Common Crop Insurance Regulations; Cranberry Crop Insurance Provisions

DEPARTMENT OF AGRICULTURE

7 CFR Part 457

RIN 0563-AB54

Common Crop Insurance Regulations; Cranberry 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 cranberries. 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 Cranberry 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 November 12, 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 November 12, 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, SW., Washington, DC., 8:15 a.m.-4:45 p.m., est,

Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Richard Brayton, Program Analyst,

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

the Kansas City, MO, address listed above, telephone (816) 926-3834.

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 June 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 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 OMB 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; Cranberry Crop Insurance Provisions.'' The

information to be collected includes: a crop insurance application and

acreage report. Information collected from the application and acreage

report is electronically submitted to FCIC by the reinsured companies.

Potential respondents to this information collection are producers of

cranberries 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.

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 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.

[[Page 48421]]

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, DC 20503 and to

Bonnie Hart, Advisory and Corporate Operations Staff, Regulatory Review

Group, Farm Service Agency, PO Box 2415, STOP 0572, U.S. Department of

Agriculture, Washington, DC 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 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) 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

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. The insured may use actual records of production or receive

a transitional yield which does not require the maintenance of

production records. If the insured elects to use actual records of

acreage and production as the basis for the production guarantee, the

insured must 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 Farm Service Agency (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 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 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 any

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 457.132, Cranberry 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 cranberries found at 7 CFR 401.127 (Cranberry

Endorsement). Upon publication of the Cranberry Crop Provisions as a

final rule, the current provisions for insuring cranberries will be

removed from Sec. 401.127 and that section will be reserved.

This rule makes minor editorial and format changes to improve the

Cranberry Endorsement's compatibility with the Common Crop Insurance

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

provisions for insuring cranberries as follows:

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

farming practices,'' ``irrigated practice,'' ``production guarantee,''

and ``written agreement'' for clarification purposes.

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

change in the unit structure.

3. Section 3(b)--Specify that the producer must report any damage,

removal of vines, and change in practices that may reduce yields. If

the producer fails to notify the insurance provider of any action or

occurrence that may reduce yields from previous levels, the insurance

provider will reduce the production guarantee at any time it becomes

aware of any damage, removal of vines, or change in practices. This

requirement is necessary to advise the insurer of circumstances that

may require adjustment of the actual production history yields that are

used to determine the insurance guarantee.

4. Section 7--Clarify that if the application is accepted after

November 20, insurance will not attach until the 10th day after the

application is received by the insurance provider. Provide policy

guidelines for attachment of insurance when insurable acreage is

acquired or relinquished. The guidelines are consistent with existing

agency practice as contained in internal agency handbooks.

5. Section 8(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

[[Page 48422]]

control mechanism is available. These exclusions are added so that

insurance coverage is not provided for causes of loss that could be

prevented. Also clarify that the inability to market the cranberries

for any reason other than actual physical damage is not a covered cause

of loss.

6. Section 9--Add provisions that require an insured to notify the

insurer of probable loss at least 15 days before the beginning of

harvesting or immediately if discovered after harvesting has begun so

an inspection can be made. The provisions also prohibit the insured

from selling or otherwise disposing of any damaged production until the

earlier of 15 days from request or when the insurer provides written

consent to do so. This was changed to standardize the perennial crop

policies and is needed to assure accurate determinations of the

insurance guarantee.

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

written agreement. FCIC has a long standing policy of permitting

certain modifications of the insurance contract by written agreement

for some policies. This amendment allows FCIC to tailor the policy to a

specific insured in certain instances. The new section will cover

application for and duration of written agreements.

List of Subjects in 7 CFR Part 457

Crop insurance, Cranberry.

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, 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 (1), and 1506(p).

2. 7 CFR part 457 is amended by adding a new Sec. 457.132 to read

as follows:

Sec. 457.132 Cranberry Crop Insurance Provisions

The Cranberry Crop Insurance Provisions for the 1998 and succeeding

crop years are as follows:

UNITED STATES DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

Cranberry 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

Barrel--100 pounds of cranberries.

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 generally recognized by the Cooperative Extension

Service as compatible with agronomic and weather conditions in the

county.

Harvest--The picking of cranberries from the vines for the

purpose of removal from the land.

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

is artificially applied during the growing season by an overhead

solid set irrigation system with the intention of providing the

quantity of water needed to prevent frost and 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 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)--The number of barrels

determined by multiplying the approved yield per acre by the

coverage level percentage you elect.

Written agreement--A written document that alters designated

terms of a policy in accordance with section 11.

2. Unit Division

(a) 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.

(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 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.

(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 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; and

(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

cranberries in the county insured under this policy.

(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):

(1) Any damage, removal of vines, 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 age of the vines; and

(3) 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: removal of vines, damage, and change in practices 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.

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. Insured Crop

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

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

cranberries 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 cranberries;

(c) That are grown in a bog that, if inspected, is considered

acceptable by us; and

(d) That are grown on vines that have reached at least the

fourth growing season after setout, unless a written agreement

provides for earlier coverage.

7. Insurance Period

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

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

[[Page 48423]]

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

that for the first crop year, 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.

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

each crop year is November 20.

(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 cranberries 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 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.

8. 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 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 bog;

(3) Wildlife;

(4) Earthquake;

(5) Volcanic eruption;

(6) Failure of 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

(Cause 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; or

(2) Inability to market the cranberries 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 the cranberries due to quarantine, boycott, or

refusal of any person to accept production.

9. 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):

(a) If you discover any insured units damaged, of if you intend

to claim an indemnity on any unit, you must give us notice of

probable loss:

(1) At least 15 days before the beginning of any harvesting, or

(2) Immediately if probable loss is discovered after harvesting

has begun.

(b) You must not sell or dispose of the damaged crop until after

the earlier of 15 days from request or when we give you written

consent to do so.

(c) If you fail to meet the requirements of this section, all

such production will be considered undamaged and included as

production to count.

10. 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 the production guarantee;

(2) Multiplying this product by the price election;

(3) Subtracting from this total, the dollar amount obtained by

multiplying the total production to count (see subsection 10(c)) by

the price election; and

(4) Multiplying this result by your share.

(c) The total production to count (in barrels) 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 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 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 to 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.

(3) Harvested production and potential unharvested production

which, due to insurable causes, does not meet, or would not if

properly handled meet, the United States Standards for Fresh

Cranberries for Processing, and has a value of less than 75 percent

of the market price for cranberries meeting the minimum requirements

will be adjusted by:

(i) Dividing the market value per barrel of such cranberries by

the market price per barrel for cranberries meeting the minimum

requirements; and

(ii) Multiplying the result by the number of barrels of such

cranberries.

11. 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

11(e);

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

variable 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 a 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, D.C., on September 9, 1996.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 96-23498 Filed 9-12-96; 8:45 am]

BILLING CODE 3410-FA-P