Common Crop Insurance Regulations; Sugar Beet Crop Insurance Provisions

 
CONTENT
Federal Register, Volume 84 Issue 230 (Friday, November 29, 2019)
[Federal Register Volume 84, Number 230 (Friday, November 29, 2019)]
[Rules and Regulations]
[Pages 65627-65639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25844]
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Rules and Regulations
                                                Federal Register
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having general applicability and legal effect, most of which are keyed
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The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 84, No. 230 / Friday, November 29, 2019 /
Rules and Regulations
[[Page 65627]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
[Docket ID FCIC-19-0005]
RIN 0563-AC63
Common Crop Insurance Regulations; Sugar Beet Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule with request for comments.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the
Common Crop Insurance Regulations, Sugar Beet Crop Insurance Provisions
(Crop Provisions) and makes amendments to the final rule, with request
for comment, published in the Federal Register on September 10, 2018,
that updated existing policy provisions and definitions to better
reflect current agricultural practices. This final rule is amended
based on comments received and other issues identified since
implementation of the previous final rule. The changes will be
effective for the 2020 and succeeding crop years in states with a
November 30 contract change date and for the 2021 and succeeding crop
years in all other states.
DATES: This final rule is effective November 30, 2019. However, FCIC
will accept written comments on this final rule until close of business
January 28, 2020. FCIC will consider these comments and make changes to
the rule if warranted.
ADDRESSES: We invite you to submit comments on this rule. In your
comments, include the date, volume, and page number of this issue of
the Federal Register, and the title of rule. You may submit comments by
any of the following methods, although FCIC prefers that you submit
comments electronically through the Federal eRulemaking Portal:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and search for Docket ID FCIC-19-0005. Follow the
online 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 and publicly available on http://www.regulations.gov.
    Privacy Act: Anyone is able to search the electronic form of all
comments received for any dockets by the name of the person submitting
the comment (or signing the comment, if submitted on behalf of an
association, business, labor union, etc.). Interested persons may
review the complete User Notice and Privacy Notice for Regulations.gov
at http://www.regulations.gov/#!privacyNotice.
FOR FURTHER INFORMATION CONTACT: Francie Tolle; Product Administration
and Standards Division, Risk Management Agency, United States
Department of Agriculture, Beacon Facility, Stop 0812, Room 7829, P.O.
Box 419205, Kansas City, MO 64141-6205, telephone (816) 926-7730; email
[email protected].
SUPPLEMENTARY INFORMATION:
Background
    This rule amends changes to the Common Crop Insurance Regulations,
Sugar Beet Crop Insurance Provisions that were published by FCIC on
September 10, 2018, as a notice of final rule with request for comment
rulemaking in the Federal Register at 83 FR 45535-45539. The public was
afforded 30 days to submit written comments and opinions.
    Comments were received from 15 commenters. The commenters included
persons or entities from the following categories: Insurance company,
insurance agent, farmer, financial, producer group, academic, trade
association, and other. The public comments received regarding the
final rule with request for comment and FCIC's responses to the
comments are as follows:
    Comment: Commenter suggested revising the definition of ``Raw
sugar'' to ``Percentage of raw sugar'' since that term is frequently
used.
    ``Percentage of raw sugar--Quantity of sugar that has not been
extracted from the sugar beet crop and is determined from analytical
tests of samples performed by the processor or other accredited
laboratories.''
    This revised definition clarifies how the percentage is determined
and by whom, and includes the ability for alternative testing of
samples by qualified facilities, which might be necessary in cases of
unharvested appraisals where sampling and testing might not be readily
performed by the processor.
    Response: FCIC is adding the following definition for percentage of
raw sugar, ``quantity of sugar determined from analytical tests of
samples performed by the processor or other laboratories approved by
us.''
    Comment: A commenter stated that Section 1 is revising the
definition of Practical to Replant and seems to strengthen the idea of
only replanting when practical to replant and will be good for the
growers.
    Another commenter stated that revising the definition of practical
to replant to align with the practicality to replant and should be an
improvement.
    Response: FCIC thanks the commenter and appreciates their input.
    Comment: Commenter stated that the definition of ``Initially
planted'' can be deleted since the term is no longer used in the Sugar
Beet CP (part of the ``Insurance Period'' details that have been
removed in section 9).
    Response: FCIC is deleting the definition of initially planted.
    Comment: Commenter stated that definitions for ``Pound'' and
``Ton'' should be added to align with other crop provisions that use
pounds as the unit of measure, and tons. This also will function in
conjunction with the proposed definition of ``Percentage of raw sugar''
(see under ``raw sugar'' below) and the production's unit of measure,
as indicated in other suggestions/recommendations provided in this
document.
     ``Pound--Sixteen ounces avoirdupois.''
     ``Ton--2,000 pounds.''
    Response: FCIC is adding the definition of pound and ton.
    Comment: Commenter stated the definition of ``Processor contract''
replacing the definition of ``sugar beet processor contract'' in the
current Sugar
[[Page 65628]]
Beet CP, now begins: ``A written agreement between you and the
processor, executed on or before the acreage reporting date, which is
in effect for the crop year, containing at a minimum: . . .''
[highlighting indicates the changes from the ``sugar beet processor
contract'' definition].
     As written, this could be misunderstood as having the
phrase ``. . . which is in effect for the crop year . . .'' apply to
the acreage reporting date rather than to the ``written agreement''
(processor contract). One way to make this clearer would be something
like: ``. . . executed on or before the acreage reporting date and in
effect for the crop year . . .''
     Also consider if this should use a term other than
``written agreement'', which generally has a different meaning for crop
insurance purposes, as in section 7(a)(4) and elsewhere. [One
possibility: ``An agreement, in writing, between . . .'']
    Response: FCIC is replacing the definition and references to the
term ``processor contract'' with the definition/term ``production
agreement'' which removes the requirement for the contract to include a
price or formula for a price based on third party data. This better
reflects sugar beet contracts because there is no third party data
source for prices and not all production agreements include a price.
    Comment: Commenter suggested revising the definition of ``Raw
sugar'' to ``Percentage of raw sugar'' since that term is frequently
used.
     ``Percentage of raw sugar--Quantity of sugar that has not
been extracted from the sugar beet crop and is determined from
analytical tests of samples performed by the processor or other
accredited laboratories.''
     This revised definition clarifies how the percentage is
determined and by whom, and includes the ability for alternative
testing of samples by qualified facilities, which might be necessary in
cases of unharvested appraisals where sampling and testing might not be
readily performed by the processor.
    Response: FCIC is adding the definition for average percentage of
raw sugar based on this comment to be the quantity of sugar determined
from analytical tests of samples performed by the processor or other
laboratories approved by the Approved Insurance Provider (AIP). FCIC is
also revising section 13(d), to allow the average percentage of raw
sugar to be determined by laboratories approved by the AIP, in addition
to tests performed by the processor. Sections 13(d)(1) and 13(e)(1)
will also clarify that raw sugar content tests may be based on the
insured's previous tests performed by the processor or other
laboratories approved by the AIP.
    Comment: A commenter stated that a change that is not in here, but
should be, is an optional unit provision based on each individual
processor contract per field. With each field being separately
contracted, this is an easy change to make. Units based on section
lines may make sense for dryland bulk commodity crops with a low per
acre value but are not appropriate for a specialty crop like sugar
beets which often have many smaller fields in the same section with
each exposed to different risks due to their location in that unit.
    Another commenter stated that one change that the commenter has
repeatedly requested but is not in here is an optional unit provision
based on each individual processor contract per field. With each field
being individually identified by its own contract number this should be
easily implemented and should increase participation.
    Response: This issue has been reviewed extensively by FCIC. In the
situation the commenter outlined, their processor contracts are by
field, and they want insurance by field. This would allow a producer to
separate their Actual Production History (APH) by field instead of
having an average production for the unit. This could add complexity to
the program and significantly increase the frequency of losses, which
could require significant premium rate increases to maintain actuarial
soundness. Further, processors, contractors, and grower groups have
been asked to supply the data to show revenue increases and benefits to
the program supporting this proposed unit structure. To date, nothing
has been provided.
    Comment: Commenter stated that Insurance Providers have some
concerns on how this change from ``standardized tons'' to ``pounds of
raw sugar'' will affect the insureds' APH. The conversion from
standardized tons to pounds of raw sugar is not clear at this time.
Insureds will need to recertify their production history to align with
the conversion from standardized tons to pounds of raw sugar.
    The commenter assumes calculations are as follows:
    Current procedure:
    Assume that 150 tons of beets harvested on 20 acres with a 14.5%
sugar content.
    Sugar percentage is 17.2% in the special provisions.
    14.5% / 17.2% = .843 factor.
    150 tons * .843 factor = 126.4 tons.
    126.4 tons / 20 acres = 6.3 standardized tons/acre that gets
reported for APH.
    Actual sugar content of beets would be:
    150 tons * 2,000 lbs. = 300,000 lbs. of beets.
    300,000 lbs. * 14.5% sugar = 43,500 lbs. of actual raw sugar in the
beets.
    43,500 lbs./20 acres = 2,175 lbs./acre actual raw sugar per acre.
    Please clarify which of the following methods will be utilized for
converting existing APH databases to pounds of raw sugar and note the
difference in the APH conversion and the actual sugar content
calculations in this example.
    1. (6.3 tons / acre APH * 2,000 lbs.) * 17.2% = 2,167.2 lbs. raw
sugar/acre APH.
    Or convert total production for the 20 acres:
    2. 126.4 standardized tons * 2,000 lbs. = 252,800 lbs. of beets.
    252,800 lbs. * 17.2% sugar from the SP = 43,481.6 lbs. of raw
sugar.
    43,481.6 lbs. of raw sugar / 20 acres = 2,174 lbs. APH.
    The example above is based on information included in the
Evaluations and Recommended Improvements for the Sugar Beets Crop
Insurance Program which was submitted by Watts and Associates, Inc.
    Plant Count Method Appraisals (Weight Method not applicable until
the factory accepts sugar beets) completed prior to the processor
accepting beets at the factory are not based on the percent of raw
sugar present in the sugar beets at the time of the appraisal. Guidance
is needed in the policy to convert appraised production based on the
plant count method to ``pounds of raw sugar.''
    Response: The conversion is based on total production, thus example
number 2 is the correct calculation. Additionally, FCIC has developed
and released procedures and training materials for insurance companies
detailing how to apply this conversion for insured producers including
the Frequently Asked Questions at https://www.rma.usda.gov/News-Room/Frequently-Asked-Questions/Sugar-Beet.
    Comment: A commenter stated that section 3 is changing standardized
tons to pounds of raw sugar. It is unclear to the commenter how this
calculation of pounds of raw sugar is made or how well it correlates to
standardized tons.
    Another commenter stated the commenter broadly supports FCIC's
proposal to change the basis of insurance from ``standardized tons'' to
pounds of raw sugar, simplifying the program and better aligning it
with commercial practice. The commenter
[[Page 65629]]
did raise a concern, however, regarding the implementation of this
important change. The shift from standardized tons to pounds of raw
sugar will be very visible to farmer-producers and could cause
considerable confusion, particularly in its first year. Insurance
coverage will look different. The mathematical relationship between a
producer's ``old'' coverage and ``new'' coverage may be far from
obvious at first. Even traditional price elections may be confusing
when now stated in the terms of pounds versus tons, as growers, agents,
and other stakeholders try to make comparisons with prior-year levels.
    To avoid this problem, the commenter believes a well-planned, well-
coordinated public outreach and education process will be essential,
including outreach to farmers so they will understand the new system,
training for agents so they can effectively explain it, training for
AIP loss adjustors and underwriters to minimize mistakes, and the
development of simple-to-use tools or applications allowing producers
quickly and easily to compare prior coverage in ``standardized tons''
to their new coverage in raw sugar pounds.
    The commenter would be pleased to assist RMA in this process, be it
in arranging outreach to the commenter's farmer members, getting
producer feedback on training materials, developing Question-and-Answer
sheets, providing farmer-level input for web-based applications, or in
any other manner that might be helpful to the agency and the
commenter's members.
    Response: FCIC has developed and released procedures and training
materials for insurance companies detailing how to apply this
conversion for insured producers including the Frequently Asked
Questions at https://www.rma.usda.gov/News-Room/Frequently-Asked-Questions/Sugar-Beet and the Sugar Beet Loss Adjustment Standards
Handbook at https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Loss-
Adjustment-Standards_-25000/Sugar-Beet/2019-25450-1H-Sugar-Beet-Loss-
Adjustment-Standards.ashx. The change in unit of measure from
standardized tons to pounds of raw sugar was made to better align with
the sugar industry in how producers are paid and for program
consistency with sugarcane. Below is a comparison example of the new
unit of measure (pounds of raw sugar), followed by previous unit of
measure (standardized tons), and final example is converting
standardized tons to pounds of raw sugar. The examples show the
conversions and how the end guarantee should be the same or within a
few pounds of their previous APH guarantee. The new APH calculation of
taking net tons to pounds of raw sugar: (20 net paid tons * 2,000 lbs.)
* 0.180 insured's average percent of raw sugar) = 7,200 pounds of raw
sugar. The previous APH calculation of taking net tons to standardized
tons: [20 net tons * (0.180 / 0.170)] = 21.2 standardized tons. The
conversions from standardized tons to pounds of raw sugar is
calculated: (21.2 standardized tons * 2,000 pounds) * 0.170 = 7,208
pounds of raw sugar.
    Comment: Commenter stated in regard to Section 3; changing
standardized tons to pounds of raw sugar. Commenter would like
clarification of how this calculation will be made, and how well it
will correlate to standardized tons. Also concerned as to how an
unharvested portion of a field would be appraised for APH on a raw
sugar basis.
    Another commenter is concerned as to how an unharvested portion of
a field would be appraised for APH purposes on a raw sugar basis.
    Response: FCIC has developed and released procedures and training
materials for insurance companies detailing how to apply this
conversion for insured producers as well as how to appraise unharvested
acreage.
    The change in unit of measure from standardized tons to pounds of
raw sugar was made to better align with the sugar industry in how
producers are paid and for program consistency with sugarcane. Below is
a comparison example of the new unit of measure (pounds of raw sugar),
followed by previous unit of measure (standardized tons), and final
example is converting standardized tons to pounds of raw sugar. The
examples show the conversions and how the end guarantee should be the
same or within a few pounds of their previous APH guarantee. The new
APH calculation of taking net tons to pounds of raw sugar: (20 net paid
tons * 2,000 lbs.) * 0.180 insured's average percent of raw sugar) =
7,200 pounds of raw sugar. The previous APH calculation of taking net
tons to standardized tons: [20 net tons * (0.180 / 0.170)] = 21.2
standardized tons. The conversions from standardized tons to pounds of
raw sugar is calculated: (21.2 standardized tons * 2,000 pounds) *
0.170 = 7,208 pounds of raw sugar. Additional examples of the
conversion can be found in the Frequently Asked Questions at https://www.rma.usda.gov/News-Room/Frequently-Asked-Questions/Sugar-Beet.
    Appraising unharvested production is located in the Sugar Beet Loss
Adjustment Standards Handbook in PART 4 Appraisals. The appraisal
worksheet instructions are located in Exhibit 3. This information can
be found at https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Loss-
Adjustment-Standards_-25000/Sugar-Beet/2019-25450-1H-Sugar-Beet-Loss-
Adjustment-Standards.ashx.
    Comment: A commenter requested to recognize that the loads from
each day of early harvest must be calculated separately.
    As of now, RMA says it is going to convert databases using the
sugar factor from the 2018 Special Provisions. This may be to the
producer's benefit. The agent should have already adjusted the tons for
percent sugar when they completed the production report. When you run
the numbers, we have identified cases where the pounds of sugar
production will be spot-on and other times when the pounds of sugar
will increase for the producer from what would be if you multiplied
tons by actual sugar.
    RMA has indicated that they will distribute a draft of the Special
Provisions for 2019 for industry review.
    Response: FCIC is aware that each day of early harvest will have to
be calculated separately. Whenever the conversion is done there are
some instances where the production goes up slightly, some that stay
the same, and some that go down slightly. The difference occurs because
of rounding. The insured has the option to do the conversion of
standardized tons to pounds of raw sugar, or they can recertify their
previous years' production in pounds of raw sugar.
    Comment: The commenter stated that section 3 is also removing the
stage guarantees. The commenter thinks this is a good thing for their
growers.
    Another commenter is pleased to see the removal of stage guarantees
in the new Sugar Beet Crop Insurance Provisions. Having played a lead
role in urging RMA originally to institute a Sugar Beet Stage Guarantee
Removal Pilot Program over a decade ago, the commenter believes the
consistent high levels of participation in the program underscore the
general acceptance of the concept by sugar beet producers. Sugar beets
are one of the last major crops to see stage guarantees eliminated from
their coverage, reflecting an updated underwriting approach, and the
commenter views this as an important step forward for the program.
    Response: FCIC thanks the commenters and appreciates their input.
[[Page 65630]]
    Comment: Commenters stated in regard to 3(a): Consider deleting
this subsection, which appears to be unnecessary.
     CCIP Basic Provisions section 3(b)(1)(iii) already states
that the insured must select the same ``Percentage of the available
price election . . .'' and ``. . . If different prices are provided by
type or variety, . . . the same price percentage will apply to all
types and varieties.''
     Also, should a separate and unique price election be
offered for the certified organic practice, then defaulting to the
Basic Provisions will ensure that there is no conflict with the crop
provisions whereby more than one price election may be applicable,
albeit each at the same percentage to the maximum price offered.
    Response: FCIC thanks the commenter and is deleting section 3(a).
    Comment: Commenter stated in regard to 3(b) [which would be re-
designated as section 3 if 3(a) is deleted]: Consider revising this to:
``The unit of measure for production is pounds of raw sugar, determined
by multiplying the quantity of sugar beets by the percentage of raw
sugar.'' This clarifies the determination of ``pounds of raw sugar,''
regardless of whether the production amount pertains to the guarantee
or appraisal/indemnity calculations.
    Response: FCIC is re-designating section 3(a) as section 3.
Percentage of raw sugar is already defined and there is procedure in
place referring to the calculations.
    Comment: Instead of ``reserving'' this section, commenter suggests
using it to add the following language that is similar to other crop
policies that require the insured crop to be grown under a processor
contract, and will facilitate the insurance provider's timely
determination of proper acreage and liability/coverage:
    ``Report of Acreage. In addition to the requirements of section 6
of the Basic Provisions, you must provide a copy of all sugar beet
processor contracts to us on or before the acreage reporting date.''
    For example: If a sugar beet contract pertains to 40 acres of sugar
beets and the acreage report shows 41.2 acres planted, then the
insurance provider has the proactive opportunity to verify with the
sugar beet processor whether or not all production from the 41.2 acres
of planted sugar beets will be accepted by the processor and if an
amended contract is needed.
    Another commenter stated that the deleted phrase that is being
moved to the ``processor contract'' definition states that the
processor contract must be executed on or before the acreage reporting
date. Please consider adding language requiring that the insured ``. .
. must provide a copy of all processor contracts to us [the AIP] on or
before the acreage reporting date . . .'' as in section 6 [Report of
Acreage] in the Processing Tomato Crop Provisions [the rest of that
reads: ``. . . in all counties, unless otherwise specified in the
Special Provisions.''].
    Section 12(b) of the Sugar Beet CP requires the insured to ``. . .
provide a copy of your processor contract, or corporate resolution if
you are the processor'' as part of the insured's ``Duties In The Event
of Damage or Loss'', but the Sugar Beet policy does not have such a
requirement when there is not a claim.
    The requirement to provide a copy of the processor contract(s)
whether or not there is a claim could be set up as in the Processing
Tomato CP (and others), with the addition of section 6, Report of
Acreage, since the current Sugar Beet section 6 is being removed.
    Response: FCIC has replaced the reserved section 6 with report of
acreage detailing the requirement that the insured provide a copy of
all production agreements.
    Comment: Commenter stated in regard to 7(a)(3): [Revised to replace
``. . . a sugar beet processor contract executed before the acreage
reporting date . . .'' with ``. . . a contract . . .'', with the
deadline now included in the new definition of ``processor contract''.]
Commenter Suggests ``. . . a processor contract . . .'' to match the
definition and avoid any confusion with a crop insurance ``contract''
as defined in the Basic Provisions.
    Response: FCIC agrees and has replaced contract with production
agreement in section 7(a)(3).
    Comment: Commenter stated in reference to 7(b)(4): [Ed.] Consider
adding quotation marks around the word ``processor'', as done in
7(b)(1).
    Response: FCIC revised by adding quotation marks around the word
processor.
    Comment: A commenter requested that sugar beets that are planted in
back to back years be insurable. The commenter stated that this would
be most helpful for the commenter's farm in Imperial Valley, CA where
the commenter's alternate crops to plant are limited.
    Another commenter is requesting sugar beets to be insurable back to
back.
    Another commenter stated that they are writing to request the FCIC/
RMA consider allowing Sugar Beet fields to be insurable if grown on
acreage that was planted in the most recent previous crop year.
Currently in Imperial County, CA it is a common practice to grow Sugar
Beets on the same field twice in consecutive years.
    The commenter stated that this is an industry standard, and the
Sugar Processor allows this, and considers this a standard farming
practice. All acreage farmed on a field in the first year, and on the
following crop year are of the same quality and tonnage. Therefore, any
acreage farmed on back to back fields should not be excluded from the
Insurance policy.
    Another commenter stated to please allow for Sugar Beets to be
insurable back to back years. The beet companies allow us to grow back
to back because it is within proper plant health standards, and
therefore we'd like to be able to be insured for each and every crop
that is within reasonable health standards. If the beet company itself
beliefs it's healthy and safe to grow back to back, the commenter is
not sure why the insurance standards would be different.
    Another commenter stated that the commenter has been growing sugar
beets in California for the last 40 years. In all of those years, it
has been an accepted cultural practice to grow them in back to back
years. The sugar companies that the commenter contracts with do not
prohibit the commenter from that practice. The commenter sees no reason
why the FCIC should deny the commenter's ability to obtain crop
insurance on those fields that are planted back to back.
    Another commenter stated that they are requesting Sugar Beets to be
insurable in back to back years. This is very important to the
commenter's farming operations and planning. The commenter believes the
request speaks for itself on why it is so important.
    Two commenters stated that they would like to see the option for
Sugar Beets to be insurable for back to back years.
    Response: The Crop Provisions as written in sections 8(a)(1) and
8(a)(3) do allow for back to back planting if it is specified in the
Special Provisions for the county and if it is an allowable rotation
outlined in the Special Provisions. These requests have been forwarded
to the regional offices for review and further consideration. Other
local or county-based concerns can be addressed to the RMA regional
office. Any interested person may find contact information for the
applicable regional office on RMA's website at https://www.rma.usda.gov/RMALocal/Field-Offices/Regional-Offices.
    Comment: The commenter stated that in regard to section 9(b) that
they
[[Page 65631]]
approve of the deletion of this language in 9(b) that dealt with the
end of insurance period for all units being when production delivered
equals the amount of production stated in the contract. This language
was unclear, difficult to administer and the commenter was unsure what
exactly it accomplished.
    Another commenter stated that the commenter agrees with deleting
the language currently in 9(b) stating that ``. . . the insurance
period ends for all units when the production delivered to the
processor equals the amount of production stated in the sugar beet
processor contract.'' This language was difficult to administer and
unclear as to what exactly it accomplished.
    Response: FCIC thanks the commenter and appreciates their input.
    Comment: The commenter is pleased to see the inclusion of
provisions providing RMA with greater flexibility to update insurance
dates and other factors. In particular, the commenter appreciates RMA's
responsiveness in recent years to shifting the basis for calculating
replant payments from a formula tied to annual price elections to a
dollar amount based on actual costs--a process now formalized in the
new policy. Such steps toward greater flexibility and responsiveness
are always important and appreciated.
    Response: FCIC thanks the commenter and appreciates their input.
    Comment: The term ``final stage'' remains in the language. It
should be removed. It should state ``at least 90 percent (90%) of the
production guarantee . . .''
    Response: FCIC has removed the language ``final stage''.
    Comment: Commenter stated clarification is needed on how the
appraisal would be calculated when being completed for a replant
determination to know if the appraised production would exceed 90% of
the insured's guarantee. Currently the calculation is based on tons
with no conversion for pounds of raw sugar.
    Response: FCIC has updated the plant count appraisal method in the
procedures to be calculated in pounds of raw sugar per acre.
    Comment: Commenter recommends the following edits be made to 13(d),
to clarify and reference defined terms.
    ``Harvested production or unharvested production that is appraised
after the earliest delivery date that the processor accepts harvested
production and that meets the minimum acceptable standards contained in
the processor contract or corporate resolution will be converted to
pounds of raw sugar by multiplying the tons of such production by 2,000
and by the average percentage of raw sugar to determine the production
to count. The average percentage of raw sugar will be determined from
tests performed at the time of crop delivery or sample acquisition
(appraisal).
    (1) If individual tests of raw sugar content are not made at the
time of delivery, the average percentage of raw sugar may be based on
the results of previous tests performed by the processor during the
crop year if it is determined that such results are representative of
the total production.
    (2) If not representative, the average percentage of raw sugar will
equal the raw sugar content percent shown in the actuarial documents.''
    Following the recommendation to recognize other institutions that
may determine the `percentage of raw sugar', stating who performs the
analytic tests is not necessary within this section since they are
identified within the revised/recommended definition. `Unharvested'
production as determined by an appraisal would not constitute crop
delivery; thus clarification is added to specify the time frame
associated with percentage of raw sugar determinations for samples
obtained from field appraisals. This also keeps consistent usage of the
term `percentage of raw sugar'. Recommend referring to the `actuarial
documents' rather than the `Special Provisions' for where the county
average percentage of raw sugar can be found.
    Response: FCIC revised to further clarify that the average
percentage of raw sugar will be determined from tests performed by the
processor or other laboratories approved by us (the AIP) at the time of
crop delivery or sample acquisition (appraisal).
    FCIC further clarified that if individual tests of raw sugar
content are not made at the time of delivery, the average percent of
raw sugar may be based on the results of your (the insured's) previous
tests.
    Comment: The provision notes that the raw sugar percentage will be
included to the extent that a raw sugar test may not be performed or
deemed unacceptable. Commenter would like to have the latter scenario
more clearly clarified under the rules as well. It's not readily
apparent to the commenter under what circumstances it would be ``deemed
unacceptable'' nor is it clear the extent to which such a distinction
could harm the commenter's production calculations in a given year.
Please clarify what you mean.
    Response: FCIC thanks the commenter and appreciates their input.
FCIC will not further define ``deemed unacceptable'' as this is not
currently in the crop provisions.
    Comment: Commenter stated regarding section 13(d)(2), and in
particular the phrase ``. . . the raw sugar content percent shown in
the Special Provisions'', it will be imperative for RMA to review and
update this parameter (as currently contained within the actuarial
documents) for each and all sugar beet county programs. For some
states, e.g., Idaho, Oregon, Washington (Pacific Northwest), Montana,
North Dakota and Wyoming, their 2018 percent sugar values are
established on a regional basis. A region-wide percent sugar better
aligns each policyholder's determined standard tons with a single
nation-wide price election. In contrast, other states, e.g., Minnesota,
have variable county percent sugar values, which appear out of sync
with their recent base period average. As the primary function of the
`county average percent sugar' has changed from being a key component
in adjusting to standard tons, to instead as a default value of `last
resort', it is important for each county's percentage of raw sugar
value to be current and reflective of the actual county instead of the
region or district.
    Response: FCIC reviews the county average percentage sugar at
regional level with data based on RMA history, sugar percentage data
from the sugar beet processor, and NASS data. Regional Offices also
consider APH and loss implications in order to ensure this percentage
is actuarially sound. Additionally, FCIC only will use this percentage
in total loss determinations.
    Comment: A commenter stated that in regard to section 13(d)(1) and
13(e)(1): Both state based on previous tests performed by the processor
during the crop year. The commenter questions if that is based on all
beets delivered to processor from all producers (in the county or
otherwise) or just from the producer in question. Although this
language was in the previous provisions it still seems unclear what
basis is to be used to ascertain the percent of raw sugar that should
be used in these situations.
    Another commenter stated in regard to 13(d)(1) & (e)(1): These both
include the statement ``. . . based on the results of previous tests
performed by the processor during the crop year . . .'' It is unclear
if that is based on all beets delivered to processor from all producers
(in the county or otherwise) or just from the producer in question.
Although this language was in the previous crop provisions, it still
seems unclear what basis is to be used to
[[Page 65632]]
ascertain the percent of raw sugar that should be used in these
situations.
    Response: FCIC is revising the Crop Provisions to specify that the
previous tests are based on the previous tests from the insured
producer.
    Comment: Commenter stated in regard to section 13, adding an early
harvest adjustment, it appears to apply a penalty to the farmer when
they are required by the processor to harvest a portion of a crop
early, especially when damage has occurred from an insurable event.
There is not clear enough guidance to insurance providers to have even
application of these provisions, too much left to the discretion of the
insurers could weaken coverage and participation.
    Another commenter stated that section 13 is adding an early harvest
adjustment. This change seems to apply a penalty to the commenters'
growers when the growers are required by the processor to harvest some
beets early, especially when there is damage from an insurable loss. An
argument can easily be made that this provision will provide less clear
guidance to insurance providers rather than clearer guidance resulting
in uneven application of the provisions. It seems this is a blatant
attempt to limit the loss payments to growers.
    Another commenter stated in reference to 13(f)(3): It is unclear if
the early harvest adjusted production should be limited to APH. If the
producer is having a good year, he/she will not be happy with that. If
part of the unit is early harvested, the early harvested acres could be
capped at the APH of the remaining harvested acres. If all of the unit
is early harvested, the sugar content from previous tests performed by
the processor could be used. This may not include lost tonnage,
however. Maybe capping at APH is ok.
    Another commenter stated that while ``early harvest factor'' allows
producers to add a one-percent-per-day adjustment to their ``production
to count'' for crops harvested prior to ``full maturity,'' it cannot
result in an annual ``production to count'' in excess of the insured
crop's current APH. The commenter suggests that this APH cap be removed
or adjusted.
    The commenter's principal concern is that an APH cap fails to
account for the fact that sugar beet yields, measured both in tonnage
and sugar content, have been rising sharply in recent years due to
adoption of new technologies, principally new bioengineered seeds and
seed treatments. As a result, sugar beet APHs, which generally reflect
a ten-year average of yields, often lag well behind current crop
potentials. For instance, according to USDA's National Agricultural
Statistical Service (NASS), over the past dozen years, sugar beet
yields have grown (a) from a national average 25.5 to 32.8 tons per
acre of beets and (b) from 3.79 to 4.87 tons per acre of actual sugar,
increases of over 28 percent overall and of over 2.3 percent per year.
In some regions, the growth has been even sharper.
                  National Growth in Sugar Beet Yields
------------------------------------------------------------------------
                           Yield per harvested      Sugar per harvested
       Crop year                acre/tons                acre/tons
------------------------------------------------------------------------
         2007/2008                     25.5                    3.79
         2008/2009                     26.8                    4.15
         2009/2010                     25.9                    3.98
         2010/2011                     27.7                    4.03
         2011/2012                     23.8                    4.04
         2012/2013                     29.3                    4.22
         2013/2014                     28.4                    4.15
         2014/2015                     27.3                    4.27
         2015/2016                     30.9                    4.47
         2016/2017                     32.8                    4.53
         2017/2018                     31.7                    4.71
         2018/2019                     32.8                    4.87
------------------------------------------------------------------------
Source: NASS, data as of 9/17/2018.
    This lag in APHs behind production trends has been recognized by
FCIC though its approval of the privately-developed Trend-Adjusted APH
Yield program for a number of crops.
    Capping the impact of an early harvest adjustment at a farmer's
current APH thus creates an unintended penalty. It creates a ceiling
below a crop's actual potential, and it hinders the ability of a
farmers yield history to catch up with rising yield trendlines. In
regions where early-harvest has occurred over the years without the
benefit of an early-harvest factor, this lag of APHs behind current
trendlines is especially pronounced. Given that the one-percent-per-day
formula itself is based on sound underwriting data reflecting real-
world experience, the commenter suggests either eliminating the APH cap
entirely as unneeded or adjusting it to a more reasonable level of 125
percent of APH.
    Another commenter stated that Insurance Providers have concerns
about capping the production after the early harvest adjustment is
applied to the APH. Capping the production would not allow the insured
to capture the true production potential of the crop given the new seed
technology that has become available. Some APH databases still have
conventional seed use included when now Roundup Ready seed is the
primary use.
    Response: The rule added an early harvest adjustment in response to
sugar beet processors requesting a portion of contracted acres be
harvested early. Early harvested beets are often lower in weight and
sugar content, resulting in what could appear to be a production loss
that would lower the producer's future Actual Production History (APH).
A solution was requested to prevent an early harvest from reducing a
producer's future guarantee. The rule added an early harvest
adjustment, which increases the producer's yield(s) on their early
harvested acreage for that year's harvest, preventing a decline in the
producer's future insurable yield due to early harvest. However, the
early harvest adjustment was limited to not exceed the unit's approved
APH. Additionally, FCIC had developed and released procedures detailing
guidance for applying the early harvest adjustment including the
Frequently Asked Questions at https://www.rma.usda.gov/News-Room/Frequently-Asked-Questions/Sugar-Beet and the Sugar Beet Loss
Adjustment Handbook at https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Loss-Adjustment-Standards-25000/Sugar-Beet/2019-25450-1H-Sugar-Beet-Loss-Adjustment-Standards.ashx.
    After further analysis, FCIC determined that due to upward trending
yields, the maximum adjustment could be overly punitive. Therefore,
FCIC is revising the limit for the early harvest adjustment to not
result in a yield greater than the higher of the producer's approved
APH yield or the actual yield of the sugar beets harvested after full
maturity from the unit. This change will better reflect the unit's
production capabilities, especially in instances of a bumper crop
because it uses the actual yield from the unit if that yield is higher
than the approved APH yield.
    Comment: A commenter stated that in reference to 13(f)(3): This
provision indicates that the early dig adjustment cannot result in
production to count in excess of the insured's actual production
history. Should ``actual production history'' be replaced by ``approved
yield'' as this is the defined term found in the CCIP Basic Provisions
as well as the basis for establishing coverage under this policy? Also,
what happens if you have a scenario where this occurs? Do you not use
the early dig adjustment at all or do you limit the production to count
to the approved yield? The commenter would recommend that this
provision be further clarified so that there is no misunderstanding for
how this should be handled when this situation occurs.
    Response: FCIC is revising the limit for the early harvest
adjustment to not result in a yield greater than the higher of the
producer's approved APH yield or
[[Page 65633]]
the actual yield of the sugar beets harvested after full maturity from
the unit. This change will better reflect the unit's production
capabilities, especially in instances of a bumper crop because it uses
the actual yield from the unit if that yield is higher than the
approved APH yield. Regarding the scenario the commenter outlined, the
adjustment will still be made, but it will be limited to the higher of
the approved actual production history yield or the actual yield of the
sugar beets harvest after full maturity from the unit.
    Comment: Is this `capping' clause referring to the insured's actual
yield of ``full maturity'' beets for the current crop year or the
highest value within the insured's APH database history?
    Response: The ``capping clause'' refers to the insured's approved
actual production history yield, but after further analysis, FCIC
determined that due to upward trending yields, the maximum adjustment
could be overly punitive. Therefore, FCIC is revising the limit for the
early harvest adjustment to not result in a yield greater than the
higher of the producer's approved APH yield or the actual yield of the
sugar beets harvested after full maturity from the unit. This change
will better reflect the unit's production capabilities, especially in
instances of a bumper crop because it uses the actual yield from the
unit if that yield is higher than the approved APH yield.
    Comment: The commenter stated on 13(f) that the Risk Management
Agency (RMA) has proposed adding an early dig factor to increase the
production to count for both claims and APH purposes once a certain
threshold has been reached as indicated in the actuarial documents. The
commenter does agree that this type of production adjustment is needed
for sugar beets when the crop is harvested early. It would be
beneficial for everyone reviewing these provisions to know what these
thresholds are as a part of this published rule so that the commenter
would be able to review and comment on the proposed threshold as a part
of these comments.
    Another commenter stated in regard to 13(f), RMA has proposed
adding an early dig factor to increase the production to count for both
claims and APH purposes once a certain threshold has been reached as
indicated in the actuarial documents. Commenter agrees that this type
of production adjustment is needed for sugar beets when the crop is
harvested early. It would be beneficial for everyone reviewing these
provisions to know what these thresholds are as a part of this
published rule so that we would be able to review and comment on the
proposed threshold as a part of these comments. It would also be
helpful to know what the proposed calendar dates for the end of the
insurance period for the different states are in order to be able to
adequately comment on the full maturity date derived using the 45-day
period used for the early dig factor.
    Response: FCIC thanks the commenter and appreciates their input.
The threshold and calendar dates for the end of insurance period have
been made publicly available in the actuarial documents. FCIC does not
produce actuarial documents as part of the rule making process and
therefore did not provide the threshold or calendar dates for the end
of insurance period in the rule. These requests have been forwarded to
the regional offices for review and further consideration. Other local
or county-based concerns can be addressed to the RMA regional office.
Any interested person may find contact information for the applicable
regional office on RMA's website at https://www.rma.usda.gov/RMALocal/Field-Offices/Regional-Offices.
    Comment: The commenter stated as framed in the new Crop Insurance
Provisions, the ``early harvest factor'' adjustment will apply only if
the percentage of insured acreage harvested before full maturity
exceeds a threshold level specified in the FCICs annual actuarial
documents. The concern behind this provision, as the commenter
understands it, is that applying the factor to very small fractions of
a field could complicate its implementation, raising costs. The
commenter appreciates RMA's decision to place the actual threshold
level in its actuarial documents--rather than freezing it in policy
terms--since this will make it easier to adjust in the future as
experience is gained over time.
    If a threshold is to be imposed, however, the commenter believes it
must be set initially at a level that reflects farm-level realities.
The commenter discussed this issue with members from various regions of
the country and found that early harvest practices vary widely. For
instance, some processors that require early harvest deliveries will
spread the burden among large numbers of members to minimize the impact
on each one. This could result in early harvests quotas of, say, 10
percent or so on each farm. In other situations, growers will be
encouraged to harvest ``openings'' or small portions of fields during
the early harvest. In other cases, early harvest can include entire
fields or larger portions. In addition, the commenter understands that
much of this data burden for implementing the new process will rest on
sugar beet processing companies who record deliveries on a regular
basis, and that crop insurance industry professionals, including agents
and AIP staff, generally have access to automated systems to facilitate
reporting.
    Given these factors, particularly the wide range of farming
practices, the commenter urges RMA initially to set the threshold at a
relatively low level, 5 percent. This would allow RMA, AIPs,
processors, and producers to gain experience on how the early harvest
adjustment operates in a wide range of conditions. The commenter also
urges RMA to review its experience after the first two years to see if
any adjustment in the threshold is justified.
    Another commenter stated in regard to 13(f), commenter agrees with
the changes allowed when harvesting prior to full maturity. However,
due to the workload involved when a small acreage is involved or a
small fraction of a unit, consider establishing the percentage of the
unit entered in the Special Provisions to be more than 25% and maybe up
to 50% of unit acreage before this increase factor would be allowed.
    Since most of the time the early harvested acreage is minimal with
only end rows or point rows harvested early, the overall impact to the
production to count is minimal in relation to the whole unit (and to
the extra work involved to adjust each load by each date). However,
when the acreage exceeds 25% of the unit it starts to become relevant,
and as the acreage approaches 50% it can become very significant.
Perhaps 33% of a unit's acreage would be a good place to begin
increasing production. If so, suggest that if more than one-third of
the unit's acreage is harvested prior to full maturity, then the
production from those acres could be increased; if less than one-third
was harvested early, no adjustment would be allowed.
    Another commenter stated in regard to 13(f), going with a
percentage of acreage before applying an early harvest adjustment might
be a good idea in theory, but when a notice of claim is submitted in
the middle or after harvest, there really is no way to determine the
acres harvested early, other than taking the farmer's word for it.
Early harvest tickets will reflect the tons per truckload and the date,
but there is no way to ascertain early harvested acreage.
    Another commenter stated that clarification is needed on how to
track the early harvested acres. The current settlement and summary
sheets available do not show the individual loads with the delivery
dates. The actual
[[Page 65634]]
weight tickets would have to be requested. These receipts are prone to
fading, are misplaced during harvest, and can be difficult to read.
Additional time may be needed by the processors to allow them to
include the additional information needed to the settlement and summary
sheets.
    Another commenter stated regarding the reference in (f) to ``. . .
exceeds the threshold specified in the actuarial documents . . .'' and
the language in (f)(1) & (3): What is the tentative/proposed threshold
amount which is to be specified in the actuarial documents? Is it to be
a percentage of the unit's total planted acreage, or a percentage of
the unit's total insured acreage, i.e., planted and prevented planted?
And what will the percentage be: 5%, 10%, or something else?
    Another commenter stated that in reference to section 13(f) that
the commenter agrees with the changes allowed when harvesting prior to
full maturity. However due to the workload involved (agents, insured's,
AIP's) when dealing with small acreages or small fractions of a unit,
the commenter would like to see the percentage of the unit entered in
the Special Provisions to be more than 25% and maybe up to 50% of unit
acreage before this increase factor would be implemented. Since most of
the time the early harvested acreage is minimal with only end rows or
point rows harvested early, the overall impact to the production to
count is minimal in relation to the whole unit (and to the extra work
involved to adjust each load by each date). However, when the acreage
exceeds 25% of the unit, it starts to become relevant. As the acreage
approaches 50% it can become very significant. Perhaps 33% (one third)
of a unit's acreage would be a good place to begin increasing
production. So, a suggestion the commenter has is, if more than one
third of the unit acreage is harvested prior to full maturity, then
production from those acres could be increased using the factor
provided. If less than \1/3\ of a unit's acreage was harvested early,
no adjustment would be allowed.
    Response: FCIC thanks the commenters and appreciates their input.
The threshold was initially set low (at 10 percent), as suggested by
one of the commenters. FCIC will continually monitor this threshold and
update as needed. Additionally, the amount of production harvested
early will be determined from processor production records obtained by
the insured. It is the insureds' responsibility to provide acceptable
production records to the AIP.
    Comment: The commenter stated in 13(f)(1): That the commenter
predicated on what the commenter believes the calendar date for the end
of insurance period will be based on prior years. The commenter does
not believe that 45 days prior to the end of the insurance period for
the date of full maturity is accurate for all areas where sugar beets
are grown. The commenter suggests that 30 days prior to the end of the
insurance period would be more appropriate in Colorado, Nebraska and
Wyoming. Using 45 days in these states would result in a September 16
full maturity date. The beets will continue to mature past this date
and sugar content increases dramatically after a hard freeze. The
average frost date for western Nebraska is September 20 and probably a
few days later in Colorado. Using 30 days prior to the end of the
insurance period date would be October 1. Early harvest started on
September 5 this year. An 11% production adjustment (1% per day from
harvest beginning to September 16) would not make this production whole
by the full maturity date. This could also be an issue for Idaho as the
local sugar beet company in this region requires some growers to start
digging early to help get the factories up and running, which usually
begins after September 1. Most growers finish harvest by October 31st
and there is a penalty by the local sugar beet company if they harvest
beets after November 5th. The commenter would recommend that RMA
further review the full maturity dates for each state and consider
increasing the production by 2% per day (rather than 1% per day) if the
producer digs early, which would be similar to the factor used in the
potato policy.
    Another commenter stated that regarding the interaction between
section 9 calendar date of the end of insurance (EOI) and the early
harvest dates derived according to 13(f)(1), please refer to the
attached Excel file for detailed information. The `NASS harvest dates'
tab tallies the beginning, most active, and ending harvest dates for
each state, and are representative of the 2009-time period. The `4
state progress' tab tallies the NASS weekly harvest progress reports
from the four major sugar beet states, representing each state's
average percent harvested during crop years 2012 through 2016; these
dates and percentages corroborate the harvest dates for the 2009-time
period remain applicable to current years' activities.
    If the November 15 calendar EOI date is to remain unchanged (for
2019) then the 45-day default works quite well in capturing the `early
harvest' phase for the states of Minnesota and North Dakota. However,
for the other states (not withstanding California) the 45-day default
significantly misses `early harvest' activities in states like Idaho
and Michigan. 
    If the calendar EOI dates are re-established for 2019, and if
October 31 is used for Minnesota and North Dakota, then a 35-day time
window may be more appropriate for these two states. If a November 10
EOI were established for Idaho, Michigan and Colorado, then a 35-day
window would seem to function reasonably as well.
    Additional challenges are foreseen for the states of Oregon,
Montana, Nebraska, and Wyoming. Their `Beginning to Active Beginning'
harvest phases are relatively short in duration and could represent
minimal if any harvest before full maturity based on the county's
location or district differences (e.g., Wyoming's Big Horn Basin versus
its Southeast region).
    Without knowing what EOI dates are changing for 2019, and which
counties will have variance to the 45-day default, it is essentially
impossible to properly evaluate these interacting policy components.
    Another commenter stated there also are concerns about how to
determine the early dig factor. The policy changes do not address the
definition or date for early harvest. The definition and date could be
different based on location. This may have to be addressed in the
county special provisions. Early harvest is mandatory per the processor
contract and not voluntary. The insured can choose which acres to
harvest during early dig.
    Another commenter stated that depending on what the calendar date
for the end of insurance period will be, commenter questions if 45 days
prior to the end of the insurance period for the date of full maturity
is accurate for all areas where sugar beets are grown. Commenter would
recommend that RMA further review the full maturity dates for each
state and consider increasing the production by 2% per day (rather than
1% per day) if the producer digs early, which would be similar to the
factor used in the potato policy.
    As an example, in Colorado, Nebraska, and Wyoming, with an EOI of
11/15, the language in section 13(f) might be ok. That is 1% per day
starting with 10/1. That means a producer would get 25% for beets
harvested on September 5, the beginning of early harvest. Also,
subsection 13(f)(1) allows for a number of days prior to EOI other
[[Page 65635]]
than 45. It states ``unless otherwise specified in the SP.''
    Another commenter stated, as this whole subsection is new procedure
for the crop, what are the proposed variances that will be noted in the
Special Provisions? Which states and counties? Can the number of days
be less than or greater than the default of 45 days?
    Another commenter stated regarding the slated change to remove the
calendar date for the EOI period from section 9 and display that
information solely within the actuarial documents (AIB Date Table),
this has significant impacts particularly with respect to the new
element within section 13(f), i.e., early harvest production
adjustments. Are there to be revisions to the EOI date for select
regions? Notwithstanding California's Imperial County, essentially all
remaining states or regions with active sugar beet processing
facilities have a November 15th date as their EOI date. Comparing this
November 15 date with the most current NASS `Usual Planting and
Harvesting dates' for sugar beets [October 2010] suggests significant
adjustments are warranted for the calendar EOI dates. Example:
Minnesota and North Dakota typically conclude harvest during the last
week of October; this constitutes approximately three weeks of extended
coverage after harvest is routinely complete.
    The final rule notes the administrative advantages to establishing
and displaying the calendar EOI date within the actuarial documents,
but without being informed of what date changes are to be made for 2019
it is impossible for policyholders and insurance providers to evaluate
the impact on potential early harvest adjustments.
    Response: The Crop Provisions as written in section 13(f)(1) states
that the Special Provisions can specify exceptions for the 45 days
prior to the calendar date for the end of insurance provision. These
requests have been forwarded to the regional offices for review and
further consideration. Other local or county-based concerns can be
addressed to the RMA regional office. Any interested person may find
contact information for the applicable regional office on RMA's website
at https://www.rma.usda.gov/RMALocal/Field-Offices/Regional-Offices.
    Additionally, FCIC set the increasing production rate to 1% per day
by gathering data from multiples stakeholders and continues to collect
more data from implementation of the Crop Provisions.
    Comment: The commenter appreciates RMA's intent that the early
harvest adjustment not apply where a grower experiences actual damage
resulting in a claim from rain, flood, drought, freeze, or some other
covered hazard. Hence, the provision specifies that ``an adjustment
will not be made if the sugar beets are damaged by an insurance cause
of loss and leaving the crop in the field would reduce production.''
The inclusion of that final clause--``leaving the crop in the field
would reduce production''--raises a question, however, whether the
factor might inadvertently limit or annul a producer's legitimate
insurance claim in some cases.
    For instance, one serious problem faced by sugar beet producers is
root rot, a condition caused by excess moisture. Root rot not only
damages beets in the field, but also continues to damage surrounding
beets after they are delivered to a processor. As a result, these beets
cannot be effectively stored for extended periods, and processors often
ask that they be delivered early to avoid later problems. Nevertheless,
if left in the field, beets affected by root rot do not necessarily
continue to deteriorate and may bounce back to some extent.
    If a field is affected by root rot early in the growing season,
reducing yields below the crop's insurance guarantee, and the crop is
subsequently delivered early because of a requirement of the processor,
it appears the early harvest adjustment could reduce the size of a
farmers claim, or potentially raise ``production to count'' above the
deductible. Similarly, the existence of the factor could act as a
disincentive for growers to deliver the affected beets early, creating
damage during storage. Clarification of the provision is needed to
avoid such unintended results.
    Response: FCIC will not further specify the causes of loss in the
crop provisions as specifying the causes of loss could have unintended
consequences since impacts could differ by region and event. Loss
adjusters will determine, on a case-by-case basis, the insurable cause
of loss and if the early harvest adjustment is to be applied. FCIC is
aware that there may be some disagreements between AIPs and the insured
or inconsistencies between AIPs. Controversial claims procedure is
already in place if an insured does not agree with the AIP's final loss
adjustment determination. This procedure allows the claim to be
referred from the loss adjuster to the AIP in order to resolve the
claim, when the insured disagrees with the loss adjuster. Additionally,
the Common Crop Insurance Policy, Basic Provisions provides a process
for insureds and AIPs to settle disputes, including disputes with loss
adjustment determinations, such as mediation and arbitration.
    Additionally, depending on situations that develop around harvest
time, bulletins may be issued to address specific situations that
arise. FCIC will continue to monitor the performance of this provision
and can address additional program changes that may be needed in future
crop provision and procedural revisions.
    Comment: Commenter stated in reference to 13(f)(3): Change the
semicolon at the end to a period.
    Response: FCIC changed the semicolon at the end of the section to a
period.
    Comment: Commenter stated about 13(e): Much more has changed in
this section than just the correction to show raw sugar instead of
standardized tons.
    This paragraph is for production that did not meet the
specifications in the contract and was damaged by an insured cause of
loss. The production will be based on the tons delivered times the
average sugar. Any damage should result in lower tons and/or sugar.
Since the production did not meet the terms of the contract, presumably
the processor will not accept it. Therefore, there should be a way to
put a salvage value on it. (The LMP definition has been removed.)
    If the production is damaged by an uninsured cause of loss, then it
is presumed that an appraisal for uninsured causes would be done for
unharvested production and a determination would be made for harvested
production. See section 13(c)(1)(ii).
    The instructions for appraising sugar beets for replant
qualifications (Exhibit 7 in the LASH) appear to be adequate. Nothing
should change here except APH will now be expressed in pounds of raw
sugar instead of tons. The calculation was APH/Plant population (for 1/
100 of an acre). The appraisal then multiplied this by the remaining
population and compared it to 90% of the APH x coverage level. (One
could actually take APH out of this equation and it would still be
valid.)
    Another commenter stated in regards to 13(e)(1): The way this
currently reads, if due to an insurable cause of loss the beets will
not meet the minimum acceptable standards in the processor contract,
then the AIP would count ALL of the production (``by multiplying the
tons of such damaged beets by 2000 and by the average percent of raw
sugar . . .''). That does not seem to be fair to an insured. If the
beets are damaged to the point that the processor will not accept them
and the beets are destroyed,
[[Page 65636]]
then there should be no production to count. Additionally, the wording
in the previous sugar beet policy contained what might be called a
``salvage value'' in that, if such damaged beets could not meet the
terms of the processor contract, but did have some value, then that
value should be used by converting it back to production to count.
    Recommend retaining this ``salvage value'' language, although
reworded slightly to accommodate the change from standardized tons to
pounds of raw sugar. Also revise the language to reflect zero
production to count in situations where it does not meet the standards
and is destroyed.
    Additionally, the 2018 Sugar Beet Loss Adjustment Standards
Handbook has several examples of these types of situations and those
examples should also be retained (with changes to pounds of raw sugar).
    Another commenter believes the language needs to be adjusted to
reflect zero production to count in situations where it does not meet
the standards and is destroyed. Additionally, the 2018 Sugar Beet Loss
Adjustment Standards Handbook has several examples of these types of
situations and those examples should also be retained (with changes to
pounds of raw sugar).
    Another commenter stated that in regard to section 13(e): Much more
has changed in this section than just the correction to show raw sugar
instead of standardized tons, as summarized in the regulations. The way
this currently reads, if due to an insurable cause of loss the beets
will not meet the minimum acceptable standards in the processor
contract then the insurance provider would still count ALL of them (by
multiplying the tons of such damaged beets by 2000 and by the average
percent of raw sugar). That does not seem to be fair to an insured. If
the beets are damaged so that the processor will not accept and the
beets are destroyed, then there should be no production to count.
    Another commenter stated that the wording in the previous sugar
beet policy contained what the commenter might call a salvage value in
that, if such damaged beets could not meet the terms of the processor
contract but did have some value--then that value should be used by
converting it back to production to count. The commenter believes this
salvage value language should remain although reworded slightly to
accommodate the change from standardized tons to pounds of raw sugar.
    Response: Section 13(e) is to address sugar beets that are damaged
but are still accepted by the processor. FCIC agrees that the salvage
value language should be maintained in the crop provisions and is
adding language back into the provisions as outlined in 13(g) to
provide that if harvested production is damaged due to an insurable
cause of loss and is rejected by the processor, but is sold to a
salvage buyer at a reduced price: Compute the pounds of raw sugar of
the sold production by dividing the gross dollar amount paid by the
salvage buyer by the established price.
    FCIC is also adding the following language in section 13(h) to
address the zero production to count scenarios, providing that if
production is damaged due to an insurable cause of loss to the extent
that the processor will not accept the production, such as the
production did not meet the standards contained in the production
agreement; and there are no salvage markets for the production, then
there would be no value for production and there would be no production
to count provided the production is destroyed in a manner acceptable to
us.
    Additionally, salvage value and zero production to count language
has been maintained in the Sugar Beet Loss Adjustment Standards
Handbook to address both situations at https://www.rma.usda.gov/-/
media/RMAweb/Handbooks/Loss-Adjustment-Standards_-25000/Sugar-Beet/
2019-25450-1H-Sugar-Beet-Loss-Adjustment-Standards.ashx.
    Comment: The commenter supports the addition of a new ``early
harvest factor'' adjustment to the Sugar Beet Crop Insurance
Provisions. Sugar beets differ from other major crops in that they are
grown almost exclusively under contract to regionally-based grower-
owned processing companies. Producers deliver their harvested beets to
the processor, which then refines them into pure sugar. The timing of
each farmer's delivery of their raw beets to the processing factory is
critical to its efficient operation. As a result, producers are often
required to harvest and deliver portions of a crop prior to its full
maturity, before the crop's tonnage and sugar content have reached
normal peak levels. The result can be an unintended penalty, through no
fault of the individual farmer, against the annual yield (called
``production to count'') that the farmer can count toward his or her
historical APH, the basis for determining future coverage.
    The ``early harvest factor'' adjustment addresses this problem by
allowing a producer, if required to harvest early, to adjust the
``production to count'' for that portion of the crop for purposes of
calculating their future APH. The adjustment is equal to 1 percent per
day for each day prior to full maturity, and ``full maturity'' is
defined as 45 days before the end of the insurance period. The size of
the adjustment is based on an extensive set of data assembled by
outside counsel for ASGA from each of the grower owned processing
companies, showing the precise amount by which tonnage and sugar
content vary during the early-harvest period.
    The commenter believes this new process will benefit many sugar
beet producers while protecting the underwriting soundness of the FCIC
program. That said, the commenter wishes to comment on three
operational points that could have a significant effect on its
performance.
    Response: FCIC thanks the commenter and appreciates their input.
    Comment: The changes being implemented by the 2019 Sugar Beet Crop
Provisions rewrite have several significant elements that are not fully
disclosed in the final rule as many are now to be solely contained in
the actuarial documents (of which no drafts are provided), e.g.,
calendar date for EOI, variances to the Early Harvest default date,
updated percentages of raw sugar, etc. Without knowing what changes
will be made it is impossible to adequately review and comment. For the
reasons outlined above, it is recommended that this CFR rule change be
delayed until the 2020 crop year and tentative actuarial document
references are available for review.
    Postponing the proposed changes until the 2020 crop year would
allow time for:
     The Special Provisions, CIH, and LASH to be updated;
     The AIPs to receive the clarification needed to convert
the APH from standardized tons to pounds of raw sugar; and
     The sugar beet processors to update the software to
capture any additional information that may be needed for claims to be
processed when the early dig factor needs to be applied.
    Response: FCIC thanks the commenter and appreciates their input.
    Comment: Commenter is frustrated that the commenter is unable to
see any comments on this at all. If insurance regulators or sugar beet
farmers are supposed to take an active role in the rule-making process,
comments should be made public. This may be one of many rules being
promulgated, but there is no reason to treat this any differently than
another rule. You should re-open the notice and comment section again
and allow comments to be made public.
    Response: FCIC is summarizing public comments received and
addressing those comments in this final
[[Page 65637]]
rule and is opening the rule for further public comment.
Effective Date and Notice and Comment
    In general, the Administrative Procedure Act (APA, 5 U.S.C. 553)
requires that a notice of proposed rulemaking be published in the
Federal Register for interested persons to be given an opportunity to
participate in the rulemaking through submission of written data,
views, or arguments with or without opportunity for oral presentation
and requires a 30-day delay in the effective date of rules, except when
the rule involves a matter relating to public property, loans, grants,
benefits, or contracts. This rule involves matters relating to
contracts and therefore the requirements in section 553 do not apply.
Although not required by APA, FCIC has chosen to request comments on
this rule.
    The Office of Management and Budget (OMB) designated this rule as
not major under the Congressional Review Act, as defined by 5 U.S.C.
804(2). Therefore, FCIC is not required to delay the effective date for
60 days from the date of publication to allow for Congressional review.
Accordingly, this rule is effective November 30, 2019.
Executive Orders 12866, 13563, 13771 and 13777
    Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review,''
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Executive Order 13563 emphasized the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility. Executive Order 13777,
``Enforcing the Regulatory Reform Agenda,'' established a federal
policy to alleviate unnecessary regulatory burdens on the American
people.
    The Office of Management and Budget (OMB) designated this rule as
not significant under Executive Order 12866, ``Regulatory Planning and
Review,'' and therefore, OMB has not reviewed this rule.
    Executive Order 13771, ``Reducing Regulation and Controlling
Regulatory Costs,'' requires that in order to manage the private costs
required to comply with Federal regulations that for every new
significant or economically significant regulation issued, the new
costs must be offset by the elimination of at least two prior
regulations. As this rule is designated as not significant, it is not
subject to Executive Order 13771.
Regulatory Flexibility Act
    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by
SBREFA, generally requires an agency to prepare a regulatory analysis
of any rule whenever an agency is required by APA or any other law to
publish a proposed rule, unless the agency certifies that the rule will
not have a significant economic impact on a substantial number of small
entities. This rule is not subject to the Regulatory Flexibility Act
because as noted above, this rule is exempt from APA and no other law
requires that a proposed rule be published for this rulemaking
initiative.
Clarity of the Regulation
    Executive Order 12866, as supplemented by Executive Order 13563,
requires each agency to write all rules in plain language. In addition
to your substantive comments on this rule, we invite your comments on
how to make the rule easier to understand. For example:
     Are the requirements in the rule clearly stated? Are the
scope and intent of the rule clear?
     Does the rule contain technical language or jargon that is
not clear?
     Is the material logically organized?
     Would changing the grouping or order of sections or adding
headings make the rule easier to understand?
     Could we improve clarity by adding tables, lists, or
diagrams?
     Would more, but shorter, sections be better? Are there
specific sections that are too long or confusing?
     What else could we do to make the rule easier to
understand?
Environmental Review
    In general, the environmental impacts of rules are to be considered
in a manner consistent with the provisions of the National
Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347) and the
regulations of the Council on Environmental Quality (40 CFR parts 1500-
1508). FCIC conducts programs and activities that have been determined
to have no individual or cumulative effect on the human environment. As
specified in 7 CFR 1b.4, FCIC is categorically excluded from the
preparation of an Environmental Analysis or Environmental Impact
Statement unless the FCIC Manager (agency head) determines that an
action may have a significant environmental effect. The FCIC Manager
has determined this rule will not have a significant environmental
effect. Therefore, FCIC will not prepare an environmental assessment or
environmental impact statement for this action and this rule serves as
documentation of the programmatic environmental compliance decision.
Executive Order 12372
    Executive Order 12372, ``Intergovernmental Review of Federal
Programs,'' requires consultation with State and local officials that
would be directly affected by proposed Federal financial assistance.
The objectives of the Executive Order are to foster an
intergovernmental partnership and a strengthened Federalism, by relying
on State and local processes for State and local government
coordination and review of proposed Federal financial assistance and
direct Federal development. For reasons specified in the final rule
related notice regarding 7 CFR part 3015, subpart V (48 FR 29115, June
24, 1983), the programs and activities in this rule are excluded from
the scope of Executive Order 12372.
Executive Order 12988
    This rule has been reviewed under Executive Order 12988, ``Civil
Justice Reform.'' This rule will not preempt State or local laws,
regulations, or policies unless they represent an irreconcilable
conflict with this rule. Before any judicial actions may be brought
regarding the provisions of this rule, the administrative appeal
provisions of 7 CFR part 11 are to be exhausted.
Executive Order 13132
    This rule has been reviewed under Executive Order 13132,
``Federalism.'' The policies contained in this rule do not have any
substantial direct effect on States, on the relationship between the
Federal Government and the States, or on the distribution of power and
responsibilities among the various levels of government, except as
required by law. Nor does this rule impose substantial direct
compliance costs on State and local governments. Therefore,
consultation with the States is not required.
Executive Order 13175
    This rule has been reviewed in accordance with the requirements of
Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments.'' Executive Order 13175 requires Federal agencies
to consult and coordinate with Tribes on a government-to-government
basis on policies that have Tribal implications,
[[Page 65638]]
including regulations, legislative comments or proposed legislation,
and other policy statements or actions that have substantial direct
effects on one or more Indian Tribes, on the relationship between the
Federal Government and Indian Tribes or on the distribution of power
and responsibilities between the Federal Government and Indian Tribes.
    FCIC has assessed the impact of this rule on Indian Tribes and
determined that this rule does not, to our knowledge, have Tribal
implications that require Tribal consultation under E.O. 13175. The
regulation changes do not have Tribal implications that preempt Tribal
law and are not expected have a substantial direct effect on one or
more Indian Tribes. If a Tribe requests consultation, FCIC will work
with the USDA Office of Tribal Relations to ensure meaningful
consultation is provided where changes, additions and modifications
identified in this rule are not expressly mandated by Congress.
Unfunded Mandates
    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L.
104-4) requires Federal agencies to assess the effects of their
regulatory actions of State, local, and Tribal governments or the
private sector. Agencies generally must prepare a written statement,
including cost benefits analysis, for proposed and final rules with
Federal mandates that may result in expenditures of $100 million or
more in any 1 year for State, local or Tribal governments, in the
aggregate, or to the private sector. UMRA generally requires agencies
to consider alternatives and adopt the more cost effective or least
burdensome alternative that achieves the objectives of the rule. This
rule contains no Federal mandates, as defined in Title II of 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.
Federal Assistance Program
    The title and number of the Federal Domestic Assistance Program
listed in the Catalog of Federal Domestic Assistance to which this rule
applies is No. 10.450--Crop Insurance.
Paperwork Reduction Act of 1995
    In accordance with the provisions of the Paperwork Reduction Act of
1995 (44 U.S.C. chapter 35, subchapter I), the rule does not change the
information collection approved by OMB under control numbers 0563-0053.
E-Government Act Compliance
    FCIC is committed to complying with the E-Government Act, to
promote the use of the internet and other information technologies to
provide increased opportunities for citizen access to Government
information and services, and for other purposes.
List of Subjects in 7 CFR Part 457
    Acreage allotments, Crop insurance, Reporting and recordkeeping
requirements.
Final Rule
    For the reasons discussed above, FCIC amends 7 CFR part 457,
effective for the 2020 and succeeding crop years in states with a
November 30 contract change date and for the 2021 and succeeding crop
years in all other states, as follows:
PART 457--COMMON CROP INSURANCE REGULATIONS
0
1. The authority citation for 7 CFR part 457 continues to read as
follows:
    Authority: 7 U.S.C. 1506(l) and 1506(o).
0
2. Amend Sec.  457.109 as follows:
0
a. In section 1:
0
 i. Remove the definition of ``Initially planted'';
0
 ii. Add definitions for ``Percentage of raw sugar'' and ``Pound'' in
alphabetical order;
0
 iii. Revise definition of ``Practical to replant'';
0
 iv. Remove the definition of ``Processor contract''; and
0
v. Add definitions for ``Production agreement'' and ``Ton'' in
alphabetical order;
0
b. Revise sections 2 and 3;
0
c. Add section 6;
0
d. In section 7:
0
 i. Revise paragraphs (a)(3) and (b)(2); and
0
 ii. In paragraph (b)(4), add quotation marks around the term
``processor'';
0
e. Revise section 12; and
0
f. In section 13:
0
i. Revise paragraphs (d) introductory text, (d)(1), (e) introductory
text, and (e)(1);
0
 ii. Revise paragraphs (f)(2) and (3); and
0
 iii. Add paragraphs (f)(4) and (5), (g), and (h).
    The revisions and additions read as follows:
Sec.  457.109  Sugar Beet Crop Insurance Provisions.
* * * * *
1. Definitions
* * * * *
    Percentage of raw sugar. Quantity of sugar determined from
analytical tests of samples performed by the processor or other
laboratories approved by us.
* * * * *
    Pound. Sixteen (16) ounces avoirdupois.
    Practical to replant. In addition to the definition in section 1 of
the Basic Provisions, it will not be considered practical to replant if
production from the replanted acreage cannot be delivered under the
terms of the production agreement, or 30 days after the initial
planting date for all counties where a late planting period is not
applicable, unless replanting is generally occurring in the area.
* * * * *
    Production agreement. A written contract between you and the
processor, executed on or before the acreage reporting date, which is
in effect for the crop year, containing at a minimum:
    (1) Your commitment to plant, grow, and deliver the sugar beet
production to the processor; and
    (2) The processor's commitment to purchase the production stated in
the contract.
* * * * *
    Ton. Two thousand (2,000) pounds avoirdupois.
2. Unit Division
    In addition to the requirements of section 34 of the Basic
Provisions, basic units may be divided into optional units only if you
have a production agreement that requires the processor to accept all
production from a number of acres specified in the production
agreement. Acreage insured to fulfill a production agreement which
provides that the processor will accept a designated amount of
production or a combination of acreage and production will not be
eligible for optional units.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities.
    The production guarantee will be expressed in pounds of raw sugar.
* * * * *
6. Report of Acreage
    In addition to the requirements of section 6 of the Basic
Provisions, you must provide a copy of all production agreements to us
on or before the acreage reporting date. Insured Crop
    (a) * * *
    (3) That are grown under a production agreement and are not
excluded from the production agreement at any time during the crop
year; and
* * * * *
    (b) * * *
    (2) The Board of Directors or officers of the processor must have
adopted and
[[Page 65639]]
executed a corporate resolution that contains essentially the same
terms as a production agreement. Such corporate resolution will be
considered a production agreement under the terms of the sugar beet
crop insurance policy;
* * * * *
12. Duties in the Event of Damage or Loss
    In accordance with the requirements of section 14 of the Basic
Provisions, representative samples of the unharvested crop must be at
least 10 feet wide and extend the entire length of each field in the
unit. The samples must not be harvested or destroyed until the earlier
of our inspection or 15 days after harvest of the balance of the unit
is completed.
13. Settlement of Claim
* * * * *
    (d) Harvested production or unharvested production that is
appraised after the earliest delivery date that the processor accepts
harvested production and that meets the minimum acceptable standards
contained in the production agreement or corporate resolution will be
converted to pounds of raw sugar by multiplying the tons of such
production by 2,000 and by the average percentage of raw sugar to
determine the production to count. The average percentage of raw sugar
will be determined from tests performed by the processor or other
laboratories approved by us at the time of delivery or sample
acquisition (appraisal).
    (1) If individual tests of raw sugar content are not made at the
time of delivery, the average percent of raw sugar may be based on the
results of your previous tests performed by the processor or other
laboratories approved by us during the crop year if it is determined
that such results are representative of the total production.
* * * * *
    (e) Harvested production or unharvested production that is
appraised after the earliest delivery date that the processor accepts
harvested production and that does not meet the minimum acceptable
standards contained in the production agreement or corporate resolution
due to an insured peril will be converted to pounds of raw sugar by
multiplying the tons of such damaged production by 2,000 and by the
average percent of raw sugar contained in such production. The average
percentage of raw sugar will be determined from tests performed by the
processor or other laboratories approved by us at the time of crop
delivery or sample acquisition (appraisal).
    (1) If individual tests of raw sugar content are not made at the
time of delivery, the average percent of raw sugar may be based on the
results of your previous tests performed by the processor or other
laboratories approved by us during the crop year if it is determined
that such results are representative of the total production.
* * * * *
    (f) * * *
    (2) The adjustment will not be made if the sugar beets are damaged
by an insurable cause of loss and leaving the crop in the field would
reduce production.
    (3) The adjustment cannot result in a yield greater than the higher
of your approved actual production history yield or the actual yield of
the production harvested after full maturity from the unit.
    (4) The adjustment will only be made if early harvest is required
in the production agreement, or the processor requests early harvest
prior to full maturity.
    (5) If the production agreement does not require early harvest and
the processor has not requested early harvest, and the processor:
    (i) Accepts the early harvested production, the early harvested
production will be counted but no early harvest adjustment will apply.
    (ii) Does not accept the early harvested production, the production
to count will be the production guarantee for the acreage harvested
early.
    (g) If harvested production is damaged due to an insurable cause of
loss and is rejected by the processor but is sold to a salvage buyer at
a reduced price: Compute the pounds of raw sugar of the sold production
by dividing the gross dollar amount paid by the salvage buyer by the
established price.
    (h) If production is damaged due to an insurable cause of loss to
the extent that the processor will not accept the production, such as
the production did not meet the standards contained in the production
agreement; and there are no salvage markets for the production, then
there would be no value for production and there would be no production
to count provided the production is destroyed in a manner acceptable to
us.
* * * * *
Martin R. Barbre,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2019-25844 Filed 11-27-19; 8:45 am]
BILLING CODE 3410-08-P