[Federal Register Volume 83, Number 21 (Wednesday, January 31, 2018)]
[Rules and Regulations]
[Pages 4564-4574]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-01964]



[[Page 4563]]

Vol. 83

Wednesday,

No. 21

January 31, 2018

Part II





Department of Agriculture





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





Federal Crop Insurance Corporation





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





7 CFR Part 457





 Common Crop Insurance Regulations; Nursery Crop Insurance Provisions; 
Final Rule

  Federal Register / Vol. 83 , No. 21 / Wednesday, January 31, 2018 / 
Rules and Regulations  

[[Page 4564]]


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

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

[Docket No. FCIC-17-0006]
RIN 0563-AC60


Common Crop Insurance Regulations; Nursery Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule with request for comments.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) amends the 
Common Crop Insurance Regulations, Nursery Crop Insurance Provisions. 
The intended effect of this action is to clarify existing policy 
provisions, increase risk management choices allowed by the policy 
provisions, and expand availability to more producers. The changes will 
be effective for the 2019 and succeeding crop years.

DATES: This final rule is effective January 31, 2018. However, FCIC 
will accept written comments on this final rule until close of business 
April 2, 2018. FCIC may consider the comments received and may conduct 
additional rulemaking based on the comments.

ADDRESSES: FCIC prefers interested persons submit their comments 
electronically through the Federal eRulemaking Portal. Interested 
persons may submit comments, identified by Docket ID No. FCIC-17-0006, 
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.
    FCIC will post all comments received, including those received by 
mail, without change to http://www.regulations.gov, including any 
personal information provided. Once these comments are posted to this 
website, the public can access all comments at its convenience from 
this website. All comments must include the agency name and docket 
number or Regulatory Information Number (RIN) for this rule. For 
detailed instructions on submitting comments and additional 
information, see http://www.regulations.gov. If interested persons are 
submitting comments electronically through the Federal eRulemaking 
Portal and want to attach a document, FCIC requests that the document 
attachment be in a text-based format. If interested persons 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 the submissions. For questions regarding attaching 
a document that is a scanned Adobe PDF file, please contact the Risk 
Management Agency (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 person submitting 
the comment (or signing the comment, if submitted on behalf of an 
entity, such as an association, business, labor union, etc.). 
Interested persons may review the complete User Notice and Privacy 
Notice for Regulations.gov at http://www.regulations.gov/#!privacyNotice.

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

SUPPLEMENTARY INFORMATION: 

Background

    FCIC amends the Common Crop Insurance Regulations (7 CFR part 457) 
by revising 7 CFR 457.162 Nursery Crop Insurance Provisions to be 
effective for the 2019 and succeeding crop years.
    The changes to 7 CFR 457.162 Nursery Crop Insurance Provisions are 
as follows:
    1. FCIC is removing the paragraph immediately preceding section 1, 
which refers to the order of priority if a conflict exists among the 
policy provisions. This same provision is contained in the Basic 
Provisions. Therefore, the appearance here is duplicative and should be 
removed from the Nursery Crop Insurance Provisions (Crop Provisions).
    2. Section 1--FCIC is deleting the definition of ``Act.'' The 
definition of ``Act'' is contained in the Basic Provisions. Therefore, 
it is duplicative and should be removed from the Crop Provisions.
    FCIC is revising the definition of ``amount of insurance'' to 
incorporate language that is currently contained in section 3(e) that 
reduces the amount of insurance if any claims have previously been paid 
for the crop year. The language is more appropriately placed in the 
definition.
    FCIC is revising the definition of ``basic unit value.'' The term 
is used repeatedly throughout the Crop Provisions, usually with a 
phrase such as ``including any revision'' or ``including the Peak 
Inventory Endorsement if elected.'' To simplify the provisions, this 
information is incorporated into the definition of ``basic unit 
value.''
    FCIC is adding a definition of ``catalog,'' which is contained in 
the Special Provisions. In addition, the phrases ``wholesale nursery 
catalog or price list,'' ``nursery catalog or price list,'' and 
``catalog or price list,'' are used interchangeably throughout the Crop 
Provisions. To simplify the provisions, the term ``catalog'' now 
replaces these phrases throughout.
    FCIC is revising the definition of ``container grown'' to improve 
readability and to clarify that ``container grown'' is a nursery 
practice. FCIC is also revising the definition to change the term 
``pot'' to ``standard nursery container.'' The term ``pot'' is the name 
of a specific standard nursery container size and the term must change 
to ``standard nursery container'' in this definition so that all 
standard nursery containers are included in this definition.
    FCIC is adding a definition of ``Crop Inventory Valuation Report 
(CIVR)'' as a result of the inclusion of this term in newly-designated 
paragraph (c)(ii) in section 6.
    FCIC is revising the definition of ``crop year deductible'' to 
simplify it. The definition uses the phrase ``sum of all plant 
inventory values for each basic unit,'' which means the same thing as 
``basic unit value.'' Therefore, the phrase is replaced with the phrase 
``basic unit value'' to make it easier to read and understand. The 
definition also states any loss under the Rehabilitation Endorsement is 
not considered a loss. This phrase is not needed with the revised 
definition of ``crop year deductible'' since payments under the 
Rehabilitation Endorsement do not affect the deductible.
    FCIC is deleting the definition of ``deductible percentage.'' The 
term ``deductible'' is defined in the Basic Provisions. Therefore, 
having the definition in the Crop Provisions is duplicative and 
unnecessary.
    FCIC is deleting the definitions of ``Eligible Plant List'' and 
``Plant Price Schedule'' and replacing them with the definition of 
``Eligible Plant List and Plant Price Schedule (EPLPPS).'' The 
definitions of ``Eligible Plant List'' and the definition of ``Plant 
Price Schedule'' refer to the same document. Combining the two 
definitions will prevent

[[Page 4565]]

confusion and eliminate redundancy. Language is also added to the new 
definition to clarify the EPLPPS is a part of the actuarial documents. 
FCIC is also replacing the term ``Eligible Plant List'' with ``EPLPPS'' 
where it appears throughout the provisions.
    FCIC is revising the definition of ``fabric grow bag'' to clarify 
fabric grow bags may be used for growing any type of field grown 
nursery plant, rather than restricting it to woody plants only. It is a 
common growing practice for fabric grow bags to be used for growing 
plants other than woody plants.
    FCIC is deleting the definition of ``FCIC.'' Its meaning is 
provided in the preamble to the Basic Provisions. Therefore, having the 
definition in the Crop Provisions is unnecessary.
    FCIC is revising the definition of ``field grown'' to clarify that 
field grown is a nursery practice. FCIC is also removing the phrase 
``without the use of an artificial root containment device'' because 
the definition goes on to specify plants grown in in-ground fabric grow 
bags, plants balled and burlapped, or plants in containers that allow 
the plants to root into the ground are considered field grown. Plants 
grown in in-ground fabric grow bags, plants balled and burlapped, and 
plants in containers are all grown using artificial root containment 
devices. Therefore, the phrase is being removed to prevent confusion 
and redundancy.
    FCIC is replacing the term ``field market value A'' and ``field 
market value B'' with ``field market value A (FMVA)'' and ``field 
market value B (FMVB),'' respectively. FCIC is also revising the 
definitions of those terms to be concise and easy to read.
    FCIC is revising the definition of ``good nursery practices.'' The 
definition currently states, ``In lieu of the definition of good 
farming practices in section 1 of the Basic Provisions. . .'' The 
definition of good farming practices contained in the Basic Provisions 
allows published information to be considered when making good farming 
practice determinations. The phrase ``In lieu of'' replaces the 
definition contained in the Basic Provisions when in fact the 
definitions should be read together because published information 
regarding good farming practices applies to nursery producers. 
Therefore, ``in lieu of'' is changed to ``in addition to'' to make it 
clear that published information can be considered when making good 
farming practice determinations for nursery producers.
    FCIC is revising the definition of ``liners'' to incorporate 
language currently contained in the Special Provisions that specifies 
the acceptable, insurable dimensions of liners.
    FCIC is revising the definition of ``loss.'' The term is used in 
the Crop Provisions and is usually preceded with the phrase ``as 
adjusted by any previous under-report factor.'' A Special Provisions 
statement uses the term ``loss'' preceded by the phrase ``as adjusted 
by any previous under-report factor or over-report factor.'' That 
Special Provisions statement, along with other Special Provisions 
statements related to the over-report factor, is incorporated into the 
Crop Provisions. The definition of ``loss'' is revised to include the 
phrase ``as adjusted by any previous under-report factor or over-report 
factor'' in order to eliminate the need to repeat that phrase 
throughout the Crop Provisions.
    FCIC is adding the definition of ``lowest price,'' which is 
currently contained in the Special Provisions. The phrase ``the price 
for each plant and size listed on your [Plant Inventory Value Report 
(PIVR)] will be the lower of the [EPLPPS] price or the lowest wholesale 
price in your nursery catalog or price list'' is used repeatedly 
throughout the Crop Provisions. To simplify the provisions, the Crop 
Provisions will substitute this phrase with the term ``lowest price.''
    FCIC is revising the definition of ``marketable'' to provide 
clarity. The definition uses the word ``it'' but does not clarify what 
``it'' means. The definition also uses the term ``market'' but does not 
indicate if the term refers to usual or customary market channels 
employed by the nursery operation or a secondary market where lesser 
values prevail. Therefore, the definition is being revised to clarify 
``a plant that can be sold in a customary or secondary market for a 
non-zero value.''
    FCIC is revising the definition of ``nursery'' to change the 
percentage from 50 percent to 40 percent. FCIC has received comments 
that the 50 percent requirement is arbitrary and that FCIC may be 
omitting market share by imposing that restriction. Since the nature of 
prices is such that retail prices are higher than wholesale prices, the 
retail share of total sales is weighted more heavily. In addition, the 
industry has evolved since this limit was implemented with more 
nurseries engaging in both wholesale and retail sales. By lowering the 
requirement from 50 to 40 percent of sales, FCIC is allowing more 
nurseries to be eligible for insurance while still recognizing the 
intent of the program is to provide coverage to nurseries with a large 
share of their production dedicated to wholesale sales. FCIC is also 
revising the definition to clarify what ``gross income'' means. The 
current definition states a nursery is ``a business enterprise that 
grows the nursery plants and derives at least 50 percent of its gross 
income from the wholesale marketing of such plants.'' The revised 
language clarifies ``gross income'' by adding the phrase ``derived from 
plant sales'' to clarify only income from plant sales, is included when 
determining if the nursery qualifies for insurance under this 
definition. Income from sales of other products is not included. For 
example, assume the nursery derives 60 percent of its income from 
landscape sales, 25 percent from wholesale plant sales, and 15 percent 
from retail plant sales. This nursery would be eligible for insurance 
according to the revised definition because 62.5 percent (25 percent 
wholesale plant sales/(25 percent wholesale plant sales + 15 retail 
plant sales) = 25/40 = 62.5 percent wholesale plant sales) of the gross 
income derived from plant sales is from the wholesale marketing of 
plants.
    FCIC is revising the definition of ``occurrence deductible'' to 
incorporate the revised definition of ``occurrence deductible'' 
contained in the Special Provisions. The revised ``occurrence 
deductible'' definition addresses the over-report factor and its 
application in the calculation of the occurrence deductible.
    FCIC is adding the definition of ``over-report factor,'' which has 
been in the Special Provisions since 2011. The ``over-report factor'' 
ensures indemnities are not overpaid when the reported basic unit 
values reported on the PIVR are greater than the inventory value 
immediately preceding the loss (FMVA). The current provisions already 
include an under-report factor to address situations where the reported 
basic unit values are less than FMVA. The over-report factor addresses 
the contrasting situation.
    FCIC is revising the definition of ``practice'' to specify the 
insurable practices are listed in the actuarial documents to be 
consistent with other Crop Provisions. Although this change would allow 
practices to be added or removed through the actuarial documents, FCIC 
currently does not intend on adding any new practices or removing any 
existing practices.
    FCIC is adding a definition of ``restock.'' Restock is not a 
defined term, but is used several times in the Crop Provisions. It is 
defined in the Peak Inventory Endorsement. Since the term is used in 
both documents, the definition should be moved to the Crop Provisions.

[[Page 4566]]

    FCIC is revising the definition of ``sales closing date'' to add 
the phrase ``of these Crop Provisions'' at the end.
    FCIC is revising the definition of ``standard nursery containers.'' 
A variation of this definition is contained in the Special Provisions, 
and is incorporated into the Crop Provisions. The definition specifies 
the minimum insurable dimension for ``standard nursery containers.''
    FCIC is revising the definition of ``survival factor'' to improve 
readability.
    FCIC is revising the definition of ``under-report factor'' to 
remove the phrase ``as adjusted by any previous under-report factor,'' 
since this phrase is to be included in the definition of ``loss'' and 
is not necessary in this definition. FCIC is also removing the last 
sentence which refers to Rehabilitation Endorsement payments. The 
sentence is not necessary in the definition of ``under-report factor.''
    3. Section 2--FCIC is revising paragraph (a) by subdividing the 
paragraph into two subparagraphs and adding provisions to allow basic 
units by non-contiguous land for the field grown practice only. 
Policyholders will be required to keep records separate for each unit 
if they elect basic units by non-contiguous land. This change gives the 
policyholders who insure their field grown practice the choice of 
selecting basic units either by plant type or by non-contiguous land. 
Policyholders may have several nursery locations throughout a county. 
FCIC has received requests to allow policyholders to insure each 
location as a separate unit because different locations have inherently 
different risks. Therefore, under the current policy language, one 
location may suffer damage while other locations may not. In the event 
of a loss, all locations within the unit must be assessed for damage, 
creating extra burden on the policyholder and insurance provider. 
Further, the loss in one location may be offset by production in other 
locations, making it difficult for policyholders to be compensated for 
the damage suffered at a single location. Allowing separate basic units 
by non-contiguous land for the field grown practice will decrease the 
burden on policyholders and insurance providers while also allowing 
policyholders greater flexibility to make appropriate risk management 
decisions for their nursery locations throughout a county. Basic units 
by non-contiguous land will not be available to the container grown 
practice, unless allowed by Special Provisions, in order to prevent 
fraud, waste and abuse. Containers are highly portable and may be moved 
from one location to another based on the operations' needs. With or 
without intentions or motives, container grown operations could 
increase the chances of an indemnity when they move inventory from one 
location (basic unit) to another.
    FCIC is revising redesignated paragraph (a)(1) to remove the phrase 
``designated in section 2(b).'' This phrase refers to the list of 
insurable plant types that are currently listed in paragraph (b). 
However, FCIC is removing the list of insurable plant types from 
paragraph (b), so this phrase is no longer applicable.
    FCIC is revising paragraph (b) to remove the list of insurable 
plant types. Insurable types for other crops are listed in the 
actuarial documents. For nursery, the insurable plant types are listed 
in the Crop Provisions and in the actuarial documents. It is not 
necessary to list them in both documents so FCIC is removing the list 
from the Crop Provisions.
    4. Section 3--FCIC is revising paragraph (a) to remove the 
reference to the misreporting provisions in the Basic Provisions. The 
misreporting provisions have been removed from the Basic Provisions so 
the reference in the Crop Provisions is no longer valid.
    FCIC is revising paragraph (c)(1)(iv)(A) by removing the reference 
to the Peak Inventory Endorsement and replacing it with the Peak 
Inventory Value Report since the policyholder submits a Peak Inventory 
Value Report rather than a Peak Inventory Endorsement.
    FCIC is revising paragraph (c)(1)(iv)(B) by clarifying that a 
coverage level must be selected if the new plant is not categorized 
under a plant type reported on the initial PIVR or Peak Inventory Value 
Report, if applicable. Previously the provision did not reference the 
Peak Inventory Value Report. The provisions in paragraph (c)(1)(iv)(A) 
refer to the Peak Inventory Value Report, so the addition of the Peak 
Inventory Value Report in paragraph (c)(1)(iv)(B) makes the provisions 
in the two paragraphs consistent.
    FCIC is also revising paragraph (d) to remove the references to the 
2006 crop year. The references are no longer needed. By removing the 
references to the 2006 crop year, paragraph (d)(2)(i) is removed. As a 
result, paragraphs (d)(2)(ii) and (iii) are redesignated as paragraphs 
(d)(2)(i) and(ii), respectively.
    FCIC is removing the provisions in paragraph (e). These provisions 
are now included in the revised definition of ``amount of insurance,'' 
and therefore, are no longer necessary. FCIC is redesignating paragraph 
(f) as (e).
    5. Section 6--FCIC is revising paragraph (b) to clarify that a 
separate PIVR must be submitted for each insured practice. The word 
``separate'' is added to provide clarification. FCIC is also revising 
paragraph (b) to state a separate PIVR is required for each non-
contiguous land unit within each insured practice if the policyholder 
selects basic units by non-contiguous land.
    FCIC is revising paragraph (b)(1) to include a provision that 
addresses the date by when policyholders will be notified if their 
applications are rejected because the required documents are 
unacceptable. The current provisions only state the policyholders will 
be notified, but are silent on when they will be notified.
    FCIC is revising paragraph (b)(2) to clarify insurance attaches on 
the 31st day after all required documents are received. The current 
provisions state insurance attaches 30 days after the documents are 
received. The Nursery Underwriting Guide clarifies what is meant by 30 
days: The 30-day waiting period does not include the date the required 
documentation is submitted or the date insurance attaches but the 
provision is more appropriate in the Crop Provisions. Now the 
provisions are clear that insurance would not attach until 30 full days 
have elapsed after the documents were received. FCIC is including the 
same clarification in the Crop Provisions.
    FCIC is revising paragraph (c)(1) to include basic units by non-
contiguous land to be consistent with the other changes to the policy 
allowing such units.
    FCIC is revising paragraph (c)(2) to divide the paragraph into 
subparagraphs to make the paragraph easier to read. Newly-designated 
paragraph (c)(2)(i) is revised by adding the phrase ``or a CIVR.'' The 
current provisions state the policyholder may be required to provide a 
detailed plant inventory listing that includes the name, the number, 
and the size of each plant. Adding the phrase mentioned above gives the 
insurance provider an option of requesting a detailed plant inventory 
listing or the CIVR, which is a plant inventory list created using the 
Nursery Inventory Software. FCIC is also moving the last sentence of 
paragraph (c)(2) to newly designated paragraph (c)(2)(ii) because it is 
more appropriately placed there than at the end of newly-designated 
paragraph (c)(2)(iii).
    Newly-designated paragraph (c)(2)(iii) contains the provisions 
currently in paragraph (c)(2) regarding the policyholders' ability to 
obtain and maintain nursery stock. FCIC is revising

[[Page 4567]]

newly-designated paragraph (c)(2)(iii) to replace the term ``nursery 
stock'' with the term ``nursery plants.'' The term ``stock plants'' is 
a defined term, excluded from insurance in section 8. The term 
``nursery plants'' is more appropriate as this section refers to 
insurable plants.
    FCIC is revising paragraph (c)(3) to improve readability and adding 
new paragraphs (c)(3)(ii) and (c)(4) to incorporate provisions 
currently contained in the Special Provisions. These provisions refer 
to the consequences for failing to provide adequate documentation 
depending on whether the documentation is requested before or after 
insurance attaches.
    FCIC is moving paragraph (f) to a newly-designated paragraph 
(c)(5). Paragraph (c) contains PIVR reporting requirements for 
policyholders. The current paragraph (f) contains PIVR reporting 
requirements for policyholders who elect catastrophic risk protection 
coverage. Since both paragraphs contain PIVR reporting requirements, 
moving paragraph (f) into paragraph (c) will add clarity by aligning 
related content. The information contained in paragraph (f) is more 
appropriate under paragraph (c), which contains reporting requirements 
for all policyholders. FCIC is also omitting some of the provisions 
from paragraph (f) because the provisions are identical to the 
provisions contained in paragraph (c)(3), which applies to catastrophic 
risk protection coverage and additional coverage. This reduces 
redundancy and improves readability.
    FCIC is revising paragraph (d) to include the phrase ``if 
applicable'' following the phrase ``Peak Inventory Value Report.'' This 
change is being made because the provision is only applicable to a Peak 
Inventory Value Report if the Peak Endorsement is elected.
    FCIC is revising the introductory text in paragraph (e) to replace 
the phrase ``inventory value by basic unit'' with the phrase ``basic 
unit value.'' The two phrases are synonymous, but ``basic unit value'' 
is defined in section 1 so the phrase ``basic unit value'' is more 
appropriate.
    FCIC is revising paragraph (e)(1). The provisions require the price 
for each plant and size listed on the PIVR must meet certain criteria. 
However, the price for each plant and size is not listed on the PIVR; 
instead, the basic unit value is listed on the PIVR. Therefore, the 
provisions are revised to state the basic unit value listed on the PIVR 
must meet certain criteria. FCIC is also revising paragraph (e)(1) to 
clarify that the inventory value for liners must also be multiplied by 
the survival factor.
    FCIC replaced the reference to the Plant Price Schedule with the 
reference to the EPLPPS in paragraph (e)(2).
    With the removal of paragraph (f), as mentioned above, paragraphs 
(g) through (k) have been redesignated as (f) through (j).
    FCIC is revising redesignated paragraph (f)(1) to state a revised 
PIVR must meet the same requirements as the original PIVR. Currently, 
redesignated paragraph (f)(1) limits the requirements for a revised 
PIVR to those requirements for a PIVR listed in paragraph (c). However, 
the requirements for a PIVR listed in paragraph (e) also apply to a 
revised PIVR.
    FCIC is revising redesignated paragraph (f)(2) to state why an 
inspection will be conducted when a revised PIVR is submitted. 
Currently, the provisions only state that an inspection will be 
performed. The revised provisions state an inspection will be performed 
to determine if adequate and acceptable facilities exist to accommodate 
the requested increased inventory value.
    FCIC is revising redesignated paragraph (f)(2) to state an 
inspection will be performed if a Peak Inventory Endorsement is 
purchased and the inventory reported on the Peak Inventory Value Report 
is increased 50 percent or more from the previous total of all basic 
unit values. Currently, an inspection will be performed whenever the 
total of all basic unit values included on the PIVR increases by 50 
percent or more due to a revised PIVR. However, the policyholder can 
purchase a Peak Inventory Endorsement to increase the amount of 
insurance by 200 percent with no mandatory inspection requirement. 
Adding language regarding Peak Inventory Endorsements to this section 
aligns the inspection requirements for revised PIVRs and Peak Inventory 
Value Reports.
    FCIC is revising redesignated paragraph (f)(3). The current 
provisions state the insurance provider has the discretion to perform 
an inspection when the total of all basic unit values on a revised PIVR 
is increased less than 50 percent. This paragraph is revised to include 
language regarding Peak Inventory Endorsements. This revision aligns 
the inspection requirements for revised PIVRs and Peak Inventory Value 
Reports. The provisions are also revised to make the wording in this 
paragraph and in redesignated paragraph (f)(2) consistent.
    FCIC is revising redesignated paragraph (f)(5). Current provisions 
state any increase in reported basic unit values will be rejected if a 
loss occurs before the increased value takes effect. The provisions are 
revised to include the following parenthetical: ``(rejection can occur 
at any time we discover such loss occurred)'' because in some cases the 
loss will not be discovered until after the increased value takes 
effect and this will clarify that the increase can be rejected at any 
time it is determined that a loss occurred before the increased value 
took effect. This language is consistent with language in section 3 
regarding rejecting any request for changes in coverage level if a loss 
occurs prior to the date insurance is scheduled to attach for the new 
coverage level.
    FCIC is adding a new paragraph (f)(7). Provisions in redesignated 
section 3(e) state the amount of insurance may be increased in 
accordance with redesignated section 6(f) if the nursery is restocked. 
Redesignated section 6(f) contains provisions that allow the inventory 
value, which is a key component of the amount of insurance, to be 
increased twice during the crop year by submitting a revised PIVR, but 
is not clear if increasing the amount of insurance due to restocking 
the nursery is counted as one of the two allowable revisions. New 
paragraph (f)(7) clarifies if the policyholder suffers an insured loss 
on a basic unit and restocks the nursery, then the policyholder is 
allowed to increase the reported inventory value for the basic unit one 
additional time.
    FCIC is revising redesignated paragraph (g)(2). The provisions 
state damaged plants will be removed from the PIVR if they are not 
accepted. However, plants are not listed on the PIVR, instead the 
insurable value of plants in each basic unit is listed on the PIVR. 
Therefore, FCIC is revising the provisions to state the insurable value 
of the damaged plants will be removed from the basic unit value 
reported on the PIVR.
    FCIC is revising redesignated paragraph (i) by removing http://www.rma.usda.gov/ and replacing it with the phrase ``RMA's website.'' 
The hyperlink to RMA's website is provided in the Basic Provisions so 
it is not necessary to include it in the Crop Provisions. This is 
consistent with same reference in the definition of ``Eligible Plant 
List and Plant Price Schedule (EPLPPS)'' in the Crop Provisions.
    FCIC is revising redesignated paragraph (i)(4) to include the 
phrase ``(except printed discount schedules)'' to be consistent with 
the new definition of ``catalog'' in section 1.
    FCIC is revising redesignated paragraph (i)(5) by replacing the 
term

[[Page 4568]]

``scientific'' with ``botanical.'' While both terms are correct, 
``botanical'' is more appropriate because its meaning infers a name 
that is assigned to plants.
    6. Section 7--FCIC is revising paragraph (a) to include provisions 
specifying that the premium is multiplied by .55 when the catastrophic 
risk protection coverage is elected. Currently, the provisions only 
address how premium is calculated for additional coverage. This 
provision is added to prevent confusion.
    FCIC is revising paragraph (c). This paragraph states premium will 
be charged for the entire month ``if your premium is prorated.'' This 
clause is not necessary since the remainder of this provision 
adequately describes the calculation of premium for a partial month.
    FCIC is revising paragraphs (d)(1) and (2) to replace the date of 
``April 1'' with the phrase ``the premium billing date listed in the 
actuarial documents.'' Because the premium billing date is listed in 
the actuarial documents, it is not necessary to list it in the Crop 
Provisions. FCIC is also revising paragraph (d)(2) by adding the phrase 
``or submission of your PIVR or catalog'' to the end of the paragraph 
to maintain consistency between the beginning of the paragraph and the 
end of the paragraph.
    7. Section 8--FCIC is revising the introductory text to clarify the 
insured crop will be all insurable nursery plants and plant types 
within each insured practice. FCIC is also removing the phrase, 
``contained on the Eligible Price List, in which you have a share.'' 
Although Eligible Price List should be Eligible Plant List, the term is 
not needed since paragraph (a) contains the requirement that plants be 
shown on the Eligible Plant List. The phrase, ``in which you have a 
share,'' is revised and moved to a new paragraph (a) to be consistent 
with the format of other Crop Provisions. Paragraphs (a) through (j) 
are redesignated as paragraphs (b) through (k).
    FCIC is revising redesignated paragraph (i) to state plants grown 
to be sold with the root system removed are not insurable. The current 
provision states plants grown for sale as Christmas trees are not 
insurable. The intent of this provision is to exclude plants severed 
from their root systems and then sold. There are plants listed on the 
EPLPPS grown for sale as Christmas trees with the root system attached. 
One example is the Norfolk Island Pine, which is grown and sold in a 
container with the root system attached. Currently, those plants are 
not insurable because they are ``grown for sale as Christmas trees.'' 
Therefore, the provision is reworded to clarify all plants that are 
grown and sold with the root system attached are insurable.
    8. Section 9--FCIC is removing all references to the 2006 crop 
year. The references are no longer needed. Paragraph (a)(1)(i) has been 
deleted as a result. Paragraphs (a)(1)(ii) and (iii) have been 
redesignated as paragraphs (a)(1)(i) and (ii), respectively.
    FCIC is revising redesignated paragraph (a)(1)(i) by stating the 
insurance provider will notify the policyholder in writing if the 
application is rejected because the PIVR or catalog is not acceptable. 
The current provisions only state the insurance provider will notify 
the policyholder in writing if the inventory is not acceptable. Section 
6(b)(1) states policyholders will be notified in writing before the end 
of the 30-day waiting period because the inspection determines the 
policyholders do not meet the insurability requirements or the PIVR, 
catalog, or supporting documentation (if requested by us) is not 
acceptable. Similar language to this already exists in redesignated 
paragraph (a)(1)(i) but that language is revised to be consistent with 
the wording of the language in section 6(b)(1). Consistency between the 
two sections reduces confusion.
    FCIC is also revising redesignated paragraph (a)(1)(i). This 
paragraph states coverage begins on June 1 if the policyholder applies 
for coverage on or before May 1. Following this provision is a phrase 
that says, ``30 days after your crop insurance agent receives an 
application signed by you.'' The phrase reiterates that coverage 
attaches on June 1, which is 30 days after May 1, and is not needed.
    FCIC is revising redesignated paragraph (a)(1)(ii). This paragraph 
currently states coverage will not begin until the next crop year if 
the policyholder applies for coverage after May 1. To minimize 
confusion, FCIC is revising this paragraph to state coverage will not 
begin until the 31st day, which occurs on or after the beginning of the 
next crop year, after all such documents have been received.
    FCIC is adding a new paragraph (b)(5) to state insurance ends when 
the crop has been abandoned. Section 11 of the Basic Provisions 
currently contains information regarding abandonment of the crop but 
section 9 of the Crop Provisions states that section 11 of the Basic 
Provisions does not apply. Therefore, information regarding abandonment 
of the crop is included in the Crop Provisions.
    9. Section 10--FCIC is revising paragraph (c)(3) to incorporate the 
lead-in sentence from paragraph (c)(3)(i). The lead-in sentence says, 
``you have installed adequate cold protection equipment or 
facilities.'' This lead-in sentence is not contained in paragraph 
(c)(3)(ii), but should be. Therefore, for consistency and 
simplification, the lead-in sentence from paragraph (c)(3)(i) is added 
to paragraph (c)(3), and removed from paragraph (c)(3)(i), so that it 
applies to both subparagraphs.
    FCIC is revising paragraph (c)(3)(ii) by adding the phrase ``or 
facilities'' after the phrase ``required cold protection equipment.'' 
This change is made to be consistent with the language in paragraph 
(c)(3).
    FCIC is revising paragraph (c)(6) to be consistent with the change 
to the definition of ``good nursery practices.'' The phrase ``In lieu 
of section 12(b) of the Basic Provisions'' in paragraph (c)(6) is 
removed because good nursery practices as defined in the Crop 
Provisions will be in addition to good farming practices as defined in 
the Basic Provisions.
    10. Section 11--FCIC is revising paragraph (b). Current provisions 
state, ``Failure to obtain our written consent as required by section 
11(a)(1) will result in the denial of your claim.'' The provisions do 
not clearly state on what portion of the policy the claim will be 
denied. The revised provision clarifies the intent of the provisions, 
which is to deny the claim on an individual basic unit basis. The 
provisions are also revised so that they are written in plain language.
    11. Section 12--FCIC is incorporating provisions throughout section 
12 currently contained in the Special Provisions regarding the over-
report factor, including revising paragraph (a), revising paragraph 
(d), and adding a new paragraph (h).
    FCIC is revising paragraph (f)(1) to change the lead-in clause from 
``For other than catastrophic risk protection coverage'' to ``For 
additional coverage.'' This change improves readability and provides 
consistency with the terminology used throughout the Crop Provisions.
    FCIC is adding a new paragraph (i) to address record-keeping for 
policyholders who elect basic units by non-contiguous land. In section 
2(a), FCIC added provisions to allow for basic units by non-contiguous 
land, which included the requirement for policyholders to keep records 
separate by unit. If policyholders elect basic units by non-contiguous 
land, and a loss occurs on only one unit, then policyholders need to 
have records

[[Page 4569]]

applicable to that unit in order for the insurance company to properly 
work the loss.
    12. Section 14--FCIC is adding a new paragraph (a) and 
redesignating paragraphs (a) through (c) as (b) through (d), 
respectively. The newly added paragraph (a) is added to clarify that 
written agreements are only allowed for plants not listed on the 
EPLPPS.
    FCIC is revising newly designated paragraphs (b) and (d) by 
changing the term ``cancellation date'' to ``sales closing date.'' 
Current provisions state written agreements must be requested with the 
application for the initial crop year or no later than the cancellation 
date for subsequent crop years. The provisions are changed so that the 
deadline is the sales closing date, rather than the cancellation date. 
If, according to the current provisions, a policyholder submits a 
request prior to the cancellation date (for example, May 15th), the 
policyholder would have a lapse in coverage from June 1st (the start 
date of the crop year) until June 15th because of the 30-day waiting 
period. By changing the deadline to the sales closing date (May 1st), 
the policyholder does not risk having a lapse in coverage because 
coverage will automatically attach on June 1st, if the written 
agreement is approved. Also in redesignated paragraph (b), FCIC revised 
the reference ``section 14(c)'' to state ``section 14(d)'' in order to 
accommodate the redesignation of paragraph (c) as (d).
    13. Section 15--FCIC is revising the Single Unit Example and the 
Peak Inventory Endorsement Example to improve readability. FCIC is also 
adding a Single Unit Example regarding the over-report factor, which is 
currently contained in the Special Provisions.

Effective Date

    This regulation modifies program eligibility criteria along with 
several elements of the Nursery Crop Provisions. The intended effect of 
this action is to clarify and simplify policy provisions, allow basic 
units by non-contiguous land for the field grown practice, and reduce 
the 50 percent wholesale sales requirement to 40 percent. This 
regulation is related to a crop insurance policy, which is a contract 
between an approved insurance provider and the insured. In order to 
make the rule effective for the upcoming crop year, RMA is publishing 
it as a final rule. To accomplish this, RMA is employing the contracts 
exemption at 5 U.S.C. 553(a)(2), which grants agencies the opportunity 
publish rules related contracts without the prior notice and public 
comment period typically required in rulemaking. If RMA elected not to 
use the contracts exemption, farmers would be denied the added 
flexibility this rule provides to the crop insurance program for a full 
crop year. Moreover, while RMA is using the contracts exemption to make 
the changes effective for the upcoming crop year, the agency remains 
committed to public participation in rulemaking and will accept written 
comments on this final rule. RMA will consider all comments that are 
received and may conduct additional rulemaking based on the comments.

Executive Orders 12866, 13563, and 13771

    Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review,'' 
direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasized the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility. The Office of 
Management and Budget (OMB) designated this rule as not significant 
under Executive Order 12866, ``Regulatory Planning and Review,'' and 
therefore, OMB has not reviewed this rule. The rule is not subject to 
Executive Order 13771, ``Reducing Regulation and Controlling Regulatory 
Costs.''

Paperwork Reduction Act of 1995

    Pursuant to the provisions of the Paperwork Reduction Act of 1995 
(44 U.S.C. chapter 35, subchapter I), 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.'' Executive Order 13175 requires Federal agencies 
to consult and coordinate with tribes on a government-to-government 
basis on policies that have tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian tribes, on the relationship between the Federal Government 
and Indian tribes or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.
    The Federal Crop Insurance Corporation has assessed the impact of 
this rule on Indian tribes and determined that this rule does not, to 
our knowledge, have tribal implications that require tribal 
consultation under E.O. 13175. If a Tribe requests consultation, the 
Federal Crop Insurance Corporation will work with the Office of Tribal 
Relations to ensure meaningful consultation is provided where changes, 
additions and modifications identified herein are not expressly 
mandated by Congress.

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

[[Page 4570]]

to submit a notice of loss and production information to determine the 
indemnity amount for 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 (FCIA) 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 a significant impact 
on a substantial number of 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 2 CFR part 415, subpart C.

Executive Order 12988

    This 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 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.

List of Subjects in 7 CFR Part 457

    Crop insurance, Reporting and recordkeeping requirements.

Final Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends 7 CFR part 457 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) and 1506(o).

0
2. Amend Sec.  457.162 as follows:
0
a. In the introductory text by removing ``2006'' and adding ``2019'' in 
its place;
0
b. By removing the undesignated paragraph immediately preceding section 
1;
0
c. In section 1:
0
i. By removing the definitions of ``Act'';
0
ii. By revising the definitions of ``Amount of insurance'' and ``Basic 
unit value'';
0
iii. By adding in alphabetical order the definition of ``Catalog'';
0
iv. By revising the definition of ``Container grown'';
0
v. By adding in alphabetical order the definition of ``Crop Inventory 
Valuation Report'';
0
vi. By revising the definition of ``Crop year deductible'';
0
vii. By removing the definitions of ``Deductible percentage'' and 
``Eligible Plant List'';
0
viii. By adding in alphabetical order the definition of ``Eligible 
Plant List and Plant Price Schedule (EPLPPS)'';
0
ix. In the definition of ``Fabric grow bag'' by removing the word 
``woody'';
0
x. By removing the definition of ``FCIC'';
0
xi. By revising the definition of ``Field grown'';
0
xii. By removing the definitions of ``Field market value A'' and 
``Field market value B'';
0
xiii. By adding in alphabetical order the definitions of ``Field market 
value A (FMVA),'' ``Field market value B (FMVB)'';
0
xiv. In the definition of ``Good nursery practices'' by removing the 
phrase ``lieu of'' and adding the phrase ``addition to'' in its place;
0
xv. In the definition of ``Irrigated practice'' by removing the phrase 
``Eligible Plant List'' and adding ``EPLPPS'' in its place;
0
xvi. By revising the definitions of ``Liners'' and ``Loss'';
0
xvii. By adding in alphabetical order the definition of ``Lowest 
price'';
0
xviii. By revising the definitions of ``Marketable'', ``Nursery'', and 
``Occurrence deductible'';
0
xix. By adding in alphabetical order the definition of ``Over-report 
factor'';
0
xx. By removing the definition of ``Plant Price Schedule'';
0
xxi. By revising the definition of ``Practice'';
0
xxii. By adding in alphabetical order the definition of ``Restock'';
0
xxiii. In the definition of ``Sales closing date'' by adding the phrase 
``of these Crop Provisions'' immediately after the phrase ``sections 
3(d) and 9(a)'';
0
xxiv. By revising the definitions of ``Standard nursery containers,'' 
``Survival factor,'' and ``Under-report factor'';
0
d. Revise section 2;
0
e. In section 3:
0
i. In paragraph (a) by removing the phrase ``, including the 
misreporting provisions,'';
0
ii. By revising paragraphs (c)(1)(iv)(A) and (B) and (d)(2);
0
iii. By removing paragraph (e) and redesignating paragraph (f) as (e); 
and
0
iv. In newly redesignated paragraph (e) by removing the phrase 
``section 6(g)'' and adding ``section 6(f)'' in its place;
0
f. In section 6:
0
i. By revising paragraphs (b) and (c);
0
ii. In paragraph (d) by adding the phrase ``, if applicable,'' 
immediately following the phrase ``Peak Inventory Value Report'';
0
iii. By revising paragraphs (e) introductory text and (e)(1) and (2);
0
iv. By removing paragraph (f) and redesignating paragraphs (g) through 
(k) as (f) through (j), respectively;
0
v. By revising newly redesignated paragraphs (f) and (g)(2) and (3);
0
vi. In newly redesignated paragraph (i) by removing the phrase 
``Eligible Plant List at http://www.rma.usda.gov/'' and adding ``EPLPPS 
on RMA's website'' in its place; and
0
vii. By revising newly redesignated paragraphs (j) introductory text 
and (j)(4) and (5);
0
g. In section 7:
0
i. By revising paragraph (a);
0
ii. In paragraph (b)(1)(ii) by removing the phrase ``wholesale catalog 
or price list'' and adding the word ``catalog'' in its place;
0
iii. In paragraph (c) by removing the phrase ``If your premium is 
prorated, premium'' and adding the word ``Premium'' in its place; and
0
iv. By revising paragraph (d);
0
h. In section 8:
0
i. By revising the introductory text;
0
ii. By redesignating paragraphs (a) through (k) as (b) through (l), 
respectively, and adding a new paragraph (a);
0
iii. In newly redesignated paragraph (b) by removing the phrase 
``Eligible

[[Page 4571]]

Plant List'' in the two places it appears and adding ``EPLPPS'' in its 
place;
0
iv. In newly redesignated paragraph (f) by removing the word ``You'' 
and adding the word ``you'' in its place;
0
v. By revising newly redesignated paragraph (i); and
0
vi. In newly redesignated paragraph (k) by removing the word 
``Harvest'' and adding the word ``harvest'' in its place;
0
i. Revise section 9;
0
j. In section 10:
0
i. By revising paragraph (c)(3); and
0
ii. In paragraph (c)(6) by removing the phrase ``In lieu of section 
12(b) of the Basic Provisions, failure'' and adding the word 
``Failure'' in its place;
0
k. In section 11 by revising paragraph (b);
0
l. Revise section 12;
0
m. In section 14:
0
i. By redesignating paragraphs (a) through (c) as (b) through (d), 
respectively, and adding a new paragraph (a);
0
ii. In newly redesignated paragraph (b) by removing the word 
``cancellation'' and adding the words ``sales closing'' in its place 
and removing the phrase ``section 14(c)'' adding the phrase ``section 
14(d)'' in its place; and
0
iii. In newly redesignated paragraph (d) introductory text by removing 
the word ``cancellation'' and adding the words ``sales closing'' in its 
place; and
0
n. Revise section 15.
    The revisions and additions reads as follows:


Sec.  457.162  Nursery crop insurance provisions.

* * * * *
1. Definitions
* * * * *
    Amount of insurance. For the purposes of calculating premium, the 
result of multiplying the basic unit value by your selected coverage 
level and by your share. For the purpose of determining the amount of 
any indemnity, the result of multiplying the basic unit value by your 
selected coverage level and by your share minus any previous 
indemnities during the crop year paid under these Crop Provisions.
    Basic unit value. The full inventory value of all insurable plants 
in a basic unit declared on your original or revised PIVR and a Peak 
Inventory Value Report, if applicable.
    Catalog. Any document, including but not limited to printed 
discount schedules, issued by your nursery and used to advise actual 
and/or potential buyers of the amount you are charging for purchases of 
each plant included in the inventory.
    (1) Such documents may be issued by season, by plant type, or other 
basis consistent with your business practices.
    (2) The documents can be in any form, but must meet the minimum 
standards contained in section 6(j), except that the printed discount 
schedules do not have to be provided to customers.
    Container grown. A nursery production practice in which plants are 
grown in standard nursery containers: above the ground; placed in the 
ground; or when placed in another standard nursery container in the 
ground (i.e., pot-in-pot).
    Crop Inventory Valuation Report (CIVR). A plant inventory list 
created on the Nursery Inventory Software for assisting in establishing 
the insurable nursery plant inventory value.
* * * * *
    Crop year deductible. The basic unit value multiplied by the 
deductible minus the amount of any previously-incurred deductible if 
you have reported each loss to us in accordance with section 11(a)(2). 
The crop year deductible will be increased for any increases in the 
inventory value on the PIVR or through the purchase of a Peak Inventory 
Endorsement, if in effect at the time of loss.
    Eligible Plant List and Plant Price Schedule (EPLPPS). A component 
of the actuarial documents that is published by FCIC on RMA's website 
and is also available on compact disk from your crop insurance agent. 
The EPLPPS contains the following information:
    (1) The botanical and common names of insurable plants;
    (2) The cold protection requirements for container grown material 
and the areas in which they apply;
    (3) The hardiness zone in which field grown material is insurable;
    (4) The designated hardiness zones available for each county;
    (5) The plant type, storage key, and hardiness zone classification 
for each plant on the list; and
    (6) A schedule of insurable plant prices that establishes the 
highest value accepted for insurance purposes unless otherwise allowed 
by the policy or an endorsement to the policy.
* * * * *
    Field grown. A nursery production practice in which plants are 
grown in the ground. Plants grown in in-ground fabric grow bags, plants 
that are balled and burlapped, or plants grown in containers that allow 
the plants to root (excluding fibrous roots) into the ground (for 
example, a container without a bottom) are also considered field grown.
    Field market value A (FMVA). Our determination of the value of all 
insurable plants in the basic unit immediately prior to the occurrence 
of a loss event. This value will be determined in accordance with the 
requirements of section 6 of these Crop Provisions. For liners, the 
total value of undamaged liners is multiplied by the survival factor to 
determine the value of undamaged insurable plants.
    Field market value B (FMVB). Our determination of the value of all 
damaged and undamaged insurable plants in the basic unit following the 
occurrence of a loss event. This value will be determined in accordance 
with the requirements of section 6 of these Crop Provisions with an 
adjustment for the amount of damage we determine the plants have 
sustained.
* * * * *
    Liners. Plants produced in standard nursery containers that have a 
minimum dimension greater than or equal to \5/8\ inch and a maximum 
dimension of less than 3 inches at the widest point of the container or 
cell interior, have an established root system, and meet all other 
conditions specified in the Special Provisions.
    Loss. FMVA minus FMVB, as adjusted by any under-report factor or 
over-report factor. Payments made under the Rehabilitation Endorsement 
are not considered to be a loss.
    Lowest price. The lesser of the minimum price stated in your 
catalog or the price contained in the EPLPPS for a plant and its size. 
The minimum price in your catalog is the lowest price at which you will 
sell that plant and size to any buyer, including all incremental volume 
discounts or any other discounting factor.
    Marketable. A plant that can be sold in a customary or secondary 
market for a non-zero value.
* * * * *
    Nursery. A business enterprise that grows the nursery plants. At 
least 40 percent of its gross income derived from plant sales must be 
from the wholesale marketing of such plants.
    Occurrence deductible. This deductible allows a smaller deductible 
than the crop year deductible to be used when FMVA is more or less than 
the reported basic unit value. The occurrence deductible is the lesser 
of:
    (1) The deductible multiplied by FMVA and:
    (i) In under-report situations, multiplied by the under-report 
factor; or
    (ii) In over-report situations, multiplied by the sum of 1.000 plus 
the over-report factor; or
    (2) The crop year deductible.
    Over-report factor. The factor that adjusts your indemnity for 
over-

[[Page 4572]]

reporting of inventory values. This factor is used to determine 
indemnities when the basic unit value minus the total of all previous 
losses is more than 110 percent of FMVA for the same basic unit plus 
the insured value of plants listed on the verifiable sales records. The 
over-report factor is calculated by:
    (1) The basic unit value reported on the PIVR, including any Peak 
Inventory Value Report during the coverage term of a Peak Inventory 
Endorsement, if applicable, minus the total of all previous losses;
    (2) FMVA plus the insured value of plants listed on the verifiable 
sales records, minus 1.100; and
    (3) Dividing the result of paragraph (1) of this definition by the 
result of paragraph (2) of this definition.
    (4) If the result is greater than 0.000, then the over-report 
factor applies.
* * * * *
    Practice. A cultural method of producing plants identified in the 
actuarial documents.
    Restock. Replacement of lost or damaged plants that increases the 
value of the insurable inventory to an amount greater than the 
remaining amount of insurance.
* * * * *
    Standard nursery containers. Rigid containers that have a minimum 
dimension greater than or equal to \5/8\ inch, unless otherwise 
provided by the Special Provisions, at the widest point of the 
container interior, above-ground fabric grow bags, and other types of 
containers specified in the Special Provisions that are appropriate in 
size and provide adequate drainage for the plant. In-ground fabric grow 
bags, balled and burlapped, and trays (flats) without individual cells 
are not considered standard nursery containers.
* * * * *
    Survival factor. A value specified in the Special Provisions that 
denotes the expected percentage of liners that normally survive the 
period from insurance attachment to market.
    Under-report factor. The factor that adjusts your indemnity for 
under-reporting of inventory values. The factor is always used in 
determining indemnities. For each basic unit, the under-report factor 
is the lesser of:
    (1) 1.000; or
    (2) The basic unit value, including a Peak Inventory Value Report 
during the coverage term of a Peak Inventory Endorsement, if 
applicable, minus the total of all previous losses; and dividing that 
result by FMVA.
* * * * *
2. Unit Division
    (a) If you elect additional coverage for a practice, a basic unit, 
as defined in section 1 of the Basic Provisions, may be divided into 
additional basic units by:
    (1) Each insurable plant type for which a premium rate is provided 
by the actuarial documents; or
    (2) For the field grown practice only, non-contiguous land. Basic 
units by non-contiguous land for the container grown practice may be 
allowed if provided for in the Special Provisions.
    (b) Only the plant types listed in the actuarial documents are 
insurable.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities
* * * * *
    (c) * * *
    (1) * * *
    (iv) * * *
    (A) A new plant is added under a revised PIVR or Peak Inventory 
Value Report, if applicable; and
    (B) The new plant is not categorized under a plant type reported on 
the initial PIVR or Peak Inventory Value Report, if applicable.
* * * * *
    (d) * * *
    (2) For carryover policies:
    (i) Changes must be requested on or before the sales closing date; 
and
    (ii) Unless we reject the proposed increase because a loss occurs 
within 30 days of the date the request is made (rejection can occur at 
any time we discover such loss has occurred), requested changes will 
take effect on the date of the start of the crop year.
* * * * *
6. PIVR
* * * * *
    (b) You must submit a separate PIVR for each insured practice, as 
applicable, and two copies of your most recent catalog to us with your 
application and on or before the sales closing date for each crop year 
following the year of application. If you elected basic units by non-
contiguous land, you must also submit a separate PIVR for each non-
contiguous land unit within the insured practice, and keep all records 
separate by unit.
    (1) You will be notified in writing on or before the end of the 30-
day waiting period if an application for insurance is rejected because 
the inspection determines you do not meet the insurability requirements 
or the PIVR, catalog, or supporting documentation (if requested by us) 
is not acceptable.
    (2) If you fail to provide a PIVR or catalog on or before the sales 
closing date for any crop year, insurance will not attach until the 
31st day after all such documents have been received by your crop 
insurance agent and we will not be liable for any losses that occur 
before insurance has attached.
    (c) The PIVR must include, by basic unit, all growing locations, 
basic unit value, coverage level selected, as applicable, and your 
share.
    (1) If you do not elect additional basic units by plant type, or 
additional basic units by non-contiguous land, or if you elect 
catastrophic risk protection coverage, the inventory values for each 
plant type in the basic unit must be separately reported on the PIVR 
and totaled to determine the basic unit value.
    (2) At our option, you will be required to provide documentation in 
support of your PIVR, including, but not limited to the following:
    (i) A detailed plant inventory listing that includes the name, the 
number, and the size of each plant, or a CIVR;
    (ii) Acceptable records of sales and purchases of plants for the 
three previous crop years in the amount of detail we require. 
Acceptable records must contain the name and telephone number of the 
purchaser or seller, as applicable, names of the plants, the number of 
each plant sold or purchased, and the sales price for each plant; and
    (iii) Your ability to properly obtain and maintain nursery plants.
    (3) If you fail to provide the requested documentation:
    (i) Before insurance attaches, your insurance will be denied for 
the crop year for any basic units for which you did not provide such 
documentation. This provision does not apply to:
    (A) Plant varieties you have not previously grown; or
    (B) New nurseries where an inspection has determined you have the 
ability to properly obtain and maintain the nursery plants.
    (ii) After insurance attaches, you will still owe premium, but you 
will not receive an indemnity for any basic units for which you did not 
provide such documentation. This provision does not apply to:
    (A) Plant varieties you have not previously grown; or
    (B) New nurseries where an inspection has determined you have the 
ability to properly obtain and maintain the nursery plants.
    (4) If you provide inadequate documentation (i.e., documentation 
that does not support the amount for which you reported) after 
insurance attaches for each basic unit, your insurance will not be 
denied for the crop year. However, your failure to provide

[[Page 4573]]

adequate documentation may result in a reduction in your indemnity for 
each basic unit where inadequate documentation was provided.
    (5) For policies insured at the catastrophic risk protection level, 
you must report, on the PIVR for each practice insured, your greatest 
plant sales in any of the previous three years and the actual inventory 
value on the date insurance attaches. For each applicable practice, the 
total of your basic unit values cannot exceed 110 percent of the higher 
of your:
    (i) Greatest amount of plant sales in any of the previous three 
years; or
    (ii) Actual inventory value on the date insurance attaches.
* * * * *
    (e) Your PIVR must reflect your insurable basic unit value.
    (1) The basic unit value you report on your PIVR must be based on 
the lowest price for each plant size included in the inventory. The 
inventory value of insured liners must be multiplied by the survival 
factor.
    (2) In no instance will we be liable for plant values greater than 
those contained in the EPLPPS.
* * * * *
    (f) You may increase your reported inventory value for each basic 
unit no more than twice during the crop year by submitting a revised 
PIVR prior to 30 days before the end of such crop year.
    (1) Any requested increase must be made in writing and meet all the 
requirements of the original PIVR.
    (2) We will perform an inspection of the nursery to determine if 
adequate and acceptable facilities exist to accommodate the requested 
increased inventory value when the total of all the basic unit values 
contained on the revised PIVR or Peak Inventory Value Report, if 
applicable, is increased 50 percent or more from the previous total of 
all the basic unit values on the PIVR, and the increase is not due to 
restocking subsequent to an insured loss.
    (3) At our discretion, we may inspect the nursery to determine if 
adequate and acceptable facilities exist to accommodate the requested 
increased inventory value if an increase of less than 50 percent is 
reported on the revised PIVR or Peak Inventory Value Report, if 
applicable.
    (4) Your revised PIVR will be considered accepted by us and 
insurance will attach on any proposed increase in inventory value 30 
days after your written request is received unless we reject the 
proposed increase in your plant inventory value in writing.
    (5) We will reject any requested increase if a loss occurs within 
30 days of the date the request is made (rejection can occur at any 
time we discover such loss has occurred).
    (6) You cannot revise your PIVR to decrease the plant inventory 
value after the start of the insurance period specified in section 9.
    (7) Notwithstanding section 6(f), if you have suffered an insured 
loss on a basic unit and have restocked the nursery, then you are 
allowed to increase your reported inventory value for the basic unit 
one additional time by submitting a revised PIVR.
    (g) * * *
    (2) The insurable value of such plants will be removed from the 
applicable basic unit value reported on the PIVR if they are not 
accepted;
    (3) The procedure for calculating the insurable value of damaged 
plants that are accepted for coverage is contained in the Special 
Provisions.
* * * * *
    (j) At a minimum, your catalog must meet the following standards:
* * * * *
    (4) Be provided to customers (except printed discount schedules) 
and used in the sale of your plants; and
    (5) List each plant's name (botanical or common), plant or 
container size, and wholesale price.
7. Premium
    (a) In lieu of section 7(c) of the Basic Provisions, we will 
determine your premium by multiplying the amount of insurance by the 
appropriate premium rate, any premium adjustment factor, and the 
monthly proration factor contained in the actuarial documents. If you 
elect catastrophic risk protection coverage, this calculation must also 
be multiplied by fifty-five percent.
* * * * *
    (d) In lieu of section 7(a) of the Basic Provisions:
    (1) If you apply for insurance before the premium billing date 
listed in the actuarial documents, the annual premium is earned and 
payable at the time coverage begins. You will be billed for the premium 
and administrative fee not earlier than the premium billing date listed 
in the actuarial documents.
    (2) If you apply for insurance, or submit your PIVR or catalog, on 
or after the premium billing date listed in the actuarial documents, 
the premium for the partial crop year will be due and must be paid at 
the time of application or submission of your PIVR or catalog.
    (3) Failure to pay the premium at the time of application or when 
you submit your PIVR or catalog will result in no insurance and no 
indemnity being owed for the crop year.
8. Insured Crop and Plants
    In lieu of the provisions of sections 8 and 9 of the Basic 
Provisions, the insured crop will be all nursery plants in each 
practice you elect to insure, and:
    (a) For which you have a share;
* * * * *
    (i) Are grown and sold with the root system attached;
* * * * *
9. Insurance Period
    (a) In lieu of section 11 of the Basic Provisions:
    (1) For the year of application, if you apply for coverage:
    (i) On or before May 1st of the crop year, coverage begins June 
1st, unless we notify you in writing that your application is rejected 
because your PIVR, catalog, or supporting documentation (if requested 
by us) is not acceptable;
    (ii) After May 1st, coverage will not begin until the 31st day 
after we receive all acceptable documents; and
    (2) For continuous policies, the insurance period begins on each 
June 1st.
    (b) Insurance ends at the earliest of:
    (1) The date of final adjustment of a loss when the total 
indemnities due equal the amount of insurance;
    (2) Removal of bare root nursery plant material from the field;
    (3) Removal of all other insured plant material from the nursery;
    (4) May 31st; or
    (5) Abandonment of the crop on the basic unit.
10. Causes of Loss
* * * * *
    (c) * * *
    (3) Cold temperatures, if cold protection is required in the 
EPLPPS, unless you have installed adequate cold protection equipment or 
facilities and:
    (i) There is a failure or breakdown of the cold protection 
equipment or facilities resulting from an insurable cause of loss 
specified in section 10(a) (the insured plants must be damaged by cold 
temperatures and the damage must occur within 72 hours of the failure 
of such equipment or facilities unless we establish that repair or 
replacement was not possible between the time of failure or breakdown 
and the time the damaging temperatures occurred); or
    (ii) The lowest temperature or its duration exceeded the ability of 
the required cold protection equipment or facilities to keep the 
insured plants from sustaining cold damage;
* * * * *

[[Page 4574]]

11. Duties in the Event of Damage or Loss
* * * * *
    (b) If you fail to obtain our written consent as required by 
section 11(a)(1), your claim will be denied on each basic unit for 
which written consent was not obtained.
12. Settlement of Claim
    We will determine indemnities for any unit as follows:
    (a) Determine the under-report factor or over-report factor, as 
applicable, for the basic unit;
    (b) Determine the occurrence deductible;
    (c) Subtract FMVB from FMVA;
    (d) Multiply the result of 12(c) by the under-report factor or one 
minus the over-report factor (1.000 - over-report factor), as 
applicable;
    (e) Subtract the occurrence deductible from the result in section 
12(d); and
    (f) If the result of section 12(e) is greater than zero, and 
subject to the limit stated in section 12(g):
    (1) For additional coverage, your indemnity equals the result of 
section 12(e) multiplied by your share.
    (2) For catastrophic risk protection coverage, your indemnity 
equals the result of section 12(e) multiplied by fifty-five percent and 
by your share.
    (g) The total of all indemnities for the crop year will not exceed 
the amount of insurance, including any peak amount of insurance during 
the coverage term of the Peak Inventory Endorsement, if this 
endorsement is elected.
    (h) In order to prevent your indemnity from being reduced when you 
have over-reported your basic unit value, the following must apply: 
FMVA plus the insured value of the plants listed on the verifiable 
sales records must support, within 10 percent, the basic unit value 
reported on the PIVR, revised PIVR, and Peak Inventory Value Report, if 
applicable, minus the total of all previous losses. Otherwise, any 
indemnity for that basic unit will be reduced by an over-report factor.
    (i) If you elected basic units by non-contiguous land, in 
accordance with section 3(a)(ii), and you do not keep your records 
separate by unit, we will combine all basic units for which records 
were not kept separate.
* * * * *
14. Written Agreements
    (a) Written agreements may only be requested for plants not listed 
on the EPLPPS.
* * * * *
15. Examples
Single Unit Example for an Under-Report Situation
    Assume you have a 100 percent share and the basic unit value 
reported by you is $100,000. Your coverage level is 75 percent. Your 
amount of insurance is $75,000 ($100,000 x .75). At the time of loss, 
we determine that the value of your inventory immediately before the 
loss (FMVA) is $125,000, and the value after the loss (FMVB) is 
$80,000. Your indemnity would be calculated as follows:
    Step (1): $100,000 / $125,000 = .80 is the under-report factor;
    Step (2): The occurrence deductible is the lesser of a) .25 x 
$125,000 x .80 = $25,000; or b) $100,000 x (1.00 - .75) = $25,000;
    Step (3): $125,000 - $80,000 = $45,000 loss;
    Step (4): $45,000 x .80 = $36,000 loss after the under-report 
factor is applied;
    Step (5): $36,000 - $25,000 = $11,000 loss after the occurrence 
deductible; and
    Step (6): $11,000 x 1.000 share = $11,000 indemnity payment.
Single Unit Example for an Over-Report Situation
    Assume you have a 100 percent share and the basic unit value 
reported by you is $125,000. Your coverage level is 75 percent. Your 
amount of insurance is $93,750 ($125,000 x .75). At the time of loss, 
we determine that the value of your inventory immediately before the 
loss (FMVA) is $100,000, and the value after the loss (FMVB) is 
$50,000. You provide verifiable sales records containing an insured 
value of plants equaling $10,000. Your indemnity would be calculated as 
follows:
    Step (1): ($125,000 / ($100,000 + $10,000)) - 1.100 = .04 is the 
over-report factor;
    Step (2): The occurrence deductible is the lesser of: a) .25 x 
$100,000 x (1.000 + .04) = $26,000; or b) .25 x $125,000 = $31,250;
    Step (3): $100,000 - $50,000 = $50,000 loss;
    Step (4): $50,000 x (1.000 - .04) = $48,000 loss after the over-
report factor is applied;
    Step (5): $48,000 - $26,000 = $22,000 loss after the occurrence 
deductible; and
    Step (6): $22,000 x 1.000 share = $22,000 indemnity payment.
Peak Inventory Value Report Example
    Assume you have a second loss on the same basic unit as the first 
example. Your amount of insurance has been reduced by subtracting your 
previous indemnity payment of $11,000 from your amount of insurance 
($75,000 - $11,000 = $64,000). Your crop year deductible has been 
reduced to zero by the previous loss ($25,000 - $36,000, but not less 
than zero). You purchase a Peak Inventory Endorsement and report 
$60,000 in inventory. Your peak amount of insurance is your reported 
inventory times your coverage level ($60,000 x .75 = $45,000). The 
combined amount of insurance for the coverage term of the peak 
endorsement is $64,000 + $45,000 = $109,000. Your crop year deductible 
is increased by $15,000 ($60,000 x .25). At the time of loss, we 
determine that the value of your inventory immediately before the loss 
(FMVA) is $124,000, and the value after the loss (FMVB) is $58,000. 
Your indemnity would be calculated as follows:
    Step (1): ($160,000 - $36,000)/$124,000 = 1.00 is the under-report 
factor;
    Step (2): The occurrence deductible is the lesser of: a) .25 x 
$60,000 x 1.00 = $15,000; or b) $60,000 x .25 = $15,000;
    Step (3): $124,000 - $58,000 = $66,000 loss;
    Step (4): $66,000 x 1.00 = $66,000 loss after the under-report 
factor is applied;
    Step (5): $66,000 - $15,000 = $51,000 loss after the occurrence 
deductible; and
    Step (6): $51,000 x 1.000 share = $51,000 indemnity payment.
    Your peak amount of insurance is reduced to zero. Your amount of 
insurance is reduced by the amount the indemnity exceeds the peak 
amount of insurance. $64,000 - ($51,000 - $45,000) = $64,000 - $6,000 = 
$58,000.

    Signed in Washington, DC, on January 26, 2018.
Heather Manzano,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 2018-01964 Filed 1-30-18; 8:45 am]
 BILLING CODE 3410-08-P