[Federal Register Volume 77, Number 136 (Monday, July 16, 2012)]
[Proposed Rules]
[Pages 41709-41716]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17235]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
[Docket No. FCIC-12-0006]
RIN 0563-AC39
Common Crop Insurance Regulations; Florida Citrus Fruit Crop
Insurance Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Proposed rule; request for comments.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to
amend the Common Crop Insurance Regulations, Florida Citrus Fruit Crop
Insurance Provisions. The intended effect of this action is to provide
policy changes, to clarify existing policy provisions to better meet
the needs of policyholders, and to reduce vulnerability to program
fraud, waste, and abuse. The proposed changes will be effective for the
2014 and succeeding crop years.
DATES: Written comments and opinions on this proposed rule will be
accepted until close of business August 15, 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-12-0006, 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 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
rmaweb.content@rma.usda.gov.
Privacy Act: Anyone is able to search the electronic form of all
comments received for any dockets by the name of the person 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: 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
This rule has been determined to be non-significant for the
purposes of Executive Order 12866 and, therefore, it has not been
reviewed by the 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
[[Page 41710]]
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 directing 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 determinations of good farming practices, as applicable,
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, or safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
Background
FCIC proposes to amend the Common Crop Insurance Regulations (7 CFR
part 457) by revising Sec. 457.107 Florida Citrus Fruit Crop Insurance
Provisions, to be effective for the 2014 and succeeding crop years.
Several requests have been made for changes to improve the insurance
coverage offered, address program integrity issues, simplify program
administration, and improve clarity of the policy provisions.
Some of the proposed changes are a result of the United States
Department of Agriculture (USDA) Acreage Crop Reporting Streamlining
Initiative, which has an objective of using common standardized data
and terminology to consolidate and simplify reporting requirements for
farmers. FCIC is proposing to change the term ``citrus fruit crop'' to
``citrus fruit commodity'' and to rename the ``citrus fruit
commodities'' to be consistent with the terms developed under the
Acreage Crop Reporting Streamlining Initiative. This change will allow
more efficient sharing of data among agencies and will assist in the
effort to reduce the burden of reporting the same information multiple
times. Some of the proposed changes herein, such as the addition of the
term ``citrus fruit group'' minimize the impact of changes to crop
names. With the incorporation of the term ``citrus fruit group'' into
the Florida Citrus Fruit Crop Provisions, FCIC will concurrently add a
field in the actuarial documents breaking each ``citrus fruit
commodity'' into ``citrus fruit groups.'' The ``citrus fruit groups''
will be the basis for determining coverage levels, basic units, and
administrative fees. In most cases these proposed changes will result
in no change from the current basis by which coverage levels are
selected, basic units are established, and administrative fees are
assessed.
To be consistent with the objectives of the Acreage Crop Reporting
Streamlining Initiative, FCIC is planning to replace the category of
``type'' in the actuarial documents with four categories named
``commodity type,'' ``class,'' ``subclass,'' and ``intended use.'' FCIC
is also planning to replace the category of ``practice'' in the
actuarial documents with four categories named ``cropping practice,''
``organic practice,'' ``irrigation practice,'' and ``interval.''
Proposed changes to the Florida Citrus Fruit Crop provisions, such as
replacing references to the term ``fruit type'' with the terms
``commodity type'' and ``intended use'' where applicable, will provide
an avenue for this transition.
Some of the other proposed changes are in response to an audit
(05099-29-At) by the Office of the Inspector General (OIG). The report
concluded the Florida Citrus Fruit policy contains a significant
vulnerability because the policy does not adequately account for the
salvage value of fruit insured as fresh that is sold for another use.
FCIC agreed to revise the Florida Citrus Fruit Crop Provisions for the
2014 crop year to address this vulnerability.
The proposed changes are as follows:
1. Section 1--FCIC proposes to revise the definition of ``amount of
insurance (per acre)'' to specify the Reference Maximum Dollar Amount
used in the calculation will be based on the applicable ``commodity
type'' and ``intended use'' in addition to the age of trees. This
change is being proposed because the terms ``commodity type'' and
``intended use'' are the terms that will replace type in the actuarial
documents that are applicable to determining the amount of insurance
per acre.
FCIC proposes to revise the definition of ``citrus fruit crop'' by
renaming it as ``citrus fruit commodity'' since insurable commodities
are identified in the actuarial documents. FCIC proposes to replace the
term ``citrus fruit crop'' with the term ``citrus fruit commodity''
where appropriate throughout the Florida Citrus Fruit Crop Provisions.
However, in some places the term ``crop'' will be changed to ``insured
crop'' which is defined in the Basic Provisions or the term ``crop''
may be retained if using the common meaning. FCIC proposes to revise
the definition of the newly renamed term of ``citrus fruit commodity''
by removing the old names ``Citrus I-IX'' and renaming the ``citrus
fruit commodities'' as ``oranges,'' ``grapefruit,'' ``tangelos,''
``mandarins/tangerines,'' ``tangors,'' ``lemons,'' ``limes,'' and ``any
other citrus fruit commodity designated in the actuarial documents.''
In some cases the new ``citrus fruit commodity'' names will result in
several of the current ``citrus fruit crops'' being combined into a
single ``citrus fruit commodity.'' For example, the current ``citrus
fruit crops'' named ``Citrus I (Early and mid-season oranges), Citrus
II (Late oranges juice), Citrus VII (Late oranges fresh), and Citrus
VIII (Navel oranges)'' will all fall under the new ``citrus fruit
commodity''
[[Page 41711]]
of ``oranges.'' In other cases the new ``citrus fruit commodity'' names
will result in current ``citrus fruit crops'' being split apart into
multiple ``citrus fruit commodities.'' For example, the current
``citrus fruit crop'' named ``Citrus VI (Lemons and Limes)'' will
become two separate ``citrus fruit commodities'' named ``lemons'' and
``limes.'' This change is being proposed because of the Acreage Crop
Reporting Streamlining Initiative. This proposed change in terminology
does not change the varieties of citrus that are insurable.
FCIC proposes to remove the definition of ``citrus fruit type
(fruit type)'' and add definitions of ``commodity type'' and ``intended
use'' to be consistent with the Acreage Reporting and Streamlining
Initiative. ``Commodity type'' and ``intended use'' are the categories
that will replace type in the actuarial documents that are applicable
to the Florida Citrus Fruit Crop Provisions.
FCIC proposes to add the definition of ``citrus fruit group.'' The
term ``citrus fruit group'' refers to a method of grouping ``commodity
types'' and ``intended uses'' within the ``citrus fruit commodity''
through the actuarial documents for the purposes of electing coverage
levels, establishing basic units, and assessing administrative fees.
This change is being proposed in order to make the insurance coverage
as similar to that which was previously provided while still being
consistent with the Acreage Crop Reporting Streamlining Initiative.
FCIC proposes to revise the definition of ``excess wind'' to allow
the use of the Florida Automated Weather Network (FAWN) reporting
stations and any other weather reporting stations identified in the
Special Provisions in addition to the U.S. National Weather Service
(NWS) reporting stations for determining wind speeds. Using the NWS
reporting station, the FAWN weather reporting station, or any other
weather reporting station identified in the Special Provisions
operating nearest to the insured acreage at the time of damage will
result in a more precise measurement of wind speeds due to the
availability of additional data points. The use of FAWN data is
currently allowed by the Special Provisions.
FCIC proposes to add the definition of ``unmarketable'' because it
is currently undefined. FCIC proposes to define ``unmarketable'' as
citrus fruit that cannot be processed into products for human
consumption.
2. Section 2--FCIC proposes to revise section 2(a) by adding
language to allow basic units by ``citrus fruit group'' designated
within a ``citrus fruit commodity'' in the actuarial documents. For
example, under the new ``citrus fruit commodity'' named ``grapefruit,''
all ``grapefruit'' with the intended use of fresh could be in one
``citrus fruit group'' and all ``grapefruit'' with the intended use of
juice could be in another ``citrus fruit group'' identified in the
actuarial documents. In this example, all ``grapefruit'' acreage with
an intended use of fresh can be insured as one basic unit and all
``grapefruit'' acreage with an intended use of juice can be insured as
another basic unit. This proposed change in terminology is intended to
allow policyholders to keep their current unit structure to the maximum
extent practicable. However, in some cases, such as with the ``citrus
fruit crop'' named ``Citrus VI (Lemons and Limes),'' which will become
separate ``citrus fruit commodities'' named ``lemons'' and ``limes,''
the policyholder will now be able to establish separate basic units for
each of these ``citrus fruit commodities.''
3. Section 3--FCIC proposes to revise section 3(a) by adding
language to allow the policyholder to select separate coverage levels
by ``citrus fruit group'' designated within a ``citrus fruit
commodity'' in the actuarial documents. For example, under the new
``citrus fruit commodity'' of ``oranges,'' all early and mid-season
oranges will be grouped together as one ``citrus fruit group'' and the
policyholder must select the same coverage level for all citrus fruit
insured under this ``citrus fruit group.'' These revisions to
terminology will allow policyholders to continue to elect coverage
levels on the same basis they currently elect for most crops. However,
in some cases, such as with the ``citrus fruit crop'' named ``Citrus VI
(Lemons and Limes)'' which will become separate ``citrus fruit
commodities'' named ``lemons'' and ``limes,'' the policyholder will now
be able to select separate coverage levels for the ``citrus fruit
groups'' within each of these ``citrus fruit commodities.''
FCIC proposes to revise section 3(c) to specify the reporting
requirements for ``citrus fruit commodities'' insured under the Florida
Citrus Fruit Crop Provisions. The proposed revision to section 3(c)
includes four subparagraphs stating what the policyholder must report
by the acreage reporting date contained in the actuarial documents. The
reporting requirements include any event or action that could reduce
the yield per acre of the insured ``citrus fruit commodity'' and the
number of affected acres, the number of trees on insurable and
uninsurable acreage, age of the trees, interplanted trees, planting
pattern, and any other information the insurance provider requests in
order to establish the amount of insurance. These requirements are
being added because this information is necessary to establish the
amount of insurance because it affects the potential production of the
unit.
FCIC proposes to revise section 3(d) by clarifying the reasons FCIC
will reduce insurable acreage or the amount of insurance, or both. The
reasons given for a reduction are consistent with the reporting
requirements contained in the proposed revision of section 3(c). Those
reasons include interplanted trees, a decrease in plant stand, cultural
practices that may reduce the productive capacity of the trees,
disease, damage, and any other circumstance that may reduce the
productive capacity of the trees or that may reduce the yield per acre
from previous levels. FCIC proposes to remove the term ``fruit type''
and replace it with the term ``commodity type'' since this is the
category in the actuarial documents that is relevant when determining
the effect of interplanted trees.
FCIC proposes to designate the second sentence from section 3(d) as
section 3(e) and revise it to state, ``If you fail to notify us of any
circumstance that may reduce the productive capacity of the trees or
that may reduce the yield per acre from previous levels, we will reduce
the acreage or amount of insurance or both as necessary any time we
become aware of the circumstance.'' The current provision states these
same consequences, but is phrased differently. This change is being
proposed to clarify ``circumstances that may reduce the productive
capacity of the trees or that may reduce the yield per acre from
previous levels'' are the reasons for reducing the acreage or amount of
insurance.
FCIC proposes to redesignate section 3(e) as 3(f). FCIC proposes to
remove the old provisions from section 3(f), which states that we will
reduce your amount of insurance per acre for damage that occurred prior
to the insurance period. This same information is contained in the
revised section 3(d). Therefore, with the proposed revisions to section
3(d), section 3(f) becomes redundant and is no longer necessary.
4. Section 6--FCIC proposes to revise section 6(a) by adding
language to allow the insured crop to be all acreage of each ``citrus
fruit group,'' designated within a ``citrus fruit commodity'' in the
actuarial documents. The ``citrus fruit groups'' within the ``citrus
fruit commodity'' will be assessed separate administrative fees and the
policyholder can elect to insure one ``citrus fruit group'' and not
insure another within
[[Page 41712]]
the same ``citrus fruit commodity.'' For example, if the ``citrus fruit
commodity'' of oranges has a ``citrus fruit group'' for all early and
mid-season oranges and another ``citrus fruit group'' for all late
oranges, the policyholder could elect to insure all of his or her early
and mid-season oranges in the county, but not insure any late oranges.
Since ``citrus fruit groups'' will provide the basis for assessing
administrative fees, in most cases this change will result in no change
from the basis by which administrative fees are currently assessed.
However, in some cases, such as with the ``citrus fruit crop'' named
``Citrus VI (Lemons and Limes)'' which will become separate ``citrus
fruit commodities'' named ``lemons'' and ``limes,'' separate
administrative fees will be assessed for each of the ``citrus fruit
groups'' within these ``citrus fruit commodities'' and the policyholder
can elect to insure one and not the other.
FCIC proposes to revise section 6(b)(1) by removing the term
``fruit type'' and adding the term ``commodity type'' in its place
since this is the category in the actuarial documents that is relevant
when determining the normal maturity period.
FCIC proposes to revise section 6(b)(2) by changing the date of
``April 30'' to ``April 15.'' This date is proposed to be changed to
coincide with the proposed new April 16 insurance attachment date to
eliminate the current gap in coverage. This provision requires trees to
have reached the fifth growing season after being set out to be
insurable. The revision will require trees to have been set out by
April 15 in order for the year of set out to be considered as a growing
season.
FCIC proposes to revise section 6(b)(3) to include ``Ambersweet''
oranges in the list of uninsurable fruit. FCIC has determined
``Ambersweet'' orange trees to be unreliable producers of fruit.
Furthermore, ``Ambersweet'' oranges are a poor quality fruit and
consequently the trees are scarcely planted for commercial production.
Excluding ``Ambersweet'' oranges from insurability will protect program
integrity by eliminating the risk associated with insuring them.
FCIC proposes to revise section 6(b)(6) by removing the term
``fruit type'' and adding the term ``commodity type'' in its place
since this is the category in the actuarial documents that is relevant
when determining the insurability of citrus fruit. FCIC proposes to
remove the phrase ``or within the definition of citrus fruit crop''
since the definition of ``citrus fruit crop'' is proposed to be
revised.
FCIC proposes to add section 6(f) which will require policyholders
who insure fresh fruit to provide management records upon request to
verify good fresh citrus fruit production practices were followed from
the beginning of bloom stage until harvest. The proposed provision also
requires policyholders who insure fresh fruit to provide acceptable
fresh fruit sales records upon request from at least one of the
previous three crop years; or for fresh fruit acreage new to the
operation or for acreage in the initial year of fresh fruit production,
a current year fresh fruit marketing contract must be provided upon
request. The proposed provision protects program integrity by
safeguarding against policyholders purchasing fresh fruit insurance
without the intention of producing fresh fruit and without providing
the necessary inputs to produce fresh fruit. This requirement is
currently implemented through the Special Provisions.
5. Section 7--FCIC proposes to revise section 7 by designating the
undesignated introductory paragraph as section 7(a) and redesignating
sections 7(a), (b), and (c) as sections 7(a)(1), (2), and (3)
respectively. These paragraphs are proposed to be redesignated in order
to add a new section 7(b). In redesignated paragraphs 7(a)(1) and (2)
FCIC proposes to remove the term ``fruit type'' everywhere this term
appears and add the term ``commodity type'' in its place since this is
the category in the actuarial documents that will be used to determine
the effect of interplanted trees.
FCIC proposes to add section 7(b) which will exclude from
insurability any acreage that has been abandoned without undergoing
remediation necessary to produce the amount and quality of production
needed to achieve the applicable Reference Maximum Dollar Amount prior
to insurance attaching. This provision is being added to address
situations where citrus acreage has been abandoned prior to insurance
attaching. While section 11 of the Basic Provisions states insurance
ends upon abandonment of the crop, neither the Basic Provisions nor the
Florida Citrus Fruit Crop Provisions address situations where acreage
is abandoned prior to the insurance period. Abandoned orchards harbor
disease and insects, which without proper control measures and
remediation efforts result in poor quality fruit and diminished
production. A similar requirement is currently implemented through the
Special Provisions.
6. Section 8--FCIC proposes to revise section 8(a)(1) by changing
the date insurance attaches from May 1 to April 16. FCIC is proposing
this change to eliminate the gap between the sales closing date and the
date insurance attaches. For the 2013 crop year the sales closing date
was moved from April 1 to April 15 as part of the Acreage Crop
Reporting Streamlining Initiative. This gap in coverage could adversely
affect producers who want to transfer their property and transfer their
coverage and right to an indemnity. Producers can only insure, and
transfer, their share at the time insurance attached and this gap
created a period in which the producer had no share that could be
transferred. This change will eliminate this situation.
FCIC proposes to revise section 8(a)(1)(i) by removing the phrase
``for the fruit type'' from the parenthetical. FCIC also proposes to
revise this section by removing the term ``grove'' and adding the term
``acreage'' in its place to be consistent with the terms used in this
provision. The revised provision requires the policyholder to provide
any information required to determine the condition of the acreage to
be insured. This change is being proposed because it is the condition
of the acreage that is important and there are other factors to
consider besides just the information regarding the fruit type.
FCIC proposes to revise section 8(a)(2) by changing the end of
insurance period date for early oranges from February 7 to February 28.
This change is being proposed because February 28 coincides more
closely to the time harvest is normally completed for early oranges.
This change has already been implemented through the Special
Provisions.
FCIC proposes to revise section 8(b)(1) to state acreage acquired
after the acreage reporting date for the crop year is not insurable
unless a transfer of coverage and right to indemnity is executed in
accordance with section 28 of the Basic Provisions. The current
provision in this section only addresses the insurability of acreage
acquired after coverage begins, but on or before the acreage reporting
date for the crop year. Since none of the crops insurable under the
Florida Citrus Fruit Crop Provisions have an acreage reporting date
that occurs after the date insurance attaches for the crop year, this
provision is not applicable. Since the language is not applicable, it
has been replaced with language that reflects the intent of the
provision.
FCIC proposes to revise section 8(b)(2) to state if a policyholder
relinquishes their insurable share on any insurable acreage of citrus
before the acreage reporting date of the crop year;
[[Page 41713]]
insurance will not attach, no premium will be due, and no indemnity
will be payable for such acreage for that crop year. The current
provision contains a similar statement, but it also includes a
provision that allows a transfer of coverage and right to indemnity if
filed before the acreage reporting date. The current provision was
written under the assumption that the acreage reporting date occurs
after insurance attaches. However, the acreage reporting date
established in the actuarial documents for all crops insured under the
Florida Citrus Fruit Crop Provisions currently occurs before the
insurance attachment date. Since, in accordance with section 28 of the
Basic Provisions, a transfer of coverage and right to indemnity can
only occur during the crop year, the exception is not applicable given
the current dates or the dates contained in this proposed rule.
Therefore, the language regarding a transfer of coverage and right to
indemnity is proposed to be removed.
7. Section 9--FCIC proposes to revise section 9(a)(6) by removing
the statement that only allows excess wind to be a covered cause of
loss if the excess wind causes fruit insured as fresh to be
unmarketable as fresh. Allowing excess wind to be a covered cause of
loss for all crops expands coverage to citrus fruit insured as juice.
Allowing this additional level of coverage provides more comprehensive
coverage against natural perils. However, this additional coverage may
affect premium rates.
8. Section 10--FCIC proposes to revise section 10(b)(1) by removing
the phrase ``fruit type and multiplying that result by your share'' and
adding the phrase ``applicable commodity type, intended use, and age of
trees.'' The term ``fruit type'' is proposed to be replaced with the
terms ``commodity type'' and ``intended use'' because these are the
categories in the actuarial documents that will replace type that are
applicable to determining the amount of insurance for the unit. The
phrase ``age of trees'' is proposed to be added because the amount of
insurance may also be different based on the age of the trees. The
phrase ``multiplying that result by your share'' is proposed to be
removed because it is redundant. The definition of ``amount of
insurance (per acre)'' already includes instructions to calculate the
dollar amount of insurance by multiplying by your share.
FCIC proposes to revise sections 10(b)(2), (5), and (6) by removing
the term ``fruit type'' and adding the terms ``commodity type'' and
``intended use'' in its place since these are the categories in the
actuarial documents that will replace type that are applicable to
determining a loss. The phrase ``age of trees'' is proposed to be added
because the amount of insurance may be different based on the age of
the trees.
FCIC proposes to revise the example in section 10(b) by removing
the phrase ``citrus crop, fruit type'' and adding the phrase
``commodity type, intended use'' in its place to be consistent with the
proposed changes in this section.
FCIC proposes to remove section 10(c) which pertains specifically
to fruit insured as fresh that is damaged by freeze and is not
harvested or could not be marketed. Section 10(c) is proposed to be
removed because assessing 50 percent damage for freeze damaged fruit
when the amount of actual damage is less than 50 percent can result in
over-payment of the claim. Furthermore, while section 10(c) attempts to
address the salvage value of fruit by using the amount of juice loss to
determine a final percent of damage, it does not reflect the actual
salvage value of the fruit because it does not account for price
differences between fresh fruit and juice fruit for different ``citrus
fruit commodities.''
FCIC proposes to add a new section 10(c) that pertains to fruit
insured either as fresh or juice. The proposed section 10(c)(1) will
contain the information from section 10(f), but will be revised to
clarify that individual citrus fruit damaged due to an insurable cause
that is on the ground and unmarketable is 100 percent damaged. The
proposed section 10(c)(2) will contain the information from section
10(g), but will be revised to clarify individual fruit that is
unmarketable because it is immature, unwholesome, decomposed,
adulterated, or otherwise unfit for human consumption due to an insured
cause will be considered as 100 percent damaged. FCIC proposes to
remove sections 10(f) and (g) because section 10(c) is proposed to
contain the same information. This change will improve the readability
of the provisions.
FCIC proposes to remove section 10(d), which pertains specifically
to fruit insured as fresh that is mechanically separated using the
specific gravity (floatation) method into undamaged and freeze damaged
fruit. Section 10(d) allows freeze damaged fruit eliminated using the
specific gravity method to be considered as damaged production not to
exceed 50 percent damage. Section 10(d) is proposed to be removed
because it is no longer relevant. The floatation method is rarely used
and many packing houses do not keep track of the actual number of fruit
eliminated solely due to freeze damage.
FCIC proposes to redesignate section 10(e) as section 10(d). FCIC
proposes to revise the newly redesignated section 10(d) by removing
references specific to freeze damage so the provision will apply to all
insured causes of loss. References to juice crops are proposed to be
removed so the provision will apply to ``citrus fruit commodities''
insured as fresh and juice. The provision is proposed to be revised to
state that any fruit that can be processed into products for human
consumption will be considered marketable. FCIC proposes to remove the
default juice contents and state that these will be found in the
Special Provisions. Placing the default juice contents in the Special
Provisions gives FCIC flexibility to add new default juice contents if
new types are made insurable or if the current default juice contents
need to be revised. The current method of determining the percent of
damage by relating the juice content of the damaged fruit to either the
average juice content of the fruit produced on the unit for the three
previous crop years or the default juice content provided by FCIC if
three years of acceptable juice records are not provided will be
retained. However, for fruit insured as fresh, an additional adjustment
will be made to increase the percent of damage based on a Fresh Fruit
Factor located in the Special Provisions. The Fresh Fruit Factor will
represent the difference between historical fresh fruit and juice
values. These values will be obtained from the National Agricultural
Statistics Service. The Fresh Fruit Factor will be derived by dividing
the five-year average of juice prices by the five-year average of fresh
prices and subtracting the result from one. When determining the loss
the Fresh Fruit Factor will be multiplied by the result obtained by
subtracting the percent of damage determined by relating the juice
content to the default juice content from 100. This result would then
be added to the percent of damage determined by relating the juice
content to the default juice content. This proposed provision works by
adjusting the percent of undamaged fruit to an amount that represents
the salvage value of the juice. This proposed change is in response to
an Office of the Inspector General audit that requires FCIC to account
for the salvage value of fruit insured as fresh.
FCIC proposes to redesignate section 10(h) as section 10(e). FCIC
proposes to revise the newly redesignated section 10(e) to make it
applicable to fruit insured as fresh that do not have a default juice
content or a Fresh Fruit Factor provided in the Special
[[Page 41714]]
Provisions. FCIC proposes to revise the provision to apply to all
insurable causes of loss rather than limiting it to hail and wind since
the freeze damage method is proposed to be removed. This provision is
intended to provide a method for determining losses for fruit insured
as fresh in which a salvage market does not exist.
List of Subjects in 7 CFR Part 457
Crop insurance, Florida citrus fruit, 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 2014 and succeeding crop years 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(l), 1506(o).
2. Amend Sec. 457.107 as follows:
a. Amend the introductory text by removing ``2009'' and adding
``2014'' in its place;
b. Amend section 1 by:
i. Revising the definitions of ``amount of insurance (per acre),''
``citrus fruit crop,'' and ``excess wind'';
ii. Adding the definitions of ``citrus fruit group,'' ``commodity
type,'' ``intended use,'' and ``unmarketable''; and
iii. Removing the definition of ``citrus fruit type (fruit type)'';
c. Amend section 2(a) by removing the phrase ``crop designated in
the Special Provisions'' and add the phrase ``group designated within a
citrus fruit commodity in the actuarial documents;
d. Revise section 3;
e. Amend section 6 by:
i. Revising paragraph (a);
ii. Amending paragraph (b)(1) by removing the term ``fruit type''
and adding the term ``commodity type'' in its place;
iii. Amending paragraph (b)(2) by removing the number ``30'' and
adding the number ``15'' in its place;
iv. Revising paragraph (b)(3);
v. Revising paragraph (b)(6); and
vi. Adding a new paragraph (f);
f. Amend section 7 by:
i. Designating the undesignated introductory paragraph as section
7(a);
ii. Redesignating paragraphs (a), (b), and (c) as (a)(1), (2), and
(3) respectively;
iii. Revising the redesignated paragraph (a)(1);
iv. Revising the redesignated paragraph (a)(2); and
v. Adding a new section 7(b);
g. Amend section 8 by:
i. Amending paragraph (a)(1) by removing the date of ``May 1'' and
adding the date of ``April 16'' in its place;
ii. Amending paragraph (a)(1)(i) by removing the phrase ``for the
fruit type'' and by removing the term ``grove'' and adding the term
acreage in its place;
iii. Amending paragraph (a)(2)(i) by removing the phrase ``early
and'';
iv. Amending paragraph (a)(2)(ii) by adding the phrase ``early
oranges and'' after the phrase ``February 28 for'';
v. Amending paragraph (a)(2)(iv) by removing the comma after the
term ``lemons'' and adding the term ``and'' before the term ``limes'';
and
vi. Revising paragraph (b);
h. Amend section 9(a)(6) by removing the phrase ``, but only if it
causes the individual citrus fruit from Citrus IV, V, VII, and VIII to
be unmarketable as fresh fruit'';
i. Amend section 10 by:
i. Revising paragraph (b)(1);
ii. Amending paragraph (b)(2) by removing the term ``fruit type''
and adding the phrase ``commodity type, intended use, and age of
trees'' in its place;
iii. Amending paragraph (b)(3) by removing the parenthesis around
the number ``10'';
iv. Amending paragraph (b)(4) by removing the parenthesis around
the number ``10'' in the first sentence;
v. Amending paragraph (b)(5) by removing the parenthesis around the
number ``10'' and by removing the term ``fruit type'' and adding the
phrase ``commodity type, intended use, and age of trees'' in its place;
vi. Amending paragraph (b)(6) by removing the parenthesis around
the number ``10'' and by removing the term ``fruit types'' and adding
the phrase ``applicable commodity types, intended uses, and ages of
trees'' in its place;
vii. Amending the example in paragraph (b) by removing the opening
parenthesis at the beginning of the example and by removing the phrase
``citrus crop, fruit type,'' and adding the phrase ``commodity type,
intended use,'' in its place;
viii. Removing paragraphs (c) and (d);
ix. Adding a new paragraph (c);
x. Redesignating paragraph (e) as (d) and revising the newly
redesignated paragraph (d);
xi. Removing paragraph (f) and (g); and
xii. Redesignating paragraph (h) as (e) and revising the newly
redesignated paragraph (e).
The revised and added text reads as follows:
Sec. 457.107 Florida citrus fruit crop insurance provisions.
* * * * *
1. Definitions
Amount of insurance (per acre). The dollar amount determined by
multiplying the Reference Maximum Dollar Amount shown on the actuarial
documents for each applicable commodity type, intended use, and age of
trees within a citrus fruit commodity, times the coverage level percent
that you elect, times your share.
* * * * *
Citrus fruit commodity. Citrus fruit as follows:
(1) Oranges;
(2) Grapefruit;
(3) Tangelos;
(4) Mandarins/Tangerines;
(5) Tangors;
(6) Lemons;
(7) Limes; and
(8) Any other citrus fruit commodity designated in the actuarial
documents.
Citrus fruit group. A designation in the actuarial documents used
to identify commodity types and intended uses within a citrus fruit
commodity that may be grouped together for the purposes of electing
coverage levels, establishing basic units, and assessing administrative
fees.
Commodity type. A specific subgroup of a commodity having a
characteristic or set of characteristics distinguishable from other
subgroups of the same commodity.
Excess wind. A natural movement of air that has sustained speeds
exceeding 58 miles per hour (50 knots) recorded at the U.S. National
Weather Service (NWS) reporting station (reported as MAX SUST (KT)),
the Florida Automated Weather Network (FAWN) reporting station
(reported as 10m Wind (mph)), or any other weather reporting station
identified in the Special Provisions operating nearest to the insured
acreage at the time of damage.
* * * * *
Intended use. The producer's expected end use or disposition of the
commodity at the time the commodity is reported.
* * * * *
Unmarketable. Citrus fruit that cannot be processed into products
for human consumption.
* * * * *
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 coverage level for each citrus fruit
group designated within a citrus fruit
[[Page 41715]]
commodity in the actuarial documents that you elect to insure. If
different amounts of insurance are available for commodity types within
a citrus fruit group, you must select the same coverage level for each
commodity type. For example, if you choose the 75 percent coverage
level for one commodity type, you must also choose the 75 percent
coverage level for all other commodity types within that citrus fruit
group.
(b) The production reporting requirements contained in section 3 of
the Basic Provisions are not applicable.
(c) You must report, by the acreage reporting date designated in
the actuarial documents:
(1) Any event or action that could reduce the yield per acre of the
insured citrus fruit commodity (including interplanted trees, removal
of trees, any damage, change in practices, or any other circumstance
that may reduce the productive capacity of the trees) and the number of
affected acres;
(2) The number of trees on insurable and uninsurable acreage;
(3) The age of the trees and the planting pattern; and
(4) Any other information we request in order to establish your
amount of insurance.
(d) We will reduce insurable acreage or the amount of insurance or
both, as necessary:
(1) Based on our estimate of the effect of the interplanted trees
on the insured commodity type;
(2) Following a decrease in plant stand;
(3) If cultural practices are performed that may reduce the
productive capacity of the trees;
(4) If disease or damage occurs to the trees that may reduce the
productive capacity of the trees; or
(5) Any other circumstance that may reduce the productive capacity
of the trees or that may reduce the yield per acre from previous
levels.
(e) If you fail to notify us of any circumstance that may reduce
the productive capacity of the trees or that may reduce the yield per
acre from previous levels, we will reduce the acreage or amount of
insurance or both as necessary any time we become aware of the
circumstance.
(f) For carryover policies:
(1) Any changes to your coverage must be requested on or before the
sales closing date;
(2) Requested changes will take effect on April 16, the first day
of the crop year, unless we reject the requested increase based on our
inspection, or because a loss occurs on or before April 15 (Rejection
can occur at any time we discover loss has occurred on or before April
15); and
(3) If the increase is rejected, coverage will remain at the same
level as the previous crop year.
* * * * *
6. Insured Crop.
(a) In accordance with section 8 of the Basic Provisions, the
insured crop will be all acreage of each citrus fruit group designated
within a citrus fruit commodity in the actuarial documents that you
elect to insure, in which you have a share, that is grown in the county
shown on the application, and for which a premium rate is quoted in the
actuarial documents.
(b) * * *
* * * * *
(3) Of ``Meyer Lemons'' and oranges commonly known as ``Sour
Oranges,'' ``Clementines,'' or ``Ambersweet'';
* * * * *
(6) Of any commodity type not specified as insurable in the Special
Provisions.
* * * * *
(f) For citrus fruit in which fresh fruit coverage is available as
designated in the actuarial documents, management records must be
available upon request to verify good fresh citrus fruit production
practices were followed from the beginning of bloom stage until
harvest. In addition, unless otherwise provided in the Special
Provisions acceptable fresh fruit sales records must be provided upon
request from at least one of the previous three crop years; or for
fresh fruit acreage new to the operation or for acreage in the initial
year of fresh fruit production, a current year fresh fruit marketing
contract must be provided to us upon request.
7. Insurable Acreage.
(a) * * *
(1) Citrus fruit from trees interplanted with another commodity
type or another commodity is insurable unless we inspect the acreage
and determine it does not meet the requirements contained in your
policy.
(2) If the citrus fruit is from trees interplanted with another
commodity type or another commodity, acreage will be prorated according
to the percentage of the acres occupied by each of the interplanted
commodity types or commodities. For example, if grapefruit have been
interplanted with oranges on 100 acres and the grapefruit trees are on
50 percent of the acreage, grapefruit will be considered planted on 50
acres and oranges will be considered planted on 50 acres.
* * * * *
(b) In addition to section 9 of the Basic Provisions, any acreage
of citrus fruit that has been abandoned and has not subsequently
undergone remediation necessary to produce the amount and quality of
production needed to achieve the applicable Reference Maximum Dollar
Amount prior to insurance attaching is not insurable.
8. Insurance Period.
* * * * *
(b) In addition to the provisions of section 11 of the Basic
Provisions:
(1) Acreage acquired after the acreage reporting date for the crop
year is not insurable unless a transfer of coverage and right to
indemnity is executed in accordance with section 28 of the Basic
Provisions.
(2) If you relinquish your insurable share on any insurable acreage
of citrus fruit on or before the acreage reporting date of the crop
year, insurance will not attach, no premium will be due, and no
indemnity payable, for such acreage for that crop year.
* * * * *
10. Settlement of Claim.
* * * * *
(b) * * *
(1) Calculating the amount of insurance for the unit by multiplying
the number of acres by the respective dollar amount of insurance per
acre for each applicable commodity type, intended use, and age of trees
in the unit.
* * * * *
(c) Any individual citrus fruit that, due to an insured cause of
loss, is unmarketable because it is:
(1) On the ground will be considered 100 percent damaged; or
(2) Immature, unwholesome, decomposed, adulterated, or otherwise
unfit for human consumption will be considered as 100 percent damaged.
(d) In addition to section 10(c), any citrus fruit that can be
processed into products for human consumption will be considered
marketable. The percent of damage for the marketable citrus fruit will
be determined by:
(1) Relating the juice content of the damaged fruit to:
(i) The average juice content of the fruit produced on the unit for
the three previous crop years based on your records, if they are
acceptable to us; or
(ii) The default juice content provided in the Special Provisions,
if at least three years of acceptable juice records are not furnished
or the citrus fruit is insured as fresh;
(2) For citrus fruit insured as fresh, the final percent of damage
for the marketable citrus fruit will be determined by:
(i) Subtracting the result of section 10(d)(1)(ii) from 100;
[[Page 41716]]
(ii) Multiplying the result of section 10(d)(2)(i) by the
applicable Fresh Fruit Factor located in the Special Provisions; and
(iii) Adding the result of section 10(d)(2)(ii) to the result of
section 10(d)(1)(ii).
(e) Notwithstanding section 10(d), for citrus fruit insured as
fresh that do not have a default juice content or a Fresh Fruit Factor
provided in the Special Provisions, any individual citrus fruit not
meeting the United States standards for packing as fresh fruit due to
an insured cause of loss, will be considered 100 percent damaged.
* * * * *
Signed in Washington, DC, on July 10, 2012.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2012-17235 Filed 7-13-12; 8:45 am]
BILLING CODE 3410-08-P