[Federal Register Volume 77, Number 169 (Thursday, August 30, 2012)]
[Rules and Regulations]
[Pages 52587-52595]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-21350]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 77, No. 169 / Thursday, August 30, 2012 /
Rules and Regulations
[[Page 52587]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
[Docket No. FCIC-11-0011]
RIN 0563-AC34
Common Crop Insurance Regulations; Peach Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the
Common Crop Insurance Regulations, Peach 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 insured
producers, and to reduce vulnerability to program fraud, waste, and
abuse. The changes will apply for the 2013 and succeeding crop years.
DATES: This rule is effective August 30, 2012.
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 Office of Management and Budget (OMB).
Paperwork Reduction Act of 1995
Pursuant to the provisions of the Paperwork Reduction Act of 1995
(44 U.S.C. chapter 35), the collections of information in this rule
have been approved by OMB under control number 0563-0053.
E-Government Act Compliance
FCIC is committed to complying with the E-Government Act of 2002,
to promote the use of the Internet and other information technologies
to provide increased opportunities for citizen access to Government
information and services, and for other purposes.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA),
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal governments and
the private sector. This rule contains no Federal mandates (under the
regulatory provisions of title II of the UMRA) for State, local, and
tribal governments or the private sector. Therefore, this rule is not
subject to the requirements of sections 202 and 205 of UMRA.
Executive Order 13132
It has been determined under section 1(a) of Executive Order 13132,
Federalism, that this rule does not have sufficient implications to
warrant consultation with the States. The provisions contained in this
rule will not have a substantial direct effect on States, or on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.
Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, Consultation and Coordination with Indian Tribal
Governments. The review reveals that this regulation will not have
substantial and direct effects on Tribal governments and will not have
significant Tribal implications.
Regulatory Flexibility Act
FCIC certifies that this regulation will not have a significant
economic impact on a substantial number of small entities. Program
requirements for the Federal crop insurance program are the same for
all producers regardless of the size of their farming operation. For
instance, all producers are required to submit an application and
acreage report to establish their insurance guarantees and compute
premium amounts, and all producers are required to submit a notice of
loss and production information to determine the amount of an indemnity
payment in the event of an insured cause of crop loss. Whether a
producer has 10 acres or 1000 acres, there is no difference in the kind
of information collected. To ensure crop insurance is available to
small entities, the Federal Crop Insurance Act authorizes FCIC to waive
collection of administrative fees from limited resource farmers. FCIC
believes this waiver helps to ensure that small entities are given the
same opportunities as large entities to manage their risks through the
use of crop insurance. A Regulatory Flexibility Analysis has not been
prepared since this regulation does not have an impact on small
entities, and, therefore, this regulation is exempt from the provisions
of the Regulatory Flexibility Act (5 U.S.C. 605).
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which require intergovernmental consultation with State and
local officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12988
This final 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 to require the insurance provider to take specific action under the
terms of the crop insurance policy, the administrative appeal
provisions published at 7 CFR part 11 CFR part 400, subpart J, for the
informal administrative review process of good farming practices as
applicable, must be exhausted before any action against FCIC for
judicial review may be brought.
[[Page 52588]]
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
This rule finalizes changes to the Common Crop Insurance
Regulations (7 CFR part 457) 457.153 Peach Crop Insurance Provisions
that were published by FCIC on January 24, 2012, as a notice of
proposed rulemaking in the Federal Register at 77 FR 3400-3404. The
public was afforded 60 days to submit comments after the regulation was
published in the Federal Register. A total of 202 comments were
received from 17 commenters. The commenters were insurance providers,
agents, growers, growers associations, an insurance organization, and
other interested parties.
The public comments received regarding the proposed rule and FCIC's
responses to the comments are as follows:
General:
Comment: A commenter stated many of the proposed changes in the
Peach Crop Provisions Proposed Rule, as explained in the ``Background''
section, appear to be reasonable.
Response: FCIC thanks the commenter for their review of the
proposed rule and their support.
Section 1--Definitions:
Comment: A few commenters expressed support for the proposed change
to remove the definition of ``actual price per bushel for'' since the
Free on Board (FOB) prices are no longer consistently reported by
Agricultural Marketing Service (AMS).
Response: FCIC thanks the commenters for their review of the
proposed rule and their support. The proposed changes have been
retained in this final rule.
Comment: A few commenters do not agree with the proposed addition
of definitions of ``fresh and ``processing'' and recommend revising the
definition to ``Fresh production'' or ``Fresh peach production'' as in
the current Apple Crop Provisions. This would then necessitate revising
item (1) to state ``Peaches from insurable acreage that:'' instead of
``Peach production * * *.'' Commenters also recommended revising the
definition to ``Processing production'' or ``Processing peach
production'' as in the current Apple Crop Provisions.
Response: FCIC agrees and has revised the definition of ``Fresh''
to ``Fresh peach production'' and ``Processing'' to ``Processing peach
production'' in these this final rule.
Comment: A few commenters recommended revising the definition of
``fresh'' to read * * * ``its basic form * * *'' to ``* * * the basic
form * * *'' as in the Apple Crop Provisions.
Response: FCIC agrees and has deleted the word ``its'' and replaced
with ``the'' from the definition of ``fresh'' and ``processing''.
Comment: A few commenters recommended that if the lead-in remains
``Peach production'' instead of ``Peaches'', to match a singular
subject, change the word ``Are'' to ``Is'' at the start of section
1(1)(i), (iii) & (iv); and change the first word of section 1(1)(ii) to
``Grades'' and section 1(1)(iv) to ``Follows''.
Response: FCIC agrees with the commenters and has revised the
provisions accordingly.
Comment: A few commenters questioned the definition of ``fresh.''
The definition requires fresh peaches to ``Grade at least U.S. Extra
No. 1 or better consisting of the minimum diameter as specified in the
Special Provisions.'' This requires the peaches actually be produced
and graded before the determination is made. The commenters expressed
concern because the peach acreage must be reported as fresh or
processing on the acreage report. The commenters ask who will be
required to grade the peaches because insurance providers have had no
training for grading peaches in the past. The commenters ask whether
there are USDA peach graders available to assist in the event of any
questions or disagreements on the grading of peaches.
Response: FCIC understands and agrees with the commenters that the
determination of whether a peach meets the definition of fresh or
processing is difficult when it is reported on the acreage report.
There is no way to know whether a peach is a fresh peach or processing
unless is it graded. The designation of peach acreage as fresh and
processing occurs on the acreage report based on the certification
provided by the producer that at least 50 percent of the peaches have
been sold as fresh and meets the other requirements for fresh. If these
requirements are met, the acreage qualifies as fresh even if the
peaches subsequently produced do not meet the definition for fresh. If
the acreage is subsequently determined not to meet the definition of
fresh peach production, the policy provides for remedies. Further, the
Peach Loss Adjustment Standards provides instructions to insurance
providers to grade peach production or have the samples of the peach
production taken to a State/Federal licensed grader to determine the
grade of the peach production. No change has been made.
Comment: Numerous commenters stated the phrase ``each unit'' needs
to be revised to avoid the problem associated with the Apple Crop
Provisions which necessitated issuance of a number of bulletins to
clarify, the reference to ``each unit'' in section 1((1)(v) of the
definition of ``Fresh''.
Response: A large number of apple producers, who are also peach
producers, pointed out that they can and do maintain records of
production by unit. However, once apples or peaches are delivered to a
warehouse, which is often a third party, for sales and distribution, it
is virtually impossible and/or impractical to expect all the apples or
peaches to be tracked by unit. FCIC agrees with the commenter and will
revise the phrase ``each unit'' to ``total production''.
Comment: Numerous commenters asked how the insured would
``certify,'' as noted in section 1(1)(v) of this definition, that at
least 50 percent of the production from acreage reported as fresh peach
acreage from each unit was sold as fresh peaches in one or more of the
four most recent crop years.'' The commenter asked whether this is
accomplished simply by the fact that the insured is reporting the
acreage as fresh rather than as processing, or whether some form of
additional documentation required (and if so, is it required with the
acreage report or at some other time, such as in the event of an Actual
Production History (APH) review).
Response: As with all APH programs, certifications include not only
the yield but also an attestation to the fact that the producer has the
actual records to support the yield. The same concept applies here. The
producer is certifying that not only has at least 50 percent of the
production from the acreage in the unit been sold as fresh but also
that the producer has the records to support those sales. Verification
by the insurance provider that records exist would occur the same as
any other program where there is a need to verify the production
reported for the purpose of establishing the guarantee. No change has
been made.
Comment: Numerous commenters stated that based on market demand,
large growers must place peaches in cold storage where they lose
quality over time. To illustrate, 1000 bushels of peaches that could be
sold as fresh peaches today are placed in cold storage. When peaches
are removed
[[Page 52589]]
from cold storage, only 850 bushels can be sold as fresh; thus only 850
bushels can be used to qualify for fresh coverage. In contrast a
smaller grower who distributes to local businesses will timely sell all
1000 bushels as fresh and use 1000 bushels towards fresh coverage
qualification. In this common situation, the policy does not treat to
all growers equally.
Response: It appears that the commenter is suggesting that grading
records obtained before the peaches are put in storage be used to
determine whether the acreage qualifies for fresh or processing. FCIC
cannot simply use grading records because there are instances where
peaches that grade as fresh are intended to be and are sold in the
processing market. Because fresh peaches gets a higher price election
than processing peaches, in order to avoid over-insuring the crop, FCIC
must ensure the producer is capable of producing fresh peaches and has
a buyer for the fresh peaches. Further, basing insurance on the intent
to sell the production as fresh is too subjective a standard. FCIC can
only base its insurance offer on verifiable documentation, in this case
the sales records of the production. FCIC has taken the concerns
expressed by the commenter into consideration when it set the threshold
at 50 percent and not some greater percentage to establish that the
acreage of peaches was produced for the fresh market. No change has
been made.
Comment: A few commenters stated direct marketers sell fresh
peaches. Due to diverse methods of record keeping many direct marketers
will be unable to produce verifiable sold records to qualify for fresh
coverage. Most direct marketers are willing to comply with the
requirements for a verifiable record. However, under the proposed
policy many will be limited to processing coverage for one or more
years until they can convert their record keeping methods and meet the
50 percent sold as fresh peach production. In this common situation,
the policy does not treat to all growers equally.
Response: As with all APH programs, there is a requirement to
certify yields based on actual records of production or transitional
yields. This means producers should already have records of past
production. This record keeping requirement applies to all crops
insured under the APH program, including those crops that are commonly
direct marketed. FCIC understands direct marketing producers may have
diverse methods of record keeping so FCIC has made revisions to
procedure to allow other acceptable verifiable records to be used for
peach direct marketers. In the past, there have been issues with
respect to whether producers seeking insurance have the experience to
grow and to follow cultural practices appropriate to produce fresh
peaches. Fresh peaches receive a higher price than processing peaches.
Therefore, to protect program integrity, FCIC must maintain the
requirement that producers demonstrate that they can produce fresh
peaches to be eligible to insure their peach acreage as fresh. No
change has been made.
Comment: A few commenters recommended that due to lack of records
in a new orchard (or transferred orchards) and along with the desire of
producers to insure fruit for fresh production, a new eligible producer
or a new orchard, should be allowed to insure for fresh coverage by
declaration.
Response: Declarations of intent without the requirement for
maintaining supporting records has proven in the past to lead to
instances of abuse of the program when producers declare their intent
to produce the crop as fresh when they have not been able to produce a
crop meeting the definition of fresh or they have no viable market for
their fresh production. FCIC cannot permit insurance based on a higher
price election if the producer does not have the ability to ever
receive that price. Unfortunately, this issue especially applies to new
producers and new orchards where there is no history of ever producing
a fresh peach crop. FCIC has taken the commenters concerns into
consideration when it set the 50 percent threshold for producing fresh
peaches and the one year requirement instead of some other percentage
or number of years. In addition, the 50 percent threshold and record
keeping requirement may limit insurance but if the new producer
legitimately grows the peaches for the fresh market, this limitation
should not last more than a year. No change has been made.
Comment: A few commenters stated the apple policy requires apples
to be sold at a price commensurate with that of a fresh apple via
product management bulletin. If FCIC intends for the peach policy to
follow the same rules then the price language needs to be added to the
definition of Fresh. In addition, FCIC needs to define ``a price
commensurate with that of a fresh peach''. The current definition is
ambiguous and does not allow for unilateral application among the
insurance providers.
Response: FCIC agrees with the commenters and has clarified in the
definition of ``fresh peach production'' to specify that peaches must
have been sold or could have been sold for a price not less than Risk
Management Agency's (RMA) published fresh peach price election. If
fresh peaches were sold or could have been sold at a fresh price that
was less than the RMA's published fresh peach price election for the
applicable year, then the producer must provide verifiable records to
show that the price received was not less than the price for fresh
peaches sold in the area the insured normally sells peach her or her
production.
Comment: Commenters stated it is critical for FCIC to define
``verifiable records'' in the definition of ``Fresh'' in section 1.
Growers need to have a clear and concise explanation of what
constitutes ``verifiable records'', especially for ``you- pick
operations'' to properly comply with the regulations.
Response: Subsequent to this proposed rule, FCIC published a final
rule amending the Common Crop Insurance Regulations. A definition for
the term ``verifiable records'' was added to that final rule to refer
the reader to the definition contained in 7 CFR part 400, subpart G.
Therefore, a definition of ``verifiable records'' is now contained in
the policy. No change has been made.
Comment: A few commenters asked if yields for you-pick operations
can be verified by an on tree pre-harvest appraisal as opposed to sales
receipts.
Response: As in the case of most perennials, the peach policy
states before production is sold by direct marketing a pre-harvest
appraisal must be completed by the insurance provider to determine the
potential production to count. However, a pre-harvest appraisal may
determine potential production to count, but it does not determine the
quantity of the total production sold as fresh peaches. Therefore, it
is incumbent upon the insured to provide verifiable records when
requested, that must reflect whether the value received is consistent
with the value of fresh peaches verses the value of processing peaches.
No change has been made.
Comment: A few commenters stated that it is confusing as to why the
phrase in section 1 in the definition of ``fresh peach production''
subsection (2) requires peach acreage with production not meeting all
the requirements in subsection (1) of the ``fresh peach production''
definition to be designated on the acreage report as processing peach
production. The commenters ask whether this designation of processing
acreage on the acreage report considered a forward-looking or an after-
the-fact looking statement, or both. The commenters suggested this
provision would be better situated in section 6 (Report of Acreage). If
all of the requirements in subsection (1) of the
[[Page 52590]]
``fresh peach production'' definition must be met, then it would be
impossible that any acreage could be designated as fresh peach
production, as subsection (1) of the ``fresh peach production''
definition most likely will never be satisfied.
Response: FCIC agrees with the commenter that the designation of
acreage not producing production meeting the requirements as fresh
peach production as processing acreage on the acreage report is not a
definitional requirement and, therefore, FCIC has removed paragraph (2)
and redesignated the remaining provisions. FCIC has also revised the
provisions in section 6 to clarify that any acreage not qualifying for
fresh peach production in accordance with these Crop Provisions must be
designated on the acreage report as processing peach production.
Comment: A few commenters recommended changing the term ``Grade''
to ``Grades'' in section 1 of ``fresh peach production'' since the
definition refers to U.S. Extra No. 1 or better.
Response: FCIC agrees with the commenters and has revised the
definition of ``fresh peach production'' accordingly.
Comment: FCIC received numerous comments in reference to the
definition of ``post production cost'' in section 1, asking how ``post
production cost'' is determined and stating the definition needs
further clarification.
Response: As FCIC stated in the ``Background'' of the proposed
rule, the definition of ``post production cost'' is defined as cost
associated with activities that occur during harvesting, packing,
transportation, and marketing. Insurance coverage is limited to those
perils and costs that occur while the crop is in the field. Therefore,
for the purposes of determining ``post production costs,'' FCIC will
separate those costs as determined by using regional peach price data
of peach production budgets from regional respective universities
extension, other USDA agencies, and other third party resources. The
``post production cost'' is utilized in order to adjust quality damage
by normalizing the actual sale price to the price election amount which
is valued ``on tree''. Post production cost amounts will be provided in
the Special Provisions. However, FCIC has revised the definition to
specify how the post production costs will be determined.
Section 2--Unit Division:
Comment: Numerous commenters expressed support for the proposed
change in section 2 which allows optional units by fresh, processing,
and non-contiguous land as specified in the Special Provisions. The
commenters stated this change will allow producers more flexibility in
making management decisions on how to insure their crops.
Response: FCIC thanks the commenters for their review of the
proposed rule and their support. The proposed change has been retained
in this final rule.
Section 3--Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities:
Comment: A few commenters questioned using the word ``bearing'' in
the section 3(c)(2). Producers are required to report their uninsurable
acres, and when trees are first planted, they will be non-bearing. The
commenters ask whether it is the intent for producers to report zero
trees on their uninsurable acres. If the block consists of older trees
and younger interplanted trees of the same variety, and only the
bearing trees are counted, the commenter states that there will be
inconsistencies with the acres, the tree spacing, and the density. If
growers remove many older trees and replace them with younger trees,
they will need to report them on the producer's Pre-Acceptance
Worksheet (PAW) as they have performed cultural practices that will
reduce the yield from previous levels. Commenters suggested growers
should be required to report all trees and this number should remain
constant until they remove trees or plant new trees. Insurance
providers should not be required to track only the trees that are
bearing and be required to revise this figure each year.
Response: The information that must be submitted in accordance with
section 3(c) is required in order to establish the producers' APH,
approved yield, and the amount of coverage. Section 3(c)(2) requires
the bearing trees on both insurable and uninsurable acreage to be
reported. The number of bearing and non-bearing trees on insurable and
uninsurable acreage must be reported on the Pre-acceptance Worksheet.
Otherwise, there will be inconsistencies with acres, tree spacing, and
the density, if only bearing trees are reported. Since non-bearing
trees are not eligible for coverage under the policy, the intent is to
have the producer report zero if there are no bearing trees in the
unit. Since premium and indemnity payments are based on the number of
trees that meet eligibility requirements, insurance providers are
required to track both bearing and non-bearing trees as outlined in the
Crop Provisions and the Crop Insurance Handbook. No change has been
made.
Comment: Numerous commenters expressed support for the proposed
change in section 3 allowing the insured to select different coverage
levels for fresh and processed peaches within the same unit. The
commenters stated this change will allow producers more flexibility in
making management decisions on how to insure their crops.
Response: FCIC thanks the commenters for their review of the
proposed rule and their support. The proposed change has been retained
in this final rule.
Comment: A few commenters referenced section 3(d) about the
reduction of the yield used to establish the production guarantee for
subsequent crop years due to tree damage, removal of trees, change in
practices, interplanted of a perennial crop, or any other circumstances
that reduce the yield. The commenters state that the eastern peach
growing areas have had downward trending component based on the 5 year
database for APH calculations. The commenters state that this makes the
peach database much more responsive to yield changes than a 10 year
database. Commenters stated procedural changes by RMA to the
application of ``downward trending'' circumvent actions taken by
Congress to minimize flaws in the Federal crop insurance program
through the Agricultural Risk Protection Act of 2000 (ARPA).
ARPA created a yield adjustment option and mandated that in the
event of a significant crop loss or zero production on a given
insurance unit, the producer would be able to replace the low yield
with 60 percent of the transitional yield. Recent procedural changes
regarding downward trending as applied to the peach crop insurance
program prohibits producers from selecting the yield adjustment option
when there are two consecutive years of crop losses recorded on a
particular insurance unit regardless of the reason for the loss. This
change negatively affects APH and is in direct contradiction of the
ARPA. Additionally downward trending allows RMA to reduce the APH to 75
percent of its value. Currently, by definition and application, a 6
year old block entering its prime production years could be subject to
downward trending if it has losses in 2 of the last 3 years due to
climatic weather events. In such a case losing the yield adjustment
option directly refutes the ARPA intention of Congress in 2000 and
dramatically lowers the producer's APH. Therefore this rule should be
removed or, at the very minimum, be applied to orchards that are 10
years of age.
[[Page 52591]]
Response: Since the recommended changes were not proposed, and the
public was not provided an opportunity to comment, the recommendation
cannot be incorporated in the final rule. However, in 2009 FCIC
released the ``Perennial Crop and Declining Yield Report to Congress''
http://www.rma.usda.gov/pubs/2009/perennialcrops.pdf. In this
publication FCIC addressed the issues of utilizing the insured's APH in
place of T-yields for yield adjustments, as well as high variability
testing for crops with a shorter base period. As noted in the report,
FCIC has requested legislative authority for these changes. Until
legislative authority is granted, FCIC procedures allow RMA Regional
Offices to modify or waive a high variability adjustment, which
includes downward trend adjustments, and to authorize yield adjustment
for APH, when appropriate. No change has been made.
Comment: FCIC received numerous comments in reference to the last
sentence of section 3(d), ``* * * We will reduce the yield used to
establish your production guarantee for the subsequent crop year''.
Commenters questioned what happens if the event that occurred was
something that only impacts the crop for the year in question and has
no carryover effect on the yield into the next year. Commenters
suggested the language needs to be revised to provide the insurance
provider some latitude as to whether the subsequent years yield should
be reduced and to what extent it should be reduced. There could also be
certain events that occur that have some effect on the next year but
the impact is less than the production that was assessed for the year
in which the event occurred. Therefore, this sentence needs to be
modified to allow the approved insurance provider to have some
flexibility to be able to determine how much, if any, that the yield
should be reduced for the subsequent crop year.
Response: Section 3(d) states that a reduction in the yield will be
done, as necessary. This gives the insurance provider the discretion to
determine the event will cause a reduction in yield on the subsequent
crop year. In addition, section 3(d) allows the insurance provider to
estimate the effect of any reduction in future years. Therefore, the
provision already contains the flexibility requested. No change has
been made.
Section 6--Report of Acreage:
Comment: FCIC received numerous comments regarding the provision to
report and designate all acreage of peaches as fresh or processing
peaches by the acreage reporting date. However, fresh and processing
are identified as types in the Special Provisions of the Actuarial
Information Browser. FCIC stated in the ``Background'' of the Peach
Crop Provision proposed rule, it removed the word ``type'' because it
is no longer applicable. The commenters stated, since the proposal is
to remove the word ``type'', it will be necessary to change the Special
Provisions. Due to the importance of the Special Provisions, the
commenter recommended FCIC provide insurance providers with a preview
of the Special Provisions, so they can see the changes.
Response: FCIC understands the commenter's concern and agrees the
types as well as the numerical type codes may change for the 2013 crop
year. As stated in the proposed rule, the word ``type'' will not be
applicable in the future, which is why the definitions of ``fresh'' and
``processing'' were added. The Actuarial Information Browser will
provide a generic definition of ``type'', which allows for changes or
additional types in the future. This is consistent with other Crop
Provisions and allows FCIC to make changes in the Special Provisions,
if applicable, without having to promulgate regulations to revise, add,
or change types of peaches, which allows FCIC to be more responsive to
the risk management needs of producers. Since these changes are similar
to other crops, it is not necessary to provide a preview of the changes
since implementation of the Special Provisions are time sensitive and
FCIC is concerned that sending the Special Provisions out for preview
will delay implementation. The change also aids in sharing information
with other United States Department of Agriculture (USDA). Adding the
definition of ``fresh peach production'' and ``processing peach
production'' clearly defines the intended use of peach production. No
change has been made.
Section 7--Insured Crop:
Comment: FCIC received comments stating that the introductory
paragraph in section 7 seems to be redundant. The opening paragraph
states ``* * * the crop insured will be all the peaches in the county
for which a premium rate is provided by the actuarial documents''.
Section 7(c) repeats the same opening paragraph by stating ``* * * any
varieties of peaches that are grown for the production of fresh or
processing peaches on insured acreage for which a guarantee and premium
rate are provided by the actuarial documents.''
Response: FCIC agrees with the commenters stating the opening
paragraph in section 7 is redundant with section 7(c) and the provision
has been revised accordingly.
Section 9--Insurance Period:
Comment: A few commenters stated subsections in section 9(a)(1) and
(c) seem somewhat contradictory and confusing. According to (a)(1):
``Coverage begins on November 21 of each crop year, except that for the
year of application* * *'' if the application is received in the last
10 days before sales closing date, coverage attaches on the 10th day.
But according to (c): ``* * * for each subsequent crop year that the
policy remains continuously in force, coverage begins on the day
immediately following the end of the insurance period * * *'' The
calendar date for the end of the insurance period is September 30 in
accordance with section 9(a)(2), so this indicates coverage would begin
October 1 (unless some other event ended coverage earlier) rather than
November 21. It appears that the November 21 date applies only the year
of application (with the 10-day exception for applications during that
10-day period) rather than for ``each'' crop year since all subsequent
crop years are addressed in (c).
Response: Since the recommended changes were not proposed, and the
public was not provided an opportunity to comment, the recommendation
cannot be incorporated in the final rule. However, FCIC believes there
is no conflict. Insurance coverage begins on November 21 of each crop
year, except for the year of application. Insurance coverage ends on
September 30. However, in accordance with these Crop Provisions, for
each subsequent crop year that the policy is remains continuously in
force, coverage begins on the day immediately following the end of
insurance period for the prior crop year. The insurance period is set
to provide insurance during the same time when the crop is at risk from
normal causes of loss. This is period is not the same for all crops.
There needs to be variance in the beginning and ending of insurance
periods to reflect differences in the crops being insured and the areas
where they are grown. The calendar date for the end of insurance period
must reflect the normal harvest date for each crop. No change has been
made.
Comment: A commenter recommended the words ``* * * after an
inspection * * *'' should be removed in section 9(b)(1). If damage has
not generally occurred in the area where such acreage is located, it
should be up to the insurance providers' discretion to decide whether
the acreage needs an inspection to be considered acceptable. The
language in this section already refers to the insurance provider
having the ability to consider the acreage acceptable. Since the
acreage
[[Page 52592]]
and production reporting dates are after insurance attaches, the
insurance provider may not know if the acreage was acquired after
coverage began, but before the acreage reporting date. The insurance
provider reserves the right to perform an inspection if they deem
necessary, but this should NOT be a requirement.
Response: Since the recommended changes were not proposed, and the
public was not provided an opportunity to comment, the recommendation
cannot be incorporated in the final rule. No change has been made.
Comment: A commenter recommended adding language to this section to
allow the insurance provider the opportunity to inspect and insure any
additional acreage that is acquired after the acreage reporting date if
they wish to do so. The insurance provider should have the opportunity
to accept or deny coverage in these types of situations. This would be
similar to what is currently allowed for acreage that is not reported
in accordance with section 6(f) of the Basic Provisions.
Response: Since the recommended changes were not proposed, and the
public was not provided an opportunity to comment, the recommendation
cannot be incorporated in the final rule. No change has been made.
Section 11--Duties in the Even of Damage:
Comment: FCIC received comments that the provision in section 11
requiring the insured to leave representative samples in units should
be removed. Peaches are extremely perishable, with a ripening period of
only 10-14 days. Beyond that, the fruit will begin to break down and
decay. Fruit left on trees provides an ideal environment for insect and
disease infestation. Many units contain multiple varieties, ripening on
different timelines. This practice of leaving samples would increase
the likelihood of infection for neighboring varieties''.
Response: FCIC realizes that there is a narrow window of time to
harvest the peaches and has tried to achieve a balance with will the
need to provide meaningful coverage, such as direct harvest which
requires an appraisal because of the difficulty with verifiable
records, and protect program integrity. Insurance providers know of the
expediency needed to appraise peaches and the goal is to conduct such
appraisals in a timely manner to avoid any adverse consequences to the
peaches or trees. No change has been made.
Section 12--Settlement of Claim:
Comment: A few commenters suggested adding a second example in
section 12(b) depicting two optional units, one for fresh peaches and a
second for processing peaches and to demonstrate within the fresh peach
unit a portion of the total production that does not meet the
requirements for fresh production and is sold as processing peach
production.
Response: FCIC understands the commenters suggestion, but due to
the numerous situations regarding optional units, it is not possible to
list them all in an example. The example in section 12(b) is only
intended to provide only a general explanation of how the indemnity
payment would be calculated in accordance with these Crop Provisions.
To the extent that other examples may be necessary, they will be
provided in the applicable procedures. No change has been made.
Comment: A few commenters recommended adding hyphens in the phrase
``3,000-bushel production guarantee'' and ``1,500-bushel production
guarantee'' in steps (A) (B).
Response: FCIC has revised the provision accordingly.
Comments: Commenter asks why the steps are designated (A)-(G)
rather than (1)-(7) to match (b) (1)-(7) and to be consistent with
other crop policies.
Response: FCIC understands the commenters questioning why the steps
in the example designated as (A)-(G) rather that (1)-(7) to match (b)
(1)-(7). However, the example follows paragraph (7) and is, in effect,
a descriptor for paragraphs (1) through (7). Therefore, it did not make
sense to designate these provisions again as paragraphs (1) through
(7). Further, descriptive headings and formatting of various policy
provisions are formulated for convenience only and are not intended to
affect the construction or meaning of any of the policy provisions. No
change has been made.
Comment: A few commenters recommended the subsection designation of
``(2.)'' should read ``(2)''.
Response: FCIC has revised the provision accordingly.
Comment: A commenter asked whether the reference to the fresh peach
price election and processing peach price election in section
12(c)(3)(i) and (ii)(A) is the same as RMA's price election in the
Special Provisions or the addendum to the Special Provisions and not
the insured's price election.
Response: The ``fresh peach and processing price election''
referenced in section 12(c)(3)(i) and (ii)(A) are RMA's price elections
as published in the Special Provisions. No change has been made.
In addition to the changes described above, FCIC has made minor
typographical and punctuation changes.
Good cause is shown to make this rule effective less than 30 days
after publication in the Federal Register. Good cause to make a rule
effective less than 30 days after publication in the Federal Register
exists when the 30-day delay in the effective date is impracticable,
unnecessary, or contrary to the public interest.
With respect to the provision for this rule, it would be contrary
to public interest to delay implementation because public interest is
served by improving the insurance product as follows: (1) Increasing
insurance flexibility by providing for separate optional units by fresh
and processing; (2) allowing different coverage levels for all fresh
peach acreage in the county and for all processing peach acreage in the
count; and (3) providing simplification and clarity to the peach crop
insurance program.
If FCIC is required to delay the implementation of this rule 30
days after the date it is published, the provisions of this rule could
not be implemented unit the 2014 crop year. This would mean the
affected producers would be without the benefits described above for an
additional year.
For the reasons stated above, good cause exists to make these
policy changes effective less than 30 days after publication in the
Federal Register.
List of Subjects in 7 CFR Part 457
Crop insurance, Peach, Reporting and recordkeeping requirements.
Final Rule
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation amends 7 CFR part 457 effective for the 2013 and
succeeding crop years as follows:
PART 457--COMMON CROP INSURANCE REGULATIONS
0
1. The authority citation for 7 CFR Part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(o).
0
2. Amend Sec. 457.153 as follows:
0
a. Amend the introductory text by removing the ``2001'' and adding
``2013'' in its place;
0
b. Remove the undesignated paragraph immediately preceding section 1.
0
c. Amend section 1 as follows:
0
1. Add definitions of ``fresh peach production'', ``post production
cost'', and ``processing peach production'' in alphabetical order; and
[[Page 52593]]
0
2. Remove the definition of ``actual price per bushel for''.
0
d. Redesignate sections 2, 3, 4, 5, 6, 7, 8, 9, 10, and 11 as 3, 4, 5,
7, 8, 9, 10, 11, 12, and 13, respectively.
0
e. Add a new section 2.
0
f. Amend redesignated section 3 as follows:
0
i. Remove the phrase ``(Insurance Guarantees, Coverage Levels, and
Prices for Determining Indemnities)'' in the introductory text;
0
ii. Redesignate paragraphs (a), (b), and (c) as (b), (c), and (e),
respectively, and adding a new paragraph (a);
0
iii. Revise redesignated paragraphs (b), (c) introductory text, (c)(1),
(c)(3), and (c)(4)(ii);
0
iv. Designate the undesignated paragraph following redesignated
paragraph (c) as paragraph (d); and
0
v. Revise redesignated paragraph (d).
0
g. Amend redesignated section 4 by removing the phrase ``(Contract
Changes)''.
0
h. Amend redesignated section 5 by removing the phrase ``(Life of
Policy, Cancellation and Termination)''.
0
i. Add a new section 6.
0
j. Amend redesignated section 7 as follows:
0
i. Remove the phrase ``(Insured Crop)'';
0
ii. Amend paragraph (c) by removing phrases ``of the types or'' and
``(except Processing Peaches excluded in California) on insured acreage
and for which guarantee and premium rate are provided by the Actuarial
Table'';
0
iii. Amend paragraph (d) by removing the word ``and'' at the end;
0
iv. Amend paragraph (e) by removing the period at the end and adding
the phrase ``; and'' in its place; and
0
v. Add a new paragraph (f).
0
k. Amend redesignated section 8 by removing the phrase ``(Insurable
Acreage)''.
0
l. Amend redesignated section 9 as follows:
0
i. Remove the phrase ``(Insurance Period)''in paragraphs (a) and (b);
and
0
ii. Amend paragraph (c) by removing the phrase ``paragraph (a)(1)'' and
adding the phrase ``section 9(a)(1)'' in its place.
0
iii. Amend paragraph (d) to add a comma after the phrase, ``termination
dates.''
0
m. Amend redesignated section 10 by removing the phrase ``(Causes of
Loss)'' in paragraphs (a) and (b).
0
n. Amend redesignated section 11 as follows:
0
i. Redesignate the introductory text as paragraph (b);
0
ii. Redesignate paragraphs (a), (b), (c), and (d) as (1), (2), (3), and
(4), respectively;
0
iiii. Add a new paragraph (a); and
0
iv. Remove the phrase ``(Duties in the Event of Damage or Loss)'' in
redesignated paragraph (b).
0
o. Amend redesignated section 12 as follows:
0
i. Revise paragraphs (b)(1) through (b)(7);
0
ii. Add a loss example after paragraph (b)(7);
0
iii. Revise paragraph (c)(1) introductory text:
0
iv. Revise paragraph (c)(1)(i)(B);
0
v. Revise paragraph (c)(1)(iii);
0
vi. Revise paragraph (c)(2); and
0
vii. Revise paragraphs (c)(3)(i) and (c)(3)(ii).
The revised and added text reads as follows:
Sec. 457.153 Peach crop insurance provisions.
* * * * *
1. Definitions.
* * * * *
Fresh peach production. Peach production from insurable acreage
that:
(1) Is sold, or could be sold, for human consumption without
undergoing any change in the basic form, such as peeling, juicing,
crushing, etc.
(2) Grades at least U.S. Extra No. 1 or better, and consisting of a
2\1/4\ inch minimum diameter, unless otherwise specified in the Special
Provisions.
(3) Is from acreage that is designated as fresh peaches on the
acreage report;
(4) Follows the recommended cultural practices generally in use for
fresh peach acreage in the area in a manner generally recognized by
agricultural experts;
(5) Is from acreage that you certify, and if requested by us,
provide verifiable records to support, that at least 50 percent of the
total production from acreage reported as fresh peach acreage was sold
as fresh peaches in one or more of the four most recent crop years; and
(6) Is sold or could have been sold for a price that is not less
than the applicable fresh peach price election for the applicable crop
year in the actuarial documents. If the fresh peach production is sold
or could have been sold for a price less than the applicable fresh
peach price election for the applicable crop year in the actuarial
documents, you must provide verifiable records to show that the price
received was at least the amount paid by buyers for fresh peaches in
the area in which you sell your peaches.
* * * * *
Post production cost. The costs, as specified in the Special
Provisions, associated with activities that occur during harvesting,
packing, transportation, and marketing, as determined by FCIC using
regional peach price data of peach production budgets from regional
respective universities extension, other USDA agencies, and other third
party resources.
Processing peach production. Peach production from insurable
acreage that is:
(i) Sold, or could be sold, for the purpose of undergoing a change
to its basic structure such as peeling, juicing, crushing, etc.; or
(ii) From acreage designated as processing peaches on the acreage
report.
* * * * *
2. Unit Division.
In addition to the requirements contained in section 34 of the
Basic Provisions, optional units may be established if each optional
unit is:
(a) Located on non-contiguous land; or
(b) By fresh and processing as specified in the Special Provisions.
3. Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities.
* * * * *
(a) You may select a separate coverage level for all fresh peach
acreage and for all processing peach acreage. For example, if you
choose the 55 percent coverage level for all fresh peach acreage, you
may choose the 75 percent coverage level for all processing peach
acreage.
(1) Notwithstanding paragraph (a) of this section, if you elect the
Catastrophic Risk Protection (CAT) level of coverage for fresh peach
acreage or processing peach acreage, the CAT level of coverage will be
applicable to all insured peach acreage in the county of both fresh and
processing peaches.
(2) If you only have fresh peach acreage designated on your acreage
report and processing peach acreage is added after the sales closing
date, we will assign a coverage level equal to the coverage level you
selected for your fresh peach acreage.
(3) If you only have processing peach acreage designated on your
acreage report and fresh peach acreage is added after the sales closing
date, we will assign a coverage level equal to the coverage level you
selected for your processing peach acreage.
(b) You may select only one price election for all the peaches in
the county insured under this policy unless the Special Provisions
provide different price elections by fresh and processing peaches. If
the Special Provisions allow
[[Page 52594]]
different price elections, you may select a separate price election for
all your fresh peaches and for all your processing peaches. If the
Special Provisions do not allow for different price elections, the
price elections you choose for fresh peaches and processing peaches
must have the same percentage relationship to the maximum price offered
by us for fresh and processing peaches. For example, if you choose 100
percent of the maximum price election for fresh peaches, you must
choose 100 percent of the maximum price election for processing
peaches.
(c) You must report, not later than the production reporting date
designated in section 3 of the Basic Provisions, separately by fresh
and processing peach acreage, as applicable:
(1) Any event or action that could impact the yield potential of
the insured crop including, interplanting of a perennial crop, removal
of trees, any tree damage, change in practices, or any other
circumstance that may reduce the expected yield upon which the
insurance guarantee is based, and the number of affected acres;
(2) * * *
(3) The age of trees, variety, and the planting pattern; and
(4) * * *
(ii) The variety;
* * * * *
(d) We will reduce the yield used to establish your production
guarantee, as necessary, based on our estimate of the effect of any
situation listed in sections 3(c)(1) through (4). If the situation
occurred:
(1) Before the beginning of the insurance period, we will reduce
the yield used to establish your production guarantee for the current
crop year as necessary. If you fail to notify us of any circumstance
that may reduce your yields from previous levels, we will reduce your
production guarantee at any time we become aware of the circumstance;
(2) Or may occur after the beginning of the insurance period and
you notify us by the production reporting date, the yield used to
establish your production guarantee is due to an uninsured cause of
loss;
(3) Or may occur after the beginning of the insurance period and
you fail to notify us by the production reporting date, production lost
due to uninsured causes equal to the amount of the reduction in yield
used to establish your production guarantee will be applied in
determining any indemnity (see section 12(c)(1)(ii). We will reduce the
yield used to establish your production guarantee for the subsequent
crop year.
* * * * *
6. Report of Acreage.
In addition to the requirements contained in section 6 of the Basic
Provisions, you must report and designate all acreage of peaches as
fresh or processing peaches by the acreage reporting date. Any acreage
not meeting all the requirements to qualify for fresh peach production
must be designated on the acreage report as processing peach
production.
7. Insured Crop.
* * *
(f) That are grown for:
(1) Fresh peach production; or
(2) Processing peach production.
* * * * *
11. Duties In the Event of Damage or Loss.
(a) In accordance with the requirements of section 14 of the Basic
Provisions, you must leave representative samples in accordance with
our procedures.
* * * * *
12. Settlement of Claim.
* * * * *
(b) * * *
(1) Multiplying the insured acreage for fresh and processing
peaches, as applicable, by the respective production guarantee;
(2) Multiplying each result in section 12(b)(1) by the respective
price election;
(3) Totaling the results in section 12(b)(2);
(4) Multiplying the total production of fresh and processing
peaches to be counted, as applicable (see subsection 12(c)) by the
respective price election;
(5) Totaling the results in section 12(b)(4);
(6) Subtracting the total in section 12(b)(5) from the total in
section 12(b)(3); and
(7) Multiplying the result in section 12(b)(6) by your share.
Example:
You have a 100 percent share in one basic unit with 10 acres of
fresh peaches and 5 acres of processing peaches designated on your
acreage report, with a 300 bushel per acre production guarantee for
both fresh and processing peaches, and you select 100 percent of the
price election of $15.50 per bushel for fresh peaches and $6.50 per
bushel for processing peaches. You harvest 2,500 bushels of fresh
peaches and 500 bushels of processing peaches. Your indemnity will be
calculated as follows:
(A) 10 acres x 300 bushels = 3,000-bushel production guarantee of
fresh peaches;
5 acres x 300 bushels = 1,500-bushel production guarantee of
processing peaches;
(B) 3,000-bushel production guarantee x $15.50 price election =
$46,500 value of the production guarantee for fresh peaches; 1,500-
bushel production guarantee x $6.50 price election = $9,750 value of
the production guarantee for processing peaches;
(C) $46,500 value of the production guarantee for fresh peaches +
$9,750 value of the production guarantee for processing peaches =
$56,250 total value of the production guarantee;
(D) 2,500 bushels of fresh peach production to count x $15.50 price
election = $38,750 value of the fresh peach production to count; 500
bushels of processing peach production to count x $6.50 price election
= $3,250 value of the processing peach production to count;
(E) $38,750 value of the fresh peach production to count + $3,250
value of the processing peach production to count = $42,000 total value
of the production to count;
(F) $56,250 total value of the production guarantee--$42,000 total
value of the production to count = $14,250 value of loss; and
(G) $14,250 value of loss x 100 percent share = $14,250 indemnity
payment.
[End of Example]
(c) * * *
(1) All appraised production as follows:
(i) * * *
(B) From which production is sold by direct marketing if you fail
to meet the requirements contained in section 11.
* * *
(iii) Unharvested peach production that would be marketable if
harvested;
* * *
(2) All harvested marketable peach production from the insurable
acreage.
(3) * * *
(i) For fresh peaches by:
(A) Dividing the value of the damaged peaches minus the post
production cost specified in the Special Provisions, by the fresh peach
price election; and
(B) Multiplying the result of section 12(c)(3)(i)(A) (not to exceed
1.00) by the number of bushels of the damaged fresh peaches.
(ii) For processing peaches by:
(A) Dividing the value of the damaged peaches minus the post
production cost specified in the Special Provisions, by the processing
peach price election; and
(B) Multiplying the result of section 12(c)(3)(ii)(A) (not to
exceed 1.00) by the number of bushels of the damaged processing
peaches.
* * * * *
[[Page 52595]]
Signed in Washington, DC, on August 24, 2012.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2012-21350 Filed 8-29-12; 8:45 am]
BILLING CODE 3410-01-P