[Federal Register Volume 69, Number 164 (Wednesday, August 25, 2004)]
[Rules and Regulations]
[Pages 52151-52157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19447]



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  Federal Register / Vol. 69, No. 164 / Wednesday, August 25, 2004 / 
Rules and Regulations  

[[Page 52151]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AB76


Common Crop Insurance Regulations; Blueberry Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the 
Common Crop Insurance Regulations, Blueberry Crop Insurance Provisions 
to convert the blueberry pilot program to a permanent crop insurance 
program. The changes will apply for the 2005 and succeeding crop years.

DATES: Effective August 30, 2004.

FOR FURTHER INFORMATION CONTACT: For further information, contact 
William Klein, Risk Management Specialist, Research and Development, 
Product Development Division, Risk Management Agency, United States 
Department of Agriculture, 6501 Beacon Drive, Stop 0812, Room 421, 
Kansas City, MO 64133-4676, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be not significant for the 
purposes of Executive Order 12866 and, therefore, it has not been 
reviewed by the Office of Management and Budget (OMB).

Paperwork Reduction Act of 1995

    Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501), 
the collections of information in this rule have been approved by the 
OMB under control number 0563-0053 through February 28, 2005.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
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. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of UMRA.

Executive Order 13132

    It has been determined under section 1(a) of Executive Order 13132, 
Federalism, that this rule does not have sufficient implications to 
warrant consultation with the States. The provisions contained in this 
rule will not have a substantial direct effect on States, or on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.

Regulatory Flexibility Act

    FCIC certifies that this regulation will not have a significant 
economic impact on a substantial number of small entities. Program 
requirements for the Federal crop insurance program are the same for 
all producers regardless of the size of their farming operation. For 
instance, all producers are required to submit an application and 
acreage report to establish their insurance guarantees and compute 
premium amounts, or notice of loss and production information to 
determine an indemnity payment in the event of an insured cause of crop 
loss. Whether a producer has 10 acres or 1000 acres, there is no 
difference in the kind of information collected. To ensure crop 
insurance is available to small entities, the Federal Crop Insurance 
Act authorizes FCIC to waive collection of administrative fees from 
limited resource farmers. FCIC believes this waiver helps to ensure 
small entities are given the same opportunities to manage their risks 
through the use of crop insurance. A Regulatory Flexibility Analysis 
has not been prepared since this regulation does not have an impact on 
small entities and therefore, this regulation is exempt from the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 605).

Federal Assistance Program

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

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
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 12988

    This rule has been reviewed in accordance with Executive Order 
12988 on civil justice reform. The provisions of this rule will not 
have a retroactive effect. The provisions of this rule will preempt 
State and local laws to the extent such State and local laws are 
inconsistent herewith. With respect to any direct action taken by FCIC 
under the terms of the crop insurance policy, the administrative appeal 
provisions published at 7 CFR part 11 and 7 CFR part 400, subpart J for 
the informal administrative review process of good farming practices, 
as applicable, must be exhausted before any action against FCIC 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.

Background

    On July 30, 2003, FCIC published a notice of proposed rulemaking in 
the Federal Register at 68 FR 44668-44672 to amend the Common Crop 
Insurance Regulations; Blueberry Crop Insurance Provisions, to convert 
the blueberry pilot program to a permanent program, effective for the 
2005 and succeeding crop years for all states and counties with 
blueberry crop insurance.
    Following publication of the proposed rule on July 30, 2003, the 
public was afforded 60 days to submit written comments and opinions. 
FCIC received 61 comments from reinsured companies, a trade 
organization, a producer, and FCIC Regional Offices. The comments 
received from the

[[Page 52152]]

proposed rule are addressed in this final rule and FCIC's responses are 
as follows:
    Comment: Two commenters asked about FCIC's plans for expansion of 
the blueberry program due to the change in status from a pilot to a 
permanent program. One commenter specifically noted that pilot program 
coverage is generally limited with respect to the areas where insurance 
is offered.
    Response: Pilot programs are eligible for expansion when they are 
converted to a permanent program. FCIC expanded the blueberry program 
to additional states and counties for the 2004 crop year based on 
expansion requests and supporting data. FCIC will continue to review 
county expansion requests and such expansion may be approved if 
sufficient actuarial data exists.
    Comment: One commenter expressed concern that the formula used to 
establish coverage under this plan allows and even stimulates cheating 
by farmers and will not be subject to close enough scrutiny to keep 
farmers honest. They further maintain the program design may allow 
insureds to cheat and that FCIC's saying there is a ``guarantee'' in 
farming is ridiculous.
    Response: FCIC disagrees with the commenter. A producer's blueberry 
production guarantee is based on a producer's individual yields and is 
established in a manner consistent with other actual production history 
crop programs. While there is always opportunity to falsify production 
records, commit fraud, etc., the risk is no greater than with these 
other crop programs. The Risk Management Agency's (RMA) underwriting 
and loss adjustment standards are designed to mitigate waste, fraud, 
and abuse. Further, insurance providers are supposed to monitor their 
policies and report to RMA any suspected fraud, waste, or abuse. RMA's 
Compliance Division is also responsible for investigating waste, fraud, 
and abuse. When waste, fraud, or abuse is found, individuals are 
prosecuted to the maximum extent under the law.
    Comment: One commenter recommended modifying a current Special 
Provisions statement that attaches to section 10(d) (previously section 
10(c)(3)) of the Blueberry Crop Insurance Provisions. These provisions 
address the quality adjustment of mature blueberries, harvested or 
unharvested, that are damaged by an insurable cause of loss to the 
extent they can not be sold as fresh or processed blueberries. The 
Special Provisions statement specifies the percent of damage required 
before the value of blueberries is reduced through a formula. The 
commenter took exception with the percent of damage threshold currently 
shown on the Special Provisions for their area. They believe it is too 
low, and should be increased for the next crop year.
    Response: The percent of damage threshold for mature damaged 
blueberries is contained in the Special Provisions rather than the Crop 
Provisions to address different blueberry types and variable 
marketability of damaged blueberries in different parts of the country. 
RMA's Regional Offices (RO) establish the threshold percentage for 
their region based on marketability and type of mature damaged 
blueberries. If data is available demonstrating the percentage 
threshold needs to be changed for a county or group of counties, the 
applicable RO has the authority to change it.
    Comment: One commenter expressed concern with the adequacy of the 
definition ``unsound blueberries.'' They believe the determinations of 
undersized, immature, mechanically damaged blueberries, etc. may be 
left up solely to the buyer or processor. What may be unsound berries 
due to size at one processor may be acceptable at another processor. 
The definition does not establish a minimum standard by which all 
production is measured, such as U.S. No. 1 or U.S. No. 1 processing. 
Furthermore, they believe a change in the definition of ``unsound 
blueberries'' could also affect the definitions of ``blueberry 
production'' and ``dry line.''
    Response: FCIC agrees with the commenter and has removed the 
definitions ``blueberry production,'' ``dry line,'' ``mechanical 
damage,'' and ``unsound blueberries.'' FCIC has added the definitions 
of ``damaged blueberries'' and ``mature blueberry production'' and has 
incorporated part of the definition of ``unsound blueberries'' into the 
definition of ``damaged blueberries.'' The definitions of both ``mature 
blueberry production'' and ``damaged blueberries'' incorporates the 
United States Standards for Grades of Blueberries, U.S. No.1, or such 
other grading standards contained in the Special Provisions. This 
permits FCIC to distinguish between the handling of the blueberries 
appraised and harvested in section 10(c) from those appraised and 
harvested in section 10(d). The modification also makes it no longer 
necessary to define ``dry-line.'' The additional provisions provide 
uniform guidelines for determining quality adjustment.
    Comment: One commenter took exception with defects listed in the 
definition of ``unsound blueberries'' that specifically include 
``undersized'' and ``mechanically damaged.'' The commenter pointed out 
other perennial policies such as apples and plums do not insure against 
damage due solely to the fruit being undersized. They also questioned 
what criteria would be used in determining acceptable size when 
appraising the field. Furthermore, they noted no other policy 
provisions cover man-made damage due to a cause such as mechanical 
damage. The stated intent of the Federal Crop Insurance Act is to 
compensate producers for natural disasters.
    Response: FCIC agrees with the commenter and has removed the 
definitions ``unsound blueberries'' and ``mechanical damage'', and 
removed the related definition ``blueberry production.'' FCIC has also 
addressed the commenter's concerns by adding definitions of ``damaged 
blueberries'' and ``mature blueberry production.'' As stated above, the 
definitions incorporate the United States Standards for Grades of 
Blueberries, U.S. No. 1, or other appropriate grading standards used in 
determining blueberry production. Further, the definition of ``damaged 
blueberries'' makes it clear that such damage must be due to an 
insurable cause of loss.
    Comment: One commenter suggested RMA define the terms 
``marketable'' and ``damage.''
    Response: FCIC agrees with the commenter and has addressed the 
commenter's concern by adding new definitions for ``damaged 
blueberries.'' However, FCIC has removed the term ``marketable'' from 
the policy and replaced it with the term ``mature'' and has defined 
that term. As stated above, this was necessary to distinguish between 
the treatment of blueberries appraised and harvested under section 
10(c) from those damaged blueberries appraised and harvested under 
section 10(d).
    Comment: One commenter asked for clarification that section 3(d) 
meant one coverage level per county when, for example, a producer has 
blueberry insurance in two counties.
    Response: The Basic Provisions make it clear that coverage levels 
are selected on a county basis and that different coverage levels can 
be selected for different counties.
    Comment: Two commenters recommended that section 3(d), which 
requires the producer or agent to provide notification when it is 
evident a cause of loss that could or would reduce the yield of the 
insured crop is known prior to the request to increase coverage, be 
removed from these Crop Provisions until this issue is addressed

[[Page 52153]]

in the Basic Provisions, because of the applicability to all crops.
    Response: FCIC agrees with the commenter. If FCIC is to adopt this 
change, the most appropriate place would be the Basic Provisions, 
because it would apply to all crops.
    Comment: Two commenters recommended the burden in section 3(d) be 
on FCIC, not on the producer, agent, or company as to when a cause of 
loss that could or would reduce the yield of the insured crop is 
evident prior to the time the increase is requested.
    Response: As stated above, FCIC has decided not to adopt this 
change in this rule.
    Comment: Three commenters recommended changes in section 7(a)(1) 
that specify the number of days the company has to inspect the acreage 
and notify the insured they are denying coverage before the coverage 
automatically attaches. The previous time frame was 10 days and the 
proposed rule calls for 20 days. Two commenters stated their preference 
is for 30 days, pointing out this would allow sufficient time for 
inspections and would be consistent with the nursery policy and other 
perennial crop policies such as Florida Fruit Trees. The third 
commenter suggested going back to 10 days because this is consistent 
with other perennial fruit crop policies with a similar insurance 
attachment such as apples, cranberries, etc. They further noted 
extending the available time period upon which an insurance provider 
may inspect acreage to deny coverage on new applications without making 
the same changes in similar perennial fruit policies creates 
administrative conflicts for delivery and service systems.
    Response: FCIC disagrees with the commenters and believes a 20-day 
time frame is the most appropriate deadline to allow for inspection and 
possible denial of coverage. Prior to publishing the proposed rule, 
producers and company personnel agreed 10 days was not an adequate 
amount of time to conduct an inspection. Further, producers believed 30 
days was too long to wait for confirmation of coverage. They agreed 20 
days was an acceptable compromise. As the other perennial fruit 
policies such as apples, cranberries etc., are revised, FCIC will 
evaluate whether a change to a 20-day time frame for inspection and 
possible denial of insurance is appropriate. Therefore, no change has 
been made.
    Comment: One commenter suggested rearranging the language in 
section 7(a)(2) from ``For each crop year subsequent to the year of 
application, that the policy * * *'' to ``For each subsequent crop year 
that * * *'' They believe this would make the language clearer.
    Response: FCIC agrees and has revised the provision.
    Comment: Two commenters recommended revising section 8(a)(2) to 
clarify fire is an insured cause of loss only when due to natural 
causes, consistent with the Federal Crop Insurance Act and the Crop 
Insurance Handbook. The language in the Proposed Rule reads, ``Fire, 
unless weeds and other forms of undergrowth have not been controlled * 
* * etc.''
    Response: The suggested change is not required and could lead to 
confusion regarding whether the other causes of loss must also be due 
to natural causes. FCIC clarified this issue in the Basic Provisions, 
which now require causes of loss be due to naturally occurring events.
    Comment: One commenter recommended removing the text after 
``mechanical damage'' in section 8(b)(4). The text reads ``Mechanical 
damage in excess of that normally experienced for mechanically 
harvested blueberries for the current crop year.''
    Response: FCIC agrees with the commenter and has removed the text 
after the words ``mechanical damage,'' which remains as an excluded 
cause of loss in section 8(b)(4). FCIC does not have the authority to 
pay losses due to mechanical damage.
    Comment: One commenter questioned why sections 9(a)(1) through (3) 
require notification ``within'' the specified time period, while the 
provisions in sections 9(a)(4) and (5) require notification ``at least 
15 days'' before the specified action.
    Response: The difference between sections 9(a)(1) through (3) and 
9(a)(4) and (5) is that sections 9(a)(1) through (3) deal with notice 
after a potential loss has occurred and immediate notice is required. 
Sections 9(a)(4) and (5) are intended to provide greater flexibility by 
providing the last day that such notice must be provided to allow 
sufficient time for an inspection. To make the provisions clearer, FCIC 
has modified the provisions under both section 9(a)(2) and 9(a)(3). The 
24-hour notification provisions are now contained in sections 
9(a)(2)(i) through (iv). Sections 9(a)(4) and (5), are renumbered as 
sections 9(a)(3) and (4), and contain reporting requirements of ``at 
least'' 15 days notice.
    Comment: One commenter questioned the meaning of the provisions in 
section 9(a)(1), which provide the insured must notify us ``Within 3 
days of the date harvest should have started if the crop will not be 
harvested.'' They asked if this meant 3 days before or three days after 
the date harvest should have started.
    Response: The provisions were intended to provide a window for the 
producer to report, either three days before, or not later than three 
days after harvest should have begun. The window gives the producer 
time to make a decision as to whether or not to harvest the crop and 
the company sufficient time to conduct needed appraisals.
    Comment: One commenter asserted that the ``within 24 hours'' of 
``any cause of loss'' notification requirement contained in section 
9(a)(2) and (3) may be difficult for an insured to meet. They noted 
some causes of loss might not be so time-specific that the insured can 
identify the surrounding 24-hour period.
    Response: The 24-hour time frame is required so the company can 
inspect the crop and is due, in part, to the perishable nature of the 
crop. FCIC agrees that producers may have difficulty identifying the 
24-hour period after some causes of loss such as drought. However, FCIC 
believes in most cases the insured knows when a cause of loss occurred 
and should be able to meet the deadline. In those cases, such as 
drought, establishing a different time frame would not eliminate the 
problem and reasonableness of the notice must be taken into 
consideration.
    Comment: One commenter suggested section 9(a)(2) is unclear, and 
even misleading. They believe it could be read in such a way that the 
24-hour notification could relate to both the occurrence of a cause of 
loss and to when the blueberries are mature and ready for harvest. They 
noted maturity does not occur for all blueberries at the same time, and 
questioned why notification would be necessary to the company, so they 
could inspect the acreage, if there is no damage.
    Response: FCIC has revised the provision to require 24-hour notice 
if a cause of loss occurs when blueberries are mature and ready for 
harvest. If no cause of loss has occurred, notice is not required.
    Comment: One commenter questioned whether section 9(a)(2) should 
also contain the language ``* * * and you do not intend to complete 
harvest on the crop * * *'' that is contained in section 9(a)(3).
    Response: FCIC determined that the 24-hour notice is required if a 
cause of loss occurs during harvest regardless of whether the producer 
intends to harvest the crop. Therefore, FCIC has removed the language 
regarding the intent to

[[Page 52154]]

complete harvest from the new combined section 9(a)(2).
    Comment: One commenter noted that in looking at section 9(a)(1) 
through (5), all but one ends with the phrase ``so we can inspect the 
insured acreage,'' or ``so we can inspect the insured production.'' 
They suggested that FCIC consider incorporating a phrase of this nature 
in 9(a) rather than repeating the concept in 9(a)(1) through (5).
    Response: After FCIC has combined and redrafted this section to 
remove ambiguity, it determined that the reference to the ability to 
inspect the acreage is no longer necessary. The provision now clearly 
and cleanly states when notice is required.
    Comment: One commenter questioned what the premium rate impact 
would be, in order to cover the additional amount of indemnities that 
will be incurred for allowances for quality adjustment. They noted 
quality adjustment would be for all causes of loss. Since the 
blueberries will be codified as a permanent program, quality adjustment 
will apply to all currently insured areas and to any expansion 
counties.
    Response: When quality adjustment provisions were added to the 
program for the 2001 crop year, they applied to mature blueberries 
damaged by hail and freeze, and premium rates were increased to cover 
those perils. This rule adds quality provisions for all insured causes 
of loss and for all States and counties where the blueberry program is 
offered. To the extent that the risk of loss is increased by this 
change, premium rates will be adjusted to reflect this additional risk.
    Comment: One commenter noted the 2004 crop year Special Provisions 
specify a threshold of 20 percent damage due to hail or freeze to 
mature blueberries as the basis for determining whether quality 
adjustment applies. The commenter believes this percentage needs to be 
increased because quality adjustment may now result from additional 
perils, including (as proposed) ``mechanical damage.''
    Response: FCIC agrees with the commenter that the percentage shown 
on the Special Provisions needs to be reviewed. For crop year 2005, 
FCIC will examine the effect of adding these additional causes of loss 
for quality adjustment to determine the new thresholds. In any case, if 
additional risk results from these added perils, premium will be 
adjusted to cover these risks. In addition, as stated above, FCIC has 
clarified that mechanical damage is an uninsured cause of loss. FCIC 
has also clarified the criteria for determining damage or loss by 
providing grade standards.
    Comment: One commenter expressed concern that as written in the 
proposed rule, section 10(c)(3) appears to give the insured wiggle room 
to argue that because they are a fresh blueberry producer who could not 
sell their production as fresh, no production should be counted, even 
though the production might have been sold for processing.
    Response: FCIC agrees the proposed rule language contained in 
section 10(c)(3) could have been misinterpreted and perhaps allowed for 
not counting fresh production sold as processing. Consequently, the 
provisions have been modified and renumbered as sections 10(d)(1) and 
(2). The revised provisions now set two standards, one for damaged 
blueberries where the percent of damaged blueberries exceeds the amount 
stated on the Special Provisions and one where the percent of damaged 
blueberries does not exceed the amount stated on the Special 
Provisions. Where the percent of damaged blueberries exceeds the amount 
stated on the Special Provisions, no blueberries from the acreage will 
count as production to count unless sold. If sold, production to count 
will be determined by dividing the price received for the damaged 
blueberries by the applicable price election and multiply the resulting 
factor by the pounds sold. Typically there is little or no juice 
market, or other processing market, for damaged blueberries that would 
normally be sold as fresh blueberries. However, if a processing market 
is found and damaged blueberries are harvested and sold, production to 
count will be based on value as determined above. Where the percent of 
damaged blueberries does not exceed the amount stated on the Special 
Provisions, all mature (undamaged) blueberries will be counted as 
production to count.
    Comment: One commenter noted a discrepancy between the provisions 
contained in section 10(c)(3) and 10(c)(3)(ii). Language contained in 
10(c)(3) states in part ``* * * damaged by an insurable cause of loss * 
* * to the extent the blueberries cannot be sold as fresh or processed 
blueberries * * *,'' while section 10(c)(3)(ii) references damaged 
blueberries that are sold. The commenter maintains it could be argued 
that section10(c)(3)(ii) would never apply because of provisions 
contained in section 10(c)(3) regarding blueberries that cannot be sold 
as fresh or processing due to the percent of damage.
    Response: FCIC has revised the proposed provisions contained in 
section 10(c)(3) and renumbered them as section 10(d) and 10(d)(1) and 
(2). As stated above, the revised provisions now clearly differentiate 
between the treatments of damaged blueberries where the percent of 
damaged blueberries does not exceed the amount stated on the Special 
Provisions and where the percent of damaged blueberries does exceed the 
amount stated on the Special Provisions. Further, the provisions are 
clarified to include the effect if damaged blueberries are sold.
    Comment: One commenter expressed concern about the addition of 
quality adjustment for all causes of loss shown in section 8 of these 
Crop Provisions. They noted some crops such as apples provide for a 
quality feature for limited perils such as hail and freeze, which are 
readily identifiable. They questioned, for instance, whether an 
adjuster could readily identify damage due to adverse weather such as 
excessive heat and sunburn that may cause the blueberries to color 
poorly or cause other forms of damage that might be difficult for the 
adjuster to determine, yet would not be accepted, based on quality, by 
the processor or buyer.
    Response: FCIC has examined this issue and consulted with producers 
and their trade associations. To provide adequate protection, FCIC has 
decided to cover all perils. However, to assist loss adjusters, FCIC 
has incorporated grading standards that are used to determine whether 
production has been damaged.
    In addition to the changes described above, FCIC has made the 
following changes:
    1. Modified the provisions in section 2 by making it clear that the 
enterprise, whole-farm, and optional unit provisions in the Basic 
Provisions are not applicable. This does not eliminate the 
applicability of other optional units.
    2. Added the word ``percentage'' after price election in the first 
line of section 3, to allow producers to select different price 
elections, if different price elections were offered for different 
types. Clarifies that it is the percentage of the price election that 
must be the same.
    3. Added provisions to section 6(a)(2)(i), to allow insurance of 
cultivars which were initially experimental, but have since become 
commercially acceptable and available.
    4. Added provisions to section 6(b) that allow the flexibility to 
specify other types of blueberries that need pruning every other year, 
if necessary, in the Special Provisions.
    5. Added provisions to section 7(a)(3) `` * * * unless specified 
otherwise in

[[Page 52155]]

the Special Provisions.'' This allows the calendar date for the end of 
the insurance period to be tailored through a Special Provisions 
statement for areas where a statewide date may be inappropriate for a 
specific type or county.
    6. Modified the provisions in section 7(a)(4) to clarify that 
coverage may not begin for a crop year if we cancel or terminate a 
policy after insurance has attached but on or before the cancellation 
and termination dates, and no premium, administrative fee, or indemnity 
will be due.
    7. Deleted in provisions in section 7(b)(2) ``* * * and the acreage 
was insured by you the previous year. * * * '' These provisions created 
confusion and could have the effect of obligating a new insured who 
relinquishes interest in an acreage shortly after insurance attaches 
(cancelled lease beginning the new calendar year) to pay premium but 
not be able to claim an indemnity on the acreage since an insurable 
interest no longer exists.
    8. Added a new provision, 7(b)(3), to clarify the effect of 
relinquishing an insurable share after the acreage reporting date. 
Since this issue is not clearly addressed in section 7 of the Basic 
Provisions, these provisions are added to clarify that premium is still 
owed if an insurable share is relinquished after the acreage reporting 
date.
    9. Deleted section 12 because blueberries are no longer a pilot 
program, so written agreements are available if permitted by the 
policy.
    Good cause is shown to make this rule effective less than 30 days 
after publication in the Federal Register. Good cause to make a rule 
effective less than 30 days after publication in the Federal Register 
exists when the 30-day delay in the effective date is impracticable, 
unnecessary, or contrary to the public interest.
    With respect to the provisions of this rule, it would be contrary 
to public interest to delay implementation because public interest is 
served by improving the insurance product as follows: (1) Added 
provisions to eliminate any lapse in insurance coverage between crop 
years, therefore, providing continuous coverage for insureds and 
providing an improved risk management product that prevents the need 
for ad hoc disaster payments; (2) added provisions to specify that if 
the insured policy is canceled or terminated for any crop year after 
insurance attached for that crop year, but on or before the 
cancellation and termination dates, whichever is later, then insurance 
will not be considered to have attached. This modifies the cancellation 
and termination provisions to coincide with continuous coverage, 
providing the greatest flexibility to insured producers to make 
insurance decisions prior to the next crop year, and providing an 
improved risk management product; (3) added provisions to clarify that 
an insurance provider may not cancel an insured's policy when an 
insured cause of loss has occurred after insurance attached, but prior 
to the cancellation and termination date, to protect insureds against 
companies canceling policies simply because a loss has occurred; (4) 
added quality adjustment provisions for determining production to count 
for mature blueberries, harvested or unharvested, that have been 
damaged to the extent the blueberries cannot be sold for fresh or 
processing, which provides improved risk management protection for 
insured producers; (5) provided simplification and clarity to the 
blueberry crop insurance program.
    If FCIC is required to delay the implementation of this rule 30 
days after the date it is published, the provisions of this rule could 
not be implemented until the 2006 crop year. This would mean the 
affected producers would be without the benefits described above for an 
additional year.
    For the reasons stated above, good cause exists to make these 
policy changes effective less than 30 days after publication in the 
Federal Register.

List of Subjects in 7 CFR Part 457

    Crop insurance, Blueberry, Reporting and recordkeeping 
requirements.


0
Accordingly, as set forth in the preamble, the Federal Crop Insurance 
Corporation amends 7 CFR part 457 as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

0
1. The authority citation for 7 CFR part 457 continues to read as 
follows:

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


0
2. Section 457.166 is added to read as follows:


Sec.  457.166  Blueberry crop insurance provisions.

    The Blueberry Crop Insurance Provisions for the 2005 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:

Blueberry Crop Insurance Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) The Catastrophic Risk Protection 
Endorsement, if applicable; (2) the Special Provisions; (3) these 
Crop Provisions; and (4) the Basic Provisions with (1) controlling 
(2), etc.
    1. Definitions.
    Damaged blueberries. Blueberries ready to harvest that due to an 
insurable cause of loss as shown in section 8 of these Crop 
Provisions do not meet the United States Standards for Grades of 
Blueberries, U.S. No. 1, or such other applicable grading standards 
specified in the Special Provisions.
    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, or permitting the general public to enter the field 
for the purpose of picking the crop.
    Harvest. Picking mature blueberries from the bushes either by 
hand or machine.
    Mature blueberry production. Blueberries ready to harvest that 
meet or exceed the United States Standards for Grades of 
Blueberries, U.S. No. 1, or such other applicable grading standards 
contained in the Special Provisions.
    Pound. Sixteen ounces avoirdupois.
    Production guarantee (per acre). The number of pounds determined 
by multiplying the approved yield per acre by the coverage level 
percentage you elect.
    Prune. A cultural practice performed to increase blueberry 
production as follows:
    (a) For lowbush blueberries, a process by which the acreage is 
either burned or mowed; and
    (b) For all other blueberries, a process by which parts of the 
bush are cut off or the bush is cut back.
    2. Unit Division.
    The enterprise, whole-farm, and optional unit provisions in the 
Basic Provisions are not applicable, and blueberry acreage is 
limited to basic units as defined in section 1 of the Basic 
Provisions, unless otherwise specified in the Special Provisions.
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) You may select only one price election percentage for each 
blueberry 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 type, if applicable) by the production 
reporting date designated in section 3 of the Basic Provisions:
    (1) For all types of blueberries: any damage; removal of bushes; 
change in practices, or any other circumstance that may reduce the 
expected yield below the yield

[[Page 52156]]

upon which the insurance guarantee is based; and the number of 
affected acres; and
    (2) For highbush and rabbiteye blueberry types:
    (i) The number of bearing bushes on insurable and uninsurable 
acreage; and
    (ii) The age of the bushes and the planting pattern.
    (c) We will reduce the yield used to establish your production 
guarantee as necessary, based on our estimate of the effect of the 
following: Removal of bushes; damage to bushes; changes 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.
    (d) You may not increase your elected or assigned coverage level 
or the ratio of your price election to the maximum price election we 
offer for the next year if a cause of loss that could or would 
reduce the yield of the insured crop is evident prior to the time 
you request the increase.
    4. Contract Changes.
    In accordance with section 4 of the Basic Provisions, the 
contract change date is August 31 preceding the cancellation date.
    5. Cancellation and Termination Dates.
    (a) In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are November 20.
    (b) If your blueberry policy is canceled or terminated by us for 
any crop year, in accordance with the terms of the policy, after 
insurance attached for that crop year but on or before the 
cancellation and termination dates whichever is later, insurance 
will be considered to have not attached for that crop year and no 
premium, administrative fee, or indemnity will be due for such crop 
year.
    (c) We may not cancel your policy when an insured cause of loss 
has occurred after insurance attached, but prior to the cancellation 
date. However, your policy can be terminated if a cause for 
termination contained in sections 2 or 27 of the Basic Provisions 
exists.
    6. Insured Crop.
    (a) In accordance with section 8 of the Basic Provisions, the 
crop insured will be all the blueberries in the county for which a 
premium rate is provided in the actuarial documents:
    (1) In which you have a share;
    (2) That are grown on bush varieties that:
    (i) Were commercially available when the bushes were set out or 
have subsequently became commercially available; and
    (ii) Are varieties adapted to the area of the following types:
    (A) Highbush blueberries;
    (B) Lowbush blueberries;
    (C) Rabbiteye blueberries; or
    (D) Other blueberry types listed on the Special Provisions.
    (3) That are produced on bushes that have reached the minimum 
insurable age or have produced the minimum yield per acre designated 
in the Special Provisions; and
    (4) That, if inspected, are considered acceptable by us.
    (b) Lowbush blueberry plants (or other types as specified in the 
Special Provisions) must be pruned every other year to be eligible 
for insurance.
    7. Insurance Period.
    (a) In accordance with the provisions of section 11 of the Basic 
Provisions:
    (1) For the year of application, coverage begins on November 21 
of the calendar year prior to the year the insured crop normally 
blooms, except that, if your application is received by us after 
November 1, insurance will attach on the twentieth day after your 
properly completed application is received in our local office 
unless we inspect the acreage during the 20-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 blueberry acreage.
    (2) For each subsequent crop year that the policy remains 
continuously in force, coverage begins on the day immediately 
following the end of the insurance period for the prior crop year. 
Policy cancellation that results solely from transferring an 
existing policy to a different insurance provider for a subsequent 
crop year will not be considered a break in continuous coverage.
    (3) The calendar date for the end of insurance period for each 
crop year is September 30 for Michigan and September 15 for all 
other states, unless specified otherwise in the Special Provisions.
    (4) Notwithstanding the provisions in this section, coverage may 
not begin for a crop year if the policy is cancelled or terminated 
in accordance with section 5(b).
    (b) In addition to the provisions of section 11 of the Basic 
Provisions:
    (1) If you acquire an insurable share in any insurable acreage 
after coverage begins but on or before the acreage reporting date 
for the crop year, and after an inspection we consider the acreage 
acceptable, insurance will be considered to have attached to such 
acreage on the calendar date for the beginning of the insurance 
period. There will be no coverage of any insurable interest acquired 
after the acreage reporting date.
    (2) If you relinquish your insurable share on any insurable 
acreage of blueberries 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.
    (3) If you relinquish your insurable share on any insurable 
acreage of blueberries after the acreage reporting date for the crop 
year, insurance coverage will be provided for any loss due to an 
insurable cause of loss that occurred prior to the date that you 
relinquished your insurable share and the whole premium will be due 
for such acreage for that crop.
    8. Causes of Loss.
    (a) In accordance with the provisions of section 12 of the Basic 
Provisions, 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 
unit;
    (3) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (4) Plant disease, but not damage due to insufficient or 
improper application of disease control measures;
    (5) Earthquake;
    (6) Volcanic eruption;
    (7) An insufficient number of chilling hours to effectively 
break dormancy;
    (8) Wildlife, unless appropriate control measures have not been 
taken; and
    (9) Failure of the irrigation water supply, if caused by a cause 
of loss specified in this section that occurs during the insurance 
period.
    (b) In addition to the causes of loss excluded in section 12 of 
the Basic Provisions, we will not insure against damage or loss of 
production due to:
    (1) Failure to install and maintain a proper drainage system;
    (2) Failure to harvest in a timely manner;
    (3) Inability to market the blueberries for any reason other 
than actual physical damage to the blueberries 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); or
    (4) Mechanical damage.
    9. Duties In The Event of Damage or Loss.
    In addition to the requirements of section 14 of the Basic 
Provisions, the following will apply:
    (a) You must notify us:
    (1) Within 3 days of the date harvest should have started if the 
crop will not be harvested.
    (2) Within 24 hours if any cause of loss occurs:
    (i) Within 15 days of harvest;
    (ii) When the blueberries are mature and ready for harvest; or
    (iii) During harvest.
    (3) 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 sold by direct marketing. 
If damage occurs after this appraisal, we will conduct an additional 
appraisal. These appraisals and 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 that is not 
less than the production guarantee per acre if such failure results 
in our inability to make the required appraisal.
    (4) At least 15 days prior to the beginning of harvest if you 
intend to claim an indemnity on any unit as a result of previously 
reported damage, so that we may inspect the damaged production.
    (b) You must not sell or dispose of the damaged crop until after 
we have given you written consent to do so. If you fail to meet

[[Page 52157]]

the requirements of this section, and such failure results in our 
inability to inspect the damaged production, all such production 
will be considered undamaged and included as production to count.
    (c) You may be required to harvest a sample, selected by us, to 
be used for appraisal purposes.
    10. Settlement of Claim.
    (a) We will determine your loss on a unit basis. In the event 
you are unable to provide acceptable production records 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 for each type, if 
applicable, by its respective production guarantee;
    (2) Multiplying each result in section 10(b)(1) by the 
respective price election, by type if applicable;
    (3) Totaling the results in section 10(b)(2) if there is more 
than one type;
    (4) Multiplying the total production to count for each blueberry 
type, if applicable, by the respective price election;
    (5) Totaling the results in section 10(b)(4), if there is more 
than one type;
    (6) Subtracting the result in section 10(b)(5) from the result 
in section 10(b)(3); and
    (7) Multiplying the result in section 10(b)(6) by your share.
    Example For Section 10(b).
    You have 100 percent share in 25 acres of highbush blueberries 
with a production guarantee of 4,000 pounds per acre and a price 
election of $.45 per pound. You are only able to harvest 62,500 
total pounds because adverse weather reduced the yield. Your 
indemnity would be calculated as follows:
A. 25 acres x 4,000 pound production guarantee/acre = 100,000 pound 
total production guarantee;
B. 100,000 pounds x $.45 price election = $45,000 guarantee;
C. One type only, so same as (2) above, $45,000;
D. 62,500 pounds production to count x $.45 price election = $28,125 
value of production to count;
E. One type only, so same as (4) above, $28,125;
F. $45,000-$28,125 = $16,875 loss; and
G. $16,875 x 100 percent share = $16,875 indemnity payment.
End of Example

    (c) The total production to count (in pounds) from all insurable 
acreage on the unit will include:
    (1) All appraised blueberry 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 9;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide production records;
    (ii) Production lost due to uninsured causes; and
    (iii) 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 
harvest 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.
    (2) All harvested mature blueberry production from the insurable 
acreage.
    (d) If you have harvested or unharvested damaged blueberries and 
the percent of damaged blueberries exceeds that shown in the Special 
Provisions for that type, production to count for the damaged unit 
or portion of a unit will be determined as follows:
    (1) The blueberries from the specific acreage will not be 
considered production to count if no blueberries are harvested and 
sold from such acreage;
    (2) For damaged blueberries that are harvested and sold, the 
production to count for such damaged blueberries will be determined 
by:
    (i) Subtracting the harvest costs contained in the Special 
Provisions from the price received for the damaged blueberries;
    (ii) Dividing the result in section 10(d)(2)(i) by the price 
election; and
    (iii) Multiplying the resulting factor from section 
10(d)(2)(ii), not less than zero, by the pounds of damaged 
blueberries;
    (e) If you have harvested or unharvested damaged blueberries and 
the percent of damaged blueberries does not exceed that shown in the 
Special Provisions for that type, the production to count for the 
damaged unit or portion of a unit will be the appraised or harvested 
production of blueberries.
    (f) If we determine that frost protection equipment, as shown on 
your accepted application, was not properly utilized, the indemnity 
for the affected acreage in the unit will be reduced by the 
percentage reduction allowed for frost protection equipment as 
specified in the Special Provisions. You must, at our request, 
provide us records by date for each period the frost protection 
equipment was used.
    11. Late and Prevented Planting.
    The late and prevented planting provisions in the Basic 
Provisions are not applicable.

    Signed in Washington, DC, on August 19, 2004.
David C. Hatch,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 04-19447 Filed 8-23-04; 9:05 am]
BILLING CODE 3410-08-U