Common Crop Insurance Regulations; Macadamia Tree Crop Insurance Provisions and Macadamia Nut Crop Insurance Provisions, 44719-44722 [2014-17997]

Agencies

• DEPARTMENT OF AGRICULTURE
• Federal Crop Insurance Corporation

[Federal Register Volume 79, Number 148 (Friday, August 1, 2014)]
[Proposed Rules]
[Pages 44719-44722]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-17997]


========================================================================
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. 79, No. 148 / Friday, August 1, 2014 / 
Proposed Rules

[[Page 44719]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

[Docket No. FCIC-14-0004]
RIN 0563-AC44


Common Crop Insurance Regulations; Macadamia Tree Crop Insurance 
Provisions and Macadamia Nut Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to 
amend the Common Crop Insurance Regulations, Macadamia Tree Crop 
Insurance Provisions and the Macadamia Nut Crop Insurance Provisions to 
remove the provision requiring an optional unit to contain at least 80 
acres. The intended effect of this action is to provide policy changes 
and to better meet the needs of the producers. The changes will apply 
for the 2016 and succeeding crop years for macadamia trees and the 2017 
and succeeding crop years for macadamia nuts.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business September 30, 2014 and will be 
considered when the rule is to be made final.

ADDRESSES: FCIC prefers that comments be submitted electronically 
through the Federal eRulemaking Portal. You may submit comments, 
identified by Docket ID No. FCIC-14-0004 by any of the following 
methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Director, Product Administration and Standards 
Division, Risk Management Agency, United States Department of 
Agriculture, P.O. Box 419205, Kansas City, MO 64133-6205. All comments 
received, including those received by mail, will be posted without 
change to https://www.regulations.gov, including any personal 
information provided, and can be accessed by the public.

All comments must include the agency name and docket number or 
Regulatory Information Number (RIN) for this rule. For detailed 
instructions on submitting comments and additional information, see 
https://www.regulations.gov. If you are submitting comments 
electronically through the Federal eRulemaking Portal and want to 
attach a document, we ask that it be in a text-based format. If you 
want to attach a document that is a scanned Adobe PDF file, it must be 
scanned as text and not as an image, thus allowing FCIC to search and 
copy certain portions of your submissions. For questions regarding 
attaching a document that is a scanned Adobe PDF file, please contact 
the RMA Web Content Team at (816) 823-4694 or by email at 
rmaweb.content@rma.usda.gov.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received for any dockets by the name of the person submitting 
the comment (or signing the comment, if submitted on behalf of an 
association, business, labor union, etc.). You may review the complete 
User Notice and Privacy Notice for Regulations.gov at https://www.regulations.gov/#!privacyNotice.

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

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
rule is not-significant for the purpose of Executive Order 12866 and, 
therefore, it has not been reviewed by OMB.

Paperwork Reduction Act of 1995

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

E-Government Act Compliance

    FCIC is committed to complying with the E-Government Act of 2002, 
to promote the use of the Internet and other information technologies 
to provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

Unfunded Mandates Reform Act of 1995

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

Executive Order 13132

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

Executive Order 13175

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

Regulatory Flexibility Act

    FCIC certifies that this regulation will not have a significant 
economic impact on a substantial number of small entities. Program 
requirements for the Federal crop insurance program are the same for 
all producers regardless of the size of their farming operation. For 
instance, all producers are required to submit an application and 
acreage report to establish their insurance

[[Page 44720]]

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).

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 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. With respect to any direct action taken by FCIC 
or action by FCIC to require the insurance provider to take specific 
action under the terms of the crop insurance policy, the administrative 
appeal provisions published at 7 CFR part 11 must be exhausted before 
any action against FCIC for judicial review may be brought.

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

    FCIC proposes to amend the Common Crop Insurance Regulations (7 CFR 
part 457) by revising Sec.  457.130 Macadamia Tree Crop Insurance 
Provisions and Sec.  457.131 Macadamia Nut Crop Insurance Provisions to 
be effective for the 2016 and succeeding crop years for macadamia trees 
and the 2017 and succeeding crop years for macadamia nuts.
    The proposed changes to Sec.  457.130 are as follows:
    1. Section 1--FCIC proposes to add a definition of ``damaged.'' The 
terms ``damaged'' and ``destroyed'' are used throughout the Crop 
Provisions. The term ``damaged'' is not defined, but the term 
``destroyed'' is. FCIC is proposing to add a definition of ``damaged'' 
to clarify that there is a distinction between ``damaged'' and 
``destroyed.'' FCIC's proposed definition of ``damaged'' is injury to 
the main trunk, scaffold limb(s), and any other subordinate limbs that 
reduces the productivity of the tree due to an insured cause of loss 
occurring during the insurance period.
    FCIC also proposes to add a definition of ``scaffold limb'' since 
it is used in the proposed definition of ``damaged.'' It is given the 
same meaning as the term in other tree crop policies for consistency.
    2. Section 2--FCIC proposes to revise section 2 by removing 
paragraph (a) which states sections 34(b)(1), (3) and (4) of the Basic 
Provisions are not applicable. These sections of the Basic Provisions 
state that the crop must be planted in a manner such that there is a 
clear and discernible break between optional units, the insured must 
have records for at least the previous crop year for each optional 
unit, and the insured must have records of marketed or stored 
production from each optional unit maintained in such a manner that 
permits the insurance provider to verify the production from each 
optional unit. Under the current policy, insureds who utilize optional 
units can manipulate their unit boundaries to maximize indemnities 
because there is no current requirement for discernible breaks between 
units. By removing paragraph (a), sections 34(b)(1), (3) and (4) of the 
Basic Provisions become applicable and, therefore, minimize program 
abuse as it relates to unit division.
    FCIC also proposes to revise section 2 by removing the provision 
that requires an optional unit to contain at least 80 acres. Most 
macadamia tree orchards contain less than 80 acres so very few insureds 
are eligible for this provision. Removing this provision provides an 
equitable opportunity for insureds who farm large operations and those 
who farm small operations to qualify for optional units. The changes 
made above will mitigate any potential abuse from this change.
    3. Section 10--FCIC proposes to revise section 10 to include 
information regarding destroyed trees and allowing for the insurance 
provider to conduct an inspection before the insured removes any 
destroyed trees. The current provisions require insureds, if they 
intend to claim an indemnity on any unit, to allow the insurance 
provider to inspect all insured acreage before pruning or removing any 
damaged trees. However, the provisions are silent on regarding the 
removal of damaged trees. In order to conduct a proper appraisal, the 
insurance provider must identify damaged and destroyed trees before 
they are removed. Therefore, the insured must allow the insurance 
provider to conduct an inspection before the insured removes any 
damaged or destroyed trees.
    4. Section 11--FCIC proposes to revise paragraph (c)(1). The 
current provisions specify that any orchard with over 80 percent actual 
damage due to an insured cause of loss will be considered to be 100 
percent damaged. The proposed provisions are revised to clarify that 
over 80 percent of trees damaged and trees destroyed due to an insured 
cause of loss will be considered to be 100 percent damaged. FCIC also 
proposes to add a settlement of claim example in section 11.
    The proposed changes to Sec.  457.131 are as follows:
    1. Section 1--FCIC proposes to add definitions of ``floaters'' and 
``peewees'' since they are proposed to be incorporated into the 
definition of ``wet in-shell.'' These terms are commonly used in the 
macadamia nut and tree industry. FCIC's proposed definition of 
``floaters'' is inedible, husked ``field run'' nuts identified by water 
floatation. FCIC's proposed definition of ``peewees'' is mature and 
immature wet in-shell nuts that are smaller than 16mm (\5/8\ inch) in 
diameter.
    FCIC proposes to revise the definition of ``wet in-shell'' to 
incorporate a statement contained in the Special Provisions, which 
states wet in-shell excludes immature and unsound nuts (floaters and 
peewees). By incorporating this information into the Crop Provisions, 
FCIC can eliminate the Special Provisions statement.
    2. Section 2--FCIC proposes to revise section 2 by removing 
paragraph (a) which states section 34(b)(1) of the Basic Provisions is 
not applicable. This section of the Basic Provisions states that the 
crop must be planted in a manner such that there is a clear and 
discernible break between optional units. Under the current provisions,

[[Page 44721]]

insureds who utilize optional units can manipulate their unit 
boundaries to maximize indemnities because there is no current 
requirement for discernible breaks between units. By removing paragraph 
(a), section 34(b)(1) of the Basic Provisions becomes applicable, and, 
therefore, minimizes program abuse as it relates to unit division.
    FCIC also proposes to revise section 2 by removing the provision 
that requires an optional unit to contain at least 80 acres. Most 
macadamia nut orchards contain less than 80 acres so, very few insureds 
are eligible for this provision. Removing this provision provides an 
equitable opportunity for insureds who farm large operations and those 
who farm small operations to qualify for optional units. These changes 
are consistent with the changes that are proposed to the Macadamia Tree 
Crop Insurance Provisions. The changes made above will mitigate any 
potential abuse from this change.
    3. Section 3--FCIC proposes to revise the paragraph (d) to update 
the crop years used in the example.
    4. Section 8--FCIC proposes to revise paragraph (a)(2) to allow the 
calendar date for the end of the insurance period to be changed by the 
Special Provisions. This will provide flexibility to update this date 
if the need arises.
    5. Section 11--FCIC proposes to add a settlement of claim example.

List of Subjects in 7 CFR Part 457

    Crop insurance, Macadamia tree and Macadamia nut, 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 effective for 
the 2016 and succeeding crop years for macadamia trees and for the 2017 
and succeeding crop years for macadamia nuts 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(1), 1506(o).

0
2. Amend Sec.  457.130 as follows:
0
a. Amend the introductory text by removing ``2011'' and adding ``2016'' 
in its place;
0
b. Amend section 1 by adding in alphabetical order definitions of 
``damaged'' and ``scaffold limb'';
0
c. Revise section 2;
0
d. Amend section 3 by removing the phrase ``(Insurance Guarantees, 
Coverage Levels, and Prices for Determining Indemnities)'' in 
paragraphs (a) introductory text and (b);
0
e. Amend section 4 by removing the phrase ``(Contract Changes)'';
0
f. Amend section 5 by removing the phrase ``(Life of Policy, 
Cancellation, and Termination)'';
0
g. Amend section 6 introductory text by removing the phrase ``(Insured 
Crop)'';
0
h. Amend section 7 by removing the phrase ``(Insurable Acreage)'';
0
i. Amend section 8 by removing the phrase ``(Insurance Period)'' 
paragraphs (a) introductory text and (b) introductory text;
0
j. Amend section 9 by removing the phrase ``(Causes of Loss)'' in 
paragraphs (a) introductory text and (b) introductory text;
0
k. Revise section 10; and
0
l. In section 11, revise paragraphs (b)(4), (c) introductory text, and 
(c)(1).
    The revisions read as follows:


Sec.  457.130  Macadamia tree crop insurance provisions.

* * * * *
1. Definitions
* * * * *
    Damaged. Injury to the main trunk, scaffold limb(s), and any other 
subordinate limbs that reduces the productivity of the macadamia tree 
due to an insured cause of loss that occurs during the insurance 
period.
* * * * *
    Scaffold limb. A major limb attached directly to the trunk.
2. Unit Division
    (a) Provisions in the Basic Provisions that allow optional units by 
section, section equivalent, or FSA farm serial number and by irrigated 
and non-irrigated practices are not applicable. Optional units may be 
established only if each optional unit is located on non-contiguous 
land, unless otherwise allowed by written agreement.
    (b) You must have provided records, which can be independently 
verified, of acreage and age of trees for each unit for at least the 
last crop year.
* * * * *
10. Duties in the Event of Damage or Loss
    In addition to the requirements of section 14 of the Basic 
Provisions, in case of damage or probable loss, if you intend to claim 
an indemnity on any unit, you must allow us to inspect all insured 
acreage before pruning any damaged trees, removing any damaged trees, 
or removing any destroyed trees.
11. Settlement of Claim
* * * * *
    (b) * * *
* * * * *
    (4) Multiply the result in section 11(b)(3) by your share.
    For example:
    You select 65 percent coverage level and 100 percent of the price 
election on 10 acres of 9-year-old macadamia trees in the unit. Your 
share is 100 percent. The amount of insurance per acre is $5,850. There 
are 90 trees per unit. Thirty five trees are destroyed. Your indemnity 
would be calculated as follows:
    (1) 10 acres x $5,850 = $58,500;
    (3)(i) 100 percent-65 percent = 35 percent deductible;
    (ii) 35 destroyed trees / 90 total unit trees = 38.9 percent loss; 
38.9 percent loss-35 percent deductible = 3.9 percent;
    (iii) 3.9 percent / 65 percent coverage level = 6.0 percent loss; 
and $58,500 total amount of insurance x 6.0 percent loss = $3,510 loss; 
and
    (4) $3,510 loss x 100 percent share = $3,510 indemnity payment.
    (c) The total amount of loss will include both damaged trees and 
destroyed trees as follows:
    (1) Any orchard with over 80 percent of the actual trees damaged or 
destroyed due to an insured cause of loss will be considered to be 100 
percent damaged; and
* * * * *
0
3. Amend Sec.  457.131 as follows:
0
a. Amend the introductory text by removing ``2012'' and adding ``2017'' 
in its place;
0
b. In section 1:
0
i. By adding definitions of in alphabetical order ``floaters'' and 
``peewees''; and
0
ii. By revising the definition of ``wet in-shell'';
0
c. Revise section 2;
0
d. In section 3:
0
i. By removing the phrase ``(Insurance Guarantees, Coverage Levels, and 
Prices for Determining Indemnities)'' in the introductory text and 
paragraph (b) introductory text;
0
ii. In paragraph (b)(4) introductory text by removing the word 
``anytime'' and replacing it with the phrase ``any time''; and
0
iii. By revising paragraph (d);
0
e. Amend section 4 by removing the phrase ``(Contract Changes)'';
0
f. Amend section 5 by removing the phrase ``(Life of Policy, 
Cancellation, and Termination)'';
0
g. In section 6:
0
i. By removing the phrase ``(Insured Crop)'' in the introductory text; 
and
0
ii. In paragraph (d) by removing the phrase ``agree in writing'' and 
adding in

[[Page 44722]]

its place the phrase ``give our approval in writing''; and
0
iii. In paragraph (d) by removing the phrase ``wet, in-shell'' and 
adding in its place the phrase ``wet in-shell'';
0
h. In section 7:
0
i. By removing the phrase ``(Insurable Acreage)''; and
0
ii. By removing the comma after the phrase ``Basic Provisions (Sec.  
457.8)'';
0
i. In section 8:
0
i. By removing the phrase ``(Insurance Period)'' in paragraphs (a) 
introductory text and (b) introductory text; and
0
ii. By revising paragraph (a)(2);
0
j. Amend section 9 by removing the phrase ``(Causes of Loss)'' in 
paragraphs (a) introductory text and (b) introductory text;
0
k. Amend section 10 introductory text by removing the phrase ``(Duties 
in the Event of Damage or Loss)'';
0
l. In section 11:
0
i. In paragraph (b)(4) by removing the phrase ``if applicable, (see 
section 11(c))'' and adding in its place the phrase ``if applicable 
(see section 11(c)),'';
0
ii. Adding a settlement of claim example after paragraph (b)(7); and
0
iii. In paragraph (c) by removing the phrase ``(wet, in-shell pounds)'' 
and adding in its place the phrase ``(we in-shell pounds)''.
    The revisions and additions read as follows:


Sec.  457.131  Macadamia nut crop insurance provisions.

* * * * *
1. Definitions
* * * * *
    Floaters. Inedible, husked ``field run'' nuts identified by water 
floatation.
* * * * *
    Peewees. Mature and immature wet in-shell nuts that are smaller 
than 16 mm (5/8 inch) in diameter, or as otherwise specified in the 
Special Provisions.
* * * * *
    Wet in-shell. The weight of the macadamia nuts as they are removed 
from the orchard with the nut meats in the shells after removal of the 
husk and excluding floaters and peewees but prior to being dried.
2. Unit Division
    Provisions in the Basic Provisions that allow optional units by 
section, section equivalent, or FSA farm serial number and by irrigated 
and non-irrigated practices are not applicable. Optional units may be 
established only if each optional unit is located on non-contiguous 
land, unless otherwise allowed by written agreement.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities
* * * * *
    (d) Instead of reporting your macadamia nut production for the 
previous crop year, as required by section 3 of the Basic Provisions, 
there is a one-year lag period. Each crop year you must report your 
production from two crop years ago, e.g., on the 2016 crop year 
production report, you will provide your 2014 crop year production.
* * * * *
8. Insurance Period
    (a) * * *
    (2) The calendar date for the end of the insurance period for each 
crop year is the second June 30th after insurance attaches, or as 
specified in the Special Provisions.
* * * * *
11. Settlement of Claim
* * * * *
    (b) * * *
    (7) * * *
    For example:
    You select 65 percent coverage level and 100 percent of the price 
election on 10 acres of macadamia nuts in the unit. Your share is 100 
percent. Your production guarantee (per acre) is 4,000 pounds. The 
price election is $0.78. You are able to harvest 25,000 pounds. Your 
indemnity would be calculated as follows:
    (1) 10 acres x 4,000 pounds = 40,000 pounds guarantee;
    (2) 40,000 pounds x $0.78 price election = $31,200 total value of 
guarantee;
    (4) 25,000 pounds production to count x $0.78 price election = 
$19,500 value of production to count;
    (6) $31,200 total value of guarantee - $19,500 value of production 
to count = $11,700 loss; and
    (7) $11,700 loss x 100 percent share = $11,700 indemnity payment.
* * * * *

    Signed in Washington, DC, on July 23, 2014.
Brandon Willis,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2014-17997 Filed 7-31-14; 8:45 am]
BILLING CODE 3410-08-P