Risk Management for the 21st Century Act
S 1580 IS
106th CONGRESS
1st Session
S. 1580
To amend the Federal Crop Insurance Act to assist agricultural
producers in managing risk, and for other purposes.
IN THE SENATE OF THE UNITED STATES
September 13, 1999
Mr. ROBERTS (for himself, Mr. KERREY, Mr. CRAIG, Mr. BURNS, Mr. BAUCUS,
Mr. GRASSLEY, Mr. SANTORUM, Mr. CRAPO, Mr. JOHNSON, Mr. THOMAS, Mr. BROWNBACK,
Mr. HAGEL, Mr. DASCHLE, Mr. HARKIN, Mr. ENZI, Mr. INHOFE, and Mr. CONRAD)
introduced the following bill; which was read twice and referred to the
Committee on Agriculture, Nutrition, and Forestry
A BILL
To amend the Federal Crop Insurance Act to assist agricultural
producers in managing risk, and for other purposes.
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 `Risk Management for
the 21st Century Act'.
(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--CROP INSURANCE COVERAGE
Sec. 101. Prevented planting.
Sec. 102. Alternative rating methodologies.
Sec. 103. Quality adjustment.
Sec. 104. Catastrophic risk protection.
Sec. 105. Payment of portion of premium by Corporation.
Sec. 106. Additional premium subsidy for risk management activities.
Sec. 107. Assigned yields.
Sec. 108. Multiyear disaster actual production history adjustment.
Sec. 109. Noninsured crop disaster assistance program.
TITLE II--PILOT PROGRAMS
Sec. 201. Administration and expansion of gross revenue pilot programs
for specialty crops.
Sec. 202. Low-risk producer pilot program.
Sec. 203. Revenue insurance pilot program for hog and cattle producers.
Sec. 204. Pilot program for coverage of specialty crops and uninsured
commodities and livestock through whole farm revenue insurance.
Sec. 205. Options pilot program for cattle and hog producers.
Sec. 206. Funding for pilot programs.
TITLE III--ADMINISTRATION
Sec. 301. Board of Directors of Corporation.
Sec. 302. Office of Risk Management.
Sec. 303. Office of Private Sector Partnership.
Sec. 304. Penalties for false information.
Sec. 306. Program compliance.
Sec. 307. Specialty crops.
Sec. 308. Adequate coverage for agricultural commodities.
Sec. 309. Limitation on double insurance.
Sec. 310. Consultation with State committees of Farm Service Agency.
Sec. 311. Fees for plans of insurance.
Sec. 312. Reinsurance agreements.
TITLE IV--MISCELLANEOUS
Sec. 402. Effective date.
TITLE I--CROP INSURANCE COVERAGE
SEC. 101. PREVENTED PLANTING.
(a) IN GENERAL- Section 508(a) of the Federal Crop Insurance Act (7
U.S.C. 1508(a)) is amended by adding at the end the following:
`(A) EQUAL COVERAGE- For each agricultural commodity for which prevented
planting coverage is available, the Corporation shall offer an equal percentage
level of prevented planting coverage.
`(B) AREA CONDITIONS REQUIRED FOR PAYMENT- The Corporation shall limit
prevented planting payments to producers to situations in which producers
in the area in which the farm is located are generally affected by the
conditions that prevent an agricultural commodity from being planted.
`(C) SUBSTITUTE COMMODITY-
`(i) AUTHORITY TO PLANT- Subject to clause (iv), a producer that has
prevented planting coverage and is eligible to receive an indemnity under
such coverage may plant an agricultural commodity, other than the commodity
covered by the prevented planting coverage, on the acreage originally prevented
from being planted.
`(ii) NONAVAILABILITY OF INSURANCE- A substitute agricultural commodity
planted under clause (i) for harvest in the same crop year shall not be
eligible for coverage under a policy or plan of insurance under this title
or for noninsured crop disaster assistance under section 196 of the Agricultural
Market Transition Act (7 U.S.C. 7333). For purposes of paragraph (7) of
subsection (b), the substitute commodity shall be deemed to have at least
catastrophic risk protection so as to satisfy the requirements of that
paragraph.
`(iii) EFFECT ON ACTUAL PRODUCTION HISTORY- If a producer plants a
substitute agricultural commodity under clause (i) for a crop year, the
Corporation shall assign the producer a recorded yield, for that crop year
for the commodity that was prevented from being planting, equal to 60 percent
of the producer's actual production history for that commodity for purposes
of determining the producer's actual production history for subsequent
crop years.
`(iv) EFFECT ON PREVENTED PLANTING PAYMENT- If a producer plants a
substitute agricultural commodity under clause (i) before the latest planting
date established by the Corporation for the agricultural commodity prevented
from being planted, the Corporation shall not make a prevented planting
payment with regard to the commodity prevented from being planted.'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall be reflected
in the rates for applicable plans of insurance not later than crop year
2001.
SEC. 102. ALTERNATIVE RATING METHODOLOGIES.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 101) is amended by adding at the end the following:
`(8) ALTERNATIVE RATING METHODOLOGIES-
`(A) IN GENERAL- Not later than September 30, 2000, the Corporation
shall develop and implement alternative methodologies for rating plans
of insurance under subsections (b) and (c), and rates for the plans of
insurance, that take into account--
`(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) REVIEW AND ADJUSTMENT- Effective for the 2001 and subsequent crop
years, the Corporation shall review and make any necessary adjustments
to methodologies and rates established under this paragraph, based on (as
determined by the Corporation)--
`(i) expected future losses, with appropriate adjustment of any historical
data used in rating to remove--
`(I) the impact of adverse selection; and
`(II) data that no longer reflects the productive capacity of the area;
`(ii) program errors; and
`(iii) any other factor that can cause errors in methodologies and
rates.
`(C) IMPLEMENTATION- In developing, implementing, and adjusting rating
methodologies and rates under this paragraph, the Corporation shall--
`(i) use methodologies for rating plans of insurance under subsections
(b) and (c) that result in the lowest premiums payable by producers of
an agricultural commodity in a geographic area, as determined by the Corporation;
and
`(ii) update the manner in which rates are applied at the individual
producer level, as determined by the Corporation.
`(D) PRIORITY- In developing, implementing, and adjusting alternative
methodologies for rating plans of insurance under subsections (b) and (c)
for agricultural commodities, the Corporation shall provide the highest
priority to agricultural commodities with (as determined by the Corporation)--
`(i) the largest average acreage; and
`(ii) the lowest percentage of producers that purchased coverage under
subsection (c).'.
SEC. 103. QUALITY ADJUSTMENT.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 102) is amended by adding at the end the following:
`(9) QUALITY ADJUSTMENT POLICIES- The Corporation shall offer, only
as an endorsement to a policy, coverage that permits a reduction in the
quantity of production of an agricultural commodity produced during a crop
year, or any similar adjustment, that results from the agricultural commodity
not meeting the quality standards established in the policy.'.
SEC. 104. CATASTROPHIC RISK PROTECTION.
Section 508(b)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)(2))
is amended--
(1) in subparagraph (A), by striking `subparagraph (B)' and inserting
`subparagraphs (B) and (C)'; and
(2) by adding at the end the following:
`(C) RERATING- The Office of Risk Management shall rerate the levels
of catastrophic risk protection offered for each of the 2000 spring crop
year, 2001 fall crop year, and subsequent crop years.'.
SEC. 105. PAYMENT OF PORTION OF PREMIUM BY CORPORATION.
(a) EXPECTED MARKET PRICE- 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:
`(5) EXPECTED MARKET PRICE-
`(A) IN GENERAL- 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- The expected market price of an agricultural commodity--
`(i) except as otherwise provided in this subparagraph, shall be not
less than the projected market price of the agricultural commodity, as
determined by the Corporation;
`(ii) may be based on the actual market price of the agricultural commodity
at the time of harvest, as determined by the Corporation;
`(iii) in the case of revenue and other similar plans of insurance,
shall be the actual market price of the agricultural commodity, as determined
by the Corporation; or
`(iv) in the case of cost of production or similar plans of insurance,
shall be the projected cost of producing the agricultural commodity, as
determined by the Corporation.'.
(b) PREMIUM AMOUNTS- Section 508(d)(2) of the Federal Crop Insurance
Act (7 U.S.C. 1508(d)(2)) is amended by striking subparagraph (C) and inserting
the following:
`(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 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 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.'.
(c) PAYMENT OF PORTION OF PREMIUM BY CORPORATION- 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:
`(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 subsections (a)(7) and (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:
`(B) In the case of additional coverage less than or equal to 50 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)(B)(i); and
`(ii) the amount of operating and administrative expenses determined
under subsection (d)(2)(B)(ii).
`(C) In the case of additional coverage at greater than 50 percent,
but 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)(i); and
`(ii) the amount of operating and administrative expenses determined
under subsection (d)(2)(B)(ii).
`(D) 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)(i); and
`(ii) the amount of operating and administrative expenses determined
under subsection (d)(2)(C)(ii).
`(E) 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 for coverage
at 75 percent of the recorded or appraised average yield indemnified at
100 percent of the expected market price under subsection (d)(2)(D)(i);
and
`(ii) the amount of operating and administrative expenses determined
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. 106. ADDITIONAL PREMIUM SUBSIDY FOR RISK MANAGEMENT ACTIVITIES.
Section 508(e) of the Federal Crop Insurance Act (7 U.S.C. 1508(e))
is amended--
(1) in paragraph (2), by striking `The amount' and inserting `Subject
to paragraph (5), the amount'; and
(2) by adding at the end the following:
`(5) RISK MANAGEMENT ACTIVITIES- The amount of the premium payable
by the Corporation for a plan of insurance issued to a producer for a covered
year under paragraph (2) shall be increased by an amount equal to 5 percent
of the premium payable by the producer if the producer obtains or uses
for the covered year at least 2 of the following risk management practices:
`(A) FUTURE OR OPTION- The producer may hedge price, revenue, or production
risk by entering into at least 1 standard exchange-traded contract for
a future or option on a principal agricultural commodity produced on the
farm.
`(B) CASH FORWARD OR OTHER MARKETING CONTRACT- The producer may cover
at least 20 percent of the value of a principal agricultural commodity
produced on the farm with a cash forward or other type of marketing contract.
`(C) AGRICULTURAL MARKETING AND RISK MANAGEMENT EDUCATION- The producer
may attend an agricultural marketing or risk management class, including
a seminar or class conducted by a broker licensed by a futures exchange.
`(D) AGRICULTURAL TRADE OPTION- The producer may hedge price, revenue,
or production risk on at least 10 percent of the value
of a principal agricultural commodity produced on the farm by purchasing
an agricultural trade option.
`(E) TRUST- The producer may make a deposit of at least 10 percent
of the payments of the producer under the Agricultural Market Transition
Act (7 U.S.C. 7201 et seq.) into a trust authorized by statute for eligible
farming businesses that may be established to accept tax deductible contributions.
`(F) FINANCIAL RISK REDUCTION- The producer may reduce farm financial
risk by reducing debt in an amount that reduces leverage or by increasing
liquidity, as determined by the Secretary.'.
SEC. 107. ASSIGNED YIELDS.
Section 508(g)(2)(B) of the Federal Crop Insurance Act (7 U.S.C. 1508(g)(2)(B))
is amended--
(1) by striking `assigned a yield' and inserting `assigned--
(2) by striking the period at the end and inserting `; or'; and
(3) by adding at the end the following:
`(ii) a yield determined by the Corporation, in the case of--
`(I) a person that has not been actively engaged in farming for a share
of the production of the insured crop for more than 2 crop years, as determined
by the Secretary;
`(II) a producer that produces an agricultural commodity on land that
has not been farmed by the producer; and
`(III) a producer that rotates a crop produced on a farm to a crop
that has not been produced on the farm.'.
SEC. 108. MULTIYEAR DISASTER ACTUAL PRODUCTION HISTORY ADJUSTMENT.
Section 508(g) of the Federal Crop Insurance Act (7 U.S.C. 1508(g))
is amended by adding at the end the following:
`(4) TRANSITIONAL ADJUSTMENT FOR DISASTERS-
`(A) DEFINITION OF A PRODUCER THAT HAS SUFFERED A MULTIYEAR DISASTER-
In this paragraph, the term `a producer that has suffered a multiyear disaster'
means a producer that has suffered a natural disaster during at least 3
of the immediately preceding 5 crop years that resulted in a cumulative
reduction of at least 25 percent in the actual production history of the
crop of an agricultural commodity.
`(B) ELIMINATION OF CERTAIN YEARS OF PRODUCTION HISTORY- Effective
beginning with the 2000 crop year, for the purpose of calculating the actual
production history for a crop of an agricultural commodity, a producer
that has suffered a multiyear disaster with respect to the crop may exclude
1 year of production history for each 5 years included in the actual production
history calculation of the crop for which the producer purchased crop insurance.
`(C) CORPORATION'S SHARE OF CHANGED COSTS- In the case of an exclusion
under subparagraph (B), in addition to any other authority to pay any portion
of premium, the Corporation shall pay--
`(i) the portion of the premium that represents the increase in premium
associated with the exclusion;
`(ii) all additional indemnities associated with the exclusion; and
`(iii) any amounts that result from the difference in the administrative
and operating expenses owed to an approved insurance provider as the result
of an adjustment in actual production history under this paragraph.
`(D) INCREASE IN ACTUAL PRODUCTION HISTORY AFTER EXCLUSIONS- In the
case of a producer that has received an exclusion under subparagraph (B),
the Corporation shall not limit the increase of the actual production history
based on the producer's actual production of the crop of an agricultural
commodity in succeeding crop years until the actual production history
for the producer reaches the level for the crop year immediately preceding
the first year of the multiyear disaster.
`(E) TERMINATION OF EXCLUSION AUTHORITY- The authority to apply this
paragraph to a producer shall terminate with respect to the first crop
year in which crop insurance is available to the producer that adequately
insures against natural disasters that occur in multiple crop years, as
determined by the Corporation.'.
SEC. 109. NONINSURED CROP DISASTER ASSISTANCE PROGRAM.
(a) OPERATION AND ADMINISTRATION OF PROGRAM- Section 196(a)(2) of the
Agricultural Market Transition Act (7 U.S.C. 7333(a)(2)) is amended by
adding at the end the following:
`(C) COMBINATION OF SIMILAR TYPES OR VARIETIES- At the option of the
Secretary, all types or varieties of a crop or commodity described in subparagraph
(A) or (B) may be considered to be a single eligible crop under this section.'.
(b) RECORDS- Section 196(b) of the Agricultural Market Transition Act
(7 U.S.C. 7333(b)) is amended--
(1) by striking paragraph (2) and inserting the following:
`(2) RECORDS- To be eligible for assistance under this section, on
payment of the service fee, a producer shall provide annually to the Secretary
records of crop acreage, acreage yields, and production for each crop,
as required by the Secretary.'; and
(2) in paragraph (3), by inserting `annual' after `shall provide'.
(c) LOSS REQUIREMENTS- Section 196 of the Agricultural Market Transition
Act (7 U.S.C. 7333) is amended by striking subsection (c) and inserting
the following:
`(1) DISASTER- To be eligible for assistance under this section, a
producer of an eligible crop shall have suffered a loss of a noninsured
commodity as the result of a natural disaster described in subsection (a)(3).
`(2) ASSISTANCE- On the declaration of a natural disaster described
in subsection (a)(3), the Secretary shall make assistance under this section
to producers of an eligible crop that have suffered a loss as a result
of the disaster.
`(3) AREA TRIGGER- The Secretary may provide assistance to individual
producers without any requirement of an area loss.'.
(d) NEW ELIGIBLE CROPS- Section 196 of the Agricultural Market Transition
Act (7 U.S.C. 7333) is amended--
(1) in subsection (d)(1)--
(A) by inserting `(except as provided in subsection (j))' after `percent';
and
(B) by inserting `determined under subsection (e)' after `for the crop';
(2) by redesignating subsection (j) as subsection (l); and
(3) by inserting after subsection (i) the following:
`(1) IN GENERAL- Subject to paragraph (2), if a producer produces an
eligible crop that is new to an area (as determined by the Secretary),
a payment for the producer shall be computed by substituting the following
percentages of yields for the percentages of yields specified in subsection
(d)(1):
`(A) In the case of the first crop year of the eligible crop produced
by the producer, 35 percent of the established yield for the crop determined
under subsection (e).
`(B) In the case of each of the second through fourth years of the
eligible crop produced by the producer--
`(i) 45 percent of the established yield for the crop determined under
subsection (e); or
`(ii) if the producer received a payment under this section for the
first crop year of the eligible crop produced by the producer, 35 percent
of the established yield for the crop determined under subsection (e).
`(2) TEMPORARY INELIGIBILITY- If a producer of an eligible crop described
in paragraph (1) receives a payment under this section in both the first
and second crop years of the eligible crop, the producer shall be ineligible
for a payment under this section until the producer has successfully produced
the crop for at least 3 consecutive crop years with no loss reported, as
determined by the Secretary.'.
(e) SERVICE FEE- Section 196 of the Agricultural Market Transition
Act (7 U.S.C. 7333) (as amended by subsection (d)) is amended by inserting
after subsection (j) the following:
`(1) IN GENERAL- To be eligible to receive assistance for an eligible
crop for a crop year under this section, a producer shall pay to the Secretary
a service fee for each eligible crop in an amount that is equal to the
per policy fee for catastrophic risk protection otherwise available under
section 508(b) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)).
`(2) USE- The Secretary shall use service fees collected under this
subsection to offset the administrative and operating expenses of carrying
out this section.'.
TITLE II--PILOT PROGRAMS
SEC. 201. ADMINISTRATION AND EXPANSION OF GROSS REVENUE PILOT PROGRAMS
FOR SPECIALTY CROPS.
Section 507(g) of the Federal Crop Insurance Act (7 U.S.C. 1507(g))
is amended by adding at the end the following:
`(4) ADMINISTRATION AND EXPANSION OF GROSS REVENUE PILOT PROGRAMS FOR
SPECIALTY CROPS-
`(A) ADMINISTRATION- The Specialty Crops Coordinator shall administer
the gross revenue pilot programs that are in effect for specialty crops.
`(B) EXPANSION- For crop year 2000, the pilot programs shall be expanded
to include any additional counties in the States of Arizona, California,
Florida, Georgia, Idaho, Maine, Michigan, New Mexico, New York, North Carolina,
Oregon, and Texas and other States that are determined by the Specialty
Crops Coordinator to be appropriate for inclusion.'.
SEC. 202. LOW-RISK PRODUCER PILOT PROGRAM.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 103) is amended by adding at the end the following:
`(10) LOW-RISK PRODUCER PILOT PROGRAM-
`(A) IN GENERAL- For each of the 2000 through 2003 crop years, the
Corporation shall carry out a pilot program that is designed to encourage
participation in the Federal crop insurance program established under this
title by producers who rarely suffer insurable losses.
`(B) SCOPE- The Corporation shall carry out the pilot program in at
least 40 counties that are determined by the Corporation to be adequate
to provide a comprehensive evaluation of the feasibility, effectiveness,
and demand among producers for a low-risk producer program.
`(C) PREMIUM REFUND- Notwithstanding section 506(o) and subsection
(d)(1), if a producer participating in the pilot program incurs a yield
loss in any crop year that is more than 10 percent but not more than 35
percent
of the yield determined under subsection (g), the Corporation shall--
`(i) refund all or part, as determined by the Corporation, of the premium
that was paid by the producer for a plan of insurance for the crop that
incurred the qualifying loss; or
`(ii) apply the amount to be refunded under clause (i) against the
premium payable by the producer for equivalent coverage for the subsequent
crop year.
`(D) REGULATIONS- The Corporation shall promulgate such regulations
as are necessary to carry out the pilot program.'.
SEC. 203. REVENUE INSURANCE PILOT PROGRAM FOR HOG AND CATTLE PRODUCERS.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 202) is amended by adding at the end the following:
`(11) REVENUE INSURANCE PILOT PROGRAM FOR HOG AND CATTLE PRODUCERS-
`(A) IN GENERAL- The Secretary shall carry out a pilot program in a
limited number of counties under which an eligible producer of hogs or
cattle described in subparagraph (B) may elect to receive insurance, through
approved insurance providers with reinsurance provided through futures
markets, against loss of revenue.
`(B) ELIGIBLE PRODUCERS- The Secretary shall offer revenue insurance
under this paragraph to--
`(i) hog producers in Hardin, Scott, and Warren counties of the State
of Iowa; and
`(ii) cattle producers in Sioux, Jackson, and Wayne counties in the
State of Iowa.
`(C) COVERAGE- Under the pilot program, a participating producer may
elect coverage that is based on the expected gross profit of the producer
from the sale of slaughter-ready hogs or cattle during a covered year.
`(D) WHOLE FARM COVERAGE- The Secretary shall permit a participating
producer that produces corn or soybeans to--
`(i) combine coverage for the corn or soybeans under this title and
coverage for hogs or cattle under this paragraph; and
`(ii) obtain a lower rate of premium for the combined coverage.
`(E) FUNDING- From funds made available to carry out this title, the
Secretary shall use not more than $200,000 to carry out this paragraph.'.
SEC. 204. PILOT PROGRAM FOR COVERAGE OF SPECIALTY CROPS AND UNINSURED COMMODITIES
AND LIVESTOCK THROUGH WHOLE FARM REVENUE INSURANCE.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 203) is amended by adding at the end the following:
`(12) PILOT PROGRAM FOR COVERAGE OF SPECIALTY CROPS AND UNINSURED COMMODITIES
AND LIVESTOCK THROUGH WHOLE FARM REVENUE INSURANCE- The Secretary shall
carry out (directly or by contract) a pilot program in a limited number
of counties, as determined by the Secretary, to determine the feasibility
of using whole farm revenue insurance to insure--
`(A) specialty crops that are insured under this title; and
`(B) commodities and livestock that are not insured under this title.'.
SEC. 205. OPTIONS PILOT PROGRAM FOR CATTLE AND HOG PRODUCERS.
Section 191 of the Agricultural Market Transition Act (7 U.S.C. 7331)
is amended--
(1) in the first sentence of subsection (a), by inserting `and cattle
and hogs' after `under this title'; and
(2) in subsection (c)(1), by inserting before the semicolon the following:
`, except that this paragraph shall not apply to a cattle or hog producer'.
SEC. 206. FUNDING FOR PILOT PROGRAMS.
Section 516(b) of the Federal Crop Insurance Act (7 U.S.C. 1516(b))
is amended by adding at the end the following:
`(A) IN GENERAL- Except as provided in subparagraph (B), from funds
made available to carry out this title, the Secretary shall use not more
than $50,000,000 for any fiscal year to carry out pilot programs under
this title.
`(B)) REVENUE INSURANCE PILOT PROGRAM FOR HOG AND CATTLE PRODUCERS-
Subparagraph (A) shall not apply to the revenue insurance pilot program
for hog and cattle producers carried out under section 508(a)(11).'.
TITLE III--ADMINISTRATION
SEC. 301. 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:
`(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) 4 members who are active agricultural producers with or without
crop insurance, with 1 member appointed from each of the 4 regions of the
United States (as determined by the Secretary);
`(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.
`(5) STAFF- The Board shall employ or contract with 1 or more individuals
who are knowledgeable and experienced in quantitative mathematics and actuarial
rating to assist the Board in reviewing and approving policies and materials
with respect to plans of insurance authorized or submitted under section
508.'.
SEC. 302. OFFICE OF RISK MANAGEMENT.
Section 226A of the Department of Agriculture Reorganization Act of
1994 (7 U.S.C. 6933) is amended--
(1) by redesignating subsections (a) through (d) as subsections (b)
through (e), respectively;
(2) by inserting after the section heading the following:
`(a) DEFINITION OF SPECIALTY CROP- In this section, the term `specialty
crop' has the meaning given the term in section 502(b) of the Federal Crop
Insurance Act (7 U.S.C. 1502(b)).';
(3) by striking subsection (b) (as so redesignated) and inserting the
following:
`(b) ESTABLISHMENT- The Secretary shall establish and maintain in the
Department an Office of Risk Management, which shall be under the direction
of the Board of Directors of the Federal Crop Insurance Corporation.';
(4) in subsection (c) (as so redesignated)--
(A) by striking paragraph (1) and inserting the following:
`(1) Assistance to the Board in developing, reviewing, and recommending
plans of insurance under section 508(a)(7) of the Federal Crop Insurance
Act (7 U.S.C. 1508(a)(7)) to ensure that each agricultural commodity (including
each new or specialty crop) is adequately served by plans of insurance.';
(B) in paragraph (3), by inserting before the period at the end the
following: `, except that the Office shall not impose a limitation on the
quantity of livestock that may be covered by any whole farm revenue insurance
pilot program conducted by the Office';
(C) by redesignating paragraph (4) as paragraph (5); and
(D) by inserting after paragraph (3) the following:
`(4) Administration of the research and development programs of the
Office (directly or by contract) for each of the 2001 and subsequent crop
years, including--
`(A) as 1 of the 3 highest research and development priorities of the
Office, development of a pasture, range, and forage program to promote
land stewardship; and
`(B) the use of at least 50 percent of the funds used by the Office
for each fiscal year for research and development programs on research
and development activities related to specialty crops, with at least 50
percent of the funds expended each fiscal year for the activities by entering
into contracts.'; and
(5) by adding at the end the following:
`(f) PARTNERSHIPS FOR RISK MANAGEMENT DEVELOPMENT AND IMPLEMENTATION-
`(1) PURPOSE- The purpose of this subsection is to authorize the Risk
Management Agency to enter into partnerships with public and private entities
for the purpose of increasing the availability of risk management tools
for specialty crop producers.
`(2) AUTHORITY- The Risk Management Agency is authorized to use for
each fiscal year not more than $20,000,000 of funds made available under
section 516(b)(2) of the Federal Crop Insurance Act (7 U.S.C. 1516(b)(2))
to enter into partnerships with the Cooperative State Research, Education,
and Extension Service, the Agricultural Research Service, the National
Oceanic and Atmospheric Administration, and other appropriate public and
private entities with demonstrated capabilities in developing and implementing
risk management and marketing options for specialty crops.
`(3) OBJECTIVES- The Risk Management Agency may enter into a partnership
under paragraph (2) to--
`(A) enhance the notice and timeliness of notice of weather conditions
that could negatively affect specialty crop yields, quality, and final
product use in order to allow producers to take preventive actions to increase
end-product profitability and marketability and to reduce the possibility
of crop insurance claims;
`(B) develop a multifaceted approach to pest management to decrease
inputs, decrease the development of pest resistance, and increase the effectiveness
of pest prevention applications;
`(C) develop a multifaceted approach to fertilization to decrease inputs,
decrease excessive nutrient loading to the environment, and increase application
efficiency;
`(D) develop or improve techniques for planning, breeding, growing,
maintaining, harvesting, storage, and shipping that will address quality
and quantity challenges for specialty crops and livestock associated with
year-to-year and regional variations;
`(E) clarify labor requirements and assist producers in complying with
requirements that allow specialty crop producers to better meet the physically
intense and time-compressed
planting, tending, and harvesting requirements associated with specialty
crop production;
`(F) provide assistance to State foresters or equivalent officials
for the prescribed use of burning on private forest land for the prevention,
control, and suppression of fire; and
`(G) develop other risk management tools that specialty crop producers
can use to further increase their economic and production stability.'.
SEC. 303. OFFICE OF PRIVATE SECTOR PARTNERSHIP.
(a) IN GENERAL- The Federal Crop Insurance Act is amended by inserting
after section 507 (7 U.S.C. 1507) the following:
`SEC. 507A. OFFICE OF PRIVATE SECTOR PARTNERSHIP.
`(a) ESTABLISHMENT- Not later than 90 days after the date of enactment
of this section, the Secretary shall establish and maintain in the Department
an Office of Private Sector Partnership, which shall be under the direction
of the Board.
`(b) FUNCTIONS- The Office shall--
`(1) provide at least monthly reports to the Board on crop insurance
issues, which shall be based on comments received from producers, approved
insurance providers, and other sources that the Office considers appropriate;
`(2)(A) review policies and materials with respect to--
`(i) subsidized plans of insurance authorized under section 508; and
`(ii) unsubsidized plans of insurance submitted to the Board under
section 508(h); and
`(B) make recommendations to the Board with respect to approval of
the policies and materials, including recommendations with respect to the
disapproval of any policies and materials that contain terms or conditions
that promote fraud;
`(3) make recommendations to the Board to encourage cooperation between
United States attorneys, the Corporation, and approved insurance providers
to minimize fraud in connection with an insurance plan or policy under
this title;
`(4) administer the reinsurance functions described in section 508(k)
on behalf of the Corporation;
`(5) review and make recommendations to the Board with respect to methodologies
for rating plans of insurance under this title; and
`(6) perform such other functions as the Board considers appropriate.
`(c) ADMINISTRATOR- The Office shall be headed by an Administrator
who shall be appointed by the Secretary.
`(d) STAFF- The Administrator shall appoint such employees pursuant
to title 5, United States Code, as are necessary for the administration
of the Office, including employees who have commercial reinsurance, actuarial,
and specialty crop experience.'.
(b) FUNDING- Section 516 of the Federal Crop Insurance Act (7 U.S.C.
1516) is amended--
(1) in subsection (a)(2)--
(A) in subparagraph (A), by striking `and' at the end;
(B) in subparagraph (B), by striking the period at the end and inserting
`; and'; and
(C) by adding at the end the following:
`(C) salaries and expenses of the Office of Private Sector Partnership.';
and
(2) in subsection (b)(1)--
(A) in subparagraph (B), by striking `; and' and inserting a semicolon;
(B) in subparagraph (C), by striking the period at the end and inserting
a semicolon; and
(C) by adding at the end the following:
`(D) salaries and expenses of the Office of Private Sector Partnership,
but not to exceed $5,000,000 for each fiscal year; and'.
SEC. 304. PENALTIES FOR FALSE INFORMATION.
Section 506(n)(1) of the Federal Crop Insurance Act (7 U.S.C. 1506(n)(1))
is amended--
(1) in subparagraph (A), by inserting `for each claim' after `$10,000';
and
(2) in subparagraph (B), by striking `noninsured assistance' and inserting
`any loan, payment, or benefit described in section 1211 of the Food Security
Act of 1985 (16 U.S.C. 3811)'.
SEC. 305. REGULATIONS.
Section 506(p) of the Federal Crop Insurance Act (7 U.S.C. 1506(p))
is amended--
(1) by striking `The Secretary' and inserting the following:
`(1) IN GENERAL- The Secretary'; and
(2) by adding at the end the following:
`(A) IN GENERAL- Regulations issued by the Secretary and the Corporation
specifying the terms of insurance under section 508 shall be issued without
regard to--
`(i) the notice and comment provisions of section 553 of title 5, United
States Code;
`(ii) the Statement of Policy of the Secretary of Agriculture effective
July 24, 1971 (36 Fed. Reg. 13804), relating to notices of proposed rulemaking
and public participation in rulemaking; and
`(iii) chapter 35 of title 44, United States Code (commonly known as
the `Paperwork Reduction Act').
`(B) CONGRESSIONAL REVIEW OF AGENCY RULEMAKING- In carrying out this
paragraph, the Secretary shall use the authority provided under section
808 of title 5, United States Code.'.
SEC. 306. PROGRAM COMPLIANCE.
Section 506(q) of the Federal Crop Insurance Act (7 U.S.C. 1506(q))
is amended--
(1) by redesignating paragraph (2) as paragraph (6); and
(2) by striking paragraph (1) and inserting the following:
`(1) IN GENERAL- Not later than 180 days after the date of enactment
of the Risk Management for the 21st Century Act, the Corporation shall
establish a program for monitoring compliance with this title by all Federal
crop insurance participants, including producers, agents, adjusters, and
approved insurance providers.
`(2) CONSULTATION- The Corporation shall consult with approved insurance
providers in developing the compliance program.
`(3) OVERSIGHT OF LOSS ADJUSTMENT- As part of the compliance program,
the Corporation shall provide for a mechanism to independently review the
performance of loss adjusters.
`(4) PROGRAM REVIEW- Not later than 90 days after the date of enactment
of the Risk Management for the 21st Century Act, the Corporation shall
submit to the Board and the Office of Private Sector Partnership for their
review the proposed compliance program under this subsection.
`(5) ANNUAL REPORTS- Beginning with fiscal year 2001, the Corporation
shall submit an annual report to the Committee on Agriculture of the House
of Representatives, the Committee on Agriculture, Nutrition, and Forestry
of the Senate, the Board, and the Office of Private Sector Partnership
concerning the compliance program established under this subsection, including
any recommendations for legislative or administrative changes that could
further improve program compliance.'.
SEC. 307. SPECIALTY CROPS.
(a) IN GENERAL- Section 507(g) of the Federal Crop Insurance Act (7
U.S.C. 1507(g)) (as amended by section 201) is amended by adding at the
end the following:
`(5) RESEARCH AND OTHER ASSISTANCE FOR NEW OR REVISED CROP INSURANCE
POLICIES FOR SPECIALTY CROPS- To encourage the development of new or revised
crop insurance policies and other materials for specialty crops and submission
of those insurance policies and other materials to the Corporation under
section 508(h), the Specialty Crops Coordinator may--
`(A) make grants on a competitive basis for the research and development
of insurance policies for underserved specialty crops;
`(B) reimburse research costs associated with product development;
`(C) enter into contracts for the research and development of insurance
policies for underserved specialty crops; and
`(D) enter into contracts and reimburse costs associated with the reassessment
and reformatting of existing insurance policies for specialty crops.
`(6) TIME PERIODS FOR PURCHASE OF COVERAGE FOR SPECIALTY CROPS-
`(A) SALES CLOSING DATE- Subject to subparagraph (B), the sales closing
date for obtaining coverage for a specialty crop under this title may not
expire before the end of the 120-day period beginning on the date of the
final release of materials for policies from the Risk Management Agency
and the Specialty Crops Coordinator.
`(B) RELEASE OF PRODUCT DELAYED TO FOLLOWING CROP YEAR- If the date
of release of an insurance product for a specialty crop for a crop year
does not allow sufficient time for the dissemination of policies and related
materials or jeopardizes the integrity and actuarial soundness of the crop
insurance program for specialty crops, the Board shall delay the release
and offering of the product until the following crop year.
`(C) PURCHASE DURING INSURANCE PERIOD- A producer of a specialty crop
may purchase new coverage for the specialty crop, or increase coverage
levels, at any time during the insurance period, subject to a 30-day waiting
period for the coverage to take effect to permit an inspection to verify
acceptability by the insurance provider.'.
(b) STUDY OF NEW SPECIALTY CROP INSURANCE POLICIES-
(1) IN GENERAL- The Federal Crop Insurance Corporation and the Specialty
Crops Coordinator shall jointly study the feasibility of developing new
insurance policies for specialty crops, including policies based on the
cost of production or adjusted gross income, quality-based policies, or
an intermediate base program with a higher coverage and cost than catastrophic
risk protection offered on the date of enactment of this Act.
(2) SUBMISSION OF RESULTS- Not later than 1 year after the date of
enactment of this Act, the Corporation and the Specialty Crops Coordinator
shall submit to Congress a report containing the results of the study required
by this subsection.
SEC. 308. ADEQUATE COVERAGE FOR AGRICULTURAL COMMODITIES.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 204) is amended by adding at the end the following:
`(13) ADEQUATE COVERAGE FOR AGRICULTURAL COMMODITIES-
`(A) REVIEW- The Board shall review the plans of insurance that are
offered by approved insurance providers under this Act to determine if
each agricultural commodity (including each new or specialty crop) is adequately
served by the plans.
`(B) RECOMMENDATIONS- If the Board determines that an agricultural
commodity (including a new or specialty crop) is not adequately served
by the plans, the Board may recommend to the Office of Risk Management
that the Office--
`(i) develop or (through the Corporation) contract to develop plans
of insurance for the agricultural commodity; and
`(ii) provide the plans to approved insurance providers, to be offered
for sale to producers.
`(C) PARTICIPATION PERCENTAGES-
`(i) IN GENERAL- The Secretary shall annually review the participation
percentage of eligible acreage insured under this Act with respect to each
State and county and with respect to each agricultural commodity.
`(ii) DETERMINATION- If the Secretary determines that the participation
percentage in a State or county for an agricultural commodity is more than
75 percent below the aggregate national average participation percentage
for the agricultural commodity, and the Secretary determines that there
is no acceptable reason for the disparity, the Secretary shall implement
program changes necessary to adjust the participation percentage in the
State or county to not less than 75 percent below the national average.
`(iii) AUTHORITY- The Secretary shall carry out this subparagraph without
regard to any other provision of law.'.
SEC. 309. LIMITATION ON DOUBLE INSURANCE.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 308) is amended by adding at the end the following:
`(14) LIMITATION ON DOUBLE INSURANCE- The Corporation may offer plans
of insurance or reinsurance for only 1 agricultural commodity on specific
acreage during a crop year, unless--
`(A) there is an established practice of double-cropping in an area,
as determined by the Corporation;
`(B) the additional plan of insurance is offered with respect to an
agricultural commodity that is customarily double-cropped in the area;
and
`(C) the producer has a history of double cropping or the acreage has
historically been double-cropped.'.
SEC. 310. CONSULTATION WITH STATE COMMITTEES OF FARM SERVICE AGENCY.
Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a))
(as amended by section 309) is amended by adding at the end the following:
`(15) CONSULTATION WITH STATE COMMITTEES OF FARM SERVICE AGENCY- The
Corporation shall establish a mechanism under which State committees of
the Farm Service Agency are consulted concerning policies of insurance
offered in a State under this title.'.
SEC. 311. FEES FOR PLANS OF INSURANCE.
(a) IN GENERAL- Section 508(h)(5) of the Federal Crop Insurance Act
(7 U.S.C. 1508(h)(5))) is amended--
(1) by striking `Any policy' and inserting the following:
`(A) IN GENERAL- Any policy'; and
(2) by adding at the end the following:
`(B) FEES FOR EXISTING PLANS OF INSURANCE-
`(i) IN GENERAL- Effective beginning with the 2000 reinsurance year,
if an approved insurance provider elects to sell a plan of insurance that
was developed by another approved insurance provider and the plan of insurance
was approved by the Board before January 1, 1999, the approved insurance
provider that developed the plan of insurance shall have the right to receive
a fee from the approved insurance provider that elects to sell the plan
of insurance.
`(ii) AMOUNT- The amount of the fee that is payable by an approved
insurance provider for a plan of insurance under clause (i) shall be--
`(I) for each of the first 5 crop years that the plan is sold, $2.00
for each policy under the plan that is sold by the approved insurance provider;
`(II) for each of the next 3 crop years that the plan is sold, $1.00
for each policy under the plan that is sold by the approved insurance provider;
and
`(III) for each crop year thereafter that the plan is sold, 50 cents
for each policy under the plan that is sold by the approved insurance provider.
`(C) FEES FOR NEW PLANS OF INSURANCE-
`(i) IN GENERAL- Effective beginning with the 2000 reinsurance year,
if an approved insurance provider elects to sell a plan of insurance that
was developed by another approved insurance provider, the plan of insurance
was approved by the Board on or after January 1, 1999, and the plan of
insurance was not available at the time the plan of insurance was approved
by the Board, the approved insurance provider that developed the plan of
insurance shall have the right to receive a fee from the approved insurance
provider that elects to sell the plan of insurance.
`(I) IN GENERAL- Subject to subclause (II), the amount of the fee that
is payable by an approved insurance provider for a plan of insurance under
clause (i) shall be an amount that is--
`(aa) determined by the approved insurance provider that developed
the plan; and
`(bb) approved by the Board.
`(II) APPROVAL- The Board shall not approve the amount of a fee under
clause (i) if the amount of the fee unnecessarily inhibits the use of the
plan of insurance, as determined by the Board.
`(D) PAYMENTS- The Corporation shall annually--
`(i) collect from an approved insurance provider the amount of any
fees that are payable by the approved insurance provider under subparagraphs
(B) and (C); and
`(ii) credit any fees that are payable to an approved insurance provider
under subparagraphs (B) and (C).
`(E) EXCEPTIONS- In the case of a policy developed by an approved insurance
provider that does not conduct business in a State--
`(i) the approved policy may be marketed in the State by another approved
insurance provider if the approved insurance provider marketing the policy
pays any fee for marketing the policy imposed by the developing provider;
and
`(ii) the developing provider shall not deny payment of a fee by another
provider to maintain full marketing rights of the approved policy.'.
(b) FUNDING- Section 516 of the Federal Crop Insurance Act (7 U.S.C.
1516) (as amended by section 303(b)(2)) is amended--
(1) in subsection (b)(1), by adding at the end the following:
`(E) payment of fees in accordance with section 508(h)(5)(C).'; and
(2) in subsection (c)(1), by inserting `and fees' after `premium income'.
SEC. 312. REINSURANCE AGREEMENTS.
Section 508(k) of the Federal Crop Insurance Act (7 U.S.C. 1508(k))
is amended by striking paragraph (3) and inserting the following:
`(3) REINSURANCE AGREEMENTS-
`(A) SHARE OF RISK- Each reinsurance agreement of the Corporation with
a reinsured company shall require the reinsured company to bear a sufficient
share of any potential loss under the agreement so as to ensure that the
reinsured company will sell and service policies of insurance in a sound
and prudent manner, taking into consideration the financial condition of
the reinsured company and the availability of private reinsurance.
`(B) COMPLIANCE- To promote program compliance and integrity, the Corporation,
after notice and an opportunity for a hearing on the record--
`(i)(I) shall assess civil fines in an amount not to exceed $10,000
per violation against agents, loss adjusters, and approved insurance providers
that are determined by the Corporation to have recurring compliance problems;
and
`(II) may deposit any civil fines collected under subclause (I) in
the insurance fund established under section 516(c); and
`(ii) shall disqualify the agents, loss adjusters, and approved insurance
providers described in clause (i)(I) from participation in the Federal
crop insurance program for a period not to exceed 5 years.
`(C) REVIEW OF AGREEMENTS- As soon as practicable after the date of
enactment of this subparagraph and regularly thereafter, in consultation
with the Office of Private Sector Partnership, the Corporation may review
the Standard Reinsurance Agreement issued by the Corporation to ensure
that the allocation of risk between the Corporation and the reinsured companies
is equitable, as determined by the Corporation.'.
TITLE IV--MISCELLANEOUS
SEC. 401. DEFINITIONS.
Section 502(b) of the Federal Crop Insurance Act (7 U.S.C. 1502(b))
is amended--
(1) by redesignating paragraphs (7) and (8) as paragraphs (8) and (10),
respectively;
(2) by inserting after paragraph (6) the following:
`(7) PROGRAM CROP- The term `program crop' has the meaning given the
term `loan commodity' in section 102 of the Agricultural Market Transition
Act (7 U.S.C. 7202).'; and
(3) by inserting after paragraph (8) (as so redesignated) the following:
`(A) IN GENERAL- The term `specialty crop' means an agricultural commodity
other than a program crop.
`(B) INCLUSIONS- The term `specialty crop' includes fruits, nuts, vegetables,
greenhouse and nursery plants, timber, and turfgrass.'.
SEC. 402. EFFECTIVE DATE.
(a) IN GENERAL- Except as provided in subsection (b), this Act and
the amendments made by this Act take effect on the date of enactment of
this Act.
(b) EXCEPTIONS- The amendments made by sections 101, 103, 105, 106,
108, 109, 201, 202, 203, 204, 205, 206, 302(f), and 307 take effect on
October 1, 2000.
END