Common Crop Insurance Regulations; Pecan Revenue Crop Insurance Provisions, 13454-13460 [2013-04468]

Agencies

• DEPARTMENT OF AGRICULTURE
• Federal Crop Insurance Corporation

[Federal Register Volume 78, Number 40 (Thursday, February 28, 2013)]
[Rules and Regulations]
[Pages 13454-13460]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04468]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

[Docket No. FCIC-11-0008]
RIN 0563-AC35


Common Crop Insurance Regulations; Pecan Revenue Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the 
Common Crop Insurance Regulations, Pecan Revenue Crop Insurance 
Provisions. The intended effect of this action is to provide policy 
changes and clarify existing policy provisions to better meet the needs 
of insured producers, and to reduce vulnerability to program fraud, 
waste, and abuse. The proposed changes will apply for the 2014 and 
succeeding crop years. Policyholders are hereby given notice that 2013 
will be the last year coverage will be available under the old Pecan 
Revenue Crop Provisions. The Pecan Revenue Special Provisions will 
modify the Pecan Revenue Crop Provisions for the 2013 crop year by 
changing the definition of two-year coverage module to one crop year. 
This change through the Special Provisions will be applicable to 
policyholders beginning the first year of a two-year coverage module in 
the 2013 crop year. All producers who choose to purchase coverage on 
pecan acreage for the 2014 crop year will begin a new two-year coverage 
module under the terms and conditions of the revised Pecan Revenue Crop 
Provisions. Requiring all producers to start a new two-year coverage 
module for the 2014 crop year under the terms of the revised Pecan 
Revenue Crop Provisions will provide equitable treatment of pecan 
producers by allowing all pecan producers to be eligible for the same 
benefits beginning in the 2014 crop year and will simplify the 
administration of the transition to the modified program.

DATES: This rule is effective April 1, 2013.

FOR FURTHER INFORMATION CONTACT: Tim Hoffmann, Director, Product 
Administration and Standards Division, Risk Management Agency, United 
States Department of Agriculture, Beacon Facility, Stop 0812, Room 421, 
P.O. Box 419205, Kansas City, MO, 64141-6205, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    This rule has been determined to be non-significant for the 
purposes of Executive Order 12866 and, therefore, it has not been 
reviewed by the Office of Management and Budget.

Paperwork Reduction Act of 1995

    Pursuant to the provisions of the Paperwork Reduction Act of 1995 
(44 U.S.C. chapter 35), the collections of information in this rule 
have been approved by OMB under control number 0563-0053.

E-Government Act Compliance

    FCIC is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
establishes requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local, and tribal governments and 
the private sector. This rule contains no Federal mandates (under the 
regulatory provisions of title II of the UMRA) for State, local, and 
tribal governments or the private sector. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of UMRA.

Executive Order 13132

    It has been determined under section 1(a) of Executive Order 13132, 
Federalism, that this rule does not have sufficient implications to 
warrant consultation with the States. The provisions contained in this 
rule will not have a substantial direct effect on States, or on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments. The review reveals that this regulation will not have 
substantial and direct effects on Tribal governments and will not have 
significant Tribal implications.

Regulatory Flexibility Act

    FCIC certifies that this regulation will not have a significant 
economic impact on a substantial number of small entities. Program 
requirements for the Federal crop insurance program are the same for 
all producers regardless of the size of their farming operation. For 
instance, all producers are required to submit an application and 
acreage report to establish their insurance guarantees and compute 
premium amounts, and all producers are required to submit a notice of 
loss and production information to determine the amount of an indemnity 
payment in the event of an insured cause of crop loss. Whether a 
producer has 10 acres or 1000 acres, there is no difference in the kind 
of information collected. To ensure crop insurance is available to 
small entities, the Federal Crop Insurance Act authorizes FCIC to waive 
collection of administrative fees from limited resource farmers. FCIC 
believes this waiver helps to ensure that small entities are given the 
same opportunities as large entities to manage their risks through the 
use of crop insurance. A Regulatory Flexibility Analysis has not been 
prepared since this regulation does not have an impact on small 
entities, and, therefore, this regulation is exempt from the provisions 
of the Regulatory Flexibility Act (5 U.S.C. 605).

[[Page 13455]]

Federal Assistance Program

    This program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.450.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which require intergovernmental consultation with State and 
local officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order 12988

    This final rule has been reviewed in accordance with Executive 
Order 12988 on civil justice reform. The provisions of this rule will 
not have a retroactive effect. The provisions of this rule will preempt 
State and local laws to the extent such State and local laws are 
inconsistent herewith. With respect to any direct action taken by FCIC 
or action by FCIC directing the insurance provider to take specific 
action under the terms of the crop insurance policy, the administrative 
appeal provisions published at 7 CFR part 11, or 7 CFR part 400, 
subpart J for determinations of good farming practices, as applicable, 
must be exhausted before any action against FCIC for judicial review 
may be brought.

Environmental Evaluation

    This action is not expected to have a significant economic impact 
on the quality of the human environment, health, or safety. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is needed.

Background

    This rule finalizes changes to the Common Crop Insurance 
Regulations (7 CFR part 457), Pecan Revenue Crop Insurance Provisions 
(7 CFR 457.167) that were published by FCIC on November 17, 2011, as a 
notice of proposed rulemaking in the Federal Register at 76 FR 71276-
71280. The public was afforded 60 days to submit comments after the 
regulation was published in the Federal Register.
    A total of 50 comments were received from 3 commenters. The 
commenters were an insurance provider, an insurance service 
organization, and a producer organization.
    The public comments received regarding the proposed rule and FCIC's 
responses to the comments are as follows:

General

    Comment: A commenter stated they support the proposed regulation.
    Response: FCIC thanks the commenter for their review of the 
proposed rule and their support.
    Comment: A few commenters stated they have no objection to 
replacing the ``lowest available dollar span'' with the ``T-Revenue'' 
(to be developed by FCIC to represent a similar value according to the 
background information in the proposed rule) throughout the Crop 
Provisions in order to ``facilitate the implementation of a continuous 
rating methodology to be consistent with other policies.''
    Response: FCIC thanks the commenters for their review and support 
of this proposed change.
    Comment: A commenter requested the Special Provisions be amended to 
reflect an April 1st acreage and production reporting date. The 
commenter stated that it is not uncommon for groves and leases to 
change control during the month of March. This change would eliminate a 
portion of those groves that are lost after acreage reporting time each 
year leaving the insured to pay full premiums for coverage on orchards 
for which they no longer have insurance. The transfer of indemnity is 
an option, but rarely used by producers. Having cared for the grove and 
invested time, money, and labor in the prior years improving the grove, 
the producer is left without any benefit of the current year's crop and 
without any benefit of the crop insurance for which he must pay full 
price. If it is not feasible to implement some form of pro-rating of 
the premium (even if limited to the first 90 days after the current 
reporting date) then we suggest a later acreage reporting date may be 
more suitable and beneficial to the insured.
    Response: The Crop Provisions require production and gross sales 
from the previous two crop years to be reported by the acreage 
reporting date for the first year of the two-year coverage module. 
Acreage reporting dates are located in the actuarial documents, and 
therefore, are not changed through the Crop Provisions. However, FCIC 
is consolidating acreage reporting dates because of the Acreage Crop 
and Reporting Streamlining Initiative (ACRSI) project, which has an 
objective of using common standardized data and terminology across USDA 
agencies to consolidate and simplify reporting requirements for 
farmers. As a result of the ACRSI project the acreage reporting date 
for pecans has been moved to March 15 in the states of Alabama, 
Arizona, Florida, Georgia, and Mississippi for the 2013 crop year. 
Additionally, for the 2013 crop year the acreage reporting date for 
pecans has been moved to May 15 in the states of New Mexico, Oklahoma, 
and Texas. This will allow additional time for producers to make their 
decisions regarding their groves, but for the purposes of consistency 
FCIC could not move the acreage reporting dates to April 1.

Section 1--Definitions

    Comment: In regard to the definition of ``approved average revenue 
per acre'' a few commenters stated according to the background 
information in the proposed rule, the proposed change from a ten-year 
base period to a six-year base period is based on a recommendation from 
a contracted study that found a shorter base period works at least as 
well and ``will be more responsive to market trends and changes in the 
productive capacity of the trees.'' The background information also 
indicates that the six-year base period is ``better for predicting 
actual yields for some perennial crops.'' The commenters questioned 
whether this applies to the crop of pecans as this was not specifically 
indicated in the background information.
    Response: FCIC agrees the background information in the proposed 
rule does not indicate the referenced study applies specifically to 
pecans. The report produced from the study did not specify which 
perennial crops were analyzed to determine the effect of a shorter base 
period. However, the concept is the same for pecans as it is for any 
other perennial crop because it is based on the premise that the 
productive capacity of a tree changes over time. The productive 
capacity of a tree generally increases over time until the tree reaches 
a maximum productive capacity and then production begins to decline. 
However, events can occur during the life of a tree that can change the 
productive capacity of that tree. Because the productive capacity of a 
tree changes over time, the most recent few years of production data 
provides the best indication of the current productive capacity of a 
tree. This means that a shorter base period will be more responsive to 
changes in the productive capacity of a perennial crop than a longer 
base period. While the Pecan Revenue program uses the revenue history 
to determine the guarantee rather than production history, the 
production history is part of the revenue history. Although there are 
other forces that can affect revenue, the production capability of the 
trees is an important factor in establishing the revenue.
    Comment: A few commenters stated that according to the definition 
of ``approved average revenue per acre,''

[[Page 13456]]

the average of the four or six years of sales records and/or T-revenue 
is subject to no adjustments before becoming the ``approved average 
revenue per acre.'' The commenters question if this is correct.
    Response: FCIC disagrees the ``approved average revenue per acre'' 
is not subject to adjustments. Although, the definition of ``approved 
average revenue per acre'' does not indicate the adjustments, the 
``approved average revenue per acre'' may be adjusted in accordance 
with the terms of the Crop Provisions. Sections 3(d) and 3(f)(2) 
provide exceptions that allow the amount of insurance per acre to be 
adjusted within the two-year coverage module. No change has been made 
to the final rule.
    Comment: A few commenters suggested rewording the definition of 
``approved average revenue per acre'' to read, ``The total of your 
average gross sales per acre based on the most recent consecutive four 
or six years of sales records and dividing that result by the number of 
years of average gross sales per acre.''
    Response: FCIC disagrees with the commenters that this section 
should be reworded. The suggested rewording could change the meaning of 
the definition to allow a choice of either four or six years of sales 
records to be used to calculate the ``approved average revenue per 
acre'' regardless of the number of years of sales records in the 
database. This differs from the proposed provision that requires four 
year of sales records to be used in the calculation unless six years of 
sales records are available. If six years of sales records are 
available six years must be used in the calculation. Therefore, the 
first sentence of the definition ``approved average revenue per acre'' 
cannot be revised as suggested. No change has been made to the final 
rule.
    Comment: A few commenters concurred with the proposed deletion of 
the pecan-specific definition of ``enterprise unit'' since it was 
essentially the same as the definition in the Basic Provisions, which 
as noted in the background information in the proposed rule, includes a 
reference to meeting the requirements of section 34 of the Basic 
Provisions. The commenters stated if optional units are not added, then 
a modified version of this definition may need to be retained.
    Response: FCIC thanks the commenters for their review and support 
of this proposed removal of the definition of ``enterprise unit.'' 
Although FCIC agrees the requirements to qualify for enterprise units 
should be consistent with the requirements in the Basic Provisions, the 
Basic Provisions do not provide requirements to qualify for enterprise 
units when non-contiguous land is the basis for optional units. 
Therefore, FCIC has revised section 2(a)(1) to state that requirements 
to qualify for enterprise units will be based on the producer having 
two or more parcels that meet the definition of non-contiguous land and 
two or more parcels must have at least the lesser of 20 acres or 20 
percent of the insured crop acreage in the enterprise unit.

Section 2--Unit Division

    Comment: A few commenters stated that the proposed Crop Provisions 
are not entirely clear on how optional units will be handled within the 
two-year coverage module. The provisions in sections 2(a), 2(a)(3)(ii), 
2(a)(3)(iii), and 3(d)(1) seem somewhat contradictory. The section 2(a) 
lead-in [``For both years of the two-year coverage module a unit will 
be:''] to 2(a)(3) indicates that if the insured qualifies for optional 
units for the first year of a two-year coverage module, the same 
optional unit structure would apply for both years of that module 
regardless of what happens during that module. Section 2(a)(3)(ii) 
requires that ``Separate records of production are provided for at 
least the most recent consecutive two crop years'' to qualify for 
optional units for the current two-year coverage module, which fits the 
definition of ``two-year coverage module'' that the same coverage 
applies for both years of the module. Section 2(a)(3)(iii) also states 
that optional units will be established ``by the acreage reporting date 
of the first year of the two-year coverage module'' but goes on to 
indicate that ``Units * * * may be adjusted or combined to reflect the 
actual unit structure when adjusting a loss.'' The commenters 
questioned if this means that a Pecan Revenue policy could have 
optional units for the first year of the module, but then have those 
units combined into basic units the second year of the module if it is 
discovered at loss time that the production was commingled (meaning the 
units are not the same for both years of the module). Or would that 
discovery result in the retroactive combining of optional units for the 
first year of the module as well, even if separate records by optional 
unit were maintained that first year? If so, this would present a 
number of difficulties. Section 3(d)(1) states that failure to provide 
acceptable records for optional units ``will result in optional units 
being combined into basic units at the time of discovery and your 
amount of insurance per acre will be recalculated for the two-year 
coverage module.'' The commenters stated, this would seem to indicate 
that the unit structure would be revised retroactively to the first 
year of the module (unless it is referring only to the recalculation of 
the amount of insurance), except that the lead-in from 3(d) is that 
``Your amount of insurance per acre will remain the same * * * for each 
year of the two-year coverage module unless.'' The word ``unless'' 
would indicate that the situation described in 3(d)(1) is one of the 
exceptions where the policy terms and coverage are not the same for 
both years of the coverage module.
    Response: FCIC agrees the lead-in paragraph for section 2(a) 
appears to create a conflict with sections 2(a)(3)(iii) and 3(d)(1) by 
stipulating the unit structure will be the same for both years of the 
two-year coverage module. The provisions in sections 2(a)(3)(iii), 
3(d)(1) and 13(b)(1) provide exceptions to the general rule that the 
unit structure will remain the same for both years of the two-year 
coverage module. Therefore, FCIC has revised section 2(a) by adding the 
phrase ``except as provided in these Crop Provisions'' to the beginning 
of the provision. The provisions in sections 2(a)(3)(iii), 3(d)(1), and 
13(b)(1) are intended to require an adjustment to the unit structure 
and amount of insurance for the current crop year and for the 
subsequent crop year of the two-year coverage module (provided another 
crop year remains in the two-year coverage module), if it is discovered 
that separate acceptable records were not maintained for optional 
units. The provisions in sections 2(a)(3)(iii), 3(d)(1), and 13(b)(1) 
are not intended to require the unit structure or amount of insurance 
to be revised retroactively for the first year of the two-year coverage 
module if separate acceptable records for optional units were 
maintained in the first year of the module, but not for the second year 
of the two-year coverage module. The provision in section 3(d)(1) has 
been revised to clarify that if you fail to provide acceptable records 
necessary to determine a loss for optional units, optional units will 
be combined to reflect the actual unit structure at the time of 
discovery and your amount of insurance per acre will be recalculated 
for the current crop year and the subsequent crop year of the two-year 
coverage module (provided another crop year remains in the two-year 
coverage module). The provision in section 13(b)(1) has been revised to 
clarify that if it is discovered at the time of loss that separate 
acceptable records were not maintained for optional units, the actual 
unit structure determined at the time of loss will be the unit 
structure for the

[[Page 13457]]

current crop year and the subsequent crop year of the two-year coverage 
module (provided another crop year remains in the two-year coverage 
module).
    Comment: A few commenters stated that if the new optional unit 
provisions are implemented, consider consolidating 2(a)(3) and 2(b) 
since both deal with optional units as available for Pecan Revenue.
    Response: FCIC agrees 2(a)(3) and 2(b) should be combined since 
they both are in lieu of provisions contained in section 34 of the 
Basic Provisions. FCIC has revised section 2(a)(3) to state that the 
provisions are in lieu of sections 34(b) and (c) of the Basic 
Provisions. With this revision to section 2(a)(3), the provision in 
section 2(b) is not necessary because provisions that allow optional 
units by section, section equivalent, FSA farm serial number, and 
irrigated, non-irrigated and organic farming practice are contained in 
section 34(c) of the Basic Provisions. FCIC has revised the provisions 
and redesignated the subsections accordingly.
    Comment: A few commenters stated that according to the background 
information in the proposed rule, the proposed change to allow optional 
units by non-contiguous land was requested by producers and ``Premium 
rates will be adjusted to compensate for any additional risk associated 
with optional units.'' The commenters stated the members (of their 
organization) they have heard from so far have objected to this 
proposed change and expressed concern with the consequences of allowing 
optional units for Pecan Revenue, and anticipate other insurance 
providers will feel the same. Based on past experience, keeping 
production records to maintain optional units for crops like pecans is 
very difficult. With crops like pecans, many of the producers are also 
processors. They are not going to shut down the processing plant to 
maintain option unit records. They are going to dump pecans into a big 
bin and keep running the shelling plant in such a manner that they lose 
their identity. Furthermore, current appraisal methods are inadequate 
for tracking production for purposes of optional units. Appraisals are 
more difficult for pecan orchards than for other crops because you can 
have producing and non-producing trees in the same orchard, depending 
on variety. Pecan trees also have varying maturity dates by variety 
which can be greatly affected by weather conditions. In addition, when 
harvesting pecans, the trees may have suffered weather stresses that 
result in harvesting three or more times per season so tracking the 
cleaned production back to an optional unit by appraisal is 
problematic. Optional units will have a negative effect on the program 
experience for this crop program. The experience has been favorable in 
recent years primarily as a result of the high prices since many 
orchards have had low yields. However, tracking production back to 
optional units will be extremely difficult and likely result in adverse 
program experience.
    Response: FCIC understands the concerns of the commenters that 
allowing optional units by non-contiguous land will result in a 
negative effect on program experience because of the difficulty of 
maintaining separate production records. However, the problems cited 
mostly involve the producer's ability to meet the requirements of 
maintaining separate records for each optional unit. Those producers 
who are unable to maintain separate records should not elect optional 
units. Further, the problems discussed are no different than for other 
perennial crops that allow optional units. Producers who choose to 
elect optional units are certifying they can provide acceptable 
separate records for optional units. Provisions have been added to 
require optional units to be combined and the amount of insurance to be 
recalculated if the producer cannot provide separate production 
records. In addition, premium rates will be adjusted to reflect any 
additional risk caused by offering optional units. Those producers not 
electing optional units will not be subject to any rate increases for 
the additional risk posed by optional units. No change has been made to 
the final rule.
    Comment: A few commenters stated they currently have pecans set up 
on a single database for irrigated versus non-irrigated on a county 
basis. If optional units are added, guidelines will need to be provided 
as to how records should be split out if a producer wants to elect 
optional units. The commenters ask whether FCIC will want insurance 
providers to maintain separate optional unit databases within the basic 
unit/enterprise unit structures like what is now being required in the 
2012 Crop Insurance Handbook since this would now be an option under 
these provisions.
    Response: To qualify for optional units producers will have to be 
able to provide production records for each optional unit from at least 
the most recent consecutive two crop years. Separate databases will 
have to be established for each optional unit. Additionally, producers 
will be required to maintain separate records for the irrigated and 
non-irrigated acreage within the optional units. FCIC will provide 
additional guidance in the Crop Insurance Handbook as to how databases 
should be established and maintained.

Section 3--Insurance Guarantees and Coverage Levels for Determining 
Indemnities

    Comment: A few commenters stated to consider revising section 3(a) 
by rearranging the phrases in the second sentence to read, ``You may 
change the coverage level for the succeeding two-year coverage module 
by giving us written notice not later than the sales closing date of 
the next two-year coverage module.''
    Response: No changes were proposed to section 3(a) and the proposed 
change does not address a conflict or vulnerability in the provision. 
Therefore, FCIC cannot consider the recommended change because the 
public was not provided an opportunity to comment on the requested 
change. No change has been made to the final rule.
    Comment: A few commenters stated if section 3(d)(1) is not an 
exception where the unit structure might be different the first and 
second years of the module, perhaps this should be added instead to 
section 3(f), which also deals with whether the insured does or does 
not report the gross sales timely.
    Response: FCIC disagrees the provision in section 3(d)(1) should be 
moved to section 3(f). As stated above, FCIC has revised section 2(a) 
to make it clear that section 3(d)(1) is an exception to section 2(a). 
Therefore, this provision has not been moved.
    Comment: A few commenters stated if optional units are added to the 
Pecan Revenue policy, perhaps some reference should be added to section 
3(f)(1) to address the effect on optional units if the insured does not 
report gross sales timely (besides having an assigned gross sales 
amount). In order to be consistent with other crop programs, producers 
would not be eligible for optional units if the most recent previous 
two years of gross sales were not reported.
    Response: FCIC agrees with the commenters. A statement has been 
added to section 3(f)(1) to clarify that if producers do not report the 
gross sales from the two previous years by the acreage reporting date 
for the first year of the next two-year coverage module, they will not 
be eligible for optional units for both years of the two-year coverage 
module.
    Comment: A few commenters stated to consider revising section 
3(f)(2) to

[[Page 13458]]

read ``we will readjust your average gross sales per acre for the next 
two-year coverage module'' instead of ``next crop year.''
    Response: Although no changes were proposed to section 3(f)(2), the 
commenter has identified a potential conflict between the provisions in 
section 3(d) and section 3(f)(2). Section 3(d) states ``your amount of 
insurance per acre will remain the same as stated in the Summary of 
Coverage on each unit for each year of the two-year coverage module 
unless* * *'' but does not provide an exception to allow a revision to 
the approved average revenue per acre for failure to timely report 
gross sales. The provision in section 3(f)(2) states that ``if your 
gross sales are reported after the acreage reporting date for the two-
year coverage module, we will readjust your average gross sales per 
acre for the next crop year.'' Therefore, to prevent a conflict between 
these provisions FCIC has revised section 3(d) by adding a new 
paragraph (4) that specifies the amount of insurance per acre remains 
the same for each year of the two-year coverage module unless the gross 
sales amount is assigned in accordance with section 3(f).

Section 6--Report of Acreage

    Comment: A commenter stated there is a fair amount of overlap and/
or repetition in 6(a)(1), 6(b), and 6(c).
    Response: The only change proposed in section 6 was to remove the 
percentage associated with the reporting of sequential thinning. FCIC 
has not proposed any changes with respect to the rewriting of the 
section. There is no conflict or vulnerability in the provision. 
Therefore, FCIC cannot consider the recommended change because the 
public was not provided an opportunity to comment. No change has been 
made to the final rule.

Section 8--Insured Crop

    Comment: A few commenters stated the proposed change to section 
8(d) would drop the minimum age requirement and make some revisions to 
the minimum production requirement of ``at least 600 pounds of pecan 
in-shell per acre (or an amount provided in the Special Provisions) in 
at least one of the previous four crop years, unless we inspect and 
allow insurance by written agreement.'' The commenters question under 
what circumstances the RMA Regional Office would consider insurance by 
written agreement for trees that have not produced at least 600 pounds 
per acre in at least one of the last four crop years. The commenters 
asked whether the intent is to consider exceptions in certain cases 
such as an orchard that has produced just under 600 pounds per acre, or 
met the minimum production requirement five years ago but not since.
    Response: The RMA Regional Offices will determine eligibility for a 
written agreement. While it is not possible to list every possible 
situation that might warrant a written agreement, one such situation 
would be if an insurable cause of loss has caused the grove to fail to 
meet the minimum production requirement, but based on an inspection of 
the grove it is clearly capable of producing the minimum production 
requirement. This provision is not intended to allow exceptions to 
acreage that was not capable of meeting the minimum production 
requirement in at least one of the previous four years on a case by 
case basis.
    Comment: A commenter requested clarification to section 8(e) in 
regard to types of pecan varieties as possibly being uninsurable or 
incompatible pollinators and the methodology for determining 
uninsurable or incompatible pollinators.
    Response: The RMA Regional Office will use published research and 
loss experience data to determine what, if any, varieties or groups of 
varieties should be considered uninsurable because they are unreliable 
producers or incompatible pollinators. Any pecan varieties or groups of 
varieties determined to be uninsurable will be listed in a Special 
Provision statement. Producers should consult with the appropriate 
agricultural experts prior to planting pecan trees to ensure they are 
reliable producers and compatible pollinators.
    Comment: A commenter stated the proposed section 8(d) would 
eliminate the need for the proposed new section 8(e) as any acreage not 
meeting the minimum level of production would already be considered 
uninsurable.
    Response: FCIC disagrees the addition of the new section 8(d) 
eliminates the need for the new section 8(e). The provision in section 
8(d) makes acreage not capable of producing the minimum production 
requirement ineligible for crop insurance coverage. This may simply be 
a function of the age of the trees, not the variety, and planting 
younger trees may allow the acreage to again be insurable. However, 
there may be certain varieties or groups of varieties that are not 
capable of producing the minimum production or may only be capable of 
occasionally producing the minimum production requirement. For these 
varieties or groups of varieties it may be necessary to exclude these 
from being insurable. For instance, it is possible a variety may be 
determined to be uninsurable if it is severely alternate bearing even 
under proper management or has characteristics which make it unsuitable 
for commercial production. No change has been made to the final rule.

Section 13--Settlement of Claim

    Comment: A commenter stated the background information in the 
proposed rule states ``FCIC intends to provide additional guidance in 
the Pecan Revenue Loss Adjustment Standards Handbook (LASH) as to when 
a price should be considered inappropriate. The guidance will create a 
minimum threshold that the price received must meet and will be based 
on a percentage of the AMS price.'' The commenter questioned whether it 
is sufficient to have that information in the LASH, or should some 
indication of that minimum threshold be included in the Crop 
Provisions.
    Response: FCIC agrees it would not be appropriate to add a minimum 
threshold to the Pecan Revenue LASH without providing an indication of 
the minimum threshold in the Pecan Revenue Crop Provisions. Therefore, 
FCIC has revised section 13(d)(2)(i) to indicate that unless otherwise 
provided in the Special Provisions and excluding pecans sold under 
contract, the price received will be not less than 95 percent of the 
lowest AMS price for the nearest location for similar quality, 
quantity, and variety of in-shell pecans published during the week the 
producer sells his or her pecans. If AMS prices are not published for 
the week the pecans were sold, the price received will be not less than 
95 percent of the lowest price per pound for in-shell pecans of the 
same variety or varieties insured offered by buyers in the area in 
which the producer normally markets the pecans on the day the producer 
sells his or her pecans. Additionally, FCIC has amended the proposed 
provision to indicate that the market price will be used for direct 
marketed pecans in order to be consistent with section 10(d)(1).

Section 15--Substitution of Yields

    Comment: A commenter suggested revising section 15 to include that 
the substitution of yields provisions of the Basic Provisions are 
applicable (with the substitution of T-Revenue in lieu of the T-Yield). 
The commenter stated this change would give the insured the same 
protection as other crops by allowing an insured to substitute 60 
percent of the applicable T-Revenue for actual revenue in order to 
mitigate effect of catastrophic years. With other crops, if a producer 
experiences a disaster and has an extremely low yield, that producer 
has

[[Page 13459]]

the option of substituting 60 percent of the T-yield for the one actual 
yield to minimize the effect of that year on the approved production 
history. This is not an option for pecan producers. If a disaster 
occurs and causes a producer to have zero production, the insured's 
summary of revenue history and their approved average revenue are 
dramatically impacted. With this one simple change to the policy 
provisions, the needs of the producer are better met and the policy 
will be more similar to other crop provisions.
    Response: No changes were proposed to the Substitution of Yields 
section and the proposed change does not address a conflict or 
vulnerability in the provision. Therefore, FCIC cannot consider the 
recommended change because the public has not been provided an 
opportunity to comment of the requested change. No change has been made 
to the final rule.
    In addition to the changes described above, FCIC has made minor 
editorial changes.

List of Subjects in 7 CFR Part 457

    Crop insurance, Pecan Revenue, Reporting and recordkeeping 
requirements.

Final Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends 7 CFR part 457 effective for the 2014 and 
succeeding crop years as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

0
1. The authority citation for 7 CFR part 457 continues to read as 
follows:

    Authority: 7 U.S.C. 1506(l), 1506(o).


0
2. Amend Sec.  457.167 as follows:
0
a. In the introductory text by removing ``2005'' and adding ``2014'' in 
its place;
0
b. In section 1 by:
0
i. Revising the definitions of ``approved average revenue per acre'' 
and ``average gross sales per acre'';
0
ii. In the definition of ``direct marketing'' by adding the word ``a'' 
before the word ``wholesaler'';
0
iii. Removing the definition of ``enterprise unit'';
0
iv. Revising the definition of ``market price''; and
0
v. Removing the definition of ``set out''; and
0
vi. Adding in alphabetical order a definition of ``transitional revenue 
(T-revenue)'';
0
c. Revise section 2;
0
d. In the introductory text of section 3 by adding a comma following 
the phrase ``In lieu of section 3 of the Basic Provisions'';
0
e. Revise section 3(d)(1);
0
f. In section 3(d)(2) by removing the phrase ``lowest available dollar 
span amount provided in the actuarial documents'' and adding the term 
``T-revenue'' in its place;
0
g. Add section 3(d)(4);
0
h. Revise section 3(f)(1);
0
i. In section 3(h) by adding a hyphen between the words ``high'' and 
``risk'' in all four instances they appear;
0
j. In section 4(b) by removing the phrase ``the RMA Web site at https://www.rma.usda.gov/ or a successor Web site'' and adding the phrase 
``RMA's Web site'' in its place;
0
k. In section 4(d) by adding a sentence;
0
l. In section 6(a)(1) by removing the phrase ``in excess of 12.5 
percent of your insured acreage'';
0
m. In section 6(a)(5) by removing the semicolon and adding a period in 
its place;
0
n. In section 6(b) by removing the phrase ``in excess of 12.5 percent 
of your insured acreage'';
0
o. In section 8 by:
0
i. Revising paragraph (d);
0
ii. Redesignating paragraphs (e) and (f) as paragraphs (f) and (g); and
0
iii. Adding a new paragraph (e);
0
p. In section 11(a)(2) by adding a comma after the term ``Fire'';
0
q. Revise section 13(b);
0
r. In section 13(d)(1)(i) introductory text by removing the semicolon 
at the end of the sentence and adding a colon in its place;
0
s. Revise section 13(d)(2)(i); and
0
t. Revise the pecan revenue example at the end of section 13.
    The revisions and additions read as follows:


Sec.  457.167  Pecan revenue crop insurance provisions.

* * * * *
    1. * * *
    Approved average revenue per acre. The total of your average gross 
sales per acre based on the most recent consecutive four years of sales 
records building to six years and dividing that result by the number of 
years of average gross sales per acre. If you provide more than four 
years of sales records, they must be the most recent consecutive six 
years of sales records. If you do not provide at least four years of 
gross sales records, your approved average revenue will be:
    (1) The average of the two most recent consecutive years of your 
gross sales per acre and two years of the T-revenue; or
    (2) If you do not provide any gross sales records, the T-revenue.
    Average gross sales per acre. Your gross sales of pecans for a crop 
year divided by your net acres of pecans grown during that crop year. 
For example, if for the crop year your gross sales were $100,000 and 
your net acres of pecans were 100, then your average gross sales per 
acre for the crop year would be $1,000.
* * * * *
    Market price. The market price is:
    (1) The average of the AMS prices for the nearest location for 
similar quality, quantity, and variety of in-shell pecans published 
during the week you sell any of your pecans, you harvest your pecans if 
they are not sold, or your pecans are appraised if you are not 
harvesting them, unless otherwise provided in the Special Provisions. 
For example, if you harvest production on November 14 but do not sell 
the production, the average of the AMS prices for the week containing 
November 14 will be used to determine the market price for the 
production harvested on November 14; or
    (2) If AMS prices are not published for the week, the average price 
per pound for in-shell pecans of the same variety or varieties insured 
offered by buyers on the day you sell any of your pecans, you harvest 
any of your pecans if they are not sold, or your pecans are appraised 
if you are not harvesting them, in the area in which you normally 
market the pecans (If buyers are not available in your immediate area, 
we will use the average in-shell price per pound offered by buyers 
nearest to your area).
* * * * *
    Transitional revenue (T-revenue). A value determined by FCIC and 
published in the actuarial documents.
* * * * *
    2. Unit Division.
    Except as provided in these Crop Provisions, for both years of the 
two-year coverage module a unit will be:
    (a) In addition to the requirements of section 34(a)(4) of the 
Basic Provisions, an enterprise unit if the insured crop is located on 
at least two parcels of non-contiguous land and at least two of the 
parcels must contain at least the lesser of 20 acres or 20 percent of 
the insured crop acreage in the enterprise unit;
    (b) A basic unit as defined in section 1 of the Basic Provisions; 
or
    (c) In lieu of the requirements contained in sections 34(b) and (c) 
of the Basic Provisions, basic units may be divided into optional units 
if, for each optional unit, the following criteria are met:
    (1) Each optional unit you select must be located on non-contiguous 
land;

[[Page 13460]]

    (2) Separate records of production are provided for at least the 
most recent consecutive two crop years. The records will be used to 
verify that trees from each unit meet the minimum production 
requirement contained in section 8(d) and to establish the approved 
average revenue per acre for the optional units selected; and
    (3) Optional units are selected and identified on the acreage 
report by the acreage reporting date of the first year of the two-year 
coverage module. Units will be determined when the acreage is reported, 
but may be adjusted or combined to reflect the actual unit structure 
when adjusting a loss. No further unit division may be made after the 
acreage reporting date for any reason.
    3. * * *
    (d) * * *
    (1) You fail to provide acceptable records necessary to determine a 
loss for optional units. This will result in optional units being 
adjusted or combined to reflect the actual unit structure at the time 
of discovery. Your amount of insurance per acre will be recalculated 
for the current crop year and the subsequent crop year of the two-year 
coverage module (provided another year remains in the two-year coverage 
module).
* * * * *
    (4) Your gross sales amount is assigned in accordance with section 
3(f).
* * * * *
    (f) * * *
    (1) If you do not report your gross sales in accordance with this 
paragraph, we will assign a gross sales amount for any year you fail to 
report and you will not be eligible for optional units for both years 
of the two-year coverage module. The gross sales amount assigned by us 
will be not greater than the T-revenue for the current coverage module.
* * * * *
    4. * * *
    (d) * * * If available from us, you may elect to receive these 
documents and changes electronically.'' following the sentence, ``If 
changes are made that will be effective for a subsequent two-year 
coverage module, such copies will be provided not later than 30 days 
prior to the cancellation date.
    8. * * *
    (d) That are grown on trees that have produced at least 600 pounds 
of pecans in-shell per acre (or an amount provided in the Special 
Provisions) in at least one of the previous four crop years, unless we 
inspect and allow insurance by written agreement. This amount of 
production must be achieved subsequent to any top work that occurs 
within a unit;
    (e) That are grown on varieties or a grouping of varieties within a 
unit that are not designated as uninsurable in the Special Provisions;
* * * * *
    13. * * *
    (b) We will determine your loss on a unit basis. In the event you 
are unable to provide separate acceptable records for any:
    (1) Optional unit, we will combine all optional units for which 
such records were not provided and this will be the unit structure the 
current crop year and the subsequent crop year of the two-year coverage 
module (provided another year remains in the two-year coverage module); 
or
    (2) Basic unit, we will allocate commingled production or revenue 
to each basic unit in proportion to our liability on the harvested 
acreage for each unit.
* * * * *
    (d) * * *
    (2) * * *
    (i) The dollar amount obtained by multiplying the number of pounds 
of pecans sold by the price received for each day the pecans were sold. 
(If the price received is not verifiable by sales receipts or if the 
pecan production was direct marketed, the market price will be used. 
Unless otherwise provided in the Special Provisions, and excluding 
pecans sold under contract, the price received will be not less than 95 
percent of the lowest AMS price for the nearest location for similar 
quality, quantity, and variety of in-shell pecans published during the 
week you sell your pecans. If AMS prices are not published for the week 
the pecans were sold, the price received will be not less than 95 
percent of the lowest price per pound for in-shell pecans of the same 
variety or varieties insured offered by buyers in the area you normally 
market the pecans or the area nearest to you if prices are not 
available in your immediate area on the day you sell your pecans.);
* * * * *

                          Pecan Revenue Example
------------------------------------------------------------------------
                                                                Average
                                                     Average     gross
                  Year                     Acres      pounds   sales per
                                                     per acre     acre
------------------------------------------------------------------------
4......................................        100        750     $1,050
3......................................        100        625       $625
2......................................        100       1250       $750
1......................................        100        200       $250
------------------------------------------------------------------------
Total Average Gross Sales Per Acre = $2,675
------------------------------------------------------------------------

    The approved average revenue equals the total average gross sales 
per acre divided by the number of years ($2,675 / 4 = $669).
    The amount of insurance per acre equals the approved average 
revenue multiplied by the coverage level percent ($669 x .65 = $435).
    Assume pecan trees in the unit experienced damage to blooms due to 
a late freeze causing low production. You produced, harvested, and sold 
300 pounds per acre of pecans from 70 acres and received an actual 
price of $0.75 per pound. On the other 30 acres, the pecans suffered 
damage due to drought. You elected not to harvest the other 30 acres of 
pecans. The 30 acres were appraised at 100 pounds per acre and on the 
day of the appraisal the average AMS price was $0.65. The total dollar 
value of production to count is (300 pounds of pecans x 70 net acres x 
$0.75) + (100 pounds x 30 net acres x $0.65) = $15,750 + $1,950 = 
$17,700.
    The indemnity would be:
    The amount of insurance per acre multiplied by the net acres minus 
the dollar value of the total production to count equals the dollar 
amount of indemnity ($435 x 100 = $43,500.00 - $17,700.00 = $25,800).
* * * * *

    Signed in Washington, DC, on February 19, 2013.
Brandon Willis,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 2013-04468 Filed 2-27-13; 8:45 am]
BILLING CODE 3410-08-P