[Federal Register Volume 77, Number 246 (Friday, December 21, 2012)]
[Rules and Regulations]
[Pages 75509-75521]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-30842]
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Rules and Regulations
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Federal Register / Vol. 77, No. 246 / Friday, December 21, 2012 /
Rules and Regulations
[[Page 75509]]
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: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the
Common Crop Insurance Regulations, Florida Citrus Fruit Crop Insurance
Provisions. The intended effect of this action is to provide policy
changes and clarify existing policy provisions to better meet the needs
of insured producers, and to reduce vulnerability to program fraud,
waste, and abuse. The proposed changes will apply for the 2014 and
succeeding crop years.
DATES: This rule is effective January 22, 2013.
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.
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, 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 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.
[[Page 75510]]
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), Florida Citrus Fruit Crop Insurance
Provisions that were published by FCIC on July 16, 2012, as a notice of
proposed rulemaking in the Federal Register at 77 FR 41709-41716. The
public was afforded 30 days to submit comments after the regulation was
published in the Federal Register.
A total of 80 comments were received from 6 commenters. The
commenters were insurance providers, an insurance service organization,
and a grower organization.
The public comments received regarding the proposed rule and FCIC's
responses to the comments are as follows:
General
Comment: A commenter asked that FCIC conduct at least one public
forum meeting, with current citrus growers, insurance provider loss
adjustment management, agents, and grower groups, before all the
proposed changes are implemented and binding in regards to the 2014
Florida Citrus Fruit policy.
Response: FCIC representatives have been present at several
meetings where Florida citrus fruit stakeholders, including loss
adjusters and grower groups have been present. At these meetings some
of the proposed changes to the Florida Citrus Fruit Crop Provisions
(Crop Provisions) were discussed and the stakeholders provided valuable
input. The information gathered at these meetings was considered when
drafting the proposed rule. FCIC regrets if all interested parties were
not in attendance at these meetings or if the topics covered did not
encompass all of the proposed changes. Further, all interested parties
have had an opportunity to comment on all the proposed changes.
Therefore, FCIC does not intend to conduct any additional meetings to
discuss the proposed changes prior to finalizing the Crop Provisions.
Comment: A few commenters stated FCIC's proposed system for
reclassifying citrus fruit is more cumbersome than the one currently
used by the agency. The commenters stated they can find no reason to
change the system and doing so will only cause confusion. Growers are
familiar with the current system as it has been in place for over 50
years. Changing such a widely accepted, time tested system simply for
the purpose of standardization with other commodities makes no sense.
Response: FCIC understands the concerns of the commenters that the
proposed changes to terminology and policy structure could initially
create confusion for stakeholders. However, these changes are necessary
in order to meet the objectives of the Acreage Crop Reporting
Streamlining Initiative, which has a broader goal of simplifying
reporting requirements for producers. Currently, different USDA
programs have different reporting requirements and terminology. In
order to streamline the reporting process, accommodations have been
made within all the affected programs to standardize their reporting.
In the long run, producers will benefit from this streamlined process.
Stakeholders should become more comfortable with the changes to
terminology and policy structure over time. No change has been made to
the final rule.
Comment: A commenter stated the proposed changes within the policy
for reclassifying citrus into commodities have their purpose and could
be perceived as a move in the right direction. However, instead of
renaming all Florida citrus and citrus fruit nationwide, the commenter
suggested that FCIC align and broaden coverage. The commenter stated
that claims should be separated at the variety level and not offset
another variety. If unit structures and coverage were enhanced and
broadened, then growers that only purchase catastrophic coverage would
be inclined to analyze their risk and management thereof and purchase
better protection.
Response: FCIC appreciates the commenter's suggestion that allowing
units to be separated at the varietal level would be more desirable to
producers and would result in producers selecting higher levels of
coverage on the varieties with a higher perceived risk. While the
proposed ``citrus fruit groups'' could be used to allow separate basic
units and coverage levels by variety, no such changes were proposed and
such changes would be significant, requiring the public to receive an
opportunity to comment. In considering such changes in the future, more
research would be necessary to determine the impact on premium rates
and the producers' willingness to pay for any increased rates. No
change has been made to the final rule.
Comment: A few commenters stated it would be helpful if FCIC would
clarify and publish all intended unit structures, commodity types,
intended uses and any other information that would be helpful to
understanding or explaining the information that will be contained in
the Special Provisions.
Response: As stated in the proposed rule, basic units will be
determined by citrus fruit group. The optional unit structure has not
changed. Although the commodity types and intended uses are subject to
change based on price availability and rating needs, the anticipated
commodity types, intended uses, and citrus fruit groups for the 2014
crop year are as follows:
----------------------------------------------------------------------------------------------------------------
Citrus fruit
Citrus fruit commodity Commodity type Intended use group
----------------------------------------------------------------------------------------------------------------
Oranges................................ Early-season.............. Juice...................... A
Oranges................................ Mid-season................ Juice...................... A
Oranges................................ Late-season............... Juice...................... B
Oranges................................ Late-season............... Fresh...................... C
Oranges................................ Navel..................... Fresh...................... D
Grapefruit............................. No Commodity Type Juice...................... E
Specified.
Grapefruit............................. No Commodity Type Fresh...................... F
Specified.
Tangelos............................... No Commodity Type Fresh...................... G
Specified.
Mandarins/Tangerines................... No Commodity Type Fresh...................... H
Specified.
Tangors................................ Murcotts.................. Fresh...................... I
Tangors................................ Temples................... Fresh...................... I
Lemons................................. No Commodity Type Juice...................... J
Specified.
Limes.................................. No Commodity Type Juice...................... K
Specified.
----------------------------------------------------------------------------------------------------------------
[[Page 75511]]
Comment: A commenter stated it would have been helpful if FCIC
would have provided a sample Special Provisions or some other example
to illustrate the distinctions between the terms, ``citrus fruit
commodities'' and ``citrus fruit groups.'' According to the definitions
and the background information in the proposed rule, it appears that a
``citrus fruit commodity'' may be subdivided into ``citrus fruit
groups'' made up of various combinations of ``commodity types'' and
``intended uses'' (and perhaps also ``classes'' and ``subclasses''). At
a guess, an example of ``commodity types'' might be early-season, mid-
season and late-season oranges, and ``intended uses'' might be fresh
and juice. The commenter stated that while the proposed definition of
``citrus fruit commodity'' includes all oranges together, various types
of oranges were designated in the current Florida Citrus Fruit Crop
Provisions as Citrus I (early and mid-season oranges), Citrus II (late
oranges juice), Citrus VII (late oranges fresh), and Citrus VIII (navel
oranges), with each of these being separate ``crops'' that the producer
could choose to insure or not. It appears that the new subdivision of
``citrus fruit group'' provides for similar insurance choices within
the ``commodity'' of oranges, so that a producer might choose to insure
``late-season oranges fresh'' but not ``late-season oranges juice'' (if
these are separate ``groups'' of ``commodity types'' and ``intended
uses''). The commenter asked if this correct.
Response: FCIC agrees with the commenter's interpretation of the
proposed rule. Within each citrus fruit commodity, such as oranges, the
producer can elect which citrus fruit groups to insure. However, once a
producer elects to insure a citrus fruit group, all oranges qualifying
for the citrus fruit group will be insured. The response to the
previous comment provides more detail on the commodity types and
intended uses FCIC plans to offer and how different combinations of the
commodity types and intended uses will be used to form citrus fruit
groups.
Comment: A commenter stated there are numerous references to
changes being made due to the expansion of type and practice into four
different new subcategories for each of these items. It would be
extremely beneficial if RMA would provide a sample of a proposed
Special Provision as a part of the proposed rule as this would assist
those reviewing the proposed rule when developing comments. It is
difficult to review and comment on various parts of this proposed rule
without knowing what the Special Provisions will contain under this new
format. The commenter requested that RMA consider publishing a sample
Special Provision as a part of all future proposed rule changes to Crop
Provisions.
Response: FCIC will consider posting a sample Special Provision
onto regulations.gov along with future proposed rules.
Comment: A commenter stated they recognize that, as stated in the
background information in the proposed rule, some of the proposed
terminology changes are made ``to be consistent with the terms
developed under the Acreage Crop Reporting Streamlining Initiative''
such as changing ``citrus fruit crop'' to ``citrus fruit commodity''
and ``citrus fruit type'' to ``commodity type.'' Also, the terms
``commodity type'' and ``intended use'' are part of the expanded types/
practices that will be implemented. The commenter stated that these
terms will become easier to deal with as stakeholders become more
familiar with them. However, the commenter stated that some of the
distinctions and coordination among the new definitions of ``citrus
fruit commodities,'' ``citrus fruit groups,'' ``commodity types,'' and
``intended uses'' (replacing the current definitions of ``citrus fruit
crop'' and ``citrus fruit type'') are not entirely clear and can result
in some confusion as to what exactly is being proposed.
Response: FCIC agrees that the new terminology will become easier
to understand over time. FCIC also agrees that not all commodity types,
intended uses, and citrus fruit groups were included in the proposed
rule. However, FCIC has listed all currently intended commodity types,
intended uses, and citrus fruit groups in response to a previous
comment.
Comment: A commenter stated changes in terminology will result in
many additional inspections for the 2014 crop year and this is a
concern.
Response: FCIC disagrees that changes in terminology will result in
additional inspections. Inspections will not be required for carryover
policyholders who have to fill out a new application solely as a result
of the revised terminology in the Crop Provisions. Inspections may be
required for carryover policyholders if: damage, production methods, or
cultural practices will reduce the insured's crop production; trees
have been removed or replaced with uninsurable trees; new land units
are added; the insured transfers to a different insurance provider; or
when spot checks are completed. However, inspection under these
circumstances was previously required. FCIC approved procedures will
provide additional information on required inspections.
Comment: A commenter recommended a series of changes to be made in
order to maintain consistency with the already-established expanded
types and practices. The commenter stated that this series of changes
will be more effective than the proposed changes, while still meeting
the apparent objectives of the proposed rule. First, the commenter
suggests removing the term ``citrus fruit group'' from the proposed
rule. Second, the commenter suggests that each of the citrus fruit
commodities (oranges, grapefruit, etc.) should reflect the commodities
upon which separate coverage levels and administrative fees are based.
More specifically, the commenter states that each commodity should be a
separate insurable commodity and a separate eligible crop insurance
contract. Third, the commenter suggests the actuarial documents be
issued with the commodity of oranges containing commodity types of
early-season and late-season with intended uses of fresh and processing
for each commodity type and the rest of the eight type practice fields
indicating they are unspecified. Fourth, the commenter suggested
coverage levels should be elected by commodity, and therefore, it is
important that the Crop Provisions clearly state this in both section 3
(Insurance Guarantees, Coverage Levels and Prices for Determining
Indemnity) and section 6 (Insured Crop).
Response: FCIC disagrees with the commenter that citrus fruit
groups should be removed from the final rule and that administrative
fees, basic units, and coverage levels should be based on the citrus
fruit commodity. The reason the citrus fruit groups were proposed to be
added was to keep the basis for administrative fees, basic units, and
coverage levels as similar to the current structure as possible while
still meeting the objectives of the Acreage Reporting and Streamlining
Initiative. Basing administrative fees, basic units, and coverage
levels on the new citrus fruit commodities would constitute a major
shift in how administrate fees, basic units, and coverage levels are
determined and restrict the choices available to producers. No change
has been made to the final rule.
Section 1--Definitions
Comment: A few commenters recommended FCIC not change the term
``citrus fruit crop'' to ``citrus fruit commodity.'' The term
``commodity'' is infrequently used in the industry and would only
confuse policyholders. The
[[Page 75512]]
commenters stated that presently, the only time that citrus crops are
called commodities is on the futures market. The goal of any language
change should be to make the policy more understandable to the
policyholder who purchased it.
Response: FCIC proposed changing the term ``crop'' to ``commodity''
because of a USDA initiative known as the Acreage Crop Reporting and
Streamlining Initiative. This initiative has an objective of
standardizing terms and consolidating acreage reports across
participating USDA agencies so that information can be shared across
agencies, thereby reducing the number of times producers are required
to report the same information to different agencies. As a result of
the Acreage Crop Reporting and Streamlining Initiative, the term
``crop'' is being replaced by the more universally used term of
``commodity'' in RMA's Actuarial Information Browser and where
applicable as Crop Provisions are revised. Because the term
``commodity'' is used in the Actuarial Information Browser, changing
the term ``crop'' to ``commodity'' in the Florida Citrus Fruit Crop
Provisions should help to eliminate confusion for producers accessing
the Actuarial Information Browser. No change has been made to the final
rule.
Comment: A commenter stated that replacing the existing citrus
fruit crops (Citrus I, Citrus II, etc.) with oranges, grapefruit, etc.
will allow for greater clarity as to what commodity is being covered.
However, because there is not a one-to-one correlation between the old
and new designations, it is appropriate to require producers to
complete new applications. Even if the final rule does not include this
requirement, it is important to include this requirement in any
announcement that accompanies the publication of the final rule, so
that insurance providers, agents and producers may prepare accordingly.
Response: FCIC agrees that the producer will be required to
complete new applications for certain citrus fruit groups that do not
have a one-to-one correlation with the old citrus fruit crop.
Therefore, carryover policyholders with a policy for Citrus IV
(Tangelos and Tangerines), Citrus VI (Lemons and Limes), or Citrus VII
(Grapefruit for which freeze damage will be adjusted on a fresh fruit
basis, and late oranges fresh) will be required to complete a new
application. FCIC will include information on completing the new
applications in an informational memorandum and in the Crop Insurance
Handbook. As stated above, even though new applications may be
required, this does not mean that new inspections must be performed.
Comment: A commenter stated the definition of ``citrus fruit
group'' states that various ``commodity types and intended uses within
a citrus fruit commodity * * * may be grouped together for the purposes
of electing coverage levels, establishing basic units, and assessing
administrative fees.'' According to the background information in the
proposed rule, this change is intended ``to make the insurance coverage
as similar to that which was previously provided while still being
consistent with the Acreage Crop Reporting Streamlining Initiative.''
This suggests that, for example, early and mid-season oranges are
likely to be a citrus fruit group [previously Citrus I] while late
oranges for juice [Citrus II] and late oranges for fresh [Citrus VII,
along with grapefruit adjusted on a fresh basis] will be separate
citrus fruit groups, and producers would be able to choose whether or
not to insure any or all of these groups, with separate basic units by
``group,'' and different coverage levels possible, instead of the
choice of insurance (and level, etc.) being by ``citrus fruit
commodity'' (so that all oranges would have to be insured). It appears
that lemons and limes will no longer be grouped together [previously
Citrus VI] since they are set up as separate ``citrus fruit
commodities,'' so producers will be able to insure one and not the
other, which was not possible before. This change for lemons and limes
is indicated in the background information in the proposed rule, so the
commenter assumes that perhaps this is the only significant difference
between the previous ``citrus fruit crops'' and the proposed ``citrus
fruit groups'' (as opposed to comparing to the proposed ``citrus fruit
commodities'').
Response: FCIC agrees with the commenter's interpretation of the
proposed rule. FCIC has tried to maintain the current insurance options
and flexibility available to producers to the maximum extent possible.
However, in addition to Citrus VI (lemons and limes), the citrus fruit
crops Citrus IV (tangelos and tangerines) and Citrus VII (grapefruit
for which freeze damage will be adjusted on a fresh fruit basis, and
late oranges fresh) will also be split apart into separate citrus fruit
commodities. This increases the insurance options available.
Comment: A commenter stated that based on the definitions of
``citrus fruit commodity'' and ``citrus fruit group,'' it appears the
``citrus fruit group'' is the basis of coverage (similar to the current
``citrus fruit crops'' of Citrus I through Citrus IX) while ``citrus
fruit commodity'' is a more generic reference to the different kinds of
citrus (oranges, grapefruit, etc.). The commenter questioned if there
is much benefit in identifying ``oranges'' as the ``citrus fruit
commodity'' if producers will continue to be able to choose to insure
``late oranges fresh'' while not insuring any other oranges (or
insuring them at different coverage levels and prices).
Response: The benefit to changing to commodity names to be
consistent with commodity names used by other USDA agencies is this
will allow information to be shared with other USDA agencies. This
change is intended to reduce the number of times a producer has to
report the same information to different agencies. Although other USDA
programs may not use all of the same terminology, some of the added
terms are necessary to maintain the current flexibility allowed by the
policy. Additionally, changing the commodity names to be consistent
between the different regions FCIC insures these commodities will
simplify the administration of the Federal crop insurance program.
Comment: A few commenters stated the proposed rule does not appear
to align with the expanded type and practice attributes established by
FCIC (commodity type, class, subclass, intended use, cropping practice,
irrigated practice, organic practice and interval) for some crops with
the 2013 reinsurance year. The proposed term ``citrus fruit group'' is
defined as ``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.'' There is
no ``group'' attribute in the now established expanded types and
practices. Adding a ninth attribute will require redesigning the
actuarial data tables and a significant amount of programming changes.
It seems as though the citrus fruit commodities listed in the proposed
rule, should be the ``citrus fruit group'' used to elect coverage
levels and assess administrative fees since this would be most similar
to the groups established under the 2009 provisions.
Response: FCIC disagrees that the citrus fruit commodities should
be the citrus fruit group. The purpose of the change is to allow for
the streamlining of reporting while maintaining current flexibility.
Eliminating the citrus fruit commodities defeats this purpose. However,
the commenter is correct that adding a ninth attribute to the type/
practice tab in the Actuarial Information
[[Page 75513]]
Browser will require significant programing changes. Therefore, FCIC
will instead list the citrus fruit groups in a Special Provisions
statement. FCIC has revised the definition of ``citrus fruit group'' by
removing the phrase ``actuarial documents'' and adding the phrase
``Special Provisions'' in its place. Additionally, FCIC has revised the
definition of ``citrus fruit group'' to clarify that different
combinations of commodity types and intended uses may grouped together
to form citrus fruit groups.
Comment: A few commenters stated if the definition of ``citrus
fruit group'' is kept, it does not need to state that the group
designation is used to establish basic units. If each group is
considered a separate ``crop policy,'' there is no alternative except
to allow for separate basic units if each group to be insured must be
designated on the application form.
Response: FCIC agrees with the commenter that it is not necessary
to state the citrus fruit group will be used to establish basic units.
The commenter is correct that since each citrus fruit group would be
considered a separate insured crop, the producer would be entitled to
separate basic units by insured crop in accordance with the definition
of ``basic unit'' in the Basic Provisions. Therefore, FCIC has revised
the definition of ``citrus fruit group'' by removing references to
basic units and administrative fees and adding a phrase that indicates
the citrus fruit group will be used to identify the insured crop in its
place. FCIC has also revised section 2 to state that basic units will
be established in accordance with section 1 of the Basic Provisions.
Comment: A few commenters stated they agree with changing the
definition of ``Excess Wind'' and expanding the number and location of
weather recording stations.
Response: FCIC thanks the commenters for their review and support
of this proposed change.
Comment: A commenter requested clarification on the intent of the
definition of ``intended use.'' The interpretation could go many
different ways when you get into claim situations. This would be
another benefit of being able to see a sample Special Provision.
Response: FCIC agrees that the definition of ``intended use'' is
ambiguous because there is no indication of what intended uses are
available. FCIC has revised the provision to clarify that insurable
intended uses are specified in the Special Provisions. Currently, the
only intended uses FCIC plans to insure under the Florida Citrus Fruit
Crop Provisions are fresh and juice. The intended use that is selected
will be used to determine the dollar amount of insurance and the loss
adjustment procedures for settling claims. Producers who choose an
intended use of fresh will be required to provide management records
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 upon request.
Comment: A commenter stated according to subsection (a)(3) of the
definition of ``potential production,'' it includes citrus fruit that
``Except as provided in (b), was missing, damaged or destroyed from
either an insured or uninsured cause''; while subsection (b)(1)
excludes citrus fruit that ``Was missing, damaged, or destroyed before
insurance attached for any crop year.'' The commenter questioned
whether this means that subsection (a)(3) applies only when these
events occur after insurance attached. The commenter also questioned if
subsection (a)(3) should specifically reference subsection (b)(1), or
do subsections (b)(2) and (3) also factor into the equation. The
commenter suggested changing the period at the end of the opening
sentence to a colon. The commenter also suggested revising subsection
(b)(3) by removing the phrase ``Any tangerines that'' and adding the
phrase ``For tangerines,'' to better follow the lead-in.
Response: No changes were proposed to this provision and the
comment does not address a conflict or vulnerability in the provision.
Therefore, FCIC cannot consider any potential changes because the
public was not given an opportunity to comment. No change has been made
to the final rule. However, with respect to the question raised by the
commenter, FCIC agrees subsection (b)(1) includes citrus fruit that was
missing, damaged, or destroyed from either an insured or uninsured
causes after insurance attached for the crop year. Additionally,
potential production does not include citrus fruit that was missing,
damaged or destroyed due to insured or uninsured causes that are
damaged or destroyed due to normal dropping as described in subsection
(b)(2) or that are tangerines that normally would not meet the 210 pack
size as described in subsection (b)(3).
Section 3--Insurance Guarantees, Coverage Levels, and Prices for
Determining Indemnities
Comment: A commenter stated as reworded, the first sentence of
section 3(a) [``You may select only one coverage level for each citrus
fruit group designated within a citrus fruit commodity in the actuarial
documents that you elect to insure.''] might be interpreted either as
being able to elect insurance by citrus fruit group or by citrus fruit
commodity. This could be clarified by putting parentheses around the
phrase ``designated within a citrus fruit commodity in the actuarial
documents.''
Response: FCIC agrees that as proposed section 3(a) may be
misinterpreted. Since the definition of ``citrus fruit group''
specifies that the citrus fruit group is within a citrus fruit
commodity, it is not necessary to restate this everywhere the term
``citrus fruit group'' is used. Therefore, FCIC has revised section
3(a) by removing the phrase ``designated within a citrus fruit
commodity in the actuarial documents.''
Comment: A few commenters requested clarification of the purpose of
section 3(c)(1). The commenters stated it is unclear exactly what the
provision is requiring producers to report. The provision states ``you
must report any event or action that could reduce the yield per acre''
but it is unclear what the starting point is for assessing if a
reduction has occurred. The commenters stated that if the purpose of
section 3(c)(1) is to have the grower report any condition that will
prevent the acreage from being capable of producing a crop that will
have a value at least equal to the amount it is insured for, it should
state it that way. The commenters stated that because this is a dollar
plan of insurance and losses are determined by the percent of damage
and not historical yields, reduction in productive capacity should be
irrelevant. The commenters stated the same coverage should be provided
for a unit regardless of the productive capacity. The commenters
questioned how units with different productive capacities can be
treated differently under this type of plan. The commenters questioned
if the true intent is to notate and capture uninsured damage, tree
removal, etc. The commenters also questioned how greening effects are
reported and suggested that this might already be handled with the
current 10% tolerance factors.
[[Page 75514]]
Response: The purpose of section 3(c)(1) is to collect information
that can be used to establish the amount of insurance and insurable
acreage. The Reference Maximum Dollar Amount used to establish the
amount of insurance per acre is based on the productive capacity of a
healthy, fully stocked citrus grove. When the productive capacity of
trees in a grove is reduced, it is not appropriate to maintain the same
amount of insurance because that would result in over-insuring the
grove because situations could occur that would make it impossible to
produce the amount of insurance even if no insurable loss has occurred.
Therefore, in section 3(c), FCIC is capturing the information needed to
evaluate the productive capacity of the grove so it can be compared
with the Reference Maximum Dollar Amount. Further, section 3(d)
specifies that if the productive capacity of the grove is reduced, the
acreage or amount of insurance can be reduced. Procedures for reporting
damage, disease, etc. and reducing acreage or the amount of insurance
will be included in the Crop Insurance Handbook. No change has been
made to the final rule.
Comment: A commenter stated the proposed provision in section 3(c)
changes the deadline from sales closing date to acreage reporting date
and would require reporting of the specified information each year
rather than only the first year of interplanting and any time the
interplanted acreage's planting pattern changes. The commenter stated
the significance of this change is not clearly specified in the
background information in the proposed rule. The commenter stated the
current section 3(c) also requires the additional information listed
when citrus trees were interplanted for the first time, and when the
planting pattern of the interplanted acreage subsequently changed. The
proposed language removes all but one reference to ``interplanted
trees,'' making the reporting requirement applicable in all cases every
year rather than only when there is interplanting and any subsequent
change. The commenter stated that this change, along with the change in
deadline to the acreage reporting date, seems to make this provision
more applicable to a ``Report of Acreage'' section corresponding to
section 6 of the Basic Provisions, rather than additional information
required in certain circumstances. The commenter requested FCIC
consider moving these provisions to a ``Report of Acreage'' section
corresponding to section 6 of the Basic Provisions.
Response: FCIC disagrees with the commenter that the provisions in
section 3(c) should be moved to a ``Report of Acreage'' section
corresponding to section 6 of the Basic Provisions. While the deadline
may have changed to the acreage reporting date, the purpose of the
provisions is to establish the amount of insurance for the crop, which
has been contained in section 3 in many of the other perennial crops
and does not affect the purpose or the meaning of the provisions. FCIC
agrees that certain reporting requirements in section 3(c) are annual.
However, the Florida Citrus Fruit Crop Provisions does not currently
contain a section for report of acreage and adding a new section would
require redesignating other sections. Further, the possibility exists
that cross references may be missed. The risk of this outweighs any
benefit from creating a new section especially since it would not
clarify or change the meaning of the proposed provisions. FCIC's
proposal to revise section 3(c) by changing the deadline for reporting
from the sales closing date to the acreage reporting date has no impact
on stakeholders because these dates are the same. No change has been
made to the final rule.
Comment: A commenter stated the reporting requirements in the
background information in the proposed rule includes ``age of the
trees, interplanted trees, planting pattern'' in addition to the new
requirements in sections 3(c)(1) and (2). The commenter stated this is
similar to the sequence in sections 3(c)(1) and (2) of the current Crop
Provisions, but ``interplanted trees'' is not in the proposed section
3(c)(3). The only mention of ``interplanted trees'' is in the
parenthetical list in section 3(c)(1) of events or actions that could
reduce the yield. The commenter questioned whether interplanting of
citrus trees will always be considered to be likely to result in a
reduction of potential yield. The commenter stated to consider if
section 3(c)(1) should be moved to section 3(c)(3) since there will not
always be an ``event or action that could reduce the yield'' to report
every year.
Response: FCIC agrees with the commenter that section 3(c)(1) is
not the appropriate place to list interplanted trees since section
3(c)(1) lists circumstances that would result in a reduction in the
guarantee per acre. Because interplanted trees would result in an
acreage reduction instead of a reduction in the guarantee per acre,
FCIC has removed the reference to interplanted trees from section
3(c)(1) and added a reference to interplanted trees to section 3(c)(2).
Comment: A commenter stated the proposed provision in section 3(d)
references a reduction in the yield potential and expected yield. The
commenter stated this reference is misplaced as this is a dollar plan
of insurance and not based on an approved yield. If the potential yield
drops below 100 boxes per acre such acreage would then be addressed by
sections 6(c) and (d). Since yields normally do change from year to
year, the commenter questioned what would constitute a yield reduction
for purposes of this provision. The commenter stated it appears this
provision could generate additional unnecessary inspections on the part
of the insurance providers.
Response: FCIC agrees sections 6(c) and (d) address situations when
the yield potential drops below 100 boxes. However, FCIC disagrees that
the amount of insurance or insurable acreage should not be reduced when
the yield potential is reduced by a quantifiable amount from the
maximum potential, but remains greater than 100 boxes per acre. Even
though this is a dollar plan of insurance, FCIC has an obligation to
ensure that it is not over-insuring the crop. This means that while any
given grove may have a unique maximum yield potential at any given
time, FCIC does not consider it appropriate to maintain the same amount
of insurance when the yield potential of a grove is reduced below a
certain level due to damage to the trees, disease, reduction in stand
density, or other causes. Reduction in yield potential will be
identified by assessing the health and vigor of the trees, as well as
damage. It may be necessary to review production records to determine
if a reduction in productive capacity has occurred. Although yields may
normally fluctuate from year to year, it should still be possible to
determine if there has been a reduction in productive capacity due to
damage to the trees, disease, reduction in stand density, or other
causes. Additional guidance will be provided in the Crop Insurance
Handbook for determining if a reduction in productive capacity has
occurred. FCIC does not consider inspections needed to reduce the
amount of insurance or acreage to the appropriate level unnecessary. No
change has been made to the final rule.
Comment: A commenter stated that according to the background
information in the proposed rule, ``FCIC proposed 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
[[Page 75515]]
proposed revision of section 3(c).'' However, the commenter stated the
added details in section 3(d) of what might require a reduction do not
seem to match what is listed in section 3(c)(1). Both section 3(c) and
(d) mention ``interplanted trees'' and ``practices,'' although section
3(d) specifies ``cultural practices,'' ``damage,'' and ``disease.'' The
commenter questioned if ``a decrease in plant stand'' is supposed to be
similar to ``removal of trees.'' The commenter also questioned if a
reference to ``plant stand'' is appropriate for tree crops, but stated
perhaps it is, since it is used in the Special Provisions statement.
Response: FCIC considers the phrase ``decrease in plant stand''
appropriate for tree crops since trees are technically plants and this
is a common phrase used in literature referring to trees. Removal of
trees would be one reason for a decrease in plant stand, but other
reasons could include natural attrition, blow-down, and mortality due
to disease. Since section 3(c) includes any event or action that could
reduce the yield per acre, FCIC did not include an all-encompassing
list of what must be reported. However, FCIC agrees the reporting terms
in section 3(c) should match as closely as possible the terms in
section 3(d). Therefore, FCIC has revised section 3(c)(1) by adding the
term ``cultural'' prior to the term ``practices'' to be consistent with
section 3(d)(3). FCIC has also revised section 3(c)(1) by adding the
term ``disease'' to be consistent with the terminology in section
3(d)(4).
Comment: A commenter stated the proposed language in section 3(e)
refers to circumstances ``that may reduce the yield per acre from
previous levels'' but no longer refers to the possibility that they
might reduce the acreage as in the last sentence of current section
3(d). The commenter questioned if that change was intended.
Response: FCIC did not intend for the proposed language in section
3(e) to exclude circumstances that might reduce the acreage. FCIC has
revised section 3(e) to include circumstances that may reduce the
acreage.
Section 5--Cancellation and Termination Dates
Comment: A commenter questioned whether the date changes in
sections 3(f) and 8(a)(1) should have any effect on the April 30
cancellation and termination dates that are unchanged in section 5.
Response: As stated below in response to a comment regarding
section 8(a)(1), the proposed date changes to sections 3(f) and 8(a)(1)
have not been retained in the final rule. Therefore, there is no change
needed to the April 30 cancellation and termination dates contained in
section 5. No change has been made to the final rule.
Section 6--Insured Crop
Comment: A commenter suggested revising section 6(a) by adding
parentheses around the phrase ``designated within a citrus fruit
commodity in the actuarial documents'' to make it clear that it is the
``citrus fruit group'' (not the ``citrus fruit commodity'') that a
producer may elect to insure.
Response: FCIC agrees that as proposed, section 6(a) may be
misinterpreted. Because the definition of ``citrus fruit group''
specifies the citrus fruit group is within a citrus fruit commodity, it
is not necessary to restate this everywhere the term ``citrus fruit
group'' is used. Therefore, FCIC has revised section 6(a) by removing
the phrase ``designated within a citrus fruit commodity in the
actuarial documents.''
Comment: A commenter stated they are disappointed that the age of
insurability in section 6(b)(2) was not lowered from five years to
three years. Citrus has moved toward increased production at younger
ages because of newer varieties and advanced production methods.
Insurability should be at three years.
Response: FCIC did not propose to lower the minimum age of
insurability for citrus trees because section 6(b)(2) already allows
for trees that have not reached the fifth growing season after set out
to be insured by written agreement or if allowed by the Special
Provisions. Since the public was not given the opportunity to comment
on this change and it does not address a conflict or vulnerability,
FCIC cannot consider the recommended change. No change has been made to
the final rule.
Comment: A commenter stated the insurability of younger trees
(fruit) should be addressed. Presently, trees have to be in the fifth
growing season (for their fruit) to be insured. The commenter stated in
today's commercial citrus growing environment, trees that are three
years old are producing fruit. Unless the fruit from the younger trees
is appraised and excluded from production and losses, it is being
counted as insured production and should be insured. The commenter
stated this could be addressed by allowing up to 25 percent resets in a
block/grove to be insured.
Response: FCIC disagrees the insurability of fruit from younger
trees could be addressed by allowing up to 25 percent resets in a
block/grove. FCIC provides guidance for commingled production and stand
reduction in the Crop Insurance Handbook. Currently the Crop Insurance
Handbook allows up to a 10 percent decrease in plant stand before
adjustments are made to acreage. A stand reduction could include resets
that have not reached the minimum age requirement. However, a stand
reduction could also include trees that have been removed, but not
replaced. Therefore, increasing the proportion of the stand that can be
reduced before acreage is adjusted could result in over-insurance in
situations where trees have been removed and not replaced or when the
trees have been replaced and have not yet began producing. Furthermore,
while the production from younger trees could potentially be considered
under current procedures when determining the percent of damage, it is
not likely to affect the overall percent of damage. As stated in
response to the previous comment, FCIC did not propose to lower the
minimum age of insurability for citrus trees because section 6(b)(2)
already allows for trees that have not reached the fifth growing season
after set out to be insured by written agreement or if allowed by the
Special Provisions. Since the public was not given the opportunity to
comment on this change and it does not address a conflict or
vulnerability, FCIC cannot consider the recommended change. No change
has been made to the final rule.
Comment: A few commenters stated that there is no reason to exclude
Ambersweet oranges from insurability as proposed in section 6(b)(3).
Ambersweet oranges exhibit typical characteristics of other insured
varieties of oranges from a risk standpoint. Therefore, the commenters
stated there is no more risk of loss as compared to other varieties.
Furthermore, the commenters stated while not grown in large quantities,
there are commercial blocks of Ambersweet oranges still in production.
The commenters stated they are puzzled as to why Ambersweet oranges
have been singled out. Additionally, the commenters would like any new
varieties to be insurable within the appropriate class and type.
Response: FCIC agrees with the commenters that Ambersweet oranges
should not be excluded from insurability in the Crop Provisions at this
time due to lack of available information to substantiate excluding
them from insurability. However, FCIC will continue to evaluate
Ambersweet oranges to determine if it is appropriate to continue to
offer insurance on this variety. New varieties that are commercially
available will be
[[Page 75516]]
evaluated on a case by case basis for insurability. The Special
Provisions will list the varieties that comprise each insurable
commodity type. FCIC has revised section 6(b)(3) by removing Ambersweet
oranges from the list of uninsurable citrus fruit.
Comment: The proposed section 6(f) states, 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 upon request. A
commenter questioned what are considered to be ``acceptable records''
for purposes of this provision and if the procedures will indicate what
are considered to be acceptable records for this purpose.
Response: Acceptable fresh fruit sales records should indicate the
citrus fruit commodity, commodity type, name of the insured, name of
the buyer, date the production was sold, location, the amount of
production sold, and the price. Acceptable fresh fruit sales records
may include: Trip tickets, pack-out statements, year-end settlement
sheets that indicate by citrus fruit commodity/commodity type the
number of standard size boxes packed or the net weight of the packed
fruit, daily sales records, and records from a State Marketing Program.
FCIC will also provide guidance in the Crop Insurance Handbook as to
what will be considered acceptable fresh fruit sales records.
Section 7--Insurable Acreage
Comment: A commenter stated to consider if the references to
``another commodity'' in sections 7(a)(1) and (2) should be changed to
``another agricultural commodity'' as defined in the Basic Provisions.
Response: FCIC agrees with the commenter and has changed the
provisions accordingly. Additionally, FCIC has revised paragraph (a) by
removing the phrase ``a crop planted with another crop'' and replacing
it with the phrase ``interplanted acreage'' to be consistent with the
phrasing in section 9 of the Basic Provisions.
Comment: A commenter stated to consider if the phrase ``the
interplanted crop acreage'' in section 7(a)(3) should be revised to
``the interplanted commodity acreage'' to match other such revisions.
Response: FCIC agrees the term ``crop'' should be removed from
section 7(a)(3). FCIC has revised the provision to state the
combination of the citrus fruit acreage and the interplanted acreage
cannot exceed the physical amount of acreage.
Comment: A commenter stated there is no premise in either the Crop
Provisions or Special Provisions to establish the threshold for
insurability for acreage that has been abandoned and subsequently
undergone remediation as proposed in section 7(b). The commenter stated
this is a dollar plan policy and is not based on actual production. If
the market price for such citrus fruit is high then even a reduced
amount of production and/or production that is of poor quality may
still meet or exceed the Reference Maximum Dollar Amount.
Response: FCIC agrees with the commenter that FCIC does not
currently provide a basis for determining the amount of production
necessary to meet the Reference Maximum Dollar Amount. Therefore, FCIC
has revised the proposed section 7(b) to simply state any acreage that
has been abandoned is not insurable.
Section 8--Insurance Period
Comment: A few commenters stated they do not think moving the date
insurance attaches from May 1 to April 16 in section 8(a)(1) is a good
move. A vast majority of fruit that sets after bloom drops from the
tree naturally by May 1. After that date, fruit drop is minimal and it
is easy to determine what fruit has been damaged. Therefore, trying to
accurately assess damage that may occur in April will prove difficult.
The commenters stated that if the concern is to shrink the time between
sales closing date and the policy inception date, a better approach
would be to extend the sales closing date.
Response: FCIC agrees the date insurance attaches should not be
moved from May 1 to April 16 because it will be more difficult to
determine potential production during this period. Additionally, moving
the sales closing date to April 16 eliminates the time needed to
perform an inspection to determine insurability prior to insurance
attaching. Therefore, FCIC has retained the original date of May 1 as
the date insurance attaches in section 8(a)(1). Consequently, FCIC has
also retained the original dates in the redesignated section 3(f).
Comment: A commenter stated they would like FCIC to address the
issue of insuring young setting fruit that is damaged by an insured
peril before the current date insurance attaches on May 1. The
commenter questioned if there is anything that can be done to cover
such damage while still affording a reasonable sales closing date.
Response: FCIC proposed changing the date insurance attaches from
May 1 to April 16. This proposed change would have addressed insuring
young setting fruit. However, as stated previously this change has not
been retained in the final rule due to potential problems it could
cause for determining potential production and determining
insurability. FCIC has not proposed any other change to address this
issue and the comment does not address a conflict or vulnerability.
Therefore, FCIC cannot consider the recommended changes because the
public was not given an opportunity to comment. No change has been made
to the final rule.
Comment: A commenter stated they presume the proposed date change
from May 1 to April 16 in section 8(a)(1) has no effect on the
unchanged calendar dates for the end of the insurance period in section
8(a)(2).
Response: FCIC agrees with the commenter that the proposed changes
to section 8(a)(1) would have no effect on the provisions in section
8(a)(2). However, as stated previously the date changes to section
8(a)(1) have not been retained in the final rule.
Comment: A commenter stated they are pleased to see FCIC proposing
to change the end of insurance period date for early oranges to
February 28. The commenter stated this date is much more in line with
current harvesting practices and will provide welcome peace of mind for
those policyholders with early oranges still on the tree in February.
Response: FCIC thanks the commenters for their review and support
of this proposed change.
Comment: A commenter stated they agree with the proposed shifting
of the reference to a transfer of coverage and right to indemnity from
(b)(2) [relinquishing a share on or before the acreage reporting date]
to (b)(1) [acquiring acreage after the acreage reporting date].
However, the commenter questioned whether the removal of the phrase
``if after inspection we consider the acreage acceptable'' means it is
not possible for the insurance provider to accept coverage following a
favorable inspection. The commenter stated maybe this was never an
option since, as stated in the background information in the proposed
rule, ``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.''
Response: As stated in the proposed rule, the provision in section
8(b)(2) would never be applicable since none of
[[Page 75517]]
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. Therefore, section 8(b)(2) never gave the authority
to accept coverage following a favorable inspection. However, section
8(a)(1)(i) contains language giving the insurance provider the
authority to inspect acreage to determine if it meets the insurability
requirements prior to insurance attaching.
Comment: A commenter recommend that in lieu of the proposed
language in section 8(b)(1), language should be added to allow
insurance providers the opportunity to inspect and insure any
additional acreage that is acquired after the acreage reporting date if
they wish to do so. The commenter stated insurance providers should
have the opportunity to accept or deny coverage in these types of
situations. This could be a substantial number of acres that may not
have coverage for the crop year they were added if they were not
insured by the previous owner. This would be similar to what is
currently allowed for acreage not reported in accordance with section
6(f) of the Basic Provisions.
Response: This change was not proposed and the comment does not
address a conflict or vulnerability in the provision. Therefore, FCIC
cannot consider the recommended changes because the public was not
given an opportunity to comment. No change has been made to the final
rule.
Section 9--Causes of Loss
Comment: A commenter recommended the insured cause of loss in
section 9(a)(1) be clarified as ``Fire, due to natural causes'' or
``Fire, if caused by lightning.''
Response: No changes were proposed to this provision and the
comment does not address a conflict or vulnerability in the provision.
Therefore, FCIC cannot consider the recommended changes because the
public was not given an opportunity to comment. No change has been made
to the final rule. However, with respect to the concerns expressed by
the commenter, section 12 of the Basic Provisions already states all
insured causes of loss must be due to a naturally occurring event. In
addition, the Federal Crop Insurance Act is clear that only natural
causes can be covered under the policy. These provisions apply to fire.
Comment: A commenter stated that feasibility should be considered
and studied to offer coverage for disease and insect infestation.
Citrus greening is the largest peril and loss to today's citrus grower.
Excess rain/flooding should also be a covered peril. Perils of the tree
and fruit policy should be aligned and duplicated because what affects
the trees has a direct effect on the fruit production. Maybe adding
``adverse weather'' as an insurable cause of loss would standardize
Florida's policy to be more in line with California and Texas.
Response: The Crop Provisions allow disease to be added as an
insurable cause of loss through the Special Provisions. However,
expanding coverage to include insects and disease would likely result
in significant rate increases due to the prevalence of disease
affecting citrus in Florida. Additional research would be necessary to
determine producers' willingness to pay additional premium for coverage
of disease. With the exception of disease, the suggested changes would
require changes to the Crop Provisions that were not proposed and the
comment does not address a conflict or vulnerability. Therefore, FCIC
cannot consider the recommended changes because the public was not
given an opportunity to comment. No change has been made to the final
rule. FCIC will consider the feasibility of expanding coverage to more
perils the next time the Crop Provisions are revised.
Comment: A commenter stated the provision in section 9(a)(7) that
allows ``disease'' as an insured cause of loss, if specified in the
Special Provisions, continues to cause a great deal of concern from
both the underwriting and loss adjustment standpoint. The commenter
questioned how a loss would be worked on groves with a disease that
causes a decline in condition of trees and yields. The commenter stated
they believe it would be very difficult to underwrite and adjust losses
for disease.
Response: Although the Crop Provisions allow disease to be added as
an insurable cause of loss through the Special Provisions, the Special
Provisions do not currently specify disease as an insurable cause of
loss. Because disease is not currently considered an insurable cause of
loss, any production damaged by disease is treated like any other
production damaged by an uninsurable cause of loss. Additionally, since
losses are adjusted on a percent of damage basis, decline in production
may not directly affect the percent of damage. Because decline in the
productive capacity of the trees due to disease may affect the expected
yield, disease should be considered when establishing or adjusting the
amount of insurance in accordance with section 3. FCIC intends to
refine guidance for adjusting the amount of insurance due to the
incidence of disease in insured groves in the Crop Insurance Handbook.
Section 10--Settlement of Claim
Comment: A commenter stated sections 10(b)(1), (2), (5), and (6)
now reference the ``age of trees.'' The commenter questioned if the
expectation is that the liability and amount of damage will be
established separately for each tree in the unit. The commenter stated
this would cause major problems with the adjustment process.
Response: The amount of insurance will continue to be established
separately by the age class of trees, but the amount of insurance will
not be established separately for each individual tree in the unit.
FCIC has added a definition of ``age class'' to specify that the trees
are grouped together by age and that each grouping has a separate
Reference Maximum Dollar Amount. Guidance in the Crop Insurance
Handbook explains how age classes will be determined if more than one
age class exists within a unit. The proposed references to age of trees
were intended to clarify the amount of insurance per acre is dependent
on the age class of the trees. FCIC has revised section 10(b) as well
as the definition of ``amount of insurance per acre'' by adding the
term ``class'' following the term ``age'' to clarify the intent of the
provisions.
Comment: A few commenters stated section 10(b)(1) describes a
calculation requiring multiplying by the ``age of trees.'' The
commenter recommended re-wording the provision because any form of this
calculation multiplied by a tree's actual age does not yield a
meaningful number. The same comment applies to the language in sections
10(b)(5) and (6).
Response: FCIC disagrees with the commenter that section 10(b)(1)
describes a calculation requiring multiplying by the age of trees. The
calculation described in section 10(b)(1) requires multiplying the
number of acres by the respective amount of insurance per acre and
totaling the results for all acreage in the unit. The amount of
insurance per acre is determined by multiplying the Reference Maximum
Dollar Amount shown in the actuarial documents for each applicable
combination of commodity type, intended use, and age class of trees
times the coverage level elected times the share. FCIC has revised
section 10(b) as well as the definition of amount of insurance per acre
by adding the phrase ``combination of'' prior to the phrase ``commodity
[[Page 75518]]
type, intended use, age class of trees'' to clarify the intent of these
provisions.
Comment: A commenter requested clarification of the last part of
the provision in section 10(b)(2). The commenter questioned what is
meant by ``divided by the undamaged potential production'' prior to the
cause of loss and how is this determined.
Response: The phrase ``undamaged potential production'' in section
10(b)(2) is referring to the total amount of production that would have
been produced if damage had not occurred. Since potential production is
defined as such in section 1 of the Crop Provisions, it is not
appropriate to use the term ``undamaged'' in section 10(b)(2) because
it could be misinterpreted to mean only the potential production that
is not damaged. FCIC has revised section 10(b)(2) by removing the term
``undamaged.'' In accordance with section 6(e), potential production
will be determined at the time of loss using FCIC approved procedures.
Comment: A few commenters stated the proposed section 10(c) should
be reworded. The proposed policy language does not appear to match the
explanation given in the background information in the proposed rule,
which states ``the proposed section 10(c)(1) will contain the
information from section 10(f), but will be revised to clarify
individual fruit damaged due to an insurable cause that is on the
ground and unmarketable is 100 percent damaged.'' This does not have
the same meaning as the proposed language in 10(c)(1), which states the
fruit ``is unmarketable because it is: (1) On the ground'' and
therefore ``will be considered 100 percent damaged.'' The commenters
stated the proposed revision to section 10(c) presumes the fruit is
unmarketable. The commenters questioned if it is possible the new
wording would encourage producers to leave fruit on the ground even if
it could be collected and marketed. Simply declaring fruit on the
ground as unmarketable and 100 percent damaged could lead to program
vulnerability. The commenters also stated the background information in
the proposed rule refers to an ``insurable'' cause of loss, while the
proposed provision refers to an ``insured'' cause of loss. Furthermore,
the commenters suggested trying to rearrange the proposed section 10(c)
to eliminate the duplication of the phrase ``will be considered as 100
percent damaged.''
Response: FCIC agrees with the commenters that the proposed
language in section 10(c) does not have the same meaning as stated in
the background information in the proposed rule. FCIC also agrees the
proposed language could lead to program vulnerability by considering
production as unmarketable because it is on the ground. Therefore, FCIC
has revised section 10(c) to be consistent with the explanation
provided in the background of the proposed rule and the intent of the
change and specify that individual citrus fruit will be considered 100
percent damaged if due to an insurable cause it is on the ground and
unmarketable. Furthermore, FCIC has revised section 10(c) by changing
the term ``insured'' to ``insurable'' and eliminating the duplication
of the phrase ``will be considered as 100 percent damaged.''
Comment: A commenter stated the introductory paragraph of section
10(d) begins with the phrase ``In addition to section 10(c), any citrus
fruit that can be processed into products for human consumption will be
considered marketable.'' The commenter contends this phrase does not
appear to correspond to redesignated section 10(c), which addresses
citrus fruit that has been determined to be unmarketable.
Response: FCIC agrees with the commenters that the phrase ``In
addition to section 10(c)'' is not necessary, although both the
unmarketable and marketable fruit must be considered when determining
the average percent of damage. Therefore, FCIC has revised section
10(d) by removing the phrase ``In addition to section 10(c).''
Comment: A commenter stated the proposed rewriting of section 10(d)
is a significant improvement over the previous language and should help
in addressing various questions. However, the commenter raised a
question about the meaning of the word ``relating'' in section 10(d)(1)
and whether there might be a clearer, more precise term. The commenter
stated if ``relating'' means ``dividing,'' then perhaps the term
``dividing'' would be clearer.
Response: FCIC thanks the commenters for their review and support
of this proposed change. The term ``relating'' was retained from the
previous Crop Provisions and refers to a method used in the Florida
Citrus Fruit Loss Adjustment Standards Handbook that is more
complicated than simply dividing. FCIC has removed the term
``relating'' in the final rule and revised the provision to instead
show the process the term ``relating'' references.
Comment: A commenter stated section 10(d)(1)(ii) as proposed, still
uses a comparison for loss purposes to a set of standards for juice
content in normal fruit. However, the standards have been proposed to
be removed from the Crop Provisions and instead would be listed in the
Special Provisions. The commenter stated this change can definitely
provide some flexibility to the program by allowing FCIC to make
changes that will keep the standards more current. However, the
commenter stated it would be helpful to know what standards FCIC is
planning to put in the Special Provisions for 2014, which would give
stakeholders comfort this movement of terminology in not in fact
adverse.
Response: As stated in the proposed rule FCIC intends to publish
the default juice contents in the Special Provisions. The default juice
contents to be listed in the 2014 Special Provisions are not expected
to change from what was listed in the Crop Provisions for the 2013 crop
year.
Comment: A commenter stated section 10(d)(2) does not flow from the
lead-in of the introductory paragraph of section 10(d) and repeats much
of the same phrasing. The commenter also suggested revising section
10(d)(1) by adding the phrase ``For citrus fruit insured as juice,'' to
the beginning of the provision to clarify the provision only applies to
fruit insured as juice.
Response: FCIC agrees section 10(d)(2) does not flow from the lead-
in from section 10(d). Therefore, FCIC has revised section 10(d)(2) to
make it flow with the lead-in from section10(d). FCIC disagrees that
section 10(d)(1) should be revised by adding the phrase ``For citrus
fruit insured as juice'' to the beginning of the provision because this
provision applies to both citrus fruit insured as fresh and juice.
However, the provision is not intended to apply to citrus fruit sold as
fresh or damaged due to uninsured causes. Therefore, FCIC has added a
parenthetical following the references to marketable fruit in section
10(d) to clarify the adjustments do not apply to fruit sold as fresh or
damaged due to uninsured causes.
Comment: A few commenters stated section 10(d)(2) creates a new
method for calculating fresh fruit losses when some salvage of fruit
that cannot be sold as fresh exists. It is impossible to accurately
judge the effectiveness of this proposed change without seeing the
actual numbers to be used as Fresh Fruit Factors and working through
some examples. Consequently, it would be helpful if FCIC would publish
the Fresh Fruit Factor tables and some examples of claims calculations.
Response: FCIC disagrees it is not possible to judge the effect of
the proposed changes without FCIC posting the Fresh Fruit Factors. FCIC
described the method to be used for determining
[[Page 75519]]
the Fresh Fruit Factors in the proposed rule. FCIC considers the
information contained in the proposed rule adequate for estimating the
Fresh Fruit Factors and determining the effect they will have on
indemnity calculations. FCIC will publish the Fresh Fruit Factors in
the Special Provisions based on the method described in the proposed
rule.
Comment: A commenter requested FCIC consider redesignating section
10(e) as section 10(d)(3) or an unnumbered paragraph following section
10(d)(2)(iii) since both sections addresses citrus fruit insured as
fresh.
Response: FCIC disagrees section 10(e) should be redesignated as
section 10(d)(3) or an unnumbered paragraph following section
10(d)(2)(iii). Although both sections 10(d) and 10(e) address citrus
fruit insured as fresh, these sections describe different processes for
determining the percent of damage. Therefore, FCIC considers it more
appropriate to list these provisions separately. However, since these
provisions are intended to work together in situations where fruit
insured as fresh is sold for an alternative use, FCIC has added a
phrase to section 10(e) to clarify that the percent of damage for any
production sold for an alternative use will be adjusted in accordance
with section 10(d). FCIC has also removed the phrase ``a default juice
content or'' because all commodity types will have a default juice
content provided in the Special Provisions.
In addition to the changes described above, FCIC has made minor
editorial changes.
List of Subjects in 7 CFR Part 457
Crop insurance, Florida citrus fruit, 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 2014 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. 457.107 as follows:
0
a. In the introductory text by removing ``2009'' and adding ``2014'' in
its place;
0
b. In section 1:
0
i. By revising the definitions of ``amount of insurance (per acre),''
and ``excess wind'';
0
ii. By adding the definitions of ``age class,'' ``citrus fruit
commodity,'' ``citrus fruit group,'' ``commodity type,'' ``intended
use,'' and ``unmarketable'' in alphabetical order; and
0
iii. By removing the definitions of ``citrus fruit crop'' and ``citrus
fruit type (fruit type)'';
0
c. By revising section 2(a);
0
d. In section 3:
0
i. By revising paragraph (a); and
0
ii. By revising paragraphs (c) through (f);
0
e. In section 6:
0
i. By revising paragraph (a);
0
ii. In paragraph (b)(1) by removing the term ``fruit type'' and adding
the term ``commodity type'' in its place;
0
iii. In paragraph (b)(2) by removing the number ``30'' and adding the
number ``15'' in its place;
0
iv. By revising paragraph (b)(3);
0
v. By revising paragraph (b)(6); and
0
vi. By adding a new paragraph (f).
0
f. In section 7:
0
i. By designating the undesignated introductory paragraph as paragraph
(a);
0
ii. In the newly designated paragraph (a) by removing the phrase ``crop
planted with another crop'' and adding the phrase ``interplanted
acreage'' in its place;
0
iii. By redesignating paragraphs (a), (b), and (c) as (a)(1), (2), and
(3) respectively;
0
iv. By revising the redesignated paragraph (a)(1);
0
v. By revising the redesignated paragraph (a)(2);
0
vi. In paragraph (a)(3) by removing the term ``crop''; and
0
vii. By adding a new section 7(b).
0
g. In section 8:
0
i. In 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;
0
ii. In paragraph (a)(2)(i) by removing the phrase ``early and'';
0
iii. In paragraph (a)(2)(ii) by adding the phrase ``early-season
oranges and'' after the phrase ``February 28 for'';
0
iv. In paragraph (a)(2)(iii) by removing the phrase ``and temple
oranges'' and adding the phrase ``oranges and temples'' in its place;
0
v. In paragraph (a)(2)(iv) by removing the comma after the term
``lemons'' and adding the term ``and'' before the term ``limes'';
0
vi. In paragraph (a)(2)(v) by removing the phrase ``murcott honey
oranges'' and adding the term ``murcotts'' in its place;
0
vii. In paragraph (a)(2)(vi) by removing the space between the terms
``late'' and ``season'' and adding a hyphen in its place; and
0
viii. By revising paragraphs (b)(1) and (2).
0
h. In 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'';
0
i. In section 10:
0
i. In paragraph (b)(1) by removing the phrase ``fruit type'' and adding
the phrase ``applicable combination of commodity type, intended use,
and age class of trees in the unit'' in its place;
0
ii. In paragraph (b)(2) by removing the term ``fruit type'' and adding
the phrase ``combination of commodity type, intended use, and age class
of trees'' in its place and by removing the term ``undamaged'';
0
iii. In paragraph (b)(3) by removing the parentheses around the number
``10'';
0
iv. In paragraph (b)(4) by removing the parentheses around the number
``10'';
0
v. In paragraph (b)(5) by removing the parentheses around the number
``10'' and by removing the term ``fruit type'' and adding the phrase
``combination of commodity type, intended use, and age class of trees''
in its place;
0
vi. By revising paragraph (b)(6);
0
vii. Amending the example in paragraph (b) by removing the opening
parenthesis before the phrase ``For example'' and by removing the
phrase ``citrus crop, fruit type, and age of trees'' and adding the
phrase ``commodity type, intended use, and age class of trees'' in its
place;
0
viii. By removing paragraphs (c) and (d);
0
ix. By adding a new paragraph (c);
0
x. By redesignating paragraph (e) as (d) and revising the newly
redesignated paragraph (d);
0
xi. By removing paragraph (f) and (g); and
0
xii. By redesignating paragraph (h) as (e) and revising the newly
redesignated paragraph (e).
The revisions and additions read as follows:
Sec. 457.107 Florida citrus fruit crop insurance provisions.
* * * * *
1. * * *
Age class. Trees in the unit are grouped by age, with each
insurable age group of a particular citrus fruit commodity, commodity
type, and intended use receiving a Reference Maximum Dollar Amount
shown in the actuarial documents that is used to calculate the amount
of insurance for the unit.
Amount of insurance (per acre). The dollar amount determined by
multiplying the Reference Maximum Dollar Amount shown on the actuarial
documents for each applicable
[[Page 75520]]
combination of commodity type, intended use, and age class 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 Special Provisions used to
identify combinations of commodity types and intended uses within a
citrus fruit commodity that may be grouped together for the purposes of
electing coverage levels and identifying the insured crop.
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. Insurable intended
uses will be specified in the Special Provisions.
* * * * *
Unmarketable. Citrus fruit that cannot be processed into products
for human consumption.
2. * * *
(a) Basic units will be established in accordance with section 1 of
the Basic Provisions.
* * * * *
3. * * *
* * * * *
(a) You may select only one coverage level for each citrus fruit
group 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.
* * * * *
(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 but not limited to removal of
trees, any damage, disease, change in cultural 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,
including interplanted trees;
(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 acreage, the productive capacity of the trees, or 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 May 1, 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 30 (Rejection
can occur at any time we discover loss has occurred on or before April
30); and
(3) If the increase is rejected, coverage will remain at the same
level as the previous crop year.
* * * * *
6. * * *
(a) In accordance with section 8 of the Basic Provisions, the
insured crop will be all acreage of each citrus fruit group 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,'' ``Sour Oranges,'' or ``Clementines'';
* * * * *
(6) Of any commodity type not specified as insurable in the Special
Provisions.
* * * * *
(f) For citrus fruit for which fresh fruit coverage is available as
designated in the actuarial documents:
(1) 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; and
(2) Unless otherwise provided in the Special Provisions:
(i) Acceptable fresh fruit sales records must be provided upon
request from at least one of the previous three crop years; or
(ii) 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. * * *
(a) * * *
(1) Citrus fruit from trees interplanted with another commodity
type or another agricultural 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 agricultural commodity, acreage will be
prorated according to the percentage of the acres occupied by each of
the interplanted commodity types or agricultural 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 is not insurable.
8. * * *
* * * * *
(b) * * *
(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
[[Page 75521]]
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. * * *
* * * * *
(b) * * *
* * * * *
(6) Totaling all such results of section 10(b)(5) for all
applicable combinations of commodity types, intended uses, and age
classes of trees in the unit and subtracting any indemnities paid for
the current crop year to determine the amount payable for the unit.
(c) Any individual citrus fruit will be considered 100 percent
damaged, if due to an insurable cause of loss it is:
(1) On the ground and unmarketable; or
(2) Unmarketable because it is immature, unwholesome, decomposed,
adulterated, or otherwise unfit for human consumption.
(d) 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 (excluding citrus fruit sold as fresh or
damaged due to uninsured causes) will be determined by:
(1) Subtracting the juice content of the marketable citrus fruit
(excluding citrus fruit sold as fresh or damaged due to uninsured
causes) from:
(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) Subtracting the juice content of the marketable citrus fruit
(excluding citrus fruit sold as fresh or damaged due to uninsured
causes) from the official weight per box for the applicable commodity
type provided in the Special Provisions;
(3) Dividing the result of section 10(d)(1) by the result of
10(b)(2);
(4) Dividing the official weight per box for the applicable
commodity type provided in the Special Provisions by:
(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; and
(5) Multiplying the result of section 10(b)(3) by the result of
10(b)(4); and
(6) For citrus fruit insured as fresh that has a Fresh Fruit Factor
listed in the Special Provisions, making an additional adjustment to
the percent of damage by:
(i) Subtracting the result of section 10(d)(5) from 100;
(ii) Multiplying the result of section 10(d)(6)(i) by the
applicable Fresh Fruit Factor located in the Special Provisions; and
(iii) Adding the result of section 10(d)(6)(ii) to the result of
section 10(d)(5).
(e) Notwithstanding section 10(d), for citrus fruit insured as
fresh that do not have a Fresh Fruit Factor provided in the Special
Provisions, any individual citrus fruit not meeting the applicable
United States Standards for packing as fresh fruit due to an insured
cause of loss will be considered 100 percent damaged, except that the
percent of damage for any production sold for an alternative use will
be adjusted in accordance with section 10(d).
* * * * *
Signed in Washington, DC, on December 18, 2012.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2012-30842 Filed 12-20-12; 8:45 am]
BILLING CODE 3410-08-P