[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