[Federal Register Volume 62, Number 50 (Friday, March 14, 1997)]
[Rules and Regulations]
[Pages 12067-12073]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6520]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Rules 
and Regulations  

[[Page 12067]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457


General Crop Insurance Regulations; Raisin Endorsement and Common 
Crop Insurance Regulations; Raisin Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
specific crop provisions for the insurance of raisins. 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 raisin 
endorsement under the Common Crop Insurance Policy for ease of use and 
consistency of terms, and to restrict the effect of the current raisin 
endorsement to the 1996 and prior crop years.

EFFECTIVE DATE: March 14, 1997.

FOR FURTHER INFORMATION CONTACT: John Meyer, Insurance Management 
Specialist, Product Development Division, Policy Development and 
Standards Branch, Federal Crop Insurance Corporation, United States 
Department of Agriculture, 9435 Holmes Road, Kansas City, MO, 64131, 
telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866

    The Office of Management and 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

    Following publication of the proposed rule, 61 Federal Register, 
55928, the public was afforded 60 days to submit written comments on 
information collection requirements previously approved by OMB under 
OMB control number 0563-0003 through September 30, 1998. No public 
comments were received.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded 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) 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, 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 part 11 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

    On Wednesday, October 30, 1996, FCIC published a proposed rule in 
the Federal Register at 61 FR 55928-55932 to add to the Common Crop 
Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.124, 
(Raisin Crop Insurance Provisions). The new provisions will replace and 
supersede the current provisions for insuring raisins found at 7 CFR 
section 401.142 and will be effective for the 1997 and succeeding crop 
years. Section 401.142

[[Page 12068]]

will also be amended to restrict its effect to the 1996 and prior crop 
years.
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments. A total of 20 comments were 
received from the crop insurance industry, Office of Inspector General 
(OIG), and FCIC Regional Service Offices (RSO). The comments received, 
and FCIC's responses, follow:
    Comment: One comment from the insurance industry suggested 
definitions be added for ``insured tonnage,'' ``uninsured tonnage,'' 
and ``guaranteed tonnage.''
    Response: Insured tonnage is throughly described and thereby 
``defined'' in section 3 of the crop provisions. Several policy 
provisions are involved in determining tonnage that may not be 
insurable. Adding a definition to describe uninsured tonnage would be 
duplicative of these provisions. These provisions do not use the term 
``guaranteed tonnage.'' Instead, a dollar guarantee is based on the 
number of insured tons. This allows damaged raisins to be valued and 
subtracted from the amount of insurance when determining the amount of 
an indemnity. No change has been made to the provisions.
    Comment: One comment from the insurance industry questioned whether 
the definition of ``non-contiguous land'' should state ``that it is 
land ownership that does not touch at any point.''
    Response: Land ownership is not a factor used to determine non-
contiguous land. Rather, it is the boundaries of the land in which a 
producer has or will have an insurable interest in the crop. If the 
boundaries of such land do not touch, the land is considered to be non-
contiguous. FCIC believes the provision is clearly stated. Therefore, 
no change will be made.
    Comment: One comment from the insurance industry suggested changing 
the language in section 2(a) from ``may be divided'' to ``will be 
divided.''
    Response: FCIC agrees with the comment and has amended the 
provisions accordingly.
    Comments: Five comments, one from an RSO, one from OIG, and three 
from the crop insurance industry requested that ``optional'' be removed 
from the language in section 2(e). The comments indicated that this 
provision should apply to all units, both basic and optional.
    Response: FCIC agrees with the comments and has amended the 
provision accordingly.
    Comment: One comment from the insurance industry concerned the 
reference to ``your share'' in subsection 3(b). The commenter wanted to 
know if the reference applied to your share at time of loss, at the 
time the raisins were laid down for drying, or at some other time.
    Response: Share is defined in the Basic Provisions. For the purpose 
of determining the premium amount, it is the share at the time 
insurance attaches. For the purpose of determining the amount of an 
indemnity, it is the lesser of the share at the time of loss or the 
share at the time insurance attaches.
    Comment: One comment from the insurance industry concerned the 
determination of ``Insured tonnage for units damaged by rain'' in 
section 3(c)(2). The commenter suggested that adjusters should be 
allowed to determine which procedure to use to determine the total 
amount lost in the vineyard: tray count (which has been dropped), vine 
count, or both methods.
    Response: Tray counts may not be reliable for determining 
production amounts. In some cases, it has been found that the number of 
trays cannot accurately be determined. However, the number of vines in 
a vineyard normally remains constant, and once production per vine is 
determined, vine count provides a more accurate method of determining 
total production in the vineyard. No change has been made to these 
provisions.
    Comment: One comment from the insurance industry questioned how the 
following situation would be treated. An adjuster takes a sample to 
measure moisture content, finds that it exceeds 24.3% and releases the 
crop. The insured delays delivering the production and the moisture 
content decreases. The insured then delivers the raisins. What would 
happen in this situation and how could it be prevented?
    Response: FCIC approved procedure prohibits an adjustor from 
releasing raisins before it is determined whether or not the crop can 
be reconditioned. However, the provision has been clarified to state 
that if any production is delivered, the moisture content will be 
determined at the time of delivery. Improper claim handling can be 
avoided with proper supervisory controls and by following established 
claims procedures as outlined in FCIC approved procedure.
    Comment: Two comments, one from the insurance industry and one from 
OIG suggested adding language in section 3(c) indicating that an 
approved method be used to determine the number of tons lost in the 
vineyard in the event no production is removed from the vineyard. The 
Proposed Rule deleted the use of tray weights to establish insured tons 
when production is not removed from the vineyard and stated that when 
appraisal is required, the amount of raisin tonnage lost will be 
determined in sample areas. The commenters stated that the policy, as 
drafted, does not address these situations. Also, when these situations 
occur, the comparison to other acreage from which raisins were removed 
is not possible. Loss adjustment procedures should contain a method for 
handling these situations and state or define how the production will 
be determined from such sample areas or give a sampling methodology as 
cited in the ``Background'' section. Determinations for these 
situations would then be used as necessary in valuing damaged raisins 
under the provisions of section 13(f).
    Response: FCIC agrees with the comment and has added a provision to 
state that when no raisins have been removed from the vineyard, an 
appraisal will be used to determine the insured tonnage. FCIC approved 
procedures provide the methods to be used to determine tonnage lost in 
the vineyard when no raisins are removed.
    Comment: Six comments, one from OIG, one from an RSO, and four from 
the crop insurance industry suggested the following language be added 
in section 6(b) to address situations in which the insured either adds 
or deletes acreage after providing the required report of intentions at 
sales closing date: ``Acreage on which you intend to produce raisins 
may be added to your location report until the time you first place 
raisins from the additional acreage on trays for drying and it is 
agreed to by us. Failure to report any insurable acreage will result in 
under-reporting penalties being applied in accordance with the 
provisions contained in section 6 (Report of Acreage) of the Basic 
Provisions (457.8). If you elect not to produce raisins on any acreage 
included on your location report, you must notify us in writing on or 
before September 21 and provide any records we may require to verify 
that raisins were not produced on that acreage.'' The comments 
indicated this language is necessary to address vulnerabilities 
associated with reporting tonnage, and that the current language is 
vague and will result in unnecessary exposure.
    Response: FCIC agrees with the comments and has amended the 
provisions to clarify the conditions under which additional acreage may 
be added to the acreage report.
    Comments: Two comments from the insurance industry indicated that 
statements in item 6 of the summary of changes section in the preamble 
and in section 6(a) of the provisions appeared to be in conflict. The 
background

[[Page 12069]]

summary section refers to ``reporting raisin acreage prior to the time 
insurance attaches'' whereas section 6(a) requires this report to be 
submitted on or before the sales closing date.
    Response: FCIC agrees with the comments. The background section 
should have stated that raisin acreage must be reported on or before 
the sales closing date.
    Comment: One comment from the insurance industry favored having the 
insured report the acreage and location more timely but questioned: (1) 
Why the guarantee can not be determined at this time; (2) would a 
growing season inspection be required if an insured leases ground after 
insurance attaches; and (3) what happens when there is a forecast of 
rain and the insured notifies the company that additional acreage has 
been leased?
    Response: The amount of insurance cannot be calculated until the 
insured tonnage can be determined. Insured tonnage is not known until 
after the crop is laid down to dry and the production is delivered or 
determined in the event of damage. Additional acreage cannot be added 
after the raisins have been laid down on the additional acreage; so no 
new acreage can be added after insurance has attached. If raisins are 
leased after they have been laid down, such raisins are only insurable 
if the lessor had insurance and properly executed a transfer of 
coverage and right to indemnity. Further additional acreage may only be 
added to the acreage report after the sales closing date if the insurer 
agrees. In the event rain is forecast, the insurance provider may deny 
coverage on the acreage.
    Comment: One comment from the insurance industry questioned why the 
term ``Location and Unit Report'' was used for what appears to be a 
preliminary acreage report. The commenter stated that, if there were 
significant differences between the two terms such that a different 
form is required, the industry would like to help develop such a form 
before the Raisin Crop Insurance Provisions are published as a Final 
Rule.
    Response: ``Location and unit report'' was thought to be a more 
descriptive term than ``acreage report.'' However, after additional 
consideration, FCIC believes that the current acreage report form may 
be used to obtain all information required by these Crop Provisions. 
Therefore, the term ``Location and unit report'' has been replaced with 
``acreage report.''
    Comments: Six comments, one from OIG, one from an RSO, and four 
from the crop insurance industry suggested that section 8(b) which 
states ``For the purpose of determining the amount of indemnity, your 
share will not exceed the lower of your share at either the time the 
raisins are first placed on trays for drying or are removed from the 
vineyards.'' be revised to read ``For the purpose of determining the 
amount of indemnity, your share will not exceed your share at the time 
the insurance attaches.'' The comment also stated that the insurance 
period for raisins lasts only two or three weeks and changes in share 
are uncommon once the crop is on trays. Also, it was stated that if 
this section is not revised, that consideration be given to using 
``lesser of'' in lieu of ``lower of''.
    Response: FCIC understands that it is uncommon for the share to 
change within the insurance period. However, in those cases where it 
does change, the insurance provider should not pay for a share in 
excess of the insured's share at the time of loss. FCIC has revised 
this provision to indicate that the share will not exceed the lesser of 
the share at the time insurance attaches or at the time of loss. For 
clarification, this provision was moved to section 13(c) (Settlement of 
Claim).
    Comments: Seven comments, one from OIG, one from an RSO, and five 
from the crop insurance industry, suggested the following be added to 
the last sentence of section 11(a) ``or determine the number of tons 
meeting RAC standards that could be obtained if the production were 
reconditioned.'' It was indicated that this language is necessary to be 
equitable to producers who intend to sell rain-damaged raisins through 
alternative market outlets.
    Response: FCIC agrees with the comments and has amended the 
provision to indicate that the insurance provider may determine the 
tons meeting RAC standards that could be obtained if the raisins were 
reconditioned. Language has also been added to clarify the 
circumstances under which this action can be taken.
    Comment: One comment questioned whether all items of sub-section 
11(c)(1)(2)&(3) must occur to get a reconditioning payment, or, are 
different combinations possible? If all three are required, the ``or'' 
at the end of (2) should be changed to ``and'', or delete it and the 
``and'' at the end of (1). If all three occurrences are not required, 
which combinations are acceptable?
    Response: Two possible combinations are acceptable. Either 11(c) 
(1) and (2) are required, or 11(c) (1) and (3).
    Comment: One comment from the insurance industry expressed concern 
that, since insured's with catastrophic risk protection (CAT) insurance 
are not eligible for a reconditioning payment, they may ``drag their 
feet'' in hopes of collecting a regular production loss. Is the 
reconditioning requirement language in sub-section 11(a) strong enough 
to discourage or prevent possible abuse?
    Response: FCIC believes that policy provisions dealing with poor 
farming practices and the valuation of damaged production if the 
insured fails to recondition the raisins should prevent cases in which 
insureds may try to inflate losses.
    Comments: Five comments, one from an RSO, and four from the 
insurance industry suggested replacing the term ``micro-contamination'' 
in section 11(c)(2) with ``other rain-caused contamination determined 
by micro-analysis * * *'' The comment stated this language would be 
more accurate since insects infest rain damaged raisins, and micro-
analysis is used to identify insects and insect parts that will not be 
removed during normal processing.
    Response: FCIC agrees with the comments and has amended the 
provision accordingly.
    Comment: One comment concerned item 8 in the background section of 
the preamble (substantive change summary). This provision states that 
``raisins discarded or lost from trays as part of normal handling will 
not be considered production to count.'' The comment stated this would 
not be a problem until it rains and the handlers throw off moldy 
raisins and what remains on the trays. Question is, would this 
production not be used to determine the guarantee and production to 
count?
    Response: Normal field handling does not include raisins which are 
discarded after a loss. If such raisins are discarded, they should not 
be included in the insured tonnage or the value of the damaged 
production.
    Comments: Two comments from the crop insurance industry suggested 
combining the provisions contained in section 14(e) with the provisions 
in section 14(a).
    Response: The provisions are clearly stated and have not been 
combined.
    Comments: Two comments received from the insurance industry 
suggested the provision in section 14(d) stating ``that written 
agreements are valid for only one year'' be removed. Terms of the 
agreement should be stated in the agreement to fit the particular 
situation for the policy, or if no substantive changes occur from one 
year to the next, allow the written agreement to be continuous.
    Response: Written agreements are intended to change policy terms or

[[Page 12070]]

permit insurance in unusual situations where such changes will not 
increase risk. If such practices continue year to year, they should be 
incorporated into the policy or Special Provisions. It is important to 
keep non-uniform exceptions to the minimum to ensure that the insured 
is well aware of the specific terms of the policy. Therefore, no change 
will be made.
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. This rule improves the raisin crop insurance 
coverage and brings it under the Common Crop Insurance Policy Basic 
Provisions for consistency among policies. The contract change date 
required for new policies is April 30, 1997. It is therefore imperative 
that these provisions be made final before that date so that the 
reinsured companies and insureds may have sufficient time to implement 
the new provisions.
    Therefore, public interest requires the agency to act immediately 
to make these provisions available for the 1997 crop year.

List of Subjects in 7 CFR Parts 401 and 457

    Crop insurance, Raisin endorsement.

Final Rule

    Accordingly, the Federal Crop Insurance Corporation hereby amends 7 
CFR parts 401 and 457 effective for the 1997 and succeeding crop years, 
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).

Sec. 401.142  [Revised]

    2. The introductory text of Sec. 401.142 is revised to read as 
follows:
    The provisions of the Raisin Endorsement for the 1990 through 1996 
crop years are as follows:
* * * * *

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. Section 457.124 is added to read as follows:


Sec. 457.124  Raisin crop insurance provisions.

    The Raisin Crop Insurance Provisions for the 1997 and succeeding 
crop years are as follows:

FCIC Policies
Department of Agriculture
Federal Crop Insurance Corporation
Reinsured Policies

(Appropriate title for insurance provider)
    Both FCIC and Reinsured Policies:
Raisin Crop Provisions
    If a conflict exists among the Basic Provisions (Sec. 457.8), these 
Crop Provisions, and the Special Provisions; the Special Provisions 
will control these Crop Provisions and the Basic Provisions; and these 
Crop Provisions will control the Basic Provisions.
    1. Definitions.
    Crop year--In lieu of the definition of ``Crop year'' contained in 
section 1 of the Basic Provisions (Sec. 457.8), the calendar year in 
which the raisins are placed on trays for drying.
    Days--Calendar days.
    Delivered ton--A ton of raisins delivered to a packer, processor, 
buyer or a reconditioner, before any adjustment for U. S. Grade B and 
better maturity standards, and after adjustments for moisture over 16 
percent and substandard raisins over 5 percent.
    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.
    RAC--The Raisin Administrative Committee, which operates under an 
order of the United States Department of Agriculture (USDA).
    Raisins--The sun-dried fruit of varieties of grapes designated 
insurable by the Actuarial Table. These grapes will be considered 
raisins for the purpose of this policy when laid on trays in the 
vineyard to dry.
    Substandard--Raisins that fail to meet the requirements of U.S. 
Grade C, or layer (cluster) raisins with seeds that fail to meet the 
requirements of U.S. Grade B.
    Reference maximum dollar amount--The value per ton established by 
FCIC and shown in the Actuarial Table.
    Table grapes--Grapes grown for commercial sale as fresh fruit on 
acreage where appropriate cultural practices were followed.
    Ton--Two thousand (2,000) pounds avoirdupois.
    Tonnage report--A report used to annually report, by unit, all the 
tons of raisins produced in the county in which you have a share.
    Written agreement--A written document that alters designated terms 
of this policy in accordance with section 14.
    2. Unit Division.
    (a) In addition to the requirements of a unit as defined in section 
1 (Definitions) of the Basic Provisions (Sec. 457.8), a basic unit will 
consist of each grape variety you insure.
    (b) Unless limited by the Special Provisions, a 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.
    (c) Basic units may not be divided into optional units on any basis 
including, but not limited to, production practice, type, and variety, 
other than as described in this section.
    (d) If you do not comply fully with these provisions, we will 
combine all optional units that are not in compliance with these 
provisions into the basic unit from which they were formed. We will 
combine the optional units at any time we discover that you have failed 
to comply with these provisions. If failure to comply with these 
provisions is determined to be inadvertent, and the optional units are 
combined into a basic unit, that portion of the additional premium paid 
for the optional units that have been combined will be refunded to you 
for the units combined.
    (e) All units you selected for the crop year must be identified on 
the acreage report for that crop year.
    (f) The following requirements must be met to qualify for separate 
optional units.
    (1) 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
    (2) Separate optional units must be located on non-contiguous land.
    3. Amounts of Insurance and Production Reporting .
    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 percentage for all the 
raisins in the county insured under this policy.
    (b) The amount of insurance for the unit will be determined by 
multiplying the insured tonnage by the reference

[[Page 12071]]

maximum dollar amount, by the coverage level percentage you elect, and 
by your share.
    (c) Insured tonnage is determined as follows:
    (1) For units not damaged by rain--The delivered tons; or
    (2) For units damaged by rain--By adding the delivered tons to any 
verified loss of production due to rain damage. When production from a 
portion of the acreage within a unit is removed from the vineyard and 
production from the remaining acreage is lost in the vineyard, the 
amount of production lost in the vineyard will be determined based on 
the number of tons of raisins produced on the acreage from which 
production was removed. When no production has been removed from the 
vineyard, the amount of production lost in the vineyard will be 
determined based on an appraisal.
    (3) Insured tonnage will be adjusted as follows:
    (i) The insured tonnage will be reduced 0.12 percent for each 0.10 
percent of moisture in excess of 16.0 percent. For example, 10.0 tons 
of raisins containing 18.0 percent moisture will be reduced to 9.760 
tons of raisins;
    (ii) Insured tonnage used for dry edible fruit will be reduced by 
0.10 percent for each 0.10 percent of substandard raisins in excess of 
5.0 percent; and
    (iii) When raisins contain moisture in excess of 24.3 percent at 
the time of delivery and are released for a use other than dry edible 
fruit (e.g. distillery material), they will be considered to contain 
24.3 percent moisture.
    (4) If any raisins are delivered, the moisture content will be 
determined at the time of delivery.
    (d) Section 3(c) of the Basic Provisions is not applicable to this 
crop.
    4. Contract Changes.
    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is April 30 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 July 31.
    6. Acreage Report and Tonnage Report.
    In lieu of the provisions contained in section 6 of the Basic 
Provisions (Sec. 457.8):
    (a) You must report by unit, and on our form, the acreage on which 
you intend to produce raisins for the crop year. This acreage report 
must be submitted to us on or before the sales closing date, and 
contain the following information:
    (1) All acreage of the crop (insurable and not insurable) in which 
you will have a share;
    (2) Your anticipated share at the time coverage will begin;
    (3) The variety; and
    (4) The location of each vineyard.
    (b) Acreage of the crop acquired after the acreage was reported, 
may be included on the acreage report if we agree to accept the 
additional acreage. Such additional acreage will not be added to the 
acreage report after you first place raisins from the additional 
acreage on trays for drying. Failure to report any acreage in which you 
have a share will result in denial of liability. If you elect not to 
produce raisins on any part of the acreage included on your acreage 
report, you must notify us in writing on or before September 21, and 
provide any records we may require to verify that raisins were not 
produced on that acreage.
    (c) If you fail to file an acreage report in a timely manner, or if 
the information reported is incorrect, we may deny liability on any 
unit.
    (d) In addition to the acreage report, you must annually submit a 
tonnage report, on our form, which includes by unit the number of 
delivered tons of raisins, and, if damage has occurred, the amount of 
any tonnage we determined was lost due to rain damage in the vineyard 
for each unit designated in the acreage report.
    (e) The tonnage report must be submitted to us as soon as the 
information is available, but not later than March 1 of the year 
following the crop year. Indemnities may be determined on the basis of 
information you submitted on this report. If you do not submit this 
report by the reporting date, we may, at our option, either determine 
the insured tonnage and share by unit or we may deny liability on any 
unit. This report may be revised only upon our approval. Errors in 
reporting units may be corrected by us at any time we discover the 
error.
    7. Annual Premium.
    In lieu of the premium computation method contained in section 7 
(Annual Premium) of the Basic Provisions (Sec. 457.8), the annual 
premium amount is determined by multiplying the amount of insurance for 
the unit at the time insurance attaches by the premium rate and then 
multiplying that result by any applicable premium adjustment factors 
that may apply.
    8. Insured Crop.
    (a) In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all the raisins in 
the county of grape varieties for which a premium rate is provided by 
the Actuarial Table and in which you have a share.
    (b) In addition to the raisins not insurable under section 8 
(Insured Crop) of the Basic Provisions (Sec. 457.8), we do not insure 
any raisins:
    (1) Laid on trays after September 8 in vineyards with north-south 
rows in Merced or Stanislaus Counties, or after September 20 in all 
other counties;
    (2) From table grape strippings; or
    (3) From vines that received manual, mechanical, or chemical 
treatment to produce table grape sizing.
    9. Insurance Period.
    In lieu of the provisions of section 11 (Insurance Period) of the 
Basic Provisions (Sec. 457.8), insurance attaches on each unit at the 
time the raisins are placed on trays for drying and ends the earlier 
of:
    (a) October 20;
    (b) The date the raisins are removed from the trays;
    (c) The date the raisins are removed from the vineyard;
    (d) Total destruction of all raisins on a unit;
    (e) Final adjustment of a loss on a unit; or
    (f) Abandonment of the raisins.
    10. Causes of Loss.
    (a) In accordance with the provisions of section 12 (Causes of 
Loss) of the Basic Provisions (Sec. 457.8), insurance is provided only 
against unavoidable loss of production resulting from rain that occurs 
during the insurance period and while the raisins are on trays or in 
rolls in the vineyard for drying.
    (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 inability to market 
the raisins 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 a person to accept production.
    11. Reconditioning Requirements and Payment.
    (a) We may require you to recondition a representative sample of 
not more than 10 tons of damaged raisins to determine if they meet 
standards established by the RAC once reconditioned. If such standards 
are met, we may require you to recondition all the damaged production. 
If we determine that it is possible to recondition any damaged 
production and, if you do not do so, we will value the damaged 
production at the reference

[[Page 12072]]

maximum dollar amount, except if your damaged production undergoes a 
USDA inspection and is stored by your packer with other producer's 
production to be reconditioned at a later date. If we agree, in 
writing, that it is not practical to recondition the damaged 
production, we will determine the number of tons meeting RAC standards 
that could be obtained if the production were reconditioned.
    (b) If the representative sample of raisins that we require you to 
recondition does not meet RAC standards for marketable raisins after 
reconditioning, the reconditioning payment will be the actual cost you 
incur to recondition the sample, not to exceed an amount that is 
reasonable and customary for such reconditioning, regardless of the 
coverage level selected.
    (c) A reconditioning payment, based on the actual (unadjusted) 
weight of the raisins, will be made if:
    (1) Insured raisin production:
    (i) Is damaged by rain within the insurance period;
    (ii) Is reconditioned by washing with water and then drying;
    (iii) Is insured at a coverage level greater than that applicable 
to the catastrophic risk protection plan of insurance; and either
    (2) The damaged production undergoes an inspection by USDA and is 
found to contain mold, embedded sand, or other rain-caused 
contamination determined by micro-analysis in excess of standards 
established by the RAC, or is found to contain moisture in excess of 18 
percent; or
    (3) We give you consent to recondition the damaged production.
    (d) Your request for consent to any wash-and-dry reconditioning 
must identify the acreage on which the production to be reconditioned 
was damaged in order to be eligible for a reconditioning payment.
    (e) The reconditioning payment for raisins that meet RAC standards 
for marketable raisins after reconditioning will be the lesser of your 
actual cost for reconditioning or the amount determined by:
    (1) Multiplying the greater of $125.00 or the reconditioning dollar 
amount per ton contained in the Special Provisions by your coverage 
level;
    (2) Multiplying the result of section 11(e)(1) by the actual number 
of tons of raisins (unadjusted weight) that are wash-and-dry 
reconditioned; and
    (3) Multiplying the result of section 11(e)(2) by your share.
    (f) Only one reconditioning payment will be made for any lot of 
raisins damaged during the crop year. Multiple reconditioning payments 
for the same production will not be made.
    12. Duties In The Event of Damage or Loss.
    (a) 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:
    (1) If you intend to claim an indemnity on any unit, you must give 
us notice within 72 hours of the time the rain fell on the raisins. We 
may reject any claim for indemnity if such notice is later. You must 
provide us the following information when you give us this notice:
    (i) The grape variety;
    (ii) The location of the vineyard and number of acres; and
    (iii) The number of vines from which the raisins were harvested.
    (2) We will not pay any indemnity unless you:
    (i) Authorize us in writing to obtain all relevant records from any 
raisin packer, raisin reconditioner, the RAC, or any other person who 
may have such records. If you fail to meet the requirements of this 
subsection, all insured production will be considered undamaged and 
valued at the reference maximum dollar value.
    (ii) Upon our request, provide us with records of previous years'' 
production and acreage. This information may be used to establish the 
amount of insured tonnage when insurable damage results in discarded 
production.
    (b) In lieu of the provisions in section 14 (Duties in the Event of 
Damage or Loss) of the Basic Provisions (Sec. 457.8) that require you 
to submit a claim for indemnity not later than 60 days after the end of 
the insurance period, any claim for indemnity must be submitted to us 
not later than March 31 following the date for the end of the insurance 
period.
    13. 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 acreage from which 
raisins were removed 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 tonnage of raisins by the reference 
maximum dollar amount and your coverage level percentage;
    (2) Subtracting from the total in section 13(b)(1) the total value 
of all insured damaged and undamaged raisins; and
    (3) Multiplying the result of section 13(b)(2) by your share.
    (c) For the purpose of determining the amount of indemnity, your 
share will not exceed the lesser of your share at the time insurance 
attaches or at the time of loss.
    (d) Undamaged raisins or raisins damaged solely by uninsured causes 
will be valued at the reference maximum dollar amount.
    (e) Raisins damaged partially by rain and partially by uninsured 
causes will be valued at the highest prices obtainable, adjusted for 
any reduction in value due to uninsured causes.
    (f) Raisins that are damaged by rain, but that are reconditioned 
and meet RAC standards for raisins, will be valued at the reference 
maximum dollar amount.
    (g) The value to count for any raisins produced on the unit that 
are damaged by rain and not removed from the vineyard will be the 
larger of the appraised salvage value or $35.00 per ton, except that 
any raisins that are damaged and discarded from trays or are lost from 
trays scattered in the vineyard as part of normal handling will not be 
considered to have any value. You must box and deliver any raisins that 
can be removed from the vineyard.
    (h) At our sole option, we may acquire all the rights and title to 
your share of any raisins damaged by rain. In such event, the raisins 
will be valued at zero in determining the amount of loss and we will 
have the right of ingress and egress to the extent necessary to take 
possession, care for, and remove such raisins.
    (i) Raisins destroyed, put to another use without our consent, or 
abandoned will be valued at the reference maximum dollar amount.
    14. 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 14(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 amount of insurance per ton, and premium rate;

[[Page 12073]]

    (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 March 6, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-6520 Filed 3-13-97; 8:45 am]
BILLING CODE 3410-08-P