Amendments of Public Law 105-185, June 23, 1998 (112 Stat. 523),
the "Agricultural Research, Extension,
and Education Reform Act of 1998" (are underlined).
Amendments of Public Law 105-277, Oct. 21, 1998 (112 Stat. 2681),
the "Omnibus Consolidated
and Emergency Supplemental Appropriations Act, 1999 - Division A:
Omnibus Consolidated
Appropriations - Agriculture, Rural Development, Food and Drug Administration,
and Related
Agencies Appropriations Act, 1999" (are bold).
Sec. 1501. Short title; application of other laws
This chapter may be cited as the "Federal Crop Insurance
Act''. Except as otherwise expressly
provided the provisions in titles I to IV, inclusive, shall not apply
with respect to this chapter, and
the term "Act'' wherever it appears in such titles shall not be construed
to include this chapter.
(Feb. 16, 1938, ch. 30, title V, Sec. 501, 52 Stat. 72.)
Sec. 1502. Purpose and definitions
(a) Purpose
It is the purpose of this chapter to promote the national welfare by
improving the economic
stability of agriculture through a sound system of crop insurance and
providing the means for the
research and experience helpful in devising and establishing such insurance.
(b) Definitions
As used in this chapter:
(1) Additional coverage
The term "additional coverage'' means a plan of crop insurance coverage
providing a
level of coverage
greater than the level available under catastrophic risk protection.
(2) Approved insurance provider
The term "approved insurance provider'' means a private insurance provider
that has
been approved by the Corporation
to provide insurance coverage to producers participating
in the Federal crop insurance
program established under this chapter.
(3) Board
The term "Board'' means the Board of Directors of the Corporation established
under
section 1505(a) of this
title.
(4) Corporation
The term "Corporation'' means the Federal Crop Insurance Corporation established
under section 1503 of this
title.
(5) Department
The term "Department'' means the United States Department of Agriculture.
(6) Loss ratio
The term "loss ratio'' means the ratio of all sums paid by the Corporation
as indemnities
under any eligible crop
insurance policy to that portion of the premium designated for
anticipated losses and a
reasonable reserve, other than that portion of the premium
designated for operating
and administrative expenses.
(7) Secretary
The term "Secretary'' means the Secretary of Agriculture.
(8) Transitional yield
The term "transitional yield'' means the maximum average production per
acre or
equivalent measure that
is assigned to acreage for a crop year by the Corporation in
accordance with the regulations
of the Corporation whenever the producer fails--
(A) to certify that acceptable documentation of production and acreage
for the crop year
is in the possession of the producer; or
(B) to present the acceptable documentation on the demand of the Corporation
or an
insurance company reinsured by the Corporation.
(Feb. 16, 1938, ch. 30, title V, Sec. 502, 52 Stat. 72; June 21, 1941,
ch. 214, Sec. 1, 55 Stat. 255;
Aug. 1, 1947, ch. 440, Sec. 4, 61 Stat. 719; Oct. 13, 1994, Pub. L.
103-354, title I, Sec. 102(a),
108 Stat. 3180.)
Sec. 1503. Federal Crop Insurance Corporation; creation; offices
To carry out the purposes of this chapter, there
is hereby created as an agency of and within
the Department a body corporate with the name "Federal Crop Insurance
Corporation''. The
principal office of the Corporation shall be located in the District
of Columbia, but there may be
established agencies or branch offices elsewhere in the United States
under rules and regulations
prescribed by the Board.
(Feb. 16, 1938, ch. 30, title V, Sec. 503, 52 Stat. 72; Oct. 13, 1994,
Pub. L. 103-354, title I, Sec.
102(b)(1), (4)(A), (B), 108 Stat. 3180, 3181.)
Sec. 1504. Capital stock of Corporation
(a) Subscription by United States
The Corporation shall have a capital stock of $500,000,000
subscribed by the United States
of America, payment for which shall, with the approval of the Secretary,
be subject to call in
whole or in part by the Board.
(b) Appropriations
There is authorized to be appropriated such sums
as are necessary for the purpose of
subscribing to the capital stock of the Corporation.
(c) Issuance of stock to Secretary of the Treasury
Receipts for payments by the United States of America
for or on account of such stock shall
be issued by the Corporation to the Secretary of the Treasury and shall
be evidence of the stock
ownership by the United States of America.
(d) Cancellation of receipts; nonliability of Corporation
Within thirty days after September 26, 1980, the
Secretary of the Treasury shall cancel,
without consideration, receipts for payments for or on account of the
stock of the Corporation
outstanding on September 26, 1980, and such receipts shall cease to
be liabilities of the
Corporation.
(Feb. 16, 1938, ch. 30, title V, Sec. 504, 52 Stat. 72; Aug. 25, 1949,
ch. 512, Secs. 4, 6, 63 Stat.
665; June 16, 1977, Pub. L. 95-47, 91 Stat. 228; Nov. 15, 1977, Pub.
L. 95-181, Sec. 1, 91 Stat.
1373; Sept. 26, 1980, Pub. L. 96-365, title I, Sec. 101, 94 Stat. 1312;
Oct. 13, 1994, Pub. L.
103-354, title I, Sec. 102(b)(2), (4)(C), 108 Stat. 3180, 3181.)
Sec. 1504a. Capitalization of Corporation
The payment for capital stock in the Federal Crop
Insurance Corporation shall be effected by
transfer of funds on the books of the Treasury Department to the credit
of the Corporation.
Sec. 1505. Management of Corporation
(a) Establishment, composition, and appointment of Board
The management of the Corporation shall be vested
in a Board subject to the general
supervision of the Secretary. The Board shall consist of the manager
of the Corporation, the
Under Secretary of Agriculture responsible for the Federal crop insurance
program, one
additional Under Secretary of Agriculture (as designated by the Secretary
of Agriculture), one
person experienced in the crop insurance business who is not otherwise
employed by the Federal
Government, and three active farmers who are not otherwise employed
by the Federal
Government. The Board shall be appointed by, and hold office at the
pleasure of, the Secretary.
The Secretary shall not be a member of the Board. The Secretary, in
appointing the three active
farmers who are not otherwise employed by the Federal Government, shall
ensure that such
members are policyholders and are from different geographic areas of
the United States, in order
that diverse agricultural interests in the United States are at all
times represented on the Board.
(b) Vacancies
Vacancies in the Board so long as there shall be
four members in office shall not impair the
powers of the Board to execute the functions of the Corporation, and
four of the members in
office shall constitute a quorum for the transaction of the business
of the Board.
(c) Compensation
The Directors of the Corporation who are employed
in the Department shall receive no
additional compensation for their services as such Directors but may
be allowed necessary
traveling and subsistence expenses when engaged in business of the
Corporation, outside of the
District of Columbia. The Directors of the Corporation who are not
employed by the Federal
Government shall be paid such compensation for their services as Directors
as the Secretary shall
determine, but such compensation shall not exceed the daily equivalent
of the rate prescribed for
grade GS-18 under section 5332 of title 5 when actually employed, and
actual necessary traveling
and subsistence expenses, or a per diem allowance in lieu of subsistence
expenses, as authorized
by section 5703 of title 5 for persons in Government service employed
intermittently, when on
the business of the Corporation away from their homes or regular places
of business.
(d) Manager of Corporation
The manager of the Corporation shall be its chief
executive officer, with such power and
authority as may be conferred by the Board. The manager shall be appointed
by, and hold office
at the pleasure of, the Secretary.
(Feb. 16, 1938, ch. 30, title V, Sec. 505, 52 Stat. 72; Aug. 1, 1947,
ch. 440, Sec. 8, 61 Stat. 719;
Aug. 25, 1949, ch. 512, Sec. 7, 63 Stat. 665; Sept. 26, 1980, Pub.
L. 96-365, title I, Sec. 102, 94
Stat. 1312; Oct. 13, 1994, Pub. L. 103-354, title I, Secs. 102(b)(3),
(4), 103, 115(a), 108 Stat.
3181, 3204.)
Sec. 1506. General powers
(a) Succession
The Corporation shall have succession in its corporate name.
(b) Corporate seal
The Corporation may adopt, alter, and use a corporate seal, which shall be judicially noticed.
(c) Property
The Corporation may purchase or lease and hold such
real and personal property as it deems
necessary or convenient in the transaction of its business, and may
dispose of such property held
by it upon such terms as it deems appropriate.
(d) Suit
The Corporation, subject to the provisions of section
1508(j) of this title, may sue and be
sued in its corporate name, but no attachment, injunction, garnishment,
or other similar process,
mesne or final, shall be issued against the Corporation or its property.
The district courts of the
United States, including the district courts of the District of Columbia
and of any territory or
possession, shall have exclusive original jurisdiction, without regard
to the amount in
controversy, of all suits brought by or against the Corporation. The
Corporation may intervene in
any court in any suit, action, or proceeding in which it has an interest.
Any suit against the
Corporation shall be brought in the District of Columbia, or in the
district wherein the plaintiff
resides or is engaged in business.
(e) Bylaws and regulations
The Corporation may adopt, amend, and repeal bylaws,
rules, and regulations governing the
manner in which its business may be conducted and the powers granted
to it by law may be
exercised and enjoyed.
(f) Mails
The Corporation shall be entitled to the use of the
United States mails in the same manner as
the other executive agencies of the Government.
(g) Assistance
The Corporation, with the consent of any board, commission,
independent establishment, or
executive department of the Government, including any field service
thereof, may avail itself of
the use of information, services, facilities, officials, and employees
thereof in carrying out the
provisions of this chapter.
(h) Data collection
The Corporation shall assemble data for the purpose
of establishing sound actuarial bases for
insurance on agricultural commodities.
(i) Expenditures
The Corporation shall determine the character and
necessity for its expenditures under this
chapter and the manner in which they shall be incurred, allowed, and
paid, without regard to the
provisions of any other laws governing the expenditure of public funds
and such determinations
shall be final and conclusive upon all other officers of the Government.
(j) Settling claims
The Corporation shall have the authority to make
final and conclusive settlement and
adjustment of any claim by or against the Corporation or a fiscal officer
of the Corporation.
(k) Other powers
The Corporation shall have such powers as may be
necessary or appropriate for the exercise of
the powers herein specifically conferred upon the Corporation and all
such incidental powers as are
customary in corporations generally.
(l) Contracts
The Corporation may enter into and carry out contracts
or agreements, and issue regulations,
necessary in the conduct of its business, as determined by the Board.
State and local laws or rules
shall not apply to contracts, agreements, or regulations of the Corporation
or the parties thereto to
the extent that such contracts, agreements, or regulations provide
that such laws or rules shall not
apply, or to the extent that such laws or rules are inconsistent with
such contracts, agreements, or
regulations.
(m) Submission of certain information
(1) Social security account and employer identification numbers
The Corporation shall
require, as a condition of eligibility for participation in the multiple
peril crop insurance program, submission of social
security account numbers, subject to the
requirements of section 405(c)(2)(C)(iii) of title
42, and employer identification numbers,
subject to the requirements of section 6109(f) of
title 26.
(2) Notification by policyholders
Each policyholder shall
notify each individual or other entity that acquires or holds a
substantial beneficial interest in such policyholder
of the requirements and limitations under
this chapter.
(3) Identification of holders of substantial interests
The Manager of the
Corporation may require each policyholder to provide to the
Manager, at such times and in such manner
as prescribed by the Manager, the name of each
individual that holds or acquires a substantial
beneficial interest in the policyholder.
(4) "Substantial beneficial interest" defined
For purposes of this
subsection, the term "substantial beneficial interest" means not less
than 5 percent of all beneficial interests
in the policyholder.
(n) Penalties
(1) False information
If a person willfully
and intentionally provides any false or inaccurate information to the
Corporation or to any insurer with respect
to an insurance plan or policy under this chapter, the
Corporation may, after notice and an opportunity
for a hearing on the record--
(A) impose a civil fine of not to exceed $10,000 on the person; and
(B) disqualify the person from purchasing catastrophic risk protection
or receiving
noninsured assistance
for a period of not to exceed 2 years, or from receiving any other
benefit under
this chapter for a period of not to exceed 10 years.
(2) Assessment of penalty
In assessing penalties
under this subsection, the Corporation shall consider the gravity of
the violation.
(o) Actuarial soundness
(1) Projected loss ratio as of October 1, 1995
The
Corporation shall take such actions as are necessary to improve the actuarial
soundness of Federal multiperil crop insurance
coverage made available under this chapter to
achieve, on and after October 1, 1995, an
overall projected loss ratio of not greater than 1.1,
including–
(A) instituting appropriate requirements for documentation of the actual
production
history of insured producers to establish recorded or appraised yields
for Federal crop
insurance coverage that more accurately reflect the associated actuarial
risk, except that
the Corporation may not carry out this paragraph in a manner that would
prevent
beginning farmers (as defined by the Secretary) from obtaining Federal
crop insurance;
(B) establishing in counties, to the extent practicable, a crop insurance
option based on
area yields in a manner that allows an insured producer to qualify for
an indemnity if a
loss has occurred in a specified area in which the farm of the insured
producer is located;
(C) establishing a database that contains the social security account and
employee
identification numbers of participating producers, agents, and loss adjusters
and using the
numbers to identify insured producers, agents, and loss adjusters who are
high risk for
actuarial purposes and insured producers who have not documented at least
4 years of
production history, to assess the performance of insurance providers, and
for other
purposes permitted by law; and
(D) taking any other measures authorized by law to improve the actuarial
soundness of
the Federal crop insurance program while maintaining fairness and effective
coverage for
(2) Projected loss ratio as of October 1, 1998
The
Corporation shall take such actions, including the establishment of adequate
premiums, as are necessary to improve
the actuarial soundness of Federal multiperil crop
insurance made available under this
chapter to achieve, on and after October 1, 1998, an
overall projected loss ratio of not
greater than 1.075. agricultural producers.
(3) Nonstandard classification system
To the extent that the Corporation uses the nonstandard classification
system, the
Corporation shall apply the system to all insured producers in a fair and
consistent manner.
(p) Regulations
The Secretary and the Corporation are each authorized
to issue such regulations as are
necessary to carry out this chapter.
(q) Program compliance
(1) Timeliness
The Corporation
shall work actively with approved insurance providers to address
program compliance and integrity issues as the issues develop.
(2) Notification of compliance problems
The Corporation
shall notify in writing any approved insurance provider with whom the
Corporation has an agreement under this chapter
of any error, omission, or failure to follow
Corporation regulations or procedures for
which the approved insurance provider may be
responsible and which may result in a debt
owed the Corporation. The notice shall be given
within 3 years of the end of the insurance
period during which the error, omission, or failure is
alleged to have occurred, except that this
time limit shall not apply with respect to errors,
omissions, or procedural violations that are
willful or intentional. The failure to timely provide
the notice required under this subsection
shall relieve the approved insurance provider from
the debt owed the Corporation.
(r) Purchase of American-made equipment and products
(1) Sense of Congress
It is the sense
of Congress that, to the greatest extent practicable, all equipment and
products purchased by the Corporation using
funds made available to the Corporation should
be American-made.
(2) Notice requirement
In providing
financial assistance to, or entering into any contract with, any entity
for the
purchase of equipment and products to carry
out this chapter, the Corporation, to the greatest
extent practicable, shall provide to the entity
a notice describing the statement made in
paragraph (1).
(s) Procedures for Responding to Certain Inquiries
(1) Procedures
required.--The Corporation shall establish procedures under which the
Corporation will provide a final agency
determination in response to an inquiry regarding the
interpretation by the Corporation of this
title or any regulation issued under this title.
(2) Implementation.--Not
later than 180 days after the date of enactment of this subsection,
the Corporation shall issue regulations
to implement this subsection. At a minimum, the
regulations shall establish--
(A) the manner in which inquiries described in paragraph (1) are required
to be submitted
to the Corporation;
and
(B) a reasonable maximum number of days within which the Corporation
will respond to
all inquiries.
(3) Effect
of failure to timely respond.--If the Corporation fails to respond to an
inquiry in
accordance with the procedures established
pursuant to the subsection, the person requesting
the interpretation of this title or regulation
may assume the interpretation is correct for the
applicable reinsurance year.
SEC. 1506 note. SEC. 536. REQUIRED TERMS AND CONDITIONS OF
STANDARD
REINSURANCE AGREEMENTS.
(a) Definitions.--In this section, the terms "approved insurance
provider" and "Corporation" have
the meanings given the terms in section 502(b) of the Federal Crop
Insurance Act (7 U.S.C.
1502(b)).
(b) Terms and Conditions.--
(1) Incorporation
of amendments.--For each of the 1999 and subsequent reinsurance years,
the Corporation shall ensure that each
Standard Reinsurance Agreement between an approved
insurance provider and the Corporation
reflects the amendments to the Federal Crop Insurance
Act (7 U.S.C. 1501 et seq.) that are made
by this subtitle to the extent the amendments are
applicable to approved insurance providers.
(2) Retention
of existing provisions.--Except to the extent necessary to implement the
amendments made by this subtitle, each
Standard Reinsurance Agreement described in
paragraph (1) shall contain the following
provisions of the Standard Reinsurance Agreement
for the 1998 reinsurance year:
(A) Section II, concerning the terms of reinsurance and underwriting
gain and loss for an
approved
insurance provider.
(B) Section III, concerning the terms for subsidies and administrative
fees for an
approved
insurance provider.
(C) Section IV, concerning the terms for loss adjustment for an approved
insurance
provider
under catastrophic risk protection.
(D) Section V.C., concerning interest payments between the Corporation
and an approved
insurance
provider.
(E) Section V.I.5, concerning liquidated damages.
(c) Implementation.--To implement this subtitle and the amendments
made by this subtitle, the
Corporation is not required to amend provisions of the Standard
Reinsurance Agreement not
specifically affected by this subtitle or an amendment made by this
subtitle.
SEC. 1506 note. SEC. 537 EFFECTIVE DATE.
Except as provided in Section 535, this subtitle and the amendments
made by this subtitle take
effect on July 1, 1998.
(Feb. 16, 1938, ch. 30, title V, Sec. 506, 52 Stat. 73; June 21, 1941,
ch. 214, Sec. 2, 55 Stat. 255;
Aug. 1, 1947, ch. 440, Sec. 7, 61 Stat. 719; Aug. 25, 1949, ch. 512,
Sec. 8, 63 Stat. 665; Sept. 26,
1980, Pub. L. 96-365, title I, Secs. 103, 107(a), 94 Stat. 1313, 1317;
Nov. 28, 1990, Pub. L.
101-624, title XXII, Secs. 2201(a), 2202, 104 Stat. 3951, 3954; Dec.
13, 1991, Pub. L. 102-237,
title VI, Sec. 601(1), (2), 105 Stat. 1878; Aug. 10, 1993, Pub. L.
103-66, title XIV, Sec. 1403(a),
107 Stat. 333; Oct. 13, 1994, Pub. L. 103-354, title I, Secs. 104,
119(f)(1), 108 Stat. 3181, 3208;
Pub. L. 105-185, title V, Sec. 533, June 23, 1998, 112 Stat. 583.)
Secs. 1506a, 1506b. Omitted
Codification
Section 1506a, act July 30, 1947, ch. 356, title II, Sec. 202, 61 Stat.
550, which related to
authority of Federal Crop Insurance Corporation to make expenditures,
was from the Department
of Agriculture Appropriation Act, 1948, and was not repeated in subsequent
appropriation acts.
Section 1506b, acts June 29, 1954, ch. 409, title II, Sec. 201,
68 Stat. 317; May 23, 1955, ch.
43, title II, Sec. 201, 69 Stat. 60; June 4, 1956, ch. 355, title II,
Sec. 201, 70 Stat. 238, which
provided that crop inspection costs and loss adjustments could be considered
as nonadministrative
or nonoperating expenses, was from the Department of Agriculture and
Farm Credit
Administration Appropriation Acts for fiscal years 1955-57, and was
not repeated in subsequent
appropriation acts.
Sec. 1507. Personnel of Corporation
(a) Appointment; civil service exemption; compensation
The Secretary shall appoint such officers and employees as may be necessary
for the
transaction of the business of the Corporation pursuant to civil-service
laws and regulations, fix
their compensation in accordance with the provisions of chapter 51
and subchapter III of chapter
53 of title 5, define their authority and duties, and delegate to them
such of the powers vested in the
Corporation as the Secretary may determine appropriate. However, personnel
paid by the hour,
day, or month when actually employed may be appointed without regard
to civil-
service laws and regulations.
(b) Application of employees' compensation law
Insofar as applicable, the benefits of subchapter I of chapter 81 of
title 5, shall extend to
persons given employment under the provisions of this chapter, including
the employees of the
committees and associations referred to in subsection (c) of this section
and the members of such
committees.
(c) Use of associations of producers and private insurance companies;
payment of administrative
and program expenses; sale of crop insurance through private agents
and brokers: renewals,
exclusion of compensation from premium rates, indemnification for errors
or omissions of
Commission or its contractors
In the administration of this chapter, the Board shall, to the maximum
extent possible, (1)
establish or use committees or associations of producers and make payments
to them to cover the
administrative and program expenses, as determined by the Board, incurred
by them in cooperating
in carrying out this chapter, (2) contract with private insurance companies,
private rating bureaus,
and other organizations as appropriate for actuarial, loss adjustment,
and other services to avoid
duplication by the Federal Government of services that are or may readily
be available in the
private sector, and reimburse such companies for the administrative
and program expenses, as
determined by the Board, incurred by them, under terms and provisions
and rates of compensation
consistent with those generally prevailing in the insurance industry,
and (3) encourage the sale of
Federal crop insurance through licensed private insurance agents and
brokers and give the insured
the right to renew such insurance for successive terms through such
agents and brokers, in which
case the agent or broker shall be reasonably compensated from premiums
paid by the insured for
such sales and renewals recognizing the function of the agent or broker
to provide continuing
services while the insurance is in effect: Provided, That such compensation
shall not be included in
computations establishing premium rates. The Board shall provide such
agents and brokers with
indemnification, including costs and reasonable attorney fees, from
the Corporation for errors or
omissions on the part of the Corporation or its contractors for which
the agent or broker is sued or
held liable, except to the extent the agent or broker has caused the
error or omission. Nothing in
this subsection shall permit the Corporation to contract with other
persons to carry out the
responsibility of the Corporation to review and approve policies, rates,
and other materials
submitted under section 1508(h) of this title.
(d) Allotment of funds to Federal and State agencies
The Secretary may allot to bureaus and offices of the Department or
transfer to such other
agencies of the State and Federal Governments that the Secretary requests
to assist in carrying out
this chapter any funds made available pursuant to the provisions of
section 1516 of this
title.
(e) Utilization of producer cooperative associations
In carrying out the provisions of this chapter the Board may, in its
discretion, utilize
producer-owned and producer-controlled cooperative associations.
(f) Use of resources, data, boards, and committees of Federal agencies
The Board should use, to the maximum extent possible, the resources,
data, boards, and the
committees of (1) the Soil Conservation Service, in assisting the Board
in the classification of land
as to risk and production capability and in the development of acceptable
conservation
practices; (2) the Forest Service, in assisting the Board in the development
of a timber insurance
plan; (3) the Agricultural Stabilization and Conservation Service,
in assisting the Board in the
determination of individual producer yields and in serving as a local
contact point for farmers
where the Board deems necessary; and (4) other Federal agencies in
any way the Board deems
necessary in carrying out this chapter.
(g) Specialty Crops Coordinator
(1) The Corporation
shall establish a management-level position to be known as the Specialty
Crops Coordinator.
(2) The Specialty
Crops Coordinator shall have primary responsibility for addressing the
needs of specialty crop producers, and for
providing information and advice, in connection
with the activities of the Corporation to
improve and expand the insurance program for
specialty crops. In carrying out this paragraph,
the Specialty Crops Coordinator shall act as the
liaison of the Corporation with representatives
of specialty crop producers and assist the
Corporation with the knowledge, expertise,
and familiarity of the producers with risk
management and production issues pertaining
to specialty crops.
(3) The Specialty
Crops Coordinator shall use information collected from Corporation field
office directors in States in which specialty
crops have a significant economic effect and from
other sources, including the extension service
and colleges and universities.
(Feb. 16, 1938, ch. 30, title V, Sec. 507, 52 Stat. 73; Aug. 1, 1947,
ch. 440, Sec. 6, 61 Stat. 719;
Aug. 25, 1949, ch. 512, Sec. 10, 63 Stat. 665; Oct. 28, 1949, ch. 782,
title XI, Sec. 1106(a), 63 Stat.
972; June 6, 1972, Pub. L. 92-310, title II, Sec. 221(b), 86 Stat.
205; Sept. 26, 1980, Pub. L.
96-365, title I, Sec. 104, 94 Stat. 1313; Nov. 28, 1990, Pub. L. 101-624,
title XXII, Sec. 2206, 104
Stat. 3958; Dec. 13, 1991, Pub. L. 102-237, title VI, Sec. 601(3),
105 Stat. 1878; Oct. 13, 1994,
Pub. L. 103-354, title I, Secs. 102(b)(4)(B), (C), 105, 115(b), 119(f)(2),
108 Stat. 3181, 3182,
3204, 3208.)
Sec. 1508. Crop insurance
(a) Authority to offer insurance
(1) In general
If sufficient
actuarial data are available (as determined by the Corporation), the
Corporation may insure, or provide reinsurance
for insurers of, producers of agricultural
commodities grown in the United States under
1 or more plans of insurance determined by the
Corporation to be adapted to the agricultural
commodity concerned. To qualify for coverage
under a plan of insurance, the losses of the
insured commodity must be due to drought, flood,
or other natural disaster (as determined by
the Secretary).
(2) Period
Except
in the cases of tobacco and potatoes, insurance shall not extend beyond
the period
during which the insured commodity is in the
field. As used in the preceding sentence, in the
case of an aquacultural species, the term
''field'' means the environment in which the
commodity is produced.
(3) Exclusions
Insurance
provided under this subsection shall not cover losses due to -
(A) the neglect or malfeasance of the producer;
(B) the failure of the producer to reseed to the same crop in such areas
and under such
circumstances
as it is customary to reseed; or
(C) the failure of the producer to follow good farming practices (as determined
by the
Secretary).
(4) Expansion to other areas or single producers
(A) Area expansion
The Corporation may offer plans of insurance or reinsurance for production
of
agricultural
commodities in the Commonwealth of Puerto Rico, the Virgin Islands, Guam,
American Samoa,
the Commonwealth of the Northern Mariana Islands, the Republic of
the Marshall
Islands, the Federated States of Micronesia, and the Republic of Palau
in the
same manner
as provided in this section for production of agricultural commodities
in the
United States.
(B) Producer expansion
In an area in the United States or specified in subparagraph (A) where
crop insurance
is not available
for a particular agricultural commodity, the Corporation may offer to enter
into a written
agreement with an individual producer operating in the area for insurance
coverage under
this chapter if the producer has actuarially sound data relating to the
production by
the producer of the commodity and the data is acceptable to the
Corporation.
(5) Dissemination of crop insurance information
The Corporation shall make available to producers through local offices
of the
Department -
(A) current and complete information on all aspects of Federal crop insurance;
and
(B) a listing of insurance agents and companies offering to sell crop insurance
in the area
of the producers.
(6) Addition of new and specialty crops
(A) Data collection
Not later than 180 days after October 13, 1994, the Secretary shall issue
guidelines
for publication
in the Federal Register for data collection to assist the Corporation in
formulating
crop insurance policies for new and specialty crops.
(B) Addition of new crops
Not later than 1 year after October 13, 1994, and annually thereafter,
the Corporation
shall report
to Congress on the progress and expected timetable for expanding crop
insurance coverage
under this chapter to new and specialty crops.
(C) Addition of direct sale perishable crops
Not later than 1 year after October 13, 1994, the Corporation shall report
to Congress
on the feasibility
of offering a crop insurance program designed to meet the needs of
specialized
producers of vegetables and other perishable crops who market through direct
marketing channels.
(D) Addition of nursery crops
Not later than 2 years after April 4, 1996, the Corporation shall conduct
a study and
limited pilot
program on the feasibility of insuring nursery crops.
(b) Catastrophic risk protection
(1) In general
The Corporation
shall offer a catastrophic risk protection plan to indemnify producers
for
crop loss due to loss of yield or prevented
planting, if provided by the Corporation, when the
producer is unable, because of drought, flood,
or other natural disaster (as determined by the
Secretary), to plant other crops for harvest
on the acreage for the crop year.
(2) Amount of coverage
(A) In general
Subject to subparagraph (B) -
(i) in the case of each of the 1995 through 1998 crop years, catastrophic
risk
protection shall offer a producer coverage for a 50 percent loss in yield,
on an
individual yield or area yield basis, indemnified at 60 percent of the
expected market
price, or a comparable coverage (as determined by the Corporation); and
(ii) in the case of each of the 1999 and subsequent crop years, catastrophic
risk
protection shall offer a producer coverage for a 50 percent loss in yield,
on an
individual yield or area yield basis, indemnified at 55 percent of the
expected market
price, or a comparable coverage (as determined by the Corporation).
(B) Reduction in actual payment
The amount paid to a producer on a claim under catastrophic risk protection
may
reflect a reduction
that is proportional to the out-of-pocket expenses that are not incurred
by the producer
as a result of not planting, growing, or harvesting the crop for which
the
claim is made,
as determined by the Corporation.
(3) Yield and loss basis
A producer
shall have the option of basing the catastrophic coverage of the producer
on an
individual yield and loss basis or on an area
yield and loss basis, if both options are offered by
the Corporation.
(4) Sale of catastrophic risk coverage
(A) In general
Catastrophic risk coverage may be offered by -
(i) approved insurance providers, if available in an area; and
(ii) at the option of the Secretary that is based on considerations of
need, local
offices of the Department.
(B) Need
For purposes of considering need under subparagraph (A)(ii), the Secretary
may take
into account
the most efficient and cost-effective use of resources, the availability
of
personnel, fairness
to local producers, the needs and convenience of local producers, and
the availability
of private insurance carriers.
(C) Delivery of coverage
(i) In general
In full consultation with approved insurance providers, the Secretary may
continue to offer catastrophic risk protection in a State (or a portion
of a State)
through local offices of the Department if the Secretary determines that
there is an
insufficient number of approved insurance providers operating in the State
or portion
of the State to adequately provide catastrophic risk protection coverage
to producers.
(ii) Coverage by approved insurance providers
To the extent that catastrophic risk protection coverage by approved insurance
providers is sufficiently available in a State (or a portion of a State)
as determined by
the Secretary, only approved insurance providers may provide the coverage
in the
State or portion of the State.
(iii) Timing of determinations
Not later than 90 days after April 4, 1996, the Secretary shall announce
the
results of the determinations under clause (i) for policies for the 1997
crop year. For
subsequent crop years, the Secretary shall make the announcement not later
than
April 30 of the year preceding the year in which the crop will be produced,
or at such
other times during the year as the Secretary finds practicable in consultation
with
affected crop insurance providers for those States (or portions of States)
in which
catastrophic coverage remains available through local offices of the Department.
(iv) Current policies
This clause shall take effect beginning with the 1997 crop year. Subject
to clause
(ii) all catastrophic risk protection policies written by local offices
of the Department
shall be transferred to the approved insurance provider for performance
of all sales,
service, and loss adjustment functions. Any fees in connection with such
policies that
are not yet collected at the time of the transfer shall be payable to the
approved
insurance providers assuming the policies. The transfer process for policies
for the
1997 crop year with sales closing dates before January 1, 1997, shall begin
at the time
of the Secretary's announcement under clause (iii) and be completed by
the sales
closing date for the crop and county. The transfer process for all subsequent
policies
(including policies for the 1998 and subsequent crop years) shall begin
at a date that
permits the process to be completed not later than 45 days before the sales
closing
date.
(5) Administrative fee.--
(A) Basic fee.--Each producer shall pay an administrative fee for catastrophic
risk
protection
in an amount equal to 10 percent of the premium for the catastrophic risk
protection
or $50 per crop per county, whichever is greater, as determined by the
Corporation.
Notwithstanding
the provisions of section 508(b)(5)(A) of the Federal Crop Insurance
Act (7 U.S.C. 508(b)(5)(A)), for the 1999
reinsurance and subsequent insurance years, no
producer shall pay more than $50 per crop
per county as an administrative fee for
catastrophic risk protection under section
508(b)(5)(A) of the Act.
(B) Additional fee.--In addition to the amount required under subparagraph
(A), the
producer
shall pay a $10 fee for each amount determined under paragraph (A).
(C) Time for payment.--The amounts required under subparagraphs (A)
and (B) shall be
paid by the
producer on the date that premium for a policy of additional coverage would
be paid by
the producer.
(D) Use of fees.--
(i) In general.--The amounts paid under this paragraph shall be deposited
in the crop
insurance fund established under section 516(c), to be available for
the programs and
activities of the Corporation.
(ii) Limitation.--No funds deposited in the crop insurance fund under
this
subparagraph may used to compensate an approved insurance provider or
agent for
the delivery of services under this subsection.
(E) Waiver of fee.--The Corporation shall waive the amounts required
under this
paragraph
for limited resource farmers, as defined by the Corporation.
(6) Participation requirement
A producer
may obtain catastrophic risk coverage for a crop of the producer on land
in the
county only if the producer obtains the coverage
for the crop on all insurable land of the
producer in the county.
(7) Eligibility for Department programs
(A) In general
Effective for the spring-planted 1996 and subsequent crops (and fall-planted
1996
crops at the
option of the Secretary), to be eligible for any payment or loan under
the
Agricultural
Market Transition Act (7 U.S.C. 7201 et seq.), for the conservation reserve
program, or
for any benefit described in section 2008f of this title, a person shall
-
(i) obtain at least the catastrophic level of insurance for each crop of
economic
significance in which the person has an interest; or
(ii) provide a written waiver to the Secretary that waives any eligibility
for
emergency crop loss assistance in connection with the crop.
(B) ''Crop of economic significance'' defined
As used in this paragraph, the term ''crop of economic significance'' means
a crop that
has contributed,
or is expected to contribute, 10 percent or more of the total expected
value of all
crops grown by the producer.
(8) Limitation due to risk
The Corporation
may limit catastrophic risk coverage in any county or area, or on any
farm, on the basis of the insurance risk concerned.
(9) Transitional coverage for 1995 crops
Effective
only for a 1995 crop planted or for which insurance attached prior to January
1,
1995, the Corporation shall allow producers
of the crops until not later than the end of the
180-day period beginning on the date of enactment
of the Federal Crop Insurance Reform Act
of 1994 (Oct. 13, 1994) to obtain catastrophic
risk protection for the crop. On enactment of
such Act, a producer who made timely purchases
of a crop insurance policy before the date of
enactment of such Act, under the provisions
of this chapter then in effect, shall be eligible for
the same benefits to which a producer would
be entitled under comparable additional coverage
under subsection (c) of this section.
(10) Simplification
(A) Catastrophic risk protection plans
In developing and carrying out the policies and procedures for a catastrophic
risk
protection plan
under this chapter, the Corporation shall, to the maximum extent
practicable,
minimize the paperwork required and the complexity and costs of procedures
governing applications
for, processing, and servicing of the plan for all parties involved.
(B) Other plans
To the extent that the policies and procedures developed under subparagraph
(A) may
be applied to
other plans of insurance offered under this chapter without jeopardizing
the
actuarial soundness
or integrity of the crop insurance program, the Corporation shall apply
the policies
and procedures to the other plans of insurance within a reasonable period
of
time (as determined
by the Corporation) after the effective date of this paragraph.
(11) Loss
adjustment.--The rate for reimbursing an approved insurance provider or
agent for
expenses incurred by the approved insurance
provider or agent for loss adjustment in
connection with a policy of catastrophic
risk protection shall not exceed 11 percent of the
premium for catastrophic risk protection
that is used to define loss ratio.
(c) General coverage levels
(1) Additional coverage generally
(A) In general
The Corporation shall offer to producers of agricultural commodities grown
in the
United States
plans of crop insurance that provide additional coverage.
(B) Purchase
To be eligible for additional coverage, a producer must apply to an approved
insurance provider
for purchase of additional coverage if the coverage is available from an
approved insurance
provider. If additional coverage is unavailable privately, the
Corporation
may offer additional coverage plans of insurance directly to producers.
(2) Transfer of relevant information
If a producer
has already applied for catastrophic risk protection at the local office
of the
Department and elects to purchase additional
coverage, the relevant information for the crop of
the producer shall be transferred to the approved
insurance provider servicing the additional
coverage crop policy.
(3) Yield and loss basis
A producer
shall have the option of purchasing additional coverage based on an individual
yield and loss basis or on an area yield and
loss basis, if both options are offered by the
Corporation.
(4) Level of coverage
The level
of coverage shall be dollar denominated and may be purchased at any level
not
to exceed 85 percent of the individual yield
or 95 percent of the area yield (as determined by
the Corporation). Not later than the beginning
of the 1996 crop year, the Corporation shall
provide producers with information on catastrophic
risk and additional coverage in terms of
dollar coverage (within the allowable limits
of coverage provided in this paragraph).
(5) Price level
The Corporation
shall establish a price level for each commodity on which insurance is
offered that -
(A) shall not be less than the projected market price for the commodity
(as determined by
the Corporation); or
(B) at the discretion of the Corporation, may be based on the actual
market price at the
time of harvest (as determined by the Corporation).
(6) Price elections
(A) In general
Subject to subparagraph (B), insurance coverage shall be made available
to a
producer on
the basis of any price election that equals or is less than the price election
established
by the Corporation. The coverage shall be quoted in terms of dollars per
acre.
(B) Minimum price elections
The Corporation may establish minimum price elections below which levels
of
insurance shall
not be offered.
(C) Wheat classes and malting barley
The Corporation shall, as the Corporation determines practicable, offer
producers
different price
elections for classes of wheat and malting barley (including contract prices
in the case
of malting barley), in addition to the standard price election, that reflect
different market
prices, as determined by the Corporation. The Corporation shall, as the
Corporation
determines practicable, offer additional coverage for each class determined
under this subparagraph
and charge a premium for each class that is actuarially sound.
(7) Fire and hail coverage
For levels
of additional coverage equal to 65 percent or more of the recorded or appraised
average yield indemnified at 100 percent of
the expected market price, or an equivalent
coverage, a producer may elect to delete from
the additional coverage any coverage against
damage caused by fire and hail if the producer
obtains an equivalent or greater dollar amount
of coverage for damage caused by fire and
hail from an approved insurance provider. On
written notice of the election to the company
issuing the policy providing additional coverage
and submission of evidence of substitute coverage
on the commodity insured, the premium of
the producer shall be reduced by an amount
determined by the Corporation to be actuarially
appropriate, taking into account the actuarial
value of the remaining coverage provided by the
Corporation. In no event shall the producer
be given credit for an amount of premium
determined to be greater than the actuarial
value of the protection against losses caused by fire
and hail that is included in the additional
coverage for the crop.
(8) State premium subsidies
The Corporation
may enter into an agreement with any State or agency of a State under
which the State or agency may pay to the approved
insurance provider an additional premium
subsidy to further reduce the portion of the
premium paid by producers in the State.
(9) Limitations on additional coverage
The Board
may limit the availability of additional coverage under this subsection
in any
county or area, or on any farm, on the basis
of the insurance risk involved. The Board shall not
offer additional coverage equal to less than
50 percent of the recorded or appraised average
yield indemnified at 100 percent of the expected
market price, or an equivalent coverage.
(10) Administrative
fee
(A) Fee required.--Except as otherwise provided in this paragraph, if a
producer elects to
purchase additional
coverage for a crop at a level this is 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 producer shall pay an administrative fee for the
additional coverage.
The administrative fee shall be $50 per crop per county, up to a
maximum of
$600 per producer for all counties in which a producer has insured crops.
Subparagraphs
(D) and (E) of subsection (b)(5) shall apply with respect to the use of
administrative
fees under this subparagraph.
(B) Exception
If a producer elects to purchase additional coverage for a crop equal to
65 percent or
more of the
recorded or appraised average yield indemnified at 100 percent of the
expected market
price, or an equivalent coverage, the producer shall not be subject to
the
administrative
fee required by this paragraph or subsection (b)(5) of this section. If
the
producer has
already paid the administrative fee for a lower level of coverage for the
crop,
the administrative
fee shall be refunded to the producer unless the refund would reduce to
less than $200
the total amount of the administrative fees paid by the producer for 2
or
more crops in
the same county for which a lower level of coverage is obtained.
(C) Additional fee
If a producer elects to purchase additional coverage for a crop equal to
or exceeding
65 percent of
the recorded or appraised average yield and 100 percent of the expected
market price
or an equivalent coverage, the producer shall pay an administrative fee
of
$20 for the
coverage. If a producer has already paid an administrative fee for lesser
coverage for
the crop, the fee for lesser coverage shall be refunded to the producer
unless
the producer
has paid the maximum fee for lesser coverage and refund of the fee will
not
reduce the amount
to be paid below the maximum amount.
(D) Deposit of fees
Notwithstanding the authority granted to the Secretary under the Federal
Crop
Insurance Corporation
account provisions of the Agricultural, Rural Development, Food
and Drug Administration,
and Related Agencies Appropriations Act, 1995, administrative
fees collected
under subparagraph (B) in excess of $100 per producer per county and
under subparagraph
(C) shall be deposited in the insurance fund established under section
1516(c) of this
title to be available for the programs and activities of the Corporation.
(d) Premiums
(1) Premiums required
The Corporation
shall fix adequate premiums for all the plans of insurance of the
Corporation at such rates as the Board determines
are actuarially sufficient to attain an
expected loss ratio of not greater than 1.1
through September 30, 1998, and not greater than
1.075 after October 1, 1998.
(2) Premium amounts
The premium
amounts for catastrophic risk protection under subsection (b) of this section
and additional coverage under subsection (c)
of this section shall be fixed as follows:
(A) In the case of catastrophic risk protection, the amount of the
premium shall be
sufficient to cover anticipated losses and a reasonable reserve.
(B) In the case of additional coverage below 65 percent of the recorded
or appraised
average yield ndemnified at 100 percent of the expected market price, or
an
equivalent coverage, but greater than 50 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.
(C) In the case of additional coverage equal to or greater 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 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.
(e) Payment of portion of premium by
Corporation
(1) In general
For the
purpose of encouraging the broadest possible participation of producers
in the
catastrophic risk protection provided under
subsection (b) of this section and the additional
coverage provided under subsection (c) of
this section, the Corporation shall pay a part of the
premium in the amounts provided in accordance
with this subsection.
(2) Amount of payment
The amount
of the premium to be paid by the Corporation shall be as follows:
(A) In the case of catastrophic risk protection, the amount shall
be equivalent to the
premium established for catastrophic risk protection under subsection (d)(2)(A)
of this section.
(B) In the case of coverage below 65 percent of the recorded or appraised
average yield
indemnified at 100 percent of the expected market price, or an equivalent
coverage,
but greater than 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 equivalent to the amount of premium established for catastrophic risk
protection
coverage and the amount of operating and administrative expenses established
under
subsection (d)(2)(B) of this section.
(C) In the case of coverage equal to or greater than 65 percent of
the recorded or
appraised average yield indemnified at 100 percent of the expected market
price, or
an equivalent coverage, on an individual or area basis, the amount shall
be equivalent
to an amount equal to the premium established for 50 percent loss in yield
indemnified at 75 percent of the expected market price and the amount of
operating
and administrative expenses established under subsection (d)(2)(C) of this
section.
(3) Premium reduction
If an
approved insurance provider determines that the provider may provide insurance
more efficiently than the expense reimbursement
amount established by the Corporation, the
approved insurance provider may reduce, subject
to the approval of the Corporation, the
premium charged the insured by an amount corresponding
to the efficiency. The approved
insurance provider shall apply to the Corporation
for authority to reduce the premium before
making such a reduction, and the reduction
shall be subject to the rules, limitations, and
procedures established by the Corporation.
(4) Individual and area crop insurance coverage
The Corporation
shall allow approved insurance providers to offer a plan of insurance to
producers that combines both individual yield
coverage and area yield coverage at a premium
rate determined by the provider under the
following conditions:
(A) The individual yield coverage shall be equal to or greater than
catastrophic risk
protection as described in subsection (b) of this section.
(B) The combined policy shall include area yield coverage that is
offered by the
Corporation or similar area coverage, as determined by the Corporation.
(C) The Corporation shall provide reinsurance on the area yield portion
of the combined
policy at the request of the provider, except that the provider shall agree
to pay to the
producer any portion of the area yield and loss indemnity payment received
from the
Corporation or a commercial reinsurer that exceeds the individual indemnity
payment
made by the provider to the producer.
(D) The Corporation shall pay a part of the premium equivalent to
-
(i) the amount authorized under paragraph (2) (except provisions
regarding
operating and administrative expenses); and
(ii) the amount of operating and administrative expenses authorized by
the
Corporation for the area yield coverage portion of the combined policy.
(E) The provider shall provide all underwriting services for the
combined policy,
including the determination of individual yield coverage premium rates,
the terms
and conditions of the policy, and the acceptance and classification of
applicants
into risk categories, subject to subparagraph (F).
(F) The Corporation shall approve the combined policy unless the
Corporation
determines that the policy is not actuarially sound or that the interests
of producers
are not adequately protected.
(f) Eligibility
(1) In general
To participate
in catastrophic risk protection coverage under this section, a producer
shall
submit an application at the local office
of the Department or to an approved insurance
provider.
(2) Sales closing date
For coverage
under this chapter, each producer shall purchase crop insurance on or before
the sales closing date for the crop by providing
the required information and executing the
required documents. Subject to the goal of
ensuring actuarial soundness for the crop insurance
program, the sales closing date shall be established
by the Corporation to maximize
convenience to producers in obtaining benefits
under price and production adjustment
programs of the Department. Beginning
with the 1995 crop year, the Corporation shall
establish, for an insurance policy for each
insurable crop that is planted in the spring, a sales
closing date that is 30 days earlier than
the corresponding sales closing date that was
established for the 1994 crop year.
(3) Records and reporting
To obtain
catastrophic risk protection under subsection (b) of this section or additional
coverage under subsection (c) of this section,
a producer shall -
(A) provide, to the extent required by the Corporation, records acceptable
to the
Corporation of historical acreage and production of the crops for which
the insurance
is sought or accept a yield determined by the Corporation; and
(B) report acreage planted and prevented from planting by the designated
acreage
reporting date for the crop and location as established by the Corporation.
(g) Yield determinations
(1) In general
Subject
to paragraph (2), the Corporation shall establish crop insurance underwriting
rules
that ensure that yield coverage, as specified
in this subsection, is provided to eligible producers
obtaining catastrophic risk protection under
subsection (b) of this section or additional
coverage under subsection (c) of this section.
(2) Yield coverage plans
(A) Actual production history
Subject to subparagraph (B), the yield for a crop shall be based on the
actual
production history
for the crop, if the crop was produced on the farm without penalty
during each
of the 4 crop years immediately preceding the crop year for which actual
production history
is being established, building up to a production data base for each of
the 10 consecutive
crop years preceding the crop year for which actual production history
is being established.
(B) Assigned yield
If the producer does not provide satisfactory evidence of the yield of
a commodity
under subparagraph
(A), the producer shall be assigned a yield that is not less than 65
percent of the
transitional yield of the producer (adjusted to reflect actual production
reflected in
the records acceptable to the Corporation for continuous years), as specified
in
regulations
issued by the Corporation based on production history requirements.
(C) Area yield
The Corporation may offer a crop insurance plan based on an area yield
that allows
an insured producer
to qualify for an indemnity if a loss has occurred in an area (as
specified by
the Corporation) in which the farm of the producer is located. Under an
area
yield plan,
an insured producer shall be allowed to select the level of area production
at
which an indemnity
will be paid consistent with such terms and conditions as are
established
by the Corporation.
(D) Commodity-by-commodity basis
A producer may choose between individual yield or area yield coverage or
combined
coverage (as
provided in subsection (e)(4) of this section), if available, on a
commodity-by-commodity
basis.
(3) Transitional yields for producers of feed or forage
(A) In general
If a producer does not provide satisfactory evidence of a yield under paragraph
(2)(A), the
producer shall be assigned a yield that is at least 80 percent of the transitional
yield established
by the Corporation (adjusted to reflect the actual production history of
the producer)
if the Secretary determines that -
(i) the producer grows feed or forage primarily for on-farm use in a livestock,
dairy,
or poultry operation; and
(ii) over 50 percent of the net farm income of the producer is derived
from the
operation.
(B) Yield calculation
The Corporation shall -
(i) for the first year of participation of a producer, provide the assigned
yield under
this paragraph to the producer of feed or forage; and
(ii) for the second year of participation of the producer, apply the actual
production
history or assigned yield requirement, as provided in this subsection.
(C) Termination of authority
The authority provided by this paragraph shall terminate on the date that
is 3 years
after the effective
date of this paragraph.
(h) Submission of policies and materials
to Board
(1) In general
In addition
to any standard forms or policies that the Board may require be made available
to producers under subsection (c) of this
section, a person may prepare for submission or
propose to the Board -
(A) other crop insurance policies and provisions of policies; and
(B) rates of premiums for multiple peril crop insurance pertaining
to wheat, soybeans,
field corn, and any other crops determined by the Secretary.
(2) Submission of policies
A policy
or other material submitted to the Board under this subsection may be prepared
without regard to the limitations contained
in this chapter, including the requirements
concerning the levels of coverage and rates
and the requirement that a price level for each
commodity insured must equal the expected
market price for the commodity as established by
the Board. In the case of such a policy, the
payment by the Corporation of a portion of the
premium of the policy may not exceed the amount
that would otherwise be authorized under
subsection (e) of this section.
(3) Review and approval by the Board
A policy
or other material submitted to the Board under this subsection shall be
reviewed
by the Board and, if the Board finds that
the interests of producers are adequately protected
and that any premiums charged to the producers
are actuarially appropriate, shall be approved
by the Board for reinsurance and for sale
to producers as an additional choice at actuarially
appropriate rates and under appropriate terms
and conditions. The Corporation may enter into
more than 1 reinsurance agreement with the
approved insurance provider simultaneously to
facilitate the offering of the new policies.
(4) Guidelines for submission and review
The Corporation
shall issue regulations to establish guidelines for the submission, and
Board review, of policies or other material
submitted to the Board under this subsection. At a
minimum, the guidelines shall ensure the following:
(A) A proposal submitted to the Board under this subsection shall
be considered as
confidential commercial or financial information for purposes of section
552(b)(4) of
title 5 until approved by the Board. A proposal disapproved by the Board
shall remain
confidential commercial or financial information.
(B) The Board shall provide an applicant with the opportunity to present
the proposal to
the Board in
person if the applicant so desires.
(C) The Board shall provide an applicant with notification of intent
to disapprove a
proposal not later than 30 days prior to making the disapproval. An applicant
that
receives the notification may modify the application of the applicant.
Any
modification shall be considered an original application for purposes of
this
paragraph.
(D) Specific guidelines shall prescribe the timing of submission
of proposals under this
subsection and timely consideration by the Board so that any approved proposal
may
be made available to all persons reinsured by the Corporation in a manner
permitting
the persons to participate, if the persons so desire, in offering such
a proposal in the
first crop year in which the proposal is approved by the Board for reinsurance,
premium subsidy, or other support offered by this chapter.
(5) Required publication
Any policy,
provision of a policy, or rate approved under this subsection shall be
published as a notice in the Federal Register
and made available to all persons contracting with
or reinsured by the Corporation under the
terms and conditions of the contract between the
Corporation and the person originally submitting
the policy or other material.
(6) Pilot cost of production risk protection plan
(A) In general
The Corporation shall offer, to the extent practicable, a cost of production
risk
protection plan
of insurance that indemnifies producers (including new producers) for
insurable losses
as provided in this paragraph.
(B) Pilot basis
The cost of production risk protection plan shall -
(i) be established as a pilot project for each of the 1996 and 1997 crop
years; and
(ii) be carried out in a number of counties that is determined by the Corporation
to
be adequate to provide a comprehensive evaluation of the feasibility, effectiveness,
and demand among producers for the plan.
(C) Insurable loss
An insurable loss shall be incurred by a producer if the gross income of
the producer
(as determined
by the Corporation) is less than an amount determined by the Corporation,
as a result
of a reduction in yield or price resulting from an insured cause.
(D) ''New producer'' defined
As used in this paragraph, the term ''new producer'' means 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.
(7) Additional prevented planting policy coverage
(A) In general
Beginning with the 1995 crop year, the Corporation shall offer to producers
additional prevented
planting coverage that insures producers against losses in
accordance with this paragraph.
(B) Approved insurance providers
Additional prevented planting coverage shall be offered by the Corporation
through
approved insurance
providers.
(C) Timing of loss
A crop loss shall be covered by the additional prevented planting coverage
if -
(i) crop insurance policies were obtained for -
(I) the crop year the loss was experienced; and
(II) the crop year immediately preceding the year of the prevented planting
loss;
and
(ii) the cause of the loss occurred -
(I) after the sales closing date for the crop in the crop year immediately
preceding the loss; and
(II) before the sales closing date for the crop in the year in which the
loss is
experienced.
(8) Pilot program of assigned yields for new producers
(A) Program required
For each of the 1995 and 1996 crop years, the Corporation shall carry out
a pilot
program to assign
to eligible new producers higher assigned yields than would otherwise
be assigned
to the producers under subsection (g) of this section. The Corporation
shall
include in the
pilot program 30 counties that are determined by the Corporation to be
adequate to
provide a comprehensive evaluation of the feasibility, effectiveness, and
demand among
new producers for increased assigned yields.
(B) Increased assigned yields
In the case of an eligible new producer participating in the pilot program,
the
Corporation
shall assign to the new producer a yield that is equal to not less than
110
percent of the transitional yield otherwise established by the Corporation.
(C) Eligible new producer
The Secretary shall establish a definition of new producer for purposes
of
determining
eligibility to participate in the pilot program.
(9) Revenue insurance pilot program
(A) In general
Not later than December 31, 1996, the Secretary shall carry out a pilot
program in a
limited number
of counties, as determined by the Secretary, for crop years 1997, 1998,
1999, and 2000,
under which a producer of wheat, feed grains, soybeans, or such other
commodity as
the Secretary considers appropriate may elect to receive insurance against
loss of revenue,
as determined by the Secretary.
(B) Administration
Revenue insurance under this paragraph shall -
(i) be offered through reinsurance arrangements with private insurance
companies;
(ii) offer at least a minimum level of coverage that is an alternative
to catastrophic
crop insurance;
(iii) be actuarially sound; and
(iv) require the payment of premiums and administrative fees by an insured
producer.
(10) Time
limits for response to submission of new policies.--
(A) In general.--The Board shall establish a reasonable time period
within which the
Board shall
approve or disapprove a proposal from a person regarding a new policy
submitted
in accordance with this subsection.
(B) Effect of failure to meet time limits.--Except as provided in subparagraph
(C), if the
Board fails
to provide a response to a proposal described in subparagraph (A) in
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