[Federal Register Volume 77, Number 187 (Wednesday, September 26, 2012)]
[Rules and Regulations]
[Pages 59045-59050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-23571]



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  Federal Register / Vol. 77, No. 187 / Wednesday, September 26, 2012 / 
Rules and Regulations  

[[Page 59045]]



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: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the 
Common Crop Insurance Regulations, Prune Crop Insurance Provisions. The 
intended effect of this action is to provide policy changes and clarify 
existing policy provisions to better meet the needs of insured 
producers, and to reduce vulnerability to program fraud, waste, and 
abuse. The changes will apply for the 2013 and succeeding crop years.

DATES: This rule is effective October 26, 2012.

FOR FURTHER INFORMATION CONTACT: Tim Hoffmann, Director, Product 
Administration and Standards Division, Risk Management Agency, United 
States Department of Agriculture, Beacon Facility, Stop 0812, Room 421, 
P.O. Box 419205, Kansas City, MO, 64141-6205, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

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

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, 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 final 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 directing 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 determinations of good farming practices, as applicable, 
must be exhausted before any action against FCIC for judicial review 
may be brought.

[[Page 59046]]

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

    This rule finalizes changes to the Common Crop Insurance 
Regulations (7 CFR part 457), Prune Crop Insurance Provisions that were 
published by FCIC on December 5, 2011, as a notice of proposed 
rulemaking in the Federal Register at 76 FR 75805-75809. The public was 
afforded 60 days to submit comments after the regulation was published 
in the Federal Register.
    A total of 31 comments were received from 2 commenters. The 
commenters were an insurance provider and an insurance service 
organization.
    The public comments received regarding the proposed rule and FCIC's 
responses to the comments are as follows:

General

    Comment: A few commenters stated they agree with the proposed 
change to remove the quality adjustment provisions from the Prune Crop 
Provisions.
    Response: FCIC thanks the commenters for their review of the 
proposed rule and for their support.

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

    Comment: A few commenters stated the ``Background'' of the proposed 
rule indicates that the phrase ``varietal group'' is being replaced by 
the word ``type'' everywhere it appears. It goes on to indicate that 
prunes are not categorized by varietal group in the Special Provisions 
rather they are categorized by type. In addition, section 6(c) has been 
revised to remove the requirements for the insured crop to be grown on 
tree varieties that were commercially available at set out and on tree 
varieties that are adapted to the area and replacing those requirements 
with a list of varieties (assume this means types) as shown in the 
Special Provision. The current Special Provisions for prunes list the 
type as ``No Type Specified 997.'' The commenters asked if there are 
plans to change the Special Provisions to list all of the insurable 
types in lieu of ``No Type Specified 997'' or will there be a separate 
listing of all of the possible insurable varieties somewhere else in 
the Special Provisions besides under the ``type'' designation where all 
such varieties will be listed to comply with the new proposed rule 
language.
    Response: For ease of administration, FCIC intends to classify the 
prune types as ``Type 997'' and then provide a list of all insurable 
types that qualify as a type 997.
    Comment: A few commenters questioned using the word ``bearing'' in 
section 3(b)(2). The commenters stated producers are required to report 
their uninsurable acres and when trees are first planted they will be 
non-bearing. The commenters asked if it is really the intent for 
producers to report zero trees on their uninsurable acres. The 
commenters stated that if the block consists of older trees and younger 
interplanted trees of the same variety, and the insurance provider only 
counts the bearing trees, they will have 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. Insurance providers should not be required to track only the 
trees that are bearing and be required to revise this figure each year.
    Response: No changes were proposed to this provision and the 
comment does not address a conflict or vulnerability in the provision. 
Therefore, FCIC cannot consider the recommended change because the 
public was not given an opportunity to provide comments. No change has 
been made to the final rule. However, in response to the concerns 
raised, the information that must be submitted in accordance with 
section 3(b) is required to establish the producer's actual production 
history (APH) approved yield and the amount of their 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 trees on insurable and uninsurable acreage must be reported on 
the PAW. Perennial crop policies contain provisions for ``bearing 
trees'' to identify such 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, insurance 
providers are required to track bearing trees as outlined in the Crop 
Provisions and the Crop Insurance Handbook (CIH). Requiring all trees 
be reported under section 3(b)(2) would create confusion regarding 
insurability and could result in the overstatement of premium and 
liability.
    Comment: In regard to section 3(b)(3), a commenter questioned 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. Insurance providers 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: No changes were proposed to this provision and the 
comment does not address a conflict or vulnerability in the provision. 
Therefore, FCIC cannot consider the recommended change because the 
public was not given an opportunity to provide comments. No change has 
been made to the final rule. However, with respect to the concerns 
expressed by the commenter, the planting pattern consists of tree 
spacing and arrangement. FCIC requires the producer to report the 
planting pattern so the insurance provider can use this information to 
determine if there is adequate tree spacing for the producer to carry 
out recommended orchard management practices and to determine the 
number of trees per acre.
    Comment: In regard to section 3(c), a commenter stated there 
appears to be a lack of consistency between similar perennial crops 
whose Crop Provisions were recently revised or issued. The Olive, Pear 
and Macadamia Nut Crop Provisions all contain similar if not the same 
verbiage as found in the Prune Crop Provisions prior to this Proposed 
Rule. On the other hand, the Stonefruit Crop Provision language is very 
similar to the Prune Crop Provision Proposed Rule language with the 
significant difference in that the results as found in (c)(1), (2) and 
(3) are hinged upon when the situation ``occurred'' as opposed to when 
the situation was ``reported.'' This is a very significant difference. 
The commenter proposes some level of similarity and/or consistency be 
used for this provision for perennial crops.
    Response: FCIC agrees with the commenter and the provision has been 
revised by changing the term ``reported'' to ``occurred.''
    Comment: A few commenters stated the last sentence in section 
3(c)(3) states ``We will reduce the yield used to establish your 
production guarantee for the subsequent crop year.'' The commenters 
question what if the event that occurred was something that only 
affects the crop for the year in question and has no carryover effect 
on the yield into the next year. In this type of situation the yield 
used to establish the

[[Page 59047]]

production guarantee for the next year should not be affected by the 
event that occurred. However, based on the above referenced language, 
the yield would have to be reduced and reduced by the same amount as 
determined during the year in which the event occurred. This language 
needs to be revised to provide the insurance providers with some 
latitude as to whether the subsequent years yield should be reduced and 
to what extent it should be reduced. The producer could also have 
certain events that occur which have some effect on the next year, but 
the effect is less than the production that was assessed for the year 
in which the event occurred. Therefore, this sentence needs to be 
modified to allow the insurance providers to have some flexibility to 
be able to determine how much, if any, the yield should be reduced for 
the subsequent crop year.
    Response: FCIC agrees with the commenter that some latitude should 
be allowed to determine if the yield should be reduced in subsequent 
years. FCIC has revised section 3(c)(3) to state the insurance provider 
``may'' reduce the yield used to establish your production guarantee 
for the subsequent crop year to reflect any reduction in the productive 
capacity of the trees.
    Comment: A few commenters stated section 3(d) states ``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 of the insured crop is 
evident prior to the time that you request the increase.'' The 
commenters feel this is a difficult provision to administer and 
recommend 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 approved 
APH yield 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, it might help to 
clarify 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.'' Consider rewriting something like: 
``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: No changes were proposed to this provision and the 
comment does not address a conflict or vulnerability in the provision. 
Therefore, FCIC cannot consider the recommended change because the 
public was not given an opportunity to provide comments. However, FCIC 
will consider this change the next time the Prune Crop Provisions are 
revised. No change has been made to the final rule.

Section 6--Insured Crop

    Comment: A few commenters stated the proposed language in section 
6(c) states ``That are grown on trees [change from ``tree varieties''] 
that: (1) Are listed in the Special Provisions * * *.'' The commenters 
suggested keeping the original ``tree varieties'' (or ``varieties of 
trees,'' if preferred) since the Special Provisions presumably will 
list the ``insurable varieties'' (as stated in the ``Background'') 
rather than some other description of ``trees.'' If this change is not 
accepted, at the very least section (c)(1) needs to include 
``varieties'' after the word ``Are''.
    Response: FCIC agrees with the commenters. Since FCIC will list the 
insurable types of trees in the Special Provisions, the phrase 
``insurable types'' has been added to section 6(c)(1).
    Comment: A few commenters stated the 2001 Prune Crop Provisions 
reads ``Are irrigated (except where otherwise provided in the Special 
Provisions)'' but this would be deleted according to the ``Background'' 
because insurable practices are listed in the Special Provisions. The 
commenters question if this is a good argument; if so, why would 
6(c)(1) be needed since the tree varieties also are listed in the 
Special Provisions? The commenters state that generally the Crop 
Provisions identify irrigated as the insurable practice when non-
irrigated is not an equally available practice for the crop. This would 
seem to be more informative than having the Crop Provisions be silent 
on that matter and identifying any limitation of insurable practices 
only in the Special Provisions. The commenters recommended this section 
of the policy be retained as a part of the Final Rule.
    Response: FCIC agrees with the commenters. The original language 
from section 6(c)(4) requiring crops to be grown on acreage that is 
irrigated has been retained.

Section 8--Insurance Period

    Comment: A few commenters recommended combining sections 8(a)(1) 
and 8(c) since both identify when coverage begins, (a)(1) for the year 
of application, and (c) for subsequent crop years.
    Response: FCIC agrees with the commenters. Sections 8(a)(1) and 
8(c) have been combined under section 8(a)(1).
    Comment: A few commenters stated the phrase ``after an inspection'' 
should be removed from section 8(b)(1). If damage has not generally 
occurred in the area where such acreage is located, it should be at the 
insurance provider's discretion to decide whether the acreage needs an 
inspection to be considered acceptable. The language in this section 
already refers to the insurance providers having the ability to 
consider the acreage acceptable. Since the acreage and production 
reporting dates are after insurance attaches, the insurance provider 
may not know if the acreage was acquired after coverage began, but 
before the acreage reporting date. The insurance provider needs the 
right to inspect if they deem necessary, but this should not be a 
requirement. The commenters also recommended additional language be 
added to section 8(b)(1) to allow insurance providers the opportunity 
to inspect and insure any additional acreage that is acquired after the 
acreage reporting date if they wish to do so. Insurance providers 
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.
    Response: No changes were proposed to this provision and the 
comment does not address a conflict or vulnerability in the provision. 
Therefore, FCIC cannot consider the recommended changes because the 
public was not given an opportunity to comment. No change has been made 
to the final rule. However, with respect to acreage acquired after the 
acreage report, section 6(f) of the Basic Provisions, which allows the 
insurance provider 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. FCIC approved procedures allow the 
insurance provider 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.

[[Page 59048]]

    Comment: A commenter stated the provision in section 8(c) has been 
added to most, if not all, of the perennial crops. The commenter agrees 
with the concept of continuous coverage applying for carryover 
producers, but has some concerns with language as it currently reads. 
The present language indicates for each subsequent crop year the policy 
remains continuously in force, coverage begins on the day immediately 
following the end of the insurance period for the prior crop year. The 
commenter raised issues about damage that occurs to next year's buds 
prior to this year's end of the insurance period date. The commenter 
asked whether this damage 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 year's crop as well as the 
buds that will produce next 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 that insurance 
providers cover damage that occurred due to insurable causes during the 
previous crop year. The commenter feels that 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 insurance 
providers will not cover damage that occurs the previous crop year if 
such damage occurs prior to the end of the previous year's end of 
insurance period.
    Response: The Prune Crop Provisions do not provide coverage for 
damage to fruit if the damage occurs outside of the insurance period as 
provided in section 9(a). FCIC disagrees language should be added to 
section 8(c) to clarify that coverage is not provided for damage to 
fruit if the damage occurs outside of the insurance period since this 
information is already contained in section 9(a). FCIC cannot consider 
the recommended change to the Prune Crop Provisions to provide coverage 
for damage that occurs outside of the insurance period since this 
change was not proposed, the comment does not address a conflict or 
vulnerability, and the public has not been given an opportunity to 
provide comments. However, FCIC will consider this change the next time 
the Prune Crop Provisions are revised. No change has been made to the 
final rule.

Section 9--Causes of Loss

    Comment: A commenter recommended that section 9(a)(2) insured cause 
of loss be clarified as ``Fire, due to natural causes, * * * '' (or 
``Fire, if caused by lightning, * * *'',).
    Response: No changes were proposed to this provision and the 
comment does not address a conflict or vulnerability in the provision. 
Therefore, FCIC cannot consider the recommended changes because the 
public was not given an opportunity to comment. No change has been made 
to the final rule. 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.

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

    Comment: A few commenters stated the language in the second 
sentence of section 10(b)(2) states in part that ``We will conduct an 
appraisal that will be used to determine your production to count * * 
*'' The commenters recommend that 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 section 
indicates that ``* * * These appraisals, and any acceptable records 
provided by you, will be used to determine your production to count * * 
*''. Insurance providers need to maintain the ability to use the actual 
records if they believe those records 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 insurance 
providers the flexibility to apply this language accordingly.
    Response: No changes were proposed to this provision and the 
comment does not address a conflict or vulnerability in the provision. 
Therefore, FCIC cannot consider the recommended changes because the 
public was not given an opportunity to provide comments. No change has 
been made to the final rule. However, this provision is consistent with 
other Crop Provisions, such as apples, stonefruit and pears, that 
contain language regarding production that is sold by direct marketing.

Section 11--Settlement of Claim

    Comment: A commenter questioned if it is correct that only prunes 
meeting the definition of standard prunes will be counted as production 
to count for claims and APH purposes, and although a producer may sell 
prunes of lesser quality, such production will not be counted as 
production to count as described above.
    Response: FCIC disagrees that only prunes meeting the definition of 
standard prunes will be counted as production to count for claims and 
APH purposes. Only counting standard prunes as production to count 
regardless of the cause of loss would create a program vulnerability. 
FCIC proposed to remove the quality adjustment provision to alleviate 
the time and effort required to apply a quality adjustment factor which 
ultimately results in zero production to count for harvested 
substandard prunes damaged due to insured causes of loss. The proposed 
removal of the quality adjustment provision, which only adjusts the 
quantity of substandard prunes damaged by insurable causes of loss, was 
not intended to prevent substandard prunes damaged by uninsurable 
causes of loss or production sold as standard prunes from being 
considered as production to count. Therefore, section 11(c)(1) has been 
revised to clarify that for appraised unharvested production, only 
prunes meeting the definition of standard prunes will be considered as 
production to count unless the prunes are damaged due to an uninsurable 
cause of loss or the prunes or prune acreage meets any of the other 
conditions described in section 11(c)(1). Section 11(c)(2) has been 
revised to clarify that for harvested production, prunes meeting the 
definition of standard prunes, prunes harvested for fresh fruit, prunes 
sold as standard prunes and prunes damaged due to uninsured causes will 
be considered as production to count.
    In addition to the changes described above, FCIC has made minor 
editorial changes.

List of Subjects in 7 CFR Part 457

    Crop insurance, Prune, Reporting and recordkeeping requirements.

Final Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends 7 CFR part 457 effective for the 2013 and 
succeeding crop years as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

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

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


0
2. Amend Sec.  457.133 as follows:
0
a. In the introductory text by removing ``2001'' and adding ``2013'' in 
its place;
0
b. By removing the undesignated paragraph immediately preceding section 
1;
0
c. In section 1:

[[Page 59049]]

0
i. By removing the definitions of ``market price for standard prunes'' 
and ``substandard prunes''; and
0
ii. In the definition of ``standard prunes'' by removing the word 
``grading'' and adding in its place the word ``grade'' in paragraph 
(b).
0
d. In section 3:
0
i. By revising paragraph (a);
0
ii. By revising paragraph (b) introductory text and (b)(4)(i);
0
iii. By redesignating paragraph (c) as paragraph (d);
0
iv. By designating the undesignated paragraph following paragraph (b) 
as paragraph (c); and
0
v. By revising newly designated paragraph (c).
0
e. In section 6:
0
i. By revising paragraph (c); and
0
ii. By removing paragraphs (d) and (e).
0
f. In section 8:
0
i. By revising paragraph (a)(1);
0
ii. By removing paragraph (c);
0
iii. By redesignating paragraph (d) as paragraph (c); and
0
iv. In newly designated paragraph (c) by adding a comma after the 
phrase ``cancellation and termination dates''.
0
g. In section 9(a)(5) by removing the word ``or'' after the semicolon 
at the end of the sentence;
0
h. In section 9(a)(6) by removing the period at the end of the sentence 
and adding a semicolon in its place;
0
i. By adding section 9(a)(7);
0
j. By adding section 9(a)(8);
0
k. By revising section 9(b);
0
l. In section 10:
0
i. By designating the introductory text as paragraph (b) and adding a 
new paragraph (a); and
0
ii. Redesignate paragraphs (a) through (d) in redesignated paragraph 
(b) as (1) through (4), respectively;
0
m. By revising section 11(b)(1) through (7) and the example;
0
n. By revising section 11(c) introductory text, (c)(1)(iii), and 
(c)(2); and
0
o. By removing section 11 (e).
    The revisions and additions read as follows:


Sec.  457.133  Prune crop insurance provisions.

* * * * *
    3. * * *
* * * * *
    (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 section 3(b) 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 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 may reduce the yield used to establish your 
production guarantee for the subsequent crop year to reflect any 
reduction in the productive capacity of the trees.
* * * * *
    6. * * *
* * * * *
    (c) That are grown on trees that:
    (1) Are listed as insurable types in the Special Provisions;
    (2) Are grown on rootstock that is adapted to the area;
    (3) Are irrigated (except where otherwise provided in the Special 
Provisions);
    (4) Are grown in an orchard that, if inspected, is considered 
acceptable by us; and
    (5) Have reached at least the seventh growing season after being 
set out.
* * * * *
    8. * * *
    (a) * * *
    (1) For the year of application, coverage begins on March 1. For 
each subsequent crop year the policy remains continuously in force, 
coverage begins on the day immediately following the end of the 
insurance period for the prior crop year. Policy cancellation that 
results solely from transferring to a different insurance provider for 
a subsequent crop year will not be considered a break in continuous 
coverage.
* * * * *
    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. * * *
* * * * *
    (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);
    (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);
    (6) Subtracting the result of section 11(b)(5) from the result of 
section 11(b)(3); and
    (7) Multiplying the result of section 11(b)(6) by your share.

[[Page 59050]]

    Example 1: 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.

    Example 2: 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:
    (1) * * *
* * * * *
    (iii) Unharvested production that meets the definition of standard 
prunes; and
* * * * *
    (2) All harvested production from the insurable acreage that:
    (i) Meets the definition of standard prunes;
    (ii) Is intended for use as fresh fruit;
    (iii) Is sold as standard prunes; or
    (iv) Is damaged due to uninsured causes.
* * * * *

    Signed in Washington, DC, on September 18, 2012.
Michael F. Hand,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 2012-23571 Filed 9-25-12; 8:45 am]
BILLING CODE 3410-08-P