[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