[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;

[[Page 41302]]

    (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

[[Page 41303]]

    (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