[Federal Register Volume 61, Number 154 (Thursday, August 8, 1996)]
[Rules and Regulations]
[Pages 41297-41303]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20195]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
RIN 0563-AB56
Common Crop Insurance Regulations; Texas Citrus Fruit Crop
Insurance Provisions
AGENCY: Federal Crop Insurance Corporation.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes
specific crop provisions for the insurance of Texas citrus fruit. 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 and combine the
current Texas Citrus Endorsement with the Common Crop Insurance Policy
for ease of use and consistency of terms.
EFFECTIVE DATE: August 8, 1996.
FOR FURTHER INFORMATION CONTACT: Louise Narber, Program Analyst,
Research and Development Division, Product Development Branch, Federal
Crop Insurance Corporation, United States Department of Agriculture,
9435 Holmes Road, Kansas City, MO 64131, telephone (816) 926-7730.
SUPPLEMENTARY INFORMATION:
Executive Order No.12866 and Departmental Regulation 1512-1
This action has been reviewed under United States Department of
Agriculture (USDA) procedures established by Executive Order No. 12866
and Departmental Regulation 1512-1. This action constitutes a review as
to the need, currency, clarity, and effectiveness of these regulations
under those procedures. The sunset review date established for these
regulations is April 30, 2001.
This rule has been determined to be not significant for the
purposes of Executive Order No. 12866 and, therefore, has not been
reviewed by the Office of Management and Budget (OMB).
Paperwork Reduction Act of 1995
Following publication of the proposed rule, the public was afforded
60 days to submit comments, data, and opinions on information
collection requirements previously approved by OMB under OMB control
number 0563-0003 through September 30, 1998. No public comments were
received.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Pub. L.
104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, FCIC
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures of State, local, or tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. When such a statement is needed for a rule, section 205 of
the UMRA generally requires FCIC to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, more
cost-effective or least burdensome alternative that achieves the
objectives of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) of State, local, and tribal
governments or the private sector. Thus, this rule is not subject to
the requirements of sections 202 and 205 of the UMRA.
Executive Order No. 12612
It has been determined under section 6(a) of Executive Order No.
12612, Federalism, that this rule does not have sufficient Federalism
implications to warrant the preparation of a Federalism Assessment. The
provisions contained in this rule will not have a substantial direct
effect on States or their political subdivisions, or on the
distribution of power and responsibilities among the various levels of
Government.
Regulatory Flexibility Act
This regulation will not have a significant impact on a substantial
number of small entities. Under the current regulations, a producer is
required to complete an application and acreage report. If the crop is
damaged or destroyed, the insured is required to give notice of loss
and provide the necessary information to complete a claim for
indemnity. An insured must also annually certify to the previous years
production or receive a transitional yield. The producer must maintain
the production records to support the certified information for at
least 3 years. This regulation does not alter those requirements. The
amount of work required of the insurance companies delivering and
servicing
[[Page 41298]]
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.
Sec. 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 parts 11 and 780 must be exhausted
before 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, June 5, 1996, FCIC published a proposed rule in the
Federal Register at 61 FR 28512-28517 to add to the Common Crop
Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.119,
Texas Citrus Fruit Crop Insurance Provisions. The new provisions will
be effective for the 1998 and succeeding crop years. These provisions
will replace the current provisions for insuring Texas citrus fruit
found at 7 CFR 401.115 (Texas Citrus Endorsement), thereby limiting the
effect of the current provisions to the 1997 and prior crop years.
After this final rule becomes effective, the current provisions for
insuring Texas citrus fruit will be removed from Sec. 401.115 and that
section will be reserved.
Following publication of that proposed rule, the public was
afforded 30 days to submit written comments, data, and opinions. A
total of 25 comments were received from producers, trade associations,
the crop insurance industry and FSA. The comments received, and FCIC's
responses are as follows:
Comment: A representative of FSA suggested that the word ``type''
be changed to ``crop'' throughout the provisions where appropriate
since the citrus type designations used in the past will be replaced
with individual crop codes beginning with the 1998 crop year.
Response: FCIC agrees and has made this change as well as deleting
the definition of type.
Comment: The crop insurance industry commented that the proposed
rule did not contain any reference to acreage reporting and suggested
that such reference be added.
Response: Section 6 (Report of Acreage) of the Basic Provisions
provides information on the reporting of acreage and specifies that the
acreage reporting date will be included in the Special Provisions. No
changes have been made to these provisions.
Comment: The crop insurance industry stated that the definition for
``excess rain'' is not very precise when compared to the definition for
``excess wind''.
Response: FCIC agrees, however it is impossible to specify an
amount of precipitation that would damage the crop. Different soil
types, temperatures, weather patterns, etc., may result in significant
variation in the amount of precipitation that can be tolerated before
the crop is damaged. No changes have been made to the definition.
Comment: A trade association was concerned about the deletion of
``frost'' as a cause of loss. They believed that the proposed
definition for freeze appeared adequate for fruit and tree damage, but
was concerned about frost damage during the bloom period.
Response: The definition of freeze is changed to also include the
formation of ice in the cells of the blossoms.
Comment: The crop insurance industry stated that the provisions
refer to a pro rata refund when optional units are combined into basic
units whenever the insured reported optional units but does not
qualify. They questioned on what basis a pro rata refund would be
determined.
Response: The reference to a pro rata refund has been deleted and
the sentence changed to read ``If failure to comply with these
provisions is determined to be inadvertent, and the optional units are
combined into a basic unit, that portion of the premium paid for the
purpose of electing optional units will be refunded to you for the
units combined.''
Comment: The crop insurance industry stated that they did not
understand why all optional units must be identified on the acreage
report for each crop year. They said that listing every possible
combination for every crop on a policy could test the limits on the
number of policy lines allowed.
Response: Although more than one method is available to determine
optional units, only one method may be used in any given crop year.
Only those optional units determined under the selected method for the
crop year for which the acreage report is completed must be listed.
Optional unit designation from past years or that could have been
established for the current year, should not be listed on the current
crop years' acreage report. The phrase ``established for a crop year''
has been added to the provisions for clarification.
Comment: The crop insurance industry suggested that the provision,
``You must have records, which can be independently verified, of
acreage and production for each optional unit for at least the last
crop year used to determine your production guarantee,'' would cause
confusion between the APH and policy year.
Response: The APH is based on the actual production of the producer
for each crop year in which a crop is produced to a maximum of 10 crop
years. There is no requirement that the producers have insured the crop
before its production be included in the APH data base. FCIC believes
the provision is clearly stated and has not made changes.
Comment: The crop insurance industry suggested that section 3(a)
begin with the phrase ``You may select only one price percentage * *
*.'' It would not then be necessary to include complex provisions
regarding different varieties with different maximum prices.
Response: Methods used to select price elections vary between
insurance providers. While some require selection of a percentage,
others require selection of a specific dollar amount. The suggested
change will not work in all
[[Page 41299]]
circumstances. No change has been made to the provisions.
Comment: The crop insurance industry suggested that the order of
the provisions in section 3 (Insurance Guarantees, Coverage Levels, and
Prices for Determining Indemnities) be rearranged for clarity.
Response: FCIC agrees and has rearranged the provisions in this
section.
Comment: The crop insurance industry questioned if the phrase ``Any
acreage of citrus damaged to the extent that the majority of producers
in the area would not further maintain it will be deemed to have been
destroyed even though you may continue to maintain it'' is necessary to
the policy and what it means.
Response: This provision is intended to limit acreage to the first
stage production guarantee when the crop is damaged to the extent that
a majority of producers in the area would not continue to maintain it.
This intent has been clarified.
Comment: A producer and a trade association stated that
establishing yields based on APH regulations will not work following a
general and severe loss. They contend that the citrus trees are still
recovering from the 1989 freeze and have only begun producing in the
last three to four years and still have not reached peak production.
Therefore, APH yields may not accurately reflect production potential.
Also, some citrus tends to be alternate bearing which will make it
difficult to develop acceptable T-yields and to apply APH rules. The
yields of tree crops are affected by tree age, size of canopy, and
other constraints, which do not affect annual crops. The planting of
new trees impacts the APH yield even if the trees are not damaged. Full
production for new trees generally occurs the sixth year after planting
and at least 25-30% of the citrus acreage has not reached full
production.
Response: FCIC believes that section 3(d) in the proposed rule (now
3(e)) provides the flexibility needed to allow yield determination by
appraisal when past production history is inadequate.
Comment: The crop insurance industry questioned if the lag year
should apply to the provision that requires that the acreage produce an
average yield of at least 3 tons per acre the previous year to be
insurable.
Response: The provision for the grove to have produced at least 3
tons per acre the previous year to be insurable will only be required
if the yield is determined by APH yields. For other methods, there must
be at least a 3-ton per acre appraised yield potential to be insured.
Comment: The crop insurance industry questioned why 30 days were
changed to 10 days in section 9(a)(1) of the policy that states ``* * *
if the application is accepted by us after November 20, insurance will
attach on the 10th day after the application is received in your
insurance provider's local office * * *.'' and if the 10-day period
would allow enough time to complete inspections.
Response: The language in section 9(a)(1) has been changed as
follows ``Coverage begins on November 21 of each crop year, except that
for the year of application, if your application is received after
November 11 but prior to November 21, insurance will attach on the 10th
day after your properly completed application is received in our local
office unless we inspect the acreage during the 10-day period and
determine that it does not meet insurability requirements. You must
provide any information that we require for the crop or to determine
the condition of the grove.'' These provisions were modified so that
they will not be interpreted as allowing late-filed applications.
Further, a thirty-day period was not reasonable. Ten days is sufficient
to prevent adverse selection and avoid unnecessary exposure to
uninsured losses during the waiting period. The insurance provider must
expedite its review of the application and any supporting documentation
filed by the producer, determine if a visual inspection is necessary,
and perform any necessary inspections within the 10-day period. The
period of 10 days is believed appropriate to meet the needs of both the
producer and the insurance provider.
Comment: The crop insurance industry stated that some flexibility
may be needed for obtaining signatures and for mail time if a transfer
takes place shortly before the acreage reporting date but the transfer
form does not reach the company office until after the acreage
reporting date.
Response: Section 9(b)(2)(ii) (Insurance Period) states ``We are
notified by you or the transferee in writing of such transfer on or
before the acreage reporting date * * *.'' If the transferor or the
transferee signs the properly completed transfer form and gives the
form to the crop insurance agent on or before the acreage reporting
date, this requirement will be met. No change has been made to the
provisions.
Comment: The crop insurance industry and a trade association
questioned whether changing an insured cause of loss from ``failure of
the irrigation water supply'' to ``failure of the irrigation water
supply, if caused by an insured peril that occurs during the insurance
period'' would be an insurable cause of loss if the drought started in
one crop year and reduced the available water to ``barely enough'' and
continued into another crop year. They also stated that drought needs
to be a covered cause of loss as well as failure of the irrigation
supply because producers count on rainfall, as well as irrigation to
produce normal tonnage and quality of fruit. If the trees were under
stress from drought in the summer or fall before bloom, which would be
prior to the beginning of the insurance period, the bloom and
consequently fruit set would be affected.
Response: Drought is a covered cause of loss for crops requiring
irrigation to be insurable. However, the commenters are suggesting that
drought be covered even though the damage from the drought occurred
before insurance attached for the crop year. It is contrary to
insurance principles to cover a loss that occurred prior to insurance
attaching. If there is insufficient water available at the time
insurance attached, the crop is not insurable. If there is sufficient
water available at the time insurance attaches, but a continuing
drought results in insufficient water and damage to the crop, any
resulting loss would be insured. No change has been made.
Comment: The crop insurance industry suggested that the last line
of section 9(b)(2)(ii) of the proposed rule should be a separate line.
Response: FCIC has reformatted and changed the wording of this
provision to improve the readability.
Comment: A trade association believes that the requirement for a
producer to give 15 days notice for an appraisal before any fruit is
marketed directly to consumers is totally unworkable. Their biggest
concern is that the appraisal may not be completed in a timely manner.
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. The production may be marketed directly to consumers any
time after the end of the 15-day waiting period regardless of whether
or not the insurance provider has fulfilled their responsibility of
appraising the crop. FCIC believes that 15 days is appropriate to meet
the needs of both the producer and the insurance provider.
Comment: The crop insurance industry believes that the policy
should
[[Page 41300]]
not allow the producer to defer settlement and wait for a later,
generally lower, appraisal on insured acreage the producer intends to
abandon or no longer care for.
Response: The later appraisal will only be necessary if the
insurance provider agrees that such appraisal would result in a more
accurate determination, and if the producer continues to care for the
crop. 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. No change
will be made to these provisions.
Comment: The crop insurance industry suggested combining the
provisions contained in section 13(e) with the provisions in section
13(a).
Response: The provisions are clearly stated and have not been
combined.
Comment: The crop insurance industry stated that they believe the
written agreement should be continuous if no substantive changes occur
from one year to the next.
Response: The written agreement can only be valid for one year
because it must contain all the variable terms of the contract
including, but not limited to, crop type or variety, the guarantee,
premium rate, and price election. One or more of these variables often
changes from year to year. No change has been made to these provisions.
In addition, written agreements are, by design, temporary and should be
replaced by applicable policy provisions.
In addition to the changes described above, FCIC has made the
following changes to the Texas Citrus Fruit Provisions:
1. Section 1--Added definitions for ``crop'' and ``varieties'' for
clarification.
2. Section 1--Changed the definition of ``non-contiguous land'' so
that a producer who share rents acreage is not prohibited from having
optional units on non-contiguous land to conform to other perennial
policies.
3. Section 1--Changed the definition of `` Excess wind'' and
``production guarantee (per acre)'' for clarification.
4. Section 3(d)--Add a provision requiring the producer to report
any circumstance that may reduce the yield to include other causes that
may not be encompassed by the other listed events.
5. Section 7--Added a provision to state that production that is
direct marketed to consumers is not insurable unless allowed by the
Special Provisions or by written agreement.
6. Section 8--Changed provisions regarding interplanted acreage so
that all insurability requirements contained in the policy are
applicable, not just these crop provisions.
7. Section 9--Clarified that the transferee must be an eligible
person.
8. Section 11--Changed the wording for clarification and added a
provision requiring the producer to give notice before beginning to
harvest any damaged production so the insurer may have an opportunity
to inspect it if the insured intends to claim an indemnity on any unit.
9. Section 12--Changed the wording for simplification and clarity.
10. Section 13--Changed the format and wording for clarity.
Good cause is shown to make this rule effective upon publication in
the Federal Register. This rule improves the Texas citrus fruit
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 August 31, 1996. 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
1998 crop year.
List of Subjects in 7 CFR Part 457
Crop insurance, Texas citrus fruit.
Final Rule
Pursuant to the authority contained in the Federal Crop Insurance
Act, as amended (7 U.S.C. 1501 et seq.), the Federal Crop Insurance
Corporation hereby amends the Common Crop Insurance Regulations (7 CFR
part 457), effective for the 1998 and succeeding crop years, to read as
follows:
PART 457--[AMENDED]
1. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), and 1506(p).
2. 7 CFR part 457 is amended by adding a new Sec. 457.119 to read
as follows:
Sec. 457.119 Texas Citrus Fruit Crop Insurance Provisions.
The Texas Citrus Fruit Crop Insurance Provisions for the 1998 and
succeeding crop years are as follows:
United States Department of Agriculture; Federal Crop Insurance
Corporation; Texas Citrus Fruit 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--Specific groups of citrus fruit as listed in the Special
Provisions.
Crop year--The period beginning with the date insurance attaches
to the citrus crop and extending through the normal harvest time. It
is designated by the calendar year following the year in which the
bloom is normally set.
Days--Calendar days.
Direct marketing--Sale of the insured crop directly to consumers
without the intervention of an intermediary such as a wholesaler,
retailer, packer, processor, shipper, or buyer. Examples of direct
marketing include selling through an on-farm or roadside stand,
farmer's market, and permitting the general public to enter the
field for the purpose of picking all or a portion of the crop.
Excess rain--An amount of precipitation that damages the crop.
Excess wind--A natural movement of air that has sustained speeds
exceeding 58 miles per hour recorded at the U. S. Weather Service
reporting station operating nearest to the grove at the time of
damage.
Freeze--The formation of ice in the cells of the tree, its
blossoms, or its fruit caused by low air temperatures.
FSA--The Farm Service Agency, an agency of the United States
Department of Agriculture, or any successor agency.
Good farming practices--The cultural practices generally in use
in the county for the crop to make normal progress toward maturity
and produce at least the yield used to determine the production
guarantee, and generally recognized by the Cooperative Extension
Service as compatible with agronomic and weather conditions in the
county.
Harvest--The severance of mature citrus fruit from the tree by
pulling, picking, or any other means, or by collecting marketable
fruit from the ground.
Hedged--A process of trimming the sides of the citrus trees for
better or more fruitful growth of the citrus fruit.
Interplanted--Acreage on which two or more crops are planted in
any form of alternating or mixed pattern.
Irrigated practice--A method of producing a crop by which water
is artificially applied during the growing season by appropriate
systems and at the proper times, with the intention of providing the
quantity of water needed to produce at least the yield used to
establish the irrigated production guarantee on the irrigated
acreage planted to the insured crop.
Local market price--The applicable citrus price per ton offered
by buyers in the area in which you normally market the insured crop.
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.
Production guarantee (per acre):
[[Page 41301]]
(a) First stage production guarantee--The second stage
production guarantee multiplied by forty percent (40%).
(b) Second stage production guarantee--The quantity of citrus
(in tons) determined by multiplying the yield determined in
accordance with section 3 by the coverage level percentage you
elect.
Ton--Two thousand (2,000) pounds avoirdupois.
Topped--A process of trimming the uppermost portion of the
citrus trees for better and more fruitful growth of the citrus
fruit.
Varieties--Subclasses of crops as listed in the Special
Provisions.
Written agreement--A written document that alters designated
terms of a policy in accordance with section 13.
2. Unit Division
(a) A unit as defined in section 1 (Definitions) of the Basic
Provisions (Sec. 457.8), will be divided into basic units by each
citrus crop designated in the Special Provisions.
(b) Unless limited by the Special Provisions, these basic units
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 premium
paid for the purpose of electing optional units will be refunded to
you for the units combined.
(e) All optional units established for a crop year must be
identified on the acreage report for that crop year.
(f) The following requirements must be met for each optional
unit:
(1) You must have records, which can be independently verified,
of acreage and production for each optional unit for at least the
last crop year used to determine your production guarantee; and
(2) You must have records of marketed production 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.
(3) Each optional unit must meet one of the following criteria,
as applicable:
(i) Optional Units by Section, Section Equivalent, or FSA Farm
Serial Number: Optional units may be established if each optional
unit is located in a separate legally identified section. In the
absence of sections, we may consider parcels of land legally
identified by other methods of measure including, but not limited to
Spanish grants, railroad surveys, leagues, labors, or Virginia
Military Lands, as the equivalent of sections for unit purposes. In
areas that have not been surveyed using the systems identified
above, or another system approved by us, or in areas where such
systems exist but boundaries are not readily discernible, each
optional unit must be located in a separate farm identified by a
single FSA Farm Serial Number; or
(ii) Optional Units on Acreage Located on Non-Contiguous Land:
In lieu of establishing optional units by section, section
equivalent or FSA Farm Serial Number, optional units may be
established if each optional unit is located on non-contiguous land.
3. Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities In addition to the requirements of section 3
(Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities) of the Basic Provisions (Sec. 457.8):
(a) You may select only one price election and coverage level
for each citrus fruit crop designated in the Special Provisions that
you elect to insure. The price election you choose for each crop
need not bear the same percentage relationship to the maximum price
offered by us for each crop. For example, if you choose one hundred
percent (100%) of the maximum price election for early oranges, you
may choose seventy-five percent (75%) of the maximum price election
for late oranges. However, if separate price elections are available
by variety within each crop, the price elections you choose within
the crop must have the same percentage relationship to the maximum
price offered by us for each variety within the crop.
(b) The production guarantee per acre is progressive by stage
and increases at specific intervals to the final stage production
guarantee. The stages and production guarantees per acre are:
(1) The first stage extends from the date insurance attaches
through April 30 of the calendar year of normal bloom. The
production guarantee will be forty percent (40%) of the yield
calculated in section 3(e) multiplied by your coverage level.
(2) The second or final stage extends from May 1 of the calendar
year of normal bloom until the end of the insurance period. The
production guarantee will be the yield calculated in section 3(e)
multiplied by your coverage level.
(c) Any acreage of citrus damaged in the first stage to the
extent that the majority of producers in the area would not further
maintain it will be limited to the first stage production guarantee
even though you may continue to maintain it.
(d) In addition to the reported production, each crop year you
must report by type:
(1) The number of trees damaged, topped, hedged, pruned or
removed; any 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 anytime the planting pattern of
such acreage is changed:
(i) The age of the interplanted crop, and type 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 the
following: interplanted perennial crop; removal, topping, hedging,
or pruning of trees; damage; change in practices and any other
circumstance on the yield potential of the insured crop. If you fail
to notify us of any circumstance that may reduce your yields from
previous levels, we will reduce your production guarantee as
necessary at any time we become aware of the circumstance.
(e) The yield used to compute your production guarantee will be
determined in accordance with Actual Production History (APH)
regulations, 7 CFR part 400, subpart G, and applicable policy
provisions unless damage or changes to the grove or trees, require
establishment of the yield by another method. In the event of such
damage or changes, the yield will be based on our appraisal of the
potential of the insured acreage for the crop year.
(f) Instead of reporting your citrus production for the previous
crop year, as required by section 3 of the Basic Provisions
(Sec. 457.8), there is a one year lag period. Each crop year you
must report your production from two crop years ago, e.g., on the
1998 crop year production report, you will provide your 1996 crop
year production.
4. Contract Changes
In accordance with section 4 (Contract Changes) of the Basic
Provisions (Sec. 457.8), the contract change date is August 31
preceding the cancellation date.
5. Cancellation and Termination Dates
In accordance with section 2 (Life of Policy, Cancellation, and
Termination) of the Basic Provisions (Sec. 457.8), the cancellation
and termination dates are November 20.
6. Annual Premium
In lieu of the premium computation method in section 7 (Annual
Premium) of the Basic Provisions (Sec. 457.8), the annual premium
amount is computed by multiplying the second stage production
guarantee per acre by the price election, the premium rate, the
insured acreage, your share at the time coverage begins, and by any
applicable premium adjustment percentages contained in the Special
Provisions.
7. Insured Crop
In accordance with section 8 (Insured Crop) of the Basic
Provisions (Sec. 457.8), the crop insured will be all the acreage in
the county of each citrus crop designated in the Special Provisions
that you elect to insure and for which a premium rate is provided by
the actuarial table:
(a) In which you have a share;
(b) That are adapted to the area;
(c) That are irrigated;
(d) That has produced an average yield of at least three tons
per acre the previous year, or we have appraised the yield potential
of at least three tons per acre;
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(e) That is grown in a grove that, if inspected, is considered
acceptable by us; and
(f) That is not sold by direct marketing, unless allowed by the
Special Provisions or by written agreement.
8. Insurable Acreage
In lieu of the provisions in section 9 (Insurable Acreage) of
the Basic Provisions (Sec. 457.8), that prohibit insurance attaching
to a crop planted with another crop, citrus interplanted with
another perennial crop is insurable unless we inspect the acreage
and determine it does not meet the requirements contained in your
policy.
9. Insurance Period
(a) In accordance with the provisions of section 11 (Insurance
Period) of the Basic Provisions (Sec. 457.8):
(1) Coverage begins on November 21 of each crop year, except
that for the year of application, if your application is received
after November 11 but prior to November 21, insurance will attach on
the 10th day after your properly completed application is received
in our local office, unless we inspect the acreage during the 10 day
period and determine that it does not meet insurability
requirements. You must provide any information that we require for
the crop or to determine the condition of the grove.
(2) The calendar date for the end of the insurance period for
each crop year is the second May 31st of the crop year.
(b) In addition to the provisions of section 11 (Insurance
Period) of the Basic Provisions (Sec. 457.8):
(1) If you acquire an insurable share in any insurable acreage
after coverage begins, but on or before the acreage reporting date
for the crop year, and after an inspection we consider the acreage
acceptable, insurance will be considered to have attached to such
acreage on the calendar date for the beginning of the insurance
period.
(2) If you relinquish your insurable share on any insurable
acreage of citrus on or before the acreage reporting date for the
crop year, insurance will not be considered to have attached to, and
no premium will be due, and no indemnity paid 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.
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 the following causes of loss that occur within the
insurance period:
(1) Excess rain;
(2) Excess wind;
(3) Fire, unless weeds and other forms of undergrowth have not
been controlled or pruning debris has not been removed from the
grove;
(4) Freeze;
(5) Hail;
(6) Tornado;
(7) Wildlife; or
(8) Failure of the irrigation water supply if caused by an
insured peril that occurs during the insurance period.
(b) In addition to the causes of loss excluded in section 12
(Causes of Loss) of the Basic Provisions (Sec. 457.8), we will not
insure against damage or loss of production due to:
(1) Disease or insect infestation, unless a cause of loss
specified in section 10(a):
(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) Inability to market the citrus for any reason other than
actual physical damage from an insurable cause specified in this
section. For example, we will not pay you an indemnity if you are
unable to market due to quarantine, boycott, or refusal of any
person to accept production.
11. Duties in the Event of Damage or Loss
In addition to the requirements of section 14 (Duties in the
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), the
following will apply:
(a) If the Special Provisions permit or a written agreement
authorizing direct marketing exists, 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.
(b) If you intend to claim an indemnity on any unit, you must
notify us before beginning to harvest any damaged production so we
may have an opportunity to inspect it. You must not sell or dispose
of the damaged crop until after we have given you written consent to
do so. If you fail to meet the requirements of this section all such
production will be considered undamaged and included as production
to count.
12. Settlement of Claim
(a) We will determine your loss on a unit basis. In the event
you are unable to provide acceptable production records:
(1) For any optional unit, we will combine all optional units
for which such production records were not provided; or
(2) For any basic unit, we will allocate any commingled
production to such units in proportion to our liability on the
harvested acreage for each unit.
(b) In the event of loss or damage covered by this policy, we
will settle your claim on a unit basis by:
(1) Multiplying the insured acreage for each crop, or variety if
applicable, by its respective production guarantee (see sections 1
and 3);
(2) Multiplying the results of section 12(b)(1) by the
respective price election for each crop or variety, if applicable;
(3) Totaling the results of section 12(b)(2);
(4) Multiplying the total production to count of each variety,
if applicable (see section 12(c)) by the respective price election;
(5) Totaling the results of section 12(b)(4);
(6) Subtracting this result of section 12(b)(5) from the result
of section 12(b)(3); and
(7) Multiplying the result of section 12(b)(6) by your share.
(c) The total production to count (in tons) from all insurable
acreage on the unit will include:
(1) All appraised production as follows:
(i) Not less than the production guarantee per acre for acreage:
(A) That is abandoned;
(B) For which you fail to provide acceptable production records;
(C) That is damaged solely by uninsured causes; or
(D) From which production is sold by direct marketing, if direct
marketing is specifically permitted by the Special Provisions or a
written agreement, and you fail to meet the requirements contained
in section 11;
(ii) Production lost due to uninsured causes;
(iii) Unharvested production; and
(iv) Potential production on insured acreage you intend to
abandon or no longer care for, if you and we agree on the appraised
amount of production. Upon such agreement, the insurance period for
that acreage will end. If you do not agree with our appraisal, we
may defer the claim only if you agree to continue to care for the
crop. We will then make another appraisal when you notify us of
further damage or that harvest is general in the area unless you
harvested the crop, in which case we will use the harvested
production. If you do not continue to care for the crop, our
appraisal made prior to deferring the claim will be used to
determine the production to count; and
(2) All harvested production from the insurable acreage.
(d) Any citrus fruit that is not marketed as fresh fruit and,
due to insurable causes, does not contain 120 or more gallons of
juice per ton, will be adjusted by:
(1) Dividing the gallons of juice per ton obtained from the
damaged citrus by 120; and
(2) Multiplying the result by the number of tons of such citrus.
If individual records of juice content are not available, an
average juice content from the nearest juice plant will be used, if
available. If not available, a field appraisal will be made to
determine the average juice content.
(e) Where the actuarial table provides, and you elect, the fresh
fruit option, citrus fruit that is not marketable as fresh fruit due
to insurable causes will be adjusted by:
(1) Dividing the value per ton of the damaged citrus by the
price of undamaged citrus fruit; and
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(2) Multiplying the result by the number of tons of such citrus
fruit. The applicable price for undamaged citrus fruit will be the
local market price the week before damage occurred.
(f) Any production will be considered marketed or marketable as
fresh fruit unless, due solely to insured causes, such production
was not marketed as fresh fruit.
(g) In the absence of acceptable records of disposition of
harvested citrus fruit, the disposition and amount of production to
count for the unit will be the guarantee on the unit.
(h) Any citrus fruit on the ground that is not harvested will be
considered totally lost if damaged by an insured cause.
13. Written Agreements
Designated terms of this policy may be altered by written
agreement in accordance with the following:
(a) You must apply in writing for each written agreement no
later than the sales closing date, except as provided in section
(13)(e);
(b) The application for written agreement must contain all terms
of the contract between you and us that will be in effect if the
written agreement is not approved;
(c) If approved, the written agreement will include all variable
terms of the contract, including, but not limited to, crop type or
variety, the guarantee, premium rate, and price election;
(d) Each written agreement will only be valid for one year (If
the written agreement is not specifically renewed the following
year, insurance coverage for subsequent crop years will be in
accordance with the printed policy); and
(e) An application for 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 August 2, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-20195 Filed 8-7-96; 8:45 am]
BILLING CODE 3410-FA-P