[Federal Register Volume 62, Number 89 (Thursday, May 8, 1997)]
[Rules and Regulations]
[Pages 25107-25110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11959]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 62, No. 89 / Thursday, May 8, 1997 / Rules 
and Regulations  

[[Page 25107]]


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

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457


General Crop Insurance Regulations and Almond Endorsement; and 
Common Crop Insurance Regulations, Almond 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 almonds. 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 
almond endorsement with the Common Crop Insurance Policy for ease of 
use and consistency of terms, and to restrict the effect of the current 
almond endorsement to the 1997 and prior crop years.

EFFECTIVE DATE: June 9, 1997.

FOR FURTHER INFORMATION CONTACT: Arden Routh, Program Analyst, Research 
and Development Division, Product Development 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, has not been reviewed by OMB.

Paperwork Reduction Act of 1995

    Following publication of the proposed rule, the public was afforded 
60 days to submit written comments and opinions 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), Pub. 
L. 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. 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, a producer is required to complete an 
application and an acreage report. If the crop is damaged or destroyed, 
the insured is required to give notice of loss and provide the 
necessary information to complete a claim for indemnity.
    The insured must also annually certify to the previous year's 
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 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order No. 12988

    This final rule has been reviewed in accordance with Executive 
Order 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

    On Friday August 9, 1996, FCIC published a proposed rule in the 
Federal Register at 61 FR 41531-41535 to add to the Common Crop 
Insurance Regulations (7 CFR part 457) a new section, 7 CFR 457.123, 
Almond Crop Insurance Provisions. The new

[[Page 25108]]

provisions will be effective for the 1998 and succeeding crop years. 
These provisions will replace and supersede the current provisions for 
insuring almonds found at 7 CFR 401.110 (Almond Endorsement). FCIC also 
amends 7 CFR 401.110 to limit its effect to the 1997 and prior crop 
years.
    Following publication of that proposed rule, the public was 
afforded 30 days to submit written comments, data, and opinions. A 
total of 2 comments were received from the crop insurance industry and 
FCIC. The comments received, and FCIC's responses, are as follows:
    Comment: One comment received from the crop insurance industry 
agreed with the definition of ``Insurable rejects'' and ``Rejects,'' 
but did not find these terms being used in the provisions except in the 
definitions. The commenter believes that insurable rejects should not 
be included in production to count when finalizing a claim. The 
commenter recommended adding the following sentence to section 11(c)(2) 
``Harvested almonds which cannot be marketed due to an insurable cause 
(insurable rejects), as determined by us, will not be considered 
production to count.''
    Response: FCIC has amended this provision so that only harvested 
production which was accepted by a buyer is included as production to 
count, provided that production not accepted by the buyer has been 
rejected because it is damaged by an insurable cause of loss. This 
change will allow rejects to be included as production to count when 
the rejects are included in the weight for which the producer receives 
payment; however, will not include rejects as production to count when 
payment is not received for them.
    Comment: One comment received from the insurance industry 
recommended that the requirement for a written agreement to be renewed 
each year be removed. If no substantive changes occur from one year to 
the next, the written agreement should be allowed to be effective.
    Response: Written agreements are intended to permit insurance 
coverage to be available in unusual or previously unknown situations. 
If the situation exists from year to year, it should be incorporated 
into the crop provisions or Special Provisions. It is important to 
minimize exceptions to the policy to ensure that the insured is well 
aware of the specific terms of the policy.
    FCIC has made the following changes to the Almond Provisions:
    1. Section 2(c)--Clarified provisions regarding premium refunds 
when optional units are combined into a basic unit.
    2. Section 2(e)(1)--Clarified that records must be provided by the 
production reporting date as one of the requirements for optional 
units.
    3. Section 8(a)(1)--Clarified the date on which coverage begins for 
the year the application is first signed.
    4. Section 8(b)--Added a provision to clarify that acreage acquired 
after the acreage reporting date is not insurable. Also, added a 
provision to clarify that a person to whom coverage is transferred must 
be eligible for insurance.
    5. Section 9--Added insects, disease and wildlife as insurable 
causes of loss, unless damage is due to insufficient or improper 
application of control measures to be consistent with other perennial 
crops. Clarified that failure of the irrigation water supply is a 
covered loss only if caused by a peril for which insurance is provided.

List of Subjects in 7 CFR Parts 401 and 457

    Almond, Almond endorsement, Crop insurance.

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(1), 1506(p).

    2. Section 401.110 introductory paragraph is amended to read as 
follows:


Sec. 401.110  Almond endorsement.

    The provisions of the Almond Crop Insurance Endorsement for the 
1988 through the 1997 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(1), 1506(p).

    4. Section 457.123 is added to read as follows:


Sec. 457.123  Almond crop insurance provisions.

    The Almond Crop Insurance Provisions for the 1998 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:

Almond 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

    Days. Calendar days.
    Good farming practices. The cultural practices generally in use 
in the county for the crop to make normal progress toward maturity 
and produce at least the yield used to determine the production 
guarantee, and are those recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Harvest. The removal of mature almonds from the orchard.
    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.
    Meat pounds. The total pounds of almond meats (whole, chipped 
and broken, and in-shell meats) and rejects. Unshelled almonds will 
be converted to meat pounds in accordance with FCIC approved 
procedures.
    Non-contiguous land. Any two or more tracks of land whose 
boundaries do not touch at any point, except that land separated 
only by a public or private right-of-way, waterway or an irrigation 
canal will be considered as contiguous.
    Production guarantee (per acre). The quantity of almonds (total 
meat pounds per acre) determined by multiplying the approved actual 
production history (APH) yield per acre by the coverage level 
percentage you elect.
    Set out. Transplanting the tree into the orchard.
    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.

[[Page 25109]]

    (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.
    (d) All optional 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 provided records by the production reporting 
date, which can be independently verified, of acreage and production 
for each optional unit for at least the last crop year used to 
determine your production guarantee;
    (2) You must have records of marketed production or measurement 
of stored production from each optional unit maintained in such a 
manner that permits us to verify the production from each optional 
unit, or the production from each unit must be kept separate until 
loss adjustment is completed by us; and
    (3) Each optional unit must be located on non-contiguous land 
unless otherwise provided by a written agreement.

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 almonds 
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 almond 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 patterns;
    (4) For the first year of insurance for acreage interplanted 
with another perennial crop, and anytime the planting pattern of 
such acreage is changed, the age of the crop that is interplanted 
with the almonds, and type if applicable, and the planting pattern; 
and
    (5) 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 the almonds in 
the county for which a premium rate is provided by the Actuarial 
Table:
    (a) In which you have a share unless allowed otherwise by 
section 8(b);
    (b) That are grown for harvest as almonds;
    (c) That are irrigated;
    (d) That are grown in an orchard that, if inspected, is 
considered acceptable to us; and
    (e) On acreage where at least 90 percent of the trees have 
reached at least the seventh growing season after set out, unless we 
agree in writing to insure trees not meeting this requirement.

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, almonds 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 21, 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 November 30.
    (b) In addition to the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8):
    (1) If you acquire an insurable share in any insurable acreage 
after coverage begins but on or before the acreage reporting date 
for the crop year, and after an inspection we consider the acreage 
acceptable, insurance will be considered to have attached to such 
acreage on the calendar date for the beginning of the insurance 
period. Acreage acquired after the acreage reporting date will not 
be insured.
    (2) If you relinquish your insurable share on any insurable 
acreage of almonds on or before the acreage reporting date for the 
crop year, insurance will not be considered to have attached to, and 
no premium or indemnity will be due for such acreage for that crop 
year unless:
    (i) A transfer of coverage and right to an indemnity, or a 
similar form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.

9. Causes of Loss

    (a) In accordance with the provisions of section 12 (Causes of 
Loss) of the Basic Provisions (Sec. 457.8), insurance is provided 
only against the following causes of loss that occur during the 
insurance period:
    (1) Adverse weather conditions;
    (2) Fire, unless weeds and undergrowth have not been controlled 
or pruning debris has not been removed from the orchard;
    (3) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (4) Plant disease, but not damage due to insufficient or 
improper application of disease control measures;
    (5) Earthquake;
    (6) Volcanic eruption;
    (7) Failure of the irrigation water supply, if caused by an 
insured peril that occurs during the insurance period; or
    (8) Wildlife, unless control measures have not been taken.
    (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 the inability to 
market the almonds for any reason other than actual physical damage 
to the almonds 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), if 
you intend to claim an indemnity on any unit, you must notify us 
prior to the beginning of harvest so that we may inspect the damaged 
production. You must not sell or dispose of the damaged crop until 
after we have given you written consent to do so. If you fail to 
meet the requirements of this section, all such production will be 
considered undamaged and included as production to count.

[[Page 25110]]

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:
    (l) 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 by its respective production 
guarantee;
    (2) Multiplying each result in section 11(b)(1) by the 
respective price election for the type;
    (3) Totaling the results in section 11(b)(2);
    (4) Multiplying the total production to be counted of each type, 
if applicable, (see subsection 11(c)) by the respective price 
election;
    (5) Totaling the results in section 11(b)(4);
    (6) Subtracting the result in section 11(b)(5) from the result 
in section 11(b)(3); and
    (7) Multiplying the result in section 11(b)(6) by your share.
    (c) The total production to count, specified in meat 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 damaged solely by uninsured causes; or
    (C) 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 meat pounds which has been accepted by a buyer 
and all harvested meat pounds rejected by a buyer unless the meat 
pounds are rejected due to an insured cause of loss.

12. Written Agreements

    Designated terms of this policy may be altered by written 
agreement in accordance with the following:
    (a) You must apply in writing for each written agreement no 
later than the sales closing date, except as provided in section 
12(e);
    (b) The application for a written agreement must contain all 
variable terms of the contract between you and us that will be in 
effect if the written agreement is not approved;
    (c) If approved, the written agreement will include all variable 
terms of the contract, including, but not limited to, crop type or 
variety, the guarantee, premium rate, and price election;
    (d) Each written agreement will only be valid for one year (If 
the written agreement is not specifically renewed the following 
year, insurance coverage for subsequent crop years will be in 
accordance with the printed policy); and
    (e) An application for a written agreement submitted after the 
sales closing date may be approved if, after a physical inspection 
of the acreage, it is determined that no loss has occurred and the 
crop is insurable in accordance with the policy and written 
agreement provisions.

    Signed in Washington DC, on May 2, 1997.
Suzette M. Dittrich,
Deputy Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-11959 Filed 5-7-97; 8:45 am]
BILLING CODE 3410-FA-P