FCIC by the approved insurance provider, whichever is 
later; or
    (ii) Transfer responsibility for maintenance to FCIC.
    (2) If the applicant elects to:
    (i) Continue to maintain the policy or plan of insurance, the 
applicant must submit a request for approval of the user fee by the 
Board at the time of the election; or
    (ii) Transfer the policy or plan of insurance to FCIC, FCIC may at 
its sole discretion, continue to maintain the policy or plan or 
insurance or elect to withdraw the availability of the policy or plan of 
insurance.
    (3) Requests for approval of the user fee must be accompanied by 
written documentation to support that the amount requested will only 
cover maintenance costs.
    (4) The Board will approve the amount of user fee that is payable to 
the applicant by approved insurance providers unless the Board 
determines that the user fee charged:
    (i) Is unreasonable in relation to the maintenance costs associated 
with the policy or plan of insurance; or
    (ii) Unnecessarily inhibits the use of the policy or plan of 
insurance by other approved insurance providers.
    (5) Reasonableness of the user fees will be determined by the Board 
based on a comparison with the amount of reimbursement for maintenance 
previously received, the number of policies, the number of approved 
insurance providers, and the expected total amount of user fees to be 
received in any reinsurance year.
    (6) A user fee unnecessarily inhibits the use of a policy or plan of 
insurance if it is so high that other approved insurance providers are 
unable to pay such fees because of the volume of business currently 
underwritten by the approved insurance provider.
    (7) The user fee charged to each approved insurance provider will be 
considered payment in full for the use of such policy, plan of insurance 
or rate of premium for the reinsurance year in which payment is made.
    (8) If the applicant does not notify FCIC at least six months prior 
to the last day of the last reinsurance year in which a maintenance 
reimbursement will be paid, as approved by the Board, ownership of the 
policy or plan of insurance will be automatically transferred to FCIC 
beginning with the next reinsurance year.
    (k) The Board may consider information from the Equal Access to 
Justice Act, 5 U.S.C. 504, the Bureau of Labor Statistic's Occupational 
Employment Statistics Survey, the Bureau of Labor Statistic's Employment 
Cost Index, and any other information determined applicable by the 
Board, in making a determination whether to approve a submission for 
reimbursement of research and development costs, or maintenance costs 
under this section or the amount of reimbursement.
    (l) For the purposes of this section, rights to, or obligations of, 
research and development cost reimbursement, maintenance cost 
reimbursement, or user fees cannot be transferred from any individual or 
entity unless specifically approved in writing by the Board.
    (m) Notwithstanding the definition in Sec. 400.701, the maintenance 
period ends for an approved submission once the applicant no longer 
performs the maintenance responsibilities, as determined by FCIC, or the 
applicant gives FCIC notice they no longer wish to maintain the 
submission.
    (n) Applicants requesting reimbursement for research and development 
costs, maintenance costs, or user fees, may present their request in 
person to

[[Page 77]]

the Board prior to consideration for approval.

[66 FR 47951, Sept. 17, 2001, as amended at 70 FR 44241, Aug. 2, 2005]



Sec. 400.713  Nonreinsured supplemental (NRS) policy.

    (a) Unless notified by FCIC, three hard copies, or an electronic 
copy in a format approved by RMA, of the new or revised NRS policy and 
related materials must be submitted to the Deputy Administrator, 
Research and Development (or successor), Risk Management Agency, 6501 
Beacon Drive, Stop 0812, Kansas City, MO 64133-4676, at least 120 days 
prior to the first sales closing date applicable to the policy.
    (b) FCIC will review the NRS policy to determine that it does not 
materially increase or shift risk to the underlying policy or plan of 
insurance reinsured by FCIC, reduce or limit the rights of the insured 
with respect to the underlying policy or plan of insurance, or cause 
disruption in the marketplace for products reinsured by FCIC.
    (1) An NRS policy will be considered to disrupt the marketplace if 
it adversely affects the sales or administration of reinsured policies, 
undermines producers' confidence in the Federal crop insurance program, 
decreases the producer's willingness or ability to use Federally 
reinsured risk management products, or harms public perception of the 
Federal crop insurance program.
    (2) The applicant, at a minimum, must provide worksheets and 
examples that establish liability and determine indemnities that 
demonstrate the performance of the NRS policy under differing scenarios. 
When the review is complete, FCIC will forward their findings to the 
applicant.
    (c) If the approved insurance provider sells an NRS policy that RMA 
determines materially increases or shifts risk to the underlying FCIC 
reinsured policy, reduces or limits the rights of the insured with 
respect to the underlying policy, or causes disruption in the 
marketplace for products reinsured by FCIC, reinsurance, A&O subsidy and 
risk subsidy will be denied on the underlying FCIC reinsured policy for 
which such NRS policy was sold.
    (d) FCIC will respond to the submitter not less than 60 days before 
the first sales closing date or provide notice why FCIC is unable to 
respond within the time frame allotted.

[70 FR 44242, Aug. 2, 2005]



Sec. 400.714  Requests for the opportunity to offer a premium discount.

    (a) To participate in the premium reduction plan, approved insurance 
providers must make a request to RMA for the opportunity to offer a 
premium discount for the reinsurance year in accordance with Sec. 
400.716.
    (b) If RMA determines that the approved insurance provider is 
eligible for the opportunity to offer a premium discount under the 
premium reduction plan for the reinsurance year, the approved insurance 
provider will only be allowed to pay a premium discount if:
    (1) The approved insurance provider has submitted the required 
information applicable for that reinsurance year in accordance with 
Sec. 400.720;
    (2) The approved insurance provider has demonstrated to RMA that it 
has operated sufficiently below its A & O subsidy to support the payment 
of such discount; and
    (3) RMA has approved the dollar amount, and the corresponding 
percentage of net book premium, for the premium discount.
    (c) For the 2006 reinsurance year:
    (1) For an approved insurance provider with an approved SRA for the 
2005 reinsurance year, requests for the opportunity to offer a premium 
discount must be received by RMA not later than August 4, 2005; and
    (2) For an approved insurance provider that did not have an approved 
SRA for the 2005 reinsurance year and did not request such agreement 
until after the deadline contained in paragraph (c)(1) of this section, 
requests for the opportunity to offer a premium discount must be 
provided with the application for approval of a SRA.
    (d) For all subsequent reinsurance years:
    (1) For an approved insurance provider with an approved SRA for the 
previous reinsurance year, requests for the opportunity to offer a 
premium discount must be received by RMA not

[[Page 78]]

later than April 1 before the reinsurance year, or the date RMA 
otherwise determines the Plan of Operations is due; and
    (2) For an approved insurance provider that did not have an approved 
SRA for the previous reinsurance year and did not request such agreement 
until after the deadline contained in paragraph (d)(1) of this section, 
requests for the opportunity to offer a premium discount under the 
premium reduction plan must be provided with the application for 
approval of a SRA.
    (e) Any request for the opportunity to offer a premium discount 
under the premium reduction plan that is not submitted by the applicable 
deadlines contained in paragraphs (c) and (d) will not be considered 
until the next reinsurance year.
    (f) The request for the opportunity to offer a premium discount 
under the premium reduction plan must be sent to the Director, 
Reinsurance Services Division (or designee).

[70 FR 41919, July 20, 2005]



Sec. 400.715  Limitations and prohibitions.

    (a) For the first two reinsurance years that RMA approves the 
payment of a premium discount, the approved insurance provider may not 
pay a premium discount under the premium reduction plan to a producer 
greater than 4.0 percent of the net book premium for the eligible crop 
insurance contract. For subsequent reinsurance years, the 4.0 percent of 
the net book premium for the eligible crop insurance contract will 
remain the maximum amount of premium discount authorized to be approved 
by RMA unless otherwise stated by RMA.
    (b) All premium discounts must be based on an actual accounting of 
efficiencies achieved by the approved insurance provider for the 
reinsurance year and may not be distributed to policyholders until the 
payment and the amount of such discounts have been approved by RMA in 
writing in accordance with Sec. 400.720.
    (c) The approved insurance provider may not impose any term or 
condition upon the distribution or amount of any premium discount (such 
as conditioning the premium discount based upon the renewal of the 
eligible crop insurance contract with the approved insurance provider or 
not having a loss for the crop year), except those included in 
Sec. Sec. 400.714 through 400.722.
    (d) Premium discounts under the premium reduction plan are not 
available for:
    (1) Eligible crop insurance contracts at CAT level of coverage; and
    (2) Ineligible producers.
    (e) No approved insurance provider or its representatives, agents, 
employees or contractors may advertise or otherwise communicate to any 
producer the availability, potential availability, or existence of:
    (1) The opportunity to offer a premium discount under the premium 
reduction plan until the approved insurance provider receives written 
notice from RMA that it is eligible for the opportunity to offer a 
premium discount;
    (2) A specific amount of premium discount prior to such amount being 
approved in writing by RMA in accordance with Sec. 400.720; and
    (3) Past or projected ability of the approved insurance provider to 
operate at less than the approved insurance provider's A&O subsidy.
    (f) After RMA has determined that the approved insurance provider is 
eligible for the opportunity to offer a premium discount in a State, the 
approved insurance provider and its representatives, agents, employees 
or contractors may advertise and communicate to producers that there is 
an opportunity for the approved insurance provider to offer a premium 
discount in that State and:
    (1) If they advertise or otherwise communicate that there is an 
opportunity to offer a premium discount in that State, such 
advertisements or other communications:
    (i) Can only state the dollar amounts or corresponding percentage of 
net book premium of premium discount actually paid to producers in the 
State for each reinsurance year for which the approved insurance 
provider paid a premium discount; and
    (ii) Must contain a prominently displayed disclaimer that:
    (A) States ``The past payments of premium discounts are not a 
guarantee that future payments will be made or

[[Page 79]]

an indication of the amount of future premium discounts''; or
    (B) States a similar statement that must be approved in writing by 
RMA; and
    (2) RMA may impose a sanction authorized in Sec. 400.719(j) if:
    (i) RMA determines that the approved insurance provider or its 
representative, agent, employee or contractor is not in compliance with 
the provisions of this section; or
    (ii) Any State regulatory authority determines that an approved 
insurance provider or its representatives, agents, employees or 
contractors has violated any State law regarding the advertising, 
marketing or solicitation of customers with respect to a premium 
discount under the premium reduction plan.
    (g) The approved insurance provider shall not distribute any premium 
discount payment:
    (1) Until the dollar amount, and corresponding percentage of net 
book premium, for the premium discount have been approved by RMA in 
writing (For example, RMA may approve a dollar amount of premium 
discount in a State of $500,000, which corresponds to a percentage of 
premium discount of 3% of the net book premium for the State); and
    (2) In an amount that is greater than the dollar amount, and 
corresponding percentage of net book premium, for the premium discount 
approved by RMA.
    (h) If RMA approves a dollar amount, and corresponding percentage of 
net book premium, for the premium discount in a State:
    (1) All producers insured by the approved insurance provider in that 
State for the corresponding reinsurance year will automatically receive 
that percentage of net book premium of premium discount (For example, if 
an approved insurance provider is approved to pay a percentage of 
premium discount of 3% of the net book premium for efficiencies attained 
during the 2006 reinsurance year in a State, all producers insured with 
that approved insurance provider during the 2006 reinsurance year in 
that State will receive a premium discount that is 3% of the net book 
premium for their eligible crop insurance contract); and
    (2) That same RMA approved premium discount percentage of net book 
premium must be paid for all crops, coverage levels except the CAT 
coverage level, and plans of insurance written by the approved insurance 
provider in that State.
    (i) The approved insurance provider must be in compliance with all 
requirements of the approved procedures to be able to pay a premium 
discount.

[70 FR 41920, July 20, 2005]



Sec. 400.716  Contents of the request for the opportunity to offer a premium 

discount.

    Each request for the opportunity to offer a premium discount under 
the premium reduction plan must include all of the following:
    (a) The name of the approved insurance provider; the person who may 
be contacted for further information regarding the request for an 
opportunity to offer a premium discount under the premium reduction 
plan; and the person who will be responsible for the administration of 
the premium reduction plan.
    (b) A list of the States where the approved insurance provider wants 
the opportunity to offer a premium discount under the premium reduction 
plan.
    (c) A detailed marketing plan that describes how the approved 
insurance provider will promote the premium reduction plan to all 
producers, especially small producers, limited resource farmers as 
defined in section 1 of the Basic Provisions in 7 CFR 457.8, women and 
minority producers. With respect to the marketing plan, it must:
    (1) Identify and utilize the appropriate media with the capacity to 
reach all producers, especially small producers, limited resource 
farmers as defined in section 1 of the Basic Provisions in 7 CFR 457.8, 
women and minority producers, in the State in which the premium 
reduction plan will be offered, such as advertising through farm 
journals, farm radio, community based organizations, etc.;
    (2) Be in addition to any solicitation or advertising done by agents 
of the approved insurance provider; and

[[Page 80]]

    (3) Contain a certification by the person responsible for signing 
the SRA that any cost saving measures will not result in a reduction in 
service to any producers, especially small producers, limited resource 
farmers as defined in section 1 of the Basic Provisions in 7 CFR 457.8, 
women and minority producers in the State in which the premium reduction 
plan will be offered.
    (d) A report of the total dollar amount of premium discount and the 
corresponding premium discount percentage by State paid for the previous 
reinsurance year (Such report must be provided to RMA not later than 15 
days after making the premium discount payments); and
    (e) Such other information as deemed necessary by RMA.

[70 FR 41921, July 20, 2005]



Sec. 400.717  New approved insurance providers.

    There may be instances where a new approved insurance provider is 
entering the crop insurance program for the first time and such approved 
insurance provider is not affiliated with an MGA, a TPA, another 
approved insurance provider, or any other entity that possesses the 
infrastructure necessary to deliver the crop insurance program, that is 
currently or has previously participated in the crop insurance program.
    (a) In such instances, the one time start-up costs that are 
associated with entering the crop insurance business (e.g., creation of 
a claims system, interface with RMA's data acceptance system, initial 
marketing costs, set up charges) must be included in the Expense 
Exhibits required by the SRA, or the applicable regulations or approved 
procedures, but the costs may be amortized in equal annual amounts for a 
period of up to three years for the purpose of determining the 
efficiency on the documents described in Sec. 400.720, in a manner 
determined by RMA.
    (b) If the approved insurance provider is affiliated with a MGA, a 
TPA, another approved insurance provider that previously participated in 
the crop insurance program but such MGA, TPA, or other approved 
insurance provider can demonstrate that it no longer has the 
infrastructure to operate the program, the FCIC Board of Directors, in 
its sole discretion, can authorize the amortization of start-up costs in 
accordance with paragraph (a) of this section.

[70 FR 41921, July 20, 2005]



Sec. 400.718  RMA Review

    If an insurance provider requests eligibility for the opportunity to 
offer a premium discount under the premium reduction plan:
    (a) For the 2006 reinsurance year, RMA will notify the approved 
insurance provider not later than 30 days after the date the approved 
insurance provider submits its request for eligibility for the 
opportunity to offer a premium discount under a premium reduction plan, 
whether it is eligible.
    (b) For all subsequent reinsurance years, RMA will notify the 
approved insurance provider at the same time it approves the Plan of 
Operations whether it is eligible.
    (c) An approved insurance provider may be determined to be eligible 
for the opportunity to offer a premium discount under the premium 
reduction plan if, in the sole determination of RMA, all of the 
following criteria are met:
    (1) All information required in Sec. 400.716 is included in the 
request for the opportunity to offer a premium discount under the 
premium reduction plan;
    (2) The marketing plan is designed to be effective at reaching all 
producers in the State, especially small producers, limited resource 
farmers as defined in section 1 of the Basic Provisions in 7 CFR 457.8, 
women and minority producers;
    (3) The implementation of any activities to enable the approved 
insurance provider to pay a premium discount does not impede the 
approved insurance provider's ability to comply with all requirements of 
the approved procedures, law, and regulation;
    (4) There must be a reasonable assurance that producers, especially 
small producers, limited resource farmers as defined in section 1 of the 
Basic Provisions in 7 CFR 457.8, women and minority producers, insured 
by the approved insurance provider will not experience a reduction in 
service;

[[Page 81]]

    (5) The insurance provider can demonstrate that it is operationally 
and financially capable and ready to serve, all producers in that State; 
and
    (6) The approved insurance provider's resources, procedures, and 
internal controls are adequate to provide a premium discount under the 
premium reduction plan, make approved premium discount payments in a 
timely manner, prevent unfair discrimination, and comply with all 
applicable laws, regulations and approved procedures.
    (d) If the approved insurance provider is determined by RMA to be 
eligible for the opportunity to provide a premium discount under the 
premium reduction plan, the approved insurance provider will be notified 
in writing by the Director, Reinsurance Services Division, or a designee 
or successor.
    (e) Notification that an approved insurance provider is eligible for 
the opportunity to offer a premium discount under the premium reduction 
plan is not a guarantee that a premium discount payment will be approved 
by RMA for the reinsurance year. Approval of a premium discount cannot 
be provided by RMA until the actual A&O costs and A&O subsidy are 
reported for the reinsurance year and RMA determines that all the 
requirements of Sec. Sec. 400.714 through 400.722 have been met.

[70 FR 41921, July 20, 2005]



Sec. 400.719  Terms and conditions for the Premium Reduction Plan.

    The following terms and conditions apply to all approved insurance 
providers that RMA has determined are eligible for the opportunity to 
offer a premium discount under the premium reduction plan:
    (a) RMA's determination that the approved insurance provider is 
eligible for the opportunity to offer a premium discount under the 
premium reduction plan will only be effective for one reinsurance year. 
Approved insurance providers must reapply each reinsurance year in 
accordance with Sec. Sec. 400.714 through 400.716.
    (b) All procedural issues, questions, problems or clarifications 
with respect to implementation of the premium reduction plan must be 
addressed by the approved insurance provider by the deadline determined 
by RMA.
    (c) The agents employed or under contract with an approved insurance 
provider that RMA has determined is eligible for the opportunity to 
offer a premium discount under the premium reduction plan must disclose 
to all producers, insured with the agent or inquiring about insuring 
with the agent, in writing the names of all approved insurance providers 
that the agent represents that RMA has determined are eligible for the 
opportunity to offer a premium discount under the premium reduction 
plan.
    (d) The approved insurance provider must provide to the Director, 
Reinsurance Services Division semi-annual reports, or more frequent 
reports as determined by RMA, that, along with other information 
obtained by RMA, permit RMA to accurately evaluate the effectiveness of 
the approved insurance provider's implementation of the premium 
reduction plan, in the manner specified by RMA. At a minimum, each 
report must contain for each State listed by the approved insurance 
provider under Sec. 400.716(b):
    (1) The number of small producers, limited resource farmers as 
defined in section 1 of the Basic Provisions in 7 CFR 457.8, women and 
minority producers making application; and
    (2) The number, substance, and final or pending resolution of 
complaints from producers regarding the service received under the 
premium reduction plan.
    (e) RMA will monitor the approved insurance provider's efforts to 
market the premium reduction plan to small producers, limited resource 
farmers as defined in section 1 of the Basic Provisions in 7 CFR 457.8, 
women and minority producers.
    (1) RMA may compare the composition of the approved insurance 
provider's book of business in a State with the composition of the books 
of business of other approved insurance providers in that State to 
assist in determining whether the marketing plan has been effective or 
there is credible evidence of unfair discrimination by the approved 
insurance provider or its agents.

[[Page 82]]

    (2) If at any time RMA determines that the marketing activities of 
the approved insurance provider are not effective in reaching small 
producers, limited resource farmers as defined in section 1 of the Basic 
Provisions in 7 CFR 457.8, women and minority producers or there is 
credible evidence of unfair discrimination by the approved insurance 
provider or its agents in any State listed by the approved insurance 
provider under Sec. 400.716(b), RMA will take the appropriate action 
authorized in paragraph (j) of this section (Remedial measures may 
include additional targeted advertising by the approved insurance 
provider or other appropriate measures to ensure the insurance provider 
is adequately serving small producers, limited resource farmers as 
defined in section 1 of the Basic Provisions in 7 CFR 457.8, women and 
minority producers or that such unfair discrimination has been 
discontinued and corrective action taken).
    (f) In no event shall RMA, FCIC or any other agency of the United 
States Government be liable for any damages caused by any mistakes, 
errors, misrepresentations, or flaws in the premium reduction plan or 
its implementation.
    (g) If RMA approves a dollar amount, and corresponding percentage of 
net book premium, for the premium discount for a State in accordance 
with Sec. 400.720, it will be applicable to the reinsurance year in 
which the efficiencies were attained and the approved insurance provider 
must pay that dollar amount, and corresponding percentage of net book 
premium, for the premium discount to its policyholders in that State for 
that reinsurance year. If the approved insurance provider fails to pay 
this amount, the approved insurance provider:
    (1) Will not be eligible for the opportunity to offer a premium 
discount for the reinsurance year immediately following RMA's approval 
of the payment of a premium discount; and
    (2) Must disclose in all its promotional and advertising material 
that it was approved to pay a premium discount by RMA but elected not to 
pay such discount, unless approval to pay the premium discount was 
withdrawn by RMA, for the next two reinsurance years subsequent to the 
failure to pay the premium discount.
    (h) For policyholders that were insured with the approved insurance 
provider in the reinsurance year from which the approved premium 
discount is applicable but are not currently insured with the approved 
insurance provider, any premium discount payments must be sent to the 
last known address of the policyholder.
    (i) The approved insurance provider and its representatives, agents, 
employees and contractors must fully cooperate with RMA and any State or 
Federal government agencies in any review of the operations or 
activities of the approved insurance provider and its representatives, 
agents, employees and contractors, with respect to the premium reduction 
plan.
    (j) At its sole discretion and upon written notice, RMA may withdraw 
a determination of eligibility for the opportunity to offer a premium 
discount under the premium reduction plan or approval of all or a part 
of a premium discount payment, preclude eligibility for the opportunity 
to offer a premium discount, or otherwise participate, under the premium 
reduction plan for a period determined by RMA commensurate with offense, 
take such other actions as authorized under the SRA, or require 
appropriate remedial measures as determined by RMA, if RMA determines 
that:
    (1) Any approved insurance provider or its representative, agent, 
employee or contractor has failed to comply with any term or condition 
contained in 7 CFR 400.714 through 400.721; or
    (2) The payment of a premium discount could adversely affect the 
financial or operational stability of the approved insurance provider, 
its MGA or TPA as required by applicable regulations or approved 
procedures.
    (k) The insurance provider may be held solely responsible for the 
actions of its representatives, agents, employees or contractors with 
respect to any violation of any term or condition contained in 
Sec. Sec. 400.714 through 400.721 or action under paragraph (j) of this 
section may be taken individually against

[[Page 83]]

the insurance provider or its representatives, agents, employees or 
contractors.

[70 FR 41922, July 21, 2005]



Sec. 400.720  Standards for approval of a premium discount.

    For approval of a premium discount:
    (a) If the approved insurance provider intends to offer a premium 
discount in a State listed by the approved insurance provider under 
Sec. 400.716(b) based on efficiencies attained during the reinsurance 
year, the approved insurance provider must, not later than December 31 
after the annual settlement for the reinsurance year, submit to RMA:
    (1) An audit, in a format approved by RMA, of the Expense Exhibits 
provided with the Plan of Operations, and the estimated A&O costs for 
the reinsurance year that were not included in such Expense Exhibits, 
certified by an independent certified public accountant with experience 
in insurance accounting, who must certify to the accuracy and 
completeness of the costs stated therein and the Expense Exhibits' 
conformance with the requirements of the SRA (The costs associated with 
such audit and certification will be at the approved insurance 
provider's expense and must be included in the approved insurance 
provider's A&O costs for the purposes of determining an efficiency);
    (2) A detailed description of all profit sharing arrangements that 
the approved insurance provider claims are not to be included as 
compensation (RMA reserves the right to request copies of such profit 
sharing contracts or other agreements); and
    (3) The dollar amount, and corresponding percentage of net book 
premium, for the premium discount that the approved insurance provider 
will pay in the State.
    (b) RMA will use the Expense Exhibits required to be submitted as 
part of the Plan of Operations to determine:
    (1) Whether the approved insurance provider's A&O costs were less 
than its A&O subsidy for the reinsurance year for the entire book of 
business; and
    (2) The actual dollar amount of efficiency attained by the approved 
insurance provider for the reinsurance year for each State where the 
approved insurance provider was eligible for the opportunity to offer a 
premium discount under the premium reduction plan. The dollar amount of 
efficiency and the dollar amount, and corresponding percentage of net 
book premium, for the premium discount must be prepared and submitted in 
accordance with approved procedures.
    (i) For the 2006 reinsurance year, such approved procedures will be 
issued within 5 days after July 20, 2005; and
    (ii) For all subsequent reinsurance years, such procedures will 
remain in effect unless revised and if such approved procedures will be 
revised, these approved procedures will be issued not later than January 
1 before the start of the reinsurance year.
    (c) For each State listed by the approved insurance provider under 
Sec. 400.716(b) for which the insurance provider requests approval to 
pay a premium discount, RMA will compare the dollar amount, and 
corresponding percentage of net book premium, for the premium discount 
determined in accordance with applicable approved procedures with the 
dollar amount, and corresponding percentage of net book premium, for the 
premium discount submitted by the approved insurance provider.
    (d) RMA may approve the dollar amount, and corresponding percentage 
of net book premium, for the premium discount submitted by the approved 
insurance provider if and to the extent that:
    (1) The dollar amount, and corresponding percentage of net book 
premium, for the premium discount submitted by the approved insurance 
provider does not exceed the dollar amount, and corresponding percentage 
of net book premium, for the premium discount determined by RMA in 
accordance with paragraph (b) of this section; and
    (2) If all other requirements of Sec. Sec. 400.714 through 400.722 
have been met.
    (e) If the dollar amount, and corresponding percentage of net book 
premium, for the premium discount submitted by the approved insurance 
provider exceeds the dollar amount, and corresponding percentage of net 
book premium, for the premium discount determined by RMA in accordance 
with

[[Page 84]]

paragraph (b) of this section, the approved insurance provider will be 
limited to paying the dollar amount, and corresponding percentage of net 
book premium, for the premium discount determined by RMA.

[70 FR 41923, July 20, 2005]



Sec. 400.721  Determinations and reconsiderations.

    (a) If RMA takes any action authorized in Sec. 400.719(j), the 
Director, Reinsurance Services Division, or a designee or successor will 
notify the approved insurance provider or its representatives, agents, 
employees or contractors against whom such action is taken, as 
applicable, in writing:
    (1) Of the action taken;
    (2) The date such action is effective; and
    (3) The basis for such action.
    (b) If eligibility for the opportunity to offer a premium discount, 
or to participate, under the premium reduction plan is withdrawn, the 
approved insurance provider or agent, as applicable, must notify its 
policyholders it is no longer eligible to offer a premium discount, 
cease any advertising or other communication regarding a premium 
discount effective for the next sales closing date, and no premium 
discount may be distributed to any producer of the insurance provider or 
agent, as applicable, for the reinsurance year.
    (c) If notice is provided under paragraph (a) of this section to an 
approved insurance provider or its representatives, agents, employees or 
contractors:
    (1) The approved insurance provider or its representatives, agents, 
employees or contractors, as applicable, may request, in writing, 
reconsideration of the decision with the Deputy Administrator of 
Insurance Services, or a designee or successor, within 30 days of the 
date stated on the notice provided in paragraph (a) of this section;
    (2) Such request must provide a detailed narrative of the basis for 
reconsideration; and
    (3) The Deputy Administrator of Insurance Services, or a designee or 
successor will issue its reconsideration decision not later than 45 days 
after receipt of the request for reconsideration.
    (d) Reconsideration decisions issued in accordance with paragraph 
(c) of this section are considered as final administrative 
determinations rendered under Sec. 400.169(a) and if the approved 
insurance provider or its representatives, agents, employees or 
contractors who received such reconsideration decision disagrees with 
this final administrative determination, it may appeal in accordance 
with Sec. 400.169(d).
    (e) If eligibility to offer a premium discount plan has been 
withdrawn by RMA under Sec. 400.719(j), the approved insurance provider 
may request eligibility for the opportunity to offer a premium discount 
for the next applicable reinsurance year if the condition which was the 
basis for such withdrawal has been remedied.

[70 FR 41923, July 20, 2005]



Sec. 400.722  Consumer complaints.

    Consumer complaints regarding an approved insurance provider's 
violation of the requirements of Sec. Sec. 400.714 through 400.721 
should be sent in confidence to RMA, attention: The Director of the 
Reinsurance Services Division, or a designee or successor.
    (a) Consumer complaints must include:
    (1) A specific citation of the requirement in Sec. Sec. 400.714 
through 400.721 that has allegedly been violated;
    (2) A detailed listing of the actions alleged to have taken place 
that violate the requirement;
    (3) Specific identification of persons involved in the violation, 
and
    (4) The date, place and circumstances under which such violation 
allegedly occurred.
    (b) Any complaint that does not meet the requirements in paragraph 
(a) of this section may be returned to the sender for further details 
before RMA can pursue investigation of the complaint.
    (c) RMA may seek additional information to assist in investigating 
the complaint.
    (d) If RMA's investigation determines there has been a violation of 
a requirement in Sec. Sec. 400.714 through 400.721, it may take the 
appropriate action authorized under Sec. 400.719(j).

[70 FR 41924, July 20, 2005]

[[Page 85]]

Subpart W [Reserved]



    Subpart X_Interpretations of Statutory and Regulatory Provisions

    Source: 63 FR 70313, Dec. 21, 1998, unless otherwise noted.



Sec. 400.765  Basis and applicability.

    (a) The regulations contained in this subpart prescribe the rules 
and criteria for obtaining a final agency determination of the 
interpretation of any provision of the Act or the regulations 
promulgated thereunder.
    (b) Requesters may seek interpretations of those provisions of the 
Act and the regulations promulgated thereunder that are in effect for 
the crop year in which the request under this subpart is being made and 
the three previous crop years.
    (c) All final agency determinations issued by FCIC, and published in 
accordance with Sec. 400.768(f ), will be binding on all participants 
in the Federal crop insurance program.

[63 FR 70313, Dec. 21, 1998, as amended at 64 FR 50246, Sept. 16, 1999]



Sec. 400.766  Definitions.

    Act. The Federal Crop Insurance Act, 7 U.S.C. 1501 et seq.
    FCIC. The Federal Crop Insurance Corporation, a wholly owned 
government corporation within the United States Department of 
Agriculture.
    Participant. Any applicant for crop insurance, a producer with a 
valid crop insurance policy, or a private insurance company with a 
reinsurance agreement with FCIC or their agents, loss adjusters, 
employees or contractors.
    Regulations. All provisions contained in 7 CFR chapter IV.



Sec. 400.767  Requester obligations.

    (a) All requests for a final agency determination under this subpart 
must:
    (1) Be submitted:
    (i) In writing by certified mail, to the Associate Administrator, 
Risk Management Agency, United States Department of Agriculture, Stop 
Code 0801, 1400 Independence Avenue, SW., Washington, DC 20250-0801;
    (ii) By facsimile at (202) 690-3604; or
    (iii) By electronic mail at RMA.Mail@rma.usda.gov;
    (2) State that it is being submitted under section 506(s) of the 
Act;
    (3) Identify and quote the specific provision in the Act or 
regulations for which a final agency determination is requested;
    (4) State the crop year for which the interpretation is sought;
    (5) State the name, address, and telephone number of a contact 
person affiliated with the request; and
    (6) Contain the requester's detailed interpretation of the 
regulation.
    (b) The requestor must advise FCIC if the request for a final agency 
determination will be used in a lawsuit or the settlement of a claim.
    (c) Each request for final agency determination under this subpart 
must contain no more than one request for an agency interpretation.

[63 FR 70313, Dec. 21, 1998, as amended at 64 FR 50246, Sept. 16, 1999; 
71 FR 2135, Jan. 13, 2006]



Sec. 400.768  FCIC obligations.

    (a) FCIC will not interpret any specific factual situation or case, 
such as actions of any participant under the terms of a policy or any 
reinsurance agreement.
    (b) If, in the sole judgement of FCIC, the request is unclear, 
ambiguous, or incomplete, FCIC will not provide an interpretation, but 
will notify the requester that the request is unclear, ambiguous or 
incomplete, within 30 days of such request.
    (c) FCIC will provide a final determination of the interpretation to 
a request that meets all the conditions stated herein to the requester 
in writing, and at FCIC's discretion in the format in which it was 
received, within 90 days of the date of receipt by FCIC.
    (d) If a requestor is notified that a request is unclear, ambiguous 
or incomplete under section 400.768(b), the time to respond will be 
tolled from the date FCIC notifies the requestor until the date that 
FCIC receives a clear, complete, and unambiguous request.
    (e) If a response is not provided within 90 days, the requestor may 
assume the interpretation provided is correct for the applicable crop 
year.

[[Page 86]]

    (f) All agency final determinations will be published by FCIC as 
specially numbered documents on the RMA Internet website.
    (g) All final agency determinations are considered matters of 
general applicability that are not appealable to the National Appeals 
Division. Before obtaining judicial review of any final agency 
determination, the person must obtain an administratively final 
determination from the Director of the National Appeals division on the 
issue of whether the final agency determination is a matter of general 
applicability.

                           PART 401 [RESERVED]



PART 402_CATASTROPHIC RISK PROTECTION ENDORSEMENT--Table of Contents




Sec.
402.1 General statement.
402.2 Applicability.
402.3 OMB control numbers.
402.4 Catastrophic Risk Protection Endorsement Provisions.

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

    Source: 61 FR 42985, Aug. 20, 1996, unless otherwise noted.



Sec. 402.1  General statement.

    The Federal Crop Insurance Act, as amended by the Federal Crop 
Insurance Reform Act of 1994, requires the Federal Crop Insurance 
Corporation to implement a catastrophic risk protection plan of 
insurance that provides a basic level of insurance coverage to protect 
producers in the event of a catastrophic crop loss due to loss of yield 
or prevented planting, if provided by the Corporation, provided the crop 
loss or prevented planting is due to an insured cause of loss specified 
in the crop insurance policy. This Catastrophic Risk Protection 
Endorsement is a continuous endorsement that is effective in conjunction 
with a crop insurance policy for the insured crop. Catastrophic risk 
protection coverage will be offered through approved insurance providers 
if there are a sufficient number available to service the area. If there 
are an insufficient number available, as determined by the Secretary, 
local offices of the Farm Service Agency will provide catastrophic risk 
protection coverage.



Sec. 402.2  Applicability.

    This Catastrophic Risk Protection Endorsement is applicable to each 
crop for which catastrophic risk protection coverage is available and 
for which the producer elects such coverage.



Sec. 402.3  OMB control numbers.

    The information collection activity associated with this rule has 
been approved by the Office of Management and Budget (OMB) pursuant to 
the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35) under OMB 
control number 0563-0053.

[61 FR 42985, Aug. 20, 1996, as amended at 69 FR 48730, Aug. 10, 2004]



Sec. 402.4  Catastrophic Risk Protection Endorsement Provisions.

                        Department of Agriculture

                   Federal Crop Insurance Corporation

                Catastrophic Risk Protection Endorsement

(This is a continuous endorsement)

    If a conflict exists between this Endorsement and any of the 
policies specified in section 2 or the Special Provisions for the 
insured crop, this endorsement will control.

                          Terms and Conditions

                             1. Definitions

    Approved insurance provider. A private insurance company, including 
its agents, that has been approved and reinsured by FCIC to provide 
insurance coverage to producers participating in the Federal Crop 
Insurance program.
    Approved yield. The amount of production per acre computed in 
accordance with FCIC's actual production history program (7 CFR part 
400, subpart G) or for crops not included under 7 CFR part 400, subpart 
G, the yield used to determine the guarantee in accordance with the Crop 
Provisions or the Special Provisions, and any adjustments elected in 
accordance with section 36 of the Basic Provisions.
    County. The political subdivision of a state listed in the actuarial 
table and designated on your accepted application, including land in an 
adjoining county, provided such land is part of a field that extends 
into the adjoining county and the county boundary is not readily 
discernable. For peanuts and tobacco, the county will also include any 
land identified by a FSA farm serial number for

[[Page 87]]

the county but physically located in another county.
    Expected market price. (price election) The price per unit of 
production (or other basis as determined by FCIC) anticipated during the 
period the insured crop normally is marketed by producers. This price 
will be set by FCIC before the sales closing date for the crop. The 
expected market price may be less than the actual price paid by buyers 
if such price typically includes remuneration for significant amounts of 
post-production expenses such as conditioning, culling, sorting, 
packing, etc.
    FCIC. The Federal Crop Insurance Corporation, a wholly owned 
Government Corporation within USDA.
    FSA. The Farm Service Agency, an agency of the United States 
Department of Agriculture or any successor agency.
    Household. A domestic establishment including the members of a 
family (parents, brothers, sisters, children, spouse, grandchildren, 
aunts, uncles, nieces, nephews, first cousins, or grandparents, related 
by blood, adoption or marriage, are considered to be family members) and 
others who live under the same roof.
    Limited resource farmer. A person with:
    (1) Direct or indirect gross farm sales not more than $100,000.00 in 
each of the previous two years (to be increased starting in fiscal year 
2004 to adjust for inflation using Prices Paid by Farmer Index as 
compiled by National Agricultural Statistical Service (NASS)); and
    (2) A total household income at or below the national poverty level 
for a family of four, or less than 50 percent of county median household 
income in each of the previous two years (to be determined annually 
using Commerce Department Data).
    Secretary. The Secretary of the United States Department of 
Agriculture.
    USDA. The United States Department of Agriculture.
    Zero acreage report. An acreage report filed by you that certifies 
you do not have a share in the crop for that crop year.

      2. Eligibility, Life of Policy, Cancellation, and Termination

    (a) You must have one of the following policies in force to elect 
this Endorsement:
    (1) The Common Crop Insurance Policy (7 CFR 457.8) and crop 
provisions;
    (2) The Group Risk Plan Policy, if available for catastrophic risk 
protection; or
    (3) A specific named crop insurance policy.
    (b) You must have made application for catastrophic risk protection 
on or before the sales closing date for the crop in the county.
    (c) You must be a ``person'' as defined in the crop policy to be 
eligible for catastrophic risk protection coverage.

                            3. Unit Division

    (a) This section is in lieu of the unit provisions specified in the 
applicable crop policy.
    (b) For catastrophic risk protection coverage, a unit will be all 
insurable acreage of the insured crop in the county on the date coverage 
begins for the crop year:
    (1) In which you have one hundred percent (100%) crop share; or
    (2) Which is owned by one person and operated by another person on a 
share basis.

(Example: If, in addition to the land you own, you rent land from five 
landlords, three on a crop share basis and two on a cash basis, you 
would be entitled to four units; one for each crop share lease and one 
that combines the two cash leases and the land you own.)

    (c) Further division of the units described in paragraph (b) above 
is not allowed under this Endorsement.

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

    (a) Notwithstanding any provision contained in any other policy 
document, catastrophic coverage will offer protection equal to fifty 
percent (50%) of your approved yield indemnified at fifty-five percent 
(55%) of the expected market price, or a comparable coverage as 
established by FCIC.
    (b) If the crop policy denominates coverage in dollars per acre or 
other measure, or any other alternative method of coverage, such 
coverage will be converted to the amount of coverage that would be 
payable at fifty percent (50%) of your approved yield indemnified at 
fifty-five percent (55%) of the expected market price.
    (c) You may elect catastrophic coverage for any crop insured or 
reinsured by FCIC on either an individual yield and loss basis or an 
area yield and loss basis, if both options are offered as set out in the 
Actuarial Table or the Special Provisions.
    (d) To be eligible for an indemnity under this endorsement you must 
have suffered at least a 50 percent loss in yield.

                          5. Report of Acreage

    (a) The report of crop acreage that you file in accordance with the 
crop policy must be signed on or before the acreage reporting date. For 
catastrophic risk protection, unless the other person with an insurable 
interest in the crop objects in writing prior to the acreage reporting 
date and provides a signed acreage report on their own behalf, the 
operator may sign the acreage report for all other persons with an 
insurable interest in the crop without a power of attorney. All persons 
with an insurable interest in the crop, and for whom the operator 
purports to sign and represent, are bound by the information contained 
in that acreage report.

[[Page 88]]

    (b) For the purpose of determining the amount of indemnity only, 
your share will not exceed your insurable interest at the earlier of the 
time of loss or the beginning of harvest. Unless the accepted 
application clearly indicates that insurance is requested for a 
partnership or joint venture, insurance will only cover the crop share 
of the person completing the application. The share will not extend to 
any other person having an interest in the crop except as may otherwise 
be specifically allowed in this endorsement. Any acreage or interest 
reported by or for your spouse, child or any member of your household 
may be considered your share. A lease containing provisions for both a 
minimum payment (such as a specified amount of cash, bushels, pounds, 
etc.) and a crop share will be considered a crop share lease. A lease 
containing provisions for either a minimum payment (such as a specified 
amount of cash, bushels, pounds, etc.,) or a crop share will be 
considered a cash lease. Land rented for cash, a fixed commodity 
payment, or any consideration other than a share in the insured crop on 
such land will be considered as owned by the lessee.

                6. Annual Premium and Administrative Fees

    (a) Notwithstanding any provision contained in any other policy 
document, you will not be responsible to pay a premium, nor will the 
policy be terminated because the premium has not been paid. FCIC will 
pay a premium subsidy equal to the premium established for the coverage 
provided under this endorsement.
    (b) In return for catastrophic risk protection coverage, you must 
pay an administrative fee to us within 30 days after you have been 
billed, unless otherwise authorized in the Federal Crop Insurance Act 
(You will be billed by the date stated in the Special Provisions);
    (1) The administrative fee owed is $300 for each crop in the county 
unless otherwise specified in the Special Provisions.
    (2) Payment of an administrative fee will not be required if you 
file a bona fide zero acreage report on or before the acreage reporting 
date for the crop (if you falsely file a zero acreage report you may be 
subject to criminal and administrative sanctions).
    (c) The administrative fee provisions of paragraph (b) of this 
section do not apply if you meet the definition of a limited resource 
farmer (see section 1). The administrative fee will be waived if you 
request it and:
    (1) You qualify as a limited resource farmer; or
    (2) You were insured prior to the 2005 crop year or for the 2005 
crop year and your administrative fee was waived for one or more of 
those crop years because you qualified as a limited resource farmer 
under a policy definition previously in effect, and you remain qualified 
as a limited resource farmer under the definition that was in effect at 
the time the administrative fee was waived.
    (d) When a crop policy has provisions to allow you the option to 
separately insure individual crop types or varieties, you must pay a 
separate administrative fee in accordance with paragraph (b) of this 
section for each type or variety you elect to separately insure.
    (e) If the administrative fee is not paid when due, you, and all 
persons with an insurable interest in the crop under the same contract, 
may be ineligible for certain other USDA program benefits.

                             7. Insured Crop

    The crop insured is specified in the applicable crop policy, 
however:
    (a) Notwithstanding any other policy provision requiring the same 
insurance coverage on all insurable acreage of the crop in the county, 
if you purchase additional coverage for a crop, you may separately 
insure acreage under catastrophic coverage that has been designated as 
``high risk'' land by FCIC, provided that you execute a High Risk Land 
Exclusion Option and obtain a catastrophic risk protection policy with 
the same approved insurance provider, if available, on or before the 
applicable sales closing date. If catastrophic coverage is not available 
from the same insurance provider, you may obtain the catastrophic risk 
protection policy for the high risk land from another approved insurance 
provider or FSA, if available. You will be required to pay a separate 
administrative fee for both the additional coverage policy and the 
catastrophic coverage policy.
    (b) A landowner will be allowed to obtain catastrophic coverage for 
all other landowners who hold an undivided interest in the insurable 
acreage, provided:
    (1) All the landowners must agree in writing to such arrangement and 
have their social security number or employer identification number 
listed on the application, without regard to the actual amount of their 
interest in the insured acreage;
    (2) All landowners must have an undivided interest in the insurable 
acreage;
    (3) None of the landowners may hold any share in other acreage for 
which they are required to obtain at least catastrophic coverage;
    (4) The total cumulative liability under the Catastrophic Risk 
Protection Endorsement for all landowners must be $2,500 or less;
    (5) The landowner insuring the crop will:
    (i) Make application for insurance and provide the name and social 
security number or employer identification number of each person with an 
undivided interest in the insurable acreage;
    (ii) Be responsible to pay the one administrative fee for all the 
producers within the county;

[[Page 89]]

    (iii) Fulfill all requirements under the insurance contract; and
    (iv) Receive any indemnity payment under the landowner's social 
security number, or when applicable, employer identification number, and 
distribute the indemnity payments to the other persons sharing in the 
crop.

                          8. Replanting Payment

    Notwithstanding any provision contained in any other crop insurance 
document, no replant payment will be paid whether or not replanting of 
the crop is required under the policy.

                         9. Claim for Indemnity

    If two or more insured crop types, varieties, or classes are insured 
within the same unit, and multiple price elections are applicable, the 
dollar amount of insurance and the dollar amount of production to be 
counted will be determined separately for each type, variety, class, 
etc., that have separate price elections and then totaled to determine 
the total liability or dollar amount of production to be counted for the 
unit.

                        10. Concealment or Fraud

    Notwithstanding any provision contained in any other crop insurance 
document, your CAT policy may be voided by us on all crops without 
waiving any of our rights, including the right to collect any amounts 
due:
    (a) If at any time you conceal or misrepresent any material fact or 
commit fraud relating to this or any other contract issued under the 
authority of the Federal Crop Insurance Act with any insurance provider; 
and
    (b) The voidance will be effective for the crop year during which 
any such act or omission occurred.

                        11. Exclusion of Coverage

    (a) Options or endorsements that extend the coverage available under 
any crop policy offered by FCIC will not be available under this 
endorsement. Written agreements are not available for any crop insured 
under this endorsement.
    (b) Notwithstanding any provision contained in any other crop 
policy, hail and fire coverage and high-risk land may not be excluded 
under catastrophic risk protection.

[61 FR 42985, Aug. 20, 1996, as amended at 63 FR 40631, July 30, 1998; 
64 FR 40740, July 28, 1999; 65 FR 40484, June 30, 2000; 69 FR 48730, 
Aug. 10, 2004; 73 FR 36408, June 27, 2008; 73 FR 70864, Nov. 24, 2008]

                        PARTS 403-406 [RESERVED]



PART 407_GROUP RISK PLAN OF INSURANCE REGULATIONS--Table of Contents




Sec.
407.1 Applicability.
407.2 Availability of Federal crop insurance.
407.3 Premium rates, amounts of protection, and coverage levels.
407.4 OMB control numbers.
407.5 Creditors.
407.6 [Reserved]
407.7 The contract.
407.8 The application and policy.
407.9 Group risk plan common policy.
407.10 Group risk plan for barley.
407.11 Group risk plan for corn.
407.12 Group risk plan for cotton.
407.13 Group risk plan for forage.
407.14 Group risk plan for peanuts.
407.15 Group risk plan for sorghum.
407.16 Group risk plan for soybean.
407.17 Group risk plan for wheat.

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

    Source: 64 FR 30219, June 7, 1999, unless otherwise noted.



Sec. 407.1  Applicability.

    The provisions of this part are applicable only to those crops and 
crop years for which a Crop Provision is contained in this part.



Sec. 407.2  Availability of Federal crop insurance.

    (a) Insurance shall be offered under the provisions of this part on 
the insured crop in counties within the limits prescribed by and in 
accordance with the provisions of the Federal Crop Insurance Act, (7 
U.S.C. 1501 et seq.) (the Act). The crops and counties shall be 
designated by the Manager of the Federal Crop Insurance Corporation 
(FCIC) from those approved by the Board of Directors of FCIC.
    (b) The insurance will be offered through companies reinsured by 
FCIC under the same terms and conditions as the contract contained in 
this part. These contracts are clearly identified as being reinsured by 
FCIC. Additionally, the contract contained in this part may be offered 
directly to producers through agents of the United States Department of 
Agriculture. Those contracts are specifically identified as being 
offered by FCIC.
    (c) No person may have in force more than one insurance policy 
issued or reinsured by FCIC on the same crop for

[[Page 90]]

the same crop year, in the same county, unless specifically approved in 
writing by FCIC.
    (d) Except as specified in paragraph (c) of this section, if a 
person has more than one contract authorized under the Act that provides 
coverage for the same loss on the same crop for the same crop year in 
the same county, all such contracts shall be voided for that crop year 
and the person will be liable for the premium on all contracts, unless 
the person can show to the satisfaction of the Corporation that the 
multiple contracts of insurance were without the fault of the person.
    (1) If the multiple contracts of insurance are shown to be without 
the fault of the person and:
    (i) One contract is an additional coverage policy and the other 
contract is a Catastrophic Risk Protection policy, the additional 
coverage policy will apply if both policies are with the same insurance 
provider, or if not, both insurance providers agree, and the 
Catastrophic Risk Protection policy will be canceled (If the insurance 
providers do not agree, the policy with the earliest date of application 
will be in force and the other contract will be canceled); or
    (ii) Both contracts are additional coverage policies or both are 
Catastrophic Risk Protection policies, the contract with the earliest 
signature date on the application will be valid and the other contract 
on that crop in the county for that crop year will be canceled, unless 
both policies are with the same insurance provider and the insurance 
provider agrees otherwise or both policies are with different insurance 
providers and both insurance providers agree otherwise.
    (2) No liability for indemnity or premium will attach to the 
contracts canceled as specified in paragraphs (d)(1)(i) and (ii) of this 
section.
    (e) The person must repay all amounts received in violation of this 
section with interest at the rate contained in the contract (see Sec. 
407.9, section 15).
    (f) A person whose contract with FCIC or with a company reinsured by 
FCIC under the Act has been terminated because of violation of the terms 
of the contract is not eligible to obtain crop insurance under the Act 
with FCIC or with a company reinsured by FCIC unless the person can show 
that the termination was improper and should not result in subsequent 
ineligibility.
    (g) All applicants for insurance under the Act must advise the 
insurance provider, in writing at the time of application, of any 
previous applications for insurance or contracts of insurance under the 
Act within the last 5 years and the present status of any such 
applications or insurance.

[64 FR 30219, June 7, 1999, as amended at 69 FR 48731, Aug. 10, 2004]



Sec. 407.3  Premium rates, amounts of protection, and coverage levels.

    (a) The Manager of FCIC shall establish premium rates, amounts of 
protection, and coverage levels for the insured crop that will be 
included in the actuarial documents on file in the insurance provider's 
office. Premium rates, amounts of protection, and coverage levels may be 
changed from year to year.
    (b) At the time the application for insurance is made, the person 
must elect an amount of protection and a coverage level from among those 
contained in the actuarial documents for the crop year.



Sec. 407.4  OMB control numbers.

    The information collection activity associated with this rule has 
been previously approved by the Office of Management and Budget (OMB) 
under control number 0563-0053.



Sec. 407.5  Creditors.

    An interest of a person in an insured crop existing by virtue of a 
lien, mortgage, garnishment, levy, execution, bankruptcy, involuntary 
transfer or other similar interest shall not entitle the holder of the 
interest to any benefit under the contract.



Sec. 407.6  [Reserved]



Sec. 407.7  The contract.

    The insurance contract shall become effective upon the acceptance by 
FCIC or the reinsured company of a complete, duly executed application 
for insurance on a form prescribed or approved by FCIC. The contract 
shall

[[Page 91]]

consist of the accepted application, Group Risk Plan of Insurance Basic 
Provisions, Crop Provisions, Special Provisions, Actuarial Table, and 
any amendments, endorsements, or options thereto. Changes made in the 
contract shall not affect its continuity from year to year. No indemnity 
shall be paid unless the person complies with all terms and conditions 
of the contract. The forms required under this part and by the contract 
are available at the office of the insurance provider, or the local FSA 
office, if applicable.

[64 FR 30219, June 7, 1999, as amended at 69 FR 48731, Aug. 10, 2004]



Sec. 407.8  The application and policy.

    (a) Application for insurance, on a form prescribed or approved by 
FCIC, must be made by any person who wishes to participate in the 
program in order to cover such person's share in the insured crop as 
landlord, owner-operator, tenant, or other crop ownership interest. No 
other person's interest in the crop may be insured under the 
application. The application must be submitted to the insurance provider 
on or before the applicable sales closing date on file in the insurance 
provider's local office.
    (b) FCIC or the reinsured company may reject or no longer accept 
applications upon the FCIC's determination that the insurance risk is 
excessive. The Manager of the Corporation is authorized in any crop year 
to extend the sales closing date for submitting applications for fall 
planted crops, unless prohibited by law, upon determining that the 
probability and severity of claims will not increase because of the 
extension, by placing the extended date on file in the insurance 
provider's office and publishing a notice in the Federal Register. If 
adverse conditions should develop during the extended period, the 
Corporation will require the insurance provider to immediately 
discontinue acceptance of applications.
    (c) Since this Group Risk Plan differs significantly from 
traditional Multiple Peril Crop Insurance, persons who purchase the 
Group Risk Plan and their crop insurance agents will be required to 
execute an ``Acknowledgment of Differences'' that explains that the 
terms and conditions of the Group Risk Plan are different from 
traditional crop insurance in that:
    (1) The Group Risk Plan indemnity payment, if any, will be made 
after the Group Risk Plan premium is received;
    (2) A person may have a low yield on his or her individual farm and 
not receive a payment under Group Risk Plan; and
    (3) A person may not have any loss of production and still collect 
under the policy if a loss of production is general in the area.
    (4) By executing the ``Acknowledgment of Differences,'' the insured 
certifies that:
    (i) He or she understands the terms of the Group Risk Plan;
    (ii) An MPCI policy may be available in the county; and
    (iii) Both a Group Risk Plan and a MPCI Plan cannot be purchased on 
the same crop by the same insured in the same county.



Sec. 407.9  Group risk plan common policy.

    [FCIC policies]

                        Department of Agriculture

                   Federal Crop Insurance Corporation

                      Group Risk Plan Common Policy

    [Reinsured policies]
(Appropriate title for insurance provider)
(This is a continuous policy. Refer to Section 18.)

    [FCIC policies]
    This insurance policy establishes a risk management program 
developed by the Federal Crop Insurance Corporation (FCIC), an agency of 
the United States Government, under the authority of the Federal Crop 
Insurance Act (Act), as amended (7 U.S.C. 1501 et seq.). All terms of 
the policy and rights and responsibilities of the parties thereto are 
subject to the Act and all regulations under the Act published in 7 CFR 
chapter IV. The provisions of this policy may not be waived or modified 
in any way by us, your insurance agent or any employee of USDA unless 
the policy specifically authorizes a waiver or modification by written 
agreement. Procedures (handbooks, manuals, memoranda, and bulletins), 
issued by us and published on the RMA Web site at http://
www.rma.usda.gov/ or a successor Web site will be used in the 
administration of this policy. All provisions of state and local laws in 
conflict with the provisions of this policy as published at 7 CFR part 
407 are preempted and the provisions of this policy control.

[[Page 92]]

    Throughout this policy, ``you'' and ``your'' refer to the person 
shown on the accepted application and ``we,'' ``us,'' and ``our'' refer 
to the Federal Crop Insurance Corporation. Unless the context indicates 
otherwise, the use of the plural form of a word includes the singular 
use and the singular form of the word includes the plural.
    AGREEMENT TO INSURE: In return for the payment of the premium, and 
subject to all of the provisions of this policy, we agree with you to 
provide the insurance as stated in this policy. If there is a conflict 
between the Act, the regulations published at 7 CFR chapter IV, and the 
procedures issued by us, the order of priority is as follows: (1) The 
Act; (2) the regulations; and (3) the procedures issued by us, with (1) 
controlling (2), etc. If there is a conflict between the policy 
provisions published at 7 CFR part 407 and the administrative 
regulations published at 7 CFR part 400, the policy provisions published 
at 7 CFR part 407 control. If a conflict exists among the policy 
provisions, the order of priority is: (1) The Catastrophic Risk 
Protection Endorsement, as applicable; (2) the Special Provisions; (3) 
the Crop Provisions; and (4) these Basic Provisions, with (1) 
controlling (2), etc.
    [Reinsured policies]
    This insurance policy establishes a risk management program 
developed by the Federal Crop Insurance Corporation (FCIC), an agency of 
the United States Government, under the authority of the Federal Crop 
Insurance Act (Act), as amended (7 U.S.C. 1501 et seq.).
    This insurance policy is reinsured by FCIC under the provisions of 
the Act. All terms of the policy and rights and responsibilities of the 
parties are subject to the Act and all regulations under the Act 
published in 7 CFR chapter IV. The provisions of this policy may not be 
waived or modified in any way by us, our insurance agent or any other 
contractor or employee of ours or any employee of USDA unless the policy 
specifically authorizes a waiver or modification by written agreement. 
We will use the procedures (handbooks, manuals, memoranda, and 
bulletins), as issued by FCIC and published on the RMA Web site at 
http://www.rma.usda.gov/ or a successor Web site, in the administration 
of this policy. All provisions of state and local laws in conflict with 
the provisions of this policy as published at 7 CFR part 407 are 
preempted and the provisions of this policy will control. In the event 
that we cannot pay your loss because we are insolvent or are otherwise 
unable to perform our duties under our reinsurance agreement with FCIC, 
your claim will be settled in accordance with the provisions of this 
policy and FCIC will be responsible for any amounts owed. No state 
guarantee fund will be liable for your loss.
    Throughout this policy, ``you'' and ``your'' refer to the person 
shown on the accepted application and ``we,'' ``us,'' and ``our'' refer 
to the reinsured company issuing this policy. Unless the context 
indicates otherwise, the use of the plural form of a word includes the 
singular use and the singular form of the word includes the plural.
    AGREEMENT TO INSURE: In return for the payment of premium and 
subject to all of the provisions of this policy, we agree with you to 
provide risk protection as stated in this policy. If there is a conflict 
between the Act, the regulations published at 7 CFR chapter IV, and the 
procedures as issued by FCIC, the order of priority is as follows: (1) 
The Act; (2) the regulations; and (3) the procedures as issued by FCIC, 
with (1) controlling (2), etc. If there is a conflict between the policy 
provisions published at 7 CFR part 407 and the administrative 
regulations published at 7 CFR part 400, the policy provisions published 
at 7 CFR part 407 control. If a conflict exists among the policy 
provisions, the order of priority is: (1) the Catastrophic Risk 
Protection Endorsement, as applicable; (2) the Special Provisions; (3) 
the Crop Provisions; and (4) these Basic Provisions, with (1) 
controlling (2), etc.
    [Both policies]
    The Group Risk Plan of Insurance (GRP) is designed as a risk 
management tool to insure against widespread loss of production of the 
insured crop in a county. It is primarily intended for use by those 
producers whose farm yields tend to follow the average county yield. It 
is possible for you to have a low yield on the acreage that you insure 
and still not receive a payment under this plan.
    For additional coverage you may select any percent coverage level 
shown on the actuarial documents. Multiplying your coverage level 
percent by the expected county yield shown on the actuarial documents 
gives your trigger yield. If the payment yield that FCIC publishes for 
the insured crop year falls below your trigger yield, you will receive a 
payment.
    On or before the sales closing date, you may select any dollar 
amount of protection between 60 and 100 percent (except for Catastrophic 
Risk Protection (CAT) which is 45 percent) of the maximum protection per 
acre shown on the actuarial documents. This protection will be provided 
for each acre of the crop planted by the acreage reporting date and 
shown on your acreage report (unless otherwise provided in the crop 
provisions) in which you have a share.
    In accordance with the Act, FCIC will pay a portion of your premium, 
as published in the actuarial documents. The premium rates, practices, 
types, maximum protection per acre, and maximum subsidy per acre are 
also shown on the actuarial documents.

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    FCIC will issue the payment yield in the calendar year following the 
crop year insured. This yield will be the official estimated yield 
published by the National Agricultural Statistics Service (NASS). You 
will be paid if the payment yield falls below your trigger yield. The 
amount of your payment per net insured acre will be calculated by 
subtracting the payment yield from the trigger yield, dividing that 
quantity by the trigger yield, and multiplying that result by your 
protection per acre for each net acre that you have insured.
    To be eligible to participate in the Group Risk Plan of Insurance 
for any crop in any county, and to receive an indemnity thereunder, you 
must have an insurable interest in an insured crop that is planted in 
the county shown on the approved application. The crop must be planted 
for harvest and be reported to us by the acreage reporting date. You may 
only purchase coverage under the Group Risk Plan of Insurance on your 
net acres of the insured crop.
    The insurance contract shall become effective upon the acceptance by 
us of a duly executed application for insurance on our form. The policy 
will consist of the accepted application, these Basic Provisions, the 
Crop Provisions, the Special Provisions, other applicable amendments, 
endorsements or options, the actuarial documents for the insured 
agricultural commodity, the Catastrophic Risk Protection Endorsement, if 
applicable, and the applicable regulations published in 7 CFR chapter 
IV. Insurance for each agricultural commodity in each county will 
constitute a separate policy.

                          Terms and Conditions

              Group Risk Plan of Insurance Basic Provisions

                             1. Definitions

    Acreage report. A report required by section 7 of these Basic 
Provisions that contains, in addition to other information, your report 
of your share of all acreage of an insured crop in the county, whether 
insurable or not insurable.
    Acreage reporting date. The date contained in the Special Provisions 
by which you must submit your acreage report in order to be eligible for 
Group Risk Insurance.
    Act. Federal Crop Insurance Act, (7 U.S.C. 1501 et seq.).
    Actuarial documents. The material for the crop year which is 
available for public inspection in your agent's office and published on 
RMA's Web site at http://www.rma.usda.gov/ or a successor Web site, and 
which shows the maximum protection per acre, expected county yield, 
coverage levels, information needed to determine the premium rates, 
practices, program dates, and other related information regarding crop 
insurance in the county.
    Additional coverage. For GRP, an amount of protection greater than 
catastrophic risk protection. The protection is on a per acre basis as 
specified in the actuarial documents for the crop, practice, and type.
    Agricultural commodity. Any crop or other commodity produced, 
regardless of whether or not it is insurable.
    Agricultural experts. Persons who are employed by the Cooperative 
State Research, Education and Extension Service or the agricultural 
departments of universities, or other persons approved by FCIC, whose 
research or occupation is related to the specific crop or practice for 
which such expertise is sought.
    Area. Land surrounding the insured acreage with geographic 
characteristics, topography, soil types and climatic conditions similar 
to the insured acreage.
    Billing date. The date, contained in the actuarial documents, by 
which we will bill you for the premium and administrative fee on the 
insured crop.
    Cancellation date. The calendar date specified in the Crop 
Provisions on which insurance for the next crop year will automatically 
renew unless the policy is canceled in writing by either you or us or 
terminated in accordance with policy terms.
    Catastrophic risk protection. The minimum level of coverage offered 
by FCIC. For GRP, an amount of protection equal to 65 percent of the 
expected county yield indemnified at 45 percent of the maximum 
protection per acre specified in the actuarial documents for the crop, 
practice, and type.
    County. Any county, parish, or other political subdivision of a 
state shown on your accepted application.
    Certifying agent. A private or governmental entity accredited by the 
USDA Secretary of Agriculture for the purpose of certifying a 
production, processing or handling operation as organic.
    Code of Federal Regulations (CFR). The codification of general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. Rules published in 
the Federal Register by FCIC are contained in 7 CFR chapter IV. The full 
text of the CFR is available in electronic format at http://
www.access.gpo.gov/ or a successor Web site.
    Contract change date. The calendar date by which changes to the 
policy, if any, will be made available in accordance with section 19 of 
these Basic Provisions.
    Conventional farming practice. A system or process for producing an 
agricultural commodity, excluding organic farming practices, that is 
necessary to produce the crop that may be, but is not required to be, 
generally recognized by agricultural experts for the area to conserve or 
enhance natural resources and the environment.

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    Cover crop. A crop generally recognized by agricultural experts as 
agronomically sound for the area for erosion control or other reasons 
related to conservation or soil improvement. A cover crop may be 
considered to be a second crop (see the definition of ``second crop'').
    Crop practice. The combination of inputs such as fertilizer, 
herbicide, and pesticide, and operations such as planting, cultivation, 
and irrigation, used to produce the insured crop. The insurable 
practices are contained in the actuarial documents.
    Crop Provisions. The part of the policy that contains the specific 
provisions of insurance for each insured crop.
    Crop year. The period of time within which the insured crop is 
normally grown and designated by the calendar year in which the crop is 
normally harvested.
    Delinquent debt. Any administrative fees or premiums for insurance 
issued under the authority of the Act, and the interest on those 
amounts, if applicable, that are not postmarked or received by us or our 
agent on or before the termination date unless you have entered into an 
agreement acceptable to us to pay such amounts or have filed for 
bankruptcy on or before the termination date; any other amounts due us 
for insurance issued under the authority of the Act (including, but not 
limited to, indemnities found not to have been earned or that were 
overpaid), and the interest on such amounts, if applicable, which are 
not postmarked or received by us or our agent by the due date specified 
in the notice to you of the amount due; or any amounts due under an 
agreement with you to pay the debt, which are not postmarked or received 
by us or our agent by the due dates specified in such agreement.
    Dollar amount of protection per acre. The percentage of coverage 
selected by you multiplied by the maximum protection per acre specified 
in the actuarial documents for the crop, practice, and type. The dollar 
amount of protection per acre is shown on your Summary of Protection.
    Double crop. Producing two or more crops for harvest on the same 
acreage in the same crop year.
    Expected county yield. The yield contained in the actuarial 
documents, on which your coverage for the crop year is based. This yield 
is determined using historical NASS county average yields, as adjusted 
by FCIC.
    FCIC. The Federal Crop Insurance Corporation, a wholly owned 
corporation within USDA.
    First insured crop. With respect to a single crop year and any 
specific crop acreage, the first instance that an agricultural commodity 
is planted for harvest or prevented from being planted and is insured 
under the authority of the Act. For example, if winter wheat that is not 
insured is planted on acreage that is later planted to soybeans that are 
insured, the first insured crop would be soybeans. If the winter wheat 
was insured, it would be the first insured crop.
    FSA. The Farm Service Agency, an agency of the United States 
Department of Agriculture, or a successor agency.
    Generally recognized. When agricultural experts or the organic 
agricultural industry, as applicable, are aware of the production method 
or practice and there is no genuine dispute regarding whether the 
production method or practice allows the crop to make normal progress 
toward maturity.
    Good farming practices. The production methods utilized to produce 
the insured crop and allow it to make normal progress toward maturity, 
which are: (1) For conventional or sustainable farming practices, those 
generally recognized by agricultural experts for the area; or (2) for 
organic farming practices, those generally recognized by the organic 
agricultural industry for the area or contained in the organic plan that 
is in accordance with the National Organic Program published in 7 CFR 
part 205. We may, or you may request us to, contact FCIC to determine 
whether or not production methods will be considered to be ``good 
farming practices.''
    GRP. Group Risk Plan of Insurance.
    Household. A domestic establishment including the members of a 
family (parents, brothers, sisters, children, spouse, grandchildren, 
aunts, uncles, nieces, nephews, first cousins, or grandparents, related 
by blood, adoption or marriage, are considered to be family members) and 
others who live under the same roof.
    Insurable loss. Damage for which coverage is provided under the 
terms of your policy, and for which you accept an indemnity payment.
    Insurance provider. The FSA or a private insurance company approved 
by FCIC which provides crop insurance coverage to producers 
participating in any Federal crop insurance program administered under 
the Act.
    Limited resource farmer. A person with:
    (1) Direct or indirect gross farm sales not more than $100,000.00 in 
each of the previous two years (to be increased starting in fiscal year 
2004 to adjust for inflation using Prices Paid by Farmer Index as 
compiled by NASS); and
    (2) A total household income at or below the national poverty level 
for a family of four, or less than 50 percent of county median household 
income in each of the previous two years (to be determined annually 
using Commerce Department Data).
    Maximum protection per acre. The highest amount of protection 
specified in the actuarial documents.
    MPCI. Multiple peril crop insurance, an insurance product based on 
an individual yield or amount of insurance.

[[Page 95]]

    NASS. National Agricultural Statistics Service, an agency within 
USDA, or its successor, that publishes the official United States 
Government yield estimates.
    Native sod. Acreage on which the plant cover is composed principally 
of native grasses, grass-like plants, forbs, or shrubs suitable for 
grazing and browsing, and that has no record of being tilled (determined 
in accordance with FSA records) for the production of an annual crop on 
or before May 22, 2008.
    Net acres. The planted acreage of the insured crop multiplied by 
your share.
    Offset. The act of deducting one amount from another amount.
    Organic agricultural industry. Persons who are employed by the 
following organizations: Appropriate Technology Transfer for Rural 
Areas, Sustainable Agriculture Research and Education or the Cooperative 
State Research, Education and Extension Service, the agricultural 
departments of universities, or other persons approved by FCIC, whose 
research or occupation is related to the specific organic crop or 
practice for which such expertise is sought.
    Organic crop. An agricultural commodity that is organically produced 
consistent with section 2103 of the Organic Foods Production Act of 1990 
(7 U.S.C. 6502).
    Organic farming practice. A system of plant production practices 
used to produce an organic crop that is approved by a certifying agent 
in accordance with 7 CFR part 205.
    Payment yield. The yield determined by FCIC based on NASS yields for 
each insurable crop's type and practice, as adjusted by FCIC, and used 
to determine whether an indemnity will be due.
    Person. An individual, partnership, association, corporation, 
estate, trust, or other legal entity, and wherever applicable, a state 
or a political subdivision or agency of a state.
    Prairie Pothole National Priority Area. Consists of specific 
counties within the States of Iowa, Minnesota, Montana, North Dakota or 
South Dakota as specified on the RMA Web site at http://
www.rma.usda.gov/.
    Replanted crop. The same agricultural commodity replanted on the 
same acreage as the first insured crop for harvest in the same crop year 
if the replanting is specifically made optional by the policy and you 
elect to replant the crop and insure it under the policy covering the 
first insured crop, or replanting is required by the policy.
    Sales closing date. The date contained in the Special Provisions by 
which an application must be filed. The last date by which you may 
change your crop insurance coverage for a crop year.
    Second crop. With respect to a single crop year, the next occurrence 
of planting any agricultural commodity for harvest following a first 
insured crop on the same acreage. The second crop may be the same or a 
different agricultural commodity as the first insured crop, except the 
term does not include a replanted crop. A cover crop, planted after a 
first insured crop and planted for the purpose of haying, grazing or 
otherwise harvesting in any manner or that is hayed or grazed during the 
crop year, or that is otherwise harvested is considered to be a second 
crop. A cover crop that is covered by FSA's noninsured crop disaster 
assistance program (NAP) or receives other USDA benefits associated with 
forage crops will be considered as planted for the purpose of haying, 
grazing or otherwise harvesting. A crop meeting the conditions stated 
herein will be considered to be a second crop regardless of whether or 
not it is insured.
    Share. Your percentage of interest in the insured crop, as an owner, 
operator, or tenant at the time insurance attaches. Premium will be 
determined on your share as of the acreage reporting date. However, only 
for the purpose of determining the amount of indemnity, your share will 
not exceed your share at the acreage reporting date or on the date of 
harvest, whichever is less.
    Special provisions. The part of the policy that contains specific 
provisions of insurance for each crop that may vary by geographic area.
    Subsidy. The portion of your premium, shown on the actuarial 
documents, that FCIC will pay in accordance with the Act.
    Substantial beneficial interest. An interest held by any person of 
at least 10 percent in you. The spouse of any individual applicant or 
individual insured will be considered to have a substantial beneficial 
interest in the applicant or insured unless the spouses can prove they 
are legally separated or otherwise legally separate under state law. Any 
child of an individual applicant or individual insured will not be 
considered to have a substantial beneficial interest in the applicant or 
insured unless the child has a separate legal interest in such person. 
For example, there are two partnerships that each have a 50 percent 
interest in you and each partnership is made up of two individuals, each 
with a 50 percent share in the partnership. In this case, each 
individual would be considered to have a 25 percent interest in you, and 
both the partnerships and the individuals would have a substantial 
beneficial interest in you (The spouses of the individuals would not be 
considered to have a substantial beneficial interest unless the spouse 
was one of the individuals that made up the partnership). However, if 
each partnership is made up of six individuals with equal interests, 
then each would only have an 8.33 percent interest in you and although 
the partnership would still have a substantial beneficial interest in 
you, the individuals would not for the purposes of reporting in section 
18.

[[Page 96]]

    Summary of protection. Our statement to you of the crop insured, 
dollar amount of protection per acre, premiums, and other information 
obtained from your accepted application, acreage report, and the 
actuarial documents.
    Sustainable farming practice. A system or process for producing an 
agricultural commodity, excluding organic farming practices, that is 
necessary to produce the crop and is generally recognized by 
agricultural experts for the area to conserve or enhance natural 
resources and the environment.
    Termination date. The calendar date contained in the Crop Provisions 
upon which insurance ceases to be in effect because of nonpayment of any 
amount due us under the policy, including premium and administrative 
fees.
    Trigger yield. The result of multiplying the expected county yield 
by the coverage level percentage chosen by you. When the payment yield 
falls below the trigger yield, an indemnity is due.
    Type. Plants of the insured crop having common traits or 
characteristics that distinguish them as a group or class, and which are 
designated in the actuarial documents.
    USDA. United States Department of Agriculture.

                             2. Insured Crop

    The insured crop will be the crop shown on your accepted 
application, as specified in the applicable Crop Provisions, and must be 
grown on insurable acres.

                    3. Insured and Insurable Acreage

    (a) The insurable acreage is all of the acreage of the insured crop 
for which premium rates are provided by the actuarial documents and in 
which you have a share and which is in the county listed in your 
accepted application. The dollar amount of protection per acre, amount 
of premium, and indemnity will be calculated separately for each county, 
type, and practice.
    (b) Only the acreage seeded to the insured crop on or before the 
acreage reporting date (unless otherwise provided in the Crop 
Provisions) and physically located in the county listed on your accepted 
application will be insured. Crops grown on acreage physically located 
in another county must be reported and insured separately.
    (c) We will not insure any acreage:
    (1) Where the crop was destroyed or put to another use during the 
crop year for the purpose of conforming with, or obtaining a payment 
under, any other program administered by the USDA;
    (2) Where you have failed to follow good farming practices for the 
insured crop; or
    (i) Planted to a type, class or variety not generally recognized for 
the area; or
    (ii) Where the conditions under which the crop is planted are not 
generally recognized for the area (For example, where agricultural 
experts determine that planting a non-irrigated corn crop after a failed 
small grain crop on the same acreage in the same crop year is not 
appropriate for the area);
    (3) Of a second crop, if you elect not to insure such acreage when 
an indemnity for a first insured crop may be subject to reduction in 
accordance with the provisions of section 21 and you intend to collect 
an indemnity payment that is equal to 100 percent of the insurable loss 
for the first insured crop acreage. This election must be made for all 
first insured crop acreage that may be subject to an indemnity reduction 
if the first insured crop is insured under this policy, or on a first 
insured crop unit basis if the first insured crop is not insured under 
this policy. For example, if the first insured crop under this policy 
consists of 40 acres, or the first insured crop unit insured under 
another policy contains 40 planted acres, then no second crop can be 
insured on any of the 40 acres. In this case:
    (i) If the first insured crop is insured under this policy, you must 
provide written notice to us of your election not to insure acreage of a 
second crop by the acreage reporting date for the second crop if it is 
insured under this policy, or before planting the second crop if it is 
insured under any other policy, or, if the first insured crop is not 
insured under this policy, at the time the first insured crop acreage is 
released by us (if no acreage in the first insured crop unit is 
released, this election must be made by the earlier of the acreage 
reporting date for the second crop or when you sign the claim for the 
first insured crop), and if you fail to provide such notice, the second 
crop acreage will be insured in accordance with applicable policy 
provisions and you must repay any overpaid indemnity for the first 
insured crop;
    (ii) In the event a second crop is planted and insured with a 
different insurance provider, or planted and insured by a different 
person, you must provide written notice to each insurance provider that 
a second crop was planted on acreage on which you had a first insured 
crop; and
    (iii) You must report the crop acreage that will not be insured on 
the applicable acreage report; or
    (4) Of a crop planted following a second crop or following an 
insured crop that is prevented from being planted after a first insured 
crop, unless it is a practice that is generally recognized by 
agricultural experts or the organic agricultural industry for the area 
to plant three or more crops for harvest on the same acreage in the same 
crop year, and additional coverage insurance provided under the 
authority of the Act is offered for the third or subsequent crop in the 
same

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crop year. Insurance will only be provided for a third or subsequent 
crop as follows:
    (i) You must provide records acceptable to us that show:
    (A) You have produced and harvested the insured crop following two 
other crops harvested on the same acreage in the same crop year in at 
least two of the last four years in which you produced the insured crop; 
or
    (B) The applicable acreage has had three or more crops produced and 
harvested on it in at least two of the last four years in which the 
insured crop was grown on it; and
    (ii) The amount of insurable acreage will not exceed 100 percent of 
the greatest number of acres for which you provide the records required 
in section 3(c)(4)(i)(A) or (B).
    (d) If the Governor of a State designated within the Prairie Pothole 
National Priority Area elects to make section 508(o) of the Act 
effective for the State, any native sod acreage greater than 5 acres 
located in a county contained within the Prairie Pothole National 
Priority Area that has been tilled for the production of an annual crop 
after May 22, 2008, is not insurable for the first 5 crop years of 
planting following the date the native sod acreage is tilled. If the 
Governor makes this election after you have received an indemnity or 
other payment for native sod acreage, you may be required to repay the 
amount received and any premium for such acreage may be refunded to you.

                          4. Policy Protection

    (a) For catastrophic risk protection GRP policies, the dollar amount 
of protection per acre will be 45 percent of the maximum protection per 
acre specified on the actuarial documents for each insured crop, 
practice, and type. For additional coverage GRP policies, you may select 
any dollar amount of protection from 60 percent through 100 percent of 
the maximum protection per acre shown on the actuarial documents for the 
crop, practice, and type.
    (b) The dollar amount of protection per acre, multiplied by your net 
insured acreage, is your policy protection for each insured crop, 
practice, and type specified in the actuarial documents.
    (c) All yields are based on NASS determinations, and such 
determinations for the county will be conclusively presumed to be 
accurate.

                           5. Coverage Levels

    (a) For catastrophic risk protection GRP policies, the coverage 
level is shown on the actuarial documents for each insured crop, 
practice, and type. For additional coverage GRP policies, you may select 
any percentage of coverage shown on the actuarial documents for the 
crop, practice, and type.
    (b) Your coverage level multiplied by the expected county yield 
shown on the actuarial documents is your trigger yield. If the payment 
yield published by FCIC for the insured crop, practice, and type for the 
insured crop year falls below your trigger yield, you will receive an 
indemnity payment.
    (c) You may change the coverage level or amount of protection for 
each insured crop on or before the sales closing date. Changes must be 
in writing and received by us by the sales closing date.

                      6. Payment Calculation Factor

    Your payment calculation factor will be ((your trigger yield-payment 
yield) / your trigger yield) for the purposes of calculating an 
indemnity payment.

                     7. Report of Acreage and Share

    (a) You must report on our form all acreage for each insured crop in 
which you have a share (insurable and not insured) by practice and type 
specified in the actuarial documents in each county listed on your 
accepted application. This report must be submitted each year on or 
before the acreage reporting date for the insured crop contained in the 
actuarial documents. If you do not submit an acreage report by the 
acreage reporting date, we will determine your acreage and share or deny 
liability on the policy.
    (b) We will not insure any acreage of the insured crop planted after 
the acreage reporting date, unless otherwise provided in the Crop 
Provisions.
    (c) The premium amount and payment of an indemnity will be based on 
your insurable acreage on the acreage reporting date subject to section 
7(d).
    (d) You must provide all required reports and you are responsible 
for the accuracy of all information contained in those reports. You 
should verify the information on all such reports prior to submitting 
them to us.
    (1) If you submit information on any report that is different than 
what is determined to be correct and such information results in:
    (i) A lower amount of policy protection than the correct amount, the 
amount of policy protection will be reduced to an amount consistent with 
the reported information; or
    (ii) A higher amount of policy protection than the correct amount, 
the information contained in the acreage report will be revised to be 
consistent with the correct information.
    (2) In addition to the other adjustments specified in section 
7(d)(1), if you misreport any information that results in an amount of 
policy protection greater than 110.0 percent or lower than 90.0 percent 
of the correct amount of policy protection, any indemnity will be based 
on the amount of policy protection determined in accordance with section 
7(d)(1)(i) or (ii) and will be reduced in an

[[Page 98]]

amount proportionate with the amount of policy protection that is 
misreported in excess of the tolerances stated in this paragraph (For 
example, if the correct amount of policy protection is determined to be 
$100.00, but you reported a policy protection amount of $120.00, any 
indemnity will be reduced by 10.0 percent ($120.00 / $100.00 = 1.20, and 
1.20 -1.10 = 0.10)).
    (e) If you request an acreage measurement prior to the acreage 
reporting date and submit documentation of such request and an acreage 
report with estimated acreage by the acreage reporting date, you must 
provide the measurement to us, we will revise your acreage report if 
there is a discrepancy, and no indemnity will be paid until the acreage 
measurement has been received by us (Failure to provide the measurement 
to us will result in the application of section 7(d) if the estimated 
acreage is not correct, and estimated acreage under this paragraph will 
no longer be accepted for any subsequent acreage report).
    (f) If there is an irreconcilable difference between:
    (1) The acreage measured by FSA or a measuring service and our on-
farm measurement, our on-farm measurement will be used; or
    (2) The acreage measured by a measuring service, other than our on-
farm measurement, and FSA, the FSA measurement will be used.
    (g) Information on the initial acreage report will not be considered 
misreported for the purposes of section 7(d) if the acreage report is 
revised:
    (1) In accordance with section 7(e) or (f);
    (2) Because information is clearly transposed;
    (3) When you provide adequate evidence that we or someone from USDA 
have committed an error regarding the information; or
    (4) As expressly permitted by the policy.
    (h) If we discover you have incorrectly reported any information on 
the acreage report for any crop year, you may be required to provide 
documentation in subsequent crop years substantiating your report of 
acreage for those crop years, including, but not limited to, an acreage 
measurement service at your own expense. If the correction of any 
misreported information would affect an indemnity that was paid in a 
prior crop year, such claim will be adjusted and you will be required to 
repay any overpaid amounts.
    (i) You may insure only your share of the crop, which includes any 
share of your spouse and dependent children unless it is demonstrated to 
our satisfaction, prior to the sales closing date, that you and your 
spouse maintain completely separate farming operations and that each 
spouse is the operator of his or her own separate operation. Any 
commingling of any part of the operations will cause shares of you and 
your spouse to be combined.

                8. Administrative Fees and Annual Premium

    (a) If you obtain a catastrophic risk protection GRP policy, you 
will pay an administrative fee, unless otherwise authorized in the Act:
    (1) Of $300 per crop per county unless otherwise specified in the 
Special Provisions;
    (2) Payable to the insurance provider on the billing date for the 
crop.
    (b) If you obtain an additional coverage GRP policy, you will pay an 
administrative fee:
    (1) Of $30 per crop per county;
    (2) Payable to the insurance provider on the billing date for the 
crop.
    (c) The administrative fee will be waived if you request it and:
    (1) You qualify as a limited resource farmer; or
    (2) You were insured prior to the 2005 crop year or for the 2005 
crop year and your administrative fee was waived for one or more of 
those crop years because you qualified as a limited resource farmer 
under a policy definition previously in effect, and you remain qualified 
as a limited resource farmer under the definition that was in effect at 
the time the administrative fee was waived.
    (d) For additional coverage GRP policies, your premium is determined 
by multiplying your policy protection by the premium rate per hundred 
dollars of protection for your coverage level contained in the actuarial 
documents, by 0.01, and subtracting the applicable subsidy.
    (e) For catastrophic risk protection and additional coverage GRP 
policies, payment of an administrative fee will not be required if you 
file a bona fide zero acreage report on or before the acreage reporting 
date for the crop (if you falsely file a zero acreage report you may be 
subject to criminal and administrative sanctions).
    (f) The annual premium is earned and payable at the time the insured 
crop is planted. For each insured crop, you will be billed for premium 
and the administrative fee not earlier than the billing date specified 
in the Special Provisions. Premium, administrative fee, and any other 
amount owed us is due on the billing date and interest will accrue if 
the premium, administrative fee, or any other amount owed is not 
received by us before the first day of the month following the premium 
billing date.
    (g) If the amount of premium (gross premium less premium subsidy 
paid on your behalf by FCIC) and administrative fee you are required to 
pay for any acreage exceeds the amount of protection for the acreage, 
coverage for those acres will not be provided (no premium or 
administrative fee will be due and no indemnity will be paid for such 
acreage).

[[Page 99]]

                          9. Written Agreements

    Terms of this policy which are specifically designated for the use 
of written agreements may be altered by written agreement in accordance 
with the following:
    (a) You must apply in writing for each written agreement or for 
renewal of any written agreement no later than the sales closing date, 
unless you demonstrate your physical inability to submit the request 
prior to the sales closing date (For example, you have been hospitalized 
or a blizzard has made it impossible to submit the written agreement 
request in person or by mail);
    (b) The application for written agreement must contain all variable 
terms of the contract between you and us that will be in effect if the 
written agreement is not approved;
    (c) If approved by FCIC, the written agreement will include all 
variable terms of the contract, including, but not limited to, crop 
practice, and type or variety;
    (d) Each written agreement will only be valid for the number of crop 
years specified in the written agreement and a multi-year written 
agreement:
    (1) Will only apply for any particular crop year designated in the 
written agreement if all terms and conditions in the written agreement 
are still applicable for the crop year and the conditions under which 
the written agreement has been provided have not changed prior to the 
beginning of the crop year (If conditions change during or prior to a 
crop year, the written agreement will not be effective for that crop 
year but may still be effective for a subsequent crop year if conditions 
under which the written agreement has been provided exist for such 
year);
    (2) May be canceled in writing by:
    (i) FCIC not less than 30 days before the cancellation date if it 
discovers that any term or condition of the written agreement, including 
the premium rate, is not appropriate for the crop; or
    (ii) You or us on or before the cancellation date;
    (3) That is not renewed in writing after it expires, is not 
applicable for a crop year, or is canceled, then insurance coverage will 
be in accordance with the terms and conditions stated in this policy, 
without regard to the written agreement; and
    (4) Will be automatically cancelled if you transfer your policy to 
another insurance provider (No notice will be provided to you and for 
any subsequent crop year, for a written agreement to be effective, you 
must timely request renewal of the written agreement in accordance with 
this section);
    (e) A request for any written agreement must contain:
    (1) A completed ``Request for Actuarial Change'' form;
    (2) Evidence from agricultural experts or the organic agricultural 
industry, as applicable, that the crop can be produced in the area if 
the request is to provide insurance for practices, types, or varieties 
that are not insurable, unless we are notified in writing by FCIC that 
such evidence is not required;
    (3) The legal description of the land (in areas where legal 
descriptions are available), FSA Farm Serial Number including tract 
number, and a FSA aerial photograph, acceptable Geographic Information 
System or Global Positioning System maps, or other legible maps 
delineating field boundaries where you intend to plant the crop for 
which insurance is requested; and
    (4) Such other information as specified in the Special Provisions or 
required by FCIC;
    (f) A request for written agreement will not be accepted if:
    (1) The request is submitted to us after the deadline contained in 
section 9(a);
    (2) All the information required in section 9(e) is not submitted to 
us with the request for a written agreement (The request for a written 
agreement may be accepted if any missing information is available from 
other acceptable sources); or
    (3) The request is to add land or crops to an existing written 
agreement or to add land or crops to a request for a written agreement 
and the request is not submitted by the deadlines specified in section 
9(a);
    (g) A request for a written agreement will be denied if:
    (1) FCIC determines the risk is excessive;
    (2) There is not adequate information available to establish an 
actuarially sound premium rate and insurance coverage for the crop and 
acreage; or
    (3) Agricultural experts or the organic agricultural industry 
determines the crop practices, types, or varieties are not generally 
recognized for the county;
    (h) A written agreement will be denied unless FCIC approves the 
written agreement and the original written agreement is signed by you 
and sent to us not later than the expiration date;
    (i) With respect to your and our ability to reject an offer for a 
written agreement:
    (1) When a single Request for Actuarial Change form is submitted, 
regardless of how many requests for changes are contained on the form, 
you and we can only accept or reject the written agreement in its 
entirety (you cannot reject specific terms of the written agreement and 
accept others);
    (2) When multiple Request for Actuarial Change forms are submitted, 
regardless of when the forms are submitted, for the same condition, all 
these forms may be treated as one request and you and we will only have 
the option of accepting or rejecting the written agreement in its 
entirety (you cannot reject specific terms of the written agreement and 
accept others);

[[Page 100]]

    (3) When multiple Request for Actuarial Change forms are submitted, 
regardless of when the forms are submitted, for the different conditions 
or for different crops, separate agreements may be issued and you and we 
will have the option to accept or reject each written agreement; and
    (4) If we reject an offer for a written agreement approved by FCIC, 
you may seek arbitration or mediation of our decision to reject the 
offer in accordance with section 16;
    (j) Any information that is submitted by you after the applicable 
deadlines in section 9(a) will not be considered, unless such 
information is specifically requested in accordance with section 
9(e)(4);
    (k) If the written agreement or the policy is canceled for any 
reason, or the period for which an existing written agreement is in 
effect ends, a request for renewal of the written agreement must contain 
all the information required by this section and be submitted in 
accordance with section 9(a), unless otherwise specified by FCIC; and
    (l) If a request for a written agreement is not approved by FCIC, a 
request for a written agreement for any subsequent crop year that fails 
to address the stated basis for the denial will not be accepted (If the 
request for a written agreement contains the same information that was 
previously rejected or denied, you will not have any right to arbitrate, 
mediate or appeal the non-acceptance of your request).

             10. Access to Insured Crop and Record Retention

    (a) We, and any employee of USDA authorized to investigate or review 
any matter relating to crop insurance, have the right to examine the 
insured crop, any records relating to the crop and this insurance, and 
any records regarding mediation, arbitration or litigation involving the 
insured crop, at any location where such crop or records may be found or 
maintained, as often as reasonably required during the record retention 
period.
    (b) You must retain, and provide upon our request, or the request of 
any employee of USDA authorized to investigate or review any matter 
relating to crop insurance, complete records pertaining to the planting 
of the insured crop and your net acres for a period of three years after 
the end of the crop year or three years after the date of final payment 
of the indemnity, whichever is later. This requirement also applies to 
all such records for acreage that is not insured.
    (c) We, or any employee of USDA authorized to investigate or review 
any matter relating to crop insurance, may extend the record retention 
period beyond three years by notifying you of such extension in writing.
    (d) By signing the application for insurance authorized under the 
Act or by continuing insurance for which you have previously applied, 
you authorize us or USDA, or any person acting for us or USDA authorized 
to investigate or review any matter relating to crop insurance, to 
obtain records relating to the planting, replanting, inputs, production, 
harvesting, and disposition of the insured crop from any person who may 
have custody of such records, including but not limited to, FSA offices, 
banks, warehouses, gins, cooperatives, marketing associations, and 
accountants. You must assist in obtaining all records we or any employee 
of USDA authorized to investigate or review any matter relating to crop 
insurance request from third parties.
    (e) Failure to provide access to the insured crop or the farm, 
maintain or provide any required records, authorize access to the 
records maintained by third parties, or assist in obtaining all such 
records will result in a determination that no indemnity is due for the 
crop year in which such failure occurred.

             11. Transfer of Coverage and Right to Indemnity

    If you transfer any part of your share during the crop year, you may 
transfer your coverage rights, if the transferee is eligible for crop 
insurance. We will not be liable for any more than the liability 
determined in accordance with your policy that existed before the 
transfer occurred. The transfer of coverage rights must be on our form 
and will not be effective until approved by us in writing. Both you and 
the transferee are jointly and severally liable for payment of the 
premium. The transferee has all rights and responsibilities under this 
policy consistent with the transferee's interest.

                       12. Assignment of Indemnity

    You may assign to another person your right to an indemnity for the 
crop year. The assignment must be on our form and will not be effective 
until approved in writing by us.

                          13. Other Insurance.

    Nothing in this section prevents you from obtaining other insurance 
not authorized under the Act. However, unless specifically required by 
policy provisions, you must not obtain any other crop insurance 
authorized under the Act on your share of the insured crop. If you 
cannot demonstrate that you did not intend to have more than one policy 
in effect, you may be subject to the consequences authorized under this 
policy, the Act, or any other applicable statute. If you can demonstrate 
that you did not intend to have more than one policy in effect (For 
example, an application to transfer your policy or written notification 
to an insurance provider that states you want to purchase, or transfer, 
insurance and you want any other

[[Page 101]]

policies for the crop canceled would demonstrate you did not intend to 
have duplicate policies), and:
    (a) One is an additional coverage policy and the other is a 
Catastrophic Risk Protection policy:
    (1) The additional coverage policy will apply if both policies are 
with the same insurance provider or, if not, both insurance providers 
agree; or
    (2) The policy with the earliest date of application will be in 
force if both insurance providers do not agree; or
    (b) Both are additional coverage policies or both are Catastrophic 
Risk Protection policies, the policy with the earliest date of 
application will be in force and the other policy will be void, unless 
both policies are with:
    (1) The same insurance provider and the insurance provider agrees 
otherwise; or
    (2) Different insurance providers and both insurance providers agree 
otherwise.

                             14. [Reserved]

    [FCIC policy]

            15. Restrictions, Limitations, and Amounts Due Us

    (a) We may restrict the amount of acreage we will insure to the 
amount allowed under any acreage limitation program established by USDA.
    (b) Violation of Federal statutes including, but not limited to, the 
Act; the controlled substance provisions of the Food Security Act of 
1985; the Food, Agriculture, Conservation, and Trade Act of 1990; and 
the Omnibus Budget Reconciliation Act of 1993, and any regulation 
promulgated thereunder, will result in cancellation, termination, or 
voidance of your crop insurance contract. We will recover any and all 
monies paid to you or received by you during your period of 
ineligibility, and your premium will be refunded, less an amount for 
expenses and handling not to exceed 20 percent of the premium paid or to 
be paid by you.
    (c) Our maximum liability under this policy will be limited to the 
policy protection specified in section 4 of this policy.
    (d) We will pay simple interest computed on the net indemnity 
ultimately found to be due by us or determined by a final judgment of a 
court of competent jurisdiction or a final administrative determination 
from, and including, the 61st day after the date we receive the NASS 
county yield estimates for the insured crop year. Interest will be paid 
only if the reason for our failure to timely pay is not due to your 
failure to provide information or other material necessary for the 
computation or payment of the indemnity. The interest rate will be that 
established by the Secretary of the Treasury under section 12 of the 
Contract Disputes Act of 1978 (41 U.S.C. 611 et seq.), and published in 
the Federal Register.
    (e) Any amount illegally or erroneously paid to you or that is owed 
to us but is delinquent may be recovered by us through offset by 
deducting it from any loan or payment due you under any Act of Congress 
or program administered by any United States Government Agency, or by 
other collection action.
    (f) Interest will accrue at the rate not to exceed 1.25 percent 
simple interest per calendar month, or any part thereof, on any unpaid 
premium or administrative fee balance. For the purpose of premium and 
administrative fee amounts due us, interest will begin to accrue on the 
first day of the month following the premium billing date specified in 
the Special Provisions.
    (g) For the purpose of any other amounts due us, such as repayment 
of indemnities found not to have been earned:
    (1) Interest will start to accrue on the date that notice is issued 
to you for the collection of the unearned amount;
    (2) Amounts found due under this paragraph will not be charged 
interest if payment is made in full within 30 days of issuance of the 
notice by us;
    (3) The amount will be considered delinquent if not paid within 30 
days of the date the notice is issued by us;
    (4) Penalties and interest will be charged in accordance with 31 
U.S.C. 3717 and 4 CFR part 102; and
    (5) The penalty for accounts more than 90 days delinquent is an 
additional 6 percent per annum.
    (h) Interest on any amount due us found to have been received by you 
because of fraud, misrepresentation, or presentation by you of a false 
claim will start on the date you received the amount with the additional 
6 percent penalty beginning on the 31st day after the notice of amount 
due is issued to you. This interest is in addition to any other amount 
found to be due under any other Federal criminal or civil statute.
    (i) If we determine that it is necessary to contract with a 
collection agency, refer the debt to governmental collection centers, 
the Department of Treasury Offset Program, or to employ an attorney to 
assist in collection, you agree to pay all of the expenses of 
collection.
    (j) All amounts paid by you will be applied first to expenses of 
collection if any, second to reduction of any penalties which may have 
been assessed, then to reduction of accrued interest, and finally, to 
reduction of the principal balance.
    [Reinsured policy]

            15. Restrictions, Limitations, and Amounts Due Us

    (a) We may restrict the amount of acreage we will insure to the 
amount allowed under

[[Page 102]]

any acreage limitation program established by USDA.
    (b) Violation of Federal statutes including, but not limited to, the 
Act; the controlled substance provisions of the Food Security Act of 
1985; the Food, Agriculture, Conservation, and Trade Act of 1990; and 
the Omnibus Budget Reconciliation Act of 1993, and any regulation 
promulgated thereunder, will result in cancellation, termination, or 
voidance of your crop insurance contract. We will recover any and all 
monies paid to you or received by you during your period of 
ineligibility, and your premium will be refunded, less a reasonable 
amount for expenses and handling not to exceed 20 percent of the premium 
paid or to be paid by you.
    (c) Our maximum liability under this policy will be limited to the 
policy protection specified in section 4 of this policy.
    (d) Interest will accrue at the rate not to exceed 1.25 percent 
simple interest per calendar month, or any part thereof, on any unpaid 
premium or administrative fee balance. For the purpose of premium and 
administrative fee amounts due us, interest will begin to accrue on the 
first day of the month following the premium billing date specified in 
the Special Provisions.
    (e) For the purpose of any amounts due us, such as repayment of 
indemnities found not to have been earned, interest will start to accrue 
on the date that notice is issued to you for the collection of the 
unearned amount. Amounts found due under this paragraph will not be 
charged interest if payment in full is made within 30 days of issuance 
of notice by us. The amount will be considered delinquent if not paid in 
full within 30 days of the date the notice is issued by us.
    (f) All amounts paid will be applied first to expenses of collection 
(see subsection (g) of this section) if any, second to reduction of 
accrued interest, and then to reduction of the principal balance.
    (g) If we determine that it is necessary to contract with a 
collection agency or to employ an attorney to assist in collection, you 
agree to pay all of the expenses of collection.
    (h) A portion of the amount paid to you to which you were not 
entitled may be collected through administrative offset from payments 
you receive from United States government agencies in accordance with 31 
U.S.C. chapter 37.
    (i) We will pay simple interest computed on the net indemnity 
ultimately found to be due by us or determined by a final judgment of a 
court of competent jurisdiction or a final administrative determination 
from, and including, the 61st day after the date we receive the NASS 
county yield estimates for the insured crop year. Interest will be paid 
only if the reason for our failure to timely pay is not due to your 
failure to provide information or other material necessary for the 
computation or payment of the indemnity. The interest rate will be that 
established by the Secretary of the Treasury under section 12 of the 
Contract Disputes Act of 1978 (41 U.S.C. 611 et seq.), and published in 
the Federal Register.
    [FCIC policy]

             16. Appeals, Administrative and Judicial Review

    (a) All determinations required by the policy will be made by us.
    (b) If you disagree with our determinations, you may:
    (1) Except for determinations specified in section 16(b)(2), obtain 
an administrative review in accordance with 7 CFR part 400, subpart J or 
appeal in accordance with 7 CFR part 11; or
    (2) For determinations regarding whether you have used good farming 
practices, request reconsideration in accordance with the 
reconsideration process established for this purpose and published at 7 
CFR part 400, subpart J.
    (c) If you fail to exhaust your administrative remedies under 7 CFR 
part 11 or the reconsideration process for determinations of good 
farming practices described in section 16(b)(2), as applicable, you will 
not be able to resolve the dispute through judicial review.
    (d) If reconsideration for good farming practices under 7 CFR part 
400, subpart J or appeal under 7 CFR part 11 has been initiated within 
the time frames specified in those sections and judicial review is 
sought, any suit against us must be:
    (1) Filed not later than one year after the date of the decision 
rendered in the reconsideration process for good farming practices or 
administrative review process under 7 CFR part 11; and
    (2) Brought in the United States district court for the district in 
which the insured farm involved in the decision is located.
    (e) You may only recover contractual damages from us. Under no 
circumstances can you recover any attorney fees or other expenses, or 
any punitive, compensatory or any other damages from us in 
administrative review, appeal or litigation.
    [Reinsured policy]

  16. Mediation, Arbitration, Appeals, and Administrative and Judicial 
                                 Review

    (a) If you and we fail to agree on any determination made by us 
except those specified in section 16(d) or (e), the disagreement may be 
resolved through mediation in accordance with section 16(g). If 
resolution cannot be reached through mediation, or you and we do not 
agree to mediation, the disagreement must be resolved through 
arbitration in accordance with the rules of the American Arbitration 
Association (AAA), except as provided in sections 16(c) and (f), and 
unless

[[Page 103]]

rules are established by FCIC for this purpose. Any mediator or 
arbitrator with a familial, financial or other business relationship to 
you or us, or our agent or loss adjuster, is disqualified from hearing 
the dispute.
    (1) All disputes involving determinations made by us, except those 
specified in section 16(d) or (e), are subject to mediation or 
arbitration. However, if the dispute in any way involves a policy or 
procedure interpretation, regarding whether a specific policy provision 
or procedure is applicable to the situation, how it is applicable, or 
the meaning of any policy provision or procedure, either you or we must 
obtain an interpretation from FCIC in accordance with 7 CFR part 400, 
subpart X or such other procedures as established by FCIC.
    (i) Any interpretation by FCIC will be binding in any mediation or 
arbitration.
    (ii) Failure to obtain any required interpretation from FCIC will 
result in the nullification of any agreement or award.
    (iii) An interpretation by FCIC of a policy provision is considered 
a rule of general applicability and is not appealable. If you disagree 
with an interpretation of a policy provision by FCIC, you must obtain a 
Director's review from the National Appeals Division in accordance with 
7 CFR 11.6 before obtaining judicial review in accordance with 
subsection (e).
    (iv) An interpretation by FCIC of a procedure may be appealed to the 
National Appeals Division in accordance with 7 CFR part 11.
    (2) Unless the dispute is resolved through mediation, the arbitrator 
must provide to you and us a written statement describing the issues in 
dispute, the factual findings, the determinations and the amount and 
basis for any award and breakdown by claim for any award. The statement 
must also include any amounts awarded for interest. Failure of the 
arbitrator to provide such written statement will result in the 
nullification of all determinations of the arbitrator. All agreements 
reached through settlement, including those resulting from mediation, 
must be in writing and contain at a minimum a statement of the issues in 
dispute and the amount of the settlement.
    (b) Regardless of whether mediation is elected:
    (1) The initiation of arbitration proceedings must occur within one 
year of the date we denied your claim or rendered the determination with 
which you disagree, whichever is later;
    (2) If you fail to initiate arbitration in accordance with section 
16(b)(1) and complete the process, you will not be able to resolve the 
dispute through judicial review;
    (3) If arbitration has been initiated in accordance with section 
16(b)(1) and completed, and judicial review is sought, suit must be 
filed not later than one year after the date the arbitration decision 
was rendered; and
    (4) In any suit, if the dispute in any way involves a policy or 
procedure interpretation, regarding whether a specific policy provision 
or procedure is applicable to the situation, how it is applicable, or 
the meaning of any policy provision or procedure, an interpretation must 
be obtained from FCIC in accordance with 7 CFR part 400, subpart X or 
such other procedures as established by FCIC. Such interpretation will 
be binding.
    (c) Any decision rendered in arbitration is binding on you and us 
unless judicial review is sought in accordance with section 16(b)(3). 
Notwithstanding any provision in the rules of the AAA, you and we have 
the right to judicial review of any decision rendered in arbitration.
    (d) If you do not agree with any determination made by us or FCIC 
regarding whether you have used a good farming practice, you may request 
reconsideration by FCIC of this determination in accordance with the 
reconsideration process established for this purpose and published at 7 
CFR part 400, subpart J (reconsideration).
    (1) You must complete reconsideration before filing suit against 
FCIC and any such suit must be brought in the United States district 
court for the district in which the insured farm is located.
    (2) Suit must be filed not later than one year after the date of the 
decision rendered in the reconsideration.
    (3) You cannot sue us for determinations of whether good farming 
practices were used by you.
    (e) Except as provided in section 16(d), if you disagree with any 
other determination made by FCIC or any claim where FCIC is directly 
involved in the claims process or directs us in the resolution of the 
claim, you may obtain an administrative review in accordance with 7 CFR 
part 400, subpart J (administrative review) or appeal in accordance with 
7 CFR part 11 (appeal).
    (1) If you elect to bring suit after completion of any appeal, such 
suit must be filed against FCIC not later than one year after the date 
of the decision rendered in such appeal.
    (2) Such suit must be brought in the United States district court 
for the district in which the insured acreage is located.
    (3) Under no circumstances can you recover any attorney fees or 
other expenses, or any punitive, compensatory or any other damages from 
FCIC.
    (f) In any mediation, arbitration, appeal, administrative review, 
reconsideration or judicial process, the terms of this policy, the Act, 
and the regulations published at 7 CFR chapter IV, including the 
provisions of 7 CFR part 400, subpart P, are binding. Conflicts between 
this policy and any state or local laws will be resolved in accordance 
with section

[[Page 104]]

31. If there are conflicts between any rules of the AAA and the 
provisions of your policy, the provisions of your policy will control.
    (g) To resolve any dispute through mediation, you and we must both:
    (1) Agree to mediate the dispute;
    (2) Agree on a mediator; and
    (3) Be present, or have a designated representative who has 
authority to settle the case present, at the mediation.
    (h) Except as provided in section 16(i), no award or settlement in 
mediation, arbitration, appeal, administrative review or reconsideration 
process or judicial review can exceed the amount of liability 
established or which should have been established under the policy, 
except for interest awarded in accordance with section 15(i).
    (i) In a judicial review only, you may recover attorneys fees or 
other expenses, or any punitive, compensatory or any other damages from 
us only if you obtain a determination from FCIC that we, our agent or 
loss adjuster failed to comply with the terms of this policy or 
procedures issued by FCIC and such failure resulted in you receiving a 
payment in an amount that is less than the amount to which you were 
entitled. Requests for such a determination should be addressed to the 
following: USDA/RMA/Deputy Administrator of Compliance/Stop 0806, 1400 
Independence Avenue, SW., Washington, DC 20250-0806.
    (j) If FCIC elects to participate in the adjustment of your claim, 
or modifies, revises or corrects your claim, prior to payment, you may 
not bring an arbitration, mediation or litigation action against us. You 
must request administrative review or appeal in accordance with section 
16(e).

                        17. Holidays and Weekends

    If any date specified in this program falls on Saturday, Sunday, or 
a legal Federal holiday, that date will be extended to the next business 
day.

            18. Life of Policy, Cancellation, and Termination

    (a) This is a continuous policy and will remain in effect for each 
crop year following the acceptance of the original application until 
canceled by you in accordance with the terms of the policy or terminated 
by operation of the terms of the policy or by us.
    (b) Your application for insurance must contain your social security 
number (SSN) if you are an individual or employer identification number 
(EIN) if you are a person other than an individual, and all SSNs and 
EINs, as applicable, of all persons with a substantial beneficial 
interest in you, the coverage level, price election, crop, type, 
variety, or class, plan of insurance, and any other material information 
required on the application to insure the crop. If you or someone with a 
substantial beneficial interest is not legally required to have a SSN or 
EIN, you must request and receive an identification number for the 
purposes of this policy from us or the Internal Revenue Service (IRS) if 
such identification number is available from the IRS. If any of the 
information regarding persons with a substantial beneficial interest 
changes during the crop year, you must revise your application by the 
next sales closing date applicable under your policy to reflect the 
correct information.
    (1) Applications that do not contain your SSN, EIN or identification 
number, or any of the other information required in section 18(b) are 
not acceptable and insurance will not be provided (Except if you fail to 
report the SSNs, EINs or identification numbers of persons with a 
substantial beneficial interest in you, the provisions in section 
18(b)(2) will apply);
    (2) If the application does not contain the SSNs, EINs or 
identification numbers of all persons with a substantial beneficial 
interest in you, you fail to revise your application in accordance with 
section 18(b), or the reported SSNs, EINs or identification numbers are 
incorrect and the incorrect SSN, EIN or identification number has not 
been corrected by the acreage reporting date, and:
    (i) Such persons are eligible for insurance, the amount of coverage 
for all crops included on this application will be reduced 
proportionately by the percentage interest in you of such persons, you 
must repay the amount of indemnity that is proportionate to the interest 
of the persons whose SSN, EIN or identification number was unreported or 
incorrect for such crops, and your premium will be reduced 
commensurately; or
    (ii) Such persons are not eligible for insurance, except as provided 
in section 18(b)(3), the policy is void and no indemnity will be owed 
for any crop included on this application, and you must repay any 
indemnity that may have been paid for such crops. If previously paid, 
the balance of any premium and any administrative fees will be returned 
to you, less twenty percent of the premium that would otherwise be due 
from you for such crops. If not previously paid, no premium or 
administrative fees will be due for such crops.
    (3) The consequences described in section 18(b)(2)(ii) will not 
apply if you have included an ineligible person's SSN, EIN or 
identification number on your application and do not include the 
ineligible person's share on the acreage report.
    (c) After acceptance of the application, you may not cancel this 
policy for the initial crop year. Thereafter, the policy will continue 
in force for each succeeding crop year unless canceled or terminated as 
provided below.

[[Page 105]]

    (d) Either you or we may cancel this policy after the initial crop 
year by providing written notice to the other on or before the 
cancellation date shown in the Crop Provisions.
    (e) Any amount due to us for any policy authorized under the Act 
will be offset from any indemnity due you for this or any other crop 
insured with us.
    (1) Even if your claim has not yet been paid, you must still pay the 
premium and administrative fee on or before the termination date for you 
to remain eligible for insurance.
    (2) If we offset any amount due us from an indemnity owed to you, 
the date of payment for the purpose of determining whether you have a 
delinquent debt will be the date FCIC publishes the payment yield for 
the applicable crop year.
    (f) A delinquent debt for any policy will make you ineligible to 
obtain crop insurance authorized under the Act for any subsequent crop 
year and result in termination of all policies in accordance with 
section 18(f)(2).
    (1) With respect to ineligibility:
    (i) Ineligibility for crop insurance will be effective on:
    (A) The date that a policy was terminated in accordance with section 
18(f)(2) for the crop for which you failed to pay premium, an 
administrative fee, or any related interest owed, as applicable;
    (B) The payment due date contained in any notification of 
indebtedness for any overpaid indemnity, if you fail to pay the amount 
owed, including any related interest owed, as applicable, by such due 
date;
    (C) The termination date for the crop year prior to the crop year in 
which a scheduled payment is due under a payment agreement if you fail 
to pay the amount owed by any payment date in any agreement to pay the 
debt; or
    (D) The termination date the policy was or would have been 
terminated under sections 18(f)(2)(i)(A), (B) or (C) if your bankruptcy 
petition is dismissed before discharge.
    (ii) If you are ineligible and a policy has been terminated in 
accordance with section 18(f)(2), you will not receive any indemnity, 
and such ineligibility and termination of the policy may affect your 
eligibility for benefits under other USDA programs. Any indemnity that 
may be owed for the policy before it has been terminated will remain 
owed to you, but may be offset in accordance with section 18(e), unless 
your policy was terminated in accordance with sections 18(f)(2)(i)(D) or 
(E).
    (2) With respect to termination:
    (i) Termination will be effective on:
    (A) For a policy with unpaid administrative fees or premiums, the 
termination date immediately subsequent to the billing date for the crop 
year;
    (B) For a policy with other amounts due, the termination date 
immediately following the date you have a delinquent debt;
    (C) For each policy for which the termination date has passed before 
you become ineligible, the termination date immediately following the 
date you become ineligible;
    (D) For execution of an agreement to pay any amounts owed and 
failure to make any scheduled payment, the termination date for the crop 
year prior to the crop year in which you failed to make the scheduled 
payment; or
    (E) For dismissal of a bankruptcy petition before discharge, the 
termination date the policy was or would have been terminated under 
sections 18(f)(2)(i)(A), (B) or (C).
    (ii) For all policies terminated under sections 18(f)(2)(i)(D) and 
(E), any indemnities paid subsequent to the termination date must be 
repaid.
    (iii) Once the policy is terminated, it cannot be reinstated for the 
current crop year unless the termination was in error. Failure to timely 
pay because of illness, bad weather, or other such extenuating 
circumstances is not grounds for reinstatement in the current crop year.
    (3) To regain eligibility, you must:
    (i) Repay the delinquent debt in full;
    (ii) Execute an agreement to pay any amounts owed and make payments 
in accordance with the agreement (We will not enter into an agreement 
with you to pay the amounts owed if you have previously failed to make a 
scheduled payment under the terms of any other agreement to pay with us 
or any other insurance provider); or
    (iii) File a petition to have your debts discharged in bankruptcy 
(Dismissal of the bankruptcy petition before discharge will terminate 
all policies in effect retroactive to the date your policy would have 
been terminated in accordance with section 18(f)(2)(i));
    (4) After you become eligible for crop insurance, if you want to 
obtain coverage for your crops, you must submit a new application on or 
before the sales closing date for the crop (Since applications for crop 
insurance cannot be accepted after the sales closing date, if you make 
any payment after the sales closing date, you cannot apply for insurance 
until the next crop year);
    (5) For example, for the 2003 crop year, if crop A, with a 
termination date of October 31, 2003, and crop B, with a termination 
date of March 15, 2004, are insured and you do not pay the premium for 
crop A by the termination date, you are ineligible for crop insurance as 
of October 31, 2003, and crop A's policy is terminated as of that date. 
Crop B's policy does not terminate until March 15, 2004, and an 
indemnity for the 2003 crop year may still be owed. If you enter an 
agreement to repay amounts owed on September 25, 2004, the earliest date 
by which you can obtain crop insurance for crop A is to apply for crop 
insurance by the October 31, 2004, sales closing date and for crop B is 
to apply for crop insurance by the March 15, 2005, sales

[[Page 106]]

closing date. If you fail to make a payment that was scheduled to be 
made on April 1, 2005, your policy will terminate as of October 31, 
2004, for crop A, and March 15, 2005, for crop B, and no indemnity will 
be due for that crop year for either crop. You will not be eligible to 
apply for crop insurance for any crop until after the amounts owed are 
paid in full or you file a petition to discharge the debt in bankruptcy.
    (6) If you are determined to be ineligible under section 18(f), 
persons with a substantial beneficial interest in you may also be 
ineligible until you become eligible again.
    (g) If you die, disappear, or are judicially declared incompetent, 
or if you are an entity other than an individual and such entity is 
dissolved, the policy will terminate as of the date of death, judicial 
declaration, or dissolution. If such event occurs after coverage begins 
for any crop year, the policy will continue in force through the crop 
year and terminate at the end of the insurance period and any indemnity 
will be paid to the person or persons determined to be beneficially 
entitled to the indemnity. The premium will be deducted from the 
indemnity or collected from the estate. Death of a partner in a 
partnership will dissolve the partnership unless the partnership 
agreement provides otherwise. If two or more persons having a joint 
interest are insured jointly, death of one of the persons will dissolve 
the joint entity.
    (h) We may cancel your policy if no premium is earned for 3 
consecutive years.
    (i) The cancellation and termination dates are contained in the Crop 
Provisions.

                          19. Contract Changes

    (a) We may change any terms and conditions of this policy from year 
to year.
    (b) Any changes in policy provisions, expected county yields, 
maximum amounts of protection, premium rates, and program dates (except 
as allowed herein) can be viewed on the RMA Web site at http://
www.rma.usda.gov/ or a successor Web site not later than the contract 
change date contained in the Crop Provisions. We may only revise this 
information after the contract change date to correct clear errors (For 
example, the maximum amount of protection was announced at $2500.00 per 
acre instead of $250.00 per acre).
    (c) After the contract change date, all changes specified in section 
19(b) will also be available upon request from your crop insurance 
agent. You will be provided, in writing, a copy of the changes to the 
Basic Provisions and Crop Provisions and a copy of the Special 
Provisions not later than 30 days prior to the cancellation date for the 
insured crop. Acceptance of the changes will be conclusively presumed in 
the absence of notice from you to change or cancel your insurance 
coverage.

                             20. [Reserved]

                 21. Indemnity and Premium Limitations.

    (a) With respect to acreage where you are due a loss for your first 
insured crop in the crop year, except in the case of double cropping 
described in section 21(c):
    (1) You may elect to not plant or to plant and not insure a second 
crop on the same acreage for harvest in the same crop year and collect 
an indemnity payment that is equal to 100 percent of the insurable loss 
for the first insured crop; or
    (2) You may elect to plant and insure a second crop on the same 
acreage for harvest in the same crop year (you will pay the full premium 
and if there is an insurable loss to the second crop, receive the full 
amount of indemnity that may be due for the second crop, regardless of 
whether there is a subsequent crop planted on the same acreage) and:
    (i) Collect an indemnity payment that is 35 percent of the insurable 
loss for the first insured crop;
    (ii) Be responsible for a premium that is 35 percent of the premium 
that you would otherwise owe for the first insured crop; and
    (iii) If the second crop does not suffer an insurable loss:
    (A) Collect an indemnity payment for the other 65 percent of 
insurable loss that was not previously paid under section 21(a)(2)(i); 
and
    (B) Be responsible for the remainder of the premium for the first 
insured crop that you did not pay under section 21(a)(2)(ii).
    (b) The reduction in the amount of indemnity and premium specified 
in section 21(a), as applicable, will apply:
    (1) Notwithstanding the priority contained in the Agreement to 
Insure section, which states that the Crop Provisions have priority over 
the Basic Provisions when a conflict exists, to any premium owed or 
indemnity paid in accordance with the Crop Provisions, and any 
applicable endorsement.
    (2) Even if another person plants the second crop on any acreage 
where the first insured crop was planted.
    (3) If you fail to provide any records we require to determine 
whether an insurable loss occurred for the second crop.
    (c) You may receive a full indemnity for a first insured crop when a 
second crop is planted on the same acreage in the same crop year, 
regardless of whether or not the second crop is insured or sustains an 
insurable loss, if each of the following conditions are met:
    (1) It is a practice that is generally recognized by agricultural 
experts or the organic agricultural industry for the area to plant two 
or more crops for harvest in the same crop year;
    (2) The second or more crops are customarily planted after the first 
insured crop for

[[Page 107]]

harvest on the same acreage in the same crop year in the area;
    (3) Additional coverage insurance offered under the authority of the 
Act is available in the county on the two or more crops that are double 
cropped; and
    (4) You provide records acceptable to us of acreage and production 
that show you have double cropped acreage in at least two of the last 
four crop years in which the first insured crop was planted, or that 
show the applicable acreage was double cropped in at least two of the 
last four crop years in which the first insured crop was grown on it.
    (d) The receipt of a full indemnity on both crops that are double 
cropped is limited to the number of acres for which you can demonstrate 
you have double cropped or that have been historically double cropped as 
specified in section 21(c).

                 An Example To Demonstrate How GRP Works

    Producer A buys 90 percent coverage and selects $160 protection per 
acre. Producer B buys 75 percent coverage and selects $185 protection 
per acre. Both producers have 100 percent share and both plant 200 acres 
of a crop in the county. The expected county yield is 45 bushels per 
acre. The premium rate for 90 percent coverage is $6.14 per hundred 
dollars of protection and the premium rate for 75 percent coverage is 
$3.30 per hundred dollars of protection.
    A's trigger yield is 40.5 bushels per acre (90% x 45), and the total 
premium due is $1,965 ($160 x $6.14 x 200 acres x 0.01). Of that amount, 
FCIC pays $614 (200 acres x the maximum subsidy of $3.07 per acre). A's 
policy protection is $32,000 ($160 x 200 acres).
    B's trigger yield is 33.8 bushels per acre (75% of 45), and the 
total premium due is $1,221 ($185 x $3.30 x 200 acres x 0.01). Of that 
amount, FCIC pays $442 (200 acres x the subsidy amount of $2.21 per 
acre). B's policy protection is $37,000 ( $185 x 200 acres).

Scenario 1 (likely)
    FCIC issues a payment yield of 46 bushels per acre. This is above 
both producers' trigger yields, so no indemnity payment is made, even if 
one or both have individual yields that are below the trigger yield.
Scenario 2 (less likely)
    FCIC issues a payment yield of 38 bushels per acre. A's payment 
calculation factor is 0.062 ((40.5 - 38) / 40.5). This number multiplied 
by the policy protection yields an indemnity payment of $1,984 (.062 x 
$32,000). B's trigger yield is less than the payment yield, so no 
indemnity payment is made.
Scenario 3 (least likely)
    FCIC issues a payment yield of 22 bushels per acre. A's payment 
calculation factor is 0.457 ((40.5 - 22) / 40.5). The payment is $14,624 
(0.457 x $32,000). B's payment calculation factor is 0.349 ((33.8 - 22) 
/ 33.8), and the final indemnity payment is $12,913 (0.349 x $37,000).

[64 FR 30219, June 7, 1999, as amended at 65 FR 40485, June 30, 2000; 68 
FR 37721, June 25, 2003; 69 FR 48731, Aug. 10, 2004; 73 FR 36408, June 
27, 2008; 73 FR 70864, Nov. 24, 2008]

    Effective Date Note: At 73 FR 76891, Dec. 18, 2008, Sec. 407.9 was 
amended by adding section 22, effective January 20, 2009. For the 
convenience of the user, the added text is set forth as follows:



Sec. 407.9  Group risk plan common policy.

                                * * * * *

    22. Remedial Sanctions
    If you willfully and intentionally provide false or inaccurate 
information to us or FCIC or you fail to comply with a requirement of 
FCIC, in accordance with 7 CFR part 400, subpart R, FCIC may impose on 
you:
    (a) A civil fine for each violation in an amount not to exceed the 
greater of:
    (1) The amount of the pecuniary gain obtained as a result of the 
false or inaccurate information provided or the noncompliance with a 
requirement of this title; or
    (2) $10,000; and
    (b) A disqualification for a period of up to 5 years from receiving 
any monetary or non-monetary benefit provided under each of the 
following:
    (1) Any crop insurance policy offered under the Act;
    (2) The Farm Security and Rural Investment Act of 2002 (7 U.S.C. 
7333 et seq.);
    (3) The Agricultural Act of 1949 (7 U.S.C. 1421 et seq.);
    (4) The Commodity Credit Corporation Charter Act (15 U.S.C. 714 et 
seq.);
    (5) The Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.);
    (6) Title XII of the Food Security Act of 1985 (16 U.S.C. 3801 et 
seq.);
    (7) The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 
et seq.); and
    (8) Any federal law that provides assistance to a producer of an 
agricultural commodity affected by a crop loss or a decline in the 
prices of agricultural commodities.



Sec. 407.10  Group risk plan for barley.

    The provisions of the Group Risk Plan for Barley for the 2000 and 
succeeding crop years are as follows:

                             1. Definitions

    Harvest. Combining or threshing the barley for grain.
    NASS yield. The yield calculated by dividing the NASS estimate of 
the barley production in the county, by the NASS estimate of the acres 
of barley in the county, as specified in the actuarial documents. The 
actuarial

[[Page 108]]

documents will specify whether harvested or planted acreage is used to 
calculate the yield used to establish the expected county yield and 
calculate indemnities.
    Planted acreage. Land in which the barley seed has been placed by a 
machine appropriate for the insured crop and planting method, at the 
correct depth, into a seedbed that has been properly prepared for the 
planting method and production practice. Land on which seed is initially 
spread onto the soil surface by any method and which subsequently is 
mechanically incorporated into the soil in a timely manner and at the 
proper depth, will also be considered planted.

                             2. Crop Insured

    The insured crop will be all barley:
    (a) Grown on insurable acreage in the county or counties listed in 
the accepted application;
    (b) Properly planted and reported by the acreage reporting date;
    (c) Planted with the intent to be harvested as grain; and
    (d) Not planted into an established grass or legume, interplanted 
with another crop, or planted as a nurse crop, unless seeded at the 
normal rate and intended for harvest as grain.

                               3. Payment

    (a) A payment will be made only if the payment yield for the insured 
crop year is less than your trigger yield.
    (b) Payment yields will be determined prior to the April 1 following 
the crop year.
    (c) We will issue any payment to you prior to the May 1 immediately 
following our determination of the payment yield.
    (d) The payment is equal to the payment calculation factor 
multiplied by your policy protection for each insured crop practice and 
type specified in the actuarial documents.
    (e) The payment will not be recalculated even though the NASS yield 
may be subsequently revised.

                            4. Program Dates

----------------------------------------------------------------------------------------------------------------
             State and county                 Cancellation and termination dates        Contract change date
----------------------------------------------------------------------------------------------------------------
Kit Carson, Lincoln, Elbert, El Paso,       September 30.........................  June 30.
 Pueblo, Las Animas Counties, Colorado and
 all Colorado Counties south and east
 thereof; all New Mexico counties except
 Taos County; Kansas; Missouri; Illinois;
 Indiana; Ohio; Pennsylvania; New York;
 Massachusetts; and all states south and
 east thereof.
Arizona; California; and Clark and Nye      October 31...........................  June 30.
 Counties, Nevada.
All Colorado counties except Kit Carson,    March 15.............................  November 30.
 Lincoln, Elbert, El Paso, Pueblo, and Las
 Animas Counties and all Colorado counties
 south and east thereof; all Nevada
 counties except Clark and Nye Counties;
 Taos County, New Mexico; and all other
 states except: Arizona, California, and
 (except) Kansas, Missouri, Illinois,
 Indiana, Ohio, Pennsylvania, New York,
 and Massachusetts and all States south
 and east thereof.
----------------------------------------------------------------------------------------------------------------



Sec. 407.11  Group risk plan for corn.

    The provisions of the Group Risk Plan for Corn for the 2000 and 
succeeding crop years are as follows:

                             1. Definitions

    Harvest. Combining or picking corn for grain, or severing the stalk 
from the land and chopping the stalk and ear for the purpose of 
livestock feed.
    NASS yield. The yield calculated by dividing the NASS estimate of 
the corn for grain production in the county, by the NASS estimate of the 
acres of corn for grain in the county, as specified in the actuarial 
documents. The actuarial documents will specify whether harvested or 
planted acreage is used to calculate the yield used to establish the 
expected county yield and calculate indemnities.
    Planted acreage. Land in which the corn seed has been placed by a 
machine appropriate for the insured crop and planting method, at the 
correct depth, into a seedbed that has been properly prepared for the 
planting method and production practice. Broadcast and subsequent 
mechanical incorporation of the corn seed is not allowed.

                             2. Crop Insured

    (a) The insured crop will be all field corn:
    (1) Grown on insurable acreage in the county listed in the accepted 
application;
    (2) Properly planted and reported by the acreage reporting date;
    (3) Planted with the intent to be harvested as grain, silage, or 
green chop; and
    (4) Not planted into an established grass or legume or interplanted 
with another crop.
    (b) Hybrid seed corn, popcorn, sweet corn, and other specialty corn 
may only be insured if a written agreement exists between you and us. 
Your request to insure such crop must be in writing and submitted to 
your agent not later than the sales closing date.

[[Page 109]]

                               3. Payment

    (a) A payment will be made only if the payment yield for the insured 
crop year is less than your trigger yield.
    (b) Payment yields will be determined prior to April 16 following 
the crop year.
    (c) We will issue any payment to you prior to the May 16 immediately 
following our determination of the payment yield.
    (d) The payment is equal to the payment calculation factor 
multiplied by your policy protection for each insured crop practice and 
type specified in the actuarial documents.
    (e) The payment will not be recalculated even though the NASS yield 
may be subsequently revised.

                            4. Program Dates

----------------------------------------------------------------------------------------------------------------
             State and county                 Cancellation and termination dates        Contract change date
----------------------------------------------------------------------------------------------------------------
Val Verde, Edwards, Kerr, Kendall, Bexar,   January 15...........................  November 30.
 Wilson, Karnes, Goliad, Victoria, and
 Jackson Counties, Texas, and all Texas
 counties lying south thereof.
El Paso, Hudspeth, Culberson, Reeves,       February 15..........................  November 30.
 Loving, Winkler, Ector, Upton, Reagan,
 Sterling, Coke, Tom Green, Concho,
 McCulloch, San Saba, Mills, Hamilton,
 Bosque, Johnson, Tarrant, Wise, and Cooke
 Counties, Texas, and all Texas Counties
 lying south and east thereof to and
 including Terrell, Crockett, Sutton,
 Kimble, Gillespie, Blanco, Comal,
 Guadalupe, Gonzales, De Witt, Lavaca,
 Colorado, Wharton, and Matagorda
 Counties, Texas.
Alabama; Arizona; Arkansas; California;     February 28..........................  November 30.
 Florida; Georgia; Louisiana; Mississippi;
 Nevada; North Carolina; South Carolina.
All other Texas counties and all other      March 15.............................  November 30.
 states.
----------------------------------------------------------------------------------------------------------------



Sec. 407.12  Group risk plan for cotton.

    The provisions of the Group Risk Plan for Cotton for the 2000 and 
succeeding crop years are as follows:

                             1. Definitions

    Harvest. Removal of the seed cotton from the stalk.
    NASS yield. The yield calculated by dividing the NASS estimate of 
upland cotton production in the county, by the NASS estimate of the 
acres of upland cotton in the county, as specified in the actuarial 
documents. The actuarial documents will specify whether harvested or 
planted acreage is used to calculate the yield used to establish the 
expected county yield and calculate indemnities.
    Planted acreage. Land in which the cotton seed has been placed by a 
machine appropriate for the insured crop and planting method, at the 
correct depth, into a seedbed that has been properly prepared for the 
planting method and production practice. Broadcast and subsequent 
mechanical incorporation of the cotton seed is not allowed.

                             2. Crop Insured

    The insured crop will be all upland cotton:
    (a) Grown on insurable acreage in the county or counties listed in 
the accepted application;
    (b) Properly planted and reported by the acreage reporting date;
    (c) Planted with the intent to be harvested; and
    (d) That is not (unless allowed by the Special Provisions or by 
written agreement):
    (1) Colored cotton lint;
    (2) Planted into an established grass or legume;
    (3) Interplanted with another spring planted crop;
    (4) Grown on acreage in which a hay crop was harvested in the same 
calendar year unless the acreage is irrigated; or
    (5) Grown on acreage on which a small grain crop reached the heading 
stage in the same calendar year unless the acreage is irrigated or 
adequate measures are taken to terminate the small grain crop prior to 
heading and less than 50 percent of the small grain plants reach the 
heading stage.

                               3. Payment.

    (a) A payment will be made only if the payment yield for the insured 
crop year is less than your trigger yield.
    (b) Payment yields will be determined prior to July 16 following the 
crop year.
    (c) We will issue any payment to you prior to the August 16 
immediately following our determination of the payment yield.
    (d) The payment is equal to the payment calculation factor 
multiplied by your policy protection for each insured crop practice and 
type specified in the actuarial documents.
    (e) The payment will not be recalculated even though the NASS yield 
may be subsequently revised.

                            4. Program Dates

[[Page 110]]



----------------------------------------------------------------------------------------------------------------
             State and county                 Cancellation and termination dates        Contract change date
----------------------------------------------------------------------------------------------------------------
Val Verde, Edwards, Kerr, Kendall, Bexar,   January 15...........................  November 30.
 Wilson, Karnes, Goliad, Victoria, and
 Jackson Counties, Texas, and all Texas
 counties lying south thereof.
Alabama; Arizona; Arkansas; California;     February 28..........................  November 30.
 Florida; Georgia; Louisiana; Mississippi;
 Nevada; North Carolina; South Carolina;
 El Paso, Hudspeth, Culberson, Reeves,
 Loving, Winkler, Ector, Upton, Reagan,
 Sterling, Coke, Tom Green, Concho,
 McCulloch, San Saba, Mills, Hamilton,
 Bosque, Johnson, Tarrant, Wise, and Cooke
 Counties, Texas, and all Texas counties
 lying south and east thereof to and
 including Terrell, Crockett, Sutton,
 Kimble, Gillespie, Blanco, Comal,
 Guadalupe, Gonzales, De Witt, Lavaca,
 Colorado, Wharton, and Matagorda
 Counties, Texas.
All other Texas counties and all other      March 15.............................  November 30.
 States.
----------------------------------------------------------------------------------------------------------------



Sec. 407.13  Group risk plan for forage.

    The provisions of the Group Risk Plan for Forage for the 2000 and 
succeeding crop years are as follows:

                             1. Definitions

    Harvest. Removal of the forage from the field, and rotational 
grazing.
    NASS yield. The yield calculated by dividing the NASS estimate of 
the production of hay in the county by the NASS estimate of the acres of 
hay in the county, as specified in the actuarial documents. The 
actuarial documents will specify whether the harvested or planted 
acreage is used to calculate the yield used to establish the expected 
county yield and calculate indemnities.
    Planted acreage. Land seeded to forage, by a planting method 
appropriate for forage, into a properly prepared seedbed.
    Rotational grazing. The defoliation of the insured forage by 
livestock, within a pasturing system whereby the forage field is 
subdivided into smaller parcels and livestock are moved from one area to 
another, allowing a period of grazing followed by a period for forage 
regrowth.

                             2. Crop Insured

    The insured crop will be the forage types shown on the Special 
Provisions:
    (a) Grown on insurable acreage in the county or counties listed in 
the accepted application;
    (b) Properly planted and reported by the acreage reporting date;
    (c) Intended for harvest; and
    (d) Not grown with another crop.

                          3. Insurable Acreage

    In addition to section 3 of the Basic Provisions of the Group Risk 
Plan Common Policy, acreage seeded to forage after July 1 of the 
previous crop year will not be insurable. Acreage physically located in 
another county not listed on the accepted application is not insured 
under this policy.

                               4. Payment

    (a) A payment will be made only if the payment yield for the insured 
crop year is less than your trigger yield.
    (b) Payment yields will be determined prior to May 1 following the 
crop year.
    (c) We will issue any payment to you prior to the May 31 immediately 
following our determination of the payment yield.
    (d) The payment is equal to the payment calculation factor 
multiplied by your policy protection for each insured crop practice and 
type specified in the actuarial documents.
    (e) The payment will not be recalculated even though the NASS yield 
may be subsequently revised.

                            5. Program Dates

    November 30 is the Cancellation and Termination Date for all states. 
The Contract Change Date is August 31 for all states.

                            6. Annual Premium

    In lieu of section 8(g) of the Basic Provisions of the Group Risk 
Plan Common Policy, the annual premium is earned and payable on the 
acreage reporting date. You will be billed for premium due on the date 
shown in the Special Provisions. The premium will be determined based on 
the rate shown on the actuarial documents.



Sec. 407.14  Group risk plan for peanuts.

    The provisions of the Group Risk Plan for Peanuts for the 2000 and 
succeeding crop years are as follows:

                             1. Definitions

    Harvest. Combining or threshing the peanuts.
    NASS yield. The yield calculated by dividing the NASS estimate of 
peanut production in the county, by the NASS estimate of the acres of 
peanuts in the county, as specified in the actuarial documents. The 
actuarial documents will specify whether the harvested or planted 
acreage is used to calculate the yield used to establish the expected 
county yield and calculate indemnities.

[[Page 111]]

    Planted acreage. Land in which the peanut seed has been placed by a 
machine appropriate for the insured crop and planting method, at the 
correct depth, into a seedbed that has been properly prepared for the 
planting method and production practice.

                             2. Crop Insured

    The insured crop will be all peanuts:
    (a) Grown on insurable acreage in the county or counties listed in 
the accepted application;
    (b) Properly planted and reported by the acreage reporting date;
    (c) Planted with the intent to be harvested as peanuts; and
    (d) Not interplanted with an established grass or legume or 
interplanted with another crop.

                               3. Payment

    (a) A payment will be made only if the payment yield for the insured 
crop year is less than your trigger yield.
    (b) Payment yields will be determined prior to June 16 following the 
crop year.
    (c) We will issue any payment to you prior to the July 16 
immediately following our determination of the payment yield.
    (d) The payment is equal to the payment calculation factor 
multiplied by your policy protection for each insured crop practice and 
type specified in the actuarial documents.
    (e) The payment will not be recalculated even though the NASS yield 
may be subsequently revised.

                            4. Program Dates

----------------------------------------------------------------------------------------------------------------
             State and county                 Cancellation and termination dates        Contract change date
----------------------------------------------------------------------------------------------------------------
Jackson, Victoria, Goliad, Bee, Live Oak,   January 15...........................  November 30.
 McMullen, La Salle, and Dimmit Counties,
 Texas and all Texas Counties lying south
 thereof.
El Paso, Hudspeth, Culberson, Reeves,       February 28..........................  November 30.
 Loving, Winkler, Ector, Upton, Reagan,
 Sterling, Coke, Tom Green, Concho,
 McCulloch, San Saba, Mills, Hamilton,
 Bosque, Johnson, Tarrant, Wise, Cooke
 Counties, Texas, and all Texas counties
 south and east thereof; and all other
 states except New Mexico, Oklahoma, and
 Virginia.
New Mexico; Oklahoma; Virginia; and all     March 15.............................  November 30.
 other Texas Counties.
----------------------------------------------------------------------------------------------------------------



Sec. 407.15  Group risk plan for sorghum.

    The provisions of the Group Risk Plan for Sorghum for the 2000 and 
succeeding crop years are as follows:

                             1. Definitions

    Harvest. Combining or threshing the sorghum for grain, or severing 
the stalk from the land and chopping the stalk and head for the purpose 
of livestock feed.
    NASS yield. The yield calculated by dividing the NASS estimate of 
sorghum for grain production in the county, by the NASS estimate of the 
acres of sorghum for grain in the county, as specified in the actuarial 
documents. The actuarial documents will specify whether the harvested or 
planted acreage is used to calculate the yield used to establish the 
expected county yield and calculate indemnities.
    Planted acreage. Land in which the sorghum seed has been placed by a 
machine appropriate for the insured crop and planting method, at the 
correct depth, into a seedbed that has been properly prepared for the 
planting method and production practice. Broadcast and subsequent 
mechanical incorporation of the sorghum seed is not allowed.

                             2. Crop Insured

    (a) The insured crop will be all sorghum:
    (1) Grown on insurable acreage in the county or counties listed in 
the accepted application;
    (2) Properly planted and reported by the acreage reporting date;
    (3) Planted with the intent to be harvested as grain or silage; and
    (4) Not interplanted with an established grass or legume or 
interplanted with another crop.
    (b) Hybrid sorghum seed may only be insured if a written agreement 
exists between you and us. Your request to insure such crop must be in 
writing and submitted to your agent not later than the sales closing 
date.

                               3. Payment

    (a) A payment will be made only if the payment yield for the insured 
crop year is less than your trigger yield.
    (b) Payment yields will be determined prior to April 16 following 
the crop year.
    (c) We will issue any payment to you prior to the May 16 immediately 
following our determination of the payment yield.
    (d) The payment is equal to the payment calculation factor 
multiplied by your policy protection for each insured crop practice and 
type specified in the actuarial documents.
    (e) The payment will not be recalculated even though the NASS yield 
may be subsequently revised.

                            4. Program Dates

[[Page 112]]



----------------------------------------------------------------------------------------------------------------
             State and county                Cancellation and  termination dates        Contract change date
----------------------------------------------------------------------------------------------------------------
Val Verde, Edwards, Kerr, Kendall, Bexar,   January 15...........................  November 30.
 Wilson, Karnes, Goliad, Victoria, and
 Jackson Counties, Texas, and all Texas
 counties lying south thereof.
El Paso, Hudspeth, Culberson, Reeves,       February 15..........................  November 30.
 Loving, Winkler, Ector, Upton, Reagan,
 Sterling, Coke, Tom Green, Concho,
 McCulloch, San Saba, Mills, Hamilton,
 Bosque, Johnson, Tarrant, Wise, and Cooke
 Counties, Texas, and all Texas counties
 south and east thereof to and including
 Terrell, Crockett, Sutton, Kimble,
 Gillespie, Blanco, Comal, Guadalupe,
 Gonzales, De Witt, Lavaca, Colorado,
 Wharton, and Matagorda Counties, Texas.
Alabama; Arizona; Arkansas; California;     February 28..........................  November 30.
 Florida; Georgia; Louisiana; Mississippi;
 Nevada; North Carolina; and South
 Carolina.
All other Texas counties and all other      March 15.............................  November 30.
 states.
----------------------------------------------------------------------------------------------------------------



Sec. 407.16  Group risk plan for soybean.

    The provisions of the Group Risk Plan for Soybeans for the 2000 and 
succeeding crop years are as follows:

                             1. Definitions

    Harvest. Combining or threshing the soybeans.
    NASS yield. The yield calculated by dividing the NASS estimate of 
soybean production in the county, by the NASS estimate of the acres of 
soybeans in the county, as specified in the actuarial documents. The 
actuarial documents will specify whether the harvested or planted 
acreage is used to calculate the yield used to establish the expected 
county yield and calculate indemnities.
    Planted acreage. Land in which the soybean seed has been placed by a 
machine appropriate for the insured crop and planting method, at the 
correct depth, into a seedbed that has been properly prepared for the 
planting method and production practice. Land on which seed is initially 
spread onto the soil surface by any method and which subsequently is 
mechanically incorporated into the soil in a timely manner and at the 
proper depth, will also be considered planted.

                             2. Crop Insured

    The insured crop will be all soybeans:
    (a) Grown on insurable acreage in the county or counties listed in 
the accepted application;
    (b) Properly planted and reported by the acreage reporting date;
    (c) Planted with the intent to be harvested as soybeans; and
    (d) Not planted into an established grass or legume or interplanted 
with another crop.

                               3. Payment

    (a) A payment will be made only if the payment yield for the insured 
crop year is less than your trigger yield.
    (b) Payment yields will be determined prior to April 16 following 
the crop year.
    (c) We will issue any payment to you prior to the May 16 immediately 
following our determination of the payment yield.
    (d) The payment is equal to the payment calculation factor 
multiplied by your policy protection for each insured crop practice and 
type specified on the actuarial documents.
    (e) The payment will not be recalculated even though the NASS yield 
may be subsequently revised.

                            4. Program Dates

----------------------------------------------------------------------------------------------------------------
             State and county                 Cancellation and termination dates        Contract change date
----------------------------------------------------------------------------------------------------------------
Jackson, Victoria, Goliad, Bee, Live Oak,   February 15..........................  November 30.
 McMullen, La Salle, and Dimmit Counties,
 Texas and all Texas counties lying south
 thereof.
Alabama; Arizona; Arkansas; California;     February 28..........................  November 30.
 Florida; Georgia; Louisiana; Mississippi;
 Nevada; North Carolina; South Carolina;
 and El Paso, Hudspeth, Culberson, Reeves,
 Loving, Winkler, Ector, Upton, Reagan,
 Sterling, Coke, Tom Green, Concho,
 McCulloch, San Saba, Mills, Hamilton,
 Bosque, Johnson, Tarrant, Wise, and Cooke
 Counties, Texas, and all Texas counties
 lying south and east thereof to and
 including Maverick, Zavala, Frio,
 Atascosa, Karnes, De Witt, Lavaca,
 Colorado, Wharton, and Matagorda
 Counties, Texas.
All other Texas counties and all other      March 15.............................  November.
 States.
All other Texas counties and all other      March 15.............................  November 30.
 states..
----------------------------------------------------------------------------------------------------------------


[[Page 113]]



Sec. 407.17  Group risk plan for wheat.

    The provisions of the Group Risk Plan for Wheat for the 2000 and 
succeeding crop years are as follows:

                             1. Definitions

    Harvest. Combining or threshing the wheat for grain.
    NASS yield. The yield calculated by dividing the NASS estimate of 
the wheat production in the county, by the NASS estimate of the acres of 
wheat in the county, as specified in the actuarial documents. The 
actuarial documents will specify whether the harvested or planted 
acreage is used to calculate the yield used to establish the expected 
county yield and calculate indemnities.
    Planted acreage. Land in which the wheat seed has been planted by a 
machine appropriate for the insured crop and planting method, at the 
correct depth, into a seedbed that has been properly prepared for the 
planting method and production practice. Land on which seed is initially 
spread onto the soil surface by any method and which subsequently is 
mechanically incorporated into the soil in a timely manner and at the 
proper depth, will also be considered planted.

                             2. Crop Insured

    The insured crop will be all wheat:
    (a) Grown on insurable acreage in the county or counties listed in 
the accepted application;
    (b) Properly planted and reported by the acreage reporting date;
    (c) Planted with the intent to be harvested as grain; and
    (d) Not planted into an established grass or legume, interplanted 
with another crop, or planted as a nurse crop, unless seeded at the 
normal rate and intended for harvest as grain.

                               3. Payment

    (a) A payment will be made only if the payment yield for the insured 
crop year is less than your trigger yield.
    (b) Payment yields will be determined prior to April 1 following the 
crop year.
    (c) We will issue any payment to you prior to the May 1 immediately 
following our determination of the payment yield.
    (d) The payment is equal to the payment calculation factor 
multiplied by your policy protection for each insured crop practice and 
type specified in the actuarial documents.
    (e) The payment will not be recalculated even though the NASS yield 
may be subsequently revised.

----------------------------------------------------------------------------------------------------------------
             State and county                Cancellation and  termination dates        Contract change date
----------------------------------------------------------------------------------------------------------------
All Colorado counties except Alamosa,       September 30.........................  June 30.
 Conejos, Costilla, Rio Grande, and
 Saguache; all Montana counties except
 Daniels and Sheridan Counties; all South
 Dakota counties except Corson, Walworth,
 Edmonds, Faulk, Spink, Beadle, Kingsbury,
 Miner, McCook, Turner, and Yankton
 Counties and all South Dakota counties
 east thereof; all Wyoming counties except
 Big Horn, Fremont, Hot Springs, Park, and
 Washakie Counties; and all other states
 except Alaska, Arizona, California,
 Maine, Minnesota, Nevada, New Hampshire,
 North Dakota, Utah, and Vermont..
Arizona; California; Nevada; and Utah.....  October 31...........................  June 30.
Alaska; Alamosa, Conejos, Costilla, Rio     March 15.............................  November 30.
 Grande, and Saguache Counties, Colorado;
 Maine; Minnesota; Daniels and Sheridan
 Counties, Montana; New Hampshire; North
 Dakota; Corson, Walworth, Edmunds, Faulk,
 Spink, Beadle, Kingsbury, Miner, McCook,
 Turner, and Yankton Counties South
 Dakota, and all South Dakota counties
 east thereof; Vermont; and Big Horn,
 Fremont, Hot Springs, Park, and Washakie
 Counties, Wyoming..
----------------------------------------------------------------------------------------------------------------

                        PARTS 408-411 [RESERVED]



PART 412_PUBLIC INFORMATION_FREEDOM OF INFORMATION--Table of Contents




Sec.
412.1 General statement.
412.2 Public inspection and copying.
412.3 Index.
412.4 Requests for records.
412.5 Appeals.
412.6 Timing of responses to requests.

    Authority: 5 U.S.C. 552 and 7 U.S.C. 1506.

    Source: 62 FR 67694, Dec. 30, 1997, unless otherwise noted.



Sec. 412.1  General statement.

    This part is issued in accordance with the regulations of the 
Secretary of Agriculture published at 7 CFR 1.1-1.23, and appendix A, 
implementing the Freedom of Information Act (5 U.S.C. 552). The 
Secretary's regulations, as implemented by this part, and the Risk 
Management Agency (RMA) govern availability of records of the Federal 
Crop Insurance Corporation (FCIC) as

[[Page 114]]

administration of the crop insurance program for FCIC.



Sec. 412.2  Public inspection and copying.

    (a) Members of the public may request access to the information 
specified in Sec. 412.2(d) for inspection and copying.
    (b) To obtain access to specified information, the public should 
submit a written request, in accordance with 7 CFR 1.6, to the Appeals, 
Litigation and Legal Liaison Staff, Risk Management Agency, United 
States Department of Agriculture, 1400 Independence Avenue, SW, STOP 
0807, room 6618-S, Washington, DC 20250-0807, from 9:00 a.m.-4:00 pm., 
EDT Monday through Friday, except holidays.
    (c) When the information requested is not located at the office of 
the Appeals, Litigation and Legal Liaison Staff, the Appeals, Litigation 
and Legal Liaison Staff will direct the request to the appropriate 
office where the information can be obtained. The requester will be 
informed that the request has been forwarded to the appropriate office.
    (d) FCIC will make available for inspection and copying, unless 
otherwise exempt from publication under sections 552(a)(2)(C) and 
552(b):
    (1) Final opinions, including concurring and dissenting opinions and 
orders made in the adjudication of cases; and
    (2) Those statements of policy and interpretations that have been 
adopted by FCIC and RMA and are not published in the Federal Register; 
and
    (3) Administrative staff manuals and instructions to staff that 
affect a member of the public.



Sec. 412.3  Index.

    5 U.S.C. 552(a)(2) requires that each agency publish, or otherwise 
make available, a current index of all materials available for public 
inspection and copying. RMA and FCIC will maintain a current index 
providing identifying information for the public as to any material 
issued, adopted, or promulgated by the Agency since July 4, 1967, and 
required by section 552(a)(2). Pursuant to the Freedom of Information 
Act provisions, RMA and FCIC have determined that in view of the small 
number of public requests for such index, publication of such an index 
would be unnecessary and impracticable. Copies of the index will be 
available upon request in person or by mail at the address stated in 
Sec. 412.2(b).



Sec. 412.4  Requests for records.

    The Director of the Appeals, Litigation and Legal Liaison staff, RMA 
located at the above stated address, is the person authorized to receive 
Freedom of Information Act and to determine whether to grant or deny 
such requests in accordance with 7 CFR 1.8.



Sec. 412.5  Appeals.

    Any person whose request under Sec. 412.4 is denied shall have the 
right to appeal such denial. This appeal shall be submitted in 
accordance with 7 CFR 1.13 and addressed to the Manager, Federal Crop 
Insurance Corporation, United States Department of Agriculture, 1400 
Independence Avenue, SW., STOP 0807, room 6618-S, Washington, DC 20250-
0807.



Sec. 412.6  Timing of responses to requests.

    (a) In general, FCIC will respond to requests according to their 
order of receipt.
    (b) Existing responsive documents or information may be maintained 
in RMA's field offices. Therefore, extra time may be necessary to search 
and collect the documents.

                        PARTS 413-456 [RESERVED]



PART 457_COMMON CROP INSURANCE REGULATIONS--Table of Contents




Sec.
457.1 Applicability.
457.2 Availability of Federal crop insurance.
457.3 Premium rates, production guarantees or amounts of insurance, 
          coverage levels, and prices at which indemnities shall be 
          computed.
457.4 OMB control numbers.
457.5 Creditors.
457.6 [Reserved]
457.7 The contract.
457.8 The application and policy.
457.9 Appropriation contingency.
457.10-457.100 [Reserved]
457.101 Small grains crop insurance.
457.102 Wheat or barley winter coverage endorsement.
457.103 [Reserved]
457.104 Cotton crop insurance provisions.

[[Page 115]]

457.105 Extra long staple cotton crop insurance provisions.
457.106 Texas citrus tree crop insurance provisions.
457.107 Florida citrus fruit crop insurance provisions.
457.108 Sunflower seed crop insurance provisions.
457.109 Sugar beet crop insurance provisions.
457.110 Fig crop insurance provisions.
457.111 Pear crop insurance provisions.
457.112 Hybrid sorghum seed crop insurance provisions.
457.113 Coarse grains crop insurance provisions.
457.114-457.115 [Reserved]
457.115 Nursery frost, freeze, and cold damage exclusion option.
457.116 Sugarcane crop insurance provisions.
457.117 Forage production crop insurance provisions.
457.118 Malting barley crop insurance.
457.119 Texas citrus fruit crop insurance provisions.
457.120 [Reserved]
457.121 Arizona-California citrus crop insurance provisions.
457.122 Walnut crop insurance provisions.
457.123 Almond crop insurance provisions.
457.124 Raisin crop insurance provisions.
457.125 Safflower crop insurance provisions.
457.126 Popcorn crop insurance provisions.
457.127 [Reserved]
457.128 Guaranteed production plan of fresh market tomato crop insurance 
          provisions.
457.129 Fresh market sweet corn crop insurance provisions.
457.130 Madacamia tree crop insurance provisions.
457.131 Macadamia nut crop insurance provisions.
457.132 Cranberry crop insurance provisions.
457.133 Prune crop insurance provisions.
457.134 Peanut crop insurance provisions.
457.135 Onion crop insurance provisions.
457.136 Guaranteed tobacco crop insurance provisions.
457.137 Green pea crop insurance provisions.
457.138 Grape crop insurance provisions.
457.139 Fresh market tomato (dollar plan) crop insurance provisions.
457.140 Dry pea crop insurance provisions.
457.141 Rice crop insurance provisions.
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.
457.147 Central and Southern potato crop insurance provisions.
457.148 Fresh market pepper crop insurance provisions.
457.149 Table grape crop insurance provisions.
457.150 Dry bean crop insurance provisions.
457.151 Forage seeding crop insurance provisions.
457.152 Hybrid seed corn crop insurance provisions.
457.153 Peach crop insurance provisions.
457.154 Processing sweet corn crop insurance provisions.
457.155 Processing bean crop insurance provisions.
457.156 Quota tobacco crop insurance provisions.
457.157 Plum crop insurance provisions.
457.158 Apple crop insurance provisions.
457.159 Stonefruit crop insurance provisions.
457.160 Processing tomato crop insurance provisions.
457.161 Canola and rapeseed crop insurance provisions.
457.162 Nursery crop insurance provisions.
457.163 Nursery peak inventory endorsement.
457.164 Nursery rehabilitation endorsement.
457.165 Millet crop insurance provisions.
457.166 Blueberry crop insurance provisions.
457.167 Pecan revenue crop insurance provisions.
457.168 Mustard crop insurance provisions.
457.169 Mint crop insurance provisions.
457.170 Cultivated wild rice crop insurance provisions.
457.172 Coverage Enhancement Option.

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

    Effective Date Note: At 73 FR 76891, Dec. 18, 2008, the authority 
citation to part 457 was revised, effective January 20, 2009. For the 
convenience of the user, the revised text is set forth as follows:
    Authority: 7 U.S.C. 1506(l), 1506(o).

    Source: 56 FR 1351, Jan. 14, 1991, unless otherwise noted.



Sec. 457.1  Applicability.

    The provisions of this part are applicable only to crops for which a 
crop provision is published as a section to 7 CFR part 457 and then only 
for the crops and crop year designated by the application section.



Sec. 457.2  Availability of Federal crop insurance.

    (a) Insurance shall be offered under the provisions of this section 
on the insured crop in counties within the limits prescribed by and in 
accordance

[[Page 116]]

with the provisions of the Federal Crop Insurance Act, as amended (the 
Act). The crops and counties shall be designated by the Manager of the 
Corporation from those approved by the Board of Directors of the 
Corporation.
    (b) The insurance is offered through companies reinsured by the 
Federal Crop Insurance Corporation (FCIC) that offer contracts 
containing the same terms and conditions as the contract set out in this 
part. These contracts are clearly identified as being reinsured by FCIC. 
FCIC may offer the contract for the catastrophic level of coverage 
contained in this part and part 402 directly to the insured through 
local offices of the Department of Agriculture only if the Secretary 
determines that the availability of local agents is not adequate. Those 
contracts are specifically identified as being offered by FCIC.
    (c) Except as specified in the Crop Provisions, the Catastrophic 
Risk Protection Endorsement (part 402 of this chapter) and part 400, 
subpart T of this chapter, no person may have in force more than one 
contract on the same crop for the same crop year in the same county.
    (d) Except as specified in paragraph (c) of this section, if a 
person has more than one contract authorized under the Act that provides 
coverage for the same loss on the same crop for the same crop year in 
the same county, all such contracts shall be voided for that crop year 
and the person will be liable for the premium on all contracts, unless 
the person can show to the satisfaction of the Corporation that the 
multiple contracts of insurance were without the fault of the person.
    (1) If the multiple contracts of insurance are shown to be without 
the fault of the person and:
    (i) One contract is an additional coverage policy and the other 
contract is a Catastrophic Risk Protection policy, the additional 
coverage policy will apply if both policies are with the same insurance 
provider, or if not, both insurance providers agree, and the 
Catastrophic Risk Protection policy will be canceled (If the insurance 
providers do not agree, the policy with the earliest date of application 
will be in force and the other contract will be canceled); or
    (ii) Both contracts are additional coverage policies or both are 
Catastrophic Risk Protection policies, the contract with the earliest 
signature date on the application will be valid and the other contract 
on that crop in the county for that crop year will be canceled, unless 
both policies are with the same insurance provider and the insurance 
provider agrees otherwise or both policies are with different insurance 
providers and both insurance providers agree otherwise.
    (2) No liability for any indemnity, prevented planting payment, 
replanting payment or premium will attach to the contracts canceled as 
specified in paragraphs (d)(1)(i) and (ii) of this section.
    (e) The person must repay all amounts received in violation of this 
section with interest at the rate contained in the contract (see Sec. 
457.8, paragraph 24).
    (f) An insured whose contract with the Corporation or with a company 
reinsured by the Corporation under the Act has been terminated because 
of violation of the terms of the contract is not eligible to obtain 
multiple peril crop insurance under the Act with the Corporation or with 
a company reinsured by the Corporation unless the insured can show that 
the default in the prior contract was cured prior to the sales closing 
date of the contract applied for or unless the insured can show that the 
termination was improper and should not result in subsequent 
ineligibility.
    (g) All applicants for insurance under the Act must advise the 
agent, in writing, at the time of application, of any previous 
applications for insurance or policies of insurance under the Act and 
the present status of any such applications or insurance.

[56 FR 1351, Jan. 14, 1991, as amended at 58 FR 58262, Nov. 1, 1993; 62 
FR 65154, Dec. 10, 1997; 63 FR 66712, Dec. 3, 1998; 69 FR 48738, Aug. 
10, 2004]



Sec. 457.3  Premium rates, production guarantees or amounts of insurance, 

coverage levels, and prices at which indemnities shall be computed.

    (a) The Manager shall establish premium rates, production guarantees 
or

[[Page 117]]

amounts of insurance, coverage levels, and prices at which indemnities 
shall be computed for the insured crop which will be included in the 
actuarial table on file in the applicable agents' office for the county 
and which may be changed from year to year.
    (b) At the time the application for insurance is made, the applicant 
will elect an amount of insurance or a coverage level and price from 
among those contained in the actuarial table for the crop year.



Sec. 457.4  OMB control numbers.

    The information collection requirements contained in these 
regulations have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. chapter 35 and have been 
assigned OMB number 0563-0053.

[62 FR 65154, Dec. 10, 1997]



Sec. 457.5  Creditors.

    An interest of a person in an insured crop existing by virtue of a 
lien, mortgage, garnishment, levy, execution, bankruptcy, involuntary 
transfer or other similar interest shall not entitle the holder of the 
interest to any benefit under the contract.



Sec. 457.6  [Reserved]



Sec. 457.7  The contract.

    The insurance contract shall become effective upon the acceptance by 
the Corporation or the reinsured company of a duly executed application 
for insurance on a form prescribed by the Corporation. Changes made in 
the contract shall not affect its continuity from year to year. No 
indemnity shall be paid unless the insured complies with all terms and 
conditions of the contract, except as provided in the policy. The forms 
referred to in the contract are available at the offices of the crop 
insurance agent.

[56 FR 1351, Jan. 14, 1991, as amended at 69 FR 48739, Aug. 10, 2004]



Sec. 457.8  The application and policy.

    (a) Application for insurance on a form prescribed by the 
Corporation, or approved by the Corporation, must be made by any person 
who wishes to participate in the program, to cover such person's share 
in the insured crop as landlord, owner-operator, crop ownership 
interest, or tenant. No other person's interest in the crop may be 
insured under an application unless that person's interest is clearly 
shown on the application and unless that other person's interest is 
insured in accordance with the procedures of the Corporation. The 
application must be submitted to the Corporation or the reinsured 
company through the crop insurance agent and must be submitted on or 
before the applicable sales closing date on file.
    (b) FCIC or the reinsured company may reject or discontinue the 
acceptance of applications in any country or of any individual 
application upon FCIC's determination that the insurance risk is 
excessive.

                        Department of Agriculture

                   Federal Crop Insurance Corporation

                    [or policy issuing company name]

                      Common Crop Insurance Policy

           (This is a continuous policy. Refer to section 2.)

                              FCIC Policies

    This is an insurance policy issued by the Federal Crop Insurance 
Corporation (FCIC), a United States government agency. The provisions of 
the policy may not be waived or modified in any way by us, your 
insurance agent or any employee of USDA unless the policy specifically 
authorizes a waiver or modification by written agreement. Procedures 
(handbooks, manuals, memoranda, and bulletins), issued by us and 
published on the RMA Web site at http://www.rma.usda.gov/ or a successor 
Web site will be used in the administration of this policy, including 
the adjustment of any loss or claim submitted hereunder.
    Throughout this policy, ``you'' and ``your'' refer to the named 
insured shown on the accepted application and ``we,'' ``us,'' and 
``our'' refer to the Federal Crop Insurance Corporation. Unless the 
context indicates otherwise, use of the plural form of a word includes 
the singular and use of the singular form of the word includes the 
plural.
    AGREEMENT TO INSURE: In return for the payment of the premium, and 
subject to all of the provisions of this policy, we agree with you to 
provide the insurance as stated in this policy. If there is a conflict 
between the Act, the regulations published at 7 CFR chapter IV, and the 
procedures issued by us,

[[Page 118]]

the order of priority is as follows: (1) The Act; (2) the regulations; 
and (3) the procedures issued by us, with (1) controlling (2), etc. If 
there is a conflict between the policy provisions published at 7 CFR 
part 457 and the administrative regulations published at 7 CFR part 400, 
the policy provisions published at 7 CFR part 457 control. If a conflict 
exists among the policy provisions, the order of priority is: (1) The 
Catastrophic Risk Protection Endorsement, as applicable; (2) the Special 
Provisions; (3) the Crop Provisions; and (4) these Basic Provisions, 
with (1) controlling (2), etc.

                           Reinsured Policies

    This insurance policy is reinsured by the Federal Crop Insurance 
Corporation (FCIC) under the provisions of the Federal Crop Insurance 
Act (Act) (7 U.S.C. 1501 et seq.). All provisions of the policy and 
rights and responsibilities of the parties are specifically subject to 
the Act. The provisions of the policy may not be waived or varied in any 
way by us, our insurance agent or any other contractor or employee of 
ours or any employee of USDA unless the policy specifically authorizes a 
waiver or modification by written agreement. We will use the procedures 
(handbooks, manuals, memoranda and bulletins), as issued by FCIC and 
published on the RMA Web site at http://www.rma.usda.gov/ or a successor 
Web site, in the administration of this policy, including the adjustment 
of any loss or claim submitted hereunder. In the event that we cannot 
pay your loss because we are insolvent or are otherwise unable to 
perform our duties under our reinsurance agreement with FCIC, your claim 
will be settled in accordance with the provisions of this policy and 
FCIC will be responsible for any amounts owed. No state guarantee fund 
will be liable for your loss.
    Throughout this policy, ``you'' and ``your'' refer to the named 
insured shown on the accepted application and ``we,'' ``us,'' and 
``our'' refer to the insurance company providing insurance. Unless the 
context indicates otherwise, use of the plural form of a word includes 
the singular and use of the singular form of the word includes the 
plural.
    AGREEMENT TO INSURE: In return for the payment of the premium, and 
subject to all of the provisions of this policy, we agree with you to 
provide the insurance as stated in this policy. If there is a conflict 
between the Act, the regulations published at 7 CFR chapter IV, and the 
procedures as issued by FCIC, the order of priority is as follows: (1) 
The Act; (2) the regulations; and (3) the procedures as issued by FCIC, 
with (1) controlling (2), etc. If there is a conflict between the policy 
provisions published at 7 CFR part 457 and the administrative 
regulations published at 7 CFR part 400, the policy provisions published 
at 7 CFR part 457 control. If a conflict exists among the policy 
provisions, the order of priority is: (1) The Catastrophic Risk 
Protection Endorsement, as applicable; (2) the Special Provisions; (3) 
the Crop Provisions; and (4) these Basic Provisions, with (1) 
controlling (2), etc.

                          Terms and Conditions

                            Basic Provisions

                             1. Definitions

    Abandon. Failure to continue to care for the crop, providing care so 
insignificant as to provide no benefit to the crop, or failure to 
harvest in a timely manner, unless an insured cause of loss prevents you 
from properly caring for or harvesting the crop or causes damage to it 
to the extent that most producers of the crop on acreage with similar 
characteristics in the area would not normally further care for or 
harvest it.
    Acreage report. A report required by section 6 of these Basic 
Provisions that contains, in addition to other required information, 
your report of your share of all acreage of an insured crop in the 
county, whether insurable or not insurable.
    Acreage reporting date. The date contained in the Special Provisions 
or as provided in section 6 by which you are required to submit your 
acreage report.
    Act. The Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).
    Actual Production History (APH). A process used to determine 
production guarantees in accordance with 7 CFR part 400, subpart (G).
    Actual yield. The yield per acre for a crop year calculated from the 
production records or claims for indemnities. The actual yield is 
determined by dividing total production (which includes harvested and 
appraised production) by planted acres.
    Actuarial documents. The material for the crop year which is 
available for public inspection in your agent's office and published on 
RMA's Web site at http://www.rma.usda.gov/ or a successor Web site, and 
which shows available coverage levels, information needed to determine 
amounts of insurance, premium rates, premium adjustment percentages, 
practices, particular types or varieties of the insurable crop, 
insurable acreage, and other related information regarding crop 
insurance in the county.
    Additional coverage. A level of coverage greater than catastrophic 
risk protection.
    Administrative fee. An amount you must pay for catastrophic risk 
protection, and additional coverage for each crop year as specified in 
section 7 and the Catastrophic Risk Protection Endorsement.
    Agricultural commodity. Any crop or other commodity produced, 
regardless of whether or not it is insurable.
    Agricultural experts. Persons who are employed by the Cooperative 
State Research,

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Education and Extension Service or the agricultural departments of 
universities, or other persons approved by FCIC, whose research or 
occupation is related to the specific crop or practice for which such 
expertise is sought.
    Annual crop. An agricultural commodity that normally must be planted 
each year.
    Application. The form required to be completed by you and accepted 
by us before insurance coverage will commence. This form must be 
completed and filed in your agent's office not later than the sales 
closing date of the initial insurance year for each crop for which 
insurance coverage is requested. If cancellation or termination of 
insurance coverage occurs for any reason, including but not limited to 
indebtedness, suspension, debarment, disqualification, cancellation by 
you or us or violation of the controlled substance provisions of the 
Food Security Act of 1985, a new application must be filed for the crop. 
Insurance coverage will not be provided if you are ineligible under the 
contract or under any Federal statute or regulation.
    Approved yield. The actual production history (APH) yield, 
calculated and approved by the verifier, used to determine the 
production guarantee by summing the yearly actual, assigned, adjusted or 
unadjusted transitional yields and dividing the sum by the number of 
yields contained in the database, which will always contain at least 
four yields. The database may contain up to 10 consecutive crop years of 
actual or assigned yields. The approved yield may have yield adjustments 
elected under section 36, revisions according to section 3, or other 
limitations according to FCIC approved procedures applied when 
calculating the approved yield.
    Area. Land surrounding the insured acreage with geographic 
characteristics, topography, soil types and climatic conditions similar 
to the insured acreage.
    Assignment of indemnity. A transfer of policy rights, made on our 
form, and effective when approved by us. It is the arrangement whereby 
you assign your right to an indemnity payment to any party of your 
choice for the crop year.
    Average yield. The yield, calculated by summing the yearly actual, 
assigned, adjusted or unadjusted transitional yields and dividing the 
sum by the number of yields contained in the database, prior to any 
adjustments, including those elected under section 36, revisions 
according to section 3, or other limitations according to FCIC approved 
procedures.
    Basic unit. All insurable acreage of the insured crop in the county 
on the date coverage begins for the crop year:
    (1) In which you have 100 percent crop share; or
    (2) Which is owned by one person and operated by another person on a 
share basis. (Example: If, in addition to the land you own, you rent 
land from five landlords, three on a crop share basis and two on a cash 
basis, you would be entitled to four units; one for each crop share 
lease and one that combines the two cash leases and the land you own.) 
Land which would otherwise be one unit may, in certain instances, be 
divided according to guidelines contained in section 34 of these Basic 
Provisions and in the applicable Crop Provisions.
    Buffer zone. A parcel of land, as designated in your organic plan, 
that separates agricultural commodities grown under organic practices 
from agricultural commodities grown under non-organic practices, and 
used to minimize the possibility of unintended contact by prohibited 
substances or organisms.
    Cancellation date. The calendar date specified in the Crop 
Provisions on which coverage for the crop will automatically renew 
unless canceled in writing by either you or us or terminated in 
accordance with the policy terms.
    Catastrophic risk protection. The minimum level of coverage offered 
by FCIC.
    Catastrophic Risk Protection Endorsement. The part of the crop 
insurance policy that contains provisions of insurance that are specific 
to catastrophic risk protection.
    Certified organic acreage. Acreage in the certified organic farming 
operation that has been certified by a certifying agent as conforming to 
organic standards in accordance with 7 CFR part 205.
    Certifying agent. A private or governmental entity accredited by the 
USDA Secretary of Agriculture for the purpose of certifying a 
production, processing or handling operation as organic.
    Claim for indemnity. A claim made on our form by you for damage or 
loss to an insured crop and submitted to us not later than 60 days after 
the end of the insurance period (see section 14).
    Consent. Approval in writing by us allowing you to take a specific 
action.
    Code of Federal Regulations (CFR). The codification of general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. Rules published in 
the Federal Register by FCIC are contained in 7 CFR chapter IV. The full 
text of the CFR is available in electronic format at http://
www.access.gpo.gov/ or a successor Web site.
    Contract. (See ``policy'').
    Contract change date. The calendar date by which changes to the 
policy, if any, will be made available in accordance with section 4 of 
these Basic Provisions.
    Conventional farming practice. A system or process for producing an 
agricultural commodity, excluding organic farming practices, that is 
necessary to produce the crop that may be, but is not required to be, 
generally recognized by agricultural experts for the

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area to conserve or enhance natural resources and the environment.
    County. Any county, parish, or other political subdivision of a 
state shown on your accepted application, including acreage in a field 
that extends into an adjoining county if the county boundary is not 
readily discernible.
    Coverage. The insurance provided by this policy, against insured 
loss of production or value, by unit as shown on your summary of 
coverage.
    Coverage begins, date. The calendar date insurance begins on the 
insured crop, as contained in the Crop Provisions, or the date planting 
begins on the unit (see section 11 of these Basic Provisions for 
specific provisions relating to prevented planting).
    Cover crop. A crop generally recognized by agricultural experts as 
agronomically sound for the area for erosion control or other purposes 
related to conservation or soil improvement. A cover crop may be 
considered to be a second crop (see the definition of ``second crop'').
    Crop Provisions. The part of the policy that contains the specific 
provisions of insurance for each insured crop.
    Crop year. The period within which the insured crop is normally 
grown, regardless of whether or not it is actually grown, and designated 
by the calendar year in which the insured crop is normally harvested, 
unless otherwise specified in the Crop Provisions.
    Damage. Injury, deterioration, or loss of production of the insured 
crop due to insured or uninsured causes.
    Days. Calendar days.
    Deductible. The amount determined by subtracting the coverage level 
percentage you choose from 100 percent. For example, if you elected a 65 
percent coverage level, your deductible would be 35 percent (100% - 65% 
= 35%).
    Delinquent debt. Any administrative fees or premiums for insurance 
issued under the authority of the Act, and the interest on those 
amounts, if applicable, that are not postmarked or received by us or our 
agent on or before the termination date unless you have entered into an 
agreement acceptable to us to pay such amounts or have filed for 
bankruptcy on or before the termination date; any other amounts due us 
for insurance issued under the authority of the Act (including, but not 
limited to, indemnities, prevented planting payments or replanting 
payments found not to have been earned or that were overpaid), and the 
interest on such amounts, if applicable, which are not postmarked or 
received by us or our agent by the due date specified in the notice to 
you of the amount due; or any amounts due under an agreement with you to 
pay the debt, which are not postmarked or received by us or our agent by 
the due dates specified in such agreement.
    Disinterested third party. A person that does not have any familial 
relationship (parents, brothers, sisters, children, spouse, 
grandchildren, aunts, uncles, nieces, nephews, first cousins, or 
grandparents, related by blood, adoption or marriage, are considered to 
have a familial relationship) with you or who will not benefit 
financially from the sale of the insured crop. Persons who are 
authorized to conduct quality analysis in accordance with the Crop 
Provisions are considered disinterested third parties unless there is a 
familial relationship.
    Double crop. Producing two or more crops for harvest on the same 
acreage in the same crop year.
    Earliest planting date. The initial planting date contained in the 
Special Provisions, which is the earliest date you may plant an insured 
agricultural commodity and qualify for a replanting payment if such 
payments are authorized by the Crop Provisions.
    End of insurance period, date of. The date upon which your crop 
insurance coverage ceases for the crop year (see Crop Provisions and 
section 11).
    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. To qualify, an enterprise unit must contain all of the 
insurable acreage of the same insured crop in:
    (1) 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, with at least some planted acreage in 
two or more separate sections, section equivalents, FSA farm serial 
numbers, or two or more separate units as established by written 
agreement; or
    (2) Two or more optional units established by separate sections, 
section equivalents, FSA farm serial numbers, or as established by 
written agreement, with at least two optional units containing some 
planted acreage.
    Field. All acreage of tillable land within a natural or artificial 
boundary (e.g., roads, waterways, fences, etc.). Different planting 
patterns or planting different crops do not create separate fields.
    Final planting date. The date contained in the Special Provisions 
for the insured crop by which the crop must initially be planted in 
order to be insured for the full production guarantee or amount of 
insurance per acre.
    First insured crop. With respect to a single crop year and any 
specific crop acreage, the first instance that an agricultural commodity 
is planted for harvest or prevented from being planted and is insured 
under the authority of the Act. For example, if winter wheat that is not 
insured is planted on acreage that is later planted to soybeans that are

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insured, the first insured crop would be soybeans. If the winter wheat 
was insured, it would be the first insured crop.
    FSA. The Farm Service Agency, an agency of the USDA, or a successor 
agency.
    FSA farm serial number. The number assigned to the farm by the local 
FSA office.
    Generally recognized. When agricultural experts or the organic 
agricultural industry, as applicable, are aware of the production method 
or practice and there is no genuine dispute regarding whether the 
production method or practice allows the crop to make normal progress 
toward maturity and produce at least the yield used to determine the 
production guarantee or amount of insurance.
    Good farming practices. The production methods utilized to produce 
the insured crop and allow it to make normal progress toward maturity 
and produce at least the yield used to determine the production 
guarantee or amount of insurance, including any adjustments for late 
planted acreage, which are: (1) For conventional or sustainable farming 
practices, those generally recognized by agricultural experts for the 
area; or (2) for organic farming practices, those generally recognized 
by the organic agricultural industry for the area or contained in the 
organic plan. We may, or you may request us to, contact FCIC to 
determine whether or not production methods will be considered to be 
``good farming practices.''
    Household. A domestic establishment including the members of a 
family (parents, brothers, sisters, children, spouse, grandchildren, 
aunts, uncles, nieces, nephews, first cousins, or grandparents, related 
by blood, adoption or marriage, are considered to be family members) and 
others who live under the same roof.
    Insurable loss. Damage for which coverage is provided under the 
terms of your policy, and for which you accept an indemnity payment.
    Insured. The named person as shown on the application accepted by 
us. This term does not extend to any other person having a share or 
interest in the crop (for example, a partnership, landlord, or any other 
person) unless specifically indicated on the accepted application.
    Insured crop. The crop in the county for which coverage is available 
under your policy as shown on the application accepted by us.
    Interplanted. Acreage on which two or more crops are planted in a 
manner that does not permit separate agronomic maintenance or harvest of 
the insured crop.
    Irrigated practice. A method of producing a crop by which water is 
artificially applied during the growing season by appropriate systems 
and at the proper times, with the intention of providing the quantity of 
water needed to produce at least the yield used to establish the 
irrigated production guarantee or amount of insurance on the irrigated 
acreage planted to the insured crop.
    Late planted. Acreage initially planted to the insured crop after 
the final planting date.
    Late planting period. The period that begins the day after the final 
planting date for the insured crop and ends 25 days after the final 
planting date, unless otherwise specified in the Crop Provisions or 
Special Provisions.
    Liability. The dollar amount of insurance coverage used in the 
premium computation for the insured agricultural commodity.
    Limited resource farmer. A person with:
    (1) Direct or indirect gross farm sales not more than $100,000.00 in 
each of the previous two years (to be increased starting in fiscal year 
2004 to adjust for inflation using Prices Paid by Farmer Index as 
compiled by National Agricultural Statistical Service (NASS)); and
    (2) A total household income at or below the national poverty level 
for a family of four, or less than 50 percent of county median household 
income in each of the previous two years (to be determined annually 
using Commerce Department Data).
    Native sod. Acreage on which the plant cover is composed principally 
of native grasses, grass-like plants, forbs, or shrubs suitable for 
grazing and browsing, and that has no record of being tilled (determined 
in accordance with FSA records) for the production of an annual crop on 
or before May 22, 2008.
    Negligence. The failure to use such care as a reasonably prudent and 
careful person would use under similar circumstances.
    Non-contiguous. Acreage of an insured crop that is separated from 
other acreage of the same insured crop by land that is neither owned by 
you nor rented by you for cash or a crop share. However, acreage 
separated by only a public or private right-of-way, waterway, or an 
irrigation canal will be considered as contiguous.
    Offset. The act of deducting one amount from another amount.
    Organic agricultural industry. Persons who are employed by the 
following organizations: Appropriate Technology Transfer for Rural 
Areas, Sustainable Agriculture Research and Education or the Cooperative 
State Research, Education and Extension Service, the agricultural 
departments of universities, or other persons approved by FCIC, whose 
research or occupation is related to the specific organic crop or 
practice for which such expertise is sought.
    Organic crop. An agricultural commodity that is organically produced 
consistent with section 2103 of the Organic Foods Production Act of 1990 
(7 U.S.C. 6502).

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    Organic farming practice. A system of plant production practices 
used to produce an organic crop that is approved by a certifying agent 
in accordance with 7 CFR part 205.
    Organic plan. A written plan, in accordance with the National 
Organic Program published in 7 CFR part 205, that describes the organic 
farming practices that you and a certifying agent agree upon annually or 
at such other times as prescribed by the certifying agent.
    Organic standards. Standards in accordance with the Organic Foods 
Production Act of 1990 (7 U.S.C. 6501 et seq.) and 7 CFR part 205.
    Perennial crop. A plant, bush, tree or vine crop that has a life 
span of more than one year.
    Person. An individual, partnership, association, corporation, 
estate, trust, or other legal entity, and wherever applicable, a State 
or a political subdivision or agency of a State. ``Person'' does not 
include the United States Government or any agency thereof.
    Planted acreage. Land in which seed, plants, or trees have been 
placed, appropriate for the insured crop and planting method, at the 
correct depth, into a seedbed that has been properly prepared for the 
planting method and production practice.
    Policy. The agreement between you and us to insure an agricultural 
commodity and consisting of the accepted application, these Basic 
Provisions, the Crop Provisions, the Special Provisions, other 
applicable endorsements or options, the actuarial documents for the 
insured agricultural commodity, the Catastrophic Risk Protection 
Endorsement, if applicable, and the applicable regulations published in 
7 CFR chapter IV. Insurance for each agricultural commodity in each 
county will constitute a separate policy.
    Practical to replant. Our determination, after loss or damage to the 
insured crop, based on all factors, including, but not limited to 
moisture availability, marketing window, condition of the field, and 
time to crop maturity, that replanting the insured crop will allow the 
crop to attain maturity prior to the calendar date for the end of the 
insurance period. It will be considered to be practical to replant 
regardless of availability of seed or plants, or the input costs 
necessary to produce the insured crop such as those that would be 
incurred for seed or plants, irrigation water, etc.
    Prairie Pothole National Priority Area. Consists of specific 
counties within the States of Iowa, Minnesota, Montana, North Dakota or 
South Dakota as specified on the RMA Web site at http://
www.rma.usda.gov/.
    Premium billing date. The earliest date upon which you will be 
billed for insurance coverage based on your acreage report. The premium 
billing date is contained in the Special Provisions.
    Prevented planting. Failure to plant the insured crop with proper 
equipment by the final planting date designated in the Special 
Provisions for the insured crop in the county. You may also be eligible 
for a prevented planting payment if you failed to plant the insured crop 
with the proper equipment within the late planting period. You must have 
been prevented from planting the insured crop due to an insured cause of 
loss that is general in the surrounding area and that prevents other 
producers from planting acreage with similar characteristics.
    Price election. The amounts contained in the Special Provisions, or 
an addendum thereto, that is the value per pound, bushel, ton, carton, 
or other applicable unit of measure for the purposes of determining 
premium and indemnity under the policy.
    Production guarantee (per acre). The number of pounds, bushels, 
tons, cartons, or other applicable units of measure determined by 
multiplying the approved yield per acre by the coverage level percentage 
you elect.
    Production report. A written record showing your annual production 
and used by us to determine your yield for insurance purposes (see 
section 3). The report contains yield information for previous years, 
including planted acreage and harvested production. This report must be 
supported by written verifiable records from a warehouseman or buyer of 
the insured crop or by measurement of farm-stored production, or by 
other records of production approved by us on an individual case basis.
    Prohibited substance. Any biological, chemical, or other agent that 
is prohibited from use or is not included in the organic standards for 
use on any certified organic, transitional or buffer zone acreage. Lists 
of such substances are contained at 7 CFR part 205.
    Replanted crop. The same agricultural commodity replanted on the 
same acreage as the first insured crop for harvest in the same crop year 
if the replanting is specifically made optional by the policy and you 
elect to replant the crop and insure it under the policy covering the 
first insured crop, or replanting is required by the policy.
    Replanting. Performing the cultural practices necessary to prepare 
the land to replace the seed or plants of the damaged or destroyed 
insured crop and then replacing the seed or plants of the same crop in 
the same insured acreage. The same crop does not necessarily mean the 
same type or variety of the crop unless different types or varieties 
constitute separate crops or it is otherwise specified in the policy.
    Representative sample. Portions of the insured crop that must remain 
in the field for examination and review by our loss adjuster when making 
a crop appraisal, as specified in the Crop Provisions. In certain 
instances we

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may allow you to harvest the crop and require only that samples of the 
crop residue be left in the field.
    Sales closing date. A date contained in the Special Provisions by 
which an application must be filed. The last date by which you may 
change your crop insurance coverage for a crop year.
    Section. (for the purposes of unit structure) A unit of measure 
under a rectangular survey system describing a tract of land usually one 
mile square and usually containing approximately 640 acres.
    Second crop. With respect to a single crop year, the next occurrence 
of planting any agricultural commodity for harvest following a first 
insured crop on the same acreage. The second crop may be the same or a 
different agricultural commodity as the first insured crop, except the 
term does not include a replanted crop. A cover crop, planted after a 
first insured crop and planted for the purpose of haying, grazing or 
otherwise harvesting in any manner or that is hayed or grazed during the 
crop year, or that is otherwise harvested is considered to be a second 
crop. A cover crop that is covered by FSA's noninsured crop disaster 
assistance program (NAP) or receives other USDA benefits associated with 
forage crops will be considered as planted for the purpose of haying, 
grazing or otherwise harvesting. A crop meeting the conditions stated 
herein will be considered to be a second crop regardless of whether or 
not it is insured. Notwithstanding the references to haying and grazing 
as harvesting in these Basic Provisions, for the purpose of determining 
the end of the insurance period, harvest of the crop will be as defined 
in the applicable Crop Provisions.
    Share. Your percentage of interest in the insured crop as an owner, 
operator, or tenant at the time insurance attaches. However, only for 
the purpose of determining the amount of indemnity, your share will not 
exceed your share at the earlier of the time of loss or the beginning of 
harvest.
    Special Provisions. The part of the policy that contains specific 
provisions of insurance for each insured crop that may vary by 
geographic area.
    State. The state shown on your accepted application.
    Substantial beneficial interest. An interest held by any person of 
at least 10 percent in you. The spouse of any individual applicant or 
individual insured will be considered to have a substantial beneficial 
interest in the applicant or insured unless the spouses can prove they 
are legally separated or otherwise legally separate under state law. Any 
child of an individual applicant or individual insured will not be 
considered to have a substantial beneficial interest in the applicant or 
insured unless the child has a separate legal interest in such person. 
For example, there are two partnerships that each have a 50 percent 
interest in you and each partnership is made up of two individuals, each 
with a 50 percent share in the partnership. In this case, each 
individual would be considered to have a 25 percent interest in you, and 
both the partnerships and the individuals would have a substantial 
beneficial interest in you (The spouses of the individuals would not be 
considered to have a substantial beneficial interest unless the spouse 
was one of the individuals that made up the partnership). However, if 
each partnership is made up of six individuals with equal interests, 
then each would only have an 8.33 percent interest in you and although 
the partnership would still have a substantial beneficial interest in 
you, the individuals would not for the purposes of reporting in section 
2.
    Summary of coverage. Our statement to you, based upon your acreage 
report, specifying the insured crop and the guarantee or amount of 
insurance coverage provided by unit.
    Sustainable farming practice. A system or process for producing an 
agricultural commodity, excluding organic farming practices, that is 
necessary to produce the crop and is generally recognized by 
agricultural experts for the area to conserve or enhance natural 
resources and the environment.
    Tenant. A person who rents land from another person for a share of 
the crop or a share of the proceeds of the crop (see the definition of 
``share'' above).
    Termination date. The calendar date contained in the Crop Provisions 
upon which your insurance ceases to be in effect because of nonpayment 
of any amount due us under the policy, including premium.
    Timely planted. Planted on or before the final planting date 
designated in the Special Provisions for the insured crop in the county.
    Transitional acreage. Acreage on which organic farming practices are 
being followed that does not yet qualify to be designated as organic 
acreage.
    USDA. United States Department of Agriculture.
    Void. When the policy is considered not to have existed for a crop 
year as a result of concealment, fraud or misrepresentation (see section 
27).
    Whole farm unit. All insurable acreage of two or more insured crops 
planted in the county in which you have a share on the date coverage 
begins for each crop for the crop year. All crops for which the whole 
farm unit structure is available must be included in the whole farm 
unit. At least two of the insured crops must each constitute at least 10 
percent of the total liability of all insured crops in the whole farm 
unit, and all crops in the unit must be insured under the same plan of 
insurance and with the same insurance provider.

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    Written agreement. A document that alters designated terms of a 
policy as authorized under these Basic Provisions, the Crop Provisions, 
or the Special Provisions for the insured crop (see section 18).

            2. Life of Policy, Cancellation, and Termination

    (a) This is a continuous policy and will remain in effect for each 
crop year following the acceptance of the original application until 
canceled by you in accordance with the terms of the policy or terminated 
by operation of the terms of the policy or by us.
    (b) Your application for insurance must contain your social security 
number (SSN) if you are an individual or employer identification number 
(EIN) if you are a person other than an individual, and all SSNs and 
EINs, as applicable, of all persons with a substantial beneficial 
interest in you, the coverage level, price election, crop, type, 
variety, or class, plan of insurance, and any other material information 
required on the application to insure the crop. If you or someone with a 
substantial beneficial interest is not legally required to have a SSN or 
EIN, you must request and receive an identification number for the 
purposes of this policy from us or the Internal Revenue Service (IRS) if 
such identification number is available from the IRS. If any of the 
information regarding persons with a substantial beneficial interest 
changes during the crop year, you must revise your application by the 
next sales closing date applicable under your policy to reflect the 
correct information.
    (1) Applications that do not contain your SSN, EIN or identification 
number, or any of the other information required in section 2(b) are not 
acceptable and insurance will not be provided (Except if you fail to 
report the SSNs, EINs or identification numbers of persons with a 
substantial beneficial interest in you, the provisions in section 
2(b)(2) will apply);
    (2) If the application does not contain the SSNs, EINs or 
identification numbers of all persons with a substantial beneficial 
interest in you, you fail to revise your application in accordance with 
section 2(b), or the reported SSNs, EINs or identification numbers are 
incorrect and the incorrect SSN, EIN or identification number has not 
been corrected by the acreage reporting date, and:
    (i) Such persons are eligible for insurance, the amount of coverage 
for all crops included on this application will be reduced 
proportionately by the percentage interest in you of such persons, you 
must repay the amount of indemnity, prevented planting payment or 
replanting payment that is proportionate to the interest of the persons 
whose SSN, EIN or identification number was unreported or incorrect for 
such crops, and your premium will be reduced commensurately; or
    (ii) Such persons are not eligible for insurance, except as provided 
in section 2(b)(3), the policy is void and no indemnity, prevented 
planting payment or replanting payment will be owed for any crop 
included on this application, and you must repay any indemnity, 
prevented planting payment or replanting payment that may have been paid 
for such crops. If previously paid, the balance of any premium and any 
administrative fees will be returned to you, less twenty percent of the 
premium that would otherwise be due from you for such crops. If not 
previously paid, no premium or administrative fees will be due for such 
crops.
    (3) The consequences described in section 2(b)(2)(ii) will not apply 
if you have included an ineligible person's SSN, EIN or identification 
number on your application and do not include the ineligible person's 
share on the acreage report.
    (c) After acceptance of the application, you may not cancel this 
policy for the initial crop year. Thereafter, the policy will continue 
in force for each succeeding crop year unless canceled or terminated as 
provided below.
    (d) Either you or we may cancel this policy after the initial crop 
year by providing written notice to the other on or before the 
cancellation date shown in the Crop Provisions.
    (e) Any amount due to us for any policy authorized under the Act 
will be offset from any indemnity or prevented planting payment due you 
for this or any other crop insured with us under the authority of the 
Act.
    (1) Even if your claim has not yet been paid, you must still pay the 
premium and administrative fee on or before the termination date for you 
to remain eligible for insurance.
    (2) If we offset any amount due us from an indemnity or prevented 
planting payment owed to you, the date of payment for the purpose of 
determining whether you have a delinquent debt will be the date that you 
submit the claim for indemnity in accordance with section 14(c) (Your 
Duties).
    (f) A delinquent debt for any policy will make you ineligible to 
obtain crop insurance authorized under the Act for any subsequent crop 
year and result in termination of all policies in accordance with 
section 2(f)(2).
    (1) With respect to ineligibility:
    (i) Ineligibility for crop insurance will be effective on:
    (A) The date that a policy was terminated in accordance with section 
2(f)(2) for the crop for which you failed to pay premium, an 
administrative fee, or any related interest owed, as applicable;
    (B) The payment due date contained in any notification of 
indebtedness for any overpaid indemnity, prevented planting payment or 
replanting payment, if you fail to pay the amount owed, including any 
related interest owed, as applicable, by such due date;

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    (C) The termination date for the crop year prior to the crop year in 
which a scheduled payment is due under a payment agreement if you fail 
to pay the amount owed by any payment date in any agreement to pay the 
debt; or
    (D) The termination date the policy was or would have been 
terminated under sections 2(f)(2)(i)(A), (B) or (C) if your bankruptcy 
petition is dismissed before discharge.
    (ii) If you are ineligible and a policy has been terminated in 
accordance with section 2(f)(2), you will not receive any indemnity, 
prevented planting payment or replanting payment, if applicable, and 
such ineligibility and termination of the policy may affect your 
eligibility for benefits under other USDA programs. Any indemnity, 
prevented planting payment or replanting payment that may be owed for 
the policy before it has been terminated will remain owed to you, but 
may be offset in accordance with section 2(e), unless your policy was 
terminated in accordance with sections 2(f)(2)(i)(D) or (E).
    (2) With respect to termination:
    (i) Termination will be effective on:
    (A) For a policy with unpaid administrative fees or premiums, the 
termination date immediately subsequent to the billing date for the crop 
year;
    (B) For a policy with other amounts due, the termination date 
immediately following the date you have a delinquent debt;
    (C) For each policy for which insurance has attached before you 
become ineligible, the termination date immediately following the date 
you become ineligible;
    (D) For execution of an agreement to pay any amounts owed and 
failure to make any scheduled payment, the termination date for the crop 
year prior to the crop year in which you failed to make the scheduled 
payment; or
    (E) For dismissal of a bankruptcy petition before discharge, the 
termination date the policy was or would have been terminated under 
sections 2(f)(2)(i)(A), (B) or (C).
    (ii) For all policies terminated under sections 2(f)(2)(i)(D) and 
(E), any indemnities, prevented planting payments or replanting payments 
paid subsequent to the termination date must be repaid.
    (iii) Once the policy is terminated, it cannot be reinstated for the 
current crop year unless the termination was in error. Failure to timely 
pay because of illness, bad weather, or other such extenuating 
circumstances is not grounds for reinstatement in the current year.
    (3) To regain eligibility, you must:
    (i) Repay the delinquent debt in full;
    (ii) Execute an agreement to pay any amounts owed and make payments 
in accordance with the agreement (We will not enter into an agreement 
with you to pay the amounts owed if you have previously failed to make a 
scheduled payment under the terms of any other agreement to pay with us 
or any other insurance provider); or
    (iii) File a petition to have your debts discharged in bankruptcy 
(Dismissal of the bankruptcy petition before discharge will terminate 
all policies in effect retroactive to the date your policy would have 
been terminated in accordance with section 2(f)(2)(i));
    (4) After you become eligible for crop insurance, if you want to 
obtain coverage for your crops, you must submit a new application on or 
before the sales closing date for the crop (Since applications for crop 
insurance cannot be accepted after the sales closing date, if you make 
any payment after the sales closing date, you cannot apply for insurance 
until the next crop year);
    (5) For example, for the 2003 crop year, if crop A, with a 
termination date of October 31, 2003, and crop B, with a termination 
date of March 15, 2004, are insured and you do not pay the premium for 
crop A by the termination date, you are ineligible for crop insurance as 
of October 31, 2003, and crop A's policy is terminated as of that date. 
Crop B's policy does not terminate until March 15, 2004, and an 
indemnity for the 2003 crop year may still be owed. If you enter an 
agreement to repay amounts owed on September 25, 2004, the earliest date 
by which you can obtain crop insurance for crop A is to apply for crop 
insurance by the October 31, 2004, sales closing date and for crop B is 
to apply for crop insurance by the March 15, 2005, sales closing date. 
If you fail to make a payment that was scheduled to be made on April 1, 
2005, your policy will terminate as of October 31, 2004, for crop A, and 
March 15, 2005, for crop B, and no indemnity, prevented planting payment 
or replanting payment will be due for that crop year for either crop. 
You will not be eligible to apply for crop insurance for any crop until 
after the amounts owed are paid in full or you file a petition to 
discharge the debt in bankruptcy.
    (6) If you are determined to be ineligible under section 2(f), 
persons with a substantial beneficial interest in you may also be 
ineligible until you become eligible again.
    (g) If you die, disappear, or are judicially declared incompetent, 
or if you are an entity other than an individual and such entity is 
dissolved, the policy will terminate as of the date of death, judicial 
declaration, or dissolution. If such event occurs after coverage begins 
for any crop year, the policy will continue in force through the crop 
year and terminate at the end of the insurance period and any indemnity 
will be paid to the person or persons determined to be beneficially 
entitled to the indemnity. The premium will be deducted from the 
indemnity or collected from the estate. Death of a partner in a 
partnership will dissolve the partnership unless the partnership 
agreement provides otherwise. If two or more persons having a joint

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interest are insured jointly, death of one of the persons will dissolve 
the joint entity.
    (h) We may cancel your policy if no premium is earned for 3 
consecutive years.
    (i) The cancellation and termination dates are contained in the Crop 
Provisions.
    (j) When obtaining catastrophic, or additional coverage, you must 
provide information regarding crop insurance coverage on any crop 
previously obtained at any other local FSA office or from an approved 
insurance provider, including the date such insurance was obtained and 
the amount of the administrative fee.
    (k) Any person may sign any document relative to crop insurance 
coverage on behalf of any other person covered by such a policy, 
provided that the person has a properly executed power of attorney or 
such other legally sufficient document authorizing such person to sign. 
You are still responsible for the accuracy of all information provided 
on your behalf and may be subject to the consequences in section 6(g), 
and any applicable consequences, if any information has been 
misreported.

          3. Insurance Guarantees, Coverage Levels, and Prices.

    (a) Unless adjusted or limited in accordance with your policy, the 
production guarantee or amount of insurance, coverage level, and price 
at which an indemnity will be determined for each unit will be those 
used to calculate your summary of coverage for each crop year.
    (b) You must select the same coverage, catastrophic risk protection 
or additional coverage, and select one level of additional coverage for 
all acreage of the crop in the county unless one of the following 
applies:
    (1) The applicable Crop Provisions allow you the option to 
separately insure individual crop types or varieties. In this case, each 
individual type or variety insured by you will be subject to separate 
administrative fees. For example, if two grape varieties in California 
are insured under the Catastrophic Risk Protection Endorsement and two 
varieties are insured under an additional coverage policy, a separate 
administrative fee will be charged for each of the four varieties.
    (2) If you have additional coverage for the crop in the county and 
the acreage has been designated as ``high risk'' by FCIC, you will be 
able to obtain a High Risk Land Exclusion Option for the high risk land 
under the additional coverage policy and insure the high risk acreage 
under a separate Catastrophic Risk Protection Endorsement, provided that 
the Catastrophic Risk Protection Endorsement is obtained from the same 
insurance provider from which the additional coverage was obtained.
    (c) In addition to the price election or amount of insurance 
available on the contract change date, we may provide an additional 
price election or amount of insurance no later than 15 days prior to the 
sales closing date. You must select the additional price election or 
amount of insurance on or before the sales closing date for the insured 
crop. These additional price elections or amounts of insurance will not 
be less than those available on the contract change date. If you elect 
the additional price election or amount of insurance, any claim 
settlement and amount of premium will be based on this amount.
    (d) You may change the coverage level, price election, or amount of 
insurance for the following crop year by giving written notice to us not 
later than the sales closing date for the insured crop. Since the price 
election or amount of insurance may change each year, if you do not 
select a new price election or amount of insurance on or before the 
sales closing date, we will assign a price election or amount of 
insurance which bears the same relationship to the price election 
schedule as the price election or amount of insurance that was in effect 
for the preceding year. (For example: If you selected 100 percent of the 
market price for the previous crop year and you do not select a new 
price election for the current crop year, we will assign 100 percent of 
the market price for the current crop year.)
    (e) You must report production to us for the previous crop year by 
the earlier of the acreage reporting date or 45 days after the 
cancellation date unless otherwise stated in the Special Provisions:
    (1) If you do not provide the required production report, we will 
assign a yield for the previous crop year. The yield assigned by us will 
not be more than 75 percent of the yield used by us to determine your 
coverage for the previous crop year. The production report or assigned 
yield will be used to compute your approved yield for the purpose of 
determining your coverage for the current crop year.
    (2) If you have filed a claim for any crop year, the documents 
signed by you which state the amount of production used to complete the 
claim for indemnity will be the production report for that year unless 
otherwise specified by FCIC.
    (3) Production and acreage for the prior crop year must be reported 
for each proposed optional unit by the production reporting date. If you 
do not provide the information stated above, the optional units will be 
combined into the basic unit.
    (4) Appraisals obtained from only a portion of the acreage in a 
field that remains unharvested after the remainder of the crop within 
the field has been destroyed or put to another use will not be used to 
establish your actual yield unless representative samples are required 
to be left by you in accordance with the Crop Provisions.

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    (f) It is your responsibility to accurately report all information 
that is used to determine your approved yield. You must certify to the 
accuracy of this information on your production report.
    (1) If you do not have written verifiable records to support the 
information on your production report, you will receive an assigned 
yield in accordance with section 3(e)(1) and 7 CFR part 400, subpart G 
for those crop years for which you do not have such records.
    (2) If you misreport any material information used to determine your 
approved yield:
    (i) We will correct the unit structure, if necessary; and
    (ii) You will be subject to the provisions regarding misreporting 
contained in section 6(g), unless we correct the information because the 
incorrect information was the result of our error or the error of 
someone from USDA.
    (g) In addition to any consequences in section 3(f), at any time the 
circumstances described below are discovered, your approved yield will 
be adjusted:
    (1) By including an assigned yield determined in accordance with 
section 3(e)(1) and 7 CFR part 400, subpart G, if the actual yield 
reported in the database is excessive for any crop year, as determined 
by FCIC under its procedures, and you do not provide verifiable records 
to support the yield in the database (If there are verifiable records 
for the yield in your database, the yield is significantly different 
from the other yields in the county or your other yields for the crop 
and you cannot prove there is a valid basis to support the differences 
in the yields, the yield will be the average of the yields for the crop 
or the applicable county transitional yield if you have no other yields 
for the crop, and you may be subject to the provisions of section 27);
    (2) By reducing it to an amount consistent with the average of the 
approved yields for other databases for your farming operation with the 
same crop, type, and practice or the county transitional yield, as 
applicable, if:
    (i) The approved APH yield is greater than 115 percent of the 
average of the approved yields of all applicable databases for your 
farming operation that have actual yields in them or it is greater than 
115 percent of the county transitional yield if no applicable databases 
exist for comparison; and
    (ii) The current year's insured acreage (including applicable 
prevented planting acreage) is greater than 400 percent of the average 
number of acres in the database or the acres contained in two or more 
individual years in the database are each less than 10 percent of the 
current year's insurable acreage in the unit (including applicable 
prevented planting acreage); or
    (3) To an amount consistent with the production methods actually 
carried out for the crop year if you use a different production method 
than was previously used and the production method actually carried out 
is likely to result in a yield lower than the average of your previous 
actual yields. The yield will be adjusted based on your other units 
where such production methods were carried out or to the applicable 
county transitional yield for the production methods if other such units 
do not exist. You must notify us of changes in your production methods 
by the acreage reporting date. If you fail to notify us, in addition to 
the reduction of your approved yield described herein, you will be 
considered to have misreported information and you will be subject to 
the consequences in section 6(g). For example, for a non-irrigated unit, 
your yield is based upon acreage of the crop that is watered once prior 
to planting, and the crop is not watered prior to planting for the 
current crop year. Your approved APH yield will be reduced to an amount 
consistent with the actual production history of your other non-
irrigated units where the crop has not been watered prior to planting or 
limited to the non-irrigated transitional yield for the unit if other 
such units do not exist.
    (h) Unless you meet the double cropping requirements contained in 
section 17(f)(4), if you elect to plant a second crop on acreage where 
the first insured crop was prevented from being planted, you will 
receive a yield equal to 60 percent of the approved yield for the first 
insured crop to calculate your average yield for subsequent crop years 
(Not applicable to crops if the APH is not the basis for the insurance 
guarantee). If the unit contains both prevented planting and planted 
acreage of the same crop, the yield for such acreage will be determined 
by:
    (1) Multiplying the number of insured prevented planting acres by 60 
percent of the approved yield for the first insured crop;
    (2) Adding the totals from section 3(h)(1) to the amount of 
appraised or harvested production for all of the insured planted 
acreage; and
    (3) Dividing the total in section 3(h)(2) by the total number of 
acres in the unit.
    (i) Hail and fire coverage may be excluded from the covered causes 
of loss for an insured crop only if you select additional coverage of 
not less than 65 percent of the approved yield indemnified at the 100 
percent price election, or an equivalent coverage as established by 
FCIC, and you have purchased the same or a higher dollar amount of 
coverage for hail and fire from us or any other source.
    (j) The applicable premium rate, or formula to calculate the premium 
rate, and transitional yield will be those contained in the actuarial 
documents except, in the case of high risk land, a written agreement may 
be requested to change such transitional yield or premium rate.

[[Page 128]]

                           4. Contract Changes

    (a) We may change the terms of your coverage under this policy from 
year to year.
    (b) Any changes in policy provisions, amounts of insurance, premium 
rates, program dates, and price elections (except as allowed herein or 
as specified in section 3) can be viewed on the RMA Web site at http://
www.rma.usda.gov/ or a successor Web site not later than the contract 
change date contained in the Crop Provisions. We may only revise this 
information after the contract change date to correct clear errors (For 
example, the price election for corn was announced at $25.00 per bushel 
instead of $2.50 per bushel or the final planting date should be May 10 
but the final planting date in the Special Provisions states August 10).
    (c) After the contract change date, all changes specified in section 
4(b) will also be available upon request from your crop insurance agent. 
You will be provided, in writing, a copy of the changes to the Basic 
Provisions and Crop Provisions and a copy of the Special Provisions not 
later than 30 days prior to the cancellation date for the insured crop. 
Acceptance of the changes will be conclusively presumed in the absence 
of notice from you to change or cancel your insurance coverage.

                              5. [Reserved]

                          6. Report of Acreage

    (a) An annual acreage report must be submitted to us on our form for 
each insured crop in the county on or before the acreage reporting date 
contained in the Special Provisions, except as follows:
    (1) If you insure multiple crops with us that have final planting 
dates on or after August 15 but before December 31, you must submit an 
acreage report for all such crops on or before the latest applicable 
acreage reporting date for such crops; and
    (2) If you insure multiple crops with us that have final planting 
dates on or after December 31 but before August 15, you must submit an 
acreage report for all such crops on or before the latest applicable 
acreage reporting date for such crops.
    (3) Notwithstanding the provisions in sections 6(a) (1) and (2):
    (i) If the Special Provisions designate separate planting periods 
for a crop, you must submit an acreage report for each planting period 
on or before the acreage reporting date contained in the Special 
Provisions for the planting period; and
    (ii) If planting of the insured crop continues after the final 
planting date or you are prevented from planting during the late 
planting period, the acreage reporting date will be the later of:
    (A) The acreage reporting date contained in the Special Provisions;
    (B) The date determined in accordance with sections (a)(1) or (2); 
or
    (C) Five (5) days after the end of the late planting period for the 
insured crop, if applicable.
    (b) If you do not have a share in an insured crop in the county for 
the crop year, you must submit an acreage report, on or before the 
acreage reporting date, so indicating.
    (c) Your acreage report must include the following information, if 
applicable:
    (1) All acreage of the crop in the county (insurable and not 
insurable) in which you have a share;
    (2) Your share at the time coverage begins;
    (3) The practice;
    (4) The type; and
    (5) The date the insured crop was planted.
    (d) Regarding the ability to revise an acreage report you have 
submitted to us:
    (1) For planted acreage, you cannot revise any information 
pertaining to the planted acreage after the acreage reporting date 
without our consent (Consent may only be provided when no cause of loss 
has occurred; our appraisal has determined that the insured crop will 
produce at least 90 percent of the yield used to determine your 
guarantee or the amount of insurance for the unit (including reported 
and unreported acreage), except when there are unreported units (see 
section 6(f)); the information on the acreage report is clearly 
transposed; you provide adequate evidence that we or someone from USDA 
have committed an error regarding the information on your acreage 
report; or if expressly permitted by the policy);
    (2) For prevented planting acreage reported on the acreage report, 
you cannot revise any information pertaining to the prevented planting 
acreage after the report is initially submitted to us without our 
consent (Consent may only be provided when information on the acreage 
report is clearly transposed or you provide adequate evidence that we or 
someone from USDA have committed an error regarding the information on 
your acreage report);
    (3) For prevented planting acreage not reported on the acreage 
report, you cannot revise your acreage report to add prevented planting 
acreage;
    (4) If you request an acreage measurement prior to the acreage 
reporting date and submit documentation of such request and an acreage 
report with estimated acreage by the acreage reporting date, you must 
provide the measurement to us, we will revise your acreage report if 
there is a discrepancy, and no indemnity, prevented planting payment or 
replant payment will be paid until the acreage measurement has been 
received by us (Failure to provide the measurement to us will result in 
the application of section 6(g) if the estimated acreage is not correct 
and estimated acreage under this section will no

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longer be accepted for any subsequent acreage report);
    (5) If there is an irreconcilable difference between:
    (i) The acreage measured by FSA or a measuring service and our on-
farm measurement, our on-farm measurement will be used; or
    (ii) The acreage measured by a measuring service, other than our on-
farm measurement, and FSA, the FSA measurement will be used; and
    (6) If the acreage report has been revised in accordance with 
section 6(d)(1), (2), (4), or (5), the information on the initial 
acreage report will not be considered misreported for the purposes of 
section 6(g).
    (e) We may elect to determine all premiums and indemnities based on 
the information you submit on the acreage report or upon the factual 
circumstances we determine to have existed, subject to the provisions 
contained in section 6(g).
    (f) If you do not submit an acreage report by the acreage reporting 
date, or if you fail to report all units, we may elect to determine by 
unit the insurable crop acreage, share, type and practice, or to deny 
liability on such units. If we deny liability for the unreported units, 
your share of any production from the unreported units will be 
allocated, for loss purposes only, as production to count to the 
reported units in proportion to the liability on each reported unit. 
However, such production will not be allocated to prevented planting 
acreage or otherwise affect any prevented planting payment.
    (g) You must provide all required reports and you are responsible 
for the accuracy of all information contained in those reports. You 
should verify the information on all such reports prior to submitting 
them to us.
    (1) If you submit information on any report that is different than 
what is determined to be correct and such information results in:
    (i) A lower liability than the actual liability determined, the 
production guarantee or amount of insurance on the unit will be reduced 
to an amount consistent with the reported information (In the event the 
insurable acreage is under-reported for any unit, all production or 
value from insurable acreage in that unit will be considered production 
or value to count in determining the indemnity); or
    (ii) A higher liability than the actual liability determined, the 
information contained in the acreage report will be revised to be 
consistent with the correct information.
    (2) In addition to the other adjustments specified in section 
6(g)(1), if you misreport any information that results in liability 
greater than 110.0 percent or lower than 90.0 percent of the actual 
liability determined for the unit, any indemnity, prevented planting 
payment, or replanting payment will be based on the amount of liability 
determined in accordance with section 6(g)(1)(i) or (ii) and will be 
reduced in an amount proportionate with the amount of liability that is 
misreported in excess of the tolerances stated in this section (For 
example, if the actual liability is determined to be $100.00, but you 
reported liability of $120.00, any indemnity, prevented planting payment 
or replanting payment will be reduced by 10.0 percent ($120.00 / $100.00 
= 1.20, and 1.20 - 1.10 = 0.10)).
    (h) If we discover you have incorrectly reported any information on 
the acreage report for any crop year, you may be required to provide 
documentation in subsequent crop years substantiating your report of 
acreage for those crop years, including, but not limited to, an acreage 
measurement service at your own expense. If the correction of any 
misreported information would affect an indemnity, prevented planting 
payment or replant payment that was paid in a prior crop year, such 
claim will be adjusted and you will be required to repay any overpaid 
amounts.
    (i) Errors in reporting units may be corrected by us at the time of 
adjusting a loss to reduce our liability and to conform to applicable 
unit division guidelines.

                7. Annual Premium and Administrative Fees

    (a) The annual premium is earned and payable at the time coverage 
begins. You will be billed for the premium and administrative fee not 
earlier than the premium billing date specified in the Special 
Provisions.
    (b) Premium or administrative fees owed by you will be offset from 
an indemnity or prevented planting payment due you in accordance with 
section 2(e).
    (c) The annual premium amount is determined, as applicable, by 
either:
    (1) Multiplying the production guarantee per acre times the price 
election, times the premium rate, times the insured acreage, times your 
share at the time coverage begins, and times any premium adjustment 
percentages that may apply; or
    (2) Multiplying the amount of insurance per acre times the premium 
rate, times the insured acreage, times your share at the time coverage 
begins, and times any premium adjustment percentages that may apply.
    (d) The premium will be computed using the price election or amount 
of insurance you elect or that we assign in accordance with section 
3(d). The information needed to determine the premium rate and any 
premium adjustment percentages that may apply are contained in the 
actuarial documents or an approved written agreement.
    (e) In addition to the premium charged:
    (1) You, unless otherwise authorized in 7 CFR part 400, must pay an 
administrative fee each crop year of $30 per crop per county for

[[Page 130]]

all levels of coverage in excess of catastrophic risk protection.
    (2) The administrative fee must be paid no later than the time that 
premium is due.
    (3) Payment of an administrative fee will not be required if you 
file a bona fide zero acreage report on or before the acreage reporting 
date for the crop. If you falsely file a zero acreage report you may be 
subject to criminal and administrative sanctions.
    (4) The administrative fee will be waived if you request it and:
    (i) You qualify as a limited resource farmer; or
    (ii) You were insured prior to the 2005 crop year or for the 2005 
crop year and your administrative fee was waived for one or more of 
those crop years because you qualified as a limited resource farmer 
under a policy definition previously in effect, and you remain qualified 
as a limited resource farmer under the definition that was in effect at 
the time the administrative fee was waived.
    (5)-(6) [Reserved]
    (7) Failure to pay the administrative fees when due may make you 
ineligible for certain other USDA benefits.
    (f) If the amount of premium (gross premium less premium subsidy 
paid on your behalf by FCIC) and administrative fee you are required to 
pay for any acreage exceeds the liability for the acreage, coverage for 
those acres will not be provided (no premium or administrative fee will 
be due and no indemnity will be paid for such acreage).

                             8. Insured Crop

    (a) The insured crop will be that shown on your accepted application 
and as specified in the Crop Provisions or Special Provisions and must 
be grown on insurable acreage.
    (b) A crop which will NOT be insured will include, but will not be 
limited to, any crop:
    (1) That is not grown on planted acreage (except for the purposes of 
prevented planting coverage), or that is a type, class or variety or 
where the conditions under which the crop is planted are not generally 
recognized for the area (For example, where agricultural experts 
determine that planting a non-irrigated corn crop after a failed small 
grain crop on the same acreage in the same crop year is not appropriate 
for the area);
    (2) For which the information necessary for insurance (price 
election, premium rate, etc.) is not included in the actuarial 
documents, unless such information is provided by a written agreement;
    (3) That is a volunteer crop;
    (4) Planted following the same crop on the same acreage and the 
first planting of the crop has been harvested in the same crop year 
unless specifically permitted by the Crop Provisions or the Special 
Provisions (For example, the second planting of grain sorghum would not 
be insurable if grain sorghum had already been planted and harvested on 
the same acreage during the crop year);
    (5) That is planted for the development or production of hybrid seed 
or for experimental purposes, unless permitted by the Crop Provisions or 
by written agreement to insure such crop; or
    (6) That is used solely for wildlife protection or management. If 
the lease states that specific acreage must remain unharvested, only 
that acreage is uninsurable. If the lease specifies that a percentage of 
the crop must be left unharvested, your share will be reduced by such 
percentage.
    (c) Although certain policy documents may state that a crop type, 
class, variety or practice is not insurable, it does not mean all other 
crop types, classes, varieties or practices are insurable. To be 
insurable the crop type, class, variety or practice must meet all the 
conditions in this section.

                          9. Insurable Acreage

    (a) Acreage planted to the insured crop in which you have a share is 
insurable except acreage:
    (1) That has not been planted and harvested or insured (including 
insured acreage that was prevented from being planted) in at least one 
of the three previous crop years unless you can show that:
    (i) Such acreage was not planted:
    (A) In at least two of the previous three crop years to comply with 
any other USDA program;
    (B) Because of crop rotation, (e.g., corn, soybeans, alfalfa; and 
the alfalfa remained for four years before the acreage was planted to 
corn again); or
    (C) Because a perennial tree, vine, or bush crop was grown on the 
acreage;
    (ii) The Crop Provisions or a written agreement specifically allow 
insurance for such acreage; or
    (iii) Such acreage constitutes five percent or less of the insured 
planted acreage in the unit;
    (2) That has been strip-mined, unless otherwise approved by written 
agreement, or unless an agricultural commodity other than a cover, hay, 
or forage crop (except corn silage), has been harvested from the acreage 
for at least five crop years after the strip-mined land was reclaimed;
    (3) For which the actuarial documents do not provide the information 
necessary to determine the premium rate, unless insurance is allowed by 
a written agreement;
    (4) On which the insured crop is damaged and it is practical to 
replant the insured crop, but the insured crop is not replanted;
    (5) That is interplanted, unless allowed by the Crop Provisions;
    (6) That is otherwise restricted by the Crop Provisions or Special 
Provisions;
    (7) That is planted in any manner other than as specified in the 
policy provisions for

[[Page 131]]

the crop unless a written agreement to such planting exists;
    (8) Of a second crop, if you elect not to insure such acreage when 
an indemnity for a first insured crop may be subject to reduction in 
accordance with the provisions of section 15 and you intend to collect 
an indemnity payment that is equal to 100 percent of the insurable loss 
for the first insured crop acreage. This election must be made on a 
first insured crop unit basis. For example, if the first insured crop 
unit contains 40 planted acres that may be subject to an indemnity 
reduction, then no second crop can be insured on any of the 40 acres. In 
this case:
    (i) If the first insured crop is insured under this policy, you must 
provide written notice to us of your election not to insure acreage of a 
second crop at the time the first insured crop acreage is released by us 
(if no acreage in the first insured crop unit is released, this election 
must be made by the earlier of the acreage reporting date for the second 
crop or when you sign the claim for indemnity for the first insured 
crop) or, if the first insured crop is insured under the Group Risk 
Protection Plan of Insurance (7 CFR part 407), this election must be 
made before the second crop insured under this policy is planted, and if 
you fail to provide such notice, the second crop acreage will be insured 
in accordance with the applicable policy provisions and you must repay 
any overpaid indemnity for the first insured crop;
    (ii) In the event a second crop is planted and insured with a 
different insurance provider, or planted and insured by a different 
person, you must provide written notice to each insurance provider that 
a second crop was planted on acreage on which you had a first insured 
crop; and
    (iii) You must report the crop acreage that will not be insured on 
the applicable acreage report; or
    (9) Of a crop planted following a second crop or following an 
insured crop that is prevented from being planted after a first insured 
crop, unless it is a practice that is generally recognized by 
agricultural experts or the organic agricultural industry for the area 
to plant three or more crops for harvest on the same acreage in the same 
crop year, and additional coverage insurance provided under the 
authority of the Act is offered for the third or subsequent crop in the 
same crop year. Insurance will only be provided for a third or 
subsequent crop as follows:
    (i) You must provide records acceptable to us that show:
    (A) You have produced and harvested the insured crop following two 
other crops harvested on the same acreage in the same crop year in at 
least two of the last four years in which you produced the insured crop; 
or
    (B) The applicable acreage has had three or more crops produced and 
harvested on it in at least two of the last four years in which the 
insured crop was grown on it; and
    (ii) The amount of insurable acreage will not exceed 100 percent of 
the greatest number of acres for which you provide the records required 
in section 9(a)(9)(i)(A) or (B).
    (b) If insurance is provided for an irrigated practice, you must 
report as irrigated only that acreage for which you have adequate 
facilities and adequate water, or the reasonable expectation of 
receiving adequate water at the time coverage begins, to carry out a 
good irrigation practice. If you knew or had reason to know that your 
water may be reduced before coverage begins, no reasonable expectation 
exists.
    (c) Notwithstanding the provisions in section 8(b)(2), if acreage is 
irrigated and we do not provide a premium rate for an irrigated 
practice, you may either report and insure the irrigated acreage as 
``non-irrigated,'' or report the irrigated acreage as not insured.
    (d) We may restrict the amount of acreage that we will insure to the 
amount allowed under any acreage limitation program established by the 
United States Department of Agriculture if we notify you of that 
restriction prior to the sales closing date.
    (e) Notwithstanding the provisions in section 9(a)(1), if the 
Governor of a State designated within the Prairie Pothole National 
Priority Area elects to make section 508(o) of the Act effective for the 
State, any native sod acreage greater than 5 acres located in a county 
contained within the Prairie Pothole National Priority Area that has 
been tilled for the production of an annual crop after May 22, 2008, is 
not insurable for the first 5 crop years of planting following the date 
the native sod acreage is tilled. If the Governor makes this election 
after you have received an indemnity or other payment for native sod 
acreage, you may be required to repay the amount received and any 
premium for such acreage may be refunded to you.

                            10. Share Insured

    (a) Insurance will attach only to the share of the person completing 
the application and will not extend to any other person having a share 
in the crop unless the application clearly states that:
    (1) The insurance is requested for an entity such as a partnership 
or a joint venture; or
    (2) You as landlord will insure your tenant's share, or you as 
tenant will insure your landlord's share. In this event, you must 
provide evidence of the other party's approval (lease, power of 
attorney, etc.). Such evidence will be retained by us. You also must 
clearly set forth the percentage shares of each person on the acreage 
report. For each landlord or tenant that is an individual, you must 
report the landlord's or tenant's social security number. For each 
landlord or tenant that is a person other than an individual

[[Page 132]]

or for a trust administered by the Bureau of Indian Affairs, you must 
report each landlord's or tenant's social security number, employer 
identification number, or other identification number assigned for the 
purposes of this policy.
    (b) We may consider any acreage or interest reported by or for your 
spouse, child or any member of your household to be included in your 
share.
    (c) Acreage rented for a percentage of the crop, or a lease 
containing provisions for both a minimum payment (such as a specified 
amount of cash, bushels, pounds, etc.,) and a crop share will be 
considered a crop share lease.
    (d) Acreage rented for cash, or a lease containing provisions for 
either a minimum payment or a crop share (such as a 50/50 share or 
$100.00 per acre, whichever is greater) will be considered a cash lease.

                          11. Insurance Period

    (a) Except for prevented planting coverage (see section 17), 
coverage begins on each unit or part of a unit at the later of:
    (1) The date we accept your application (For the purposes of this 
paragraph, the date of acceptance is the date that you submit a properly 
executed application in accordance with section 2);
    (2) The date the insured crop is planted; or
    (3) The calendar date contained in the Crop Provisions for the 
beginning of the insurance period.
    (b) Coverage ends at the earliest of:
    (1) Total destruction of the insured crop on the unit;
    (2) Harvest of the unit;
    (3) Final adjustment of a loss on a unit;
    (4) The calendar date contained in the Crop Provisions for the end 
of the insurance period;
    (5) Abandonment of the crop on the unit; or
    (6) As otherwise specified in the Crop Provisions.

                           12. Causes of Loss

    The insurance provided is against only unavoidable loss directly 
caused by specific causes of loss contained in the Crop Provisions. All 
specified causes of loss, except where the Crop Provisions specifically 
cover loss of revenue due to a reduced price in the marketplace, must be 
due to a naturally occurring event. All other causes of loss, including 
but not limited to the following, are NOT covered:
    (a) Negligence, mismanagement, or wrongdoing by you, any member of 
your family or household, your tenants, or employees;
    (b) Failure to follow recognized good farming practices for the 
insured crop;
    (c) Water that is contained by or within structures that are 
designed to contain a specific amount of water, such as dams, locks or 
reservoir projects, etc., on any acreage when such water stays within 
the designed limits (For example, a dam is designed to contain water to 
an elevation of 1,200 feet but you plant a crop on acreage at an 
elevation of 1,100 feet. A storm causes the water behind the dam to rise 
to an elevation of 1,200 feet. Under such circumstances, the resulting 
damage would not be caused by an insurable cause of loss. However, if 
you planted on acreage that was above 1,200 feet elevation, any damage 
caused by water that exceeded that elevation would be caused by an 
insurable cause of loss);
    (d) Failure or breakdown of the irrigation equipment or facilities 
unless the failure or breakdown is due to a cause of loss specified in 
the Crop Provisions (If damage is due to an insured cause, you must make 
all reasonable efforts to restore the equipment or facilities to proper 
working order within a reasonable amount of time unless we determine it 
is not practical to do so. Cost will not be considered when determining 
whether it is practical to restore the equipment or facilities);
    (e) Failure to carry out a good irrigation practice for the insured 
crop, if applicable; or
    (f) Any cause of loss that results in damage that is not evident or 
would not have been evident during the insurance period, including, but 
not limited to, damage that only becomes evident after the end of the 
insurance period unless expressly authorized in the Crop Provisions. 
Even though we may not inspect the damaged crop until after the end of 
the insurance period, damage due to insured causes that would have been 
evident during the insurance period will be covered.

                         13. Replanting Payment

    (a) If allowed by the Crop Provisions, a replanting payment may be 
made on an insured crop replanted after we have given consent and the 
acreage replanted is at least the lesser of 20 acres or 20 percent of 
the insured planted acreage for the unit (as determined on the final 
planting date or within the late planting period if a late planting 
period is applicable).
    (b) No replanting payment will be made on acreage:
    (1) On which our appraisal establishes that production will exceed 
the level set by the Crop Provisions;
    (2) Initially planted prior to the earliest planting date 
established by the Special Provisions; or
    (3) On which one replanting payment has already been allowed for the 
crop year.
    (c) The replanting payment per acre will be your actual cost for 
replanting, but will not exceed the amount determined in accordance with 
the Crop Provisions.
    (d) No replanting payment will be paid if we determine it is not 
practical to replant.

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 14. Duties in the Event of Damage, Loss, Abandonment, Destruction, or 
                   Alternative Use of Crop or Acreage

    Your Duties--
    (a) In case of damage to any insured crop you must:
    (1) Protect the crop from further damage by providing sufficient 
care;
    (2) Give us notice within 72 hours of your initial discovery of 
damage (but not later than 15 days after the end of the insurance 
period), by unit, for each insured crop;
    (3) If representative samples are required by the Crop Provisions, 
leave representative samples intact of the unharvested crop if you 
report damage less than 15 days before the time you begin harvest or 
during harvest of the damaged unit (The samples must be left intact 
until we inspect them or until 15 days after completion of harvest on 
the unit, whichever is earlier. Unless otherwise specified in the Crop 
Provisions or Special Provisions, the samples of the crop in each field 
in the unit must be 10 feet wide and extend the entire length of the 
row, if the crop is planted in rows, or if the crop is not planted in 
rows, the longest dimension of the field. The period to retain 
representative samples may be extended if it is necessary to accurately 
determine the loss. You will be notified in writing of any such 
extension); and
    (4) Cooperate with us in the investigation or settlement of the 
claim, and, as often as we reasonably require:
    (i) Show us the damaged crop;
    (ii) Allow us to remove samples of the insured crop; and
    (iii) Provide us with records and documents we request and permit us 
to make copies.
    (b) You must obtain consent from us before, and notify us after you:
    (1) Destroy any of the insured crop that is not harvested;
    (2) Put the insured crop to an alternative use;
    (3) Put the acreage to another use; or
    (4) Abandon any portion of the insured crop. We will not give 
consent for any of the actions in sections 14(b) (1) through (4) if it 
is practical to replant the crop or until we have made an appraisal of 
the potential production of the crop.
    (c) In addition to complying with the notice requirements, you must 
submit a claim for indemnity declaring the amount of your loss:
    (1) Not later than 60 days after the end of the insurance period 
unless, prior to the end of the 60 day period, you:
    (i) Request an extension in writing and we agree to such request 
(Extensions will only be granted if the amount of loss cannot be 
determined within such time period because the information needed to 
determine the amount of the loss is not available.); or
    (ii) Have farm-stored production and elect, in writing, to delay 
measurement of your farm-stored production and settlement of any 
potential associated claim for indemnity (Extensions will be granted for 
this purpose up to 180 days after the end of the insurance period.); and
    (2) That includes all information we require to settle the claim. 
Failure to submit a claim or provide the required information will 
result in no indemnity, prevented planting payment or replant payment 
(even though no indemnity or other payment is due, you will still be 
required to pay the premium due under the policy for the unit).
    (d) You must:
    (1) Provide a complete harvesting and marketing record of each 
insured crop by unit including separate records showing the same 
information for production from any acreage not insured. In addition, if 
you insure any acreage that may be subject to an indemnity reduction as 
specified in section 15(e)(2) (for example, you planted a second crop on 
acreage where a first insured crop had an insurable loss and you do not 
qualify for the double cropping exemption), you must provide separate 
records of production from such acreage for all insured crops planted on 
the acreage. For example, if you have an insurable loss on 10 acres of 
wheat and subsequently plant cotton on the same 10 acres, you must 
provide records of the wheat and cotton production on the 10 acres 
separate from any other wheat and cotton production that may be planted 
in the same unit. If you fail to provide such separate records, we will 
allocate the production of each crop to the acreage in proportion to our 
liability for the acreage; and
    (2) Upon our request, or that of any USDA employee authorized to 
conduct investigations of the crop insurance program, submit to an 
examination under oath.
    (e) You must establish the total production or value received for 
the insured crop on the unit, that any loss of production or value 
occurred during the insurance period, and that the loss of production or 
value was directly caused by one or more of the insured causes specified 
in the Crop Provisions.
    (f) In the event you are prevented from planting an insured crop 
which has prevented planting coverage, you must notify us within 72 
hours after:
    (1) The final planting date, if you do not intend to plant the 
insured crop during the late planting period or if a late planting 
period is not applicable; or
    (2) You determine you will not be able to plant the insured crop 
within any applicable late planting period.
    (g) All notices required in this section that must be received by us 
within 72 hours may be made by telephone or in person to your crop 
insurance agent but must be confirmed in writing within 15 days.

[[Page 134]]

    (h) It is your duty to prove you have complied with all provisions 
of this policy.
    (1) Failure to comply with the requirements of section 14(c) (Your 
Duties) will result in denial of your claim for indemnity or prevented 
planting or replant payment for the acreage for which the failure 
occurred. Failure to comply with all other requirements of this section 
will result in denial of your claim for indemnity or prevented planting 
or replant payment for the acreage for which the failure occurred, 
unless we still have the ability to accurately adjust the loss (Even 
though no indemnity or other payment is due, you will still be required 
to pay the premium due under the policy for the unit); and
    (2) Failure to comply with other sections of the policy will subject 
you to the consequences specified in those sections.
    Our Duties--
    (a) If you have complied with all the policy provisions, we will pay 
your loss within 30 days after the later of:
    (1) We reach agreement with you;
    (2) Completion of arbitration, reconsideration of determinations 
regarding good farming practices or any other appeal that results in an 
award in your favor, unless we exercise our right to appeal such 
decision;
    (3) Completion of any investigation by USDA, if applicable, of your 
current or any past claim for indemnity if no evidence of wrongdoing has 
been found (If any evidence of wrongdoing has been discovered, the 
amount of any indemnity, prevented planting or replant overpayment as a 
result of such wrongdoing may be offset from any indemnity or prevented 
planting payment owed to you); or
    (4) The entry of a final judgment by a court of competent 
jurisdiction.
    (b) In the event we are unable to pay your loss within 30 days, we 
will give you notice of our intentions within the 30-day period.
    (c) We may defer the adjustment of a loss until the amount of loss 
can be accurately determined. We will not pay for additional damage 
resulting from your failure to provide sufficient care for the crop 
during the deferral period.
    (d) We recognize and apply the loss adjustment procedures 
established or approved by the Federal Crop Insurance Corporation.

    15. Production Included in Determining an Indemnity and Payment 
                               Reductions.

    (a) The total production to be counted for a unit will include all 
production determined in accordance with the policy.
    (b) Appraised production will be used to calculate your claim if you 
are not going to harvest your acreage. Such appraisals may be conducted 
after the end of the insurance period. If you harvest the crop after the 
crop has been appraised:
    (1) You must provide us with the amount of harvested production; and
    (2) If the harvested production exceeds the appraised production, 
claims will be adjusted using the harvested production, and you will be 
required to repay any overpaid indemnity; or
    (3) If the harvested production is less than the appraised 
production, and:
    (i) You harvest after the end of the insurance period, your 
appraised production will be used to adjust the loss unless you can 
prove that no additional causes of loss or deterioration of the crop 
occurred after the end of the insurance period; or
    (ii) You harvest before the end of the insurance period, your 
harvested production will be used to adjust the loss.
    (c) If you elect to exclude hail and fire as insured causes of loss 
and the insured crop is damaged by hail or fire, appraisals will be made 
as described in the applicable Form FCI-78 ``Request To Exclude Hail and 
Fire'' or a form containing the same terms approved by the Federal Crop 
Insurance Corporation.
    (d) The amount of an indemnity that may be determined under the 
applicable provisions of your policy may be reduced by an amount, 
determined in accordance with the Crop Provisions or Special Provisions, 
to reflect out-of-pocket expenses that were not incurred by you as a 
result of not planting, caring for, or harvesting the crop. Indemnities 
paid for acreage prevented from being planted will be based on a reduced 
guarantee as provided for in the policy and will not be further reduced 
to reflect expenses not incurred.
    (e) With respect to acreage where you have suffered an insurable 
loss to planted acreage of your first insured crop in the crop year, 
except in the case of double cropping described in section 15(h):
    (1) You may elect to not plant or to plant and not insure a second 
crop on the same acreage for harvest in the same crop year and collect 
an indemnity payment that is equal to 100 percent of the insurable loss 
for the first insured crop; or
    (2) You may elect to plant and insure a second crop on the same 
acreage for harvest in the same crop year (you will pay the full premium 
and, if there is an insurable loss to the second crop, receive the full 
amount of indemnity that may be due for the second crop, regardless of 
whether there is a subsequent crop planted on the same acreage) and:
    (i) Collect an indemnity payment that is 35 percent of the insurable 
loss for the first insured crop;
    (ii) Be responsible for premium that is 35 percent of the premium 
that you would otherwise owe for the first insured crop; and
    (iii) If the second crop does not suffer an insurable loss:

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    (A) Collect an indemnity payment for the other 65 percent of 
insurable loss that was not previously paid under section 15(e)(2)(i); 
and
    (B) Be responsible for the remainder of the premium for the first 
insured crop that you did not pay under section 15(e)(2)(ii).
    (f) With respect to acreage where you were prevented from planting 
the first insured crop in the crop year, except in the case of double 
cropping described in section 15(h):
    (1) If a second crop is not planted on the same acreage for harvest 
in the same crop year, you may collect a prevented planting payment that 
is equal to 100 percent of the prevented planting payment for the 
acreage for the first insured crop; or
    (2) If a second crop is planted on the same acreage for harvest in 
the same crop year (you will pay the full premium and, if there is an 
insurable loss to the second crop, receive the full amount of indemnity 
that may be due for the second crop, regardless of whether there is a 
subsequent crop planted on the same acreage) and:
    (i) Provided the second crop is not planted on or before the final 
planting date or during the late planting period (as applicable) for the 
first insured crop, you may collect a prevented planting payment that is 
35 percent of the prevented planting payment for the first insured crop; 
and
    (ii) Be responsible for premium that is 35 percent of the premium 
that you would otherwise owe for the first insured crop.
    (g) The reduction in the amount of indemnity or prevented planting 
payment and premium specified in sections 15(e) and 15(f), as 
applicable, will apply:
    (1) Notwithstanding the priority contained in the Agreement to 
Insure section, which states that the Crop Provisions have priority over 
the Basic Provisions when a conflict exists, to any premium owed or 
indemnity or prevented planting payment made in accordance with the Crop 
Provisions, and any applicable endorsement.
    (2) Even if another person plants the second crop on any acreage 
where the first insured crop was planted or was prevented from being 
planted, as applicable.
    (3) For prevented planting only:
    (i) If a volunteer crop or cover crop is hayed or grazed from the 
same acreage, after the late planting period (or after the final 
planting date if a late planting period is not applicable) for the first 
insured crop in the same crop year, or is otherwise harvested anytime 
after the late planting period (or after the final planting date if a 
late planting period is not applicable); or
    (ii) If you receive cash rent for any acreage on which you were 
prevented from planting.
    (h) You may receive a full indemnity, or a full prevented planting 
payment for a first insured crop when a second crop is planted on the 
same acreage in the same crop year, regardless of whether or not the 
second crop is insured or sustains an insurable loss, if each of the 
following conditions are met:
    (1) It is a practice that is generally recognized by agricultural 
experts or the organic agricultural industry for the area to plant two 
or more crops for harvest in the same crop year;
    (2) The second or more crops are customarily planted after the first 
insured crop for harvest on the same acreage in the same crop year in 
the area;
    (3) Additional coverage insurance offered under the authority of the 
Act is available in the county on the two or more crops that are double 
cropped;
    (4) You provide records acceptable to us of acreage and production 
that show you have double cropped acreage in at least two of the last 
four crop years in which the first insured crop was planted, or that 
show the applicable acreage was double cropped in at least two of the 
last four crop years in which the first insured crop was grown on it; 
and
    (5) In the case of prevented planting, the second crop is not 
planted on or prior to the final planting date or, if applicable, prior 
to the end of the late planting period for the first insured crop.
    (i) The receipt of a full indemnity or prevented planting payment on 
both crops that are double cropped is limited to the number of acres for 
which you can demonstrate you have double cropped or that have been 
historically double cropped as specified in section 15(h).
    (j) If any Federal or State agency requires destruction of any 
insured crop or crop production, as applicable, because it contains 
levels of a substance, or has a condition, that is injurious to human or 
animal health in excess of the maximum amounts allowed by the Food and 
Drug Administration, other public health organizations of the United 
States or an agency of the applicable State, you must destroy the 
insured crop or crop production, as applicable, and certify that such 
insured crop or crop production has been destroyed prior to receiving an 
indemnity payment. Failure to destroy the insured crop or crop 
production, as applicable, will result in you having to repay any 
indemnity paid and you may be subject to administrative sanctions in 
accordance with section 515(h) of the Act and 7 CFR part 400, subpart R, 
and any applicable civil or criminal sanctions.

                            16. Late Planting

    Unless limited by the Crop Provisions, insurance will be provided 
for acreage planted to the insured crop after the final planting date in 
accordance with the following:
    (a) The production guarantee or amount of insurance for each acre 
planted to the insured crop during the late planting period

[[Page 136]]

will be reduced by 1 percent per day for each day planted after the 
final planting date.
    (b) Acreage planted after the late planting period (or after the 
final planting date for crops that do not have a late planting period) 
may be insured as follows:
    (1) The production guarantee or amount of insurance for each acre 
planted as specified in this subsection will be determined by 
multiplying the production guarantee or amount of insurance that is 
provided for acreage of the insured crop that is timely planted by the 
prevented planting coverage level percentage you elected, or that is 
contained in the Crop Provisions if you did not elect a prevented 
planting coverage level percentage;
    (2) Planting on such acreage must have been prevented by the final 
planting date (or during the late planting period, if applicable) by an 
insurable cause occurring within the insurance period for prevented 
planting coverage; and
    (3) All production from insured acreage as specified in this section 
will be included as production to count for the unit.
    (c) The premium amount for insurable acreage specified in this 
section will be the same as that for timely planted acreage. If the 
amount of premium you are required to pay (gross premium less our 
subsidy) for such acreage exceeds the liability, coverage for those 
acres will not be provided (no premium will be due and no indemnity will 
be paid).
    (d) Any acreage on which an insured cause of loss is a material 
factor in preventing completion of planting, as specified in the 
definition of ``planted acreage'' (e.g., seed is broadcast on the soil 
surface but cannot be incorporated) will be considered as acreage 
planted after the final planting date and the production guarantee will 
be calculated in accordance with section 16(b)(1).

                         17. Prevented Planting

    (a) Unless limited by the policy provisions, a prevented planting 
payment may be made to you for eligible acreage if:
    (1) You were prevented from planting the insured crop (Failure to 
plant when other producers in the area were planting will result in the 
denial of the prevented planting claim) by an insured cause that occurs:
    (i) On or after the sales closing date contained in the Special 
Provisions for the insured crop in the county for the crop year the 
application for insurance is accepted; or
    (ii) For any subsequent crop year, on or after the sales closing 
date for the previous crop year for the insured crop in the county, 
provided insurance has been in force continuously since that date. 
Cancellation for the purpose of transferring the policy to a different 
insurance provider for the subsequent crop year will not be considered a 
break in continuity for the purpose of the preceding sentence;
    (2) You include any acreage of the insured crop that was prevented 
from being planted on your acreage report; and
    (3) You did not plant the insured crop during or after the late 
planting period. If such acreage was planted to the insured crop during 
or after the late planting period, it is covered under the late planting 
provisions.
    (b) The actuarial documents may contain additional levels of 
prevented planting coverage that you may purchase for the insured crop:
    (1) Such purchase must be made on or before the sales closing date.
    (2) If you do not purchase one of those additional levels by the 
sales closing date, you will receive the prevented planting coverage 
specified in the Crop Provisions.
    (3) If you have a Catastrophic Risk Protection Endorsement for any 
crop, the additional levels of prevented planting coverage will not be 
available for that crop.
    (4) You may not increase your elected or assigned prevented planting 
coverage level for any crop year if a cause of loss that will or could 
prevent planting is evident prior to the time you wish to change your 
prevented planting coverage level.
    (c) The premium amount for acreage that is prevented from being 
planted will be the same as that for timely planted acreage except as 
specified in section 15(f). If the amount of premium you are required to 
pay (gross premium less our subsidy) for acreage that is prevented from 
being planted exceeds the liability on such acreage, coverage for those 
acres will not be provided (no premium will be due and no indemnity will 
be paid for such acreage).
    (d) Drought or failure of the irrigation water supply will be 
considered to be an insurable cause of loss for the purposes of 
prevented planting only if on the final planting date (or within the 
late planting period if you elect to try to plant the crop):
    (1) For non-irrigated acreage, the area that is prevented from being 
planted has insufficient soil moisture for germination of seed or 
progress toward crop maturity due to a prolonged period of dry weather. 
Prolonged precipitation deficiencies must be verifiable using 
information collected by sources whose business it is to record and 
study the weather, including, but not limited to, local weather 
reporting stations of the National Weather Service; or
    (2) For irrigated acreage, there is not a reasonable expectation of 
having adequate water to carry out an irrigated practice. If you knew or 
had reason to know that your water is reduced before the final planting 
date, no reasonable expectation existed.

[[Page 137]]

    (e) The maximum number of acres that may be eligible for a prevented 
planting payment for any crop will be determined as follows:
    (1) The total number of acres eligible for prevented planting 
coverage for all crops cannot exceed the number of acres of cropland in 
your farming operation for the crop year, unless you are eligible for 
prevented planting coverage on double cropped acreage in accordance with 
section 17(f) (4). The eligible acres for each insured crop will be 
determined in accordance with the following table.

------------------------------------------------------------------------
                                                     Eligible acres if,
                               Eligible acres if,   in any of the 4 most
                              in any of the 4 most   recent crop years,
                               recent crop years,   you have not planted
                              you have planted any     any crop in the
                               crop in the county     county for which
        Type of crop           for which prevented   prevented planting
                               planting insurance       insurance was
                                was available or      available or have
                                 have received a       not received a
                               prevented planting    prevented planting
                               insurance guarantee   insurance guarantee
------------------------------------------------------------------------
(i) The crop is not required  (A) The maximum       (B) The number of
 to be contracted with a       number of acres       acres specified on
 processor to be insured.      certified for APH     your intended
                               purposes, or          acreage report
                               insured acres         which is submitted
                               reported, for the     to us by the sales
                               crop in any one of    closing date for
                               the 4 most recent     all crops you
                               crop years (not       insure for the crop
                               including reported    year and that is
                               prevented planting    accepted by us. The
                               acreage that was      total number of
                               planted to a second   acres listed may
                               crop unless you       not exceed the
                               meet the double       number of acres of
                               cropping              cropland in your
                               requirements in       farming operation
                               section 17(f)(4)).    at the time you
                               The number of acres   submit the intended
                               determined above      acreage report. The
                               for a crop may be     number of acres
                               increased by          determined above
                               multiplying it by     for a crop may only
                               the ratio of the      be increased by
                               total cropland        multiplying it by
                               acres that you are    the ratio of the
                               farming this year     total cropland
                               (if greater) to the   acres that you are
                               total cropland        farming this year
                               acres that you        (if greater) to the
                               farmed in the         number of acres
                               previous year,        listed on your
                               provided that you     intended acreage
                               submit proof to us    report, if you meet
                               that for the          the conditions
                               current crop year     stated in section
                               you have purchased    17(e)(1)(i)(A).
                               or leased
                               additional land or
                               that acreage will
                               be released from
                               any USDA program
                               which prohibits
                               harvest of a crop.
                               Such acreage must
                               have been
                               purchased, leased,
                               or released from
                               the USDA program,
                               in time to plant it
                               for the current
                               crop year using
                               good farming
                               practices. No cause
                               of loss that would
                               prevent planting
                               may be evident at
                               the time you lease
                               the acreage (except
                               acreage you leased
                               the previous year
                               and continue to
                               lease in the
                               current crop year);
                               you buy the
                               acreage; the
                               acreage is released
                               from a USDA program
                               which prohibits
                               harvest of a crop;
                               you request a
                               written agreement
                               to insure the
                               acreage; or you
                               otherwise acquire
                               the acreage (such
                               as inherited or
                               gifted acreage)..

[[Page 138]]

 
(ii)The crop must be          (A) The number of     (B) The number of
 contracted with a processor   acres of the crop     acres of the crop
 to be insured.                specified in the      as determined in
                               processor contract,   section
                               if the contract       17(e)(1)(ii)(A).
                               specifies a number
                               of acres contracted
                               for the crop year;
                               or the result of
                               dividing the
                               quantity of
                               production stated
                               in the processor
                               contract by your
                               approved yield, if
                               the processor
                               contract specifies
                               a quantity of
                               production that
                               will be accepted.
                               If a minimum number
                               of acres or amount
                               of production is
                               specified in the
                               processor contract,
                               this amount will be
                               used to determine
                               the eligible acres.
                               If a processor
                               cancels or does not
                               provide contracts,
                               or reduces the
                               contracted acreage
                               or production from
                               what would have
                               otherwise been
                               allowed, solely
                               because the acreage
                               was prevented from
                               being planted due
                               to an insured cause
                               of loss, we may
                               elect to determine
                               the number of acres
                               eligible based on
                               the number of acres
                               or amount of
                               production you had
                               contracted in the
                               county in the
                               previous crop year.
                               If you did not have
                               a processor
                               contract in place
                               for the previous
                               crop year, you will
                               not have any
                               eligible prevented
                               planting acreage
                               for the applicable
                               processor crop. The
                               total eligible
                               prevented planting
                               acres in all
                               counties cannot
                               exceed the total
                               number of acres or
                               amount of
                               production
                               contracted in all
                               counties in the
                               previous crop year.
                               If the applicable
                               crop provisions
                               require that the
                               price election be
                               based on a contract
                               price, and a
                               contract is not in
                               force for the
                               current year, the
                               price election may
                               be based on the
                               contract price in
                               place for the
                               previous crop year..
------------------------------------------------------------------------

    (2) Any eligible acreage determined in accordance with the table 
contained in section 17(e)(1) will be reduced by subtracting the number 
of acres of the crop (insured and uninsured) that are timely and late 
planted, including acreage specified in section 16(b).
    (f) Regardless of the number of eligible acres determined in section 
17(e), prevented planting coverage will not be provided for any acreage:
    (1) That does not constitute at least 20 acres or 20 percent of the 
insurable crop acreage in the unit, whichever is less, and any prevented 
planting acreage within a field that contains planted acreage will be 
considered to be acreage of the same crop, type, and practice that is 
planted in the field except that the prevented planting acreage may be 
considered to be acreage of a crop, type, and practice other than that 
which is planted in the field if:
    (i) The acreage that was prevented from being planted constitutes at 
least 20 acres or 20 percent of the total insurable acreage in the field 
and you produced both crops, crop types, or followed both practices in 
the same field in the same crop year within any one of the four most 
recent crop years;
    (ii) You were prevented from planting a first insured crop and you 
planted a second crop in the field (There can only be one first insured 
crop in a field unless the requirements in section 17(f)(1)(i) or (iii) 
are met); or
    (iii) The insured crop planted in the field would not have been 
planted on the remaining prevented planting acreage (For example, where 
rotation requirements would not be met or you already planted the total 
number of acres specified in the processor contract);
    (2) For which the actuarial documents do not provide the information 
needed to determine a premium rate unless a written agreement designates 
such premium rate;
    (3) Used for conservation purposes, intended to be left unplanted 
under any program administered by the USDA or other government agency, 
or required to be left unharvested under the terms of the lease or any 
other agreement (The number of acres eligible for prevented planting 
will be limited to the number of acres specified in the lease for which 
you are required to pay either cash or share rent);
    (4) On which the insured crop is prevented from being planted, if 
you or any other person receives a prevented planting payment for any 
crop for the same acreage in the same crop year (It is your 
responsibility to

[[Page 139]]

determine whether a prevented planting payment had previously been made 
for the crop year on the acreage for which you are now claiming a 
prevented planting payment and report such information to us before any 
prevented planting payment can be made), excluding share arrangements, 
unless:
    (5) On which the insured crop is prevented from being planted, if:
    (i) Any crop is planted within or prior to the late planting period 
or on or prior to the final planting date if no late planting period is 
applicable, unless:
    (A) You meet the double cropping requirements in section 17(f)(4);
    (B) The crop planted was a cover crop; or
    (C) No benefit, including any benefit under any USDA program, was 
derived from the crop; or
    (ii) Any volunteer or cover crop is hayed, grazed or otherwise 
harvested within or prior to the late planting period or on or prior to 
the final planting date if no late planting period is applicable;
    (6) For which planting history or conservation plans indicate that 
the acreage would remain fallow for crop rotation purposes or on which 
any pasture or other forage crop is in place on the acreage during the 
time that planting of the insured crop generally occurs in the area;
    (7) That exceeds the number of acres eligible for a prevented 
planting payment;
    (8) That exceeds the number of eligible acres physically available 
for planting;
    (9) For which you cannot provide proof that you had the inputs 
available to plant and produce a crop with the expectation of at least 
producing the yield used to determine the production guarantee or amount 
of insurance (Evidence that you have previously planted the crop on the 
unit will be considered adequate proof unless your planting practices or 
rotational requirements show that the acreage would have remained fallow 
or been planted to another crop);
    (10) Based on an irrigated practice production guarantee or amount 
of insurance unless adequate irrigation facilities were in place to 
carry out an irrigated practice on the acreage prior to the insured 
cause of loss that prevented you from planting. Acreage with an 
irrigated practice production guarantee will be limited to the number of 
acres allowed for that practice under sections 17(e) and (f);
    (11) Based on a crop type that you did not plant, or did not receive 
a prevented planting insurance guarantee for, in at least one of the 
four most recent crop years. Types for which separate price elections, 
amounts of insurance, or production guarantees are available must be 
included in your APH database in at least one of the four most recent 
crop years, or crops that do not require yield certification (crops for 
which the insurance guarantee is not based on APH) must be reported on 
your acreage report in at least one of the four most recent crop years 
except as allowed in section 17(e)(1)(i)(B). We will limit prevented 
planting payments based on a specific crop type to the number of acres 
allowed for that crop type as specified in sections 17(e) and (f); or
    (12) If a cause of loss has occurred that would prevent planting at 
the time:
    (i) You lease the acreage (except acreage you leased the previous 
crop year and continue to lease in the current crop year);
    (ii) You buy the acreage;
    (iii) The acreage is released from a USDA program which prohibits 
harvest of a crop;
    (iv) You request a written agreement to insure the acreage; or
    (v) You acquire the acreage through means other than lease or 
purchase (such as inherited or gifted acreage).
    (g) If you purchased an additional coverage policy for a crop, and 
you executed a High Risk Land Exclusion Option that separately insures 
acreage which has been designated as ``high-risk'' land by FCIC under a 
Catastrophic Risk Protection Endorsement for that crop, the maximum 
number of acres eligible for a prevented planting payment will be 
limited for each policy as specified in sections 17(e) and (f).
    (h) If you are prevented from planting a crop for which you do not 
have an adequate base of eligible prevented planting acreage, as 
determined in accordance with section 17(e)(1), your prevented planting 
production guarantee or amount of insurance, premium, and prevented 
planting payment will be based on the crops insured for the current crop 
year, for which you have remaining eligible prevented planting acreage. 
The crops used for this purpose will be those that result in a prevented 
planting payment most similar to the prevented planting payment that 
would have been made for the crop that was prevented from being planted.
    (1) For example, assume you were prevented from planting 200 acres 
of corn and have 100 acres eligible for a corn prevented planting 
guarantee that would result in a payment of $40 per acre. You also had 
50 acres of potato eligibility that would result in a $100 per acre 
payment, 90 acres of grain sorghum eligibility that would result in a 
$30 per acre payment, and 100 acres of soybean eligibility that would 
result in a $25 per acre payment. Your prevented planting coverage for 
the 200 acres would be based on 100 acres of corn ($40 per acre), 90 
acres of grain sorghum ($30 per acre), and 10 acres of soybeans ($25 per 
acre).
    (2) Prevented planting coverage will be allowed as specified in this 
section (17(h)) only if the crop that was prevented from being planted 
meets all policy provisions, except for having an adequate base of 
eligible prevented planting acreage. Payment may be made based on crops 
other than those that

[[Page 140]]

were prevented from being planted even though other policy provisions, 
including but not limited to, processor contract and rotation 
requirements, have not been met for the crop on which payment is being 
based. However, if you were prevented from planting any non-irrigated 
crop acreage and you do not have any remaining eligible acreage for that 
crop and you do not have any other crop remaining with eligible acres 
under a non-irrigated practice, no prevented planting payment will be 
made for the acreage.
    (i) The prevented planting payment for any eligible acreage within a 
unit will be determined by:
    (1) Multiplying the liability per acre for timely planted acreage of 
the insured crop (the amount of insurance per acre or the production 
guarantee per acre multiplied by the price election for the crop, or 
type if applicable) by the prevented planting coverage level percentage 
you elected, or that is contained in the Crop Provisions if you did not 
elect a prevented planting coverage level percentage;
    (2) Multiplying the result of section 17(i)(1) by the number of 
eligible prevented planting acres in the unit; and
    (3) Multiplying the result of section 17(i)(2) by your share.

                         18. Written Agreements

    Terms of this policy which are specifically designated for the use 
of written agreements may be altered by written agreement in accordance 
with the following:
    (a) You must apply in writing for each written agreement no later 
than the sales closing date, except as provided in section 18(e);
    (b) The application for a written agreement must contain all 
variable terms of the contract between you and us that will be in effect 
if the written agreement is not approved;
    (c) If approved by FCIC, the written agreement will include all 
variable terms of the contract, including, but not limited to, crop 
practice, type or variety, the guarantee (except for a written agreement 
in effect for more than one year) and premium rate or information needed 
to determine the guarantee and premium rate, and price election (Price 
elections will not exceed the price election contained in the Special 
Provisions, or an addendum thereto, for the county that is used to 
establish the other terms of the written agreement. If no price election 
can be provided, the written agreement will not be approved by FCIC);
    (d) Each written agreement will only be valid for the number of crop 
years specified in the written agreement, and a multi-year written 
agreement:
    (1) Will only apply for any particular crop year designated in the 
written agreement if all terms and conditions in the written agreement 
are still applicable for the crop year and the conditions under which 
the written agreement has been provided have not changed prior to the 
beginning of the insurance period (If conditions change during or prior 
to the crop year, the written agreement will not be effective for that 
crop year but may still be effective for a subsequent crop year if 
conditions under which the written agreement has been provided exist for 
such year);
    (2) May be canceled in writing by:
    (i) FCIC not less than 30 days before the cancellation date if it 
discovers that any term or condition of the written agreement, including 
the premium rate, is not appropriate for the crop; or
    (ii) You or us on or before the cancellation date;
    (3) That is not renewed in writing after it expires, is not 
applicable for a crop year, or is canceled, then insurance coverage will 
be in accordance with the terms and conditions stated in this policy, 
without regard to the written agreement; and
    (4) Will be automatically cancelled if you transfer your policy to 
another insurance provider (No notice will be provided to you and for 
any subsequent crop year, for a written agreement to be effective, you 
must timely request renewal of the written agreement in accordance with 
this section);
    (e) A request for a written agreement may be submitted:
    (1) After the sales closing date, but on or before the acreage 
reporting date, if you demonstrate your physical inability to submit the 
request prior to the sales closing date (For example, you have been 
hospitalized or a blizzard has made it impossible to submit the written 
agreement request in person or by mail);
    (2) For the first year the written agreement will be in effect only:
    (i) On or before the acreage reporting date, to:
    (A) Insure unrated land, or an unrated practice, type or variety of 
a crop (Such written agreements may be approved only after inspection of 
the acreage by us and the written agreement may only be approved by FCIC 
if the crop's potential is equal to or exceeds 90 percent of the yield 
used to determine the production guarantee or the amount of insurance 
and you sign the agreement on the same day the appraisal is made); or
    (B) Establish optional units in accordance with FCIC procedures that 
otherwise would not be allowed, change the premium rate or transitional 
yield for designated high risk land, change a tobacco classification, or 
insure acreage that is greater than five percent of the planted acreage 
in the unit where the acreage has not been planted and harvested or 
insured in any of the three previous crop years; or

[[Page 141]]

    (ii) On or before the cancellation date, to insure a crop in a 
county that does not have actuarial documents for the crop (If the Crop 
Provisions do not provide a cancellation date for the county, the 
cancellation date for other insurable crops in the same state that have 
similar final planting and harvesting dates will be applicable); or
    (iii) On or before the date specified in the Crop Provisions or 
Special Provisions;
    (3) On or before the sales closing date, for all requests for 
renewal of written agreements, except as provided in section 18(e)(1);
    (4) To add land or a crop to an existing written agreement or to add 
land or a crop to a request for a written agreement provided the request 
is submitted by the deadlines specified in this subsection;
    (f) A request for a written agreement must contain:
    (1) For all written agreement requests:
    (i) A completed ``Request for Actuarial Change'' form;
    (ii) An APH form (except for policies that do not require APH) 
containing all the information needed to determine the approved yield 
for the current crop year (completed APH form), signed by you, or an 
unsigned, completed APH form with the applicable production reports 
signed and dated by you that are based on verifiable records of actual 
yields for the crop and county for which the written agreement is being 
requested (the actual yields do not necessarily have to be from the same 
physical acreage for which you are requesting a written agreement) for 
at least the most recent crop year during the base period and verifiable 
records of actual yields if required by FCIC;
    (iii) Evidence from agricultural experts or the organic agricultural 
industry, as applicable, that the crop can be produced in the area if 
the request is to provide insurance for practices, types, or varieties 
that are not insurable, unless we are notified in writing by FCIC that 
such evidence is not required by FCIC;
    (iv) The legal description of the land (in areas where legal 
descriptions are available), FSA Farm Serial Number including tract 
number, and a FSA aerial photograph, acceptable Geographic Information 
System or Global Positioning System maps, or other legible maps 
delineating field boundaries where you intend to plant the crop for 
which insurance is requested;
    (v) For any perennial crop, an inspection report completed by us; 
and
    (vi) All other information that supports your request for a written 
agreement (including but not limited to records pertaining to levees, 
drainage systems, flood frequency data, soil types, elevation, etc.);
    (2) For written agreement requests for counties without actuarial 
documents for the crop, the requirements in section 18(f)(1) (except 
section 18(f)(1)(ii)) and:
    (i) For a crop you have previously planted in the county or area for 
at least three years:
    (A) A completed APH form (only for crops that require APH) based on 
verifiable production records for at least the three most recent crop 
years in which the crop was planted; and
    (B) Verifiable production records for at least the three most recent 
crop years in which the crop was planted:
    (1) The verifiable production records do not necessarily have to be 
from the same physical acreage for which you are requesting a written 
agreement; and
    (2) Verifiable production records do not have to be submitted if you 
have insured the crop in the county or area for at least the previous 
three crop years and have certified the yields on the applicable 
production reports or the yields are based on your insurance claim 
(although you are not required to submit production records, you still 
must maintain production records in accordance with section 21);
    (ii) For a crop you have not previously planted in the county or 
area for at least three years:
    (A) A completed APH form (only for crops that require APH) based on 
verifiable production records for at least the three most recent crop 
years for a similar crop from acreage:
    (1) In the county; or
    (2) In the area if you have not produced the crop in the county; and
    (B) Verifiable production records for at least the three most recent 
crop years in which the similar crop was planted:
    (1) The verifiable production records for the similar crop do not 
necessarily have to be from the same physical acreage for which you are 
requesting a written agreement; and
    (2) Verifiable production records do not have to be submitted if you 
have insured the similar crop for at least the three previous crop years 
and have certified the yields on the applicable production reports or 
the yields are based on your insurance claim (although you are not 
required to submit production records, you still must maintain 
production records in accordance with section 21);
    (C) If you have at least one year of production records, but less 
than three years of production records, for the crop in the county or 
area but have production records for a similar crop in the county or 
area such that the combination of both sets of records results in at 
least three years of production records, you must provide the 
information required in sections 18(f)(2)(i)(A) & (B) for the years you 
grew the crop in the county or area and the information required in 
sections 18(f)(2)(ii)(A) & (B) regarding the similar crop for the 
remaining years; and
    (D) A similar crop to the crop for which a written agreement is 
being requested must:

[[Page 142]]

    (1) Be included in the same category of crops, e.g., row crops 
(including, but not limited to, small grains, coarse grains, and oil 
seed crops), vegetable crops grown in rows, tree crops, vine crops, bush 
crops, etc., as defined by FCIC;
    (2) Have substantially the same growing season (i.e., normally 
planted around the same dates and harvested around the same dates);
    (3) Require comparable agronomic conditions (e.g., comparable needs 
for water, soil, etc.); and
    (4) Be subject to substantially the same risks (frequency and 
severity of loss would be expected to be comparable from the same cause 
of loss);
    (iii) The dates you and other growers in the area normally plant and 
harvest the crop, if applicable;
    (iv) The name, location of, and approximate distance to the place 
the crop will be sold or used by you;
    (v) For any irrigated practice, the water source, method of 
irrigation, and the amount of water needed for an irrigated practice for 
the crop; and
    (vi) All other information that supports your request for a written 
agreement (such as publications regarding yields, practices, risks, 
climatic data, etc.); and
    (3) Such other information as specified in the Special Provisions or 
required by FCIC;
    (g) A request for a written agreement will not be accepted if:
    (1) The request is submitted to us after the deadline contained in 
sections 18(a) or (e);
    (2) All the information required in section 18(f) is not submitted 
to us with the request for a written agreement (The request for a 
written agreement may be accepted if any missing information is 
available from other acceptable sources); or
    (3) The request is to add land to an existing written agreement or 
to add land to a request for a written agreement and the request to add 
the land is not submitted by the deadlines specified in sections (a) or 
(e);
    (h) A request for a written agreement will be denied if:
    (1) FCIC determines the risk is excessive;
    (2) Your APH history demonstrates you have not produced at least 50 
percent of the transitional yield for the crop, type, and practice 
obtained from a county with similar agronomic conditions and risk 
exposure;
    (3) There is not adequate information available to establish an 
actuarially sound premium rate and insurance coverage for the crop and 
acreage;
    (4) The crop was not previously grown in the county or there is no 
evidence of a market for the crop based on sales receipts, 
contemporaneous feeding records or a contract for the crop (applicable 
only for counties without actuarial documents); or
    (5) Agricultural experts or the organic agricultural industry 
determines the crop is not adapted to the county;
    (i) A written agreement will be denied unless:
    (1) FCIC approves the written agreement;
    (2) The original written agreement is signed by you and sent to us 
not later than the expiration date; and
    (3) The crop meets the minimum appraisal amount specified in section 
18(e)(2)(i)(A), if applicable;
    (j) Multiyear written agreements may be canceled and requests for 
renewal may be rejected if the severity or frequency of your loss 
experience under the written agreement is significantly worse than 
expected based on the information provided by you or used to establish 
your premium rate and the loss experience of other crops with similar 
risks in the area;
    (k) With respect to your and our ability to reject an offer for a 
written agreement:
    (1) When a single Request for Actuarial Change form is submitted, 
regardless of how many requests for changes are contained on the form, 
you and we can only accept or reject the written agreement in its 
entirety (you cannot reject specific terms of the written agreement and 
accept others);
    (2) When multiple Request for Actuarial Change forms are submitted, 
regardless of when the forms are submitted, for the same condition or 
for the same crop (i.e., to insure corn on ten legal descriptions where 
there are no actuarial documents in the county or the request is to 
change the premium rates from the high risk rates) all these forms may 
be treated as one request and you and we will only have the option of 
accepting or rejecting the written agreement in its entirety (you cannot 
reject specific terms of the written agreement and accept others);
    (3) When multiple Request for Actuarial Change forms are submitted, 
regardless of when the forms are submitted, for the different conditions 
or for different crops, separate agreements may be issued and you and we 
will have the option to accept or reject each written agreement; and
    (4) If we reject an offer for a written agreement approved by FCIC, 
you may seek arbitration or mediation of our decision to reject the 
offer in accordance with section 20;
    (l) Any information that is submitted by you after the applicable 
deadlines in sections 18(a) and (e) will not be considered, unless such 
information is specifically requested in accordance with section 
18(f)(3);
    (m) If the written agreement or the policy is canceled for any 
reason, or the period for which an existing written agreement is in 
effect ends, a request for renewal of the written agreement must contain 
all the information required by this section and be submitted in 
accordance with section 18(e), unless otherwise specified by FCIC; and

[[Page 143]]

    (n) If a request for a written agreement is not approved by FCIC, a 
request for a written agreement for any subsequent crop year that fails 
to address the stated basis for the denial will not be accepted (If the 
request for a written agreement contains the same information that was 
previously rejected or denied, you will not have any right to arbitrate, 
mediate or appeal the non-acceptance of your request).

                          19. Crops as Payment

    You must not abandon any crop to us. We will not accept any crop as 
compensation for payments due us.

                           [For FCIC Policies]

    20. Appeal, Reconsideration, Administrative and Judicial Review.

    (a) All determinations required by the policy will be made by us.
    (b) If you disagree with our determinations, you may:
    (1) Except for determinations specified in section 20(b)(2), obtain 
an administrative review in accordance with 7 CFR part 400, subpart J 
(administrative review) or appeal in accordance with 7 CFR part 11 
(appeal); or
    (2) For determinations regarding whether you have used good farming 
practices (excluding determinations of the amount of assigned production 
for uninsured causes for your failure to use good farming practices), 
request reconsideration in accordance with the reconsideration process 
established for this purpose and published at 7 CFR part 400, subpart J 
(reconsideration). To appeal or request administrative review of 
determinations of the amount of assigned production, you must use the 
appeal or administrative review process.
    (c) If you fail to exhaust your right to appeal or for 
reconsideration, as applicable, you will not be able to resolve the 
dispute through judicial review.
    (d) If reconsideration or appeal has been initiated within the time 
frames specified in those sections and judicial review is sought, any 
suit against us must be:
    (1) Filed not later than one year after the date of the decision 
rendered in the reconsideration or appeal; and
    (2) Brought in the United States district court for the district in 
which the insured farm involved in the decision is located.
    (e) You may only recover contractual damages from us. Under no 
circumstances can you recover any attorney fees or other expenses, or 
any punitive, compensatory or any other damages from us in 
administrative review, appeal, reconsideration or litigation.

                        [For Reinsured Policies]

20. Mediation, Arbitration, Appeal, Reconsideration, and Administrative 
                          and Judicial Review.

    (a) If you and we fail to agree on any determination made by us 
except those specified in section 20(d) or (e), the disagreement may be 
resolved through mediation in accordance with section 20(g). If 
resolution cannot be reached through mediation, or you and we do not 
agree to mediation, the disagreement must be resolved through 
arbitration in accordance with the rules of the American Arbitration 
Association (AAA), except as provided in sections 20(c) and (f), and 
unless rules are established by FCIC for this purpose. Any mediator or 
arbitrator with a familial, financial or other business relationship to 
you or us, or our agent or loss adjuster, is disqualified from hearing 
the dispute.
    (1) All disputes involving determinations made by us, except those 
specified in section 20(d) or (e), are subject to mediation or 
arbitration. However, if the dispute in any way involves a policy or 
procedure interpretation, regarding whether a specific policy provision 
or procedure is applicable to the situation, how it is applicable, or 
the meaning of any policy provision or procedure, either you or we must 
obtain an interpretation from FCIC in accordance with 7 CFR part 400, 
subpart X or such other procedures as established by FCIC.
    (i) Any interpretation by FCIC will be binding in any mediation or 
arbitration.
    (ii) Failure to obtain any required interpretation from FCIC will 
result in the nullification of any agreement or award.
    (iii) An interpretation by FCIC of a policy provision is considered 
a rule of general applicability and is not appealable. If you disagree 
with an interpretation of a policy provision by FCIC, you must obtain a 
Director's review from the National Appeals Division in accordance with 
7 CFR 11.6 before obtaining judicial review in accordance with 
subsection (e).
    (iv) An interpretation by FCIC of a procedure may be appealed to the 
National Appeals Division in accordance with 7 CFR part 11.
    (2) Unless the dispute is resolved through mediation, the arbitrator 
must provide to you and us a written statement describing the issues in 
dispute, the factual findings, the determinations and the amount and 
basis for any award and breakdown by claim for any award. The statement 
must also include any amounts awarded for interest. Failure of the 
arbitrator to provide such written statement will result in the 
nullification of all determinations of the arbitrator. All agreements 
reached through settlement, including those resulting from mediation, 
must be in writing and contain at a

[[Page 144]]

minimum a statement of the issues in dispute and the amount of the 
settlement.
    (b) Regardless of whether mediation is elected:
    (1) The initiation of arbitration proceedings must occur within one 
year of the date we denied your claim or rendered the determination with 
which you disagree, whichever is later;
    (2) If you fail to initiate arbitration in accordance with section 
20(b)(1) and complete the process, you will not be able to resolve the 
dispute through judicial review;
    (3) If arbitration has been initiated in accordance with section 
20(b)(1) and completed, and judicial review is sought, suit must be 
filed not later than one year after the date the arbitration decision 
was rendered; and
    (4) In any suit, if the dispute in any way involves a policy or 
procedure interpretation, regarding whether a specific policy provision 
or procedure is applicable to the situation, how it is applicable, or 
the meaning of any policy provision or procedure, an interpretation must 
be obtained from FCIC in accordance with 7 CFR part 400, subpart X or 
such other procedures as established by FCIC. Such interpretation will 
be binding.
    (c) Any decision rendered in arbitration is binding on you and us 
unless judicial review is sought in accordance with section 20(b)(3). 
Notwithstanding any provision in the rules of the AAA, you and we have 
the right to judicial review of any decision rendered in arbitration.
    (d) If you do not agree with any determination made by us or FCIC 
regarding whether you have used a good farming practice (excluding 
determinations by us of the amount of assigned production for uninsured 
causes for your failure to use good farming practices), you may request 
reconsideration by FCIC of this determination in accordance with the 
reconsideration process established for this purpose and published at 7 
CFR part 400, subpart J (reconsideration). To resolve disputes regarding 
determinations of the amount of assigned production, you must use the 
arbitration or mediation process contained in this section.
    (1) You must complete reconsideration before filing suit against 
FCIC and any such suit must be brought in the United States district 
court for the district in which the insured farm is located.
    (2) Suit must be filed not later than one year after the date of the 
decision rendered in the reconsideration.
    (3) You cannot sue us for determinations of whether good farming 
practices were used by you.
    (e) Except as provided in section 20(d), if you disagree with any 
other determination made by FCIC or any claim where FCIC is directly 
involved in the claims process or directs us in the resolution of the 
claim, you may obtain an administrative review in accordance with 7 CFR 
part 400, subpart J (administrative review) or appeal in accordance with 
7 CFR part 11 (appeal).
    (1) If you elect to bring suit after completion of any appeal, such 
suit must be filed against FCIC not later than one year after the date 
of the decision rendered in such appeal.
    (2) Such suit must be brought in the United States district court 
for the district in which the insured acreage is located.
    (3) Under no circumstances can you recover any attorney fees or 
other expenses, or any punitive, compensatory or any other damages from 
FCIC.
    (f) In any mediation, arbitration, appeal, administrative review, 
reconsideration or judicial process, the terms of this policy, the Act, 
and the regulations published at 7 CFR chapter IV, including the 
provisions of 7 CFR part 400, subpart P, are binding. Conflicts between 
this policy and any state or local laws will be resolved in accordance 
with section 31. If there are conflicts between any rules of the AAA and 
the provisions of your policy, the provisions of your policy will 
control.
    (g) To resolve any dispute through mediation, you and we must both:
    (1) Agree to mediate the dispute;
    (2) Agree on a mediator; and
    (3) Be present, or have a designated representative who has 
authority to settle the case present, at the mediation.
    (h) Except as provided in section 20(i), no award or settlement in 
mediation, arbitration, appeal, administrative review or reconsideration 
process or judicial review can exceed the amount of liability 
established or which should have been established under the policy, 
except for interest awarded in accordance with section 26.
    (i) In a judicial review only, you may recover attorneys fees or 
other expenses, or any punitive, compensatory or any other damages from 
us only if you obtain a determination from FCIC that we, our agent or 
loss adjuster failed to comply with the terms of this policy or 
procedures issued by FCIC and such failure resulted in you receiving a 
payment in an amount that is less than the amount to which you were 
entitled. Requests for such a determination should be addressed to the 
following: USDA/RMA/Deputy Administrator of Compliance/Stop 0806, 1400 
Independence Avenue, SW., Washington, DC 20250-0806.
    (j) If FCIC elects to participate in the adjustment of your claim, 
or modifies, revises or corrects your claim, prior to payment, you may 
not bring an arbitration, mediation or litigation action against us. You 
must request administrative review or appeal in accordance with section 
20(e).

[[Page 145]]

      21. Access to Insured Crop and Records, and Record Retention.

    (a) We, and any employee of USDA authorized to investigate or review 
any matter relating to crop insurance, have the right to examine the 
insured crop and all records related to the insured crop and any 
mediation, arbitration or litigation involving the insured crop as often 
as reasonably required during the record retention period.
    (b) You must retain, and provide upon our request, or the request of 
any employee of USDA authorized to investigate or review any matter 
relating to crop insurance:
    (1) Complete records of the planting, replanting, inputs, 
production, harvesting, and disposition of the insured crop on each unit 
for three years after the end of the crop year (This requirement also 
applies to all such records for acreage that is not insured); and
    (2) All records used to establish the amount of production you 
certified on your production reports used to compute your approved yield 
for three years after the end of the crop year for which you initially 
certified such records, unless such records have already been provided 
to us (For example, if your approved yield for the 2003 crop year was 
based on production records you certified for the 1997 through 2002 crop 
years, you must retain all such records through the 2006 crop year, 
unless such records have already been provided to us).
    (c) We, or any employee of USDA authorized to investigate or review 
any matter relating to crop insurance, may extend the record retention 
period beyond three years by notifying you of such extension in writing.
    (d) By signing the application for insurance authorized under the 
Act or by continuing insurance for which you have previously applied, 
you authorize us or USDA, or any person acting for us or USDA authorized 
to investigate or review any matter relating to crop insurance, to 
obtain records relating to the planting, replanting, inputs, production, 
harvesting, and disposition of the insured crop from any person who may 
have custody of such records, including but not limited to, FSA offices, 
banks, warehouses, gins, cooperatives, marketing associations, and 
accountants. You must assist in obtaining all records we or any employee 
of USDA authorized to investigate or review any matter relating to crop 
insurance request from third parties.
    (e) Failure to provide access to the insured crop or the farm, 
authorize access to the records maintained by third parties or assist in 
obtaining such records will result in a determination that no indemnity 
is due for the crop year in which such failure occurred.
    (f) Failure to maintain or provide records will result in:
    (1) The imposition of an assigned yield in accordance with section 
3(e)(1) and 7 CFR part 400, subpart G for those crop years for which you 
do not have the required production records to support a certified 
yield;
    (2) A determination that no indemnity is due if you fail to provide 
records necessary to determine your loss;
    (3) Combination of the optional units into the applicable basic 
unit;
    (4) Assignment of production to the units by us if you fail to 
maintain separate records:
    (i) For your basic units; or
    (ii) For any uninsurable acreage; and
    (5) The imposition of consequences specified in section 6(g), as 
applicable.
    (g) If the imposition of an assigned yield under section 21(f)(1) 
would affect an indemnity, prevented planting payment or replant payment 
that was paid in a prior crop year, such claim will be adjusted and you 
will be required to repay any overpaid amounts.

                           22. Other Insurance

    (a) Other Like Insurance--Nothing in this section prevents you from 
obtaining other insurance not authorized under the Act. However, unless 
specifically required by policy provisions, you must not obtain any 
other crop insurance authorized under the Act on your share of the 
insured crop. If you cannot demonstrate that you did not intend to have 
more than one policy in effect, you may be subject to the consequences 
authorized under this policy, the Act, or any other applicable statute. 
If you can demonstrate that you did not intend to have more than one 
policy in effect (For example, an application to transfer your policy or 
written notification to an insurance provider that states you want to 
purchase, or transfer, insurance and you want any other policies for the 
crop canceled would demonstrate you did not intend to have duplicate 
policies), and:
    (1) One is an additional coverage policy and the other is a 
Catastrophic Risk Protection policy:
    (i) The additional coverage policy will apply if both policies are 
with the same insurance provider or, if not, both insurance providers 
agree; or
    (ii) The policy with the earliest date of application will be in 
force if both insurance providers do not agree; or
    (2) Both are additional coverage policies or both are Catastrophic 
Risk Protection policies, the policy with the earliest date of 
application will be in force and the other policy will be void, unless 
both policies are with:
    (i) The same insurance provider and the insurance provider agrees 
otherwise; or
    (ii) Different insurance providers and both insurance providers 
agree otherwise.
    (b) Other Insurance Against Fire. If you have other insurance, 
whether valid or not,

[[Page 146]]

against damage to the insured crop by fire during the insurance period, 
and you have not excluded coverage for fire from this policy, we will be 
liable for loss due to fire caused by a naturally occurring event only 
for the smaller of:
    (1) The amount of indemnity determined pursuant to this policy 
without regard to such other insurance; or
    (2) The amount by which the loss from fire is determined to exceed 
the indemnity paid or payable under such other insurance.
    (c) For the purpose of subsection (b) of this section the amount of 
loss from fire will be the difference between the fair market value of 
the production of the insured crop on the unit involved before the fire 
and after the fire, as determined from appraisals made by us.

                   23. Conformity to Food Security Act

    Although your violation of a number of federal statutes, including 
the Act, may cause cancellation, termination, or voidance of your 
insurance contract, you should be specifically aware that your policy 
will be canceled if you are determined to be ineligible to receive 
benefits under the Act due to violation of the controlled substance 
provisions (title XVII) of the Food Security Act of 1985 (Pub. L. 99-
198) and the regulations promulgated under the Act by USDA. Your 
insurance policy will be canceled if you are determined, by the 
appropriate Agency, to be in violation of these provisions. We will 
recover any and all monies paid to you or received by you during your 
period of ineligibility, and your premium will be refunded, less a 
reasonable amount for expenses and handling not to exceed 20 percent of 
the premium paid or to be paid by you.

                            For FCIC policies

                           24. Amounts Due Us

    (a) Any amount illegally or erroneously paid to you or that is owed 
to us but is delinquent may be recovered by us through offset by 
deducting it from any loan or payment due you under any Act of Congress 
or program administered by any United States Government Agency, or by 
other collection action.
    (b) Interest will accrue at the rate of 1.25 percent simple interest 
per calendar month, or any part thereof, on any unpaid premium amount or 
administrative fee due us. With respect to any premiums or 
administrative fees owed, interest will start to accrue on the first day 
of the month following the premium billing date specified in the Special 
Provisions.
    (c) For the purpose of any other amounts due us, such as repayment 
of indemnities found not to have been earned:
    (1) Interest will start on the date that notice is issued to you for 
the collection of the unearned amount;
    (2) Amounts found due under this paragraph will not be charged 
interest if payment is made within 30 days of issuance of the notice by 
us;
    (3) The amount will be considered delinquent if not paid within 30 
days of the date the notice is issued by us;
    (4) Penalties and interest will be charged in accordance with 31 
U.S.C. 3717 and 4 CFR part 102; and
    (5) The penalty for accounts more than 90 days delinquent is an 
additional 6 percent per annum.
    (d) Interest on any amount due us found to have been received by you 
because of fraud, misrepresentation or presentation by you of a false 
claim will start on the date you received the amount with the additional 
6 percent penalty beginning on the 31st day after the notice of amount 
due is issued to you. This interest is in addition to any other amount 
found to be due under any other federal criminal or civil statute.
    If we determine that it is necessary to contract with a collection 
agency, refer the debt to government collection centers, the Department 
of Treasury Offset Program, or to employ an attorney to assist in 
collection, you agree to pay all the expenses of collection.
    (f) All amounts paid will be applied first to expenses of collection 
if any, second to the reduction of any penalties which may have been 
assessed, then to reduction of accrued interest, and finally to 
reduction of the principal balance.

                         For reinsured policies

                           24. Amounts Due Us

    (a) Interest will accrue at the rate of 1.25 percent simple interest 
per calendar month, or any portion thereof, on any unpaid amount owed to 
us or on any unpaid administrative fees owed to FCIC. For the purpose of 
premium amounts owed to us or administrative fees owed to FCIC, interest 
will start to accrue on the first day of the month following the premium 
billing date specified in the Special Provisions. We will collect any 
unpaid amounts owed to us and any interest owed thereon and, prior to 
the termination date, we will collect any administrative fees and 
interest owed thereon to FCIC. After the termination date, FCIC will 
collect any unpaid administrative fees and any interest owed thereon.
    (b) For the purpose of any other amounts due us, such as repayment 
of indemnities found not to have been earned, interest will start to 
accrue on the date that notice is issued to you for the collection of 
the unearned amount. Amounts found due under this paragraph will not be 
charged interest if

[[Page 147]]

payment is made within 30 days of issuance of the notice by us. The 
amount will be considered delinquent if not paid within 30 days of the 
date the notice is issued by us.
    (c) All amounts paid will be applied first to expenses of collection 
(see subsection (d) of this section) if any, second to the reduction of 
accrued interest, and then to the reduction of the principal balance.
    (d) If we determine that it is necessary to contract with a 
collection agency or to employ an attorney to assist in collection, you 
agree to pay all of the expenses of collection.
    (e) The portion of the amounts owed by you for a policy authorized 
under the Act that are owed to FCIC may be collected in part through 
administrative offset from payments you receive from United States 
government agencies in accordance with 31 U.S.C. chapter 37. Such 
amounts include all administrative fees, and the share of the overpaid 
indemnities and premiums retained by FCIC plus any interest owed 
thereon.

                             25. [Reserved]

                        26. Interest Limitations

    We will pay simple interest computed on the net indemnity ultimately 
found to be due by us or by a final judgment of a court of competent 
jurisdiction, from and including the 61st day after the date you sign, 
date, and submit to us the properly completed claim on our form. 
Interest will be paid only if the reason for our failure to timely pay 
is NOT due to your failure to provide information or other material 
necessary for the computation or payment of the indemnity. The interest 
rate will be that established by the Secretary of the Treasury under 
section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611) and 
published in the Federal Register semiannually on or about January 1 and 
July 1 of each year, and may vary with each publication.

               27. Concealment, Misrepresentation or Fraud

    (a) If you have falsely or fraudulently concealed the fact that you 
are ineligible to receive benefits under the Act or if you or anyone 
assisting you has intentionally concealed or misrepresented any material 
fact relating to this policy:
    (1) This policy will be voided; and
    (2) You may be subject to remedial sanctions in accordance with 7 
CFR part 400, subpart R.
    (b) Even though the policy is void, you may still be required to pay 
20 percent of the premium due under the policy to offset costs incurred 
by us in the service of this policy. If previously paid, the balance of 
the premium will be returned.
    (c) Voidance of this policy will result in you having to reimburse 
all indemnities paid for the crop year in which the voidance was 
effective.
    (d) Voidance will be effective on the first day of the insurance 
period for the crop year in which the act occurred and will not affect 
the policy for subsequent crop years unless a violation of this section 
also occurred in such crop years.

             28. Transfer of Coverage and Right to Indemnity

    If you transfer any part of your share during the crop year, you may 
transfer your coverage rights, if the transferee is eligible for crop 
insurance. We will not be liable for any more than the liability 
determined in accordance with your policy that existed before the 
transfer occurred. The transfer of coverage rights must be on our form 
and will not be effective until approved by us in writing. Both you and 
the transferee are jointly and severally liable for the payment of the 
premium and administrative fees. The transferee has all rights and 
responsibilities under this policy consistent with the transferee's 
interest.

                       29. Assignment of Indemnity

    You may assign to another party your right to an indemnity for the 
crop year. The assignment must be on our form and will not be effective 
until approved in writing by us. The assignee will have the right to 
submit all loss notices and forms as required by the policy. If you have 
suffered a loss from an insurable cause and fail to file a claim for 
indemnity within 60 days after the end of the insurance period, the 
assignee may submit the claim for indemnity not later than 15 days after 
the 60-day period has expired. We will honor the terms of the assignment 
only if we can accurately determine the amount of the claim. However, no 
action will lie against us for failure to do so.

          30. Subrogation (Recovery of Loss From a Third Party)

    Since you may be able to recover all or a part of your loss from 
someone other than us, you must do all you can to preserve this right. 
If you receive any compensation for your loss, excluding private hail 
insurance payments and payments covered by section 35, and the indemnity 
due under this policy plus the amount you receive from the person 
exceeds the amount of your actual loss, the indemnity will be reduced by 
the excess amount, or if the indemnity has already been paid, you will 
be required to repay the excess amount, not to exceed the amount of the 
indemnity. The total amount of the actual loss is the difference between 
the value of the insured crop before and after the loss, based on your 
production records and the highest price election or amount of insurance 
available for the crop. If we pay you for your loss, your right to 
recovery will, at our option, belong to us. If we recover more than we 
paid

[[Page 148]]

you plus or expenses, the excess will be paid to you.

              31. Applicability of State and Local Statutes

    If the provisions of this policy conflict with statutes of the State 
or locality in which this policy is issued, the policy provisions will 
prevail. State and local laws and regulations in conflict with federal 
statutes, this policy, and the applicable regulations do not apply to 
this policy.

                        32. Descriptive Headings

    The descriptive headings of the various policy provisions are 
formulated for convenience only and are not intended to affect the 
construction or meaning of any of the policy provisions.

                               33. Notices

    (a) All notices required to be given by you must be in writing and 
received by your crop insurance agent within the designated time unless 
otherwise provided by the notice requirement. Notices required to be 
given immediately may be by telephone or in person and confirmed in 
writing. Time of the notice will be determined by the time of our 
receipt of the written notice. If the date by which you are required to 
submit a report or notice falls on Saturday, Sunday, or a Federal 
holiday, or if your agent's office is, for any reason, not open for 
business on the date you are required to submit such notice or report, 
such notice or report must be submitted on the next business day.
    (b) All notices and communications required to be sent by us to you 
will be mailed to the address contained in your records located with 
your crop insurance agent. Notice sent to such address will be 
conclusively presumed to have been received by you. You should advise us 
immediately of any change of address.

                            34. Unit Division

    (a) You may elect an enterprise unit or a whole farm unit if the 
Special Provisions allow such unit structure, subject to the following:
    (1) You must make such election on or before the earliest sales 
closing date for the insured crops and report such unit structure to us 
in writing. Your unit selection will remain in effect from year to year 
unless you notify us in writing by the earliest sales closing date for 
the crop year for which you wish to change this election. These units 
may not be further divided except as specified herein;
    (2) For an enterprise unit:
    (i) You must report the acreage for each optional or basic unit on 
your acreage report that comprises the enterprise unit;
    (ii) These basic units or optional units that comprise the 
enterprise unit must each have insurable planted acreage of the same 
crop in the crop year insured;
    (iii) You must comply with all reporting requirements for the 
enterprise unit (While separate records of acreage and production for 
basic or optional units must be maintained, if you want to change your 
unit structure in subsequent crop years, it is not required to qualify 
for an enterprise unit);
    (iv) The qualifying basic units or optional units may not be 
combined into an enterprise unit on any basis other than as described 
herein;
    (v) If you do not comply with the production reporting provisions 
for the enterprise unit, your yield for the enterprise unit will be 
determined in accordance with section 3(e)(1);
    (vi) At any time we discover you do not qualify for an enterprise 
unit, we will assign the basic unit structure; and
    (vii) The discount contained in the actuarial documents will only 
apply to acreage in the enterprise unit that has been planted.
    (3) For a whole farm unit:
    (i) You must report on your acreage report the acreage for each 
optional or basic unit for each crop produced in the county that 
comprises the whole farm unit;
    (ii) Although you may insure all of your crops under a whole farm 
unit, you will be required to pay separate applicable administrative 
fees for each crop included in the whole farm unit; and
    (iii) At any time we discover you do not qualify for a whole farm 
unit, we will assign the basic unit structure.
    (b) Unless limited by the Crop Provisions or Special Provisions, a 
basic unit as defined in section 1 of the Basic Provisions may be 
divided into optional units if, for each optional unit, you meet the 
following:
    (1) You must plant the crop in a manner that results in a clear and 
discernible break in the planting pattern at the boundaries of each 
optional unit;
    (2) All optional units you select for the crop year are identified 
on the acreage report for that crop year (Units will be determined when 
the acreage is reported but may be adjusted or combined to reflect the 
actual unit structure when adjusting a loss. No further unit division 
may be made after the acreage reporting date for any reason);
    (3) You have records, that are acceptable to us, for at least the 
previous crop year for all optional units that you will report in the 
current crop year (You may be required to produce the records for all 
optional units for the previous crop year);
    (4) You have records of marketed or stored production from each 
optional unit maintained in such a manner that permits us to verify the 
production from each optional unit, or the production from each optional 
unit is kept separate until loss adjustment is completed by us; and

[[Page 149]]

    (c) Each optional unit must meet one or more of the following, 
unless otherwise specified in the Crop Provisions or allowed by written 
agreement:
    (1) Optional units may be established if each optional unit is 
located in a separate section. In the absence of sections, we may 
consider parcels of land legally identified by other methods of measure 
such as Spanish grants, as the equivalents of sections for unit 
purposes. In areas which have not been surveyed using sections, section 
equivalents or in areas where boundaries are not readily discernible, 
each optional unit must be located in a separate FSA farm serial number;
    (2) In addition to, or instead of, establishing optional units by 
section, section equivalent or FSA farm serial number, optional units 
may be based on irrigated and non-irrigated acreage. To qualify as 
separate irrigated and non-irrigated optional units, the non-irrigated 
acreage may not continue into the irrigated acreage in the same rows or 
planting pattern. The irrigated acreage may not extend beyond the point 
at which the irrigation system can deliver the quantity of water needed 
to produce the yield on which the guarantee is based, except the corners 
of a field in which a center-pivot irrigation system is used may be 
considered as irrigated acreage if the corners of a field in which a 
center-pivot irrigation system is used do not qualify as a separate non-
irrigated optional unit. In this case, production from both practices 
will be used to determine your approved yield; and
    (3) In addition to, or instead of, establishing optional units by 
section, section equivalent or FSA farm serial number, or irrigated and 
non-irrigated acreage, separate optional units may be established for 
acreage of the insured crop grown and insured under an organic farming 
practice. Certified organic, transitional and buffer zone acreages do 
not individually qualify as separate units. (See section 37 for 
additional provisions regarding acreage insured under an organic farming 
practice).
    (d) Optional units are not available for crops insured under a 
Catastrophic Risk Protection Endorsement.
    (e) If you do not comply fully with the provisions in this section, 
we will combine all optional units that are not in compliance with these 
provisions into the basic unit from which they were formed. We will 
combine the optional units at any time we discover that you have failed 
to comply with these provisions. If failure to comply with these 
provisions is determined by us to be inadvertent, and the optional units 
are combined into a basic unit, that portion of the additional premium 
paid for the optional units that have been combined will be refunded to 
you for the units combined.
    35. Multiple Benefits
    (a) If you are eligible to receive an indemnity and are also 
eligible to receive benefits for the same loss under any other USDA 
program, you may receive benefits under both programs, unless 
specifically limited by the crop insurance contract or by law.
    (b) The total amount received from all such sources may not exceed 
the amount of your actual loss. The total amount of the actual loss is 
the difference between the fair market value of the insured commodity 
before and after the loss, based on your production records and the 
highest price election or amount of insurance available for the crop.
    (c) FSA will determine and pay the additional amount due you for any 
applicable USDA program after first considering the amount of any crop 
insurance indemnity.
    36. Substitution of Yields.
    (a) When you have actual yields in your production history database 
that, due to an insurable cause of loss, are less than 60 percent of the 
applicable transitional yield (T-yield) you may elect, on an individual 
actual yield basis, to exclude and replace one or more of any such 
yields within each database.
    (b) Each election made in section 36(a) must be made on or before 
the production reporting date for the insured crop and each such 
election will remain in effect for succeeding years unless cancelled by 
the production reporting date for the succeeding crop year. If you 
cancel an election, the actual yield will be used in the database. For 
example, if you elected to substitute yields in your database for the 
1998 and 2000 crop year, for any subsequent crop year, you can elect to 
cancel the substitution for either or both years.
    (c) Each excluded actual yield will be replaced with a yield equal 
to 60 percent of the applicable T-yield for the crop year in which the 
yield is being replaced (For example, if you elect to exclude a 2001 
crop year actual yield, the T-yield in effect for the 2001 crop year in 
the county will be used. If you also elect to exclude a 2002 crop year 
actual yield, the T-yield in effect for the 2002 crop year in the county 
will be used). The replacement yields will be used in the same manner as 
actual yields for the purpose of calculating the approved yield.
    (d) Once you have elected to exclude an actual yield from the 
database, the replacement yield will remain in effect

[[Page 150]]

until such time as that crop year is no longer included in the database 
unless this election is cancelled in accordance with section 36(b).
    (e) Although your approved yield will be used to determine your 
amount of premium owed, the premium rate will be increased to cover the 
additional risk associated with the substitution of higher yields.
    37. Organic Farming Practices.
    (a) In accordance with section 8(b)(2), insurance will not be 
provided for any crop grown using an organic farming practice, unless 
the information needed to determine a premium rate for an organic 
farming practice is specified on the actuarial table, or insurance is 
allowed by a written agreement.
    (b) If insurance is provided for an organic farming practice as 
specified in section 37(a), only the following acreage will be insured 
under such practice:
    (1) Certified organic acreage;
    (2) Transitional acreage being converted to certified organic 
acreage in accordance with an organic plan; and
    (3) Buffer zone acreage.
    (c) On the date you report your acreage, you must have:
    (1) For certified organic acreage, a written certification in effect 
from a certifying agent indicating the name of the entity certified, 
effective date of certification, certificate number, types of 
commodities certified, and name and address of the certifying agent (A 
certificate issued to a tenant may be used to qualify a landlord or 
other similar arrangement);
    (2) For transitional acreage, a certificate as described in section 
37(c)(1), or written documentation from a certifying agent indicating an 
organic plan is in effect for the acreage; and
    (3) Records from the certifying agent showing the specific location 
of each field of certified organic, transitional, buffer zone, and 
acreage not maintained under organic management.
    (d) If you claim a loss on any acreage insured under an organic 
farming practice, you must provide us with copies of the records 
required in section 37(c).
    (e) If any acreage qualifies as certified organic or transitional 
acreage on the date you report such acreage, and such certification is 
subsequently revoked by the certifying agent, or the certifying agent no 
longer considers the acreage as transitional acreage for the remainder 
of the crop year, that acreage will remain insured under the reported 
practice for which it qualified at the time the acreage was reported. 
Any loss due to failure to comply with organic standards will be 
considered an uninsured cause of loss.
    (f) Contamination by application or drift of prohibited substances 
onto land on which crops are grown using organic farming practices will 
not be an insured peril on any certified organic, transitional or buffer 
zone acreage.
    (g) In addition to the provisions contained in section 17(f), 
prevented planting coverage will not be provided for any acreage based 
on an organic farming practice in excess of the number of acres that 
will be grown under an organic farming practice and shown as such in the 
records required in section 37(c).
    (h) In lieu of the provisions contained in section 17(f)(1) that 
specify prevented planting acreage within a field that contains planted 
acreage will be considered to be acreage of the same practice that is 
planted in the field, prevented planting acreage will be considered as 
organic practice acreage if it is identified as certified organic, 
transitional, or buffer zone acreage in the organic plan.

[56 FR 1351, Jan. 14, 1991, as amended at 58 FR 58262, 58263, Nov. 1, 
1993; 59 FR 42751, Aug. 19, 1994; 62 FR 65154, Dec. 10, 1997; 63 FR 
40634, July 30, 1998; 63 FR 66712, Dec. 3, 1998; 64 FR 40742, July 28, 
1999; 65 FR 40485, June 30, 2000; 68 FR 37723, June 25, 2003; 68 FR 
43457, July 23, 2003; 69 FR 48738, Aug. 10, 2004; 69 FR 74405, Dec. 14, 
2004; 70 FR 71751, Nov. 30, 2005; 71 FR 36982, June 29, 2006; 73 FR 
70865, Nov. 24, 2008]

    Effective Date Note: At 73 FR 76891, Dec. 18, 2008, Sec. 457.8 was 
amended by adding paragraph (e) to the end of section 27, effective 
January 20, 2009. For the convenience of the user, the added text is set 
forth as follows:



Sec. 457.8  The application and policy.

                                * * * * *

    27. Concealment, Misrepresentation or Fraud.

                                * * * * *

    (e) If you willfully and intentionally provide false or inaccurate 
information to us or

[[Page 151]]

FCIC or you fail to comply with a requirement of FCIC, in accordance 
with 7 CFR part 400, subpart R, FCIC may impose on you:
    (1) A civil fine for each violation in an amount not to exceed the 
greater of:
    (i) The amount of the pecuniary gain obtained as a result of the 
false or inaccurate information provided or the noncompliance with a 
requirement of this title; or
    (ii) $10,000; and
    (2) A disqualification for a period of up to 5 years from receiving 
any monetary or non-monetary benefit provided under each of the 
following:
    (i) Any crop insurance policy offered under the Act;
    (ii) The Farm Security and Rural Investment Act of 2002 (7 U.S.C. 
7333 et seq.);
    (iii) The Agricultural Act of 1949 (7 U.S.C. 1421 et seq.);
    (iv) The Commodity Credit Corporation Charter Act (15 U.S.C. 714 et 
seq.);
    (v) The Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.);
    (vi) Title XII of the Food Security Act of 1985 (16 U.S.C. 3801 et 
seq.);
    (vii) The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 
et seq.); and
    (viii) Any federal law that provides assistance to a producer of an 
agricultural commodity affected by a crop loss or a decline in the 
prices of agricultural commodities.

                                * * * * *



Sec. 457.9  Appropriation contingency.

    Notwithstanding the cancellation date stated in the policy, if there 
are insufficient funds appropriated by the Congress to deliver the crop 
insurance program, the policy will automatically terminate without 
liability.

[59 FR 45972, Sept. 6, 1994]



Sec. 457.10-457.100  [Reserved]



Sec. 457.101  Small grains crop insurance.

    The small grains crop insurance provisions for the 2004 and 
succeeding crop years are as follows:

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                      Small Grains Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Adequate stand--A population of live plants per unit of acreage 
which will produce at least the yield used to establish your production 
guarantee.
    Harvest--Combining or threshing the insured crop for grain or 
cutting for hay or silage on any acreage. A crop which is swathed prior 
to combining is not considered harvested.
    Initially planted--The first occurrence of planting the insured crop 
on insurable acreage for the crop year.
    Khorasan. The common name for a variety of wheat (Triticum 
turanicum) that is marketed under trademarks such as Kamut. Khorasan is 
considered to be spring wheat for the purposes of this policy.
    Latest final planting date--
    (1) The final planting date for spring-planted acreage in all 
counties for which the Special Provisions designate a final planting 
date for spring-planted acreage only;
    (2) The final planting date for fall-planted acreage in all counties 
for which the Special Provisions designate a final planting date for 
fall-planted acreage only; or
    (3) The final planting date for spring-planted acreage in all 
counties for which the Special Provisions designate final planting dates 
for both spring-planted and fall-planted acreage.
    Local market price. The cash grain price per bushel for the 
applicable quality level indicated below and offered by buyers in the 
area in which you normally market the insured crop. The local market 
price will reflect the maximum limits of quality deficiencies allowable 
for the applicable quality level indicated below. Factors not associated 
with the specified quality levels, including but not limited to protein, 
oil or moisture content, or milling quality will not be considered.
    (1) U.S. No. 2 for Wheat (subclass hard amber durum for durum wheat 
and subclass northern spring for hard red spring wheat), except 
Khorasan; barley (including hull-less barley); oats (including hull-less 
oats); rye; and flax.
    (2) The quality factor levels required for durum wheat to grade U.S. 
No. 2 for Khorasan.
    (3) No. 2 grade buckwheat determined in accordance with the 
applicable state grading standards.
    Nurse crop (companion crop)--A crop planted into the same acreage as 
another crop, that is intended to be harvested separately, and which is 
planted to improve growing conditions for the crop with which it is 
grown.
    Planted acreage--In addition to the definition contained in the 
Basic Provisions, except for flax, land on which seed is initially 
spread onto the soil surface by any method

[[Page 152]]

and subsequently is mechanically incorporated into the soil in a timely 
manner and at the proper depth will be considered planted. Flax seed 
must initially be planted in rows to be considered planted, unless 
otherwise provided by the Special Provisions, actuarial documents, or by 
written agreement.
    Prevented planting. In lieu of the definition contained in the Basic 
Provisions, failure to plant the insured crop with proper equipment by 
the latest final planting date designated in the Special Provisions for 
the insured crop in the county. You may also be eligible for a prevented 
planting payment if you failed to plant the insured crop with the proper 
equipment within the applicable late planting period following the 
latest final planting date. You must have been prevented from planting 
the insured crop due to an insured cause of loss that is general in the 
surrounding area and that prevents other producers from planting acreage 
with similar characteristics.
    Sales closing date--In lieu of the definition contained in the Basic 
Provisions, a date contained in the Special Provisions by which an 
application must be filed and by which you may change your crop 
insurance coverage for a crop year. If the Special Provisions provide a 
sales closing date for both winter and spring types of the insured crop 
and you plant any insurable acreage of the winter type, you may not 
change your crop insurance coverage after the sales closing date for the 
winter type.
    Small grains. Wheat, including only common wheat (Triticum 
aestivum), club wheat (T. compactum), durum wheat (T. durum) and 
Khorasan (T. turanicum); barley (Hordeum vulgare), including hull-less 
barley and excluding black barley; oats (Avena sativa, and A. 
byzantina), and hull-less oats (A. Nuda); rye (Secale cereale); flax 
(Linum usitatissimum); and buckwheat (Fagopyrum esculentum).
    Swathed-- Severance of the stem and grain head from the ground 
without removal of the seed from the head and placing into a windrow.

                            2. Unit Division

    In addition to the requirements of section 34(b) of the Basic 
Provisions, for wheat only, in addition to, or instead of, establishing 
optional units by section, section equivalent or FSA farm serial number 
and by irrigated and non-irrigated practices, optional units may be 
established if each optional unit contains only initially planted winter 
wheat, only initially planted spring wheat, only initially planted club 
wheat or only initially planted durum wheat. Separate optional units for 
initially planted winter wheat and initially planted spring wheat may be 
established only in counties having both winter and spring type final 
planting dates as designated in the Special Provisions. A separate 
optional unit for club wheat may be established only in counties for 
which the Special Provisions designate club wheat as a wheat type 
(separate optional units may be established for initially planted winter 
club and initially planted spring club wheat if the Special Provisions 
specify both as wheat types). A separate optional unit for durum wheat 
may be established only in counties for which the Special Provisions 
designate durum wheat as a separate wheat type (separate optional units 
may be established for initially planted winter durum wheat and 
initially planted spring durum wheat if the Special Provisions specify 
both as wheat types).

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

    (a) In addition to the requirements of section 3 of the Basic 
Provisions, you may select only one price election for each crop in the 
county insured under this policy unless the Special Provisions provide 
different price elections by type, in which case each type must be 
insured using the price election for the respective type. The price 
elections you choose for each type must have the same percentage 
relationship to the maximum price offered by us for each type. For 
example, if you choose 100 percent of the maximum price election for one 
type, you must also choose 100 percent of the maximum price election for 
all other types.
    (b) In addition to the requirements of section 3 of the Basic 
Provisions, in counties with both fall and spring sales closing dates 
for the insured crop, you may only change your coverage level or price 
election until the spring sales closing date if you do not have any 
insured fall planted acreage of the insured crop. If you have any 
insured fall planted acreage of the insured crop, you may not change 
your coverage level or price election after the fall sales closing date.

                           4. Contract Changes

    In accordance with section 4 of the Basic Provisions, the contract 
change date is November 30 preceding the cancellation date for counties 
with a March 15 cancellation date and June 30 preceding the cancellation 
date for all other counties.

                  5. Cancellation and Termination Dates

    The cancellation and termination dates are:

[[Page 153]]



----------------------------------------------------------------------------------------------------------------
         Crop, state and county                     Cancellation date                   Termination date
----------------------------------------------------------------------------------------------------------------
Wheat:
    All Colorado counties except          September 30........................  September 30.
     Alamosa, Archuleta, Conejos,
     Costilla, Custer, Delta, Dolores,
     Eagle, Garfield, Grand, La Plata,
     Mesa, Moffat, Montezuma, Montrose,
     Ouray, Pitkin, Rio Blanco, Rio
     Grande, Routt, Saguache, and San
     Miguel; all Iowa counties except
     Plymouth, Cherokee, Buena Vista,
     Pocahontas, Humbolt, Wright,
     Franklin, Butler, Black Hawk,
     Buchanan, Delaware, Dubuque and all
     Iowa counties north thereof; all
     Wisconsin counties except Buffalo,
     Trempealeau, Jackson, Wood,
     Portage, Waupaca, Outagamie, Brown,
     Kewaunee and all Wisconsin counties
     north thereof; all other states
     except Alaska, Arizona, California,
     Connecticut, Idaho, Maine,
     Massachusetts, Minnesota, Montana,
     Nevada, New Hampshire, New York,
     North Dakota, Oregon, Rhode Island,
     South Dakota, Utah, Vermont,
     Washington, and Wyoming.
    Del Norte, Humboldt, Lassen, Modoc,   September 30........................  November 30.
     Plumas, Shasta, Siskiyou and
     Trinity Counties, California;
     Archuleta, Custer, Delta, Dolores,
     Eagle, Garfield, Grand, La Plata,
     Mesa, Moffat, Montezuma, Montrose,
     Ouray, Pitkin, Rio Blanco, Routt
     and San Miguel Counties, Colorado;
     Connecticut; Idaho; Plymouth,
     Cherokee, Buena Vista, Pocahontas,
     Humbolt, Wright, Franklin, Butler,
     Black Hawk, Buchanan, Delaware and
     Dubuque Counties, Iowa, and all
     Iowa counties north thereof;
     Massachusetts; all Montana counties
     except Daniels and Sheridan; New
     York; Oregon; Rhode Island; all
     South Dakota counties except
     Corson, Walworth, Edmunds, Faulk,
     Spink, Beadle, Kingsbury, Miner,
     McCook, Turner, Yankton and all
     South Dakota counties north and
     east thereof; Washington; Buffalo,
     Trempealeau, Jackson, Wood,
     Portage, Waupaca, Outagamie, Brown
     and Kewaunee Counties, Wisconsin,
     and all Wisconsin counties north
     thereof; all Wyoming counties
     except Big Horn, Fremont, Hot
     Springs, Park, and Washakie.
    Arizona; all California counties      October 31..........................  November 30.
     except Del Norte, Humboldt, Lassen,
     Modoc, Plumas, Shasta, Siskiyou and
     Trinity; Nevada; and Utah.
    Alaska; Alamosa, Conejos, Costilla,   March 15............................  March 15.
     Rio Grande and Saguache Counties,
     Colorado; Maine; Minnesota; Daniels
     and Sheridan Counties, Montana; New
     Hampshire; North Dakota; Corson,
     Walworth, Edmunds, Faulk, Spink,
     Beadle, Kingsbury, Miner, McCook,
     Turner, and Yankton Counties, South
     Dakota, and all South Dakota
     counties north and east thereof;
     Vermont; and Big Horn, Fremont, Hot
     Springs, Park, and Washakie
     Counties, Wyoming.
Barley:
    All New Mexico counties except Taos;  September 30........................  September 30.
     Texas, Oklahoma, Missouri,
     Illinois, Indiana, Ohio,
     Pennsylvania, New Jersey and all
     states south and east thereof.
    Kit Carson, Lincoln, Elbert, El       September 30........................  November 30.
     Paso, Pueblo and Las Animas
     Counties, Colorado, and all
     Colorado counties south and east
     thereof; Connecticut; Kansas;
     Massachusetts; New York; and Rhode
     Island.
    Arizona; all California counties      October 31..........................  November 30.
     except Del Norte, Humboldt, Lassen,
     Modoc, Plumas, Shasta, Siskiyou and
     Trinity; Clark, Humboldt, Nye and
     Pershing Counties, Nevada; and Box
     Elder, Millard and Utah Counties,
     Utah.
    Del Norte, Humboldt, Lassen, Modoc,   March 15............................  March 15.
     Plumas, Shasta, Siskiyou and
     Trinity Counties, California; All
     Colorado counties except Kit
     Carson, Lincoln, Elbert, El Paso,
     Pueblo and Las Animas, and all
     Colorado counties south and east
     thereof; all Nevada counties except
     Clark, Humboldt, Nye and Pershing;
     Taos County, New Mexico; all Utah
     counties except Box Elder, Millard
     and Utah; and all other states
     except Arizona, and (except) Texas,
     Oklahoma, Missouri, Illinois,
     Indiana, Ohio, Pennsylvania, New
     Jersey and all states south and
     east thereof.
Oats:
    Alabama; Arkansas; Florida; Georgia;  September 30........................  September 30.
     Louisiana; Mississippi; All New
     Mexico counties except Taos County;
     North Carolina; Oklahoma; South
     Carolina; Tennessee; Texas; and
     Patrick, Franklin, Pittsylvania,
     Campbell, Appomattox, Fluvanna,
     Buckingham, Louisa, Spotsylvania,
     Caroline, Essex, and Westmoreland
     Counties, Virginia, and all
     Virginia counties east thereof.
    Arizona; All California counties      October 31..........................  October 31.
     except Del Norte, Humboldt, Lassen,
     Modoc, Plumas, Shasta, Siskiyou and
     Trinity.

[[Page 154]]

 
    Del Norte, Humbolt, Lassen, Modoc,    March 15............................  March 15.
     Plumas, Shasta, Siskiyou, and
     Trinity Counties, California; Taos
     County, New Mexico; all Virginia
     counties except Patrick, Franklin,
     Pittsylvania, Campbell, Attomattox,
     Fluvanna, Buckingham, Louisa,
     Spotsylvania, Caroline, Essex, and
     Westmoreland, and all Virginia
     counties east thereof; and all
     other states except Alabama,
     Arizona, Arkansas, Florida,
     Georgia, Louisiana, Mississippi,
     North Carolina, Oklahoma, South
     Carolina, Tennessee, and Texas.
Rye:
    All states..........................  September 30........................  September 30.
Flax:
    All states..........................  March 15............................  March 15.
Buckwheat:
    All states..........................  March 15............................  March 15.
----------------------------------------------------------------------------------------------------------------

                             6. Insured Crop

    (a) The crop insured will be each small grain you elect to insure, 
that is grown in the county on insurable acreage, and for which premium 
rates are provided by the actuarial documents:
    (1) In which you have a share;
    (2) That is planted for harvest as grain (a grain mixture in which 
barley or oats is the predominate grain may also be insured if allowed 
by the Barley or Oat Special Provisions, or if we agree in writing to 
insure such mixture. The crop insured will be the grain which is 
predominate in the mixture. The production from such mixture will be 
considered as the predominate grain on a weight basis);
    (3) That is not:
    (i) Interplanted with another crop except as allowed in paragraph 
6.(a)(2);
    (ii) Planted into an established grass or legume; or
    (iii) Planted as a nurse crop, unless planted as a nurse crop for 
new forage seeding, but only if seeded at a normal rate and intended for 
harvest as grain.
    (4) We may agree, in writing, to insure a crop prohibited under 
paragraph 6.(a)(3) if you so request. Your request to insure such crop 
must be in writing, and submitted to your agent not later than 15 days 
after the acreage reporting date.
    (b) If you anticipate destroying any acreage prior to harvest you:
    (1) May report all planted acreage when you report your acreage for 
the crop year and specify any acreage to be destroyed as uninsurable 
acreage (By doing so, no coverage will be considered to have attached on 
the specified acreage and no premium will be due for such acreage. If 
you do not destroy such acreage, you will be subject to the under-
reporting provisions contained in section 6 of the Basic Provisions); or
    (2) May report all planted acreage as insurable when you report your 
acreage for the crop year. Premium will be due on all the acreage except 
as set forth herein. If the Special Provisions allow a reduced premium 
amount for acreage intentionally destroyed prior to harvest, you may 
qualify for such reduction only if you notify us in writing on or before 
the date designated in the Special Provisions of the intended 
destruction, and do not claim an indemnity on the acreage. No premium 
reduction will be allowed if the required notice is not given or if you 
claim an indemnity for the acreage. Upon receiving timely notice, 
insurance coverage on the acreage you do not intend to harvest will 
cease and we will revise your acreage report to indicate the applicable 
reduction in premium. If you do not destroy the crop as intended, you 
will be subject to the under-reporting provisions contained in section 6 
of the Basic Provisions.
    (c) In counties for which the actuarial table provides premium rates 
for the Wheat or Barley Winter Coverage Endorsement (7 CFR 457.102), 
additional coverage is available for wheat or barley damaged between the 
time coverage begins and the spring final planting date. Coverage under 
the endorsement is effective only if you qualify under the terms of the 
endorsement and you execute the endorsement by the sales closing date.
    (d) In counties for which the actuarial table provides premium rates 
for malting barley coverage, an endorsement is available (7 CFR 457.118) 
that provides additional insurance protection for malting barley. This 
endorsement provides coverage for producers who grow malting barley 
under contract and for those who do not have a contract. Coverage under 
the endorsement is effective only if you qualify under the terms of the 
endorsement and you execute the endorsement by the sales closing date.

                           7. Insurance Period

    In lieu of the requirements under section 11 (Insurance Period) of 
the Basic Provisions (Sec. 457.8), and subject to any provisions 
provided by the Wheat or Barley Winter Coverage Endorsement (Sec. 
457.102) if you have elected such endorsement, the insurance period is 
as follows:

[[Page 155]]

    (a) Insurance attaches on each unit or part thereof on the later of 
the date we accept your application or the date the insured crop is 
planted.
    (1) For oats, rye, flax and buckwheat, the following limitations 
apply:
    (i) The acreage must be planted on or before the final planting date 
designated in the Special Provisions for the insured crop except as 
allowed in section 12 of these Crop Provisions and section 16 of the 
Basic Provisions.
    (ii) Any acreage of the insured crop damaged before the final 
planting date, to the extent that producers in the surrounding area 
would not normally further care for the crop, must be replanted unless 
we agree that it is not practical to replant.
    (2) For barley and wheat, the following limitations apply:
    (i) The acreage must be planted on or before the final planting date 
designated in the Special Provisions for the type (winter or spring) 
except as allowed in section 12 of these Crop Provisions and section 16 
of the Basic Provisions.
    (ii) Whenever the Special Provisions designate only a fall final 
planting date, any acreage of winter barley or wheat damaged before such 
final planting date, to the extent that growers in the area would 
normally not further care for the crop, must be replanted to a winter 
type of the insured crop unless we agree that replanting is not 
practical.
    (iii) Whenever the Special Provisions designate both fall and spring 
final planting dates, any winter barley or winter wheat that is damaged 
before the spring final planting date, to the extent that growers in the 
area would normally not further care for the crop, must be replanted to 
a winter type of the insured crop to maintain insurance based on the 
winter type unless we agree that replanting is not practical. If it is 
not practical to replant to the winter type of wheat or barley but is 
practical to replant to a spring type, you must replant to a spring type 
to keep your insurance based on the winter type in force. Any winter 
barley or winter wheat acreage that is replanted to a spring type of the 
same crop when it was practical to replant the winter type will be 
insured as the spring type and the production guarantee, premium and 
price election applicable to the spring type will be used. In this case, 
the acreage will be considered to be initially planted to the spring 
type. If you have elected coverage under a barley or wheat winter 
coverage endorsement (if available in the county), insurance will be in 
accordance with the option.
    (iv) Whenever the Special Provisions designate a spring final 
planting date, any acreage of spring barley or wheat damaged before such 
final planting date, to the extent that growers in the area would 
normally not further care for the crop, must be replanted to a spring 
type of the insured crop unless we agree that replanting is not 
practical.
    (v) Whenever the Special Provisions designate only a spring final 
planting date, any acreage of fall planted barley or fall planted wheat 
is not insured unless you request such coverage on or before the spring 
sales closing date, and we agree in writing that the acreage has an 
adequate stand in the spring to produce the yield used to determine your 
production guarantee. The fall planted barley or fall planted wheat will 
be insured as a spring type for the purpose of the production guarantee, 
premium and price election. Insurance will attach to such acreage on the 
date we determine an adequate stand exists or on the spring final 
planting date if we do not determine adequacy of the stand by the spring 
final planting date. Any acreage of such fall planted barley or fall 
planted wheat that is damaged after it is accepted for insurance but 
before the spring final planting date, to the extent that growers in the 
area would normally not further care for the crop, must be replanted to 
a spring type of the insured crop unless we agree it is not practical to 
replant. If fall planted acreage is not to be insured it must be 
recorded on the acreage report as uninsured fall planted acreage.
    (b) Insurance ends on each unit at the earliest of:
    (1) Total destruction of the insured crop on the unit;
    (2) Harvest of the unit;
    (3) Final adjustment of a loss on the unit;
    (4) The following applicable date of the calendar year in which the 
crop is normally harvested:
    (i) September 25 following planting in Alaska;
    (ii) July 31 in Alabama, Arizona, Arkansas, Connecticut, Delaware, 
Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New 
Jersey, North Carolina, South Carolina and Tennessee; or
    (iii) October 31 in all other states; or
    (5) Abandonment of the crop on the unit.

                            8. Causes of Loss

    In addition to the provisions under section 12 (Causes of Loss) of 
the Basic Provisions, any loss covered by this policy must occur within 
the insurance period.
    The specific causes of loss for small grains are:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage allowed because of insufficient or 
improper application of pest control measures;
    (d) Plant disease, but not damage allowed because of insufficient or 
improper application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply.

[[Page 156]]

                         9. Replanting Payments

    (a) A replanting payment is allowed as follows:
    (1) In lieu of provisions in section 13 of the Basic Provisions that 
limit the amount of a replant payment to the actual cost of replanting, 
the amount of any replanting payment will be determined in accordance 
with these crop provisions;
    (2) You must comply with all requirements regarding replanting 
payments contained in section 13 of the Basic Provisions (except as 
allowed in section 9(a)(1)) and in any winter coverage endorsement for 
which you are eligible and which you have elected;
    (3) The insured crop must be damaged by an insurable cause of loss 
to the extent that the remaining stand will not produce at least 90 
percent of the production guarantee for the acreage;
    (4) The acreage must have been initially planted to a spring type of 
the insured crop in those counties with only a spring final planting 
date;
    (5) Damage must occur after the fall final planting date in those 
counties where both a fall and spring final planting date are designated 
(If the Special Provisions provide more than one fall final planting 
date, the fall final planting date applicable to policies with the Wheat 
or Barley Winter Coverage Endorsement will be used for this purpose, 
regardless of whether or not the endorsement is actually in effect.); 
and
    (6) The replanted crop must be seeded at a rate sufficient to 
achieve a total (undamaged and new seeding) plant population that will 
produce at least the yield used to determine your production guarantee.
    (b) No replanting payment will be made for acreage initially planted 
to a winter type of the insured crop (including rye) in any county for 
which the Special Provisions contain only a fall final planting date 
(including final planting dates in December, January and February).
    (c) The maximum amount of the replanting payment per acre will be 
the lesser of 20.0 percent of the production guarantee or the number of 
bushels for the applicable crop specified below, multiplied by your 
price election and your share:
    (1) 2 bushels for flax or buckwheat;
    (2) 4 bushels for wheat; or
    (3) 5 bushels for barley or oats.
    (d) When the crop is replanted using a practice that is uninsurable 
for an original planting, the liability on the unit will be reduced by 
the amount of the replanting payment. The premium amount will not be 
reduced.
    (e) Replanting payments will be calculated using the price election 
and production guarantee for the crop type that is replanted and 
insured. For example, if damaged spring wheat is replanted to durum 
wheat, the price election applicable to durum wheat will be used to 
calculate any replanting payment that may be due. A revised acreage 
report will be required to reflect the replanted type. Notwithstanding 
the previous two sentences, the following will have a replanting payment 
based on the guarantee and price election for the crop type initially 
planted:
    (1) Any damaged winter crop type that is replanted to a spring crop 
type, but that retains insurance based on the winter crop type guarantee 
and price election; and
    (2) Any acreage replanted at a reduced seeding rate into a partially 
damaged stand of the insured crop.

                10. Duties in the Event of Damage or Loss

    In addition to your duties under section 14 of the Basic Provisions 
(Sec. 457.8), if you initially discover damage to any insured crop 
within 15 days of, or during harvest, you must leave representative 
samples of the unharvested crop for our inspection. The samples must be 
at least 10 feet wide and the entire length of each field in the unit, 
and must not be harvested or destroyed until the earlier of our 
inspection or 15 days after harvest of the balance of the unit is 
completed.

                         11. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide records of production that are acceptable to us 
for any:
    (1) Optional unit, we will combine all optional units for which 
acceptable records of production were not provided; or for any
    (2) Basic unit, we will allocate any commingled production to such 
units in proportion to our liability on the harvested acreage for each 
unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the insured acreage by its respective production 
guarantee;
    (2) Multiplying each result in section 11(b)(1) by the respective 
price election;
    (3) Totaling the results of section 11(b)(2);
    (4) Multiplying the total production to be counted of each type, if 
applicable (see sections 11(c), (d), and (e)), by the respective price 
election;
    (5) Totaling the results of section 11(b)(4);
    (6) Subtracting the result of section 11(b)(5) from the result in 
section 11(b)(3); and
    (7) Multiplying the result of section 11(b)(6) by your share.
    (c) The total production (bushels) to count from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) Which is abandoned;
    (B) Put to another use without our consent;

[[Page 157]]

    (C) Damaged solely by uninsured causes; or
    (D) For which you fail to provide records of production that are 
acceptable to us;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production may be 
adjusted for quality deficiencies and excess moisture in accordance with 
subsection 11.(d));
    (iv) Potential production on insured acreage that you intend to put 
to another use or abandon, if you and we agree on the appraised amount 
of production. Upon such agreement, the insurance period for that 
acreage will end when you put the acreage to another use or abandon the 
crop. If agreement on the appraised amount of production is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to leave 
intact, and provide sufficient care for, representative samples of the 
crop in locations acceptable to us (The amount of production to count 
for such acreage will be based on the harvested production or appraisals 
from the samples at the time harvest should have occurred. If you do not 
leave the required samples intact, or you fail to provide sufficient 
care for the samples, our appraisal made prior to giving you consent to 
put the acreage to another use will be used to determine the amount of 
production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested production, or 
our reappraisal if additional damage occurs and the crop is not 
harvested; and
    (d) Mature wheat, barley, oat, rye, and buckwheat production may be 
adjusted for excess moisture and quality deficiencies. Flax production 
may be adjusted for quality deficiencies only. If a moisture adjustment 
is applicable, it will be made prior to any adjustment for quality.
    (1) Production will be reduced by .12 percent for each .1 percentage 
point of moisture in excess of:
    (i) 13.5 percent for wheat;
    (ii) 14.5 percent for barley;
    (iii) 14.0 percent for oats; and
    (iv) 16.0 percent for rye and buckwheat.
    We may obtain samples of the production to determine the moisture 
content.
    (2) Production will be eligible for quality adjustment if:
    (i) Deficiencies in quality, in accordance with the Official United 
States Standards for Grain including the definition of terms used in 
section 11(d), result in:
    (A) Wheat, except Khorasan, not meeting the grade requirements for 
U.S. No. 4 (grades U.S. No. 5 or worse) because of test weight; total 
damaged kernels (heat-damaged kernels will not be considered to be 
damaged); shrunken or broken kernels; defects (foreign material and heat 
damage will not be considered to be defects); a musty, sour, or 
commercially objectionable foreign odor (except smut odor); or grading 
garlicky, light smutty, smutty or ergoty;
    (B) Barley, except hull-less barley, not meeting the grade 
requirements for U.S. No. 4 (grades U.S. No. 5 or worse) because of test 
weight; percentage of sound barley (heat-damaged kernels will be 
considered to be sound barley); damaged kernels (heat-damaged kernels 
will not be considered to be damaged); thin barley; black barley; a 
musty, sour, or commercially objectionable foreign odor (except smut or 
garlic odor); or grading blighted, smutty, garlicky or ergoty;
    (C) Oats, except hull-less oats, not meeting the grade requirements 
for U.S. No. 4 (grade U.S. sample grade) because of test weight; 
percentage of sound oats (heat-damaged kernels will be considered to be 
sound oats); a musty, sour, or commercially objectionable foreign odor 
(except smut or garlic odor); or grading smutty, thin, garlicky or 
ergoty;
    (D) Rye not meeting the grade requirements for U.S. No. 3 (grades 
U.S. No. 4 or worse) because of test weight; percent damaged kernels 
(heat-damaged kernels will not be considered to be damaged); thin rye; a 
musty, sour, or commercially objectionable foreign odor (except smut or 
garlic odor); or grading light smutty, smutty, light garlicky, garlicky, 
or ergoty;
    (E) Flaxseed not meeting the grade requirements for U.S. No. 2 
(grades U.S. sample grade) due to test weight; damaged kernels (heat-
damaged kernels will not be considered to be damaged); or a musty, sour, 
or commercially objectionable foreign odor (except smut or garlic odor);
    (ii) Deficiencies in the quality of buckwheat, determined in 
accordance with applicable state grading standards, result in it not 
meeting No. 3 grade requirements due to test weight; a musty, sour or 
commercially objectionable foreign odor (except smut or garlic odor); or 
grading garlicky, smutty or ergoty if such grades are provided for by 
the applicable state grading standards;
    (iii) Quality factors for Khorasan fall below the levels contained 
in the Official United States Standards for Grain that cause durum wheat 
to grade less than U.S. No. 4. For example, if durum wheat grades less 
than U.S. No. 4 when its test weight falls below 54.0 pounds per bushel, 
Khorasan would be eligible for quality adjustment if its test weight 
falls below 54.0 pounds per bushel. The same quality factors considered 
for quality adjustment of durum wheat will be applicable and 
determination of deficiencies will be made in accordance with the 
Federal Grain Inspection Service directive that establishes procedures 
for quality factor analysis of Khorasan seed. Quality adjustment 
discount factors for U.S. grades specified in the Special Provisions 
will also apply

[[Page 158]]

to Khorasan at the same levels applicable to durum wheat;
    (iv) Quality factors for hull-less barley fall below the levels 
contained in the Official United States Standards for Grain that cause 
barley to grade less than U.S. No. 4. For example, if barley grades less 
than U.S. No. 4 when its test weight falls below 40.0 pounds per bushel, 
hull-less barley would be eligible for quality adjustment if its test 
weight falls below 40.0 pounds per bushel. The same quality factors 
considered for quality adjustment of barley will be applicable and 
determination of deficiencies will be made in accordance with the 
Federal Grain Inspection Service directive that establishes procedures 
for quality factor analysis of hull-less barley. Quality adjustment 
discount factors for U.S. grades specified in the Special Provisions 
will also apply to hull-less barley at the same levels applicable to 
barley;
    (v) Quality factors for hull-less oats fall below the levels 
contained in the Official United States Standards for Grain that cause 
oats to grade less than U.S. No. 4. For example, if oats grade less than 
U.S. No. 4 when its test weight falls below 27.0 pounds per bushel, 
hull-less oats would be eligible for quality adjustment if the test 
weight falls below 27.0 pounds per bushel. The same quality factors 
considered for quality adjustment of oats will be applicable and 
determination of deficiencies will be made in accordance with the 
Federal Grain Inspection Service directive that establishes procedures 
for quality factor analysis of hull-less oats. Quality adjustment 
discount factors for U.S. grades specified in the Special Provisions 
will also apply to hull-less oats at the same levels applicable to oats; 
or
    (vi) Substances or conditions are present, including mycotoxins, 
that are identified by the Food and Drug Administration or other public 
health organizations of the United States as being injurious to human or 
animal health.
    (3) Quality will be a factor in determining your loss only if:
    (i) The deficiencies, substances, or conditions resulted from a 
cause of loss against which insurance is provided under these crop 
provisions;
    (ii) All determinations of these deficiencies, substances, or 
conditions are made using samples of the production obtained by us or by 
a disinterested third party approved by us;
    (iii) With regard to deficiencies in quality (except test weight, 
which may be determined by our loss adjustor), the samples are analyzed 
by:
    (A) A grain grader licensed under the United States Grain Standards 
Act or the United States Warehouse Act;
    (B) A grain grader licensed under State law and employed by a 
warehouse operator who has a commodity storage agreement with the 
Commodity Credit Corporation; or
    (C) A grain grader not licensed under State law, but who is employed 
by a warehouse operator who has a commodity storage agreement with the 
Commodity Credit Corporation and is in compliance with State law 
regarding warehouses; and
    (iv) With regard to substances or conditions injurious to human or 
animal health, the samples are analyzed by a laboratory approved by us.
    (4) Small grain production that is eligible for quality adjustment, 
as specified in sections 11(d)(2) and (3), will be reduced by the 
quality adjustment factor contained in the Special Provisions.
    (e) Any production harvested from plants growing in the insured crop 
may be counted as production of the insured crop on a weight basis.

                            12. Late Planting

    A late planting period is applicable to small grains, except to any 
barley or wheat acreage covered under the terms of the Wheat or Barley 
Winter Coverage Endorsement. Barley or wheat covered under the terms of 
the Winter Coverage Endorsement must be planted on or prior to the 
applicable final planting date specified in the Special Provisions. In 
counties having one fall final planting date for acreage covered under 
the Wheat or Barley Winter Coverage Endorsement and another fall final 
planting date for acreage not covered under the endorsement, the fall 
late planting period will begin after the final planting date for 
acreage not covered under the endorsement.

                         13. Prevented Planting

    (a) In addition to the provisions contained in section 17 of the 
Basic Provisions, in counties for which the Special Provisions designate 
a spring final planting date, your prevented planting production 
guarantee will be based on your approved yield for spring-planted 
acreage of the insured crop.
    (b) Your prevented planting coverage will be 60 percent of your 
production guarantee for timely planted acreage. If you have limited or 
additional levels of coverage, as specified in 7 CFR part 400, subpart 
T, and pay an additional premium, you may increase your prevented 
planting coverage to a level specified in the actuarial documents.

[59 FR 9391, Feb. 28, 1994, as amended at 60 FR 62723, Dec. 7, 1995; 62 
FR 65164, Dec. 10, 1997; 67 FR 43526, June 28, 2002; 68 FR 34268, June 
9, 2003]

[[Page 159]]



Sec. 457.102  Wheat or barley winter coverage endorsement.

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

               Wheat or Barley Winter Coverage Endorsement

(This is a continuous endorsement)

    1. In return for payment of the additional premium designated in the 
actuarial documents, this endorsement is attached to and made part of 
the Small Grains Crop Provisions subject to the terms and conditions 
described herein.
    2. This endorsement is available only in counties for which the 
Special Provisions for the insured crop designate both a fall final 
planting date and a spring final planting date, and for which the 
actuarial documents provide a premium rate for this coverage.
    3. You must have a Small Grains Crop Insurance Policy in force and 
elect to insure barley or wheat under that policy.
    4. You must select this coverage, by crop, on your application for 
insurance. Failure to do so means you have rejected this coverage for 
both wheat and barley and this endorsement is void.
    5. In addition to the requirements of section 34(b) of the Basic 
Provisions and section 2 of the Small Grains Crop Provisions, optional 
units may be established for barley if each optional unit contains only 
initially planted winter barley or only initially planted spring barley.
    6. If you elect this endorsement for winter barley, the contract 
change, cancellation, and termination dates applicable to wheat in the 
county will be applicable to all your spring and winter barley.
    7. Coverage under this endorsement begins on the later of the date 
we accept your application for coverage or on the fall final planting 
date designated in the Special Provisions. Coverage ends on the spring 
final planting date designated in the Special Provisions.
    8. The provisions of section 14 of the Basic Provisions are amended 
to require that all notices of damage be provided to us by the spring 
final planting date designated in the Special Provisions.
    9. All eligible acreage of each crop covered under this endorsement 
must be insured.
    10. The amount of any indemnity paid under the terms of this 
endorsement will be subject to any reduction specified in the Basic 
Provisions for multiple crop benefits in the same crop year.
    11. Whenever any winter wheat or barley is damaged during the 
insurance period and at least 20 acres or 20 percent of the insured 
planted acreage in the unit, whichever is less, does not have an 
adequate stand to produce at least 90 percent of the production 
guarantee for the acreage, you may, at your option, take one of the 
following actions:
    (a) Continue to care for the damaged crop. By doing so, coverage 
will continue under the terms of the Basic Provisions, the Small Grains 
Crop Insurance Provisions and this endorsement.
    (b) Replant the acreage to an appropriate variety of the insured 
crop, if it is practical, and receive a replanting payment in accordance 
with the terms of section 9 (Replanting Payments) of the Small Grains 
Crop Insurance Provisions. By doing so, coverage will continue under the 
terms of the Basic Provisions, the Small Grains Crop Insurance 
Provisions and this endorsement, and the production guarantee for winter 
wheat or barley will remain in effect.
    (c) Destroy the remaining crop on such acreage. By doing so, you 
agree to accept an appraised amount of production determined in 
accordance with section 11(c)(1) of the Small Grains Crop Insurance 
Provisions to count against the unit production guarantee. This amount 
will be considered production to count in determining any final 
indemnity on the unit and will be used to settle your claim as described 
in section 11 (Settlement of Claim) of the Small Grains Crop Insurance 
Provisions. You may use such acreage for any purpose, including planting 
and separately insuring any other crop if such insurance is available. 
If you elect to plant and elect to insure a spring type of the same crop 
(you must elect whether or not you want insurance on the spring type of 
the same crop at the time we release the winter type acreage), you must 
pay additional premium for the insurance. Such acreage will be insured 
in accordance with the policy provisions that are applicable to acreage 
that is initially planted to a spring type of the insured crop, and you 
must:
    (1) Plant the spring type in a manner which results in a clear and 
discernable break in the planting pattern at the boundary between it and 
any remaining acreage of the winter type; and
    (2) Store or market the production in a manner which permits us to 
verify the amount of spring type production separately from any winter 
type production. In the event you are unable to provide records of 
production that are acceptable to us, the spring type acreage will be 
considered to be a part of the original winter type unit.

           Option A (30 Percent Coverage and Acreage Release)

    Whenever any winter wheat is damaged during the insurance period 
(see section 3, above), and at least 20 acres or 20 percent of the 
acreage in the unit, whichever is less, does not have an adequate stand 
to produce at least 90 percent of the production guarantee for the 
acreage, you may take any one of the following actions:

[[Page 160]]

    (a) Destroy the remaining crop on such acreage. By doing so, you 
agree to accept an amount of production to count against the unit 
production guarantee equal to 70 percent of the production guarantee for 
the damaged acreage, or an appraisal determined in accordance with 
paragraph 11.(c)(1) of the Small Grains Crop Insurance Provisions (Sec. 
457.101) if such an appraisal results in a greater amount of production. 
This amount will be considered production to count in determining any 
final indemnity on the unit and will be used to settle your claim as 
described in the provisions under section 11. (Settlement of Claim) of 
the Small Grains Crop Insurance Provisions (Sec. 457.101). You may use 
such acreage for any purpose, including planting and separately insuring 
any other crop. If you elect to utilize such acreage for the production 
of spring wheat, you must:
    (1) Plant the spring wheat in a manner which results in a clear and 
discernible break in the planting pattern at the boundary between it and 
any remaining winter wheat; and
    (2) Store or market the production from such acreage in a manner 
which permits us to verify the amount of spring wheat production 
separately from any winter wheat production.
    In the event you are unable to provide records of production that 
are acceptable to us, the spring wheat acreage will be considered to be 
a part of the original winter wheat unit. If you elected to insure the 
spring wheat acreage as a separate optional unit, any premium amount for 
such acreage will be considered earned and payable to us.
    (b) Continue to care for the damaged crop. By doing so, coverage 
will continue under the terms of the Common Crop Insurance Policy (Sec. 
457.8), the Small Grains Crop Insurance Provisions (Sec. 457.101), and 
this Option.
    (c) Replant the acreage to an appropriate variety of wheat, if it is 
practical, and receive a replanting payment in accordance with the terms 
of section 9. (Replanting Payments) of the Small Grains Crop Provisions 
(Sec. 457.101). By doing so, coverage will continue under the terms of 
the Common Crop Insurance Policy (Sec. 457.8), the Small Grains Crop 
Insurance Provisions (Sec. 457.101), and this Option, and the 
production guarantee for winter wheat will remain in effect.

               Option B (With Full Winter Damage Coverage)

    Whenever any winter wheat is damaged during the insurance period and 
at least 20 acres or 20 percent of the acreage in the unit, whichever is 
less, does not have an adequate stand to produce at least 90 percent of 
the production guarantee for the acreage, you may, at your option, take 
one of the following actions:
    (a) Continue to care for the damaged crop. By doing so, coverage 
will continue under the terms of the Common Crop Insurance Policy (Sec. 
457.8), the Small Grains Crop Insurance Provisions (Sec. 457.101), and 
this Option.
    (b) Replant the acreage to an appropriate variety of wheat, if it is 
practical, and receive a replanting payment in accordance with the terms 
of section 9. (Replanting Payments) of the Small Grains Crop Provisions 
(Sec. 457.101). By doing so, coverage will continue under the terms of 
the Common Crop Insurance Policy (Sec. 457.8), the Small Grains Crop 
Insurance Provisions (Sec. 457.101), and this Option, and the 
production guarantee for winter wheat will remain in effect.
    (c) Accept our appraisal of the crop on the damaged acreage as 
production to count against the production guarantee for the damaged 
acreage, destroy the remaining crop on such acreage, and be eligible for 
any indemnity due under the terms of the Common Crop Insurance Policy 
(Sec. 457.8) and the Small Grains Crop Provisions (Sec. 457.101). The 
appraisal will be considered production to count in determining any 
final indemnity on the unit and will be used to settle your claim as 
described in the provisions of section 11. (Settlement of Claim) of the 
Small Grains Crop Insurance Provisions (Sec. 457.101). You may use such 
acreage for any purpose, including planting and separately insuring any 
other crop. If you elect to utilize such acreage for the production of 
spring wheat, you must:
    (1) Plant the spring wheat in a manner which results in a clear and 
discernable break in the planting pattern at the boundary between it and 
any remaining winter wheat; and
    (2) Store or market the production from such acreage in a manner 
which permits us to verify the amount of spring wheat production 
separately from any winter wheat production.
    In the event you are unable to provide records of production that 
are acceptable to us, the spring wheat acreage will be considered to be 
a part of the original winter wheat unit. If you elected to insure the 
spring wheat acreage as a separate optional unit, any premium amount for 
such acreage will be considered earned and payable to us.

[59 FR 9397, Feb. 28, 1994, as amended at 68 FR 34272, June 9, 2003]]



Sec. 457.103  [Reserved]



Sec. 457.104  Cotton crop insurance provisions.

    The cotton crop insurance provisions for the 1998 and succeeding 
crop years are as follows:

[[Page 161]]

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                         Cotton Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Cotton--Varieties identified as American Upland Cotton.
    Growth area--A geographic area designated by the Secretary of 
Agriculture for the purpose of reporting cotton prices.
    Harvest--The removal of the seed cotton from the open cotton boll, 
or the severance of the open cotton boll from the stalk by either manual 
or mechanical means.
    Mature cotton--Cotton that can be harvested either manually or 
mechanically.
    Planted acreage--In addition to the definition contained in the 
Basic Provisions, cotton must be planted in rows, unless otherwise 
provided by the Special Provisions, actuarial documents, or by written 
agreement. The yield conversion factor normally applied to non-irrigated 
skip-row cotton acreage will not be used if the land between the rows of 
cotton is planted to any other spring planted crop.
    Production guarantee--The number of pounds determined by multiplying 
the approved yield per acre by any applicable yield conversion factor 
for non-irrigated skip-row planting patterns, and multiplying the result 
by the coverage level percentage you elect.
    Skip-row--A planting pattern that:
    (1) Consists of alternating rows of cotton and fallow land or land 
planted to another crop the previous fall; and
    (2) Qualifies as a skip-row planting pattern as defined by the Farm 
Service Agency (FSA) or a successor agency.

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

    In addition to the requirements of section 3 (Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities) of the Basic 
Provisions (Sec. 457.8), you may select only one price election for all 
cotton in the county insured under this policy.

                           3. Contract Changes

    The contract change date is November 30 (December 17 for the 1998 
crop year only) preceding the cancellation date (see the provisions of 
section 4 (Contract Changes) of the Basic Provisions).

                  4. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation and 
termination dates are:

------------------------------------------------------------------------
                                                    Cancellation and
               State and county                     termination dates
------------------------------------------------------------------------
Val Verde, Edwards, Kerr, Kendall, Bexar,       January 15.
 Wilson, Karnes, Goliad, Victoria, and Jackson
 Counties, Texas, and all Texas counties lying
 south thereof.
Alabama; Arizona; Arkansas; California;         February 28.
 Florida; Georgia; Louisiana; Mississippi;
 Nevada; North Carolina; South Carolina; El
 Paso, Hudspeth, Culberson, Reeves, Loving,
 Winkler, Ector, Upton, Reagon, Sterling,
 Coke, Tom Green, Concho, McCulloch, San Saba,
 Mills, Hamilton, Bosque, Johnson, Tarrant,
 Wise, and Cooke Counties, Texas, and all
 Texas counties lying south and east thereof
 to and including Terrell, Crocket, Sutton,
 Kimble, Gillespie, Blanco, Comal, Guadalupe,
 Gonzales, De Witt, Lavaca, Colorado, Wharton,
 Matagorda Counties, Texas..
All other Texas counties and all other States.  March 15.
------------------------------------------------------------------------

                             5. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic Provisions 
(Sec. 457.8), the crop insured will be all the cotton lint, in the 
county for which premium rates are provided by the actuarial documents:
    (a) In which you have a share; and
    (b) That is not (unless allowed by the Special Provisions or by 
written agreement):
    (1) Colored cotton lint;
    (2) Planted into an established grass or legume;
    (3) Interplanted with another spring planted crop;
    (4) Grown on acreage from which a hay crop was harvested in the same 
calendar year unless the acreage is irrigated; or
    (5) Grown on acreage on which a small grain crop reached the heading 
stage in the same calendar year unless the acreage is irrigated or 
adequate measures are taken to terminate the small grain crop prior to 
heading and less than fifty percent (50%) of the small grain plants 
reach the heading stage.

                          6. Insurable Acreage

    In addition to the provisions of section 9 (Insurable Acreage) of 
the Basic Provisions (Sec. 457.8):

[[Page 162]]

    (a) The acreage insured will be only the land occupied by the rows 
of cotton when a skip row planting pattern is utilized; and
    (b) Any acreage of the insured crop damaged before the final 
planting date, to the extent that a majority of the producers in the 
area would not normally further care for the crop, must be replanted 
unless we agree that it is not practical to replant.

                           7. Insurance Period

    (a) In lieu of section 11(b)(2) of the Basic Provisions, insurance 
will end upon the removal of the cotton from the field.
    (b) In accordance with the provisions under section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), the calendar date for the 
end of the insurance period is the date immediately following planting 
as follows:
    (1) September 30 in Val Verde, Edwards, Kerr, Kendall, Bexar, 
Wilson, Karnes, Goliad, Victoria, and Jackson Counties, Texas, and all 
Texas counties lying south thereof;
    (2) January 31 in Arizona, California, New Mexico, Oklahoma, and all 
other Texas counties; and
    (3) December 31 in all other states.

                            8. Causes of Loss

    In accordance with the provisions of section 12 (Causes of Loss) of 
the Basic Provisions (Sec. 457.8), insurance is provided only against 
the following causes of loss which occur within the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or improper 
application of disease control meaures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if applicable, due to an 
unavoidable cause of loss occurring within the insurance period.

                9. Duties in the Event of Damage or Loss

    (a) In addition to your duties under section 14 (Duties in the Event 
of Damage or Loss) of the Basic Provisions (Sec. 457.8), in the event 
of damage or loss:
    (1) The cotton stalks must remain intact for our inspection; and
    (2) If you initially discover damage to the insured crop within 15 
days of harvest, or during harvest, you must leave representative 
samples of the unharvested crop in the field for our inspection. The 
samples must be at least 10 feet wide and extend the entire length of 
each field in the unit.
    (b) The stalks must not be destroyed, and required samples must not 
be harvested, until the earlier of our inspection or 15 days after 
harvest of the balance of the unit is completed and written notice of 
probable loss given to us.

                         10. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide records of production:
    (1) For any optional unit, we will combine all optional units for 
which acceptable records of production were not provided; or
    (2) For any basic unit, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for each unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim on any unit by:
    (1) Multiplying the insured acreage by the production guarantee;
    (2) Subtracting from this the total production to count;
    (3) Multiplying the remainder by your price election; and
    (4) Multiplying this result by your share.
    (c) The total production (pounds) to count from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage;
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) Damaged solely by uninsured causes;
    (D) For which you fail to provide records of production that are 
acceptable to us; or
    (E) On which the cotton stalks are destroyed, in violation of 
section 9;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production of white 
cotton may be adjusted for quality deficiencies in accordance with 
subsection 10(d)); and
    (iv) Potential production on insured acreage you want to put to 
another use or you wish to abandon or no longer care for, if you and we 
agree on the appraised amount of production. Upon such agreement, the 
insurance period for that acreage will end if you put the acreage to 
another use or abandon the crop. If agreement on the appraised amount of 
production is not reached:
    (A) If you do not elect to continue to care for the crop we may give 
you consent to put the acreage to another use if you agree to leave 
intact, and provide sufficient care for, representative samples of the 
crop in locations acceptable to us (The amount of production to count 
for such acreage will be based on the harvested production of appraisals 
from the samples at the time harvest should have occurred. If you do not 
leave the required samples intact, or you fail to provide sufficient 
care for the samples,

[[Page 163]]

our appraisal made prior to giving you consent to put the acreage to 
another use will be used to determine the amount of production to 
count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested production, or 
our reappraisal if additional damage occurs and the crop is not 
harvested; and
    (2) All harvested production from the insurable acreage, including 
any mature cotton retrieved from the ground.
    (d) Mature white cotton may be adjusted for quality when production 
has been damaged by insured causes. Such production to count will be 
reduced if the price quotation for cotton of like quality (price 
quotation ``A'') for the applicable growth area is less than seventy-
five percent (75%) of price quotation ``B.'' Price quotation ``B'' is 
defined as the price quotation for the applicable growth area for cotton 
of the color and leaf grade, staple length, and micronaire reading 
designated in the Special Provisions for this purpose. Price quotations 
``A'' and ``B'' will be the price quotations contained in the Daily Spot 
Cotton Quotations published by the USDA Agricultural Marketing Service 
on the date the last bale from the unit is classed. If the date the last 
bale classed is not available, the price quotations will be determined 
on the date the last bale from the unit is delivered to the warehouse, 
as shown on the producer's account summary obtained from the gin. If 
eligible for adjustment, the amount of production to be counted will be 
determined by multiplying the number of pounds of such production by the 
factor derived from dividing price quotation ``A'' by seventy-five 
percent (75%) of price quotation ``B.''
    (e) Colored cotton lint will not be eligible for quality adjustment.

                         11. Prevented Planting

    (a) In addition to the provisions contained in section 17 of the 
Basic Provisions, your prevented planting production guarantee will be 
based on your approved yield without adjustment for skip-row planting 
patterns.
    (b) Your prevented planting coverage will be 50 percent of your 
production guarantee for timely planted acreage. If you have limited or 
additional levels of coverage, as specified in 7 CFR part 400, subpart 
T, and pay an additional premium, you may increase your prevented 
planting coverage to a level specified in the actuarial documents.

[59 FR 49154, Sept. 27, 1994, as amended at 60 FR 62725, Dec. 7, 1995; 
62 FR 7134, Feb. 18, 1997; 62 FR 63633, Dec. 2, 1997; 62 FR 65164, Dec. 
10, 1997; 63 FR 55497, Oct. 16, 1998; 63 FR 66717, Dec. 3, 1998]



Sec. 457.105  Extra long staple cotton crop insurance provisions.

    The extra long staple cotton crop insurance provisions for the 1998 
and succeeding crop years are as follows:

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                       ELS Cotton Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement; (2) the Special Provisions; (3) these Crop Provisions; (4) 
the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Cotton--Varieties identified as Extra Long Staple (ELS) cotton and 
American Upland (AUP) cotton if ELS cotton is destroyed by an insured 
cause and acreage is replanted to AUP cotton.
    ELS cotton--Extra Long Staple cotton (also called Pima cotton, 
American-Egyptian cotton, and American Pima cotton).
    Harvest--The removal of the seed cotton from the open cotton boll, 
or the severance of the open cotton boll from the stalk by either manual 
or mechanical means.
    Mature ELS cotton--ELS cotton that can be harvested either manually 
or mechanically.
    Planted acreage--In addition to the definition contained in the 
Basic Provisions, cotton must be planted in rows, unless otherwise 
provided by the Special Provisions, actuarial documents, or by written 
agreement. The yield conversion factor normally applied to non-irrigated 
skip-row cotton acreage will not be used if the land between the rows of 
cotton is planted to any other spring planted crop.
    Production guarantee-- The number of pounds determined by 
multiplying the approved yield per acre by any applicable yield 
conversion factor for non-irrigated skip-row planting patterns, and 
multiplying the result by the coverage level percentage you elect.
    Replanting-- Performing the cultural practices necessary to replace 
the ELS cotton seed, and replacing the seed with either ELS or AUP 
cotton seed in the insured acreage with the expectation of growing a 
successful crop.
    Skip-row-- A planting pattern that:
    (1) Consists of alternating rows of cotton and fallow land or land 
planted to another crop the previous fall; and
    (2) Qualifies as a skip-row planting pattern as defined by the Farm 
Service Agency (FSA) or a successor agency.

[[Page 164]]

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

    In addition to the requirements of section 3 (Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities) of the Basic 
Provisions (Sec. 457.8) you may select only one price election for all 
the cotton in the county insured under this policy.

                           3. Contract Changes

    The contract change date is November 30 (December 17 for the 1998 
crop year only) preceding the cancellation date (see the provisions of 
section 4 (Contract Changes) of the Basic Provisions).

                  4. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation and 
termination dates are:

------------------------------------------------------------------------
                                            Cancellation and termination
                  States                                dates
------------------------------------------------------------------------
New Mexico................................  March 15.
All other States..........................  Feb. 28.
------------------------------------------------------------------------

                             5. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic Provisions 
(Sec. 457.8), the crop insured will be all the cotton lint in the 
county for which premium rates are provided by the actuarial documents:
    (a) In which you have a share; and
    (b) That is not (unless allowed by the Special Provisions or by a 
written agreement):
    (1) Planted into an established grass or legume;
    (2) Interplanted with another spring planted crop;
    (3) Grown on acreage from which a hay crop was harvested in the same 
calendar year unless the acreage is irrigated; or
    (4) Grown on acreage on which a small grain crop reached the heading 
stage in the same calendar year unless the acreage is irrigated or 
adequate measures are taken to terminate the small grain crop prior to 
heading and less than fifty percent (50%) of the small grain plants 
reach the heading stage.

                          6. Insurable Acreage

    In addition to the provisions of section 9 (Insurable Acreage) of 
the Basic Provisions (Sec. 457.8):
    (a) The acreage insured will be only the land occupied by the rows 
of cotton when a skip row planting pattern is utilized; and
    (b) Any acreage of the insured crop damaged before the final 
planting date, to the extent that a majority of producers in the area 
would not be replanted unless we agree that it is not practical to 
replant.

                           7. Insurance Period

    (a) In lieu of section 11(b)(b)(2) of the Basic Provisions, 
insurance will end upon the removal of the cotton from the field.
    (b) In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), the calendar date for the 
end of the insurance period is January 31 immediately following 
planting.

                            8. Causes of Loss

    In accordance with the provisions of section 12 (Causes of Loss) of 
the Basic Provisions (Sec. 457.8), insurance is provided only against 
the following causes of loss which occur within the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of irrigation water supply, if applicable, due to an 
unavoidable cause of loss occurring within the insurance period.

                9. Duties in the Event of Damage or Loss

    (a) In addition to your duties under section 14 (Duties in the Event 
of Damage or Loss) of the Basic Provisions (Sec. 457.8), in the event 
of damage or loss:
    (1) You must give us notice if you intend to replant any acreage 
originally planted to ELS cotton to AUP cotton;
    (2) The cotton stalks must remain intact for our inspection; and
    (3) If you initially discover damage to any insured crop within 15 
days of harvest, or during harvest, you must leave representative 
samples of the unharvested crop for our inspection. The samples must be 
at least 10 feet wide and extend the entire length of the field in the 
unit.
    (b) The stalks must not be destroyed, and required samples must not 
be harvested, until the earlier of our inspection or 15 days after 
harvest of the balance of the unit is completed and written notice of 
probable loss is given to us.

                         10. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide records of production:
    (1) For any optional unit, we will combine all optional units for 
which acceptable records of production were not provided; or
    (2) For any basic unit, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for each unit.

[[Page 165]]

    (b) In the event of loss or damage covered by this policy, we will 
settle your claim on any unit by:
    (1) Multiplying the insured acreage by the production guarantee;
    (2) Subtracting from this the total production to count;
    (3) Multiplying the remainder by your price election; and
    (4) Multiplying this result by your share.
    (c) The total production (pounds) to count from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) Damaged solely by uninsured causes;
    (D) For which you fail to provide records of production that are 
acceptable to us; or
    (E) On which the cotton stalks are destroyed in violation of section 
9;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production may be 
adjusted for quality deficiencies in accordance with subsection:
    (A) 10(d) and (e) if it is mature ELS cotton; or
    (B) 10(f) if it is AUP cotton insured under these crop provisions); 
and
    (iv) Potential production on insured acreage you want to put to 
another use or you wish to abandon or no longer care for, if you and we 
agree on the appraised amount of production. Upon such agreement the 
insurance period for that acreage will end if you put the acreage to 
another use or abandon the crop. If agreement on the appraised amount of 
production is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to leave 
intact, and provide sufficient care for, representative samples of the 
crop in locations acceptable to us (The amount of production to count 
for such acreage will be based on the harvested production or appraisals 
from the samples at the time harvest should have occurred. If you do not 
leave the required samples intact, or you fail to provided sufficient 
care for the samples, our appraisal made prior to giving you consent to 
put the acreage to another use will be used to determine the amount of 
production to count.); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested production, or 
our reappraisal if additional damage occurs and the crop is not 
harvested; and
    (2) All harvested production from the insurable acreage, including 
any mature cotton retrieved from the ground.
    (d) Mature ELS cotton production may be adjusted for quality when 
production has been damaged by insured causes. Such production to count 
will be reduced if the price quotation for ELS cotton of like quality 
(price quotation ``A'') for the applicable growth area is less than 75 
percent of price quotation ``B.'' Price quotation ``B'' is defined as 
the price quotation for the applicable growth area for ELS cotton of the 
grade, staple length, and micronaire reading designated in the Special 
Provisions for this purpose. Price quotations ``A'' and ``B'' will be 
the price quotations contained in the Daily Spot Cotton Quotations 
published by the USDA Agricultural Marketing Service on the date the 
last bale from the unit is classed. If the date the last bale is classed 
is not available, the price quotations will be determined when the last 
bale from the unit is delivered to the warehouse, as shown on the 
producers account summary obtained from the gin. If eligible for quality 
adjustment, the amount of production to be counted will be determined by 
multiplying the number of pounds of such production by the factor 
derived from dividing price quotation ``A'' by 75 percent of price 
quotation ``B.''
    (e) For ELS cotton to be eligible for quality adjustment as shown in 
subsection 10(d), ginning must have been completed at a gin using roller 
equipment.
    (f) Any AUP cotton harvested or appraised from the acreage 
originally planted to ELS cotton in the same growing season will be 
reduced by the factor obtained by dividing the price per pound of the 
AUP cotton by the price quotation for the ELS cotton of the grade, 
staple length, and micronaire reading designated in the Special 
Provisions for this purpose. The prices used for the AUP and ELS cotton 
will be the price quotations contained in the Daily Spot Cotton 
Quotations published by the USDA Agricultural Marketing Service on the 
date the last bale from the unit is classed. If the date the last bale 
is classed is not available, the price quotations will be determined 
when the last bale from the unit is delivered to the warehouse, as shown 
on the producer's account summary obtained from the gin. If either price 
quotation is unavailable for the dates stated above, the price 
quotations for the nearest prior date for which price quotations for 
both the AUP and ELS cotton are available will be used. If prices are 
not yet available for the insured crop year, the previous season's 
average prices will be used.

                            11. Late Planting

    A late planting period is not applicable to ELS cotton. Any ELS 
cotton that is planted after the final planting date will not be insured 
unless you were prevented from planting it by the final planting date. 
Such acreage will be insurable, and the production

[[Page 166]]

guarantee and premium for the acreage will be determined in accordance 
with section 16 of the Basic Provisions.

                         12. Prevented Planting

    (a) In addition to the provisions contained in section 17 of the 
Basic Provisions, your prevented planting production guarantee will be 
based on your approved yield without adjustment for skip-row planting 
patterns.
    (b) Your prevented planting coverage will be 50 percent of your 
production guarantee for timely planted acreage. If you have limited or 
additional levels of coverage, as specified in 7 CFR part 400, subpart 
T, and pay an additional premium, you may increase your prevented 
planting coverage to a level specified in the actuarial documents.

[59 FR 49169, Sept. 27, 1994, as amended at 60 FR 62726, Dec. 7, 1995; 
62 FR 6704, Feb. 13, 1997; 62 FR 63633, Dec. 2, 1997; 62 FR 65165, Dec. 
10, 1997; 63 FR 55497, Oct. 16, 1998; 63 FR 66717, Dec. 3, 1998]



Sec. 457.106  Texas citrus tree crop insurance provisions.

    The Texas Citrus Tree Crop Insurance Provisions for the 1999 and 
succeeding crop years are as follows:

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                           Reinsured policies

               (Appropriate title for insurance provider)

    Both FCIC and Reinsured Policies

                    Texas Citrus Tree Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Bud union--The location on the tree trunk where a bud from one tree 
variety is grafted onto root stock of another variety.
    Crop--Specific groups of citrus fruit trees as listed in the Special 
Provisions.
    Crop year--For the 1998 crop year only, a period of time that begins 
on June 1, 1997, and ends on November 20, 1998. For all other crop 
years, a period of time that begins on November 21 of the calendar year 
prior to the year the trees normally bloom, and ends on November 20 of 
the following calendar year. The crop year is designated by the year in 
which the insurance period ends.
    Dehorning--Cutting all scaffold limbs to a length not longer than 
\1/4\ the height of the tree before such cutting.
    Destroyed--Trees damaged to the extent that removal is necessary.
    Excess precipitation--An amount of precipitation sufficient to 
directly damage the tree.
    Excess wind--A natural movement of air that has sustained speeds in 
excess of 58 miles per hour recorded at the U.S. Weather Service 
reporting station nearest to the crop at the time of crop damage.
    Freeze--The formation of ice in the cells of the trees caused by low 
air temperatures.
    Good farming practices--The cultural practices generally in use in 
the county for the trees to have normal growth and vigor and recognized 
by the Cooperative State Research, Education, and Extension Service as 
compatible with agronomic and weather conditions in the county.
    Interplanted--Acreage on which two or more crops are planted in any 
form of alternating or mixed pattern.
    Irrigated practice--A method by which the normal growth and vigor of 
the insured trees is maintained by artificially applying adequate 
quantities of water during the growing season using the appropriate 
irrigation systems at the proper times.
    Root stock--A root or a piece of a root of one tree variety onto 
which a bud from another tree variety is grafted.
    Scaffold limbs--Major limbs attached directly to the trunk.
    Set out--Transplanting the tree into the grove.

                            2. Unit Division

    (a) A basic unit, as defined in section 1 of the Basic Provisions, 
will be divided into additional basic units by each citrus crop 
designated in the Special Provisions.
    (b) Sections 34(a) (1), (3), and (4) of the Basic Provisions are not 
applicable.
    (c) Provisions in the Basic Provisions that allow optional units by 
irrigated and non-irrigated practices are not applicable.
    (d) Instead of establishing optional units by section, section 
equivalent, or FSA farm serial number optional units may be established 
if each optional unit is located on non-contiguous land.

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

    (a) In lieu of the requirement of section 3 (Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities) of the Basic 
Provisions (Sec. 457.8), that prohibits you from selecting more than 
one coverage level for each insured crop, you may select a different 
coverage level for each crop designated in the Special Provisions that 
you elect to insure.
    (b) In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) of 
the Basic Provisions (Sec. 457.8):

[[Page 167]]

    (1) If you insure trees within a crop which are either of a 
different variety or are planted at a different population density, the 
per acre amount of insurance for each variety or population density for 
the crop must bear the same relationship to the maximum amount of 
insurance available for each variety and population density of the crop 
as specified in the Actuarial documents. For example, if you elect 100 
percent of the maximum amount of insurance for a variety within a 
population density for the crop, you must select 100 percent of the 
maximum amount of insurance for that variety for all population 
densities for the crop. The amount of insurance for each variety and 
population density must be multiplied by any applicable factor contained 
in section 3(b)(2).
    (2) The amount of insurance per acre will be the product obtained by 
multiplying the reference maximum dollar amount of insurance that is 
shown in the actuarial documents for the applicable population density 
by the percentage for the level of coverage you select and by:
    (i) Thirty-three percent (0.33) for the year of set out, the year 
following dehorning, or the year following grafting of a set out tree. 
(Insurance will be limited to this amount until trees that are set out 
are one year of age or older on the first day of the crop year);
    (ii) Sixty percent (0.60) for the first growing season after being 
set out, the second year following dehorning, or the second year 
following grafting of a set out tree;
    (iii) Eighty percent (0.80) for the second growing season after 
being set out, the third year following dehorning, or the third year 
following grafting of a set out tree; or
    (iv) Ninety percent (0.90) for the third growing season after being 
set out, the fourth year following dehorning, or the fourth year 
following grafting of a set out tree.
    (3) The amount of insurance per acre for each population density, or 
factor as appropriate, will be multiplied by the applicable number of 
insured acres. These results will then be added together to determine 
the amount of insurance for the unit.
    (4) The amount of insurance will be reduced proportionately for any 
unit on which the stand is less than 90 percent, based on the original 
planting pattern. For example, if the amount of insurance you selected 
is $2,000 and the remaining stand is 85 percent of the original stand, 
the amount of insurance on which the premium and any indemnity will be 
based is $1,700 ($2,000 multiplied by 0.85).
    (5) If any insurable acreage of trees is set out after the first day 
of the crop year, and you elect to insure such acreage during that crop 
year, you must report the acreage, practice, crop, number of trees, date 
set out is completed, and your share to us within 72 hours after set out 
is completed for the unit.
    (6) Production reporting requirements contained in section 3 
(Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities) of the Basic Provisions (Sec. 457.8), are not applicable.
    (7) You must report, by the sales closing date contained in the 
Special Provisions, by type if applicable:
    (i) Any damage, removal of trees, change in practices, or any other 
circumstance that may reduce the amount of insurance, and the number of 
affected acres;
    (ii) The number of trees on insurable and uninsurable acreage;
    (iii) The date of original set out and the planting pattern;
    (iv) The date of replacement or dehorning, if more than 10 percent 
of the trees on any unit have been replaced or dehorned in the previous 
5 years; and
    (v) For the first year of insurance for acreage interplanted with 
another perennial crop, and anytime the planting pattern of such acreage 
is changed:
    (A) The age of the interplanted crop, and type if applicable;
    (B) The planting pattern; and
    (C) Any other information that we request in order to establish your 
amount of insurance.
    We will reduce the amount of insurance as necessary, based on our 
estimate of the effect of interplanting a perennial crop; removal of 
trees; damage; change in practices and any other circumstance on the 
potential of the insured crop. If you fail to notify us of any 
circumstance that may reduce the potential for the insured crop, we will 
reduce your amount of insurance as necessary at any time we become aware 
of the circumstance.

                           4. Contract Changes

    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is August 31 
preceding the cancellation date.

                  5. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation and 
termination dates are November 20.

                            6. Annual Premium

    In addition to the provisions of section 5 (Annual Premium) of the 
Basic Provisions (Sec. 457.8), for the 1998 crop year, the premium 
amount otherwise payable for the 1998 crop year will be increased by 46 
percent as a result of the additional six months of coverage for that 
crop year.

[[Page 168]]

                             7. Insured Crop

    (a) In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all of each citrus 
tree crop designated in the Special Provisions in the county for which a 
premium rate is provided by the actuarial documents and that you elect 
to insure:
    (1) In which you have an ownership share;
    (2) That is adapted to the area;
    (3) That is set out for the purpose of growing fruit to be harvested 
for the commercial production of fresh fruit or for juice;
    (4) That is irrigated; and
    (5) That have the potential to produce at least 70 percent of the 
county average yield for the crop and age, unless a written agreement is 
approved to insure the trees with lesser potential.
    (b) In addition to section 8 (Insured Crop) of the Basic Provisions 
(Sec. 457.8), we do not insure any citrus trees:
    (1) During the crop year the application for insurance is filed, 
unless we inspect the acreage and consider it acceptable; or
    (2) That have been grafted onto existing root stock or nursery stock 
within the one-year period prior to the date insurance attaches.
    (c) We may exclude from insurance or limit the amount of insurance 
on any acreage that was not insured the previous year.

                          8. Insurable Acreage

    In lieu of the provisions in section 9 (Insurable Acreage) of the 
Basic Provisions (Sec. 457.8), that prohibit insurance attaching to a 
crop planted with another crop, citrus trees interplanted with another 
perennial crop are insurable, unless we inspect the acreage and 
determine that it does not meet the requirements contained in your 
policy.

                           9. Insurance Period

    In lieu of the provisions of section 11 (Insurance Period) of the 
Basic Provisions (Sec. 457.8):
    (a) The insurance period is as follows:
    (1) For the 1998 crop year only, coverage will begin on June 1, 
1997, and will end on November 20, 1998.
    (2) For all subsequent crop years, coverage begins on November 21 of 
the calendar year prior to the year the insured crop normally blooms, 
except that for the year of application, if your application is received 
after November 11 but prior to November 21, insurance will attach on the 
10th day after your properly completed application is received in our 
local office, unless we inspect the acreage during the 10 day period and 
determine that it does not meet the requirements for insurability 
contained in your policy. You must provide any information that we 
require for the crop or to determine the condition of the grove.
    (3) The calendar date for the end of the insurance period for each 
crop year is November 20.
    (b) If you acquire an insurable share in any insurable acreage after 
coverage begins but on or before the acreage reporting date for the crop 
year, and after an inspection we consider the acreage acceptable, 
insurance will be considered to have attached to such acreage on the 
calendar date for the beginning of the insurance period.
    (c) If you relinquish your insurable share on any insurable acreage 
of citrus trees on or before the acreage reporting date for the crop 
year, insurance will not be considered to have attached to and no 
premium or indemnity will be due for such acreage for that crop year 
unless:
    (1) A transfer of coverage and right to an indemnity, or a similar 
form approved by us, is completed by all affected parties;
    (2) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (3) The transferee is eligible for crop insurance.

                           10. Causes of Loss

    In accordance with the provisions of section 12 (Causes of Loss) of 
the Basic Provisions (Sec. 457.8), insurance is provided only against 
the following causes of loss that occur within the insurance period:
    (a) Excess precipitation;
    (b) Excess wind;
    (c) Fire, unless weeds and other forms of undergrowth have not been 
controlled or pruning debris has not been removed from the grove;
    (d) Freeze;
    (e) Hail;
    (f) Tornado; or
    (g) Failure of the irrigation water supply if caused by an insured 
peril or drought that occurs during the insurance period.

                11. Duties in the Event of Damage or Loss

    In addition to the requirements of section 14 (Duties in the Event 
of Damage or Loss) of the Basic Provisions (Sec. 457.8), in case of 
damage or probable loss, if you intend to claim an indemnity on any 
unit, you must allow us to inspect all insured acreage before pruning, 
dehorning, or removal of any damaged trees.

                         12. Settlement of Claim

    (a) In the event of damage covered by this policy, we will settle 
your claim on a unit basis by:
    (1) Determining the actual percent of damage for the unit in 
accordance with sections 12 (b), (c), and (d);
    (2) Subtracting your deductible from the percent of damage for the 
unit (this result must be greater than zero to receive an indemnity);

[[Page 169]]

    (3) Dividing the result of section 12(a)(2) by your coverage level 
percentage;
    (4) Multiplying the result of section 12(a)(3) by the amount of 
insurance per acre determined in accordance with section 3(b)(2);
    (5) Multiplying the result of section 12(a)(4) by the number of 
insured acres; and
    (6) Multiplying the result of section 12(a)(5) by your share.
    (b) The percent of damage for any tree will be determined as 
follows:
    (1) For damage occurring during the year of set out (trees that have 
not been set out for at least one year at the time insurance attaches):
    (i) One-hundred percent (100%) whenever there is no live wood above 
the bud union;
    (ii) Ninety percent (90%) whenever there is less than 12 inches of 
live wood above the bud union; or
    (iii) The tree will be considered undamaged whenever there is more 
than 12 inches of live wood above the bud union; or
    (2) For damage occurring in any year following the year of set out:
    (i) The percentage of damage will be determined by dividing the 
number of scaffold limbs damaged in an area from the trunk to a length 
equal to one-fourth (\1/4\) the height of the tree, by the total number 
of scaffold limbs before damage occurred. Whenever this percentage 
exceeds 80 percent, the tree will be considered as 100 percent damaged.
    (ii) The percent of damage for the unit will be determined by 
computing the average of the determinations made for the individual 
trees. If this percent of damage exceeds 80 percent, the unit will be 
considered 100 percent damaged.
    (c) The percent of damage on the unit will be reduced by the 
percentage of damage due to uninsured causes.

                     13. Late and Prevented Planting

    The late and prevented planting provisions of the Basic Provisions 
are not applicable.

[62 FR 4117, Jan. 29, 1997, as amended at 62 FR 65166, Dec. 10, 1997; 63 
FR 55779, Oct. 19, 1998]



Sec. 457.107  Florida citrus fruit crop insurance provisions.

    The Florida Citrus Fruit Crop Insurance Provisions for the 2009 and 
succeeding crop years are as follows:

FCIC policies: United States Department of Agriculture, Federal Crop 
    Insurance Corporation
Reinsured policies: (Appropriate title for insurance provider)
Both FCIC and reinsured policies: Florida Citrus Fruit Crop Insurance 
    Provisions

                             1. Definitions

    Amount of insurance (per acre). The dollar amount determined by 
multiplying the Reference Maximum Dollar Amount shown on the actuarial 
documents for each fruit type and age of trees, within a citrus fruit 
crop, times the coverage level percent that you elect, times your share.
    Box. A standard field box as prescribed in the State of Florida 
Citrus Fruit Laws or contained in standards issued by FCIC.
    Buckhorn. To prune any limb at a diameter of at least three inches 
for citrus.
    Citrus fruit crop. Except as otherwise provided in section 6, any of 
the following:
    (1) Citrus I--Early and mid-season oranges;
    (2) Citrus II--Late oranges juice;
    (3) Citrus III--Grapefruit for which freeze damage will be adjusted 
on a juice basis;
    (4) Citrus IV--Tangelos and Tangerines;
    (5) Citrus V--Murcott Honey Oranges (also known as Honey Tangerines) 
and Temple Oranges;
    (6) Citrus VI--Lemons and Limes;
    (7) Citrus VII--Grapefruit for which freeze damage will be adjusted 
on a fresh fruit basis, and late oranges fresh;
    (8) Citrus VIII--Navel Oranges; and
    (9) Citrus IX--Any other citrus fruit crop designated in the Special 
Provisions.
    Citrus fruit type (fruit type). Any of the separate citrus fruit 
listed in the Special Provisions and contained within one of the citrus 
fruit crops designated as Citrus I through IX.
    Excess wind. A natural movement of air that has sustained speeds 
exceeding 58 miles per hour recorded at the U.S. Weather Service 
reporting station operating nearest to the grove at the time of damage.
    Freeze. The formation of ice in the cells of the fruit caused by low 
air temperatures.
    Harvest. The severance of mature citrus fruit from the tree by 
pulling, picking, shaking, or any other means, or collecting the 
marketable citrus fruit from the ground.

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    Hurricane. A windstorm classified by the U.S. Weather Service as a 
hurricane.
    Interstock. The area of the tree that is grafted to a rootstock. For 
example, the rootstock may be Sour Orange, and the interstock 
grapefruit, and the grafted scion Valencia orange.
    Potential production. The amount, converted to boxes, of citrus 
fruit that would have been produced had damage not occurred.
    (a) Including citrus fruit that:
    (1) Was harvested before damage occurred;
    (2) Remained on the tree after damage occurred;
    (3) Except as provided in (b), was missing, damaged, or destroyed 
from either an insured or uninsured cause;
    (4) Was marketed or could be marketed as fresh citrus fruit;
    (5) Was harvested prior to inspection by us; or
    (6) Was harvested within 7 days after a freeze;
    (b) Not including citrus fruit that:
    (1) Was missing, damaged, or destroyed before insurance attached for 
any crop year;
    (2) Was damaged or destroyed by normal dropping; or
    (3) Any tangerines that normally would not meet the 210 pack size (2 
and \4/16\ inch minimum diameter) under United States Standards by the 
end of the insurance period for tangerines.
    Scion. A detached living portion of a plant joined to a stock in 
grafting.
    Top worked. A buckhorned citrus tree with a new scion grafted onto 
the interstock.

                            2. Unit Division

    (a) A basic unit, as defined in section 1 of the Basic Provisions, 
will be divided into additional basic units by each citrus fruit crop 
designated in the Special Provisions.
    (b) Provisions in the Basic Provisions that allow optional units by 
irrigated and non-irrigated practices are not applicable.
    (c) In addition to establishing optional units by section, section 
equivalent, or FSA farm serial number, optional units may be established 
if each optional unit is located on non-contiguous land.

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

    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) You may select only one coverage level for each citrus fruit 
crop shown in section 1 of these Crop Provisions, or designated in the 
Special Provisions, that you elect to insure. If different amounts of 
insurance are available for fruit types within a citrus fruit crop, you 
must select the same coverage level for each fruit type. For example, if 
you choose the 75 percent coverage level for one fruit type, you must 
also choose the 75 percent coverage level for all other fruit types 
within that citrus fruit crop.
    (b) The production reporting requirements contained in section 3 of 
the Basic Provisions are not applicable.
    (c) For the first year of insurance for acreage interplanted with 
another fruit type or another crop, and any time the planting pattern of 
such acreage is changed, you must report, by the sales closing date, the 
following:
    (1) The age and fruit type of the interplanted citrus trees, as 
applicable;
    (2) The planting pattern; and
    (3) Any other information we request in order to establish your 
amount of insurance.
    (d) We will reduce acreage or the amount of insurance or both, as 
necessary, based on our estimate of the effect of the interplanted fruit 
type or another crop on the insured fruit type. If you fail to notify us 
of any circumstance that may reduce the acreage or amount of insurance, 
we will reduce the acreage or amount of insurance or both as necessary 
any time we become aware of the circumstance.
    (e) For carryover policies:
    (1) Any changes to your coverage must be requested on or before the 
sales closing date;
    (2) Requested changes will take effect on May 1, the first day of 
the crop year, unless we reject the requested increase based on our 
inspection, or because a loss occurs on or before April 30 (Rejection 
can occur at any time we discover loss has occurred on or before April 
30); and
    (3) If the increase is rejected, coverage will remain at the same 
level as the previous crop year.

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    (f) If your citrus fruit was damaged prior to the beginning of the 
insurance period, your amount of insurance (per acre) will be reduced by 
the amount of damage that occurred.

                           4. Contract Changes

    In accordance with section 4 of the Basic Provisions, the contract 
change date is January 31 preceding the cancellation date.

                  5. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are April 30.

                             6. Insured Crop

    (a) In accordance with section 8 of the Basic Provisions, the crop 
insured will be all acreage of each citrus fruit crop that you elect to 
insure, in which you have a share, that is grown in the county shown on 
the application, and for which a premium rate is quoted in the actuarial 
documents.
    (b) In addition to the citrus fruit not insurable in section 8 of 
the Basic Provisions, we do not insure any citrus fruit:
    (1) That cannot be expected to mature each crop year within the 
normal maturity period for the fruit type;
    (2) Produced by citrus trees that have not reached the fifth growing 
season after being set out, unless otherwise provided in the Special 
Provisions or by a written agreement to insure such citrus fruit (In 
order for the year of set out to be considered as a growing season, 
citrus trees must be set out on or before April 30 of the calendar 
year);
    (3) Of ``Meyer Lemons'' and oranges commonly known as ``Sour 
Oranges'' or ``Clementines'';
    (4) Of the Robinson tangerine variety, for any crop year in which 
you have elected to exclude such tangerines from insurance (You must 
elect this exclusion prior to the crop year for which the exclusion is 
to be effective, except that for the first crop year you must elect this 
exclusion by the later of the sales closing date or the time you submit 
the application for insurance);
    (5) That is produced on citrus trees that have been topworked until 
the third crop year after topworking. The Special Provisions will 
specify the appropriate rate class for trees insurable following 
topworking, but that have not reached full production; or
    (6) Of any fruit type not specified as insurable in the Special 
Provisions or within the definition of ``citrus fruit crop.''
    (c) Prior to the date insurance attaches, and upon our approval, you 
may elect to insure or exclude from insurance any insurable citrus 
acreage that has a potential production of less than 100 boxes per acre. 
If you elect to:
    (1) Insure such acreage, we will consider the potential production 
to be 100 boxes per acre when determining the amount of loss; or
    (2) Exclude such acreage, we will disregard the acreage for all 
purposes related to this policy.
    (d) In addition to the provisions in section 6 of the Basic 
Provisions, if you fail to notify us of your election to insure or 
exclude citrus acreage, and the potential production from such acreage 
is 100 or more boxes per acre, we will determine the percent of damage 
on all of the insurable acreage for the unit, but will not allow the 
percent of damage for the unit to be increased by including such 
acreage.
    (e) Potential production will be determined during loss adjustment.

                          7. Insurable Acreage

    In lieu of the provisions in section 9 of the Basic Provisions that 
prohibit insurance attaching to a crop planted with another crop:
    (a) Citrus fruit from trees interplanted with another fruit type or 
another crop is insurable unless we inspect the acreage and determine it 
does not meet the requirements contained in your policy.
    (b) If the citrus fruit is from trees interplanted with another 
fruit type or another crop, acreage will be prorated according to the 
percentage of the acres occupied by each of the interplanted fruit types 
or crops (For example, if grapefruit have been interplanted with oranges 
on 100 acres and the grapefruit trees are on 50 percent of the acreage, 
grapefruit will be considered planted on 50 acres and oranges will be 
considered planted on 50 acres).

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    (c) The combination of the citrus fruit acreage and the interplanted 
crop acreage cannot exceed the physical amount of acreage.

                           8. Insurance Period

    (a) In accordance with the provisions of section 11 of the Basic 
Provisions:
    (1) Coverage begins on May 1 of each crop year, unless:
    (i) For new or carryover policies, as applicable, we inspect the 
acreage and determine it does not meet the requirements for insurability 
contained in your policy (You must provide any information we require 
for the fruit type, so we may determine the condition of the grove to be 
insured); or
    (ii) For carryover policies, you report additional citrus acreage, 
or a greater share, such that the amount of insurance will increase by 
more than 10 percent and we notify you all or a part of your citrus 
acreage is not insurable.
    (2) The calendar date for the end of the insurance period for each 
crop year, unless specified otherwise in the Special Provisions, is:
    (i) February 7 for early and navel oranges, Orlando tangelos and 
tangerines;
    (ii) February 28 for all other tangelos;
    (iii) March 31 for mid-season and temple oranges;
    (iv) April 30 for lemons, limes;
    (v) May 15 for murcott honey oranges; and
    (vi) June 30 for grapefruit and late season oranges.
    (b) In addition to the provisions of section 11 of the Basic 
Provisions:
    (1) If you acquire an insurable share in any insurable acreage of 
citrus fruit after coverage begins, but on or before the acreage 
reporting date of any crop year, and if after inspection we consider the 
acreage acceptable, then insurance will be considered to have attached 
to such acreage on the calendar date for the beginning of the insurance 
period.
    (2) If you relinquish your insurable share on any insurable acreage 
of citrus fruit on or before the acreage reporting date of any crop 
year, insurance will not be considered to have attached, no premium will 
be due, and no indemnity payable, for such acreage for that crop year 
unless:
    (i) A transfer of coverage and right to an indemnity, or a similar 
form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.

                            9. Causes of Loss

    (a) In accordance with the provisions of section 12 of the Basic 
Provisions, insurance is provided only against the following causes of 
loss to citrus fruit that occur within the insurance period:
    (1) Fire, unless weeds and other forms of undergrowth have not been 
controlled or pruning debris has not been removed from the grove;
    (2) Freeze;
    (3) Hail;
    (4) Hurricane;
    (5) Tornado;
    (6) Excess wind, but only if it causes the individual citrus fruit 
from Citrus IV, V, VII, and VIII to be unmarketable as fresh fruit; or
    (7) Diseases, but only if specified in the Special Provisions.
    (b) In addition to the causes of loss excluded in section 12 of the 
Basic Provisions, we will not insure against damage or loss of 
production due to:
    (1) Damage to the blossoms or trees; or
    (2) Inability to market the citrus fruit for any reason other than 
actual physical damage from an insurable cause specified in this 
section. For example, we will not pay you an indemnity if you are unable 
to market due to quarantine, boycott, or refusal of any person to accept 
production.

                         10. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide separate acceptable production records:
    (1) For any optional units, we will combine all optional units for 
which such production records were not provided; or
    (2) For any basic units, we will allocate any commingled production 
to

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such units in proportion to our liability on the harvested acreage for 
the units.
    (b) If any citrus fruit within a unit is damaged by an insurable 
cause of loss, we will settle your claim by:
    (1) Calculating the amount of insurance for the unit by multiplying 
the number of acres by the respective dollar amount of insurance per 
acre for each fruit type and multiplying that result by your share;
    (2) Calculating the average percent of damage to the fruit within 
each respective fruit type, rounded to the nearest tenth of a percent 
(0.1%) (To determine the percent of damage, the amount of citrus fruit 
damaged from an insured cause must be converted to boxes and divided by 
the undamaged potential production);
    (3) Subtracting the deductible from the result of section 
(10)(b)(2);
    (4) If the result of section (10)(b)(3) is positive, dividing this 
result by the coverage level percentage (If the result of section 
10(b)(3) is negative, no indemnity will be due);
    (5) Multiplying the result of section (10)(b)(4) by the amount of 
insurance for the unit for the respective fruit type, to determine the 
value of all damage; and
    (6) Totaling all such results of section (10)(b)(5) for all fruit 
types and subtracting any indemnities paid for the current crop year to 
determine the amount payable for the unit. (For example, assume a 55-
acre unit sustains late season damage. No previous damage has occurred 
on the unit during the crop year and no fruit has been harvested. The 
producer elected the 75 percent coverage level and has a 100 percent 
share. The amount of insurance is $1,180 per acre, based on the 75 
percent coverage level, for the citrus crop, fruit type, and age of 
trees. The amount of potential production is 24,530 boxes and the amount 
of damaged production is 17,171 boxes. The loss would be calculated as 
follows:
    1. 55 acres x $1,180 = $64,900 amount of insurance for the unit;
    2. 17,171 / 24,530 = 70 percent average percent of damage;
    3. 70 percent damage - 25 percent deductible (100 percent - 75 
percent) = 45 percent;
    4. 45 percent / 75 percent = 60 percent adjusted damage; and
    5. 60 percent x $64,900 = $38,940 indemnity.
    (c) Citrus fruit crops IV, V, VII, and VIII that are seriously 
damaged by freeze, as determined by a fresh-fruit cut of a 
representative sample of fruit in the unit in accordance with the 
applicable provisions of the State of Florida Citrus Fruit Laws, or 
contained in standards issued by FCIC, and that are not or could not be 
marketed as fresh fruit, will be considered damaged to the following 
extent:
    (1) If less than 16 percent of the fruit in a sample shows serious 
freeze damage, the fruit will be considered undamaged; or
    (2) If 16 percent or more of the fruit in a sample shows serious 
freeze damage, the fruit will be considered 50 percent damaged, except 
that:
    (i) For tangerines of Citrus IV, damage in excess of 50 percent will 
be the actual percent of damaged fruit; and
    (ii) Citrus IV (except tangerines), V, VII, and VIII, if it is 
determined that the juice loss in the fruit exceeds 50 percent, such 
percent will be considered the percent of damage.
    (d) Notwithstanding the provisions of section 10(c) of these crop 
provisions as to citrus fruit of Citrus IV, V, VII, and VIII, in any 
unit that is mechanically separated using the specific-gravity 
(floatation) method into undamaged and freeze-damaged fruit, the amount 
of damage will be the actual percent of freeze-damaged fruit not to 
exceed 50 percent and will not be affected by subsequent fresh-fruit 
marketing. However, the 50 percent limitation on mechanically separated, 
freeze-damaged fruit will not apply to tangerines of Citrus IV.
    (e) Any citrus fruit of Citrus I, II, III, and VI damaged by freeze, 
but that can be processed into products for human consumption, will be 
considered as marketable for juice. The percent of damage will be 
determined by relating the juice content of the damaged fruit to:
    (1) The average juice content of the fruit produced on the unit for 
the three previous crop years based on your records, if they are 
acceptable to us; or

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    (2) The following juice content, if acceptable records are not 
furnished:
    (i) Citrus I--52 pounds of juice per box;
    (ii) Citrus II--54 pounds of juice per box;
    (iii) Citrus III--45 pounds of juice per box; and
    (iv) Citrus VI--43 pounds of juice per box.
    (f) Any individual citrus fruit on the ground that is not collected 
and marketed will be considered as 100 percent damaged if the damage was 
due to an insured cause.
    (g) Any individual citrus fruit that is unmarketable either as fresh 
fruit or as juice because it is immature, unwholesome, decomposed, 
adulterated, or otherwise unfit for human consumption due to an insured 
cause will be considered as 100 percent damaged.
    (h) Individual citrus fruit of Citrus IV, V, VII, and VIII, that are 
unmarketable as fresh fruit due to serious damage from hail as defined 
in the applicable United States Standards for Grades of Florida fruit, 
or wind damage from a hurricane, tornado or other excess wind storms 
that results in the fruit not meeting the standards for packing as fresh 
fruit, will be considered 100 percent damaged.

                     11. Late and Prevented Planting

    The late and prevented planting provisions of the Basic Provisions 
are not applicable.

[73 FR 7196, Feb. 7, 2008; 73 FR 10973, Feb. 29, 2008]



Sec. 457.108  Sunflower seed crop insurance provisions.

    The sunflower seed crop insurance provisions for the 2003 and 
succeeding crop years are as follows:

                        Department of Agriculture

                   Federal Crop Insurance Corporation

                     Sunflower Seed Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Harvest--Combining or threshing the sunflowers for seed.
    Local market price--The cash seed price per pound for oil type 
sunflower seed grading U.S. No. 2, or non-oil type sunflower seed with a 
test weight of at least 22 pounds per bushel and less than five percent 
(5%) kernel damage, offered by buyers in the area in which you normally 
market the sunflower seed. The local market price for oil type sunflower 
seed will reflect the maximum limits of quality deficiencies allowable 
for the U.S. No. 2 grade of sunflower seed. Factors not associated with 
grading of sunflower seed under the Official United States Standards for 
Grain including, but not limited to, oil or moisture content will not be 
considered.
    Planted acreage--In addition to the definition contained in the 
Basic Provisions, sunflower seed must initially be planted ini rows far 
enough apart to permit mechanical cultivation, unless otherwise provided 
by the Special Provisions, actuarial documents, or by written agreement.

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

    In addition to the requirements of section 3 (Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities) of the Basic 
Provisions (Sec. 457.8), you may select only one price election for all 
the sunflower seed in the county insured under this policy. 
Notwithstanding the preceding sentence, if the Special Provisions 
provide different price elections by type, you may select one price 
election for each sunflower seed type designated in the Special 
Provisions.

                           3. Contract Changes

    The contract change date is November 30 (December 17 for the 1998 
crop year only) preceding the cancellation date (see the provisions of 
Section 4 (Contract Changes) of the Basic Provisions).

                  4. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions (Sec. 457.8), 
the cancellation and termination dates are March 15.

                             5. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic Provisions 
(Sec. 457.8), the crop insured will be all the oil and non-oil type 
sunflower seed in the county for which a premium rate is provided by the 
actuarial documents:
    (a) In which you have a share;
    (b) That is planted for harvest as sunflower seed; and
    (c) That is not (unless a written agreement allows otherwise):
    (1) Interplanted with another crop; or

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    (2) Planted into an established grass or legume.

                          6. Insurable Acreage

    In addition to the provisions of section 9 (Insurable Acreage) of 
the Basic Provisions (Sec. 457.8):
    (a) We will not insure any acreage which does not meet the rotation 
requirements shown in the Special Provisions; and
    (b) Any acreage of the insured crop damaged before the final 
planting date, to the extent that a majority of producers in the area 
would not normally further care for the crop, must be replanted unless 
we agree that it is not practical to replant.

                           7. Insurance Period

    In accordance with the provisions of section 11 (Insurance Period) 
of the Basic Provisions (Sec. 457.8), the calendar date for the end of 
the insurance period is November 30, immediately following planting.

                            8. Causes of Loss

    In accordance with the provisions of section 12 (Causes of Loss) of 
the Basic Provisions (Sec. 457.8), insurance is provided only against 
the following causes of loss which occur within the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) If applicable, failure of the irrigation water supply due to an 
unavoidable cause of loss occurring after the beginning of planting.

                         9. Replanting Payments

    (a) In accordance with section 13 of the Basic Provisions, a 
replanting payment for sunflower seed is allowed if the sunflowers are 
damaged by an insurable cause of loss to the extent that the remaining 
stand will not produce at least ninety percent of the production 
guarantee for the acreage and it is practical to replant.
    (b) The maximum amount of the replanting payment per acre will be 
the lesser of twenty percent (20%) of the production guarantee or 175 
(pounds of seed), multiplied by your price election, multiplied by your 
insured share or the share determined in accordance with section 9(c), 
if applicable.
    (c) When more than one person insures the same crop on a share 
basis, a replanting payment based on the total shares insured by us may 
be made to the insured person who incurs the total cost of replanting. 
Payment will be made in this manner only if an agreement exists between 
the insured persons which:
    (1) Requires one person to incur the entire cost of replanting; or
    (2) Gives the right to all replanting payments to one person.
    (d) When sunflower seed is replanted using a practice that is 
uninsurable as an original planting, the liability for the unit will be 
reduced by the amount of the replanting payment which is attributable to 
your share. The premium amount will not be reduced.

                10. Duties in the Event of Damage or Loss

    In accordance with the requirements of section 14 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), the 
representative samples of the unharvested crop must be at least 10 feet 
wide and extend the entire length of each field in the unit. The samples 
must not be harvested or destroyed until the earlier of our inspection 
or 15 days after harvest of the balance of the unit is completed.

                         11. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide records of production:
    (1) For any optional unit, we will combine all optional units for 
which acceptable records of production were not provided; or
    (2) For any basic unit, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for each unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim on any unit by:
    (1) Multiplying the insured acreage of each type of sunflower seed 
by the production guarantee for the applicable type;
    (2) Multiplying each result by the price election for the applicable 
type;
    (3) Adding these values;
    (4) Multiplying the production to count of each type of sunflower 
seed by the price election for that type;
    (5) Adding these dollar values;
    (6) Subtracting the result of step (5) from the result of step (3); 
and
    (7) Multiplying the result by your share.
    (c) The total production (pounds) to count from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) Damaged solely by uninsured causes; or
    (D) For which you fail to provide records of production that are 
acceptable to us;

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    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production may be 
adjusted for quality deficiencies and excess moisture in accordance with 
subsection 11(d)); and
    (iv) Potential production on insured acreage you want to put to 
another use or you wish to abandon and no longer care for, if you and we 
agree on the appraised amount of production. Upon such agreement, the 
insurance period for that acreage will end if you put the acreage to 
another use or abandon the crop. If agreement on the appraised amount of 
production is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to leave 
intact, and provide sufficient care for, representative samples of the 
crop in locations acceptable to us, (The amount of production to count 
for such acreage will be based on the harvested production or appraisals 
from the samples at the time harvest should have occurred. If you do not 
leave the required samples intact, or you fail to provide sufficient 
care for the samples, our appraisal made prior to giving you consent to 
put the acreage to another use will be used to determine the amount of 
production to count.); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested production, or 
our reappraisal if additional damage occurs and the crop is not 
harvested; and
    (2) All harvested production from the insurable acreage.
    (d) Mature sunflower seed production may be adjusted for excess 
moisture and quality deficiencies. If moisture adjustment is applicable, 
it will be made prior to any adjustment for quality.
    (1) Production will be reduced by 0.12 percent for each 0.1 
percentage point of moisture in excess of ten percent (10%). We may 
obtain samples of the production to determine the moisture content.
    (2) Production will be eligible for quality adjustment if:
    (i) Deficiencies in quality result in:
    (A) Oil type sunflower seed not meeting the grade requirements for 
U.S. No. 2 (grades U.S. sample grade) because of test weight, kernel 
damage (excluding heat damage), or a musty, sour or commercially 
objectionable foreign odor; or
    (B) Non-oil type sunflower seed having a test weight below 22 pounds 
per bushel or kernel damage (excluding heat damage) in excess of five 
percent (5%) or a musty, sour or commercially objectionable foreign 
odor; or
    (ii) Substances or conditions are present that are identified by the 
Food and Drug Administration or other public health organizations of the 
United States as being injurious to human or animal health.
    (3) Quality will be a factor in determining your loss only if:
    (i) The deficiencies, substances, or conditions, resulted from a 
cause of loss against which insurance is provided under these crop 
provisions and within the insurance period ;
    (ii) All determinations of these deficiencies, substances, or 
conditions are made using samples of the production obtained by us or by 
a disinterested third party approved by us;
    (iii) With regard to deficiencies in quality (except test weight, 
which may be determined by our loss adjustor), the samples are analyzed 
by:
    (A) A grain grader licensed under the United States Grain Standards 
Act or the United States Warehouse Act;
    (B) A grain grader licensed under State law and employed by a 
warehouse operator who has a storage agreement with the Commodity Credit 
Corporation; or
    (C) A grain grader not licensed under State law, but who is employed 
by a warehouse operator who has a commodity storage agreement with the 
Commodity Credit Corporation and is in compliance with State law 
regarding warehouses; and
    (iv) With regard to substances or conditions injurious to human or 
animal health, the samples are analyzed by a laboratory approved by us.
    (4) Sunflower seed production that is eligible for quality 
adjustment, as specified in paragraphs 11(d) (2) and (3), will be 
reduced:
    (i) In accordance with quality adjustment factor provisions 
contained in the Special Provisions; or
    (ii) As follows, if quality adjustment factor provisions are not 
contained in the Special Provisions:
    (A) The market price of the qualifying damaged production and the 
local market price will be determined on the earlier of the date such 
quality adjusted production is sold or the date of final inspection for 
the unit. The price for the qualifying damaged production will be the 
market price for the local area to the extent feasible. Discounts used 
to establish the net price of the damaged production will be limited to 
those which are usual, customary, and reasonable. The price will not be 
reduced for:
    (1) Moisture content;
    (2) Damage due to uninsured causes; or
    (3) Drying, handling, processing, or any other costs associated with 
normal harvesting, handling, and marketing of the sunflower seed; 
except, if the price of the damaged production can be increased by 
conditioning, we may reduce the price of the production after it has 
been conditioned by the cost of conditioning but not lower than the 
value of the production before conditioning. (We may obtain prices from 
any buyer of our

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choice. If we obtain prices from one or more buyers located outside your 
local market area, we will reduce such prices by the additional costs 
required to deliver the sunflower seed to those buyers.);
    (B) The value of the damaged or conditioned production will be 
divided by the local market price to determine the quality adjustment 
factor; and
    (C) The number of pounds remaining after any reduction due to 
excessive moisture (the moisture-adjusted gross pounds (if appropriate)) 
of the damaged or conditioned production will then be multiplied by the 
quality adjustment factor to determine the net production to count.
    (e) Any production harvested from plants growing in the insured crop 
may be counted as production of the insured crop on a weight basis.

                         12. Prevented Planting

    Your prevented planting coverage will be 60 percent of your 
production guarantee for timely planted acreage. If you have limited or 
additional levels of coverage, as specified in 7 CFR part 400, subpart 
T, and pay an additional premium, you may increase you prevented 
planting coverage to a level specified in the actuarial documents.

[59 FR 67136, Dec. 29, 1994, as amended at 60 FR 62727, Dec. 7, 1995; 62 
FR 63633, Dec. 2, 1997; 62 FR 65166, Dec. 10, 1997; 67 FR 55690, Aug. 
30, 2002]



Sec. 457.109  Sugar Beet Crop Insurance Provisions.

    The Sugar Beet Crop Insurance Provisions for the 1998 and succeeding 
crop years in countries with a contract change date of November 30, and 
for the 1999 and succeeding crop years in countries with a contract 
change date of April 30, are as follows:
    FCIC Policies

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                           Reinsured policies

               (Appropriate title for insurance provider)

    Both FCIC and Reinsured Policies

                       Sugar Beet Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Crop year. In Imperial, Lassen, Modoc, Shasta and Siskiyou counties, 
California and all other States, the period within which the sugar beets 
are normally grown, which is designated by the calendar year in which 
the sugar beets are normally harvested. In all other California 
counties, the period from planting until the applicable date for the end 
of the insurance period which is designated by:
    (a) The calendar year in which planted if planted on or before July 
15; or
    (b) The following calendar year if planted after July 15.
    Harvest. Topping and lifting of sugar beets in the field.
    Initially planted. The first occurrence that land is considered as 
planted acreage for the crop year.
    Local market price. The price per pound for raw sugar offered by 
buyers in the area in which you normally market the sugar beets.
    Planted acreage.--In addition to the definition contained in the 
Basic Provisions, sugar beets must initially be planted in rows, unless 
otherwise provided by the Special Provisions, actuarial documents, or by 
written agreement.
    Practical to replant. In lieu of the definition of ``Practical to 
replant'' contained in section 1 of the Basic Provisions (Sec. 457.8), 
practical to replant is defined as our determination, after loss or 
damage to the insured crop, based on factors, including but not limited 
to moisture availability, condition of the field, time to crop maturity, 
and marketing window, that replanting the insured crop will allow the 
crop to attain maturity prior to the calendar date for the end of the 
insurance period. It will not be considered practical to replant if 
production from the replanted acreage cannot be delivered under the 
terms of the processor contract, or 30 days after the initial planting 
date for all counties where a late planting period is not applicable, 
unless replanting is generally occurring in the area.
    Processor. Any business enterprise regularly engaged in processing 
sugar beets for sugar that possesses all licenses and permits for 
processing sugar beets required by the State in which it operates, and 
that possesses facilities, or has contractual access to such facilities, 
with enough equipment to accept and process the contracted sugar beets 
within a reasonable amount of time after harvest.
    Production guarantee (per acre):
    (a) First stage production guarantee--The final stage production 
guarantee multiplied by 60 percent.
    (b) Final stage production guarantee--The number of tons determined 
by multiplying the approved yield per acre by the coverage level 
percentage you elect.

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    Raw sugar. Sugar that has not been extracted from the sugar beet.
    Standardized ton. A ton of sugar beets containing the percentage of 
raw sugar specified in the Special Provisions.
    Sugar beet processor contract. A written contract between the 
producer and the processor, containing at a minimum:
    (1) The producer's commitment to plant and grow sugar beets, and to 
deliver the sugar beet production to the processor;
    (2) The processor's commitment to purchase the production stated in 
the contract; and
    (3) A price or formula for a price based on third party data that 
will be paid to the producer for the production stated in the contract.
    Thinning. The process of removing, either by machine or hand, a 
portion of the sugar beet plants to attain a desired plant population.
    Ton. Two thousand (2,000) pounds avoirdupois.

                            2. Unit Division

    In addition to the requirements of section 34 of the Basic 
Provisions, basic units may be divided into optional units only if you 
have a sugar beet processor contract that requires the processor to 
accept all production from a number of acres specified in the sugar beet 
processor contract. Acreage insured to fulfil a sugar beet contract 
which provides that the processor will accept a designated amount of 
production or a combination of acreage and production will not be 
eligible for optional units.

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

    (a) In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) of 
the Basic Provisions (Sec. 457.8), you may select only one price 
election for all the sugar beets in the county insured under this 
policy.
    (b) The production guarantees are progressive by stages, and 
increase at specified intervals to the final stage. The stages are:
    (1) First stage, with a guarantee of 60 percent (60%) of the final 
stage production guarantee, extends from planting until:
    (i) July 1 in Lassen, Modoc, Shasta and Siskiyou counties, 
California and all other States except Arizona; and
    (ii) The earlier of thinning or 90 days after planting in Arizona 
and all other California counties.
    (2) Final stage, with a guarantee of 100 percent (100%) of the final 
stage production guarantee, applies to all insured sugar beets that 
complete the first stage.
    (c) The production guarantee will be expressed in standardized tons.
    (d) Any acreage of sugar beets damaged in the first stage to the 
extent that growers in the area would not normally further care for the 
sugar beets will be deemed to have been destroyed, even though you may 
continue to care for it. The production guarantee for such acreage will 
not exceed the first stage production guarantee.

                           4. Contract Changes

    In accordance with the provisions of section 4 (Contract Changes) of 
the Basic Provisions, the contract change date is April 30 preceding the 
cancellation date for counties with a July 15 or August 31 cancellation 
date and November 30 (December 17 for the 1998 crop year only) preceding 
the cancellation date for all other counties.

                  5. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation and 
termination dates are:

 
------------------------------------------------------------------------
                                                             Termination
       State and County              Cancellation date           date
------------------------------------------------------------------------
Arizona; and Imperial County,  August 31...................  August 31.
 California.
All California counties,       July 15.....................  November
 except Imperial, Lassen,                                       30.
 Modoc, Shasta and Siskiyou.
All Other States, and Lassen,  March 15....................  March 15.
 Modoc, Shasta and Siskiyou
 Counties, California.
------------------------------------------------------------------------

                            6. Annual Premium

    In lieu of the premium computation method contained in section 7 
(Annual Premium) of the Basic Provisions (Sec. 457.8), the annual 
premium amount is computed by multiplying the final stage production 
guarantee by the price election, the premium rate, the insured acreage, 
your share at the time of planting, and any applicable premium 
adjustment factors contained in the Actuarial Table.

                             7. Insured Crop

    (a) In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all the sugar beets 
in the county for which a premium rate is provided by the actuarial 
documents:
    (1) In which you have a share;
    (2) That are planted for harvest as sugar beets;
    (3) That are grown under a sugar beet processor contract executed 
before the acreage reporting date and are not excluded from the 
processor contract at any time during the crop year; and

[[Page 179]]

    (4) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Interplanted with another crop;
    (ii) Planted into an established grass or legume; or
    (iii) Planted prior to submitting a properly completed application.
    (b) Sugar beet growers who are also processors may establish an 
insurable interest if they meet the following requirements:
    (1) The processor must meet the definition of a ``processor'' in 
section 1 of these crop provisions and have a valid insurable interest 
in the sugar beet crop;
    (2) The Board of Directors or officers of the processor must have 
duly promulgated a resolution that sets forth essentially the same terms 
as a sugar beet processor contract. Such resolution will be considered a 
sugar beet processing contract under the terms of the sugar beet crop 
insurance policy;
    (3) The sales records of the processor showing the amount of sugar 
produced the previous year must be supplied to us to confirm the 
processor has produced and sold sugar in the past; and
    (4) Our inspection of the processing facilities determines that they 
conform to the definition of processor contained in section 1 of these 
crop provisions.

                          8. Insurable Acreage

    In addition to the provisions of section 9 (Insurable Acreage) of 
the Basic Provisions (Sec. 457.8):
    (a) We will not insure any acreage planted to sugar beets:
    (1) The preceding crop year, unless otherwise specified in the 
Special Provisions for the county;
    (2) In any crop year following the discovery of rhizomania on the 
acreage, unless allowed by the Special Provisions or by written 
agreement; or
    (3) That does not meet the rotation requirements shown in the 
Special Provisions;
    (b) Any acreage of the insured crop damaged before the final 
planting date, (or within 30 days of initial planting for those counties 
without a final planting date) to the extent that growers in the area 
would normally not further care for the crop, must be replanted unless 
we agree that replanting is not practical.

                           9. Insurance Period

    (a) In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), the calendar date for the 
end of the insurance period is:
    (1) July 15 in Arizona and in Imperial County, California;
    (2) The last day of the 12th month after the insured crop was 
initially planted in all California counties except Imperial, Lassen, 
Modoc, Shasta and Siskiyou;
    (3) October 31 in Lassen, Modoc, Shasta and Siskiyou Counties, 
California, and in Klamath County, Oregon;
    (4) November 25 in Ohio;
    (5) December 31 in New Mexico and Texas; and
    (6) November 15 in all other States and counties.
    (b) In addition to the provisions of section 11 (Insurance Period) 
of the Basic Provisions (Sec. 457.8), regarding the end of the 
insurance period, the insurance period ends for all units when the 
production delivered to the processor equals the amount of production 
stated in the sugar beet processor contract.

                           10. Causes of Loss

    In accordance with the provisions of section 12 (Causes of Loss) of 
the Basic Provisions (Sec. 457.8), insurance is provided only against 
the following causes of loss that occur within the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if caused by an insured 
peril that occurs during the insurance period.

                         11. Replanting Payments

    (a) In accordance with section 13 (Replanting Payment) of the Basic 
Provisions (Sec. 457.8), a replanting payment is allowed if the crop is 
damaged by an insurable cause of loss to the extent that the remaining 
stand will not produce at least 90 percent (90%) of the final stage 
production guarantee for the acreage and it is practical to replant.
    (b) The maximum amount of the replanting payment per acre will be 
the lesser of 10 percent (10%) of the final stage production guarantee 
or one ton, multiplied by your price election, multiplied by your 
insured share.
    (c) When sugar beets are replanted using a practice that is 
uninsurable for an original planting, our liability on the unit will be 
reduced by the amount of the replanting payment. The premium amount will 
not be reduced.

                12. Duties in the Event of Damage or Loss

    In accordance with the requirements of section 14 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8):
    (a) Representative samples of the unharvested crop must be at least 
10 feet wide and extend the entire length of each

[[Page 180]]

field in the unit. The samples must not be harvested or destroyed until 
the earlier of our inspection or 15 days after harvest of the balance of 
the unit is completed; and
    (b) You must provide a copy of your sugar beet processor contract or 
corporate resolution if you are the processor.

                         13. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide separate acceptable production records:
    (1) For any optional unit, we will combine all optional units for 
which acceptable production records were not provided; or
    (2) For any basic unit, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for each unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim on any unit by:
    (1) Multiplying the insured acreage by its respective production 
guarantee;
    (2) Subtracting the total production to count from the result in 
paragraph (b)(1);
    (3) Multiplying the result of paragraph (b)(2) by your price 
election; and
    (4) Multiplying the result of paragraph (b)(3) by your share.
    (c) The total production to count (in standardized tons) from all 
insurable acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide acceptable production records that 
are acceptable to us;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (unharvested production that is 
appraised prior to the earliest delivery date that the processor accepts 
harvested production will not be eligible for a conversion to 
standardized tons in accordance with section 13 (d) and (e));
    (iv) Only appraised production in excess of the difference between 
the first and final stage production guarantee for acreage that does not 
qualify for the final stage guarantee will be counted, except that all 
production from acreage subject to section 13(c)(1) (i) and (ii) will be 
counted; and
    (v) Potential production on insured acreage that you intend to put 
to another use or abandon, if you and we agree on the appraised amount 
of production. Upon such agreement, the insurance period for that 
acreage will end if you put the acreage to another use or abandon the 
crop. If agreement on the appraised amount of production is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to leave 
intact, and provide sufficient care for, representative samples of the 
crop in locations acceptable to us (The amount of production to count 
for such acreage will be based on the harvested production or appraisals 
from the samples at the time harvest should have occurred. If you do not 
leave the required samples intact, or you fail to provide sufficient 
care for the samples, our appraisal made prior to giving you consent to 
put the acreage to another use will be used to determine the amount of 
production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested production, or 
our reappraisal if additional damage occurs and the crop is not 
harvested; and
    (2) All harvested production from the insurable acreage.
    (d) Harvested production or unharvested production that is appraised 
after the earliest delivery date that the processor accepts harvested 
production and that meets the minimum acceptable standards contained in 
the sugar beet processor contract or corporate resolution will be 
converted to standardized tons by:
    (1) Dividing the average percentage of raw sugar in such sugar beets 
by the raw sugar content percentage shown in the Special Provisions; and
    (2) Multiplying the result (rounded to three places) by the number 
of tons of such sugar beets.
    The average percentage of raw sugar will be determined from tests 
performed by the processor at the time of delivery. If individual tests 
of raw sugar content are not made at the time of delivery, the average 
percent of raw sugar may be based on the results of previous tests 
performed by the processor during the crop year if it is determined that 
such results are representative of the total production. If not 
representative, the average percent of raw sugar will equal the raw 
sugar content percent shown in the Special Provisions.
    (e) Harvested production or unharvested production that is appraised 
after the earliest delivery date that the processor accepts harvested 
production and that does not meet the minimum acceptable standards 
contained in the sugar beet processor contract due to an insured peril 
will be converted to standardized tons by:
    (1) Dividing the gross dollar value of all of the damaged sugar 
beets on the unit (including the value of cooperative stock, patronage 
refunds, etc.) by the local market price per

[[Page 181]]

pound on the earlier of the date such production is sold or the date of 
final inspection for the unit;
    (2) Dividing that result by 2,000; and
    (3) Dividing that result by the county average raw sugar factor 
contained in the Special Provisions for this purpose.
    For example, assume that the total dollar value of the damaged sugar 
beets is $6,000.00; the local market price is $0.10; and the county 
average raw sugar factor is 0.15. The amount of production to count 
would be calculated as follows: (($6,000.00 / $0.10) / 2,000) / 0.15 = 
200 tons.

                     14. Late and Prevented Planting

    The late planting provisions contained in section 16 of the Basic 
Provisions are not applicable in California counties with a July 15, 
cancellation date.

                         15. Prevented Planting

    (a) The prevented planting provision contained in sectino 17 of the 
Basic Provisions are not applicable in Califronia counties with a July 
15, cancellation date.
    (b) Except in those counties indicated in section 15(a), your 
prevented planting coverage will be 45 percent of your production 
guarantee for timely planted acreage. If you have limited or additional 
levels of coverage, as specified in 7 CFR part 400, subpart T, and pay 
an additional premium, you may increase your prevented planting coverage 
to a level specified in the actuarial documents.

[61 FR 58775, Nov. 19, 1996, as amended at 62 FR 63633, Dec. 2, 1997; 62 
FR 65167, Dec. 10, 1997]



Sec. 457.110  Fig crop insurance provisions.

    The Fig Crop Insurance Provisions for the 2001 and succeeding crop 
years are as follows:

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                           Fig Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Harvest--The picking of the figs from the trees or ground by hand or 
machine for the purpose of removal from the orchard.
    Interplanted--Acreage on which two or more crops are planted in any 
form of alternating or mixed pattern.
    Manufacturing grade production-- Production that meets the minimum 
grade standards and is defined as ``manufacturing grade'' by the 
Marketing Order for Dried Figs, as amended, which is in effect on the 
date insurance attaches.
    Marketable figs-- Figs that grade manufacturing grade or better in 
accordance with the Marketing Order for Dried Figs, as amended, which is 
in effect on the date insurance attaches.
    Substandard production-- Production that does not meet minimum grade 
standards and is defined as ``substandard'' by the Marketing Order for 
Dried Figs, as amended, which is in effect on the date insurance 
attaches.

                            2. Unit Division

    (a) A basic unit, as defined in section 1 of the Basic Provisions, 
will be divided into additional basic units by each fig type designated 
in the Special Provisions.
    (b) Provisions in the Basic Provisions that allow optional units by 
section, section equivalent, or FSA farm serial number and by irrigated 
and non-irrigated practices are not applicable. Optional units may be 
established only if each optional unit is located on non-contiguous 
land, unless otherwise allowed by written agreement.

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

    (a) In addition to the requirements under section 3 of the Basic 
Provisions, you may select only one price election for each fig type 
designated in the Special Provisions and insured in the county under 
this policy.
    (b) You may not increase your elected or assigned coverage level or 
the ratio of your price election to the maximum price election if a 
cause of loss that could or would reduce the yield of the insured crop 
has occurred prior to the time you request the increase.
    (c) You must report, by the production reporting date designated in 
section 3 of the Basic Provisions, by type if applicable:
    (1) Any damage, removal of trees, change in practices, or any other 
circumstance that may reduce the expected yield below the yield upon 
which the insurance guarantee is based, and the number of affected 
acres;
    (2) The number of bearing trees on insurable and uninsurable 
acreage;
    (3) The age of the trees and the planting pattern;
    (4) For the first year of insurance for acreage interplanted with 
another perennial crop, and anytime the planting pattern of such acreage 
is changed, the age of the crop that is interplanted with the figs, and 
type if applicable, and the planting pattern; and
    (5) Any other information that we request in order to establish your 
approved yield. We will reduce the yield used to establish your

[[Page 182]]

production guarantee as necessary, based on our estimate of the effect 
of the following: Interplanted perennial crop; removal of trees; damage; 
change in practices and any other circumstance on the yield potential of 
the insured crop. If you fail to notify us of any circumstance that may 
reduce your yields from previous levels, we will reduce your production 
guarantee as necessary at any time we become aware of the circumstance.

                           4. Contract Changes

    The contract change date is October 31 preceding the cancellation 
date (see the provisions under section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8)).

                  5. Cancellation and Termination Dates

    The cancellation and termination dates are February 28.

                          6. Report of Acreage

    By applying for fig crop insurance, you authorize us to have access 
to and to determine or verify your production and acreage from records 
maintained by the California Fig Advisory Board and the fig packer.

                             7. Insured Crop

    The crop insured will be all the commercially grown dried figs that 
are grown in the county on insurable acreage, and for which a premium 
rate is provided by the actuarial documents:
    (a) In which you have a share;
    (b) That are grown for harvest as dried figs;
    (c) That are irrigated;
    (d) That have reached the seventh growing season after being set 
out; and
    (e) For which acceptable production records for at least the 
previous crop year are provided;
    (f) That are not figs:
    (1) Grown on acreage with less than 90 percent of a stand based on 
the original planting pattern unless we agree, in writing, to insure 
such figs;
    (2) Which we inspect and consider not acceptable;
    (3) Grown for the crop year the application is filed unless 
inspected and accepted by us; or
    (4) Grown on acreage acquired for the crop year unless such acreage 
has been inspected and accepted by us.

                          8. Insurable Acreage

    In lieu of the provisions in section 9 of the Basic Provisions, that 
prohibit insurance attaching to a crop planted with another crop, figs 
interplanted with another perennial crop are insurable unless we inspect 
the acreage and determine that it does not meet the requirements 
contained in your policy.

                           9. Insurance Period

    (a) In accordance with the provisions of section 11 of the Basic 
Provisions:
    (1) Coverage begins on March 1, except that for the year of 
application, if your application is received after February 19 but prior 
to March 1, insurance will attach on the 10th day after your properly 
completed application is received in our local office, unless we inspect 
the acreage during the 10 day period and determine that it does not meet 
insurability requirements. You must provide any information that we 
require for the crop or to determine the condition of the orchard.
    (2) The calendar date for the end of the insurance period for each 
crop year is October 31 or the date harvest of the figs (by type) should 
have started on any acreage that will not be harvested (Exceptions, if 
any, for specific counties or varieties or varietal group are contained 
in the Special Provisions).
    (b) Notwithstanding paragraph (a)(1) of this section, for each 
subsequent crop year that the policy remains continuously in force, 
coverage begins on the day immediately following the end of the 
insurance period for the prior crop year. Policy cancellation that 
results solely from transferring to a different insurance provider for a 
subsequent crop year will not be considered a break in continuous 
coverage.
    (c) If your fig policy is canceled or terminated for any crop year, 
in accordance with the terms of the policy, after insurance attached for 
that crop year but on or before the cancellation and termination dates 
whichever is later, insurance will not be considered to have attached 
for that crop year and no premium, administrative fee, or indemnity will 
be due for such crop year.

                           10. Causes of Loss

    (a) In addition to the provisions under section 12 (Causes of Loss) 
of the Basic Provisions (Sec. 457.8), any loss covered by this policy 
must occur within the insurance period. The specific causes of loss for 
figs are:
    (1) Adverse weather conditions;
    (2) Earthquake;
    (3) Fire;
    (4) Volcanic eruption;
    (5) Wildlife; or
    (6) Failure of the irrigation water supply.
    (b) In addition to the causes of loss not insured against contained 
in section 12 (Causes of Loss) of the Basic Provisions (Sec. 457.8), we 
will not insure against:
    (1) Any loss of production due to fire, where weeds and other forms 
of undergrowth have not been controlled or tree pruning debris has not 
been removed from the grove; or
    (2) The inability to market the fruit as a direct result of 
quarantine, boycott, or refusal of any entity to accept production.

[[Page 183]]

                         11. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide records of production that are acceptable to us 
for any:
    (1) Optional unit, we will combine all optional units for which 
acceptable records of production were not provided; or
    (2) Basic unit, we will allocate any commingled production to such 
units in proportion to our liability on the harvested acreage for each 
unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the insured acreage by the production guarantee;
    (2) Subtracting from this the total production to count;
    (3) Multiplying the remainder by your price election; and
    (4) Multiplying this result by your share.
    (c) The total production (pounds) to count from all insurable 
acreage on the unit will include all harvested and appraised marketable 
figs.
    (1) Figs, which due to insurable causes, grade manufacturing grade 
will be adjusted by:
    (i) Dividing the value per pound of the manufacturing grade 
production by the highest price election available for the insured type; 
and
    (ii) Multiplying the result (not to exceed 1) by the number of 
pounds of such manufacturing grade production.
    (2) Figs, which due to insurable causes, grade substandard and are 
delivered to the substandard pool will not be considered production to 
count, provided all the insured's substandard production is inspected by 
us and we give written consent to such delivery prior to delivery. If we 
do not give written consent prior to the delivery to the substandard 
pool, all production will be counted as undamaged marketable production. 
Substandard production for which we give written consent to you prior to 
delivery to the substandard pool, which is not delivered to the 
substandard pool, and is sold by you, will be considered production to 
count and adjusted as follows:
    (i) Dividing the value per pound received for such substandard 
production by the highest price election available for the insured type; 
and
    (ii) Multiplying the result (not to exceed 1) by the number of 
pounds of such substandard production.
    (3) Appraised production to be counted will include:
    (i) Potential production lost due to uninsured causes and failure to 
follow recognized good fig farming practices;
    (ii) Not less than the production guarantee for the figs on any 
acreage:
    (A) That is abandoned without our consent;
    (B) Damaged solely by uninsured causes;
    (c) If the figs are destroyed by you without our consent; or
    (D) For which you fail to provide records of production that are 
acceptable to us;
    (iii) Unharvested production which would be marketable if harvested; 
and
    (iv) Potential production on insured acreage that you want to 
abandon and no longer care for if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for that 
acreage will end if you abandon the crop. If agreement on the appraised 
amount of production is not reached:
    (A) We may require you to continue to care for the crop so that a 
subsequent appraisal may be made or the crop harvested to determine 
actual production. You must notify us within three days of the date 
harvest should have started if the crop is not harvested; or
    (B) You may elect to continue to care for the crop. We will 
determine the amount of production to count for the acreage using the 
harvested production or our reappraisal if the crop is not harvested.

                     12. Late and Prevented Planting

    The late and prevented planting provisions of the Basic Provisions 
are not applicable.

[59 FR 9615, Mar. 1, 1994, as amended at 62 FR 65167, Dec. 10, 1997; 65 
FR 47836, Aug. 4, 2000]



Sec. 457.111  Pear crop insurance provisions.

    The Pear Crop Insurance Provisions for the 2001 and succeeding crop 
years are as follows:
    FCIC Policies

                        Department of Agriculture

                   Federal Crop Insurance Corporation

                           Reinsured Policies

               (Appropriate title for insurance provider)

    Both FCIC and Reinsured Policies

                          Pear Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Direct marketing. Sale of the insured crop directly to consumers 
without the intervention of an intermediary such as a wholesaler, 
retailer, packer, processor, shipper, or buyer. Examples of direct 
marketing include selling

[[Page 184]]

through an on-farm or roadside stand, farmer's market, and permitting 
the general public to enter the field for the purpose of picking all or 
a portion of the crop.
    Harvest. The picking of mature pears from the trees or the 
collecting of marketable pears from the ground.
    Interplanted. Acreage on which two or more crops are planted in any 
form of alternating or mixed pattern.
    Marketable. Pear production acceptable for processing or other human 
consumption even if failing to meet any U.S. or applicable state grading 
standard.
    Ton. Two thousand (2,000) pounds avoirdupois.
    Varietal group. Types of pears with similar characteristics that are 
grouped for insurance purposes as specified in the Special Provisions.

                            2. Unit Division

    (a) Provisions in the Basic Provision that allow optional units by 
irrigated and non-irrigated practices are not applicable.
    (b) Instead of establishing optional units by section, section 
equivalents, or FSA farm serial number optional units may be established 
if each optional unit is located on non-contiguous.
    (c) In addition to, or instead of, establishing optional units by 
section, section equivalents, FSA farm serial number, or on non-
contiguous land, optional units may be established by varietal group 
when provided for in the Special Provisions. The requirements of section 
34(a)(1) of the Basic Provisions are not applicable for this method of 
unit division.

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

    In addition to the requirements of section 3 (Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities) of the Basic 
Provisions (Sec. 457.8):
    (a) You may select only one price election for all the pears in the 
county insured under this policy unless the Special Provisions provide 
different price elections by varietal group, in which case you may 
select one price election for each varietal group designated in the 
Special Provisions. The price elections you choose for each varietal 
group must have the same percentage relationship to the maximum price 
offered by us for each varietal group. For example, if you choose one 
hundred percent (100%) of the maximum price election for one varietal 
group, you must also choose one hundred percent (100%) of the maximum 
price election for all other varietal groups.
    (b) You must report, by the production reporting date designated in 
section 3 (Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities) of the Basic Provisions (Sec. 457.8), by 
varietal group:
    (1) Any damage, removal of trees, change in practices or any other 
circumstance that may reduce the expected yield below the yield upon 
which the insurance guarantee is based, and the number of affected 
acres;
    (2) The number of bearing trees on insurable and uninsurable 
acreage;
    (3) The age of the trees and the planting pattern; and
    (4) For the first year of insurance for acreage interplanted with 
another perennial crop, and any time the planting pattern of such 
acreage is changed:
    (i) The age of the interplanted crop, and type if applicable;
    (ii) The planting pattern; and
    (iii) Any other information that we request in order to establish 
your approved yield. We will reduce the yield used to establish your 
production guarantee as necessary, based on our estimate of the effect 
of the following: interplanted perennial crop; removal of trees; damage; 
change in practices or any other circumstance on the yield potential of 
the insured crop. If you fail to notify us of any circumstance that may 
reduce your yields from previous levels, we will reduce your production 
guarantee as necessary at any time that we become aware of the 
circumstance.
    (c) You may not increase your elected or assigned coverage level or 
the ratio of your price election to the maximum price election if a 
cause of loss that could or would reduce the yield of the insured crop 
has occurred prior to the time that you request the increase.

                           4. Contract Changes

    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is October 31 
preceding the cancellation date for states with a January 31 
cancellation date and August 31 preceding the cancellation date for all 
other states.

                  5. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation and 
termination dates are:

------------------------------------------------------------------------
                                           Cancellation and termination
                 States                               dates
------------------------------------------------------------------------
California.............................  January 31.
All other states.......................  November 20.
------------------------------------------------------------------------

                             6. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic Provisions 
(Sec. 457.8), the crop insured will be all the pears in the county for

[[Page 185]]

which a premium rate is provided by the actuarial documents:
    (a) In which you have a share;
    (b) That are of varieties adapted to the area;
    (c) That are grown on trees that have produced an average of at 
least five (5) tons of pears per acre in at least one of the four 
previous crop years unless the Special Provisions or a written agreement 
establishes a lower production level; and
    (d) That are grown in an orchard that, if inspected, is considered 
acceptable by us.

                          7. Insurable Acreage

    In lieu of the provisions in section 9 (Insurable Acreage) of the 
Basic Provisions (Sec. 457.8), that prohibit insurance attaching to a 
crop planted with another crop, pears interplanted with another 
perennial crop are insurable unless we inspect the acreage and determine 
that it does not meet the requirements contained in your policy.

                           8. Insurance Period

    (a) In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8):
    (1) Coverage begins:
    (i) In California, on February 1 of each crop year, except that for 
the year of application, if your application is received after January 
22 but prior to February 1, insurance will attach on the 10th day after 
your properly completed application is received in our local office, 
unless we inspect the acreage during the 10 day period and determine 
that it does not meet insurability requirements. You must provide any 
information that we require for the crop or to determine the condition 
of the orchard; or
    (ii) In all other states, on November 21 of each crop year, except 
that for the year of application, if your application is received after 
November 11 but prior to November 21, insurance will attach on the 10th 
day after your properly completed application is received in our local 
office, unless we inspect the acreage during the 10 day period and 
determine that it does not meet insurability requirements. You must 
provide any information that we require for the crop or to determine the 
condition of the orchard.
    (2) The calendar date for the end of the insurance period for each 
crop year is:
    (i) September 15 for Bartlett (green and red) and Star Crimson 
(Crimson Red) varietal groups; or
    (ii) October 15 for all other varietal groups.
    (b) In addition to the provisions of section 11 (Insurance Period) 
of the Basic Provisions (Sec. 457.8):
    (1) If you acquire an insurable share in any insurable acreage after 
coverage begins but on or before the acreage reporting date for the crop 
year, and after an inspection we consider the acreage acceptable, 
insurance will be considered to have attached to such acreage on the 
calendar date for the beginning of the insurance period.
    (2) If you relinquish your insurable interest on any insurable 
acreage of pears on or before the acreage reporting date of any crop 
year, insurance will not be considered to have attached to, and no 
premium will be due, and no indemnity paid, for such acreage for that 
crop year unless:
    (i) A transfer of coverage and right to an indemnity, or a similar 
form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.
    (c) Notwithstanding paragraph (a)(1) of this section, for each 
subsequent crop year that the policy remains continuously in force, 
coverage begins on the day immediately following the end of the 
insurance period for the prior crop year. Policy cancellation that 
results solely from transferring to a different insurance provider for a 
subsequent crop year will not be considered a break in continuous 
coverage.
    (d) If your pear policy is canceled or terminated for any crop year, 
in accordance with the terms of the policy, after insurance attached for 
that crop year but on or before the cancellation and termination dates 
whichever is later, insurance will not be considered to have attached 
for that crop year and no premium, administrative fee, or indemnity will 
be due for such crop year.

                            9. Causes of Loss

    (a) In accordance with the provisions of section 12 (Causes of Loss) 
of the Basic Provisions (Sec. 457.8), insurance is provided only 
against the following causes of loss that occur within the insurance 
period:
    (1) Adverse weather conditions;
    (2) Fire, unless weeds and other forms of undergrowth have not been 
controlled or pruning debris has not been removed from the orchard;
    (3) Earthquake;
    (4) Volcanic eruption; or
    (5) Failure of the irrigation water supply, if caused by an insured 
peril that occurs during the insurance period.
    (b) In addition to the causes of loss excluded in section 12 (Causes 
of Loss) of the Basic Provisions (Sec. 457.8), we will not insure 
against damage or loss of production due to:
    (1) Disease or insect infestation, unless adverse weather:
    (i) Prevents the proper application of control measures or causes 
properly applied control measures to be ineffective; or
    (ii) Causes disease or insect infestation for which no effective 
control mechanism is available.

[[Page 186]]

    (2) Failure of the fruit to color properly; or
    (3) Inability to market the pears for any reason other than actual 
physical damage from an insurable cause specified in this section. For 
example, we will not pay you an indemnity if you are unable to market 
due to quarantine, boycott, or refusal of any person to accept 
production.

                10. Duties in the Event of Damage or Loss

    In addition to the requirements of section 14 (Duties in the Event 
of Damage or Loss) of the Basic Provisions (Sec. 457.8), the following 
will apply:
    (a) You must notify us within 3 days of the date harvest should have 
started if the crop will not be harvested.
    (b) You must notify us at least 15 days before any production from 
any unit will be sold by direct marketing. We will conduct an appraisal 
that will be used to determine your production to count for production 
that is sold by direct marketing. If damage occurs after this appraisal, 
we will conduct an additional appraisal. These appraisals, and any 
acceptable records provided by you, will be used to determine your 
production to count. Failure to give timely notice that production will 
be sold by direct marketing will result in an appraised amount of 
production to count of not less than the production guarantee per acre 
if such failure results in our inability to make the required appraisal.
    (c) If you intend to claim an indemnity on any unit, you must notify 
us at least 15 days prior to the beginning of harvest if you previously 
gave notice in accordance with section 14 of the Basic Provisions (Sec. 
457.8), so that we may inspect the damaged production. You must not sell 
or dispose of the damaged crop until after we have given you written 
consent to do so. If you fail to meet the requirements of this section, 
and such failure results in our inability to inspect the damaged 
production, all such production will be considered undamaged and 
included as production to count.

                         11. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide separate, acceptable production records:
    (1) For any optional unit, we will combine all optional units for 
which such production records were not provided; or
    (2) For any basic unit, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for each unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the insured acreage for each varietal group if 
applicable, by its respective production guarantee;
    (2) Multiplying the results of section 11(b)(1) by the respective 
price election for each varietal group, if applicable;
    (3) Totaling the results of section 11(b)(2);
    (4) Multiplying the total production to be counted of each varietal 
group, if applicable, by the respective price election;
    (5) Totaling the results of section 11(b)(4);
    (6) Subtracting this result of section 11(b)(5) from the result of 
section 11(b)(3); and
    (7) Multiplying the result of section 11(b)(6) by your share.
    (c) The total production to count (in tons) from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) That is sold by direct marketing if you fail to meet the 
requirements contained in section 10;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide production records that are 
acceptable to us;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production; and
    (iv) Potential production on insured acreage that you intend to 
abandon or no longer care for, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for that 
acreage will end. If you do not agree with our appraisal, we may defer 
the claim only if you agree to continue to care for the crop. We will 
then make another appraisal when you notify us of further damage or that 
harvest is general in the area unless you harvested the crop, in which 
case we will use the harvested production. If you do not continue to 
care for the crop, our appraisal made prior to deferring the claim will 
be used to determine the production to count; and
    (2) For all states except California, all harvested and appraised 
marketable pear production from the insurable acreage.
    (3) For California, all harvested and appraised production that:
    (i) Meets the standards for first grade canning as defined by the 
California Pear Advisory Board or for U.S. Number 1 as defined by the 
United States Standards for Grades of Summer and Fall Pears, or Pears 
for Processing, or for U.S. Extra Number 1 or U.S. Number 1 as defined 
by the United States Standards for Grades of Winter Pears;
    (ii) Is accepted by a processor for canning or packing; or
    (iii) Is marketable for any purpose. However, if the pears are 
damaged by an insured cause, the production to count will be reduced by 
the greater of the following amounts:

[[Page 187]]

    (A) The excess over ten percent (10%) of pears that are size 180 or 
smaller for varieties other than Forelle, Seckel or Winter Nelis; or
    (B) The result of dividing the value per ton of such pears by the 
highest price election for the insured varietal group, subtracting this 
result from 1.000, and multiplying this difference (if positive) by the 
number of tons of such pears.

                     12. Late and Prevented Planting

    The late and prevented planting provisions of the Basic Provisions 
are not applicable.

                 13. Pear Quality Adjustment Endorsement

    (a) This endorsement applies to any crop year: Provided,
    (1) The insured pears are located in a State other than California 
and the actuarial documents designate a premium rate for this 
endorsement;
    (2) You have not elected to insure your pears under the Catastrophic 
Risk Protection (CAT) Endorsement;
    (3) You elected it on your application or other form approved by us, 
and did so on or before the sales closing date for the initial crop year 
for which you wish it to be effective. By doing so, you agreed to pay 
the additional premium designated in the actuarial documents for this 
optional coverage; and
    (4) You or we did not cancel it in writing on or before the 
cancellation date. Your election of CAT coverage for any crop year after 
this endorsement is effective will be considered as notice of 
cancellation by you.
    (b) If the pear production is damaged by hail and if eleven percent 
(11%) or more of the harvested and appraised production does not grade 
at least U.S. No. 2 in accordance with applicable United States 
Standards for Grades of Summer and Fall Pears, United States Standards 
for Grades of Winter Pears, or United States Standards for Grades of 
Pears for Processing, as applicable, due solely to hail, the amount of 
production to count will be reduced as follows:
    (1) By two percent (2%) for each full one percent (1%) in excess of 
ten percent (10%), when eleven percent (11%) through sixty percent (60%) 
of the pears fail the grade standard; or
    (2) By one hundred percent (100%) when more than sixty percent (60%) 
of the pears fail the grade standard.
    The difference between the reduced production determined in section 
13(b) and the total production will be considered as cull production.
    (c) Pears that are knocked to the ground by wind or that are frozen 
and cannot be packed or marketed as fresh pears will be considered one 
hundred percent (100%) cull production.
    (d) Marketable production that grades less than U.S. No. 2 due to 
causes not covered by this endorsement will not be reduced.
    (e) Fifteen percent (15%) of all production considered as cull 
production in accordance with section 13 (b) and (c) will be production 
to count.

[61 FR 57580, Nov. 7, 1996; 62 FR 2007, Jan. 15, 1997; 62 FR 65167, Dec. 
10, 1997; 65 FR 47837, Aug. 4, 2000]



Sec. 457.112  Hybrid sorghum seed crop insurance provisions.

    The Hybrid Sorghum Seed Crop Insurance Provisions for the 1998 and 
succeeding crop years are as follows:
    FCIC policies:

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                           Reinsured Policies

               (Appropriate title for insurance provider)

    Both FCIC and Reinsured Policies

                   Hybrid Sorghum Seed Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows:
    (1) The Catastrophic Risk Protection Endorsement, if applicable; (2) 
the Special Provisions; (3) these Crop Provisions; and (4) the Basic 
Provisions, (Sec. 457.8) with (1) controlling (2), etc.

                             1. Definitions

    Adjusted yield. An amount determined by multiplying the county yield 
by the coverage level factor.
    Amount of insurance per acre. A dollar amount determined by 
multiplying the adjusted yield by the price election you select and 
subtracting any minimum guaranteed payment, not to exceed the total 
compensation specified in the hybrid sorghum seed processor contract. If 
your hybrid sorghum seed processor contract contains a minimum 
guaranteed payment that is stated in bushels, we will convert that value 
to dollars by multiplying it by the price election you selected.
    Approved yield. In lieu of the definition contained in the Basic 
Provisions, an amount FCIC determines to be representative of the yield 
that the female parent plants are expected to produce when grown under a 
specific production practice. FCIC will establish the approved yield 
based upon records provided by the seed company and other information it 
deems appropriate.
    Bushel. Fifty-six pounds avoirdupois of the insured crop.

[[Page 188]]

    Certified seed test. A warm germination test performed on clean seed 
according to specifications of the ``Rules for Testing Seeds'' of the 
Association of Official Seed Analysts.
    Commercial hybrid sorghum seed. The offspring produced by crossing a 
male and female parent plant, each having a different genetic character. 
This offspring is the product intended for use by an agricultural 
producer to produce a commercial field sorghum crop for grain or forage.
    County yield. An amount contained in the actuarial documents that is 
established by FCIC to represent the yield that a producer of hybrid 
sorghum seed would be expected to produce if the acreage had been 
planted to commercial field sorghum.
    Coverage level factor. A factor contained in the Special Provisions 
to adjust the county yield for commercial field sorghum to reflect the 
higher value of hybrid sorghum seed.
    Dollar value per bushel. An amount that determines the value of any 
seed production to count. It is determined by dividing the amount of 
insurance per acre by the result of multiplying the approved yield by 
the coverage level percentage, expressed as a decimal.
    Female parent plants. Sorghum plants that are grown for the purpose 
of producing commercial hybrid sorghum seed and are male sterile.
    Field run. Commercial hybrid sorghum seed production before it has 
been processed or screened.
    Good farming practices. In addition to the definition contained in 
the Basic Provisions, good farming practices include those practices 
required by the hybrid sorghum seed processor contract.
    Harvest. Combining, threshing or picking of the female parent plants 
to obtain commercial hybrid sorghum seed.
    Hybrid sorghum seed processor contract. An agreement executed in 
writing between the hybrid sorghum seed crop producer and a seed company 
containing, at a minimum:
    (a) The producer's promise to plant and grow male and female parent 
plants, and to deliver all commercial hybrid sorghum seed produced from 
such plants to the seed company;
    (b) The seed company's promise to purchase the commercial hybrid 
sorghum seed produced by the producer; and
    (c) Either a fixed price per unit of measure (bushels, 
hundredweight, etc.) of the commercial hybrid sorghum seed or a formula 
to determine the value of such seed. Any formula for establishing the 
value must be based on data provided by a public third party that 
establishes or provides pricing information to the general public, based 
on prices paid in the open market (e.g., commodity futures exchanges), 
to be acceptable for the purpose of this policy.
    Inadequate germination. Germination of less than 80 percent of the 
commercial hybrid sorghum seed as determined by using a certified seed 
test.
    Insurable interest. Your share of the financial loss that occurs in 
the event seed production is damaged by a cause of loss specified in 
section 10.
    Local market price. The cash price offered by buyers for any 
production from the female parent plants that is not considered 
commercial hybrid sorghum seed under the terms of this policy.
    Male parent plants. Sorghum plants grown for the purpose of 
pollinating female parent plants.
    Minimum guaranteed payment. A minimum amount (usually stated in 
dollars or bushels) specified in your hybrid sorghum seed processor 
contract that will be paid or credited to you by the seed company 
regardless of the quantity of seed produced.
    Non-seed production. Production that does not qualify as seed 
production because of inadequate germination.
    Planted acreage. In addition to the definition contained in the 
Basic Provisions, the insured crop must be planted in rows wide enough 
to permit mechanical cultivation, unless provided by the Special 
Provisions or by written agreement.
    Planting pattern. The arrangement of the rows of the male and female 
parent plants in a field. An example of a planting pattern is four 
consecutive rows of female parent plants followed by two consecutive 
rows of male parent plants.
    Practical to replant. In addition to the definition contained in the 
Basic Provisions, practical to replant applies to either the female or 
male parent plant. It will not be considered practical to replant unless 
production from the replanted acreage can be delivered under the terms 
of the hybrid sorghum seed processor contract, or the seed company 
agrees that it will accept the production from the replanted acreage.
    Prevented planting. In addition to the definition contained in the 
Basic Provisions, prevented planting applies to the female and male 
parent plants. The male parent plants must be planted in accordance with 
the requirements of the hybrid sorghum seed processor contract to be 
considered planted.
    Sample. For the purpose of the certified seed test, at least 3 
pounds of randomly selected field run sorghum seed for each type or 
variety of commercial hybrid sorghum seed grown on the unit.
    Seed company. A business enterprise that possesses all licenses for 
marketing commercial hybrid sorghum seed required by the state in which 
it is domiciled or operates, and which possesses facilities with enough 
storage and drying capacity to accept and process the insured crop 
within a reasonable amount of time after harvest. If the seed

[[Page 189]]

company is the insured, it must also be a corporation.
    Seed production. All seed produced by female parent plants with a 
germination rate of at least 80 percent as determined by a certified 
seed test.
    Type. Grain sorghum, forage sorghum, or sorghum sudan parent plants.
    Variety. The name, number or code assigned to a specific genetic 
cross by the seed company or the Special Provisions for the insured crop 
in the county.

                            2. Unit Division

    (a) For any processor contract that stipulates the amount of 
production to be delivered:
    (1) In lieu of the definition of ``basic unit'' contained in the 
Basic Provisions, a basic unit will consist of all acreage planted to 
the insured crop in the county that will be used to fulfill a hybrid 
sorghum seed processor contract;
    (2) There will be no more than one basic unit for all production 
contracted with each processor contract;
    (3) In accordance with section 12, all production from any basic 
unit in excess of the amount under contract will be included as 
production to count if such production is applied to any other basic 
unit for which the contracted amount has not been fulfilled; and
    (4) Optional units will not be established.
    (b) For any processor contract that stipulates a number of acres to 
be planted, the provisions in the Basic Provisions that allow optional 
units by irrigated and non-irrigated practices are not applicable.

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

    (a) In addition to the requirements of section 3 of the Basic 
Provisions, you may select only one price election for all the hybrid 
sorghum seed in the county insured under this policy unless the Special 
Provisions provide different price elections by type or variety, in 
which case you may elect one price election for each hybrid sorghum seed 
type or variety designated in the Special Provisions. The price election 
you choose for each type or variety must have the same percentage 
relationship to the maximum price offered by us for each type or 
variety. For example, if you choose 100 percent of the maximum price 
election for one specific type or variety, you must also choose 100 
percent of the maximum price election for all other types or varieties.
    (b) The production reporting requirements contained in section 3 of 
the Basic Provisions are not applicable to this contract.

                           4. Contract Changes

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

                  5. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are March 15.

                          6. Report of Acreage

    In addition to the requirements of section 6 of the Basic 
Provisions, you must:
    (a) Report by type and variety, the location and insurable acreage 
of the insured crop;
    (b) Report any acreage that is uninsured, including that portion of 
the total acreage occupied by male parent plants; and
    (c) Certify that you have a hybrid sorghum seed processor contract 
and report the amount, if any, of any minimum guaranteed payment.

                             7. Insured Crop

    (a) In accordance with section 8 of the Basic Provisions, the crop 
insured will be all the female parent plants in the county for which a 
premium rate is provided by the actuarial documents:
    (1) In which you have a share;
    (2) That are grown under a hybrid sorghum seed processor contract 
executed before the acreage reporting date;
    (3) That are planted for harvest as commercial hybrid sorghum seed 
in accordance with the requirements of the hybrid sorghum seed processor 
contract and the production management practices of the seed company; 
and
    (4) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Planted with a mixture of female and male parent seed in the 
same row;
    (ii) Planted for any purpose other than for commercial hybrid 
sorghum seed;
    (iii) Interplanted with another crop; or
    (iv) Planted into an established grass or legume.
    (b) An instrument in the form of a ``lease'' under which you retain 
control of the acreage on which the insured crop is grown and that 
provides for delivery of the crop under substantially the same terms as 
a hybrid sorghum seed processor contract will be treated as a contract 
under which you have an insurable interest in the crop.
    (c) A commercial hybrid sorghum seed producer who is also a 
commercial hybrid sorghum seed company may be able to insure the hybrid 
sorghum seed crop if the following requirements are met:
    (1) The seed company has an insurable interest in the hybrid sorghum 
seed crop;
    (2) Prior to the sales closing date, the Board of Directors of the 
seed company has

[[Page 190]]

executed and adopted a corporate resolution containing the same terms as 
an acceptable hybrid sorghum seed processor contract. This corporate 
resolution will be considered a contract under the terms of this policy;
    (3) Sales records for at least the previous years' seed production 
must be provided to confirm that the seed company has produced and sold 
seed. If such records are not available, the crop may be insured under 
the Coarse Grains Crop Provisions with a written agreement; and
    (4) Our inspection reveals that the storage and drying facilities 
satisfy the definition of a seed company.
    (d) Any of the insured crop that is under contract with different 
seed companies may be insured under separate policies with different 
insurance providers provided all acreage of the insured crop in the 
county is insured. If you elect to insure the insured crop with 
different insurance providers, you agree to pay separate administrative 
fees for each insurance policy.

                          8. Insurable Acreage

    In addition to the provisions of section 9 of the Basic Provisions, 
we will not insure any acreage of the insured crop:
    (a) Planted and occupied exclusively by male parent plants;
    (b) Not in compliance with the rotation requirements contained in 
the Special Provisions or, if applicable, required by the hybrid sorghum 
seed processor contract; or
    (c) If either the female or male parent plants are damaged before 
the final planting date and we determine that insured crop is practical 
to replant but it is not replanted.

                           9. Insurance Period

    (a) In addition to the provisions of section 11 of the Basic 
Provisions, insurance attaches upon completion of planting of:
    (1) The female parent plant seed on or before the final planting 
date designated in the Special Provisions, except as allowed in section 
16 of the Basic Provisions; and
    (2) The male parent plant seed.
    (b) In accordance with the provisions of section 11 of the Basic 
Provisions, the calendar date for the end of the insurance period is the 
November 30 immediately following planting.

                           10. Causes of Loss

    (a) In accordance with the provisions of section 12 of the Basic 
Provisions, insurance is provided only against the following causes of 
loss that occur during the insurance period:
    (1) Adverse weather conditions;
    (2) Fire;
    (3) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (4) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (5) Wildlife;
    (6) Earthquake;
    (7) Volcanic eruption; or
    (8) Failure of the irrigation water supply, if due to a cause of 
loss contained in section 10(a) (1) through (7) that occurs during the 
insurance period.
    (b) In addition to the causes of loss excluded by section 12 of the 
Basic Provisions, we will not insure against any loss of production due 
to:
    (1) The use of unadapted, incompatible, or genetically deficient 
male or female parent plant seed;
    (2) Frost or freeze after the date set by the Special Provisions;
    (3) Failure to follow the requirements stated in the hybrid sorghum 
seed processor contract and production management practices of the seed 
company;
    (4) Inadequate germination, even if resulting from an insured cause 
of loss, unless you have provided adequate notice as required by section 
11(b)(1); or
    (5) Failure to plant the male parent plant seed at a time or in a 
manner sufficient to assure adequate pollination of the female parent 
plants, unless you are prevented from planting the male parent plant 
seed by an insured cause of loss.

                11. Duties in the Event of Damage or Loss

    (a) In accordance with the requirements of section 14 of the Basic 
Provisions, you must leave representative samples of at least one 
complete planting pattern of the male and female parent plant rows that 
extend the entire length of each field in the unit. If you are going to 
destroy any acreage of the insured crop that will not be harvested, the 
samples must not be destroyed until after our inspection.
    (b) In addition to the requirements of section 14 of the Basic 
Provisions:
    (1) You must give us notice of probable loss at least 15 days before 
the beginning of harvest if you anticipate inadequate germination on any 
unit; and
    (2) You must provide a completed copy of your hybrid sorghum seed 
processor contract unless we have determined it has already been 
provided by the seed company, and the seed company certifies that such 
contract is used for all its producers without any waivers or 
amendments.

                         12. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide separate acceptable production records:
    (1) For any optional units, we will combine all optional units for 
which such production records were not provided; or

[[Page 191]]

    (2) For any basic units, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for the units.
    (b) You will not receive an indemnity payment on a unit if the seed 
company refuses to provide us with records we require to determine the 
dollar value per bushel of production for each variety.
    (c) In the event of loss or damage covered by this policy, we will 
settle your claim on any unit by:
    (1) Multiplying the insured acreage by its respective amount of 
insurance per acre, by type and variety if applicable;
    (2) Totaling the results of section 12(c)(1) if there are more than 
one type or variety;
    (3) Multiplying the total seed production to count (see section 
12(d)) for each type and variety of commercial hybrid sorghum seed by 
the applicable dollar value per bushel for that type or variety;
    (4) Multiplying the total non-seed production to count (see section 
12(e)) for each type and variety by the applicable local market price 
determined on the earlier of the date the non-seed production is sold or 
the date of final inspection;
    (5) Totaling the results of sections 12(c)(3) and 12(c)(4) by type 
and variety;
    (6) Subtracting the result of section 12(c)(5) from the result of 
section 12(c)(1) if there is only one type or variety, or subtracting 
the result of 12(c)(5) from the result of section 12(c)(2) if there are 
more than one type or variety; and
    (7) Multiplying the result of section 12(c)(6) by your share.
For example:
    You have a 100 percent share in 50 acres insured for the development 
of type ``A'' hybrid sorghum seed in the unit, with an amount of 
insurance per acre guarantee of $361 (county yield of 170 bushels times 
a coverage level factor of .867 for the 65 percent coverage level, times 
a price election of $2.45 per bushel, minus the minimum guaranteed 
payment of zero). Your seed production was 1,400 bushels and the dollar 
value per bushel was $3.47. Your non-seed production was 100 bushels 
with a local market value of $2.00 per bushel. Your indemnity would be 
calculated as follows:
    (1) 50 acres x $361 = $18,050 amount of insurance guarantee;
    (3) 1,400 bushels x $3.47 = $4,858 value of seed production;
    (4) 100 bushels of non-seed x $2.00 = $200 of non-seed production;
    (5) $4,858 + $200 = $5,058;
    (6) $18,050 - $5,058 = $12,992; and
    (7) $12,992 x 100 percent share = $12,992 indemnity payment.
    You also have a 100 percent share in 50 acres insured for the 
development of type ``B'' hybrid sorghum seed in the unit, with an 
amount of insurance per acre guarantee of $340 (county yield of 160 
bushels times a coverage level factor of .867 for the 65 percent 
coverage level, times a price election of $2.45 per bushel, minus the 
minimum guaranteed payment of zero). You harvested 1,200 bushels and the 
dollar value per bushel for the harvested amount was $4.63. You also 
harvested 200 bushels of non-seed with a market value of $2.00 per 
bushel. Your indemnity would be calculated as follows:
    (1) 50 acres x $361 = $18,050 amount of insurance guarantee for type 
``A'' and 50 acres x $340 = $17,000 amount of insurance guarantee for 
type ``B'';
    (2) $18,050 + $17,000 = $35,050 amount of insurance guarantee;
    (3) 1,400 bushels x $3.47 = $4,858 value of seed production for type 
``A'' and 1,200 bushels x $4.63 = $5,556 value of seed production for 
type ``B'';
    (4) 100 bushels of non-seedx$2.00 = $200 of non-seed production for 
type ``A'' and 200 bushels of non-seed x $2.00 = $400 of non-seed 
production for type ``B''
    (5) $4,858 + $200 + $5,556 + $400 = $11,014 value of production to 
count;
    (6) $35,050 - $11,014 = $24,036; and
    (7) $24,036 x 100 percent share = $24,036 indemnity payment.
    (d) Production to be counted as seed production will include:
    (1) All appraised production as follows:
    (i) Not less than the amount of insurance per acre for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide acceptable production records;
    (ii) Production lost due to uninsured causes;
    (iii) Mature unharvested production with a germination rate of at 
least 80 percent of the commercial hybrid sorghum seed as determined by 
a certified seed test. Any such production may be adjusted in accordance 
with section 12(f);
    (iv) Immature appraised production;
    (v) Potential production on insured acreage that you intend to put 
to another use or abandon, if you and we agree on the appraised amount 
of production. Upon such agreement, the insurance period for that 
acreage will end when you put the acreage to another use or abandon the 
crop. If agreement on the appraised amount of production is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to leave 
intact, and provide sufficient care for, representative samples of the 
crop in locations acceptable to us (The amount of production to count 
for such acreage will be

[[Page 192]]

based on the harvested production or appraisals from the samples at the 
time harvest should have occurred. If you do not leave the required 
samples intact, or fail to provide sufficient care for the samples, our 
appraisal made prior to giving you consent to put the acreage to another 
use will be used to determine the amount of production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested production, or 
our reappraisal if additional damage occurs and the crop is not 
harvested; and
    (2) Harvested production that you deliver as commercial hybrid 
sorghum seed to the seed company stated in your hybrid sorghum seed 
processor contract, regardless of quality, unless the production has 
inadequate germination.
    (e) Production to be counted as non-seed production will include all 
harvested or mature appraised production that does not qualify as seed 
production to count as specified in section 12(d). Any such production 
may be adjusted in accordance with section 12(f).
    (f) For the purpose of determining the quantity of mature 
production:
    (1) Commercial hybrid sorghum seed production will be:
    (i) Increased 0.12 percent for each 0.1 percentage point of moisture 
below 13.0 percent; or
    (ii) Decreased 0.12 percent for each 0.1 percentage point of 
moisture in excess of 13.0 percent.
    (2) When records of commercial hybrid sorghum seed production 
provided by the seed company have been adjusted to a basis of 13.0 
percent moisture and 56 pound avoirdupois bushels, section 12(f)(1) 
above will not apply to harvested production. In such cases, records of 
the seed company will be used to determine the amount of production to 
count, provided that the moisture and weight of such production are 
calculated on the same basis as that used to determine the approved 
yield.

                         13. Prevented Planting

    Your prevented planting coverage will be 60 percent of your amount 
of insurance for timely planted acreage. If you have limited or 
additional levels of coverage as specified in 7 CFR part 400, subpart T, 
and pay an additional premium, you may increase your prevented planting 
coverage to a level specified in the actuarial documents.

[62 FR 65318, Dec. 12, 1997]



Sec. 457.113  Coarse grains crop insurance provisions.

    The coarse grains crop insurance provisions for the 2003 and 
succeeding crop years are as follows:

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                      Coarse Grains Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Coarse grains-- Corn, grain sorghum, and soybeans.
    Grain sorghum-- The crop defined as sorghum under the United States 
Grain Standards Act.
    Harvest-- Combining, threshing, or picking the insured crop for 
grain, or cutting for hay, silage, or fodder.
    Local market price-- The cash grain price per bushel for the U.S. 
No. 2 yellow corn, U.S. No. 2 grain sorghum, or U.S. No. 1 soybeans, 
offered by buyers in the area in which you normally market the insured 
crop. The local market price will reflect the maximum limits of quality 
deficiencies allowable for the U.S. No. 2 grade for yellow corn and 
grain sorghum, or U.S. No. 1 grade for soybeans. Factors not associated 
with grading under the Official United States Standards for Grain, 
including but not limited to protein and oil, will not be considered.
    Planted acreage--In addition to the definition contained in the 
Basic Provisions, coarse grains must initially be planted in rows (corn 
must be planted in rows far enough apart to permit mechanical 
cultivation), unless otherwise provided by the Special Provisions, 
actuarial documents, or by written agreement.
    Production guarantee(per acre)--In lieu of the definition contained 
in the Basic Provisions, the number of bushels (tons for corn insured a 
silage) determined by multiplying the approved actual production history 
(APH) yield per acre, calculated in accordance with 7 CFR part 400, 
subpart G, by the coverage level percentage you elect.
    Silage-- A product that results from severing the plant from the 
land and chopping it for the purpose of livestock feed.
    Ton-- Two thousand (2000) pounds avoirdupois.

[[Page 193]]

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

    (a) In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) of 
the Basic Provisions (Sec. 457.8) you may select:
    (1) For grain sorghum and soybeans, only one price election for each 
crop in the county insured under this policy; and
    (2) For corn, only one price election for all the corn in the county 
insured as grain under this policy, and only one price election for all 
the corn in the county insured as silage under this policy. The price 
elections you choose for grain and silage must have the same percentage 
relationship to the maximum price election offered by us for grain and 
silage. For example, if you choose one hundred percent (100%) of the 
maximum grain price election and you also insure corn on a silage basis, 
you must choose one hundred percent (100%) of the maximum silage price 
election.
    (b) For corn only, if you harvest the crop in a manner other than 
the manner you reported (for example, you reported grain but harvested 
as silage) and you did not select a price election for the type 
harvested, we will assign a price election for the type harvested that 
bears the same percentage relationship to the maximum price election you 
selected for the type reported (for example, if you selected a grain 
price election in the amount of eighty percent (80%) of the maximum 
price election for grain and you did not select a silage price election, 
we will assign a silage price election in the amount of eighty percent 
(80%) of the maximum price election for silage specified in the Special 
Provisions if you harvest for silage). This assigned price election will 
be used only to determine the dollar value of production to count for 
indemnity purposes and will not be used to determine the amount of 
insurance or premium.

                           3. Contract Changes

    The contract change date is November 30 (December 17 for the 1998 
crop year only) preceding the cancellation date (see the provisions of 
Section 4 (Contract Changes) of the Basic Provisions).

                  4. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions (Sec. 457.8), 
the cancellation and termination dates are:

------------------------------------------------------------------------
                                                    Cancellation and
               State and county                     termination dates
------------------------------------------------------------------------
(a) For corn and grain sorghum:
  Val Verde, Edwards, Kerr, Kendall, Bexar,     January 15.
   Wilson, Karnes, Goliad, Victoria, and
   Jackson Counties, Texas, and all Texas
   counties lying south thereof.
  El Paso, Hudspeth, Culberson, Reeves,         February 15.
   Loving, Winkler, Ector, Upton, Reagan,
   Sterling, Coke, Tom Green, Concho,
   McCulloch, San Saba, Mills, Hamilton,
   Bosque, Johnson, Tarrant, Wise, Cooke
   Counties, Texas, and all Texas counties
   lying south and east thereof to and
   including Terrell, Crockett, Sutton,
   Kimble, Gillespie, Blanco, Comal,
   Guadalupe, Gonzales, De Witt, Lavaca,
   Colorado, Wharton, and Matagorda Counties,
   Texas.
  Alabama; Arizona; Arkansas; California;       February 28.
   Florida; Georgia; Louisiana; Mississippi;
   Nevada; North Carolina; and South Carolina.
  All other Texas counties and all other        March 15.
   states.
(b) For soybeans:
  Jackson, Victoria, Goliad, Bee, Live Oak,     February 15.
   McMullen, LaSalle, and Dimmit Counties,
   Texas and all Texas counties lying south
   thereof.
  Alabama; Arizona; Arkansas; California;       February 28.
   Florida; Georgia; Louisiana; Mississippi;
   Nevada; North Carolina; and South Carolina;
   and El Paso, Hudspeth, Culberson, Reeves,
   Loving, Winkler, Ector, Upton, Reagan,
   Sterling, Coke, Tom Green, Concho,
   McCulloch, San Saba, Mills, Hamilton,
   Bosque, Johnson, Tarrant, Wise, Cooke
   Counties, Texas, and all Texas counties
   lying south and east thereof to and
   including Maverick, Zavala, Frio, Atascosa,
   Karnes, De Witt, Lavaca, Colorado, Wharton,
   and Matagorda Counties, Texas.
  All other Texas counties and all other        March 15.
   states.
------------------------------------------------------------------------

                             5. Insured Crop

    (a) In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be each coarse grain 
crop you elect to insure for which premium rates are provided by the 
actuarial documents:
    (1) In which you have a share;
    (2) That is adapted to the area based on days to maturity and is 
compatible with agronomic and weather conditions in the area; and
    (3) That is not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Interplanted with another crop except as allowed in paragraph 
5(b)(1); or
    (ii) Planted into an established grass or legume.
    (b) For corn only, in addition to the provisions of subsection 5(a), 
the corn crop insured will be all corn that is:
    (1) Planted for harvest either as grain or as silage (see subsection 
5(c)). A mixture of corn and sorghum (grain or forage-type) will

[[Page 194]]

be insured as corn silage if the sorghum does not constitute more than 
twenty percent (20%) of the plants;
    (2) Yellow dent or white corn, including mixed yellow and white, 
waxy or high-lysine corn, and excluding:
    (i) High-amylose, high-oil, high-protein, flint, flour, Indian, or 
blue corn, or a variety genetically adapted to provide forage for 
wildlife or any other open pollinated corn, unless a written agreement 
allows insurance of such excluded crops.
    (ii) A variety of corn adapted for silage use only when the corn is 
reported for insurance as grain.
    (c) For corn only, if the actuarial documents for the county provide 
a premium rate for:
    (1) Both grain and silage, all insurable acreage will be insured as 
the type or types reported by you on or before the acreage reporting 
date;
    (2) Grain but not silage, all insurable acreage will be insured as 
grain unless a written agreement allows insurance on all or a portion of 
the insurable acreage as silage; or
    (3) Silage but not grain, all insurable corn acreage will be insured 
as silage unless a written agreement allows insurance on all or a 
portion of the insurable acreage as grain.
    (d) For grain sorghum only, in addition to the provisions of 
subsection 5(a), the grain sorghum crop insured will be all of the grain 
sorghum in the county:
    (1) That is planted for harvest as grain;
    (2) That is a combine-type hybrid grain sorghum (grown from hybrid 
seed); and
    (3) That is not a dual-purpose type of grain sorghum (a type used 
for both grain and forage), unless a written agreement allows insurance 
of such grain sorghum.
    (e) For soybeans only, in addition to the provisions of subsection 
5(a), the soybean crop insured will be all of the soybeans in the county 
that are planted for harvest as beans.

                          6. Insurable Acreage

    In addition to the provisions of section 9 of the Basic Provisions, 
any acreage of the insured crop damaged before the final planting date, 
to the extent that a majority of producers in the area would not 
normally further care for the crop, must be replanted unless we agreee 
that it is not practical to replant.

                           7. Insurance Period

    In accordance with the provisions under section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), the calendar date for the 
end of the insurance period is the date immediately following planting 
as follows:

(a) For corn insured as grain:
  (1) Val Verde, Edwards, Kerr, Kendall,        September 30.
   Bexar, Wilson, Karnes, Goliad, Victoria,
   and Jackson Counties, Texas, and all Texas
   counties lying south thereof.
  (2) Clark, Cowlitz, Grays Harbor, Island,     October 31.
   Jefferson, King, Kitsap, Lewis, Pierce,
   Skagit, Snohomish, Thurston, Wahkiakum, and
   Whatcom Counties, Washington.
  (3) All other counties and states...........  December 10.
(b) For corn insured as silage:
  All states..................................  September 30.
(c) For grain sorghum:
  (1) Val Verde, Edwards, Kerr, Kendall,        September 30.
   Bexar, Wilson, Karnes, Goliad, Victoria,
   and Jackson Counties, Texas, and all Texas
   counties lying south thereof.
  (2) All other Texas counties and all other    December 10.
   states.
(d) For soybeans: All states..................  December 10.
 

                            8. Causes of Loss

    In accordance with the provisions of section 12 (Causes of Loss) of 
the Basic Provisions (Sec. 457.8), insurance is provided only against 
the following causes of loss which occur within the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if applicable, due to an 
unavoidable cause of loss occurring within the insurance period.

                         9. Replanting Payments

    (a) In accordance with section 13 of the Basic Provisions, 
replanting payments for coarse grains are allowed if the coarse grains 
are damaged by an insurable cause of loss to the extent that the 
remaining stand will not produce at least 90 percent of the production 
guarantee for the acreage and it is practical to replant.
    (b) The maximum amount of the replanting payment per acre will be 
the lesser of twenty percent (20%) of the production guarantee or the 
number of bushels (tons for corn insured as silage) set out herein, 
multiplied

[[Page 195]]

by your price election multiplied by your insured share or the share 
determined under 9(c), if applicable. The number of bushels or tons are 
8 bushels for corn grain; 1 ton for corn silage; 7 bushels for grain 
sorghum; and 3 bushels for soybeans.
    (c) When more than one person insures the same crop on a share 
basis, a replanting payment based on the total shares insured by us may 
be made to the insured person who incurs the total cost of replanting. 
Payment will be made in this manner only if an agreement exists between 
the insured persons which:
    (1) Requires one person to incur the entire cost of replanting; or
    (2) Gives the right to all replanting payments to one person.
    (d) When the insured crop is replanted using a practice that is 
uninsurable as an original planting, the liability for the unit will be 
reduced by the amount of the replanting payment which is attributable to 
your share. The premium amount will not be reduced.

                10. Duties in the Event of Damage or Loss

    (a) In accordance with the requirements of section 14 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), if you 
initially discover damage to any insured crop within 15 days of or 
during harvest, you must leave representative samples of the unharvested 
crop for our inspection. The samples must be at least 10 feet wide and 
extend the entire length of each field in the unit, and must not be 
harvested or destroyed until the earlier of our inspection or 15 days 
after harvest of the balance of the unit is completed.
    (b) For any corn unit that has separate dates for the end of the 
insurance period (grain and silage):
    (1) In lieu of paragraph 14.(a)(2) of the Basic Provisions (Sec. 
457.8), if damage occurs:
    (i) Before the earliest end of insurance period date (grain or 
silage), you must give us notice within 72 hours of your initial 
discovery of damage (but not later than 15 days after that earliest end 
of insurance period date); or
    (ii) If damage does not occur before the earliest end of insurance 
period date (grain or silage), but occurs before the latest end of 
insurance period date (grain or silage), you must give notice within 72 
hours of your initial discovery of damage (but not later than 15 days 
after that latest end of insurance period date).
    (2) In lieu of subsection 14.(c) of the Basic Provisions (Sec. 
457.8), in addition to complying with all other notice requirements, you 
must submit a claim for indemnity declaring the amount of your loss not 
later than 60 days after the latest date for the end of insurance period 
for the unit. This claim must include all the information we require to 
settle the claim.

                         11. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide records of production:
    (1) For any optional unit, we will combine all optional units for 
which acceptable records of production were not provided; or
    (2) For any basic unit, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for each unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim on any unit:
    (1) For grain sorghum and soybeans by:
    (i) Multiplying the insured acreage by the production guarantee;
    (ii) Subtracting from this the total production to count;
    (iii) Multiplying the remainder by your price election; and
    (iv) Multiplying this result by your share.
    (2) For corn by:
    (i) Multiplying the insured acreage of each type (grain/silage) by 
the production guarantee for the applicable type;
    (ii) Multiplying each result by the price election for the 
applicable type;
    (iii) Adding these values;
    (iv) Multiplying the production to count of each type (see 
subsection 11(d)) by the price election for that type (see the 
provisions under section 2 (Insurance Guarantees, Coverage Levels, and 
Prices for Determining Indemnities));
    (v) Adding these dollar values;
    (vi) Subtracting the result of step (v) from the result of step 
(iii); and
    (vii) Multiplying the result by your share.
    (c) The total production in bushels (tons for corn silage) (see 
subsection 11(d)) to count from all insurable acreage on the unit will 
include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) Damaged solely by uninsured causes; or
    (D) For which you fail to provide records of production that are 
acceptable to us;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production may be 
adjusted for quality deficiencies and excess moisture in accordance with 
subsection 11(e)); and
    (iv) Potential production on insured acreage you want to put to 
another use or you wish to abandon and no longer care for, if you and we 
agree on the appraised amount of production. Upon such agreement the 
insurance period for that acreage will end if you

[[Page 196]]

put the acreage to another use or abandon the crop. If agreement on the 
appraised amount of production is not reached:
    (A) If you do not elect to continue to care for the crop we may give 
you consent to put the acreage to another use if you agree to leave 
intact, and provide sufficient care for, representative samples of the 
crop in locations acceptable to us (The amount of production to count 
for such acreage will be based on the harvested production or appraisals 
from the samples at the time harvest should have occurred. If you do not 
leave the required samples intact, or you fail to provide sufficient 
care for the samples, our appraisal made prior to giving you consent to 
put the acreage to another use will be used to determine the amount of 
production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested production, or 
our reappraisal if additional damage occurs and the crop is not 
harvested; and
    (2) All harvested production from the insurable acreage.
    (d) The production to count for corn will be in bushels for grain 
and in tons for silage as follows:
    (1) For harvested acreage, according to the method of harvest; and
    (2) For unharvested acreage, according to the information contained 
on your acreage report;

except as otherwise provided in paragraph 11(c)(1).
    (e) Mature coarse grain production (excluding corn insured or 
harvested as silage) may be adjusted for excess moisture and quality 
deficiencies. If moisture adjustment is applicable it will be made prior 
to any adjustment for quality. Corn insured or harvested as silage will 
be adjusted for excess moisture and quality only as specified in 
subsection 11(f).
    (1) Production will be reduced by 0.12 percent for each 0.1 
percentage point of moisture in excess of:
    (i) Fifteen percent (15%) for corn (If moisture exceeds 30 percent 
(30%), production will be reduced 0.2 percent for each 0.1 percentage 
point above 30 percent (30%));
    (ii) Fourteen percent (14%) for grain sorghum; and
    (iii) Thirteen percent (13%) for soybeans.
    We may obtain samples of the production to determine the moisture 
content.
    (2) Production will be eligible for quality adjustment if:
    (i) Deficiencies in quality, in accordance with the Official United 
States Standards for Grain, result in:
    (A) Corn not meeting the grade requirements for U.S. No. 4 (grades 
U.S. No. 5 or worse) because of test weight or kernel damage (excluding 
heat damage) or having a musty, sour, or commercially objectionable 
foreign odor;
    (B) Grain sorghum not meeting the grade requirements for U.S. No. 4 
(grades U.S. Sample grade) because of test weight or kernel damage 
(excluding heat damage) or having a musty, sour, or commercially 
objectionable foreign odor (except smut odor), or meets the special 
grade requirements for smutty grain sorghum; or
    (C) Soybeans not meeting the grade requirements for U.S. No. 4 
(grades U.S. Sample grade) because of test weight or kernel damage 
(excluding heat damage) or having a musty, sour, or commercially 
objectionable foreign odor (except garlic odor), or which meet the 
special grade requirements for garlicky soybeans; or
    (ii) Substances or conditions are present that are identified by the 
Food and Drug Administration or other public health organizations of the 
United States as being injurious to human or animal health.
    (3) Quality will be a factor in determining your loss only if:
    (i) The deficiencies, substances, or conditions resulted from a 
cause of loss against which insurance is provided under these crop 
provisions;
    (ii) All determinations of these deficiencies, substances, or 
conditions are made using samples of the production obtained by us or by 
a disinterested third party approved by us;
    (iii) With regard to deficiencies in quality (except test weight, 
which may be determined by our loss adjuster), the samples are analyzed 
by:
    (A) A grain grader licensed under the United States Grain Standards 
Act or the United States Warehouse Act;
    (B) A grain grader licensed under State law and employed by a 
warehouse operator who has a storage agreement with the Commodity Credit 
Corporation; or
    (C) A grain grader not licensed under State law, but who is employed 
by a warehouse operator who has a commodity storage agreement with the 
Commodity Credit Corporation and is in compliance with State law 
regarding warehouses; and
    (iv) With regard to substances or conditions injurious to human or 
animal health, the samples are analyzed by a laboratory approved by us.
    (4) Coarse grain production that is eligible for quality adjustment, 
as specified in paragraphs 11.(e) (2) and (3), will be reduced by the 
quality adjustment factor contained in the Special Provisions.
    (f) For corn insured or harvested as silage:
    (1) Whenever our appraisal of grain content is less than 4.5 bushels 
of grain per ton of silage, the silage production will be reduced by 1 
percentage point for each 0.1(1/10) of a bushel less than 4.5 bushels 
per ton (If we cannot make a grain appraisal before harvest and you do 
not leave a representative unharvested sample, in accordance with the

[[Page 197]]

policy no reduction for grain-deficient silage will be made.); and
    (2) If the normal silage harvesting period has ended, or for any 
acreage harvested as silage or appraised as silage after September 30 of 
the crop year we may increase the silage production to count to 65 
percent (65%) moisture equivalent to reflect the normal moisture content 
of silage harvested during the normal silage harvesting period.
    (g) Any production harvested from plants growing in the insured crop 
may be counted as production of the insured crop on a weight basis.

                         12. Prevented Planting

    Your prevented planting coverage will be 60 percent of your 
production guarantee for timely planted aceage. if you have limited or 
additional levels of coverage, as specified in 7 CFR part 400, subpart 
T, and pay an additional premium, you may increase your prevented 
planting coverage to a level specified in the actuarial documents.

[59 FR 49161, Sept. 27, 1994; 59 FR 60063, Nov. 22, 1994, as amended at 
60 FR 62728, 62729, Dec. 7, 1995; 62 FR 63633, Dec. 2, 1997; 62 FR 
65168, Dec. 10, 1997; 67 FR 55690, Aug. 30, 2002]



Sec. Sec. 457.114-457.115  [Reserved]



Sec. 457.116  Sugarcane crop insurance provisions.

    The Sugarcane Crop Insurance Provisions for the 2004 and succeeding 
crop years are as follows:

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                        Sugarcane Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Crop year--The period within which the insured sugarcane is normally 
grown and designated by the calendar year in which the harvest of 
sugarcane normally begins in the county.
    Harvest--Cutting and removing the mature sugarcane from the field.
    Irrigated practice--A method of producing a crop by which water is 
artificially applied during the growing season by appropriate systems 
and at the proper times, with the intention of providing the quantity of 
water needed to produce at least the yield used to establish the 
irrigated production guarantee on the irrigated acreage planted to the 
insured crop.
    Local market price--The price per pound for raw sugar offered by 
buyers in the area in which you normally market the sugarcane.
    Plant cane--The insured crop which grows from seed planted for the 
crop year.
    Stubble cane--The insured crop which grows from the stubble of 
sugarcane that was harvested the previous crop year.
    Sugarcane. The grass, Saccharum officinarum, that is grown to 
produce sugar.

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

    (a) In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) of 
the Basic Provisions (Sec. 457.8), you may select only one price 
election for all the sugarcane in the county insured under this policy.
    (b) Instead of reporting your sugarcane production for the previous 
crop year as required by subsection 3.(c) of the Basic Provisions (Sec. 
457.8), there is a lag period of one year and you are required to report 
production from two crop years previously, e.g., 1994 crop year 
production must be reported by the required date for the 1996 crop year.

                           3. Contract Changes

    In accordance with section 4 of the Basic Provisions (Sec. 457.8), 
the contract change date is June 30 preceding the cancellation date.

                  4. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions (Sec. 457.8), 
the cancellation and termination dates are September 30.

                             5. Insured Crop

    (a) In accordance with section 8 of the Basic Provisions (Sec. 
457.8), the crop insured will be all the sugarcane in the county for 
which a premium rate is provided by the actuarial documents:
    (1) In which you have a share;
    (2) That is grown for processing for sugar or for seed; and
    (3) That is not interplanted with another crop, unless allowed by a 
written agreement.
    (b) In addition to the crop listed as not insured in section 8(b) of 
the Basic Provisions (Sec. 457.8), we will not insure any sugarcane:
    (1) That was damaged the previous crop year to the extent the 
sugarcane is unable to produce the yield used to establish the 
production guarantee for the unit for the current crop year; or
    (2) That exceeds the age limitations (by variety, if applicable) 
contained in the Special Provisions , unless we agree in writing to 
insure such acreage. An agreement in writing will not be provided 
unless, after an appraisal, we determine that the crop is able to 
produce at least the yield used to establish

[[Page 198]]

the production guarantee for the unit for the current crop year.

                          6. Insurable Acreage

    Section 9(a)(3) of the Basic Provisions (Sec. 457.8), is not 
applicable to the Sugarcane Crop Insurance Provisions.

                           7. Insurance Period

    (a) In addition to the provisions of section 11 of the Basic 
Provisions (Sec. 457.8), insurance attaches:
    (1) On the later of the day we accept your application or at the 
time of planting for plant cane;
    (2) On the first day following harvest of the previous crop for 
stubble cane except as contained in sections 7(a)(3) and (4);
    (3) On the later of April 15 or 30 days following harvest of the 
previous crop for stubble cane damaged during the previous crop year in 
all states (except Louisiana); and
    (4) On the later of April 30 or 30 days following harvest of the 
previous crop for stubble cane damaged during the previous crop year in 
Louisiana.
    (b) In accordance with the provisions of section 11 of the Basic 
Provisions (Sec. 457.8), the calendar date for the end of the insurance 
period is:
    (1) January 31 in Louisiana; and
    (2) April 30 in all other states.

                            8. Causes of Loss

    In accordance with the provisions of section 12 (Causes of Loss) of 
the Basic Provisions (Sec. 457.8), insurance is provided only against 
the following causes of loss that occur within the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if applicable, due to an 
unavoidable cause of loss occurring within the insurance period.

 9. Duties in the Event of Damage or Loss or Cutting the Sugarcane for 
                                  Seed

    (a) In addition to your duties under section 14 of the Basic 
Provisions (Sec. 457.8), in the event of damage or loss:
    (1) All sugarcane stubble must remain intact for our inspection; and
    (2) You must give us notice at least 15 days before you begin 
cutting any sugarcane for seed. Your notice must include the unit number 
and the number of acres you intend to harvest as seed. Failure to give 
us timely notice will cause the acreage cut for seed to be considered as 
put to another use without consent. The production to count for such 
acreage will not be less than the production guarantee.
    (3) You must request an appraisal if any time during the crop year 
sugarcane acreage cut for seed will not produce at least the production 
guarantee so we can determine the production to count. If you do not 
request an appraisal, the production to count for such acreage will be 
the production guarantee.
    (b) In accordance with the requirements of section 14 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), if you 
initially discover damage to any insured crop within 15 days of, or 
during harvest, you must leave representative samples of the unharvested 
crop for our inspection. The representative samples of the unharvested 
crop must be at least 10 feet wide and extend the entire length of each 
field in the unit. The stubble must not be destroyed and the required 
samples must not be harvested until the earlier of our inspection or 15 
days after harvest of the balance of the unit is completed.

                         10. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide records of production:
    (1) For any optional unit, we will combine all optional units for 
which acceptable records of production were not provided; or
    (2) For any basic unit, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for each unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim on any unit by:
    (1) Multiplying the insured acreage by the production guarantee;
    (2) Subtracting from this the total production to count;
    (3) Multiplying the remainder by your price election; and
    (4) Multiplying this result by your share.

    Example 1: Assume you have a 100 percent share in a unit of 100 
acres of sugarcane, an approved yield of 6,000 pounds of raw sugar per 
acre, a coverage election of 65 percent, and a price election of $0.12 a 
pound. The production guarantee would be 3,900 pounds of raw sugar per 
acre (6,000 x 65%). Further assume that you are only able to harvest 
200,000 pounds of raw sugar because the unit was damaged by an insurable 
cause of loss. Your indemnity would be calculated as follows:
    (1) 100 acres x 3,900 pound production guarantee = 390,000 pound 
production guarantee;
    (2) 390,000 pound production guarantee-200,000 pounds harvested 
production = 190,000 pound production loss;

[[Page 199]]

    (3) 190,000 pound production loss x $0.12 price election = $22,800 
loss; and
    (4) $22,800 loss x 100 percent share = $22,800 indemnity payment.
    Example 2: Assume the same set of facts. Also, assume that you cut 
20 acres of this unit for seed without giving notice that you were 
cutting this acreage for seed and that you are only able to harvest 
200,000 pounds from the remaining 80 acres. Your indemnity would be 
calculated as follows:
    (1) 100 acres x 3,900 pound production guarantee = 390,000 pound 
production guarantee;
    (2) 390,000 pound production guarantee-278,000 (200,000 pounds 
harvested production + 78,000 pounds production for putting acreage to 
another use without consent, (20 acres x 3,900 pound production 
guarantee per acre)) = 112,000 pound production loss;
    (3) 112,000 pound production loss x $0.12 price election = $13,440 
loss; and
    (4) $13,440 loss x 100 percent share = $13,440 indemnity payment.

    (c) The total production (pounds of sugar) to count from all 
insurable acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) Damaged solely by uninsured causes;
    (D) For which you fail to provide records of production that are 
acceptable to us; or
    (E) On which the sugarcane stubble is destroyed within 15 days after 
harvest is completed without our consent;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production;
    (iv) Potential production on insured acreage harvested for seed (see 
section 9(a)(3));
    (v) Potential production on insured acreage you want to put to 
another use or you wish to abandon and no longer care for, if you and we 
agree on the appraised amount of production. Upon such agreement, the 
insurance period for that acreage will end if you put the acreage to 
another use or abandon the crop. If agreement on the appraised amount of 
production is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to leave 
intact, and provide sufficient care for, representative samples of the 
crop in locations acceptable to us. (The amount of production to count 
for such acreage will be based on the harvested production or appraisals 
from the samples at the time harvest should have occurred. If you do not 
leave the required samples intact, or you fail to provide sufficient 
care for the samples, our appraisal made prior to giving you consent to 
put the acreage to another use will be used to determine the amount of 
production to count.); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested production, or 
our reappraisal if additional damage occurs and the crop is not 
harvested; and
    (2) All harvested production from insurable acreage. Final records 
of sugar production will be used to determine the amount of production 
to count. Preliminary mill estimates will not be used.
    (d) Harvested sugarcane may be adjusted for low quality if it is 
damaged by one or more freezes occurring within the insurance period to 
the extent that it cannot be processed for sugar by the boiling house 
operation. The amount of production to count for such sugarcane will be 
determined by dividing the dollar value of the damaged production by the 
local market price per pound for raw sugar. The prices used for this 
adjustment will be determined on the earlier of the date such quality-
adjusted production is sold or the date of final inspection for the 
unit.

                     11. Late and Prevented Planting

    The late and prevented planting provisions of the Basic Provisions 
are not applicable.

[60 FR 25602, May 12, 1995, as amended at 62 FR 65169, Dec. 10, 1997; 67 
FR 46095, July 12, 2002; 67 FR 52841, Aug. 14, 2002]



Sec. 457.117  Forage production crop insurance provisions.

    The Forage Production Crop Insurance Provisions for the 2001 and 
succeeding crop years are as follows:
    FCIC Policies

                        Department of Agriculture

                   Federal Crop Insurance Corporation

                           Reinsured Policies

               (Appropriate title for insurance provider)

    Both FCIC and Reinsured Policies

               Forage Production Crop Insurance Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Adequate stand--A population of live forage plants that equals or 
exceeds the minimum required number of plants per square foot as shown 
in the Special Provisions.
    Air-dry forage--Forage that has dried in windrows by natural means 
to less than 13

[[Page 200]]

percent moisture before being put into stacks or bales.
    Crop year--The period from the date insurance attaches until harvest 
is normally completed, which is designated by the calendar year in which 
the majority of the forage is normally harvested.
    Cutting. The severance of the forage plant from its roots.
    Direct marketing. Sale of the forage crop directly to consumers 
without the intervention of an intermediary such as a wholesaler, 
shipper, buyer, or broker. An example of direct marketing is selling 
directly to other producers.
    Fall planted. A forage crop seeded after June 30.
    Forage--Planted perennial alfalfa, perennial red clover, perennial 
grasses, or a mixture thereof, or other species as shown in the 
Actuarial Documents.
    Harvest--Removal of forage from the windrow or field. Grazing will 
not be considered harvested.
    Spring planted. A forage crop seeded before July 1.
    Ton--Two thousand (2,000) pounds avoirdupois.
    Windrow. Forage that is cut and placed in a row.
    Year of establishment--The period between seeding and when the 
forage crop has developed an adequate stand. Insurance during the year 
of establishment may be available under the forage seeding policy. 
Insurance under this policy does not attach until after the year of 
establishment. The year of establishment is determined by the date of 
seeding. The year of establishment for spring planted forage is 
designated by the calendar year in which seeding occurred. The year of 
establishment for fall planted forage is designated by the calendar year 
after the year in which the crop was planted.

  2. Insurance Guarantees, Coverage Levels, and Prices for Determining 
         overage Levels, and Prices for Determining Indemnities

    In addition to the requirements of section 3 (Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities) of the Basic 
Provisions (Sec. 457.8):
    (a) You may only select one price election for all the forage in the 
county insured under this policy unless the Special Provisions provide 
different price elections by type, in which case you may select one 
price election for each forage type designated in the Special 
Provisions. The price elections you choose for each type must have the 
same percentage relationship to the maximum price offered by us for each 
type. For example, if you choose 100 percent of the maximum price 
election for a specific type, you must also choose 100 percent of the 
maximum price election for all other types.
    (b) You must report the total production harvested from insurable 
acreage for all cuttings for each unit by the production reporting date.
    (c) Separate guarantees will be determined by forage type, as 
applicable.

                           3. Contract Changes

    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is June 30 preceding 
the cancellation date.

                 4. Cancellation and Termination Dates.

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

------------------------------------------------------------------------
                  State                    Cancellation/termination date
------------------------------------------------------------------------
California, Nevada and Utah..............  October 31;
All other states.........................  September 30.
------------------------------------------------------------------------

                          5. Report of Acreage.

    In lieu of the provisions of section 6(a) of the Basic Provisions, a 
report of all insured acreage of forage production must be submitted on 
or before each forage production acreage reporting date specified in the 
Special Provisions.

                             6. Insured Crop

    (a) In accordance with section 8 of the Basic Provisions, the crop 
insured will be all the forage in the county for which a premium rate is 
provided by the actuarial documents:
    (1) In which you have a share; and
    (2) That is grown during one or more years after the year of 
establishment.
    (b) In addition to the crop listed as not insured in section 8 
(Insured Crop) of the Basic Provisions (Sec. 457.8), we will not insure 
any forage that:
    (1) Does not have an adequate stand at the beginning of the 
insurance period;
    (2) Is grown with a non-forage crop; or
    (3) Exceeds the age limitations for forage stands contained in the 
Special Provisions.

                           7. Insurance Period

    In lieu of the provisions of section 11 (Insurance Period) of the 
Basic Provisions (Sec. 457.8):
    (a) Insurance attaches on acreage with an adequate stand on the 
following dates:
    (1) For the calendar year following the year of seeding for:
    (i) Spring planted forage in Lassen, Modoc, Mono, Shasta and 
Siskiyou Counties California, Colorado, Idaho, Nebraska, Nevada, Oregon, 
Utah and Washington--April 15;
    (ii) Spring planted forage in Iowa, Minnesota, Montana, New 
Hampshire, New York,

[[Page 201]]

North Dakota, Pennsylvania, Wisconsin, Wyoming and all other states--May 
22;
    (iii) Fall planted forage in Lassen, Modoc, Mono, Shasta and 
Siskiyou Counties California, and all other states--October 16;
    (iv) Fall planted forage in all California counties except Lassen, 
Modoc, Mono, Shasta, and Siskiyou--December 1.
    (2) For the calendar year of seeding for spring planted acreage in 
all California counties except Lassen, Modoc, Mono, Shasta and 
Siskiyou--December 1.
    (3) For calendar years subsequent to the calendar year following the 
year of seeding for:
    (i) Lassen, Modoc, Mono, Shasta and Siskiyou California counties, 
and all other states--October 16;
    (ii) All California counties except Lassen, Modoc, Mono, Shasta and 
Siskiyou--December 1.
    (b) Insurance ends at the earliest of:
    (1) Total destruction of the forage crop;
    (2) Removal from the windrow or the field for each cutting;
    (3) Final adjustment of a loss;
    (4) The date grazing commences on the forage crop;
    (5) Abandonment of the forage crop; or
    (6) The following dates of the crop year:
    (i) For Lassen, Modoc, Mono, Shasta, and Siskiyou Counties 
California and all other states--October 15;
    (ii) For all California counties except Lassen, Modoc, Mono, Shasta 
and Siskiyou--November 30.
    (c) In order to obtain year-round coverage for a calendar year, you 
must purchase the Forage Production Winter Coverage Endorsement (Sec. 
457.127).

                            8. Causes of Loss

    (a) In accordance with the provisions of section 12 (Causes of Loss) 
of the Basic Provisions (Sec. 457.8), insurance is provided only 
against the following causes of loss that occur during the insurance 
period:
    (1) Adverse weather conditions;
    (2) Fire;
    (3) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (4) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (5) Wildlife;
    (6) Earthquake;
    (7) Volcanic eruption; or
    (8) Failure of the irrigation water supply, if caused by an insured 
peril that occurs during the insurance period.
    (b) In addition to the causes of loss specifically excluded in 
section 12 of the Basic Provisions, we will not insure against damage of 
loss of production that occurs after removal from the windrow.

                9. Duties in the Event of Damage or Loss

    In addition to the requirements of section 14 of the Basic 
Provisions, the following will apply:
    (a) You must notify us within 3 days of the date harvest should have 
started if the insured crop will not be harvested;
    (b) You must notify us at least 15 days before any production from 
any unit will be sold by direct marketing unless you have records 
verifying that the forage was direct marketed. Failure to give timely 
notice that production will be sold by direct marketing will result in 
an appraised amount of production to count of not less than the 
production guarantee per acre if such failure results in our inability 
to make the required appraisal;
    (c) If you intend to claim an indemnity on any unit, you must notify 
us at least 15 days prior to the beginning of harvest if you previously 
gave notice in accordance with section 14 of the Basic Provisions so 
that we may inspect the damaged production. You must not destroy the 
damaged crop until after we have given you written consent to do so. If 
you fail to meet the requirements of this section, and such failure 
results in our inability to inspect the damaged production, all such 
production will be considered undamaged and will be included as 
production to count; and
    (d) You must notify us at least 5 days before grazing of insured 
forage begins so we can conduct an appraisal to determine production to 
count. Failure to give timely notice that the acreage will be grazed 
will result in an appraised amount of production to count of not less 
than the production guarantee per acre.

                         10. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide separate acceptable production records:
    (1) For any optional units, we will combine all optional units for 
which such production records were not provided; or
    (2) For any basic units, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for the units.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the insured acreage for each type, by its respective 
production guarantee;
    (2) Multiplying each result in section 11(b)(1) by the respective 
price election you selected;
    (3) Totaling the results of each crop type in section 11(b)(2);
    (4) Multiplying the total production to be counted of each type, if 
applicable, (see section 11(c)) by the respective price election you 
selected;

[[Page 202]]

    (5) Totaling the results of each crop type in section 11(b)(4);
    (6) Subtracting the result in section 11(b)(5) from the result in 
section 11(b)(3); and
    (7) Multiplying the result in section 11(b)(6) by your share.

                                Example 1

    Assume you have a 100 percent share in 100 acres of type A forage in 
the unit, with a guarantee of 3.0 tons per acre and a price election of 
$65.00 per ton. Due to adverse weather you were only able to harvest 
50.0 tons. Your indemnity would be calculated as follows:
    1. 100 acres type A x 3 tons = 300 ton guarantee;
    2 & 3. 300 tons x $65 price election = $19,500 total value 
guarantee;
    4 & 5. 50 tons production to count x $65 price election = $3,250 
total value of production to count;
    6. $19,500 value guarantee--$3,250 = $16,250 loss; and
    7. $16,250 x 100 percent share = $16,250 indemnity payment.

                                Example 2

    Assume you also have a 100 percent share in 100 acres of type B 
forage in the same unit, with a guarantee of 1.0 ton per acre and a 
price election of $50.00 per ton. Due to adverse weather you were only 
able to harvest 5.0 tons. Your total indemnity for forage production for 
both types A and B in the same unit would be calculated as follows:
    1. 100 acres x 3 tons = 300 ton guarantee for type A; and 100 acres 
x 1 ton = 100 ton guarantee for type B;
    2. 300 ton guarantee x $65 price election = $19,500 total value of 
the guarantee for type A; and 100 ton guarantee x $50 price election = 
$5,000 total value of the guarantee for type B;
    3. $19,500 + $5,000 = $24,500 total value of the guarantee;
    4. 50 tons x $65 price election = $3,250 total value of production 
to count for type A; and 5 tons x $50 price election = $250 total value 
of production to count for type B;
    5. $3,250 + $250 = $ 3,500 total value of production to count for 
types A and B;
    6. $24,500--$3,500 = $21,000 loss; and
    7. $21,000 loss x 100 percent share = $21,000 indemnity payment.
    (c) The total production to count (in tons) from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) Damaged solely by uninsured causes; or
    (D) For which you fail to provide production records that are 
acceptable to us;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production;
    (iv) Potential production on insured acreage that you intend to put 
to another use or abandon, if you and we agree on the appraised amount 
of production. Upon such agreement, the insurance period for that 
acreage will end when you put the acreage to another use or abandon the 
crop. If agreement on the appraised amount of production is not reached 
and:
    (A) You do not elect to continue to care for the crop, we may give 
you consent to put the acreage to another use if you agree to leave 
intact, and provide sufficient care for, representative samples of the 
crop in locations acceptable to us (The amount of production to count 
for such acreage will be based on the harvested production or appraisals 
from the samples at the time harvest should have occurred. If you do not 
leave the required samples intact, or fail to provide sufficient care 
for the samples, our appraisal made prior to giving you consent to put 
the acreage to another use will be used to determine the amount of 
production to count); or
    (B) You elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested production, or 
our reappraisal if additional damage occurs and the crop is not 
harvested; and
    (2) All harvested production from the insurable acreage.
    (d) When forage is harvested as other than air-dry forage, the 
production to count will be adjusted to the equivalent of air-dry 
forage.
    (e) Any harvested production from plants growing in the forage will 
be counted as forage on a weight basis.
    (f) In addition to the provisions of section 15 (Production Included 
in Determining Indemnities) of the Basic Provisions (Sec. 457.8), we 
may determine the amount of production of any unharvested forage on the 
basis of our field appraisals conducted after the normal time for each 
cutting for the area.

                     11. Late and Prevented Planting

    The late and prevented planting provisions of the Basic Provisions 
are not applicable.

[62 FR 14285, Mar. 26, 1997, as amended at 62 FR 65169, Dec. 10, 1997; 
65 FR 3783, Jan. 25, 2000; 65 FR 11457, Mar. 3, 2000]



Sec. 457.118  Malting barley crop insurance.

    The malting barley crop insurance provisions for the 1996 and 
succeeding crop years are as follows:

[[Page 203]]

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

Small Grains Crop Insurance Malting Barley Price and Quality Endorsement

(This is a continuous endorsement. Refer to section 2 of the Common Crop 
Insurance Policy.)
    In return for your payment of premium for the coverage contained 
herein, this endorsement will be attached to and made part of the Common 
Crop Insurance Policy (Sec. 457.8) and Small Grains Crop Provisions 
(Sec. 457.101), subject to the terms and conditions described herein.
    1. You must have the Common Crop Insurance Policy (Sec. 457.8) and 
the Small Grains Crop Insurance Provisions (Sec. 457.101) in force to 
elect to insure malting barley under this endorsement.
    2. You must select either Option A or Option B on or before the 
sales closing date. Failure to select either Option A or Option B, or if 
you elect Option B but fail to have a malting barley contract in effect 
by the acreage reporting date, will result in no coverage under this 
endorsement for the applicable crop year. If you elect coverage under 
Option A, and subsequently enter into a malting barley contract, your 
coverage will continue under the terms of Option A. Your selection 
(Option A or B) will continue from year to year unless you cancel or 
change your selection on or before the sales closing date.
    3. You must select either an additional value price election or a 
percentage of the maximum additional value price election on or before 
the sales closing date. The percentage of the maximum additional value 
price election you select does not have to be the same as that selected 
under the Small Grains Crop Provisions for feed barley. In the event 
that you choose a percentage of the maximum additional value price 
election, we will multiply that percentage by the maximum additional 
value price election specified in Option A or B to determine the 
additional value price election that pertains to your contract.
    4. The additional premium amount for this coverage will be 
determined by multiplying your malting barley production guarantee per 
acre by your selected additional value price election, times the premium 
rate stated in the Actuarial Table, times the acreage planted to 
approved malting barley varieties, times your share at the time coverage 
begins.
    5. In addition to the reporting requirements contained in section 6 
of the Common Crop Insurance Policy (Sec. 457.8), you must provide the 
information required by the Option you select.
    6. In lieu of the provisions regarding units and unit division in 
the Common Crop Insurance Policy (Sec. 457.8) and the Small Grains Crop 
Provisions (Sec. 457.101), all barley acreage in the county that is 
planted to malting varieties that is insurable under the Small Grains 
Crop Provisions for feed barley and your selected Option must be insured 
under this endorsement and will be considered as one unit regardless of 
whether such acreage is owned, rented for cash, or rented for a share of 
the crop. The producer's shares in the malting barley acreage to be 
insured under this endorsement must be designated on the acreage report.
    7. In lieu of the provisions in the Common Crop Insurance Policy 
(Sec. 457.8) that requires us to pay your loss within 30 days after we 
reach agreement with you, whenever any production fails one or more of 
the quality criteria specified herein, the claim may not be settled 
until the earlier of:
    (a) The date you sell, feed, donate, or otherwise utilize such 
production for any purpose; or
    (b) May 31 of the calendar year immediately following the calendar 
year in which the insured malting barley is normally harvested.
    If the production meets all quality criteria contained herein or 
grades U.S. No. 4 or lower in accordance with the grades and grade 
requirements for the subclasses Six-rowed and Two-rowed barley, and for 
the class Barley in accordance with the Official United States Standards 
for Grain, the claim will be settled within 30 days in accordance with 
the Common Crop Insurance Policy (Sec. 457.8).
    8. This endorsement does not provide additional prevented planting 
coverage. Such coverage is only provided in accordance with the 
provisions of the Small Grain Crop Provisions for feed barley.
    9. Production from all acreage insured under this endorsement and 
any production of feed barley varieties must not be commingled prior to 
our making all determinations necessary for the purposes of this 
insurance. Failure to keep production separate may result in denial of 
your claim for indemnity.
    10. Definitions:
    (a) APH. Actual production history as determined in accordance with 
7 CFR part 400, subpart G.
    (b) Approved malting variety. A variety of barley specified as such 
in the Special Provisions.
    (c) Brewery. A facility where malt beverages are commercially 
produced for human consumption.
    (d) Contracted production. A quantity of barley the producer agrees 
to grow and deliver, and the buyer agrees to accept, under the terms of 
the malting barley contract.
    (e) Licensed grain grader. A person authorized by the U.S. 
Department of Agriculture to inspect and grade barley under the U.S. 
Standards for malt barley.

[[Page 204]]

    (f) Malting barley contract. An agreement in writing between the 
producer and a brewery or a business enterprise that produces or sells 
malt or processed mash to a brewery, or a business enterprise owned by 
such brewery or business, that contains the amount of contracted 
production, the purchase price, or a method to determine such price, and 
other such terms that establish the obligations of each party to the 
agreement.
    (g) Objective test. A determination made by a qualified person using 
standardized equipment that is widely used in the malting industry, and 
following a procedure approved by the American Society of Brewing 
Chemists when determining percent germination or protein content; 
grading performed by following a procedure approved by the Federal Grain 
Inspection Service when determining quality factors other than percent 
germination or protein content; or by the Food and Drug Administration 
when determining concentrations of mycotoxins or other substances or 
conditions that are identified as being injurious to human or animal 
health.
    (h) Subjective test. A determination made by a person using 
olfactory, visual, touch or feel, masticatory, or other senses unless 
performed by a licensed grain grader; or that uses non-standardized 
equipment; or that does not follow a procedure approved by the American 
Society of Brewing Chemists, the Federal Grain Inspection Service, or 
the Food and Drug Administration.
    (i) Unit. All insurable acreage of approved malting varieties in the 
county on the date coverage begins for the crop year.

 Option A--(Available for Producers of Production Contracted After the 
   Sales Closing Date, Non-Contracted Production, or a Combination of 
                Contracted and Non-Contracted Production)

    This option provides coverage for malting barley production and 
quality losses at a price per bushel greater than that offered under the 
Small Grains Crop Provisions.
    1. To be eligible for coverage under this option, you must provide 
us acceptable records of your sales of malting barley and the number of 
acres planted to malting varieties for at least the four crop years in 
your APH database prior to the crop year immediately preceding the 
current crop year. For example, to determine your production guarantee 
for the 1996 crop year, records must be provided for the 1991 through 
the 1994 crop years, if malting barley varieties were planted in each of 
those crop years. Failure to provide acceptable records or reports as 
required herein will make you ineligible for coverage under this 
endorsement. You must provide these records to us no later than the 
production reporting date specified in the Common Crop Insurance Policy 
(Sec. 457.8).
    2. Your malting barley production guarantee per acre will be the 
lesser of:
    (a) The production guarantee for feed barley for acreage planted to 
approved malting varieties calculated in accordance with the Small 
Grains Crop Provisions and APH regulations; or
    (b) A production guarantee calculated in accordance with APH 
procedures using the malting barley sales and acreage records provided 
by you.
    3. The additional value price per bushel elected cannot exceed the 
maximum price designated in the Special Provisions.
    4. The amount of production to count against your malting barley 
production guarantee will be determined as follows:
    (a) Production to count will include all:
    (1) Appraised production determined in accordance with sections 
11(c)(1) (i) and (ii) of the Small Grains Crop Provisions;
    (2) Harvested production and potential unharvested production that 
meets, or would meet if properly handled;
    (i) Tolerances established by the Food and Drug Administration or 
other public health organization of the United States for substances or 
conditions, including mycotoxins, that are identified as being injurious 
to human health; and
    (ii) The following quality standards, as applicable:

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

    (3) Harvested production that does not meet the quality standards 
contained in section 4(a)(2) of this Option, but is accepted by a buyer 
for malting purposes. For such production, the production to count may 
be reduced or the price used to settle the claim may be adjusted in 
accordance with sections 4 (b), (c), and (d) of this Option.
    (b) The quantity of production that initially fails any quality 
standard contained in section 4(a)(2), but is sold as malting barley 
(except production included in section 4(c)), may be reduced as 
described in this subsection, provided the failure of such production to 
meet these standards is due to insurable causes. The production to count 
of production sold under section 4(a)(3) will be determined by:
    (1) Adding the maximum barley price election under the Small Grains 
Crop Provisions and the maximum additional value price;
    (2) Dividing the price per bushel received for the damaged 
production by the result of paragraph (1); and

[[Page 205]]

    (3) Multiplying the result of paragraph (2) (not to exceed 1.000) by 
the number of bushels of damaged production.
    (c) The production to count for production that initially fails any 
quality standard contained in section 4 (a)(2), sold as malting barley, 
but is conditioned before the sale will not be reduced under section 
4(b). Such production will be considered separately from all other 
production to count. (See section 5(d).)
    (d) The additional value price election per bushel used to determine 
the value of the production to count for production that initially fails 
any quality standard contained in section 4(a)(2), but is sold as 
malting barley, may be reduced by the cost incurred for any conditioning 
required to improve the quality of production so that it is marketable 
as malting barley, provided the failure of such production to meet these 
standards is due to insurable causes.
    (e) No reduction in the production to count or the additional value 
price election will be allowed for moisture content, damage due to 
uninsured causes; costs or reduced value associated with drying, 
handling, processing, or quality factors other than those contained in 
section 4(a)(2) of this Option; or any other costs associated with 
normal handling and marketing of malting barely.
    (f) All grade and quality determinations must be based on the 
results of objective tests. No indemnity will be paid for any loss 
established by subjective tests. We may obtain one or more samples of 
the insured crop and have tests performed at an official grain 
inspection location established under the U.S. Grain Standards Act or 
laboratory of our choice to verify the results of any test. In the event 
of a conflict in the test results, our results will determine the amount 
of production to count.
    5. In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (a) Multiplying the insured acreage times your malting barley 
production guarantee per acre;
    (b) Multiplying the result in subsection (a) of this section times 
your additional value price election per bushel;
    (c) Multiplying the number of bushels of production to count 
determined in accordance with sections 4(a) and (b) of this Option times 
your elected additional value price per bushel;
    (d) Multiplying the production to count determined under section 
4(c) of this Option times the additional value price per bushel 
determined in section 4(d) of the Option;
    (e) Adding the results of subsections (c) and (d) of this section;
    (f) Subtracting the result of subsection (e) of this section from 
the result in subsection (b); and
    (g) Multiplying the result of subsection (f) of this section times 
your share.
    6. For example, assume you insure two units of barley under the 
Small Grains Crop Provisions in which you have a 100% share and that are 
planted to approved malting varieties. Assume the following:
    (a) Each unit contains 40 acres;
    (b) You have sold an average of 20 bushels per acre of malting 
barley for each of the last 6 years;
    (c) You have selected the 70 percent coverage level;
    (d) Your production guarantee under the Small Grains Crop Provisions 
and the APH regulations for feed barley is 30 bushels per acre;
    (e) Your total production from all units under the Small Grains Crop 
Provisions is 1,000 bushels, all of which fails to meet the quality 
standards specified by this Option. Two hundred bushels are sold for 
malting purposes after conditioning. Conditioning costs are $0.05 per 
bushel; and
    (f) Your additional value price election is $0.40 per bushel.
    Your malting barley production guarantee is 1120.0 bushels (the 
lesser of 20 or 30x70 percent coverage level x80 acres). The value of 
your production guarantee is $448.00 (1120 bushels x$0.40 per bushel). 
Your production to count is 200 bushels. The value of your production to 
count is $70.00 (200 bushels x$0.35 ($0.40--$0.05)). Your indemnity for 
the malting barley unit is $378.00 (($448.00--$70.00) x100 percent 
share). Any remaining loss is paid under the Small Grains Crop 
Provisions for feed barley.

    Option B--(Available for Producers of Contracted Production Only)

    This option provides coverage for malting barley production and 
quality losses at a price per bushel greater than that offered under the 
Small Grains Crop Provisions provided you have a malting barley 
contract.
    1. If you elect this option you must provide us a copy of your 
malting barley contract on or before the acreage reporting date. All 
terms and conditions of the contract, including the contract price or 
futures contract premium price, must be specified in the contract and be 
effective on or before the acreage reporting date. If you fail to timely 
provide the contract, or any terms are omitted, we may elect to 
determine the relevant information necessary for insurance under this 
Option (B), or deny liability. Only contracted production or acreage is 
covered by this Option (B).
    2. Your malting barley guarantee per acre will be the lesser of:
    (a) The production guarantee for feed barley for acreage planted to 
approved malting barley varieties calculated in accordance with the 
Small Grains Crop Provisions and APH regulations; or
    (b) The number of bushels obtained by:

[[Page 206]]

    (1) Dividing the number of bushels of contracted production by the 
number of acres planted to approved malting varieties in the current 
crop year; and
    (2) Multiplying the result by the percentage for the coverage level 
you elected under the Small Grains Crop Provisions.
    3. The additional value price election per bushel will be the lesser 
of, as applicable:
    (a) The guaranteed sale price per bushel established in the malting 
barley contract (without regard to discounts or incentives that may 
apply) minus the maximum price election for feed barley; or
    (b) The premium price per bushel (without regard to discounts or 
incentives) if the sale price is based on a future market price as 
specified in the malting barley contract.
    Under no circumstances will the additional value price election per 
bushel exceed $2.00 per bushel.
    4. The amount of production to count against your malting barley 
production guarantee will be determined as follows:
    (a) Production to count will include all:
    (1) Appraised production determined in accordance with sections 
11(c)(1) (i) and (ii) of the Small Grains Crop Provisions;
    (2) Harvested production and potential unharvested production that 
meets, or would meet if properly handled, the minimum acceptance 
standards contained in the malting barley contract for protein, plump 
kernels, thin kernels, germination, blight damage, mold injury or 
damage, sprout damage, frost injury or damage, and mycotoxins or other 
substances or conditions identified by the Food and Drug Administration 
or other public health organization of the United States as being 
injurious to human health, or the following quality standards as 
applicable:

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

    (3) Harvested production that does not meet the quality standards 
contained in section 4(a)(2) of this Option, but is accepted by a buyer 
for malting purposes. For such production, the production to count may 
be reduced or the price used to settle the claim may be adjusted in 
accordance with sections 4 (b), (c), and (d) of this Option.
    (b) The quantity of production that initially fails any quality 
standard contained in section 4(a)(2), but is sold as malting barley 
(except production included in section 4(c)), may be reduced as 
described in this subsection, provided the failure of such production to 
meet these standards is due to insurable causes. The production to count 
of production sold under section 4(a)(3) will be determined by:
    (1) Adding the maximum barley price election under the Small Grains 
Crop Provisions and the maximum additional value price;
    (2) Dividing the price per bushel received for the damaged 
production by the result of paragraph (1); and
    (3i) Multiplying the result of paragraph (2) (not to exceed 1.000) 
by the number of bushels of damaged production.
    (c) The production to count for production that initially fails any 
quality standard contained in section 4(a)(2), sold as malting barley, 
but is conditioned before the sale will not be reduced under section 
4(b). Such production will be considered separately from all other 
production to count. (See section 5(d).)
    (d) The additional value price election per bushel used to determine 
the value of the production to count for production that initially fails 
any quality standard contained in section 4(a)(2), but is sold as 
malting barley, may be reduced by the cost incurred for any conditioning 
required to improve the quality of production so that it is marketable 
as malting barley, provided the failure of such production to meet these 
standards is due to insurable causes.
    (e) No reduction in the production to count or the additional value 
price election will be allowed for moisture content, damage due to 
uninsured causes; costs or reduced value associated with drying, 
handling, processing, or quality factors other than those contained in 
section 4(a)(2) of this Option; or any other costs associated with 
normal handling and marketing of malting barely.
    (f) All grade and quality determinations must be based on the 
results of objective tests. No indemnity will be paid for any loss 
established by subjective tests. We may obtain one or more samples of 
the insured crop and have tests performed at an official grain 
inspection location established under the U.S. Grain Standards Act or 
laboratory of our choice to verify the results of any test. In the event 
of a conflict in the test results, our results will determine the amount 
of production to count.
    5. In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (a) Multiplying the insured acreage times your malting barley 
production guarantee per acre;
    (b) Multiplying the result in subsection (a) of this section times 
your additional value price election per bushel;
    (c) Multiplying the number of bushels of production to count 
determined in accordance with sections 4 (a) and (b) of this Option

[[Page 207]]

times your elected additional value price per bushel;
    (d) Multiplying the production to count determined under section 
4(c) of this Option times the additional value price per bushel 
determined in section 4(d) of the Option;
    (e) Adding the results of subsections (c) and (d) of this section;
    (f) Subtracting the result of subsection (e) of this section from 
the result in subsection (b); and
    (g) Multiplying the result of subsection (f) of this section times 
your share.
    6. For example, assume you insure two units of barley under the 
Small Grains Crop Provisions in which you have a 100% share and that are 
planted to approved malting varieties. Assume the following:
    (a) Each unit contains 40 acres;
    (b) You have a contract for the sale of 2500 bushels of malting 
barley;
    (c) You have selected the 70 percent coverage level;
    (d) Your production guarantee under the Small Grains Crop Provisions 
and the APH regulations for feed barley is 35 bushels per acre;
    (e) Your total production from all units under the Small Grains Crop 
Provisions is 1,000 bushels, all of which fails to meet the quality 
standards specified by this Option. Two hundred bushels are sold for 
malting purposes after conditioning. Conditioning cost $0.05 per bushel; 
and
    (f) Your additional value price election is $0.60 per bushel.
    Your malting barley production guarantee is 1750.0 bushels (the 
lesser of 35 or 21.875 (2500 contracted bushels /80 acresx70 percent 
coverage)x80 acres). The value of your production guarantee is $1050.00 
(1750 bushelsx$0.60 per bushel). Your production to count is 200 
bushels. The value of your production to count is $110.00 (200 
bushelsx$0.55 ($0.60--$0.05)). Your indemnity for the malting barley 
unit is $940.00 (($1050.00-$110.00)x100 percent share). Any remaining 
loss is paid under the Small Grains Crop Provisions for feed barley.

[61 FR 8855, Mar. 6, 1996; 61 FR 27245, May 31, 1996]



Sec. 457.119  Texas citrus fruit crop insurance provisions.

    The Texas citrus fruit crop insurance provisions for the 2000 and 
succeeding crop years are as follows:

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                   Texas Citrus Fruit Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Crop. Specific groups of citrus fruit as listed in the Special 
Provisions.
    Crop year. The period beginning with the date insurance attaches to 
the citrus crop and extending through the normal harvest time. It is 
designated by the calendar year following the year in which the bloom is 
normally set.
    Direct marketing. Sale of the insured crop directly to consumers 
without the intervention of an intermediary such as a wholesaler, 
retailer, packer, processor, shipper, or buyer. Examples of direct 
marketing include selling through an on-farm or roadside stand, farmer's 
market, and permitting the general public to enter the field for the 
purpose of picking all or a portion of the crop.
    Excess rain. An amount of precipitation that damages the crop.
    Excess wind. A natural movement of air that has sustained speeds 
exceeding 58 miles per hour recorded at the U. S. Weather Service 
reporting station operating nearest to the grove at the time of damage.
    Freeze. The formation of ice in the cells of the tree, its blossoms, 
or its fruit caused by low air temperatures.
    Harvest. The severance of mature citrus fruit from the tree by 
pulling, picking, or any other means, or by collecting marketable fruit 
from the ground.
    Hedged. A process of trimming the sides of the citrus trees for 
better or more fruitful growth of the citrus fruit.
    Interplanted. Acreage on which two or more crops are planted in any 
form of alternating or mixed pattern.
    Local market price. The applicable citrus price per ton offered by 
buyers in the area in which you normally market the insured crop.
    Production guarantee (per acre):
    (a) First stage production guarantee. The second stage production 
guarantee multiplied by forty percent (40%).
    (b) Second stage production guarantee. The quantity of citrus (in 
tons) determined by multiplying the yield determined in accordance with 
section 3 by the coverage level percentage you elect.
    Ton. Two thousand (2,000) pounds avoirdupois.
    Topped. A process of trimming the uppermost portion of the citrus 
trees for better and more fruitful growth of the citrus fruit.
    Varieties. Subclasses of crops as listed in the Special Provisions.

[[Page 208]]

                            2. Unit Division

    (a) A basic unit, as defined in section 1 of the Basic Provisions, 
will be divided into additional basic units by each citrus crop 
designated in the Special Provisions.
    (b) Provisions in the Basic Provisions that allow optional units by 
irrigated and non-irrigated practices are not applicable.
    (c) Instead of establishing optional units by section, section 
equivalent, or FSA farm serial number, optional unit is located on non-
contiguous land.

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

    In addition to the requirements of section 3 (Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities) of the Basic 
Provisions (Sec. 457.8):
    (a) You may select only one price election and coverage level for 
each citrus fruit crop designated in the Special Provisions that you 
elect to insure. The price election you choose for each crop need not 
bear the same percentage relationship to the maximum price offered by us 
for each crop. For example, if you choose one hundred percent (100%) of 
the maximum price election for early oranges, you may choose seventy-
five percent (75%) of the maximum price election for late oranges. 
However, if separate price elections are available by variety within 
each crop, the price elections you choose within the crop must have the 
same percentage relationship to the maximum price offered by us for each 
variety within the crop.
    (b) The production guarantee per acre is progressive by stage and 
increases at specific intervals to the final stage production guarantee. 
The stages and production guarantees per acre are:
    (1) The first stage extends from the date insurance attaches through 
April 30 of the calendar year of normal bloom. The production guarantee 
will be forty percent (40%) of the yield calculated in section 3(e) 
multiplied by your coverage level.
    (2) The second or final stage extends from May 1 of the calendar 
year of normal bloom until the end of the insurance period. The 
production guarantee will be the yield calculated in section 3(e) 
multiplied by your coverage level.
    (c) Any acreage of citrus damaged in the first stage to the extent 
that the majority of producers in the area would not further maintain it 
will be limited to the first stage production guarantee even though you 
may continue to maintain it.
    (d) In addition to the reported production, each crop year you must 
report by type:
    (1) The number of trees damaged, topped, hedged, pruned or removed; 
any change in practices or any other circumstance that may reduce the 
expected yield below the yield upon which the insurance guarantee is 
based; and the number of affected acres;
    (2) The number of bearing trees on insurable and uninsurable 
acreage;
    (3) The age of the trees and the planting pattern; and
    (4) For the first year of insurance for acreage interplanted with 
another perennial crop, and anytime the planting pattern of such acreage 
is changed:
    (i) The age of the interplanted crop, and type if applicable;
    (ii) The planting pattern; and
    (iii) Any other information that we request in order to establish 
your approved yield.
    We will reduce the yield used to establish your production guarantee 
as necessary, based on our estimate of the effect of the following: 
interplanted perennial crop; removal, topping, hedging, or pruning of 
trees; damage; change in practices and any other circumstance on the 
yield potential of the insured crop. If you fail to notify us of any 
circumstance that may reduce your yields from previous levels, we will 
reduce your production guarantee as necessary at any time we become 
aware of the circumstance.
    (e) The yield used to compute your production guarantee will be 
determined in accordance with Actual Production History (APH) 
regulations, 7 CFR part 400, subpart G, and applicable policy provisions 
unless damage or changes to the grove or trees, require establishment of 
the yield by another method. In the event of such damage or changes, the 
yield will be based on our appraisal of the potential of the insured 
acreage for the crop year.
    (f) Instead of reporting your citrus production for the previous 
crop year, as required by section 3 of the Basic Provisions (Sec. 
457.8), there is a one year lag period. Each crop year you must report 
your production from two crop years ago, e.g., on the 1998 crop year 
production report, you will provide your 1996 crop year production.

                           4. Contract Changes

    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is August 31 
preceding the cancellation date.

                  5. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation and 
termination dates are November 20.

                            6. Annual Premium

    In lieu of the premium computation method in section 7 (Annual 
Premium) of the Basic Provisions (Sec. 457.8), the annual premium 
amount is computed by multiplying the second stage production guarantee 
per acre by the price election, the premium rate,

[[Page 209]]

the insured acreage, your share at the time coverage begins, and by any 
applicable premium adjustment percentages contained in the Special 
Provisions.

                             7. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic Provisions 
(Sec. 457.8), the crop insured will be all the acreage in the county of 
each citrus crop designated in the Special Provisions that you elect to 
insure and for which a premium rate is provided by the actuarial 
documents:
    (a) In which you have a share;
    (b) That are adapted to the area;
    (c) That are irrigated;
    (d) That has produced an average yield of at least three tons per 
acre the previous year, or we have appraised the yield potential of at 
least three tons per acre;
    (e) That is grown in a grove that, if inspected, is considered 
acceptable by us; and
    (f) That is not sold by direct marketing, unless allowed by the 
Special Provisions or by written agreement.

                          8. Insurable Acreage

    In lieu of the provisions in section 9 (Insurable Acreage) of the 
Basic Provisions (Sec. 457.8), that prohibit insurance attaching to a 
crop planted with another crop, citrus interplanted with another 
perennial crop is insurable unless we inspect the acreage and determine 
it does not meet the requirements contained in your policy.

                           9. Insurance Period

    (a) In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8):
    (1) Coverage begins on November 21 of each crop year, except that 
for the year of application, if your application is received after 
November 11 but prior to November 21, insurance will attach on the 10th 
day after your properly completed application is received in our local 
office, unless we inspect the acreage during the 10 day period and 
determine that it does not meet insurability requirements. You must 
provide any information that we require for the crop or to determine the 
condition of the grove.
    (2) The calendar date for the end of the insurance period for each 
crop year is the second May 31st of the crop year.
    (b) In addition to the provisions of section 11 (Insurance Period) 
of the Basic Provisions (Sec. 457.8):
    (1) If you acquire an insurable share in any insurable acreage after 
coverage begins, but on or before the acreage reporting date for the 
crop year, and after an inspection we consider the acreage acceptable, 
insurance will be considered to have attached to such acreage on the 
calendar date for the beginning of the insurance period.
    (2) If you relinquish your insurable share on any insurable acreage 
of citrus on or before the acreage reporting date for the crop year, 
insurance will not be considered to have attached to, and no premium 
will be due, and no indemnity paid for such acreage for that crop year 
unless:
    (i) A transfer of coverage and right to an indemnity, or a similar 
form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.

                           10. Causes of Loss

    (a) In accordance with the provisions of section 12 (Causes of Loss) 
of the Basic Provisions (Sec. 457.8), insurance is provided only 
against the following causes of loss that occur within the insurance 
period:
    (1) Excess rain;
    (2) Excess wind;
    (3) Fire, unless weeds and other forms of undergrowth have not been 
controlled or pruning debris has not been removed from the grove;
    (4) Freeze;
    (5) Hail;
    (6) Tornado;
    (7) Wildlife; or
    (8) Failure of the irrigation water supply if caused by an insured 
peril or drought that occurs during the insurance period.
    (b) In addition to the causes of loss excluded in section 12 (Causes 
of Loss) of the Basic Provisions (Sec. 457.8), we will not insure 
against damage or loss of production due to:
    (1) Disease or insect infestation, unless a cause of loss specified 
in section 10(a):
    (i) Prevents the proper application of control measures or causes 
properly applied control measures to be ineffective; or
    (ii) Causes disease or insect infestation for which no effective 
control mechanism is available;
    (2) Inability to market the citrus for any reason other than actual 
physical damage from an insurable cause specified in this section. For 
example, we will not pay you an indemnity if you are unable to market 
due to quarantine, boycott, or refusal of any person to accept 
production.

                11. Duties in the Event of Damage or Loss

    In addition to the requirements of section 14 (Duties in the Event 
of Damage or Loss) of the Basic Provisions (Sec. 457.8), the following 
will apply:
    (a) If the Special Provisions permit or a written agreement 
authorizing direct marketing exists, you must notify us at least 15 days 
before any production from any unit will be sold by direct marketing. We 
will

[[Page 210]]

conduct an appraisal that will be used to determine your production to 
count for production that is sold by direct marketing. If damage occurs 
after this appraisal, we will conduct an additional appraisal. These 
appraisals, and any acceptable records provided by you, will be used to 
determine your production to count. Failure to give timely notice that 
production will be sold by direct marketing will result in an appraised 
amount of production to count of not less than the production guarantee 
per acre if such failure results in our inability to make the required 
appraisal.
    (b) If you intend to claim an indemnity on any unit, you must notify 
us before beginning to harvest any damaged production so we may have an 
opportunity to inspect it. You must not sell or dispose of the damaged 
crop until after we have given you written consent to do so. If you fail 
to meet the requirements of this section all such production will be 
considered undamaged and included as production to count.

                         12. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide acceptable production records:
    (1) For any optional unit, we will combine all optional units for 
which such production records were not provided; or
    (2) For any basic unit, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for each unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim on a unit basis by:
    (1) Multiplying the insured acreage for each crop, or variety if 
applicable, by its respective production guarantee (see sections 1 and 
3);
    (2) Multiplying the results of section 12(b)(1) by the respective 
price election for each crop or variety, if applicable;
    (3) Totaling the results of section 12(b)(2);
    (4) Multiplying the total production to count of each variety, if 
applicable (see section 12(c)) by the respective price election;
    (5) Totaling the results of section 12(b)(4);
    (6) Subtracting this result of section 12(b)(5) from the result of 
section 12(b)(3); and
    (7) Multiplying the result of section 12(b)(6) by your share.
    (c) The total production to count (in tons) from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) For which you fail to provide acceptable production records;
    (C) That is damaged solely by uninsured causes; or
    (D) From which production is sold by direct marketing, if direct 
marketing is specifically permitted by the Special Provisions or a 
written agreement, and you fail to meet the requirements contained in 
section 11;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production; and
    (iv) Potential production on insured acreage you intend to abandon 
or no longer care for, if you and we agree on the appraised amount of 
production. Upon such agreement, the insurance period for that acreage 
will end. If you do not agree with our appraisal, we may defer the claim 
only if you agree to continue to care for the crop. We will then make 
another appraisal when you notify us of further damage or that harvest 
is general in the area unless you harvested the crop, in which case we 
will use the harvested production. If you do not continue to care for 
the crop, our appraisal made prior to deferring the claim will be used 
to determine the production to count; and
    (2) All harvested production from the insurable acreage.
    (d) Any citrus fruit that is not marketed as fresh fruit and, due to 
insurable causes, does not contain 120 or more gallons of juice per ton, 
will be adjusted by:
    (1) Dividing the gallons of juice per ton obtained from the damaged 
citrus by 120; and
    (2) Multiplying the result by the number of tons of such citrus.
    If individual records of juice content are not available, an average 
juice content from the nearest juice plant will be used, if available. 
If not available, a field appraisal will be made to determine the 
average juice content.
    (e) Where the actuarial documents provide, and you elect, the fresh 
fruit option, citrus fruit that is not marketable as fresh fruit due to 
insurable causes will be adjusted by:
    (1) Dividing the value per ton of the damaged citrus by the price of 
undamaged citrus fruit; and
    (2) Multiplying the result by the number of tons of such citrus 
fruit. The applicable price for undamaged citrus fruit will be the local 
market price the week before damage occurred.
    (f) Any production will be considered marketed or marketable as 
fresh fruit unless, due solely to insured causes, such production was 
not marketed as fresh fruit.
    (g) In the absence of acceptable records of disposition of harvested 
citrus fruit, the disposition and amount of production to count for the 
unit will be the guarantee on the unit.
    (h) Any citrus fruit on the ground that is not harvested will be 
considered totally lost if damaged by an insured cause.

[[Page 211]]

                     13. Late and Prevented Planting

    The late and prevented planting provisions of the Basic Provisions 
are not applicable.

[61 FR 41300, Aug. 8, 1996; 61 FR 57583, Nov. 7, 1996, as amended at 62 
FR 65169, Dec. 10, 1997]



Sec. 457.120  [Reserved]



Sec. 457.121  Arizona-California citrus crop insurance provisions.

    The Arizona-California citrus crop insurance provisions for the 2000 
and succeeding crop years are as follows:

                 United States Department of Agriculture

                   Federal Crop Insurance Corporation

                Arizona-California Citrus Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Carton. The standard container for marketing the fresh packed citrus 
fruit crop as shown below. In the absence of marketing records on a 
carton basis, production will be converted to cartons on the basis of 
the following average net pounds of packed fruit in a standard packed 
carton.

------------------------------------------------------------------------
            Container size                    Fruit crop         Pounds
------------------------------------------------------------------------
Container 58................  Navel oranges, Valencia        38
                                        oranges & Sweet
                                        oranges.
Container 58................  Lemons.................        40
Container 59................  Grapefruit.............        32
Container 63................  Tangerines (including          25
                                        Tangelos) & Mandarin
                                        oranges.
------------------------------------------------------------------------

    Crop. Citrus fruit as listed in the Special Provisions.
    Crop year. The period beginning with the date insurance attaches to 
the citrus crop and extending through normal harvest time. It is 
designated by the calendar year following the year in which the bloom is 
normally set.
    Dehorning. Cutting of any scaffold limb to a length that is not 
greater than one-fourth (\1/4\) the height of the tree before cutting.
    Direct marketing. Sale of the insured crop directly to consumers 
without the intervention of an intermediary such as a wholesaler, 
retailer, packer, processor, shipper or buyer. Examples of direct 
marketing include selling through an on-farm or roadside stand, farmer's 
market, and permitting the general public to enter the field for the 
purpose of picking all or a portion of the crop.
    Harvest. The severance of mature citrus from the tree by pulling, 
picking, or any other means, or by collecting marketable fruit from the 
ground.
    Interplanted. Acreage on which two or more crops are planted in any 
form of alternating or mixed pattern.
    Scaffold limb. A major limb attached directly to the trunk.
    Set out. Transplanting a tree into the grove.
    Variety. Subclass of crop as listed in the Special Provisions.

                            2. Unit Division

    (a) A basic unit, as defined in section 1 of the Basic Provisions, 
will also be divided into additional basic units by each citrus crop 
designated in the Special Provisions.
    (b) Provisions in the Basic Provisions that allow optional units by 
section, section equivalent, or FSA farm serial number and by irrigated 
and non-irrigated practices are not applicable. Optional units may be 
established only if each optional unit is located on non-contiguous 
land, unless otherwise allowed by written agreement.

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

    (a) In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) of 
the Basic Provisions (Sec. 457.8), you may select only one price 
election and coverage level for each citrus fruit crop designated in the 
Special Provisions that you elect to insure. The price election you 
choose for each crop need not bear the same percentage relationship to 
the maximum price offered by us for each crop. For example, if you 
choose one hundred percent (100%) of the maximum price election for 
sweet oranges, you may choose seventy-five percent (75%) of the maximum 
price election for grapefruit. However, if separate price elections are 
available by variety within each crop, the price elections you choose 
for each variety must have the same percentage relationship to the 
maximum price offered by us for each variety within the crop.
    (b) In lieu of reporting your citrus production of marketable fresh 
fruit for the previous crop year, as required by section 3 of the Basic 
Provisions (Sec. 457.8), there is a lag period of one year. Each crop 
year, you must report your production from two crop years ago, e.g., on 
the 1998 crop year production report, you will provide your 1996 crop 
year production.
    (c) In addition, you must report, by the production reporting date 
designated in section 3 (Insurance Guarantees, Coverage Levels, and 
Prices for Determining Indemnities) of the Basic Provisions (Sec. 
457.8), by type, if applicable:

[[Page 212]]

    (1) The number of trees damaged, dehorned or removed; any change in 
practices or any other circumstance that may reduce the expected yield 
below the yield upon which the insurance guarantee is based; and the 
number of affected acres;
    (2) The number of bearing trees on insurable and uninsurable 
acreage;
    (3) The age of the trees and the planting pattern; and
    (4) For the first year of insurance for acreage interplanted with 
another perennial crop, and anytime the planting pattern of such acreage 
is changed:
    (i) The age of the interplanted crop, and type, if applicable;
    (ii) The planting pattern; and
    (iii) Any other information that we request in order to establish 
your approved yield.
    We will reduce the yield used to establish your production guarantee 
as necessary, based on our estimate of the effect of the following: 
interplanted perennial crop; damage; dehorning; removal of trees; change 
in practices and any other circumstance on the yield potential of the 
insured crop. If you fail to notify us of any circumstance that may 
reduce your yields from previous levels, we will reduce your production 
guarantee as necessary at any time we become aware of the circumstance.

                           4. Contract Changes

    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is August 31 
preceding the cancellation date.

                  5. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation and 
termination dates are November 20.

                             6. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic Provisions 
(Sec. 457.8), the crop insured will be all the acreage in the county of 
each citrus crop designated in the Special Provisions that you elect to 
insure and for which a premium rate is provided by the actuarial 
documents:
    (a) In which you have a share;
    (b) That is adapted to the area;
    (c) That is irrigated;
    (d) That is grown in a grove that, if inspected, is considered 
acceptable by us;
    (e) That is not sold by direct marketing, unless allowed by the 
Special Provisions or by written agreement; and
    (f) That has reached at least the sixth growing season after being 
set out. However, we may agree to insure acreage that has not reached 
this age if we inspect and approve a written agreement to insure such 
acreage.

                          7. Insurable Acreage

    In lieu of the provisions in section 9 (Insurable Acreage) of the 
Basic Provisions (Sec. 457.8), that prohibit insurance attaching to a 
crop planted with another crop, citrus interplanted with another 
perennial crop is insurable unless we inspect the acreage and determine 
it does not meet the requirements contained in your policy.

                           8. Insurance Period

    (a) In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8):
    (1) Coverage begins on November 21 of each crop year, except that 
for the year of application, if your application is received after 
November 11 but prior to November 21, insurance will attach on the 10th 
day after your properly completed application is received in our local 
office unless we inspect the acreage during the 10 day period and 
determine that it does not meet insurability requirements. You must 
provide any information that we require for the crop or to determine the 
condition of the grove.
    (2) The calendar date for the end of the insurance period for each 
crop year is:
    (i) August 31 for Navel oranges and Southern California lemons;
    (ii) November 20 for Valencia oranges; and
    (iii) July 31 for all other citrus crops.
    (b) In addition to the provisions of section 11 (Insurance Period) 
of the Basic Provisions (Sec. 457.8):
    (1) If you acquire an insurable share in any insurable acreage after 
coverage begins, but on or before the acreage reporting date for the 
crop year, and after an inspection we consider the acreage acceptable, 
insurance will be considered to have attached to such acreage on the 
calendar date for the beginning of the insurance period.
    (2) If you relinquish your insurable share on any insurable acreage 
of citrus on or before the acreage reporting date for the crop year, 
insurance will not be considered to have attached to and no premium will 
be due, and no indemnity paid, for such acreage for that crop year 
unless:
    (i) A transfer of coverage and right to an indemnity, or a similar 
form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.

                            9. Causes of Loss

    (a) In accordance with the provisions of section 12 (Causes of Loss) 
of the Basic Provisions (Sec. 457.8), insurance is provided only 
against the following causes of loss that occur during the insurance 
period:
    (1) Adverse weather conditions;

[[Page 213]]

    (2) Fire, unless weeds and other forms of undergrowth have not been 
controlled or pruning debris has not been removed from the grove;
    (3) Wildlife;
    (4) Earthquake;
    (5) Volcanic eruption; or
    (6) Failure of irrigation water supply, if caused by an insured 
peril that occurs during the insurance period.
    (b) In addition to the causes of loss excluded in section 12 (Causes 
of Loss) of the Basic Provisions (Sec. 457.8), we will not insure 
against damage or loss of production due to:
    (1) Disease or insect infestation, unless adverse weather 
conditions:
    (i) Prevents the proper application of control measures or causes 
properly applied control measures to be ineffective; or
    (ii) Causes disease or insect infestation for which no effective 
control mechanism is available;
    (2) Inability to market the citrus for any reason other than actual 
physical damage from an insurable cause specified in this section. For 
example, we will not pay you an indemnity if you are unable to market 
due to quarantine, boycott, or refusal of any person to accept 
production.

                10. Duties in the Event of Damage or Loss

    In addition to the requirements of section 14 (Duties in the Event 
of Damage or Loss) of the Basic Provisions (Sec. 457.8), the following 
will apply:
    (a) If the Special Provisions permit or a written agreement 
authorizing direct marketing exists, you must notify us at least 15 days 
before any production from any unit will be sold by direct marketing. We 
will conduct an appraisal that will be used to determine your production 
to count for production that is sold by direct marketing. If damage 
occurs after this appraisal, we will conduct an additional appraisal. 
These appraisals, and any acceptable records provided by you, will be 
used to determine your production to count. Failure to give timely 
notice that production will be sold by direct marketing will result in 
an appraised amount of production to count of not less than the 
production guarantee per acre if such failure results in our inability 
to make the required appraisal.
    (b) If you intend to claim an indemnity on any unit, you must notify 
us before beginning to harvest any damaged production so that we may 
have an opportunity to inspect it. You must not sell or dispose of the 
damaged crop until after we have given you written consent to do so. If 
you fail to meet the requirements of this section, all such production 
will be considered undamaged and included as production to count.

                         11. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide acceptable production records:
    (1) For any optional unit, we will combine all optional units for 
which such production records were not provided; or
    (2) For any basic unit, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for each unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the insured acreage for each crop, or variety if 
applicable, by its respective production guarantee;
    (2) Multiplying the results of section 11(b)(1) by the respective 
price election for each crop, or variety, if applicable;
    (3) Totaling the results of section 11(b)(2);
    (4) Multiplying the total production to be counted of each variety, 
if applicable (see section 11(c)), by the respective price election;
    (5) Totaling the results of section 11(b)(4);
    (6) Subtracting this result of section 11(b)(5) from the result of 
section 11(b)(3); and
    (7) Multiplying the result of section 11(b)(6) by your share;
    (c) The total production to count (in cartons) from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) For which you fail to provide acceptable production records;
    (C) That is damaged solely by uninsured causes; or
    (D) From which production is sold by direct marketing, if direct 
marketing is specifically permitted by the Special Provisions or a 
written agreement, and you fail to meet the requirements contained in 
section 10;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production determined to be marketable as fresh 
packed fruit; and
    (iv) Potential production on insured acreage that you intend to 
abandon or no longer care for, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for that 
acreage will end. If you do not agree with our appraisal, we may defer 
the claim only if you agree to continue to care for the crop. We will 
then make another appraisal when you notify us of further damage or that 
harvest is general in the area unless you harvested the crop, in which 
case we will use the harvested production. If you do not continue to 
care for the crop, our appraisal made prior to deferring the claim will 
be used to determine the production to count;

[[Page 214]]

    (2) All harvested production marketed as fresh packed fruit from the 
insurable acreage; and
    (3) All citrus that was disposed of or sold without an inspection or 
written consent.
    (d) Any production will be considered marketed or marketable as 
fresh packed fruit unless, due solely to insured causes, such production 
was not marketed or marketable as fresh packed fruit.
    (e) Citrus that cannot be marketed as fresh packed fruit due to 
insurable causes will not be considered production to count.
    (f) If we determine that frost protection equipment was not properly 
utilized or not properly reported, the indemnity for the unit will be 
reduced by the percentage of premium reduction allowed for frost 
protection equipment. You must, at our request, provide us records 
showing the start-stop times by date for each period the frost 
protection equipment was used.

                     12. Late and Prevented Planting

    The late and prevented planting provisions of the Basic Provisions 
are not applicable.

[61 FR 44147, Aug. 28, 1996, as amended at 62 FR 65170, Dec. 10, 1997]



Sec. 457.122  Walnut crop insurance provisions.

    The Walnut Crop Insurance Provisions for the 2008 and succeeding 
crop years are as follows:
    FCIC Policies

                        Department of Agriculture

                   Federal Crop Insurance Corporation

                           Reinsured Policies

               (Appropriate title for insurance provider)

    Both FCIC and reinsured policies:

                         Walnut Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Harvest--Removal of the walnuts from the orchard.
    Interplanted--Acreage on which two or more crops are planted in any 
form of alternating or mixed pattern.
    Net delivered weight--Delivered weight (pounds) of dry, hulled, in-
shell walnuts, excluding foreign material.
    Pound--A unit of weight equal to 16 ounces avoirdupois.
    Production guarantee (per acre)--The number of pounds (whole in-
shell walnuts), determined by multiplying the approved APH yield per 
acre by the coverage level percentage you elect.

                            2. Unit Division

    Provisions in the Basic Provisions that allow optional units by 
section, section equivalent, or FSA farm serial number and by irrigated 
and non-irrigated practices are not applicable. Optional units may be 
established only if each optional unit is located on non-contiguous 
land, unless otherwise allowed by written agreement.

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

    In addition to the requirements of section 3 of the Basic Provisions 
(Sec. 457.8):
    (a) You may select only one price election for all the walnuts in 
the county insured under this policy unless the Special Provisions 
provide different price elections by variety or varietal group, in which 
case you may select one price election for each walnut variety or 
varietal group designated in the Special Provisions. The price elections 
you choose for each variety or varietal group must have the same 
percentage relationship to the maximum price offered by us for each 
variety or varietal group. For example, if you choose 100 percent of the 
maximum price election for a specific variety or varietal group, you 
must also choose 100 percent of the maximum price election for all other 
varieties or varietal groups.
    (b) You must report, by the production reporting date designated in 
section 3 of the Basic Provisions (Sec. 457.8), by variety or varietal 
group if applicable:
    (1) Any damage, removal of trees, change in practices, or any other 
circumstance that may reduce the expected yield below the yield upon 
which the insurance guarantee is based, and the number of affected 
acres;
    (2) The number of bearing trees on insurable and uninsurable 
acreage;
    (3) The age of the trees and the planting pattern;
    (4) For the first year of insurance for acreage interplanted with 
another perennial crop, and anytime the planting pattern of such acreage 
is changed, the age of the crop that is interplanted with the walnuts, 
and type if applicable, and the planting pattern; and
    (5) Any other information that we request in order to establish your 
approved yield.
    We will reduce the yield used to establish your production guarantee 
as necessary, based on our estimate of the effect of the following: 
interplanted perennial crop; removal of trees; damage; change in 
practices and any other circumstance on the yield potential of the 
insured crop. If you fail to notify

[[Page 215]]

us of any circumstance that may reduce your yields from previous levels, 
we will reduce your production guarantee as necessary at any time we 
become aware of the circumstances.
    (c) You may not increase your elected or assigned coverage level or 
the ratio of your price election to the maximum price election if a 
cause of loss that could or would reduce the yield of the insured crop 
has occurred prior to the time that you request the increase.

                           4. Contract Changes

    In accordance with section 4 of the Basic Provisions, the contract 
change dates are October 31 for California and August 31 preceding the 
cancellation date for all other states.

                  5. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are January 31 for California and 
November 20 for all other states.

                             6. Insured Crop

    In accordance with section 8 of the Basic Provisions (Sec. 457.8), 
the crop insured will be all the commercially grown English Walnuts 
(excluding black walnuts) in the county for which a premium rate is 
provided by the actuarial documents:
    (a) In which you have a share;
    (b) That are grown on tree varieties that:
    (1) Were commercially available when the trees were set out;
    (2) Are adapted to the area; and
    (3) Are grown on a root stock that is adapted to the area;
    (c) That are grown in an orchard that, if inspected, are considered 
acceptable by us;
    (d) On acreage where at least 90 percent of the trees have reached 
at least the seventh growing season after being set out, unless 
otherwise provided in the Special Provisions.
    (e) That are in a unit that consists of at least five acres, unless 
we agree in writing to insure a smaller unit.

                          7. Insurable Acreage

    In lieu of the provisions in section 9 of the Basic Provisions 
(Sec. 457.8), that prohibit insurance attaching to a crop planted with 
another crop, walnuts interplanted with another perennial crop are 
insurable unless we inspect the acreage and determine that it does not 
meet the requirements contained in your policy.

                           8. Insurance Period

    (a) In accordance with the provisions of section 11 of the Basic 
Provisions:
    (1) Coverage begins on February 1 in California and November 21 in 
all other states of each crop year, except that for the year of 
application, if your application is received after January 22 but prior 
to February 1 in California or after November 11 but prior to November 
21 in all states, insurance will attach on the 10th day after your 
properly completed application is received in our local office, unless 
we inspect the acreage during the 10 day period and determine that it 
does not meet insurability requirements. You must provide any 
information that we require for the crop or to determine the condition 
of the orchard.
    (2) The calendar date for the end of the insurance period for each 
crop year is November 15 (Exceptions, if any, for specific counties or 
varieties or varietal group are contained in the Special Provisions).
    (3) Notwithstanding paragraph (a)(1) of this section, for each 
subsequent crop year that the policy remains continuously in force, 
coverage begins on the day immediately following the end of the 
insurance period for the prior crop year. Policy cancellation that 
results solely from transferring to a different insurance provider for a 
subsequent crop year will not be considered a break in continuous 
coverage.
    (4) If your walnut policy is canceled or terminated for any crop 
year, in accordance with the terms of the policy, after insurance 
attached for that crop year but on or before the cancellation and 
termination dates whichever is later, insurance will not be considered 
to have attached for that crop year and no premium, administrative fee, 
or indemnity will be due for such crop year.
    (b) In addition to the provisions of section 11 (Insurance Period) 
of the Basic Provisions (Sec. 457.8):
    (1) If you acquire an insurable share in any insurable acreage after 
coverage begins but on or before the acreage reporting date for the crop 
year, and after an inspection we consider the acreage acceptable, 
insurance will be considered to have attached to such acreage on the 
calendar date for the beginning of the insurance period. Acreage 
acquired after the acreage reporting date will not be insured.
    (2) If you relinquish your insurable share on any insurable acreage 
of walnuts on or before the acreage reporting date for the crop year, 
insurance will not be considered to have attached to, and no premium or 
indemnity will be due for such acreage for that crop year unless:
    (i) A transfer of coverage and right to an indemnity, or a similar 
form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.

[[Page 216]]

                            9. Causes of Loss

    (a) In accordance with the provisions of section 12 of the Basic 
Provisions (Sec. 457.8), insurance is provided only against the 
following causes of loss that occur during the insurance period:
    (1) Adverse weather conditions;
    (2) Fire, unless weeds and undergrowth have not been controlled or 
pruning debris has not been removed from the orchard;
    (3) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (4) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (5) Wildlife;
    (6) Earthquake;
    (7) Volcanic eruption; or
    (8) Failure of irrigation water supply, if caused by an insured 
peril that occurs during the insurance period.
    (b) In addition to the causes of loss excluded in section 12 (Causes 
of Loss) of the Basic Provisions (Sec. 457.8), we will not insure 
against any damage or loss of production due to the inability to market 
the walnuts for any reason other than actual physical damage to the 
walnuts from an insurable cause specified in this section. For example, 
we will not pay you an indemnity if you are unable to market due to 
quarantine, boycott, or refusal of any person to accept production.

               10. Duties in the Event of Damage or Loss.

    (a) In addition to the requirements of section 14 of the Basic 
Provisions, if you intend to claim an indemnity on any unit:
    (1) You must notify us prior to the beginning of harvest so that we 
may inspect the damaged production;
    (2) You must give notice when knowledge is obtained of any mold 
damage or 15 days prior to harvest so that we may inspect the mold 
damaged production; and
    (3) You must not sell or dispose of the damaged crop until we have 
given you written consent to do so.
    (b) If you fail to meet the requirements of this section, all such 
production will be considered undamaged and included as production to 
count.

                         11. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide separate acceptable production records:
    (1) For any optional units, we will combine all optional units for 
which such production records were not provided; or
    (2) For any basic units, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for the units.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the insured acreage by the respective production 
guarantee;
    (2) Multiplying each result in section 11(b)(1) by the respective 
price election for each variety or varietal group;
    (3) Totaling the results in section 11(b)(2);
    (4) Multiplying the total production to be counted of each variety 
or varietal group, if applicable, (see section 11(c)) by the respective 
price election;
    (5) Totaling the results in section 11(b)(4);
    (6) Subtracting the result in section 11(b)(5) from the result in 
section 11(b)(3); and
    (7) Multiplying the result in section 11(b)(6) by your share.
    For example:
    You have a 100 percent share in 100 acres of walnuts in the unit, 
with a guarantee of 2,500 pounds per acre and a price election of $0.61 
per pound. You are only able to harvest 200,000 pounds. Your indemnity 
would be calculated as follows:
    (1) 100 acres x 2,500 pounds = 250,000 pound insurance guarantee;
    (2 & 3) 250,000 pounds x $0.61 price election = $152,500 total value 
of insurance guarantee;
    (4 & 5) 200,000 pounds production to count x $0.61 price election = 
$122,000 total value of production to count;
    (6) $152,500 total value guarantee--$122,000 total value of 
production to count = $30,500 loss; and
    (7) $30,500 x 100 percent share = $30,500 indemnity payment.
    (c) The total production to count (whole in-shell pounds) from all 
insurable acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) That is damaged solely by uninsured causes; or
    (C) For which you fail to provide acceptable production records;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production; and
    (iv) Potential production on insured acreage that you intend to 
abandon or no longer care for, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for that 
acreage will end. If you do not agree with our appraisal, we may defer 
the claim only if you agree to continue to care for the crop. We will 
then make another appraisal when you notify us of further damage or that 
harvest is general in the area unless you harvested the crop, in which 
case we will use the harvested production. If you do not continue to 
care for the crop, our appraisal made prior to deferring the claim will 
be used to determine the production to count; and

[[Page 217]]

    (2) All harvested production from the insurable acreage.
    (d) Mature walnut production damaged due to an insurable cause of 
loss which occurs within the insurance period may be adjusted for 
quality based on an inspection by the Dried Fruit Association or during 
our loss adjustment process. Walnut production that has mold damage 
greater than 8 percent, based on the net delivered weight, will be 
reduced by the quality adjustment factors contained in the Special 
Provisions. Walnut production that exceeds 30 percent mold damage and 
will not be sold, the production to count will be zero.

                     12. Late and Prevented Planting

    The late and prevented planting provisions of the Basic Provisions 
are not applicable.

[62 FR 20091, Apr. 25, 1997, as amended at 62 FR 65170, Dec. 10, 1997; 
65 FR 47837, Aug. 4, 2000; 72 FR 10909, Mar. 12, 2007]



Sec. 457.123  Almond crop insurance provisions.

    The Almond Crop Insurance Provisions for the 2008 and succeeding 
crop years are as follows:
    FCIC Policies

                        Department of Agriculture

                   Federal Crop Insurance Corporation

                           Reinsured Policies

               (Appropriate title for insurance provider)

Both FCIC and Reinsured Policies

                         Almond Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop 
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.

                             1. Definitions

    Harvest. The removal of mature almonds from the orchard.
    Interplanted. Acreage on which two or more crops are planted in any 
form of alternating or mixed pattern.
    Meat pounds. The total pounds of almond meats (whole, chipped and 
broken, and in-shell meats). In-shell almonds will be converted to meat 
pounds in accordance with FCIC approved procedures.
    Production guarantee (per acre). The quantity of almonds (total meat 
pounds per acre) determined by multiplying the approved actual 
production history (APH) yield per acre by the coverage level percentage 
you elect.
    Set out. Transplanting the tree into the orchard.

                            2. Unit Division

    Provisions in the Basic Provisions that allow optional units by 
section, section equivalent, or FSA farm serial number and by irrigated 
and non-irrigated practices are not applicable. Optional units may be 
established only if each optional unit is located on non-contiguous 
land, unless otherwise allowed by written agreement.

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

    In addition to the requirements of section 3 of the Basic Provisions 
(Sec. 457.8):
    (a) You may select only one price election for all the almonds in 
the county insured under this policy unless the Special Provisions 
provide different price elections by type, in which case you may select 
one price election for each almond type designated in the Special 
Provisions. The price elections you choose for each type must have the 
same percentage relationship to the maximum price offered by us for each 
type. For example, if you choose 100 percent of the maximum price 
election for one type, you must also choose 100 percent of the maximum 
price election for all other types.
    (b) You must report, by the production reporting date designated in 
section 3 of the Basic Provisions (Sec. 457.8), by type if applicable:
    (1) Any damage, removal of trees, change in practices, or any other 
circumstance that may reduce the expected yield below the yield upon 
which the insurance guarantee is based, and the number of affected 
acres;
    (2) The number of bearing trees on insurable and uninsurable 
acreage;
    (3) The age of the trees and the planting patterns;
    (4) For the first year of insurance for acreage interplanted with 
another perennial crop, and anytime the planting pattern of such acreage 
is changed, the age of the crop that is interplanted with the almonds, 
and type if applicable, and the planting pattern; and
    (5) Any other information that we request in order to establish your 
approved yield.
    We will reduce the yield used to establish your production guarantee 
as necessary, based on our estimate of the effect of the following: 
interplanted perennial crop; removal of trees; damage; change in 
practices and any other circumstance on the yield potential of the 
insured crop. If you fail to notify us of any circumstance that may 
reduce your yields from previous levels, we will reduce your production 
guarantee as necessary at any time we become aware of the circumstance.
    (c) You may not increase your elected or assigned coverage level or 
the ratio of your price election to the maximum price election if a 
cause of loss that would or could reduce

[[Page 218]]

the yield of the insured crop has occurred prior to the time that you 
request the increase.

                           4. Contract Changes

    In accordance with section 4 of the Basic Provisions (Sec. 457.8), 
the contract change date is August 31 preceding the cancellation date.

                  5. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions (Sec. 457.8), 
the cancellation and termination dates are December 31.

                             6. Insured Crop

    In accordance with section 8 of the Basic Provisions (Sec. 457.8), 
the crop insured will be all the almonds in the county for which a 
premium rate is provided by the actuarial documents:
    (a) In which you have a share unless allowed otherwise by section 
8(b);
    (b) That are grown for harvest as almonds;
    (c) That are irrigated;
    (d) That are grown in an orchard that, if inspected, is considered 
acceptable to us; and
    (e) On acreage where at least 90 percent of the trees have reached 
at least the sixth growing season after being set out, unless otherwise 
provided in the Special Provisions.

                          7. Insurable Acreage

    In lieu of the provisions in section 9 of the Basic Provisions 
(Sec. 457.8), that prohibit insurance attaching to a crop planted with 
another crop, almonds interplanted with another perennial crop are 
insurable unless we inspect the acreage and determine that it does not 
meet the requirements contained in your policy.

                           8. Insurance Period

    (a) In accordance with the provisions of section 11 of the Basic 
Provisions (Sec. 457.8):
    (1) Coverage begins on January 1 of each crop year, except that for 
the year of application, if your application is received after December 
21, but prior to January 1, insurance will attach on the 10th day after 
your properly completed application is received in our local office 
unless we inspect the acreage during the 10 day period and determine 
that it does not meet insurability requirements. You must provide any 
information that we require for the crop or to determine the condition 
of the orchard.
    (2) The calendar date for the end of the insurance period for each 
crop year is November 30.
    (3) Notwithstanding paragraph (a)(1) of this section, for each 
subsequent crop year that the policy remains continuously in force, 
coverage begins on the day immediately following the end of the 
insurance period for the prior crop year. Policy cancellation that 
results solely from transferring to a different insurance provider for a 
subsequent crop year will not be considered a break in continuous 
coverage.
    (4) If your almond policy is canceled or terminated for any crop 
year, in accordance with the terms of the policy, after insurance 
attached for that crop year but on or before the cancellation and 
termination dates whichever is later, insurance will not be considered 
to have attached for that crop year and no premium, administrative fee, 
or indemnity will be due for such crop year.
    (b) In addition to the provisions of section 11 (Insurance Period) 
of the Basic Provisions (Sec. 457.8):
    (1) If you acquire an insurable share in any insurable acreage after 
coverage begins but on or before the acreage reporting date for the crop 
year, and after an inspection we consider the acreage acceptable, 
insurance will be considered to have attached to such acreage on the 
calendar date for the beginning of the insurance period. Acreage 
acquired after the acreage reporting date will not be insured.
    (2) If you relinquish your insurable share on any insurable acreage 
of almonds on or before the acreage reporting date for the crop year, 
insurance will not be considered to have attached to, and no premium or 
indemnity will be due for such acreage for that crop year unless:
    (i) A transfer of coverage and right to an indemnity, or a similar 
form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.

                            9. Causes of Loss

    (a) In accordance with the provisions of section 12 of the Basic 
Provisions (Sec. 457.8), insurance is provided only against the 
following causes of loss that occur during the insurance period:
    (1) Adverse weather conditions;
    (2) Fire, unless weeds and undergrowth have not been controlled or 
pruning debris has not been removed from the orchard;
    (3) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (4) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (5) Earthquake;
    (6) Volcanic eruption;
    (7) Failure of the irrigation water supply, if caused by an insured 
peril that occurs during the insurance period; or
    (8) Wildlife, unless control measures have not been taken.
    (b) In addition to the causes of loss excluded in section 12 (Causes 
of Loss) of the Basic Provisions (Sec. 457.8), we will not insure

[[Page 219]]

against damage or loss of production due to the inability to market the 
almonds for any reason other than actual physical damage to the almonds 
from an insurable cause specified in this section. For example, we will 
not pay you an indemnity if you are unable to market due to quarantine, 
boycott, or refusal of any person to accept production.

                10. Duties in the Event of Damage or Loss

    In addition to the requirements of section 14 of the Basic 
Provisions (Sec. 457.8), if you intend to claim an indemnity on any 
unit, you must notify us prior to the beginning of harvest so that we 
may inspect the damaged production. You must not sell or dispose of the 
damaged crop until after we have given you written consent to do so. If 
you fail to meet the requirements of this section, all such production 
will be considered undamaged and included as production to count.

                         11. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide separate acceptable production records:
    (l) For any optional units, we will combine all optional units for 
which such production records were not provided; or
    (2) For any basic units, we will allocate any commingled production 
to such units in proportion to our liability on the harvested acreage 
for the units.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the insured acreage by its respective production 
guarantee;
    (2) Multiplying each result in section 11(b)(1) by the respective 
price election for the type;
    (3) Totaling the results in section 11(b)(2);
    (4) Multiplying the total production to be counted of each type, if 
applicable, (see subsection 11(c)) by the respective price election;
    (5) Totaling the results in section 11(b)(4);
    (6) Subtracting the result in section 11(b)(5) from the result in 
section 11(b)(3); and
    (7) Multiplying the result in section 11(b)(6) by your share.
    For example:
    You have a 100 percent share in 100 acres of almonds in the unit, 
with a guarantee of 1,200 pounds per acre and a price election of $1.70 
per pound. You are only able to harvest 100,000 pounds. Your indemnity 
would be calculated as follows:
    (1) 100 acres x 1,200 pounds = 120,000 pound insurance guarantee;
    (2 & 3) 120,000 pounds x $1.70 price election = $204,000 total value 
of insurance guarantee;
    (4 & 5) 100,000 pounds production to count x $1.70 price election = 
$170,000 total value of production to count;
    (6) $204,000 total of value guarantee--$170,000 total value of 
production to count = $34,000 loss; and
    (7) $34,000 x 100 percent share = $34,000 indemnity payment.
    (c) The total production to count, specified in meat pounds, from 
all insurable acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) That is damaged solely by uninsured causes; or
    (C) For which you fail to provide acceptable production records;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production; and
    (iv) Potential production on insured acreage that you intend to 
abandon or no longer care for, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for that 
acreage will end. If you do not agree with our appraisal, we may defer 
the claim only if you agree to continue to care for the crop. We will 
then make another appraisal when you notify us of further damage or that 
harvest is general in the area unless you harvested the crop, in which 
case we will use the harvested production. If you do not continue to 
care for the crop, our appraisal made prior to deferring the claim will 
be used to determine the production to count; and
    (2) All harvested meat pounds, including meat pounds damaged due to 
uninsured causes of loss.

                     12. Late and Prevented Planting

    The late and prevented planting provisions of the Basic Provisions 
are not applicable.

[62 FR 25108, May 8, 1997, as amended at 62 FR 65170, Dec. 10, 1997; 65 
FR 47838, Aug. 4, 2000; 72 FR 10909, Mar. 12, 2007]



Sec. 457.124  Raisin crop insurance provisions.

    The raisin crop insurance provisions for the 1998 and succeeding 
crop years are as follows:
    FCIC Policies

                        Department of Agriculture

                   Federal Crop Insurance Corporation

                           Reinsured Policies

               (Appropriate title for insurance provider)

Both FCIC and Reinsured Policies

                         Raisin Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1)

[[Page 220]]

The Catastrophic Risk Protection Endorsement, if applicable; (2) the 
Special Provisions; (3) these Crop Provisions; and (4) the Basic 
Provisions with (1) controlling (2), etc.

                             1. Definitions

    Crop year--In lieu of the definition of ``Crop year'' contained in 
section 1 of the Basic Provisions (Sec. 457.8), the calendar year in 
which the raisins are placed on trays for drying.
    Delivered ton--A ton of raisins delivered to a packer, processor, 
buyer or a reconditioner, before any adjustment for U. S. Grade B and 
better maturity standards, and after adjustments for moisture over 16 
percent and substandard raisins over 5 percent.
    RAC--The Raisin Administrative Committee, which operates under an 
order of the United States Department of Agriculture (USDA).
    Raisins--The sun-dried fruit of varieties of grapes designated 
insurable by the actuarial documents. These grapes will be considered 
raisins for the purpose of this policy when laid on trays in the 
vineyard to dry.
    Reference maximum dollar amount--The value per ton established by 
FCIC and shown in the actuarial documents.
    Substandard--Raisins that fail to meet the requirements of U.S. 
Grade C, or layer (cluster) raisins with seeds that fail to meet the 
requirements of U.S. Grade B.
    Table grapes--Grapes grown for commercial sale as fresh fruit on 
acreage where appropriate cultural practices were followed.
    Ton--Two thousand (2,000) pounds avoirdupois.
    Tonnage report--A report used to annually report, by unit, all the 
tons of raisins produced in the county in which you have a share.

                            2. Unit Division

    (a) A basic unit, as defined in section 1 of the Basic Provisions, 
will be divided into additional basic units by grape variety.
    (b) Provisions in the Basic Provisions that allow optional units by 
section, section equivalent, or FSA farm serial number and by irrigated 
and non-irrigated practices are not applicable. Optional units may be 
established only if each optional unit is located on non-contiguous 
land, unless otherwise allowed by written agreement.

            3. Amounts of Insurance and Production Reporting

    In addition to the requirements of section 3 (Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities) of the Basic 
Provisions (Sec. 457.8):
    (a) You may select only one coverage level percentage for all the 
raisins in the county insured under this policy.
    (b) The amount of insurance for the unit will be determined by 
multiplying the insured tonnage by the reference maximum dollar amount, 
by the coverage level percentage you elect, and by your share.
    (c) Insured tonnage is determined as follows:
    (1) For units not damaged by rain--The delivered tons; or
    (2) For units damaged by rain--By adding the delivered tons to any 
verified loss of production due to rain damage. When production from a 
portion of the acreage within a unit is removed from the vineyard and 
production from the remaining acreage is lost in the vineyard, the 
amount of production lost in the vineyard will be determined based on 
the number of tons of raisins produced on the acreage from which 
production was removed. When no production has been removed from the 
vineyard, the amount of production lost in the vineyard will be 
determined based on an appraisal.
    (3) Insured tonnage will be adjusted as follows:
    (i) The insured tonnage will be reduced 0.12 percent for each 0.10 
percent of moisture in excess of 16.0 percent. For example, 10.0 tons of 
raisins containing 18.0 percent moisture will be reduced to 9.760 tons 
of raisins;
    (ii) Insured tonnage used for dry edible fruit will be reduced by 
0.10 percent for each 0.10 percent of substandard raisins in excess of 
5.0 percent; and
    (iii) When raisins contain moisture in excess of 24.3 percent at the 
time of delivery and are released for a use other than dry edible fruit 
(e.g. distillery material), they will be considered to contain 24.3 
percent moisture.
    (4) If any raisins are delivered, the moisture content will be 
determined at the time of delivery.
    (d) Section 3(c) of the Basic Provisions is not applicable to this 
crop.

                           4. Contract Changes

    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is April 30 preceding 
the cancellation date.

                  5. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation and 
termination dates are July 31.

                  6. Acreage Report and Tonnage Report

    In lieu of the provisions contained in section 6 of the Basic 
Provisions (Sec. 457.8):
    (a) You must report by unit, and on our form, the acreage on which 
you intend to

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produce raisins for the crop year. This acreage report must be submitted 
to us on or before the sales closing date, and contain the following 
information:
    (1) All acreage of the crop (insurable and not insurable) in which 
you will have a share;
    (2) Your anticipated share at the time coverage will begin;
    (3) The variety; and
    (4) The location of each vineyard.
    (b) Acreage of the crop acquired after the acreage was reported, may 
be included on the acreage report if we agree to accept the additional 
acreage. Such additional acreage will not be added to the acreage report 
after you first place raisins from the additional acreage on trays for 
drying. Failure to report any acreage in which you have a share will 
result in denial of liability. If you elect not to produce raisins on 
any part of the acreage included on your acreage report, you must notify 
us in writing on or before September 21, and provide any records we may 
require to verify that raisins were not produced on that acreage.
    (c) If you fail to file an acreage report in a timely manner, or if 
the information reported is incorrect, we may deny liability on any 
unit.
    (d) In addition to the acreage report, you must annually submit a 
tonnage report, on our form, which includes by unit the number of 
delivered tons of raisins, and, if damage has occurred, the amount of 
any tonnage we determined was lost due to rain damage in the vineyard 
for each unit designated in the acreage report.
    (e) The tonnage report must be submitted to us as soon as the 
information is available, but not later than March 1 of the year 
following the crop year. Indemnities may be determined on the basis of 
information you submitted on this report. If you do not submit this 
report by the reporting date, we may, at our option, either determine 
the insured tonnage and share by unit or we may deny liability on any 
unit. This report may be revised only upon our approval. Errors in 
reporting units may be corrected by us at any time we discover the 
error.

                            7. Annual Premium

    In lieu of the premium computation method contained in section 7 
(Annual Premium) of the Basic Provisions (Sec. 457.8), the annual 
premium amount is determined by multiplying the amount of insurance for 
the unit at the time insurance attaches by the premium rate and then 
multiplying that result by any applicable premium adjustment factors 
that may apply.

                             8. Insured Crop

    (a) In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all the raisins in 
the county of grape varieties for which a premium rate is provided by 
the actuarial documents and in which you have a share.
    (b) In addition to the raisins not insurable under section 8 
(Insured Crop) of the Basic Provisions (Sec. 457.8), we do not insure 
any raisins:
    (1) Laid on trays after September 8 in vineyards with north-south 
rows in Merced or Stanislaus Counties, or after September 20 in all 
other counties;
    (2) From table grape strippings; or
    (3) From vines that received manual, mechanical, or chemical 
treatment to produce table grape sizing.

                           9. Insurance Period

    In lieu of the provisions of section 11 (Insurance Period) of the 
Basic Provisions (Sec. 457.8), insurance attaches on each unit at the 
time the raisins are placed on trays for drying and ends the earlier of:
    (a) October 20;
    (b) The date the raisins are removed from the trays;
    (c) The date the raisins are removed from the vineyard;
    (d) Total destruction of all raisins on a unit;
    (e) Final adjustment of a loss on a unit; or
    (f) Abandonment of the raisins.

                           10. Causes of Loss

    (a) In accordance with the provisions of section 12 (Causes of Loss) 
of the Basic Provisions (Sec. 457.8), insurance is provided only 
against unavoidable loss of production resulting from rain that occurs 
during the insurance period and while the raisins are on trays or in 
rolls in the vineyard for drying.
    (b) In addition to the causes of loss excluded in section 12 (Causes 
of Loss) of the Basic Provisions (Sec. 457.8), we will not insure 
against damage or loss of production due to inability to market the 
raisins for any reason other than actual physical damage from an 
insurable cause specified in this section. For example, we will not pay 
you an indemnity if you are unable to market due to quarantine, boycott, 
or refusal of a person to accept production.

               11. Reconditioning Requirements and Payment

    (a) We may require you to recondition a representative sample of not 
more than 10 tons of damaged raisins to determine if they meet standards 
established by the RAC once reconditioned. If such standards are met, we 
may require you to recondition all the damaged production. If we 
determine that it is possible to recondition any damaged production and, 
if you do not do so, we will value the damaged production at the 
reference maximum dollar amount, except if your

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damaged production undergoes a USDA inspection and is stored by your 
packer with other producer's production to be reconditioned at a later 
date. If we agree, in writing, that it is not practical to recondition 
the damaged production, we will determine the number of tons meeting RAC 
standards that could be obtained if the production were reconditioned.
    (b) If the representative sample of raisins that we require you to 
recondition does not meet RAC standards for marketable raisins after 
reconditioning, the reconditioning payment will be the actual cost you 
incur to recondition the sample, not to exceed an amount that is 
reasonable and customary for such reconditioning, regardless of the 
coverage level selected.
    (c) A reconditioning payment, based on the actual (unadjusted) 
weight of the raisins, will be made if:
    (1) Insured raisin production:
    (i) Is damaged by rain within the insurance period;
    (ii) Is reconditioned by washing with water and then drying;
    (iii) Is insured at a coverage level greater than that applicable to 
the catastrophic risk protection plan of insurance; and either
    (2) The damaged product