Federal Crop Insurance Corporation Rule: Common Crop Insurance Regulations, Sunflower Seed Crop Insurance Provisions, Dry Pea Crop Insurance Provisions

WASHINGTON, Dec. 1 -- The Federal Crop Insurance Corporation has issued a rule (7 CFR Part 407 and 7 CFR Part 457), published in the Federal Register on Nov. 30, entitled: "Area Risk Protection Insurance Regulations; Common Crop Insurance Policy Basic Provisions; Common Crop Insurance Regulations, Sunflower Seed Crop Insurance Provisions; and Common Crop Insurance Regulations, Dry Pea Crop Insurance Provisions".

The rule was issued by Martin Barbre, Manager, Federal Crop Insurance Corporation.

DATES:

Effective Date: This final rule is effective November 30, 2020.

Comment Date: We will consider comments that we receive by the close of business January 29, 2021. FCIC may consider the comments received and may conduct additional rulemaking based on the comments.

ADDRESSES:

We invite you to submit comments on this rule. You may submit comments by either of the following methods, although FCIC prefers that you submit comments electronically through the Federal eRulemaking Portal:

Federal eRulemaking Portal: Go to https://www.regulations.gov/docket?D=FCIC-20-0008 and follow the instructions for submitting comments.

Mail: Director, Product Administration and Standards Division, Risk Management Agency, US Department of Agriculture, P.O. Box 419205, Kansas City, MO 64133-6205. In your comment, specify docket ID FCIC-20-0008.

Comments will be available for viewing online at www.regulations.gov. Comments received will be posted without change, including any personal information provided. In addition, comments will be available for public inspection at the above address during business hours from 8 a.m. to 5 p.m., Monday through Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: Francie Tolle; telephone (816) 926-7829; or email [email protected].

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The Federal Crop Insurance Corporation (FCIC) amends the Area Risk Protection Insurance (ARPI) Regulations; Common Crop Insurance Policy (CCIP), Basic Provisions; Common Crop Insurance Regulations, Sunflower Seed Crop Insurance Provisions (Sunflower Seed Crop Provisions); and Common Crop Insurance Regulations, Dry Pea Crop Insurance Provisions (Dry Pea Crop Provisions).

The intended effect of this action is to improve prevented planting provisions, revise beginning farmer or rancher and veteran farmer or rancher provisions and clarify arbitration provisions.

In addition to these changes, FCIC is making clarifications to the Dry Pea Crop Provisions and revising the cancellation and termination dates in the Sunflower Seed Crop Provisions.

The changes to the policy made in this rule are applicable for the 2021 and succeeding crop years for crops with a contract change date on or after November 30, 2020.

For all other crops, the changes to the policy made in this rule are applicable for the 2022 and succeeding crop years.

SUPPLEMENTARY INFORMATION:

Background

FCIC serves America's agricultural producers through effective, market-based risk management tools to strengthen the economic stability of agricultural producers and rural communities. The Risk Management Agency (RMA) administers the FCIC regulations. FCIC is committed to increasing the availability and effectiveness of Federal crop insurance as a risk management tool. Approved Insurance Providers (AIPs) sell and service Federal crop insurance policies in every state and in Puerto Rico through a public-private partnership. FCIC reinsures the AIPs who share the risk associated with catastrophic losses due to major weather events. FCIC's vision is to secure the future of agriculture by providing world class risk management tools to rural America.

Federal crop insurance policies typically consist of the Basic Provisions, the Crop Provisions, the Special Provisions, the Commodity Exchange Price Provisions, if applicable, other applicable endorsements or options, the actuarial documents for the insured agricultural commodity, the Catastrophic Risk Protection Endorsement, if applicable, and the applicable regulations published in 7 CFR chapter IV.

FCIC amends the ARPI Basic Provisions, the CCIP Basic Provisions, the Sunflower Seed Crop Provisions, and the Dry Pea Crop Provisions. The changes to the policy made in this rule are applicable for the 2021 and succeeding crop years for crops with a contract change date on or after November 30, 2020. For all other crops the changes to the policy made in this rule are applicable for the 2022 and succeeding crop years.

ARPI Basic Provisions

The changes to the ARPI Basic Provisions (7 CFR part 407) are:

FCIC is revising sections 23(d)(1), (2), and (5)(i) of the ARPI Basic Provisions to clarify the responsibility is on the producer to start dispute resolution through arbitration when the producer disagrees with an AIP determination. There has been confusion that this provision could require both the producer and the AIP to start arbitration prior to litigation.

FCIC is also making non-substantive changes to the regulation. Examples include making references consistent, making grammatical corrections, and clarifying word changes. These revisions are editorial in nature and are intended to provide clarity to the regulation.

CCIP Basic Provisions

The changes to the CCIP Basic Provisions (7 CFR part 457.8) are:

FCIC is revising section 3(l) to allow a producer that qualifies as a beginning farmer or rancher (BFR), or veteran farmer or rancher (VFR), to receive a yield based on the actual production history (APH) of the previous producer of the crop or livestock on the acreage, if the BFR or VFR was previously involved in the decision-making or physical activities of the crop or livestock on any farm. Previously, the provisions specified that the APH history of the acreage could only be used if the BFR or VFR was previously involved on the specific acreage acquired.

Prevented planting is a feature of many crop insurance plans that provides a partial payment to cover certain pre-plant costs for a crop that was prevented from being planted due to an insurable cause of loss. After unprecedented prevented planting in 2019, FCIC examined how to improve the prevented planting coverage within a policy. FCIC held discussions with stakeholders via a Prevented Planting Taskforce that included FCIC and industry representatives. The taskforce reviewed the previous policy, discussed impacts, and explored policy improvements. The goal of the taskforce was to improve coverage for producers when needed most, but not replace market incentives with government incentives, while maintaining program integrity. The taskforce identified several issues that are extremely uncommon but could occur in years when prevented planting is catastrophic and widespread. The following lists the changes in section 17 of the CCIP Basic Provisions:

FCIC is revising section 17(e)(1)(i) to add a reference to the new provisions in section 17(e)(1)(ii)(E).

FCIC is revising section 17(e)(1)(ii) to allow the use of an intended acreage report for the first 2 consecutive crop years the producer farms in a new county, instead of only the first year.

The CCIP Basic Provisions define "intended acreage report" as a report of the acreage a producer intends to plant, by crop, for the current crop year and used solely for the purpose of establishing eligible prevented planting acreage, as required in section 17. Further, section 17 states that if the insured did not plant any crop in the county for which prevented planting coverage was available in the 4 most recent crop years, the producer must complete and submit an intended acreage report to the AIP by the sales closing date, or within 10 days of land acquisition after the sales closing date, to establish the potential maximum number of eligible prevented planting acres.

Based on the previous provision, when a producer adds new land in a new county, the producer could only indicate intended acres for the first year. An issue arises in the second year if the producer, following good farming practices for crop rotation, intends to plant a different crop. Because the producer only has 1 year of history in the county, the producer is limited in the amount of acreage (and type of crop) that can be claimed for prevented planting purposes.

For example, a producer adds land in a new county. The first year, the producer files an intended acreage report for wheat and plants the entire acreage to wheat. The second year, the producer intends to plant corn, but is prevented from planting due to an insurable cause of loss. Under the previous regulations, the producer would not have any eligible prevented planting acreage for corn because they only have eligible wheat acres based on their first year's history in their APH database. The producer would receive a prevented planting payment based on the eligible wheat acres. This would result in a different prevented planting payment than the intended corn crop, which may not be reflective of their pre-plant costs.

As specified above, FCIC will revise section 17(e)(1)(ii) to allow the producer to submit an intended acreage report for the first 2 consecutive crop years the producer farms in a new county. In the above scenario, this will allow the producer to receive a prevented planting payment based on the acres contained on the intended acreage report for the second year and the payment will be based on corn. This change acknowledges rotational practices are a good farming practice. It will also result in more accurate prevented planting payments because they will be based on the producer's actual intended plantings for that year.

FCIC is revising section 17(e)(2) to provide that if following a failed first insured crop, an uninsured second crop is planted on the same acres within the same crop year, the planted acres of the uninsured crop will not be subtracted from the eligible prevented planting acreage.

Section 17(e)(2) of the CCIP Basic Provisions previously stated, "Any eligible acreage determined in accordance with section 17(e)(1) will be reduced by subtracting the number of acres of the crop (insured and uninsured) that are timely and late planted, including acreage specified in section 16(b)." If following a failed first insured crop, the producer plants an uninsured second crop on the same acres within the same crop year; acres from both plantings (first insured crop and second uninsured crop) are subtracted from the eligible prevented planting acreage, even though it is the same physical land subtracted twice. On occasion, this can lead to the producer having acres that do not receive a prevented planting payment due to inadequate eligible prevented planting acres. This occurrence is extremely rare, but it affected a small number of producers in the 2019 crop year. To illustrate the rarity of these circumstances, for the reduction to apply under the previous regulation, all of the following must have been true for the producer:

(1) Planted a first crop that fails,

(2) Planted a second crop on the same acreage following the failed crop, and

(3) Exhausted eligible prevented planting acres available to pay a claim.

The underlying concern is that the same physical acres are subtracted twice from overall prevented planting eligible acres. To illustrate the inequity of the double subtraction, the following is a simple example of the previous provisions. A producer has 100 total acres of cropland (fields A & B) and intends to plant all 100 acres to corn. Based on production history, the producer also has 100 prevented planting eligible acres (50 for corn and 50 for soybeans). The producer plants 50 acres of corn in field A, resulting in 50 corn acres subtracted from eligible prevented planting acres. At this point, there are 50 soybean eligible prevented planting acres and zero corn eligible prevented planting acres. A flood destroys the 50 acres of corn in field A, the AIP determines it is not practical to replant, and the producer does not have to replant to retain insurance. The producer files a claim for indemnity for the crop loss and receives an indemnity for the field A 50 destroyed corn acres. Later, the producer plants the 50 acres in field A to soybeans that are not insured. The second planting of field A (uninsured soybeans) would result in the subtraction of 50 acres of eligible prevented planting acres of soybeans. This equates to 100 eligible prevented planting acres being subtracted from the same 50 physical acres (field A); leaving 0 eligible prevented planting acres remaining for the 50 physical acres prevented from planting in field B that remains unplanted.

FCIC is removing the double subtraction on field A by no longer subtracting the uninsured second planting from eligible prevented planting acres. This would allow a prevented planting payment on field B, if those acres were unable to be planted, and if other policy provisions for prevented planting claims are met.

To illustrate the inequity of the previous provisions in a different way, see the following scenarios below. These scenarios show the disparate treatment of two producers in the same situation, except that their 100 prevented planting eligible acres are for different crops. Scenario 1: Producer has 100 acres of corn prevented planting eligible acres and 0 acres of soybean prevented planting eligibility. There is no impact on prevented planting eligibility for field B. Since there are 0 acres of soybean eligible prevented planting acres, the 50 planted acres of uninsured soybeans (field A) would not be subtracted from prevented planting eligibility. In this case, the producer would remain eligible for a prevented planting payment on the 50 acres of corn (field B) that were prevented from being planted.

Martin Barbre,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 2020-26036 Filed 11-27-20; 8:45 am]

BILLING CODE 3410-08-P

The document is published in the Federal Register: https://www.federalregister.gov/documents/2020/11/30/2020-26036/area-risk-protection-insurance-regulations-common-crop-insurance-policy-basic-provisions-common-crop

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