HR 1536 IH

To amend the Federal Crop Insurance Act to encourage the broadest possible participation of producers in the Federal crop insurance program and to ensure the continued availability of affordable crop insurance for producers.

To amend the Federal Crop Insurance Act to encourage the broadest possible participation of producers in the Federal crop insurance program and to ensure the continued availability of affordable crop insurance for producers.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Crop Insurance Improvement Act of 1999'.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Establishment or approval of expected market price for each agricultural commodity for which insurance is offered.

Sec. 3. Fixing adequate premium amounts for additional coverage.

Sec. 4. Payment of portion of crop insurance premium by Corporation.

Sec. 5. Effect of disaster declaration on determination of producer's actual production history.

Sec. 6. Assigned yields for newly acquired lands and new crops.

Sec. 7. Cost of production risk protection pilot project.

Sec. 8. Rating methodologies pilot project.

Sec. 9. Livestock coverage pilot project.

Sec. 10. Board of directors of Corporation.

SEC. 2. ESTABLISHMENT OR APPROVAL OF EXPECTED MARKET PRICE FOR EACH AGRICULTURAL COMMODITY FOR WHICH INSURANCE IS OFFERED.

Section 508(c) of the Federal Crop Insurance Act (7 U.S.C. 1508(c)) is amended by striking paragraph (5) and inserting the following new paragraph:

`(5) EXPECTED MARKET PRICE-

`(A) ESTABLISHMENT OR APPROVAL- For the purposes of this title, the Corporation shall establish or approve the price level (referred to in this title as the `expected market price') of each agricultural commodity for which insurance is offered.

`(B) AMOUNT GENERALLY- Except as provided in subparagraphs (C) and (D), the expected market price of an agricultural commodity shall be not less than the projected market price of the agricultural commodity, as determined by the Corporation, but the expected market price may be based on the actual market price of the agricultural commodity at the time of harvest, as determined by the Corporation.

`(C) REVENUE AND SIMILAR PLANS- In the case of revenue and other similar plans of insurance, the expected market price of an agricultural commodity shall be the actual market price of the agricultural commodity, as determined by the Corporation.

`(D) COST OF PRODUCTION AND SIMILAR PLANS- In the case of cost of production or similar plans of insurance, the expected market price of an agricultural commodity shall be the projected cost of producing the agricultural commodity, as determined by the Corporation.'.

SEC. 3. FIXING ADEQUATE PREMIUM AMOUNTS FOR ADDITIONAL COVERAGE.

Section 508(d)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(d)(2)) is amended--

(1) in subparagraph (B), by striking `under all policies with that level of coverage' after `anticipated losses'; and

(2) by striking subparagraph (C) and inserting the following new subparagraphs:

`(C) In the case of additional coverage at greater than or equal to 65 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an equivalent coverage, but less than 75 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an equivalent coverage, the amount of the premium shall--

`(i) be sufficient to cover anticipated losses under all policies with that level of coverage and a reasonable reserve; and

`(ii) include an amount for operating and administrative expenses, as determined by the Corporation, on an industry-wide basis as a percentage of the amount of the premium used to define loss ratio.

`(D) In the case of additional coverage equal to or greater than 75 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an equivalent coverage, the amount of the premium shall--

`(i) be sufficient to cover anticipated losses under all policies with that level of coverage and a reasonable reserve; and

`(ii) include an amount for operating and administrative expenses, as determined by the Corporation, on an industry-wide basis as a percentage of the amount of the premium used to define loss ratio.'.

SEC. 4. PAYMENT OF PORTION OF CROP INSURANCE PREMIUM BY CORPORATION.

(a) PAYMENT REQUIRED- Section 508(e) of the Federal Crop Insurance Act (7 U.S.C. 1508(e)) is amended--

(1) by striking paragraph (1) and inserting the following new paragraph:

`(1) IN GENERAL-

`(A) MANDATORY PAYMENTS- For the purpose of encouraging the broadest possible participation of producers in the crop insurance plans of insurance authorized to be insured or reinsured under subsections (b) and (c), the Corporation shall pay a part of the premium in the amounts determined under this subsection.

`(B) DISCRETIONARY PAYMENTS- In the case of a plan of insurance approved by the Corporation under subsection (h), the Corporation may pay a part of the premium in the amounts not to exceed the amounts determined under this subsection.'; and

(2) in paragraph (2), by striking subparagraphs (B) and (C) and inserting the following new subparagraphs:

`(B) In the case of additional coverage less than 65 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an equivalent coverage, the amount shall be equal to the sum of--

`(i) 45 percent of the amount of the premium established under subsection (d)(2)(B) to satisfy the requirements of clause (i) of such subsection; and

`(ii) the amount of operating and administrative expenses included under subsection (d)(2)(B)(ii).

`(C) In the case of coverage at greater than or equal to 65 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an equivalent coverage, but less than 75 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an equivalent coverage, the amount shall be equal to the sum of--

`(i) 50 percent of the amount of the premium established under subsection (d)(2)(C) to satisfy the requirements of clause (i) of such subsection; and

`(ii) the amount of operating and administrative expenses included under subsection (d)(2)(C)(ii).

`(D) In the case of coverage equal to or greater than 75 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an equivalent coverage, the amount shall be equal to the sum of--

`(i) 55 percent of the amount of the premium established under subsection (d)(2)(D) to satisfy the requirements of clause (i) of such subsection for coverage at 75 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price; and

`(ii) the amount of operating and administrative expenses included under subsection (d)(2)(D)(ii).'.

(d) CONFORMING AMENDMENT- Section 508(h)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(2)) is amended by striking the second sentence.

SEC. 5. EFFECT OF DISASTER DECLARATION ON DETERMINATION OF PRODUCER'S ACTUAL PRODUCTION HISTORY.

(a) DEFINITION OF DESIGNATED DISASTER AREA- Section 502(b) of the Federal Crop Insurance Act (7 U.S.C. 1502(b)) is amended--

(1) by redesignating paragraphs (6), (7), and (8) as paragraphs (7), (8), and (9), respectively; and

(2) by inserting after paragraph (5) the following new paragraph:

`(6) DESIGNATED DISASTER AREA- The term `designated disaster area' means an area--

`(A) covered by a Presidential declaration of major disaster issued under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170); or

`(B) determined to be a disaster area by the Secretary under subpart A of part 1945 of title 7, Code of Federal Regulations.'.

(b) YIELD DETERMINATIONS- Section 508(g) of such Act (7 U.S.C. 1508(g)) is amended by striking paragraph (3) and inserting the following new paragraph (3):

`(3) EXCLUSION OF ONE OR MORE CROP YEARS- In establishing the actual production history of a producer for a crop under paragraph (2)(A) or using the producer's actual production records for any other purpose under this subsection, the Corporation shall exclude any crop year of the crop at the producer's election if, at any time during the crop year, the county in which the crop was grown (or an adjacent county) was included in a designated disaster area declared as a result of damaging weather.'.

SEC. 6. ASSIGNED YIELDS FOR NEWLY ACQUIRED LANDS AND NEW CROPS.

Section 508(g)(2)(B) of the Federal Crop Insurance Act (7 U.S.C. 1508(g)(2)(B)) is amended by adding at

SEC. 7. COST OF PRODUCTION RISK PROTECTION PILOT PROJECT.

Section 508(h)(6) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(6)) is amended--

(1) in subparagraph (A), by striking `, to the extent practicable,';

(2) in subparagraph (B)(i), by striking `1996 and 1997 crop years' and inserting `2000 through 2004 crop years'; and

(3) by striking subparagraph (C) and inserting the following new subparagraph:

`(C) COVERAGE LEVEL; DETERMINATION OF COST OF PRODUCTION- A producer electing to participate in the pilot project may select a coverage level not to exceed 90 percent of the applicable cost of production determined by the Office of Risk Management for the county or an area of the county in which the producer's farm is located. The cost of production coverage determined by the Office shall be based on cost of production data prepared and published by the land-grant college or university for the State in which the producer's farm is located.'.

SEC. 8. RATING METHODOLOGIES PILOT PROJECT.

(a) IN GENERAL- Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) is amended by striking paragraph (8) and inserting the following new paragraph:

`(8) RATING METHODOLOGIES PILOT PROJECT- Not later than September 30, 2000, the Office of Risk Management shall--

`(A) review the methodologies that are used to rate plans of insurance under this title; and

`(B) enter into a contract with a person in the private sector to develop new methodologies for rating plans of insurance under this title that take into account the lower risk pool of--

`(i) producers that elect not to participate in the Federal crop insurance program established under this title; and

`(ii) producers that elect only to obtain catastrophic risk protection under subsection (b).'.

(b) CONFORMING AMENDMENT- Section 507(c) of the Federal Crop Insurance Act (7 U.S.C. 1507(c)) is amended in the last sentence by striking `Nothing' and inserting `Except as provided in section 508(h)(8), nothing'.

SEC. 9. LIVESTOCK COVERAGE PILOT PROJECT.

Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) is amended by adding at the end the following new paragraph:

`(11) LIVESTOCK COVERAGE PILOT PROJECT- Notwithstanding section 518, the Corporation shall carry out a pilot project in a limited number of counties, to be selected by the Corporation, under which a producer of livestock may elect to receive federally reinsured coverage under this title.'.

SEC. 10. BOARD OF DIRECTORS OF CORPORATION.

Section 505 of the Federal Crop Insurance Act (7 U.S.C. 1505) is amended by striking subsection (a) and inserting the following new subsection:

`(a) BOARD OF DIRECTORS-

`(1) IN GENERAL- The management of the Corporation shall be vested in a Board subject to the general supervision of the Secretary.

`(2) COMPOSITION- The Board shall consist of--

`(A) 2 members who are active agricultural producers with or without crop insurance;

`(B) 1 member who is active in the crop insurance business;

`(C) 1 member who is active in the reinsurance business;

`(D) the Under Secretary for Farm and Foreign Agricultural Services;

`(E) the Under Secretary for Rural Development; and

`(F) the Chief Economist of the Department of Agriculture.

`(3) APPOINTMENT AND TERMS OF PRIVATE SECTOR MEMBERS- The members of the Board described in subparagraphs (A), (B), and (C) of paragraph (2)--

`(A) shall be appointed by, and hold office at the pleasure of, the Secretary;

`(B) shall not be otherwise employed by the Federal Government;

`(C) shall be appointed to staggered 4-year terms, as determined by the Secretary; and

`(D) shall serve not more than 2 consecutive terms.

`(4) CHAIRPERSON- The Board shall select a member of the Board described in subparagraph (A), (B), or (C) of paragraph (2) to serve as Chairperson of the Board.'.