[Federal Register Volume 61, Number 168 (Wednesday, August 28, 1996)]
[Rules and Regulations]
[Pages 44145-44149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21893]



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 Rules and Regulations
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  Federal Register / Vol. 61, No. 168 / Wednesday, August 28, 1996 / 
Rules and Regulations  

[[Page 44145]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457


Common Crop Insurance Regulations; Arizona-California Citrus Crop 
Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
specific crop provisions for the insurance of Arizona-California 
citrus. 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 Arizona-California Citrus Crop Insurance 
Regulations with the Common Crop Insurance Policy for ease of use and 
consistency of terms.

EFFECTIVE DATE: August 28, 1996.

FOR FURTHER INFORMATION CONTACT: John Meyer, 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 June 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 
1 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 these policies will not increase significantly from the 
amount of work currently required. This rule does not have any greater 
or lesser impact on the producer. Therefore, this action is determined 
to be exempt from the provisions of the Regulatory Flexibility Act (5 
U.S.C. 605), and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

    This program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.450.

Executive Order No. 12372

    This program is not subject to the provisions of Executive Order 
No. 12372, which require intergovernmental consultation with State and 
local officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order No. 12778

    The Office of the General Counsel has determined that these 
regulations meet the applicable standards provided in sections 2(a) and 
2(b)(2) of Executive Order No. 12778. The provisions of this rule will 
not have a retroactive effect prior to the effective date. The 
provisions of this rule will preempt State and local laws to the extent 
such State and local laws are inconsistent herewith. The administrative 
appeal provisions published at 7 CFR parts 11 and 780 must be exhausted 
before any action for judicial review may be brought.

[[Page 44146]]

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 Thursday, June 20, 1996, FCIC published a proposed rule in the 
Federal Register at 61 FR 31464-31468 to add to the Common Crop 
Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.121, 
Arizona-California Citrus 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 Arizona-
California citrus found at 7 CFR part 409 (Arizona-California Citrus 
Crop Insurance Regulations), 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 Arizona-
California citrus will be removed from 7 CFR part 409 and that part 
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 14 comments were received from the crop insurance industry. 
The comments received, and FCIC's response are as follows:
    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 questioned the need to define 
``FSA'' in the provisions and recommended deletion.
    Response: FCIC agrees and has deleted the definition for ``FSA''.
    Comment: The crop insurance industry stated that the provisions 
refer to a pro rata refund when optional units are combined into basic 
units when 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 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: Optional units are only allowed by non-contiguous land. 
Only those optional units determined 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 or 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 producer 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 questioned why optional units 
were allowed only by non-contiguous land without the alternative of 
optional units by section/legal description whereas in other citrus 
policies optional units are offered by both criteria.
    Response: Offering optional units by legal description would 
increase the administrative burden on the program without offering any 
benefit to producers, because most producers in Arizona and California 
tend to farm within a section. No change has been made to these 
provisions.
    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 circumstances. No change has been made to 
the provisions.
    Comment: The crop insurance industry suggested that statements 
listed in section 6(b)(1) ``That is not irrigated'' and 6(b)(2) ``That 
has not reached the sixth growing season after being set out * * * '' 
be changed to positive statements and listed under 6(a).
    Response: FCIC agrees and has rewritten and rearranged the 
provisions in this section.
    Comment: The crop insurance industry questioned why a 10 day delay 
was incorporated into section 8(a)(1) of the policy that states, `` * * 
* for the first crop year, if the application is accepted by us after 
November 20, insurance will attach on the 10th day after the 
application, if approved, is received in our local agent's office * * * 
'' and if the 10 day period would allow enough time to complete 
inspections.
    Response: The language in section 8(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 to be 
consistent with other perennial crop provisions, to prevent adverse 
selection, and for the producer to 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.

[[Page 44147]]

    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 8(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 believes that the policy 
should 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 12(e) with the provisions in section 
12(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 1 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 Arizona-California Citrus Crop Provisions.
    1. Section 1--Revised 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 and to conform to other perennial 
policies.
    2. Section 1--Revised the definition of ``carton'' and ``production 
guarantee (per acre)'' for clarification.
    3. Section 1--Added definitions for ``crop'' and ``variety'' for 
clarification.
    4. Section 1--Removed the definition of ``type'' because the word 
``type'' has been 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.
    5. Section 6--Added a provision to allow citrus sold by direct 
marketing to be insurable, if specifically allowed by the Special 
Provisions or by written agreement, to conform to other perennial 
policies.
    6. Section 8(b)--Revised the provisions for when an insured 
relinquishes an insurable share on any insurable acreage of citrus on 
or before the acreage reporting date for the crop year.
    7. Section 10--Removed the provision requiring the producer to 
notify the insurance provider within three days of the date harvest 
should have started if the crop will not be harvested. Citrus is 
harvested over a long period of time and this provision would be 
difficult to administer.
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. This rule improves the Arizona-California citrus 
crop insurance coverage and brings it under the Common Crop Insurance 
Policy Basic Provisions for consistency among policies. The contract 
change date required for new policies is 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, Arizona-California citrus.

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. 457.121 to read 
as follows:


Sec. 457.121   Arizona-California Citrus Crop Insurance Provisions

    The Arizona-California Citrus Crop Insurance Provisions for the 
1998 and succeeding crop years are as follows:

United States Department of Agriculture

Federal Crop Insurance Corporation

Arizona-California Citrus 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

    Carton--The standard container for marketing the fresh packed 
citrus fruit crop as shown below. In the absence of marketing 
records on a carton basis, production will be converted to cartons 
on the basis of the following average net pounds of packed fruit in 
a standard packed carton.

------------------------------------------------------------------------
            Container size                    Fruit crop         Pounds 
------------------------------------------------------------------------
Container #58........................  Navel oranges, Valencia        38
                                        oranges & Sweet                 
                                        oranges.                        
Container #58........................  Lemons.................        40
Container #59........................  Grapefruit.............        32
Container #63........................  Tangerines (including          25
                                        Tangelos) & Mandarin            
                                        oranges.                        
------------------------------------------------------------------------

    Crop--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 normal harvest time. It is 
designated by the calendar year following the year in which the 
bloom is normally set.
    Days--Calendar days.
    Dehorning--Cutting of any scaffold limb to a length that is not 
greater than one-fourth (\1/4\) the height of the tree before 
cutting.
    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.
    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

[[Page 44148]]

generally recognized by the Cooperative Extension Service as 
compatible with agronomic and weather conditions in the county.
    Harvest--The severance of mature citrus from the tree by 
pulling, picking, or any other means, or by collecting marketable 
fruit from the ground.
    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.
    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)--The number of citrus (cartons) 
determined by multiplying the approved APH yield per acre by the 
coverage level percentage you elect.
    Scaffold limb--A major limb attached directly to the trunk.
    Set out--Transplanting a tree into the grove.
    Variety--Subclass of crop as listed in the Special Provisions.
    Written agreement--A written document that alters designated 
terms of a policy in accordance with section 12.

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 stored 
production from each optional unit maintained in such a manner that 
permits us to verify the production from each optional unit, or the 
production from each unit must be kept separate until loss 
adjustment is completed by us; and
    (3) Each optional unit must be located on non-contiguous land.

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

    (a) In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) 
of the Basic Provisions (Sec. 457.8), 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 sweet oranges, you may choose seventy-five 
percent (75%) of the maximum price election for grapefruit. However, 
if separate price elections are available by variety within each 
crop, the price elections you choose for each variety must have the 
same percentage relationship to the maximum price offered by us for 
each variety within the crop.
    (b) In lieu of reporting your citrus production of marketable 
fresh fruit for the previous crop year, as required by section 3 of 
the Basic Provisions (Sec. 457.8), there is a lag period of one 
year. 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.
    (c) In addition, you must report, by the production reporting 
date designated in section 3 (Insurance Guarantees, Coverage Levels, 
and Prices for Determining Indemnities) of the Basic Provisions 
(Sec. 457.8), by type, if applicable:
    (1) The number of trees damaged, dehorned 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; damage; dehorning; removal 
of trees; 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.

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. 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 is adapted to the area;
    (c) That is irrigated;
    (d) That is grown in a grove that, if inspected, is considered 
acceptable by us;
    (e) That is not sold by direct marketing, unless allowed by the 
Special Provisions or by written agreement; and
    (f) That has reached at least the sixth growing season after 
being set out. However, we may agree to insure acreage that has not 
reached this age if we inspect and approve a written agreement to 
insure such acreage.

7. 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.

8. 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:
    (i) August 31 for Navel oranges and Southern California lemons;
    (ii) November 20 for Valencia oranges; and
    (iii) July 31 for all other citrus crops.
    (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

[[Page 44149]]

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.

9. 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 during the 
insurance period:
    (1) Adverse weather conditions;
    (2) Fire, unless weeds and other forms of undergrowth have not 
been controlled or pruning debris has not been removed from the 
grove;
    (3) Wildlife;
    (4) Earthquake;
    (5) Volcanic eruption; or
    (6) Failure of 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 adverse weather 
conditions:
    (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.

10. 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 that 
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.

11. 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 by:
    (1) Multiplying the insured acreage for each crop, or variety if 
applicable, by its respective production guarantee;
    (2) Multiplying the results of section 11(b)(1) by the 
respective price election for each crop, or variety, if applicable;
    (3) Totaling the results of section 11(b)(2);
    (4) Multiplying the total production to be counted of each 
variety, if applicable (see section 11(c)), by the respective price 
election;
    (5) Totaling the results of section 11(b)(4);
    (6) Subtracting this result of section 11(b)(5) from the result 
of section 11(b)(3); and
    (7) Multiplying the result of section 11(b)(6) by your share;
    (c) The total production to count (in cartons) 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 10;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production determined to be marketable as 
fresh packed fruit; and
    (iv) Potential production on insured acreage that you intend to 
abandon or no longer care for, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
that acreage will end. If you do not agree with our appraisal, we 
may defer the claim only if you agree to continue to care for the 
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;
    (2) All harvested production marketed as fresh packed fruit from 
the insurable acreage; and
    (3) All citrus that was disposed of or sold without an 
inspection or written consent.
    (d) Any production will be considered marketed or marketable as 
fresh packed fruit unless, due solely to insured causes, such 
production was not marketed or marketable as fresh packed fruit.
    (e) Citrus that cannot be marketed as fresh packed fruit due to 
insurable causes will not be considered production to count.
    (f) If we determine that frost protection equipment was not 
properly utilized or not properly reported, the indemnity for the 
unit will be reduced by the percentage of premium reduction allowed 
for frost protection equipment. You must, at our request, provide us 
records showing the start-stop times by date for each period the 
frost protection equipment was used.

12. Written Agreement

    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 
12(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, D.C., on August 22, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-21893 Filed 8-27-96; 8:45 am]
BILLING CODE 3410-FA-P