Part 400-General Administrative Regulation-Subpart V-Submission of Policies, Provisions of Policies and Rates of Premium, 10008-10022 [2015-03604]

Download as PDF 10008 Proposed Rules Federal Register Vol. 80, No. 37 Wednesday, February 25, 2015 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. DEPARTMENT OF AGRICULTURE Federal Crop Insurance Corporation 7 CFR Part 400 [Docket No. FCIC–13–0006] RIN 0563–AC46 Part 400—General Administrative Regulation—Subpart V—Submission of Policies, Provisions of Policies and Rates of Premium Federal Crop Insurance Corporation, USDA. ACTION: Proposed rule. AGENCY: The Federal Crop Insurance Corporation (FCIC) proposes to replace the General Administrative Regulation—Subpart V—Submission of Policies, Provisions of Policies and Rates of Premium. The intended effect of this action is to incorporate legislative changes to the Federal Crop Insurance Act (Act) stemming from the Agricultural Act of 2014, clarify existing regulations, lessen the burden of submitters of crop insurance policies, provisions of policies, or rates of premium under section 508(h) of the Act, provide guidance on the submission and payment for concept proposals under section 522 of the Act, and to incorporate changes that are consistent with those made in the Common Crop Insurance Policy Basic Provisions (Basic Provisions). DATES: Written comments and opinions on this proposed rule will be accepted until close of business April 27, 2015 and will be considered when the rule is to be made final. ADDRESSES: FCIC prefers that comments be submitted electronically through the Federal eRulemaking Portal. You may submit comments, identified by Docket ID No. FCIC–13–0006 by any of the following methods: • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. • Mail: Director, Product Administration and Standards Division, wreier-aviles on DSK5TPTVN1PROD with PROPOSALS SUMMARY: VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 Risk Management Agency, United States Department of Agriculture, P.O. Box 419205, Kansas City, MO 64133–6205. All comments received, including those received by mail, will be posted without change to http://www.regulations.gov, including any personal information provided, and can be accessed by the public. All comments must include the agency name and docket number or Regulatory Information Number (RIN) for this rule. For detailed instructions on submitting comments and additional information, see http:// www.regulations.gov. If you are submitting comments electronically through the Federal eRulemaking Portal and want to attach a document, we ask that it be in a text-based format. If you want to attach a document that is a scanned Adobe PDF file, it must be scanned as text and not as an image, thus allowing FCIC to search and copy certain portions of your submissions. For questions regarding attaching a document that is a scanned Adobe PDF file, please contact the RMA Web Content Team at (816) 823–4694 or by email at rmaweb.content@rma.usda.gov. Privacy Act: Anyone is able to search the electronic form of all comments received for any dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review the complete User Notice and Privacy Notice for Regulations.gov at http:// www.regulations.gov/#!privacyNotice. FOR FURTHER INFORMATION CONTACT: Tim Hoffmann, Product Administration and Standards Division, Risk Management Agency, United States Department of Agriculture, Beacon Facility, Stop 0812, Room 421, P.O. Box 419205, Kansas City, MO 64141–6205, telephone (816) 926–7730. SUPPLEMENTARY INFORMATION: Executive Order 12866 This rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, it has not been reviewed by the 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 the Office of Management PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 and Budget (OMB) under control number 0563–0064. E-Government Act Compliance FCIC is committed to complying with the E-Government Act of 2002, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes. Unfunded Mandates Reform Act of 1995 Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA. Executive Order 13132 It has been determined under section 1(a) of Executive Order 13132, Federalism, that this rule does not have sufficient implications to warrant consultation with the States. The provisions contained in this rule will not have a substantial direct effect on States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Executive Order 13175 This rule has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation will not have substantial and direct effects on Tribal governments and will not have significant Tribal implications. Regulatory Flexibility Act FCIC certifies that this regulation will not have a significant economic impact on a substantial number of small entities. The regulation does not require any more action on the part of the small entities than is required on the part of large entities. No matter the size of the submitter, all submitters are required to E:\FR\FM\25FEP1.SGM 25FEP1 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules perform the same tasks and those tasks are necessary to ensure that the concept proposal can be made into a viable and marketable submission and any submission can be made into viable and marketable, actuarially sound insurance product. 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 rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith. With respect to any direct action taken by FCIC or to require the insurance provider to take specific action under the terms of the crop insurance policy, the administrative appeal provisions published at 7 CFR part 11 must be exhausted before any action against FCIC for judicial review may be brought. wreier-aviles on DSK5TPTVN1PROD 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 makes available standard policies for producers to insure certain agricultural commodities against various agricultural production risks and perils. Under the provisions of section 508(h) of the Act, any person may submit or propose other crop insurance policies, plans of insurance, provisions of policies, or rates of premium to the FCIC Board of Directors (Board) for approval for reinsurance and subsidy. These policies may be submitted without regard to certain VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 limitations contained in the Act. Section 508(h) of the Act also requires that FCIC issue regulations to establish guidelines for the submission and Board review of policies or other material submitted to the Board under the Act. These regulations were published at 7 CFR part 400, subpart V (Subpart V) and provided the process for making submissions, its contents, the approval process, and the procedures for requests for reimbursement of research and development costs and maintenance. Section 522 of the Act authorizes the advance payment of research and development costs for concept proposals and this proposed rule includes the procedures for requesting such advanced payment. The Agricultural Act of 2014 amended parts of section 508(h) as well as other sections of the Act. One such change requires FCIC to develop procedures for submitting index-based weather plans of insurance. Another change mandated by the Agricultural Act of 2014 requires submitters of products for specialty crops to follow certain consultation requirements with grower groups in the major producing areas. The Agricultural Act of 2014 also contains amendments that require changes to review criteria and establish approval priorities and considerations of submissions under section 508(h) of the Federal Crop Insurance Act. In addition to the changes required by the Agricultural Act of 2014, other changes are being proposed to provide clarity or lessen the burden on submitters or FCIC. This rule contains proposed revisions to definitions to clarify the meaning of terms used in Subpart V as well as new definitions for terms that were either not defined or not previously used. This rule also contains proposed changes to clarify FCIC and submitter responsibilities with respect to timing, content, approval, reimbursement for research and development costs and maintenance costs, and potential user fees for such submissions. To lessen the burden on submitters, this rule proposes to reduce the number of printed copies of the submission that must be provided to FCIC. This rule proposes to provide additional guidance for submitting concept proposals, including confidentially standards and advance payment provisions. This rule also proposes changes to guidelines for nonreinsured supplemental policies to be submitted to FCIC including a proposed provision to decrease the burden on FCIC by increasing the time FCIC has to review such policies from 120 to 150 days. PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 10009 List of Subjects in 7 CFR Part 400 Administrative practice and procedure, Crop insurance. Proposed Rule Accordingly, as set forth in the preamble, FCIC proposes to amend 7 CFR part 400 by replacing subpart V in its entirety as set forth below: PART 400—GENERAL ADMINISTRATIVE REGULATIONS Revise subpart V to read as follows: Subpart V—Submission of Policies, Provisions of Policies, Rates of Premium, and Non-Reinsured Supplemental Policies Sec. 400.700 Basis, purpose, and applicability. 400.701 Definitions. 400.702 Confidentiality and duration of confidentiality. 400.703 Timing and format. 400.704 Covered by this subpart. 400.705 Contents for new and changed submissions, concept proposals, and index-based weather plans of insurance. 400.706 Review. 400.707 Presentation to the Board for approval or disapproval. 400.708 Post approval. 400.709 Roles and responsibilities. 400.710 Preemption and premium taxation. 400.711 Right of review, modification, and the withdrawal of approval. 400.712 Research and development reimbursement, maintenance reimbursement, advance payments for concept proposals, and user fees. 400.713 Non-reinsured supplemental (NRS) policy. Subpart V—Submission of Policies, Provisions of Policies, Rates of Premium, and Non-Reinsured Supplemental Policies. Authority: 7 U.S.C. 1506(l), 1506(o), 1508(h), 1522(b), 1523(i). § 400.700 Basis, purpose, and applicability. This subpart establishes guidelines, the approval process, and responsibilities of FCIC and the applicant for policies, provisions of policies, and rates of premium submitted to the Board as authorized under section 508(h) of the Act. It also provides procedures for reimbursement of research and development costs and maintenance costs for concept proposals and approved submissions. Guidelines for submitting concept proposals and the standards for approval and advance payments are provided in this subpart. This subpart also provides guidelines and reference to procedures for submitting index-based weather plans of insurance as authorized under section 523(i) of the Act. The procedures for E:\FR\FM\25FEP1.SGM 25FEP1 10010 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules submitting non-reinsured supplemental policies in accordance with the Standard Reinsurance Agreement (SRA) are also contained within. wreier-aviles on DSK5TPTVN1PROD with PROPOSALS § 400.701 Definitions. Act. Subtitle A of the Federal Crop Insurance Act, as amended (7 U.S.C. 1501–1524). Actuarial documents. The information for the crop or insurance year that is available for public inspection in your agent’s office and published on RMA’s Web site, and that shows available insurance policies, coverage levels, information needed to determine amounts of insurance and guarantees, prices, premium rates, premium adjustment percentages, practices, particular types or varieties of the insurable crop or agricultural commodity, insurable acreage, and other related information regarding insurance in the county or state. Actuarially appropriate. Premium rates expected to cover anticipated losses and establish a reasonable reserve based on valid reasoning, an examination of available risk data, or knowledge or experience of the expected value of future costs associated with the risk to be covered. This will be expressed by a combination of data including, but not limited to liability, premium, indemnity, and loss ratios based on actual data or simulations reflecting the risks covered by the policy. Administrative and operating (A&O) subsidy. The subsidy for the administrative and operating expenses authorized by the Act and paid by FCIC on behalf of the producer to the approved insurance provider. Loss adjustment expense reimbursement paid by FCIC for catastrophic risk protection (CAT) eligible crop insurance contracts is not considered as A&O subsidy. Advance payment. A portion, up to 50 percent, of the estimated research and development costs, that may be approved by the Board under section 522(b) of the Act for an approved concept proposal, and after the applicant has begun research and development activities, the Board may at its sole discretion provide up to an additional 25 percent advance payment of the estimated research and development costs. Agent. An individual licensed by the State in which an eligible crop insurance contract is sold and serviced for the reinsurance year, and who is employed by, or under contract with, the approved insurance provider, or its designee, to sell and service such eligible crop insurance contracts. VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 Applicant. Any person or entity that submits to the Board for approval a submission under section 508(h) of the Act, a concept proposal under section 522 of the Act, or an index-based weather plan of insurance under section 523(i) of the Act. Approved insurance provider. A legal entity that has entered into a reinsurance agreement with FCIC for the applicable reinsurance year. Approved procedures. The applicable handbooks, manuals, memoranda, bulletins or other directives issued by RMA or the Board. Board. The Board of Directors of FCIC. Commodity. Has the same meaning as section 518 of the Act. Complete. A submission, concept proposal, or index-based weather plan of insurance determined by RMA and the Board to contain all required documentation in accordance with § 400.705 and is of sufficient quality, as determined by the Board and RMA, to conduct a meaningful review. Complexity. Consideration of factors such as originality of policy materials, underwriting methods, actuarial rating methodology, and the pricing methodology used in design, construction and processes for the full development of a policy or plan of insurance. Concept proposal. A written proposal for a prospective submission, submitted under section 522 of the Act for advance payment of research and development, and containing enough information that the Board is able to determine that, if approved, will be developed into a viable and marketable policy consistent with Board approved procedures, these regulations, and section 508(h) of the Act. Delivery system. The components or parties that make the policy or plan of insurance available to the public for sale. The delivery system includes, but is not limited to RMA, approved insurance providers, and agents. Development. The process of composing documentation and procedures, pricing and rating methodologies, administrative and operating procedures, systems and software, supporting materials, and documentation necessary to create and implement a submission. Disinterested third party. A person who: (1) Does not have any familial relationship (parents, brothers, sisters, children, spouse, grandchildren, aunts, uncles, nieces, nephews, first cousins, or grandparents, related by blood, adoption or marriage, are considered to PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 have a familial relationship) with the submitter; (2) Who will not benefit financially from the submission, concept proposal, or index-based weather plan of insurance if approved, or from the administration of any approved policy or plan of insurance; or (3) Must not be employed by or work under contract or be associated in any similar manner to the applicant on a regular basis. Endorsement. A document that amends or revises an insurance policy reinsured under the Act in a manner that changes existing, or provides additional, coverage provided by such policy. Expert reviewer. Independent persons contracted by the Board who meets the criteria for underwriters or actuaries that are selected by the Board to review a concept proposal, submission, or index-based weather plan of insurance and provide advice to the Board regarding the results of their review, FCIC. The Federal Crop Insurance Corporation, a wholly owned government corporation within USDA, whose programs are administered by RMA. Index-based weather plan of insurance. A risk management product in which indemnities are based on a defined weather parameter exceeding or failing to meet a given threshold during a specified time period. The weather index is a proxy to measure expected loss of production when the defined weather parameter does not meet the threshold. Limited resource producer. Has the same meaning as the term defined by USDA at: www.lrftool.sc.egov.usda.gov/ LRP_Definition.aspx or a successor Web site. Livestock commodity. Has the same meaning as the term in section 523(i) of the Act. Maintenance. For the purposes of this subpart only, the process of continual support, revision or improvement, as needed, for an approved submission, including the periodic review of premium rates and prices, updating or modifying the rating or pricing methodologies, updating or modifying policy terms and conditions, adding a new commodity under similar policy terms and conditions with similar rating and pricing methodology, or expanding a plan or policy to additional states and counties, and any other actions necessary to provide adequate, reasonable and meaningful protection for producers, ensure actuarial soundness, or to respond to statutory or regulatory changes. A concept proposal that is similar to a previously approved E:\FR\FM\25FEP1.SGM 25FEP1 wreier-aviles on DSK5TPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules submission will be considered maintenance for the similar approved submission if submitted by the same person. Maintenance costs. Specific expenses associated with the maintenance of an approved submission as authorized by § 400.712. Maintenance period. A period of time that begins on the date the Board approves the submission and ends on the date that is not more than four reinsurance years after such approval. Manager. The Manager of FCIC. Marketing plan. A plan that identifies, at a minimum, the expected number of potential buyers, premium, liability, and the data upon which such information is based. Such data must include, but is not limited to, focus group results, market research studies, qualitative market estimates, effects upon the delivery system or participants, an assessment of factors that could negatively or adversely affect the market, responses from a reasonable representative cross-section of producers or significant market segment to be affected by the policy or plan of insurance, and if applicable, results from the consultation with the major producer groups of specialty crops demonstrating their interest in purchasing the product. Multiple peril crop insurance (MPCI). Policies reinsured by FCIC that provide protection against multiple causes of loss that adversely affect production or revenue, such as to natural disasters, such as hail, drought, and floods. National Agricultural Statistics Service (NASS). An agency within USDA, or its successor agency that collects and analyzes data collected from producers and other sources. Non-reinsured supplemental policy (NRS). A policy, endorsement, or other risk management tool not reinsured by FCIC under the Act, that offers additional coverage, other than for loss related to hail. Non-significant changes. Minor changes to the policy or plan of insurance, such as technical corrections, that do not affect the rating or pricing methodologies, the amount of subsidy owed, the amount or type of coverage, FCIC’s reinsurance risk, or any other condition that does not affect liability or the amount of loss to be paid under the policy. Revisions to approved plans required by statutory or regulatory changes are included in this category. Changes to the policy that involve concepts that have been previously sent for expert review are also included in this category. Plan of insurance. A class of policies, such as yield, revenue, or area based VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 that offers a specific type of coverage to one or more agricultural commodities. Policy. Has the same meaning as the term in section 1 of the Basic Provisions (7 CFR 457.8). Rate of premium. The dollar amount per insured unit, or percentage rate per dollar of liability, that is needed to pay anticipated losses and provide a reasonable reserve. Reinsurance year. The term beginning July 1 and ending on June 30 of the following year and, for reference purposes, identified by reference to the year containing June. Related material. The actuarial documents for the insured commodity and any underwriting or loss adjustment manuals, handbooks, forms, instructions or other information needed to administer the policy. Research. For the purposes of development, the gathering of information related to: producer needs and interests for risk management; the marketability of the policy or plan of insurance; appropriate policy terms, premium rates, price elections, administrative and operating procedures, supporting materials, documentation, and the systems and software necessary to implement a policy or plan of insurance. The gathering of information to determine whether it is feasible to expand a policy or plan of insurance to a new area or to cover a new commodity under the same policy terms and conditions, price, and premium rates is not considered research. Research and development costs. Specific expenses incurred and directly related to the research and development activities of a submission as authorized in § 400.712. Risk Management Agency (RMA). An agency within USDA that is authorized to administer the crop insurance program on behalf of FCIC. Risk subsidy. The portion of the premium paid by FCIC on behalf of the insured. Sales closing date. A date contained in the Special Provisions by which an application must be filed and the last date by which the insured may change the crop insurance coverage for a crop year. Secretary. The Secretary of the United States Department of Agriculture. Significant change. Any change to the policy or plan of insurance that may affect the rating and pricing methodologies, the amount of subsidy owed, the amount of coverage, the interests of producers, FCIC’s reinsurance risk, or any condition that may affect liability or the amount of loss to be paid under the policy. PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 10011 Special Provisions. Has the same meaning as the term in section 1 of the Basic Provisions (7 CFR 457.8). Specialty crops. Fruits and vegetables, tree nuts, dried fruits, and horticulture and nursery crops (including floriculture). Socially disadvantaged producer. Has the same meaning as section 2501(E) of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 2279(e)). Standard Reinsurance Agreement (SRA). The reinsurance agreement between FCIC and the approved insurance provider, under which the approved insurance provider is authorized to sell and service the eligible crop insurance contracts for which the premium discount is proposed. For the purposes of this subpart, all references to the SRA will also include any other reinsurance agreements entered into with FCIC, including the Livestock Price Reinsurance Agreement. Submission. A policy, plan of insurance, provision of a policy or plan of insurance, or rates of premium provided by an applicant to FCIC in accordance with the requirements of § 400.705. Submissions as referenced in this subpart do not include concept proposals, index-based weather plans of insurance, or non-reinsured supplemental policies. Submitter. Same meaning as applicant. Sufficient quality. The material presented is complete, understandable and unambiguous, so that a disinterested third party can understand, comprehend and make calculations, draw substantiated conclusions or results to determine whether the submission, concept proposal, or index-based weather plan of insurance is, or can result in, a viable and marketable insurance product with actuarially appropriate rates, reasonable expected market prices, provides meaningful coverage, and that protects the interests of producers and program integrity. The material must be presented in Microsoft Office format and must also contain adequate information that is presented clearly enough for the determination to be made whether RMA has the resources to implement, administer, and deliver the submission effectively and efficiently. Liability (guarantee), premium, and indemnity are clearly defined and consistent in calculation throughout the policy materials and appropriate for the commodity and the risks covered. As applicable, the policy, loss adjustment methods, underwriting procedures, and actuarial rating and pricing E:\FR\FM\25FEP1.SGM 25FEP1 10012 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules methodologies must be clearly identified and correspond to the risks covered. Targeted producer. Producers who are considered small, socially disadvantaged, beginning and limited resource or other specific aspects designated by FCIC for review. USDA. The United States Department of Agriculture. User fees. Fees, approved by the Board, that can be charged to approved insurance provider for use of a policy or plan of insurance once the period for maintenance has expired that covers the expected maintenance costs to be incurred by the submitter. Viable and marketable. A determination by the Board based on a detailed, written marketing plan demonstrating that a sufficient number of producers will purchase the product to justify the resources and expenses required to offer the product for sale and maintain the product for subsequent years. wreier-aviles on DSK5TPTVN1PROD with PROPOSALS § 400.702 Confidentiality and duration of confidentiality. (a) Pursuant to section 508(h)(4)(A) of the Act, prior to approval by the Board, any submission submitted to the Board under section 508(h) of the Act, concept proposal submitted under section 522 of the Act, or index-based weather plan of insurance submitted under section 523(i) of the Act, including any information generated from the submission, concept proposal, or indexbased weather plan of insurance, will be considered confidential commercial or financial information for purposes of 5 U.S.C. 552(b)(4) and will not be released by FCIC to the public, unless the applicant authorizes such release in writing. (b) Once the Board approves a submission or an index-based weather plan of insurance, information provided with the submission (including information from the concept proposal) or the index-based weather plan of insurance, or generated in the approval process, may be released to the public, as applicable, including any mathematical modeling and data, unless it remains confidential business information under 5 U.S.C. 552(b)(4). While the expert reviews are releasable once the submission or an index-based weather plan of insurance has been approved, the names of the expert reviewers may be redacted to prevent any harassment or undue pressure on the expert reviewers. (c) Any submission, concept proposal, or index-based weather plan of insurance disapproved by the Board will remain confidential commercial or VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 financial information in accordance with 5 U.S.C. 552(b)(4) and no information related to such submission, concept proposal, or index-based weather plan of insurance will be released by FCIC unless authorized in writing by the applicant. (d) All submissions, concept proposals, and index-based weather plans of insurance, will be kept confidential until approved by the Board and will be given an identification number for tracking purposes, unless the applicant advises otherwise. § 400.703 Timing and format. (a) A submission, concept proposal, or index-based weather plan of insurance may only be provided to FCIC during the first five business days in January, April, July, and October. (b) A submission, concept proposal, or index-based weather plan of insurance must be provided to FCIC in the following format: (1) Electronic format, sent to the address in paragraph (d)(1) of this section by the due date in paragraph (a) of this section. The electronic copy must be provided as a single document so that when printed the order and content exactly match the hard copy; and (2) Two hard copies, mailed to the addresses in paragraph (d)(2) of this section and postmarked by the due date in paragraph (a) of this section. The hard copies must exactly match the electronic copy. (c) Any submission, concept proposal, or index-based weather plan of insurance not provided within the first 5 business days of a month stated in paragraph (a) of this section will be considered to have been provided in the next month stated in paragraph (a). For example, if an applicant provides a submission on January 10, it will be considered to have been received on April 1. (d) Any submission, concept proposal, or index-based weather plan of insurance must be provided: (1) In electronic format to the Deputy Administrator for Product Management (or successor) at DeputyAdministrator@ rma.usda.gov and the Administrator at Administrator@rma.usda.gov; and (2) In hard copy format, with one hard copy provided to the Deputy Administrator for Product Management (or any successor position), USDA/Risk Management Agency, Beacon Facility Mail Stop 0812, 9240 Troost Ave., Kansas City, MO 64131–3055, and one identical hard copy must be provided to the Administrator, Risk Management Agency, 1400 Independence Ave., Stop PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 0801, Room 3053 South Building, Washington, DC 20250–0801. (e) In addition to the requirements in paragraph (a) of this section, a submission must be received not later than 240 days prior to the earliest proposed sales closing date to be considered for sale in the requested crop year. (f) To be offered for sale in a crop year, there must be at least sixty days between the date the policy has been approved by the Board and ready to be made available for sale and the earliest sales closing date, unless this requirement is waived by the Board. (g) Notwithstanding, paragraph (f) of this section, the Board, or RMA if authorized by the Board, shall determine when sales can begin for a submission approved by the Board. § 400.704 Covered by this subpart. (a) An applicant may submit to the Board, in accordance with § 400.705, a submission that is: (1) A policy or plan of insurance not currently reinsured by FCIC; (2) One or more proposed revisions to a policy or plan of insurance authorized under the Act; or (3) Rates of premium for any policy or plan of insurance authorized under the Act. (b) An applicant must submit to the Board, any significant change to a previously approved submission, including requests for expansion, prior to making the change in accordance with § 400.705. (c) An applicant may submit a concept proposal to the Board prior to developing a full submission, in accordance with this subpart and the Procedures Handbook 17030— Approved Procedures for Submission of Concept Proposals Seeking Advance Payment of Research and Development Expenses, which can be found on the RMA Web site at www.rma.usda.gov. (d) An applicant who is an approved insurance provider may submit an index-based weather plan of insurance for consideration as a pilot program in accordance with this subpart and the Procedures Handbook 17050— Approved Procedures for Submission of Index-based Weather Plans of Insurance, which can be found on the RMA Web site at www.rma.usda.gov. (e) An applicant must submit a nonreinsured supplemental policy or endorsement to RMA in accordance with § 400.713. § 400.705 Contents for new and changed submissions, concept proposals, and indexed-based weather plans of insurance. (a) A complete submission must contain the following material, as E:\FR\FM\25FEP1.SGM 25FEP1 wreier-aviles on DSK5TPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules applicable, in the order given, in a 3ring binder for hard copies and in a single Microsoft Word document file for electronic copies, with a table of contents, page numbers, and section dividers clearly labeling each section, as applicable. All relevant materials should be provided in the designated section and not appended to the end of the submission. (b) The first section will contain general information numbered as follows (1, 2, 3, etc.), including, as applicable: (1) The applicant’s name(s), address or primary business location, phone number, and email address; (2) The type of submission (see § 400.704) and a notation of whether or not the submission was approved by the Board as a concept proposal; (3) A statement of whether the applicant is requesting: (i) Reinsurance; (ii) Risk subsidy; (iii) A&O subsidy; (iv) Reimbursement for research and development costs, as applicable and, if the submission was previously submitted as a concept proposal, the amount of the advance payment for expected research and development costs; or (v) Reimbursement for expected maintenance costs, if applicable; (4) The proposed agricultural commodities to be covered, including types, varieties, and practices covered by the submission; (5) The crop or insurance year and reinsurance year in which the submission is proposed to be available for purchase by producers; (6) The proposed sales closing date, if applicable, or if not applicable, the earliest date the applicant expects to release the product to the public; (7) The proposed area for the plan of insurance and if applicable, the reasons why the submission is not being proposed for other areas producing the commodity; (8) Any known or anticipated future expansion plans; (9) Identification, including names, addresses, telephone numbers, and email addresses, of the person(s) responsible for: (i) Addressing questions regarding the policy, underwriting rules, loss adjustment procedures, rate and price methodologies, data processing and record-keeping requirements, and any other questions that may arise in implementing or administering the program if it is approved; and (ii) Annual reviews to ensure compliance with all requirements of the Act, this subpart, and any agreements VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 executed between the applicant and FCIC; and (10) A statement of whether the submission will be filed with the applicable office responsible for regulating insurance in each state proposed for insurance coverage, and if not, reasons why the submission will not be filed for review. (c) The second section must contain the benefits of the plan, including, as applicable, a summary that includes: (1) How the submission offers coverage or other benefits not currently available from existing public or private programs; (2) The projected demand for the submission, including support for and against development from market research, producers or producer groups, agents, lending institutions, and other interested parties that provide verifiable evidence of demand; (3) Potential impacts the submission may have on producers both where the new plan will and will not be available (include both positive and negative impacts); (4) How the submission meets public policy goals and objectives consistent with the Act and other laws, as well as policy goals supported by USDA and the Federal Government; and (5) A detailed description of the coverage provided by the submission and its applicability to all producers, including targeted producers. (d) Except as provided in this section, the third section must contain the policy, that is clearly written in plain language in accordance with the Plain Writing Act of 2010 (5 U.S.C. 301) such that producers will be able to understand the coverage being offered. The policy language permits actuaries to form a clear understanding of the payment contingencies for which they will set rates. The policy language does not encourage an excessive number of disputes or legal actions because of misinterpretations. (1) If the submission involves a new insurance policy or plan of insurance: (i) All applicable policy provisions; and (ii) A list of any additional coverage that may be elected by the insured in conjunction with the submission such as applicable endorsements (include a description of the coverage and how such coverage may be obtained). (2) If the submission involves a change to a previously approved policy, plan of insurance, or rates of premium, the proposed revisions, rationale for each change, data and analysis supporting each change, the impact of each change, and the impact of all changes in aggregate. PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 10013 (e) The fourth section must contain a marketing plan, including, as applicable: (1) A list of counties and states where the submission is proposed to be offered; (2) The amount of commodity (acres, head, board feet, etc.), the amount of production, and the value of each agricultural commodity proposed to be covered in each proposed county and state; (3) A reasonable estimate of expected liability and premium, for each proposed county and state and total expected liability and premium by crop year based on the marketing plan and an estimate of the market penetration of other similar products; (4) If available, any insurance experience for each year and in each proposed county and state in which the policy has been previously offered for sale including an evaluation of the policy’s performance and, if data are available, a comparison with other similar insurance policies reinsured under the Act; (5) Focus group results, both positive and negative reactions; (6) Market research studies that include: (i) Evidence the proposed submission will be positively received by producers; and (ii) Market estimates that show demand and level of coverage for which producers are willing to pay; (7) For submissions proposing products for specialty crops a consultation report must be provided that includes a summary and analysis of discussions with groups representing producers of those agricultural commodities in all major producing areas for commodities to be served or potentially impacted, either directly or indirectly, and the expected impact of the proposed submission on the general marketing and production of the crop from both a regional and national perspective including evidence that the submission will not create adverse market distortions; (8) Effects upon the delivery system or participants including: (i) Estimated computer system impacts and costs; (ii) Estimated administrative and training costs; and (iii) What, if any, efficiency will be gained; (9) Correspondence from producers expressing the need for such policy or plan of insurance; and (10) A commitment in writing from at least one approved insurance provider to sell and support the policy or plan of insurance. E:\FR\FM\25FEP1.SGM 25FEP1 wreier-aviles on DSK5TPTVN1PROD with PROPOSALS 10014 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules (f) The fifth section must contain the information related to the underwriting and loss adjustment of the submission, including as applicable: (1) Detailed rules for determining insurance eligibility, including all producer reporting requirements; (2) Relevant dates; (3) Step by step examples of the data and calculations needed to establish the insurance guarantee (liability) and premium per acre or other unit of measure, including worksheets that provide the calculations in sufficient detail and in the same order as presented in the policy to allow verification that the premiums charged for the coverage are consistent with policy provisions; (4) Step-by-step examples of calculations used to determine indemnity payments for all probable situations where a partial or total loss may occur; (5) A detailed description of the causes of loss covered by the policy or plan of insurance and any causes of loss excluded; (6) Any statements to be included in the actuarial documents including any intended Special Provisions statements that may change any underlying policy terms or conditions; and (7) The loss adjustment standards handbook for the policy or plan of insurance that includes: (i) A table of contents and introduction; (ii) A section containing abbreviations, acronyms, and definitions; (iii) A section containing insurance contract information (insurability requirements; Crop Provisions not applicable to catastrophic risk protection; specific unit division guidelines, if applicable; notice of damage or loss provisions; quality adjustment provisions; etc.); (iv) A section that thoroughly explains appraisal methods, if applicable; (v) Illustrative samples of all the applicable forms needed for insuring and adjusting losses in regards to the submission, plus detailed instructions for their use and completion; (vi) Instructions, examples of calculations, and loss adjustment procedures that are necessary to establish the amounts of coverage and loss; (vii) A section containing any special coverage information (i.e., replanting, tree replacement or rehabilitation, prevented planting, etc.), as applicable; and (viii) A section containing all applicable reference material (i.e., VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 minimum sample requirements, row width factors, etc.). (g) The sixth section must contain information related to prices and rates of premium, including, as applicable: (1) A detailed description of the specific premium rating methodology proposed to be used and the basis for selection of the rating methodology; (2) A list of all assumptions made in the premium rating and commodity pricing methodologies, and the basis for these assumptions; (3) A detailed description of the pricing and rating methodologies, including: (i) Supporting documentation; (ii) All mathematical formulas and equations; (iii) Data and data sources used in determining rates and prices and a detailed assessment of the data and how it supports the proposed rates and prices; (iv) A detailed explanation of how the rates account for each of the risks covered by the policy; and (v) A detailed explanation of how the prices are applicable to the policy; (4) An example of both a rate calculation and a price calculation; (5) A discussion of the applicant’s objective evaluation of the accuracy of the data, the short and long term availability of the data, and how the data will be obtained (if the data source is confidential or proprietary explain the cost of obtaining the data); and (6) An analysis of the results of simulations or modeling showing the performance of proposed rates and commodity prices, as applicable, based on one or more of the following (Such simulations must use all years of experience available to the applicant and must reflect both partial losses and total losses): (i) A recalculation of total premium and losses compared to a similar or comparable insurance plan offered under the authority of the Act with modifications, as needed, to represent the components of the submission; (ii) A simulation that shows liability, premium, indemnity, and loss ratios for the proposed insurance product based on the probability distributions used to develop the rates and commodity prices, as applicable, including sensitivity tests that demonstrate price or yield extremes, and the impact of inappropriate assumptions; or (iii) Any other comparable simulation that provides results indicating both aggregate and individual performance of the submission including expected liability, premium, indemnity, and loss ratios for the proposed insurance product, under various scenarios PO 00000 Frm 00007 Fmt 4702 Sfmt 4702 depicting good and poor actuarial experience. (h) The seventh section must contain forms, instructions for completing forms, and statements for all forms applicable to the submission in a format compatible with the Document and Supplemental Standards Handbook (FCIC 24040) found at http:// www.rma.usda.gov/handbooks/24000/ index.html. (i) The eighth section must contain the following: (1) A statement certifying that the submitter and any approved insurance provider or its affiliates will not solicit or market the submission until at least 60 days after all policy materials are released to the public by RMA, unless otherwise specified by the Board; (2) An explanation of any provision of the policy not authorized under the Act and identification of the portion of the rate of premium due to these provisions; and (3) If applicable, agent and loss adjuster training plans. (j) The ninth section must contain a statement from the submitter that, if the submission is approved, the submitter will work with RMA and its computer programmers as needed to assure an effective and efficient implementation process. The applicant must consult with RMA to determine whether or not the submission can be effectively and efficiently implemented and administered through the current information technology standards and systems. (1) If FCIC approves the submission and determines that its information technology systems have the capacity to implement and administer the submission, the applicant must provide a document detailing acceptable computer processing requirements consistent with those used by RMA as shown on the RMA Web site in the Appendix III/M–13 Handbook. This information details the acceptable computer processing requirements in a manner consistent with that used by RMA to facilitate the acceptance of producer applications and related data. (2) Any computer systems, requirements, code and software must be consistent with that used by RMA and comply with the standards established in Appendix III/M–13 Handbook, or any successor document, of the SRA or other reinsurance agreement as specified by FCIC. (3) These requirements are available from the USDA/Risk Management Agency, Beacon Facility Mail Stop 0812, 9240 Troost Ave., Kansas City, MO 64131–3055, or on RMA’s Web site at E:\FR\FM\25FEP1.SGM 25FEP1 wreier-aviles on DSK5TPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules http://www.rma.usda.gov/data/#m13, or a successor Web site. (k) The tenth section submitted on separate pages and in accordance with §§ 400.712 must specify: (1) On one page, the amount received for an advance payment, an estimate of the total amount of reimbursement for research and development costs (new products only) or an estimate for maintenance costs for the year that the submission will be effective (for products that are within the maintenance period); and (2) On another page, a detailed estimate of maintenance costs for future years of the maintenance period and the basis that such maintenance costs will be incurred, including, but not limited to: (i) Any anticipated expansion; (ii) Anticipated changes or updates to policy materials; (iii) The generation of premium rates; (iv) The determination of prices; and (v) Any other costs that the applicant anticipates will be requested for reimbursement of maintenance costs or expenses; (l) The eleventh section must contain executed (signed) certification statements in accordance with the following: (1) ‘‘{Applicant’s Name} hereby claim that the basis and amounts set forth in this section and § 400.712 are correct and due and owing to {Applicant’s Name} by FCIC under the Federal Crop Insurance Act’’; and (2) ‘‘{Applicant Name} understands that, in addition to criminal fines and imprisonment, the submission of false or fraudulent statements or claims may result in civil and administrative sanctions.’’ (m) The contents required for concept proposals are found in the Procedures Handbook 17030—Approved Procedures for Submission of Concept Proposals Seeking Advance Payment of Research and Development Expenses. In addition, the proposal must provide a detailed description of why the concept provides insurance: (1) In a significantly improved form; (2) To a crop or region not traditionally served by the Federal crop insurance program; or (3) In a form that addresses a recognized flaw or problem in the program; (n) The contents required for indexbased weather plans of insurance are found in the Procedures Handbook 17050—Approved Procedures for Submission of Index-based Weather Plans of Insurance. In accordance with the Board approved procedures, the approved insurance provider that VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 submits the index-based weather plan of insurance must provide evidence they have: (1) Adequate experience underwriting and administering policies or plans of insurance that are comparable to the proposed policy of plan of insurance; (2) Sufficient assets or reinsurance to satisfy the underwriting obligations of the approved insurance provider, and possess a sufficient insurance credit rating from an appropriate credit rating bureau; and (3) Applicable authority and approval from each State in which the approved insurance provider intends to sell the insurance product. § 400.706 Review. (a) Prior to providing a submission, concept proposal, or index-based weather plan of insurance to the Board, RMA will: (1) Review the submission, concept proposal, or index-based weather plan of insurance to determine if all required documentation is included in accordance with § 400.705; (2) Review the submission, concept proposal, or index-based weather plan of insurance to determine whether it is of sufficient quality to conduct a meaningful review such that the Board will be able to make an informed decision regarding approval or disapproval; (3) In accordance with section 508(h)(1)(B) of the Act, at its sole discretion, determine if the policy or plan of insurance: (i) Will likely result in a viable and marketable policy; (ii) Will provide crop insurance coverage in a significantly improved form; and (iii) Adequately protect the interests of producers. (4) Except for submissions developed from a concept proposal funded for advanced payment by the Board, reject and return any submission, concept proposal, or indexed based weather plan of insurance that: (i) Does not contain all the required information or is not of sufficient quality to conduct a meaningful review; (ii) Is unlikely result in a viable and marketable policy; (iii) Will not provide crop insurance coverage in a significantly improved form; and (iv) Will not adequately protect the interests of producers. (5) Except as provided in paragraph (a)(4) of this section or if the submission was developed from an approved concept proposal, forward the submission, concept proposal, or indexbased weather plan of insurance, and PO 00000 Frm 00008 Fmt 4702 Sfmt 4702 10015 the results of RMA’s initial review, to the Board for its determination of completeness. (b) Upon the Board’s receipt of a submission, the Board will: (1) Determine if the submission is complete (The date the Board votes to contract with the expert reviewers is the date the submission is deemed to be complete for the start of the 120 day time-period for approval); (2) Unless the submission makes nonsignificant changes to a policy or plan of insurance, or involves policy provisions that have already undergone expert review, forward the complete submission to at least five expert reviewers to review the submission: (i) Of the five expert reviewers, no more than one will be employed by the Federal Government, and none may be employed by any approved insurance provider or their representative; and (ii) The expert reviewers will each provide their individual assessment of whether the submission: (A) Protects the interests of agricultural producers and taxpayers; (B) Is actuarially appropriate; (C) Follows appropriate insurance principles; (D) Meets the requirements of the Act; (E) Does not contain excessive risks; (F) Follows sound, reasonable, and appropriate underwriting principles; (G) Will provide a new kind of coverage that is likely to be viable and marketable; (H) Will provide crop insurance coverage in a manner that addresses a clear and identifiable flaw or problem in an existing policy; (I) Will provide a new kind of coverage for a commodity that previously had no available crop insurance, or has demonstrated a low level of participation or coverage level under existing coverage; (J) May have a significant adverse impact on the crop insurance delivery system; (K) Contains a marketing plan that reasonably demonstrates the product would be viable and marketable; (L) If applicable, contains a consultation report that provides evidence the submission will not create adverse market distortions; and (M) Meets any other criteria the Board may deem necessary; (3) Return to the applicant any submission the Board determines is not complete, along with an explanation of the reason for the determination and: (i) With respect to submissions developed from approved concept proposals, the provisions in § 400.712(c)(1) shall apply; and (ii) Except for submissions developed from concept proposals, if the E:\FR\FM\25FEP1.SGM 25FEP1 wreier-aviles on DSK5TPTVN1PROD with PROPOSALS 10016 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules submission is resubmitted at a later date, it will be considered a new submission solely for the purpose of determining the amount of time that the Board must take action; (4) For complete submissions: (i) Request review by RMA to provide its assessment of whether the submission: (A) Meets the criteria listed in subsections (b)(2)(ii)(A) through (M); (B) Is consistent with USDA’s public policy goals; (C) Does not increase or shift risk to any other FCIC reinsured policy; (D) Can be implemented, administered, and delivered effectively and efficiently using RMA’s information technology and delivery systems; and (E) Contains requested amounts of government reinsurance, risk subsidy, and administrative and operating subsidies that are reasonable and appropriate for the type of coverage provided by the policy submission; and (ii) Seek review from the Office of the General Counsel (OGC) to determine if the submission conforms to the requirements of the Act and all applicable Federal statutes and regulations. (5) Unless all the requirements for approval for submissions in this subsection are met or reasons for notice of disapproval exist as specified in subsection (k), provide a notice of intent to disapprove, including the reasons for the intent to disapprove. (c) Upon the Board’s receipt of a concept proposal, the Board will: (1) Determine whether the concept proposal is complete (The date the Board votes to contract with expert reviewers is the date the concept proposal is deemed to be a complete concept proposal for the start of the 120 day time-period for approval); (2) If complete, forward the complete concept proposal to at least two expert reviewers with underwriting or actuarial experience to review the concept in accordance with section 522(b)(2) of the Act, this subpart, and Procedures Handbook 17030—Approved Procedures for Submission of Concept Proposals Seeking Advance Payment of Research and Development Expenses; (3) Return to the applicant any concept proposal the Board determines is not complete, along with an explanation of the reason for the determination (If the concept proposal is resubmitted at a later date, it will be considered a new concept proposal solely for the purposes of determining the amount of time that the Board must take action); (4) Determine whether the concept proposal, if developed into a policy or VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 plan of insurance would, in good faith, would meet the requirement of being likely to result in a viable and marketable policy consistent with section 508(h); (5) At its sole discretion, determine whether the concept proposal, if developed into a policy or plan of insurance would meet the requirement of providing coverage: (i) In a significantly improved form; (ii) To a crop or region not traditionally served by the Federal crop insurance program; or (iii) In a form that addresses a recognized flaw or problem in the program; (6) Determine whether the proposed budget and timetable are reasonable; (7) Determine whether the concept proposal meets all other requirements imposed by the Board or as otherwise specified in Procedures Handbook 17030—Approved Procedures for Submission of Concept Proposals Seeking Advance Payment of Research and Development Expenses; (8) Provide a date by which the submission must be provided in consultation with the applicant; and (9) Unless all the requirements for approval of concept proposals in this subsection are met or reasons for disapproval exist as specified in subsection (l), provide a notice of disapproval, including the reasons for disapproval. (d) Upon the Board’s receipt of an index-based weather plan of insurance, the Board will: (1) Determine whether the indexbased weather plan of insurance is complete (The date the Board votes to contract with expert reviewers is the date the index-based weather plan of insurance is deemed to be a complete for the start of the 120 day time-period for approval); (2) If determined to be complete, contract with five expert reviewers and review the index-based weather plan of insurance in accordance with section 523(i) of the Act, this subpart, and Procedures Handbook 17050— Approved Procedures for Submission of Index-based Weather Plans of Insurance; (3) Return to the applicant any indexbased weather plan of insurance the Board determines is not complete, along with an explanation of the reason for the determination (If the index-based weather plan of insurance is resubmitted at a later date, it will be considered a new index-based weather plan of insurance solely for the purposes of determining the amount of time that the Board must take action); (4) Give the highest priority for approval of index-based weather plans PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 of insurance that provide a new kind of coverage for specialty crops and livestock commodities that previously had no available crop insurance, or has demonstrated a low level of participation under existing coverage; and (5) Unless all the requirements for approval of index-based weather plans of insurance in this subsection are met or reasons for notice of disapproval exist as specified in paragraph (m) of this section, provide a notice of intent to disapprove including the reasons for the intent to disapprove. (e) All comments and evaluations will be provided to the Board by a date determined by the Board to allow the Board adequate time for review. (f) The Board will consider all comments, evaluations, and recommendations in its review process. Prior to making a decision, the Board may request additional information from RMA, OGC, the expert reviewers, or the applicant. (g) In considering whether to approve a submission and when such submission will be offered for sale, the Board will: (1) First, consider policies or plans of insurance that address underserved commodities, including commodities for which there is no insurance; (2) Second, consider existing policies or plans of insurance for which there is inadequate coverage or there exists low levels of participation; and (3) Last, consider all policies or plans of insurance submitted to the Board that do not meet the criteria described in paragraph (g)(1) or (2) of this section. (h) At any time an applicant may request a time delay after the submission, concept proposal, or indexbased weather plan of insurance has been placed on the Board meeting agenda. The Board is not required to agree to such an extension. (1) With respect to submissions from concept proposals approved by the Board for advanced payment, the applicant must provide good cause why consideration should be delayed. (2) Any requested time delay is not limited in the length of time unless a date is set by the Board by which all revisions to the submission, concept proposal or indexed-based weather plan of insurance must be made. However, delays may make implementation of the submission for the targeted crop year impractical or impossible as determined by the Board. (3) The time period during which the Board will make a decision to approve or disapprove the submission, concept proposal or indexed-based weather plan of insurance shall be extended E:\FR\FM\25FEP1.SGM 25FEP1 wreier-aviles on DSK5TPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules commensurately with any time delay requested by the applicant. (i) The applicant may withdraw a submission, concept proposal, indexbased weather plan of insurance, or a portion of a submission or concept proposal, at any time by presenting a request to the Board. A withdrawn submission, concept proposal or indexbased weather plan of insurance that is resubmitted will be deemed a new submission, concept proposal, or indexbased weather plan of insurance solely for the purposes of determining the amount of time that the Board must take action. (j) The Board will render a decision on a submission, concept proposal, or indexed-based weather plan of insurance, with or without revision within 90 days after the date the submission, concept proposal, or indexed-based weather plan of insurance is considered complete by the Board, unless the Board agrees to a time delay in accordance with paragraph (h) of this section. Failure to approve a submission, concept proposal, or indexed-based weather plan of insurance constitutes intent to give of intent to disapprove a submission or index-based weather plan of insurance or disapproval of a concept proposal. (k) The Board may provide a notice of intent to disapprove a submission if it determines: (1) The interests of producers and taxpayers are not protected, including but not limited to: (i) The submission does not provide adequate coverage or treats producers disparately; (ii) The applicant has not presented sufficient documentation that the submission will provide a new kind of coverage that is likely to be viable and marketable; (iii) Coverage would be similar to another policy or plan of insurance that has not demonstrated a low level of participation or does not contain a clear and identifiable flaw, and the producer would not significantly benefit from the submission; (iv) The submission may create adverse market distortions or adversely impact other crops or agricultural commodities if marketed; (v) The submission will have a significant adverse impact on the private delivery system; or (vi) The submission cannot be implemented, administered, and delivered effectively and efficiently using RMA’s information technology and delivery systems; (2) The premium rates are not actuarially appropriate; VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 (3) The submission does not conform to sound insurance and underwriting principles; (4) The risks associated with the submission are excessive or it increases or shifts risk to another reinsured policy; (5) The submission does not meet the requirements of the Act; or (6) The 90 day deadline under subsection (i) will expire before the Board has time to make an informed decision to approve or disapprove the submission. (l) The Board may disapprove a concept proposal if it determines: (1) The concept, in good faith, will not likely result in a viable and marketable policy consistent with section 508(h); (2) At the sole discretion of the Board, the concept, if developed into a policy and approved by the Board, would not provide crop insurance coverage: (i) In a significantly improved form; (ii) To a crop or region not traditionally served by the Federal crop insurance program; or (iii) In a form that addresses a recognized flaw or problem in the program; (3) The proposed budget and timetable are not reasonable, as determined by the Board; or (4) The concept proposal fails to meet one or more requirements established by the Board. (m) The Board may provide a notice of intent to disapprove an index-based weather plan of insurance if it determines there is not: (1) Adequate experience underwriting and administering policies or plans of insurance that are comparable to the proposed policy or plan of insurance; (2) Sufficient assets or reinsurance to satisfy the underwriting obligations of the approved insurance provider, and possess a sufficient insurance credit rating from an appropriate credit rating bureau, in accordance with Board procedures; and (3) Applicable authority and approval from each State in which the approved insurance provider intends to sell the insurance product. (n) Unless otherwise provided for in this section: (1) If the Board intends to disapprove a submission or index-based weather plan of insurance or disapproves a concept proposal, the Board will provide the applicant with a written explanation outlining the basis for the intent to disapprove or disapproval; and (2) Any approval or disapproval of a submission, concept proposal, or indexbased weather plan of insurance must be made by the Board in writing not PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 10017 later than 120 days after the Board has determined it to be complete. (o) If a notice of intent to disapprove all or part of a submission or indexbased weather plan of insurance has been provided by the Board, the applicant must provide written notice to the Board not later than 30 days after the Board provides such notice if the submission or index-based weather plan of insurance will be modified. If the applicant does not respond within the 30-day period, the Board will send the applicant a letter stating the submission or index-based weather plan of insurance is disapproved. (p) If the applicant elects to modify the submission or index-based weather plan of insurance: (1) The applicant must advise the Board of a date by which the modified submission or index-based weather plan of insurance will be presented to the Board; and (2) The remainder of the time left between the Board’s notice of intent to disapprove and the expiration of the 120 day deadline is tolled until the modified submission or index-based weather plan of insurance is received by the Board. (3) The Board will disapprove a modified submission or index-based weather plan of insurance if the: (i) Causes for disapproval stated by the Board in its notification of intent to disapprove the submission or indexbased weather plan of insurance are not satisfactorily addressed; (ii) Board determines there is insufficient time for the Board to finish its review before the expiration of the 120-day deadline for disapproval of a submission or index-based weather plan of insurance, unless the applicant grants the Board an extension of time to adequately consider the modified submission or index-based weather plan of insurance (If an extension of time is agreed upon, the time period during which the Board must act on the modified submission or index-based weather plan of insurance will tolled during the extension); or (iii) Applicant does not present a modification of the submission or index-based weather plan of insurance to the Board on the date the applicant specified and the applicant does not request an additional time delay. (q) If the Board fails to render a decision on a new submission or indexbased weather plan of insurance within the time periods specified in paragraph (j) or (n) of this section, such submission or index-based weather plan of insurance will be deemed approved by the Board for the initial reinsurance year designated for the submission or indexbased weather plan of insurance. The E:\FR\FM\25FEP1.SGM 25FEP1 10018 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules Board must approve the submission or index-based weather plan of insurance for it to be available for any subsequent reinsurance year. § 400.707 Presentation to the Board for approval or disapproval. (a) The Board will inform the applicant of the date, time, and place of the Board meeting. (b) The applicant will be given the opportunity and is encouraged to present the submission, concept proposal, or index-based weather plan of insurance to the Board in person. The applicant must confirm in writing, email or fax whether the applicant will present in person to the Board. (c) If the applicant elects not to present the submission, concept proposal, or index-based weather plan of insurance to the Board, the Board will make its decision based on the information provided in accordance with § 400.705 and § 400.706. wreier-aviles on DSK5TPTVN1PROD with PROPOSALS § 400.708 Post approval. (a) After a submission is approved by the Board, and prior to it being made available for sale to producers: (1) The following must be executed, as applicable: (i) If required by FCIC, an agreement between the applicant and FCIC that specifies: (A) In addition to the requirements in § 400.709, responsibilities of each with respect to the implementation, delivery and maintenance of the submission; and (B) The required timeframes for submission of any information and documentation needed to administer the approved submission; (ii) A reinsurance agreement if terms and conditions differ from the available existing reinsurance agreements; and (iii) A training package to facilitate implementation of the approved submission; (2) The Board may limit the availability of coverage, for any policy or plan of insurance developed under the authority of the Act and this regulation, on any farm or in any county or area; (3) A submission approved by the Board under this subpart will be made available to all approved insurance providers under the same reinsurance, subsidy, and terms and conditions as received by the applicant; (4) Any solicitation, sales, marketing, or advertising of the approved submission by the applicant before FCIC has made the policy materials available to all interested parties through its official issuance system will result in the denial of reinsurance, risk subsidy, and A&O subsidy for those policies affected; and VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 (5) The property rights to the submission will automatically transfer to FCIC if the applicant elects not to maintain the submission under § 400.712(a)(3) or fails to notify FCIC of its decision to elect or not elect maintenance of the program under § 400.712(l). (b) Requirements and procedures for approved index-based weather plans of insurance are contained in Procedures Handbook 17050—Approved Procedures for Submission of Indexbased Weather Plans of Insurance. In accordance with the Board approved procedures, index-based weather plans of insurance are not eligible for federal reinsurance, but may be approved for risk subsidy and A&O subsidy. § 400.709 Roles and responsibilities. (a) With respect to the applicant: (1) The applicant is responsible for: (i) Preparing and ensuring that all policy documents, rates of premium, prices, and supporting materials, including actuarial documents, are submitted by the deadline specified by FCIC, in the form approved by the Board, and are in compliance with Section 508 of the Rehabilitation Act; (ii) Annually updating and providing maintenance changes no later than 180 days prior to the earliest contract change date for the commodity in all counties or states in which the policy or plan of insurance is sold; (iii) Timely addressing responses to procedural issues, questions, problems or clarifications in regard to a policy or plan of insurance (all such resolutions for approved submissions will be communicated to all approved insurance providers through FCIC’s official issuance system); and (iv) If requested by the Board, providing an annual review of the policy’s performance, in writing to the Board, 180 days prior to the contract change date for the plan of insurance (The first annual report will be submitted one full year after implementation of an approved policy or plan of insurance, as agreed to by the submitter and RMA); (2) Only the applicant may make changes to the policy, plan of insurance, or rates of premium approved by the Board: (i) Any changes to approved submissions, both non-significant and significant, must be submitted to FCIC in the form of a submission for review in accordance with this subpart no later than 180 days prior to the earliest contract change date for the commodity in all counties or states in which the policy or plan of insurance is sold; and PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 (ii) Significant changes will be considered a new submission; (3) Except as provided in paragraph (a)(4) of this section, the applicant is solely liable for any mistakes, errors, or flaws in the submitted policy, plan of insurance, their related materials, or the rates of premium that have been approved by the Board unless the policy or plan of insurance is transferred to FCIC in accordance with § 400.712(l) (The applicant remains liable for any mistakes, errors, or flaws that occurred prior to transfer of the policy or plan of insurance to FCIC); (4) If the mistake, error, or flaw in the policy, plan of insurance, their related materials, or the rates of premium is discovered more than 45 days prior to the cancellation or termination date for the policy or plan of insurance, the applicant may request in writing that FCIC withdraw the approved policy, plan of insurance, or rates of premium: (i) Such request must state the discovered mistake, error, or flaw in the policy, plan of insurance, or rates of premium, and the expected impact on the program; and (ii) For all timely received requests for withdrawal, no liability will attach to such policies, plans of insurance, or rates of premium that have been withdrawn and no producer, approved insurance provider, or any other person will have a right of action against the applicant; (5) Notwithstanding the policy provisions regarding cancellation, any policy, plan of insurance, or rates of premium that have been withdrawn by the applicant, in accordance with paragraph (a)(4) of this section is deemed canceled and applications are deemed not accepted as of the date that FCIC publishes the notice of withdrawal on its Web site at www.rma.usda.gov. (i) Approved insurance providers will be notified in writing by FCIC that the policy, plan of insurance, or premium rates have been withdrawn; and (ii) Producers will have the option of selecting any other policy or plan of insurance authorized under the Act that is available in the area by the sales closing date for such policy or plan of insurance; and (6) Failure of the applicant to perform all of the applicant’s responsibilities may result in the withdrawal of approval for the policy or plan of insurance. (b) With respect to FCIC: (1) FCIC is responsible for: (i) Conducting a review of the submission in accordance with § 400.706 and providing its recommendations to the Board; (ii) With respect to submissions: E:\FR\FM\25FEP1.SGM 25FEP1 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules wreier-aviles on DSK5TPTVN1PROD with PROPOSALS (A) Ensuring that all approved insurance providers receive the approved policy or plan of insurance, and related material, for sale to producers in a timely manner (All such information shall be communicated to all approved insurance providers through FCIC’s official issuance system); (B) As applicable, ensuring that approved insurance providers receive reinsurance under the same terms and conditions as the applicant (Approved insurance providers should contact FCIC to obtain and execute a copy of the reinsurance agreement) if required; and (C) Reviewing the activities of approved insurance providers, agents, loss adjusters, and producers to ensure that they are in accordance with the terms of the policy or plan of insurance, the reinsurance agreement, and all applicable procedures; (2) FCIC will not be liable for any mistakes, errors, or flaws in the policy, plan of insurance, their related materials, or the rates of premium and no cause of action may be taken against FCIC as a result of such mistake, error, or flaw in a submission or index-based weather plan of insurance submitted under this subpart; (3) If at any time prior to the cancellation date, FCIC discovers there is a mistake, error, or flaw in the policy, plan of insurance, their related materials, or the rates of premium, or any other reason for withdrawal of approval contained in § 400.706(k) exists, FCIC will deny reinsurance for such policy or plan of insurance (If reinsurance is denied, a written notice will be provided to on RMA’s Web site at www.rma.usda.gov); (4) If maintenance of the policy or plan of insurance is transferred to FCIC in accordance with § 400.712(l), FCIC will assume liability for the policy or plan of insurance for any mistake, error, or flaw that occur after the date the policy is transferred. (c) If approval by the Board is withdrawn or reinsurance is denied for any submission, the approved insurance provider must cancel the policy or plan of insurance in accordance with its terms. § 400.710 taxation. Preemption and premium A policy or plan of insurance that is approved by the Board for FCIC reinsurance is preempted from state and local taxation. This preemption does not apply to index-based weather plans of insurance approved for premium subsidy or A&O subsidy under this part. VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 § 400.711 Right of review, modification, and the withdrawal of approval. (a) At any time after approval, the Board may review any policy, plan of insurance, related material, or rates of premium approved under this subpart, including index-based weather plans of insurance and request additional information to determine whether the policy, plan of insurance, related material, or rates of premium comply with the requirements of this subpart. (b) The Board will notify the applicant of any problem or issue that may arise and allow the applicant an opportunity to make any needed change. If the contract change date has passed, the applicant will be liable for such problems or issues for the crop year in accordance with § 400.709 until the policy may be changed. (c) The Board may withdraw approval for the applicable policy, plan of insurance or rate of premium, including index-based weather plans of insurance, as applicable, if: (1) The applicant fails to perform the responsibilities stated under § 400.709(a); (2) The applicant does not timely and satisfactorily provide materials or resolve any issue to the Board’s satisfaction so that necessary changes can be made prior to the earliest contract change date; (3) The Board determines the applicable policy, plan of insurance or rate of premium, including index-based weather plans of insurance is not in conformance with the Act, these regulations or the applicable procedures; (4) The policy, plan of insurance, or rates of premium are not sufficiently marketable according to the applicant’s estimate in the submission or fails to perform sufficiently as determined by the Board; or (5) The interest of producers or tax payers is not protected or the continuation of the program raises questions or issues of program integrity. § 400.712 Research and development reimbursement, maintenance reimbursement, advance payments for concept proposals, and user fees. (a) For submissions approved by the Board for reinsurance under section 508(h) of the Act: (1) The submission may be eligible for a one-time payment of research and development costs and reimbursement of maintenance costs for up to four reinsurance years, as determined by the Board; (2) Reimbursement of research and development costs or maintenance costs will be considered as payment in full by PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 10019 FCIC for the submission, and no additional amounts will be owed to the applicant if the submission is transferred to FCIC in accordance with paragraph (l) of this section; and (3) If the applicant elects at any time not to continue to maintain the submission, it will automatically become the property of FCIC and the applicant will no longer have any property rights to the submission and will not receive any user fees for the plan of insurance; (b) The Board approved procedures and time-frames must be followed, or research and development costs and maintenance costs may not be reimbursed, unless otherwise determined by the Board. (1) After a submission has been approved by the Board for reinsurance, to be considered for reimbursement of: (i) Research and development costs, the applicant must submit the total amount requested and all supporting documentation to FCIC by electronic method or by hard copy and such information must be received by FCIC on or before August 1 immediately following the date the submission was released to approved insurance providers through FCIC’s issuance system; or (ii) Maintenance costs, the applicant must submit the total amount requested and all supporting documentation to FCIC by electronic method or by hard copy and such information must be received by FCIC on or before August 1 of each year of the maintenance period. (2) Given the limitation on funds, regardless of when the request is received, no payment will be made prior to September 15 of the applicable fiscal year. (c) Applicants submitting a concept proposal may request an advance payment of up to 50 percent of the projected total research and development costs, and after the applicant has begun research and development activities, the Board may at its sole discretion provide up to an additional 25 percent advance payment of the estimated research and development costs, if requested in accordance with Procedures Handbook 17030—Approved Procedures for Submission of Concept Proposals Seeking Advance Payment of Research and Development Expenses. (1) If a concept proposal is approved by the Board for advance payment, the applicant is responsible for independently developing a submission that is complete and of sufficient quality as specified in this subpart by the deadline set by the Board. E:\FR\FM\25FEP1.SGM 25FEP1 wreier-aviles on DSK5TPTVN1PROD with PROPOSALS 10020 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules (i) If an applicant fails to fulfill the obligation to provide a submission that is complete and of sufficient quality by the deadline set by the Board, the Board shall provide a notice of noncompliance to the applicant and allow not less than 30 days for the applicant to respond; (ii) If the applicant fails to respond, to the satisfaction of the Board, with just cause as to why a submission that is complete and of sufficient quality was not provided by the deadline set by the Board, the applicant shall return the amount of the advance payment plus interest at the rate of 1.25 percent simple interest per calendar month; (iii) If the applicant responds, to the satisfaction of the Board, with just cause as to why a submission that is complete and of sufficient quality was not provided by the deadline set by the Board, the applicant will be given a new deadline by which to provide a submission that is complete and of sufficient quality; and (iv) If the applicant fails to provide a submission that is complete and of sufficient quality by the deadline, no additional extensions will be approved by the Board and the applicant shall return the amount of the advance payment plus interest at the rate of 1.25 percent simple interest per calendar month. (2) If an applicant receives an advance payment for a portion of the expected research and development costs for a concept proposal that is developed into a submission and determined by the Board to be complete and of sufficient quality, but the submission is not approved by the Board following expert review, the Board will not: (i) Seek a refund of any advance payments for research and development costs; and (ii) Make any further research and development cost reimbursements associated with the submission. (d) Under section 522 of the Act, there are limited funds available on an annual fiscal year basis to pay for reimbursements of research and development costs (including advance payments for concept proposals) and maintenance costs. Consistent with paragraphs (e) through (j) of this section if all applicants’ requests for reimbursement of research and development costs (including advance payments for concept proposals) and maintenance costs in any fiscal year: (1) Do not exceed the maximum amount authorized by law, the applicants may receive the full amount of reimbursement determined reasonable by the Board; or VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 (2) Exceed the amount authorized by law, each applicant’s reimbursement determined reasonable by the Board will be determined by dividing the total amount of each individual applicant’s reimbursable costs authorized in paragraphs (e) through (j) of this section by the total amount of the aggregate of all applicants’ reimbursable costs authorized in paragraphs (e) through (j) for the year and multiplying the result by the amount of reimbursement authorized under the Act. (e) The amount of reimbursement for research and development costs requested by the applicant may be reduced based on: (1) The complexity of the policy, plan of insurance, or rates of premium, so requests for reimbursements for submissions: (i) Adding commodities to existing plans of insurance (i.e., Yield Protection and Revenue Protection under the Common Crop insurance Policy Basic Provisions, Area Risk Protection, Actual Revenue History, Whole Farm, Rainfall Index, Vegetative Index, etc.) may be reduced by as much as 20 percent; (ii) Using existing rating methodologies or commodity prices or a price methodology may be reduced by as much as 10 percent; (iii) Using existing policy provisions, procedures, etc., may be reduced by as much as 10 percent; and (2) The scope as measured by the agricultural commodities proposed to be covered or geographic area the proposed submission will cover, as determined by FCIC so requests for reimbursements for submissions: (i) That cover a single commodity may be reduced by 10 percent; and (ii) That cover a small geographic area compared to the total growing area for the commodity may be reduced by 10 percent. (f) Research and development and maintenance costs must be supported by itemized statements and supporting documentation (copies of contracts, billing statements, time sheets, travel vouchers, accounting ledgers, etc.). (1) Actual costs submitted will be examined for reasonableness and may be adjusted at the sole discretion of the Board. (2) Allowable research and development costs and maintenance costs (directly related to research and development or maintenance of the submission only) may include the following: (i) Wages and benefits, exclusive of bonuses, overtime pay, or shift differentials; PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 (A) One line per employee or contractor, include job title, total hours, and total dollars; (B) The rates charged must be commensurate with the tasks performed (For example, a person performing the task of data entry should not be paid at the rate for performing data analysis); (C) The wage rate and benefits shall not exceed two times the hourly wage rate plus benefits provided by the Bureau of Labor Statistics; and (D) The applicant must report any familial or business relationship that exists between the applicant and the contractor or employee (Reimbursement may be limited or denied if the contractor or employee is associated to the applicant and they may be considered as one and the same. This includes a separate entity being created by the applicant to conduct research and development. Reimbursement may be limited or denied if the contractor is paid a salary or other compensation); (ii) Travel and transportation (One line per event, include the job title, destination, purpose of travel, lodging cost, mileage, air or other identified transportation costs, food and miscellaneous expenses, other costs, and the total cost); (iii) Software and computer programming developed specifically to determine appropriate rates, prices, or coverage amounts (Identify the item, include the purpose, and provide receipts or contract or straight-time hourly wage, hours, and total cost. Software developed to send or receive data between the producer, agent, approved insurance provider or RMA or such other similar software may not be included as an allowable cost); (iv) Miscellaneous expenses such as postage, telephone, express mail, and printing (Identify the item, cost per unit, number of items, and total dollars); and (v) Training costs expended to facilitate implementation of a new approved submission (Include instructor(s) hourly rate, hours, and cost of materials and travel) conducted at a national level, directed to all approved insurance providers interested in selling the submission, and approved prior to the training by RMA). (3) The following expenses are specifically not eligible for research and development and maintenance cost reimbursement: (i) Copyright fees, patent fees, or any other charges, costs or expenses related to the use of intellectual property; (ii) Training costs, excluding training costs to facilitate implementation of the approved submission in accordance with subsection (f)(2)(v); (iii) State filing fees and expenses; E:\FR\FM\25FEP1.SGM 25FEP1 wreier-aviles on DSK5TPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules (iv) Normal ongoing administrative expenses or indirect overhead costs (for example, costs associated with the management or general functions of an organization, such as costs for internet service, telephone, utilities, and office supplies); (v) Paid or incurred losses; (vi) Loss adjustment expenses; (vii) Sales commission; (viii) Marketing costs; (ix) Lobbying costs; (x) Product or applicant liability resulting from the research, development, preparation or marketing of the policy; (xi) Copyright infringement claims resulting from the research, development, preparation or marketing of the policy; (xii) Costs of making program changes as a result of any mistakes, errors or flaws in the policy or plan of insurance; (xiii) Costs associated with building rents or space allocation; (xiv) Costs in paragraphs (i) and (j) of this section determined by the Board to be ineligible for reimbursement; and (xv) Local, State, or Federal taxes. (g) Requests for reimbursement of maintenance costs must be supported by itemized statements and supporting documentary evidence for each reinsurance year in the maintenance period. (1) Actual costs submitted will be examined for reasonableness and may be adjusted at the sole discretion of the Board. (2) Maintenance costs for the following activities may be reimbursed: (i) Expansion of the original submission into additional crops, counties or states; (ii) Non-significant changes to the policy and any related material; (iii) Non-significant or significant changes to the policy as necessary to protect program integrity or as required by Congress; and (iv) Any other activity that qualifies as maintenance. (h) Projected costs for research and development for concept proposals shall be based on a reasonable estimate of the costs allowed in paragraph (f) of this section. (i) If a submission is determined to be of insufficient quality to refer to expert review, or is considered incomplete and is subsequently resubmitted and approved, the costs to perfect the submission may not be considered reimbursable costs depending on the level of insufficiency or incompleteness of the submission, as determined at the sole discretion of the Board. (j) Reimbursement of costs associated with addressing issues raised by the VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 Board, expert reviewers and RMA will be evaluated based on the substance of the issue and the amount of time reasonably necessary to address the specific issue raised. Delays and additional costs caused by the inability or refusal to adequately address issues may not be considered reimbursable, as determined at the sole discretion of the Board. (k) If the Board withdraws its approval for reinsurance at any time during the period that reimbursement for maintenance is being made or user fees are being collected, no maintenance reimbursement shall be made nor any user fee be owed after the date of such withdrawal. (l) Not later than 180 days prior to the end of the last reinsurance year in which a maintenance reimbursement will be paid for the approved submission, the applicant must notify FCIC in writing regarding its decision on future ownership and maintenance of the policy or plan of insurance. (1) The applicant must notify FCIC in writing whether it intends to: (i) Continue to maintain the policy or plan of insurance and charge approved insurance providers a user fee to cover maintenance expenses for all policies earning premium; or (ii) Transfer responsibility for maintenance to FCIC. (2) If the applicant fails to notify FCIC in writing by the deadline, the policy or plan of insurance will automatically transfer to FCIC beginning with the next reinsurance year. (3) If the applicant elects to: (i) Continue to maintain the policy or plan of insurance, the applicant must submit a request for approval of the user fee by the Board at the time of the election; or (ii) Transfer the policy or plan of insurance to FCIC, FCIC may at its sole discretion, continue to maintain the policy or plan of insurance or elect to withdraw the availability of the policy or plan of insurance. (4) Requests for approval of the user fee must be accompanied by written documentation to support the amount requested will only cover direct costs to maintain the plan of insurance. Costs that are not eligible for research and development and maintenance reimbursements under this section are not eligible to be considered for determining the user fee. (5) The Board will approve the amount of user fee, including the maximum amount of total maintenance that may be collected per year, that is payable to the applicant by approved insurance providers unless the Board determines that the user fee charged: PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 10021 (i) Is unreasonable in relation to the maintenance costs associated with the policy or plan of insurance; or (ii) Unnecessarily inhibits the use of the policy or plan of insurance by approved insurance providers. (6) If the total user fee exceeds the maximum amount determined by the Board, the maximum amount determined by the Board will be divided by the number of policies earning premium to determine the amount to be paid by each approved insurance provider. (7) Reasonableness of the initial request to charge a user fee will be determined by the Board based on a comparison of the amount of reimbursement for maintenance previously received, the number of policies, the number of approved insurance providers, and the expected total amount of user fees to be received in any reinsurance year. (8) A user fee unnecessarily inhibits the use of a policy or plan of insurance if it is so high that approved insurance providers will not sell the policy. (9) The user fee charged to each approved insurance provider will be considered payment in full for the use of such policy, plan of insurance or rate of premium for the reinsurance year in which payment is made. (10) It is the sole responsibility of the applicant to collect such fees from an approved insurance provider and any indebtedness for such fees must be resolved by the applicant and approved insurance provider. (i) Applicants may request that FCIC provide the number of policies sold by each approved insurance provider. (ii) Such information will be provided not later than 90 days after such request is made or not later than 90 days after the requisite information has been provided to FCIC by the approved insurance provider, whichever is later. (11) Every two years after approval of a user fee, or if the applicant has made a significant change to the approved submission, applicants must submit documentation to the Board for review in determining if the user fee should be revised. (12) The Board may review the amount of the user fee at any time at its sole discretion. (m) The Board may consider information from the Equal Access to Justice Act, 5 U.S.C. 504, the Bureau of Labor Statistic’s Occupational Employment Statistics Survey, the Bureau of Labor Statistic’s Employment Cost Index, and any other information determined applicable by the Board, in making a determination whether to approve a submission for E:\FR\FM\25FEP1.SGM 25FEP1 10022 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules reimbursement of research and development costs, maintenance costs, or user fees. (n) For purposes of this section, rights to, or obligations of, research and development cost reimbursement, maintenance cost reimbursement, or user fees cannot be transferred from any individual or entity unless specifically approved in writing by the Board. (o) Applicants requesting reimbursement for research and development costs, maintenance costs, or user fees, may present their request in person to the Board prior to consideration for approval. (p) Index-based weather plans of insurance are not eligible for reimbursement from FCIC for maintenance costs or research and development costs. Submitters of approved index-based weather plans of insurance may collect user fees from other approved insurance providers in accordance with Procedures Handbook 17050—Approved Procedures for Submission of Index-based Weather Plans of Insurance. wreier-aviles on DSK5TPTVN1PROD with PROPOSALS § 400.713 Non-reinsured supplemental (NRS) policy. (a) Unless otherwise specified by FCIC, any NRS policy that covers the same agricultural commodity as any policy reinsured by FCIC under the Act must be provided to RMA to ensure it does not shift any loss under the FCIC reinsured policy. Failure to provide such NRS policy or endorsement to RMA prior to its issuance shall result in the denial of reinsurance, A&O subsidy and risk subsidy on the underlying FCIC reinsured policy for which such NRS policy was sold. (b) Three hard copies, and an electronic copy in a format approved by RMA, of the new or revised NRS policy and related materials must be submitted at least 150 days prior to the first sales closing date applicable to the NRS policy. At a minimum, examples that demonstrate how liability and indemnities are determined under differing scenarios must be included. (1) Hard copies of the NRS must be sent to the Deputy Administrator for Product Management (or successor), USDA/Risk Management Agency, Beacon Facility Mail Stop 0812, 9240 Troost Ave., Kansas City, MO 64131– 3055. (2) Electronic copies of the NRS must be sent to the Deputy Administrator for Product Management (or successor) at DeputyAdministrator@rma.usda.gov. (c) RMA will review the NRS policy. If any of the conditions found in paragraphs (c)(1) through (5) of this section are found to occur, FCIC will VerDate Sep<11>2014 15:09 Feb 24, 2015 Jkt 235001 deny reinsurance, A&O subsidy and risk subsidy on the underlying FCIC reinsured policy for which such NRS policy was sold. (1) If the NRS policy materially increases or shifts risk to the underlying policy or plan of insurance reinsured by FCIC. (i) An NRS policy will be considered to materially increase or shift risk to the underlying policy or plan of insurance reinsured by FCIC if it creates an incentive for moral hazard such as a financial incentive to increase the number or size of losses or, allows for aggregate indemnities in excess of the expected value of the insured commodity. (ii) The NRS must include language that clearly states no indemnity will be paid in excess of the initial value of the insured commodity. (2) The NRS reduces or limits the rights of the insured with respect to the underlying policy or plan of insurance reinsured by FCIC. An NRS policy will be considered to reduce or limit the rights of the insured with respect to the underlying policy or plan of insurance if it alters the terms or conditions of the underlying policy or otherwise preempts procedures issued by FCIC. (3) The NRS disrupts the marketplace. An NRS policy will be considered to disrupt the marketplace if it encourages planting more acres of the insured commodity in excess of normal market demand, adversely affects the sales or administration of reinsured policies, undermines producers’ confidence in the Federal crop insurance program, or harms public perception of the Federal crop insurance program. (4) The NRS is an impermissible rebate. An NRS may be considered to be an impermissible rebate if FCIC determines that the premium rates charged are insufficient to cover the expected losses and a reasonable reserve or it offers other benefits that are generally provided at a cost. (5) The NRS policy is conditioned upon or provides incentive for the purchase of the underlying policy or plan of insurance reinsured by FCIC with a specific agent or approved insurance provider. (d) RMA will respond not less than 60 days before the first sales closing date or provide notice why RMA is unable to respond within the time frame allotted. (e) NRS policies reviewed by RMA will not need to be submitted for a five year period unless a change is made to the NRS or the underlying policy or the loss ratio for the NRS policy exceeds 2.0. Once any changes are made to either policy or the five year period has PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 concluded, the NRS must be resubmitted for review. Signed in Washington, DC, on February 13, 2015. Brandon Willis, Manager, Federal Crop Insurance Corporation. [FR Doc. 2015–03604 Filed 2–23–15; 8:45 am] BILLING CODE 3410–08–P COMMODITY FUTURES TRADING COMMISSION 17 CFR Parts 1, 15, 17, 19, 32, 37, 38, 140, and 150 RIN 3038–AD99; 3038–AD82 Position Limits for Derivatives and Aggregation of Positions Commodity Futures Trading Commission. ACTION: Notice of proposed rulemaking; provision of Table 11a; and reopening of comment periods. AGENCY: On December 12, 2013, the Commodity Futures Trading Commission (‘‘Commission’’) published in the Federal Register a notice of proposed rulemaking (the ‘‘Position Limits Proposal’’) to establish speculative position limits for 28 exempt and agricultural commodity futures and options contracts and the physical commodity swaps that are economically equivalent to such contracts. On November 15, 2013, the Commission published in the Federal Register a notice of proposed rulemaking (the ‘‘Aggregation Proposal’’) to amend existing regulations setting out the Commission’s policy for aggregation under its position limits regime. The Commission’s Energy and Environmental Markets Advisory Committee has scheduled a public meeting to be held on February 26, 2015, which will consider, among other matters, exemptions for bona fide hedging positions. In conjunction with the meeting of the Commission’s Energy and Environmental Markets Advisory Committee, the Commission will post an agenda and associated materials, if any, on the Commission’s Web site; additionally, access to a video webcast of the meeting will be added to the Web site. In addition, and in connection with the meeting, the Commission is providing counts of the unique persons over percentages of the 28 proposed position limit levels (currently provided in Table 11 of the Position Limits Proposal based on counts from the period of January 1, 2011, to December 31, 2012 period) in a new table, Table SUMMARY: E:\FR\FM\25FEP1.SGM 25FEP1

Agencies

[Federal Register Volume 80, Number 37 (Wednesday, February 25, 2015)]
[Proposed Rules]
[Pages 10008-10022]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-03604]


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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.

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Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / 
Proposed Rules

[[Page 10008]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 400

[Docket No. FCIC-13-0006]
RIN 0563-AC46


Part 400--General Administrative Regulation--Subpart V--
Submission of Policies, Provisions of Policies and Rates of Premium

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to 
replace the General Administrative Regulation--Subpart V--Submission of 
Policies, Provisions of Policies and Rates of Premium. The intended 
effect of this action is to incorporate legislative changes to the 
Federal Crop Insurance Act (Act) stemming from the Agricultural Act of 
2014, clarify existing regulations, lessen the burden of submitters of 
crop insurance policies, provisions of policies, or rates of premium 
under section 508(h) of the Act, provide guidance on the submission and 
payment for concept proposals under section 522 of the Act, and to 
incorporate changes that are consistent with those made in the Common 
Crop Insurance Policy Basic Provisions (Basic Provisions).

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business April 27, 2015 and will be considered 
when the rule is to be made final.

ADDRESSES: FCIC prefers that comments be submitted electronically 
through the Federal eRulemaking Portal. You may submit comments, 
identified by Docket ID No. FCIC-13-0006 by any of the following 
methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Director, Product Administration and Standards 
Division, Risk Management Agency, United States Department of 
Agriculture, P.O. Box 419205, Kansas City, MO 64133-6205. All comments 
received, including those received by mail, will be posted without 
change to http://www.regulations.gov, including any personal 
information provided, and can be accessed by the public.
    All comments must include the agency name and docket number or 
Regulatory Information Number (RIN) for this rule. For detailed 
instructions on submitting comments and additional information, see 
http://www.regulations.gov. If you are submitting comments 
electronically through the Federal eRulemaking Portal and want to 
attach a document, we ask that it be in a text-based format. If you 
want to attach a document that is a scanned Adobe PDF file, it must be 
scanned as text and not as an image, thus allowing FCIC to search and 
copy certain portions of your submissions. For questions regarding 
attaching a document that is a scanned Adobe PDF file, please contact 
the RMA Web Content Team at (816) 823-4694 or by email at 
rmaweb.content@rma.usda.gov.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received for any dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review the 
complete User Notice and Privacy Notice for Regulations.gov at http://www.regulations.gov/#!privacyNotice.

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

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be not significant for the 
purposes of Executive Order 12866 and, therefore, it has not been 
reviewed by the 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 the Office of Management and Budget (OMB) under 
control number 0563-0064.

E-Government Act Compliance

    FCIC is committed to complying with the E-Government Act of 2002, 
to promote the use of the Internet and other information technologies 
to provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
establishes requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local, and tribal governments and 
the private sector. This rule contains no Federal mandates (under the 
regulatory provisions of title II of the UMRA) for State, local, and 
tribal governments or the private sector. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of UMRA.

Executive Order 13132

    It has been determined under section 1(a) of Executive Order 13132, 
Federalism, that this rule does not have sufficient implications to 
warrant consultation with the States. The provisions contained in this 
rule will not have a substantial direct effect on States, or on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.

Executive Order 13175

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

Regulatory Flexibility Act

    FCIC certifies that this regulation will not have a significant 
economic impact on a substantial number of small entities. The 
regulation does not require any more action on the part of the small 
entities than is required on the part of large entities. No matter the 
size of the submitter, all submitters are required to

[[Page 10009]]

perform the same tasks and those tasks are necessary to ensure that the 
concept proposal can be made into a viable and marketable submission 
and any submission can be made into viable and marketable, actuarially 
sound insurance product. 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 rule will preempt 
State and local laws to the extent such State and local laws are 
inconsistent herewith. With respect to any direct action taken by FCIC 
or to require the insurance provider to take specific action under the 
terms of the crop insurance policy, the administrative appeal 
provisions published at 7 CFR part 11 must be exhausted before any 
action against FCIC for judicial review may be brought.

Environmental Evaluation

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

Background

    FCIC makes available standard policies for producers to insure 
certain agricultural commodities against various agricultural 
production risks and perils. Under the provisions of section 508(h) of 
the Act, any person may submit or propose other crop insurance 
policies, plans of insurance, provisions of policies, or rates of 
premium to the FCIC Board of Directors (Board) for approval for 
reinsurance and subsidy. These policies may be submitted without regard 
to certain limitations contained in the Act. Section 508(h) of the Act 
also requires that FCIC issue regulations to establish guidelines for 
the submission and Board review of policies or other material submitted 
to the Board under the Act. These regulations were published at 7 CFR 
part 400, subpart V (Subpart V) and provided the process for making 
submissions, its contents, the approval process, and the procedures for 
requests for reimbursement of research and development costs and 
maintenance. Section 522 of the Act authorizes the advance payment of 
research and development costs for concept proposals and this proposed 
rule includes the procedures for requesting such advanced payment.
    The Agricultural Act of 2014 amended parts of section 508(h) as 
well as other sections of the Act. One such change requires FCIC to 
develop procedures for submitting index-based weather plans of 
insurance. Another change mandated by the Agricultural Act of 2014 
requires submitters of products for specialty crops to follow certain 
consultation requirements with grower groups in the major producing 
areas. The Agricultural Act of 2014 also contains amendments that 
require changes to review criteria and establish approval priorities 
and considerations of submissions under section 508(h) of the Federal 
Crop Insurance Act.
    In addition to the changes required by the Agricultural Act of 
2014, other changes are being proposed to provide clarity or lessen the 
burden on submitters or FCIC. This rule contains proposed revisions to 
definitions to clarify the meaning of terms used in Subpart V as well 
as new definitions for terms that were either not defined or not 
previously used. This rule also contains proposed changes to clarify 
FCIC and submitter responsibilities with respect to timing, content, 
approval, reimbursement for research and development costs and 
maintenance costs, and potential user fees for such submissions. To 
lessen the burden on submitters, this rule proposes to reduce the 
number of printed copies of the submission that must be provided to 
FCIC. This rule proposes to provide additional guidance for submitting 
concept proposals, including confidentially standards and advance 
payment provisions. This rule also proposes changes to guidelines for 
non-reinsured supplemental policies to be submitted to FCIC including a 
proposed provision to decrease the burden on FCIC by increasing the 
time FCIC has to review such policies from 120 to 150 days.

List of Subjects in 7 CFR Part 400

    Administrative practice and procedure, Crop insurance.

Proposed Rule

    Accordingly, as set forth in the preamble, FCIC proposes to amend 7 
CFR part 400 by replacing subpart V in its entirety as set forth below:

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

    Revise subpart V to read as follows:
Subpart V--Submission of Policies, Provisions of Policies, Rates of 
Premium, and Non-Reinsured Supplemental Policies
Sec.
400.700 Basis, purpose, and applicability.
400.701 Definitions.
400.702 Confidentiality and duration of confidentiality.
400.703 Timing and format.
400.704 Covered by this subpart.
400.705 Contents for new and changed submissions, concept proposals, 
and index-based weather plans of insurance.
400.706 Review.
400.707 Presentation to the Board for approval or disapproval.
400.708 Post approval.
400.709 Roles and responsibilities.
400.710 Preemption and premium taxation.
400.711 Right of review, modification, and the withdrawal of 
approval.
400.712 Research and development reimbursement, maintenance 
reimbursement, advance payments for concept proposals, and user 
fees.
400.713 Non-reinsured supplemental (NRS) policy.

Subpart V--Submission of Policies, Provisions of Policies, Rates of 
Premium, and Non-Reinsured Supplemental Policies.

    Authority: 7 U.S.C. 1506(l), 1506(o), 1508(h), 1522(b), 1523(i).


Sec.  400.700  Basis, purpose, and applicability.

    This subpart establishes guidelines, the approval process, and 
responsibilities of FCIC and the applicant for policies, provisions of 
policies, and rates of premium submitted to the Board as authorized 
under section 508(h) of the Act. It also provides procedures for 
reimbursement of research and development costs and maintenance costs 
for concept proposals and approved submissions. Guidelines for 
submitting concept proposals and the standards for approval and advance 
payments are provided in this subpart. This subpart also provides 
guidelines and reference to procedures for submitting index-based 
weather plans of insurance as authorized under section 523(i) of the 
Act. The procedures for

[[Page 10010]]

submitting non-reinsured supplemental policies in accordance with the 
Standard Reinsurance Agreement (SRA) are also contained within.


Sec.  400.701  Definitions.

    Act. Subtitle A of the Federal Crop Insurance Act, as amended (7 
U.S.C. 1501-1524).
    Actuarial documents. The information for the crop or insurance year 
that is available for public inspection in your agent's office and 
published on RMA's Web site, and that shows available insurance 
policies, coverage levels, information needed to determine amounts of 
insurance and guarantees, prices, premium rates, premium adjustment 
percentages, practices, particular types or varieties of the insurable 
crop or agricultural commodity, insurable acreage, and other related 
information regarding insurance in the county or state.
    Actuarially appropriate. Premium rates expected to cover 
anticipated losses and establish a reasonable reserve based on valid 
reasoning, an examination of available risk data, or knowledge or 
experience of the expected value of future costs associated with the 
risk to be covered. This will be expressed by a combination of data 
including, but not limited to liability, premium, indemnity, and loss 
ratios based on actual data or simulations reflecting the risks covered 
by the policy.
    Administrative and operating (A&O) subsidy. The subsidy for the 
administrative and operating expenses authorized by the Act and paid by 
FCIC on behalf of the producer to the approved insurance provider. Loss 
adjustment expense reimbursement paid by FCIC for catastrophic risk 
protection (CAT) eligible crop insurance contracts is not considered as 
A&O subsidy.
    Advance payment. A portion, up to 50 percent, of the estimated 
research and development costs, that may be approved by the Board under 
section 522(b) of the Act for an approved concept proposal, and after 
the applicant has begun research and development activities, the Board 
may at its sole discretion provide up to an additional 25 percent 
advance payment of the estimated research and development costs.
    Agent. An individual licensed by the State in which an eligible 
crop insurance contract is sold and serviced for the reinsurance year, 
and who is employed by, or under contract with, the approved insurance 
provider, or its designee, to sell and service such eligible crop 
insurance contracts.
    Applicant. Any person or entity that submits to the Board for 
approval a submission under section 508(h) of the Act, a concept 
proposal under section 522 of the Act, or an index-based weather plan 
of insurance under section 523(i) of the Act.
    Approved insurance provider. A legal entity that has entered into a 
reinsurance agreement with FCIC for the applicable reinsurance year.
    Approved procedures. The applicable handbooks, manuals, memoranda, 
bulletins or other directives issued by RMA or the Board.
    Board. The Board of Directors of FCIC.
    Commodity. Has the same meaning as section 518 of the Act.
    Complete. A submission, concept proposal, or index-based weather 
plan of insurance determined by RMA and the Board to contain all 
required documentation in accordance with Sec.  400.705 and is of 
sufficient quality, as determined by the Board and RMA, to conduct a 
meaningful review.
    Complexity. Consideration of factors such as originality of policy 
materials, underwriting methods, actuarial rating methodology, and the 
pricing methodology used in design, construction and processes for the 
full development of a policy or plan of insurance.
    Concept proposal. A written proposal for a prospective submission, 
submitted under section 522 of the Act for advance payment of research 
and development, and containing enough information that the Board is 
able to determine that, if approved, will be developed into a viable 
and marketable policy consistent with Board approved procedures, these 
regulations, and section 508(h) of the Act.
    Delivery system. The components or parties that make the policy or 
plan of insurance available to the public for sale. The delivery system 
includes, but is not limited to RMA, approved insurance providers, and 
agents.
    Development. The process of composing documentation and procedures, 
pricing and rating methodologies, administrative and operating 
procedures, systems and software, supporting materials, and 
documentation necessary to create and implement a submission.
    Disinterested third party. A person who:
    (1) Does not have any familial relationship (parents, brothers, 
sisters, children, spouse, grandchildren, aunts, uncles, nieces, 
nephews, first cousins, or grandparents, related by blood, adoption or 
marriage, are considered to have a familial relationship) with the 
submitter;
    (2) Who will not benefit financially from the submission, concept 
proposal, or index-based weather plan of insurance if approved, or from 
the administration of any approved policy or plan of insurance; or
    (3) Must not be employed by or work under contract or be associated 
in any similar manner to the applicant on a regular basis.
    Endorsement. A document that amends or revises an insurance policy 
reinsured under the Act in a manner that changes existing, or provides 
additional, coverage provided by such policy.
    Expert reviewer. Independent persons contracted by the Board who 
meets the criteria for underwriters or actuaries that are selected by 
the Board to review a concept proposal, submission, or index-based 
weather plan of insurance and provide advice to the Board regarding the 
results of their review,
    FCIC. The Federal Crop Insurance Corporation, a wholly owned 
government corporation within USDA, whose programs are administered by 
RMA.
    Index-based weather plan of insurance. A risk management product in 
which indemnities are based on a defined weather parameter exceeding or 
failing to meet a given threshold during a specified time period. The 
weather index is a proxy to measure expected loss of production when 
the defined weather parameter does not meet the threshold.
    Limited resource producer. Has the same meaning as the term defined 
by USDA at: www.lrftool.sc.egov.usda.gov/LRP_Definition.aspx or a 
successor Web site.
    Livestock commodity. Has the same meaning as the term in section 
523(i) of the Act.
    Maintenance. For the purposes of this subpart only, the process of 
continual support, revision or improvement, as needed, for an approved 
submission, including the periodic review of premium rates and prices, 
updating or modifying the rating or pricing methodologies, updating or 
modifying policy terms and conditions, adding a new commodity under 
similar policy terms and conditions with similar rating and pricing 
methodology, or expanding a plan or policy to additional states and 
counties, and any other actions necessary to provide adequate, 
reasonable and meaningful protection for producers, ensure actuarial 
soundness, or to respond to statutory or regulatory changes. A concept 
proposal that is similar to a previously approved

[[Page 10011]]

submission will be considered maintenance for the similar approved 
submission if submitted by the same person.
    Maintenance costs. Specific expenses associated with the 
maintenance of an approved submission as authorized by Sec.  400.712.
    Maintenance period. A period of time that begins on the date the 
Board approves the submission and ends on the date that is not more 
than four reinsurance years after such approval.
    Manager. The Manager of FCIC.
    Marketing plan. A plan that identifies, at a minimum, the expected 
number of potential buyers, premium, liability, and the data upon which 
such information is based. Such data must include, but is not limited 
to, focus group results, market research studies, qualitative market 
estimates, effects upon the delivery system or participants, an 
assessment of factors that could negatively or adversely affect the 
market, responses from a reasonable representative cross-section of 
producers or significant market segment to be affected by the policy or 
plan of insurance, and if applicable, results from the consultation 
with the major producer groups of specialty crops demonstrating their 
interest in purchasing the product.
    Multiple peril crop insurance (MPCI). Policies reinsured by FCIC 
that provide protection against multiple causes of loss that adversely 
affect production or revenue, such as to natural disasters, such as 
hail, drought, and floods.
    National Agricultural Statistics Service (NASS). An agency within 
USDA, or its successor agency that collects and analyzes data collected 
from producers and other sources.
    Non-reinsured supplemental policy (NRS). A policy, endorsement, or 
other risk management tool not reinsured by FCIC under the Act, that 
offers additional coverage, other than for loss related to hail.
    Non-significant changes. Minor changes to the policy or plan of 
insurance, such as technical corrections, that do not affect the rating 
or pricing methodologies, the amount of subsidy owed, the amount or 
type of coverage, FCIC's reinsurance risk, or any other condition that 
does not affect liability or the amount of loss to be paid under the 
policy. Revisions to approved plans required by statutory or regulatory 
changes are included in this category. Changes to the policy that 
involve concepts that have been previously sent for expert review are 
also included in this category.
    Plan of insurance. A class of policies, such as yield, revenue, or 
area based that offers a specific type of coverage to one or more 
agricultural commodities.
    Policy. Has the same meaning as the term in section 1 of the Basic 
Provisions (7 CFR 457.8).
    Rate of premium. The dollar amount per insured unit, or percentage 
rate per dollar of liability, that is needed to pay anticipated losses 
and provide a reasonable reserve.
    Reinsurance year. The term beginning July 1 and ending on June 30 
of the following year and, for reference purposes, identified by 
reference to the year containing June.
    Related material. The actuarial documents for the insured commodity 
and any underwriting or loss adjustment manuals, handbooks, forms, 
instructions or other information needed to administer the policy.
    Research. For the purposes of development, the gathering of 
information related to: producer needs and interests for risk 
management; the marketability of the policy or plan of insurance; 
appropriate policy terms, premium rates, price elections, 
administrative and operating procedures, supporting materials, 
documentation, and the systems and software necessary to implement a 
policy or plan of insurance. The gathering of information to determine 
whether it is feasible to expand a policy or plan of insurance to a new 
area or to cover a new commodity under the same policy terms and 
conditions, price, and premium rates is not considered research.
    Research and development costs. Specific expenses incurred and 
directly related to the research and development activities of a 
submission as authorized in Sec.  400.712.
    Risk Management Agency (RMA). An agency within USDA that is 
authorized to administer the crop insurance program on behalf of FCIC.
    Risk subsidy. The portion of the premium paid by FCIC on behalf of 
the insured.
    Sales closing date. A date contained in the Special Provisions by 
which an application must be filed and the last date by which the 
insured may change the crop insurance coverage for a crop year.
    Secretary. The Secretary of the United States Department of 
Agriculture.
    Significant change. Any change to the policy or plan of insurance 
that may affect the rating and pricing methodologies, the amount of 
subsidy owed, the amount of coverage, the interests of producers, 
FCIC's reinsurance risk, or any condition that may affect liability or 
the amount of loss to be paid under the policy.
    Special Provisions. Has the same meaning as the term in section 1 
of the Basic Provisions (7 CFR 457.8).
    Specialty crops. Fruits and vegetables, tree nuts, dried fruits, 
and horticulture and nursery crops (including floriculture).
    Socially disadvantaged producer. Has the same meaning as section 
2501(E) of the Food, Agriculture, Conservation, and Trade Act of 1990 
(7 U.S.C. 2279(e)).
    Standard Reinsurance Agreement (SRA). The reinsurance agreement 
between FCIC and the approved insurance provider, under which the 
approved insurance provider is authorized to sell and service the 
eligible crop insurance contracts for which the premium discount is 
proposed. For the purposes of this subpart, all references to the SRA 
will also include any other reinsurance agreements entered into with 
FCIC, including the Livestock Price Reinsurance Agreement.
    Submission. A policy, plan of insurance, provision of a policy or 
plan of insurance, or rates of premium provided by an applicant to FCIC 
in accordance with the requirements of Sec.  400.705. Submissions as 
referenced in this subpart do not include concept proposals, index-
based weather plans of insurance, or non-reinsured supplemental 
policies.
    Submitter. Same meaning as applicant.
    Sufficient quality. The material presented is complete, 
understandable and unambiguous, so that a disinterested third party can 
understand, comprehend and make calculations, draw substantiated 
conclusions or results to determine whether the submission, concept 
proposal, or index-based weather plan of insurance is, or can result 
in, a viable and marketable insurance product with actuarially 
appropriate rates, reasonable expected market prices, provides 
meaningful coverage, and that protects the interests of producers and 
program integrity. The material must be presented in Microsoft Office 
format and must also contain adequate information that is presented 
clearly enough for the determination to be made whether RMA has the 
resources to implement, administer, and deliver the submission 
effectively and efficiently. Liability (guarantee), premium, and 
indemnity are clearly defined and consistent in calculation throughout 
the policy materials and appropriate for the commodity and the risks 
covered. As applicable, the policy, loss adjustment methods, 
underwriting procedures, and actuarial rating and pricing

[[Page 10012]]

methodologies must be clearly identified and correspond to the risks 
covered.
    Targeted producer. Producers who are considered small, socially 
disadvantaged, beginning and limited resource or other specific aspects 
designated by FCIC for review.
    USDA. The United States Department of Agriculture.
    User fees. Fees, approved by the Board, that can be charged to 
approved insurance provider for use of a policy or plan of insurance 
once the period for maintenance has expired that covers the expected 
maintenance costs to be incurred by the submitter.
    Viable and marketable. A determination by the Board based on a 
detailed, written marketing plan demonstrating that a sufficient number 
of producers will purchase the product to justify the resources and 
expenses required to offer the product for sale and maintain the 
product for subsequent years.


Sec.  400.702  Confidentiality and duration of confidentiality.

    (a) Pursuant to section 508(h)(4)(A) of the Act, prior to approval 
by the Board, any submission submitted to the Board under section 
508(h) of the Act, concept proposal submitted under section 522 of the 
Act, or index-based weather plan of insurance submitted under section 
523(i) of the Act, including any information generated from the 
submission, concept proposal, or index-based weather plan of insurance, 
will be considered confidential commercial or financial information for 
purposes of 5 U.S.C. 552(b)(4) and will not be released by FCIC to the 
public, unless the applicant authorizes such release in writing.
    (b) Once the Board approves a submission or an index-based weather 
plan of insurance, information provided with the submission (including 
information from the concept proposal) or the index-based weather plan 
of insurance, or generated in the approval process, may be released to 
the public, as applicable, including any mathematical modeling and 
data, unless it remains confidential business information under 5 
U.S.C. 552(b)(4). While the expert reviews are releasable once the 
submission or an index-based weather plan of insurance has been 
approved, the names of the expert reviewers may be redacted to prevent 
any harassment or undue pressure on the expert reviewers.
    (c) Any submission, concept proposal, or index-based weather plan 
of insurance disapproved by the Board will remain confidential 
commercial or financial information in accordance with 5 U.S.C. 
552(b)(4) and no information related to such submission, concept 
proposal, or index-based weather plan of insurance will be released by 
FCIC unless authorized in writing by the applicant.
    (d) All submissions, concept proposals, and index-based weather 
plans of insurance, will be kept confidential until approved by the 
Board and will be given an identification number for tracking purposes, 
unless the applicant advises otherwise.


Sec.  400.703  Timing and format.

    (a) A submission, concept proposal, or index-based weather plan of 
insurance may only be provided to FCIC during the first five business 
days in January, April, July, and October.
    (b) A submission, concept proposal, or index-based weather plan of 
insurance must be provided to FCIC in the following format:
    (1) Electronic format, sent to the address in paragraph (d)(1) of 
this section by the due date in paragraph (a) of this section. The 
electronic copy must be provided as a single document so that when 
printed the order and content exactly match the hard copy; and
    (2) Two hard copies, mailed to the addresses in paragraph (d)(2) of 
this section and postmarked by the due date in paragraph (a) of this 
section. The hard copies must exactly match the electronic copy.
    (c) Any submission, concept proposal, or index-based weather plan 
of insurance not provided within the first 5 business days of a month 
stated in paragraph (a) of this section will be considered to have been 
provided in the next month stated in paragraph (a). For example, if an 
applicant provides a submission on January 10, it will be considered to 
have been received on April 1.
    (d) Any submission, concept proposal, or index-based weather plan 
of insurance must be provided:
    (1) In electronic format to the Deputy Administrator for Product 
Management (or successor) at DeputyAdministrator@rma.usda.gov and the 
Administrator at Administrator@rma.usda.gov; and
    (2) In hard copy format, with one hard copy provided to the Deputy 
Administrator for Product Management (or any successor position), USDA/
Risk Management Agency, Beacon Facility Mail Stop 0812, 9240 Troost 
Ave., Kansas City, MO 64131-3055, and one identical hard copy must be 
provided to the Administrator, Risk Management Agency, 1400 
Independence Ave., Stop 0801, Room 3053 South Building, Washington, DC 
20250-0801.
    (e) In addition to the requirements in paragraph (a) of this 
section, a submission must be received not later than 240 days prior to 
the earliest proposed sales closing date to be considered for sale in 
the requested crop year.
    (f) To be offered for sale in a crop year, there must be at least 
sixty days between the date the policy has been approved by the Board 
and ready to be made available for sale and the earliest sales closing 
date, unless this requirement is waived by the Board.
    (g) Notwithstanding, paragraph (f) of this section, the Board, or 
RMA if authorized by the Board, shall determine when sales can begin 
for a submission approved by the Board.


Sec.  400.704  Covered by this subpart.

    (a) An applicant may submit to the Board, in accordance with Sec.  
400.705, a submission that is:
    (1) A policy or plan of insurance not currently reinsured by FCIC;
    (2) One or more proposed revisions to a policy or plan of insurance 
authorized under the Act; or
    (3) Rates of premium for any policy or plan of insurance authorized 
under the Act.
    (b) An applicant must submit to the Board, any significant change 
to a previously approved submission, including requests for expansion, 
prior to making the change in accordance with Sec.  400.705.
    (c) An applicant may submit a concept proposal to the Board prior 
to developing a full submission, in accordance with this subpart and 
the Procedures Handbook 17030--Approved Procedures for Submission of 
Concept Proposals Seeking Advance Payment of Research and Development 
Expenses, which can be found on the RMA Web site at www.rma.usda.gov.
    (d) An applicant who is an approved insurance provider may submit 
an index-based weather plan of insurance for consideration as a pilot 
program in accordance with this subpart and the Procedures Handbook 
17050--Approved Procedures for Submission of Index-based Weather Plans 
of Insurance, which can be found on the RMA Web site at 
www.rma.usda.gov.
    (e) An applicant must submit a non-reinsured supplemental policy or 
endorsement to RMA in accordance with Sec.  400.713.


Sec.  400.705  Contents for new and changed submissions, concept 
proposals, and indexed-based weather plans of insurance.

    (a) A complete submission must contain the following material, as

[[Page 10013]]

applicable, in the order given, in a 3-ring binder for hard copies and 
in a single Microsoft Word document file for electronic copies, with a 
table of contents, page numbers, and section dividers clearly labeling 
each section, as applicable. All relevant materials should be provided 
in the designated section and not appended to the end of the 
submission.
    (b) The first section will contain general information numbered as 
follows (1, 2, 3, etc.), including, as applicable:
    (1) The applicant's name(s), address or primary business location, 
phone number, and email address;
    (2) The type of submission (see Sec.  400.704) and a notation of 
whether or not the submission was approved by the Board as a concept 
proposal;
    (3) A statement of whether the applicant is requesting:
    (i) Reinsurance;
    (ii) Risk subsidy;
    (iii) A&O subsidy;
    (iv) Reimbursement for research and development costs, as 
applicable and, if the submission was previously submitted as a concept 
proposal, the amount of the advance payment for expected research and 
development costs; or
    (v) Reimbursement for expected maintenance costs, if applicable;
    (4) The proposed agricultural commodities to be covered, including 
types, varieties, and practices covered by the submission;
    (5) The crop or insurance year and reinsurance year in which the 
submission is proposed to be available for purchase by producers;
    (6) The proposed sales closing date, if applicable, or if not 
applicable, the earliest date the applicant expects to release the 
product to the public;
    (7) The proposed area for the plan of insurance and if applicable, 
the reasons why the submission is not being proposed for other areas 
producing the commodity;
    (8) Any known or anticipated future expansion plans;
    (9) Identification, including names, addresses, telephone numbers, 
and email addresses, of the person(s) responsible for:
    (i) Addressing questions regarding the policy, underwriting rules, 
loss adjustment procedures, rate and price methodologies, data 
processing and record-keeping requirements, and any other questions 
that may arise in implementing or administering the program if it is 
approved; and
    (ii) Annual reviews to ensure compliance with all requirements of 
the Act, this subpart, and any agreements executed between the 
applicant and FCIC; and
    (10) A statement of whether the submission will be filed with the 
applicable office responsible for regulating insurance in each state 
proposed for insurance coverage, and if not, reasons why the submission 
will not be filed for review.
    (c) The second section must contain the benefits of the plan, 
including, as applicable, a summary that includes:
    (1) How the submission offers coverage or other benefits not 
currently available from existing public or private programs;
    (2) The projected demand for the submission, including support for 
and against development from market research, producers or producer 
groups, agents, lending institutions, and other interested parties that 
provide verifiable evidence of demand;
    (3) Potential impacts the submission may have on producers both 
where the new plan will and will not be available (include both 
positive and negative impacts);
    (4) How the submission meets public policy goals and objectives 
consistent with the Act and other laws, as well as policy goals 
supported by USDA and the Federal Government; and
    (5) A detailed description of the coverage provided by the 
submission and its applicability to all producers, including targeted 
producers.
    (d) Except as provided in this section, the third section must 
contain the policy, that is clearly written in plain language in 
accordance with the Plain Writing Act of 2010 (5 U.S.C. 301) such that 
producers will be able to understand the coverage being offered. The 
policy language permits actuaries to form a clear understanding of the 
payment contingencies for which they will set rates. The policy 
language does not encourage an excessive number of disputes or legal 
actions because of misinterpretations.
    (1) If the submission involves a new insurance policy or plan of 
insurance:
    (i) All applicable policy provisions; and
    (ii) A list of any additional coverage that may be elected by the 
insured in conjunction with the submission such as applicable 
endorsements (include a description of the coverage and how such 
coverage may be obtained).
    (2) If the submission involves a change to a previously approved 
policy, plan of insurance, or rates of premium, the proposed revisions, 
rationale for each change, data and analysis supporting each change, 
the impact of each change, and the impact of all changes in aggregate.
    (e) The fourth section must contain a marketing plan, including, as 
applicable:
    (1) A list of counties and states where the submission is proposed 
to be offered;
    (2) The amount of commodity (acres, head, board feet, etc.), the 
amount of production, and the value of each agricultural commodity 
proposed to be covered in each proposed county and state;
    (3) A reasonable estimate of expected liability and premium, for 
each proposed county and state and total expected liability and premium 
by crop year based on the marketing plan and an estimate of the market 
penetration of other similar products;
    (4) If available, any insurance experience for each year and in 
each proposed county and state in which the policy has been previously 
offered for sale including an evaluation of the policy's performance 
and, if data are available, a comparison with other similar insurance 
policies reinsured under the Act;
    (5) Focus group results, both positive and negative reactions;
    (6) Market research studies that include:
    (i) Evidence the proposed submission will be positively received by 
producers; and
    (ii) Market estimates that show demand and level of coverage for 
which producers are willing to pay;
    (7) For submissions proposing products for specialty crops a 
consultation report must be provided that includes a summary and 
analysis of discussions with groups representing producers of those 
agricultural commodities in all major producing areas for commodities 
to be served or potentially impacted, either directly or indirectly, 
and the expected impact of the proposed submission on the general 
marketing and production of the crop from both a regional and national 
perspective including evidence that the submission will not create 
adverse market distortions;
    (8) Effects upon the delivery system or participants including:
    (i) Estimated computer system impacts and costs;
    (ii) Estimated administrative and training costs; and
    (iii) What, if any, efficiency will be gained;
    (9) Correspondence from producers expressing the need for such 
policy or plan of insurance; and
    (10) A commitment in writing from at least one approved insurance 
provider to sell and support the policy or plan of insurance.

[[Page 10014]]

    (f) The fifth section must contain the information related to the 
underwriting and loss adjustment of the submission, including as 
applicable:
    (1) Detailed rules for determining insurance eligibility, including 
all producer reporting requirements;
    (2) Relevant dates;
    (3) Step by step examples of the data and calculations needed to 
establish the insurance guarantee (liability) and premium per acre or 
other unit of measure, including worksheets that provide the 
calculations in sufficient detail and in the same order as presented in 
the policy to allow verification that the premiums charged for the 
coverage are consistent with policy provisions;
    (4) Step-by-step examples of calculations used to determine 
indemnity payments for all probable situations where a partial or total 
loss may occur;
    (5) A detailed description of the causes of loss covered by the 
policy or plan of insurance and any causes of loss excluded;
    (6) Any statements to be included in the actuarial documents 
including any intended Special Provisions statements that may change 
any underlying policy terms or conditions; and
    (7) The loss adjustment standards handbook for the policy or plan 
of insurance that includes:
    (i) A table of contents and introduction;
    (ii) A section containing abbreviations, acronyms, and definitions;
    (iii) A section containing insurance contract information 
(insurability requirements; Crop Provisions not applicable to 
catastrophic risk protection; specific unit division guidelines, if 
applicable; notice of damage or loss provisions; quality adjustment 
provisions; etc.);
    (iv) A section that thoroughly explains appraisal methods, if 
applicable;
    (v) Illustrative samples of all the applicable forms needed for 
insuring and adjusting losses in regards to the submission, plus 
detailed instructions for their use and completion;
    (vi) Instructions, examples of calculations, and loss adjustment 
procedures that are necessary to establish the amounts of coverage and 
loss;
    (vii) A section containing any special coverage information (i.e., 
replanting, tree replacement or rehabilitation, prevented planting, 
etc.), as applicable; and
    (viii) A section containing all applicable reference material 
(i.e., minimum sample requirements, row width factors, etc.).
    (g) The sixth section must contain information related to prices 
and rates of premium, including, as applicable:
    (1) A detailed description of the specific premium rating 
methodology proposed to be used and the basis for selection of the 
rating methodology;
    (2) A list of all assumptions made in the premium rating and 
commodity pricing methodologies, and the basis for these assumptions;
    (3) A detailed description of the pricing and rating methodologies, 
including:
    (i) Supporting documentation;
    (ii) All mathematical formulas and equations;
    (iii) Data and data sources used in determining rates and prices 
and a detailed assessment of the data and how it supports the proposed 
rates and prices;
    (iv) A detailed explanation of how the rates account for each of 
the risks covered by the policy; and
    (v) A detailed explanation of how the prices are applicable to the 
policy;
    (4) An example of both a rate calculation and a price calculation;
    (5) A discussion of the applicant's objective evaluation of the 
accuracy of the data, the short and long term availability of the data, 
and how the data will be obtained (if the data source is confidential 
or proprietary explain the cost of obtaining the data); and
    (6) An analysis of the results of simulations or modeling showing 
the performance of proposed rates and commodity prices, as applicable, 
based on one or more of the following (Such simulations must use all 
years of experience available to the applicant and must reflect both 
partial losses and total losses):
    (i) A recalculation of total premium and losses compared to a 
similar or comparable insurance plan offered under the authority of the 
Act with modifications, as needed, to represent the components of the 
submission;
    (ii) A simulation that shows liability, premium, indemnity, and 
loss ratios for the proposed insurance product based on the probability 
distributions used to develop the rates and commodity prices, as 
applicable, including sensitivity tests that demonstrate price or yield 
extremes, and the impact of inappropriate assumptions; or
    (iii) Any other comparable simulation that provides results 
indicating both aggregate and individual performance of the submission 
including expected liability, premium, indemnity, and loss ratios for 
the proposed insurance product, under various scenarios depicting good 
and poor actuarial experience.
    (h) The seventh section must contain forms, instructions for 
completing forms, and statements for all forms applicable to the 
submission in a format compatible with the Document and Supplemental 
Standards Handbook (FCIC 24040) found at http://www.rma.usda.gov/handbooks/24000/index.html.
    (i) The eighth section must contain the following:
    (1) A statement certifying that the submitter and any approved 
insurance provider or its affiliates will not solicit or market the 
submission until at least 60 days after all policy materials are 
released to the public by RMA, unless otherwise specified by the Board;
    (2) An explanation of any provision of the policy not authorized 
under the Act and identification of the portion of the rate of premium 
due to these provisions; and
    (3) If applicable, agent and loss adjuster training plans.
    (j) The ninth section must contain a statement from the submitter 
that, if the submission is approved, the submitter will work with RMA 
and its computer programmers as needed to assure an effective and 
efficient implementation process. The applicant must consult with RMA 
to determine whether or not the submission can be effectively and 
efficiently implemented and administered through the current 
information technology standards and systems.
    (1) If FCIC approves the submission and determines that its 
information technology systems have the capacity to implement and 
administer the submission, the applicant must provide a document 
detailing acceptable computer processing requirements consistent with 
those used by RMA as shown on the RMA Web site in the Appendix III/M-13 
Handbook. This information details the acceptable computer processing 
requirements in a manner consistent with that used by RMA to facilitate 
the acceptance of producer applications and related data.
    (2) Any computer systems, requirements, code and software must be 
consistent with that used by RMA and comply with the standards 
established in Appendix III/M-13 Handbook, or any successor document, 
of the SRA or other reinsurance agreement as specified by FCIC.
    (3) These requirements are available from the USDA/Risk Management 
Agency, Beacon Facility Mail Stop 0812, 9240 Troost Ave., Kansas City, 
MO 64131-3055, or on RMA's Web site at

[[Page 10015]]

http://www.rma.usda.gov/data/#m13, or a successor Web site.
    (k) The tenth section submitted on separate pages and in accordance 
with Sec. Sec.  400.712 must specify:
    (1) On one page, the amount received for an advance payment, an 
estimate of the total amount of reimbursement for research and 
development costs (new products only) or an estimate for maintenance 
costs for the year that the submission will be effective (for products 
that are within the maintenance period); and
    (2) On another page, a detailed estimate of maintenance costs for 
future years of the maintenance period and the basis that such 
maintenance costs will be incurred, including, but not limited to:
    (i) Any anticipated expansion;
    (ii) Anticipated changes or updates to policy materials;
    (iii) The generation of premium rates;
    (iv) The determination of prices; and
    (v) Any other costs that the applicant anticipates will be 
requested for reimbursement of maintenance costs or expenses;
    (l) The eleventh section must contain executed (signed) 
certification statements in accordance with the following:
    (1) ``{Applicant's Name{time}  hereby claim that the basis and 
amounts set forth in this section and Sec.  400.712 are correct and due 
and owing to {Applicant's Name{time}  by FCIC under the Federal Crop 
Insurance Act''; and
    (2) ``{Applicant Name{time}  understands that, in addition to 
criminal fines and imprisonment, the submission of false or fraudulent 
statements or claims may result in civil and administrative 
sanctions.''
    (m) The contents required for concept proposals are found in the 
Procedures Handbook 17030--Approved Procedures for Submission of 
Concept Proposals Seeking Advance Payment of Research and Development 
Expenses. In addition, the proposal must provide a detailed description 
of why the concept provides insurance:
    (1) In a significantly improved form;
    (2) To a crop or region not traditionally served by the Federal 
crop insurance program; or
    (3) In a form that addresses a recognized flaw or problem in the 
program;
    (n) The contents required for index-based weather plans of 
insurance are found in the Procedures Handbook 17050--Approved 
Procedures for Submission of Index-based Weather Plans of Insurance. In 
accordance with the Board approved procedures, the approved insurance 
provider that submits the index-based weather plan of insurance must 
provide evidence they have:
    (1) Adequate experience underwriting and administering policies or 
plans of insurance that are comparable to the proposed policy of plan 
of insurance;
    (2) Sufficient assets or reinsurance to satisfy the underwriting 
obligations of the approved insurance provider, and possess a 
sufficient insurance credit rating from an appropriate credit rating 
bureau; and
    (3) Applicable authority and approval from each State in which the 
approved insurance provider intends to sell the insurance product.


Sec.  400.706  Review.

    (a) Prior to providing a submission, concept proposal, or index-
based weather plan of insurance to the Board, RMA will:
    (1) Review the submission, concept proposal, or index-based weather 
plan of insurance to determine if all required documentation is 
included in accordance with Sec.  400.705;
    (2) Review the submission, concept proposal, or index-based weather 
plan of insurance to determine whether it is of sufficient quality to 
conduct a meaningful review such that the Board will be able to make an 
informed decision regarding approval or disapproval;
    (3) In accordance with section 508(h)(1)(B) of the Act, at its sole 
discretion, determine if the policy or plan of insurance:
    (i) Will likely result in a viable and marketable policy;
    (ii) Will provide crop insurance coverage in a significantly 
improved form; and
    (iii) Adequately protect the interests of producers.
    (4) Except for submissions developed from a concept proposal funded 
for advanced payment by the Board, reject and return any submission, 
concept proposal, or indexed based weather plan of insurance that:
    (i) Does not contain all the required information or is not of 
sufficient quality to conduct a meaningful review;
    (ii) Is unlikely result in a viable and marketable policy;
    (iii) Will not provide crop insurance coverage in a significantly 
improved form; and
    (iv) Will not adequately protect the interests of producers.
    (5) Except as provided in paragraph (a)(4) of this section or if 
the submission was developed from an approved concept proposal, forward 
the submission, concept proposal, or index-based weather plan of 
insurance, and the results of RMA's initial review, to the Board for 
its determination of completeness.
    (b) Upon the Board's receipt of a submission, the Board will:
    (1) Determine if the submission is complete (The date the Board 
votes to contract with the expert reviewers is the date the submission 
is deemed to be complete for the start of the 120 day time-period for 
approval);
    (2) Unless the submission makes non-significant changes to a policy 
or plan of insurance, or involves policy provisions that have already 
undergone expert review, forward the complete submission to at least 
five expert reviewers to review the submission:
    (i) Of the five expert reviewers, no more than one will be employed 
by the Federal Government, and none may be employed by any approved 
insurance provider or their representative; and
    (ii) The expert reviewers will each provide their individual 
assessment of whether the submission:
    (A) Protects the interests of agricultural producers and taxpayers;
    (B) Is actuarially appropriate;
    (C) Follows appropriate insurance principles;
    (D) Meets the requirements of the Act;
    (E) Does not contain excessive risks;
    (F) Follows sound, reasonable, and appropriate underwriting 
principles;
    (G) Will provide a new kind of coverage that is likely to be viable 
and marketable;
    (H) Will provide crop insurance coverage in a manner that addresses 
a clear and identifiable flaw or problem in an existing policy;
    (I) Will provide a new kind of coverage for a commodity that 
previously had no available crop insurance, or has demonstrated a low 
level of participation or coverage level under existing coverage;
    (J) May have a significant adverse impact on the crop insurance 
delivery system;
    (K) Contains a marketing plan that reasonably demonstrates the 
product would be viable and marketable;
    (L) If applicable, contains a consultation report that provides 
evidence the submission will not create adverse market distortions; and
    (M) Meets any other criteria the Board may deem necessary;
    (3) Return to the applicant any submission the Board determines is 
not complete, along with an explanation of the reason for the 
determination and:
    (i) With respect to submissions developed from approved concept 
proposals, the provisions in Sec.  400.712(c)(1) shall apply; and
    (ii) Except for submissions developed from concept proposals, if 
the

[[Page 10016]]

submission is resubmitted at a later date, it will be considered a new 
submission solely for the purpose of determining the amount of time 
that the Board must take action;
    (4) For complete submissions:
    (i) Request review by RMA to provide its assessment of whether the 
submission:
    (A) Meets the criteria listed in subsections (b)(2)(ii)(A) through 
(M);
    (B) Is consistent with USDA's public policy goals;
    (C) Does not increase or shift risk to any other FCIC reinsured 
policy;
    (D) Can be implemented, administered, and delivered effectively and 
efficiently using RMA's information technology and delivery systems; 
and
    (E) Contains requested amounts of government reinsurance, risk 
subsidy, and administrative and operating subsidies that are reasonable 
and appropriate for the type of coverage provided by the policy 
submission; and
    (ii) Seek review from the Office of the General Counsel (OGC) to 
determine if the submission conforms to the requirements of the Act and 
all applicable Federal statutes and regulations.
    (5) Unless all the requirements for approval for submissions in 
this subsection are met or reasons for notice of disapproval exist as 
specified in subsection (k), provide a notice of intent to disapprove, 
including the reasons for the intent to disapprove.
    (c) Upon the Board's receipt of a concept proposal, the Board will:
    (1) Determine whether the concept proposal is complete (The date 
the Board votes to contract with expert reviewers is the date the 
concept proposal is deemed to be a complete concept proposal for the 
start of the 120 day time-period for approval);
    (2) If complete, forward the complete concept proposal to at least 
two expert reviewers with underwriting or actuarial experience to 
review the concept in accordance with section 522(b)(2) of the Act, 
this subpart, and Procedures Handbook 17030--Approved Procedures for 
Submission of Concept Proposals Seeking Advance Payment of Research and 
Development Expenses;
    (3) Return to the applicant any concept proposal the Board 
determines is not complete, along with an explanation of the reason for 
the determination (If the concept proposal is resubmitted at a later 
date, it will be considered a new concept proposal solely for the 
purposes of determining the amount of time that the Board must take 
action);
    (4) Determine whether the concept proposal, if developed into a 
policy or plan of insurance would, in good faith, would meet the 
requirement of being likely to result in a viable and marketable policy 
consistent with section 508(h);
    (5) At its sole discretion, determine whether the concept proposal, 
if developed into a policy or plan of insurance would meet the 
requirement of providing coverage:
    (i) In a significantly improved form;
    (ii) To a crop or region not traditionally served by the Federal 
crop insurance program; or
    (iii) In a form that addresses a recognized flaw or problem in the 
program;
    (6) Determine whether the proposed budget and timetable are 
reasonable;
    (7) Determine whether the concept proposal meets all other 
requirements imposed by the Board or as otherwise specified in 
Procedures Handbook 17030--Approved Procedures for Submission of 
Concept Proposals Seeking Advance Payment of Research and Development 
Expenses;
    (8) Provide a date by which the submission must be provided in 
consultation with the applicant; and
    (9) Unless all the requirements for approval of concept proposals 
in this subsection are met or reasons for disapproval exist as 
specified in subsection (l), provide a notice of disapproval, including 
the reasons for disapproval.
    (d) Upon the Board's receipt of an index-based weather plan of 
insurance, the Board will:
    (1) Determine whether the index-based weather plan of insurance is 
complete (The date the Board votes to contract with expert reviewers is 
the date the index-based weather plan of insurance is deemed to be a 
complete for the start of the 120 day time-period for approval);
    (2) If determined to be complete, contract with five expert 
reviewers and review the index-based weather plan of insurance in 
accordance with section 523(i) of the Act, this subpart, and Procedures 
Handbook 17050--Approved Procedures for Submission of Index-based 
Weather Plans of Insurance;
    (3) Return to the applicant any index-based weather plan of 
insurance the Board determines is not complete, along with an 
explanation of the reason for the determination (If the index-based 
weather plan of insurance is resubmitted at a later date, it will be 
considered a new index-based weather plan of insurance solely for the 
purposes of determining the amount of time that the Board must take 
action);
    (4) Give the highest priority for approval of index-based weather 
plans of insurance that provide a new kind of coverage for specialty 
crops and livestock commodities that previously had no available crop 
insurance, or has demonstrated a low level of participation under 
existing coverage; and
    (5) Unless all the requirements for approval of index-based weather 
plans of insurance in this subsection are met or reasons for notice of 
disapproval exist as specified in paragraph (m) of this section, 
provide a notice of intent to disapprove including the reasons for the 
intent to disapprove.
    (e) All comments and evaluations will be provided to the Board by a 
date determined by the Board to allow the Board adequate time for 
review.
    (f) The Board will consider all comments, evaluations, and 
recommendations in its review process. Prior to making a decision, the 
Board may request additional information from RMA, OGC, the expert 
reviewers, or the applicant.
    (g) In considering whether to approve a submission and when such 
submission will be offered for sale, the Board will:
    (1) First, consider policies or plans of insurance that address 
underserved commodities, including commodities for which there is no 
insurance;
    (2) Second, consider existing policies or plans of insurance for 
which there is inadequate coverage or there exists low levels of 
participation; and
    (3) Last, consider all policies or plans of insurance submitted to 
the Board that do not meet the criteria described in paragraph (g)(1) 
or (2) of this section.
    (h) At any time an applicant may request a time delay after the 
submission, concept proposal, or index-based weather plan of insurance 
has been placed on the Board meeting agenda. The Board is not required 
to agree to such an extension.
    (1) With respect to submissions from concept proposals approved by 
the Board for advanced payment, the applicant must provide good cause 
why consideration should be delayed.
    (2) Any requested time delay is not limited in the length of time 
unless a date is set by the Board by which all revisions to the 
submission, concept proposal or indexed-based weather plan of insurance 
must be made. However, delays may make implementation of the submission 
for the targeted crop year impractical or impossible as determined by 
the Board.
    (3) The time period during which the Board will make a decision to 
approve or disapprove the submission, concept proposal or indexed-based 
weather plan of insurance shall be extended

[[Page 10017]]

commensurately with any time delay requested by the applicant.
    (i) The applicant may withdraw a submission, concept proposal, 
index-based weather plan of insurance, or a portion of a submission or 
concept proposal, at any time by presenting a request to the Board. A 
withdrawn submission, concept proposal or index-based weather plan of 
insurance that is resubmitted will be deemed a new submission, concept 
proposal, or index-based weather plan of insurance solely for the 
purposes of determining the amount of time that the Board must take 
action.
    (j) The Board will render a decision on a submission, concept 
proposal, or indexed-based weather plan of insurance, with or without 
revision within 90 days after the date the submission, concept 
proposal, or indexed-based weather plan of insurance is considered 
complete by the Board, unless the Board agrees to a time delay in 
accordance with paragraph (h) of this section. Failure to approve a 
submission, concept proposal, or indexed-based weather plan of 
insurance constitutes intent to give of intent to disapprove a 
submission or index-based weather plan of insurance or disapproval of a 
concept proposal.
    (k) The Board may provide a notice of intent to disapprove a 
submission if it determines:
    (1) The interests of producers and taxpayers are not protected, 
including but not limited to:
    (i) The submission does not provide adequate coverage or treats 
producers disparately;
    (ii) The applicant has not presented sufficient documentation that 
the submission will provide a new kind of coverage that is likely to be 
viable and marketable;
    (iii) Coverage would be similar to another policy or plan of 
insurance that has not demonstrated a low level of participation or 
does not contain a clear and identifiable flaw, and the producer would 
not significantly benefit from the submission;
    (iv) The submission may create adverse market distortions or 
adversely impact other crops or agricultural commodities if marketed;
    (v) The submission will have a significant adverse impact on the 
private delivery system; or
    (vi) The submission cannot be implemented, administered, and 
delivered effectively and efficiently using RMA's information 
technology and delivery systems;
    (2) The premium rates are not actuarially appropriate;
    (3) The submission does not conform to sound insurance and 
underwriting principles;
    (4) The risks associated with the submission are excessive or it 
increases or shifts risk to another reinsured policy;
    (5) The submission does not meet the requirements of the Act; or
    (6) The 90 day deadline under subsection (i) will expire before the 
Board has time to make an informed decision to approve or disapprove 
the submission.
    (l) The Board may disapprove a concept proposal if it determines:
    (1) The concept, in good faith, will not likely result in a viable 
and marketable policy consistent with section 508(h);
    (2) At the sole discretion of the Board, the concept, if developed 
into a policy and approved by the Board, would not provide crop 
insurance coverage:
    (i) In a significantly improved form;
    (ii) To a crop or region not traditionally served by the Federal 
crop insurance program; or
    (iii) In a form that addresses a recognized flaw or problem in the 
program;
    (3) The proposed budget and timetable are not reasonable, as 
determined by the Board; or
    (4) The concept proposal fails to meet one or more requirements 
established by the Board.
    (m) The Board may provide a notice of intent to disapprove an 
index-based weather plan of insurance if it determines there is not:
    (1) Adequate experience underwriting and administering policies or 
plans of insurance that are comparable to the proposed policy or plan 
of insurance;
    (2) Sufficient assets or reinsurance to satisfy the underwriting 
obligations of the approved insurance provider, and possess a 
sufficient insurance credit rating from an appropriate credit rating 
bureau, in accordance with Board procedures; and
    (3) Applicable authority and approval from each State in which the 
approved insurance provider intends to sell the insurance product.
    (n) Unless otherwise provided for in this section:
    (1) If the Board intends to disapprove a submission or index-based 
weather plan of insurance or disapproves a concept proposal, the Board 
will provide the applicant with a written explanation outlining the 
basis for the intent to disapprove or disapproval; and
    (2) Any approval or disapproval of a submission, concept proposal, 
or index-based weather plan of insurance must be made by the Board in 
writing not later than 120 days after the Board has determined it to be 
complete.
    (o) If a notice of intent to disapprove all or part of a submission 
or index-based weather plan of insurance has been provided by the 
Board, the applicant must provide written notice to the Board not later 
than 30 days after the Board provides such notice if the submission or 
index-based weather plan of insurance will be modified. If the 
applicant does not respond within the 30-day period, the Board will 
send the applicant a letter stating the submission or index-based 
weather plan of insurance is disapproved.
    (p) If the applicant elects to modify the submission or index-based 
weather plan of insurance:
    (1) The applicant must advise the Board of a date by which the 
modified submission or index-based weather plan of insurance will be 
presented to the Board; and
    (2) The remainder of the time left between the Board's notice of 
intent to disapprove and the expiration of the 120 day deadline is 
tolled until the modified submission or index-based weather plan of 
insurance is received by the Board.
    (3) The Board will disapprove a modified submission or index-based 
weather plan of insurance if the:
    (i) Causes for disapproval stated by the Board in its notification 
of intent to disapprove the submission or index-based weather plan of 
insurance are not satisfactorily addressed;
    (ii) Board determines there is insufficient time for the Board to 
finish its review before the expiration of the 120-day deadline for 
disapproval of a submission or index-based weather plan of insurance, 
unless the applicant grants the Board an extension of time to 
adequately consider the modified submission or index-based weather plan 
of insurance (If an extension of time is agreed upon, the time period 
during which the Board must act on the modified submission or index-
based weather plan of insurance will tolled during the extension); or
    (iii) Applicant does not present a modification of the submission 
or index-based weather plan of insurance to the Board on the date the 
applicant specified and the applicant does not request an additional 
time delay.
    (q) If the Board fails to render a decision on a new submission or 
index-based weather plan of insurance within the time periods specified 
in paragraph (j) or (n) of this section, such submission or index-based 
weather plan of insurance will be deemed approved by the Board for the 
initial reinsurance year designated for the submission or index-based 
weather plan of insurance. The

[[Page 10018]]

Board must approve the submission or index-based weather plan of 
insurance for it to be available for any subsequent reinsurance year.


Sec.  400.707  Presentation to the Board for approval or disapproval.

    (a) The Board will inform the applicant of the date, time, and 
place of the Board meeting.
    (b) The applicant will be given the opportunity and is encouraged 
to present the submission, concept proposal, or index-based weather 
plan of insurance to the Board in person. The applicant must confirm in 
writing, email or fax whether the applicant will present in person to 
the Board.
    (c) If the applicant elects not to present the submission, concept 
proposal, or index-based weather plan of insurance to the Board, the 
Board will make its decision based on the information provided in 
accordance with Sec.  400.705 and Sec.  400.706.


Sec.  400.708  Post approval.

    (a) After a submission is approved by the Board, and prior to it 
being made available for sale to producers:
    (1) The following must be executed, as applicable:
    (i) If required by FCIC, an agreement between the applicant and 
FCIC that specifies:
    (A) In addition to the requirements in Sec.  400.709, 
responsibilities of each with respect to the implementation, delivery 
and maintenance of the submission; and
    (B) The required timeframes for submission of any information and 
documentation needed to administer the approved submission;
    (ii) A reinsurance agreement if terms and conditions differ from 
the available existing reinsurance agreements; and
    (iii) A training package to facilitate implementation of the 
approved submission;
    (2) The Board may limit the availability of coverage, for any 
policy or plan of insurance developed under the authority of the Act 
and this regulation, on any farm or in any county or area;
    (3) A submission approved by the Board under this subpart will be 
made available to all approved insurance providers under the same 
reinsurance, subsidy, and terms and conditions as received by the 
applicant;
    (4) Any solicitation, sales, marketing, or advertising of the 
approved submission by the applicant before FCIC has made the policy 
materials available to all interested parties through its official 
issuance system will result in the denial of reinsurance, risk subsidy, 
and A&O subsidy for those policies affected; and
    (5) The property rights to the submission will automatically 
transfer to FCIC if the applicant elects not to maintain the submission 
under Sec.  400.712(a)(3) or fails to notify FCIC of its decision to 
elect or not elect maintenance of the program under Sec.  400.712(l).
    (b) Requirements and procedures for approved index-based weather 
plans of insurance are contained in Procedures Handbook 17050--Approved 
Procedures for Submission of Index-based Weather Plans of Insurance. In 
accordance with the Board approved procedures, index-based weather 
plans of insurance are not eligible for federal reinsurance, but may be 
approved for risk subsidy and A&O subsidy.


Sec.  400.709  Roles and responsibilities.

    (a) With respect to the applicant:
    (1) The applicant is responsible for:
    (i) Preparing and ensuring that all policy documents, rates of 
premium, prices, and supporting materials, including actuarial 
documents, are submitted by the deadline specified by FCIC, in the form 
approved by the Board, and are in compliance with Section 508 of the 
Rehabilitation Act;
    (ii) Annually updating and providing maintenance changes no later 
than 180 days prior to the earliest contract change date for the 
commodity in all counties or states in which the policy or plan of 
insurance is sold;
    (iii) Timely addressing responses to procedural issues, questions, 
problems or clarifications in regard to a policy or plan of insurance 
(all such resolutions for approved submissions will be communicated to 
all approved insurance providers through FCIC's official issuance 
system); and
    (iv) If requested by the Board, providing an annual review of the 
policy's performance, in writing to the Board, 180 days prior to the 
contract change date for the plan of insurance (The first annual report 
will be submitted one full year after implementation of an approved 
policy or plan of insurance, as agreed to by the submitter and RMA);
    (2) Only the applicant may make changes to the policy, plan of 
insurance, or rates of premium approved by the Board:
    (i) Any changes to approved submissions, both non-significant and 
significant, must be submitted to FCIC in the form of a submission for 
review in accordance with this subpart no later than 180 days prior to 
the earliest contract change date for the commodity in all counties or 
states in which the policy or plan of insurance is sold; and
    (ii) Significant changes will be considered a new submission;
    (3) Except as provided in paragraph (a)(4) of this section, the 
applicant is solely liable for any mistakes, errors, or flaws in the 
submitted policy, plan of insurance, their related materials, or the 
rates of premium that have been approved by the Board unless the policy 
or plan of insurance is transferred to FCIC in accordance with Sec.  
400.712(l) (The applicant remains liable for any mistakes, errors, or 
flaws that occurred prior to transfer of the policy or plan of 
insurance to FCIC);
    (4) If the mistake, error, or flaw in the policy, plan of 
insurance, their related materials, or the rates of premium is 
discovered more than 45 days prior to the cancellation or termination 
date for the policy or plan of insurance, the applicant may request in 
writing that FCIC withdraw the approved policy, plan of insurance, or 
rates of premium:
    (i) Such request must state the discovered mistake, error, or flaw 
in the policy, plan of insurance, or rates of premium, and the expected 
impact on the program; and
    (ii) For all timely received requests for withdrawal, no liability 
will attach to such policies, plans of insurance, or rates of premium 
that have been withdrawn and no producer, approved insurance provider, 
or any other person will have a right of action against the applicant;
    (5) Notwithstanding the policy provisions regarding cancellation, 
any policy, plan of insurance, or rates of premium that have been 
withdrawn by the applicant, in accordance with paragraph (a)(4) of this 
section is deemed canceled and applications are deemed not accepted as 
of the date that FCIC publishes the notice of withdrawal on its Web 
site at www.rma.usda.gov.
    (i) Approved insurance providers will be notified in writing by 
FCIC that the policy, plan of insurance, or premium rates have been 
withdrawn; and
    (ii) Producers will have the option of selecting any other policy 
or plan of insurance authorized under the Act that is available in the 
area by the sales closing date for such policy or plan of insurance; 
and
    (6) Failure of the applicant to perform all of the applicant's 
responsibilities may result in the withdrawal of approval for the 
policy or plan of insurance.
    (b) With respect to FCIC:
    (1) FCIC is responsible for:
    (i) Conducting a review of the submission in accordance with Sec.  
400.706 and providing its recommendations to the Board;
    (ii) With respect to submissions:

[[Page 10019]]

    (A) Ensuring that all approved insurance providers receive the 
approved policy or plan of insurance, and related material, for sale to 
producers in a timely manner (All such information shall be 
communicated to all approved insurance providers through FCIC's 
official issuance system);
    (B) As applicable, ensuring that approved insurance providers 
receive reinsurance under the same terms and conditions as the 
applicant (Approved insurance providers should contact FCIC to obtain 
and execute a copy of the reinsurance agreement) if required; and
    (C) Reviewing the activities of approved insurance providers, 
agents, loss adjusters, and producers to ensure that they are in 
accordance with the terms of the policy or plan of insurance, the 
reinsurance agreement, and all applicable procedures;
    (2) FCIC will not be liable for any mistakes, errors, or flaws in 
the policy, plan of insurance, their related materials, or the rates of 
premium and no cause of action may be taken against FCIC as a result of 
such mistake, error, or flaw in a submission or index-based weather 
plan of insurance submitted under this subpart;
    (3) If at any time prior to the cancellation date, FCIC discovers 
there is a mistake, error, or flaw in the policy, plan of insurance, 
their related materials, or the rates of premium, or any other reason 
for withdrawal of approval contained in Sec.  400.706(k) exists, FCIC 
will deny reinsurance for such policy or plan of insurance (If 
reinsurance is denied, a written notice will be provided to on RMA's 
Web site at www.rma.usda.gov);
    (4) If maintenance of the policy or plan of insurance is 
transferred to FCIC in accordance with Sec.  400.712(l), FCIC will 
assume liability for the policy or plan of insurance for any mistake, 
error, or flaw that occur after the date the policy is transferred.
    (c) If approval by the Board is withdrawn or reinsurance is denied 
for any submission, the approved insurance provider must cancel the 
policy or plan of insurance in accordance with its terms.


Sec.  400.710  Preemption and premium taxation.

    A policy or plan of insurance that is approved by the Board for 
FCIC reinsurance is preempted from state and local taxation. This 
preemption does not apply to index-based weather plans of insurance 
approved for premium subsidy or A&O subsidy under this part.


Sec.  400.711  Right of review, modification, and the withdrawal of 
approval.

    (a) At any time after approval, the Board may review any policy, 
plan of insurance, related material, or rates of premium approved under 
this subpart, including index-based weather plans of insurance and 
request additional information to determine whether the policy, plan of 
insurance, related material, or rates of premium comply with the 
requirements of this subpart.
    (b) The Board will notify the applicant of any problem or issue 
that may arise and allow the applicant an opportunity to make any 
needed change. If the contract change date has passed, the applicant 
will be liable for such problems or issues for the crop year in 
accordance with Sec.  400.709 until the policy may be changed.
    (c) The Board may withdraw approval for the applicable policy, plan 
of insurance or rate of premium, including index-based weather plans of 
insurance, as applicable, if:
    (1) The applicant fails to perform the responsibilities stated 
under Sec.  400.709(a);
    (2) The applicant does not timely and satisfactorily provide 
materials or resolve any issue to the Board's satisfaction so that 
necessary changes can be made prior to the earliest contract change 
date;
    (3) The Board determines the applicable policy, plan of insurance 
or rate of premium, including index-based weather plans of insurance is 
not in conformance with the Act, these regulations or the applicable 
procedures;
    (4) The policy, plan of insurance, or rates of premium are not 
sufficiently marketable according to the applicant's estimate in the 
submission or fails to perform sufficiently as determined by the Board; 
or
    (5) The interest of producers or tax payers is not protected or the 
continuation of the program raises questions or issues of program 
integrity.


Sec.  400.712  Research and development reimbursement, maintenance 
reimbursement, advance payments for concept proposals, and user fees.

    (a) For submissions approved by the Board for reinsurance under 
section 508(h) of the Act:
    (1) The submission may be eligible for a one-time payment of 
research and development costs and reimbursement of maintenance costs 
for up to four reinsurance years, as determined by the Board;
    (2) Reimbursement of research and development costs or maintenance 
costs will be considered as payment in full by FCIC for the submission, 
and no additional amounts will be owed to the applicant if the 
submission is transferred to FCIC in accordance with paragraph (l) of 
this section; and
    (3) If the applicant elects at any time not to continue to maintain 
the submission, it will automatically become the property of FCIC and 
the applicant will no longer have any property rights to the submission 
and will not receive any user fees for the plan of insurance;
    (b) The Board approved procedures and time-frames must be followed, 
or research and development costs and maintenance costs may not be 
reimbursed, unless otherwise determined by the Board.
    (1) After a submission has been approved by the Board for 
reinsurance, to be considered for reimbursement of:
    (i) Research and development costs, the applicant must submit the 
total amount requested and all supporting documentation to FCIC by 
electronic method or by hard copy and such information must be received 
by FCIC on or before August 1 immediately following the date the 
submission was released to approved insurance providers through FCIC's 
issuance system; or
    (ii) Maintenance costs, the applicant must submit the total amount 
requested and all supporting documentation to FCIC by electronic method 
or by hard copy and such information must be received by FCIC on or 
before August 1 of each year of the maintenance period.
    (2) Given the limitation on funds, regardless of when the request 
is received, no payment will be made prior to September 15 of the 
applicable fiscal year.
    (c) Applicants submitting a concept proposal may request an advance 
payment of up to 50 percent of the projected total research and 
development costs, and after the applicant has begun research and 
development activities, the Board may at its sole discretion provide up 
to an additional 25 percent advance payment of the estimated research 
and development costs, if requested in accordance with Procedures 
Handbook 17030--Approved Procedures for Submission of Concept Proposals 
Seeking Advance Payment of Research and Development Expenses.
    (1) If a concept proposal is approved by the Board for advance 
payment, the applicant is responsible for independently developing a 
submission that is complete and of sufficient quality as specified in 
this subpart by the deadline set by the Board.

[[Page 10020]]

    (i) If an applicant fails to fulfill the obligation to provide a 
submission that is complete and of sufficient quality by the deadline 
set by the Board, the Board shall provide a notice of non-compliance to 
the applicant and allow not less than 30 days for the applicant to 
respond;
    (ii) If the applicant fails to respond, to the satisfaction of the 
Board, with just cause as to why a submission that is complete and of 
sufficient quality was not provided by the deadline set by the Board, 
the applicant shall return the amount of the advance payment plus 
interest at the rate of 1.25 percent simple interest per calendar 
month;
    (iii) If the applicant responds, to the satisfaction of the Board, 
with just cause as to why a submission that is complete and of 
sufficient quality was not provided by the deadline set by the Board, 
the applicant will be given a new deadline by which to provide a 
submission that is complete and of sufficient quality; and
    (iv) If the applicant fails to provide a submission that is 
complete and of sufficient quality by the deadline, no additional 
extensions will be approved by the Board and the applicant shall return 
the amount of the advance payment plus interest at the rate of 1.25 
percent simple interest per calendar month.
    (2) If an applicant receives an advance payment for a portion of 
the expected research and development costs for a concept proposal that 
is developed into a submission and determined by the Board to be 
complete and of sufficient quality, but the submission is not approved 
by the Board following expert review, the Board will not:
    (i) Seek a refund of any advance payments for research and 
development costs; and
    (ii) Make any further research and development cost reimbursements 
associated with the submission.
    (d) Under section 522 of the Act, there are limited funds available 
on an annual fiscal year basis to pay for reimbursements of research 
and development costs (including advance payments for concept 
proposals) and maintenance costs. Consistent with paragraphs (e) 
through (j) of this section if all applicants' requests for 
reimbursement of research and development costs (including advance 
payments for concept proposals) and maintenance costs in any fiscal 
year:
    (1) Do not exceed the maximum amount authorized by law, the 
applicants may receive the full amount of reimbursement determined 
reasonable by the Board; or
    (2) Exceed the amount authorized by law, each applicant's 
reimbursement determined reasonable by the Board will be determined by 
dividing the total amount of each individual applicant's reimbursable 
costs authorized in paragraphs (e) through (j) of this section by the 
total amount of the aggregate of all applicants' reimbursable costs 
authorized in paragraphs (e) through (j) for the year and multiplying 
the result by the amount of reimbursement authorized under the Act.
    (e) The amount of reimbursement for research and development costs 
requested by the applicant may be reduced based on:
    (1) The complexity of the policy, plan of insurance, or rates of 
premium, so requests for reimbursements for submissions:
    (i) Adding commodities to existing plans of insurance (i.e., Yield 
Protection and Revenue Protection under the Common Crop insurance 
Policy Basic Provisions, Area Risk Protection, Actual Revenue History, 
Whole Farm, Rainfall Index, Vegetative Index, etc.) may be reduced by 
as much as 20 percent;
    (ii) Using existing rating methodologies or commodity prices or a 
price methodology may be reduced by as much as 10 percent;
    (iii) Using existing policy provisions, procedures, etc., may be 
reduced by as much as 10 percent; and
    (2) The scope as measured by the agricultural commodities proposed 
to be covered or geographic area the proposed submission will cover, as 
determined by FCIC so requests for reimbursements for submissions:
    (i) That cover a single commodity may be reduced by 10 percent; and
    (ii) That cover a small geographic area compared to the total 
growing area for the commodity may be reduced by 10 percent.
    (f) Research and development and maintenance costs must be 
supported by itemized statements and supporting documentation (copies 
of contracts, billing statements, time sheets, travel vouchers, 
accounting ledgers, etc.).
    (1) Actual costs submitted will be examined for reasonableness and 
may be adjusted at the sole discretion of the Board.
    (2) Allowable research and development costs and maintenance costs 
(directly related to research and development or maintenance of the 
submission only) may include the following:
    (i) Wages and benefits, exclusive of bonuses, overtime pay, or 
shift differentials;
    (A) One line per employee or contractor, include job title, total 
hours, and total dollars;
    (B) The rates charged must be commensurate with the tasks performed 
(For example, a person performing the task of data entry should not be 
paid at the rate for performing data analysis);
    (C) The wage rate and benefits shall not exceed two times the 
hourly wage rate plus benefits provided by the Bureau of Labor 
Statistics; and
    (D) The applicant must report any familial or business relationship 
that exists between the applicant and the contractor or employee 
(Reimbursement may be limited or denied if the contractor or employee 
is associated to the applicant and they may be considered as one and 
the same. This includes a separate entity being created by the 
applicant to conduct research and development. Reimbursement may be 
limited or denied if the contractor is paid a salary or other 
compensation);
    (ii) Travel and transportation (One line per event, include the job 
title, destination, purpose of travel, lodging cost, mileage, air or 
other identified transportation costs, food and miscellaneous expenses, 
other costs, and the total cost);
    (iii) Software and computer programming developed specifically to 
determine appropriate rates, prices, or coverage amounts (Identify the 
item, include the purpose, and provide receipts or contract or 
straight-time hourly wage, hours, and total cost. Software developed to 
send or receive data between the producer, agent, approved insurance 
provider or RMA or such other similar software may not be included as 
an allowable cost);
    (iv) Miscellaneous expenses such as postage, telephone, express 
mail, and printing (Identify the item, cost per unit, number of items, 
and total dollars); and
    (v) Training costs expended to facilitate implementation of a new 
approved submission (Include instructor(s) hourly rate, hours, and cost 
of materials and travel) conducted at a national level, directed to all 
approved insurance providers interested in selling the submission, and 
approved prior to the training by RMA).
    (3) The following expenses are specifically not eligible for 
research and development and maintenance cost reimbursement:
    (i) Copyright fees, patent fees, or any other charges, costs or 
expenses related to the use of intellectual property;
    (ii) Training costs, excluding training costs to facilitate 
implementation of the approved submission in accordance with subsection 
(f)(2)(v);
    (iii) State filing fees and expenses;

[[Page 10021]]

    (iv) Normal ongoing administrative expenses or indirect overhead 
costs (for example, costs associated with the management or general 
functions of an organization, such as costs for internet service, 
telephone, utilities, and office supplies);
    (v) Paid or incurred losses;
    (vi) Loss adjustment expenses;
    (vii) Sales commission;
    (viii) Marketing costs;
    (ix) Lobbying costs;
    (x) Product or applicant liability resulting from the research, 
development, preparation or marketing of the policy;
    (xi) Copyright infringement claims resulting from the research, 
development, preparation or marketing of the policy;
    (xii) Costs of making program changes as a result of any mistakes, 
errors or flaws in the policy or plan of insurance;
    (xiii) Costs associated with building rents or space allocation;
    (xiv) Costs in paragraphs (i) and (j) of this section determined by 
the Board to be ineligible for reimbursement; and
    (xv) Local, State, or Federal taxes.
    (g) Requests for reimbursement of maintenance costs must be 
supported by itemized statements and supporting documentary evidence 
for each reinsurance year in the maintenance period.
    (1) Actual costs submitted will be examined for reasonableness and 
may be adjusted at the sole discretion of the Board.
    (2) Maintenance costs for the following activities may be 
reimbursed:
    (i) Expansion of the original submission into additional crops, 
counties or states;
    (ii) Non-significant changes to the policy and any related 
material;
    (iii) Non-significant or significant changes to the policy as 
necessary to protect program integrity or as required by Congress; and
    (iv) Any other activity that qualifies as maintenance.
    (h) Projected costs for research and development for concept 
proposals shall be based on a reasonable estimate of the costs allowed 
in paragraph (f) of this section.
    (i) If a submission is determined to be of insufficient quality to 
refer to expert review, or is considered incomplete and is subsequently 
resubmitted and approved, the costs to perfect the submission may not 
be considered reimbursable costs depending on the level of 
insufficiency or incompleteness of the submission, as determined at the 
sole discretion of the Board.
    (j) Reimbursement of costs associated with addressing issues raised 
by the Board, expert reviewers and RMA will be evaluated based on the 
substance of the issue and the amount of time reasonably necessary to 
address the specific issue raised. Delays and additional costs caused 
by the inability or refusal to adequately address issues may not be 
considered reimbursable, as determined at the sole discretion of the 
Board.
    (k) If the Board withdraws its approval for reinsurance at any time 
during the period that reimbursement for maintenance is being made or 
user fees are being collected, no maintenance reimbursement shall be 
made nor any user fee be owed after the date of such withdrawal.
    (l) Not later than 180 days prior to the end of the last 
reinsurance year in which a maintenance reimbursement will be paid for 
the approved submission, the applicant must notify FCIC in writing 
regarding its decision on future ownership and maintenance of the 
policy or plan of insurance.
    (1) The applicant must notify FCIC in writing whether it intends 
to:
    (i) Continue to maintain the policy or plan of insurance and charge 
approved insurance providers a user fee to cover maintenance expenses 
for all policies earning premium; or
    (ii) Transfer responsibility for maintenance to FCIC.
    (2) If the applicant fails to notify FCIC in writing by the 
deadline, the policy or plan of insurance will automatically transfer 
to FCIC beginning with the next reinsurance year.
    (3) If the applicant elects to:
    (i) Continue to maintain the policy or plan of insurance, the 
applicant must submit a request for approval of the user fee by the 
Board at the time of the election; or
    (ii) Transfer the policy or plan of insurance to FCIC, FCIC may at 
its sole discretion, continue to maintain the policy or plan of 
insurance or elect to withdraw the availability of the policy or plan 
of insurance.
    (4) Requests for approval of the user fee must be accompanied by 
written documentation to support the amount requested will only cover 
direct costs to maintain the plan of insurance. Costs that are not 
eligible for research and development and maintenance reimbursements 
under this section are not eligible to be considered for determining 
the user fee.
    (5) The Board will approve the amount of user fee, including the 
maximum amount of total maintenance that may be collected per year, 
that is payable to the applicant by approved insurance providers unless 
the Board determines that the user fee charged:
    (i) Is unreasonable in relation to the maintenance costs associated 
with the policy or plan of insurance; or
    (ii) Unnecessarily inhibits the use of the policy or plan of 
insurance by approved insurance providers.
    (6) If the total user fee exceeds the maximum amount determined by 
the Board, the maximum amount determined by the Board will be divided 
by the number of policies earning premium to determine the amount to be 
paid by each approved insurance provider.
    (7) Reasonableness of the initial request to charge a user fee will 
be determined by the Board based on a comparison of the amount of 
reimbursement for maintenance previously received, the number of 
policies, the number of approved insurance providers, and the expected 
total amount of user fees to be received in any reinsurance year.
    (8) A user fee unnecessarily inhibits the use of a policy or plan 
of insurance if it is so high that approved insurance providers will 
not sell the policy.
    (9) The user fee charged to each approved insurance provider will 
be considered payment in full for the use of such policy, plan of 
insurance or rate of premium for the reinsurance year in which payment 
is made.
    (10) It is the sole responsibility of the applicant to collect such 
fees from an approved insurance provider and any indebtedness for such 
fees must be resolved by the applicant and approved insurance provider.
    (i) Applicants may request that FCIC provide the number of policies 
sold by each approved insurance provider.
    (ii) Such information will be provided not later than 90 days after 
such request is made or not later than 90 days after the requisite 
information has been provided to FCIC by the approved insurance 
provider, whichever is later.
    (11) Every two years after approval of a user fee, or if the 
applicant has made a significant change to the approved submission, 
applicants must submit documentation to the Board for review in 
determining if the user fee should be revised.
    (12) The Board may review the amount of the user fee at any time at 
its sole discretion.
    (m) The Board may consider information from the Equal Access to 
Justice Act, 5 U.S.C. 504, the Bureau of Labor Statistic's Occupational 
Employment Statistics Survey, the Bureau of Labor Statistic's 
Employment Cost Index, and any other information determined applicable 
by the Board, in making a determination whether to approve a submission 
for

[[Page 10022]]

reimbursement of research and development costs, maintenance costs, or 
user fees.
    (n) For purposes of this section, rights to, or obligations of, 
research and development cost reimbursement, maintenance cost 
reimbursement, or user fees cannot be transferred from any individual 
or entity unless specifically approved in writing by the Board.
    (o) Applicants requesting reimbursement for research and 
development costs, maintenance costs, or user fees, may present their 
request in person to the Board prior to consideration for approval.
    (p) Index-based weather plans of insurance are not eligible for 
reimbursement from FCIC for maintenance costs or research and 
development costs. Submitters of approved index-based weather plans of 
insurance may collect user fees from other approved insurance providers 
in accordance with Procedures Handbook 17050--Approved Procedures for 
Submission of Index-based Weather Plans of Insurance.


Sec.  400.713  Non-reinsured supplemental (NRS) policy.

    (a) Unless otherwise specified by FCIC, any NRS policy that covers 
the same agricultural commodity as any policy reinsured by FCIC under 
the Act must be provided to RMA to ensure it does not shift any loss 
under the FCIC reinsured policy. Failure to provide such NRS policy or 
endorsement to RMA prior to its issuance shall result in the denial of 
reinsurance, A&O subsidy and risk subsidy on the underlying FCIC 
reinsured policy for which such NRS policy was sold.
    (b) Three hard copies, and an electronic copy in a format approved 
by RMA, of the new or revised NRS policy and related materials must be 
submitted at least 150 days prior to the first sales closing date 
applicable to the NRS policy. At a minimum, examples that demonstrate 
how liability and indemnities are determined under differing scenarios 
must be included.
    (1) Hard copies of the NRS must be sent to the Deputy Administrator 
for Product Management (or successor), USDA/Risk Management Agency, 
Beacon Facility Mail Stop 0812, 9240 Troost Ave., Kansas City, MO 
64131-3055.
    (2) Electronic copies of the NRS must be sent to the Deputy 
Administrator for Product Management (or successor) at 
DeputyAdministrator@rma.usda.gov.
    (c) RMA will review the NRS policy. If any of the conditions found 
in paragraphs (c)(1) through (5) of this section are found to occur, 
FCIC will deny reinsurance, A&O subsidy and risk subsidy on the 
underlying FCIC reinsured policy for which such NRS policy was sold.
    (1) If the NRS policy materially increases or shifts risk to the 
underlying policy or plan of insurance reinsured by FCIC.
    (i) An NRS policy will be considered to materially increase or 
shift risk to the underlying policy or plan of insurance reinsured by 
FCIC if it creates an incentive for moral hazard such as a financial 
incentive to increase the number or size of losses or, allows for 
aggregate indemnities in excess of the expected value of the insured 
commodity.
    (ii) The NRS must include language that clearly states no indemnity 
will be paid in excess of the initial value of the insured commodity.
    (2) The NRS reduces or limits the rights of the insured with 
respect to the underlying policy or plan of insurance reinsured by 
FCIC. An NRS policy will be considered to reduce or limit the rights of 
the insured with respect to the underlying policy or plan of insurance 
if it alters the terms or conditions of the underlying policy or 
otherwise preempts procedures issued by FCIC.
    (3) The NRS disrupts the marketplace. An NRS policy will be 
considered to disrupt the marketplace if it encourages planting more 
acres of the insured commodity in excess of normal market demand, 
adversely affects the sales or administration of reinsured policies, 
undermines producers' confidence in the Federal crop insurance program, 
or harms public perception of the Federal crop insurance program.
    (4) The NRS is an impermissible rebate. An NRS may be considered to 
be an impermissible rebate if FCIC determines that the premium rates 
charged are insufficient to cover the expected losses and a reasonable 
reserve or it offers other benefits that are generally provided at a 
cost.
    (5) The NRS policy is conditioned upon or provides incentive for 
the purchase of the underlying policy or plan of insurance reinsured by 
FCIC with a specific agent or approved insurance provider.
    (d) RMA will respond not less than 60 days before the first sales 
closing date or provide notice why RMA is unable to respond within the 
time frame allotted.
    (e) NRS policies reviewed by RMA will not need to be submitted for 
a five year period unless a change is made to the NRS or the underlying 
policy or the loss ratio for the NRS policy exceeds 2.0. Once any 
changes are made to either policy or the five year period has 
concluded, the NRS must be resubmitted for review.

    Signed in Washington, DC, on February 13, 2015.
Brandon Willis,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2015-03604 Filed 2-23-15; 8:45 am]
BILLING CODE 3410-08-P