[Federal Register Volume 74, Number 170 (Thursday, September 3, 2009)]
[Rules and Regulations]
[Pages 45537-45544]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-21233]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 74, No. 170 / Thursday, September 3, 2009 /
Rules and Regulations
[[Page 45537]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 402, 407, and 457
RIN 0563-AC19
Catastrophic Risk Protection Endorsement; Group Risk Plan of
Insurance Regulations; and the Common Crop Insurance Regulations, Basic
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the
Catastrophic Risk Protection Endorsement, the Group Risk Plan of
Insurance Regulations, and the Common Crop Insurance Regulations, Basic
Provisions to revise those provisions as mandated by the Food,
Conservation, and Energy Act of 2008 (2008 Farm Bill). The changes will
apply for the 2010 and succeeding crop years for all crops with a 2010
crop year contract change date on or after the effective date of this
rule and for the 2011 and succeeding crop years for all crops with a
2010 crop year contract change date prior to the effective date of this
rule.
DATES: Effective Date: This rule is effective October 5, 2009.
FOR FURTHER INFORMATION CONTACT: Erin Albright, Risk Management
Specialist, Product Management, Product Administration and Standards
Division, Risk Management Agency, United States Department of
Agriculture, Beacon Facility--Mail Stop 0812, PO Box 419205, Kansas
City, MO 64141-6205, telephone (816) 926-7730.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
rule is non-significant for the purposes of Executive Order 12866 and,
therefore, it has not been reviewed by OMB.
Paperwork Reduction Act of 1995
Pursuant to the provisions of the Paperwork Reduction Act of 1995
(44 U.S.C. chapter 35), the collections of information in this rule
have been approved by OMB under control number 0563-0053 through March
31, 2012.
E-Government Act Compliance
FCIC is committed to complying with the E-Government Act of 2002,
to promote the use of the Internet and other information technologies
to provide increased opportunities for citizen access to Government
information and services, and for other purposes.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal governments and
the private sector. This rule contains no Federal mandates (under the
regulatory provisions of title II of the UMRA) for State, local, and
tribal governments or the private sector. Therefore, this rule is not
subject to the requirements of sections 202 and 205 of UMRA.
Executive Order 13132
It has been determined under section 1(a) of Executive Order 13132,
Federalism, that this rule does not have sufficient implications to
warrant consultation with the States. The provisions contained in this
rule will not have a substantial direct effect on States, or on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.
Regulatory Flexibility Act
FCIC certifies that this regulation will not have a significant
economic impact on a substantial number of small entities. Program
requirements for the Federal crop insurance program are the same for
all producers regardless of the size of their farming operation. For
instance, all producers are required to submit an application and
acreage report to establish their insurance guarantees and compute
premium amounts, and all producers are required to submit a notice of
loss and production information to determine the amount of an indemnity
payment in the event of an insured cause of crop loss. Whether a
producer has 10 acres or 1,000 acres, there is no difference in the
kind of information collected. To ensure crop insurance is available to
small entities, the Federal Crop Insurance Act authorizes FCIC to waive
collection of administrative fees from limited resource farmers. FCIC
believes this waiver helps to ensure that small entities are given the
same opportunities as large entities to manage their risks through the
use of crop insurance. A Regulatory Flexibility Analysis has not been
prepared since this regulation does not have an impact on small
entities, and, therefore, this regulation is exempt from the provisions
of the Regulatory Flexibility Act (5 U.S.C. 605).
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which require intergovernmental consultation with State and
local officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12988
This final rule has been reviewed in accordance with Executive
Order 12988 on civil justice reform. The provisions of this rule will
not have a retroactive effect. The provisions of this rule will preempt
State and local laws to the extent such State and local laws are
inconsistent herewith. With respect to any direct action taken by FCIC
or to require the insurance provider to take specific action under the
terms of the crop insurance policy, the administrative appeal
provisions published at 7 CFR part 11 must be exhausted before any
action against FCIC for judicial review may be brought.
Environmental Evaluation
This action is not expected to have a significant economic impact
on the quality of the human environment, health, or safety. Therefore,
neither an
[[Page 45538]]
Environmental Assessment nor an Environmental Impact Statement is
needed.
Background
This rule finalizes changes to the Catastrophic Risk Protection
Endorsement, the Group Risk Plan of Insurance Regulations, and the
Common Crop Insurance Regulations, Basic Provisions, mandated by the
2008 Farm Bill, that were published by FCIC on November 24, 2008, as a
notice of interim rulemaking in the Federal Register at 73 FR 70861-
70865. The public was afforded 60 days to submit written comments and
opinions.
A total of 52 comments were received from 14 commenters. The
commenters were reinsured companies, conservation organizations, a
state agricultural association, an insurance service organization, a
grower association, a government agency, and other interested parties.
The public comments received are organized below by the issues
identified in this rule and the specific public comments received. The
comments received and FCIC's responses are as follows:
General
Comment: A commenter asked how the changes in the interim rule will
be conveyed to the insureds. The commenter asked whether the changes
will be added to the Basic Provisions as an endorsement or whether the
insurance providers will be required to issue a completely new set of
Basic Provisions.
Response: The changes will be issued in a revised Farm Bill
Amendment. Therefore, the insurance providers will only have to issue
the revised endorsement rather than reissue the entire Basic
Provisions.
Comment: A few commenters stated the language in this interim rule
has already been sent, or is in the process of being sent, to all
affected policyholders. If RMA makes any changes to what is in the
interim rule, the commenters would recommend that any such changes to
the Farm Bill Amendment necessitated by the final rule be issued in
conjunction with the Administrative Remedies for Non-Compliance Final
Rule language (7 CFR Part 400, 407, and 457; RIN 0563-AB73 published on
December 18, 2008) instead of having another separate revised Farm Bill
Amendment.
Response: FCIC has already issued the Administrative Remedies for
Non-Compliance final rule language in the Sanctions Amendment.
Therefore, any changes made in this final rule will result in the
revision of the Farm Bill Amendment.
Comment: A few commenters stated the Supplementary Information for
Executive Order 12866 in item number (3) indicates that this will not
impact a large number of insured producers. There are a large number of
current policyholders who have their own structures for farm-stored
harvested production, and if a substantial percentage of these
producers elect to extend the settlement of their claims, this could
result in a large number of producers being impacted by this rule.
Response: The provisions only provide a producer the option to
postpone settlement of their claim if they have farm-stored production.
FCIC does not anticipate a large number of producers will elect this
option. Further, the provisions only allow a short delay for
calculating a claim and only when there is farm-stored production.
Therefore, FCIC does not anticipate the changes within this provision
will significantly impact a large number of producers.
Linkage Requirements
Comment: A few commenters stated FCIC has proposed removing all
references to other United States Department of Agriculture (USDA)
program benefits (linkage requirements). A commenter stated even though
the question of eligibility is for other agencies to determine, their
recommendation would be to maintain this language in the provisions so
producers are aware of these requirements. A commenter stated while
this makes sense since the question of eligibility and the requirements
are dependent on those other programs as they become available, and
such details should be provided by those other agencies, it would seem
that there should be at least some mention of these potential
requirements in the crop insurance policy language so policyholders are
aware of them. Both commenters stated if FCIC chooses to continue with
removing all language regarding linkage requirements from the policies,
it would be beneficial if insurance providers were provided with some
kind of notification when those linkage requirements are imposed or
changed.
Response: Producers are generally aware of other USDA program
benefits, so FCIC does not believe the addition of a general provision
would be of any assistance to them. Further, these requirements have
changed over the years. As stated in the interim rule, any program
eligibility requirements for a particular program are best provided by
the agency administering such program.
Delay of Claims for Farm-Stored Production
Comment: A few commenters stated section 12014 of the Farm Bill
allows producers with farm-stored production to elect to extend the
settlement of their claim for up to four additional months beyond the
60 days allowed in the current policy provisions. The commenters stated
this language needs to clarify that it is applicable only to grain
crops and also recommended the word ``harvested'' be inserted after the
word ``Have'' and in front of the words ``farm-stored production'' to
preclude any arguments from policyholders who maintain they are storing
such production in the field (since there was not a definition of
``farm-stored production'' being added to the provisions).
Response: These provisions were intended to only apply to harvested
farm-stored grain and FCIC has revised the provisions accordingly.
Comment: A few commenters stated the new farm-stored production
provisions could potentially present some additional problems of
extending the final determination of production for actual production
history (APH) purposes beyond the applicable production reporting date.
Policyholders may also feel this provides them with additional time to
pay their premium beyond the termination date. There could also be APH
reviews or other quality control reviews that are delayed beyond the
April 30 deadline for reporting such information to the RMA because of
this language. The additional time also allows for more things to
happen to the grain before a final determination of production is made.
Response: FCIC is statutorily mandated to allow producers to delay
their claims. However, FCIC does not anticipate many producers will opt
to wait the full 180 days to determine the amount of farm-stored
production. FCIC has added provisions notifying producers they will be
assigned their prior year's approved yield in accordance with the
temporary yield procedure contained in the Crop Insurance Handbook when
extensions go beyond the date production reports are due. FCIC has also
added provisions notifying producers that no additional time is
provided for payment of premium nor can damage that occurs after grain
is stored be covered. When quality control reviews cannot be completed
before reports are due because production amounts are not yet
[[Page 45539]]
available, it should be noted in the report remarks that the review is
not yet complete because of the delayed measurement.
Comment: A few commenters questioned what happens if the producer
elects to delay measurement of the grain for an additional four months
but subsequently removes and sells the grain during the four month
period. The commenters asked whether the production from the settlement
sheets with the buyer would be used in lieu of any measurements in this
situation. The commenters also asked what happens if the grain is lost
due to tornado or fire during this four month period. The added policy
language does not address these issues.
Response: When production is sold, the sales records will be used
to determine the amount of production provided the records are
verifiable. Since harvest ends the insurance period, no coverage is
provided for any subsequent damage. Provisions have been added to make
this clear. When production is lost after the end of the insurance
period and no records of production are available, no claim can be paid
because there is no way to accurately adjust the claim.
Native Sod Acreage Located in the Prairie Pothole National Priority
Area
Comment: A commenter stated placing the Farm Service Agency (FSA)
in the position of determining if the soil has been tilled in the past,
without an appeals process for the producer, is unacceptable. FSA
records are available for only the last 30 to 40 years while the land
has been operated for at least 100 years. With the current definition
of native sod and no appeals rights, any grass area that does not have
a farm number and a field number will be native sod. This goes far
beyond the intent of the conference committee and the managers.
A few commenters stated there is acreage that was farmed over a
decade ago and now appears to be native sod. This acreage was not
farmed again until after May 22, 2008. Therefore, they believe this
acreage will not be classified as native sod as defined in the Farm
Bill Amendment. RMA must specify the acceptable documentation necessary
to prove acreage last farmed over a decade ago is not native sod. This
will allow the producer to avoid the 5-year moratorium on coverage if
the Governor of a State enacts section 508(o) of the Federal Crop
Insurance Act (Act). Because ``no record of being tilled'' is based on
FSA records and FSA records exist for a limited number of years, as are
the producer's records, the commenters asked if acreage that was
previously farmed but for which no records exist to prove such farming,
is returned to a ``native sod'' status by fact of ``no record of being
tilled.'' If some documentation exists to prove old tillage, the
commenters asked how the insurance providers will know if such
documentation is considered acceptable (e.g., Fish and Wildlife Refuge
rental agreements). RMA must specify a list of documents or document
criteria that is acceptable to prove prior tillage of a piece of ground
that appears to be native sod but the land owner/producer claims is
not. The commenter suggests RMA simply indicate that any available
documentation, when outside the retention period, must contain an
acceptable legal description (e.g., 578's, CRP contracts).
Another commenter recommended the rule specify these records must
consist of some type of official, written record tied to the specific
piece of property under evaluation or consideration which indicates the
property had been tilled at some point in the past; producers should
not be allowed to self-certify any tillage records.
Another commenter stated FSA records are not infallible. The
commenter recommended allowing a landowner to present the FSA with hard
evidence that the land has been tilled and cropped in the past. If that
evidence is persuasive, the FSA should be allowed to determine that the
land had been previously tilled and is thus outside the operation of
the rule and thus eligible for crop insurance.
A few commenters were concerned about the definition of native sod.
The legislative definition of native sod differs from the definition in
the regulation. The legislation defines native sod as land ``that has
never been tilled for the production of an annual crop as of the date
of enactment.'' The regulation defines native sod as land ``that has no
record date of being tilled (determined in accordance with Farm Service
Agency (FSA) records) as of the date of enactment.'' The definition in
the regulation is significantly more restrictive. In most cases, FSA
records are only available for the past 30 or 40 years while the land
may have been in production as long as a century ago. It appears that
the burden is on the grower to dispute the FSA records even though
there is no appeals process available.
The commenters stated Congress did not limit the evidence or
information a landowner could use to show that the land had been used
for the production of an annual crop at some point in the past. Instead
of relying on FSA records producers should be permitted to provide
photos, personal records and affidavits as evidence that the land in
question has been tilled in the past.
Response: FCIC agrees records other than those from FSA may be used
to determine whether land has been tilled in the past. The provisions
have been revised to allow the use of written verifiable records from
other sources that are acceptable to the insurance provider. Since the
kinds of records that could be used to verify prior tillage may vary
considerably, FCIC does not intend to provide a specific list of
documents, because doing so may eliminate the use of some acceptable
records that would clearly indicate prior tillage. Acceptable records
of tillage must be verifiable and identify the location of the acreage.
Self-certification of past tillage is not acceptable. However, past
farm records provided by a producer may be acceptable.
Comment: A commenter recommended considering the phrase ``tilled''
in its broadest meaning, which they believe agrees with the intent of
Congress. That is, if land is converted to cropland using plowing,
disking, chemicals like glyphosate, or other methods, the effect is the
same and the conversion should fall under the ``native sod'' rules.
Another commenter wanted to ensure the term ``tilled'' is
understood to broadly encapsulate the various means by which acreage
may be prepared for an annual crop, including the understanding that
the act of seeding an annual crop constitutes tilling. Acreage may be
converted with many methods, including chemical treatment and no-till
drilling, but the determinative factor is the acreage has no previous
record of any means of conversion for an annual crop.
Response: Plowing, disking, no-till drilling following the
termination of existing plants, and chemical tillage would all be
considered tillage for the purpose of these provisions, provided it was
done for the production of an annual crop. FCIC has added a definition
to so specify.
Comment: A commenter stated it is not clear what constitutes native
sod. The regulation merely transposes the legislative language--this is
unacceptable. As there is with other conservation programs, there
should be a specific list of criteria for what generally constitutes
native sod (tall grass, mixed grasses and/or short prairie grasses),
specific varieties of sod grasses covered by this provision, and how it
will be identified and applied.
A commenter stated there should be an opt-out clause in periods of
low or
[[Page 45540]]
projected low grain stocks, such as because of drought or increased
grain demand.
The economic implications of this provision and the likelihood it
could discourage much needed economic activity on the state level must
be considered. There needs to be economic factors to allow a state to
opt into or out of the program.
Response: There are no limitations on what factors a Governor may
use to determine whether they will elect to implement the provisions.
The choice is for the Governor to make. Further, the 2008 Farm Bill
does not provide any authority that would allow an opt-out clause. Once
the Governor makes the election, the only exception is for the five
acre de minimis. FCIC does not believe specifying tall grass or short
prairie grass, etc., provides any additional clarification. The term
``native grasses'' in the definition is clearly inclusive of these
grass types. It is up to agricultural experts to determine what
constitutes native grasses, grass-like plants, forbs, or shrubs
suitable for grazing and browsing for a particular area. Therefore, no
changes have been made in response to this comment.
Comment: A commenter stated the definition of ``native sod'' would
allow brome grass or other grass-like plants to be declared native sod.
The intent is to protect tall-, mixed-, and short-grass prairie. The
definition should identify the grasses in those prairies such as big
bluestem, Indian grass, green needle grass, blue gamma grass, buffalo
grass, little blue stem, etc. A specific list of criteria must be
developed for native sod including grass types, soils, and erosion
factors before this program is put into effect.
Another commenter stated it is clear the definition specifies
native grasses but also specifies other plants (grass-like, or forbs,
or shrubs) all of which are suitable for grazing and browsing. They
emphasized this for the fact the ``native'' designation of existing
grasses is just one of multiple possible plants that meet the
definition. In using ``or'' the definition emphasizes, in effect, the
native or non-native status of the plants present is not the compelling
criteria. Rather, it is the broadly referenced native grass, grass-like
plants, forbs, or shrubs which are of a type suitable for grazing and
browsing.
Secondly, and of ultimately higher determinative value, the
definition requires the suitable plants are present on ``land''
(section 12020 of the 2008 Farm Bill) or ``acreage'' (interim rule)
that has never been tilled for the production of an annual crop. The
commenter emphasized this second criteria is of higher determinative
value because the broad definition of suitable plants ultimately
depends upon the plants simply being suitable for grazing and browsing.
Additionally, as determined by the ``and'' in the interim rules
definition which reads ``* * * and that has no record of being tilled *
* *,'' the prevailing factor is that the acreage (``determined in
accordance with FSA records'') has not previously been in annual crop
production.
The commenter emphasized these points to clarify appropriate
establishment and subsequent adherence to the rule should never be
dependent on the native status or specific species of grass or plants.
Beyond simply consisting of various plants being suitable for grazing
and browsing, the final determining factor is that the acreage has not
previously been converted for an annual crop.
Another commenter recommended reordering the definition of native
sod to read as follows: ``Acreages on which no records exist indicating
tillage (determined in accordance with FSA records) for the production
of an annual crop on or before May 22, 2008, and the plant cover is
composed principally of grasses, grass-like plants, forbs, or shrubs
suitable for grazing and browsing.''
While the interim rule does not suggest there is a priority in the
criteria, the commenter believed the lack of tillage history is a more
important indicator of native sod than the plant community description
provided. Native sod may also contain nonnative species that have
invaded from adjacent habitat and may encounter changes in vegetation
composition associated with natural succession and wildfire.
Furthermore, the vegetation composition may be difficult to discern by
FCIC or FSA staff who are not trained botanists or biologists because
plant communities may also vary depending on intensity and frequency of
drought, fire and grazing. For these reasons, the commenter recommended
the word ``native'' be stricken from the definition. They believe that
doing so, in combination with the suggested reorganization of the
definition, will facilitate implementation of the rule and fulfill
Congressional intent.
Another commenter stated under the law, the definition of ``Native
Sod'' includes land ``* * * on which the plant cover is composed
principally of native grasses, grasslike plants, forbs, or shrubs
suitable for grazing and browsing * * *'' Given the clear Congressional
intent of the language, USDA need not consider arguments about which
plants should be included as ``native grasses, grasslike plants'' etc.
The real test is whether the producer is converting land to cropland
that has not been converted before, and upon which there is therefore
no prior crop insurance history. USDA properly relied on statutory
language in defining ``Native Sod.'' The commenter would oppose USDA
adopting a substantially different definition of Native Sod. One
practice USDA should be wary of is a landowner drilling non-native
plant species into a native prairie, and then claiming what they are
breaking is not `native sod' and thus outside the operation of the
rule. The status of the land as of May 22, 2008, should determine
program eligibility under this provision.
Response: The primary consideration is whether the acreage has been
tilled in the past and FCIC has reordered the definition accordingly.
The term ``native'' cannot be removed from the definition because it is
specified in the 2008 Farm Bill. Acreage that has never been tilled is
very likely to contain the broad categories of plant types listed in
the definition. The intent is to protect acreage with native plants
that has never been tilled. Acreage that has been tilled and planted
with non-native species, such as Smooth Brome Grass, would not be
included under the definition of ``native sod.'' The native sod
provisions are applicable in a wide geographic area and FCIC cannot
list all the native plants that may be found in these areas. In
questionable cases, agricultural experts in the area may be consulted
to determine the native plants for a specific area. FCIC has added a
definition of ``tilled'' to make it clear that simply drilling non-
native plant species into native sod without terminating the native
plants would not be considered tilling. Whether there is a prior crop
insurance history is not material. The paramount question is whether
the acreage has previously been tilled.
Comment: Several comments were received regarding the Governor's
authority to determine whether section 508(o) of the Act will be
effective in their State. A commenter stated RMA must impose a specific
deadline that limits the amount of time the Governor has to make this
election. If RMA does not establish a deadline to limit the decision-
making window, there is the potential a producer may suffer unwarranted
penalties. A fixed number of days following the applicable acreage
reporting date is acceptable. In addition, RMA must clarify what crop
year this will apply to if the election is imposed after said deadline.
(i.e., if section 508(o) of the Act becomes effective more than
[[Page 45541]]
60 days past the applicable acreage reporting deadline specified in the
Special Provisions for the crop year, the election will be effective
for the following crop year and succeeding crop years).
A few commenters stated as the rule notes, the Governor of each of
the five states has the sole authority to determine whether the
provision will be operative in his or her state. The commenters
appreciated and supported USDA's suggestion that the Governors make
their designation by February 15, 2009, to put everyone on notice and
allow crop insurance to be purchased where available. The commenters
also recognized this as a helpful suggestion with practical advantages
for avoiding the complexities of required benefit repayments and
premium refunds in the first crop year in which the election may be
made. However, the statute does not set a deadline for Governors to
make this determination.
A few commenters questioned whether the Governor's election to
participate or not participate in the provision is a one-time permanent
election or if there is some other time period during which the
election applies. The rule should clarify whether the Governors can
elect to participate at any time in the future or can change their
decision at a later time. A commenter questioned if the Governor of a
respective state can change their election, does the election start at
the date of the election, is the election for one year, or is it a
permanent decision. If the election can be changed, the commenter asked
whether FCIC would be obligated to ``look-back'' to the May 22, 2008
enactment date of the Farm Bill. A few commenters stated it is not
clear whether a future Governor can change the election made by a
predecessor.
A few commenters recommended the decisions made by the Governor
during the 2009 crop year should be final, and language should be
inserted into the provisions to clarify the finality of these
decisions. The commenters also recommended any decision made by the
Governor should be maintained for the duration of the 2008 Farm Bill
regardless of whether the Governor who made the decision remains in
office during this period. The commenters believed that would ensure
consistency for the duration of the 2008 Farm Bill, in fairness to
farmers within the affected region who might otherwise be impacted by
fines or insurance repayment should a decision be changed after 2009.
Another commenter stated section 12020 of the 2008 Farm Bill and the
interim rule clearly do not and should not place any limit upon when a
current or future Governor within the Prairie Pothole National Priority
Area may elect to make section 508(o) of the Act effective, and section
12020 of the 2008 Farm Bill and the interim rule clearly do not and
should not enable a current or future Governor to nullify section
508(o) of the Act if an election has been made previously. However,
with respect to the complexities of future required benefit repayments
and premium refunds on any acreage in the first five years after
section 508(o) of the Act is made effective--on native sod acreage
converted anytime after May 22, 2008--the commenter recommended that
future elections should become effective only prior to February 15 of a
given year. Or stated alternatively, elections made after February 15
will become effective for the next crop year.
A few commenters stated it is not clear what constitutes
application of a Governor's approval and how the FCIC will notify
individual farmers of the election (e.g., a phone call, a document
transmitted in writing or by electronic e-mail). To avoid any
confusion, it would seem prudent for the FCIC to require a Governor's
election in writing. Also, an application should only apply from the
date of a Governor's approval. The commenter opposed retroactive
``look-backs'' of any indemnities or other payments.
A few commenters had concerns growers will be subject to
retroactive penalty as a result of indemnities or disaster assistance
payments in the event a Governor decides to enroll in the program at
some future date. A producer should only forfeit indemnities and
disaster payments that would be received after a Governor elects to
make section 508(o) of the Act effective in the state since prior to
that time the statute is not applicable. Similarly, the interim rule
does not explain whether a Governor has the authority later to withdraw
their state from the program once the decision has been made to enroll.
Response: The 2008 Farm Bill does not contain any deadlines for the
Governors to decide whether to implement section 508(o) of the Act.
Therefore, FCIC lacks the authority to impose a deadline. However, in
correspondence to the Governors and in the interim rule, FCIC explained
the potential negative impacts of a delayed decision. Any time a
Governor makes the election, the provision becomes effective for any
acreage newly tilled after May 22, 2008, and insurance is not available
for the first five years of planting. Producers who received an
indemnity for acreage tilled after this date will be required to repay
it and any premiums paid must be refunded. If the election could be
changed, it would effectively negate the provision. If a Governor
elects to implement section 508(o) of the Act, it will be announced by
RMA via a Manager's Bulletin and posted on the RMA Web site at http://www.rma.usda.gov/. Insurance providers will be directed to notify
individual producers when such announcement is made.
Comment: Several commenters stated the interim rule specifies the
counties in the Prairie Pothole National Priority Area by referencing
the RMA Web site. The commenters recommended the rule identify the
specific counties within the States of Iowa, Minnesota, Montana, North
Dakota, and South Dakota that are included in the RMA Web site map of
the Prairie Pothole National Priority Area to make it clearer, and to
avoid inadvertently changing the operation of the rule should the Web
site be changed, updated, or become temporarily unavailable. The Web
site map should be cited as a reference tool.
Response: The counties identified on the RMA Web site are
consistent with the counties identified by the FSA, Agricultural
Resource Conservation Program 2-CRP (Revision 4) dated April 28, 2008.
The Web site would only be changed or updated if the designated
counties change. However, FCIC will include the FSA reference in case
the Web site is unavailable.
Comment: A few comments were received regarding how the native sod
provisions are only applicable in the Prairie Pothole National Priority
Area. A commenter questioned why the area in the Prairie Pothole
National Priority Area is of more concern than other areas in the
state. The arbitrary decision makes it impossible to explain to
producers that native sod in the Prairie Pothole National Priority Area
is a higher priority than native sod in other parts of the state. A
commenter believed the native sod provisions of the 2008 Farm Bill
resulted from a clear problem that applies well beyond the Prairie
Pothole National Priority Area. Throughout the Great Plains, and in
other parts of the country, native prairie, virgin forest, and other
types of native habitat are being tilled, cleared and converted to
cropland. Much of this land is marginal and would not be farmed if the
risk in doing so were not underwritten by taxpayer-subsidized crop
insurance and disaster assistance programs, along with commodity
payments and other USDA programs.
The commenter stated in sagebrush grasslands, the rapid pace of
conversion
[[Page 45542]]
represents a long-term threat to the health and viability of sage-
grouse populations and other sagebrush obligate species. Portions of
the Prairie Pothole National Priority Area within Montana include
important sage-grouse habitat as well as native grasslands important to
migratory birds of concern. Unfortunately, the current focus on the
Prairie Pothole National Priority Area excludes significant blocks of
native grasslands within the Great Plains in Montana and other states.
Putting the native sod provisions in effect in the Prairie Pothole
National Priority Area would be a good first step, but the job is
nowhere near complete if we seek to maintain functional working
landscapes throughout our nation.
The commenter urged USDA to examine this issue carefully, and to
undertake monitoring and research on how much native prairie and other
native habitat is being converted to cropland and the influence of USDA
insurance, commodity, and other programs in those decisions. Should one
or more Governors choose to have the provision apply in their state, it
would provide an invaluable opportunity to study side-by-side
comparisons of conversion rates with and without the availability of
Federal crop insurance.
Another commenter stated USDA data shows the loss of rangeland and
pastureland is not limited to the states of the Prairie Pothole
National Priority Area. In fact, data cited in a Government
Accountability Office (GAO) report shows states like Colorado, New
Mexico and Texas are experiencing losses as bad as or worse than those
in the Prairie Pothole National Priority Area. Landowners throughout
the country who are maintaining grasslands receive none of the Federal
farm program supports that studies show are an important factor in
converting grasslands to annual crop production. Again, the GAO
detailed that even among annual crop producers, the landowners that are
converting the most native sod are receiving far larger insurance
benefits than their neighbors who are not. Further, the Federal farm
program is paying landowners to re-establish perennial grass and plants
on previously converted sod at the very same time crop insurance and
other Federal benefits are prodding the conversion of perennial
grasslands.
The commenter recommended the ``added land'' provision of crop
insurance rules be amended to require land without production crop
history prior to May 22, 2008, that is subsequently planted to a crop,
must establish a full four to ten year actual production history prior
to becoming eligible for insurance.
A commenter strongly recommended an incentive-based program to help
preserve tall-, mixed-, and short-grass prairies in the entire state of
South Dakota, as opposed to the current sod saver program for the
Prairie Pothole National Priority Area.
Another commenter noted in their explanatory language on the new
Farm Bill, the Managers Report cites a GAO report and recommendation
that USDA should ``(1) track annual conversion and provide current data
to policymakers, and (2) conduct a study of the relationship between
farm program payments and land conversion and report findings to
Congress * * * The Managers intend for the Secretary to undertake a
study on the influence of the crop insurance program on the conversion
of native sod to crop production * * *'' and to provide recommendations
to Congress.
The commenter echoed this call for careful study and
recommendations. They also asked USDA to look for other opportunities
within the existing structure of Federal crop insurance and non-insured
disaster assistance payments to reduce or eliminate the taxpayer-paid
incentives that are now in place that encourage landowners to break out
native prairie and other native habitats, and to work to combat abuses
of the current system that waste taxpayer money.
Response: Congress created an exception to the rule regarding the
eligibility of acreage for insurance. Because it is an exception to the
rule, it should not be read more broadly than it is written. The 2008
Farm Bill specifically provided the authority to implement these
provisions in the Prairie Pothole National Priority Area. The 2008 Farm
Bill also specified the 5-year period in which insurance cannot be
offered after native sod acreage has been tilled. In addition, the crop
insurance policy already contains provisions that limit insurance on
certain acreage on which a crop was not previously planted or harvested
in the previous three years. As conversion data is gathered and
included in required reports to policymakers, policy changes may be
vetted to determine the best land management practices that meet the
needs of all land users.
Comment: A commenter stated the interim rule makes native sod
tilled after May 22, 2008, ineligible for crop insurance for the first
five years an annual crop is planted. It appears this will also make
the crop ineligible for any disaster payments because crop insurance is
a requirement for disaster assistance. This reduces a risk management
tool for the producer in the Prairie Pothole National Priority Area.
The commenters asked for the justification for eliminating these tools
for the producer in the Prairie Pothole National Priority Area and not
for the producer across the road in another county that is not in the
Prairie Pothole National Priority Area. The commenter recommended an
incentive to not break the native sod with a pilot program or a CREP-
like program of some sort. Producers who have gone out of the livestock
business are limited in the use of the land under Sod Saver. The
producer should make decisions based on his or her operation needs, not
disincentives for change because he or she lives in the Prairie Pothole
National Priority Area.
Another commenter stated if a producer falls under the sod saver
provisions in the interim rule, they are not eligible for disaster
assistance. This would place these farmers at an economic disadvantage
relative to other farmers. The commenter was opposed to that outcome.
Response: FCIC is required to implement the provisions of the 2008
Farm Bill. Further, its provisions limit crop insurance and noninsured
crop disaster assistance program benefits. It does not expressly
exclude the payment of disaster benefits. FSA provides disaster
assistance and any program requirements for insurance are detailed in
materials developed and issued by FSA. Producers should contact their
local FSA office to verify disaster assistance program requirements.
Comment: A commenter stated the interim rule adds a new subsection
in section 3 of 7 CFR 407.9 and a new subsection in section 9 of 7 CFR
457.8 to specify when native sod is ineligible for crop insurance. The
language is virtually identical in the two sections and is consistent
with section 12020 of the 2008 Farm Bill, except in the final sentence
of the sections: ``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.''
Section 12020 of the 2008 Farm Bill states that, ``* * * native sod
acreage that has been tilled for the production of an annual crop after
the date of enactment of this subsection shall be ineligible during the
first 5 crop years of planting * * *''
Both section 12020 of the 2008 Farm Bill and the interim rule
affirm acreage tilled for production after May 22, 2008 is not
insurable, so the commenter
[[Page 45543]]
believed it will be necessary to specify that a payment received shall
be repaid and a premium paid shall be refunded.
Further to this point, paragraph d. of the ``Background'' section
of the interim rule contains the same usage of ``may'' that the
commenter asserts should be ``shall.'' As stated in paragraph d. in
adherence to section 12020 of the 2008 Farm Bill, ``The 2008 Farm Bill
is specific in that, at the election of the Governors of these states,
any acreage of native sod that is tilled for production of an annual
crop after the date of enactment will be ineligible for insurance for
the first 5 crops years of planting.'' The commenter agreed the 2008
Farm Bill is specific and that the ineligibility shall apply whenever a
Governor elects to make section 508(o) of the Act effective.
Response: The commenter is correct that if the election is made by
the Governor, acreage first tilled after May 22, 2008, is ineligible
for insurance so the provisions should indicate prior payments will
have to be repaid. FCIC has revised the provisions accordingly.
Comment: A commenter stated the statutory language says ``The
Secretary shall exempt areas of 5 acres or less'' from the clause,
which is designed to provide a `de minimum' exemption. The commenter
believed the rule's language is clear that ``any native sod acreage
greater than 5 acres'' is not insurable. The commenter recommended the
Secretary, in providing direction to USDA employees, ensures landowners
do not skirt the rule by trying to claim an exemption for five acres of
an area one year, five more acres the following year, another five
acres the third year, etc.
Another commenter stated section 12020 of the 2008 Farm Bill
specifies a ``De Minimis Acreage Exemption'' that requires areas of 5
acres or less to be exempt from the ineligibility designation. The
commenter wanted to emphasize it would contradict the intent and spirit
of the law to allow incremental conversion of contiguous parcels of 5
acres or less. They emphasized this point to clarify appropriate
establishment and subsequent adherence to the rule must ensure multiple
tracts of 5 acres or less that become contiguous tracts totaling more
than 5 acres should be regarded as a single tract larger than 5 acres
and therefore ineligible for crop insurance.
Response: The intent is to provide an exception for acreage that is
legitimately five acres or less. The intent is not to allow incremental
increases in the amount of converted acreage. FCIC has added provisions
specifying that adding to the acreage so more than 5 acres have been
converted would subject all the converted acreage to the provisions
beginning the year the producer cumulatively converted more than the 5
acre threshold.
Comment: A commenter stated they live in a wildlife paradise in
Central North Dakota adjacent to U.S. Fish & Wildlife land and the
wildlife is every bit as plentiful and cared for on their land as on
the government-owned land. They have watched all of these projects and
land acquisitions over the years and the amount of tax-payer money that
has been spent could surely help eliminate the deficit. The commenter
asked USDA to use its influence to deter another costly program.
Response: Since the program changes contained in this rule were
mandated by the 2008 Farm Bill, FCIC is required by law to implement
the changes.
List of Subjects in 7 CFR Parts 402, 407 and 457
Crop insurance, Reporting and recordkeeping requirements.
Final Rule
0
Accordingly, as set forth in the preamble and under the authority of 7
U.S.C. 1506(l), 1506(o), the interim rule amending 7 CFR parts 402, 407
and 457 which was published at 73 FR 70861-70865 on November 24, 2008,
is adopted as final with the following changes. The amendments listed
below are effective for the 2010 and succeeding crop years for all
crops with a 2010 crop year contract change date on or after the
effective date of this rule and for the 2011 and succeeding crop years
for all crops with a 2010 crop year contract change date prior to the
effective date of this rule as follows:
PART 407--GROUP RISK PLAN OF INSURANCE REGULATIONS
0
1. The authority citation for 7 CFR Part 407 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(o).
0
2. Amend Sec. 407.9 as follows:
0
a. Amend section 1 by adding the definition of ``tilled'' and revising
the definitions of ``native sod'' and ``Prairie Pothole National
Priority Area;'' '' and
0
b. Amend section 3 by revising paragraph (d).
The revised and added text reads as follows:
Sec. 407.9 Group risk plan common policy.
* * * * *
1. Definitions.
* * * * *
Native sod. Acreage that has no record of being tilled (determined
in accordance with FSA or other verifiable records acceptable to us)
for the production of an annual crop on or before May 22, 2008, and on
which the plant cover is composed principally of native grasses, grass-
like plants, forbs, or shrubs suitable for grazing and browsing.
* * * * *
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:[sol][sol]www.rma.usda.gov/, or a successor Web site, or the Farm
Service Agency, Agricultural Resource Conservation Program 2-CRP
(Revision 4), dated April 28, 2008, or a subsequent publication.
* * * * *
Tilled. The termination of existing plants by plowing, disking,
burning, application of chemicals, or by other means to prepare acreage
for the production of an annual crop.
* * * * *
3. Insured and Insurable Acreage.
* * * * *
(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 five acres
located in a county contained within the Prairie Pothole National
Priority Area that has been tilled after May 22, 2008, is not insurable
for the first five crop years of planting following the date the native
sod acreage is tilled.
(1) If the Governor makes this election after you have received an
indemnity or other payment for native sod acreage, you will be required
to repay the amount received and any premium for such acreage will be
refunded to you.
(2) If we determine you have tilled less than five acres of native
sod a year for more than one crop year, we will add all the native sod
acreage tilled after May 22, 2008, and all such acreage will be
ineligible for insurance for the first five crop years of planting
following the date the cumulative native sod acreage tilled exceeds
five acres.
* * * * *
PART 457--COMMON CROP INSURANCE REGULATIONS
0
3. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(o).
0
4. Amend Sec. 457.8 as follows:
0
a. Amend section 1 by adding the definition of ``tilled'' and revising
the
[[Page 45544]]
definitions of ``native sod'' and ``Prairie Pothole National Priority
Area;''
0
b. Amend section 9 by revising paragraph (e); and
0
c. Revise section 14(c) (Your Duties).
The revised and added text reads as follows:
Sec. 457.8 The application and policy.
1. Definitions.
* * * * *
Native sod. Acreage that has no record of being tilled (determined
in accordance with FSA or other verifiable records acceptable to us)
for the production of an annual crop on or before May 22, 2008, and on
which the plant cover is composed principally of native grasses, grass-
like plants, forbs, or shrubs suitable for grazing and browsing.
* * * * *
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:[sol][sol]www.rma.usda.gov/, or a successor Web site, or the Farm
Service Agency, Agricultural Resource Conservation Program 2-CRP
(Revision 4), dated April 28, 2008, or a subsequent publication.
* * * * *
Tilled. The termination of existing plants by plowing, disking,
burning, application of chemicals, or by other means to prepare acreage
for the production of an annual crop.
* * * * *
9. Insurable Acreage.
* * * * *
(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 five acres located in a
county contained within the Prairie Pothole National Priority Area that
has been tilled after May 22, 2008, is not insurable for the first five
crop years of planting following the date the native sod acreage is
tilled.
(1) If the Governor makes this election after you have received an
indemnity or other payment for native sod acreage, you will be required
to repay the amount received and any premium for such acreage will be
refunded to you.
(2) If we determine you have tilled less than five acres of native
sod a year for more than one crop year, we will add all the native sod
acreage tilled after May 22, 2008, and all such acreage will be
ineligible for insurance for the first five crop years of planting
following the date the cumulative native sod acreage tilled exceeds
five acres.
* * * * *
14. Duties in the Event of Damage, Loss, Abandonment, Destruction,
or Alternative Use of Crop or Acreage.
Your Duties--
* * * * *
(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 harvested farm-stored grain 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).
(A) For policies that require APH, if such extension continues
beyond the date you are required to submit your production report, you
will be assigned the previous year's approved yield as a temporary
yield in accordance with applicable procedures.
(B) Any extension does not extend any date specified in the policy
by which premiums, administrative fees, or other debts owed must be
paid.
(C) Damage that occurs after the end of the insurance period (for
example, while the harvested crop production is in storage) is not
covered; 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).
* * * * *
Signed in Washington, DC, on August 28, 2009.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. E9-21233 Filed 9-2-09; 8:45 am]
BILLING CODE 3410-08-P