II

106TH CONGRESS

1ST SESSION S. 1401

To amend the Federal Crop Insurance Act to promote the development

and use of affordable crop insurance policies designed to meet the specific

needs of producers of specialty crops, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 20, 1999

Mr. GRAHAM (for himself, Mr. MACK, Mrs. BOXER, Mrs. FEINSTEIN, and Mr.

BINGAMAN) 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 promote the

development and use of affordable crop insurance policies

designed to meet the specific needs of producers of specialty crops, 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.

4 This Act may be cited as the ‘‘Specialty Crop Insur5 ance Act of 1999’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—Congress finds that—
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1 (1)(A) crop insurance policies under the Fed2 eral crop insurance program must be developed

3 through a streamlined and simplified process to

4 meet the specific needs of producers of specialty

5 crops, while providing sufficient and affordable crop

6 insurance coverage; and

7 (B) current crop insurance policies available for

8 specialty crops, which the Risk Management Agency

9 of the Department of Agriculture has based on the

10 needs of producers of program crops, do not cover

11 the unique characteristics associated with the plant12 ing, growing, and harvesting of specialty crops;

13 (2) the types of crop insurance policies needed

14 for the wide variety of specialty crops are not suffi15 cient and are not being developed quickly enough to

16 meet producers’ needs;

17 (3) current application of the noninsured crop

18 disaster assistance program under section 196 of the

19 Federal Agriculture Improvement and Reform Act of

20 1996 (7 U.S.C. 7333) to specialty crops has not

21 been sufficient to address disastrous situations;

22 (4) the Federal crop insurance program is one

23 of the few programs available to specialty crop pro24 ducers that directly provide incentives and risk man25 agement tools, and therefore benefit specialty crops;
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1 (5)(A) the current contribution of specialty

2 crops to the actuarial soundness of the Federal crop

3 insurance program is positive;

4 (B) despite the high market value of specialty

5 crops, the average loss ratio for specialty crops (as

6 calculated by dividing claims payments by total pre7 miums) from the time that the specialty crop insur8 ance was offered through 1998 was reported by the

9 General Accounting Office to be .99; and

10 (C) the average loss ratio for specialty crops is

11 less than the average loss ratio for nonspecialty

12 crops of 1.12;

13 (6)(A) specialty crops represent an important

14 segment to United States agriculture and the United

15 States economy as a whole; and

16 (B) the National Agricultural Statistics Service

17 of the Department of Agriculture reported in the

18 1997 Census of Agriculture that the total value of

19 fruits, nuts, berries, tobacco, nursery and green20 house vegetables, melons, and sweet corn rep21 resented 36 percent, or $98,000,000,000, of the

22 total value of United States crops;

23 (7) involvement of trade associations and co24 operatives in group purchasing will expand coverage,
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1 educate growers, spread risk, and increase overall

2 program participation; and

3 (8)(A) the Federal Agriculture Improvement

4 and Reform Act of 1996 (Public Law 104–127)

5 shifted agricultural policy away from traditional

6 price support programs to more market-oriented and

7 risk-bearing policies; and

8 (B) at the same time, the exposure of specialty

9 crop producers to market volatility, natural disas10 ters, and the pressure to reduce inputs has in11 creased, thus increasing the need for innovation,

12 education, and outreach to provide specialty crop

13 producers with the tools needed to make informed

14 decisions regarding risk management, production,

15 and marketing.

16 (b) PURPOSES.—The purposes of this Act are—

17 (1) to develop a Federal crop insurance pro18 gram to meet the needs of producers of specialty

19 crops, while achieving the overall objectives of the

20 Federal crop insurance program—

21 (A) to offer products that economically

22 provide sufficient risk management tools for ag23 ricultural producers; and

24 (B) to increase producer participation in

25 the program;
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1 (2) to promote the development of crop insur2 ance policies for specialty crops that are flexible

3 enough to respond to changing conditions and are

4 actuarially sound; and

5 (3) to reduce the reliance on, and eventually

6 eliminate the need for, the noninsured crop disaster

7 assistance program under section 196 of the Federal

8 Agriculture Improvement and Reform Act of 1996

9 (7 U.S.C. 7333), which provides basic coverage for

10 specialty crops for which catastrophic risk protection

11 under section 508(b) of the Federal Crop Insurance

12 Act (7 U.S.C. 1508(b)) is not available.

13 SEC. 3. SPECIALTY CROPS.

14 The Federal Crop Insurance Act (7 U.S.C. 1501 et

15 seq.) is amended by adding at the end the following:

16 ‘‘SEC. 522. SPECIALTY CROPS.

17 ‘‘(a) DEFINITIONS.—In this section:

18 ‘‘(1) PROGRAM CROP.—The term ‘program

19 crop’ has the meaning given the term ‘loan com20 modity’ in section 102 of the Agricultural Market

21 Transition Act (7 U.S.C. 7202).

22 ‘‘(2) SPECIALTY CROP.—

23 ‘‘(A) IN GENERAL.—The term ‘specialty

24 crop’ means an agricultural commodity other

25 than a program crop.
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1 ‘‘(B) INCLUSIONS.—The term ‘specialty

2 crop’ includes fruits, nuts, vegetables, green3 house and nursery plants, timber, and

4 turfgrass.

5 ‘‘(3) SPECIALTY CROP ADMINISTRATOR.—The

6 term ‘specialty crop administrator’ means a non7 profit corporation that is—

8 ‘‘(A) established with the approval of the

9 National Association of Insurance Commis10 sioners;

11 ‘‘(B) organized to—

12 ‘‘(i) develop, assess, and rate new and

13 existing crop insurance policies;

14 ‘‘(ii) accumulate, tabulate, and ana15 lyze relevant annual statistics acquired by

16 standard reinsurance agreement holders;

17 ‘‘(iii) operate as a crop insurance ad18 visory organization and a crop insurance

19 statistical organization;

20 ‘‘(iv) provide statistics, loss expenses,

21 actuarial analyses, actuarial formulas, pro22 cedures, forms, and information to stand23 ard reinsurance agreement holders and

24 other purchasers;
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1 ‘‘(v) consult and meet with groups or

2 individuals throughout the United States

3 having an interest in crop insurance, in4 cluding representatives of Federal, State,

5 and local governments, colleges and univer6 sities, producers, and trade organizations;

7 ‘‘(vi) develop, provide, and publicize

8 procedures and forms for adjustment of

9 crop losses; and

10 ‘‘(vii) carry out research, training,

11 and education activities to promote im12 proved knowledge and understanding of

13 the applicable aspects of crop insurance.

14 ‘‘(b) TRANSFER OF CROP INSURANCE PROGRAM

15 FUNCTIONS FOR SPECIALTY CROPS.—

16 ‘‘(1) PURPOSE.—The purpose of this subsection

17 is to authorize a contract between the Corporation

18 and the specialty crop administrator that will enable

19 greater flexibility, increased expertise, and a more

20 rapid response needed for the development and

21 maintenance of specialty crop insurance products

22 and policies tailored to the different crops, varieties,

23 growing conditions, planting dates, harvesting dates,

24 geographical regions, and variable changes in crop

25 value associated with specialty crops.
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1 ‘‘(2) CONTRACT FOR TRANSFER.—Not later

2 than 120 days after the date of enactment of this

3 section, the Corporation shall offer to enter into a

4 contract with the specialty crop administrator, under

5 which the specialty crop administrator will assume

6 responsibility from the Risk Management Agency

7 for—

8 ‘‘(A) the administration of crop insurance

9 products, policies, and other risk management

10 tools for specialty crops under the Federal crop

11 insurance program;

12 ‘‘(B) the development of revised or new

13 products, policies, and risk management tools

14 for specialty crops; and

15 ‘‘(C) the procedures, data collection, re16 search, and forms-adjusting activities related to

17 that administration and development.

18 ‘‘(3) EXCEPTION.—Nothing in paragraph (2)

19 authorizes or requires the transfer to the specialty

20 crop administrator of the responsibility of the Risk

21 Management Agency over reinsurance and compli22 ance oversight activities carried out under the Fed23 eral crop insurance program.

24 ‘‘(4) SPECIALTY CROP ADMINISTRATOR PRO25 GRAM ADVISORY COMMITTEE.—
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1 ‘‘(A) ESTABLISHMENT.—As part of the

2 contract described in paragraph (2), the Cor3 poration shall authorize the specialty crop ad4 ministrator to establish such advisory commit5 tees on a State or regional basis as the spe6 cialty crop administrator considers necessary

7 for each specialty crop program.

8 ‘‘(B) MEMBERSHIP.—Each advisory com9 mittee may consist of—

10 ‘‘(i) the specialty crop administrator;

11 ‘‘(ii) representatives from each State

12 or region in which the specialty crop pro13 gram is administered;

14 ‘‘(iii) producers;

15 ‘‘(iv) commodity group representa16 tives;

17 ‘‘(v) representatives from association

18 groups or cooperatives through which an

19 insurance product is offered (if applicable);

20 ‘‘(vi) members of the land grant uni21 versity system relevant to the program

22 area and region of the committee; and

23 ‘‘(vii) representatives of the insurance

24 companies actively engaged in selling and

25 servicing the program.
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1 ‘‘(C) DUTIES.—Each advisory committee

2 shall—

3 ‘‘(i) meet on an annual basis or more

4 frequently as necessary to review the spe5 cialty crop program within the State or re6 gion; and

7 ‘‘(ii) report to the specialty crop ad8 ministrator and the Board of Directors of

9 the Corporation.

10 ‘‘(5) BOARD AUTHORITY.—

11 ‘‘(A) IN GENERAL.—Except as otherwise

12 provided by this subsection, the Board shall re13 tain authority over all program decisions, poli14 cies, risk management tools, loss adjustment

15 procedures, forms, rates and premiums associ16 ated with specialty crops.

17 ‘‘(B) TYPES OF AUTHORITY.—In carrying

18 out subparagraph (A), the Board may order, on

19 reasonable notice—

20 ‘‘(i) changes or adjustments in prior21 ities;

22 ‘‘(ii) changes in policies or programs;

23 ‘‘(iii) changes in procedures or forms;

24 ‘‘(iv) changes in rates; or
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1 ‘‘(v) adoption of other risk manage2 ment tools, on a pilot or permanent basis.

3 ‘‘(6) PRIORITIES FOR SPECIALTY CROP ADMIN4 ISTRATOR.—

5 ‘‘(A) INITIAL ESTABLISHMENT.—Not later

6 than 90 days after the date on which the con7 tract described in paragraph (2) is entered into,

8 the Corporation shall establish the initial prior9 ities of the specialty crop administrator.

10 ‘‘(B) CONTINUING ESTABLISHMENT.—

11 After the establishment of the initial priorities,

12 during the fourth quarter of each fiscal year,

13 the Corporation shall establish the priorities of

14 the specialty crop administrator for the next fis15 cal year.

16 ‘‘(C) SOLICITATION OF PROPOSED INITIAL

17 PRIORITIES.—

18 ‘‘(i) IN GENERAL.—The Corporation

19 shall solicit proposed initial priorities for

20 the specialty crop administrator from—

21 ‘‘(I) Members of Congress;

22 ‘‘(II) the Risk Management

23 Agency and other agencies of the De24 partment;
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1 ‘‘(III) the specialty crop adminis2 trator;

3 ‘‘(IV) advisory committees estab4 lished by the specialty crop adminis5 trator under paragraph (4);

6 ‘‘(V) approved insurance pro7 viders;

8 ‘‘(VI) associations of producers;

9 ‘‘(VII) commodity groups;

10 ‘‘(VIII) insurance agents; and

11 ‘‘(IX) the public.

12 ‘‘(ii) PROCEDURES FOR RECEIPT OF

13 PROPOSED PRIORITIES.—The Corporation

14 shall—

15 ‘‘(I) establish procedures to en16 sure that proposed priorities are re17 ceived by the Corporation in a timely

18 fashion so that the priorities can be

19 established in accordance with the

20 schedule established under subpara21 graph (A); and

22 ‘‘(II) publish the procedures in

23 the Federal Register not later than 5

24 days after the date of adoption of the

25 procedures.
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1 ‘‘(7) POLICY APPROVAL PROCEDURES.—

2 ‘‘(A) IN GENERAL.—The specialty crop ad3 ministrator shall submit all insurance plans,

4 products, policies, procedures, and other mate5 rial that the specialty crop administrator devel6 ops for specialty crops to the Board for ap7 proval and reinsurance.

8 ‘‘(B) SUBMISSION TO RISK MANAGEMENT

9 AGENCY.—

10 ‘‘(i) IN GENERAL.—After development

11 by the specialty crop administrator of a

12 proposed program for a new policy or a

13 proposed program to revise a previously

14 published policy for a specialty crop and

15 before submission of the proposed program

16 (referred to in this paragraph as the ‘pro17 posed program’) for approval to the Board,

18 the specialty crop administrator shall sub19 mit the proposed program to the Risk

20 Management Agency for review and com21 ment.

22 ‘‘(ii) COMMENTS FROM OTHER AGEN23 CIES.—

24 ‘‘(I) IN GENERAL.—The Risk

25 Management Agency shall promptly
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1 forward copies of the proposed pro2 gram to the Office of Management

3 and Budget and to any other agency

4 that is required to review a new or re5 vised crop insurance policy under this

6 title or other law.

7 ‘‘(II) DEADLINE FOR ANAL8 YSES.—Notwithstanding any other

9 provision of law, each agency shall

10 complete an analysis of, and prepara11 tion of comments with respect to, the

12 proposed program during the 75-day

13 period described in subparagraph (C)

14 (referred to in this subsection as the

15 ‘75-day period’).

16 ‘‘(iii) PUBLIC COMMENT.—

17 ‘‘(I) PUBLICATION.—The Risk

18 Management Agency shall—

19 ‘‘(aa) promptly publish the

20 proposed program in the Federal

21 Register; and

22 ‘‘(bb) direct that all com23 ments be provided to the Risk

24 Management Agency not later
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1 than 45 days after the date of

2 publication.

3 ‘‘(II) DISTRIBUTION OF COM4 MENTS.—The Risk Management

5 Agency shall make available copies of

6 all comments received under subclause

7 (I)(bb), upon request, to the specialty

8 crop administrator, the Board, or any

9 member of the Board.

10 ‘‘(C) PROVISION OF COMMENTS TO SPE11 CIALTY CROP ADMINISTRATOR.—Not later than

12 75 days after the date of receipt of the pro13 posed program, the Risk Management Agency

14 shall provide to—

15 ‘‘(i) the specialty crop administrator

16 in writing any comments that the Risk

17 Management Agency has regarding the

18 proposed program and the comments of

19 other agencies under subparagraph (B)(ii);

20 and

21 ‘‘(ii) the specialty crop administrator

22 and the Board a summary of public com23 ments received under subparagraph (B)(iii)

24 during the 75-day period.
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1 ‘‘(D) RESPONSE TO RISK MANAGEMENT

2 AGENCY COMMENTS.—If the Risk Management

3 Agency provides comments under subparagraph

4 (C) during the 75-day period, the specialty crop

5 administrator shall—

6 ‘‘(i) consider the comments of the

7 Risk Management Agency and make ap8 propriate revisions to the proposed pro9 gram; and

10 ‘‘(ii) after carrying out clause (i), sub11 mit the proposed program to the Board for

12 approval.

13 ‘‘(E) EFFECT OF FAILURE OF RISK MAN14 AGEMENT AGENCY TO PROVIDE COMMENTS.—If

15 the Risk Management Agency does not provide

16 comments under subparagraph (C) during the

17 75-day period—

18 ‘‘(i) the specialty crop administrator

19 may submit the proposed program to the

20 Board for consideration;

21 ‘‘(ii) the specialty crop administrator

22 shall advise the Board of the absence of

23 timely comments by the Risk Management

24 Agency; and
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1 ‘‘(iii) the absence of timely comments

2 shall be deemed to constitute the concur3 rence of the Risk Management Agency

4 with the proposed program.

5 ‘‘(F) COMPLETENESS OF PROPOSED PRO6 GRAMS SUBMITTED TO BOARD.—A proposed

7 program submitted by the specialty crop admin8 istrator to the Board for approval shall be suffi9 ciently complete so that, if approved by the

10 Board, the program can be priced and sold to

11 producers without any necessity for further pol12 icy development, actuarial study, initial pre13 mium rating, or similar activity.

14 ‘‘(G) CONSIDERATION OF PROPOSED PRO15 GRAMS BY BOARD.—

16 ‘‘(i) PUBLIC MEETING.—After receiv17 ing from the specialty crop administrator

18 for approval a proposed program, the

19 Board shall consider the proposed program

20 at a public meeting held not later than 45

21 days after receipt of the proposed program.

22 ‘‘(ii) PUBLIC REVIEW.—Copies of the

23 proposed program shall be available for

24 public review by any interested person.
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1 ‘‘(H) APPROVAL OR DISAPPROVAL OF PRO2 POSED PROGRAMS BY BOARD.—

3 ‘‘(i) IN GENERAL.—Not later than 30

4 days after the date of the public meeting

5 under subparagraph (G)(i), the Board

6 shall approve or disapprove the proposed

7 program.

8 ‘‘(ii) DISAPPROVAL.—

9 ‘‘(I) STATEMENT OF REASONS.—

10 If the Board disapproves a proposed

11 program submitted by the specialty

12 crop administrator, the Board, not

13 later than 30 days after the vote by

14 the Board disapproving the proposed

15 program, shall provide to the specialty

16 crop administrator a written state17 ment of the reasons for the dis18 approval that is sufficiently detailed to

19 permit the specialty crop adminis20 trator to prepare and resubmit a re21 vised proposed program that the spe22 cialty crop administrator reasonably

23 can assume will be approved by the

24 Board.
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1 ‘‘(II) PROCEDURES.—Submission

2 to and review by the Risk Manage3 ment Agency and the Board of a re4 vised proposed program shall be in ac5 cordance with the procedures estab6 lished by this paragraph.

7 ‘‘(iii) APPROVAL.—After approving a

8 proposed program, the Board shall publish

9 in the Federal Register not later than 5

10 days after the vote of approval—

11 ‘‘(I) a description of the proposed

12 program;

13 ‘‘(II) a statement that the pro14 posed program is an approved insur15 ance policy; and

16 ‘‘(III) a statement of the date on

17 which the approved insurance policy

18 will be available to approved insurance

19 providers.

20 ‘‘(I) PROCEDURES FOR DISTRIBUTION OF

21 INFORMATION TO APPROVED INSURANCE PRO22 VIDERS.—The Board shall ensure that the spe23 cialty crop administrator has established proce24 dures for distributing actuarial data and loss

25 adjustment procedures to approved insurance
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1 providers and their agents and adjusters in

2 order to permit the timely processing and sale

3 of any policy or adjustment of losses approved

4 by the Board under this section.

5 ‘‘(8) CONTINUING AUTHORITY OF SPECIALTY

6 CROP ADMINISTRATOR.—The specialty crop

7 administrator—

8 ‘‘(A) in connection with the administration

9 of policies for specialty crops, including policies

10 developed by the specialty crop administrator,

11 may monitor the policies for their actuarial

12 soundness and recommend to the Board adjust13 ments in premium rates and other changes that

14 promote an actuarially sound system of crop in15 surance; but

16 ‘‘(B) may not change the coverage under

17 any policy without approval by the Board.

18 ‘‘(9) REPORTS TO UNDER SECRETARY FOR

19 FARM AND FOREIGN AGRICULTURAL SERVICES.—

20 The specialty crop administrator shall report peri21 odically, but not less often than quarterly, to the

22 Under Secretary for Farm and Foreign Agricultural

23 Services on the progress of the specialty crop admin24 istrator in developing proposed programs for new
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1 policies or proposed programs to revise previously

2 published policies for specialty crops.

3 ‘‘(10) REPORT BY COMPTROLLER GENERAL.—

4 Not later than 5 years after the date of enactment

5 of this section, the Comptroller General of the

6 United States shall submit to Congress a report that

7 reviews the actuarial soundness of the specialty crop

8 program established under this section and evaluates

9 the adequacy of the program to meet the needs of

10 specialty crops.

11 ‘‘(c) RESEARCH AND OTHER ASSISTANCE FOR NEW

12 OR REVISED CROP INSURANCE PRODUCTS FOR SPE13 CIALTY CROPS.—To encourage the development of new or

14 revised crop insurance policies and other materials for spe15 cialty crops and submission of those insurance policies and

16 other materials to the Corporation under section 508(h),

17 the specialty crop administrator may—

18 ‘‘(1) make grants on a competitive basis for the

19 research and development of insurance products for

20 underserved specialty crops;

21 ‘‘(2) reimburse research costs associated with

22 product development;

23 ‘‘(3) enter into contracts for the research and

24 development of insurance products for underserved

25 specialty crops; and
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1 ‘‘(4) enter into contracts and reimburse costs

2 associated with the reassessment and reformatting

3 of existing insurance products for specialty crops.

4 ‘‘(d) FUNDING FOR SPECIALTY CROP COVERAGE.—

5 ‘‘(1) MAINTENANCE OF EFFORT.—Expenditures

6 from the insurance fund established under section

7 516(c) for the benefit of specialty crops shall be

8 maintained at a level equal to, at a minimum, the

9 greatest of the following:

10 ‘‘(A) The level of expenditures for specialty

11 crops for the reinsurance year in effect as of

12 the date of enactment of this section.

13 ‘‘(B) The percentage expended for spe14 cialty crops of the total expenditures from the

15 insurance fund for that reinsurance year.

16 ‘‘(C) $50,000,000 for each fiscal year.

17 ‘‘(2) USE OF SAVINGS.—Any Federal crop in18 surance program savings resulting from the reforms

19 required by this section and from the phase-out of

20 the noninsured crop disaster assistance program

21 should be applied only to the crop insurance pro22 gram for specialty crops.

23 ‘‘(e) MINIMUM CATASTROPHIC RISK PROTECTION FI24 NANCING AND COVERAGE FOR SPECIALTY CROPS.—Ex25 cept as otherwise specifically provided by law, the Cor-
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1 poration shall not change the following aspects of the cata2 strophic risk protection plan required to be offered to pro3 ducers of specialty crops under section 508(b):

4 ‘‘(1) Catastrophic risk protection shall offer a

5 producer coverage for a 50 percent loss in yield, on

6 an individual yield or area yield basis, indemnified at

7 55 percent of the expected market price, or a com8 parable coverage (as determined by the Corpora9 tion), as specified in section 508(b)(2)(A)(ii).

10 ‘‘(2) The administrative fee for catastrophic

11 risk protection may not exceed $60 per crop, as

12 specified in section 508(b)(5).

13 ‘‘(3) The Corporation shall pay the premium es14 tablished for catastrophic risk protection under sec15 tion 508(d)(2)(A).

16 ‘‘(4) The 11 percent level of excess loss adjust17 ment expense and the existing underwriting gain for18 mula shall be maintained.

19 ‘‘(f) RETENTION OF MINIMUM SUBSIDY LEVELS FOR

20 ADDITIONAL COVERAGE FOR SPECIALTY CROPS.—Except

21 as otherwise specifically provided by law, the percentage

22 of the premium for additional coverage for a specialty crop

23 paid by the Corporation under section 508(e) may not be

24 reduced below the percentage in effect on the date of en-
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1 actment of this section for that same level of additional

2 coverage.

3 ‘‘(g) PREMIUM DISCOUNTS AND SURCHARGES.—

4 ‘‘(1) IN GENERAL.—Notwithstanding sections

5 506(o) and 508(d)(1), the Corporation may provide

6 a discount for, or impose a surcharge on, the

7 amount of the premium payable by an individual

8 producer for catastrophic risk protection or addi9 tional coverage for a specialty crop based on the pro10 ducer’s actual loss experience.

11 ‘‘(2) AMOUNT.—

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

13 base the amount of the discount or surcharge

14 for a specialty crop of an individual producer on

15 the actuarial experience of the producer with

16 the specialty crop as compared to the actuarial

17 experience of other producers in the region that

18 produce the specialty crop.

19 ‘‘(B) LIMITATION ON SURCHARGES.—The

20 Corporation shall not apply a surcharge on the

21 amount of the premium payable by an indi22 vidual producer under paragraph (1) if the

23 losses experienced by the producer are the re24 sult of damaging weather or related condition

25 that is beyond the control of the producer.
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1 ‘‘(h) TIME PERIODS FOR PURCHASE OF COVERAGE

2 FOR SPECIALTY CROPS.—

3 ‘‘(1) MINIMUM SALES CLOSING DATE.—Subject

4 to paragraph (2), the sales closing date for obtaining

5 coverage for a specialty crop under this title may not

6 expire before the end of the 120-day period begin7 ning on the date of the final release of materials for

8 policies from the Risk Management Agency and the

9 specialty crop administrator.

10 ‘‘(2) RELEASE OF PRODUCT DELAYED TO FOL11 LOWING CROP YEAR.—If the date of release of an in12 surance product for a specialty crop for a crop year

13 does not allow sufficient time for the dissemination

14 of policies and related materials or jeopardizes the

15 integrity and actuarial soundness of the crop insur16 ance program for specialty crops, the Board may

17 delay the release and offering of the product until

18 the following crop year.

19 ‘‘(3) PURCHASE DURING INSURANCE PERIOD.—

20 A producer of a specialty crop may purchase new

21 coverage for the specialty crop, or increase coverage

22 levels, at any time during the insurance period, sub23 ject to a 30-day waiting period for the coverage to

24 take effect to permit an inspection to verify accept25 ability by the insurance provider.
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1 ‘‘(i) AUTHORIZED PAYMENT OF FEES REQUIRED

2 FOR CATASTROPHIC RISK PROTECTION ON BEHALF OF

3 PRODUCERS.—

4 ‘‘(1) PAYMENT BY COOPERATIVES OR TRADE

5 ASSOCIATIONS.—A cooperative association of agricul6 tural producers or a nonprofit trade association may

7 pay, on behalf of its members, the basic fee or addi8 tional fee required for catastrophic risk protection

9 for a specialty crop under section 508(b)(5).

10 ‘‘(2) TREATMENT OF PAYMENT.—A licensing

11 fee or other payment made by an insurance provider

12 to the cooperative association or trade association in

13 connection with the issuance of catastrophic risk

14 protection or additional coverage under this title to

15 members of the cooperative association or trade as16 sociation shall not be considered to be a rebate to

17 the members under the standard reinsurance agree18 ment between the Corporation and the insurance

19 provider if the members are informed in advance of

20 the fee or payment.

21 ‘‘(3) MAXIMUM AMOUNT OF ENDORSEMENT

22 FEES OR OTHER PAYMENTS.—Any endorsement fee

23 or other payment paid by an insurance provider to

24 a cooperative association or trade association that is

25 allowed under State law shall not exceed the amount
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1 of fees or premiums paid by the insurance provider

2 for the coverage involved.

3 ‘‘(4) AUTHORIZATION.—In order to purchase

4 catastrophic risk protection for an individual mem5 ber, a cooperative association or trade association

6 must have the written authorization of the individual

7 member in advance of the group purchase.

8 ‘‘(j) ENFORCEMENT.—

9 ‘‘(1) IN GENERAL.—For the purpose of discour10 aging the submission of false claims or the inten11 tional destruction of an insured crop, the functions

12 of sales agent and adjuster may not be conducted by

13 the same person.

14 ‘‘(2) PURCHASE OF CATASTROPHIC RISK PRO15 TECTION BY COOPERATIVES AND TRADE ASSOCIA16 TIONS.—

17 ‘‘(A) COMPLIANCE.—A cooperative associa18 tion or trade association that purchases cata19 strophic risk protection for members under sub20 section (i) shall provide such information to the

21 Risk Management Agency as is required to en22 sure the compliance of the members with this

23 title.

24 ‘‘(B) UNFAIR PROFITS.—The Risk Man25 agement Agency shall ensure that cooperative
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1 associations and trade associations do not profit

2 unfairly from the sale of catastrophic risk pro3 tection, or offering of premium discounts, to

4 members of the associations.

5 ‘‘(C) SIMILAR COVERAGE.—A member may

6 not individually purchase catastrophic risk pro7 tection for the same crop and time period that

8 is covered by the cooperative association or

9 trade association payment under subsection (i).

10 ‘‘(3) NONPREEMPTION.—Except as otherwise

11 specifically provided in this section, nothing in this

12 section preempts any State insurance law.

13 ‘‘(k) PARTNERSHIPS FOR RISK MANAGEMENT DE14 VELOPMENT AND IMPLEMENTATION.—

15 ‘‘(1) PURPOSE.—The purpose of this subsection

16 is authorize the Risk Management Agency to enter

17 into partnerships with public and private entities for

18 the purpose of increasing the availability of risk

19 management tools for specialty crop producers.

20 ‘‘(2) AUTHORITY.—The Risk Management

21 Agency is authorized to use each fiscal year not

22 more than $20,000,000 of funds made available

23 under section 516(b)(2) to enter into partnerships

24 with the Cooperative State Research, Education, and

25 Extension Service, the Agricultural Research Serv-
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1 ice, the National Oceanic and Atmospheric Adminis2 tration, and other appropriate public and private en3 tities with demonstrated capabilities in developing

4 and implementing risk management and marketing

5 options for specialty crops.

6 ‘‘(3) OBJECTIVES.—The Risk Management

7 Agency may enter into a partnership under para8 graph (2) to—

9 ‘‘(A) enhance the notice and timeliness of

10 notice of weather conditions that could nega11 tively affect specialty crop yields, quality, and

12 final product use in order to allow producers to

13 take preventive actions to increase end-product

14 profitability and marketability and to reduce

15 the possibility of crop insurance claims;

16 ‘‘(B) develop a multifaceted approach to

17 pest management to decrease inputs, decrease

18 the development of pest resistance, and increase

19 the effectiveness of pest prevention applications;

20 ‘‘(C) develop a multifaceted approach to

21 fertilization to decrease inputs, decrease exces22 sive nutrient loading to the environment, and

23 increase application efficiency;

24 ‘‘(D) develop or improve techniques for

25 planning, breeding, growing, maintaining, har-
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1 vesting, storage, and shipping that will address

2 quality and quantity challenges for specialty

3 crops and livestock associated with year-to-year

4 and regional variations;

5 ‘‘(E) clarify labor requirements and assist

6 producers in complying with requirements that

7 allow specialty crop producers to better meet

8 the physically intense and time-compressed

9 planting, tending, and harvesting requirements

10 associated with specialty crop production;

11 ‘‘(F) provide assistance to State foresters

12 or equivalent officials for the prescribed use of

13 burning on private forest land for the preven14 tion, control, and suppression of fire; and

15 ‘‘(G) develop other risk management tools

16 that specialty crop producers can use to further

17 increase their economic and production sta18 bility.

19 ‘‘(l) STUDY OF NEW SPECIALTY CROP INSURANCE

20 PRODUCTS.—

21 ‘‘(1) IN GENERAL.—As part of the contract de22 scribed in subsection (b), the Corporation and the

23 specialty crop administrator shall jointly study the

24 feasibility of developing new insurance products for

25 specialty crops, including products based on the cost
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1 of production or adjusted gross income, quality2 based policies, or an intermediate base program with

3 a higher coverage and cost than catastrophic risk

4 protection offered on the date of enactment of this

5 section.

6 ‘‘(2) SUBMISSION OF RESULTS.—Not later than

7 1 year after the date of enactment of this section,

8 the Secretary and the specialty crop administrator

9 shall submit to Congress a report containing the re10 sults of the study required by this subsection.

11 ‘‘(m) ADMINISTRATION AND EXPANSION OF GROSS

12 REVENUE PILOT PROGRAMS FOR SPECIALTY CROPS.—

13 ‘‘(1) ADMINISTRATION.—As part of the con14 tract described in subsection (b), the Corporation

15 shall use the specialty crop administrator to admin16 ister the gross revenue pilot programs that are in ef17 fect for specialty crops.

18 ‘‘(2) EXPANSION.—For crop year 2000, the

19 pilot programs shall be expanded to include any ad20 ditional counties in the States of Arizona, California,

21 Florida, Georgia, Idaho, Maine, Michigan, New Mex22 ico, New York, North Carolina, Oregon, Texas, and

23 other States that are determined appropriate by the

24 specialty crop administrator.’’.
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1 SEC. 4. BOARD OF DIRECTORS OF CORPORATION.

2 Section 505 of the Federal Crop Insurance Act (7

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

4 inserting the following:

5 ‘‘(a) BOARD OF DIRECTORS.—

6 ‘‘(1) IN GENERAL.—The management of the

7 Corporation shall be vested in a Board subject to the

8 general supervision of the Secretary.

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

10 of—

11 ‘‘(A) 4 members who are active agricul12 tural producers with or without crop insurance,

13 representing the various regions and agricul14 tural commodities of the United States;

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

16 insurance business;

17 ‘‘(C) 1 member who represents specialty

18 crop production;

19 ‘‘(D) 1 member who represents coopera20 tives and trade associations;

21 ‘‘(E) the Under Secretary for Farm and

22 Foreign Agricultural Services, who shall serve

23 as chairperson;

24 ‘‘(F) 1 additional Under Secretary of Agri25 culture (as designated by the Secretary of Agri26 culture); and
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•S 1401 IS

1 ‘‘(G) the Chief Economist of the Depart2 ment of Agriculture.

3 ‘‘(3) APPOINTMENT AND TERMS OF PRIVATE

4 SECTOR MEMBERS.—The members of the Board de5 scribed in subparagraphs (A) through (D) of para6 graph (2)—

7 ‘‘(A) shall be appointed by, and hold office

8 at the pleasure of, the Secretary;

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

10 the Federal Government;

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

12 terms, as determined by the Secretary; and

13 ‘‘(D) shall serve not more than 2 consecu14 tive terms.

15 ‘‘(4) SPECIALTY CROPS.—The Board shall have

16 independent oversight authority over all program de17 cisions with respect to specialty crops made by the

18 Corporation, the Risk Management Agency, and the

19 specialty crop administrator (under the contract de20 scribed in section 522(b)).

21 ‘‘(5) MAINTENANCE OF BOARD INDEPEND22 ENCE.—No official or employee of the Corporation,

23 the Risk Management Agency, or the specialty crop

24 administrator may serve on the Board.’’.
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1 SEC. 5. FEES COLLECTED BY APPROVED INSURANCE PRO2 VIDERS.

3 Section 508(b)(5)(D) of the Federal Crop Insurance

4 Act (7 U.S.C. 1508(b)(5)(D)) is amended—

5 (1) in clause (i), by striking ‘‘The amounts’’

6 and inserting ‘‘Except as provided in clause (ii), the

7 amounts’’; and

8 (2) by striking clause (ii) and inserting the fol9 lowing:

10 ‘‘(ii) FEES COLLECTED BY APPROVED

11 INSURANCE PROVIDERS.—Not more than

12 $120 of the administrative fees paid by a

13 producer for catastrophic risk coverage for

14 specialty crops that are collected by an ap15 proved insurance provider shall be retained

16 by the provider as a payment for operating

17 and administrative expenses incurred for

18 the delivery of catastrophic risk protec19 tion.’’.

20 SEC. 6. PILOT PROGRAM AUTHORITY.

21 Section 508(m) of the Federal Crop Insurance Act

22 (7 U.S.C. 1508(m)) is amended by adding at the end the

23 following:

24 ‘‘(4) PILOT PROGRAMS.—Except as otherwise

25 provided in this title, in carrying out a pilot program
35

•S 1401 IS

1 of insurance or reinsurance under this title, the 18

2 Corporation and the Secretary may—

3 ‘‘(A) offer the pilot program on a regional,

4 State, or national basis, based on the interests

5 of affected producers and the interests and

6 risks of the Corporation;

7 ‘‘(B) operate the pilot program for a pe8 riod of up to 3 years; and

9 ‘‘(C) extend the duration of the pilot pro10 gram for additional periods, as determined by

11 the Corporation and the Secretary, respec12 tively.’’.

13 SEC. 7. EXPANSION OF REVENUE INSURANCE.

14 Section 508 of the Federal Crop Insurance Act (7

15 U.S.C. 1508) is amended by—

16 (1) in subsection (a)(1) by striking the second

17 sentence and inserting ‘‘To qualify for coverage

18 under a plan of insurance, the losses associated with

19 the insured commodity must be due to a change in

20 the price level or drought, flood, or other natural

21 disaster (as determined by the Corporation).’’; and

22 (2) striking subsection (h)(9).
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•S 1401 IS

1 SEC. 8. FUNDING FOR PARTNERSHIPS FOR RISK MANAGE2 MENT DEVELOPMENT AND IMPLEMENTA3 TION.

4 Section 516(b)(2) of the Federal Crop Insurance Act

5 (7 U.S.C. 1516(b)(2)) is amended by adding at the end

6 the following:

7 ‘‘(C) PARTNERSHIPS FOR RISK MANAGE8 MENT DEVELOPMENT AND IMPLEMENTATION.—

9 For each of the 2000 and subsequent reinsur10 ance years, the Corporation may pay from the

11 insurance fund established under subsection (c)

12 $20,000,000 to carry out section 522(k).’’.

13 SEC. 9. NONINSURED CROP DISASTER ASSISTANCE PRO14 GRAM.

15 Section 196(c) of the Agricultural Market Transition

16 Act (7 U.S.C. 7333(c)) is amended—

17 (1) by striking paragraph (1);

18 (2) in paragraph (2)—

19 (A) by striking ‘‘Subject to paragraph (1),

20 the’’ and inserting ‘‘The’’; and

21 (B) by striking ‘‘because of drought, flood,

22 or other natural disaster, as determined by the

23 Secretary’’;

24 (3) in paragraph (3)—

25 (A) by striking ‘‘Subject to paragraph (1),

26 the’’ and inserting ‘‘The’’; and
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•S 1401 IS

1 (B) by striking ‘‘, because of drought,

2 flood, or other natural disaster as determined

3 by the Secretary,’’;

4 (4) by redesignating paragraphs (2) and (3) as

5 paragraphs (1) and (2), respectively; and

6 (5) by adding at the end the following:

7 ‘‘(3) AREA TRIGGER.—The Secretary shall pro8 vide assistance to individual producers without any

9 requirement of an area loss.’’.

10 SEC. 10. EFFECTIVE DATE AND APPLICATION.

11 This Act and the amendments made by this Act—

12 (1) take effect on the date of enactment of this

13 Act; and

14 (2) shall apply beginning with the 2000 crop

15 year for a specialty crop.

Æ