[Federal Register Volume 62, Number 89 (Thursday, May 8, 1997)]
[Proposed Rules]
[Pages 25140-25146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11960]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 405 and 457


Apple Crop Insurance Regulations; and Common Crop Insurance 
Regulations, Apple Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes 
specific crop provisions for the insurance of apples. 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 apple 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 
apple crop insurance regulation to 1997 and prior crop years.

DATES: Written comments on this proposed rule will be accepted until 
close of business June 9, 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.


[[Page 25141]]


FOR FURTHER INFORMATION CONTACT: Gary Johnson, 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, this rule has not been reviewed by OMB.

Paperwork Reduction Act of 1995

    The information collection requirements contained in these 
regulations were previously approved by OMB pursuant to the Paperwork 
Reduction Act of 1995 (44 U.S.C. chapter 35) under OMB control number 
0563-0003 through September 30, 1998.
    Section 7 of the 1998 Apple Crop Provisions adds interplanting as 
an insurable farming practice for apples interplanted with another 
perennial crop as long as the crop would not be adversely affected. 
This practice was not insurable under the previous Apple 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 1 percent of the 32 insureds who 
interplant their apple crop. Standard interplanting language has been 
added to most perennial crops. Offering insurance for this practice 
will benefit agriculture because now more perennial crop producers will 
be covered by insurance and less acreage will need to be placed into 
the noninsured crop disaster assistance program (NAP). Section 13 of 
the 1998 Apple Crop Provisions adds optional quality adjustment for 
fresh fruit and processing apples, thus eliminating the Apple Fresh 
Fruit Option Form and the Apple Sunburn Option Form. The incorporation 
of these options reduces paperwork more than the slight increase which 
will result from the interplanting language for those few insureds who 
interplant their apple crop.
    The amendments set forth in this proposed rule do not contain 
additional information collections that require clearance by the 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; Apple Crop Insurance Provisions.'' The 
information to be collected includes a crop insurance application and 
acreage report. Information collected from the application and acreage 
report is electronically submitted to FCIC by the reinsured companies. 
Potential respondents to this information collection are producers of 
apples 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, DC 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 
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 various levels of 
government.

Regulatory Flexibility Act

    This regulation will not have a significant impact on a substantial 
number of small entities. New provisions included in this rule will not 
impact small entities to a greater extent than large entities. Under 
the current regulations, a producer is required to complete an 
application and acreage report. If the crop is damaged or destroyed, 
the insured is required to give notice of loss and provide the 
necessary information to complete a claim for indemnity. The insured 
must also annually certify to the previous years production 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.

[[Page 25142]]

Executive Order No. 12988

    This proposed 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

    FCIC proposes to add to the Common Crop Insurance Regulations (7 
CFR part 457), a new section, 7 CFR 457.158, Apple Crop Insurance 
Provisions. The new provisions will be effective for the 1998 and 
succeeding crop years. These provisions will replace and supersede the 
current provisions for insuring apples found at 7 CFR part 405 (Apple 
Crop Insurance Regulations). FCIC also proposes to amend 7 CFR part 405 
to limit its effect to the 1997 and prior crop years.
    This rule makes minor editorial and format changes to improve the 
Apple Crop Insurance Regulations' compatibility with the Common Crop 
Insurance Policy. In addition, FCIC is proposing substantive changes in 
the provisions for insuring apples as follows:
    1. Section 1--Add definitions for the terms ``adapted,'' ``culls,'' 
``days,'' ``direct marketing,'' ``excessive sun,'' ``FSA,'' ``good 
farming practices,'' ``interplanted,'' ``irrigated practice,'' ``non-
contiguous,'' ``pound,'' ``production guarantee (per acre),'' 
``russeting,'' ``sunburn,'' ``ton,'' ``USDA,'' and ``written 
agreement'' for clarification. Remove the definitions for: ``contiguous 
land'' for consistency with other crop policies; ``freeze,'' ``frost,'' 
and ``fruit set failure'' because these causes of loss will be referred 
to as ``adverse weather;'' and ``loose field box'' because it has been 
changed to ``box.'' Amend the definition of ``bushel'' for 
clarification.
    2. Section 2--Add a provision to permit optional unit division when 
acreage is located in non-contiguous parcels rather than by contiguous 
land as provided in the current policy. Also, add a provision to allow 
producers from all areas to select optional units by section, section 
equivalent or FSA Farm Serial Number. These changes were made to be 
consistent with other perennial crops.
    3. Section 3(a)--Specify that an insured may select only one price 
election for all the apples 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 
apple type designated in the Special Provisions.
    4. Section 3(b)--Specify that the insured must report damage, 
removal of trees, and change in practices that may reduce the expected 
yield. The insured must also report, 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 and type, if 
applicable, of any interplanted crop, its planting pattern, and any 
other information that the insurer requests in order to establish the 
yield upon which the production guarantee is based. If the insured 
fails to notify the insurer of factors that may reduce yields from 
previous levels, the insurer will reduce the production guarantee at 
any time the insurer becomes aware of damage, removal of trees, or 
change in practices. This change will standardize these provisions with 
those in other perennial crop policies.
    5. Section 7--Add a provision making apples interplanted with 
another perennial crop insurable unless, after an inspection, the 
insurer determines it does not meet the requirements contained in the 
policy.
    6. Section 8(a)(1)--Change the date that insurance begins for the 
year of application. If the application is received after November 11 
but prior to November 21, insurance will attach on the 10th day after 
the insured's properly completed application is received in the 
insurer's local office unless the insurer inspects the acreage during 
the 10 day period and determines that the requirements of the insurance 
contract are not met. These provisions were modified to avoid 
interpretation that late-filed applications are allowed and a thirty 
day period in this situation is not reasonable. Ten days is sufficient 
for the insurance provider to inspect the condition of the orchard with 
limited exposure for the producer.
    7. Section 8(b)(1)--Clarify the date coverage begins if the 
producer acquires an insurable interest in any insurable acreage of 
apples on or before the acreage reporting date of any crop year. 
Clarify that there is no coverage for an insurable interest acquired 
after the acreage reporting date.
    8. Section 8(b)(2)--Clarify that insurance will be deemed to not 
have attached if the producer relinquishes an insurable interest in any 
insurable acreage of apples on or before the acreage reporting date of 
any crop year unless a transfer of coverage and right to an indemnity 
is completed and the insurance provider is notified in writing on or 
before the acreage reporting date. The transferee must be eligible for 
crop insurance.
    9. Section 9(a)(1)--Add adverse weather conditions as a cause of 
loss. Delete frost, freeze, hail, drought, wind and fruit-set failure 
because these are included by the term adverse weather.
    10. Section 9(a) (3) and (4)--Clarify that disease and insect 
infestation are included causes of loss, but not damage due to 
insufficient or improper application of disease or pest control 
measures.
    11. Section 9(a)(9) and (b) (2) and (3)--Add wildlife as a cause of 
loss unless appropriate control measures have not been taken. Also 
specifically exclude from coverage inability to market apples for any 
reason other than actual physical damage from an insurable cause of 
loss, and mechanical damage. These changes were made to be consistent 
with other perennial crop provisions.
    12. Section 10--Require the producer to give notice: (1) Within 3 
days of the date harvest should have started if the crop will not be 
harvested; (2) at least 15 days before any production from any unit 
will be sold by direct marketing so an inspection can be made; and (3) 
if the crop has been previously damaged and notice provided, at least 
15 days prior to harvest as a result of that previous damage so a 
preharvest inspection can be made if the insured intends to claim an 
indemnity. These changes will incorporate and standardize the notice of 
loss requirements used for other perennial crops.
    13. Section 12--Add provisions for providing insurance coverage by 
written agreement. FCIC has a long standing policy of permitting 
certain modifications of the insurance contracts 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.

[[Page 25143]]

    14. Section 13--Add optional quality adjustment provisions for 
fresh fruit and processing apples to the Apple Crop Provisions, thereby 
eliminating insured's paperwork burden of completing the Apple Fresh 
Fruit Option and the Apple Sunburn Option forms. Also, add provision 
that specifies these options are not available to insureds who elect 
the Catastrophic Risk Protection (CAT) Endorsement. Also, increase the 
percentage of cull production that will be considered as production to 
count from 15 to 30 percent. This change provides for a reduced long 
term loss ratio by increasing the percentage of the cull production as 
production to count.

List of Subjects in 7 CFR Parts 405 and 457

    Apple Crop insurance, Apple crop insurance regulations.

Proposed Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby proposes to amend 7 CFR parts 405 and 
457, as follows:

PART 405--APPLE CROP INSURANCE REGULATIONS FOR THE 1986 THROUGH THE 
1997 CROP YEARS

    1. The authority citation for 7 CFR part 405 is amended as follows:

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

    2. The part heading is revised to read as set forth above.
    3. Subpart Heading ``Subpart--Regulations for the 1986 through the 
1997 Crop Years'' is removed.


Sec. 405.7  [Amended]

    4. Section 405.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:
* * * * *
    (d) The application for the 1986 and subsequent crop years is found 
at subpart D of part 400, General Administrative Regulations (7 CFR 
400.37, 400.38). The provisions of the Apple Insurance Policy for the 
1986 through 1997 crop years are as follows:
* * * * *

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

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

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

    5. Section 457.158 is added to read as follows:


Sec. 457.158  Apple crop insurance provisions.

    The Apple 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:

Apple 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

    Adapted. (For the purpose of determining varieties adapted to 
the area), varieties that are recognized by Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Area A. A geographic area that includes Montana, Wyoming, Utah, 
New Mexico and all states west thereof.
    Area B. A geographic area that includes all states not included 
in Area A, except for Colorado.
    Area C. Colorado.
    Bin. A container that contains a minimum of 875 pounds of apples 
or some other quantity designated in the Special Provisions.
    Box. A container that contains 35 pounds of apples or some other 
quantity designated in the Special Provisions.
    Bushel. 42 pounds of apples in all states except Colorado. In 
Colorado, a bushel equals 40 pounds of apples.
    Culls. Apples that fail to meet the requirements of U.S. Cider 
Grade.
    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, or a 
farmer's market, and permitting the general public to enter the 
field for the purpose of picking all or a portion of the crop.
    Excessive sun. Exposure of unharvested apples to direct or 
indirect sunlight that causes apples to grade less than U.S. Fancy 
due to sunburn.
    FSA. The Farm Service Agency, an agency of the United States 
Department of Agriculture, or a successor agency.
    Good farming practices. The cultural practices generally in use 
in the county for the crop to make normal progress toward maturity 
and produce at least the yield used to determine the production 
guarantee, and are those recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Harvest. The picking of mature marketable apples from the trees 
or removing such apples from the ground.
    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.
    Marketable. Apple production that grades U.S. No. 1, 2, or Cider 
in accordance with the United States Standards for Grades of Apples.
    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 an irrigation canal 
will be considered as contiguous.
    Pound. Sixteen (16) ounces avoirdupois.
    Production guarantee (per acre). The quantity of apples (boxes 
or bushels) determined by multiplying the approved APH yield per 
acre by the coverage level percentage you elect.
    Russeting. A brownish roughened area on the surface of the 
apple.
    Sunburn. As defined in the United States Standards for Grades of 
Apples.
    Ton. Two thousand (2,000) pounds avoirdupois.
    USDA. United States Department of Agriculture.
    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.
    (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 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 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;

[[Page 25144]]

    (2) For each crop year, records of marketed production or 
measurement of stored production from each optional unit must be 
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 meet one or more of the following 
criteria unless otherwise specified by written agreement, as 
applicable:
    (i) Optional Units by Section, Section Equivalent, or FSA Farm 
Serial Number: Optional units may be established if each optional 
unit is located in a separate legally identified section. In the 
absence of sections, we may consider parcels of land legally 
identified by other methods of measure including, but not limited to 
Spanish grants, railroad surveys, leagues, labors, or Virginia 
Military Lands, as the equivalent of sections for unit purposes. In 
areas that have not been surveyed using the systems identified 
above, or another system approved by us, or in areas where such 
systems exist but boundaries are not readily discernable, each 
optional unit must be located in a separate farm identified by a 
single FSA Farm Serial Number.
    (ii) Optional Units on Acreage Including Both Irrigated and Non-
irrigated Practices: In addition to, or instead of, establishing 
optional units by section, section equivalent, or FSA Farm Serial 
Number, optional units may be based on irrigated acreage and non-
irrigated acreage (in those counties where ``non-irrigated'' 
practice is allowed in the actuarial table) if both are located in 
the same section, section equivalent, or FSA Farm Serial Number. The 
irrigated acreage may not extend beyond the point at which your 
irrigation system can deliver the quantity of water needed to 
produce the yield on which the guarantee is based, and you may not 
continue into non-irrigated acreage in the same rows or planting 
pattern.
    (iii) Optional Units on Acreage Located on Non-Contiguous Land: 
In addition to, or instead of, establishing optional units by 
section, section equivalent, FSA Farm Serial Number, or irrigated 
and non-irrigated practices, optional units may be established if 
each optional unit is located on non-contiguous land.

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

    In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) 
of the Basic Provisions (Sec. 457.8):
    (a) You may select only one price election for all the apples 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 apple 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;
    (4) The separate acreage of apples intended for fresh-market or 
processing as shown on the actuarial table; and
    (5) For the first year of insurance for acreage interplanted 
with another perennial crop, and anytime the planting pattern of 
such acreage has 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 November 20.

6. Insured Crop

    In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all the apples 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) Are adapted to the area;
    (2) Are in area A and have produced at least an average of 10 
bins per acre;
    (3) Are in area B and have produced at least an average of 150 
bushels per acre;
    (4) Are in Area C and have produced at least an average of 200 
bushels per acre; and
    (c) That are grown in an orchard that, if inspected, is 
considered acceptable by us.

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, apples interplanted with 
another perennial crop are insurable unless we inspect the acreage 
and determine that it does not meet the insurability requirements 
contained in your policy.

8. Insurance Period

    (a) In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8):
    (1) Coverage begins on November 21 of each crop year, 
notwithstanding the previous sentence for the year of application, 
if your application is received after November 11 but prior to 
November 21 insurance will attach on the 10th day after your 
properly completed application is received in our local office 
unless we inspect the acreage during the 10-day period and determine 
that it does not meet insurability requirements. You must provide 
any information that we require for the crop 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 5.
    (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. There will no coverage of any insurable interest acquired 
after the acreage reporting date.
    (2) If you relinquish your insurable share on any insurable 
acreage of apples 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 other forms of 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;
    (8) Excess sun, only if you have elected the Fresh Fruit Option 
B and the Sunburn Option as described in section 13.
    (9) Wildlife, unless appropriate control measures have not been 
taken.

[[Page 25145]]

    (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) Failure of the fruit to size, shape, or color properly; or
    (2) Inability to market the apples 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.
    (3) Mechanical damage including, but not limited to, limb rubs, 
scars, and punctures; or

10. Duties in the Event of Damage or Loss

    In addition to the requirements of section 14 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), the 
following will apply:
    (a) You must notify us within three 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 the crop has been damaged during the growing season and 
you previously gave notice in accordance with section 14 of the 
Basic Provisions (Sec. 457.8), you must also provide notice at least 
15 days prior to the beginning of harvest if you intend to claim an 
indemnity as a result of the damage previously reported. 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.

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 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 count 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 (boxes or bushels) 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 marketable harvested production from the insurable 
acreage.
    (3) Mature marketable apple production may be reduced as a 
result of loss in quality due to hail, wind, freeze, or sunburn in 
accordance with section 13 of these provisions, if you elect one or 
more of these coverages.

12. Written Agreements

    Terms of this policy which are specifically designated for the 
use of written agreements 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.

13. Optional Coverage for Quality Adjustment

    (a) These quality adjustment options apply only if the following 
conditions are met:
    (1) You have not elected to insure your apples under the 
Catastrophic Risk Protection (CAT) Endorsement.
    (2) You elected the Fresh Fruit Option A or the Fresh Fruit 
Option B; or you elected both the Fresh Fruit Option B and the 
Sunburn Option on your application or other form approved by us, and 
did so on or before the sales closing date for the initial crop year 
for which you wish it to be effective. By doing so, you agreed to 
pay the additional premium designated in the actuarial table for 
this optional coverage; and
    (3) You or we did not cancel the option in writing on or before 
the cancellation date. Your election of CAT coverage for any crop 
year after this endorsement is effective will be considered as 
notice of cancellation by you.
    (b) If you select Fresh Fruit Option A only, Fresh Fruit Option 
A will apply to all of your apples intended for processing and fresh 
market.
    (c) If you select Fresh Fruit Option B, those provisions will 
apply to all of your apples intended for fresh-market and the 
provisions of Fresh Fruit Option A will apply to all of your apples 
intended for processing.
    (d) If you select the Sunburn Option as designated in the 
Special Provisions, you must also select the Fresh Fruit Option B.
    (e) In addition to the requirements of section 10 of these 
provisions, you must permit us to inspect and grade the fruit prior 
to harvest or no quality adjustment will be made.
    (f) Fresh Fruit Option A and Fresh Fruit Option B are subject to 
the following conditions:
    (1) Fresh Fruit Option A--In addition to section 11(c) of these 
provisions and notwithstanding the definition of ``marketable'' in 
section 1 of these provisions, your production to count for any 
acreage designated for processing or fresh-market will be adjusted 
when your apples are damaged by hail to the extent that such apples 
will not grade U.S. No. 1 (processing). The adjustment factor (not 
to exceed 1.00) will be the ratio of the average market price 
(received by you or determined by us, whichever is larger) for the 
damaged production to the average market price for U.S. No 1 
(processing) apples. There will be no adjustment for quality if the 
apples do not grade U.S. No. 1 due to size, color, or russeting.
    (2) Fresh Fruit Option B--Notwithstanding section 11(c) and the 
definitions of ``harvest'' and ``marketable'' in section 1 of these 
provisions, the total production to count for a unit must include 
all harvested and appraised production. Harvested apple production 
which is damaged by hail to the extent that it does not grade 80 
percent U.S. Fancy or better, in accordance with

[[Page 25146]]

applicable USDA Standards for Grades of Apples, will be adjusted as 
follows:
    (i) Production with 21 through 40 percent not grading U.S. Fancy 
or better will be reduced 2 percent for each percent in excess of 20 
percent.
    (ii) Production with 41 through 50 percent not grading U.S. 
Fancy or better will be reduced 40 percent plus an additional 3 
percent for each percent in excess of 40 percent.
    (iii) Production with 51 through 64 percent not grading U.S. 
Fancy or better will be reduced 70 percent plus an additional 2 
percent for each percent in excess of 50 percent.
    (iv) Production with 65 percent or more not grading U.S. Fancy 
or better be considered 100 percent cull production.
    (v) The difference between the reduced production and the total 
production will be considered cull production.
    (3) Apples that are knocked to the ground by wind or frozen to 
the extent that they can be harvested but not packed or marketed as 
fresh apples will be considered 100 percent cull production.
    (4) Thirty (30) percent of all cull production will be 
considered production to count.
    (5) No reduction in grade will be applied to any apple grading 
less than U.S. Fancy due solely to shape, russeting, or color.
    (6) Any appraisal we make on the insured acreage will be 
considered production to count unless such appraised production is 
knocked to the ground by wind or hail or frozen on the tree to the 
extent that harvest is not practical.
    (g) Sunburn Option
    (1) In addition to the causes of loss specified in section 9 of 
these provisions, excess sun is an insurable cause of loss.
    (2) Notwithstanding the definitions of ``harvest'' and 
``marketable'' in section 1 and 11(c)(1) and (2) of these 
provisions, the total production to be counted for a unit must 
include all harvested and appraised production. Harvested apple 
production which, due to excessive sun or in conjunction with hail 
damage, does not grade 80 percent U.S. Fancy or better, in 
accordance with applicable USDA Standards, will be adjusted as 
follows:
    (i) Production with 21 through 40 percent not grading U.S. Fancy 
or better due solely to excessive sun or excessive sun along with 
hail damage, will be reduced 2 percent for each percent in excess of 
20 percent.
    (ii) Production with 41 through 50 percent not grading U.S. 
Fancy or better due solely to excessive sun or excessive sun along 
with hail damage, will be reduced 40 percent plus an additional 3 
percent for each percent in excess of 40 percent.
    (iii) Production with 51 through 64 percent not grading U.S. 
Fancy or better due solely to excessive sun or excessive sun along 
with hail damage, will be reduced 70 percent plus an additional 2 
percent for each percent in excess of 50 percent.
    (iv) Production with 65 percent or more not grading U.S. Fancy 
or better due solely to excessive sun or along with hail damage, 
will be considered 100 percent cull production.
    (v) The difference between the reduced production and the total 
production to count will be considered cull production.
    (vi) Thirty (30) percent of all cull production will be 
considered as production to count.

    Signed in Washington, D.C., on May 2, 1997.
Suzette M. Dittrich,
Deputy Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-11960 Filed 5-7-97; 8:45 am]
BILLING CODE 3410-FA-P