General Crop Insurance Regulations and Almond Endorsement; and Common Crop Insurance Regulations, Almond Crop Insurance Provisions

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457

General Crop Insurance Regulations and Almond Endorsement; and

Common Crop Insurance Regulations, Almond Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes

specific crop provisions for the insurance of almonds. 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

almond endorsement with the Common Crop Insurance Policy for ease of

use and consistency of terms, and to restrict the effect of the current

almond endorsement to the 1997 and prior crop years.

EFFECTIVE DATE: June 9, 1997.

FOR FURTHER INFORMATION CONTACT: Arden Routh, 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

The Office of Management and Budget (OMB) has determined this rule

to be exempt for the purposes of Executive Order No. 12866, and,

therefore, has not been reviewed by OMB.

Paperwork Reduction Act of 1995

Following publication of the proposed rule, the public was afforded

60 days to submit written comments and opinions on information

collection requirements previously approved by OMB under OMB control

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

received.

Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.

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

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

governments and the private sector. 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 an 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 year's

production if adequate records are available to support the

certification. The producer must maintain the production records to

support the certified information for at least three 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 3015, subpart V,

published at 48 FR 29115, June 24, 1983.

Executive Order No. 12988

This final rule has been reviewed in accordance with Executive

Order 12988. 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 part 11 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

On Friday August 9, 1996, FCIC published a proposed rule in the

Federal Register at 61 FR 41531-41535 to add to the Common Crop

Insurance Regulations (7 CFR part 457) a new section, 7 CFR 457.123,

Almond Crop Insurance Provisions. The new

[[Page 25108]]

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

These provisions will replace and supersede the current provisions for

insuring almonds found at 7 CFR 401.110 (Almond Endorsement). FCIC also

amends 7 CFR 401.110 to limit its effect to the 1997 and prior crop

years.

Following publication of that proposed rule, the public was

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

total of 2 comments were received from the crop insurance industry and

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

Comment: One comment received from the crop insurance industry

agreed with the definition of ``Insurable rejects'' and ``Rejects,''

but did not find these terms being used in the provisions except in the

definitions. The commenter believes that insurable rejects should not

be included in production to count when finalizing a claim. The

commenter recommended adding the following sentence to section 11(c)(2)

``Harvested almonds which cannot be marketed due to an insurable cause

(insurable rejects), as determined by us, will not be considered

production to count.''

Response: FCIC has amended this provision so that only harvested

production which was accepted by a buyer is included as production to

count, provided that production not accepted by the buyer has been

rejected because it is damaged by an insurable cause of loss. This

change will allow rejects to be included as production to count when

the rejects are included in the weight for which the producer receives

payment; however, will not include rejects as production to count when

payment is not received for them.

Comment: One comment received from the insurance industry

recommended that the requirement for a written agreement to be renewed

each year be removed. If no substantive changes occur from one year to

the next, the written agreement should be allowed to be effective.

Response: Written agreements are intended to permit insurance

coverage to be available in unusual or previously unknown situations.

If the situation exists from year to year, it should be incorporated

into the crop provisions or Special Provisions. It is important to

minimize exceptions to the policy to ensure that the insured is well

aware of the specific terms of the policy.

FCIC has made the following changes to the Almond Provisions:

1. Section 2(c)--Clarified provisions regarding premium refunds

when optional units are combined into a basic unit.

2. Section 2(e)(1)--Clarified that records must be provided by the

production reporting date as one of the requirements for optional

units.

3. Section 8(a)(1)--Clarified the date on which coverage begins for

the year the application is first signed.

4. Section 8(b)--Added a provision to clarify that acreage acquired

after the acreage reporting date is not insurable. Also, added a

provision to clarify that a person to whom coverage is transferred must

be eligible for insurance.

5. Section 9--Added insects, disease and wildlife as insurable

causes of loss, unless damage is due to insufficient or improper

application of control measures to be consistent with other perennial

crops. Clarified that failure of the irrigation water supply is a

covered loss only if caused by a peril for which insurance is provided.

List of Subjects in 7 CFR Parts 401 and 457

Almond, Almond endorsement, Crop insurance.

Final Rule

Accordingly, for the reasons set forth in the preamble, the Federal

Crop Insurance Corporation hereby amends 7 CFR parts 401 and 457 as

follows:

PART 401--GENERAL CROP INSURANCE REGULATIONS--REGULATIONS FOR THE

1988 AND SUBSEQUENT CONTRACT YEARS

1. The authority citation for 7 CFR part 401 continues to read as

follows:

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

2. Section 401.110 introductory paragraph is amended to read as

follows:

Sec. 401.110 Almond endorsement.

The provisions of the Almond Crop Insurance Endorsement for the

1988 through the 1997 crop years are as follows:

* * * * *

PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE

1994 AND SUBSEQUENT CONTRACT YEARS

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

follows:

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

4. Section 457.123 is added to read as follows:

Sec. 457.123 Almond crop insurance provisions.

The Almond Crop Insurance Provisions for the 1998 and succeeding

crop years are as follows:

FCIC policies:

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

Reinsured policies:

(Appropriate title for insurance provider)

Both FCIC and reinsured policies:

Almond 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.

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 are those recognized by the Cooperative State

Research, Education, and Extension Service as compatible with

agronomic and weather conditions in the county.

Harvest. The removal of mature almonds from the orchard.

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.

Meat pounds. The total pounds of almond meats (whole, chipped

and broken, and in-shell meats) and rejects. Unshelled almonds will

be converted to meat pounds in accordance with FCIC approved

procedures.

Non-contiguous land. Any two or more tracks 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 almonds (total

meat pounds per acre) determined by multiplying the approved actual

production history (APH) yield per acre by the coverage level

percentage you elect.

Set out. Transplanting the tree into the orchard.

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 unit) may be divided into optional units if, for each

optional unit, you meet all the conditions of this section.

[[Page 25109]]

(b) Basic units may not be divided into optional units on any

basis 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 additional

premium paid for the optional units that have been combined will be

refunded to you.

(d) All optional units you selected for the 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 provided records by the production reporting

date, which can be independently verified, of acreage and production

for each optional unit for at least the last crop year used to

determine your production guarantee;

(2) You must have records of marketed production or measurement

of stored production from each optional unit maintained in such a

manner that permits us to verify the production from each optional

unit, or the production from each unit must be kept separate until

loss adjustment is completed by us; and

(3) Each optional unit must be located on non-contiguous land

unless otherwise provided by a written agreement.

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 almonds

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 almond 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

of the maximum price election for one type, you must also choose 100

percent 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 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 patterns;

(4) For the first year of insurance for acreage interplanted

with another perennial crop, and anytime the planting pattern of

such acreage is changed, the age of the crop that is interplanted

with the almonds, and type if applicable, and the planting pattern;

and

(5) 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 and any other circumstance on the yield

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

circumstance that may reduce your yields from previous levels, we

will reduce your production guarantee as necessary at any time we

become aware of the circumstance.

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 December 31.

6. Insured Crop

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

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

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

Table:

(a) In which you have a share unless allowed otherwise by

section 8(b);

(b) That are grown for harvest as almonds;

(c) That are irrigated;

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

considered acceptable to us; and

(e) On acreage where at least 90 percent of the trees have

reached at least the seventh growing season after set out, unless we

agree in writing to insure trees not meeting this requirement.

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, almonds 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 January 1 of each crop year, except that

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

December 21, but prior to January 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.

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

each crop year is November 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. Acreage acquired after the acreage reporting date will not

be insured.

(2) If you relinquish your insurable share on any insurable

acreage of almonds 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 during the

insurance period:

(1) Adverse weather conditions;

(2) Fire, unless weeds and undergrowth have not been controlled

or pruning debris has not been removed from the orchard;

(3) Insects, but not damage due to insufficient or improper

application of pest control measures;

(4) Plant disease, but not damage due to insufficient or

improper application of disease control measures;

(5) Earthquake;

(6) Volcanic eruption;

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

insured peril that occurs during the insurance period; or

(8) Wildlife, unless control measures have not been taken.

(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 the inability to

market the almonds for any reason other than actual physical damage

to the almonds 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), if

you intend to claim an indemnity on any unit, you must notify us

prior to the beginning of harvest 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, all such production will be

considered undamaged and included as production to count.

[[Page 25110]]

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:

(l) For any optional units, we will combine all optional units

for which such production records were not provided; or

(2) For any basic units, we will allocate any commingled

production to such units in proportion to our liability on the

harvested acreage for the units.

(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 11(b)(1) by the

respective price election for the type;

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

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

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

election;

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

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

in section 11(b)(3); and

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

(c) The total production to count, specified in meat pounds,

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 acceptable production records;

(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 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 meat pounds which has been accepted by a buyer

and all harvested meat pounds rejected by a buyer unless the meat

pounds are rejected due to an insured cause of loss.

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 May 2, 1997.

Suzette M. Dittrich,

Deputy Manager, Federal Crop Insurance Corporation.

[FR Doc. 97-11959 Filed 5-7-97; 8:45 am]

BILLING CODE 3410-FA-P