Common Crop Insurance Regulations; Peanut Crop Insurance Provisions

AGENCY:

Federal Crop Insurance Corporation, USDA.

ACTION:

Proposed rule with request for comments.

SUMMARY:

The Federal Crop Insurance Corporation (FCIC) proposes to amend the Peanut Crop Insurance Provisions. The intended effect of this action is to provide policy changes and clarify existing policy provisions to better meet the needs of the insureds and to restrict the effect of the current Peanut Crop Insurance Regulations to the 2004 and prior crop years.

DATES:

Written comments and opinions on this proposed rule will be accepted until close of business June 16, 2004, and will be considered when the rule is to be made final.

ADDRESSES:

Interested persons are invited to submit written comments to the Director, Product Development Division, Risk Management Agency, United States Department of Agriculture, 6501 Beacon Drive, Stop 0812, Room 421, Kansas City, MO 64133-4676. Comments titled “Peanut Crop Provisions” may be sent via the Internet directly to DirectorPDD@rma.usda.gov, or the Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. A copy of each response will be available for public inspection and copying from 7 a.m. to 4:30 p.m., CDT, Monday through Friday except holidays, at the above address.

FOR FURTHER INFORMATION CONTACT:

Gary Johnson, Risk Management Specialist, Research and Development, Product Development Division, Risk Management Agency, at the Kansas City, MO, address listed above, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

The Office of Management and Budget (OMB) has determined that this rule is not 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 Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by the Office of Management and Budget (OMB) under control number 0563-0053 through February 28, 2005.

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, or a notice of loss and production information to determine 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. The amount of information collected may be determined by farm size but it is the larger farms that would have to report more information because they are likely to have more acreage. 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 small entities are given the same opportunities 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 action taken by FCIC under the terms of the crop insurance policy, the administrative appeal provisions published at 7 CFR part 11 or 7 CFR 400.169, as applicable, must be exhausted before any action for judicial review of any determination or action by FCIC may be brought.

Environmental Evaluation

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

Background

FCIC proposes to amend the Common Crop Insurance Regulations (7 CFR part 457) by amending § 457.134 Peanut Crop Insurance Provisions effective for the 2005 and succeeding crop years. This rule will remove and reserve section 2 of the Peanut Crop Insurance Provisions, which will allow optional units for peanuts to be established in accordance with section 34 of the Common Crop Insurance Policy Basic Provisions (Basic Provisions). Under the current Peanut Crop Insurance Provisions, optional units for peanuts are only allowed by Farm Serial Number (FSN). Prior to the Farm Security and Rural Investment Act of 2002 (2002 Farm Bill), peanut producers were required to report their peanut acreage and production to their county Farm Service Agency (FSA) office. The FSA office used the information to establish peanut quotas and peanut farm yields by FSN. This information served as the basis for determining a peanut producer's production guarantee for crop insurance purposes. The 2002 Farm Bill repealed peanut quotas, which caused the peanut crop insurance program to default to the provisions specifying that the production guarantee would be based on the actual production history (APH) of the producer. Due to loss of peanut quotas, peanut producers have requested that optional units be allowed consistent with optional units requirements contained in section 34 of the Basic Provisions. The proposed change will allow peanut producers to have optional units, with an appropriate rate surcharge, based on sections, or section equivalents.

The elimination of the peanut quota has resulted in making the quota price elections no longer applicable. Producers have expressed a desire for a price election for peanuts based on a “contract price”. Producers have requested that FCIC consider allowing producers to insure their peanuts on the basis of a “contract price”. Therefore, FCIC is requesting public comment as to the feasibility and possible approaches for insuring peanuts at a “contract price” when grown under a processor contact. Recommended approaches should address issues such as the terms of the processor contract (acreage based, production based), available contract price information, applicable quality standards, the contracting entity, access to information that is free from producer or other related bias, and other parameters that would be necessary to develop a contract price option that meets producer needs and is not subject to waste, fraud, and abuse.

List of Subjects in 7 CFR Part 457

• Crop insurance
• Peanuts
• Reporting and recordkeeping requirements

Proposed Rule

Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation proposes to amend 7 CFR part 457, Common Crop Insurance Regulations, for the 2005 and succeeding crop years as follows:

PART 457—COMMON CROP INSURANCE REGULATIONS

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

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

2. Amend § 457.134 by revising the introductory text and removing and reserving section 2., Unit Division.