General Crop Insurance Regulations, Canning and Processing Tomato Endorsement; and Common Crop Insurance Regulations, Processing Tomato Provisions

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457

General Crop Insurance Regulations, Canning and Processing Tomato

Endorsement; and Common Crop Insurance Regulations, Processing Tomato

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 processing tomatoes. 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 canning and processing tomato endorsement with the Common Crop

Insurance Policy for ease of use and consistency of terms, and to

restrict the effect of the current canning and processing tomato

endorsement to the 1997 and prior crop years.

EFFECTIVE DATE: November 19, 1997.

FOR FURTHER INFORMATION CONTACT: Richard Brayton, Insurance Management

Specialist, Research and Development, Product Development Division,

Federal Crop Insurance Corporation, United States Department of

Agriculture, 9435 Holmes Road, Kansas City, MO 6413, 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 12866, and therefore,

this rule 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 currently being reviewed by OMB pursuant to the

Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) under OMB

control number 0563-0053. No public comments were received.

Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates 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. Therefore,

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 economic impact on a

substantial number of small entities. The amount of work required of

insurance companies will not increase because the information used to

determine eligibility is already maintained at their office and the

other information required is already being gathered as a result of the

present policy. No additional actions are required as a result of this

action on the part of either the producer or the reinsured company.

Additionally, the regulation does not require any action on the part of

the small entities than is required on the part of large entities.

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. 12988

This final rule has been reviewed in accordance with Executive

Order 12988 on civil justice reform. 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 Monday, June 23, 1997, FCIC published a proposed rule in the

Federal Register at 62 FR 33763-33768 to add to the Common Crop

Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.160,

Processing Tomato 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 canning and

processing tomatoes found at 7 CFR part 401 (Canning and Processing

Tomato Endorsement). FCIC

[[Page 54340]]

also amends 7 CFR 401.114 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 and opinions. A total of 62

comments were received from an insurance service organization,

reinsured companies, agents, a California Tomato Growers Association,

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

follows:

Comment: An insurance service organization recommended that a

number of definitions common to most crops be removed from the crop

provisions and placed into the Basic Provisions.

Response: FCIC agrees and is currently in the regulatory review

process that will move commonly used definitions from the crop

provisions to the Basic Provisions and this rule will be revised to

delete the definitions when the Basic Provisions are published as a

final rule.

Comment: A reinsured company and a crop insurance agent recommended

changing the sales closing date in California from January 15 to

February 28. The commenter indicated that the sales closing date of

January 15 causes inefficiency because it differs from the February 28

sales closing date for most other spring crops.

Response: The Federal Crop Insurance Reform Act of 1994 required

the sales closing date to be moved from February 15 to January 15. This

date cannot be extended without appropriate legislative changes.

Therefore, no change has been made.

Comment: An insurance service organization recommended changing the

definition of ``bypassed acreage'' to read as follows: ``Land on which

production is ready for harvest but is left unharvested in favor of

harvesting other fields.''

Response: The definition of bypassed acreage has been revised to

clarify that land on which production is ready for harvest but the

processor elects not to accept such production so it is not harvested.

Comment: An insurance service organization expressed concern with

the definition of ``good farming practice,'' which makes reference to

cultural practices generally in use in the county and that are

recognized by the Cooperative State Research, Education, and Extension

Service (CSREES) as compatible with agronomic and weather conditions in

the county. The comment questioned whether cultural practices exist

that are not necessarily recognized (or possible known) by the CSREES.

The comment suggested changing the term ``county'' to ``area.''

Response: FCIC believes that the CSREES recognizes farming

practices that are considered acceptable for producing processing

tomatoes. If a producer is following practices not recognized as

acceptable by the CSREES, such recognition can be sought by interested

parties. Although cultural practices recognized by the CSREES may only

pertain to specific areas within a county, the actuarial documents are

on a county basis. No change has been made.

Comment: An insurance service organization recommended changing the

definition of ``planted acreage'' so that either initially or replanted

acreage must be planted in rows to be considered planted.

Response: FCIC agrees and has amended the definition as suggested.

The definition of replanting has also been changed accordingly.

Comment: An insurance service organization recommended that the

definition of ``replanting'' be clarified by inserting ``processing

tomato'' between the last two words (``successful'' and ``crop'') in

the sentence.

Response: To be consistent with language contained in the proposed

rule of the Basic Provisions, FCIC has revised the definition to

clarify that ``replanting'' is performing the cultural practices

necessary to prepare the land to replace the seed or plants of the

damaged or destroyed crop and then replacing the seed or plants in the

insured acreage.

Comment: An insurance service organization recommended that the

definition of ``timely planted'' be clarified by inserting the word

``initially'' at the beginning of the definition.

Response: To be consistent with language contained in the proposed

rule of the Basic Provisions, FCIC believes the definition is clearly

stated. Therefore, no change has been made.

Comment: An insurance service organization, a reinsured company,

insurance agents, a tomato growers association, and a tomato grower

disagreed with the provisions that remove ``units by share'' in

California (section 2(a.). The comments indicated that: (1) Unit

division by share is no more difficult to administer for tomatoes than

it is for other crops in California; (2) The change will give producers

a greater incentive to purchase CAT than buy-up, since the CAT

Endorsement allows basic units by share; and (3) Inequitable loss

payments between tenants and landlords would result.

Response: FCIC agrees that optional units based on share should be

provided. Section 2(a) has been deleted and the remaining sections have

been redesignated accordingly. The language in 8(b) is intended to

cover a producer who has a crop share agreement, who rents, or who owns

acreage. This should be separate from the unit issue.

Comment: An insurance service organization, reinsured companies, a

grower association, insurance agents, and tomato producers stated that

section 2(b) eliminates optional units for nearly all California

producers since most contracts are written for a specific amount of

production. Removal of this benefit will have a detrimental impact on

producers who had optional units in the past. For example: A producer

with 6,000 contracted tons, 200 acres of land, an approved yield of 30

tons per acre, and a production guarantee of 22.5 tons per acre,

receives no benefit if only one unit is allowed and 4,500 tons of

tomatoes are produced. However, if two 100 acre units are allowed, the

first unit produces 3,000 tons and the second unit produces 1,500 tons

(4,500 total tons), an indemnity based on 750 tons would be allowed on

the second unit.

Response: FCIC agrees that optional units should remain available

in California and has amended section 2(b) (redesignated 2(a))

accordingly. Premium rates also will reflect adoption of this change.

Comment: An insurance service organization and reinsured companies

indicated that the ``earlier of'' * * * aspect of section 3(b)

eliminates the need for item (1). Item (2), the acreage reporting date,

will always be earlier than item (1) (August 20). One comment

questioned why the provision allows until August 20 to obtain signed

contracts in all but a few counties in California.

Response: Section 3(b) was not intended to indicate the earlier of

item (1) or (2). It was intended to indicate the earlier of August 20

or the date of damage only in those counties with a July 15 acreage

reporting date, and the earlier of the acreage reporting date or the

date of damage in all other counties. In years of high production, it

is common for contracts in northern California counties to be signed as

late as August 20. The provision was designed to accommodate this

practice and permit insurance to continue for all contracted tonnage.

The provision has been clarified accordingly.

Comment: Five comments from reinsured companies asked why section

3(c) was changed to reduce the price election rather than the

production guarantee.

[[Page 54341]]

Response: The Federal Crop Insurance Act authorizes FCIC to reduce

the payment to producers who elect catastrophic coverage for acreage

that is not harvested or for any other costs that are not incurred if

the crop is lost prior to harvest. The change is in compliance with

this provision of law.

Comment: An insurance service organization and a reinsured company

stated that provisions in section 6 that require the producer to

provide a copy of the processor contract no later than the acreage

reporting date: (1) Could allow producers to wait until the acreage

reporting date to decide if they want coverage; and (2) will be nearly

impossible to implement since processor contracts will not be finalized

by the dates specified in section 3.

Response: Virtually all processor contracts should be completed

within the time frame provided for in the policy. Production covered by

contracts completed after these time frames will not be insured.

Therefore, no change has been made.

Comment: A reinsured company questioned why the price election for

unharvested acreage is used in the premium calculations in section 7.

Response: The provision should have referred to the price election

for the third (final) stage. The provision has been revised

accordingly.

Comment: An insurance service organization and a reinsured company

stated that section 8(b) is confusing and seems to indicate that the

landlord does not have a share unless the landlord's name is written on

the tomato contract. Another reinsured company interpreted the

provision to mean that a tenant cannot have a share since that person

does not retain possession of the acreage.

Response: The language in 8(b) is intended to cover a producer who

has a crop share arrangement, who rents, or who owns acreage. The

provision has been clarified by indicating that control of the acreage

is retained rather than possession.

Comment: An insurance service organization stated that section

8(a)(4) would allow coverage by written agreement or Special Provisions

on tomatoes following tomatoes in either of the two previous years,

interplanted with another crop or planted into an established grass or

legume and asked if these practices would ever be allowed by the

processor contract. The comment indicated that consideration should be

given to inserting some of this language into the Basic Provisions

since it is duplicated in most Crop Provisions.

Response: Some processor contracts may not stipulate rotation or

planting practices. Therefore, the provisions have been retained to

limit insurance when a crop is interplanted, planted into a grass or

legume, or is planted in an unusual rotation. These provisions vary

among Crop Provisions and therefore, should not be moved to the Basic

Provisions. Therefore, no change has been made.

Comment: An insurance service organization and a reinsured company

questioned whether the provisions in sections 10(a) and (b) that end

the insurance period on the date sufficient production is harvested to

fulfill the producers processor contract: (a) Eliminate unit division

benefits or (b) conflict with the provision in section 12(a) that

states ``We will determine your loss on a unit basis.'' The commenters

questioned whether production to count from an appraisal prior to

harvest would be included when determining fulfillment of the processor

contract. The insurance service organization questioned whether the

insured would know when enough production is harvested to fulfill the

processor contract. This commenter asked if production exceeding the

contracted amount is considered production to count for APH or loss

adjustment or whether the processor settlement sheet is the only

acceptable record. One commenter also questioned whether ``delivered

to'' is the same as ``acceptable by'' the processor.

Response: Sections 10(a) and (b) do not eliminate unit division

provisions or conflict with section 14(a). All indemnities will be paid

on a unit basis. Once acreage is harvested and the processor contract

is fulfilled, the insurance period ends. If there is unharvested

production and the processor contract has not been fulfilled, due to an

insured cause of loss is still covered. Appraised acreage will not be

used to determine whether the contract has been fulfilled and the

insurance period ends, although it will be used to determine production

to count and in determining the producer's APH. When determining

production to count, only the harvested production shown on the

settlement sheet or rejected as a result of uninsured cause of loss

will be used. FCIC has revised section 10(a) to clarify that insurance

ceases ``the date you harvest sufficient production to fulfill your

processor contract if your processor contract stipulates a specific

amount of production to be delivered.'' The contract is not fulfilled

if the production is not accepted by the processor. However, rejected

production maybe considered as production to count unless damaged by an

insurable cause of loss occurring during the insurance period. Further,

records are maintained as production is delivered to the processor.

Therefore, the insured should know when the contract is fulfilled.

Comment: An insurance service organization questioned the summary

of changes to the proposed rule in section 13(a)(2). The commenter

stated the summary of changes says ``the producer must give notice on

or before the date the tomatoes should be harvested if any acreage on a

unit will not be harvested,'' but the provision states the producer

must give notice ``not later than 48 hours after: (1) Total destruction

of the tomatoes in the unit; or (2) Discontinuance of harvest on a unit

on which production remains.

Response: FCIC agrees that the summary was in error and the

provisions as proposed are correct.

Comment: An insurance service organization questioned the

notification requirement in section 13(b), which states that the

insured must notify the insurance provider ``within 3 days of the date

harvest should have started on any acreage that will not be

harvested...'' The commenter stated there is a difference between

notice ``within 3 days'' as the policy provision indicates and ``on or

before'' as item 21 of the summary of changes indicates. The commenter

also asked how the date tomatoes should have been harvested will be

determined.

Response: The summary of changes was not correct. It should have

indicated ``within 3 days after the date harvest should have

started....'' The insured is best able to assess the date tomatoes

should be harvested based on the maturity of the crop. Therefore, no

change has been made.

Comment: An insurance service organization stated that the language

in 13(c) does not address timely notice if damage is discovered less

than 15 days prior to harvest.

Response: The notice requirement in section 13 are in addition to

the requirements in section 14 of the Basic Provisions that require

notice of loss within 72 hours of initial discovery of damage. Notice

within this time period would be required if damage is discovered less

than 15 days before harvest. If damage is discovered during harvest,

notice must be given immediately. FCIC believes that these provisions,

as a whole, are adequate. Therefore, no change has been made.

Comment: An insurance service organization stated that section

14(c)(1)(iii) should not allow the insured to defer settlement and wait

for a later, generally lower appraisal, especially on crops that have a

short ``shelf life.''

[[Page 54342]]

Response: A later appraisal will only be necessary if the insurance

provider agrees that such an appraisal would result in a more accurate

determination and if the producer continues to care for the crop. If

the producer does not continue to care for the crop, the original

appraisal will be used. Therefore, no change has been made.

Comment: A reinsured company recommended removal of the requirement

to renew written agreements each year if there are no significant

changes to the farming operation.

Response: Written agreements are intended to supplement policy

terms or permit insurance in unusual situations that require

modification of the otherwise standard insurance provisions. If such

practices continue from year to year, they should be incorporated into

the policy or Special Provisions. It is important to minimize written

agreement exceptions to assure that the insured is well aware of the

specific terms of the policy. FCIC has proposed that the written

agreement provision be included in the Basic Provisions. Therefore, no

change has been made.

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

editorial changes and has amended the following Processing Tomato

Provisions:

1. The paragraph preceding section 1 is amended to include the

Catastrophic Risk Protection Endorsement.

2. Section 1--Added a definition of ``approved yield''. The

definitions of ``bypassed acreage,'' ``planted acreage'' ``practical to

replant'' ``production guarantee (per acre)'' and ``replanting'' have

been revised for clarification.

3. Removed the reference to ``written agreement'' in section 2(a)

of the proposed rule and added it to section 2(e)(4) of the final rule

to clarify which provisions may be revised by written agreement.

4. Section 2(a)--Added provisions to clarify that no indemnity will

be paid for any loss of production on any unit if the insured produced

a crop sufficient to fulfill the processor contracts forming the basis

for the guarantee, and any indemnity will be limited to the amount

necessary to compensate for loss in yield at the price elected between

production to count and the contract requirements.

5. Section 3(b)--Has been revised for clarification.

6. Section 3(e)--Added provisions to clarify when appraised

production on bypassed acreage not bypassed due to an insurable cause

of loss will be used when determining the producer's approved yield.

7. Section 3(f)--Added provisions to clarify when acreage is

bypassed because it was damage by an insurable cause of loss to the

extent that the processor cannot use the product will be considered to

have a zero yield when determining your approved yield.

8. Section 6--Clarify a producer must provide a copy of all

processor contracts to us on or before the acreage reporting date in

all counties, unless otherwise specified in the Special Provisions.

9. Sections 8(b), (c)(1), (2), and (3)--Have been revised for

clarification.

10. Section 10(a)--Revised to conform this provision with other

processing crop provisions, which specify that once the processor

contract has been fulfilled, the insurance period will end if the

processor contract stipulates a specific amount of production.

11. Section 10(b)--Clarify that the insurance period will end when

the crop should have been harvested.

12. Section 11(a)(5)--Clarified the wildlife cause of loss by

deleting the language ``unless proper measures to control wildlife have

not been taken'' to be consistent with other crop provisions.

13. Section 11(a)(ii)--Has been revised for clarification.

14. Section 11(a)(9)--Deleted this provision because it is

unnecessary since other listed causes of loss are what results in

physical damage.

15. Section 11(b)(4)--Deleted this provision since such damage

would occur outside the insurance period specified in section 10.

16. Section 13(b)--Clarified that the insured must give notice of

loss within 3 days after the date harvest should have started is the

acreage will not be harvested. The insured must also provide

documentation stating why the acreage was bypassed.

17. Section 14(b)(1) thru (7)--Revised and added an example of

settlement of claim.

18. Section 14(c)(E)--Deleted this provision as proposed.

19. Section 14(c)(iii)--Added provisions to clarify production on

acreage that is bypassed unless the acreage was bypassed due to an

insured cause of loss which resulted in production which would not be

acceptable under the terms of the processor contract. 14(c)(iii) as

proposed has been redesignated as 14(c)(iv).

20. Section 14(d)--Clarified that once harvest has begun on acreage

covered by a processor contract that specifies the number of tons to be

delivered, the total indemnity payable will be limited to an amount

based on the lesser of the guaranteed tons, or the tons remaining

unfulfilled under the processor contract.

21. Section 15--Added statement that late and prevented planting is

not applicable to processing tomatoes.

22. Section 16--Written agreements had been redesignated. Clarify

when provisions of the policy may be altered by written agreement.

List of Subjects in CFR Parts 401 and 457

Crop insurance, Canning and processing tomato endorsement,

Processing tomato.

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

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

follows:

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

2. Section 401.114 introductory text is revised to read as follows:

Sec. 401.114 Canning and processing tomato endorsement.

The provisions of the Canning and Processing Tomato 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(l), 1506(p).

4. Section 457.160 is added to read as follows:

Sec. 457.160 Processing tomato crop insurance provisions.

The Processing Tomato Crop Insurance Provisions for the 1998 and

succeeding crop years are as follows:

FCIC policies:

UNITED STATES DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

Reinsured policies:

(Appropriate title for insurance provider)

Both FCIC and reinsured polices:

Processing Tomato Crop Provisions

If a conflict exists among the policy provisions the order of

priority is as follows: (1) the Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special Provisions; (3) these

Crop Provisions; and (4) the Basic Provisions (Sec. 457.8) with (1)

controlling (2) etc.

[[Page 54343]]

1. Definitions

Acre. 43,560 square feet of land on which row widths do not

exceed 6 feet, or the land on which at least 7,260 linear feet rows

are planted if row widths exceed 6 feet.

Approved yield. The yield determined in accordance with 7 CFR

part 400, subpart (g).

Bypassed acreage. Land on which production is ready for harvest

but the processor elects not to accept such production so it is not

harvested.

Days. Calendar days.

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

Department of Agriculture, or a successor agency.

Final planting date. The date contained in the Special

Provisions for the insured crop by which the crop must initially be

planted in order to be insured for the full production guarantee.

First fruit set. The reproductive stage of the plant at which 30

percent of the plants have produced a fruit that has reached a

minimum of one inch in diameter.

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 required by the tomato processor contract

with the processing company, 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 severance of tomatoes from the vines.

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

a manner that does not permit separate agronomic maintenance or

harvest of the insured crop.

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.

Plant stand. The number of plants per acre considered to be

normal for the applicable tomato variety and growing area.

Planted acreage. Land in which seed or plants have been placed

by a machine appropriate for the insured crop and planting method,

at the correct depth, into a seedbed that has been properly prepared

for the planting method and production practice. Tomatoes must

initially be placed in rows to be considered planted. Acreage

planted in any other manner will not be insurable unless otherwise

provided by the Special Provisions or by written agreement.

Practical to replant. In lieu of the definition of ``Practical

to replant'' contained in section 1 of the Basic Provisions,

practical to replant is defined as our determination, after loss or

damage to the insured crop, based on factors, including but not

limited to moisture availability, marketing window, condition of the

field, and time to crop maturity, that replanting the insured crop

will allow the crop to attain maturity prior to the calendar date

for the end of the insurance period. It will not be considered

practical to replant unless the replanted acreage can produce at

least 75% of the approved yield, and the processor agrees in writing

that it will accept the production from the replanted acreage.

Processor. Any business enterprise regularly engaged in

processing tomatoes for human consumption, that possesses all

licenses and permits for processing tomatoes required by the state

in which it operates, and that possesses facilities, or has

contractual access to such facilities, with enough equipment to

accept and process contracted processing tomatoes within a

reasonable amount of time after harvest.

Processor contract. A written agreement between the producer and

a processor, containing at a minimum:

(a) The producer's commitment to plant and grow processing

tomatoes, and to deliver the tomato production to the processor;

(b) The processor's commitment to purchase all the production

stated in the processor contract; and

(c) A price per ton that will be paid for the production.

Production guarantee (per acre). The number of tons determined

by multiplying the approved yield per acre by the coverage level

percentage you elect.

Replanting. Performing the cultural practices necessary to

prepare the land to replace the seed or plants of the damaged or

destroyed crop and then replacing the seed or plants in the insured

acreage.

Timely planted. Planted on or before the final planting date

designated in the Special Provisions for the insured crop in the

county.

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

USDA. United States Department of Agriculture.

Written agreement. A written document that alters designated

terms of this policy in accordance with section 16.

2. Unit Division

(a) Unless limited by the Special Provisions, a basic unit, as

defined in section in section 1 of the Basic Provisions, may be

divided into optional units if, for each optional unit, you meet all

the conditions of this section. Notwithstanding the provisions of

this section on unit division, no indemnity will be paid for any

loss of production on any unit if the insured produced a crop

sufficient to fulfill the processor contracts forming the basis for

the guarantee, and any indemnity will be limited to the amount

necessary to compensate for loss in yield at the price elected

between production to count and the contract requirements.

(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 planted acreage and

production for each optional unit for at least the last crop year

used to determine your production guarantee;

(2) You must plant the crop in a manner that results in a clear

and discernable break in the planting pattern at the boundaries of

each optional unit;

(3) For each crop year, records of marketed production or

measurement of stored production from each optional unit must be

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

(4) Each optional unit must meet one or more of the following

criteria, as applicable, unless otherwise specified by written

agreement:

(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, such as Spanish grants, as

the equivalent of their sections for unit purposes. In areas that

have not been surveyed using sections are equivalent systems, 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 and non-

irrigated acreage (in those counties where ``non-irrigated''

practice is allowed in the actuarial table) if both are located in

the same section, section equivalent, or FSA Farm Serial Number. To

qualify as separate irrigated and non-irrigated optional units, the

non-irrigated acreage may not continue into the irrigated acreage in

the same rows or planting pattern. The irrigated acreage may not

extend beyond the point at which the irrigation system can deliver

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

guarantee is based, except the corners of a field in which a center-

pivot irrigation system is used will be considered as irrigated

acreage if separate acceptable records of production from the

corners are not provided. If the corners of a field in which a

center-pivot irrigation system is used do not qualify as a separate

non-irrigated optional unit, they will be a part of the unit

containing the irrigated acreage. Non-irrigated acreage that is not

a part of a field in which a center-pivot irrigation system is used

may qualify as a separate optional unit provided that all other

requirements of this section are met.

[[Page 54344]]

(iii) Optional Units on Separate Acreage Planted to Tomatoes: In

California only, in addition to or instead of establishing optional

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

optional units may be established if acreage planted to tomatoes is

separated by a field that is not planted to tomatoes, or by a

permanent boundary such as a permanent waterway, fence, public road

or woodland. Such optional unit must consist of the minimum number

of acres stated in the Special Provisions. Acreage planted to

tomatoes that is less than the minimum number of acres required will

attach to the closest unit within the section, section equivalent or

FSA Farm Serial Number.

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

Indemnities

In addition to the requirements of section 3 of the Basic

Provisions:

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

processing tomatoes in the county insured under this policy unless

the Special Provisions provide different price elections by type.

The percentage of the maximum price election you choose for one type

will be applicable to all other types insured under this policy. 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) Liability under this policy will not exceed the number of

tons required to be accepted by the processor under a processor

contract in effect on or before:

(1) The earlier of August 20 or the date of damage to the

insured crop in all counties with an acreage reporting date of July

15; or

(2) The earlier of the acreage reporting date or the date of

damage in all other counties. (Exclude indemnities that occur in

stage one and replant payments.)

(c) The price election used to determine the amount of an

indemnity is progressive by stage and increases, at specified

intervals, to the price used for final stage losses. Stages will be

determined on an acre basis. The stages and applicable price

elections are:

(1) First stage is from planting until first fruit set. If any

acreage of the insured crop is destroyed in this stage, the price

used to establish the amount of any indemnity owed for such acreage

will be 50 percent of your price election;

(2) Second stage is from the first fruit set until harvest. If

any acreage of the insured crop is destroyed in this stage, the

price used to establish the amount of any indemnity owed for such

acreage will be 80 percent of your price election; and

(3) Third stage (final stage) is harvested acreage. The price

election used in this stage to establish the amount of any indemnity

owed will be 100 percent of your price election.

(d) Any acreage of tomatoes damaged to the extent, that the

majority of producers in the area would not normally further care

for the tomatoes, will be deemed to have been destroyed even though

you may continue to care for it. The price election used to

determine the amount of an indemnity will be that applicable to the

stage in which the tomatoes were destroyed.

(e) The appraised production from bypassed acreage that could

have been accepted by the processor will be included when

determining your approved yield.

(f) Acreage that is bypassed because it was damaged by an

insurable cause of loss to the extent that the processor cannot use

the product will be considered to have a zero yield when determining

your approved yield.

4. Contract Changes

In accordance with section 4 of the Basic Provisions, the

contract change date is August 31 preceding the cancellation date

for California and November 30 preceding the cancellation date for

all other states.

5. Cancellation and Termination Dates

In accordance with section 2 of the Basic Provisions, the

cancellation and termination dates are January 15 in California and

March 15 in all other states.

6. Report of Acreage

In addition to the provisions of section 6 of the Basic

Provisions, you must provide a copy of all processor contracts to us

on or before the acreage reporting date in all counties, unless

otherwise specified in the Special Provisions.

7. Annual Premium

In lieu of the premium amount determinations contained in

section 7 of the Basic Provisions, the annual premium amount per

acre is determined by multiplying the production guarantee per acre

by the price election for the third (final) stage; by the premium

rate; by the insured acreage; by the applicable share at the time of

planting; and ultimately by any applicable premium adjustment

factors contained in the Actuarial Table.

8. Insured Crop

(a) In accordance with section 8 of the Basic Provisions, the

crop insured will be all the tomatoes in the county for which a

premium rate is provided by the actuarial table:

(1) In which you have a share;

(2) That are planted for harvest as processing tomatoes;

(3) That are grown under, and in accordance with, the

requirements of a processor contract executed on or before August 20

in all counties with an acreage reporting date of July 15, or on or

before the acreage reporting date in all other counties, and are not

excluded from the processor contract for or during the crop year;

and

(4) That are not (unless allowed by the Special Provisions or by

written agreement):

(i) Grown on acreage on which tomatoes were grown in either of

the two previous years, except in California;

(ii) Interplanted with another crop; or

(iii) Planted into an established grass or legume.

(b) You will be considered to have a share in the insured crop

if, under the processor contract, you retain control of the acreage

on which the tomatoes are grown, you are at risk of loss, and the

processor contract provides for delivery of processing tomatoes

under specified conditions and at a stipulated price.

(c) A tomato producer who is also a processor may establish an

insurable interest if the following requirements are met:

(1) The processor must comply with these Crop Provisions;

(2) Prior to the sales closing date, the Board of Directors or

officers of the processor must execute and adopt a resolution that

contains the same terms as an acceptable processor contract. Such

resolution will be considered a contract under this policy; and

(3) Our inspection provides that the processing facilities

comply with the definition of a processor contained in these Crop

Provisions.

9. Insurable Acreage

In addition to the provisions of section 9 of the Basic

Provisions:

(a) Any acreage of the insured crop that is damaged before the

final planting date, to the extent that the majority of producers in

the area would normally not further care for the crop, must be

replanted unless we agree that it is not practical to replant; and

(b) We will not insure any acreage that does not meet the

rotation requirements, if applicable, contained in the Special

Provisions.

10. Insurance Period

In lieu of the provisions contained in section 11 of the Basic

Provisions, regarding the end of the insurance period, insurance

ceases at the earlier of the date:

(a) You harvest sufficient production to fulfill your processor

contract if the processor contract stipulates a specific amount of

production to be delivered;

(b) The tomatoes should have been harvested but was not

harvested;

(c) The tomatoes were abandoned;

(d) Harvest was completed;

(e) Final adjustment of a loss was completed; or

(f) The following calendar date for the end of the insurance

period

(1) October 20 in California; and

(2) October 10 in all other states.

11. Causes of Loss

In accordance with the provisions of section 12 of the Basic

Provisions:

(a) Insurance is provided only against the following causes of

loss that occur during the insurance period:

(1) Adverse weather conditions, including:

(i) Excessive moisture that prevents the harvesting equipment

from entering the field or that prevents the timely operation of

harvesting equipment; and

(ii) Abnormally hot or cold temperatures that cause an

unexpected number of acres over a large producing area to be ready

for harvest at the same time, affecting the timely harvest of a

large number of such acres or the processing of such production

being beyond the capacity of the processor, either of which causes

the acreage to be bypassed;

(2) Fire;

(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) Wildlife;

(6) Earthquake;

(7) Volcanic eruption; or

(8) Failure of the irrigation water supply, if due to a cause of

loss contained in sections

[[Page 54345]]

11(a)(1) through (7) that occurs during the insurance period.

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

the Basic Provisions, we will not insure against any loss of

production due to:

(1) Acreage being bypassed, if the acreage is bypassed because:

(i) The breakdown or non-operation of equipment or facilities;

or

(ii) The availability of a crop insurance payment. We may deny

any indemnity immediately in such circumstance or, if an indemnity

has been paid, require you to repay it to us with interest at any

time acreage was bypassed due to the availability of a crop

insurance payment;

(2) The processing tomatoes not being timely harvested, unless

such delay in harvesting is solely and directly due to an insured

cause of loss; or

(3) Your failure to follow the requirements contained in the

processor contract.

12. Replanting Payment

(a) In accordance with section 13 of the Basic Provisions, a

replanting payment is allowed if the crop sustained a loss exceeding

50 percent of the plant stand and it is practical to replant.

(b) The maximum amount of the replanting payment per acre will

be the lesser of 20 percent of the production guarantee or three

tons, multiplied by your third stage (final) price election,

multiplied by your share.

13. Duties in the Event of Damage or Loss

In addition to the notice required by section 14 of the Basic

Provisions, you must give us notice:

(a) Not later than 48 hours after:

(1) Total destruction of the tomatoes in the unit; or

(2) Discontinuance of harvest on a unit on which unharvested

production remains;

(b) Within 3 days after the date harvest should have started on

any acreage that will not be harvested. You must also provide

acceptable documentation of the reason the acreage was bypassed.

Failure to provide such documentation will result in our

determination that the acreage was bypassed due to an uninsured

cause of loss. If the crop will not be harvested and you wish to

destroy the crop, you must leave representative samples of the

unharvested crop for our inspection. The samples must be at least 10

feet wide and extend the entire length of each field in the unit.

The samples must not be destroyed until the earlier of our

inspection or 15 days after notice is given to us; and

(c) At least 15 days prior to the beginning of harvest if you

intend to claim an indemnity on any unit, or immediately if damage

is discovered during the 15 day period or during harvest, so that we

may inspect the damaged production. If you fail to notify us and

such failure results in our inability to inspect the damaged

production, we will consider all such production to be undamaged and

include it as production to count. You are not required to delay

harvest.

14. 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 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, by type if applicable;

(2) Multiplying each result of section 14(b)(1) by the

respective price election, by type if applicable;

(3) Totaling the results of section 14(b)(2) if there are more

than one type;

(4) Multiplying the total production to counted (see section

14(c)), for each type if applicable, by its respective price

election;

(5) Totaling the results of section 14(b)(4) if there are more

than one type;

(6) Subtracting the result of section 14(b)(4) from the result

of section 14(b)(2) if there is only one type or subtracting the

result of section 14(b)(5) from the result of section 14(b)(3) if

there are more than one type; and

(7) Multiplying the result of section 14(b)(6) by your share.

For example:

You have a 100 percent share in 50 acres of type A processing

tomatoes in the unit, with a guarantee of 18.8 tons per acre and a

price election of $50.00 per ton. You are only able to harvest 10.0

tons. Your indemnity would be calculated as follows:

(1) 50.0 acres x 18.8 tons = 940.0 tons guarantee;

(2) 940.0 tons x $50.00 price election = $47,000.00 value

guarantee;

(4) 10.0 tons x $50.00 price election = $500.00 value of

production to count;

(6) $47,000.00-$500.00 = $46,500.00 loss; and

(7) $46,500 x 100 percent = $46,500.00 indemnity payment.

You also have a 100 percent share in 50 acres of type B

processing tomatoes in the same unit, with a guarantee of 15.0 tons

per acre and a price election of $35.00 per ton. You are only able

to harvest 5.0 tons. Your total indemnity for both types A and B

would be calculated as follows:

(1) 50.0 acres x 18.8 tons = 940.0 ton guarantee for type A

and 50.0 acres x 15.0 tons = 750.0 ton guarantee for type B;

(2) 940.0 ton guarantee x $50.00 price election = $47,000.00

value of guarantee for type A and 750.0 ton guarantee x $35.00 =

$26,500.00 value of guarantee for type B;

(3) $47,000.00 + $26,500.00=$72,500.00 total value of guarantee;

(4) 10.0 tons x $50.00 price election=$500.00 value of

production to count for type A and 5.0 tons x $35.00 price

election=$175.00 value of production to count for type B;

(5) $500.00 + $175.00=$675.00 total value of production to

count;

(6) $72,500.00-$675.00=$71,575.00 loss; and

(7) $71,575 loss x 100 percent=$71,575.00 indemnity payment.

(c) The total production to count, specified in tons, from all

insurable acreage on the unit will include:

(1) All appraised production as follows:

(i) Not less than the production guarantee for acreage:

(A) That is abandoned;

(B) Put to another use without our consent;

(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) Production on acreage that is bypassed unless the acreage

was bypassed due to an insured cause of loss which resulted in

production which would not be acceptable under the terms of the

processor contract;

(iv) Potential production on insured acreage that you intend to

put to another use or abandoned, if you and we agree on the

appraised amount of production. Upon such agreement, the insurance

period for that acreage will end when you put the acreage to another

use or abandon the crop. If agreement on the appraised amount of

production is not reached:

(A) If you do not elect to continue to care for the crop, we may

give you consent to put the acreage to another use if you agree to

leave intact, and provide sufficient care for, representative

samples of the crop in locations acceptable to us, (The amount of

production to count for such acreage will be based on the harvested

production or appraisals from the samples at the time harvest should

have occurred. If you do not leave the required samples intact, or

you fail to provide sufficient care for the samples, our appraisal

made prior to giving you consent to put the acreage to another use

will be used to determine the amount of production to count); or

(B) If you elect to continue to care for the crop, the amount of

production to count for the acreage will be the harvested

production, or our reappraisal if additional damage occurs and the

crop is not harvested;

(2) All harvested production (in tons) delivered to the

processor which meets the quality requirements of the processor

contract (expressed as usable or payable weight).

(3) All harvested tomato production delivered to processor which

does not meet the quality requirements of the processor contract due

to not being timely delivered.

(d) Once harvest has begun on any acreage covered by a processor

contract that specifies the number of tons to be delivered, the

total indemnity payable will be limited to an amount based on the

lesser of the guaranteed tons, or the tons remaining unfulfilled

under the processor contract.

15. Late and Prevented Planting

The late and prevented planting provisions of the Basic

Provisions are not applicable.

16. Written Agreements.

Terms of this policy which are specifically designated for the

use of written agreements 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

16(e);

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

variable terms of the

[[Page 54346]]

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 physical inspection of

the acreage, it is determined that no loss has occurred and the crop

is insurable in accordance with the policy and written agreement

provisions.

Signed in Washington, D.C., on October 10, 1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 97-27652 Filed 10-17-97; 8:45 am]

BILLING CODE 3410-08-P