[Federal Register Volume 76, Number 233 (Monday, December 5, 2011)]
[Proposed Rules]
[Pages 75805-75809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31083]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
[Docket No. FCIC-11-0007]
RIN 0563-AC36
Common Crop Insurance Regulations; Prune Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Proposed rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to
amend the Common Crop Insurance Regulations, Prune Crop Insurance
Provisions to remove the quality adjustment provisions for substandard
prunes and to make other changes to clarify policy provisions. The
intended effect of this action is to provide policy changes, to clarify
existing policy provisions to better meet the needs of the producers,
and to reduce vulnerability to program fraud, waste, and abuse. The
changes will apply for the 2013 and succeeding crop years.
DATES: Written comments and opinions on this proposed rule will be
accepted until close of business February 3, 2012 and will be
considered when the rule is to be made final.
ADDRESSES: FCIC prefers that comments be submitted electronically
through the Federal eRulemaking Portal. You may submit comments,
identified by Docket ID No. FCIC-11-0007, by any of the following
methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Director, Product Administration and Standards
Division, Risk Management Agency, United States Department of
Agriculture, P.O. Box 419205, Kansas City, MO 64133-6205.
All comments received, including those received by mail, will be
posted without change to http://www.regulations.gov, including any
personal information provided, and can be accessed by the public. All
comments must include the agency name and docket number or Regulatory
Information Number (RIN) for this rule. For detailed instructions on
submitting
[[Page 75806]]
comments and additional information, see http://www.regulations.gov. If
you are submitting comments electronically through the Federal
eRulemaking Portal and want to attach a document, we ask that it be in
a text-based format. If you want to attach a document that is a scanned
Adobe PDF file, it must be scanned as text and not as an image, thus
allowing FCIC to search and copy certain portions of your submissions.
For questions regarding attaching a document that is a scanned Adobe
PDF file, please contact the RMA Web Content Team at (816) 823-4694 or
by email at [email protected].
Privacy Act: Anyone is able to search the electronic form of all
comments received for any dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review the
complete User Notice and Privacy Notice for Regulations.gov at http://www.regulations.gov/#!privacyNotice.
FOR FURTHER INFORMATION CONTACT: Chief, Policy Administration Branch,
Product Administration and Standards Division, Risk Management Agency,
at the Kansas City, MO, address listed above, telephone at (816) 926-
7730.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
rule is non-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 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).
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 proposed 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 or 7 CFR part 400, subpart
J for the informal review process of good farming practices as
applicable, must be exhausted before any action against FCIC may be
brought.
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
FCIC proposes to revise 7 CFR part 457, Common Crop Insurance
Regulations, by revising Sec. 457.133, Prune Crop Insurance
Provisions, to be effective for the 2013 and succeeding crop years.
Several requests have been made for changes to improve the coverage
offered, address program integrity issues, and improve clarity of the
Prune Crop Insurance Provisions.
The proposed changes to Sec. 457.133 are as follows:
1. FCIC proposes to remove the paragraph immediately preceding
section 1 which refers to the order of priority in the event of a
conflict. This same information is contained in the Basic Provisions.
Therefore, it is duplicative and should be removed in the Crop
Provisions.
2. Section 1--FCIC proposes to remove the definitions of ``market
price for standard prunes'' and ``substandard prunes.'' These terms and
definitions are no longer needed with the proposed
[[Page 75807]]
removal of quality adjustment for substandard prunes in section 11(e).
FCIC proposes to revise the definition of ``standard prunes'' to
replace the phrase ``grading standards'' with the phrase ``grade
standards.'' The term ``grade standards,'' rather than ``grading
standards,'' is consistent with terminology in other Crop Provisions
administered by FCIC and is a more accurate term.
3. Section 3--FCIC proposes to revise paragraphs (a) and (b) to
remove the phrase ``varietal group'' and replace it with the word
``type'' everywhere it appears. Varietal groups are typically
identified in the Special Provisions. However, prunes are not
categorized by varietal group in the Special Provisions, rather they
are categorized by type. Therefore, using the word ``type'' is more
appropriate.
FCIC proposes to redesignate section 3(c) as section 3(d) and
designate the undesignated paragraph following section 3(b) as section
3(c). FCIC proposes to revise newly designated section 3(c) to add
provisions to specify how yields will be reduced if an event or action
occurs that may reduce the yield potential based on when the situation
is reported. The current provision states that the insurance provider
will reduce the yield used to establish the insured's production
guarantee, but does not tell when or how. The proposed section 3(c)(1)
states that if a situation that may reduce the insured's yield is
reported before the beginning of the insurance period, the yield used
to establish the insured's production guarantee will be reduced for the
current crop year regardless of whether the situation was due to an
insured or uninsured cause of loss. The proposed section 3(c)(2) states
that if a situation that may reduce the insured's yield is reported
after the beginning of the insurance period and the insured notifies
the insurance provider by the production reporting date, the yield used
to establish the insured's production guarantee will be reduced for the
current crop year only if the potential reduction in the yield used to
establish the insured's production guarantee is due to an uninsured
cause of loss. The proposed section 3(c)(3) states that if a situation
that may reduce the insured's yield is reported after the beginning of
the insurance period and the insured fails to notify the insurance
provider by the production reporting date, an amount equal to the
reduction in the yield will be added to the production to count
calculated in section 11(c) due to uninsured causes and the insurance
provider will reduce the yield used to establish the insured's
production guarantee for the subsequent crop year.
FCIC also proposes to revise newly designated section 3(c) to
remove the list of possible situations that affect yield and instead
refer back to section 3(b), which contains the same information. This
eliminates redundancy and is consistent with other perennial Crop
Provisions, such as apples, grapes, and stonefruit.
4. Section 6--FCIC proposes to revise section 6(c) by removing the
requirements for the insured crop to be grown on tree varieties that
were commercially available at set out and tree varieties that are
adapted to the area because these provisions have created confusion as
to which varieties meet these requirements. FCIC proposes to add a
requirement for the insured crop to be grown on trees that are listed
in the Special Provisions. This provision will eliminate any confusion
as to which varieties are insurable because insurable varieties will be
listed in the Special Provisions. FCIC proposes to remove the
requirement for trees to be irrigated because insurable practices are
listed in the Special Provisions.
5. Section 8--FCIC proposes to revise section 8(a) to state that
the year of application coverage begins on March 1. FCIC proposes to
revise section 8(c) to remove the phrase ``Notwithstanding paragraph
(a)(1) of this section.'' These changes will allow continuous coverage
of the citrus fruit from year to year with no gaps in coverage. This
proposed change is consistent with other perennial Crop Provisions,
such as apples and grapes.
6. Section 9--FCIC proposes to add provisions in section 9(a) that
allow insects and disease to be insurable causes of loss unless damage
is due to insufficient or improper application of control measures.
FCIC proposes to remove the provisions in section 9(b)(1) that excludes
insects and disease from insurability unless adverse weather prevents
the proper application of control measures or causes properly applied
control measures to be ineffective or causes disease or insect
infestation for which no effective control mechanism is available. This
will make insects and disease a presumed insurable cause of loss unless
one of the stated conditions exists as opposed to a presumed
uninsurable cause of loss unless one of the stated conditions exists.
7. Section 10--FCIC proposes to add a new section 10(a) to clarify
the insured must leave representative samples for appraisal purposes in
accordance with the Basic Provisions. The rest of the provisions are
proposed to be redesignated.
8. Section 11--FCIC proposes to revise section 11(b) to remove the
phrase ``varietal group'' and replace it with the word ``type''
everywhere it appears. As stated above, varietal groups are typically
identified in the Special Provisions. However, prunes are not
categorized by varietal group in the Special Provisions, rather they
are categorized by type. Therefore, using the word ``type'' is more
appropriate.
FCIC proposes to revise the settlement of claim examples in section
11(b). FCIC proposes to revise the example by changing the term
``varietal group'' to ``type'' everywhere it appears in the example for
reasons stated above. FCIC proposes to revise the example to illustrate
the correct rounding of decimals and to identify units consistently.
FCIC also proposes to revise the introductory paragraph of the second
part of the example to clarify that information contained in the second
part of the example is in addition to the information contained in the
first part of the example. These changes are proposed to improve
accuracy and readability of the example.
FCIC proposes to revise section 11(c) to replace the phrase ``grade
substandard or better'' with the phrase ``meet the definition of
standard prunes.'' The phrase ``grade substandard or better'' is no
longer applicable with the proposed removal of quality adjustment for
substandard prunes in section 11(e).
FCIC proposes to remove section 11(e) which removes the provisions
regarding quality adjustment for substandard prunes. The calculation
used to determine the quality adjustment factor was the value per ton
of substandard prunes divided by the market price per ton for standard
prunes. In addition, there was a statement on the Special Provisions
that reduced the value per ton by the harvest cost per ton prior to
calculating the quality adjustment factor. The value per ton of
substandard prunes is a value published by the Prune Bargaining
Association (PBA). In recent years, PBA has either not published a
substandard price or has published a price that is near or below zero.
In some instances, PBA's value per ton for substandard prunes was so
low that when the harvest cost per ton specified in the Special
Provisions was deducted from the value per ton, the result was less
than zero. When the value of substandard prunes is less than or equal
to zero, substandard prune production does not count as production to
count for claims purposes. The quality adjustment
[[Page 75808]]
procedure was burdensome to the producer and the insurance provider who
had to wait until the PBA published prices to settle claims and it
generally had little to no effect on indemnities so the quality
adjustment procedures are being removed from the policy. As proposed,
only counting as production to count those prunes that meet the
specified standards will take into consideration the quality of the
prunes.
List of Subjects in 7 CFR Part 457
Crop insurance, Prunes, Reporting and recordkeeping requirements.
Proposed Rule
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation proposes to amend 7 CFR part 457 effective for
the 2013 and succeeding crop years to read as follows:
PART 457--COMMON CROP INSURANCE REGULATIONS
1. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(o).
2. Amend Sec. 457.133 as follows:
a. Amend the introductory text by removing ``2001'' and adding
``2013'' in its place;
b. Remove the undesignated paragraph immediately preceding section
1;
c. Amend section 1 to:
i. Remove the definitions of ``market price for standard prunes''
and ``substandard prunes''; and
ii. Amend the definition of ``standard prunes'' by removing the
word ``grading'' and replacing it with the word ``grade'' in paragraph
(b);
d. Amend section 3 to:
i. Revise paragraph (a);
ii. Revise paragraph (b);
iii. Designate the undesignated paragraph following paragraph (b)
as paragraph (c);
iv. Revise newly designated paragraph (c); and
v. Redesignate paragraph (c) as paragraph (d);
e. Amend section 6 to:
i. Revise paragraph (c); and
ii. Remove paragraphs (d) and (e);
f. Revise section 8(a)(1);
g. Amend section 8(c) by removing the phrase ``Notwithstanding
paragraph (a)(1) of this section, for'' and replacing it with the word
``For'';
h. Amend section 9(a)(5) by removing the word ``or'' after the
semicolon at the end of the sentence;
i. Amend section 9(a)(6) by removing the period at the end of the
sentence and adding a semicolon in its place;
j. Add a new section 9(a)(7);
k. Add a new section 9(a)(8);
l. Revise section 9(b);
m. Amend section 10 to:
i. Designate the introductory text as paragraph (b) and adding a
new paragraph (a); and
ii. Redesignate paragraphs (a) through (d) in redesignated
paragraph (b) as (1) through (4), respectively;
n. Amend section 11 to:
i. Revise paragraph (b);
ii. Revise paragraph (c); and
iii. Remove paragraph (e).
The additions and revisions read as follows:
Sec. 457.133 Prune crop insurance 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 for all the prunes in
the county insured under this policy unless the Special Provisions
provide different price elections by type, in which case you may select
one price election for each type designated in the Special Provisions.
The price elections you choose for each type must have the same
percentage relationship to the maximum price offered by us for each
type. For example, if you choose 100 percent of the maximum price
election for one type, you must also choose 100 percent of the maximum
price election for all other types.
(b) You must report, by the production reporting date designated in
section 3 of the Basic Provisions, by type if applicable:
* * * * *
(4) * * *
(i) The age of the interplanted crop, and type, if applicable;
* * * * *
(c) We will reduce the yield used to establish your production
guarantee, as necessary, based on our estimate of the effect of any
such situation listed in section 3(b) that may occur. If you fail to
notify us of any situation in section 3(b), we will reduce the yield
used to establish your production guarantee at any time we become aware
of the circumstance. If the situation in 3(b) is reported:
(1) Before the beginning of the insurance period, the yield used to
establish your production guarantee will be reduced for the current
crop year regardless of whether the situation was due to an insured or
uninsured cause of loss;
(2) After the beginning of the insurance period and you notify us
by the production reporting date, the yield used to establish your
production guarantee will be reduced for the current crop year only if
the potential reduction in the yield used to establish your production
guarantee is due to an uninsured cause of loss; or
(3) After the beginning of the insurance period and you fail to
notify us by the production reporting date, an amount equal to the
reduction in the yield will be added to the production to count
calculated in section 11(c) due to uninsured causes when determining
any indemnity. We will reduce the yield used to establish your
production guarantee for the subsequent crop year.
* * * * *
6. Insured Crop.
* * * * *
(c) That are grown on trees that:
(1) Are listed in the Special Provisions;
(2) Are grown on rootstock that is adapted to the area;
(3) Are grown in an orchard that, if inspected, is considered
acceptable by us; and
(4) Have reached at least the seventh growing season after being
set out.
* * * * *
8. Insurance Period.
(a) * * *
(1) For the year of application, coverage begins on March 1.
* * * * *
9. Causes of Loss.
(a) * * *
* * * * *
(7) Insects, but not damage due to insufficient or improper
application of pest control measures; or
(8) Plant disease, but not damage due to insufficient or improper
application of disease control measures.
(b) In addition to the causes of loss excluded in section 12 of the
Basic Provisions, we will not insure against damage or loss of
production due to inability to market the prunes for any reason other
than actual physical damage from an insurable cause specified in this
section. For example, we will not pay you an indemnity if you are
unable to market due to quarantine, boycott, or refusal of any person
to accept production.
10. Duties in the Event of Damage or Loss.
(a) In accordance with the requirements of section 14 of the Basic
Provisions, you must leave representative samples in accordance with
our procedures.
* * * * *
11. Settlement of Claim.
* * * * *
[[Page 75809]]
(b) * * *
(1) Multiplying the insured acreage for each type, if applicable,
by its respective production guarantee;
(2) Multiplying the result of 11(b)(1) by the respective price
election for each type, if applicable;
(3) Totaling the results of section 11(b)(2) if there is more than
one type;
(4) Multiplying the total production to count (see section 11(c)),
of each type, if applicable, by its respective price election;
(5) Totaling the results of section 11(b)(4) if there is more than
one type;
(6) Subtracting the result of section 11(b)(4) from the result of
section 11(b)(2) if there is only one type or subtracting the result of
section 11(b)(5) from the result of section 11(b)(3) if there is more
than one type; and
(7) Multiplying the result of section 11(b)(6) by your share.
For example:
You select 75 percent coverage level, 100 percent of the price
election, and have a 100 percent share in 50.0 acres of type A prunes
in the unit. The production guarantee is 2.5 tons per acre and your
price election is $630.00 per ton. You harvest 10.0 tons. Your
indemnity would be calculated as follows:
(1) 50.0 acres x 2.5 tons = 125.0 ton production guarantee;
(2) 125.0 ton guarantee x $630.00 price election = $78,750 value of
production guarantee;
(4) 10.0 tons x $630.00 price election = $6,300 value of production
to count;
(6) $78,750 - $6,300 = $72,450 loss; and
(7) $72,450 x 1.000 share = $72,450 indemnity payment.
In addition to the information in the first example, you have an
additional 50.0 acres of type B prunes with 100 percent share in the
same unit. The production guarantee is 2.0 tons per acre and the price
election is $550.00 per ton. You harvest 5.0 tons. Your total indemnity
for both types A and B would be calculated as follows:
(1) 50.0 acres x 2.5 tons = 125.0 ton production guarantee for type
A and 50.0 acres x 2.0 tons = 100.0 ton production guarantee for type
B;
(2) 125.0 ton guarantee x $630.00 price election = $78,750 value of
production guarantee for type A and 100.0 ton guarantee x $550.00 price
election = $55,000 value production guarantee for type B;
(3) $78,750 + $55,000 = $133,750 total value of production
guarantee;
(4) 10.0 tons x $630.00 price election = $6,300 value of production
to count for type A and 5.0 tons x $550.00 price election = $2,750
value of production to count for type B;
(5) $6,300 + $2,750 = $9,050 total value of production to count;
(6) $133,750 - $9,050 = $124,700 loss; and
(7) $124,700 loss x 1.000 share = $124,700 indemnity payment.
(c) The total production to count (in tons) from all insurable
acreage on the unit will include all harvested and appraised production
of natural condition prunes that meet the definition of standard prunes
and any production that is harvested and intended for use as fresh
fruit. The total production to count will include:
* * * * *
Signed in Washington, DC, on November 22, 2011.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2011-31083 Filed 12-2-11; 8:45 am]
BILLING CODE 3410-08-P