[Federal Register Volume 62, Number 75 (Friday, April 18, 1997)]
[Proposed Rules]
[Pages 19063-19067]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10042]


 ========================================================================
 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. 62, No. 75 / Friday, April 18, 1997 / 
Proposed Rules  

[[Page 19063]]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 455 and 457


Macadamia Nut Crop Insurance Regulations; and Common Crop 
Insurance Regulations, Macadamia Nut Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes 
specific crop provisions for the insurance of macadamia nuts. 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 macadamia nut crop insurance regulations with the Common Crop 
Insurance Policy for ease of use and consistency of terms, and to 
restrict the effect of the current macadamia nut 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 May 19, 1997 and will be considered 
when the rule is to be made final.

ADDRESSES: Interested persons are invited to submit written comments to 
the Director, Product Development Division, Federal Crop Insurance 
Corporation, United States Department of Agriculture, 9435 Holmes Road, 
Kansas City, MO 64131.

FOR FURTHER INFORMATION CONTACT: Stephen Hoy, Insurance Management 
Specialist, Research and Development, Product Development Division, 
Federal Crop Insurance Corporation, at the Kansas City, MO, address 
listed above, 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, 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 through September 30, 1998.
    Section 7 of the 1999 Macadamia Nut Crop Provisions adds 
interplanting as an insurable farming practice for macadamia nuts 
interplanted with another perennial crop as long as the crop would not 
be adversely affected. This practice was not insurable under the 
previous Macadamia Nut Crop Insurance Policy. 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 macadamia nut crop. 
Standard interplanting language has been added to most perennial crops. 
Offering insurance for this practice benefits agriculture because now 
more perennial crop producers will be able to purchase increased 
coverage than was otherwise available under 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; Macadamia Nut Crop Insurance Provisions.'' The 
information to be collected includes a crop insurance application and 
an 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 macadamia nuts that are eligible for Federal crop 
insurance.
    The information requested is necessary for the reinsured companies 
and FCIC to provide insurance and reinsurance, determine eligibility, 
determine the correct parties to the agreement or contract, determine 
and collect premiums or other monetary amounts, and pay benefits.
    All information is reported annually. The reporting burden for this 
collection of information is estimated to average 16.9 minutes per 
response for each of the 3.6 responses from approximately 1,755,015 
respondents. The total annual burden on the public for this information 
collection is 2,676,932 hours.
    FCIC is requesting comments on 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.
    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 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

[[Page 19064]]

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. The 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 producer 
must also annually certify to the previous years production if adequate 
records are available to support the certification. The producer must 
maintain the production records to support the certified information 
for at least three 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. 12988

    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

    FCIC proposes to add to the Common Crop Insurance Regulations (7 
CFR part 457), a new section, 7 CFR 457.131, Macadamia Nut Crop 
Insurance Provisions. The new provisions will be effective for the 1999 
and succeeding crop years. These provisions will replace and supersede 
the current provisions for insuring macadamia nuts found at 7 CFR part 
455 (Macadamia Nut Crop Insurance Regulations). FCIC also proposes to 
amend 7 CFR part 455 to limit its effect to the 1997 and prior crop 
years. FCIC will later publish a regulation to remove and reserve part 
455.
    This rule makes minor editorial and format changes to improve the 
Macadamia Nut Crop Insurance Regulations' compatibility with the Common 
Crop Insurance Policy. In addition, FCIC is proposing substantive 
changes in the provisions for insuring macadamia nuts as follows:
    1. Amend the contract term between the producer and the insurance 
provider to provide continuous coverage. The current policy is not a 
continuous contract. This change standardizes the Macadamia Nut Crop 
Insurance Policy with other crop insurance policies and removes the 
requirement of annually filing an application.
    2. Section 1--Add definitions for the terms ``age,'' ``days,'' 
``direct marketing,'' ``good farming practices,'' ``graft,'' 
``interplanted,'' ``irrigated practice,'' ``non-contiguous,'' 
``pound,'' ``production guarantee (per acre),'' ``rootstock,'' and 
``written agreement'' for clarification. Clarify that the crop year is 
designated by the calendar year in which the insurance period ends.
    3. Section 2--Describe the guidelines under which basic units may 
be divided into optional units consistent with other perennial crops 
offering optional units. These provisions also incorporate the 
requirement that each optional unit must contain at least 80 acres of 
bearing macadamia trees and be located on non-contiguous land. These 
optional unit guidelines standardize macadamia nuts with other 
perennial crops.
    4. Section 3(a)--Specify that the insured may select only one price 
election for all the macadamia nuts 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 macadamia nut type designated in the Special Provisions to 
standardize these provisions with other crops that allow insurance 
prices by type.
    5. Section 3(b)--Specify the reporting requirements when any 
circumstance occurs that may reduce the expected yields and when the 
insured crop is interplanted with another perennial crop to ensure that 
the guarantee accurately reflects the production capabilities of the 
acreage and to maximize the number of acres which are insurable so that 
such acreage need no longer be covered by NAP.
    6. Section 4--Establish August 31 as the contract change date. 
Previously, the policy contained no contract change date since it was 
not a continuous policy.
    7. Section 5--Establish December 31 as the cancellation date. 
Previously, the policy contained no cancellation date since it was not 
a continuous policy.
    8. Section 6(d)--Allow insurance coverage for macadamia nuts 
produced on trees that have not reached the fifth growing season, 
provided they have produced at least 200 pounds (wet, in-shell) per 
acre in a previous crop year, and the insurance provider agrees in 
writing to provide such coverage in order to increase the number of 
acres that are insurable without adversely affecting the actuarial 
soundness of the program.
    9. Section 6(e)--Specify that the crop insured will be macadamia 
nuts that are produced from blooms that normally occur during the 
calendar year in which insurance attaches and that are harvested prior 
to the end of the insurance period.
    10. Section 7--Allow insurance for macadamia nuts interplanted with 
another perennial crop in order to conform with other perennial crops 
and increase the number of acres available for insurance coverage.

[[Page 19065]]

    11. Section 8--Change the calendar date for the end of the 
insurance period from December 31 to the second June 30th of the crop 
year. The date insurance attaches remains January 1 of each crop year. 
Macadamia trees bloom intermittently throughout the entire calendar 
year; however, the primary bloom periods usually occur between January 
and July of each calendar year. The nuts are harvested approximately 
seven to eight months after the bloom period. The macadamia nut 
industry's crop production year extends from July 1 of each calendar 
year through June 30 of the next calendar year. The insurance period in 
the current policy covers the primary bloom periods but ends on 
December 31, midway through the industry's crop production year; 
therefore, it is not conducive to maintaining Actual Production History 
(APH) records or establishing effective loss adjustment procedures. The 
proposed insurance period will provide coverage against insured causes 
of loss that occur during the bloom periods, subsequently affecting 
macadamia nut production during the macadamia nut crop production year. 
The first revised insurance period will begin January 1, 1998, and end 
June 30, 1999.
    12. Section 8(a)--Specify that if the application is received after 
December 22 but prior to January 1, insurance will attach on the 10th 
day after the insured's properly completed application is received in 
the insurance provider's local office unless the acreage is inspected 
during the 10 day period and it is determined that insurability 
requirements are not met. These provisions were modified so they will 
not be interpreted as allowing late-filed applications and a thirty day 
period in this situation is not reasonable. Ten days is sufficient to 
prevent adverse selection and avoid unnecessary exposure to uninsured 
losses during the waiting period.
    13. Section 8(b)--Add provisions to clarify the procedure for 
insuring acreage when an insurable share is acquired or relinquished on 
or before the acreage reporting date.
    14. Section 9--Clarify that wildlife is an insurable cause of loss, 
unless proper measures to control wildlife have not been taken. Disease 
and insect infestation are excluded causes of loss unless adverse 
weather prevents the proper application of control measures, causes 
control measures to be ineffective when properly applied, or causes 
disease or insect infestation for which no effective control mechanism 
is available to be consistent with other crop provisions.
    15. Section 10(a)--Specify the notice requirements if the orchard 
has suffered a loss and the crop will not be harvested in order to 
permit a timely appraisal of any loss and accurately determine 
production to count.
    16. Section 10(b)--Require the producer to give notice at least 15 
days prior to harvest so a preharvest inspection can be made if the 
insured intends to engage in direct marketing to consumers in order to 
permit a timely appraisal and determine production to count.
    17. Section 10(c)--Require the producer to give at least 15 days 
notice prior to the beginning of harvest or immediately if damage is 
discovered during harvest so damaged production may be inspected.
    18. 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 in 7 CFR Parts 455 and 457

    Crop insurance, Macadamia nut.

Proposed Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby proposes to amend 7 CFR parts 455 and 
457, as follows:

PART 455--MACADAMIA NUT CROP INSURANCE REGULATIONS

    1. The authority citation for 7 CFR part 455 is amended to read as 
follows:

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

    2. The subpart heading preceding Section 455.1 is revised to read 
as follows:

Subpart--Regulations for the 1988 Through 1997 Crop Years

    3. Sec. 455.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:


Sec. 455.7  The application and policy.

* * * * *
    (d) The application for the 1988 through 1997 crop years is found 
at subpart D of part 400, General Administrative Regulations (7 CFR 
400.37, 400.38). The provisions of the Macadamia Nut Crop Insurance 
Policy for the 1988 through 1997 crop years are as follows:
* * * * *

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

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

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

    5. Sec. 457.131 is added to read as follows:


Sec. 457.131  Macadamia Nut Crop insurance provisions.

    The Macadamia Nut Crop Insurance Provisions for the 1999 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:

Macadamia Nut 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

    Age--The number of complete 12-month periods that have elapsed 
since the month the trees were set out or were grafted, whichever is 
later. An age determination will be made for each unit, or portion 
thereof, as of January 1 of each crop year.
    Crop year--A period beginning with the date insurance attaches 
to the macadamia nut crop and extending through the normal harvest 
time. It is designated by the calendar year in which the insurance 
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, and permitting the general public to enter the 
field for the purpose of picking all or a portion of the crop.
    Good farming practices--The cultural practices generally in use 
in the county for the crop to make normal progress toward maturity 
and produce at least the yield used to determine the production 
guarantee, and are those recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Graft--The uniting of a macadamia shoot to an established 
macadamia tree rootstock for future production of macadamia nuts.
    Harvest--Picking of mature macadamia nuts from the ground.

[[Page 19066]]

    Interplanted--Acreage on which two or more crops are planted in 
any form of alternating or mixed pattern.
    Irrigated practice--A method of producing a crop by which water 
is artificially applied during the growing season by appropriate 
systems and at the proper times, with the intention of providing the 
quantity of water needed to produce at least the yield used to 
establish the irrigated production guarantee on the irrigated 
acreage planted to the insured crop.
    Non-contiguous--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 irrigation canal will 
be considered as contiguous.
    Pound--A unit of weight equal to 16 ounces avoirdupois.
    Production guarantee (per acre)--The number of wet, in-shell 
pounds determined by multiplying the approved APH yield per acre by 
the coverage level percentage you elect.
    Rootstock--The root and stem portion of a macadamia tree to 
which a macadamia shoot can be grafted.
    Wet, in-shell--The weight of the macadamia nuts as they are 
removed from the orchard with the nut meats in the shells after 
removal of the husk but prior to being dried.
    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 unit) may be divided into optional units if, for each 
optional unit you meet all the conditions of this section or if a 
written agreement to such division exists.
    (b) Basic units may not be divided into optional units on any 
basis 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 additional 
premium paid for the optional units that have been combined will be 
refunded to you for the units combined.
    (d) All units you selected for the 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;
    (2) You must have records of marketed production or measurement 
of stored production from each optional unit maintained in such a 
manner that permits us to verify the production from each optional 
unit, or the production from each unit must be kept separate until 
loss adjustment is completed by us;
    (3) Each optional unit must contain at least 80 acres of bearing 
macadamia trees; and
    (4) Each optional unit must be located on non-contiguous land.

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

    In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) 
of the Basic Provisions (Sec. 457.8):
    (a) You may select only one price election for all the macadamia 
nuts 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 macadamia nut 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 of the maximum price election for one type, you 
must also choose 100 percent 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 trees, change in practices, or any 
other circumstance that may reduce the expected yield below the 
yield upon which the insurance guarantee is based and the number of 
affected acres;
    (2) The number of bearing trees on insurable and uninsurable 
acreage;
    (3) The age of the trees and the planting pattern; and
    (4) For the first year of insurance for acreage interplanted 
with another perennial crop, and anytime the planting pattern of 
such acreage is changed:
    (i) The age of the interplanted crop, and type if applicable;
    (ii) The planting pattern; and
    (iii) Any other information that we request in order to 
establish your approved yield.
    We will reduce the yield used to establish your production 
guarantee as necessary, based on our estimate of the effect of the 
following: interplanted perennial crop; removal of trees; damage; 
change in practices and any other circumstance on the yield 
potential of the insured crop. If you fail to notify us of any 
circumstance that may reduce your yields from previous levels, we 
will reduce your production guarantee as necessary at any time we 
become aware of the circumstance.

4. Contract Changes

    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is August 31 
preceding the cancellation date.

5. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation 
and termination dates are December 31.

6. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all macadamia nuts 
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 adapted to the area; and
    (3) Are grown on a rootstock that is adapted to the area.
    (c) That are grown in an orchard that, if inspected, is 
considered acceptable by us;
    (d) That have reached at least the fifth growing season after 
being set out or grafted. However, we may agree in writing to insure 
acreage that has not reached this age if it has produced at least 
200 pounds of (wet, in-shell) macadamia nuts per acre in a previous 
crop year; and
    (e) That are produced from blooms that normally occur during the 
calendar year in which insurance attaches and that are normally 
harvested prior to the end of the insurance period.

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, macadamia nuts 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 January 1 of each crop year, except that 
for the year of application, if your application is received after 
December 22 but prior to January 1, insurance will attach on the 
10th day after your properly completed application is received in 
our local office, unless we inspect the acreage during the 10 day 
period and determine that it does not meet insurability 
requirements. You must provide any information that we require for 
the crop or to determine the condition of the orchard.
    (2) The calendar date for the end of the insurance period for 
each crop year is the second June 30th of the crop year.
    (b) In addition to the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8):
    (1) If you acquire an insurable share in any insurable acreage 
after coverage begins but on or before the acreage reporting date 
for the crop year, and after an inspection we consider the acreage 
acceptable, insurance will be considered to have attached to such 
acreage on the calendar date for the beginning of the insurance 
period.
    (2) If you relinquish your insurable share on any insurable 
acreage of macadamia nuts 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,

[[Page 19067]]

is completed by all affected parties; (ii) We are notified by you or 
the transferee in writing of such transfer on or before the acreage 
reporting date; and
    (iii) The transferee is eligible for crop insurance.

9. Causes of Loss

    (a) In accordance with the provisions of section 12 (Causes of 
Loss) of the Basic Provisions (Sec. 457.8), insurance is provided 
only against the following causes of loss that occur during the 
insurance period:
    (1) Adverse weather conditions;
    (2) Fire, unless weeds and other forms of undergrowth have not 
been controlled or pruning debris has not been removed from the 
orchard;
    (3) Earthquake;
    (4) Volcanic eruption;
    (5) Wildlife, unless proper measures to control wildlife have 
not been taken; 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; or
    (2) Inability to market the macadamia nuts 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 3 days of the date harvest 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 of 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 or 
immediately if damage is discovered during harvest, so that we may 
inspect the damaged production. If you fail to notify us and such 
failure results in our inability to inspect the damaged production, 
we may consider all such production to be undamaged and include it 
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 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) Multiplying the insured acreage for each type, if 
applicable, by its respective production guarantee;
    (2) Multiplying each result in section 11(b)(1) by the 
respective price election for each type, if applicable;
    (3) Totaling the results in section 11(b)(2);
    (4) Multiplying the total production to be counted of each type, 
if applicable, (see section 11(c)) by the respective price election;
    (5) Totaling the results in section 11(b)(4);
    (6) Subtracting the total in section 11(b)(5) from the total in 
section 11(b)(3); and
    (7) Multiplying the result in section 11(b)(6) by your share.
    (c) The total production to count (wet, in-shell pounds) from 
all insurable acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) 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;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production; and
    (iv) Potential production on insured acreage that you intend to 
abandon or no longer care for, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
that acreage will end. If you do not agree with our appraisal, we 
may defer the claim only if you agree to continue to care for the 
crop. We will then make another appraisal when you notify us of 
further damage or that harvest is general 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
    (2) All harvested production from the insurable acreage.

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 D.C., on April 10, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-10042 Filed 4-17-97; 8:45 am]
BILLING CODE 3410-FA-P