[Federal Register Volume 60, Number 115 (Thursday, June 15, 1995)]
[Rules and Regulations]
[Pages 31375-31381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14710]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
RIN 0563-AA96
Common Crop Insurance Regulations; Nursery Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) hereby adopts
regulations for specific crop provisions to insure nursery plants.
These provisions will supplement the Common Crop Insurance Policy Basic
Provisions which contains standard terms and conditions common to most
crops. The intended effect of this rule is to move specific crop
provisions for insuring nursery from the Nursery Crop Insurance
Regulations (7 CFR part 406) to the Common Crop Insurance Policy
(Sec. 457.8) for ease of use by the public and conformance among policy
terms, and to add a nursery frost, freeze, and cold damage exclusion
option to better meet the needs of the insured.
EFFECTIVE DATE: June 15, 1995.
FOR FURTHER INFORMATION CONTACT: Diana Moslak, Federal Crop Insurance
Corporation, U.S. Department of Agriculture, Washington, DC 20250.
Telephone (202) 254-8314.
SUPPLEMENTARY INFORMATION: This action has been reviewed under United
States Department of Agriculture (``USDA'') procedures established by
Executive Order 12866 and Departmental Regulation 1512-1. This action
constitutes a review as to the need, currency, clarity, and
effectiveness of these regulations under those procedures. The sunset
review date established for these regulations is June 1, 2000.
This rule has been determined to be ``not significant'' for the
purposes of Executive Order 12866 and, therefore, has not been reviewed
by the Office of Management and Budget (``OMB'').
The information collection or record-keeping requirements contained
in these regulations (7 CFR part 457) were submitted to OMB in
accordance with the provisions of 44 U.S.C. 3501 et seq., and have been
assigned OMB control number 0563-0050.
It has been determined under section 6(a) of Executive Order 12612,
Federalism, that this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
policies and procedures contained in this rule will not have a
substantial direct effect on states or their political subdivisions, or
on the distribution of power and responsibilities among the various
levels of government.
This regulation will not have a significant impact on a substantial
number of small entities. This action reduces the paperwork burden on
the insured and the reinsured company. Therefore, this action is
determined to be exempt from the provisions of the Regulatory
Flexibility Act (5 U.S.C. 605) and no Regulatory Flexibility Analysis
was prepared.
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
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.
The Office of the General Counsel has determined that these
regulations meet the applicable standards provided in subsections
(2)(a) and 2(b)(2) of Executive Order 12778. The provisions of this
rule will preempt state and local laws to the extent such state and
local laws are inconsistent herewith. The administrative appeal
provisions located at 7 CFR part 400, subpart J or promulgated by the
National Appeals Division, whichever is applicable, must be exhausted
before judicial action may be brought.
This action is not expected to have any significant impact on the
quality of the human environment, health, and safety. Therefore,
neither an [[Page 31376]] Environmental Assessment nor an Environmental
Impact Statement is needed.
By separate rule, FCIC will amend 7 CFR part 406 to restrict the
crop years of application to those prior to the crop year for which
this rule will be effective. FCIC will terminate the provisions of the
present policy at the end of the crop year and later remove that part.
On Friday, January 27, 1995, FCIC published a notice of proposed
rulemaking in the Federal Register at 60 FR 5339 proposing to revise
the Common Crop Insurance Regulations by adding new provisions for
nursery crop insurance.
Following publication of the proposed rule, the public was afforded
30 days to submit written comments, data, and opinions. The comments
received and FCIC responses are as follows:
Comment: One comment received from an insurance company disagreed
with using the insured's wholesale price list in determining the
insurance coverage rather than using the projected market price
because:
(1) The proposed rule ties price levels (i.e., ``monthly market
value'') to growers' wholesale price lists, while the Federal Crop
Insurance Reform Act of 1994 (Act) ties price levels to projected
market prices. Wholesale price lists represent offers; however, market
prices represent offers and acceptance. It was questioned whether FCIC
had the authority to determine that wholesale price lists are the
``projected market prices'' when: (a) FCIC has never seen and never
validated such price lists; (b) they are not the product of independent
economic forces or analysis; and (c) they are the estimates of insureds
who have an economic interest in inflating the prices on their
wholesale price lists. The company believes that allowing each grower
to define his or her own market price by quoting an offering price
invites fraud; and
(2) The Act requires FCIC, not individual growers, to determine
``projected market price''. The company acknowledged that FCIC has the
authority to determine that a grower's wholesale price list is the
``projected market price'' but questions whether this is a lawful
exercise of that authority. It was recommended that FCIC base the price
level for nursery crops on the actual market price at the time of
harvest (as determined by the Corporation).
Response: FCIC believes using the growers' wholesale price lists to
establish the projected market prices does not violate the Act because
the Act authorizes the Corporation to determine the wholesale market
price as the projected market price. Due to numerous varieties of
nursery plants eligible for insurance, FCIC believes that it is
impractical to establish a price for each insured plant in the various
states prior to the crop year. FCIC will determine whether the
wholesale market price of the plant is reasonable before accepting it
as the projected market price. The Federal Crop Insurance Corporation
will investigate options on how nursery prices should be established
for the 1997 crop year. Therefore, FCIC does not believe that it is
necessary to change these provisions at this time.
Comment: One comment received from an insurance company disagreed
with the elimination of the 10 percent reduced valuation in subsection
1.(a) (definition of ``Amount of insurance''). The company stated that
the 10 percent value reduction must remain in the policy to account for
salvage valuation because many damaged plants can be restored to
marketability or the Standard Reinsurance Agreement should be amended
to reimburse insurance companies for this change. A concern was raised
that deletion of the 10 percent reduction would result in increased
premiums to insureds.
Response: The 10 percent reduction was originally incorporated to
eliminate costs for packing, shipping, sales commissions and other
expenses that would not be incurred due to the loss. The proposal to
eliminate this 10 percent reduction was made to offset the expense of
disposing of the destroyed inventory. However, eliminating the 10
percent factor would increase premium by 10% to cover the additional
liability. No data is available at this time to determine if the costs
of inventory disposal approximates the amount of 10%. Therefore, FCIC
agrees that the 10 percent reduced valuation should remain in the
nursery provisions and has amended the provisions accordingly.
Comment: One comment received from an insurance company requested
the term ``Annual loss deductible'' contained in subsection 1.(b) be
changed to ``Crop year loss deductible''.
Response: FCIC agrees with the comment and has adopted this change.
Comment: One comment received from an insurance company suggested
that the word ``unit'' be removed from the definition of ``Field market
value A'' in subsection 1.(e) and from the definition of ``Field market
value B'' in subsection 1.(f) because it is redundant and invites the
unintended interpretation that field market value A and field market
value B include both insured and uninsured plants.
Response: FCIC agrees with this comment. FCIC has added ``insurable
plants'' or ``insured plants'' to the term to clarify these provisions.
Comment: One comment received from an insurance company suggested
the definition of ``Standard nursery containers'' contained in
subsection 1.(n) be changed to read as follows: ``Rigid containers not
less than three (3) inches across the smallest dimension which are
commercially sold to nurseries, and for the plant contained, are
appropriate in size with the proper drainage holes and used in
conjunction with an appropriate growing medium''. Justification for
this change was that too often growers permit plants to become root
bound or use containers with drainage holes that are too high or too
low for the plant or use an inappropriate growing medium. The company
stated that FCIC should make clear that insurance does not attach
unless all of these conditions are satisfied.
Response: FCIC agrees with the comment and has modified the
provisions with language similar to that recommended.
Comment: One comment received from a national trade organization
for the nursery industry strongly disagreed with the proposed
definition of ``Standard Nursery Containers'' which excludes trays and
cellpacks. This organization stated that trays and cell packs are
indeed standard containers for a large segment of the nursery industry
and that many trays, flats, and cell packs are larger than three inches
across the smallest dimension. FCIC was urged to reconsider the
proposed definition to explicitly incorporate flats, trays, and cell
packs.
Response: FCIC disagrees with this comment. These types of
containers are not insurable under the nursery policy. The nursery
policy is based on plants grown in standard nursery containers not less
than three (3) inches across the largest dimension at the top of the
container. FCIC will study the feasibility of insuring nursery plants
grown in other types of containers for the 1997 crop year. Therefore,
FCIC does not believe that it is necessary to amend these provisions at
this time.
Comment: One comment received from an insurance company suggested
that subsection 6.(d) be amended to specify that insurers have no duty
or contractual obligation to consent to a revision of the nursery plant
inventory summary. The company also recommended that paragraphs
6.(d)(1) and 6.(d)(2) be deleted. The company stated that an inspection
should be made before insurance attaches on any proposed increase in
inventory and that [[Page 31377]] because an insurer has no duty to
accept a proposed increase, it should have no duty to inspect it. The
company stated that the policy should state that a refusal to inspect
constitutes a refusal to accept a proposed increase.
Response: FCIC disagrees with the comment. The proposed provisions
do not require an insurer to make an inspection in some cases. However,
an inspection is necessary for insurance to attach if the conditions of
paragraphs 6(f)(1) and 6(f)(2) apply. FCIC believes removing paragraphs
6(f)(1) and 6(f)(2) would require the insured to request an inspection
for any inventory increase. Therefore, FCIC does not believe that it is
necessary to amend these provisions.
Comment: One comment received from an insurance company stated that
the proposed nursery regulations do not contain provisions for the
inclusion of an amount for operating and administrative expenses in the
calculation of premium and, therefore, are in violation of the Federal
Crop Insurance Corporation Reform Act of 1994.
Response: FCIC disagrees with this comment. All information
concerning subsidies, including the producer premium subsidy and
administrative expenses, is contained in the actuarial table.
Therefore, FCIC does not believe that it is necessary to amend these
provisions.
Comment: One comment received from an FCIC Regional Service Office
suggested that subsection 8.(a), paragraph (4) be amended to read as
follows: ``Are grown in standard nursery containers (not planted in the
ground), at least three (3) inches across the smallest dimension unless
provided for on the actuarial table.'' Justification for this change
was that many requests to insure trays or ``flatted stock'' containers
with multiple plantings have been received. To alleviate the time and
personnel needed to process the number of written agreements, the
actuarial table could authorize such coverage.
Response: FCIC disagrees with this comment. The nursery policy does
not allow insuring trays or ``flatted stock'' containers with multiple
plantings. Only plants grown in standard nursery containers that are at
least three (3) inches across the largest dimension at the top of the
container are insurable. FCIC will study the feasibility of providing
insurance coverage for nursery plants not grown in standard nursery
containers for the 1997 crop year. Therefore, FCIC has amended the
proposed provisions to delete the availability of written agreements
for such plants.
Comment: One comment from a national trade organization for the
nursery industry expressed concern that as many of 5,000 or more plant
species are commercially produced by nursery growers, yet the Nursery
Eligible Plant Listing for the 1994 crop year contained only 494
species. The organization urged FCIC to expand the Nursery Eligible
Plant Listing as soon as possible and stated that until the listing is
more inclusive, the nursery program will remain unattractive to a
sizable segment of the industry.
Response: The Nursery Eligible Plant Listing was amended for the
1995 crop year and will be amended for the 1996 crop year to include
additional plant species. FCIC is continuing to work with nursery
experts to evaluate additional plant species that may be added to this
listing.
Comment: One comment was received from an insurance company
regarding paragraphs 10.(a) (3) and (4) which specify that insects and
plant disease are insured causes of loss. The company stated that: (a)
the only insect and plant disease that should be insured against are
those determined by a state department of agriculture or an accredited
agriculture college in the state to be an unprecedented affliction in
that state to that plant and for which no effective control is
available, because most insect and plant-disease losses are the result
of poor nursery practices; and (b) paragraphs 10.(a) (3) and (4) should
make it clear that policyholders have an obligation to keep all
receipts for purchases of sprays and maintain spraying records.
Response: FCIC disagrees with the comment. The crop provisions
already exclude damage due to insufficient or improper application of
pest and disease control measures. The Common Crop Insurance Policy
Basic Provisions, to which the Nursery Crop Provisions attach, exclude
losses due to failure to follow recognized good practices, and also
require policyholders to maintain records. Therefore, FCIC does not
believe that it is necessary to amend these provisions.
Comment: One comment received from an insurance company disagreed
with providing coverage specified in paragraph 10.(a)(9) for failure or
breakdown of frost/freeze protection equipment or facilities due to
direct damage to such equipment or facilities from an insurable cause
of loss. The company questioned how the loss adjuster is to determine:
that ``direct damage'' caused the loss if protection equipment or
facilities were not properly maintained; whether the proximate cause of
the loss was from owner negligence or insurable causes, or if from
both, how the adjuster makes allowance for contributory negligence; and
that the plants are damaged within 72 hours after the failure of the
equipment or facilities. For the reasons stated above, it was
recommended that paragraph 10.(a)(9) be deleted in its entirety and
paragraph 10.(b)(5) be amended to delete the clause ``unless due to an
insured cause of loss.''
Response: FCIC disagrees with this comment. The intent of the
Nursery Crop Provisions is to protect the producer from unavoidable
causes of loss. Therefore, failure or breakdown of the frost/freeze
protection equipment or facilities due to an unavoidable insurable
cause of loss will be covered. It is the loss adjuster's responsibility
to determine whether an insurable cause of loss directly caused the
damage in accordance with loss adjustment procedure approved by FCIC.
Comment: One comment received from an insurance company stated that
because nursery plants are portable, section 11 should require that the
insurer's permission to dump be in writing and signed by a loss
adjuster and should require the insured to identify, in advance, the
location where plants will be dumped and require the insured to keep
dumping records.
Response: Section 11 requires the insured to obtain written consent
from the insurer prior to destroying, selling or otherwise disposing of
any plant inventory that is damaged. Further, the Common Crop Insurance
Policy Basic Provisions already require the insured to keep records of
the disposition of the crop. FCIC will study and address this issue for
the 1997 crop year. Therefore, for the reasons stated, FCIC does not
believe that it is necessary to amend these provisions.
Comment: Two comments were received requesting that insurance be
allowed to attach to nursery inventory that produce edible berries,
fruits, or nuts as follows:
(1) One comment received from a national trade organization for the
nursery industry stated that the production and irrigation practices
for nursery plants that are produced as entire plants for subsequent
sale to others, where the purchaser's intent is to use the plants to
produce edible berries, fruits, and nuts for market are similar to the
production and irrigation practices for ornamental plant types. The
organization strongly urged FCIC to allow insurance coverage for
nursery plants that are produced for the wholesale market as entire
plants, and not for berry, fruit, or nut sales; and [[Page 31378]]
(2) One comment received from an FCIC Regional Service Office
requested that insurance be allowed to attach to plants that produce
edible berries, fruits, or nuts due to numerous requests to insure such
plants.
Response: FCIC disagrees with these comments. These plants are
primarily hardwoods with tap roots. The roots are usually severed or
otherwise constricted and stressed when the tree is placed into a
container. These trees are usually grafted as well. When stressed,
disease can more easily attack these trees through the roots or the
graft. Nursery operators cannot assess the quality of the merchandise
and may not be aware of the tree condition if the trees are purchased
from a supplier, nor can the insurer who accepts the risk. FCIC will
study the feasibility of providing insurance on these types of plants
for the 1997 crop year. Therefore, FCIC does not believe that it is
necessary to amend these provisions at this time.
Comment: One comment received from a national trade organization
for the nursery industry questioned the reasoning for and disagreed
with the proposed clarification that stock plants used for
reproduction, growing cuttings, air layering or propagating will not be
insured.
Response: The intent of the nursery crop insurance policy is to
provide coverage for nursery plants that are grown to be sold as entire
plants. Premium rates have been established on this basis. Therefore,
FCIC does not believe that it is necessary to amend subsection 8.(h).
Comment: One comment from a national trade organization for the
nursery industry expressed concern regarding the requirement that the
insured must report monthly market values of nursery inventory. The
organization perceived this as excessively burdensome and, thus, a
strong disincentive to the purchase of crop insurance.
Response: FCIC agrees that this requirement is time consuming and
costly for all parties. However, since indemnity payments are based on
the monthly market values, the insured must continue to provide the
reports until an alternative method is derived. FCIC will study
alternative methods to offer nursery insurance coverage that may
eliminate this requirement. Therefore, FCIC does not believe that it is
necessary to delay implementation of these provisions at this time.
In addition to the changes indicated in the responses to comments,
FCIC has determined that:
1. Subsections 1. (d), (e), (f), and (i), subsection 7.(a)
paragraph (3), subsection 7.(a) paragraph (3), and subsection 12.(a)
paragraph (1)(ii) reference the 10% reduced valuation due to the
comment above regarding subsection 1.(a). FCIC has amended these
provisions accordingly.
2. Subsection 1. (h) and (n), definitions of ``Largest dimension''
and ``Standard nursery containers'' is amended to clarify that standard
nursery containers must be at least three (3) inches across the largest
dimension at the top of the container. This will be consistent with the
nursery industry definition of the largest dimension and standard
nursery containers.
3. Section 6 is amended to: (1) Allow an insured to revise the
Nursery Plant Inventory Summary after the sales closing date to add
plants not listed on the Nursery Plant Listing, if the insured
requested a written agreement to insure such plants by the sales
closing date and it has been offered and accepted; (2) allow the
insured to revise the Nursery Plant Inventory Summary to correct or
change the value of the insurable inventory if a new plant species is
being added which was not originally reported on the nursery plant
inventory summary without regard to the 10%/$25,000 limitation; and (3)
remove the restriction requiring that the increase in inventory value
must have been due to a quantity change.
4. Subsection 9.(b) is amended to clarify that the date of final
adjustment of a loss on the unit, when the total indemnities paid for
the unit equal the amount of insurance for that unit is one of the
events that ends the insurance period.
Accordingly, the rule, ``Common Crop Insurance Regulations; Nursery
Crop Insurance Provisions and Nursery Frost, Freeze, and Cold Damage
Exclusion Option'' published at 60 FR 5339 as revised and set out below
is hereby adopted as final rule.
List of Subjects in 7 CFR Part 457
Crop insurance, nursery crop.
Final Rule
Accordingly, pursuant to the authority contained in the Federal
Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.), the Federal
Crop Insurance Corporation hereby amends the Common Crop Insurance
Regulations (7 CFR part 457), effective for the 1996 and succeeding
crop years, to read as follows:
PART 457--[AMENDED]
1. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(1).
2. 7 CFR part 457 is amended by adding Secs. 457.114 and 457.115 to
read as follows:
Sec. 457.114 Nursery Crop Insurance Provisions.
The Nursery Crop Insurance Provisions for the 1996 and succeeding
crop years are as follows:
United States Department of Agriculture
Federal Crop Insurance Corporation
Nursery Crop Provisions
If a conflict exists among the Basic Provisions (Sec. 457.8),
these crop provisions, and the Special Provisions, the Special
Provisions will control these crop provisions and the Basic
Provisions; and these crop provisions will control the Basic
Provisions.
1. Definitions
(a) Amount of insurance--The result of multiplying the highest
monthly market value reported on the nursery plant inventory summary
(including inventory reported by you and accepted by us on a revised
nursery plant inventory summary) by .9, multiplied by the percentage
for the coverage level you elect.
(b) Brownout--A reduction in electric power that affects the
unit.
(c) Crop year--The 12 month period beginning October 1 and
extending through September 30 of the next calendar year, designated
by the year in which it ends. (The 1996 crop year begins October 1,
1995, and ends September 30, 1996).
(d) Crop year loss deductible--The value calculated by
multiplying the highest monthly market value reported on the nursery
plant inventory summary by .9 and subtracting from this product the
amount of insurance.
(e) Field market value A--Ninety percent (90%) of the wholesale
market value for the insured plants in the unit immediately prior to
the occurrence of the loss.
(f) Field market value B--Ninety percent (90%) of the wholesale
market value remaining for the insurable plants in the unit
immediately following the occurrence of the loss as determined by
our appraisal conducted as soon as reasonably possible after the
loss is reported.
(g) Irrigated practice--A method of producing a crop by which
water is artificially applied during the growing season by
appropriate systems and at the proper times, with the intention of
providing the quantity of water needed to maintain the amount of
insurance on the nursery plant inventory.
(h) Largest dimension--The distance measured at the top of the
standard nursery container from one side directly across to the
opposite at the widest point.
(i) Monthly loss deductible--The smaller of: (1) The highest
monthly market value reported on the nursery plant inventory summary
multiplied by .9; or (2) field market value A; multiplied by the
number derived by subtracting the coverage level percent from one
hundred percent (100%), not to exceed the crop year loss deductible.
[[Page 31379]]
(j) Monthly market value--The dollar amount determined by
multiplying the quantity of each insurable plant by its wholesale
market value for that month, less the maximum discount (stated in
dollar terms) granted to any buyer, and totalling the resulting
values for all insurable plants in the unit.
(k) Nursery--A business enterprise that produces ornamental
plants in standard nursery containers for the wholesale market.
(l) Nursery eligible plant listing--A listing contained in the
Actuarial Table that specifies the plants eligible for insurance and
any mandatory or recommended storage required for such plants in
each hardiness zone defined by the United States Department of
Agriculture.
(m) Nursery plant inventory summary--A report that specifies the
numbers, growing locations, and wholesale prices of plants included
in the nursery inventory.
(n) Standard nursery containers--Rigid containers not less than
three (3) inches across the largest dimension at the top of the
container, and which are appropriate in size and with proper
drainage holes for the plant contained. Grow bags, trays, cellpacks,
and burlap are not standard nursery containers under these crop
provisions.
(o) Stock plants--Plants used for reproduction, for growing
cuttings, for air layering or for propagating.
(p) Wholesale market value--The total dollar valuation of the
insurable plants actually contained within the unit at any time. The
values used will be based on your wholesale price list if properly
supported by your records, less the maximum discount (stated in
dollar terms) granted to any buyer.
(q) Written agreement--Designated terms of this policy may be
altered by written agreement. Each agreement must be applied for by
the insured in writing no later than the sales closing date and is
valid for one year only. If not specifically renewed the following
year, continuous insurance will be in accordance with the printed
policy. All variable terms including, but not limited to, plant type
and premium rate must be contained in the written agreement.
Notwithstanding the sales closing date restriction contained herein,
in specific instances, a written agreement may be applied for after
the sales closing date and approved if, after a physical inspection
of the nursery plant inventory, there is a determination that the
inventory has the expectancy of meeting the amount of insurance. All
applications for written agreements as submitted by the insured must
contain all variable terms of the contract between the company and
the insured that will be in effect if the written agreement is
disapproved. A written agreement will not be approved for other than
standard nursery containers.
2. Unit Division
In lieu of the definition of ``unit'' contained in section 1
(Definitions) of the Basic Provisions (Sec. 457.8), a unit consists
of all growing locations in the county within a five mile radius of
the named insured locations designated on your nursery plant
inventory summary. Any growing location more than five miles from
any other growing location, but within the county, may be designated
as a separate basic unit or be included in the closest unit listed
on your nursery plant inventory summary.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
The production reporting requirements contained in section 3
(Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities) of the Basic Provisions (Sec. 457.8) are not applicable
to the Nursery Crop Provisions.
4. Contract Changes
The contract change date is June 30 preceding the crop year (see
the provisions of section 4 (Contract Changes) of the Basic
Provisions (Sec. 457.8)).
5. Cancellation and Termination Dates
In accordance with section 2 ( Life of Policy, Cancellation, and
Termination) of the Basic Provisions (Sec. 457.8), the cancellation
and termination dates are September 30 preceding the crop year.
6. Nursery Plant Inventory Summary
(a) Section 6 (Report of Acreage) of the Basic Provisions
(Sec. 457.8) is not applicable to the Nursery Crop Provisions.
(b) You must submit a nursery plant inventory summary to us on
or before September 30 preceding the crop year.
(c) The nursery plant inventory summary is a projection of the
expected inventory for the following 12 months. This summary must
include, by unit and by month for each type of plant in the
inventory, the:
(1) Container sizes, as measured at the largest dimension at the
top of the container;
(2) Number of plants;
(3) Wholesale price for each month of the crop year; and
(4) Your share.
If your inventory usually changes within a specific month,
report the largest inventory that you expect to have for that month.
(d) Your annual nursery plant inventory summary will be used to
determine your premium and the amount of insurance for each unit. If
you do not submit the summary by the reporting date, we may elect to
determine the nursery plant inventory for each unit or we may deny
liability on any unit. Errors in reporting units may be corrected by
us at the time of loss adjustment.
(e) Your wholesale price list may be examined to determine
whether the prices listed are reasonable. If the prices are
determined to be unreasonable, the previous acceptable wholesale
price list will be used or we may establish the wholesale price for
each type of plant.
(f) With our consent, you may revise your reported nursery plant
inventory summary to correct or change the value of the insurable
inventory if the amount of the revision is at least ten percent
(10%) of the highest monthly market value reported on the nursery
plant inventory summary or $25,000, whichever is smaller, or if a
new plant species is being added that was not originally reported on
your nursery plant inventory summary or was approved by written
agreement. If you wish to revise the nursery plant inventory
summary, you must notify us in writing at least 14 days before a
change in inventory value. We must inspect and accept the nursery
before insurance attaches on any proposed increase in inventory if:
(1) The storage facilities have changed in any way since our
previous inspection; or
(2) The revision includes plants that have specific over-
wintering storage requirements and that were not previously reported
on your nursery plant inventory summary.
(g) You may not revise your nursery plant inventory summary
after the sales closing date to add plants not listed on the Nursery
Eligible Plant Listing unless a request for a written agreement to
add such plants has been submitted by the sales closing date.
(h) Insurable plants that are not reported on your nursery plant
inventory summary will not be insured, but the value of such plants
after a loss will be included as production to count. Such
unreported inventory may reduce the amount of any indemnity payable
to you.
(i) You must designate separately any plant inventory that is
not insurable.
7. Annual Premium
We will determine your premium as follows:
(a) The annual premium for each unit will be calculated by:
(1) Determing the total value of each plant type and container
size designated on your nursery plant inventory summary for each
month by multiplying the number of plants by the price for that type
and container size shown on your accepted wholesale price list for
that month, less the maximum discount (stated in dollar terms)
granted to any buyer, and totalling the resulting values for each
separate classification shown on the actuarial table;
(2) Adding the total values of all plant types and container
sizes (determined in (1) above) for each month separately to
determine the monthly market values. Then compare the resulting
twelve (12) monthly market values to determine the highest monthly
market value for the crop year;
(3) Taking the total value of each plant type and container size
obtained in (1) above for the month having the highest monthly
market value for the crop year (determined in (2) above) for each
classification specified in the actuarial table and multiplying
these values by .9, then multiplying the results by the percentage
coverage level you have elected;
(4) Multiplying each product obtained in (3) above by the
appropriate premium rate listed on the actuarial table;
(5) Adding the products obtained in (4) above; and
(6) Multiplying the total obtained in (5) above by your share.
(b) The annual premium will be earned in full when insurance
attaches. It is due and payable as follows:
(1) Forty percent (40%) on the later of September 30 preceding
each crop year or the date we accept the inventory for insurance;
(2) Thirty percent (30%) on January 1 of the crop year; and
(3) Thirty percent (30%) on April 1 of the crop year.
[[Page 31380]]
(c) Additional premium earned from an increase in the nursery
plant inventory summary is due and payable when the revised nursery
plant inventory summary is approved by us.
(d) Premium will not be reduced due to a decrease in the nursery
plant inventory summary, unless such decrease results from the
deletion of uninsurable inventory from the summary that was
erroneously reported as insurable.
8. Insured Plants
In lieu of the provisions of section 8 (Insured Crop) and
section 9 (Insurable Acreage) of the Basic Provisions (Sec. 457.8),
the insured nursery plant inventory will be all nursery plants in
the county reported by you or determined by us for which an
application is accepted, a premium rate is provided by the actuarial
table, and that:
(a) Are grown under an irrigated practice for which you have
adequate facilities and water at the time coverage begins in order
to carry out a good irrigation practice;
(b) Are classified as woody, herbaceous, or foliage landscape
plants;
(c) Do not include plants that produce edible berries, fruits,
or nuts;
(d) Are grown in standard nursery containers;
(e) Are grown in an appropriate growing medium;
(f) Are inspected by us and determined to be acceptable;
(g) Are listed on the Nursery Eligible Plant Listing unless a
written agreement provides otherwise;
(h) Are not stock plants;
(i) Are grown in accordance with the production practices for
which premium rates have been established; and
(j) Meet the ``mandatory'' or ``recommended'' storage
requirements, unless you have applied for and received the Frost/
Freeze, and Cold Damage Exclusion Option for those nursery plants.
9. Insurance Period
In lieu of the provisions of section 11 (Insurance Period) of
the Basic Provisions (Sec. 457.8), coverage begins on each unit or
part of a unit the later of October 1 or the date we accept the
inventory for insurance, provided you have complied with the terms
of paragraph 7.(b)(1). Coverage will not attach for plant inventory
added due to a revised nursery plant inventory summary until any
additional premium is paid in full. Insurance ends for each unit at
the earliest of:
(a) The date all plant inventory within the unit is sold or
otherwise removed unless that inventory is replaced and additional
earned premium is paid (If a portion of the plants are sold or
otherwise removed from inventory, and are not replaced, insurance
only ends on that part of the unit.);
(b) The date of final adjustment of a loss on the unit when the
total indemnities paid for the unit equal the amount of insurance
for that unit; or
(c) September 30 of the crop year.
10. Causes of Loss
(a) In accordance with the provisions of section 12 (Causes of
Loss) of the Basic Provisions (Sec. 457.8), insurance is provided
for unavoidable damage caused only by the following causes of loss
which occur within the insurance period:
(1) Adverse weather conditions;
(2) Fire, except as specified in (b)(4);
(3) Insects, but not damage due to insufficient or improper
application of pest control measures;
(4) Plant disease, but not damage due to insufficient or
improper application of disease control measures;
(5) Wildlife;
(6) Earthquake;
(7) Volcanic eruption;
(8) Failure of the irrigation water supply, due to an
unavoidable cause of loss occurring within the insurance period; or
(9) Frost or freeze if there is a failure or breakdown of frost/
freeze protection equipment or facilities and the failure or
breakdown is directly caused by an insurable cause of loss, provided
the insured nursery plants are damaged by freezing temperatures
within 72 hours after the failure of such equipment or facilities
and you establish that repair or replacement was not possible
between the time of failure or breakdown and the time the freezing
temperatures occurred.
(b) In addition to the causes of loss excluded in section 12
(Causes of Loss) of the Basic Provisions (Sec. 457.8), we do not
insure against any loss caused by:
(1) Brownout;
(2) Failure of the power supply unless such failure is due to an
insurable cause of loss;
(3) The inability to market the nursery plants as a direct
result of quarantine, boycott, or refusal of a buyer to accept
production;
(4) Fire, where weeds and other forms of undergrowth in the
vicinity of the building and on your property have not been
controlled; or
(5) Collapse or failure of buildings or structures.
11. Duties in the Event of Damage or Loss
In addition to your duties contained under section 14 (Duties in
the Event of Damage or Loss) of the Basic Provisions (Sec. 457.8),
you must:
(a) Obtain our written consent prior to:
(1) Destroying, selling or otherwise disposing of any plant
inventory that is damaged; or
(2) Changing or discontinuing your normal growing practices with
respect to care and maintenance of the insured plant inventory.
(b) Upon our request, provide complete copies of your nursery
plant inventory wholesale price list for the 12 month period
immediately preceding the loss and your marketing records including
plant shipping invoices for the same period.
(c) Submit a claim for indemnity to us on our form, not later
than 60 days after the earliest of:
(1) The date of your loss; or
(2) The end of the insurance period.
12. Settlement of Claim
(a) The indemnity will be the amount calculated by us for each
unit as follows:
(1) Subtracting field market value B from the lesser of:
(i) Field market value A; or
(ii) The highest monthly market value for the unit reported on
the nursery plant inventory summary multiplied by .9;
(2) Subtracting the monthly loss deductible (not to exceed the
remaining crop year loss deductible) from the product obtained in
(1) above; and
(3) Multiplying the result by your share.
(b) Individual insured losses occurring on the same unit during
the crop year may be accumulated if each loss is reported and valued
by us to satisfy the crop year loss deductible. Paragraph 12.(a)(2)
will not apply to any subsequent individual loss determinations when
the total amount of accumulated monthly loss deductibles is equal to
or greater than the crop year loss deductible. Total indemnities for
a unit will not exceed the amount of insurance for the unit.
(c) The value of any insured plant inventory may be determined
on the basis of our appraisals conducted after the end of the
insurance period.
Sec. 457.115 Nursery Frost, Freeze, and Cold Damage Exclusion Option.
This is not a continuous option. Application for this option
must be made on or before the sales closing date for each crop year
this Option is to be in effect (see exception in item 2 below).
Insured's Name---------------------------------------------------------
Address----------------------------------------------------------------
Contract Number--------------------------------------------------------
Identification Number--------------------------------------------------
SSN/EIN----------------------------------------------------------------
Tax I.D.---------------------------------------------------------------
Crop Year--------------------------------------------------------------
Unit Number------------------------------------------------------------
Hardiness Zone---------------------------------------------------------
For the crop year designated above, the Nursery Crop Provisions
(Sec. 457.114) are amended in accordance with the following terms
and conditions:
1. You must have the Common Crop Insurance Policy Basic
Provisions and Nursery Crop Provisions in force.
2. This option must be submitted to us on or before the final
date for accepting applications for the crop year in which you wish
to insure your nursery plant inventory under this option. If the
provisions of paragraph 6.(f)(2) of the Nursery Crop Provisions
apply, we may accept this option after the sales closing date, or we
may allow additional plants to be added to this option after such
date.
3. Executing this option does not reduce the premium rate for
nursery crop insurance.
4. All provisions of the Basic Provisions (Sec. 457.8) and
Nursery Crop Provisions (Sec. 457.114) not in conflict with this
option are applicable.
5. Upon execution of this option, the following plant varieties
will not have frost, freeze, or cold damage coverage on this unit
because the mandatory (Risk Group A) or recommended (Risk Group B)
over-wintering requirements will not be met.
[[Page 31381]]
------------------------------------------------------------------------
Over-wintering
Scientific name Common name requirements to be
excluded
------------------------------------------------------------------------
................... .......................
................... .......................
................... .......................
................... .......................
................... .......................
------------------------------------------------------------------------
Insured's Signature
----------------------------------------------------------------------
Date-------------------------------------------------------------------
Insurance Company Representative's Signature and Code Number
----------------------------------------------------------------------
Date-------------------------------------------------------------------
Done in Washington, DC, on June 9, 1995.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 95-14710 Filed 6-14-95; 8:45 am]
BILLING CODE 3410-08-P
