[Federal Register Volume 80, Number 73 (Thursday, April 16, 2015)]
[Rules and Regulations]
[Pages 20407-20413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-08690]



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

[[Page 20407]]



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.

[[Page 20408]]

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 pest-incidence, 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

[[Page 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:
    <bullet> ``. . . 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.
    <bullet> ``. . . 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 three-day 
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:
    <bullet> 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
    <bullet> In paragraph (b)(4) at step (3)(iii), if the calculation 
of the dollar amount of loss [``. . . and $58,500 total amount of 
insurance x 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.

[[Page 20410]]

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 in-shell'' 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 in-shell 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

[[Page 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 Arizona-California 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 Arizona-California 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 in-shell) 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

[[Page 20412]]

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

0
1. The authority citation for 7 CFR part 457 continues to read as 
follows:

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


0
2. Amend Sec.  457.130 as follows:
0
a. In the introductory text by removing ``2011'' and adding ``2016'' in 
its place;
0
b. In section 1 by adding in alphabetical order definitions of 
``Damaged'' and ``Scaffold limb'';
0
c. By revising section 2;
0
d. In section 3 by removing the phrase ``(Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities)'' in 
paragraphs (a) introductory text and (b);
0
e. In section 4 by removing the phrase ``(Contract Changes)'';
0
f. In section 5 by removing the phrase ``(Life of Policy, Cancellation, 
and Termination)'';
0
g. In section 6 introductory text by removing the phrase ``(Insured 
Crop)'';
0
h. In section 7 by removing the phrase ``(Insurable Acreage) of the 
Basic Provisions (Sec.  457.8), that prohibit'' and adding in its place 
the phrase ``of the Basic Provisions (Sec.  457.8) that prohibit'';
0
i. In section 8 by removing the phrase ``(Insurance Period)'' in 
paragraphs (a) introductory text and (b) introductory text;
0
j. In section 9 by removing the phrase ``(Causes of Loss)'' in 
paragraphs (a) introductory text and (b) introductory text;
0
k. By revising section 10; and
0
l. In section 11:
0
i. By revising paragraph (b)(3);
0
ii. By redesignating paragraph (b)(4) as paragraph (b)(5);
0
iii. By adding paragraph (b)(4); and
0
iv. By revising newly redesignated paragraph (b)(5) and paragraphs (c) 
introductory text and (c)(1).
    The revisions and additions read as follows:


Sec.  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 non-irrigated practices are not applicable. Optional units may be 
established only if each optional unit is located on non-contiguous 
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 x $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 x 6.0 percent loss = $3,510 
loss; and
    (5) $3,510 loss x 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
* * * * *

0
3. Amend Sec.  457.131 as follows:
0
a. In the introductory text by removing ``2012'' and adding ``2017'' in 
its place;
0
b. In section 1:
0
i. By adding definitions in alphabetical order of ``Floaters'' and 
``Peewees''; and
0
ii. By revising the definition of ``Wet in-shell'';
0
c. By revising section 2;
0
d. In section 3:
0
i. In the introductory text and paragraph (b) introductory text by

[[Page 20413]]

removing the phrase ``(Insurance Guarantees, Coverage Levels, and 
Prices for Determining Indemnities)'';
0
ii. In paragraph (b)(4) introductory text by removing the word 
``anytime'' and adding in its place the phrase ``any time''; and
0
iii. By revising paragraph (d);
0
e. In section 4 by removing the phrase ``(Contract Changes)'';
0
f. In section 5 by removing the phrase ``(Life of Policy, Cancellation, 
and Termination)'';
0
g. In section 6:
0
i. By removing the phrase ``(Insured Crop)'' in the introductory text; 
and
0
ii. By revising paragraph (d);
0
h. In section 7:
0
i. By removing the phrase ``(Insurable Acreage)''; and
0
ii. By removing the comma after the phrase ``Basic Provisions (Sec.  
457.8)'';
0
i. In section 8:
0
i. By removing the phrase ``(Insurance Period)'' in paragraphs (a) 
introductory text and (b) introductory text; and
0
ii. By revising paragraph (a)(2);
0
j. In section 9 by removing the phrase ``(Causes of Loss)'' in 
paragraphs (a) introductory text and (b) introductory text;
0
k. In section 10 introductory text by removing the phrase ``(Duties in 
the Event of Damage or Loss)'';
0
l. In section 11:
0
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)),'';
0
ii. By adding a settlement of claim example after paragraph (b)(7); and
0
iii. In paragraph (c) by removing the phrase ``(wet, in-shell pounds)'' 
and adding in its place the phrase ``(wet in-shell pounds)''.
    The revisions and additions read as follows:


Sec.  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 non-contiguous 
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 x 4,000 pounds = 40,000 pounds guarantee;
    (2) 40,000 pounds x $0.78 price election = $31,200 total value of 
guarantee;
    (4) 25,000 pounds production to count x $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 x 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