[Federal Register Volume 76, Number 107 (Friday, June 3, 2011)]
[Rules and Regulations]
[Pages 32067-32069]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-13354]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 76, No. 107 / Friday, June 3, 2011 / Rules 
and Regulations

[[Page 32067]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

[Docket No. FCIC-10-0002]
RIN 0563-AC27


Common Crop Insurance Regulations; Extra Long Staple Cotton Crop 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
amendments made to the Common Crop Insurance Regulations, Extra Long 
Staple Cotton Crop Insurance Provisions to remove all references to the 
Daily Spot Cotton Quotation and replace the references with the 
National Average Loan Rate published by the Farm Service Agency (FSA), 
to incorporate a current Special Provisions statement into the Crop 
Provisions, and to make the Extra Long Staple Cotton Crop Insurance 
Provisions consistent with the Upland Cotton Crop Insurance Provisions. 
The intended effect of this action is to provide policy changes, to 
clarify existing policy provisions to better meet the needs of the 
producers, and to reduce vulnerability to program fraud, waste, and 
abuse. The changes will be effective for the 2012 and succeeding crop 
years.

DATES: Effective Date: This rule is effective July 5, 2011.

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

SUPPLEMENTARY INFORMATION:

Executive Order 12866

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

Paperwork Reduction Act of 1995

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

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments. The review reveals that this regulation will not have 
substantial and direct effects on Tribal governments and will not have 
significant Tribal implications.

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 1000 acres, there is no difference in the kind 
of information collected. To ensure crop insurance is available to 
small entities, the Federal Crop Insurance Act authorizes FCIC to waive 
collection of administrative fees from limited resource farmers. FCIC 
believes this waiver helps to ensure that small entities are given the 
same opportunities as large entities to manage their risks through the 
use of crop insurance. A Regulatory Flexibility Analysis has not been 
prepared since this regulation does not have an impact on small 
entities, and therefore, this regulation is exempt from the provisions 
of the Regulatory Flexibility Act (5 U.S.C. 605).

Federal Assistance Program

    This program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.450.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which require intergovernmental consultation with State and 
local officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988 on civil justice reform. The provisions of this rule will not 
have a retroactive effect. The provisions of this rule will preempt 
State and local laws to the extent such State and local laws are 
inconsistent herewith. With respect to

[[Page 32068]]

any direct action taken by FCIC or action by FCIC to require the 
insurance provider to take specific action under the terms of the crop 
insurance policy, the administrative appeal provisions published at 7 
CFR part 11 must be exhausted before any action against FCIC for 
judicial review may be brought.

Environmental Evaluation

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

Background

    On November 19, 2010, FCIC published a notice of proposed 
rulemaking in the Federal Register at 75 FR 70850-70852 to revise 7 CFR 
part 457, Common Crop Insurance Regulations, by revising Sec.  457.105 
(Extra Long Staple Cotton Crop Insurance Provisions). Requests have 
been made for changes to improve the coverage offered, address program 
integrity issues, and simplify program administration. The provisions 
will be effective for the 2012 and succeeding crop years.
    A total of six comments were received from one commenter. The 
commenter was an insurance service organization. The comments received 
and FCIC's responses are as follows:

General Comments

    Comment: A commenter suggests FCIC remove the Basic Provisions 
section titles which are set off by parenthesis throughout the Crop 
Provisions, as has been done when other Crop Provisions that have been 
revised recently. For example, section 2 could read ``In addition to 
the requirements of section 3 of the Basic Provisions * * *'' [deleting 
the parenthetical ``* * * (Insurance Guarantees, Coverage Levels, and 
Prices for Determining Indemnities) * * *'' following ``section 3'']. 
Affected sections are 2, 3, 4, 5, 6, 7(b), 8, and 9(a).
    Response: Although this section was not included in the proposed 
rule, FCIC agrees and has revised the provisions accordingly since it 
is a technical correction and does not change the meaning or intent of 
the provision.
    Comment: A commenter recommends changing ``The total production 
(pounds) to count * * *'' in section 10(c) to ``The total production to 
count (in pounds) * * *'' so as to keep the phrase ``production to 
count'' intact.
    Response: Although this section was not included in the proposed 
rule, FCIC agrees and has revised the provisions accordingly since it 
is a technical correction and does not change the meaning or intent of 
the provision.

Section 10--Settlement of Claim

    Comment: A commenter supports the proposed changes of the prices 
used in section 10(d) and (f) and the change of the Price B percentage 
used from 75 percent to 85 percent since equivalent changes have 
already been made in the 2011 Cotton Crop Provisions.
    Response: FCIC thanks the commenter for their support regarding the 
changes of the prices used in section 10 and the change of the Price B 
percentage.
    Comment: A commenter points out the Background section of the 
Proposed Rule states the following: ``FCIC also proposes to change the 
percentage of Price B from 75 percent to 85 percent in sections 10(d) 
and 10(d)(3). This does not change the existing terms of the policy 
because the change was already implemented in the Special Provisions. 
FCIC is proposing to move the provision to the Crop Provisions because 
the change is being implemented in all areas where ELS cotton is 
available.''
     If the summary of this Proposed Rule accurately describes 
the actions taken, and represents clarification or standardization to 
conform to the 2011 Basic Provisions, the only comment would concern 
whether FCIC has conducted whatever necessary rate impact evaluations 
and made any necessary adjustments. Whether or not the rate analysis 
has been done is a little unclear based on two phrases in the third 
paragraph of item 2 in the Background section of the Proposed Rule.
     The second sentence of the paragraph in the Background 
section suggests the change to 85 percent ``was'' already implemented 
(in the past), while the third sentence indicates the change ``is 
being'' implemented (currently) everywhere ELS Cotton is insurable. The 
difference between ``was'' and ``is being'' might be explained in the 
context that the change to 85 percent ``was'' already added in a 
previous year's Special Provisions, and now ``is being'' added in the 
Crop Provisions instead (with a Special Provisions statement no longer 
being necessary), but it could be clarified. Was the 85 percent change 
previously in the Special Provisions for ALL counties where ELS Cotton 
was insurable, or only in some?
    Response: The change from 75 percent to 85 percent was put into 
place in crop year 2000 with a Special Provisions statement. At the 
time the change was implemented, a rate adjustment was made. There has 
been nothing in the performance of the policy to suggest that this rate 
change was not appropriate or was inadequate. Therefore, no additional 
rate analysis is necessary.
    The Special Provisions statement that says the production to count 
will be reduced if price quotation ``A'' is less than 85 percent of 
price quotation ``B'' will be removed from the Special Provisions and 
incorporated into the Crop Provisions. The change was made years ago 
and this Special Provisions statement existed in all counties where ELS 
Cotton is insurable. As incorporated into the Crop Provisions, no new 
Special Provisions statements will be required if ELS cotton is 
expanded to additional counties.

Section 12--Prevented Planting

    Comment: A commenter recommends eliminating the option to increase 
prevented planting coverage levels.
    Response: This section was not included in the proposed rule and 
would be considered a substantive change to the policy. Since the 
public was not provided an opportunity to comment, FCIC cannot consider 
the recommended change.
    In addition to the changes described above, FCIC has revised 
section 10(f) by removing the phrase ``Any AUP cotton'' and replacing 
it with the phrase ``Mature AUP cotton'' to clarify the AUP cotton must 
be mature in order to calculate a conversion factor between AUP cotton 
and ELS cotton.

List of Subjects in 7 CFR Part 457

    Crop insurance, Extra long staple cotton, Reporting and 
recordkeeping requirements.

Final Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends 7 CFR part 457 effective for the 2012 and 
succeeding crop years for the Extra Long Staple Cotton Crop Insurance 
Provisions.

PART 457--COMMON CROP INSURANCE REGULATIONS

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

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


0
2. Amend Sec.  457.105 as follows:
0
a. Amend the introductory text by removing ``1998'' and adding ``2012'' 
in its place;
0
b. Remove the undesignated paragraph immediately preceding section 1.
0
c. Amend section 2 by removing the phrase ``(Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities)'';

[[Page 32069]]

0
d. Amend section 3 by removing the phrase ``(Contract Changes)'';
0
e. Amend section 4 by removing the phrase ``(Life of Policy, 
Cancellation, and Termination)'';
0
f. Amend the introductory text of section 5 by removing the phrase 
``(Insured Crop)'';
0
g. Amend the introductory text of section 6 by removing the phrase 
``(Insurable Acreage)'';
0
h. Amend section 7(b) by removing the phrase ``(Insurance Period)'';
0
i. Amend the introductory text of section 8 by removing the phrase 
``(Causes of Loss)'';
0
j. Amend section 9(a) by removing the phrase ``(Duties in the Event of 
Damage or Loss)'';
0
k. Amend the introductory text of section 10(c) by removing the phrase 
``The total production (pounds) to count'' and replacing it with the 
phrase ``The total production to count (in pounds)'';
0
l. Revise section 10(d); and
0
m. Revise section 10(f).
    The revisions read as follows:


Sec.  457.105  Extra long staple cotton crop insurance provisions.

* * * * *
    10. Settlement of Claim.
* * * * *
    (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 Price A is less than 85 percent of Price B.
    (1) Price B is defined as the Extra Long Staple Cotton National 
Average Loan Rate determined by FSA, or as specified in the Special 
Provisions.
    (2) Price A is defined as the loan value per pound for the bale 
determined in accordance with the FSA Schedule of Premiums and 
Discounts for the applicable crop year, or as specified in the Special 
Provisions.
    (3) 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 A by 85 
percent of Price B.
* * * * *
    (f) Mature AUP cotton harvested or appraised from acreage 
originally planted to ELS cotton in the same growing season will be 
reduced by the factor obtained by dividing the price per pound for AUP 
cotton by the price per pound for ELS cotton. The prices used for AUP 
and ELS cotton will be calculated using the Upland Cotton National 
Average Loan Rate determined by FSA and the Extra Long Staple Cotton 
National Average Loan Rate determined by FSA, or as specified in the 
Special Provisions.
* * * * *

    Signed in Washington, DC, on May 23, 2011.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2011-13354 Filed 6-2-11; 8:45 am]
BILLING CODE 3410-08-P