Common Crop Insurance Regulations; Grape Crop Insurance Provisions

SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes

specific crop provisions for the insurance of grapes. 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 include the current

Grape 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 25, 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 22, 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. to 4:45 p.m.,

est Monday through Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: John Meyer, 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

This action has been reviewed under United States Department of

Agriculture (USDA) procedures established by Executive Order No. 12866.

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 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.

Section 8 of the 1998 Grape 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

present Grape Endorsement or 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 0.5 percent of the 5,408 insureds who

interplant their grape 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 most

perennial crop producers and, as a result, less acreage will need to be

placed into the noninsured crop disaster assistance program (NAP).

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; Grape Crop Insurance Provisions.'' The

information to be collected include: 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

grapes 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 2,669,970 hours.

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, USDA, FSA, Advisory and Corporate Operations Staff,

Regulatory Review Group, P.O. Box 2415, STOP 0572, Washington, D.C.

20013-2415, telephone (202) 690-2857. Copies of the information

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

Unfunded Mandates Reform Act of 1995

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

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

effects of their regulatory actions on State, local,

[[Page 49983]]

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

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 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. The amount of work required of the insurance companies

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 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

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

CFR part 457), a new section, 7 CFR 457.138, Grape Crop Insurance

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

succeeding crop years. These provisions will supersede and replace the

current provisions for insuring grapes found at 7 CFR 401.130 (Grape

Endorsement) thereby limiting the effect of the current provisions to

the 1997 and prior crop years. Upon publication of the Grape Crop

Provisions as a final rule, the current provisions for insuring grapes

will be removed from Sec. 401.130 and that section will be reserved.

This rule makes minor editorial and format changes to improve the

Grape Endorsement's compatibility with the Common Crop Insurance

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

provisions for insuring grapes as follows:

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

``good farming practice,'' ``interplanted,'' ``irrigated practice,''

''production guarantee,'' ``set out,'' ``varietal group,'' and

``written agreement'' for the purpose of clarification.

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

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

unless the Special Provisions provide different price elections by

variety or varietal group, in which case the insured may select one

price election for each grape variety or varietal group designated in

the Special Provisions. The price election the insured selects for each

grape type must have the same relationship to the maximum price

offered. This helps protect against adverse selection and simplifies

administration of the program.

3. Section 3(b)--Specify that in California only, an insured may

apply for a written agreement to establish a price election for a

variety they wish to insure, when that specific variety does not have a

separate price election on the Special Provisions.

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

removal of bearing vines, and any change in practice that may reduce

yields. For the first year of insurance for acreage interplanted with

another perennial crop or anytime the planting pattern of such acreage

is changed, the insured must also report, the age and type, if

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

other information needed to establish the approved yield. If the

insured fails to notify the insurer of factors that may reduce yields

from previous levels, the insurer will reduce the production guarantee

at any time the insurer becomes aware of damage, removal of vines, or

change in practices. This allows the insurance provider to limit

liability, if necessary, before insurance attaches.

5. Section 5--The cancellation and termination dates are changed to

February 28 in California, and to November 20 in all other States

except Idaho, Oregon, and Washington. Currently, the policy states

January 31 in California, and December 10 in all other States except

Idaho, Oregon, and Washington. The change in some States from December

10 to November 20 was made to standardize the perennial crop policies.

In California, the change was made at the request of a grower

organization and will allow additional time for growers to make

decisions

[[Page 49984]]

regarding their insurance coverage without compromising program

integrity.

6. Section 7(e)--Specify that at least an average of 2 tons of

grapes per acre must have been produced in at least 1 of the 3 most

recent crop years of the actual production history base period for the

crop to be insured, unless we inspect such acreage and give our

approval in writing. Previous endorsement required a minimum of 2 tons

per acre but did not clearly state that the minimum must have been

produced in 1 of the 3 most recent crop years.

7. Section 8--Allow insurance for grapes interplanted with another

perennial crop 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.

8. Section 9(a)--Change the date insurance attaches from February 1

to March 1 in California, and from December 11 to November 21 in all

other States to be consistent with other perennial crops. Clarifies

that for the year of application, if an application is received after

February 19 (February 20 in years when February has 29 days) but prior

to March 1 in California, or after November 11 but prior to November 21

in all other States, insurance will attach on the 10th day after the

properly completed application is received in the insurance provider's

local office, unless we inspect the acreage during the 10 day period

and determine that it does not meet insurability requirements.

9. Section 9(b)--Add provisions to clarify insurability when an

insurable share is acquired or relinquished on or before the acreage

reporting date.

10. Section 10(b)--Clarify that disease and insect infestation 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.

Damage caused by phylloxera is not covered regardless of cause.

11. Section 11(b)--Add provisions that require an insured to notify

the insurer of damage prior to harvest in order to permit a timely

appraisal. Also add provisions that prohibit the insured from selling

or otherwise disposing of any damaged production until written consent

is provided by the insurance provider.

12. Section 12(c)--Add provisions for converting grape production

harvested and dried for raisins to a fresh weight basis.

13. Section 12(e)--Add provisions indicating that the average

market price will be determined in all States by averaging the prices

being paid by usual marketing outlets for the area during the week in

which the damaged grapes were valued. In the current grape endorsement,

in California the average market price is the price shown by the

Federal State Market News California Wine Report for the same week in

which the damaged grapes were valued.

Also add provisions indicating that the value per ton of the

qualifying damaged production and the average market price of undamaged

grapes will be determined on the earlier of the date the damaged

production is sold or the date of final inspection for the unit. The

current grape endorsement does not list a specific time.

14. Section 13--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.

Written agreements are not available under the current Grape

Endorsement. This amendment allows FCIC to tailor the policy to a

specific insured in certain instances. The new section will cover the

procedures for and duration of written agreements.

List of Subjects in 7 CFR Part 457

Crop insurance, grape.

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(l), and 1506(p).

2. 7 CFR part 457 is amended by adding a new Sec. 457.138 to read

as follows:

Sec. 457.138 Grape Crop Insurance Provisions.

The Grape Crop Insurance Provisions for the 1998 and succeeding

crop years are as follows:

United States Department of Agriculture

Federal Crop Insurance Corporation

Grape 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.

(a) Days--Calendar days.

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

Department of Agriculture, or any successor agency.

(c) 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

State Research, Education, and Extension Service as compatible with

agronomic and weather conditions in the county.

(d) Graft--To unite a shoot or bud (scion) with a rootstock or

an existing vine in accordance with recommended practices to form a

living union.

(e) Harvest--Picking the clusters of grapes from the vines

either by hand or machine.

(f) Interplanted--Acreage on which two or more crops are planted

in any form of alternating or mixed pattern.

(g) 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.

(h) Non-contiguous--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.

(i) Production guarantee (per acre)--The number of grapes (tons)

determined by multiplying the approved APH yield per acre by the

coverage level percentage you elect.

(j) Set out--Physically planting the desired variety of grape

plant in the ground in a desired planting pattern.

(k) Ton--Two thousand (2000) pounds avoirdupois.

(l) Varietal group--Grapes with similar characteristics that are

grouped for insurance purposes as specified in the Special

Provisions.

(m) Written agreement--A written document that alters designated

terms of this policy in accordance with section 13.

2. Unit Division.

(a) In California only, a unit as defined in section 1

(Definitions) of the Basic Provisions (Sec. 457.8), will be divided

into basic units by each variety that you insure.

(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

[[Page 49985]]

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, that 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.

(g) Each optional unit must also meet one or more of the

following criteria, as applicable:

(1) In California only, optional units may be established if

each optional unit is located on non-contiguous land.

(2) In all states except California, each optional unit must

meet one or more of the following criteria:

(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 discernable, each

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

single FSA Farm Serial Number.

(ii) Optional Units on Acreage Including Both Irrigated and Non-

irrigated Practices: In addition to, or instead of, establishing

optional units by section, section equivalent, or FSA Farm Serial

Number, optional units may be based on irrigated acreage or non-

irrigated acreage if both are located in the same section, section

equivalent, or FSA Farm Serial Number. The irrigated acreage may not

extend beyond the point at which your irrigation system can deliver

the quantity of water needed to produce the yield on which the

guarantee is based and you may not continue into non-irrigated

acreage in the same rows or planting pattern.

(iii) Optional Units on Acreage Located on Non-contiguous Land:

In addition to, or instead of, establishing optional units by

section, section equivalent, FSA Farm Serial Number, or irrigated/

non-irrigated land, optional units may be established if each

optional unit is located on non-contiguous land.

(iv) Optional Units on Acreage by Varietal Group: In addition

to, or instead of, establishing optional units by section, section

equivalent, FSA Farm Serial Number, irrigated/non-irrigated land or

on non-contiguous land, optional units may be established by

varietal group when separate varietal groups are specified in the

Special Provisions.

3. Insurance Guarantees, Coverage Levels, and Prices for

Determining Indemnities.

In addition to the requirements of section 3 (Insurance

Guarantees, Coverage Levels, and Prices for Determining Indemnities)

of the Basic Provisions (Sec. 457.8):

(a) In California, you may select only one price election and

coverage level for each grape variety in the county insured under

this policy. In all other states, you may select only one price

election for all the grapes in the county insured under this policy

unless the Special Provisions provide different price elections by

varietal group, in which case you may select one price election for

each varietal group designated in the Special Provisions. The price

elections you choose for each varietal group must have the same

percentage relationship to the maximum price offered by us for each

varietal group. For example, if you choose 100 percent (100%) of the

maximum price election for one varietal group, you must also choose

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

varietal groups.

(b) In California only, if the Special Provisions do not provide

a separate price election for a specific variety you wish to insure,

you may apply for a written agreement to establish a price election.

Your application for the written agreement must include:

(1) The number of tons sold for at least the two most recent

crop years; and

(2) The price received for all production of the variety in the

years for which production records are provided.

(c) 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

variety or varietal group, if applicable:

(1) Any damage, removal of bearing 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 number of bearing vines on insurable and uninsurable

acreage;

(3) The age of the vines 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 the type or variety or

varietal group, if applicable;

(ii) The planting pattern; and

(iii) Any other information that we request to establish the

yield upon which your production guarantee is based.

We will reduce the yield used to establish your production

guarantee, based on our estimate of the effect of the following:

interplanted perennial crop; removal of vines; 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 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 for all States except California,

and October 31 preceding the cancellation date for California.

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 February 28 (February 29 in years when

February has 29 days) in California and November 20 in all other

states.

6. Report of Acreage.

In addition to the requirements of section 6 (Report of Acreage)

of the Basic Provisions (Sec. 457.8), you must report the grape

varieties in California or the varietal groups in all other States.

7. Insured Crop.

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

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

California, any insurable variety that you elect to insure; in all

other States, all insurable varieties.) 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 wine, juice, raisins, or canning;

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

considered acceptable by us;

(d) That, after being set out or grafted, have reached the

number of growing seasons designated by the Special Provisions; or

(e) That have produced an average of two tons of grapes per acre

during at least one of the three crop years immediately preceding

the insured crop year, unless we inspect and allow insurance on such

acreage.

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, grapes interplanted with

another perennial crop are insurable unless we inspect the acreage

and determine that 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 March 1 in California and November 21 in

all other States of each crop year, except that for the year of

application if your application is received after February 19

(February 20 in years when February has 29 days) but prior to March

1 in California, or after November 11 but prior to November 21 in

all other States, 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

[[Page 49986]]

information that we require for the crop or to determine the

condition of the vineyard.

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

each crop year is the date during the calendar year in which the

grapes are normally harvested, as follows:

(i) October 10 in Mississippi and Texas;

(ii) November 10 in California, Idaho, Oregon, and Washington;

and

(iii) November 20 in all other states.

(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 grapes 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;

(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 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

vineyard;

(3) Wildlife;

(4) Earthquake;

(5) Volanic eruption; or

(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

(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) Phylloxera, regardless of cause; or

(3) Inability to market the grapes 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) You must notify us within 3 days of the date harvest should

have started if the crop will not be harvested.

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

notify us at least 15 days prior to the beginning of harvest if you

previously gave notice in accordance with section 14 of the Basic

Provisions (Sec. 457.8), 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 section and such failure results in

our inability to inspect the damaged production, 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 by:

(1) Multiplying the insured acreage by its respective production

guarantee;

(2) Multiplying each result in section 12(b)(1) by the

respective price election for each variety or varietal group;

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

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

varietal group, if applicable, (see section 12 (c)-(e)) by the

respective price election;

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

(6) Subtracting the total in section 12(b)(5) from the total in

section 12(b)(3); and

(7) Multiplying the result in 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) That is damaged solely by uninsured causes; or

(C) For which you fail to provide production records;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production (mature unharvested production may

be adjusted for quality deficiencies in accordance with subsection

12(e)); 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 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. Grape

production that is harvested and dried for raisins will be converted

to a fresh weight basis by multiplying the number of tons of raisin

production by 4.5.

(d) If any grapes are harvested before normal maturity or for a

special use (such as Champagne or Botrytis-affected grapes), the

production of such grapes will be increased by the factor obtained

by dividing the price per ton received for such grapes by the price

per ton for fully matured grapes of the type for which the claim is

being made.

(e) Mature marketable grape production may be adjusted for

quality deficiencies as follows:

(1) Production will be eligible for quality adjustment if, due

to insurable causes, it has a value of less than 75 percent of the

average market price of undamaged grapes of the same or similar

variety. The value per ton of the qualifying damaged production and

the average market price of undamaged grapes will be determined on

the earlier of the date the damaged production is sold or the date

of final inspection for the unit. The average market price of

undamaged production will be calculated by averaging the prices

being paid by usual marketing outlets for the area during the week

in which the damaged grapes were valued.

(2) Grape production that is eligible for quality adjustment, as

specified in subsection 12(e)(1) will be reduced by:

(i) Dividing the value per ton of the damaged grapes by the

maximum price election available for such grapes to determine the

quality adjustment factor; and

(ii) Multiplying this result (not to exceed 1.000) by the number

of tons of the eligible damaged grapes.

13. Written Agreement.

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 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.

[[Page 49987]]

Signed in Washington, DC, on September 12, 1996.

Phyllis W. Honor,

Acting Manager, Federal Crop Insurance Corporation.

[FR Doc. 96-23993 Filed 9-23-96; 8:45 am]

BILLING CODE 3410-FA-P