Common Crop Insurance Regulations; Almond Crop Insurance Provisions

DEPARTMENT OF AGRICULTURE

7 CFR Part 457

Common Crop Insurance Regulations; Almond Crop Insurance

Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes

specific crop provisions for the insurance of almonds. The provisions

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

Provisions, which contain 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 combine the current

Almond Endorsement with the Common Crop Insurance Policy for ease of

use and consistency of terms.

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

be accepted until close of business September 9, 1996, and will be

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

information collections under the Paperwork Reduction Act of 1995

continues through October 7, 1996.

ADDRESSES: Interested persons are invited to submit written comments to

the Chief, Product Development Branch, Federal Crop Insurance

Corporation, United States Department of Agriculture, 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, S.W., Washington, D.C., 8:15 a.m.-4:45 p.m., EDT

Monday through Friday. For addresses see the Paperwork Reduction Act

paragraph under SUPPLEMENTARY INFORMATION.

FOR FURTHER INFORMATION CONTACT: Arden Routh, Program Analyst, Research

and Development Division, Product Development Branch, FCIC, at the

Kansas City, MO address listed above. Telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866 and Departmental Regulation 1512-1

This action has been reviewed under United States Department of

Agriculture (USDA) procedures established by Executive Order No. 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 April 30, 2001.

This rule has been determined to be not significant for the

purposes of Executive Order No. 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 the Almond

Crop Insurance Provisions have been submitted to OMB for approval under

section 3507(j) of the Paperwork Reduction Act of 1995. This proposed

rule will amend the information collection requirements under OMB

control number 0563-0003 through September 30, 1998. The Federal Crop

Insurance Corporation will be amending the information collection to

adjust the estimated reporting hours and revising the usage of FCI-12-

P, Pre-Acceptance Perennial Crop Inspection Report as it applies to the

Almond Crop Insurance Provisions.

Section 7 of the 1998 Almond Crop Provisions adds interplanting as

an insurable farming practice as long as it is interplanted with

another perennial crop. This practice was not insurable under the

previous Almond Endorsement or and the General Crop Insurance Policy to

which it attached. Consequently, interplanting information will need to

be collected using the FCI-12-P Pre-Acceptance Perennial Crop

Inspection Report form for approximately 3 percent (3%) of the almond

insureds who interplant their almond crop. Standard interplanting

language has been added to most perennial crops. Interplanting is an

insurable practice as long as it does not adversely affect the insured

crop. This is a benefit to agriculture because insurance is now

available for more perennial crop producers and, as a result, less

acreage will need to be placed into the noninsured crop disaster

assistance program (NAP).

Revised reporting estimates and requirements for usage of OMB

control number 0563-0003 will be submitted to OMB for approval under

the provisions of 44 U.S.C., chapter 35. Public comments are due by

October 7, 1996.

The title of this information collection is ``Catastrophic Risk

Protection Plan and Related Requirements including, Common Crop

Insurance Regulations; Almond Crop Insurance Provisions.'' The

information to be collected includes a crop insurance acreage report,

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 producers of almonds that are eligible for

Federal crop insurance.

The information requested is necessary for the reinsured companies

and FCIC to provide insurance and reinsurance, determine eligibility,

determine the correct parties to the agreement or contract, determine

and collect premiums or other monetary amounts, and pay benefits.

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All information is reported annually. The reporting burden for this

collection of information is estimated to average 25 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 2,669,970.

FCIC is requesting comments 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

gathering technology.

Comments regarding paperwork reduction should be submitted to the

Desk Officer for Agriculture, Office of Information and Regulatory

Affairs, Office of Management and Budget, 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. Copies of the information

collection may be obtained from Bonnie Hart at the above address,

telephone (202) 690-2857.

Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Public

Law 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 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 No. 12612

It has been determined under section 6(a) of Executive Order No.

12612, Federalism, that this rule does not have sufficient federalism

implication 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. The insured must certify to the number of acres and

production on an annual basis or receive a transitional yield. The

producer must maintain the records to support the certified information

for at least 3 years. 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 producer.

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 No. 12372

This program is not subject to the provisions of Executive Order

No. 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 No. 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 No. 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 in 7 CFR parts 11 and 780 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 to be known as 7 CFR 457.123, Almond Crop

Insurance Provisions. The provisions will be effective for the 1998 and

succeeding crop years. The proposed provisions will supersede and

replace those found at 7 CFR 401.110 (Almond Endorsement). By separate

rule, FCIC will revise Sec. 401.110 to restrict its effect through the

1997 crop year and later remove that section.

This rule makes minor editorial and format changes to improve the

Almond Endorsement's compatibility with the Common Crop Insurance

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

provisions for insuring almonds as follows:

1. Section 1--Add the definitions for the terms ``days,'' ``good

farming practices,'' ``insurable rejects,'' ``interplanted,''

``irrigated practice,'' ``production guarantee (per acre),'' ``rejects

(inedible meats),'' ``set out,'' and ``written agreement'' for the

purpose of clarification.

2. Section 2--Revise the unit language for clarity. There is no

change in the unit structure.

3. Section 3(a)--Specify that the insured may select only one price

election for all the almonds in the county insured under the policy,

unless the Special Provisions provide different price elections by

type, in which case the insured may select one price election for each

almond type designated in the Special Provisions. The price election

the insured selects for each almond type must have the same percentage

relationship to the

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maximum price offered. This helps protect against adverse selection and

simplifies administration of the program.

4. Section 3(b)--Specify that the insured must report damage,

removal of trees, and any change in practice that may reduce yields.

The insured must also report, for the first year of insurance for

acreage interplanted with another perennial crop and anytime the

planting pattern of such acreage is changed, the age and type, if

applicable, of any interplanted crop, the planting pattern, and any

other information needed to establish the approved yield. The acreage

or the yield used to establish your production guarantee, or both, may

be adjusted by us when the insurance provider become aware of the

situation if the insured has not previously reported it. Interplanting

is not provided under the current Almond Endorsement. Section 7 of

these crop provisions allows interplanting almonds with another

perennial crop. The change in policy language is based on FCIC's desire

to insure the maximum amount of acreage.

5. Section 7--Add interplanting as an insurable farming practice if

the almond crop is interplanted with another perennial in order to make

insurance available on more acreage and reduce reliance on the

noninsured crop disaster assistance program (NAP) for protection for

crop losses.

6. Section 8(a)--Clarify that if an application is accepted by us

after December 31, insurance will attach on the 10th day after the

application is received in the insurance provider's local office.

However, full premium will be due for the partial year.

7. Section 8(b)--Add provisions to clarify the procedure for

insuring acreage when an insurable share is acquired or relinquished on

or before the acreage reporting date.

8. Section 9(a)--Remove direct Mediterranean Fruit Fly damage as a

cause of loss because insect infestations are no longer covered.

9. Section 9(b)(1)--Clarify that disease and insect infestations

are excluded causes of loss unless adverse weather prevents the proper

application of control measures, causes control measures to be

ineffective when properly applied, or causes disease or insect

infestation for which no effective control mechanism is available.

10. Section 10--Add provisions that require an insured to notify

the insurer of damage prior to harvest so that an inspection can be

made in order to permit a timely appraisal. The provisions also

prohibit the insured from selling or otherwise disposing of any damaged

production until consent to do so is provided by the insurer.

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

written agreement. FCIC has a long standing policy of permitting

modification of certain provisions of insurance contracts by written

agreement. Written agreements are not available in the current Almond

Endorsement. The new section will cover application for, and duration

of, written agreements.

List of Subjects in 7 CFR Part 457

Crop insurance, Almonds.

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 part 457), effective for the 1998 and succeeding

crop years, as follows:

PART 457--[AMENDED]

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

follows:

Authority: 7 U.S.C. 1506(1), 1506(p).

2. 7 CFR part 457 is amended by adding a new Sec. 457.123 to read

as follows:

Sec. 457.123 Almond crop insurance provisions.

The Almond Crop Insurance Provisions for the 1998 and succeeding

crop years are as follows:

UNITED STATES DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

Almond 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

Days--Calendar days.

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 removal of mature almonds from the orchard.

Insurable rejects--Inedible meats that due to an insurable cause

of loss will not be considered as production to count.

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.

Non-contiguous land--Any two or more tracks of land whose

boundaries do not touch at any point, except that land separated

only by a public or private right-of-way, waterway or an irrigation

canal will be considered as contiguous.

Production guarantee (per acre)--The quantity of almonds (total

meat pounds) determined by multiplying the approved yield per acre

by the coverage level percentage you elect.

Rejects (inedible meats)--As defined by the USDA Agricultural

Marketing Service for Handling of Almonds Grown in California.

Set out--Transplanting the tree into the orchard.

Total meat pounds--The total pounds of almond meats (whole,

chipped and broken, and in-shell meats) and rejects, excluding

insurable rejects. Unshelled almonds will be converted to meat

pounds in accordance with FCIC approved procedures.

Written agreement--A written document that alters designated

terms of a policy in accordance with section 12.

2. Unit Division

(a) Unless limited by the Special Provisions, a unit as defined

in section l (Definitions) of the Basic Provisions (Sec. 457.8), 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.

(b) 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.

(c) 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.

(d) All optional units must be identified on the acreage report

for each crop year.

(e) 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;

(2) You must have records of marketed or 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; and

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(3) Each optional unit must be located on non-contiguous land.

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 almonds

in the county insured under this policy unless the Special

Provisions provide different price elections by type, in which case

you may select one price election for each almond type designated in

the Special Provisions. The price elections you choose for each type

must have the same percentage relationship to the maximum price

offered by us for each type. For example, if you choose 100 percent

(100%) of the maximum price election for a specific type, you must

also choose 100 percent (100%) of the maximum price election for all

other types.

(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

type if applicable:

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

may reduce the expected yield below the yield upon which the

insurance guarantee is based, and the number of affected acres;

(2) The number of bearing trees on insurable and uninsurable

acreage;

(3) The age of the trees and the planting patterns; 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 our estimate of 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 any circumstances that may reduce yields from previous

levels, we will reduce your production guarantee as necessary at any

time we become aware of the circumstance.

4. Contract Changes

In accordance with section 4 (Contract Changes) of the Basic

Provisions (Sec. 457.8), the contract change date is August 31

preceding the cancellation date.

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 December 31.

6. Insured Crop

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

Provisions (Sec. 457.8), the crop insured will be all the almonds in

the county for which a premium rate is provided by the actuarial

table:

(a) In which you have a share;

(b) That are grown for harvest as almonds;

(c) That are irrigated;

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

considered acceptable to us; and

(e) That are grown on trees that have reached at least the

seventh growing season after set out, unless we agree in writing to

insure such acreage.

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, almonds 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 on January 1 of each crop year, except that

for the first crop year, if the application is accepted by us after

December 31, insurance will attach on the 10th day after the

application is received in our local agent's office.

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

each crop year is November 30.

(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

after coverage begins but on or before the acreage reporting date of

any crop year, and after an inspection we 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 share on any insurable

acreage of almonds on or before the acreage reporting date for the

crop year, insurance will not be considered to have attached to, and

no premium or indemnity will be due for, such acreage for that crop

year unless:

(i) A transfer of coverage and right to an indemnity or a

similar form approved by us is completed by all affected parties;

and

(ii) We are 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 occurs during 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) Wildlife;

(4) Earthquake;

(5) Volcanic eruption; or

(6) Failure of the irrigation water supply, if due to a cause of

loss covered by this policy and occurring within 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) Inability to market the almonds 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), if

you intend to claim an indemnity on any unit, you must notify us

prior to the beginning of harvest so 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 production records 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 result in paragraph (1) by the respective

price election for the type;

(3) Totaling the results in paragraph (2);

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

if applicable, (see subsection 11(c)) by the respective price

election;

(5) Totaling the results in paragraph (4);

(6) Subtracting the total in paragraph (5) from the total in

paragraph (3); and

(7) Multiplying the result of paragraph (6) by your share.

(c) The total production to count (in meat pounds) from all

insurable acreage on the unit will include:

(l) 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 records of production that are

acceptable to us;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production; and

(iv) Potential production on insured acreage that you intend to

abandon or no longer care for, if you and we agree on the appraised

amount of production. Upon such

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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

general 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) The total meat pounds harvested from the insurable acreage.

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

12(e).

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

of the contract between you and us and the insured 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.

Signed in Washington D.C., on August 1, 1996.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 96-20193 Filed 8-8-96; 8:45 am]

BILLING CODE 3410-FA-P