Proposed Rule2021-26989
Common Crop Insurance Regulations; Apple Crop Insurance Provisions
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 16, 2021
Issuing agencies
Agriculture DepartmentFederal Crop Insurance Corporation
Abstract
The Federal Crop Insurance Corporation (FCIC) proposes to amend the Common Crop Insurance Regulations, Apple Crop Insurance Provisions. The intended effect of this action is to provide policy changes to better meet the needs of the apple producers, to address program vulnerabilities that have caused increased loss ratios and rising premium costs, and to provide safeguards against fraud, waste, and abuse. The proposed changes will be effective for the 2023 and succeeding crop years.
Full Text
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[Federal Register Volume 86, Number 239 (Thursday, December 16, 2021)]
[Proposed Rules]
[Pages 71396-71406]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-26989]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 86, No. 239 / Thursday, December 16, 2021 /
Proposed Rules
[[Page 71396]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
[Docket ID FCIC-21-0007]
RIN 0563-AC75
Common Crop Insurance Regulations; Apple Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, U.S. Department of
Agriculture (USDA).
ACTION: Proposed rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to
amend the Common Crop Insurance Regulations, Apple Crop Insurance
Provisions. The intended effect of this action is to provide policy
changes to better meet the needs of the apple producers, to address
program vulnerabilities that have caused increased loss ratios and
rising premium costs, and to provide safeguards against fraud, waste,
and abuse. The proposed changes will be effective for the 2023 and
succeeding crop years.
DATES: Written comments and opinions on this proposed rule will be
accepted until close of business February 14, 2022 and will be
considered when the rule is to be made final.
ADDRESSES: We invite you to submit comments on this rule. You may
submit comments by either of the following methods, although FCIC
prefers that you submit comments electronically through the Federal
eRulemaking Portal:
<bullet> Federal eRulemaking Portal: Go to <a href="https://www.regulations.gov">https://www.regulations.gov</a> and search for Docket ID FCIC-21-0007. Follow the
instructions for submitting comments.
<bullet> Mail: Director, Product Administration and Standards
Division, Risk Management Agency (RMA), U.S. Department of Agriculture,
P.O. Box 419205, Kansas City, MO 64133-6205. In your comment, specify
docket ID FCIC-21-0007.
<bullet> Comments will be available for viewing online at
<a href="http://www.regulations.gov">www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Francie Tolle; telephone (816) 926-
7829; or email <a href="/cdn-cgi/l/email-protection#a8cedac9c6cbc1cd86dcc7c4c4cde8dddbccc986cfc7de"><span class="__cf_email__" data-cfemail="a7c1d5c6c9c4cec289d3c8cbcbc2e7d2d4c3c689c0c8d1">[email protected]</span></a>. Persons with disabilities who
require alternative means for communication should contact the USDA
Target Center at (202) 720-2600 (voice).
SUPPLEMENTARY INFORMATION:
Background
The FCIC serves America's agricultural producers through effective,
market-based risk management tools to strengthen the economic stability
of agricultural producers and rural communities. FCIC is committed to
increasing the availability and effectiveness of Federal crop insurance
as a risk management tool. Approved Insurance Providers (AIP) sell and
service Federal crop insurance policies in every state through a
public-private partnership. FCIC reinsures the AIPs who share the risks
associated with catastrophic losses due to major weather events. FCIC's
vision is to secure the future of agriculture by providing world class
risk management tools to rural America.
FCIC proposes to amend the Common Crop Insurance Regulations by
revising 7 CFR 457.158 Apple Crop Insurance Provisions to be effective
for the 2023 and succeeding crop years.
The proposed changes to 7 CFR 457.158 Apple Crop Insurance
Provisions are as follows:
1. Throughout the Crop Provisions, FCIC proposes to include a
reference to a type listed in the actuarial documents. The type name
proposed is ``Fresh (Combined),'' which is synonymous with type ``Fresh
111'' that policyholders are likely familiar with. FCIC proposes no
changes to what is insurable under the type; the only proposed change
is to the type name.
2. Section 1--FCIC proposes to add a definition of ``Apple
Supplemental Report.'' This term and its definition are added because
of proposed changes in section 3 and section 6.
FCIC proposes to add a definition of ``block.'' This term is used
in the Crop Provisions but had not been defined.
FCIC proposes to revise the definition of ``damaged apple
production.'' The current definition defines damaged apple production
in two parts: (1) With respect to production insured under the base
policy, damaged apple production is fresh or processing apple
production that fails to grade U.S. No. 1 Processing or better; and (2)
with respect to production insured under the Fresh Fruit Quality
Adjustment (Quality Option), damaged apple production is fresh apple
production that fails to grade U.S. Fancy or better. FCIC is proposing
changes in the Quality Option that require production that grades U.S.
#1 Processing or better but less than U.S. Fancy to be included in
production to count at a reduced value; therefore, the proposed
revisions to the definition of ``damaged apple production'' had to be
the same for apples insured under the base policy and apples insured
under the Quality Option. Due to these proposed changes, the second
part of the definition of ``damaged apple production,'' which refers to
the Quality Option, is proposed to be removed.
FCIC proposes to revise the definition of ``direct marketing.''
Direct marketing is the sale of the insured crop directly to consumers
without the intervention of an intermediary such as a wholesaler,
retailer, packer, processor, shipper, buyer, or broker. The definition
is being revised to provide two clarifications. The first is to state
that production records are controlled exclusively by the policyholder.
The second is to add a sentence clarifying that only the portion of the
crop sold directly to consumers will be considered direct marketed.
FCIC proposes to revise the definition of ``fresh apple
production.'' FCIC proposes to move paragraphs (1)(ii), (1)(iv) and (2)
to Section 7, Insured Crop, because these paragraphs contain provisions
that are more appropriately placed in that section. FCIC proposes to
redesignate paragraph (1)(i) as (1), paragraph (1)(iii) as (3), revise
redesignated paragraphs (1) and (3), and add a new paragraph (2). In
redesignated paragraph (1), the definition contains a list of actions
that the apples undergo to change them from their basic form. Even
though ``dicing'' was not included in the list of actions, one could
maintain that it was included in the catch-all ``etc.'' at the end of
the list. However, FCIC received questions regarding whether ``dicing''
would be considered in this list of actions. To provide clarification,
FCIC proposes to add the word ``dicing'' to the list of actions that
would constitute changing apples from their basic form.
[[Page 71397]]
In new paragraph (2), FCIC proposes to clarify that apples sold for
the processing market are not considered fresh apple production unless
they were sold with a grade of U.S. Fancy or better. For example,
apples sold for the slicer market or the hard cider market that are not
sold with a grade of U.S. Fancy or better. According to the definition,
as here pertinent, ``fresh apple production'' is apples that do not
undergo any change in basic form. Slicer apples are, just as their name
suggests, apples that are sliced, which is a change in basic form.
Sales of slicer apples are currently allowed to be considered fresh if
the sales price was commensurate with fresh apple sales. However,
slicers are a processed apple, meaning they undergo a change in basic
form. Similarly, apples sold to the hard cider market undergo a change
in basic form. A contracted study completed at FCIC's request
determined that prices for slicers are more commensurate with
processing apples. Currently, apples sold as slicers can be insured as
Fresh, thus qualifying for optional coverage under the Quality Option;
however, they can be sold without a grade of U.S. Fancy, thus never
being included in production to count, and contributing to high loss
ratios in some areas. Under this proposed change, records indicating
apples were sold as slicers or for hard cider will not be used to
determine whether production meets the one-in-four fresh requirement
under the Quality Option unless the apples were sold with a grade of
U.S. Fancy or better.
FCIC also proposes to revise redesignated paragraph (3). The
current provisions require producers to follow cultural practices
generally in use for fresh apple acreage in the area in a manner
generally recognized by agricultural experts. FCIC proposes to revise
this paragraph to provide flexibility through Special Provisions to
include additional cultural practices that may be required for acreage
to meet the definition of ``fresh apple production.'' Examples of
cultural practices may include specific spraying programs, hail
netting, and wind machines or misting systems.
FCIC proposes to add a definition of ``fresh fruit factor.'' This
term and its definition are added because of proposed changes made in
section 14.
FCIC proposes to add a definition of ``graft.'' This term and its
definition are added because of proposed changes made in section 7(f).
FCIC proposes to add a definition of ``high density.'' This term
and its definition are added because of a proposed change in section 6.
FCIC proposes to add definitions of ``maximum additional value
price'' and ``premium price election'' because of proposed changes made
in section 3.
FCIC proposes to revise the definition of ``processing apple
production.'' FCIC proposes to add the word ``dicing'' to the list of
actions that would constitute changing apples from their basic form, to
be consistent with the addition in the definition of ``fresh apple
production.'' FCIC also proposes to remove the phrase ``failing to meet
the insurability requirements for fresh apple production'' and add
similar language to it in Section 7, Insured Crop, because this
language contains provisions that are more appropriately placed in that
section.
3. Section 2--FCIC proposes to designate the undesignated paragraph
as paragraph (a) and revise the lead-in sentence in that paragraph to
make two proposed changes. First, current provisions reference section
34(b) of the Basic Provisions. However, section 34(c) of the Basic
Provisions is a more appropriate reference. Second, the current
provisions are not clear whether producers can have optional units in
addition to or instead of the optional unit offerings under the Basic
Provisions. FCIC proposes to clarify that optional units by non-
contiguous land or type may be established in addition to or instead of
the optional unit provisions in the Basic Provisions.
FCIC proposes to redesignate paragraphs (a) and (b) as paragraphs
(a)(1) and (2). FCIC proposes to revise redesignated paragraph (a)(2).
This section currently allows optional units by type ``as specified in
the Special Provisions.'' Currently, every county where apples are
insured includes a Special Provisions statement that allows optional
units by type. The ``as specified in the Special Provisions'' provided
the flexibility to permit optional units by type by county. Since
optional units by type are permitted in every county, FCIC proposes to
remove the phrase ``as specified in the Special Provisions'' and simply
allow optional units by type through the Crop Provisions. FCIC also
proposes to add the phrase ``unless otherwise provided in the Special
Provisions'' to allow flexibility through Special Provisions to alter
this language if it is determined optional units by type should not be
allowed in certain counties.
FCIC also proposes to add a new paragraph (b). Optional units by
type are allowed in the Crop Provisions. However, the Crop Provisions
do not address situations where more than one type is planted on the
same acreage. For example, Granny Smith apples are often planted with
other types of apples on the same acreage. In section 3, FCIC proposes
to allow separate coverage levels and percentages of price elections by
type. If optional units by type were not allowed in this situation,
there would be a chance that AIPs would have to combine units resulting
in different coverage levels and percentages of price elections within
a single unit. To address this, FCIC proposes to add language that
states the requirements of section 34 of the Basic Provisions that
require the crop to be planted in a manner that results in a clear and
discernable break in the planting pattern at the boundaries of each
optional unit are not applicable for optional units by type. This will
allow separate optional units for types that do not have a clear and
discernable planting pattern, such as situations where more than one
type is planted on the same acreage. However, it is important that
producers maintain separate records of production for each optional
unit in accordance with section 12(a) of the Apple Crop Provisions.
4. Section 3--FCIC proposes to revise paragraph (a) to allow
separate coverage levels by type. The current provisions allow
producers who purchase additional coverage to only select separate
coverage levels by fresh apple acreage and processing apple acreage.
Fresh and processing are separate types; however, in addition to the
general ``Fresh (Combined)'' type, there are three other fresh types
listed in the actuarial documents that are classified as fresh:
Varietal group A, varietal group B, and varietal group C. Under the
current provisions, producers who insure apples under any of the fresh
type must select the same coverage level for all of their fresh types.
The proposed changes will provide producers the ability to select a
separate coverage level for each fresh type and will allow producers,
who purchase additional coverage, to structure their coverage based on
the perceived risk associated with each fresh type. For example, the
producer could select 90 percent coverage level for varietal group A
and 70 percent coverage level for varietal group B.
FCIC proposes to revise paragraph (b) to replace the ``Special
Provisions'' reference in two places with a reference to the
``actuarial documents'' because the provisions refer to the location of
price elections. Actuarial documents are where the price elections are
located, so actuarial documents are a more appropriate reference. FCIC
also proposes to revise paragraph (b) to allow the price election
percentage to differ among each type. The types may have
[[Page 71398]]
different characteristics with different risks. By allowing producers
to select a different percentage of the price election by type, this
change allows producers to manage premium costs based on their risks.
FCIC also proposes to add a sentence in paragraph (b) clarifying
that the percentage of the price election producers elect must be in
accordance with FCIC approved procedures based on the level of coverage
elected. For example, if a producer elected 75 percent coverage level,
FCIC approved procedures allow producers to choose a percentage of
price election between 67 and 100 percent. FCIC also proposes to add
similar to language in paragraph (a) regarding assigning coverage
levels to acreage that is added after the acreage reporting date. The
language added in paragraph (b) is added for guidance on assigning
price election percentages to acreage added after the acreage reporting
date.
FCIC proposes to redesignate paragraphs (c) and (d) as (d) and (e),
respectively, and add a new paragraph (c) to provide producers an
opportunity to insure at a price, called the premium price election,
greater than the published price election for apples that are sold
predominantly to a direct market or a premium processing market. Direct
markets are often niche markets that demand higher prices than
wholesale markets. FCIC's processing price is historically based upon
standard juice processing prices and market prices for premium
processing is not generally available to establish prices. The premium
processing prices generally demand higher prices and include items such
as baby food, which demands high-quality apples; or hard ciders, which
have similar quality expectations as wineries. Additionally, slicers,
which are apples often sold for school lunches, are a premium
processing-priced apple and demand a price, on average, about 20
percent higher than the standard processing prices. This change
addresses producers' concerns regarding the higher prices they receive
for apples sold via direct marketing and premium processing apples
(such as slicers). The premium price election will be based on the
producer's history reported on the Apple Supplemental Report and the
maximum additional value price published in the actuarial documents and
only offered in specific areas, via Special Provision statements, where
premium processors or direct markets are prevalent. The premium price
election will be greater than the published price election for type
``Fresh (Combined)'' or type ``Processing,'' as applicable, and less
than or equal to the maximum additional value price. In order to obtain
the premium price election, producers must submit an Apple Supplemental
Report to capture producers' production by fresh sales (including
direct marketing sales) and processing sales. For data-gathering
purposes, FCIC is also requiring producers to submit their revenue by
fresh sales and processing sales to allow FCIC to maintain the program
(e.g., transitional yields and price elections) in light of data
collected and reported by third-party organizations becoming scarce.
FCIC proposes to revise redesignated paragraph (e) to revise for
clarity. The current provisions point back to specific situations that
occur as outlined in redesignated paragraph (e). However, other
situations, not addressed in redesignated paragraph (e), could occur
that affect the yield used to establish the production guarantee. The
current language limits the situations to those in redesignated
paragraph (e). FCIC proposes to revise the language to refer to
situations not necessarily specific to redesignated paragraph (e).
FCIC proposes to revise redesignated paragraph (e)(1). This
paragraph addresses situations where any circumstance that may reduce
the producer's yields from previous levels occurs before the insurance
period. It is silent on the timeframe in which the producer notifies
the AIP. However, in redesignated paragraph (e)(2), the producer
notifies the AIP by the production reporting date. For consistency
between the two paragraphs, FCIC proposes to add the same language in
redesignated paragraph (e)(2) to (e)(1) regarding notification by the
production reporting date.
FCIC also proposes to revise redesignated paragraph (e)(1) to
remove the last sentence. This information is proposed to be
incorporated into redesignated paragraph (e)(3).
FCIC proposes to revise redesignated paragraphs (e)(2) and (e)(3).
The first sentence in each paragraph requires the producer to notify
the AIP if a situation occurred or may occur after the beginning of the
insurance period. While redesignated paragraph (e)(2) refers to
situations when the producer notifies the AIP by the production
reporting date and redesignated paragraph (e)(3) refers to situations
when the producer fails to notify the AIP by the production reporting
date, both paragraphs expect the producer to be aware of circumstances
that have not occurred yet. Therefore, FCIC proposes to remove the
phrase ``or may occur'' in both paragraphs.
FCIC also proposes to revise redesignated paragraph (e)(3) to add
clarifying language in the last sentence. The last sentence says, ``We
will reduce the yield used to establish your production guarantee for
the subsequent crop year.'' To further clarify the purpose of the yield
reduction in the subsequent crop year, FCIC proposes to add language
that says the yield reduction will reflect any reduction in the
productive capacity of the trees or the yield potential of the insured
acreage. The proposed provisions in redesignated paragraph (e)
consistent with provisions that FCIC recently added to other perennial
crop policies, such as the Texas Citrus Fruit Crop Insurance
Provisions. Adding these provisions is intended to remove potential
ambiguity regarding the consequences when circumstances occur that will
reduce the yield potential and to promote consistency with
administration of similar policies.
FCIC proposes to add a new paragraph (f) to inform producers that
they can insure fresh acreage in aggregate under type ``Fresh
(Combined)'' or by other fresh types identified in the actuarial
documents (e.g., fresh varietal group types), not both. The type
``Fresh (Combined)'' includes all fresh varieties insured under the
apple policy and the price offered for type ``Fresh (Combined)'' is an
average price of all insurable varieties. Fresh varieties can also be
insured under other types, either in groupings of specific varietals
identified in the Special Provisions or individual varieties, if
available in the county's actuarial documents. The fresh varieties
insured in groupings of specific varietals identified in the Special
Provisions or as individual varieties are insured at prices that are
reflective of those smaller groupings. Under this proposed change,
producers may insure all of their fresh acreage together under an
umbrella of Fresh for an average price or they can insure groupings of
fresh varieties and receive better prices by those groupings, if they
have records to substantiate the separate varieties.
5. Section 6--FCIC proposes to designate the undesignated paragraph
as paragraph (a). FCIC proposes to revise newly designated paragraph
(a) to divide the paragraph into subparagraphs for ease of reading.
In paragraph (a)(1), FCIC proposes to make two changes. First, the
word ``option'' is removed following ``Optional Coverage for Fresh
Fruit Quality Adjustment'' because the word is redundant. Second, the
reference to
[[Page 71399]]
``these Crop Provisions'' is struck for consistency, whereby only
references to external documents are named by title.
FCIC proposes to revise newly designated paragraph (a)(2)(i). The
current provisions state if producers designate fresh acreage on their
acreage report then they are certifying that at least 50 percent of the
production from fresh apple acreage in each unit was sold as fresh
apples in one or more of the four most recent crop years in accordance
with the definition of ``fresh apple production.''
FCIC also proposes to revise newly-designated paragraph (a)(2)(i)
to replace the reference to the definition of ``fresh apple
production'' with the reference to section 7(d). FCIC is proposing to
move some provisions in the definition of ``fresh apple production'' to
section 7(d). Therefore, the reference in newly-designated paragraph
(a)(2)(i) needs to be updated to reflect the new location of the
provisions in section 7(d).
FCIC proposes to add a new paragraph (a)(2)(ii) to require
producers who wish to insure as fresh to submit an Apple Supplemental
Report that captures their total production by all fresh types
aggregated and the processing type. This supports the existing FCIC
rule to insure as fresh, which is that at least one of the prior four
years must have produced at least 50 percent of the fresh guarantee.
This change also allows FCIC to collect data to assist in determining
whether fresh production requirements under the policy should be
adjusted in the future. Adjustments could include using the producer's
historical percent sold as fresh, replace the one-in-four fresh
requirement with the producer's historical percent of fresh sales, etc.
FCIC also proposes to revise newly-designated paragraph (a) to add
a new paragraph (a)(2)(iii) to complement the proposed language in new
paragraph (a)(2)(ii) regarding the Apple Supplemental Report. The
language proposed to be added in new paragraph (a)(2)(iii) notifies the
producer that failure to submit the Apple Supplemental Report will
result in no coverage under any fresh types. The producer will be able
to have coverage under the processing type.
FCIC also proposes to revise newly-designated paragraph (a) to add
a new paragraph (a)(2)(iv) to an exception to the fresh apple
production requirement mentioned in the above paragraph for high
density acreage in the first year of insurability or in other
circumstances as authorized by FCIC. First, high density acreage is
established with the intent of producing fresh apples and FCIC
recognizes that producers that invest in high density systems are
intending to grow for fresh, but may not have the sales records in the
first year of insurability to substantiate sales of fresh production.
Therefore, it is not necessary to require high density acreage to meet
the fresh apple production requirement for that first year of
insurability. Second, allowing exceptions to the fresh apple production
requirement in other circumstances as authorized by FCIC will provide
FCIC to waive the fresh apple production requirement on a case-by-case
basis if producers suffer exceptionally bad years (such as a year in
which a natural disaster or other extreme weather occurs) which
affected the end use of their apples that they intended to sell as
fresh.
FCIC proposes to add a new paragraph (b) to require producers to
notify the AIP 15 days prior to harvest if they intend to sell
production via direct marketing so AIPs can perform the necessary
preharvest inspections. Producers who sell production via direct
marketing are required to notify AIPs prior to harvest if there is a
loss. Currently, there is no provision that requires those producers to
notify AIPs prior to harvest if there is no loss. By adding this
provision, it provides AIPs an opportunity to conduct a preharvest
appraisal when there is no loss.
6. Section 7--FCIC proposes to revise paragraph (d) to add language
that was previously contained in the definition of ``fresh apple
production.'' That language is better suited in this section than in
the definition. Additionally, FCIC is proposing to revise the language
that is moved to paragraph (d). The first proposed change is to replace
a reference of ``unit'' with ``policy or unit, as applicable''. Over
the years, FCIC received comments that producers find it difficult and
inappropriate to maintain separate records by unit after the apple
production has left the field. Producers pointed out that while they
can and do maintain records of production by unit, once the apples are
delivered to a warehouse, which is often a third party, for later sales
and distribution it is virtually impossible and/or impractical to
expect all the apples to be tracked by unit. In 2011, FCIC issued a
Manager's Bulletin (MGR-11-015) that allowed producers who do not have
separate records by unit of fresh apple production in one of the last
four years but do have records of total fresh apple production may
still be able to qualify for the fresh apple production requirement (at
least 50 percent of the production from fresh apple acreage was sold as
fresh apples in one or more of the four most recent crop years). MGR-
11-015 authorized AIPs to consider records of total production (e.g.,
by policy rather than by unit, if the producer could not provide
records by unit) from one of the four most recent crop years that
reflect fresh apple sales. FCIC is proposing to incorporate the
guidance in MGR-11-015 by adding replacing ``unit'' with ``policy or
unit, as applicable'' in paragraph (d).
The second proposed change in paragraph (d) is to add after the
phrase ``one or more of the four most recent crop years'' the phrase
``preceding the previous crop year, unless authorized by FCIC.'' The
proposed phrase aligns the one-in-four fresh requirement with the years
proposed to be reported on the Apple Supplemental Report. Under the
current provisions, the one-in-four fresh requirement is based on the
four most recent crop years. For example, if the producer is purchasing
crop insurance for the 2023 crop year, then the AIP would consider
records from crop years 2019 through 2022. Under the proposed
provisions, the Apple Supplemental Report is requesting information for
the crop year prior to the previous crop year. Therefore, if the
producer is purchasing crop insurance for the 2023 crop year, then
producer would report information based on the 2021 crop year. The
proposed changes in this paragraph are meant to align the information
the producer reports on the Apple Supplemental Report with the last
year in the one or more of the four most recent crop years.
FCIC also proposes to move language in paragraph (d) regarding
``processing apple production'' to a new paragraph (e) and add language
that was previously contained in the definition of ``processing apple
production.'' That language is better suited in this section than in
the definitions.
FCIC also proposes to add a new paragraph (f) to allow for a
reduced premium in certain circumstances. Currently, producers must
report their acreage by the January 15th acreage reporting date, which
is before they typically conduct routine orchard maintenance. Producers
typically graft or remove apple trees after the acreage reporting date
and into March. Those trees that are grafted or removed will not
produce apples that crop year. This provision allows producers to
either report the acreage as uninsurable as of the acreage reporting
date; or receive a reduced premium rate to better reflect the condition
of their orchards if they submit a revised acreage report by March 31st
that trees were grafted or removed.
[[Page 71400]]
7. Section 9--FCIC proposes to revise paragraph (b)(3) to insert
the following phrase at the beginning of the paragraph: ``Except as
provided in section 28 of the Basic Provisions.'' Paragraph (b)(3) of
the Apple Crop Provisions speaks only to relinquishing the producer's
insurable share after the acreage reporting date and is silent on
whether a transfer of coverage occurred to relinquish the insurable
share. This paragraph implies that coverage ends on the date the
producer relinquishes their share. It is not clear, as it is written,
whether a transfer of coverage and right to indemnity was submitted and
approved in accordance with section 28 of the Basic Provisions. To
clarify that this provision only addresses situations when a transfer
of coverage and right to indemnity is not approved, FCIC proposes to
add the aforementioned phrase.
8. Section 11--FCIC proposes to revise paragraph (b)(2). This
paragraph outlines the requirements for producers when any portion of
the crop is direct marketed. FCIC proposes to revise this paragraph to
make a few changes. First, the phrase ``15 days'' is proposed to be
clarified to ``15 calendar days.'' Next, FCIC proposes to require, in
the event any portion of the crop will be direct marketed, the producer
to notify the AIP at least 15 calendar days before the crop is
harvested. The current provisions require notification prior to when
the crop is sold. The proposed revision allows for the AIPs to conduct
pre-harvest appraisals. Lastly, FCIC proposes to make other changes
within the paragraph for clarification purposes.
9. Section 12--FCIC also proposes to revise the claim example
following paragraph (b).
FCIC also proposes to redesignate paragraph (c)(2) as (c)(3) and
add a new paragraph (c)(2) to state that when 65 percent or more of a
unit's processing apple production is damaged apple production, the
processing apple production from the unit will not be considered
production to count provided none of the processing apple production
from the unit will be sold. Based on engagement with apple producers,
FCIC was made aware that at certain thresholds of damage, processors
will not accept apple production. In response to this feedback, FCIC
proposes to allow for adjustments to processing production that reflect
current industry standards.
10. Section 14--FCIC proposes to revise paragraph (b). The phrase
``this option provides for quality adjustment of fresh apple
production'' reads more clearly when the word ``coverage'' is added
between the words ``provides'' and ``for.''
FCIC proposes to revise paragraph (b)(1) to replace the phrase
``Catastrophic Risk Protection (CAT)'' with the acronym ``CAT.'' The
acronym is spelled out earlier in the Crop Provisions, so it is only
necessary here to use the acronym.
FCIC proposes to revise paragraph (b)(3). The current provisions
say that apple acreage designated on your acreage report qualifies for
the Optional Coverage for Fresh Apple Quality Adjustment. FCIC proposes
to clarify that only fresh apple acreage qualifies for the option.
FCIC proposes to revise paragraph (b)(5) to make several changes.
Where available, the Quality Option allows apple producers the option
to purchase additional coverage that compensates them when their fresh
apple production fails to grade U.S. Fancy or better due to an
insurable cause of loss. The revisions to this paragraph clarify that
production to count for apples is the greater of sold production
adjusted according to the sliding scale in paragraph (b)(5) or adjusted
for quality in paragraph (b)(6), instead of basing the determination on
the sliding scale alone.
In paragraph (b)(5), FCIC also proposes to revise the sliding scale
under which production to count is adjusted due to damage so that it is
linear. A linear sliding scale is more appropriate than the current
sliding scale which alternates from linear to non-linear back to linear
again. The current sliding scale adjusts production in increments
beginning at 21 percent damage and zeroing at 65 percent damage:
<bullet> The first increment is between 21 percent and 40 percent
with a reduction of 2 percent for each full percent of damage in that
range,
<bullet> The second 41 percent to 50 percent with a reduction of 3
percent for each full percent of damage in that range, and
<bullet> The third 51 percent to 64 percent with a reduction of 2
percent for each full percent of damage in excess of 50 percent.
The current sliding scale is not regionally appropriate. As
proposed, the revised sliding scale would begin adjustments at 15
percent and reduce production to count by two percent for each full
percent more than 15 percent. FCIC received producer feedback that the
sliding scale should start at a lesser threshold of damage (15 percent
rather than 20 percent). The only difference between the current
sliding scale and the proposed one is when the range of production not
grading U.S. Fancy or better is greater than 15 percent but less than
50 percent. After 50 percent, the current sliding scale and the
proposed sliding scales are identical.
In paragraph (b)(6), the following proposed changes are necessary
to address concerns regarding the high loss ratios and rising premium
costs under the Quality Option. The high loss ratios are a result of
producers' inability to maintain records to meet the requirements to
qualify for the Quality Option and to settle claims, and climate and
growing conditions in certain regions may limit the ability of
producers in these areas to consistently produce U.S. Fancy grade.
<bullet> Production sold with a grade of U.S. Fancy or better will
continue to be counted on a one-for-one basis.
<bullet> Production that grades U.S. #1 Processing or better but
less than U.S. Fancy will be included in production to count at a
reduced value by multiplying a fresh fruit factor to the sold
marketable production as follows:
[cir] The fresh fruit factor applies to production sold:
[ssquf] As fresh without a grade that exceeds what appraised as
U.S. Fancy or better (prior to adjustments under the sliding scale);
[ssquf] Any production sold for fresh without a grade will be
counted on a one-to-one basis not to exceed the production that
appraised as U.S. Fancy or better (prior to adjustments under the
sliding scale).
[ssquf] Any production sold for a grade below U.S. Fancy;
[ssquf] Any production sold as processing, excluding any production
that grades less than U.S. #1 Processing.
[cir] For the basic coverage, all apples that are U.S. #1
Processing or better are included in production to count, without any
further discounts for quality adjustment. Currently, for the Quality
Option, all apples that are sold as U.S. Fancy or better are included
as production to count. Not all sales indicate a grading standard and
therefore a producer could claim that no fresh apples were sold as U.S.
Fancy or better, even if the apples were sold as fresh. Therefore, a
producer could ``double-dip'' on indemnity and sales from these apples.
Adjustments to production under the Quality Option are not reflected in
the producer's actual production history (APH); therefore, the
guarantee does not accurately reflect expected production of fresh
apples. The intent of the fresh fruit factor is to capture the reduced
value of apples sold for other than U.S. Fancy or better so that the
APH will more accurately reflect the producer's guarantee.
[[Page 71401]]
[cir] The fresh fruit factor will not be applied to any production
that grades less than U.S. #1 Processing or better.
[cir] The fresh fruit factor will be published in the actuarial
documents to account for regional differences.
FCIC proposes to revise paragraph (c). The current provisions state
any production not graded or appraised prior to the earlier of the time
apples are placed in storage or the date the apples are delivered to a
packer, processor, or other handler will not be considered damaged
apple production. According to the current definition of ``damaged
apple production,'' damaged apple production under the Quality Option
is anything that fails to grade U.S. Fancy or better. In other words,
the aforementioned production will be considered U.S. Fancy or better.
As stated earlier, FCIC is proposing to remove the portion of the
definition that refers to the Quality Option. Therefore, paragraph (c)
needs to be revised so that the provision has the same meaning as
before: Any production not graded or appraised prior to the earlier of
the time apples are placed in storage or the date the apples are
delivered will be considered U.S. Fancy or better.
FCIC proposes to add a new paragraph (e) to address written
agreements. The Quality Option is contained within the Crop Provisions,
which confuses whether written agreements should apply to the Quality
Option when written agreements are written on the Crop Provisions. The
proposed language allows written agreements to apply to the Quality
Option with three requirements: (1) The option may apply to a written
agreement for apples when this option is contained in the actuarial
documents for the county and crop; (2) the option may apply to apples
in a county which does not have actuarial documents for the crop when a
written agreement specifically allows this option; and (3) FCIC has the
right to not allow this option on a written agreement in accordance
with the provisions in section 18 of the Basic Provisions. This
requirement also allows the producer to have coverage by written
agreement on apple production insured under the Crop Provisions if the
requirements for written agreement are not met on the Quality Option.
FCIC proposes to revise the claim example following new paragraph
(e) to align with the proposed changes made throughout section 14.
Notice and Comment, and Exemptions
The Administrative Procedure Act (APA, 5 U.S.C. 553) provides that
the notice and comment and 30-day delay in the effective date
provisions do not apply when the rule involves specified actions,
including matters relating to contracts. This rule governs contracts
for crop insurance policies and therefore falls within that exemption.
Although not required by APA or any other law, FCIC has chosen to
propose the regulatory changes and request comments on the changes
prior to issuing a final rule.
This rule is exempt from the regulatory analysis requirements of
the Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by the
Small Business Regulatory Enforcement Fairness Act of 1996.
Executive Orders 12866 and 13563
Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review,''
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Executive Order 13563 emphasized the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility. The requirements in
Executive Orders 12866 and 13563 for the analysis of costs and benefits
apply to rules that are determined to be significant.
The Office of Management and Budget (OMB) designated this rule as
not significant under Executive Order 12866, ``Regulatory Planning and
Review,'' and therefore, OMB has not reviewed this rule and analysis of
the costs and benefits is not required under either Executive Order
12866 or 13563.
Clarity of the Regulation
Executive Order 12866, as supplemented by Executive Order 13563,
requires each agency to write all rules in plain language. In addition
to your substantive comments on this rule, we invite your comments on
how to make the rule easier to understand. For example:
<bullet> Are the requirements in the rule clearly stated? Are the
scope and intent of the rule clear?
<bullet> Does the rule contain technical language or jargon that is
not clear?
<bullet> Is the material logically organized?
<bullet> Would changing the grouping or order of sections or adding
headings make the rule easier to understand?
<bullet> Could we improve clarity by adding tables, lists, or
diagrams?
<bullet> Would more, but shorter, sections be better? Are there
specific sections that are too long or confusing?
<bullet> What else could we do to make the rule easier to
understand?
Environmental Review
In general, the environmental impacts of rules are to be considered
in a manner consistent with the provisions of the National
Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347) and the
regulations of the Council on Environmental Quality (40 CFR parts 1500-
1508). FCIC conducts programs and activities that have been determined
to have no individual or cumulative effect on the human environment. As
specified in 7 CFR 1b.4, FCIC is categorically excluded from the
preparation of an Environmental Analysis or Environmental Impact
Statement unless the FCIC Manager (agency head) determines that an
action may have a significant environmental effect. The FCIC Manager
has determined this rule will not have a significant environmental
effect. Therefore, FCIC will not prepare an environmental assessment or
environmental impact statement for this action and this rule serves as
documentation of the programmatic environmental compliance decision.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, ``Civil
Justice Reform.'' This rule will not preempt State or local laws,
regulations, or policies unless they represent an irreconcilable
conflict with this rule. Before any judicial actions may be brought
regarding the provisions of this rule, the administrative appeal
provisions of 7 CFR part 11 are to be exhausted.
Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments.'' Executive Order 13175 requires Federal agencies
to consult and coordinate with Tribes on a government-to-government
basis on policies that have Tribal implications, including regulations,
legislative comments or proposed legislation, and other policy
statements or actions that have substantial direct effects on one or
more Indian Tribes, on the relationship between the Federal Government
and Indian Tribes or on the distribution of power and responsibilities
between the Federal Government and Indian Tribes.
RMA has assessed the impact of this rule on Indian Tribes and
determined
[[Page 71402]]
that this rule does not, to our knowledge, have Tribal implications
that require Tribal consultation under E.O. 13175. The regulation
changes do not have Tribal implications that preempt Tribal law and are
not expected have a substantial direct effect on one or more Indian
Tribes. If a Tribe requests consultation, RMA will work with the USDA
Office of Tribal Relations to ensure meaningful consultation is
provided where changes, additions and modifications identified in this
rule are not expressly mandated by Congress.
The Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L.
104-4) requires Federal agencies to assess the effects of their
regulatory actions of State, local, and Tribal governments, or the
private sector. Agencies generally must prepare a written statement,
including cost benefits analysis, for proposed and final rules with
Federal mandates that may result in expenditures of $100 million or
more in any 1 year for State, local or Tribal governments, in the
aggregate, or to the private sector. UMRA generally requires agencies
to consider alternatives and adopt the more cost effective or least
burdensome alternative that achieves the objectives of the rule. This
rule contains no Federal mandates, as defined in Title II of 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.
Federal Assistance Program
The title and number of the Federal Domestic Assistance Program
listed in the Catalog of Federal Domestic Assistance to which this rule
applies is No. 10.450--Crop Insurance.
Paperwork Reduction Act of 1995
In accordance with the provisions of the Paperwork Reduction Act of
1995 (44 U.S.C. chapter 35, subchapter I), the rule does not change the
information collection approved by OMB under control numbers 0563-0053.
USDA Non-Discrimination Policy
In accordance with Federal civil rights law and USDA civil rights
regulations and policies, USDA, its Agencies, offices, and employees,
and institutions participating in or administering USDA programs are
prohibited from discriminating based on race, color, national origin,
religion, sex, gender identity (including gender expression), sexual
orientation, disability, age, marital status, family or parental
status, income derived from a public assistance program, political
beliefs, or reprisal or retaliation for prior civil rights activity, in
any program or activity conducted or funded by USDA (not all bases
apply to all programs). Remedies and complaint filing deadlines vary by
program or incident.
Persons with disabilities who require alternative means of
communication for program information (for example, braille, large
print, audiotape, American Sign Language, etc.) should contact the
responsible Agency or USDA TARGET Center at (202) 720-2600 or 844-433-
2774 (toll-free nationwide). Additionally, program information may be
made available in languages other than English. To file a program
discrimination complaint, complete the USDA Program Discrimination
Complaint Form, AD-3027, found online at <a href="https://www.usda.gov/oascr/how-to-file-a-program-discrimination-complaint">https://www.usda.gov/oascr/how-to-file-a-program-discrimination-complaint</a> and at any USDA office
or write a letter addressed to USDA and provide in the letter all the
information requested in the form. To request a copy of the complaint
form, call (866) 632-9992. Submit your completed form or letter to USDA
by mail to: U.S. Department of Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC
20250-9410 or email: <a href="/cdn-cgi/l/email-protection#450a040605303621246b222a33"><span class="__cf_email__" data-cfemail="0847494b487d7b6c69266f677e">[email protected]</span></a>.
USDA is an equal opportunity provider, employer, and lender.
List of Subjects in 7 CFR Part 457
Acreage allotments, Crop insurance, Reporting and recordkeeping
requirements.
Proposed Rule
For the reasons discussed above, FCIC proposes to amend 7 CFR part
457 to read 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. 457.158 by:
0
a. Revising the introductory text;
0
b. In section 1:
0
i. Adding in alphabetical order the definitions for ``Apple
Supplemental Report,'' ``block,'' ``fresh fruit factor,'' ``graft,''
``high density,'' ``maximum additional value price,'' and ``premium
price election'';
0
ii. Adding in the definition of ``Area A'', a comma after the words
``New Mexico''; and
0
iii. Revising the definitions for ``damaged apple production,''
``direct marketing,'' ``fresh apple production,'' and ``processing
apple production'';
0
c. Revising section 2;
0
d. Revising section 3;
0
e. Revising section 6;
0
f. In section 7:
0
i. Removing in paragraph (c), the word ``and'' at the end of the
sentence;
0
ii. Revising paragraph (d); and
0
iii. Adding new paragraphs (e) and (f);
0
g. In section 9:
0
i. Removing in paragraph (b)(3), the word ``If'' at the beginning of
the paragraph and adding the words ``Except as provided in section 28
of the Basic Provisions, if'' in its place;
0
h. Revising section 11 paragraph (b)(2);
0
i. In section 12:
0
i. Revising the example following paragraph (b) titled ``Basic Coverage
Example'';
0
ii. Removing in paragraph (c)(1)(iv), the word ``; and'' at the end of
the sentence and adding ``.'' in its place;
0
iii. Redesignating paragraph (c)(2) as (3), and adding a new paragraph
(c)(2); and
0
j. Revising section 14.
The revisions and additions read as follows:
Sec. 457.158 Apple crop insurance provisions.
The apple crop insurance provisions for the 2023 and succeeding
crop years are as follows:
* * * * *
1. Definitions
* * * * *
Apple Supplemental Report. A written report, supported by
acceptable records, submitted as required on our form and in accordance
with section 3 and section 6, as applicable. The information contained
on the report will be based on your sales history, as applicable, from
the crop year prior to the previous crop year (e.g., on the production
reporting date for the 2023 crop year, the Apple Supplement Report
reflects total revenue from the 2021 crop year).
* * * * *
Block. Trees in an orchard of a single or mixed age and density,
distinguished by applicable practice, type, T-Yield Map Areas, or other
characteristics shown in the actuarial documents.
* * * * *
Damaged apple production. Fresh or processing apple production that
fails to grade U.S. No. 1 Processing or better in accordance with the
applicable grade standards due to an insurable cause of loss.
Direct marketing. The sale of the insured crop directly to
consumers
[[Page 71403]]
without the intervention of an intermediary such as a wholesaler,
retailer, packer, processor, shipper, buyer, or broker. Production
records are controlled exclusively by the policyholder. Examples of
direct marketing include selling through an on-farm or roadside stand,
a farmer's market, or permitting the general public to enter the field
for the purpose of picking all or a portion of the crop. Only the
portion of the crop sold directly to consumers will be considered
direct marketed.
Fresh apple production. Apples:
(1) That are sold, or could be sold, for human consumption without
undergoing any change in the basic form, such as peeling, juicing,
crushing, dicing, etc.;
(2) That are not sold for the processing market (e.g., slicer or
hard cider market) except for apples sold with a grade of U.S. Fancy or
better (unless another grade is specified in the Special Provisions);
and
(3) That follow the recommended cultural practices generally in use
for fresh apple acreage in the area in a manner generally recognized by
agricultural experts and any other practices specified in the Special
Provisions.
Fresh fruit factor. A factor contained in the actuarial documents
that is used to account for the salvage value of sold apples for
production insured under the Optional Coverage for Fresh Fruit Quality
Adjustment contained in section 14.
* * * * *
Graft. To unite a shoot or bud with a rootstock in accordance with
recommended practices to form a living union.
* * * * *
High density. The number of trees per acre and any other
characteristics specified in the Special Provisions.
* * * * *
Maximum additional value price. A price established by type by FCIC
and published in the actuarial documents when authorized by the Special
Provisions. It is used to compute the premium price election.
* * * * *
Premium price election. A price calculated using your sales history
reported on the Apple Supplemental Report and the maximum additional
value price. The premium price election will be no less than the
published price election for type ``Fresh (Combined)'' or type
``Processing,'' as applicable, and no greater than the maximum
additional value price.
Processing apple production. Apples from insurable acreage that are
sold, or could be sold for the purpose of undergoing a change to the
basic structure such as peeling, juicing, crushing, dicing, etc.
* * * * *
2. Unit Division
(a) In addition to, or instead of, establishing optional units as
provided in section 34(c) of the Basic Provisions, optional units may
be established if each optional unit is:
(1) Located on non-contiguous land; or
(2) By type, unless otherwise provided in the Special Provisions.
(b) The requirements of section 34 of the Basic Provisions that
require the crop to be planted in a manner that results in a clear and
discernable break in the planting pattern at the boundaries of each
optional unit are not applicable for optional units by type.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
In addition to the requirements of section 3 of the Basic
Provisions:
(a) You may select only one coverage level for each type. For
example, if you choose the 55 percent coverage level for one type, you
may choose the 75 percent coverage level for another type. However, if
you elect the Catastrophic Risk Protection (CAT) level of coverage for
any of your apple acreage, the CAT level of coverage will be applicable
to all insured apple acreage in the county. If you only have fresh
apple acreage designated on your acreage report and processing apple
acreage is added after the sales closing date, we will assign a
coverage level equal to the lowest coverage level you selected for your
fresh apple acreage. If you only have processing apple acreage
designated on your acreage report and fresh apple acreage is added
after the sales closing date, we will assign a coverage level equal to
the coverage level you selected for your processing apple acreage.
(b) You may select only one price election for all the apples in
the county insured under this policy unless the actuarial documents
provide different price elections by type, in which case you may select
one price election for each apple type designated in the actuarial
documents. The price elections you choose for each type are not
required to have the same percentage relationship to the maximum price
election offered by us for each type. However, the percentage of the
maximum price election must be in accordance with FCIC approved
procedures. For example, if you choose 100 percent of the maximum price
election for one type, you may choose a different percentage of the
maximum price election for all other types. If you only have fresh
apple acreage designated on your acreage report and processing apple
acreage is added after the sales closing date, we will assign a price
election percentage equal to the lowest price election percentage you
selected for your fresh apple acreage. If you only have processing
apple acreage designated on your acreage report and fresh apple acreage
is added after the sales closing date, we will assign a price election
percentage equal to the price election percentage you selected for your
processing apple acreage.
(c) If you elect an additional level of coverage, you may insure
your type ``Fresh (Combined),'' type ``Processing,'' or both, at the
premium price election if:
(1) Authorized in the Special Provisions;
(2) You submit an Apple Supplemental Report, by policy by the
production reporting date, containing your total sales (including
production and revenue), differentiated by the following, as
applicable:
(i) Fresh and direct marketing; and
(ii) Processing;
(3) Upon initial election of the premium price election, you
provide three years of production and revenue as indicated in section
3(c)(2); and
(4) You meet any additional requirements specified in the Special
Provisions.
(d) We will reduce the yield used to establish your production
guarantee, as necessary, based on our estimate of the effect of any
situation listed in sections 3(c)(1) through (4). If the situation
occurred:
(1) Before the beginning of the insurance period, the yield used to
establish your production guarantee will be reduced for the current
crop year regardless of whether the situation was due to an insured or
uninsured cause of loss. If you fail to notify us of any circumstance
that may reduce your yields from previous levels, we will reduce the
yield used to establish your production guarantee at any time we become
aware of the circumstance;
(2) Or may occur after the beginning of the insurance period and
you notify us by the production reporting date, the yield used to
establish your production guarantee will be reduced for the current
crop year only if the potential reduction in the yield used to
establish your production guarantee is due to an uninsured cause of
loss; or
[[Page 71404]]
(3) Or may occur after the beginning of the insurance period and
you fail to notify us by the production reporting date, production lost
due to uninsured causes equal to the amount of the reduction in the
yield used to establish your production guarantee will be applied in
determining any indemnity (see section 12(c)(1)(ii)). We will reduce
the yield used to establish your production guarantee for the
subsequent crop year.
(e) We will reduce the yield used to establish your production
guarantee, as necessary, based on our estimate of the effect of any
circumstance that may reduce your yields from previous levels. If the
circumstance occurred:
(1) Before the beginning of the insurance period and you notify us
by the production reporting date, the yield used to establish your
production guarantee will be reduced for the current crop year
regardless of whether the circumstance was due to an insured or
uninsured cause of loss;
(2) After the beginning of the insurance period and you notify us
by the production reporting date, the yield used to establish your
production guarantee will be reduced for the current crop year only if
the potential reduction in the yield used to establish your production
guarantee is due to an uninsured cause of loss; or
(3) Before or after the beginning of the insurance period and you
fail to notify us by the production reporting date, an amount equal to
the reduction in the yield will be added to the production to count
calculated in section 12(c) due to uninsured causes. We will reduce the
yield used to establish your production guarantee for the subsequent
crop year to reflect any reduction in the productive capacity of the
trees or in the yield potential of the insured acreage.
(f) If the actuarial documents contain type ``Fresh (Combined),''
you can elect to insure your fresh acreage in aggregate under type
``Fresh (Combined)'' or by other fresh types identified in the
actuarial documents, but not both.
* * * * *
6. Report of Acreage
(a) In addition to the requirements contained in section 6 of the
Basic Provisions, you must report and designate all acreage by type by
the acreage reporting date.
(1) Any acreage not qualifying for fresh apple production is not
eligible for the Optional Coverage for Fresh Fruit Quality Adjustment
contained in section 14.
(2) If you designate fresh apple acreage on the acreage report:
(i) You are certifying that your fresh apple acreage meets the
requirements in section 7(d), unless otherwise authorized by FCIC.
(ii) You must submit an Apple Supplemental Report on the same basis
you certify your acreage in section 6(a)(2)(i) by the production
reporting date, containing the following, as applicable.
(A) Production sold as fresh;
(B) Production sold by direct marketing;
(C) Production sold as processing; and
(D) Production in storage.
(iii) And you fail to submit an Apple Supplemental Report in
accordance with section 6(a)(2)(ii), you will not have coverage under
any fresh type listed in the actuarial documents.
(iv) And you have high density acreage, the requirement in section
6(a)(2)(i) does not apply to high density acreage in the first year of
insurability or as authorized by FCIC procedure.
(b) If any portion of your crop will be direct marketed, you must
notify us at least 15 calendar days before any production will be
harvested. We will conduct an appraisal that will be used to verify
your production records in accordance with FCIC procedures.
7. Insured Crop
* * * * *
(d) That are grown for fresh apple production on acreage:
(1) That is designated as fresh apples on the acreage report; and
(2) That you certify and, if requested by us, provide verifiable
records to support, that at least 50 percent of the production from all
acreage reported as fresh apple acreage by policy or unit, as
applicable, was sold as fresh apples in one or more of the four most
recent crop years preceding the previous crop year (e.g., for the 2023
crop year, the four most recent crop years preceding the previous crop
year end in the 2021 crop year), unless authorized by FCIC procedures;
(e) That are grown on acreage designated as processing apple
production on the acreage report. Any production from acreage not
meeting the requirements in section 7(d) must be designated on the
acreage report as processing apple production; and
(f) If you anticipate performing any action that will reduce the
productive capacity of the trees or the yield potential of the insured
acreage (e.g., removing or grafting trees) after the acreage reporting
date you:
(1) May report all apple acreage when you report your acreage for
the crop year and specify any affected acreage as uninsurable acreage
(By doing so, no coverage will be considered to have attached on the
specified acreage and no premium will be due for such acreage. If you
do not perform any action that will reduce the productive capacity of
the trees or the yield potential of the insured acreage, you will be
subject to the under-reporting provisions contained in section 6 of the
Basic Provisions); or
(2) May report all apple acreage as insurable when you report your
acreage for the crop year. Premium will be due on all the acreage
except as set forth herein.
(i) On acreage for which you perform actions that will reduce the
productive capacity of the trees or the yield potential of the insured
acreage, you may qualify for a reduction in premium only if you notify
us in writing on a revised acreage report on or before March 31st or
the date designated in the Special Provisions, and do not claim an
indemnity on the acreage. No reduction in premium will be allowed if
the required notice is not given or if you claim an indemnity for the
acreage.
(ii) Upon receiving timely notice, insurance coverage on such
acreage will cease and we will process your revised acreage report to
indicate the applicable reduction in premium. If you do not perform the
actions to the apple acreage as intended, you will be subject to the
under-reporting provisions contained in section 6 of the Basic
Provisions.
* * * * *
11. Duties in the Event of Damage or Loss
* * * * *
(b) * * *
* * * * *
(2) If any portion of your crop will be direct marketed, you must
notify us at least 15 calendar days before any production will be
harvested. We will conduct an appraisal that will be used to verify
your production records in accordance with FCIC procedures. If damage
occurs after this appraisal, we will conduct an additional appraisal.
These appraisals, and any other acceptable records required to be
provided by you, will be used to determine your production to count.
Failure to give timely notice that production will be sold by direct
marketing will result in an appraised amount of production to count of
not less than the production guarantee per acre if such failure results
in our inability to make the required appraisal.
* * * * *
12. Settlement of Claim
* * * * *
[[Page 71405]]
(b) * * *
Basic Coverage Example:
You have a 100 percent share in one basic unit with 10 acres of
fresh apples and 5 acres of processing apples designated on your
acreage report, with a 600-bushel per acre production guarantee for
both fresh and processing apples, and you select 100 percent of the
price election on a price election of $9.10 per bushel for fresh apples
and $2.50 per bushel for processing apples. You harvest 5,000 bushels
of fresh apples and 1,000 bushels of processing apples, all grading
U.S. No. 1 Processing or better. Your indemnity will be calculated as
follows:
(A) 10 acres x 600 bushels = 6,000-bushel production guarantee of
fresh apples;
5 acres x 600 bushels = 3,000-bushel production guarantee of
processing apples;
(B) 6,000-bushel production guarantee x $9.10 price election x 100
percent of price election = $54,600 value of production guarantee for
fresh apples;
3,000-bushel production guarantee x $2.50 price election x 100
percent of price election = $7,500 value of production guarantee for
processing apples;
(C) $54,600 value of production guarantee for fresh apples + $7,500
value of production guarantee for processing apples = $62,100.00 total
value of the production guarantee;
(D) 5,000 bushels of fresh apples are harvested and 1,000 bushels
of processing apples are harvested.
(E) 5,000 bushels of fresh apple production to count x $9.10 price
election x 100 percent of price election = $45,500 value of fresh apple
production to count;
1,000 bushels of processing apple production to count x $2.50 price
election x 100 percent of price election = $2,500 value of processing
apple production to count;
(F) $45,500 value of fresh apple production to count + $2,500 value
of processing apple production to count = $48,000 total value of
production to count;
(G) $62,100 total value of the production guarantee-$48,000 total
value of production to count = $14,100.00 value of loss; and
(H) $14,100 value of loss x 100 percent share = $14,100 indemnity
payment.
(c) * * *
* * * * *
(2) Notwithstanding section 12(c)(1), when 65 percent or more of a
unit's processing apple production is damaged apple production, the
processing apple production from the unit will not be considered
production to count provided none of the processing apple production
from the unit will be sold.
* * * * *
14. Optional Coverage for Fresh Fruit Quality Adjustment
(a) In the event of a conflict between the Apple Crop Insurance
Provisions and this option, this option will control. Insureds who
select this option cannot receive less than the indemnity due under
section 12.
(b) In return for payment of the additional premium designated in
the actuarial documents, this option provides coverage for quality
adjustment of fresh apple production as follows:
(1) To be eligible for this option, you must have elected to insure
your apples at the additional coverage level. If you elect CAT after
this option is effective, it will be considered as notice of
cancellation of this option by you.
(2) You must elect this option on or before the sales closing date
for the initial crop year for which you wish to insure your apples
under this option. This option will continue in effect until canceled
by either you or us for any succeeding crop year by written notice to
the other party on or before the cancellation date. (3) This option
will apply to all your fresh apple acreage designated on your acreage
report and that meets the insurability requirements specified in the
Apple Crop Insurance Provisions, except any acreage specifically
excluded by the actuarial documents. Any acreage designated in your
acreage report as grown for processing apple production is not eligible
for coverage under this option.
(4) In lieu of sections 12(c)(1)(iii), (iv) and (2), the production
to count will include all appraised and harvested production from all
of the fresh apple acreage in the unit, adjusted in accordance with
this option.
(5) Except as provided in section 14(b)(6), if the block or unit,
as applicable, is damaged due to an insurable cause of loss to the
extent that more than 15 percent of the apple production does not grade
U.S. Fancy or better (unless another grade is specified in the Special
Provisions) the following adjustments to the production to count will
apply:
(i) When 16 percent through 64 percent of the apple production does
not grade U.S. Fancy or better (unless another grade is specified in
the Special Provisions), the production to count will be reduced two
percent for each full one percent in excess of 15 percent.
(ii) When 65 percent or more of the apple production does not grade
U.S. Fancy or better (unless another grade is specified in the Special
Provisions), the production will not be considered production to count.
(6) If you sell any of your fresh apple production from the block
or unit, as applicable, your production to count will be the greater of
the amount determined in section 14(b)(5) or the sum of the amount
determined as follows:
(i) All apples sold with a grade of U.S. Fancy or better (unless
another grade is specified in the Special Provisions);
(ii) All marketable apple production sold with a grade of less than
U.S. Fancy (unless another grade is specified in the Special
Provisions) multiplied by the fresh fruit factor;
(iii) All marketable apple production sold as fresh without a
grade. This amount is not to exceed what appraised or graded as U.S.
Fancy or better (unless another grade is specified in the Special
Provisions) prior to the adjustments under section 14(b)(5);
(iv) All marketable apple production sold as fresh without a grade
that exceeds what appraised or graded as U.S. Fancy or better (unless
another grade is specified in the Special Provisions) prior to the
adjustments under section 14(b)(5) multiplied by the fresh fruit
factor; and
(v) All marketable apple production sold as processing without a
grade multiplied by the fresh fruit factor.
(7) The grade standards used in accordance with section 14(b)(6)
and applied during the appraisal process with be the applicable grade
standards used when evaluating the final disposition of the apple
production.
(c) Any apple production not graded or appraised prior to the
earlier of the time apples are placed in storage or the date the apples
are delivered to a packer, processor, or other handler, will be
considered U.S. Fancy or better (unless another grade is specified in
the Special Provisions) and included in production to count under this
option.
(d) Any adjustments that reduce your production to count under this
option will not be applicable when determining production to count for
APH purposes.
(e) Regarding written agreements under this option:
(1) This option may apply to a written agreement for apples when
this option is contained in the actuarial documents for the county and
crop.
(2) This option may apply to apples in a county which does not have
actuarial documents for the crop when
[[Page 71406]]
a written agreement specifically allows this option.
(3) FCIC has the right to not allow this option on a written
agreement in accordance with the provisions in section 18 of the Basic
Provisions.
Optional Coverage for Fresh Fruit Quality Adjustment Example:
You have a 100 percent share in 10 acres of fresh apples designated
on your acreage report, with a 600 bushel per acre guarantee, and you
select 100 percent of the price election on a price election of $9.10
per bushel. You harvest 5,000 marketable bushels of apples from your
designated fresh apple acreage, but only 2,650 of those bushels grade
U.S. Fancy or better. Assuming you do not sell any of your fresh apple
production, your indemnity would be calculated as follows:
(A) 10 acres x 600 bushels per acre = 6,000-bushel production
guarantee of fresh apples;
(B) 6,000-bushel production guarantee of fresh apples x $9.10 price
election x 100 percent of price election = $54,600 value of production
guarantee for fresh apple acreage;
(C) The value of the fresh apple production to count is determined
as follows:
(i) 5,000 bushels harvested-2,650 bushels that graded U.S. Fancy or
better = 2,350 bushels of fresh apple production not grading U.S. Fancy
or better;
(ii) 2,350/5,000 = 47 percent of fresh apple production not grading
U.S. Fancy or better;
(iii) In accordance with section 14(b)(5)(i): 47 percent-15 percent
= 32 percent in excess of 15 percent;
(iv) 32 percent x 2 = 64 percent;
(v) 5,000 bushels harvested x .64 (64 percent)-3,200 bushels of
fresh apple production not grading U.S. Fancy or better;
(vi) 5,000 bushels harvested-3,200 bushels of fresh apple
production not grading U.S. Fancy or better = 1,800 bushels of adjusted
fresh apple production to count;
(vii) 1,800 bushels of adjusted fresh apples production to count x
$9.10 price election x 100 percent of price election = $16,380 value of
fresh apple production to count;
(D) $54,600 value of production guarantee for fresh apples-$16,380
value of fresh apple production to count = $38,220 value of loss;
(E) $38,220 value of loss x 100 percent share = $38,220 indemnity
payment.
Richard Flournoy,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 2021-26989 Filed 12-14-21; 11:15 am]
BILLING CODE 3410-08-P
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</html>Indexed from Federal Register on December 16, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.