[Federal Register Volume 76, Number 4 (Thursday, January 6, 2011)]
[Proposed Rules]
[Pages 718-721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-14]
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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. 76, No. 4 / Thursday, January 6, 2011 /
Proposed Rules
[[Page 718]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 400
RIN 0563-AC28
General Administrative Regulations; Good-Performance Refunds
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Proposed rule with request for comments.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to
amend the General Administrative Regulations by adding a new subpart Y
to provide a Good-Performance Refund (GPR) to producers who have
demonstrated favorable crop insurance performance evidenced by a very
limited number of claims experienced over a specified number of years
participating Federal crop insurance programs. The GPR will recognize
an individual producer's contributions to favorable program performance
as authorized under section 508(d)(3) of the Federal Crop Insurance Act
(Act). In addition, new or beginning producers demonstrating favorable
crop insurance performance may also be recognized for initial
participation in the program.
DATES: Written comments and opinions on this proposed rule will be
accepted until close of business January 21, 2011 and will be
considered when the rule is to be made final.
ADDRESSES: Interested persons are invited to submit comments, titled
``Good-Performance Refund Proposed Rule'', by any of the following
methods:
By Mail to: Leiann Nelson, Product Management, Risk
Management Agency, United States Department of Agriculture, Beacon
Facility--Mail Stop 0801, P.O. Box 419205, Kansas City, MO 64141-6205.
By Express Mail to: Leiann Nelson, Product Management,
Risk Management Agency, United States Department of Agriculture, Beacon
Facility, Stop 0801, 9240 Troost Avenue, Kansas City, MO 64131-3055.
E-Mail: [email protected].
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
A copy of each response will be available for public inspection and
copying from 7 a.m. to 4:30 p.m., CST, Monday through Friday, except
holidays, at the above address.
FOR FURTHER INFORMATION CONTACT: Leiann Nelson, Senior Underwriter,
Product Management, Risk Management Agency, United States Department of
Agriculture, Beacon Facility, Stop 0801, P.O. Box 419205, Kansas City,
MO 64141-6205, telephone (816) 926-7394.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be significant for the purposes of
Executive Order 12866 and, therefore, it has been reviewed by the
Office of Management and Budget (OMB).
Regulatory Impact Analysis
A Regulatory Impact Analysis has been completed and is available to
interested persons from the Kansas City address listed above. In
summary, the analysis finds that the benefits of Good Performance
Refunds will outweigh the expenses of the program. Good Performance
Refunds will return a portion of producer paid premium back to
producers who purchase crop insurance for their risk management needs,
pursue loss prevention and loss reduction methods, and demonstrate good
farming practices, providing, in effect, a premium discount to
individual producers demonstrating a series of good years with very few
losses in their insurance history.
The Good Performance Refund program will specifically encourage
sound management practices as well as encouraging insured producers to
continue participation in the crop insurance program. Benefits to
insured's who qualify for the program based on their individual number
of insured years and losses, will be cash refunds of premium based on
their out-of-pocket premium amount. Cash refunds are estimated on
average to be slightly over $1,000 for the 2011 refund and will vary
annually depending on the number of producers qualifying, and, once
qualified, the individual insured's number of years of insurance
history and amount of insurance purchased. The return of some
previously paid premium dollars may be used to offset anticipated
increases in the costs of production inputs or higher crop insurance
premiums due to higher crop prices and, in some cases, higher
volatility of prices. With these higher anticipated costs, these
benefits allow producers to continue purchasing higher levels of crop
insurance.
The GPR program will, additionally, encourage insureds not to claim
small or insignificant losses so they may qualify for a refund later.
Small losses present administrative costs to insurance providers, the
government, and taxpayers that can add up program-wide. Any reduction
of these types of losses can result, long-term, in decreases in
administrative costs of the program as well as possible decreases for
future premium rates and corresponding subsidy amounts, thus benefiting
insureds, insurance providers, the government and taxpayers.
GPR costs to the government are estimated at $75 million annually.
Paperwork Reduction Act of 1995
Pursuant to the provisions of the Paperwork Reduction Act of 1995
(44 U.S.C. chapter 35), there are no paperwork implications involved
with this rule.
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.
[[Page 719]]
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. GPR payments
for the Federal crop insurance program are calculated using the same
method for all producers regardless of the size of their farming
operation. The amount of work required of the insurance companies will
not increase because the information must already be collected under
the present regulations, policies and procedures approved by the FCIC
and by the Risk Management Agency of the United States Department of
Agriculture (RMA), and the GPR payments will be issued by RMA on behalf
of FCIC. 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 requires intergovernmental consultation with State and
local officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988 on civil justice reform. The provisions of this rule will 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,
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
Section 508(d)(3) of the Federal Crop Insurance Act (Act)
authorizes the Federal Crop Insurance Corporation (FCIC) to provide a
performance-based premium discount to a producer of an agricultural
commodity who has good insurance or production experience relative to
other producers of that agricultural commodity in the same area and as
determined by the FCIC.
The proposed rule will implement a GPR program to producers meeting
the qualifications for years of participation in the Federal crop
insurance program combined with a limited number of losses,
demonstrating favorable program performance. In addition, any new or
beginning producers may be recognized for initial participation in the
program who also demonstrated favorable program performance.
GPR payments will not exceed $75 million unless FCIC makes an
announcement of an alternative amount in a notice published in the
Federal Register. Based on the net paid premium of qualifying producers
and the total amount designated for GPR payments, a premium percentage
will be determined to apply to all producers who meet the program
qualification requirements.
Good cause is shown to provide a shortened comment period because
the provisions of this rule are straight-forward, so a shortened
comment period still allows enough time for the public to provide
meaningful comments.
While the premium to purchase buy-up levels of coverage in the
Federal crop insurance program already receive substantial subsidies,
these subsidies are not tied to an individual producer's performance.
The good performance refund will provide a tool to encourage producers
to mitigate small losses.
Producers will soon be making decisions regarding the upcoming crop
year so knowing and understanding the benefits of this rule will allow
producers to take more timely actions to purchase the necessary buy-up
levels of coverage required for qualification for a good performance
refund, and to reduce or prevent small losses that could otherwise
jeopardize their future qualifications for such refund. To the extent
losses are mitigated or reduced in the Federal crop insurance program,
premium rates also may be lower, in turn reducing program costs to
producers, the government, and taxpayers.
A longer comment period, such as a 60 day period, would delay the
implementation of this rule and the payment of any refunds hereunder,
until well after the normal spring planting season for most 2011 crops.
By delaying these refunds, producers will not be able to use them to
help finance their 2011 spring operations. In addition, in the coming
weeks, producers will be making decisions regarding the upcoming crop
year so knowing and understanding the benefits of this rule will allow
producers to take more timely actions to purchase the necessary buy-up
levels of coverage required for qualification for a good performance
refund, and to reduce or prevent small losses that could otherwise
jeopardize their future qualifications for such refund. To the extent
losses are mitigated or reduced in the crop insurance program, premium
rates also may be lower, in turn reducing program costs to producers,
the government, and taxpayers.
The agency believes that requirements governing the payment of a
good performance refund are straight-forward. There are a limited
number of ways that such refunds can be provided within the context of
the Federal crop insurance program. Therefore, a lengthy delay of
implementation of the program is unnecessary and contrary to providing
the benefits to producers receiving these refunds in time for them to
be used to help finance their spring 2011 operations. For the reasons
stated above, good cause is shown to limit the comment period to 15
days for this rule as a lengthy comment period is not practicable and
would be contrary to the public interest.
The GPR is applicable to the 2011 and succeeding calendar years as
long as funds are available for GPR payments.
List of Subjects in 7 CFR Part 400
Administrative practice and procedure, Crop insurance.
Proposed Rule
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation proposes to add a new
[[Page 720]]
subpart Y to 7 CFR part 400 to read as follows:
PART 400--GENERAL ADMINISTRATIVE REGULATIONS
Subpart Y--Good-Performance Refunds
Sec.
400.800 Basis and applicability.
400.801 Definitions.
400.802 Eligibility requirements.
400.803 New or beginning producers.
400.804 Payments.
400.805 GPR announcements.
Authority: 7 U.S.C. 1506(1), 1506(o).
Subpart Y--Good-Performance Refunds
Sec. 400.800 Basis and applicability.
(a) The regulations contained in this subpart describe the
eligibility requirements, rules, and criteria for receiving a Good-
Performance Refund (GPR).
(b) GPR payments will be made annually generally during the first
quarter of the calendar year, provided funds are available.
Sec. 400.801 Definitions.
Base period. A period of crop insurance program performance used to
determine an individual producer's net paid premium including the base
year and nine years prior to the base year. For example: If the base
year is 2009, the base period includes years 2000 through 2009.
Base year. The last crop year that has been completed and all
claims would normally have been paid. The base year is used to
establish the base period. For example: A payment for the 2011 calendar
year will be based on information containing the producer's crop
insurance experience with a base year of 2009 because claims for the
2010 crop year would not all have been finalized. For a 2012 calendar
year payment the base year would be 2010.
Buy-up coverage level. A level of coverage greater than
catastrophic risk protection. This level of insurance may also be
referred to as ``additional coverage.''
FCIC. Has the same meaning as contained in section 1 of the Common
Crop Insurance Policy Basic Provisions (Basic Provisions) (7 CFR Sec.
457.8).
Net paid premium. For the base period, total premium for all crops
and units insured by the producer less the total premium subsidy and
any indemnities received. Indemnities will include all payments for all
claims except those designated as replant payments.
New or beginning producers. A producer who has not participated in
any farming or ranching operation, either as a primary entity or as a
person having a SBI in the operation, for any crop year prior to the
two crop years immediately preceding the base year. Example: New or
beginning producers for a GPR payment authorized for the 2011 crop year
could have been involved as a primary operator or a SBI in any farm or
ranch in 2007, 2008, and 2009 but could not have been a primary
operator or have a SBI in any farm or ranch for any crop year prior to
2007.
Percentage of net paid premium. A percentage determined by FCIC and
used to calculate the GPR, based on the total funds determined by FCIC
to be available for the GPR program and the total net paid premium of
all qualified producers. The percent of net paid premium will not
exceed 15 percent. (The percentage of net paid premium is adjusted to
account for the minimum and maximum allowable payments and new or
beginning producer payments.)
Positive net paid premium. When the net paid premium is greater
than one.
Substantial beneficial interest (SBI). Has the same meaning as
contained in section 1 of the Basic Provisions and any applicable
procedures.
Sec. 400.802 Eligibility requirements.
To be eligible for a GPR payment, a producer must:
(a) Have been a participant in any Federal crop insurance program
at the buy-up coverage level for at least one insurance policy that
earned premium for the base year.
(b) Not be determined to be ineligible in accordance with the Basic
Provisions or subpart U of this part, for the crop year subsequent to
the base year. For example, if the 2009 crop year is the base year, the
insured must not be determined to be ineligible for the 2010 crop year.
(c) Have used the same social security number or employer
identification number to identify the primary insured entity throughout
the base period.
(d) Meet the following good-performance requirements of:
(1) In the case of a producer with seven to ten years of program
participation during the base period:
(i) Not more than 1 year with a reported loss, and
(ii) Have a positive net paid premium for the program participation
period; or
(2) In the case of a program with four to six years of program
participation during the base period of having no years with a reported
loss.
Sec. 400.803 New or beginning producers.
(a) New or beginning producers will be eligible for a GPR payment
for any given year when GPR payments are made, unless FCIC publishes an
announcement, as specified in Sec. 400.805, stating otherwise.
(b) New or beginning producers must meet the requirements of
Sec. Sec. 400.802(a), (b), and (c).
(c) New or beginning producers will be required to sign a
certification statement that they meet the requirements to be
designated as a new or beginning producer in order to be eligible for a
GPR payment.
(d) New or beginning producers must demonstrate favorable program
performance by participating in the Federal crop insurance program for
the most recent one to three years of the base period, and have a
positive net paid premium for that period of participation.
Sec. 400.804 Payments.
(a) Aggregated premium and indemnity for all crops insured in all
counties under a qualifying producer's social security number or
employer identification number will be used to calculate the GPR.
(b) Except as provided herein, in the case of a new or beginning
producer, the net paid premium percentage will be reduced by 50 percent
of the percentage paid to producers who are not new or beginning. For
example: If the percent of net paid premium is 8 percent for producers
who are not new or beginning producers, then new and beginning
producers will receive a GPR of 4 percent of net paid premium, unless
an adjustment is needed due to a larger number of certifying new or
beginning producers than is anticipated.
(c) GPR payments under this section will not exceed $75 million. If
amounts to be paid exceed $75 million due to a larger than anticipated
number of producers that certify they are new or beginning, then FCIC
will adjust the percentage refund for new or beginning producers,
contained in paragraph (b) of this section, downward.
(d) Subject to paragraph (e) of this section, GPR payments will be
calculated as follows:
(1) For producers, other than new or beginning producers, multiply
the percent of net paid premium by the individual producer's net paid
premium; and
(2) For new and beginning producers, multiply the percent of net
paid premium by .50, unless adjusted in accordance with paragraph (c)
of this section, and then multiply the result by the individual
producer's net paid premium.
(e) A GPR payment will:
[[Page 721]]
(1) Not be made unless it is at least $25; and
(2) Be capped at $25,000 for calculated GPR payments larger than
$25,000, regardless of the calculated payment.
(f) All GPR payments will be considered final with no adjustments,
modifications, additions or deletions, except as specified in
paragraphs (g) and (h) of this section, and will be based on data
contained in the RMA crop insurance database as of the end of the first
full week in January of the year the GPR payment is authorized, unless
FCIC publishes an announcement in accordance with Sec. 400.805
providing a different date. For example: For GPR payments made for the
2011 calendar year, the data used would be as of the end of the first
full week in January 2011.
(g) Any qualifying producer involved in arbitration, litigation, or
mediation will not receive a payment until the legal proceedings have
been resolved.
(h) If a producer receives a GPR payment under this subpart and is
determined to be ineligible for the crop year subsequent to the base
year or is at any time determined to not meet the requirements of Sec.
400.803, the GPR payment must be repaid to FCIC in accordance with
section 24 of the Basic Provisions and any applicable procedures.
Sec. 400.805 GPR announcements.
FCIC will post information on the RMA Web site, at http://www.rma.usda.gov or a successor Web site, to provide the public with
information regarding the GPR for a calendar year.
Signed in Washington, DC, on January 3, 2011.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2011-14 Filed 1-4-11; 11:15 am]
BILLING CODE 3410-08-P