Common Crop Insurance Regulations; Texas Citrus Fruit Crop Insurance Provisions

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AB56

Common Crop Insurance Regulations; Texas Citrus Fruit Crop

Insurance Provisions

AGENCY: Federal Crop Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes

specific crop provisions for the insurance of Texas citrus fruit. 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 combine the

current Texas Citrus Endorsement with the Common Crop Insurance Policy

for ease of use and consistency of terms.

EFFECTIVE DATE: August 8, 1996.

FOR FURTHER INFORMATION CONTACT: Louise Narber, Program Analyst,

Research and Development Division, Product Development Branch, Federal

Crop Insurance Corporation, United States Department of Agriculture,

9435 Holmes Road, Kansas City, MO 64131, 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

Following publication of the proposed rule, the public was afforded

60 days to submit comments, data, and opinions on information

collection requirements previously approved by OMB under OMB control

number 0563-0003 through September 30, 1998. No public comments were

received.

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 of State, local, or tribal governments, in

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

one 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) of 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

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. An insured must also annually certify to the previous years

production or receive a transitional yield. The producer must maintain

the production records to support the certified information for at

least 3 years. This regulation does not alter those requirements. The

amount of work required of the insurance companies delivering and

servicing

[[Page 41298]]

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.

Sec. 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 sections 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 published at 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

On Wednesday, June 5, 1996, FCIC published a proposed rule in the

Federal Register at 61 FR 28512-28517 to add to the Common Crop

Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.119,

Texas Citrus Fruit Crop Insurance Provisions. The new provisions will

be effective for the 1998 and succeeding crop years. These provisions

will replace the current provisions for insuring Texas citrus fruit

found at 7 CFR 401.115 (Texas Citrus Endorsement), thereby limiting the

effect of the current provisions to the 1997 and prior crop years.

After this final rule becomes effective, the current provisions for

insuring Texas citrus fruit will be removed from Sec. 401.115 and that

section will be reserved.

Following publication of that proposed rule, the public was

afforded 30 days to submit written comments, data, and opinions. A

total of 25 comments were received from producers, trade associations,

the crop insurance industry and FSA. The comments received, and FCIC's

responses are as follows:

Comment: A representative of FSA suggested that the word ``type''

be changed to ``crop'' throughout the provisions where appropriate

since the citrus type designations used in the past will be replaced

with individual crop codes beginning with the 1998 crop year.

Response: FCIC agrees and has made this change as well as deleting

the definition of type.

Comment: The crop insurance industry commented that the proposed

rule did not contain any reference to acreage reporting and suggested

that such reference be added.

Response: Section 6 (Report of Acreage) of the Basic Provisions

provides information on the reporting of acreage and specifies that the

acreage reporting date will be included in the Special Provisions. No

changes have been made to these provisions.

Comment: The crop insurance industry stated that the definition for

``excess rain'' is not very precise when compared to the definition for

``excess wind''.

Response: FCIC agrees, however it is impossible to specify an

amount of precipitation that would damage the crop. Different soil

types, temperatures, weather patterns, etc., may result in significant

variation in the amount of precipitation that can be tolerated before

the crop is damaged. No changes have been made to the definition.

Comment: A trade association was concerned about the deletion of

``frost'' as a cause of loss. They believed that the proposed

definition for freeze appeared adequate for fruit and tree damage, but

was concerned about frost damage during the bloom period.

Response: The definition of freeze is changed to also include the

formation of ice in the cells of the blossoms.

Comment: The crop insurance industry stated that the provisions

refer to a pro rata refund when optional units are combined into basic

units whenever the insured reported optional units but does not

qualify. They questioned on what basis a pro rata refund would be

determined.

Response: The reference to a pro rata refund has been deleted and

the sentence changed to read ``If failure to comply with these

provisions is determined to be inadvertent, and the optional units are

combined into a basic unit, that portion of the premium paid for the

purpose of electing optional units will be refunded to you for the

units combined.''

Comment: The crop insurance industry stated that they did not

understand why all optional units must be identified on the acreage

report for each crop year. They said that listing every possible

combination for every crop on a policy could test the limits on the

number of policy lines allowed.

Response: Although more than one method is available to determine

optional units, only one method may be used in any given crop year.

Only those optional units determined under the selected method for the

crop year for which the acreage report is completed must be listed.

Optional unit designation from past years or that could have been

established for the current year, should not be listed on the current

crop years' acreage report. The phrase ``established for a crop year''

has been added to the provisions for clarification.

Comment: The crop insurance industry suggested that the provision,

``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,'' would cause

confusion between the APH and policy year.

Response: The APH is based on the actual production of the producer

for each crop year in which a crop is produced to a maximum of 10 crop

years. There is no requirement that the producers have insured the crop

before its production be included in the APH data base. FCIC believes

the provision is clearly stated and has not made changes.

Comment: The crop insurance industry suggested that section 3(a)

begin with the phrase ``You may select only one price percentage * *

*.'' It would not then be necessary to include complex provisions

regarding different varieties with different maximum prices.

Response: Methods used to select price elections vary between

insurance providers. While some require selection of a percentage,

others require selection of a specific dollar amount. The suggested

change will not work in all

[[Page 41299]]

circumstances. No change has been made to the provisions.

Comment: The crop insurance industry suggested that the order of

the provisions in section 3 (Insurance Guarantees, Coverage Levels, and

Prices for Determining Indemnities) be rearranged for clarity.

Response: FCIC agrees and has rearranged the provisions in this

section.

Comment: The crop insurance industry questioned if the phrase ``Any

acreage of citrus damaged to the extent that the majority of producers

in the area would not further maintain it will be deemed to have been

destroyed even though you may continue to maintain it'' is necessary to

the policy and what it means.

Response: This provision is intended to limit acreage to the first

stage production guarantee when the crop is damaged to the extent that

a majority of producers in the area would not continue to maintain it.

This intent has been clarified.

Comment: A producer and a trade association stated that

establishing yields based on APH regulations will not work following a

general and severe loss. They contend that the citrus trees are still

recovering from the 1989 freeze and have only begun producing in the

last three to four years and still have not reached peak production.

Therefore, APH yields may not accurately reflect production potential.

Also, some citrus tends to be alternate bearing which will make it

difficult to develop acceptable T-yields and to apply APH rules. The

yields of tree crops are affected by tree age, size of canopy, and

other constraints, which do not affect annual crops. The planting of

new trees impacts the APH yield even if the trees are not damaged. Full

production for new trees generally occurs the sixth year after planting

and at least 25-30% of the citrus acreage has not reached full

production.

Response: FCIC believes that section 3(d) in the proposed rule (now

3(e)) provides the flexibility needed to allow yield determination by

appraisal when past production history is inadequate.

Comment: The crop insurance industry questioned if the lag year

should apply to the provision that requires that the acreage produce an

average yield of at least 3 tons per acre the previous year to be

insurable.

Response: The provision for the grove to have produced at least 3

tons per acre the previous year to be insurable will only be required

if the yield is determined by APH yields. For other methods, there must

be at least a 3-ton per acre appraised yield potential to be insured.

Comment: The crop insurance industry questioned why 30 days were

changed to 10 days in section 9(a)(1) of the policy that states ``* * *

if the application is accepted by us after November 20, insurance will

attach on the 10th day after the application is received in your

insurance provider's local office * * *.'' and if the 10-day period

would allow enough time to complete inspections.

Response: The language in section 9(a)(1) has been changed as

follows ``Coverage begins on November 21 of each crop year, except that

for the year of application, if your application is received after

November 11 but prior to November 21, insurance will attach on the 10th

day after your properly completed application is received in our local

office unless we inspect the acreage during the 10-day period and

determine that it does not meet insurability requirements. You must

provide any information that we require for the crop or to determine

the condition of the grove.'' These provisions were modified so that

they will not be interpreted as allowing late-filed applications.

Further, a thirty-day period was not reasonable. Ten days is sufficient

to prevent adverse selection and avoid unnecessary exposure to

uninsured losses during the waiting period. The insurance provider must

expedite its review of the application and any supporting documentation

filed by the producer, determine if a visual inspection is necessary,

and perform any necessary inspections within the 10-day period. The

period of 10 days is believed appropriate to meet the needs of both the

producer and the insurance provider.

Comment: The crop insurance industry stated that some flexibility

may be needed for obtaining signatures and for mail time if a transfer

takes place shortly before the acreage reporting date but the transfer

form does not reach the company office until after the acreage

reporting date.

Response: Section 9(b)(2)(ii) (Insurance Period) states ``We are

notified by you or the transferee in writing of such transfer on or

before the acreage reporting date * * *.'' If the transferor or the

transferee signs the properly completed transfer form and gives the

form to the crop insurance agent on or before the acreage reporting

date, this requirement will be met. No change has been made to the

provisions.

Comment: The crop insurance industry and a trade association

questioned whether changing an insured cause of loss from ``failure of

the irrigation water supply'' to ``failure of the irrigation water

supply, if caused by an insured peril that occurs during the insurance

period'' would be an insurable cause of loss if the drought started in

one crop year and reduced the available water to ``barely enough'' and

continued into another crop year. They also stated that drought needs

to be a covered cause of loss as well as failure of the irrigation

supply because producers count on rainfall, as well as irrigation to

produce normal tonnage and quality of fruit. If the trees were under

stress from drought in the summer or fall before bloom, which would be

prior to the beginning of the insurance period, the bloom and

consequently fruit set would be affected.

Response: Drought is a covered cause of loss for crops requiring

irrigation to be insurable. However, the commenters are suggesting that

drought be covered even though the damage from the drought occurred

before insurance attached for the crop year. It is contrary to

insurance principles to cover a loss that occurred prior to insurance

attaching. If there is insufficient water available at the time

insurance attached, the crop is not insurable. If there is sufficient

water available at the time insurance attaches, but a continuing

drought results in insufficient water and damage to the crop, any

resulting loss would be insured. No change has been made.

Comment: The crop insurance industry suggested that the last line

of section 9(b)(2)(ii) of the proposed rule should be a separate line.

Response: FCIC has reformatted and changed the wording of this

provision to improve the readability.

Comment: A trade association believes that the requirement for a

producer to give 15 days notice for an appraisal before any fruit is

marketed directly to consumers is totally unworkable. Their biggest

concern is that the appraisal may not be completed in a timely manner.

Response: The producer is required to give notice at least 15 days

prior to any production being marketed directly to consumers and the

insurance provider is required to complete the appraisal within that 15

day period. The production may be marketed directly to consumers any

time after the end of the 15-day waiting period regardless of whether

or not the insurance provider has fulfilled their responsibility of

appraising the crop. FCIC believes that 15 days is appropriate to meet

the needs of both the producer and the insurance provider.

Comment: The crop insurance industry believes that the policy

should

[[Page 41300]]

not allow the producer to defer settlement and wait for a later,

generally lower, appraisal on insured acreage the producer intends to

abandon or no longer care for.

Response: The later appraisal will only be necessary if the

insurance provider agrees that such appraisal would result in a more

accurate determination, and if the producer continues to care for the

crop. If the producer does not care for the crop, the original

appraisal is used. If the insurance provider believes the original

appraisal is accurate, resolution of the dispute may be sought through

arbitration or appeal procedures, whichever is applicable. No change

will be made to these provisions.

Comment: The crop insurance industry suggested combining the

provisions contained in section 13(e) with the provisions in section

13(a).

Response: The provisions are clearly stated and have not been

combined.

Comment: The crop insurance industry stated that they believe the

written agreement should be continuous if no substantive changes occur

from one year to the next.

Response: The written agreement can only be valid for one year

because it must contain all the variable terms of the contract

including, but not limited to, crop type or variety, the guarantee,

premium rate, and price election. One or more of these variables often

changes from year to year. No change has been made to these provisions.

In addition, written agreements are, by design, temporary and should be

replaced by applicable policy provisions.

In addition to the changes described above, FCIC has made the

following changes to the Texas Citrus Fruit Provisions:

1. Section 1--Added definitions for ``crop'' and ``varieties'' for

clarification.

2. Section 1--Changed the definition of ``non-contiguous land'' so

that a producer who share rents acreage is not prohibited from having

optional units on non-contiguous land to conform to other perennial

policies.

3. Section 1--Changed the definition of `` Excess wind'' and

``production guarantee (per acre)'' for clarification.

4. Section 3(d)--Add a provision requiring the producer to report

any circumstance that may reduce the yield to include other causes that

may not be encompassed by the other listed events.

5. Section 7--Added a provision to state that production that is

direct marketed to consumers is not insurable unless allowed by the

Special Provisions or by written agreement.

6. Section 8--Changed provisions regarding interplanted acreage so

that all insurability requirements contained in the policy are

applicable, not just these crop provisions.

7. Section 9--Clarified that the transferee must be an eligible

person.

8. Section 11--Changed the wording for clarification and added a

provision requiring the producer to give notice before beginning to

harvest any damaged production so the insurer may have an opportunity

to inspect it if the insured intends to claim an indemnity on any unit.

9. Section 12--Changed the wording for simplification and clarity.

10. Section 13--Changed the format and wording for clarity.

Good cause is shown to make this rule effective upon publication in

the Federal Register. This rule improves the Texas citrus fruit

insurance coverage and brings it under the Common Crop Insurance Policy

Basic Provisions for consistency among policies. The contract change

date required for new policies is August 31, 1996. It is therefore

imperative that these provisions be made final before that date so that

the reinsured companies and insureds may have sufficient time to

implement the new provisions. Therefore public interest requires the

agency to act immediately to make these provisions available for the

1998 crop year.

List of Subjects in 7 CFR Part 457

Crop insurance, Texas citrus fruit.

Final 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 amends the Common Crop Insurance Regulations (7 CFR

part 457), effective for the 1998 and succeeding crop years, to read 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(l), and 1506(p).

2. 7 CFR part 457 is amended by adding a new Sec. 457.119 to read

as follows:

Sec. 457.119 Texas Citrus Fruit Crop Insurance Provisions.

The Texas Citrus Fruit Crop Insurance Provisions for the 1998 and

succeeding crop years are as follows:

United States Department of Agriculture; Federal Crop Insurance

Corporation; Texas Citrus Fruit 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

Crop--Specific groups of citrus fruit as listed in the Special

Provisions.

Crop year--The period beginning with the date insurance attaches

to the citrus crop and extending through the normal harvest time. It

is designated by the calendar year following the year in which the

bloom is normally set.

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,

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

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

Excess rain--An amount of precipitation that damages the crop.

Excess wind--A natural movement of air that has sustained speeds

exceeding 58 miles per hour recorded at the U. S. Weather Service

reporting station operating nearest to the grove at the time of

damage.

Freeze--The formation of ice in the cells of the tree, its

blossoms, or its fruit caused by low air temperatures.

FSA--The Farm Service Agency, an agency of the United States

Department of Agriculture, or any successor agency.

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 generally recognized by the Cooperative Extension

Service as compatible with agronomic and weather conditions in the

county.

Harvest--The severance of mature citrus fruit from the tree by

pulling, picking, or any other means, or by collecting marketable

fruit from the ground.

Hedged--A process of trimming the sides of the citrus trees for

better or more fruitful growth of the citrus fruit.

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.

Local market price--The applicable citrus price per ton offered

by buyers in the area in which you normally market the insured crop.

Non-contiguous land--Any two or more tracts 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):

[[Page 41301]]

(a) First stage production guarantee--The second stage

production guarantee multiplied by forty percent (40%).

(b) Second stage production guarantee--The quantity of citrus

(in tons) determined by multiplying the yield determined in

accordance with section 3 by the coverage level percentage you

elect.

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

Topped--A process of trimming the uppermost portion of the

citrus trees for better and more fruitful growth of the citrus

fruit.

Varieties--Subclasses of crops as listed in the Special

Provisions.

Written agreement--A written document that alters designated

terms of a policy in accordance with section 13.

2. Unit Division

(a) A unit as defined in section 1 (Definitions) of the Basic

Provisions (Sec. 457.8), will be divided into basic units by each

citrus crop designated in the Special Provisions.

(b) Unless limited by the Special Provisions, these basic units

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.

(c) 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.

(d) 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 into a basic unit, that portion of the premium

paid for the purpose of electing optional units will be refunded to

you for the units combined.

(e) All optional units established for a crop year must be

identified on the acreage report for that crop year.

(f) 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.

(3) Each optional unit must meet one of the following criteria,

as applicable:

(i) Optional Units by Section, Section Equivalent, or 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 discernible, each

optional unit must be located in a separate farm identified by a

single FSA Farm Serial Number; or

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

In lieu 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. 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 and coverage level

for each citrus fruit crop designated in the Special Provisions that

you elect to insure. The price election you choose for each crop

need not bear the same percentage relationship to the maximum price

offered by us for each crop. For example, if you choose one hundred

percent (100%) of the maximum price election for early oranges, you

may choose seventy-five percent (75%) of the maximum price election

for late oranges. However, if separate price elections are available

by variety within each crop, the price elections you choose within

the crop must have the same percentage relationship to the maximum

price offered by us for each variety within the crop.

(b) The production guarantee per acre is progressive by stage

and increases at specific intervals to the final stage production

guarantee. The stages and production guarantees per acre are:

(1) The first stage extends from the date insurance attaches

through April 30 of the calendar year of normal bloom. The

production guarantee will be forty percent (40%) of the yield

calculated in section 3(e) multiplied by your coverage level.

(2) The second or final stage extends from May 1 of the calendar

year of normal bloom until the end of the insurance period. The

production guarantee will be the yield calculated in section 3(e)

multiplied by your coverage level.

(c) Any acreage of citrus damaged in the first stage to the

extent that the majority of producers in the area would not further

maintain it will be limited to the first stage production guarantee

even though you may continue to maintain it.

(d) In addition to the reported production, each crop year you

must report by type:

(1) The number of trees damaged, topped, hedged, pruned or

removed; any change in practices or any other circumstance 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 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 our estimate of the effect of the

following: interplanted perennial crop; removal, topping, hedging,

or pruning of trees; damage; change in practices and any other

circumstance on the yield potential of the insured crop. If you fail

to notify us of any circumstance that may reduce your yields from

previous levels, we will reduce your production guarantee as

necessary at any time we become aware of the circumstance.

(e) The yield used to compute your production guarantee will be

determined in accordance with Actual Production History (APH)

regulations, 7 CFR part 400, subpart G, and applicable policy

provisions unless damage or changes to the grove or trees, require

establishment of the yield by another method. In the event of such

damage or changes, the yield will be based on our appraisal of the

potential of the insured acreage for the crop year.

(f) Instead of reporting your citrus production for the previous

crop year, as required by section 3 of the Basic Provisions

(Sec. 457.8), there is a one year lag period. Each crop year you

must report your production from two crop years ago, e.g., on the

1998 crop year production report, you will provide your 1996 crop

year production.

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 November 20.

6. Annual Premium

In lieu of the premium computation method in section 7 (Annual

Premium) of the Basic Provisions (Sec. 457.8), the annual premium

amount is computed by multiplying the second stage production

guarantee per acre by the price election, the premium rate, the

insured acreage, your share at the time coverage begins, and by any

applicable premium adjustment percentages contained in the Special

Provisions.

7. Insured Crop

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

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

the county of each citrus crop designated in the Special Provisions

that you elect to insure and for which a premium rate is provided by

the actuarial table:

(a) In which you have a share;

(b) That are adapted to the area;

(c) That are irrigated;

(d) That has produced an average yield of at least three tons

per acre the previous year, or we have appraised the yield potential

of at least three tons per acre;

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(e) That is grown in a grove that, if inspected, is considered

acceptable by us; and

(f) That is not sold by direct marketing, unless allowed by the

Special Provisions or by written agreement.

8. 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, citrus interplanted with

another perennial crop is insurable unless we inspect the acreage

and determine it does not meet the requirements contained in your

policy.

9. Insurance Period

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

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

(1) Coverage begins on November 21 of each crop year, except

that for the year of application, if your application is received

after November 11 but prior to November 21, insurance will attach on

the 10th day after your properly completed application is received

in our local office, unless we inspect the acreage during the 10 day

period and determine that it does not meet insurability

requirements. You must provide any information that we require for

the crop or to determine the condition of the grove.

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

each crop year is the second May 31st of the crop year.

(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

for the 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 citrus on or before the acreage reporting date for the

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

no premium will be due, and no indemnity paid 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;

(ii) We are notified by you or the transferee in writing of such

transfer on or before the acreage reporting date; and

(iii) The transferee is eligible for crop insurance.

10. 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) Excess rain;

(2) Excess wind;

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

been controlled or pruning debris has not been removed from the

grove;

(4) Freeze;

(5) Hail;

(6) Tornado;

(7) Wildlife; or

(8) 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 a cause of loss

specified in section 10(a):

(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 citrus 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.

11. 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) If the Special Provisions permit or a written agreement

authorizing direct marketing exists, you must notify us at least 15

days before any production from any unit will be sold by direct

marketing. We will conduct an appraisal that will be used to

determine your production to count for production that is sold by

direct marketing. If damage occurs after this appraisal, we will

conduct an additional appraisal. These appraisals, and any

acceptable records provided by you, will be used to determine your

production to count. Failure to give timely notice that production

will be sold by direct marketing will result in an appraised amount

of production to count of not less than the production guarantee per

acre if such failure results in our inability to make the required

appraisal.

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

notify us before beginning to harvest any damaged production so we

may have an opportunity to inspect it. 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 section all such

production will be considered undamaged and included as production

to count.

12. Settlement of Claim

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

you are unable to provide acceptable production records:

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

for which such 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 on a unit basis by:

(1) Multiplying the insured acreage for each crop, or variety if

applicable, by its respective production guarantee (see sections 1

and 3);

(2) Multiplying the results of section 12(b)(1) by the

respective price election for each crop or variety, if applicable;

(3) Totaling the results of section 12(b)(2);

(4) Multiplying the total production to count of each variety,

if applicable (see section 12(c)) by the respective price election;

(5) Totaling the results of section 12(b)(4);

(6) Subtracting this result of section 12(b)(5) from the result

of section 12(b)(3); and

(7) Multiplying the result of section 12(b)(6) 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) For which you fail to provide acceptable production records;

(C) That is damaged solely by uninsured causes; or

(D) From which production is sold by direct marketing, if direct

marketing is specifically permitted by the Special Provisions or a

written agreement, and you fail to meet the requirements contained

in section 11;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production; and

(iv) Potential production on insured acreage 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 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) All harvested production from the insurable acreage.

(d) Any citrus fruit that is not marketed as fresh fruit and,

due to insurable causes, does not contain 120 or more gallons of

juice per ton, will be adjusted by:

(1) Dividing the gallons of juice per ton obtained from the

damaged citrus by 120; and

(2) Multiplying the result by the number of tons of such citrus.

If individual records of juice content are not available, an

average juice content from the nearest juice plant will be used, if

available. If not available, a field appraisal will be made to

determine the average juice content.

(e) Where the actuarial table provides, and you elect, the fresh

fruit option, citrus fruit that is not marketable as fresh fruit due

to insurable causes will be adjusted by:

(1) Dividing the value per ton of the damaged citrus by the

price of undamaged citrus fruit; and

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(2) Multiplying the result by the number of tons of such citrus

fruit. The applicable price for undamaged citrus fruit will be the

local market price the week before damage occurred.

(f) Any production will be considered marketed or marketable as

fresh fruit unless, due solely to insured causes, such production

was not marketed as fresh fruit.

(g) In the absence of acceptable records of disposition of

harvested citrus fruit, the disposition and amount of production to

count for the unit will be the guarantee on the unit.

(h) Any citrus fruit on the ground that is not harvested will be

considered totally lost if damaged by an insured cause.

13. Written Agreements

Designated terms of this policy may be altered by written

agreement in accordance with the following:

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

later than the sales closing date, except as provided in section

(13)(e);

(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 one 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); and

(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 and written

agreement provisions.

Signed in Washington, DC, on August 2, 1996.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 96-20195 Filed 8-7-96; 8:45 am]

BILLING CODE 3410-FA-P