[Federal Register Volume 62, Number 202 (Monday, October 20, 1997)]
[Rules and Regulations]
[Pages 54339-54346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27652]



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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. 202 / Monday, October 20, 1997 / 
Rules and Regulations

[[Page 54339]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457


General Crop Insurance Regulations, Canning and Processing Tomato 
Endorsement; and Common Crop Insurance Regulations, Processing Tomato 
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 processing tomatoes. 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 canning and processing tomato endorsement with the Common Crop 
Insurance Policy for ease of use and consistency of terms, and to 
restrict the effect of the current canning and processing tomato 
endorsement to the 1997 and prior crop years.

EFFECTIVE DATE: November 19, 1997.

FOR FURTHER INFORMATION CONTACT: Richard Brayton, Insurance Management 
Specialist, Research and Development, Product Development Division, 
Federal Crop Insurance Corporation, United States Department of 
Agriculture, 9435 Holmes Road, Kansas City, MO 6413, 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 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), 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. 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 and the 
other information required is already being gathered as a result of the 
present policy. No additional actions are required as a result of this 
action on the part of either the producer or the reinsured company. 
Additionally, the regulation does not require any action on the part of 
the small entities than is required on the part of 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 final rule has been reviewed in accordance with Executive 
Order 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 Monday, June 23, 1997, FCIC published a proposed rule in the 
Federal Register at 62 FR 33763-33768 to add to the Common Crop 
Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.160, 
Processing Tomato 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 canning and 
processing tomatoes found at 7 CFR part 401 (Canning and Processing 
Tomato Endorsement). FCIC

[[Page 54340]]

also amends 7 CFR 401.114 to limit its effect to the 1997 and prior 
crop years.
    Following publication of that proposed rule, the public was 
afforded 30 days to submit written comments and opinions. A total of 62 
comments were received from an insurance service organization, 
reinsured companies, agents, a California Tomato Growers Association, 
and tomato growers. The comments received, and FCIC's responses are as 
follows:
    Comment: An insurance service organization recommended that a 
number of definitions common to most crops be removed from the crop 
provisions and placed into the Basic Provisions.
    Response: FCIC agrees and is currently in the regulatory review 
process that will move commonly used definitions from the crop 
provisions to the Basic Provisions and this rule will be revised to 
delete the definitions when the Basic Provisions are published as a 
final rule.
    Comment: A reinsured company and a crop insurance agent recommended 
changing the sales closing date in California from January 15 to 
February 28. The commenter indicated that the sales closing date of 
January 15 causes inefficiency because it differs from the February 28 
sales closing date for most other spring crops.
    Response: The Federal Crop Insurance Reform Act of 1994 required 
the sales closing date to be moved from February 15 to January 15. This 
date cannot be extended without appropriate legislative changes. 
Therefore, no change has been made.
    Comment: An insurance service organization recommended changing the 
definition of ``bypassed acreage'' to read as follows: ``Land on which 
production is ready for harvest but is left unharvested in favor of 
harvesting other fields.''
    Response: The definition of bypassed acreage has been revised to 
clarify that land on which production is ready for harvest but the 
processor elects not to accept such production so it is not harvested.
    Comment: An insurance service organization expressed concern with 
the definition of ``good farming practice,'' which makes reference to 
cultural practices generally in use in the county and that are 
recognized by the Cooperative State Research, Education, and Extension 
Service (CSREES) as compatible with agronomic and weather conditions in 
the county. The comment questioned whether cultural practices exist 
that are not necessarily recognized (or possible known) by the CSREES. 
The comment suggested changing the term ``county'' to ``area.''
    Response: FCIC believes that the CSREES recognizes farming 
practices that are considered acceptable for producing processing 
tomatoes. If a producer is following practices not recognized as 
acceptable by the CSREES, such recognition can be sought by interested 
parties. Although cultural practices recognized by the CSREES may only 
pertain to specific areas within a county, the actuarial documents are 
on a county basis. No change has been made.
    Comment: An insurance service organization recommended changing the 
definition of ``planted acreage'' so that either initially or replanted 
acreage must be planted in rows to be considered planted.
    Response: FCIC agrees and has amended the definition as suggested. 
The definition of replanting has also been changed accordingly.
    Comment: An insurance service organization recommended that the 
definition of ``replanting'' be clarified by inserting ``processing 
tomato'' between the last two words (``successful'' and ``crop'') in 
the sentence.
    Response: To be consistent with language contained in the proposed 
rule of the Basic Provisions, FCIC has revised the definition to 
clarify that ``replanting'' is performing the cultural practices 
necessary to prepare the land to replace the seed or plants of the 
damaged or destroyed crop and then replacing the seed or plants in the 
insured acreage.
    Comment: An insurance service organization recommended that the 
definition of ``timely planted'' be clarified by inserting the word 
``initially'' at the beginning of the definition.
    Response: To be consistent with language contained in the proposed 
rule of the Basic Provisions, FCIC believes the definition is clearly 
stated. Therefore, no change has been made.
    Comment: An insurance service organization, a reinsured company, 
insurance agents, a tomato growers association, and a tomato grower 
disagreed with the provisions that remove ``units by share'' in 
California (section 2(a.). The comments indicated that: (1) Unit 
division by share is no more difficult to administer for tomatoes than 
it is for other crops in California; (2) The change will give producers 
a greater incentive to purchase CAT than buy-up, since the CAT 
Endorsement allows basic units by share; and (3) Inequitable loss 
payments between tenants and landlords would result.
    Response: FCIC agrees that optional units based on share should be 
provided. Section 2(a) has been deleted and the remaining sections have 
been redesignated accordingly. The language in 8(b) is intended to 
cover a producer who has a crop share agreement, who rents, or who owns 
acreage. This should be separate from the unit issue.
    Comment: An insurance service organization, reinsured companies, a 
grower association, insurance agents, and tomato producers stated that 
section 2(b) eliminates optional units for nearly all California 
producers since most contracts are written for a specific amount of 
production. Removal of this benefit will have a detrimental impact on 
producers who had optional units in the past. For example: A producer 
with 6,000 contracted tons, 200 acres of land, an approved yield of 30 
tons per acre, and a production guarantee of 22.5 tons per acre, 
receives no benefit if only one unit is allowed and 4,500 tons of 
tomatoes are produced. However, if two 100 acre units are allowed, the 
first unit produces 3,000 tons and the second unit produces 1,500 tons 
(4,500 total tons), an indemnity based on 750 tons would be allowed on 
the second unit.
    Response: FCIC agrees that optional units should remain available 
in California and has amended section 2(b) (redesignated 2(a)) 
accordingly. Premium rates also will reflect adoption of this change.
    Comment: An insurance service organization and reinsured companies 
indicated that the ``earlier of'' * * * aspect of section 3(b) 
eliminates the need for item (1). Item (2), the acreage reporting date, 
will always be earlier than item (1) (August 20). One comment 
questioned why the provision allows until August 20 to obtain signed 
contracts in all but a few counties in California.
    Response: Section 3(b) was not intended to indicate the earlier of 
item (1) or (2). It was intended to indicate the earlier of August 20 
or the date of damage only in those counties with a July 15 acreage 
reporting date, and the earlier of the acreage reporting date or the 
date of damage in all other counties. In years of high production, it 
is common for contracts in northern California counties to be signed as 
late as August 20. The provision was designed to accommodate this 
practice and permit insurance to continue for all contracted tonnage. 
The provision has been clarified accordingly.
    Comment: Five comments from reinsured companies asked why section 
3(c) was changed to reduce the price election rather than the 
production guarantee.

[[Page 54341]]

    Response: The Federal Crop Insurance Act authorizes FCIC to reduce 
the payment to producers who elect catastrophic coverage for acreage 
that is not harvested or for any other costs that are not incurred if 
the crop is lost prior to harvest. The change is in compliance with 
this provision of law.
    Comment: An insurance service organization and a reinsured company 
stated that provisions in section 6 that require the producer to 
provide a copy of the processor contract no later than the acreage 
reporting date: (1) Could allow producers to wait until the acreage 
reporting date to decide if they want coverage; and (2) will be nearly 
impossible to implement since processor contracts will not be finalized 
by the dates specified in section 3.
    Response: Virtually all processor contracts should be completed 
within the time frame provided for in the policy. Production covered by 
contracts completed after these time frames will not be insured. 
Therefore, no change has been made.
    Comment: A reinsured company questioned why the price election for 
unharvested acreage is used in the premium calculations in section 7.
    Response: The provision should have referred to the price election 
for the third (final) stage. The provision has been revised 
accordingly.
    Comment: An insurance service organization and a reinsured company 
stated that section 8(b) is confusing and seems to indicate that the 
landlord does not have a share unless the landlord's name is written on 
the tomato contract. Another reinsured company interpreted the 
provision to mean that a tenant cannot have a share since that person 
does not retain possession of the acreage.
    Response: The language in 8(b) is intended to cover a producer who 
has a crop share arrangement, who rents, or who owns acreage. The 
provision has been clarified by indicating that control of the acreage 
is retained rather than possession.
    Comment: An insurance service organization stated that section 
8(a)(4) would allow coverage by written agreement or Special Provisions 
on tomatoes following tomatoes in either of the two previous years, 
interplanted with another crop or planted into an established grass or 
legume and asked if these practices would ever be allowed by the 
processor contract. The comment indicated that consideration should be 
given to inserting some of this language into the Basic Provisions 
since it is duplicated in most Crop Provisions.
    Response: Some processor contracts may not stipulate rotation or 
planting practices. Therefore, the provisions have been retained to 
limit insurance when a crop is interplanted, planted into a grass or 
legume, or is planted in an unusual rotation. These provisions vary 
among Crop Provisions and therefore, should not be moved to the Basic 
Provisions. Therefore, no change has been made.
    Comment: An insurance service organization and a reinsured company 
questioned whether the provisions in sections 10(a) and (b) that end 
the insurance period on the date sufficient production is harvested to 
fulfill the producers processor contract: (a) Eliminate unit division 
benefits or (b) conflict with the provision in section 12(a) that 
states ``We will determine your loss on a unit basis.'' The commenters 
questioned whether production to count from an appraisal prior to 
harvest would be included when determining fulfillment of the processor 
contract. The insurance service organization questioned whether the 
insured would know when enough production is harvested to fulfill the 
processor contract. This commenter asked if production exceeding the 
contracted amount is considered production to count for APH or loss 
adjustment or whether the processor settlement sheet is the only 
acceptable record. One commenter also questioned whether ``delivered 
to'' is the same as ``acceptable by'' the processor.
    Response: Sections 10(a) and (b) do not eliminate unit division 
provisions or conflict with section 14(a). All indemnities will be paid 
on a unit basis. Once acreage is harvested and the processor contract 
is fulfilled, the insurance period ends. If there is unharvested 
production and the processor contract has not been fulfilled, due to an 
insured cause of loss is still covered. Appraised acreage will not be 
used to determine whether the contract has been fulfilled and the 
insurance period ends, although it will be used to determine production 
to count and in determining the producer's APH. When determining 
production to count, only the harvested production shown on the 
settlement sheet or rejected as a result of uninsured cause of loss 
will be used. FCIC has revised section 10(a) to clarify that insurance 
ceases ``the date you harvest sufficient production to fulfill your 
processor contract if your processor contract stipulates a specific 
amount of production to be delivered.'' The contract is not fulfilled 
if the production is not accepted by the processor. However, rejected 
production maybe considered as production to count unless damaged by an 
insurable cause of loss occurring during the insurance period. Further, 
records are maintained as production is delivered to the processor. 
Therefore, the insured should know when the contract is fulfilled.
    Comment: An insurance service organization questioned the summary 
of changes to the proposed rule in section 13(a)(2). The commenter 
stated the summary of changes says ``the producer must give notice on 
or before the date the tomatoes should be harvested if any acreage on a 
unit will not be harvested,'' but the provision states the producer 
must give notice ``not later than 48 hours after: (1) Total destruction 
of the tomatoes in the unit; or (2) Discontinuance of harvest on a unit 
on which production remains.
    Response: FCIC agrees that the summary was in error and the 
provisions as proposed are correct.
    Comment: An insurance service organization questioned the 
notification requirement in section 13(b), which states that the 
insured must notify the insurance provider ``within 3 days of the date 
harvest should have started on any acreage that will not be 
harvested...'' The commenter stated there is a difference between 
notice ``within 3 days'' as the policy provision indicates and ``on or 
before'' as item 21 of the summary of changes indicates. The commenter 
also asked how the date tomatoes should have been harvested will be 
determined.
    Response: The summary of changes was not correct. It should have 
indicated ``within 3 days after the date harvest should have 
started....'' The insured is best able to assess the date tomatoes 
should be harvested based on the maturity of the crop. Therefore, no 
change has been made.
    Comment: An insurance service organization stated that the language 
in 13(c) does not address timely notice if damage is discovered less 
than 15 days prior to harvest.
    Response: The notice requirement in section 13 are in addition to 
the requirements in section 14 of the Basic Provisions that require 
notice of loss within 72 hours of initial discovery of damage. Notice 
within this time period would be required if damage is discovered less 
than 15 days before harvest. If damage is discovered during harvest, 
notice must be given immediately. FCIC believes that these provisions, 
as a whole, are adequate. Therefore, no change has been made.
    Comment: An insurance service organization stated that section 
14(c)(1)(iii) should not allow the insured to defer settlement and wait 
for a later, generally lower appraisal, especially on crops that have a 
short ``shelf life.''

[[Page 54342]]

    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: A reinsured company recommended removal of the requirement 
to renew written agreements each year if there are no significant 
changes to the farming operation.
    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 from 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. FCIC has proposed that the written 
agreement provision be included in the Basic Provisions. Therefore, no 
change has been made.
    In addition to the changes described above, FCIC has made minor 
editorial changes and has amended the following Processing Tomato 
Provisions:
    1. The paragraph preceding section 1 is amended to include the 
Catastrophic Risk Protection Endorsement.
    2. Section 1--Added a definition of ``approved yield''. The 
definitions of ``bypassed acreage,'' ``planted acreage'' ``practical to 
replant'' ``production guarantee (per acre)'' and ``replanting'' have 
been revised for clarification.
    3. Removed the reference to ``written agreement'' in section 2(a) 
of the proposed rule and added it to section 2(e)(4) of the final rule 
to clarify which provisions may be revised by written agreement.
    4. Section 2(a)--Added provisions to clarify that no indemnity will 
be paid for any loss of production on any unit if the insured produced 
a crop sufficient to fulfill the processor contracts forming the basis 
for the guarantee, and any indemnity will be limited to the amount 
necessary to compensate for loss in yield at the price elected between 
production to count and the contract requirements.
    5. Section 3(b)--Has been revised for clarification.
    6. Section 3(e)--Added provisions to clarify when appraised 
production on bypassed acreage not bypassed due to an insurable cause 
of loss will be used when determining the producer's approved yield.
    7. Section 3(f)--Added provisions to clarify when acreage is 
bypassed because it was damage by an insurable cause of loss to the 
extent that the processor cannot use the product will be considered to 
have a zero yield when determining your approved yield.
    8. Section 6--Clarify a producer must provide a copy of all 
processor contracts to us on or before the acreage reporting date in 
all counties, unless otherwise specified in the Special Provisions.
    9. Sections 8(b), (c)(1), (2), and (3)--Have been revised for 
clarification.
    10. Section 10(a)--Revised to conform this provision with other 
processing crop provisions, which specify that once the processor 
contract has been fulfilled, the insurance period will end if the 
processor contract stipulates a specific amount of production.
    11. Section 10(b)--Clarify that the insurance period will end when 
the crop should have been harvested.
    12. Section 11(a)(5)--Clarified the wildlife cause of loss by 
deleting the language ``unless proper measures to control wildlife have 
not been taken'' to be consistent with other crop provisions.
    13. Section 11(a)(ii)--Has been revised for clarification.
    14. Section 11(a)(9)--Deleted this provision because it is 
unnecessary since other listed causes of loss are what results in 
physical damage.
    15. Section 11(b)(4)--Deleted this provision since such damage 
would occur outside the insurance period specified in section 10.
    16. Section 13(b)--Clarified that the insured must give notice of 
loss within 3 days after the date harvest should have started is the 
acreage will not be harvested. The insured must also provide 
documentation stating why the acreage was bypassed.
    17. Section 14(b)(1) thru (7)--Revised and added an example of 
settlement of claim.
    18. Section 14(c)(E)--Deleted this provision as proposed.
    19. Section 14(c)(iii)--Added provisions to clarify production on 
acreage that is bypassed unless the acreage was bypassed due to an 
insured cause of loss which resulted in production which would not be 
acceptable under the terms of the processor contract. 14(c)(iii) as 
proposed has been redesignated as 14(c)(iv).
    20. Section 14(d)--Clarified that once harvest has begun on acreage 
covered by a processor contract that specifies the number of tons to be 
delivered, the total indemnity payable will be limited to an amount 
based on the lesser of the guaranteed tons, or the tons remaining 
unfulfilled under the processor contract.
    21. Section 15--Added statement that late and prevented planting is 
not applicable to processing tomatoes.
    22. Section 16--Written agreements had been redesignated. Clarify 
when provisions of the policy may be altered by written agreement.

List of Subjects in CFR Parts 401 and 457

    Crop insurance, Canning and processing tomato endorsement, 
Processing tomato.

Final Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby amends 7 CFR parts 401 and 457 as 
follows:

PART 401--GENERAL CROP INSURANCE REGULATIONS

    1. The authority citation for 7 CFR part 401 is revised to read as 
follows:

    Authority: 7 U. S. C. 1506(1), 1506(p).

    2. Section 401.114 introductory text is revised to read as follows:


Sec. 401.114  Canning and processing tomato endorsement.

    The provisions of the Canning and Processing Tomato Crop Insurance 
Endorsement for the 1988 through the 1997 crop years are as follows:
* * * * *

PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE 
1994 AND SUBSEQUENT CONTRACT YEARS

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

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

    4. Section 457.160 is added to read as follows:


Sec. 457.160  Processing tomato crop insurance provisions.

    The Processing Tomato 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 polices:

Processing Tomato Crop Provisions

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

[[Page 54343]]

1. Definitions

    Acre. 43,560 square feet of land on which row widths do not 
exceed 6 feet, or the land on which at least 7,260 linear feet rows 
are planted if row widths exceed 6 feet.

    Approved yield. The yield determined in accordance with 7 CFR 
part 400, subpart (g).
    Bypassed acreage. Land on which production is ready for harvest 
but the processor elects not to accept such production so it is not 
harvested.
    Days. Calendar days.
    FSA. The Farm Service Agency, an agency of the United States 
Department of Agriculture, or a successor agency.
    Final planting date. The date contained in the Special 
Provisions for the insured crop by which the crop must initially be 
planted in order to be insured for the full production guarantee.
    First fruit set. The reproductive stage of the plant at which 30 
percent of the plants have produced a fruit that has reached a 
minimum of one inch in diameter.
    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 required by the tomato processor contract 
with the processing company, and are those recognized by the 
Cooperative State Research, Education, and Extension Service as 
compatible with agronomic and weather conditions in the county.
    Harvest. The severance of tomatoes from the vines.
    Interplanted. Acreage on which two or more crops are planted in 
a manner that does not permit separate agronomic maintenance or 
harvest of the insured crop.
    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.
    Plant stand. The number of plants per acre considered to be 
normal for the applicable tomato variety and growing area.
    Planted acreage. Land in which seed or plants have been placed 
by a machine appropriate for the insured crop and planting method, 
at the correct depth, into a seedbed that has been properly prepared 
for the planting method and production practice. Tomatoes must 
initially be placed in rows to be considered planted. Acreage 
planted in any other manner will not be insurable unless otherwise 
provided by the Special Provisions or by written agreement.
    Practical to replant. In lieu of the definition of ``Practical 
to replant'' contained in section 1 of the Basic Provisions, 
practical to replant is defined as our determination, after loss or 
damage to the insured crop, based on factors, including but not 
limited to moisture availability, marketing window, condition of the 
field, and time to crop maturity, that replanting the insured crop 
will allow the crop to attain maturity prior to the calendar date 
for the end of the insurance period. It will not be considered 
practical to replant unless the replanted acreage can produce at 
least 75% of the approved yield, and the processor agrees in writing 
that it will accept the production from the replanted acreage.
    Processor. Any business enterprise regularly engaged in 
processing tomatoes for human consumption, that possesses all 
licenses and permits for processing tomatoes required by the state 
in which it operates, and that possesses facilities, or has 
contractual access to such facilities, with enough equipment to 
accept and process contracted processing tomatoes within a 
reasonable amount of time after harvest.
    Processor contract. A written agreement between the producer and 
a processor, containing at a minimum:
    (a) The producer's commitment to plant and grow processing 
tomatoes, and to deliver the tomato production to the processor;
    (b) The processor's commitment to purchase all the production 
stated in the processor contract; and
    (c) A price per ton that will be paid for the production.
    Production guarantee (per acre). The number of tons determined 
by multiplying the approved yield per acre by the coverage level 
percentage you elect.
    Replanting. Performing the cultural practices necessary to 
prepare the land to replace the seed or plants of the damaged or 
destroyed crop and then replacing the seed or plants in the insured 
acreage.
    Timely planted. Planted on or before the final planting date 
designated in the Special Provisions for the insured crop in the 
county.
    Ton. Two thousand (2,000) pounds avoirdupois.
    USDA. United States Department of Agriculture.
    Written agreement. A written document that alters designated 
terms of this policy in accordance with section 16.

2. Unit Division

    (a) Unless limited by the Special Provisions, a basic unit, as 
defined in section in section 1 of the Basic Provisions, may be 
divided into optional units if, for each optional unit, you meet all 
the conditions of this section. Notwithstanding the provisions of 
this section on unit division, no indemnity will be paid for any 
loss of production on any unit if the insured produced a crop 
sufficient to fulfill the processor contracts forming the basis for 
the guarantee, and any indemnity will be limited to the amount 
necessary to compensate for loss in yield at the price elected 
between production to count and the contract requirements.
    (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.
    (d) All optional 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 by the production reporting 
date, which can be independently verified, of planted acreage and 
production for each optional unit for at least the last crop year 
used to determine your production guarantee;
    (2) You must plant the crop in a manner that results in a clear 
and discernable break in the planting pattern at the boundaries of 
each optional unit;
    (3) For each crop year, records of marketed production or 
measurement of stored production from each optional unit must be 
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
    (4) Each optional unit must meet one or more of the following 
criteria, as applicable, unless otherwise specified by 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 their sections for unit purposes. In areas that 
have not been surveyed using sections are equivalent systems, 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.
    (ii) Optional Units on Acreage Including Both Irrigated and Non-
irrigated Practices: In addition to, or instead of, establishing 
optional units by section, section equivalent, or FSA Farm Serial 
Number, optional units may be based on irrigated acreage and non-
irrigated acreage (in those counties where ``non-irrigated'' 
practice is allowed in the actuarial table) if both are located in 
the same section, section equivalent, or FSA Farm Serial Number. To 
qualify as separate irrigated and non-irrigated optional units, the 
non-irrigated acreage may not continue into the irrigated acreage in 
the same rows or planting pattern. The irrigated acreage may not 
extend beyond the point at which the irrigation system can deliver 
the quantity of water needed to produce the yield on which the 
guarantee is based, except the corners of a field in which a center-
pivot irrigation system is used will be considered as irrigated 
acreage if separate acceptable records of production from the 
corners are not provided. If the corners of a field in which a 
center-pivot irrigation system is used do not qualify as a separate 
non-irrigated optional unit, they will be a part of the unit 
containing the irrigated acreage. Non-irrigated acreage that is not 
a part of a field in which a center-pivot irrigation system is used 
may qualify as a separate optional unit provided that all other 
requirements of this section are met.

[[Page 54344]]

    (iii) Optional Units on Separate Acreage Planted to Tomatoes: In 
California only, in addition to or instead of establishing optional 
units by section, section equivalent, or FSA Farm Serial Number, 
optional units may be established if acreage planted to tomatoes is 
separated by a field that is not planted to tomatoes, or by a 
permanent boundary such as a permanent waterway, fence, public road 
or woodland. Such optional unit must consist of the minimum number 
of acres stated in the Special Provisions. Acreage planted to 
tomatoes that is less than the minimum number of acres required will 
attach to the closest unit within the section, section equivalent or 
FSA Farm Serial Number.

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 
processing tomatoes in the county insured under this policy unless 
the Special Provisions provide different price elections by type. 
The percentage of the maximum price election you choose for one type 
will be applicable to all other types insured under this policy. For 
example, if you choose 100 percent of the maximum price election for 
one type, you must also choose 100 percent of the maximum price 
election for all other types.
    (b) Liability under this policy will not exceed the number of 
tons required to be accepted by the processor under a processor 
contract in effect on or before:
    (1) The earlier of August 20 or the date of damage to the 
insured crop in all counties with an acreage reporting date of July 
15; or
    (2) The earlier of the acreage reporting date or the date of 
damage in all other counties. (Exclude indemnities that occur in 
stage one and replant payments.)
    (c) The price election used to determine the amount of an 
indemnity is progressive by stage and increases, at specified 
intervals, to the price used for final stage losses. Stages will be 
determined on an acre basis. The stages and applicable price 
elections are:
    (1) First stage is from planting until first fruit set. If any 
acreage of the insured crop is destroyed in this stage, the price 
used to establish the amount of any indemnity owed for such acreage 
will be 50 percent of your price election;
    (2) Second stage is from the first fruit set until harvest. If 
any acreage of the insured crop is destroyed in this stage, the 
price used to establish the amount of any indemnity owed for such 
acreage will be 80 percent of your price election; and
    (3) Third stage (final stage) is harvested acreage. The price 
election used in this stage to establish the amount of any indemnity 
owed will be 100 percent of your price election.
    (d) Any acreage of tomatoes damaged to the extent, that the 
majority of producers in the area would not normally further care 
for the tomatoes, will be deemed to have been destroyed even though 
you may continue to care for it. The price election used to 
determine the amount of an indemnity will be that applicable to the 
stage in which the tomatoes were destroyed.
    (e) The appraised production from bypassed acreage that could 
have been accepted by the processor will be included when 
determining your approved yield.
    (f) Acreage that is bypassed because it was damaged by an 
insurable cause of loss to the extent that the processor cannot use 
the product will be considered to have a zero yield when determining 
your approved yield.

4. Contract Changes

    In accordance with section 4 of the Basic Provisions, the 
contract change date is August 31 preceding the cancellation date 
for California and November 30 preceding the cancellation date for 
all other states.

5. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are January 15 in California and 
March 15 in all other states.

6. Report of Acreage

    In addition to the provisions of section 6 of the Basic 
Provisions, you must provide a copy of all processor contracts to us 
on or before the acreage reporting date in all counties, unless 
otherwise specified in the Special Provisions.

7. Annual Premium

    In lieu of the premium amount determinations contained in 
section 7 of the Basic Provisions, the annual premium amount per 
acre is determined by multiplying the production guarantee per acre 
by the price election for the third (final) stage; by the premium 
rate; by the insured acreage; by the applicable share at the time of 
planting; and ultimately by any applicable premium adjustment 
factors contained in the Actuarial Table.

8. Insured Crop

    (a) In accordance with section 8 of the Basic Provisions, the 
crop insured will be all the tomatoes in the county for which a 
premium rate is provided by the actuarial table:
    (1) In which you have a share;
    (2) That are planted for harvest as processing tomatoes;
    (3) That are grown under, and in accordance with, the 
requirements of a processor contract executed on or before August 20 
in all counties with an acreage reporting date of July 15, or on or 
before the acreage reporting date in all other counties, and are not 
excluded from the processor contract for or during the crop year; 
and
    (4) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Grown on acreage on which tomatoes were grown in either of 
the two previous years, except in California;
    (ii) Interplanted with another crop; or
    (iii) Planted into an established grass or legume.
    (b) You will be considered to have a share in the insured crop 
if, under the processor contract, you retain control of the acreage 
on which the tomatoes are grown, you are at risk of loss, and the 
processor contract provides for delivery of processing tomatoes 
under specified conditions and at a stipulated price.
    (c) A tomato producer who is also a processor may establish an 
insurable interest if the following requirements are met:
    (1) The processor must comply with these Crop Provisions;
    (2) Prior to the sales closing date, the Board of Directors or 
officers of the processor must execute and adopt a resolution that 
contains the same terms as an acceptable processor contract. Such 
resolution will be considered a contract under this policy; and
    (3) Our inspection provides that the processing facilities 
comply with the definition of a processor contained in these Crop 
Provisions.

9. Insurable Acreage

    In addition to the provisions of section 9 of the Basic 
Provisions:
    (a) Any acreage of the insured crop that is damaged before the 
final planting date, to the extent that the majority of producers in 
the area would normally not further care for the crop, must be 
replanted unless we agree that it is not practical to replant; and
    (b) We will not insure any acreage that does not meet the 
rotation requirements, if applicable, contained in the Special 
Provisions.

10. Insurance Period

    In lieu of the provisions contained in section 11 of the Basic 
Provisions, regarding the end of the insurance period, insurance 
ceases at the earlier of the date:
    (a) You harvest sufficient production to fulfill your processor 
contract if the processor contract stipulates a specific amount of 
production to be delivered;
    (b) The tomatoes should have been harvested but was not 
harvested;
    (c) The tomatoes were abandoned;
    (d) Harvest was completed;
    (e) Final adjustment of a loss was completed; or
    (f) The following calendar date for the end of the insurance 
period
    (1) October 20 in California; and
    (2) October 10 in all other states.

11. Causes of Loss

    In accordance with the provisions of section 12 of the Basic 
Provisions:
    (a) Insurance is provided only against the following causes of 
loss that occur during the insurance period:
    (1) Adverse weather conditions, including:
    (i) Excessive moisture that prevents the harvesting equipment 
from entering the field or that prevents the timely operation of 
harvesting equipment; and
    (ii) Abnormally hot or cold temperatures that cause an 
unexpected number of acres over a large producing area to be ready 
for harvest at the same time, affecting the timely harvest of a 
large number of such acres or the processing of such production 
being beyond the capacity of the processor, either of which causes 
the acreage to be bypassed;
    (2) Fire;
    (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 the irrigation water supply, if due to a cause of 
loss contained in sections

[[Page 54345]]

11(a)(1) through (7) that occurs during the insurance period.
    (b) In addition to the causes of loss excluded by section 12 of 
the Basic Provisions, we will not insure against any loss of 
production due to:
    (1) Acreage being bypassed, if the acreage is bypassed because:
    (i) The breakdown or non-operation of equipment or facilities; 
or
    (ii) The availability of a crop insurance payment. We may deny 
any indemnity immediately in such circumstance or, if an indemnity 
has been paid, require you to repay it to us with interest at any 
time acreage was bypassed due to the availability of a crop 
insurance payment;
    (2) The processing tomatoes not being timely harvested, unless 
such delay in harvesting is solely and directly due to an insured 
cause of loss; or
    (3) Your failure to follow the requirements contained in the 
processor contract.

12. Replanting Payment

    (a) In accordance with section 13 of the Basic Provisions, a 
replanting payment is allowed if the crop sustained a loss exceeding 
50 percent of the plant stand and it is practical to replant.
    (b) The maximum amount of the replanting payment per acre will 
be the lesser of 20 percent of the production guarantee or three 
tons, multiplied by your third stage (final) price election, 
multiplied by your share.

13. Duties in the Event of Damage or Loss

    In addition to the notice required by section 14 of the Basic 
Provisions, you must give us notice:
    (a) Not later than 48 hours after:
    (1) Total destruction of the tomatoes in the unit; or
    (2) Discontinuance of harvest on a unit on which unharvested 
production remains;
    (b) Within 3 days after the date harvest should have started on 
any acreage that will not be harvested. You must also provide 
acceptable documentation of the reason the acreage was bypassed. 
Failure to provide such documentation will result in our 
determination that the acreage was bypassed due to an uninsured 
cause of loss. If the crop will not be harvested and you wish to 
destroy the crop, you must leave representative samples of the 
unharvested crop for our inspection. The samples must be at least 10 
feet wide and extend the entire length of each field in the unit. 
The samples must not be destroyed until the earlier of our 
inspection or 15 days after notice is given to us; and
    (c) At least 15 days prior to the beginning of harvest if you 
intend to claim an indemnity on any unit, or immediately if damage 
is discovered during the 15 day period or during harvest, so that we 
may inspect the damaged production. If you fail to notify us and 
such failure results in our inability to inspect the damaged 
production, we will consider all such production to be undamaged and 
include it as production to count. You are not required to delay 
harvest.

14. 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 its respective production 
guarantee, by type if applicable;
    (2) Multiplying each result of section 14(b)(1) by the 
respective price election, by type if applicable;
    (3) Totaling the results of section 14(b)(2) if there are more 
than one type;
    (4) Multiplying the total production to counted (see section 
14(c)), for each type if applicable, by its respective price 
election;
    (5) Totaling the results of section 14(b)(4) if there are more 
than one type;
    (6) Subtracting the result of section 14(b)(4) from the result 
of section 14(b)(2) if there is only one type or subtracting the 
result of section 14(b)(5) from the result of section 14(b)(3) if 
there are more than one type; and
    (7) Multiplying the result of section 14(b)(6) by your share.
For example:
    You have a 100 percent share in 50 acres of type A processing 
tomatoes in the unit, with a guarantee of 18.8 tons per acre and a 
price election of $50.00 per ton. You are only able to harvest 10.0 
tons. Your indemnity would be calculated as follows:
    (1) 50.0 acres  x  18.8 tons = 940.0 tons guarantee;
    (2) 940.0 tons  x  $50.00 price election = $47,000.00 value 
guarantee;
    (4) 10.0 tons  x  $50.00 price election = $500.00 value of 
production to count;
    (6) $47,000.00-$500.00 = $46,500.00 loss; and
    (7) $46,500  x  100 percent = $46,500.00 indemnity payment.
    You also have a 100 percent share in 50 acres of type B 
processing tomatoes in the same unit, with a guarantee of 15.0 tons 
per acre and a price election of $35.00 per ton. You are only able 
to harvest 5.0 tons. Your total indemnity for both types A and B 
would be calculated as follows:
    (1) 50.0 acres  x  18.8 tons = 940.0 ton guarantee for type A 
and 50.0 acres  x  15.0 tons = 750.0 ton guarantee for type B;
    (2) 940.0 ton guarantee  x  $50.00 price election = $47,000.00 
value of guarantee for type A and 750.0 ton guarantee  x  $35.00 = 
$26,500.00 value of guarantee for type B;
    (3) $47,000.00 + $26,500.00=$72,500.00 total value of guarantee;
    (4) 10.0 tons  x  $50.00 price election=$500.00 value of 
production to count for type A and 5.0 tons  x  $35.00 price 
election=$175.00 value of production to count for type B;
    (5) $500.00 + $175.00=$675.00 total value of production to 
count;
    (6) $72,500.00-$675.00=$71,575.00 loss; and
    (7) $71,575 loss  x  100 percent=$71,575.00 indemnity payment.
    (c) The total production to count, specified in tons, from all 
insurable acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide production records that are 
acceptable to us.
    (ii) Production lost due to uninsured causes;
    (iii) Production on acreage that is bypassed unless the acreage 
was bypassed due to an insured cause of loss which resulted in 
production which would not be acceptable under the terms of the 
processor contract;
    (iv) Potential production on insured acreage that you intend to 
put to another use or abandoned, if you and we agree on the 
appraised amount of production. Upon such agreement, the insurance 
period for that acreage will end when you put the acreage to another 
use or abandon the crop. If agreement on the appraised amount of 
production is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to 
leave intact, and provide sufficient care for, representative 
samples of the crop in locations acceptable to us, (The amount of 
production to count for such acreage will be based on the harvested 
production or appraisals from the samples at the time harvest should 
have occurred. If you do not leave the required samples intact, or 
you fail to provide sufficient care for the samples, our appraisal 
made prior to giving you consent to put the acreage to another use 
will be used to determine the amount of production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested 
production, or our reappraisal if additional damage occurs and the 
crop is not harvested;
    (2) All harvested production (in tons) delivered to the 
processor which meets the quality requirements of the processor 
contract (expressed as usable or payable weight).
    (3) All harvested tomato production delivered to processor which 
does not meet the quality requirements of the processor contract due 
to not being timely delivered.
    (d) Once harvest has begun on any acreage covered by a processor 
contract that specifies the number of tons to be delivered, the 
total indemnity payable will be limited to an amount based on the 
lesser of the guaranteed tons, or the tons remaining unfulfilled 
under the processor contract.

15. Late and Prevented Planting

    The late and prevented planting provisions of the Basic 
Provisions are not applicable.

16. 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 
16(e);
    (b) The application for a written agreement must contain all 
variable terms of the

[[Page 54346]]

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 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 10, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-27652 Filed 10-17-97; 8:45 am]
BILLING CODE 3410-08-P