[Federal Register Volume 62, Number 120 (Monday, June 23, 1997)]
[Rules and Regulations]
[Pages 33733-33737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16271]



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  Federal Register / Vol. 62, No. 120 / Monday, June 23, 1997 / Rules 
and Regulations  

[[Page 33733]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457


General Crop Insurance Regulations; Fresh Plum Endorsement, and 
Common Crop Insurance Regulations; Plum Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
specific crop provisions for the insurance of plums. 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 Fresh Plum 
Crop Insurance Endorsement with the Common Crop Insurance Policy for 
ease of use and consistency of terms, and to restrict the effect of the 
current Fresh Plum Endorsement to the 1997 and prior crop years.

EFFECTIVE DATE: July 23, 1997.

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

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866

    The Office of Management and Budget (OMB) has determined this rule 
to be exempt for the purposes of Executive Order No. 12866, and, 
therefore, this rule has not been reviewed by OMB.

Paperwork Reduction Act of 1995

    Following publication of the proposed rule, the public was afforded 
60 days to submit written comments and opinions on information 
collection requirements previously approved by OMB under OMB control 
number 0563-0053 through September 30, 1998. No public comments were 
received.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. This rule contains no Federal 
mandates (under the regulatory provisions of title II of the UMRA) for 
State, local, and tribal governments or the private sector. Thus, the 
rule is not subject to the requirements of section 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

    The Manager, Federal Crop Insurance Corporation, certifies that 
this regulation will not have a significant economic 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. Therefore, this action is determined to be exempt from the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), 
and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

    This program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.450.

Executive Order No. 12372

    This program is not subject to the provisions of Executive Order 
No. 12372, which require intergovernmental consultation with State and 
local officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order No. 12988

    This final rule has been reviewed in accordance with Executive 
Order No. 12988 on civil justice reform. 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 Tuesday, February 11, 1997, FCIC published a proposed rule in 
the Federal Register at 62 FR 6134-6138 to add to the Common Crop 
Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.157, 
Plum 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 plums found at 
Sec. 401.146 (Fresh Plum Crop Insurance Endorsement). FCIC also amends 
7 CFR 401.146 to limit its effect to the 1997 and prior crop years.
    Following publication of the proposed rule, the public was afforded 
60 days to submit written comments and opinions. A total of 16 comments 
were received from an insurance service organization and reinsured 
companies. The comments received and FCIC's responses are as follows:
    Comment: An insurance service organization and a reinsured company 
expressed concern with the definition of ``Good farming practices,'' 
which makes

[[Page 33734]]

reference to ``cultural practices generally in use in the county * * * 
recognized by the Cooperative State Research, Education, and Extension 
Service as compatible with agronomic and weather conditions in the 
county.'' The commenters indicated there are areas or situations where 
good, accepted farming practices may not necessarily be recognized by 
the Extension Service, and ``county'' should be changed to ``area.''
    Response: FCIC believes that the Cooperative State Research, 
Education, and Extension Service (CSREES) recognizes farming practices 
that are considered acceptable for producing plums. If a producer is 
following practices currently not recognized as acceptable by CSREES, 
there is no reason why such recognition cannot be sought by interested 
parties. The cultural practices recognized by CSREES pertain only to 
specific areas within a county. Such limitations would be considered by 
FCIC. Therefore, no change has been made to these provisions.
    Comment: An insurance service organization recommended changing 
``production guarantee'' to ``insured's average yield'' or ``average 
yield'' in the definitions of ``good farming practice'' and ``irrigated 
practice.''
    Response: Depending on the number of years for which records are 
provided, the yield used to determine the production guarantee may be 
calculated using the insured's actual production history (APH) yields, 
assigned yields, or a combination thereof. FCIC believes that 
referencing the ``yield used to determine the production guarantee'' 
rather than ``insured's average yield'' or ``average yield'' in these 
definitions is more accurate and reduces the possibility that the yield 
determination will be misrepresented. Also, this language is consistent 
with other perennial crop policies. Therefore, no change has been made.
    Comment: An insurance service organization and a reinsured company 
recommended deleting the words ``or machine'' in the definition of 
``harvest'' since there is no machine harvest of fresh plums.
    Response: FCIC agrees and has revised the definition accordingly.
    Comment: An insurance service organization recommended changing the 
definition of ``interplanted'' to require that the acreage planted to 
another crop, within the insured's crop planting pattern, occupy more 
than five percent of the total acreage in the unit.
    Response: Planting patterns may vary when perennial crops are 
interplanted. FCIC believes that introducing, into the definition, an 
exact percentage of interplanted acres that must be exceeded before the 
plums are considered interplanted is arbitrary because there is no 
evidence to support any particular amount. No basis was provided for 
this recommendation, and the definition of ``interplanted'' in other 
perennial crop policies does not specify a percentage of interplanted 
acres. Therefore, no change has been made.
    Comment: A reinsured company recommended adding the words ``and 
quality'' after the word ``quantity'' in the definition of ``irrigated 
practice.''
    Response: There are no clear criteria regarding the quality of 
water necessary to produce a crop. Further, such criteria would be 
difficult to develop and administer due to complex interactions of 
various factors. Therefore, no change has been made to the definition.
    Comment: An insurance service organization recommended removal of 
the phrase in section 2(e)(3)(ii) which states ``In addition to, or 
instead of, establishing optional units on non-contiguous land,'' since 
section 2(e)(3) states that ``Each optional unit must meet one or more 
of the following criteria * * *.''
    Response: FCIC agrees and has revised the section accordingly.
    Comment: An insurance service organization expressed concern 
regarding removal of the provision restricting coverage on plums 
harvested directly by the public since there are no third-party 
receipts, thereby making production difficult to track.
    Response: The producer is required to give notice at least 15 days 
prior to any production being marketed directly to consumers and the 
insurance provider is required to complete an appraisal within that 15 
day period. The production may be marketed directly to consumers any 
time following the 15 day waiting period regardless of whether or not 
the insurance provider had fulfilled its responsibility to appraise the 
crop. FCIC believes that 15 days is appropriate to meet the needs of 
both the producer and the insurance provider. Therefore, no change has 
been made to the provisions.
    Comment: An insurance service organization recommended deleting the 
phrase ``an average of'' in section 6(d) so the language would read 
``That have produced at least 200 lugs per acre * * *.''
    Response: A unit may consist of two or more blocks of plums with 
yield variations among the blocks due to tree age, soil fertility, etc. 
The phrase ``an average of'' clarifies that the minimum yield 
requirement for insurance to attach is based on a per acre average for 
the unit rather than being based on each acre. Removal of the phrase 
could cause confusion because the minimum yield requirement for 
insurance coverage in a number of other perennial crop policies is 
based on average yield per acre. Therefore, no change has been made.
    Comment: A reinsured company stated that coverage should begin on 
February 1 of each crop year. The commenter indicated that the 
additional wording in section 8(a)(1) of the policy may provide a loop-
hole for the producer whose application is received prior to January 22 
and section 6(e) already specifies that the orchard, if inspected, must 
be acceptable by us. In addition, an insurance service organization 
recommended that a specific date (by which an application must be 
received for insurance to attach on January 1) should not be listed. 
Instead of a date, this section should state ``if your application is 
received less than ten days before the sales closing date.''
    Response: Coverage does begin on February 1, unless the producer 
submits the application less than 10 days before that date. Perennial 
crops are unique in that insurance usually attaches on the day 
following the sales closing date. For most other crops, insurance 
attaches when the crop is planted. The 10 day period is intended to 
prevent producers from only purchasing insurance because they know an 
``event'' will occur that will make a loss likely. The period of 10 
days is believed appropriate to meet the needs of both the producer and 
the insurance provider. These provisions were modified to be consistent 
with other perennial crop provisions. FCIC does not believe that this 
wording adds confusion or provides a loop-hole for producers whose 
application is received prior to January 22. Listing the date by which 
an application must be received for insurance to attach on January 1 is 
more specific, avoids possible confusion, and is consistent with other 
perennial crop policies. Therefore, no change has been made.
    Comment: An insurance service organization stated that ``pitburn 
and sunburn,'' which are causes of loss listed in section 9(a)(2), are 
natural culls in the Crop-Hail policy and should be natural culls in 
the MPCI policy.
    Response: Although pitburn and sunburn may be considered natural 
culls in the Crop-Hail policy, they are caused by adverse weather 
(excessive heat), which is an insured cause of loss. Therefore, 
although these causes of loss do not require separate listing, they 
would still be covered. FCIC has revised section 9(a)(2) accordingly.

[[Page 33735]]

    Comment: An insurance service organization stated that section 
11(c)(1)(iv) ``Settlement of Claim'' should not allow the insured to 
defer settlement and wait for a later, generally lower, appraisal, 
especially on crops that have a short ``shelf life.''
    Response: A later appraisal will only be necessary if the insurance 
provider agrees that such an appraisal would result in a more accurate 
determination and if the producer continues to care for the crop. If 
the producer does not continue to care for the crop, the original 
appraisal will be used. Therefore, no change will be made to these 
provisions.
    Comment: An insurance service organization and reinsured companies 
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 commenter indicated that limiting administrative 
agreements to one year increases administrative costs, complexity, and 
opportunity for misunderstanding and error.
    Response: Written agreements are, by design, temporary and intended 
to address unusual circumstances. If the conditions for which a written 
agreement is needed exists each crop year, the policy or Special 
Provisions should be amended to reflect this condition. Therefore, no 
change will be made to the provision.
    In addition to the changes described above, FCIC has made the 
following editorial change to the Plum Provisions:
    1. Section 1--Added a definition of ``Adapted'' for clarification.
    2. Section 2(a)--Deleted language addressing division of basic 
units into optional units by written agreement, since this is addressed 
in section 2(e)(3).
    3. Section 6(b)(4)--Added California Tree Fruit Agreement to the 
list of entities that regulate tree varieties.
    4. Section 9(a)(6)--Clarified that wildlife is an insured cause of 
loss unless control measures have not been taken.
    5. Section 10(d)--Changed the requirement for notification of 
damage or loss to state that the producer must not destroy the damaged 
crop until after the insurance provider has given written consent to do 
so. Previous wording restricted the producer from selling or disposing 
of the damaged crop until written consent was given; however, due to 
the perishable nature of the crop, FCIC believes the expanded 
limitation on the producer's action is reasonable for effective program 
management.
    6. Section 11(c)(2)(i)--Changed the quality standards when 
determining production to count of plums packed and sold as fresh fruit 
from the California Marketing Order grade requirement to the U.S. No. 1 
standards as modified by the California Tree Fruit Agreement 
publication for plums for the applicable crop year. This terminology is 
more descriptive and corresponds with existing practices.

List of Subjects in 7 CFR Parts 401 and 457

    Crop insurance, Fresh plums endorsement, Plums.

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(l), 1506(p).
    2. Section 401.146 introductory text is revised to read as follows:


Sec. 401.146  Fresh plum endorsement.

    The provisions of the Fresh Plum Crop Insurance Endorsement for the 
1990 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(l), 1506(p).

    4. Section 457.157 is added to read as follows:


Sec. 457.157  Plum crop insurance provisions.

    The Plum Crop Insurance Provisions for the 1998 and succeeding crop 
years are as follows:

    FCIC policies:

United States Department of Agriculture

Federal Crop Insurance Corporation

    Reinsured policies:

(Appropriate title for insurance provider)

    Both FCIC and reinsured policies:

Plum Crop Provisions

    If a conflict exists among the Basic Provisions (Sec. 457.8), 
these Crop Provisions, the Special Provisions and the Catastrophic 
Risk Protection Endorsement, if applicable; the Special Provisions 
will control these Crop Provisions and the Basic Provisions; these 
Crop Provisions will control the Basic Provisions; and the 
Catastrophic Risk Protection Endorsement, if applicable, will 
control all provisions.

1. Definitions

    Adapted. Varieties of the insured crop that are recognized by 
the Cooperative State Research, Education, and Extension Service as 
compatible with agronomic and weather conditions in the county.
    Days. Calendar days.
    Direct marketing. Sale of the insured crop directly to consumers 
without the intervention of an intermediary such as a wholesaler, 
retailer, packer, processor, shipper, or buyer. Examples of direct 
marketing include selling through an on-farm or roadside stand, 
farmer's market, and permitting the general public to enter the 
field for the purpose of picking all or a portion of the crop.
    Good farming practices. The cultural practices generally in use 
in the county for the crop to make normal progress toward maturity 
and produce at least the yield used to determine the production 
guarantee, and are those recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Harvest. The picking of mature plums from the trees by hand.
    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.
    Lug. Twenty-eight (28) pounds of the insured crop.
    Non-contiguous. Any two or more tracts of land whose boundaries 
do not touch at any point, except that land separated only by a 
public or private right-of-way, waterway, or an irrigation canal 
will be considered as contiguous.
    Production guarantee (per acre). The number of lugs of plums 
determined by multiplying the approved APH yield per acre by the 
coverage level percentage you elect.
    Scion. Twig or portion of a twig of one plant that is grafted 
onto a stock of another.
    Varietal group. Different varieties of plums that are grouped 
according to the normal maturity dates as specified in the Special 
Provisions.
    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

[[Page 33736]]

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;
    (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 meet one or more of the following 
criteria unless otherwise specified by the written agreement, as 
applicable:
    (i) Optional Units on Acreage Located on Non-Contiguous Land: 
Optional units may be established if each optional unit is located 
on non-contiguous land.
    (ii) Optional Units on Acreage by Varietal Group: Optional units 
may be established by varietal group when provided for in the 
Special Provisions.

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 plums in 
the county insured under this policy unless the Special Provisions 
provide different price elections by varietal group, in which case 
you may select one price election for each plum varietal group 
designated in the Special Provisions. The price elections you choose 
for each varietal group must have the same percentage relationship 
to the maximum price offered by us for each varietal group. For 
example, if you choose 100 percent of the maximum price election for 
one varietal group, you must also choose 100 percent of the maximum 
price election for all other varietal groups.
    (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 
varietal group if applicable:
    (1) Any damage, removal of trees, change in practices, or any 
other circumstance that may reduce the expected yield below the 
yield upon which the insurance guarantee is based, and the number of 
affected acres;
    (2) The number of bearing trees on insurable and uninsurable 
acreage;
    (3) The age of the trees and the planting pattern; and
    (4) For the first year of insurance for acreage interplanted 
with another perennial crop, and any time the planting pattern of 
such acreage is changed:
    (i) The age of the interplanted crop and varietal group 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 
interplanting a perennial crop, removal of trees, damage, change in 
practice, and any other circumstance that may effect 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 October 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 January 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 plums in 
the county for which a premium rate is provided by the actuarial 
table:
    (a) In which you have a share;
    (b) That are grown on tree varieties that:
    (1) Were commercially available when the trees were set out;
    (2) Are adapted to the area;
    (3) Are grown on rootstock that is adapted to the area; and
    (4) Are regulated by the California Tree Fruit Agreement, 
California Advisory Board Standards, a related crop advisory board, 
or the State;
    (c) That are irrigated;
    (d) That have produced an average of at least 200 lugs per acre 
in at least one of the three most recent actual production history 
crop years, unless we inspect the acreage and give our approval to 
insure such acreage in writing;
    (e) That are grown in an orchard that, if inspected, is 
considered acceptable by us; and
    (f) That have reached at least the fifth (5th) growing season 
after set out. Plums produced on scions that have not reached the 
fifth growing season may be insured if the provisions in section 
6(a), (b), (c), and (e) are met. Such trees must have produced at 
least 200 lugs per acre in at least one year after being grafted.

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, plums 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 February 1 of each crop year. 
Notwithstanding the previous sentence, for the year of application, 
if your application is received after January 22 but prior to 
February 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 September 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.
    (2) If you relinquish your insurable share on any insurable 
acreage of plums 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) Wildlife, unless control measures have not been taken;
    (4) Earthquake;
    (5) Volcanic eruption;
    (6) An insufficient number of chilling hours to effectively 
break dormancy; or
    (7) Failure of the irrigation water supply, if caused by an 
insured peril that occurs during the insurance period.
    (b) In addition to the causes of loss excluded in section 12 
(Causes of Loss) of the Basic Provisions (Sec. 457.8), we will not 
insure against damage or loss of production due to:

[[Page 33737]]

    (1) Disease or insect infestation, unless adverse weather:
    (i) Prevents the proper application of control measures or 
causes properly applied control measures to be ineffective; or
    (ii) Causes disease or insect infestation for which no effective 
control mechanism is available;
    (2) Rejection of the crop by the packing house due to being 
undersized, immature, overripe, or mechanically damaged; or
    (3) Inability to market the plums for any reason other than 
actual physical damage from an insurable cause specified in this 
section. For example, we will not pay you an indemnity if you are 
unable to market due to quarantine, boycott, or refusal of any 
person to accept production.

10. Duties In The Event of Damage or Loss

    In addition to the requirements of section 14 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), the 
following will apply:
    (a) You must notify us within 3 days of the date harvest should 
have started if the crop will not be harvested.
    (b) You must notify us at least 15 days before any production 
from any unit will be sold by direct marketing. We will conduct an 
appraisal that will be used to determine your production to count 
for production that is sold by direct marketing. If damage occurs 
after this appraisal, we will conduct an additional appraisal. These 
appraisals, and any acceptable records provided by you, will be used 
to determine your production to count. Failure to give timely notice 
that production will be sold by direct marketing will result in an 
appraised amount of production to count of not less than the 
production guarantee per acre if such failure results in our 
inability to make the required appraisal.
    (c) If you intend to claim an indemnity on any unit, you must 
notify us at least 15 days prior to the beginning of harvest or 
immediately if damage is discovered during harvest, so that we may 
inspect the damaged production.
    (d) You must not destroy the damaged crop until after we have 
given you written consent to do so.
    (e) If you fail to notify us in accordance with this section, we 
may consider all such production to be undamaged and include it as 
production to count.

11. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event 
you are unable to provide separate, acceptable production records:
    (1) For any optional unit, we will combine all optional units 
for which such production records were not provided; or
    (2) For any basic unit, we will allocate any commingled 
production from such units in proportion to our liability on the 
harvested acreage for the units.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim by:
    (1) Multiplying the insured acreage for each varietal group, if 
applicable, by its respective production guarantee;
    (2) Multiplying the results in section 11(b)(1) by the 
respective price election for each varietal group, if applicable;
    (3) Totaling the results in section 11(b)(2);
    (4) Multiplying the total production to be counted of each 
varietal group, if applicable, (see section 11(c)) by the respective 
price election;
    (5) Totaling the results in section 11(b)(4);
    (6) Subtracting the results in section 11(b)(5) from the results 
in section 11 (b)(3); and
    (7) Multiplying the result in section 11(b)(6) by your share.
    (c) The total production to count (in lugs) 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 directly if you fail to 
meet the requirement contained in section 10;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide production records that are 
acceptable to us.
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production; and
    (iv) Potential production on insured acreage that you intend to 
abandon or no longer care for, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
that acreage will end. If you do not agree with our appraisal, we 
may defer the claim only if you agree to continue to care for the 
crop. We will then make another appraisal when you notify us of 
further damage or that harvest is general in the area unless you 
harvested the crop, in which case we will use the harvested 
production. If you do not continue to care for the crop, our 
appraisal made prior to deferring the claim will be used to 
determine the production to count; and
    (2) All harvested production from the insurable acreage:
    (i) That is packed and sold as fresh fruit and meets the U.S. 
No. 1 standards as modified by the California Tree Fruit Agreement 
publication for plums for the applicable crop year;
    (ii) That is packed and sold as fresh fruit but does not meet 
the grade requirements specified in section 11(c)(2)(i) due to 
insurable causes. Such production will be adjusted by:
    (A) Dividing the value per lug of this production by the highest 
price election available for the applicable varietal group; and
    (B) Multiplying the resulting factor, if less than 1.0, by the 
number of lugs of such plums.
    (iii) That is damaged and is, or could be, marketed for any use 
other than fresh packed plums. Such production will be adjusted by:
    (A) Multiplying the number of tons of such production by the 
value per ton of the damaged plums or $50.00, whichever is greater; 
and
    (B) Dividing that result by the highest price election available 
for the applicable varietal group.

12. Written Agreement

    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 
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 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 written agreement submitted after the 
sales closing date may be approved if, after 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 June 16, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-16271 Filed 6-20-97; 8:45 am]
BILLING CODE 3410-08-P