[Federal Register Volume 74, Number 172 (Tuesday, September 8, 2009)]
[Proposed Rules]
[Pages 46023-46026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-21598]
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Proposed Rules
Federal Register
________________________________________________________________________
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. 74, No. 172 / Tuesday, September 8, 2009 /
Proposed Rules
[[Page 46023]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
RIN 0563-AC10
Common Crop Insurance Regulations; Apple Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Proposed rule with request for comments.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to
amend the Common Crop Insurance Regulations, Apple Crop Insurance
Provisions. The intended effect of this action is to provide policy
changes, to clarify existing policy provisions to better meet the needs
of insured producers, and to reduce vulnerability to program fraud,
waste, and abuse. The proposed changes will be effective for the 2011
and succeeding crop years.
DATES: Written comments and opinions on this proposed rule will be
accepted until close of business November 9, 2009 and will be
considered when the rule is to be made final.
ADDRESSES: Interested persons are invited to submit comments, titled
``Apple Crop Provisions'', by any of the following methods:
By Mail to: Director, Product Administration and Standards
Division, Risk Management Agency, United States Department of
Agriculture, Beacon Facility--Mail Stop 0812, Room 421, PO Box 419205,
Kansas City, MO 64141-6205.
By Express Mail to: Director, Product Administration and
Standards Division, Risk Management Agency, United States Department of
Agriculture, Beacon Facility, Stop 0812, 9240 Troost Avenue, Kansas
City, MO 64131-3055.
E-Mail: [email protected].
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
A copy of each response will be available for public inspection and
copying from 7 a.m. to 4:30 p.m., CST, Monday through Friday, except
holidays, at 6501 Beacon Drive, Stop 0812, Room 421, Kansas City, MO
64133-4676.
FOR FURTHER INFORMATION CONTACT: Erin Albright, Risk Management
Specialist, Product Management, Product Administration and Standards
Division, Risk Management Agency, United States Department of
Agriculture, Beacon Facility, Stop 0812, Room 421, PO Box 419205,
Kansas City, MO 64141-6205, telephone (816) 926- 7730.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be non-significant for the
purposes of Executive Order 12866 and, therefore, it has not been
reviewed by the OMB.
Paperwork Reduction Act of 1995
Pursuant to the provisions of the Paperwork Reduction Act of 1995
(44 U.S.C. chapter 35), the collections of information in this rule
have been approved by OMB under control number 0563-0053.
E-Government Act Compliance
FCIC is committed to complying with the E-Government Act of 2002,
to promote the use of the Internet and other information technologies
to provide increased opportunities for citizen access to Government
information and services, and for other purposes.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. This rule contains no Federal
mandates (under the regulatory provisions of title II of the UMRA) for
State, local, and tribal governments or the private sector. 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, and all producers are required to submit a notice of
loss and production information to determine the amount of 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 that small entities are given the
same opportunities as large entities 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 proposed rule has been reviewed in accordance with Executive
Order 12988 on civil justice reform. The
[[Page 46024]]
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 or to require the insurance provider to
take specific action under the terms of the crop insurance policy, the
administrative appeal provisions published at 7 CFR part 11 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 economic impact
on the quality of the human environment, health, or safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
Background
FCIC proposes to amend the Common Crop Insurance Regulations (7 CFR
part 457) by revising Sec. 457.158, Apple Crop Insurance Provisions,
to be effective for the 2011 and succeeding crop years. Several
requests have been made for changes to improve the coverage offered,
address program integrity issues, simplify program administration, and
improve clarity of the policy provisions.
The proposed changes are as follows:
1. FCIC proposes to remove the paragraph immediately preceding
section 1 which refers to the order of priority in the event of a
conflict. This same information is contained in the Basic Provisions.
Therefore, it is duplicative and should be removed in the Crop
Provisions.
2. Section 1--FCIC proposes to revise the definition of ``apple
production'' to reference ``fresh apple production and processing apple
production'' to be consistent with the proposed changes to revise the
names of the defined terms of ``fresh apples'' and ``processing
apples'' to ``fresh apple production'' and ``processing apple
production.''
FCIC proposes to revise the definition of ``damaged apple
production'' to remove the reference to ``within each lot, bin, bushel,
or box, as applicable.'' Questions have been raise regarding whether
claims for indemnity, including appraisals and quality adjustment
determinations, were required to be completed for each lot, bin,
bushel, or box of damaged apples rather than on a unit basis. This
change is being made to clarify that damage is determined on a unit
basis.
FCIC proposes to revise the name of the defined term ``fresh
apples'' to ``fresh apple production'' for clarification. FCIC also
proposes to revise the definition to require insureds to certify and,
if requested by their approved insurance provider, provide verifiable
records to prove at least 50 percent of their fresh apple acreage was
sold as fresh apples in one or more of the three most recent crop
years. FCIC also proposes to revise the definition to clarify insureds
must follow the recommended cultural practices generally in use for
fresh apple acreage in the county as determined by agricultural
experts. These revisions will help ensure processing apple production
is not insured as fresh apple production.
FCIC proposes to revise the name of the defined term ``processing
apples'' to ``processing apple production'' for clarification. FCIC
also proposes to revise the definition to clarify processing apple
production is apples from insurable acreage failing to meet the fresh
apple production requirements.
FCIC proposes to revise the definition of ``type'' to refer to a
category of apples as designated in the Special Provisions. This change
is being made to allow for type changes in the future.
FCIC proposes to delete the definition of ``lot.'' With the removal
of any reference to ``lot'' in the definition of ``damaged apple
production,'' this term will no longer be needed and is no longer
recognized by the apple industry.
FCIC also proposes to delete the definition of ``varietal group.''
With the removal of the term in the definition of ``type'' and section
2(b), this term will no longer be needed.
3. Section 2--FCIC proposes to revise section 2(b) to allow
optional units by type as specified in the Special Provisions.
Different types may have significantly different management practices,
production risks and uses.
4. Section 3--FCIC proposes to add a new section 3(a) to allow the
insured to select different coverage levels for all fresh apple acreage
in the county and for all processing apple acreage in the county.
FCIC also proposes to revise redesignated section 3(c)(1) to revise
the list of possible effects on yield potential to include all of the
items currently listed in section 3(c).
FCIC proposes to revise redesignated section 3(d) to add provisions
to specify if the insured fails to notify the insurance provider by the
production reporting date of an event or action that occurs during the
crop year that may reduce the yield potential, any loss of production
from such acreage will result in an appraisal for uninsured causes. The
yield used to establish the insured's production guarantee will be
reduced for the subsequent crop year. FCIC also proposes to revise
redesignated section 3(d) to remove the list of possible effects on
yield potential and to add language that refers back to section
3(c)(1)-(4), which currently contains the possible effects on yield
potential. Removing the list of possible effects on yield potential in
redesignated section 3(d) eliminates redundancy.
5. Section 6--FCIC proposes to revise the second sentence in
section 6 to clarify that only acreage qualifying as fresh apple
production is eligible for the Optional Coverage for Quality Adjustment
provisions contained in section 14. This revision will help ensure
processing apple production is not insured or adjusted as fresh apple
production.
6. Section 7--FCIC proposes to add a new section 7(d) to clarify
the insured crop is apples grown for either fresh apple production or
processing apple production as defined in section 1.
7. Section 11--FCIC proposes to add a new section 11(a) to clarify
the insured must leave representative samples for appraisal purposes if
required by the insurance provider in accordance with the Basic
Provisions.
8. Section 12--FCIC proposes to revise the Basic Coverage example
in section 12 and move it to follow section 12(b)(7) to be consistent
with the proposed example in section 14.
FCIC proposes to remove the current section 12(d) and move the
provisions to a new section 14(d). FCIC also proposes to add a new
section 12(d) to state any apple production not graded prior to sale or
storage will be considered as production to count. Since harvest ends
the insurance period, no coverage is provided for any subsequent damage
that occurs after the apple production is sold or placed in storage.
Provisions have been added to make this clear.
9. Section 14--FCIC proposes to revise section 14(a) to specify
that insureds who select the Optional Coverage for Quality Adjustment
cannot receive less than the indemnity due under section 12.
FCIC proposes to revise section 14(b)(4) to clarify that production
to count under the Optional Coverage for Quality Adjustment will
include all appraised and harvested production from all of the fresh
apple acreage in the unit.
FCIC proposes to revise section 14(b)(5) to clarify the percent of
damaged appraised or harvested apple production is applied within the
applicable unit.
[[Page 46025]]
FCIC proposes to revise section 14(b)(5)(v) by adding the phrase
``or better'' after the phrase ``U.S. Fancy'' to clarify if any fresh
apple production is sold as U.S. Fancy or better, all such sold
production will be included as production to count under the Optional
Coverage for Quality Adjustment.
FCIC also proposes to add a new section 14(c) to state if any
production is not graded prior to sale or storage, it will be
considered as production to count. As stated above, since harvest ends
the insurance period, no coverage is provided for any subsequent damage
that occurs after the apple production is sold or placed in storage.
Provisions have been added to make this clear.
FCIC proposes to add a new section 14(d) to add provisions that any
adjustments that reduce your production to count under the Optional
Coverage for Quality Adjustment will not be applied when determining
production to count for actual production history (APH) purposes. These
provisions were previously contained in section 12(d), but since they
are applicable to the Optional Coverage for Quality Adjustment, they
are more appropriately included here.
FCIC proposes to revise the example in section 14 to clarify loss
calculations under the Optional Coverage for Quality Adjustment to
include all appraised and harvested production for all of the unit's
fresh apple acreage.
List of Subjects in 7 CFR Part 457
Crop insurance, Apple, Reporting and recordkeeping requirements.
Proposed Rule
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation proposes to amend 7 CFR part 457 effective for
the 2011 and succeeding crop years as follows:
PART 457--COMMON CROP INSURANCE REGULATIONS
1. The authority citation for 7 CFR Part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(o).
2. Amend Sec. 457.158 as follows:
a. Revise the introductory text;
b. Remove the paragraph immediately preceding section 1;
c. Add definitions in section 1 for ``fresh apple production'' and
``processing apple production;'' remove the definitions of ``fresh
apples,'' ``lot,'' ``processing apples,'' and ``varietal group;''
revise the definitions of ``apple production'' and ``type;'' and amend
the definition of ``damaged apple production'' by removing the phrase
``, within each lot, bin, bushel, or box, as applicable,'' from both
paragraphs (a) and (b);
d. Revise section 2(b);
e. Amend section 3 by redesignating paragraphs (a), (b), and (c) as
(b), (c), and (d) respectively, and adding a new paragraph (a);
f. Revise sections 3(b)(1) and 3(c);
g. Amend section 6 by removing the phrase ``Blocks of apple acreage
grown for processing are'' and adding the phrase ``Any acreage not
qualifying for fresh apple production is'' in its place in the second
sentence;
h. Amend section 7(b)(3) by removing the word ``and'' after the
semicolon at the end;
i. Amend section 7(c) by removing the period at the end and
replacing it with ``; and'';
j. Add a new section 7(d);
k. Amend section 11 by redesignating the introductory text as
paragraph (b), redesignating paragraphs (a), (b), and (c) as (1), (2),
and (3) respectively, and adding a new paragraph (a);
l. Revise the Basic Coverage Example in section 12 and move it to
follow section 12(b)(7);
m. Revise section 12(d);
n. Amend section 14(a) by adding at the end of the paragraph the
following sentence, ``Insureds who select this option cannot receive
less than the indemnity due under section 12.'';
o. Amend section 14(b)(3) by removing the phrase ``fresh apples''
and adding the phrase ``fresh apple production'' in its place and
removing the phrase ``processing apples'' and adding the phrase
``processing apple production'' in its place;
p. Revise section 14(b)(4);
q. Revise section 14(b)(5) introductory text;
r. Amend section 14(b)(5) by adding the word ``one'' after the
phrase ``percent for each full'' in paragraphs (i), (ii), and (iii);
s. Amend section 14(b)(5)(v) by adding the phrase ``or better''
after the phrase ``if you sell any of your fresh apple production as
U.S. Fancy'';
t. Add new sections 14(c) and (d);
u. Revise the Optional Coverage for Quality Adjustment example; and
The revised and added text reads as follows:
Sec. 457.158 Apple crop insurance provisions.
The apple crop insurance provisions for the 2011 and succeeding
crop years are as follows:
* * * * *
1. Definitions.
Apple production. All fresh apple production and processing apple
production from insurable acreage.
* * * * *
Fresh apple production. Apples: (1) That are sold, or could be
sold, for consumption without undergoing any change in its basic form,
such as peeling, juicing, crushing, etc.; (2) from acreage that is
designated as fresh apples on the acreage report; (3) that follow the
recommended cultural practices generally in use for fresh apple acreage
in the county as determined by agricultural experts; and (4) you
certify and, if requested by us, provide verifiable records to show at
least 50 percent of the production from acreage reported as fresh apple
acreage was sold as fresh apples in one or more of the three most
recent crop years.
* * * * *
Processing apple production. Apples from insurable acreage failing
to meet the insurability requirements for fresh apple production that
are: (1) Sold, or could be sold for the purpose of undergoing a change
to its basic structure such as peeling, juicing, crushing, etc.; or (2)
from acreage designated as processing apples on the acreage report.
* * * * *
Type. A category of apples as designated in the Special Provisions.
2. Unit Division.
* * * * *
(b) By type as specified in the Special Provisions.
* * * * *
3. Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities.
* * * * *
(a) You may select only one coverage level for all fresh apple
acreage and only one coverage level for all processing apple acreage.
* * * * *
(c) * * *
(1) Any event or action that could impact the yield potential of
the insured crop including, interplanted perennial crop, removal of
trees, any damage, change in practices, or any other circumstance that
may reduce the expected yield upon which the insurance guarantee is
based, and the number of affected acres;
* * * * *
(d) We will reduce the yield used to establish your production
guarantee based on our estimate of such event or action of any of the
items listed in section 3(c)(1) through (4) as indicated below. If the
event or action occurred:
(1) Before the beginning of the insurance period, we will reduce
the yield used to establish your production guarantee for the current
crop year as necessary. If you fail to notify us of any
[[Page 46026]]
circumstance that may reduce your yields from previous levels, we will
reduce your production guarantee at any time we become aware of the
circumstance;
(2) Or may occur after the beginning of the insurance period and
you notify us by the production reporting date, we will reduce the
yield used to establish your production guarantee for the current crop
year as necessary; or
(3) Or may occur after the beginning of the insurance period and
you fail to notify us by the production reporting date, we will
appraise your production in accordance with section 12(c)(1)(ii). We
will reduce the yield used to establish your production guarantee for
the subsequent crop year.
7. Insured Crop.
* * * * *
(d) That are grown for:
(1) Fresh apple production; or
(2) Processing apple production.
* * * * *
11. Duties In the Event of Damage or Loss.
(a) In accordance with the requirements of section 14 of the Basic
Provisions, you must leave representative samples in accordance with
our procedures.
* * * * *
12. Settlement of Claim.
* * * * *
(b) * * *
(7) * * *
Basic Coverage example:
You have a 100 percent share in one basic unit with 10 acres of
fresh apples and 5 acres of processing apples designated on your
acreage report, with a 600 bushel per acre production guarantee for
both fresh and processing apples, and a price election of $9.10 per
bushel for fresh apples and $2.50 per bushel for processing apples. You
harvest 5,000 bushels of fresh apples and 1,000 bushels of processing
apples all grading U.S. No. 1 Processing or better. Your indemnity will
be calculated as follows:
(A) 10 acres x 600 bushels = 6,000 bushel production guarantee of fresh
apples;
5 acres x 600 bushels = 3,000 bushel production guarantee of processing
apples;
(B) 6,000 bushel production guarantee x $9.10 price election =
$54,600.00 value of production guarantee for fresh apples;
3,000 bushel production guarantee x $2.50 price election = $7,500.00
value of production guarantee for processing apples;
(C) $54,600.00 value of production guarantee for fresh apples +
$7,500.00 value of production guarantee for processing apples =
$62,100.00 total value of the production guarantee;
(D) 5,000 bushels of fresh apple production to count x $9.10 price
election = $45,500.00 value of fresh apple production to count;
1,000 bushels of processing apple production to count x $2.50 price
election = $2,500.00 value of processing apple production to count;
(E) $45,500.00 value of fresh apple production to count + $2,500.00
value of processing apple production to count = $48,000.00 total value
of production to count;
(F) $62,100.00 total value of the production guarantee - $48,000.00
total value of production to count = $14,100.00 value of loss; and
(G) $14,100.00 value of loss x 100 percent share = $14,100.00 indemnity
payment.
[End of Example]
* * * * *
(d) Any apple production not graded prior to the earlier of the
time apples are placed in storage, or the date the apples are delivered
to a packer, processor, or other handler will not be considered damaged
apple production and will be considered production to count.
* * * * *
14. Optional Coverage for Quality Adjustment.
* * * * *
(b) * * *
(4) In lieu of sections 12(c)(1)(iii), (iv) and (2), the production
to count will include all appraised and harvested production from all
of the fresh apple acreage in the unit.
(5) If appraised or harvested fresh apple production within the
applicable unit is damaged to the extent that more than 20 percent of
the apple production does not grade U.S. Fancy or better the following
adjustments will apply:
* * * * *
(c) Any apple production not graded prior to the earlier of the
time apples are placed in storage, or the date the apples are delivered
to a packer, processor, or other handler will not be considered damaged
apple production and will be considered production to count under this
option.
(d) Any adjustments that reduce your production to count under this
option will not be applicable when determining production to count for
APH purposes.
Optional Coverage for Quality Adjustment:
You have a 100 percent share in 10 acres of fresh apples designated
on your acreage report, with a 600 bushel per acre guarantee, and a
price election of $9.10 per bushel. You harvest 5,000 bushels of apples
from your designated fresh apple acreage, but only 2,650 of those
bushels grade U.S. Fancy or better. Your indemnity would be calculated
as follows:
(1) 10 acres x 600 bushels per acre = 6,000 bushel production guarantee
of fresh apples;
(2) 6,000 bushel production guarantee of fresh apples x $9.10 price
election = $54,600.00 value of production guarantee for fresh apple
acreage;
(3) The value of the fresh apple production to count is determined as
follows:
(i) 5,000 bushels harvested - 2,650 bushels that graded U.S. Fancy
or better = 2,350 bushels of fresh apple production not grading U.S.
Fancy or better;
(ii) 2,350/5,000 = 47 percent of fresh apple production not grading
U.S. Fancy or better;
(iii) In accordance with section 14(b)(5)(ii): 47 percent - 40
percent = 7 percent in excess of 40 percent;
(iv) 7 percent x 3 = 21 percent;
(v) 40 percent + 21 percent = 61 percent;
(vi) 5,000 bushels harvested x .61 (61 percent) = 3,050 bushels of
fresh apple production not grading U.S. Fancy or better;
(vii) 5,000 bushels harvested - 3,050 bushels of fresh apple
production not grading U.S. Fancy or better = 1,950 bushels of adjusted
fresh apple production to count;
(viii) 1,950 bushels of adjusted fresh apples production to count x
$9.10 price election = $17,745.00 value of fresh apple production to
count;
(4) $54,600.00 value of production guarantee for fresh apples -
$17,745.00 value of fresh apple production to count = $36,855.00 value
of loss;
(5) $36,855.00 value of loss x 100 percent share = $36,855.00 indemnity
payment.
[End of Example]
* * * * *
Signed in Washington, DC, on September 1, 2009.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. E9-21598 Filed 9-4-09; 8:45 am]
BILLING CODE 3410-08-P