Common Crop Insurance Regulations; Potato Provisions, 42761-42770 [06-6527]

Download as PDF 42761 Proposed Rules Federal Register Vol. 71, No. 145 Friday, July 28, 2006 This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. Federal Crop Insurance Corporation 7 CFR Part 457 RIN 0563–AC05 Executive Order 12866 Common Crop Insurance Regulations; Potato Provisions Federal Crop Insurance Corporation, USDA. ACTION: Proposed rule. AGENCY: The Federal Crop Insurance Corporation (FCIC) proposes to amend the Common Crop Insurance Regulations; Northern Potato Crop Insurance Provisions, Northern Potato Crop Insurance Quality Endorsement, Northern Potato Crop Insurance Processing Quality Endorsement, Potato Crop Insurance Certified Seed Endorsement, Northern Potato Crop Insurance Storage Coverage Endorsement, and the Central and Southern Potato 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 reduce vulnerability to fraud, waste and abuse. The changes are intended to apply for the 2008 and succeeding crop years. DATES: Written comments and opinions on this proposed rule will be accepted until close of business September 26, 2006 and will be considered when the rule is to be made final. ADDRESSES: Interested persons are invited to submit comments, titled ‘‘Potato Crop Insurance Provisions’’, by any of the following methods: • By Mail to: Director, Product Administration and Standards Division, Risk Management Agency, United States Department of Agriculture, 6501 Beacon Drive, Stop 0812, Room 421, Kansas City, MO 64133–4676. • E-mail: DirectorPDD@rma.usda.gov. • Federal eRulemaking Portal: https:// www.regulations.gov. Follow the instructions for submitting comments. sroberts on PROD1PC70 with PROPOSALS SUMMARY: 17:17 Jul 27, 2006 FOR FURTHER INFORMATION CONTACT: Elizabeth Lopez, Risk Management Specialist, Product Management, Product Administration and Standards Division, Risk Management Agency, at the Kansas City, MO, address listed above; telephone (816) 926–7730. SUPPLEMENTARY INFORMATION: DEPARTMENT OF AGRICULTURE VerDate Aug<31>2005 A copy of each response will be available for public inspection from 7 a.m. to 4:30 p.m., c.s.t. Monday through Friday except holidays at the above address. Jkt 208001 This 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 provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by OMB under control number 0563–0053 through November 30, 2007. E-Government Act Compliance FCIC is committed to complying with the E-Government Act, 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. 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 impact on a substantial number of small entities. Program requirements for the Federal crop insurance program are the same for all producers regardless of the size of their farming operation. For instance, all producers are required to submit an application and acreage report to establish their insurance guarantees and compute premium amounts, and all producers are required to submit a notice of loss and production information to determine the amount of an indemnity payment in the event of an insured cause of crop loss. Whether a producer has 10 acres or 1000 acres, there is no difference in the kind of information collected. To ensure crop insurance is available to small entities, the Federal Crop Insurance Act authorizes FCIC to waive collection of administrative fees from limited resource farmers. FCIC believes this waiver helps to ensure that small entities are given the same opportunities as large entities to manage their risks through the use of crop insurance. A Regulatory Flexibility Analysis has not been prepared since this regulation does not have an impact on small entities, and therefore, this regulation is exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 605). Federal Assistance Program This program is listed in the Catalog of Federal Domestic Assistance under No. 10.450. Executive Order 13132 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. 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 Executive Order 12988 This proposed 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 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\28JYP1.SGM 28JYP1 42762 Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / Proposed Rules 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 and 7 CFR part 400, subpart J for the informal administrative review process of good farming practices, as applicable, must be exhausted before any action against FCIC for judicial review may be brought. sroberts on PROD1PC70 with PROPOSALS 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 FCIC proposes to amend the Common Crop Insurance Regulations; Northern Potato Crop Insurance Provisions, Northern Potato Crop Insurance Quality Endorsement, Northern Potato Crop Insurance Processing Quality Endorsement, Potato Crop Insurance Certified Seed Endorsement, Northern Potato Crop Insurance Storage Coverage Endorsement, and Central and Southern Potato Crop Insurance Provisions. The documents listed above were last updated effective for the 1998 crop year in states where insurance is offered under the Northern Potato Crop Provisions and for the 1999 crop year in states where insurance is offered under the Central and Southern Potato Crop Provisions. Since that time, several requests have been made for changes to improve the coverage offered, address program integrity issues, simplify program administration and improve clarity of the policy provisions. The various requests and the actions, if any, taken in response to the request are included below. The proposed changes are as follows: 1. FCIC proposes to amend § 457.142, Northern Potato Crop Insurance Provisions as follows: a. FCIC is proposing to amend the introductory text to include Kansas and San Juan County, New Mexico, because growing and post harvest handling of production is similar to other areas currently covered by the Northern Potato Crop Provisions. FCIC is also proposing to allow the Special Provisions to include additional states or counties in which insurance can be provided under the Northern Potato Crop Provisions. This will allow FCIC to better meet the needs of producers by VerDate Aug<31>2005 17:17 Jul 27, 2006 Jkt 208001 more quickly making insurance available in other areas; b. FCIC is proposing to remove provisions regarding document priority because these provisions are now contained in the Basic Provisions; c. Section 1—FCIC is proposing to revise the definition of ‘‘Certified seed’’ to clarify that certified seed includes both seed used to produce a seed crop for the next crop year or a potato crop for harvest for commercial sale in the next crop year. This will clarify that certified seed must be used to produce the crop for both purposes and clarify the amount of production to count under the Potato Crop Insurance Certified Seed Endorsement. A definition of ‘‘Potato certified seed program’’ is being proposed because it is used in the definition of ‘‘Certified seed’’. FCIC is also proposing to revise the definition of ‘‘Grade inspection’’ to specify the standards that will be used to grade the potatoes. Since there are several grading standards that differ based on the intended use of the potato (i.e., chipping, processing, etc.), the policy needs to specify how these different standards will be applied for grading the potatoes. FCIC is also proposing to remove the definition of ‘‘reduction percentage’’ because the revised quality adjustment provisions no longer use the term. FCIC is also proposing to move the definition of ‘‘processor contract’’ from the Northern Potato Crop Provisions to the Northern Potato Crop Insurance Processing Quality Endorsement because the term is used only in that endorsement; d. Section 2(b)—FCIC is proposing to revise the amount of percentage of the price election used to calculate an indemnity when the crop is not harvested. Producer groups requested FCIC review harvesting costs to determine if the current adjustment to the price election for unharvested acreage is accurate. The Federal Crop Insurance Act authorizes a reduction in the indemnity paid that is proportional to the out-of-pocket expenses that are not incurred as a result of not harvesting the crop. To effectuate this reduction in indemnity, FCIC reduces the price election used to compute the indemnity for unharvested acreage. Under the current policy, 80 percent of the price election is used when calculating the indemnity for unharvested acreage. Using cost of production budgets prepared by the Cooperative State Research Education and Extension Service (CSREES), FCIC determined an average harvest cost (inputs associated with vine kill through hauling) of approximately 10 percent of the cost of production. Therefore, FCIC PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 is proposing the price election used to determine an indemnity for unharvested production be set at 90 percent of the price election. Sections 2(b) and 11(b) of the Northern Potato Crop Provisions and sections 3(b) and 12(b) of the Southern Potato Crop Provisions have also been revised to reflect this change; e. Section 8(c)—FCIC is proposing to revise the provisions to include the state of Kansas with other states having October 15 as the end of insurance period because this is the date by which harvest is usually completed in this state; f. Section 8(e)—FCIC is proposing to revise the provisions to include San Juan County, New Mexico with other states having October 31 as the end of insurance because this is the date by which harvest is usually completed in this county; g. Section 11(b)(7)—FCIC is proposing to revise the indemnity calculation example to incorporate the new percentage used to reduce the price election for unharvested acreage; h. Section 11(d)(1)(iv)—FCIC is proposing to revise the provisions to clarify that all unharvested production is subject to the price reduction used to determine the indemnity for unharvested acreage and qualifies for a quality adjustment. As currently drafted, it may not be clear that all unharvested production is subject to these provisions. Further, since unharvested production is eligible for the quality adjustments, potential production in acreage put to another use or abandoned should also be eligible for quality adjustment. FCIC also proposes to revise the cross references to the quality adjustment provisions; i. Section 11(e)(2)—FCIC is proposing to clarify that a grade inspection must be completed no later than 21 days after end of the insurance period. If the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable, samples must be obtained within 60 days from the end of the insurance period and a quality (grade) determination must occur within 21 days of sampling. To allow grade inspections to occur at later dates will lead to the potential to have quality adjustments based on other than insurable causes of loss that occur within the insurance period; j. FCIC also proposes to add section 11(e)(3) to the quality adjustment provisions to clarify that the producer must report the intended use of the potatoes so that the appropriate United States Standards can be applied. This will allow for a more accurate quality adjustment based on the disposition of the potatoes; E:\FR\FM\28JYP1.SGM 28JYP1 sroberts on PROD1PC70 with PROPOSALS Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / Proposed Rules k. Section 11(g)—FCIC is proposing to revise section 11(g) because the Office of Inspector General (OIG) and an RMA Compliance office recommended changes to the quality adjustment provisions. Section 11(g) provides the quality adjustment standards based on a certain number of days within which the potatoes are discarded, delivered, or there is an agreement on the price of potatoes (within 21 days of the end of the insurance period or 60 days if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable). Based on these standards, the amount of production counted as production to count is reduced. The production to count is used to determine whether an indemnity is due. Reports prepared by OIG and RMA Compliance indicated there were some cases in which producers retained production beyond the time period specified and then were able to sell more production than the amount of production used to determine the production to count. Therefore, FCIC is proposing changes to the quality adjustment procedures for situations in which damaged production is not sold within the applicable time period. In these cases, the amount of production to count will be the greater of the amount determined by dividing the sale price per cwt. of the production eligible for a quality adjustment by the price election and multiplying the result by the number of cwt. of production eligible for a quality adjustment, or the amount determined by reducing the production by a specified percentage factor based on the percent damage. By using the greater of these two amounts, the production will no longer be able to qualify for an adjustment based on the percentage factors contained in the policy and then later sold in a greater amount. The amount of production used to calculate the claim will be the amount actually sold. In addition, FCIC proposes to revise the percentages used for this purpose and the same factors will be used for damage resulting from tuber rot and for freeze. The current policy uses different factors for tuber rot and freeze and is complex to administer when there is a combination of such damage. Instead, FCIC has carefully considered the factors and is proposing new factors it believes are a balance between the two sets of current factors and should adequately reflect the value lost due to tuber rot and freeze; and l. FCIC proposes to add provisions to section 11(g) to clarify how discarded production will be adjusted. Currently, the provisions state that if production with freeze damage in excess of 17.9 percent is not discarded within 21 days VerDate Aug<31>2005 17:17 Jul 27, 2006 Jkt 208001 of the end of the insurance period, 15 percent of such production will be included as production to count. Now production that has more than 5.1 percent freeze damage and could not have been sold will receive a zero as production to count. However, such production must be destroyed before a claim can be settled. If the production could have been sold or was discarded more than 21 days after the end of the insurance period, the production will be adjusted under section 11(g)(2)(iii). This change treats freeze damage consistent with the manner in which tuber rot is currently adjusted and eliminates the additional complexity required by many different percentage standards. Any additional losses this change will cause will be included in the premium rating. 2. FCIC proposes to amend § 457.143, Northern Potato Crop Insurance Quality Endorsement as follows: a. FCIC is proposing to add a new section 1, and move the definition of ‘‘Percentage factor’’ currently in section 10 to section 1. This new format will conform to all other crop provisions that have the definitions first, which will make it easier to read; b. Section 4—FCIC is proposing to revise provisions to reflect the format and changes for the quality adjustment provisions in section 11(g) of the Northern Potato Crop Provisions; and c. Section 5—For the reasons stated above, FCIC is proposing to add provisions to clarify how discarded production will be adjusted. 3. FCIC proposes to revise § 457.144, Northern Potato Crop Insurance Processing Quality Endorsement as follows: a. Section 1—FCIC is proposing to add a new section 1, move the definition of ‘‘Percentage factor’’ currently in section 10 to section 1 and add definitions for ‘‘Broker,’’ ‘‘Processor,’’ and ‘‘Processor contract’’. This new format will conform to all the other crop provisions that have the definitions first, which will make it easier to read. Previously, the terms ‘‘Processor’’ and ‘‘Processor contract’’ were included in the endorsement but were not defined. Definitions are necessary to ensure a uniform meaning is provided for these terms, which are consistent with the definitions of such terms in other crop policies involving processing crops. The definition of ‘‘Broker’’ is added because FCIC recognizes that not all potatoes are sold directly to processors and instead the potatoes are sold through brokers. Subsequent sections will be redesignated as necessary; b. Section 2—FCIC is proposing to add a new section 2 that consolidates PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 42763 the provisions regarding eligibility from current sections 2, 3, 4 and 5, into one section to eliminate ambiguity. The new section 2 now contains the requirement that the producer must have a Northern Potato Crop Insurance Quality Endorsement in effect and the Northern Potato Crop Insurance Processing Quality Endorsement must be elected on or before the sales closing date. Further, FCIC is proposing to add a provision that specifies that if the producer cancels the Northern Potato Crop Insurance Quality Endorsement, the Northern Potato Crop Insurance Processing Quality Endorsement is automatically cancelled. The provision regarding the ability to cancel the Northern Potato Crop Insurance Processing Quality Endorsement for subsequent years has been added to this section because the other cancellation provisions are here and it is best to keep such provisions together. FCIC also proposes to add a requirement that the producer have a processor contract executed with a processor or broker as a condition of eligibility. This is implied in other sections but now it is clear that such a contract is a condition of eligibility for coverage; c. Redesignated section 5—FCIC is proposing to include processor contracts executed with brokers because this has become an increasingly common mechanism for producers to sell their potato production and without inclusion of these contracts, such producers would be without coverage. FCIC also proposes to add those provisions currently in section 6 because they also relate to the insurable acreage. Inclusion of all related provisions should improve the readability of the policy and remove ambiguities; d. Redsignated section 6—FCIC is proposing to revise the quality adjustment provisions for potatoes to include a standard for chipping potatoes. A producer group recommended including a quality standard specific to chipping potatoes in the Northern Potato Crop Insurance Processing Quality Endorsement. FCIC agrees such standard should be added. FCIC is proposing to use a standard based on an Agtron rating because this rating is commonly recognized by the potato industry as well as being referenced in the U.S. Standards for Grades of Potatoes for Processing or Chipping. FCIC is proposing to use an Agtron rating value of 58 because this appears to be an average threshold of what processors will accept. For the reasons stated above, FCIC is also proposing to revise the provisions to reflect the changes in the new quality E:\FR\FM\28JYP1.SGM 28JYP1 sroberts on PROD1PC70 with PROPOSALS 42764 Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / Proposed Rules adjustment provisions in the Northern Potato Crop Provisions. FCIC is also proposing to simplify the provisions and make other grammatical changes for readability; e. FCIC is proposing to add a new section 7 to clarify how discarded production will be adjusted for the same reasons stated above; and f. FCIC is proposing to combine the provisions in current sections 7 and 8 to specify that all quality determinations must be based on a grade inspection using the United States Standards for Grades of Potatoes for Processing and Chipping. 4. FCIC proposes to amend § 457.145, Potato Crop Insurance Certified Seed Endorsement as follows: a. Section 1—FCIC is proposing to revise the provisions to clarify that the Certified Seed Endorsement only extends the time period to discover damage beyond harvest that resulted from a cause of loss that occurred during the insurance period, it does not extend the insurance period and any new causes of loss that occur after harvest are not covered. Therefore, the additional premium paid for coverage under the Storage Coverage Endorsement will not apply; b. Section 2—FCIC is proposing to move the definition ‘‘potato certified seed program’’ to Northern Potato Crop Provisions because the term is used in the definition of certified seed; c. Section 6—FCIC also proposes to move the provisions currently in section 11 to section 6 and add new provisions to clarify that failure to meet any requirements under the potato seed certification program will be considered loss due to uninsured causes, which under section 8(d) means that such production is counted as production to count. This will ensure that coverage is only provided for potatoes that could have met the standards for certification if not for an insurable cause of loss; and d. Section 10—FCIC also proposes to clarify that coverage is not provided for failure to meet quality requirements for seed used to produce a subsequent seed crop. Certified seed can be used to produce a subsequent commercial crop or a subsequent seed crop. This endorsement only covers quality losses due to insurable causes of certified seed used to produce a subsequent commercial crop, not the subsequent seed crop. This is because certified seed that does not meet the quality standards for a subsequent seed crop generally still meets the requirements to be used for a commercial crop. 5. FCIC proposes to amend § 457.146, Northern Potato Crop Insurance Storage Coverage Endorsement as follows: VerDate Aug<31>2005 17:17 Jul 27, 2006 Jkt 208001 a. Section 5(a)(3)—FCIC is proposing to revise the provisions to include the Agtron standard for chipping potatoes for the reasons stated above; b. Section 5(c)—FCIC is proposing to revise the provisions to include provisions currently contained in section 5(d) because the provisions all relate to sampling and now provide the time frame such sampling must occur for all situations and who may conduct the sampling; and c. Producer groups recommended increasing the length of time coverage is provided under the Northern Potato Crop Insurance Storage Coverage Endorsement period. The current endorsement provides 60 days after the end of the insurance period to discover damage that occurred during the insurance period but does not become evident until a later time. To determine the feasibility of extending the storage period, the historic experience for policies with the Storage Coverage Endorsement was analyzed. A review of crop years from 1998 through 2003 indicated that for five of the six years, losses exceeded premiums collected under the Storage Coverage Endorsement. In addition, several potato industry experts state that virtually all damage that occurs within the covered insurance period (coverage ends upon harvest) will become apparent within 45 days after production is harvested. Therefore, based on loss experience to date and adequacy of the current coverage period, no time extension is proposed. 6. FCIC proposes to amend § 457.147, Central and Southern Potato Crop Insurance Provisions as follows: a. Introductory text—FCIC is proposing to revise to exclude San Juan County, New Mexico, and to allow for the Special Provisions to include states or counties in which insurance can be provided under the Central and Southern Potato Crop Insurance Provisions; b. FCIC is proposing to remove provisions regarding document priority because these are now contained in the Basic Provisions; c. Section 1—FCIC is proposing to revise the definition of ‘‘Certified seed’’ to clarify that certified seed includes both seed used to produce a seed crop for the next crop year or a potato crop for harvest for commercial sale in the next crop year. This will clarify that certified seed must be used to produce the crop for both purposes. The definition of ‘‘Potato certified seed program’’ is included because it is used in the definition of certified seed. FCIC is also proposing to revise the definition of ‘‘grade inspection’’ to specify the PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 standards that will be used to grade the potatoes. Since there are several grading standards that differ based on the intended use of the potato (i.e., chipping, processing, etc.), the policy needs to specify how these different standards will be applied for grading the potatoes; d. Section 3(b)—FCIC is proposing to revise the percent of the price election used to determine the indemnity for unharvested acreage from 80 to 90 percent; e. Section 4—FCIC is proposing to add an additional contract change date of October 31 for counties with a new January 31 cancellation date as specified below. This will allow sufficient time for affected producers to make informed decisions by the cancellation date; f. Section 5—FCIC is proposing to add an additional cancellation and termination date of January 31 for Delaware, Maryland, New Jersey, North Carolina, and Virginia. This change is being made to accurately reflect the growing cycle in these states; g. Section 12(b)—FCIC is proposing to revise the indemnity calculation example to incorporate the new percentage used to reduce the price election for unharvested acreage; and h. Section12(e)—FCIC is proposing to add the requirement that the producer provide notice of the intended use of the potato so the appropriate grading standard can be applied. Further, FCIC is proposing to revise the provisions to clarify that the same quality determinations apply for both harvested and unharvested production. List of Subjects in 7 CFR Part 547 Crop insurance, Potatoes, 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 effective for the 2008 and succeeding crop years to read 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(1), 1506(p). 2. Amend § 457.142 Northern potato crop insurance provisions as follows: a. Revise the introductory text; b. Remove the paragraph regarding document priority immediately preceding section 1 and revise the remaining paragraph below the heading ‘‘Northern Potato Crop Provisions’’ and before section 1; E:\FR\FM\28JYP1.SGM 28JYP1 Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / Proposed Rules c. Amend section 1 by revising the definition of ‘‘Certified seed’’ and ‘‘Grade inspection’’. Add definition of ‘‘Potato certified seed program’’, and remove the definitions of ‘‘Processor contract’’ and ‘‘Reduction percentage’’; d. Amend section 2 by revising paragraph (b); e. Amend section 8 by revising paragraphs (c) and (e); and f. Amend section 11 as follows: (1) Revise paragraph (b)(7); (2) Remove paragraph (d)(1)(iv), redesignate paragraph (d)(1)(v) as (d)(1)(iv) and revise it; (3) Revise paragraph (e)(2); (4) Add new paragraph (e)(3); (5) Revise section 11(g); and (6) Remove paragraph (h). The added and revised text reads as follows: sroberts on PROD1PC70 with PROPOSALS § 457.142 Northern potato crop insurance provisions The Northern Potato Crop Insurance Provisions for the 2008 and succeeding crop years are as follows: * * * * * These provisions will be applicable in: Alaska; Humboldt, Modoc, and Siskiyou Counties, California; Colorado; Connecticut; Idaho; Indiana; Iowa; Kansas; Maine; Massachusetts; Michigan; Minnesota; Montana; Nebraska; Nevada; San Juan County, New Mexico; New York; North Dakota; Ohio; Oregon; Pennsylvania; Rhode Island; South Dakota; Utah; Washington; Wisconsin; and Wyoming; and any other states or counties if allowed by the Special Provisions. * * * * * 1. Definitions * * * * * Certified seed. Potatoes that were entered into the potato certified seed program and that meet all requirements for production to be used to produce a seed crop for the next crop year or a potato crop for harvest for commercial uses in the next crop year. * * * * * Grade inspection. An inspection in which samples of production are obtained by us, or a party approved by us, prior to the sale, storage, or disposal of any lot of potatoes, or any portion of a lot of and the potatoes are evaluated and quality (grade) determinations are made by us, a laboratory approved by us, or a potato grader licensed or certified by the applicable State or the United States Department of Agriculture, in accordance with the United States Standards for Grades of Potatoes. The United States standards used to determine the quality (grade) deficiencies will be: (1) For potatoes VerDate Aug<31>2005 17:17 Jul 27, 2006 Jkt 208001 produced or sold for chipping, the United States Standards for Grades of Potatoes for Chipping; (2) for potatoes produced or sold for processing, the United States Standards for Grades of Potatoes for Processing; and (3) for all other potatoes, the United States Standards for Grades of Potatoes. The quantity and number of samples required will be determined in accordance with procedure issued by FCIC. * * * * * Potato certified seed program. The state program administered by a public agency responsible for the seed certification process within the state in which the seed is produced. * * * * * 2. Insurance Guarantees, Coverage Levels, and Prices for Determining Indemnities * * * * * (b) If the production from any acreage of the insured crop is not harvested, the price used to determine your indemnity will be 90 percent of your price election. This requirement is not applicable to the certified seed endorsement price election. * * * * * 8. Insurance Period * * * * * (c) October 15 in Colorado; Indiana; Iowa; Kansas; Michigan; Minnesota; Montana; Nevada; North Dakota; South Dakota; Utah; and Wisconsin. * * * * * (e) October 31 in Humboldt, Modoc, and Siskiyou Counties, California; Connecticut; Idaho; Massachusetts; San Juan County, New Mexico; New York; Ohio; Oregon; Pennsylvania; Rhode Island; and Washington. * * * * * 11. Settlement of Claim * * * * * (b) * * * (7) Multiplying the result of section 11(b)(6) by your share. For example: You have a 100 percent share in 100 harvested acres of potatoes in the unit, with a guarantee of 150 hundredweight per acre and a price election of $4.00 per hundredweight. You are only able to harvest 10,000 hundredweight. Your indemnity would be calculated as follows: (1) 100 acres × 150 hundredweight = 15,000 hundredweight guarantee; (2) 15,000 hundredweight × $4.00 price election = $60,000.00 value of guarantee; (4) 10,000 hundredweight × $4.00 price election = $40,000.00 value of production to count; PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 42765 (6) $60,000.00 – $40,000.00 = $20,000.00 loss; and (7) $20,000.00 × 100 percent = $20,000.00 indemnity payment. You also have a 100 percent share in 100 unharvested acres of potatoes in the same unit, with a guarantee of 150 hundredweight per acre and a price election of $3.60 per hundredweight. (The price election for unharvested acreage is 90.0 percent of your elected price election ($4.00 × 0.90 = $3.60.)) This unharvested acreage was appraised at 35 hundredweight per acre for a total of 3500 hundredweight as production to count. Your total indemnity for the harvested and unharvested acreage would be calculated as follows: (1) 100 acres × 150 hundredweight = 15,000 hundredweight guarantee for the harvested acreage, and 100 acres × 150 hundredweight = 15,000 hundredweight guarantee for the unharvested acreage; (2) 15,000 hundredweight guarantee × $4.00 price election = $60,000.00 value of guarantee for the harvested acreage, and 15,000 hundredweight guarantee × $3.60 price election = $54,000.00 value of guarantee for the unharvested acreage; (3) $60,000.00 + $54,000.00 = $114,000.00 total value of guarantee; (4) 10,000 hundredweight × $4.00 price election = $40,000.00 value of production to count for the harvested acreage, and 3500 hundredweight × $3.60 = $12,600.00 value of production to count for the unharvested acreage; (5) $40,000.00 + $12,600.00 = $52,600.00 total value of production to count; (6) $114,000.00 – $52,600.00 = $61,400.00 loss; and (7) $61,400.00 loss × 100 percent = $61,400.00 indemnity payment. * * * * * (d) * * * (1) * * * (iv) Unharvested production, including unharvested production on insured acreage that you intend to put to another use or acreage damaged by insurable causes and for which you cease to provide further care or abandon, if you and we agree on the appraised amount of production. Upon such agreement, the insurance period for that acreage will end when you put the acreage to another use or cease providing care for the crop. This unharvested production may be adjusted in accordance with sections 11(e), (f), and (g); and the value of all unharvested production will be calculated using the reduced price election determined in section 2(b). If agreement on the appraised amount of production is not reached: * * * * * E:\FR\FM\28JYP1.SGM 28JYP1 sroberts on PROD1PC70 with PROPOSALS 42766 Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / Proposed Rules (e) * * * (2) A grade inspection is completed no later than 21 days after the end of insurance period (if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable, samples must be obtained within 60 days of the end of insurance period and quality (grade) determinations must be completed with 21 days of sampling); and (3) Prior to any quality adjustment, you notify us of the intended use of the potatoes so the applicable United States Standards will be applied. * * * * * (g) Potato production to count that is eligible for quality adjustment, as specified in section 11(e), with 5.1 percent damage or more (by weight) will be determined as follows: (1) For potatoes for which a price is agreed upon between you and a buyer within 21 days of the end of insurance period (60 days of the end of insurance period if the Northern Potato Crop Insurance Storage Coverage endorsement is applicable), or that are delivered to a buyer within 21 days (60 days if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of production will be determined by: (i) Dividing the price received or that will be received per hundredweight by the highest price election designated in the Special Provisions or addendum thereto for the insured potato type (if the production is sold for a price lower than the value appropriate to and representative of the local market, we will determine the value of the production based on the price you could have received in the local market); and (ii) Multiplying the result (not to exceed 1.0) by the number of harvested hundredweight; or (2) For potatoes for which a price is not agreed upon between you and a buyer or are not delivered and no price is agreed upon within 21 days of the end of insurance period (60 days of the end of insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable) and that remain in storage 22 or more days after the end of insurance period (61 or more days after the end of insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of production will be the greater of: (i) The amount determined by: (A) Dividing the price that is received, or will be received after the end of the applicable insurance period, per hundredweight by the highest price election designated in the Special VerDate Aug<31>2005 17:17 Jul 27, 2006 Jkt 208001 Provisions or addendum thereto for the insured potato type (if the production is sold for a price lower than the value appropriate to and representative of the local market, we will determine the value of the production based in the price you could have received in the local market); and (B) Multiplying the result of section 11(g)(2)(i)(A) (not to exceed 1.0) by the number of harvested hundredweight; or (ii) The amount of production determined by: (A) Reducing any harvested or appraised production: (1) By 0.1 percent for 0.1 percent damage through 5.0 percent; (2) By 0.5 percent for each 0.1 percent of damage from 5.1 percent through 6.0 percent; (3) By 1.0 percent for each 0.1 percent of damage from 6.1 through 13.5 percent; or (B) Including 15 percent of the production when damage is in excess of 13.5 percent. (iii) For any production discarded: (A) Within 21 days after the end of insurance period (60 days after the end of the insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of production to count will be: (1) Zero if we determine the production could not have been sold; or (2) Determined in accordance with section 11(g)(2)(ii) if we determine the production could have been sold; or (B) Later 21 days after the end of insurance period (60 days after the end of the insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of production to count will be adjusted in accordance with section 11(g)(2)(ii). * * * * * 3. Amend § 457.143, Northern potato crop insurance quality endorsement, as follows: a. Revise the introductory text; b. Redesignate sections 5 through 8 as 7 through 10; c. Redesiginate sections 1 through 4, as sections 2 through 5, and add new section 1; d. Revise redesignated section 5; and e. Add a new section 6. The revised and added text reads as follows: § 457.143 Northern potato crop insurance quality endorsement. The Northern Potato Crop Insurance Quality Endorsement Provisions for the 2008 and succeeding crop years are as follows: * * * * * 1. Definitions Percentage factor. The historical average percentage of potatoes grading PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 U.S. No. 2 or better, by type, determined from your records. If at least 4 continuous years of records are available, the percentage factor will be the simple average of the available records not to exceed 10 years. If less than 4 years of records are available, the percentage factor will be determined based on a combination of your records and the percentage factor contained in the Special Provisions so that such a combination would be the functional equivalent of 4 years of records. * * * * * 5. We will adjust the production to count determined in accordance with section 15 of the Basic Provisions and section 11 of the Northern Potato Crop Provisions for potatoes that do not meet U.S. No. 2 grade requirements from unharvested acreage or harvested acreage that is stored or is marketed after a grade inspection due to: (a) Internal defects as long as the number of potatoes with such defects are in excess of the tolerances allowed for the U.S. No. 2 grade potatoes on a lot basis and are not separable from undamaged production using methods used by the packers or processors to whom you normally deliver your potato production as follows: (1) For potatoes for which a price is agreed upon between you and a buyer within 21 days of the end of insurance period (60 days of the end of insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), or that are delivered to a buyer within 21 days of the end of insurance period (60 days of the end of insurance period if the Northern Potato Crop Insurance Storage Coverage endorsement is applicable), the amount of production will be determined by: (i) Dividing the price received or that will be received per hundredweight by the highest price election designated in the Special Provisions or addendum thereto for the insured potato type (if the production is sold for a price lower than the value appropriate to and representative of the local market, we will determine the value of the production based on the price you could have received in the local market); and (ii) Multiplying the result (not to exceed 1.0) by the number of harvested hundredweight; or (2) For potatoes for which a price is not agreed upon between you and a buyer or are not delivered and no price is agreed upon within 21 days of the end of insurance period (60 days of the end of insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable) and that E:\FR\FM\28JYP1.SGM 28JYP1 sroberts on PROD1PC70 with PROPOSALS Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / Proposed Rules remain in storage 22 or more days of the end of insurance period (61 or more days of the end of insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of production will be the greater of: (i) The amount of production determined by: (A) Dividing the price that is received, or will be received after the end of the applicable insurance period, per hundredweight by the highest price election designated in the Special Provisions or addendum thereto for the insured potato type (if the production is sold for a price lower than the value appropriate to and representative of the local market, we will determine the value of the production based on the price you could have received in the local market); and (B) Multiplying the result of section 5(a)(2)(i)(A) (not to exceed 1.0) by the number of hundredweight of sold production (Adjustment under section 5(a)(2)(i)(A) will not be performed if it already has been performed under the terms of section 11(g)(2) of the Northern Potato Crop Provisions); or (ii) The amount of production determined as follows: (A) The combined weight of sampled potatoes that grade U.S. No. 2 or better (the amount of potatoes grading U.S. No. 2 will be based on a grade inspection completed no later than 21 days after the end of insurance period (if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable, samples must be obtained within 60 days of the end of insurance period and a grade inspection completed within 21 days of sampling) and are damaged by freeze or tuber rot will be divided by the total sample weight; (B) The percentage determined in section 5(a)(2)(ii)(A) will be divided by the applicable percentage factor determined in accordance with section 1; and (C) The result of section 5(a)(2)(ii)(B) will be multiplied by the amount of production to count determined in accordance with section 15 of the Basic Provisions and section 11 of the Northern Potato Crop Provisions. (b) Factors other than those specified in section 5(a), in accordance with section 5(a)(2)(ii). 6. For any production discarded that qualifies for adjustment in accordance with section 6(a): (a) Within 21 days after the end of insurance period (60 days after the end of the insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of production to count will be: VerDate Aug<31>2005 17:17 Jul 27, 2006 Jkt 208001 (1) Zero if we determine the production could not have been sold; or (2) Determined in accordance with section 5(a)(2)(ii) if we determine the production could have been sold; or (b) Later than 21 days after the end of insurance period (60 days after the end of the insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of production to count will be adjusted in accordance with section 5(a)(2)(ii). * * * * * 4. Revise § 457.144, Northern potato crop insurance processing quality endorsement provisions in its entirety to read as follows: § 457.144 Northern potato crop insurance processing quality endorsement. The Northern Potato Crop Insurance Processing Quality Endorsement Provision for the 2008 and succeeding crop years are as follows: 1. Definitions. Broker. Any business enterprise regularly engaged in the buying and selling of processing potatoes, that possesses all licenses and permits as required by the state in which it operates, and when required, has the necessary facilities or the contractual access to such facilities, with enough equipment to accept and transfer processing potatoes to the broker within a reasonable amount of time after harvest or the typical storage period. Percentage factor. The historical average percent of potatoes grading U.S. No. 2 or better, by type, determined from your records. If a least 4 continuous years of records are available, the percentage factor will be the simple average of the available records not to exceed 10 years. If less than 4 years of records are available, the percentage factor will be determined based on a combination of your records and the percentage factor contained in the Special Provisions so that such combination would be the functional equivalent of 4 years of records. Processor. Any business enterprise regularly engaged in processing potatoes for human consumption, that possesses all licenses and permits for processing potatoes required by the state in which it operates, and that possesses facilities, or has contractual access to such facilities, with enough equipment to accept and process processing potatoes grown under a processing contract within a reasonable amount of time after harvest or the typical storage period. Processor contract. A written agreement between the producer and processor, or between a producer and a broker, containing at a minimum: PO 00000 Frm 00007 Fmt 4702 Sfmt 4702 42767 (a) The producer’s commitment to plant and grow processing potatoes, and to deliver the potato production to the processor or broker; (b) The processor’s or broker’s commitment to purchase all the production stated in the processing contract; and (c) A price or pricing mechanism to determine the value of delivered production. 2. To be eligible for coverage under this endorsement, you must have a: (a) Northern Potato Crop Insurance Quality Endorsement in place and elect this endorsement on or before the sales closing date for the initial crop year in which you wish to insure your potatoes under this endorsement; (1) Cancellation of your Northern Potato Crop Insurance Quality Endorsement will automatically result in cancellation of this endorsement; (2) This endorsement may be canceled by either you or us for any succeeding crop year by giving written notice to the other party on or before the cancellation date; and (b) Processor contract executed with a processor or broker for the potato types insured under this endorsement that is applicable for the crop year; (1) A copy of the processor contract must be submitted to us on or before the acreage reporting date for potatoes: (2) Failure to timely provide the processor contract will result in no coverage under this endorsement and coverage will be provided only under the terms of the Northern Potato Crop Insurance and Northern Potato Crop Insurance Quality Endorsement. 3. In return for payment of the additional premium designated in the actuarial documents, this endorsement is attached to and made part of your Northern Potato Crop Provisions and Northern Potato Crop Insurance Quality Endorsement subject to the terms and conditions described herein. In the event of a conflict between the Northern Potato Crop Provisions or Northern Potato Crop Insurance Quality Endorsement and this endorsement, this endorsement will control. 4. All terms of the Northern Potato Crop Insurance Quality Endorsement not modified by this endorsement will be applicable to acreage covered under this endorsement. 5. If you elect this endorsement, all insurable acreage of production under contract with the processor or broker must be insured under this endorsement: (a) When the processor contract requires the processor or broker to purchase a stated amount of production, rather than all of the production from a E:\FR\FM\28JYP1.SGM 28JYP1 sroberts on PROD1PC70 with PROPOSALS 42768 Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / Proposed Rules stated number of acres, the insurable acreage will be determined by dividing the stated amount of production by the approved yield for the acreage; and (b) The number of acres insured under this endorsement will not exceed the actual number of acres planted to the potato types needed to fulfill the contract. 6. In lieu of the provisions contained in section 5 of the Northern Potato Crop Insurance Quality Endorsement, production to count determined in accordance with section 15 of the Basic Provisions and section 11 of the Northern Potato Crop Provisions will be adjusted in accordance with sections 6(a) or 6(b), whichever is applicable, from unharvested acreage or harvested acreage that is stored or is marketed after a grade inspection conducted in accordance with section 8 as follows: (a) The production to count for potatoes rejected by a processor or broker because they do not meet U.S. No. 2 grade requirements due to internal defects as long as the number of potatoes with such defects are in excess of the tolerance allowed for U.S. No. 2 grade potatoes on a lot basis and are not separable from undamaged production using methods used by the potato packers to whom you normally deliver your potato production; a specific gravity lower than the lesser of 1.074 or the minimum acceptable amount specified in the processor contract; a fry color of No. 3 or darker due to either sugar exceeding 10 percent or sugar ends exceeding 19 percent; or an Agtron rating lower than the lesser of 58 or the minimum acceptable amount specified in the processor contact will be determined as follows: (1) For potatoes for which a price is agreed upon between you and a buyer within 21 days of the end of insurance period (60 days of the end of insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), or that are delivered to a buyer within 21 days of the end of insurance period (60 days of the end of insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of production will be determined by: (i) Dividing the price received or that will be received per hundredweight by the highest price election designated in the Special Provisions or addendum thereto for the insured potato type (If the production is sold for a price lower than the value appropriate to and representative of the local market, we will determine the value of the production based on the price you could have received in the local market); and VerDate Aug<31>2005 17:17 Jul 27, 2006 Jkt 208001 (ii) Multiplying the result of section 6(a)(1)(i) (not to exceed 1.0) by the number of hundredweight; or (2) For potatoes for which a price is not agreed upon between you and a buyer or are not delivered and no price is agreed upon within 21 days of the end of insurance period (60 days of the end of insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable) and that remain in storage 22 or more days after the end of insurance period (61 or more days after the end of insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of production will be the greater of: (i) The amount of production determined by: (A) Dividing the price that is received, or will be received after the end of the applicable insurance period, per hundredweight by the highest price election designated in the Special Provisions or addendum thereto for the insured potato type (if the production is sold for a price lower than the value appropriate to and representative of the local market, we will determine the value of the production based on the price you could have received in the local market); and (B) Multiplying the result of section 6(a)(2)(i)(A) (not to exceed 1.0) by the number of hundredweight of sold production (Adjustment under section 6(a)(2)(i) will not be performed if it already has been performed under the terms of section 11(g)(2) of the Northern Potato Crop Provisions): or (ii) The amount of production determined as follows: (A) The combined weight of sampled potatoes that grade U.S. No. 2 or better, and that are damaged by freeze or tuber rot will be based on a grade inspection: (1) The amount of potatoes grading U.S. No. 2 or better will be based on a grade inspection from samples taken no later than 21 days after the end of insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is not applicable; (2) If the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable, samples must be obtained within 60 days of the end of insurance period and quality (grade) determination completed within 21 days of sampling. (B) The percentage determined in section 6(a)(2)(ii)(A) will be divided by the applicable percentage factor; and (C) The result of section 6(a)(2)(ii)(B) will be multiplied by the amount of production to count determined in accordance with section 15 of the Basic PO 00000 Frm 00008 Fmt 4702 Sfmt 4702 Provisions and section 11 of the Northern Potato Crop Provisions. (b) The production to count for potatoes rejected by the processor or broker due to factors other than those specified in section 6(a) will be adjusted in accordance with section 6(a)(2)(ii). 7. For any production that qualifies for adjustment in accordance with section 6(a) and that is discarded: (a) Within 21 days after the end of insurance period (60 days after the end of the insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of production to count will be: (1) Zero if we determine the production could not have been sold; or (2) Determined in accordance with section 6(a)(2)(ii) if we determine the production could have been sold; or (b) Later than 21 days after the end of insurance period (60 days after the end of the insurance period if the Northern Potato Crop Insurance Storage Coverage Endorsement is applicable), the amount of will production to count will be adjusted in accordance with section 6(a)(2)(ii). 8. All quality determinations must be based upon a grade inspection using the United States Standards for Grades of Potatoes for Processing or Chipping. 9. The actuarial documents may provide ‘‘U.S. No. 1 grade’’ in place of ‘‘U.S. No. 2 grade’’ as used in this endorsement. If both U.S. No. 1 and 2 grades are available in the actuarial documents, you may elect U.S. No. 1 or 2 grade by potato type or group, if separate types or groups are specified in the Special Provisions. 5. Amend § 457.145, Potato crop insurance certified seed endorsement, as follows: a. Revise the introductory text; b. Revise section 1; c. Remove section 2, and redesignate sections 3 through 11 as 2 through 10; d. Revise redesignated section 6; and e. Revise redesignated section 10. The added and revised text reads as follows: § 457.145 Potato crop insurance certified seed endorsement. The Potato Crop Insurance Certified Seed Endorsement Provisions for the 2008 and succeeding crop years are as follows: * * * * * 1. In return for payment of the additional premium designated in the actuarial documents, this endorsement is attached to and made part of your Northern Potato Crop Provisions subject to the terms and conditions described herein. Any additional premium paid for coverage under the Northern Potato E:\FR\FM\28JYP1.SGM 28JYP1 Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / Proposed Rules Crop Insurance Storage Coverage Endorsement will not apply to the additional coverage provided under the terms of this endorsement. In the event of a conflict between the Northern Potato Crop Provisions and this endorsement, this endorsement will control. * * * * * 6. All potatoes insured for certified seed production must be produced and managed in accordance with the regulations, standards, practices, and procedures required for certification under the potato certified seed program. Any production that does not qualify as certified seed because of varietal mixing or your failure to meet any requirements under the potato certified seed program will be considered as lost due to uninsured causes. * * * * * 10. Failure to meet any requirements for seed to be used to produce a subsequent seed crop will not be covered. All the production that meets requirements for certified seed used to produce a commercial crop will be included in production to count. 6. Amend § 457.146 Northern potato crop insurance storage coverage endorsement as follows: a. Revise the introductory text; and b. Amend section 5 by revising the first sentence, removing paragraph (d) and revising paragraphs (a)(3) and (c). The revised text reads as follows: sroberts on PROD1PC70 with PROPOSALS § 457.146 Northern potato crop insurance storage coverage endorsement. The Northern Potato Crop Insurance Storage Coverage Endorsement Provisions for the 2008 and succeeding crop years are as follows: * * * * * 5. In lieu of section 9(b)(1) of the Northern Potato Crop Provisions, the extended coverage provided by this endorsement will be applicable but only if: (a) * * * (3) A specific gravity lower than the lesser of 1.074 or the minimum acceptable amount specified in the processor contract, or a fry color of No. 3 or darker due to either sugar exceeding 10 percent or sugar ends exceeding 19 percent, or an Agtron rating lower than the lesser of 58 or the minimum acceptable amount specified in the processor contract. This coverage is applicable only to production covered under the Northern Potato Crop Insurance Processing Quality Endorsement. * * * * * VerDate Aug<31>2005 17:17 Jul 27, 2006 Jkt 208001 (c) The percentage of production that has any of the quality deficiencies specified in section 5(a) is determined based on samples obtained no later than 60 days after the end of the insurance period and the potatoes are evaluated and quality (grade) determinations are made by us, a laboratory approved by us, a potato grader licensed or certified by the applicable State or the United States Department of Agriculture, or us, in accordance with the United States Standards for Grades of Potatoes; (1) Samples of damaged production must be obtained by us or a party approved by us prior to the sale or disposal of any lot of potatoes; and (2) If production is not sold or disposed of within 60 days of the end of insurance period, samples must be obtained within 60 days of the end of insurance period and a quality (grade) determination must be completed within 21 days of sampling. 7. Amend § 457.147, Central and southern potato crop insurance provisions as follows: a. Revise the introductory text; b. Remove the paragraph regarding document priority immediately preceding section 1 and revise the remaining paragraph below the heading ‘‘Central and Southern Potato Crop Provisions’’ and before section 1; c. Amend section 1 by revising the definition of ‘‘Certified seed’’ and ‘‘Grade inspection’’, and adding a new definition for ‘‘Potato certified seed program’’; d. Amend section 3 by revising paragraph (b); e. Amend section 4 by redesignating the current paragraph (c) as paragraph (d) and adding a new paragraph (c); f. Revise section 5; and g. Amend section 12 as follows: (1) Revise paragraph (b)(7); and (2) Revise paragraph (e) in its entirety. The added and revised text reads as follows: § 457.147 Central and southern potato crop insurance provisions. The Central and Southern Potato Crop Insurance Provisions for the 2008 and succeeding crop years are as follows: * * * * * These provisions will be applicable in Alabama; Arizona; all California counties except Humboldt, Modoc, and Siskiyou; Delaware; Florida; Georgia; Maryland; Missouri; New Jersey; all New Mexico counties except San Juan; North Carolina; Oklahoma; Texas and Virginia; and other states or counties if allowed by the Special Provisions. * * * * * PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 42769 1. Definitions * * * * Certified seed. Potatoes that were entered into the potato certified seed program and that meet all requirements for production to be used to produce a seed crop for the next year or a potato crop for harvest for commercial uses in the next crop year. * * * * * Grade inspection. An inspection in which samples of production are obtained by us, or a party approved by us, prior to the sale, storage, or disposal of any lot of potatoes, or any portion of a lot and the potatoes are evaluated and quality (grade) determinations are made by us, a laboratory approved by us, or a potato grader licensed or certified by the applicable State or the United States Department of Agriculture, in accordance with the United States Standards for Grades of Potatoes. The United States standards used to determine the quality (grade) deficiencies will be: (1) For potatoes produced or sold for chipping, the United States Standards for Grades of Potatoes for Chipping; (2) for potatoes produced or sold for processing, the United States Standards for Grades of Potatoes for Processing; and (3) for all other potatoes, the United States Standards for Grades of Potatoes. The quantity and number of samples required will be determined in accordance with procedure issued by FCIC. * * * * * Potato certified seed program. The state program administered by a public agency responsible for the seed certification process within the state in which the seed is produced. * * * * * 3. Insurance Guarantees, Coverage Levels, and Prices for Determining Indemnities. * * * * * (b) If the production from any acreage of the insured crop is not harvested, the price used to determine your indemnity will be 90 percent of your price election. * * * * * 4. Contract Changes * * * * * (c) October 31 preceding the cancellation date for counties with a January 31 cancellation date; and * * * * * 5. Cancellation and Termination Dates In accordance with section 2 of the Basic Provisions, the cancellation and termination dates are: * E:\FR\FM\28JYP1.SGM 28JYP1 42770 Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / Proposed Rules State and county Dates Pinellas, Hillsborough, Polk, Oseola, and Brevard Counties, Florida, and all Florida counties lying south thereof ....................... Arizona; all California counties; and all Texas counties except Bailey, Castro, Dallam, Deaf Smith, Floyd, Gaines, Hale, Hartley, Haskell, Knox, Lamb, Parmer, Swisher, and Yoakum. Alabama; Georgia; Missouri; and All Florida Counties except Pinellas, Hillsborough, Polk, Oseola, and Brevard Counties, Florida, and all Florida counties to the south thereof. Delaware; Maryland; New Jersey; North Carolina; and Virginia ...................................................................................................... Oklahoma; and Haskell and Knox Counties, Texas ........................................................................................................................ Bailey, Castro, Dallam, Deaf Smith, Floyd, Gaines, Hale, Hartley, Lamb, Parmer, Swisher, and Yoakum counties, Texas; and New Mexico. sroberts on PROD1PC70 with PROPOSALS * * * * * 12. Settlement of Claim. * * * * * (b) * * * (7) Multiplying the result of section 12(b)(6) by your share. For example: You have a 100 percent share in 100 harvested acreage acres of potatoes in the unit, with a guarantee of 150 hundredweight per acre and a price election of $4.00 per hundredweight. You are only able to harvest 10,000 hundredweight. Your indemnity would be calculated as follows: (1) 100 acres × 150 hundredweight = 15,000 hundredweight guarantee; (2) 15,000 hundredweight × $4.00 price election = $60,000.00 value of guarantee; (4) 10,000 hundredweight × $4.00 price election = $40,000.00 value of production to count; (6) $60,000.00 ¥ $40,000.00 = $20,000.00 loss; and (7) $20,000.00 × 100 percent = $20,000.00 indemnity payment. You also have a 100 percent share in 100 unharvested acres of potatoes in the same unit, with a guarantee of 150 hundredweight per acre and a price election of $3.60 per hundredweight. (The price election for unharvested acreage is 90.0 percent of your elected price election ($4.00 x 0.90 = $3.60.)) This unharvested acreage was appraised at 35 hundredweight per acre for a total of 3500 hundredweight as production to count. Your total indemnity for the harvested and unharvested acreage would be calculated as follows: (1) 100 acres × 150 hundredweight = 15,000 hundredweight guarantee for the harvested acreage, and 100 acres × 150 hundredweight = 15,000 hundredweight guarantee for the unharvested acreage; (2) 15,000 hundredweight guarantee × $4.00 price election = $60,000.00 value of guarantee for the harvested acreage, and 15,000 hundredweight guarantee × $3.60 price election = $54,000.00 value of guarantee for the unharvested acreage; (3) $60,000.00 + $54,000.00 = $114,000.00 total value of guarantee; VerDate Aug<31>2005 17:17 Jul 27, 2006 Jkt 208001 (4) 10,000 hundredweight × $4.00 price election = $40,000.00 value of production to count for the harvested acreage, and 3500 hundredweight × $3.60 = $12,600.00 value of production to count for the unharvested acreage; (5) $40,000.00 + $12,600.00 = $52,600.00 total value of production to count; (6) $114,000.00 ¥ $52,600.00 = $61,400.00 loss; and (7) $61,400.00 loss × 100 percent = $61,400.00 indemnity payment. * * * * * (e) With the exception of production with external defects, only marketable lots of mature potatoes will be production to count for loss adjustment purposes: (1) Production not meeting the standards for grading U.S. No. 2 due to external defects will be determined on an individual basis for all harvested and unharvested potatoes if we determine it is or would be practical to separate the damaged production; (2) All determinations must be based upon a grade inspection; and (3) Prior to any grade inspection, you must notify us of the intended use of the potatoes so the applicable United States Standard will be applied. (4) Marketable lots of potatoes will include any lot of potatoes that is: (i) Stored; (ii) Sold as seed; (iii) Sold for human consumption; or (iv) Harvested and not sold or that is appraised if such lots meet the standards for grading U.S. No. 2 or better on a sample basis. (5) Marketable lots will also include any potatoes that we determine: (i) Could have been sold for seed or human consumption in the general marketing area; (ii) Were not sold as a result of uninsured causes including, but not limited to, failure to meet chipper or processor standards for fry color or specific gravity; or (iii) Were disposed of without our prior written consent and such disposition prevented our determination of marketability. (6) Unless included in section 12(e)(4) or (5), a potato lot will not be PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 September 30. November 30. December 31. January 31. February 28. March 15. considered marketable if, due to insurable causes of damage, it: (i) Is partially damaged, and is salvageable only for starch, alcohol, or livestock feed; (ii) Does not meet the standards for grading U.S. No. 2 or better due to internal defects; or (iii) Does not meet the standards for grading U.S. No. 2 or better due to external defects, and it is not practical to separate the damaged production. * * * * * Signed in Washington, DC, on July 21, 2006. James Callan, Acting Manager, Federal Crop Insurance Corporation. [FR Doc. 06–6527 Filed 7–27–06; 8:45 am] BILLING CODE 3410–08–P DEPARTMENT OF AGRICULTURE Federal Crop Insurance Corporation 7 CFR Part 457 RIN 0563–AC02 Common Crop Insurance Regulations; Fresh Market Sweet Corn Crop Insurance Provisions Federal Crop Insurance Corporation, USDA. ACTION: Proposed rule with request for comments. AGENCY: SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to amend its Fresh Market Sweet Corn Crop Insurance Provisions. The intended effect of this action is to provide policy changes to allow for the expansion of fresh market sweet corn coverage into areas where the crop is produced and when provided in the actuarial documents, and allow coverage for fresh market sweet corn when it is marketed through direct marketing. This change will be applicable for the 2008 and succeeding crop years. DATES: Written comments and opinions on this proposed rule will be accepted until close of business September 26, 2006 and will be considered when the E:\FR\FM\28JYP1.SGM 28JYP1

Agencies

[Federal Register Volume 71, Number 145 (Friday, July 28, 2006)]
[Proposed Rules]
[Pages 42761-42770]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-6527]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / 
Proposed Rules

[[Page 42761]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AC05


Common Crop Insurance Regulations; Potato Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to 
amend the Common Crop Insurance Regulations; Northern Potato Crop 
Insurance Provisions, Northern Potato Crop Insurance Quality 
Endorsement, Northern Potato Crop Insurance Processing Quality 
Endorsement, Potato Crop Insurance Certified Seed Endorsement, Northern 
Potato Crop Insurance Storage Coverage Endorsement, and the Central and 
Southern Potato 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 reduce 
vulnerability to fraud, waste and abuse. The changes are intended to 
apply for the 2008 and succeeding crop years.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business September 26, 2006 and will be 
considered when the rule is to be made final.

ADDRESSES: Interested persons are invited to submit comments, titled 
``Potato Crop Insurance Provisions'', by any of the following methods:
     By Mail to: Director, Product Administration and Standards 
Division, Risk Management Agency, United States Department of 
Agriculture, 6501 Beacon Drive, Stop 0812, Room 421, Kansas City, MO 
64133-4676.
     E-mail: DirectorPDD@rma.usda.gov.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
    A copy of each response will be available for public inspection 
from 7 a.m. to 4:30 p.m., c.s.t. Monday through Friday except holidays 
at the above address.

FOR FURTHER INFORMATION CONTACT: Elizabeth Lopez, Risk Management 
Specialist, Product Management, Product Administration and Standards 
Division, Risk Management Agency, at the Kansas City, MO, address 
listed above; telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This 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 provisions of the Paperwork Reduction Act of 1995 
(44 U.S.C. chapter 35), the collections of information in this rule 
have been approved by OMB under control number 0563-0053 through 
November 30, 2007.

E-Government Act Compliance

    FCIC is committed to complying with the E-Government Act, 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 
impact on a substantial number of small entities. Program requirements 
for the Federal crop insurance program are the same for all producers 
regardless of the size of their farming operation. For instance, all 
producers are required to submit an application and acreage report to 
establish their insurance guarantees and compute premium amounts, and 
all producers are required to submit a notice of loss and production 
information to determine the amount of an indemnity payment in the 
event of an insured cause of crop loss. Whether a producer has 10 acres 
or 1000 acres, there is no difference in the kind of information 
collected. To ensure crop insurance is available to small entities, the 
Federal Crop Insurance Act authorizes FCIC to waive collection of 
administrative fees from limited resource farmers. FCIC believes this 
waiver helps to ensure that small entities are given the same 
opportunities as large entities to manage their risks through the use 
of crop insurance. A Regulatory Flexibility Analysis has not been 
prepared since this regulation does not have an impact on small 
entities, and therefore, this regulation is exempt from the provisions 
of the Regulatory Flexibility Act (5 U.S.C. 605).

Federal Assistance Program

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

Executive Order 12372

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

Executive Order 12988

    This proposed 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

[[Page 42762]]

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 and 7 CFR part 400, 
subpart J for the informal administrative review process of good 
farming practices, as applicable, 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

    FCIC proposes to amend the Common Crop Insurance Regulations; 
Northern Potato Crop Insurance Provisions, Northern Potato Crop 
Insurance Quality Endorsement, Northern Potato Crop Insurance 
Processing Quality Endorsement, Potato Crop Insurance Certified Seed 
Endorsement, Northern Potato Crop Insurance Storage Coverage 
Endorsement, and Central and Southern Potato Crop Insurance Provisions.
    The documents listed above were last updated effective for the 1998 
crop year in states where insurance is offered under the Northern 
Potato Crop Provisions and for the 1999 crop year in states where 
insurance is offered under the Central and Southern Potato Crop 
Provisions. Since that time, several requests have been made for 
changes to improve the coverage offered, address program integrity 
issues, simplify program administration and improve clarity of the 
policy provisions. The various requests and the actions, if any, taken 
in response to the request are included below.
    The proposed changes are as follows:
    1. FCIC proposes to amend Sec.  457.142, Northern Potato Crop 
Insurance Provisions as follows:
    a. FCIC is proposing to amend the introductory text to include 
Kansas and San Juan County, New Mexico, because growing and post 
harvest handling of production is similar to other areas currently 
covered by the Northern Potato Crop Provisions. FCIC is also proposing 
to allow the Special Provisions to include additional states or 
counties in which insurance can be provided under the Northern Potato 
Crop Provisions. This will allow FCIC to better meet the needs of 
producers by more quickly making insurance available in other areas;
    b. FCIC is proposing to remove provisions regarding document 
priority because these provisions are now contained in the Basic 
Provisions;
    c. Section 1--FCIC is proposing to revise the definition of 
``Certified seed'' to clarify that certified seed includes both seed 
used to produce a seed crop for the next crop year or a potato crop for 
harvest for commercial sale in the next crop year. This will clarify 
that certified seed must be used to produce the crop for both purposes 
and clarify the amount of production to count under the Potato Crop 
Insurance Certified Seed Endorsement. A definition of ``Potato 
certified seed program'' is being proposed because it is used in the 
definition of ``Certified seed''. FCIC is also proposing to revise the 
definition of ``Grade inspection'' to specify the standards that will 
be used to grade the potatoes. Since there are several grading 
standards that differ based on the intended use of the potato (i.e., 
chipping, processing, etc.), the policy needs to specify how these 
different standards will be applied for grading the potatoes. FCIC is 
also proposing to remove the definition of ``reduction percentage'' 
because the revised quality adjustment provisions no longer use the 
term. FCIC is also proposing to move the definition of ``processor 
contract'' from the Northern Potato Crop Provisions to the Northern 
Potato Crop Insurance Processing Quality Endorsement because the term 
is used only in that endorsement;
    d. Section 2(b)--FCIC is proposing to revise the amount of 
percentage of the price election used to calculate an indemnity when 
the crop is not harvested. Producer groups requested FCIC review 
harvesting costs to determine if the current adjustment to the price 
election for unharvested acreage is accurate. The Federal Crop 
Insurance Act authorizes a reduction in the indemnity paid that is 
proportional to the out-of-pocket expenses that are not incurred as a 
result of not harvesting the crop. To effectuate this reduction in 
indemnity, FCIC reduces the price election used to compute the 
indemnity for unharvested acreage.
    Under the current policy, 80 percent of the price election is used 
when calculating the indemnity for unharvested acreage. Using cost of 
production budgets prepared by the Cooperative State Research Education 
and Extension Service (CSREES), FCIC determined an average harvest cost 
(inputs associated with vine kill through hauling) of approximately 10 
percent of the cost of production. Therefore, FCIC is proposing the 
price election used to determine an indemnity for unharvested 
production be set at 90 percent of the price election. Sections 2(b) 
and 11(b) of the Northern Potato Crop Provisions and sections 3(b) and 
12(b) of the Southern Potato Crop Provisions have also been revised to 
reflect this change;
    e. Section 8(c)--FCIC is proposing to revise the provisions to 
include the state of Kansas with other states having October 15 as the 
end of insurance period because this is the date by which harvest is 
usually completed in this state;
    f. Section 8(e)--FCIC is proposing to revise the provisions to 
include San Juan County, New Mexico with other states having October 31 
as the end of insurance because this is the date by which harvest is 
usually completed in this county;
    g. Section 11(b)(7)--FCIC is proposing to revise the indemnity 
calculation example to incorporate the new percentage used to reduce 
the price election for unharvested acreage;
    h. Section 11(d)(1)(iv)--FCIC is proposing to revise the provisions 
to clarify that all unharvested production is subject to the price 
reduction used to determine the indemnity for unharvested acreage and 
qualifies for a quality adjustment. As currently drafted, it may not be 
clear that all unharvested production is subject to these provisions. 
Further, since unharvested production is eligible for the quality 
adjustments, potential production in acreage put to another use or 
abandoned should also be eligible for quality adjustment. FCIC also 
proposes to revise the cross references to the quality adjustment 
provisions;
    i. Section 11(e)(2)--FCIC is proposing to clarify that a grade 
inspection must be completed no later than 21 days after end of the 
insurance period. If the Northern Potato Crop Insurance Storage 
Coverage Endorsement is applicable, samples must be obtained within 60 
days from the end of the insurance period and a quality (grade) 
determination must occur within 21 days of sampling. To allow grade 
inspections to occur at later dates will lead to the potential to have 
quality adjustments based on other than insurable causes of loss that 
occur within the insurance period;
    j. FCIC also proposes to add section 11(e)(3) to the quality 
adjustment provisions to clarify that the producer must report the 
intended use of the potatoes so that the appropriate United States 
Standards can be applied. This will allow for a more accurate quality 
adjustment based on the disposition of the potatoes;

[[Page 42763]]

    k. Section 11(g)--FCIC is proposing to revise section 11(g) because 
the Office of Inspector General (OIG) and an RMA Compliance office 
recommended changes to the quality adjustment provisions. Section 11(g) 
provides the quality adjustment standards based on a certain number of 
days within which the potatoes are discarded, delivered, or there is an 
agreement on the price of potatoes (within 21 days of the end of the 
insurance period or 60 days if the Northern Potato Crop Insurance 
Storage Coverage Endorsement is applicable). Based on these standards, 
the amount of production counted as production to count is reduced. The 
production to count is used to determine whether an indemnity is due. 
Reports prepared by OIG and RMA Compliance indicated there were some 
cases in which producers retained production beyond the time period 
specified and then were able to sell more production than the amount of 
production used to determine the production to count. Therefore, FCIC 
is proposing changes to the quality adjustment procedures for 
situations in which damaged production is not sold within the 
applicable time period. In these cases, the amount of production to 
count will be the greater of the amount determined by dividing the sale 
price per cwt. of the production eligible for a quality adjustment by 
the price election and multiplying the result by the number of cwt. of 
production eligible for a quality adjustment, or the amount determined 
by reducing the production by a specified percentage factor based on 
the percent damage. By using the greater of these two amounts, the 
production will no longer be able to qualify for an adjustment based on 
the percentage factors contained in the policy and then later sold in a 
greater amount. The amount of production used to calculate the claim 
will be the amount actually sold.
    In addition, FCIC proposes to revise the percentages used for this 
purpose and the same factors will be used for damage resulting from 
tuber rot and for freeze. The current policy uses different factors for 
tuber rot and freeze and is complex to administer when there is a 
combination of such damage. Instead, FCIC has carefully considered the 
factors and is proposing new factors it believes are a balance between 
the two sets of current factors and should adequately reflect the value 
lost due to tuber rot and freeze; and
    l. FCIC proposes to add provisions to section 11(g) to clarify how 
discarded production will be adjusted. Currently, the provisions state 
that if production with freeze damage in excess of 17.9 percent is not 
discarded within 21 days of the end of the insurance period, 15 percent 
of such production will be included as production to count. Now 
production that has more than 5.1 percent freeze damage and could not 
have been sold will receive a zero as production to count. However, 
such production must be destroyed before a claim can be settled. If the 
production could have been sold or was discarded more than 21 days 
after the end of the insurance period, the production will be adjusted 
under section 11(g)(2)(iii). This change treats freeze damage 
consistent with the manner in which tuber rot is currently adjusted and 
eliminates the additional complexity required by many different 
percentage standards. Any additional losses this change will cause will 
be included in the premium rating.
    2. FCIC proposes to amend Sec.  457.143, Northern Potato Crop 
Insurance Quality Endorsement as follows:
    a. FCIC is proposing to add a new section 1, and move the 
definition of ``Percentage factor'' currently in section 10 to section 
1. This new format will conform to all other crop provisions that have 
the definitions first, which will make it easier to read;
    b. Section 4--FCIC is proposing to revise provisions to reflect the 
format and changes for the quality adjustment provisions in section 
11(g) of the Northern Potato Crop Provisions; and
    c. Section 5--For the reasons stated above, FCIC is proposing to 
add provisions to clarify how discarded production will be adjusted.
    3. FCIC proposes to revise Sec.  457.144, Northern Potato Crop 
Insurance Processing Quality Endorsement as follows:
    a. Section 1--FCIC is proposing to add a new section 1, move the 
definition of ``Percentage factor'' currently in section 10 to section 
1 and add definitions for ``Broker,'' ``Processor,'' and ``Processor 
contract''. This new format will conform to all the other crop 
provisions that have the definitions first, which will make it easier 
to read. Previously, the terms ``Processor'' and ``Processor contract'' 
were included in the endorsement but were not defined. Definitions are 
necessary to ensure a uniform meaning is provided for these terms, 
which are consistent with the definitions of such terms in other crop 
policies involving processing crops. The definition of ``Broker'' is 
added because FCIC recognizes that not all potatoes are sold directly 
to processors and instead the potatoes are sold through brokers. 
Subsequent sections will be redesignated as necessary;
    b. Section 2--FCIC is proposing to add a new section 2 that 
consolidates the provisions regarding eligibility from current sections 
2, 3, 4 and 5, into one section to eliminate ambiguity. The new section 
2 now contains the requirement that the producer must have a Northern 
Potato Crop Insurance Quality Endorsement in effect and the Northern 
Potato Crop Insurance Processing Quality Endorsement must be elected on 
or before the sales closing date. Further, FCIC is proposing to add a 
provision that specifies that if the producer cancels the Northern 
Potato Crop Insurance Quality Endorsement, the Northern Potato Crop 
Insurance Processing Quality Endorsement is automatically cancelled. 
The provision regarding the ability to cancel the Northern Potato Crop 
Insurance Processing Quality Endorsement for subsequent years has been 
added to this section because the other cancellation provisions are 
here and it is best to keep such provisions together. FCIC also 
proposes to add a requirement that the producer have a processor 
contract executed with a processor or broker as a condition of 
eligibility. This is implied in other sections but now it is clear that 
such a contract is a condition of eligibility for coverage;
    c. Redesignated section 5--FCIC is proposing to include processor 
contracts executed with brokers because this has become an increasingly 
common mechanism for producers to sell their potato production and 
without inclusion of these contracts, such producers would be without 
coverage. FCIC also proposes to add those provisions currently in 
section 6 because they also relate to the insurable acreage. Inclusion 
of all related provisions should improve the readability of the policy 
and remove ambiguities;
    d. Redsignated section 6--FCIC is proposing to revise the quality 
adjustment provisions for potatoes to include a standard for chipping 
potatoes. A producer group recommended including a quality standard 
specific to chipping potatoes in the Northern Potato Crop Insurance 
Processing Quality Endorsement. FCIC agrees such standard should be 
added. FCIC is proposing to use a standard based on an Agtron rating 
because this rating is commonly recognized by the potato industry as 
well as being referenced in the U.S. Standards for Grades of Potatoes 
for Processing or Chipping. FCIC is proposing to use an Agtron rating 
value of 58 because this appears to be an average threshold of what 
processors will accept. For the reasons stated above, FCIC is also 
proposing to revise the provisions to reflect the changes in the new 
quality

[[Page 42764]]

adjustment provisions in the Northern Potato Crop Provisions. FCIC is 
also proposing to simplify the provisions and make other grammatical 
changes for readability;
    e. FCIC is proposing to add a new section 7 to clarify how 
discarded production will be adjusted for the same reasons stated 
above; and
    f. FCIC is proposing to combine the provisions in current sections 
7 and 8 to specify that all quality determinations must be based on a 
grade inspection using the United States Standards for Grades of 
Potatoes for Processing and Chipping.
    4. FCIC proposes to amend Sec.  457.145, Potato Crop Insurance 
Certified Seed Endorsement as follows:
    a. Section 1--FCIC is proposing to revise the provisions to clarify 
that the Certified Seed Endorsement only extends the time period to 
discover damage beyond harvest that resulted from a cause of loss that 
occurred during the insurance period, it does not extend the insurance 
period and any new causes of loss that occur after harvest are not 
covered. Therefore, the additional premium paid for coverage under the 
Storage Coverage Endorsement will not apply;
     b. Section 2--FCIC is proposing to move the definition ``potato 
certified seed program'' to Northern Potato Crop Provisions because the 
term is used in the definition of certified seed;
    c. Section 6--FCIC also proposes to move the provisions currently 
in section 11 to section 6 and add new provisions to clarify that 
failure to meet any requirements under the potato seed certification 
program will be considered loss due to uninsured causes, which under 
section 8(d) means that such production is counted as production to 
count. This will ensure that coverage is only provided for potatoes 
that could have met the standards for certification if not for an 
insurable cause of loss; and
    d. Section 10--FCIC also proposes to clarify that coverage is not 
provided for failure to meet quality requirements for seed used to 
produce a subsequent seed crop. Certified seed can be used to produce a 
subsequent commercial crop or a subsequent seed crop. This endorsement 
only covers quality losses due to insurable causes of certified seed 
used to produce a subsequent commercial crop, not the subsequent seed 
crop. This is because certified seed that does not meet the quality 
standards for a subsequent seed crop generally still meets the 
requirements to be used for a commercial crop.
    5. FCIC proposes to amend Sec.  457.146, Northern Potato Crop 
Insurance Storage Coverage Endorsement as follows:
    a. Section 5(a)(3)--FCIC is proposing to revise the provisions to 
include the Agtron standard for chipping potatoes for the reasons 
stated above;
    b. Section 5(c)--FCIC is proposing to revise the provisions to 
include provisions currently contained in section 5(d) because the 
provisions all relate to sampling and now provide the time frame such 
sampling must occur for all situations and who may conduct the 
sampling; and
    c. Producer groups recommended increasing the length of time 
coverage is provided under the Northern Potato Crop Insurance Storage 
Coverage Endorsement period. The current endorsement provides 60 days 
after the end of the insurance period to discover damage that occurred 
during the insurance period but does not become evident until a later 
time. To determine the feasibility of extending the storage period, the 
historic experience for policies with the Storage Coverage Endorsement 
was analyzed. A review of crop years from 1998 through 2003 indicated 
that for five of the six years, losses exceeded premiums collected 
under the Storage Coverage Endorsement. In addition, several potato 
industry experts state that virtually all damage that occurs within the 
covered insurance period (coverage ends upon harvest) will become 
apparent within 45 days after production is harvested. Therefore, based 
on loss experience to date and adequacy of the current coverage period, 
no time extension is proposed.
    6. FCIC proposes to amend Sec.  457.147, Central and Southern 
Potato Crop Insurance Provisions as follows:
    a. Introductory text--FCIC is proposing to revise to exclude San 
Juan County, New Mexico, and to allow for the Special Provisions to 
include states or counties in which insurance can be provided under the 
Central and Southern Potato Crop Insurance Provisions;
    b. FCIC is proposing to remove provisions regarding document 
priority because these are now contained in the Basic Provisions;
    c. Section 1--FCIC is proposing to revise the definition of 
``Certified seed'' to clarify that certified seed includes both seed 
used to produce a seed crop for the next crop year or a potato crop for 
harvest for commercial sale in the next crop year. This will clarify 
that certified seed must be used to produce the crop for both purposes. 
The definition of ``Potato certified seed program'' is included because 
it is used in the definition of certified seed. FCIC is also proposing 
to revise the definition of ``grade inspection'' to specify the 
standards that will be used to grade the potatoes. Since there are 
several grading standards that differ based on the intended use of the 
potato (i.e., chipping, processing, etc.), the policy needs to specify 
how these different standards will be applied for grading the potatoes;
     d. Section 3(b)--FCIC is proposing to revise the percent of the 
price election used to determine the indemnity for unharvested acreage 
from 80 to 90 percent;
    e. Section 4--FCIC is proposing to add an additional contract 
change date of October 31 for counties with a new January 31 
cancellation date as specified below. This will allow sufficient time 
for affected producers to make informed decisions by the cancellation 
date;
    f. Section 5--FCIC is proposing to add an additional cancellation 
and termination date of January 31 for Delaware, Maryland, New Jersey, 
North Carolina, and Virginia. This change is being made to accurately 
reflect the growing cycle in these states;
     g. Section 12(b)--FCIC is proposing to revise the indemnity 
calculation example to incorporate the new percentage used to reduce 
the price election for unharvested acreage; and
    h. Section12(e)--FCIC is proposing to add the requirement that the 
producer provide notice of the intended use of the potato so the 
appropriate grading standard can be applied. Further, FCIC is proposing 
to revise the provisions to clarify that the same quality 
determinations apply for both harvested and unharvested production.

List of Subjects in 7 CFR Part 547

    Crop insurance, Potatoes, 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 effective for 
the 2008 and succeeding crop years to read 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(1), 1506(p).

    2. Amend Sec.  457.142 Northern potato crop insurance provisions as 
follows:
    a. Revise the introductory text;
    b. Remove the paragraph regarding document priority immediately 
preceding section 1 and revise the remaining paragraph below the 
heading ``Northern Potato Crop Provisions'' and before section 1;

[[Page 42765]]

    c. Amend section 1 by revising the definition of ``Certified seed'' 
and ``Grade inspection''. Add definition of ``Potato certified seed 
program'', and remove the definitions of ``Processor contract'' and 
``Reduction percentage'';
    d. Amend section 2 by revising paragraph (b);
    e. Amend section 8 by revising paragraphs (c) and (e); and
    f. Amend section 11 as follows:
    (1) Revise paragraph (b)(7);
    (2) Remove paragraph (d)(1)(iv), redesignate paragraph (d)(1)(v) as 
(d)(1)(iv) and revise it;
    (3) Revise paragraph (e)(2);
    (4) Add new paragraph (e)(3);
    (5) Revise section 11(g); and
    (6) Remove paragraph (h).
    The added and revised text reads as follows:


Sec.  457.142  Northern potato crop insurance provisions

    The Northern Potato Crop Insurance Provisions for the 2008 and 
succeeding crop years are as follows:
* * * * *
    These provisions will be applicable in: Alaska; Humboldt, Modoc, 
and Siskiyou Counties, California; Colorado; Connecticut; Idaho; 
Indiana; Iowa; Kansas; Maine; Massachusetts; Michigan; Minnesota; 
Montana; Nebraska; Nevada; San Juan County, New Mexico; New York; North 
Dakota; Ohio; Oregon; Pennsylvania; Rhode Island; South Dakota; Utah; 
Washington; Wisconsin; and Wyoming; and any other states or counties if 
allowed by the Special Provisions.
* * * * *
    1. Definitions
* * * * *
    Certified seed. Potatoes that were entered into the potato 
certified seed program and that meet all requirements for production to 
be used to produce a seed crop for the next crop year or a potato crop 
for harvest for commercial uses in the next crop year.
* * * * *
    Grade inspection. An inspection in which samples of production are 
obtained by us, or a party approved by us, prior to the sale, storage, 
or disposal of any lot of potatoes, or any portion of a lot of and the 
potatoes are evaluated and quality (grade) determinations are made by 
us, a laboratory approved by us, or a potato grader licensed or 
certified by the applicable State or the United States Department of 
Agriculture, in accordance with the United States Standards for Grades 
of Potatoes. The United States standards used to determine the quality 
(grade) deficiencies will be: (1) For potatoes produced or sold for 
chipping, the United States Standards for Grades of Potatoes for 
Chipping; (2) for potatoes produced or sold for processing, the United 
States Standards for Grades of Potatoes for Processing; and (3) for all 
other potatoes, the United States Standards for Grades of Potatoes. The 
quantity and number of samples required will be determined in 
accordance with procedure issued by FCIC.
* * * * *
    Potato certified seed program. The state program administered by a 
public agency responsible for the seed certification process within the 
state in which the seed is produced.
* * * * *
    2. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities
* * * * *
    (b) If the production from any acreage of the insured crop is not 
harvested, the price used to determine your indemnity will be 90 
percent of your price election. This requirement is not applicable to 
the certified seed endorsement price election.
* * * * *
    8. Insurance Period
* * * * *
    (c) October 15 in Colorado; Indiana; Iowa; Kansas; Michigan; 
Minnesota; Montana; Nevada; North Dakota; South Dakota; Utah; and 
Wisconsin.
* * * * *
    (e) October 31 in Humboldt, Modoc, and Siskiyou Counties, 
California; Connecticut; Idaho; Massachusetts; San Juan County, New 
Mexico; New York; Ohio; Oregon; Pennsylvania; Rhode Island; and 
Washington.
* * * * *
    11. Settlement of Claim
* * * * *
    (b) * * *
    (7) Multiplying the result of section 11(b)(6) by your share.
    For example:
    You have a 100 percent share in 100 harvested acres of potatoes in 
the unit, with a guarantee of 150 hundredweight per acre and a price 
election of $4.00 per hundredweight. You are only able to harvest 
10,000 hundredweight. Your indemnity would be calculated as follows:
    (1) 100 acres x 150 hundredweight = 15,000 hundredweight guarantee;
    (2) 15,000 hundredweight x $4.00 price election = $60,000.00 value 
of guarantee;
    (4) 10,000 hundredweight x $4.00 price election = $40,000.00 value 
of production to count;
    (6) $60,000.00 - $40,000.00 = $20,000.00 loss; and
    (7) $20,000.00 x 100 percent = $20,000.00 indemnity payment.
    You also have a 100 percent share in 100 unharvested acres of 
potatoes in the same unit, with a guarantee of 150 hundredweight per 
acre and a price election of $3.60 per hundredweight. (The price 
election for unharvested acreage is 90.0 percent of your elected price 
election ($4.00 x 0.90 = $3.60.)) This unharvested acreage was 
appraised at 35 hundredweight per acre for a total of 3500 
hundredweight as production to count. Your total indemnity for the 
harvested and unharvested acreage would be calculated as follows:
    (1) 100 acres x 150 hundredweight = 15,000 hundredweight guarantee 
for the harvested acreage, and 100 acres x 150 hundredweight = 15,000 
hundredweight guarantee for the unharvested acreage;
    (2) 15,000 hundredweight guarantee x $4.00 price election = 
$60,000.00 value of guarantee for the harvested acreage, and 15,000 
hundredweight guarantee x $3.60 price election = $54,000.00 value of 
guarantee for the unharvested acreage;
    (3) $60,000.00 + $54,000.00 = $114,000.00 total value of guarantee;
    (4) 10,000 hundredweight x $4.00 price election = $40,000.00 value 
of production to count for the harvested acreage, and 3500 
hundredweight x $3.60 = $12,600.00 value of production to count for the 
unharvested acreage;
    (5) $40,000.00 + $12,600.00 = $52,600.00 total value of production 
to count;
    (6) $114,000.00 - $52,600.00 = $61,400.00 loss; and
    (7) $61,400.00 loss x 100 percent = $61,400.00 indemnity payment.
* * * * *
    (d) * * *
    (1) * * *
    (iv) Unharvested production, including unharvested production on 
insured acreage that you intend to put to another use or acreage 
damaged by insurable causes and for which you cease to provide further 
care or abandon, if you and we agree on the appraised amount of 
production. Upon such agreement, the insurance period for that acreage 
will end when you put the acreage to another use or cease providing 
care for the crop. This unharvested production may be adjusted in 
accordance with sections 11(e), (f), and (g); and the value of all 
unharvested production will be calculated using the reduced price 
election determined in section 2(b). If agreement on the appraised 
amount of production is not reached:
* * * * *

[[Page 42766]]

    (e) * * *
    (2) A grade inspection is completed no later than 21 days after the 
end of insurance period (if the Northern Potato Crop Insurance Storage 
Coverage Endorsement is applicable, samples must be obtained within 60 
days of the end of insurance period and quality (grade) determinations 
must be completed with 21 days of sampling); and
    (3) Prior to any quality adjustment, you notify us of the intended 
use of the potatoes so the applicable United States Standards will be 
applied.
* * * * *
    (g) Potato production to count that is eligible for quality 
adjustment, as specified in section 11(e), with 5.1 percent damage or 
more (by weight) will be determined as follows:
    (1) For potatoes for which a price is agreed upon between you and a 
buyer within 21 days of the end of insurance period (60 days of the end 
of insurance period if the Northern Potato Crop Insurance Storage 
Coverage endorsement is applicable), or that are delivered to a buyer 
within 21 days (60 days if the Northern Potato Crop Insurance Storage 
Coverage Endorsement is applicable), the amount of production will be 
determined by:
    (i) Dividing the price received or that will be received per 
hundredweight by the highest price election designated in the Special 
Provisions or addendum thereto for the insured potato type (if the 
production is sold for a price lower than the value appropriate to and 
representative of the local market, we will determine the value of the 
production based on the price you could have received in the local 
market); and
    (ii) Multiplying the result (not to exceed 1.0) by the number of 
harvested hundredweight; or
    (2) For potatoes for which a price is not agreed upon between you 
and a buyer or are not delivered and no price is agreed upon within 21 
days of the end of insurance period (60 days of the end of insurance 
period if the Northern Potato Crop Insurance Storage Coverage 
Endorsement is applicable) and that remain in storage 22 or more days 
after the end of insurance period (61 or more days after the end of 
insurance period if the Northern Potato Crop Insurance Storage Coverage 
Endorsement is applicable), the amount of production will be the 
greater of:
    (i) The amount determined by:
    (A) Dividing the price that is received, or will be received after 
the end of the applicable insurance period, per hundredweight by the 
highest price election designated in the Special Provisions or addendum 
thereto for the insured potato type (if the production is sold for a 
price lower than the value appropriate to and representative of the 
local market, we will determine the value of the production based in 
the price you could have received in the local market); and
    (B) Multiplying the result of section 11(g)(2)(i)(A) (not to exceed 
1.0) by the number of harvested hundredweight; or
    (ii) The amount of production determined by:
    (A) Reducing any harvested or appraised production:
    (1) By 0.1 percent for 0.1 percent damage through 5.0 percent;
    (2) By 0.5 percent for each 0.1 percent of damage from 5.1 percent 
through 6.0 percent;
    (3) By 1.0 percent for each 0.1 percent of damage from 6.1 through 
13.5 percent; or
    (B) Including 15 percent of the production when damage is in excess 
of 13.5 percent.
    (iii) For any production discarded:
    (A) Within 21 days after the end of insurance period (60 days after 
the end of the insurance period if the Northern Potato Crop Insurance 
Storage Coverage Endorsement is applicable), the amount of production 
to count will be:
    (1) Zero if we determine the production could not have been sold; 
or
    (2) Determined in accordance with section 11(g)(2)(ii) if we 
determine the production could have been sold; or
    (B) Later 21 days after the end of insurance period (60 days after 
the end of the insurance period if the Northern Potato Crop Insurance 
Storage Coverage Endorsement is applicable), the amount of production 
to count will be adjusted in accordance with section 11(g)(2)(ii).
* * * * *
    3. Amend Sec.  457.143, Northern potato crop insurance quality 
endorsement, as follows:
    a. Revise the introductory text;
    b. Redesignate sections 5 through 8 as 7 through 10;
    c. Redesiginate sections 1 through 4, as sections 2 through 5, and 
add new section 1;
    d. Revise redesignated section 5; and
    e. Add a new section 6.
    The revised and added text reads as follows:


Sec.  457.143  Northern potato crop insurance quality endorsement.

    The Northern Potato Crop Insurance Quality Endorsement Provisions 
for the 2008 and succeeding crop years are as follows:
* * * * *
    1. Definitions
    Percentage factor. The historical average percentage of potatoes 
grading U.S. No. 2 or better, by type, determined from your records. If 
at least 4 continuous years of records are available, the percentage 
factor will be the simple average of the available records not to 
exceed 10 years. If less than 4 years of records are available, the 
percentage factor will be determined based on a combination of your 
records and the percentage factor contained in the Special Provisions 
so that such a combination would be the functional equivalent of 4 
years of records.
* * * * *
    5. We will adjust the production to count determined in accordance 
with section 15 of the Basic Provisions and section 11 of the Northern 
Potato Crop Provisions for potatoes that do not meet U.S. No. 2 grade 
requirements from unharvested acreage or harvested acreage that is 
stored or is marketed after a grade inspection due to:
    (a) Internal defects as long as the number of potatoes with such 
defects are in excess of the tolerances allowed for the U.S. No. 2 
grade potatoes on a lot basis and are not separable from undamaged 
production using methods used by the packers or processors to whom you 
normally deliver your potato production as follows:
    (1) For potatoes for which a price is agreed upon between you and a 
buyer within 21 days of the end of insurance period (60 days of the end 
of insurance period if the Northern Potato Crop Insurance Storage 
Coverage Endorsement is applicable), or that are delivered to a buyer 
within 21 days of the end of insurance period (60 days of the end of 
insurance period if the Northern Potato Crop Insurance Storage Coverage 
endorsement is applicable), the amount of production will be determined 
by:
    (i) Dividing the price received or that will be received per 
hundredweight by the highest price election designated in the Special 
Provisions or addendum thereto for the insured potato type (if the 
production is sold for a price lower than the value appropriate to and 
representative of the local market, we will determine the value of the 
production based on the price you could have received in the local 
market); and
    (ii) Multiplying the result (not to exceed 1.0) by the number of 
harvested hundredweight; or
    (2) For potatoes for which a price is not agreed upon between you 
and a buyer or are not delivered and no price is agreed upon within 21 
days of the end of insurance period (60 days of the end of insurance 
period if the Northern Potato Crop Insurance Storage Coverage 
Endorsement is applicable) and that

[[Page 42767]]

remain in storage 22 or more days of the end of insurance period (61 or 
more days of the end of insurance period if the Northern Potato Crop 
Insurance Storage Coverage Endorsement is applicable), the amount of 
production will be the greater of:
    (i) The amount of production determined by:
    (A) Dividing the price that is received, or will be received after 
the end of the applicable insurance period, per hundredweight by the 
highest price election designated in the Special Provisions or addendum 
thereto for the insured potato type (if the production is sold for a 
price lower than the value appropriate to and representative of the 
local market, we will determine the value of the production based on 
the price you could have received in the local market); and
    (B) Multiplying the result of section 5(a)(2)(i)(A) (not to exceed 
1.0) by the number of hundredweight of sold production (Adjustment 
under section 5(a)(2)(i)(A) will not be performed if it already has 
been performed under the terms of section 11(g)(2) of the Northern 
Potato Crop Provisions); or
    (ii) The amount of production determined as follows:
    (A) The combined weight of sampled potatoes that grade U.S. No. 2 
or better (the amount of potatoes grading U.S. No. 2 will be based on a 
grade inspection completed no later than 21 days after the end of 
insurance period (if the Northern Potato Crop Insurance Storage 
Coverage Endorsement is applicable, samples must be obtained within 60 
days of the end of insurance period and a grade inspection completed 
within 21 days of sampling) and are damaged by freeze or tuber rot will 
be divided by the total sample weight;
    (B) The percentage determined in section 5(a)(2)(ii)(A) will be 
divided by the applicable percentage factor determined in accordance 
with section 1; and
    (C) The result of section 5(a)(2)(ii)(B) will be multiplied by the 
amount of production to count determined in accordance with section 15 
of the Basic Provisions and section 11 of the Northern Potato Crop 
Provisions.
    (b) Factors other than those specified in section 5(a), in 
accordance with section 5(a)(2)(ii).
    6. For any production discarded that qualifies for adjustment in 
accordance with section 6(a):
    (a) Within 21 days after the end of insurance period (60 days after 
the end of the insurance period if the Northern Potato Crop Insurance 
Storage Coverage Endorsement is applicable), the amount of production 
to count will be:
    (1) Zero if we determine the production could not have been sold; 
or
    (2) Determined in accordance with section 5(a)(2)(ii) if we 
determine the production could have been sold; or
    (b) Later than 21 days after the end of insurance period (60 days 
after the end of the insurance period if the Northern Potato Crop 
Insurance Storage Coverage Endorsement is applicable), the amount of 
production to count will be adjusted in accordance with section 
5(a)(2)(ii).
* * * * *
    4. Revise Sec.  457.144, Northern potato crop insurance processing 
quality endorsement provisions in its entirety to read as follows:


Sec.  457.144  Northern potato crop insurance processing quality 
endorsement.

    The Northern Potato Crop Insurance Processing Quality Endorsement 
Provision for the 2008 and succeeding crop years are as follows:
    1. Definitions.
    Broker. Any business enterprise regularly engaged in the buying and 
selling of processing potatoes, that possesses all licenses and permits 
as required by the state in which it operates, and when required, has 
the necessary facilities or the contractual access to such facilities, 
with enough equipment to accept and transfer processing potatoes to the 
broker within a reasonable amount of time after harvest or the typical 
storage period.
    Percentage factor. The historical average percent of potatoes 
grading U.S. No. 2 or better, by type, determined from your records. If 
a least 4 continuous years of records are available, the percentage 
factor will be the simple average of the available records not to 
exceed 10 years. If less than 4 years of records are available, the 
percentage factor will be determined based on a combination of your 
records and the percentage factor contained in the Special Provisions 
so that such combination would be the functional equivalent of 4 years 
of records.
    Processor. Any business enterprise regularly engaged in processing 
potatoes for human consumption, that possesses all licenses and permits 
for processing potatoes required by the state in which it operates, and 
that possesses facilities, or has contractual access to such 
facilities, with enough equipment to accept and process processing 
potatoes grown under a processing contract within a reasonable amount 
of time after harvest or the typical storage period.
    Processor contract. A written agreement between the producer and 
processor, or between a producer and a broker, containing at a minimum:
    (a) The producer's commitment to plant and grow processing 
potatoes, and to deliver the potato production to the processor or 
broker;
    (b) The processor's or broker's commitment to purchase all the 
production stated in the processing contract; and
    (c) A price or pricing mechanism to determine the value of 
delivered production.
    2. To be eligible for coverage under this endorsement, you must 
have a:
    (a) Northern Potato Crop Insurance Quality Endorsement in place and 
elect this endorsement on or before the sales closing date for the 
initial crop year in which you wish to insure your potatoes under this 
endorsement;
    (1) Cancellation of your Northern Potato Crop Insurance Quality 
Endorsement will automatically result in cancellation of this 
endorsement;
    (2) This endorsement may be canceled by either you or us for any 
succeeding crop year by giving written notice to the other party on or 
before the cancellation date; and
    (b) Processor contract executed with a processor or broker for the 
potato types insured under this endorsement that is applicable for the 
crop year;
    (1) A copy of the processor contract must be submitted to us on or 
before the acreage reporting date for potatoes:
    (2) Failure to timely provide the processor contract will result in 
no coverage under this endorsement and coverage will be provided only 
under the terms of the Northern Potato Crop Insurance and Northern 
Potato Crop Insurance Quality Endorsement.
    3. In return for payment of the additional premium designated in 
the actuarial documents, this endorsement is attached to and made part 
of your Northern Potato Crop Provisions and Northern Potato Crop 
Insurance Quality Endorsement subject to the terms and conditions 
described herein. In the event of a conflict between the Northern 
Potato Crop Provisions or Northern Potato Crop Insurance Quality 
Endorsement and this endorsement, this endorsement will control.
    4. All terms of the Northern Potato Crop Insurance Quality 
Endorsement not modified by this endorsement will be applicable to 
acreage covered under this endorsement.
    5. If you elect this endorsement, all insurable acreage of 
production under contract with the processor or broker must be insured 
under this endorsement:
    (a) When the processor contract requires the processor or broker to 
purchase a stated amount of production, rather than all of the 
production from a

[[Page 42768]]

stated number of acres, the insurable acreage will be determined by 
dividing the stated amount of production by the approved yield for the 
acreage; and
    (b) The number of acres insured under this endorsement will not 
exceed the actual number of acres planted to the potato types needed to 
fulfill the contract.
    6. In lieu of the provisions contained in section 5 of the Northern 
Potato Crop Insurance Quality Endorsement, production to count 
determined in accordance with section 15 of the Basic Provisions and 
section 11 of the Northern Potato Crop Provisions will be adjusted in 
accordance with sections 6(a) or 6(b), whichever is applicable, from 
unharvested acreage or harvested acreage that is stored or is marketed 
after a grade inspection conducted in accordance with section 8 as 
follows:
    (a) The production to count for potatoes rejected by a processor or 
broker because they do not meet U.S. No. 2 grade requirements due to 
internal defects as long as the number of potatoes with such defects 
are in excess of the tolerance allowed for U.S. No. 2 grade potatoes on 
a lot basis and are not separable from undamaged production using 
methods used by the potato packers to whom you normally deliver your 
potato production; a specific gravity lower than the lesser of 1.074 or 
the minimum acceptable amount specified in the processor contract; a 
fry color of No. 3 or darker due to either sugar exceeding 10 percent 
or sugar ends exceeding 19 percent; or an Agtron rating lower than the 
lesser of 58 or the minimum acceptable amount specified in the 
processor contact will be determined as follows:
    (1) For potatoes for which a price is agreed upon between you and a 
buyer within 21 days of the end of insurance period (60 days of the end 
of insurance period if the Northern Potato Crop Insurance Storage 
Coverage Endorsement is applicable), or that are delivered to a buyer 
within 21 days of the end of insurance period (60 days of the end of 
insurance period if the Northern Potato Crop Insurance Storage Coverage 
Endorsement is applicable), the amount of production will be determined 
by:
    (i) Dividing the price received or that will be received per 
hundredweight by the highest price election designated in the Special 
Provisions or addendum thereto for the insured potato type (If the 
production is sold for a price lower than the value appropriate to and 
representative of the local market, we will determine the value of the 
production based on the price you could have received in the local 
market); and
    (ii) Multiplying the result of section 6(a)(1)(i) (not to exceed 
1.0) by the number of hundredweight; or
    (2) For potatoes for which a price is not agreed upon between you 
and a buyer or are not delivered and no price is agreed upon within 21 
days of the end of insurance period (60 days of the end of insurance 
period if the Northern Potato Crop Insurance Storage Coverage 
Endorsement is applicable) and that remain in storage 22 or more days 
after the end of insurance period (61 or more days after the end of 
insurance period if the Northern Potato Crop Insurance Storage Coverage 
Endorsement is applicable), the amount of production will be the 
greater of:
    (i) The amount of production determined by:
    (A) Dividing the price that is received, or will be received after 
the end of the applicable insurance period, per hundredweight by the 
highest price election designated in the Special Provisions or addendum 
thereto for the insured potato type (if the production is sold for a 
price lower than the value appropriate to and representative of the 
local market, we will determine the value of the production based on 
the price you could have received in the local market); and
    (B) Multiplying the result of section 6(a)(2)(i)(A) (not to exceed 
1.0) by the number of hundredweight of sold production (Adjustment 
under section 6(a)(2)(i) will not be performed if it already has been 
performed under the terms of section 11(g)(2) of the Northern Potato 
Crop Provisions): or
    (ii) The amount of production determined as follows:
    (A) The combined weight of sampled potatoes that grade U.S. No. 2 
or better, and that are damaged by freeze or tuber rot will be based on 
a grade inspection:
    (1) The amount of potatoes grading U.S. No. 2 or better will be 
based on a grade inspection from samples taken no later than 21 days 
after the end of insurance period if the Northern Potato Crop Insurance 
Storage Coverage Endorsement is not applicable;
    (2) If the Northern Potato Crop Insurance Storage Coverage 
Endorsement is applicable, samples must be obtained within 60 days of 
the end of insurance period and quality (grade) determination completed 
within 21 days of sampling.
    (B) The percentage determined in section 6(a)(2)(ii)(A) will be 
divided by the applicable percentage factor; and
    (C) The result of section 6(a)(2)(ii)(B) will be multiplied by the 
amount of production to count determined in accordance with section 15 
of the Basic Provisions and section 11 of the Northern Potato Crop 
Provisions.
    (b) The production to count for potatoes rejected by the processor 
or broker due to factors other than those specified in section 6(a) 
will be adjusted in accordance with section 6(a)(2)(ii).
    7. For any production that qualifies for adjustment in accordance 
with section 6(a) and that is discarded:
    (a) Within 21 days after the end of insurance period (60 days after 
the end of the insurance period if the Northern Potato Crop Insurance 
Storage Coverage Endorsement is applicable), the amount of production 
to count will be:
    (1) Zero if we determine the production could not have been sold; 
or
    (2) Determined in accordance with section 6(a)(2)(ii) if we 
determine the production could have been sold; or
    (b) Later than 21 days after the end of insurance period (60 days 
after the end of the insurance period if the Northern Potato Crop 
Insurance Storage Coverage Endorsement is applicable), the amount of 
will production to count will be adjusted in accordance with section 
6(a)(2)(ii).
    8. All quality determinations must be based upon a grade inspection 
using the United States Standards for Grades of Potatoes for Processing 
or Chipping.
    9. The actuarial documents may provide ``U.S. No. 1 grade'' in 
place of ``U.S. No. 2 grade'' as used in this endorsement. If both U.S. 
No. 1 and 2 grades are available in the actuarial documents, you may 
elect U.S. No. 1 or 2 grade by potato type or group, if separate types 
or groups are specified in the Special Provisions.
    5. Amend Sec.  457.145, Potato crop insurance certified seed 
endorsement, as follows:
    a. Revise the introductory text;
    b. Revise section 1;
    c. Remove section 2, and redesignate sections 3 through 11 as 2 
through 10;
    d. Revise redesignated section 6; and
    e. Revise redesignated section 10.
    The added and revised text reads as follows:


Sec.  457.145  Potato crop insurance certified seed endorsement.

    The Potato Crop Insurance Certified Seed Endorsement Provisions for 
the 2008 and succeeding crop years are as follows:
* * * * *
    1. In return for payment of the additional premium designated in 
the actuarial documents, this endorsement is attached to and made part 
of your Northern Potato Crop Provisions subject to the terms and 
conditions described herein. Any additional premium paid for coverage 
under the Northern Potato

[[Page 42769]]

Crop Insurance Storage Coverage Endorsement will not apply to the 
additional coverage provided under the terms of this endorsement. In 
the event of a conflict between the Northern Potato Crop Provisions and 
this endorsement, this endorsement will control.
* * * * *
    6. All potatoes insured for certified seed production must be 
produced and managed in accordance with the regulations, standards, 
practices, and procedures required for certification under the potato 
certified seed program. Any production that does not qualify as 
certified seed because of varietal mixing or your failure to meet any 
requirements under the potato certified seed program will be considered 
as lost due to uninsured causes.
* * * * *
    10. Failure to meet any requirements for seed to be used to produce 
a subsequent seed crop will not be covered. All the production that 
meets requirements for certified seed used to produce a commercial crop 
will be included in production to count.
    6. Amend Sec.  457.146 Northern potato crop insurance storage 
coverage endorsement as follows:
    a. Revise the introductory text; and
    b. Amend section 5 by revising the first sentence, removing 
paragraph (d) and revising paragraphs (a)(3) and (c).
    The revised text reads as follows:


Sec.  457.146  Northern potato crop insurance storage coverage 
endorsement.

    The Northern Potato Crop Insurance Storage Coverage Endorsement 
Provisions for the 2008 and succeeding crop years are as follows:
* * * * *
    5. In lieu of section 9(b)(1) of the Northern Potato Crop 
Provisions, the extended coverage provided by this endorsement will be 
applicable but only if:
    (a) * * *
    (3) A specific gravity lower than the lesser of 1.074 or the 
minimum acceptable amount specified in the processor contract, or a fry 
color of No. 3 or darker due to either sugar exceeding 10 percent or 
sugar ends exceeding 19 percent, or an Agtron rating lower than the 
lesser of 58 or the minimum acceptable amount specified in the 
processor contract. This coverage is applicable only to production 
covered under the Northern Potato Crop Insurance Processing Quality 
Endorsement.
* * * * *
    (c) The percentage of production that has any of the quality 
deficiencies specified in section 5(a) is determined based on samples 
obtained no later than 60 days after the end of the insurance period 
and the potatoes are evaluated and quality (grade) determinations are 
made by us, a laboratory approved by us, a potato grader licensed or 
certified by the applicable State or the United States Department of 
Agriculture, or us, in accordance with the United States Standards for 
Grades of Potatoes;
    (1) Samples of damaged production must be obtained by us or a party 
approved by us prior to the sale or disposal of any lot of potatoes; 
and
    (2) If production is not sold or disposed of within 60 days of the 
end of insurance period, samples must be obtained within 60 days of the 
end of insurance period and a quality (grade) determination must be 
completed within 21 days of sampling.
    7. Amend Sec.  457.147, Central and southern potato crop insurance 
provisions as follows:
    a. Revise the introductory text;
    b. Remove the paragraph regarding document priority immediately 
preceding section 1 and revise the remaining paragraph below the 
heading ``Central and Southern Potato Crop Provisions'' and before 
section 1;
    c. Amend section 1 by revising the definition of ``Certified seed'' 
and ``Grade inspection'', and adding a new definition for ``Potato 
certified seed program'';
    d. Amend section 3 by revising paragraph (b);
    e. Amend section 4 by redesignating the current paragraph (c) as 
paragraph (d) and adding a new paragraph (c);
    f. Revise section 5; and
    g. Amend section 12 as follows:
    (1) Revise paragraph (b)(7); and
    (2) Revise paragraph (e) in its entirety.
    The added and revised text reads as follows:


Sec.  457.147  Central and southern potato crop insurance provisions.

    The Central and Southern Potato Crop Insurance Provisions for the 
2008 and succeeding crop years are as follows:
* * * * *
    These provisions will be applicable in Alabama; Arizona; all 
California counties except Humboldt, Modoc, and Siskiyou; Delaware; 
Florida; Georgia; Maryland; Missouri; New Jersey; all New Mexico 
counties except San Juan; North Carolina; Oklahoma; Texas and Virginia; 
and other states or counties if allowed by the Special Provisions.
* * * * *
    1. Definitions
* * * * *
    Certified seed. Potatoes that were entered into the potato 
certified seed program and that meet all requirements for production to 
be used to produce a seed crop for the next year or a potato crop for 
harvest for commercial uses in the next crop year.
* * * * *
    Grade inspection. An inspection in which samples of production are 
obtained by us, or a party approved by us, prior to the sale, storage, 
or disposal of any lot of potatoes, or any portion of a lot and the 
potatoes are evaluated and quality (grade) determinations are made by 
us, a laboratory approved by us, or a potato grader licensed or 
certified by the applicable State or the United States Department of 
Agriculture, in accordance with the United States Standards for Grades 
of Potatoes. The United States standards used to determine the quality 
(grade) deficiencies will be: (1) For potatoes produced or sold for 
chipping, the United States Standards for Grades of Potatoes for 
Chipping; (2) for potatoes produced or sold for processing, the United 
States Standards for Grades of Potatoes for Processing; and (3) for all 
other potatoes, the United States Standards for Grades of Potatoes. The 
quantity and number of samples required will be determined in 
accordance with procedure issued by FCIC.
* * * * *
    Potato certified seed program. The state program administered by a 
public agency responsible for the seed certification process within the 
state in which the seed is produced.
* * * * *
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
* * * * *
    (b) If the production from any acreage of the insured crop is not 
harvested, the price used to determine your indemnity will be 90 
percent of your price election.
* * * * *
    4. Contract Changes
* * * * *
    (c) October 31 preceding the cancellation date for counties with a 
January 31 cancellation date; and
* * * * *
    5. Cancellation and Termination Dates
    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are:

[[Page 42770]]



------------------------------------------------------------------------
            State and county                          Dates
---------------------------------------------------------------