[Federal Register Volume 62, Number 176 (Thursday, September 11, 1997)]
[Rules and Regulations]
[Pages 47745-47749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23906]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 176 / Thursday, September 11, 1997 / 
Rules and Regulations  

[[Page 47745]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 441 and 457


General Crop Insurance Regulations; Table Grape Crop Insurance 
Regulations and Common Crop Insurance Regulations; Table Grape 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 table grapes. 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 table grape crop insurance regulations under the Common Crop 
Insurance Policy for ease of use and consistency of terms, and to 
restrict the effect of the current table grape crop insurance 
regulations to the 1997 and prior crop years.

EFFECTIVE DATE: October 14, 1997.

FOR FURTHER INFORMATION CONTACT: John Meyer, Insurance Management 
Specialist, Product Development Division, Policy Development and 
Standards Branch, 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, 62 FR 2059, the public 
was afforded 60 days to submit written comments on information 
collection requirements currently being reviewed by OMB under OMB 
control number 0563-0003. No public comments were received.

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 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. Under the current regulations, all producers are required to 
complete an application and acreage report. If the crop is damaged or 
destroyed, insureds are required to give notice of loss and provide the 
necessary information to complete a claim for indemnity. 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 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 Wednesday, January 15, 1997, FCIC published a proposed rule in 
the Federal Register at 62 FR 2059 to add to the Common Crop Insurance 
Regulations (7 CFR part 457), a new section, 7 CFR 457.149, (Table 
Grape Crop Insurance Provisions). The new provisions will replace and 
supersede the current provisions for insuring table grapes found at 7 
CFR part 441 and will

[[Page 47746]]

be effective for the 1998 and succeeding crop years.
    Following publication of the proposed rule, the public was afforded 
60 days to submit written comments. A total of 14 comments were 
received from reinsured companies and an insurance service 
organization. The comments received, and FCIC's responses, follow:
    Comment: A reinsured company questioned the need to define ``FSA'' 
and recommended it be deleted.
    Response: FCIC agrees with the comment and has deleted the 
definition.
    Comment: A reinsured company suggested that in the definition of 
``Good farming practices,'' the phrase ``* * * by the Cooperative State 
Research, Education, and Extension Service'' be deleted since some 
producers carry out practices that are compatible but not ``generally'' 
recognized by the Extension Service.
    Response: FCIC has removed the word ``generally'' from this part of 
the definition. However, FCIC believes that the Cooperative State 
Research, Education, and Extension Service (CSREES) recognizes farming 
practices that are considered acceptable for producing table grapes. If 
a producer is following practices currently recognized as acceptable by 
the CSREES, there is no reason why such recognition cannot be sought by 
interested parties. CSREES pertains only to specific areas within a 
county. Such limitations would be considered by FCIC.
    Comment: A reinsured company suggested that in the definition of 
``Irrigated practice,'' the words ``and quality'' be added after the 
words ``* * * providing the quantity.''
    Response: FCIC agrees that water quality is an important issue. 
However, since no standards or procedures have been developed to 
measure water quality for insurance purposes, quality cannot be 
included in the definition. Therefore, no change will be made.
    Comment: An insurance service organization questioned whether the 
change in the number of pounds of table grapes in a lug will require a 
recalculation of previously certified production history to bring it 
up-to-date, or does the change only apply to future production history.
    Response: For 1996 and prior years, the certified actual production 
history must be adjusted by use of a factor to conform with the new 
weight standard for lugs. For all California districts and Arizona, the 
adjustment factor is 1.1000.
    Comment: An insurance service organization stated that the language 
in section 2(a) ``A unit * * * will be divided into basic units * * *'' 
may be confusing since unit division usually deals with optional units 
(as in section 2.(b)). It was suggested this be rewritten to read, 
``Basic units as defined in section 1 * * * will be established for 
each table grape variety you insure.''
    Response: FCIC agrees the provisions may be confusing and has 
clarified this section.
    Comment: An insurance service organization indicated that section 
2(f)(3) states that non-contiguous land qualifies for separate optional 
units and that basic units by non-contiguous land are allowed by 
current provisions. It was suggested that this policy change be 
identified in the Summary of Changes so agents and policyholders are 
made aware of the change and can make necessary adjustments.
    Response: FCIC agrees that the change from basic to optional unit 
status should have been identified in the Summary of Changes. FCIC will 
describe this change to insurance providers when the policy is released 
for use.
    Comment: A reinsured company suggested including the acreage 
reporting date in section 6 of the crop provisions.
    Response: FCIC believes the acreage reporting date should remain in 
the Special Provisions because it could vary by region. Therefore, no 
changes have been made to these provisions.
    Comment: A reinsured company recommended a new paragraph (7(b)(3)) 
be added to the policy to read as follows: ``That, after grafting over, 
have reached the third growing season or produced at least 150 lugs per 
acre, whichever occurs first.''
    Response: FCIC agrees that mature grapes ``grafted over'' to 
produce a variety other than originally grown tend to produce faster 
than normal rootstock that is set out; however, occasionally grafts do 
not ``take'' and the vines may never produce 150 lugs per acre. Table 
grapes must have produced 150 lugs per acre before they are insurable. 
Therefore, no change has been made.
    Comment: A reinsured company suggested that the first sentence in 
section 9(a)(1) be shortened to read, ``Coverage begins on February 1 
of each crop year.'' The industry believes the additional wordage only 
adds confusion and suggests a poor producer could avoid an inspection 
by sending an application in early. Also, they questioned whether 10 
days was sufficient time for insurance providers to send adjusters out 
to inspect every table grape vineyard, and stated that section 7(a)(4) 
already specifies that the vineyard must be acceptable to the insurance 
provider.
    Response: The provisions were revised to clarify that late-filed 
applications are not allowed. The ten day waiting period is necessary 
to prevent insurance against an immediate cause of loss and avoid 
unnecessary exposure to uninsured causes of loss. The insurance 
provider must expedite its review of the application and any supporting 
documentation filed by the producer, determine if a visual inspection 
is necessary, and perform any necessary inspections 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. Section 7(a)(4) does 
not require an inspection, it just states, that if there is an 
inspection, the orchard must be acceptable. This is unrelated to the 
requirement for an inspection during the 10 day period to determine 
whether the producer is attempting to insure an existing or probable 
loss. Therefore, no change has been made.
    Comment: A reinsured company suggested that section 9(a)(2) be 
changed to read, ``This policy is continuous after the first year of 
application, except the calendar date for the end of the insurance 
period (as specified in the Special Provisions) for each crop year, is 
the date during the calendar year in which the grapes are normally 
harvested.''
    Response: Section 2(a) of the Basic Provisions states that the 
policy is continuous. Therefore, it is not necessary to repeat this 
provision in the Crop Provisions.
    Comment: A reinsured company recommended removing the ``end of 
insurance period dates'' from the policy since they are currently 
listed in the Special Provisions. This would allow the addition of 
dates for new varieties or revisions of existing dates to be 
accomplished more quickly.
    Response: FCIC agrees with this recommendation and has amended the 
provisions accordingly.
    Comment: A reinsured company stated that phylloxera should not be 
excluded as a cause of loss, but should be included under ``Disease or 
insect infestation'' referenced in section 10(b)(1). The comment also 
stated that it is impossible to determine the amount of loss or damage 
attributable specifically to phylloxera and that implementation would 
be a loss adjusting nightmare and impossible to audit.
    Response: It is widely accepted that Type B phylloxera will 
ultimately destroy nearly all vineyards that were planted on non-
resistant root stock. The wine industry has done extensive research and 
worked with producers to develop plans to destroy and replace non-
resistant vineyards and some

[[Page 47747]]

vineyards have been destroyed immediately after finding infestations. 
Providing coverage for phylloxera related losses may inhibit the 
efforts being made to stop the spread of this pest and may be 
considered to promote poor pest management practices. Attributing 
losses to phylloxera should be no more difficult than attributing 
losses to any other uninsurable cause of loss. Therefore, no changes 
have been made.
    Comment: An insurance service organization suggested combining the 
provisions contained in section 13(e) with the provisions in section 
13(a).
    Response: The requirement that requests for written agreement be 
executed by the sales closing date is intended to be the rule and the 
application submitted after the sales closing date will only be an 
exception to this rule in limited circumstances. Therefore, no change 
will be made.
    Comment: Two reinsured companies and an insurance service 
organization suggested the provision in section 13(d) stating ``Each 
written agreement will only be valid for one year'' be deleted. The 
valid period should be stated in the wording of the agreement. In most 
cases, written agreements should be continuous, like policies. Limiting 
written agreements to one year only increases administrative cost, 
complexity and opportunity for misunderstanding and error.
    Response: Written agreements are intended to change policy terms or 
permit insurance in unusual or previously unknown situations. If such 
practices continue year to year, they should be incorporated into the 
policy or Special Provisions. It is important to keep non-uniform 
exceptions to the minimum and to insure that the insured is well aware 
of the specific terms of the policy. Therefore, no change will be made.
    In addition to the changes indicated above, FCIC has made the 
following changes:
    1. Preamble--Include the Catastrophic Risk Protection Endorsement 
for clarification.
    2. Section 1--Add a definition for ``adapted'' to clarify the 
provisions that identify the insured crop (section 7(a)), and change 
the lug (box) weight in Arizona from 22 pounds to 20 pounds to be 
consistent with comparable marketing areas in Riverside and Imperial 
Counties, California (Coachella Valley).
    3. Section 2--Clarify that written agreements may only be used to 
obtain optional units on other than non-contiguous land.
    4. Section 11(c)--Clarify that the damaged crop must not be 
destroyed until the earlier of 15 days from the date notice of loss was 
given or after the insurance provider gives written consent to do so. 
Failure to meet this requirement will result in all such production to 
be considered undamaged and included as production to count.

List of Subjects in 7 CFR Parts 441 and 457

    Crop insurance, Table grape, Table grape crop insurance 
regulations.

Final Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby amends 7 CFR parts 441 and 457, as 
follows:

PART 441--TABLE GRAPE CROP INSURANCE REGULATIONS FOR THE 1987 
THROUGH 1997 CROP YEARS

    1. The authority citation for 7 CFR part 441 is amended to read as 
follows:

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

    2. The part heading is revised to read as set forth above.
    3. Subpart heading ``Subpart--Regulations for the 1987 and 
Succeeding Crop Years'' is removed.
    4. Section 441.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:


Sec. 441.7  The application and policy.

* * * * *
    (d) The application for the 1987 and succeeding crop years is found 
at subpart D of part 400, General Administrative Regulations (7 CFR 
400.37, 400.38). The provisions of the Table Grape Insurance Policy for 
the 1987 through 1997 crop years are as follows:
* * * * *

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

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

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

    5. Section 457.149 is added to read as follows:


Sec. 457.149  Table grape crop insurance provisions.

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

    For FCIC policies:

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

    For reinsured policies:

(Insurance provider's name or other appropriate heading)

    For both FCIC and reinsured policies:

TABLE GRAPE 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; and 
these Crop Provisions will control the Basic Provisions. The 
Catastrophic Risk Protection Endorsement, if applicable, will 
control all other provisions.

1. Definitions

    Adapted. Varieties that are recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Cluster thinning and removal. Removing parts of an immature 
cluster or the entire cluster of grapes.
    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 recognized by the Cooperative State Research, 
Education, and Extension Service as compatible with agronomic and 
weather conditions in the area.
    Graft. To unite a shoot or bud (scion) with a rootstock or an 
existing vine in accordance with recommended practices to form a 
living union.
    Harvest. Severing the clusters of mature grapes from the vine.
    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 pounds of table grapes in the Coachella Valley, 
California district; 21 pounds in all other California districts; 
and 20 pounds in Arizona.
    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.

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    Production guarantee (per acre). The number of lugs of grapes 
determined by multiplying the approved APH yield per acre by the 
coverage level percentage you elect.
    Set out. Physically planting the grape plant in the vineyard.
    Table grapes. Grapes that are grown for commercial sale for 
human consumption as fresh fruit on acreage where the cultural 
practices to produce fresh marketable grapes are carried out.
    Written agreement. A written document that alters designated 
terms of this policy in accordance with section 13.

2. Unit Division

    (a) In addition to the provisions of crop definition of unit 
contained in section 1 (Definitions) of the Basic Provisions 
(Sec. 457.8), a basic unit will also be established for each table 
grape variety you insure.
    (b) Unless limited by the Special Provisions, these 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 including, but not limited to, production practice, type, and 
variety, 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 premium 
paid for the purpose of electing optional units will be refunded to 
you for the units combined.
    (e) All optional units that you elect 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) 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) Unless otherwise allowed by a written agreement, each 
optional unit must 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 and coverage level 
for each table grape variety in the county insured under this 
policy.
    (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 
variety if applicable:
    (1) Any damage, removal of bearing vines, 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 vines on insurable and uninsurable 
acreage;
    (3) The age of the vines 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 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: Interplanting perennial crop, removal of vines, damage, 
change in practices and any other circumstance that may affect 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. Report of Acreage

    In addition to the requirements of section 6 (Report of Acreage) 
of the Basic Provisions (Sec. 457.8), you must report the acreage of 
table grapes in the county by variety.

7. Insured Crop

    (a) In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be any insurable 
variety of grapes in the county that you elect and for which a 
premium rate is provided by the actuarial table:
    (1) In which you have a share;
    (2) That are grown for harvest as table grapes;
    (3) That are adapted to the area; and
    (4) That are grown in a vineyard that, if inspected, is 
considered acceptable by us.
    (b) In addition to table grapes not insurable under section 8 
(Insured Crop) of the Basic Provisions (Sec. 457.8), we do not 
insure any table grapes grown on vines:
    (1) That, after being set out or grafted, have not reached the 
number of growing seasons designated by the Special Provisions; or
    (2) That have not produced an average of at least 150 lugs of 
table grapes per acre in at least one of the most recent three crop 
years in your actual production history base period. However, we may 
inspect and agree in writing to insure acreage that has not produced 
this amount.

8. 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, table grapes 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.

9. 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 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 vineyard.
    (2) The calendar date for the end of the insurance period for 
each crop year is the date during the calendar year in which the 
grapes are normally harvested or contained in the Special Provisions 
as provided to you on or before the contract change date.
    (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 table grapes on or before the acreage reporting date for 
the crop year, insurance will not be considered to have attached to, 
and no premium will be due or indemnity paid 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.

10. 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 
vineyard;
    (3) Wildlife;
    (4) Earthquake;
    (5) Volanic eruption; or

[[Page 47749]]

    (6) Failure of irrigation water supply, if caused by an insured 
cause of loss ((a)(1) through (5) of this section) 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) Phylloxera, regardless of cause; or
    (3) Inability to market the table grapes 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.

11. 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 after the date harvest 
should have started if the crop will not be harvested.
    (b) You must notify us at least 15 days before any production 
from any unit will be sold by direct marketing. We will conduct an 
appraisal that will be used to determine your production to count 
for production that is sold by direct marketing. If damage occurs 
after this appraisal, we will conduct an additional appraisal. These 
appraisals, and any acceptable records provided by you, will be used 
to determine your production to count. Failure to give timely notice 
that production will be sold by direct marketing will result in an 
appraised amount of production to count of not less than the 
production guarantee per acre if such failure results in our 
inability to make the required appraisal.
    (c) If the crop has been damaged during the growing season, you 
must provide notice at least 15 days prior to the beginning of 
harvest if you intend to claim an indemnity as a result of the 
damage previously reported. You must not destroy the damaged crop 
until the earlier of 15 days from the date you gave notice of loss, 
or our written consent to do so. If you fail to meet the 
requirements of this section all such production will be considered 
undamaged and included as production to count.

12. 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 to such units in proportion to our liability on the 
harvested acreage for each unit.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim by:
    (1) Multiplying the insured acreage by its respective production 
guarantee;
    (2) Multiplying the result in section 12(b)(1) by the respective 
price election for the variety;
    (3) Totaling the results in section 12(b)(2);
    (4) Multiplying the total production to be counted of the 
variety (see section 12(c)) by the respective price election;
    (5) Totaling the results in section 12(b)(4);
    (6) Subtracting the result of section 12(b)(5) from the result 
in section 12(b)(3); and
    (7) Multiplying the result of section 12(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 if you fail to meet the 
requirements in section 11(b);
    (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 that meets, or would meet if 
properly handled, the California Department of Food and Agriculture 
minimum standards for table grapes; 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 insurable acreage regardless 
of condition or disposition. The quantity of production to count for 
table grape production damaged by insurable causes within the 
insurance period that is marketed for any use other than table 
grapes will be determined by multiplying the greater of (1) the 
value of the table grapes per ton or (2) $50, by the number of tons 
and dividing that result by the highest price election available for 
the insured unit. This result will be the number of lugs to count.

13. Written Agreement

    Terms of this policy which are specifically designated as 
allowing the use of a 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 
13(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, DC, on September 4, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-23906 Filed 9-10-97; 8:45 am]
BILLING CODE 3410-08-P