[Federal Register Volume 62, Number 127 (Wednesday, July 2, 1997)]
[Rules and Regulations]
[Pages 35662-35666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17354]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 455 and 457


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

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
specific crop provisions for the insurance of macadamia nuts. The 
provisions will be used in conjunction with the Common Crop Insurance 
Policy Basic Provisions, which contain standard terms and conditions 
common to most crops. The intended effect of this action is to provide 
policy changes to better meet the needs of the insured, include the 
current macadamia nut crop insurance regulations with the Common Crop 
Insurance Policy for ease of use and consistency of terms, and to 
restrict the effect of the current macadamia nut crop insurance 
regulations to the 1997 and prior crop years.

EFFECTIVE DATES: July 2, 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, 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, this 
rule is not subject to the requirements of sections 202 and 205 of the 
UMRA.

Executive Order No. 12612

    It has been determined under section 6(a) of Executive Order No. 
12612, Federalism, that this rule does not have sufficient federalism 
implications to warrant the preparation of a Federalism Assessment. The 
provisions contained in this rule will not have a substantial direct 
effect on states or their political subdivisions, or on the 
distribution of power and responsibilities among the various levels of 
government.

Regulatory Flexibility Act

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

[[Page 35663]]

years production if adequate records are available to support the 
certification. The producer must maintain the production records to 
support the certified information for at least three years. This 
regulation does not alter those requirements. The amount of work 
required of the insurance companies delivering and servicing these 
policies will not increase significantly from the amount of work 
currently required. This rule does not have any greater or lesser 
impact on the producer. Therefore, this action is determined to be 
exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 
605), and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

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

Executive Order No. 12372

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

Executive Order No. 12988

    This final rule has been reviewed in accordance with Executive 
Order No. 12988. The provisions of this rule will not have a 
retroactive effect prior to the effective date. The provisions of this 
rule will preempt State and local laws to the extent such State and 
local laws are inconsistent herewith. The administrative appeal 
provisions published at 7 CFR part 11 must be exhausted before any 
action for judicial review may be brought.

Environmental Evaluation

    This action is not expected to have a significant impact on the 
quality of the human environment, health, and safety. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is needed.

National Performance Review

    This regulatory action is being taken as part of the National 
Performance Review Initiative to eliminate unnecessary or duplicative 
regulations and improve those that remain in force.

Background

    On Friday, April 18, 1997, FCIC published a proposed rule in the 
Federal Register at 62 FR 19063-19067 to add to the Common Crop 
Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.131, 
Macadamia Nut Crop Insurance Provisions. The new provisions will be 
effective for the 1999 and succeeding crop years. These provisions will 
replace and supersede the current provisions for insuring macadamia 
nuts found at 7 CFR part 455 (Macadamia Nut Crop Insurance 
Regulations). FCIC also amends 7 CFR part 455 to limit its effect to 
the 1997 and prior crop years.
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments and opinions. A total of 14 comments 
were received from reinsured companies, a crop insurance agent, an 
insurance service organization, and an FCIC Regional Service Office 
(RSO). The comments received and FCIC's responses are as follows:
    Comment: An insurance service organization and a reinsured company 
recommended that the word ``field'' in the last line of the definition 
of ``Direct marketing'' be replaced by the word ``orchard.''
    Response: FCIC agrees and has revised the definition accordingly.
    Comment: An insurance service organization and a reinsured company 
expressed concern with the definition of ``Good farming practices,'' 
which makes 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 commenter questioned whether cultural 
practices exist that are not necessarily recognized (or possibly known) 
by the Cooperative State Research, Education, and Extension Service. 
The commenter also indicated that the term ``county'' in the definition 
of ``Good farming practices'' 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 macadamia nuts. If a 
producer is following practices currently not recognized as acceptable 
by the CSREES, there is no reason why such recognition cannot be sought 
by interested parties. The cultural practices recognized by the CSREES 
may pertain only to specific areas within a county. Such limitation 
would be considered by FCIC; therefore, no change has been made. FCIC 
agrees with the recommendation to change the term ``county'' to 
``area'' in the definition of ``Good farming practice'' and has revised 
the definition accordingly.
    Comment: An insurance service organization recommended that the 
summary of changes in the proposed rule should have indicated that the 
definition of ``Harvest'' in section 1 had been changed from the 
definition in the insurance service organization's policy which defines 
``Harvest'' as ``The removal of the macadamia nuts from the orchard.''
    Response: The summary of changes in the proposed rule addressed 
substantive changes between the proposed provisions and the current 
Macadamia Nut Crop Insurance Policy issued by FCIC. No comparison was 
made to the insurance service organization's policy.
    Comment: Comments received from reinsured companies, a crop 
insurance agent, an insurance service organization, and an FCIC RSO 
expressed concern that the provisions for an optional unit in section 
2(e) (3) and (4), as proposed, would require each unit to contain at 
least 80 acres of bearing macadamia trees and be located on non-
contiguous land. Optional unit division guidelines currently require at 
least 80 acres of bearing macadamia trees. Requiring both minimum 
acreage and non-contiguous land would severely limit the number of 
units allowed, particularly for growers with large, contiguous 
orchards. The majority of commenters recommended that the word ``and'' 
be replaced with ``or'' so that the provisions require each optional 
unit to be at least 80 acres of bearing macadamia trees or be located 
on non-contiguous land.
    Response: FCIC agrees and has revised the requirements accordingly.
    Comment: A reinsured company questioned the reason for the ``10-day 
period'' to inspect the acreage as specified in section 8(a)(1). The 
commenter indicated that the period limits their ability to reject an 
unacceptable orchard. 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: FCIC believes that the insurance provider must expedite 
its review of the application and any supporting documentation filed by 
the producer, determine if a visual inspection of the orchard is 
necessary, and perform any inspection within the 10-day period. The 
period of 10 days is believed appropriate to meet the needs of both the 
producer and the insurance provider. Listing the date by which an 
application must be received for insurance to attach on January 1 is 
more specific, avoids possible confusion, and

[[Page 35664]]

is consistent with other perennial crop policies. No change has been 
made to these provisions.
    Comment: An insurance service organization stated that section 
11(c)(1)(iv) 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. No change will be made to these provisions.
    Comment: An insurance service organization and a reinsured company 
recommended removal of the requirement for a written agreement to be 
renewed each year. If no substantive changes occur from one year to the 
next, allow the written agreement to be continuous.
    Response: Written agreements are intended to supplement policy 
terms or permit insurance in unusual situations that require 
modification of the otherwise standard insurance provisions. If such 
practices continue year to year, they should be incorporated into the 
policy or Special Provisions. It is not intended that written 
agreements be so numerous that they would significantly increase 
administrative costs and cause producer misunderstanding. It is 
important to minimize written agreement exceptions to assure that the 
insured is well aware of the specific terms of the policy. Therefore, 
no change will be made.
    In addition to the changes described above, FCIC has made the 
following editorial changes to the Macadamia Nut Provisions:
    1. Section 2(e)--Modified the language to clarify optional unit 
requirements. For each optional unit, the producer must have provided 
records of acreage and production by the production reporting date and 
maintain records of marketed production or measurement of stored 
production for each crop year. Each optional unit must also meet 
specific criteria unless otherwise specified by written agreement.
    2. Section 3(c)--Added to clarify that the producer's production 
guarantee will be determined according to the APH regulations unless 
damage or changes to the orchard or trees require establishment of the 
yield by another method.
    3. Section 3(d)--Added to clarify that instead of reporting the 
previous year's production, a one year lag period will occur and the 
producer will report production from two crop years ago.
    4. Section 8(a)--Clarified that the calendar date for the end of 
the insurance period is the second June 30th after insurance attaches.
    5. Section 10(c)--Clarified that the producer must not destroy the 
damaged crop until after the insurance provider has given written 
consent to do so.
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. This rule improves the macadamia nut insurance 
coverage and brings it under the Common Crop Insurance Policy Basic 
Provisions for consistency among policies. The current regulations are 
not continuous, and actuarial filing date for the 1999 crop year is 
August 31, 1997. It is, therefore, imperative that these provisions be 
made final before that date so that the reinsured companies may have 
sufficient time to implement these changes. Therefore, public interest 
requires the agency to act immediately to make these provisions 
available for the 1999 crop year.

List of Subjects in 7 CFR Parts 455 and 457

    Crop insurance, Macadamia nuts.

Final Rule

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

PART 455--MACADAMIA NUT CROP INSURANCE REGULATIONS FOR THE 1988 
THROUGH THE 1997 CROP YEARS

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

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

    2. The part heading is revised to read as set forth above.
    3. The subpart heading ``Subpart--Regulations for the 1988 and 
Succeeding Crop Years'' is removed.
    4. Section 455.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:


Sec. 455.7  The application and policy.

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

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

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

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

    6. Section 457.131 is added to read as follows:


Sec. 457.131  Macadamia nut crop insurance provisions.

    The Macadamia Nut Crop Insurance Provisions for the 1999 and 
succeeding crop years are as follows:

    FCIC policies:

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

    Reinsured policies:
(Appropriate title for insurance provider)
    Both FCIC and reinsured policies:

Macadamia Nut Crop Provisions

    If a conflict exists among the Basic Provisions (Sec. 457.8), 
these Crop Provisions, and the Special Provisions; the Special 
Provisions will control these Crop Provisions and the Basic 
Provisions; and these Crop Provisions will control the Basic 
Provisions.
    1. Definitions.
    Age. The number of complete 12-month periods that have elapsed 
since the month the trees were set out or were grafted, whichever is 
later. An age determination will be made for each unit, or portion 
thereof, as of January 1 of each crop year.
    Crop year. A period beginning with the date insurance attaches 
to the macadamia nut crop and extending through the normal harvest 
time. The crop year is designated by the calendar year in which the 
insurance period ends.
    Days. Calendar days.
    Direct marketing. Sale of the insured crop directly to consumers 
without the intervention of an intermediary such as a wholesaler, 
retailer, packer, processor, shipper or buyer. Examples of direct 
marketing include selling through an on-farm or roadside stand, 
farmer's market, and permitting the general public to enter the 
orchard 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 area.
    Graft. The uniting of a macadamia shoot to an established 
macadamia tree rootstock for future production of macadamia nuts.
    Harvest. Picking of mature macadamia nuts from the ground.
    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

[[Page 35665]]

during the growing season by appropriate systems and at the proper 
times, with the intention of providing the quantity of water needed 
to produce at least the yield used to establish the irrigated 
production guarantee on the irrigated acreage planted to the insured 
crop.
    Non-contiguous. Any two or more tracts of land whose boundaries 
do not touch at any point, except that land separated only by a 
public or private right-of-way, waterway, or irrigation canal will 
be considered as contiguous.
    Pound. A unit of weight equal to 16 ounces avoirdupois.
    Production guarantee (per acre). The number of wet, in-shell 
pounds determined by multiplying the approved APH yield per acre by 
the coverage level percentage you elect.
    Rootstock. The root and stem portion of a macadamia tree to 
which a macadamia shoot can be grafted.
    Wet in-shell. The weight of the macadamia nuts as they are 
removed from the orchard with the nut meats in the shells after 
removal of the husk but prior to being dried.
    Written agreement. A written document that alters designated 
terms of this policy in accordance with section 12.
    2. Unit Division.
    (a) Unless limited by the Special Provisions, a unit as defined 
in section 1 (Definitions) of the Basic Provisions (Sec. 457.8), 
(basic unit) may be divided into optional units if, for each 
optional unit, you meet all the conditions of this section.
    (b) Basic units may not be divided into optional units on any 
basis other than as described in this section.
    (c) If you do not comply fully with these provisions, we will 
combine all optional units that are not in compliance with these 
provisions into the basic unit from which they were formed. We will 
combine the optional units at any time we discover that you have 
failed to comply with these provisions. If failure to comply with 
these provisions is determined to be inadvertent, and the optional 
units are combined into a basic unit, that portion of the additional 
premium paid for the optional units that have been combined will be 
refunded to you for the units combined.
    (d) All units you selected for the crop year must be identified 
on the acreage report for that crop year.
    (e) The following requirements must be met for each optional 
unit:
    (1) You must have provided records by the production reporting 
date, which can be independently verified, of acreage and production 
for each optional unit for at least the last crop year used to 
determine your production guarantee;
    (2) 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;
    (3) Each optional unit must meet one or more of the following 
criteria, as applicable, unless otherwise specified by written 
agreement:
    (i) Contain at least 80 acres of bearing macadamia trees; or
    (ii) Be located on non-contiguous land.
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) 
of the Basic Provisions (Sec. 457.8):
    (a) You may select only one price election for all the macadamia 
nuts in the county insured under this policy unless the Special 
Provisions provide different price elections by type, in which case 
you may select one price election for each macadamia nut type 
designated in the Special Provisions. The price elections you choose 
for each type must have the same percentage relationship to the 
maximum price offered by us for each type. For example, if you 
choose 100 percent of the maximum price election for one type, you 
must also choose 100 percent of the maximum price election for all 
other types.
    (b) You must report, by the production reporting date designated 
in section 3 (Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities) of the Basic Provisions (Sec. 457.8), by 
type if applicable:
    (1) Any damage, removal of trees, change in practices, or any 
other circumstance that may reduce the expected yield below the 
yield upon which the insurance guarantee is based and the number of 
affected acres;
    (2) The number of bearing trees on insurable and uninsurable 
acreage;
    (3) The age of the trees and the planting pattern; and
    (4) For the first year of insurance for acreage interplanted 
with another perennial crop, and anytime the planting pattern of 
such acreage is changed:
    (i) The age of the interplanted crop, and type if applicable;
    (ii) The planting pattern; and
    (iii) Any other information that we request in order to 
establish your approved yield.
    We will reduce the yield used to establish your production 
guarantee as necessary, based on our estimate of the effect of the 
following: interplanted perennial crop; removal of trees; damage; 
change in practices and any other circumstance on the yield 
potential of the insured crop. If you fail to notify us of any 
circumstance that may reduce your yields from previous levels, we 
will reduce your production guarantee as necessary at any time we 
become aware of the circumstance.
    (c) The yield used to compute your production guarantee will be 
determined in accordance with Actual Production History (APH) 
regulations, 7 CFR part 400, subpart G, and applicable policy 
provisions unless damage or changes to the orchard or trees require 
establishment of the yield by another method. In the event of such 
damage or changes, the yield will be based on our appraisal of the 
potential of the insured acreage for the crop year.
    (d) Instead of reporting your macadamia nut production for the 
previous crop year, as required by section 3 of the Basic Provisions 
(Sec. 457.8), there is a one year lag period. Each crop year you 
must report your production from two crop years ago, e.g., on the 
2001 crop year production report, you will provide your 1999 crop 
year production.
    4. Contract Changes.
    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is August 31 
preceding the cancellation date.
    5. Cancellation and Termination Dates.
    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation 
and termination dates are December 31.
    6. Insured Crop.
    In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all macadamia nuts 
in the county for which a premium rate is provided by the actuarial 
table:
    (a) In which you have a share;
    (b) That are grown on tree varieties that:
    (1) Were commercially available when the trees were set out;
    (2) Are adapted to the area; and
    (3) Are grown on a rootstock that is adapted to the area.
    (c) That are grown in an orchard that, if inspected, is 
considered acceptable by us;
    (d) That are grown on trees that have reached at least the fifth 
growing season after being set out or grafted. However, we may agree 
in writing to insure acreage that has not reached this age if it has 
produced at least 200 pounds of (wet, in-shell) macadamia nuts per 
acre in a previous crop year; and
    (e) That are produced from blooms that normally occur during the 
calendar year in which insurance attaches and that are normally 
harvested prior to the end of the insurance period.
    7. Insurable Acreage.
    In lieu of the provisions in section 9 (Insurable Acreage) of 
the Basic Provisions (Sec. 457.8), that prohibit insurance attaching 
to a crop planted with another crop, macadamia nuts interplanted 
with another perennial crop are insurable unless we inspect the 
acreage and determine that it does not meet the requirements 
contained in your policy.
    8. Insurance Period.
    (a) In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8):
    (1) Coverage begins on January 1 of each crop year, except that 
for the year of application, if your application is received after 
December 22 but prior to January 1, insurance will attach on the 
10th day after your properly completed application is received in 
our local office, unless we inspect the acreage during the 10-day 
period and determine that it does not meet insurability 
requirements. You must provide any information that we require for 
the crop or to determine the condition of the orchard.
    (2) The calendar date for the end of the insurance period for 
each crop year is the second June 30th after insurance attaches.
    (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

[[Page 35666]]

acreage on the calendar date for the beginning of the insurance 
period.
    (2) If you relinquish your insurable share on any insurable 
acreage of macadamia nuts on or before the acreage reporting date 
for the crop year, insurance will not be considered to have attached 
to, and no premium or indemnity will be due for such acreage for 
that crop year unless:
    (i) A transfer of coverage and right to an indemnity, or a 
similar form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.
    9. Causes of loss.
    (a) In accordance with the provisions of section 12 (Causes of 
Loss) of the Basic Provisions (Sec. 457.8), insurance is provided 
only against the following causes of loss that occur during the 
insurance period:
    (1) Adverse weather conditions;
    (2) Fire, unless weeds and other forms of undergrowth have not 
been controlled or pruning debris has not been removed from the 
orchard;
    (3) Earthquake;
    (4) Volcanic eruption;
    (5) Wildlife, unless proper measures to control wildlife have 
not been taken; or
    (6) Failure of irrigation water supply, if caused by an insured 
peril that occurs during the insurance period.
    (b) In addition to the causes of loss excluded in section 12 
(Causes of Loss) of the Basic Provisions (Sec. 457.8), we will not 
insure against damage or loss of production due to:
    (1) Disease or insect infestation, unless adverse weather:
    (i) Prevents the proper application of control measures or 
causes properly applied control measures to be ineffective; or
    (ii) Causes disease or insect infestation for which no effective 
control mechanism is available;
    (2) Inability to market the macadamia nuts for any reason other 
than actual physical damage from an insurable cause specified in 
this section. For example, we will not pay you an indemnity if you 
are unable to market due to quarantine, boycott, or refusal of any 
person to accept production.
    10. Duties in the Event of Damage or Loss.
    In addition to the requirements of section 14 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), the 
following will apply:
    (a) You must notify us within 3 days of the date harvest should 
have started if the crop will not be harvested.
    (b) You must notify us at least 15 days before any production 
from any unit will be sold by direct marketing. We will conduct an 
appraisal that will be used to determine your production to count 
for production that is sold by direct marketing. If damage occurs 
after this appraisal, we will conduct an additional appraisal. These 
appraisals, and any acceptable records provided by you, will be used 
to determine your production to count. Failure to give timely notice 
that production will be sold by direct marketing will result in an 
appraised amount of production to count of not less than the 
production guarantee per acre if such failure results in our 
inability to make the required appraisal.
    (c) If you intend to claim an indemnity on any unit, you must 
notify us at least 15 days prior to the beginning of harvest or 
immediately if damage is discovered during harvest, so that we may 
inspect the damaged production. You must not destroy the damaged 
crop until after we have given you written consent to do so. If you 
fail to meet the requirements of this section and such failure 
results in our inability to inspect the damaged production, we may 
consider all such production to be undamaged and include it as 
production to count.
    11. Settlement of Claim.
    (a) We will determine your loss on a unit basis. In the event 
you are unable to provide separate, acceptable production records:
    (1) For any optional units, we will combine all optional units 
for which such production records were not provided; or
    (2) For any basic units, we will allocate any commingled 
production to such units in proportion to our liability on the 
harvested acreage for the units.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim by:
    (1) Multiplying the insured acreage for each type, if 
applicable, by its respective production guarantee;
    (2) Multiplying each result in section 11(b)(1) by the 
respective price election for each type, if applicable;
    (3) Totaling the results in section 11(b)(2);
    (4) Multiplying the total production to be counted of each type, 
if applicable, (see section 11(c)) by the respective price election;
    (5) Totaling the results in section 11(b)(4);
    (6) Subtracting the 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 (wet, in-shell pounds) from 
all insurable acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) That is sold by direct marketing if you fail to meet the 
requirements contained in section 10;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide acceptable production records;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production; and
    (iv) Potential production on insured acreage that you intend to 
abandon or no longer care for, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
that acreage will end. If you do not agree with our appraisal, we 
may defer the claim only if you agree to continue to care for the 
crop. We will then make another appraisal when you notify us of 
further damage or that harvest is general in the area unless you 
harvested the crop, in which case we will use the harvested 
production. If you do not continue to care for the crop, our 
appraisal made prior to deferring the claim will be used to 
determine the production to count; and
    (2) All harvested production from the insurable acreage.
    12. Written Agreements.
    Terms of this policy that are specifically designated for the 
use of written agreement may be altered by written agreement in 
accordance with the following:
    (a) You must apply in writing for each written agreement no 
later than the sales closing date, except as provided in section 
12(e);
    (b) The application for a written agreement must contain all 
variable terms of the contract between you and us that will be in 
effect if the written agreement is not approved;
    (c) If approved, the written agreement will include all variable 
terms of the contract, including, but not limited to, crop type or 
variety, the guarantee, premium rate, and price election;
    (d) Each written agreement will only be valid for one year (If 
the written agreement is not specifically renewed the following 
year, insurance coverage for subsequent crop years will be in 
accordance with the printed policy); and
    (e) An application for a written agreement submitted after the 
sales closing date may be approved if, after a physical inspection 
of the acreage, it is determined that no loss has occurred and the 
crop is insurable in accordance with the policy and written 
agreement provisions.

    Signed in Washington D.C., on June 26, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-17354 Filed 7-1-97; 8:45 am]
BILLING CODE 3410-08-P