Common Crop Insurance Regulations; Pear Crop Insurance Provisions

SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes

specific crop provisions for the insurance of Pears. The provisions

will be used in conjunction with the Common Crop Insurance Policy Basic

Provisions which contains standard terms and conditions common to most

crops. The intended effect of this action is to provide policy changes

to better meet the needs of the insured and to include the current pear

endorsement with the Common Crop Insurance Policy for ease of use and

consistency of policy terms.

DATES: Written comments, data, and opinions on this proposed rule will

be accepted until close of business May 28, 1996 and will be considered

when the rule is to be made final. The comment period for information

collection under the Paperwork Reduction Act of 1995 continues through

June 24, 1996.

ADDRESSES: Interested persons are invited to submit written comments to

the Chief, Program Development Branch, Federal Crop Insurance

Corporation (FCIC), Farm Service Agency (FSA), United States Department

of Agriculture (USDA), 9435 Holmes Road, Kansas City, MO 64131. Written

comments will be available for public inspection and copying in room

0324, South Building, USDA, 14th and Independence Avenue SW.,

Washington, D.C., 8:15 a.m.-4:45 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Louise Narber, Program Analyst,

Research and Development Division, Product Development Branch, FCIC,

FSA, USDA, 9435 Holmes Road, Kansas City, MO 64131, telephone (816)

926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Departmental Regulation 1512-1

This action has been reviewed under United States Department of

Agriculture (USDA) procedures established by Executive Order 12866 and

Departmental Regulation 1512-1. This action constitutes a review as to

the need, currency, clarity, and effectiveness of these regulations

under those procedures. The sunset review date established for these

regulations is February 1, 2001.

This rule has been determined to be exempt for the purposes of

Executive Order 12866 and therefore has not been reviewed by the Office

of Management and Budget (OMB).

Paperwork Reduction Act of 1995

The information collection requirements contained in these

regulations were previously approved by OMB pursuant to the Paperwork

Reduction Act of 1995 (44 U.S.C. Chapter 35) under OMB control number

0563-0003 through September 30, 1998.

The amendments set forth in this proposed rule do not contain

additional information collections that require clearance by the Office

of Management and Budget under the provisions of 44 U.S.C. Chapter 35.

The title of this information collection is ``Catastrophic Risk

Protection Plan and Related Requirements including, Common Crop

Insurance Regulations; Pear Crop Insurance Provisions.'' The

information to be collected includes: a crop insurance acreage report,

an insurance application and a continuous contract. Information

collected from the acreage report and application is electronically

submitted to FCIC by the reinsured companies. Potential respondents to

this information collection are growers of pears that are eligible for

Federal crop insurance.

The information requested is necessary for the insurance company

and FCIC to provide insurance, provide reinsurance, determine

eligibility, determine and collect premiums or other monetary amounts,

and pay benefits.

All information is reported annually. The reporting burden for this

collection of information is estimated to average 16.9 minutes per

response for each of the 3.6 responses from approximately 1,755,015

respondents. The total annual burden on the public for this information

collection is 2,676,932 hours.

The comment period for information collections under the Paperwork

Reduction Act of 1995 continues through June 24, 1996, for the

following: (a) whether the proposed collection of information is

necessary for the proper performance of the functions of the agency,

including whether the information shall have practical utility; (b) the

accuracy of the agency's estimate of the burden of the proposed

collection of information; (c) ways to enhance the quality, utility,

and clarity of the information to be collected; and (d) ways to

minimize the burden of the collection of information on respondents,

including through the use of automated collection techniques or other

forms of information technology.

Comments should be submitted to the Desk Officer for Agriculture,

Office of Information and Regulatory Affairs, Office of Management and

Budget (OMB), Washington, D.C. 20503 and to Bonnie Hart, Advisory and

Corporate Operations Staff, Regulatory Review Group, Farm Service

Agency, P.O. Box 2415, Ag Box 0572, U.S. Department of Agriculture,

Washington, D.C. 20013-2415, telephone (202) 690-2857. Copies of the

information collection may be obtained from Bonnie Hart at the above

address.

Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Pub. L.

104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, FCIC

generally must prepare a written statement, including a cost-benefit

analysis, for proposed and final rules with ``Federal mandates'' that

may result in expenditures to State, local, or tribal governments, in

the aggregate, or to the private sector, of $100 million or more in any

1 year. When such a statement is needed for a rule, section 205 of the

UMRA generally requires FCIC to identify and consider a reasonable

number of regulatory

[[Page 18294]]

alternatives and adopt the least costly, more cost-effective or least

burdensome alternative that achieves the objectives of the rule.

This rule contains no Federal mandates (under the regulatory

provisions of Title II of the UMRA) for State, local, and tribal

governments or the private sector. Thus, this rule is not subject to

the requirements of sections 202 and 205 of the UMRA.

Executive Order 12612

It has been determined under section 6(a) of Executive Order 12612,

Federalism, that this rule does not have sufficient federalism

implications to warrant the preparation of a Federalism Assessment. The

provisions contained in this rule will not have a substantial direct

effect on States or their political subdivisions, or on the

distribution of power and responsibilities among the various levels of

government.

Regulatory Flexibility Act

This regulation will not have a significant impact on a substantial

number of small entities. Under the current regulations, a producer is

required to complete an application and acreage report. If the crop is

damaged or destroyed, the insured is required to give notice of loss

and provide the necessary information to complete a claim for

indemnity. If the insured elects to use actual records of acreage and

production as the basis for the production guarantee, the insured may

elect to report this information on a yearly basis. This regulation

does not alter those requirements. Therefore, the amount of work

required of the insurance companies and FSA offices delivering and

servicing these policies will not increase significantly from the

amount of work currently required. This rule does not have any greater

or lesser impact on the insured. Therefore, this action is determined

to be exempt from the provisions of the Regulatory Flexibility Act (5

U.S.C. 605), and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

This program is listed in the Catalog of Federal Domestic

Assistance under No. 10.450.

Executive Order 12372

This program is not subject to the provisions of Executive Order

12372 which require intergovernmental consultation with State and local

officials. See the Notice related to 7 CFR part 3015, subpart V,

published at 48 FR 29115, June 24, 1983.

Executive Order 12778

The Office of the General Counsel has determined that these

regulations meet the applicable standards provided in subsections 2(a)

and 2(b)(2) of Executive Order 12778. The provisions of this rule will

not have a retroactive effect prior to the effective date. The

provisions of this rule will preempt State and local laws to the extent

such State and local laws are inconsistent herewith. The administrative

appeal provisions of the National Appeals Division published in 7 CFR

part 11 must be exhausted before action for judicial review may be

brought.

Environmental Evaluation

This action is not expected to have a significant impact on the

quality of the human environment, health, and safety. Therefore,

neither an Environmental Assessment nor an Environmental Impact

Statement is needed.

National Performance Review

This regulatory action is being taken as part of the National

Performance Review initiative to eliminate unnecessary or duplicative

regulations and improve those that remain in force.

Background

FCIC proposes to add to the Common Crop Insurance Regulations (7

CFR part 457) a new section, 7 CFR part 457.111, Pear Crop Insurance

Provisions. The provisions will be effective for the 1997 and

succeeding crop years. The proposed Pear Crop Insurance provisions will

replace the provisions found at 7 CFR part 401.140 (Pear Endorsement).

Upon publication of 7 CFR part 457.111 as a final rule, the provisions

for insuring pears contained herein will supersede the current

provisions contained in 7 CFR part 401.140. By separate rule, FCIC will

revise 7 CFR part 401.140 to limit its effect to the 1996 crop year and

later remove that section.

This rule makes minor editorial and format changes to improve the

Pear Crop Insurance Endorsement's compatibility with the Common Crop

Insurance Policy. In addition, FCIC is proposing substantive changes in

the provisions for insuring pears as follows:

1. The Pacific Northwest grows several varieties of pears in

addition to Green Bartletts; however, other areas primarily grow Green

Bartletts. Therefore, varietal groups will be identified in the Special

Provisions and all references to type I and type II have been deleted.

2. Section 1--Add definitions for ``culls,'' ``days,'' ``direct

marketing,'' ``good farming practices,'' ``interplanted,'' ``irrigated

practice,'' ``marketable,'' ``production guarantee (per acre),''

``varietal group,'' and ``written agreement'' for clarification

purposes.

3. Section 2--Specify that optional units may be established by

section, section equivalent, or FSA Farm Serial Number; or by acreage

located on non-contiguous land, but not by both. This policy is

consistent with some other perennial crop provisions. Optional units

also may be established by varietal group when authorized by the

Special Provisions. The provision in section 7 of the Pear Endorsement

that prevented interplanted acreage of type I and type II from being

divided into separate units has been deleted because two or more

varieties which are interplanted may now be separate units. Production

records from each variety are kept separate and many varieties do not

mature at the same time. It is not realistic or necessary to allow

units by blocks of different varieties but not allow units when

different varieties are interplanted within a block.

4. Section 3(a)--Clarify that an insured may select only one price

election for all the pears in the county insured under this policy,

unless the Special Provisions provide different price elections by

varietal group in which case the insured may select one price election

for each varietal group designated in the Special Provisions. Each

price election chosen for each varietal group must have the same

percentage relationship to the maximum price offered by the insurer.

5. Section 3(b)--Add provisions for reporting the age and type, if

applicable, of any interplanted perennial crop, its planting pattern,

and any other information needed to establish the yield upon which the

production guarantee is based. If the insured fails to notify the

insurer of factors that may reduce yields from previous levels, the

insurer will reduce the production guarantee at any time the insurer

becomes aware of damage, removal of trees, or changes in practices.

Interplanting is not allowed under the current Pear Endorsement.

6. Section 4--Change the contract change date in California from

August 31 to October 31 to be consistent with other perennial crops in

California.

7. Section 5--Change the cancellation and termination dates in

California from November 20 to January 31 to be consistent with other

perennial crops in California.

8. Section 6--Specify that to be insurable, the pears must be grown

on trees that have produced an average of at least 5 tons per acre, in

at least 1 of

[[Page 18295]]

the 4 previous crop years unless the Special Provisions or a written

agreement set a lower threshold. Previous provisions required that the

type must produce an average of 4 tons of pears per acre of first grade

canning or U.S. Number 1 in at least 1 of the 4 previous crop years to

be insurable. The change to 5 tons per acre is being proposed as more

characteristic of an orchard reaching a level of production which

should continue on an up trend. Four tons per acre is not an adequate

indicator that the orchard has passed problems typical of a new

orchard. The ``of first grade canning or U.S. Number 1'' requirement

will be eliminated because it does not include U.S. No. 2 grade pears

that are included in the production to count. The provision that

required acceptable production records for insurance to attach also

will be eliminated because if the insured does not provide acceptable

records of production the guarantee may be based on a transitional

yield in accordance with Actual Production History regulations

published at 7 CFR part 400, subpart G.

9. Section 7--Add a provision to make interplanted pears insurable

if planted with another perennial crop unless the insurance provider

inspects the acreage and determines it does not qualify to be accepted

for insurance coverage. This provision was added to provide insurance

coverage to the maximum extent to all pear producers, and to reduce the

number of acres that would require coverage under the Non-insured

Assistance Program (NAP).

10. Section 8--Modify the insurance period in California so

coverage will begin the later of the date the application is accepted

or February 1, instead of November 21, since the cancellation and

termination dates were changed to January 31 and the contract change

date was changed to October 31. Provisions also were added for insuring

acreage when an insurable share is acquired or relinquished on or

before the acreage reporting date. Under the current Pear Endorsement

for acreage acquired (for which an application is in place) on or

before the acreage reporting date, coverage would attach at the time

the insurer considers the crop inspection as being acceptable provided

it was on or after November 21. In the same situation under these new

provisions (in all States except California), coverage will have

started on November 21 even if the insurer considers the inspection as

being acceptable on January 14. Under the current Pear Endorsement for

acreage relinquished on or before the acreage reporting date but after

coverage had attached, the premium would still be due from the insured

even if the insured no longer had an insurable interest. In the same

situation under these new provisions, insurance will not be considered

to have attached so the premium will not be due unless a transfer of

right to an indemnity was completed.

11. Section 9(a)--Add adverse weather conditions as a cause of loss

and delete drought, excess wind, freeze, frost, fruit-set failure and

hail because they are included by the term adverse weather. Also add a

clause to the insurable cause of loss ``failure of the irrigation water

supply'' to limit it to a cause of loss covered by this policy.

12. Section 9(b)--Add disease and insect infestation to the

excluded causes of loss unless adverse weather prevents the proper

application of control measures, causes control measures to be

ineffective when properly applied, or no effective control mechanism is

available for such disease or insect infestation. These exclusions need

to be added for clarification so that insurance coverage is not

provided for causes of loss that could be prevented.

13. Section 10--Require the producer to give notice within 3 days

of the date harvest should have started if the crop will not be

harvested. It also requires the producer to give notice at least 15

days prior to harvest so a preharvest inspection can be made if the

insured intends to sell fruit directly to retail customers in any

manner. This appraisal may be used to determine the amount of

production to count in a loss situation.

14. Section 11--Add a provision explaining when potential

production on abandoned acreage will be included in total production to

count. If the insured and the insurer agree on potential production on

acreage the insured wishes to abandon or no longer care for, the

insurance period for that acreage will end. If agreement is not

reached, the claim may be deferred if the insured agrees to continue to

care for the crop. The insurance provider will make another appraisal

when the insured notifies them of further damage or that harvest is

generally occurring in the area unless the crop is harvested in which

case the harvested production will be used to determine the production

to count. If the insured does not continue to care for the crop, the

appraisal made prior to deferring the claim will be used to determine

the production to count. Also for purposes of settling a claim in all

States except California, the production to count is all the harvested

and appraised marketable production. There is no adjustment for quality

unless the ``Quality Adjustment Endorsement'' is elected. For

California, references to the California Tree Fruit Agreement

Standards, which is obsolete, have been changed to the California Pear

Advisory Board.

15. Section 12--Add provisions for providing insurance coverage by

written agreement. FCIC has a long-standing policy of permitting

modification of insurance contracts by written agreement. This

provision is not documented in the current Pear Endorsement. Section 12

will discuss application for, and duration of, written agreements.

16. Section 13--Provide for a quality adjustment endorsement for

all States, except California, if the insured meets the following: has

limited or additional coverage, pays the additional premium, the pears

are damaged by volcano eruption, frost, freeze, wind or hail, and the

endorsement is timely elected. The current pear provisions, without a

quality adjustment endorsement, are appropriate in California because

the primary marketing intent for pears grown in California is for fresh

pack and then to market the pears that do not make U.S. No. 1 as

processing or as juice. Also the California pear growers generally have

records available for the most recent crop year in the base period. In

the Pacific Northwest records for the most recent crop year in the base

period are not available as winter pears go into controlled atmospheric

storage and may not sell or be graded until well into the next calendar

year. Also, the Pacific Northwest has widespread fire blight problems,

and the quality adjustment endorsement will allow a more reflective

yield of the orchards.

List of Subjects in 7 CFR Part 457

Crop insurance, Pears.

Proposed Rule

Pursuant to the authority contained in the Federal Crop Insurance

Act, as amended (7 U.S.C. 1501 et seq.), the Federal Crop Insurance

Corporation hereby proposes to amend the Common Crop Insurance

Regulations (7 CFR 457), effective for the 1997 and succeeding crop

years, as follows:

PART 457--[AMENDED]

1. The authority citation for 7 CFR 457 continues to read as

follows:

Authority: 7 U.S.C. 1506(l), 1506(p).

2. 7 CFR 457 is amended by adding a new Sec. 457.111 to read as

follows:

[[Page 18296]]

Sec. 457.111 Pear Crop Insurance Provisions.

The Pear Crop Insurance Provisions for the 1997 and succeeding crop

years are as follows:

United States Department of Agriculture

Federal Crop Insurance Corporation

Pear Crop Provisions

If a conflict exists among the Basic Provisions (Sec. 457.8), these

crop provisions, and the Special Provisions, the Special Provisions

will control these crop provisions and the Basic Provisions; and these

crop provisions will control the Basic Provisions.

1. Definitions

Culls--Pears that do not meet the requirements of U.S. No. 2 grade

or better.

Days--Calendar days.

Direct Marketing--Sale of the insured crop directly to consumers

without the intervention of an intermediary such as a wholesaler,

retailer, packer, processor, shipper, or buyer. Examples of direct

marketing include selling through an on-farm or roadside stand or a

farmer's market, and permitting the general public to enter the

field(s) for the purpose of picking all or a portion of the crop.

FSA--Farm Service Agency of the United States Department of

Agriculture.

Good farming practices--The cultural practices generally in use in

the county for the crop to make normal progress toward maturity and

produce at least the yield used to determine the production guarantee

and are those generally recognized by the Cooperative Extension Service

as compatible with agronomic and weather conditions in the county.

Harvest--The picking of mature pears from the trees or the

collecting of marketable pears from the ground.

Interplanted--Acreage on which two or more crops are planted in any

form of alternating or mixed pattern.

Irrigated practice--A method of producing a crop by which water is

artificially applied during the growing season by appropriate systems

and at the proper times, with the intention of providing the quantity

of water needed to produce at least the yield used to establish the

irrigated production guarantee on the irrigated acreage planted to the

insured crop.

Marketable--Pear production acceptable for processing or other

human consumptive use even if it does not meet any U.S. or applicable

state grading standard.

Non-contiguous land--Any land owned by you or rented by you for any

consideration other than a share in the insured crop, whose boundaries

do not touch at any point. Land that is separated only by a public or

private right-of-way, waterway or irrigation canal will be considered

to be touching.

Production guarantee (per acre)--The quantity of pears (in tons)

determined by multiplying the approved yield per acre by the coverage

level percentage you elect, and multiplying the result by any

applicable adjustment factor provided for in section 6(b)(f) of the

Basic Provisions (Sec. 457.8).

Ton--Two thousand (2,000) pounds avoirdupois.

Varietal Group--Types of pears with similar characteristics that

are grouped for insurance purposes as specified in the Special

Provisions.

Written agreement--A written document that alters designated terms

of a policy.

2. Unit Division

Unless limited by the Special Provisions, a unit as defined in

section 1 (Definitions) of the Basic Provisions (Sec. 457.8) (basic

unit), may be divided into optional units if, for each optional unit

you meet all the conditions of this section or if a written agreement

to such division exists. Basic units may not be divided into optional

units on any basis including, but not limited to, production practice,

type, and variety, other than as described in this section. If you do

not comply fully with these provisions, we will combine all optional

units that are not in compliance with these provisions into the basic

unit from which they were formed. We will combine the optional units at

any time we discover that you have failed to comply with these

provisions. If failure to comply with these provisions is determined to

be inadvertent, and the optional units are combined, that portion of

the premium paid for the purpose of electing optional units will be

refunded to you pro rata for the units combined. All optional units

must be identified on the acreage report for each crop year.

(a) The following requirements must be met for each optional unit:

(1) You must have records, which can be independently verified, of

acreage and production for each optional unit for at least the last

crop year used to determine your production guarantee; and

(2) You must have records of marketed production or measurement of

stored production from each optional unit maintained in such a manner

that permits us to verify the production from each optional unit or the

production from each unit must be kept separate until loss adjustment

is completed by us.

(b) Each optional unit must meet one or more of the following

criteria as applicable:

(1) Optional Units by Section, Section Equivalent, or Farm Service

Agency (FSA) Farm Serial Number: Optional units may be established if

each optional unit is located in a separate legally identified section.

In the absence of sections, we may consider parcels of land legally

identified by other methods of measure including, but not limited to

Spanish grants, railroad surveys, leagues, labors, or Virginia Military

Lands, as the equivalent of sections for unit purposes. In areas that

have not been surveyed using the systems identified above, or another

system approved by us, or in areas where such systems exist but

boundaries are not readily discernable, each optional unit must be

located in a separate farm identified by a single FSA Farm Serial

Number; or

(2) Optional Units on Acreage Located on Non-Contiguous Land:

Instead of establishing optional units by section, section equivalent

or FSA Farm Serial Number, optional units may be established if each

optional unit is located on non-contiguous land.

(3) Optional Units on Acreage by Varietal Group: In addition to, or

instead of, establishing optional units by section, section equivalent,

FSA Farm Serial Number, or on non-contiguous land, optional units may

be established by varietal Group when provided for in the Special

Provisions.

3. Insurance Guarantees, Coverage Levels, and Prices for Determining

Indemnities

In addition to the requirements of section 3 (Insurance Guarantees,

Coverage Levels, and Prices for Determining Indemnities) of the Basic

Provisions (Sec. 457.8):

(a) You may select only one price election for all the pears in the

county insured under this policy unless the Special Provisions provide

different price elections by varietal group, in which case you may

select one price election for each varietal group designated in the

Special Provisions. The price election you choose for each varietal

group must have the same percentage relationship to the maximum price

offered by us for each varietal group. For example, if you choose one

hundred percent (100%) of the maximum price election for a specific

varietal group, you must also choose one hundred percent (100%) of the

[[Page 18297]]

maximum price election for all other varietal groups.

(b) You must report, by the production reporting date designated in

section 3 (Insurance Guarantees, Coverage Levels, and Prices for

Determining Indemnities) of the Basic Provisions (Sec. 457.8), by

varietal group:

(1) Any damage, removal of trees, or change in practices that may

reduce yields from previous levels, and the number of affected acres;

(2) The number of trees on insurable and uninsurable acreage;

(3) The age of the trees and the planting pattern; and

(4) For the first year of insurance for acreage interplanted with

another perennial crop and anytime the planting pattern of such acreage

is changed:

(i) The age of the interplanted crop, and type if applicable;

(ii) The planting pattern; and

(iii) Any other information that we request in order to establish

your approved yield.

We will reduce the yield used to establish your production

guarantee as necessary, based on the effect of the interplanted

perennial crop, removal of trees, damage, or change in practices on the

yield potential of the insured crop. If you fail to notify us of

factors that may reduce yields from previous levels, we will reduce

your production guarantee as necessary at any time we become aware of

the interplanted crop, removal of trees, damage, or change in

practices.

4. Contract Changes

The contract change date is October 31 preceding the cancellation

date for states with a January 31 cancellation date and August 31

preceding the cancellation date for all other states (see the

provisions of section 4 (Contract Changes) of the Basic Provisions

(Sec. 457.8)).

5. Cancellation and Termination Dates

In accordance with section 2 (Life of Policy, Cancellation, and

Termination) of the Basic Provisions (Sec. 457.8), the cancellation and

termination dates are:

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

Cancellation and termination

States dates

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

California................................ January 31.

All other states.......................... November 20.

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

6. Insured Crop

In accordance with section 8 (Insured Crop) of the Basic Provisions

(Sec. 457.8), the crop insured will be all the pears in the county for

which a premium rate is provided by the actuarial table:

(a) In which you have a share;

(b) That are of varieties adapted to the area;

(c) That are grown on trees that have produced an average of at

least five (5) tons of pears per acre in at least one of the four

previous crop years unless the Special Provisions or a written

agreement authorizes lesser production; and

(d) That are grown in an orchard that, if inspected, is considered

acceptable by us.

7. Insurable Acreage

In lieu of the provisions in section 9 (Insurable Acreage) of the

Basic Provisions (Sec. 457.8), that prohibit insurance attaching to a

crop planted with another crop, pears interplanted with another

perennial crop are insurable unless we inspect the acreage and

determine it does not meet insurability requirements.

8. Insurance Period

(a) In accordance with the provisions of section 11 (Insurance

Period) of the Basic Provisions (Sec. 457.8):

(1) Coverage begins for each crop year on the later of the date we

accept your application or:

(i) In California, on February 1; or

(ii) In all other states, on November 21.

(2) The calendar date for the end of the insurance period for each

crop year is:

(i) September 15 for Bartlett (green and red) and Star Crimson

(Crimson Red) varietal groups; or

(ii) October 15 for all other varietal groups.

(b) In addition to the provisions of section 11 (Insurance Period)

of the Basic Provisions (Sec. 457.8):

(1) If you acquire an insurable share in any insurable acreage on

or before the acreage reporting date of any crop year and if we

inspect, and consider the acreage acceptable, insurance will be

considered to have attached to such acreage on the calendar date for

the beginning of the insurance period.

(2) If you relinquish your insurable interest on any acreage of

pears on or before the acreage reporting date of any crop year

insurance will not be considered to have attached to such acreage for

that crop year unless:

(i) A transfer of right to an indemnity or a similar form approved

by us is completed by all affected parties; and

(ii) The insurance provider is notified by you or the transferee in

writing of such transfer on or before the acreage reporting date.

9. Causes of Loss

(a) In accordance with the provisions of section 12 (Causes of

Loss) of the Basic Provisions (Sec. 457.8), insurance is provided only

against the following causes of loss that occur within the insurance

period:

(1) Adverse weather conditions;

(2) Fire, unless weeds and other forms of undergrowth have not been

controlled or pruning debris has not been removed from the orchard;

(3) Earthquake;

(4) Volcanic eruption; or

(5) Failure of the irrigation water supply, if caused by an insured

peril that occurs during the insurance period.

(b) In addition to the causes of loss excluded in section 12

(Causes of Loss) of the Basic Provisions (Sec. 457.8), we will not

insure against damage or loss of production due to:

(1) Disease or insect infestation, unless adverse weather:

(i) Prevents the proper application of control measures or causes

properly applied control measures to be ineffective; or

(ii) Causes disease or insect infestation for which no effective

control mechanism is available.

(2) Failure of the fruit to color properly; or

(3) Inability to market the pears for any reason other than actual

physical damage from an insurable cause specified in this section. For

example, we will not pay you an indemnity if you are unable to market

due to quarantine, boycott, or refusal of any person to accept

production.

10. Duties in the Event of Damage or Loss

In addition to the requirements of section 14 (Duties in the Event

of Damage or Loss) of the Basic Provisions (Sec. 457.8), the following

will apply:

(a) You must notify us within 3 days of the date harvest should

have started if the crop will not be harvested.

(b) You must notify us at least 15 days before harvest begins if

any production from any unit will be marketed directly to consumers. We

will conduct a preharvest appraisal that will be used to determine your

production. If damage occurs after the preharvest appraisal, and you

can provide acceptable records to us that account for all production

removed from the unit after our appraisal, we will conduct an

additional appraisal that will be used to determine your production.

Failure to give timely notice that production will be marketed directly

to consumers will result in an appraised amount of production to count

of not less than the production guarantee per acre.

(c) If you intend to claim an indemnity on any unit, you must

notify us prior to the beginning of harvest so

[[Page 18298]]

that we may inspect the damaged production. You must not sell or

dispose of the damaged crop until after we have given you written

consent to do so. If you fail to meet the requirements of this

subsection, all such production will be considered undamaged and

included as production to count.

11. Settlement of Claim

(a) We will determine your loss on a unit basis. In the event you

are unable to provide production records:

(1) For any optional unit, we will combine all optional units for

which acceptable records of production were not provided; or

(2) For any basic unit, we will allocate any commingled production

to such units in proportion to our liability on the harvested acreage

for each unit.

(b) In the event of loss or damage covered by this policy, we will

settle your claim by:

(1) Multiplying the insured acreage by its respective production

guarantee;

(2) Multiplying each product by the respective price election;

(3) Summing all such products;

(4) Multiplying the total production to be counted of each varietal

group (see subsection 11(c)) by the respective price election;

(5) Summing all such products;

(6) Subtracting this total from the total in (3); and

(7) Multiplying the result by your share.

(c) The total production to count (in tons) from all insurable

acreage on the unit will include:

(1) All appraised production as follows:

(i) Not less than the production guarantee per acre for acreage:

(A) That is abandoned;

(B) Damaged solely by uninsured causes; or

(C) For which you fail to provide production records that are

acceptable to us;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production; and

(iv) Potential production on acreage that you intend to abandon or

no longer care for, if you and we agree on the appraised amount of

production. Upon such agreement, the insurance period for that acreage

will end. If you do not agree with our appraisal, we may defer the

claim only if you agree to continue to care for the crop. We will then

make another appraisal when you notify us of further damage or that

harvest is generally occurring in the area unless you harvested the

crop, in which case we will use the harvested production. If you do not

continue to care for the crop, our appraisal made prior to deferring

the claim will be used to determine the production to count; and

(2) For all states except California, all harvested and appraised

marketable pear production from the insurable acreage.

(3) For California, all harvested and appraised production that:

(i) Meets the standards for first grade canning as defined by the

California Pear Advisory Board or for U.S. Number 1 as defined by the

United States Standards for Grades of Summer and Fall Pears, or Pears

for Processing, or for U.S. Extra Number 1 or U.S. Number 1 as defined

by the United States Standards for Grades of Winter Pears; or

(ii) Is accepted by a processor for canning or packing; or

(iii) Is marketable for any purpose.

(4) For California, notwithstanding the terms of 11(c)(3), if the

cause of loss was due to an insurable cause, the quantity of production

that otherwise would be considered as production to count will be

reduced by whichever of the following methods results in the least

production to count:

(i) By the excess over ten percent (10%) of the total production

from the unit of varieties other than Forelle, Seckel or Winter Nelis

that is size 180 or smaller as defined in the United States Standards

for Summer and Fall Pears or for Winter Pears; or

(ii) By dividing the value per ton by the highest price election

available for the insured varietal group that does not meet the

specifications of section 11(c)(3)(i), subtracting this result from

1.000, multiplying this difference by the number of tons of such pears

and subtracting this result from the production to count.

12. Written Agreements

Designated terms of this policy may be altered by written

agreement. The following conditions will apply:

(a) You must apply in writing for each written agreement no later

than the sales closing date, except as provided in subsection (e) of

this section.

(b) The application for written agreement must contain all terms of

the contract between you and us that will be in effect if the written

agreement is not approved.

(c) If approved, the written agreement will include all variable

terms of the contract, including, but not limited to, crop type or

variety, the guarantee, premium rate, and price election.

(d) Each written agreement will only be valid for 1 year. If the

written agreement is not specifically renewed the following year,

insurance coverage for subsequent crop years will be in accordance with

the printed policy.

(e) An application for written agreement submitted after the sales

closing date may be approved if, after a physical inspection of the

acreage, it is determined that no loss has occurred and the crop is

insurable in accordance with the policy provisions.

13. Pear Quality Adjustment Endorsement

(a) The provisions of this endorsement apply if:

(1) You elect the Pear Quality Adjustment Endorsement on your

application or on a form approved by us, on or before the sales closing

date for the initial crop year in which you wish to insure your pears

under this endorsement. By doing so, you agree to pay the additional

premium designated in the actuarial table for this optional coverage;

and

(2) This endorsement is not excluded by your policy.

(b) This endorsement is available in all counties for which the

actuarial table designates pear premium rates, except for counties in

California. This endorsement does not cover acreage insured under the

Catastrophic Risk Production Endorsement in any counties.

(c) Pears damaged by volcano eruption; frost; freeze; wind; or hail

are eligible for quality adjustment, subject to the following:

(1) If the harvested and appraised production does not grade eighty

percent (80%) U. S. No. 2 or better in accordance with applicable

United States Standards for Grades of Summer and Fall Pears, United

States Standards for Grades of Winter Pears, or United States Standards

for Grades of Pears for Processing, as applicable, production will be

reduced as follows:

(i) By two percent (2%) for each full one percent (1%) in excess of

twenty percent (20%), when twenty-one percent (21%) through sixty

percent (60%) of the pears fail the grade standard; and

(ii) By one hundred percent (100%) when more than sixty percent

(60%) of the pears fail the grade standard. The difference between the

reduced production and the total production will be considered cull

production.

(2) Pears that are knocked to the ground by wind or frozen and

cannot be packed or marketed as fresh pears will be considered one

hundred percent (100%) cull production.

(3) Fifteen percent (15%) of all production that is considered cull

production will be production to count.

[[Page 18299]]

(4) No reduction in grade will be recognized for any pears that

fail the grade standard due to uninsurable causes of loss.

(d) This endorsement may be canceled by either you or us for any

succeeding crop year by giving written notice on or before the

cancellation date preceding the crop year for which the cancellation of

this endorsement is to be effective.

Signed in Washington, D.C., on April 18, 1996.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 96-10145 Filed 4-24-96; 8:45 am]

BILLING CODE 3410-FA-P