[Federal Register Volume 78, Number 40 (Thursday, February 28, 2013)]
[Rules and Regulations]
[Pages 13454-13460]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04468]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
[Docket No. FCIC-11-0008]
RIN 0563-AC35
Common Crop Insurance Regulations; Pecan Revenue Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the
Common Crop Insurance Regulations, Pecan Revenue 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. Policyholders are hereby given notice that 2013
will be the last year coverage will be available under the old Pecan
Revenue Crop Provisions. The Pecan Revenue Special Provisions will
modify the Pecan Revenue Crop Provisions for the 2013 crop year by
changing the definition of two-year coverage module to one crop year.
This change through the Special Provisions will be applicable to
policyholders beginning the first year of a two-year coverage module in
the 2013 crop year. All producers who choose to purchase coverage on
pecan acreage for the 2014 crop year will begin a new two-year coverage
module under the terms and conditions of the revised Pecan Revenue Crop
Provisions. Requiring all producers to start a new two-year coverage
module for the 2014 crop year under the terms of the revised Pecan
Revenue Crop Provisions will provide equitable treatment of pecan
producers by allowing all pecan producers to be eligible for the same
benefits beginning in the 2014 crop year and will simplify the
administration of the transition to the modified program.
DATES: This rule is effective April 1, 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).
[[Page 13455]]
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.
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), Pecan Revenue Crop Insurance Provisions
(7 CFR 457.167) that were published by FCIC on November 17, 2011, as a
notice of proposed rulemaking in the Federal Register at 76 FR 71276-
71280. The public was afforded 60 days to submit comments after the
regulation was published in the Federal Register.
A total of 50 comments were received from 3 commenters. The
commenters were an insurance provider, an insurance service
organization, and a producer organization.
The public comments received regarding the proposed rule and FCIC's
responses to the comments are as follows:
General
Comment: A commenter stated they support the proposed regulation.
Response: FCIC thanks the commenter for their review of the
proposed rule and their support.
Comment: A few commenters stated they have no objection to
replacing the ``lowest available dollar span'' with the ``T-Revenue''
(to be developed by FCIC to represent a similar value according to the
background information in the proposed rule) throughout the Crop
Provisions in order to ``facilitate the implementation of a continuous
rating methodology to be consistent with other policies.''
Response: FCIC thanks the commenters for their review and support
of this proposed change.
Comment: A commenter requested the Special Provisions be amended to
reflect an April 1st acreage and production reporting date. The
commenter stated that it is not uncommon for groves and leases to
change control during the month of March. This change would eliminate a
portion of those groves that are lost after acreage reporting time each
year leaving the insured to pay full premiums for coverage on orchards
for which they no longer have insurance. The transfer of indemnity is
an option, but rarely used by producers. Having cared for the grove and
invested time, money, and labor in the prior years improving the grove,
the producer is left without any benefit of the current year's crop and
without any benefit of the crop insurance for which he must pay full
price. If it is not feasible to implement some form of pro-rating of
the premium (even if limited to the first 90 days after the current
reporting date) then we suggest a later acreage reporting date may be
more suitable and beneficial to the insured.
Response: The Crop Provisions require production and gross sales
from the previous two crop years to be reported by the acreage
reporting date for the first year of the two-year coverage module.
Acreage reporting dates are located in the actuarial documents, and
therefore, are not changed through the Crop Provisions. However, FCIC
is consolidating acreage reporting dates because of the Acreage Crop
and Reporting Streamlining Initiative (ACRSI) project, which has an
objective of using common standardized data and terminology across USDA
agencies to consolidate and simplify reporting requirements for
farmers. As a result of the ACRSI project the acreage reporting date
for pecans has been moved to March 15 in the states of Alabama,
Arizona, Florida, Georgia, and Mississippi for the 2013 crop year.
Additionally, for the 2013 crop year the acreage reporting date for
pecans has been moved to May 15 in the states of New Mexico, Oklahoma,
and Texas. This will allow additional time for producers to make their
decisions regarding their groves, but for the purposes of consistency
FCIC could not move the acreage reporting dates to April 1.
Section 1--Definitions
Comment: In regard to the definition of ``approved average revenue
per acre'' a few commenters stated according to the background
information in the proposed rule, the proposed change from a ten-year
base period to a six-year base period is based on a recommendation from
a contracted study that found a shorter base period works at least as
well and ``will be more responsive to market trends and changes in the
productive capacity of the trees.'' The background information also
indicates that the six-year base period is ``better for predicting
actual yields for some perennial crops.'' The commenters questioned
whether this applies to the crop of pecans as this was not specifically
indicated in the background information.
Response: FCIC agrees the background information in the proposed
rule does not indicate the referenced study applies specifically to
pecans. The report produced from the study did not specify which
perennial crops were analyzed to determine the effect of a shorter base
period. However, the concept is the same for pecans as it is for any
other perennial crop because it is based on the premise that the
productive capacity of a tree changes over time. The productive
capacity of a tree generally increases over time until the tree reaches
a maximum productive capacity and then production begins to decline.
However, events can occur during the life of a tree that can change the
productive capacity of that tree. Because the productive capacity of a
tree changes over time, the most recent few years of production data
provides the best indication of the current productive capacity of a
tree. This means that a shorter base period will be more responsive to
changes in the productive capacity of a perennial crop than a longer
base period. While the Pecan Revenue program uses the revenue history
to determine the guarantee rather than production history, the
production history is part of the revenue history. Although there are
other forces that can affect revenue, the production capability of the
trees is an important factor in establishing the revenue.
Comment: A few commenters stated that according to the definition
of ``approved average revenue per acre,''
[[Page 13456]]
the average of the four or six years of sales records and/or T-revenue
is subject to no adjustments before becoming the ``approved average
revenue per acre.'' The commenters question if this is correct.
Response: FCIC disagrees the ``approved average revenue per acre''
is not subject to adjustments. Although, the definition of ``approved
average revenue per acre'' does not indicate the adjustments, the
``approved average revenue per acre'' may be adjusted in accordance
with the terms of the Crop Provisions. Sections 3(d) and 3(f)(2)
provide exceptions that allow the amount of insurance per acre to be
adjusted within the two-year coverage module. No change has been made
to the final rule.
Comment: A few commenters suggested rewording the definition of
``approved average revenue per acre'' to read, ``The total of your
average gross sales per acre based on the most recent consecutive four
or six years of sales records and dividing that result by the number of
years of average gross sales per acre.''
Response: FCIC disagrees with the commenters that this section
should be reworded. The suggested rewording could change the meaning of
the definition to allow a choice of either four or six years of sales
records to be used to calculate the ``approved average revenue per
acre'' regardless of the number of years of sales records in the
database. This differs from the proposed provision that requires four
year of sales records to be used in the calculation unless six years of
sales records are available. If six years of sales records are
available six years must be used in the calculation. Therefore, the
first sentence of the definition ``approved average revenue per acre''
cannot be revised as suggested. No change has been made to the final
rule.
Comment: A few commenters concurred with the proposed deletion of
the pecan-specific definition of ``enterprise unit'' since it was
essentially the same as the definition in the Basic Provisions, which
as noted in the background information in the proposed rule, includes a
reference to meeting the requirements of section 34 of the Basic
Provisions. The commenters stated if optional units are not added, then
a modified version of this definition may need to be retained.
Response: FCIC thanks the commenters for their review and support
of this proposed removal of the definition of ``enterprise unit.''
Although FCIC agrees the requirements to qualify for enterprise units
should be consistent with the requirements in the Basic Provisions, the
Basic Provisions do not provide requirements to qualify for enterprise
units when non-contiguous land is the basis for optional units.
Therefore, FCIC has revised section 2(a)(1) to state that requirements
to qualify for enterprise units will be based on the producer having
two or more parcels that meet the definition of non-contiguous land and
two or more parcels must have at least the lesser of 20 acres or 20
percent of the insured crop acreage in the enterprise unit.
Section 2--Unit Division
Comment: A few commenters stated that the proposed Crop Provisions
are not entirely clear on how optional units will be handled within the
two-year coverage module. The provisions in sections 2(a), 2(a)(3)(ii),
2(a)(3)(iii), and 3(d)(1) seem somewhat contradictory. The section 2(a)
lead-in [``For both years of the two-year coverage module a unit will
be:''] to 2(a)(3) indicates that if the insured qualifies for optional
units for the first year of a two-year coverage module, the same
optional unit structure would apply for both years of that module
regardless of what happens during that module. Section 2(a)(3)(ii)
requires that ``Separate records of production are provided for at
least the most recent consecutive two crop years'' to qualify for
optional units for the current two-year coverage module, which fits the
definition of ``two-year coverage module'' that the same coverage
applies for both years of the module. Section 2(a)(3)(iii) also states
that optional units will be established ``by the acreage reporting date
of the first year of the two-year coverage module'' but goes on to
indicate that ``Units * * * may be adjusted or combined to reflect the
actual unit structure when adjusting a loss.'' The commenters
questioned if this means that a Pecan Revenue policy could have
optional units for the first year of the module, but then have those
units combined into basic units the second year of the module if it is
discovered at loss time that the production was commingled (meaning the
units are not the same for both years of the module). Or would that
discovery result in the retroactive combining of optional units for the
first year of the module as well, even if separate records by optional
unit were maintained that first year? If so, this would present a
number of difficulties. Section 3(d)(1) states that failure to provide
acceptable records for optional units ``will result in optional units
being combined into basic units at the time of discovery and your
amount of insurance per acre will be recalculated for the two-year
coverage module.'' The commenters stated, this would seem to indicate
that the unit structure would be revised retroactively to the first
year of the module (unless it is referring only to the recalculation of
the amount of insurance), except that the lead-in from 3(d) is that
``Your amount of insurance per acre will remain the same * * * for each
year of the two-year coverage module unless.'' The word ``unless''
would indicate that the situation described in 3(d)(1) is one of the
exceptions where the policy terms and coverage are not the same for
both years of the coverage module.
Response: FCIC agrees the lead-in paragraph for section 2(a)
appears to create a conflict with sections 2(a)(3)(iii) and 3(d)(1) by
stipulating the unit structure will be the same for both years of the
two-year coverage module. The provisions in sections 2(a)(3)(iii),
3(d)(1) and 13(b)(1) provide exceptions to the general rule that the
unit structure will remain the same for both years of the two-year
coverage module. Therefore, FCIC has revised section 2(a) by adding the
phrase ``except as provided in these Crop Provisions'' to the beginning
of the provision. The provisions in sections 2(a)(3)(iii), 3(d)(1), and
13(b)(1) are intended to require an adjustment to the unit structure
and amount of insurance for the current crop year and for the
subsequent crop year of the two-year coverage module (provided another
crop year remains in the two-year coverage module), if it is discovered
that separate acceptable records were not maintained for optional
units. The provisions in sections 2(a)(3)(iii), 3(d)(1), and 13(b)(1)
are not intended to require the unit structure or amount of insurance
to be revised retroactively for the first year of the two-year coverage
module if separate acceptable records for optional units were
maintained in the first year of the module, but not for the second year
of the two-year coverage module. The provision in section 3(d)(1) has
been revised to clarify that if you fail to provide acceptable records
necessary to determine a loss for optional units, optional units will
be combined to reflect the actual unit structure at the time of
discovery and your amount of insurance per acre will be recalculated
for the current crop year and the subsequent crop year of the two-year
coverage module (provided another crop year remains in the two-year
coverage module). The provision in section 13(b)(1) has been revised to
clarify that if it is discovered at the time of loss that separate
acceptable records were not maintained for optional units, the actual
unit structure determined at the time of loss will be the unit
structure for the
[[Page 13457]]
current crop year and the subsequent crop year of the two-year coverage
module (provided another crop year remains in the two-year coverage
module).
Comment: A few commenters stated that if the new optional unit
provisions are implemented, consider consolidating 2(a)(3) and 2(b)
since both deal with optional units as available for Pecan Revenue.
Response: FCIC agrees 2(a)(3) and 2(b) should be combined since
they both are in lieu of provisions contained in section 34 of the
Basic Provisions. FCIC has revised section 2(a)(3) to state that the
provisions are in lieu of sections 34(b) and (c) of the Basic
Provisions. With this revision to section 2(a)(3), the provision in
section 2(b) is not necessary because provisions that allow optional
units by section, section equivalent, FSA farm serial number, and
irrigated, non-irrigated and organic farming practice are contained in
section 34(c) of the Basic Provisions. FCIC has revised the provisions
and redesignated the subsections accordingly.
Comment: A few commenters stated that according to the background
information in the proposed rule, the proposed change to allow optional
units by non-contiguous land was requested by producers and ``Premium
rates will be adjusted to compensate for any additional risk associated
with optional units.'' The commenters stated the members (of their
organization) they have heard from so far have objected to this
proposed change and expressed concern with the consequences of allowing
optional units for Pecan Revenue, and anticipate other insurance
providers will feel the same. Based on past experience, keeping
production records to maintain optional units for crops like pecans is
very difficult. With crops like pecans, many of the producers are also
processors. They are not going to shut down the processing plant to
maintain option unit records. They are going to dump pecans into a big
bin and keep running the shelling plant in such a manner that they lose
their identity. Furthermore, current appraisal methods are inadequate
for tracking production for purposes of optional units. Appraisals are
more difficult for pecan orchards than for other crops because you can
have producing and non-producing trees in the same orchard, depending
on variety. Pecan trees also have varying maturity dates by variety
which can be greatly affected by weather conditions. In addition, when
harvesting pecans, the trees may have suffered weather stresses that
result in harvesting three or more times per season so tracking the
cleaned production back to an optional unit by appraisal is
problematic. Optional units will have a negative effect on the program
experience for this crop program. The experience has been favorable in
recent years primarily as a result of the high prices since many
orchards have had low yields. However, tracking production back to
optional units will be extremely difficult and likely result in adverse
program experience.
Response: FCIC understands the concerns of the commenters that
allowing optional units by non-contiguous land will result in a
negative effect on program experience because of the difficulty of
maintaining separate production records. However, the problems cited
mostly involve the producer's ability to meet the requirements of
maintaining separate records for each optional unit. Those producers
who are unable to maintain separate records should not elect optional
units. Further, the problems discussed are no different than for other
perennial crops that allow optional units. Producers who choose to
elect optional units are certifying they can provide acceptable
separate records for optional units. Provisions have been added to
require optional units to be combined and the amount of insurance to be
recalculated if the producer cannot provide separate production
records. In addition, premium rates will be adjusted to reflect any
additional risk caused by offering optional units. Those producers not
electing optional units will not be subject to any rate increases for
the additional risk posed by optional units. No change has been made to
the final rule.
Comment: A few commenters stated they currently have pecans set up
on a single database for irrigated versus non-irrigated on a county
basis. If optional units are added, guidelines will need to be provided
as to how records should be split out if a producer wants to elect
optional units. The commenters ask whether FCIC will want insurance
providers to maintain separate optional unit databases within the basic
unit/enterprise unit structures like what is now being required in the
2012 Crop Insurance Handbook since this would now be an option under
these provisions.
Response: To qualify for optional units producers will have to be
able to provide production records for each optional unit from at least
the most recent consecutive two crop years. Separate databases will
have to be established for each optional unit. Additionally, producers
will be required to maintain separate records for the irrigated and
non-irrigated acreage within the optional units. FCIC will provide
additional guidance in the Crop Insurance Handbook as to how databases
should be established and maintained.
Section 3--Insurance Guarantees and Coverage Levels for Determining
Indemnities
Comment: A few commenters stated to consider revising section 3(a)
by rearranging the phrases in the second sentence to read, ``You may
change the coverage level for the succeeding two-year coverage module
by giving us written notice not later than the sales closing date of
the next two-year coverage module.''
Response: No changes were proposed to section 3(a) and the proposed
change does not address a conflict or vulnerability in the provision.
Therefore, FCIC cannot consider the recommended change because the
public was not provided an opportunity to comment on the requested
change. No change has been made to the final rule.
Comment: A few commenters stated if section 3(d)(1) is not an
exception where the unit structure might be different the first and
second years of the module, perhaps this should be added instead to
section 3(f), which also deals with whether the insured does or does
not report the gross sales timely.
Response: FCIC disagrees the provision in section 3(d)(1) should be
moved to section 3(f). As stated above, FCIC has revised section 2(a)
to make it clear that section 3(d)(1) is an exception to section 2(a).
Therefore, this provision has not been moved.
Comment: A few commenters stated if optional units are added to the
Pecan Revenue policy, perhaps some reference should be added to section
3(f)(1) to address the effect on optional units if the insured does not
report gross sales timely (besides having an assigned gross sales
amount). In order to be consistent with other crop programs, producers
would not be eligible for optional units if the most recent previous
two years of gross sales were not reported.
Response: FCIC agrees with the commenters. A statement has been
added to section 3(f)(1) to clarify that if producers do not report the
gross sales from the two previous years by the acreage reporting date
for the first year of the next two-year coverage module, they will not
be eligible for optional units for both years of the two-year coverage
module.
Comment: A few commenters stated to consider revising section
3(f)(2) to
[[Page 13458]]
read ``we will readjust your average gross sales per acre for the next
two-year coverage module'' instead of ``next crop year.''
Response: Although no changes were proposed to section 3(f)(2), the
commenter has identified a potential conflict between the provisions in
section 3(d) and section 3(f)(2). Section 3(d) states ``your amount of
insurance per acre will remain the same as stated in the Summary of
Coverage on each unit for each year of the two-year coverage module
unless* * *'' but does not provide an exception to allow a revision to
the approved average revenue per acre for failure to timely report
gross sales. The provision in section 3(f)(2) states that ``if your
gross sales are reported after the acreage reporting date for the two-
year coverage module, we will readjust your average gross sales per
acre for the next crop year.'' Therefore, to prevent a conflict between
these provisions FCIC has revised section 3(d) by adding a new
paragraph (4) that specifies the amount of insurance per acre remains
the same for each year of the two-year coverage module unless the gross
sales amount is assigned in accordance with section 3(f).
Section 6--Report of Acreage
Comment: A commenter stated there is a fair amount of overlap and/
or repetition in 6(a)(1), 6(b), and 6(c).
Response: The only change proposed in section 6 was to remove the
percentage associated with the reporting of sequential thinning. FCIC
has not proposed any changes with respect to the rewriting of the
section. There is no conflict or vulnerability in the provision.
Therefore, FCIC cannot consider the recommended change because the
public was not provided an opportunity to comment. No change has been
made to the final rule.
Section 8--Insured Crop
Comment: A few commenters stated the proposed change to section
8(d) would drop the minimum age requirement and make some revisions to
the minimum production requirement of ``at least 600 pounds of pecan
in-shell per acre (or an amount provided in the Special Provisions) in
at least one of the previous four crop years, unless we inspect and
allow insurance by written agreement.'' The commenters question under
what circumstances the RMA Regional Office would consider insurance by
written agreement for trees that have not produced at least 600 pounds
per acre in at least one of the last four crop years. The commenters
asked whether the intent is to consider exceptions in certain cases
such as an orchard that has produced just under 600 pounds per acre, or
met the minimum production requirement five years ago but not since.
Response: The RMA Regional Offices will determine eligibility for a
written agreement. While it is not possible to list every possible
situation that might warrant a written agreement, one such situation
would be if an insurable cause of loss has caused the grove to fail to
meet the minimum production requirement, but based on an inspection of
the grove it is clearly capable of producing the minimum production
requirement. This provision is not intended to allow exceptions to
acreage that was not capable of meeting the minimum production
requirement in at least one of the previous four years on a case by
case basis.
Comment: A commenter requested clarification to section 8(e) in
regard to types of pecan varieties as possibly being uninsurable or
incompatible pollinators and the methodology for determining
uninsurable or incompatible pollinators.
Response: The RMA Regional Office will use published research and
loss experience data to determine what, if any, varieties or groups of
varieties should be considered uninsurable because they are unreliable
producers or incompatible pollinators. Any pecan varieties or groups of
varieties determined to be uninsurable will be listed in a Special
Provision statement. Producers should consult with the appropriate
agricultural experts prior to planting pecan trees to ensure they are
reliable producers and compatible pollinators.
Comment: A commenter stated the proposed section 8(d) would
eliminate the need for the proposed new section 8(e) as any acreage not
meeting the minimum level of production would already be considered
uninsurable.
Response: FCIC disagrees the addition of the new section 8(d)
eliminates the need for the new section 8(e). The provision in section
8(d) makes acreage not capable of producing the minimum production
requirement ineligible for crop insurance coverage. This may simply be
a function of the age of the trees, not the variety, and planting
younger trees may allow the acreage to again be insurable. However,
there may be certain varieties or groups of varieties that are not
capable of producing the minimum production or may only be capable of
occasionally producing the minimum production requirement. For these
varieties or groups of varieties it may be necessary to exclude these
from being insurable. For instance, it is possible a variety may be
determined to be uninsurable if it is severely alternate bearing even
under proper management or has characteristics which make it unsuitable
for commercial production. No change has been made to the final rule.
Section 13--Settlement of Claim
Comment: A commenter stated the background information in the
proposed rule states ``FCIC intends to provide additional guidance in
the Pecan Revenue Loss Adjustment Standards Handbook (LASH) as to when
a price should be considered inappropriate. The guidance will create a
minimum threshold that the price received must meet and will be based
on a percentage of the AMS price.'' The commenter questioned whether it
is sufficient to have that information in the LASH, or should some
indication of that minimum threshold be included in the Crop
Provisions.
Response: FCIC agrees it would not be appropriate to add a minimum
threshold to the Pecan Revenue LASH without providing an indication of
the minimum threshold in the Pecan Revenue Crop Provisions. Therefore,
FCIC has revised section 13(d)(2)(i) to indicate that unless otherwise
provided in the Special Provisions and excluding pecans sold under
contract, the price received will be not less than 95 percent of the
lowest AMS price for the nearest location for similar quality,
quantity, and variety of in-shell pecans published during the week the
producer sells his or her pecans. If AMS prices are not published for
the week the pecans were sold, the price received will be not less than
95 percent of the lowest price per pound for in-shell pecans of the
same variety or varieties insured offered by buyers in the area in
which the producer normally markets the pecans on the day the producer
sells his or her pecans. Additionally, FCIC has amended the proposed
provision to indicate that the market price will be used for direct
marketed pecans in order to be consistent with section 10(d)(1).
Section 15--Substitution of Yields
Comment: A commenter suggested revising section 15 to include that
the substitution of yields provisions of the Basic Provisions are
applicable (with the substitution of T-Revenue in lieu of the T-Yield).
The commenter stated this change would give the insured the same
protection as other crops by allowing an insured to substitute 60
percent of the applicable T-Revenue for actual revenue in order to
mitigate effect of catastrophic years. With other crops, if a producer
experiences a disaster and has an extremely low yield, that producer
has
[[Page 13459]]
the option of substituting 60 percent of the T-yield for the one actual
yield to minimize the effect of that year on the approved production
history. This is not an option for pecan producers. If a disaster
occurs and causes a producer to have zero production, the insured's
summary of revenue history and their approved average revenue are
dramatically impacted. With this one simple change to the policy
provisions, the needs of the producer are better met and the policy
will be more similar to other crop provisions.
Response: No changes were proposed to the Substitution of Yields
section and the proposed change does not address a conflict or
vulnerability in the provision. Therefore, FCIC cannot consider the
recommended change because the public has not been provided an
opportunity to comment of the requested change. No change has been made
to the final rule.
In addition to the changes described above, FCIC has made minor
editorial changes.
List of Subjects in 7 CFR Part 457
Crop insurance, Pecan Revenue, 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. 457.167 as follows:
0
a. In the introductory text by removing ``2005'' and adding ``2014'' in
its place;
0
b. In section 1 by:
0
i. Revising the definitions of ``approved average revenue per acre''
and ``average gross sales per acre'';
0
ii. In the definition of ``direct marketing'' by adding the word ``a''
before the word ``wholesaler'';
0
iii. Removing the definition of ``enterprise unit'';
0
iv. Revising the definition of ``market price''; and
0
v. Removing the definition of ``set out''; and
0
vi. Adding in alphabetical order a definition of ``transitional revenue
(T-revenue)'';
0
c. Revise section 2;
0
d. In the introductory text of section 3 by adding a comma following
the phrase ``In lieu of section 3 of the Basic Provisions'';
0
e. Revise section 3(d)(1);
0
f. In section 3(d)(2) by removing the phrase ``lowest available dollar
span amount provided in the actuarial documents'' and adding the term
``T-revenue'' in its place;
0
g. Add section 3(d)(4);
0
h. Revise section 3(f)(1);
0
i. In section 3(h) by adding a hyphen between the words ``high'' and
``risk'' in all four instances they appear;
0
j. In section 4(b) by removing the phrase ``the RMA Web site at http://www.rma.usda.gov/ or a successor Web site'' and adding the phrase
``RMA's Web site'' in its place;
0
k. In section 4(d) by adding a sentence;
0
l. In section 6(a)(1) by removing the phrase ``in excess of 12.5
percent of your insured acreage'';
0
m. In section 6(a)(5) by removing the semicolon and adding a period in
its place;
0
n. In section 6(b) by removing the phrase ``in excess of 12.5 percent
of your insured acreage'';
0
o. In section 8 by:
0
i. Revising paragraph (d);
0
ii. Redesignating paragraphs (e) and (f) as paragraphs (f) and (g); and
0
iii. Adding a new paragraph (e);
0
p. In section 11(a)(2) by adding a comma after the term ``Fire'';
0
q. Revise section 13(b);
0
r. In section 13(d)(1)(i) introductory text by removing the semicolon
at the end of the sentence and adding a colon in its place;
0
s. Revise section 13(d)(2)(i); and
0
t. Revise the pecan revenue example at the end of section 13.
The revisions and additions read as follows:
Sec. 457.167 Pecan revenue crop insurance provisions.
* * * * *
1. * * *
Approved average revenue per acre. The total of your average gross
sales per acre based on the most recent consecutive four years of sales
records building to six years and dividing that result by the number of
years of average gross sales per acre. If you provide more than four
years of sales records, they must be the most recent consecutive six
years of sales records. If you do not provide at least four years of
gross sales records, your approved average revenue will be:
(1) The average of the two most recent consecutive years of your
gross sales per acre and two years of the T-revenue; or
(2) If you do not provide any gross sales records, the T-revenue.
Average gross sales per acre. Your gross sales of pecans for a crop
year divided by your net acres of pecans grown during that crop year.
For example, if for the crop year your gross sales were $100,000 and
your net acres of pecans were 100, then your average gross sales per
acre for the crop year would be $1,000.
* * * * *
Market price. The market price is:
(1) The average of the AMS prices for the nearest location for
similar quality, quantity, and variety of in-shell pecans published
during the week you sell any of your pecans, you harvest your pecans if
they are not sold, or your pecans are appraised if you are not
harvesting them, unless otherwise provided in the Special Provisions.
For example, if you harvest production on November 14 but do not sell
the production, the average of the AMS prices for the week containing
November 14 will be used to determine the market price for the
production harvested on November 14; or
(2) If AMS prices are not published for the week, the average price
per pound for in-shell pecans of the same variety or varieties insured
offered by buyers on the day you sell any of your pecans, you harvest
any of your pecans if they are not sold, or your pecans are appraised
if you are not harvesting them, in the area in which you normally
market the pecans (If buyers are not available in your immediate area,
we will use the average in-shell price per pound offered by buyers
nearest to your area).
* * * * *
Transitional revenue (T-revenue). A value determined by FCIC and
published in the actuarial documents.
* * * * *
2. Unit Division.
Except as provided in these Crop Provisions, for both years of the
two-year coverage module a unit will be:
(a) In addition to the requirements of section 34(a)(4) of the
Basic Provisions, an enterprise unit if the insured crop is located on
at least two parcels of non-contiguous land and at least two of the
parcels must contain at least the lesser of 20 acres or 20 percent of
the insured crop acreage in the enterprise unit;
(b) A basic unit as defined in section 1 of the Basic Provisions;
or
(c) In lieu of the requirements contained in sections 34(b) and (c)
of the Basic Provisions, basic units may be divided into optional units
if, for each optional unit, the following criteria are met:
(1) Each optional unit you select must be located on non-contiguous
land;
[[Page 13460]]
(2) Separate records of production are provided for at least the
most recent consecutive two crop years. The records will be used to
verify that trees from each unit meet the minimum production
requirement contained in section 8(d) and to establish the approved
average revenue per acre for the optional units selected; and
(3) Optional units are selected and identified on the acreage
report by the acreage reporting date of the first year of the two-year
coverage module. Units will be determined when the acreage is reported,
but may be adjusted or combined to reflect the actual unit structure
when adjusting a loss. No further unit division may be made after the
acreage reporting date for any reason.
3. * * *
(d) * * *
(1) You fail to provide acceptable records necessary to determine a
loss for optional units. This will result in optional units being
adjusted or combined to reflect the actual unit structure at the time
of discovery. Your amount of insurance per acre will be recalculated
for the current crop year and the subsequent crop year of the two-year
coverage module (provided another year remains in the two-year coverage
module).
* * * * *
(4) Your gross sales amount is assigned in accordance with section
3(f).
* * * * *
(f) * * *
(1) If you do not report your gross sales in accordance with this
paragraph, we will assign a gross sales amount for any year you fail to
report and you will not be eligible for optional units for both years
of the two-year coverage module. The gross sales amount assigned by us
will be not greater than the T-revenue for the current coverage module.
* * * * *
4. * * *
(d) * * * If available from us, you may elect to receive these
documents and changes electronically.'' following the sentence, ``If
changes are made that will be effective for a subsequent two-year
coverage module, such copies will be provided not later than 30 days
prior to the cancellation date.
8. * * *
(d) That are grown on trees that have produced at least 600 pounds
of pecans in-shell per acre (or an amount provided in the Special
Provisions) in at least one of the previous four crop years, unless we
inspect and allow insurance by written agreement. This amount of
production must be achieved subsequent to any top work that occurs
within a unit;
(e) That are grown on varieties or a grouping of varieties within a
unit that are not designated as uninsurable in the Special Provisions;
* * * * *
13. * * *
(b) We will determine your loss on a unit basis. In the event you
are unable to provide separate acceptable records for any:
(1) Optional unit, we will combine all optional units for which
such records were not provided and this will be the unit structure the
current crop year and the subsequent crop year of the two-year coverage
module (provided another year remains in the two-year coverage module);
or
(2) Basic unit, we will allocate commingled production or revenue
to each basic unit in proportion to our liability on the harvested
acreage for each unit.
* * * * *
(d) * * *
(2) * * *
(i) The dollar amount obtained by multiplying the number of pounds
of pecans sold by the price received for each day the pecans were sold.
(If the price received is not verifiable by sales receipts or if the
pecan production was direct marketed, the market price will be used.
Unless otherwise provided in the Special Provisions, and excluding
pecans sold under contract, the price received will be not less than 95
percent of the lowest AMS price for the nearest location for similar
quality, quantity, and variety of in-shell pecans published during the
week you sell your pecans. If AMS prices are not published for the week
the pecans were sold, the price received will be not less than 95
percent of the lowest price per pound for in-shell pecans of the same
variety or varieties insured offered by buyers in the area you normally
market the pecans or the area nearest to you if prices are not
available in your immediate area on the day you sell your pecans.);
* * * * *
Pecan Revenue Example
------------------------------------------------------------------------
Average
Average gross
Year Acres pounds sales per
per acre acre
------------------------------------------------------------------------
4...................................... 100 750 $1,050
3...................................... 100 625 $625
2...................................... 100 1250 $750
1...................................... 100 200 $250
------------------------------------------------------------------------
Total Average Gross Sales Per Acre = $2,675
------------------------------------------------------------------------
The approved average revenue equals the total average gross sales
per acre divided by the number of years ($2,675 / 4 = $669).
The amount of insurance per acre equals the approved average
revenue multiplied by the coverage level percent ($669 x .65 = $435).
Assume pecan trees in the unit experienced damage to blooms due to
a late freeze causing low production. You produced, harvested, and sold
300 pounds per acre of pecans from 70 acres and received an actual
price of $0.75 per pound. On the other 30 acres, the pecans suffered
damage due to drought. You elected not to harvest the other 30 acres of
pecans. The 30 acres were appraised at 100 pounds per acre and on the
day of the appraisal the average AMS price was $0.65. The total dollar
value of production to count is (300 pounds of pecans x 70 net acres x
$0.75) + (100 pounds x 30 net acres x $0.65) = $15,750 + $1,950 =
$17,700.
The indemnity would be:
The amount of insurance per acre multiplied by the net acres minus
the dollar value of the total production to count equals the dollar
amount of indemnity ($435 x 100 = $43,500.00 - $17,700.00 = $25,800).
* * * * *
Signed in Washington, DC, on February 19, 2013.
Brandon Willis,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 2013-04468 Filed 2-27-13; 8:45 am]
BILLING CODE 3410-08-P