Common Crop Insurance Regulations; Pear Crop Insurance Provisions

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AB03

Common Crop Insurance Regulations; Pear 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 pears. 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 Pear

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

consistency of terms.

EFFECTIVE DATE: December 9, 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 July 31, 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 written comments, data, and opinions on information

collection requirements previously approved by OMB under OMB control

number 0563-0003. No public comments were received.

Unfunded Mandates Reform Act of 1995

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

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

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

governments and the private sector. 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. New provisions included in this rule will not

impact small entities to a greater extent than large 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 also annually certify to the previous years production or receive

an assigned 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 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

On Thursday, April 25, 1996, FCIC published a proposed rule in the

Federal Register at 61 FR 18293-18299 to add to the Common Crop

Insurance Regulations (7 CFR part 457) a new section, 7 CFR 457.111,

Pear 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 pears found at 7 CFR Sec. 401.140

(Pear Endorsement), thereby limiting the effect of the current

provisions to the 1997 and prior crop years. After the final rule

becomes effective, the current provisions for insuring pears will be

removed from Sec. 401.140 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 twenty-six (26) comments were received from the crop insurance

industry and FCIC. The comments received, and FCIC's responses are as

follows:

[[Page 57579]]

Comment: The crop insurance industry questioned whether Red

Bartletts and Green Bartletts would be considered to be the same

varietal group, and recommended retaining some kind of ``all other''

category so all varieties are addressed in some manner.

Response: Type I and Type II were deleted from the pear provisions

to allow varietal grouping by growing region. FCIC recognizes that

varietal groups are still necessary since several varieties of pears in

addition to Green Bartletts are grown in the Pacific Northwest. In

regions where more than one varietal group is grown, separate groupings

will be provided on the Special Provisions. No change has been made.

Comment: The crop insurance industry recommended that the

definition of ``irrigated practice'' should also address the quality of

the water being applied.

Response: FCIC disagrees. There is no clear criteria regarding the

quality of water necessary to produce a crop. The highly variable

factors involved would make such criteria difficult to develop and

administer. Good farming practices would apply. No change has been made

in the definition.

Comment: The crop insurance industry questioned what was intended

in the definition of ``production guarantee (per acre)'' by the phrase

``and multiply the result by any applicable adjustment factor.''

Response: Section 6(f) of the Basic Provisions states, ``If the

information reported by you on the acreage report for a unit results in

a lower premium than the actual premium determined to be due on the

basis of the share, acreage, practice, type or other material

information determined to actually exist, the production guarantee or

amount of insurance on the unit will be reduced proportionately.* * *''

The definition of ``production guarantee'' simply reflects the

possibility of such an adjustment.

Comment: The crop insurance industry stated that providing insureds

with optional units by section, section equivalent or farm serial

number, or optional units by non-contiguous land could cause confusion

and that producers may not understand their options.

Response: Most policies offer optional units by section, section

equivalent, irrigated land, or non-contiguous land. Insurance providers

have adequately explained these policy choices to producers in the

past. FCIC anticipates that insurance providers will continue to be

able to explain available coverage options. No changes have been made.

Comment: The crop insurance industry stated that optional units

should be allowed by variety rather than varietal group (i.e., Red

Bartlett and Green Bartlett are distinct varieties and should be

allowed to be separate optional units).

Response: Permitting unit division by variety could lead to

extremely small insurance units and an increase in the frequency of

losses and overall loss adjustment experiences. In some cases a few

rows of a pollinator variety could qualify as an insurance unit. These

extremely small insurance units would increase paperwork,

administrative expenses, and spot losses. No change has been made.

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: 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 designations from past years, or that could

have been established for the current year but were not, should not be

listed on the current crop years' acreage report. This provision has

been clarified.

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 questioned if 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'' could cause

confusion between the APH or policy crop year.

Response: The last year used to determine the production guarantee

refers to the most recent year included in the APH data base. Such year

is always an APH crop year and may or may not be a year in which a

policy was in force. 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 say so much about when different

varieties have different maximum prices.

Response: The method to select price elections varies between

insurance providers. While some require selection of a percentage,

others require a selection of a specific dollar amount. The suggested

changes will not work for all circumstances. No change has been made to

the provisions.

Comment: The crop insurance industry suggested that the insurance

provider modify the APH yield for the next crop year when damage,

removal of trees or change in practices may reduce yields from previous

levels. They stated that there is no procedure for reducing the

guarantee at the time of loss.

Response: Guarantees are determined at the beginning of the crop

year. These Pear Crop Provisions provide the authority to reduce the

APH yield when tree damage has occurred or cultural practices have been

performed that will reduce the insured crop from previous production

levels at the time the guarantee is established or at any time the

insurance provider discovers the damage, removal of trees or change in

practice.

Comment: The crop insurance industry questioned whether the sales

closing date for pears in California will be changed to January 31 to

match the new cancellation/termination dates.

Response: The sales closing date for pears in California will be

changed to January 31.

Comment: The crop insurance industry questioned what is meant by

``In accordance with the provisions of section 11 (Insurance Period) of

the Basic Provisions (Sec. 457.8): (1) Coverage begins for each crop

year on the later of the date we accept your application or: (i) In

California, on February 1; or (ii) In all other states, on November

21.'' They asked if the intent is to allow acceptance of applications

after the sales closing date.

Response: Section 11 of the Basic Provisions states that coverage

begins on the later of the date of application, when the insured crop

is planted, or the date specified in the crop provisions. This

provision provides that date. FCIC has also clarified this provision to

provide the date when coverage begins in the year of application when

the producer's application is received by the insurance provider within

10 days of the sales

[[Page 57580]]

closing date. These provisions were modified so they will not be

interpreted as allowing late filed applications.

Comment: The crop insurance industry recommended removing the

requirement that a written agreement be renewed each year. If no

substantive changes occur from one year to the next, the written

agreement should be continuous.

Response: Provisions regarding written agreements require that the

guarantee, premium rate, and price election be included on the

agreement. Since one or more of these items typically change each year,

the agreement must be renewed every year. No change is made.

Comment: The crop insurance industry stated that the Pear Quality

Adjustment Endorsement should be removed from the crop provisions and

drafted as a separate endorsement, which would only be issued to those

insureds who elect the additional coverage. Otherwise CAT insureds and

others may think such coverage is included as a part of their crop

provisions. It was also suggested that the provisions in section 13(a)

follow those contained in section 13(b).

Response: FCIC believes that the quality adjustment endorsement

should be included in the Pear Crop Insurance Provisions so that pear

producers can readily see their coverage options. However, the

endorsement has been clarified to state in section 13(a) that the

endorsement does not apply if the insured insures the pears under the

catastrophic risk protection (CAT) endorsement or has not specifically

selected such coverage. Therefore, FCIC does not believe that persons

insured under the Catastrophic Risk Protection Endorsement or others

who did not elect this coverage will think they have this coverage. For

further clarification, provisions contained in sections 13(a) and (b)

of the proposed rule have been combined.

Comment: The crop insurance industry is concerned that section

13(c)(1)(ii) is more complicated than necessary. Their interpretation

was that the production will be reduced to zero and that the total

production would be considered cull production.

Response: When more than sixty percent of the pears fail the grade

standard the production will be reduced to zero and that production

will be considered cull production. FCIC believes that the provisions

are written as clearly as possible.

Comment: The crop insurance industry stated that section 13(c)(2)

is not necessary because such pears would be included under section

13(c)(1) whenever an appraisal is made.

Response: FCIC has reformatted the provisions but believes all the

provisions are necessary for clarity.

Comment: One comment received from an FCIC office recommended that

production be adjusted when it does not grade ninety percent (90%) U.S.

No. 2 grade or better in accordance with applicable United States

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

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

Pears for Processing, as applicable when the damage is caused by hail.

Proposed provisions contained in section 13(c)(1) allowed adjustment

only when production did not grade eighty percent (80%) U.S. No. 2 or

better. The comment stated that the majority of orchards normally

produce eighty-seven percent (87%) to ninety-five percent (95%) U.S.

No. 2 grade or better and eighty percent (80%) did not give adequate

protection to the producers. Although, five to thirteen percent of all

pears are culls, very few of these pears are damaged by a cause of loss

covered under the endorsement.

Response: FCIC agrees that eighty percent (80%) may not provide

adequate coverage and has increased the amount to ninety percent (90%).

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

following changes:

1. Section 1--Clarify the definitions of ``FSA,'' ``non-

contiguous,'' and ``written agreement''. Delete the definition of

``culls'' because fruit that is considered to be cull production for

the purposes of this policy is sufficiently identified in section 13.

2. Section 3(b)--Amend the provision to include any circumstance

that may reduce the expected yield below the yield upon which the

insurance guarantee is based. The proposed rule required an insured to

report only damage, removal of trees, and changes in practices and

there may be other circumstances that may affect the yield.

3. Section 8(b)(1)--Clarify that if the producer acquires an

insurable share after coverage begins but on or before the acreage

reporting date, insurance attaches on the calendar date for the

beginning of the insurance period.

4. Section 8(b)(2)--Clarify that not only will insurance not attach

but no premium will be due if the producer relinquishes an insurable

interest in any insurable acreage of pears on or before the acreage

reporting date of any crop year unless a transfer of coverage and right

to an indemnity is completed and the insurance provider is notified in

writing on or before the acreage reporting date. Clarify that the

transferee must also be eligible for crop insurance.

5. Section 10(b)--Simplify the provision to remove any ambiguity.

6. Section 10(c)--Modify the provision to specify that the producer

must notify the insurance provider at least 15 days prior to the

beginning of harvest if the producer previously gave notice in

accordance with section 14 of the Basic Provisions (Sec. 457.8). Also

specify that if the producer fails to meet the requirements of this

section, and such failure results in the insurance providers inability

to inspect the damaged production, all such production will be

considered undamaged and included as production to count.

7. Section 11--Add a provision to specify that an amount of

production not less than the production guarantee per acre will be

counted if the producer fails to notify the insurer of acreage that is

to be sold by direct marketing to conform to section 10(b). Also

clarify the claim settlement calculation and the quality adjustment

provisions for pears grown in California.

8. Section 13--Clarify the pear quality adjustment endorsement

provisions. Also, limit the cause of loss to hail only in section

13(b)(1) to be consistent with optional coverage provided for apples in

the same area.

List of Subjects in 7 CFR Part 457

Crop insurance, Pears, Reporting and recordkeeping requirements.

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, 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), 1506(p) .

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

as follows:

Sec. 457.111 Pear crop insurance provisions.

The Pear Crop Insurance Provisions for the 1998 and succeeding crop

years are as follows:

FCIC Policies:

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

Reinsured Policies:

[[Page 57581]]

(Appropriate title for insurance provider)

Both FCIC and Reinsured Policies:

Pear Crop Provisions

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

these crop provisions, and the Special Provisions; the Special

Provisions will control these crop provisions and the Basic

Provisions; and these crop provisions will control the Basic

Provisions.

1. Definitions

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.

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

Department of Agriculture, or a 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 State

Research, Education, and Extension Service as compatible with

agronomic and weather conditions in the county.

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

collecting of marketable pears from the ground.

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

any form of alternating or mixed pattern.

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

is artificially applied during the growing season by appropriate

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

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

establish the irrigated production guarantee on the irrigated

acreage planted to the insured crop.

Marketable--Pear production acceptable for processing or other

human consumption even if failing to meet any U.S. or applicable

state grading standard.

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.

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

determined by multiplying the approved APH yield per acre by the

coverage level percentage you elect, and multiplying the result by

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

Basic Provisions (Sec. 457.8).

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

Varietal group--Types of pears with similar characteristics that

are grouped for insurance purposes as specified in the Special

Provisions.

Written agreement--A written document that alters designated

terms of this policy in accordance with section 12.

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), a

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 established for a crop year must be

identified on the acreage report for that 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; 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 or more 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 discernable, 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.

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

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

equivalent, FSA Farm Serial Number, or on non-contiguous land,

optional units may be established by varietal group when provided

for in the Special Provisions.

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

Indemnities

In addition to the requirements of section 3 (Insurance

Guarantees, Coverage Levels, and Prices for Determining Indemnities)

of the Basic Provisions (Sec. 457.8):

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

the county insured under this policy unless the Special Provisions

provide different price elections by varietal group, in which case

you may select one price election for each varietal group designated

in the Special Provisions. The price 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 one hundred percent (100%) of the maximum price election

for one varietal group, you must also choose one hundred percent

(100%) of the maximum price election for all other varietal groups.

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

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

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

varietal group:

(1) Any damage, removal of trees, 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 any time 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 of trees; damage; change in practices or 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 that 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 October 31

preceding the cancellation date for states with a January 31

cancellation date and August 31 preceding the cancellation date for

all other states.

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:

[[Page 57582]]

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

Cancellation and termination

States dates

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

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

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

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

6. Insured Crop

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

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

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

table:

(a) In which you have a share;

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

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

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

previous crop years unless the Special Provisions or a written

agreement establishes a lower production level; and

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

considered acceptable by us.

7. Insurable Acreage

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

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

to a crop planted with another crop, pears interplanted with another

perennial crop are insurable unless we inspect the acreage and

determine that it does not meet the requirements contained in your

policy.

8. Insurance Period

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

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

(1) Coverage begins:

(i) In California, on February 1 of each crop year, except that

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

January 22 but prior to February 1, 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 orchard; or

(ii) In all other states, 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 orchard.

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

each crop year is:

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

(Crimson Red) varietal groups; or

(ii) October 15 for all other varietal groups.

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

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

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

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 interest on any insurable

acreage of pears on or before the acreage reporting date of any 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.

9. Causes of Loss

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

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

only against the following causes of loss that occur within the

insurance period:

(1) Adverse weather conditions;

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

been controlled or pruning debris has not been removed from the

orchard;

(3) Earthquake;

(4) Volcanic eruption; or

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

insured peril that occurs during the insurance period.

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

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

insure against damage or loss of production due to:

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

(i) Prevents the proper application of control measures or

causes properly applied control measures to be ineffective; or

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

control mechanism is available.

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

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

actual physical damage from an insurable cause specified in this

section. For example, we will not pay you an indemnity if you are

unable to market due to quarantine, boycott, or refusal of any

person to accept production.

10. Duties in the Event of Damage or Loss

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

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

following will apply:

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

have started if the crop will not be harvested.

(b) You must notify us at least 15 days before 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.

(c) 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.

11. Settlement of Claim

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

you are unable to provide separate, 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 for each varietal group if

applicable, by its respective production guarantee;

(2) Multiplying the results of section 11(b)(1) by the

respective price election for each varietal group, if applicable;

(3) Totaling the results of section 11(b)(2);

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

varietal group, if applicable, by the respective price election;

(5) Totaling the results of section 11(b)(4);

(6) Subtracting this result of section 11(b)(5) from the result

of section 11(b)(3); and

(7) Multiplying the result of section 11(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 sold by direct marketing if you fail to meet the

requirements contained in section 10;

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

(D) 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 in the area unless you

harvested the crop, in

[[Page 57583]]

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

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

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

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

appraised marketable pear production from the insurable acreage.

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

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

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

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

or Pears for Processing, or for U.S. Extra Number 1 or U.S. Number 1

as defined by the United States Standards for Grades of Winter

Pears;

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

(iii) Is marketable for any purpose. However, if the pears are

damaged by an insured cause, the production to count will be reduced

by the greater of the following amounts:

(A) The excess over ten percent (10%) of pears that are size 180

or smaller for varieties other than Forelle, Seckel or Winter Nelis;

or

(B) The result of dividing the value per ton of such pears by

the highest price election for the insured varietal group,

subtracting this result from 1.000, and multiplying this difference

(if positive) by the number of tons of such pears.

12. 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

12(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.

13. Pear Quality Adjustment Endorsement

(a) This endorsement applies to any crop year: Provided,

(1) The insured pears are located in a State other than

California and the actuarial table designates a premium rate for

this endorsement;

(2) You have not elected to insure your pears under the

Catastrophic Risk Protection (CAT) Endorsement;

(3) You elected it on your application or other form approved by

us, and did so on or before the sales closing date for the initial

crop year for which you wish it to be effective. By doing so, you

agreed to pay the additional premium designated in the actuarial

table for this optional coverage; and

(4) You or we did not cancel it in writing on or before the

cancellation date. Your election of CAT coverage for any crop year

after this endorsement is effective will be considered as notice of

cancellation by you.

(b) If the pear production is damaged by hail and if eleven

percent (11%) or more of the harvested and appraised production does

not grade at least U.S. No. 2 in accordance with applicable United

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

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

Grades of Pears for Processing, as applicable, due solely to hail,

the amount of production to count will be reduced as follows:

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

of ten percent (10%), when eleven percent (11%) through sixty

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

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

(60%) of the pears fail the grade standard.

The difference between the reduced production determined in

section 13(b) and the total production will be considered as cull

production.

(c) Pears that are knocked to the ground by wind or that are

frozen and cannot be packed or marketed as fresh pears will be

considered one hundred percent (100%) cull production.

(d) Marketable production that grades less than U.S. No. 2 due

to causes not covered by this endorsement will not be reduced.

(e) Fifteen percent (15%) of all production considered as cull

production in accordance with section 13 (b) and (c) will be

production to count.

Signed in Washington, D.C., on October 31, 1996.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 96-28607 Filed 11-6-96; 8:45 am]

BILLING CODE 3410-FA-P