This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

29933

Vol. 63, No. 105

Tuesday, June 2, 1998

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457

General Crop Insurance Regulations,

Stonefruit Endorsement; and Common

Crop Insurance Regulations, Stonefruit

Crop Insurance Provisions

AGENCY: Federal Crop Insurance

Corporation, USDA.

ACTION: Final rule.

SUMMARY: The Federal Crop Insurance

Corporation (FCIC) finalizes specific

crop provisions for the insurance of

stonefruit. The provisions will be used

in conjunction with the Common Crop

Insurance Policy, Basic Provisions,

which contain standard terms and

conditions common to most crops. The

intended effect of this action is to

provide policy changes to better meet

the needs of the insured, include the

current stonefruit endorsement with the

Common Crop Insurance Policy for ease

of use and consistency of terms, and to

restrict the effect of the current

stonefruit endorsement to the 1998 and

prior crop years.

EFFECTIVE DATE: July 2, 1998.

FOR FURTHER INFORMATION CONTACT:

Richard Brayton, Insurance

Management Specialist, Research and

Development, Product Development

Division, Federal Crop Insurance

Corporation, United States Department

of Agriculture, 9435 Holmes Road,

Kansas City, MO 64131, telephone (816)

926–7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be

exempt for the purposes of Executive

Order 12866 and, therefore, has not

been reviewed by the Office of

Management and Budget (OMB).

Paperwork Reduction Act of 1995

Pursuant to the Paperwork Reduction

Act of 1995 (44 U.S.C. chapter 35), the

collections of information for this rule

have been approved by the Office of

Management and Budget (OMB) under

control number 0563–0053 through

October 31, 2000.

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

the UMRA.

Executive Order 12612

It has been determined under section

6(a) of Executive Order 12612,

Federalism, that this rule does not have

sufficient federalism implications to

warrant the preparation of a Federalism

Assessment. The provisions contained

in this rule will not have a substantial

direct effect on States or their political

subdivisions or on the distribution of

power and responsibilities among the

various levels of government.

Regulatory Flexibility Act

This regulation will not have a

significant economic impact on a

substantial number of small entities.

The amount of work required of the

insurance companies will not increase

because the information used to

determine eligibility is already

maintained at their office and the other

information required is already being

gathered as a result of the present

policy. No additional actions are

required as a result of this action on the

part of either the insured or the

insurance companies. Additionally, the

regulation does not require any action

on the part of the small entities than is

required on the part of large entities.

Therefore, this action is determined to

be exempt from the provisions of the

Regulatory Flexibility Act (5 U.S.C.

605), and no Regulatory Flexibility

Analysis was prepared.

Federal Assistance Program

This program is listed in the Catalog

of Federal Domestic Assistance under

No. 10.450.

Executive Order 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 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. The

administrative appeal provisions

published at 7 CFR part 11 must be

exhausted before any action against

FCIC for judicial review may be brought.

Environmental Evaluation

This action is not expected to have a

significant economic impact on the

quality of the human environment,

health, and safety. Therefore, neither an

Environmental Assessment nor an

Environmental Impact Statement is

needed.

National Performance Review

This regulatory action is being taken

as part of the National Performance

Review Initiative to eliminate

unnecessary or duplicative regulations

and improve those that remain in force.

Background

On Tuesday, July 22, 1997, FCIC

published a notice of proposed

rulemaking in the Federal Register at 62

FR 39189–39194 to add to the Common

Crop Insurance Regulations (7 CFR part

457), a new section, 7 CFR 457.159,

Stonefruit Crop Insurance Provisions.

The new provisions will be effective for

the 1999 and succeeding crop years.

These provisions will replace and

supersede the current provisions for

insuring stonefruit found at 7 CFR 401

(Stonefruit Endorsement). FCIC also

amends § 401.122 to limit its effect to

the 1998 and prior crop years.

Following publication of the proposed

rule, the public was afforded 60 days to

submit written comments and opinions.
29934 Federal Register / Vol. 63, No. 105 /Tuesday, June 2, 1998 /Rules and Regulations

A total of 16 comments were received

from an insurance service organization

and reinsured companies. The

comments received and FCIC’s

responses are as follows:

Comment: A reinsured company

expressed a concern that sales closing,

production reporting, and acreage

reporting all have the same date of

January 31. The commenter stated it

would be difficult to service these

policies when all reporting

requirements must be completed at the

same time.

Response: FCIC disagrees with the

comment. The sales closing and acreage

reporting dates have been January 31 in

previous years. The production

reporting date is March 17, which

would be 45 days after the earlier of the

cancellation date or the acreage

reporting date. This is consistent with

other crop policies. Therefore, no

change has been made.

Comment: An insurance service

organization suggested in the definition

of ‘‘good farming practices’’ the

reference to ‘‘county’’ be changed to

‘‘area.’’

Response: The term ‘‘area’’ is less

clear than the term ‘‘county’’ and would

cause determinations to be more

subjective. The actuarial documents are

on a county basis. Therefore, no change

has been made, except the definition of

‘‘good farming practices’’ has been

moved to the Basic Provisions.

Comment: An insurance service

organization questioned the definition

of ‘‘interplanted’’ in the proposed rule.

The commenter stated that the current

stonefruit policy does not consider

acreage interplanted unless more than

10% of the insured acreage is planted to

another crop.

Response: Although the current

stonefruit policies issued by most

reinsured companies contain the 10%

requirement in the definition of

interplanted, the current stonefruit

regulation contained in 7 CFR 401.122

does not. All reinsured MPCI policies

will be brought to conformance with

this regulation. FCIC believes that

introducing an exact percentage of acres

that must be exceeded before stonefruit

is considered interplanted is too

restrictive. The definition is consistent

with other perennial crop policies.

Therefore, no change has been made.

Comment: An insurance service

organization questioned the definition

of ‘‘lug’’ in the proposed rule. The

commenter stated the current policy

refers to ‘‘average’’ net pounds of

packed fruit and questioned if the word

‘‘average’’ should not be included in the

proposed rule.

Response: FCIC agrees and has

amended the definition to refer to

‘‘average net pounds of packed fruit.’’

Comment: An insurance service

organization recommended rewording

section 2(a) of the proposed provisions

to read: ‘‘In addition to the basic units

as defined in section 1 of the Basic

Provisions, each stonefruit crop

designated in the Special Provisions

will be a basic unit.’’

Response: FCIC has removed section

2(a) of the proposed provisions which

stated, ‘‘A unit as defined in section 1

of the Basic Provisions, will be divided

into additional basic units by each

stonefruit crop designated in the Special

Provisions that you elect to insure.’’

FCIC instead has revised section 2 to

conform with the new unit language in

the Basic Provisions. As defined in the

Basic Provisions, each stonefruit crop

designated in the Special Provisions

will be a basic unit.

Comment: An insurance service

organization and a reinsured company

expressed concerns with sections

2(f)(3)(i) and (ii) of the proposed rule.

One commenter stated the proposed

language restricts policyholders to

optional units either by non-contiguous

land or by type, or by varietal group.

The commenter recommended allowing

optional units for non-contiguous land

and by type or varietal group by

changing section 2(f)(3) to read, ‘‘each

optional unit must meet at least one of

the following criteria, as applicable,

unless otherwise specified in the

Special Provisions,’’ and delete the ‘‘or’’

between subparagraphs (i) and (ii). One

commenter questioned if optional units

are available for non-contiguous land,

even if the land is under the same

ownership and possibly separated only

by another crop.

Response: FCIC agrees that optional

units should be offered by noncontiguous land and by type or varietal

group and has deleted ‘‘or’’ between

subparagraphs (i) and (ii) for

clarification. Under these proposed

provisions, optional units are not

available for non-contiguous land, if the

land is under the same ownership or

separated by another crop.

Comment: An insurance service

organization stated that the current

1988–CHIAA 796 policy includes a

statement that fresh market stonefruit

may be insured as processing stonefruit,

with converted or appraised production.

The commenter asked if this should be

included in the Crop Provisions, or be

covered only in the underwriting

procedure.

Response: FCIC agrees that the

statement on the CHIAA 796 allows any

fresh market stonefruit to be insured as

processing stonefruit by converting

harvested or appraised fresh market

stonefruit lugs to processing stonefruit

tons. The conversion procedure is

covered by underwriting procedures.

Comment: An insurance service

organization asked if section 8(b)(2)

indicates that anyone who attempts to

acquire a new orchard between the

cancellation date and the acreage

reporting date but is unsuccessful will

be considered to have coverage and owe

premium.

Response: FCIC believes that the

commenter misinterpreted the

provisions. Section 8(b)(2) allows a

producer to avoid liability for premium

in some circumstances for an orchard on

which a policy was in force on the

cancellation date. Under that section,

the insurance can be transferred to a

qualified third party under certain

circumstances.

Comment: A reinsured company

expressed concerns with section 10(b),

stating that the direct marketing

provisions contained in this section will

be difficult to monitor and control.

Response: The producer is required to

give notice at least 15 days prior to any

production being marketed directly to

consumers, and the insurance provider

is required to complete the appraisal

within that 15 day period. FCIC believes

that 15 days is appropriate to meet the

needs of both the producer and the

insurance provider. Therefore, no

change has been made.

Comment: An insurance service

organization stated that the language in

section 10(c) does not address timely

notice of damage or loss if damage is

discovered less than 15 days prior to

harvest.

Response: The notice requirements in

section 10 are in addition to the

requirements of section 14 of the Basic

Provisions that require notice of loss

within 72 hours of initial discovery of

damage. If damage is discovered during

harvest, notice must be given

immediately. FCIC believes that these

provisions, as a whole, are adequate as

stated. Therefore, no change has been

made.

Comment: An insurance service

organization stated that section 12 of the

proposed provisions, which explains

how a claim is settled, is difficult to

follow.

Response: Settlement of claims is

covered in section 11. Section 11 has

been revised to illustrate the

calculations of a claim for indemnity,

and has been explicitly worded to

eliminate any misunderstanding or

confusion.

Comment: An insurance service

organization stated that section
Federal Register / Vol. 63, No. 105 /Tuesday, June 2, 1998 /Rules and Regulations 29935

11(c)(1)(iv) should not allow the insured

to defer settlement and wait for a later,

generally lower appraisal, especially on

crops that have a short ‘‘shelf life.’’

Response: A later appraisal will only

be necessary if the producer continues

to care for the crop. If the producer does

not continue to care for the crop, the

original appraisal will be used. If the

producer does not care for the crop, the

original appraisal is used. If the

insurance provider believes the original

appraisal is accurate, resolution of the

dispute may be sought through

arbitration or appeal procedures,

whichever is applicable. Therefore, no

change has been made.

Comment: An insurance service

organization stated that section

11(c)(2)(ii) was confusing. The

commenter stated the provisions seem

to mean that harvested production

packed and sold as California Utility

grade fresh fruit was not considered

production to count if the production

was not damaged by an insurable cause.

The commenter stated that any

production that can be packed and sold

as fresh fruit should be included as

production to count.

Response: FCIC agrees with the

comment and has amended the

provisions, redesignated 11(c)(3)(i) and

(ii) to clarify the provisions.

Comment: An insurance service

organization suggested that sections 12

(a) and (e) be combined since both deal

with deadlines to request written

agreements. The commenter suggested

this provision might be less misleading

if the acreage reporting date ‘‘exception’’

be incorporated. The insurance service

organization also asked that the

requirement for annual renewal be

removed from 12(d).

Response: Section 12 ‘‘written

agreements’’ has been removed from the

proposed provisions and placed in the

Basic Provisions. FCIC believes that the

annual renewal date in these provisions

are clearly stated, so no change will be

made in this regard. Written agreements

are intended to supplement policy terms

or permit insurance in unusual

situations that require modification of

the otherwise standard insurance

provisions. If such practices continue

year to year, they should be

incorporated into the policy or Special

Provisions. It is important to minimize

written agreement exceptions to assure

that the insured are well aware of the

specific terms of the policy. Therefore,

no change has been made to the

requirement that written agreements be

renewed each year.

In addition to the changes described

above, FCIC has made minor editorial

changes and has amended the following

Stonefruit Crop Provisions:

1. Amended the paragraph preceding

section 1 to provide that provisions of

any Catastrophic Risk Protection

Endorsement take precedence over any

conflicting provision in any other policy

provision.

2. Section 1—Removed definitions for

‘‘days,’’ ‘‘FSA,’’ ‘‘good farming

practices,’’ ‘‘irrigated practice,’’ ‘‘noncontiguous,’’ ‘‘production guarantee (per

acre),’’ ‘‘USDA,’’ and ‘‘written

agreement’’ because these definitions

now appear in the Basic Provisions.

Added a new definition of ‘‘grading

standards’’ to these provisions for

clarification. Added to the definition of

lug the weights used for processing

apricots, cling peaches, and freestone

peaches are in tons.

3. Section 2—Revised the provisions

regarding units to conform with new

language in the Basic Provisions.

4. Section 9(a)(3) and (6)—Revised the

wildlife cause of loss by deleting the

language ‘‘unless proper measures to

control wildlife have not been taken’’

because it is impossible to control

wildlife. Also clarified the cause of loss

‘‘failure of the irrigation water supply’’

by adding ‘‘if due to a cause of loss

contained in sections 9(a) (1) through (5)

that occurs during the insurance

period’’ to be consistent with other crop

policies.

5. Section 10(c)—Deleted the

limitation on notifying us at least 15

days prior to harvest ‘‘if you previously

gave notice so we can inspect the

damaged production,’’ because notice

prior to harvest is required in all cases.

6. Section 11(b)—Revised and added

a settlement of claim example for

clarity.

7. Section 11(c)(4)—Revised to clarify

when harvested production of stonefruit

is eligible for quality adjustment when

packed and sold as fresh fruit and for all

other fresh stonefruit. Also this section

has been reformatted for clarity.

8. Section 12—Deleted the written

agreement provisions since these have

been placed in the Basic Provisions and

added a provision that the late and

prevented planting provisions of the

Basic Provisions are not applicable to

stonefruit since stonefruit is a perennial

crop.

List of Subjects in 7 CFR Parts 401 and

457

Crop insurance, Stonefruit

endorsement, Stonefruit.

Final Rule

Accordingly, as set forth in the

preamble, the Federal Crop Insurance

Corporation amends 7 CFR parts 401

and 457 as follows:

PART 401—GENERAL CROP

INSURANCE REGULATIONS;

REGULATIONS FOR THE 1988

THROUGH 1998 CONTRACT YEARS

1. The authority citation for 7 CFR

part 401 continues to read as follows:

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

2. The part heading is revised as set

forth above.

3. Section 401.122 introductory

paragraph is revised to read as follows:

§ 401.122 Stonefruit endorsement.

The provisions of the Stonefruit Crop

Insurance Endorsement for the 1988

through 1998 crop years are as follows:

* * * * *

PART 457—COMMON CROP

INSURANCE REGULATIONS;

REGULATIONS FOR THE 1994 AND

SUBSEQUENT CONTRACT YEARS

4. The authority citation for 7 CFR

part 457 continues to read as follows:

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

5. Section 457.159 is added to read as

follows:

§ 457.159 Stonefruit Crop Insurance

Provisions.

The Stonefruit Crop Insurance

Provisions for the 1999 and succeeding

crop years are as follows:

FCIC Policies:

UNITED STATES DEPARTMENT OF

AGRICULTURE

Federal Crop Insurance Corporation

Reinsured Policies:

(Appropriate title for insurance provider)

Both FCIC and Reinsured Policies

Stonefruit Crop Insurance Provisions

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) the Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

1. Definitions

Direct marketing. Sale of the insured crop

directly to consumers without the

intervention of an intermediary such as

wholesaler, retailer, packer, processor,

shipper, or buyer. Examples of direct

marketing include selling through an on-farm

or roadside stand, farmer’s market, and

permitting the general public to enter the

field for the purpose of picking all or a

portion of the crop.

Grading standards. The California Tree

Fruit Agreement Marketing Order, or

California State Department of Food and

Agriculture Code of Regulations in effect for

the appropriate crop, type, or varietal group.
29936 Federal Register / Vol. 63, No. 105 /Tuesday, June 2, 1998 /Rules and Regulations

Harvest. The picking of mature stonefruit

either by hand or machine.

Interplanted. Acreage on which two or

more crops are planted in any form of

alternating or mixed pattern.

Lug. A container of fresh stonefruit of

specified weight. Lugs of varying sizes will

be converted to standard lug equivalents on

the basis of the following average net pounds

of packed fruit:

Crop Pounds

per lug

Fresh Apricots .................................. 24

Fresh Nectarines .............................. 25

Fresh Freestone Peaches ................ 22

Weight for Processing Apricots, Processing

Cling Peaches, and Processing Freestone

Peaches are specified in tons.

Marketable. Stonefruit production

acceptable for processing or other human

consumption, even if it fails to meet the State

Department of Food and Agriculture

minimum grading standard.

Processor. A business enterprise regularly

engaged in processing fruit for human

consumption that possesses all licenses and

permits for processing fruit required by the

state in which it operates, and that possesses

facilities, or has contractual access to such

facilities, with enough equipment to accept

and process contracted fruit within a

reasonable amount of time after harvest.

Stonefruit. Any of the following crops

grown for fresh market or processing:

(a) Fresh Apricots,

(b) Fresh Freestone Peaches,

(c) Fresh Nectarines,

(d) Processing Apricots,

(e) Processing Cling Peaches, and

(f) Processing Freestone Peaches.

Ton. Two thousand (2,000) pounds

avoirdupois.

Type. Class of a stonefruit crop with

similar characteristics that are grouped for

insurance purposes.

Varietal group. A subclass of type.

2. Unit Division

Notwithstanding the provisions of section

34 of the Basic Provisions that allow optional

units by section, section equivalent, or FSA

farm serial number and by irrigated and nonirrigated practices, optional units will only

be allowed as stated herein or by written

agreement.

(a) Optional Units on Acreage Located on

Non-contiguous Land: Optional units may be

established if each optional unit is located on

non-contiguous land.

(b) Optional Units by Type or Varietal

Group: Optional units may be established by

type or varietal group if allowed by the

Special Provisions.

3. Insurance Guarantees, Coverage Levels,

and Prices for Determining Indemnities

In addition to the requirements of section

3 of the Basic Provisions:

(a) You may select only one price election

and coverage level for each crop grown in the

county and listed in the Special Provisions

that is insured under this policy. If separate

price elections are available by type or

varietal group of a crop, the price elections

you choose for each type or varietal group

must have the same percentage relationship

to the maximum price offered by us for each

type or varietal group. For example, if you

choose 100 percent of the maximum price

election for one type of cling peaches, you

must choose 100 percent of the maximum

price election for all other types of cling

peaches.

(b) You must report, by the production

reporting date designated in section 3 of the

Basic Provisions, by type or varietal group, if

applicable, for each stonefruit crop:

(1) Any damage, removal of trees, change

in practices, or any other circumstance that

may reduce the expected yield below the

yield upon which the insurance guarantee is

based, and the number of affected acres;

(2) The number of bearing trees on

insurable and uninsurable acreage;

(3) The age of the trees and the planting

pattern; and

(4) For the first year of insurance for

acreage interplanted with another perennial

crop, and any time the planting pattern of

such acreage is changed:

(i) The age of the interplanted crop, and

type or varietal group if applicable;

(ii) The planting pattern; and

(iii) Any other information that we request

in order to establish your approved yield.

We will reduce the yield used to establish

your production guarantee as necessary,

based on our estimate of the effect of

interplanting a perennial crop, removal of

trees, damage, change in practice, and any

other circumstance that could affect the yield

potential of the insured crop. If you fail to

notify us of any circumstance that may

reduce your yields from previous levels, we

will reduce your production guarantee as

necessary at any time we become aware of

the circumstance.

4. Contract Changes

In accordance with section 4 of the Basic

Provisions, the contract change date is

October 31 preceding the cancellation date.

5. Cancellation and Termination Dates

In accordance with section 2 of the Basic

Provisions, the cancellation and termination

dates are January 31.

6. Insured Crop

In accordance with section 8 of the Basic

Provisions, the crop insured will be all of

each stonefruit crop you elect to insure, that

is grown in the county, and for which

premium rates are provided in the actuarial

documents:

(a) In which you have a share;

(b) That is grown on trees that:

(1) Were commercially available when the

trees were set out;

(2) Is adapted to the area; and

(3) Is grown on a root stock that is adapted

to the area;

(c) That is irrigated;

(d) That have produced at least 200 lugs of

fresh market production per acre, or at least

2.2 tons per acre for processing crops, in at

least 1 of the 3 most recent actual production

history crop years, unless we inspect such

acreage and give our approval in writing;

(e) That are regulated by the California

Tree Fruit Agreement or related crop

advisory board for the state (for applicable

types);

(f) That are grown in an orchard that, if

inspected, is considered acceptable by us;

and

(g) That have reached at least the fifth

growing season after set out. However, we

may agree in writing to insure acreage that

has not reached this age if it meets the

requirements of subsection (d) of this section.

7. Insurable Acreage

In lieu of the provisions of section 9 of the

Basic Provisions that prohibit insurance

attaching to a crop planted with another

crop, stonefruit interplanted with another

perennial crop is insurable unless we inspect

the acreage and determine that it does not

meet the requirements for insurability

contained in your policy.

8. Insurance Period

(a) In accordance with the provisions of

section 11 of the Basic Provisions:

(1) Coverage begins on February 1 of each

crop year, except that for the year of

application, if your application is received

after January 22 but prior to February 1,

insurance will attach on the 10th day after

your properly completed application is

received in our local office unless we inspect

the acreage and determine that it does not

meet insurability requirements. You must

provide any information that we require for

the crop or to determine the condition of the

orchard.

(2) The calendar date for the end of the

insurance period for each crop year is:

(i) July 31 for all apricots; and

(ii) September 30 for all nectarines and

peaches.

(b) In addition to the provisions of section

11 of the Basic Provisions:

(1) If you acquire an insurable share in any

insurable acreage after coverage begins but on

or before the acreage reporting date for the

crop year, and after an inspection we

consider the acreage acceptable, insurance

will be considered to have attached to such

acreage on the calendar date of acquisition.

(2) If you lose or relinquish your insurable

share on any insurable acreage of stonefruit

on or before the acreage reporting date for the

crop year and if the acreage was insured by

you the previous crop year, insurance will

not be considered to have attached to, and no

premium or indemnity will be due for such

acreage for that crop year unless:

(i) A transfer of coverage and right to an

indemnity, or a similar form approved by us,

is completed by all affected parties;

(ii) We are notified by you or the transferee

in writing of such transfer on or before the

acreage reporting date; and

(iii) The transferee is eligible for crop

insurance.

9. Causes of Loss

(a) In accordance with the provisions of

section 12 of the Basic Provisions, insurance

is provided only against the following causes

of loss that occur during the insurance

period:

(1) Adverse weather conditions;

(2) Fire, unless weeds and other forms of

undergrowth have not been controlled or

pruning debris has not been removed from

the orchard;
Federal Register / Vol. 63, No. 105 /Tuesday, June 2, 1998 /Rules and Regulations 29937

(3) Wildlife;

(4) Earthquake;

(5) Volcanic eruption; or

(6) Failure of the irrigation water supply,

if due to a cause of loss contained in sections

9(a)(1) through (5) that occurs during the

insurance period.

(b) In addition to the causes of loss

excluded by section 12 of the Basic

Provisions, we will not insure against

damage or loss of production due to:

(1) Disease or insect infestation, unless

adverse weather:

(i) Prevents the proper application of

control measures or causes properly applied

control measures to be ineffective; or

(ii) Causes disease or insect infestation for

which no effective control mechanism is

available;

(2) Split pits regardless of cause; or

(3) Inability to market the insured crop for

any reason other than actual physical damage

from an insurable cause of loss specified in

this section. For example, we will not pay

you an indemnity if you are unable to market

due to quarantine, boycott, or refusal of any

person to accept production.

10. Duties in the Event of Damage or Loss

In addition to the requirements of section

14 of the Basic Provisions, the following will

apply:

(a) You must notify us within 3 days after

the date harvest should have started if the

insured crop will not be harvested.

(b) You must notify us at least 15 days

before any production from any unit will be

sold by direct marketing. We will conduct an

appraisal that will be used to determine your

production to count for production that is

sold by direct marketing. If damage occurs

after this appraisal, we will conduct an

additional appraisal. These appraisals, and

any acceptable records provided by you, will

be used to determine your production to

count. Failure to give timely notice that

production will be sold by direct marketing

will result in an appraised amount of

production to count of not less than the

production guarantee per acre if such failure

results in our inability to make the required

appraisal.

(c) In addition to section 14 of the Basic

Provisions, if you intend to claim an

indemnity on any unit, you must give us

notice at least 15 days prior to the beginning

of harvest. You must not destroy the

damaged crop until after we have given you

written consent to do so. If you fail to notify

us and such failure results in our inability to

inspect the damaged production, we may

consider all such production to be

undamaged and include it as production to

count.

11. Settlement of Claim

(a) We will determine your loss on a unit

basis. In the event you are unable to provide

separate acceptable production records:

(1) For any optional units, we will combine

all optional units for which such production

records were not provided; or

(2) For any basic units, we will allocate any

commingled production to such units in

proportion to our liability on the harvested

acreage for the units.

(b) In the event of loss or damage covered

by this policy, we will settle your claim by:

(1) Multiplying the insured acreage for

each type or varietal group by its respective

production guarantee;

(2) Multiplying each result of section

11(b)(1) by the respective price election for

the type or varietal group;

(3) Totaling the results of section 11(b)(2).

(If there is only one type or varietal group,

the result of (3) will be the same as the result

of (2));

(4) Multiplying the total production to

count (see section 11(c)), for each type or

varietal group, by the respective price

election;

(5) Totaling the results of section 11(b)(4);

(6) Subtracting the result of section 11(b)(5)

from the result of section 11(b)(2). (If there

is only one type or varietal group, the result

of (6) will be the same as the result of (5));

and

(7) Multiplying the result of section

11(b)(6) by your share.

For example:

You have a 100 percent share in 50 acres

of varietal group A stonefruit in the unit,

with a guarantee of 500 lugs per acre and a

price election of $6.00 per lug. You are only

able to harvest 5,000 lugs. Your indemnity

would be calculated as follows:

(1) 50.0 acres × 500 lugs = 25,000 lugs

guarantee;

(2) and (3) 25,000 lugs × $6.00 price election

= $150,000.00 value of guarantee;

(4) 5,000 lugs × $6.00 price election =

$30,000.00 value of production to count;

(5) and (6) $150,000.00—$30,000.00 =

$120,000.00 loss; and

(7) $120,000.00 × 100 percent = $120,000

indemnity payment.

You also have a 100 percent share in 50

acres of varietal group B stonefruit in the

unit, with a guarantee of 300 lugs per acre

and a price election of $3.00 per lug. You are

only able to harvest 3,000 lugs. Your

indemnity would be calculated as follows:

(1) 50.0 acres × 500 lugs varietal group A

= 25,000 lugs guarantee; and 50.0 acres × 300

lugs varietal group B = 15,000 lugs guarantee;

(2) 25,000 lugs × $ 6.00 price election =

$150,000.00 value of guarantee for varietal

group A; and 15,000 lugs × $3.00 price

election = $45,000.00 value of guarantee for

varietal group B;

(3) $150,00.00 + $45,000.00 = $195,000.00

total value of guarantee;

(4) 5,000 lugs varietal group A × $6.00

price election = $30,000.00 value of

production to count; and 3,000 lugs varietal

group B × $3.00 price election = $9,000.00

value of production to count; and

(5) $30,000.00 + $9,000.00 = $39,000.00

total value of production to count;

(6) $195,000.00—$39,000.00 = $156,000.00

loss

(7) $156,000.00 loss × 1.000 = $156,000

indemnity payment.

(c) The total production to count (in lugs

or tons) from all insurable acres on a unit

will include:

(1) All appraised production as follows:

(i) Not less than the production guarantee

per acre for acreage:

(A) That is abandoned;

(B) That is sold by direct marketing if you

fail to meet the requirements contained in

section 10;

(C) That is damaged solely by uninsured

causes; or

(D) For which you fail to provide

production records that are acceptable to us;

(ii) Production lost due to uninsured

causes;

(iii) Unharvested production that would be

marketable if harvested; and

(iv) Potential production on insured

acreage that you intend to abandon or no

longer care for, if you and we agree on the

appraised amount of production. Upon such

agreement, the insurance period for that

acreage will end. If you do not agree with our

appraisal, we may defer the claim only if you

agree to continue to care for the insured crop.

We will then make another appraisal when

you notify us if any further damage or that

harvest is general in the area unless you

harvested the crop. If you harvest the crop we

will use the harvested production. If you do

not continue to care for the crop, our

appraisal made prior to deferring the claim

will be used to determine the production to

count; and

(2) All harvested production from the

insurable acreage.

(3) The quantity of harvested production

will be reduced if the following conditions

apply:

(i) The value of the damaged production is

less than 75 percent of the marketable value

of undamaged production due to an insured

cause of loss; and

(ii) For stonefruit insured as fresh fruit

only, the stonefruit either is packed and sold

as fresh fruit and meets only the utility grade

requirements of the applicable grading

standards, or fails to meet the applicable

grading standards but is or could be sold for

any use other than fresh packed stonefruit.

(4) Harvested production of stonefruit that

is eligible for quality adjustment as specified

in section 11(c)(3) will be reduced as follows:

(i) When packed and sold as fresh fruit or

when insured as a processing crop, by

dividing the marketable value per lug or ton

by the highest price election (for the

applicable coverage level) and multiplying

the result (not to exceed 1.00) by the quantity

of such production; or

(ii) For all other fresh stonefruit,

multiplying the number of tons that could be

marketed by the value per ton (for the

applicable coverage level) and dividing that

result by the highest price election available

for that type.

12. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions (§ 457.8) are not

applicable.

Signed in Washington, D.C., on May 20,

1998.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 98–14545 Filed 6–1–98; 8:45 am]

BILLING CODE 3410–08–P