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Federal Register / Vol. 86, No. 239 / Thursday, December 16, 2021 / Proposed Rules
7. Section 9FCIC proposes to revise paragraph b3 to insert the following phrase at the beginning of the paragraph: Except as provided in section 28 of the Basic Provisions.
Paragraph b3 of the Apple Crop Provisions speaks only to relinquishing the producers 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 11FCIC proposes to revise paragraph b2. 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 preharvest appraisals. Lastly, FCIC
proposes to make other changes within the paragraph for clarification purposes.
9. Section 12FCIC also proposes to revise the claim example following paragraph b.
FCIC also proposes to redesignate paragraph c2 as c3 and add a new paragraph c2 to state that when 65
percent or more of a units 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 14FCIC 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
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added between the words provides and for.
FCIC proposes to revise paragraph b1 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 b3. 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 b5 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 b5 or adjusted for quality in paragraph b6, instead of basing the determination on the sliding scale alone.
In paragraph b5, 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
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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 b6, 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:
The fresh fruit factor applies to production sold:
D As fresh without a grade that exceeds what appraised as U.S. Fancy or better prior to adjustments under the sliding scale;
D 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.
D Any production sold for a grade below U.S. Fancy;
D Any production sold as processing, excluding any production that grades less than U.S. 1 Processing.
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 producers 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 producers guarantee.

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