[Federal Register Volume 62, Number 140 (Tuesday, July 22, 1997)]
[Proposed Rules]
[Pages 39189-39194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19214]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 62, No. 140 / Tuesday, July 22, 1997 / 
Proposed Rules  

[[Page 39189]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457


General Crop Insurance Regulations, Stonefruit Endorsement; and 
Common Crop Insurance Regulations, Stonefruit 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 stonefruit. 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 stonefruit endorsement with the Common Crop Insurance Policy 
for ease of use and consistency of terms, and to restrict the effect of 
the current stonefruit endorsement to the 1998 and prior crop years.

DATES: Written comments and opinions on this proposed rule will be 
excepted until close of business September 22, 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.

FOR FURTHER INFORMATION CONTACT: Ron Nesheim, 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 are being reviewed by OMB pursuant to the Paperwork 
Reduction Act of 1995 (44 U.S.C. chapter 35) under OMB control number 
0563-0053.
    The title of this information collection is ``Multiple Peril Crop 
Insurance.''
    The burden associated with stonefruit is estimated at 14 minutes 
per response from approximately 3,392 respondents each year for a total 
number of 1,196 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 collection 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), Pub. 
L. 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. This rule contains no Federal 
mandates (under the regulatory provisions of title II of the UMRA) 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. 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. 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 proposed rule has been reviewed under 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.

[[Page 39190]]

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 457.159, Stonefruit 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 stonefruit found at 7 CFR 401.122 ( 
Stonefruit Endorsement). FCIC also proposes to amend 401.122 to limit 
its effect to the 1998 and prior crop years.
    This rule makes minor editorial and format changes to improve the 
Stonefruit Endorsement compatibility with the Common Crop Insurance 
Policy. In addition, FCIC is proposing substantive changes in the 
provisions for insuring stonefruit as follows:
    1. Section 1--Add definitions for the terms ``days,'' ``direct 
marketing,'' ``FSA,'' ``good farming practices,'' ``interplanted,'' 
``irrigated practice,'' ``marketable,'' ``non-contiguous,'' 
``processor,'' ``production guarantee (per acre),'' ``stonefruit,'' 
``type,'' ``USDA,'' ``varietal group,'' and ``written agreement'' for 
clarification. The definition of ``stonefruit'' removes current policy 
type references I through VI for each stonefruit, though the same types 
remain insurable. Also, change the definition of ``ton'' for 
clarification. The definition is applicable to each stonefruit that can 
be measured in tons. Also, remove definitions of ``appraisal'' and 
``crop year'' as unnecessary.
    2. Section 2--Provide that stonefruit will be divided into 
additional basic units by each Stonefruit crop designated in the 
Special Provisions that the producer elects to insure. Basic units may 
be further divided into optional units based on non-contiguous land and 
by type or varietal group, if provided for in the Special Provisions.
    3. Section 3(a)--Specify that the insured may select only one price 
election for each crop in the county insured under this policy, unless 
the Special Provisions provide different price elections by type or 
varietal group, in which case the insured may select one price election 
for each type or varietal group. The price election the insured selects 
must have the same percentage relationship to the maximum price 
offered. This will help to protect against adverse selection and 
simplifies administration of the program.
    4. Section 3(b)--Specify that the insured must report damage, 
removal of trees, and any change in practice that could reduce yields. 
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 varietal 
group, if applicable, of any interplanted crop, its planting pattern, 
and any other information that the insurance provider requests in order 
to establish the approved yield. If the insured fails to notify the 
insurance provider of factors that may reduce yields from previous 
levels, the insurance provider will reduce the production guarantee at 
any time the insurance provider becomes aware of damage, removal of 
trees, or changes in practices. This change will standardize these 
provisions with those in other perennial crop policies.
    5. Section 6--Remove the provision that requires production records 
to be provided for at least the previous crop year. Transitional yields 
are now available to producers who do not have production records for 
the previous crop year.
    6. Section 6(d)--Specify that at least 200 lugs per acre of fresh 
market production or at least 2.2 tons per acre of processing types 
production must have been produced in at least one of the three most 
recent crop years of the actual production history base period for the 
crop to be insured, unless the insurer inspects such acreage and gives 
approval in writing. This requirement requires the orchard to produce 
the minimum production in the most recent years which indicates the 
orchard is productive and is a feasible insurance risk. Previous 
regulations required a minimum 200 lugs fresh market production per 
acre (at least 2.2 tons per acre for processing types) but did not 
clearly state that the minimum must have been produced in one of the 
three most recent crop years.
    7. Section 7--Allow insurance for stonefruit interplanted with 
another perennial crop in order to make insurance available on more 
acreage and reduce the reliance on noninsured crop disaster assistance 
(NAP) for protection against crop losses.
    8. Section 8(a)(1)--Specify that the insurance period begins on 
February 1 of each crop year, except that for the year of application, 
if the producers's application is received after January 22 but prior 
to February 1, insurance will attach on the 10th day after the 
producer's application is received in the insurance provider's local 
office unless the insurance provider inspects the acreage and 
determines that it does not meet insurability requirements. These 
provisions were modified to avoid interpretation that late-filed 
applications are allowed. Ten days is sufficient to prevent adverse 
selection and avoid unnecessary exposure to uninsured losses during the 
waiting period.
    9. Section 8(b)--Provide policy guidelines for attachment of 
insurance when insurable acreage is acquired or relinquished after 
coverage begins but on or before the acreage reporting date and if the 
acreage was insured by you the previous crop year, insurance will not 
be considered to have attached to, and no premium or indemnity will be 
due. Under the current endorsement for acreage relinquished on or 
before the acreage reporting date, the premium would still be due from 
the producer even if the producer no longer had an insurable interest. 
In the same situation under these new provisions, insurance will not be 
considered to have attached, so the premium will not be due unless a 
transfer of right to an indemnity was in effect.
    10. Section 9(a)--Remove insufficient chilling hours as a specified 
insurable cause of loss because not enough actuarial data is available 
to demonstrate that a lack of chilling hours adversely affects 
stonefruit production. If damage or loss was due to an insufficient 
number of chilling hours, such loss would be covered under adverse 
weather. This change is consistent with other perennial crop policies.
    11. Section 9(b)(1) (i) and (ii)--Clarify that damage or loss of 
production due to disease or insect infestation will not be an insured 
cause of loss, unless adverse weather prevents the proper application 
of control measures, causes properly applied control measures to be 
ineffective, or causes disease or insect infestation for which no 
effective control mechanism is available. This change also will be made 
to be consistent with other crop policies.
    12. Section 10--Specify that the insured must notify the insurance 
provider: (1) Within 3 days of the date harvest should have started if 
the crop will not be harvested, (2) 15 days prior to harvest if the 
insured previously gave notice of loss so that an inspection can be 
made, (3) at least 15 days prior to

[[Page 39191]]

harvest so a preharvest inspection can be made if the insured intends 
to directly market the crop, and (4) must not destroy the damaged crop 
which is not marketed until after we have given written consent to do 
so. 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 the insurance provider's inability to make the 
required appraisal. The current endorsement requires written notice 
within 72 hours of damage, immediate notice of damage if damage occurs 
within 72 hours of or during harvest, notice 72 hours prior to harvest, 
and prohibits the insured from selling or otherwise disposing of any 
damaged production until written consent is given by the insurance 
provider. These proposed changes will incorporate and standardize the 
notice of loss requirements used for other perennial crops.
    13. Section 11(c)(2)(i)--Specify that the total production to count 
will include all harvested production from insurable acreage that is 
packed and sold as fresh fruit and that meets the grade requirements of 
the California Tree Fruit Agreement Marketing Order or State Department 
of Food and Agriculture Code of Regulations, as amended, in effect for 
the crop, or processing industry.
    14. Section 11(c)(2)(ii)--Specify how production to count is 
determined for fresh fruit that is marketed and meets California 
Utility Grade. This change clarifies that fresh fruit that is damaged 
and of poor quality is eligible for quality adjustment on a fresh fruit 
basis.
    15. Section 11(c)(2)(iii)--Specify how production to count is 
determined for fresh harvested production that does not meet the 
specific grade requirements, but is used for any use other than fresh 
stonefruit. This change clarifies that fresh fruit that does not meet 
the specific grade requirements is eligible for quality adjustment on a 
processing fruit basis.
    16. Section 11(c)(2)(v)--Add procedure for determining the 
production to count for mature Processing Apricots, Processing Cling 
Peaches, and Processing Freestone Peaches damaged by insurable causes 
within the insurance period to the extent that their value is less than 
75 percent of the marketable value of the corresponding undamaged crop. 
This change is added to allow quality adjustment for such processing 
fruit.
    17. Section 12--Add provisions for providing insurance coverage by 
written agreement. FCIC has a long-standing policy of permitting 
certain modifications of the insurance contract 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.

List of Subjects in 7 CFR Parts 401 and 457

    Crop insurance, Stonefruit endorsement.

Proposed Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation, hereby, proposes to amend 7 CFR parts 401 
and 457 as follows:

PART 401--GENERAL CROP INSURANCE REGULATIONS--REGULATIONS FOR THE 
1988 AND SUBSEQUENT CONTRACT YEARS

    1. The authority citation for 7 CFR part 401 continues to read as 
follows:

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

    2. The introductory text of Sec. 401.122 is revised to read as 
follows:


Sec. 401.122  Stonefruit endorsement.

    The provisions of the Stonefruit Crop Insurance Endorsement for the 
1988 through 1998 crop years are as follows:
* * * * *

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

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

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

    4. Section 457.159 is added to read as follows:


Sec. 457.159  Stonefruit crop insurance provisions.

    The Stonefruit Crop Insurance Provisions for the 1999 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:

Stonefruit Crop Provisions

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

1. Definitions

    Days. Calendar days.
    Direct marketing. Sale of the insured crop directly to consumers 
without the intervention of an intermediary such as 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.
    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 stonefruit either by hand or 
machine.
    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. A container of fresh stonefruit of specified weight. Lugs 
of varying sizes will be converted to standard lug equivalents on 
the basis of the following net pounds of packed fruit:

------------------------------------------------------------------------
                            Crop                              Pounds/Lug
------------------------------------------------------------------------
Fresh Apricots.............................................           24
Fresh Nectarines...........................................           25
Fresh Freestone Peaches....................................          22 
------------------------------------------------------------------------
(Weights for Processing Apricots, Processing Cling Peaches, and         
  Processing Freestone Peaches are specified in tons.)                  

    Marketable. Stonefruit production acceptable for processing or 
other human consumption, even if it fails to meet the state 
Department of Food and Agriculture minimum grading standard.
    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.
    Processor. A business enterprise regularly engaged in processing 
fruit for human consumption that possesses all licenses and permits 
for processing fruit required by the state in which it operates, and 
that possesses facilities, or has contractual access to such 
facilities, with enough equipment to accept

[[Page 39192]]

and process contracted fruit within a reasonable amount of time 
after harvest.
    Production guarantee (per acre). The number of tons or lugs of 
stonefruit determined by multiplying the approved APH yield per acre 
by the coverage level percentage you elect.
    Stonefruit. Any of the following crops grown for fresh market or 
processing:
    (a) Fresh Apricots,
    (b) Fresh Freestone Peaches,
    (c) Fresh Nectarines,
    (d) Processing Apricots,
    (e) Processing Cling Peaches, or
    (f) Processing Freestone Peaches.
    Ton. Two thousand (2,000) pounds avoirdupois.
    Type. Classes of a stonefruit crop with similar characteristics 
that are grouped for insurance purposes.
    USDA. United States Department of Agriculture.
    Varietal group. A subclass of type.
    Written agreement. A written document that alters designated 
terms of this policy in accordance with section 12.

2. Unit Division

    (a) A unit as defined in section 1 (Definitions) of the Basic 
Provisions (Sec. 457.8), will be divided into additional basic units 
by each stonefruit crop designated in the Special Provisions that 
you elect to insure.
    (b) Unless limited by the Special Provisions, basic units may be 
divided into optional units if, for each optional unit you meet all 
the conditions of this section.
    (c) Basic units may not be divided into optional units on any 
basis other than as described in this section.
    (d) 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.
    (e) All optional units you selected for the crop year must be 
identified on the acreage report for that crop year.
    (f) 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) 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 of the following criteria, 
as applicable, unless otherwise specified by written agreement:
    (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; or
    (ii) Optional Units by Type or Varietal Group: Optional units 
may be established by type or varietal group if 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 and coverage level 
for each crop grown in the county and listed in the Special 
Provisions that is insured under this policy. If separate price 
elections are available by type or varietal group of a crop, the 
price elections you choose for each type or varietal group must have 
the same percentage relationship to the maximum price offered by us 
for each type or varietal group. For example, if you choose 100 
percent of the maximum price election for one type of cling peaches, 
you must choose 100 percent of the maximum price election for all 
other types of cling peaches.
    (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 or varietal group, if applicable, for each stonefruit crop:
    (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 or 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 could 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 of each 
stonefruit crop you elect to insure, that is grown in the county, 
and for which premium rates are provided in the actuarial table:
    (a) In which you have a share; (b) That are grown on trees that:
    (1) Were commercially available when the trees were set out; (2) 
Are adapted to the area; and
    (3) Are grown on a root stock that is adapted to the area;
    (c) That are irrigated;
    (d) That have produced at least 200 lugs of fresh market 
production per acre, or at least 2.2 tons per acre for processing 
crops, in at least 1 of the 3 most recent actual production history 
crop years, unless we inspect such acreage and give our approval in 
writing;
    (e) That are regulated by the California Tree Fruit Agreement or 
related crop advisory board for the state (for applicable types);
    (f) That are grown in an orchard that, if inspected, is 
considered acceptable by us; and
    (g) That have reached at least the fifth growing seasons after 
set out. However, we may agree in writing to insure acreage that has 
not reached this age if it has produced at least 200 lugs fresh 
market production per acre or at least 2.2 tons per acre for 
processing types.

7. Insurable Acreage

    In lieu of the provisions of section 9 (Insurable Acreage) of 
the Basic Provisions (Sec. 457.8), that prohibit insurance attaching 
to a crop planted with another crop, stonefruit interplanted with 
another perennial crop is 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, except that 
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 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:
    (i) July 31 for all apricots, and
    (ii) September 30 for all nectarines and peaches.
    (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 39193]]

acreage on the calendar date for the beginning of the insurance 
period.
    (2) If you relinquish your insurable share on any insurable 
acreage of stonefruit on or before the acreage reporting date for 
the crop year and if the acreage was insured by you the previous 
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 appropriate control measures have not been 
taken;
    (4) Earthquake;
    (5) Volcanic eruption; or
    (6) Failure of irrigation water supply, if caused by an insured 
cause of loss 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) Split pits regardless of cause; or
    (3) Inability to market the insured crop for any reason other 
than actual physical damage from an insurable cause of loss 
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 insured 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 if you 
previously gave notice in accordance with section 14 of the Basic 
Provisions (Sec. 457.8), 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 notify us 
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 or varietal 
group, if applicable, by its respective production guarantee;
    (2) Multiplying each result in section 11(b)(1) by the 
respective price election for each type or varietal group, if 
applicable;
    (3) Totaling the results in section 11(b)(2);
    (4) Multiplying the total production to be counted of each type 
or 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 result in section 11(b)(5) from the result 
in section 11(b)(3); and
    (7) Multiplying the result in section 11(b)(6) by your share.
    (c) The total production to count (in standard lugs equivalent 
or tons) from all insurable acres on a 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 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 
insured 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 grade 
requirements shown in the California Tree Fruit Agreement Marketing 
Order, or State Department of Food and Agriculture Code of 
Regulations, as amended, in effect for the crop, type, or varietal 
group;
    (ii) That is packed and sold as fresh fruit as California 
Utility grade, damaged by an insurable cause, and the value of the 
damaged crop is less than 75 percent of the marketable value of an 
undamaged crop, such production will be adjusted by:
    (A) Dividing the marketable value per lug of this production by 
the highest price election available for the crop, type, or varietal 
group; and
    (B) Multiplying the resulting factor, if less than 1.0, by the 
number of lugs of each crop, type, or varietal group;
    (iii) That does not meet the applicable standards in section 
11(c)(2)(i) due to insurable causes but is, or could be, used for 
any use other than fresh packed stonefruit. Such production will be 
determined by:
    (A) Dividing the greater of the marketable value per ton, or 
$50.00, by the highest price election available for the crop, type, 
or varietal group; and
    (B) Multiplying the resulting factor by the number of tons of 
such crop, type, or varietal group;
    (iv) That is mature production of Processing Apricots, 
Processing Cling Peaches, or Processing Freestone Peaches which is 
acceptable to the processor;
    (v) That is mature production of Processing Apricots, Processing 
Cling Peaches, or Processing Freestone Peaches, damaged by insurable 
causes, and the value of the damaged crop is less than 75 percent of 
the marketable value of an undamaged crop, the production will be 
determined as follows:
    (A) Divide the damaged value per ton by the highest price 
election available for the crop, type, or varietal group; and
    (B) Multiply the resulting factor (not to exceed 1.00) by the 
number of tons of such production.

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 by us, the written agreement will include all 
variable terms of the contract, including, but not limited to,

[[Page 39194]]

type or varietal group, the guarantee, premium rate, and price 
election;
    (d) Each written agreement will only be valid for one year (If 
the written agreement is not specifically renewed the following 
year, insurance coverage for subsequent crop years will be in 
accordance with the printed policy); and
    (e) An application for a written agreement submitted after the 
sales closing date may be approved if, after a physical inspection 
of the acreage, it is determined that no loss has occurred and the 
crop is insurable in accordance with the policy and written 
agreement provisions.

    Signed in Washington, DC, on July 16, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-19214 Filed 7-21-97; 8:45 am]
BILLING CODE 3410-08-P