[Federal Register Volume 80, Number 73 (Thursday, April 16, 2015)]
[Rules and Regulations]
[Pages 20407-20413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-08690]
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Rules and Regulations
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Federal Register / Vol. 80, No. 73 / Thursday, April 16, 2015 / Rules
and Regulations
[[Page 20407]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
[Docket No. FCIC-14-0004]
RIN 0563-AC44
Common Crop Insurance Regulations; Macadamia Tree Crop Insurance
Provisions and Macadamia Nut 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, Macadamia Tree Crop Insurance
Provisions and the Macadamia Nut Crop Insurance Provisions. The
intended effect of this action is to provide policy changes and to
better meet the needs of the producers. The proposed changes will be
effective for the 2016 and succeeding crop years for macadamia trees
and for the 2017 and succeeding crop years for macadamia nuts.
DATES: This rule is effective May 18, 2015.
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
The Office of Management and Budget (OMB) has determined that this
rule is not-significant for the purpose of Executive Order 12866 and,
therefore, it has not been reviewed by OMB.
Paperwork Reduction Act of 1995
Pursuant to the provisions of the Paperwork Reduction Act of 1995
(44 U.S.C. chapter 35), the collections of information in this rule
have been approved by OMB under control number 0563-0053.
E-Government Act Compliance
FCIC is committed to complying with the E-Government Act of 2002,
to promote the use of the Internet and other information technologies
to provide increased opportunities for citizen access to Government
information and services, and for other purposes.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal governments and
the private sector. This rule contains no Federal mandates (under the
regulatory provisions of title II of the UMRA) for State, local, and
tribal governments or the private sector. Therefore, this rule is not
subject to the requirements of sections 202 and 205 of UMRA.
Executive Order 13132
It has been determined under section 1(a) of Executive Order 13132,
Federalism, that this rule does not have sufficient implications to
warrant consultation with the States. The provisions contained in this
rule will not have a substantial direct effect on States, or on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.
Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, Consultation and Coordination with Indian Tribal
Governments. The review reveals that this regulation will not have
substantial and direct effects on Tribal governments and will not have
significant Tribal implications.
Regulatory Flexibility Act
FCIC certifies that this regulation will not have a significant
economic impact on a substantial number of small entities. Program
requirements for the Federal crop insurance program are the same for
all producers regardless of the size of their farming operation. For
instance, all producers are required to submit an application and
acreage report to establish their insurance guarantees and compute
premium amounts, and all producers are required to submit a notice of
loss and production information to determine the amount of an indemnity
payment in the event of an insured cause of crop loss. Whether a
producer has 10 acres or 1,000 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 to require the insurance provider to take specific
action under the terms of the crop insurance policy, the administrative
appeal provisions published at 7 CFR part 11 must be exhausted before
any action against FCIC for judicial review may be brought.
[[Page 20408]]
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), Macadamia Tree Crop Insurance Provisions
and Macadamia Nut Crop Insurance Provisions that were published by FCIC
on August 1, 2014, as a notice of proposed rulemaking in the Federal
Register at 79 FR 44719-44722. The public was afforded 60 days to
submit comments after the regulation was published in the Federal
Register.
A total of 23 comments were received from two commenters. The
commenters were an insurance service organization and a producer
association.
The public comments received regarding the proposed rule and FCIC's
responses to the comments are as follows:
Macadamia Tree Crop Insurance Provisions
Section 1
Comment: One commenter agrees with the proposal to add definitions
for ``damaged'' and ``scaffold limb.''
Response: FCIC thanks the commenter for its review and its support
of the addition of these two definitions.
Section 2
Comment: One commenter states the first sentence in redesignated
paragraph (a) states that optional units by legal description or by
irrigated/non-irrigated practices are not applicable; and the second
sentence states that ``. . . Optional units may be established ONLY if
each optional unit is located on non-contiguous land, unless otherwise
allowed by written agreement'' [emphasis added]. The commenter states
that neither sentence addresses the possibility of optional units for
organic and conventional practices, which is allowed according to
section 34(c)(3) of the Basic Provisions. As written, this provision
appears to mean that separate optional units for organic and
conventional acreage would be possible only if they happen to be on
non-contiguous land or unless allowed by written agreement. If that is
the intention, it would be clearer to include ``organic practices'' in
the first sentence as not applicable. If it is not intended to exclude
optional units by organic/conventional practices, the second sentence
should be revised to clarify that optional units by non-contiguous land
may be ``in addition to'' the optional units by organic/conventional
allowed in section 34(c)(3) of the Basic Provisions.
Response: FCIC intends for optional units to be allowed on acreage
located on non-contiguous land or on acreage grown and insured under an
organic farming practice. FCIC does not intend to require that optional
units distinguished by organic and conventional practices must also be
located on non-contiguous land. FCIC has revised the provisions
accordingly.
Comment: One commenter states the ``Background'' explains that the
proposal to remove the 80-acre minimum requirement for optional units
is because most macadamia tree orchards are smaller than that, and the
other proposed changes (requiring a clear and discernible break, and
records) ``. . . will mitigate any potential abuse from this change.''
The commenter has no objection to this change.
Response: FCIC agrees with the commenter and thanks it for its
support. FCIC also notes that the planned removal of this 80-acre
optional unit minimum requirement was inadvertently described in the
proposed rule summary. The discussion of this requirement removal was
also described in specific detail under the description of changes for
this rule at Section 2. Therefore, FCIC removed this inadvertent
reference from the final rule summary because specific mention of this
proposal in the proposed rule summary was inadvertent and duplicative.
This removal of the duplicative language from the proposed rule summary
does not affect the commenter's agreement with the proposal: FCIC
continues to agree with the commenter, and the proposal as originally
proposed has been adopted.
Comment: One commenter states if the current section 2(a) is
deleted as proposed, then Basic Provisions sections 34(b)(1), (3) and
(4) will apply, meaning optional units will require a clear and
discernible break, and acceptable and verifiable records. The commenter
has no objection to this change.
Response: FCIC agrees with the commenter that by deleting section
2(a) of the Macadamia Tree Crop Provisions, sections 34(b)(1), (3) and
(4) of the Basic Provisions will apply. FCIC thanks the commenter for
its support.
Comment: One commenter states the proposed change would require
that optional units must have a ``clear and discernable break between
optional units.'' This is clarified further by stating ``optional units
may be established only if each optional unit is located on non-
contiguous land.'' There is no clear definition of what constitutes a
``clear and discernable break.'' It does disqualify optional units
determined by ``section, section equivalent, or FSA farm serial number
and by irrigated and non-irrigated practices.''
Without a clear specification for what actually fits their
definition for the ``clear and discernable break,'' there is great
potential for a broad interpretation from the Risk Management Agency
that would ultimately prohibit larger operations from using optional
units at all. Since large operations have significantly varied
conditions over the span of their operations that can cause production
loss over only certain sections (such as differences in rainfall,
elevation, soil-type, disease and pest-incidence, etc.), optional units
are important and necessary to provide operations with some security to
protect from losses. Without the optional units, an operation becomes
far more vulnerable, since only significant orchard-wide production
losses would ever qualify for a claim. It becomes financially
infeasible to even have insurance for many producers with such
limitations. This rule change should not pass without explicit
definitions of what would qualify as a ``clear and discernible break.''
Based on how the insurance companies had treated boundaries in the
past with regards to the formation of optional units, a clear and
discernible break should be defined by a designated production area
(for instance, a block or field) with a set acreage that has enough
production statistics for the APH to qualify for insurance. For
instance, in our operation, we have had the same fields that have
remained consistent since planting. Each field should be able to
qualify as a block, as production statistics are kept for each field
separately.
Response: FCIC agrees with the commenter that the proposed change
to remove paragraph (a) requires optional units to have a clear and
discernible break. Paragraph (a) states sections 34(b)(1), (3) and (4)
of the Basic Provisions are not applicable. These sections of the Basic
Provisions state, among other things, that the crop must be planted in
a manner such that there is a clear and discernible break between
optional units. By removing paragraph (a), sections 34(b)(1), (3) and
(4) of the Basic Provisions now become applicable. Under the current
policy, insureds who utilize optional units can manipulate their unit
boundaries to maximize indemnities because there is
[[Page 20409]]
no current requirement for discernible breaks between units. FCIC
believes this requirement will minimize program abuse as it relates to
unit division. Based on a previous comment, FCIC has revised Section 2
to clarify that optional units are allowed by non-contiguous land or by
organic and conventional acreage, thereby giving producers multiple
options to insure their acreage under optional units. FCIC does not
define ``clear and discernible break'' in its policy; however, in
general, when a term is not specifically defined in the policy, its
common or ordinary meaning may be applicable as found in a standard
dictionary. Examples of a clear and discernible break are highways,
railroads and rivers. No change has been made.
Section 7
Comment: One commenter recommends deleting the first comma in the
following sentence: ``In lieu of the provisions in section 9 of the
Basic Provisions, that prohibit insurance attaching to a crop planted
with another crop . . .'' The commenter says this change will be
consistent with a similar change proposed in section 8 of the Macadamia
Nut Crop Provisions.
Response: FCIC agrees with the commenter. The comma is not
necessary and its removal does not change the meaning of the provision.
FCIC has revised the provisions accordingly.
Section 10
Comment: One commenter states the proposed rule adds a phrase about
destroyed trees in the following phrase so it would read: ``. . . allow
us to inspect all insured acreage before pruning any damaged trees,
removing any damaged trees, or removing any destroyed trees.'' This can
be left as written, but consider if either of these alternatives might
be preferable:
``. . . before pruning or removing any damaged trees, or
removing any destroyed trees.'' This keeps the current wording about
the two possible actions for damaged trees, and adds the new phrase
about removing destroyed trees.
``. . . before pruning any damaged trees, or removing any
damaged or destroyed trees.'' This would put ``pruning'' in one phrase
(applying only to damaged trees) and ``removing'' in another (whether
the trees are damaged or destroyed).
Response: FCIC appreciates the recommendations. However, FCIC
believes its proposed language offers the option of the possibilities
least likely to create misunderstanding because each action word is
individually paired with the tree type (damaged vs. destroyed) for
which the action is prohibited.
Comment: One commenter states that, concerning halting of cleanup
following tree damage, during the most recent experience with Hurricane
Iselle, it took the insurance companies around two weeks, and in some
cases longer, to fly appraisers to Hawaii to assess storm damage. For
any agricultural operation, especially during harvest season, waiting
that long to remove damaged trees, branches, and other debris can pose
not only safety hazards, but can also limit movement throughout
orchards and can lead to crop loss due to the inability of harvest
equipment and crews to safely traverse through the areas of damage.
The majority of the insurance companies are located on the
continental United States, so they typically wait to hear from all of
the insured operations in Hawaii before deploying loss adjusters. This
is due to the distance and the large expense of sending people back and
forth. In light of these limitations, it is not practical or fair to
make farms wait so long before cleaning up. The alternatives to these
rule changes would be either to not change this rule or to add to the
change a requirement for tree loss appraisers to be on-site no later
than three days after notice of a major crop or tree loss.
Response: FCIC understands that it may take insurance companies
additional time to travel to Hawaii than to travel within the
continental United States. This inspection requirement is consistent
with the provisions in other Crop Provisions, such as the Hawaii
Tropical Tree Crop Provisions, which also provide coverage for crops in
Hawaii. Travel could be difficult after a catastrophic event, such as a
named storm. Therefore, a regulatory provision always requiring
insurance company presence on-site within three days after notice of a
loss is inappropriate in part because not all circumstances will always
allow such Loss Adjuster to arrive within that timeframe. A three-day
arrival expectation may be appropriate in some, though not necessarily
all, instances of loss. Insurance companies are required to arrive
onsite after receiving a notice of loss within appropriate time frames.
For example, the current Loss Adjustment Manual (LAM), in paragraph
41(A)(3), provides guidance that insurance companies must assign notice
of damage to adjusters as quickly as possible to assure timely service
to the insured. FCIC will, as it generally does in widespread loss
situations, monitor the performance of and loss adjustment service
provided by insurance companies in responding to a loss event.
Section 11
Comment: One commenter states with the example added in section
11(b)(4), consider if the parenthetical example in section
11(b)(3)(iii) is still useful or if it could be deleted. If it is kept,
consider deleting the phrase ``. . . specified in section 11(b)(3) . .
.'' since it is part of 11(b)(3).
Response: Given that no change to this provision was proposed, and
the public was not provided an opportunity to comment, FCIC declines to
adopt the recommendation in the final rule. No change has been made.
Comment: One commenter states the calculations in paragraph (b)(4)
at step (3)(ii) and (iii) do not appear to correspond to the
description of those steps in paragraph (b)(3) because the example
includes additional calculations as well. The example appears to work
out correctly, but it might be worth considering the following:
In paragraph (b)(4) at step (3)(ii), if the calculation of
the ``actual percent of loss'' should be identified as such, or
included in the introductory paragraph instead; and/or
In paragraph (b)(4) at step (3)(iii), if the calculation
of the dollar amount of loss [``. . . and $58,500 total amount of
insurance x 6.0 percent loss = $3,510 loss''] should be better
identified [since step (3) says only to divide the previous result by
the coverage level] or perhaps moved to be part of the final step (4).
Response: FCIC agrees with the commenter that the steps in
paragraph (b) do not correspond with the calculations in the settlement
of claim example. FCIC agrees with both of the commenters'
recommendations to clarify the steps in paragraph (b). FCIC has revised
the provisions as recommended, has made additional clarifications in
the steps in paragraph (b), and has revised the settlement of claim
example at redesignated paragraph (b)(5) to reflect the revisions in
paragraph (b).
Comment: One commenter recommends, in the introduction of paragraph
(b)(4) of the settlement of claim example, to add a hyphen in ``Thirty
five trees. . . .'' so it reads, ``Thirty-five trees . . .''
Response: FCIC agrees with the commenter and has revised the
provisions in redesignated paragraph (b)(5) accordingly.
[[Page 20410]]
Macadamia Nut Crop Insurance Provisions
Section 1
Comment: One commenter recommends correcting the spelling of
``floatation'' to ``flotation'' in the definition of ``floaters.''
Response: FCIC agrees with the commenter, even though
``floatation'' is an accepted spelling of ``flotation,'' and has
revised the provisions accordingly.
Comment: One commenter states the definition of ``wet in-shell'' is
revised to say that it excludes floaters and peewees, which FCIC claims
are terms commonly used in the Macadamia industry. While the terms are
sometimes used, there are some issues with the suggested use of these
terms and how the FCIC defines them. For starters, there was no
consultation with processors or husking operations to ascertain what
the industry-accepted definition of ``wet in-shell'' is. Furthermore,
the term ``floater'' has a different definition to the Macadamia nut
industry than is suggested by FCIC and in actuality is seldom used.
This is primarily because float grading is not a common practice for
Macadamia nut husking or processing and when it is employed, it is
typically performed at a different stage in the husking operation than
what FCIC has suggested in their interpretation of the rules. It is
believed that the reason that the FCIC is recommending this change is
in response to a claim dispute, in order to validate FCIC's stance
against the industry standards. The commenter states FCIC would
essentially create an ultimatum for the industry that producers would
either need to request their processors to change their processing
methods or face the penalty of not qualifying for crop insurance. The
cost of making infrastructural changes in order to comply with these
proposed changes would be high, so many processors may be discouraged
from making these changes, given that many only purchase nuts from
producers and have no stake in the rules governing crop insurance. The
rule change would essentially create an impossible standard for
producers to ever qualify for crop insurance.
Though it was stated in the past that the industry was consulted in
the development of the Macadamia nut policy, the policy as it is
currently written does not reflect this. It is recommended that (1) the
definition of ``wet in-shell'' be amended, (2) the industry be given an
opportunity to provide input on how things operate in Hawaii, and (3)
how the policy could be amended to better represent reality.
The revision to the definition of ``wet in-shell'' should be
according to what is common to the industry. Wet in-shell (WIS) nuts
are the result after husking has been implemented; this WIS weight is
considered a gross number; the ``extraneous materials'' percentage is
used to calculate the amount to subtract from the WIS number to come up
with a net WIS. The ``extraneous materials'' percentage or trash is
calculated in a quality analysis lab using samples obtained from the
husking operation. While sample collection may vary from one operation
to the next, this method of determining the net WIS is basically the
same across the industry.
Response: FCIC disagrees with the commenter's understanding of
changes to the ``wet in-shell'' definition. The language FCIC proposes
to incorporate in the Crop Provisions definition is derived from the
Special Provisions as well as the Macadamia Nut Loss Adjustment
Standards Handbook (LASH). The Special Provisions and LASH are part of
the policy or are used to service the policy. FCIC is not changing the
definition meaning by incorporating the Special Provisions and LASH
statements into the definition. The Special Provisions statement has
been in effect since the 2006 crop year and the LASH definition has
been in effect since the 2005 crop year.
The commenter says they believe the reason FCIC is recommending the
change to the definition of ``wet in-shell'' is in response to a claim
dispute, in order to validate FCIC's stance against the industry
standards. The commenter says FCIC would essentially create an
ultimatum for the industry that producers would either need to request
their processors to change their processing methods or face the penalty
of not qualifying for crop insurance. The commenter says the change
would essentially create an impossible standard for producers to ever
qualify for crop insurance. As mentioned in the previous paragraph,
FCIC is not making a substantial change to the definition of ``wet in-
shell.'' The primary change is to incorporate language contained in the
Special Provisions and LASH that are currently in effect and have been
in effect since the 2006 and 2005 crop years, respectively. Since this
change is not substantial, this definition has already existed in large
part, and was required for use in policy servicing, FCIC does not agree
that such change creates an ultimatum for producers.
Furthermore, FCIC's definition of ``wet in-shell,'' as now updated,
corresponds with the definition the commenter seeks for the industry
concerns. The commenter says wet in-shell nuts are the result after
husking has been implemented (gross weight) and the ``extraneous
materials'' percentage or trash is used to calculate the amount that is
subtracted from the gross weight. The difference between the gross
weight and the ``extraneous materials'' percentage or trash is the wet
in-shell net weight. FCIC's definition says the wet in-shell weight is
the weight after removal of the husk (gross weight) and excluding
floaters and peewees (extraneous material or trash) but prior to being
dried. The industry agrees FCIC should not include floaters and peewees
in the wet in-shell weight for purposes of production to count, and
refers to such floaters and peewees as ``trash'' or ``extraneous
materials.'' FCIC understands the comment to assume FCIC requires all
macadamia nut production to be float graded using water flotation for
insurance purposes. However, this assumption is incorrect. Under the
policy, float grading using water flotation is only one acceptable
method of determining floaters to exclude from production to count. To
clarify and specifically address the commenter's concern regarding
industry practices, FCIC has specifically added to the definition of
wet in-shell, through the component definition of floaters, a reference
that laboratory testing for floater determination is also acceptable as
an alternative to float grading using water floatation. In sum, FCIC
requires that the reported production must not include floaters and
peewees, or, in other words, the weight of the trash, which the
industry and FCIC now similarly define.
In the proposed rule, FCIC proposed to define the terms
``floaters'' and ``peewees'' because those terms are used in the
Special Provisions statement and LASH definitions that were proposed
for incorporation into the ``wet in-shell'' definition. Those terms
were not previously defined within the Crop Provisions, but they were
defined in the Macadamia Nut LASH. The LASH has contained those terms
and their definitions since the 2005 crop year.
The proposed rule comment period is an opportunity for the public
to provide input on changes FCIC proposes to make to the Crop
Provisions. Interested parties are permitted to provide comments during
that time. If the commenter had specific suggestions for recommended
changes to this portion of the Macadamia Nut Crop Provisions, the
commenter had an opportunity to provide specific proposed changes on
this issue during the proposed rule comment period. However, FCIC has
made an addition to the definition that
[[Page 20411]]
will address the commenter's industry concern.
Comment: One commenter recommends deleting the comma in the phrase
``wet, in-shell pounds'' in the definition of ``production guarantee
(per acre)'' to match the defined term of ``wet in-shell,'' as was done
in sections 6(d) and 11(c).
Response: FCIC agrees with the commenter that the comma should be
removed from the sentence. The comma is not necessary and its removal
does not change the meaning of the provision. FCIC has revised the
provisions accordingly.
Comment: One commenter recommends adding a comma before the added
phrase ``. . . excluding floaters and peewees . . .'' in the definition
of ``wet in-shell.''
Response: FCIC disagrees with the commenter. A comma would not add
clarity.
Section 2
Comment: One commenter states if the current paragraph (a) is
deleted as proposed, then Basic Provisions section 34(b)(1) will apply,
meaning optional units will require a clear and discernible break, and
acceptable and verifiable records. The commenter has no objection to
this change.
Response: FCIC agrees with the commenter that by deleting paragraph
(a) of the Macadamia Tree Crop Provisions, section 34(b)(1) of the
Basic Provisions will apply. FCIC thanks the commenter for its support.
Comment: One commenter states that the first sentence in section 2
states that optional units by legal description or by irrigated/non-
irrigated practices are not applicable; and the second sentence states
that ``. . . Optional units may be established ONLY if each optional
unit is located on non-contiguous land, unless otherwise allowed by
written agreement'' [emphasis added]. The commenter states that neither
sentence addresses the possibility of optional units for organic and
conventional practices, which is allowed according to section 34(c)(3)
of the Basic Provisions. As written, this provision appears to mean
that separate optional units for organic and conventional acreage would
be possible only if they happen to be on non-contiguous land or unless
allowed by written agreement. If that is the intention, it would be
clearer to include ``organic practices'' in the first sentence as not
applicable. If it is not intended to exclude optional units by organic/
conventional practices, the second sentence should be revised to
clarify that optional units by non-contiguous land may be ``in addition
to'' the optional units by organic/conventional allowed in section
34(c)(3) of the Basic Provisions.
Response: FCIC intends for optional units to be allowed on acreage
located on non-contiguous land or grown and insured under an organic
farming practice. FCIC does not intend to require that optional units
distinguished by organic and conventional practices must also be
located on non-contiguous land. FCIC has revised the provisions
accordingly.
Comment: One commenter states the ``Background'' explains that the
proposal to remove the 80-acre minimum requirement for optional units
is because most macadamia tree orchards are smaller than that, and the
other proposed changes (requiring a clear and discernible break, and
records) ``. . . will mitigate any potential abuse from this change.''
The commenter has no objection to this change.
Response: FCIC agrees with the commenter and thanks it for its
support.
Section 3
Comment: One commenter recommends shifting the following phrase in
paragraph (b): ``. . . on the yield potential of the insured crop''
from the end of the first sentence to be ahead of the list, so it would
read: ``. . . based on our estimate of the effect on the yield
potential of the insured crop of the following: Interplanted perennial
crop; removal of trees; damage; change in practices and any other
circumstance. If you fail . . .''
Response: Given that no change to this provision was proposed, and
the public was not provided an opportunity to comment, FCIC declines to
adopt the recommendation in the final rule. In addition, this language
is consistent with other Crop Provisions, such as Texas Citrus Fruit
and Arizona-California Citrus. No change has been made.
Comment: One commenter recommends revising the following sentence
in paragraph (d), ``Each crop year you must report your production from
two crop years ago . . .'' to ``. . . from two crop years before . .
.''
Response: Given that no change to this provision was proposed, and
the public was not provided an opportunity to comment, FCIC declines to
adopt the recommendation in the final rule. In addition, this language
is consistent with other Crop Provisions, such as Texas Citrus Fruit
and Arizona-California Citrus. No change has been made.
Section 6
Comment: One commenter agrees the wording change from ``. . . we
may agree in writing . . .'' to ``. . . we may give our approval in
writing . . .'' in paragraph (d) makes it less likely for this to be
taken as a reference to a written agreement.
Response: FCIC agrees with the commenter and thanks it for its
support.
Comment: One commenter states the second sentence in paragraph (d)
sounds a bit odd when it refers to ``. . . approval in writing to
insure ACREAGE that has not yet reached this age . . .'', referring to
the requirement in the first sentence that the insured crop be ``. . .
grown on TREES that have reached at least the fifth growing season . .
.'' Since the second sentence goes on to say coverage on this under-age
acreage can be approved ``. . . if IT has produced at least 200 pounds
of (wet in-shell) macadamia nuts per ACRE in a previous crop year'',
maybe the word ``acreage'' is correct and no change is needed. But one
possible alternative to consider might be: ``. . . to insure acreage of
trees that have not reached this age . . .''
Response: Given that no change to this provision was proposed, and
the public was not provided an opportunity to comment, FCIC declines to
adopt the recommendation in the final rule. In addition, the original
Macadamia Nut Crop Provisions are written with this language because
nut production, not nut trees, is insured under these particular Crop
Provisions. No change has been made.
Section 8
Comment: One commenter states the proposal is to add the phrase
``or as specified in the Special Provisions'' to paragraph (a)(2), so
paragraph (a)(2) would read as follows: ``The calendar date for the end
of the insurance period for each crop year is the second June 30th
after insurance attaches, or as specified in the Special Provisions.''
According to the ``Background'', this ``. . . will provide flexibility
to update this date if the need arises.'' The commenter does not object
to providing flexibility to make the program work better, though it can
also add some complexity by making the calendar date subject to change,
meaning it must be looked up in the Special Provisions for the
applicable county to be certain the date is unchanged.
Response: FCIC agrees with the commenter that the added phrase
provides flexibility to make the program work better. This flexibility
eliminates the administrative burden of revising
[[Page 20412]]
the regulation if FCIC determines the calendar date for the end of
insurance period should be different than what is stated in the Crop
Provisions. In addition, the change does not add the complexity issue
raised by the commenter because a policyholder must always read the
Special Provisions to ensure it is aware of any changes to any issue
covered by the Special Provisions, which may extend beyond changes to
the end of the insurance period. No change has been made.
List of Subjects in 7 CFR Part 457
Crop insurance, Macadamia tree and macadamia nut, 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 2016 and
succeeding crop years for macadamia trees and for the 2017 and
succeeding crop years for macadamia nuts 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(1) and 1506(o).
0
2. Amend Sec. 457.130 as follows:
0
a. In the introductory text by removing ``2011'' and adding ``2016'' in
its place;
0
b. In section 1 by adding in alphabetical order definitions of
``Damaged'' and ``Scaffold limb'';
0
c. By revising section 2;
0
d. In section 3 by removing the phrase ``(Insurance Guarantees,
Coverage Levels, and Prices for Determining Indemnities)'' in
paragraphs (a) introductory text and (b);
0
e. In section 4 by removing the phrase ``(Contract Changes)'';
0
f. In section 5 by removing the phrase ``(Life of Policy, Cancellation,
and Termination)'';
0
g. In section 6 introductory text by removing the phrase ``(Insured
Crop)'';
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h. In section 7 by removing the phrase ``(Insurable Acreage) of the
Basic Provisions (Sec. 457.8), that prohibit'' and adding in its place
the phrase ``of the Basic Provisions (Sec. 457.8) that prohibit'';
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i. In section 8 by removing the phrase ``(Insurance Period)'' in
paragraphs (a) introductory text and (b) introductory text;
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j. In section 9 by removing the phrase ``(Causes of Loss)'' in
paragraphs (a) introductory text and (b) introductory text;
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k. By revising section 10; and
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l. In section 11:
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i. By revising paragraph (b)(3);
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ii. By redesignating paragraph (b)(4) as paragraph (b)(5);
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iii. By adding paragraph (b)(4); and
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iv. By revising newly redesignated paragraph (b)(5) and paragraphs (c)
introductory text and (c)(1).
The revisions and additions read as follows:
Sec. 457.130 Macadamia tree crop insurance provisions.
* * * * *
1. Definitions
* * * * *
Damaged. Injury to the main trunk, scaffold limb(s), and any other
subordinate limbs that reduces the productivity of the macadamia tree
due to an insured cause of loss that occurs during the insurance
period.
* * * * *
Scaffold limb. A major limb attached directly to the trunk.
2. Unit Division
(a) Provisions in the Basic Provisions that allow optional units by
section, section equivalent, or FSA farm serial number and by irrigated
and non-irrigated practices are not applicable. Optional units may be
established only if each optional unit is located on non-contiguous
land or grown and insured under an organic farming practice, unless
otherwise allowed by written agreement.
(b) You must have provided records, which can be independently
verified, of acreage and age of trees for each unit for at least the
last crop year.
* * * * *
10. Duties in the Event of Damage or Loss
In addition to the requirements of section 14 of the Basic
Provisions, in case of damage or probable loss, if you intend to claim
an indemnity on any unit, you must allow us to inspect all insured
acreage before pruning any damaged trees, removing any damaged trees,
or removing any destroyed trees.
11. Settlement of Claim
* * * * *
(b) * * *
* * * * *
(3) Determine the applicable percent of loss, which is calculated
as follows:
(i) Subtract the coverage level percent you elected from 100
percent;
(ii) Determine the actual percent of loss, which is determined as
follows:
(A) Divide the number of trees destroyed by the total number of
trees to calculate the percent loss;
(B) Divide the number of trees damaged by the total number of trees
to calculate the percent of damage;
(C) Add the results of sections 11(b)(3)(ii)(A) and (B).
(iii) Subtract the result obtained in section 11(b)(3)(i) from
section 11(b)(3)(ii);
(iv) Divide the result in section 11(b)(3)(iii) by the coverage
level you elected (For example, if you elected the 75 percent coverage
level and your actual percent of loss was 70 percent, the percent of
loss specified in section 11(b)(3) would be calculated as follows:
100%-75% = 25%; 70%-25% = 45%; 45% / 75% = 60%.);
(4) Multiply the result of section 11(b)(3) by the total dollar
amount of insurance obtained in section 11(b)(2); and
(5) Multiply the result in section 11(b)(4) by your share.
For example:
You select 65 percent coverage level and 100 percent of the price
election on 10 acres of 9-year-old macadamia trees in the unit. Your
share is 100 percent. The amount of insurance per acre is $5,850. There
are 90 trees per unit. Thirty-five trees are destroyed. Your indemnity
would be calculated as follows:
(1) 10 acres x $5,850 = $58,500;
(3)(i) 100 percent - 65 percent = 35 percent deductible;
(ii) 35 destroyed trees / 90 total unit trees = 38.9 percent loss;
(iii) 38.9 percent loss - 35 percent deductible = 3.9 percent;
(iv) 3.9 percent / 65 percent coverage level = 6.0 percent loss;
(4) $58,500 total amount of insurance x 6.0 percent loss = $3,510
loss; and
(5) $3,510 loss x 100 percent share = $3,510 indemnity payment.
(c) The total amount of loss will include both damaged trees and
destroyed trees as follows:
(1) Any orchard with over 80 percent of the actual trees damaged or
destroyed due to an insured cause of loss will be considered to be 100
percent damaged; and
* * * * *
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3. Amend Sec. 457.131 as follows:
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a. In the introductory text by removing ``2012'' and adding ``2017'' in
its place;
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b. In section 1:
0
i. By adding definitions in alphabetical order of ``Floaters'' and
``Peewees''; and
0
ii. By revising the definition of ``Wet in-shell'';
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c. By revising section 2;
0
d. In section 3:
0
i. In the introductory text and paragraph (b) introductory text by
[[Page 20413]]
removing the phrase ``(Insurance Guarantees, Coverage Levels, and
Prices for Determining Indemnities)'';
0
ii. In paragraph (b)(4) introductory text by removing the word
``anytime'' and adding in its place the phrase ``any time''; and
0
iii. By revising paragraph (d);
0
e. In section 4 by removing the phrase ``(Contract Changes)'';
0
f. In section 5 by removing the phrase ``(Life of Policy, Cancellation,
and Termination)'';
0
g. In section 6:
0
i. By removing the phrase ``(Insured Crop)'' in the introductory text;
and
0
ii. By revising paragraph (d);
0
h. In section 7:
0
i. By removing the phrase ``(Insurable Acreage)''; and
0
ii. By removing the comma after the phrase ``Basic Provisions (Sec.
457.8)'';
0
i. In section 8:
0
i. By removing the phrase ``(Insurance Period)'' in paragraphs (a)
introductory text and (b) introductory text; and
0
ii. By revising paragraph (a)(2);
0
j. In section 9 by removing the phrase ``(Causes of Loss)'' in
paragraphs (a) introductory text and (b) introductory text;
0
k. In section 10 introductory text by removing the phrase ``(Duties in
the Event of Damage or Loss)'';
0
l. In section 11:
0
i. In paragraph (b)(4) by removing the phrase ``if applicable, (see
section 11(c))'' and adding in its place the phrase ``if applicable
(see section 11(c)),'';
0
ii. By adding a settlement of claim example after paragraph (b)(7); and
0
iii. In paragraph (c) by removing the phrase ``(wet, in-shell pounds)''
and adding in its place the phrase ``(wet in-shell pounds)''.
The revisions and additions read as follows:
Sec. 457.131 Macadamia nut crop insurance provisions.
* * * * *
1. Definitions
* * * * *
Floaters. Inedible, husked ``field run'' nuts identified by water
flotation or laboratory testing.
* * * * *
Peewees. Mature and immature wet in-shell nuts that are smaller
than 16 mm (5/8 inch) in diameter.
* * * * *
Wet in-shell. The weight of the macadamia nuts as they are removed
from the orchard with the nut meats in the shells after removal of the
husk and excluding floaters and peewees but prior to being dried.
2. Unit Division
Provisions in the Basic Provisions that allow optional units by
section, section equivalent, or FSA farm serial number and by irrigated
and non-irrigated practices are not applicable. Optional units may be
established only if each optional unit is located on non-contiguous
land or grown and insured under an organic farming practice, unless
otherwise allowed by written agreement.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
* * * * *
(d) Instead of reporting your macadamia nut production for the
previous crop year, as required by section 3 of the Basic Provisions,
there is a one-year lag period. Each crop year you must report your
production from two crop years ago, e.g., on the 2016 crop year
production report, you will provide your 2014 crop year production.
* * * * *
6. Insured Crop
* * * * *
(d) That are grown on trees that have reached at least the fifth
growing season after being set out or grafted. However, we may give our
approval in writing to insure acreage of trees that has not reached
this age if it has produced at least 200 pounds of (wet in-shell)
macadamia nuts per acre in a previous crop year; and
* * * * *
8. Insurance Period
(a) * * *
(2) The calendar date for the end of the insurance period for each
crop year is the second June 30th after insurance attaches, or as
specified in the Special Provisions.
* * * * *
11. Settlement of Claim
* * * * *
(b) * * *
(7) * * *
For example:
You select the 65 percent coverage level and 100 percent of the
price election on 10 acres of macadamia nuts in the unit. Your share is
100 percent. Your production guarantee (per acre) is 4,000 pounds. The
price election is $0.78. You are able to harvest 25,000 pounds. Your
indemnity would be calculated as follows:
(1) 10 acres x 4,000 pounds = 40,000 pounds guarantee;
(2) 40,000 pounds x $0.78 price election = $31,200 total value of
guarantee;
(4) 25,000 pounds production to count x $0.78 price election =
$19,500 value of production to count;
(6) $31,200 total value of guarantee - $19,500 value of production
to count = $11,700 loss; and
(7) $11,700 loss x 100 percent share = $11,700 indemnity payment.
* * * * *
Signed in Washington, DC, on April 9, 2015.
Brandon Willis,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2015-08690 Filed 4-15-15; 8:45 am]
BILLING CODE 3410-08-P