[Federal Register Volume 75, Number 145 (Thursday, July 29, 2010)]
[Rules and Regulations]
[Pages 44709-44718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-18359]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 75, No. 145 / Thursday, July 29, 2010 / Rules
and Regulations
[[Page 44709]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
RIN 0563-AC21
Common Crop Insurance Regulations; Stonefruit Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes
amendments to the Common Crop Insurance Regulations, Stonefruit Crop
Insurance Provisions, and removes the Plum Crop Insurance Provisions
from the Code of Federal Regulations. The intended effect of this
action is to allow coverage for plums under the Stonefruit Crop
Insurance Provisions; provide policy changes and clarify existing
policy provisions to better meet the needs of the producers; and to
reduce vulnerability to program fraud, waste, and abuse to the Federal
crop Insurance Program. The changes will be effective for the 2011 and
succeeding crop years.
DATES: Effective Date: This rule is effective August 30, 2010.
FOR FURTHER INFORMATION CONTACT: Claire White, Economist, Product
Management, Product Administration and Standards Division, Risk
Management Agency, Beacon Facility, Stop 0812, Room 421, PO Box 419205,
Kansas City, MO 64141-6205 at the Kansas City, MO, telephone (816) 926-
7730.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
rule is non-significant for the purpose of Executive Order 12866 and,
therefore, it has not been reviewed by OMB.
Paperwork Reduction Act of 1995
Pursuant to the provisions of the Paperwork Reduction Act of 1995
(44 U.S.C. chapter 35), the collections of information in this rule
have been approved by OMB under control number 0563-0053 through March
31, 2012.
E-Government Act Compliance
FCIC is committed to complying with the E-Government Act of 2002,
to promote the use of the Internet and other information technologies
to provide increased opportunities for citizen access to Government
information and services, and for other purposes.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal governments and
the private sector. This rule contains no Federal mandates (under the
regulatory provisions of title II of the UMRA) for State, local, and
tribal governments or the private sector. Therefore, this rule is not
subject to the requirements of sections 202 and 205 of UMRA.
Executive Order 13132
It has been determined under section 1(a) of Executive Order 13132,
Federalism, that this rule does not have sufficient implications to
warrant consultation with the States. The provisions contained in this
rule will not have a substantial direct effect on States, or on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.
Regulatory Flexibility Act
FCIC certifies that this regulation will not have a significant
economic impact on a substantial number of small entities. Program
requirements for the Federal crop insurance program are the same for
all producers regardless of the size of their farming operation. For
instance, all producers are required to submit an application and
acreage report to establish their insurance guarantees and compute
premium amounts, and all producers are required to submit a notice of
loss and production information to determine the amount of an indemnity
payment in the event of an insured cause of crop loss. Whether a
producer has 10 acres or 1000 acres, there is no difference in the kind
of information collected. To ensure crop insurance is available to
small entities, the Federal Crop Insurance Act authorizes FCIC to waive
collection of administrative fees from limited resource farmers. FCIC
believes this waiver helps to ensure that small entities are given the
same opportunities as large entities to manage their risks through the
use of crop insurance. A Regulatory Flexibility Analysis has not been
prepared since this regulation does not have an impact on small
entities, and therefore, this regulation is exempt from the provisions
of the Regulatory Flexibility Act (5 U.S.C. 605).
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which require intergovernmental consultation with State and
local officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12988
This proposed rule has been reviewed in accordance with Executive
Order 12988 on civil justice reform. The provisions of this rule will
not have a retroactive effect. The provisions of this rule will preempt
State and local laws to the extent such State and local laws are
inconsistent herewith. With respect to any direct action taken by FCIC
or action by FCIC to require the insurance provider to take specific
action under the terms of the crop insurance policy, the administrative
appeal provisions published at 7 CFR part 11 must be exhausted before
any action against FCIC for judicial review may be brought.
Environmental Evaluation
This action is not expected to have a significant economic impact
on the quality of the human environment, health, or safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
[[Page 44710]]
Background
On November 24, 2009, FCIC published a notice of proposed
rulemaking in the Federal Register at 74 FR 61286-61289 to remove and
reserve 7 CFR 457.157 and to revise 7 CFR 457.159 Stonefruit Crop
Insurance Provisions. Following publication of the proposed rule, the
public was afforded 60 days to submit written comments and opinions.
A total of 50 comments were received from three commenters. The
commenters were two reinsured companies and one insurance services
organization. The comments received and FCIC's responses are as
follows:
General Comments
Comment: Several commenters support combining the Plum Crop
Insurance Provisions and the Stonefruit Crop Insurance Provisions since
the policy provisions are so similar. A commenter specifically supports
expanding plum coverage to the Pacific Northwest states.
Response: FCIC thanks the commenters for their support regarding
combining the Plum Crop Insurance Provisions and the Stonefruit Crop
Insurance Provisions. Combining the two Crop Provisions will enable
expansion of plum insurance to producers beyond California, where there
is supporting data.
Comment: A commenter recommends FCIC provide reinsured companies
with a preview of the Special Provisions statements and a list of any
areas intended for expansion.
Response: Providing the reinsured companies with a preview of the
Special Provisions statements for intended areas of expansion exceeds
the scope of this rule. FCIC cannot expand any program unless there is
sufficient actuarial data upon which to establish premium rates. FCIC
will coordinate with the reinsured companies through the normal course
of business to ensure proper coverage is made available.
Comment: A commenter states there are some differences, such as
provisions or phrases contained in the Plum Crop Insurance Provisions
that are not contained in the current or proposed Stonefruit Crop
Insurance Provisions, some of which are addressed in comments below. If
the provisions apply only to plums, a number of ``in lieu of''
statements in the Plum Special Provisions statements will be required,
which may not be worth combining these two sets of Crop Provisions. The
commenter asked how this consolidation will affect the existing Special
Provisions statements for the covered crops.
Response: Each crop insured under the Stonefruit Crop Insurance
Provisions has a separate set of Special Provisions statements.
Therefore, plums will have a separate set of Special Provisions
statements. Each set of Special Provisions statements will clearly
indicate any exclusions, restrictions, etc. for plums and for the other
specific crops insured under the Stonefruit Crop Insurance Provisions.
Further, FCIC has many policies, such as coarse grains and small
grains, that apply to more than crop and there may be provisions that
are unique to one crop. FCIC will similarly handle any such unique
provisions for stonefruit and plums.
Comment: Two commenters asked if coverage will be expanded beyond
the current counties with plums and stonefruit crops, and if so, the
commenters asked where and when the expansion will occur.
Response: The new provisions will enable expansion of plum
insurance to producers beyond California and stonefruit insurance to
producers beyond the counties where stonefruit insurance is currently
available, where there is actuarially sufficient data to establish
premium rates. Requests to expand the Stonefruit crop insurance program
should be submitted to the applicable Risk Management Agency (RMA)
Regional Office.
Section 1--Definitions
Comment: A commenter states the proposed definition of
``marketable'' states ``stonefruit production that meets or exceeds the
quality standards for U.S. No. 1 in accordance with the applicable
grade standards or other standards specified in the Special Provisions
or is accepted by a packer, processor or other handler.'' According to
the Background section of the proposed rule, ``* * *The new definition
clarifies that the grade standards will first be applied to determine
whether the stonefruit is marketable. If the stonefruit does not make
grade, it is not considered marketable unless a packer, handler or
processor accepts the production not making grade. If accepted, it will
be considered marketable.'' However, this is not clear in the revised
definition, which still allows production to be considered
``marketable'' by either meeting the standards or being accepted by a
processor, etc., without any indication that the grade standards must
be applied first. Maybe that sequence is not needed since the
production will be considered ``marketable'' either way, and this
revision at least refers to the grade standards first (as compared to
the current definition). But if it is truly intended that the grade be
determined first, before considering whether the production has been
accepted, the language needs to be reworked to include the phrase ``* *
* or if it failed to meet the applicable standards but is accepted * *
*'' at the end of the definition.
A commenter states if the definition of ``marketable'' remains as
is, then a comma should be added after ``Special Provisions * * *''
A commenter states the definition could be revised to remove the
words ``or other standards specified in the Special Provisions'' since
this is already covered in the revised definition of ``Grade
Standards.''
Response: FCIC agrees the definition of ``marketable'' is not
clear. FCIC has revised the definition of marketable to be consistent
with the information provided in the Background section of the proposed
rule. The definition has been revised to clarify the grade standards
will first be applied to determine whether the stonefruit is
marketable. If the stonefruit does not make the applicable grade, it is
not considered marketable unless a packer, handler or processor accepts
the production not making grade. FCIC also agrees with adding a comma
after ``Special Provisions'' and has revised the provisions
accordingly.
Comment: A commenter recommends adding a definition of ``scion,''
which is currently defined in the Plum Crop Insurance Provisions.
Response: A scion, according to the Plum Crop Insurance Provisions,
is a ``twig or portion of a twig of one plant that is grafted onto a
stock of another.'' The only other reference to scion in the Plum Crop
Insurance Provisions is in section 6 regarding the minimum insurability
requirements for plums produced on scions. Based on another comment
FCIC received for section 6 of the proposed Stonefruit Crop Insurance
Provisions, FCIC made a revision to section 6(b)(6) to specify minimum
insurability requirements for trees that have been grafted. Since
scions result from grafting, the reference to grafting will also
include plums and other stonefruit. Therefore, it is not necessary to
add a definition of ``scion.'' The recommended change has not been
made.
Comment: Two commenters state the proposed rule adds flexibility by
including several references to ``* * * or as specified in the Special
Provisions'' throughout the Crop Provisions so policy changes can be
made without having to go through the regulatory process. The
commenters are interested to see what comments are
[[Page 44711]]
received from the reinsured companies. While some flexibility can be
helpful, some of these changes could cause confusion, such as adding
another stonefruit crop to be covered under these Crop Provisions
without having any references to that crop other than in the Special
Provisions. The commenters question whether the definition of
``stonefruit'' should allow for a new stonefruit crop to be added in
the Special Provisions without having to go through the regulatory
process of revising these Crop Provisions. That would seem to bypass
the process that allows members of the crop insurance industry and
other members of the public to review and comment to such a significant
policy change. It also could make it difficult for producers to know
what exactly their policy covers when the Crop Provisions do not
include a complete list of which crops are insurable under the policy.
Response: FCIC does not agree creating the flexibility to add
another stonefruit crop through the Special Provisions could cause
confusion. Providing this flexibility eliminates the administrative
burden of revising regulations if it is determined an additional crop
can be adequately insured under the Stonefruit Crop Insurance
Provisions. FCIC has retained the provisions. No change has been made.
Comment: A commenter states the usual format for FCIC's policy
provisions is to use semicolons at the end of subsections (a)-(g)
rather than commas.
Response: FCIC agrees and has revised the provisions accordingly.
Comment: A few commenters state the proposed definition of ``type''
states: ``A category of a stonefruit crop with similar characteristics
that are grouped for insurance purposes.'' The commenter states this
definition indicates the types will be listed in the Special
Provisions. It is difficult to consider and comment on how that might
affect various aspects of the crop program without any indication of
what those types might be and whether they will be the same as under
the current Stonefruit Crop Insurance Provisions and Plum Crop
Insurance Provisions or if there will be changes. There are many
references to ``type'' in this proposed rule but reinsured companies
cannot get an accurate idea of how type will apply to the various
components of this proposed rule, such as unit division, unless a
preview of the Special Provisions is also provided in advance.
Response: FCIC is using type instead of varietal group but the
meaning has not changed. The current varietal groups are now the new
types. Therefore, the only change has been in nomenclature.
Section 2--Unit Division
Comment: Two commenters state the introductory sentence in this
section uses the word ``Notwithstanding'' but recommends replacing this
word with ``In lieu of'' to be more consistent with the terminology
used in other Crop Provisions.
Response: Although this section was not included in the proposed
rule, FCIC agrees and has revised the provisions accordingly, since it
is merely a technical correction and does not change the meaning or
intent of the provision.
Comment: Two commenters state section 2(b), as revised in the
proposed rule, reads as follows: ``Optional Units by Type: Optional
units may be established by type if allowed by the Special
Provisions.'' The commenters suggest revising section 2(b) to read as
follows: ``Optional Units by Type: Optional units may be established by
type.'' Alternatively, based on a comment above, if a reference to the
Special Provisions is still deemed as necessary, consider changing it
to read as follows: ``Optional Units by Type: Optional units may be
established by type if different types are listed in the Special
Provisions.'' The current phrase ``if allowed'' gives the appearance
the Special Provisions will have a statement indicating whether or not
optional units by type are allowed, which is not intended by this item.
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended change.
Section 3--Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities
Comment: A commenter recommends changing the phrase ``one price
election'' to ``one price election percentage.'' If this change is
made, this might require revision of the rest of this subsection to
reflect this change.
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended change.
Comment: A commenter recommends changing the first reference to
`cling peaches' from plural to singular (`cling peach') in section
3(a).
Response: Although this section was not included in the proposed
rule, FCIC agrees and has revised the provisions accordingly, since it
is merely a technical correction and does not change the meaning or
intent of the provision.
Comment: A commenter suggests the reference to ``Any damage * * *''
in section 3(b)(1) might be clarified as ``Any damage to the trees * *
*'' to distinguish it from damage to the previous year's fruit crop
that would be reflected in a lower yield for the crop year.
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended change.
Comment: A commenter questions using the word ``bearing'' in
section 3(b)(2). Producers are required to report their uninsurable
acres, and when trees are first planted, they will be non-bearing. The
commenter asked whether it is the intent for producers to report zero
trees on their uninsurable acres. If the block consists of older trees
and younger interplanted trees of the same variety, and only the
bearing trees are counted, there will be inconsistencies with the
acres, the tree spacing, and the density. If producers remove many
older trees and replace them with younger trees, they will need to
report them on the Producer's Pre-Acceptance Worksheet (PAW) as they
have performed cultural practices that will reduce the yield from
previous levels. Producers should be required to report all trees and
this number should remain constant until they remove trees or plant new
trees. The commenter states they should not be required to track only
the trees that are bearing and be required to revise this figure each
year.
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended change. In
addition, the information that must be submitted in accordance with
section 3(b) is required in order to establish the producer's actual
production history (APH) approved yield and the amount of his/her
coverage. While section 3(b)(2) only requires the bearing trees on
insurable and uninsurable acreage to be reported, the number of bearing
and non-bearing
[[Page 44712]]
trees on insurable and uninsurable acreage must be reported on the PAW.
Perennial crop policies contain provisions for ``bearing trees'' to
identify trees that meet the eligibility requirements for insurance
coverage. Since premium and indemnity payments are based on the number
of trees that meet eligibility requirements, reinsured companies are
required to track bearing trees as outlined in the Crop Provisions and
the Crop Insurance Handbook.
Comment: A commenter states section 3(b) requires the producer to
report for each stonefruit crop the age of trees and the planting
pattern. The commenter states concerns have been raised about
interplanting and tracking of age differences between plantings.
Although this section of the existing Crop Provisions is not
specifically included in this proposed rule, FCIC needs to address
different planting patterns within a block and new plantings
interplanted with mature trees. This issue is not specific to
stonefruit as it affects most all Category C crops, but it is essential
FCIC provide clear instructions. It is reasonable to address it during
this time so it can be covered in these new provisions for 2011.
More specifically, the commenter states producers may have
significant differences in age of trees within a block, even the same
row. Many trees are already several years old but if damage results to
a specific tree or group of trees, or if the tree is just not producing
well, a producer may remove the tree and replace it with a new
planting. This could be one or two trees within a row or one row within
a block. Additionally, the planting pattern may start out the same but
become closer or more spread out as it nears the end of the row or
starts to go up a hill. FCIC must recognize that spacing requirements
and planting patterns are not constant. This common practice results in
inaccurate reporting because a procedure does not exist for this type
of tracking. The policy language requires the producer to report the
age of the trees and the planting pattern. Language needs to be added
to address policies covering trees that vary in age and planting
patterns.
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended change.
However, FCIC acknowledges situations, such as those outlined by the
commenter, are not readily addressed by the general terms of the policy
provisions. For this reason, instructions are provided in the Crop
Insurance Handbook.
Comment: A commenter questions the need to know the planting
pattern. This requires space on the PAW that could better be used to
ask if the producer is `intending to direct market' any portion of
their crop. The commenter states they already capture tree spacing and
tree count and this is what is needed to determine if there have been
tree removals or acreage reductions.
Response: FCIC requires the producer to report the planting pattern
so the reinsured company can use this information to determine if there
is adequate tree spacing for the producer to carry out recommended
orchard management practices.
Comment: A commenter states section 3(c) specifically states that
the yield used to establish the production guarantee will be reduced.
This language only indicates when it will be reduced but not how a
reinsured company should apply the reduction. Although much of this
language is existing in the current Stonefruit Crop Insurance
Provisions, FCIC must clarify how the yield used to establish the
production guarantee will be reduced or the procedures to be applied to
reduce the yield used to establish the production guarantee.
Response: Not all situations will be reduced the same so it is not
practical to put the provisions in the Crop Provisions. Some guidance
is provided in the Basic Provisions and will be provided in the Crop
Insurance Handbook. No change has been made.
Comment: Two commenters state the reference to ``* * * any event or
action of any of the items listed in section 3(b)(1) through (4) * *
*'' in section 3(c) should be changed to refer to 3(b)(1), or possibly
(1) and (4), since 3(b)(2) [number of bearing trees] and 3(b)(3) [age
of trees and planting pattern] are not an ``event or action'' that will
occur at a particular time and potentially reduce the yield used to
establish the production guarantee.
Response: FCIC agrees that the items listed are not all events or
actions. The provisions have been revised to refer to any of the
``situations'' specified in section 3(b)(1) through (4).
In addition, FCIC has removed the phrase ``of any of the items'' in
section 3(c) because it is not needed.
Comment: A commenter states the phrase ``as indicated below'' at
the end of the first sentence of 3(c) could be deleted since the
subsequent phrase ``If the event or action occurred:'' leads in to
sections 3(b)(1) through (3). Another commenter suggests revising the
phrase ``as indicated below'' to state ``that occurred.''
Response: As stated above, FCIC has revised the provisions to refer
to the situations listed because some are not actions or events and
deleted the phrase ``as indicated below.''
Comment: A commenter states throughout sections 3(c) and 3(c)(1)
through 3(c)(3), it is stated that ``We will reduce the yield used to
establish your production guarantee, as necessary * * *'' when certain
events or actions have occurred. The commenter questions whether those
events or actions would include when a reduced yield is due to
insurable or uninsurable causes of loss that are normally reflected
when the yield used to establish the production guarantee is
established or updated.
Response: When situation occurs before the beginning of the
insurance period, the yield used to establish the production guarantee
will be reduced if the situation is due to either an insurable or
uninsurable cause of loss. When the situation occurs after the
beginning of the insurance period, regardless if the producer provides
notification, the yield used to establish the production guarantee will
be reduced if the event or action is due to an uninsurable cause of
loss. FCIC has revised the provisions in sections 3(c)(1) through (3)
to provide clarification.
Comment: A commenter states the wording in section 3(c)(1) is
unclear:
The first sentence states ``[If the event or action
occurred:] (1) Before the beginning of the insurance period, we will
reduce the yield used to establish your production guarantee for the
current crop year as necessary.'' The phrases ``we will reduce the
yield used to establish your production guarantee'' and ``as
necessary'' are already stated in the preceding section 3(c). Perhaps
this could be rewritten or rearranged to reduce the repetition.
The second sentence states ``If you fail to notify us of
any circumstance that may reduce your yields from previous levels, we
will reduce your production guarantee at any time we become aware of
the circumstance.'' Is it intended that the production guarantee will
be reduced in this case, instead of the yield used to establish your
production guarantee as is stated in the rest of sections 3(c) and
3(c)(1) through 3(c)(3), or should this also say ``yield used to
establish your production guarantee?'' If the latter, then what is the
difference in the penalty applied whether or not the producer notifies
the reinsured company of the circumstance?
The second sentence also states yield used to establish
the production
[[Page 44713]]
guarantee will be reduced if the producer fails to notify the reinsured
company ``* * * of any circumstance that may reduce your yields from
previous levels * * *'' Will the yield used to establish the production
guarantee be reduced if the producer fails to notify the reinsured
company even if the ``circumstance'' does not reduce the yields used to
establish the production guarantee after all? If not, the statement
``we will reduce * * *'' needs to be modified with the phrase ``as
necessary,'' as used in the first sentence and in sections 3(c) and
3(c)(2).
The second sentence should also be reworded to state ``If
you fail to notify us of any reduction in your yields from previous
levels due to any circumstance that reduces the crop's expected yield
[or perhaps ``yield potential'' would be better] for the current crop
year, we will reduce * * *'', rather than ``If you fail to notify us of
any circumstance that may reduce your yields from previous levels, we
will reduce * * *''
Response: FCIC agrees the language in the first sentence of section
3(c)(1) needs to be rewritten and has revised the language to reduce
repetition. FCIC has also revised the same language in sections 3(c)(2)
and 3(c)(3).
FCIC agrees the language in the second sentence of section 3(c)(1)
needs to be revised. The phrase ``we will reduce your production
guarantee'' is replaced with the phrase ``we will reduce the yield used
to establish your production guarantee.'' There is no difference in the
penalty applied whether or not the producer notified the reinsured
company of the circumstance prior to the beginning of the insurance
period.
If the producer fails to notify the reinsured company before the
beginning of the insurance period and the circumstance does not reduce
the yield used to establish the production guarantee, the producer's
yield used to establish the production guarantee will not be reduced.
FCIC does not agree the phrase ``as necessary'' needs to be added after
the phrase ``we will reduce'' because it is clear in section 3(c) that
the yield will only be reduced as necessary. The phrase has been
removed in paragraphs (1) and (2),
FCIC does not agree with the recommended rewording of the second
sentence. The suggestion does not significantly change or clarify the
provisions. No change has been made.
Comment: Two commenters recommend language be added to the last
sentence of section 3(c)(1) to read as follows: ``* * * If you fail to
notify us of any circumstance that may reduce your yields from previous
levels, we will reduce your production guarantee or assess uninsured
cause of loss against your claim at any time we become aware of the
circumstances.'' The phrase ``or assess uninsured cause of loss against
your claim'' is the additional suggested language being proposed.
Producers have a responsibility to report to the reinsured company
damage and removal of trees, etc. If they report it to the reinsured
company timely, the reinsured company can adjust their production
guarantee and premium. There should be a penalty if they do not timely
report this information and it is discovered by the adjuster at claim
time. Currently there is no penalty, so there is little incentive to
timely report this information to the reinsured company.
Response: FCIC does not agree the additional suggested language be
added. Section 3(c)(1) refers to circumstances that occur before the
beginning of the insurance period. Coverage can never be provided for
any damage occurring prior to the beginning of the insurance period.
Therefore, premium cannot be charged and there cannot be any uninsured
cause of loss appraisals for coverage that could not be provided. No
change has been made.
Comment: Two commenters ask, regarding sections 3(c)(2) and
3(c)(3), will producers always be aware of an event or action that
``may occur after the beginning of the insurance period * * *'' in
order to notify the reinsured company of that potential event or
action? And if such notification is not provided and the event or
action does not occur, does section 3(c)(3) still require the reinsured
company to do an appraisal and reduce the APH approved yield? In
addition, section 3(c)(3) indicates how to handle the yield used to
establish the production guarantee for the subsequent crop year but
does not address what to do with the yield used to establish the
production guarantee for the current crop year. Is the yield used to
establish the production guarantee for the current crop year impacted
in this situation?
Response: Generally, producers should be aware of what is going on
in their farming operations, including situations that may affect this
year's crop production that may occur after the beginning of the
insurance period (e.g., a planned orchard renovation). Therefore, the
producers should be able to timely notify their reinsured company. In
situations where a planned event (e.g., grafting of new varieties on
existing trees) does not occur, then no adjustments are made since the
situation did not occur. For situations impacting the yield used to
establish the production guarantee after insurance has attached but the
reinsured company was not notified, production lost due to uninsured
causes equal to the amount of the reduction in the yield used to
establish your production guarantee will be applied in determining any
indemnity. The yield used to establish the production guarantee is not
adjusted for the current crop year.
Comment: A commenter states it is unclear how the appraisal in
section 3(c)(3) will be applied, suggesting the following as a possible
alternative wording: ``* * * an appraisal for production lost due to
uninsured causes (see section 11(c)(1)(ii)) equal to the amount of the
reduction in yield will be applied in determining any indemnity * * *''
Response: FCIC agrees and has revised the provisions.
Comment: A commenter states the provisions in section 3(d) are
difficult to administer. The provisions state ``You may not increase
your elected or assigned coverage level or the ratio of your price
election to the maximum price election we offer if a cause of loss that
could or would reduce the yield used to establish the production
guarantee of the insured crop is evident prior to the time that you
request the increase.'' The commenter recommends it be removed from the
policy. The PAW contains the following question: ``Has damage (i.e.
disease, hail, freeze) occurred to Trees/Vines/Bushes/Bog or have
cultural practices been performed that will reduce the insured crop's
production from previous levels?'' If damage has occurred, and the
question has been answered `yes,' the yield used to establish the
production guarantee will be adjusted accordingly to reflect the
reduced potential production. This question on the PAW appears to
address the issues this section is intending to handle. In addition,
the sales closing dates are generally established based on the precept
that any applications taken by that date will not be subject to adverse
selection. If the decision is made to retain this provision, the
commenter suggests clarifying what time frame is meant by ``* * * if a
cause of loss * * * is evident prior to the time that you request the
increase.'' A cause of loss that occurred the previous crop year would
be ``prior to the time that you request the increase.'' Another
suggestion is to rewrite this provision to read as follows: ``Your
request to increase the coverage level or price election percentage
will not be accepted if a cause of loss that could or would reduce the
yield of the insured crop is evident when your request is made.''
Response: This section was not included in the proposed rule, the
[[Page 44714]]
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended change.
Section 6--Insured Crop
Comment: Two commenters suggest revising the introductory language
``* * * will be all of each stonefruit crop * * *'' to ``* * * will be
any stonefruit crop * * *'' or ``* * * will be all acreage of each
stonefruit crop * * *''
Response: FCIC agrees and has revised the language to read ``will
be all acreage of each stonefruit crop.''
Comment: A commenter recommends capitalizing the first word in
section 6(b)(3) to be consistent with the first word in the other
paragraphs.
Response: FCIC agrees and has revised the provision accordingly.
Comment: A commenter supports the proposed change in section
6(b)(5) to allow the crop to be insured if it meets the minimum
production requirement in at least one of four years, as opposed to one
in three years. This allows producers who may have had low yields due
to circumstances beyond their control to still have an opportunity for
coverage.
Response: FCIC thanks the commenter for their support of this
change.
Comment: A commenter states section 6(b)(5) refers to the reinsured
company's ``approval in writing'' to insure acreage that has not yet
produced the required amount of lugs or tons per acre, while section
6(b)(6) says the reinsured company ``may agree in writing'' to insure
acreage that has not yet reached the fifth growing season after set
out. The commenter asks whether the different phrases are intended to
mean different things. The commenter asks whether ``agree in writing''
in section 6(b)(6) requires a written agreement while section 6(b)(5)
does not? If not, consider using the same phrase to avoid confusion.
Response: The two phrases are intended to mean the same thing. FCIC
has revised the provision in 6(b)(6) to be consistent with the
provision in 6(b)(5).
Comment: A commenter states section 6(b)(6) states the stonefruit
crop must have reached at least the fifth growing season after set out
in order to be insurable. However, the reinsured company may agree in
writing to insure acreage that has not reached this age if it meets the
requirements of section 6(b)(5). The commenter states specific language
relating to plums produced on scions and to grafted plums is not
present in this section of the proposed rule. Language needs to be
included to address insurability when these two situations are present.
The commenter also states this proposed rule, as well as other
perennial Crop Provisions, contain the following language in the:
``[h]owever, we may agree in writing * * *'' or ``unless we inspect
such acreage and give our approval in writing.'' However, the policy
does not state the yield that will be applied if approval is granted.
FCIC must add language to specify how the yield is set if crops have
not met the minimum age or production requirement.
Response: FCIC agrees language addressing the minimum insurability
requirements for plums needs to be added. FCIC has addressed this by
revising the provisions in section 6(b)(6) to include language
regarding the minimum insurability requirements for trees that have
been grafted.
FCIC does not agree language needs to be added to the Stonefruit
Crop Insurance Provisions to specify how the yield is set if crops have
not met the minimum age or production requirement. It would be
difficult to address in the Crop Provisions all scenarios when minimum
age or production requirements are not met. Therefore, instructions for
handling situations for which minimum age or production requirements
are not met are contained in section 7F(2)(f) of the Crop Insurance
Handbook.
Section 8--Insurance Period
Comment: Two commenters state the end of the insurance period date
in section 8(a)(2) for plums in California has been changed from
September 30 to October 20. The background portion of the proposed rule
indicates that based on published data plums can be harvested as late
as October 20. The commenters are concerned about the increased
exposure from extending this date and wondering if this extension
should only apply to certain types of plum in certain areas rather than
all plums in California. The commenters also asked what `published
data' was used to support making this change.
Response: Based on the published data and an analysis conducted by
FCIC, any increased exposure due to extending the end of insurance
period for all plums in California from September 30 to October 20 will
be minimal. The published data to which FCIC is referring is the United
States Department of Agriculture National Agricultural Statistics
Service Agriculture Handbook Number 729, which is titled ``Fruits and
Tree Nuts: Blooming, Harvesting, and Marketing Dates.'' According to
this handbook, the Usual Harvesting Dates for Plums in California are
May 15 through October 20. If other data becomes available that would
warrant changing the end of insurance period for certain types of
plums, section 8 of the Stonefruit Crop Insurance Provisions provides
the flexibility to change the end of insurance period through the
Special Provisions. No change has been made.
Comment: A commenter recommends consolidating and revising sections
8(a)(2)(ii) and 8(a)(2)(iii) to read as follows: ``(ii) September 30
for all nectarines and peaches, and for all fresh plums in states other
than California.''
Response: FCIC does not agree with consolidating and revising
sections 8(a)(2)(ii) and 8(a)(2)(iii). While the dates may be the same,
combining sections 8(a)(2)(ii) and 8(a)(2)(iii) as recommended may
cause confusion. The suggested revision could be interpreted to mean
all nectarines, all peaches and all plums in all states except
California have an end of insurance period of September 30, rather than
all nectarines and all peaches in all states have a September 30 end of
insurance period and only plums in California have an end of insurance
period of September 30. No change has been made.
Comment: Two commenters state the phrase ``* * * after an
inspection * * *'' in section 8(b)(1) should be removed. If damage has
not generally occurred in the area where such acreage is located, it
should be up to the reinsured company's discretion to decide whether
the acreage needs an inspection to be considered acceptable. The
language in this section already refers to the reinsured company having
the ability to consider the acreage acceptable. Since the acreage and
production reporting dates are after insurance attaches, the reinsured
company may not know if the acreage was acquired after coverage began,
but before the acreage reporting date. The commenters state reinsured
companies need the right to inspect if they deem necessary, but this
should not be a requirement.
The commenters also recommend language be added to section 8(b)(1)
to allow reinsured companies the opportunity to inspect and insure any
additional acreage that is acquired after the acreage reporting date if
they wish to do so. Reinsured companies should have the opportunity to
accept or deny coverage in these types of situations. This would be
similar to what is currently allowed for acreage that is not reported
per section 6(f) of the Basic Provisions.
[[Page 44715]]
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended changes.
However, with respect to acreage acquired after the acreage report,
section 6(f) of the Basic Provisions, which allows the reinsured
company to determine by unit the insurable crop acreage, share, type
and practice, or to deny liability if the producer fails to report all
units, would apply. The Crop Insurance Handbook also allows for
reinsured company to revise an acreage report to increase liability if
the crop is inspected and the appraisal indicates the crop will produce
at least 90 percent of the yield used to determine the guarantee or
amount of insurance for the unit.
Comment: Two commenters state the language in section 8(c) was
added to most, if not all, of the perennial crops several years ago.
The commenters are in agreement with the concept of continuous coverage
applying for carryover producers but do have some concerns with
language as it currently reads. The current language indicates, for
each subsequent crop year, the policy remains continuously in force and
coverage begins on the day immediately following the end of the
insurance period for the prior crop year. The commenters question what
happens if the damage occurs to next crop year's buds prior to this
crop year's end of the insurance period. The commenters ask whether
damage such as this is intended to be covered by this language. For
example, assume a producer is insured and a severe hail storm occurs in
July. This damage may injure this crop year's crop as well as the buds
that will produce next crop year's crop. However, this damage would be
outside the current insurance period based on the current language. If
the intent is to cover this damage for carryover producers, the
language should be revised to something along the lines of the language
in the Adjusted Gross Revenue handbook, which states damage due to
insurable causes of loss occurring during the previous crop year is
covered. The commenters state it will be difficult to assess such
damage and that it should be covered under the policy. If this is not
the intent, it should be stated very clearly that we will not cover
damage that occurs the previous crop year if such damage occurs prior
to the end of the previous crop year's end of insurance period.
Response: The Stonefruit Crop Provisions do not provide coverage
for damage to fruit if the damage occurs outside of the insurance
period. FCIC recognizes situations such as the one highlighted by the
commenter may occur, but believes from contacts within the agronomic
community that the likelihood of those situations occurring is rare.
This section was not included in the proposed rule, and the public was
not provided an opportunity to comment. Therefore, FCIC cannot make
changes to this section. However, FCIC will take into consideration the
situation highlighted by the commenter and evaluate further if coverage
should be included in the Stonefruit Crop Provisions in the future.
Comment: Two commenters suggest adding a comma after ``* * * and
termination dates * * *'' in section 8(d).
Response: Although this section was not included in the proposed
rule, FCIC agrees and has revised the provisions accordingly since it
is merely a technical correction and does not change the meaning or
intent of the provision.
Section 9--Causes of Loss
Comment: A commenter recommends the insured cause of loss in
section 9(a)(2) be clarified as ``Fire, due to natural causes, * * *''
(or ``Fire, if caused by lightning, * * *'' as in the proposed rule
revisions to the Tobacco Crop Insurance Provisions).
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended changes.
However, section 12 of the Basic Provisions already states all insured
causes of loss must be due to a naturally occurring event. In addition,
the Federal Crop Insurance Act is clear that only natural causes can be
covered under the policy.
Comment: A commenter recommends considering if all of section
9(a)(3) of the Plum Crop Insurance Provisions, ``Wildlife, unless
control measures have not been taken,'' should be added to section
9(a)(3) of the Stonefruit Crop Insurance Provisions, which only states
``Wildlife.''
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended changes.
Comment: A commenter recommends considering if section 9(a)(3) of
the Plum Crop Insurance Provisions regarding insufficient number of
chilling hours to effectively break dormancy should be added to section
9(a) in the Stonefruit Crop Insurance Provisions as an insurable cause
of loss.
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended changes.
Comment: A commenter states section 9(b)(2) of the existing Plum
Crop Insurance Provisions states that rejection of the crop by the
packing house due to being undersized, immature, overripe, or
mechanically damaged is excluded as a covered cause of loss but is not
excluded in this proposed rule. This language needs to be added back
into the 2011 Stonefruit Crop Insurance Provisions as recent crop
harvests have produced an abundance of good fruit, which results in
lack of market due to high volume. The high volume of fruit results in
packers rejecting what would normally be a nice sized piece of fruit.
Although the language indicating what is covered is very specific and
section 9(b)(3) of the Stonefruit Crop Insurance Provisions is also
specific in the reference that inability to market is not covered, this
particular language may prevent a misunderstanding among producers, RMA
and reinsured companies as to the scope of coverage.
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended changes.
However, section 9(b)(3) of the Stonefruit Crop Insurance Provisions
states ``Inability to market the insured crop for any reason other than
actual physical damage from an insurable cause of loss specified in
this section. For example, we will not pay you an indemnity if you are
unable to market due to quarantine, boycott, or refusal of any person
to accept production.'' Therefore, rejection of the crop by the packing
house is addressed under section 9(b)(3) of the Stonefruit Crop
Insurance Provisions.
Section 10--Duties in the Event of Damage or Loss
Comment: Two commenters state the language in the second sentence
of section 10(b) states, in part, that ``We will conduct an appraisal
that will be used to determine your production to count * * *'' The
commenters
[[Page 44716]]
recommend this language be revised as follows: ``We will conduct an
appraisal that may be used to determine your production to count * *
*'' Additional language in this paragraph indicates that ``* * * These
appraisals, and any acceptable records provided by you, will be used to
determine your production to count * * *'' The commenters state the
reinsured company needs to maintain the ability to use the records if
the reinsured company believes they are more accurate than the
appraisal, as noted in this additional language. Therefore, the word
``will'' should be changed to ``may'' in order to allow reinsured
companies the flexibility to apply this language accordingly.
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended changes. his
provision is consistent with provisions in other Crop Provisions, such
as apples and pears, that contain language regarding production that is
sold by direct marketing.
Comment: A commenter states section 10(c) states ``* * * you must
give us notice at least 15 days prior to the beginning of harvest * *
*'' The Plum Crop Insurance Provisions also includes the following
phrase ``* * * or immediately if damage is discovered during harvest,
so that we may inspect the damaged production.'' The commenter asks if
this is no longer needed, or should it be included in the new
Stonefruit Crop Insurance Provisions.
Response: This section was not included in the proposed rule, the
recommended change is substantive or could have unintended
consequences, and the public was not provided an opportunity to
comment. Therefore, FCIC cannot consider the recommended changes.
Comment: Two commenters suggest adding a comma after ``* * * If you
fail to notify us * * *'' in section 10(c).
Response: Although this section was not included in the proposed
rule, FCIC agrees and has revised the provisions accordingly, since it
is merely a technical correction and does not change the meaning or
intent of the provision.
Section 11--Settlement of Claim
Comment: Two commenters noted the quality loss adjustment
instructions in the Stonefruit Loss Adjustment Standards Handbook
(LASH) need to be clarified. There have been questions surrounding
quality for a number of years. The intent of the policy language
relative to handling quality adjustment needs to be clearly spelled out
in the final version of the Stonefruit LASH.
Response: FCIC will update the Stonefruit LASH to reflect any
changes regarding quality adjustment made in the Final Rule, as
applicable, and to clarify otherwise ambiguous language.
Comment: Two commenters state the settlement of claim example
references the term ``guarantee'' throughout and recommend this
reference be changed to ``production guarantee'' when reference is
intended on a per acre basis as this is the term defined in the Basic
Provisions. Additionally, the settlement of claim example is overly
simplistic and could be considered misleading. The language that states
in part ``You are only able to harvest 5,000 lugs * * *'' could lead
someone to believe production to count for the claim is based on `the
amount of lugs they are able to harvest.' The commenters recommend
revising the language to state something like ``You only produce 5,000
lugs as production to count.'' The commenters would also like to see an
example for a quality loss situation. It is simple when the entire
fresh crop is rejected, sent to the processor, and a bulk price per
pound is received for all the fruit. However, the commenters would like
to see an example which is more realistic and likely to occur in which
the stonefruit is grown for fresh market and is delivered to the
packer. Assume that some of the fruit makes grade and receives full
price. Some of the fruit receives a slightly reduced price and
additional fruit receives varying prices less than 75 percent of the
marketable value. The Stonefruit LASH requires the reinsured company
field grade the fruit in the field, and it is very unclear whether the
reinsured company uses the field grade, or the fruit pack-out, or a
combination of both, and how all of this fits together to determine the
final production to count for the claim. This has been a questionable
issue for a number of years and this would be a great opportunity to
clarify the intent via an example in the Stonefruit Crop Insurance
Provisions. This would also provide clear direction for additional
support and clarification that is also needed in the Stonefruit LASH.
Response: FCIC agrees and has replaced the term ``guarantee'' in
the settlement of claim example with the term ``production guarantee''
when reference is intended on a per acre basis. FCIC agrees the
sentence ``You are only able to harvest 5,000 lugs.'' is misleading and
has revised it as ``You harvest 5,000 lugs.'' FCIC has also revised the
sentence ``You are only able to harvest 3,000 lugs'' in Scenario 2 as
``You harvest 3,000 lugs.''
FCIC also agrees the settlement of claim example is simplified. As
with other Crop Provisions, the settlement of claim example provided in
the Stonefruit Crop Insurance Provisions is intended to be a simple
step-by-step example. FCIC will revise the Stonefruit LASH to include
examples of more complex situations and information suggested by the
commenters.
Comment: A commenter recommends adding a hyphen between ``25,000''
and ``lug'' in scenario 1, step 1, of the settlement of claim section.
The commenter also recommends adding a hyphen between ``25,000'' and
``lugs'' and ``15,000'' and ``lugs'' in scenario 2, step 1.
Response: FCIC agrees and has revised the provisions accordingly.
In scenario 2, step 1, FCIC also replaced the word ``lugs'' with the
word ``lug'' to be consistent with the terminology used in scenario 1,
step 1.
Comment: A commenter states section 11(c)(3), which references the
quality adjustment for the value of insured damaged fruit, is not
clear. The commenter asks if the price the packer is going to pay will
be used or will there be a reduction in value listed in the Special
Provisions for that particular grade of fruit.
Response: The price the packer pays, minus any adjustments for
costs incurred for harvest and delivery if allowed by the Special
Provisions, is the price used to value the damaged fruit. A reduction
in value for that particular grade of fruit will not be listed in the
Special Provisions.
Comment: Two commenters suggest inserting the phrase ``for the same
type'' after the portion of section 11(c)(4)(i) that states ``* * * the
highest price election * * *'' This will clarify that the price
election used for this computation is based on that for the same type
that is being quality adjusted and is needed whenever the price
election varies by type. Paragraph 11(c)(4)(ii) already contains
similar language but the commenter recommends changing ``* * *
available for that type'' to ``* * * available for the same type.''
Response: FCIC agrees and has revised sections 11(c)(4)(i) and
11(c)(4)(ii) accordingly.
In addition to the changes described above, FCIC has made the
following changes:
1. Added a definition of ``graft'' due to added provisions in
section 6(b)(6);
2. Revised section 3(c)(2) to clarify the yield used to establish
the production
[[Page 44717]]
guarantee will be reduced only if the potential reduction in yield is
due to an uninsured cause of loss; and
3. Removed the introductory phrase, ``Notwithstanding paragraph
(a)(1) of this section, for'' and replaced it with the word ``For'' in
section 8(c) to be consistent with other Crop Provisions, such as
apples and grapes; and
4. Revised section 11(b)(2), section 11(b)(4), and the settlement
of claim examples to address the applicability of the percent of the
price election.
List of Subjects in 7 CFR Part 457
Crop Insurance, Stonefruit, Reporting and recordkeeping
requirements.
Final Rule
0
Accordingly, as set forth in the preamble, the Federal Crop Insurance
Corporation amends 7 CFR part 457 effective for the 2011 and succeeding
crop years for the Stonefruit Crop Insurance Provisions.
PART 457--COMMON CROP INSURANCE REGULATIONS
0
1. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(o).
Sec. 457.157 [Removed and reserved]
0
2. Section 457.157 is removed and reserved.
0
3. Amend Sec. 457.159 as follows:
0
a. Amend the introductory text by removing ``2001'' and adding ``2011''
in its place;
0
b. Remove the undesignated paragraph immediately preceding section 1.
Definitions;
0
c. Add definitions in section 1 for ``grade standards'' and ``graft'';
0
d. Remove the definitions in section 1 for ``grading standards'' and
``varietal group'';
0
e. Revise the definitions in section 1 for ``harvest'', ``lug'',
``marketable'', ``stonefruit'' and ``type'';
0
f. Remove the word ``Notwithstanding'' in the introductory text in
section 2 and add in its place the phrase ``In lieu of'';
0
g. Revise section 2(b);
0
h. Revise section 3(a);
0
i. Amend the introductory text in section 3(b) and section 3(b)(4)(i)
by removing the phrase ``or varietal group'' in all instances where it
is found;
0
j. Amend section 3 by redesignating paragraph (c) as paragraph (d) and
designating the undesignated paragraph following paragraph (b)(4)(iii)
as paragraph (c);
0
k. Revise redesignated section 3(c);
0
l. Revise redesignated section 3(d);
0
m. Amend section 4 by adding the phrase ``, or as specified in the
Special Provisions'' after the word ``states'';
0
n. Amend section 5 by adding the phrase ``, or as specified in the
Special Provisions'' after the word ``states'';
0
o. Amend the introductory text in section 6 by adding the word
``acreage'' after the word ``all'';
0
p. Revise section 6(b);
0
q. Remove sections 6(c), 6(d), 6(e), 6(f) and 6(g);
0
r. Revise section 8(a)(2)(ii);
0
s. Amend section 8 by redesignating paragraph (a)(2)(iii) as (a)(2)(v)
and adding new paragraphs (a)(2)(iii) and (a)(2)(iv);
0
t. Amend section 8(c) by removing the phrase ``Notwithstanding
paragraph (a)(1) of this section, for'' and adding in its place the
word ``For'';
0
u. Amend section 8(d) by adding a comma after the phrase ``termination
dates'';
0
v. Revise section 11(b);
0
w. Amend section 11(c)(3)(ii) by removing the word ``grading'' and
adding the word ``grade'' in its place in both instances it is found;
and
0
x. Revise section 11(c)(4).
The additions and revisions read as follows:
Sec. 457.159 Stonefruit crop insurance provisions.
* * * * *
1. Definitions.
* * * * *
Grade standards. The United States Standards for Grades of Peaches,
the United States Standards for Grades of Nectarines, the United States
Standards for Grades of Apricots, and the United States Standards for
Grades of Fresh Plums and Prunes, or other such standards specified in
the Special Provisions.
Graft. To unite a shoot or bud with a rootstock in accordance with
recommended practices to form a living union.
Harvest. The physical removal of mature stonefruit from the tree
either by hand or machine.
* * * * *
Lug. A container of fresh stonefruit of specified weight. Lugs of
varying sizes will be converted to standard lug equivalents on the
basis of the following average net pounds of packed fruit, or as
specified in the Special Provisions:
------------------------------------------------------------------------
Pounds
Crop per lug
------------------------------------------------------------------------
Fresh Apricots............................................... 24
Fresh Nectarines............................................. 25
Fresh Freestone Peaches...................................... 25
Fresh Plums.................................................. 28
------------------------------------------------------------------------
Weight for Processing Apricots, Processing Cling Peaches, and
Processing Freestone Peaches is specified in tons.
Marketable. Stonefruit production that meets or exceeds the quality
standards for U.S. No. 1 in accordance with the applicable grade
standards or other standards as specified in the Special Provisions, or
if stonefruit production fails to meet the applicable grade standards,
stonefruit production that is accepted by a packer, processor or other
handler.
* * * * *
Stonefruit. Any of the following crops grown for fresh market or
processing:
(a) Fresh Apricots;
(b) Fresh Freestone Peaches;
(c) Fresh Nectarines;
(d) Fresh Plums;
(e) Processing Apricots;
(f) Processing Cling Peaches;
(g) Processing Freestone Peaches; and
(h) Other crops listed in the Special Provisions.
* * * * *
Type. A category of a stonefruit crop with similar characteristics
that are grouped for insurance purposes, as listed in the Special
Provisions.
* * * * *
2. Unit Division.
* * * * *
(b) Optional Units by Type: Optional units may be established by
type if allowed by the Special Provisions.
3. Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities.
* * * * *
(a) You may select only one price election and coverage level for
each crop grown in the county and listed in the Special Provisions that
is insured under this policy. If separate price elections are available
by type of a crop, the price elections you choose for each type must
have the same percentage relationship to the maximum price offered by
us for each type. For example, if you choose 100 percent of the maximum
price election for one type of cling peach, you must choose 100 percent
of the maximum price election for all other types of cling peaches.
* * * * *
(c) We will reduce the yield used to establish your production
guarantee, as necessary, based on our estimate of the effect of any
situation listed in sections 3(b)(1) through (b)(4). If the situation
occurred:
(1) Before the beginning of the insurance period, the yield used to
establish your production guarantee will be reduced for the current
crop year regardless of whether the situation was
[[Page 44718]]
due to an insured or uninsured cause of loss. If you fail to notify us
of any circumstance that may reduce your yields from previous levels,
we will reduce the yield used to establish your production guarantee at
any time we become aware of the circumstance;
(2) Or may occur after the beginning of the insurance period and
you notify us by the production reporting date, the yield used to
establish your production guarantee will be reduced for the current
crop year only if the potential reduction in the yield used to
establish your production guarantee is due to an uninsured cause of
loss; or
(3) Or may occur after the beginning of the insurance period and
you fail to notify us by the production reporting date, production lost
due to uninsured causes equal to the amount of the reduction in yield
used to establish your production guarantee will be applied in
determining any indemnity (see section 11(c)(1)(ii)). We will reduce
the yield used to establish your production guarantee for the
subsequent crop year.
* * * * *
6. Insured Crop.
* * * * *
(b) That is grown on trees that:
(1) Were commercially available when the trees were set out or have
subsequently become commercially available;
(2) Are adapted to the area;
(3) Are grown on root stock that is adapted to the area;
(4) Are in compliance with the applicable State's Tree Fruit
Agreement or related crop advisory board for the state (for each
insured crop and type), when such regulations exist;
(5) Have produced at least 200 lugs of fresh market production per
acre, or at least 2.2 tons per acre for processing crops, in at least
one of the four most recent actual production history crop years,
unless we inspect such acreage and give our approval in writing;
(6) Have, after being set out or grafted, reached at least the
fifth growing season. However, we may give our approval in writing to
insure acreage that has not reached this age if it meets the
requirements of 6(b)(5); and
(7) Are grown in an orchard that, if inspected, is considered
acceptable by us.
* * * * *
8. Insurance Period.
(a) * * *
* * * * *
(2) * * *
* * * * *
(ii) September 30 for all nectarines and peaches;
(iii) In all states except California, September 30 for all fresh
plums;
(iv) In California only, October 20 for all fresh plums; or
(v) As otherwise provided for specific counties or types in the
Special Provisions.
* * * * *
11. Settlement of Claim.
* * * * *
(b) In the event of loss or damage covered by this policy, we will
settle your claim by:
(1) Multiplying the insured acreage for each type by its respective
production guarantee;
(2) Multiplying each result of section 11(b)(1) by the respective
price election for the type and by the percent of the price election;
(3) Totaling the results of section 11(b)(2) (if there is only one
type, the result of (3) will be the same as the result of (2));
(4) Multiplying the total production to count (see section 11(c)),
for each type, by the respective price election and by the percent of
the price election;
(5) Totaling the results of section 11(b)(4);
(6) Subtracting the result of section 11(b)(5) from the result of
section 11(b)(3) (if there is only one type, the result of (6) will be
the same as the result of (5)); and
(7) Multiplying the result of section 11(b)(6) by your share.
Scenario 1:
You select 75 percent coverage level and 100 percent of the price
election on 50.0 acres of Type A stonefruit with 100 percent share in
the unit. The production guarantee is 500.0 lugs per acre and the price
election is $6.00 per lug. You harvest 5,000 lugs. Your indemnity would
be calculated as follows:
(1) 50.0 acres x 500.0 lugs = 25,000-lug production guarantee;
(2) 25,000 lugs x $6.00 price election x 100 percent of the price
election = $150,000 value of production guarantee;
(4) 5,000 harvested lugs x $6.00 price election x 100 percent of
the price election = $30,000 value of production to count;
(6) $150,000-$30,000 = $120,000 loss; and
(7) 120,000 x 1.000 share = $120,000 indemnity payment.
Scenario 2:
In addition to the above information in Scenario 1, you have an
additional 50.0 acres of Type B stonefruit with 100 percent share in
the unit. The production guarantee is 300.0 lugs per acre and the price
election is $3.00 per lug. You harvest 3,000 lugs. Your indemnity would
be calculated as follows:
(1) 50.0 acres x 500.0 lugs Type A = 25,000-lug guarantee; and 50.0
acres x 300.0 lugs Type B = 15,000-lug guarantee;
(2) 25,000 lugs x $6.00 price election x 100 percent of the price
election = $150,000 value of guarantee for Type A; and 15,000 lugs x
$3.00 price election x 100 percent of the price election = $45,000
value of guarantee for Type B;
(3) $150,000 + $45,000 = $195,000 total value of production
guarantee;
(4) 5,000 harvested lugs Type A x $6.00 price election x 100
percent of the price election = $30,000 value of production to count;
and 3,000 harvested lugs Type B x $3.00 price election x 100 percent of
the price election = $9,000 value of production to count;
(5) $30,000 + $9,000 = $39,000 total value of production to count;
(6) $195,000-$39,000 = $156,000 total loss; and
(7) $156,000 loss x 1.000 share = $156,000 indemnity payment.
(c) * * *
* * * * *
(4) Harvested fresh or processing stonefruit production that is
eligible for quality adjustment as specified in section 11(c)(3) will
be reduced as follows:
(i) When packed and sold as fresh fruit or when insured as a
processing crop, by dividing the value per lug or ton of marketable
production by the highest price election for the same type and
multiplying the result (not to exceed 1.00) by the quantity of such
production; or
(ii) For all other fresh stonefruit, by multiplying the number of
tons that could be marketed by the value per ton and dividing that
result by the highest price election available for the same type.
* * * * *
Signed in Washington, DC, on July 21, 2010.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2010-18359 Filed 7-28-10; 8:45 am]
BILLING CODE 3410-08-P