Calendar No. 552

103D CONGRESS

2D SESSION H. R. 4217

AN ACT

To reform the Federal crop insurance program, and

for other purposes.

AUGUST 10 (legislative day, AUGUST 8), 1994

Received; read twice and placed on the calendar
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Calendar No. 552

103D CONGRESS

2D SESSION H. R. 4217

IN THE SENATE OF THE UNITED STATES

AUGUST 10 (legislative day, AUGUST 8), 1994

Received; read twice and placed on the calendar

AN ACT

To reform the Federal crop insurance program, 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, AND DEFI4 NITIONS.

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

6 ‘‘Federal Crop Insurance Reform Act of 1994’’.

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

8 this Act is as follows:

Sec. 1. Short title, table of contents, and definitions.

Sec. 2. Members of Board of Directors of Federal Crop Insurance Corporation.

Sec. 3. General powers of Corporation.

Sec. 4. Personnel.

Sec. 5. General authority to offer crop insurance.

Sec. 6. Catastrophic risk protection, buy-up levels, premiums, and yield determinations.
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Sec. 7. Preparation of policies, claims, and reinsurance.

Sec. 8. Authorization of appropriations and crop insurance fund.

Sec. 9. Advisory Committee.

Sec. 10. Noninsured crop disaster assistance.

Sec. 11. Crop insurance requirements under price support programs.

Sec. 12. Elimination of gender references.

Sec. 13. GAO crop insurance provider study.

Sec. 14. Effective date.

1 (c) DEFINITIONS.—Section 502 of the Federal Crop

2 Insurance Act (7 U.S.C. 1502) is amended—

3 (1) by striking the section heading and ‘‘SEC.

4 502.’’ and inserting the following:

5 ‘‘SEC. 502. PURPOSE AND DEFINITIONS.

6 ‘‘(a) PURPOSE.—’’; and

7 (2) by adding at the end the following new sub8 section:

9 ‘‘(b) DEFINITIONS.—For purposes of this title:

10 ‘‘(1) SECRETARY.—The term ‘Secretary’ means

11 the Secretary of Agriculture.

12 ‘‘(2) CORPORATION.—The term ‘Corporation’

13 means the Federal Crop Insurance Corporation es14 tablished under section 503.

15 ‘‘(3) BOARD.—The term ‘Board’ means the

16 Board of Directors of the Corporation established

17 under section 505(a).

18 ‘‘(4) LOSS RATIO.—The term ‘loss ratio’ means

19 the ratio of all sums paid by the Corporation as in20 demnities under all crop insurance policies to that of

21 the premiums designated for anticipated losses and
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1 a reasonable reserve, not including the portion of the

2 premiums designated for operating and administra3 tive expenses.

4 ‘‘(5) TRANSITIONAL YIELD.—The term ‘transi5 tional yield’ means the maximum average production

6 per acre or equivalent measure that is assigned to

7 acreage for a crop year by the Corporation in ac8 cordance with its regulations whenever the producer

9 fails—

10 ‘‘(A) to certify that acceptable documenta11 tion of production and acreage for that crop

12 year is in the producer’s possession; or

13 ‘‘(B) to present such acceptable docu14 mentation upon the demand of the Corporation

15 or an insurance company reinsured by the Cor16 poration.’’.

17 (d) CONFORMING AMENDMENTS.—The Federal Crop

18 Insurance Act (7 U.S.C. 1501 et seq.) is amended—

19 (1) in section 503 (7 U.S.C. 1503), by striking

20 ‘‘(herein called the Corporation)’’; and

21 (2) in section 505(a) (7 U.S.C. 1505(a)), by

22 striking ‘‘(hereinafter called the ‘Board’)’’.
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1 SEC. 2. MEMBERS OF BOARD OF DIRECTORS OF FEDERAL

2 CROP INSURANCE CORPORATION.

3 Section 505(a) of the Federal Crop Insurance Act (7

4 U.S.C. 1505(a)) is amended in the second sentence—

5 (1) by striking ‘‘or Assistant Secretary’’ the

6 first place it appears; and

7 (2) by striking ‘‘the Under Secretary or Assist8 ant Secretary of Agriculture responsible for the farm

9 credit programs of the Department of Agriculture’’

10 and inserting ‘‘one additional Under Secretary of

11 Agriculture (as designated by the Secretary of Agri12 culture)’’.

13 SEC. 3. GENERAL POWERS OF CORPORATION.

14 (a) CLAIMS SETTLEMENT.—Section 506 of the Fed15 eral Crop Insurance Act (7 U.S.C. 1506) is amended—

16 (1) by redesignating subsections (j), (k), (l),

17 (m), and (n) as subsections (k), (l), (m), (n), and

18 (o), respectively; and

19 (2) by inserting after subsection (i) the follow20 ing new subsection:

21 ‘‘(j) CLAIMS SETTLEMENT.—The Corporation shall

22 have the authority to make final and conclusive settlement

23 and adjustment of any claims made by or against the Cor24 poration or the accounts of its fiscal officers.’’.

25 (b) REGULATIONS; PREEMPTION.—Subsection (e) of

26 such section is amended—
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1 (1) by striking ‘‘governing’’ and inserting ‘‘to

2 carry out this title and to govern’’; and

3 (2) by adding at the end the following new sen4 tence: ‘‘State and local laws or rules shall not apply

5 to rules and regulations adopted by the Corporation

6 to the extent that such rules and regulations so pro7 vide or to the extent that State and local laws or

8 rules are inconsistent with such rules and regula9 tions.’’.

10 (c) DEFINITION OF SUBSTANTIAL BENEFICIAL IN11 TEREST.—Subsection (m) of such section (as redesignated

12 by subsection (a)(1)) is amended in paragraph (4) by

13 striking ‘‘5 percent’’ and inserting ‘‘10 percent’’.

14 (d) PENALTY FOR FALSE INFORMATION.—Sub15 section (n) of such section (as redesignated by subsection

16 (a)(1)) is amended in paragraph (1) by striking subpara17 graph (B) and inserting the following new subparagraph:

18 ‘‘(B) disqualify the person—

19 ‘‘(i) from purchasing catastrophic risk

20 protection under section 508(b) or partici21 pating in the noninsured assistance pro22 gram under section 519 for a period not to

23 exceed 2 years; and
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1 ‘‘(ii) from receiving any other benefit

2 under this title for a period not to exceed

3 10 years.’’.

4 (e) ACTUARIAL SOUNDNESS.—Subsection (o) of such

5 section (as redesignated by subsection (a)(1)) is amend6 ed—

7 (1) in paragraph (1), by striking ‘‘beginning

8 farmers from obtaining adequate Federal crop insur9 ance, as determined by the Corporation’’ and insert10 ing ‘‘beginning farmers, as determined by the Sec11 retary, from obtaining Federal crop insurance’’;

12 (2) in paragraph (3), by striking ‘‘and’’ at the

13 end of the paragraph;

14 (3) by redesignating paragraph (4) as para15 graph (5); and

16 (4) by inserting after paragraph (3) the follow17 ing new paragraph:

18 ‘‘(4) establishing a database that contains social

19 security numbers or employee identification numbers

20 of insurance agents and adjusters and using the

21 numbers to identify agents and adjusters who are

22 high risk for actuarial purposes, and for other pur23 poses permitted by law; and’’.
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1 (f) REGULATORY AND PAPERWORK REDUCTION.—

2 Such section is further amended by adding at the end the

3 following new subsection:

4 ‘‘(p) REGULATORY AND PAPERWORK REDUCTION.—

5 ‘‘(1) CATASTROPHIC RISK PROTECTION.—In de6 veloping and carrying out the policies and proce7 dures for catastrophic risk protection under section

8 508(b), the Corporation shall minimize, to the maxi9 mum extent practicable, the paperwork required and

10 the complexity and costs of procedures governing the

11 application for, and the processing and servicing of,

12 catastrophic risk protection.

13 ‘‘(2) OTHER PLANS.—To the extent that the

14 policies and procedures developed under paragraph

15 (1) may be applied to other plans of insurance of16 fered under this title without jeopardizing the actu17 arial soundness or integrity of the crop insurance

18 program under this title, the Corporation shall apply

19 the policies and procedures to the other plans of in20 surance within a reasonable period of time (as deter21 mined by the Corporation) after the effective date of

22 this paragraph.

23 ‘‘(3) SOLICITATION OF COST INFORMATION AND

24 COST-REDUCTION PROPOSALS.—
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1 ‘‘(A) COST INFORMATION.—The Corpora2 tion shall solicit from private insurance provid3 ers and agents information regarding—

4 ‘‘(i) their average cost per policy of

5 complying with requirements, regulations,

6 procedures, and processes under this title;

7 and

8 ‘‘(ii) the data upon which such costs

9 are determined.

10 ‘‘(B) COST-REDUCTION PROPOSALS.—The

11 Corporation shall also solicit from private insur12 ance providers and agents proposals for modify13 ing or altering the requirements, regulations,

14 procedures, and processes under this title to re15 duce their total average cost per policy.

16 ‘‘(C) REPORT.—By June 1, 1995, the Cor17 poration shall submit a report to Congress con18 taining the information received under subpara19 graph (A) and an evaluation of the cost-reduc20 tion proposals received under subparagraph

21 (B).

22 ‘‘(4) COST REDUCTION PLAN.—

23 ‘‘(A) PLAN REQUIRED.—Subject to the

24 condition that the Corporation maintain the in25 tegrity of the crop insurance program under
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1 this title, the Corporation shall include in the

2 report required under paragraph (3) a plan to

3 reduce the average cost per policy incurred by

4 private insurance providers and agents to com5 ply with requirements, regulations, procedures,

6 and processes under this title. To the extent

7 practicable, the Corporation shall set a target

8 percentage by which such costs should be re9 duced.

10 ‘‘(B) IMPLEMENTATION OF PLAN.—Not

11 later than 60 days after submitting the report

12 required under paragraph (3), and in accord13 ance with the plan contained in the report, the

14 Corporation shall adopt such measures consist15 ent with maintaining the integrity of the crop

16 insurance program under this title as the Cor17 poration determines are appropriate—

18 ‘‘(i) to improve Corporation liaison

19 with policyholders and private insurance

20 providers; and

21 ‘‘(ii) to reduce the average cost per

22 policy to meet the target percentage set by

23 the Corporation.’’.
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1 (g) IMPROVED PROGRAM COMPLIANCE.—Such sec2 tion is further amended by inserting after subsection (p)

3 (as added by subsection (f)) the following new subsection:

4 ‘‘(q) PROGRAM COMPLIANCE.—

5 ‘‘(1) TIMELINESS.—The Corporation shall work

6 actively with private insurance providers to address

7 program compliance and integrity issues as such is8 sues develop.

9 ‘‘(2) NOTIFICATION OF COMPLIANCE PROB10 LEMS.—The Corporation shall notify in writing any

11 private insurance provider with whom the Corpora12 tion has an agreement under this title of any error,

13 omission, or failure to follow Corporation regulations

14 or procedures for which the private insurance pro15 vider may be responsible and which may result in a

16 debt owed the Corporation. Such notice shall be

17 given within 3 years of the end of the insurance pe18 riod during which the error, omission, or failure is

19 alleged to have occurred, except that such time limit

20 shall not apply with respect to errors, omissions, or

21 procedural violations that are willful or intentional.

22 The failure to timely provide the notice required

23 under this subsection shall relieve the private insur24 ance provider from the debt owed the Corporation.’’.
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1 SEC. 4. PERSONNEL.

2 Section 507 of the Federal Crop Insurance Act (7

3 U.S.C. 1507) is amended—

4 (1) in subsection (a), by striking ‘‘, and county

5 crop insurance committeemen’’;

6 (2) in subsection (c), by striking ‘‘, in which

7 case the agent or broker’’ in the first sentence and

8 all that follows through the period at the end of the

9 second sentence and inserting the following: ‘‘, ex10 cept that the rate established by the Board to reim11 burse approved insurance providers and agents for

12 their administrative and operating costs shall not ex13 ceed, for the 1997 crop year, 29 percent of the pre14 mium used to define loss ratio under section 502,

15 and for the 1998 and 1999 crops, such reimburse16 ment rate shall not exceed 28 percent of the pre17 mium used to define loss ratio under section 502.

18 Consistent with the provisions of section 506(p), the

19 Board shall provide regulatory relief to such ap20 proved insurance providers and agents in an amount

21 proportional to the reduction in the reimbursement

22 rate established by the Board for the 1997, 1998,

23 and 1999 crop years. No action shall be taken which

24 would jeopardize program integrity, enhance oppor25 tunities for fraud or abuse, hinder program expan26 sion or diminish quality of service to customers.’’;
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1 (3) in subsection (d), by striking ‘‘, except

2 that’’ and all that follows through the period at the

3 end of the subsection and inserting a period; and

4 (4) by adding at the end the following new sub5 section:

6 ‘‘(g) SPECIALTY CROPS COORDINATOR.—The Cor7 poration shall establish a senior-level position to be known

8 as the Specialty Crops Coordinator. The Specialty Crops

9 Coordinator shall have primary responsibility for address10 ing the needs of specialty crop producers and for providing

11 information and advice in connection with the Corpora12 tion’s activities to improve and expand the insurance pro13 gram for specialty crops. In carrying out such responsibil14 ity, the Specialty Crops Coordinator shall act as the Cor15 poration’s liaison with representatives of specialty crop

16 producers and provide the Corporation with the producers’

17 knowledge, expertise, and familiarity with risk manage18 ment and production issues pertaining to specialty crops.

19 The Specialty Crops Coordinator shall also use informa20 tion collected from Corporation field office directors in

21 States in which specialty crops have a significant economic

22 effect and from other sources, including the extension

23 service and colleges and universities.’’.
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1 SEC. 5. GENERAL AUTHORITY TO OFFER CROP INSURANCE.

2 (a) GENERAL AUTHORITY TO OFFER INSURANCE.—

3 Subsection (a) of section 508 of the Federal Crop Insur4 ance Act (7 U.S.C. 1508) is amended to read as follows:

5 ‘‘(a) AUTHORITY TO OFFER INSURANCE.—

6 ‘‘(1) GENERAL AUTHORITY AND LOSSES COV7 ERED.—If sufficient actuarial data are available, as

8 determined by the Board, the Corporation may in9 sure (or provide reinsurance for insurers of) produc10 ers of agricultural commodities grown in the United

11 States under any plan or plans of insurance deter12 mined by the Board to be adapted to the agricul13 tural commodity involved. To qualify for coverage

14 under these plans of insurance, the losses of the in15 sured commodity shall be due to drought, flood, or

16 other natural disaster, as determined by the Sec17 retary.

18 ‘‘(2) PERIOD OF COVERAGE.—Except in the

19 case of tobacco, insurance shall not extend beyond

20 the period the insured commodity is in the field. For

21 the purpose of the foregoing sentence, in the case of

22 aquacultural species, the term ‘field’ means the envi23 ronment in which the commodity is produced.

24 ‘‘(3) EXCLUSIONS.—Insurance provided under

25 this section shall not cover losses—
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1 ‘‘(A) due to the neglect or malfeasance of

2 the producer;

3 ‘‘(B) due to the failure of the producer to

4 reseed to the same crop in those areas and

5 under such circumstances where it is customary

6 to reseed; or

7 ‘‘(C) due to the failure of the producer to

8 follow good farming practices, as determined by

9 the Corporation.

10 ‘‘(4) EXPANSION TO OTHER AREAS OR SINGLE

11 PRODUCERS.—

12 ‘‘(A) AREA EXPANSION.—The Corporation

13 may offer plans of insurance or reinsurance for

14 production of agricultural commodities in the

15 Commonwealth of Puerto Rico, the Virgin Is16 lands of the United States, Guam, American

17 Samoa, the Commonwealth of the Northern

18 Mariana Islands, and the Trust Territory of the

19 Pacific Islands in the same manner as provided

20 in this section for production of agricultural

21 commodities in the United States.

22 ‘‘(B) PRODUCER EXPANSION.—In areas in

23 the United States or specified in subparagraph

24 (A) where crop insurance is not available for a

25 particular agricultural commodity, the Corpora-
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1 tion may offer to enter into a written agree2 ment with an individual producer operating in

3 that area for insurance coverage under this title

4 if the producer has actuarially sound data relat5 ing to the producer’s production of that com6 modity and such data is acceptable to the Cor7 poration.

8 ‘‘(5) DISSEMINATION OF CROP INSURANCE IN9 FORMATION.—The Corporation shall make available

10 to producers through local offices of the Department

11 of Agriculture—

12 ‘‘(A) current and complete information on

13 all aspects of Federal crop insurance; and

14 ‘‘(B) a listing of insurance agents and

15 companies offering to sell crop insurance in

16 their area.

17 ‘‘(6) ADDITION OF NEW AND SPECIALTY

18 CROPS.—

19 ‘‘(A) DATA COLLECTION.—Not later than

20 6 months after the date of the enactment of

21 this paragraph, the Secretary shall issue guide22 lines for publication in the Federal Register for

23 data collection to assist the Corporation in for24 mulating crop insurance policies for new and

25 specialty crops.
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1 ‘‘(B) ADDITION OF NEW CROPS.—Not later

2 than 1 year after the date of the enactment of

3 this paragraph, and annually thereafter, the

4 Corporation shall report to Congress on the

5 progress and expected timetable for expanding

6 crop insurance coverage under this title to new

7 and specialty crops.

8 ‘‘(C) ADDITION OF DIRECT SALE PERISH9 ABLE CROPS.—Not later than 1 year after the

10 date of the enactment of this paragraph, the

11 Corporation shall report to Congress on the fea12 sibility of offering a crop insurance program de13 signed to meet the needs of specialized produc14 ers of vegetables and other perishable crops who

15 market through direct marketing channels.’’.

16 (b) REPORT ON IMPROVING DISSEMINATION OF

17 CROP INSURANCE INFORMATION.—Not later than 6

18 months after the date of the enactment of this Act, the

19 Federal Crop Insurance Corporation shall submit a report

20 to Congress containing a plan to implement a sound pro21 gram for producer education regarding the crop insurance

22 program and for the dissemination of crop insurance infor23 mation to producers, as required by section 508(a)(5) of

24 the Federal Crop Insurance Act. Subsequent reports on
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1 the progress of the implementation of the program shall

2 be submitted to Congress in 1996 and 1997.

3 SEC. 6. CATASTROPHIC RISK PROTECTION, BUY-UP COV4 ERAGE, PREMIUMS, AND YIELD DETERMINA5 TIONS.

6 (a) IN GENERAL.—Section 508 of the Federal Crop

7 Insurance Act (7 U.S.C. 1508) is amended—

8 (1) by striking subsections (c), (e), (f), (g), (h),

9 (i), (l), (m), and (n);

10 (2) by redesignating subsections (b) and (d) as

11 subsections (h) and (i), respectively; and

12 (3) by inserting after subsection (a) the follow13 ing new subsections:

14 ‘‘(b) CATASTROPHIC RISK PROTECTION.—

15 ‘‘(1) CATASTROPHIC RISK PROTECTION RE16 QUIRED.—The Corporation shall offer to producers

17 of agricultural commodities grown in the United

18 States a catastrophic risk protection plan to indem19 nify a producer for crop losses due to loss of yield

20 or prevented planting resulting from drought, flood,

21 or other natural disaster, as determined by the Sec22 retary, if the producer is unable to plant other crops

23 for harvest on that acreage for that crop year.

24 ‘‘(2) AMOUNT OF COVERAGE.—
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1 ‘‘(A) IN GENERAL.—Subject to subpara2 graph (B), under catastrophic risk protection,

3 the Corporation shall offer producers—

4 ‘‘(i) coverage equal to 50 percent loss

5 in yield (determined on an area or individ6 ual yield basis as described in subsection

7 (g)) indemnified at 60 percent of the ex8 pected market price of the commodity (as

9 determined by the Corporation); or

10 ‘‘(ii) other coverage established by the

11 Corporation that is comparable to the cov12 erage described in clause (i).

13 ‘‘(B) REDUCTION IN ACTUAL PAYMENT.—

14 The amount paid to a producer on a claim

15 under catastrophic risk protection may reflect a

16 reduction that is proportional to the out-of17 pocket expenses that are not incurred by the

18 producer as a result of not planting, growing,

19 or harvesting the crop for which the claim is

20 made, as determined by the Corporation.

21 ‘‘(3) YIELD AND LOSS BASIS.—Producers shall

22 have the option of purchasing catastrophic risk pro23 tection based on either an individual yield and loss

24 basis or on an area yield and loss basis, as described
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1 in subsection (g), when both options are offered by

2 the Corporation.

3 ‘‘(4) APPLICATION.—To participate in cata4 strophic risk protection, producers shall submit an

5 application at the local office of the Department of

6 Agriculture or to a private insurance provider ap7 proved by the Corporation.

8 ‘‘(5) ADMINISTRATIVE FEE.—

9 ‘‘(A) FEE REQUIRED.—Producers shall

10 pay an administrative fee for catastrophic risk

11 protection. The administrative fee for each pro12 ducer shall be $50 per crop per county, but not

13 to exceed $200 per producer per county up to

14 a maximum of $600 per producer for all coun15 ties in which a producer has insured crops. The

16 administrative fee shall be paid by the producer

17 at the time the producer applies for cata18 strophic risk protection.

19 ‘‘(B) WAIVER OF FEE.—The Corporation

20 shall waive the administrative fee for limited re21 source farmers, as defined by the Corporation.

22 ‘‘(C) USE OF FEES.—There are authorized

23 to be appropriated from fees required under

24 subparagraph (A) such sums as may be nec25 essary for operating and administrative ex-
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1 penses incurred for the delivery of catastrophic

2 risk protection.

3 ‘‘(6) COVERAGE OF ALL CROPS.—To be eligible

4 for benefits under any commodity price support, pro5 duction adjustment, or conservation program admin6 istered by the Department of Agriculture, or for the

7 farmer loan programs of the Farmers Home Admin8 istration or any successor of that agency, a producer

9 must obtain at least catastrophic risk protection for

10 each crop of economic significance produced on each

11 farm in any county in which the producer has an in12 terest, if insurance is available in the county for

13 those crops. For purposes of this paragraph, the

14 term ‘crop of economic significance’ means a crop

15 that has contributed, or is expected to contribute, 10

16 percent or more of the total expected value of all

17 crops grown by the producer.

18 ‘‘(7) COVERAGE UNDER ONE POLICY.—If a pro19 ducer applies for catastrophic risk protection for a

20 crop produced by the producer in a county, the pro21 ducer shall be required to secure such protection

22 under a single policy.

23 ‘‘(8) AUTHORITY TO LIMIT CATASTROPHIC RISK

24 PROTECTION.—The Board may limit the availability

25 of catastrophic risk protection in any county or area,
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1 or on any farm, on the basis of the insurance risk

2 involved.

3 ‘‘(9) TRANSITIONAL COVERAGE FOR 1995

4 CROPS.—Effective only for the 1995 crops and for

5 which the sales period for crop insurance expires be6 fore the date of the enactment of the Federal Crop

7 Insurance Reform Act of 1994, the Corporation

8 shall allow producers of such crops until at least the

9 end of the 6-month period beginning on such date

10 to obtain catastrophic risk protection for such crops.

11 Upon the enactment of such Act, producers who

12 made timely purchases of a crop insurance policy be13 fore the date of the enactment of such Act, under

14 the provisions then in effect, shall be eligible for the

15 same benefits to which a producer would be entitled

16 under comparable buy-up coverage under subsection

17 (c).

18 ‘‘(c) COVERAGE LEVELS GREATER THAN CATA19 STROPHIC RISK PROTECTION.—

20 ‘‘(1) BUY-UP COVERAGE GENERALLY.—The

21 Corporation shall offer to producers of agricultural

22 commodities grown in the United States plans of

23 crop insurance providing levels of coverage greater

24 than that available under catastrophic risk protec25 tion under subsection (b). Plans of insurance under
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1 this subsection shall be known as ‘buy-up coverage’.

2 Producers shall apply to private insurance providers

3 approved by the Corporation for purchase of buy-up

4 coverage if such coverage is available from private

5 insurance providers. If buy-up coverage is unavail6 able privately, the Corporation may offer buy-up cov7 erage plans of insurance directly to producers. If a

8 producer applies for catastrophic risk protection at

9 an office of the Department of Agriculture but then

10 elects to purchase buy-up coverage under this sub11 section, the insurance file for that producer shall be

12 transferred to the approved private insurance pro13 vider servicing the buy-up coverage policy.

14 ‘‘(2) ADMINISTRATIVE FEE.—

15 ‘‘(A) FEE REQUIRED.—If a producer elects

16 to purchase buy-up coverage for a crop at a

17 level less than 65 percent of the recorded or ap18 praised average yield indemnified at 100 per19 cent of the expected market price, or an equiva20 lent coverage, the producer shall pay an admin21 istrative fee for such buy-up coverage. Sub22 section (b)(5) shall apply in determining the

23 amount and use of the administrative fee or in

24 determining whether to waive the administra25 tive fee.
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1 ‘‘(B) EXCEPTION.—If a producer elects to

2 purchase buy-up coverage for a crop equal to

3 65 percent or more of the recorded or appraised

4 average yield indemnified at 100 percent of the

5 expected market price, or an equivalent cov6 erage, the producer shall not be subject to the

7 administrative fee required by this paragraph or

8 subsection (b)(5). If the producer has already

9 paid the administrative fee for a lower level of

10 coverage for that crop, the administrative fee

11 shall be refunded to the producer unless the re12 fund would reduce to less than $200 the total

13 amount of the administrative fees paid by the

14 producer for 2 or more crops in the same coun15 ty for which a lower level of coverage is ob16 tained.

17 ‘‘(3) YIELD AND LOSS BASIS.—Producers shall

18 have the option of purchasing buy-up coverage based

19 on either an individual yield and loss basis or on an

20 area yield and loss basis, as described in subsection

21 (g), when both options are offered by the Corpora22 tion.

23 ‘‘(4) YIELD ELECTIONS.—Yield coverage shall

24 be made available to the producer on the basis of

25 any yield election that equals or is less than 85 per-
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1 cent of the individual yield or 95 percent of the area

2 yield, as determined by the Corporation.

3 ‘‘(5) PRICE LEVELS.—

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

5 establish a price level for each commodity on

6 which buy-up coverage is offered that—

7 ‘‘(i) shall not be less than the ex8 pected market price for the commodity, as

9 determined by the Corporation; or

10 ‘‘(ii) at the discretion of the Corpora11 tion, may be based on the actual market

12 price at the time of harvest, as determined

13 by the Corporation.

14 ‘‘(B) SPECIAL RULE FOR MALTING BAR15 LEY.—For malting barley covered by a contract

16 between a producer and a processor, the Cor17 poration may offer a plan of insurance that al18 lows the producer to select the contract price as

19 the price election if—

20 ‘‘(i) the contract is definite as to the

21 quantity and the price;

22 ‘‘(ii) the producer submits a copy of

23 the contract with the application for insur24 ance prior to the sales closing date for the

25 crop;
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1 ‘‘(iii) coverage does not exceed the

2 quantity contained in the contract;

3 ‘‘(iv) the contracted quantity does not

4 exceed the production guarantee;

5 ‘‘(v) the contract is usual and cus6 tomary in form and content for the area;

7 ‘‘(vi) the processor is completely inde8 pendent from the producer; and

9 ‘‘(vii) the processor does not have an

10 insurable interest in the crop.

11 ‘‘(6) PRICE ELECTIONS.—Subject to paragraph

12 (10), insurance coverage shall be made available to

13 the producer on the basis of any price election that

14 equals or is less than that established by the Board.

15 ‘‘(7) LEVEL OF COVERAGE.—Not later than the

16 beginning of the 1996 crop year, the level of cov17 erage shall be quoted in terms of dollars per acre.

18 ‘‘(8) REDUCTION IN ACTUAL PAYMENT.—The

19 amount paid to a producer on a claim under buy-up

20 coverage may reflect a reduction that is proportional

21 to the out-of-pocket expenses that are not incurred

22 by the producer as a result of not planting, growing,

23 or harvesting the crop for which the claim is made,

24 as determined by the Corporation.
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1 ‘‘(9) FIRE AND HAIL COVERAGE.—For levels of

2 buy-up coverage equal to 65 percent or more of the

3 recorded or appraised average yield indemnified at

4 100 percent of the expected market price, or an

5 equivalent coverage, the producer may elect to delete

6 from the buy-up coverage any coverage against dam7 age caused by fire and hail if the producer obtains

8 an equivalent or greater dollar amount of coverage

9 for damage caused by fire and hail from a private

10 insurance provider. Upon written notice of such elec11 tion to the company issuing the policy providing

12 buy-up coverage and submission of evidence of sub13 stitute coverage on the commodity insured, the pro14 ducer’s premium shall be reduced by an amount de15 termined by the Corporation to be actuarially appro16 priate, taking into account the actuarial value of the

17 remaining coverage provided by the Corporation. In

18 no event shall the producer be given credit for an

19 amount of premium determined to be greater than

20 the actuarial value of the protection against losses

21 caused by fire and hail that is included in the buy22 up coverage for the crop.

23 ‘‘(10) LIMITATIONS ON BUY-UP COVERAGE.—

24 The Board may limit the availability of buy-up cov25 erage under this subsection in any county or area,
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1 or on any farm, on the basis of the insurance risk

2 involved. The Board shall not offer buy-up coverage

3 equal to less than 50 percent of the recorded or ap4 praised average yield indemnified at 100 percent of

5 the expected market price, or an equivalent coverage.

6 ‘‘(d) PREMIUMS.—

7 ‘‘(1) PREMIUMS REQUIRED.—The Corporation

8 shall fix adequate premiums for all its plans of in9 surance at such rates as the Board deems actuari10 ally sufficient to attain an expected loss ratio of not

11 greater than 1.1.

12 ‘‘(2) PREMIUM AMOUNTS.—The premium

13 amounts for catastrophic risk protection under sub14 section (b) and buy-up coverage under subsection (c)

15 shall be fixed as follows:

16 ‘‘(A) In the case of catastrophic risk pro17 tection, the amount of the premium shall be

18 sufficient to cover anticipated losses and a rea19 sonable reserve.

20 ‘‘(B) In the case of buy-up coverage below

21 65 percent of the recorded or appraised average

22 yield indemnified at 100 percent of the expected

23 market price, or an equivalent coverage, but

24 greater than 50 percent of the recorded or ap25 praised average yield indemnified at 100 per-
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1 cent of the expected market price, or an equiva2 lent coverage, the amount of the premium

3 shall—

4 ‘‘(i) be sufficient to cover anticipated

5 losses and a reasonable reserve; and

6 ‘‘(ii) include an amount for operating

7 and administrative expenses, as determined

8 by the Corporation, that is less than the

9 amount established for coverage at 65 per10 cent of the recorded or appraised average

11 yield indemnified at 100 percent of the ex12 pected market price, or an equivalent cov13 erage.

14 ‘‘(C) In the case of buy-up coverage equal

15 to or greater than 65 percent of the recorded

16 or appraised average yield indemnified at 100

17 percent of the expected market price, or an

18 equivalent coverage, the amount of the premium

19 shall—

20 ‘‘(i) be sufficient to cover anticipated

21 losses and a reasonable reserve; and

22 ‘‘(ii) include an amount for operating

23 and administrative expenses, as determined

24 by the Corporation, on an industry-wide

25 basis as a percent of the amount of the
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1 premium used to define loss ratio under

2 section 502.

3 ‘‘(3) PREMIUM REDUCTION.—If a private insur4 ance provider determines that it may provide insur5 ance more efficiently than the expense reimburse6 ment amount established by the Corporation, the

7 private insurance provider may reduce, subject to

8 the approval of the Corporation, the premium

9 charged the insured by an amount corresponding to

10 such efficiency. The private insurance provider shall

11 apply to the Corporation for authority to reduce the

12 premium before making such a reduction, and the

13 reduction shall be subject to the rules, limitations,

14 and procedures established by the Corporation.

15 ‘‘(4) INDIVIDUAL AND AREA CROP INSURANCE

16 COVERAGE.—The Corporation shall allow approved

17 insurance providers to offer to producers a plan of

18 insurance that combines both individual yield cov19 erage and area yield coverage at a premium rate de20 termined by the provider, subject to the following

21 conditions:

22 ‘‘(A) The individual yield coverage shall be

23 equal to or greater than catastrophic risk pro24 tection, as described in subsection (b).
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1 ‘‘(B) The combined policy shall include

2 area yield coverage that is offered by the Cor3 poration or similar area coverage, as deter4 mined by the Corporation.

5 ‘‘(C) The Corporation shall provide rein6 surance on the area yield portion of the com7 bined policy at the request of the provider, ex8 cept that the provider shall agree to pay to the

9 producer any portion of the area yield and loss

10 indemnity payment received from the Corpora11 tion or a commercial reinsurer that exceeds the

12 individual indemnity payment made by the pro13 vider to the producer.

14 ‘‘(D) The Corporation shall pay a part of

15 the premium equivalent to—

16 ‘‘(i) the amount authorized under sub17 section (e)(2) (except provisions regarding

18 operating and administrative expenses);

19 and

20 ‘‘(ii) the amount of operating and ad21 ministrative expenses authorized by the

22 Corporation for the area yield coverage

23 portion of the combined policy.

24 ‘‘(E) The provider shall provide all under25 writing services for the combined policy, includ-
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1 ing the determination of individual yield cov2 erage premium rates, the terms and conditions

3 of the policy, and the acceptance and classifica4 tion of applicants into risk categories, subject to

5 subparagraph (F).

6 ‘‘(F) The Corporation shall approve the

7 combined policy unless the Corporation deter8 mines that the policy is not actuarially sound or

9 that the interests of producers are not ade10 quately protected.’’.

11 ‘‘(e) PAYMENT OF PORTION OF PREMIUM BY COR12 PORATION.—

13 ‘‘(1) IN GENERAL.—For the purpose of encour14 aging the broadest possible participation of produc15 ers in the catastrophic risk protection provided

16 under subsection (b) and the buy-up coverage pro17 vided under subsection (c), the Corporation shall pay

18 a part of the premium in the amounts provided in

19 this subsection.

20 ‘‘(2) AMOUNT OF PAYMENT.—The amount of

21 the premium to be paid by the Corporation shall be

22 as follows:

23 ‘‘(A) In the case of catastrophic risk pro24 tection, the amount shall be equivalent to the
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1 premium established for catastrophic risk pro2 tection under subsection (d)(2)(A).

3 ‘‘(B) In the case of coverage below 65 per4 cent of the recorded or appraised average yield

5 indemnified at 100 percent of the expected mar6 ket price, or an equivalent coverage, but greater

7 than 50 percent of the recorded or appraised

8 average yield indemnified at 100 percent of the

9 expected market price, or an equivalent cov10 erage, the amount shall be equivalent to the

11 amount of premium established for catastrophic

12 risk protection coverage and the amount of op13 erating and administrative expenses established

14 under subsection (d)(2)(B).

15 ‘‘(C) In the case of coverage equal to or

16 greater than 65 percent of the recorded or ap17 praised average yield indemnified at 100 per18 cent of the expected market price, or an equiva19 lent coverage, on an individual or area basis,

20 the amount shall be equivalent to an amount

21 equal to the premium established for 50 percent

22 loss in yield indemnified at 75 percent of the

23 expected market price and the amount of oper24 ating and administrative expenses established

25 under subsection (d)(2)(C).
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1 ‘‘(3) STATE SUBSIDY AUTHORIZED.—The

2 Board may enter into agreements with any State or

3 agency of a State under which the State or agency

4 may pay to the approved insurance provider an addi5 tional premium subsidy to further reduce the portion

6 of the premium paid by producers in the State.

7 ‘‘(f) ELIGIBILITY REQUIREMENTS.—

8 ‘‘(1) PERSONS ELIGIBLE.—Except as otherwise

9 provided in this title, no producer may be denied in10 surance under this section if the producer meets the

11 definition of person, as defined by the Secretary. In

12 the case of plans of insurance under this title other

13 than catastrophic risk protection, the definition of

14 person shall include a producer who is over 18 years

15 of age or older and has a bona fide insurable inter16 est in a crop as an owner, owner-operator, landlord,

17 tenant, or sharecropper.

18 ‘‘(2) SALES CLOSING DATE.—A producer who

19 desires to obtain catastrophic risk protection under

20 subsection (b) or buy-up coverage under subsection

21 (c) for a crop shall submit an application by the

22 sales closing date for the crop. The Corporation

23 shall establish sales closing dates to maximize con24 venience to producers in obtaining benefits under

25 commodity price support and production adjustment
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1 programs of the Department whenever feasible; ex2 cept that, in establishing such dates, the Corporation

3 shall ensure that the goal of actuarial soundness for

4 the crop insurance program under this title is met.

5 Beginning with the 1995 crop year, the Corporation

6 shall establish for each insurable crop a sales closing

7 date that is 30 days earlier than the corresponding

8 sales closing date that was established for the 1994

9 crop year.

10 ‘‘(3) RECORDS AND REPORTING.—To obtain

11 catastrophic risk protection under subsection (b) or

12 buy-up coverage under subsection (c), a producer

13 shall—

14 ‘‘(A) provide, to the extent required by the

15 Corporation, records acceptable to the Corpora16 tion of historical acreage and production of the

17 crops for which the insurance is sought or ac18 cept a yield determined by the Corporation; and

19 ‘‘(B) report acreage planted and prevented

20 from planting by the designated acreage report21 ing date for that crop and location as estab22 lished by the Corporation.

23 ‘‘(4) LIMITATION ON MULTIPLE BENEFITS FOR

24 SAME LOSS.—If a producer who is eligible to receive

25 benefits under catastrophic risk protection under
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1 subsection (b) or noninsured crop disaster assistance

2 under section 519 is also eligible to receive assist3 ance for the same loss under any other program ad4 ministered by the Secretary, the producer shall be

5 required to elect whether to receive benefits under

6 this title or under such other program, but not both.

7 A producer who purchases buy-up coverage under

8 subsection (c) may also receive assistance for the

9 same loss under other programs administered by the

10 Secretary, except that the amount received for the

11 loss under the buy-up coverage together with the

12 amount received under such other programs may not

13 exceed the amount of the producer’s actual loss.

14 ‘‘(g) YIELD COVERAGE DETERMINATIONS.—

15 ‘‘(1) IN GENERAL.—The Corporation shall im16 plement crop insurance underwriting rules that en17 sure that yield coverage, as specified in this sub18 section, is provided to eligible producers obtaining

19 catastrophic risk protection under subsection (b) or

20 buy-up coverage under subsection (c).

21 ‘‘(2) INDIVIDUAL YIELD BASIS.—

22 ‘‘(A) ACTUAL PRODUCTION HISTORY.—The

23 Corporation shall determine yield coverage

24 using the producer’s actual production history

25 over a period of not less than the 4 previous
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1 consecutive crop years and not more than 10

2 consecutive crop years. Subject to subparagraph

3 (B), the yield for insurance purposes for the

4 year for which insurance is sought shall be

5 equal to the average of the producer’s actual

6 production history during the period considered.

7 ‘‘(B) ASSIGNMENT OF YIELD.—Except as

8 provided in subparagraphs (C) and (D), if a

9 producer does not submit adequate documenta10 tion of production history to determine crop

11 yield under subparagraph (A), the Corporation

12 shall assign to the producer a yield equal to not

13 less than 65 percent of the transitional yield of

14 the producer (adjusted to reflect actual produc15 tion reflected in the records acceptable to the

16 Corporation for continuous years), as specified

17 in regulations issued by the Corporation based

18 on production history requirements.

19 ‘‘(C) PILOT PROGRAM OF ASSIGNED

20 YIELDS FOR NEW PRODUCERS.—

21 ‘‘(i) PROGRAM REQUIRED.—For each

22 of the 1995 and 1996 crop years, the Cor23 poration shall carry out a pilot program to

24 assign to eligible new producers higher as25 signed yields than would otherwise be as-
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1 signed to such producers under subpara2 graph (B). The Corporation shall include

3 in the pilot program 30 counties that are

4 determined by the Corporation to be ade5 quate to provide a comprehensive evalua6 tion of the feasibility, effectiveness, and de7 mand among new producers for increased

8 assigned yields.

9 ‘‘(ii) INCREASED ASSIGNED YIELDS.—

10 In the case of an eligible new producer

11 participating in the pilot program, the Cor12 poration shall assign to the new producer

13 a yield equal to not less than 110 percent

14 of the transitional yield otherwise estab15 lished by the Corporation.

16 ‘‘(iii) ELIGIBLE NEW PRODUCER.—

17 The Secretary shall establish a definition

18 of new producer for purposes of determin19 ing eligibility to participate in the pilot

20 program.

21 ‘‘(D) ALTERNATIVE ASSIGNED YIELDS FOR

22 PRODUCERS OF FEED OR FORAGE.—

23 ‘‘(i) FEED OR FORAGE YIELDS.—For

24 the first crop year for which an eligible

25 producer described in clause (ii) obtains
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1 catastrophic risk protection under sub2 section (b) or buy-up coverage under sub3 section (c) for a feed or forage crop, the

4 Corporation shall assign to the producer a

5 yield equal to not less than 80 percent of

6 the transitional yield established by the

7 Corporation (adjusted to reflect the actual

8 production history of the producer) if the

9 producer does not provide satisfactory evi10 dence of the yield under subparagraph (A).

11 For not more than three additional years,

12 the Corporation shall provide the producer

13 with a yield based on the greater of—

14 ‘‘(I) the producer’s actual pro15 duction history for the preceding year

16 (or years if available); and

17 ‘‘(II) the assigned yield deter18 mined under this clause.

19 ‘‘(ii) ELIGIBLE PRODUCERS.—An eli20 gible producer referred to in clause (i) is a

21 producer that, as determined by the Sec22 retary—

23 ‘‘(I) grows the insured feed or

24 forage crop primarily for on-farm use
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1 in a livestock, dairy, or poultry oper2 ation; and

3 ‘‘(II) derives over 50 percent of

4 the producer’s gross farm income

5 from the livestock, dairy, or poultry

6 operation.

7 ‘‘(iii) TERMINATION OF AUTHORITY.—

8 The authority provided by this subpara9 graph shall apply only during the 1995

10 through 1998 crop years.

11 ‘‘(3) AREA YIELD BASIS.—The Corporation may

12 offer a crop insurance plan based on an area yield

13 that allows an insured producer to qualify for an in14 demnity if a loss occurs in an area, as specified by

15 the Corporation, in which the farm of the producer

16 is located. Under an area yield plan, an insured pro17 ducer shall be allowed to select the level of area pro18 duction at which an indemnity will be paid consist19 ent with the terms and conditions established by the

20 Corporation.

21 ‘‘(4) COMMODITY-BY-COMMODITY BASIS.—A

22 producer may choose between either individual yield

23 or area yield coverage, where available, on a com24 modity-by-commodity basis.’’.

25 (b) CONFORMING AMENDMENTS.—
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1 (1) REPEAL OF EXISTING CROP INSURANCE

2 YIELD COVERAGE.—Section 508A of the Federal

3 Crop Insurance Act (7 U.S.C. 1508A) is repealed.

4 (2) PREEMPTION.—Section 511 of such Act (7

5 U.S.C. 1511) is amended by adding at the end the

6 following sentence: ‘‘The Corporation’s contracts of

7 insurance and the contracts of insurance reinsured

8 by the Corporation shall be exempt from taxation

9 imposed by any State, municipality, or local taxing

10 authority.’’.

11 (3) PERSONS UNDER 21 YEARS OF AGE.—Sec12 tion 520 of such Act (7 U.S.C. 1520) is repealed.

13 SEC. 7. PREPARATION OF POLICIES, CLAIMS, AND REIN14 SURANCE.

15 (a) SUBMISSION OF POLICIES.—Subsection (h) of

16 section 508 of the Federal Crop Insurance Act (7 U.S.C.

17 1508), as redesignated by section 6(a)(2), is amended—

18 (1) in paragraph (1), by striking ‘‘subsection

19 (a)’’ and inserting ‘‘subsection (c)’’; and

20 (2) by striking paragraphs (2), (3), and (4) and

21 inserting the following new paragraphs:

22 ‘‘(2) SUBMISSION OF POLICIES.—A policy or

23 other material submitted to the Board under this

24 subsection may be prepared without regard to the

25 limitations contained in this title, including the re-
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1 quirements concerning the levels of coverage and

2 rates and the requirement that a price level for each

3 commodity insured must equal the expected market

4 price for the commodity as established by the Board.

5 In the case of such a policy, the payment by the

6 Corporation of a portion of the premium of the pol7 icy may not exceed the amount that would otherwise

8 be authorized under subsection (e).

9 ‘‘(3) REVIEW AND APPROVAL BY THE BOARD.—

10 A policy or other material submitted to the Board

11 under this subsection shall be reviewed by the Board

12 and, if the Board finds that the interests of produc13 ers are adequately protected and that any premiums

14 charged to such producers are actuarially appro15 priate, shall be approved by the Board for reinsur16 ance and for sale to producers as an additional

17 choice at actuarially appropriate rates and under ap18 propriate terms and conditions. The Corporation

19 may enter into more than one reinsurance agree20 ment with the private insurance provider simulta21 neously to facilitate the offering of such new policies.

22 ‘‘(4) GUIDELINES FOR SUBMISSION AND RE23 VIEW.—The Corporation shall issue regulations to

24 establish guidelines for the submission and Board

25 review of policies or other material submitted to the
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1 Board under this subsection. At a minimum, the

2 guidelines shall ensure the following:

3 ‘‘(A) Proposals submitted to the Board

4 under this subsection shall be considered as

5 confidential commercial or financial information

6 for purposes of section 552(b)(4) of title 5,

7 United States Code, until approved by the

8 Board. Proposals disapproved by the Board

9 shall remain confidential commercial or finan10 cial information.

11 ‘‘(B) The Board shall provide an applicant

12 with the opportunity to present the proposal to

13 the Board in person if the applicant so desires.

14 ‘‘(C) The Board shall provide an applicant

15 with notification of intent to disapprove a pro16 posal not later than 30 days prior to taking

17 such action. An applicant that receives such no18 tification may modify such application, and

19 such modification shall be considered an origi20 nal application for purposes of this paragraph.

21 ‘‘(D) Specific guidelines shall deal with the

22 timing of submission of proposals under this

23 subsection and timely consideration by the

24 Board so that any approved proposal may be

25 made available to all persons reinsured by the
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1 Corporation in a manner permitting them to

2 participate, if they so desire, in offering such a

3 proposal in the first crop year in which it is ap4 proved by the Board for reinsurance, premium

5 subsidy, or other support offered by this title.

6 ‘‘(5) REQUIRED PUBLICATION.—Any policies,

7 provisions of policies, and rates approved under this

8 subsection shall be published as a notice in the Fed9 eral Register and made available to all persons con10 tracting with or reinsured by the Corporation under

11 the same terms and conditions as between the Cor12 poration and the person originally submitting the

13 policy or other material.’’.

14 (b) CLAIMS FOR LOSSES AND REINSURANCE.—Sec15 tion 508 of the Federal Crop Insurance Act (7 U.S.C.

16 1508) is further amended—

17 (1) by redesignating subsections (j) and (k) as

18 subsections (l) and (m), respectively; and

19 (2) inserting after subsection (i), as redesig20 nated by section 6(a)(2), the following new sub21 sections:

22 ‘‘(j) CLAIMS FOR LOSSES.—

23 ‘‘(1) IN GENERAL.—Under rules prescribed by

24 the Corporation, the Corporation may provide for

25 adjustment and payment of claims for losses. The
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1 rules prescribed by the Corporation shall establish

2 standards to ensure that all claims for losses are ad3 justed, to the extent practicable, in a uniform and

4 timely manner.

5 ‘‘(2) DENIAL OF CLAIMS.—

6 ‘‘(A) IN GENERAL.—Subject to subpara7 graph (B), if a claim for indemnity is denied by

8 the Corporation, an action on the claim may be

9 brought against the Corporation or Secretary

10 only in the United States district court for the

11 district in which the insured farm is located.

12 ‘‘(B) STATUTE OF LIMITATIONS.—A suit

13 on the claim may be brought not later than 1

14 year after the date on which written notice of

15 denial of the claim is provided to the claimant.

16 ‘‘(3) INDEMNIFICATION.—The Corporation shall

17 provide private insurance providers with indemnifica18 tion, including costs and reasonable attorney fees in19 curred by the private insurance provider, due to er20 rors or omissions on the part of the Corporation.

21 ‘‘(k) REINSURANCE.—Notwithstanding any other

22 provision of this title, the Corporation shall, to the maxi23 mum extent practicable, provide reinsurance to insurers

24 approved by the Corporation that insure producers of any

25 agricultural commodity under a plan or plans acceptable
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1 to the Corporation. Such reinsurance shall be provided

2 upon such terms and conditions as the Board may deter3 mine to be consistent with subsections (b) and (c) and

4 sound reinsurance principles. The Corporation’s reinsur5 ance agreements with the reinsured companies shall re6 quire the reinsured companies to bear a sufficient share

7 of any potential loss under such agreement so as to ensure

8 that the reinsured company will sell and service policies

9 of insurance in a sound and prudent manner, taking into

10 consideration the financial condition of the reinsured com11 panies and the availability of private reinsurance.’’.

12 (c) CROSS REFERENCES.—

13 (1) CLAIMS FOR LOSSES.—Section 506(d) of

14 the Federal Crop Insurance Act (7 U.S.C. 1506(d))

15 is amended in the first sentence by striking ‘‘section

16 508(f)’’ and inserting ‘‘section 508(j)’’.

17 (2) SUBMISSION OF MATERIALS TO BOARD.—

18 Section 507(c) of such Act (7 U.S.C. 1507(c)) is

19 amended in the last sentence by striking ‘‘section

20 508(b)’’ and inserting ‘‘section 508(h)’’.

21 (3) DEFINITION OF AGRICULTURAL COMMOD22 ITY.—Section 518 of such Act (7 U.S.C. 1518) is

23 amended by striking ‘‘or (k)’’ and inserting ‘‘or

24 (m)’’.
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1 SEC. 8. AUTHORIZATION OF APPROPRIATIONS AND CROP

2 INSURANCE FUND.

3 Section 516 of the Federal Crop Insurance Act (7

4 U.S.C. 1516) is amended to read as follows:

5 ‘‘SEC. 516. FUNDING.

6 ‘‘(a) AUTHORIZATION OF APPROPRIATIONS FOR COR7 PORATION SALARIES AND AGENT COMMISSIONS.—There

8 are hereby authorized to be appropriated such sums as

9 are necessary to cover the salaries and administrative ex10 penses of the Corporation and the administrative and op11 erating expenses of the Corporation for the sales commis12 sions of agents.

13 ‘‘(b) CROP INSURANCE FUND.—

14 ‘‘(1) ESTABLISHMENT.—There is hereby estab15 lished an insurance fund for deposit of premiums

16 collected under section 508(d), income from reinsur17 ance operations, and appropriations made available

18 under paragraph (2).

19 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.—

20 There are hereby authorized to be appropriated such

21 sums as may be necessary to carry out the purposes

22 of the insurance fund.

23 ‘‘(c) PURPOSES OF INSURANCE FUND.—In such ag24 gregate amount as is provided in advance in appropria25 tions Acts, the Corporation may use amounts in the insur26 ance fund to pay the following:
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1 ‘‘(1) Beginning with the 1998 crop year, the

2 administrative and operating expenses of approved

3 insurance providers, other than expenses for which

4 funds are authorized to be appropriated under sub5 section (a).

6 ‘‘(2) All other expenses of the Corporation

7 (other than expenses for which funds are authorized

8 to be appropriated under subsection (a)), including

9 all premium subsidies and indemnities.

10 ‘‘(3) For the 1995, 1996, and 1997 crop years,

11 all administrative and expense reimbursements due

12 under a reinsurance agreement with an approved

13 private insurance provider.

14 ‘‘(4) Expenses incurred by the Corporation to

15 carry out research and development.

16 ‘‘(d) PURCHASE OF AMERICAN-MADE EQUIPMENT

17 AND PRODUCTS.—

18 ‘‘(1) SENSE OF CONGRESS.—It is the sense of

19 the Congress that, to the greatest extent practicable,

20 all equipment and products purchased by the Cor21 poration using funds made available to the Corpora22 tion should be American-made.

23 ‘‘(2) NOTICE REQUIREMENT.—In providing fi24 nancial assistance to, or entering into any contract

25 with, any entity for the purchase of equipment and
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1 products to carry out this title, the Corporation, to

2 the greatest extent practicable, shall provide to such

3 entity a notice describing the statement made in

4 paragraph (1) by the Congress.’’.

5 SEC. 9. ADVISORY COMMITTEE.

6 The Federal Crop Insurance Act is amended by in7 serting after section 514 (7 U.S.C. 1514) the following

8 new section:

9 ‘‘SEC. 515. ADVISORY COMMITTEE FOR FEDERAL CROP IN10 SURANCE.

11 ‘‘(a) ESTABLISHMENT AND TERMINATION.—The

12 Secretary may establish within the Department of Agri13 culture an advisory committee to be known as the Advisory

14 Committee for Federal Crop Insurance. If established, the

15 Advisory Committee shall remain in existence until Sep16 tember 30, 1998.

17 ‘‘(b) PRIMARY RESPONSIBILITY.—The primary re18 sponsibility of the Advisory Committee shall be to advise

19 the Secretary on the implementation of this title and on

20 other issues related to crop insurance, as determined by

21 the Manager.

22 ‘‘(c) MEMBERSHIP.—The Advisory Committee shall

23 be composed of the Manager of the Corporation, the Sec24 retary (or a designee of the Secretary), and not less than

25 12 members representing organizations and agencies in-
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1 volved in the provision of crop insurance under this title.

2 Not less than 3 of the members of the Advisory Committee

3 shall be representatives of the specialty crops industry.

4 The organizations or agencies represented by members on

5 the Advisory Committee may include insurance companies,

6 insurance agents, farm producer organizations, experts on

7 agronomic practices, and banking and lending institutions.

8 ‘‘(d) ADMINISTRATIVE PROVISIONS.—

9 ‘‘(1) TERMS.—Members of the Advisory Com10 mittee shall be appointed by the Secretary for a

11 term of up to 2 years from nominations made by the

12 organizations and agencies specified in subsection

13 (c). The terms of the members shall be staggered.

14 ‘‘(2) CHAIRPERSON.—The Advisory Committee

15 shall be chaired by the Manager of the Corporation.

16 ‘‘(3) MEETINGS.—The Advisory Committee

17 shall meet at least annually. The meetings of the

18 Advisory Committee shall be publicly announced in

19 advance and shall be open to the public. Appropriate

20 records of the activities of the Advisory Committee

21 shall be kept and made available to the public on re22 quest.

23 ‘‘(e) REPORTS.—Not later than June 30 of each year,

24 the Advisory Committee shall submit to the Secretary a
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1 report specifying its conclusions and recommendations re2 garding—

3 ‘‘(1) the progress toward implementation of the

4 provisions of this title;

5 ‘‘(2) the actuarial soundness of the Federal

6 crop insurance program;

7 ‘‘(3) the rate of producer participation in both

8 catastrophic risk protection under section 508(b)

9 and buy-up coverage under section 508(c); and

10 ‘‘(4) the progress toward improved crop insur11 ance coverage for new and specialty crops.’’.

12 SEC. 10. NONINSURED CROP DISASTER ASSISTANCE.

13 (a) IN GENERAL.—Section 519 of the Federal Crop

14 Insurance Act (7 U.S.C. 1519) is amended to read as fol15 lows:

16 ‘‘SEC. 519. NONINSURED CROP DISASTER ASSISTANCE PRO17 GRAM.

18 ‘‘(a) ESTABLISHMENT OF PROGRAM.—

19 ‘‘(1) ESTABLISHMENT.—In the case of an eligi20 ble crop described in paragraph (2), the Corporation

21 shall establish a noninsured crop disaster assistance

22 program to provide coverage equivalent to the cata23 strophic risk protection otherwise available under

24 section 508(b).

25 ‘‘(2) ELIGIBLE CROPS.—
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1 ‘‘(A) IN GENERAL.—For purposes of this

2 section, the term ‘eligible crop’ means each

3 commercial crop or other agricultural commod4 ity (except livestock)—

5 ‘‘(i) for which catastrophic risk pro6 tection under section 508(b) is not avail7 able; and

8 ‘‘(ii) which is produced for food or

9 fiber.

10 ‘‘(B) CROPS SPECIFICALLY INCLUDED.—

11 The term ‘eligible crop’ shall include floricul12 tural, ornamental nursery, and Christmas tree

13 crops and turfgrass sod.

14 ‘‘(3) CAUSE OF LOSS.—To qualify for assist15 ance under this section, the losses of the noninsured

16 commodity shall be due to drought, flood, or other

17 natural disaster, as determined by the Secretary.

18 ‘‘(b) APPLICATION FOR NONINSURED CROP DISAS19 TER ASSISTANCE.—

20 ‘‘(1) TIMELY APPLICATION.—To be eligible for

21 assistance under this section, producers shall submit

22 an application for noninsured crop disaster assist23 ance at a local office of the Department of Agri24 culture. The application shall be in such form, con-
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1 tain such information, and be submitted at such

2 time as the Corporation may require.

3 ‘‘(2) RECORDS AND REPORTS.—To obtain

4 noninsured crop disaster assistance, a producer

5 shall—

6 ‘‘(A) provide records acceptable to the Cor7 poration of historical acreage and production of

8 the eligible crops for which assistance is sought

9 or accept a yield determined by the Corpora10 tion; and

11 ‘‘(B) report acreage planted and prevented

12 from planting by the designated acreage report13 ing date for that crop and location as estab14 lished by the Corporation.

15 ‘‘(3) EXCLUSIONS.—Noninsured crop disaster

16 assistance under this section shall not cover losses

17 due to—

18 ‘‘(A) the neglect or malfeasance of the pro19 ducer;

20 ‘‘(B) the failure of the producer to reseed

21 to the same crop in those areas and under such

22 circumstances where it is customary to reseed;

23 or
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1 ‘‘(C) the failure of the producer to follow

2 good farming practices, as determined by the

3 Corporation.

4 ‘‘(4) REVENUE LIMITATION.—A person who has

5 qualifying gross revenues in excess of $2,000,000

6 annually, as determined by the Secretary, shall not

7 be eligible to receive any noninsured crop disaster

8 assistance payments. For purposes of this section,

9 the term ‘qualifying gross revenues’ means—

10 ‘‘(A) if a majority of the person’s gross

11 revenue is received from farming, ranching, and

12 forestry operations, the gross revenue from the

13 person’s farming, ranching, and forestry oper14 ations; and

15 ‘‘(B) if less than a majority of the person’s

16 gross revenue is received from farming, ranch17 ing, and forestry operations, the person’s gross

18 revenue from all sources.

19 ‘‘(c) LOSS REQUIREMENTS.—

20 ‘‘(1) REQUIRED AREA LOSS.—A producer of an

21 eligible crop shall not receive noninsured crop disas22 ter assistance unless the average yield for that crop,

23 or an equivalent measure in the event yield data are

24 not available, in an area falls below 65 percent of
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1 the expected area yield, as established by the Cor2 poration.

3 ‘‘(2) PREVENTED PLANTING.—Subject to para4 graph (1), the Corporation shall make a prevented

5 planting noninsured crop disaster assistance pay6 ment if the producer is prevented from planting

7 more than 35 percent of the acreage intended for

8 the eligible crop because of drought, flood, or other

9 natural disaster, as determined by the Secretary.

10 ‘‘(3) REDUCED YIELDS.—Subject to paragraph

11 (1), the Corporation shall make a reduced yield

12 noninsured crop disaster assistance payment if the

13 total quantity of the eligible crop that a producer is

14 able to harvest on any farm is, because of drought,

15 flood, or other natural disaster as determined by the

16 Secretary, less than 50 percent of the expected indi17 vidual yield for the crop, as determined by the Cor18 poration, factored for the producer’s interest for the

19 crop.

20 ‘‘(d) PAYMENTS.—

21 ‘‘(1) REDUCED YIELDS.—If the producer is eli22 gible for reduced yield noninsured crop disaster as23 sistance, payments shall be made for farm losses in

24 excess of 50 percent of the established farm yield for

25 the eligible crop indemnified at 60 percent of the av-
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1 erage market price for that crop, or a comparable

2 coverage as determined by the Corporation. Any eli3 gible crop that is produced with significant and vari4 able, post-planting expenses, the payment shall be

5 reduced to reflect reduced production costs and har6 vesting costs if the crop is not harvested.

7 ‘‘(2) PREVENTED PLANTING.—If the producer

8 is eligible for a prevented planting payment under

9 this section, the amount paid to the producer on a

10 claim under this section may reflect a reduction that

11 is proportional to the out-of-pocket expenses that are

12 not incurred by the producer as a result of not

13 planting, growing, or harvesting the crop for which

14 the claim is made, as determined by the Corpora15 tion.

16 ‘‘(e) YIELD DETERMINATIONS.—

17 ‘‘(1) ESTABLISHMENT.—The Corporation shall

18 establish farm yields for purposes of providing

19 noninsured crop disaster assistance under this sec20 tion.

21 ‘‘(2) ACTUAL PRODUCTION HISTORY.—The Cor22 poration shall determine yield coverage using the

23 producer’s actual production history over a period of

24 not less than the 4 previous consecutive crop years

25 and not more than 10 consecutive crop years. Sub-
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1 ject to paragraph (3), the yield for the year in which

2 noninsured crop disaster assistance is sought shall

3 be equal to the average of the producer’s actual pro4 duction history during the period considered.

5 ‘‘(3) ASSIGNMENT OF YIELD.—If a producer

6 does not submit adequate documentation of produc7 tion history to determine a crop yield under para8 graph (2), the Corporation shall assign to the pro9 ducer a yield equal to not less than 65 percent of

10 the transitional yield of the producer (adjusted to re11 flect actual production reflected in the records ac12 ceptable to the Corporation for continuous years), as

13 specified in regulations issued by the Corporation

14 based on production history requirements.

15 ‘‘(4) PROHIBITION ON ASSIGNED YIELDS IN

16 CERTAIN COUNTIES.—If the acreage of a crop in a

17 county has increased by more than 100 percent

18 since the 1987 crop year, a producer who produces

19 that crop on a farm located in that county may not

20 obtain an assigned yield under paragraph (3). In21 stead, the producer must provide detailed docu22 mentation of production costs, acres planted, and

23 yield (as required by the Corporation) to become eli24 gible for a noninsured assistance payment.
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1 ‘‘(5) LIMITATION ON RECEIPT OF SUBSEQUENT

2 ASSIGNED YIELD.—A producer who receives an as3 signed yield for the current year of a natural disas4 ter because required production records were not

5 submitted to the local office of the Department shall

6 not be eligible for an assigned yield for the year of

7 the next natural disaster unless the required produc8 tion records of the previous 1 or more years (as ap9 plicable) are provided to the local office.

10 ‘‘(6) YIELD VARIATIONS DUE TO DIFFERENT

11 FARMING PRACTICES.—The Corporation shall ensure

12 that noninsured crop disaster assistance accurately

13 reflects significant yield variations due to different

14 farming practices, such as between irrigated and

15 nonirrigated acreage.

16 ‘‘(f) PAYMENT OF LOSSES.—Payments for

17 noninsured crop disaster assistance losses under this sec18 tion shall be made from the insurance fund established

19 under section 516. Such losses shall not be included in

20 calculating the premiums charged to producers for insur21 ance under section 508.

22 ‘‘(g) PAYMENT LIMITATIONS.—The total amount of

23 payments that a person shall be entitled to receive annu24 ally under this section may not exceed $100,000. For pur25 poses of applying this limitation, the Secretary shall issue
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1 regulations defining the term ‘person’ that shall conform,

2 to the extent practicable, to the regulations defining ‘per3 son’ issued under section 1001 of the Food Security Act

4 of 1985 (7 U.S.C. 1308).’’.

5 (b) CONFORMING AMENDMENTS.—

6 (1) EXISTING EMERGENCY CROP LOSS ASSIST7 ANCE PROGRAM.—Effective July 1, 1995, chapter 3

8 of subtitle B of title XXII of the Food, Agriculture,

9 Conservation, and Trade Act of 1990 (7 U.S.C.

10 1421 note) is amended by striking subchapter A.

11 (2) EMERGENCY APPROPRIATIONS.—Effective

12 July 1, 1995, the Balanced Budget and Emergency

13 Deficit Control Act of 1985 is amended—

14 (A) in section 251(b)(2)(D)(i) (2 U.S.C.

15 901(b)(2)(D)(i)), by adding at the end the fol16 lowing new sentence: ‘‘The preceding sentence

17 shall not apply to appropriations to cover agri18 cultural crop disaster assistance.’’; and

19 (B) in section 252(e) (2 U.S.C. 902(e)), by

20 adding at the end the following new sentence:

21 ‘‘The preceding sentence shall not apply to di22 rect spending provisions to cover agricultural

23 crop disaster assistance.’’.
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1 SEC. 11. CROP INSURANCE REQUIREMENTS UNDER PRICE

2 SUPPORT PROGRAMS.

3 (a) RICE.—Section 101B(c) of the Agricultural Act

4 of 1949 (7 U.S.C. 1441–2(c)) is amended—

5 (1) by striking paragraph (1)(F); and

6 (2) by striking paragraph (2) and inserting in

7 lieu thereof the following:

8 ‘‘(2) CROP INSURANCE REQUIREMENT.—As a

9 condition of receiving any benefit (including pay10 ments) under this section, a producer must obtain at

11 least catastrophic risk protection insurance coverage

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

13 Act for the crop and crop year in which the benefit

14 is sought, if such coverage is offered by the Federal

15 Crop Insurance Corporation.’’.

16 (b) EXTRA LONG STAPLE COTTON.—Section 103(h)

17 of the Agricultural Act of 1949 (7 U.S.C. 1444(h)) is

18 amended—

19 (1) by redesignating paragraph (16) as para20 graph (17) and moving the margin 2 ems to the left;

21 and

22 (2) by inserting after paragraph (15) the fol23 lowing new paragraph:

24 ‘‘(16) CROP INSURANCE REQUIREMENT.—As a con25 dition of receiving any benefit (including payments) under

26 this section, a producer must obtain at least catastrophic
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1 risk protection insurance coverage under section 508(b)

2 of the Federal Crop Insurance Act for the crop and crop

3 year in which the benefit is sought, if such coverage is

4 offered by the Federal Crop Insurance Corporation.’’.

5 (c) UPLAND COTTON.—Section 103B(c) of the Agri6 cultural Act of 1949 (7 U.S.C. 1444–2(c)) is amended—

7 (1) by striking paragraph (1)(F); and

8 (2) by striking paragraph (2) and inserting in

9 lieu thereof the following:

10 ‘‘(2) CROP INSURANCE REQUIREMENT.—As a

11 condition of receiving any benefit (including pay12 ments) under this section, a producer must obtain at

13 least catastrophic risk protection insurance coverage

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

15 Act for the crop and crop year in which the benefit

16 is sought, if such coverage is offered by the Federal

17 Crop Insurance Corporation.’’.

18 (d) FEED GRAINS.—Section 105B(c) of the Agricul19 tural Act of 1949 (7 U.S.C. 1444f(c)) is amended—

20 (1) by striking paragraph (1)(G); and

21 (2) by striking paragraph (2) and inserting in

22 lieu thereof the following:

23 ‘‘(2) CROP INSURANCE REQUIREMENT.—As a

24 condition of receiving any benefit (including pay25 ments) under this section, a producer must obtain at
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1 least catastrophic risk protection insurance coverage

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

3 Act for the crop and crop year in which the benefit

4 is sought, if such coverage is offered by the Federal

5 Crop Insurance Corporation.’’.

6 (e) TOBACCO.—Section 106 of the Agricultural Act

7 of 1949 (7 U.S.C. 1445) is amended by striking sub8 section (e) and inserting in lieu thereof the following:

9 ‘‘(e) CROP INSURANCE REQUIREMENT.—As a condi10 tion of receiving any benefit (including payments) under

11 this section, a producer must obtain at least catastrophic

12 risk protection insurance coverage under section 508(b)

13 of the Federal Crop Insurance Act for the crop and crop

14 year in which the benefit is sought, if such coverage is

15 offered by the Federal Crop Insurance Corporation.’’.

16 (f) WHEAT.—Section 107B(c) of the Agricultural Act

17 of 1949 (7 U.S.C. 1444b–3a(c)) is amended—

18 (1) by striking paragraph (1)(G); and

19 (2) by striking paragraph (2) and inserting in

20 lieu thereof the following:

21 ‘‘(2) CROP INSURANCE REQUIREMENT.—As a

22 condition of receiving any benefit (including pay23 ments) under this section, a producer must obtain at

24 least catastrophic risk protection insurance coverage

25 under section 508(b) of the Federal Crop Insurance
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1 Act for the crop and crop year in which the benefit

2 is sought, if such coverage is offered by the Federal

3 Crop Insurance Corporation.’’.

4 (g) PEANUTS.—Section 108B of the Agricultural Act

5 of 1949 (7 U.S.C. 1445c–3) is amended—

6 (1) by redesignating subsection (h) as sub7 section (i); and

8 (2) by inserting after subsection (g) the follow9 ing new subsection:

10 ‘‘(h) CROP INSURANCE REQUIREMENT.—As a condi11 tion of receiving any benefit (including payments) under

12 this section, a producer must obtain at least catastrophic

13 risk protection insurance coverage under section 508(b)

14 of the Federal Crop Insurance Act for the crop and crop

15 year in which the benefit is sought, if such coverage is

16 offered by the Federal Crop Insurance Corporation.’’.

17 (h) OILSEEDS.—Section 205 of the Agricultural Act

18 of 1949 (7 U.S.C. 1446f) is amended—

19 (1) by redesignating subsection (n) as sub20 section (o); and

21 (2) by inserting after subsection (m) the follow22 ing new subsection:

23 ‘‘(n) CROP INSURANCE REQUIREMENT.—As a condi24 tion of receiving any benefit (including payments) under

25 this section, a producer must obtain at least catastrophic
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1 risk protection insurance coverage under section 508(b)

2 of the Federal Crop Insurance Act for the crop and crop

3 year in which the benefit is sought, if such coverage is

4 offered by the Federal Crop Insurance Corporation.’’.

5 (i) SUGAR.—Section 206 of the Agricultural Act of

6 1949 (7 U.S.C. 1446g) is amended—

7 (1) by redesignating subsection (j) as sub8 section (k); and

9 (2) by inserting after subsection (i) the follow10 ing new subsection:

11 ‘‘(j) CROP INSURANCE REQUIREMENT.—As a condi12 tion of receiving any benefit (including payments) under

13 this section, a producer must obtain at least catastrophic

14 risk protection insurance coverage under section 508(b)

15 of the Federal Crop Insurance Act for the crop and crop

16 year in which the benefit is sought, if such coverage is

17 offered by the Federal Crop Insurance Corporation.’’.

18 (j) HONEY.—Section 207 of the Agricultural Act of

19 1949 (7 U.S.C. 1446h) is amended—

20 (1) by redesignating subsection (j) as sub21 section (k); and

22 (2) by inserting after subsection (i) the follow23 ing new subsection:

24 ‘‘(j) CROP INSURANCE REQUIREMENT.—As a condi25 tion of receiving any benefit (including payments) under
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1 this section, a producer must obtain at least catastrophic

2 risk protection insurance coverage under section 508(b)

3 of the Federal Crop Insurance Act for the crop and crop

4 year in which the benefit is sought, if such coverage is

5 offered by the Federal Crop Insurance Corporation.’’.

6 (k) DISASTER PAYMENTS.—Section 208 of the Agri7 cultural Act of 1949 (7 U.S.C. 1446i) is repealed.

8 SEC. 12. ELIMINATION OF GENDER REFERENCES.

9 (a) MANAGEMENT OF CORPORATION.—Section 505

10 of the Federal Crop Insurance Act (7 U.S.C. 1505) is

11 amended—

12 (1) in subsection (a), by striking the third sen13 tence and inserting ‘‘The Board shall be appointed

14 by, and hold office at the pleasure of, the Secretary.

15 The Secretary shall not be a member of the Board.’’;

16 and

17 (2) in subsection (d)—

18 (A) by striking ‘‘upon him’’; and

19 (B) by striking ‘‘He shall be appointed

20 by,’’ and inserting ‘‘The manager shall be ap21 pointed by,’’.

22 (b) PERSONNEL.—Section 507 of such Act (7 U.S.C.

23 1507) is amended—

24 (1) in subsection (a), by striking ‘‘as he may

25 determine: Provided, That’’ and inserting ‘‘as the
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1 Secretary may determine appropriate. However,’’;

2 and

3 (2) in subsection (d), by striking ‘‘as he may re4 quest’’ and inserting ‘‘that the Secretary requests’’.

5 (c) INDEMNITIES EXEMPT FROM LEVY.—Section

6 509 of such Act (7 U.S.C. 1509) is amended by striking

7 ‘‘or his estate’’ and inserting ‘‘or the estate of the in8 sured’’.

9 SEC. 13. GAO CROP INSURANCE PROVIDER STUDY.

10 (a) The General Accounting Office shall, within 2

11 years of enactment, investigate the contractual relation12 ships between the Federal Crop Insurance Corporation

13 and approved insurance providers to determine the qual14 ity, costs and efficiency of the provision of multiperil crop

15 insurance to producers of agricultural commodities cov16 ered under the Federal Crop Insurance Act. The study

17 shall be completed in two parts. The first, to be completed

18 within one year of enactment, shall examine the currently

19 available data to make the determinations required by this

20 section. The second part shall examine the changes that

21 occur because of the expansion of the program as partici22 pation increases.

23 (b) This study shall include, but not be limited to,

24 an investigation of providers’ actual cost of delivery of

25 multiperil crop insurance for which providers receive reim-
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1 bursement from the Corporation, cost differences for dif2 ferent provider firm sizes, and changes in cost resulting

3 from the expansion of the program. The study shall also

4 compare delivery costs of multiperil crop insurance to

5 other insurance coverage that the provider may sell and

6 identify any cross-subsidization from federally reimbursed

7 delivery to delivery costs of other insurance coverage.

8 (c) The study shall assess, to the extent practicable,

9 alternative methods of reimbursing delivery costs to pro10 viders. In addition, the study shall identify unnecessary

11 expenditures, if any, required by the Corporation for com12 pliance and program integrity.

13 (d) In addition, the study shall include, but not be

14 limited to, the provisions of the standard reinsurance

15 agreement between the Corporation and approved provid16 ers, including the risk transferred to the Corporation

17 under the terms of the agreement, the return on providers’

18 capital, a determination of the return on capital relative

19 to differences in provider firm size, and a determination

20 of the return on providers’ capital in multiperil crop insur21 ance relative to other insurance coverage.

22 (e) The study shall assess, to the extent practicable,

23 the potential for provider firm concentration in the

24 multiperil crop insurance industry and any economic dis25 tortions that might occur from such concentration.
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1 (f) In conducting this study, the General Accounting

2 Office shall maintain the privacy of provider proprietary

3 information. The General Accounting Office shall have full

4 powers to subpoena any required information from any

5 provider firm.

6 SEC. 14. EFFECTIVE DATE.

7 Except as provided in section 10(b) and section 13,

8 this Act and the amendments made by this Act shall take

9 effect on the date of the enactment of this Act and shall

10 apply to the provision of crop insurance under the Federal

11 Crop Insurance Act (7 U.S.C. 1501 et seq.) beginning

12 with the 1995 crop year. With respect to the 1994 crop

13 year, the Federal Crop Insurance Act (as in effect on the

14 day before the date of the enactment of this Act) shall

15 continue to apply.

Passed the House of Representatives August 5,

1994.

Attest: DONNALD K. ANDERSON,

Clerk.

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