[Federal Register Volume 74, Number 225 (Tuesday, November 24, 2009)]
[Proposed Rules]
[Pages 61286-61289]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-27988]


 ========================================================================
 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. 225 / Tuesday, November 24, 2009 / 
Proposed Rules  

[[Page 61286]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AC14


Common Crop Insurance Regulations; Stonefruit Crop Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to 
amend the Common Crop Insurance Regulations, Stonefruit Crop Insurance 
Provisions to allow coverage for plums under the Stonefruit Crop 
Insurance Provisions and to make other changes to clarify policy 
provisions. The proposed rule will also remove the Plum Crop Insurance 
Provisions from the Code of Federal Regulations. The intended effect of 
this action is to provide policy changes, to clarify existing policy 
provisions to better meet the needs of the producers, and to reduce 
vulnerability to program fraud, waste, and abuse. The changes will 
apply for the 2011 and succeeding crop years.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business January 25, 2010 and will be 
considered when the rule is to be made final.

ADDRESSES: Interested persons are invited to submit written comments, 
titled ``Stonefruit 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, 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 the above address.

FOR FURTHER INFORMATION CONTACT: Claire White, Economist, Product 
Management, Product Administration and Standards Division, Risk 
Management Agency, at the Kansas City, MO address listed above, 
telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
rule is non-significant for the purpose of Executive Order 12866 and, 
therefore, it has not been reviewed by 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 through March 
31, 2012.

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) 
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 1,000 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.

[[Page 61287]]

Executive Order 12988

    This proposed 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 
or action by FCIC 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 revise 7 CFR part 457, Common Crop Insurance 
Regulations, by removing and reserving Sec.  457.157 and revising Sec.  
457.159 (Stonefruit Crop Insurance Provisions). Plums, along with 
apricots, nectarines, and peaches, are a member of the stonefruit 
family. Coverage under the Plum Crop Insurance Provisions is similar to 
the coverage under the Stonefruit Crop Insurance Provisions. Several 
requests have been made to combine the Plum Crop Insurance Provisions 
and the Stonefruit Crop Insurance Provisions to consolidate the Crop 
Provisions, underwriting procedures, and loss adjustment standards. 
Several requests also have been made for changes to improve the 
coverage offered, address program integrity issues, and improve clarity 
of the Stonefruit Crop Insurance Provisions. The provisions will be 
effective for the 2011 and succeeding crop years.
    The proposed changes to Sec.  457.159 are as follows:
    1. Section 1--FCIC proposes to remove the definition of ``grading 
standards'' and replace it with a definition of ``grade standards.'' 
The term ``grade standards,'' rather than ``grading standards,'' is 
consistent with terminology in other Crop Provisions administered by 
FCIC. The term ``grade standards'' replaces the term ``grading 
standards'' everywhere it appears in the Stonefruit Crop Insurance 
Provisions.
    FCIC proposes to revise the definition of ``harvest.'' The current 
definition says ``The picking of mature stonefruit either by hand or 
machine.'' The proposed definition says ``The physical removal of 
mature stonefruit from the tree either by hand or machine.'' Use of the 
term ``picking'' created an ambiguity which is eliminated with the use 
of the term ``physical removal.''
    FCIC proposes to revise the table in the definition of ``lug'' to 
include plums and provide a weight for plums per lug. FCIC also 
proposes to revise the table in the definition of ``lug'' to change the 
unit weight measurement for fresh freestone peaches from 22 pounds per 
lug to 25 pounds per lug. Data indicates the peach industry now uses 
25, rather than 22, pounds per lug. FCIC also proposes to revise the 
definition of ``lug'' to allow the flexibility to change the weight 
measurement through the Special Provisions, if necessary. This will 
eliminate the administrative burden of revising the regulation when a 
simple numerical change is necessary because of a change in industry 
practices.
    FCIC proposes to revise the definition of ``marketable.'' The 
current definition states ``Stonefruit production acceptable for 
processing or other human consumption, even if it fails to meet the 
State Department of Food and Agriculture minimum grading standard.'' 
The proposed definition states ``Stonefruit production that meets or 
exceeds the quality standards for U.S. No. 1 in accordance with the 
applicable grade standards or other standards specified in the Special 
Provisions or is accepted by a packer, processor or other handler.'' 
The new definition clarifies that the grade standards will first be 
applied to determine whether the stonefruit is marketable. If the 
stonefruit does not make grade, it is not considered marketable unless 
a packer, handler or processor accepts the production not making grade. 
If accepted, it will be considered marketable.
    FCIC proposes to revise the definition of ``stonefruit'' to include 
plums. FCIC also proposes to revise the definition of ``stonefruit'' to 
allow other stonefruit crops to be added via the Special Provisions, if 
such crops can be added without making any other changes to the Crop 
Provisions.
    FCIC proposes to revise the definition of ``type'' to remove the 
word ``class'' and replace it with the word ``category.'' The proposed 
change is necessary due to administrative system changes in the near 
future. The definition of ``type'' is also revised to clarify the types 
are listed in the Special Provisions.
    FCIC proposes to remove the definition of ``varietal group.'' 
``Varietal group'' is defined as ``a subclass of type'' and is used 
throughout the Crop Provisions. ``Type'' is also defined. However, the 
context in which ``varietal group'' is used is synonymous with 
``type.'' Therefore, the term ``varietal group'' is not needed.
    2. Section 3--FCIC proposes to redesignate paragraph (c) as 
paragraph (d) and designate the undesignated paragraph following 
paragraph (b)(4)(iii) as paragraph (c). FCIC proposes to revise 
redesignated section 3(c) 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 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 also be reduced for the subsequent crop year. FCIC also proposes 
to revise redesignated section 3(c) to remove the list of possible 
effects on yield potential and instead cross-reference section 3(b)(1)-
(4), which currently contains the possible effects on yield potential. 
This will eliminate the current redundancy.
    3. Section 4--FCIC proposes to revise section 4 to add language to 
allow additional contract change dates to be specified in the Special 
Provisions. This provides additional flexibility to adjust the dates or 
add new dates as needed.
    4. Section 5--FCIC proposes to revise section 5 to add language to 
allow additional cancellation and termination dates to be specified in 
the Special Provisions. This provides additional flexibility to adjust 
the dates or add new dates as needed.
    5. Section 6--FCIC proposes to revise paragraph (b)(1) to allow 
insurance for trees that become commercially available after set out. 
Currently, insurance only attaches to trees that are commercially 
available at set out. However, there are situations where trees may 
become commercially available after they have been set out, such as 
trees that were set out for experimental purposes. In some cases these 
experimental trees become commercially acceptable and available after 
set out. According to the current provisions, these trees would not be 
eligible for insurance because they were not commercially available 
when they were set out. The proposed language allows these trees to be 
insurable.
    FCIC proposes to revise paragraph (b) to include the provision 
currently in paragraphs (d), (e), (f), and (g) and remove paragraphs 
(d), (e), (f), and (g). Current paragraphs (b), (d), (e), (f), and (g) 
refer to conditions of insurability of the stonefruit trees so it 
provides clarity to combine the provisions into one

[[Page 61288]]

provision. However, currently, paragraph (e) suggests that the trees 
must be regulated by the state before they are insurable. There are 
some states where the trees are not regulated by the state. Therefore, 
FCIC proposes to revise the provisions of the new paragraph (b)(4) to 
clarify that the trees must be regulated by the state only if such 
regulations exist. Further, FCIC also proposes to revise the new 
paragraph (b)(5) to allow the stonefruit crop to be insurable if grown 
on trees that have produced a minimum amount of production in at least 
one of the previous four, instead of the previous three, actual 
production history crop years. This is consistent with the minimum 
production requirement in other perennial crops such as apples and 
pears.
    FCIC proposes to remove paragraph (c), which states stonefruit is 
insurable if grown on trees that are irrigated. Requirements for 
irrigation will be contained in the Special Provisions. Removing this 
paragraph makes the Stonefruit Crop Insurance Provisions consistent 
with other Crop Provisions that include the insurable practices in the 
Special Provisions and actuarial documents.
    6. Section 8--FCIC proposes to revise paragraph (a)(2) to establish 
an end of insurance period of September 30 for fresh plums in all 
states except California and to establish an end of insurance period of 
October 20 for fresh plums in California only. Under the current Plum 
Crop Insurance Provisions, which is currently only available in 
California, the end of the insurance period is September 30. September 
30 will remain the end of insurance period for fresh plums in other 
counties in other states where insurance is available. However, 
according to published data, plums can be harvested as late as October 
20 in California. Therefore, the end of the insurance period is 
extended to allow for harvesting until October 20.

List of Subjects in 7 CFR Part 457

    Crop insurance, Stonefruit, 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 2010 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(1), 1506(o).


Sec.  457.157  [Removed and Reserved]

    2. Remove and reserve Sec.  457.157.
    3. Amend Sec.  457.159 as follows:
    a. Amend the introductory text by removing ``2001'' and adding 
``2011'' in its place;
    b. Remove the undesignated paragraph immediately preceding section 
1.
    c. Amend section 1 by:
    1. Adding a definition of ``grade standards'';
    2. Removing the definitions of ``grading standards'' and ``varietal 
group''; and
    3. Revising the definitions of ``harvest'', ``lug'', 
``marketable'', ``stonefruit'', ``type''.
    d. Amend section 2(b) by removing the phrase ``varietal group'' in 
two places;
    e. Amend section 3 by:
    1. Revising paragraph (a) by removing the phrase '' or varietal 
group'' in all three places;
    2. Revising the introductory text of paragraph (b) and (b)(4)(i); 
and
    3. Redesignating paragraph (c) as paragraph (d), designating the 
undesignated paragraph following paragraph (b)(4)(iii) as paragraph 
(c), and revising redesignated paragraph (c).
    f. Amend section 4 by adding the phrase ``, or as specified in the 
Special Provisions'' after the word ``states''.
    g. Amend section 5 by adding the phrase ``, or as specified in the 
Special Provisions'' after the word ``states''.
    h. Amend section 6 by:
    1. Revising paragraph (b); and
    2. Removing paragraphs (c), (d), (e), (f) and (g).
    i. Amend section 8 by revising paragraphs (a)(2)(ii) and 
(a)(2)(iii) and adding a new paragraph (a)(2)(iv).
    j. Amend section 11 by:
    1. Revising paragraph (b);
    2. Revising paragraph (c)(3)(ii) by removing the word ``grading'' 
and adding the word ``grade'' in its place in both instances it is 
found; and
    3. Revising paragraph (c)(4).
    The additions and revisions read as follows:


Sec.  457.159  Stonefruit crop insurance provisions.

* * * * *
    1. Definitions.
* * * * *
    Grade standards. The United States Standards for Grades of Peaches, 
the United States Standards for Grades of Nectarines, the United States 
Standards for Grades of Apricots, and the United States Standards for 
Grades of Fresh Plums and Prunes, or other such standards specified in 
the Special Provisions.
    Harvest. The physical removal of mature stonefruit from the tree 
either by hand or machine.
* * * * *
    Lug. A container of fresh stonefruit of specified weight. Lugs of 
varying sizes will be converted to standard lug equivalents on the 
basis of the following average net pounds of packed fruit, or as 
specified in the Special Provisions:

------------------------------------------------------------------------
                                                             Pounds  per
                            Crop                                 lug
------------------------------------------------------------------------
Fresh Apricots.............................................           24
Fresh Nectarines...........................................           25
Fresh Freestone Peaches....................................           25
Fresh Plums................................................           28
------------------------------------------------------------------------

    Weight for Processing Apricots, Processing Cling Peaches, and 
Processing Freestone Peaches is specified in tons.
    Marketable. Stonefruit production that meets or exceeds the quality 
standards for U.S. No. 1 in accordance with the applicable grade 
standards or other standards specified in the Special Provisions or is 
accepted by a packer, processor or other handler.
* * * * *
    Stonefruit. Any of the following crops grown for fresh market or 
processing:
    (a) Fresh Apricots,
    (b) Fresh Freestone Peaches,
    (c) Fresh Nectarines,
    (d) Fresh Plums,
    (e) Processing Apricots,
    (f) Processing Cling Peaches,
    (g) Processing Freestone Peaches, and
    (h) Other crops listed in the Special Provisions.
* * * * *
    Type. A category of a stonefruit crop with similar characteristics 
that are grouped for insurance purposes, as listed in the Special 
Provisions.
* * * * *
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
* * * * *
    (b) You must report, by the production reporting date designated in 
section 3 of the Basic Provisions, by type, if applicable, for each 
stonefruit crop:
* * * * *
    (4) * * *
    (i) The age of the interplanted crop, and type, if applicable;
* * * * *
    (c) We will reduce the yield used to establish your production 
guarantee, as necessary, based on our estimate of such event or action 
of any of the items listed

[[Page 61289]]

in section 3(b)(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 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 11(c)(1)(ii). We 
will reduce the yield used to establish your production guarantee for 
the subsequent crop year.
* * * * *
    6. Insured Crop.
* * * * *
    (b) That is grown on trees that:
    (1) Were commercially available when the trees were set out or have 
subsequently become commercially available;
    (2) Are adapted to the area;
    (3) are grown on root stock that is adapted to the area;
    (4) Are in compliance with the applicable State's Tree Fruit 
Agreement or related crop advisory board for the state (for each 
insured crop and type), when such regulations exist;
    (5) Have produced at least 200 lugs of fresh market production per 
acre, or at least 2.2 tons per acre for processing crops, in at least 
one of the four most recent actual production history crop years, 
unless we inspect such acreage and give our approval in writing;
    (6) Have reached at least the fifth growing season after set out. 
However, we may agree in writing to insure acreage that has not reached 
this age if it meets the requirements of 6(b)(5); and
    (7) Are grown in an orchard that, if inspected, is considered 
acceptable by us.
* * * * *
    8. Insurance Period.
    (a) * * *
* * * * *
    (2) * * *
    (i) * * *
    (ii) September 30 for all nectarines and peaches;
    (iii) In all states except California, September 30 for all fresh 
plums;
    (iv) In California only, October 20 for all fresh plums; or
    (v) As otherwise provided for specific counties or types in the 
Special Provisions.
* * * * *
    11. Settlement of Claim.
* * * * *
    (b) * * *
    (1) Multiplying the insured acreage for each type by its respective 
production guarantee;
    (2) Multiplying each result of section 11(b)(1) by the respective 
price election for the type;
    (3) Totaling the results of section 11(b)(2) (if there is only one 
type, the result of (3) will be the same as the result of (2));
    (4) Multiplying the total production to count (see section 11(c)), 
for each type, by the respective price election;
    (5) Totaling the results of section 11(b)(4);
    (6) Subtracting the result of section 11(b)(5) from the result of 
section 11(b)(3) (if there is only one type, the result of (6) will be 
the same as the result of (5)); and
    (7) Multiplying the result of section 11(b)(6) by your share.
    Scenario 1:
    You select 75 percent coverage level and 100 percent of the price 
election on 50 acres of type A stonefruit with 100 percent share in the 
unit. The guarantee is 500 lugs per acre and the price election is 
$6.00 per lug. You are only able to harvest 5,000 lugs. Your indemnity 
would be calculated as follows:
    (1) 50.0 acres x 500 lugs = 25,000 lug guarantee;
    (2) 25,000 lugs x $6.00 price election = $150,000.00 value of 
guarantee;
    (4) 5,000 harvested lugs x $6.00 price election = $30,000.00 value 
of production to count;
    (6) $150,000.00 - $30,000.00 = $120,000.00 loss; and
    (7) 120,000.00 x 1.000 share = $120,000 indemnity payment.
    Scenario 2:
    In addition to the above information in Scenario 1, you have an 
additional 50 acres of type B stonefruit with 100 percent share in the 
unit. The guarantee is 300 lugs per acre and the price election is 
$3.00 per lug. You are only able to harvest 3,000 lugs. Your indemnity 
would be calculated as follows:
    (1) 50.0 acres x 500 lugs type A = 25,000 lugs guarantee; and 50.0 
acres x 300 lugs type B = 15,000 lugs guarantee:
    (2) 25,000 lugs x $6.00 price election = $150,000.00 value of 
guarantee for type A; and 15,000 lugs x $3.00 price election = 
$45,000.00 value of guarantee for type B;
    (3) $150,000.00 + $45,000.00 = $195,000.00 total value of 
guarantee;
    (4) 5,000 harvested lugs type A x $6.00 price election = $30,000.00 
value of production to count; and 3,000 harvested lugs type B x $3.00 
price election = $9,000.00 value of production to count; and
    (5) $30,000.00 + $9,000.00 = $39,000.00 total value of production 
to count;
    (6) $195,000.00 - $39,000.00 = $156,000.00 total loss; and
    (7) $156,000.00 loss x 1.000 share = $156,000 indemnity payment.
    (c) 
* * * * *
    (4) Harvested fresh or processing stonefruit production that is 
eligible for quality adjustment as specified in section 11(c)(3) will 
be reduced as follows:
    (i) When packed and sold as fresh fruit or when insured as a 
processing crop, by dividing the value per lug or ton of marketable 
production by the highest price election and multiplying the result 
(not to exceed 1.00) by the quantity of such production; or
    (ii) For all other fresh stonefruit, by multiplying the number of 
tons that could be marketed by the value per ton and dividing that 
result by the highest price election available for that type.
* * * * *

    Signed in Washington, DC, on November 13, 2009.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. E9-27988 Filed 11-23-09; 8:45 am]
BILLING CODE 3410-08-P