[Federal Register Volume 75, Number 145 (Thursday, July 29, 2010)]
[Rules and Regulations]
[Pages 44709-44718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-18359]



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  Federal Register / Vol. 75, No. 145 / Thursday, July 29, 2010 / Rules 
and Regulations  

[[Page 44709]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563-AC21


Common Crop Insurance Regulations; Stonefruit Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
amendments to the Common Crop Insurance Regulations, Stonefruit Crop 
Insurance Provisions, and removes the Plum Crop Insurance Provisions 
from the Code of Federal Regulations. The intended effect of this 
action is to allow coverage for plums under the Stonefruit Crop 
Insurance Provisions; provide policy changes and clarify existing 
policy provisions to better meet the needs of the producers; and to 
reduce vulnerability to program fraud, waste, and abuse to the Federal 
crop Insurance Program. The changes will be effective for the 2011 and 
succeeding crop years.

DATES: Effective Date: This rule is effective August 30, 2010.

FOR FURTHER INFORMATION CONTACT: Claire White, Economist, Product 
Management, Product Administration and Standards Division, Risk 
Management Agency, Beacon Facility, Stop 0812, Room 421, PO Box 419205, 
Kansas City, MO 64141-6205 at the Kansas City, MO, 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 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 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.

[[Page 44710]]

Background

    On November 24, 2009, FCIC published a notice of proposed 
rulemaking in the Federal Register at 74 FR 61286-61289 to remove and 
reserve 7 CFR 457.157 and to revise 7 CFR 457.159 Stonefruit Crop 
Insurance Provisions. Following publication of the proposed rule, the 
public was afforded 60 days to submit written comments and opinions.
    A total of 50 comments were received from three commenters. The 
commenters were two reinsured companies and one insurance services 
organization. The comments received and FCIC's responses are as 
follows:

General Comments

    Comment: Several commenters support combining the Plum Crop 
Insurance Provisions and the Stonefruit Crop Insurance Provisions since 
the policy provisions are so similar. A commenter specifically supports 
expanding plum coverage to the Pacific Northwest states.
    Response: FCIC thanks the commenters for their support regarding 
combining the Plum Crop Insurance Provisions and the Stonefruit Crop 
Insurance Provisions. Combining the two Crop Provisions will enable 
expansion of plum insurance to producers beyond California, where there 
is supporting data.
    Comment: A commenter recommends FCIC provide reinsured companies 
with a preview of the Special Provisions statements and a list of any 
areas intended for expansion.
    Response: Providing the reinsured companies with a preview of the 
Special Provisions statements for intended areas of expansion exceeds 
the scope of this rule. FCIC cannot expand any program unless there is 
sufficient actuarial data upon which to establish premium rates. FCIC 
will coordinate with the reinsured companies through the normal course 
of business to ensure proper coverage is made available.
    Comment: A commenter states there are some differences, such as 
provisions or phrases contained in the Plum Crop Insurance Provisions 
that are not contained in the current or proposed Stonefruit Crop 
Insurance Provisions, some of which are addressed in comments below. If 
the provisions apply only to plums, a number of ``in lieu of'' 
statements in the Plum Special Provisions statements will be required, 
which may not be worth combining these two sets of Crop Provisions. The 
commenter asked how this consolidation will affect the existing Special 
Provisions statements for the covered crops.
    Response: Each crop insured under the Stonefruit Crop Insurance 
Provisions has a separate set of Special Provisions statements. 
Therefore, plums will have a separate set of Special Provisions 
statements. Each set of Special Provisions statements will clearly 
indicate any exclusions, restrictions, etc. for plums and for the other 
specific crops insured under the Stonefruit Crop Insurance Provisions. 
Further, FCIC has many policies, such as coarse grains and small 
grains, that apply to more than crop and there may be provisions that 
are unique to one crop. FCIC will similarly handle any such unique 
provisions for stonefruit and plums.
    Comment: Two commenters asked if coverage will be expanded beyond 
the current counties with plums and stonefruit crops, and if so, the 
commenters asked where and when the expansion will occur.
    Response: The new provisions will enable expansion of plum 
insurance to producers beyond California and stonefruit insurance to 
producers beyond the counties where stonefruit insurance is currently 
available, where there is actuarially sufficient data to establish 
premium rates. Requests to expand the Stonefruit crop insurance program 
should be submitted to the applicable Risk Management Agency (RMA) 
Regional Office.

Section 1--Definitions

    Comment: A commenter states the proposed definition of 
``marketable'' 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.'' According to 
the Background section of the proposed rule, ``* * *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.'' However, this is not clear in the revised 
definition, which still allows production to be considered 
``marketable'' by either meeting the standards or being accepted by a 
processor, etc., without any indication that the grade standards must 
be applied first. Maybe that sequence is not needed since the 
production will be considered ``marketable'' either way, and this 
revision at least refers to the grade standards first (as compared to 
the current definition). But if it is truly intended that the grade be 
determined first, before considering whether the production has been 
accepted, the language needs to be reworked to include the phrase ``* * 
* or if it failed to meet the applicable standards but is accepted * * 
*'' at the end of the definition.
    A commenter states if the definition of ``marketable'' remains as 
is, then a comma should be added after ``Special Provisions * * *''
    A commenter states the definition could be revised to remove the 
words ``or other standards specified in the Special Provisions'' since 
this is already covered in the revised definition of ``Grade 
Standards.''
    Response: FCIC agrees the definition of ``marketable'' is not 
clear. FCIC has revised the definition of marketable to be consistent 
with the information provided in the Background section of the proposed 
rule. The definition has been revised to clarify the grade standards 
will first be applied to determine whether the stonefruit is 
marketable. If the stonefruit does not make the applicable grade, it is 
not considered marketable unless a packer, handler or processor accepts 
the production not making grade. FCIC also agrees with adding a comma 
after ``Special Provisions'' and has revised the provisions 
accordingly.
    Comment: A commenter recommends adding a definition of ``scion,'' 
which is currently defined in the Plum Crop Insurance Provisions.
    Response: A scion, according to the Plum Crop Insurance Provisions, 
is a ``twig or portion of a twig of one plant that is grafted onto a 
stock of another.'' The only other reference to scion in the Plum Crop 
Insurance Provisions is in section 6 regarding the minimum insurability 
requirements for plums produced on scions. Based on another comment 
FCIC received for section 6 of the proposed Stonefruit Crop Insurance 
Provisions, FCIC made a revision to section 6(b)(6) to specify minimum 
insurability requirements for trees that have been grafted. Since 
scions result from grafting, the reference to grafting will also 
include plums and other stonefruit. Therefore, it is not necessary to 
add a definition of ``scion.'' The recommended change has not been 
made.
    Comment: Two commenters state the proposed rule adds flexibility by 
including several references to ``* * * or as specified in the Special 
Provisions'' throughout the Crop Provisions so policy changes can be 
made without having to go through the regulatory process. The 
commenters are interested to see what comments are

[[Page 44711]]

received from the reinsured companies. While some flexibility can be 
helpful, some of these changes could cause confusion, such as adding 
another stonefruit crop to be covered under these Crop Provisions 
without having any references to that crop other than in the Special 
Provisions. The commenters question whether the definition of 
``stonefruit'' should allow for a new stonefruit crop to be added in 
the Special Provisions without having to go through the regulatory 
process of revising these Crop Provisions. That would seem to bypass 
the process that allows members of the crop insurance industry and 
other members of the public to review and comment to such a significant 
policy change. It also could make it difficult for producers to know 
what exactly their policy covers when the Crop Provisions do not 
include a complete list of which crops are insurable under the policy.
    Response: FCIC does not agree creating the flexibility to add 
another stonefruit crop through the Special Provisions could cause 
confusion. Providing this flexibility eliminates the administrative 
burden of revising regulations if it is determined an additional crop 
can be adequately insured under the Stonefruit Crop Insurance 
Provisions. FCIC has retained the provisions. No change has been made.
    Comment: A commenter states the usual format for FCIC's policy 
provisions is to use semicolons at the end of subsections (a)-(g) 
rather than commas.
    Response: FCIC agrees and has revised the provisions accordingly.
    Comment: A few commenters state the proposed definition of ``type'' 
states: ``A category of a stonefruit crop with similar characteristics 
that are grouped for insurance purposes.'' The commenter states this 
definition indicates the types will be listed in the Special 
Provisions. It is difficult to consider and comment on how that might 
affect various aspects of the crop program without any indication of 
what those types might be and whether they will be the same as under 
the current Stonefruit Crop Insurance Provisions and Plum Crop 
Insurance Provisions or if there will be changes. There are many 
references to ``type'' in this proposed rule but reinsured companies 
cannot get an accurate idea of how type will apply to the various 
components of this proposed rule, such as unit division, unless a 
preview of the Special Provisions is also provided in advance.
    Response: FCIC is using type instead of varietal group but the 
meaning has not changed. The current varietal groups are now the new 
types. Therefore, the only change has been in nomenclature.

Section 2--Unit Division

    Comment: Two commenters state the introductory sentence in this 
section uses the word ``Notwithstanding'' but recommends replacing this 
word with ``In lieu of'' to be more consistent with the terminology 
used in other Crop Provisions.
    Response: Although this section was not included in the proposed 
rule, FCIC agrees and has revised the provisions accordingly, since it 
is merely a technical correction and does not change the meaning or 
intent of the provision.
    Comment: Two commenters state section 2(b), as revised in the 
proposed rule, reads as follows: ``Optional Units by Type: Optional 
units may be established by type if allowed by the Special 
Provisions.'' The commenters suggest revising section 2(b) to read as 
follows: ``Optional Units by Type: Optional units may be established by 
type.'' Alternatively, based on a comment above, if a reference to the 
Special Provisions is still deemed as necessary, consider changing it 
to read as follows: ``Optional Units by Type: Optional units may be 
established by type if different types are listed in the Special 
Provisions.'' The current phrase ``if allowed'' gives the appearance 
the Special Provisions will have a statement indicating whether or not 
optional units by type are allowed, which is not intended by this item.
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended change.

Section 3--Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities

    Comment: A commenter recommends changing the phrase ``one price 
election'' to ``one price election percentage.'' If this change is 
made, this might require revision of the rest of this subsection to 
reflect this change.
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended change.
    Comment: A commenter recommends changing the first reference to 
`cling peaches' from plural to singular (`cling peach') in section 
3(a).
    Response: Although this section was not included in the proposed 
rule, FCIC agrees and has revised the provisions accordingly, since it 
is merely a technical correction and does not change the meaning or 
intent of the provision.
    Comment: A commenter suggests the reference to ``Any damage * * *'' 
in section 3(b)(1) might be clarified as ``Any damage to the trees * * 
*'' to distinguish it from damage to the previous year's fruit crop 
that would be reflected in a lower yield for the crop year.
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended change.
    Comment: A commenter questions using the word ``bearing'' in 
section 3(b)(2). Producers are required to report their uninsurable 
acres, and when trees are first planted, they will be non-bearing. The 
commenter asked whether it is the intent for producers to report zero 
trees on their uninsurable acres. If the block consists of older trees 
and younger interplanted trees of the same variety, and only the 
bearing trees are counted, there will be inconsistencies with the 
acres, the tree spacing, and the density. If producers remove many 
older trees and replace them with younger trees, they will need to 
report them on the Producer's Pre-Acceptance Worksheet (PAW) as they 
have performed cultural practices that will reduce the yield from 
previous levels. Producers should be required to report all trees and 
this number should remain constant until they remove trees or plant new 
trees. The commenter states they should not be required to track only 
the trees that are bearing and be required to revise this figure each 
year.
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended change. In 
addition, the information that must be submitted in accordance with 
section 3(b) is required in order to establish the producer's actual 
production history (APH) approved yield and the amount of his/her 
coverage. While section 3(b)(2) only requires the bearing trees on 
insurable and uninsurable acreage to be reported, the number of bearing 
and non-bearing

[[Page 44712]]

trees on insurable and uninsurable acreage must be reported on the PAW. 
Perennial crop policies contain provisions for ``bearing trees'' to 
identify trees that meet the eligibility requirements for insurance 
coverage. Since premium and indemnity payments are based on the number 
of trees that meet eligibility requirements, reinsured companies are 
required to track bearing trees as outlined in the Crop Provisions and 
the Crop Insurance Handbook.
    Comment: A commenter states section 3(b) requires the producer to 
report for each stonefruit crop the age of trees and the planting 
pattern. The commenter states concerns have been raised about 
interplanting and tracking of age differences between plantings. 
Although this section of the existing Crop Provisions is not 
specifically included in this proposed rule, FCIC needs to address 
different planting patterns within a block and new plantings 
interplanted with mature trees. This issue is not specific to 
stonefruit as it affects most all Category C crops, but it is essential 
FCIC provide clear instructions. It is reasonable to address it during 
this time so it can be covered in these new provisions for 2011.
    More specifically, the commenter states producers may have 
significant differences in age of trees within a block, even the same 
row. Many trees are already several years old but if damage results to 
a specific tree or group of trees, or if the tree is just not producing 
well, a producer may remove the tree and replace it with a new 
planting. This could be one or two trees within a row or one row within 
a block. Additionally, the planting pattern may start out the same but 
become closer or more spread out as it nears the end of the row or 
starts to go up a hill. FCIC must recognize that spacing requirements 
and planting patterns are not constant. This common practice results in 
inaccurate reporting because a procedure does not exist for this type 
of tracking. The policy language requires the producer to report the 
age of the trees and the planting pattern. Language needs to be added 
to address policies covering trees that vary in age and planting 
patterns.
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended change. 
However, FCIC acknowledges situations, such as those outlined by the 
commenter, are not readily addressed by the general terms of the policy 
provisions. For this reason, instructions are provided in the Crop 
Insurance Handbook.
    Comment: A commenter questions the need to know the planting 
pattern. This requires space on the PAW that could better be used to 
ask if the producer is `intending to direct market' any portion of 
their crop. The commenter states they already capture tree spacing and 
tree count and this is what is needed to determine if there have been 
tree removals or acreage reductions.
    Response: FCIC requires the producer to report the planting pattern 
so the reinsured company can use this information to determine if there 
is adequate tree spacing for the producer to carry out recommended 
orchard management practices.
    Comment: A commenter states section 3(c) specifically states that 
the yield used to establish the production guarantee will be reduced. 
This language only indicates when it will be reduced but not how a 
reinsured company should apply the reduction. Although much of this 
language is existing in the current Stonefruit Crop Insurance 
Provisions, FCIC must clarify how the yield used to establish the 
production guarantee will be reduced or the procedures to be applied to 
reduce the yield used to establish the production guarantee.
    Response: Not all situations will be reduced the same so it is not 
practical to put the provisions in the Crop Provisions. Some guidance 
is provided in the Basic Provisions and will be provided in the Crop 
Insurance Handbook. No change has been made.
    Comment: Two commenters state the reference to ``* * * any event or 
action of any of the items listed in section 3(b)(1) through (4) * * 
*'' in section 3(c) should be changed to refer to 3(b)(1), or possibly 
(1) and (4), since 3(b)(2) [number of bearing trees] and 3(b)(3) [age 
of trees and planting pattern] are not an ``event or action'' that will 
occur at a particular time and potentially reduce the yield used to 
establish the production guarantee.
    Response: FCIC agrees that the items listed are not all events or 
actions. The provisions have been revised to refer to any of the 
``situations'' specified in section 3(b)(1) through (4).
    In addition, FCIC has removed the phrase ``of any of the items'' in 
section 3(c) because it is not needed.
    Comment: A commenter states the phrase ``as indicated below'' at 
the end of the first sentence of 3(c) could be deleted since the 
subsequent phrase ``If the event or action occurred:'' leads in to 
sections 3(b)(1) through (3). Another commenter suggests revising the 
phrase ``as indicated below'' to state ``that occurred.''
    Response: As stated above, FCIC has revised the provisions to refer 
to the situations listed because some are not actions or events and 
deleted the phrase ``as indicated below.''
    Comment: A commenter states throughout sections 3(c) and 3(c)(1) 
through 3(c)(3), it is stated that ``We will reduce the yield used to 
establish your production guarantee, as necessary * * *'' when certain 
events or actions have occurred. The commenter questions whether those 
events or actions would include when a reduced yield is due to 
insurable or uninsurable causes of loss that are normally reflected 
when the yield used to establish the production guarantee is 
established or updated.
    Response: When situation occurs before the beginning of the 
insurance period, the yield used to establish the production guarantee 
will be reduced if the situation is due to either an insurable or 
uninsurable cause of loss. When the situation occurs after the 
beginning of the insurance period, regardless if the producer provides 
notification, the yield used to establish the production guarantee will 
be reduced if the event or action is due to an uninsurable cause of 
loss. FCIC has revised the provisions in sections 3(c)(1) through (3) 
to provide clarification.
    Comment: A commenter states the wording in section 3(c)(1) is 
unclear:
     The first sentence states ``[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.'' The phrases ``we will reduce the 
yield used to establish your production guarantee'' and ``as 
necessary'' are already stated in the preceding section 3(c). Perhaps 
this could be rewritten or rearranged to reduce the repetition.
     The second sentence states ``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.'' Is it intended that the production guarantee will 
be reduced in this case, instead of the yield used to establish your 
production guarantee as is stated in the rest of sections 3(c) and 
3(c)(1) through 3(c)(3), or should this also say ``yield used to 
establish your production guarantee?'' If the latter, then what is the 
difference in the penalty applied whether or not the producer notifies 
the reinsured company of the circumstance?
     The second sentence also states yield used to establish 
the production

[[Page 44713]]

guarantee will be reduced if the producer fails to notify the reinsured 
company ``* * * of any circumstance that may reduce your yields from 
previous levels * * *'' Will the yield used to establish the production 
guarantee be reduced if the producer fails to notify the reinsured 
company even if the ``circumstance'' does not reduce the yields used to 
establish the production guarantee after all? If not, the statement 
``we will reduce * * *'' needs to be modified with the phrase ``as 
necessary,'' as used in the first sentence and in sections 3(c) and 
3(c)(2).
     The second sentence should also be reworded to state ``If 
you fail to notify us of any reduction in your yields from previous 
levels due to any circumstance that reduces the crop's expected yield 
[or perhaps ``yield potential'' would be better] for the current crop 
year, we will reduce * * *'', rather than ``If you fail to notify us of 
any circumstance that may reduce your yields from previous levels, we 
will reduce * * *''
    Response: FCIC agrees the language in the first sentence of section 
3(c)(1) needs to be rewritten and has revised the language to reduce 
repetition. FCIC has also revised the same language in sections 3(c)(2) 
and 3(c)(3).
    FCIC agrees the language in the second sentence of section 3(c)(1) 
needs to be revised. The phrase ``we will reduce your production 
guarantee'' is replaced with the phrase ``we will reduce the yield used 
to establish your production guarantee.'' There is no difference in the 
penalty applied whether or not the producer notified the reinsured 
company of the circumstance prior to the beginning of the insurance 
period.
    If the producer fails to notify the reinsured company before the 
beginning of the insurance period and the circumstance does not reduce 
the yield used to establish the production guarantee, the producer's 
yield used to establish the production guarantee will not be reduced. 
FCIC does not agree the phrase ``as necessary'' needs to be added after 
the phrase ``we will reduce'' because it is clear in section 3(c) that 
the yield will only be reduced as necessary. The phrase has been 
removed in paragraphs (1) and (2),
    FCIC does not agree with the recommended rewording of the second 
sentence. The suggestion does not significantly change or clarify the 
provisions. No change has been made.
    Comment: Two commenters recommend language be added to the last 
sentence of section 3(c)(1) to read as follows: ``* * * If you fail to 
notify us of any circumstance that may reduce your yields from previous 
levels, we will reduce your production guarantee or assess uninsured 
cause of loss against your claim at any time we become aware of the 
circumstances.'' The phrase ``or assess uninsured cause of loss against 
your claim'' is the additional suggested language being proposed. 
Producers have a responsibility to report to the reinsured company 
damage and removal of trees, etc. If they report it to the reinsured 
company timely, the reinsured company can adjust their production 
guarantee and premium. There should be a penalty if they do not timely 
report this information and it is discovered by the adjuster at claim 
time. Currently there is no penalty, so there is little incentive to 
timely report this information to the reinsured company.
    Response: FCIC does not agree the additional suggested language be 
added. Section 3(c)(1) refers to circumstances that occur before the 
beginning of the insurance period. Coverage can never be provided for 
any damage occurring prior to the beginning of the insurance period. 
Therefore, premium cannot be charged and there cannot be any uninsured 
cause of loss appraisals for coverage that could not be provided. No 
change has been made.
    Comment: Two commenters ask, regarding sections 3(c)(2) and 
3(c)(3), will producers always be aware of an event or action that 
``may occur after the beginning of the insurance period * * *'' in 
order to notify the reinsured company of that potential event or 
action? And if such notification is not provided and the event or 
action does not occur, does section 3(c)(3) still require the reinsured 
company to do an appraisal and reduce the APH approved yield? In 
addition, section 3(c)(3) indicates how to handle the yield used to 
establish the production guarantee for the subsequent crop year but 
does not address what to do with the yield used to establish the 
production guarantee for the current crop year. Is the yield used to 
establish the production guarantee for the current crop year impacted 
in this situation?
    Response: Generally, producers should be aware of what is going on 
in their farming operations, including situations that may affect this 
year's crop production that may occur after the beginning of the 
insurance period (e.g., a planned orchard renovation). Therefore, the 
producers should be able to timely notify their reinsured company. In 
situations where a planned event (e.g., grafting of new varieties on 
existing trees) does not occur, then no adjustments are made since the 
situation did not occur. For situations impacting the yield used to 
establish the production guarantee after insurance has attached but the 
reinsured company was not notified, production lost due to uninsured 
causes equal to the amount of the reduction in the yield used to 
establish your production guarantee will be applied in determining any 
indemnity. The yield used to establish the production guarantee is not 
adjusted for the current crop year.
    Comment: A commenter states it is unclear how the appraisal in 
section 3(c)(3) will be applied, suggesting the following as a possible 
alternative wording: ``* * * an appraisal for production lost due to 
uninsured causes (see section 11(c)(1)(ii)) equal to the amount of the 
reduction in yield will be applied in determining any indemnity * * *''
    Response: FCIC agrees and has revised the provisions.
    Comment: A commenter states the provisions in section 3(d) are 
difficult to administer. The provisions state ``You may not increase 
your elected or assigned coverage level or the ratio of your price 
election to the maximum price election we offer if a cause of loss that 
could or would reduce the yield used to establish the production 
guarantee of the insured crop is evident prior to the time that you 
request the increase.'' The commenter recommends it be removed from the 
policy. The PAW contains the following question: ``Has damage (i.e. 
disease, hail, freeze) occurred to Trees/Vines/Bushes/Bog or have 
cultural practices been performed that will reduce the insured crop's 
production from previous levels?'' If damage has occurred, and the 
question has been answered `yes,' the yield used to establish the 
production guarantee will be adjusted accordingly to reflect the 
reduced potential production. This question on the PAW appears to 
address the issues this section is intending to handle. In addition, 
the sales closing dates are generally established based on the precept 
that any applications taken by that date will not be subject to adverse 
selection. If the decision is made to retain this provision, the 
commenter suggests clarifying what time frame is meant by ``* * * if a 
cause of loss * * * is evident prior to the time that you request the 
increase.'' A cause of loss that occurred the previous crop year would 
be ``prior to the time that you request the increase.'' Another 
suggestion is to rewrite this provision to read as follows: ``Your 
request to increase the coverage level or price election percentage 
will not be accepted if a cause of loss that could or would reduce the 
yield of the insured crop is evident when your request is made.''
    Response: This section was not included in the proposed rule, the

[[Page 44714]]

recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended change.

Section 6--Insured Crop

    Comment: Two commenters suggest revising the introductory language 
``* * * will be all of each stonefruit crop * * *'' to ``* * * will be 
any stonefruit crop * * *'' or ``* * * will be all acreage of each 
stonefruit crop * * *''
    Response: FCIC agrees and has revised the language to read ``will 
be all acreage of each stonefruit crop.''
    Comment: A commenter recommends capitalizing the first word in 
section 6(b)(3) to be consistent with the first word in the other 
paragraphs.
    Response: FCIC agrees and has revised the provision accordingly.
    Comment: A commenter supports the proposed change in section 
6(b)(5) to allow the crop to be insured if it meets the minimum 
production requirement in at least one of four years, as opposed to one 
in three years. This allows producers who may have had low yields due 
to circumstances beyond their control to still have an opportunity for 
coverage.
    Response: FCIC thanks the commenter for their support of this 
change.
    Comment: A commenter states section 6(b)(5) refers to the reinsured 
company's ``approval in writing'' to insure acreage that has not yet 
produced the required amount of lugs or tons per acre, while section 
6(b)(6) says the reinsured company ``may agree in writing'' to insure 
acreage that has not yet reached the fifth growing season after set 
out. The commenter asks whether the different phrases are intended to 
mean different things. The commenter asks whether ``agree in writing'' 
in section 6(b)(6) requires a written agreement while section 6(b)(5) 
does not? If not, consider using the same phrase to avoid confusion.
    Response: The two phrases are intended to mean the same thing. FCIC 
has revised the provision in 6(b)(6) to be consistent with the 
provision in 6(b)(5).
    Comment: A commenter states section 6(b)(6) states the stonefruit 
crop must have reached at least the fifth growing season after set out 
in order to be insurable. However, the reinsured company may agree in 
writing to insure acreage that has not reached this age if it meets the 
requirements of section 6(b)(5). The commenter states specific language 
relating to plums produced on scions and to grafted plums is not 
present in this section of the proposed rule. Language needs to be 
included to address insurability when these two situations are present.
    The commenter also states this proposed rule, as well as other 
perennial Crop Provisions, contain the following language in the: 
``[h]owever, we may agree in writing * * *'' or ``unless we inspect 
such acreage and give our approval in writing.'' However, the policy 
does not state the yield that will be applied if approval is granted. 
FCIC must add language to specify how the yield is set if crops have 
not met the minimum age or production requirement.
    Response: FCIC agrees language addressing the minimum insurability 
requirements for plums needs to be added. FCIC has addressed this by 
revising the provisions in section 6(b)(6) to include language 
regarding the minimum insurability requirements for trees that have 
been grafted.
    FCIC does not agree language needs to be added to the Stonefruit 
Crop Insurance Provisions to specify how the yield is set if crops have 
not met the minimum age or production requirement. It would be 
difficult to address in the Crop Provisions all scenarios when minimum 
age or production requirements are not met. Therefore, instructions for 
handling situations for which minimum age or production requirements 
are not met are contained in section 7F(2)(f) of the Crop Insurance 
Handbook.

Section 8--Insurance Period

    Comment: Two commenters state the end of the insurance period date 
in section 8(a)(2) for plums in California has been changed from 
September 30 to October 20. The background portion of the proposed rule 
indicates that based on published data plums can be harvested as late 
as October 20. The commenters are concerned about the increased 
exposure from extending this date and wondering if this extension 
should only apply to certain types of plum in certain areas rather than 
all plums in California. The commenters also asked what `published 
data' was used to support making this change.
    Response: Based on the published data and an analysis conducted by 
FCIC, any increased exposure due to extending the end of insurance 
period for all plums in California from September 30 to October 20 will 
be minimal. The published data to which FCIC is referring is the United 
States Department of Agriculture National Agricultural Statistics 
Service Agriculture Handbook Number 729, which is titled ``Fruits and 
Tree Nuts: Blooming, Harvesting, and Marketing Dates.'' According to 
this handbook, the Usual Harvesting Dates for Plums in California are 
May 15 through October 20. If other data becomes available that would 
warrant changing the end of insurance period for certain types of 
plums, section 8 of the Stonefruit Crop Insurance Provisions provides 
the flexibility to change the end of insurance period through the 
Special Provisions. No change has been made.
    Comment: A commenter recommends consolidating and revising sections 
8(a)(2)(ii) and 8(a)(2)(iii) to read as follows: ``(ii) September 30 
for all nectarines and peaches, and for all fresh plums in states other 
than California.''
    Response: FCIC does not agree with consolidating and revising 
sections 8(a)(2)(ii) and 8(a)(2)(iii). While the dates may be the same, 
combining sections 8(a)(2)(ii) and 8(a)(2)(iii) as recommended may 
cause confusion. The suggested revision could be interpreted to mean 
all nectarines, all peaches and all plums in all states except 
California have an end of insurance period of September 30, rather than 
all nectarines and all peaches in all states have a September 30 end of 
insurance period and only plums in California have an end of insurance 
period of September 30. No change has been made.
    Comment: Two commenters state the phrase ``* * * after an 
inspection * * *'' in section 8(b)(1) should be removed. If damage has 
not generally occurred in the area where such acreage is located, it 
should be up to the reinsured company's discretion to decide whether 
the acreage needs an inspection to be considered acceptable. The 
language in this section already refers to the reinsured company having 
the ability to consider the acreage acceptable. Since the acreage and 
production reporting dates are after insurance attaches, the reinsured 
company may not know if the acreage was acquired after coverage began, 
but before the acreage reporting date. The commenters state reinsured 
companies need the right to inspect if they deem necessary, but this 
should not be a requirement.
    The commenters also recommend language be added to section 8(b)(1) 
to allow reinsured companies the opportunity to inspect and insure any 
additional acreage that is acquired after the acreage reporting date if 
they wish to do so. Reinsured companies should have the opportunity to 
accept or deny coverage in these types of situations. This would be 
similar to what is currently allowed for acreage that is not reported 
per section 6(f) of the Basic Provisions.

[[Page 44715]]

    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended changes. 
However, with respect to acreage acquired after the acreage report, 
section 6(f) of the Basic Provisions, which allows the reinsured 
company to determine by unit the insurable crop acreage, share, type 
and practice, or to deny liability if the producer fails to report all 
units, would apply. The Crop Insurance Handbook also allows for 
reinsured company to revise an acreage report to increase liability if 
the crop is inspected and the appraisal indicates the crop will produce 
at least 90 percent of the yield used to determine the guarantee or 
amount of insurance for the unit.
    Comment: Two commenters state the language in section 8(c) was 
added to most, if not all, of the perennial crops several years ago. 
The commenters are in agreement with the concept of continuous coverage 
applying for carryover producers but do have some concerns with 
language as it currently reads. The current language indicates, for 
each subsequent crop year, the policy remains continuously in force and 
coverage begins on the day immediately following the end of the 
insurance period for the prior crop year. The commenters question what 
happens if the damage occurs to next crop year's buds prior to this 
crop year's end of the insurance period. The commenters ask whether 
damage such as this is intended to be covered by this language. For 
example, assume a producer is insured and a severe hail storm occurs in 
July. This damage may injure this crop year's crop as well as the buds 
that will produce next crop year's crop. However, this damage would be 
outside the current insurance period based on the current language. If 
the intent is to cover this damage for carryover producers, the 
language should be revised to something along the lines of the language 
in the Adjusted Gross Revenue handbook, which states damage due to 
insurable causes of loss occurring during the previous crop year is 
covered. The commenters state it will be difficult to assess such 
damage and that it should be covered under the policy. If this is not 
the intent, it should be stated very clearly that we will not cover 
damage that occurs the previous crop year if such damage occurs prior 
to the end of the previous crop year's end of insurance period.
    Response: The Stonefruit Crop Provisions do not provide coverage 
for damage to fruit if the damage occurs outside of the insurance 
period. FCIC recognizes situations such as the one highlighted by the 
commenter may occur, but believes from contacts within the agronomic 
community that the likelihood of those situations occurring is rare. 
This section was not included in the proposed rule, and the public was 
not provided an opportunity to comment. Therefore, FCIC cannot make 
changes to this section. However, FCIC will take into consideration the 
situation highlighted by the commenter and evaluate further if coverage 
should be included in the Stonefruit Crop Provisions in the future.
    Comment: Two commenters suggest adding a comma after ``* * * and 
termination dates * * *'' in section 8(d).
    Response: Although this section was not included in the proposed 
rule, FCIC agrees and has revised the provisions accordingly since it 
is merely a technical correction and does not change the meaning or 
intent of the provision.

Section 9--Causes of Loss

    Comment: A commenter recommends the insured cause of loss in 
section 9(a)(2) be clarified as ``Fire, due to natural causes, * * *'' 
(or ``Fire, if caused by lightning, * * *'' as in the proposed rule 
revisions to the Tobacco Crop Insurance Provisions).
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended changes. 
However, section 12 of the Basic Provisions already states all insured 
causes of loss must be due to a naturally occurring event. In addition, 
the Federal Crop Insurance Act is clear that only natural causes can be 
covered under the policy.
    Comment: A commenter recommends considering if all of section 
9(a)(3) of the Plum Crop Insurance Provisions, ``Wildlife, unless 
control measures have not been taken,'' should be added to section 
9(a)(3) of the Stonefruit Crop Insurance Provisions, which only states 
``Wildlife.''
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended changes.
    Comment: A commenter recommends considering if section 9(a)(3) of 
the Plum Crop Insurance Provisions regarding insufficient number of 
chilling hours to effectively break dormancy should be added to section 
9(a) in the Stonefruit Crop Insurance Provisions as an insurable cause 
of loss.
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended changes.
    Comment: A commenter states section 9(b)(2) of the existing Plum 
Crop Insurance Provisions states that rejection of the crop by the 
packing house due to being undersized, immature, overripe, or 
mechanically damaged is excluded as a covered cause of loss but is not 
excluded in this proposed rule. This language needs to be added back 
into the 2011 Stonefruit Crop Insurance Provisions as recent crop 
harvests have produced an abundance of good fruit, which results in 
lack of market due to high volume. The high volume of fruit results in 
packers rejecting what would normally be a nice sized piece of fruit. 
Although the language indicating what is covered is very specific and 
section 9(b)(3) of the Stonefruit Crop Insurance Provisions is also 
specific in the reference that inability to market is not covered, this 
particular language may prevent a misunderstanding among producers, RMA 
and reinsured companies as to the scope of coverage.
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended changes. 
However, section 9(b)(3) of the Stonefruit Crop Insurance Provisions 
states ``Inability to market the insured crop for any reason other than 
actual physical damage from an insurable cause of loss specified in 
this section. For example, we will not pay you an indemnity if you are 
unable to market due to quarantine, boycott, or refusal of any person 
to accept production.'' Therefore, rejection of the crop by the packing 
house is addressed under section 9(b)(3) of the Stonefruit Crop 
Insurance Provisions.

Section 10--Duties in the Event of Damage or Loss

    Comment: Two commenters state the language in the second sentence 
of section 10(b) states, in part, that ``We will conduct an appraisal 
that will be used to determine your production to count * * *'' The 
commenters

[[Page 44716]]

recommend this language be revised as follows: ``We will conduct an 
appraisal that may be used to determine your production to count * * 
*'' Additional language in this paragraph indicates that ``* * * These 
appraisals, and any acceptable records provided by you, will be used to 
determine your production to count * * *'' The commenters state the 
reinsured company needs to maintain the ability to use the records if 
the reinsured company believes they are more accurate than the 
appraisal, as noted in this additional language. Therefore, the word 
``will'' should be changed to ``may'' in order to allow reinsured 
companies the flexibility to apply this language accordingly.
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended changes. his 
provision is consistent with provisions in other Crop Provisions, such 
as apples and pears, that contain language regarding production that is 
sold by direct marketing.
    Comment: A commenter states section 10(c) states ``* * * you must 
give us notice at least 15 days prior to the beginning of harvest * * 
*'' The Plum Crop Insurance Provisions also includes the following 
phrase ``* * * or immediately if damage is discovered during harvest, 
so that we may inspect the damaged production.'' The commenter asks if 
this is no longer needed, or should it be included in the new 
Stonefruit Crop Insurance Provisions.
    Response: This section was not included in the proposed rule, the 
recommended change is substantive or could have unintended 
consequences, and the public was not provided an opportunity to 
comment. Therefore, FCIC cannot consider the recommended changes.
    Comment: Two commenters suggest adding a comma after ``* * * If you 
fail to notify us * * *'' in section 10(c).
    Response: Although this section was not included in the proposed 
rule, FCIC agrees and has revised the provisions accordingly, since it 
is merely a technical correction and does not change the meaning or 
intent of the provision.

Section 11--Settlement of Claim

    Comment: Two commenters noted the quality loss adjustment 
instructions in the Stonefruit Loss Adjustment Standards Handbook 
(LASH) need to be clarified. There have been questions surrounding 
quality for a number of years. The intent of the policy language 
relative to handling quality adjustment needs to be clearly spelled out 
in the final version of the Stonefruit LASH.
    Response: FCIC will update the Stonefruit LASH to reflect any 
changes regarding quality adjustment made in the Final Rule, as 
applicable, and to clarify otherwise ambiguous language.
    Comment: Two commenters state the settlement of claim example 
references the term ``guarantee'' throughout and recommend this 
reference be changed to ``production guarantee'' when reference is 
intended on a per acre basis as this is the term defined in the Basic 
Provisions. Additionally, the settlement of claim example is overly 
simplistic and could be considered misleading. The language that states 
in part ``You are only able to harvest 5,000 lugs * * *'' could lead 
someone to believe production to count for the claim is based on `the 
amount of lugs they are able to harvest.' The commenters recommend 
revising the language to state something like ``You only produce 5,000 
lugs as production to count.'' The commenters would also like to see an 
example for a quality loss situation. It is simple when the entire 
fresh crop is rejected, sent to the processor, and a bulk price per 
pound is received for all the fruit. However, the commenters would like 
to see an example which is more realistic and likely to occur in which 
the stonefruit is grown for fresh market and is delivered to the 
packer. Assume that some of the fruit makes grade and receives full 
price. Some of the fruit receives a slightly reduced price and 
additional fruit receives varying prices less than 75 percent of the 
marketable value. The Stonefruit LASH requires the reinsured company 
field grade the fruit in the field, and it is very unclear whether the 
reinsured company uses the field grade, or the fruit pack-out, or a 
combination of both, and how all of this fits together to determine the 
final production to count for the claim. This has been a questionable 
issue for a number of years and this would be a great opportunity to 
clarify the intent via an example in the Stonefruit Crop Insurance 
Provisions. This would also provide clear direction for additional 
support and clarification that is also needed in the Stonefruit LASH.
    Response: FCIC agrees and has replaced the term ``guarantee'' in 
the settlement of claim example with the term ``production guarantee'' 
when reference is intended on a per acre basis. FCIC agrees the 
sentence ``You are only able to harvest 5,000 lugs.'' is misleading and 
has revised it as ``You harvest 5,000 lugs.'' FCIC has also revised the 
sentence ``You are only able to harvest 3,000 lugs'' in Scenario 2 as 
``You harvest 3,000 lugs.''
    FCIC also agrees the settlement of claim example is simplified. As 
with other Crop Provisions, the settlement of claim example provided in 
the Stonefruit Crop Insurance Provisions is intended to be a simple 
step-by-step example. FCIC will revise the Stonefruit LASH to include 
examples of more complex situations and information suggested by the 
commenters.
    Comment: A commenter recommends adding a hyphen between ``25,000'' 
and ``lug'' in scenario 1, step 1, of the settlement of claim section. 
The commenter also recommends adding a hyphen between ``25,000'' and 
``lugs'' and ``15,000'' and ``lugs'' in scenario 2, step 1.
    Response: FCIC agrees and has revised the provisions accordingly. 
In scenario 2, step 1, FCIC also replaced the word ``lugs'' with the 
word ``lug'' to be consistent with the terminology used in scenario 1, 
step 1.
    Comment: A commenter states section 11(c)(3), which references the 
quality adjustment for the value of insured damaged fruit, is not 
clear. The commenter asks if the price the packer is going to pay will 
be used or will there be a reduction in value listed in the Special 
Provisions for that particular grade of fruit.
    Response: The price the packer pays, minus any adjustments for 
costs incurred for harvest and delivery if allowed by the Special 
Provisions, is the price used to value the damaged fruit. A reduction 
in value for that particular grade of fruit will not be listed in the 
Special Provisions.
    Comment: Two commenters suggest inserting the phrase ``for the same 
type'' after the portion of section 11(c)(4)(i) that states ``* * * the 
highest price election * * *'' This will clarify that the price 
election used for this computation is based on that for the same type 
that is being quality adjusted and is needed whenever the price 
election varies by type. Paragraph 11(c)(4)(ii) already contains 
similar language but the commenter recommends changing ``* * * 
available for that type'' to ``* * * available for the same type.''
    Response: FCIC agrees and has revised sections 11(c)(4)(i) and 
11(c)(4)(ii) accordingly.
    In addition to the changes described above, FCIC has made the 
following changes:
    1. Added a definition of ``graft'' due to added provisions in 
section 6(b)(6);
    2. Revised section 3(c)(2) to clarify the yield used to establish 
the production

[[Page 44717]]

guarantee will be reduced only if the potential reduction in yield is 
due to an uninsured cause of loss; and
    3. Removed the introductory phrase, ``Notwithstanding paragraph 
(a)(1) of this section, for'' and replaced it with the word ``For'' in 
section 8(c) to be consistent with other Crop Provisions, such as 
apples and grapes; and
    4. Revised section 11(b)(2), section 11(b)(4), and the settlement 
of claim examples to address the applicability of the percent of the 
price election.

List of Subjects in 7 CFR Part 457

    Crop Insurance, Stonefruit, Reporting and recordkeeping 
requirements.

Final Rule

0
Accordingly, as set forth in the preamble, the Federal Crop Insurance 
Corporation amends 7 CFR part 457 effective for the 2011 and succeeding 
crop years for the Stonefruit Crop Insurance Provisions.

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(1), 1506(o).


Sec.  457.157  [Removed and reserved]

0
2. Section 457.157 is removed and reserved.
0
3. Amend Sec.  457.159 as follows:
0
a. Amend the introductory text by removing ``2001'' and adding ``2011'' 
in its place;
0
b. Remove the undesignated paragraph immediately preceding section 1. 
Definitions;
0
c. Add definitions in section 1 for ``grade standards'' and ``graft'';
0
d. Remove the definitions in section 1 for ``grading standards'' and 
``varietal group'';
0
e. Revise the definitions in section 1 for ``harvest'', ``lug'', 
``marketable'', ``stonefruit'' and ``type'';
0
f. Remove the word ``Notwithstanding'' in the introductory text in 
section 2 and add in its place the phrase ``In lieu of'';
0
g. Revise section 2(b);
0
h. Revise section 3(a);
0
i. Amend the introductory text in section 3(b) and section 3(b)(4)(i) 
by removing the phrase ``or varietal group'' in all instances where it 
is found;
0
j. Amend section 3 by redesignating paragraph (c) as paragraph (d) and 
designating the undesignated paragraph following paragraph (b)(4)(iii) 
as paragraph (c);
0
k. Revise redesignated section 3(c);
0
l. Revise redesignated section 3(d);
0
m. Amend section 4 by adding the phrase ``, or as specified in the 
Special Provisions'' after the word ``states'';
0
n. Amend section 5 by adding the phrase ``, or as specified in the 
Special Provisions'' after the word ``states'';
0
o. Amend the introductory text in section 6 by adding the word 
``acreage'' after the word ``all'';
0
p. Revise section 6(b);
0
q. Remove sections 6(c), 6(d), 6(e), 6(f) and 6(g);
0
r. Revise section 8(a)(2)(ii);
0
s. Amend section 8 by redesignating paragraph (a)(2)(iii) as (a)(2)(v) 
and adding new paragraphs (a)(2)(iii) and (a)(2)(iv);
0
t. Amend section 8(c) by removing the phrase ``Notwithstanding 
paragraph (a)(1) of this section, for'' and adding in its place the 
word ``For'';
0
u. Amend section 8(d) by adding a comma after the phrase ``termination 
dates'';
0
v. Revise section 11(b);
0
w. Amend section 11(c)(3)(ii) by removing the word ``grading'' and 
adding the word ``grade'' in its place in both instances it is found; 
and
0
x. Revise section 11(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.
    Graft. To unite a shoot or bud with a rootstock in accordance with 
recommended practices to form a living union.
    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
                             Crop                               per 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 as specified in the Special Provisions, or 
if stonefruit production fails to meet the applicable grade standards, 
stonefruit production that 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.
* * * * *
    2. Unit Division.
* * * * *
    (b) Optional Units by Type: Optional units may be established by 
type if allowed by the Special Provisions.
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
* * * * *
    (a) You may select only one price election and coverage level for 
each crop grown in the county and listed in the Special Provisions that 
is insured under this policy. If separate price elections are available 
by type of a crop, 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 of cling peach, you must choose 100 percent 
of the maximum price election for all other types of cling peaches.
* * * * *
    (c) We will reduce the yield used to establish your production 
guarantee, as necessary, based on our estimate of the effect of any 
situation listed in sections 3(b)(1) through (b)(4). If the situation 
occurred:
    (1) Before the beginning of the insurance period, the yield used to 
establish your production guarantee will be reduced for the current 
crop year regardless of whether the situation was

[[Page 44718]]

due to an insured or uninsured cause of loss. If you fail to notify us 
of any circumstance that may reduce your yields from previous levels, 
we will reduce the yield used to establish 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, the yield used to 
establish your production guarantee will be reduced for the current 
crop year only if the potential reduction in the yield used to 
establish your production guarantee is due to an uninsured cause of 
loss; or
    (3) Or may occur after the beginning of the insurance period and 
you fail to notify us by the production reporting date, production lost 
due to uninsured causes equal to the amount of the reduction in yield 
used to establish your production guarantee will be applied in 
determining any indemnity (see 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, after being set out or grafted, reached at least the 
fifth growing season. However, we may give our approval 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) * * *
* * * * *
    (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) 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 by its respective 
production guarantee;
    (2) Multiplying each result of section 11(b)(1) by the respective 
price election for the type and by the percent of the price election;
    (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 and by the percent of 
the 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 50.0 acres of Type A stonefruit with 100 percent share in 
the unit. The production guarantee is 500.0 lugs per acre and the price 
election is $6.00 per lug. You harvest 5,000 lugs. Your indemnity would 
be calculated as follows:
    (1) 50.0 acres x 500.0 lugs = 25,000-lug production guarantee;
    (2) 25,000 lugs x $6.00 price election x 100 percent of the price 
election = $150,000 value of production guarantee;
    (4) 5,000 harvested lugs x $6.00 price election x 100 percent of 
the price election = $30,000 value of production to count;
    (6) $150,000-$30,000 = $120,000 loss; and
    (7) 120,000 x 1.000 share = $120,000 indemnity payment.
    Scenario 2:
    In addition to the above information in Scenario 1, you have an 
additional 50.0 acres of Type B stonefruit with 100 percent share in 
the unit. The production guarantee is 300.0 lugs per acre and the price 
election is $3.00 per lug. You harvest 3,000 lugs. Your indemnity would 
be calculated as follows:
    (1) 50.0 acres x 500.0 lugs Type A = 25,000-lug guarantee; and 50.0 
acres x 300.0 lugs Type B = 15,000-lug guarantee;
    (2) 25,000 lugs x $6.00 price election x 100 percent of the price 
election = $150,000 value of guarantee for Type A; and 15,000 lugs x 
$3.00 price election x 100 percent of the price election = $45,000 
value of guarantee for Type B;
    (3) $150,000 + $45,000 = $195,000 total value of production 
guarantee;
    (4) 5,000 harvested lugs Type A x $6.00 price election x 100 
percent of the price election = $30,000 value of production to count; 
and 3,000 harvested lugs Type B x $3.00 price election x 100 percent of 
the price election = $9,000 value of production to count;
    (5) $30,000 + $9,000 = $39,000 total value of production to count;
    (6) $195,000-$39,000 = $156,000 total loss; and
    (7) $156,000 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 for the same type 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 the same type.
* * * * *

    Signed in Washington, DC, on July 21, 2010.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2010-18359 Filed 7-28-10; 8:45 am]
BILLING CODE 3410-08-P