[Federal Register: July 30, 2003 (Volume 68, Number 146)]
[Proposed Rules]
[Page 44668-44672]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jy03-17]
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[[Page 44668]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
RIN 0563-AB76
Common Crop Insurance Regulations; Blueberry Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Proposed rule with request for comments.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to add
to 7 CFR part 457 a new Sec. 457.166 that provides for the insurance
of Blueberries. The provisions will be used in conjunction with the
Common Crop Insurance Policy Basic Provisions (Basic Provisions), which
contain standard terms and conditions common to most crops. The
intended effect of this action is to convert the blueberry pilot crop
insurance program to a permanent insurance program administered by FCIC
for the 2005 and succeeding crop years. In this rule the Risk
Management Agency (RMA) particularly calls attention to, and solicits
comments on the provisions contained in section 5, Cancellation and
Termination Dates, and Section 7, Insurance Period, that were modified
to accommodate year-round insurance coverage for blueberries.
DATES: Written comments and opinions on this proposed rule will be
accepted until close of business September 29, 2003 and will be
considered when the rule is to be made final. The comment period for
information collections under the Paperwork Reduction Act of 1995
continues through September 29, 2003.
ADDRESSES: Interested persons are invited to submit written comments to
the Director, Product Development Division, Federal Crop Insurance
Corporation, United States Department of Agriculture, 6501 Beacon
Drive, Stop 0812, Room 421, Kansas City, MO 64133. Comments titled
``Blueberry Crop Insurance Provisions'' may be sent via the Internet to
``directorpdd@rm.fcic.usda.gov.'' A copy of each response will be
available for public inspection and copying from 7 a.m. to 4:30 p.m.,
CST Monday through Friday, except holidays, at the above address.
FOR FURTHER INFORMATION CONTACT: William Klein, Risk Management
Specialist, Research and Development, Product Development Division,
Federal Crop Insurance Corporation, at the Kansas City, MO address
listed above, telephone (816) 926-7730.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be Not-Significant for the purpose
of Executive Order 12866 and, therefore, has not been reviewed by the
Office of Management and Budget (OMB).
Paperwork Reduction Act of 1995
Under the provisions of the Paperwork Reduction Act of 1995 (44
U.S.C. chapter 35), the collections of information for this rule have
been previously approved by OMB under control number 0563-0053 through
February 28, 2005.
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 the UMRA.
Executive Order 13132
The provisions contained in this rule will not have a substantial
direct effect on States, the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, no
consultation with States is required.
Regulatory Flexibility Act
This regulation will not have a significant economic impact on a
substantial number of small entities. The availability of insurance for
the current population of blueberry entities is limited to selected
counties in nine pilot states that have significant blueberry
production. New provisions included in this rule will not impact small
entities to a greater extent than large entities. Under the Basic
Provisions, every producer is required to complete an application and
acreage report. If the crop is damaged or destroyed, the insured is
required to give notice of loss and provide the necessary information
to complete a claim for indemnity. This proposed rule does not alter
those requirements. The amount of work required of insurance companies
delivering and servicing these policies will not increase significantly
from the amount of work currently required. Therefore, this action is
determined to be exempt from the provisions of the Regulatory
Flexibility Act (5 U.S.C. 605), and no Regulatory Flexibility Analysis
was prepared.
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 requires 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 proposed 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. The administrative appeal provisions published
at 7 CFR part 11 must be exhausted before any action for judicial
review may be brought.
Environmental Evaluation
This action is not expected to have a significant economic impact
on the quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an
[[Page 44669]]
Environmental Impact Statement is needed.
Background
FCIC offered a pilot crop insurance program for blueberries
beginning with the 1995 crop year in selected counties in Michigan,
Mississippi, New Jersey, and North Carolina. In 1997 the pilot program
was expanded to include two counties with lowbush blueberries in Maine,
and in 1999 it was expanded to include five additional North Carolina
counties. It was expanded to selected counties in Alabama, Florida,
Georgia, and South Carolina for the 2000 crop year. For the 2002 crop
year, blueberry crop insurance is available in selected counties in
Alabama, Florida, Georgia, Maine, Michigan, Mississippi, New Jersey,
North Carolina, and South Carolina.
The pilot program has provided a valuable risk management tool and
has favorable insurance experience since the pilot program was
initiated. The combined loss ratio from 1995 through the 2001 crop year
has been approximately .40. The highest loss ratio for the pilot
program was in 1996, at .77. Loss ratios for the other years of the
pilot program were significantly lower, at .64 and below. The major
causes of loss (accounting for approximately 76 percent of indemnities
paid) from 1995 through 2001 were hail, freeze, frost, drought, and
insufficient chilling hours.
FCIC has decided to convert the blueberry pilot program a permanent
crop insurance program beginning with the 2005 crop year. To effectuate
this conversion, FCIC proposes to add to the Common Crop Insurance
Regulations (7 CFR part 457), a new section, 7 CFR 457.166, Blueberry
Crop Insurance Provisions effective for the 2005 and succeeding crop
years. The blueberry pilot program is an actual production history
(APH) insurance plan of multiple peril crop insurance. Insurance is
provided against the standard causes of loss such as adverse weather,
fire, etc., insufficient chilling hours to effectively break dormancy,
and loss of quality. Unit division is limited to basic units, unless
otherwise specified in the Special Provisions of Insurance. The Special
Provisions allow optional units by type for the rabbiteye and highbush
types in Alabama, Florida, Georgia, North Carolina, and South Carolina.
The overall participation rate has been approximately 56 percent.
The number of policies earning premiums increased 77 percent from 1995
to 2001. Under the blueberry pilot crop insurance program, 2,291
policies and approximately 151,000 acres were insured for the 1995
through 2001 crop years.
During the pilot program, modifications were made to improve the
loss adjustment procedures. Policy language was also added to
accommodate insuring lowbush blueberry varieties, after the first two
Maine counties with lowbush blueberries were added to the pilot program
in 1997.
As a result of the pilot program experience and program reviews,
several changes have been made to the pilot program and are
incorporated in this proposed rule. The most significant changes are as
follows: (1) Modified provisions to increase the number of days for
insurance to attach from 10 to 20 days to allow time for companies to
complete inspections; (2) added provisions to eliminate any lapse in
insurance coverage between crop years to ensure that all insurable
perils are covered; (3) added provisions to specify that if the insured
policy is canceled or terminated for any crop year after insurance
attached for that crop year, but on or before the cancellation and
termination dates, whichever is later, then insurance will not be
considered to have attached for that year and no premium,
administrative fee, or indemnity will be due; (4) added provisions to
clarify that an insurance provider may not cancel an insured's policy
when an insured cause of loss has occurred after insurance attached,
but prior to the cancellation and termination date; (5) added a
provision that notifies the insured that they may be required to
harvest a sample that the insurance provider selects for appraisal
purposes to simplify the loss adjustment process; (6) added quality
adjustment provisions for determining production to count for mature
blueberries, harvested or unharvested, that have been damaged to the
extent the blueberries cannot be sold for fresh or processing (If
damaged blueberry production is sold, the production to count is
determined by dividing the price received for the damaged blueberries
by the applicable price election and multiplying that factor by the
production sold); (7) added provisions to reduce the indemnity for
affected acreage in a unit by the percentage of premium reduction
specified in the Special Provisions for frost protection equipment if
the insurance provider determines that the frost protection equipment
was not properly utilized or not correctly reported.
The proposed provisions will be effective for the 2005 and
succeeding crop years. These provisions will replace and supersede the
current unpublished provisions that insure blueberries under pilot
program status.
List of Subjects in 7 CFR Part 457
Crop insurance, Blueberry, Reporting and recordkeeping
requirements.
Proposed Rule
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation proposes to amend 7 CFR part 457 as follows:
PART 457--COMMON CROP INSURANCE REGULATIONS
1. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
2. Section 457.166 is added to read as follows:
Sec. 457.166 Blueberry crop insurance provisions.
The Blueberry Crop Insurance Provisions for the 2005 and succeeding
crop years are as follows:
FCIC policies:
UNITED STATES DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
Reinsured policies:
(Appropriate title for insurance provider)
Both FCIC and reinsured policies:
Blueberry crop insurance provisions
If a conflict exists among the policy provisions, the order of
priority is as follows: (1) the Catastrophic Risk Protection
Endorsement, if applicable; (2) the Special Provisions; (3) these Crop
Provisions; and (4) the Basic Provisions with (1) controlling (2), etc.
1. Definitions
Blueberry production--All mature harvested and appraised
blueberries, excluding plant material and unsound blueberries
eliminated during the inspection process by either wash or dry-line
methods or field appraised in an equivalent manner, usually referred to
as first net weight.
Direct marketing--Sale of the insured crop directly to consumers
without the intervention of an intermediary such as a wholesaler,
retailer, packer, processor, shipper or buyer. Examples of direct
marketing include selling through an on-farm or roadside stand,
farmer's market, or permitting the general public to enter the field
for the purpose of picking the crop.
Dry-line--A process by which the blueberries are run across a
``sorting
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belt'' to allow for plant material to be blown off, the blueberries to
be sized, and unsound blueberries to be removed mechanically by the
belt or by hand.
Harvest--Picking mature blueberries from the bushes either by hand
or machine.
Mechanical damage--Damage to the blueberries caused by machinery or
tools.
Pound--Sixteen ounces avoirdupois.
Production guarantee (per acre)--The number of pounds determined by
multiplying the approved yield per acre by the coverage level
percentage you elect.
Prune--A cultural practice performed to increase blueberry
production as follows:
(a) For lowbush blueberries, a process by which the acreage is
either burned or mowed; and
(b) For all other blueberries, a process by which parts of the bush
are cut off or the bush is cut back.
Unsound blueberries--Blueberry fruit that is not considered as
blueberry production because it is undersized, immature, soft,
overripe, damaged by insects, wildlife, disease, or mechanically
damaged to the extent that the fruit is not marketable.
2. Unit Division
Notwithstanding section 34 of the Basic Provisions, blueberry
acreage is limited to basic units as defined in section 1 of the Basic
Provisions, unless otherwise specified in the Special Provisions.
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 price election for each blueberry type
designated in the Special Provisions. The price elections you choose
for each type must have the same percentage relationship to the maximum
price offered by us for each type. For example, if you choose 100
percent of the maximum price election for one type, you must also
choose 100 percent of the maximum price election for all other types.
(b) You must report (by type if applicable) by the production
reporting date designated in section 3 of the Basic Provisions:
(1) For all types of blueberries: any damage; removal of bushes;
change in practices, or any other circumstance that may reduce the
expected yield below the yield upon which the insurance guarantee is
based, and the number of affected acres; and
(2) For highbush and rabbiteye blueberry types:
(i) The number of bearing bushes on insurable and uninsurable
acreage; and
(ii) The age of the bushes and the planting pattern.
(c) We will reduce the yield used to establish your production
guarantee as necessary, based on our estimate of the effect of the
following: removal of bushes; damage to bushes; changes in practices;
and any other circumstance that may affect the yield potential of the
insured crop. If you fail to notify us of any circumstance that may
reduce your yields from previous levels, we will reduce your production
guarantee as necessary at any time we become aware of the circumstance.
(d) You may not increase your elected or assigned coverage level or
the ratio of your price election to the maximum price election we offer
for the next year if a cause of loss that could or would reduce the
yield of the insured crop is evident prior to the time you request the
increase.
4. Contract Changes
In accordance with section 4 of the Basic Provisions, the contract
change date is August 31 preceding the cancellation date.
5. Cancellation and Termination Dates
(a) In accordance with section 2 of the Basic Provisions, the
cancellation and termination dates are November 20.
(b) If your blueberry policy is canceled or terminated by us for
any crop year, in accordance with the terms of the policy, after
insurance attached for that crop year, but on or before the
cancellation and termination dates, whichever is later, insurance will
not be considered to have attached for that crop year and no premium,
administrative fee, or indemnity will be due for such crop year.
(c) We may not cancel your policy when an insured cause of loss has
occurred after insurance attached, but prior to the cancellation date.
However your policy can be terminated if a cause for termination
contained in sections 2 or 27 of the Basic Provisions exists.
6. Insured Crop
(a) In accordance with section 8 of the Basic Provisions, the crop
insured will be all the blueberries in the county for which a premium
rate is provided in the actuarial documents:
(1) In which you have a share;
(2) That are grown on bush varieties that:
(i) Were commercially available when the bushes were set out; and
(ii) Are varieties adapted to the area of the following types:
(A) Highbush blueberries;
(B) Lowbush blueberries;
(C) Rabbiteye blueberries; or
(D) Other blueberry types listed on the Special Provisions.
(3) Are produced on bushes that have reached the minimum insurable
age or have produced the minimum yield per acre designated in the
Special Provisions; and
(4) If inspected, are considered acceptable by us.
(b) Lowbush blueberry plants must be pruned every other year to be
eligible for insurance.
7. Insurance Period
(a) In accordance with the provisions of section 11 of the Basic
Provisions:
(1) For the year of application, coverage begins on November 21 of
the calendar year prior to the year the insured crop normally blooms,
except that, if your application is received by us after November 1,
insurance will attach on the twentieth day after your properly
completed application is received in our local office, unless we
inspect the acreage during the 20 day period and determine that it does
not meet insurability requirements. You must provide any information
that we require for the crop or to determine the condition of the
blueberry acreage.
(2) For each crop year subsequent to the year of application, that
the policy remains continuously in force, coverage begins on the day
immediately following the end of the insurance period for the prior
crop year. Policy cancellation that results solely from transferring an
existing policy to a different insurance provider for a subsequent crop
year will not be considered a break in continuous coverage.
(3) The calendar date for the end of insurance period for each crop
year is, September 30 for Michigan and September 15 for all other
states.
(4) Cancellation and termination provisions that pertain to the
period after insurance has attached, but prior to the cancellation and
termination date, are contained in section 5 of these crop provisions.
(b) In addition to the provisions of section 11 of the Basic
Provisions:
(1) If you acquire an insurable share in any insurable acreage
after coverage begins but on or before the acreage reporting date for
the crop year, and after an inspection we consider the acreage
acceptable, insurance will be considered to have attached to such
acreage on the calendar date for the beginning of the insurance period.
There will be no coverage of any
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insurable interest acquired after the acreage reporting date.
(2) If you relinquish your insurable share on any insurable acreage
of blueberries on or before the acreage reporting date for the crop
year, and the acreage was insured by you the previous crop year,
insurance will not be considered to have attached to, and no premium or
indemnity will be due for such acreage for that crop year unless:
(i) A transfer of coverage and right to an indemnity, or a similar
form approved by us, is completed by all affected parties;
(ii) We are notified by you or the transferee in writing of such
transfer on or before the acreage reporting date; and
(iii) The transferee is eligible for crop insurance.
8. Causes of Loss
(a) In accordance with the provisions of section 12 of the Basic
Provisions, insurance is provided only against the following causes of
loss that occur during the insurance period:
(1) Adverse weather conditions;
(2) Fire, unless weeds and other forms of undergrowth have not been
controlled or pruning debris has not been removed from the unit;
(3) Insects, but not damage due to insufficient or improper
application of pest control measures;
(4) Plant disease, but not damage due to insufficient or improper
application of disease control measures;
(5) Earthquake;
(6) Volcanic eruption;
(7) An insufficient number of chilling hours to effectively break
dormancy;
(8) Wildlife, unless appropriate control measures have not been
taken; and
(9) Failure of the irrigation water supply, if caused by a cause of
loss specified in this section that occurs during the insurance period.
(b) In addition to the causes of loss excluded in section 12 of the
Basic Provisions, we will not insure against damage or loss of
production due to:
(1) Failure to install and maintain a proper drainage system;
(2) Failure to harvest in a timely manner;
(3) Inability to market the blueberries for any reason other than
actual physical damage to the blueberries from an insurable cause
specified in this section (For example, we will not pay you an
indemnity if you are unable to market due to quarantine, boycott, or
refusal of any person to accept production); or
(4) Mechanical damage in excess of that normally experienced for
mechanically harvested blueberries for the current crop year.
9. Duties in the Event of Damage or Loss
In addition to the requirements of section 14 of the Basic
Provisions, the following will apply:
(a) You must notify us:
(1) Within 3 days of the date harvest should have started if the
crop will not be harvested.
(2) Within 24 hours if any cause of loss occurs within 15 days of
harvest, or when the blueberries are mature and ready for harvest or
during harvest, so we can inspect the insured acreage.
(3) Within 24 hours if any cause of loss occurs during harvest, and
you do not intend to complete harvesting of the crop, so that we can
inspect the acreage.
(4) At least 15 days before any production from any unit will be
sold by direct marketing. We will conduct an appraisal that will be
used to determine your production to count sold by direct marketing. If
damage occurs after this appraisal, we will conduct an additional
appraisal. These appraisals, and any acceptable records 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 that is not
less than the production guarantee per acre if such failure results in
our inability to make the required appraisal.
(5) At least 15 days prior to the beginning of harvest if you
intend to claim an indemnity on any unit, as a result of previously
reported damage, so that we may inspect the damaged production.
(b) You must not sell or dispose of the damaged crop until after we
have given you written consent to do so. If you fail to meet the
requirements of this section, and such failure results in our inability
to inspect the damaged production, all such production will be
considered undamaged and included as production to count.
(c) You may be required to harvest a sample, selected by us, to be
used for appraisal purposes.
10. Settlement of Claim
(a) We will determine your loss on a unit basis. In the event you
are unable to provide acceptable production records for any basic unit,
we will allocate any commingled production to such units in proportion
to our liability on the harvested acreage for each unit.
(b) In the event of loss or damage covered by this policy, we will
settle your claim by:
(1) Multiplying the insured acreage for each type, if applicable,
by its respective production guarantee;
(2) Multiplying each result in section 10(b)(1) by the respective
price election, by type if applicable;
(3) Totaling the results in section 10(b)(2) if there is more than
one type;
(4) Multiplying the total production to count for each blueberry
type, if applicable, by the respective price election;
(5) Totaling the results in section 10(b)(4), if there is more than
one type;
(6) Subtracting the result in section 10(b)(5) from the result in
section 10(b)(3); and
(7) Multiplying the result in section 10(b)(6) by your share.
Example
You have 100 percent share in 25 acres of highbush blueberries with
a production guarantee of 4,000 pounds per acre and a price election of
$.45 per pound. You are only able to harvest 62,500 total pounds
because adverse weather reduced the yield. Your indemnity would be
calculated as follows:
(1) 25 acres x 4,000 pound production guarantee/acre = 100,000
pound total production guarantee;
(2) 100,000 pounds x $.45 price election = $45,000 guarantee;
(3) One type only, so same as (2) above $45,000;
(4) 62,500 pounds production to count x $.45 price election =
$28,125 value of production to count;
(5) One type only, so same as (4) above $28,125;
(6) $45,000 - $28,125 = $16,875 loss; and
(7) $16,875 x 100 percent share = $16,875 indemnity payment.
End of Example
(c) The total production to count (in pounds) from all insurable
acreage on the unit will include:
(1) All appraised production as follows:
(i) Not less than the production guarantee per acre for acreage:
(A) That is abandoned;
(B) That is sold by direct marketing if you fail to meet the
requirements contained in section 9;
(C) That is damaged solely by uninsured causes; or
(D) For which you fail to provide production records;
(ii) Production lost due to uninsured causes; and
(iii) Potential production on insured acreage that you intend to
abandon or no longer care for, if you and we agree on the appraised
amount of production. Upon such agreement, the insurance period for
that acreage will end. If you do not agree with our appraisal, we may
[[Page 44672]]
defer the claim only if you agree to continue to care for the crop. We
will then make another appraisal when you notify us of further damage
or that harvest is general in the area unless you harvest the crop, in
which case we will use the harvested production. If you do not continue
to care for the crop, our appraisal made prior to deferring the claim
will be used to determine the production to count; and
(2) All harvested production from the insurable acreage.
(3) If mature blueberries, harvested or unharvested, are damaged by
an insurable cause of loss specified in section 8 of these Crop
Provisions, to the extent that the blueberries can not be sold as fresh
or processed blueberries, and the percent of damage to the blueberries
exceeds that shown in the Special Provisions for the type, production
to count for the unit or portion of a unit will be as follows:
(i) The damaged blueberries will not be counted for that acreage if
the blueberries are not sold; and
(ii) The production to count for damaged blueberries that are sold
will be adjusted by dividing the price received for the damaged
blueberries by the applicable price election and multiplying the
resulting factor times the pounds sold.
(4) If we determine that frost protection equipment, as shown on
your accepted application was not properly utilized, the indemnity for
the affected acreage in the unit will be reduced by the percentage
reduction allowed for frost protection equipment as specified in the
Special Provisions. You must, at our request, provide us records by
date for each period the frost protection equipment was used.
11. Late and Prevented Planting
The late and prevented planting provisions in the Basic Provisions
are not applicable.
12. Written Agreements
The written agreement provisions in the Basic Provisions are not
applicable, unless provided otherwise in the Special Provisions.
Signed in Washington, DC, on July 23, 2003.
Ross J. Davidson Jr.,
Administrator, Federal Crop Insurance Corporation.
[FR Doc. 03-19344 Filed 7-29-03; 8:45 am]
BILLING CODE 3410-08-P
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