Final Agency Determination: FAD-054

Subject: Request dated September 7, 2005, requesting a Final Agency Determination for the 2006 and succeeding crop years regarding the scope of section 9(b)(3) of the Nursery Crop Insurance Provisions, published at 7 C.F.R. §457.162. This request is pursuant to section 806(s) of the Federal Crop Insurance Act, 7 U.S.C. §1506(s) and 7 C.F.R. part 400, subpart X.

Section 1 of the Nursery Crop Insurance Provisions defines “field grown” to mean, in part:

Plants grown in in-ground fabric grow bags, plants that are balled and burlapped or plants grown in containers that allow the plants to root (excluding fibrous roots) into the ground…

Section 9, entitled “Insurance Period,” provides, as here pertinent:

(b) Insurance ends at the earliest of:

* * *
(3) Removal of all other insured plant material from the nursery…

For the purposes of determining the point at which insurance coverage ends for field grown nursery crops that are balled and burlapped, the requestor interprets section 9(b)(3) to mean that insurance ends at the point in time the nursery physically removes the balled and burlapped trees from the ground.

The requestor provided the following example to explain the context of the interpretation. A nursery insures 10,000 balled and burlapped live oaks as field grown material. Prior to sale or delivery, the trees are removed from the ground and placed directly on the ground or on trucks.

With respect to the above-described scenario, the requestor interprets section 9(b)(3) to mean that insurance ends when the trees are removed from the ground, i.e., the trees are no longer “in-ground.” Accordingly, the live oaks are not covered and any damage suffered is uninsurable once they are removed from the ground and placed, for example, directly on the ground, benches or trucks.

The Federal Crop Insurance Corporation (FCIC) disagrees with the interpretation of section 9(b)(3) as submitted. Removal of balled and burlapped nursery plants from the field does not end the insurance period.

In addition to section 9(b)(3), section 9(b)(2) states

(b) Insurance ends at the earliest of:

* * *
(2) Removal of bare root nursery plant material from the field;

Section 9(b)(2) refers to bare root plants only; section 9(b)(3) refers to all other nursery plants, including balled and burlapped nursery material, that are not bare root plants. Therefore, insurance ends when bare root plants are removed from the field but does not end for all other nursery plants until such nursery plants have been removed from the nursery. Balled and burlapped nursery plants removed from the ground must continue to be cared for consistent with good nursery practices until removal from the nursery.

In accordance with the 7 C.F.R. 400.765(c), this constitutes the final agency determination and is binding on all participants in the Federal crop insurance program for the 2006 and succeeding crop years.

Date of Issue: October 26, 2005