Crop Insurance Improvement Act of 1999

Summary: Crop Insurance Improvement Act of 1999 - Amends the Federal Crop Insurance Act to specify expected market price criteria for revenue or production-based crop insurance. 
(Sec. 3) Provides for 75 percent additional coverage. 
(Sec. 4) Revises Federal Crop Insurance Corporation premium subsidy provisions, including by making provision for certain mandatory and discretionary payments. 
(Sec. 5) Defines "designated disaster area." Excludes from yield determinations at producer request any crop year during which the county in which the crop was grown (or adjacent county) was included in a designated disaster area. 
(Sec. 6) Provides elective average production history adjustments for producers who are working new land or new crops. 
(Sec. 7) Extends the pilot cost of production risk protection plan.  Authorizes 90 percent coverage. 
(Sec. 8) Directs the Office of Risk Management to contract for a rating methodologies development pilot program. 
(Sec. 9) Directs the Corporation to carry out a pilot livestock coverage project. 
(Sec. 10) Revises the membership of the Corporation's Board of Directors.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Crop Insurance 
Improvement Act of 1999''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Establishment or approval of expected market price for each 
                            agricultural commodity for which insurance 
                            is offered.
Sec. 3. Fixing adequate premium amounts for additional coverage.
Sec. 4. Payment of portion of crop insurance premium by Corporation.
Sec. 5. Effect of disaster declaration on determination of producer's 
                            actual production history.
Sec. 6. Assigned yields for newly acquired lands and new crops.
Sec. 7. Cost of production risk protection pilot project.
Sec. 8. Rating methodologies pilot project.
Sec. 9. Livestock coverage pilot project.
Sec. 10. Board of directors of Corporation.

SEC. 2. ESTABLISHMENT OR APPROVAL OF EXPECTED MARKET PRICE FOR EACH 
              AGRICULTURAL COMMODITY FOR WHICH INSURANCE IS OFFERED.

    Section 508(c) of the Federal Crop Insurance Act (7 U.S.C. 1508(c)) 
is amended by striking paragraph (5) and inserting the following new 
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) Amount generally.--Except as provided in 
                subparagraphs (C) and (D), 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, but the expected 
                market price may be based on the actual market price of 
                the agricultural commodity at the time of harvest, as 
                determined by the Corporation.
                    ``(C) Revenue and similar plans.--In the case of 
                revenue and other similar plans of insurance, the 
                expected market price of an agricultural commodity 
                shall be the actual market price of the agricultural 
                commodity, as determined by the Corporation.
                    ``(D) Cost of production and similar plans.--In the 
                case of cost of production or similar plans of 
                insurance, the expected market price of an agricultural 
                commodity shall be the projected cost of producing the 
                agricultural commodity, as determined by the 
                Corporation.''.

SEC. 3. FIXING ADEQUATE PREMIUM AMOUNTS FOR ADDITIONAL COVERAGE.

    Section 508(d)(2) of the Federal Crop Insurance Act (7 U.S.C. 
1508(d)(2)) is amended--
            (1) in subparagraph (B), by striking ``under all policies 
        with that level of coverage'' after ``anticipated losses''; and
            (2) by striking subparagraph (C) and inserting the 
        following new subparagraphs:
                    ``(C) In the case of additional coverage at greater 
                than or equal to 65 percent of the recorded or 
                appraised average yield indemnified at 100 percent of 
                the expected market price, or an equivalent coverage, 
                but less than 75 percent of the recorded or appraised 
                average yield indemnified at 100 percent of the 
                expected market price, or an equivalent coverage, the 
                amount of the premium shall--
                            ``(i) be sufficient to cover anticipated 
                        losses under all policies with that level of 
                        coverage and a reasonable reserve; and
                            ``(ii) include an amount for operating and 
                        administrative expenses, as determined by the 
                        Corporation, on an industry-wide basis as a 
                        percentage of the amount of the premium used to 
                        define loss ratio.
                    ``(D) In the case of additional coverage equal to 
                or greater than 75 percent of the recorded or appraised 
                average yield indemnified at 100 percent of the 
                expected market price, or an equivalent coverage, the 
                amount of the premium shall--
                            ``(i) be sufficient to cover anticipated 
                        losses under all policies with that level of 
                        coverage 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.''.

SEC. 4. PAYMENT OF PORTION OF CROP INSURANCE PREMIUM BY CORPORATION.

    (a) Payment Required.--Section 508(e) of the Federal Crop Insurance 
Act (7 U.S.C. 1508(e)) is amended--
            (1) by striking paragraph (1) and inserting the following 
        new paragraph:
            ``(1) In general.--
                    ``(A) Mandatory payments.--For the purpose of 
                encouraging the broadest possible participation of 
                producers in the crop insurance plans of insurance 
                authorized to be insured or reinsured under subsections 
                (b) and (c), the Corporation shall pay a part of the 
                premium in the amounts determined under this 
                subsection.
                    ``(B) Discretionary payments.--In the case of a 
                plan of insurance approved by the Corporation under 
                subsection (h), the Corporation may pay a part of the 
                premium in the amounts not to exceed the amounts 
                determined under this subsection.''; and
            (2) in paragraph (2), by striking subparagraphs (B) and (C) 
        and inserting the following new subparagraphs:
                    ``(B) In the case of additional coverage less than 
                65 percent of the recorded or appraised average yield 
                indemnified at 100 percent of the expected market 
                price, or an equivalent coverage, the amount shall be 
                equal to the sum of--
                            ``(i) 45 percent of the amount of the 
                        premium established under subsection (d)(2)(B) 
                        to satisfy the requirements of clause (i) of 
                        such subsection; and
                            ``(ii) the amount of operating and 
                        administrative expenses included under 
                        subsection (d)(2)(B)(ii).
                    ``(C) In the case of coverage at greater than or 
                equal to 65 percent of the recorded or appraised 
                average yield indemnified at 100 percent of the 
                expected market price, or an equivalent coverage, but 
                less than 75 percent of the recorded or appraised 
                average yield indemnified at 100 percent of the 
                expected market price, or an equivalent coverage, the 
                amount shall be equal to the sum of--
                            ``(i) 50 percent of the amount of the 
                        premium established under subsection (d)(2)(C) 
                        to satisfy the requirements of clause (i) of 
                        such subsection; and
                            ``(ii) the amount of operating and 
                        administrative expenses included under 
                        subsection (d)(2)(C)(ii).
                    ``(D) In the case of coverage equal to or greater 
                than 75 percent of the recorded or appraised average 
                yield indemnified at 100 percent of the expected market 
                price, or an equivalent coverage, the amount shall be 
                equal to the sum of--
                            ``(i) 55 percent of the amount of the 
                        premium established under subsection (d)(2)(D) 
                        to satisfy the requirements of clause (i) of 
                        such subsection for coverage at 75 percent of 
                        the recorded or appraised average yield 
                        indemnified at 100 percent of the expected 
                        market price; and
                            ``(ii) the amount of operating and 
                        administrative expenses included under 
                        subsection (d)(2)(D)(ii).''.
    (d) Conforming Amendment.--Section 508(h)(2) of the Federal Crop 
Insurance Act (7 U.S.C. 1508(h)(2)) is amended by striking the second 
sentence.

SEC. 5. EFFECT OF DISASTER DECLARATION ON DETERMINATION OF PRODUCER'S 
              ACTUAL PRODUCTION HISTORY.

    (a) Definition of Designated Disaster Area.--Section 502(b) of the 
Federal Crop Insurance Act (7 U.S.C. 1502(b)) is amended--
            (1) by redesignating paragraphs (6), (7), and (8) as 
        paragraphs (7), (8), and (9), respectively; and
            (2) by inserting after paragraph (5) the following new 
        paragraph:
            ``(6) Designated disaster area.--The term `designated 
        disaster area' means an area--
                    ``(A) covered by a Presidential declaration of 
                major disaster issued under section 401 of the Robert 
                T. Stafford Disaster Relief and Emergency Assistance 
                Act (42 U.S.C. 5170); or
                    ``(B) determined to be a disaster area by the 
                Secretary under subpart A of part 1945 of title 7, Code 
                of Federal Regulations.''.
    (b) Yield Determinations.--Section 508(g) of such Act (7 U.S.C. 
1508(g)) is amended by striking paragraph (3) and inserting the 
following new paragraph (3):
            ``(3) Exclusion of one or more crop years.--In establishing 
        the actual production history of a producer for a crop under 
        paragraph (2)(A) or using the producer's actual production 
        records for any other purpose under this subsection, the 
        Corporation shall exclude any crop year of the crop at the 
        producer's election if, at any time during the crop year, the 
        county in which the crop was grown (or an adjacent county) was 
        included in a designated disaster area declared as a result of 
        damaging weather.''.

SEC. 6. ASSIGNED YIELDS FOR NEWLY ACQUIRED LANDS AND NEW CROPS.

    Section 508(g)(2)(B) of the Federal Crop Insurance Act (7 U.S.C. 
1508(g)(2)(B)) is amended by adding at the end the following new 
sentence: ``However, if the lack of satisfactory yield evidence is the 
result of the recent acquisition of land by the producer, the 
conversion of noncrop land to production, or the conversion of cropland 
to a different crop, as determined by the Corporation, then at the 
election of the producer, the Corporation shall assign the producer a 
yield for that land that is equal to 100 percent of the average 
transitional yield for the commodity involved in the county in which 
the land is located.''.

SEC. 7. COST OF PRODUCTION RISK PROTECTION PILOT PROJECT.

    Section 508(h)(6) of the Federal Crop Insurance Act (7 U.S.C. 
1508(h)(6)) is amended--
            (1) in subparagraph (A), by striking ``, to the extent 
        practicable,'';
            (2) in subparagraph (B)(i), by striking ``1996 and 1997 
        crop years'' and inserting ``2000 through 2004 crop years''; 
        and
            (3) by striking subparagraph (C) and inserting the 
        following new subparagraph:
                    ``(C) Coverage level; determination of cost of 
                production.--A producer electing to participate in the 
                pilot project may select a coverage level not to exceed 
                90 percent of the applicable cost of production 
                determined by the Office of Risk Management for the 
                county or an area of the county in which the producer's 
                farm is located. The cost of production coverage 
                determined by the Office shall be based on cost of 
                production data prepared and published by the land-
                grant college or university for the State in which the 
                producer's farm is located.''.

SEC. 8. RATING METHODOLOGIES PILOT PROJECT.

    (a) In General.--Section 508(h) of the Federal Crop Insurance Act 
(7 U.S.C. 1508(h)) is amended by striking paragraph (8) and inserting 
the following new paragraph:
            ``(8) Rating methodologies pilot project.--Not later than 
        September 30, 2000, the Office of Risk Management shall--
                    ``(A) review the methodologies that are used to 
                rate plans of insurance under this title; and
                    ``(B) enter into a contract with a person in the 
                private sector to develop new methodologies for rating 
                plans of insurance under this title that take into 
                account the lower risk pool of--
                            ``(i) producers that elect not to 
                        participate in the Federal crop insurance 
                        program established under this title; and
                            ``(ii) producers that elect only to obtain 
                        catastrophic risk protection under subsection 
                        (b).''.
    (b) Conforming Amendment.--Section 507(c) of the Federal Crop 
Insurance Act (7 U.S.C. 1507(c)) is amended in the last sentence by 
striking ``Nothing'' and inserting ``Except as provided in section 
508(h)(8), nothing''.

SEC. 9. LIVESTOCK COVERAGE PILOT PROJECT.

    Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) 
is amended by adding at the end the following new paragraph:
            ``(11) Livestock coverage pilot project.--Notwithstanding 
        section 518, the Corporation shall carry out a pilot project in 
        a limited number of counties, to be selected by the 
        Corporation, under which a producer of livestock may elect to 
        receive federally reinsured coverage under this title.''.

SEC. 10. BOARD OF DIRECTORS OF CORPORATION.

    Section 505 of the Federal Crop Insurance Act (7 U.S.C. 1505) is 
amended by striking subsection (a) and inserting the following new 
subsection:
    ``(a) Board of Directors.--
            ``(1) In general.--The management of the Corporation shall 
        be vested in a Board subject to the general supervision of the 
        Secretary.
            ``(2) Composition.--The Board shall consist of--
                    ``(A) 2 members who are active agricultural 
                producers with or without crop insurance;
                    ``(B) 1 member who is active in the crop insurance 
                business;
                    ``(C) 1 member who is active in the reinsurance 
                business;
                    ``(D) the Under Secretary for Farm and Foreign 
                Agricultural Services;
                    ``(E) the Under Secretary for Rural Development; 
                and
                    ``(F) the Chief Economist of the Department of 
                Agriculture.
            ``(3) Appointment and terms of private sector members.--The 
        members of the Board described in subparagraphs (A), (B), and 
        (C) of paragraph (2)--
                    ``(A) shall be appointed by, and hold office at the 
                pleasure of, the Secretary;
                    ``(B) shall not be otherwise employed by the 
                Federal Government;
                    ``(C) shall be appointed to staggered 4-year terms, 
                as determined by the Secretary; and
                    ``(D) shall serve not more than 2 consecutive 
                terms.
            ``(4) Chairperson.--The Board shall select a member of the 
        Board described in subparagraph (A), (B), or (C) of paragraph 
        (2) to serve as Chairperson of the Board.''.