[Federal Register Volume 79, Number 126 (Tuesday, July 1, 2014)]
[Rules and Regulations]
[Pages 37155-37166]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15074]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

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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.

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Federal Register / Vol. 79, No. 126 / Tuesday, July 1, 2014 / Rules 
and Regulations

[[Page 37155]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 400, 402, 407 and 457

[Docket No. FCIC-14-0005]
RIN 0563-AC43


General Administrative Regulations; Catastrophic Risk Protection 
Endorsement; Area Risk Protection Insurance Regulations; and the Common 
Crop Insurance Regulations, Basic Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Interim Rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) amends the 
General Administrative Regulations--Ineligibility for Programs under 
the Federal Crop Insurance Act, the Catastrophic Risk Protection 
Endorsement, the Area Risk Protection Insurance Regulations, and the 
Common Crop Insurance Regulations, Basic Provisions to revise those 
provisions affected by changes mandated by the Agricultural Act of 2014 
(commonly referred to as the 2014 Farm Bill), enacted on February 7, 
2014.

DATES: This rule is effective June 30, 2014. Written comments and 
opinions on this rule will be accepted until close of business 
September 2, 2014 and will be considered when the rule is made final.

ADDRESSES: FCIC prefers that comments be submitted electronically 
through the Federal eRulemaking Portal. You may submit comments, 
identified by Docket ID No. FCIC-14-0005, by any of the following 
methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Director, Product Administration and Standards 
Division, Risk Management Agency, United States Department of 
Agriculture, P.O. Box 419205, Kansas City, MO 64133-6205.
    All comments received, including those received by mail, will be 
posted without change to http://www.regulations.gov, including any 
personal information provided, and can be accessed by the public. All 
comments must include the agency name and docket number or Regulatory 
Information Number (RIN) for this rule. For detailed instructions on 
submitting comments and additional information, see http://www.regulations.gov. If you are submitting comments electronically 
through the Federal eRulemaking Portal and want to attach a document, 
we ask that it be in a text-based format. If you want to attach a 
document that is a scanned Adobe PDF file, it must be scanned as text 
and not as an image, thus allowing FCIC to search and copy certain 
portions of your submissions. For questions regarding attaching a 
document that is a scanned Adobe PDF file, please contact the RMA Web 
Content Team at (816) 823-4694 or by email at 
rmaweb.content@rma.usda.gov.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received for any dockets by the name of the person submitting 
the comment (or signing the comment, if submitted on behalf of an 
association, business, labor union, etc.). You may review the complete 
User Notice and Privacy Notice for Regulations.gov at http://www.regulations.gov/#!privacyNotice.

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

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    This rule has been determined to be economically significant for 
the purposes of Executive Order 12866 and, therefore, it has been 
reviewed by the Office of Management and Budget (OMB).

Benefit-Cost Analysis

    A Benefit-Cost Analysis (BCA) has been completed and a summary is 
shown below; the full analysis may be viewed on http://www.regulations.gov. In summary, the analysis finds that changes in the 
rule will have an expected cost of $115.9 million annually over a 10-
year period to the FCIC in administration of the Federal crop insurance 
program. Non-quantifiable benefits of this rule include increased 
program integrity, additional risk management tools, and incentives for 
beginning farmers and ranchers to participate in the Federal crop 
insurance program.
    On February 7, 2014, the 2014 Farm Bill was enacted. As a result, 
FCIC must revise those provisions of the General Administrative 
Regulations--Ineligibility for Programs under the Federal Crop 
Insurance Act (Subpart U), Catastrophic Risk Protection Endorsement 
(CAT Endorsement), Area Risk Protection Insurance (ARPI) Basic 
Provisions, and the Common Crop Insurance Provisions (CCIP) Basic 
Provisions to implement program changes identified in Titles II and XI 
of the 2014 Farm Bill.
    On January 2014, the Congressional Budget Office (CBO) issued its 
estimates on the effects on direct spending and revenues of the 2014 
Farm Bill. These estimates were used as a basis for the quantifiable 
costs and benefits stated in this BCA.
    The purpose of this rule is to amend Subpart U, the CAT 
Endorsement, the ARPI Basic Provisions, and the CCIP Basic Provisions 
to implement the following changes:
    Section 2611 requires those enrolled in crop insurance, for certain 
agriculture commodities, to comply with conservation compliance 
requirements or forego premium subsidy. For acts or situations of non-
compliance, ineligibility for premium subsidy will be applied beginning 
with the 2016 reinsurance year. Annually, FCIC anticipates a savings of 
$4.6 million as a result of this change.
    Section 11007 makes available insurance coverage by separate 
enterprise units based on irrigated and non-irrigated acreage of crops 
within counties. Annually, FCIC anticipates a cost of $53.3 million as 
a result of this change.
    Section 11009 allows insureds to exclude any recorded or appraised 
yield for any crop year in which the per planted acre yield in the 
county is at least 50 percent below the simple

[[Page 37156]]

average for the crop in the county for the previous 10 consecutive crop 
years, and allows insureds in any county contiguous to a county in 
which an insured is eligible to exclude a recorded or appraised yield 
to also elect a similar adjustment. Annually, FCIC anticipates a cost 
of $35.7 million as a result of this change.
    Section 11014 applies a reduction of premium subsidy, a reduced 
insurance guarantee, and eliminates substitute yields in the insurance 
guarantee during the first four crop years that land is converted from 
native sod to the production of an annual crop in the States of Iowa, 
Minnesota, Montana, Nebraska, North Dakota, and South Dakota. Annually, 
FCIC anticipates a savings of $11.4 million as a result of this change.
    Section 11015 allows producers to elect a different level of 
coverage for an agricultural commodity by irrigated and non-irrigated 
acreage. Annually, FCIC anticipates a cost of $16.8 million as a result 
of this change.
    Section 11016 establishes crop insurance benefits for beginning 
farmers and ranchers by increasing the premium subsidy available by ten 
percentage points, allowing the use of yield history from any previous 
farm or ranch operation in which they had decision making or physical 
involvement, and replacing a low yield in their actual production 
history with a yield equal to 80 percent of the applicable transitional 
yield. Annually, FCIC anticipates a cost of $26.1 million as a result 
of this change.
    Section 11019 allows for the correction of errors in information 
obtained from the producer within a reasonable amount of time and 
consistent with information provided to other agencies of the 
Department of Agriculture subject to certain limitations for 
maintaining program integrity. This section also provides for the 
payment of debt after the termination date in accordance with 
procedures and limitations established by the FCIC, if a producer 
inadvertently fails to pay a debt and has been determined to be 
ineligible to participate in the Federal crop insurance program. FCIC 
does not believe there are any additional cost outlays resulting from 
this change. Therefore, FCIC believes insureds will benefit from this 
change and the benefits are non-quantifiable.

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 numbers 0563-0085, 0563-0083, 
and 0563-0053.

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 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 (Act) authorizes FCIC to 
waive collection of administrative fees from beginning farmers or 
ranchers and limited resource farmers. FCIC believes this waiver helps 
to ensure that small entities are given the same opportunities as large 
entities to manage their risks through the use of crop insurance. A 
Regulatory Flexibility Analysis has not been prepared since this 
regulation does not have an impact on small entities, and, therefore, 
this regulation is exempt from the provisions of the Regulatory 
Flexibility Act (5 U.S.C. 605).

Federal Assistance Program

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

Executive Order 12372

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

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988 on civil justice reform. The provisions of this rule will not 
have a retroactive effect. The provisions of this rule will preempt 
State and local laws to the extent such State and local laws are 
inconsistent herewith. With respect to any direct action taken by FCIC 
or to require the insurance provider to take specific action under the 
terms of the crop insurance policy, the administrative appeal 
provisions published at 7 CFR part 11 must be exhausted before any 
action against FCIC for judicial review may be brought.

Environmental Evaluation

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

Background

    On February 7, 2014, the 2014 Farm Bill was enacted. FCIC must 
revise those provisions of the General Administrative Regulations--
Ineligibility for Programs under the Federal Crop Insurance Act 
(Subpart U), Catastrophic Risk Protection Endorsement (CAT 
Endorsement), Area Risk Protection Insurance Basic Provisions (ARPI 
Basic Provisions), and the Common Crop Insurance Policy Basic 
Provisions (CCIP Basic Provisions) to implement program changes 
mandated by the 2014 Farm Bill. On March 14, 2014, the Farm Service 
Agency (FSA) and Risk Management

[[Page 37157]]

Agency (RMA) published a notice in the Federal Register (79 FR 14472-
14475) announcing a listening session for initial public input about 
the new programs and changes to existing programs for which FSA and RMA 
were delegated authority to implement. The agencies also announced an 
opportunity for the public to also make written statements through 
April 2, 2014. The listening session was held on March 27, 2014, in the 
Department of Agriculture's Jefferson Auditorium in Washington, DC.
    FSA and RMA received 32 written comments from individuals, trade 
groups, other organizations, and State entities. All written comments 
are available to the public for review via this link: http://www.regulations.gov/#!documentDetail;D=FSA-2014-0002-0001.
    Total attendance at the listening session was 127 people. All of 
the Commodity, Credit, and Crop Insurance Titles, and parts of the 
Conservation, Energy, and Miscellaneous Titles were covered during the 
listening session. A number of oral statements from attendees were 
program-specific. However, recurring overarching ideas expressed during 
the listening session included placing a priority on information 
sharing between the United States Department of Agriculture (USDA) and 
its employees, farmers and ranchers in general, and beginning and 
socially disadvantaged farmers and ranchers.
    Another overarching recommendation was the need to develop 
education, outreach, and tools to help farmers and ranchers in making 
their decisions. Other recommendation urged USDA to develop programs 
and policies that do not hinder business and family farming decisions 
and strengthen local assistance to farmers and ranchers on completing 
forms and planning.
    Statements that addressed issues outside the scope of the 2014 Farm 
Bill are not addressed in this rule. Statements, such as those about 
RMA developing new products to help small, diversified farmers are not 
related to this rule but will be considered by RMA when establishing 
its priorities for research and development.
    In general, RMA received listening session statements regarding the 
timing of when the 2014 Farm Bill requirements would go into effect. 
Statements were also received urging RMA to issue rules and information 
as quickly as possible.
    Provisions in the 2014 Farm Bill that require revisions in the 
regulations are as follows:
    a. Section 2611 of the 2014 Farm Bill links the eligibility for 
premium subsidy paid by FCIC to an insured's compliance with the Highly 
Erodible Land Conservation (HELC) and Wetland Conservation (WC) 
provisions of the Food Security Act of 1985. The regulations covering 
these provisions are set forth in the Federal Register at 7 CFR Part 
12. To be eligible for premium subsidy paid by FCIC, an insured must 
(1) have a completed certification of compliance, form AD-1026, with 
the HELC and WC provisions on file with the Farm Service Agency (FSA); 
(2) be in compliance with a conservation plan approved by NRCS for all 
highly erodible land; (3) not plant an agricultural commodity on a 
wetland converted after February 7, 2014; and (4) not have converted a 
wetland for the purpose, or to have the effect, of making the 
production of an annually planted agricultural commodity possible on 
such converted wetland after February 7, 2014.
    For the purposes of the HELC and WC provisions, ``agricultural 
commodity'' is defined as any agricultural commodity planted and 
produced in a state by annual tilling of the soil, including tilling by 
one-trip planters, or sugarcane. Insureds determined ineligible for 
premium subsidy paid by FCIC for a reinsurance year will be ineligible 
for premium subsidy paid by FCIC on all their policies, including CAT 
policies, unless specific exemptions apply. There is a phase-in period 
for insureds who have never been subject to the HELC and WC provisions 
previously and these insureds will be given additional time to become 
compliant before any premium subsidy is denied.
    USDA will determine an insured's eligibility for premium subsidy 
paid by FCIC at a time that is as close to the beginning of the next 
reinsurance year (July 1) as practical. The determination will be based 
on FSA and Natural Resources Conservation Service determinations 
regarding compliance with the HELC and WC provisions, as recorded in 
FSA's automated system. Insureds who do not have a certification of 
compliance, form AD-1026, on file with FSA prior to the beginning of 
the reinsurance year (July 1) will be ineligible for premium subsidy, 
unless insureds can demonstrate they are a beginning farmer or rancher 
who has not previously had an insurable interest in a crop or livestock 
and they began farming for the first time after the beginning of the 
reinsurance year but prior to the sales closing date. In addition, an 
insured who is in violation of the HELC or WC provisions will be 
ineligible for premium subsidy, unless specific exemptions apply. This 
means that an insured who is determined to be non-compliant on June 1, 
2015, (2015 reinsurance year) will, unless otherwise exempted, be 
denied premium subsidy effective July 1, 2015, the start of the 2016 
reinsurance year, and will not be eligible for any premium subsidy for 
any policies during the 2016 reinsurance year. Even if the insured 
becomes compliant during the 2016 reinsurance year, the insured will 
not be eligible for premium subsidy until the 2017 reinsurance year 
starting on July 1, 2016. FCIC is amending the CAT Endorsement, ARPI 
Basic Provisions, and CCIP Basic Provisions to implement these 
provisions effective for any policies with a sales closing date on or 
after July 1, 2015.
    b. Section 11003 of the 2014 Farm Bill created a new insurance 
product that provides coverage for a portion of the underlying crop 
insurance policy deductible called the Supplemental Coverage Option 
(SCO). SCO must be purchased as an endorsement to the CCIP Basic 
Provisions and applicable Crop Provisions. SCO will be available, 
starting with the 2015 crop year, in select counties for corn, 
soybeans, wheat, sorghum, cotton, and rice, and made available to other 
crops and areas in future years if there is sufficient data and 
coverage is provided on the actuarial documents.
    Prior to the 2014 Farm Bill, the CAT Endorsement did not allow 
options or endorsements to extend to CAT policies. However, section 
11003 specifically makes SCO available to all policies offered under 
Subtitle A of the Act, which includes both additional coverage and CAT 
coverage. Therefore, this rule amends the CAT Endorsement to allow SCO 
to be available for CAT policies.
    c. Section 11007 of the 2014 Farm Bill makes available insurance 
coverage by separate enterprise units for irrigated and non-irrigated 
acreage of a crop within the county. The new language allows two 
separate enterprise units, one for all irrigated acreage of the crop, 
and one for all non-irrigated acreage of the crop. Enterprise units by 
irrigated and non-irrigated practice will be available for any crop in 
which enterprise units are allowed through the actuarial documents, 
Crop Provisions, or Special Provisions. Availability of enterprise 
units will be subject to the current requirements in the Basic 
Provisions. This means that both the irrigated and non-irrigated 
acreage must each separately qualify for enterprise units. If insureds 
do not qualify for separate irrigated and non-irrigated

[[Page 37158]]

enterprise units, there are two options based on the timing of the 
determination: (1) If the determination is made on or before the 
acreage reporting date, insureds may have one enterprise unit comprise 
of all irrigated and non-irrigated acreage in the county of the crop, 
if they qualify, or basic or optional units depending on which unit 
structure the insureds reported on the acreage report; or (2) if the 
determination is made after acreage reporting date, the policy allows 
insureds to have one enterprise unit comprise of all irrigated and non-
irrigated acreage in the county of the crop if they meet the 
qualifications or a basic unit will be assigned. The provisions 
regarding this section of the 2014 Farm Bill may not be implemented 
upon publication; therefore to allow flexibility, FCIC has revised 
section 34 of the CCIP Basic Provisions to allow the actuarial 
documents to specify when separate enterprise units by irrigated and 
non-irrigated practice will be available.
    d. Section 11009 of the 2014 Farm Bill allows insureds to elect to 
exclude any recorded or appraised yield for any crop year in which the 
per planted acre yield in the county was at least 50 percent below the 
simple average of the per planted acre yield during the previous 10 
consecutive crop years. A crop year determined eligible for exclusion 
in a county will also be eligible for exclusion in any contiguous 
county. Elections to exclude yields, by eligible crop year, by 
irrigated and non-irrigated acreage will be specified in the actuarial 
documents. Eligible crop year(s) depends upon the history for the crop 
year in comparison to the previous 10 consecutive crop years for a 
crop/county and irrigation practice. Production data availability and 
intensive data analysis may limit FCIC's ability to authorize 
exclusions of yields for all APH crops in all counties. The provisions 
regarding this section of the 2014 Farm Bill may not be implemented 
upon publication; therefore, to allow flexibility, FCIC has revised the 
CCIP Basic Provisions to allow the actuarial documents to specify when 
insureds may elect to exclude any recorded or appraised yield.
    e. Section 11014 of the 2014 Farm Bill stipulates there will be a 
reduction of benefits on native sod acreage during the first four crop 
years after the acreage is tilled and is planted to an annual crop 
after the date of enactment of the 2014 Farm Bill. Insureds' benefits 
are reduced for native sod acreage during the first four crop years of 
planting an annual crop by reducing the amount of premium subsidy by 50 
percentage points than otherwise would be available on additional 
coverage policies, reducing the insurance guarantee to 65 percent of 
the applicable transitional yield, and eliminating yield substitution 
for a year of poor or low yields, as applicable. The reduction in 
insureds' benefits only applies to insureds who have tilled an area of 
native sod greater than five acres in the county in the States of Iowa, 
Minnesota, Montana, Nebraska, North Dakota, or South Dakota. FCIC has 
revised the premium subsidy and insurance guarantee provisions in the 
CCIP Basic Provisions and the ARPI Basic Provisions, as applicable, to 
incorporate these changes.
    f. Section 11015 of the 2014 Farm Bill allows insureds with 
additional coverage policies to elect two separate coverage levels, one 
for all irrigated acreage of the crop in the county and one for all 
non-irrigated acreage of the crop in the county. This will be available 
where both an irrigated practice and non-irrigated practice is 
available in the actuarial documents. For example, an insured may 
choose a 65 percent coverage level for all irrigated acreage (corn 
irrigated practice) and an 80 percent coverage level for all non-
irrigated acreage (corn non-irrigated practice). Further, if the Crop 
Provisions allow the option to separately insure individual crop types 
or varieties, separate coverage levels by irrigated and non-irrigated 
practice will also be available for each type or variety. For example, 
an insured may choose 65 percent coverage level for processing type 
apples with an irrigated practice and a 70 percent coverage level for 
processing type apples with a non-irrigated practice. The insured may 
also choose a 70 percent coverage level for fresh type apples with an 
irrigated practice and a 75 percent coverage level for fresh type 
apples with a non-irrigated practice. This election is already allowed 
in the ARPI Basic Provisions. The provisions regarding this section of 
the 2014 Farm Bill may not be implemented upon publication; therefore, 
to allow flexibility for implementing this provision, FCIC has revised 
the CCIP Basic Provisions to allow the actuarial documents to specify 
when separate coverage levels by irrigated and non-irrigated practices 
will be available.
    g. Section 11016 of the 2014 Farm Bill establishes crop insurance 
incentives for beginning farmers and ranchers by waiving the 
administrative fee for CAT coverage and additional coverage policies, 
increasing the premium subsidy that otherwise would have been available 
by ten percentage points, allowing the use of yield history from any 
previous involvement in a farm or ranch operation, including decision 
making or physical involvement in the production of the crop or 
livestock, and replacing an excluded yield within actual production 
history with a yield equal to 80 percent of the applicable transitional 
yield. To qualify as a beginning farmer or rancher, a producer must not 
have actively operated and managed a farm or ranch in any county, in 
any state, with an insurable interest in any crop or livestock as an 
owner-operator, landlord, tenant, or sharecropper for more than five 
crop years. This will exclude any crop year when the beginning farmer 
or rancher was under the age of 18, enrolled in post-secondary studies 
or on active duty in the U.S. military. Entities may qualify for 
beginning farmer or rancher benefits only if all of the substantial 
beneficial interest holders qualify as a beginning farmer or rancher. 
For example, a son moves home to take over the family farm and 
incorporates with his spouse and neither have previous farming 
experience. Their corporation would qualify for beginning farmer or 
rancher benefits. FCIC has added a definition of ``beginning farmer and 
rancher'' and revised the administrative fee, premium subsidy, 
insurance guarantee, and yield substitution provision in the CCIP Basic 
Provisions and the ARPI Basic Provisions, as applicable, to incorporate 
these changes.
    h. Section 11017 of the 2014 Farm Bill allows producers of upland 
cotton to purchase an additional policy known as the ``Stacked Income 
Protection Plan'' (STAX). STAX can be purchased as a stand-alone policy 
or in conjunction with any individual or area plan of insurance at any 
coverage level offered by FCIC. Further, STAX is found in section 508B 
of the Act and is not limited to the additional coverage found in 
section 508(c) of the Act. This means that STAX is statutorily 
authorized to be offered with CAT policies. Therefore, this rule amends 
the CAT Endorsement to clarify that STAX will be available for CAT 
policies. STAX will be available, starting with the 2015 crop year, in 
select counties were insurance for upland cotton is available as 
specified on the actuarial documents.
    i. Section 11019 of the 2014 Farm Bill allows for the correction of 
errors in information obtained from the insured in addition to the 
correction of information currently authorized in the policies for the 
purposes of obtaining coverage. Within a reasonable amount of time 
following the sales closing date, corrections can be made in the 
information provided for the purposes of obtaining coverage to ensure

[[Page 37159]]

consistency with information provided to other agencies of the 
Department of Agriculture. Section 11019 allows certain information to 
be corrected after the acreage reporting date to reconcile information 
determined from any other USDA program or verified by another USDA 
agency. This ability to correct reported information does not apply to 
any other information that has not been determined or verified for the 
purposes of another USDA program. The ability to make these corrections 
are not without limitation and program integrity will be protected. 
Lastly, electronic transmission errors, such as transpositions, 
committed by the insurance provider, agent or any agency within USDA 
can be corrected by the insurance provider at any time the error is 
discovered. This section of the 2014 Farm Bill also provides for the 
payment of debt after the sales closing date in accordance with 
procedures and limitations established by FCIC, if an insured 
inadvertently fails to pay a debt and has been determined ineligible to 
participate in the Federal crop insurance program. FCIC is revising 
Subpart U, the CCIP Basic Provisions, and the ARPI Basic Provisions to 
incorporate these changes.
    The changes mandated by the 2014 Farm Bill impact almost all county 
crop programs within the Federal crop insurance program. This entails a 
monumental amount of work. FCIC is implementing the changes made by the 
2014 Farm Bill to all applicable programs as quickly as possible but 
there may be situations in which certain programs or program changes 
cannot be made for the earliest crop or reinsurance year after 
publication of these regulations. FCIC will continue to work on 
implementing the provisions everywhere they are applicable as 
expeditiously as possible. Insureds should check with their agents and 
on the RMA Web site at www.rma.usda.gov for updates on the 
implementation efforts.
    Previously, changes made to the Federal crop insurance policies 
codified in the Code of Federal Regulations were required to be 
implemented through the rulemaking process. Such action was not 
required by the Administrative Procedures Act because contracts were 
exempt from notice and comment rulemaking and the crop insurance policy 
is a contract. However, a prior Secretary of Agriculture published a 
notice in the Federal Register stating that the Department of 
Agriculture would, to the maximum extent practicable, use the notice 
and comment rulemaking process when making program changes, including 
those involving contracts. FCIC has complied with this notice over the 
subsequent years. Recently, the current Secretary of Agriculture has 
published a notice in the Federal Register rescinding the prior notice, 
thereby making contracts again exempt from the notice and comment 
rulemaking process. However, FCIC values the input it receives through 
comments and has elected to solicit comments to this interim rule, 
which will be considered when this rule is made final. For these 
reasons, these policy changes are effective upon filing with the Office 
of the Federal Register.
    The changes to the policy made in this rule are applicable for the 
2015 and succeeding crop years for all crops with a contract change 
date on or after the effective date of this rule, and for the 2016 and 
succeeding crop years for all crops with a contract change date prior 
to the effective date of this rule, provided the actuarial documents 
reflect the implementation of the policy changes, as applicable.
    1. The specific changes to Subpart U--Ineligibility for Programs 
Under the Federal Crop Insurance Act (7 CFR part 400) are as follows:
    a. FCIC is adding a new section 400.679(g) to specify when a person 
who has requested to have their policy reinstated by the Administrator 
of the Risk Management Agency and the request is denied, the person 
remains ineligible consistent with section 11019 of the 2014 Farm Bill.
    b. FCIC is adding a new section 400.682(g) to specify when FCIC 
will allow the payment of debt after the sales closing date if a 
producer inadvertently fails to pay a debt and has been determined 
ineligible to participate in the Federal crop insurance program 
consistent with section 11019 of the 2014 Farm Bill.
    c. FCIC is revising section 400.485(b) to specify reinstatement is 
an option to regain ineligibility in this paragraph.
    2. The specific changes to the CAT Endorsement (7 CFR part 402) are 
as follows:
    a. Section 6--FCIC is revising section 6(a) to clarify that 
insureds will be responsible to pay the premium if it is determined the 
insured has committed a violation of the HELC or WC provisions of 7 CFR 
part 12 as amended by the 2014 Farm Bill or the insured has not filed a 
form AD-1026 consistent with section 2611 of the 2014 Farm Bill unless 
the insured is otherwise exempted. FCIC is also revising section 6(a) 
to clarify that the policy will be terminated for failure to pay any 
premium that may be due.
    FCIC is revising section 6(b) to clarify that if premium is due, as 
specified in new section 6(f), it must be paid within 30 days after the 
insured has been billed.
    FCIC is revising section 6(c) to specify the administrative fee for 
CAT coverage will also be waived for insureds who qualify as beginning 
farmers or ranchers consistent with section 11016 of the 2014 Farm 
Bill.
    FCIC is revising section 6(e) to clarify that if premium is owed, 
as specified in new section 6(f), and is not paid when due, the insured 
may be ineligible for certain other USDA program benefits.
    FCIC is adding a new section 6(f) to specify the insured will be 
responsible for the payment of the premium if it is determined the 
insured has committed a violation of the HELC or WC provisions of 7 CFR 
part 12 as amended by the 2014 Farm Bill or the insured has not filed a 
form AD-1026 consistent with section 2611 of the 2014 Farm Bill.
    FCIC is adding a new section 6(g) to specify that if the Act 
expressly authorizes an option or endorsement to be applicable to CAT 
coverage, the insured will owe a separate annual premium and 
administrative fee for such option or endorsement. SCO and STAX, 
authorized by sections 11003 and 11017 of the 2014 Farm Bill, will 
require the payment of premium for such coverage even if the insured 
has elected CAT coverage. FCIC is also adding a new section 6(h) to 
specify the policy will be terminated if the insured fails to pay the 
premium due by the termination date.
    b. Section 11--FCIC is revising section 11(a) to specify that if 
the Act authorizes options or endorsements to be applicable to CAT 
coverage, such options or endorsements may be purchased in addition to 
the CAT Endorsement. This revision should eliminate any conflict 
between the CAT Endorsement and SCO or STAX, allowing both to be 
available with CAT coverage consistent with sections 11003 and 11017of 
the 2014 Farm Bill.
    3. The specific changes to the Area Risk Protection Insurance Basic 
Provisions (7 CFR part 407) are as follows:
    a. Section 1--FCIC is adding the definition of ``beginning farmer 
or rancher'' consistent with section 11016 of the 2014 Farm Bill, which 
allows the exclusion of crop years in which an individual had an 
insurable interest if, at the time, the individual was under the age of 
18, while serving full-time in the military service of the United 
States, or while in post-secondary education. FCIC is revising the 
definition of ``native sod'' to clarify the designation now refers to 
the date of enactment of the 2014 Farm Bill and removing the

[[Page 37160]]

definition of ``Prairie Pothole National Priority Area'' since only 
native sod in the states of Iowa, Minnesota, Montana, Nebraska, North 
Dakota, or South Dakota and are effected by the restrictions contained 
in section 11014 of the 2014 Farm Bill;
    b. Section 2--FCIC is revising section 2(k)(2)(iii) to specify when 
FCIC will allow the payment of debt after the sales closing date if a 
producer inadvertently fails to pay a debt and has been determined 
ineligible to participate in the Federal crop insurance program 
consistent with section 11019 of the 2014 Farm Bill.
    FCIC is adding section 2(k)(2)(iv) to specify that any 
determination made in accordance with section 2(k)(2)(iii)(B) exhausts 
all administrative remedies for the purposes of termination.
    c. Section 5--FCIC is removing the provisions in section 5(d) 
regarding the ability of a Governor of a State designated within the 
Prairie Pothole National Priority Area to elect to make native sod 
acreage uninsurable for the first five crop years of planting because 
these provisions are no longer applicable under section 11014 of the 
2014 Farm Bill. FCIC is adding provisions to section 5(d) regarding the 
consequences for the first four crop years of planting on native sod 
acreage, which requires guarantees to be based on a reduced yield of 65 
percent of the transitional yield and a reduced premium subsidy for 
additional coverage policies that is 50 percentage points less than 
would otherwise be available. Since area based plans of insurance do 
not have a transitional yield, FCIC is amending the provisions to 
require a reduced yield equal to a 65 percent protection factor. This 
will have the similar effect as reducing the yield to 65 percent of the 
transitional yield consistent with section 11014 of the 2014 Farm Bill.
    FCIC is adding a new section 5(e) that clarifies that the 
provisions of section 5(d) do not apply to native sod areas of five 
acres or less in a county.
    d. Section 7--FCIC is revising section 7(a)(6) to specify the 
administrative fee will be waived for insureds who qualify as beginning 
farmers or ranchers consistent with section 11016 of the 2014 Farm 
Bill.
    FCIC is adding a new section 7(h) to specify the insured's premium 
subsidy will be 10 percentage points greater if they qualify as a 
beginning farmer or rancher consistent with section 11016 of the 2014 
Farm Bill.
    FCIC is adding a new section 7(i) to specify the insured will be 
ineligible for premium subsidy if it is determined the insured has 
committed a violation of the HELC or WC provisions of 7 CFR part 12, as 
amended by the Agricultural Act of 2014, or the insured has not filed a 
form AD-1026 consistent with section 2611 of the 2014 Farm Bill unless 
the insured is otherwise exempted.
    e. Section 22--FCIC is revising section 22(a) by removing the 
phrase ``any portion thereof,'' to remove ambiguity of the billing 
process and interest situations on amounts owed, and to ensure 
consistency in how insurance providers administer this section. Section 
11019 of the 2014 Farm Bill allows producers to pay debts after the 
termination date and still remain eligible for insurance if certain 
conditions are met.
    f. FCIC is adding a new section 31 to specify that in addition to 
the corrections to information provided by the insured previously 
allowed in the policy, the insurance provider may correct the 
information provided on an application or by the sales closing date, by 
the insured, including identification numbers for the insured and any 
person with an substantial beneficial interest in the insured, within a 
reasonable time after the sales closing date if the information is in 
error to ensure such information is correct and consistent with 
information reported by the insured for other USDA programs. FCIC is 
also adding a provision that allows the reconciliation of errors in 
information reported by the insured within a reasonable time after the 
acreage reporting date if an agency within USDA has determined the 
correct information. Corrections can also be made after the date an 
agency within USDA has corrected the data as a result of the 
verification of the information. There are limitations on such 
corrections if the insured would avoid an eligibility requirement or 
obtain a disproportionate benefit, increase the guarantee or indemnity 
if a cause of loss has occurred or avoid premium if no cause of loss 
has occurred, or to avoid an obligation under Federal or State law. 
FCIC has also added a provision that allows the insurance provider at 
any time to revise any incorrect information provided by the insured, 
if the incorrect information was caused by electronic transmission 
errors by the insurance provider or agent or errors made by any agency 
within USDA in transmitting the information provided by the insured for 
purposes of other USDA programs. This is consistent with section 11019 
of the 2014 Farm Bill.
    4. The specific changes to the Common Crop Insurance Regulations, 
Basic Provisions (7 CFR part 457) are as follows:
    a. Section 1--FCIC is adding the definition of ``beginning farmer 
or rancher'' consistent with section 11016 of the 2014 Farm Bill, which 
allows the exclusion of crop years in which an individual had an 
insurable interest if, at the time, the individual was under the age of 
18, while serving full-time in the military service of the United 
States, or while in post-secondary education. FCIC is revising the 
definition of ``native sod'' to clarify the designation now refers to 
the date of enactment of the 2014 Farm Bill and removing the definition 
of ``Prairie Pothole National Priority Area'' since only native sod in 
the states of Iowa, Minnesota, Montana, Nebraska, North Dakota, and 
South Dakota and are effected by the restrictions contained in section 
11014 of the 2014 Farm Bill.
    b. Section 2--FCIC is revising section 2(f)(2)(iii) to specify when 
FCIC will allow the payment of debt after the sales closing date if a 
producer inadvertently fails to pay a debt and has been determined 
ineligible to participate in the Federal crop insurance program 
consistent with section 11019 of the 2014 Farm Bill.
    FCIC is adding section 2(f)(2)(iv) to specify that any 
determination made in accordance with section 2(f)(2)(iii)(B) exhausts 
all administrative remedies for the purposes of termination.
    c. Section 3--FCIC is adding a new section 3(b)(2)(iii) to allow 
separate coverage levels for irrigated and non-irrigated practices 
consistent with section 11015 of the 2014 Farm Bill.
    FCIC is also adding a new section 3(l) to specify that 
notwithstanding any other provision in section 3, if the insured is a 
beginning farmer or rancher who was previously involved in a farming or 
ranching operation, including involvement in the decision-making or 
physical involvement in the production of the crop or livestock on the 
farm, for any acreage obtained by the beginning farmer or rancher, the 
beginning farmer or rancher shall receive a yield that is the higher 
of: (1) The actual production history of the previous producer of the 
crop or livestock on the acreage in which the beginning farmer or 
rancher was involved; or (2) the actual production history of the 
beginning farmer or rancher.
    d. Section 5--FCIC is replacing the previously reserved section 5 
with a new section titled ``Exclusion of Yields'' to specify when an 
insured may elect to exclude their actual yields if the actual yield 
for the acreage is at least 50 percent below the simple average of the 
per planted acre yield for the crop in the county for the previous 10 
years

[[Page 37161]]

consistent with section 11009 of the 2014 Farm Bill.
    e. Section 7--FCIC is revising section 7(e)(4) to specify the 
administrative fee will be waived for insureds who qualify as beginning 
farmers or ranchers consistent with section 11016 of the 2014 Farm 
Bill.
    FCIC is adding a new section 7(g) to specify the insured's premium 
subsidy will be 10 percentage points greater if they qualify as a 
beginning farmer or rancher consistent with section 11016 of the 2014 
Farm Bill.
    FCIC is adding a new section 7(h) to specify the insured will be 
ineligible for premium subsidy if it is determined the insured has 
committed a violation of the HELC or WC provisions of 7 CFR part 12, as 
amended by the 2014 Farm Bill, or the insured has not filed a form AD-
1026 consistent with section 2611 of the 2014 Farm Bill unless the 
insured is otherwise exempted.
    f. Section 9--FCIC is removing the provisions in section 9(e) 
regarding the ability of a Governor of a State designated within the 
Prairie Pothole National Priority Area to elect to make native sod 
acreage uninsurable for the first five crop years of planting because 
these provisions are no longer applicable under section 11014 of the 
2014 Farm Bill. FCIC is adding provisions to section 9(e) regarding the 
consequences for the first four crop years of planting on native sod 
acreage, which requires guarantees to be based on a reduced yield of 65 
percent of the transitional yield, meaning the established yield for 
the insured will be based on 65 percent of the transitional yield, and 
a reduced premium subsidy for additional coverage policies that is 50 
percentage points less than would otherwise be available consistent 
with section 11014 of the 2014 Farm Bill.
    FCIC is adding a new section 9(f) that clarifies that the 
provisions of section 9(e) do not apply to native sod areas of five 
acres or less in a county.
    g. Section 24--FCIC is revising section 24(a) by removing the 
phrase ``any portion thereof,'' to remove ambiguity of the billing 
process and interest situations on amounts owed, and to ensure 
consistency in how insurance providers administer this section. Section 
11019 of the 2014 Farm Bill allows producers to pay debts after the 
termination date and still remain eligible for insurance if certain 
conditions are met.
    h. FCIC is replacing the previously reserved section 25 with a new 
section titled ``Correction of Errors'' to specify that in addition to 
the corrections to information provided by the insured previously 
allowed in the policy, the insurance provider may correct the 
information provided on an application or by the sales closing date, by 
the insured, including identification numbers for the insured and any 
person with a substantial beneficial interest in the insured, within a 
reasonable time after the sales closing date if the information is in 
error to ensure such information is correct and consistent with 
information reported by the insured for other USDA programs. FCIC is 
also adding a provision that allows the reconciliation of errors in 
information reported by the insured within a reasonable time after the 
acreage reporting date if an agency within USDA has determined the 
correct information. Corrections can also be made after the date an 
agency within USDA has corrected the data as a result of the 
verification of the information. There are limitations on such 
corrections if the insured would avoid an eligibility requirement or 
obtain a disproportionate benefit, increase the guarantee or indemnity 
if a cause of loss has occurred, or avoid premium if no cause of loss 
has occurred, or to avoid an obligation under Federal or State law. 
FCIC has also added a provision that allows the insurance provider at 
any time to revise any incorrect information provided by the insured, 
if the incorrect information was caused by electronic transmission 
errors by the insurance provider or agent, or errors made by any agency 
within USDA in transmitting the information provided by the insured for 
purposes of other USDA programs. This is consistent with section 11019 
of the 2014 Farm Bill.
    i. Section 34--FCIC is adding a new section 34(a)(4)(viii) to allow 
enterprise units for irrigated and non-irrigated practices if the 
acreage of each practice separately qualifies for an enterprise unit 
consistent with section 11007 of the 2014 Farm Bill.
    j. Section 36--FCIC is revising section 36(c) to specify that if 
the insured qualifies as a beginning farmer or rancher, the insured can 
elect to replace the excluded actual yield with a yield equal to 80 
percent of the applicable transitional yield for the crop year in which 
the yield is being replaced consistent with section 11016 of the 2014 
Farm Bill.

List of Subjects in 7 CFR Parts 400, 402, 407 and 457

    Administrative practice and procedure, Crop insurance, Reporting 
and recordkeeping requirements.

Interim Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends 7 CFR parts 400, 402, 407 and 457 as 
follows:

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

0
1. The authority citation for 7 CFR part 400 continues to read as 
follows:

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

0
2. Amend Sec.  400.679 as follows:
0
a. In paragraph (e) by removing the word ``or'' after the semicolon at 
the end of the paragraph;
0
b. In paragraph (f) by removing the period at the end of the paragraph 
and adding ``; or'' in its place; and
0
c. Add new paragraph (g).
    The addition reads as follows:


Sec.  400.679  Criteria for ineligibility.

* * * * *
    (g) Has requested the Administrator of the Risk Management Agency 
for consideration to reinstate their eligibility in accordance with the 
applicable policy provisions and such request has been denied.
0
3. Amend Sec.  400.682 by adding a new paragraph (g) to read as 
follows:


Sec.  400.682  Determination and notification.

* * * * *
    (g) No later than 60 days after the termination date, the missed 
payment date of a previously executed written payment agreement, or the 
due date specified in the notice to the person of the amount due, as 
applicable, the ineligible person may request consideration for 
reinstatement from the Administrator of the Risk Management Agency in 
accordance with section 2 of the Common Crop insurance Policy Basic 
Provisions (7 CFR 457.8).


Sec.  400.685  [Amended]

0
4. Amend paragraph (b) in Sec.  400.685 by adding the word 
``reinstatement,'' between the words ``through'' and ``mediation''.

PART 402--CATASTROPHIC RISK PROTECTION ENDORSEMENT

0
5. The authority citation for 7 CFR part 402 continues to read as 
follows:

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

0
6. Amend Sec.  402.4 as follows:
0
a. In section 6(a) by removing the word ``Notwithstanding'' and adding 
in its place the phrase ``Except as provided in paragraphs (f) and (h) 
of this section and notwithstanding'';
0
b. In section 6(b) introductory text by adding the phrase ``and premium 
as

[[Page 37162]]

specified in paragraph (f) of this section'' between the phrases 
``administrative fee'' and ``to us within;''
0
c. Revise section 6(c);
0
d. In section 6(e) by adding the phrase ``and premium as specified in 
paragraph (f) of this section'' between the phrases ``administrative 
fee'' and ``is not paid;''
0
e. Add new sections 6(f), (g), and (h); and
0
f. Revise section 11(a).
    The revisions and additions read as follows:


Sec.  402.4  Catastrophic Risk Protection Endorsement Provisions.

* * * * *
    6. Annual Premium and Administrative Fees.
* * * * *
    (c) The administrative fee provisions of paragraph (b) of this 
section do not apply if you are a ``beginning farmer or rancher'' or a 
``limited resource farmer'' as defined in the applicable crop policy. 
The administrative fee will be waived if you request it and you meet 
the requirements contained in the annual premium provisions of the 
applicable crop policy.
* * * * *
    (f) Effective for any policies with a sales closing date on or 
after July 1, 2015, you will be responsible for payment of the premium 
established for the coverage provided under this endorsement if:
    (1) USDA determines you have committed a violation of the highly 
erodible land conservation or wetland conservation provisions of 7 CFR 
part 12 as amended by the Agricultural Act of 2014; or
    (2) You have not filed form AD-1026 or successor form with FSA by 
June 1 prior to the sales closing date to be properly identified as in 
compliance with the conservation provisions specified in paragraph 
(f)(1) of this section (For example, to be eligible for a premium 
subsidy for a crop with a sales closing date of March 15, 2016, you 
must have filed your form AD-1026 by June 1, 2015).
    (i) Notwithstanding paragraph (f)(2) of this section, if you 
demonstrate you are a beginning farmer or rancher who has not 
previously had an insurable interest in a crop or livestock and began 
farming for the first time after June 30 prior to the sales closing 
date, you fail to file form AD-1026 or successor form with the FSA, by 
June 1 after you make application for insurance.
    (ii) To be eligible for premium subsidy paid on your behalf by 
FCIC, it is your responsibility to assure you meet all the requirements 
for:
    (A) Compliance with the conservation provisions specified in 
paragraph (f)(1) of this section; and
    (B) Filing form AD-1026, or successor form, to be properly 
identified as in compliance with the conservation provisions specified 
in paragraph (f)(1) of this section.
    (g) If the Act expressly authorizes an option or endorsement to be 
available in addition to the coverage available under this Endorsement 
(for example, the Supplemental Coverage Option) or any other additional 
coverage offered under the Federal Crop Insurance Act (for example, the 
Stacked Income Protection Plan), you will owe a separate annual premium 
and administrative fee for such option or endorsement if the option or 
endorsement has been made available in the actuarial documents and you 
elect to purchase such coverage.
    (h) Failure to pay the premium specified in paragraph (f) of this 
section will result in the termination of the policy and all other 
policies in accordance with the termination provisions specified in the 
applicable Basic Provisions.
* * * * *
    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, except for the Supplemental Coverage Option and any other 
option or endorsement or other additional coverage expressly authorized 
in the Federal Crop Insurance Act and allowed in the actuarial 
documents (for example, the Stacked Income Protection Plan). Written 
agreements are not available for any crop insured under this 
endorsement.
* * * * *

PART 407--AREA RISK PROTECTION INSURANCE REGULATIONS

0
7. The authority citation for 7 CFR part 407 continues to read as 
follows:

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


0
8. Amend Sec.  407.9 as follows:
0
a. In section 1 by adding the definition of ``beginning farmer or 
rancher'' in alphabetical order, revising the definition of ``native 
sod,'' and removing the definition of ``Prairie Pothole National 
Priority Area'';
0
b. Revise section 2(k)(2)(iii);
0
c. Add new section 2(k)(2)(iv);
0
d. Revise section 5(d);
0
f. Add a new section 5(e);
0
g. Revise section 7(a)(6)(i);
0
h. Redesignate section 7(a)(6)(ii) as section 7(a)(6)(iii) and add a 
new section 7(a)(6)(ii);
0
i. Add new sections 7(h) and (i);
0
j. In section 22(a) by removing the phrase ``, or any portion 
thereof,''; and
0
k. Add a new section 31.
    The revisions and additions reads as follows:


Sec.  407.9  Area risk protection insurance policy.

* * * * *
    1. Definitions.
* * * * *
    Beginning farmer or rancher. An individual who has not actively 
operated and managed a farm or ranch in any state, with an insurable 
interest in a crop or livestock as an owner-operator, landlord, tenant, 
or sharecropper for more than five crop years, as determined in 
accordance with FCIC procedures. Any crop year's insurable interest 
may, at your election, be excluded if earned while under the age of 18, 
while in full-time military service of the United States, or while in 
post-secondary education, in accordance with FCIC procedures. A person 
other than an individual may be eligible for beginning farmer or 
rancher benefits if all of the substantial beneficial interest holders 
qualify as a beginning farmer or rancher.
* * * * *
    Native sod. Acreage that has no record of being tilled (determined 
in accordance with information collected and maintained by an agency of 
the USDA or other verifiable records that you provide and are 
acceptable to us) for the production of an annual crop on or before 
February 7, 2014, and on which the plant cover is composed principally 
of native grasses, grass-like plants, forbs, or shrubs suitable for 
grazing and browsing.
* * * * *
    2. Life of Policy, Cancellation, and Termination.
* * * * *
    (k) * * *
    (2) * * *
    (iii) Once the policy is terminated, it cannot be reinstated for 
the current crop year unless:
    (A) The termination was in error;
    (B) The Administrator of the Risk Management Agency, at his or her 
sole discretion, determines that the following conditions are met:
    (1) In accordance with 7 CFR part 400, subpart U and FCIC issued 
procedures, you provide documentation that your failure to pay your 
debt is due to an unforeseen or unavoidable event or an extraordinary 
weather event that created an impossible situation for you to make 
timely payment;
    (2) You remit full payment of the delinquent debt owed to us or 
FCIC

[[Page 37163]]

with your request submitted in accordance with section 
2(k)(2)(iii)(B)(3); and
    (3) You submit a written request for reinstatement of your policy 
to us no later than 60 days after the termination date or the missed 
payment date of a previously executed written payment agreement, or the 
due date specified in the notice to you of the amount due, if 
applicable.
    (i) If authorization for reinstatement is granted, your policies 
will be reinstated effective at the beginning of the crop year for 
which you were determined ineligible, and you will be entitled to all 
applicable benefits under such policies, provided you meet all 
eligibility requirements and comply with the terms of the policy; and
    (ii) There is no evidence of fraud or misrepresentation; or
    (C) We determine that, in accordance with 7 CFR part 400, subpart U 
and FCIC issued procedures, the following are met:
    (1) You can demonstrate:
    (i) You made timely payment for the amount of premium owed but you 
inadvertently omitted some small amount, such as the most recent 
month's interest or a small administrative fee;
    (ii) The amount of the payment was clearly transposed from the 
amount that was otherwise due (For example, you owed $832 but you paid 
$823); or
    (iii) You made the full payment of the amount owed but the payment 
was delayed and postmarked by no more than 7 calendar days after the 
termination date or the missed payment date of a previously executed 
written payment agreement, or the due date specified in the notice to 
you of the amount due, as applicable;
    (2) You remit full payment of the delinquent debt owed to us; and
    (3) You submit a written request for reinstatement of your policy 
to us in accordance with 7 CFR part 400, subpart U and applicable 
procedures no later than 30 days after the termination date or the 
missed payment date of a previously executed written payment agreement, 
or the due date specified in the notice to you of the amount due, if 
applicable; and
    (4) There is no evidence of fraud or misrepresentation.
    (iv) A determination made in section 2(k)(2)(iii)(B) exhausts all 
administrative remedies for purposes of termination.
* * * * *
    5. Insurable Acreage.
* * * * *
    (d) Except as provided in section 5(e), in the states of Iowa, 
Minnesota, Montana, Nebraska, North Dakota, and South Dakota, during 
the first four crop years of planting on native sod acreage that has 
been tilled and is planted to an annual crop, after February 7, 2014, 
such acreage may be insured if the requirements of section 5(a) have 
been met but will, for additional coverage policies;
    (1) Notwithstanding the provisions in section 6, receive a 
liability that is based on a 65 percent of the protection factor; and
    (2) Receive a premium subsidy that is 50 percentage points less 
than would otherwise be provided on acreage not qualifying as native 
sod. If the premium subsidy applicable to these acres is less than 50 
percent before the reduction, you will receive no premium subsidy.
    (e) Section 5(d) is not applicable to areas of native sod acreage 
that is five acres or less in the county.
* * * * *
    7. Annual Premium and Administrative Fees.
    (a) * * *
    (6) * * *
    (i) You qualify as a beginning farmer or rancher;
    (ii) You qualify as a limited resource farmer; or
* * * * *
    (h) If you qualify as a beginning farmer or rancher, your premium 
subsidy will be 10 percentage points greater than the premium subsidy 
that you would otherwise receive, unless otherwise specified in the 
Special Provisions.
    (i) Effective for any policies with a sales closing date on or 
after July 1, 2015, you will be ineligible for any premium subsidy paid 
on your behalf by FCIC for any policy issued by us if:
    (1) USDA determines you have committed a violation of the highly 
erodible land conservation or wetland conservation provisions of 7 CFR 
part 12 as amended by the Agricultural Act of 2014; or
    (2) You have not filed form AD-1026, or successor form, with FSA by 
June 1 prior to the sales closing date to be properly identified as in 
compliance with the conservation provisions specified in section 
7(i)(1) (For example, to be eligible for a premium subsidy for a crop 
with a sales closing date of March 15, 2016, you must have filed your 
form AD-1026 by June 1, 2015).
    (i) Notwithstanding section 7(i)(2), if you demonstrate you are a 
beginning farmer or rancher who has not previously had an insurable 
interest in a crop or livestock and began farming for the first time 
after June 30 prior to the sales closing date, you fail to file form 
AD-1026 or successor form with the FSA by June 1 after you make 
application for insurance.
    (ii) To be eligible for premium subsidy paid on your behalf by 
FCIC, it is your responsibility to assure you meet all the requirements 
for:
    (A) Compliance with the conservation provisions specified in 
section 7(i)(1) of this section; and
    (B) Filing form AD-1026, or successor form, to be properly 
identified as in compliance with the conservation provisions specified 
in section 7(i)(1) of this section.
* * * * *
    31. Correction of Errors.
    (a) In addition to any other corrections allowed in your policy 
subject to section 31(b), we may correct:
    (1) Within 60 days after the sales closing date, any incorrect 
information on your application or provided by the sales closing date, 
including identification numbers for you and any person with a 
substantial beneficial interest in the you, to ensure that the 
eligibility information is correct and consistent with information 
reported by you to any USDA agency;
    (2) Within 30 days after the acreage reporting date, information 
reported to reconcile errors in the information with correct 
information that has been determined by any USDA agency;
    (3) Within 30 days of any subsequent correction of data by FSA, 
erroneous information corrected as a result of verification of 
information; and
    (4) At any time, any incorrect information if the incorrect 
information was caused by electronic transmission errors by us or 
errors made by any agency within USDA in transmitting the information 
provided by you for purposes of other USDA programs.
    (b) Corrections may be made but will not take effect for the 
current crop year if the correction would allow you to:
    (1) Avoid ineligibility requirements for insurance or obtain a 
disproportionate benefit under the crop insurance program or any 
related program administered by the Secretary;
    (2) Obtain, enhance, or increase an insurance guarantee or 
indemnity if a cause of loss exists or has occurred before any 
correction has been made, or avoid premium owed if no loss is likely to 
occur; or
    (3) Avoid an obligation or requirement under any Federal or State 
law.

PART 457--COMMON CROP INSURANCE REGULATIONS

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


[[Page 37164]]


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


0
10. Amend Sec.  457.8 as follows:
0
a. In section 1 by adding the definition of ``beginning farmer or 
rancher,'' revising the definition of ``native sod,'' and removing the 
definition of ``Prairie Pothole National Priority Area;''
0
b. Revise section 2(f)(2)(iii);
0
c. Add new section 2(f)(2)(iv);
0
d. Add new section 3(b)(2)(iii);
0
e. Add new section 3(l);
0
f. Add new section 5;
0
g. Revise section 7(e)(4)(i);
0
h. Redesignate section 7(e)(4)(ii) as section 7(e)(4)(iii) and add a 
new section 7(e)(4)(ii);
0
i. Add new sections 7(g) and (h);
0
j. Revise section 9(e);
0
k. Add a new section 9(f);
0
l. In section 24(b) [For FCIC policies] by removing the phrase ``, or 
any part thereof,'';
0
m. In section 24(a) [For reinsured policies] by removing the phrase ``, 
or any portion thereof,'';
0
n. Add new section 25;
0
o. Add new section 34(a)(4)(viii); and
0
p. Revise section 36(c).
    The revisions and additions reads as follows:


Sec.  457.8  The application and policy.

* * * * *
    1. Definitions.
* * * * *
    Beginning farmer or rancher. An individual who has not actively 
operated and managed a farm or ranch in any state, with an insurable 
interest in a crop or livestock as an owner-operator, landlord, tenant, 
or sharecropper for more than five crop years, as determined in 
accordance with FCIC procedures. Any crop year's insurable interest 
may, at your election, be excluded if earned while under the age of 18, 
while in full-time military service of the United States, or while in 
post-secondary education, in accordance with FCIC procedures. A person 
other than an individual may be eligible for beginning farmer or 
rancher benefits if all of the substantial beneficial interest holders 
qualify as a beginning farmer or rancher.
* * * * *
    Native sod. Acreage that has no record of being tilled (determined 
in accordance with information collected and maintained by an agency of 
the USDA or other verifiable records that you provide and are 
acceptable to us) for the production of an annual crop on or before 
February 7, 2014, and on which the plant cover is composed principally 
of native grasses, grass-like plants, forbs, or shrubs suitable for 
grazing and browsing.
* * * * *
    2. Life of Policy, Cancellation, and Termination.
* * * * *
    (f) * * *
    (2) * * *
    (iii) Once the policy is terminated, it cannot be reinstated for 
the current crop year unless:
    (A) The termination was in error;
    (B) The Administrator of the Risk Management Agency, at his or her 
sole discretion, determines that the following are met:
    (1) In accordance with 7 CFR part 400, subpart U and FCIC issued 
procedures, you provide documentation that your failure to pay your 
debt is due to an unforeseen or unavoidable event or an extraordinary 
weather event that created an impossible situation for you to make 
timely payment;
    (2) You remit full payment of the delinquent debt owed to us or 
FCIC with your request submitted in accordance with section 
2(f)(2)(iii)(B)(3); and
    (3) You submit a written request for reinstatement of your policy 
to us no later than 60 days after the termination date or the missed 
payment date of a previously executed written payment agreement, or the 
due date specified in the notice to you of the amount due, if 
applicable.
    (i) If authorization for reinstatement is granted, your policies 
will be reinstated effective at the beginning of the crop year for 
which you were determined ineligible, and you will be entitled to all 
applicable benefits under such policies, provided you meet all 
eligibility requirements and comply with the terms of the policy; and
    (ii) There is no evidence of fraud or misrepresentation; or
    (C) We determine that, in accordance with 7 CFR part 400, subpart U 
and FCIC issued procedures, the following are met:
    (1) You can demonstrate:
    (i) You made timely payment for the amount of premium owed but you 
inadvertently omitted some small amount, such as the most recent 
month's interest or a small administrative fee;
    (ii) The amount of the payment was clearly transposed from the 
amount that was otherwise due (For example, you owed $832 but you paid 
$823); or
    (iii) You made the full payment of the amount owed but the payment 
was delayed and postmarked by no more than 7 calendar days after the 
termination date or the missed payment date of a previously executed 
written payment agreement, or the due date specified in the notice to 
you of the amount due, as applicable.
    (2) You remit full payment of the delinquent debt owed to us; and
    (3) You submit a written request for reinstatement of your policy 
to us in accordance with 7 CFR part 400, subpart U and applicable 
procedures no later than 30 days after the termination date or the 
missed payment date of a previously executed written payment agreement, 
or the due date specified in the notice to you of the amount due, if 
applicable; and
    (4) There is no evidence of fraud or misrepresentation.
    (iv) A determination made in section 2(f)(2)(iii)(B) exhausts all 
administrative remedies for purposes of termination.
* * * * *
    3. Insurance Guarantees, Coverage Levels, and Prices.
* * * * *
    (b) * * *
    (2) * * *
    (iii) You have additional coverage for the crop in the county, and 
the actuarial documents provide for separate coverage by irrigated and 
non-irrigated practices for the crop.
    (A) You may select one coverage level for all irrigated acreage and 
one coverage level for all non-irrigated acreage. For example: You may 
choose a 65 percent coverage level for all irrigated acreage (corn 
irrigated practice) and an 80 percent coverage level for all non-
irrigated acreage (corn non-irrigated practice).
    (B) If the Crop Provisions allow the option to separately insure 
individual crop types or varieties, and the actuarial documents provide 
for separate coverage, you may select coverage levels by irrigated and 
non-irrigated practice for each separate type or variety.
* * * * *
    (l) Notwithstanding any other provision, if you qualify as a 
beginning farmer or rancher and were previously involved in a farming 
or ranching operation, including involvement in the decision-making or 
physical involvement in the production of the crop or livestock on the 
farm, for any acreage obtained by you, you may receive a yield that is 
the higher of:
    (1) The actual production history of the previous producer of the 
crop or livestock on the acreage you were previously involved with; or
    (2) Your actual production history.
* * * * *
    5. Exclusion of Yields.
    If provided in the actuarial documents, you may elect to exclude 
any actual yield for any crop year when FCIC determines for a county, 
or its contiguous counties, the per planted acre yield was at least 50 
percent below

[[Page 37165]]

the simple average of the per acre planted yield for the crop in the 
county for the previous 10 consecutive crop years.
* * * * *
    7. Annual Premium and Administrative Fees.
* * * * *
    (e) * * *
    (4) * * *
    (i) You qualify as a beginning farmer or rancher;
    (ii) You qualify as a limited resource farmer; or
* * * * *
    (g) If you qualify as a beginning farmer or rancher, your premium 
subsidy will be 10 percentage points greater than the premium subsidy 
that you would otherwise receive, unless otherwise specified in the 
Special Provisions.
    (h) Effective for any policies with a sales closing date on or 
after July 1, 2015, you will be ineligible for any premium subsidy paid 
on your behalf by FCIC for any policy issued by us if:
    (1) USDA determines you have committed a violation of the highly 
erodible land conservation or wetland conservation provisions of 7 CFR 
part 12 as amended by the Agricultural Act of 2014; or
    (2) You have not filed form AD-1026, or successor form, with FSA by 
June 1 prior to the sales closing date to be properly identified as in 
compliance with the applicable conservation provisions specified in 
section 7(h)(1).
    (i) Notwithstanding section 7(h)(2), if you demonstrate you are a 
beginning farmer or rancher who has not previously had an insurable 
interest in a crop or livestock and began farming for the first time 
after June 30 prior to the sales closing date, you fail to file form 
AD-1026 or successor form with the FSA, by June 1 after you make 
application for insurance.
    (ii) To be eligible for premium subsidy paid on your behalf by 
FCIC, it is your responsibility to assure you meet all the requirements 
for:
    (A) Compliance with the conservation provisions specified in 
section 7(h)(1) of this section; and
    (B) Filing form AD-1026, or successor form, to be properly 
identified as in compliance with the conservation provisions specified 
in section 7(h)(1) of this section.
* * * * *
    9. Insurable Acreage.
* * * * *
    (e) Except as provided in section 9(f), in the states of Iowa, 
Minnesota, Montana, Nebraska, North Dakota, or South Dakota, during the 
first four crop years of planting on native sod acreage that has been 
tilled and is planted to an annual crop after February 7, 2014, such 
acreage may be insured if the requirements of section 9(a) have been 
met but will:
    (1) Notwithstanding the provisions in section 3 regarding your 
production guarantee, receive a production guarantee (per acre) that is 
based on 65 percent of the transitional yield for the county; and
    (2) For additional coverage policies, receive a premium subsidy 
that is 50 percentage points less than would otherwise be provided on 
acreage not qualifying as native sod. If the premium subsidy applicable 
to these acres is less than 50 percent before the reduction, you will 
receive no premium subsidy.
    (f) Section 9(e) is not applicable to areas of native sod acreage 
that is five acres or less in the county.
* * * * *
    25. Correction of Errors.
    (a) In addition to any other corrections allowed in your policy 
subject to section 25(b), we may correct:
    (1) Within 60 days after the sales closing date, any incorrect 
information on your application or provided by the sales closing date, 
including identification numbers for you and any person with an 
substantial beneficial interest in the you, to ensure that the 
eligibility information is correct and consistent with information 
reported by you to any USDA agency;
    (2) Within 30 days after the acreage reporting date, information 
reported to reconcile errors in the information with correct 
information that has been determined by any USDA agency;
    (3) Within 30 days of any subsequent correction of data by FSA, 
erroneous information corrected as a result of verification of 
information; and
    (4) At any time, any incorrect information if the incorrect 
information was caused by electronic transmission errors by us or 
errors made by any agency within USDA in transmitting the information 
provided by you for purposes of other USDA programs.
    (b) Corrections may be made but will not take effect for the 
current crop year if the correction would allow you to:
    (1) Avoid ineligibility requirements for insurance or obtain a 
disproportionate benefit under the crop insurance program or any 
related program administered by the Secretary;
    (2) Obtain, enhance, or increase an insurance guarantee or 
indemnity if a cause of loss exists or has occurred before any 
correction has been made, or avoid premium owed if no loss is likely to 
occur; or
    (3) Avoid an obligation or requirement under any Federal or State 
law.
* * * * *
    34. Units.
    (a) * * *
    (4) * * *
    (viii) If allowed by the actuarial documents, you may elect 
separate enterprise units for irrigated and non-irrigated practices.
    (A) You may elect one enterprise unit for all irrigated practices 
and one enterprise unit for all non-irrigated practices.
    (B) You must separately meet the requirements in section 34(a)(4) 
for each enterprise unit.
    (C) If we discover you do not qualify for an enterprise unit for 
the irrigated and non-irrigated practices and such discovery is made:
    (1) On or before the acreage reporting date, you may elect to 
insure all acreage of the crop in the county in one enterprise unit 
provided you meet the requirements in section 34(a)(4), or your unit 
division will be based on basic or optional units, whichever you report 
on your acreage report and qualify for; or
    (2) At any time after the acreage reporting date, your unit 
structure will be one enterprise unit provided you meet the 
requirements in section 34(a)(4). Otherwise, we will assign the basic 
unit structure.
* * * * *
    36. Substitution of Yields.
* * * * *
    (c) Each excluded actual yield will be replaced with a yield equal 
to 60 percent of the applicable transitional yield for the crop year in 
which the yield is being replaced, unless you qualify as a beginning 
farmer or rancher in which case the excluded actual yield will be 
replaced with a yield equal to 80 percent of the applicable 
transitional 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 transitional 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 transitional 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.
* * * * *


[[Page 37166]]


    Signed in Washington, DC, on June 23, 2014.
Brandon C. Willis,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2014-15074 Filed 6-30-14; 8:45 am]
BILLING CODE 3410-08-P