[Federal Register Volume 62, Number 210 (Thursday, October 30, 1997)]
[Rules and Regulations]
[Pages 58628-58632]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28772]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 450 and 457


Prune Crop Insurance Regulations; and Common Crop Insurance 
Regulations, Prune 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 prunes. 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 
prune 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 prune crop insurance regulations to the 1997 and prior crop 
years.

EFFECTIVE DATE: October 30, 1997.

FOR FURTHER INFORMATION CONTACT: Linda Williams, Insurance Management 
Specialist, Research and Development, Product Development Division, 
Federal Crop Insurance Corporation, United States Department of 
Agriculture, 9435 Holmes Road, Kansas City, MO 64313, 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, this rule 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 currently being reviewed by OMB pursuant to the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) under OMB 
control number 0563-0053. No public comments were received.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 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. Therefore, 
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 economic impact on a 
substantial number of small entities. The amount of work required of 
insurance companies will not increase because the information used to 
determine eligibility is already maintained at their office. The other 
information required is already being gathered as a result of the 
present policy. No additional requirements are imposed on the producer 
or reinsured company as a result of this regulation. Additionally, the 
regulation does not impose any burden on small entities than it does on 
large entities. 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 rule has been reviewed in accordance with Executive Order No. 
12988 on civil justice reform. 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 Thursday, July 10, 1997, FCIC published a proposed rule in the 
Federal Register at 62 FR 37000 to add to the Common Crop Insurance 
Regulations (7 CFR part 457) a new section, 7 CFR 457.133, Prune 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 prunes found at 7 CFR part 450 
(Prune Crop Insurance Regulations). FCIC also amends 7 CFR part 450 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 13 comments 
were received from the reinsured companies and an insurance service 
organization. The comments received and FCIC's responses are as 
follows:
    Comment: An insurance service organization recommended that several 
definitions common to most crops be put into the Basic Provisions.
    Response: The Basic Provisions, which are currently in the 
regulatory review process, will include definition of commonly used 
terms and this rule will be revised to delete those definitions when 
the Basic Provisions are published as a final rule.
    Comment: A reinsured company and an insurance service organization 
expressed concern with the definition of ``good farming practice,'' 
which states

[[Page 58629]]

``* * * recognized by the Cooperative State Research, Education, and 
Extension Service as compatible * * *'' since there may be accepted 
practices not so recognized. The commenters suggested revising the 
language to state ``generally recognized * * *'' and changing the term 
``county'' to ``area.''
    Response: The Cooperative State Research, Education, and Extension 
Service (CSREES) recognizes farming practices that are considered 
acceptable for producing prunes. If a producer is following practices 
currently not recognized as acceptable by the CSREES, such recognition 
can be sought by interested parties. Use of the term ``generally 
recognized'' will only make the policy more difficult to administer. 
Although the cultural practices recognized by CSREES may only pertain 
to specific areas within a county, actuarial documents are on a county 
basis. Therefore, no change has been made.
    Comment: A reinsured company recommended that in the definition of 
``irrigated practice,'' the words ``and quality'' should be added after 
the words ``* * * providing the quantity.''
    Response: There are no established criteria regarding the quality 
of water necessary to produce a crop. The highly variable factors 
involved would make such criteria difficult to develop and administer. 
The provisions regarding good farming practices can be applied in 
situations in which the insured person failed to exercise due care and 
diligence. Therefore, no change has been made to the definition.
    Comment: An insurance service organization and a reinsured company 
questioned whether the references in section 2(e)(2) to ``measurement 
of stored production'' is applicable to prunes. The commenter stated it 
was not a common practice to store prunes.
    Response: FCIC agrees measurement of stored production does not 
apply to prunes. The provisions have been amended accordingly.
    Comment: An insurance service organization expressed concern in 
discrepancies regarding the provisions contained in section 2(e)(3). 
The commenter indicated that the proposed rule summary of changes 
stated section 2(e) contained changes in the provisions to allow 
optional units on non-contiguous land and for land located in separate 
sections. The commenter stated 2(e)(3) refers to ``one or more of the 
following criteria,'' but 2(e)(3)(ii) states that optional units by 
non-contiguous land are in lieu of establishing optional units by 
section, section equivalent or FSA Farm Serial Number. The commenter 
also stated policyholders will need to understand they must qualify for 
separate optional units and could lose optional units if production was 
commingled.
    Response: FCIC agrees that the provisions in section 2(e)(3) were 
confusing and that the proposed rule summary of changes did not 
accurately describe the changes in section 2(e)(3). FCIC has amended 
the wording contained in section 2(e)(3) to clarify that each optional 
unit ``must also meet one of the following criteria as applicable * * 
*'' In addition, section 2(e)(3)(ii) has been amended to remove 
language which stated ``In lieu of establishing optional units by 
section, section equivalent or FSA Farm Serial Number.'' These changes 
will clarify that optional unit may be established if each optional 
unit meets one of the following criteria: (1) by section, FSA Farm 
Serial Number, or their equivalent; or (2) by non-contiguous land.
    Comment: An insurance service organization stated that the language 
in section 10(c) does not address timely notice if damage is discovered 
less than 15 days prior to harvest.
    Response: Section 10(c) provides the notice requirements in the 
event the insured intends to file a claim for indemnity. Section 10(c) 
states that notice must be given 15 days prior to the beginning of 
harvest or immediately if damage is discovered during harvest. In 
addition, Section 10 states that the requirements contained in section 
14 of the Basic Provisions, which requires notice of loss within 72 
hours of initial discovery of damage, are applicable. Therefore, no 
change has been made.
    Comment: An insurance service organization stated that it seems 
unnecessary to refer to previous items by number in section 11. All 
references make it difficult to follow the calculation sequence.
    Response: This section has been explicitly worded to eliminate any 
misunderstanding or confusion. However, to provide clarification in the 
calculations, an example of the indemnity calculation has been 
included.
    Comment: An insurance service organization stated that section 
11(c)(1)(iv) should not allow the insured to defer settlement and wait 
for a later, generally lower, appraisal.
    Response: A later appraisal will only be necessary if the insurance 
provider agrees that such an appraisal would result in a more accurate 
determination and if the producer continues to care for the crop. If 
the producer does not continue to care for the crop, the original 
appraisal will be used. Therefore, no change has been made.
    Comment: An insurance service organization and two reinsured 
companies recommended removal of the requirement that written 
agreements be renewed each year if there are no significant changes to 
the farming operation. One reinsured company suggested that the written 
agreement should contain the effective period for each specific 
agreement because limiting the effective period to one year only 
increases administrative cost, complexity and the opportunity for 
misunderstanding.
    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 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 minor 
editorial changes and has amended the following provisions:
    1. Amended the paragraph preceding section 1 to include the 
Catastrophic Risk Protection Endorsement for the purpose of 
clarification.
    2. Section 2(e)(3)(i)--Revised the language for clarification.
    3. Section 9(a)(3)--Clarified wildlife as a cause of loss by 
deleting the language ``unless proper measures to control wildlife have 
not been taken.''
    4. Section 9(a)(6)--To be consistent with causes of loss in other 
Crop Provisions, clarified that failure of the irrigation water supply 
must be ``due to a cause specified in section 9(a)(1) through (5).''
    5. Section 11(d)--Clarify any prune production harvested for fresh 
fruit will be converted to a dried prune weight basis by dividing the 
total amount (in tons) of fresh fruit production by 3.0. Evidence 
compiled by FCIC after publication of the proposed rule indicated that 
3.0 is a more accurate conversion factor than the value 3.1 contained 
in the proposed rule.
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. This rule improves the prune crop insurance 
coverage and brings it under the Common Crop Insurance Policy Basic 
Provisions for consistency among policies. The earliest contract change 
date that can be met for the 1998 crop year is October 31, 1997, and 
the final rule must be published as soon as possible. It is therefore, 
imperative that these provisions be

[[Page 58630]]

made final so that the reinsured companies may have sufficient time to 
implement these changes. Therefore, public interest requires the agency 
to make the rules effective upon publication.

List of Subjects in 7 CFR Parts 450 and 457

    Crop insurance, Prunes.

Final Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation, hereby amends 7 CFR parts 450 and 457, as 
follows:

PART 450--PRUNE CROP INSURANCE REGULATIONS FOR THE 1996 AND 
SUCCEEDING CROP YEARS

    1. The authority citation for 7 CFR part 450 is revised to read as 
follows:

    Authority: 7 U.S.C. 1506(l), 1506(p).

    2. The part heading is revised to read as set forth above.
    3. The Subpart Heading ``Subpart-Regulations for the 1986 and 
Succeeding Crop Years'' is removed.
    4. Section 450.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:


Sec. 450.7  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 (7 CFR 
400.37, 400.38). The provisions of the Prune 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

    5. The authority citation for 7 CFR part 457 continues to read as 
follows:

    Authority: 7 U.S.C. 1506(l), 1506(p).

    6. Section 457.133 is added to read as follows:


Sec. 457.133  Prune crop insurance provisions.

    The Prune Crop Insurance Provisions for the 1998 and succeeding 
crop years are as follows:
    FCIC policies:

UNITED STATES DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

    Reinsured policies:

(Appropriate title for insurance provider)

    Both FCIC and reinsured policies:

Prune Crop Provisions

    If a conflict exists among the policy provisions, the order of 
priority is as follows: (1) the Catastrophic Risk Endorsement, if 
applicable; (2) the Special Provisions; (3) these Crop Provisions; 
and (4) the Basic Provisions (Sec. 457.8); with (1) controlling (2) 
etc.

1. Definitions

    Days. Calendar days.
    Direct marketing. Sale of the insured crop directly to consumers 
without the intervention of an intermediary such as a wholesaler, 
retailer, packer, processor, shipper or buyer. Examples of direct 
marketing include: selling through an on-farm or roadside stand, 
farmer's market, and permitting the general public to enter the 
field for the purpose of picking all or a portion of the crop.
    FSA. The Farm Service Agency, an agency of the United States 
Department of Agriculture, or a successor agency.
    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 recognized by the Cooperative State Research, 
Education, and Extension Service as compatible with agronomic and 
weather conditions in the county.
    Harvest. Picking of mature prunes from the trees or ground 
either by hand or machine.
    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.
    Market price for standard prunes. The price per ton shown on the 
processor's settlement sheet for each size count of standard prunes.
    Natural condition prunes. The condition of prunes in which they 
are normally delivered from a dehydrator or dry yard.
    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.
    Production guarantee (per acre). The number of tons determined 
by multiplying the approved APH yield per acre by the coverage level 
percentage you elect.
    Prunes. Any type or variety of plums that is grown in the area 
for the production of prunes and that meets the requirements defined 
in the applicable Federal Marketing Agreement Dried Prune Order.
    Standard prunes. Any natural condition prunes:
    (a) That grade ``C'' or better in accordance with the United 
States Standards for Grades of Fresh Plums and Prunes; or
    (b) That meet or exceed the grading standards in effect for the 
crop year if a Federal Marketing Agreement Dried Prune Order has 
been established for the area in which the insured crop is grown.
    Substandard prunes. Any natural condition prunes failing to meet 
the applicable grading specifications for standard prunes.
    Ton. Two thousand (2,000) pounds avoirdupois.
    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 of the Basic Provisions, (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 premium 
paid for the purpose of electing optional units will be refunded to 
you for the units combined.
    (d) All optional units established for a 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 by the production reporting 
date, that 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) For each crop year, you must have records of marketed 
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;
    (3) Each optional unit must also meet one of the following 
criteria as applicable, unless otherwise allowed by a written 
agreement:
    (i) Optional units by Section, Section Equivalent, or FSA Farm 
Serial Number: Optional units may be established if each optional 
unit is located in a separate legally identified section. In the 
absence of sections, we may consider parcels of land legally 
identified by other methods of measure such as Spanish grants, as 
the equivalent of sections for unit purposes. In areas that have not 
been surveyed using sections or their equivalent, or in areas where 
such systems exist but boundaries are not readily discernable, each 
optional unit must be located in a separate farm identified by a 
single FSA Farm Serial Number; or
    (ii) Optional Units on Acreage Located on Non-Contiguous Land: 
Optional units may be established if each optional unit is located 
on non-contiguous land.

[[Page 58631]]

3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities

    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) You may select only one price election for all the prunes in 
the county insured under this policy unless the Special Provisions 
provide different price elections by varietal group, in which case 
you may select one price election for each prune varietal group 
designated in the Special Provisions. The price elections you choose 
for each varietal group must have the same percentage relationship 
to the maximum price offered by us for each varietal group. For 
example, if you choose 100 percent of the maximum price election for 
one varietal group, you must also choose 100 percent of the maximum 
price election for all other varietal groups.
    (b) You must report, by the production reporting date designated 
in section 3 of the Basic Provisions, by varietal group if 
applicable:
    (1) Any damage, removal of trees, change in practices, or any 
other circumstance that may reduce the expected yields 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; and
    (4) For the first year of insurance for acreage interplanted 
with another perennial crop, and any time the planting pattern of 
such acreage is changed:
    (i) The age of the interplanted crop, and varietal group if 
applicable;
    (ii) The planting pattern; and
    (iii) 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 
interplanting the perennial crop; removal of trees; damage; a change 
in practices, and any other circumstance that may affect 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 at any time we become aware of 
the circumstance.

4. Contract Changes

    In accordance with section 4 of the Basic Provisions, the 
contract change date is October 31 preceding the cancellation date.

5. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are January 31.

6. Insured Crop

    In accordance with section 8 of the Basic Provisions, the crop 
insured will be all the prunes 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 natural condition 
prunes;
    (c) That are grown on tree varieties that:
    (1) Were commercially available when the trees were set out;
    (2) Are adapted to the area;
    (3) Are grown on rootstock that is adapted to the area; and
    (4) Are irrigated (except where otherwise provided in the 
Special Provisions);
    (d) That are grown in an orchard that, if inspected, is 
considered acceptable by us; and
    (e) That are grown on trees that have reached at least the 
seventh growing season after being set out.

7. Insurable Acreage

    In lieu of the provisions in section 9 of the Basic Provisions 
that prohibit insurance attaching to a crop planted with another 
crop, prunes interplanted with another perennial crop are insurable 
unless we inspect the acreage and determine that it does not meet 
the insurability requirements contained in your policy.

8. Insurance Period

    (a) In accordance with the provisions of section 11 of the Basic 
Provisions:
    (1) Coverage begins for each crop year on March 1.
    (2) The calendar date for the end of the insurance period for 
each crop year is:
    (i) October 1 for California; or
    (ii) October 15 for Oregon.
    (b) In addition to the provisions of section 11 of the Basic 
Provisions:
    (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 prunes on or before the acreage reporting date for the 
crop year and if the acreage was insured by you the previous 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 of the Basic 
Provisions, 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) Wildlife;
    (4) Earthquake;
    (5) Volcanic eruption; or
    (6) Failure of the irrigation water supply, if due to a cause 
specified in section 9(a)(1) through (5) that occurs during the 
insurance period.
    (b) In addition to the causes of loss excluded in section 12 of 
the Basic Provisions, we will not insure against damage or loss of 
production due to:
    (1) Disease or insect infestation, unless adverse weather:
    (i) Prevents the proper application of control measures or 
causes properly applied control measures to be ineffective; or
    (ii) Causes disease or insect infestation for which no effective 
control mechanism is available; or
    (2) Inability to market the prunes for any reason other than 
actual physical damage 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 of the Basic 
Provisions, the following will apply:
    (a) You must notify us within 3 days of the date harvest should 
have started if the crop will not be harvested.
    (b) You must notify us at least 15 days before any production 
from any unit will be sold by direct marketing or sold as fresh 
fruit. We will conduct an appraisal that will be used to determine 
your production to count for production that is sold by direct 
marketing or is sold as fresh fruit production. If damage occurs 
after this appraisal, we will conduct an additional appraisal. These 
appraisals, and any acceptable records provided by you, will be used 
to determine your production to count. Failure to give timely notice 
that production will be sold by direct marketing or sold as fresh 
fruit will result in an appraised amount of production to count of 
not less than the production guarantee per acre if such failure 
results in our inability to make the required appraisal.
    (c) If you intend to claim an indemnity on any unit, you must 
notify us at least 15 days prior to the beginning of harvest, or 
immediately if damage is discovered during harvest, so that we may 
inspect the damaged production.
    (d) You must not destroy the damaged crop until after we have 
given you written consent to do so. If you fail to meet the 
requirements of this section and such failure results in our 
inability to inspect the damaged production, 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 each unit.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim by:
    (1) Multiplying the insured acreage for each varietal group, if 
applicable, by its respective production guarantee;
    (2) Multiplying the result of 11(b)(1) by the respective price 
election for each varietal group, if applicable;

[[Page 58632]]

    (3) Totaling the results of section 11(b)(2) if there is more 
than one varietal group;
    (4) Multiplying the total production to count (see section 
11(c)), of each varietal group if applicable, by its respective 
price election;
    (5) Totaling the results of section 11(b)(4) if there is more 
than one varietal group;
    (6) Subtracting the result of section 11(b)(4) from the result 
of section 11(b)(2) if there is only one varietal group or 
subtracting the result of section 11(b)(5) from the result of 
section 11(b)(3) if there is more than one varietal group; and
    (7) Multiplying the result of section 11(b)(6) by your share.
For Example
    You have a 100 percent share in 50 acres of varietal group A 
prunes in the unit, with a guarantee of 2.5 tons per acre and a 
price election of $630.00 per ton. You are only able to harvest 10.0 
tons. Your indemnity would be calculated as follows:

(1) 50 acres  x  2.5 tons = 125.0 ton guarantee;
(2) 125.0 tons  x  $ 630.00 price election = $78,750.00 value of 
guarantee;
(4) 10.0 tons  x  $630.00 price election = $6,300.00 value of 
production to count;
(6) $78,750.00-$6,300.00 = $72,450.00 loss; and
(7) $72,450.00  x  100 percent = $72,450 indemnity payment.

    You also have a 100 percent share in 50 acres of varietal group 
B prunes in the same unit, with a guarantee of 2.0 ton per acre and 
a price election of $550.00 per ton. You are only able to harvest 
5.0 tons. Your total indemnity for both varietal groups A and B 
would be calculated as follows:

(1) 50 acres  x  2.5 tons = 125.0 ton guarantee for varietal group A 
and 50.0 acres  x  2.0 tons = 100.0 ton guarantee for varietal group 
B;
(2) 125.0 ton guarantee  x  $630.00 price election = $78,750.00 
value of guarantee for varietal group A and 100.0 ton guarantee  x  
$550.00 price election = $55,000.00 value guarantee for varietal 
group B;
(3) $78,750.00 + $55,000.00 = $133,750.00 total value guarantee;
(4) 10.0 tons  x  $630.00 price election = $6,300.00 value of 
production to count for varietal group A and 5.0 tons  x  $550.00 
price election = $2,750.00 value of production to count for varietal 
group B;
(5) $6,300.00 + $2,750.00 = $9,050.00 total value of production to 
count;
(6) $133,750.00-$9,050.00 = $124,700.00 loss; and
(7) $124,700.00 loss  x  100 percent = $124,700 indemnity payment.

    (c) The total production to count (in tons) from all insurable 
acreage on the unit will include all harvested and appraised 
production of natural condition prunes that grade substandard or 
better and any production that is harvested and intended for use as 
fresh fruit. The total production to count 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 sold by direct marketing or sold as fresh fruit if 
you fail to meet the requirements contained in section 10;
    (C) That is damaged solely by uninsured causes; or
    (D) 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 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) Any prune production harvested for fresh fruit will be 
converted to a dried prune weight basis by dividing the total amount 
(in tons) of fresh fruit production by 3.0.
    (e) Any production of substandard prunes resulting from damage 
by insurable causes will be adjusted based on the average size count 
as indicated on the applicable Dried Fruit Association (DFA) 
Inspection Report and Certification Form. Any insurable damage will 
be adjusted by:
    (1) Dividing the value per ton of such substandard prunes by the 
market price per ton for standard prunes (of the same size count); 
and
    (2) Multiplying the result by the number of tons of such prunes.

12. Written Agreements

    Terms of this policy which are specifically designated for the 
use of written agreements 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 
varietal group, 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 accordance with the policy and written 
agreement provisions.

    Signed in Washington, D.C., on October 27, 1997.
Suzette M. Dittrich,
Deputy Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-28772 Filed 10-29-97; 8:45 am]
BILLING CODE 3410-08-P