Common Crop Insurance Regulations; Peach Crop Insurance Provisions and Peach Crop Insurance Regulations

SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes

specific crop provisions for the insurance of peaches. 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, include the current peach

(fresh) crop insurance regulations with the Common Crop Insurance

Policy for ease of use and consistency of terms, and to restrict the

effect to the current peach crop insurance regulations to the 1997 and

prior crop years.

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

be accepted until close of business January 21, 1997 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 January 17, 1997.

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: Richard Brayton, 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 August 31, 2002.

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 7 of the 1998 Peach Crop Provisions adds interplanting as

an insurable farming practice as long as it is interplanted with

another perennial crop. This practice was not an insurable under the

previous Peach 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 46 insureds who interplant their peach

crop. Standard interplanting language has been added to most perennial

crops. Interplanting is an insurable practice as long as it does not

adversely affect the insured crop. This is a benefit to agriculture

because insurance is now available for more perennial crop producers

and, as a result, less acreage will need to be placed into the

noninsured crop disaster assistance program (NAP).

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; Peach 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

peaches 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.

Comments should be submitted 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

[[Page 58787]]

information collection may be obtained from Bonnie Hart at the above

address.

The Office of Management and Budget (OMB) is required to make a

decision concerning the collections of information contained in these

proposed regulations between 30 and 60 days after submission to OMB.

Therefore, a comment to OMB is best assured of having full effect if

OMB receives it within 30 days of publication. This does not affect the

deadline for the public to comment on the proposed regulation.

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) 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. 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 the 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 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 457.153, Peach Crop Insurance

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

succeeding crop years. These provisions will replace and supersede the

current provisions for insuring peaches found at 7 CFR part 403 (Peach

Crop Insurance Regulation). FCIC also proposes to amend 7 CFR 403 to

limit its effect to the 1997 and prior crop years. FCIC will later

publish a regulation to remove and reserve part 403.

This rule makes minor editorial and format changes to improve the

Peach Crop Insurance Regulations compatibility with the Common Crop

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

the provisions for insuring peaches as follows:

1. Section 1--Add definition for the terms ``actual price per

bushel,'' ``bushel,'' ``crop year,'' ``direct marketing,'' ``freight on

board (FOB),'' ``good farming practices,'' ``harvest,''

``interplanted,'' ``irrigated practice,'' ``production guarantee,'' and

``written agreement'' for clarification.

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

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

unless the Special Provisions provide different price elections by

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

peach type designated in the Special Provisions.

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

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

guarantee is based. The proposed rule requires an insured to report

damage, removal of or addition of trees, and change in practices that

may reduce yields. If the insured fails to notify the insurance

provider of factors that may reduce yields from previous levels, the

production guarantee will be reduced at any time the insurance provider

becomes aware of any circumstance that may effect the yield.

4. Section 5--Change the cancellation and termination dates to

November 20. Currently, the policy States November 30. This change

standardizes the perennial crop policies.

5. Section 7--Allow insurance for peaches interplanted with another

perennial crop subject to a pre-acceptance inspection and Regional

Service Office (RSO) approved yield. Currently the peach policy does

not allow coverage on interplanted acreage. This change standardizes

the perennial crop policies and will have no adverse actuarial effect.

6. Section 8(a)(1)--Specify that insurance coverage begins on

November 21 of each crop year, except that for the year of application,

if the application is received after November 11, but prior to November

21, insurance will attach on the 10th day after the properly completed

application is received in the insurer's local office.

7. Section 8(b)(2)--Add provisions to clarify that insurance will

not be considered to attach and no premium

[[Page 58788]]

will be due if an insurable interest on any acreage of peaches is

relinquished on or before the acreage reporting date for the crop year.

8. Section 9(a)(1)--Add adverse weather conditions as a cause of

loss. Delete freeze, frost, hail, drought, wind and lightning because

they are included in the term adverse weather. This change standardizes

the perennial crop policies.

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

excluded as causes of loss unless adverse weather prevents the proper

application of control measures, causes control measures to be

ineffective when properly applied, or causes disease or insect

infestation for which no effective control mechanism is available.

10. Section 10(b)--Require the producer to give notice at least 15

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

marketing.

11. Section 11(b)--Add provisions specifying the total production

to be counted will be multiplied by the price election. The current

policy multiplies the total production to be counted by the actual

price per bushel Freight on Board (FOB) or by the price election,

whichever is larger. This change standardizes the perennial crop

policies.

12. Section 11(c)(3)--Add provisions to extend quality adjustment

to all insurable perils. Currently the policy only allows quality

adjustment for damage due to frost, freeze, and misshapen fruit.

13. Section 11(c)(3)(i)--Add provisions which allow Freight on

Board (FOB) peach prices in the absence of the Market News Service

prices. Currently the policy does not allow for FOB prices when the

Market New Services does not establish a price.

14. Section 12--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 the

procedures for and duration of written agreements.

List of Subjects

7 CFR Part 403

Crop Insurance, Peaches.

7 CFR Part 457

Crop Insurance, Peaches.

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) and the Peach Crop Insurance Regulations

(7 CFR part 403) effective for the 1998 and succeeding crop years, to

read as follows:

PART 403--[AMENDED]

1. The authority citation for 7 CFR part 403 is amended to read as

follows:

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

2. The heading of the subpart in part 403 is revised to read as

follows:

``Subpart--Regulations for the 1986 through 1997 Crop Years.''

3. Section 403.7 is amended by revising the introductory text of

paragraph (d) to read as follows:

Sec. 403.7 The application and policy.

* * * * *

(d) The application for the 1985 and succeeding crop years is found

at subpart D of part 400, General Administrative Regulations (7 CFR

400.37, 400.38). The provisions of the Peach Insurance Policy for the

1985 through 1997 crop years are as follows:

* * * *

PART 457--[AMENDED]

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

follows:

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

5. 7 CFR part 457 is amended by adding a new Sec. 457.153 to read

as follows:

Sec. 457.153 Peach Crop Insurance Provisions

The Peach Crop Insurance Provisions for the 1998 and succeeding

crop years are as follows:

United States Department of Agriculture

Federal Crop Insurance Corporation

Peach 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

Actual price per bushel for :

(a) Fresh peaches means the average price per three-quarter (\3/

4\) bushel carton of U.S. Extra No. 1 ``2 inch'' peaches (if not

available, the next larger size for which a price is available)

determined from applicable prices reported by the Market News

Service of the United States Department of Agriculture for seven

consecutive marketing days, commencing with the day harvest of the

variety begins, less the allowable cost designated by the actuarial

table. In the absence of FOB shipping point price from the Market

News Service, the price per three-quarter (\3/4\) bushel carton of

U.S. Extra No. 1 ``two-inch'' peaches will be the sum of the price

election for the damaged peaches and the allowable cost as shown in

the actuarial documents for the county; and

(b) Processing peaches means the average price per bushel for

that applicable variety determined for seven consecutive marketing

days, commencing with the day harvest of the variety begins, less

the allowable cost designated by the actuarial table.

Bushel--Forty-eight pounds of ungraded peaches. A three-quarter

(\3/4\) bushel of graded peaches is considered equivalent to a

forty-eight pound bushel of ungraded peaches.

Crop year--The period beginning November 21 and extending

through September 30 of the following year, which is designated by

the calendar year in which the period ends.

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, or permitting the general public to enter the field

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

Freight on board (FOB)--A shipping point price reported by the

Market News Service.

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

Department of Agriculture, or any successor agency.

Good farming practices--The cultural practices generally in use

in the county for the crop to make normal progress toward maturity

and produce at least the yield used to determine the production

guarantee, and recognized by the USDA & Cooperative State Research,

Education, and Extension Service as compatible with agronomic and

weather conditions in the county.

Harvest--The picking or removal of mature peaches from the trees

either by hand or machine.

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.

Production guarantee (per acre)--The quantity of peaches

(bushels) determined by multiplying the approved Actual Production

History (APH) yield per acre by the coverage level percentage you

elect.

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),

(basic units) may be divided into optional units if, for each

optional unit, you meet all

[[Page 58789]]

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 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.

(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.

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 peaches

in the county insured under this policy unless the Special

Provisions provide different price elections by type, in which case

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

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

must have the same percentage relationship to the maximum price

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

(100%) of the maximum price election for one type, you must choose

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

types.

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

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

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

type if applicable:

(1) Any damage, removal of or addition of trees, or 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 and nonbearing trees on insurable and

uninsurable acreage;

(3) The age of the trees, variety, type, and the planting

pattern; and

(4) For the first year of insurance, acreage interplanted with

another perennial crop, and anytime the planting pattern of such

acreage is changed:

(i) The age of the interplanted crop;

(ii) The variety, and type if applicable;

(iii) The planting pattern; and

(iv) Any other information that we request in order to establish

your approved yield. We will adjust the yield used to establish your

production guarantee as necessary, based on our estimate of the

effect on the following: interplanted perennial crop; removal or

addition of trees or varieties of trees; physical or structural tree

damage; change in practices or changes in tree population and

density, and any other circumstance affecting the yield potential of

the insured crop. If you fail to notify us of any circumstance that

may affect your yields from previous levels, we will adjust 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 peaches 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 on tree varieties that:

(1) Were commercially available when the trees were set out;

(2) Are a sufficient chilling hour variety;

(3) Are grown on a root stock that is adapted to the area.

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

considered acceptable by us; and

(d) That have reached at least the fourth growing season after

set out. However, we may agree in writing to insure acreage that has

not reached this age if it has produced at least 100 bushels of

peaches per acre.

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, peaches 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 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 to determine the condition of the orchard.

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

each crop year is September 30.

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

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

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

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

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 acreage of

peaches 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.

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

[[Page 58790]]

pruning debris has not been removed from the orchard;

(3) Earthquake;

(4) Volcanic eruption;

(5) An insufficient number of chilling hours to effectively

break dormancy; 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) Split pits, regardless of cause; or

(3) Inability to market the peaches 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 three days of the date that

harvest of the damaged variety 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 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 of the

damaged variety, if you previously gave notice in accordance with

section 14 of the Basis 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 by its respective production

guarantee;

(2) Multiplying the result of section 11(b)(1) by the respective

price election;

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

(4) Multiplying the total production to be counted by type, if

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

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

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

in section 11(b)(3); and

(7) Multiplying the result of section 11(b)(6) by your share.

(c) The total production to count (in bushels) from all

insurable acreage on the unit will include:

(1) All appraised production will be determined 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 acceptable production records

that are acceptable to us;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production;

(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

(v) Any appraised production on insured acreage will be

considered production to count unless such production is exceeded by

the actual harvested production.

(2) All harvested production from the insurable acreage.

(3) Mature marketable peach production may be reduced as a

result of a loss in quality due to an insured cause of loss. The

amount of production to count for such peaches will be determined as

follows:

(i) Peaches grown for fresh use by:

(A) Dividing the value per \3/4\ bushel carton of the damaged

peaches by the actual price per bushel for undamaged peaches; and

(B) Multiplying the result of section 11(c)(3)(i)(A) by the

number of bushels of the eligible damaged peaches.

(ii) Peaches grown for processing by:

(A) Dividing the value per bushel of the damaged peaches by the

average price per bushel of undamaged peaches for processing; and

(B) Multiplying the result of section 11(c)(3)(ii)(A) by the

number of bushels of the eligible damaged peaches.

(4) Peaches that cannot be marketed due to insurable causes will

not be considered production to count.

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.

Signed in Washington, DC, on November 13, 1996.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 96-29559 Filed 11-18-96; 8:45 am]

BILLING CODE 3410-FA-P