[Federal Register Volume 62, Number 127 (Wednesday, July 2, 1997)]
[Rules and Regulations]
[Pages 35666-35670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17355]
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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: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes
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
[[Page 35667]]
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.
EFFECTIVE DATES: July 2, 1997.
FOR FURTHER INFORMATION CONTACT: Stephen Hoy, Insurance Management
Specialist, Research and Development, 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 and opinions on information
collection requirements previously approved by OMB under OMB control
number 0563-0053 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
The Manager, FCIC, certifies that this regulation will not have a
significant impact on a substantial number of small entities. The 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. The producer 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 part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order No. 12988
This final 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, April 18, 1997, FCIC published a proposed rule in the
Federal Register at 62 FR 19067-19071 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 amends 7 CFR part 456 to limit its effect to
the 1997 and prior crop years.
Following publication of the proposed rule, the public was afforded
30 days to submit written comments and opinions. A total of 12 comments
were received from an insurance service organization, reinsured
companies and an FCIC Regional Service Office (RSO). The comments
received and FCIC's responses are as follows:
Comment: An insurance service organization recommended that the
definition of ``Destroyed'' be revised to state ``Trees damaged to the
extent that we determine replacement, including grafts, is required.''
Response: FCIC agrees and has revised the definition accordingly.
Comment: An insurance service organization and a reinsured company
expressed concern with the definition of ``Good farming practices,''
which makes reference to ``cultural practices generally in use in the
county * * * recognized by the Cooperative State Research, Education,
and Extension Service as compatible with agronomic and weather
conditions in the county.'' The commenter questioned whether cultural
practices exist that are not necessarily recognized (or possibly known)
by the Cooperative State Research, Education, and Extension Service.
The commenter also indicated that the term ``county'' in the definition
of ``Good farming practice'' should be changed to ``area.''
Response: FCIC believes that the Cooperative State Research,
Education, and Extension Service (CSREES) recognizes farming practices
that are considered acceptable for growing and maintaining macadamia
trees. If a producer is following practices currently not recognized as
acceptable by the CSREES, there is no reason why such recognition
cannot be sought by interested parties. The cultural practices
recognized by the CSREES may pertain only to specific areas within a
county.
[[Page 35668]]
Such limitation would be considered by FCIC; therefore, no change has
been made. FCIC agrees with the recommendation to change the term
``county'' to ``area'' in the definition of ``Good farming practice''
and has revised the definition accordingly.
Comment: Comments received from reinsured companies, an insurance
service organization, and an FCIC RSO expressed concern that the
provisions for an optional unit in section 2(e) (2) and (3), as
proposed, would require each unit to contain at least 80 acres of
bearing macadamia trees and be located on non-contiguous land. Optional
unit division guidelines currently require at least 80 acres of bearing
macadamia trees. Requiring both minimum acreage and non-contiguous land
would severely limit the number of units allowed, particularly for
growers with large, contiguous orchards. The majority of commenters
recommended that the word ``and'' be replaced with ``or'' so that the
provisions require each optional unit to be at least 80 acres of
bearing macadamia trees or be located on non-contiguous land.
Response: FCIC agrees and has revised the requirements accordingly.
Comment: An insurance service organization recommends that section
3(a)(3)(iv) be revised to clarify that the month and year of tree
replacement are reported the first year of insurance coverage following
replacement.
Response: FCIC agrees and has revised this section accordingly.
Comment: A reinsured company questioned the reason for the ``10-day
period'' to inspect the acreage as specified in section 8(a)(1). The
commenter indicated that the period limits their ability to reject an
unacceptable orchard. In addition, an insurance service organization
recommended that a specific date by which an application must be
received for insurance to attach on January 1 should not be listed.
Instead of a date, this section should state ``if your application is
received less than ten days before the sales closing date.''
Response: FCIC believes that the insurance provider must expedite
its review of the application and any supporting documentation filed by
the producer, determine if a visual inspection of the orchard is
necessary, and perform any inspection within the 10-day period. The
period of 10 days is believed appropriate to meet the needs of both the
producer and the insurance provider. Listing the date by which an
application must be received for insurance to attach on January 1 is
more specific, avoids possible confusion, and is consistent with other
perennial crop policies. No change has been made to these provisions.
Comment: An insurance service organization and a reinsured company
recommended removal of the requirement for a written agreement to be
renewed each year. If no substantive changes occur from one year to the
next, allow the written agreement to be continuous.
Response: Written agreements are intended to supplement policy
terms or permit insurance in unusual situations that require
modification of the otherwise standard insurance provisions. If such
practices continue year to year, they should be incorporated into the
policy or Special Provisions. It is not intended that written
agreements be so numerous that they would significantly increase
administrative costs and cause producer misunderstanding. It is
important to minimize written agreement exceptions 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 editorial change to the Macadamia Tree Provisions:
Section 2(e)--Modified the language to clarify optional unit
requirements. For each optional unit, the producer must have provided
records of acreage and age of trees for each unit for at least the last
crop year. Each optional unit must also meet specific criteria unless
otherwise specified by written agreement.
Good cause is shown to make this rule effective upon publication in
the Federal Register. This rule improves the macadamia tree insurance
coverage and brings it under the Common Crop Insurance Policy Basic
Provisions for consistency among policies. The current regulations are
not continuous, and the actuarial filing date for the 1998 crop year is
August 31, 1997. It is, therefore, imperative that these provisions be
made final before that date so that the reinsured companies may have
sufficient time to implement these changes. Therefore, public interest
requires the agency to act immediately to make these provisions
available for the 1998 crop year.
List of Subjects in 7 CFR Parts 456 and 457
Crop insurance, Macadamia trees.
Final Rule
Accordingly, for the reasons set forth in the preamble, the Federal
Crop Insurance Corporation hereby amends 7 CFR parts 456 and 457, as
follows:
PART 456--MACADAMIA TREE CROP INSURANCE REGULATIONS FOR THE 1988
THROUGH 1997 CROP YEARS
1. The authority citation for 7 CFR part 456 is revised to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(p).
2. The part heading is revised to read as set forth above.
3. The subpart heading ``Subpart--Regulations for the 1988 and
Succeeding Crop Years'' is removed.
4. Section 456.7 is amended by revising the introductory text of
paragraph (d) 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
5. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(p).
6. Section 457.130 is added to read as follows:
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.
[[Page 35669]]
Days. Calendar days.
Destroyed. Trees damaged to the extent that we determine
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 area.
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.
(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 provided records, which can be independently
verified, of acreage and age of trees for each unit for at least the
last crop year; and
(2) Each optional unit must meet one or more of the following
criteria, as applicable, unless otherwise specified by written
agreement:
(i) Contain at least 80 acres of insurable age macadamia trees;
or
(ii) 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) For the first year of insurance following replacement, 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 any time 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 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 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
[[Page 35670]]
(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 (Sec. 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 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
Terms of this policy that are specifically designated for the
use of written agreement 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 June 26, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-17355 Filed 7-1-97; 8:45 am]
BILLING CODE 3410-08-P
