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

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457

General Crop Insurance Regulations, Stonefruit Endorsement; and

Common Crop Insurance Regulations, Stonefruit Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes

specific crop provisions for the insurance of stonefruit. 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 stonefruit endorsement with the Common Crop Insurance Policy

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

the current stonefruit endorsement to the 1998 and prior crop years.

EFFECTIVE DATE: July 2, 1998.

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 64131, telephone (816)

926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be exempt for the purposes of

Executive Order 12866 and, therefore, has not been reviewed by the

Office of Management and Budget (OMB).

Paperwork Reduction Act of 1995

Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter

35), the collections of information for this rule have been approved by

the Office of Management and Budget (OMB) under control number 0563-

0053 through October 31, 2000.

Unfunded Mandates Reform Act of 1995

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

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 12612

It has been determined under section 6(a) of Executive Order 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

the 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 insured or the insurance companies.

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 12372

This program is not subject to the provisions of Executive Order

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 12988

This 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. 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 against FCIC for

judicial review may be brought.

Environmental Evaluation

This action is not expected to have a significant economic 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 Tuesday, July 22, 1997, FCIC published a notice of proposed

rulemaking in the Federal Register at 62 FR 39189-39194 to add to the

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

CFR 457.159, Stonefruit Crop Insurance Provisions. The new provisions

will be effective for the 1999 and succeeding crop years. These

provisions will replace and supersede the current provisions for

insuring stonefruit found at 7 CFR 401 (Stonefruit Endorsement). FCIC

also amends Sec. 401.122 to limit its effect to the 1998 and prior crop

years.

Following publication of the proposed rule, the public was afforded

60 days to submit written comments and opinions.

[[Page 29934]]

A total of 16 comments were received from an insurance service

organization and reinsured companies. The comments received and FCIC's

responses are as follows:

Comment: A reinsured company expressed a concern that sales

closing, production reporting, and acreage reporting all have the same

date of January 31. The commenter stated it would be difficult to

service these policies when all reporting requirements must be

completed at the same time.

Response: FCIC disagrees with the comment. The sales closing and

acreage reporting dates have been January 31 in previous years. The

production reporting date is March 17, which would be 45 days after the

earlier of the cancellation date or the acreage reporting date. This is

consistent with other crop policies. Therefore, no change has been

made.

Comment: An insurance service organization suggested in the

definition of ``good farming practices'' the reference to ``county'' be

changed to ``area.''

Response: The term ``area'' is less clear than the term ``county''

and would cause determinations to be more subjective. The actuarial

documents are on a county basis. Therefore, no change has been made,

except the definition of ``good farming practices'' has been moved to

the Basic Provisions.

Comment: An insurance service organization questioned the

definition of ``interplanted'' in the proposed rule. The commenter

stated that the current stonefruit policy does not consider acreage

interplanted unless more than 10% of the insured acreage is planted to

another crop.

Response: Although the current stonefruit policies issued by most

reinsured companies contain the 10% requirement in the definition of

interplanted, the current stonefruit regulation contained in 7 CFR

401.122 does not. All reinsured MPCI policies will be brought to

conformance with this regulation. FCIC believes that introducing an

exact percentage of acres that must be exceeded before stonefruit is

considered interplanted is too restrictive. The definition is

consistent with other perennial crop policies. Therefore, no change has

been made.

Comment: An insurance service organization questioned the

definition of ``lug'' in the proposed rule. The commenter stated the

current policy refers to ``average'' net pounds of packed fruit and

questioned if the word ``average'' should not be included in the

proposed rule.

Response: FCIC agrees and has amended the definition to refer to

``average net pounds of packed fruit.''

Comment: An insurance service organization recommended rewording

section 2(a) of the proposed provisions to read: ``In addition to the

basic units as defined in section 1 of the Basic Provisions, each

stonefruit crop designated in the Special Provisions will be a basic

unit.''

Response: FCIC has removed section 2(a) of the proposed provisions

which stated, ``A unit as defined in section 1 of the Basic Provisions,

will be divided into additional basic units by each stonefruit crop

designated in the Special Provisions that you elect to insure.'' FCIC

instead has revised section 2 to conform with the new unit language in

the Basic Provisions. As defined in the Basic Provisions, each

stonefruit crop designated in the Special Provisions will be a basic

unit.

Comment: An insurance service organization and a reinsured company

expressed concerns with sections 2(f)(3)(i) and (ii) of the proposed

rule. One commenter stated the proposed language restricts

policyholders to optional units either by non-contiguous land or by

type, or by varietal group. The commenter recommended allowing optional

units for non-contiguous land and by type or varietal group by changing

section 2(f)(3) to read, ``each optional unit must meet at least one of

the following criteria, as applicable, unless otherwise specified in

the Special Provisions,'' and delete the ``or'' between subparagraphs

(i) and (ii). One commenter questioned if optional units are available

for non-contiguous land, even if the land is under the same ownership

and possibly separated only by another crop.

Response: FCIC agrees that optional units should be offered by non-

contiguous land and by type or varietal group and has deleted ``or''

between subparagraphs (i) and (ii) for clarification. Under these

proposed provisions, optional units are not available for non-

contiguous land, if the land is under the same ownership or separated

by another crop.

Comment: An insurance service organization stated that the current

1988-CHIAA 796 policy includes a statement that fresh market stonefruit

may be insured as processing stonefruit, with converted or appraised

production. The commenter asked if this should be included in the Crop

Provisions, or be covered only in the underwriting procedure.

Response: FCIC agrees that the statement on the CHIAA 796 allows

any fresh market stonefruit to be insured as processing stonefruit by

converting harvested or appraised fresh market stonefruit lugs to

processing stonefruit tons. The conversion procedure is covered by

underwriting procedures.

Comment: An insurance service organization asked if section 8(b)(2)

indicates that anyone who attempts to acquire a new orchard between the

cancellation date and the acreage reporting date but is unsuccessful

will be considered to have coverage and owe premium.

Response: FCIC believes that the commenter misinterpreted the

provisions. Section 8(b)(2) allows a producer to avoid liability for

premium in some circumstances for an orchard on which a policy was in

force on the cancellation date. Under that section, the insurance can

be transferred to a qualified third party under certain circumstances.

Comment: A reinsured company expressed concerns with section 10(b),

stating that the direct marketing provisions contained in this section

will be difficult to monitor and control.

Response: The producer is required to give notice at least 15 days

prior to any production being marketed directly to consumers, and the

insurance provider is required to complete the appraisal within that 15

day period. FCIC believes that 15 days is appropriate to meet the needs

of both the producer and the insurance provider. Therefore, no change

has been made.

Comment: An insurance service organization stated that the language

in section 10(c) does not address timely notice of damage or loss if

damage is discovered less than 15 days prior to harvest.

Response: The notice requirements in section 10 are in addition to

the requirements of section 14 of the Basic Provisions that require

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

damage is discovered during harvest, notice must be given immediately.

FCIC believes that these provisions, as a whole, are adequate as

stated. Therefore, no change has been made.

Comment: An insurance service organization stated that section 12

of the proposed provisions, which explains how a claim is settled, is

difficult to follow.

Response: Settlement of claims is covered in section 11. Section 11

has been revised to illustrate the calculations of a claim for

indemnity, and has been explicitly worded to eliminate any

misunderstanding or confusion.

Comment: An insurance service organization stated that section

[[Page 29935]]

11(c)(1)(iv) 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.''

Response: A later appraisal will only be necessary 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. If the producer

does not care for the crop, the original appraisal is used. If the

insurance provider believes the original appraisal is accurate,

resolution of the dispute may be sought through arbitration or appeal

procedures, whichever is applicable. Therefore, no change has been

made.

Comment: An insurance service organization stated that section

11(c)(2)(ii) was confusing. The commenter stated the provisions seem to

mean that harvested production packed and sold as California Utility

grade fresh fruit was not considered production to count if the

production was not damaged by an insurable cause. The commenter stated

that any production that can be packed and sold as fresh fruit should

be included as production to count.

Response: FCIC agrees with the comment and has amended the

provisions, redesignated 11(c)(3)(i) and (ii) to clarify the

provisions.

Comment: An insurance service organization suggested that sections

12 (a) and (e) be combined since both deal with deadlines to request

written agreements. The commenter suggested this provision might be

less misleading if the acreage reporting date ``exception'' be

incorporated. The insurance service organization also asked that the

requirement for annual renewal be removed from 12(d).

Response: Section 12 ``written agreements'' has been removed from

the proposed provisions and placed in the Basic Provisions. FCIC

believes that the annual renewal date in these provisions are clearly

stated, so no change will be made in this regard. 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 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 are well aware of the specific terms of the policy. Therefore,

no change has been made to the requirement that written agreements be

renewed each year.

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

editorial changes and has amended the following Stonefruit Crop

Provisions:

1. Amended the paragraph preceding section 1 to provide that

provisions of any Catastrophic Risk Protection Endorsement take

precedence over any conflicting provision in any other policy

provision.

2. Section 1--Removed definitions for ``days,'' ``FSA,'' ``good

farming practices,'' ``irrigated practice,'' ``non-contiguous,''

``production guarantee (per acre),'' ``USDA,'' and ``written

agreement'' because these definitions now appear in the Basic

Provisions. Added a new definition of ``grading standards'' to these

provisions for clarification. Added to the definition of lug the

weights used for processing apricots, cling peaches, and freestone

peaches are in tons.

3. Section 2--Revised the provisions regarding units to conform

with new language in the Basic Provisions.

4. Section 9(a)(3) and (6)--Revised the wildlife cause of loss by

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

not been taken'' because it is impossible to control wildlife. Also

clarified the cause of loss ``failure of the irrigation water supply''

by adding ``if due to a cause of loss contained in sections 9(a) (1)

through (5) that occurs during the insurance period'' to be consistent

with other crop policies.

5. Section 10(c)--Deleted the limitation on notifying us at least

15 days prior to harvest ``if you previously gave notice so we can

inspect the damaged production,'' because notice prior to harvest is

required in all cases.

6. Section 11(b)--Revised and added a settlement of claim example

for clarity.

7. Section 11(c)(4)--Revised to clarify when harvested production

of stonefruit is eligible for quality adjustment when packed and sold

as fresh fruit and for all other fresh stonefruit. Also this section

has been reformatted for clarity.

8. Section 12--Deleted the written agreement provisions since these

have been placed in the Basic Provisions and added a provision that the

late and prevented planting provisions of the Basic Provisions are not

applicable to stonefruit since stonefruit is a perennial crop.

List of Subjects in 7 CFR Parts 401 and 457

Crop insurance, Stonefruit endorsement, Stonefruit.

Final Rule

Accordingly, as set forth in the preamble, the Federal Crop

Insurance Corporation amends 7 CFR parts 401 and 457 as follows:

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

1988 THROUGH 1998 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).

2. The part heading is revised as set forth above.

3. Section 401.122 introductory paragraph is revised to read as

follows:

Sec. 401.122 Stonefruit endorsement.

The provisions of the Stonefruit Crop Insurance Endorsement for the

1988 through 1998 crop years are as follows:

* * * * *

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

1994 AND SUBSEQUENT CONTRACT YEARS

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

follows:

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

5. Section 457.159 is added to read as follows:

Sec. 457.159 Stonefruit Crop Insurance Provisions.

The Stonefruit Crop Insurance Provisions for the 1999 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 Policies

Stonefruit Crop Insurance 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 with (1) controlling

(2), etc.

1. Definitions

Direct marketing. Sale of the insured crop directly to consumers

without the intervention of an intermediary such as wholesaler,

retailer, packer, processor, shipper, or buyer. Examples of direct

marketing include selling through an on-farm or roadside stand,

farmer's market, and permitting the general public to enter the

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

Grading standards. The California Tree Fruit Agreement Marketing

Order, or California State Department of Food and Agriculture Code

of Regulations in effect for the appropriate crop, type, or varietal

group.

[[Page 29936]]

Harvest. The picking of mature stonefruit either by hand or

machine.

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

any form of alternating or mixed pattern.

Lug. A container of fresh stonefruit of specified weight. Lugs

of varying sizes will be converted to standard lug equivalents on

the basis of the following average net pounds of packed fruit:

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

Pounds

Crop per lug

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

Fresh Apricots................................................. 24

Fresh Nectarines............................................... 25

Fresh Freestone Peaches........................................ 22

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

Weight for Processing Apricots, Processing Cling Peaches, and

Processing Freestone Peaches are specified in tons.

Marketable. Stonefruit production acceptable for processing or

other human consumption, even if it fails to meet the State

Department of Food and Agriculture minimum grading standard.

Processor. A business enterprise regularly engaged in processing

fruit for human consumption that possesses all licenses and permits

for processing fruit 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

fruit within a reasonable amount of time after harvest.

Stonefruit. Any of the following crops grown for fresh market or

processing:

(a) Fresh Apricots,

(b) Fresh Freestone Peaches,

(c) Fresh Nectarines,

(d) Processing Apricots,

(e) Processing Cling Peaches, and

(f) Processing Freestone Peaches.

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

Type. Class of a stonefruit crop with similar characteristics

that are grouped for insurance purposes.

Varietal group. A subclass of type.

2. Unit Division

Notwithstanding the provisions of section 34 of the Basic

Provisions that allow optional units by section, section equivalent,

or FSA farm serial number and by irrigated and non-irrigated

practices, optional units will only be allowed as stated herein or

by written agreement.

(a) Optional Units on Acreage Located on Non-contiguous Land:

Optional units may be established if each optional unit is located

on non-contiguous land.

(b) Optional Units by Type or Varietal Group: Optional units may

be established by type or varietal group if allowed by the Special

Provisions.

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 and coverage level

for each crop grown in the county and listed in the Special

Provisions that is insured under this policy. If separate price

elections are available by type or varietal group of a crop, the

price elections you choose for each type or varietal group must have

the same percentage relationship to the maximum price offered by us

for each type or varietal group. For example, if you choose 100

percent of the maximum price election for one type of cling peaches,

you must choose 100 percent of the maximum price election for all

other types of cling peaches.

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

in section 3 of the Basic Provisions, by type or varietal group, if

applicable, for each stonefruit crop:

(1) Any damage, removal of trees, change in practices, or any

other circumstance that may reduce the expected yield below the

yield upon which the insurance guarantee is based, and the number of

affected acres;

(2) The number of bearing trees on insurable and uninsurable

acreage;

(3) The age of the trees and the planting pattern; and

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

with another perennial crop, and any time the planting pattern of

such acreage is changed:

(i) The age of the interplanted crop, and type or varietal group

if applicable;

(ii) The planting pattern; and

(iii) Any other information that we request in order to

establish your approved yield.

We will reduce the yield used to establish your production

guarantee as necessary, based on our estimate of the effect of

interplanting a perennial crop, removal of trees, damage, change in

practice, and any other circumstance that could affect the yield

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

circumstance that may reduce your yields from previous levels, we

will reduce your production guarantee as necessary at any time we

become aware of the circumstance.

4. Contract Changes

In accordance with section 4 of the Basic Provisions, the

contract change date is October 31 preceding the cancellation date.

5. Cancellation and Termination Dates

In accordance with section 2 of the Basic Provisions, the

cancellation and termination dates are January 31.

6. Insured Crop

In accordance with section 8 of the Basic Provisions, the crop

insured will be all of each stonefruit crop you elect to insure,

that is grown in the county, and for which premium rates are

provided in the actuarial documents:

(a) In which you have a share;

(b) That is grown on trees that:

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

(2) Is adapted to the area; and

(3) Is grown on a root stock that is adapted to the area;

(c) That is irrigated;

(d) That have produced at least 200 lugs of fresh market

production per acre, or at least 2.2 tons per acre for processing

crops, in at least 1 of the 3 most recent actual production history

crop years, unless we inspect such acreage and give our approval in

writing;

(e) That are regulated by the California Tree Fruit Agreement or

related crop advisory board for the state (for applicable types);

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

considered acceptable by us; and

(g) That have reached at least the fifth growing season after

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

not reached this age if it meets the requirements of subsection (d)

of this section.

7. Insurable Acreage

In lieu of the provisions of section 9 of the Basic Provisions

that prohibit insurance attaching to a crop planted with another

crop, stonefruit interplanted with another perennial crop is

insurable unless we inspect the acreage and determine that it does

not meet the requirements for insurability contained in your policy.

8. Insurance Period

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

Provisions:

(1) Coverage begins on February 1 of each crop year, except that

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

January 22 but prior to February 1, insurance will attach on the

10th day after your properly completed application is received in

our local office unless we inspect the acreage and determine that it

does not meet insurability requirements. You must provide any

information that we require for the crop or to determine the

condition of the orchard.

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

each crop year is:

(i) July 31 for all apricots; and

(ii) September 30 for all nectarines and peaches.

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

Provisions:

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

after coverage begins but on or before the acreage reporting date

for the crop year, and after an inspection we consider the acreage

acceptable, insurance will be considered to have attached to such

acreage on the calendar date of acquisition.

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

insurable acreage of stonefruit on or before the acreage reporting

date for the crop year and if the acreage was insured by you the

previous crop year, insurance will not be considered to have

attached to, and no premium or indemnity will be due for such

acreage for that crop year unless:

(i) A transfer of coverage and right to an indemnity, or a

similar form approved by us, is completed by all affected parties;

(ii) We are notified by you or the transferee in writing of such

transfer on or before the acreage reporting date; and

(iii) The transferee is eligible for crop insurance.

9. Causes of Loss

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

Provisions, insurance is provided only against the following causes

of loss that occur during the insurance period:

(1) Adverse weather conditions;

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

been controlled or pruning debris has not been removed from the

orchard;

[[Page 29937]]

(3) Wildlife;

(4) Earthquake;

(5) Volcanic eruption; or

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

loss contained in sections 9(a)(1) through (5) 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 damage or loss of

production due to:

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

(i) Prevents the proper application of control measures or

causes properly applied control measures to be ineffective; or

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

control mechanism is available;

(2) Split pits regardless of cause; or

(3) Inability to market the insured crop for any reason other

than actual physical damage from an insurable cause of loss

specified in this section. For example, we will not pay you an

indemnity if you are unable to market due to quarantine, boycott, or

refusal of any person to accept production.

10. Duties in the Event of Damage or Loss

In addition to the requirements of section 14 of the Basic

Provisions, the following will apply:

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

should have started if the insured crop will not be harvested.

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

from any unit will be sold by direct marketing. We will conduct an

appraisal that will be used to determine your production to count

for production that is sold by direct marketing. If damage occurs

after this appraisal, we will conduct an additional appraisal. These

appraisals, and any acceptable records provided by you, will be used

to determine your production to count. Failure to give timely notice

that production will be sold by direct marketing will result in an

appraised amount of production to count of not less than the

production guarantee per acre if such failure results in our

inability to make the required appraisal.

(c) In addition to section 14 of the Basic Provisions, if you

intend to claim an indemnity on any unit, you must give us notice at

least 15 days prior to the beginning of harvest. You must not

destroy the damaged crop until after we have given you written

consent to do so. If you fail to notify us and such failure results

in our inability to inspect the damaged production, we may consider

all such production to be undamaged and include it as production to

count.

11. Settlement of Claim

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

you are unable to provide separate acceptable production records:

(1) For any optional 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 for each type or varietal

group by its respective production guarantee;

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

respective price election for the type or varietal group;

(3) Totaling the results of section 11(b)(2). (If there is only

one type or varietal group, the result of (3) will be the same as

the result of (2));

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

11(c)), for each type or varietal group, by the respective price

election;

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

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

of section 11(b)(2). (If there is only one type or varietal group,

the result of (6) will be the same as the result of (5)); and

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

For example:

You have a 100 percent share in 50 acres of varietal group A

stonefruit in the unit, with a guarantee of 500 lugs per acre and a

price election of $6.00 per lug. You are only able to harvest 5,000

lugs. Your indemnity would be calculated as follows:

(1) 50.0 acres x 500 lugs = 25,000 lugs guarantee;

(2) and (3) 25,000 lugs x $6.00 price election = $150,000.00 value

of guarantee;

(4) 5,000 lugs x $6.00 price election = $30,000.00 value of

production to count;

(5) and (6) $150,000.00--$30,000.00 = $120,000.00 loss; and

(7) $120,000.00 x 100 percent = $120,000 indemnity payment.

You also have a 100 percent share in 50 acres of varietal group

B stonefruit in the unit, with a guarantee of 300 lugs per acre and

a price election of $3.00 per lug. You are only able to harvest

3,000 lugs. Your indemnity would be calculated as follows:

(1) 50.0 acres x 500 lugs varietal group A = 25,000 lugs

guarantee; and 50.0 acres x 300 lugs varietal group B = 15,000

lugs guarantee;

(2) 25,000 lugs x $ 6.00 price election = $150,000.00 value of

guarantee for varietal group A; and 15,000 lugs x $3.00 price

election = $45,000.00 value of guarantee for varietal group B;

(3) $150,00.00 + $45,000.00 = $195,000.00 total value of

guarantee;

(4) 5,000 lugs varietal group A x $6.00 price election =

$30,000.00 value of production to count; and 3,000 lugs varietal

group B x $3.00 price election = $9,000.00 value of production to

count; and

(5) $30,000.00 + $9,000.00 = $39,000.00 total value of

production to count;

(6) $195,000.00--$39,000.00 = $156,000.00 loss

(7) $156,000.00 loss x 1.000 = $156,000 indemnity payment.

(c) The total production to count (in lugs or tons) from all

insurable acres on a unit will include:

(1) All appraised production as follows:

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

(A) That is abandoned;

(B) That is sold by direct marketing if you fail to meet the

requirements contained in section 10;

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

(D) For which you fail to provide production records that are

acceptable to us;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production that would be marketable if

harvested; and

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

abandon or no longer care for, if you and we agree on the appraised

amount of production. Upon such agreement, the insurance period for

that acreage will end. If you do not agree with our appraisal, we

may defer the claim only if you agree to continue to care for the

insured crop. We will then make another appraisal when you notify us

if any further damage or that harvest is general in the area unless

you harvested the crop. If you harvest the crop we will use the

harvested production. If you do not continue to care for the crop,

our appraisal made prior to deferring the claim will be used to

determine the production to count; and

(2) All harvested production from the insurable acreage.

(3) The quantity of harvested production will be reduced if the

following conditions apply:

(i) The value of the damaged production is less than 75 percent

of the marketable value of undamaged production due to an insured

cause of loss; and

(ii) For stonefruit insured as fresh fruit only, the stonefruit

either is packed and sold as fresh fruit and meets only the utility

grade requirements of the applicable grading standards, or fails to

meet the applicable grading standards but is or could be sold for

any use other than fresh packed stonefruit.

(4) Harvested production of stonefruit that is eligible for

quality adjustment as specified in section 11(c)(3) will be reduced

as follows:

(i) When packed and sold as fresh fruit or when insured as a

processing crop, by dividing the marketable value per lug or ton by

the highest price election (for the applicable coverage level) and

multiplying the result (not to exceed 1.00) by the quantity of such

production; or

(ii) For all other fresh stonefruit, multiplying the number of

tons that could be marketed by the value per ton (for the applicable

coverage level) and dividing that result by the highest price

election available for that type.

12. Late and Prevented Planting

The late and prevented planting provisions of the Basic

Provisions (Sec. 457.8) are not applicable.

Signed in Washington, D.C., on May 20, 1998.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 98-14545 Filed 6-1-98; 8:45 am]

BILLING CODE 3410-08-P