Common Crop Insurance Regulations; Nursery Crop Insurance Provisions, 4564-4574 [2018-01964]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
[Docket No. FCIC–17–0006]
RIN 0563–AC60
Common Crop Insurance Regulations;
Nursery Crop Insurance Provisions
Federal Crop Insurance
Corporation, USDA.
ACTION: Final rule with request for
comments.
AGENCY:
The Federal Crop Insurance
Corporation (FCIC) amends the
Common Crop Insurance Regulations,
Nursery Crop Insurance Provisions. The
intended effect of this action is to clarify
existing policy provisions, increase risk
management choices allowed by the
policy provisions, and expand
availability to more producers. The
changes will be effective for the 2019
and succeeding crop years.
DATES: This final rule is effective
January 31, 2018. However, FCIC will
accept written comments on this final
rule until close of business April 2,
2018. FCIC may consider the comments
received and may conduct additional
rulemaking based on the comments.
ADDRESSES: FCIC prefers interested
persons submit their comments
electronically through the Federal
eRulemaking Portal. Interested persons
may submit comments, identified by
Docket ID No. FCIC–17–0006, 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.
FCIC will post all comments received,
including those received by mail,
without change to https://
www.regulations.gov, including any
personal information provided. Once
these comments are posted to this
website, the public can access all
comments at its convenience from this
website. 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 interested
persons are submitting comments
electronically through the Federal
eRulemaking Portal and want to attach
a document, FCIC requests that the
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SUMMARY:
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document attachment be in a text-based
format. If interested persons 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 the submissions. For
questions regarding attaching a
document that is a scanned Adobe PDF
file, please contact the Risk
Management Agency (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 entity, such as an
association, business, labor union, etc.).
Interested persons may review the
complete User Notice and Privacy
Notice for Regulations.gov at https://
www.regulations.gov/#!privacyNotice.
FOR FURTHER INFORMATION CONTACT: Tim
Hoffmann, Product Management,
Product Administration and Standards
Division, Risk Management Agency,
United States Department of
Agriculture, Beacon Facility, Stop 0812,
Room 421, PO Box 419205, Kansas City,
MO 64141–6205, telephone (816) 926–
7730.
SUPPLEMENTARY INFORMATION:
Background
FCIC amends the Common Crop
Insurance Regulations (7 CFR part 457)
by revising 7 CFR 457.162 Nursery Crop
Insurance Provisions to be effective for
the 2019 and succeeding crop years.
The changes to 7 CFR 457.162
Nursery Crop Insurance Provisions are
as follows:
1. FCIC is removing the paragraph
immediately preceding section 1, which
refers to the order of priority if a conflict
exists among the policy provisions. This
same provision is contained in the Basic
Provisions. Therefore, the appearance
here is duplicative and should be
removed from the Nursery Crop
Insurance Provisions (Crop Provisions).
2. Section 1—FCIC is deleting the
definition of ‘‘Act.’’ The definition of
‘‘Act’’ is contained in the Basic
Provisions. Therefore, it is duplicative
and should be removed from the Crop
Provisions.
FCIC is revising the definition of
‘‘amount of insurance’’ to incorporate
language that is currently contained in
section 3(e) that reduces the amount of
insurance if any claims have previously
been paid for the crop year. The
language is more appropriately placed
in the definition.
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FCIC is revising the definition of
‘‘basic unit value.’’ The term is used
repeatedly throughout the Crop
Provisions, usually with a phrase such
as ‘‘including any revision’’ or
‘‘including the Peak Inventory
Endorsement if elected.’’ To simplify
the provisions, this information is
incorporated into the definition of
‘‘basic unit value.’’
FCIC is adding a definition of
‘‘catalog,’’ which is contained in the
Special Provisions. In addition, the
phrases ‘‘wholesale nursery catalog or
price list,’’ ‘‘nursery catalog or price
list,’’ and ‘‘catalog or price list,’’ are
used interchangeably throughout the
Crop Provisions. To simplify the
provisions, the term ‘‘catalog’’ now
replaces these phrases throughout.
FCIC is revising the definition of
‘‘container grown’’ to improve
readability and to clarify that ‘‘container
grown’’ is a nursery practice. FCIC is
also revising the definition to change
the term ‘‘pot’’ to ‘‘standard nursery
container.’’ The term ‘‘pot’’ is the name
of a specific standard nursery container
size and the term must change to
‘‘standard nursery container’’ in this
definition so that all standard nursery
containers are included in this
definition.
FCIC is adding a definition of ‘‘Crop
Inventory Valuation Report (CIVR)’’ as a
result of the inclusion of this term in
newly-designated paragraph (c)(ii) in
section 6.
FCIC is revising the definition of
‘‘crop year deductible’’ to simplify it.
The definition uses the phrase ‘‘sum of
all plant inventory values for each basic
unit,’’ which means the same thing as
‘‘basic unit value.’’ Therefore, the
phrase is replaced with the phrase
‘‘basic unit value’’ to make it easier to
read and understand. The definition
also states any loss under the
Rehabilitation Endorsement is not
considered a loss. This phrase is not
needed with the revised definition of
‘‘crop year deductible’’ since payments
under the Rehabilitation Endorsement
do not affect the deductible.
FCIC is deleting the definition of
‘‘deductible percentage.’’ The term
‘‘deductible’’ is defined in the Basic
Provisions. Therefore, having the
definition in the Crop Provisions is
duplicative and unnecessary.
FCIC is deleting the definitions of
‘‘Eligible Plant List’’ and ‘‘Plant Price
Schedule’’ and replacing them with the
definition of ‘‘Eligible Plant List and
Plant Price Schedule (EPLPPS).’’ The
definitions of ‘‘Eligible Plant List’’ and
the definition of ‘‘Plant Price Schedule’’
refer to the same document. Combining
the two definitions will prevent
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confusion and eliminate redundancy.
Language is also added to the new
definition to clarify the EPLPPS is a part
of the actuarial documents. FCIC is also
replacing the term ‘‘Eligible Plant List’’
with ‘‘EPLPPS’’ where it appears
throughout the provisions.
FCIC is revising the definition of
‘‘fabric grow bag’’ to clarify fabric grow
bags may be used for growing any type
of field grown nursery plant, rather than
restricting it to woody plants only. It is
a common growing practice for fabric
grow bags to be used for growing plants
other than woody plants.
FCIC is deleting the definition of
‘‘FCIC.’’ Its meaning is provided in the
preamble to the Basic Provisions.
Therefore, having the definition in the
Crop Provisions is unnecessary.
FCIC is revising the definition of
‘‘field grown’’ to clarify that field grown
is a nursery practice. FCIC is also
removing the phrase ‘‘without the use of
an artificial root containment device’’
because the definition goes on to specify
plants grown in in-ground fabric grow
bags, plants balled and burlapped, or
plants in containers that allow the
plants to root into the ground are
considered field grown. Plants grown in
in-ground fabric grow bags, plants
balled and burlapped, and plants in
containers are all grown using artificial
root containment devices. Therefore, the
phrase is being removed to prevent
confusion and redundancy.
FCIC is replacing the term ‘‘field
market value A’’ and ‘‘field market
value B’’ with ‘‘field market value A
(FMVA)’’ and ‘‘field market value B
(FMVB),’’ respectively. FCIC is also
revising the definitions of those terms to
be concise and easy to read.
FCIC is revising the definition of
‘‘good nursery practices.’’ The definition
currently states, ‘‘In lieu of the
definition of good farming practices in
section 1 of the Basic Provisions. . .’’
The definition of good farming practices
contained in the Basic Provisions allows
published information to be considered
when making good farming practice
determinations. The phrase ‘‘In lieu of’’
replaces the definition contained in the
Basic Provisions when in fact the
definitions should be read together
because published information
regarding good farming practices applies
to nursery producers. Therefore, ‘‘in lieu
of’’ is changed to ‘‘in addition to’’ to
make it clear that published information
can be considered when making good
farming practice determinations for
nursery producers.
FCIC is revising the definition of
‘‘liners’’ to incorporate language
currently contained in the Special
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Provisions that specifies the acceptable,
insurable dimensions of liners.
FCIC is revising the definition of
‘‘loss.’’ The term is used in the Crop
Provisions and is usually preceded with
the phrase ‘‘as adjusted by any previous
under-report factor.’’ A Special
Provisions statement uses the term
‘‘loss’’ preceded by the phrase ‘‘as
adjusted by any previous under-report
factor or over-report factor.’’ That
Special Provisions statement, along with
other Special Provisions statements
related to the over-report factor, is
incorporated into the Crop Provisions.
The definition of ‘‘loss’’ is revised to
include the phrase ‘‘as adjusted by any
previous under-report factor or overreport factor’’ in order to eliminate the
need to repeat that phrase throughout
the Crop Provisions.
FCIC is adding the definition of
‘‘lowest price,’’ which is currently
contained in the Special Provisions. The
phrase ‘‘the price for each plant and size
listed on your [Plant Inventory Value
Report (PIVR)] will be the lower of the
[EPLPPS] price or the lowest wholesale
price in your nursery catalog or price
list’’ is used repeatedly throughout the
Crop Provisions. To simplify the
provisions, the Crop Provisions will
substitute this phrase with the term
‘‘lowest price.’’
FCIC is revising the definition of
‘‘marketable’’ to provide clarity. The
definition uses the word ‘‘it’’ but does
not clarify what ‘‘it’’ means. The
definition also uses the term ‘‘market’’
but does not indicate if the term refers
to usual or customary market channels
employed by the nursery operation or a
secondary market where lesser values
prevail. Therefore, the definition is
being revised to clarify ‘‘a plant that can
be sold in a customary or secondary
market for a non-zero value.’’
FCIC is revising the definition of
‘‘nursery’’ to change the percentage from
50 percent to 40 percent. FCIC has
received comments that the 50 percent
requirement is arbitrary and that FCIC
may be omitting market share by
imposing that restriction. Since the
nature of prices is such that retail prices
are higher than wholesale prices, the
retail share of total sales is weighted
more heavily. In addition, the industry
has evolved since this limit was
implemented with more nurseries
engaging in both wholesale and retail
sales. By lowering the requirement from
50 to 40 percent of sales, FCIC is
allowing more nurseries to be eligible
for insurance while still recognizing the
intent of the program is to provide
coverage to nurseries with a large share
of their production dedicated to
wholesale sales. FCIC is also revising
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the definition to clarify what ‘‘gross
income’’ means. The current definition
states a nursery is ‘‘a business enterprise
that grows the nursery plants and
derives at least 50 percent of its gross
income from the wholesale marketing of
such plants.’’ The revised language
clarifies ‘‘gross income’’ by adding the
phrase ‘‘derived from plant sales’’ to
clarify only income from plant sales, is
included when determining if the
nursery qualifies for insurance under
this definition. Income from sales of
other products is not included. For
example, assume the nursery derives 60
percent of its income from landscape
sales, 25 percent from wholesale plant
sales, and 15 percent from retail plant
sales. This nursery would be eligible for
insurance according to the revised
definition because 62.5 percent (25
percent wholesale plant sales/(25
percent wholesale plant sales + 15 retail
plant sales) = 25/40 = 62.5 percent
wholesale plant sales) of the gross
income derived from plant sales is from
the wholesale marketing of plants.
FCIC is revising the definition of
‘‘occurrence deductible’’ to incorporate
the revised definition of ‘‘occurrence
deductible’’ contained in the Special
Provisions. The revised ‘‘occurrence
deductible’’ definition addresses the
over-report factor and its application in
the calculation of the occurrence
deductible.
FCIC is adding the definition of ‘‘overreport factor,’’ which has been in the
Special Provisions since 2011. The
‘‘over-report factor’’ ensures indemnities
are not overpaid when the reported
basic unit values reported on the PIVR
are greater than the inventory value
immediately preceding the loss (FMVA).
The current provisions already include
an under-report factor to address
situations where the reported basic unit
values are less than FMVA. The overreport factor addresses the contrasting
situation.
FCIC is revising the definition of
‘‘practice’’ to specify the insurable
practices are listed in the actuarial
documents to be consistent with other
Crop Provisions. Although this change
would allow practices to be added or
removed through the actuarial
documents, FCIC currently does not
intend on adding any new practices or
removing any existing practices.
FCIC is adding a definition of
‘‘restock.’’ Restock is not a defined term,
but is used several times in the Crop
Provisions. It is defined in the Peak
Inventory Endorsement. Since the term
is used in both documents, the
definition should be moved to the Crop
Provisions.
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FCIC is revising the definition of
‘‘sales closing date’’ to add the phrase
‘‘of these Crop Provisions’’ at the end.
FCIC is revising the definition of
‘‘standard nursery containers.’’ A
variation of this definition is contained
in the Special Provisions, and is
incorporated into the Crop Provisions.
The definition specifies the minimum
insurable dimension for ‘‘standard
nursery containers.’’
FCIC is revising the definition of
‘‘survival factor’’ to improve readability.
FCIC is revising the definition of
‘‘under-report factor’’ to remove the
phrase ‘‘as adjusted by any previous
under-report factor,’’ since this phrase is
to be included in the definition of
‘‘loss’’ and is not necessary in this
definition. FCIC is also removing the
last sentence which refers to
Rehabilitation Endorsement payments.
The sentence is not necessary in the
definition of ‘‘under-report factor.’’
3. Section 2—FCIC is revising
paragraph (a) by subdividing the
paragraph into two subparagraphs and
adding provisions to allow basic units
by non-contiguous land for the field
grown practice only. Policyholders will
be required to keep records separate for
each unit if they elect basic units by
non-contiguous land. This change gives
the policyholders who insure their field
grown practice the choice of selecting
basic units either by plant type or by
non-contiguous land. Policyholders may
have several nursery locations
throughout a county. FCIC has received
requests to allow policyholders to
insure each location as a separate unit
because different locations have
inherently different risks. Therefore,
under the current policy language, one
location may suffer damage while other
locations may not. In the event of a loss,
all locations within the unit must be
assessed for damage, creating extra
burden on the policyholder and
insurance provider. Further, the loss in
one location may be offset by
production in other locations, making it
difficult for policyholders to be
compensated for the damage suffered at
a single location. Allowing separate
basic units by non-contiguous land for
the field grown practice will decrease
the burden on policyholders and
insurance providers while also allowing
policyholders greater flexibility to make
appropriate risk management decisions
for their nursery locations throughout a
county. Basic units by non-contiguous
land will not be available to the
container grown practice, unless
allowed by Special Provisions, in order
to prevent fraud, waste and abuse.
Containers are highly portable and may
be moved from one location to another
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based on the operations’ needs. With or
without intentions or motives, container
grown operations could increase the
chances of an indemnity when they
move inventory from one location (basic
unit) to another.
FCIC is revising redesignated
paragraph (a)(1) to remove the phrase
‘‘designated in section 2(b).’’ This
phrase refers to the list of insurable
plant types that are currently listed in
paragraph (b). However, FCIC is
removing the list of insurable plant
types from paragraph (b), so this phrase
is no longer applicable.
FCIC is revising paragraph (b) to
remove the list of insurable plant types.
Insurable types for other crops are listed
in the actuarial documents. For nursery,
the insurable plant types are listed in
the Crop Provisions and in the actuarial
documents. It is not necessary to list
them in both documents so FCIC is
removing the list from the Crop
Provisions.
4. Section 3—FCIC is revising
paragraph (a) to remove the reference to
the misreporting provisions in the Basic
Provisions. The misreporting provisions
have been removed from the Basic
Provisions so the reference in the Crop
Provisions is no longer valid.
FCIC is revising paragraph
(c)(1)(iv)(A) by removing the reference
to the Peak Inventory Endorsement and
replacing it with the Peak Inventory
Value Report since the policyholder
submits a Peak Inventory Value Report
rather than a Peak Inventory
Endorsement.
FCIC is revising paragraph
(c)(1)(iv)(B) by clarifying that a coverage
level must be selected if the new plant
is not categorized under a plant type
reported on the initial PIVR or Peak
Inventory Value Report, if applicable.
Previously the provision did not
reference the Peak Inventory Value
Report. The provisions in paragraph
(c)(1)(iv)(A) refer to the Peak Inventory
Value Report, so the addition of the
Peak Inventory Value Report in
paragraph (c)(1)(iv)(B) makes the
provisions in the two paragraphs
consistent.
FCIC is also revising paragraph (d) to
remove the references to the 2006 crop
year. The references are no longer
needed. By removing the references to
the 2006 crop year, paragraph (d)(2)(i) is
removed. As a result, paragraphs
(d)(2)(ii) and (iii) are redesignated as
paragraphs (d)(2)(i) and(ii), respectively.
FCIC is removing the provisions in
paragraph (e). These provisions are now
included in the revised definition of
‘‘amount of insurance,’’ and therefore,
are no longer necessary. FCIC is
redesignating paragraph (f) as (e).
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5. Section 6—FCIC is revising
paragraph (b) to clarify that a separate
PIVR must be submitted for each
insured practice. The word ‘‘separate’’ is
added to provide clarification. FCIC is
also revising paragraph (b) to state a
separate PIVR is required for each noncontiguous land unit within each
insured practice if the policyholder
selects basic units by non-contiguous
land.
FCIC is revising paragraph (b)(1) to
include a provision that addresses the
date by when policyholders will be
notified if their applications are rejected
because the required documents are
unacceptable. The current provisions
only state the policyholders will be
notified, but are silent on when they
will be notified.
FCIC is revising paragraph (b)(2) to
clarify insurance attaches on the 31st
day after all required documents are
received. The current provisions state
insurance attaches 30 days after the
documents are received. The Nursery
Underwriting Guide clarifies what is
meant by 30 days: The 30-day waiting
period does not include the date the
required documentation is submitted or
the date insurance attaches but the
provision is more appropriate in the
Crop Provisions. Now the provisions are
clear that insurance would not attach
until 30 full days have elapsed after the
documents were received. FCIC is
including the same clarification in the
Crop Provisions.
FCIC is revising paragraph (c)(1) to
include basic units by non-contiguous
land to be consistent with the other
changes to the policy allowing such
units.
FCIC is revising paragraph (c)(2) to
divide the paragraph into subparagraphs
to make the paragraph easier to read.
Newly-designated paragraph (c)(2)(i) is
revised by adding the phrase ‘‘or a
CIVR.’’ The current provisions state the
policyholder may be required to provide
a detailed plant inventory listing that
includes the name, the number, and the
size of each plant. Adding the phrase
mentioned above gives the insurance
provider an option of requesting a
detailed plant inventory listing or the
CIVR, which is a plant inventory list
created using the Nursery Inventory
Software. FCIC is also moving the last
sentence of paragraph (c)(2) to newly
designated paragraph (c)(2)(ii) because it
is more appropriately placed there than
at the end of newly-designated
paragraph (c)(2)(iii).
Newly-designated paragraph (c)(2)(iii)
contains the provisions currently in
paragraph (c)(2) regarding the
policyholders’ ability to obtain and
maintain nursery stock. FCIC is revising
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newly-designated paragraph (c)(2)(iii) to
replace the term ‘‘nursery stock’’ with
the term ‘‘nursery plants.’’ The term
‘‘stock plants’’ is a defined term,
excluded from insurance in section 8.
The term ‘‘nursery plants’’ is more
appropriate as this section refers to
insurable plants.
FCIC is revising paragraph (c)(3) to
improve readability and adding new
paragraphs (c)(3)(ii) and (c)(4) to
incorporate provisions currently
contained in the Special Provisions.
These provisions refer to the
consequences for failing to provide
adequate documentation depending on
whether the documentation is requested
before or after insurance attaches.
FCIC is moving paragraph (f) to a
newly-designated paragraph (c)(5).
Paragraph (c) contains PIVR reporting
requirements for policyholders. The
current paragraph (f) contains PIVR
reporting requirements for
policyholders who elect catastrophic
risk protection coverage. Since both
paragraphs contain PIVR reporting
requirements, moving paragraph (f) into
paragraph (c) will add clarity by
aligning related content. The
information contained in paragraph (f)
is more appropriate under paragraph (c),
which contains reporting requirements
for all policyholders. FCIC is also
omitting some of the provisions from
paragraph (f) because the provisions are
identical to the provisions contained in
paragraph (c)(3), which applies to
catastrophic risk protection coverage
and additional coverage. This reduces
redundancy and improves readability.
FCIC is revising paragraph (d) to
include the phrase ‘‘if applicable’’
following the phrase ‘‘Peak Inventory
Value Report.’’ This change is being
made because the provision is only
applicable to a Peak Inventory Value
Report if the Peak Endorsement is
elected.
FCIC is revising the introductory text
in paragraph (e) to replace the phrase
‘‘inventory value by basic unit’’ with the
phrase ‘‘basic unit value.’’ The two
phrases are synonymous, but ‘‘basic unit
value’’ is defined in section 1 so the
phrase ‘‘basic unit value’’ is more
appropriate.
FCIC is revising paragraph (e)(1). The
provisions require the price for each
plant and size listed on the PIVR must
meet certain criteria. However, the price
for each plant and size is not listed on
the PIVR; instead, the basic unit value
is listed on the PIVR. Therefore, the
provisions are revised to state the basic
unit value listed on the PIVR must meet
certain criteria. FCIC is also revising
paragraph (e)(1) to clarify that the
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inventory value for liners must also be
multiplied by the survival factor.
FCIC replaced the reference to the
Plant Price Schedule with the reference
to the EPLPPS in paragraph (e)(2).
With the removal of paragraph (f), as
mentioned above, paragraphs (g)
through (k) have been redesignated as (f)
through (j).
FCIC is revising redesignated
paragraph (f)(1) to state a revised PIVR
must meet the same requirements as the
original PIVR. Currently, redesignated
paragraph (f)(1) limits the requirements
for a revised PIVR to those requirements
for a PIVR listed in paragraph (c).
However, the requirements for a PIVR
listed in paragraph (e) also apply to a
revised PIVR.
FCIC is revising redesignated
paragraph (f)(2) to state why an
inspection will be conducted when a
revised PIVR is submitted. Currently,
the provisions only state that an
inspection will be performed. The
revised provisions state an inspection
will be performed to determine if
adequate and acceptable facilities exist
to accommodate the requested increased
inventory value.
FCIC is revising redesignated
paragraph (f)(2) to state an inspection
will be performed if a Peak Inventory
Endorsement is purchased and the
inventory reported on the Peak
Inventory Value Report is increased 50
percent or more from the previous total
of all basic unit values. Currently, an
inspection will be performed whenever
the total of all basic unit values
included on the PIVR increases by 50
percent or more due to a revised PIVR.
However, the policyholder can purchase
a Peak Inventory Endorsement to
increase the amount of insurance by 200
percent with no mandatory inspection
requirement. Adding language regarding
Peak Inventory Endorsements to this
section aligns the inspection
requirements for revised PIVRs and
Peak Inventory Value Reports.
FCIC is revising redesignated
paragraph (f)(3). The current provisions
state the insurance provider has the
discretion to perform an inspection
when the total of all basic unit values
on a revised PIVR is increased less than
50 percent. This paragraph is revised to
include language regarding Peak
Inventory Endorsements. This revision
aligns the inspection requirements for
revised PIVRs and Peak Inventory Value
Reports. The provisions are also revised
to make the wording in this paragraph
and in redesignated paragraph (f)(2)
consistent.
FCIC is revising redesignated
paragraph (f)(5). Current provisions state
any increase in reported basic unit
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values will be rejected if a loss occurs
before the increased value takes effect.
The provisions are revised to include
the following parenthetical: ‘‘(rejection
can occur at any time we discover such
loss occurred)’’ because in some cases
the loss will not be discovered until
after the increased value takes effect and
this will clarify that the increase can be
rejected at any time it is determined that
a loss occurred before the increased
value took effect. This language is
consistent with language in section 3
regarding rejecting any request for
changes in coverage level if a loss
occurs prior to the date insurance is
scheduled to attach for the new
coverage level.
FCIC is adding a new paragraph (f)(7).
Provisions in redesignated section 3(e)
state the amount of insurance may be
increased in accordance with
redesignated section 6(f) if the nursery
is restocked. Redesignated section 6(f)
contains provisions that allow the
inventory value, which is a key
component of the amount of insurance,
to be increased twice during the crop
year by submitting a revised PIVR, but
is not clear if increasing the amount of
insurance due to restocking the nursery
is counted as one of the two allowable
revisions. New paragraph (f)(7) clarifies
if the policyholder suffers an insured
loss on a basic unit and restocks the
nursery, then the policyholder is
allowed to increase the reported
inventory value for the basic unit one
additional time.
FCIC is revising redesignated
paragraph (g)(2). The provisions state
damaged plants will be removed from
the PIVR if they are not accepted.
However, plants are not listed on the
PIVR, instead the insurable value of
plants in each basic unit is listed on the
PIVR. Therefore, FCIC is revising the
provisions to state the insurable value of
the damaged plants will be removed
from the basic unit value reported on
the PIVR.
FCIC is revising redesignated
paragraph (i) by removing https://
www.rma.usda.gov/ and replacing it
with the phrase ‘‘RMA’s website.’’ The
hyperlink to RMA’s website is provided
in the Basic Provisions so it is not
necessary to include it in the Crop
Provisions. This is consistent with same
reference in the definition of ‘‘Eligible
Plant List and Plant Price Schedule
(EPLPPS)’’ in the Crop Provisions.
FCIC is revising redesignated
paragraph (i)(4) to include the phrase
‘‘(except printed discount schedules)’’
to be consistent with the new definition
of ‘‘catalog’’ in section 1.
FCIC is revising redesignated
paragraph (i)(5) by replacing the term
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‘‘scientific’’ with ‘‘botanical.’’ While
both terms are correct, ‘‘botanical’’ is
more appropriate because its meaning
infers a name that is assigned to plants.
6. Section 7—FCIC is revising
paragraph (a) to include provisions
specifying that the premium is
multiplied by .55 when the catastrophic
risk protection coverage is elected.
Currently, the provisions only address
how premium is calculated for
additional coverage. This provision is
added to prevent confusion.
FCIC is revising paragraph (c). This
paragraph states premium will be
charged for the entire month ‘‘if your
premium is prorated.’’ This clause is not
necessary since the remainder of this
provision adequately describes the
calculation of premium for a partial
month.
FCIC is revising paragraphs (d)(1) and
(2) to replace the date of ‘‘April 1’’ with
the phrase ‘‘the premium billing date
listed in the actuarial documents.’’
Because the premium billing date is
listed in the actuarial documents, it is
not necessary to list it in the Crop
Provisions. FCIC is also revising
paragraph (d)(2) by adding the phrase
‘‘or submission of your PIVR or catalog’’
to the end of the paragraph to maintain
consistency between the beginning of
the paragraph and the end of the
paragraph.
7. Section 8—FCIC is revising the
introductory text to clarify the insured
crop will be all insurable nursery plants
and plant types within each insured
practice. FCIC is also removing the
phrase, ‘‘contained on the Eligible Price
List, in which you have a share.’’
Although Eligible Price List should be
Eligible Plant List, the term is not
needed since paragraph (a) contains the
requirement that plants be shown on the
Eligible Plant List. The phrase, ‘‘in
which you have a share,’’ is revised and
moved to a new paragraph (a) to be
consistent with the format of other Crop
Provisions. Paragraphs (a) through (j) are
redesignated as paragraphs (b) through
(k).
FCIC is revising redesignated
paragraph (i) to state plants grown to be
sold with the root system removed are
not insurable. The current provision
states plants grown for sale as Christmas
trees are not insurable. The intent of this
provision is to exclude plants severed
from their root systems and then sold.
There are plants listed on the EPLPPS
grown for sale as Christmas trees with
the root system attached. One example
is the Norfolk Island Pine, which is
grown and sold in a container with the
root system attached. Currently, those
plants are not insurable because they are
‘‘grown for sale as Christmas trees.’’
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Therefore, the provision is reworded to
clarify all plants that are grown and sold
with the root system attached are
insurable.
8. Section 9—FCIC is removing all
references to the 2006 crop year. The
references are no longer needed.
Paragraph (a)(1)(i) has been deleted as a
result. Paragraphs (a)(1)(ii) and (iii) have
been redesignated as paragraphs (a)(1)(i)
and (ii), respectively.
FCIC is revising redesignated
paragraph (a)(1)(i) by stating the
insurance provider will notify the
policyholder in writing if the
application is rejected because the PIVR
or catalog is not acceptable. The current
provisions only state the insurance
provider will notify the policyholder in
writing if the inventory is not
acceptable. Section 6(b)(1) states
policyholders will be notified in writing
before the end of the 30-day waiting
period because the inspection
determines the policyholders do not
meet the insurability requirements or
the PIVR, catalog, or supporting
documentation (if requested by us) is
not acceptable. Similar language to this
already exists in redesignated paragraph
(a)(1)(i) but that language is revised to
be consistent with the wording of the
language in section 6(b)(1). Consistency
between the two sections reduces
confusion.
FCIC is also revising redesignated
paragraph (a)(1)(i). This paragraph states
coverage begins on June 1 if the
policyholder applies for coverage on or
before May 1. Following this provision
is a phrase that says, ‘‘30 days after your
crop insurance agent receives an
application signed by you.’’ The phrase
reiterates that coverage attaches on June
1, which is 30 days after May 1, and is
not needed.
FCIC is revising redesignated
paragraph (a)(1)(ii). This paragraph
currently states coverage will not begin
until the next crop year if the
policyholder applies for coverage after
May 1. To minimize confusion, FCIC is
revising this paragraph to state coverage
will not begin until the 31st day, which
occurs on or after the beginning of the
next crop year, after all such documents
have been received.
FCIC is adding a new paragraph (b)(5)
to state insurance ends when the crop
has been abandoned. Section 11 of the
Basic Provisions currently contains
information regarding abandonment of
the crop but section 9 of the Crop
Provisions states that section 11 of the
Basic Provisions does not apply.
Therefore, information regarding
abandonment of the crop is included in
the Crop Provisions.
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9. Section 10—FCIC is revising
paragraph (c)(3) to incorporate the leadin sentence from paragraph (c)(3)(i). The
lead-in sentence says, ‘‘you have
installed adequate cold protection
equipment or facilities.’’ This lead-in
sentence is not contained in paragraph
(c)(3)(ii), but should be. Therefore, for
consistency and simplification, the leadin sentence from paragraph (c)(3)(i) is
added to paragraph (c)(3), and removed
from paragraph (c)(3)(i), so that it
applies to both subparagraphs.
FCIC is revising paragraph (c)(3)(ii) by
adding the phrase ‘‘or facilities’’ after
the phrase ‘‘required cold protection
equipment.’’ This change is made to be
consistent with the language in
paragraph (c)(3).
FCIC is revising paragraph (c)(6) to be
consistent with the change to the
definition of ‘‘good nursery practices.’’
The phrase ‘‘In lieu of section 12(b) of
the Basic Provisions’’ in paragraph (c)(6)
is removed because good nursery
practices as defined in the Crop
Provisions will be in addition to good
farming practices as defined in the Basic
Provisions.
10. Section 11—FCIC is revising
paragraph (b). Current provisions state,
‘‘Failure to obtain our written consent as
required by section 11(a)(1) will result
in the denial of your claim.’’ The
provisions do not clearly state on what
portion of the policy the claim will be
denied. The revised provision clarifies
the intent of the provisions, which is to
deny the claim on an individual basic
unit basis. The provisions are also
revised so that they are written in plain
language.
11. Section 12—FCIC is incorporating
provisions throughout section 12
currently contained in the Special
Provisions regarding the over-report
factor, including revising paragraph (a),
revising paragraph (d), and adding a
new paragraph (h).
FCIC is revising paragraph (f)(1) to
change the lead-in clause from ‘‘For
other than catastrophic risk protection
coverage’’ to ‘‘For additional coverage.’’
This change improves readability and
provides consistency with the
terminology used throughout the Crop
Provisions.
FCIC is adding a new paragraph (i) to
address record-keeping for
policyholders who elect basic units by
non-contiguous land. In section 2(a),
FCIC added provisions to allow for basic
units by non-contiguous land, which
included the requirement for
policyholders to keep records separate
by unit. If policyholders elect basic
units by non-contiguous land, and a loss
occurs on only one unit, then
policyholders need to have records
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applicable to that unit in order for the
insurance company to properly work
the loss.
12. Section 14—FCIC is adding a new
paragraph (a) and redesignating
paragraphs (a) through (c) as (b) through
(d), respectively. The newly added
paragraph (a) is added to clarify that
written agreements are only allowed for
plants not listed on the EPLPPS.
FCIC is revising newly designated
paragraphs (b) and (d) by changing the
term ‘‘cancellation date’’ to ‘‘sales
closing date.’’ Current provisions state
written agreements must be requested
with the application for the initial crop
year or no later than the cancellation
date for subsequent crop years. The
provisions are changed so that the
deadline is the sales closing date, rather
than the cancellation date. If, according
to the current provisions, a policyholder
submits a request prior to the
cancellation date (for example, May
15th), the policyholder would have a
lapse in coverage from June 1st (the start
date of the crop year) until June 15th
because of the 30-day waiting period. By
changing the deadline to the sales
closing date (May 1st), the policyholder
does not risk having a lapse in coverage
because coverage will automatically
attach on June 1st, if the written
agreement is approved. Also in
redesignated paragraph (b), FCIC revised
the reference ‘‘section 14(c)’’ to state
‘‘section 14(d)’’ in order to
accommodate the redesignation of
paragraph (c) as (d).
13. Section 15—FCIC is revising the
Single Unit Example and the Peak
Inventory Endorsement Example to
improve readability. FCIC is also adding
a Single Unit Example regarding the
over-report factor, which is currently
contained in the Special Provisions.
Effective Date
This regulation modifies program
eligibility criteria along with several
elements of the Nursery Crop
Provisions. The intended effect of this
action is to clarify and simplify policy
provisions, allow basic units by noncontiguous land for the field grown
practice, and reduce the 50 percent
wholesale sales requirement to 40
percent. This regulation is related to a
crop insurance policy, which is a
contract between an approved insurance
provider and the insured. In order to
make the rule effective for the upcoming
crop year, RMA is publishing it as a
final rule. To accomplish this, RMA is
employing the contracts exemption at 5
U.S.C. 553(a)(2), which grants agencies
the opportunity publish rules related
contracts without the prior notice and
public comment period typically
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required in rulemaking. If RMA elected
not to use the contracts exemption,
farmers would be denied the added
flexibility this rule provides to the crop
insurance program for a full crop year.
Moreover, while RMA is using the
contracts exemption to make the
changes effective for the upcoming crop
year, the agency remains committed to
public participation in rulemaking and
will accept written comments on this
final rule. RMA will consider all
comments that are received and may
conduct additional rulemaking based on
the comments.
Executive Orders 12866, 13563, and
13771
Executive Order 12866, ‘‘Regulatory
Planning and Review,’’ and Executive
Order 13563, ‘‘Improving Regulation
and Regulatory Review,’’ direct agencies
to assess all costs and benefits of
available regulatory alternatives and, if
regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). Executive Order 13563
emphasized the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. The Office
of Management and Budget (OMB)
designated this rule as not significant
under Executive Order 12866,
‘‘Regulatory Planning and Review,’’ and
therefore, OMB has not reviewed this
rule. The rule is not subject to Executive
Order 13771, ‘‘Reducing Regulation and
Controlling Regulatory Costs.’’
Paperwork Reduction Act of 1995
Pursuant to the provisions of the
Paperwork Reduction Act of 1995 (44
U.S.C. chapter 35, subchapter I), 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.
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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.’’ Executive Order 13175
requires Federal agencies to consult and
coordinate with tribes on a governmentto-government basis on policies that
have tribal implications, including
regulations, legislative comments or
proposed legislation, and other policy
statements or actions that have
substantial direct effects on one or more
Indian tribes, on the relationship
between the Federal Government and
Indian tribes or on the distribution of
power and responsibilities between the
Federal Government and Indian tribes.
The Federal Crop Insurance
Corporation has assessed the impact of
this rule on Indian tribes and
determined that this rule does not, to
our knowledge, have tribal implications
that require tribal consultation under
E.O. 13175. If a Tribe requests
consultation, the Federal Crop
Insurance Corporation will work with
the Office of Tribal Relations to ensure
meaningful consultation is provided
where changes, additions and
modifications identified herein are not
expressly mandated by Congress.
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
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to submit a notice of loss and
production information to determine the
indemnity amount for 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 (FCIA) 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 a significant impact on a
substantial number of 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 2 CFR part 415, subpart C.
Executive Order 12988
This 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 must be
exhausted before any action against
FCIC for judicial review may be brought.
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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.
List of Subjects in 7 CFR Part 457
Crop insurance, Reporting and
recordkeeping requirements.
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Final Rule
Accordingly, as set forth in the
preamble, the Federal Crop Insurance
Corporation amends 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) and 1506(o).
2. Amend § 457.162 as follows:
a. In the introductory text by
removing ‘‘2006’’ and adding ‘‘2019’’ in
its place;
■ b. By removing the undesignated
paragraph immediately preceding
section 1;
■ c. In section 1:
■ i. By removing the definitions of
‘‘Act’’;
■ ii. By revising the definitions of
‘‘Amount of insurance’’ and ‘‘Basic unit
value’’;
■ iii. By adding in alphabetical order the
definition of ‘‘Catalog’’;
■ iv. By revising the definition of
‘‘Container grown’’;
■ v. By adding in alphabetical order the
definition of ‘‘Crop Inventory Valuation
Report’’;
■ vi. By revising the definition of ‘‘Crop
year deductible’’;
■ vii. By removing the definitions of
‘‘Deductible percentage’’ and ‘‘Eligible
Plant List’’;
■ viii. By adding in alphabetical order
the definition of ‘‘Eligible Plant List and
Plant Price Schedule (EPLPPS)’’;
■ ix. In the definition of ‘‘Fabric grow
bag’’ by removing the word ‘‘woody’’;
■ x. By removing the definition of
‘‘FCIC’’;
■ xi. By revising the definition of ‘‘Field
grown’’;
■ xii. By removing the definitions of
‘‘Field market value A’’ and ‘‘Field
market value B’’;
■ xiii. By adding in alphabetical order
the definitions of ‘‘Field market value A
(FMVA),’’ ‘‘Field market value B
(FMVB)’’;
■ xiv. In the definition of ‘‘Good nursery
practices’’ by removing the phrase ‘‘lieu
of’’ and adding the phrase ‘‘addition to’’
in its place;
■ xv. In the definition of ‘‘Irrigated
practice’’ by removing the phrase
‘‘Eligible Plant List’’ and adding
‘‘EPLPPS’’ in its place;
■ xvi. By revising the definitions of
‘‘Liners’’ and ‘‘Loss’’;
■ xvii. By adding in alphabetical order
the definition of ‘‘Lowest price’’;
■ xviii. By revising the definitions of
‘‘Marketable’’, ‘‘Nursery’’, and
‘‘Occurrence deductible’’;
■
■
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xix. By adding in alphabetical order
the definition of ‘‘Over-report factor’’;
■ xx. By removing the definition of
‘‘Plant Price Schedule’’;
■ xxi. By revising the definition of
‘‘Practice’’;
■ xxii. By adding in alphabetical order
the definition of ‘‘Restock’’;
■ xxiii. In the definition of ‘‘Sales
closing date’’ by adding the phrase ‘‘of
these Crop Provisions’’ immediately
after the phrase ‘‘sections 3(d) and 9(a)’’;
■ xxiv. By revising the definitions of
‘‘Standard nursery containers,’’
‘‘Survival factor,’’ and ‘‘Under-report
factor’’;
■ d. Revise section 2;
■ e. In section 3:
■ i. In paragraph (a) by removing the
phrase ‘‘, including the misreporting
provisions,’’;
■ ii. By revising paragraphs (c)(1)(iv)(A)
and (B) and (d)(2);
■ iii. By removing paragraph (e) and
redesignating paragraph (f) as (e); and
■ iv. In newly redesignated paragraph
(e) by removing the phrase ‘‘section
6(g)’’ and adding ‘‘section 6(f)’’ in its
place;
■ f. In section 6:
■ i. By revising paragraphs (b) and (c);
■ ii. In paragraph (d) by adding the
phrase ‘‘, if applicable,’’ immediately
following the phrase ‘‘Peak Inventory
Value Report’’;
■ iii. By revising paragraphs (e)
introductory text and (e)(1) and (2);
■ iv. By removing paragraph (f) and
redesignating paragraphs (g) through (k)
as (f) through (j), respectively;
■ v. By revising newly redesignated
paragraphs (f) and (g)(2) and (3);
■ vi. In newly redesignated paragraph
(i) by removing the phrase ‘‘Eligible
Plant List at https://www.rma.usda.gov/’’
and adding ‘‘EPLPPS on RMA’s
website’’ in its place; and
■ vii. By revising newly redesignated
paragraphs (j) introductory text and
(j)(4) and (5);
■ g. In section 7:
■ i. By revising paragraph (a);
■ ii. In paragraph (b)(1)(ii) by removing
the phrase ‘‘wholesale catalog or price
list’’ and adding the word ‘‘catalog’’ in
its place;
■ iii. In paragraph (c) by removing the
phrase ‘‘If your premium is prorated,
premium’’ and adding the word
‘‘Premium’’ in its place; and
■ iv. By revising paragraph (d);
■ h. In section 8:
■ i. By revising the introductory text;
■ ii. By redesignating paragraphs (a)
through (k) as (b) through (l),
respectively, and adding a new
paragraph (a);
■ iii. In newly redesignated paragraph
(b) by removing the phrase ‘‘Eligible
■
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Plant List’’ in the two places it appears
and adding ‘‘EPLPPS’’ in its place;
■ iv. In newly redesignated paragraph
(f) by removing the word ‘‘You’’ and
adding the word ‘‘you’’ in its place;
■ v. By revising newly redesignated
paragraph (i); and
■ vi. In newly redesignated paragraph
(k) by removing the word ‘‘Harvest’’ and
adding the word ‘‘harvest’’ in its place;
■ i. Revise section 9;
■ j. In section 10:
■ i. By revising paragraph (c)(3); and
■ ii. In paragraph (c)(6) by removing the
phrase ‘‘In lieu of section 12(b) of the
Basic Provisions, failure’’ and adding
the word ‘‘Failure’’ in its place;
■ k. In section 11 by revising paragraph
(b);
■ l. Revise section 12;
■ m. In section 14:
■ i. By redesignating paragraphs (a)
through (c) as (b) through (d),
respectively, and adding a new
paragraph (a);
■ ii. In newly redesignated paragraph (b)
by removing the word ‘‘cancellation’’
and adding the words ‘‘sales closing’’ in
its place and removing the phrase
‘‘section 14(c)’’ adding the phrase
‘‘section 14(d)’’ in its place; and
■ iii. In newly redesignated paragraph
(d) introductory text by removing the
word ‘‘cancellation’’ and adding the
words ‘‘sales closing’’ in its place; and
■ n. Revise section 15.
The revisions and additions reads as
follows:
§ 457.162 Nursery crop insurance
provisions.
*
*
*
*
*
1. Definitions
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*
*
*
*
*
Amount of insurance. For the
purposes of calculating premium, the
result of multiplying the basic unit
value by your selected coverage level
and by your share. For the purpose of
determining the amount of any
indemnity, the result of multiplying the
basic unit value by your selected
coverage level and by your share minus
any previous indemnities during the
crop year paid under these Crop
Provisions.
Basic unit value. The full inventory
value of all insurable plants in a basic
unit declared on your original or revised
PIVR and a Peak Inventory Value
Report, if applicable.
Catalog. Any document, including but
not limited to printed discount
schedules, issued by your nursery and
used to advise actual and/or potential
buyers of the amount you are charging
for purchases of each plant included in
the inventory.
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(1) Such documents may be issued by
season, by plant type, or other basis
consistent with your business practices.
(2) The documents can be in any
form, but must meet the minimum
standards contained in section 6(j),
except that the printed discount
schedules do not have to be provided to
customers.
Container grown. A nursery
production practice in which plants are
grown in standard nursery containers:
above the ground; placed in the ground;
or when placed in another standard
nursery container in the ground (i.e.,
pot-in-pot).
Crop Inventory Valuation Report
(CIVR). A plant inventory list created on
the Nursery Inventory Software for
assisting in establishing the insurable
nursery plant inventory value.
*
*
*
*
*
Crop year deductible. The basic unit
value multiplied by the deductible
minus the amount of any previouslyincurred deductible if you have reported
each loss to us in accordance with
section 11(a)(2). The crop year
deductible will be increased for any
increases in the inventory value on the
PIVR or through the purchase of a Peak
Inventory Endorsement, if in effect at
the time of loss.
Eligible Plant List and Plant Price
Schedule (EPLPPS). A component of the
actuarial documents that is published
by FCIC on RMA’s website and is also
available on compact disk from your
crop insurance agent. The EPLPPS
contains the following information:
(1) The botanical and common names
of insurable plants;
(2) The cold protection requirements
for container grown material and the
areas in which they apply;
(3) The hardiness zone in which field
grown material is insurable;
(4) The designated hardiness zones
available for each county;
(5) The plant type, storage key, and
hardiness zone classification for each
plant on the list; and
(6) A schedule of insurable plant
prices that establishes the highest value
accepted for insurance purposes unless
otherwise allowed by the policy or an
endorsement to the policy.
*
*
*
*
*
Field grown. A nursery production
practice in which plants are grown in
the ground. Plants grown in in-ground
fabric grow bags, plants that are balled
and burlapped, or plants grown in
containers that allow the plants to root
(excluding fibrous roots) into the ground
(for example, a container without a
bottom) are also considered field grown.
Field market value A (FMVA). Our
determination of the value of all
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insurable plants in the basic unit
immediately prior to the occurrence of
a loss event. This value will be
determined in accordance with the
requirements of section 6 of these Crop
Provisions. For liners, the total value of
undamaged liners is multiplied by the
survival factor to determine the value of
undamaged insurable plants.
Field market value B (FMVB). Our
determination of the value of all
damaged and undamaged insurable
plants in the basic unit following the
occurrence of a loss event. This value
will be determined in accordance with
the requirements of section 6 of these
Crop Provisions with an adjustment for
the amount of damage we determine the
plants have sustained.
*
*
*
*
*
Liners. Plants produced in standard
nursery containers that have a minimum
dimension greater than or equal to 5⁄8
inch and a maximum dimension of less
than 3 inches at the widest point of the
container or cell interior, have an
established root system, and meet all
other conditions specified in the Special
Provisions.
Loss. FMVA minus FMVB, as adjusted
by any under-report factor or over-report
factor. Payments made under the
Rehabilitation Endorsement are not
considered to be a loss.
Lowest price. The lesser of the
minimum price stated in your catalog or
the price contained in the EPLPPS for a
plant and its size. The minimum price
in your catalog is the lowest price at
which you will sell that plant and size
to any buyer, including all incremental
volume discounts or any other
discounting factor.
Marketable. A plant that can be sold
in a customary or secondary market for
a non-zero value.
*
*
*
*
*
Nursery. A business enterprise that
grows the nursery plants. At least 40
percent of its gross income derived from
plant sales must be from the wholesale
marketing of such plants.
Occurrence deductible. This
deductible allows a smaller deductible
than the crop year deductible to be used
when FMVA is more or less than the
reported basic unit value. The
occurrence deductible is the lesser of:
(1) The deductible multiplied by
FMVA and:
(i) In under-report situations,
multiplied by the under-report factor; or
(ii) In over-report situations,
multiplied by the sum of 1.000 plus the
over-report factor; or
(2) The crop year deductible.
Over-report factor. The factor that
adjusts your indemnity for over-
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reporting of inventory values. This
factor is used to determine indemnities
when the basic unit value minus the
total of all previous losses is more than
110 percent of FMVA for the same basic
unit plus the insured value of plants
listed on the verifiable sales records.
The over-report factor is calculated by:
(1) The basic unit value reported on
the PIVR, including any Peak Inventory
Value Report during the coverage term
of a Peak Inventory Endorsement, if
applicable, minus the total of all
previous losses;
(2) FMVA plus the insured value of
plants listed on the verifiable sales
records, minus 1.100; and
(3) Dividing the result of paragraph (1)
of this definition by the result of
paragraph (2) of this definition.
(4) If the result is greater than 0.000,
then the over-report factor applies.
*
*
*
*
*
Practice. A cultural method of
producing plants identified in the
actuarial documents.
Restock. Replacement of lost or
damaged plants that increases the value
of the insurable inventory to an amount
greater than the remaining amount of
insurance.
*
*
*
*
*
Standard nursery containers. Rigid
containers that have a minimum
dimension greater than or equal to 5⁄8
inch, unless otherwise provided by the
Special Provisions, at the widest point
of the container interior, above-ground
fabric grow bags, and other types of
containers specified in the Special
Provisions that are appropriate in size
and provide adequate drainage for the
plant. In-ground fabric grow bags, balled
and burlapped, and trays (flats) without
individual cells are not considered
standard nursery containers.
*
*
*
*
*
Survival factor. A value specified in
the Special Provisions that denotes the
expected percentage of liners that
normally survive the period from
insurance attachment to market.
Under-report factor. The factor that
adjusts your indemnity for underreporting of inventory values. The factor
is always used in determining
indemnities. For each basic unit, the
under-report factor is the lesser of:
(1) 1.000; or
(2) The basic unit value, including a
Peak Inventory Value Report during the
coverage term of a Peak Inventory
Endorsement, if applicable, minus the
total of all previous losses; and dividing
that result by FMVA.
*
*
*
*
*
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2. Unit Division
(a) If you elect additional coverage for
a practice, a basic unit, as defined in
section 1 of the Basic Provisions, may be
divided into additional basic units by:
(1) Each insurable plant type for
which a premium rate is provided by
the actuarial documents; or
(2) For the field grown practice only,
non-contiguous land. Basic units by
non-contiguous land for the container
grown practice may be allowed if
provided for in the Special Provisions.
(b) Only the plant types listed in the
actuarial documents are insurable.
3. Insurance Guarantees, Coverage
Levels, and Prices for Determining
Indemnities
*
*
*
*
*
(c) * * *
(1) * * *
(iv) * * *
(A) A new plant is added under a
revised PIVR or Peak Inventory Value
Report, if applicable; and
(B) The new plant is not categorized
under a plant type reported on the
initial PIVR or Peak Inventory Value
Report, if applicable.
*
*
*
*
*
(d) * * *
(2) For carryover policies:
(i) Changes must be requested on or
before the sales closing date; and
(ii) Unless we reject the proposed
increase because a loss occurs within 30
days of the date the request is made
(rejection can occur at any time we
discover such loss has occurred),
requested changes will take effect on the
date of the start of the crop year.
*
*
*
*
*
6. PIVR
*
*
*
*
*
(b) You must submit a separate PIVR
for each insured practice, as applicable,
and two copies of your most recent
catalog to us with your application and
on or before the sales closing date for
each crop year following the year of
application. If you elected basic units by
non-contiguous land, you must also
submit a separate PIVR for each noncontiguous land unit within the insured
practice, and keep all records separate
by unit.
(1) You will be notified in writing on
or before the end of the 30-day waiting
period if an application for insurance is
rejected because the inspection
determines you do not meet the
insurability requirements or the PIVR,
catalog, or supporting documentation (if
requested by us) is not acceptable.
(2) If you fail to provide a PIVR or
catalog on or before the sales closing
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date for any crop year, insurance will
not attach until the 31st day after all
such documents have been received by
your crop insurance agent and we will
not be liable for any losses that occur
before insurance has attached.
(c) The PIVR must include, by basic
unit, all growing locations, basic unit
value, coverage level selected, as
applicable, and your share.
(1) If you do not elect additional basic
units by plant type, or additional basic
units by non-contiguous land, or if you
elect catastrophic risk protection
coverage, the inventory values for each
plant type in the basic unit must be
separately reported on the PIVR and
totaled to determine the basic unit
value.
(2) At our option, you will be required
to provide documentation in support of
your PIVR, including, but not limited to
the following:
(i) A detailed plant inventory listing
that includes the name, the number, and
the size of each plant, or a CIVR;
(ii) Acceptable records of sales and
purchases of plants for the three
previous crop years in the amount of
detail we require. Acceptable records
must contain the name and telephone
number of the purchaser or seller, as
applicable, names of the plants, the
number of each plant sold or purchased,
and the sales price for each plant; and
(iii) Your ability to properly obtain
and maintain nursery plants.
(3) If you fail to provide the requested
documentation:
(i) Before insurance attaches, your
insurance will be denied for the crop
year for any basic units for which you
did not provide such documentation.
This provision does not apply to:
(A) Plant varieties you have not
previously grown; or
(B) New nurseries where an
inspection has determined you have the
ability to properly obtain and maintain
the nursery plants.
(ii) After insurance attaches, you will
still owe premium, but you will not
receive an indemnity for any basic units
for which you did not provide such
documentation. This provision does not
apply to:
(A) Plant varieties you have not
previously grown; or
(B) New nurseries where an
inspection has determined you have the
ability to properly obtain and maintain
the nursery plants.
(4) If you provide inadequate
documentation (i.e., documentation that
does not support the amount for which
you reported) after insurance attaches
for each basic unit, your insurance will
not be denied for the crop year.
However, your failure to provide
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adequate documentation may result in a
reduction in your indemnity for each
basic unit where inadequate
documentation was provided.
(5) For policies insured at the
catastrophic risk protection level, you
must report, on the PIVR for each
practice insured, your greatest plant
sales in any of the previous three years
and the actual inventory value on the
date insurance attaches. For each
applicable practice, the total of your
basic unit values cannot exceed 110
percent of the higher of your:
(i) Greatest amount of plant sales in
any of the previous three years; or
(ii) Actual inventory value on the date
insurance attaches.
*
*
*
*
*
(e) Your PIVR must reflect your
insurable basic unit value.
(1) The basic unit value you report on
your PIVR must be based on the lowest
price for each plant size included in the
inventory. The inventory value of
insured liners must be multiplied by the
survival factor.
(2) In no instance will we be liable for
plant values greater than those
contained in the EPLPPS.
*
*
*
*
*
(f) You may increase your reported
inventory value for each basic unit no
more than twice during the crop year by
submitting a revised PIVR prior to 30
days before the end of such crop year.
(1) Any requested increase must be
made in writing and meet all the
requirements of the original PIVR.
(2) We will perform an inspection of
the nursery to determine if adequate and
acceptable facilities exist to
accommodate the requested increased
inventory value when the total of all the
basic unit values contained on the
revised PIVR or Peak Inventory Value
Report, if applicable, is increased 50
percent or more from the previous total
of all the basic unit values on the PIVR,
and the increase is not due to restocking
subsequent to an insured loss.
(3) At our discretion, we may inspect
the nursery to determine if adequate and
acceptable facilities exist to
accommodate the requested increased
inventory value if an increase of less
than 50 percent is reported on the
revised PIVR or Peak Inventory Value
Report, if applicable.
(4) Your revised PIVR will be
considered accepted by us and
insurance will attach on any proposed
increase in inventory value 30 days after
your written request is received unless
we reject the proposed increase in your
plant inventory value in writing.
(5) We will reject any requested
increase if a loss occurs within 30 days
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of the date the request is made (rejection
can occur at any time we discover such
loss has occurred).
(6) You cannot revise your PIVR to
decrease the plant inventory value after
the start of the insurance period
specified in section 9.
(7) Notwithstanding section 6(f), if
you have suffered an insured loss on a
basic unit and have restocked the
nursery, then you are allowed to
increase your reported inventory value
for the basic unit one additional time by
submitting a revised PIVR.
(g) * * *
(2) The insurable value of such plants
will be removed from the applicable
basic unit value reported on the PIVR if
they are not accepted;
(3) The procedure for calculating the
insurable value of damaged plants that
are accepted for coverage is contained in
the Special Provisions.
*
*
*
*
*
(j) At a minimum, your catalog must
meet the following standards:
*
*
*
*
*
(4) Be provided to customers (except
printed discount schedules) and used in
the sale of your plants; and
(5) List each plant’s name (botanical
or common), plant or container size, and
wholesale price.
7. Premium
(a) In lieu of section 7(c) of the Basic
Provisions, we will determine your
premium by multiplying the amount of
insurance by the appropriate premium
rate, any premium adjustment factor,
and the monthly proration factor
contained in the actuarial documents. If
you elect catastrophic risk protection
coverage, this calculation must also be
multiplied by fifty-five percent.
*
*
*
*
*
(d) In lieu of section 7(a) of the Basic
Provisions:
(1) If you apply for insurance before
the premium billing date listed in the
actuarial documents, the annual
premium is earned and payable at the
time coverage begins. You will be billed
for the premium and administrative fee
not earlier than the premium billing
date listed in the actuarial documents.
(2) If you apply for insurance, or
submit your PIVR or catalog, on or after
the premium billing date listed in the
actuarial documents, the premium for
the partial crop year will be due and
must be paid at the time of application
or submission of your PIVR or catalog.
(3) Failure to pay the premium at the
time of application or when you submit
your PIVR or catalog will result in no
insurance and no indemnity being owed
for the crop year.
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4573
8. Insured Crop and Plants
In lieu of the provisions of sections 8
and 9 of the Basic Provisions, the
insured crop will be all nursery plants
in each practice you elect to insure, and:
(a) For which you have a share;
*
*
*
*
*
(i) Are grown and sold with the root
system attached;
*
*
*
*
*
9. Insurance Period
(a) In lieu of section 11 of the Basic
Provisions:
(1) For the year of application, if you
apply for coverage:
(i) On or before May 1st of the crop
year, coverage begins June 1st, unless
we notify you in writing that your
application is rejected because your
PIVR, catalog, or supporting
documentation (if requested by us) is
not acceptable;
(ii) After May 1st, coverage will not
begin until the 31st day after we receive
all acceptable documents; and
(2) For continuous policies, the
insurance period begins on each June
1st.
(b) Insurance ends at the earliest of:
(1) The date of final adjustment of a
loss when the total indemnities due
equal the amount of insurance;
(2) Removal of bare root nursery plant
material from the field;
(3) Removal of all other insured plant
material from the nursery;
(4) May 31st; or
(5) Abandonment of the crop on the
basic unit.
10. Causes of Loss
*
*
*
*
*
(c) * * *
(3) Cold temperatures, if cold
protection is required in the EPLPPS,
unless you have installed adequate cold
protection equipment or facilities and:
(i) There is a failure or breakdown of
the cold protection equipment or
facilities resulting from an insurable
cause of loss specified in section 10(a)
(the insured plants must be damaged by
cold temperatures and the damage must
occur within 72 hours of the failure of
such equipment or facilities unless we
establish that repair or replacement was
not possible between the time of failure
or breakdown and the time the
damaging temperatures occurred); or
(ii) The lowest temperature or its
duration exceeded the ability of the
required cold protection equipment or
facilities to keep the insured plants from
sustaining cold damage;
*
*
*
*
*
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11. Duties in the Event of Damage or
Loss
*
*
*
*
*
(b) If you fail to obtain our written
consent as required by section 11(a)(1),
your claim will be denied on each basic
unit for which written consent was not
obtained.
sradovich on DSK3GMQ082PROD with RULES2
12. Settlement of Claim
We will determine indemnities for
any unit as follows:
(a) Determine the under-report factor
or over-report factor, as applicable, for
the basic unit;
(b) Determine the occurrence
deductible;
(c) Subtract FMVB from FMVA;
(d) Multiply the result of 12(c) by the
under-report factor or one minus the
over-report factor (1.000 ¥ over-report
factor), as applicable;
(e) Subtract the occurrence deductible
from the result in section 12(d); and
(f) If the result of section 12(e) is
greater than zero, and subject to the
limit stated in section 12(g):
(1) For additional coverage, your
indemnity equals the result of section
12(e) multiplied by your share.
(2) For catastrophic risk protection
coverage, your indemnity equals the
result of section 12(e) multiplied by
fifty-five percent and by your share.
(g) The total of all indemnities for the
crop year will not exceed the amount of
insurance, including any peak amount
of insurance during the coverage term of
the Peak Inventory Endorsement, if this
endorsement is elected.
(h) In order to prevent your indemnity
from being reduced when you have
over-reported your basic unit value, the
following must apply: FMVA plus the
insured value of the plants listed on the
verifiable sales records must support,
within 10 percent, the basic unit value
reported on the PIVR, revised PIVR, and
Peak Inventory Value Report, if
applicable, minus the total of all
previous losses. Otherwise, any
indemnity for that basic unit will be
reduced by an over-report factor.
(i) If you elected basic units by noncontiguous land, in accordance with
section 3(a)(ii), and you do not keep
your records separate by unit, we will
combine all basic units for which
records were not kept separate.
*
*
*
*
*
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14. Written Agreements
(a) Written agreements may only be
requested for plants not listed on the
EPLPPS.
*
*
*
*
*
15. Examples
Single Unit Example for an UnderReport Situation
Assume you have a 100 percent share
and the basic unit value reported by you
is $100,000. Your coverage level is 75
percent. Your amount of insurance is
$75,000 ($100,000 × .75). At the time of
loss, we determine that the value of
your inventory immediately before the
loss (FMVA) is $125,000, and the value
after the loss (FMVB) is $80,000. Your
indemnity would be calculated as
follows:
Step (1): $100,000 ÷ $125,000 = .80 is
the under-report factor;
Step (2): The occurrence deductible is
the lesser of a) .25 × $125,000 × .80 =
$25,000; or b) $100,000 × (1.00 ¥ .75)
= $25,000;
Step (3): $125,000 ¥ $80,000 =
$45,000 loss;
Step (4): $45,000 × .80 = $36,000 loss
after the under-report factor is applied;
Step (5): $36,000 ¥ $25,000 = $11,000
loss after the occurrence deductible; and
Step (6): $11,000 × 1.000 share =
$11,000 indemnity payment.
Single Unit Example for an Over-Report
Situation
Assume you have a 100 percent share
and the basic unit value reported by you
is $125,000. Your coverage level is 75
percent. Your amount of insurance is
$93,750 ($125,000 × .75). At the time of
loss, we determine that the value of
your inventory immediately before the
loss (FMVA) is $100,000, and the value
after the loss (FMVB) is $50,000. You
provide verifiable sales records
containing an insured value of plants
equaling $10,000. Your indemnity
would be calculated as follows:
Step (1): ($125,000 ÷ ($100,000 +
$10,000)) ¥ 1.100 = .04 is the overreport factor;
Step (2): The occurrence deductible is
the lesser of: a) .25 × $100,000 × (1.000
+ .04) = $26,000; or b) .25 × $125,000
= $31,250;
Step (3): $100,000 ¥ $50,000 =
$50,000 loss;
Step (4): $50,000 × (1.000 ¥ .04) =
$48,000 loss after the over-report factor
is applied;
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Step (5): $48,000 ¥ $26,000 = $22,000
loss after the occurrence deductible; and
Step (6): $22,000 × 1.000 share =
$22,000 indemnity payment.
Peak Inventory Value Report Example
Assume you have a second loss on the
same basic unit as the first example.
Your amount of insurance has been
reduced by subtracting your previous
indemnity payment of $11,000 from
your amount of insurance ($75,000 ¥
$11,000 = $64,000). Your crop year
deductible has been reduced to zero by
the previous loss ($25,000 ¥ $36,000,
but not less than zero). You purchase a
Peak Inventory Endorsement and report
$60,000 in inventory. Your peak amount
of insurance is your reported inventory
times your coverage level ($60,000 × .75
= $45,000). The combined amount of
insurance for the coverage term of the
peak endorsement is $64,000 + $45,000
= $109,000. Your crop year deductible
is increased by $15,000 ($60,000 × .25).
At the time of loss, we determine that
the value of your inventory immediately
before the loss (FMVA) is $124,000, and
the value after the loss (FMVB) is
$58,000. Your indemnity would be
calculated as follows:
Step (1): ($160,000 ¥ $36,000)/
$124,000 = 1.00 is the under-report
factor;
Step (2): The occurrence deductible is
the lesser of: a) .25 × $60,000 × 1.00 =
$15,000; or b) $60,000 × .25 = $15,000;
Step (3): $124,000 ¥ $58,000 =
$66,000 loss;
Step (4): $66,000 × 1.00 = $66,000 loss
after the under-report factor is applied;
Step (5): $66,000 ¥ $15,000 = $51,000
loss after the occurrence deductible; and
Step (6): $51,000 × 1.000 share =
$51,000 indemnity payment.
Your peak amount of insurance is
reduced to zero. Your amount of
insurance is reduced by the amount the
indemnity exceeds the peak amount of
insurance. $64,000 ¥ ($51,000 ¥
$45,000) = $64,000 ¥ $6,000 = $58,000.
Signed in Washington, DC, on January 26,
2018.
Heather Manzano,
Acting Manager, Federal Crop Insurance
Corporation.
[FR Doc. 2018–01964 Filed 1–30–18; 8:45 am]
BILLING CODE 3410–08–P
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]]>Agencies
[Federal Register Volume 83, Number 21 (Wednesday, January 31, 2018)]
[Rules and Regulations]
[Pages 4564-4574]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-01964]
[[Page 4563]]
Vol. 83
Wednesday,
No. 21
January 31, 2018
Part II
Department of Agriculture
-----------------------------------------------------------------------
Federal Crop Insurance Corporation
-----------------------------------------------------------------------
7 CFR Part 457
Common Crop Insurance Regulations; Nursery Crop Insurance Provisions;
Final Rule
Federal Register / Vol. 83 , No. 21 / Wednesday, January 31, 2018 /
Rules and Regulations
[[Page 4564]]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
[Docket No. FCIC-17-0006]
RIN 0563-AC60
Common Crop Insurance Regulations; Nursery Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: The Federal Crop Insurance Corporation (FCIC) amends the
Common Crop Insurance Regulations, Nursery Crop Insurance Provisions.
The intended effect of this action is to clarify existing policy
provisions, increase risk management choices allowed by the policy
provisions, and expand availability to more producers. The changes will
be effective for the 2019 and succeeding crop years.
DATES: This final rule is effective January 31, 2018. However, FCIC
will accept written comments on this final rule until close of business
April 2, 2018. FCIC may consider the comments received and may conduct
additional rulemaking based on the comments.
ADDRESSES: FCIC prefers interested persons submit their comments
electronically through the Federal eRulemaking Portal. Interested
persons may submit comments, identified by Docket ID No. FCIC-17-0006,
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.
FCIC will post all comments received, including those received by
mail, without change to https://www.regulations.gov, including any
personal information provided. Once these comments are posted to this
website, the public can access all comments at its convenience from
this website. 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 interested persons are
submitting comments electronically through the Federal eRulemaking
Portal and want to attach a document, FCIC requests that the document
attachment be in a text-based format. If interested persons 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 the submissions. For questions regarding attaching
a document that is a scanned Adobe PDF file, please contact the Risk
Management Agency (RMA) Web Content Team at (816) 823-4694 or by email
at [email protected].
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
entity, such as an association, business, labor union, etc.).
Interested persons may review the complete User Notice and Privacy
Notice for Regulations.gov at https://www.regulations.gov/#!privacyNotice.
FOR FURTHER INFORMATION CONTACT: Tim Hoffmann, Product Management,
Product Administration and Standards Division, Risk Management Agency,
United States Department of Agriculture, Beacon Facility, Stop 0812,
Room 421, PO Box 419205, Kansas City, MO 64141-6205, telephone (816)
926-7730.
SUPPLEMENTARY INFORMATION:
Background
FCIC amends the Common Crop Insurance Regulations (7 CFR part 457)
by revising 7 CFR 457.162 Nursery Crop Insurance Provisions to be
effective for the 2019 and succeeding crop years.
The changes to 7 CFR 457.162 Nursery Crop Insurance Provisions are
as follows:
1. FCIC is removing the paragraph immediately preceding section 1,
which refers to the order of priority if a conflict exists among the
policy provisions. This same provision is contained in the Basic
Provisions. Therefore, the appearance here is duplicative and should be
removed from the Nursery Crop Insurance Provisions (Crop Provisions).
2. Section 1--FCIC is deleting the definition of ``Act.'' The
definition of ``Act'' is contained in the Basic Provisions. Therefore,
it is duplicative and should be removed from the Crop Provisions.
FCIC is revising the definition of ``amount of insurance'' to
incorporate language that is currently contained in section 3(e) that
reduces the amount of insurance if any claims have previously been paid
for the crop year. The language is more appropriately placed in the
definition.
FCIC is revising the definition of ``basic unit value.'' The term
is used repeatedly throughout the Crop Provisions, usually with a
phrase such as ``including any revision'' or ``including the Peak
Inventory Endorsement if elected.'' To simplify the provisions, this
information is incorporated into the definition of ``basic unit
value.''
FCIC is adding a definition of ``catalog,'' which is contained in
the Special Provisions. In addition, the phrases ``wholesale nursery
catalog or price list,'' ``nursery catalog or price list,'' and
``catalog or price list,'' are used interchangeably throughout the Crop
Provisions. To simplify the provisions, the term ``catalog'' now
replaces these phrases throughout.
FCIC is revising the definition of ``container grown'' to improve
readability and to clarify that ``container grown'' is a nursery
practice. FCIC is also revising the definition to change the term
``pot'' to ``standard nursery container.'' The term ``pot'' is the name
of a specific standard nursery container size and the term must change
to ``standard nursery container'' in this definition so that all
standard nursery containers are included in this definition.
FCIC is adding a definition of ``Crop Inventory Valuation Report
(CIVR)'' as a result of the inclusion of this term in newly-designated
paragraph (c)(ii) in section 6.
FCIC is revising the definition of ``crop year deductible'' to
simplify it. The definition uses the phrase ``sum of all plant
inventory values for each basic unit,'' which means the same thing as
``basic unit value.'' Therefore, the phrase is replaced with the phrase
``basic unit value'' to make it easier to read and understand. The
definition also states any loss under the Rehabilitation Endorsement is
not considered a loss. This phrase is not needed with the revised
definition of ``crop year deductible'' since payments under the
Rehabilitation Endorsement do not affect the deductible.
FCIC is deleting the definition of ``deductible percentage.'' The
term ``deductible'' is defined in the Basic Provisions. Therefore,
having the definition in the Crop Provisions is duplicative and
unnecessary.
FCIC is deleting the definitions of ``Eligible Plant List'' and
``Plant Price Schedule'' and replacing them with the definition of
``Eligible Plant List and Plant Price Schedule (EPLPPS).'' The
definitions of ``Eligible Plant List'' and the definition of ``Plant
Price Schedule'' refer to the same document. Combining the two
definitions will prevent
[[Page 4565]]
confusion and eliminate redundancy. Language is also added to the new
definition to clarify the EPLPPS is a part of the actuarial documents.
FCIC is also replacing the term ``Eligible Plant List'' with ``EPLPPS''
where it appears throughout the provisions.
FCIC is revising the definition of ``fabric grow bag'' to clarify
fabric grow bags may be used for growing any type of field grown
nursery plant, rather than restricting it to woody plants only. It is a
common growing practice for fabric grow bags to be used for growing
plants other than woody plants.
FCIC is deleting the definition of ``FCIC.'' Its meaning is
provided in the preamble to the Basic Provisions. Therefore, having the
definition in the Crop Provisions is unnecessary.
FCIC is revising the definition of ``field grown'' to clarify that
field grown is a nursery practice. FCIC is also removing the phrase
``without the use of an artificial root containment device'' because
the definition goes on to specify plants grown in in-ground fabric grow
bags, plants balled and burlapped, or plants in containers that allow
the plants to root into the ground are considered field grown. Plants
grown in in-ground fabric grow bags, plants balled and burlapped, and
plants in containers are all grown using artificial root containment
devices. Therefore, the phrase is being removed to prevent confusion
and redundancy.
FCIC is replacing the term ``field market value A'' and ``field
market value B'' with ``field market value A (FMVA)'' and ``field
market value B (FMVB),'' respectively. FCIC is also revising the
definitions of those terms to be concise and easy to read.
FCIC is revising the definition of ``good nursery practices.'' The
definition currently states, ``In lieu of the definition of good
farming practices in section 1 of the Basic Provisions. . .'' The
definition of good farming practices contained in the Basic Provisions
allows published information to be considered when making good farming
practice determinations. The phrase ``In lieu of'' replaces the
definition contained in the Basic Provisions when in fact the
definitions should be read together because published information
regarding good farming practices applies to nursery producers.
Therefore, ``in lieu of'' is changed to ``in addition to'' to make it
clear that published information can be considered when making good
farming practice determinations for nursery producers.
FCIC is revising the definition of ``liners'' to incorporate
language currently contained in the Special Provisions that specifies
the acceptable, insurable dimensions of liners.
FCIC is revising the definition of ``loss.'' The term is used in
the Crop Provisions and is usually preceded with the phrase ``as
adjusted by any previous under-report factor.'' A Special Provisions
statement uses the term ``loss'' preceded by the phrase ``as adjusted
by any previous under-report factor or over-report factor.'' That
Special Provisions statement, along with other Special Provisions
statements related to the over-report factor, is incorporated into the
Crop Provisions. The definition of ``loss'' is revised to include the
phrase ``as adjusted by any previous under-report factor or over-report
factor'' in order to eliminate the need to repeat that phrase
throughout the Crop Provisions.
FCIC is adding the definition of ``lowest price,'' which is
currently contained in the Special Provisions. The phrase ``the price
for each plant and size listed on your [Plant Inventory Value Report
(PIVR)] will be the lower of the [EPLPPS] price or the lowest wholesale
price in your nursery catalog or price list'' is used repeatedly
throughout the Crop Provisions. To simplify the provisions, the Crop
Provisions will substitute this phrase with the term ``lowest price.''
FCIC is revising the definition of ``marketable'' to provide
clarity. The definition uses the word ``it'' but does not clarify what
``it'' means. The definition also uses the term ``market'' but does not
indicate if the term refers to usual or customary market channels
employed by the nursery operation or a secondary market where lesser
values prevail. Therefore, the definition is being revised to clarify
``a plant that can be sold in a customary or secondary market for a
non-zero value.''
FCIC is revising the definition of ``nursery'' to change the
percentage from 50 percent to 40 percent. FCIC has received comments
that the 50 percent requirement is arbitrary and that FCIC may be
omitting market share by imposing that restriction. Since the nature of
prices is such that retail prices are higher than wholesale prices, the
retail share of total sales is weighted more heavily. In addition, the
industry has evolved since this limit was implemented with more
nurseries engaging in both wholesale and retail sales. By lowering the
requirement from 50 to 40 percent of sales, FCIC is allowing more
nurseries to be eligible for insurance while still recognizing the
intent of the program is to provide coverage to nurseries with a large
share of their production dedicated to wholesale sales. FCIC is also
revising the definition to clarify what ``gross income'' means. The
current definition states a nursery is ``a business enterprise that
grows the nursery plants and derives at least 50 percent of its gross
income from the wholesale marketing of such plants.'' The revised
language clarifies ``gross income'' by adding the phrase ``derived from
plant sales'' to clarify only income from plant sales, is included when
determining if the nursery qualifies for insurance under this
definition. Income from sales of other products is not included. For
example, assume the nursery derives 60 percent of its income from
landscape sales, 25 percent from wholesale plant sales, and 15 percent
from retail plant sales. This nursery would be eligible for insurance
according to the revised definition because 62.5 percent (25 percent
wholesale plant sales/(25 percent wholesale plant sales + 15 retail
plant sales) = 25/40 = 62.5 percent wholesale plant sales) of the gross
income derived from plant sales is from the wholesale marketing of
plants.
FCIC is revising the definition of ``occurrence deductible'' to
incorporate the revised definition of ``occurrence deductible''
contained in the Special Provisions. The revised ``occurrence
deductible'' definition addresses the over-report factor and its
application in the calculation of the occurrence deductible.
FCIC is adding the definition of ``over-report factor,'' which has
been in the Special Provisions since 2011. The ``over-report factor''
ensures indemnities are not overpaid when the reported basic unit
values reported on the PIVR are greater than the inventory value
immediately preceding the loss (FMVA). The current provisions already
include an under-report factor to address situations where the reported
basic unit values are less than FMVA. The over-report factor addresses
the contrasting situation.
FCIC is revising the definition of ``practice'' to specify the
insurable practices are listed in the actuarial documents to be
consistent with other Crop Provisions. Although this change would allow
practices to be added or removed through the actuarial documents, FCIC
currently does not intend on adding any new practices or removing any
existing practices.
FCIC is adding a definition of ``restock.'' Restock is not a
defined term, but is used several times in the Crop Provisions. It is
defined in the Peak Inventory Endorsement. Since the term is used in
both documents, the definition should be moved to the Crop Provisions.
[[Page 4566]]
FCIC is revising the definition of ``sales closing date'' to add
the phrase ``of these Crop Provisions'' at the end.
FCIC is revising the definition of ``standard nursery containers.''
A variation of this definition is contained in the Special Provisions,
and is incorporated into the Crop Provisions. The definition specifies
the minimum insurable dimension for ``standard nursery containers.''
FCIC is revising the definition of ``survival factor'' to improve
readability.
FCIC is revising the definition of ``under-report factor'' to
remove the phrase ``as adjusted by any previous under-report factor,''
since this phrase is to be included in the definition of ``loss'' and
is not necessary in this definition. FCIC is also removing the last
sentence which refers to Rehabilitation Endorsement payments. The
sentence is not necessary in the definition of ``under-report factor.''
3. Section 2--FCIC is revising paragraph (a) by subdividing the
paragraph into two subparagraphs and adding provisions to allow basic
units by non-contiguous land for the field grown practice only.
Policyholders will be required to keep records separate for each unit
if they elect basic units by non-contiguous land. This change gives the
policyholders who insure their field grown practice the choice of
selecting basic units either by plant type or by non-contiguous land.
Policyholders may have several nursery locations throughout a county.
FCIC has received requests to allow policyholders to insure each
location as a separate unit because different locations have inherently
different risks. Therefore, under the current policy language, one
location may suffer damage while other locations may not. In the event
of a loss, all locations within the unit must be assessed for damage,
creating extra burden on the policyholder and insurance provider.
Further, the loss in one location may be offset by production in other
locations, making it difficult for policyholders to be compensated for
the damage suffered at a single location. Allowing separate basic units
by non-contiguous land for the field grown practice will decrease the
burden on policyholders and insurance providers while also allowing
policyholders greater flexibility to make appropriate risk management
decisions for their nursery locations throughout a county. Basic units
by non-contiguous land will not be available to the container grown
practice, unless allowed by Special Provisions, in order to prevent
fraud, waste and abuse. Containers are highly portable and may be moved
from one location to another based on the operations' needs. With or
without intentions or motives, container grown operations could
increase the chances of an indemnity when they move inventory from one
location (basic unit) to another.
FCIC is revising redesignated paragraph (a)(1) to remove the phrase
``designated in section 2(b).'' This phrase refers to the list of
insurable plant types that are currently listed in paragraph (b).
However, FCIC is removing the list of insurable plant types from
paragraph (b), so this phrase is no longer applicable.
FCIC is revising paragraph (b) to remove the list of insurable
plant types. Insurable types for other crops are listed in the
actuarial documents. For nursery, the insurable plant types are listed
in the Crop Provisions and in the actuarial documents. It is not
necessary to list them in both documents so FCIC is removing the list
from the Crop Provisions.
4. Section 3--FCIC is revising paragraph (a) to remove the
reference to the misreporting provisions in the Basic Provisions. The
misreporting provisions have been removed from the Basic Provisions so
the reference in the Crop Provisions is no longer valid.
FCIC is revising paragraph (c)(1)(iv)(A) by removing the reference
to the Peak Inventory Endorsement and replacing it with the Peak
Inventory Value Report since the policyholder submits a Peak Inventory
Value Report rather than a Peak Inventory Endorsement.
FCIC is revising paragraph (c)(1)(iv)(B) by clarifying that a
coverage level must be selected if the new plant is not categorized
under a plant type reported on the initial PIVR or Peak Inventory Value
Report, if applicable. Previously the provision did not reference the
Peak Inventory Value Report. The provisions in paragraph (c)(1)(iv)(A)
refer to the Peak Inventory Value Report, so the addition of the Peak
Inventory Value Report in paragraph (c)(1)(iv)(B) makes the provisions
in the two paragraphs consistent.
FCIC is also revising paragraph (d) to remove the references to the
2006 crop year. The references are no longer needed. By removing the
references to the 2006 crop year, paragraph (d)(2)(i) is removed. As a
result, paragraphs (d)(2)(ii) and (iii) are redesignated as paragraphs
(d)(2)(i) and(ii), respectively.
FCIC is removing the provisions in paragraph (e). These provisions
are now included in the revised definition of ``amount of insurance,''
and therefore, are no longer necessary. FCIC is redesignating paragraph
(f) as (e).
5. Section 6--FCIC is revising paragraph (b) to clarify that a
separate PIVR must be submitted for each insured practice. The word
``separate'' is added to provide clarification. FCIC is also revising
paragraph (b) to state a separate PIVR is required for each non-
contiguous land unit within each insured practice if the policyholder
selects basic units by non-contiguous land.
FCIC is revising paragraph (b)(1) to include a provision that
addresses the date by when policyholders will be notified if their
applications are rejected because the required documents are
unacceptable. The current provisions only state the policyholders will
be notified, but are silent on when they will be notified.
FCIC is revising paragraph (b)(2) to clarify insurance attaches on
the 31st day after all required documents are received. The current
provisions state insurance attaches 30 days after the documents are
received. The Nursery Underwriting Guide clarifies what is meant by 30
days: The 30-day waiting period does not include the date the required
documentation is submitted or the date insurance attaches but the
provision is more appropriate in the Crop Provisions. Now the
provisions are clear that insurance would not attach until 30 full days
have elapsed after the documents were received. FCIC is including the
same clarification in the Crop Provisions.
FCIC is revising paragraph (c)(1) to include basic units by non-
contiguous land to be consistent with the other changes to the policy
allowing such units.
FCIC is revising paragraph (c)(2) to divide the paragraph into
subparagraphs to make the paragraph easier to read. Newly-designated
paragraph (c)(2)(i) is revised by adding the phrase ``or a CIVR.'' The
current provisions state the policyholder may be required to provide a
detailed plant inventory listing that includes the name, the number,
and the size of each plant. Adding the phrase mentioned above gives the
insurance provider an option of requesting a detailed plant inventory
listing or the CIVR, which is a plant inventory list created using the
Nursery Inventory Software. FCIC is also moving the last sentence of
paragraph (c)(2) to newly designated paragraph (c)(2)(ii) because it is
more appropriately placed there than at the end of newly-designated
paragraph (c)(2)(iii).
Newly-designated paragraph (c)(2)(iii) contains the provisions
currently in paragraph (c)(2) regarding the policyholders' ability to
obtain and maintain nursery stock. FCIC is revising
[[Page 4567]]
newly-designated paragraph (c)(2)(iii) to replace the term ``nursery
stock'' with the term ``nursery plants.'' The term ``stock plants'' is
a defined term, excluded from insurance in section 8. The term
``nursery plants'' is more appropriate as this section refers to
insurable plants.
FCIC is revising paragraph (c)(3) to improve readability and adding
new paragraphs (c)(3)(ii) and (c)(4) to incorporate provisions
currently contained in the Special Provisions. These provisions refer
to the consequences for failing to provide adequate documentation
depending on whether the documentation is requested before or after
insurance attaches.
FCIC is moving paragraph (f) to a newly-designated paragraph
(c)(5). Paragraph (c) contains PIVR reporting requirements for
policyholders. The current paragraph (f) contains PIVR reporting
requirements for policyholders who elect catastrophic risk protection
coverage. Since both paragraphs contain PIVR reporting requirements,
moving paragraph (f) into paragraph (c) will add clarity by aligning
related content. The information contained in paragraph (f) is more
appropriate under paragraph (c), which contains reporting requirements
for all policyholders. FCIC is also omitting some of the provisions
from paragraph (f) because the provisions are identical to the
provisions contained in paragraph (c)(3), which applies to catastrophic
risk protection coverage and additional coverage. This reduces
redundancy and improves readability.
FCIC is revising paragraph (d) to include the phrase ``if
applicable'' following the phrase ``Peak Inventory Value Report.'' This
change is being made because the provision is only applicable to a Peak
Inventory Value Report if the Peak Endorsement is elected.
FCIC is revising the introductory text in paragraph (e) to replace
the phrase ``inventory value by basic unit'' with the phrase ``basic
unit value.'' The two phrases are synonymous, but ``basic unit value''
is defined in section 1 so the phrase ``basic unit value'' is more
appropriate.
FCIC is revising paragraph (e)(1). The provisions require the price
for each plant and size listed on the PIVR must meet certain criteria.
However, the price for each plant and size is not listed on the PIVR;
instead, the basic unit value is listed on the PIVR. Therefore, the
provisions are revised to state the basic unit value listed on the PIVR
must meet certain criteria. FCIC is also revising paragraph (e)(1) to
clarify that the inventory value for liners must also be multiplied by
the survival factor.
FCIC replaced the reference to the Plant Price Schedule with the
reference to the EPLPPS in paragraph (e)(2).
With the removal of paragraph (f), as mentioned above, paragraphs
(g) through (k) have been redesignated as (f) through (j).
FCIC is revising redesignated paragraph (f)(1) to state a revised
PIVR must meet the same requirements as the original PIVR. Currently,
redesignated paragraph (f)(1) limits the requirements for a revised
PIVR to those requirements for a PIVR listed in paragraph (c). However,
the requirements for a PIVR listed in paragraph (e) also apply to a
revised PIVR.
FCIC is revising redesignated paragraph (f)(2) to state why an
inspection will be conducted when a revised PIVR is submitted.
Currently, the provisions only state that an inspection will be
performed. The revised provisions state an inspection will be performed
to determine if adequate and acceptable facilities exist to accommodate
the requested increased inventory value.
FCIC is revising redesignated paragraph (f)(2) to state an
inspection will be performed if a Peak Inventory Endorsement is
purchased and the inventory reported on the Peak Inventory Value Report
is increased 50 percent or more from the previous total of all basic
unit values. Currently, an inspection will be performed whenever the
total of all basic unit values included on the PIVR increases by 50
percent or more due to a revised PIVR. However, the policyholder can
purchase a Peak Inventory Endorsement to increase the amount of
insurance by 200 percent with no mandatory inspection requirement.
Adding language regarding Peak Inventory Endorsements to this section
aligns the inspection requirements for revised PIVRs and Peak Inventory
Value Reports.
FCIC is revising redesignated paragraph (f)(3). The current
provisions state the insurance provider has the discretion to perform
an inspection when the total of all basic unit values on a revised PIVR
is increased less than 50 percent. This paragraph is revised to include
language regarding Peak Inventory Endorsements. This revision aligns
the inspection requirements for revised PIVRs and Peak Inventory Value
Reports. The provisions are also revised to make the wording in this
paragraph and in redesignated paragraph (f)(2) consistent.
FCIC is revising redesignated paragraph (f)(5). Current provisions
state any increase in reported basic unit values will be rejected if a
loss occurs before the increased value takes effect. The provisions are
revised to include the following parenthetical: ``(rejection can occur
at any time we discover such loss occurred)'' because in some cases the
loss will not be discovered until after the increased value takes
effect and this will clarify that the increase can be rejected at any
time it is determined that a loss occurred before the increased value
took effect. This language is consistent with language in section 3
regarding rejecting any request for changes in coverage level if a loss
occurs prior to the date insurance is scheduled to attach for the new
coverage level.
FCIC is adding a new paragraph (f)(7). Provisions in redesignated
section 3(e) state the amount of insurance may be increased in
accordance with redesignated section 6(f) if the nursery is restocked.
Redesignated section 6(f) contains provisions that allow the inventory
value, which is a key component of the amount of insurance, to be
increased twice during the crop year by submitting a revised PIVR, but
is not clear if increasing the amount of insurance due to restocking
the nursery is counted as one of the two allowable revisions. New
paragraph (f)(7) clarifies if the policyholder suffers an insured loss
on a basic unit and restocks the nursery, then the policyholder is
allowed to increase the reported inventory value for the basic unit one
additional time.
FCIC is revising redesignated paragraph (g)(2). The provisions
state damaged plants will be removed from the PIVR if they are not
accepted. However, plants are not listed on the PIVR, instead the
insurable value of plants in each basic unit is listed on the PIVR.
Therefore, FCIC is revising the provisions to state the insurable value
of the damaged plants will be removed from the basic unit value
reported on the PIVR.
FCIC is revising redesignated paragraph (i) by removing https://www.rma.usda.gov/ and replacing it with the phrase ``RMA's website.''
The hyperlink to RMA's website is provided in the Basic Provisions so
it is not necessary to include it in the Crop Provisions. This is
consistent with same reference in the definition of ``Eligible Plant
List and Plant Price Schedule (EPLPPS)'' in the Crop Provisions.
FCIC is revising redesignated paragraph (i)(4) to include the
phrase ``(except printed discount schedules)'' to be consistent with
the new definition of ``catalog'' in section 1.
FCIC is revising redesignated paragraph (i)(5) by replacing the
term
[[Page 4568]]
``scientific'' with ``botanical.'' While both terms are correct,
``botanical'' is more appropriate because its meaning infers a name
that is assigned to plants.
6. Section 7--FCIC is revising paragraph (a) to include provisions
specifying that the premium is multiplied by .55 when the catastrophic
risk protection coverage is elected. Currently, the provisions only
address how premium is calculated for additional coverage. This
provision is added to prevent confusion.
FCIC is revising paragraph (c). This paragraph states premium will
be charged for the entire month ``if your premium is prorated.'' This
clause is not necessary since the remainder of this provision
adequately describes the calculation of premium for a partial month.
FCIC is revising paragraphs (d)(1) and (2) to replace the date of
``April 1'' with the phrase ``the premium billing date listed in the
actuarial documents.'' Because the premium billing date is listed in
the actuarial documents, it is not necessary to list it in the Crop
Provisions. FCIC is also revising paragraph (d)(2) by adding the phrase
``or submission of your PIVR or catalog'' to the end of the paragraph
to maintain consistency between the beginning of the paragraph and the
end of the paragraph.
7. Section 8--FCIC is revising the introductory text to clarify the
insured crop will be all insurable nursery plants and plant types
within each insured practice. FCIC is also removing the phrase,
``contained on the Eligible Price List, in which you have a share.''
Although Eligible Price List should be Eligible Plant List, the term is
not needed since paragraph (a) contains the requirement that plants be
shown on the Eligible Plant List. The phrase, ``in which you have a
share,'' is revised and moved to a new paragraph (a) to be consistent
with the format of other Crop Provisions. Paragraphs (a) through (j)
are redesignated as paragraphs (b) through (k).
FCIC is revising redesignated paragraph (i) to state plants grown
to be sold with the root system removed are not insurable. The current
provision states plants grown for sale as Christmas trees are not
insurable. The intent of this provision is to exclude plants severed
from their root systems and then sold. There are plants listed on the
EPLPPS grown for sale as Christmas trees with the root system attached.
One example is the Norfolk Island Pine, which is grown and sold in a
container with the root system attached. Currently, those plants are
not insurable because they are ``grown for sale as Christmas trees.''
Therefore, the provision is reworded to clarify all plants that are
grown and sold with the root system attached are insurable.
8. Section 9--FCIC is removing all references to the 2006 crop
year. The references are no longer needed. Paragraph (a)(1)(i) has been
deleted as a result. Paragraphs (a)(1)(ii) and (iii) have been
redesignated as paragraphs (a)(1)(i) and (ii), respectively.
FCIC is revising redesignated paragraph (a)(1)(i) by stating the
insurance provider will notify the policyholder in writing if the
application is rejected because the PIVR or catalog is not acceptable.
The current provisions only state the insurance provider will notify
the policyholder in writing if the inventory is not acceptable. Section
6(b)(1) states policyholders will be notified in writing before the end
of the 30-day waiting period because the inspection determines the
policyholders do not meet the insurability requirements or the PIVR,
catalog, or supporting documentation (if requested by us) is not
acceptable. Similar language to this already exists in redesignated
paragraph (a)(1)(i) but that language is revised to be consistent with
the wording of the language in section 6(b)(1). Consistency between the
two sections reduces confusion.
FCIC is also revising redesignated paragraph (a)(1)(i). This
paragraph states coverage begins on June 1 if the policyholder applies
for coverage on or before May 1. Following this provision is a phrase
that says, ``30 days after your crop insurance agent receives an
application signed by you.'' The phrase reiterates that coverage
attaches on June 1, which is 30 days after May 1, and is not needed.
FCIC is revising redesignated paragraph (a)(1)(ii). This paragraph
currently states coverage will not begin until the next crop year if
the policyholder applies for coverage after May 1. To minimize
confusion, FCIC is revising this paragraph to state coverage will not
begin until the 31st day, which occurs on or after the beginning of the
next crop year, after all such documents have been received.
FCIC is adding a new paragraph (b)(5) to state insurance ends when
the crop has been abandoned. Section 11 of the Basic Provisions
currently contains information regarding abandonment of the crop but
section 9 of the Crop Provisions states that section 11 of the Basic
Provisions does not apply. Therefore, information regarding abandonment
of the crop is included in the Crop Provisions.
9. Section 10--FCIC is revising paragraph (c)(3) to incorporate the
lead-in sentence from paragraph (c)(3)(i). The lead-in sentence says,
``you have installed adequate cold protection equipment or
facilities.'' This lead-in sentence is not contained in paragraph
(c)(3)(ii), but should be. Therefore, for consistency and
simplification, the lead-in sentence from paragraph (c)(3)(i) is added
to paragraph (c)(3), and removed from paragraph (c)(3)(i), so that it
applies to both subparagraphs.
FCIC is revising paragraph (c)(3)(ii) by adding the phrase ``or
facilities'' after the phrase ``required cold protection equipment.''
This change is made to be consistent with the language in paragraph
(c)(3).
FCIC is revising paragraph (c)(6) to be consistent with the change
to the definition of ``good nursery practices.'' The phrase ``In lieu
of section 12(b) of the Basic Provisions'' in paragraph (c)(6) is
removed because good nursery practices as defined in the Crop
Provisions will be in addition to good farming practices as defined in
the Basic Provisions.
10. Section 11--FCIC is revising paragraph (b). Current provisions
state, ``Failure to obtain our written consent as required by section
11(a)(1) will result in the denial of your claim.'' The provisions do
not clearly state on what portion of the policy the claim will be
denied. The revised provision clarifies the intent of the provisions,
which is to deny the claim on an individual basic unit basis. The
provisions are also revised so that they are written in plain language.
11. Section 12--FCIC is incorporating provisions throughout section
12 currently contained in the Special Provisions regarding the over-
report factor, including revising paragraph (a), revising paragraph
(d), and adding a new paragraph (h).
FCIC is revising paragraph (f)(1) to change the lead-in clause from
``For other than catastrophic risk protection coverage'' to ``For
additional coverage.'' This change improves readability and provides
consistency with the terminology used throughout the Crop Provisions.
FCIC is adding a new paragraph (i) to address record-keeping for
policyholders who elect basic units by non-contiguous land. In section
2(a), FCIC added provisions to allow for basic units by non-contiguous
land, which included the requirement for policyholders to keep records
separate by unit. If policyholders elect basic units by non-contiguous
land, and a loss occurs on only one unit, then policyholders need to
have records
[[Page 4569]]
applicable to that unit in order for the insurance company to properly
work the loss.
12. Section 14--FCIC is adding a new paragraph (a) and
redesignating paragraphs (a) through (c) as (b) through (d),
respectively. The newly added paragraph (a) is added to clarify that
written agreements are only allowed for plants not listed on the
EPLPPS.
FCIC is revising newly designated paragraphs (b) and (d) by
changing the term ``cancellation date'' to ``sales closing date.''
Current provisions state written agreements must be requested with the
application for the initial crop year or no later than the cancellation
date for subsequent crop years. The provisions are changed so that the
deadline is the sales closing date, rather than the cancellation date.
If, according to the current provisions, a policyholder submits a
request prior to the cancellation date (for example, May 15th), the
policyholder would have a lapse in coverage from June 1st (the start
date of the crop year) until June 15th because of the 30-day waiting
period. By changing the deadline to the sales closing date (May 1st),
the policyholder does not risk having a lapse in coverage because
coverage will automatically attach on June 1st, if the written
agreement is approved. Also in redesignated paragraph (b), FCIC revised
the reference ``section 14(c)'' to state ``section 14(d)'' in order to
accommodate the redesignation of paragraph (c) as (d).
13. Section 15--FCIC is revising the Single Unit Example and the
Peak Inventory Endorsement Example to improve readability. FCIC is also
adding a Single Unit Example regarding the over-report factor, which is
currently contained in the Special Provisions.
Effective Date
This regulation modifies program eligibility criteria along with
several elements of the Nursery Crop Provisions. The intended effect of
this action is to clarify and simplify policy provisions, allow basic
units by non-contiguous land for the field grown practice, and reduce
the 50 percent wholesale sales requirement to 40 percent. This
regulation is related to a crop insurance policy, which is a contract
between an approved insurance provider and the insured. In order to
make the rule effective for the upcoming crop year, RMA is publishing
it as a final rule. To accomplish this, RMA is employing the contracts
exemption at 5 U.S.C. 553(a)(2), which grants agencies the opportunity
publish rules related contracts without the prior notice and public
comment period typically required in rulemaking. If RMA elected not to
use the contracts exemption, farmers would be denied the added
flexibility this rule provides to the crop insurance program for a full
crop year. Moreover, while RMA is using the contracts exemption to make
the changes effective for the upcoming crop year, the agency remains
committed to public participation in rulemaking and will accept written
comments on this final rule. RMA will consider all comments that are
received and may conduct additional rulemaking based on the comments.
Executive Orders 12866, 13563, and 13771
Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review,''
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Executive Order 13563 emphasized the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility. The Office of
Management and Budget (OMB) designated this rule as not significant
under Executive Order 12866, ``Regulatory Planning and Review,'' and
therefore, OMB has not reviewed this rule. The rule is not subject to
Executive Order 13771, ``Reducing Regulation and Controlling Regulatory
Costs.''
Paperwork Reduction Act of 1995
Pursuant to the provisions of the Paperwork Reduction Act of 1995
(44 U.S.C. chapter 35, subchapter I), 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.'' Executive Order 13175 requires Federal agencies
to consult and coordinate with tribes on a government-to-government
basis on policies that have tribal implications, including regulations,
legislative comments or proposed legislation, and other policy
statements or actions that have substantial direct effects on one or
more Indian tribes, on the relationship between the Federal Government
and Indian tribes or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.
The Federal Crop Insurance Corporation has assessed the impact of
this rule on Indian tribes and determined that this rule does not, to
our knowledge, have tribal implications that require tribal
consultation under E.O. 13175. If a Tribe requests consultation, the
Federal Crop Insurance Corporation will work with the Office of Tribal
Relations to ensure meaningful consultation is provided where changes,
additions and modifications identified herein are not expressly
mandated by Congress.
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
[[Page 4570]]
to submit a notice of loss and production information to determine the
indemnity amount for 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 (FCIA) 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 a significant impact
on a substantial number of 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 2 CFR part 415, subpart C.
Executive Order 12988
This 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 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.
List of Subjects in 7 CFR Part 457
Crop insurance, Reporting and recordkeeping requirements.
Final Rule
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation amends 7 CFR part 457 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) and 1506(o).
0
2. Amend Sec. 457.162 as follows:
0
a. In the introductory text by removing ``2006'' and adding ``2019'' in
its place;
0
b. By removing the undesignated paragraph immediately preceding section
1;
0
c. In section 1:
0
i. By removing the definitions of ``Act'';
0
ii. By revising the definitions of ``Amount of insurance'' and ``Basic
unit value'';
0
iii. By adding in alphabetical order the definition of ``Catalog'';
0
iv. By revising the definition of ``Container grown'';
0
v. By adding in alphabetical order the definition of ``Crop Inventory
Valuation Report'';
0
vi. By revising the definition of ``Crop year deductible'';
0
vii. By removing the definitions of ``Deductible percentage'' and
``Eligible Plant List'';
0
viii. By adding in alphabetical order the definition of ``Eligible
Plant List and Plant Price Schedule (EPLPPS)'';
0
ix. In the definition of ``Fabric grow bag'' by removing the word
``woody'';
0
x. By removing the definition of ``FCIC'';
0
xi. By revising the definition of ``Field grown'';
0
xii. By removing the definitions of ``Field market value A'' and
``Field market value B'';
0
xiii. By adding in alphabetical order the definitions of ``Field market
value A (FMVA),'' ``Field market value B (FMVB)'';
0
xiv. In the definition of ``Good nursery practices'' by removing the
phrase ``lieu of'' and adding the phrase ``addition to'' in its place;
0
xv. In the definition of ``Irrigated practice'' by removing the phrase
``Eligible Plant List'' and adding ``EPLPPS'' in its place;
0
xvi. By revising the definitions of ``Liners'' and ``Loss'';
0
xvii. By adding in alphabetical order the definition of ``Lowest
price'';
0
xviii. By revising the definitions of ``Marketable'', ``Nursery'', and
``Occurrence deductible'';
0
xix. By adding in alphabetical order the definition of ``Over-report
factor'';
0
xx. By removing the definition of ``Plant Price Schedule'';
0
xxi. By revising the definition of ``Practice'';
0
xxii. By adding in alphabetical order the definition of ``Restock'';
0
xxiii. In the definition of ``Sales closing date'' by adding the phrase
``of these Crop Provisions'' immediately after the phrase ``sections
3(d) and 9(a)'';
0
xxiv. By revising the definitions of ``Standard nursery containers,''
``Survival factor,'' and ``Under-report factor'';
0
d. Revise section 2;
0
e. In section 3:
0
i. In paragraph (a) by removing the phrase ``, including the
misreporting provisions,'';
0
ii. By revising paragraphs (c)(1)(iv)(A) and (B) and (d)(2);
0
iii. By removing paragraph (e) and redesignating paragraph (f) as (e);
and
0
iv. In newly redesignated paragraph (e) by removing the phrase
``section 6(g)'' and adding ``section 6(f)'' in its place;
0
f. In section 6:
0
i. By revising paragraphs (b) and (c);
0
ii. In paragraph (d) by adding the phrase ``, if applicable,''
immediately following the phrase ``Peak Inventory Value Report'';
0
iii. By revising paragraphs (e) introductory text and (e)(1) and (2);
0
iv. By removing paragraph (f) and redesignating paragraphs (g) through
(k) as (f) through (j), respectively;
0
v. By revising newly redesignated paragraphs (f) and (g)(2) and (3);
0
vi. In newly redesignated paragraph (i) by removing the phrase
``Eligible Plant List at https://www.rma.usda.gov/'' and adding ``EPLPPS
on RMA's website'' in its place; and
0
vii. By revising newly redesignated paragraphs (j) introductory text
and (j)(4) and (5);
0
g. In section 7:
0
i. By revising paragraph (a);
0
ii. In paragraph (b)(1)(ii) by removing the phrase ``wholesale catalog
or price list'' and adding the word ``catalog'' in its place;
0
iii. In paragraph (c) by removing the phrase ``If your premium is
prorated, premium'' and adding the word ``Premium'' in its place; and
0
iv. By revising paragraph (d);
0
h. In section 8:
0
i. By revising the introductory text;
0
ii. By redesignating paragraphs (a) through (k) as (b) through (l),
respectively, and adding a new paragraph (a);
0
iii. In newly redesignated paragraph (b) by removing the phrase
``Eligible
[[Page 4571]]
Plant List'' in the two places it appears and adding ``EPLPPS'' in its
place;
0
iv. In newly redesignated paragraph (f) by removing the word ``You''
and adding the word ``you'' in its place;
0
v. By revising newly redesignated paragraph (i); and
0
vi. In newly redesignated paragraph (k) by removing the word
``Harvest'' and adding the word ``harvest'' in its place;
0
i. Revise section 9;
0
j. In section 10:
0
i. By revising paragraph (c)(3); and
0
ii. In paragraph (c)(6) by removing the phrase ``In lieu of section
12(b) of the Basic Provisions, failure'' and adding the word
``Failure'' in its place;
0
k. In section 11 by revising paragraph (b);
0
l. Revise section 12;
0
m. In section 14:
0
i. By redesignating paragraphs (a) through (c) as (b) through (d),
respectively, and adding a new paragraph (a);
0
ii. In newly redesignated paragraph (b) by removing the word
``cancellation'' and adding the words ``sales closing'' in its place
and removing the phrase ``section 14(c)'' adding the phrase ``section
14(d)'' in its place; and
0
iii. In newly redesignated paragraph (d) introductory text by removing
the word ``cancellation'' and adding the words ``sales closing'' in its
place; and
0
n. Revise section 15.
The revisions and additions reads as follows:
Sec. 457.162 Nursery crop insurance provisions.
* * * * *
1. Definitions
* * * * *
Amount of insurance. For the purposes of calculating premium, the
result of multiplying the basic unit value by your selected coverage
level and by your share. For the purpose of determining the amount of
any indemnity, the result of multiplying the basic unit value by your
selected coverage level and by your share minus any previous
indemnities during the crop year paid under these Crop Provisions.
Basic unit value. The full inventory value of all insurable plants
in a basic unit declared on your original or revised PIVR and a Peak
Inventory Value Report, if applicable.
Catalog. Any document, including but not limited to printed
discount schedules, issued by your nursery and used to advise actual
and/or potential buyers of the amount you are charging for purchases of
each plant included in the inventory.
(1) Such documents may be issued by season, by plant type, or other
basis consistent with your business practices.
(2) The documents can be in any form, but must meet the minimum
standards contained in section 6(j), except that the printed discount
schedules do not have to be provided to customers.
Container grown. A nursery production practice in which plants are
grown in standard nursery containers: above the ground; placed in the
ground; or when placed in another standard nursery container in the
ground (i.e., pot-in-pot).
Crop Inventory Valuation Report (CIVR). A plant inventory list
created on the Nursery Inventory Software for assisting in establishing
the insurable nursery plant inventory value.
* * * * *
Crop year deductible. The basic unit value multiplied by the
deductible minus the amount of any previously-incurred deductible if
you have reported each loss to us in accordance with section 11(a)(2).
The crop year deductible will be increased for any increases in the
inventory value on the PIVR or through the purchase of a Peak Inventory
Endorsement, if in effect at the time of loss.
Eligible Plant List and Plant Price Schedule (EPLPPS). A component
of the actuarial documents that is published by FCIC on RMA's website
and is also available on compact disk from your crop insurance agent.
The EPLPPS contains the following information:
(1) The botanical and common names of insurable plants;
(2) The cold protection requirements for container grown material
and the areas in which they apply;
(3) The hardiness zone in which field grown material is insurable;
(4) The designated hardiness zones available for each county;
(5) The plant type, storage key, and hardiness zone classification
for each plant on the list; and
(6) A schedule of insurable plant prices that establishes the
highest value accepted for insurance purposes unless otherwise allowed
by the policy or an endorsement to the policy.
* * * * *
Field grown. A nursery production practice in which plants are
grown in the ground. Plants grown in in-ground fabric grow bags, plants
that are balled and burlapped, or plants grown in containers that allow
the plants to root (excluding fibrous roots) into the ground (for
example, a container without a bottom) are also considered field grown.
Field market value A (FMVA). Our determination of the value of all
insurable plants in the basic unit immediately prior to the occurrence
of a loss event. This value will be determined in accordance with the
requirements of section 6 of these Crop Provisions. For liners, the
total value of undamaged liners is multiplied by the survival factor to
determine the value of undamaged insurable plants.
Field market value B (FMVB). Our determination of the value of all
damaged and undamaged insurable plants in the basic unit following the
occurrence of a loss event. This value will be determined in accordance
with the requirements of section 6 of these Crop Provisions with an
adjustment for the amount of damage we determine the plants have
sustained.
* * * * *
Liners. Plants produced in standard nursery containers that have a
minimum dimension greater than or equal to \5/8\ inch and a maximum
dimension of less than 3 inches at the widest point of the container or
cell interior, have an established root system, and meet all other
conditions specified in the Special Provisions.
Loss. FMVA minus FMVB, as adjusted by any under-report factor or
over-report factor. Payments made under the Rehabilitation Endorsement
are not considered to be a loss.
Lowest price. The lesser of the minimum price stated in your
catalog or the price contained in the EPLPPS for a plant and its size.
The minimum price in your catalog is the lowest price at which you will
sell that plant and size to any buyer, including all incremental volume
discounts or any other discounting factor.
Marketable. A plant that can be sold in a customary or secondary
market for a non-zero value.
* * * * *
Nursery. A business enterprise that grows the nursery plants. At
least 40 percent of its gross income derived from plant sales must be
from the wholesale marketing of such plants.
Occurrence deductible. This deductible allows a smaller deductible
than the crop year deductible to be used when FMVA is more or less than
the reported basic unit value. The occurrence deductible is the lesser
of:
(1) The deductible multiplied by FMVA and:
(i) In under-report situations, multiplied by the under-report
factor; or
(ii) In over-report situations, multiplied by the sum of 1.000 plus
the over-report factor; or
(2) The crop year deductible.
Over-report factor. The factor that adjusts your indemnity for
over-
[[Page 4572]]
reporting of inventory values. This factor is used to determine
indemnities when the basic unit value minus the total of all previous
losses is more than 110 percent of FMVA for the same basic unit plus
the insured value of plants listed on the verifiable sales records. The
over-report factor is calculated by:
(1) The basic unit value reported on the PIVR, including any Peak
Inventory Value Report during the coverage term of a Peak Inventory
Endorsement, if applicable, minus the total of all previous losses;
(2) FMVA plus the insured value of plants listed on the verifiable
sales records, minus 1.100; and
(3) Dividing the result of paragraph (1) of this definition by the
result of paragraph (2) of this definition.
(4) If the result is greater than 0.000, then the over-report
factor applies.
* * * * *
Practice. A cultural method of producing plants identified in the
actuarial documents.
Restock. Replacement of lost or damaged plants that increases the
value of the insurable inventory to an amount greater than the
remaining amount of insurance.
* * * * *
Standard nursery containers. Rigid containers that have a minimum
dimension greater than or equal to \5/8\ inch, unless otherwise
provided by the Special Provisions, at the widest point of the
container interior, above-ground fabric grow bags, and other types of
containers specified in the Special Provisions that are appropriate in
size and provide adequate drainage for the plant. In-ground fabric grow
bags, balled and burlapped, and trays (flats) without individual cells
are not considered standard nursery containers.
* * * * *
Survival factor. A value specified in the Special Provisions that
denotes the expected percentage of liners that normally survive the
period from insurance attachment to market.
Under-report factor. The factor that adjusts your indemnity for
under-reporting of inventory values. The factor is always used in
determining indemnities. For each basic unit, the under-report factor
is the lesser of:
(1) 1.000; or
(2) The basic unit value, including a Peak Inventory Value Report
during the coverage term of a Peak Inventory Endorsement, if
applicable, minus the total of all previous losses; and dividing that
result by FMVA.
* * * * *
2. Unit Division
(a) If you elect additional coverage for a practice, a basic unit,
as defined in section 1 of the Basic Provisions, may be divided into
additional basic units by:
(1) Each insurable plant type for which a premium rate is provided
by the actuarial documents; or
(2) For the field grown practice only, non-contiguous land. Basic
units by non-contiguous land for the container grown practice may be
allowed if provided for in the Special Provisions.
(b) Only the plant types listed in the actuarial documents are
insurable.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
* * * * *
(c) * * *
(1) * * *
(iv) * * *
(A) A new plant is added under a revised PIVR or Peak Inventory
Value Report, if applicable; and
(B) The new plant is not categorized under a plant type reported on
the initial PIVR or Peak Inventory Value Report, if applicable.
* * * * *
(d) * * *
(2) For carryover policies:
(i) Changes must be requested on or before the sales closing date;
and
(ii) Unless we reject the proposed increase because a loss occurs
within 30 days of the date the request is made (rejection can occur at
any time we discover such loss has occurred), requested changes will
take effect on the date of the start of the crop year.
* * * * *
6. PIVR
* * * * *
(b) You must submit a separate PIVR for each insured practice, as
applicable, and two copies of your most recent catalog to us with your
application and on or before the sales closing date for each crop year
following the year of application. If you elected basic units by non-
contiguous land, you must also submit a separate PIVR for each non-
contiguous land unit within the insured practice, and keep all records
separate by unit.
(1) You will be notified in writing on or before the end of the 30-
day waiting period if an application for insurance is rejected because
the inspection determines you do not meet the insurability requirements
or the PIVR, catalog, or supporting documentation (if requested by us)
is not acceptable.
(2) If you fail to provide a PIVR or catalog on or before the sales
closing date for any crop year, insurance will not attach until the
31st day after all such documents have been received by your crop
insurance agent and we will not be liable for any losses that occur
before insurance has attached.
(c) The PIVR must include, by basic unit, all growing locations,
basic unit value, coverage level selected, as applicable, and your
share.
(1) If you do not elect additional basic units by plant type, or
additional basic units by non-contiguous land, or if you elect
catastrophic risk protection coverage, the inventory values for each
plant type in the basic unit must be separately reported on the PIVR
and totaled to determine the basic unit value.
(2) At our option, you will be required to provide documentation in
support of your PIVR, including, but not limited to the following:
(i) A detailed plant inventory listing that includes the name, the
number, and the size of each plant, or a CIVR;
(ii) Acceptable records of sales and purchases of plants for the
three previous crop years in the amount of detail we require.
Acceptable records must contain the name and telephone number of the
purchaser or seller, as applicable, names of the plants, the number of
each plant sold or purchased, and the sales price for each plant; and
(iii) Your ability to properly obtain and maintain nursery plants.
(3) If you fail to provide the requested documentation:
(i) Before insurance attaches, your insurance will be denied for
the crop year for any basic units for which you did not provide such
documentation. This provision does not apply to:
(A) Plant varieties you have not previously grown; or
(B) New nurseries where an inspection has determined you have the
ability to properly obtain and maintain the nursery plants.
(ii) After insurance attaches, you will still owe premium, but you
will not receive an indemnity for any basic units for which you did not
provide such documentation. This provision does not apply to:
(A) Plant varieties you have not previously grown; or
(B) New nurseries where an inspection has determined you have the
ability to properly obtain and maintain the nursery plants.
(4) If you provide inadequate documentation (i.e., documentation
that does not support the amount for which you reported) after
insurance attaches for each basic unit, your insurance will not be
denied for the crop year. However, your failure to provide
[[Page 4573]]
adequate documentation may result in a reduction in your indemnity for
each basic unit where inadequate documentation was provided.
(5) For policies insured at the catastrophic risk protection level,
you must report, on the PIVR for each practice insured, your greatest
plant sales in any of the previous three years and the actual inventory
value on the date insurance attaches. For each applicable practice, the
total of your basic unit values cannot exceed 110 percent of the higher
of your:
(i) Greatest amount of plant sales in any of the previous three
years; or
(ii) Actual inventory value on the date insurance attaches.
* * * * *
(e) Your PIVR must reflect your insurable basic unit value.
(1) The basic unit value you report on your PIVR must be based on
the lowest price for each plant size included in the inventory. The
inventory value of insured liners must be multiplied by the survival
factor.
(2) In no instance will we be liable for plant values greater than
those contained in the EPLPPS.
* * * * *
(f) You may increase your reported inventory value for each basic
unit no more than twice during the crop year by submitting a revised
PIVR prior to 30 days before the end of such crop year.
(1) Any requested increase must be made in writing and meet all the
requirements of the original PIVR.
(2) We will perform an inspection of the nursery to determine if
adequate and acceptable facilities exist to accommodate the requested
increased inventory value when the total of all the basic unit values
contained on the revised PIVR or Peak Inventory Value Report, if
applicable, is increased 50 percent or more from the previous total of
all the basic unit values on the PIVR, and the increase is not due to
restocking subsequent to an insured loss.
(3) At our discretion, we may inspect the nursery to determine if
adequate and acceptable facilities exist to accommodate the requested
increased inventory value if an increase of less than 50 percent is
reported on the revised PIVR or Peak Inventory Value Report, if
applicable.
(4) Your revised PIVR will be considered accepted by us and
insurance will attach on any proposed increase in inventory value 30
days after your written request is received unless we reject the
proposed increase in your plant inventory value in writing.
(5) We will reject any requested increase if a loss occurs within
30 days of the date the request is made (rejection can occur at any
time we discover such loss has occurred).
(6) You cannot revise your PIVR to decrease the plant inventory
value after the start of the insurance period specified in section 9.
(7) Notwithstanding section 6(f), if you have suffered an insured
loss on a basic unit and have restocked the nursery, then you are
allowed to increase your reported inventory value for the basic unit
one additional time by submitting a revised PIVR.
(g) * * *
(2) The insurable value of such plants will be removed from the
applicable basic unit value reported on the PIVR if they are not
accepted;
(3) The procedure for calculating the insurable value of damaged
plants that are accepted for coverage is contained in the Special
Provisions.
* * * * *
(j) At a minimum, your catalog must meet the following standards:
* * * * *
(4) Be provided to customers (except printed discount schedules)
and used in the sale of your plants; and
(5) List each plant's name (botanical or common), plant or
container size, and wholesale price.
7. Premium
(a) In lieu of section 7(c) of the Basic Provisions, we will
determine your premium by multiplying the amount of insurance by the
appropriate premium rate, any premium adjustment factor, and the
monthly proration factor contained in the actuarial documents. If you
elect catastrophic risk protection coverage, this calculation must also
be multiplied by fifty-five percent.
* * * * *
(d) In lieu of section 7(a) of the Basic Provisions:
(1) If you apply for insurance before the premium billing date
listed in the actuarial documents, the annual premium is earned and
payable at the time coverage begins. You will be billed for the premium
and administrative fee not earlier than the premium billing date listed
in the actuarial documents.
(2) If you apply for insurance, or submit your PIVR or catalog, on
or after the premium billing date listed in the actuarial documents,
the premium for the partial crop year will be due and must be paid at
the time of application or submission of your PIVR or catalog.
(3) Failure to pay the premium at the time of application or when
you submit your PIVR or catalog will result in no insurance and no
indemnity being owed for the crop year.
8. Insured Crop and Plants
In lieu of the provisions of sections 8 and 9 of the Basic
Provisions, the insured crop will be all nursery plants in each
practice you elect to insure, and:
(a) For which you have a share;
* * * * *
(i) Are grown and sold with the root system attached;
* * * * *
9. Insurance Period
(a) In lieu of section 11 of the Basic Provisions:
(1) For the year of application, if you apply for coverage:
(i) On or before May 1st of the crop year, coverage begins June
1st, unless we notify you in writing that your application is rejected
because your PIVR, catalog, or supporting documentation (if requested
by us) is not acceptable;
(ii) After May 1st, coverage will not begin until the 31st day
after we receive all acceptable documents; and
(2) For continuous policies, the insurance period begins on each
June 1st.
(b) Insurance ends at the earliest of:
(1) The date of final adjustment of a loss when the total
indemnities due equal the amount of insurance;
(2) Removal of bare root nursery plant material from the field;
(3) Removal of all other insured plant material from the nursery;
(4) May 31st; or
(5) Abandonment of the crop on the basic unit.
10. Causes of Loss
* * * * *
(c) * * *
(3) Cold temperatures, if cold protection is required in the
EPLPPS, unless you have installed adequate cold protection equipment or
facilities and:
(i) There is a failure or breakdown of the cold protection
equipment or facilities resulting from an insurable cause of loss
specified in section 10(a) (the insured plants must be damaged by cold
temperatures and the damage must occur within 72 hours of the failure
of such equipment or facilities unless we establish that repair or
replacement was not possible between the time of failure or breakdown
and the time the damaging temperatures occurred); or
(ii) The lowest temperature or its duration exceeded the ability of
the required cold protection equipment or facilities to keep the
insured plants from sustaining cold damage;
* * * * *
[[Page 4574]]
11. Duties in the Event of Damage or Loss
* * * * *
(b) If you fail to obtain our written consent as required by
section 11(a)(1), your claim will be denied on each basic unit for
which written consent was not obtained.
12. Settlement of Claim
We will determine indemnities for any unit as follows:
(a) Determine the under-report factor or over-report factor, as
applicable, for the basic unit;
(b) Determine the occurrence deductible;
(c) Subtract FMVB from FMVA;
(d) Multiply the result of 12(c) by the under-report factor or one
minus the over-report factor (1.000 - over-report factor), as
applicable;
(e) Subtract the occurrence deductible from the result in section
12(d); and
(f) If the result of section 12(e) is greater than zero, and
subject to the limit stated in section 12(g):
(1) For additional coverage, your indemnity equals the result of
section 12(e) multiplied by your share.
(2) For catastrophic risk protection coverage, your indemnity
equals the result of section 12(e) multiplied by fifty-five percent and
by your share.
(g) The total of all indemnities for the crop year will not exceed
the amount of insurance, including any peak amount of insurance during
the coverage term of the Peak Inventory Endorsement, if this
endorsement is elected.
(h) In order to prevent your indemnity from being reduced when you
have over-reported your basic unit value, the following must apply:
FMVA plus the insured value of the plants listed on the verifiable
sales records must support, within 10 percent, the basic unit value
reported on the PIVR, revised PIVR, and Peak Inventory Value Report, if
applicable, minus the total of all previous losses. Otherwise, any
indemnity for that basic unit will be reduced by an over-report factor.
(i) If you elected basic units by non-contiguous land, in
accordance with section 3(a)(ii), and you do not keep your records
separate by unit, we will combine all basic units for which records
were not kept separate.
* * * * *
14. Written Agreements
(a) Written agreements may only be requested for plants not listed
on the EPLPPS.
* * * * *
15. Examples
Single Unit Example for an Under-Report Situation
Assume you have a 100 percent share and the basic unit value
reported by you is $100,000. Your coverage level is 75 percent. Your
amount of insurance is $75,000 ($100,000 x .75). At the time of loss,
we determine that the value of your inventory immediately before the
loss (FMVA) is $125,000, and the value after the loss (FMVB) is
$80,000. Your indemnity would be calculated as follows:
Step (1): $100,000 / $125,000 = .80 is the under-report factor;
Step (2): The occurrence deductible is the lesser of a) .25 x
$125,000 x .80 = $25,000; or b) $100,000 x (1.00 - .75) = $25,000;
Step (3): $125,000 - $80,000 = $45,000 loss;
Step (4): $45,000 x .80 = $36,000 loss after the under-report
factor is applied;
Step (5): $36,000 - $25,000 = $11,000 loss after the occurrence
deductible; and
Step (6): $11,000 x 1.000 share = $11,000 indemnity payment.
Single Unit Example for an Over-Report Situation
Assume you have a 100 percent share and the basic unit value
reported by you is $125,000. Your coverage level is 75 percent. Your
amount of insurance is $93,750 ($125,000 x .75). At the time of loss,
we determine that the value of your inventory immediately before the
loss (FMVA) is $100,000, and the value after the loss (FMVB) is
$50,000. You provide verifiable sales records containing an insured
value of plants equaling $10,000. Your indemnity would be calculated as
follows:
Step (1): ($125,000 / ($100,000 + $10,000)) - 1.100 = .04 is the
over-report factor;
Step (2): The occurrence deductible is the lesser of: a) .25 x
$100,000 x (1.000 + .04) = $26,000; or b) .25 x $125,000 = $31,250;
Step (3): $100,000 - $50,000 = $50,000 loss;
Step (4): $50,000 x (1.000 - .04) = $48,000 loss after the over-
report factor is applied;
Step (5): $48,000 - $26,000 = $22,000 loss after the occurrence
deductible; and
Step (6): $22,000 x 1.000 share = $22,000 indemnity payment.
Peak Inventory Value Report Example
Assume you have a second loss on the same basic unit as the first
example. Your amount of insurance has been reduced by subtracting your
previous indemnity payment of $11,000 from your amount of insurance
($75,000 - $11,000 = $64,000). Your crop year deductible has been
reduced to zero by the previous loss ($25,000 - $36,000, but not less
than zero). You purchase a Peak Inventory Endorsement and report
$60,000 in inventory. Your peak amount of insurance is your reported
inventory times your coverage level ($60,000 x .75 = $45,000). The
combined amount of insurance for the coverage term of the peak
endorsement is $64,000 + $45,000 = $109,000. Your crop year deductible
is increased by $15,000 ($60,000 x .25). At the time of loss, we
determine that the value of your inventory immediately before the loss
(FMVA) is $124,000, and the value after the loss (FMVB) is $58,000.
Your indemnity would be calculated as follows:
Step (1): ($160,000 - $36,000)/$124,000 = 1.00 is the under-report
factor;
Step (2): The occurrence deductible is the lesser of: a) .25 x
$60,000 x 1.00 = $15,000; or b) $60,000 x .25 = $15,000;
Step (3): $124,000 - $58,000 = $66,000 loss;
Step (4): $66,000 x 1.00 = $66,000 loss after the under-report
factor is applied;
Step (5): $66,000 - $15,000 = $51,000 loss after the occurrence
deductible; and
Step (6): $51,000 x 1.000 share = $51,000 indemnity payment.
Your peak amount of insurance is reduced to zero. Your amount of
insurance is reduced by the amount the indemnity exceeds the peak
amount of insurance. $64,000 - ($51,000 - $45,000) = $64,000 - $6,000 =
$58,000.
Signed in Washington, DC, on January 26, 2018.
Heather Manzano,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 2018-01964 Filed 1-30-18; 8:45 am]
BILLING CODE 3410-08-P
