Common Crop Insurance Regulations; Onion Crop Insurance Provisions

AGENCY:

Federal Crop Insurance Corporation, USDA.

ACTION:

Final rule.

SUMMARY:

The Federal Crop Insurance Corporation (FCIC) finalizes the Common Crop Insurance Regulations, Onion Crop Insurance Provisions. The intended effect of this action is to provide policy changes and clarify existing policy provisions to better meet the needs of insured producers, and to reduce vulnerability to program fraud, waste, and abuse. The changes will apply for the 2013 and succeeding crop years.

DATES:

This rule is effective April 9, 2012.

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

Executive Order 12866

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

Paperwork Reduction Act of 1995

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

E-Government Act Compliance

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

Unfunded Mandates Reform Act of 1995

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

Executive Order 13132

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

Executive Order 13175

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

Regulatory Flexibility Act

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

Federal Assistance Program

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

Executive Order 12372

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

Executive Order 12988

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

Environmental Evaluation

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

Background

This rule finalizes changes to the Common Crop Insurance Regulations (7 CFR part 457), Onion Crop Insurance Provisions that were published by FCIC on July 21, 2011, as a notice of proposed rulemaking in the Federal Register at 76 FR 43606-43610. The public was afforded 60 days to submit comments after the regulation was published in the Federal Register.

A total of 35 comments were received from 6 commenters. The commenters were insurance providers, an insurance service organization, and other interested parties.

The public comments received regarding the proposed rule and FCIC's responses to the comments are as follows:

General

Comment: A commenter stated many of the proposed changes in the Onion Crop Provisions Proposed Rule, as explained in the “Background” section, appear to be reasonable.

Response: FCIC thanks the commenter for their review of the proposed rule and their support.

Section 1—Definitions

Comment: A few commenters recommended beginning the definition of “non-storage onions” with the phrase “Onions of a Bermuda, Granex, or Grano variety * * *” consistent with the definition of “storage onions.”

Response: FCIC agrees with the commenters and has revised the provision accordingly.

Comment: A few comments were received regarding the definition of “onion production.” The commenters stated FCIC proposed removing the phrase “of recoverable size and condition” because as stated in the Background of the proposed rule “these terms are vague and ambiguous.” However, if that phrase is deleted, the commenters questioned whether it will mean that onions that are too small to recover could be considered “onion production.” The definition of “damaged onion production” includes onions that do not meet certain grade standards. The commenters questioned whether it is supposed to be implied that (undamaged) “onion production” will always meet those standards. The commenters questioned whether this definition should also include some reference to those standards. While damaged onions are considered storage type onions that do not grade U.S. No. 1 or do not satisfy any other standards that may be contained in the Special Provisions, or non-storage type onions that do not satisfy any applicable marketing order (i.e., U.S. commercial), there are many times the insurance provider has had to deal with unharvested onions that obviously made grade, but there is a crop production loss, and they are able to determine the production to count based on weighing what the harvest equipment could pick up without having to have the crop graded by state/federal graders. The insurance provider was able to get the producer to harvest a representative strip and did not have to manually dig the onions with shovels, or deal with grading. The commenters felt the deleted phrase either needs to be retained, or if it is considered to be too vague, it can be further defined by indicating something about the size and condition that can be picked up by normal harvesting equipment. It would be very inefficient for adjusters to hand dig, bag and haul the really small onions that would not have been picked up by the harvesting equipment to have them graded because of the multitude of different marketing orders for size requirements that may be in effect. Additionally, if there is no language that production has to be of recoverable size and condition, would this mean insurance providers have to appraise every single harvested field to prove that any onions left in the field after harvest did not make grade? Would the insurance providers have to go to the Loss Adjustment Manual and prove the small onions were not able to be mechanically harvested?

Response: FCIC agrees and has retained the deleted phrase “of recoverable size and condition” and has retained the current definition in the final rule.

Comment: A commenter stated the definition of “planted acreage” states, “in addition to the definition contained in the Basic Provisions, onions must be planted in rows.” The commenter noted in the Basic Provisions, planted acreage is “land in which seeds, plants, or trees have been placed * * *” The commenter asks if an onion set (bulb) may not be considered a seed (otherwise a conflict between direct seeded and transplanted will result). The commenter asked FCIC to consider revising the definition of “planted acreage” in the Onion Crop Provisions to “* * * land in which seeds, sets, or plants have been placed * * *”

Response: Although no changes were proposed to this provision, the commenter has identified a potential conflict within the policy because sets, which are bulbs, are not considered seeds, plants or trees, which are used in the definition of planted acreage in the Basic Provisions. Therefore, sets must be added to the definition in these Crop Provisions. FCIC has revised the definition of “planted acreage” include a reference to sets.

Comment: A few commenters supported the change to the definition of “production guarantee (per acre)” that increased the first stage production guarantee for direct seeded onions from 35 percent to 45 percent of the final stage production guarantee, and also supported the corresponding change of the prevented planting coverage from 45 percent to 35 percent in section 15. The commenters wanted FCIC to adequately account for any increased coverage in the rating methodology for areas where this first stage guarantee was not previously increased in the Special Provisions.

Response: FCIC agrees with the commenters and will evaluate and adjust premium rates as necessary.

Comment: A commenter stated the term “sets” is added as a definition, but is not used in the current Onion Crop Provisions or the proposed rule. The definition of “transplanted” continues to refer to “* * * placing of the onion plant or bulb * * *” The commenter asked FCIC to consider revising the definition of “transplanted” to read “* * * placing of the plant or sets * * *” and replace the term “bulb” with “sets” where it appears in the Onion Crop Provisions and is used in the context of planting the crop. The commenter stated this change provides consistency with usage of the term “sets” in proposed section 3(b)(2)(ii).

Response: FCIC agrees with the commenter and has revised the definition of “transplanted” by replacing the word “bulb” with “sets.” FCIC also agrees that transplanted and sets are used in the context of planting the acreage and has revised the definition of “planted acreage” to include direct seeded and transplanting to clarify the methods of planting the crops. These changes will provide consistency within the Crop Provisions.

Comment: A few commenters stated the definition of “storage onions” begins with the phrase “Onions other than a Bermuda, Granex, or Grano variety” and ends with the added sentence “Includes varieties grown for a processor under the requirements of a processor contract.” The commenters questioned if Bermuda, Granex or Grano onions could ever be grown for processing resulting in a contradiction between these two sentences. The commenters stated perhaps this potential conflict could be resolved by moving the added language to the first sentence to state “Onions other than a Bermuda, Granex, or Grano variety, or hybrids developed from these varieties, and including onions grown under a processor contract.” The commenters stated another alternative is if the added last sentence is left where it is, it could begin with “Storage onions include varieties * * *” and consider if it would be sufficient to say “grown under a processor contract” or “grown for processing” instead of “grown for a processor under the requirements of a processor contract.”

Response: FCIC agrees with the commenters and has revised the provisions by removing the last sentence. It is the type of onion that determines whether it is a storage onion, not whether it is grown under a contract. Therefore, this provision is not needed. Any onions meeting the definition are considered storage onions, and this would include onions grown under a processing contract if they meet the requirements.

Comment: A few commenters recommended in the definition of “storage onions” to add a comma in the first sentence after the phrase “or hybrids developed from these varieties” similar to the definition of “non-storage onions.”

Response: FCIC agrees with the commenters and has revised the definition accordingly.

Section 3—Insurance Guarantees, Coverage Levels, and Prices for Determining Indemnities

Comment: A commenter recommended revising section 3(b) from “* * * same stage to qualify for the applicable stage guarantee * * *” to “* * * same stage to qualify for the first and second stages * * *” The commenter stated the current provision incorrectly suggests that eligibility for the final stage requires a determination that at least 75 percent of the plants have reached the final stage when in fact the final stage is based on the completion of topping and lifting or digging the onion acreage.

Response: Although no changes were proposed to this provision, the commenter has identified a conflict in the provisions that need to be corrected to eliminate this ambiguity. FCIC has revised section 3(b) to clarify all stages are determined on an acre basis and only the first and second stage rely on a percentage of plants reaching a growth stage to determine eligibility for the applicable stage.

Comment: A commenter questioned if the phrase “* * * until eligible for the final stage” is required in section 3(b)(2), should it not also be included in section 3(b)(1) as follows “* * * until eligible for the second stage.”

Response: No changes were proposed to this provision and the proposed change does not address a conflict or vulnerability in the provision. No change has been made to the final rule.

Comment: Several commenters requested FCIC further clarify the phrase “* * * the majority of producers in the area would not normally further care for the onions * * *” in section 3(c). The commenters stated the insurance providers need to have the option to stage the crop according to the date of damage based on their assessment of the severity of the damage without this being a point of contention with producers. The commenters stated this language has proved extremely difficult to administer and poses a real problem in areas where there are very few producers of a particular crop.

Response: FCIC understands the commenters concern that it can be difficult to determine a majority in an area that has few producers of the insured crop. The provision is flexible so that no matter the total number of producers of the crop in the area, an insurance provider will base their determination on a simple majority. This provision is necessary to prevent program abuse of advancing the stages of a heavily damaged crop in order to receive a higher production guarantee resulting in a larger indemnity payment. When an insurance provider determines the crop is damaged to the extent that the majority of producers would not further care for the damaged crop then the liability will be limited to the stage production guarantee when the damage occurred. The proposed first sentence “The indemnity payable for any acreage of onions will be based on the stage the plants achieved when damage occurred” could be misinterpreted to mean that any amount of damage to the onion crop would stop the progression of the production guarantee. FCIC has revised section 3(c) by removing the proposed first sentence because it conflicts with the rest of the provision.

Section 5—Cancellation and Termination Dates

Comment: A commenter stated the proposed cancellation and termination date of November 30 for all California Counties, except Lassen, Modoc, Shasta and Siskiyou do not align with the distinct growing period of California. The commenter stated the planting of onions in California generally begins as early as September and, therefore, September 30 would be a more appropriate date for cancellation and termination in this region of the country.

Response: FCIC agrees with the commenter and has revised the provision accordingly.

Section 6—Report of Acreage

Comment: A few commenters stated the Special Provisions for onions in Georgia designate separate planting periods, but the Onion Crop Provisions are silent on this issue. The commenters requested the Onion Crop Provisions or the Special Provisions for Georgia be amended to include a definition of “planting period.” The commenters also requested adding a provision to section 6 of the Onion Crop Provisions which would amend section 6(a)(3) of the Basic Provisions, and make it clear when acreage reports for onions are due in these counties in situations where producers may also have other crops insured under the same policy.

Response: FCIC disagrees that the Special Provisions for Georgia designate separate planting periods. The Special Provisions for Georgia list planting dates for separate practices of planting such as direct seeded and transplanted. The onion crop is planted earlier for the direct seeded practice and later for the transplanted practice. For either practice of planting the onion crop results in similar development, maturity, and harvest periods. Since there are not separate planting periods, section 6(a)(3) of the Basic Provisions is not applicable. The planted and insured onion crop acres must be reported by the latest applicable acreage reporting date specified in the Special Provisions. No change has been made to the final rule.

Section 10—Insurance Period

Comment: A commenter stated the proposed language separating the end of insurance date for Walla Walla Sweets (July 31st) from other non-storage onions (August 31st) is incorrect for Oregon and Washington. The commenter recommended revising the language for Oregon and Washington to read “July 31 for fall planted non-storage onions in Oregon and Washington.”

Response: FCIC agrees with the commenter and has revised the provision accordingly.

Comment: A commenter stated in section 10(b)(2) the words “Basic Provision” should be corrected to “Basic Provisions.”

Response: FCIC agrees with the commenter and has revised the provision accordingly.

Section 11—Causes of Loss

Comment: A commenter recommended section 11(a)(2) be revised to clarify an insured cause of loss is “Fire, due to natural causes, * * *” or “Fire, if caused by lightning, * * *” as in the proposed revisions to the Tobacco Crop Provisions.

Response: FCIC disagrees with the commenter. Revising the insured cause of loss to read “Fire, due to natural causes * * *” is not necessary since section 12 of the Basic Provisions states all insured causes of loss must be due to a naturally occurring event. Further, the Federal Crop Insurance Act also limits coverage to naturally occurring events. To include this requirement for a single cause of loss in the Onion Crop Provisions will only create confusion regarding whether or not the other listed causes must be naturally occurring. FCIC also disagrees with revising the insured cause of loss to read “Fire, if caused by lightning * * *” as in the proposed revisions to the Tobacco Crop Provisions. “Fire, if caused by lightning * * *” was proposed in the Tobacco Proposed Rule but due to public comments, the original provision, “Fire,” was retained because there are naturally occurring fires caused by something other than lightning, such as wildlife getting stuck in transformers causing sparks to trigger a fire. No change has been made to the final rule.

Section 13—Duties in the Event of Damage or Loss

Comment: Several commenters recommended revising section 13(a). A commenter suggested removing the word “unharvested” as representative samples of the unharvested crop that may be required cannot be topped, lifted, or dug as the term “harvest” by definition applies only after the acreage has been topped, lifted or dug, thus such acreage that is topped, lifted, or dug is still unharvested. This commenter further stated the proposed change does not achieve its objective (leaving the acreage undisturbed) as in the following sentence, “The samples must not be harvested or destroyed until the earlier of our inspection * * *” reverts back to the harvest term which describes removal of the onions from the field after lifting or digging. A few other commenters suggested moving the proposed phrase “cannot be topped, lifted, or dug and” to the last sentence, which would be revised to read, “The samples must not be topped, lifted, dug, harvested or destroyed until the earlier of our inspection or 15 days after harvest of the balance of the unit is completed.” These commenters suggested if the phrase is left in the first sentence to add a comma after the phrase “or dug”.

Response: FCIC agrees with the commenters and will remove the word “unharvested.” FCIC will also move the added phrase “cannot be topped, lifted, or dug and” to the last sentence and change the wording accordingly as suggested.

Section 14—Settlement of Claim

Comment: A commenter stated in the section 14(b)(7) example, the total production to count is determined at the unit level not for part of the unit. The commenter asked FCIC to consider revising “total production to count” to “harvested production to count.” Similar revisions elsewhere in this example should be made using the words “appraised” or “harvested” as applicable or by removing the word “total” all together.

Response: FCIC has reviewed all references to the word “total” throughout the section 14(b)(7) example and revised them as necessary.

Comment: A commenter suggested in the introduction to the section 14(b)(7) example, revising the phrase “16,000 hundredweight total production to count” to “16,000 hundredweight of harvested production to count.”

Response: FCIC agrees with the commenter and has revised the provision accordingly.

Comment: A commenter suggested in step (3) of the section 14(b)(7) example, adding the word “guarantee” as in “$24,000 value of second stage production guarantee * * *”

Response: FCIC agrees with the commenter and has revised the provision accordingly.

Comment: A commenter suggested in step (4) of the section 14(b)(7) example, adding the phrase “step 4” into the phrase “* * * (from section 14(c)(1)(iv) example) * * *”

Response: FCIC agrees with the commenter and has revised the provision to read “(from step 4 of the section 14(c)(1)(iv) example).”

Comment: A commenter suggested in the section 14(c)(1)(iv) example, revising the phrase “total production to count” to “appraised production to count” for each instance the phrase is used. The commenter states section 14(c)(1) deals with determining appraised production to count, not total production to count. The commenter also states total production to count is determined at the unit level not for part of the unit.

Response: FCIC agrees with the commenter that section 14(c)(1) deals with appraised production, but the example for section 14(c)(1)(iv) deals with determining production to count for appraised production on acreage that does not qualify for the final stage guarantee. FCIC has revised the provisions by removing the term “total” but has not added the term “appraised.”

Comment: A commenter suggested numbering the steps in the section 14(c)(1)(iv) example similar to how the steps were numbered for the section 14(b)(7) example.

Response: FCIC agrees with the commenter and has revised the provision accordingly.

Comment: A commenter suggested in the fourth step of the section 14(c)(1)(iv) example adding the phrase “step 4” into the phrase “* * * (for section 14(b) example) * * *”

Response: FCIC agrees with the commenter and has revised the provision to read “(for step 4 of the section 14(b) example).”

Comment: A few commenters stated the section 14(c)(1)(iv) example disrupts the flow from (i), (ii), (iii), (iv), and (v). The commenters suggested three possible solutions for consideration: (1) Move the example to the end of 14(c); (2) Move both examples from section 14 to the end of the Crop Provisions with references to the examples in sections 14(b) and (c); or (3) Move the “; and” following section 14(c)(1)(iv) to the end of the example.

Response: FCIC disagrees with the commenters because the cited example after section 14(c)(1)(iv) specifically addresses the provisions as stated in section 14(c)(1)(iv). No change has been made.

Section 15—Prevented Planting

Comment: A few commenters expressed their support for the proposed change to the prevented planting coverage from 45 percent to 35 percent in section 15 and the corresponding increasing of the first stage coverage from 35 percent to 45 percent of the final stage production guarantee in the section 1 “production guarantee (per acre)” definition. The commenters stated that this change recognizes there are more costs incurred by a producer for onions damaged in the first stage versus a prevented planting situation.

Response: FCIC thanks the commenter for their review of the proposed rule and their support. The proposed changes have been retained in this final rule.

List of Subjects in 7 CFR Part 457

• Crop insurance
• Onion
• Reporting and recordkeeping requirements

Final Rule

Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation amends 7 CFR part 457 effective for the 2013 and succeeding crop years as follows:

PART 457—COMMON CROP INSURANCE REGULATIONS

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

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

2. Amend § 457.135 as follows:

a. Revise the introductory text;

b. Add definitions in section 1 for “Processor”, “Processor contract”, and “Sets”; and revise the definitions of “Direct seeded”, “Non-storage onions”, “Planted acreage”, “Production guarantee (per acre)”, “Storage onions”, “Topping”, “Transplanted”; and remove the definition of “Type”;

c. Remove the first section 2 heading and revise section 2;

d. Amend section 3(a) by removing the phrase “(Insurance Guarantees, Coverage Levels, and Prices for Determining Indemnities)”;

e. Revise section 3(b) introductory text;

f. Revise sections 3(b)(2)(i), 3(b)(2)(ii), and 3(b)(3);

g. Revise section 3(c);

h. Revise section 4;

i. Revise section 5;

j. Redesignate sections 6 through 14 as sections 7 through 15, respectively, and add a new section 6;

k. Amend newly redesignated section 7 by removing the phrase “(Annual Premium)”;

l. Revise newly redesignated section 8 introductory text;

m. Amend newly redesignated section 9 introductory text by removing the phrase “(Insurable Acreage)”;

n. Amend newly redesignated section 9(a) by removing the word “specified” and adding the word “designated” in its place;

o. Amend newly redesignated section 10(a) by removing the phrase “addition to” and adding the phrase “accordance with” in its place, and also removing the phrase “(Insurance Period)”;

p. Revise newly redesignated section 10(b);

q. Amend newly redesignated sections 11(a) introductory text and 11(b) by removing the phrase “(Causes of Loss)”;

r. Amend newly redesignated section 12(a) by removing the phrase “(Replanting Payment)”;

s. Revise newly redesignated section 13(a);

t. Amend newly redesignated section 14 by removing the phrase “section 13” and adding the phrase “section 14” in its place everywhere it appears;

u. Amend newly redesignated section 14(b)(6) by removing the phrase “13(b)(3)” and adding the phrase “14(b)(3)” in its place;

v. Add an example after newly redesignated section 14(b)(7);

w. Amend newly redesignated section 14(c)(1)(i)(B) by removing the phrase “section 12” and adding the phrase “section 13” in its place;

x. Revise newly redesignated section 14(c)(1)(iv);

y. Add an example after newly redesignated section 14(c)(1)(iv); and

z. Revise newly redesignated section 15.

The revised and added text reads as follows: