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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

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Rules and Regulations Federal Register

20407 

Vol. 80, No. 73 

Thursday, April 16, 2015 

DEPARTMENT OF AGRICULTURE 

Federal Crop Insurance Corporation 

7 CFR Part 457 

[Docket No. FCIC–14–0004] 

RIN 0563–AC44 

Common Crop Insurance Regulations; 

Macadamia Tree Crop Insurance 

Provisions and Macadamia Nut Crop 

Insurance Provisions 

AGENCY: Federal Crop Insurance 

Corporation, USDA. 

ACTION: Final rule. 

SUMMARY: The Federal Crop Insurance 

Corporation (FCIC) finalizes the 

Common Crop Insurance Regulations, 

Macadamia Tree Crop Insurance 

Provisions and the Macadamia Nut Crop 

Insurance Provisions. The intended 

effect of this action is to provide policy 

changes and to better meet the needs of 

the producers. The proposed changes 

will be effective for the 2016 and 

succeeding crop years for macadamia 

trees and for the 2017 and succeeding 

crop years for macadamia nuts. 

DATES: This rule is effective May 18, 

2015. 

FOR FURTHER INFORMATION CONTACT: Tim 

Hoffmann, Director, Product 

Administration and Standards Division, 

Risk Management Agency, United States 

Department of Agriculture, Beacon 

Facility, Stop 0812, Room 421, P.O. Box 

419205, Kansas City, MO 64141–6205, 

telephone (816) 926–7730. 

SUPPLEMENTARY INFORMATION: 

Executive Order 12866 

The Office of Management and Budget 

(OMB) has determined that this rule is 

not-significant for the purpose of 

Executive Order 12866 and, therefore, it 

has not been reviewed by OMB. 

Paperwork Reduction Act of 1995 

Pursuant to the provisions of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. chapter 35), the collections of 

information in this rule have been 

approved by OMB under control 

number 0563–0053. 

E-Government Act Compliance 

FCIC is committed to complying with 

the E-Government Act of 2002, to 

promote the use of the Internet and 

other information technologies to 

provide increased opportunities for 

citizen access to Government 

information and services, and for other 

purposes. 

Unfunded Mandates Reform Act of 

1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA) 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 

UMRA. 

Executive Order 13132 

It has been determined under section 

1(a) of Executive Order 13132, 

Federalism, that this rule does not have 

sufficient implications to warrant 

consultation with the States. The 

provisions contained in this rule will 

not have a substantial direct effect on 

States, or on the relationship between 

the national government and the States, 

or on the distribution of power and 

responsibilities among the various 

levels of government. 

Executive Order 13175 

This rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175, Consultation 

and Coordination with Indian Tribal 

Governments. The review reveals that 

this regulation will not have substantial 

and direct effects on Tribal governments 

and will not have significant Tribal 

implications. 

Regulatory Flexibility Act 

FCIC certifies that this regulation will 

not have a significant economic impact 

on a substantial number of small 

entities. Program requirements for the 

Federal crop insurance program are the 

same for all producers regardless of the 

size of their farming operation. For 

instance, all producers are required to 

submit an application and acreage 

report to establish their insurance 

guarantees and compute premium 

amounts, and all producers are required 

to submit a notice of loss and 

production information to determine the 

amount of an indemnity payment in the 

event of an insured cause of crop loss. 

Whether a producer has 10 acres or 

1,000 acres, there is no difference in the 

kind of information collected. To ensure 

crop insurance is available to small 

entities, the Federal Crop Insurance Act 

authorizes FCIC to waive collection of 

administrative fees from limited 

resource farmers. FCIC believes this 

waiver helps to ensure that small 

entities are given the same opportunities 

as large entities to manage their risks 

through the use of crop insurance. A 

Regulatory Flexibility Analysis has not 

been prepared since this regulation does 

not have an impact on small entities, 

and therefore, this regulation is exempt 

from the provisions of the Regulatory 

Flexibility Act (5 U.S.C. 605). 

Federal Assistance Program 

This program is listed in the Catalog 

of Federal Domestic Assistance under 

No. 10.450. 

Executive Order 12372 

This program is not subject to the 

provisions of Executive Order 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 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. The provisions of this rule will 

preempt State and local laws to the 

extent such State and local laws are 

inconsistent herewith. With respect to 

any direct action taken by FCIC or 

action by FCIC to require the insurance 

provider to take specific action under 

the terms of the crop insurance policy, 

the administrative appeal provisions 

published at 7 CFR part 11 must be 

exhausted before any action against 

FCIC for judicial review may be brought. 


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20408 Federal Register / Vol. 80, No. 73 / Thursday, April 16, 2015 / Rules and Regulations 

Environmental Evaluation 

This action is not expected to have a 

significant economic impact on the 

quality of the human environment, 

health, or safety. Therefore, neither an 

Environmental Assessment nor an 

Environmental Impact Statement is 

needed. 

Background 

This rule finalizes changes to the 

Common Crop Insurance Regulations (7 

CFR part 457), Macadamia Tree Crop 

Insurance Provisions and Macadamia 

Nut Crop Insurance Provisions that were 

published by FCIC on August 1, 2014, 

as a notice of proposed rulemaking in 

the Federal Register at 79 FR 44719– 

44722. The public was afforded 60 days 

to submit comments after the regulation 

was published in the Federal Register. 

A total of 23 comments were received 

from two commenters. The commenters 

were an insurance service organization 

and a producer association. 

The public comments received 

regarding the proposed rule and FCIC’s 

responses to the comments are as 

follows: 

Macadamia Tree Crop Insurance 

Provisions 

Section 1 

Comment: One commenter agrees 

with the proposal to add definitions for 

‘‘damaged’’ and ‘‘scaffold limb.’’ 

Response: FCIC thanks the commenter 

for its review and its support of the 

addition of these two definitions. 

Section 2 

Comment: One commenter states the 

first sentence in redesignated paragraph 

(a) states that optional units by legal 

description or by irrigated/non-irrigated 

practices are not applicable; and the 

second sentence states that ‘‘. . . 

Optional units may be established 

ONLY if each optional unit is located on 

non-contiguous land, unless otherwise 

allowed by written agreement’’ 

[emphasis added]. The commenter 

states that neither sentence addresses 

the possibility of optional units for 

organic and conventional practices, 

which is allowed according to section 

34(c)(3) of the Basic Provisions. As 

written, this provision appears to mean 

that separate optional units for organic 

and conventional acreage would be 

possible only if they happen to be on 

non-contiguous land or unless allowed 

by written agreement. If that is the 

intention, it would be clearer to include 

‘‘organic practices’’ in the first sentence 

as not applicable. If it is not intended to 

exclude optional units by organic/

conventional practices, the second 

sentence should be revised to clarify 

that optional units by non-contiguous 

land may be ‘‘in addition to’’ the 

optional units by organic/conventional 

allowed in section 34(c)(3) of the Basic 

Provisions. 

Response: FCIC intends for optional 

units to be allowed on acreage located 

on non-contiguous land or on acreage 

grown and insured under an organic 

farming practice. FCIC does not intend 

to require that optional units 

distinguished by organic and 

conventional practices must also be 

located on non-contiguous land. FCIC 

has revised the provisions accordingly. 

Comment: One commenter states the 

‘‘Background’’ explains that the 

proposal to remove the 80-acre 

minimum requirement for optional 

units is because most macadamia tree 

orchards are smaller than that, and the 

other proposed changes (requiring a 

clear and discernible break, and records) 

‘‘. . . will mitigate any potential abuse 

from this change.’’ The commenter has 

no objection to this change. 

Response: FCIC agrees with the 

commenter and thanks it for its support. 

FCIC also notes that the planned 

removal of this 80-acre optional unit 

minimum requirement was 

inadvertently described in the proposed 

rule summary. The discussion of this 

requirement removal was also described 

in specific detail under the description 

of changes for this rule at Section 2. 

Therefore, FCIC removed this 

inadvertent reference from the final rule 

summary because specific mention of 

this proposal in the proposed rule 

summary was inadvertent and 

duplicative. This removal of the 

duplicative language from the proposed 

rule summary does not affect the 

commenter’s agreement with the 

proposal: FCIC continues to agree with 

the commenter, and the proposal as 

originally proposed has been adopted. 

Comment: One commenter states if 

the current section 2(a) is deleted as 

proposed, then Basic Provisions 

sections 34(b)(1), (3) and (4) will apply, 

meaning optional units will require a 

clear and discernible break, and 

acceptable and verifiable records. The 

commenter has no objection to this 

change. 

Response: FCIC agrees with the 

commenter that by deleting section 2(a) 

of the Macadamia Tree Crop Provisions, 

sections 34(b)(1), (3) and (4) of the Basic 

Provisions will apply. FCIC thanks the 

commenter for its support. 

Comment: One commenter states the 

proposed change would require that 

optional units must have a ‘‘clear and 

discernable break between optional 

units.’’ This is clarified further by 

stating ‘‘optional units may be 

established only if each optional unit is 

located on non-contiguous land.’’ There 

is no clear definition of what constitutes 

a ‘‘clear and discernable break.’’ It does 

disqualify optional units determined by 

‘‘section, section equivalent, or FSA 

farm serial number and by irrigated and 

non-irrigated practices.’’ 

Without a clear specification for what 

actually fits their definition for the 

‘‘clear and discernable break,’’ there is 

great potential for a broad interpretation 

from the Risk Management Agency that 

would ultimately prohibit larger 

operations from using optional units at 

all. Since large operations have 

significantly varied conditions over the 

span of their operations that can cause 

production loss over only certain 

sections (such as differences in rainfall, 

elevation, soil-type, disease and pestincidence, etc.), optional units are 

important and necessary to provide 

operations with some security to protect 

from losses. Without the optional units, 

an operation becomes far more 

vulnerable, since only significant 

orchard-wide production losses would 

ever qualify for a claim. It becomes 

financially infeasible to even have 

insurance for many producers with such 

limitations. This rule change should not 

pass without explicit definitions of what 

would qualify as a ‘‘clear and 

discernible break.’’ 

Based on how the insurance 

companies had treated boundaries in 

the past with regards to the formation of 

optional units, a clear and discernible 

break should be defined by a designated 

production area (for instance, a block or 

field) with a set acreage that has enough 

production statistics for the APH to 

qualify for insurance. For instance, in 

our operation, we have had the same 

fields that have remained consistent 

since planting. Each field should be able 

to qualify as a block, as production 

statistics are kept for each field 

separately. 

Response: FCIC agrees with the 

commenter that the proposed change to 

remove paragraph (a) requires optional 

units to have a clear and discernible 

break. Paragraph (a) states sections 

34(b)(1), (3) and (4) of the Basic 

Provisions are not applicable. These 

sections of the Basic Provisions state, 

among other things, that the crop must 

be planted in a manner such that there 

is a clear and discernible break between 

optional units. By removing paragraph 

(a), sections 34(b)(1), (3) and (4) of the 

Basic Provisions now become 

applicable. Under the current policy, 

insureds who utilize optional units can 

manipulate their unit boundaries to 

maximize indemnities because there is 


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Federal Register / Vol. 80, No. 73 / Thursday, April 16, 2015 / Rules and Regulations 20409 

no current requirement for discernible 

breaks between units. FCIC believes this 

requirement will minimize program 

abuse as it relates to unit division. 

Based on a previous comment, FCIC has 

revised Section 2 to clarify that optional 

units are allowed by non-contiguous 

land or by organic and conventional 

acreage, thereby giving producers 

multiple options to insure their acreage 

under optional units. FCIC does not 

define ‘‘clear and discernible break’’ in 

its policy; however, in general, when a 

term is not specifically defined in the 

policy, its common or ordinary meaning 

may be applicable as found in a 

standard dictionary. Examples of a clear 

and discernible break are highways, 

railroads and rivers. No change has been 

made. 

Section 7 

Comment: One commenter 

recommends deleting the first comma in 

the following sentence: ‘‘In lieu of the 

provisions in section 9 of the Basic 

Provisions, that prohibit insurance 

attaching to a crop planted with another 

crop . . .’’ The commenter says this 

change will be consistent with a similar 

change proposed in section 8 of the 

Macadamia Nut Crop Provisions. 

Response: FCIC agrees with the 

commenter. The comma is not necessary 

and its removal does not change the 

meaning of the provision. FCIC has 

revised the provisions accordingly. 

Section 10 

Comment: One commenter states the 

proposed rule adds a phrase about 

destroyed trees in the following phrase 

so it would read: ‘‘. . . allow us to 

inspect all insured acreage before 

pruning any damaged trees, removing 

any damaged trees, or removing any 

destroyed trees.’’ This can be left as 

written, but consider if either of these 

alternatives might be preferable: 

• ‘‘. . . before pruning or removing 

any damaged trees, or removing any 

destroyed trees.’’ This keeps the current 

wording about the two possible actions 

for damaged trees, and adds the new 

phrase about removing destroyed trees. 

• ‘‘. . . before pruning any damaged 

trees, or removing any damaged or 

destroyed trees.’’ This would put 

‘‘pruning’’ in one phrase (applying only 

to damaged trees) and ‘‘removing’’ in 

another (whether the trees are damaged 

or destroyed). 

Response: FCIC appreciates the 

recommendations. However, FCIC 

believes its proposed language offers the 

option of the possibilities least likely to 

create misunderstanding because each 

action word is individually paired with 

the tree type (damaged vs. destroyed) for 

which the action is prohibited. 

Comment: One commenter states that, 

concerning halting of cleanup following 

tree damage, during the most recent 

experience with Hurricane Iselle, it took 

the insurance companies around two 

weeks, and in some cases longer, to fly 

appraisers to Hawaii to assess storm 

damage. For any agricultural operation, 

especially during harvest season, 

waiting that long to remove damaged 

trees, branches, and other debris can 

pose not only safety hazards, but can 

also limit movement throughout 

orchards and can lead to crop loss due 

to the inability of harvest equipment 

and crews to safely traverse through the 

areas of damage. 

The majority of the insurance 

companies are located on the 

continental United States, so they 

typically wait to hear from all of the 

insured operations in Hawaii before 

deploying loss adjusters. This is due to 

the distance and the large expense of 

sending people back and forth. In light 

of these limitations, it is not practical or 

fair to make farms wait so long before 

cleaning up. The alternatives to these 

rule changes would be either to not 

change this rule or to add to the change 

a requirement for tree loss appraisers to 

be on-site no later than three days after 

notice of a major crop or tree loss. 

Response: FCIC understands that it 

may take insurance companies 

additional time to travel to Hawaii than 

to travel within the continental United 

States. This inspection requirement is 

consistent with the provisions in other 

Crop Provisions, such as the Hawaii 

Tropical Tree Crop Provisions, which 

also provide coverage for crops in 

Hawaii. Travel could be difficult after a 

catastrophic event, such as a named 

storm. Therefore, a regulatory provision 

always requiring insurance company 

presence on-site within three days after 

notice of a loss is inappropriate in part 

because not all circumstances will 

always allow such Loss Adjuster to 

arrive within that timeframe. A threeday arrival expectation may be 

appropriate in some, though not 

necessarily all, instances of loss. 

Insurance companies are required to 

arrive onsite after receiving a notice of 

loss within appropriate time frames. For 

example, the current Loss Adjustment 

Manual (LAM), in paragraph 41(A)(3), 

provides guidance that insurance 

companies must assign notice of damage 

to adjusters as quickly as possible to 

assure timely service to the insured. 

FCIC will, as it generally does in 

widespread loss situations, monitor the 

performance of and loss adjustment 

service provided by insurance 

companies in responding to a loss event. 

Section 11 

Comment: One commenter states with 

the example added in section 11(b)(4), 

consider if the parenthetical example in 

section 11(b)(3)(iii) is still useful or if it 

could be deleted. If it is kept, consider 

deleting the phrase ‘‘. . . specified in 

section 11(b)(3) . . .’’ since it is part of 

11(b)(3). 

Response: Given that no change to 

this provision was proposed, and the 

public was not provided an opportunity 

to comment, FCIC declines to adopt the 

recommendation in the final rule. No 

change has been made. 

Comment: One commenter states the 

calculations in paragraph (b)(4) at step 

(3)(ii) and (iii) do not appear to 

correspond to the description of those 

steps in paragraph (b)(3) because the 

example includes additional 

calculations as well. The example 

appears to work out correctly, but it 

might be worth considering the 

following: 

• In paragraph (b)(4) at step (3)(ii), if 

the calculation of the ‘‘actual percent of 

loss’’ should be identified as such, or 

included in the introductory paragraph 

instead; and/or 

• In paragraph (b)(4) at step (3)(iii), if 

the calculation of the dollar amount of 

loss [‘‘. . . and $58,500 total amount of 

insurance × 6.0 percent loss = $3,510 

loss’’] should be better identified [since 

step (3) says only to divide the previous 

result by the coverage level] or perhaps 

moved to be part of the final step (4). 

Response: FCIC agrees with the 

commenter that the steps in paragraph 

(b) do not correspond with the 

calculations in the settlement of claim 

example. FCIC agrees with both of the 

commenters’ recommendations to 

clarify the steps in paragraph (b). FCIC 

has revised the provisions as 

recommended, has made additional 

clarifications in the steps in paragraph 

(b), and has revised the settlement of 

claim example at redesignated 

paragraph (b)(5) to reflect the revisions 

in paragraph (b). 

Comment: One commenter 

recommends, in the introduction of 

paragraph (b)(4) of the settlement of 

claim example, to add a hyphen in 

‘‘Thirty five trees. . . .’’ so it reads, 

‘‘Thirty-five trees . . .’’ 

Response: FCIC agrees with the 

commenter and has revised the 

provisions in redesignated paragraph 

(b)(5) accordingly. 


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Macadamia Nut Crop Insurance 

Provisions 

Section 1 

Comment: One commenter 

recommends correcting the spelling of 

‘‘floatation’’ to ‘‘flotation’’ in the 

definition of ‘‘floaters.’’ 

Response: FCIC agrees with the 

commenter, even though ‘‘floatation’’ is 

an accepted spelling of ‘‘flotation,’’ and 

has revised the provisions accordingly. 

Comment: One commenter states the 

definition of ‘‘wet in-shell’’ is revised to 

say that it excludes floaters and 

peewees, which FCIC claims are terms 

commonly used in the Macadamia 

industry. While the terms are sometimes 

used, there are some issues with the 

suggested use of these terms and how 

the FCIC defines them. For starters, 

there was no consultation with 

processors or husking operations to 

ascertain what the industry-accepted 

definition of ‘‘wet in-shell’’ is. 

Furthermore, the term ‘‘floater’’ has a 

different definition to the Macadamia 

nut industry than is suggested by FCIC 

and in actuality is seldom used. This is 

primarily because float grading is not a 

common practice for Macadamia nut 

husking or processing and when it is 

employed, it is typically performed at a 

different stage in the husking operation 

than what FCIC has suggested in their 

interpretation of the rules. It is believed 

that the reason that the FCIC is 

recommending this change is in 

response to a claim dispute, in order to 

validate FCIC’s stance against the 

industry standards. The commenter 

states FCIC would essentially create an 

ultimatum for the industry that 

producers would either need to request 

their processors to change their 

processing methods or face the penalty 

of not qualifying for crop insurance. The 

cost of making infrastructural changes 

in order to comply with these proposed 

changes would be high, so many 

processors may be discouraged from 

making these changes, given that many 

only purchase nuts from producers and 

have no stake in the rules governing 

crop insurance. The rule change would 

essentially create an impossible 

standard for producers to ever qualify 

for crop insurance. 

Though it was stated in the past that 

the industry was consulted in the 

development of the Macadamia nut 

policy, the policy as it is currently 

written does not reflect this. It is 

recommended that (1) the definition of 

‘‘wet in-shell’’ be amended, (2) the 

industry be given an opportunity to 

provide input on how things operate in 

Hawaii, and (3) how the policy could be 

amended to better represent reality. 

The revision to the definition of ‘‘wet 

in-shell’’ should be according to what is 

common to the industry. Wet in-shell 

(WIS) nuts are the result after husking 

has been implemented; this WIS weight 

is considered a gross number; the 

‘‘extraneous materials’’ percentage is 

used to calculate the amount to subtract 

from the WIS number to come up with 

a net WIS. The ‘‘extraneous materials’’ 

percentage or trash is calculated in a 

quality analysis lab using samples 

obtained from the husking operation. 

While sample collection may vary from 

one operation to the next, this method 

of determining the net WIS is basically 

the same across the industry. 

Response: FCIC disagrees with the 

commenter’s understanding of changes 

to the ‘‘wet in-shell’’ definition. The 

language FCIC proposes to incorporate 

in the Crop Provisions definition is 

derived from the Special Provisions as 

well as the Macadamia Nut Loss 

Adjustment Standards Handbook 

(LASH). The Special Provisions and 

LASH are part of the policy or are used 

to service the policy. FCIC is not 

changing the definition meaning by 

incorporating the Special Provisions 

and LASH statements into the 

definition. The Special Provisions 

statement has been in effect since the 

2006 crop year and the LASH definition 

has been in effect since the 2005 crop 

year. 

The commenter says they believe the 

reason FCIC is recommending the 

change to the definition of ‘‘wet inshell’’ is in response to a claim dispute, 

in order to validate FCIC’s stance 

against the industry standards. The 

commenter says FCIC would essentially 

create an ultimatum for the industry 

that producers would either need to 

request their processors to change their 

processing methods or face the penalty 

of not qualifying for crop insurance. The 

commenter says the change would 

essentially create an impossible 

standard for producers to ever qualify 

for crop insurance. As mentioned in the 

previous paragraph, FCIC is not making 

a substantial change to the definition of 

‘‘wet in-shell.’’ The primary change is to 

incorporate language contained in the 

Special Provisions and LASH that are 

currently in effect and have been in 

effect since the 2006 and 2005 crop 

years, respectively. Since this change is 

not substantial, this definition has 

already existed in large part, and was 

required for use in policy servicing, 

FCIC does not agree that such change 

creates an ultimatum for producers. 

Furthermore, FCIC’s definition of 

‘‘wet in-shell,’’ as now updated, 

corresponds with the definition the 

commenter seeks for the industry 

concerns. The commenter says wet inshell nuts are the result after husking 

has been implemented (gross weight) 

and the ‘‘extraneous materials’’ 

percentage or trash is used to calculate 

the amount that is subtracted from the 

gross weight. The difference between 

the gross weight and the ‘‘extraneous 

materials’’ percentage or trash is the wet 

in-shell net weight. FCIC’s definition 

says the wet in-shell weight is the 

weight after removal of the husk (gross 

weight) and excluding floaters and 

peewees (extraneous material or trash) 

but prior to being dried. The industry 

agrees FCIC should not include floaters 

and peewees in the wet in-shell weight 

for purposes of production to count, and 

refers to such floaters and peewees as 

‘‘trash’’ or ‘‘extraneous materials.’’ FCIC 

understands the comment to assume 

FCIC requires all macadamia nut 

production to be float graded using 

water flotation for insurance purposes. 

However, this assumption is incorrect. 

Under the policy, float grading using 

water flotation is only one acceptable 

method of determining floaters to 

exclude from production to count. To 

clarify and specifically address the 

commenter’s concern regarding industry 

practices, FCIC has specifically added to 

the definition of wet in-shell, through 

the component definition of floaters, a 

reference that laboratory testing for 

floater determination is also acceptable 

as an alternative to float grading using 

water floatation. In sum, FCIC requires 

that the reported production must not 

include floaters and peewees, or, in 

other words, the weight of the trash, 

which the industry and FCIC now 

similarly define. 

In the proposed rule, FCIC proposed 

to define the terms ‘‘floaters’’ and 

‘‘peewees’’ because those terms are used 

in the Special Provisions statement and 

LASH definitions that were proposed 

for incorporation into the ‘‘wet in-shell’’ 

definition. Those terms were not 

previously defined within the Crop 

Provisions, but they were defined in the 

Macadamia Nut LASH. The LASH has 

contained those terms and their 

definitions since the 2005 crop year. 

The proposed rule comment period is 

an opportunity for the public to provide 

input on changes FCIC proposes to 

make to the Crop Provisions. Interested 

parties are permitted to provide 

comments during that time. If the 

commenter had specific suggestions for 

recommended changes to this portion of 

the Macadamia Nut Crop Provisions, the 

commenter had an opportunity to 

provide specific proposed changes on 

this issue during the proposed rule 

comment period. However, FCIC has 

made an addition to the definition that 


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Federal Register / Vol. 80, No. 73 / Thursday, April 16, 2015 / Rules and Regulations 20411 

will address the commenter’s industry 

concern. 

Comment: One commenter 

recommends deleting the comma in the 

phrase ‘‘wet, in-shell pounds’’ in the 

definition of ‘‘production guarantee (per 

acre)’’ to match the defined term of ‘‘wet 

in-shell,’’ as was done in sections 6(d) 

and 11(c). 

Response: FCIC agrees with the 

commenter that the comma should be 

removed from the sentence. The comma 

is not necessary and its removal does 

not change the meaning of the 

provision. FCIC has revised the 

provisions accordingly. 

Comment: One commenter 

recommends adding a comma before the 

added phrase ‘‘. . . excluding floaters 

and peewees . . .’’ in the definition of 

‘‘wet in-shell.’’ 

Response: FCIC disagrees with the 

commenter. A comma would not add 

clarity. 

Section 2 

Comment: One commenter states if 

the current paragraph (a) is deleted as 

proposed, then Basic Provisions section 

34(b)(1) will apply, meaning optional 

units will require a clear and discernible 

break, and acceptable and verifiable 

records. The commenter has no 

objection to this change. 

Response: FCIC agrees with the 

commenter that by deleting paragraph 

(a) of the Macadamia Tree Crop 

Provisions, section 34(b)(1) of the Basic 

Provisions will apply. FCIC thanks the 

commenter for its support. 

Comment: One commenter states that 

the first sentence in section 2 states that 

optional units by legal description or by 

irrigated/non-irrigated practices are not 

applicable; and the second sentence 

states that ‘‘. . . Optional units may be 

established ONLY if each optional unit 

is located on non-contiguous land, 

unless otherwise allowed by written 

agreement’’ [emphasis added]. The 

commenter states that neither sentence 

addresses the possibility of optional 

units for organic and conventional 

practices, which is allowed according to 

section 34(c)(3) of the Basic Provisions. 

As written, this provision appears to 

mean that separate optional units for 

organic and conventional acreage would 

be possible only if they happen to be on 

non-contiguous land or unless allowed 

by written agreement. If that is the 

intention, it would be clearer to include 

‘‘organic practices’’ in the first sentence 

as not applicable. If it is not intended to 

exclude optional units by organic/

conventional practices, the second 

sentence should be revised to clarify 

that optional units by non-contiguous 

land may be ‘‘in addition to’’ the 

optional units by organic/conventional 

allowed in section 34(c)(3) of the Basic 

Provisions. 

Response: FCIC intends for optional 

units to be allowed on acreage located 

on non-contiguous land or grown and 

insured under an organic farming 

practice. FCIC does not intend to require 

that optional units distinguished by 

organic and conventional practices must 

also be located on non-contiguous land. 

FCIC has revised the provisions 

accordingly. 

Comment: One commenter states the 

‘‘Background’’ explains that the 

proposal to remove the 80-acre 

minimum requirement for optional 

units is because most macadamia tree 

orchards are smaller than that, and the 

other proposed changes (requiring a 

clear and discernible break, and records) 

‘‘. . . will mitigate any potential abuse 

from this change.’’ The commenter has 

no objection to this change. 

Response: FCIC agrees with the 

commenter and thanks it for its support. 

Section 3 

Comment: One commenter 

recommends shifting the following 

phrase in paragraph (b): ‘‘. . . on the 

yield potential of the insured crop’’ 

from the end of the first sentence to be 

ahead of the list, so it would read: ‘‘. . . 

based on our estimate of the effect on 

the yield potential of the insured crop 

of the following: Interplanted perennial 

crop; removal of trees; damage; change 

in practices and any other circumstance. 

If you fail . . .’’ 

Response: Given that no change to 

this provision was proposed, and the 

public was not provided an opportunity 

to comment, FCIC declines to adopt the 

recommendation in the final rule. In 

addition, this language is consistent 

with other Crop Provisions, such as 

Texas Citrus Fruit and ArizonaCalifornia Citrus. No change has been 

made. 

Comment: One commenter 

recommends revising the following 

sentence in paragraph (d), ‘‘Each crop 

year you must report your production 

from two crop years ago . . .’’ to ‘‘. . . 

from two crop years before . . .’’ 

Response: Given that no change to 

this provision was proposed, and the 

public was not provided an opportunity 

to comment, FCIC declines to adopt the 

recommendation in the final rule. In 

addition, this language is consistent 

with other Crop Provisions, such as 

Texas Citrus Fruit and ArizonaCalifornia Citrus. No change has been 

made. 

Section 6 

Comment: One commenter agrees the 

wording change from ‘‘. . . we may 

agree in writing . . .’’ to ‘‘. . . we may 

give our approval in writing . . .’’ in 

paragraph (d) makes it less likely for 

this to be taken as a reference to a 

written agreement. 

Response: FCIC agrees with the 

commenter and thanks it for its support. 

Comment: One commenter states the 

second sentence in paragraph (d) 

sounds a bit odd when it refers to ‘‘. . . 

approval in writing to insure ACREAGE 

that has not yet reached this age . . .’’, 

referring to the requirement in the first 

sentence that the insured crop be ‘‘. . . 

grown on TREES that have reached at 

least the fifth growing season . . .’’ 

Since the second sentence goes on to 

say coverage on this under-age acreage 

can be approved ‘‘. . . if IT has 

produced at least 200 pounds of (wet inshell) macadamia nuts per ACRE in a 

previous crop year’’, maybe the word 

‘‘acreage’’ is correct and no change is 

needed. But one possible alternative to 

consider might be: ‘‘. . . to insure 

acreage of trees that have not reached 

this age . . .’’ 

Response: Given that no change to 

this provision was proposed, and the 

public was not provided an opportunity 

to comment, FCIC declines to adopt the 

recommendation in the final rule. In 

addition, the original Macadamia Nut 

Crop Provisions are written with this 

language because nut production, not 

nut trees, is insured under these 

particular Crop Provisions. No change 

has been made. 

Section 8 

Comment: One commenter states the 

proposal is to add the phrase ‘‘or as 

specified in the Special Provisions’’ to 

paragraph (a)(2), so paragraph (a)(2) 

would read as follows: ‘‘The calendar 

date for the end of the insurance period 

for each crop year is the second June 

30th after insurance attaches, or as 

specified in the Special Provisions.’’ 

According to the ‘‘Background’’, this 

‘‘. . . will provide flexibility to update 

this date if the need arises.’’ The 

commenter does not object to providing 

flexibility to make the program work 

better, though it can also add some 

complexity by making the calendar date 

subject to change, meaning it must be 

looked up in the Special Provisions for 

the applicable county to be certain the 

date is unchanged. 

Response: FCIC agrees with the 

commenter that the added phrase 

provides flexibility to make the program 

work better. This flexibility eliminates 

the administrative burden of revising 


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20412 Federal Register / Vol. 80, No. 73 / Thursday, April 16, 2015 / Rules and Regulations 

the regulation if FCIC determines the 

calendar date for the end of insurance 

period should be different than what is 

stated in the Crop Provisions. In 

addition, the change does not add the 

complexity issue raised by the 

commenter because a policyholder must 

always read the Special Provisions to 

ensure it is aware of any changes to any 

issue covered by the Special Provisions, 

which may extend beyond changes to 

the end of the insurance period. No 

change has been made. 

List of Subjects in 7 CFR Part 457 

Crop insurance, Macadamia tree and 

macadamia nut, Reporting and 

recordkeeping requirements. 

Final Rule 

Accordingly, as set forth in the 

preamble, the Federal Crop Insurance 

Corporation amends 7 CFR part 457 

effective for the 2016 and succeeding 

crop years for macadamia trees and for 

the 2017 and succeeding crop years for 

macadamia nuts as follows: 

PART 457—COMMON CROP 

INSURANCE REGULATIONS 

■ 1. The authority citation for 7 CFR 

part 457 continues to read as follows: 

Authority: 7 U.S.C. 1506(1) and 1506(o). 

■ 2. Amend § 457.130 as follows: 

■ a. In the introductory text by 

removing ‘‘2011’’ and adding ‘‘2016’’ in 

its place; 

■ b. In section 1 by adding in 

alphabetical order definitions of 

‘‘Damaged’’ and ‘‘Scaffold limb’’; 

■ c. By revising section 2; 

■ d. In section 3 by removing the phrase 

‘‘(Insurance Guarantees, Coverage 

Levels, and Prices for Determining 

Indemnities)’’ in paragraphs (a) 

introductory text and (b); 

■ e. In section 4 by removing the phrase 

‘‘(Contract Changes)’’; 

■ f. In section 5 by removing the phrase 

‘‘(Life of Policy, Cancellation, and 

Termination)’’; 

■ g. In section 6 introductory text by 

removing the phrase ‘‘(Insured Crop)’’; 

■ h. In section 7 by removing the phrase 

‘‘(Insurable Acreage) of the Basic 

Provisions (§ 457.8), that prohibit’’ and 

adding in its place the phrase ‘‘of the 

Basic Provisions (§ 457.8) that prohibit’’; 

■ i. In section 8 by removing the phrase 

‘‘(Insurance Period)’’ in paragraphs (a) 

introductory text and (b) introductory 

text; 

■ j. In section 9 by removing the phrase 

‘‘(Causes of Loss)’’ in paragraphs (a) 

introductory text and (b) introductory 

text; 

■ k. By revising section 10; and 

■ l. In section 11: 

■ i. By revising paragraph (b)(3); 

■ ii. By redesignating paragraph (b)(4) as 

paragraph (b)(5); 

■ iii. By adding paragraph (b)(4); and 

■ iv. By revising newly redesignated 

paragraph (b)(5) and paragraphs (c) 

introductory text and (c)(1). 

The revisions and additions read as 

follows: 

§ 457.130 Macadamia tree crop insurance 

provisions. 

* * * * * 

1. Definitions 

* * * * * 

Damaged. Injury to the main trunk, 

scaffold limb(s), and any other 

subordinate limbs that reduces the 

productivity of the macadamia tree due 

to an insured cause of loss that occurs 

during the insurance period. 

* * * * * 

Scaffold limb. A major limb attached 

directly to the trunk. 

2. Unit Division 

(a) Provisions in the Basic Provisions 

that allow optional units by section, 

section equivalent, or FSA farm serial 

number and by irrigated and nonirrigated practices are not applicable. 

Optional units may be established only 

if each optional unit is located on noncontiguous land or grown and insured 

under an organic farming practice, 

unless otherwise allowed by written 

agreement. 

(b) You must have provided records, 

which can be independently verified, of 

acreage and age of trees for each unit for 

at least the last crop year. 

* * * * * 

10. Duties in the Event of Damage or 

Loss 

In addition to the requirements of 

section 14 of the Basic Provisions, in 

case of damage or probable loss, if you 

intend to claim an indemnity on any 

unit, you must allow us to inspect all 

insured acreage before pruning any 

damaged trees, removing any damaged 

trees, or removing any destroyed trees. 

11. Settlement of Claim 

* * * * * 

(b) * * * 

* * * * * 

(3) Determine the applicable percent 

of loss, which is calculated as follows: 

(i) Subtract the coverage level percent 

you elected from 100 percent; 

(ii) Determine the actual percent of 

loss, which is determined as follows: 

(A) Divide the number of trees 

destroyed by the total number of trees 

to calculate the percent loss; 

(B) Divide the number of trees 

damaged by the total number of trees to 

calculate the percent of damage; 

(C) Add the results of sections 

11(b)(3)(ii)(A) and (B). 

(iii) Subtract the result obtained in 

section 11(b)(3)(i) from section 

11(b)(3)(ii); 

(iv) Divide the result in section 

11(b)(3)(iii) by the coverage level you 

elected (For example, if you elected the 

75 percent coverage level and your 

actual percent of loss was 70 percent, 

the percent of loss specified in section 

11(b)(3) would be calculated as follows: 

100%¥75% = 25%; 70%¥25% = 45%; 

45% ÷ 75% = 60%.); 

(4) Multiply the result of section 

11(b)(3) by the total dollar amount of 

insurance obtained in section 11(b)(2); 

and 

(5) Multiply the result in section 

11(b)(4) by your share. 

For example: 

You select 65 percent coverage level 

and 100 percent of the price election on 

10 acres of 9-year-old macadamia trees 

in the unit. Your share is 100 percent. 

The amount of insurance per acre is 

$5,850. There are 90 trees per unit. 

Thirty-five trees are destroyed. Your 

indemnity would be calculated as 

follows: 

(1) 10 acres × $5,850 = $58,500; 

(3)(i) 100 percent ¥ 65 percent = 35 

percent deductible; 

(ii) 35 destroyed trees ÷ 90 total unit 

trees = 38.9 percent loss; 

(iii) 38.9 percent loss ¥ 35 percent 

deductible = 3.9 percent; 

(iv) 3.9 percent ÷ 65 percent coverage 

level = 6.0 percent loss; 

(4) $58,500 total amount of insurance 

× 6.0 percent loss = $3,510 loss; and 

(5) $3,510 loss × 100 percent share = 

$3,510 indemnity payment. 

(c) The total amount of loss will 

include both damaged trees and 

destroyed trees as follows: 

(1) Any orchard with over 80 percent 

of the actual trees damaged or destroyed 

due to an insured cause of loss will be 

considered to be 100 percent damaged; 

and 

* * * * * 

■ 3. Amend § 457.131 as follows: 

■ a. In the introductory text by 

removing ‘‘2012’’ and adding ‘‘2017’’ in 

its place; 

■ b. In section 1: 

■ i. By adding definitions in 

alphabetical order of ‘‘Floaters’’ and 

‘‘Peewees’’; and 

■ ii. By revising the definition of ‘‘Wet 

in-shell’’; 

■ c. By revising section 2; 

■ d. In section 3: 

■ i. In the introductory text and 

paragraph (b) introductory text by 


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Federal Register / Vol. 80, No. 73 / Thursday, April 16, 2015 / Rules and Regulations 20413 

removing the phrase ‘‘(Insurance 

Guarantees, Coverage Levels, and Prices 

for Determining Indemnities)’’; 

■ ii. In paragraph (b)(4) introductory 

text by removing the word ‘‘anytime’’ 

and adding in its place the phrase ‘‘any 

time’’; and 

■ iii. By revising paragraph (d); 

■ e. In section 4 by removing the phrase 

‘‘(Contract Changes)’’; 

■ f. In section 5 by removing the phrase 

‘‘(Life of Policy, Cancellation, and 

Termination)’’; 

■ g. In section 6: 

■ i. By removing the phrase ‘‘(Insured 

Crop)’’ in the introductory text; and 

■ ii. By revising paragraph (d); 

■ h. In section 7: 

■ i. By removing the phrase ‘‘(Insurable 

Acreage)’’; and 

■ ii. By removing the comma after the 

phrase ‘‘Basic Provisions (§ 457.8)’’; 

■ i. In section 8: 

■ i. By removing the phrase ‘‘(Insurance 

Period)’’ in paragraphs (a) introductory 

text and (b) introductory text; and 

■ ii. By revising paragraph (a)(2); 

■ j. In section 9 by removing the phrase 

‘‘(Causes of Loss)’’ in paragraphs (a) 

introductory text and (b) introductory 

text; 

■ k. In section 10 introductory text by 

removing the phrase ‘‘(Duties in the 

Event of Damage or Loss)’’; 

■ l. In section 11: 

■ i. In paragraph (b)(4) by removing the 

phrase ‘‘if applicable, (see section 

11(c))’’ and adding in its place the 

phrase ‘‘if applicable (see section 

11(c)),’’; 

■ ii. By adding a settlement of claim 

example after paragraph (b)(7); and 

■ iii. In paragraph (c) by removing the 

phrase ‘‘(wet, in-shell pounds)’’ and 

adding in its place the phrase ‘‘(wet inshell pounds)’’. 

The revisions and additions read as 

follows: 

§ 457.131 Macadamia nut crop insurance 

provisions. 

* * * * * 

1. Definitions 

* * * * * 

Floaters. Inedible, husked ‘‘field run’’ 

nuts identified by water flotation or 

laboratory testing. 

* * * * * 

Peewees. Mature and immature wet 

in-shell nuts that are smaller than 16 

mm (5/8 inch) in diameter. 

* * * * * 

Wet in-shell. The weight of the 

macadamia nuts as they are removed 

from the orchard with the nut meats in 

the shells after removal of the husk and 

excluding floaters and peewees but 

prior to being dried. 

2. Unit Division 

Provisions in the Basic Provisions that 

allow optional units by section, section 

equivalent, or FSA farm serial number 

and by irrigated and non-irrigated 

practices are not applicable. Optional 

units may be established only if each 

optional unit is located on noncontiguous land or grown and insured 

under an organic farming practice, 

unless otherwise allowed by written 

agreement. 

3. Insurance Guarantees, Coverage 

Levels, and Prices for Determining 

Indemnities 

* * * * * 

(d) Instead of reporting your 

macadamia nut production for the 

previous crop year, as required by 

section 3 of the Basic Provisions, there 

is a one-year lag period. Each crop year 

you must report your production from 

two crop years ago, e.g., on the 2016 

crop year production report, you will 

provide your 2014 crop year production. 

* * * * * 

6. Insured Crop 

* * * * * 

(d) That are grown on trees that have 

reached at least the fifth growing season 

after being set out or grafted. However, 

we may give our approval in writing to 

insure acreage of trees that has not 

reached this age if it has produced at 

least 200 pounds of (wet in-shell) 

macadamia nuts per acre in a previous 

crop year; and 

* * * * * 

8. Insurance Period 

(a) * * * 

(2) The calendar date for the end of 

the insurance period for each crop year 

is the second June 30th after insurance 

attaches, or as specified in the Special 

Provisions. 

* * * * * 

11. Settlement of Claim 

* * * * * 

(b) * * * 

(7) * * * 

For example: 

You select the 65 percent coverage 

level and 100 percent of the price 

election on 10 acres of macadamia nuts 

in the unit. Your share is 100 percent. 

Your production guarantee (per acre) is 

4,000 pounds. The price election is 

$0.78. You are able to harvest 25,000 

pounds. Your indemnity would be 

calculated as follows: 

(1) 10 acres × 4,000 pounds = 40,000 

pounds guarantee; 

(2) 40,000 pounds × $0.78 price 

election = $31,200 total value of 

guarantee; 

(4) 25,000 pounds production to 

count × $0.78 price election = $19,500 

value of production to count; 

(6) $31,200 total value of guarantee ¥ 

$19,500 value of production to count = 

$11,700 loss; and 

(7) $11,700 loss × 100 percent share 

= $11,700 indemnity payment. 

* * * * * 

Signed in Washington, DC, on April 9, 

2015. 

Brandon Willis, 

Manager, Federal Crop Insurance 

Corporation. 

[FR Doc. 2015–08690 Filed 4–15–15; 8:45 am] 

BILLING CODE 3410–08–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9713] 

RIN 1545–BL46; 1545–BM60 

Reporting for Premium; Basis 

Reporting by Securities Brokers and 

Basis Determination for Debt 

Instruments and Options; Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final and temporary 

regulations; correction. 

SUMMARY: This document contains 

corrections to final and temporary 

regulations (TD 9713) that were 

published in the Federal Register on 

March 13, 2015 (80 FR 13233). The final 

regulations are relating to information 

reporting by brokers for bond premium 

and acquisition premium. 

DATES: This correction is effective on 

April 16, 2015 and applicable beginning 

March 13, 2015. 

FOR FURTHER INFORMATION CONTACT: 

Pamela Lew at (202) 317–7053 (not a 

toll free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The final and temporary regulations 

(TD 9713) that are the subject of this 

correction is under section 6045 of the 

Internal Revenue Code. 

Need for Correction 

As published, the final and temporary 

regulations (TD 9713) contains errors 

that may prove to be misleading and are 

in need of clarification. 

Correction of Publication 

Accordingly, the final and temporary 

regulations (TD 9713), that are the 


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