General Crop Insurance Regulations; Raisin Endorsement and Common Crop Insurance Regulations; Raisin Crop Insurance Provisions

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes

specific crop provisions for the insurance of raisins. 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 raisin

endorsement under the Common Crop Insurance Policy for ease of use and

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

endorsement to the 1996 and prior crop years.

EFFECTIVE DATE: March 14, 1997.

FOR FURTHER INFORMATION CONTACT: John Meyer, Insurance Management

Specialist, Product Development Division, Policy Development and

Standards 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, this rule has not been reviewed by OMB.

Paperwork Reduction Act of 1995

Following publication of the proposed rule, 61 Federal Register,

55928, the public was afforded 60 days to submit written comments 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), 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, all producers are required to complete an

application and acreage report. If the crop is damaged or destroyed,

insureds are required to give notice of loss and provide the necessary

information to complete a claim for indemnity. This regulation does not

alter those requirements. The amount of work required of the insurance

companies delivering and servicing these policies will not increase

significantly from the amount of work currently required. This rule

does not have any greater or lesser impact on the producer. Therefore,

this action is determined to be exempt from the provisions of the

Regulatory Flexibility Act (5 U.S.C. 605), and no Regulatory

Flexibility Analysis was prepared.

Federal Assistance Program

This program is listed in the Catalog of Federal Domestic

Assistance under No. 10.450.

Executive Order No. 12372

This program is not subject to the provisions of Executive Order

No. 12372, which require intergovernmental consultation with state and

local officials. See the Notice related to 7 CFR part 3015, subpart V,

published at 48 FR 29115, June 24, 1983.

Executive Order No. 12778

The Office of the General Counsel has determined that these

regulations meet the applicable standards provided in sections 2(a) and

2(b)(2) of Executive Order No. 12778. The provisions of this rule will

not have a retroactive effect prior to the effective date. The

provisions of this rule will preempt state and local laws to the extent

such state and local laws are inconsistent herewith. The administrative

appeal provisions published at 7 CFR 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 Wednesday, October 30, 1996, FCIC published a proposed rule in

the Federal Register at 61 FR 55928-55932 to add to the Common Crop

Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.124,

(Raisin Crop Insurance Provisions). The new provisions will replace and

supersede the current provisions for insuring raisins found at 7 CFR

section 401.142 and will be effective for the 1997 and succeeding crop

years. Section 401.142

[[Page 12068]]

will also be amended to restrict its effect to the 1996 and prior crop

years.

Following publication of the proposed rule, the public was afforded

30 days to submit written comments. A total of 20 comments were

received from the crop insurance industry, Office of Inspector General

(OIG), and FCIC Regional Service Offices (RSO). The comments received,

and FCIC's responses, follow:

Comment: One comment from the insurance industry suggested

definitions be added for ``insured tonnage,'' ``uninsured tonnage,''

and ``guaranteed tonnage.''

Response: Insured tonnage is throughly described and thereby

``defined'' in section 3 of the crop provisions. Several policy

provisions are involved in determining tonnage that may not be

insurable. Adding a definition to describe uninsured tonnage would be

duplicative of these provisions. These provisions do not use the term

``guaranteed tonnage.'' Instead, a dollar guarantee is based on the

number of insured tons. This allows damaged raisins to be valued and

subtracted from the amount of insurance when determining the amount of

an indemnity. No change has been made to the provisions.

Comment: One comment from the insurance industry questioned whether

the definition of ``non-contiguous land'' should state ``that it is

land ownership that does not touch at any point.''

Response: Land ownership is not a factor used to determine non-

contiguous land. Rather, it is the boundaries of the land in which a

producer has or will have an insurable interest in the crop. If the

boundaries of such land do not touch, the land is considered to be non-

contiguous. FCIC believes the provision is clearly stated. Therefore,

no change will be made.

Comment: One comment from the insurance industry suggested changing

the language in section 2(a) from ``may be divided'' to ``will be

divided.''

Response: FCIC agrees with the comment and has amended the

provisions accordingly.

Comments: Five comments, one from an RSO, one from OIG, and three

from the crop insurance industry requested that ``optional'' be removed

from the language in section 2(e). The comments indicated that this

provision should apply to all units, both basic and optional.

Response: FCIC agrees with the comments and has amended the

provision accordingly.

Comment: One comment from the insurance industry concerned the

reference to ``your share'' in subsection 3(b). The commenter wanted to

know if the reference applied to your share at time of loss, at the

time the raisins were laid down for drying, or at some other time.

Response: Share is defined in the Basic Provisions. For the purpose

of determining the premium amount, it is the share at the time

insurance attaches. For the purpose of determining the amount of an

indemnity, it is the lesser of the share at the time of loss or the

share at the time insurance attaches.

Comment: One comment from the insurance industry concerned the

determination of ``Insured tonnage for units damaged by rain'' in

section 3(c)(2). The commenter suggested that adjusters should be

allowed to determine which procedure to use to determine the total

amount lost in the vineyard: tray count (which has been dropped), vine

count, or both methods.

Response: Tray counts may not be reliable for determining

production amounts. In some cases, it has been found that the number of

trays cannot accurately be determined. However, the number of vines in

a vineyard normally remains constant, and once production per vine is

determined, vine count provides a more accurate method of determining

total production in the vineyard. No change has been made to these

provisions.

Comment: One comment from the insurance industry questioned how the

following situation would be treated. An adjuster takes a sample to

measure moisture content, finds that it exceeds 24.3% and releases the

crop. The insured delays delivering the production and the moisture

content decreases. The insured then delivers the raisins. What would

happen in this situation and how could it be prevented?

Response: FCIC approved procedure prohibits an adjustor from

releasing raisins before it is determined whether or not the crop can

be reconditioned. However, the provision has been clarified to state

that if any production is delivered, the moisture content will be

determined at the time of delivery. Improper claim handling can be

avoided with proper supervisory controls and by following established

claims procedures as outlined in FCIC approved procedure.

Comment: Two comments, one from the insurance industry and one from

OIG suggested adding language in section 3(c) indicating that an

approved method be used to determine the number of tons lost in the

vineyard in the event no production is removed from the vineyard. The

Proposed Rule deleted the use of tray weights to establish insured tons

when production is not removed from the vineyard and stated that when

appraisal is required, the amount of raisin tonnage lost will be

determined in sample areas. The commenters stated that the policy, as

drafted, does not address these situations. Also, when these situations

occur, the comparison to other acreage from which raisins were removed

is not possible. Loss adjustment procedures should contain a method for

handling these situations and state or define how the production will

be determined from such sample areas or give a sampling methodology as

cited in the ``Background'' section. Determinations for these

situations would then be used as necessary in valuing damaged raisins

under the provisions of section 13(f).

Response: FCIC agrees with the comment and has added a provision to

state that when no raisins have been removed from the vineyard, an

appraisal will be used to determine the insured tonnage. FCIC approved

procedures provide the methods to be used to determine tonnage lost in

the vineyard when no raisins are removed.

Comment: Six comments, one from OIG, one from an RSO, and four from

the crop insurance industry suggested the following language be added

in section 6(b) to address situations in which the insured either adds

or deletes acreage after providing the required report of intentions at

sales closing date: ``Acreage on which you intend to produce raisins

may be added to your location report until the time you first place

raisins from the additional acreage on trays for drying and it is

agreed to by us. Failure to report any insurable acreage will result in

under-reporting penalties being applied in accordance with the

provisions contained in section 6 (Report of Acreage) of the Basic

Provisions (457.8). If you elect not to produce raisins on any acreage

included on your location report, you must notify us in writing on or

before September 21 and provide any records we may require to verify

that raisins were not produced on that acreage.'' The comments

indicated this language is necessary to address vulnerabilities

associated with reporting tonnage, and that the current language is

vague and will result in unnecessary exposure.

Response: FCIC agrees with the comments and has amended the

provisions to clarify the conditions under which additional acreage may

be added to the acreage report.

Comments: Two comments from the insurance industry indicated that

statements in item 6 of the summary of changes section in the preamble

and in section 6(a) of the provisions appeared to be in conflict. The

background

[[Page 12069]]

summary section refers to ``reporting raisin acreage prior to the time

insurance attaches'' whereas section 6(a) requires this report to be

submitted on or before the sales closing date.

Response: FCIC agrees with the comments. The background section

should have stated that raisin acreage must be reported on or before

the sales closing date.

Comment: One comment from the insurance industry favored having the

insured report the acreage and location more timely but questioned: (1)

Why the guarantee can not be determined at this time; (2) would a

growing season inspection be required if an insured leases ground after

insurance attaches; and (3) what happens when there is a forecast of

rain and the insured notifies the company that additional acreage has

been leased?

Response: The amount of insurance cannot be calculated until the

insured tonnage can be determined. Insured tonnage is not known until

after the crop is laid down to dry and the production is delivered or

determined in the event of damage. Additional acreage cannot be added

after the raisins have been laid down on the additional acreage; so no

new acreage can be added after insurance has attached. If raisins are

leased after they have been laid down, such raisins are only insurable

if the lessor had insurance and properly executed a transfer of

coverage and right to indemnity. Further additional acreage may only be

added to the acreage report after the sales closing date if the insurer

agrees. In the event rain is forecast, the insurance provider may deny

coverage on the acreage.

Comment: One comment from the insurance industry questioned why the

term ``Location and Unit Report'' was used for what appears to be a

preliminary acreage report. The commenter stated that, if there were

significant differences between the two terms such that a different

form is required, the industry would like to help develop such a form

before the Raisin Crop Insurance Provisions are published as a Final

Rule.

Response: ``Location and unit report'' was thought to be a more

descriptive term than ``acreage report.'' However, after additional

consideration, FCIC believes that the current acreage report form may

be used to obtain all information required by these Crop Provisions.

Therefore, the term ``Location and unit report'' has been replaced with

``acreage report.''

Comments: Six comments, one from OIG, one from an RSO, and four

from the crop insurance industry suggested that section 8(b) which

states ``For the purpose of determining the amount of indemnity, your

share will not exceed the lower of your share at either the time the

raisins are first placed on trays for drying or are removed from the

vineyards.'' be revised to read ``For the purpose of determining the

amount of indemnity, your share will not exceed your share at the time

the insurance attaches.'' The comment also stated that the insurance

period for raisins lasts only two or three weeks and changes in share

are uncommon once the crop is on trays. Also, it was stated that if

this section is not revised, that consideration be given to using

``lesser of'' in lieu of ``lower of''.

Response: FCIC understands that it is uncommon for the share to

change within the insurance period. However, in those cases where it

does change, the insurance provider should not pay for a share in

excess of the insured's share at the time of loss. FCIC has revised

this provision to indicate that the share will not exceed the lesser of

the share at the time insurance attaches or at the time of loss. For

clarification, this provision was moved to section 13(c) (Settlement of

Claim).

Comments: Seven comments, one from OIG, one from an RSO, and five

from the crop insurance industry, suggested the following be added to

the last sentence of section 11(a) ``or determine the number of tons

meeting RAC standards that could be obtained if the production were

reconditioned.'' It was indicated that this language is necessary to be

equitable to producers who intend to sell rain-damaged raisins through

alternative market outlets.

Response: FCIC agrees with the comments and has amended the

provision to indicate that the insurance provider may determine the

tons meeting RAC standards that could be obtained if the raisins were

reconditioned. Language has also been added to clarify the

circumstances under which this action can be taken.

Comment: One comment questioned whether all items of sub-section

11(c)(1)(2)&(3) must occur to get a reconditioning payment, or, are

different combinations possible? If all three are required, the ``or''

at the end of (2) should be changed to ``and'', or delete it and the

``and'' at the end of (1). If all three occurrences are not required,

which combinations are acceptable?

Response: Two possible combinations are acceptable. Either 11(c)

(1) and (2) are required, or 11(c) (1) and (3).

Comment: One comment from the insurance industry expressed concern

that, since insured's with catastrophic risk protection (CAT) insurance

are not eligible for a reconditioning payment, they may ``drag their

feet'' in hopes of collecting a regular production loss. Is the

reconditioning requirement language in sub-section 11(a) strong enough

to discourage or prevent possible abuse?

Response: FCIC believes that policy provisions dealing with poor

farming practices and the valuation of damaged production if the

insured fails to recondition the raisins should prevent cases in which

insureds may try to inflate losses.

Comments: Five comments, one from an RSO, and four from the

insurance industry suggested replacing the term ``micro-contamination''

in section 11(c)(2) with ``other rain-caused contamination determined

by micro-analysis * * *'' The comment stated this language would be

more accurate since insects infest rain damaged raisins, and micro-

analysis is used to identify insects and insect parts that will not be

removed during normal processing.

Response: FCIC agrees with the comments and has amended the

provision accordingly.

Comment: One comment concerned item 8 in the background section of

the preamble (substantive change summary). This provision states that

``raisins discarded or lost from trays as part of normal handling will

not be considered production to count.'' The comment stated this would

not be a problem until it rains and the handlers throw off moldy

raisins and what remains on the trays. Question is, would this

production not be used to determine the guarantee and production to

count?

Response: Normal field handling does not include raisins which are

discarded after a loss. If such raisins are discarded, they should not

be included in the insured tonnage or the value of the damaged

production.

Comments: Two comments from the crop insurance industry suggested

combining the provisions contained in section 14(e) with the provisions

in section 14(a).

Response: The provisions are clearly stated and have not been

combined.

Comments: Two comments received from the insurance industry

suggested the provision in section 14(d) stating ``that written

agreements are valid for only one year'' be removed. Terms of the

agreement should be stated in the agreement to fit the particular

situation for the policy, or if no substantive changes occur from one

year to the next, allow the written agreement to be continuous.

Response: Written agreements are intended to change policy terms or

[[Page 12070]]

permit insurance in unusual situations where such changes will not

increase risk. If such practices continue year to year, they should be

incorporated into the policy or Special Provisions. It is important to

keep non-uniform exceptions to the minimum to ensure that the insured

is well aware of the specific terms of the policy. Therefore, no change

will be made.

Good cause is shown to make this rule effective upon publication in

the Federal Register. This rule improves the raisin crop insurance

coverage and brings it under the Common Crop Insurance Policy Basic

Provisions for consistency among policies. The contract change date

required for new policies is April 30, 1997. It is therefore imperative

that these provisions be made final before that date so that the

reinsured companies and insureds may have sufficient time to implement

the new provisions.

Therefore, public interest requires the agency to act immediately

to make these provisions available for the 1997 crop year.

List of Subjects in 7 CFR Parts 401 and 457

Crop insurance, Raisin endorsement.

Final Rule

Accordingly, the Federal Crop Insurance Corporation hereby amends 7

CFR parts 401 and 457 effective for the 1997 and succeeding crop years,

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(l), 1506(p).

Sec. 401.142 [Revised]

2. The introductory text of Sec. 401.142 is revised to read as

follows:

The provisions of the Raisin Endorsement for the 1990 through 1996

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 457.124 is added to read as follows:

Sec. 457.124 Raisin crop insurance provisions.

The Raisin Crop Insurance Provisions for the 1997 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:

Raisin 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.

Crop year--In lieu of the definition of ``Crop year'' contained in

section 1 of the Basic Provisions (Sec. 457.8), the calendar year in

which the raisins are placed on trays for drying.

Days--Calendar days.

Delivered ton--A ton of raisins delivered to a packer, processor,

buyer or a reconditioner, before any adjustment for U. S. Grade B and

better maturity standards, and after adjustments for moisture over 16

percent and substandard raisins over 5 percent.

Non-contiguous land--Any two or more tracts of land whose

boundaries do not touch at any point, except that land separated only

by a public or private right-of-way, waterway, or an irrigation canal

will be considered as contiguous.

RAC--The Raisin Administrative Committee, which operates under an

order of the United States Department of Agriculture (USDA).

Raisins--The sun-dried fruit of varieties of grapes designated

insurable by the Actuarial Table. These grapes will be considered

raisins for the purpose of this policy when laid on trays in the

vineyard to dry.

Substandard--Raisins that fail to meet the requirements of U.S.

Grade C, or layer (cluster) raisins with seeds that fail to meet the

requirements of U.S. Grade B.

Reference maximum dollar amount--The value per ton established by

FCIC and shown in the Actuarial Table.

Table grapes--Grapes grown for commercial sale as fresh fruit on

acreage where appropriate cultural practices were followed.

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

Tonnage report--A report used to annually report, by unit, all the

tons of raisins produced in the county in which you have a share.

Written agreement--A written document that alters designated terms

of this policy in accordance with section 14.

2. Unit Division.

(a) In addition to the requirements of a unit as defined in section

1 (Definitions) of the Basic Provisions (Sec. 457.8), a basic unit will

consist of each grape variety you insure.

(b) Unless limited by the Special Provisions, a basic unit may be

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

conditions of this section or if a written agreement to such division

exists.

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

including, but not limited to, production practice, type, and variety,

other than as described in this section.

(d) If you do not comply fully with these provisions, we will

combine all optional units that are not in compliance with these

provisions into the basic unit from which they were formed. We will

combine the 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

for the units combined.

(e) All units you selected for the crop year must be identified on

the acreage report for that crop year.

(f) The following requirements must be met to qualify for separate

optional units.

(1) 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

(2) Separate optional units must be located on non-contiguous land.

3. Amounts of Insurance and Production Reporting .

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 coverage level percentage for all the

raisins in the county insured under this policy.

(b) The amount of insurance for the unit will be determined by

multiplying the insured tonnage by the reference

[[Page 12071]]

maximum dollar amount, by the coverage level percentage you elect, and

by your share.

(c) Insured tonnage is determined as follows:

(1) For units not damaged by rain--The delivered tons; or

(2) For units damaged by rain--By adding the delivered tons to any

verified loss of production due to rain damage. When production from a

portion of the acreage within a unit is removed from the vineyard and

production from the remaining acreage is lost in the vineyard, the

amount of production lost in the vineyard will be determined based on

the number of tons of raisins produced on the acreage from which

production was removed. When no production has been removed from the

vineyard, the amount of production lost in the vineyard will be

determined based on an appraisal.

(3) Insured tonnage will be adjusted as follows:

(i) The insured tonnage will be reduced 0.12 percent for each 0.10

percent of moisture in excess of 16.0 percent. For example, 10.0 tons

of raisins containing 18.0 percent moisture will be reduced to 9.760

tons of raisins;

(ii) Insured tonnage used for dry edible fruit will be reduced by

0.10 percent for each 0.10 percent of substandard raisins in excess of

5.0 percent; and

(iii) When raisins contain moisture in excess of 24.3 percent at

the time of delivery and are released for a use other than dry edible

fruit (e.g. distillery material), they will be considered to contain

24.3 percent moisture.

(4) If any raisins are delivered, the moisture content will be

determined at the time of delivery.

(d) Section 3(c) of the Basic Provisions is not applicable to this

crop.

4. Contract Changes.

In accordance with section 4 (Contract Changes) of the Basic

Provisions (Sec. 457.8), the contract change date is April 30 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 July 31.

6. Acreage Report and Tonnage Report.

In lieu of the provisions contained in section 6 of the Basic

Provisions (Sec. 457.8):

(a) You must report by unit, and on our form, the acreage on which

you intend to produce raisins for the crop year. This acreage report

must be submitted to us on or before the sales closing date, and

contain the following information:

(1) All acreage of the crop (insurable and not insurable) in which

you will have a share;

(2) Your anticipated share at the time coverage will begin;

(3) The variety; and

(4) The location of each vineyard.

(b) Acreage of the crop acquired after the acreage was reported,

may be included on the acreage report if we agree to accept the

additional acreage. Such additional acreage will not be added to the

acreage report after you first place raisins from the additional

acreage on trays for drying. Failure to report any acreage in which you

have a share will result in denial of liability. If you elect not to

produce raisins on any part of the acreage included on your acreage

report, you must notify us in writing on or before September 21, and

provide any records we may require to verify that raisins were not

produced on that acreage.

(c) If you fail to file an acreage report in a timely manner, or if

the information reported is incorrect, we may deny liability on any

unit.

(d) In addition to the acreage report, you must annually submit a

tonnage report, on our form, which includes by unit the number of

delivered tons of raisins, and, if damage has occurred, the amount of

any tonnage we determined was lost due to rain damage in the vineyard

for each unit designated in the acreage report.

(e) The tonnage report must be submitted to us as soon as the

information is available, but not later than March 1 of the year

following the crop year. Indemnities may be determined on the basis of

information you submitted on this report. If you do not submit this

report by the reporting date, we may, at our option, either determine

the insured tonnage and share by unit or we may deny liability on any

unit. This report may be revised only upon our approval. Errors in

reporting units may be corrected by us at any time we discover the

error.

7. Annual Premium.

In lieu of the premium computation method contained in section 7

(Annual Premium) of the Basic Provisions (Sec. 457.8), the annual

premium amount is determined by multiplying the amount of insurance for

the unit at the time insurance attaches by the premium rate and then

multiplying that result by any applicable premium adjustment factors

that may apply.

8. Insured Crop.

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

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

the county of grape varieties for which a premium rate is provided by

the Actuarial Table and in which you have a share.

(b) In addition to the raisins not insurable under section 8

(Insured Crop) of the Basic Provisions (Sec. 457.8), we do not insure

any raisins:

(1) Laid on trays after September 8 in vineyards with north-south

rows in Merced or Stanislaus Counties, or after September 20 in all

other counties;

(2) From table grape strippings; or

(3) From vines that received manual, mechanical, or chemical

treatment to produce table grape sizing.

9. Insurance Period.

In lieu of the provisions of section 11 (Insurance Period) of the

Basic Provisions (Sec. 457.8), insurance attaches on each unit at the

time the raisins are placed on trays for drying and ends the earlier

of:

(a) October 20;

(b) The date the raisins are removed from the trays;

(c) The date the raisins are removed from the vineyard;

(d) Total destruction of all raisins on a unit;

(e) Final adjustment of a loss on a unit; or

(f) Abandonment of the raisins.

10. Causes of Loss.

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

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

against unavoidable loss of production resulting from rain that occurs

during the insurance period and while the raisins are on trays or in

rolls in the vineyard for drying.

(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 inability to market

the raisins 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 a person to accept production.

11. Reconditioning Requirements and Payment.

(a) We may require you to recondition a representative sample of

not more than 10 tons of damaged raisins to determine if they meet

standards established by the RAC once reconditioned. If such standards

are met, we may require you to recondition all the damaged production.

If we determine that it is possible to recondition any damaged

production and, if you do not do so, we will value the damaged

production at the reference

[[Page 12072]]

maximum dollar amount, except if your damaged production undergoes a

USDA inspection and is stored by your packer with other producer's

production to be reconditioned at a later date. If we agree, in

writing, that it is not practical to recondition the damaged

production, we will determine the number of tons meeting RAC standards

that could be obtained if the production were reconditioned.

(b) If the representative sample of raisins that we require you to

recondition does not meet RAC standards for marketable raisins after

reconditioning, the reconditioning payment will be the actual cost you

incur to recondition the sample, not to exceed an amount that is

reasonable and customary for such reconditioning, regardless of the

coverage level selected.

(c) A reconditioning payment, based on the actual (unadjusted)

weight of the raisins, will be made if:

(1) Insured raisin production:

(i) Is damaged by rain within the insurance period;

(ii) Is reconditioned by washing with water and then drying;

(iii) Is insured at a coverage level greater than that applicable

to the catastrophic risk protection plan of insurance; and either

(2) The damaged production undergoes an inspection by USDA and is

found to contain mold, embedded sand, or other rain-caused

contamination determined by micro-analysis in excess of standards

established by the RAC, or is found to contain moisture in excess of 18

percent; or

(3) We give you consent to recondition the damaged production.

(d) Your request for consent to any wash-and-dry reconditioning

must identify the acreage on which the production to be reconditioned

was damaged in order to be eligible for a reconditioning payment.

(e) The reconditioning payment for raisins that meet RAC standards

for marketable raisins after reconditioning will be the lesser of your

actual cost for reconditioning or the amount determined by:

(1) Multiplying the greater of $125.00 or the reconditioning dollar

amount per ton contained in the Special Provisions by your coverage

level;

(2) Multiplying the result of section 11(e)(1) by the actual number

of tons of raisins (unadjusted weight) that are wash-and-dry

reconditioned; and

(3) Multiplying the result of section 11(e)(2) by your share.

(f) Only one reconditioning payment will be made for any lot of

raisins damaged during the crop year. Multiple reconditioning payments

for the same production will not be made.

12. Duties In The Event of Damage or Loss.

(a) 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:

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

us notice within 72 hours of the time the rain fell on the raisins. We

may reject any claim for indemnity if such notice is later. You must

provide us the following information when you give us this notice:

(i) The grape variety;

(ii) The location of the vineyard and number of acres; and

(iii) The number of vines from which the raisins were harvested.

(2) We will not pay any indemnity unless you:

(i) Authorize us in writing to obtain all relevant records from any

raisin packer, raisin reconditioner, the RAC, or any other person who

may have such records. If you fail to meet the requirements of this

subsection, all insured production will be considered undamaged and

valued at the reference maximum dollar value.

(ii) Upon our request, provide us with records of previous years''

production and acreage. This information may be used to establish the

amount of insured tonnage when insurable damage results in discarded

production.

(b) In lieu of the provisions in section 14 (Duties in the Event of

Damage or Loss) of the Basic Provisions (Sec. 457.8) that require you

to submit a claim for indemnity not later than 60 days after the end of

the insurance period, any claim for indemnity must be submitted to us

not later than March 31 following the date for the end of the insurance

period.

13. 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 acreage from which

raisins were removed 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 tonnage of raisins by the reference

maximum dollar amount and your coverage level percentage;

(2) Subtracting from the total in section 13(b)(1) the total value

of all insured damaged and undamaged raisins; and

(3) Multiplying the result of section 13(b)(2) by your share.

(c) For the purpose of determining the amount of indemnity, your

share will not exceed the lesser of your share at the time insurance

attaches or at the time of loss.

(d) Undamaged raisins or raisins damaged solely by uninsured causes

will be valued at the reference maximum dollar amount.

(e) Raisins damaged partially by rain and partially by uninsured

causes will be valued at the highest prices obtainable, adjusted for

any reduction in value due to uninsured causes.

(f) Raisins that are damaged by rain, but that are reconditioned

and meet RAC standards for raisins, will be valued at the reference

maximum dollar amount.

(g) The value to count for any raisins produced on the unit that

are damaged by rain and not removed from the vineyard will be the

larger of the appraised salvage value or $35.00 per ton, except that

any raisins that are damaged and discarded from trays or are lost from

trays scattered in the vineyard as part of normal handling will not be

considered to have any value. You must box and deliver any raisins that

can be removed from the vineyard.

(h) At our sole option, we may acquire all the rights and title to

your share of any raisins damaged by rain. In such event, the raisins

will be valued at zero in determining the amount of loss and we will

have the right of ingress and egress to the extent necessary to take

possession, care for, and remove such raisins.

(i) Raisins destroyed, put to another use without our consent, or

abandoned will be valued at the reference maximum dollar amount.

14. 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 14(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 amount of insurance per ton, and premium rate;

[[Page 12073]]

(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 March 6, 1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 97-6520 Filed 3-13-97; 8:45 am]

BILLING CODE 3410-08-P