Common Crop Insurance Regulations; Apple Crop Insurance Provisions, 71396-71406 [2021-26989]

Agencies

• DEPARTMENT OF AGRICULTURE
• Federal Crop Insurance Corporation

[Federal Register Volume 86, Number 239 (Thursday, December 16, 2021)]
[Proposed Rules]
[Pages 71396-71406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26989]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 86, No. 239 / Thursday, December 16, 2021 / 
Proposed Rules

[[Page 71396]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

[Docket ID FCIC-21-0007]
RIN 0563-AC75


Common Crop Insurance Regulations; Apple Crop Insurance 
Provisions

AGENCY: Federal Crop Insurance Corporation, U.S. Department of 
Agriculture (USDA).

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to 
amend the Common Crop Insurance Regulations, Apple Crop Insurance 
Provisions. The intended effect of this action is to provide policy 
changes to better meet the needs of the apple producers, to address 
program vulnerabilities that have caused increased loss ratios and 
rising premium costs, and to provide safeguards against fraud, waste, 
and abuse. The proposed changes will be effective for the 2023 and 
succeeding crop years.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business February 14, 2022 and will be 
considered when the rule is to be made final.

ADDRESSES: We invite you to submit comments on this rule. You may 
submit comments by either of the following methods, although FCIC 
prefers that you submit comments electronically through the Federal 
eRulemaking Portal:
     Federal eRulemaking Portal: Go to https://www.regulations.gov and search for Docket ID FCIC-21-0007. Follow the 
instructions for submitting comments.
     Mail: Director, Product Administration and Standards 
Division, Risk Management Agency (RMA), U.S. Department of Agriculture, 
P.O. Box 419205, Kansas City, MO 64133-6205. In your comment, specify 
docket ID FCIC-21-0007.
     Comments will be available for viewing online at 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Francie Tolle; telephone (816) 926-
7829; or email [email protected]. Persons with disabilities who 
require alternative means for communication should contact the USDA 
Target Center at (202) 720-2600 (voice).

SUPPLEMENTARY INFORMATION:

Background

    The FCIC serves America's agricultural producers through effective, 
market-based risk management tools to strengthen the economic stability 
of agricultural producers and rural communities. FCIC is committed to 
increasing the availability and effectiveness of Federal crop insurance 
as a risk management tool. Approved Insurance Providers (AIP) sell and 
service Federal crop insurance policies in every state through a 
public-private partnership. FCIC reinsures the AIPs who share the risks 
associated with catastrophic losses due to major weather events. FCIC's 
vision is to secure the future of agriculture by providing world class 
risk management tools to rural America.
    FCIC proposes to amend the Common Crop Insurance Regulations by 
revising 7 CFR 457.158 Apple Crop Insurance Provisions to be effective 
for the 2023 and succeeding crop years.
    The proposed changes to 7 CFR 457.158 Apple Crop Insurance 
Provisions are as follows:
    1. Throughout the Crop Provisions, FCIC proposes to include a 
reference to a type listed in the actuarial documents. The type name 
proposed is ``Fresh (Combined),'' which is synonymous with type ``Fresh 
111'' that policyholders are likely familiar with. FCIC proposes no 
changes to what is insurable under the type; the only proposed change 
is to the type name.
    2. Section 1--FCIC proposes to add a definition of ``Apple 
Supplemental Report.'' This term and its definition are added because 
of proposed changes in section 3 and section 6.
    FCIC proposes to add a definition of ``block.'' This term is used 
in the Crop Provisions but had not been defined.
    FCIC proposes to revise the definition of ``damaged apple 
production.'' The current definition defines damaged apple production 
in two parts: (1) With respect to production insured under the base 
policy, damaged apple production is fresh or processing apple 
production that fails to grade U.S. No. 1 Processing or better; and (2) 
with respect to production insured under the Fresh Fruit Quality 
Adjustment (Quality Option), damaged apple production is fresh apple 
production that fails to grade U.S. Fancy or better. FCIC is proposing 
changes in the Quality Option that require production that grades U.S. 
#1 Processing or better but less than U.S. Fancy to be included in 
production to count at a reduced value; therefore, the proposed 
revisions to the definition of ``damaged apple production'' had to be 
the same for apples insured under the base policy and apples insured 
under the Quality Option. Due to these proposed changes, the second 
part of the definition of ``damaged apple production,'' which refers to 
the Quality Option, is proposed to be removed.
    FCIC proposes to revise the definition of ``direct marketing.'' 
Direct marketing is the sale of the insured crop directly to consumers 
without the intervention of an intermediary such as a wholesaler, 
retailer, packer, processor, shipper, buyer, or broker. The definition 
is being revised to provide two clarifications. The first is to state 
that production records are controlled exclusively by the policyholder. 
The second is to add a sentence clarifying that only the portion of the 
crop sold directly to consumers will be considered direct marketed.
    FCIC proposes to revise the definition of ``fresh apple 
production.'' FCIC proposes to move paragraphs (1)(ii), (1)(iv) and (2) 
to Section 7, Insured Crop, because these paragraphs contain provisions 
that are more appropriately placed in that section. FCIC proposes to 
redesignate paragraph (1)(i) as (1), paragraph (1)(iii) as (3), revise 
redesignated paragraphs (1) and (3), and add a new paragraph (2). In 
redesignated paragraph (1), the definition contains a list of actions 
that the apples undergo to change them from their basic form. Even 
though ``dicing'' was not included in the list of actions, one could 
maintain that it was included in the catch-all ``etc.'' at the end of 
the list. However, FCIC received questions regarding whether ``dicing'' 
would be considered in this list of actions. To provide clarification, 
FCIC proposes to add the word ``dicing'' to the list of actions that 
would constitute changing apples from their basic form.

[[Page 71397]]

    In new paragraph (2), FCIC proposes to clarify that apples sold for 
the processing market are not considered fresh apple production unless 
they were sold with a grade of U.S. Fancy or better. For example, 
apples sold for the slicer market or the hard cider market that are not 
sold with a grade of U.S. Fancy or better. According to the definition, 
as here pertinent, ``fresh apple production'' is apples that do not 
undergo any change in basic form. Slicer apples are, just as their name 
suggests, apples that are sliced, which is a change in basic form. 
Sales of slicer apples are currently allowed to be considered fresh if 
the sales price was commensurate with fresh apple sales. However, 
slicers are a processed apple, meaning they undergo a change in basic 
form. Similarly, apples sold to the hard cider market undergo a change 
in basic form. A contracted study completed at FCIC's request 
determined that prices for slicers are more commensurate with 
processing apples. Currently, apples sold as slicers can be insured as 
Fresh, thus qualifying for optional coverage under the Quality Option; 
however, they can be sold without a grade of U.S. Fancy, thus never 
being included in production to count, and contributing to high loss 
ratios in some areas. Under this proposed change, records indicating 
apples were sold as slicers or for hard cider will not be used to 
determine whether production meets the one-in-four fresh requirement 
under the Quality Option unless the apples were sold with a grade of 
U.S. Fancy or better.
    FCIC also proposes to revise redesignated paragraph (3). The 
current provisions require producers to follow cultural practices 
generally in use for fresh apple acreage in the area in a manner 
generally recognized by agricultural experts. FCIC proposes to revise 
this paragraph to provide flexibility through Special Provisions to 
include additional cultural practices that may be required for acreage 
to meet the definition of ``fresh apple production.'' Examples of 
cultural practices may include specific spraying programs, hail 
netting, and wind machines or misting systems.
    FCIC proposes to add a definition of ``fresh fruit factor.'' This 
term and its definition are added because of proposed changes made in 
section 14.
    FCIC proposes to add a definition of ``graft.'' This term and its 
definition are added because of proposed changes made in section 7(f).
    FCIC proposes to add a definition of ``high density.'' This term 
and its definition are added because of a proposed change in section 6.
    FCIC proposes to add definitions of ``maximum additional value 
price'' and ``premium price election'' because of proposed changes made 
in section 3.
    FCIC proposes to revise the definition of ``processing apple 
production.'' FCIC proposes to add the word ``dicing'' to the list of 
actions that would constitute changing apples from their basic form, to 
be consistent with the addition in the definition of ``fresh apple 
production.'' FCIC also proposes to remove the phrase ``failing to meet 
the insurability requirements for fresh apple production'' and add 
similar language to it in Section 7, Insured Crop, because this 
language contains provisions that are more appropriately placed in that 
section.
    3. Section 2--FCIC proposes to designate the undesignated paragraph 
as paragraph (a) and revise the lead-in sentence in that paragraph to 
make two proposed changes. First, current provisions reference section 
34(b) of the Basic Provisions. However, section 34(c) of the Basic 
Provisions is a more appropriate reference. Second, the current 
provisions are not clear whether producers can have optional units in 
addition to or instead of the optional unit offerings under the Basic 
Provisions. FCIC proposes to clarify that optional units by non-
contiguous land or type may be established in addition to or instead of 
the optional unit provisions in the Basic Provisions.
    FCIC proposes to redesignate paragraphs (a) and (b) as paragraphs 
(a)(1) and (2). FCIC proposes to revise redesignated paragraph (a)(2). 
This section currently allows optional units by type ``as specified in 
the Special Provisions.'' Currently, every county where apples are 
insured includes a Special Provisions statement that allows optional 
units by type. The ``as specified in the Special Provisions'' provided 
the flexibility to permit optional units by type by county. Since 
optional units by type are permitted in every county, FCIC proposes to 
remove the phrase ``as specified in the Special Provisions'' and simply 
allow optional units by type through the Crop Provisions. FCIC also 
proposes to add the phrase ``unless otherwise provided in the Special 
Provisions'' to allow flexibility through Special Provisions to alter 
this language if it is determined optional units by type should not be 
allowed in certain counties.
    FCIC also proposes to add a new paragraph (b). Optional units by 
type are allowed in the Crop Provisions. However, the Crop Provisions 
do not address situations where more than one type is planted on the 
same acreage. For example, Granny Smith apples are often planted with 
other types of apples on the same acreage. In section 3, FCIC proposes 
to allow separate coverage levels and percentages of price elections by 
type. If optional units by type were not allowed in this situation, 
there would be a chance that AIPs would have to combine units resulting 
in different coverage levels and percentages of price elections within 
a single unit. To address this, FCIC proposes to add language that 
states the requirements of section 34 of the Basic Provisions that 
require the crop to be planted in a manner that results in a clear and 
discernable break in the planting pattern at the boundaries of each 
optional unit are not applicable for optional units by type. This will 
allow separate optional units for types that do not have a clear and 
discernable planting pattern, such as situations where more than one 
type is planted on the same acreage. However, it is important that 
producers maintain separate records of production for each optional 
unit in accordance with section 12(a) of the Apple Crop Provisions.
    4. Section 3--FCIC proposes to revise paragraph (a) to allow 
separate coverage levels by type. The current provisions allow 
producers who purchase additional coverage to only select separate 
coverage levels by fresh apple acreage and processing apple acreage. 
Fresh and processing are separate types; however, in addition to the 
general ``Fresh (Combined)'' type, there are three other fresh types 
listed in the actuarial documents that are classified as fresh: 
Varietal group A, varietal group B, and varietal group C. Under the 
current provisions, producers who insure apples under any of the fresh 
type must select the same coverage level for all of their fresh types. 
The proposed changes will provide producers the ability to select a 
separate coverage level for each fresh type and will allow producers, 
who purchase additional coverage, to structure their coverage based on 
the perceived risk associated with each fresh type. For example, the 
producer could select 90 percent coverage level for varietal group A 
and 70 percent coverage level for varietal group B.
    FCIC proposes to revise paragraph (b) to replace the ``Special 
Provisions'' reference in two places with a reference to the 
``actuarial documents'' because the provisions refer to the location of 
price elections. Actuarial documents are where the price elections are 
located, so actuarial documents are a more appropriate reference. FCIC 
also proposes to revise paragraph (b) to allow the price election 
percentage to differ among each type. The types may have

[[Page 71398]]

different characteristics with different risks. By allowing producers 
to select a different percentage of the price election by type, this 
change allows producers to manage premium costs based on their risks.
    FCIC also proposes to add a sentence in paragraph (b) clarifying 
that the percentage of the price election producers elect must be in 
accordance with FCIC approved procedures based on the level of coverage 
elected. For example, if a producer elected 75 percent coverage level, 
FCIC approved procedures allow producers to choose a percentage of 
price election between 67 and 100 percent. FCIC also proposes to add 
similar to language in paragraph (a) regarding assigning coverage 
levels to acreage that is added after the acreage reporting date. The 
language added in paragraph (b) is added for guidance on assigning 
price election percentages to acreage added after the acreage reporting 
date.
    FCIC proposes to redesignate paragraphs (c) and (d) as (d) and (e), 
respectively, and add a new paragraph (c) to provide producers an 
opportunity to insure at a price, called the premium price election, 
greater than the published price election for apples that are sold 
predominantly to a direct market or a premium processing market. Direct 
markets are often niche markets that demand higher prices than 
wholesale markets. FCIC's processing price is historically based upon 
standard juice processing prices and market prices for premium 
processing is not generally available to establish prices. The premium 
processing prices generally demand higher prices and include items such 
as baby food, which demands high-quality apples; or hard ciders, which 
have similar quality expectations as wineries. Additionally, slicers, 
which are apples often sold for school lunches, are a premium 
processing-priced apple and demand a price, on average, about 20 
percent higher than the standard processing prices. This change 
addresses producers' concerns regarding the higher prices they receive 
for apples sold via direct marketing and premium processing apples 
(such as slicers). The premium price election will be based on the 
producer's history reported on the Apple Supplemental Report and the 
maximum additional value price published in the actuarial documents and 
only offered in specific areas, via Special Provision statements, where 
premium processors or direct markets are prevalent. The premium price 
election will be greater than the published price election for type 
``Fresh (Combined)'' or type ``Processing,'' as applicable, and less 
than or equal to the maximum additional value price. In order to obtain 
the premium price election, producers must submit an Apple Supplemental 
Report to capture producers' production by fresh sales (including 
direct marketing sales) and processing sales. For data-gathering 
purposes, FCIC is also requiring producers to submit their revenue by 
fresh sales and processing sales to allow FCIC to maintain the program 
(e.g., transitional yields and price elections) in light of data 
collected and reported by third-party organizations becoming scarce.
    FCIC proposes to revise redesignated paragraph (e) to revise for 
clarity. The current provisions point back to specific situations that 
occur as outlined in redesignated paragraph (e). However, other 
situations, not addressed in redesignated paragraph (e), could occur 
that affect the yield used to establish the production guarantee. The 
current language limits the situations to those in redesignated 
paragraph (e). FCIC proposes to revise the language to refer to 
situations not necessarily specific to redesignated paragraph (e).
    FCIC proposes to revise redesignated paragraph (e)(1). This 
paragraph addresses situations where any circumstance that may reduce 
the producer's yields from previous levels occurs before the insurance 
period. It is silent on the timeframe in which the producer notifies 
the AIP. However, in redesignated paragraph (e)(2), the producer 
notifies the AIP by the production reporting date. For consistency 
between the two paragraphs, FCIC proposes to add the same language in 
redesignated paragraph (e)(2) to (e)(1) regarding notification by the 
production reporting date.
    FCIC also proposes to revise redesignated paragraph (e)(1) to 
remove the last sentence. This information is proposed to be 
incorporated into redesignated paragraph (e)(3).
    FCIC proposes to revise redesignated paragraphs (e)(2) and (e)(3). 
The first sentence in each paragraph requires the producer to notify 
the AIP if a situation occurred or may occur after the beginning of the 
insurance period. While redesignated paragraph (e)(2) refers to 
situations when the producer notifies the AIP by the production 
reporting date and redesignated paragraph (e)(3) refers to situations 
when the producer fails to notify the AIP by the production reporting 
date, both paragraphs expect the producer to be aware of circumstances 
that have not occurred yet. Therefore, FCIC proposes to remove the 
phrase ``or may occur'' in both paragraphs.
    FCIC also proposes to revise redesignated paragraph (e)(3) to add 
clarifying language in the last sentence. The last sentence says, ``We 
will reduce the yield used to establish your production guarantee for 
the subsequent crop year.'' To further clarify the purpose of the yield 
reduction in the subsequent crop year, FCIC proposes to add language 
that says the yield reduction will reflect any reduction in the 
productive capacity of the trees or the yield potential of the insured 
acreage. The proposed provisions in redesignated paragraph (e) 
consistent with provisions that FCIC recently added to other perennial 
crop policies, such as the Texas Citrus Fruit Crop Insurance 
Provisions. Adding these provisions is intended to remove potential 
ambiguity regarding the consequences when circumstances occur that will 
reduce the yield potential and to promote consistency with 
administration of similar policies.
    FCIC proposes to add a new paragraph (f) to inform producers that 
they can insure fresh acreage in aggregate under type ``Fresh 
(Combined)'' or by other fresh types identified in the actuarial 
documents (e.g., fresh varietal group types), not both. The type 
``Fresh (Combined)'' includes all fresh varieties insured under the 
apple policy and the price offered for type ``Fresh (Combined)'' is an 
average price of all insurable varieties. Fresh varieties can also be 
insured under other types, either in groupings of specific varietals 
identified in the Special Provisions or individual varieties, if 
available in the county's actuarial documents. The fresh varieties 
insured in groupings of specific varietals identified in the Special 
Provisions or as individual varieties are insured at prices that are 
reflective of those smaller groupings. Under this proposed change, 
producers may insure all of their fresh acreage together under an 
umbrella of Fresh for an average price or they can insure groupings of 
fresh varieties and receive better prices by those groupings, if they 
have records to substantiate the separate varieties.
    5. Section 6--FCIC proposes to designate the undesignated paragraph 
as paragraph (a). FCIC proposes to revise newly designated paragraph 
(a) to divide the paragraph into subparagraphs for ease of reading.
    In paragraph (a)(1), FCIC proposes to make two changes. First, the 
word ``option'' is removed following ``Optional Coverage for Fresh 
Fruit Quality Adjustment'' because the word is redundant. Second, the 
reference to

[[Page 71399]]

``these Crop Provisions'' is struck for consistency, whereby only 
references to external documents are named by title.
    FCIC proposes to revise newly designated paragraph (a)(2)(i). The 
current provisions state if producers designate fresh acreage on their 
acreage report then they are certifying that at least 50 percent of the 
production from fresh apple acreage in each unit was sold as fresh 
apples in one or more of the four most recent crop years in accordance 
with the definition of ``fresh apple production.''
    FCIC also proposes to revise newly-designated paragraph (a)(2)(i) 
to replace the reference to the definition of ``fresh apple 
production'' with the reference to section 7(d). FCIC is proposing to 
move some provisions in the definition of ``fresh apple production'' to 
section 7(d). Therefore, the reference in newly-designated paragraph 
(a)(2)(i) needs to be updated to reflect the new location of the 
provisions in section 7(d).
    FCIC proposes to add a new paragraph (a)(2)(ii) to require 
producers who wish to insure as fresh to submit an Apple Supplemental 
Report that captures their total production by all fresh types 
aggregated and the processing type. This supports the existing FCIC 
rule to insure as fresh, which is that at least one of the prior four 
years must have produced at least 50 percent of the fresh guarantee. 
This change also allows FCIC to collect data to assist in determining 
whether fresh production requirements under the policy should be 
adjusted in the future. Adjustments could include using the producer's 
historical percent sold as fresh, replace the one-in-four fresh 
requirement with the producer's historical percent of fresh sales, etc.
    FCIC also proposes to revise newly-designated paragraph (a) to add 
a new paragraph (a)(2)(iii) to complement the proposed language in new 
paragraph (a)(2)(ii) regarding the Apple Supplemental Report. The 
language proposed to be added in new paragraph (a)(2)(iii) notifies the 
producer that failure to submit the Apple Supplemental Report will 
result in no coverage under any fresh types. The producer will be able 
to have coverage under the processing type.
    FCIC also proposes to revise newly-designated paragraph (a) to add 
a new paragraph (a)(2)(iv) to an exception to the fresh apple 
production requirement mentioned in the above paragraph for high 
density acreage in the first year of insurability or in other 
circumstances as authorized by FCIC. First, high density acreage is 
established with the intent of producing fresh apples and FCIC 
recognizes that producers that invest in high density systems are 
intending to grow for fresh, but may not have the sales records in the 
first year of insurability to substantiate sales of fresh production. 
Therefore, it is not necessary to require high density acreage to meet 
the fresh apple production requirement for that first year of 
insurability. Second, allowing exceptions to the fresh apple production 
requirement in other circumstances as authorized by FCIC will provide 
FCIC to waive the fresh apple production requirement on a case-by-case 
basis if producers suffer exceptionally bad years (such as a year in 
which a natural disaster or other extreme weather occurs) which 
affected the end use of their apples that they intended to sell as 
fresh.
    FCIC proposes to add a new paragraph (b) to require producers to 
notify the AIP 15 days prior to harvest if they intend to sell 
production via direct marketing so AIPs can perform the necessary 
preharvest inspections. Producers who sell production via direct 
marketing are required to notify AIPs prior to harvest if there is a 
loss. Currently, there is no provision that requires those producers to 
notify AIPs prior to harvest if there is no loss. By adding this 
provision, it provides AIPs an opportunity to conduct a preharvest 
appraisal when there is no loss.
    6. Section 7--FCIC proposes to revise paragraph (d) to add language 
that was previously contained in the definition of ``fresh apple 
production.'' That language is better suited in this section than in 
the definition. Additionally, FCIC is proposing to revise the language 
that is moved to paragraph (d). The first proposed change is to replace 
a reference of ``unit'' with ``policy or unit, as applicable''. Over 
the years, FCIC received comments that producers find it difficult and 
inappropriate to maintain separate records by unit after the apple 
production has left the field. Producers pointed out that while they 
can and do maintain records of production by unit, once the apples are 
delivered to a warehouse, which is often a third party, for later sales 
and distribution it is virtually impossible and/or impractical to 
expect all the apples to be tracked by unit. In 2011, FCIC issued a 
Manager's Bulletin (MGR-11-015) that allowed producers who do not have 
separate records by unit of fresh apple production in one of the last 
four years but do have records of total fresh apple production may 
still be able to qualify for the fresh apple production requirement (at 
least 50 percent of the production from fresh apple acreage was sold as 
fresh apples in one or more of the four most recent crop years). MGR-
11-015 authorized AIPs to consider records of total production (e.g., 
by policy rather than by unit, if the producer could not provide 
records by unit) from one of the four most recent crop years that 
reflect fresh apple sales. FCIC is proposing to incorporate the 
guidance in MGR-11-015 by adding replacing ``unit'' with ``policy or 
unit, as applicable'' in paragraph (d).
    The second proposed change in paragraph (d) is to add after the 
phrase ``one or more of the four most recent crop years'' the phrase 
``preceding the previous crop year, unless authorized by FCIC.'' The 
proposed phrase aligns the one-in-four fresh requirement with the years 
proposed to be reported on the Apple Supplemental Report. Under the 
current provisions, the one-in-four fresh requirement is based on the 
four most recent crop years. For example, if the producer is purchasing 
crop insurance for the 2023 crop year, then the AIP would consider 
records from crop years 2019 through 2022. Under the proposed 
provisions, the Apple Supplemental Report is requesting information for 
the crop year prior to the previous crop year. Therefore, if the 
producer is purchasing crop insurance for the 2023 crop year, then 
producer would report information based on the 2021 crop year. The 
proposed changes in this paragraph are meant to align the information 
the producer reports on the Apple Supplemental Report with the last 
year in the one or more of the four most recent crop years.
    FCIC also proposes to move language in paragraph (d) regarding 
``processing apple production'' to a new paragraph (e) and add language 
that was previously contained in the definition of ``processing apple 
production.'' That language is better suited in this section than in 
the definitions.
    FCIC also proposes to add a new paragraph (f) to allow for a 
reduced premium in certain circumstances. Currently, producers must 
report their acreage by the January 15th acreage reporting date, which 
is before they typically conduct routine orchard maintenance. Producers 
typically graft or remove apple trees after the acreage reporting date 
and into March. Those trees that are grafted or removed will not 
produce apples that crop year. This provision allows producers to 
either report the acreage as uninsurable as of the acreage reporting 
date; or receive a reduced premium rate to better reflect the condition 
of their orchards if they submit a revised acreage report by March 31st 
that trees were grafted or removed.

[[Page 71400]]

    7. Section 9--FCIC proposes to revise paragraph (b)(3) to insert 
the following phrase at the beginning of the paragraph: ``Except as 
provided in section 28 of the Basic Provisions.'' Paragraph (b)(3) of 
the Apple Crop Provisions speaks only to relinquishing the producer's 
insurable share after the acreage reporting date and is silent on 
whether a transfer of coverage occurred to relinquish the insurable 
share. This paragraph implies that coverage ends on the date the 
producer relinquishes their share. It is not clear, as it is written, 
whether a transfer of coverage and right to indemnity was submitted and 
approved in accordance with section 28 of the Basic Provisions. To 
clarify that this provision only addresses situations when a transfer 
of coverage and right to indemnity is not approved, FCIC proposes to 
add the aforementioned phrase.
    8. Section 11--FCIC proposes to revise paragraph (b)(2). This 
paragraph outlines the requirements for producers when any portion of 
the crop is direct marketed. FCIC proposes to revise this paragraph to 
make a few changes. First, the phrase ``15 days'' is proposed to be 
clarified to ``15 calendar days.'' Next, FCIC proposes to require, in 
the event any portion of the crop will be direct marketed, the producer 
to notify the AIP at least 15 calendar days before the crop is 
harvested. The current provisions require notification prior to when 
the crop is sold. The proposed revision allows for the AIPs to conduct 
pre-harvest appraisals. Lastly, FCIC proposes to make other changes 
within the paragraph for clarification purposes.
    9. Section 12--FCIC also proposes to revise the claim example 
following paragraph (b).
    FCIC also proposes to redesignate paragraph (c)(2) as (c)(3) and 
add a new paragraph (c)(2) to state that when 65 percent or more of a 
unit's processing apple production is damaged apple production, the 
processing apple production from the unit will not be considered 
production to count provided none of the processing apple production 
from the unit will be sold. Based on engagement with apple producers, 
FCIC was made aware that at certain thresholds of damage, processors 
will not accept apple production. In response to this feedback, FCIC 
proposes to allow for adjustments to processing production that reflect 
current industry standards.
    10. Section 14--FCIC proposes to revise paragraph (b). The phrase 
``this option provides for quality adjustment of fresh apple 
production'' reads more clearly when the word ``coverage'' is added 
between the words ``provides'' and ``for.''
    FCIC proposes to revise paragraph (b)(1) to replace the phrase 
``Catastrophic Risk Protection (CAT)'' with the acronym ``CAT.'' The 
acronym is spelled out earlier in the Crop Provisions, so it is only 
necessary here to use the acronym.
    FCIC proposes to revise paragraph (b)(3). The current provisions 
say that apple acreage designated on your acreage report qualifies for 
the Optional Coverage for Fresh Apple Quality Adjustment. FCIC proposes 
to clarify that only fresh apple acreage qualifies for the option.
    FCIC proposes to revise paragraph (b)(5) to make several changes. 
Where available, the Quality Option allows apple producers the option 
to purchase additional coverage that compensates them when their fresh 
apple production fails to grade U.S. Fancy or better due to an 
insurable cause of loss. The revisions to this paragraph clarify that 
production to count for apples is the greater of sold production 
adjusted according to the sliding scale in paragraph (b)(5) or adjusted 
for quality in paragraph (b)(6), instead of basing the determination on 
the sliding scale alone.
    In paragraph (b)(5), FCIC also proposes to revise the sliding scale 
under which production to count is adjusted due to damage so that it is 
linear. A linear sliding scale is more appropriate than the current 
sliding scale which alternates from linear to non-linear back to linear 
again. The current sliding scale adjusts production in increments 
beginning at 21 percent damage and zeroing at 65 percent damage:
     The first increment is between 21 percent and 40 percent 
with a reduction of 2 percent for each full percent of damage in that 
range,
     The second 41 percent to 50 percent with a reduction of 3 
percent for each full percent of damage in that range, and
     The third 51 percent to 64 percent with a reduction of 2 
percent for each full percent of damage in excess of 50 percent.
    The current sliding scale is not regionally appropriate. As 
proposed, the revised sliding scale would begin adjustments at 15 
percent and reduce production to count by two percent for each full 
percent more than 15 percent. FCIC received producer feedback that the 
sliding scale should start at a lesser threshold of damage (15 percent 
rather than 20 percent). The only difference between the current 
sliding scale and the proposed one is when the range of production not 
grading U.S. Fancy or better is greater than 15 percent but less than 
50 percent. After 50 percent, the current sliding scale and the 
proposed sliding scales are identical.
    In paragraph (b)(6), the following proposed changes are necessary 
to address concerns regarding the high loss ratios and rising premium 
costs under the Quality Option. The high loss ratios are a result of 
producers' inability to maintain records to meet the requirements to 
qualify for the Quality Option and to settle claims, and climate and 
growing conditions in certain regions may limit the ability of 
producers in these areas to consistently produce U.S. Fancy grade.
     Production sold with a grade of U.S. Fancy or better will 
continue to be counted on a one-for-one basis.
     Production that grades U.S. #1 Processing or better but 
less than U.S. Fancy will be included in production to count at a 
reduced value by multiplying a fresh fruit factor to the sold 
marketable production as follows:
    [cir] The fresh fruit factor applies to production sold:
    [ssquf] As fresh without a grade that exceeds what appraised as 
U.S. Fancy or better (prior to adjustments under the sliding scale);
    [ssquf] Any production sold for fresh without a grade will be 
counted on a one-to-one basis not to exceed the production that 
appraised as U.S. Fancy or better (prior to adjustments under the 
sliding scale).
    [ssquf] Any production sold for a grade below U.S. Fancy;
    [ssquf] Any production sold as processing, excluding any production 
that grades less than U.S. #1 Processing.
    [cir] For the basic coverage, all apples that are U.S. #1 
Processing or better are included in production to count, without any 
further discounts for quality adjustment. Currently, for the Quality 
Option, all apples that are sold as U.S. Fancy or better are included 
as production to count. Not all sales indicate a grading standard and 
therefore a producer could claim that no fresh apples were sold as U.S. 
Fancy or better, even if the apples were sold as fresh. Therefore, a 
producer could ``double-dip'' on indemnity and sales from these apples. 
Adjustments to production under the Quality Option are not reflected in 
the producer's actual production history (APH); therefore, the 
guarantee does not accurately reflect expected production of fresh 
apples. The intent of the fresh fruit factor is to capture the reduced 
value of apples sold for other than U.S. Fancy or better so that the 
APH will more accurately reflect the producer's guarantee.

[[Page 71401]]

    [cir] The fresh fruit factor will not be applied to any production 
that grades less than U.S. #1 Processing or better.
    [cir] The fresh fruit factor will be published in the actuarial 
documents to account for regional differences.
    FCIC proposes to revise paragraph (c). The current provisions state 
any production not graded or appraised prior to the earlier of the time 
apples are placed in storage or the date the apples are delivered to a 
packer, processor, or other handler will not be considered damaged 
apple production. According to the current definition of ``damaged 
apple production,'' damaged apple production under the Quality Option 
is anything that fails to grade U.S. Fancy or better. In other words, 
the aforementioned production will be considered U.S. Fancy or better. 
As stated earlier, FCIC is proposing to remove the portion of the 
definition that refers to the Quality Option. Therefore, paragraph (c) 
needs to be revised so that the provision has the same meaning as 
before: Any production not graded or appraised prior to the earlier of 
the time apples are placed in storage or the date the apples are 
delivered will be considered U.S. Fancy or better.
    FCIC proposes to add a new paragraph (e) to address written 
agreements. The Quality Option is contained within the Crop Provisions, 
which confuses whether written agreements should apply to the Quality 
Option when written agreements are written on the Crop Provisions. The 
proposed language allows written agreements to apply to the Quality 
Option with three requirements: (1) The option may apply to a written 
agreement for apples when this option is contained in the actuarial 
documents for the county and crop; (2) the option may apply to apples 
in a county which does not have actuarial documents for the crop when a 
written agreement specifically allows this option; and (3) FCIC has the 
right to not allow this option on a written agreement in accordance 
with the provisions in section 18 of the Basic Provisions. This 
requirement also allows the producer to have coverage by written 
agreement on apple production insured under the Crop Provisions if the 
requirements for written agreement are not met on the Quality Option.
    FCIC proposes to revise the claim example following new paragraph 
(e) to align with the proposed changes made throughout section 14.

Notice and Comment, and Exemptions

    The Administrative Procedure Act (APA, 5 U.S.C. 553) provides that 
the notice and comment and 30-day delay in the effective date 
provisions do not apply when the rule involves specified actions, 
including matters relating to contracts. This rule governs contracts 
for crop insurance policies and therefore falls within that exemption. 
Although not required by APA or any other law, FCIC has chosen to 
propose the regulatory changes and request comments on the changes 
prior to issuing a final rule.
    This rule is exempt from the regulatory analysis requirements of 
the Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by the 
Small Business Regulatory Enforcement Fairness Act of 1996.

Executive Orders 12866 and 13563

    Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review,'' 
direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasized the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility. The requirements in 
Executive Orders 12866 and 13563 for the analysis of costs and benefits 
apply to rules that are determined to be significant.
    The Office of Management and Budget (OMB) designated this rule as 
not significant under Executive Order 12866, ``Regulatory Planning and 
Review,'' and therefore, OMB has not reviewed this rule and analysis of 
the costs and benefits is not required under either Executive Order 
12866 or 13563.

Clarity of the Regulation

    Executive Order 12866, as supplemented by Executive Order 13563, 
requires each agency to write all rules in plain language. In addition 
to your substantive comments on this rule, we invite your comments on 
how to make the rule easier to understand. For example:
     Are the requirements in the rule clearly stated? Are the 
scope and intent of the rule clear?
     Does the rule contain technical language or jargon that is 
not clear?
     Is the material logically organized?
     Would changing the grouping or order of sections or adding 
headings make the rule easier to understand?
     Could we improve clarity by adding tables, lists, or 
diagrams?
     Would more, but shorter, sections be better? Are there 
specific sections that are too long or confusing?
     What else could we do to make the rule easier to 
understand?

Environmental Review

    In general, the environmental impacts of rules are to be considered 
in a manner consistent with the provisions of the National 
Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347) and the 
regulations of the Council on Environmental Quality (40 CFR parts 1500-
1508). FCIC conducts programs and activities that have been determined 
to have no individual or cumulative effect on the human environment. As 
specified in 7 CFR 1b.4, FCIC is categorically excluded from the 
preparation of an Environmental Analysis or Environmental Impact 
Statement unless the FCIC Manager (agency head) determines that an 
action may have a significant environmental effect. The FCIC Manager 
has determined this rule will not have a significant environmental 
effect. Therefore, FCIC will not prepare an environmental assessment or 
environmental impact statement for this action and this rule serves as 
documentation of the programmatic environmental compliance decision.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, ``Civil 
Justice Reform.'' This rule will not preempt State or local laws, 
regulations, or policies unless they represent an irreconcilable 
conflict with this rule. Before any judicial actions may be brought 
regarding the provisions of this rule, the administrative appeal 
provisions of 7 CFR part 11 are to be exhausted.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments.'' Executive Order 13175 requires Federal agencies 
to consult and coordinate with Tribes on a government-to-government 
basis on policies that have Tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian Tribes, on the relationship between the Federal Government 
and Indian Tribes or on the distribution of power and responsibilities 
between the Federal Government and Indian Tribes.
    RMA has assessed the impact of this rule on Indian Tribes and 
determined

[[Page 71402]]

that this rule does not, to our knowledge, have Tribal implications 
that require Tribal consultation under E.O. 13175. The regulation 
changes do not have Tribal implications that preempt Tribal law and are 
not expected have a substantial direct effect on one or more Indian 
Tribes. If a Tribe requests consultation, RMA will work with the USDA 
Office of Tribal Relations to ensure meaningful consultation is 
provided where changes, additions and modifications identified in this 
rule are not expressly mandated by Congress.

The Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 
104-4) requires Federal agencies to assess the effects of their 
regulatory actions of State, local, and Tribal governments, or the 
private sector. Agencies generally must prepare a written statement, 
including cost benefits analysis, for proposed and final rules with 
Federal mandates that may result in expenditures of $100 million or 
more in any 1 year for State, local or Tribal governments, in the 
aggregate, or to the private sector. UMRA generally requires agencies 
to consider alternatives and adopt the more cost effective or least 
burdensome alternative that achieves the objectives of the rule. This 
rule contains no Federal mandates, as defined in Title II of UMRA, for 
State, local, and Tribal governments, or the private sector. Therefore, 
this rule is not subject to the requirements of sections 202 and 205 of 
UMRA.

Federal Assistance Program

    The title and number of the Federal Domestic Assistance Program 
listed in the Catalog of Federal Domestic Assistance to which this rule 
applies is No. 10.450--Crop Insurance.

Paperwork Reduction Act of 1995

    In accordance with the provisions of the Paperwork Reduction Act of 
1995 (44 U.S.C. chapter 35, subchapter I), the rule does not change the 
information collection approved by OMB under control numbers 0563-0053.

USDA Non-Discrimination Policy

    In accordance with Federal civil rights law and USDA civil rights 
regulations and policies, USDA, its Agencies, offices, and employees, 
and institutions participating in or administering USDA programs are 
prohibited from discriminating based on race, color, national origin, 
religion, sex, gender identity (including gender expression), sexual 
orientation, disability, age, marital status, family or parental 
status, income derived from a public assistance program, political 
beliefs, or reprisal or retaliation for prior civil rights activity, in 
any program or activity conducted or funded by USDA (not all bases 
apply to all programs). Remedies and complaint filing deadlines vary by 
program or incident.
    Persons with disabilities who require alternative means of 
communication for program information (for example, braille, large 
print, audiotape, American Sign Language, etc.) should contact the 
responsible Agency or USDA TARGET Center at (202) 720-2600 or 844-433-
2774 (toll-free nationwide). Additionally, program information may be 
made available in languages other than English. To file a program 
discrimination complaint, complete the USDA Program Discrimination 
Complaint Form, AD-3027, found online at https://www.usda.gov/oascr/how-to-file-a-program-discrimination-complaint and at any USDA office 
or write a letter addressed to USDA and provide in the letter all the 
information requested in the form. To request a copy of the complaint 
form, call (866) 632-9992. Submit your completed form or letter to USDA 
by mail to: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 
20250-9410 or email: [email protected].
    USDA is an equal opportunity provider, employer, and lender.

List of Subjects in 7 CFR Part 457

    Acreage allotments, Crop insurance, Reporting and recordkeeping 
requirements.

Proposed Rule

    For the reasons discussed above, FCIC proposes to amend 7 CFR part 
457 to read as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

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

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

0
2. Amend Sec.  457.158 by:
0
a. Revising the introductory text;
0
b. In section 1:
0
i. Adding in alphabetical order the definitions for ``Apple 
Supplemental Report,'' ``block,'' ``fresh fruit factor,'' ``graft,'' 
``high density,'' ``maximum additional value price,'' and ``premium 
price election'';
0
ii. Adding in the definition of ``Area A'', a comma after the words 
``New Mexico''; and
0
iii. Revising the definitions for ``damaged apple production,'' 
``direct marketing,'' ``fresh apple production,'' and ``processing 
apple production'';
0
c. Revising section 2;
0
d. Revising section 3;
0
e. Revising section 6;
0
f. In section 7:
0
i. Removing in paragraph (c), the word ``and'' at the end of the 
sentence;
0
ii. Revising paragraph (d); and
0
iii. Adding new paragraphs (e) and (f);
0
g. In section 9:
0
i. Removing in paragraph (b)(3), the word ``If'' at the beginning of 
the paragraph and adding the words ``Except as provided in section 28 
of the Basic Provisions, if'' in its place;
0
h. Revising section 11 paragraph (b)(2);
0
i. In section 12:
0
i. Revising the example following paragraph (b) titled ``Basic Coverage 
Example'';
0
ii. Removing in paragraph (c)(1)(iv), the word ``; and'' at the end of 
the sentence and adding ``.'' in its place;
0
iii. Redesignating paragraph (c)(2) as (3), and adding a new paragraph 
(c)(2); and
0
j. Revising section 14.
    The revisions and additions read as follows:


Sec.  457.158  Apple crop insurance provisions.

    The apple crop insurance provisions for the 2023 and succeeding 
crop years are as follows:
* * * * *
1. Definitions
* * * * *
    Apple Supplemental Report. A written report, supported by 
acceptable records, submitted as required on our form and in accordance 
with section 3 and section 6, as applicable. The information contained 
on the report will be based on your sales history, as applicable, from 
the crop year prior to the previous crop year (e.g., on the production 
reporting date for the 2023 crop year, the Apple Supplement Report 
reflects total revenue from the 2021 crop year).
* * * * *
    Block. Trees in an orchard of a single or mixed age and density, 
distinguished by applicable practice, type, T-Yield Map Areas, or other 
characteristics shown in the actuarial documents.
* * * * *
    Damaged apple production. Fresh or processing apple production that 
fails to grade U.S. No. 1 Processing or better in accordance with the 
applicable grade standards due to an insurable cause of loss.
    Direct marketing. The sale of the insured crop directly to 
consumers

[[Page 71403]]

without the intervention of an intermediary such as a wholesaler, 
retailer, packer, processor, shipper, buyer, or broker. Production 
records are controlled exclusively by the policyholder. Examples of 
direct marketing include selling through an on-farm or roadside stand, 
a farmer's market, or permitting the general public to enter the field 
for the purpose of picking all or a portion of the crop. Only the 
portion of the crop sold directly to consumers will be considered 
direct marketed.
    Fresh apple production. Apples:
    (1) That are sold, or could be sold, for human consumption without 
undergoing any change in the basic form, such as peeling, juicing, 
crushing, dicing, etc.;
    (2) That are not sold for the processing market (e.g., slicer or 
hard cider market) except for apples sold with a grade of U.S. Fancy or 
better (unless another grade is specified in the Special Provisions); 
and
    (3) That follow the recommended cultural practices generally in use 
for fresh apple acreage in the area in a manner generally recognized by 
agricultural experts and any other practices specified in the Special 
Provisions.
    Fresh fruit factor. A factor contained in the actuarial documents 
that is used to account for the salvage value of sold apples for 
production insured under the Optional Coverage for Fresh Fruit Quality 
Adjustment contained in section 14.
* * * * *
    Graft. To unite a shoot or bud with a rootstock in accordance with 
recommended practices to form a living union.
* * * * *
    High density. The number of trees per acre and any other 
characteristics specified in the Special Provisions.
* * * * *
    Maximum additional value price. A price established by type by FCIC 
and published in the actuarial documents when authorized by the Special 
Provisions. It is used to compute the premium price election.
* * * * *
    Premium price election. A price calculated using your sales history 
reported on the Apple Supplemental Report and the maximum additional 
value price. The premium price election will be no less than the 
published price election for type ``Fresh (Combined)'' or type 
``Processing,'' as applicable, and no greater than the maximum 
additional value price.
    Processing apple production. Apples from insurable acreage that are 
sold, or could be sold for the purpose of undergoing a change to the 
basic structure such as peeling, juicing, crushing, dicing, etc.
* * * * *
2. Unit Division
    (a) In addition to, or instead of, establishing optional units as 
provided in section 34(c) of the Basic Provisions, optional units may 
be established if each optional unit is:
    (1) Located on non-contiguous land; or
    (2) By type, unless otherwise provided in the Special Provisions.
    (b) The requirements of section 34 of the Basic Provisions that 
require the crop to be planted in a manner that results in a clear and 
discernable break in the planting pattern at the boundaries of each 
optional unit are not applicable for optional units by type.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities
    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) You may select only one coverage level for each type. For 
example, if you choose the 55 percent coverage level for one type, you 
may choose the 75 percent coverage level for another type. However, if 
you elect the Catastrophic Risk Protection (CAT) level of coverage for 
any of your apple acreage, the CAT level of coverage will be applicable 
to all insured apple acreage in the county. If you only have fresh 
apple acreage designated on your acreage report and processing apple 
acreage is added after the sales closing date, we will assign a 
coverage level equal to the lowest coverage level you selected for your 
fresh apple acreage. If you only have processing apple acreage 
designated on your acreage report and fresh apple acreage is added 
after the sales closing date, we will assign a coverage level equal to 
the coverage level you selected for your processing apple acreage.
    (b) You may select only one price election for all the apples in 
the county insured under this policy unless the actuarial documents 
provide different price elections by type, in which case you may select 
one price election for each apple type designated in the actuarial 
documents. The price elections you choose for each type are not 
required to have the same percentage relationship to the maximum price 
election offered by us for each type. However, the percentage of the 
maximum price election must be in accordance with FCIC approved 
procedures. For example, if you choose 100 percent of the maximum price 
election for one type, you may choose a different percentage of the 
maximum price election for all other types. If you only have fresh 
apple acreage designated on your acreage report and processing apple 
acreage is added after the sales closing date, we will assign a price 
election percentage equal to the lowest price election percentage you 
selected for your fresh apple acreage. If you only have processing 
apple acreage designated on your acreage report and fresh apple acreage 
is added after the sales closing date, we will assign a price election 
percentage equal to the price election percentage you selected for your 
processing apple acreage.
    (c) If you elect an additional level of coverage, you may insure 
your type ``Fresh (Combined),'' type ``Processing,'' or both, at the 
premium price election if:
    (1) Authorized in the Special Provisions;
    (2) You submit an Apple Supplemental Report, by policy by the 
production reporting date, containing your total sales (including 
production and revenue), differentiated by the following, as 
applicable:
    (i) Fresh and direct marketing; and
    (ii) Processing;
    (3) Upon initial election of the premium price election, you 
provide three years of production and revenue as indicated in section 
3(c)(2); and
    (4) You meet any additional requirements specified in the Special 
Provisions.
    (d) We will reduce the yield used to establish your production 
guarantee, as necessary, based on our estimate of the effect of any 
situation listed in sections 3(c)(1) through (4). If the situation 
occurred:
    (1) Before the beginning of the insurance period, the yield used to 
establish your production guarantee will be reduced for the current 
crop year regardless of whether the situation was due to an insured or 
uninsured cause of loss. If you fail to notify us of any circumstance 
that may reduce your yields from previous levels, we will reduce the 
yield used to establish your production guarantee at any time we become 
aware of the circumstance;
    (2) Or may occur after the beginning of the insurance period and 
you notify us by the production reporting date, the yield used to 
establish your production guarantee will be reduced for the current 
crop year only if the potential reduction in the yield used to 
establish your production guarantee is due to an uninsured cause of 
loss; or

[[Page 71404]]

    (3) Or may occur after the beginning of the insurance period and 
you fail to notify us by the production reporting date, production lost 
due to uninsured causes equal to the amount of the reduction in the 
yield used to establish your production guarantee will be applied in 
determining any indemnity (see section 12(c)(1)(ii)). We will reduce 
the yield used to establish your production guarantee for the 
subsequent crop year.
    (e) We will reduce the yield used to establish your production 
guarantee, as necessary, based on our estimate of the effect of any 
circumstance that may reduce your yields from previous levels. If the 
circumstance occurred:
    (1) Before the beginning of the insurance period and you notify us 
by the production reporting date, the yield used to establish your 
production guarantee will be reduced for the current crop year 
regardless of whether the circumstance was due to an insured or 
uninsured cause of loss;
    (2) After the beginning of the insurance period and you notify us 
by the production reporting date, the yield used to establish your 
production guarantee will be reduced for the current crop year only if 
the potential reduction in the yield used to establish your production 
guarantee is due to an uninsured cause of loss; or
    (3) Before or after the beginning of the insurance period and you 
fail to notify us by the production reporting date, an amount equal to 
the reduction in the yield will be added to the production to count 
calculated in section 12(c) due to uninsured causes. We will reduce the 
yield used to establish your production guarantee for the subsequent 
crop year to reflect any reduction in the productive capacity of the 
trees or in the yield potential of the insured acreage.
    (f) If the actuarial documents contain type ``Fresh (Combined),'' 
you can elect to insure your fresh acreage in aggregate under type 
``Fresh (Combined)'' or by other fresh types identified in the 
actuarial documents, but not both.
* * * * *
6. Report of Acreage
    (a) In addition to the requirements contained in section 6 of the 
Basic Provisions, you must report and designate all acreage by type by 
the acreage reporting date.
    (1) Any acreage not qualifying for fresh apple production is not 
eligible for the Optional Coverage for Fresh Fruit Quality Adjustment 
contained in section 14.
    (2) If you designate fresh apple acreage on the acreage report:
    (i) You are certifying that your fresh apple acreage meets the 
requirements in section 7(d), unless otherwise authorized by FCIC.
    (ii) You must submit an Apple Supplemental Report on the same basis 
you certify your acreage in section 6(a)(2)(i) by the production 
reporting date, containing the following, as applicable.
    (A) Production sold as fresh;
    (B) Production sold by direct marketing;
    (C) Production sold as processing; and
    (D) Production in storage.
    (iii) And you fail to submit an Apple Supplemental Report in 
accordance with section 6(a)(2)(ii), you will not have coverage under 
any fresh type listed in the actuarial documents.
    (iv) And you have high density acreage, the requirement in section 
6(a)(2)(i) does not apply to high density acreage in the first year of 
insurability or as authorized by FCIC procedure.
    (b) If any portion of your crop will be direct marketed, you must 
notify us at least 15 calendar days before any production will be 
harvested. We will conduct an appraisal that will be used to verify 
your production records in accordance with FCIC procedures.
7. Insured Crop
* * * * *
    (d) That are grown for fresh apple production on acreage:
    (1) That is designated as fresh apples on the acreage report; and
    (2) That you certify and, if requested by us, provide verifiable 
records to support, that at least 50 percent of the production from all 
acreage reported as fresh apple acreage by policy or unit, as 
applicable, was sold as fresh apples in one or more of the four most 
recent crop years preceding the previous crop year (e.g., for the 2023 
crop year, the four most recent crop years preceding the previous crop 
year end in the 2021 crop year), unless authorized by FCIC procedures;
    (e) That are grown on acreage designated as processing apple 
production on the acreage report. Any production from acreage not 
meeting the requirements in section 7(d) must be designated on the 
acreage report as processing apple production; and
    (f) If you anticipate performing any action that will reduce the 
productive capacity of the trees or the yield potential of the insured 
acreage (e.g., removing or grafting trees) after the acreage reporting 
date you:
    (1) May report all apple acreage when you report your acreage for 
the crop year and specify any affected acreage as uninsurable acreage 
(By doing so, no coverage will be considered to have attached on the 
specified acreage and no premium will be due for such acreage. If you 
do not perform any action that will reduce the productive capacity of 
the trees or the yield potential of the insured acreage, you will be 
subject to the under-reporting provisions contained in section 6 of the 
Basic Provisions); or
    (2) May report all apple acreage as insurable when you report your 
acreage for the crop year. Premium will be due on all the acreage 
except as set forth herein.
    (i) On acreage for which you perform actions that will reduce the 
productive capacity of the trees or the yield potential of the insured 
acreage, you may qualify for a reduction in premium only if you notify 
us in writing on a revised acreage report on or before March 31st or 
the date designated in the Special Provisions, and do not claim an 
indemnity on the acreage. No reduction in premium will be allowed if 
the required notice is not given or if you claim an indemnity for the 
acreage.
    (ii) Upon receiving timely notice, insurance coverage on such 
acreage will cease and we will process your revised acreage report to 
indicate the applicable reduction in premium. If you do not perform the 
actions to the apple acreage as intended, you will be subject to the 
under-reporting provisions contained in section 6 of the Basic 
Provisions.
* * * * *
11. Duties in the Event of Damage or Loss
* * * * *
    (b) * * *
* * * * *
    (2) If any portion of your crop will be direct marketed, you must 
notify us at least 15 calendar days before any production will be 
harvested. We will conduct an appraisal that will be used to verify 
your production records in accordance with FCIC procedures. If damage 
occurs after this appraisal, we will conduct an additional appraisal. 
These appraisals, and any other acceptable records required to be 
provided by you, will be used to determine your production to count. 
Failure to give timely notice that production will be sold by direct 
marketing will result in an appraised amount of production to count of 
not less than the production guarantee per acre if such failure results 
in our inability to make the required appraisal.
* * * * *
12. Settlement of Claim
* * * * *

[[Page 71405]]

    (b) * * *
    Basic Coverage Example:
    You have a 100 percent share in one basic unit with 10 acres of 
fresh apples and 5 acres of processing apples designated on your 
acreage report, with a 600-bushel per acre production guarantee for 
both fresh and processing apples, and you select 100 percent of the 
price election on a price election of $9.10 per bushel for fresh apples 
and $2.50 per bushel for processing apples. You harvest 5,000 bushels 
of fresh apples and 1,000 bushels of processing apples, all grading 
U.S. No. 1 Processing or better. Your indemnity will be calculated as 
follows:
    (A) 10 acres x 600 bushels = 6,000-bushel production guarantee of 
fresh apples;
    5 acres x 600 bushels = 3,000-bushel production guarantee of 
processing apples;
    (B) 6,000-bushel production guarantee x $9.10 price election x 100 
percent of price election = $54,600 value of production guarantee for 
fresh apples;
    3,000-bushel production guarantee x $2.50 price election x 100 
percent of price election = $7,500 value of production guarantee for 
processing apples;
    (C) $54,600 value of production guarantee for fresh apples + $7,500 
value of production guarantee for processing apples = $62,100.00 total 
value of the production guarantee;
    (D) 5,000 bushels of fresh apples are harvested and 1,000 bushels 
of processing apples are harvested.
    (E) 5,000 bushels of fresh apple production to count x $9.10 price 
election x 100 percent of price election = $45,500 value of fresh apple 
production to count;
    1,000 bushels of processing apple production to count x $2.50 price 
election x 100 percent of price election = $2,500 value of processing 
apple production to count;
    (F) $45,500 value of fresh apple production to count + $2,500 value 
of processing apple production to count = $48,000 total value of 
production to count;
    (G) $62,100 total value of the production guarantee-$48,000 total 
value of production to count = $14,100.00 value of loss; and
    (H) $14,100 value of loss x 100 percent share = $14,100 indemnity 
payment.
    (c) * * *
* * * * *
    (2) Notwithstanding section 12(c)(1), when 65 percent or more of a 
unit's processing apple production is damaged apple production, the 
processing apple production from the unit will not be considered 
production to count provided none of the processing apple production 
from the unit will be sold.
* * * * *
14. Optional Coverage for Fresh Fruit Quality Adjustment
    (a) In the event of a conflict between the Apple Crop Insurance 
Provisions and this option, this option will control. Insureds who 
select this option cannot receive less than the indemnity due under 
section 12.
    (b) In return for payment of the additional premium designated in 
the actuarial documents, this option provides coverage for quality 
adjustment of fresh apple production as follows:
    (1) To be eligible for this option, you must have elected to insure 
your apples at the additional coverage level. If you elect CAT after 
this option is effective, it will be considered as notice of 
cancellation of this option by you.
    (2) You must elect this option on or before the sales closing date 
for the initial crop year for which you wish to insure your apples 
under this option. This option will continue in effect until canceled 
by either you or us for any succeeding crop year by written notice to 
the other party on or before the cancellation date. (3) This option 
will apply to all your fresh apple acreage designated on your acreage 
report and that meets the insurability requirements specified in the 
Apple Crop Insurance Provisions, except any acreage specifically 
excluded by the actuarial documents. Any acreage designated in your 
acreage report as grown for processing apple production is not eligible 
for coverage under this option.
    (4) In lieu of sections 12(c)(1)(iii), (iv) and (2), the production 
to count will include all appraised and harvested production from all 
of the fresh apple acreage in the unit, adjusted in accordance with 
this option.
    (5) Except as provided in section 14(b)(6), if the block or unit, 
as applicable, is damaged due to an insurable cause of loss to the 
extent that more than 15 percent of the apple production does not grade 
U.S. Fancy or better (unless another grade is specified in the Special 
Provisions) the following adjustments to the production to count will 
apply:
    (i) When 16 percent through 64 percent of the apple production does 
not grade U.S. Fancy or better (unless another grade is specified in 
the Special Provisions), the production to count will be reduced two 
percent for each full one percent in excess of 15 percent.
    (ii) When 65 percent or more of the apple production does not grade 
U.S. Fancy or better (unless another grade is specified in the Special 
Provisions), the production will not be considered production to count.
    (6) If you sell any of your fresh apple production from the block 
or unit, as applicable, your production to count will be the greater of 
the amount determined in section 14(b)(5) or the sum of the amount 
determined as follows:
    (i) All apples sold with a grade of U.S. Fancy or better (unless 
another grade is specified in the Special Provisions);
    (ii) All marketable apple production sold with a grade of less than 
U.S. Fancy (unless another grade is specified in the Special 
Provisions) multiplied by the fresh fruit factor;
    (iii) All marketable apple production sold as fresh without a 
grade. This amount is not to exceed what appraised or graded as U.S. 
Fancy or better (unless another grade is specified in the Special 
Provisions) prior to the adjustments under section 14(b)(5);
    (iv) All marketable apple production sold as fresh without a grade 
that exceeds what appraised or graded as U.S. Fancy or better (unless 
another grade is specified in the Special Provisions) prior to the 
adjustments under section 14(b)(5) multiplied by the fresh fruit 
factor; and
    (v) All marketable apple production sold as processing without a 
grade multiplied by the fresh fruit factor.
    (7) The grade standards used in accordance with section 14(b)(6) 
and applied during the appraisal process with be the applicable grade 
standards used when evaluating the final disposition of the apple 
production.
    (c) Any apple production not graded or appraised prior to the 
earlier of the time apples are placed in storage or the date the apples 
are delivered to a packer, processor, or other handler, will be 
considered U.S. Fancy or better (unless another grade is specified in 
the Special Provisions) and included in production to count under this 
option.
    (d) Any adjustments that reduce your production to count under this 
option will not be applicable when determining production to count for 
APH purposes.
    (e) Regarding written agreements under this option:
    (1) This option may apply to a written agreement for apples when 
this option is contained in the actuarial documents for the county and 
crop.
    (2) This option may apply to apples in a county which does not have 
actuarial documents for the crop when

[[Page 71406]]

a written agreement specifically allows this option.
    (3) FCIC has the right to not allow this option on a written 
agreement in accordance with the provisions in section 18 of the Basic 
Provisions.
    Optional Coverage for Fresh Fruit Quality Adjustment Example:
    You have a 100 percent share in 10 acres of fresh apples designated 
on your acreage report, with a 600 bushel per acre guarantee, and you 
select 100 percent of the price election on a price election of $9.10 
per bushel. You harvest 5,000 marketable bushels of apples from your 
designated fresh apple acreage, but only 2,650 of those bushels grade 
U.S. Fancy or better. Assuming you do not sell any of your fresh apple 
production, your indemnity would be calculated as follows:
    (A) 10 acres x 600 bushels per acre = 6,000-bushel production 
guarantee of fresh apples;
    (B) 6,000-bushel production guarantee of fresh apples x $9.10 price 
election x 100 percent of price election = $54,600 value of production 
guarantee for fresh apple acreage;
    (C) The value of the fresh apple production to count is determined 
as follows:
    (i) 5,000 bushels harvested-2,650 bushels that graded U.S. Fancy or 
better = 2,350 bushels of fresh apple production not grading U.S. Fancy 
or better;
    (ii) 2,350/5,000 = 47 percent of fresh apple production not grading 
U.S. Fancy or better;
    (iii) In accordance with section 14(b)(5)(i): 47 percent-15 percent 
= 32 percent in excess of 15 percent;
    (iv) 32 percent x 2 = 64 percent;
    (v) 5,000 bushels harvested x .64 (64 percent)-3,200 bushels of 
fresh apple production not grading U.S. Fancy or better;
    (vi) 5,000 bushels harvested-3,200 bushels of fresh apple 
production not grading U.S. Fancy or better = 1,800 bushels of adjusted 
fresh apple production to count;
    (vii) 1,800 bushels of adjusted fresh apples production to count x 
$9.10 price election x 100 percent of price election = $16,380 value of 
fresh apple production to count;
    (D) $54,600 value of production guarantee for fresh apples-$16,380 
value of fresh apple production to count = $38,220 value of loss;
    (E) $38,220 value of loss x 100 percent share = $38,220 indemnity 
payment.

Richard Flournoy,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 2021-26989 Filed 12-14-21; 11:15 am]
BILLING CODE 3410-08-P