Source: https://www.federalregister.gov/documents/2014/08/01/2014-17997/common-crop-insurance-regulations-macadamia-tree-crop-insurance-provisions-and-macadamia-nut-crop
Timestamp: 2018-08-16 01:39:23
Document Index: 572006248

Matched Legal Cases: ['art 457', '§\u2009457', '§\u2009457', '§\u2009457', '§\u2009457', 'art 457', '§\u2009457', '§\u2009457', '§\u2009457', '§\u2009457']

Federal Register :: Common Crop Insurance Regulations; Macadamia Tree Crop Insurance Provisions and Macadamia Nut Crop Insurance Provisions
A Proposed Rule by the Federal Crop Insurance Corporation on 08/01/2014
79 FR 44719
0563-AC44
2014-17997
FCIC-14-0004
https://www.federalregister.gov/d/2014-17997 https://www.federalregister.gov/d/2014-17997
FCIC prefers that comments be submitted electronically through the Federal eRulemaking Portal. You may submit comments, identified by Docket ID No. FCIC-14-0004 by any of the following methods:
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 Start Printed Page 44720guarantees 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 1000 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).
FCIC proposes to amend the Common Crop Insurance Regulations (7 CFR part 457) by revising § 457.130 Macadamia Tree Crop Insurance Provisions and § 457.131 Macadamia Nut Crop Insurance Provisions to be effective for the 2016 and succeeding crop years for macadamia trees and the 2017 and succeeding crop years for macadamia nuts.
The proposed changes to § 457.130 are as follows:
1. Section 1—FCIC proposes to add a definition of “damaged.” The terms “damaged” and “destroyed” are used throughout the Crop Provisions. The term “damaged” is not defined, but the term “destroyed” is. FCIC is proposing to add a definition of “damaged” to clarify that there is a distinction between “damaged” and “destroyed.” FCIC's proposed definition of “damaged” is injury to the main trunk, scaffold limb(s), and any other subordinate limbs that reduces the productivity of the tree due to an insured cause of loss occurring during the insurance period.
FCIC also proposes to add a definition of “scaffold limb” since it is used in the proposed definition of “damaged.” It is given the same meaning as the term in other tree crop policies for consistency.
2. Section 2—FCIC proposes to revise section 2 by removing paragraph (a) which states sections 34(b)(1), (3) and (4) of the Basic Provisions are not applicable. These sections of the Basic Provisions state that the crop must be planted in a manner such that there is a clear and discernible break between optional units, the insured must have records for at least the previous crop year for each optional unit, and the insured must have records of marketed or stored production from each optional unit maintained in such a manner that permits the insurance provider to verify the production from each optional unit. Under the current policy, insureds who utilize optional units can manipulate their unit boundaries to maximize indemnities because there is no current requirement for discernible breaks between units. By removing paragraph (a), sections 34(b)(1), (3) and (4) of the Basic Provisions become applicable and, therefore, minimize program abuse as it relates to unit division.
FCIC also proposes to revise section 2 by removing the provision that requires an optional unit to contain at least 80 acres. Most macadamia tree orchards contain less than 80 acres so very few insureds are eligible for this provision. Removing this provision provides an equitable opportunity for insureds who farm large operations and those who farm small operations to qualify for optional units. The changes made above will mitigate any potential abuse from this change.
3. Section 10—FCIC proposes to revise section 10 to include information regarding destroyed trees and allowing for the insurance provider to conduct an inspection before the insured removes any destroyed trees. The current provisions require insureds, if they intend to claim an indemnity on any unit, to allow the insurance provider to inspect all insured acreage before pruning or removing any damaged trees. However, the provisions are silent on regarding the removal of damaged trees. In order to conduct a proper appraisal, the insurance provider must identify damaged and destroyed trees before they are removed. Therefore, the insured must allow the insurance provider to conduct an inspection before the insured removes any damaged or destroyed trees.
4. Section 11—FCIC proposes to revise paragraph (c)(1). The current provisions specify that any orchard with over 80 percent actual damage due to an insured cause of loss will be considered to be 100 percent damaged. The proposed provisions are revised to clarify that over 80 percent of trees damaged and trees destroyed due to an insured cause of loss will be considered to be 100 percent damaged. FCIC also proposes to add a settlement of claim example in section 11.
The proposed changes to § 457.131 are as follows:
1. Section 1—FCIC proposes to add definitions of “floaters” and “peewees” since they are proposed to be incorporated into the definition of “wet in-shell.” These terms are commonly used in the macadamia nut and tree industry. FCIC's proposed definition of “floaters” is inedible, husked “field run” nuts identified by water floatation. FCIC's proposed definition of “peewees” is mature and immature wet in-shell nuts that are smaller than 16mm (5/8 inch) in diameter.
FCIC proposes to revise the definition of “wet in-shell” to incorporate a statement contained in the Special Provisions, which states wet in-shell excludes immature and unsound nuts (floaters and peewees). By incorporating this information into the Crop Provisions, FCIC can eliminate the Special Provisions statement.
2. Section 2—FCIC proposes to revise section 2 by removing paragraph (a) which states section 34(b)(1) of the Basic Provisions is not applicable. This section of the Basic Provisions states that the crop must be planted in a manner such that there is a clear and discernible break between optional units. Under the current provisions, Start Printed Page 44721insureds who utilize optional units can manipulate their unit boundaries to maximize indemnities because there is no current requirement for discernible breaks between units. By removing paragraph (a), section 34(b)(1) of the Basic Provisions becomes applicable, and, therefore, minimizes program abuse as it relates to unit division.
FCIC also proposes to revise section 2 by removing the provision that requires an optional unit to contain at least 80 acres. Most macadamia nut orchards contain less than 80 acres so, very few insureds are eligible for this provision. Removing this provision provides an equitable opportunity for insureds who farm large operations and those who farm small operations to qualify for optional units. These changes are consistent with the changes that are proposed to the Macadamia Tree Crop Insurance Provisions. The changes made above will mitigate any potential abuse from this change.
3. Section 3—FCIC proposes to revise the paragraph (d) to update the crop years used in the example.
4. Section 8—FCIC proposes to revise paragraph (a)(2) to allow the calendar date for the end of the insurance period to be changed by the Special Provisions. This will provide flexibility to update this date if the need arises.
5. Section 11—FCIC proposes to add a settlement of claim example.
Macadamia tree and Macadamia nut
Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation proposes to amend 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 to read as follows:
2. Amend § 457.130 as follows:
a. Amend the introductory text by removing “2011” and adding “2016” in its place;
b. Amend section 1 by adding in alphabetical order definitions of “damaged” and “scaffold limb”;
d. Amend section 3 by removing the phrase “(Insurance Guarantees, Coverage Levels, and Prices for Determining Indemnities)” in paragraphs (a) introductory text and (b);
e. Amend section 4 by removing the phrase “(Contract Changes)”;
f. Amend section 5 by removing the phrase “(Life of Policy, Cancellation, and Termination)”;
g. Amend section 6 introductory text by removing the phrase “(Insured Crop)”;
h. Amend section 7 by removing the phrase “(Insurable Acreage)”;
i. Amend section 8 by removing the phrase “(Insurance Period)” paragraphs (a) introductory text and (b) introductory text;
j. Amend section 9 by removing the phrase “(Causes of Loss)” in paragraphs (a) introductory text and (b) introductory text;
k. Revise section 10; and
l. In section 11, revise paragraphs (b)(4), (c) introductory text, and (c)(1).
§ 457.130
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.
(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, unless otherwise allowed by written agreement.
(4) Multiply the result in section 11(b)(3) by your share.
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:
(3)(i) 100 percent−65 percent = 35 percent deductible;
(ii) 35 destroyed trees ÷ 90 total unit trees = 38.9 percent loss; 38.9 percent loss−35 percent deductible = 3.9 percent;
(iii) 3.9 percent ÷ 65 percent coverage level = 6.0 percent loss; and $58,500 total amount of insurance × 6.0 percent loss = $3,510 loss; and
(4) $3,510 loss × 100 percent share = $3,510 indemnity payment.
(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. Amend the introductory text by removing “2012” and adding “2017” in its place;
i. By adding definitions of in alphabetical order “floaters” and “peewees”; and
ii. By revising the definition of “wet in-shell”;
i. By removing the phrase “(Insurance Guarantees, Coverage Levels, and Prices for Determining Indemnities)” in the introductory text and paragraph (b) introductory text;
ii. In paragraph (b)(4) introductory text by removing the word “anytime” and replacing it with the phrase “any time”; and
iii. By revising paragraph (d);
g. In section 6:
i. By removing the phrase “(Insured Crop)” in the introductory text; and
ii. In paragraph (d) by removing the phrase “agree in writing” and adding in Start Printed Page 44722its place the phrase “give our approval in writing”; and
iii. In paragraph (d) by removing the phrase “wet, in-shell” and adding in its place the phrase “wet in-shell”;
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);
k. Amend 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. 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 “(we in-shell pounds)”.
Floaters. Inedible, husked “field run” nuts identified by water floatation.
Peewees. Mature and immature wet in-shell nuts that are smaller than 16 mm (5/8 inch) in diameter, or as otherwise specified in the Special Provisions.
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.
(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.
(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.
You select 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:
Signed in Washington, DC, on July 23, 2014.
[FR Doc. 2014-17997 Filed 7-31-14; 8:45 am]