Federal Crop Insurance and Non-Insured Crop Assistance

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PART I—FEDERAL CROP INSURANCE AND NONINSURED
CROP ASSISTANCE
[As Amended Through Public Law 109–97, Nov. 10, 2005]

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1. FEDERAL CROP INSURANCE ACT
[The Federal Crop Insurance Act is title V of the Agricultural Act of 1938, Public
Law 430, 75th Congress, 52 Stat. 31, Feb. 16, 1938. Consequently, references
within the Federal Crop Insurance Act are addressed to ‘‘this title’’ rather than
to ‘‘this Act’’.]

SHORT TITLE AND APPLICATION OF OTHER PROVISIONS

SEC. 501. ø7 U.S.C. 1501¿ This title 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 title, and the term ‘‘Act’’ wherever it appears in such
titles shall not be construed to include this title.
SEC. 502. ø7 U.S.C. 1502¿ PURPOSE AND DEFINITIONS.
(a) PURPOSE.—It is the purpose of this title 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 title:
(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 title.
(3) BOARD.—The term ‘‘Board’’ means the Board of Directors of the Corporation established under section 505(a).
(4) CORPORATION.—The term ‘‘Corporation’’ means the
Federal Crop Insurance Corporation established under section
503.
(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.
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(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.
(c) PROTECTION OF CONFIDENTIAL INFORMATION.—
(1) GENERAL PROHIBITION AGAINST DISCLOSURE.—Except as
provided in paragraph (2), the Secretary, any other officer or
employee of the Department or an agency thereof, an approved
insurance provider and its employees and contractors, and any
other person may not disclose to the public information furnished by a producer under this title.
(2) AUTHORIZED DISCLOSURE.—
(A) DISCLOSURE IN STATISTICAL OR AGGREGATE FORM.—
Information described in paragraph (1) may be disclosed to
the public if the information has been transformed into a
statistical or aggregate form that does not allow the identification of the person who supplied particular information.
(B) CONSENT OF PRODUCER.—A producer may consent
to the disclosure of information described in paragraph (1).
The participation of the producer in, and the receipt of any
benefit by the producer under, this title or any other program administered by the Secretary may not be conditioned on the producer providing consent under this paragraph.
(3) VIOLATIONS; PENALTIES.—Section 1770(c) of the Food
Security Act of 1985 (7 U.S.C. 2276(c)) shall apply with respect
to the release of information collected in any manner or for any
purpose prohibited by this subsection.
(d) RELATION TO OTHER LAWS.—
(1) TERMS AND CONDITIONS OF POLICIES AND PLANS.—The
terms and conditions of any policy or plan of insurance offered
under this title that is reinsured by the Corporation shall
not—
(A) be subject to the jurisdiction of the Commodity Futures Trading Commission or the Securities and Exchange
Commission; or
(B) be considered to be accounts, agreements (including any transaction that is of the character of, or is commonly known to the trade as, an ‘‘option’’, ‘‘privilege’’, ‘‘indemnity’’, ‘‘bid’’, ‘‘offer’’, ‘‘put’’, ‘‘call’’, ‘‘advance guaranty’’,
or ‘‘decline guaranty’’), or transactions involving contracts
of sale of a commodity for future delivery, traded or executed on a contract market for the purposes of the Commodity Exchange Act (7 U.S.C. 1 et seq.).
(2) EFFECT ON CFTC AND COMMODITY EXCHANGE ACT.—
Nothing in this title affects the jurisdiction of the Commodity
Futures Trading Commission or the applicability of the ComNovember 16, 2005

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FEDERAL CROP INSURANCE ACT

Sec. 505

modity Exchange Act (7 U.S.C. 1 et seq.) to any transaction
conducted on a contract market under that Act by an approved
insurance provider to offset the approved insurance provider’s
risk under a plan or policy of insurance under this title.
CREATION OF FEDERAL CROP INSURANCE CORPORATION

SEC. 503. ø7 U.S.C. 1503¿ To carry out the purposes of this
title, 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.
CAPITAL STOCK

SEC. 504. 1 ø7 U.S.C. 1504¿ (a) 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) There is hereby authorized to be appropriated such sums as
are necessary for the purpose of subscribing to the capital stock of
the Corporation.
(c) 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) Within thirty days after the date of enactment of the Federal Crop Insurance Act of 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 such date
of enactment and such receipts shall cease to be liabilities of the
Corporation.
SEC. 505. ø7 U.S.C. 1505¿ MANAGEMENT OF CORPORATION.
(a) BOARD OF DIRECTORS.—
(1) ESTABLISHMENT.—The management of the

Corporation
shall be vested in a Board of Directors subject to the general
supervision of the Secretary.
(2) COMPOSITION.—The Board shall consist of only the following members:
(A) The manager of the Corporation, who shall serve
as a nonvoting ex officio member.
(B) The Under Secretary of Agriculture responsible for
the Federal crop insurance program.
(C) One additional Under Secretary of Agriculture (as
designated by the Secretary).
(D) The Chief Economist of the Department of Agriculture.

1 The Capital stock of the Corporation was increased from $100,000,000 to $200,000,000 by
P.L. 95–181, 91 Stat. 1373, Nov. 15, 1977, and increased again to $500,000,000 by P.L. 96–365,
94 Stat. 1312, Sept. 26, 1980. The Act of June 27, 1940 (54 Stat. 640) provides that ‘‘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.’’.

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(E) One person experienced in the crop insurance business.
(F) One person experienced in reinsurance or the regulation of insurance.
(G) Four active producers who are policy holders, are
from different geographic areas of the United States, and
represent a cross-section of agricultural commodities
grown in the United States, including at least one specialty crop producer.
(3) APPOINTMENT OF PRIVATE SECTOR MEMBERS.—The
members of the Board described in subparagraphs (E), (F), and
(G) of paragraph (2)—
(A) shall be appointed by, and hold office at the pleasure of, the Secretary;
(B) shall not be otherwise employed by the Federal
Government;
(C) shall be appointed to staggered 4-year terms, as
determined by the Secretary; and
(D) shall serve not more than two consecutive terms.
(4) CHAIRPERSON.—The Board shall select a member of the
Board to serve as Chairperson.
(b) 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) 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 of the United States Code 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 of the United States Code for persons in
Government service employed intermittently, when on the business
of the Corporation away from their homes or regular places of business.
(d) 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.
(e) EXPERT REVIEW OF POLICIES, PLANS OF INSURANCE, AND
RELATED MATERIAL.—
(1) REVIEW BY EXPERTS.—The Board shall establish procedures under which any policy or plan of insurance, as well as
any related material or modification of such a policy or plan of
insurance, to be offered under this title shall be subject to
independent reviews by persons experienced as actuaries and
in underwriting, as determined by the Board.
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Sec. 506

(2) REVIEW OF CORPORATION POLICIES AND PLANS.—Except
as provided in paragraph (3), the Board shall contract with at
least five persons to each conduct a review of the policy or plan
of insurance, of whom—
(A) not more than one person may be employed by the
Federal Government; and
(B) at least one person must be designated by approved insurance providers pursuant to procedures determined by the Board.
(3) REVIEW OF PRIVATE SUBMISSIONS.—If the reviews under
paragraph (1) cover a policy or plan of insurance, or any related material or modification of a policy or plan of insurance,
submitted under section 508(h)—
(A) the Board shall contract with at least five persons
to each conduct a review of the policy or plan of insurance,
of whom—
(i) not more than one person may be employed by
the Federal Government; and
(ii) none may be employed by an approved insurance provider; and
(B) each review must be completed and submitted to
the Board not later than 30 days prior to the end of the
120-day period described in section 508(h)(4)(D).
(4) CONSIDERATION OF REVIEWS.—The Board shall include
reviews conducted under this subsection as part of the consideration of any policy or plan or insurance, or any related material or modification of a policy or plan of insurance, proposed
to be offered under this title.
(5) FUNDING OF REVIEWS.—Each contract to conduct a review under this subsection shall be funded from amounts made
available under section 516(b)(2)(A)(ii).
(6) RELATION TO OTHER AUTHORITY.—The contract authority provided in this subsection is in addition to any other contracting authority that may be exercised by the Board under
section 506(l).
SEC. 506. ø7 U.S.C. 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
508(j), 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
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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 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 title.
(h) COLLECTION AND SHARING OF INFORMATION.—
(1) SURVEYS AND INVESTIGATIONS.—The Corporation may
conduct surveys and investigations relating to crop insurance,
agriculture-related risks and losses, and other issues related to
carrying out this title.
(2) DATA COLLECTION.—The Corporation shall assemble
data for the purpose of establishing sound actuarial bases for
insurance on agricultural commodities.
(3) SHARING OF RECORDS.—Notwithstanding section 502(c),
records submitted in accordance with this title and section 196
of the Agricultural Market Transition Act (7 U.S.C. 7333) shall
be available to agencies and local offices of the Department,
appropriate State and Federal agencies and divisions, and approved insurance providers for use in carrying out this title,
such section 196, and other agricultural programs.
(i) EXPENDITURES.—The Corporation shall determine the character and necessity for its expenditures under this title 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.—
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Sec. 506

(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 205(c)(2)(C)(iii) 1 of the
Social Security Act, and employer identification numbers, subject to the requirements of section 6109(f) of the Internal Revenue Code of 1986.
(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 title.
(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) DEFINITION.—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 title, 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 title 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 title 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 pre1 Clause (iii) of section 205(c)(2)(C) of the Social Security Act (42 U.S.C. 405(c)(2)(C)) was redesignated as clause (iv) by section 321(a)(9) of Public Law 103–296 (108 Stat. 1536).

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vent 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 agricultural producers.
(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 title to achieve, on and after October 1,
1998, an overall projected loss ratio of not greater than 1.075.
(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 title.
(q) 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 title, the
Corporation, to the greatest extent practicable, shall provide to
the entity a notice describing the statement made in paragraph
(1).
(r) 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
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FEDERAL CROP INSURANCE ACT

Sec. 507

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 this subsection, the person
requesting the interpretation of this title or regulation may assume the interpretation is correct for the applicable reinsurance year.
PERSONNEL

SEC. 507. ø7 U.S.C. 1507¿ (a) 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 the Classification Act of 1923 1, as amended, 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 and their compensation fixed without
regard to civil-service laws and regulations or the Classification Act
of 1923, as amended.
(b) Insofar as applicable, the benefits of the Act entitled ‘‘An
Act to provide compensation for employees of the United States suffering injuries while in the performance of their duties, and for
other purposes,’’ approved September 7, 1916, as amended (5
U.S.C. Chapter 8, subchapter I), shall extend to persons given employment under the provisions of this title, including the employees
of the committees and associations referred to in subsection (c) of
this section and the members of such committees.
(c) In the administration of this title, 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 title, (2) contract with private insurance companies, private rating bureaus,
and other organizations as appropriate for actuarial services, services relating to loss adjustment and rating plans of insurance, and
other services to avoid duplication by the Federal Government of
services that are or may readily be available in the private sector
and to enable the Corporation to concentrate on regulating the provision of insurance under this title and evaluating new products
and materials submitted under section 508(h) or 523, and reim1 Section 1106(a) of the Classification Act of 1949 (63 Stat. 972) provides as follows: ‘‘Whenever reference is made in any other law to the Classification Act of 1923, as amended, such reference shall be held and considered to mean [the Classification Act of 1949]. Whenever reference
is made in any other law to a grade of the Classification Act of 1923, as amended, such reference
shall be held and considered to mean the corresponding grade shown in section 604 of the Classification Act of 1949.’’ The Classification Act of 1949 is now codified as Chapter 51 and subchapter III of Chapter 53 of title 5, United States Code. See section 7(b) of Public Law 89–554
(80 Stat. 631).

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burse 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 508(h).
(d) The Secretary may allot to bureaus and offices of the Department or transfer to such other agencies of the State and Federal Governments as he may request to assist in carrying out this
title any funds made available pursuant to the provisions of section
516.
(e) In carrying out the provisions of this title the Board may,
in its discretion, utilize producer-owned and producer-controlled cooperative associations.
(f) 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 title.
(g)(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 speNovember 16, 2005

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cialty crops have a significant economic effect and from other
sources, including the extension service and colleges and universities.
SEC. 508. ø7 U.S.C. 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) 1 PERIOD.—Except in the cases of tobacco, potatoes, and
sweet 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) EXCLUSION OF LOSSES DUE TO CERTAIN ACTIONS OF PRODUCER.—
(A) EXCLUSIONS.—Insurance provided under this subsection shall not cover losses due to—
(i) the neglect or malfeasance of the producer;
(ii) 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
(iii) the failure of the producer to follow good
farming practices, including scientifically sound sustainable and organic farming practices.
(B) GOOD FARMING PRACTICES.—
(i) INFORMAL ADMINISTRATIVE PROCESS.—A producer shall have the right to a review of a determination regarding good farming practices made under subparagraph (A)(iii) in accordance with an informal administrative process to be established by the Corporation.
(ii) ADMINISTRATIVE REVIEW.—
(I) NO ADVERSE DECISION.—The determination
shall not be considered an adverse decision for
purposes of subtitle H of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 6991
et seq.).
(II) REVERSAL OR MODIFICATION.—Except as
provided in clause (i), the determination may not
be reversed or modified as the result of a subsequent administrative review.

1 Section 760 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2002 (P.L. 107–76; 115 Stat. 743), provides as follows:

SEC. 760. During fiscal year 2002, subsection (a)(2) of section 508 of the Federal Crop Insurance Act (7 U.S.C. 1508) shall be applied as though the term ‘‘and potatoes’’ read as follows:
‘‘, potatoes, and sweet potatoes’’.

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(iii) JUDICIAL REVIEW.—
(I) RIGHT TO REVIEW.—A producer shall have
the right to judicial review of the determination
without exhausting any right to a review under
clause (i).
(II) REVERSAL OR MODIFICATION.—The determination may not be reversed or modified as the
result of judicial review unless the determination
is found to be arbitrary or capricious.
(C) LIMITATION ON REVENUE COVERAGE FOR POTATOES.—No policy or plan of insurance provided under this
title (including a policy or plan of insurance approved by
the Board under subsection (h)) shall cover losses due to
a reduction in revenue for potatoes except as covered
under a whole farm policy or plan of insurance, as determined by the Corporation.
(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 title if the producer
has actuarially sound data relating to the production by
the producer of the commodity or similar commodities and
the data is acceptable to the Corporation.
(5) DISSEMINATION OF CROP INSURANCE INFORMATION.—
(A) AVAILABLE INFORMATION.—The Corporation shall
make available to producers through local offices of the
Department—
(i) current and complete information on all aspects
of Federal crop insurance; and
(ii) a listing of insurance agents and companies offering to sell crop insurance in the area of the producers.
(B) USE OF ELECTRONIC METHODS.—
(i) DISSEMINATION BY CORPORATION.—The Corporation shall make the information described in subparagraph (A) available electronically to producers and
approved insurance providers.
(ii) SUBMISSION TO CORPORATION.—To the maximum extent practicable, the Corporation shall allow
producers and approved insurance providers to use
electronic methods to submit information required by
the Corporation.
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(6) ADDITION OF NEW AND SPECIALTY CROPS.—
(A) DATA COLLECTION.—Not later than 180 days after
the date of enactment of this paragraph, 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 the date of enactment of this paragraph, and annually thereafter, the Corporation shall report to Congress on
the progress and expected timetable for expanding crop insurance coverage under this title to new and specialty
crops.
(C) ADDITION OF DIRECT SALE PERISHABLE CROPS.—Not
later than 1 year after the date of enactment of this paragraph, 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 the date of enactment of this subparagraph, the
Corporation shall conduct a study and limited pilot program on the feasibility of insuring nursery crops.
(7) ADEQUATE COVERAGE FOR STATES.—
(A) DEFINITION OF ADEQUATELY SERVED.—In this paragraph, the term ‘‘adequately served’’ means having a participation rate that is at least 50 percent of the national
average participation rate.
(B) REVIEW.—The Board shall review the policies and
plans of insurance that are offered by approved insurance
providers under this title to determine if each State is adequately served by the policies and plans of insurance.
(C) REPORT.—
(i) IN GENERAL.—Not later than 30 days after completion of the review under subparagraph (B), the
Board shall submit to Congress a report on the results
of the review.
(ii) RECOMMENDATIONS.—The report shall include
recommendations to increase participation in States
that are not adequately served by the policies and
plans of insurance.
(8) SPECIAL PROVISIONS FOR COTTON AND RICE.—Notwithstanding any other provision of this title, beginning with the
2001 crops of upland cotton, extra long staple cotton, and rice,
the Corporation shall offer plans of insurance, including prevented planting coverage and replanting coverage, under this
title that cover losses of upland cotton, extra long staple cotton,
and rice resulting from failure of irrigation water supplies due
to drought and saltwater intrusion.
(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
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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) ALTERNATIVE CATASTROPHIC COVERAGE.—Beginning
with the 2001 crop year, the Corporation shall offer producers
of an agricultural commodity the option of selecting either of
the following:
(A) The catastrophic risk protection coverage available
under paragraph (2)(A).
(B) An alternative catastrophic risk protection coverage that—
(i) indemnifies the producer on an area yield and
loss basis if such a policy or plan of insurance is offered for the agricultural commodity in the county in
which the farm is located;
(ii) provides, on a uniform national basis, a higher
combination of yield and price protection than the coverage available under paragraph (2)(A); and
(iii) the Corporation determines is comparable to
the coverage available under paragraph (2)(A) for purposes of subsection (e)(2)(A).
(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
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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 the date of enactment of this subparagraph, 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.—
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(A) 1 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 $100 per crop per county, whichever is
greater, as determined by the Corporation.
(B) PAYMENT ON BEHALF OF PRODUCERS.—
(i) PAYMENT AUTHORIZED.—If State law permits a
licensing fee or other payment to be paid by an insurance provider to a cooperative association or trade association and rebated to a producer with catastrophic
risk protection or additional coverage, a cooperative
association or trade association located in that State
may pay, on behalf of a member of the association in
that State or a contiguous State who consents to be insured under such an arrangement, all or a portion of
the administrative fee required by this paragraph for
catastrophic risk protection.
(ii) TREATMENT OF LICENSING FEES.—A licensing
fee or other payment made by an insurance provider
to the cooperative association or trade association in
connection with the issuance of catastrophic risk protection or additional coverage to members of the cooperative association or trade association shall be subject
to the laws regarding rebates of the State in which the
fee or other payment is made.
(iii) SELECTION OF PROVIDER.—Nothing in this
subparagraph limits the option of a producer to select
the licensed insurance agent or other approved insurance provider from whom the producer will purchase
a policy or plan of insurance or to refuse coverage for
which a payment is offered to be made under clause
(i).
(iv) DELIVERY OF INSURANCE.—A policy or plan of
insurance for which a payment is made under clause
(i) shall be delivered by a licensed insurance agent or
other approved insurance provider.
(v) ADDITIONAL COVERAGE ENCOURAGED.—A cooperative association or trade association, and any approved insurance provider with whom a licensing fee
or other arrangement under this subparagraph is
made, shall encourage producer members to purchase
appropriate levels of additional coverage in order to
meet the risk management needs of the member producers.
(vi) REPORT.—Not later than April 1, 2002, the
Secretary shall submit to the Committee on Agri1 Section 748 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999 (as contained in section 101(a) of division A of Public
Law 105–277; 7 U.S.C. 1508 note), and amended by section 103(b)(2) of the Agricultural Risk
Protection Act of 2000 (Public Law 106–224; 114 Stat. 365), provides as follows: ‘‘Notwithstanding the provisions of section 508(b)(5)(A) of the Federal Crop Insurance Act (7 U.S.C.
1508(b)(5)(A)), for the 1999 reinsurance and subsequent reinsurance years, no producer shall
pay more than $100 per crop per county as an administrative fee for catastrophic risk protection
under section 508(b)(5)(A) of the Act.’’. Although the limitation is contained in a one-year appropriations Act, because of the reference to ‘‘the 1999 reinsurance and subsequent reinsurance
years’’, the limitation continues to apply in fiscal year 2000 and subsequent fiscal years.

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culture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the
Senate a report that evaluates—
(I) the operation of this subparagraph; and
(II) the impact of this subparagraph on participation in the Federal crop insurance program,
including the impact on levels of coverage purchased.
(C) TIME FOR PAYMENT.—The administrative fee required by this paragraph 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 be 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, for the
conservation reserve program, or for any benefit described
in section 371 of the Consolidated Farm and Rural Development Act (7 U.S.C. 2008f), 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) DEFINITION OF CROP OF ECONOMIC SIGNIFICANCE.—
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
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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 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 title then
in effect, shall be eligible for the same benefits to which a producer would be entitled under comparable additional coverage
under subsection (c).
(10) SIMPLIFICATION.—
(A) CATASTROPHIC RISK PROTECTION PLANS.—In developing and carrying out the policies and procedures for a
catastrophic risk protection plan under this title, 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 title
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 8 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.
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(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) EXPECTED MARKET PRICE.—
(A) ESTABLISHMENT OR APPROVAL.—For the purposes
of this title, the Corporation shall establish or approve the
price level (referred to in this title as the ‘‘expected market
price’’) of each agricultural commodity for which insurance
is offered.
(B) GENERAL RULE.—Except as otherwise provided in
subparagraph (C), the expected market price of an agricultural commodity shall be not less than the projected market price of the agricultural commodity, as determined by
the Corporation.
(C) OTHER AUTHORIZED APPROACHES.—The expected
market price of an agricultural commodity—
(i) may be based on the actual market price of the
agricultural commodity at the time of harvest, as determined by the Corporation;
(ii) in the case of revenue and other similar plans
of insurance, may be the actual market price of the agricultural commodity, as determined by the Corporation;
(iii) in the case of cost of production or similar
plans of insurance, shall be the projected cost of producing the agricultural commodity, as determined by
the Corporation; or
(iv) in the case of other plans of insurance, may be
an appropriate amount, 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.
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(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.—If a producer elects to purchase
coverage for a crop at a level in excess of catastrophic risk
protection, the producer shall pay an administrative fee for
the additional coverage of $30 per crop per county.
(B) USE OF FEES; WAIVER.—Subparagraphs (D) and (E)
of subsection (b)(5) shall apply with respect to the collection and use of administrative fees under this paragraph.
(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) and additional
coverage under subsection (c) 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 equal to or
greater than 50 percent of the recorded or appraised averNovember 16, 2005

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age yield indemnified at not greater than 100 percent of
the expected market price, or a comparable coverage for a
policy or plan of insurance that is not based on individual
yield, 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.
(3) PERFORMANCE-BASED DISCOUNT.—The Corporation may
provide a performance-based premium discount for a producer
of an agricultural commodity who has good insurance or production experience relative to other producers of that agricultural commodity in the same area, as determined by the Corporation.
(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) and the additional coverage provided under subsection (c), the Corporation
shall pay a part of the premium in the amounts provided in
accordance with this subsection.
(2) AMOUNT OF PAYMENT.—Subject to paragraph (4), 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).
(B) In the case of additional coverage equal to or
greater than 50 percent, but less than 55 percent, of the
recorded or appraised average yield indemnified at not
greater than 100 percent of the expected market price, or
a comparable coverage for a policy or plan of insurance
that is not based on individual yield, the amount shall be
equal to the sum of—
(i) 67 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage
level selected; and
(ii) the amount determined under subsection
(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.
(C) In the case of additional coverage equal to or
greater than 55 percent, but less than 65 percent, of the
recorded or appraised average yield indemnified at not
greater than 100 percent of the expected market price, or
a comparable coverage for a policy or plan of insurance
that is not based on individual yield, the amount shall be
equal to the sum of—
(i) 64 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage
level selected; and
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(ii) the amount determined under subsection
(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.
(D) In the case of additional coverage equal to or
greater than 65 percent, but less than 75 percent, of the
recorded or appraised average yield indemnified at not
greater than 100 percent of the expected market price, or
a comparable coverage for a policy or plan of insurance
that is not based on individual yield, the amount shall be
equal to the sum of—
(i) 59 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage
level selected; and
(ii) the amount determined under subsection
(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.
(E) In the case of additional coverage equal to or
greater than 75 percent, but less than 80 percent, of the
recorded or appraised average yield indemnified at not
greater than 100 percent of the expected market price, or
a comparable coverage for a policy or plan of insurance
that is not based on individual yield, the amount shall be
equal to the sum of—
(i) 55 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage
level selected; and
(ii) the amount determined under subsection
(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.
(F) In the case of additional coverage equal to or greater than 80 percent, but less than 85 percent, of the recorded or appraised average yield indemnified at not greater than 100 percent of the expected market price, or a
comparable coverage for a policy or plan of insurance that
is not based on individual yield, the amount shall be equal
to the sum of—
(i) 48 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage
level selected; and
(ii) the amount determined under subsection
(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.
(G) Subject to subsection (c)(4), in the case of additional coverage equal to or greater than 85 percent of the
recorded or appraised average yield indemnified at not
greater than 100 percent of the expected market price, or
a comparable coverage for a policy or plan of insurance
that is not based on individual yield, the amount shall be
equal to the sum of—
(i) 38 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage
level selected; and
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(ii) the amount determined under subsection
(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.
(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) PROHIBITION ON CONTINUOUS COVERAGE.—Notwithstanding paragraph (2), during each of the 2001 and subsequent reinsurance years, additional coverage under subsection
(c) shall be available only in 5 percent increments beginning at
50 percent of the recorded or appraised average yield.
(5) PREMIUM PAYMENT DISCLOSURE.—Each policy or plan of
insurance under this title shall prominently indicate the dollar
amount of the portion of the premium paid by the Corporation.
(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.—
(A) IN GENERAL.—For coverage under this title, 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.
(B) ESTABLISHED DATES.—Except as provided in subparagraph (C), 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.
(C) EXCEPTION.—If compliance with subparagraph (B)
results in a sales closing date for an agricultural commodity that is earlier than January 31, the sales closing
date for that commodity shall be January 31 beginning
with the 2000 crop year.
(3) RECORDS AND REPORTING.—To obtain catastrophic risk
protection under subsection (b) or additional coverage under
subsection (c), a producer shall—
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tion for each agricultural commodity insured under this
title 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) or additional coverage under subsection
(c).
(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—
(i) 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; or
(ii) a yield determined by the Corporation, in the
case of—
(I) a producer that has not had a share of the
production of the insured crop for more than two
crop years, as determined by the Secretary;
(II) a producer that produces an agricultural
commodity on land that has not been farmed by
the producer; or
(III) a producer that rotates a crop produced
on a farm to a crop that has not been produced on
the farm.
(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
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or combined coverage, 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.
(4) ADJUSTMENT IN ACTUAL PRODUCTION HISTORY TO ESTABLISH INSURABLE YIELDS.—
(A) APPLICATION.—This paragraph shall apply whenever the Corporation uses the actual production records of
the producer to establish the producer’s actual production
history for an agricultural commodity for any of the 2001
and subsequent crop years.
(B) ELECTION TO USE PERCENTAGE OF TRANSITIONAL
YIELD.—If, for one or more of the crop years used to establish the producer’s actual production history of an agricultural commodity, the producer’s recorded or appraised
yield of the commodity was less than 60 percent of the applicable transitional yield, as determined by the Corporation, the Corporation shall, at the election of the
producer—
(i) exclude any of such recorded or appraised yield;
and
(ii) replace each excluded yield with a yield equal
to 60 percent of the applicable transitional yield.
(C) PREMIUM ADJUSTMENT.—In the case of a producer
that makes an election under subparagraph (B), the Corporation shall adjust the premium to reflect the risk associated with the adjustment made in the actual production
history of the producer.
(5) ADJUSTMENT TO REFLECT INCREASED YIELDS FROM SUCCESSFUL PEST CONTROL EFFORTS.—
(A) SITUATIONS JUSTIFYING ADJUSTMENT.—The Corporation shall develop a methodology for adjusting the acNovember 16, 2005

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tual production history of a producer when each of the following apply:
(i) The producer’s farm is located in an area where
systematic, area-wide efforts have been undertaken
using certain operations or measures, or the producer’s farm is a location at which certain operations
or measures have been undertaken, to detect, eradicate, suppress, or control, or at least to prevent or retard the spread of, a plant disease or plant pest, including a plant pest (as defined in section 102 of the
Department of Agriculture Organic Act of 1944 (7
U.S.C. 147a)).
(ii) The presence of the plant disease or plant pest
has been found to adversely affect the yield of the agricultural commodity for which the producer is applying for insurance.
(iii) The efforts described in clause (i) have been
effective.
(B) ADJUSTMENT AMOUNT.—The amount by which the
Corporation adjusts the actual production history of a producer of an agricultural commodity shall reflect the degree
to which the success of the systematic, area-wide efforts
described in subparagraph (A), on average, increases the
yield of the commodity on the producer’s farm, as determined by the Corporation.
(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), a person (including an approved
insurance provider, a college or university, a cooperative or
trade association, or any other 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 title, 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.
(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 by approved insurance providers to producers as an additional choice at actuarially appropriate rates and under appropriate terms and conditions. The Corporation may enter into
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ance 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) CONFIDENTIALITY.—
(i) IN GENERAL.—A proposal submitted to the
Board under this subsection (including any information generated from the proposal) shall be considered
to be confidential commercial or financial information
for the purposes of section 552(b)(4) of title 5, United
States Code.
(ii) STANDARD OF CONFIDENTIALITY.—If information concerning a proposal could be withheld by the
Secretary under the standard for privileged or confidential information pertaining to trade secrets and
commercial or financial information under section
552(b)(4) of title 5, United States Code, the information shall not be released to the public.
(iii) APPLICATION.—This subparagraph shall apply
with respect to a proposal only during the period preceding any approval of the proposal by the Board.
(B) PERSONAL PRESENTATION.—The Board shall provide an applicant with the opportunity to present the proposal to the Board in person if the applicant so desires.
(C) NOTIFICATION OF INTENT TO DISAPPROVE.—
(i) TIME PERIOD.—The Board shall provide an applicant with notification of intent to disapprove a proposal not later than 30 days prior to making the disapproval.
(ii) MODIFICATION OF APPLICATION.—
(I) AUTHORITY.—An applicant that receives
the notification may modify the application, and
such application, as modified, shall be considered
by the Board in the manner provided in subparagraph (D) within the 30-day period beginning on
the date the modified application is submitted.
(II) TIME PERIOD.—Clause (i) shall not apply
to the Board’s consideration of the modified application.
(iii) EXPLANATION.—Any notification of intent to
disapprove a policy or other material submitted under
this subsection shall be accompanied by a complete explanation as to the reasons for the Board’s intention to
deny approval.
(D) DETERMINATION TO APPROVE OR DISAPPROVE
POLICIES OR MATERIALS.—
(i) TIME PERIOD.—Not later than 120 days after a
policy or other material is submitted under this subsection, the Board shall make a determination to approve or disapprove the policy or material.
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(ii) EXPLANATION.—Any determination by the
Board to disapprove any policy or other material shall
be accompanied by a complete explanation of the reasons for the Board’s decision to deny approval.
(iii) FAILURE TO MEET DEADLINE.—Notwithstanding any other provision of this title, if the Board
fails to make a determination within the prescribed
time period, the submitted policy or other material
shall be deemed approved by the Board for the initial
reinsurance year designated for the policy or material,
unless the Board and the applicant agree to an extension.
(5) PREMIUM SCHEDULE.—
(A) PAYMENT BY CORPORATION.—In the case of a policy
or plan of insurance developed and approved under this
subsection or section 522, or conducted under section 523
(other than a policy or plan of insurance applicable to livestock), the Corporation shall pay a portion of the premium
of the policy or plan of insurance that is equal to—
(i) the percentage, specified in subsection (e) for a
similar level of coverage, of the total amount of the
premium used to define loss ratio; and
(ii) an amount for administrative and operating
expenses determined in accordance with subsection
(k)(4).
(B) TRANSITIONAL SCHEDULE.—Effective only during
the 2001 reinsurance year, in the case of a policy or plan
of insurance developed and approved under this subsection
or section 522, or conducted under section 523 (other than
a policy or plan of insurance applicable to livestock), and
first approved by the Board after the date of the enactment of this subparagraph, the payment by the Corporation of a portion of the premium of the policy may not exceed the dollar amount that would otherwise be authorized
under subsection (e) (consistent with subsection (c)(5), as
in effect on the day before the date of the enactment of
this subparagraph).
(6) 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
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(II) before the sales closing date for the crop
in the year in which the loss is experienced.
(i) ADOPTION OF RATES AND COVERAGES.—
(1) IN GENERAL.—The Corporation shall adopt, as soon as
practicable, rates and coverages that will improve the actuarial
soundness of the insurance operations of the Corporation for
those crops that are determined to be insured at rates that are
not actuarially sound, except that no rate may be increased by
an amount of more than 20 percent over the comparable rate
of the preceding crop year.
(2) REVIEW OF RATING METHODOLOGIES.—To maximize participation in the Federal crop insurance program and to ensure
equity for producers, the Corporation shall periodically review
the methodologies employed for rating plans of insurance
under this title consistent with section 507(c)(2).
(3) ANALYSIS OF RATING AND LOSS HISTORY.—The Corporation shall analyze the rating and loss history of approved policies and plans of insurance for agricultural commodities by
area.
(4) PREMIUM ADJUSTMENT.—If the Corporation makes a determination that premium rates are excessive for an agricultural commodity in an area relative to the requirements of subsection (d)(2) for that area, then, for the 2002 crop year (and
as necessary thereafter), the Corporation shall make appropriate adjustments in the premium rates for that area for that
agricultural commodity.
(j) CLAIMS FOR LOSSES.—
(1) IN GENERAL.—Under rules prescribed by the Corporation, the Corporation may provide for adjustment and payment
of claims for losses. The rules prescribed by the Corporation
shall establish standards to ensure that all claims for losses
are adjusted, to the extent practicable, in a uniform and timely
manner.
(2) DENIAL OF CLAIMS.—
(A) IN GENERAL.—Subject to subparagraph (B), if a
claim for indemnity is denied by the Corporation or an approved provider, an action on the claim may be brought
against the Corporation or Secretary only in the United
States district court for the district in which the insured
farm is located.
(B) STATUTE OF LIMITATIONS.—A suit on the claim
may be brought not later than 1 year after the date on
which final notice of denial of the claim is provided to the
claimant.
(3) INDEMNIFICATION.—The Corporation shall provide approved insurance providers with indemnification, including
costs and reasonable attorney fees incurred by the approved insurance provider, due to errors or omissions on the part of the
Corporation.
(4) MARKETING WINDOWS.—The Corporation shall consider
marketing windows in determining whether it is feasible to require planting during a crop year.
(k) REINSURANCE.—
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(1) IN GENERAL.—Notwithstanding any other provision of
this title, the Corporation shall, to the maximum extent practicable, provide reinsurance to insurers approved by the Corporation that insure producers of any agricultural commodity
under 1 or more plans acceptable to the Corporation.
(2) TERMS AND CONDITIONS.—The reinsurance shall be provided on such terms and conditions as the Board may determine to be consistent with subsections (b) and (c) and sound
reinsurance principles.
(3) SHARE OF RISK.—The reinsurance agreements of the
Corporation with the reinsured companies shall require the reinsured companies to bear a sufficient share of any potential
loss under the agreement so as to ensure that the reinsured
company will sell and service policies of insurance in a sound
and prudent manner, taking into consideration the financial
condition of the reinsured companies and the availability of
private reinsurance.
(4) RATE.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), the rate established by the Board to reimburse approved insurance providers and agents for the administrative and operating costs of the providers and agents shall
not exceed—
(i) for the 1998 reinsurance year, 27 percent of the
premium used to define loss ratio; and
(ii) for each of the 1999 and subsequent reinsurance years, 24.5 percent of the premium used to define
loss ratio.
(B) PROPORTIONAL REDUCTIONS.—A policy of additional
coverage that received a rate of reimbursement for administrative and operating costs for the 1998 reinsurance year
that is lower than the rate specified in subparagraph (A)(i)
shall receive a reduction in the rate of reimbursement that
is proportional to the reduction in the rate of reimbursement between clauses (i) and (ii) of subparagraph (A).
(C) OTHER REDUCTIONS.—Beginning with the 2002 reinsurance year, in the case of a policy or plan of insurance
approved by the Board that was not reinsured during the
1998 reinsurance year but, had it been reinsured, would
have received a reduced rate of reimbursement during the
1998 reinsurance year, the rate of reimbursement for administrative and operating costs established for the policy
or plan of insurance shall take into account the factors
used to determine the rate of reimbursement for administrative and operating costs during the 1998 reinsurance
year, including the expected difference in premium and actual administrative and operating costs of the policy or
plan of insurance relative to an individual yield policy or
plan of insurance and other appropriate factors, as determined by the Corporation.
(5) COST AND REGULATORY REDUCTION.—Consistent with
section 118 of the Federal Crop Insurance Reform Act of 1994,
and consistent with maintenance of program integrity, prevention of fraud and abuse, the need for program expansion, and
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improvement of quality of service to customers, the Board shall
alter program procedures and administrative requirements in
order to reduce the administrative and operating costs of approved insurance providers and agents in an amount that corresponds to any reduction in the reimbursement rate required
under paragraph (4) during the 5-year period beginning on the
date of enactment of this paragraph.
(6) AGENCY DISCRETION.—The determination of whether
the Corporation is achieving, or has achieved, corresponding
administrative cost savings shall not be subject to administrative review, and is wholly committed to agency discretion within the meaning of section 701(a)(2) of title 5, United States
Code.
(7) PLAN.—The Corporation shall submit to Congress a
plan outlining the measures that will be used to achieve the
reduction required under paragraph (5). If the Corporation can
identify additional cost reduction measures, the Corporation
shall describe the measures in the plan.
(l) OPTIONAL COVERAGES.—The Corporation may offer specific
risk protection programs, including protection against prevented
planting, wildlife depredation, tree damage and disease, and insect
infestation, under such terms and conditions as the Board may determine, except that no program may be undertaken if insurance
for the specific risk involved is generally available from private
companies.
(m) QUALITY LOSS ADJUSTMENT COVERAGE.—
(1) EFFECT OF COVERAGE.—If a policy or plan of insurance
offered under this title includes quality loss adjustment coverage, the coverage shall provide for a reduction in the quantity of production of the agricultural commodity considered produced during a crop year, or a similar adjustment, as a result
of the agricultural commodity not meeting the quality standards established in the policy or plan of insurance.
(2) ADDITIONAL QUALITY LOSS ADJUSTMENT.—
(A) PRODUCER OPTION.—Notwithstanding any other
provision of law, in addition to the quality loss adjustment
coverage available under paragraph (1), the Corporation
shall offer producers the option of purchasing quality loss
adjustment coverage on a basis that is smaller than a unit
with respect to an agricultural commodity that satisfies
each of the following:
(i) The agricultural commodity is sold on an identity-preserved basis.
(ii) All quality determinations are made solely by
the Federal agency designated to grade or classify the
agricultural commodity.
(iii) All quality determinations are made in accordance with standards published by the Federal
agency in the Federal Register.
(iv) The discount schedules that reflect the reduction in quality of the agricultural commodity are established by the Secretary.
(B) BASIS FOR ADJUSTMENT.—Under this paragraph,
the Corporation shall set the quality standards below
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which quality losses will be paid based on the variability
of the grade of the agricultural commodity from the base
quality for the agricultural commodity.
(3) REVIEW OF CRITERIA AND PROCEDURES.—
(A) REVIEW.—The Corporation shall contract with a
qualified person to review the quality loss adjustment procedures of the Corporation so that the procedures more accurately reflect local quality discounts that are applied to
agricultural commodities insured under this title.
(B) PROCEDURES.—Effective beginning not later than
the 2004 reinsurance year, based on the review, the Corporation shall make adjustments in the procedures, taking
into consideration the actuarial soundness of the adjustment and the prevention of fraud, waste, and abuse.
(4) QUALITY OF AGRICULTURAL COMMODITIES DELIVERED TO
WAREHOUSE OPERATORS.—In administering this title, the Secretary shall accept, in the same manner and under the same
terms and conditions, evidence of the quality of agricultural
commodities delivered to—
(A) warehouse operators that are licensed under the
United States Warehouse Act (7 U.S.C. 241 et seq.);
(B) warehouse operators that—
(i) are licensed under State law; and
(ii) have entered into a storage agreement with
the Commodity Credit Corporation; and
(C) warehouse operators that—
(i) are not licensed under State law but are in
compliance with State law regarding warehouses; and
(ii) have entered into a commodity storage agreement with the Commodity Credit Corporation.
(n) LIMITATION ON MULTIPLE BENEFITS FOR SAME LOSS.—
(1) IN GENERAL.—Except as provided in paragraph (2),
if a producer who is eligible to receive benefits under catastrophic risk protection under subsection (b) is also eligible
to receive assistance for the same loss under any other
program administered by the Secretary, the producer shall
be required to elect whether to receive benefits under this
title or under the other program, but not both. A producer
who purchases additional coverage under subsection (c)
may also receive assistance for the same loss under other
programs administered by the Secretary, except that the
amount received for the loss under the additional coverage
together with the amount received under the other programs may not exceed the amount of the actual loss of the
producer.
(2) EXCEPTION.—Paragraph (1) shall not apply to
emergency loans under subtitle C of the Consolidated
Farm and Rural Development Act (7 U.S.C. 1961 et seq.).
SEC. 508A. ø7 U.S.C. 1508a¿ DOUBLE INSURANCE AND PREVENTED
PLANTING.
(a) DEFINITIONS.—In this section:
(1) FIRST CROP.—The term ‘‘first crop’’ means the first crop

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vented from being planted, on specific acreage during a crop
year and insured under this title.
(2) SECOND CROP.—The term ‘‘second crop’’ means a second
crop of the same agricultural commodity as the first crop, or
a crop of a different agricultural commodity following the first
crop, planted on the same acreage as the first crop for harvest
in the same crop year, except the term does not include a replanted crop.
(3) REPLANTED CROP.—The term ‘‘replanted crop’’ means
any agricultural commodity replanted on the same acreage as
the first crop for harvest in the same crop year if the replanting is required by the terms of the policy of insurance covering
the first crop.
(b) DOUBLE INSURANCE.—
(1) OPTIONS ON LOSS TO FIRST CROP.—Except as provided
in subsections (d) and (e), if a first crop insured under this title
in a crop year has a total or partial insurable loss, the producer of the first crop may elect one of the following options:
(A) NO SECOND CROP PLANTED.—The producer may—
(i) elect to not plant a second crop on the same
acreage for harvest in the same crop year; and
(ii) collect an indemnity payment that is equal to
100 percent of the insurable loss for the first crop.
(B) SECOND CROP PLANTED.—The producer may—
(i) plant a second crop on the same acreage for
harvest in the same crop year; and
(ii) collect an indemnity payment established by
the Corporation for the first crop, but not to exceed 35
percent of the insurable loss for the first crop.
(2) EFFECT OF NO LOSS TO SECOND CROP.—If a producer
makes an election under paragraph (1)(B) and the producer
does not suffer an insurable loss to the second crop, the producer may collect an indemnity payment for the first crop that
is equal to—
(A) 100 percent of the insurable loss for the first crop;
less
(B) the amount previously collected under paragraph
(1)(B)(ii).
(3) PREMIUM FOR FIRST CROP IF SECOND CROP PLANTED.—
(A) INITIAL PREMIUM.—If a producer makes an election
under paragraph (1)(B), the producer shall be responsible
for a premium for the first crop that is commensurate with
the indemnity paid under paragraph (1)(B)(ii). The Corporation shall adjust the total premium for the first crop
to reflect the reduced indemnity.
(B) EFFECT OF NO LOSS TO SECOND CROP.—If the producer makes an election under paragraph (1)(B) and the
producer does not suffer an insurable loss to the second
crop, the producer shall be responsible for a premium for
the first crop that is equal to—
(i) the full premium owed by the producer for the
first crop; less
(ii) the amount of premium previously paid under
subparagraph (A).
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(c) PREVENTED PLANTING COVERAGE.—
(1) OPTIONS ON LOSS TO FIRST CROP.—Except as provided
in subsections (d) and (e), if a first crop insured under this title
in a crop year is prevented from being planted, the producer
of the first crop may elect one of the following options:
(A) NO SECOND CROP PLANTED.—The producer may—
(i) elect to not plant a second crop on the same
acreage for harvest in the same crop year; and
(ii) subject to paragraph (4), collect an indemnity
payment that is equal to 100 percent of the prevented
planting guarantee for the acreage for the first crop.
(B) SECOND CROP PLANTED.—The producer may—
(i) plant a second crop on the same acreage for
harvest in the same crop year; and
(ii) subject to paragraphs (4) and (5), collect an indemnity payment established by the Corporation for
the first crop, but not to exceed 35 percent of the prevented planting guarantee for the acreage for the first
crop.
(2) PREMIUM FOR FIRST CROP IF SECOND PLANTED.—If the
producer makes an election under paragraph (1)(B), the producer shall pay a premium for the first crop that is commensurate with the indemnity paid under paragraph (1)(B)(ii). The
Corporation shall adjust the total premium for the first crop to
reflect the reduced indemnity.
(3) EFFECT ON ACTUAL PRODUCTION HISTORY.—Except in
the case of double cropping described in subsection (d), if a producer make an election under paragraph (1)(B) for a crop year,
the Corporation shall assign the producer a recorded yield for
that crop year for the first crop equal to 60 percent of the producer’s actual production history for the agricultural commodity involved, for purposes of determining the producer’s actual production history for subsequent crop years.
(4) AREA CONDITIONS REQUIRED FOR PAYMENT.—The Corporation shall limit prevented planting payments for producers
to those situations in which other producers, in the area where
a first crop is prevented from being planted is located, are also
generally affected by the conditions that prevented the first
crop from being planted.
(5) PLANTING DATE.—If a producer plants the second crop
before the latest planting date established by the Corporation
for the first crop, the Corporation shall not make a prevented
planting payment with regard to the first crop.
(d) EXCEPTION FOR ESTABLISHED DOUBLE CROPPING PRACTICES.—A producer may receive full indemnity payments on two or
more crops planted for harvest in the same crop year and insured
under this title if each of the following conditions are met:
(1) There is an established practice of planting two or more
crops for harvest in the same crop year in the area, as determined by the Corporation.
(2) An additional coverage policy or plan of insurance is offered with respect to the agricultural commodities planted on
the same acreage for harvest in the same crop year in the area.
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(3) The producer has a history of planting two or more
crops for harvest in the same crop year or the applicable acreage has historically had two or more crops planted for harvest
in the same crop year.
(4) The second or more crops are customarily planted after
the first crop for harvest on the same acreage in the same year
in the area.
(e) SUBSEQUENT CROPS.—Except in the case of double cropping
described in subsection (d), if a producer elects to plant a crop
(other than a replanted crop) subsequent to a second crop on the
same acreage as the first crop and second crop for harvest in the
same crop year, the producer shall not be eligible for insurance
under this title, or noninsured crop assistance under section 196 of
the Agricultural Market Transition Act (7 U.S.C. 7333), for the
subsequent crop.
INDEMNITIES EXEMPT FROM LEVY

SEC. 509. ø7 U.S.C. 1509¿ Claims for indemnities under this
title shall not be liable to attachment, levy, garnishment, or any
other legal process before payment to the insured or to deduction
on account of the indebtedness of the insured or the estate of the
insured to the United States except claims of the United States or
the Corporation arising under this title.
DEPOSIT OF FUNDS

SEC. 510. ø7 U.S.C. 1510¿ All money of the Corporation not
otherwise employed may be deposited with the Treasurer of the
United States or in any bank approved by the Secretary of the
Treasury, subject to withdrawal by the Corporation at any time, or
with the approval of the Secretary of the Treasury may be invested
in obligations of the United States or in obligations guaranteed as
to principal and interest by the United States. Subject to the approval of the Secretary of the Treasury, the Federal Reserve banks
are hereby authorized and directed to act as depositories,
custodians, and fiscal agents for the Corporation in the performance of its powers conferred by this title.
TAX EXEMPTION

SEC. 511. ø7 U.S.C. 1511¿ The Corporation, including its franchise, its capital, reserves, and surplus, and its income and property, shall be exempt from all taxation now or hereafter imposed
by the United States or by any Territory, dependency, or possession
thereof, or by any State, county, municipality or local taxing authority. A contract of insurance of the Corporation, and a contract
of insurance reinsured by the Corporation, shall be exempt from
taxation imposed by any State, municipality, or local taxing authority.
FISCAL AGENCY OF GOVERNMENT

SEC. 512. ø7 U.S.C. 1512¿ When designated for that purpose
by the Secretary of the Treasury, the Corporation shall be a depository of public money, except receipts from customs, under such regulations as may be prescribed by said Secretary; and it may also
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FEDERAL CROP INSURANCE ACT

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be employed as a financial agent of the Government; and it shall
perform all such reasonable duties, as a depository of public money
and financial agent of the Government, as may be required of it.
ACCOUNTING BY CORPORATION

SEC. 513. ø7 U.S.C. 1513¿ The Corporation shall at all times
maintain complete and accurate books of account and shall file annually with the Secretary a complete report as to the business of
the Corporation.
CRIMES AND OFFENSES

SEC. 514. ø7 U.S.C. 1514¿ øSubsections (a) through (e) repealed by 62 Stat. 859.¿ øSee criminal provisions at the end of this
Act.¿
(f) The provisions of section 22 of title 41 shall not apply to any
crop insurance agreements made under this title.
SEC. 515. ø7 U.S.C. 1515¿ PROGRAM COMPLIANCE AND INTEGRITY.
(a) PURPOSE.—
(1) IN GENERAL.—The purpose of this section is to improve

compliance with, and the integrity of, the Federal crop insurance program.
(2) ROLE OF INSURANCE PROVIDERS.—The Corporation shall
work actively with approved insurance providers to address
program compliance and integrity issues as such issues develop.
(b) NOTIFICATION OF COMPLIANCE PROBLEMS.—
(1) NOTIFICATION OF ERRORS, OMISSIONS, AND FAILURES.—
The Corporation shall notify in writing an approved insurance
provider 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.
(2) TIME FOR NOTIFICATION.—Notice under paragraph (1)
shall be given within 3 years after the end of the insurance period during which the error, omission, or failure is alleged to
have occurred, except that this time limitation shall not apply
with respect to an error, omission, or procedural violation that
is willful or intentional.
(3) EFFECT OF FAILURE TO TIMELY NOTIFY.—Except as provided in paragraph (2), the failure to timely provide the notice
required under this subsection shall relieve the approved insurance provider from the debt owed the Corporation.
(c) RECONCILING PRODUCER INFORMATION.—The Secretary
shall develop and implement a coordinated plan for the Corporation
and the Farm Service Agency to reconcile all relevant information
received by the Corporation or the Farm Service Agency from a
producer who obtains crop insurance coverage under this title. Beginning with the 2001 crop year, the Secretary shall require that
the Corporation and the Farm Service Agency reconcile such producer-derived information on at least an annual basis in order to
identify and address any discrepancies.
(d) IDENTIFICATION AND ELIMINATION OF FRAUD, WASTE, AND
ABUSE.—
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FEDERAL CROP INSURANCE ACT

Sec. 515

(1) FSA MONITORING PROGRAM.—The Secretary shall develop and implement a coordinated plan for the Farm Service
Agency to assist the Corporation in the ongoing monitoring of
programs carried out under this title, including—
(A) at the request of the Corporation or, subject to
paragraph (2), on its own initiative if the Farm Service
Agency has reason to suspect the existence of program
fraud, waste, or abuse, conducting fact finding relative to
allegations of program fraud, waste, or abuse;
(B) reporting to the Corporation, in writing in a timely
manner, the results of any fact finding conducted pursuant
to subparagraph (A), any allegation of fraud, waste, or
abuse, and any identified program vulnerabilities; and
(C) assisting the Corporation and approved insurance
providers in auditing a statistically appropriate number of
claims made under any policy or plan of insurance under
this title.
(2) FSA INQUIRY.—If, within five calendar days after receiving a report submitted under paragraph (1)(B), the Corporation does not provide a written response that describes the
intended actions of the Corporation, the Farm Service Agency
may conduct its own inquiry into the alleged program fraud,
waste, or abuse on approval from the State director of the
Farm Service Agency of the State in which the alleged fraud,
waste, or abuse occurred. If as a result of the inquiry, the
Farm Service Agency concludes further investigation is warranted, but the Corporation declines to proceed with the investigation, the Farm Service Agency may refer the matter to the
Inspector General of the Department of Agriculture.
(3) USE OF FIELD INFRASTRUCTURE.—The plan required by
paragraph (1) shall provide for the use of the field infrastructure of the Farm Service Agency. The Secretary shall ensure
that relevant Farm Service Agency personnel are appropriately
trained for any responsibilities assigned to the personnel under
the plan. At a minimum, the personnel shall receive the same
level of training and pass the same basic competency tests as
required of loss adjusters of approved insurance providers.
(4) MAINTENANCE OF PROVIDER EFFORT.—
(A) IN GENERAL.—The activities of the Farm Service
Agency under this subsection do not affect the responsibility of approved insurance providers to conduct any audits of claims or other program reviews required by the
Corporation.
(B) NOTIFICATION OF PROVIDERS.—The Corporation
shall notify the appropriate approved insurance provider of
a report from the Farm Service Agency regarding alleged
program fraud, waste, or abuse, unless the provider is suspected to be included in, or a party to, the alleged fraud,
waste, or abuse.
(C) RESPONSE.—An approved insurance provider that
receives a notice under subparagraph (B) shall submit a
report to the Corporation, within an appropriate time period determined by the Secretary, describing the actions
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taken by the provider to investigate the allegations of program fraud, waste, or abuse contained in the notice.
(5) CORPORATION RESPONSE TO PROVIDER REPORTS.—
(A) PROMPT RESPONSE.—If an approved insurance provider reports to the Corporation that the approved insurance provider suspects intentional misrepresentation,
fraud, waste, or abuse, the Corporation shall make a determination and provide, within 90 calendar days after receiving the report, a written response that describes the
intended actions of the Corporation.
(B) COOPERATIVE EFFORT.—The approved insurance
provider and the Corporation shall take coordinated action
in any case where misrepresentation, fraud, waste, or
abuse is alleged.
(C) FAILURE TO TIMELY RESPOND.—If the Corporation
fails to respond as required by subparagraph (A), an approved insurance provider may request the Farm Service
Agency to assist the provider in an inquiry into the alleged
program fraud, waste, or abuse.
(e) CONSULTATION WITH STATE FSA COMMITTEES.—The Secretary shall establish procedures under which the Corporation
shall consult with the State committee of the Farm Service Agency
for a State with respect to policies, plans of insurance, and material related to such policies or plans of insurance (including applicable sales closing dates, assigned yields, and transitional yields)
offered in that State under this title.
(f ) DETECTION OF DISPARATE PERFORMANCE.—
(1) COVERED ACTIVITIES.—The Secretary shall establish
procedures under which the Corporation will be able to identify
the following:
(A) Any agent engaged in the sale of coverage offered
under this title where the loss claims associated with such
sales by the agent are equal to or greater than 150 percent
(or an appropriate percentage specified by the Corporation)
of the mean for all loss claims associated with such sales
by all other agents operating in the same area, as determined by the Corporation.
(B) Any person performing loss adjustment services
relative to coverage offered under this title where such loss
adjustments performed by the person result in accepted or
denied claims equal to or greater than 150 percent (or an
appropriate percentage specified by the Corporation) of the
mean for accepted or denied claims (as applicable) for all
other persons performing loss adjustment services in the
same area, as determined by the Corporation.
(2) REVIEW.—
(A) REVIEW REQUIRED.—The Corporation shall conduct
a review of any agent identified pursuant to paragraph
(1)(A), and any person identified pursuant to paragraph
(1)(B), to determine whether the higher loss claims associated with the agent or the higher number of accepted or
denied claims (as applicable) associated with the person
are the result of fraud, waste, or abuse.
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(B) REMEDIAL ACTION.—The Corporation shall take appropriate remedial action with respect to any occurrence of
fraud, waste, or abuse identified in a review conducted
under this paragraph.
(3) OVERSIGHT OF AGENTS AND LOSS ADJUSTERS.—The Corporation shall develop procedures to require an annual review
by an approved insurance provider of the performance of each
agent and loss adjuster used by the approved insurance provider. The Corporation shall oversee the conduct of annual reviews and may consult with an approved insurance provider
regarding any remedial action that is determined to be necessary as a result of the annual review of an agent or loss adjuster.
(g) SUBMISSION OF INFORMATION TO CORPORATION TO SUPPORT
COMPLIANCE EFFORTS.—
(1) TYPES OF INFORMATION REQUIRED.—The Secretary shall
establish procedures under which approved insurance providers shall submit to the Corporation the following information with respect to each policy or plan of insurance offered
under this title:
(A) The name and identification number of the insured.
(B) The agricultural commodity to be insured.
(C) The elected coverage level, including the price election, of the insured.
(2) TIME FOR SUBMISSION.—The information required by
paragraph (1) with respect to a policy or plan of insurance
shall be submitted so as to ensure receipt by the Corporation
not later than the Saturday of the week containing the calendar day that is 30 days after the applicable sales closing
date for the crop to be insured.
(h) SANCTIONS FOR PROGRAM NONCOMPLIANCE AND FRAUD.—
(1) FALSE INFORMATION.—A producer, agent, loss adjuster,
approved insurance provider, or other person that willfully and
intentionally provides any false or inaccurate information to
the Corporation or to an approved insurance provider with respect to a policy or plan of insurance under this title may, after
notice and an opportunity for a hearing on the record, be subject to one or more of the sanctions described in paragraph (3).
(2) COMPLIANCE.—A person may, after notice and an opportunity for a hearing on the record, be subject to one or more
of the sanctions described in paragraph (3) if the person is a
producer, agent, loss adjuster, approved insurance provider, or
other person that willfully and intentionally fails to comply
with a requirement of the Corporation.
(3) AUTHORIZED SANCTIONS.—If the Secretary determines
that a person covered by this subsection has committed a material violation under paragraph (1) or (2), the following sanctions may be imposed:
(A) CIVIL FINES.—A civil fine may be imposed for each
violation in an amount not to exceed the greater of—
(i) the amount of the pecuniary gain obtained as
a result of the false or inaccurate information provided
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or the noncompliance with a requirement of this title;
or
(ii) $10,000.
(B) PRODUCER DISQUALIFICATION.—In the case of a violation committed by a producer, the producer may be disqualified for a period of up to 5 years from receiving any
monetary or nonmonetary benefit provided under each of
the following:
(i) This title.
(ii) The Agricultural Market Transition Act (7
U.S.C. 7201 et seq.), including the noninsured crop
disaster assistance program under section 196 of that
Act (7 U.S.C. 7333).
(iii) The Agricultural Act of 1949 (7 U.S.C. 1421 et
seq.).
(iv) The Commodity Credit Corporation Charter
Act (15 U.S.C. 714 et seq.).
(v) The Agricultural Adjustment Act of 1938 (7
U.S.C. 1281 et seq.).
(vi) Title XII of the Food Security Act of 1985 (16
U.S.C. 3801 et seq.).
(vii) The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.).
(viii) Any law that provides assistance to a producer of an agricultural commodity affected by a crop
loss or a decline in the prices of agricultural commodities.
(C) DISQUALIFICATION OF OTHER PERSONS.—In the case
of a violation committed by an agent, loss adjuster, approved insurance provider, or other person (other than a
producer), the violator may be disqualified for a period of
up to 5 years from participating in any program, or receiving any benefit, under this title.
(4) ASSESSMENT OF SANCTION.—The Secretary shall consider the gravity of the violation of the person covered by this
subsection in determining—
(A) whether to impose a sanction under this subsection; and
(B) the type and amount of the sanction to be imposed.
(5) DISCLOSURE OF SANCTIONS.—Each policy or plan of insurance under this title shall provide notice describing the
sanctions prescribed under paragraph (3) for willfully and
intentionally—
(A) providing false or inaccurate information to the
Corporation or to an approved insurance provider; or
(B) failing to comply with a requirement of the Corporation.
(6) INSURANCE FUND.—Any funds collected under this subsection shall be deposited into the insurance fund established
under section 516(c).
(i) ANNUAL REPORT ON PROGRAM COMPLIANCE AND INTEGRITY
EFFORTS.—
(1) REPORT REQUIRED.—The Secretary shall submit to the
Committee on Agriculture of the House of Representatives and
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FEDERAL CROP INSURANCE ACT

Sec. 516

the Committee on Agriculture, Nutrition, and Forestry of the
Senate an annual report describing the operation of this section during the preceding year and efforts undertaken by the
Secretary and the Corporation to carry out this section.
(2) INFORMATION REGARDING FRAUD, WASTE, AND ABUSE.—
The report shall identify specific occurrences of waste, fraud, or
abuse and contain an outline of actions that have been or are
being taken to eliminate the identified waste, fraud, or abuse.
( j) INFORMATION MANAGEMENT.—
(1) SYSTEMS UPGRADES.—The Secretary shall upgrade the
information management systems of the Corporation used in
the administration and enforcement and this title. In upgrading the systems, the Secretary shall ensure that new hardware
and software are compatible with the hardware and software
used by other agencies of the Department to maximize data
sharing and promote the purpose of this section.
(2) USE OF AVAILABLE INFORMATION TECHNOLOGIES.—The
Secretary shall use the information technologies known as data
mining and data warehousing and other available information
technologies to administer and enforce this title.
(3) USE OF PRIVATE SECTOR.—The Secretary may enter into
contracts to use private sector expertise and technological resources in implementing this subsection.
(k) FUNDING.—
(1) AVAILABLE FUNDS.—To carry out this section and sections 502(c), 506(h), 508(a)(3)(B), and 508(f )(3)(A), the Corporation may use, from amounts made available from the insurance
fund established under section 516(c), not more than
$23,000,000 during the period of fiscal years 2001 through
2005, of which not more than $9,000,000 shall be available for
fiscal year 2001.
(2) PROHIBITION.—None of the funds made available under
paragraph (1) may be used to pay the salaries of employees of
the Corporation.
SEC. 516. ø7 U.S.C. 1516¿ FUNDING.
(a) AUTHORIZATION OF APPROPRIATIONS.—
(1) DISCRETIONARY EXPENSES.—There

are authorized to be
appropriated for fiscal year 1999 and each subsequent fiscal
year such sums as are necessary to cover the salaries and expenses of the Corporation.
(2) MANDATORY EXPENSES.—There are authorized to be appropriated such sums as are necessary to cover for each of the
1999 and subsequent reinsurance years the following:
(A) The administrative and operating expenses of the
Corporation for the sales commissions of agents.
(B) Premium subsidies, including the administrative
and operating expenses of an approved insurance provider
for the delivery of policies with additional coverage.
(C) Costs associated with the conduct of livestock and
wild salmon pilot programs carried out under section 523,
subject to the limitations in subsections (a)(3)(E)(ii) and
(b)(10) of section 523.

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(D) Costs associated with the reimbursement, contracting, and partnerships for research and development
under section 522.
(b) PAYMENT OF CORPORATION EXPENSES FROM INSURANCE
FUND.—
(1) EXPENSES GENERALLY.—For each of the 1999 and subsequent reinsurance years, the Corporation may pay from the
insurance fund established under subsection (c) all expenses of
the Corporation (other than expenses covered by subsection
(a)(1) and expenses covered by paragraph (2)(A)), including the
following:
(A) Premium subsidies and indemnities.
(B) Administrative and operating expenses of the Corporation necessary to pay the sales commissions of agents.
(C) All administrative and operating expense reimbursements due under a reinsurance agreement with an
approved insurance provider.
(D) Costs associated with the conduct of livestock and
wild salmon pilot programs carried out under section 523,
subject to the limitations in subsections (a)(3)(E)(ii) and
(b)(10) of section 523.
(E) Costs associated with the reimbursement, contracting, and partnerships for research and development
under section 522.
(2) POLICY CONSIDERATION AND IMPLEMENTATION.—
(A) IN GENERAL.—For each of the 1999 and subsequent
reinsurance years, the Corporation may use the insurance
fund established under subsection (c), but not to exceed
$3,500,000 for each fiscal year, to pay the following:
(i) Costs associated with the consideration and implementation of policies, plans of insurance, and related materials submitted under section 508(h) or developed under section 522 or 523.
(ii) Costs to contract for the review of policies,
plans of insurance, and related materials under section 505(e) and to contract for other assistance in considering policies, plans of insurance, and related materials.
(B) DAIRY OPTIONS PILOT PROGRAM.—Amounts necessary to carry out the dairy options pilot program shall
not be counted toward the limitation on expenses specified
in subparagraph (A).
(c) INSURANCE FUND.—
(1) IN GENERAL.—There is established an insurance fund,
for the deposit of premium income, amounts made available
under subsection (a)(2), and civil fines collected under section
515(h), to be available without fiscal year limitation.
(2) COMMODITY CREDIT CORPORATION FUNDS.—If at any
time the amounts in the insurance fund are insufficient to enable the Corporation to carry out subsection (b), to the extent
the funds of the Commodity Credit Corporation are available—
(A) the Corporation may request the Secretary to use
the funds of the Commodity Credit Corporation to carry
out subsection (b); and
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FEDERAL CROP INSURANCE ACT

Sec. 521

(B) the Secretary may use the funds of the Commodity
Credit Corporation to carry out subsection (b).
SEPARABILITY

SEC. 517. ø7 U.S.C. 1517¿ The sections of this title and subdivisions of sections are hereby declared to be separable, and in the
event any one or more sections or parts of the same of this title
be held to be unconstitutional, the same shall not affect the validity
of other sections or parts of sections of this title.
AGRICULTURAL COMMODITY

SEC. 518. ø7 U.S.C. 1518¿ ‘‘Agricultural commodity’’, as used
in this title, means wheat, cotton, flax, corn, dry beans, oats, barley, rye, tobacco, rice, peanuts, soybeans, sugar beets, sugar cane,
tomatoes, grain sorghum, sunflowers, raisins, oranges, sweet corn,
dry peas, freezing and canning peas, forage, apples, grapes, potatoes, timber and forests, nursery crops, citrus, and other fruits and
vegetables, nuts, tame hay, native grass, aquacultural species (including, but not limited to, any species of finfish, mollusk, crustacean, or other aquatic invertebrate, amphibian, reptile, or aquatic
plant propagated or reared in a controlled or selected environment),
or any other agricultural commodity, excluding stored grain, determined by the Board, or any one or more of such commodities, as
the context may indicate.
SEC. 519. NONINSURED CROP DISASTER ASSISTANCE PROGRAM.

øRepealed by P.L. 104–127, § 196(j), Apr. 4, 1996, 110 Stat.
950. Such section 196 provides for the administration and operation of a new noninsured crop assistance program by the Farm
Service Agency. A compilation is available of this section.¿
SEC. 520. ø7 U.S.C. 1520¿ PRODUCER ELIGIBILITY.

Except as otherwise provided in this title, a producer shall not
be denied insurance under this title if—
(1) for purposes of catastrophic risk protection coverage,
the producer is a ‘‘person’’ (as defined by the Secretary); and
(2) for purposes of any other plan of insurance, the producer is 18 years of age and has a bona fide insurable interest
in a crop as an owner-operator, landlord, tenant, or sharecropper.
SEC. 521. ø7 U.S.C. 1521¿ INELIGIBILITY FOR CATASTROPHIC RISK AND
NONINSURED ASSISTANCE PAYMENTS.

If the Secretary determines that a person has knowingly adopted a material scheme or device to obtain catastrophic risk, additional coverage, or noninsured assistance benefits under this title
to which the person is not entitled, has evaded this title, or has
acted with the purposes of evading this title, the person shall be
ineligible to receive all benefits applicable to the crop year for
which the scheme or device was adopted. The authority provided
by this section shall be in addition to, and shall not supplant, the
authority provided by section 506(n).
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Sec. 522

FEDERAL CROP INSURANCE ACT

SEC. 522. ø7 U.S.C. 1522¿ RESEARCH AND DEVELOPMENT.
(a) DEFINITION OF POLICY.—In this section, the

1–46

term ‘‘policy’’
means a policy, plan of insurance, provision of a policy or plan of
insurance, and related materials.
(b) REIMBURSEMENT OF RESEARCH, DEVELOPMENT, AND MAINTENANCE COSTS.—
(1) RESEARCH AND DEVELOPMENT REIMBURSEMENT.—The
Corporation shall provide a payment to reimburse an applicant
for research and development costs directly related to a policy
that is—
(A) submitted to the Board and approved by the Board
under section 508(h) for reinsurance; and
(B) if applicable, offered for sale to producers.
(2) EXISTING PLANS.—The Corporation shall reimburse
costs associated with research and development costs directly
related to a policy that was approved by the Board prior to the
date of the enactment of this section.
(3) MARKETABILITY.—The Corporation shall approve a reimbursement under paragraph (1) or (2) only after determining
that the policy is marketable based on a reasonable marketing
plan, as determined by the Board.
(4) MAINTENANCE PAYMENTS.—
(A) REQUIREMENT.—The Corporation shall reimburse
maintenance costs associated with the annual cost of underwriting for a policy described in paragraphs (1) and (2).
(B) DURATION.—Payments with respect to maintenance costs may be provided for a period of not more than
four reinsurance years subsequent to Board approval for
payment under this subsection.
(C) OPTIONS FOR MAINTENANCE.—On the expiration of
the 4-year period described in subparagraph (B), the approved insurance provider responsible for maintenance of
the policy may—
(i) maintain the policy and charge a fee to approved insurance providers that elect to sell the policy
under this subsection; or
(ii) transfer responsibility for maintenance of the
policy to the Corporation.
(D) FEE.—
(i) AMOUNT.—Subject to approval by the Board,
the amount of the fee that is payable by an approved
insurance provider that elects to sell the policy shall
be an amount that is determined by the approved insurance provider maintaining the policy.
(ii) APPROVAL.—The Board shall approve the
amount of a fee determined under clause (i) for maintenance of the policy unless the Board determines that
the amount of the fee—
(I) is unreasonable in relation to the maintenance costs associated with the policy; or
(II) unnecessarily inhibits the use of the policy.
(5) TREATMENT OF PAYMENT.—Payments made under this
subsection for a policy shall be considered as payment in full
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FEDERAL CROP INSURANCE ACT

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by the Corporation for the research and development conducted
with regard to the policy and any property rights to the policy.
(6) REIMBURSEMENT AMOUNT.—The Corporation shall determine the amount of the payment under this subsection for
an approved policy based on the complexity of the policy and
the size of the area in which the policy or material is expected
to be sold.
(c) RESEARCH AND DEVELOPMENT CONTRACTING AUTHORITY.—
(1) AUTHORITY.—The Corporation may enter into contracts
to carry out research and development to—
(A) increase participation in States in which the Corporation determines that—
(i) there is traditionally, and continues to be, a
low level of Federal crop insurance participation and
availability; and
(ii) the State is underserved by the Federal crop
insurance program;
(B) increase participation in areas that are underserved by the Federal crop insurance program; and
(C) increase participation by producers of underserved
agricultural commodities, including specialty crops.
(2) UNDERSERVED AGRICULTURAL COMMODITIES AND
AREAS.—
(A) AUTHORITY.—The Corporation may enter into contracts under procedures prescribed by the Corporation
with qualified persons to carry out research and development for policies that promote the purposes of paragraph
(1).
(B) CONSULTATION.—Before entering into a contract
under subparagraph (A), the Corporation shall consult
with groups representing producers of agricultural commodities that would be served by the policies that are the
subject of the research and development.
(3) QUALIFIED PERSONS.—A person with experience in crop
insurance or farm or ranch risk management (including a college or university, an approved insurance provider, and a trade
or research organization), as determined by the Corporation,
shall be eligible to enter into a contract with the Corporation
under this subsection.
(4) TYPES OF CONTRACTS.—A contract under this subsection may provide for research and development regarding
new or expanded policies, including policies based on adjusted
gross income, cost-of-production, quality losses, and an intermediate base program with a higher coverage and cost than
catastrophic risk protection.
(5) USE OF RESULTING POLICIES.—The Corporation may
offer any policy developed under this subsection that is approved by the Board.
(6) RESEARCH AND DEVELOPMENT PRIORITIES.—The Corporation shall establish as one of the highest research and development priorities of the Corporation the development of a
pasture, range, and forage program.
(7) STUDY OF MULTIYEAR COVERAGE.—
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(A) IN GENERAL.—The Corporation shall contract with
a qualified person to conduct a study to determine whether
offering policies that provide coverage for multiple years
would reduce fraud, waste, and abuse by persons that participate in the Federal crop insurance program.
(B) REPORT.—Not later than 1 year after the date of
the enactment of this section, the Corporation shall submit
to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition,
and Forestry of the Senate a report that describes the results of the study conducted under subparagraph (A).
(8) CONTRACT FOR REVENUE COVERAGE PLANS.—The Corporation shall enter into a contract for research and development regarding one or more revenue coverage plans that are
designed to enable producers to take maximum advantage of
fluctuations in market prices and thereby maximize revenue
realized from the sale of an agricultural commodity. A revenue
coverage plan may include the use of existing market instruments or the development of new market instruments. Not
later than 15 months after the date of the enactment of this
section, the Corporation shall submit to the Committee on Agriculture of the House of Representatives and the Committee
on Agriculture, Nutrition, and Forestry of the Senate a report
that describes the results of the contract entered into under
this paragraph.
(9) CONTRACT FOR COST OF PRODUCTION POLICY.—
(A) AUTHORITY.—The Corporation shall enter into a
contract for research and development regarding a cost of
production policy.
(B) RESEARCH AND DEVELOPMENT.—The research and
development shall—
(i) take into consideration the differences in the
cost of production on a county-by-county basis; and
(ii) cover as many commodities as is practicable.
(10) RELATION TO LIMITATIONS.—A policy developed under
this subsection may be prepared without regard to the limitations of this title, including—
(A) the requirement concerning the levels of coverage
and rates; and
(B) the requirement that the price level for each insured agricultural commodity must equal the expected
market price for the agricultural commodity, as established by the Board.
(d) PARTNERSHIPS FOR RISK MANAGEMENT DEVELOPMENT AND
IMPLEMENTATION.—
(1) PURPOSE.—The purpose of this subsection is to authorize the Corporation to enter into partnerships with public and
private entities for the purpose of increasing the availability of
loss mitigation, financial, and other risk management tools for
producers, with a priority given to risk management tools for
producers of agricultural commodities covered by section 196 of
the Agricultural Market Transition Act (7 U.S.C. 7333), specialty crops, and underserved agricultural commodities.
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FEDERAL CROP INSURANCE ACT

Sec. 522

(2) AUTHORITY.—The Corporation may enter into partnerships with the Cooperative State Research, Education, and Extension Service, the Agricultural Research Service, the National Oceanic Atmospheric Administration, and other appropriate public and private entities with demonstrated capabilities in developing and implementing risk management and
marketing options for producers of specialty crops and underserved agricultural commodities.
(3) OBJECTIVES.—The Corporation may enter into a partnership under paragraph (2)—
(A) to enhance the notice and timeliness of notice of
weather conditions that could negatively affect crop yields,
quality, and final product use in order to allow producers
to take preventive actions to increase end product profitability and marketability and to reduce the possibility of
crop insurance claims;
(B) to develop a multifaceted approach to pest management and fertilization to decrease inputs, decrease environmental exposure, and increase application efficiency;
(C) to develop or improve techniques for planning,
breeding, planting, growing, maintaining, harvesting, storing, shipping, and marketing that will address quality and
quantity challenges associated with year-to-year and regional variations;
(D) to clarify labor requirements and assist producers
in complying with requirements to better meet the physically intense and time-compressed planting, tending, and
harvesting requirements associated with the production of
specialty crops and underserved agricultural commodities;
(E) to provide assistance to State foresters or equivalent officials for the prescribed use of burning on private
forest land for the prevention, control, and suppression of
fire;
(F) to provide producers with training and informational opportunities so that the producers will be better
able to use financial management, crop insurance, marketing contracts, and other existing and emerging risk
management tools; and
(G) to develop other risk management tools to further
increase economic and production stability.
(e) FUNDING.—
(1) REIMBURSEMENTS.—Of the amounts made available
from the insurance fund established under section 516(c), the
Corporation may use to provide reimbursements under subsection (b) not more than $10,000,000 for each of fiscal years
2001 and 2002 and not more than $15,000,000 for fiscal year
2003 and each subsequent fiscal year.
(2) CONTRACTING.—
(A) AUTHORITY.—Of the amounts made available from
the insurance fund established under section 516(c), the
Corporation may use to carry out contracting and partnerships under subsections (c) and (d) not more than
$20,000,000 for each of fiscal years 2001 through 2003 and
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not more than $25,000,000 for fiscal year 2004 and each
subsequent fiscal year.
(B) UNDERSERVED STATES.—Of the amount made
available under subparagraph (A) for a fiscal year, the
Corporation shall use not more than $5,000,000 for the fiscal year to carry out contracting for research and development to carry out the purpose described in subsection
(c)(1)(A).
(3) UNUSED FUNDING.—If the Corporation determines that
the amount available to provide either reimbursement payments or contract payments under this section for a fiscal year
is not needed for such purposes, the Corporation may use the
excess amount to carry out another function authorized under
this section.
(4) PROHIBITED RESEARCH AND DEVELOPMENT BY CORPORATION.—
(A) NEW POLICIES.—Notwithstanding subsection (d),
on and after October 1, 2000, the Corporation shall not
conduct research and development for any new policy for
an agricultural commodity offered under this title.
(B) EXISTING POLICIES.—Any policy developed by the
Corporation under this title before that date may continue
to be offered for sale to producers.
SEC. 523. ø7 U.S.C. 1523¿ PILOT PROGRAMS.
(a) GENERAL PROVISIONS.—
(1) AUTHORITY.—Except as otherwise

provided in this section, the Corporation may conduct a pilot program submitted
to and approved by the Board under section 508(h), or that is
developed under subsection (b) or section 522, to evaluate
whether a proposal or new risk management tool tested by the
pilot program is suitable for the marketplace and addresses the
needs of producers of agricultural commodities.
(2) PRIVATE COVERAGE.—Under this section, the Corporation shall not conduct any pilot program that provides insurance protection against a risk if insurance protection against
the risk is generally available from private companies.
(3) COVERED ACTIVITIES.—The pilot programs described in
paragraph (1) may include pilot programs providing insurance
protection against losses involving—
(A) reduced forage on rangeland caused by drought or
insect infestation;
(B) livestock poisoning and disease;
(C) destruction of bees due to the use of pesticides;
(D) unique special risks related to fruits, nuts, vegetables, and specialty crops in general, aquacultural species,
and forest industry needs (including appreciation);
(E) after October 1, 2001, wild salmon, except that—
(i) any pilot program with regard to wild salmon
may be carried out without regard to the limitations
of this title; and
(ii) the Corporation shall conduct all wild salmon
programs under this title so that, to the maximum extent practicable, all costs associated with conducting

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the programs are not expected to exceed $1,000,000 for
fiscal year 2002 and each subsequent fiscal year.
(4) SCOPE OF PILOT PROGRAMS.—The Corporation may—
(A) approve a pilot program under this section to be
conducted on a regional, State, or national basis after considering the interests of affected producers and the interests of, and risks to, the Corporation;
(B) operate the pilot program, including any modifications of the pilot program, for a period of up to 4 years;
(C) extend the time period for the pilot program for
additional periods, as determined appropriate by the Corporation; and
(D) provide pilot programs that would allow
producers—
(i) to receive a reduced premium for using whole
farm units or single crop units of insurance; and
(ii) to cross State and county boundaries to form
insurable units.
(5) EVALUATION.—
(A) REQUIREMENT.—After the completion of any pilot
program under this section, the Corporation shall evaluate
the pilot program and submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report on the operations of the pilot program.
(B) EVALUATION AND RECOMMENDATIONS.—The report
shall include an evaluation by the Corporation of the pilot
program and the recommendations of the Corporation with
respect to implementing the program on a national basis.
(b) LIVESTOCK PILOT PROGRAMS.—
(1) DEFINITION OF LIVESTOCK.—In this subsection, the
term ‘‘livestock’’ includes, but is not limited to, cattle, sheep,
swine, goats, and poultry.
(2) PROGRAMS REQUIRED.—Subject to paragraph (7), the
Corporation shall conduct two or more pilot programs to evaluate the effectiveness of risk management tools for livestock
producers, including the use of futures and options contracts
and policies and plans of insurance that protect the interests
of livestock producers and that provide—
(A) livestock producers with reasonable protection
from the financial risks of price or income fluctuations inherent in the production and marketing of livestock; or
(B) protection for production losses.
(3) PURPOSE OF PROGRAMS.—To the maximum extent practicable, the Corporation shall evaluate the greatest number
and variety of pilot programs described in paragraph (2) to determine which of the offered risk management tools are best
suited to protect livestock producers from the financial risks
associated with the production and marketing of livestock.
(4) TIMING.—The Corporation shall begin conducting livestock pilot programs under this subsection during fiscal year
2001.
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(5) RELATION TO OTHER LIMITATIONS.—Any policy or plan
of insurance offered under this subsection may be prepared
without regard to the limitations of this title.
(6) ASSISTANCE.—As part of a pilot program under this
subsection, the Corporation may provide reinsurance for policies or plans of insurance and subsidize the purchase of futures
and options contracts or policies and plans of insurance offered
under the pilot program.
(7) PRIVATE INSURANCE.—No action may be undertaken
with respect to a risk under this subsection if the Corporation
determines that insurance protection for livestock producers
against the risk is generally available from private companies.
(8) LOCATION.—The Corporation shall conduct the livestock
pilot programs under this subsection 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 risk management
tools evaluated in the pilot programs.
(9) ELIGIBLE PRODUCERS.—Any producer of a type of livestock covered by a pilot program under this subsection that
owns or operates a farm or ranch in a county selected as a location for that pilot program shall be eligible to participate in
that pilot program.
(10) LIMITATION ON EXPENDITURES.—The Corporation shall
conduct all livestock programs under this title so that, to the
maximum extent practicable, all costs associated with conducting the livestock programs (other than research and development costs covered by section 522) are not expected to exceed
the following:
(A) $10,000,000 for each of fiscal years 2001 and 2002.
(B) $15,000,000 for fiscal year 2003.
(C) $20,000,000 for fiscal year 2004 and each subsequent fiscal year.
(c) REVENUE INSURANCE PILOT PROGRAM.—
(1) IN GENERAL.—Subject to section 522(e)(4), the Secretary shall carry out a pilot program in a limited number of
counties, as determined by the Secretary, for crop years 1997
through 2001, 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.
(2) ADMINISTRATION.—Revenue insurance under this subsection shall—
(A) be offered through reinsurance arrangements with
private insurance companies;
(B) offer at least a minimum level of coverage that is
an alternative to catastrophic crop insurance;
(C) be actuarially sound; and
(D) require the payment of premiums and administrative fees by an insured producer.
(d) PREMIUM RATE REDUCTION PILOT PROGRAM.—
(1) PURPOSE.—The purpose of the pilot program established under this subsection is to determine whether approved
insurance providers will compete to market policies or plans of
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insurance with reduced rates of premium, in a manner that
maintains the financial soundness of approved insurance providers and is consistent with the integrity of the Federal crop
insurance program.
(2) ESTABLISHMENT.—
(A) IN GENERAL.—Beginning with the 2002 crop year,
the Corporation shall establish a pilot program under
which approved insurance providers may propose for approval by the Board policies or plans of insurance with reduced rates of premium—
(i) for one or more agricultural commodities; and
(ii) within a limited geographic area, as proposed
by the approved insurance provider and approved by
the Board.
(B) DETERMINATION BY BOARD.—The Board shall approve a policy or plan of insurance proposed under this
subsection that involves a premium reduction if the Board
determines that—
(i) the interests of producers are adequately protected within the pilot area;
(ii) rates of premium are actuarially appropriate,
as determined by the Board;
(iii) the size of the proposed pilot area is adequate;
(iv) the proposed policy or plan of insurance would
not unfairly discriminate among producers within the
proposed pilot area;
(v) if the proposed policy or plan of insurance were
available in a geographic area larger than the proposed pilot area, the proposed policy or plan of insurance would—
(I) not have a significant adverse impact on
the crop insurance delivery system;
(II) not result in a reduction of program
integrity;
(III) be actuarially appropriate; and
(IV) not place an additional financial burden
on the Federal Government; and
(vi) the proposed policy or plan of insurance meets
other requirements of this title determined appropriate by the Board.
(C) TIME LIMITATIONS AND PROCEDURES.—The time
limitations and procedures of the Board established under
section 508(h) shall apply to a proposal submitted under
this subsection.
(e) ADJUSTED GROSS REVENUE INSURANCE PILOT PROGRAM.—
(1) IN GENERAL.—The Corporation shall carry out, through
at least the 2004 reinsurance year, the adjusted gross revenue
insurance pilot program in effect for the 2002 reinsurance year.
(2) ADDITIONAL COUNTIES.—
(A) IN GENERAL.—In addition to counties otherwise included in the pilot program, the Corporation shall include
in the pilot program for the 2003 reinsurance year at least
8 counties in the State of California and at least 8 counties
in the State of Pennsylvania.
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(B) SELECTION CRITERIA.—In carrying out subparagraph (A), the Corporation shall work with the respective
State Departments of Agriculture to establish criteria to
determine which counties to include in the pilot program.
SEC. 524. ø7 U.S.C. 1524¿ EDUCATION AND RISK MANAGEMENT ASSISTANCE.
(a) EDUCATION ASSISTANCE.—
(1) IN GENERAL.—Subject to the amounts made available

under paragraph (4)—
(A) the Corporation shall carry out the program established under paragraph (2); and
(B) the Secretary, acting through the Cooperative
State Research, Education, and Extension Service, shall
carry out the program established under paragraph (3).
(2) EDUCATION AND INFORMATION.—The Corporation shall
establish a program under which crop insurance education and
information is provided to producers in States in which (as determined by the Secretary)—
(A) there is traditionally, and continues to be, a low
level of Federal crop insurance participation and availability; and
(B) producers are underserved by the Federal crop insurance program.
(3) PARTNERSHIPS FOR RISK MANAGEMENT EDUCATION.—
(A) AUTHORITY.—The Secretary, acting through the
Cooperative State Research, Education, and Extension
Service, shall establish a program under which competitive
grants are made to qualified public and private entities
(including land grant colleges, cooperative extension services, and colleges or universities), as determined by the
Secretary, for the purpose of educating agricultural producers about the full range of risk management activities,
including futures, options, agricultural trade options, crop
insurance, cash forward contracting, debt reduction, production diversification, farm resources risk reduction, and
other risk management strategies.
(B) BASIS FOR GRANTS.—A grant under this paragraph
shall be awarded on the basis of merit and shall be subject
to peer or merit review.
(C) OBLIGATION PERIOD.—Funds for a grant under this
paragraph shall be available to the Secretary for obligation
for a 2-year period.
(D) ADMINISTRATIVE COSTS.—The Secretary may use
not more than 4 percent of the funds made available for
grants under this paragraph for administrative costs incurred by the Secretary in carrying out this paragraph.
(4) FUNDING.—From the insurance fund established under
section 516(c), there is transferred—
(A) for the education and information program established under paragraph (2), $5,000,000 for fiscal year 2001
and each subsequent fiscal year; and
(B) for the partnerships for risk management education program established under paragraph (3),
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$5,000,000 for fiscal year 2001 and each subsequent fiscal
year.
(b) AGRICULTURAL MANAGEMENT ASSISTANCE.—
(1) AUTHORITY.—The Secretary shall provide financial assistance to producers in the States of Connecticut, Delaware,
Maryland, Massachusetts, Maine, Nevada, New Hampshire,
New Jersey, New York, Pennsylvania, Rhode Island, Utah,
Vermont, West Virginia, and Wyoming.
(2) USES.—A producer may use financial assistance provided under this subsection to—
(A) construct or improve—
(i) watershed management structures; or
(ii) irrigation structures;
(B) plant trees to form windbreaks or to improve water
quality;
(C) mitigate financial risk through production or marketing diversification or resource conservation practices,
including—
(i) soil erosion control;
(ii) integrated pest management;
(iii) organic farming; or
(iv) to develop and implement a plan to create
marketing opportunities for the producer, including
through value-added processing;
(D) enter into futures, hedging, or options contracts in
a manner designed to help reduce production, price, or revenue risk;
(E) enter into agricultural trade options as a hedging
transaction to reduce production, price, or revenue risk; or
(F) conduct any other activity relating to an activity
described in subparagraphs (A) through (E), as determined
by the Secretary.
(3) PAYMENT LIMITATION.—The total amount of payments
made to a person (as defined in section 1001(5) of the Food Security Act (7 U.S.C. 1308(5))) under this subsection for any
year may not exceed $50,000.
(4) COMMODITY CREDIT CORPORATION.—
(A) IN GENERAL.—The Secretary shall carry out this
subsection through the Commodity Credit Corporation.
(B) FUNDING.—
(i) IN GENERAL.—Except as provided in clauses (ii)
and (iii), the Commodity Credit Corporation shall
make available to carry out this subsection not less
than $10,000,000 for each fiscal year.
(ii) EXCEPTION.—For each of fiscal years 2003
through 2007, the Commodity Credit Corporation shall
make available to carry out this subsection
$20,000,000.
(iii) CERTAIN USES.—Of the amounts made available to carry out this subsection for each of fiscal
years 2004 through 2007 the Commodity Credit Corporation shall use not less than—
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(I) $14,000,000 to carry out subparagraphs
(A), (B), and (C) of paragraph (2) through the Natural Resources Conservation Service;
(II) $1,000,000 to provide organic certification
cost share assistance through the Agricultural
Marketing Service; and
(III) $5,000,000 to conduct activities to carry
out subparagraph (F) of paragraph (2) through the
Risk Management Agency.

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2. NONINSURED CROP ASSISTANCE PROGRAM
[This section was enacted as part of title I of the Federal Agriculture Improvement
and Reform Act of 1996 (the Agricultural Market Transition Act). See Public Law
104–127; 110 Stat. 947]

SEC. 196. ø7 U.S.C. 7333¿ ADMINISTRATION AND OPERATION OF NONINSURED CROP ASSISTANCE PROGRAM.
(a) OPERATION AND ADMINISTRATION OF PROGRAM.—
(1) IN GENERAL.—In the case of an eligible crop described

in paragraph (2), the Secretary of Agriculture shall operate a
noninsured crop disaster assistance program to provide coverage equivalent to the catastrophic risk protection otherwise
available under section 508(b) of the Federal Crop Insurance
Act (7 U.S.C. 1508(b)). The Secretary shall carry out this section through the Consolidated Farm Service Agency (in this
section referred to as the ‘‘Agency’’).
(2) ELIGIBLE CROPS.—
(A) IN GENERAL.—In this section, the term ‘‘eligible
crop’’ means each commercial crop or other agricultural
commodity (except livestock)—
(i) for which catastrophic risk protection under
section 508(b) of the Federal Crop Insurance Act (7
U.S.C. 1508(b)) is not available; and
(ii) that is produced for food or fiber.
(B) CROPS SPECIFICALLY INCLUDED.—The term ‘‘eligible
crop’’ shall include floricultural, ornamental nursery, and
Christmas tree crops, turfgrass sod, seed crops, aquaculture (including ornamental fish), sea grass and sea oats,
and industrial crops.
(C) COMBINATION OF SIMILAR TYPES OR VARIETIES.—At
the option of the Secretary, all types or varieties of a crop
or commodity, described in subparagraphs (A) and (B),
may be considered to be a single eligible crop under this
section.
(3) CAUSE OF LOSS.—To qualify for assistance under this
section, the losses of the noninsured commodity shall be due to
drought, flood, or other natural disaster, as determined by the
Secretary.
(b) APPLICATION FOR NONINSURED CROP DISASTER ASSISTANCE.—
(1) TIMELY APPLICATION.—To be eligible for assistance
under this section, a producer shall submit an application for
noninsured crop disaster assistance at a local office of the Department. The application shall be in such form, contain such
information, and be submitted not later than 30 days before
2–1
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the beginning of the coverage period, as determined by the Secretary.
(2) RECORDS.—To be eligible for assistance under this section, a producer shall provide annually to the Secretary records
of crop acreage, acreage yields, and production for each crop,
as required by the Secretary.
(3) ACREAGE REPORTS.—A producer shall provide annual
reports on acreage planted or prevented from being planted, as
required by the Secretary, by the designated acreage reporting
date for the crop and location as established by the Secretary.
(c) LOSS REQUIREMENTS.—
(1) CAUSE.—To be eligible for assistance under this section, a producer of an eligible crop shall have suffered a loss
of a noninsured commodity as the result of a cause described
in subsection (a)(3).
(2) ASSISTANCE.—On making a determination described in
subsection (a)(3), the Secretary shall provide assistance under
this section to producers of an eligible crop that have suffered
a loss as a result of the cause described in subsection (a)(3).
(3) PREVENTED PLANTING.—Subject to paragraph (1), the
Secretary shall make a prevented planting noninsured crop
disaster assistance payment if the producer is prevented from
planting more than 35 percent of the acreage intended for the
eligible crop because of drought, flood, or other natural disaster, as determined by the Secretary.
(4) AREA TRIGGER.—The Secretary shall provide assistance
to individual producers without any requirement of an area
loss.
(d) PAYMENT.—The Secretary shall make available to a producer eligible for noninsured assistance under this section a payment computed by multiplying—
(1) the quantity that is less than 50 percent of the established yield for the crop; by
(2)(A) in the case of each of the 1996 through 1998 crop
years, 60 percent of the average market price for the crop (or
any comparable coverage determined by the Secretary); or
(B) in the case of each of the 1999 and subsequent crop
years, 55 percent of the average market price for the crop (or
any comparable coverage determined by the Secretary); by
(3) a payment rate for the type of crop (as determined by
the Secretary) that—
(A) in the case of a crop that is produced with a significant and variable harvesting expense, reflects the decreasing cost incurred in the production cycle for the crop
that is—
(i) harvested;
(ii) planted but not harvested; and
(iii) prevented from being planted because of
drought, flood, or other natural disaster (as determined by the Secretary); and
(B) in the case of a crop that is not produced with a
significant and variable harvesting expense, as determined
by the Secretary.
(e) YIELD DETERMINATIONS.—
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Sec. 196

(1) ESTABLISHMENT.—The Secretary shall establish farm
yields for purposes of providing noninsured crop disaster assistance under this section.
(2) ACTUAL PRODUCTION HISTORY.—The Secretary shall determine yield coverage using the actual production history of
the producer over a period of not less than the 4 previous consecutive crop years and not more than 10 consecutive crop
years. Subject to paragraph (3), the yield for the year in which
noninsured crop disaster assistance is sought shall be equal to
the average of the actual production history of the producer
during the period considered.
(3) ASSIGNMENT OF YIELD.—If a producer does not submit
adequate documentation of production history to determine a
crop yield under paragraph (2), the Secretary shall assign to
the producer a yield equal to not less than 65 percent of the
transitional yield of the producer (adjusted to reflect actual
production reflected in the records acceptable to the Secretary
for continuous years), as specified in regulations issued by the
Secretary based on production history requirements.
(4) PROHIBITION ON ASSIGNED YIELDS IN CERTAIN COUNTIES.—
(A) IN GENERAL.—
(i) DOCUMENTATION.—If sufficient data are available to demonstrate that the acreage of a crop in a
county for the crop year has increased by more than
100 percent over any year in the preceding 7 crop
years or, if data are not available, if the acreage of the
crop in the county has increased significantly from the
previous crop years, a producer must provide such detailed documentation of production costs, acres planted, and yield for the crop year for which benefits are
being claimed as is required by the Secretary. If the
Secretary determines that the documentation provided
is not sufficient, the Secretary may require documenting proof that the crop, had the crop been harvested, could have been marketed at a reasonable
price.
(ii) PROHIBITION.—Except as provided in subparagraph (B), a producer who produces a crop on a farm
located in a county described in clause (i) may not obtain an assigned yield.
(B) EXCEPTION.—A crop or a producer shall not be subject to this subsection if—
(i) the planted acreage of the producer for the crop
has been inspected by a third party acceptable to the
Secretary; or
(ii)(I) the County Executive Director and the State
Executive Director recommend an exemption from the
requirement to the Administrator of the Agency; and
(II) the Administrator approves the recommendation.
(5) LIMITATION ON RECEIPT OF SUBSEQUENT ASSIGNED
YIELD.—A producer who receives an assigned yield for the current year of a natural disaster because required production
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2–4

records were not submitted to the local office of the Department shall not be eligible for an assigned yield for the year of
the next natural disaster unless the required production
records of the previous 1 or more years (as applicable) are provided to the local office.
(6) YIELD VARIATIONS DUE TO DIFFERENT FARMING PRACTICES.—The Secretary shall ensure that noninsured crop disaster assistance accurately reflects significant yield variations
due to different farming practices, such as between irrigated
and nonirrigated acreage.
(f) CONTRACT PAYMENTS.—A producer who has received a guaranteed payment for production, as opposed to delivery, of a crop
pursuant to a contract shall have the production of the producer
adjusted upward by the amount of the production equal to the
amount of the contract payment received.
(g) USE OF COMMODITY CREDIT CORPORATION.—The Secretary
may use the funds of the Commodity Credit Corporation to carry
out this section.
(h) EXCLUSIONS.—Noninsured crop disaster assistance under
this section shall not cover losses due to—
(1) the neglect or malfeasance of the producer;
(2) the failure of the producer to reseed to the same crop
in those areas and under such circumstances where it is customary to reseed; or
(3) the failure of the producer to follow good farming practices, as determined by the Secretary.
(i) PAYMENT AND INCOME LIMITATIONS.—
(1) DEFINITIONS.—In this subsection:
(A) PERSON.—The term ‘‘person’’ has the meaning provided the term in regulations issued by the Secretary. The
regulations shall conform, to the extent practicable, to the
regulations defining the term ‘‘person’’ issued under section 1001 of the Food Security Act of 1985 (7 U.S.C. 1308).
(B) QUALIFYING GROSS REVENUES.—The term ‘‘qualifying gross revenues’’ means—
(i) if a majority of the gross revenue of the person
is received from farming, ranching, and forestry operations, the gross revenue from the farming, ranching,
and forestry operations of the person; and
(ii) if less than a majority of the gross revenue of
the person is received from farming, ranching, and forestry operations, the gross revenue of the person from
all sources.
(2) PAYMENT LIMITATION.—The total amount of payments
that a person shall be entitled to receive annually under this
section may not exceed $100,000.
(3) LIMITATION ON MULTIPLE BENEFITS FOR SAME LOSS.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), if a producer who is eligible to receive benefits under
this section is also eligible to receive assistance for the
same loss under any other program administered by the
Secretary, the producer shall be required to elect whether
to receive benefits under this section or under the other
program, but not both.
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(B) EXCEPTION.—Subparagraph (A) shall not apply to
emergency loans under subtitle C of the Consolidated
Farm and Rural Development Act (7 U.S.C. 1961 et seq.).
(4) INCOME LIMITATION.—A person who has qualifying
gross revenues in excess of the amount specified in section
2266(a) of the Food, Agriculture, Conservation, and Trade Act
of 1990 (7 U.S.C. 1421 note) (as in effect on November 28,
1990) during the taxable year (as determined by the Secretary)
shall not be eligible to receive any noninsured assistance payment under this section.
(5) REGULATIONS.—The Secretary shall issue regulations
prescribing such rules as the Secretary determines necessary
to ensure a fair and equitable application of section 1001 of the
Food Security Act of 1985 (7 U.S.C. 1308), the general payment
limitation regulations of the Secretary, and the limitations established under this subsection.
(j) CONFORMING REPEAL.—Section 519 of the Federal Crop Insurance Act (7 U.S.C. 1519) is repealed.
(k) SERVICE FEE.—
(1) IN GENERAL.—To be eligible to receive assistance for an
eligible crop for a crop year under this section, a producer shall
pay to the Secretary (at the time at which the producer submits the application under subsection (b)(1)) a service fee for
the eligible crop in an amount that is equal to the lesser of—
(A) $100 per crop per county; or
(B) $300 per producer per county, but not to exceed a
total of $900 per producer.
(2) WAIVER.—The Secretary shall waive the service fee required under paragraph (1) in the case of a limited resource
farmer, as defined by the Secretary.
(3) USE.—The Secretary shall deposit service fees collected
under this subsection in the Commodity Credit Corporation
Fund.

November 16, 2005