[Federal Register Volume 62, Number 75 (Friday, April 18, 1997)]
[Proposed Rules]
[Pages 19067-19071]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10041]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 456 and 457
Macadamia Tree Crop Insurance Regulations; and Common Crop
Insurance Regulations, Macadamia Tree Crop Insurance Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Proposed rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes
specific crop provisions for the insurance of macadamia trees. The
provisions will be used in conjunction with the Common Crop Insurance
Policy Basic Provisions, which contain standard terms and conditions
common to most crops. The intended effect of this action is to provide
policy changes to better meet the needs of the insured, include the
current macadamia tree crop insurance regulations with the Common Crop
Insurance Policy for ease of use and consistency of terms, and to
restrict the effect of the current macadamia tree crop insurance
regulations to the 1997 and prior crop years.
DATES: Written comments on this proposed rule will be accepted until
close of business May 19, 1997 and will be considered when the rule is
to be made final.
ADDRESSES: Interested persons are invited to submit written comments to
[[Page 19068]]
the Director, Product Development Division, Federal Crop Insurance
Corporation, United States Department of Agriculture, 9435 Holmes Road,
Kansas City, MO 64131.
FOR FURTHER INFORMATION CONTACT: Stephen Hoy, Insurance Management
Specialist, Research and Development, Product Development Division,
Federal Crop Insurance Corporation, at the Kansas City, MO, address
listed above, telephone (816) 926-7730.
SUPPLEMENTARY INFORMATION:
Executive Order No. 12866
The Office of Management and Budget (OMB) has determined this rule
to be exempt for the purposes of Executive Order No. 12866, and,
therefore, has not been reviewed by OMB.
Paperwork Reduction Act of 1995
The information collection requirements contained in these
regulations were previously approved by OMB pursuant to the Paperwork
Reduction Act of 1995 (44 U.S.C. chapter 35) under OMB control number
0563-0003 through September 30, 1998.
Section 7 of the 1998 Macadamia Tree Crop Provisions adds
interplanting as an insurable farming practice for macadamia trees
interplanted with another perennial crop as long as the macadamia tree
crop would not be adversely affected. This practice was not insurable
under the previous Macadamia Tree Crop Insurance Policy. Consequently,
interplanting information will need to be collected using the FCI-12-P
Pre-Acceptance Perennial Crop Inspection Report form for approximately
0.5 percent of the 27 insureds who interplant their macadamia tree
crop. Standard interplanting language has been added to most perennial
crops. Offering insurance for this practice benefits agriculture
because now more perennial crop producers are covered by insurance.
The amendments set forth in this proposed rule do not contain
additional information collections that require clearance by OMB under
the provisions of 44 U.S.C. chapter 35.
The title of this information collection is ``Catastrophic Risk
Protection Plan and Related Requirements including, Common Crop
Insurance Regulations; Macadamia Tree Crop Insurance Provisions.'' The
information to be collected includes a crop insurance application and
an acreage report. Information collected from the application and
acreage report is electronically submitted to FCIC by the reinsured
companies. Potential respondents to this information collection are
producers of macadamia trees that are eligible for Federal crop
insurance.
The information requested is necessary for the reinsured companies
and FCIC to provide insurance and reinsurance, determine eligibility,
determine the correct parties to the agreement or contract, determine
and collect premiums or other monetary amounts, and pay benefits.
All information is reported annually. The reporting burden for this
collection of information is estimated to average 16.9 minutes per
response for each of the 3.6 responses from approximately 1,755,015
respondents. The total annual burden on the public for this information
collection is 2,676,932 hours.
FCIC is requesting comments on the following: (a) Whether the
proposed collection of information is necessary for the proper
performance of the functions of the agency, including whether the
information shall have practical utility; (b) the accuracy of the
agency's estimate of the burden of the proposed collection of
information; (c) ways to enhance the quality, utility, and clarity of
the information to be collected; and (d) ways to minimize the burden of
the collection of information on respondents, including through the use
of automated collection techniques or other forms of information
gathering technology.
Comments regarding paperwork reduction should be submitted to the
Desk Officer for Agriculture, Office of Information and Regulatory
Affairs, Office of Management and Budget, Washington, D.C. 20503.
The Office of Management and Budget (OMB) is required to make a
decision concerning the collections of information contained in these
proposed regulations between 30 and 60 days after submission to OMB.
Therefore, a comment to OMB is best assured of having full effect if
OMB receives it within 30 days of publication. This does not affect the
deadline for the public to comment on the proposed regulation.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, 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. Thus, this
rule is not subject to the requirements of sections 202 and 205 of the
UMRA.
Executive Order No. 12612
It has been determined under section 6(a) of Executive Order No.
12612, Federalism, that this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
provisions 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.
Regulatory Flexibility Act
This regulation will not have a significant impact on a substantial
number of small entities. New provisions included in this rule will not
impact small entities to a greater extent than large entities. Under
the current regulations, a producer is required to complete an
application and acreage report. If the crop is damaged or destroyed,
the insured is required to give notice of loss and provide the
necessary information to complete a claim for indemnity. This
regulation does not alter those requirements. The amount of work
required of the insurance companies delivering and servicing these
policies will not increase significantly from the amount of work
currently required. This rule does not have any greater or lesser
impact on the producer. 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.
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order No. 12372
This program is not subject to the provisions of Executive Order
No. 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 No. 12988
The provisions of this rule will not have a retroactive effect
prior to the effective date. 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 published
at 7 CFR part 11 must be exhausted before any action for judicial
review may be brought.
[[Page 19069]]
Environmental Evaluation
This action is not expected to have a significant impact on the
quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review Initiative to eliminate unnecessary or duplicative
regulations and improve those that remain in force.
Background
FCIC proposes to add to the Common Crop Insurance Regulations (7
CFR part 457), a new section, 7 CFR 457.130, Macadamia Tree Crop
Insurance Provisions. The new provisions will be effective for the 1998
and succeeding crop years. These provisions will replace and supersede
the current provisions for insuring macadamia trees found at 7 CFR part
456 (Macadamia Tree Crop Insurance Regulations). FCIC also proposes to
amend 7 CFR part 456 to limit its effect to the 1997 and prior crop
years. FCIC will later publish a regulation to remove and reserve part
456.
This rule makes minor editorial and format changes to improve the
Macadamia Tree Crop Insurance Regulations' compatibility with the
Common Crop Insurance Policy. In addition, FCIC is proposing
substantive changes in the provisions for insuring macadamia trees as
follows:
1. Amend the insurance contract to provide continuous coverage. The
current policy is not a continuous contract. This change standardizes
the Macadamia Tree Crop Insurance Policy with other crop insurance
policies.
2. Section 1--Add definitions for the terms ``days,'' ``good
farming practices,'' ``interplanted,'' ``irrigated practice,'' ``non-
contiguous,'' ``rootstock,'' and ``written agreement'' for
clarification. Delete the definition of ``planting pattern.'' This is a
commonly understood term that is not defined in other crop policies.
3. Section 2--Describe the guidelines under which basic units may
be divided into optional units consistent with other perennial crops
offering optional units. These provisions also incorporate the
requirement that each optional unit must contain at least 80 acres of
insurable age macadamia trees and be located on non-contiguous land.
These optional unit guidelines standardize macadamia trees with other
perennial crops.
4. Section 3(a)(1)--Specify that the insured may select only one
dollar amount of insurance for all the macadamia trees in the county in
each age group contained in the actuarial table that are insured under
the policy to standardize these provisions with other perennial crops.
The dollar amount of insurance chosen by the insured for each age group
must have the same percentage relationship to the maximum dollar amount
offered by the insurance provider for each age group.
5. Section 3(a)(3)--Specify the reporting requirements when any
circumstance occurs that may be expected to cause a reduction in the
dollar amount of insurance and when the insured crop is interplanted
with another perennial crop to ensure that the amount of insurance
accurately reflects the value of the trees and to maximize the number
of acres which are insurable.
6. Section 4--Establish August 31 as the contract change date.
Previously, the policy contained no contract change date since it was
not a continuous policy.
7. Section 5--Establish December 31 as the cancellation date.
Previously, the policy contained no cancellation date since it was not
a continuous policy.
8. Section 7--Allow insurance for macadamia trees interplanted with
another perennial crop in order to increase the number of acres that
are insurable without adversely affecting the actuarial soundness of
the program.
9. Section 8(a)--Specify that if the application is received after
December 22 but prior to January 1, insurance will attach on the 10th
day after the insured's properly completed application is received in
the insurance provider's local office unless the acreage is inspected
during the 10 day period and it is determined that requirements of the
insurance contract are not met. These provisions were modified so they
will not be interpreted as allowing late-filed applications, and a
thirty day period in this situation is not reasonable. Ten days is
sufficient to prevent adverse selection and avoid unnecessary exposure
to uninsured losses during the waiting period.
10. Section 8(b)--Add provisions to clarify the procedure for
insuring acreage when an insurable share is acquired or relinquished on
or before the acreage reporting date.
11. Section 9--Add adverse weather conditions, earthquake, failure
of irrigation water supply, and wildlife, unless proper control
measures to control wildlife have not been taken, as insurable causes
of loss to be consistent with the coverage provided for other perennial
crops. Wind is deleted because it is encompassed by the term adverse
weather. Disease and insect infestation are also excluded as causes of
loss unless adverse weather prevents the proper application of control
measures, causes control measures to be ineffective when properly
applied, or causes disease or insect infestation for which no effective
control mechanism is available.
12. Section 12--Add provisions for providing insurance coverage by
written agreement. FCIC has a long standing policy of permitting
certain modifications of the insurance contact by written agreement for
some policies. This amendment allows FCIC to tailor the policy to a
specific insured in certain instances. The new section will cover the
procedures for, and duration of, written agreements.
List of Subjects in 7 CFR Parts 456 and 457
Crop insurance, Macadamia tree.
Proposed Rule
Accordingly, for the reasons set forth in the preamble, the Federal
Crop Insurance Corporation hereby proposes to amend 7 CFR parts 456 and
457, as follows:
PART 456--MACADAMIA TREE CROP INSURANCE REGULATIONS
1. The authority citation for 7 CFR part 456 is amended to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(p).
2. The subpart heading preceding 456.1 is revised to read as
follows:
Subpart--Regulations for the 1988 Through 1997 Crop Years
3. In Sec. 456.7 the introductory text of paragraph (d) is revised
to read as follows:
Sec. 456.7 The application and policy.
* * * * *
(d) The application is found at subpart D of part 400, General
Administrative Regulations (7 CFR 400.37, 400.38). The provisions of
the Macadamia Tree Crop Insurance Policy for the 1988 through 1997 crop
years are as follows:
* * * * *
PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE
1994 AND SUBSEQUENT CONTRACT YEARS
4. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
5. Sec. 457.130 is added to read as follows:
[[Page 19070]]
Sec. 457.130 Macadamia Tree Crop insurance provisions.
The Macadamia Tree Crop Insurance Provisions for the 1998 and
succeeding crop years are as follows:
FCIC policies:
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
Reinsured policies:
(Appropriate title for insurance provider)
Both FCIC and reinsured policies:
Macadamia Tree 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
Age--The number of complete 12-month periods that have elapsed
since the month the trees were set out or were grafted, whichever is
later. Age determination will be made for each unit, or portion
thereof, as of January 1 of each crop year.
Crop year--A period beginning with the date insurance attaches
to the macadamia tree crop extending through December 31 of the same
calendar year. The crop year is designated by the calendar year in
which insurance attaches.
Days--Calendar days.
Destroyed--Trees damaged to the extent that replacement,
including grafts, is required.
Good farming practices--The cultural practices generally in use
in the county for the crop to have normal growth and vigor, and are
those recognized by the Cooperative State Research, Education, and
Extension Service as compatible with agronomic and weather
conditions in the county.
Graft--The uniting of a macadamia shoot to an established
macadamia tree rootstock for future production of macadamia nuts.
Interplanted--Acreage on which two or more crops are planted in
any form of alternating or mixed pattern.
Irrigated practice--A method by which the normal growth and
vigor of the insured trees is maintained by artificially applying
adequate quantities of water during the growing season by
appropriate systems and at the proper times.
Non-contiguous--Any two or more tracts of land whose boundaries
do not touch at any point, except that land separated only by a
public or private right-of-way, waterway, or an irrigation canal
will be considered as contiguous.
Rootstock--The root and stem portion of a macadamia tree to
which a macadamia shoot can be grafted.
Written agreement--A written document that alters designated
terms of this policy in accordance with section 12.
2. Unit Division
(a) Unless limited by the Special Provisions, a unit as defined
in section 1 (Definitions) of the Basic Provisions (Sec. 457.8),
(basic unit) may be divided into optional units if, for each
optional unit you meet all the conditions of this section or if the
division complies with a valid written agreement.
(b) Basic units may not be divided into optional units on any
basis other than as described in this section.
(c) If you do not comply fully with these provisions, we will
combine all optional units that are not in compliance with these
provisions into the basic unit from which they were formed. We will
combine the optional units at any time we discover that you have
failed to comply with these provisions. If failure to comply with
these provisions is determined to be inadvertent, and the optional
units are combined into a basic unit, that portion of the additional
premium paid for the optional units that have been combined will be
refunded to you for the units combined.
(d) All units you selected for the crop year must be identified
on the acreage report for that crop year.
(e) The following requirements must be met for each optional
unit:
(1) You must have records, which can be independently verified,
of acreage and age of trees for each unit for at least the last crop
year;
(2) Each optional unit must contain at least 80 acres of
insurable age macadamia trees; and
(3) Each optional unit must be located on non-contiguous land.
3. Insurance Guarantees, Coverage Levels, and Dollar Amounts for
Determining Indemnities
(a) In addition to the requirements of section 3 (Insurance
Guarantees, Coverage Levels, and Prices for Determining Indemnities)
of the Basic Provisions (Sec. 457.8):
(1) You may select only one dollar amount of insurance for all
the macadamia trees in the county in each age group contained in the
actuarial table that are insured under this policy. The dollar
amount of insurance you choose for each age group must have the same
percentage relationship to the maximum dollar amount offered by us
for each age group. For example, if you choose 100 percent of the
maximum dollar amount of insurance for one age group, you must also
choose 100 percent of the maximum dollar amount of insurance for all
other age groups.
(2) If the stand is less than 90 percent, based on the original
planting pattern, the dollar amount of insurance will be reduced 1
percent for each percent below 90 percent. For example, if the
dollar amount of insurance you selected is $2,000 and the stand is
85 percent of the original stand, the dollar amount of insurance on
which any indemnity will be based is $1,900 ($2,000 multiplied by
0.95).
(3) You must report, by the sales closing date contained in the
Special Provisions, by type if applicable:
(i) Any damage, removal of trees, change in practices, or any
other circumstance that may reduce the dollar amount of insurance
and the number of affected acres;
(ii) The number of trees on insurable and uninsurable acreage;
(iii) The month and year on which the trees were set out or
grafted and the planting pattern;
(iv) The month and year of replacement if more than 10 percent
of the trees on any unit have been replaced in the previous five
crop years; and
(v) For the first year of insurance for acreage interplanted
with another perennial crop, and anytime the planting pattern of
such acreage is changed:
(A) The age of the interplanted crop, and type if applicable;
(B) The planting pattern; and
(C) Any other information that we request in order to establish
your dollar amount of insurance.
We will reduce the dollar amount of insurance as necessary,
based on our estimate of the effect of interplanted perennial crop,
removal of trees, damage, change in practices, and any other
circumstance that adversely affects the insured crop. If you fail to
notify us of any circumstance that may reduce your dollar amount of
insurance from previous levels, we will reduce your dollar amount of
insurance as necessary at any time we become aware of the
circumstance.
(b) The production reporting requirements contained in section 3
(Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities) of the Basic Provisions (Sec. 457.8), do not apply to
macadamia trees.
4. Contract Changes
In accordance with section 4 (Contract Changes) of the Basic
Provisions (Sec. 457.8), the contract change date is August 31
preceding the cancellation date.
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 December 31.
6. Insured Crop
In accordance with section 8 (Insured Crop) of the Basic
Provisions (Sec. 457.8), the crop insured will be all macadamia
trees in the county for which a premium rate is provided by the
actuarial table:
(a) In which you have a share;
(b) That are grown for the production of macadamia nuts;
(c) For which the rootstock is adapted to the area;
(d) That are at least one year of age when the insurance period
begins; and
(e) That, if the orchard is inspected, is considered acceptable
by us.
7. Insurable Acreage
In lieu of the provisions in section 9 (Insurable Acreage) of
the Basic Provisions (Sec. 457.8), that prohibit insurance attaching
to a crop planted with another crop, macadamia trees interplanted
with another perennial crop are insurable unless we inspect the
acreage and determine that it does not meet the requirements
contained in your policy.
8. Insurance Period
(a) In accordance with the provisions of section 11 (Insurance
Period) of the Basic Provisions (Sec. 457.8):
(1) Coverage begins on January 1 of each crop year, except that
for the year of application, if your application is received after
December 22 but prior to January 1, insurance will attach on the
10th day after
[[Page 19071]]
your properly completed application is received in our local office,
unless we inspect the acreage during the 10 day period and determine
that it does not meet the requirements contained in the insurance
contract. You must provide any information that we require for the
crop or to determine the condition of the orchard.
(2) The calendar date for the end of the insurance period for
each crop year is December 31.
(b) In addition to the provisions of section 11 (Insurance
Period) of the Basic Provisions (Sec. 457.8):
(1) If you acquire an insurable share in any insurable acreage
after coverage begins but on or before the acreage reporting date
for the crop year, and after an inspection we consider the acreage
acceptable, insurance will be considered to have attached to such
acreage on the calendar date for the beginning of the insurance
period.
(2) If you relinquish your insurable share on any insurable
acreage of macadamia trees on or before the acreage reporting date
for the crop year, insurance will not be considered to have attached
to, and no premium or indemnity will be due for, such acreage for
that crop year unless:
(i) A transfer of coverage and right to an indemnity, or a
similar form approved by us, is completed by all affected parties;
(ii) We are notified by you or the transferee in writing of such
transfer on or before the acreage reporting date; and
(iii) The transferee is eligible for crop insurance.
9. 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
only against the following causes of loss that occur during the
insurance period:
(1) Adverse weather conditions;
(2) Fire, unless weeds and other forms of undergrowth have not
been controlled or pruning debris has not been removed from the
orchard;
(3) Earthquake;
(4) Volcanic eruption;
(5) Wildlife, unless proper measures to control wildlife have
not been taken; or
(6) Failure of irrigation water supply, if caused by an insured
cause of loss that occurs during the insurance period.
(b) In addition to the causes of loss excluded in section 12
(Causes of Loss) of the Basic Provisions (Sec. 457.8), we will not
insure against damage due to disease or insect infestation, unless
adverse weather:
(1) Prevents the proper application of control measures or
causes properly applied control measures to be ineffective; or
(2) Causes disease or insect infestation for which no effective
control mechanism is available.
10. Duties in the Event of Damage or Loss
In addition to the requirements of section 14 (Duties in the
Event of Damage or Loss) of the Basic Provisions ( 457.8), in case
of damage or probable loss, if you intend to claim an indemnity on
any unit, you must allow us to inspect all insured acreage before
pruning or removing of any damaged trees.
11. Settlement of Claim
(a) We will determine your loss on a unit basis.
(b) In the event of loss or damage covered by this policy, we
will settle your claim by:
(1) Multiplying the insured acreage by the dollar amount of
insurance per acre for each age group;
(2) Totaling the results in section 11(b)(1);
(3) Multiplying the total dollar amount of insurance obtained in
section 11(b)(2) by the applicable percent of loss, which is
determined as follows:
(i) Subtract the coverage level percent you elected from 100
percent;
(ii) Subtract the result obtained in section 11(b)(3)(i) from
the actual percent of loss;
(iii) Divide the result in section 11(b)(3)(ii) by the coverage
level you elected (For example, if you elected the 75 percent
coverage level and your actual percent of loss was 70 percent, the
percent of loss specified in section 11(b)(3) would be calculated as
follows: 100%-75%=25%; 70%-25%=45%; 45%75%=60%.); and
(4) Multiply the result in section 11(b)(3) by your share.
(c) The total amount of loss will include both trees damaged and
trees destroyed as follows:
(1) Any orchard with over 80 percent actual damage due to an
insured cause of loss will be considered to be 100 percent damaged;
and
(2) Any percent of damage by uninsured causes will not be
included in the percent of loss.
12. Written Agreements
Designated terms of this policy may be altered by written
agreement in accordance with the following:
(a) You must apply in writing for each written agreement no
later than the sales closing date, except as provided in section
12(e);
(b) The application for a written agreement must contain all
variable terms of the contract between you and us that will be in
effect if the written agreement is not approved;
(c) If approved, the written agreement will include all variable
terms of the contract, including, but not limited to, crop type or
variety, the guarantee, premium rate, and dollar amount of
insurance;
(d) Each written agreement will only be valid for one year (If
the written agreement is not specifically renewed the following
year, insurance coverage for subsequent crop years will be in
accordance with the printed policy); and
(e) An application for a written agreement submitted after the
sales closing date may be approved if, after a physical inspection
of the acreage, it is determined that no loss has occurred and the
crop is insurable in accordance with the policy and written
agreement provisions.
Signed in Washington D.C., on April 10, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-10041 Filed 4-17-97; 8:45 am]
BILLING CODE 3410-FA-P
