JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE
The Managers on the part of the House and the Senate at the conference
on the disagreeing votes of the two Houses on the amendment
of the Senate to the bill (H.R. 2559),
to amend the Federal Crop Insurance Act to strengthen the safety net for
agricultural producers by providing
greater access to more affordable risk
management tools and improved protection from production and income loss,
to improve the efficiency
and integrity of the Federal crop insurance
program, and for other purposes, submit the following joint statement to
the House and the Senate in
explanation of the effect of the action
agreed upon by the managers and recommended in the accompanying conference
report:
The Senate amendment struck out all of the House bill after the enacting
clause and inserted a substitute text.
The House recedes from its disagreement to the amendment of the Senate
with an amendment which is a substitute for the House bill
and the Senate amendment. The differences
between the House bill, the Senate amendment, and the substitute agreed
to in conference are
noted below, except for clerical corrections,
conforming changes made necessary by agreements reached by the conferees,
and minor drafting
and clarifying changes.[1]
In the case where a provision of the House bill or the Senate amendment
is adopted under the Conference substitute,
report language appurtenant to such provision
of the House bill or Senate amendment, respectively, stands.
Short Title
The House bill provides that this Act may be cited as the "Agricultural
Risk Protection Act of 1999." (Section 1)
The Senate amendment provides that this Act may be cited as the "Risk Management
for the 21st Century Act." (Section 1)
The Conference substitute adopts the House provision providing that the
Act be cited as the “Agricultural Risk Protection Act of 2000.”
(Section 1)
Title I—Crop Insurance Coverage
Subtitle A – Crop Insurance Coverage
Premium Schedule for Additional Coverage
The
House bill amends section 508(d)(2) by striking subparagraphs (B) and (C)
and inserts a new subparagraph (B).
Paragraph
(B) requires that the premium for insurance coverage equal to or greater
than 50/100 (or an equivalent coverage) be
sufficient to cover anticipated losses
and a reasonable reserve and include operating and administrative expenses,
as determined by FCIC
based on an industry-wide percentage of
the amount of premium used to define loss ratio.
Amends
section 508(e)(2) by striking paragraphs (B) and (C) that provide the amount
of premium to be paid by FCIC for coverage of
less than 65/100 but greater than 50/100,
and for coverage greater than 65/100, respectively.
Adds new
paragraphs (B) through (G) that provide for the new amount to be paid by
FCIC for coverage levels ranging from 50 percent
coverage to 85 percent coverage.
Provides
that the amount to be paid by FCIC for each coverage level (or equivalent
coverage) is the sum of the percent of premium
provided below (plus an amount of administrative
and operating expenses determined under another section).
50-54% coverage = 67%
55-59% coverage = 64%
60-64% coverage = 64%
65-69% coverage = 59%
70-74% coverage = 59%
75-79% coverage = 54%
80-84% coverage = 40.6%
85% coverage = 30.6%
(Producers may choose any price election
up to 100 percent of the price election, and coverage in 1 percent increments
is authorized as under
current law.
Provides that each policy or plan of insurance
contain a disclosure of the portion of premium paid by FCIC.
The
House bill amends section 508(d) by adding a new paragraph (3) to authorize
FCIC to provide performance-based discounts to
producers with good production or insurance
experience.
Authorizes
a 20 percent premium discount for the 2000 crop year for certain producers
of specific crops that received a discounted
price due to Scab or Vomitoxin damage.
The House
bill amends section 508(c)(5) to provide that in the case of a cost of
production or similar plan of insurance, the expected
market price (price election) is the projected
cost of producing the crop. (Section 101, 106 and 107)
The Senate
amendment amends section 508(d)(2) by striking subparagraph (C) and inserting
a new (C) and (D) establishing premium
amounts.
Paragraph
(C) requires that the premium for insurance coverage equal to or greater
than 65/100 but less than 75/100 (or a comparable
coverage for a plan of insurance not based
on yield) be sufficient to cover anticipated losses and a reasonable reserve
and include operating
and administrative expenses, as determined
by FCIC based on an industry-wide percentage of the amount of premium used
to define loss
ratio.
Paragraph
(D) requires that the premium for insurance coverage equal to 75/100, 80/100,
and 85/100 (or a comparable coverage for a
plan of insurance not based on yield)
is established at a level as indicated under paragraph (C).
Amends
section 508(e) by striking paragraph (1) providing that FCIC pay a portion
of premium and inserts a new paragraph relative to
the same.
Provides
under paragraph (1)(A) that FCIC pay a portion of the premium as established
in section 508(e)(2).
Amends
section 508(e)(2) by striking paragraphs (B) and (C) that provide for the
amount of premium to be paid by FCIC for coverage of
less than 65/100 but greater than 50/100,
and for coverage greater than 65/100, respectively.
Adds new
paragraphs (B) through (G) that provide for the new amount to be paid by
FCIC for coverage levels ranging from 50/100 to
85/100.
Provides
that the amount to be paid by FCIC for each coverage level (or comparable
coverage for a plan of insurance not based on yield)
is the sum of the percent of premium provided
below (plus an amount of administrative and operating expenses determined
under another
section).
50/100% coverage = 60%
55/100% coverage = 45%
60/100% coverage = 45%
65/100% coverage = 50%
70/100% coverage = 50%
75/100% coverage = 55%
80/100% coverage = 38%
85/100% coverage = 28%
(Producers must choose 100 percent price
election to receive correlating percentage of assistance, and availability
of coverage is limited to 5
percent increments).
Provides
under new paragraph (H) that paragraphs (A) through (G) are applicable
for the 2001 through 2004 fiscal years.
Amends
section 508(a) by striking paragraph (3) relative to exclusions for coverage
and inserting a new paragraph (3) relative to the
same.
Provides
conforming amendments amending section 508(e) by striking paragraph (4)
requiring individual and area crop insurance
coverage and by striking reference to
such authority under section 508(g)(2)(D).
The Senate
amendment amends section 508(c) by striking paragraph (5) relative to price
levels and inserts a new paragraph relative to
price elections.
Requires
FCIC to establish or approve a price level, or expected market price, for
each commodity insured.
Provides
that the expected market price (1) not be less than the projected market
price of the crop; (2) may be based on the actual
market price of the crop at the time of
harvest; (3) in the case of revenue or similar policies be the actual
market price of the crop; or (4) in the
case of cost of production or similar
policies be the cost of producing the crop. (Section 103)
The Conference substitute adopts the Senate provision relative to the expected
market price with minor changes to clarify intent. The
Conference substitute adopts the House
provisions relative to premium amounts, performance-based discounts, payment
schedule, and
premium payment disclosure with certain
changes. Language with respect to premium amounts and payment schedule
has been modified to
clarify intent. The provision providing
discounts for producers of crops damaged by scab is omitted. Premium
assistance at the 75, 80, and 85
percent coverage levels are increased
to 55 percent, 48 percent, and 38 percent, respectively, of the amount
of premium used to define loss
ratio. Current statutory authority
to offer coverage in one percent increments is temporarily suspended.
(Section 101)
Premium Schedule for Other Plans of Insurance
The House
bill amends section 508(h)(2) by striking the second sentence limiting
the portion of premium FCIC may pay for innovative
policies and by creating paragraphs (A)
and (B).
Subparagraph
(B) requires that in the case of a policy submitted under section 508(h)
(except paragraph (10) or subsection (m)(4)),
FCIC shall pay a portion of the premium
equal to the percentage, prescribed under section 508(e) for a similar
level of coverage, of the total
amount of the premium used to define loss
ratio, and the dollar amount of the administrative and operating expenses
that would be paid by FCIC
under section 508(e) for a similar level
of coverage. (Section 102)
The Senate
amendment amends section 508(e) by striking paragraph (1) relative to requiring
FCIC to pay a portion of premiums and
inserts a new paragraph (1) related to
the same.
Provides
under the new paragraph (1)(B) that FCIC may pay a portion of the premium
as established in 508(e)(2) for innovative plans of
insurance approved by FCIC under section
508(h). (Section 103)
The Conference
substitute adopts the House provision relative to premium assistance for
all policies or plans of insurance developed
and approved under section 508(h) or 522
or conducted under section 523 (except livestock pilot programs) with certain
changes. The
administrative and operating costs associated
with all such policies or plans of insurance must comply with section 508(k)(4),
including any
proportional reductions that may apply.
Section 508(k)(4), including any proportional reductions, applies to all
such policies or plans of
insurance whether developed and approved
on, before, or after the date of enactment of this Act. However,
the effective date of the
amendments made by section 102 are delayed
until after the reinsurance year 2001 with respect to policies or plans
of insurance developed
and approved subsequent to the date of
enactment. During the reinsurance year 2001, the portion of the premium
paid by the Corporation for
such policies or plans of insurance developed
and approved subsequent to the date of enactment may not exceed the dollar
amount authorized
under the new payment schedule for multiple
peril crop insurance. Administrative and operating costs associated
with such policies during the
reinsurance year 2001 are adjusted accordingly,
subject to section 508(k)(4), including any proportional reductions that
may apply. (Section
102)
Catastrophic Risk Protection
The House
bill amends section 508(b) by striking paragraph (3) relative to yield
and loss basis and inserts a new paragraph (3) relative
to the same.
Provides
that, beginning with the 2000 crop year, FCIC must offer producers a choice
between the current CAT coverage and an
alternative CAT coverage that indemnifies
the producer on an area yield and loss basis, provides a higher combination
of yield and price
election, and that FCIC determines is
comparable to "CAT."
The House bill amends section 508(b)(5) by adding a new subparagraph (F)
relative to payment of fees on behalf of producers.
Authorizes a cooperative association or
nonprofit trade association to pay "CAT" fees on behalf of consenting producers.
Provides
that licensing fees or other payments made by approved insurance providers
to a cooperative association or nonprofit trade
association in connection with the sale
of "CAT" or "buy-up" insurance shall not be construed as a rebate providing
the producer receives prior
notice of the fee.
Provides
that nothing in the subparagraph limits the ability of a producer to choose
an agent or an insurance provider or refuse "CAT"
coverage purchased pursuant to this subparagraph.
Further requires that "CAT" policies sold under such an arrangement must
be through a
licensed agent or approved insurance provider.
Requires
that participating cooperative associations, nonprofit trade associations,
and approved insurance providers that operate under
this subparagraph to encourage producer
members to purchase appropriate coverage.
The House
bill amends section 508(b)(11) reducing loss adjustment expense reimbursements
relative to CAT policies to approved
insurance providers from 11 percent of
imputed premium to 8 percent of the same.
Amends
section 508(k)(4)(A)(ii) by reducing administrative and operating expense
reimbursements to approved insurance providers
from 24.5 percent of premium used to define
loss ratio to 24 percent of the same.
Provides
that amendments are applicable with respect to the 2001 and subsequent
reinsurance years. (Sections 108, 109 and
310(a)(1))
The Senate
amendment requires any person that sells or solicits the purchase of a
policy or adjusts losses under the FCIA in any state
must be licensed and qualified to do business
in that state, and must comply with all state regulations (including commission
and anti-rebating
regulations) as required under state law.
(Sections 313)
The Conference
substitute adopts the House provisions relative to the provision of alternative
catastrophic risk protection and the
reimbursement rate change for loss adjustments
associated with catastrophic risk protection. The reduction in administration
and operating
cost reimbursement is omitted. The
Conference substitute further adopts the House provision relative to the
payment of catastrophic risk
protection fees by associations on behalf
of member producers, and the treatment of licensing fees received by associations
in connection with
the issuance of insurance with changes.
Rebating in connection with the issuance of crop insurance coverage is
subject to the State laws in
which the rebate is made. If a cooperative
association or trade association is located in a State that permits rebating
in connection with the
issuance of crop insurance coverage, the
association may pay catastrophic risk protection (CAT) fees on behalf of
members in that State or in a
contiguous State. A report to Congress
on the operation and impact of this provision is required.
Finally, the Conference substitute increases
the fees associated with catastrophic
risk protection from $60 to $100 per crop per county. (Section 103)
Administrative Fee for additional coverage
The Conference substitute provides for an administrative fee of $30 per
crop per county to be paid by producers electing coverage in
excess of catastrophic risk protection.
(Section 104)
Assigned yields and actual production history
adjustments
The House
bill amends section 508(g) by adding paragraph (4) relative to adjustment
in actual production history to establish insurable
yields.
Provides
that this paragraph shall apply when FCIC uses the APH of a producer to
establish insurable yields for a crop for the 2001 and
subsequent crop years.
Provides
that, if, for one or more of the crop years used by a producer to establish
APH, the producer's yield is less than 60 percent of the
applicable "T" yield, the producer may
exclude each of such crop years and replace the excluded yield with a yield
equal to 60 percent of "T".
This section applies retroactively to
already recorded yields and prospectively to future yields.
Amends
section 508(g) by adding paragraph (5) relative to APH adjustment to reflect
participation in major pest control efforts.
Requires
FCIC to develop a methodology for adjusting the APH of a producer's crop
when the producer's farm is located in an area
where efforts have been undertaken to
eradicate or retard plant pests and disease, where the presence of the
pest or disease has been found
to reduce applicable crop yields, and
where the efforts undertaken have been effective. Requires APH adjustments
to reflect the success of the
effort undertaken. (Section 103)
The Senate
amendment amends section 508(g)(2)(B) by requiring FCIC to assign a producer
a yield for a crop where the producer has
not had a share of the production of the
crop for more than 2 years; has not before farmed the land; or rotates
to a crop that has not before been
produced on the farm.
The Senate
amendment amends section 508(g) by adding paragraph (4) relative to transitional
adjustments for disasters.
Defines
"a producer that has suffered a multiyear disaster" as a producer or successor
entity 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 APH of a crop.
Provides
that, beginning with the 2001 crop year, a producer of an insured crop
that has suffered a multiyear disaster may exclude 1 year
of the crop's production history for each
5 years included in the crop's APH.
Requires
FCIC to pay for any increased premiums, indemnities, and administrative
and operating expenses that result from the exercise
of a producer to exclude 1 year of a crop's
production history.
Prohibits
FCIC from limiting any increase in a producer's APH due to the producer's
actual production of the crop in succeeding years
until such time that the producer's APH
has recovered to the level obtained in the year before the first year of
multiyear disaster.
Rescinds
FCIC authority allowing eligible producers to exclude any 1 crop year in
the first crop year where a policy is available to
adequately address natural disasters occurring
in multiple crop years.
Makes the
paragraph applicable for the 2001 through 2004 reinsurance years. (Sections
104 & 105)
The Conference
substitute adopts the Senate provision relative to assigned yields and
the House provision relative to adjustments to
actual production history with minor changes
to clarify intent. (Section 105)
Review and Adjustment in Rating Methodologies
The House
bill amends section 508(a) by adding a new paragraph (7) relative to the
review and adjustment in rating methodologies.
Requires
FCIC to periodically review the methodologies employed for rating plans
of insurance consistent with section 507(c)(2) relative
to contracting for such services.
Requires FCIC to analyze the rating and loss history of policies and plans
of insurance for crops by area and
make appropriate adjustments for the 2000
crop year or as soon as possible where premium rates are found to be excessive.
(Section 104)
The Senate
amendment requires FCIC to contract for the study and development of alternative
rating methodologies for rating plans of
insurance for "CAT" and "buy-up" coverage,
taking into account producers not electing to participate in crop insurance
and those electing only
"CAT" coverage.
Requires
that, with respect to such rating studies, a priority be given to crops
with the largest average acreage nationwide but lowest
percentage of producer participation at
buy-up coverage levels.
Requires
FCIC to provide funding for rating studies from the account established
under section 516(b)(2)(A) of the FCIA, and specifically
authorizes $1 million for fiscal years
2001 and 2002 and $250,000 in fiscal years 2003 and 2004.
Provides
that the paragraph relative to funding be applicable for the fiscal years
2001 through 2004. (Section 202)
The Conference
substitute adopts the House provision relative to review and adjustment
in rating methodologies with a change to
require such adjustments take place in
the 2002 crop year and thereafter, rather than in the 2000 crop year and
thereafter. (Section 106)
The Managers
urge the Corporation to complete the process of developing alternative
rating methodologies for all insurable crops. The
Managers also urge the Corporation to
base Multi-Peril Crop Insurance (MPCI) cotton rates in Texas on the results
of the analysis prepared on
their behalf by researchers at Montana
State University and to adopt these rates beginning with the 2001 crop
year on the same basis as the
Corporation implemented revised MPCI Premium
rates in the Mid-South and Far West regions.
Quality Adjustment
The House
bill amends section 508(a) by adding a new paragraph (9) relative to quality
grade loss adjustment.
Requires
that, consistent with subsection (m)(4) relative to contracting for research
requirements, FCIC enter into a contract by the 2000
crop year to analyze quality loss adjustment
procedures and make adjustments necessary to more accurately reflect local
quality discounts,
taking into account actuarial soundness
requirements and prevention of fraud, waste, and abuse. (Section 112)
The Senate
amendment strikes 508(a)(6) requiring guidelines, reports, studies, and
pilot programs relative to the addition of new and
specialty crops, and inserts a new paragraph
(6) relative to quality adjustment.
Requires
FCIC to offer coverage that permits a reduction in production for purposes
of determining a loss to reflect any production not
meeting quality standards.
Allows
producers to opt-out of quality adjustment coverage and receive a reduction
in premium equal to the cost of the coverage.
Requires
FCIC to contract for the study of quality loss adjustment procedures and,
based on the study, to adjust the coverage to better
reflect local quality discounts, taking
into consideration actuarial soundness and the prevention of fraud, waste,
and abuse. (Section 101)
The Conference
substitute adopts the Senate provision relative to quality adjustments
with certain changes. Language to permit
producers to opt-out of such coverage
and receive a premium reduction is omitted. Language is included
to permit producers to elect such
coverage, under limited circumstances,
on a basis smaller than a unit, and a provision relative to the manner
in which the Corporation sets
quality standards is also included.
(Section 107)
Double Insurance and Prevented Planting
The House bill amends section 508(a) by adding a new paragraph (8) relative
to prevented planting.
Allows
producers to opt-out of prevented planting coverage and receive a reduction
in premium equal to the cost of the prevented
planting coverage.
Requires
FCIC to provide an equal percentage level of prevented planting coverage
for each crop.
Limits
prevented planting payments to producers prevented from planting due to
conditions generally affecting the area in which the
producer farms.
Authorizes
a producer who received a prevented planting payment to plant a second
crop other than the crop prevented from being
planted on the same acreage, except that
the second crop is not eligible for NAP or crop insurance coverage.
Provides
that a producer who elects to plant a second crop which is not insurable
or NAP eligible still qualifies for AMTA loans and
payments, CRP, and guaranteed and direct
loans and other benefits under the ConAct.
Requires
FCIC to assign a producer who receives a prevented planting payment and
who elects to plant a second crop a yield for the
prevented crop for that year equal to
60 percent of the producer's actual production history for purposes of
future APH.
Denies a prevented planting payment to
a producer who plants a second crop before the latest planting date for
the crop prevented from being
planted.
The House
bill amends section 508(a) by adding a new paragraph (10) relative to limitations
on double insurance.
Prohibits
a policy or plan of insurance for more than one crop planted on the same
acreage in the same crop year unless the coverage
for the additional crop is "CAT" coverage.
Provides
an exception to the limitation on double insurance where both crops are
normally harvested within the same crop year on the
same acreage; there is an established
practice of double-cropping in the area and the additional crop is customarily
double-cropped in the area
with the first crop; a policy of insurance
is offered for both crops; and the additional crop is planted on or before
the final or late planting date for
that crop. (Sections 110 and 201)
The Senate
amendment is substantially the same as the H.R. 2559 except the following
additional provisions.
Makes the
prevented planting paragraph applicable for the 2001 through 2004 crop
years.
Requires
that changes made to prevented planting coverage be reflected in the rates
for coverage not later than the 2001 reinsurance
year. (Section 102)
The Senate
amendment amends section 508(m) (subsection (n) designated as (m) under
section 207 of Senate amendments.
Requires
that FCIC may only offer insurance or reinsurance on 1 crop produced on
specific acreage during a crop year, unless there is
an established practice of double-cropping
in an area, the additional insurance is offered to a crop that is customarily
double-cropped in the
area, and the producer has a history of
double-cropping or the acreage has historically been double-cropped.
(Section 308)
The Conference
substitute provides limitations with respect to double insurance and prevented
planting coverage.
The Conference substitute establishes
a new Section 508A for both double insurance and prevented planting and
provides the following
definitions:
"First Crop" means the first crop of the first agricultural commodity insured
and planted for harvest, or prevented from being planted, on
specific acreage during a crop year.
"Second Crop" means a second crop of the same or different agricultural
commodity following the first crop that is planted for harvest on
the same acreage as the first crop in
the same crop year. However, the term does not include a replanted
crop.
"Replanted Crop" means the second planting of the first crop on the same
acreage in the same crop year, if the replanting is required by
the terms of the policy of insurance on
the first crop.
In the case of double insurance, the Conference substitute provides a producer
with two options if a first crop has a total or partial
insurable loss. If the producer
chooses not to plant a second crop, then the producer is entitled to 100
percent of the indemnity payment for the
first crop.
If the
producer plants a second crop, then the producer will receive an initial
indemnity payment up to 35 percent of the total calculated
indemnity payment for the first crop.
The Managers intend that the Secretary adjust the percentage paid as necessary
to prevent abuse of the
program. If the producer is not
paid an indemnity on the second crop, then the producer will receive an
additional indemnity payment equal to
the total calculated indemnity on the
first crop less the initial indemnity payment. If an indemnity is
paid with respect to the second crop, then the
producer is not entitled to receive the
additional indemnity payment with respect to the first crop.
In the
case of a producer who chooses to plant a second crop, the premium owed
for insurance on the first crop will be reduced
commensurate with any reduction in indemnity
payment received on the first crop. If no indemnity is paid on the
second crop, then the producer
owes the full premium for insurance on
the first crop.
With regard
to prevented planting, the Conference substitute provides a producer with
two options if a first crop is prevented from being
planted. If the producer chooses
not to plant a second crop, then the producer may collect 100 percent of
the prevented planting guarantee for
the first crop.
If the
producer plants a second crop, then the producer will receive up to 35
percent of the prevented planting guarantee for the first crop.
The Managers intend that the Secretary
adjust the percentage paid as necessary to prevent abuse of the program.
In addition, except for
producers who double crop in a double
cropping area, a producer who plants a second crop will be assigned a recorded
yield of 60 percent of
the producer's actual production history
for the crop on which a prevented planting guarantee payment is received.
This will be used in
determining a producer's actual production
history for subsequent crop years for the first crop. The Corporation may
only pay the prevented
planting guarantee to a producer if the
conditions that prevented the first crop from being planted have also generally
affected other producers in
the area. In addition, the Corporation
may not make a prevented planting guarantee payment for the first crop
in the case of any producer who
plants a second crop before the latest
planting date for the first crop.
In the
case of a producer who chooses to plant a second crop, the producer's premium
for the first crop will be reduced commensurate
with any reduction in indemnity payment
received on the first crop.
The Conference
substitute provides that, notwithstanding the restrictions placed on double
insurance and prevented planting, a producer
will receive full indemnity payments and
prevented planting guarantees on 2 or more crops in a double cropping area.
There must be an
established practice of planting 2 or
more crops for harvest in the same crop year in the area, as determined
by the Corporation, and an
additional coverage policy or plan of
insurance must be offered with respect to the commodities planted on the
same acreage in the same crop
year. In addition, the producer
must have a history of planting 2 or more crops in the same year; the applicable
acreage must have historically
been planted to 2 or more crops in the
same year; and the second or subsequent crops must be customarily planted
after the first crop on the
same acreage in the same year. The
Managers intend that in determining when an agricultural commodity is customarily
double cropped in a
double cropping area, that the Corporation
consider the farming and irrigation practices applicable to the crops in
the area. (Section 108)
Noninsured Crop Disaster Assistance Program
The House bill amends section 196(i) of the AMTA in paragraph (1) by striking
"gross revenues" wherever it appears and inserting
"gross income" and by striking paragraph
(4) and adding a new paragraph (4).
Paragraph
(4) provides that a person with a qualifying adjusted gross income of greater
than $2 million during the taxable year is
ineligible to receive NAP assistance.
The House
bill also amends section 196(b) of the FAIR Act of 1996 to require that
to be eligible for NAP, producers must provide
annually to the Secretary, acting through
the agency, records of crop acreage, acreage yields, and production for
each eligible crop. (Sections
111 and 205)
The Senate
amendment amends section 196(a)(2) of AMTA by adding a new subparagraph
(C) allowing the Secretary to consider all
varieties of a crop eligible for NAP as
a single eligible crop for program purposes.
Amends
section 196(b)(1) relative to when a producer must apply for NAP assistance,
striking discretionary authority for the Secretary to
determine the application deadline and
inserting the requirement that producers apply not later than March 15.
Strikes
paragraph 196(b)(2) providing the Secretary discretionary authority pertaining
to what production records a producer must
submit, and inserting a requirement that,
to be eligible for NAP, producers must annually submit crop acreage, acreage
yields, and production
for each crop.
Amends
paragraph 196(b)(3) to require annual reporting of acreage planted or prevented
from being planted.
Strikes
section 196(c) relating to loss requirements and inserts a new subsection
(c) relative to the same.
Provides
that a producer of an eligible crop must have suffered a loss of a noninsured
crop as a result of drought, flood, or other natural
disaster as determined by the Secretary.
Authorizes
the Secretary to make payments under NAP once a drought, flood, or other
natural disaster determination is made.
Changes
the prevented planting payment trigger for eligible crops from a 35 percent
acreage threshold to a 15 percent acreage
threshold.
Authorizes
the Secretary to make a NAP payment irrespective of any area loss trigger.
Amends
section 196 by inserting a new subsection (j) and (k) relative to new eligible
crops and service fees, respectively, and
designating the current subsection (j)
as subsection (l).
Provides
under section 196(j)(1) that the NAP payment to a producer of an eligible
crop that is new to an area will be equal to 35 percent
of the established yield for the first
year the crop is produced.
Provides
that the NAP payment to a producer of an eligible crop that is new to an
area will be equal to 45 percent of the established yield
for the second through fourth years the
crop is produced, except where a NAP payment was made in the first year
in which case the payment is
35 percent.
Makes a
producer of an eligible crop ineligible for a NAP payment where the producer
collects a NAP payment in the first 2 crop years,
until such time that the crop is produced
for 3 consecutive crop years with no reported losses.
Provides
for a service fee for NAP eligibility under section 196(k), requiring producers
to pay the Secretary an amount equal to the fee for
a CAT policy ($60 per crop per county)
or $200 per producer per county, not to exceed $600 per producer. Provides
for the waiver of NAP fees
for limited resource producers.
Provides
that NAP fees collected by the Secretary be deposited in the CCC Fund.
Makes amendments under this section applicable for
the 2001 through 2004 crop years.
(Section 106)
The Conference
substitute adopts the Senate provision relative to the Noninsured Crop
Disaster Assistance Program with changes.
Producers are required to make an application
for NAP eligibility not later than 30 days before the beginning of the
coverage period. Changes
relative to prevented planting and yields
for new NAP eligible crops provided under the Senate amendment are omitted.
The NAP fee provided
in the Senate amendment is modified to
require producers to pay the lesser of $100 per crop per county or $300
per producer per county, but
not to exceed $900 per producer.
(Section 109)
Subtitle B – Improving Program Integrity
Improving Program Compliance and Integrity
The House
bill amends section 506(q) by designating paragraphs (1) and (2) as (2)
and (3), creating paragraph (1) relative to purposes,
and creating new paragraphs (4) through
(7) relative to certain compliance requirements.
Paragraph
(4) requires the Secretary to develop and implement a coordinated plan
for FCIC and FSA to reconcile information received
from producers and, beginning with the
2000 crop year, requires FCIC and FSA to annually conduct such reconciliation
to identify and address
any discrepancies.
Paragraph
(5) requires the Secretary to develop and implement a coordinated plan
for FSA to assist FCIC in ongoing monitoring of FCIA
programs, including conducting fact findings
relative to allegations of fraud, waste or abuse at the request of FCIC
or on its own initiative after
consultation with FCIC; reporting fraud,
waste, abuse, and program vulnerabilities to FCIC; assisting FCIC in auditing
a statistically appropriate
number of claims. Also provides
that the Secretary ensure that FSA personnel are appropriately trained
and, at minimum, receive the same
training and testing as loss adjusters.
Requires
maintenance of effort on the part of approved insurance providers in conducting
audits of claims, requires FCIC to respond
within 90 days of receiving notice by
approved insurance providers of intentional violations, and requires a
coordinated response to violations by
FCIC and approved insurance providers.
Paragraph
(6) requires the Secretary to establish a mechanism under which state FSA
committees are consulted concerning policies
and plans of insurance offered in the
state.
Paragraph (7) requires the Secretary to
submit an annual report to the House and Senate Agriculture Committees
containing findings relative to
the efforts undertaken in paragraphs (4)
and (5), identifying specific incidences of fraud, waste, and abuse along
with actions taken to eliminate
the same.
The House
bill amends section 506(n) by striking "penalties" where it occurs and
inserting "sanctions" and redesignating paragraph (2)
as paragraph (3).
Strikes
paragraph (1) relative to false information and inserts new paragraph (1)
relating to the same.
Provides
that a producer, agent, loss, adjuster, approved insurance provider, or
other person that intentionally provides false or
inaccurate information to FCIC or to an
approved insurance provider with respect to a policy may, after notice
and opportunity for a hearing, be
subject to sanctions.
Provides
that sanctions include a civil fine not to exceed the greater of the amount
of the pecuniary gain obtained by the violator or
$10,000; debarment of a producer from
specified farm programs for up to 5 years; and debarment of other persons
from benefits under the
FCIA for up to 5 years. Also provides
that FCIC may require the producer to forfeit any premium owed notwithstanding
denial of a claim or
collection of overpayment if the violation
is material.
Requires
sanctions be disclosed on each policy. (Sections 202 and 203)
The Senate
amendment strikes section 506(n), relative to penalties for false information,
and provides a new subsection (n) relative to
sanctions for program noncompliance and
fraud.
Provides
that a producer, agent, loss, adjuster, approved insurance provider, or
other person that intentionally provides false or
inaccurate information to FCIC or to an
approved insurance provider with respect to a policy may, after notice
and opportunity for a hearing, be
subject to a sanction under this subsection.
Provides
that a producer, agent, loss adjuster, approved insurance provider, or
other person that intentionally fails to comply with an FCIC
requirement is subject to sanctions, and
that any such person (other than a producer) intentionally failing to comply
with an SRA is also subject to
sanctions.
Provides
sanctions for material violations relative to providing false information
and compliance failure. Sanctions include a civil fine not
to exceed the greater of the amount of
the pecuniary gain obtained by the violator or $10,000; debarment of a
producer from all farm programs
for up to 5 years; and debarment of other
persons from benefits under the FCIA for up to 5 years.
Requires
the Secretary to consider the gravity of the violation in determining whether
to impose a sanction and the amount or degree of
any sanction imposed. Also requires
disclosure of sanctions on each policy of insurance.
Requires
that funds collected under this subsection be deposited into the insurance
fund provided under section 516(c)(1) of the FCIA
(general FCIA insurance fund). Amends
section 516(c)(1) of the FCIA by striking paragraph (1) and inserting a
new paragraph (1) providing
that, along with premium income and amounts
under section 516(a)(2), sanctions fees are to be deposited in this fund.
The Senate
amendment amends section 506(q) of the FCIA, relative to program compliance,
by adding at the end paragraphs (3) and
(4).
Paragraph
(3) requires FCIC to develop procedures for an annual review of each agent
and loss adjuster by approved insurance
providers, oversee such review, and consult
with approved insurance providers relative to any remedial action required.
Requires
FCIC to file a report with the House and Senate Agriculture Committees
by the end of each fiscal year relative to compliance,
along with recommendations for any necessary
legislative or administrative changes. (Sections 303 and 304)
The Conference
substitute adopts the House provisions relative to improving compliance
and integrity with modifications. Procedures
with respect to FSA inquiries into fraud,
waste, and abuse as well as notice and response requirements concerning
allegations of fraud, waste,
and abuse are clarified. The Secretary
is required to establish procedures by which the Corporation will be able
to identify agents and loss
adjusters with disparate performance records
in order to conduct a review and take remedial action where appropriate.
Certain information,
including the name and identification
number of each insured and the crop to be insured, the elected coverage
level, and price election selected
must be received by the Corporation approximately
30 days subsequent to the sales closing date. The Conference substitute
also adopts the
Senate provision relative to sanctions
for program noncompliance and fraud, with a minor change to exclude the
failure to comply with a
Standard Reinsurance Agreement from the
class of activities that would trigger the imposition of sanctions enumerated
under this section. The
Conference substitute further adopts the
Senate provision to require the Corporation to develop procedures for approved
insurance providers to
review the performance of agents and loss
adjusters. Finally, the Conference substitute adopts provisions to
require the Secretary to upgrade
information management systems and use
data mining and data warehousing technologies, including contracting with
private entities with
expertise in this area, in implementing
compliance provisions. Limited funding is authorized for fiscal years
2001 through 2005 to carry out
these compliance activities, excluding
salaries. (Section 121)
In an effort
to combat fraud and abuse in the crop insurance program, the Managers direct
the Secretary to develop and implement a
coordinated plan for the Farm Service
Agency to assist the Corporation in monitoring and reporting on crop insurance
program activity at the
local field level. In addition, the Corporation
must establish a working relationship with insurance providers in order
that information regarding
fraud, waste, and abuse may be reported
to the Corporation without fear of legal reprisal to the insurance providers.
The Managers expect the
Secretary to ensure that each of the agency
roles are clearly defined with the Corporation responsible for implementing
all rules and regulations
relating to the insurance program.
The Managers
expect that the Corporation will make full use of the capabilities of information
management systems, specifically data
warehousing and data mining technologies,
both within or outside of the Federal government, to fulfill the requirements
of this section to improve
the compliance and integrity of the Federal
crop insurance program. The Managers expect the Corporation to use
funds made available by this
Act, or otherwise available, to contract
with the Center for Agribusiness Excellence at Tarleton State University
and the Center for Agribusiness
and Agrotechnologies at Bradley University
for management and development of a system to implement the requirements
of this section.
The Managers
direct the Corporation to place the highest financial priority and emphasis
on the interactive computer operations to
ensure that participating insurance companies
are able to accurately transmit financial data back to the agency.
Protection of Confidential Information
The House
bill amends section 502 by adding a new subsection (c) relative to the
protection of confidential information.
Prohibits
the Secretary, any other officer, employee, or agency of USDA, an approved
insurance provider and its employees and
contractors, and any other person from
disclosing producer-derived information to the public unless it is transformed
into a statistical or
aggregate form that does not reveal the
producer's identity.
Provides
for penalties consistent with section 1770(c) of the Food Security Act
of 1985, including fines up to $10,000 and or
imprisonment for up to 1 year. (Section
204)
The Senate
amendment has no comparable provision.
The Conference
substitute adopts the House provision protecting producer confidentiality
with a minor change to allow producers to
consent to the release of otherwise protected
information as long as program eligibility is not conditioned upon the
release. (Section 122)
Good Farming Practices
The House
bill amends section 508(a)(3)(C) relative to losses excluded from coverage
by clarifying that scientifically sound sustainable
and organic farming practices are good
farming practices. (Section 309)
The Senate
amendment is substantially the same as the House bill.
The Conference
substitute adopts the Senate provision relative to the inclusion of scientifically
sound sustainable and organic farming
practices as good farming practices for
purposes of what constitutes an insurable loss under the Federal Crop Insurance
Act. The Conference
substitute further requires that producers
be provided with an informal administrative review of a determination regarding
good farming
practices but proscribes any such review
pursuant to the National Appeals Division. Producers have a right
to judicial review relative to a
determination regarding good farming practices
without having to exhaust any informal administrative review. However,
any determination
regarding good farming practices may not
be reversed under a judicial review unless it is found to be arbitrary
or capricious. (Section 123)
The Managers
understand that producers of organic cotton who destroy their crop when
it has been exposed to chemicals used in boll
weevil eradication are currently being
penalized relative to their actual production history despite the fact
that they do not qualify for a crop
insurance indemnity. The Managers
expect the Corporation to immediately rectify this inequity with respect
to any producer of an organic crop
who must destroy that crop in order to
maintain organic certification. To the extent that no indemnity is
received for a lost crop under these
circumstances, no penalty relative to
actual production history should obtain.
Records and Reporting
The House
bill amends section 508(f)(3)(A) of the FCIA relative to producer reporting
requirements.
Requires
producers participating in the crop insurance program to annually report
records acceptable to the Secretary regarding crop
acreage, acreage yields, and production
for each crop insured.
Amends
section 506(h) of the FCIA by requiring the coordination of records kept
under the FCIA and under the NAP program to avoid
duplication, to streamline submission
procedures, and to enhance accuracy.
Provides
that such records collected under NAP and the FCIA be made available to
appropriate state and federal agencies to carry out
these programs and other agricultural
programs and related responsibilities.
Amends
section 196(b) of the FAIR Act of 1996 to require that to be eligible for
NAP, producers must provide annually to the Secretary,
acting through the agency, records of
crop acreage, acreage yields, and production for each eligible crop. (Section
205)
The Senate
amendment amends section 508(f)(3)(A) of the FCIA relative to producer
reporting requirements.
Requires
producers participating in the crop insurance program to annually report
records acceptable to the Secretary regarding crop
acreage, acreage yields, and production
for each crop insured.
Amends
section 506(h) of the FCIA by requiring the coordination of records kept
under the FCIA and under the NAP program to avoid
duplication, to streamline submission
procedures, and to enhance accuracy.
Provides
that such records collected under NAP and the FCIA be made available to
appropriate state and federal agencies to carry out
these programs and other agricultural
programs and related responsibilities.
The Senate
amendment also strikes paragraph 196(b)(2) providing the Secretary discretionary
authority pertaining to what production
records a producer must submit, and inserting
a requirement that, to be eligible for NAP, producers must annually submit
crop acreage, acreage
yields, and production for each crop.
Amends paragraph 196(b)(3) to require annual reporting of acreage planted
or prevented from being
planted. (Sections 306 and 106)
The Conference
substitute adopts the House provision with changes to omit provisions dealt
with elsewhere in the Act. (Section 124)
Subtitle C—Research and Pilot Programs
Research and Development
The House
bill amends section 508(h) by adding a new paragraph (6) relative to reimbursement
of research, development, and
maintenance costs.
Requires
FCIC to reimburse an applicant for research, development, and maintenance
costs directly related to a policy submitted to and
approved by the Board and, if applicable,
sold to producers.
Authorizes
payments to applicants beginning with fiscal year 2001 and limits reimbursement
for maintenance to no more than 4
reinsurance years from approval, after
which FCIC assumes maintenance of successful policies.
Provides
that payments under this paragraph be considered payment in full for research
and development and any property rights.
Requires
FCIC to determine the amount of reimbursement based upon the complexity
of the policy or material and the size of the area to
be served. Requires FCIC to issue
final regulations not later than October 1, 2000.
The House
bill also authorizes $55 million for each fiscal year for reimbursement
and direct contracting for research and development of
new policies.
The House
bill amends section 508(m) by adding a new paragraph (4).
Paragraph
(4) requires FCIC to make full use of the reimbursement provisions of section
508(h) to encourage and promote private
research and development of new policies
and plans of insurance.
Provides
that where FCIC determines that a crop, including a specialty crop, is
not adequately served by crop insurance, FCIC may enter
into contracts directly with any person
or entity with experience in crop insurance or farm or ranch risk management,
including universities,
approved insurance providers, and trade
and research organizations, to conduct research and development, without
regard to the limitations
contained in the FCIA.
Provides
that the authority of FCIC to contract for the research and development
of policies, includes research and development for
policies based on adjusted gross income,
cost of production, quality losses, and an intermediate base program with
a higher coverage and cost
than "CAT".
Delays
effective date of contracting authority until October 1, 2000.
Provides
that FCIC may offer any policy developed under this subparagraph that is
approved by the Board.
Requires
FCIC to contract for research and development regarding one or more revenue
coverage plans involving current or new market
instruments. Requires FCIC to report
the results of the contract within 15 months from enactment of this paragraph.
Amends
section 508(m)(2) relative to the prohibition of FCIC research with respect
to risk protection generally available from the private
sector, to prohibit FCIC from conducting
its own research and development of new policies on or after October 1,
2000. Provides that FCIC
may continue to offer any policies developed
by FCIC before that date.
Amends
section 508(m) by adding a new paragraph (5), relative to partnerships
for risk management development and implementation.
Authorizes
FCIC to enter into partnerships with public and private entities to increase
the availability of loss mitigation, financial, and risk
management tools for producers of crops
covered under NAP and other under-served and specialty crop producers.
Authorizes
FCIC to enter into partnerships with CSREES, ARS, NOAA, and other appropriate
public and private entities with
demonstrated ability in developing and
implementing risk management and marketing options for specialty and under-served
crops.
Provides
a list of objectives to be obtained as a result of any partnerships.
Provides
that funds not used for reimbursements or for direct contracting for specialty
and under-served crops may be used by FCIC to
enter into such partnerships.
Provides
that funding for partnerships during fiscal years 2001 through 2004 are
available where amounts used for reimbursements and
direct contracting are less than $44 million,
$47 million, $50 million, and $52 million for fiscal years 2001 through
2004, respectively, and where
the amount for partnerships does not exceed
the difference between the amounts provided above and the amount actually
spent thereon.
This paragraph
is applicable beginning on October 1, 2000.
The House
bill amends section 508(h)(6) by adding a new subparagraph (E) relative
to expenditures on reimbursements and direct
contracting for research and development.
Provides
that of the amounts made available for reimbursements and direct contracting
for research and development, $25 million shall
be reserved for direct contracting for
specialty and under-served crops. Provides that any unused portions
of the reserved amount may be used
for reimbursements, with priority for
under-served crops. Also provides that of the amounts made available
for reimbursements and direct
contracting for research and development,
more than $25 million may be used for contracting for specialty and under-served
crops where
necessary.
Authorizes
$55 million for each fiscal year for reimbursement and direct contracting
for research and development of new policies.
Amends
section 516(a)(2) by adding a new subparagraph (D) authorizing appropriations
for costs associated with research,
development, and maintenance costs.
Amends
section 516(b)(1) by adding a new subparagraph (E) authorizing reimbursements,
research, and development costs to be paid
by the FCIA Fund. (Section 302,
303 and 304)
The Senate
amendment provides that with respect to research and analysis concerning
any crop insurance issue, including outreach,
education, pilot programs, or the development
of new plans of insurance, FCIC is limited to the authority provided under
the newly created
section 522 and the funds made available
under section 516(b)(2)(A) of the FCIA when contracting or reimbursing
research costs related to
policy development or modification.
Newly created section 523 relative to specialty crops is exempted from
this limitation.
Requires
that FCIC establish the development of a pasture, range, and forage program
to promote land stewardship as "1 of the highest
research and development priorities."
Requires
FCIC to contract for a study to determine whether the development of a
plan of insurance providing coverage for multiple years
would curb fraud and abuse, and requires
a report on findings to the House and Senate Agriculture Committee within
1 year of enactment.
The Senate
amendment also amends the FCIA by adding at the end section 523, relative
to specialty crops.
Authorizes
the Specialty Crops Coordinator to make grants or enter into contract for
research and development of policies to serve
under-served specialty crops and reimburse
costs associated with such research and development.
Authorizes
the Specialty Crops Coordinator to enter into partnerships with public
and private entities to increase the availability of risk
management tools for specialty crop producers.
Authorizes
$20 million in funding from section 516(c)(1) (FCIA Fund) for each of fiscal
years 2001 through 2004 to enter into cooperative
agreements with public and private entities
to develop and implement risk management tools for specialty crop producers.
Provides that such
amounts may not come from section 516(b)(2)(A).
Provides
a list of objectives to be obtained as a result of any partnerships.
Prohibits
FCIC from establishing a sales closing date for specialty crops that is
before the end of the 120-day period beginning on the
date of the final release of materials
for policies from RMA and the Specialty Crops Coordinator.
Allows
producers of specialty crops to purchase new coverage or increase coverage
levels at any time during the insurance period,
subject to a 30-day waiting period and
an inspection by FCIC to verify acceptability of the approved insurance
provider, provided FCIC is able
to adequately rate the risk.
Requires
FCIC and the Specialty Crop Coordinator to jointly conduct feasibility
studies for developing new policies for specialty crops,
and requires a progress report to Congress
not later than 1 year from the date of enactment.
The authority
for the Specialty Crops Coordinator to enter into partnerships and the
extension of the sales closing date and time for
purchase of coverage is applicable for
the 2001 through 2004 fiscal years.
Requires
that not later than 180 days after enactment, the Secretary must submit
a report to the President and the House and Senate
Agriculture Committees assessing USDA's
progress in expanding coverage to specialty crops and USDA's plans to continue
that progress.
Also requires
that the report include an assessment of whether "CAT" has resulted in
uniform quality of protection for all regions of the
country and fulfilled the goal of increased
participation, especially in states with traditionally low participation
rates and high proportion of
specialty crops. The report should
also address the question of whether USDA should resume offering CAT and
performing loss adjustments.
The Senate
amendment strikes subsection (m) providing FCIC its current authority to
conduct research, surveys, pilot programs, and
investigations relating to crop insurance
and agriculture-related risks and losses. Subsection (n) is designated
as subsection (m).
Amends
section 516(b)(2)(A) to increase mandatory funding for research and development
expenses from not to exceed $3.5 million for
each fiscal year to $4.5 million in fiscal
years 2001 and 2002, $3.75 million in fiscal years 2003 and 2004, and returning
to $3.5 million for each
subsequent fiscal year.
Provides
a conforming amendment relative to section references in section 518, defining
agricultural commodity. (Section 202, 207 and
309)
The Conference
substitute adopts the House provisions relative to reimbursements, contracting,
and partnership for policy research and
development with certain changes.
The provision includes authority to reimburse research and development
costs associated with policies
developed before enactment. Reimbursement
for research and development costs is limited to policies that are determined
to be marketable.
Reimbursement for maintenance is limited
to 4 reinsurance years from the date of Board approval after which the
provider responsible for
maintenance has three options. The
provider may transfer maintenance responsibility to the Corporation, charge
a Board-approved fee to be
paid by other providers electing to offer
the policy, or continue to maintain the policy and absorb the appurtenant
costs. The provision authorizes
the Corporation to enter into contracts
for research and development on policies in order to (1) increase participation
in States where the
Corporation determines there is low crop
insurance participation or availability, and the State is under-served
by the program; (2) increase
participation in areas that are under-served
by the program; and (3) increase participation by producers of under-served
agricultural
commodities, including specialty crops.
The provision requires the Corporation to consult with groups representing
producers that would be
served by a policy that is the subject
of the research and development before entering into a contract.
The Conference substitute adopts the
Senate provisions to require the Corporation
to establish the development of a pasture, range, and forage program as
one of the highest
priorities and to require the Corporation
to contract for a study relative to offering coverage for multiple years
to reduce fraud, waste, and abuse.
Provisions are included to make partnership
authority under this section eligible for funding for contracting, and
to reserve $5 million of such
funding for contracting for policy development
to increase participation in States where the Corporation determines there
is low crop insurance
participation or availability and the
State is under-served by the program. The Managers consider it a
high priority to develop policies that work
for producers and products in these low
participation states. The provision also requires the Corporation
to contract for research and
development relative to a cost of production
policy. Finally, funding for reimbursements and contracting are limited
to new levels. (Section 131)
The Managers
recognize that it is difficult to predict the range of new and innovative
approaches to the private development of insurance
products under the new environment created
under this bill. There is no reason to believe all policies will
necessarily fit under the current
structure of yield-based or revenue-based
products; some may focus on a narrower array of perils than are now included
in available coverage.
These could include plans to protect against
the uncontrollable risks associated with the use of certain conservation
techniques such as
integrated pest management, best management
practices, or conservation tillage systems. The Corporation should
take such factors into
account when considering approval of such
proposals.
The Managers
expect the Corporation to study the feasibility of offering a vine and
tree replacement program as an option for growers of
grapes, citrus, tree fruit, nut, kiwi,
blueberries, and other high-value, permanent crops.
Pilot Program
The House bill amends section 508(h) by repealing obsolete pilot programs
contained in paragraphs (6) and (8) relative to cost of
production and assigned yields, respectively.
Authorizes
FCIC to offer pilot programs on a regional, state, or national basis after
considering the interests of producers and the
interests and risks of FCIC, and to operate
the pilot program, including any modifications, for up to 3 years with
authority to extend for additional
periods.
Amends
section 508(h)(4) to require FCIC to promulgate regulations within 180
days of enactment to establish guidelines for the
submission and Board review of policies
submitted under section 508(h), including streamlined guidelines governing
the submission and Board
review of pilot programs that the Board
determines are limited in scope and duration and involve a reduced level
of liability to the government
and an increased level of liability to
the approved insurance provider.
Provides
that FCIC must notify the applicant of its intent to disapprove a low risk
pilot program within 60 days of the submission.
Requires
FCIC to approve or not approve a low risk pilot program within 90 days
of submission, and requires a detailed explanation for
any disapproval.
Provides
that where FCIC fails to make a timely determination with respect to a
low risk pilot program, the pilot is approved for the initial
reinsurance year unless an extension is
agreed to.
Amends
section 508(h) by striking paragraph (10) relative to time limits for submission
of new policies and inserts a new paragraph (10)
relative to livestock pilot programs.
Requires
FCIC to conduct 1 or more livestock pilot programs to evaluate risk management
tools, including futures and options contracts
and policies and plans of insurance, including
protection for environmental liability, and requires that the greatest
number and variety of
programs be evaluated.
Requires
FCIC to begin the conduct of livestock pilot programs during the 2001 fiscal
year and without regard to the limitations in the
FCIA, except that no coverage may be offered
where that coverage is generally available from private insurance.
Requires
FCIC to conduct the livestock pilot programs in a number of counties that
will facilitate comprehensive evaluation, and provides
that any producer of eligible livestock
owning a farm or ranch in a selected county is eligible to participate.
Defines
livestock as cattle, sheep, swine, goats, and poultry.
Requires
FCIC to operate all livestock pilot programs so that, to the maximum extent
practicable, associated costs (other than for
research and development) are not expected
to exceed $20 million for fiscal year 2001, $30 million for fiscal year
2002, $40 million for fiscal
year 2003, and $55 million for fiscal
year 2004 and each subsequent fiscal year.
Amends
section 518 of the FCIA by striking the livestock exclusion from insurance.
(Section 105)
The Senate
amendment authorizes FCIC to conduct research, surveys, pilot programs,
and investigations relating to crop insurance and
agriculture-related risks and losses based
on proposals developed by FCIC and others to determine their suitability
to meet producer needs.
Provides
an exception that FCIC may not conduct such research activity to provide
risk protection where such protection is generally
available from the private sector.
Provides
under newly created section 522(a)(3) a list of eligible activities for
research activity, including after October 1, 2000, livestock
and livestock products, wild salmon, and
loss or damage to trees or fruit due to "sharka."
Clarifies
the scope of pilot programs under newly created section 522(a)(4).
Authorizes FCIC to offer pilot programs on a regional, state,
or national basis after considering the
interests of producers and the interests and risks of FCIC, and to operate
the pilot program, including any
modifications, for up to 4 years with
authority to extend for additional periods. Also authorizes FCIC
to provide premium discounts to producers
using whole farm or single crop units
of insurance and to cross state and county boundaries to form units.
Requires
under newly created section 522(a)(5) that FCIC evaluate each pilot program
and submit a report to the Senate and House
Agriculture Committees with a recommendation
on whether to offer the pilot on a national basis.
Authorizes
under newly created section 522(a)(6) funds to carry out research and pilot
programs (except for research related to
alternative rating methodologies authorized
under section 202 of the Senate amendment). Authorized amounts may
not exceed $10 million in
FY2001, $30 million in FY2002, $50 million
in FY2003, and $60 million in FY2004.
Provides
that provisions under section 201 of the Senate amendment that require
funding are applicable for fiscal years 2001 through
2004, including authority for timber,
wild salmon, and livestock coverage, general pilot authority, and general
research funding.
The Senate amendment provides that the purpose of the pilot program is
to determine what incentives are necessary for approved
insurance providers to develop and offer
risk management products, rate premiums, and competitively market such
products.
Requires
FCIC to establish a pilot program under which approved insurance providers
may propose to the FCIC Board loss of yield or
revenue insurance coverage for 1 or more
commodities, including commodities not insurable (but excluding livestock),
rates of premium, and
underwriting systems.
Requires
FCIC to approve the risk management product before it can be marketed.
Provides
that the FCIC Board may approve a risk management product submitted if
the Board determines that the interests of producers
are protected; premium rates are actuarially
appropriate and underwriting systems are actuarially appropriate and adequate;
the product is
reinsured under the FCIA, through private
reinsurance, or self-insured; the size of the pilot is adequate; the product
is not generally available
through private insurance plans; and any
other requirements imposed by FCIC.
Requires
that all information concerning a risk management product be considered
confidential commercial or financial information, and
provides the standard that if the Secretary
could withhold such information, the information may not be released.
Defines
original provider as an approved insurance provider that submits a product
for approval under this section. Provides that risk
management products approved under this
section may only be sold by the original provider, unless another approved
insurance provider
desiring to offer the product pays a fee
established by the original provider. (Sections 201 and 205)
The Conference substitute adopts the Senate provisions relative to the
scope of pilot programs and to a pilot program for insurance
coverage on wild salmon. Pilot authority
for insurance coverage for timber due to drought, flood, fire or other
natural disaster and for trees or fruit
affected by plum pox (including quarantined
trees or fruit) are omitted because statutory authority currently exists
to insure the crops against
these perils. The House bill language
relative to expedited consideration of low risk pilot programs is omitted.
The Conference substitute
adopts the House bill’s provision relative
to livestock pilot programs, except that pilot authority to offer insurance
coverage for environmental
liability is omitted and the definition
of livestock is modified to include but not be limited to the livestock
referenced in the House bill. Funding for
all livestock programs is also limited
to new levels. The provision authorizes a premium-rate reduction
pilot program. Finally, House bill
language clarifying regulatory jurisdiction
over policies or plans of insurance is included but in a separate section
of the Act.
(Section 132)
The Managers
intend for the Corporation to proceed with crop insurance coverage for
sorghum silage beginning with the 2001 crop year
by implementing the pilot program that
was drafted and presented to grain sorghum producers in October of 1999.
The Corporation shall
develop the program in a way that provides
sorghum silage the same coverage as corn silage with the program to be
fully developed by
September 30, 2000.
The Managers
are aware of proposals to implement a pilot insurance policy to provide
coverage on timber losses resulting from drought,
flood, fire, or other natural disaster.
The Managers expect the Corporation to implement this pilot under current
authority, with special
consideration given to Florida.
The Managers
are aware of the serious concerns the plum pox virus is causing in several
states, including Pennsylvania. The Managers
believe the Corporation has the same authority
to develop a policy to provide coverage for plum pox as has been developed
for citrus canker.
The Managers expect the Corporation to
develop an insurance policy that provides coverage for trees against losses
associated with plum pox
virus.
The Managers
intend that the premium rate reduction pilot program authorized by this
provision explore whether premium rate
competition can benefit producers without
harming program integrity or the crop insurance delivery system.
The Managers hope and expect
that the Corporation will approve proposed
premium reductions, as long as such proposed reductions meet the standards
of approval contained
in Section 132(d) of the Conference substitute.
The Managers
are aware that Section 508(e)(3) of the Federal Crop Insurance Act already
authorizes premium reductions if an
approved insurance provider can demonstrate
to the Corporation that it can provide crop insurance more efficiently
than the expense
reimbursement provided by the Corporation.
The 508(e)(3) standard, however, is too limiting because an approved insurance
provider’s gross
income includes underwriting gain as well
as the expense reimbursement. As a result, the Managers intend that
the limitations on premium
reductions contained in Section 508(e)(3)
of the Federal Crop Insurance Act not apply to the premium rate reduction
pilot program authorized by
this provision.
Education and Risk Management Assistance
The Senate
amendment requires FCIC to establish two programs for the fiscal years
2001 through 2004, not to exceed the available
funding limitations.
Requires
FCIC to establish a program of education and information for states in
which there is traditionally and continues to be a low
level of program participation and coverage
availability, and which the Secretary determines is under-served.
Requires
FCIC to establish a program of research and development to develop new
approaches to increasing participation in states in
which there is traditionally and continues
to be a low level of program participation and coverage availability, and
which the Secretary
determines is under-served. Requires
that $10 million in each of fiscal years 2001 through 2004 be made available
for the Education,
Information, and Insurance Provider Recruitment
program from the account provided under section 516(a)(2)(C) (mandatory
funding account for
risk management payments).
Requires
that $5 million in each of fiscal years 2001 through 2004 be made available
for the Research and Development program from
the account provided under section 516(a)(2)(C)
(mandatory funding account for risk management payments). (Section
206)
The House
bill has no comparable provision.
The Conference
substitute adopts the Senate provision relative to education and research
with certain changes. The provision
authorizing the Corporation to establish
a program of research and development for new approaches to increase program
participation in
specified states is omitted and partnerships
for risk management education is authorized. The Secretary, acting
through the CSREES, is
required to establish a program under
which competitive grants are made to qualified persons for the purpose
of educating producers about risk
management activities. Funding for
the education and information program provided under the Senate amendment
and the partnerships for risk
management education program are each
limited to $5 million for each fiscal year beginning with 2001. The
provision also provides for an
agricultural management assistance program
under which the Secretary is to offer cost share assistance to producers
located in states with
historically low crop insurance participation
for the uses as specified in the Act. Funding for this program is
limited to $10 million for each fiscal
year beginning with 2001. (Section
133)
Farmers
have voiced support for marketing clubs, supported through small grants
from USDA. The clubs provide an opportunity for
farmers to improve their understanding
of marketing and managing price risk by sharing their marketing experiences
with their peers. The
Managers encourage the Secretary to continue
to support development of marketing clubs for farmers.
Options Pilot Program
The Senate
amendment amends section 191 of the AMTA relative to options pilot program
authority by extending such authority until
December 31, 2004.
Expands
authority to operate options pilot programs from not more than 100 counties
with a limit of 6 counties per state, to not more than
300 counties with a limit of 25 counties
per state.
Authorizes
the Secretary to enter into a contract with any producer who volunteers
to participate in the pilot program during any calendar
year in which a county in which the farm
of the producer is located is authorized to operate the pilot program.
Requires
FCIC transfer $27 million for each of fiscal years 2002 through 2004 from
section 516(a)(2)(C) (mandatory funds for risk
management payments) to the Secretary
to fund the operation of the expanded options pilot program. (Section
204)
The House
bill has no comparable provision.
The Conference
substitute adopts the Senate provision relative to the options pilot program
with certain changes. Authority to conduct
the options pilot program is expanded
to include an increased number of counties with such authority continuing
until the expiration of the 1996
Farm Bill. Finally, funding is limited
under this section. (Section 134)
Subtitle D—Administration
Relation to Other Laws
The House bill provides that any policy or plan of insurance offered under
the FCIA is not subject to the jurisdiction of the CFTC or SEC.
Provides a savings clause that states
that the provision does not affect the jurisdiction of the CFTC with respect
to transactions conducted on a
contract market.
The Senate amendment provides that any policy or plan of insurance offered
under the FCIA is not subject to the jurisdiction of the CFTC,
but does not affect the jurisdiction of
the CFTC with respect to transactions conducted on a contract market.
The Conference
substitute adopts the provision included in section 105 of the House Bill
relative to jurisdiction over policies or plans of
insurance and over any underlying instrument
utilized in such a policy or plan of insurance. (Section 141)
Management of Corporation
The House
bill strikes section 505(a) relative to the Board of Directors of FCIC
and inserts a new section 505(a) and (b), relative to the
same.
Provides
that the management of FCIC is to be vested in the Board of Directors,
subject to the supervision of the Secretary.
Provides
that the Board consist of the manager of FCIC (serving as a non voting
ex officio member), 1 member active in the crop
insurance business, 1 member active in
the regulation of insurance, the Under Secretary for Farm and Foreign Agricultural
Services, 1
additional Under Secretary for Agriculture,
USDA's Chief Economist, and 4 active producers who are policy holders,
are from different
geographic regions, represent a cross-section
of commodities grown, with 1 producer being a specialty crop producer.
Provides
that the private sector members of the Board be appointed and serve at
the pleasure of the Secretary, and not otherwise be
employed by the government.
Requires
that a private-sector member of the Board serve as its Chairman and be
elected by the Board.
Provides
that the amendment made by section 301 takes effect 30 days from enactment,
allowing current Board members to continue to
serve until the earlier of their replacement
date or 180 days after enactment. (Section 301)
The Senate
amendment strikes section 505(a) relative to the Board of Directors of
FCIC and inserts a new section 505(a).
Provides
that the management of FCIC is to be vested in the Board of Directors,
subject to the supervision of the Secretary.
Provides
that the Board consist of 4 producers from each region of the country,
1 member active in the crop insurance business, 1
member active in the reinsurance business,
the Under Secretary for Farm and Foreign Agricultural Services, the Under
Secretary for Rural
Development, and USDA's Chief Economist.
Provides
that the private sector members of the Board be appointed and serve at
the pleasure of the Secretary, not be employed by the
government, be appointed to staggered
4 year terms, and serve no more than 2 consecutive terms.
Requires
that a private sector member of the Board serve as its Chairman and be
elected by the Board.
Requires
RMA to assist the Board in developing, reviewing, and recommending new
plans of insurance and pilot projects, terms of the
SRA, and with other issues involved in
the administration of the program.
Provides
for the appointment of an Executive Director by the Secretary to assist
the Board and report to the Secretary.
Provides
for a staff of 4 to report to the Executive Director, all 4 having knowledge
and experience in quantitative mathematics and
actuarial rating.
Requires
the Executive Director and staff to assist the Board in reviewing and approving
policies and plans of insurance submitted under
sections 508, 522, or 523, and report
at least monthly to the Board on crop insurance issues.
Requires
the Executive Director and staff to review subsidized and unsubsidized
insurance, make recommendations for approval or
disapproval, make recommendations to encourage
cooperation between the U.S. attorneys, FCIC, and approved insurance providers
to
minimize fraud, and make recommendations
with respect to rating methodologies.
Provides
$500,000 for fiscal year 2001 from the FCIA Fund to pay the salaries and
expenses of the Executive Director and staff.
Requires
that RMA transfer $500,000 for fiscal year 2001, and $1 million for each
subsequent fiscal year to the Executive Director for
salaries and expenses, subject to the
availability of appropriations. (Section 301)
The Conference
substitute adopts the House provision relative to the composition of the
Corporation Board of Directors with changes to
permit the Secretary the option of appointing
1 person experienced in reinsurance or 1 person experienced in the regulation
of insurance,
requiring that Board members be limited
to two consecutive terms and be appointed for staggered 4-year terms.
The new Board is to be
appointed during the period beginning
February 1, 2001 and ending April 1, 2001. Finally, the Board of
Directors is required to contract with
persons experienced as actuaries and in
underwriting for expert reviews of policies and plans of insurance offered
under the Federal Crop
Insurance Act. Funding for such
reviews is authorized from mandatory funds formerly dedicated to research
and development. The authority
provided under this section, including
funding dedicated to carry out this section, is in addition to the general
management authority over the
Corporation, including any other contracting
authority under the title, that is vested in the Board of Directors.
(Section 142)
Contracting for Rating of Plans of Insurance
The House
bill amends section 507(c)(2) relative to requiring FCIC to contract for
certain services by including the contracting for
actuarial services, services relating
to loss adjustment, and rating plans of insurance. Underscores that
FCIC should concentrate on the
regulation of insurance and on the evaluation
process for newly developed policies under section 508(h). (Section
306)
Section
202 of the Senate amendment corresponds with sections 306 and 104 of House
bill
The Conference
substitute adopts the House provision relative to contracting for rating
plans of insurance. (Section 143)
Electronic Availability of Crop Insurance
Information
The House
bill amends section 508(a)(5) by making technical amendments and adding
a new subparagraph (B) relative to electronic
availability of crop insurance information.
Requires
FCIC to make general insurance information electronically available to
producers and insurance providers, and also requires,
where practicable, that FCIC allow producers
and providers to provide insurance information electronically. (Section
307)
The Senate
amendment has no comparable provision.
The Conference
substitute adopts the House provision relative to the electronic availability
of crop insurance information. (Section 144)
Adequate Coverage for States
The Senate
amendment amends section 508(a) adding paragraph (9) relative to adequate
coverage for states.
Defines
adequately served as having a participation rate that is at least 50 percent
of the national average.
Requires
FCIC to review policies offered by approved insurance providers to determine
if each state is adequately served.
Requires
that not later than 30 days after completion of the review, FCIC must submit
to Congress a report of the results along with
recommendations to increase participation
in states not adequately served. (Section 305)
The House
bill has no comparable provision.
The Conference
substitute adopts the Senate provision relative to adequate coverage for
states. (Section 145)
Submission of Policies and Materials to
Board
The House
bill amends section 508(h)(1) to clarify that a "person" that may propose
a policy to the Board for approval includes an
approved insurance provider, a college
or university, a cooperative or trade association, or other persons. Clarifies
that policies are to be sold
to producers by approved insurance providers.
Requires
FCIC to consider any modified policy proposal within 30 days from the submission
of the modifications, and requires that any
decision to disapprove a policy must be
accompanied by a complete explanation.
Requires
that FCIC make a determination to approve or disapprove a policy proposal
within 120 days from submission, and any
decision to disapprove a policy must be
accompanied by a complete explanation. Provides that the proposed
policy is approved for the initial
reinsurance year where FCIC fails to provide
a timely determination unless the parties agree to an extension.
Amends
section 516(b)(2) to authorize the current $3.5 million in mandatory funds
for research and development to be used for costs
associated with considering and contracting
for assistance in considering policies submitted for approval and carrying
out policies resulting
from direct contracting,
The House
bill also requires FCIC to issue regulations establishing guidelines within
180 days of enactment to govern the submission of
policies. (Sections 305 and 105)