[Federal Register Volume 61, Number 224 (Tuesday, November 19, 1996)]
[Proposed Rules]
[Pages 58786-58790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29559]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 61, No. 224 / Tuesday, November 19, 1996 / 
Proposed Rules  

[[Page 58786]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 403 and 457


Common Crop Insurance Regulations; Peach Crop Insurance 
Provisions and Peach Crop Insurance Regulations

AGENCY: Federal Crop Insurance Corporation.

ACTION: Proposed rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes 
specific crop provisions for the insurance of peaches. The provisions 
will be used in conjunction with the Common Crop Insurance Policy Basic 
Provisions, which contain standard terms and conditions common to most 
crops. The intended effect of this action is to provide policy changes 
to better meet the needs of the insured, include the current peach 
(fresh) crop insurance regulations with the Common Crop Insurance 
Policy for ease of use and consistency of terms, and to restrict the 
effect to the current peach crop insurance regulations to the 1997 and 
prior crop years.

DATES: Written comments, data, and opinions on this proposed rule will 
be accepted until close of business January 21, 1997 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 January 17, 1997.

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, S.W., Washington, D.C., 8:15 a.m .to 4:45 p.m., 
est, Monday through Friday, except holidays.

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) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866

    This action has been reviewed under United States Department of 
Agriculture (USDA) procedures established by Executive Order No. 12866. 
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 August 31, 2002.
    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.
    Section 7 of the 1998 Peach Crop Provisions adds interplanting as 
an insurable farming practice as long as it is interplanted with 
another perennial crop. This practice was not an insurable under the 
previous Peach Crop Insurance Policy to which it attached. 
Consequently, interplanting information will need to be collected using 
the FCI-12-P Pre-Acceptance Perennial Crop Inspection Report form for 
approximately 0.5 percent of the 46 insureds who interplant their peach 
crop. Standard interplanting language has been added to most perennial 
crops. Interplanting is an insurable practice as long as it does not 
adversely affect the insured crop. This is a benefit to agriculture 
because insurance is now available for more perennial crop producers 
and, as a result, less acreage will need to be placed into the 
noninsured crop disaster assistance program (NAP).
    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; Peach 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 
peaches 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 2,669,970 hours.
    Comments should be submitted 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.
    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, D.C. 20503 and to 
Bonnie Hart, USDA, FSA, Advisory and Corporate Operations Staff, 
Regulatory Review Group, P.O. Box 2415, STOP 0572, Washington, D.C. 
20013-2415, telephone (202) 690-2857. Copies of the

[[Page 58787]]

information collection may be obtained from Bonnie Hart at the above 
address.
    The Office of Management and Budget (OMB) is required to make a 
decision concerning the collections of information contained in these 
proposed regulations between 30 and 60 days after submission to OMB. 
Therefore, a comment to OMB is best assured of having full effect if 
OMB receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the proposed regulation.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Public 
Law 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. 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. New provisions included in this rule will not 
impact small entities to a greater extent than large 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 
must also annually certify to the previous years production or receive 
an assigned 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 the 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.

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 457.153, Peach Crop Insurance 
Provisions. The new provisions will be effective for the 1998 and 
succeeding crop years. These provisions will replace and supersede the 
current provisions for insuring peaches found at 7 CFR part 403 (Peach 
Crop Insurance Regulation). FCIC also proposes to amend 7 CFR 403 to 
limit its effect to the 1997 and prior crop years. FCIC will later 
publish a regulation to remove and reserve part 403.
    This rule makes minor editorial and format changes to improve the 
Peach Crop Insurance Regulations compatibility with the Common Crop 
Insurance Policy. In addition, FCIC is proposing substantive changes in 
the provisions for insuring peaches as follows:
    1. Section 1--Add definition for the terms ``actual price per 
bushel,'' ``bushel,'' ``crop year,'' ``direct marketing,'' ``freight on 
board (FOB),'' ``good farming practices,'' ``harvest,'' 
``interplanted,'' ``irrigated practice,'' ``production guarantee,'' and 
``written agreement'' for clarification.
    2. Section 3(a)--Specify that the insured may select only one price 
election for all the peaches in the county insured under the policy, 
unless the Special Provisions provide different price elections by 
type, in which case the insured may select one price election for each 
peach type designated in the Special Provisions.
    3. Section 3(b)--Amend the provisions to include any circumstance 
that may reduce the expected yield below the yield upon which the 
guarantee is based. The proposed rule requires an insured to report 
damage, removal of or addition of trees, and change in practices that 
may reduce yields. If the insured fails to notify the insurance 
provider of factors that may reduce yields from previous levels, the 
production guarantee will be reduced at any time the insurance provider 
becomes aware of any circumstance that may effect the yield.
    4. Section 5--Change the cancellation and termination dates to 
November 20. Currently, the policy States November 30. This change 
standardizes the perennial crop policies.
    5. Section 7--Allow insurance for peaches interplanted with another 
perennial crop subject to a pre-acceptance inspection and Regional 
Service Office (RSO) approved yield. Currently the peach policy does 
not allow coverage on interplanted acreage. This change standardizes 
the perennial crop policies and will have no adverse actuarial effect.
    6. Section 8(a)(1)--Specify that insurance coverage begins on 
November 21 of each crop year, except that for the year of application, 
if the application is received after November 11, but prior to November 
21, insurance will attach on the 10th day after the properly completed 
application is received in the insurer's local office.
    7. Section 8(b)(2)--Add provisions to clarify that insurance will 
not be considered to attach and no premium

[[Page 58788]]

will be due if an insurable interest on any acreage of peaches is 
relinquished on or before the acreage reporting date for the crop year.
    8. Section 9(a)(1)--Add adverse weather conditions as a cause of 
loss. Delete freeze, frost, hail, drought, wind and lightning because 
they are included in the term adverse weather. This change standardizes 
the perennial crop policies.
    9. Section 9(b)(1)--Clarify that disease and insect infestation are 
excluded as 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 control mechanism is available.
    10. Section 10(b)--Require the producer to give notice at least 15 
days before any production from a unit will be sold by direct 
marketing.
    11. Section 11(b)--Add provisions specifying the total production 
to be counted will be multiplied by the price election. The current 
policy multiplies the total production to be counted by the actual 
price per bushel Freight on Board (FOB) or by the price election, 
whichever is larger. This change standardizes the perennial crop 
policies.
    12. Section 11(c)(3)--Add provisions to extend quality adjustment 
to all insurable perils. Currently the policy only allows quality 
adjustment for damage due to frost, freeze, and misshapen fruit.
    13. Section 11(c)(3)(i)--Add provisions which allow Freight on 
Board (FOB) peach prices in the absence of the Market News Service 
prices. Currently the policy does not allow for FOB prices when the 
Market New Services does not establish a price.
    14. Section 12--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 the 
procedures for and duration of written agreements.

List of Subjects

7 CFR Part 403

    Crop Insurance, Peaches.

7 CFR Part 457

    Crop Insurance, Peaches.

    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) and the Peach Crop Insurance Regulations 
(7 CFR part 403) effective for the 1998 and succeeding crop years, to 
read as follows:

PART 403--[AMENDED]

    1. The authority citation for 7 CFR part 403 is amended to read as 
follows:

    Authority: 7 U.S.C. 1506(1), 1506(p).

    2. The heading of the subpart in part 403 is revised to read as 
follows:
    ``Subpart--Regulations for the 1986 through 1997 Crop Years.''
    3. Section 403.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:


Sec. 403.7  The application and policy.

* * * * *
    (d) The application for the 1985 and succeeding crop years is found 
at subpart D of part 400, General Administrative Regulations (7 CFR 
400.37, 400.38). The provisions of the Peach Insurance Policy for the 
1985 through 1997 crop years are as follows:
* * * *

PART 457--[AMENDED]

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

    Authority: 7 U.S.C. 1506(1), 1506(p).

    5. 7 CFR part 457 is amended by adding a new Sec. 457.153 to read 
as follows:


Sec. 457.153  Peach Crop Insurance Provisions

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

United States Department of Agriculture

Federal Crop Insurance Corporation

Peach 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

    Actual price per bushel for :
    (a) Fresh peaches means the average price per three-quarter (\3/
4\) bushel carton of U.S. Extra No. 1 ``2 inch'' peaches (if not 
available, the next larger size for which a price is available) 
determined from applicable prices reported by the Market News 
Service of the United States Department of Agriculture for seven 
consecutive marketing days, commencing with the day harvest of the 
variety begins, less the allowable cost designated by the actuarial 
table. In the absence of FOB shipping point price from the Market 
News Service, the price per three-quarter (\3/4\) bushel carton of 
U.S. Extra No. 1 ``two-inch'' peaches will be the sum of the price 
election for the damaged peaches and the allowable cost as shown in 
the actuarial documents for the county; and
    (b) Processing peaches means the average price per bushel for 
that applicable variety determined for seven consecutive marketing 
days, commencing with the day harvest of the variety begins, less 
the allowable cost designated by the actuarial table.
    Bushel--Forty-eight pounds of ungraded peaches. A three-quarter 
(\3/4\) bushel of graded peaches is considered equivalent to a 
forty-eight pound bushel of ungraded peaches.
    Crop year--The period beginning November 21 and extending 
through September 30 of the following year, which is designated by 
the calendar year in which the period ends.
    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, or permitting the general public to enter the field 
for the purpose of picking all or a portion of the crop.
    Freight on board (FOB)--A shipping point price reported by the 
Market News Service.
    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 recognized by the USDA & Cooperative State Research, 
Education, and Extension Service as compatible with agronomic and 
weather conditions in the county.
    Harvest--The picking or removal of mature peaches from the trees 
either by hand or machine.
    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.
    Production guarantee (per acre)--The quantity of peaches 
(bushels) determined by multiplying the approved Actual Production 
History (APH) yield per acre by the coverage level percentage you 
elect.
    Written agreement--A written document that alters designated 
terms of this policy in accordance with section 12.

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 units) may be divided into optional units if, for each 
optional unit, you meet all

[[Page 58789]]

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 established for a crop year must be 
identified on the acreage report for that 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; and
    (2) You must have records of marketed 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 or more 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 discernable, each 
optional unit must be located in a separate farm identified by a 
single FSA Farm Serial Number.
    (ii) Optional Units on Acreage Including Both Irrigated and Non-
irrigated Practices: In addition to, or instead of, establishing 
optional units by section, section equivalent, or FSA Farm Serial 
Number, optional units may be based on irrigated acreage or non-
irrigated acreage if both are located in the same section, section 
equivalent, or FSA Farm Serial Number. The irrigated acreage may not 
extend beyond the point at which your irrigation system can deliver 
the quantity of water needed to produce the yield on which the 
guarantee is based and you may not continue into non-irrigated 
acreage in the same rows or planting pattern.

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 peaches 
in the county insured under this policy unless the Special 
Provisions provide different price elections by type, in which case 
you may select one price election for each peach type designated in 
the Special Provisions. The price elections you choose for each type 
must have the same percentage relationship to the maximum price 
offered by us for each type. For example, if you choose 100 percent 
(100%) of the maximum price election for one type, you must choose 
100 percent (100%) of the maximum price election for all other 
types.
    (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), by 
type if applicable:
    (1) Any damage, removal of or addition of trees, or 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 and nonbearing trees on insurable and 
uninsurable acreage;
    (3) The age of the trees, variety, type, and the planting 
pattern; and
    (4) For the first year of insurance, acreage interplanted with 
another perennial crop, and anytime the planting pattern of such 
acreage is changed:
    (i) The age of the interplanted crop;
    (ii) The variety, and type if applicable;
    (iii) The planting pattern; and
    (iv) Any other information that we request in order to establish 
your approved yield. We will adjust the yield used to establish your 
production guarantee as necessary, based on our estimate of the 
effect on the following: interplanted perennial crop; removal or 
addition of trees or varieties of trees; physical or structural tree 
damage; change in practices or changes in tree population and 
density, and any other circumstance affecting the yield potential of 
the insured crop. If you fail to notify us of any circumstance that 
may affect your yields from previous levels, we will adjust 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 peaches 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 on tree varieties that:
    (1) Were commercially available when the trees were set out;
    (2) Are a sufficient chilling hour variety;
    (3) Are grown on a root stock that is adapted to the area.
    (c) That are grown in an orchard that, if inspected, is 
considered acceptable by us; and
    (d) That have reached at least the fourth growing season after 
set out. However, we may agree in writing to insure acreage that has 
not reached this age if it has produced at least 100 bushels of 
peaches per acre.

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, peaches interplanted with 
another perennial crop are insurable unless we inspect the acreage 
and determine that 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 to determine the condition of the orchard.
    (2) The calendar date for the end of the insurance period for 
each crop year is September 30.
    (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 interest on any acreage of 
peaches on or before the acreage reporting date for the crop year, 
insurance will not be considered to have attached to, and no premium 
or indemnity will be due for, such acreage for that crop year 
unless:
    (i) A transfer of coverage and right to an indemnity, or a 
similar form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.

9. Causes of Loss

    (a) In accordance with the provisions of section 12 (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) Adverse weather conditions;
    (2) Fire, unless weeds and other forms of undergrowth have not 
been controlled or

[[Page 58790]]

pruning debris has not been removed from the orchard;
    (3) Earthquake;
    (4) Volcanic eruption;
    (5) An insufficient number of chilling hours to effectively 
break dormancy; 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:
    (i) Prevents the proper application of control measures or 
causes properly applied control measures to be ineffective; or
    (ii) Causes disease or insect infestation for which no effective 
control mechanism is available;
    (2) Split pits, regardless of cause; or
    (3) Inability to market the peaches 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) You must notify us within three days of the date that 
harvest of the damaged variety should have started if the crop will 
not be harvested.
    (b) You must notify us at least 15 days before any production 
from any unit will be sold by direct marketing. We will conduct an 
appraisal that will be used to determine your production to count 
for production that is sold by direct marketing. If damage occurs 
after this appraisal, we will conduct an additional appraisal. These 
appraisals, and any acceptable records provided by you, will be used 
to determine your production to count. Failure to give timely notice 
that production will be sold by direct marketing will result in an 
appraised amount of production to count not less than the production 
guarantee per acre if such failure results in our inability to make 
the required appraisal.
    (c) If you intend to claim an indemnity on any unit, you must 
notify us at least 15 days prior to the beginning of harvest of the 
damaged variety, if you previously gave notice in accordance with 
section 14 of the Basis Provisions (Sec. 457.8), so that we may 
inspect the damaged production. 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, and such 
failure results in our inability to inspect the damaged production, 
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 separate 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 by its respective production 
guarantee;
    (2) Multiplying the result of section 11(b)(1) by the respective 
price election;
    (3) Totaling the results of section 11(b)(2);
    (4) Multiplying the total production to be counted by type, if 
applicable, (see subsection 11(c)) by the respective price election;
    (5) Totaling the results of section 11(b)(4);
    (6) Subtracting the result of section 11(b)(5) from the result 
in section 11(b)(3); and
    (7) Multiplying the result of section 11(b)(6) by your share.
    (c) The total production to count (in bushels) from all 
insurable acreage on the unit will include:
    (1) All appraised production will be determined as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) That is sold by direct marketing if you fail to meet the 
requirements contained in section 10;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide acceptable production records 
that are acceptable to us;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production;
    (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; and
    (v) Any appraised production on insured acreage will be 
considered production to count unless such production is exceeded by 
the actual harvested production.
    (2) All harvested production from the insurable acreage.
    (3) Mature marketable peach production may be reduced as a 
result of a loss in quality due to an insured cause of loss. The 
amount of production to count for such peaches will be determined as 
follows:
    (i) Peaches grown for fresh use by:
    (A) Dividing the value per \3/4\ bushel carton of the damaged 
peaches by the actual price per bushel for undamaged peaches; and
    (B) Multiplying the result of section 11(c)(3)(i)(A) by the 
number of bushels of the eligible damaged peaches.
    (ii) Peaches grown for processing by:
    (A) Dividing the value per bushel of the damaged peaches by the 
average price per bushel of undamaged peaches for processing; and
    (B) Multiplying the result of section 11(c)(3)(ii)(A) by the 
number of bushels of the eligible damaged peaches.
    (4) Peaches that cannot be marketed due to insurable causes will 
not be considered production to count.

12. 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 
12(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, DC, on November 13, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-29559 Filed 11-18-96; 8:45 am]
BILLING CODE 3410-FA-P