[Federal Register Volume 62, Number 80 (Friday, April 25, 1997)]
[Rules and Regulations]
[Pages 20089-20093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10676]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
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Federal Register / Vol. 62, No. 80 / Friday, April 25, 1997 / Rules
and Regulations
[[Page 20089]]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 446 and 457
Walnut Crop Insurance Regulations; and Common Crop Insurance
Regulations, Walnut Crop Insurance Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes
specific crop provisions for the insurance of walnuts. 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 walnut
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 walnut crop insurance regulations to the 1997 and prior crop
years.
EFFECTIVE DATE: June 24, 1997.
FOR FURTHER INFORMATION CONTACT: Arden Routh, Insurance Management
Specialist, Product Development Division, Federal Crop Insurance
Corporation, United States Department of Agriculture, 9435 Holmes Road,
Kansas City, MO 64131, 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
Following publication of the proposed rule, the public was afforded
60 days to submit written comments on information collection
requirements previously approved by OMB under OMB control number 0563-
0003 through September 30, 1998. No public comments were received.
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 an 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.
The insured must also annually certify to the previous years
production if adequate records are available to support the
certification. The producer must maintain the production records to
support the certified information for at least three years. 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 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order No. 12988
This rule has been reviewed in accordance with 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.
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
On Friday, August 9, 1996, FCIC published a proposed rule in the
Federal Register at 61 FR 41527-41531 to add to the Common Crop
Insurance Regulations (7 CFR part 457) a new section, 7 CFR 457.122,
Walnut Crop Insurance Provisions. The new
[[Page 20090]]
provisions will be effective for the 1998 and succeeding crop years.
These provisions will replace and supersede the current provisions for
insuring Walnuts found at 7 CFR part 446 (Walnut Crop Insurance
Regulations). FCIC also amends 7 CFR part 446 to limit its effect to
the 1997 and prior crop years. FCIC will later publish a regulation to
remove and reserve part 446.
Following publication of the proposed rule, the public was afforded
60 days to submit written comments. A total of 10 comments were
received from the crop insurance industry (industry) and FCIC. The
comments received, and FCIC's responses, are as follows:
Comment: The industry recommended adding the words ``and quality''
after the word ``quantity'' in the definition of ``irrigated
practice.''
Response: FCIC agrees that water quality is an important issue.
However, there are no standards that have been developed to measure
water quality for insurance purposes. Therefore, no change has been
made.
Comment: The industry questioned why all optional units must be
identified on the acreage report for each crop year, and if so, is this
by crop or also by practice, type, and variety.
Response: FCIC has clarified this provision to indicate that only
those optional units selected for the specific crop year need be
identified on the acreage report.
Comment: The industry is concerned with section 3 (Insurance
Guarantees, Coverage Levels, and Prices for Determining Indemnities),
and recommends that the language be changed to ``* * * select only one
price percentage * * *'' It would not then be necessary to include
complex provisions regarding varieties or varietal group with different
maximum prices.
Response: Methods used to select price elections vary between
insurance providers. While some require selection of a percentage of
the price election, others require selection of a specific dollar
amount. Therefore, no change has been made.
Comment: The industry questioned whether the language contained in
section 6(e) pertained to optional units, basic units, or both. If the
provisions applies only to optional units, the industry recommended
moving the provisions to section 2. The industry also questioned if the
agreement in writing to insure less than 5 acres would be a Written
Unit Agreement or a written statement accepted by the parties involved.
Response: This provision pertains to both optional and basic units.
The provision requires only that the insurance provider agree in
writing to insure the acreage. It is not necessary to have a formal
Written Unit Agreement. Therefore, no change has been made.
Comment: The industry recommended changing the language in section
8(a)(1) from ``in your insurance provider's local office'' to ``in our
local agent's office'' to be consistent with other perennial crop
policies. One comment also asked if the provisions in this section
allow late filed applications.
Response: FCIC agrees with the comment and has amended the
provisions to read ``* * * in our local office * * *'' This section was
not intended to allow late filed applications. The provisions have been
rewritten to indicate that the date insurance attaches is 10 days after
the application is received, if it is received within the 10 day period
prior to the sales closing date.
Comment: The industry believes that section 11(c)(1)(iv) should not
allow the producer to defer settlement and wait for a later, generally
lower, appraisal on insured acreage the producer intends to abandon or
no longer care for.
Response: The later appraisal will only be necessary if the
insurance provider agrees that such appraisal would result in a more
accurate determination and the producer continues to care for the crop.
If the producer does not care for the crop, the original appraisal is
used. If the insurance provider believes the original appraisal is
accurate, resolution of the dispute may be sought through arbitration
or appeal procedures, whichever are applicable. Therefore, no change
has been made.
Comment: The industry suggested combining the provisions contained
in section 12(e) with the provisions in section 12(a).
Response: The requirement that requests for written agreements be
submitted by the sales closing date is intended to be the rule and
acceptance after such date will only be allowed under unusual
circumstances. Therefore, no change has been made.
Comment: The industry recommended that the requirement for a
written agreement to be renewed each year be removed. Terms of the
agreement should be stated in the agreement to fit the particular
situation for the policy, or if no substantive changes occur from one
year to the next, allow the written agreement to be continuous.
Response: Written agreements are intended to change policy terms or
permit insurance in unusual situations where such changes will not
increase risk. If such practices continue year to year, they should be
incorporated into the policy or Special Provisions. It is important to
keep non-uniform exceptions to the minimum to assure that the insured
is well aware of the specific terms of the policy. Therefore, no change
will be made.
In addition to the changes described above, FCIC has made the
following changes to the Walnut Provisions:
1. Section 2(b)--Deleted this provision because it was in conflict
with section 2(a) and redesignated the following provisions.
2. Section 2(c)--Clarified provisions regarding premium refunds
when optional units are combined into a basic unit.
3. Section 2(e)(1)--Clarified that production reports must be
certified by the production reporting date as one of the requirements
for optional units.
4. Section 6(d)--Added a specific percentage of the trees that must
have reached the ninth growing season before the crop is insurable
unless the insured obtains a written agreement.
5. Section 8(b)(1)--Added a provision to clarify that acreage
acquired after the acreage reporting date is not insurable.
6. Section 8(b)(2)(iii)--Added a provision to clarify that a person
to whom coverage is transferred must be eligible for insurance.
7. Section 9--Clarified provisions to indicate that adverse weather
that prevents the proper application of control measures, causes
properly applied control measures to be ineffective, or causes a
circumstance that promotes disease or insect infestation for which no
effective control mechanism is available for disease and insect damage
is an insured causes of loss to be consistent with other crops. Also,
clarified that failure of the irrigation water supply is a covered loss
only if caused by a peril for which insurance is provided.
8. Section 11(b)--Clarified the calculations used to settle a
claim.
List of Subjects in 7 CFR Parts 446 and 457
Crop insurance, Reporting and recordkeeping requirements, Walnut
crop, Walnut insurance regulations.
Final Rule
Accordingly, for the reasons set forth in the preamble, the Federal
Crop Insurance Corporation hereby amends 7 CFR parts 446 and 457 as
follows:
PART 446--WALNUT CROP INSURANCE REGULATIONS
1. The authority citation for 7 CFR part 446 continues to read as
follows:
[[Page 20091]]
Authority: 7 U.S.C. 1506(l), 1506(p).
2. The subpart heading preceding Sec. 446.1 is revised to read as
follows:
Subpart--Regulations for the 1986 Through the 1997 Crop Years
3. Section 446.7 is amended by revising the introductory text of
paragraph (d) to read as follows:
Sec. 446.7 The application and policy.
* * * * *
(d) The application for the 1986 and succeeding crop years is found
at subpart D of part 400--General Administrative Regulations and may be
amended from time to time for subsequent crop years. The provisions of
the Walnut Insurance Policy for the 1986 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. Section 457.122 is added to read as follows:
Sec. 457.122 Walnut Crop Insurance Provisions.
The Walnut 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:
Walnut 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
Days--Calendar days.
Good farming practices--The cultural practices generally in use
in the county for the crop to make normal progress toward maturity
and produce at least the yield used to determine the production
guarantee, and are those recognized by the Cooperative State
Research, Education, and Extension Service as compatible with
agronomic and weather conditions in the county.
Harvest--Removal of the walnuts from the orchard.
Interplanted--Acreage on which two or more crops are planted in
any form of alternating or mixed pattern.
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 produce at least the yield used to
establish the irrigated production guarantee on the irrigated
acreage planted to the insured crop.
Net delivered weight--Delivered weight (pounds) of dry, hulled,
in-shell walnuts, excluding foreign material.
Non-contiguous land--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.
Pound--A unit of weight equal to 16 ounces avoirdupois.
Production guarantee (per acre)--The number of pounds (whole in-
shell walnuts), determined by multiplying the approved APH yield per
acre by the coverage level percentage you elect.
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 a
written agreement to such division exists.
(b) 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.
(c) All optional units you selected for the crop year must be
identified on the acreage report for that crop year.
(d) The following requirements must be met for each optional
unit and may not be waived by written agreement:
(1) You must have provided records by the production reporting
date, which can be independently verified, of acreage and production
for each optional unit for at least the last crop year used to
determine your production guarantee;
(2) You must have records of marketed production or measurement
of stored production from each optional unit maintained in such a
manner that permits us to verify the production from each optional
unit, or the production from each unit must be kept separate until
loss adjustment is completed by us; and
(3) Each optional unit must be located on non-contiguous land.
3. Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities.
In addition to the requirements of section 3 (Insurance
Guarantees, Coverage Levels, and Prices for Determining Indemnities)
of the Basic Provisions (Sec. 457.8):
(a) You may select only one price election for all the walnuts
in the county insured under this policy unless the Special
Provisions provide different price elections by variety or varietal
group, in which case you may select one price election for each
walnut variety or varietal group designated in the Special
Provisions. The price elections you choose for each variety or
varietal group must have the same percentage relationship to the
maximum price offered by us for each variety or varietal group. For
example, if you choose 100 percent of the maximum price election for
a specific variety or varietal group, you must also choose 100
percent of the maximum price election for all other varieties or
varietal groups.
(b) You must report, by the production reporting date designated
in section 3 (Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities) of the Basic Provisions (Sec. 457.8), by
variety or varietal group if applicable:
(1) Any damage, removal of trees, change in practices, or any
other circumstance that may reduce the expected yield below the
yield upon which the insurance guarantee is based, and the number of
affected acres;
(2) The number of bearing trees on insurable and uninsurable
acreage;
(3) The age of the trees and the planting pattern;
(4) For the first year of insurance for acreage interplanted
with another perennial crop, and anytime the planting pattern of
such acreage is changed, the age of the crop that is interplanted
with the walnuts, and type if applicable, and the planting pattern;
and
(5) Any other information that we request in order to establish
your approved yield.
We will reduce the yield used to establish your production
guarantee as necessary, based on our estimate of the effect of the
following: interplanted perennial crop; removal of trees; damage;
change in practices and any other circumstance on the yield
potential of the insured crop. If you fail to notify us of any
circumstance that may reduce your yields from previous levels, we
will reduce your production guarantee as necessary at any time we
become aware of the circumstances.
4. Contract Changes
In accordance with section 4 (Contract Changes) of the Basic
Provisions (Sec. 457.8), the contract change date is October 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 January 31.
6. Insured Crop
In accordance with section 8 (Insured Crop) of the Basic
Provisions (Sec. 457.8), the crop insured will be all the
commercially grown English Walnuts (excluding black walnuts) 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 on tree varieties that:
[[Page 20092]]
(1) Were commercially available when the trees were set out;
(2) Are adapted to the area; and
(3) Are grown on a root stock that is adapted to the area;
(c) That are grown in an orchard that, if inspected, are
considered acceptable by us;
(d) On acreage where at least 90 percent of the trees have
reached at least the ninth growing season after being set out,
unless we agree in writing to insure trees not meeting this
requirement; and
(e) That are in a unit that consists of at least five acres,
unless we agree in writing to insure a smaller unit.
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, walnuts 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 February 1 of each crop year, except that
for the year of application, if your application is received after
January 22, but prior to February 1, insurance will attach on the
10th day after 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 insurability
requirements. 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 November 15.
(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. Acreage acquired after the acreage reporting date will not
be insured.
(2) If you relinquish your insurable share on any insurable
acreage of walnuts 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 undergrowth have not been controlled
or pruning debris has not been removed from the orchard;
(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; or
(8) Failure of irrigation water supply, if caused by an insured
peril 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 any damage or loss of production due to the inability
to market the walnuts for any reason other than actual physical
damage to the walnuts from an insurable cause specified in this
section. For example, we will not pay you an indemnity if you are
unable to market due to quarantine, boycott, or refusal of any
person to accept production.
10. Duties in the Event of Damage or Loss
In addition to the requirements of section 14 (Duties in the
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), if
you intend to claim an indemnity on any unit, you must notify us
prior to the beginning of harvest so that we may inspect the damaged
production. You must not sell or dispose of the damaged crop until
after we have given you written consent to do so. If you fail to
meet the requirements of this section, all such production will be
considered undamaged and included as production to count.
11. Settlement of Claim
(a) We will determine your loss on a unit basis. In the event
you are unable to provide separate acceptable production records:
(1) For any optional units, we will combine all optional units
for which such production records were not provided; or
(2) For any basic units, we will allocate any commingled
production to such units in proportion to our liability on the
harvested acreage for the units.
(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 respective production
guarantee;
(2) Multiplying each result in section 11(b)(1) by the
respective price election for each variety or varietal group;
(3) Totaling the results in section 11(b)(2);
(4) Multiplying the total production to be counted of each
variety or varietal group, if applicable, (see section 11(c)) by the
respective price election;
(5) Totaling the results in section 11(b)(4);
(6) Subtracting the result in section 11(b)(5) from the result
in section 11(b)(3); and
(7) Multiplying the result in section 11(b)(6) by your share.
(c) The total production to count (whole in-shell pounds) from
all insurable acreage on the unit will include:
(1) All appraised production as follows:
(i) Not less than the production guarantee per acre for acreage:
(A) That is abandoned;
(B) That is damaged solely by uninsured causes; or
(C) For which you fail to provide acceptable production records;
(ii) Production lost due to uninsured causes;
(iii) Unharvested production; and
(iv) Potential production on insured acreage that you intend to
abandon or no longer care for, if you and we agree on the appraised
amount of production. Upon such agreement, the insurance period for
that acreage will end. If you do not agree with our appraisal, we
may defer the claim only if you agree to continue to care for the
crop. We will then make another appraisal when you notify us of
further damage or that harvest is general in the area unless you
harvested the crop, in which case we will use the harvested
production. If you do not continue to care for the crop, our
appraisal made prior to deferring the claim will be used to
determine the production to count; and
(2) All harvested production from the insurable acreage.
(d) Mature walnut production damaged due to an insurable cause
of loss which occurs within the insurance period may be adjusted for
quality based on an inspection by the Dried Fruit Association or as
determined by us. Walnut production that has mold damage greater
than 8 percent, based on the net delivered weight, will be reduced
by the factor contained in the Special Provisions. Walnut production
that has mold damage greater than 30 percent, based on the net
delivered weight, will not be considered as production to count
unless such production is sold. If such production is sold, the
total amount received for the production will be divided by the
maximum available price election to establish the amount of
production to count.
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 price election;
(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
[[Page 20093]]
accordance with the policy and written agreement provisions.
Signed in Washington, D.C., on April 17, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-10676 Filed 4-24-97; 8:45 am]
BILLING CODE 3410-FA-P
