[Federal Register Volume 76, Number 233 (Monday, December 5, 2011)]
[Proposed Rules]
[Pages 75805-75809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31083]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

[Docket No. FCIC-11-0007]
RIN 0563-AC36


Common Crop Insurance Regulations; Prune Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to 
amend the Common Crop Insurance Regulations, Prune Crop Insurance 
Provisions to remove the quality adjustment provisions for substandard 
prunes and to make other changes to clarify policy provisions. 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 2013 and succeeding crop years.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business February 3, 2012 and will be 
considered when the rule is to be made final.

ADDRESSES: FCIC prefers that comments be submitted electronically 
through the Federal eRulemaking Portal. You may submit comments, 
identified by Docket ID No. FCIC-11-0007, by any of the following 
methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Director, Product Administration and Standards 
Division, Risk Management Agency, United States Department of 
Agriculture, P.O. Box 419205, Kansas City, MO 64133-6205.

    All comments received, including those received by mail, will be 
posted without change to http://www.regulations.gov, including any 
personal information provided, and can be accessed by the public. All 
comments must include the agency name and docket number or Regulatory 
Information Number (RIN) for this rule. For detailed instructions on 
submitting

[[Page 75806]]

comments and additional information, see http://www.regulations.gov. If 
you are submitting comments electronically through the Federal 
eRulemaking Portal and want to attach a document, we ask that it be in 
a text-based format. If you want to attach a document that is a scanned 
Adobe PDF file, it must be scanned as text and not as an image, thus 
allowing FCIC to search and copy certain portions of your submissions. 
For questions regarding attaching a document that is a scanned Adobe 
PDF file, please contact the RMA Web Content Team at (816) 823-4694 or 
by email at [email protected].
    Privacy Act: Anyone is able to search the electronic form of all 
comments received for any dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review the 
complete User Notice and Privacy Notice for Regulations.gov at http://www.regulations.gov/#!privacyNotice.

FOR FURTHER INFORMATION CONTACT: Chief, Policy Administration Branch, 
Product Administration and Standards Division, Risk Management Agency, 
at the Kansas City, MO, address listed above, telephone at (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.

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.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments. The review reveals that this regulation will not have 
substantial and direct effects on Tribal governments and will not have 
significant Tribal implications.

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 or 7 CFR part 400, subpart 
J for the informal review process of good farming practices as 
applicable, must be exhausted before any action against FCIC 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 revising Sec.  457.133, Prune Crop Insurance 
Provisions, to be effective for the 2013 and succeeding crop years. 
Several requests have been made for changes to improve the coverage 
offered, address program integrity issues, and improve clarity of the 
Prune Crop Insurance Provisions.
    The proposed changes to Sec.  457.133 are as follows:
    1. FCIC proposes to remove the paragraph immediately preceding 
section 1 which refers to the order of priority in the event of a 
conflict. This same information is contained in the Basic Provisions. 
Therefore, it is duplicative and should be removed in the Crop 
Provisions.
    2. Section 1--FCIC proposes to remove the definitions of ``market 
price for standard prunes'' and ``substandard prunes.'' These terms and 
definitions are no longer needed with the proposed

[[Page 75807]]

removal of quality adjustment for substandard prunes in section 11(e).
    FCIC proposes to revise the definition of ``standard prunes'' to 
replace the phrase ``grading standards'' with the phrase ``grade 
standards.'' The term ``grade standards,'' rather than ``grading 
standards,'' is consistent with terminology in other Crop Provisions 
administered by FCIC and is a more accurate term.
    3. Section 3--FCIC proposes to revise paragraphs (a) and (b) to 
remove the phrase ``varietal group'' and replace it with the word 
``type'' everywhere it appears. Varietal groups are typically 
identified in the Special Provisions. However, prunes are not 
categorized by varietal group in the Special Provisions, rather they 
are categorized by type. Therefore, using the word ``type'' is more 
appropriate.
    FCIC proposes to redesignate section 3(c) as section 3(d) and 
designate the undesignated paragraph following section 3(b) as section 
3(c). FCIC proposes to revise newly designated section 3(c) to add 
provisions to specify how yields will be reduced if an event or action 
occurs that may reduce the yield potential based on when the situation 
is reported. The current provision states that the insurance provider 
will reduce the yield used to establish the insured's production 
guarantee, but does not tell when or how. The proposed section 3(c)(1) 
states that if a situation that may reduce the insured's yield is 
reported before the beginning of the insurance period, the yield used 
to establish the insured's production guarantee will be reduced for the 
current crop year regardless of whether the situation was due to an 
insured or uninsured cause of loss. The proposed section 3(c)(2) states 
that if a situation that may reduce the insured's yield is reported 
after the beginning of the insurance period and the insured notifies 
the insurance provider by the production reporting date, the yield used 
to establish the insured's production guarantee will be reduced for the 
current crop year only if the potential reduction in the yield used to 
establish the insured's production guarantee is due to an uninsured 
cause of loss. The proposed section 3(c)(3) states that if a situation 
that may reduce the insured's yield is reported after the beginning of 
the insurance period and the insured fails to notify the insurance 
provider by the production reporting date, an amount equal to the 
reduction in the yield will be added to the production to count 
calculated in section 11(c) due to uninsured causes and the insurance 
provider will reduce the yield used to establish the insured's 
production guarantee for the subsequent crop year.
    FCIC also proposes to revise newly designated section 3(c) to 
remove the list of possible situations that affect yield and instead 
refer back to section 3(b), which contains the same information. This 
eliminates redundancy and is consistent with other perennial Crop 
Provisions, such as apples, grapes, and stonefruit.
    4. Section 6--FCIC proposes to revise section 6(c) by removing the 
requirements for the insured crop to be grown on tree varieties that 
were commercially available at set out and tree varieties that are 
adapted to the area because these provisions have created confusion as 
to which varieties meet these requirements. FCIC proposes to add a 
requirement for the insured crop to be grown on trees that are listed 
in the Special Provisions. This provision will eliminate any confusion 
as to which varieties are insurable because insurable varieties will be 
listed in the Special Provisions. FCIC proposes to remove the 
requirement for trees to be irrigated because insurable practices are 
listed in the Special Provisions.
    5. Section 8--FCIC proposes to revise section 8(a) to state that 
the year of application coverage begins on March 1. FCIC proposes to 
revise section 8(c) to remove the phrase ``Notwithstanding paragraph 
(a)(1) of this section.'' These changes will allow continuous coverage 
of the citrus fruit from year to year with no gaps in coverage. This 
proposed change is consistent with other perennial Crop Provisions, 
such as apples and grapes.
    6. Section 9--FCIC proposes to add provisions in section 9(a) that 
allow insects and disease to be insurable causes of loss unless damage 
is due to insufficient or improper application of control measures. 
FCIC proposes to remove the provisions in section 9(b)(1) that excludes 
insects and disease from insurability unless adverse weather prevents 
the proper application of control measures or causes properly applied 
control measures to be ineffective or causes disease or insect 
infestation for which no effective control mechanism is available. This 
will make insects and disease a presumed insurable cause of loss unless 
one of the stated conditions exists as opposed to a presumed 
uninsurable cause of loss unless one of the stated conditions exists.
    7. Section 10--FCIC proposes to add a new section 10(a) to clarify 
the insured must leave representative samples for appraisal purposes in 
accordance with the Basic Provisions. The rest of the provisions are 
proposed to be redesignated.
    8. Section 11--FCIC proposes to revise section 11(b) to remove the 
phrase ``varietal group'' and replace it with the word ``type'' 
everywhere it appears. As stated above, varietal groups are typically 
identified in the Special Provisions. However, prunes are not 
categorized by varietal group in the Special Provisions, rather they 
are categorized by type. Therefore, using the word ``type'' is more 
appropriate.
    FCIC proposes to revise the settlement of claim examples in section 
11(b). FCIC proposes to revise the example by changing the term 
``varietal group'' to ``type'' everywhere it appears in the example for 
reasons stated above. FCIC proposes to revise the example to illustrate 
the correct rounding of decimals and to identify units consistently. 
FCIC also proposes to revise the introductory paragraph of the second 
part of the example to clarify that information contained in the second 
part of the example is in addition to the information contained in the 
first part of the example. These changes are proposed to improve 
accuracy and readability of the example.
    FCIC proposes to revise section 11(c) to replace the phrase ``grade 
substandard or better'' with the phrase ``meet the definition of 
standard prunes.'' The phrase ``grade substandard or better'' is no 
longer applicable with the proposed removal of quality adjustment for 
substandard prunes in section 11(e).
    FCIC proposes to remove section 11(e) which removes the provisions 
regarding quality adjustment for substandard prunes. The calculation 
used to determine the quality adjustment factor was the value per ton 
of substandard prunes divided by the market price per ton for standard 
prunes. In addition, there was a statement on the Special Provisions 
that reduced the value per ton by the harvest cost per ton prior to 
calculating the quality adjustment factor. The value per ton of 
substandard prunes is a value published by the Prune Bargaining 
Association (PBA). In recent years, PBA has either not published a 
substandard price or has published a price that is near or below zero. 
In some instances, PBA's value per ton for substandard prunes was so 
low that when the harvest cost per ton specified in the Special 
Provisions was deducted from the value per ton, the result was less 
than zero. When the value of substandard prunes is less than or equal 
to zero, substandard prune production does not count as production to 
count for claims purposes. The quality adjustment

[[Page 75808]]

procedure was burdensome to the producer and the insurance provider who 
had to wait until the PBA published prices to settle claims and it 
generally had little to no effect on indemnities so the quality 
adjustment procedures are being removed from the policy. As proposed, 
only counting as production to count those prunes that meet the 
specified standards will take into consideration the quality of the 
prunes.

List of Subjects in 7 CFR Part 457

    Crop insurance, Prunes, 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 2013 and succeeding crop years to read 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).

    2. Amend Sec.  457.133 as follows:
    a. Amend the introductory text by removing ``2001'' and adding 
``2013'' in its place;
    b. Remove the undesignated paragraph immediately preceding section 
1;
    c. Amend section 1 to:
    i. Remove the definitions of ``market price for standard prunes'' 
and ``substandard prunes''; and
    ii. Amend the definition of ``standard prunes'' by removing the 
word ``grading'' and replacing it with the word ``grade'' in paragraph 
(b);
    d. Amend section 3 to:
    i. Revise paragraph (a);
    ii. Revise paragraph (b);
    iii. Designate the undesignated paragraph following paragraph (b) 
as paragraph (c);
    iv. Revise newly designated paragraph (c); and
    v. Redesignate paragraph (c) as paragraph (d);
    e. Amend section 6 to:
    i. Revise paragraph (c); and
    ii. Remove paragraphs (d) and (e);
    f. Revise section 8(a)(1);
    g. Amend section 8(c) by removing the phrase ``Notwithstanding 
paragraph (a)(1) of this section, for'' and replacing it with the word 
``For'';
    h. Amend section 9(a)(5) by removing the word ``or'' after the 
semicolon at the end of the sentence;
    i. Amend section 9(a)(6) by removing the period at the end of the 
sentence and adding a semicolon in its place;
    j. Add a new section 9(a)(7);
    k. Add a new section 9(a)(8);
    l. Revise section 9(b);
    m. Amend section 10 to:
    i. Designate the introductory text as paragraph (b) and adding a 
new paragraph (a); and
    ii. Redesignate paragraphs (a) through (d) in redesignated 
paragraph (b) as (1) through (4), respectively;
    n. Amend section 11 to:
    i. Revise paragraph (b);
    ii. Revise paragraph (c); and
    iii. Remove paragraph (e).
    The additions and revisions read as follows:


Sec.  457.133  Prune crop insurance provisions.

* * * * *
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) You may select only one price election for all the prunes in 
the county insured under this policy unless the Special Provisions 
provide different price elections by type, in which case you may select 
one price election for each type designated in the Special Provisions. 
The price elections you choose for each type must have the same 
percentage relationship to the maximum price offered by us for each 
type. For example, if you choose 100 percent of the maximum price 
election for one type, you must also choose 100 percent of the maximum 
price election for all other types.
    (b) You must report, by the production reporting date designated in 
section 3 of the Basic Provisions, by type if applicable:
* * * * *
    (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 the effect of any 
such situation listed in section 3(b) that may occur. If you fail to 
notify us of any situation in section 3(b), we will reduce the yield 
used to establish your production guarantee at any time we become aware 
of the circumstance. If the situation in 3(b) is reported:
    (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 due to an insured or 
uninsured cause of loss;
    (2) 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) After the beginning of the insurance period and you fail to 
notify us by the production reporting date, an amount equal to the 
reduction in the yield will be added to the production to count 
calculated in section 11(c) due to uninsured causes when determining 
any indemnity. We will reduce the yield used to establish your 
production guarantee for the subsequent crop year.
* * * * *
    6. Insured Crop.
* * * * *
    (c) That are grown on trees that:
    (1) Are listed in the Special Provisions;
    (2) Are grown on rootstock that is adapted to the area;
    (3) Are grown in an orchard that, if inspected, is considered 
acceptable by us; and
    (4) Have reached at least the seventh growing season after being 
set out.
* * * * *
    8. Insurance Period.
    (a) * * *
    (1) For the year of application, coverage begins on March 1.
* * * * *
    9. Causes of Loss.
    (a) * * *
* * * * *
    (7) Insects, but not damage due to insufficient or improper 
application of pest control measures; or
    (8) Plant disease, but not damage due to insufficient or improper 
application of disease control measures.
    (b) In addition to the causes of loss excluded in section 12 of the 
Basic Provisions, we will not insure against damage or loss of 
production due to inability to market the prunes for any reason other 
than actual physical damage from an insurable cause specified in this 
section. For example, we will not pay you an indemnity if you are 
unable to market due to quarantine, boycott, or refusal of any person 
to accept production.
    10. Duties in the Event of Damage or Loss.
    (a) In accordance with the requirements of section 14 of the Basic 
Provisions, you must leave representative samples in accordance with 
our procedures.
* * * * *
    11. Settlement of Claim.
* * * * *

[[Page 75809]]

    (b) * * *
    (1) Multiplying the insured acreage for each type, if applicable, 
by its respective production guarantee;
    (2) Multiplying the result of 11(b)(1) by the respective price 
election for each type, if applicable;
    (3) Totaling the results of section 11(b)(2) if there is more than 
one type;
    (4) Multiplying the total production to count (see section 11(c)), 
of each type, if applicable, by its respective price election;
    (5) Totaling the results of section 11(b)(4) if there is more than 
one type;
    (6) Subtracting the result of section 11(b)(4) from the result of 
section 11(b)(2) if there is only one type or subtracting the result of 
section 11(b)(5) from the result of section 11(b)(3) if there is more 
than one type; and
    (7) Multiplying the result of section 11(b)(6) by your share.
    For example:
    You select 75 percent coverage level, 100 percent of the price 
election, and have a 100 percent share in 50.0 acres of type A prunes 
in the unit. The production guarantee is 2.5 tons per acre and your 
price election is $630.00 per ton. You harvest 10.0 tons. Your 
indemnity would be calculated as follows:
    (1) 50.0 acres x 2.5 tons = 125.0 ton production guarantee;
    (2) 125.0 ton guarantee x $630.00 price election = $78,750 value of 
production guarantee;
    (4) 10.0 tons x $630.00 price election = $6,300 value of production 
to count;
    (6) $78,750 - $6,300 = $72,450 loss; and
    (7) $72,450 x 1.000 share = $72,450 indemnity payment.
    In addition to the information in the first example, you have an 
additional 50.0 acres of type B prunes with 100 percent share in the 
same unit. The production guarantee is 2.0 tons per acre and the price 
election is $550.00 per ton. You harvest 5.0 tons. Your total indemnity 
for both types A and B would be calculated as follows:
    (1) 50.0 acres x 2.5 tons = 125.0 ton production guarantee for type 
A and 50.0 acres x 2.0 tons = 100.0 ton production guarantee for type 
B;
    (2) 125.0 ton guarantee x $630.00 price election = $78,750 value of 
production guarantee for type A and 100.0 ton guarantee x $550.00 price 
election = $55,000 value production guarantee for type B;
    (3) $78,750 + $55,000 = $133,750 total value of production 
guarantee;
    (4) 10.0 tons x $630.00 price election = $6,300 value of production 
to count for type A and 5.0 tons x $550.00 price election = $2,750 
value of production to count for type B;
    (5) $6,300 + $2,750 = $9,050 total value of production to count;
    (6) $133,750 - $9,050 = $124,700 loss; and
    (7) $124,700 loss x 1.000 share = $124,700 indemnity payment.
    (c) The total production to count (in tons) from all insurable 
acreage on the unit will include all harvested and appraised production 
of natural condition prunes that meet the definition of standard prunes 
and any production that is harvested and intended for use as fresh 
fruit. The total production to count will include:
* * * * *

    Signed in Washington, DC, on November 22, 2011.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2011-31083 Filed 12-2-11; 8:45 am]
BILLING CODE 3410-08-P