II

106TH CONGRESS

1ST SESSION S. 1108

To amend the Federal Crop Insurance Act to improve crop insurance coverage

and administration, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 24, 1999

Mr. COCHRAN (for himself, Mrs. LINCOLN, Mr. COVERDELL, Mr. SESSIONS,

Mr. CLELAND, Mr. HOLLINGS, Mr. SHELBY, Mr. ROBB, and Mr. HUTCHINSON) introduced the following bill; which was read twice and referred

to the Committee on Agriculture, Nutrition, and Forestry

A BILL

To amend the Federal Crop Insurance Act to improve crop

insurance coverage and administration, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Crop Insurance Equity Act of 1999’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—CROP INSURANCE COVERAGE
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Sec. 101. Prevented planting.

Sec. 102. Alternative rating methodologies.

Sec. 103. Quality adjustment.

Sec. 104. Low-risk producer pilot program.

Sec. 105. Catastrophic risk protection.

Sec. 106. Loss adjustment.

Sec. 107. Cost of production plans of insurance.

Sec. 108. Discounts.

Sec. 109. Adjustments to subsidy levels.

Sec. 110. Sales closing dates.

Sec. 111. Assigned yields.

Sec. 112. Actual production history adjustment for disasters.

Sec. 113. Payment of portion of premium.

Sec. 114. Limitation on premiums included in underwriting gains.

TITLE II—ADMINISTRATION

Sec. 201. Board of Directors of Corporation.

Sec. 202. Office of Risk Management.

Sec. 203. Office of Private Sector Partnership.

Sec. 204. Penalties for false information.

Sec. 205. Regulations.

Sec. 206. Program compliance.

Sec. 207. Payments by cooperative associations.

Sec. 208. Limitation on double insurance.

Sec. 209. Consultation with State committees of Farm Service Agency.

Sec. 210. Records and reporting.

Sec. 211. Fees for plans of insurance.

Sec. 212. Flexible subsidy pilot program.

Sec. 213. Reinsurance agreements.

Sec. 214. Funding.

1 TITLE I—CROP INSURANCE

2 COVERAGE

3 SEC. 101. PREVENTED PLANTING.

4 Section 508(a) of the Federal Crop Insurance Act (7

5 U.S.C. 1508(a)) is amended by adding at the end the fol6 lowing:

7 ‘‘(7) PREVENTED PLANTING.—

8 ‘‘(A) IN GENERAL.—The Corporation shall

9 offer coverage for prevented planting of an agri10 cultural commodity only as an endorsement to

11 a policy.
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1 ‘‘(B) EQUAL COVERAGE.—For each agri2 cultural commodity for which prevented plant3 ing coverage is available, the Corporation shall

4 offer an equal level of prevented planting cov5 erage.

6 ‘‘(C) PLANTING OF SUBSTITUTE AGRICUL7 TURAL COMMODITIES.—In the case of prevented

8 planting coverage that is offered under this

9 paragraph, the Corporation shall allow pro10 ducers that have the coverage, and that are eli11 gible to receive a prevented planting indemnity,

12 to plant an agricultural commodity, other than

13 the commodity covered by the prevented plant14 ing coverage, on the acreage that the producer

15 has been prevented from planting to the origi16 nal agricultural commodity.

17 ‘‘(D) INELIGIBILITY FOR COVERAGE.—A

18 substitute agricultural commodity described in

19 subparagraph (C) shall not be eligible for cov20 erage under a plan of insurance under this

21 title.’’.

22 SEC. 102. ALTERNATIVE RATING METHODOLOGIES.

23 Section 508(a) of the Federal Crop Insurance Act (7

24 U.S.C. 1508(a)) (as amended by section 101) is amended

25 by adding at the end the following:
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1 ‘‘(8) ALTERNATIVE RATING METHODOLOGIES.—

2 ‘‘(A) IN GENERAL.—Not later than Sep3 tember 30, 2000, the Corporation shall develop

4 and implement alternative methodologies for

5 rating plans of insurance under subsections (b)

6 and (c), and rates for the plans of insurance,

7 that take into account—

8 ‘‘(i) producers that elect not to par9 ticipate in the Federal crop insurance pro10 gram established under this title; and

11 ‘‘(ii) producers that elect only to ob12 tain catastrophic risk protection under

13 subsection (b).

14 ‘‘(B) REVIEW AND ADJUSTMENT.—Effec15 tive for the 2001 and subsequent crop years,

16 the Corporation shall review and make any nec17 essary adjustments to methodologies and rates

18 established under this paragraph, based on (as

19 determined by the Corporation)—

20 ‘‘(i) expected future losses, with ap21 propriate adjustment of any historical data

22 used in rating to remove—

23 ‘‘(I) the impact of adverse selec24 tion; and
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1 ‘‘(II) data that no longer reflects

2 the productive capacity of the area;

3 ‘‘(ii) program errors; and

4 ‘‘(iii) any other factor that can cause

5 errors in methodologies and rates.

6 ‘‘(C) IMPLEMENTATION.—In developing,

7 implementing, and adjusting rating methodolo8 gies and rates under this paragraph, the Cor9 poration shall—

10 ‘‘(i) use methodologies for rating

11 plans of insurance under subsections (b)

12 and (c) that result in the lowest premiums

13 payable by producers of an agricultural

14 commodity in a geographic area, as deter15 mined by the Corporation; and

16 ‘‘(ii) update the manner in which

17 rates are applied at the individual producer

18 level, as determined by the Corporation.

19 ‘‘(D) PRIORITY.—In developing, imple20 menting, and adjusting alternative methodolo21 gies for rating plans of insurance under sub22 sections (b) and (c) for agricultural commod23 ities, the Corporation shall provide the highest

24 priority to agricultural commodities with (as de25 termined by the Corporation)—
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1 ‘‘(i) the largest average acreage; and

2 ‘‘(ii) the lowest percentage of pro3 ducers that purchased coverage under sub4 section (c).’’.

5 SEC. 103. QUALITY ADJUSTMENT.

6 Section 508(a) of the Federal Crop Insurance Act (7

7 U.S.C. 1508(a)) (as amended by section 102) is amended

8 by adding at the end the following:

9 ‘‘(9) QUALITY ADJUSTMENT POLICIES.—The

10 Corporation shall offer, only as an endorsement to a

11 policy, coverage that permits a reduction in the

12 quantity of production of an agricultural commodity

13 produced during a crop year, or any similar adjust14 ment, that results from the agricultural commodity

15 not meeting the quality standards established in the

16 policy.’’.

17 SEC. 104. LOW-RISK PRODUCER PILOT PROGRAM.

18 Section 508(a) of the Federal Crop Insurance Act (7

19 U.S.C. 1508(a)) (as amended by section 103) is amended

20 by adding at the end the following:

21 ‘‘(10) LOW-RISK PRODUCER PILOT PROGRAM.—

22 ‘‘(A) IN GENERAL.—For each of the 2000

23 through 2003 crop years, the Corporation shall

24 carry out a pilot program that is designed to

25 encourage participation in the Federal crop in-
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1 surance program established under this title by

2 producers who rarely suffer insurable losses.

3 ‘‘(B) SCOPE.—The Corporation shall carry

4 out the pilot program in at least 40 counties

5 that are determined by the Corporation to be

6 adequate to provide a comprehensive evaluation

7 of the feasibility, effectiveness, and demand

8 among producers for a low-risk producer pro9 gram.

10 ‘‘(C) PREMIUM REFUND.—Notwith11 standing section 506(o) and subsection (d)(1),

12 if a producer participating in the pilot program

13 incurs a yield loss in any crop year that is more

14 than 10 percent but not more than 35 percent

15 of the yield determined under subsection (g),

16 the Corporation shall—

17 ‘‘(i) refund all or part, as determined

18 by the Corporation, of the premium that

19 was paid by the producer for a plan of in20 surance for the crop that incurred the

21 qualifying loss; or

22 ‘‘(ii) apply the amount to be refunded

23 under clause (i) against the premium pay24 able by the producer for equivalent cov25 erage for the subsequent crop year.
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1 ‘‘(D) REGULATIONS.—The Corporation

2 shall promulgate such regulations as are nec3 essary to carry out the pilot program.’’.

4 SEC. 105. CATASTROPHIC RISK PROTECTION.

5 Section 508(b)(2)(A) of the Federal Crop Insurance

6 Act (7 U.S.C. 1508(b)(2)(A)) is amended—

7 (1) in clause (i), by striking ‘‘and’’ at the end;

8 (2) in clause (ii)—

9 (A) by striking ‘‘each of the 1999 and sub10 sequent crop years’’ and inserting ‘‘the 1999

11 crop year’’; and

12 (B) by striking the period at the end and

13 inserting ‘‘; and’’; and

14 (3) by adding at the end the following:

15 ‘‘(iii) in the case of each of the 2000

16 and subsequent crop years, catastrophic

17 risk protection shall offer a producer cov18 erage for a 60 percent loss in yield, on an

19 individual yield or area yield basis, indem20 nified at 70 percent of the expected market

21 price, or a comparable coverage (as deter22 mined by the Corporation).’’.

23 SEC. 106. LOSS ADJUSTMENT.

24 Section 508(b)(11) of the Federal Crop Insurance

25 Act (7 U.S.C. 1508(b)(11)) is amended by striking ‘‘11
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1 percent’’ and all that follows through the end of the para2 graph and inserting ‘‘$50 for each claim that is adjusted

3 under this subsection.’’.

4 SEC. 107. COST OF PRODUCTION PLANS OF INSURANCE.

5 (a) IN GENERAL.—Section 508(c) of the Federal

6 Crop Insurance Act (7 U.S.C. 1508(c)) is amended by

7 striking paragraph (5) and inserting the following:

8 ‘‘(5) EXPECTED MARKET PRICE.—

9 ‘‘(A) IN GENERAL.—For the purposes of

10 this title, the Corporation shall establish or ap11 prove the price level (referred to in this title as

12 the ‘expected market price’) of each agricultural

13 commodity for which insurance is offered.

14 ‘‘(B) AMOUNT.—The expected market

15 price of an agricultural commodity—

16 ‘‘(i) except as otherwise provided in

17 this subparagraph, shall be not less than

18 the projected market price of the agricul19 tural commodity, as determined by the

20 Corporation;

21 ‘‘(ii) may be based on the actual mar22 ket price of the agricultural commodity at

23 the time of harvest, as determined by the

24 Corporation; or
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1 ‘‘(iii) in the case of cost of production

2 or similar plans of insurance, shall be the

3 projected cost of producing the agricultural

4 commodity, as determined by the Corpora5 tion.’’.

6 (b) CONFORMING AMENDMENTS.—Section 508(h) of

7 the Federal Crop Insurance Act (7 U.S.C. 1508(h)) is

8 amended—

9 (1) by striking paragraph (9); and

10 (2) by redesignating paragraph (10) as para11 graph (9).

12 SEC. 108. DISCOUNTS.

13 Section 508(d) of the Federal Crop Insurance Act (7

14 U.S.C. 1508(d)) is amended by adding at the end the fol15 lowing:

16 ‘‘(3) DISCOUNTS.—

17 ‘‘(A) IN GENERAL.—Notwithstanding sec18 tion 506(o) and paragraph (1), the Corporation

19 shall provide a discount in the premium payable

20 by the producer for a plan of insurance under

21 subsections (b) and (c) for an agricultural com22 modity in a county if the producer—

23 ‘‘(i) during each of the preceding 5

24 consecutive crop years—
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1 ‘‘(I) has obtained insurance

2 under this title for the agricultural

3 commodity; and

4 ‘‘(II) has not filed any claim

5 under the insurance;

6 ‘‘(ii) if offered by the Corporation,

7 elects to have unit coverage that reduces

8 the risk of loss below the risk of loss that

9 is expected for a unit comprised of all in10 surable acreage of the agricultural com11 modity in the county; or

12 ‘‘(iii) implements innovative farming

13 management practices that reduce the risk

14 of insurable loss, as determined by the

15 Corporation.

16 ‘‘(B) AMOUNT.—

17 ‘‘(i) IN GENERAL.—Subject to clause

18 (ii), the amount of the discount provided to

19 a producer for a crop year under subpara20 graph (A) shall be determined by the Cor21 poration.

22 ‘‘(ii) NO CLAIM DISCOUNT.—The

23 amount of the discount provided to a pro24 ducer for a crop year under subparagraph

25 (A)(i) shall increase for each additional
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1 consecutive crop year for which the pro2 ducer is eligible for a discount under sub3 paragraph (A)(i).’’.

4 SEC. 109. ADJUSTMENTS TO SUBSIDY LEVELS.

5 (a) IN GENERAL.—Section 508(e)(2) of the Federal

6 Crop Insurance Act (7 U.S.C. 1508(e)(2)) is amended by

7 striking subparagraphs (B) and (C) and inserting the fol8 lowing:

9 ‘‘(B) In the case of additional coverage

10 below 65 percent of the recorded or appraised

11 average yield indemnified at 100 percent of the

12 expected market price, or an equivalent cov13 erage, the amount shall be equal to the sum

14 of—

15 ‘‘(i) 50 percent of the amount of the

16 premium established under subsection

17 (d)(2)(B)(i); and

18 ‘‘(ii) the amount of operating and ad19 ministrative expenses determined under

20 subsection (d)(2)(B)(ii).

21 ‘‘(C) In the case of additional coverage

22 equal to or greater than 65 percent of the re23 corded or appraised average yield indemnified

24 at 100 percent of the expected market price, or
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1 an equivalent coverage, the amount shall be

2 equal to the sum of—

3 ‘‘(i) 50 percent of the amount of the

4 premium established under subsection

5 (d)(2)(C)(i); and

6 ‘‘(ii) the amount of operating and ad7 ministrative expenses determined under

8 subsection (d)(2)(C)(ii).’’.

9 (b) APPLICATION.—The amendment made by sub10 section (a) applies beginning with the 2000 crop year.

11 SEC. 110. SALES CLOSING DATES.

12 Section 508(f)(2) of the Federal Crop Insurance Act

13 (7 U.S.C. 1508(f)(2)) is amended by striking the last sen14 tence.

15 SEC. 111. ASSIGNED YIELDS.

16 Section 508(g)(2)(B) of the Federal Crop Insurance

17 Act (7 U.S.C. 1508(g)(2)(B)) is amended—

18 (1) by striking ‘‘assigned a yield’’ and inserting

19 ‘‘assigned—

20 ‘‘(i) a yield’’;

21 (2) by striking the period at the end and insert22 ing ‘‘; or’’; and

23 (3) by adding at the end the following:

24 ‘‘(ii) a yield determined by the Cor25 poration, in the case of—
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1 ‘‘(I) a person that has not been

2 actively engaged in farming for a

3 share of the production of the insured

4 crop for more than 2 crop years, as

5 determined by the Secretary;

6 ‘‘(II) a producer that produces

7 an agricultural commodity on land

8 that has not been farmed by the pro9 ducer; and

10 ‘‘(III) a producer that rotates a

11 crop produced on a farm to a crop

12 that has not been produced on the

13 farm.’’.

14 SEC. 112. ACTUAL PRODUCTION HISTORY ADJUSTMENT

15 FOR DISASTERS.

16 Section 508(g)(2) of the Federal Crop Insurance Act

17 (7 U.S.C. 1508(g)(2)) is amended by adding at the end

18 the following:

19 ‘‘(E) SUBSTITUTION OF TRANSITIONAL

20 YIELD.—Effective beginning with the 2000 crop

21 year, if the producer’s yield of an agricultural

22 commodity in any crop year is less than 85 per23 cent of the transitional yield established by the

24 Corporation for the agricultural commodity, the

25 Corporation shall, at the option of the producer,
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1 consider the producer’s yield for the crop year

2 to be 85 percent of the transitional yield for

3 the purpose of calculating the actual production

4 history for a crop of an agricultural commodity

5 under subparagraph (A).

6 ‘‘(F) CORPORATION’S SHARE OF COSTS.—

7 In the case of any yield substitution under sub8 paragraph (E), in addition to any other author9 ity to pay any portion of the premium and in10 demnity, the Corporation shall pay—

11 ‘‘(i) the portion of the premium or in12 demnity that represents the increase in

13 premium associated with the substitution

14 of the transitional yield under subpara15 graph (E);

16 ‘‘(ii) all additional indemnities associ17 ated with the substitution; and

18 ‘‘(iii) any amounts that result from

19 the difference in the administrative and op20 erating expenses owed to an approved in21 surance provider as the result of the sub22 stitution.’’.

23 SEC. 113. PAYMENT OF PORTION OF PREMIUM.

24 Section 508(h)(2) of the Federal Crop Insurance Act

25 (7 U.S.C. 1508(h)(2)) is amended in the second sentence
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1 by inserting before the period at the end the following:

2 ‘‘, except that the Corporation shall not pay any portion

3 of the premium for any plan of insurance that offers cov4 erage for losses associated with a change in price’’.

5 SEC. 114. LIMITATION ON PREMIUMS INCLUDED IN UNDER6 WRITING GAINS.

7 Section 508(k) of the Federal Crop Insurance Act (7

8 U.S.C. 1508(k)) is amended by adding at the end the fol9 lowing:

10 ‘‘(8) LIMITATION ON PREMIUMS INCLUDED IN

11 UNDERWRITING GAINS.—Notwithstanding any other

12 provision of law, the reinsurance agreements of the

13 Corporation shall require that not more than 50 per14 cent of any premium for catastrophic risk protection

15 under subsection (b) be included in the calculation

16 of gains or losses of an approved insurance provider

17 unless the loss ratio for catastrophic risk protection

18 exceeds 1.0.’’.

19 TITLE II—ADMINISTRATION

20 SEC. 201. BOARD OF DIRECTORS OF CORPORATION.

21 Section 505 of the Federal Crop Insurance Act (7

22 U.S.C. 1505) is amended by striking subsection (a) and

23 inserting the following:

24 ‘‘(a) BOARD OF DIRECTORS.—
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1 ‘‘(1) IN GENERAL.—The management of the

2 Corporation shall be vested in a Board subject to the

3 general supervision of the Secretary.

4 ‘‘(2) COMPOSITION.—The Board shall consist

5 of—

6 ‘‘(A) 4 members who are active agricul7 tural producers with or without crop insurance,

8 with 1 member appointed from each of the 4 re9 gions of the United States (as determined by

10 the Secretary);

11 ‘‘(B) 1 member who is active in the crop

12 insurance business;

13 ‘‘(C) 1 member who is active in the rein14 surance business;

15 ‘‘(D) the Under Secretary for Farm and

16 Foreign Agricultural Services;

17 ‘‘(E) the Under Secretary for Rural Devel18 opment; and

19 ‘‘(F) the Chief Economist of the Depart20 ment of Agriculture.

21 ‘‘(3) APPOINTMENT AND TERMS OF PRIVATE

22 SECTOR MEMBERS.—The members of the Board de23 scribed in subparagraphs (A), (B), and (C) of para24 graph (2)—
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1 ‘‘(A) shall be appointed by, and hold office

2 at the pleasure of, the Secretary;

3 ‘‘(B) shall not be otherwise employed by

4 the Federal Government;

5 ‘‘(C) shall be appointed to staggered 4-year

6 terms, as determined by the Secretary; and

7 ‘‘(D) shall serve not more than 2 consecu8 tive terms.

9 ‘‘(4) CHAIRPERSON.—The Board shall select a

10 member of the Board described in subparagraph

11 (A), (B), or (C) of paragraph (2) to serve as Chair12 person of the Board.

13 ‘‘(5) STAFF.—The Board shall employ or con14 tract with 1 or more individuals who are knowledge15 able and experienced in quantitative mathematics

16 and actuarial rating to assist the Board in reviewing

17 and approving policies and materials with respect to

18 plans of insurance authorized or submitted under

19 section 508.’’.

20 SEC. 202. OFFICE OF RISK MANAGEMENT.

21 (a) ESTABLISHMENT.—Section 226A(a) of the De22 partment of Agriculture Reorganization Act of 1994 (7

23 U.S.C. 6933(a)) is amended by striking ‘‘independent Of24 fice of Risk Management’’ and inserting ‘‘Office of Risk

25 Management, which shall be under the direction of the
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1 Board of Directors of the Federal Crop Insurance Cor2 poration’’.

3 (b) FUNCTIONS.—Section 226A(b) of the Depart4 ment of Agriculture Reorganization Act of 1994 (7 U.S.C.

5 6933(b)) is amended by striking paragraph (1) and insert6 ing the following:

7 ‘‘(1) Assistance to the Board in developing, re8 viewing, and recommending plans of insurance under

9 section 508(a)(7) of the Federal Crop Insurance Act

10 (7 U.S.C. 1508(a)(7)) to ensure that each agricul11 tural commodity (including each new or speciality

12 crop) is adequately served by plans of insurance.’’.

13 SEC. 203. OFFICE OF PRIVATE SECTOR PARTNERSHIP.

14 The Federal Crop Insurance Act is amended by in15 serting after section 507 (7 U.S.C. 1507) the following:

16 ‘‘SEC. 507A. OFFICE OF PRIVATE SECTOR PARTNERSHIP.

17 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab18 lish and maintain in the Department an Office of Private

19 Sector Partnership, which shall be under the direction of

20 the Board.

21 ‘‘(b) FUNCTIONS.—The Office shall—

22 ‘‘(1) provide at least monthly reports to the

23 Board on crop insurance issues, which shall be based

24 on comments received from producers, approved in-
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1 surance providers, and other sources that the Office

2 considers appropriate;

3 ‘‘(2)(A) review policies and materials with re4 spect to—

5 ‘‘(i) subsidized plans of insurance author6 ized under section 508; and

7 ‘‘(ii) unsubsidized plans of insurance sub8 mitted to the Board under section 508(h); and

9 ‘‘(B) make recommendations to the Board with

10 respect to approval of the policies and materials;

11 ‘‘(3) administer the reinsurance functions de12 scribed in section 508(k) on behalf of the Corpora13 tion;

14 ‘‘(4) review and make recommendations to the

15 Board with respect to methodologies for rating plans

16 of insurance under this title; and

17 ‘‘(5) perform such other functions as the Board

18 considers appropriate.

19 ‘‘(c) ADMINISTRATOR.—The Office shall be headed

20 by an Administrator who shall be appointed by the Sec21 retary.

22 ‘‘(d) STAFF.—The Administrator shall appoint such

23 employees pursuant to title 5, United States Code, as are

24 necessary for the administration of the Office, including
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1 employees who have commercial reinsurance and actuarial

2 experience.’’.

3 SEC. 204. PENALTIES FOR FALSE INFORMATION.

4 Section 506(n)(1) of the Federal Crop Insurance Act

5 (7 U.S.C. 1506(n)(1)) is amended—

6 (1) in subparagraph (A), by inserting ‘‘for each

7 claim’’ after ‘‘$10,000’’; and

8 (2) in subparagraph (B), by striking ‘‘non9 insured assistance’’ and inserting ‘‘any loan, pay10 ment, or benefit described in section 1211 of the

11 Food Security Act of 1985 (16 U.S.C. 3811)’’.

12 SEC. 205. REGULATIONS.

13 Section 506(p) of the Federal Crop Insurance Act (7

14 U.S.C. 1506(p)) is amended—

15 (1) by striking ‘‘The Secretary’’ and inserting

16 the following:

17 ‘‘(1) IN GENERAL.—The Secretary’’; and

18 (2) by adding at the end the following:

19 ‘‘(2) TERMS OF INSURANCE.—

20 ‘‘(A) IN GENERAL.—Regulations issued by

21 the Secretary and the Corporation specifying

22 the terms of insurance under section 508 shall

23 be issued without regard to—
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1 ‘‘(i) the notice and comment provi2 sions of section 553 of title 5, United

3 States Code;

4 ‘‘(ii) the Statement of Policy of the

5 Secretary of Agriculture effective July 24,

6 1971 (36 Fed. Reg. 13804), relating to no7 tices of proposed rulemaking and public

8 participation in rulemaking; and

9 ‘‘(iii) chapter 35 of title 44, United

10 States Code (commonly known as the ‘Pa11 perwork Reduction Act’).

12 ‘‘(B) CONGRESSIONAL REVIEW OF AGENCY

13 RULEMAKING.—In carrying out this paragraph,

14 the Secretary shall use the authority provided

15 under section 808 of title 5, United States

16 Code.’’.

17 SEC. 206. PROGRAM COMPLIANCE.

18 Section 506(q) of the Federal Crop Insurance Act (7

19 U.S.C. 1506(q)) is amended—

20 (1) by redesignating paragraph (2) as para21 graph (6); and

22 (2) by striking paragraph (1) and inserting the

23 following:

24 ‘‘(1) IN GENERAL.—Not later than 180 days

25 after the date of enactment of the Crop Insurance
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1 Equity Act of 1999, the Corporation shall establish

2 a program for monitoring compliance with this title

3 by all Federal crop insurance participants, including

4 producers, agents, adjusters, and approved insurance

5 providers.

6 ‘‘(2) CONSULTATION.—The Corporation shall

7 consult with approved insurance providers in devel8 oping the compliance program.

9 ‘‘(3) OVERSIGHT OF LOSS ADJUSTMENT.—As

10 part of the compliance program, the Corporation

11 shall provide for a mechanism to independently re12 view the performance of loss adjusters.

13 ‘‘(4) PROGRAM REVIEW.—Not later than 90

14 days after the date of enactment of the Crop Insur15 ance Equity Act of 1999, the Corporation shall sub16 mit to the Board and the Office of Private Sector

17 Partnership for their review the proposed compliance

18 program under this subsection.

19 ‘‘(5) ANNUAL REPORTS.—Beginning with fiscal

20 year 2001, the Corporation shall submit an annual

21 report to the Committee on Agriculture of the House

22 of Representatives, the Committee on Agriculture,

23 Nutrition, and Forestry of the Senate, the Board,

24 and the Office of Private Sector Partnership con25 cerning the compliance program established under
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1 this subsection, including any recommendations for

2 legislative or administrative changes that could fur3 ther improve program compliance.’’.

4 SEC. 207. PAYMENTS BY COOPERATIVE ASSOCIATIONS.

5 Section 507(e) of the Federal Crop Insurance Act (7

6 U.S.C. 1507(e)) is amended—

7 (1) by striking ‘‘(e) In’’ and inserting the fol8 lowing:

9 ‘‘(e) COOPERATIVE ASSOCIATIONS.—

10 ‘‘(1) IN GENERAL.—In’’; and

11 (2) by adding at the end the following:

12 ‘‘(2) PAYMENTS.—A cooperative association de13 scribed in paragraph (1) that is licensed and acts as

14 an agent or approved insurance provider with re15 spect to any plan of insurance offered under this

16 title may provide to the members of the association

17 all or part of any funds received from the Corpora18 tion under this title.’’.

19 SEC. 208. LIMITATION ON DOUBLE INSURANCE.

20 Section 508(a) of the Federal Crop Insurance Act (7

21 U.S.C. 1508(a)) (as amended by section 104) is amended

22 by adding at the end the following:

23 ‘‘(11) LIMITATION ON DOUBLE INSURANCE.—

24 The Corporation may offer plans of insurance or re-
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1 insurance for only 1 agricultural commodity on spe2 cific acreage during a crop year, unless—

3 ‘‘(A) there is an established practice of

4 double-cropping in an area, as determined by

5 the Corporation;

6 ‘‘(B) the additional plan of insurance is of7 fered with respect to an agricultural commodity

8 that is customarily double-cropped in the area;

9 and

10 ‘‘(C) the producer has a history of double

11 cropping or the acreage has historically been

12 double-cropped.’’.

13 SEC. 209. CONSULTATION WITH STATE COMMITTEES OF

14 FARM SERVICE AGENCY.

15 Section 508(a) of the Federal Crop Insurance Act (7

16 U.S.C. 1508(a)) (as amended by section 208) is amended

17 by adding at the end the following:

18 ‘‘(12) CONSULTATION WITH STATE COMMIT19 TEES OF FARM SERVICE AGENCY.—The Corporation

20 shall establish a mechanism under which State com21 mittees of the Farm Service Agency are consulted

22 concerning policies of insurance offered in a State

23 under this title.’’.
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1 SEC. 210. RECORDS AND REPORTING.

2 (a) CATASTROPHIC RISK PROTECTION.—Section

3 508(f)(3)(A) of the Federal Crop Insurance Act (7 U.S.C.

4 1508(f)(3)(A)) is amended by striking ‘‘provide, to the ex5 tent required by the Corporation,’’ and inserting ‘‘to the

6 extent required by the Corporation, provide to the Sec7 retary, acting through the Farm Service Agency,’’.

8 (b) NONINSURED CROP DISASTER ASSISTANCE PRO9 GRAM.—Section 196(b) of the Agricultural Market Transi10 tion Act (7 U.S.C. 7333(b)) is amended—

11 (1) by striking paragraph (2) and inserting the

12 following:

13 ‘‘(2) RECORDS.—To be eligible for assistance

14 under this section, a producer shall provide annually

15 to the Secretary, acting through the Farm Service

16 Agency, records of crop acreage, acreage yields, and

17 production for each eligible crop.’’; and

18 (2) in paragraph (3), by inserting ‘‘annual’’

19 after ‘‘shall provide’’.

20 SEC. 211. FEES FOR PLANS OF INSURANCE.

21 Section 508(h)(5) of the Federal Crop Insurance Act

22 (7 U.S.C. 1508(h)(5))) is amended—

23 (1) by striking ‘‘Any policy’’ and inserting the

24 following:

25 ‘‘(A) IN GENERAL.—Any policy’’; and

26 (2) by adding at the end the following:
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1 ‘‘(B) FEES FOR NEW PLANS OF INSUR2 ANCE.—

3 ‘‘(i) IN GENERAL.—If an approved in4 surance provider elects to sell a plan of in5 surance that was developed by another ap6 proved insurance provider after the date of

7 enactment of this subparagraph and the

8 plan of insurance offered coverage that was

9 not available for any crop at the time the

10 plan of insurance was approved by the

11 Board (as determined by the Corporation),

12 the approved insurance provider that devel13 oped the plan of insurance shall have the

14 right to receive a fee from the approved in15 surance provider that elects to sell the plan

16 of insurance.

17 ‘‘(ii) AMOUNT.—

18 ‘‘(I) IN GENERAL.—Subject to

19 subclause (II), the amount of the fee

20 that is payable by an approved insur21 ance provider for a plan of insurance

22 under clause (i) shall be an amount

23 that is—
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1 ‘‘(aa) determined by the ap2 proved insurance provider that

3 developed the plan; and

4 ‘‘(bb) approved by the

5 Board.

6 ‘‘(II) APPROVAL.—The Board

7 shall not approve the amount of a fee

8 under clause (i) if the amount of the

9 fee unnecessarily inhibits the use of

10 the plan of insurance, as determined

11 by the Board.

12 ‘‘(C) PAYMENTS.—The Corporation shall

13 annually—

14 ‘‘(i) collect from an approved insur15 ance provider the amount of any fees that

16 are payable by the approved insurance pro17 vider under subparagraph (B); and

18 ‘‘(ii) credit any fees that are payable

19 to an approved insurance provider under

20 subparagraph (B).’’.

21 SEC. 212. FLEXIBLE SUBSIDY PILOT PROGRAM.

22 Section 508(h) of the Federal Crop Insurance Act (7

23 U.S.C. 1508(h)) is amended by adding at the end the fol24 lowing:
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1 ‘‘(11) FLEXIBLE SUBSIDY PILOT PROGRAM.—

2 For each of the 2000 through 2002 crop years, the

3 Corporation shall carry out a pilot program under

4 which flexible subsidies are provided under this title

5 to encourage private sector innovation through ex6 clusive marketing rights and premium rate competi7 tion.’’.

8 SEC. 213. REINSURANCE AGREEMENTS.

9 Section 508(k) of the Federal Crop Insurance Act (7

10 U.S.C. 1508(k)) is amended by striking paragraph (3) and

11 inserting the following:

12 ‘‘(3) REINSURANCE AGREEMENTS.—

13 ‘‘(A) SHARE OF RISK.—Each reinsurance

14 agreement of the Corporation with a reinsured

15 company shall require the reinsured company to

16 bear a sufficient share of any potential loss

17 under the agreement so as to ensure that the

18 reinsured company will sell and service policies

19 of insurance in a sound and prudent manner,

20 taking into consideration the financial condition

21 of the reinsured company and the availability of

22 private reinsurance.

23 ‘‘(B) COMPLIANCE.—To promote program

24 compliance and integrity, the Corporation, after
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1 notice and an opportunity for a hearing on the

2 record—

3 ‘‘(i)(I) shall assess civil fines in an

4 amount not to exceed $10,000 per viola5 tion against agents, loss adjusters, and ap6 proved insurance providers that are deter7 mined by the Corporation to have recur8 ring compliance problems; and

9 ‘‘(II) may deposit any civil fines col10 lected under subclause (I) in the insurance

11 fund established under section 516(c); and

12 ‘‘(ii) shall disqualify the agents, loss

13 adjusters, and approved insurance pro14 viders described in clause (i)(I) from par15 ticipation in the Federal crop insurance

16 program for a period not to exceed 5 years.

17 ‘‘(C) REVIEW OF AGREEMENTS.—As soon

18 as practicable after the date of enactment of

19 this subparagraph and regularly thereafter, in

20 consultation with the Office of Private Sector

21 Partnership, the Corporation shall review the

22 Standard Reinsurance Agreement issued by the

23 Corporation to ensure that the allocation of risk

24 between the Corporation and the reinsured
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1 companies is equitable, as determined by the

2 Corporation.’’.

3 SEC. 214. FUNDING.

4 Section 516 of the Federal Crop Insurance Act (7

5 U.S.C. 1516) is amended—

6 (1) in subsection (a)(2)—

7 (A) in subparagraph (A), by striking

8 ‘‘and’’ at the end;

9 (B) in subparagraph (B), by striking the

10 period at the end and inserting ‘‘; and’’; and

11 (C) by adding at the end the following:

12 ‘‘(C) salaries and expenses of the Office of

13 Private Sector Partnership.’’;

14 (2) in subsection (b)(1)—

15 (A) in subparagraph (B), by striking ‘‘;

16 and’’ and inserting a semicolon;

17 (B) in subparagraph (C), by striking the

18 period at the end and inserting a semicolon;

19 and

20 (C) by adding at the end the following:

21 ‘‘(D) salaries and expenses of the Office of

22 Private Sector Partnership, but not to exceed

23 $5,000,000 for each fiscal year;

24 ‘‘(E) administrative expenses of collecting

25 information under section 508(f)(3); and
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1 ‘‘(F) payment of fees in accordance with

2 section 508(h)(5)(B).’’; and

3 (3) in subsection (c)(1), by inserting ‘‘, fees

4 under section 508(h)(5)(B), civil fines under section

5 508(k)(3)(B)(i)(II),’’ after ‘‘premium income’’.

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