7 U.S.C. § 1508 : US Code - Section 1508: Crop insurance

Search 7 U.S.C. § 1508 : US Code - Section 1508: Crop insurance

(a) Authority to offer insurance
(1) In general
If sufficient actuarial data are available (as determined by
the Corporation), the Corporation may insure, or provide
reinsurance for insurers of, producers of agricultural
commodities grown in the United States under 1 or more plans of
insurance determined by the Corporation to be adapted to the
agricultural commodity concerned. To qualify for coverage under a
plan of insurance, the losses of the insured commodity must be
due to drought, flood, or other natural disaster (as determined
by the Secretary).
(2) Period
Except in the cases of tobacco, 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.
(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 chapter
(including a policy or plan of insurance approved by the Board
under subsection (h) of this section) 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 chapter 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.
(6) Addition of new and specialty crops
(A) Data collection
Not later than 180 days after October 13, 1994, the Secretary
shall issue guidelines for publication in the Federal Register
for data collection to assist the Corporation in formulating
crop insurance policies for new and specialty crops.
(B) Addition of new crops
Not later than 1 year after October 13, 1994, and annually
thereafter, the Corporation shall report to Congress on the
progress and expected timetable for expanding crop insurance
coverage under this chapter to new and specialty crops.
(C) Addition of direct sale perishable crops
Not later than 1 year after October 13, 1994, the Corporation
shall report to Congress on the feasibility of offering a crop
insurance program designed to meet the needs of specialized
producers of vegetables and other perishable crops who market
through direct marketing channels.
(D) Addition of nursery crops
Not later than 2 years after April 4, 1996, the Corporation
shall conduct a study and limited pilot program on the
feasibility of insuring nursery crops.
(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
chapter 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 chapter, 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 chapter 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 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) of this section.
(4) Sale of catastrophic risk coverage
(A) In general
Catastrophic risk coverage may be offered by - 
(i) approved insurance providers, if available in an area;
and
(ii) at the option of the Secretary that is based on
considerations of need, local offices of the Department.
(B) Need
For purposes of considering need under subparagraph (A)(ii),
the Secretary may take into account the most efficient and cost-
effective use of resources, the availability of personnel,
fairness to local producers, the needs and convenience of local
producers, and the availability of private insurance carriers.
(C) Delivery of coverage
(i) In general
In full consultation with approved insurance providers, the
Secretary may continue to offer catastrophic risk protection
in a State (or a portion of a State) through local offices of
the Department if the Secretary determines that there is an
insufficient number of approved insurance providers operating
in the State or portion of the State to adequately provide
catastrophic risk protection coverage to producers.
(ii) Coverage by approved insurance providers
To the extent that catastrophic risk protection coverage by
approved insurance providers is sufficiently available in a
State (or a portion of a State) as determined by the
Secretary, only approved insurance providers may provide the
coverage in the State or portion of the State.
(iii) Timing of determinations
Not later than 90 days after April 4, 1996, the Secretary
shall announce the results of the determinations under clause
(i) for policies for the 1997 crop year. For subsequent crop
years, the Secretary shall make the announcement not later
than April 30 of the year preceding the year in which the
crop will be produced, or at such other times during the year
as the Secretary finds practicable in consultation with
affected crop insurance providers for those States (or
portions of States) in which catastrophic coverage remains
available through local offices of the Department.
(iv) Current policies
This clause shall take effect beginning with the 1997 crop
year. Subject to clause (ii) all catastrophic risk protection
policies written by local offices of the Department shall be
transferred to the approved insurance provider for
performance of all sales, service, and loss adjustment
functions. Any fees in connection with such policies that are
not yet collected at the time of the transfer shall be
payable to the approved insurance providers assuming the
policies. The transfer process for policies for the 1997 crop
year with sales closing dates before January 1, 1997, shall
begin at the time of the Secretary's announcement under
clause (iii) and be completed by the sales closing date for
the crop and county. The transfer process for all subsequent
policies (including policies for the 1998 and subsequent crop
years) shall begin at a date that permits the process to be
completed not later than 45 days before the sales closing
date.
(5) Administrative fee
(A) Basic fee
Each producer shall pay an administrative fee for
catastrophic risk protection in an amount equal to 10 percent
of the premium for the catastrophic risk protection or $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 Agriculture 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 1516(c) of
this title, 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 [7 U.S.C. 7201 et seq.], for the
conservation reserve program, or for any benefit described in
section 2008f of this title, a person shall - 
(i) obtain at least the catastrophic level of insurance for
each crop of economic significance in which the person has an
interest; or
(ii) provide a written waiver to the Secretary that waives
any eligibility for emergency crop loss assistance in
connection with the crop.
(B) "Crop of economic significance" defined
As used in this paragraph, the term "crop of economic
significance" means a crop that has contributed, or is expected
to contribute, 10 percent or more of the total expected value
of all crops grown by the producer.
(8) Limitation due to risk
The Corporation may limit catastrophic risk coverage in any
county or area, or on any farm, on the basis of the insurance
risk concerned.
(9) Transitional coverage for 1995 crops
Effective only for a 1995 crop planted or for which insurance
attached prior to January 1, 1995, the Corporation shall allow
producers of the crops until not later than the end of the 180-
day period beginning on the date of enactment of the Federal
Crop Insurance Reform Act of 1994 [Oct. 13, 1994] to obtain
catastrophic risk protection for the crop. On enactment of such
Act, a producer who made timely purchases of a crop insurance
policy before the date of enactment of such Act, under the
provisions of this chapter then in effect, shall be eligible for
the same benefits to which a producer would be entitled under
comparable additional coverage under subsection (c) of this
section.
(10) Simplification
(A) Catastrophic risk protection plans
In developing and carrying out the policies and procedures
for a catastrophic risk protection plan under this chapter, the
Corporation shall, to the maximum extent practicable, minimize
the paperwork required and the complexity and costs of
procedures governing applications for, processing, and
servicing of the plan for all parties involved.
(B) Other plans
To the extent that the policies and procedures developed
under subparagraph (A) may be applied to other plans of
insurance offered under this chapter without jeopardizing the
actuarial soundness or integrity of the crop insurance program,
the Corporation shall apply the policies and procedures to the
other plans of insurance within a reasonable period of time (as
determined by the Corporation) after the effective date of this
paragraph.
(11) Loss adjustment
The rate for reimbursing an approved insurance provider or
agent for expenses incurred by the approved insurance provider or
agent for loss adjustment in connection with a policy of
catastrophic risk protection shall not exceed 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.
(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 chapter, the Corporation shall
establish or approve the price level (referred to in this
chapter 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.
(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) of this
section 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) of this section and additional coverage under
subsection (c) of this section shall be fixed as follows:
(A) In the case of catastrophic risk protection, the amount
of the premium shall be sufficient to cover anticipated losses
and a reasonable reserve.
(B) In the case of additional coverage equal to or greater
than 50 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 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) of this section and the additional
coverage provided under subsection (c) of this section, the
Corporation shall pay a part of the premium in the amounts
provided in accordance with this subsection.
(2) Amount of payment
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) of this section.
(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) of this section for the
coverage level selected; and
(ii) the amount determined under subsection (d)(2)(B)(ii)
of this section 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) of this section for the
coverage level selected; and
(ii) the amount determined under subsection (d)(2)(B)(ii)
of this section 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) of this section for the
coverage level selected; and
(ii) the amount determined under subsection (d)(2)(B)(ii)
of this section 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) of this section for the
coverage level selected; and
(ii) the amount determined under subsection (d)(2)(B)(ii)
of this section 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) of this section for the
coverage level selected; and
(ii) the amount determined under subsection (d)(2)(B)(ii)
of this section for the coverage level selected to cover
operating and administrative expenses.
(G) Subject to subsection (c)(4) of this section, 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) of this section for the
coverage level selected; and
(ii) the amount determined under subsection (d)(2)(B)(ii)
of this section 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) of this section 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 chapter 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 chapter, each producer shall purchase
crop insurance on or before the sales closing date for the crop
by providing the required information and executing the
required documents. Subject to the goal of ensuring actuarial
soundness for the crop insurance program, the sales closing
date shall be established by the Corporation to maximize
convenience to producers in obtaining benefits under price and
production adjustment programs of the Department.
(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) of
this section or additional coverage under subsection (c) of this
section, a producer shall - 
(A) provide annually records acceptable to the Secretary
regarding crop acreage, acreage yields, and production for each
agricultural commodity insured under this chapter or accept a
yield determined by the Corporation; and
(B) report acreage planted and prevented from planting by the
designated acreage reporting date for the crop and location as
established by the Corporation.
(g) Yield determinations
(1) In general
Subject to paragraph (2), the Corporation shall establish crop
insurance underwriting rules that ensure that yield coverage, as
specified in this subsection, is provided to eligible producers
obtaining catastrophic risk protection under subsection (b) of
this section or additional coverage under subsection (c) of this
section.
(2) Yield coverage plans
(A) Actual production history
Subject to subparagraph (B), the yield for a crop shall be
based on the actual production history for the crop, if the
crop was produced on the farm without penalty during each of
the 4 crop years immediately preceding the crop year for which
actual production history is being established, building up to
a production data base for each of the 10 consecutive crop
years preceding the crop year for which actual production
history is being established.
(B) Assigned yield
If the producer does not provide satisfactory evidence of the
yield of a commodity under subparagraph (A), the producer shall
be assigned - 
(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 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
actual 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
7759 (!1) of this title).
(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)
of this section, 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 chapter, including the requirements concerning
the levels of coverage and rates and the requirement that a price
level for each commodity insured must equal the expected market
price for the commodity as established by the Board.
(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
more than 1 reinsurance agreement with the approved insurance
provider simultaneously to facilitate the offering of the new
policies.
(4) Guidelines for submission and review
The Corporation shall issue regulations to establish guidelines
for the submission, and Board review, of policies or other
material submitted to the Board under this subsection. At a
minimum, the guidelines shall ensure the following:
(A) 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.
(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, 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.
(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 chapter, 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 1522 of this title,
or conducted under section 1523 of this title (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) of this
section 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) of this
section.
(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 1522 of this title, or conducted
under section 1523 of this title (other than a policy or plan
of insurance applicable to livestock), and first approved by
the Board after June 20, 2000, 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) of this section (consistent with subsection
(c)(5) of this section, as in effect on the day before June 20,
2000).
(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
(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 chapter consistent with section
1507(c)(2) of this title.
(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) of this section 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
(1) In general
Notwithstanding any other provision of this chapter, 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) of this section 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 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 October 13, 1994.
(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.
(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 chapter
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 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 chapter.
(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 chapter, 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) of 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 chapter or under the other
program, but not both. A producer who purchases additional
coverage under subsection (c) of this section 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.).