[Federal Register Volume 61, Number 179 (Friday, September 13, 1996)]
[Proposed Rules]
[Pages 48420-48423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23498]


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DEPARTMENT OF AGRICULTURE
7 CFR Part 457

RIN 0563-AB54


Common Crop Insurance Regulations; Cranberry Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (``FCIC'') proposes 
specific crop provisions for the insurance of cranberries. 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 Cranberry Endorsement with the Common Crop Insurance Policy for 
ease of use and consistency of terms.

DATES: Written comments, data, and opinions on this proposed rule will 
be accepted until close of business November 12, 1996, and will be 
considered when the rule is to be made final. The comment period for 
information collections under the Paperwork Reduction Act of 1995 
continues through November 12, 1996.

ADDRESSES: Interested persons are invited to submit written comments to 
the Chief, Product Development Branch, Federal Crop Insurance 
Corporation, United States Department of Agriculture, 9435 Holmes Road, 
Kansas City, MO 64131. Written comments will be available for public 
inspection and copying in room 0324, South Building, USDA, 14th and 
Independence Avenue, SW., Washington, DC., 8:15 a.m.-4:45 p.m., est, 
Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Richard Brayton, Program Analyst, 
Research and Development Division, Product Development Branch, FCIC, at 
the Kansas City, MO, address listed above, telephone (816) 926-3834.

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

    The information collection requirements contained in these 
regulations were previously approved by OMB pursuant to the Paperwork 
Reduction Act of 1995 (44 U.S.C. chapter 35) under OMB control number 
0563-0003 through September 30, 1998.
    The amendments set forth in this proposed rule do not contain 
additional information collections that require clearance by OMB under 
the provisions of 44 U.S.C. chapter 35.
    The title of this information collection is ``Catastrophic Risk 
Protection Plan and Related Requirements including, Common Crop 
Insurance Regulations; Cranberry Crop Insurance Provisions.'' The 
information to be collected includes: a crop insurance application and 
acreage report. Information collected from the application and acreage 
report is electronically submitted to FCIC by the reinsured companies. 
Potential respondents to this information collection are producers of 
cranberries that are eligible for Federal crop insurance.
    The information requested is necessary for the reinsured companies 
and FCIC to provide insurance and reinsurance, determine eligibility, 
determine the correct parties to the agreement or contract, determine 
and collect premiums or other monetary amounts, and pay benefits.
    All information is reported annually. The reporting burden for this 
collection of information is estimated to average 16.9 minutes per 
response for each of the 3.6 responses from approximately 1,755,015 
respondents. The total annual burden on the public for this information 
collection is 2,676,932 hours.
    The comment period for information collections under the Paperwork 
Reduction Act of 1995 continues for the following: (a) Whether the 
proposed collection of information is necessary for the proper 
performance of the functions of the agency, including whether the 
information shall have practical utility; (b) the accuracy of the 
agency's estimate of the burden of the proposed collection of 
information; (c) ways to enhance the quality, utility, and clarity of 
the information to be collected; and (d) ways to minimize the burden of 
the collection of information on respondents, including through the use 
of automated collection techniques or other forms of information 
gathering technology.

[[Page 48421]]

    Comments regarding paperwork reduction should be submitted to the 
Desk Officer for Agriculture, Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, DC 20503 and to 
Bonnie Hart, Advisory and Corporate Operations Staff, Regulatory Review 
Group, Farm Service Agency, PO Box 2415, STOP 0572, U.S. Department of 
Agriculture, Washington, DC 20013-2415, telephone (202) 690-2857. 
Copies of the information collection may be obtained from Bonnie Hart 
at the above address.

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) for State, local, and tribal 
governments or the private sector. Thus, this rule is not subject to 
the requirements of sections 202 and 205 of the UMRA.

Executive Order No. 12612

    It has been determined under section 6(a) of Executive Order No. 
12612, Federalism, that this rule does not have sufficient federalism 
implications to warrant the preparation of a Federalism Assessment. The 
provisions contained in this rule will not have a substantial direct 
effect on States or their political subdivisions, or on the 
distribution of power and responsibilities among the various levels of 
government.

Regulatory Flexibility Act

    This regulation will not have a significant impact on a substantial 
number of small entities. 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. The insured may use actual records of production or receive 
a transitional yield which does not require the maintenance of 
production records. If the insured elects to use actual records of 
acreage and production as the basis for the production guarantee, the 
insured must report this information on a yearly basis. This regulation 
does not alter those requirements. Therefore, the amount of work 
required of the insurance companies and Farm Service Agency (FSA) 
offices 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 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 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 in 7 CFR parts 11 and 780 must be exhausted before any 
action for judicial review may be brought.

Environmental Evaluation

    This action is not expected to have a significant impact on the 
quality of the human environment, health, and safety. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is needed.

National Performance Review

    This regulatory action is being taken as part of the National 
Performance Review Initiative to eliminate unnecessary or duplicative 
regulations and improve those that remain in force.

Background

    FCIC proposes to add to the Common Crop Insurance Regulations (7 
CFR part 457), a new section, 7 CFR 457.132, Cranberry 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 cranberries found at 7 CFR 401.127 (Cranberry 
Endorsement). Upon publication of the Cranberry Crop Provisions as a 
final rule, the current provisions for insuring cranberries will be 
removed from Sec. 401.127 and that section will be reserved.
    This rule makes minor editorial and format changes to improve the 
Cranberry Endorsement's compatibility with the Common Crop Insurance 
Policy. In addition, FCIC is proposing substantive changes in the 
provisions for insuring cranberries as follows:
    1. Section 1--Add definitions for the terms ``days,'' ``good 
farming practices,'' ``irrigated practice,'' ``production guarantee,'' 
and ``written agreement'' for clarification purposes.
    2. Section 2--Revise the unit language for clarity. There is no 
change in the unit structure.
    3. Section 3(b)--Specify that the producer must report any damage, 
removal of vines, and change in practices that may reduce yields. If 
the producer fails to notify the insurance provider of any action or 
occurrence that may reduce yields from previous levels, the insurance 
provider will reduce the production guarantee at any time it becomes 
aware of any damage, removal of vines, or change in practices. This 
requirement is necessary to advise the insurer of circumstances that 
may require adjustment of the actual production history yields that are 
used to determine the insurance guarantee.
    4. Section 7--Clarify that if the application is accepted after 
November 20, insurance will not attach until the 10th day after the 
application is received by the insurance provider. Provide policy 
guidelines for attachment of insurance when insurable acreage is 
acquired or relinquished. The guidelines are consistent with existing 
agency practice as contained in internal agency handbooks.
    5. Section 8(b)(1)--Clarify that disease and insect infestations 
are excluded causes of loss unless adverse weather prevents the proper 
application of control measures, causes control measures to be 
ineffective when properly applied, or causes disease or insect 
infestation for which no effective

[[Page 48422]]

control mechanism is available. These exclusions are added so that 
insurance coverage is not provided for causes of loss that could be 
prevented. Also clarify that the inability to market the cranberries 
for any reason other than actual physical damage is not a covered cause 
of loss.
    6. Section 9--Add provisions that require an insured to notify the 
insurer of probable loss at least 15 days before the beginning of 
harvesting or immediately if discovered after harvesting has begun so 
an inspection can be made. The provisions also prohibit the insured 
from selling or otherwise disposing of any damaged production until the 
earlier of 15 days from request or when the insurer provides written 
consent to do so. This was changed to standardize the perennial crop 
policies and is needed to assure accurate determinations of the 
insurance guarantee.
    7. Section 11--Add provisions for providing insurance coverage by 
written agreement. FCIC has a long standing policy of permitting 
certain modifications of the insurance contract by written agreement 
for some policies. This amendment allows FCIC to tailor the policy to a 
specific insured in certain instances. The new section will cover 
application for and duration of written agreements.

List of Subjects in 7 CFR Part 457

    Crop insurance, Cranberry.

    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 proposes to amend 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 (1), and 1506(p).

    2. 7 CFR part 457 is amended by adding a new Sec. 457.132 to read 
as follows:


Sec. 457.132  Cranberry Crop Insurance Provisions

    The Cranberry Crop Insurance Provisions for the 1998 and succeeding 
crop years are as follows:

UNITED STATES DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

Cranberry 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

    Barrel--100 pounds of cranberries.
    Days--Calendar days.
    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 picking of cranberries from the vines for the 
purpose of removal from the land.
    Irrigated practice--A method of producing a crop by which water 
is artificially applied during the growing season by an overhead 
solid set irrigation system with the intention of providing the 
quantity of water needed to prevent frost and 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 barrels 
determined by multiplying the approved yield per acre by the 
coverage level percentage you elect.
    Written agreement--A written document that alters designated 
terms of a policy in accordance with section 11.

2. Unit Division

    (a) Unless limited by the Special Provisions, a unit as defined 
in section 1 (Definitions) of the Basic Provisions (Sec. 457.8), 
(basic unit) may be divided into optional units if, for each 
optional unit you meet all the conditions of this section or if a 
written agreement to such division exists.
    (b) 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.
    (c) 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.
    (d) All optional units must be identified on the acreage report 
for each crop year.
    (e) 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;
    (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; and
    (3) Each optional unit must be 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 for all the 
cranberries in the county insured under this policy.
    (b) 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):
    (1) Any damage, removal of vines, 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 age of the vines; and
    (3) 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: removal of vines, damage, and change in practices 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 
cranberries in the county for which a premium rate is provided by 
the actuarial table:
    (a) In which you have a share;
    (b) That are grown for harvest as cranberries;
    (c) That are grown in a bog that, if inspected, is considered 
acceptable by us; and
    (d) That are grown on vines that have reached at least the 
fourth growing season after setout, unless a written agreement 
provides for earlier coverage.

7. Insurance Period

    (a) In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8):

[[Page 48423]]

    (1) Coverage begins on November 21 of each crop year, except 
that 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 is received in your insurance provider's local office.
    (2) The calendar date for the end of the insurance period for 
each crop year is November 20.
    (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 cranberries 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 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; 
and
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date.

8. 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 bog;
    (3) Wildlife;
    (4) Earthquake;
    (5) Volcanic eruption;
    (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 
(Cause 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:
    (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; or
    (2) Inability to market the cranberries 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 the cranberries due to quarantine, boycott, or 
refusal of any person to accept production.

9. 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):
    (a) If you discover any insured units damaged, of if you intend 
to claim an indemnity on any unit, you must give us notice of 
probable loss:
    (1) At least 15 days before the beginning of any harvesting, or
    (2) Immediately if probable loss is discovered after harvesting 
has begun.
    (b) You must not sell or dispose of the damaged crop until after 
the earlier of 15 days from request or when we give you written 
consent to do so.
    (c) If you fail to meet the requirements of this section, all 
such production will be considered undamaged and included as 
production to count.

10. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event 
you are unable to provide production records:
    (1) For any optional unit, we will combine all optional units 
for which acceptable 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 by the production guarantee;
    (2) Multiplying this product by the price election;
    (3) Subtracting from this total, the dollar amount obtained by 
multiplying the total production to count (see subsection 10(c)) by 
the price election; and
    (4) Multiplying this result by your share.
    (c) The total production to count (in barrels) 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) Damaged solely by uninsured causes; or
    (C) For which you fail to provide production records that are 
acceptable to us;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production; 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 to 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.
    (3) Harvested production and potential unharvested production 
which, due to insurable causes, does not meet, or would not if 
properly handled meet, the United States Standards for Fresh 
Cranberries for Processing, and has a value of less than 75 percent 
of the market price for cranberries meeting the minimum requirements 
will be adjusted by:
    (i) Dividing the market value per barrel of such cranberries by 
the market price per barrel for cranberries meeting the minimum 
requirements; and
    (ii) Multiplying the result by the number of barrels of such 
cranberries.

11. 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 
11(e);
    (b) The application for a written agreement must contain all 
variable terms of the contract between you and us that will be in 
effect if the written agreement is not approved;
    (c) If approved, the written agreement will include all variable 
terms of the contract, including, but not limited to, crop type or 
variety, the 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 a written agreement submitted after the 
sales closing date may be approved if, after a physical inspection 
of the acreage, it is determined that no loss has occurred and the 
crop is insurable in accordance with the policy and written 
agreement provisions.

    Signed in Washington, D.C., on September 9, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-23498 Filed 9-12-96; 8:45 am]
BILLING CODE 3410-FA-P