I

103D CONGRESS

2D SESSION H. R. 4217

To reform the Federal crop insurance program, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 14, 1994

Mr. DE LA GARZA (for himself, Mr. JOHNSON of South Dakota, and Mr.

MINGE) (all by request) introduced the following bill; which was referred

to the Committee on Agriculture

A BILL

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.

4 This Act may be cited as the ‘‘Federal Crop Insur5 ance Reform Act of 1994’’.

6 SEC. 2. CROP INSURANCE AMENDMENTS.

7 (a) Section 505(a) of title V of the Agricultural Ad8 justment Act of 1938 (7 U.S.C. 1505) is amended—

9 (1) by striking ‘‘the’’ after ‘‘Federal crop insur10 ance program,’’ and inserting ‘‘one additional’’; and
2

HR 4217 IH

1 (2) by striking ‘‘responsible for the farm credit

2 programs of the Department of Agriculture’’ and in3 serting ‘‘as designated by the Secretary of Agri4 culture’’.

5 (b) Section 506 of title V of the Agricultural Adjust6 ment Act of 1938 (7 U.S.C. 1506) is amended—

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

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

9 (o), respectively;

10 (2) by inserting after subsection (i) the follow11 ing new subsection:

12 ‘‘(j) SETTLING CLAIMS.—The Corporation shall have

13 the authority to make final and conclusive settlement and

14 adjustment of any claims by or against the Corporation

15 or the account of its fiscal officers.’’;

16 (3) in subsection (1) (as redesignated), by strik17 ing ‘‘contracts or agreements’’ each place it appears

18 and inserting ‘‘contracts, agreements, or regula19 tions’’;

20 (4) in subsection (n)(1) (as redesignated), by

21 striking paragraph (B) and inserting the following

22 new paragraph:

23 ‘‘(B) disqualify the person from purchasing

24 catastrophic risk protection or receiving

25 noninsured assistance for a period not to exceed
3

HR 4217 IH

1 2 years and from receiving any other benefit

2 under this title for a period not to exceed 10

3 years.’’;

4 (5) in subsection (o) (as redesignated), by strik5 ing paragraph (1) and inserting the following new

6 paragraph:

7 ‘‘(1) instituting appropriate requirements for

8 documentation of the actual production history of in9 sured producers to establish recorded or appraised

10 yields for Federal crop insurance coverage that more

11 accurately reflect the associated actuarial risk. The

12 Corporation may not carry out this paragraph in a

13 manner that would prevent beginning farmers, as

14 determined by the Secretary, from obtaining Federal

15 crop insurance.’’; and

16 (6) by adding at the end thereof the following

17 new subsections:

18 ‘‘(p) REGULATIONS.—The Secretary and the Cor19 poration, respectively, are authorized to issue regulations

20 as may be necessary to carry out this title.

21 ‘‘(q) SOURCE OF FUNDING.—There is hereby appro22 priated, without fiscal year limitation, such sums as may

23 be necessary to carry out the purpose of the insurance

24 fund.’’.
4

HR 4217 IH

1 (c) Section 507 of title V of the Agricultural Adjust2 ment Act of 1938 (7 U.S.C. 1507) is amended—

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

4 crop insurance committeemen’’;

5 (2) in subsection (c), by striking the words be6 ginning with ‘‘, in which case the agent or broker’’

7 through ‘‘the agent or broker has caused the error

8 or omission’’; and

9 (3) in subsection (d), by replacing the comma

10 with a period after the words ‘‘section 516 of this

11 Act’’, and by deleting the remainder of the sub12 section.

13 (d) Section 508 of title V of the Agricultural Adjust14 ment Act of 1938 (7 U.S.C. 1508) is amended—

15 (1) by striking subsection (a) and inserting the

16 following new subsection:

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

18 (1) If sufficient actuarial data are available, as

19 determined by the Board, the Corporation may in20 sure or provide reinsurance for insurers of producers

21 of agricultural commodities grown in the United

22 States under any plan or plans of insurance deter23 mined by the Board to be adapted to the agricul24 tural commodity involved. To qualify for coverage

25 under these plans of insurance, the losses of the in-
5

HR 4217 IH

1 sured commodity shall be due to drought, flood or

2 other natural disaster as determined by the Sec3 retary. Except in the case of tobacco, insurance shall

4 not extend beyond the period the insured commodity

5 is in the field. For the purpose of the foregoing sen6 tence, in the case of aquacultural species, the term

7 ‘field’ means the environment in which the commod8 ity is produced. Insurance provided under this sub9 section shall not cover losses due to—

10 ‘‘(i) the neglect or malfeasance of the pro11 ducer;

12 ‘‘(ii) the failure of the producer to reseed

13 to the same crop in those areas and under such

14 circumstances where it is customary to so re15 seed; or

16 ‘‘(iii) the failure of the producer to follow

17 good farming practices, as determined by the

18 Corporation.’’;

19 (2) by striking subsections (c), (e), (g), (l) and

20 (n);

21 (3) by redesignating subsections (b), (d), (f),

22 (h), (i), (j), (k), and (m) as subsections (g), (h), (i),

23 (j), (k), (l), (m), and (n), respectively;

24 (4) by inserting after subsection (a) the follow25 ing new subsections:
6

HR 4217 IH

1 ‘‘(b) CATASTROPHIC RISK PROTECTION.—

2 ‘‘(1) The Corporation shall offer a catastrophic

3 risk protection plan to indemnify producers for crop

4 loss due to loss of yield and prevented planting when

5 the producer is unable because of drought, flood or

6 other natural disaster, as determined by the Sec7 retary, to plant other crops for harvest on that acre8 age for that crop year.

9 ‘‘(2) Catastrophic risk protection shall offer the

10 producer 50 percent loss in yield coverage, on an

11 area or individual yield basis, indemnified at 60 per12 cent of the expected market price or a comparable

13 coverage, as determined by the Corporation.

14 ‘‘(3) Producers shall have the option of basing

15 their catastrophic coverage on either an individual

16 yield and loss basis or on an area yield and loss

17 basis when both options are offered by the Corpora18 tion.

19 ‘‘(4) For catastrophic risk protection, producers

20 shall pay an administrative fee. The administrative

21 fees shall be $50 per crop per county, not to exceed

22 $100 per producer per county. The administrative

23 fee shall be paid at the service point—the United

24 States Department of Agriculture office or the ap25 proved private insurance provider—at the time of
7

HR 4217 IH

1 application. This administrative fee shall be waived

2 for limited resource farmers, as defined by the Cor3 poration, or if the producer elects to purchase addi4 tional protection at 65 percent or more of the re5 corded or appraised average yield and 100 percent

6 of the expected market price, or an equivalent cov7 erage, offered by approved crop insurance providers.

8 Funds collected as administrative fees shall be avail9 able, subject to appropriations, for salaries and ex10 penses.

11 ‘‘(5) Participation in the catastrophic risk cov12 erage for any producer’s crop on any land in the

13 county requires participation for that producer’s

14 crop on all insurable land of the producer in the

15 county.

16 ‘‘(6) To be eligible for any price support, pro17 duction adjustment, or conservation program admin18 istered by the United States Department of Agri19 culture for any crop, or for loans under any program

20 of the Farmers Home Administration or any succes21 sor agency, the producer must obtain at least the

22 catastrophic level of insurance for all crops of eco23 nomic significance grown on all farms in the county

24 in which the producer has an interest, if insurance

25 is available in the county for those crops. The term
8

HR 4217 IH

1 ‘economic significance’ shall mean any crop that has

2 contributed, or is expected to contribute, 10 percent

3 or more of the total expected value of all crops

4 grown by the producer.

5 ‘‘(7) The Board may limit insurance in any

6 county or area, or on any farm, on the basis of the

7 insurance risk involved.

8 ‘‘(c) COVERAGE LEVELS GENERALLY.—

9 ‘‘(1) The Corporation shall offer plans of insur10 ance providing levels of coverage greater than that

11 available under catastrophic risk protection. Produc12 ers may only purchase there other plans from ap13 proved private insurance providers, if such private

14 insurance is available. Nothing contained herein re15 stricts the Corporation from offering insurance if

16 coverage from private insurance providers is unavail17 able. If the producer has already applied for cata18 strophic risk protection at the United States Depart19 ment of Agriculture office and elects to purchase ad20 ditional coverage, the insurance file for that pro21 ducer shall be transferred to the approved private

22 insurance provider servicing the additional coverage

23 policy and the administrative fee for the crop for

24 which additional coverage at 65 percent or more of

25 the recorded or appraised average yield and 100 per-
9

HR 4217 IH

1 cent of the expected market price, or an equivalent

2 coverage, is obtained shall be refunded to the in3 sured.

4 ‘‘(2) Producers shall have the option of pur5 chasing additional coverage based on either an indi6 vidual yield and loss basis or on an area yield and

7 loss basis when both options are offered by the Cor8 poration.

9 ‘‘(3) The level of coverage shall be dollar de10 nominated and may be purchased at any level not to

11 exceed 85 percent of the individual yield or 95 per12 cent of the area yield, as determined by the Corpora13 tion.

14 ‘‘(4) The Corporation shall establish a price

15 level for each commodity on which insurance is of16 fered that—

17 ‘‘(A) shall not be less than the projected

18 market price for the commodity as determined

19 by the Corporation; or

20 ‘‘(B) at the discretion of the Corporation,

21 may be based on the actual market price at the

22 time of harvest, as determined by the Corpora23 tion.

24 ‘‘(5) Insurance coverage shall be made available

25 to the producer on the basis of any price election
10

HR 4217 IH

1 that equals or is less than that established by the

2 Board and the coverage shall be quoted in terms of

3 dollars per acre: Provided, That the Corporation

4 may establish minimum price elections below which

5 levels of insurance shall not be offered.

6 ‘‘(6) For levels of coverage 65 percent or more

7 of the recorded or appraised average yield and 100

8 percent of the expected market price, or an equiva9 lent coverage, the producer may elect to delete from

10 the insurance coverage provided under this title cov11 erage against damage caused by fire and hail, pro12 vided an equivalent or greater dollar amount of cov13 erage for damage caused by fire and hail is obtained

14 from a private hail/fire insurance provider. Upon

15 written notice of such election to the company issu16 ing the policy providing coverage under this title and

17 submission of evidence of substitute coverage on the

18 commodity insured, the producer’s premium shall be

19 reduced by an amount determined by the Corpora20 tion to be actuarially appropriate, taking into ac21 count the actuarial value of the remaining coverage

22 provided by the Corporation. In no event shall the

23 producer be given credit for an amount of premium

24 determined to be greater than the actuarial value of

25 the protection against losses caused by fire and hail
11

HR 4217 IH

1 that is included in the coverage under this title for

2 the crop.

3 ‘‘(7) The Board may enter into agreements

4 with any State or agency of a State under which

5 such State or agency may pay to the approved insur6 ance provider an additional premium subsidy to fur7 ther reduce the portion of the premium paid by

8 farmers in such State.

9 ‘‘(8) The Board may limit or refuse insurance

10 in any county or area, or on any farm, on the basis

11 of the insurance risk involved.

12 ‘‘(d) PREMIUMS.—

13 ‘‘(1) The Corporation shall fix adequate pre14 miums for all its plans of insurance at such rates as

15 the Board deems actuarially sufficient to attain an

16 expected loss ratio of not greater than 1.1.

17 ‘‘(A) For catastrophic risk protection cov18 erage, the amount of premium shall be suffi19 cient to cover anticipated losses and a reason20 able reserve.

21 ‘‘(B) For levels of coverage below 65 per22 cent of the recorded or appraised average yield

23 and 100 percent of the expected market price,

24 or an equivalent coverage, but greater than cat25 astrophic risk protection, the amount of pre-
12

HR 4217 IH

1 mium shall be sufficient to cover anticipated

2 losses, a reasonable reserve, and an amount for

3 operating and administrative expenses, as deter4 mined by the Corporation, that is less than the

5 amount established for coverage at 65 percent

6 and 100 percent of the expected market price,

7 or an equivalent coverage.

8 ‘‘(C) For levels of coverage of at least 65

9 percent of the recorded or appraised average

10 yield and 100 percent of the expected market

11 price, or an equivalent coverage, the amount of

12 premium shall be sufficient to cover anticipated

13 losses, a reasonable reserve, and an amount to

14 pay the operating and administrative expenses

15 as determined by the Corporation on an indus16 try-wide basis as a percent of the total pre17 mium.

18 ‘‘(2) For the purpose of encouraging the broad19 est possible participation, the Corporation shall pay

20 a part of the premium equivalent to—

21 ‘‘(A) for catastrophic risk protection cov22 erage, an amount equal to the premium estab23 lished in paragraph (1)(A) of this section;

24 ‘‘(B) for levels of coverage below 65 per25 cent of the recorded or appraised average yield
13

HR 4217 IH

1 and 100 percent of the expected market price

2 or an equivalent coverage, but greater than cat3 astrophic risk protection, the amount of pre4 mium established for catastrophic risk protec5 tion coverage, a reasonable reserve, plus the

6 amount of operating and administrative ex7 penses established in paragraph (1)(B) of this

8 section; and

9 ‘‘(C) for levels of coverage at or greater

10 than 65 percent of the recorded and appraised

11 yield and 100 percent of the expected market

12 price, or an equivalent coverage, on an individ13 ual or area basis, an amount equal to the pre14 mium established for 50 percent loss in yield in15 demnified at 75 percent of the expected market

16 price, a reasonable reserve, plus the amount of

17 operating and administrative expenses estab18 lished in paragraph (1)(C) of this section.

19 ‘‘(3) If a private insurance provider determines

20 that it may provide insurance more efficiently than

21 the expense reimbursement amount set by the Cor22 poration, the private insurance provider, if approved

23 by the Board, may reduce the premium charged the

24 insured by the amount of such efficiency. Any such
14

HR 4217 IH

1 reductions shall be subject to the rules, limitations,

2 and procedures established by the Corporation.

3 ‘‘(e) ELIGIBILITY.—To participate in catastrophic

4 risk protection coverage under this title, producers may

5 make application at the local United States Department

6 of Agriculture office or to an approved private crop insur7 ance provider. For all coverages, producers shall be re8 quired to—

9 ‘‘(1) purchase crop insurance on or before the

10 sales closing date for the crop by providing the re11 quired information and executing the required docu12 ments. Such sales closing date shall be established

13 by the Corporation to maximize convenience to pro14 ducers in obtaining benefits under price and produc15 tion adjustment programs of the Department when16 ever feasible; however, the Corporation will establish

17 all sales closing dates to assure that the goal of ac18 tuarial soundness for the crop insurance program is

19 met;

20 ‘‘(2) provide records, acceptable to the Corpora21 tion, of previous acreage and production or accept a

22 Corporation determined yield; and

23 ‘‘(3) report acreage planted and prevented from

24 planting by the designated acreage reporting date
15

HR 4217 IH

1 for that crop and location as established by the Cor2 poration.

3 ‘‘(f) YIELD DETERMINATIONS.—

4 ‘‘(1) IN GENERAL.—The Corporation shall im5 plement crop insurance underwriting rules that en6 sure that yield coverage, as specified in subsection

7 (f)(2) of this section, is provided to all producers

8 participating in the Federal crop insurance program.

9 ‘‘(2) YIELD COVERAGE PLANS.—

10 ‘‘(A) ACTUAL PRODUCTION HISTORY.—

11 ‘‘(i) This plan uses the producer’s ac12 tual production history for the 4 previous

13 consecutive crop years without penalty, up

14 to a production data base of 10 consecutive

15 years, subject to paragraph (ii), to deter16 mine yield coverage.

17 ‘‘(ii) If the producer does not submit

18 adequate documentation of history for a

19 crop, the producer shall be assigned, as the

20 producer’s farm program yield, not less

21 than 65 percent of the transitional yield of

22 the producer (adjusted to reflect actual

23 production reflected in the records accept24 able to the Corporation for continuous

25 years), as specified in regulations issued by
16

HR 4217 IH

1 the Corporation based on production his2 tory requirements.

3 ‘‘(B) AREA YIELD.—The Corporation may

4 offer a crop insurance plan based on an area

5 yield that allows an insured producer to qualify

6 for an indemnity if a loss has occurred in an

7 area, as specified by the Corporation, in which

8 the farm of the producer is located. Under an

9 area yield plan, an insured producer shall be al10 lowed to select the level of area production at

11 which an indemnity will be paid consistent with

12 the terms and conditions established by the

13 Corporation.

14 ‘‘(C) COMMODITY-BY-COMMODITY BASIS.—

15 A producer may choose between either individ16 ual yield or area yield coverage, where available,

17 on a commodity-by-commodity basis.

18 ‘‘(D) NOTICE.—The Corporation shall en19 sure that, whenever the yield coverage provi20 sions of this section are effective, producers are

21 given adequate notice of such provisions in ad22 vance of the crop insurance application period

23 for the crops to which such provisions first will

24 apply.’’;

25 (5) in subsection (g) (as redesignated)—
17

HR 4217 IH

1 (A) in paragraph (1), by striking ‘‘(a)’’

2 and inserting ‘‘(c)’’;

3 (B) by striking paragraph (2) and insert4 ing the following new paragraph:

5 ‘‘(2) PREPARATION OF POLICIES.—A policy or

6 other material submitted to the Board under this

7 subsection may be prepared without regard to the

8 limitations contained in this title, including the re9 quirements concerning the levels of coverage and

10 rates and the requirement that a price level for each

11 commodity insured must equal the projected market

12 price for the commodity as established by the Board.

13 Such policy may only be subsidized at an amount

14 equivalent to coverage that is authorized under this

15 title.’’;

16 (C) in paragraph (3)—

17 (i) by striking ‘‘taking into consider18 ation the risks covered by the policy or

19 other material’’;

20 (ii) by inserting after ‘‘more than one

21 reinsurance agreement’’ the words ‘‘with

22 the private insurance provider’’; and

23 (iii) by striking title ‘‘V’’ and insert24 ing ‘‘title 5’’; and
18

HR 4217 IH

1 (D) by striking paragraph (4) and insert2 ing the following new paragraph:

3 ‘‘(4) REQUIRED PUBLICATION.—Any policies,

4 provisions of policies, and rates approved under this

5 subsection shall be published as a notice in the Fed6 eral Register and made available to all persons con7 tracting with or reinsured by the Corporation under

8 the same terms and conditions as between the Cor9 poration and the submitting person.’’;

10 (6) by striking subsection (i) (as redesignated)

11 and inserting the following new subsection:

12 ‘‘(i) CLAIMS FOR LOSSES.—The Corporation may

13 provide for adjustment and payment of claims for losses

14 as provided under subsection (a) of this section under

15 rules prescribed by the Board. The rules prescribed by the

16 Board shall establish standards to ensure that all claims

17 for losses are adjusted, to the extent practicable, in a uni18 form and timely manner. If any claim for indemnity is

19 denied by the Corporation, an action on such claim may

20 be brought against the Corporation and the insurance pro21 vider in the United States district court for the district

22 in which the insured farm is located: Provided, That no

23 suit on such claim may be allowed under this section un24 less it shall have been brought within one year after the
19

HR 4217 IH

1 date when written notice of denial of the claim is provided

2 to the claimant.’’;

3 (7) by striking subsection (j) (as redesignated)

4 and inserting the following new subsection:

5 ‘‘(j) REINSURANCE.—Notwithstanding any other pro6 vision of this title, the Corporation is directed, to the maxi7 mum extent practicable, to provide reinsurance upon such

8 terms and conditions as the Board may determine to be

9 consistent with subsections (b) and (c) of this section and

10 sound reinsurance principles to insurers, as defined by the

11 Corporation, that insure producers of any agricultural

12 commodity under a plan or plans acceptable to the Cor13 poration. The Corporation’s reinsurance agreements with

14 the reinsured companies shall require the reinsured com15 panies to bear a sufficient share of any potential loss

16 under such agreement so as to ensure that the reinsured

17 company will sell and service policies of insurance in a

18 sound and prudent manner, taking into consideration the

19 availability of private reinsurance.’’;

20 (8) in subsection (k) (as redesignated), by strik21 ing ‘‘provide’’ after ‘‘The Corporation may’’ and in22 serting ‘‘offer plans of’’; and

23 (9) by striking subsection (n) (as redesignated)

24 and inserting the following new subsection:
20

HR 4217 IH

1 ‘‘(n) INFORMATION COLLECTION ON CROP INSUR2 ANCE.—The Corporation shall make available to produc3 ers through local offices of the Department of Agri4 culture—

5 ‘‘(1) current and complete information on all

6 aspects of Federal crop insurance; and

7 ‘‘(2) a listing of insurance agents.’’.

8 (e) Section 508A of title V of the Agricultural Adjust9 ment Act of 1938 (7 U.S.C. 1508A) is repealed.

10 (f) Section 511 of title V of the Agricultural Adjust11 ment Act of 1938 (7 U.S.C. 1511) is amended by inserting

12 ‘‘its contracts of insurance and premium thereon, whether

13 insured directly or reinsured by the Corporation,’’ after

14 ‘‘The Corporation, including’’.

15 (g) Title V of the Agricultural Adjustment Act of

16 1938 is amended by striking section 516 and inserting the

17 following new section:

18 ‘‘SEC. 516. AUTHORIZATION OF APPROPRIATIONS.

19 ‘‘(a) APPROPRIATIONS.—There are hereby authorized

20 to be appropriated such sums as may be necessary, includ21 ing funds collected as administrative fees, to cover the ad22 ministrative and operating expenses of the Corporation.

23 ‘‘(b) INSURANCE FUND.—There shall be established

24 an insurance fund for deposit of premium income, income

25 from reinsurance operations, and appropriations provided
21

HR 4217 IH

1 by this Act. The Corporation will pay amounts due under

2 its reinsurance agreements with private insurance provid3 ers, including premium subsidies, from the fund.’’.

4 (h) Title V of the Agricultural Adjustment Act of

5 1938 is amended by striking section 520 and inserting the

6 following new section:

7 ‘‘SEC. 520. PRODUCER ELIGIBILITY.

8 ‘‘Except as otherwise provided in this title, no pro9 ducer shall be denied insurance under this title if—

10 ‘‘(1) for purposes of catastrophic risk protection

11 coverage, the producer meets the definition of per12 son, as defined by the Secretary; and

13 ‘‘(2) for purposes of any other plan of insur14 ance, the producer is eighteen years of age and has

15 a bona fide insurable interest in a crop as an owner16 operator, landlord, tenant, or sharecropper.’’.

17 SEC. 3. ADVISORY COMMITTEE.

18 Title V of the Agricultural Adjustment Act of 1938

19 is amended by adding the following new section:

20 ‘‘SEC. 521. ADVISORY COMMITTEE FOR FEDERAL CROP IN21 SURANCE.

22 ‘‘(a) ESTABLISHMENT.—The Secretary may establish

23 within the Department of Agriculture a committee to be

24 known as the Advisory Committee for Federal Crop Insur-
22

HR 4217 IH

1 ance which shall remain in existence until September 30,

2 1998.

3 ‘‘(b) MEMBERSHIP.—The Advisory Committee shall

4 be composed of the Manager of the Corporation, the Sec5 retary or his designee, and not less than ten representa6 tives of organizations or agencies involved with the Fed7 eral crop insurance program, which may include the fol8 lowing: insurance companies; insurance agents; farm pro9 ducer organizations; experts on agronomic practices; and

10 banking and lending institutions.

11 ‘‘(c) ADMINISTRATIVE PROVISIONS.—

12 ‘‘(1) TERMS.—Members of the Advisory Com13 mittee shall be appointed by the Secretary for a

14 term of up to two years from nominations made by

15 the participating organizations. The terms of the

16 members shall be staggered.

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

18 shall be chaired by the Manager of the Corporation.

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

20 shall meet at least annually. The meetings of the

21 Advisory Committee shall be publicly announced in

22 advance and shall be open to the public. Appropriate

23 records of the activities of the Advisory Committee

24 shall be kept and made available to the public on re25 quest.
23

HR 4217 IH

1 ‘‘(d) PRIMARY RESPONSIBILITY.—The primary re2 sponsibility of the Advisory Committee shall be to advise

3 the Secretary on the implementation of this title and on

4 other issues related to crop insurance, as determined by

5 the Manager.

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

7 the Advisory Committee shall prepare, and submit to the

8 Secretary, a report specifying its conclusions on—

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

10 provisions of this title;

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

12 crop insurance program; and

13 ‘‘(3) the rate of participation in both the cata14 strophic and the additional coverage programs.’’.

15 SEC. 4. NONINSURED ASSISTANCE.

16 Title V of the Agricultural Adjustment Act of 1938

17 is amended by adding the following new section:

18 ‘‘SEC. 522. NONINSURED ASSISTANCE PROGRAM.

19 ‘‘(a) ELIGIBILITY.—

20 ‘‘(1) A noninsured assistance program is estab21 lished to provide coverage equivalent to the cata22 strophic risk protection insurance for crops for

23 which catastrophic risk protection insurance is not

24 available. Crops covered include all commercial crops

25 and commodities for which catastrophic risk protec-
24

HR 4217 IH

1 tion coverage is not available and that are produced

2 for food or fiber on a commercial basis but shall not

3 include livestock. Noninsured assistance shall not

4 cover losses due to—

5 ‘‘(i) the neglect or malfeasance of the pro6 ducer;

7 ‘‘(ii) the failure of the producer to reseed

8 to the same crop in those areas and under such

9 circumstances where it is customary to so re10 seed; or

11 ‘‘(iii) the failure of the producer to follow

12 good farming practices, as determined by the

13 Corporation.

14 ‘‘(2) Producers shall make a timely application

15 for noninsured assistance at the United States De16 partment of Agriculture office.

17 ‘‘(3) Producers shall provide records, acceptable

18 to the Corporation, of previous crop acreage and

19 production or the producers shall accept a yield as

20 determined by the Corporation.

21 ‘‘(4) Producers shall report acreage planted and

22 prevented from being planted by the designated

23 acreage reporting date for that crop and location as

24 established by the Corporation.
25

HR 4217 IH

1 ‘‘(5) Producers of non-program crops shall not

2 be eligible for noninsured assistance unless the area,

3 as determined by the Corporation, average yield, or

4 an equivalent measure in the event yield data are

5 not available, for that crop falls below 65 percent of

6 the expected area yield as established by the Cor7 poration.

8 ‘‘(6) The Corporation shall make a prevented

9 planting noninsured assistance payment if the pro10 ducer is prevented from planting more than 35 per11 cent of the acreage intended for the crop because of

12 drought, flood, or other natural disaster as deter13 mined by the Secretary.

14 ‘‘(7) If, because of drought, flood, or other nat15 ural disaster as determined by the Secretary, the

16 total quantity of the crop that a producer is able to

17 harvest on any farm is less than 50 percent of the

18 expected area yield for the crop, as determined by

19 the Corporation, factored for the producer’s interest

20 for the crop, the Corporation shall make a reduced

21 yield noninsured assistance payment.

22 ‘‘(8) A person who has qualifying gross reve23 nues in excess of $2,000,000 annually, as deter24 mined by the Secretary, shall not be eligible to re25 ceive any noninsured assistance payments. For pur-
26

HR 4217 IH

1 poses of this section, the term ‘qualifying gross reve2 nues’ means—

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

4 revenue is received from farming, ranching, and

5 forestry operations, the gross revenue from the

6 person’s farming, ranching, and forestry oper7 ations; and

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

9 gross revenue is received from farming, ranch10 ing, and forestry operations, the person’s gross

11 revenue from all sources.

12 ‘‘(b) PAYMENT RATE.—If the producer is eligible for

13 noninsured assistance, payments shall be made for losses

14 in excess of 50 percent of the established yield for the crop

15 at 60 percent of the average market price for that crop

16 or any comparable coverage as determined by the Corpora17 tion.

18 ‘‘(c) FARM YIELDS.—

19 ‘‘(1) The Corporation shall establish noninsured

20 assistance program farm yields for crops for the

21 purposes of this section.

22 ‘‘(2) If the producer can provide satisfactory

23 evidence of the producer’s actual production history

24 for the four previous consecutive crop years, up to

25 a production data base of ten consecutive crop years,
27

HR 4217 IH

1 the yield of the farm shall be based on such proven

2 yield.

3 ‘‘(3) If the producer does not submit adequate

4 documentation of such history for the crop, the pro5 ducer shall be assigned as the producer’s farm pro6 gram yield not less than 65 percent of the transi7 tional yield (adjusted to reflect actual experience), as

8 specified in regulations issued by the Corporation

9 based on production history requirements.

10 ‘‘(d) PAYMENT OF LOSSES.—Payments for

11 noninsured assistance losses under this section shall be

12 made from the insurance fund and shall be reimbursed

13 from appropriations provided under this Act. Such losses

14 shall not be included in calculating the premiums charged

15 to producers for insurance.

16 ‘‘(e) PAYMENT LIMITATIONS.—

17 ‘‘(1) The total amount of payments that a per18 son shall be entitled to receive annually under this

19 section may not exceed $100,000.

20 ‘‘(2) The Corporation shall issue regulations de21 fining the term ‘person’ that shall conform, to the

22 extent practicable, to the regulations defining ‘per23 son’ issued under section 1001 of the Food Security

24 Act of 1985 (7 U.S.C. 1308).’’.
28

HR 4217 IH

1 SEC. 5. CONFORMING AMENDMENTS.

2 (a) The Agricultural Act of 1949 is amended—

3 (1) in section 101B (7 U.S.C. 1441–2)—

4 (A) by striking subsection (c)(1)(F); and

5 (B) in subsection (c) by striking paragraph

6 (2) and inserting in lieu thereof the following:

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

8 condition of receiving any benefits (including pay9 ments) under this section, the producer must, if of10 fered by the Federal Crop Insurance Corporation,

11 obtain at least the catastrophic risk protection insur12 ance coverage for the crop and crop year in which

13 the benefit is sought.’’;

14 (2) in section 103(h) (7 U.S.C. 1444), by add15 ing at the end the following new paragraph:

16 ‘‘(17) As a condition of receiving any benefits

17 (including payments) under this section, the pro18 ducer must, if offered by the Federal Crop Insur19 ance Corporation, obtain at least the catastrophic

20 risk protection insurance coverage for the crop and

21 crop year in which the benefit is sought.’’;

22 (3) in section 103B (7 U.S.C. 1444–2)—

23 (A) by striking subsection (c)(1)(F); and

24 (B) in subsection (c) by striking paragraph

25 (2) and inserting in lieu thereof the following:
29

HR 4217 IH

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

2 condition of receiving any benefits (including pay3 ments) under this section, the producer must, if of4 fered by the Federal Crop Insurance Corporation,

5 obtain at least the catastrophic risk protection insur6 ance coverage for the crop and crop year in which

7 the benefit is sought.’’;

8 (4) in section 105B (7 U.S.C. 1444f)—

9 (A) by striking subsection (c)(1)(G); and

10 (B) in subsection (c) by striking paragraph

11 (2) and inserting in lieu thereof the following:

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

13 condition of receiving any benefits (including pay14 ments) under this section, the producer must, if of15 fered by the Federal Crop Insurance Corporation,

16 obtain at least the catastrophic risk protection insur17 ance coverage for the crop and crop year in which

18 the benefit is sought.’’;

19 (5) in section 107B (7 U.S.C. 1444b–3a)—

20 (A) by striking subsection (c)(1)(G); and

21 (B) in subsection (c) by striking paragraph

22 (2) and inserting in lieu thereof the following:

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

24 condition of receiving any benefits (including pay25 ments) under this section, the producer must, if of-
30

HR 4217 IH

1 fered by the Federal Crop Insurance Corporation,

2 obtain at least the catastrophic risk protection insur3 ance coverage for the crop and crop year in which

4 the benefit is sought.’’;

5 (6) in section 108B (7 U.S.C. 1445c–3), by

6 adding at the end the following new subsection:

7 ‘‘(i) CROP INSURANCE REQUIREMENT.—As a condi8 tion of receiving any benefits (including payments) under

9 this section, the producer must, if offered by the Federal

10 Crop Insurance Corporation, obtain at least the cata11 strophic risk protection insurance coverage for the crop

12 and crop year in which the benefit is sought.’’;

13 (7) in section 205 (7 U.S.C. 1446f), by adding

14 at the end the following new subsection:

15 ‘‘(o) CROP INSURANCE REQUIREMENT.—As a condi16 tion of receiving any benefits (including payments) under

17 this section, the producer must, if offered by the Federal

18 Crop Insurance Corporation, obtain at least the cata19 strophic risk protection insurance coverage for the crop

20 and crop year in which the benefit is sought.’’;

21 (8) in section 206 (7 U.S.C. 1446g), by adding

22 at the end the following new subsection:

23 ‘‘(k) CROP INSURANCE REQUIREMENT.—As a condi24 tion of receiving any benefits under this section, the pro25 ducer must, if offered by the Federal Crop Insurance Cor-
31

HR 4217 IH

1 poration, obtain at least the catastrophic risk protection

2 insurance coverage for the crop and crop year in which

3 the benefit is sought.’’;

4 (9) in section 207 (7 U.S.C. 1446h), by adding

5 at the end the following new subsection:

6 ‘‘(k) CROP INSURANCE REQUIREMENT.—As a condi7 tion of receiving any benefits (including payments) under

8 this section, the producer must, if offered by the Federal

9 Corp Insurance Corporation, obtain at least the cata10 strophic risk protection insurance coverage for the crop

11 and crop year in which the benefit is sought.’’; and

12 (10) by repealing section 208 (7 U.S.C. 1446i).

13 (b) The Food, Agriculture, Conservation, and Trade

14 Act of 1990 is amended by striking chapters 1, 2, and

15 3 of subtitle B of title XXII.

16 (c) Section 251(b)(2)(D) of the Balanced Budget and

17 Emergency Deficit Control Act of 1985 (2 U.S.C.

18 901(b)(2)(D)), is amended effective July 1, 1995, by strik19 ing subparagraph (i) and inserting the following new sub20 paragraph:

21 ‘‘(i) If, for any fiscal year, appropriations for discre22 tionary accounts are enacted that the President designates

23 as emergency requirements and that Congress so des24 ignates in statute, the adjustment shall be the total of

25 such appropriations in discretionary accounts designated
32

HR 4217 IH

1 as emergency requirements and the outlays flowing in all

2 years from such appropriations: Provided, That this provi3 sion shall not apply to appropriations to cover agricultural

4 crop disaster assistance.’’.

5 SEC. 6. EFFECTIVE DATE.

6 Except as otherwise specifically provided in section

7 5(c), this Act shall become effective beginning with the

8 crop year immediately following the date of enactment.

Æ

HR 4217 IH——2

HR 4217 IH——3