[Federal Register Volume 61, Number 252 (Tuesday, December 31, 1996)]
[Rules and Regulations]
[Pages 68998-69004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-33068]


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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation

7 CFR Parts 401 and 457

RIN 0563-AB03


Common Crop Insurance Regulations; Florida Citrus Fruit Crop 
Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
specific crop provisions for the insurance of Florida 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, include the 
current Florida Citrus Endorsement with the Common Crop Insurance 
Policy for ease of use and consistency of terms, and to restrict the 
effect of the current Florida Citrus Endorsement to the 1997 and prior 
crop years.

EFFECTIVE DATE: January 30, 1997.

FOR FURTHER INFORMATION CONTACT: Bill Klein, Program Analyst, Research 
and Development Division, Product Development Branch, Federal Crop 
Insurance Corporation, United States

[[Page 68999]]

Department of Agriculture, 9435 Holmes Road, Kansas City, MO 64131, 
telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866

    The Office of Management Budget (OMB) has determined this rule to 
be exempt for the purposes of Executive Order No. 12866, and, 
therefore, this rule has not been reviewed by 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 at the proposed rule stage.
    The amendments set forth in this final rule contains information 
collections that have been cleared by OMB under the provisions of 44 
U.S.C. chapter 35.
    No public comments were received.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates 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) 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. New provisions included in this rule will not 
impact small entities to a greater extent than large entities. Under 
the current regulations, all producers are required to complete an 
application and acreage report. If the crop is damaged or destroyed, 
insureds are required to give notice of loss and provide the necessary 
information to complete a claim for indemnity. 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 action for judicial review may be brought.

Environmental Evaluation

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

National Performance Review

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

Background

    On Friday, March 15, 1996, FCIC published a proposed rule in the 
Federal Register at 61 FR 10699-10703 to add to the Common Crop 
Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.107 
(Florida Citrus Fruit Crop Insurance Provisions). The new provisions 
will replace and supersede the current provisions for insuring Florida 
citrus found at 7 CFR 401.143 and will be effective for the 1998 and 
succeeding crop years. Section 401.143 will also be amended to restrict 
its effect to the 1997 and prior crop years. By separate rule, 
Sec. 401.143 will be removed and that section will be reserved.
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments, data, and opinions. A total of 32 
comments were received from the crop insurance industry. The comments 
received and FCIC's response are as follows:
    Comment: The crop insurance industry expressed concern that the 
proposed changes shown in the Federal Register were to be effective for 
the 1997 crop year.
    Response: FCIC originally intended that the proposed rule be made 
final prior to the contract change date and in sufficient time to 
provide the industry and insureds time to be made aware of the changes 
and make adjustments as needed. When the proposed rule was not 
published until March 15, 1996, it was no longer possible to publish a 
final rule prior to the April 15, 1996, contract change date. The 
relevant sections have been amended to specify that the changes will 
not be implemented until the 1998 crop year.
    Comment: One comment from the crop insurance industry questioned 
why optional units were allowed by both (or either) legal description 
and non-contiguous land for Florida citrus fruit, whereas in other 
citrus policies, optional units are offered by one or the other or by 
non-contiguous land only. They questioned whether regional differences 
are significant enough to preclude standardization.
    Response: The unit structure in the proposed rule was intended to 
be the same as that contained in the current policy. The current policy 
allows optional units by legal description or by non-contiguous 
acreage. The provision has been amended to clarify the apparent 
ambiguity created in the proposed rule.
    Comment: The crop insurance industry stated that the proposed 
varying levels of deductibles ranging from 25 percent to 50 percent of 
damage represents a substantial change from the current 10 percent of 
damage deductible and ``will create an insurance product that is 
substantially deficient in providing desired protection for growers.'' 
They requested that the 10 percent deductible level be reinstated in 
the final rule.
    Response: FCIC does not have the authority to offer a 10 percent

[[Page 69000]]

deductible for any crop. Section 508(b)(6) and 508(c)(6) of the Federal 
Crop Insurance Act, as amended, only allows coverage up to 85 percent 
of the individual yield, which requires more than 15 percent damage 
before an indemnity would be due. FCIC does not currently offer 85 
percent coverage for any actual production history based policy. 
Implementation of an 85 percent coverage for Florida citrus fruit is 
being considered for the 1998 crop year. If approved, this coverage 
level will be shown on the County Actuarial Table. Therefore, no change 
has been made in the provisions.
    Comment: The crop insurance industry expressed concern that the 
only justification for changing the 10 percent deductible was to make 
the provisions more compatible with the Common Crop Insurance Policy. 
The current program participation is high with the implementation of 
crop insurance reform and the loss ratio is low, in short the program 
works. It appears that change is only for change's sake.
    Response: Although the timing of this change coincides with the 
Florida Citrus Fruit Crop Insurance Provisions being brought under the 
Common Crop Insurance Policy, the change is mandated by the above 
stated limitation contained in the Federal Crop Insurance Act, as 
amended.
    Comment: The crop insurance industry expressed concern that the 10 
percent deductible change would undermine their attempts to encourage 
``buy-up'' sales. Producers buy CAT because they believe that the 
current program (limited and full coverage) is overpriced.
    Response: FCIC has no choice but to increase the deductible to be 
in compliance with the Federal Crop Insurance Act, as amended. With the 
new coverage levels, ``buy up'' coverage should provide a level of 
coverage that will meet the insured's risk management needs.
    Comment: One comment from the crop insurance industry criticized 
FCIC for not taking into account the needs of producers in making 
rules. While the proposed changes may favorably impact premium, the 
coverage will no longer be reasonable.
    Response: FCIC met with producers and with the Florida Citrus 
Association, who both provided input and suggestions for the draft 
Florida Citrus Fruit Crop Provisions. Although FCIC is aware of the 
industry's opposition to replacing the 10 percent deductible with a 
proportional deductible, the Federal Crop Insurance Act, as amended, 
does not allow a 10 percent deductible.
    Comment: One comment from the crop insurance industry suggested 
that a large majority of producers take CAT coverage because they feel 
the premium for limited and additional coverage is too high based on 
their assessment of the risk. The program is working with the current 
deductibles and does not need to be changed.
    Response: FCIC has no choice but to change the current coverage 
levels. Under the new program, a series of different level deductibles 
will have separate rates and will allow producers to chose more 
appropriate levels of coverage, which should result in increased 
participation in limited and buy-up insurance.
    Comment: One comment from the crop insurance industry was a request 
that the language in section 3(a), ``You may select only one percent of 
the maximum dollar amount of insurance * * * '', be clarified. They 
understand the language to mean that only one level of coverage may be 
selected for each type of citrus fruit insured.
    Response: FCIC has added language to clarify the intent of section 
3(a). If more than one kind of citrus fruit is included within a type 
and each citrus fruit has a different maximum amount of insurance, the 
insured must select the same coverage level for each kind of citrus 
fruit. For example, if an insured chooses the 75 percent coverage level 
for Naval Oranges, then the insured must also choose the 75 percent 
coverage level for Tangerines since both are included as Type IV citrus 
fruit.
    Comment: One comment from the crop insurance industry suggests that 
neither ineligibility nor a reduction of benefits should be based on 
the age of the citrus tree. They contend that trees planted at a higher 
density can produce a marketable crop in as little as three years. They 
propose that eligibility be based on production of 100 boxes per acre 
on a unit basis.
    Response: The proposed rule for Florida Citrus Fruit Crop Insurance 
Provisions authorized insuring trees that have not reached the fifth 
growing season after being set out either in the Special Provisions or 
by written agreement. Thus, if the 100 box requirement proves 
reasonable after review of the grove's production potential, coverage 
can be provided. Therefore, no change will be made in the provisions.
    Comment: One comment from the crop insurance industry maintained 
that adding the proportional deductible to limited and additional 
insurance would serve to push producers to CAT.
    Response: Currently more than 90 percent of the Florida citrus 
fruit producers have opted for CAT coverage, even with the availability 
of a 10 percent deductible. With a properly rated proportional 
deductible, insureds should find the limited and additional levels of 
insurance to be more affordable and a better risk management tool.
    Comment: The crop insurance industry recommended establishing a 
contract change date earlier than March 15. Recommendations ranged from 
December 31 to February 28.
    Response: FCIC would be willing to move the contract change date 
earlier if sufficient price and yield data were available to accurately 
estimate amounts of insurance. Currently, the data available is 
incomplete before February and the Actuarial Division believes that 
moving the date earlier than March 15 will not allow sufficient time to 
utilize the most recent information. For example, a major January 
freeze will have a significant effect on citrus fruit production and 
prices. Therefore, no change will be made to the provisions.
    Comment: The crop insurance industry recommended that two amounts 
of insurance be offered. One amount would apply to trees 5 to 7 years 
and the other for trees more than 7 years. The five year limit could be 
waived if after inspection it was determined that the acreage could 
produce 100 boxes per acre.
    Response: The current actuarial basis for insuring three age groups 
was based on National Agricultural Statistics Service (NASS) data and 
extensive research. If further study indicates that insuring based on 
two age groups would be more equitable, this change can be made in the 
actuarial table and need not be specified in the policy. Therefore, no 
change will be made to the provisions.
    Comment: One comment from the crop insurance industry recommended 
that reclaimed land be made insurable. Insurability would be based on 
an inspection for both buy-up and CAT, with no written agreement 
required.
    Response: There is reclaimed land that has been rated and, 
therefore, it is insurable. Other reclaimed land has not been rated and 
is not insurable except by written agreement. The insurability of 
reclaimed lands is provided in the Special Provisions. The rating of 
unrated reclaimed land is an underwriting issue which will be 
considered for possible future implementation.
    Comment: The crop insurance industry recommended that Type II (Late 
Oranges) be covered as fresh fruit if records demonstrate the crop has 
been sold as fresh. Either designate Type II as

[[Page 69001]]

``fresh fruit'' or add varieties to Type II such as 024 Late Orange 
Juice, and 025 Late Orange Fresh.
    Response: FCIC agrees with the concept of insuring certain late 
oranges as fresh fruit. After studying the recommendation it was 
determined that these late oranges should be added to Type VII, as Late 
Oranges ``Fresh''.
    Comment: The crop insurance industry recommended that insurance 
attach at fruit set so that there would be no gap in coverage.
    Response: FCIC does not have sufficient underwriting information to 
change the date insurance attaches at this time. FCIC is currently 
researching other methods for insuring Florida citrus and one area of 
study is the date insurance should attach.
    Comment: One comment from the crop insurance industry recommended 
that FCIC cover excessive rain and excessive wind damage that did not 
occur in conjunction with a hurricane or tornado. Fresh fruit blown 
from the tree and fresh fruit that is scarred or adulterated and cannot 
be marketed as fresh fruit due to excessive rain or wind would be 
adjusted on a fresh fruit basis.
    Response: Insuring damage resulting from excess wind or rain not 
associated with a hurricane or tornado would greatly increase risk and 
the associated premium. This change could not be made without a notice 
and comment period. Therefore, no change will be made to the 
provisions.
    Comment: One comment from 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: 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. 
Therefore, no change will be made to the provisions.
    Comment: One comment from the crop insurance industry recommended 
revising the language in section 10(b)(2)(ii), ``Citrus fruit will be 
considered undamaged potential production if it is: (i) Or could be 
marketed as fresh fruit;'' to ``Citrus fruit will be considered 
undamaged potential production if it is: (i) Marketed or could be 
marketed as fresh fruit;''.
    Response: FCIC agrees and has revised the provision accordingly.
    Comment: One comment from the crop insurance industry recommended 
that section 10(c)(2)(ii) be amended to delete pink and red grapefruit 
because proposed changes make it a ``juice only'' fruit.
    Response: FCIC agrees with the comment and has deleted the words 
``pink and red grapefruit of Type III'' from section 10(c)(2)(ii).
    Comment: One comment from the crop insurance industry recommended 
that pink and red grapefruit of citrus Type III needs to be omitted 
from the fruit that are considered a total loss as a result of hail 
damage in section 10(h).
    Response: FCIC agrees with the comment and has deleted the words 
``pink and red grapefruit of citrus Type III'' from section 10(h).
    Comment: One comment from the crop insurance industry recommended 
that the crop provisions be expanded to allow insureds to insure one 
crop of grapefruit as fresh fruit and a separate crop as juice.
    Response: FCIC agrees to implement the recommendation and has 
removed the language in section 6 which required producers to insure 
all their grapefruit under a single type. Acreage of fresh and 
processing grapefruit will be identified separately on the acreage 
report.
    Comment: The crop insurance industry recommended that the levels of 
juice content for types I, II, and III used to determine damage 
whenever a producer's records are deemed unacceptable be amended as 
follows:

Type I--52 pounds of juice per box
Type II--54 pounds of juice per box
Type III--45 pounds of juice per box

    These recommendations are based on improvements in processing 
technologies and processing equipment implemented during the past few 
years and documented weighted averages for the last three seasons.
    Response: FCIC agrees and has made the changes in section 10.
    Comment: One comment from the crop insurance industry recommended 
that the written agreement language be more flexible and allow 
continuous coverage from year to year if no substantive changes occur.
    Response: Written agreements are intended to provide a deviation 
from the terms of the policy or to extend coverage. If it is 
appropriate to continue the practice, the policy or Special Provisions 
should be amended to include the change or new coverage. Therefore, no 
change will be made to the provisions.
    In addition to the changes described above, and minor reformatting 
and word changes for clarity, FCIC has made the following changes:
    1. Section 1--Added the definition of ``amount of insurance 
(acre)'' ``FSA'' and changed the definition of ``citrus fruit type'' to 
add Late Oranges Fresh to Type VII, and changed the definition of 
``good farming practices,'' ``non-contiguous,'' and ``written 
agreement,'' for clarification.
    2. Section 6--Removed language that provided that we could exclude 
from insurance, or limit the amount of insurance on, any acreage that 
was not insured the previous crop year. This language was not deemed to 
be necessary because because we currently inspect new acreage or 
acreage added to an existing unit.
    3. Section 8(a)(1)--Clarified that if the application is submitted 
less than 10 days before the date insurance attaches, insurance will 
not attach until 10 days after receipt of the application. This 
provision is designed to prevent producers from applying for insurance 
only when they believe a loss is probable.
    4. Section (8)(b)--Clarify that no premium will be due if the 
producer relinquishes an insurable interest in any insurable acreage of 
Florida citrus on or before the acreage reporting date of any crop 
year, unless a transfer of coverage and right to an indemnity is 
completed and the insurance provider is notified in writing on or 
before the acreage reporting date. The transferee must meet the 
eligibility requirements contained in this policy and the form must be 
subsequently approved by the insurance provider.

List of Subjects in 7 CFR Parts 401 and 457

    Crop insurance, Florida citrus endorsement, Florida citrus fruit.

Final Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby amends 7 CFR parts 401 and 457 as 
follows:

PART 401--GENERAL CROP INSURANCE REGULATIONS--REGULATIONS FOR THE 
1988 AND SUBSEQUENT CONTRACT YEARS

    1. The authority citation for 7 CFR part 401 continues to read as 
follows:

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

    2. Section 401.143 introductory paragraph is revised to read as 
follows:


Sec. 401.143  Florida citrus endorsement.

    The provisions of the Florida Citrus Endorsement, for the 1990 
through 1997 crop years are as follows:
* * * * *

[[Page 69002]]

PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE 
1994 AND SUBSEQUENT CONTRACT YEARS

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

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

    4. 7 CFR part 457 is amended by adding a new Sec. 457.107 to read 
as follows:


Sec. 457.107  Florida Citrus Fruit Crop Insurance Provisions.

    The Florida Citrus Fruit Crop Insurance Provisions for the 1998 and 
succeeding crop years are as follows:

Department of Agriculture

Federal Crop Insurance Corporation

Florida Citrus Fruit Crop Provisions

    If a conflict exists among the Basic Provisions (Sec. 457.8), 
these Crop Provisions, and the Special Provisions; the Special 
Provisions will control these Crop Provisions and the Basic 
Provisions; and these Crop Provisions will control the Basic 
Provisions.

1. Definitions

    Amount of insurance (acre)--The dollar amount determined by 
multiplying the Reference Maximum Dollar Amount shown on the 
Actuarial Table for the citrus fruit times the coverage level you 
elect, times your share.
    Box--A standard field box as prescribed in the State of Florida 
Citrus Fruit Laws.
    Citrus fruit type--Any of the following:
    (1) Type I--Early and mid-season oranges;
    (2) Type II--Late oranges juice;
    (3) Type III--Grapefruit for which freeze damage will be 
adjusted on a juice basis;
    (4) Type IV--Navel Oranges, Tangelos and Tangerines;
    (5) Type V--Murcott Honey Oranges (also known as Honey 
Tangerines) and Temple Oranges;
    (6) Type VI--Lemons and Limes; and
    (7) Type VII--Grapefruit for which freeze damage will be 
adjusted on a fresh fruit basis, and late oranges fresh.
    Days--Calendar days.
    FSA--Farm Service Agency, an agency of the United States 
Department of Agriculture or a successor agency.
    Freeze--The formation of ice in the cells of the fruit caused by 
low air temperatures.
    Good farming practices--The cultural practices generally in use 
in the county for the crop to make normal progress toward maturity 
and produce the expected yield for the type and age of citrus fruit, 
and are those recognized by the Cooperative State Research, 
Education, and Extension Service as compatible with agronomic and 
weather conditions in the county.
    Harvest--The severance of mature citrus fruit from the tree by 
pulling, picking, or any other means, or collecting the marketable 
fruit from the ground.
    Hurricane--A windstorm classified by the U.S. Weather Service as 
a hurricane.
    Interplanted--Acreage on which two or more crops are planted in 
any form of alternating or mixed pattern.
    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.
    Potential production--Citrus fruit that would have been produced 
had damage not occurred, including citrus fruit that:
    (1) Was harvested before damage occurred;
    (2) Remained on the tree after damage occurred; and
    (3) Was lost from either an insured or uninsured cause;
    But not including citrus fruit that:
    (1) Was lost before insurance attached for any crop year;
    (2) Was lost by normal dropping; or
    (3) Any tangerines that normally would not meet the 210 pack 
size (2 and 4/16 inch minimum diameter) under United States 
Standards by the end of the insurance period for tangerines.
    Written agreement--A written document that alters designated 
terms of this policy in accordance with section 11.

2. Unit Division

    (a) A unit as defined in section 1 (Definitions) of the Basic 
Provisions (Sec. 457.8), (basic unit) will be divided into basic 
units by each citrus fruit type shown in section 1 of these crop 
provisions or 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 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 additional 
premium paid for the optional units that have been combined will be 
refunded to you for the units combined.
    (e) All optional units you selected for the crop year must be 
identified on the acreage report for that crop year.
    (f) Each optional unit must meet one of the following criteria, 
as applicable:
    (1) Optional Units by Section, Section Equivalent, or Farm 
Service Agency (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; or
    (2) Optional Units on Acreage Located on Non-Contiguous Land: 
Optional units may be established if each optional unit is located 
on non-contiguous land.

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

    In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) 
of the Basic Provisions (Sec. 457.8):
    (a) You may select only one coverage level for each Florida 
citrus fruit type shown in section 1 of these crop provisions or 
designated in the Special Provisions, that you elect to insure. If 
different amounts of insurance are available for citrus fruit within 
a type, you must select the same coverage level for each citrus 
fruit. For example, if you choose the 75 percent coverage level for 
a specific citrus fruit within a type, you must also choose the 75 
percent coverage level for all other citrus fruit within that type.
    (b) In lieu of the production reporting date contained in 
section 3 (Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities) of the Basic Provisions (Sec. 457.8), 
potential production for each unit will be determined during loss 
adjustment.
    (c) By the sales closing date contained in the Special 
Provisions, for the first year of insurance for acreage interplanted 
with another citrus fruit crop, and anytime the planting pattern of 
such acreage is changed, you must report the following:
    (1) The age of the interplanted trees and type if applicable;
    (2) The planting pattern; and
    (3) Any other information we request in order to establish your 
amount of insurance.
    (d) We will reduce acreage or the amount of insurance or both, 
as necessary, based on our estimate of the effect of the 
interplanted citrus fruit trees on the insured citrus fruit crop. If 
you fail to notify us of any circumstance that may reduce the 
acreage or amount of insurance, we will reduce the acreage or amount 
of insurance or both as necessary 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 March 15 
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 
date is April 30 preceding the crop year. The termination date is 
April 30 of the crop year.

6. Insured Crop

    (a) In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all acreage of 
each citrus fruit type that you elect to insure, in which you have a 
share, that is grown in the county shown on the application, and for 
which a premium rate is quoted in the actuarial table.

[[Page 69003]]

    (b) In addition to the citrus fruit not insurable in section 8 
(Insured Crop) of the Basic Provisions (Sec. 457.8), we do not 
insure any citrus fruit:
    (1) That cannot be expected to mature each crop year within the 
normal maturity period for the type;
    (2) Produced by trees that have not reached the fifth growing 
season after being set out, unless otherwise provided in the Special 
Provisions or by a written agreement to insure such citrus fruit;
    (3) Of ``Meyer Lemons'' and oranges commonly known as ``Sour 
Oranges'' or ``Clementines''; or
    (4) Of the Robinson tangerine variety, for any crop year in 
which you have elected to exclude such tangerines from insurance. 
(You must elect this exclusion prior to the crop year for which the 
exclusion is to be effective, except that for the first crop year 
you must elect this exclusion by the later of April 30 or the time 
you submit the application for insurance.)
    (c) Upon our approval, prior to the date insurance attaches, you 
may elect to insure or exclude from insurance any insurable acreage 
that has a potential production of less than 100 boxes per acre. If 
you:
    (1) Elect to insure such acreage, we will consider the potential 
production to be 100 boxes per acre when determining the amount of 
loss; or
    (2) Elect to exclude such acreage, we will disregard the acreage 
for all purposes related to this contract.
    (d) In addition to the provisions in Section 6(f) (Report of 
Acreage) of the Basic Provisions (Sec. 457.8), if you fail to notify 
us of your election to insure or exclude acreage, and the potential 
production from such acreage is 100 or more boxes per acre, we will 
determine the percent of damage on all of the insurable acreage for 
the unit, but will not allow the percent of damage for the unit to 
be increased by including 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 fruit interplanted with 
another citrus fruit crop is 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 May 1 of each crop year, except that for 
the year of application if your application is received by us after 
April 21, but prior to May 1, insurance will attach on the 10th day 
after your properly completed application, acreage, and production 
reports are received in our local office, unless we inspect the 
acreage during the 10 day period and determine that it does not meet 
the requirements for insurability contained in your policy. You must 
provide any information that we require for the crop to determine 
the condition of the grove to be insured.
    (2) The calendar date for the end of the insurance period for 
each crop year is:
    (i) January 31 for tangerines and navel oranges;
    (ii) April 30 for lemons, limes, tangelos, early and mid-season 
oranges; and
    (iii) June 30 for late oranges, grapefruit, Temple, and Murcott 
Honey Oranges.
    (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 
of any crop year, and if after inspection we consider the acreage 
acceptable, then 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 fruit on or before the acreage reporting date of 
any crop year, insurance will not be considered to have attached to, 
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 within the 
insurance period:
    (1) Fire, unless weeds and other forms of undergrowth have not 
been controlled or pruning debris has not been removed from the 
grove;
    (2) Freeze;
    (3) Hail;
    (4) Hurricane; or
    (5) Tornado.
    (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) Any damage to the blossoms or trees; or
    (2) Inability to market the citrus fruit 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. 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 units, we will combine all optional units 
for which such production records were not provided; or
    (2) For any basic units, we will allocate any commingled 
production to such units in proportion to our liability on the 
harvested acreage for the units.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim by:
    (1) Calculating the amount of insurance for the unit by 
multiplying the number of acres by the respective dollar amount of 
insurance per acre for the citrus fruit and multiplying that result 
by your share;
    (2) Calculating the average percent of damage to the respective 
citrus fruit, rounded to the nearest tenth of a percent (0.1%). The 
percent of damage will be the ratio of the number of boxes of citrus 
fruit considered damaged from an insured cause divided by the 
undamaged potential production. Citrus fruit will be considered 
undamaged potential production if it is:
    (i) Marketed or could be marketed as fresh fruit;
    (ii) Harvested prior to inspection by us; or
    (iii) Harvested within 7 days after a freeze;
    (3) Subtracting the coverage level percentage from 100 percent;
    (i) Subtracting this result from the result of section 
(10)(b)(2); and
    (ii) If the result section (10)(b)(3)(i) is positive, dividing 
this result by the coverage level percentage;
    (4) Multiplying the result of section (10)(b)(3)(ii) by the 
amount of insurance for the unit for the respective citrus fruit.
    (For example, if the average percent of damage is 70 percent and 
the coverage level is 75 percent (the deductible is 25 percent), the 
amount payable is 60 percent times the amount of insurance (70% 
damage - 25 % level deductible)=45% (45%  75%) 60% adjusted 
damage times the amount of insurance); and
    (5) Totaling all such results of section (10)(b)(4) to determine 
the amount payable for the unit.
    (c) Citrus fruit of Types IV, V, and VII that are seriously 
damaged by freeze, as determined by a fresh-fruit cut of a 
representative sample of fruit in the unit in accordance with the 
applicable provisions of the State of Florida Citrus Fruit laws, and 
that are not or could not be marketed as fresh fruit, will be 
considered damaged to the following extent:
    (1) If less than 16 percent of the fruit in a sample shows 
serious freeze damage, the fruit will be considered undamaged; or
    (2) If 16 percent or more of the fruit in a sample shows serious 
freeze damage, the fruit will be considered 50 percent damaged, 
except that:
    (i) For tangerines of Type IV, damage in excess of 50 percent 
will be the actual percent of damaged fruit; and
    (ii) Citrus of Types IV (except tangerines), V, and VII, if it 
is determined that the juice loss in the fruit exceeds 50 percent, 
such percent will be considered the percent of damage.
    (d) Notwithstanding the provisions of section 10(c) of these 
crop provisions as to citrus fruit of Types IV, V, and VII, in any 
unit that is mechanically separated using the specific-gravity 
(floatation) method into undamaged and freeze-damaged fruit, the 
amount of damage will be the actual percent of freeze-damaged fruit 
not to exceed 50 percent and will not be affected by subsequent 
fresh-fruit marketing. However, the 50 percent limitation on 
mechanically-separated, freeze-damaged fruit will not apply to 
tangerines of citrus fruit Type IV.
    (e) Any citrus fruit of Types I, II, III, and VI damaged by 
freeze, but that can be processed into products for human

[[Page 69004]]

consumption, will be considered as marketable for juice. The percent 
of damage will be determined by relating the juice content of the 
damaged fruit to:
    (1) The average juice content of the fruit produced on the unit 
for the three previous crop years based on your records, if they are 
acceptable to us; or
    (2) The following juice content, if acceptable records are not 
furnished:

(i) Type I--52 pounds of juice per box
(ii) Type II--54 pounds of juice per box
(iii) Type III--45 pounds of juice per box
(iv) Type VI--43 pounds of juice per box

    (f) Any citrus fruit on the ground that is not collected and 
marketed will be considered as 100 percent damaged if the damage was 
due to an insured cause.
    (g) Any citrus fruit that is unmarketable either as fresh fruit 
or as juice because it is immature, unwholesome, decomposed, 
adulterated, or otherwise unfit for human consumption due to an 
insured cause will be considered as 100 percent damaged.
    (h) Citrus fruit of Types IV, V, and VII that are unmarketable 
as fresh fruit due to serious damage from hail as defined in the 
applicable United States Standards for Grades of Florida fruit will 
be considered totally lost.

11. Written Agreements

    Designated terms of this policy may be altered by written 
agreement in accordance with the following:
    (a) You must apply to us 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 by us, the written agreement will include all 
variable terms of the contract, including, but not limited to, crop 
type and variety, the guarantee, premium rate, and price election;
    (d) Each written agreement will 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 December 20, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-33068 Filed 12-30-96; 8:45 am]
BILLING CODE 3410-FA-P