[Federal Register Volume 62, Number 28 (Tuesday, February 11, 1997)]
[Proposed Rules]
[Pages 6134-6138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3330]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / 
Proposed Rules

[[Page 6134]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457


Fresh Plum Crop Insurance Provisions; and Common Crop Insurance 
Regulations; Plum Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes 
specific crop provisions for the insurance of plums. 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 Fresh Plum 
Crop Insurance Endorsement with the Common Crop Insurance Policy for 
ease of use and consistency of terms, and to restrict the effects of 
the current Fresh Plum Endorsement to the 1997 and prior crop years.

DATES: Written comments on this proposed rule will be accepted until 
close of business April 14, 1997, and will be considered when the rule 
is to be made final. The comment period for information collections 
under the Paperwork Reduction Act of 1995 continues through April 11, 
1997.

ADDRESSES: Interested persons are invited to submit written comments to 
the Director, Product Development Division, Federal Crop Insurance 
Corporation, United States Department of Agriculture, 9435 Holmes Road, 
Kansas City, MO, 64131. Written comments will be available for public 
inspection and copying in room 0324, South Building, United States 
Department of Agriculture, 14th and Independence Avenue, SW., 
Washington, DC, 8:15 a.m. to 4:45 p.m., est, Monday through Friday, 
except holidays.

FOR FURTHER INFORMATION CONTACT: Stephen Hoy, Program Analyst, Research 
and Development, Product Development Division, Federal Crop Insurance 
Corporation, at the Kansas City, MO address listed above, telephone 
(816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866

    The amendments set forth in this proposed rule contain information 
collection that requires clearance by the Office of Management and 
Budget (OMB) under provisions of 44 U.S.C. chapter 35.

Paperwork Reduction Act of 1995

    The information collection requirements contained in these 
regulations were previously approved by OMB pursuant to the Paperwork 
Reduction Act of 1995 (44 U.S.C. chapter 35) under OMB control number 
0563-0003 through September 30, 1998.
    Section 7 of the 1998 Plum Crop Provisions adds interplanting as an 
insurable farming practice as long as it is interplanted with another 
perennial crop and does not adversely affect the insured crop. This 
practice was not insurable under the previous fresh plum endorsement 
and the General Crop Insurance Policy 88-G (REV 3-91) to which it 
attached. Consequently, interplanting information will need to be 
collected using the FCI-12-P Pre-Acceptance Perennial Crop Inspection 
Report form for approximately two percent of the insureds who 
interplant their plum crop. Standard interplanting language has been 
added to most perennial crops to make insurance available for more 
perennial crop producers and reduce the acreage that will need to be 
placed into the noninsured crop disaster assistance program (NAP).
    The other amendments set forth in this proposed rule to not contain 
additional information collections that require clearance by OMB under 
the provisions of 44 U.S.C. chapter 35.
    The title of this information collection is ``Catastrophic Risk 
Protection Plan and Related Requirements including, Common Crop 
Insurance Regulations; Plum Crop Insurance Provision.'' The information 
to be collected includes a crop insurance application and an acreage 
report. Information collected from the application and acreage report 
is electronically submitted to FCIC by the reinsured companies. 
Potential respondents to this information collection are producers of 
plums that are eligible for Federal crop insurance.
    The information requested is necessary for the reinsured companies 
and FCIC to provide insurance and reinsurance, determine eligibility, 
determine the correct parties to the agreement or contract, determine 
and collect premiums or other monetary amounts, and pay benefits.
    All information is reported annually. The reporting burden for this 
collection of information is estimated to average 16.9 minutes per 
response for each of the 3.6 responses from approximately 1,755,015 
respondents. The total annual burden on the public for the information 
collection is 2,669,932 hours.
    FCIC is requesting comments on the following: (a) Whether the 
proposed collection of information is necessary for the proper 
performance of the functions of the agency, including whether the 
information shall have practical utility; (b) the accuracy of the 
agency's estimate of the burden of the proposed collection of 
information; (c) ways to enhance the quality, utility, and clarity of 
the information to be collected; and (d) ways to minimize the burden of 
the collection of information on respondents, including through the use 
of automated collection techniques or other forms of information 
gathering technology.
    Comments regarding paperwork reduction should be submitted to the 
Desk Officer for Agriculture, Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, DC 20503.
    OMB is required to make a decision concerning the collections of 
information contained in these proposed regulations between 30 and 60 
days after submission to OMB. Therefore, a comment to OMB is best 
assured of having full effect if OMB receives it within 30 days of 
publication. This does not affect the deadline for the public to 
comment on the proposed regulation.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for

[[Page 6135]]

Federal agencies to assess the effects of their regulatory actions on 
state, local, and tribal governments and the private sector. This rule 
contains no Federal mandates (under the regulatory provisions of Title 
II of the UMRA) for state, local, and tribal governments or the private 
sector. Thus, the rule is not subject to the requirements of section 
202 and 205 of the UMRA.

Executive Order No. 12612

    It has been determined under section 6(a) of Executive Order No. 
12612, Federalism, that this rule does not have sufficient federalism 
implications to warrant the preparation of a Federalism Assessment. The 
provisions contained in this rule will not have a substantial direct 
effect on states or their political subdivisions, or on the 
distribution of power and responsibilities among the various levels of 
government.

Regulatory Flexibility Act

    This regulation will not have a significant impact on a substantial 
number of small entities. New provisions included in this rule will not 
impact small entities to a greater extent than large entities. Under 
the current regulations, a producer is required to complete an 
application and acreage report. If the crop is damaged or destroyed, 
the insured is required to give notice of loss and provide the 
necessary information to complete a claim for indemnity. The producer 
must also annually certify to the previous years production, if 
adequate records are available to support the certification, or receive 
a transitional yield. The producer must maintain the production records 
to support the certified information for at least three years. This 
regulation does not alter those requirements. The amount of work 
required of the insurance companies delivering and servicing these 
policies will not increase significantly from the amount of work 
currently required. This rule does not have any greater or lesser 
impact on the producer. Therefore, this action is determined to be 
exempt from the provisions of the regulatory Flexibility Act (5 U.S.C. 
605), and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

    This program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.450.

Executive Order No. 12372

    This program is not subject to the provisions of Executive Order 
No. 12372, which require intergovernmental consultation with state and 
local officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order No. 12778

    The Office of the General Counsel has determined that these 
regulations meet the applicable standards provided in sections 2(a) and 
2(b)(2) of Executive Order No. 12778. 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

    FCIC proposes to add to the Common Crop Insurance Regulations (7 
CFR part 457), a new section, 7 CFR 457.157, Plum 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 fresh plums found at 7 CFR 401.146 
(Fresh Plum Endorsement). FCIC also proposes to amend Sec. 401.146 to 
limit its effect to the 1997 and prior crop years. FCIC will later 
publish a regulation to remove and reserve Sec. 401.146.
    This rule makes minor editorial and format changes to improve the 
Fresh Plum Endorsement's compatibility with the Common Crop Insurance 
Policy. In addition, FCIC is proposing substantive changes in the 
provisions for insuring plums as follows:
    1. Remove the word ``fresh'' from the title of the policy since 
plums marketed for uses other than fresh packed are covered.
    2. Section 1--Add definitions for the terms ``days,'' ``direct 
marketing,'' ``good farming practice,'' ``interplanted,'' ``irrigated 
practice,'' ``non-contiguous,'' ``pitburn and sunburn,'' ``production 
guarantee (per acre),'' ``scion,'' ``varietal group,'' and ``written 
agreement'' for clarification purposes.
    3. Section 2(e)(3)(ii)--Add optional units by varietal group to be 
consistent with other policies that offer insurance by crop variety.
    4. Section 3(a)--Specify that the insured may select only one price 
election for all the plums in the county insured under this policy, 
unless the Special Provisions provide different price elections by 
varietal group, in which case the insured may select one price election 
for each varietal group. The price election the insured selects must 
have the same percentage relationship to the maximum price offered. 
This helps to protect against adverse selection and simplifies 
administration of the program.
    5. Section 3(b)--Specify that an insured must report damage, 
removal of trees, and any change in practice that may reduce yields. 
For the first year of insurance for acreage interplanted with another 
perennial crop and anytime the planting pattern of such acreage is 
changed, the insured must report the age and varietal group, if 
applicable, of any interplanted perennial crop, its planting pattern, 
and any other information needed to establish the approved yield. If 
the insured fails to notify the insurer of factors that may reduce 
yields from previous levels, the insurer will reduce the production 
guarantee at any time the insurer becomes aware of damage, removal of 
trees, or changes in practices. This allows the insurance provider to 
limit liability, if necessary, before insurance attaches.
    6. Section 6--Remove the provision that restricts crop insurance 
coverage if plums are harvested directly by the public. Section 10(b) 
of the proposed rule requires the insured to notify the insurance 
provider at least 15 days before any production from any unit will be 
sold by direct marketing in order to accurately determine production to 
count.
    7. Section 6(d)--Specify that at least 200 lugs per acre must have 
been produced in at least one of the three most recent actual 
production history crop years. Previous regulations required a minimum 
of 200 lugs per acre of fresh market production in the previous crop 
year unless the acreage is inspected by us and approved for coverage. 
Basing the required minimum production on only the previous crop year 
is too restrictive considering that one year of adverse growing 
conditions would exclude eligibility for crop insurance.
    8. Section 6(f)--Allow insurance for plums produced on scions that 
have not reached the fifth growing season after being grafted to 
established rootstock. If

[[Page 6136]]

all other requirements for insurability have been met, the crop should 
make the approved yield.
    9. Section 7--Allow insurance for plums interplanted with another 
perennial crop in order to make insurance available on more acreage and 
reduce the reliance on the noninsured crop disaster assistance program 
(NAP) for protection against crop losses.
    10. Section 8(a)(1)--Specify that the insurance period begins on 
February 1 of each crop year, except for the year of application, if 
the application is received after January 22 but prior to February 1, 
insurance will attach on the 10th day after the application is received 
in the insurance provider's local office unless the acreage is 
inspected during the 10 day period and does not meet insurability 
requirements. This provision is consistent with other perennial crops 
to prevent producers from obtaining insurance only when they know a 
loss is likely.
    11. Section 8(b)--Add provisions to clarify the procedures when an 
insurable share is acquired or relinquished on or before the acreage 
reporting date.
    12. Section 9(a)(2)--Add pitburn and sunburn as insured causes of 
loss since they are common causes of loss.
    13. Section 9(c)(1)--Clarify that disease and insect infestation 
are excluded causes of loss unless adverse weather prevents the proper 
application of control measures, causes control measures to be 
ineffective when properly applied, or causes disease or insect 
infestation for which no effective control mechanism is available.
    14. Section 10(a)--Specify the notice requirements if the orchard 
has suffered a loss, and the crop will not be harvested, in order to 
permit timely appraisal of any loss.
    15. Section 10(b)--Require the producer to give notice at least 15 
days prior to harvest so a preharvest inspection can be made if the 
insured intends to engage in direct marketing to consumers. This is 
necessary to permit an accurate appraisal of production to count 
because it is difficult to verify production that is directly marketed 
to consumers.
    16. Section 10(c)--Require the producer to give at least 15 days 
notice prior to the beginning of harvest or immediately if damage is 
discovered during harvest to permit the insurance provider to make a 
timely inspection.
    17. Section 10(d)--Prohibit the insured from selling or otherwise 
disposing of any damaged production until consent is given by the 
insurance provider.
    18. Section 11(c)(2)(i)--Change the quality specifications for 
determining production to count from U.S. Number 1 standards to the 
California Marketing Order grade requirements in effect for the crop 
year, since such grade order requirements better correspond with the 
quality specifications used by the plum industry.
    19. Sections 11(c)(2)(ii)--Specify the adjustment of the production 
to count for harvested production that is packed and sold as fresh 
fruit but does not meet California Marketing Order grade requirements.
    20. Sections 11(c)(2)(iii)--Specify the adjustment of the 
production to count for harvested production that is or could be 
marketed for any use other than fresh packed plums.
    21. Section 12--Add provisions for providing insurance covered by 
written agreement. FCC has a long standing policy of permitting certain 
modifications of the insurance contracts by written agreement for some 
policies. This amendment allows FCC to tailor the policy to a specific 
insured in certain instances. The new section will cover the 
application for and duration of written agreements.

List of Subjects in 7 CFR Parts 401 and 457

    Crop insurance, Fresh plums endorsement, Plums.

Proposed Rule

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

PART 401--GENERAL CROP INSURANCE REGULATIONS--REGULATIONS FOR THE 
1988 AND SUBSEQUENT CONTRACT YEARS

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

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

    2. The introductory text of Sec. 401.146 is revised to read as 
follows:


Sec. 401.146  Fresh plum endorsement.

    The provisions of the Fresh Plum Crop Insurance Endorsement for the 
1990 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. 7 CFR part 457 is amended by adding a new Sec. 457.157 to read 
as follows:


Sec. 457.157  Plum Crop Insurance Provisions.

    The Plum Crop Insurance Provisions for the 1998 and succeeding crop 
years are as follows:

    FCIC policies:

Department of Agriculture

Federal Crop Insurance Corporation

    Reinsured policies:

(Appropriate title for insurance provider)
    Both FCIC and reinsured policies:

Plum Crop Provisions

    If a conflict exists among the Basic Provisions (Sec. 457.8), 
these crop provisions, and the Special Provisions; the Special 
Provisions will control these crop provisions and the Basic 
Provisions; and these crop provisions will control the Basic 
Provisions.
    1. Definitions.
    Days--Calendar days.
    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.
    Good farming practices--The cultural practices generally in use 
in the county for the crop to make normal progress toward maturity 
and produce at least the yield used to determine the production 
guarantee, and are those recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Harvest--The picking of mature plums from the trees 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.
    Lug--Twenty-eight (28) pounds of the insured crop.
    Non-contiguous--Any two or more tracts of land whose boundaries 
do not touch at any point, except that land separated only by a 
public or private right-of-way, waterway, or an irrigation canal 
will be considered as contiguous.
    Pitburn and sunburn--Damage to fresh fruit as a result of 
excessive heat.
    Production guarantee (per acre)--The number of lugs of plums 
determined by multiplying the approved APH yield per acre by the 
coverage level percentage you elect.

[[Page 6137]]

    Scion--Twig or portion of a twig of one plant that is grafted on 
to a stock of another.
    Varietal group--Different varieties of plums that are grouped 
according to the normal maturity dates as specified in the Special 
Provisions.
    Written agreement--A written document that alters designated 
terms of this policy in accordance with section 12.
    2. Unit Division.
    (a) Unless limited by the Special Provisions, a unit as defined 
in section 1 (Definitions) of the Basic Provisions (Sec. 457.8) 
(basic unit), may be divided into optional units if, for each 
optional unit, you meet all the conditions of this section or if a 
written agreement to such division exists.
    (b) Basic units may not be divided into optional units on any 
basis other than as described in this section.
    (c) If you do not comply fully with these provisions, we will 
combine all optional units that are not in compliance with these 
provisions into the basic unit from which they were formed. We will 
combine the optional units at any time we discover that you have 
failed to comply with these provisions. If failure to comply with 
these provisions is determined to be inadvertent, and the optional 
units are combined into a basic unit, that portion of the additional 
premium paid for the optional units that have been combined will be 
refunded to you for the units combined.
    (d) All 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 records, which can be independently verified, 
of acreage and production for each optional unit for at least the 
last crop year used to determine your production guarantee;
    (2) You must have records of marketed production or measurement 
of stored production from each optional unit maintained in such a 
manner that permits us to verify the production from each optional 
unit, or the production from each unit must be kept separate until 
loss adjustment is completed by us; and
    (3) Each optional unit must meet one or more of the following 
criteria, as applicable:
    (i) Optional Units on Acreage Located on Non-Contiguous Land: 
Optional units may be established if each optional unit is located 
on non-contiguous land.
    (ii) Optional Units on Acreage by Varietal Group: In addition 
to, or instead of, establishing optional units on non-contiguous 
land, optional units may be established by varietal group when 
provided for in the Special Provisions.
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    In addition to the requirements of section 3 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) 
of the Basic Provisions (Sec. 457.8):
    (a) You may select only one price election for all the plums 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 plum 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 (Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities) of the Basic Provisions (Sec. 457.8), by 
varietal group if applicable:
    (1) Any damage, removal of trees, change in practices, or any 
other circumstance that may reduce the expected yield below the 
yield upon which the insurance guarantee is based, and the number of 
affected acres;
    (2) The number of bearing trees on insurable and uninsurable 
acreage;
    (3) The age of the trees and the planting pattern; and
    (4) For the first year of insurance for acreage interplanted 
with another perennial crop, and anytime 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 a perennial crop, removal of trees, damage, change in 
practice, and any other circumstance that may effect the yield 
potential of the insured crop. If you fail to notify us of any 
circumstance that may reduce your yields from previous levels, we 
will reduce your production guarantee as necessary at any time we 
become aware of the circumstance.
    4. Contract Changes.
    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is October 31 
preceding the cancellation date.
    5. Cancellation and Termination Dates.
    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation 
and termination dates are January 31.
    6. Insured Crop.
    In accordance with section 8 (Insured Crop) of the Basic 
Provisions (Sec. 457.8), the crop insured will be all the plums in 
the county for which a premium rate is provided by the actuarial 
table:
    (a) In which you have a share;
    (b) That are grown on tree varieties that:
    (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 regulated by the California Advisory Board Standards, a 
related crop advisory board, or the state;
    (c) That are irrigated;
    (d) That have produced an average of at least 200 lugs per acre 
in at least one of the three most recent actual production history 
crop years, unless we inspect such acreage and give our approval in 
writing;
    (e) That are grown in an orchard that, if inspected, is 
considered acceptable by us; and
    (f) That have reached at least the fifth (5th) growing season 
after set out. Plums produced on scions that have not reached the 
fifth growing season may be insured if the provisions in section 6 
(a), (b), (c), and (e) are met. Such trees must have produced at 
least 200 lugs per acre in at least one year after being grafted.
    7. Insurable Acreage.
    In lieu of the provisions in section 9 (Insurable Acreage) of 
the Basic Provisions (Sec. 457.8) that prohibit insurance attaching 
to a crop planted with another crop, plums interplanted with another 
perennial crop are insurable unless we inspect the acreage and 
determine that it does not meet the requirements contained in your 
policy.
    8. Insurance Period.
    (a) In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8):
    (1) Coverage begins on February 1 of each crop year, except that 
for the year of application, if your application is received after 
January 22 but prior to February 1, insurance will attach on the 
10th day after your properly completed application is received in 
our local office unless we inspect the acreage during the 10 day 
period and determine that it does not meet insurability 
requirements. You must provide any information that we require for 
the crop or to determine the condition of the orchard.
    (2) The calendar date for the end of the insurance period for 
each crop year is September 30.
    (b) In addition to the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8):
    (1) If you acquire an insurable share in any insurable acreage 
after coverage begins but on or before the acreage reporting date 
for the crop year, and after an inspection we consider the acreage 
acceptable, insurance will be considered to have attached to such 
acreage on the calendar date for the beginning of the insurance 
period.
    (2) If you relinquish your insurable share on any insurable 
acreage of plums on or before the acreage reporting date for the 
crop year, insurance will not be considered to have attached to, and 
no premium or indemnity will be due for such acreage for that crop 
year unless:
    (i) A transfer of coverage and right to an indemnity, or a 
similar form approved by us, is completed by all affected parties;
    (ii) We are notified by you or the transferee in writing of such 
transfer on or before the acreage reporting date; and
    (iii) The transferee is eligible for crop insurance.
    9. Causes of Loss.
    (a) In accordance with the provisions of section 12 (Causes of 
Loss) of the Basic Provisions (Sec. 457.8), insurance is provided 
only against the following causes of loss that occur during the 
insurance period:
    (1) Adverse weather conditions;
    (2) Pitburn and sunburn;
    (3) Fire, unless weeds and other forms of undergrowth have not 
been controlled or

[[Page 6138]]

pruning debris has not been removed from the orchard;
    (4) Wildlife;
    (5) Earthquake;
    (6) Volcanic eruption;
    (7) An insufficient number of chilling hours to effectively 
break dormancy; or
    (8) Failure of the irrigation water supply, if caused by an 
insured peril that occurs during the insurance period.
    (b) In addition to the causes of loss excluded in section 12 
(Causes of Loss) of the Basic Provisions (Sec. 457.8), we will not 
insure against 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;
    (2) Rejection of the crop by the packing house due to being 
undersized, immature, overripe, or mechanically damaged; or
    (3) Inability to market the plums 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 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), 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. We will conduct an 
appraisal that will be used to determine your production to count 
for production that is sold by direct marketing. 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 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 sell or dispose of the damaged crop until after 
we have given you written consent to do so. If you fail to notify us 
and such failure results in our inability to inspect the damaged 
production, we may consider all such production to be undamaged and 
include it 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 acceptable 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 for each varietal group, if 
applicable, by its respective production guarantee;
    (2) Multiplying the results in section 11(b)(1) by the 
respective price election for each varietal group, if applicable;
    (3) Totaling the results in section 11(b)(2);
    (4) Multiplying the total production to be counted of each 
varietal group, if applicable, (see section 11(c)) by the respective 
price election;
    (5) Totaling the results in section 11(b)(4);
    (6) Subtracting the results in section 11(b)(5) from the results 
in section 11 (b)(3); and
    (7) Multiplying the result in section 11(b)(6) by your share.
    (c) The total production to count (in lugs) from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) That is sold by direct marketing directly if you fail to 
meet the requirement contained in section 10;
    (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) Unharvested production; and
    (iv) Potential production on insured acreage that you intend to 
abandon or no longer care for, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
that acreage will end. If you do not agree with our appraisal, we 
may defer the claim only if you agree to continue to care for the 
crop. We will then make another appraisal when you notify us of 
further damage or that harvest is general in the area unless you 
harvested the crop, in which case we will use the harvested 
production. If you do not continue to care for the crop, our 
appraisal made prior to deferring the claim will be used to 
determine the production to count; and
    (2) All harvested production from the insurable acreage:
    (i) That is packed and sold as fresh fruit and meets the 
California Marketing Order grade requirements, as amended, in effect 
for the applicable crop year;
    (ii) That is packed and sold as fresh fruit but does not meet 
the grade requirements specified in section 11(c)(2)(i) due to 
insurable causes. Such production will be adjusted by:
    (A) Dividing the value per lug of this production by the highest 
price election available for the applicable varietal group; and
    (B) Multiplying the resulting factor, if less than 1.0, by the 
number of lugs of such plums.
    (iii) That is damaged and is, or could be, marketed for any use 
other than fresh packed plums. Such production will be adjusted by:
    (A) Multiplying the number of tons of such production by the 
value per ton of the damaged plums or $50.00, whichever is greater; 
and
    (B) Dividing that result by the highest price election available 
for the applicable varietal group.
    12. Written agreement.
    Designated terms of this policy may be altered by written 
agreement in accordance with the following:
    (a) You must apply in writing for each written agreement no 
later than the sales closing date, except as provided in section 
12(e);
    (b) The application for a written agreement must contain all 
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 variety, 
the guarantee, premium rate, and price election;
    (d) Each 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 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, DC, on February 6, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-3330 Filed 2-10-97; 8:45 am]
BILLING CODE 3410-FA-P