69–006

106TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 106–300

AGRICULTURAL RISK PROTECTION ACT OF 1999

AUGUST 5, 1999.—Committed to the Committee of the Whole House on the State

of the Union and ordered to be printed

Mr. COMBEST, from the Committee on Agriculture,

submitted the following

R E P O R T

together with

ADDITIONAL VIEWS

[To accompany H.R. 2559]

The Committee on Agriculture, to whom was referred the bill

(H.R. 2559) to amend the Federal Crop Insurance Act to strengthen

the safety net for agricultural producers by providing greater access to more affordable risk management tools and improved protection from production and income loss, to improve the efficiency

and integrity of the Federal crop insurance program, and for other

purposes, having considered the same, report favorably thereon

with an amendment and recommend that the bill as amended do

pass.

The amendment is as follows:

Strike out all after the enacting clause and insert in lieu thereof

the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Agricultural Risk Protection Act

of 1999’’.

(b) TABLE OF CONTENTS.—The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—STRENGTHENING THE FARM SAFETY NET

Sec. 101. Premium schedule for additional coverage.

Sec. 102. Premium schedule for other plans of insurance.

Sec. 103. Adjustment in actual production history to establish insurable yields.

Sec. 104. Review and adjustment in rating methodologies.

Sec. 105. Conduct of pilot programs, including livestock.

Sec. 106. Cost of production as a price election.

Sec. 107. Premium discounts for good performance.

Sec. 108. Options for catastrophic risk protection.
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Sec. 109. Authority for nonprofit associations to pay fees on behalf of producers.

Sec. 110. Elections regarding prevented planting coverage.

Sec. 111. Limitations under noninsured crop disaster assistance program.

Sec. 112. Quality grade loss adjustment.

Sec. 113. Application of amendments.

TITLE II—IMPROVING PROGRAM INTEGRITY

Sec. 201. Limitation on double insurance.

Sec. 202. Improving program compliance and integrity.

Sec. 203. Sanctions for false information.

Sec. 204. Protection of confidential information.

Sec. 205. Records and reporting.

Sec. 206. Compliance with State licensing requirements.

TITLE III—ADMINISTRATION

Sec. 301. Board of Directors of Corporation.

Sec. 302. Promotion of submission of policies and related materials.

Sec. 303. Research and development, including contracts regarding underserved commodities.

Sec. 304. Funding for reimbursement and research and development.

Sec. 305. Board consideration of submitted policies and materials.

Sec. 306. Contracting for rating of plans of insurance.

Sec. 307. Electronic availability of crop insurance information.

Sec. 308. Fees for use of new policies and plans of insurance.

Sec. 309. Clarification of producer requirement to follow good farming practices.

Sec. 310. Reimbursements and negotiation of standard reinsurance agreement.

TITLE I—STRENGTHENING THE FARM SAFETY

NET

SEC. 101. PREMIUM SCHEDULE FOR ADDITIONAL COVERAGE.

(a) PREMIUM AMOUNTS.—Section 508(d)(2) of the Federal Crop Insurance Act (7

U.S.C. 1508(d)(2)) is amended by striking subparagraphs (B) and (C) and inserting

the following new subparagraph:

‘‘(B) In the case of additional coverage equal to or greater than 50 percent

of the recorded or appraised average yield indemnified at not greater than

100 percent of the expected market price, or an equivalent coverage, the

amount of the premium shall—

‘‘(i) be sufficient to cover anticipated losses and a reasonable reserve;

and

‘‘(ii) include an amount for operating and administrative expenses, as

determined by the Corporation, on an industry-wide basis as a percentage of the amount of the premium used to define loss ratio.’’.

(b) PAYMENT SCHEDULE.—Section 508(e)(2) of the Federal Crop Insurance Act (7

U.S.C. 1508(e)(2)) is amended by striking subparagraphs (B) and (C) and inserting

the following new subparagraphs:

‘‘(B) In the case of additional coverage equal to or greater than 50 percent, but less than 55 percent, of the recorded or appraised average yield

indemnified at not greater than 100 percent of the expected market price,

or an equivalent coverage, the amount shall be equal to the sum of—

‘‘(i) 67 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage level selected; and

‘‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

‘‘(C) In the case of additional coverage equal to or greater than 55 percent, but less than 65 percent, of the recorded or appraised average yield

indemnified at not greater than 100 percent of the expected market price,

or an equivalent coverage, the amount shall be equal to the sum of—

‘‘(i) 64 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage level selected; and

‘‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

‘‘(D) In the case of additional coverage equal to or greater than 65 percent, but less than 75 percent, of the recorded and appraised average yield

indemnified at not greater than 100 percent of the expected market price,

or an equivalent coverage, the amount shall be equal to the sum of—

‘‘(i) 59 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage level selected; and

‘‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

‘‘(E) In the case of additional coverage equal to or greater than 75 percent, but less than 80 percent, of the recorded or appraised average yield
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indemnified at not greater than 100 percent of the expected market price,

or an equivalent coverage, the amount shall be equal to the sum of—

‘‘(i) 54 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage level selected; and

‘‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

‘‘(F) In the case of additional coverage equal to or greater than 80 percent, but less than 85 percent, of the recorded or appraised average yield

indemnified at not greater than 100 percent of the expected market price,

or an equivalent coverage, the amount shall be equal to the sum of—

‘‘(i) 40.6 percent of the amount of the premium established under

subsection (d)(2)(B)(i) for the coverage level selected; and

‘‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

‘‘(G) Subject to subsection (c)(4), in the case of additional coverage equal

to or greater than 85 percent of the recorded or appraised average yield indemnified at not greater than 100 percent of the expected market price, or

an equivalent coverage, the amount shall be equal to the sum of—

‘‘(i) 30.6 percent of the amount of the premium established under

subsection (d)(2)(B)(i) for the coverage level selected; and

‘‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.’’.

(c) PREMIUM PAYMENT DISCLOSURE.—Section 508(e) of the Federal Crop Insurance

Act (7 U.S.C. 1508(e)) is amended by adding at the end the following new paragraph:

‘‘(5) PREMIUM PAYMENT DISCLOSURE.—Each policy or plan of insurance under

this title shall prominently indicate the dollar amount of the portion of the premium paid by the Corporation under this subsection or subsection (h)(2).’’.

SEC. 102. PREMIUM SCHEDULE FOR OTHER PLANS OF INSURANCE.

Section 508(h)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(2)) is

amended—

(1) by striking ‘‘A policy’’ and inserting the following:

‘‘(A) PREPARATION.—A policy’’;

(2) by striking the second sentence; and

(3) by adding at the end the following new subparagraph:

‘‘(B) PREMIUM SCHEDULE.—In the case of a policy offered under this subsection (except paragraph (10)) or subsection (m)(4), the Corporation shall

pay a portion of the premium of the policy that shall be equal to—

‘‘(i) the percentage, specified in subsection (e) for a similar level of

coverage, of the total amount of the premium used to define loss ratio;

and

‘‘(ii) the dollar amount of the administrative and operating expenses

that would be paid by the Corporation under subsection (e) for a similar level of coverage.’’.

SEC. 103. ADJUSTMENT IN ACTUAL PRODUCTION HISTORY TO ESTABLISH INSURABLE

YIELDS.

(a) USE OF PERCENTAGE OF TRANSITIONAL YIELD.—Section 508(g) of the Federal

Crop Insurance Act (7 U.S.C. 1508(g)) is amended by adding at the end the following new paragraph:

‘‘(4) ADJUSTMENT IN ACTUAL PRODUCTION HISTORY TO ESTABLISH INSURABLE

YIELDS.—

‘‘(A) APPLICATION.—This paragraph shall apply whenever the Corporation

uses the actual production history of the producer to establish insurable

yields for an agricultural commodity for the 2000 and subsequent crop

years.

‘‘(B) ELECTION TO USE PERCENTAGE OF TRANSITIONAL YIELD.—If, for one

or more of the crop years used to establish the producer’s actual production

history of an agricultural commodity, the producer’s recorded or appraised

yield of the commodity was less than 60 percent of the applicable transitional yield, as determined by the Corporation, the Corporation shall, at the

election of the producer—

‘‘(i) exclude any of such recorded or appraised yield; and

‘‘(ii) replace each excluded yield with a yield equal to 60 percent of

the applicable transitional yield.’’.

(b) APH ADJUSTMENT TO REFLECT PARTICIPATION IN MAJOR PEST CONTROL EFFORTS.—Section 508(g) of the Federal Crop Insurance Act (7 U.S.C. 1508(g)) is
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amended by inserting after paragraph (4), as added by subsection (a), the following

new paragraph:

‘‘(5) ADJUSTMENT TO REFLECT INCREASED YIELDS FROM SUCCESSFUL PEST CON- TROL EFFORTS.— ‘‘(A) SITUATIONS JUSTIFYING ADJUSTMENT.—The Corporation shall develop

a methodology for adjusting the actual production history of a producer

when each of the following apply:

‘‘(i) The producer’s farm is located in an area where systematic, areawide efforts have been undertaken using certain operations or measures, or the producer’s farm is a location at which certain operations

or measures have been undertaken, to detect, eradicate, suppress, or

control, or at least to prevent or retard the spread of, a plant disease

or plant pest, including a plant pest covered by the definition in section

102 of the Department of Agriculture Organic Act of 1944 (7 U.S.C.

147a).

‘‘(ii) The presence of the plant disease or plant pest has been found

to adversely affect the yield of the agricultural commodity for which the

producer is applying for insurance.

‘‘(iii) The efforts described in clause (i) have been effective.

‘‘(B) ADJUSTMENT AMOUNT.—The amount by which the Corporation adjusts the actual production history of a producer of an agricultural commodity shall reflect the degree to which the success of the systematic, areawide efforts described in paragraph (1)(A), on average, increases the yield

of the commodity on the producer’s farm, as determined by the Corporation.’’.

SEC. 104. REVIEW AND ADJUSTMENT IN RATING METHODOLOGIES.

Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) is amended

by adding at the end the following:

‘‘(7) REVIEW AND ADJUSTMENT OF RATES.— ‘‘(A) REVIEW REQUIRED.—To maximize participation in the Federal crop

insurance program and to ensure equity for producers, the Corporation

shall periodically review the methodologies employed for rating plans of insurance under this title consistent with section 507(c)(2).

‘‘(B) PREMIUM ADJUSTMENT.—The Corporation shall analyze the rating

and loss history of approved policies and plans of insurance for agricultural

commodities by area. If the Corporation makes a determination that premium rates are excessive for an agricultural commodity in an area relative

to the requirements of subsection (d)(2)(B) for that area, then, in the 2000

crop year or as soon as practicable after the determination is made, the

Corporation shall make appropriate adjustments in the premium rates for

that area for that agricultural commodity.’’.

SEC. 105. CONDUCT OF PILOT PROGRAMS, INCLUDING LIVESTOCK.

(a) REPEAL OF OBSOLETE PILOT PROGRAMS.—Section 508(h) of the Federal Crop

Insurance Act (7 U.S.C. 1508(h)) is amended by striking paragraphs (6) and (8).

(b) GENERAL REQUIREMENTS.—Section 508(h) of the Federal Crop Insurance Act

(7 U.S.C. 1508(h)) is amended by inserting after paragraph (7) the following new

paragraph:

‘‘(8) GENERAL REQUIREMENTS APPLICABLE TO PILOT PROGRAMS.—In conducting

any pilot program of insurance or reinsurance authorized or required by this

title, the Corporation—

‘‘(A) may offer the pilot program on a regional, whole State, or national

basis after considering the interests of affected producers and the interests

of and risks to the Corporation;

‘‘(B) may operate the pilot program, including any modifications thereof,

for a period of up to 3 years; and

‘‘(C) may extend the time period for the pilot program for additional periods, as determined appropriate by the Corporation.’’.

(c) EXPEDITED CONSIDERATION.—Section 508(h)(4) of the Federal Crop Insurance

Act (7 U.S.C. 1508(h)(4)) is amended—

(1) by redesignating subparagraphs (A), (B), (C), and (D) as clauses (i), (ii),

(iii), and (iv), respectively;

(2) by moving the text of the clauses (as so designated) 2 ems to the right;

(3) by striking ‘‘The Corporation’’ in the first sentence and inserting the following:

‘‘(A) GUIDELINES REQUIRED.—Not later than 180 days after the date of the

enactment of the Agricultural Risk Protection Act of 1999, the Corporation’’;

and
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(4) by adding at the end the following new subparagraph:

‘‘(B) EXPEDITED CONSIDERATION OF PROPOSED PILOT PROGRAMS.—The regulations required by subparagraph (A) shall include streamlined guidelines

for the submission, and Board review, of pilot programs that the Board determines are limited in scope and duration and involve a reduced level of

liability to the Federal Government, and an increased level of risk to approved insurance providers participating in the pilot program, relative to

other policies or materials submitted under this subsection. The streamlined guidelines shall be consistent with the guidelines established under

subparagraph (A), except as follows:

‘‘(i) Not later than 60 days after submission of the proposed pilot program, the Corporation shall provide an applicant with notification of its

intent to recommend disapproval of the proposal to the Board.

‘‘(ii) Not later than 90 days after the proposed pilot program is submitted to the Board, the Board shall make a determination to approve

or disapprove the pilot program. Any determination by the Board to

disapprove the pilot program shall be accompanied by a complete explanation of the reasons for the Board’s decision to deny approval. In the

event the Board fails to make a determination within the prescribed

time period, the pilot program submitted shall be deemed approved by

the Board for the initial reinsurance year designated for the pilot program, except in the case where the Board and the applicant agree to

an extension.’’.

(d) LIVESTOCK PILOT PROGRAMS.— (1) PROGRAMS REQUIRED.—Section 508(h) of the Federal Crop Insurance Act

(7 U.S.C. 1508(h)) is amended by striking paragraph (10) and inserting the following new paragraph:

‘‘(10) LIVESTOCK PILOT PROGRAMS.— ‘‘(A) PROGRAMS REQUIRED.—The Corporation shall conduct one or more

pilot programs to evaluate the effectiveness of risk management tools for

livestock producers, including the use of futures and options contracts and

policies and plans of insurance that provide livestock producers with reasonable protection from the financial risks of price or income fluctuations

inherent in the production and marketing of livestock, provide protection

for production losses, and otherwise protect the interests of livestock producers. To the maximum extent practicable, the Corporation shall evaluate

the greatest number and variety of such programs to determine which of

the offered risk management tools are best suited to protect livestock producers from the financial risks associated with the production and marketing of livestock.

‘‘(B) IMPLEMENTATION; ASSISTANCE.—The Corporation shall begin conducting livestock pilot programs under this paragraph during fiscal year

2001, and any policy or plan of insurance offered under this paragraph may

be prepared without regard to the limitations contained in this title. As

part of such a pilot program, the Corporation may provide assistance to producers to purchase futures and options contracts or policies and plans of insurance offered under that pilot program. However, no action may be undertaken with respect to a risk under this paragraph if the Corporation determines that insurance protection for livestock producers against the risk

is generally available from private companies.

‘‘(C) LOCATION.—The Corporation shall conduct the livestock pilot programs under this paragraph in a number of counties that is determined by

the Corporation to be adequate to provide a comprehensive evaluation of

the feasibility, effectiveness, and demand among producers for the risk

management tools evaluated in the pilot programs.

‘‘(D) ELIGIBLE PRODUCERS; LIVESTOCK.—Any producer of a type of livestock covered by a pilot program under this paragraph who owns or operates a farm or ranch in a county selected as a location for that pilot program shall be eligible to participate in that pilot program. In this paragraph, the term ‘livestock’ means cattle, sheep, swine, goats, and poultry.

‘‘(E) RELATION TO OTHER LAWS.—The terms and conditions of any policy

or plan of insurance offered under this paragraph that is reinsured by the

Corporation is not subject to the jurisdiction of the Commodity Futures

Trading Commission or the Securities and Exchange Commission or considered as accounts, agreements (including any transaction which is of the

character of, or is commonly known to the trade as, an ‘option’, ‘privilege’,

‘indemnity’, ‘bid’, ‘offer’, ‘put’, ‘call’, ‘advance guaranty’, or ‘decline guaranty’), or transactions involving contracts of sale of a commodity for future
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delivery, traded or executed on a contract market for the purposes of the

Commodity Exchange Act (7 U.S.C. 1 et seq.). Nothing in this subparagraph

is intended to affect the jurisdiction of the Commodity Futures Trading

Commission or the applicability of the Commodity Exchange Act to any

transaction conducted on a designated contract market (as that term is

used in such Act) by an approved insurance provider to offset the provider’s

risk under a plan or policy of insurance under this paragraph.

‘‘(F) LIMITATION ON EXPENDITURES.—The Corporation shall conduct all

livestock programs under this title so that, to the maximum extent practicable, all costs associated with conducting the livestock programs (other

than research and development costs covered by paragraph (6) or subsection (m)(4)) are not expected to exceed the following: ‘‘(i) $20,000,000 for fiscal year 2001.

‘‘(ii) $30,000,000 for fiscal year 2002.

‘‘(iii) $40,000,000 for fiscal year 2003.

‘‘(iv) $55,000,000 for fiscal year 2004 and each subsequent fiscal

year.’’.

(2) CONFORMING AMENDMENT TO DEFINITION OF AGRICULTURAL COMMODITY.— Section 518 of the Federal Crop Insurance Act (7 U.S.C. 1518) is amended by

striking ‘‘livestock and’’ after ‘‘commodity, excluding’’.

(e) FUNDING OF LIVESTOCK PILOT PROGRAMS.— (1) AUTHORIZATION OF APPROPRIATIONS.—Section 516(a)(2) of the Federal Crop

Insurance Act (7 U.S.C. 1516(a)(2)) is amended—

(A) by striking ‘‘years—’’ and inserting ‘‘years the following:’’;

(B) by capitalizing the first letter of the first word of each subparagraph;

(C) by striking ‘‘; and’’ at the end of subparagraph (A) and inserting a period; and

(D) by adding at the end the following new subparagraph:

‘‘(C) Costs associated with the conduct of livestock pilot programs carried

out under section 508(h)(10), subject to subparagraph (F) of such section.’’.

(2) USE OF INSURANCE FUND.—Section 516(b)(1) of the Federal Crop Insurance

Act (7 U.S.C. 1516(b)(1)) is amended—

(A) by striking ‘‘including—’’ and inserting ‘‘including the following:’’;

(B) by capitalizing the first letter of the first word of each subparagraph;

(C) by striking the semicolon at the end of subparagraph (A) and inserting a period;

(D) by striking ‘‘; and’’ at the end of subparagraph (B) and inserting a

period; and

(E) by adding at the end the following new subparagraph:

‘‘(D) Costs associated with the conduct of livestock pilot programs carried

out under section 508(h)(10), subject to subparagraph (F) of such section.’’.

SEC. 106. COST OF PRODUCTION AS A PRICE ELECTION.

Section 508(c)(5) of the Federal Crop Insurance Act (7 U.S.C. 1508(c)(5)) is

amended—

(1) by striking ‘‘The Corporation shall establish a price’’ in the matter preceding subparagraph (A) and inserting ‘‘For purposes of this title, the Corporation shall establish or approve a price’’;

(2) by striking ‘‘or’’ at the end of subparagraph (A);

(3) by striking the period at the end of subparagraph (B) and inserting ‘‘; or’’;

and

(4) by adding at the end the following—

‘‘(C) in the case of cost of production or similar plans of insurance, shall

be the projected cost of producing the agricultural commodity (as determined by the Corporation).’’.

SEC. 107. PREMIUM DISCOUNTS FOR GOOD PERFORMANCE.

Section 508(d) of the Federal Crop Insurance Act (7 U.S.C. 1508(d)) is amended

by adding at the end the following new paragraph:

‘‘(3) PREMIUM DISCOUNTS.— ‘‘(A) PERFORMANCE-BASED DISCOUNT.—The Corporation may provide a

performance-based premium discount for a producer of an agricultural commodity who has good insurance or production experience relative to other

producers of that agricultural commodity in the same area, as determined

by the Corporation.

‘‘(B) DISCOUNT FOR REDUCED PRICE FOR CERTAIN COMMODITIES.—A producer who insured wheat, barley, oats, or rye during at least 2 of the 1995

through 1999 crop years may be eligible to receive an additional 20 percent

premium discount on the producer-paid premium for any 2000 crop policy
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if the producer demonstrates that the producer’s wheat, barley, oats, or rye

crop was subjected to a discounted price due to Scab or Vomitoxin damage,

or both, during any 2 years of that period. The 2000 insured crop or crops

need not be wheat, barley, oats, or rye to qualify for the discount under this

subparagraph. The 2 years of insurance and the 2 years of discounted

prices need not be the same.’’.

SEC. 108. OPTIONS FOR CATASTROPHIC RISK PROTECTION.

Section 508(b) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)) is amended

by striking paragraph (3) and inserting the following new paragraph:

‘‘(3) ALTERNATIVE CATASTROPHIC COVERAGE.—Beginning with the 2000 crop

year, the Corporation shall offer producers of an agricultural commodity the option of selecting either of the following:

‘‘(A) The catastrophic risk protection coverage available under paragraph

(2)(A).

‘‘(B) An alternative catastrophic risk protection coverage that—

‘‘(i) indemnifies the producer on an area yield and loss basis if such

a plan of insurance is offered for the agricultural commodity in the

county in which the farm is located;

‘‘(ii) provides, on a uniform national basis, a higher combination of

yield and price protection than the coverage available under paragraph

(2)(A); and

‘‘(iii) the Corporation determines is comparable to the coverage available under paragraph (2)(A) for purposes of subsection (e)(2)(A).’’.

SEC. 109. AUTHORITY FOR NONPROFIT ASSOCIATIONS TO PAY FEES ON BEHALF OF PRODUCERS.

Section 508(b)(5) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)(5)) is

amended by adding at the end the following new subparagraph:

‘‘(F) PAYMENT OF FEES ON BEHALF OF PRODUCERS.—

‘‘(i) PAYMENT AUTHORIZED.—Notwithstanding any other subparagraph of this paragraph, a cooperative association of agricultural producers or a nonprofit trade association may pay to the Corporation, on

behalf of a member of the association who consents to be insured under

such an arrangement, all or a portion of the fees imposed under subparagraphs (A) and (B) for catastrophic risk protection.

‘‘(ii) TREATMENT OF LICENSING FEES.—A licensing fee or other payment made by the insurance provider to the cooperative association or

trade association in connection with the issuance of catastrophic risk

protection or additional coverage under this section to members of the

cooperative association or trade association shall not be considered to

be a rebate to the members if the members are informed in advance

of the fee or payment.

‘‘(iii) SELECTION OF PROVIDER; DELIVERY.—Nothing in this subparagraph shall be construed so as to limit the ability of a producer to

choose the licensed insurance agent or other approved insurance provider from whom the member will purchase a policy or plan of insurance or to refuse coverage for which a payment is offered to be made

under clause (i). A policy or plan of insurance for which a payment is

made under clause (i) shall be delivered by a licensed insurance agent

or other approved insurance provider.

‘‘(iv) ADDITIONAL COVERAGE ENCOURAGED.—Cooperatives and trade

associations and any approved insurance provider with whom a licensing fee or other arrangement under this subparagraph is made shall

encourage producer members to purchase appropriate levels of additional coverage in order to meet the risk management needs of such

member producers.’’.

SEC. 110. ELECTIONS REGARDING PREVENTED PLANTING COVERAGE.

Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) is amended

by inserting after paragraph (7), as added by section 104, the following new paragraph:

‘‘(8) PREVENTED PLANTING COVERAGE.—

‘‘(A) ELECTION NOT TO RECEIVE COVERAGE.—

‘‘(i) ELECTION.—A producer may elect not to receive coverage for prevented planting of an agricultural commodity.

‘‘(ii) REDUCTION.—In the case of an election under clause (i), the Corporation shall provide a reduction in the premium payable by the pro-
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ducer for a plan of insurance in an amount equal to the premium for

the prevented planting coverage, as determined by the Corporation.

‘‘(B) EQUAL COVERAGE.—For each agricultural commodity for which prevented planting coverage is available, the Corporation shall offer an equal

percentage level of prevented planting coverage.

‘‘(C) AREA CONDITIONS REQUIRED FOR PAYMENT.—The Corporation shall

limit prevented planting payments to producers to those situations in which

producers in the area in which the farm is located are generally affected

by the conditions that prevent an agricultural commodity from being planted.

‘‘(D) SUBSTITUTE COMMODITY.—

‘‘(i) AUTHORITY TO PLANT.—Subject to clause (iv), a producer who has

prevented planting coverage and who is eligible to receive an indemnity

under such coverage may plant an agricultural commodity, other than

the commodity covered by the prevented planting coverage, on the acreage originally prevented from being planted.

‘‘(ii) NONAVAILABILITY OF INSURANCE.—A substitute agricultural commodity planted as authorized by clause (i) for harvest in the same crop

year shall not be eligible for coverage under a policy or plan of insurance under this title or for noninsured crop disaster assistance under

section 196 of the Federal Agriculture Improvement and Reform Act of

1996 (7 U.S.C. 7333). For purposes of subsection (b)(7) only, the substitute commodity shall be deemed to have at least catastrophic risk

protection so as to satisfy the requirements of that subsection.

‘‘(iii) EFFECT ON ACTUAL PRODUCTION HISTORY.—If a producer plants

a substitute agricultural commodity as authorized by clause (i) for a

crop year, the Corporation shall assign the producer a recorded yield,

for that crop year for the commodity that was prevented from being

planting, equal to 60 percent of the producer’s actual production history

for such commodity for purposes of determining the producer’s actual

production history for subsequent crop years.

‘‘(iv) EFFECT ON PREVENTED PLANTING PAYMENT.—If a producer plants

a substitute agricultural commodity as authorized by clause (i) before

the latest planting date established by the Corporation for the agricultural commodity prevented from being planted, the Corporation shall

not make a prevented planting payment with regard to the commodity

prevented from being planted.’’.

SEC. 111. LIMITATIONS UNDER NONINSURED CROP DISASTER ASSISTANCE PROGRAM.

(b) LIMITATION.—Section 196(i) of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333(i)) is amended—

(1) in paragraph (1)(B)—

(A) by striking ‘‘GROSS REVENUES’’ in the subparagraph heading and inserting ‘‘ADJUSTED GROSS INCOME’’; and

(B) by striking ‘‘gross revenue’’ and ‘‘gross revenues’’ each place they appear and inserting ‘‘adjusted gross income’’; and

(2) by striking paragraph (4) and inserting the following new paragraph:

‘‘(4) LIMITATION.—A person who has qualifying adjusted gross income in excess of $2,000,000 during the taxable year shall not be eligible to receive any

noninsured crop disaster assistance payment under this section.’’.

SEC. 112. QUALITY GRADE LOSS ADJUSTMENT.

Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) is amended

by inserting after paragraph (8), as added by section 110, the following new paragraph:

‘‘(9) QUALITY GRADE LOSS ADJUSTMENT.—Consistent with subsection (m)(4), by

the 2000 crop year, the Corporation shall enter into a contract to analyze its

quality loss adjustment procedures and make such adjustments as may be necessary to more accurately reflect local quality discounts that are applied to agricultural commodities insured under this title, taking into consideration the actuarial soundness of the adjustment and the prevention of fraud, waste and

abuse.’’.

SEC. 113. APPLICATION OF AMENDMENTS.

Except where the context specifically provides otherwise, the amendments made

by this title shall apply beginning with the 2000 crop year.
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TITLE II—IMPROVING PROGRAM

EFFICIENCIES

SEC. 201. LIMITATION ON DOUBLE INSURANCE.

Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) is amended

by inserting after paragraph (9), as added by section 112, the following new paragraph:

‘‘(10) LIMITATION ON DOUBLE INSURANCE.—

‘‘(A) RESTRICTED TO CATASTROPHIC RISK PROTECTION.—Except for situations covered by subparagraph (B), no policy or plan of insurance may be

offered under this title for more than one agricultural commodity planted

on the same acreage in the same crop year unless the coverage for the additional crop is limited to catastrophic risk protection available under subsection (b).

‘‘(B) EXCEPTION FOR DOUBLE-CROPPING.—A policy or plan of insurance

may be offered under this title for an agricultural commodity and for an

additional agricultural commodity when both agricultural commodities are

normally harvested within the same crop year on the same acreage if the

following conditions are met:

‘‘(i) There is an established practice of double-cropping in the area

and the additional agricultural commodity is customarily doublecropped in the area with the first agricultural commodity, as determined by the Corporation.

‘‘(ii) A policy or plan of insurance for the first agricultural commodity

and the additional agricultural commodity is available under this title.

‘‘(iii) The additional commodity is planted on or before the final

planting date or late planting date for that additional commodity, as

established by the Corporation.’’.

SEC. 202. IMPROVING PROGRAM COMPLIANCE AND INTEGRITY.

(a) ADDITIONAL METHODS.—Section 506(q) of the Federal Crop Insurance Act (7

U.S.C. 1506(q)) is amended—

(1) by redesignating paragraphs (1) and (2) as paragraphs (2) and (3);

(2) by inserting after the subsection heading the following new paragraph (1):

‘‘(1) PURPOSE.—The purpose of this subsection is to improve compliance with

the Federal crop insurance program and to improve program integrity.’’; and

(3) by adding at the end the following new paragraphs:

‘‘(4) RECONCILING PRODUCER INFORMATION.—The Secretary shall develop and

implement a coordinated plan for the Corporation and the Administrator of the

Farm Service Agency to reconcile all relevant information received by the Corporation or the Farm Service Agency from a producer who obtains crop insurance coverage under this title. Beginning with the 2000 crop year, the Secretary

shall require that the Corporation and the Farm Service Agency reconcile such

producer-derived information on at least an annual basis in order to identify

and address any discrepancies.

‘‘(5) IDENTIFICATION AND ELIMINATION OF FRAUD, WASTE, AND ABUSE.—

‘‘(A) FSA MONITORING PROGRAM.—The Secretary shall develop and implement a coordinated plan for the Farm Service Agency to assist the Corporation in the ongoing monitoring of programs carried out under this title,

including—

‘‘(i) conducting fact finding relative to allegations of program fraud,

waste, and abuse, both at the request of the Corporation or on its own

initiative after consultation with the Corporation;

‘‘(ii) reporting any allegation of fraud, waste, and abuse or identified

program vulnerabilities to the Corporation in a timely manner; and

‘‘(iii) assisting the Corporation and approved insurance providers in

auditing a statistically appropriate number of claims made under any

policy or plan of insurance under this title.

‘‘(B) USE OF FIELD INFRASTRUCTURE.—The plan required by this paragraph shall use the field infrastructure of the Farm Service Agency, and the

Secretary shall ensure that relevant Farm Service Agency personnel are appropriately trained for any responsibilities assigned to them under the plan.

At a minimum, such personnel shall receive the same level of training and

pass the same basic competency tests as required of loss adjusters of approved insurance providers.
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‘‘(C) MAINTENANCE OF PROVIDER EFFORT; COOPERATION.—The activities of

the Farm Service Agency under this paragraph do not affect the responsibility of approved insurance providers to conduct any audits of claims or

other program reviews required by the Corporation. If an insurance provider reports to the Corporation that it suspects intentional misrepresentation, fraud, waste, or abuse, the Corporation shall make a determination

and provide a written response within 90 days after receiving the report.

The insurance provider and the Corporation shall take coordinated action

in any case where misrepresentation, fraud, waste, or abuse has occurred.

‘‘(6) CONSULTATION WITH STATE COMMITTEES.—The Corporation shall establish

a mechanism under which State committees of the Farm Service Agency are

consulted concerning policies and plans of insurance offered in a State under

this title.

‘‘(7) ANNUAL REPORT ON COMPLIANCE EFFORTS.—The Secretary shall submit to

the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate an annual report

containing findings relative to the efforts undertaken pursuant to paragraphs

(4) and (5). The report shall identify specific occurrences of waste, fraud, and

abuse and contain an outline of actions that have been or are being taken to

eliminate the identified waste, fraud, and abuse.’’.

(b) TECHNICAL CORRECTION.—Paragraph (3) of section 506(q) of the Federal Crop

Insurance Act (7 U.S.C. 1506(q)), as redesignated by subsection (a), is amended by

striking ‘‘this subsection’’ and inserting ‘‘this paragraph’’.

SEC. 203. SANCTIONS FOR FALSE INFORMATION.

(a) AUTHORIZED SANCTIONS.—Section 506(n) of the Federal Crop Insurance Act (7

U.S.C. 1506(n)) is amended—

(1) in the subsection heading, by striking ‘‘PENALTIES’’ and inserting ‘‘SANCTIONS FOR VIOLATIONS’’;

(2) by redesignating paragraph (2) as paragraph (3) and, in such paragraph,

by striking ‘‘PENALTY’’ and ‘‘assessing penalties’’ and inserting ‘‘SANCTION’’ and

‘‘imposing a sanction’’, respectively; and

(3) by striking paragraph (1) and inserting the following new paragraphs:

‘‘(1) FALSE INFORMATION.—If a producer, an agent, a loss adjuster, an approved insurance provider, or any other person willfully and intentionally provides any false or inaccurate information to the Corporation or to an approved

insurance provider with respect to a policy or plan of insurance under this title,

the Corporation may, after notice and an opportunity for a hearing on the

record, impose one or more of the sanctions specified in paragraph (2).

‘‘(2) AUTHORIZED SANCTIONS.—The following sanctions may be imposed for a

violation under paragraph (1):

‘‘(A) The Corporation may impose a civil fine for each violation not to exceed the greater of—

‘‘(i) the amount of the pecuniary gain obtained as a result of the false

or inaccurate information provided; or

‘‘(ii) $10,000.

‘‘(B) If the violation is committed by a producer, the producer may be disqualified for a period of up to 5 years from—

‘‘(i) participating in, or receiving any benefit provided under this title,

the noninsured crop disaster assistance program under section 196 of

the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C.

7333), the Agricultural Market Transition Act (7 U.S.C. 7201 et seq.),

the Agricultural Act of 1949 (7 U.S.C. 1421 et seq.), the Commodity

Credit Corporation Charter Act (15 U.S.C. 714 et seq.), or the Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.);

‘‘(ii) receiving any loan made, insured, or guaranteed under the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et. seq.);

‘‘(iii) receiving any benefit provided, or indemnity made available,

under any other law to assist a producer of an agricultural commodity

due to a crop loss or a decline in commodity prices; or

‘‘(iv) receiving any cost share assistance for conservation or any other

assistance provided under title XII of the Food Security Act (16 U.S.C.

3801 et seq.).

‘‘(C) If the violation is committed by an agent, loss adjuster, approved insurance provider, or any other person (other than a producer), the violator

may be disqualified for a period of up to 5 years from participating in, or

receiving any benefit provided under this title.
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‘‘(D) If the violation is committed by a producer, the Corporation may require the producer to forfeit any premium owed under the policy, notwithstanding a denial of claim or collection of an overpayment, if the false or

inaccurate information was material.’’.

(b) DISCLOSURE OF SANCTIONS.—Section 506(n) of the Federal Crop Insurance Act

(7 U.S.C. 1506(n)) is amended by adding at the end the following new paragraph:

‘‘(4) DISCLOSURE OF SANCTIONS.—Each policy or plan of insurance under this

title shall prominently indicate the sanctions prescribed under paragraph (2) for

willfully and intentionally providing false or inaccurate information to the Corporation or to an approved insurance provider.’’.

SEC. 204. PROTECTION OF CONFIDENTIAL INFORMATION.

Section 502 of the Federal Crop Insurance Act (7 U.S.C. 1502) is amended by adding at the end the following new subsection:

‘‘(c) PROTECTION OF CONFIDENTIAL INFORMATION.—

‘‘(1) AUTHORIZED DISCLOSURE.—In the case of information furnished by a producer to participate in or receive any benefit under this title, the Secretary, any

other officer or employee of the Department or an agency thereof, an approved

insurance provider and its employees and contractors, and any other person

may not disclose the information to the public, unless the information has been

transformed into a statistical or aggregate form that does not allow the identification of the person who supplied particular information.

‘‘(2) VIOLATIONS; PENALTIES.—Subsection (c) of section 1770 of the Food Security Act of 1985 (7 U.S.C. 2276) shall apply with respect to the release of information collected in any manner or for any purpose prohibited by paragraph

(1).’’.

SEC. 205. RECORDS AND REPORTING.

(a) CONDITION OF OBTAINING COVERAGE.—Section 508(f)(3)(A) of the Federal Crop

Insurance Act (7 U.S.C. 1508(f)(3)(A)) is amended by striking ‘‘provide, to the extent

required by the Corporation, records acceptable to the Corporation of historical acreage and production of the crops for which the insurance is sought’’ and inserting

‘‘provide annually records acceptable to the Secretary regarding crop acreage, acreage yields, and production for each agricultural commodity insured under this title’’.

(b) COORDINATION OF RECORDS.—Section 506(h) of the Federal Crop Insurance Act

(7 U.S.C. 1506(h)) is amended—

(1) by striking ‘‘The Corporation’’ and inserting the following:

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

(2) by adding at the end the following new paragraph:

‘‘(2) COORDINATION AND USE OF RECORDS.—

‘‘(A) COORDINATION BETWEEN AGENCIES.—The Secretary shall ensure that

recordkeeping and reporting requirements under this title and section 196

of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C.

7333) are coordinated by the Corporation and the Farm Service Agency to

avoid duplication of such records, to streamline procedures involved with

the submission of such records, and to enhance the accuracy of such

records.

‘‘(B) USE OF RECORDS.—Notwithstanding section 502(c), records submitted

in accordance with this title and section 196 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333) shall be available to

agencies and local offices of the Department, appropriate State and Federal

agencies and divisions, and approved insurance providers for use in carrying out this title and such section 196 as well as other agricultural programs and related responsibilities.’’.

(c) NONINSURED CROP DISASTER ASSISTANCE PROGRAM.—Section 196(b) of the

Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333(b)) is

amended—

(1) by striking paragraph (2) and inserting the following:

‘‘(2) RECORDS.—To be eligible for assistance under this section, a producer

shall provide annually to the Secretary, acting through the Agency, records of

crop acreage, acreage yields, and production for each eligible crop.’’; and

(2) in paragraph (3), by inserting ‘‘annual’’ after ‘‘shall provide’’.

SEC. 206. COMPLIANCE WITH STATE LICENSING REQUIREMENTS.

Section 508 of the Federal Crop Insurance Act (7 U.S.C. 1508) is amended by adding at the end the following new subsection:

‘‘(o) COMPLIANCE WITH STATE LICENSING REQUIREMENTS.—Any person who sells

or solicits the purchase of a policy or plan of insurance under this title, including
12

catastrophic risk protection, in any State shall be licensed and otherwise qualified

to do business in that State.’’.

TITLE III—ADMINISTRATION

SEC. 301. BOARD OF DIRECTORS OF CORPORATION.

(a) CHANGE IN COMPOSITION.—Section 505 of the Federal Crop Insurance Act (7

U.S.C. 1505) is amended by striking the section heading, ‘‘SEC. 505.’’, and subsection

(a) and inserting the following:

‘‘SEC. 505. MANAGEMENT OF CORPORATION.

‘‘(a) BOARD OF DIRECTORS.— ‘‘(1) ESTABLISHMENT.—The management of the Corporation shall be vested in

a Board of Directors subject to the general supervision of the Secretary.

‘‘(2) COMPOSITION.—The Board shall consist of only the following members:

‘‘(A) The manager of the Corporation, who shall serve as a nonvoting ex

officio member.

‘‘(B) The Under Secretary of Agriculture responsible for the Federal crop

insurance program.

‘‘(C) One additional Under Secretary of Agriculture (as designated by the

Secretary).

‘‘(D) The Chief Economist of the Department of Agriculture.

‘‘(E) One person experienced in the crop insurance business.

‘‘(F) One person experienced in the regulation of insurance.

‘‘(G) Four active producers who are policy holders, are from different geographic areas of the United States, and represent a cross-section of agricultural commodities grown in the United States. At least one of the four shall

be a specialty crop producer.

‘‘(3) APPOINTMENT OF PRIVATE SECTOR MEMBERS.—The members of the Board

described in subparagraphs (E), (F), and (G) of paragraph (2)—

‘‘(A) shall be appointed by, and hold office at the pleasure of, the Secretary; and

‘‘(B) shall not be otherwise employed by the Federal Government.

‘‘(4) CHAIRPERSON.—The Board shall select a member of the Board to serve

as Chairperson.’’.

(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect 30

days after the date of the enactment of this Act.

(c) EFFECT ON EXISTING BOARD.—A member of the Board of Directors of the Federal Crop Insurance Corporation on the effective date specified in subsection (b) may

continue to serve as a member of the Board until the earlier of the following:

(1) The date the replacement Board is appointed.

(2) The end of the 180-day period beginning on the effective date specified in

subsection (b).

SEC. 302. PROMOTION OF SUBMISSION OF POLICIES AND RELATED MATERIALS.

(a) REIMBURSEMENT AUTHORITY.—Section 508(h) of the Federal Crop Insurance

Act (7 U.S.C. 1508(h)), as amended by section 105(a) of this Act, is amended by inserting after paragraph (5) the following new paragraph:

‘‘(6) REIMBURSEMENT OF RESEARCH, DEVELOPMENT, AND MAINTENANCE

COSTS.—

‘‘(A) REIMBURSEMENT PROVIDED.—Subject to the conditions of this paragraph, the Corporation shall provide a payment to reimburse an applicant

for research, development, and maintenance costs directly related to a policy or other material that is—

‘‘(i) submitted to, and approved by, the Board under this subsection

for reinsurance; and

‘‘(ii) if applicable, offered for sale to producers.

‘‘(B) DURATION.—Payments under subparagraph (A) may be made available beginning in fiscal year 2001. Payments with respect to the maintenance of an approved policy or other material may be provided for a period

of not more than 4 reinsurance years following Board approval. Upon the

expiration of that 4-year period, or earlier upon the agreement of the Corporation and the person receiving the payment, the Corporation shall assume responsibility for maintenance of a successful policy, as determined

by the Corporation based on the market share attained by the policy, the

total number of policies sold, the total amount of premium paid, and the

performance of the policy in the States where the policy is sold.
13

‘‘(C) TREATMENT OF PAYMENT.—Payments made under subparagraph (A)

for a policy or other material shall be considered as payment in full for the

research and development conducted with regard to the policy or material

and any property rights to the policy or material.

‘‘(D) REIMBURSEMENT AMOUNT.—The Corporation shall determine the

amount of the payment under subparagraph (A) for an approved policy or

other material based on the complexity of the policy or material and the

size of the area in which the policy or material is expected to be used.’’.

(b) ISSUANCE OF REGULATIONS.—Not later than October 1, 2000, the Corporation

shall issue final regulations to carry out the amendment made by subsection (a).

SEC. 303. RESEARCH AND DEVELOPMENT, INCLUDING CONTRACTS REGARDING UNDERSERVED COMMODITIES.

(a) SUPPORT FOR PRIVATE RESEARCH AND DEVELOPMENT.—Section 508(m) of the

Federal Crop Insurance Act (7 U.S.C. 1508(m)) is amended by adding at the end

the following new paragraph:

‘‘(4) PRIVATE RESEARCH AND DEVELOPMENT OF POLICIES AND OTHER MATERIALS.—

‘‘(A) USE OF REIMBURSEMENT AUTHORITY.—To encourage and promote the

necessary research and development for policies, plans of insurance, and related materials, including policies, plans, and materials under the livestock

pilot programs under subsection (h)(10), the Corporation shall make full use

of private resources by providing payment for research and development for

approved policies and plans of insurance, and related materials, pursuant

to subsection (h)(6).

‘‘(B) CONTRACTS FOR UNDERSERVED COMMODITIES.—

‘‘(i) DEVELOPMENT OF PRODUCTS AND RELATED MATERIALS.—In the

event the Corporation determines that an agricultural commodity, including a specialty crop, is not adequately served by policies and plans

of insurance and related materials submitted under subsection (h) or

any other provision of this title, the Corporation may enter into a contract, under procedures prescribed by the Corporation, directly with

any person or entity with experience in crop insurance or farm or ranch

risk management, including universities, providers of crop insurance,

and trade and research organizations, to carry out research and development for policies and plans of insurance and related materials for

that agricultural commodity without regard to the limitations contained

in this title.

‘‘(ii) TYPES OF CONTRACTS.—A contract under this subparagraph may

provide for research and development regarding new or expanded policies and plans of insurance and related materials, including policies

based on adjusted gross income, cost-of-production, quality losses, and

an intermediate base program with a higher coverage and cost than

catastrophic risk protection.

‘‘(iii) DELAYED EFFECTIVE DATE FOR CONTRACTS.—A contract entered

into under this subparagraph may not take effect before October 1,

2000.

‘‘(iv) USE OF RESULTING POLICIES AND PLANS.—The Corporation may

offer any policy or plan of insurance developed under this subparagraph that is approved by the Board.

‘‘(C) CONTRACT FOR REVENUE COVERAGE PLAN.—The Corporation shall

enter into a contract for research and development regarding one or more

revenue coverage plans designed to enable producers to take maximum advantage of fluctuations in market prices and thereby maximize revenue realized from the sale of a crop. Such a plan may include market instruments

currently available or may involve the development of new instruments to

achieve this goal. Not later than 15 months after the date of the enactment

of this paragraph, the Corporation shall submit to Congress a report containing the results of the contract.’’.

(b) RELIANCE ON PRIVATE DEVELOPMENT OF NEW POLICIES.—Section 508(m)(2) of

the Federal Crop Insurance Act (7 U.S.C. 1508(m)(2)) is amended—

(1) by striking ‘‘EXCEPTION.—No action’’ and inserting—

‘‘(2) EXCEPTIONS.—

‘‘(A) PRIVATE AVAILABILITY.—No action’’; and

(2) by adding at the end the following new subparagraph:

‘‘(B) PROHIBITED RESEARCH AND DEVELOPMENT BY CORPORATION.—Notwithstanding paragraphs (1) and (5), on and after October 1, 2000, the Corporation shall not conduct research and development for any new policy or
14

plan of insurance for an agricultural commodity offered under this title.

Any policy or plan of insurance developed by the Corporation under this

title before that date shall, at the discretion of the Corporation, continue

to be offered for sale to producers.’’.

(c) PARTNERSHIPS FOR RISK MANAGEMENT DEVELOPMENT AND IMPLEMENTATION.—

Section 508(m) of the Federal Crop Insurance Act (7 U.S.C. 1508(m)) is amended

by inserting after paragraph (4), as added by subsection (a), the following new paragraph:

‘‘(5) PARTNERSHIPS FOR RISK MANAGEMENT DEVELOPMENT AND IMPLEMENTATION.—

‘‘(A) PURPOSE.—The purpose of this paragraph is to authorize the Corporation to enter into partnerships with public and private entities for the

purpose of increasing the availability of loss mitigation, financial, and other

risk management tools for crop producers, with priority given to risk management tools for producers of agricultural commodities covered by section

196 of the Federal Agriculture Improvement and Reform Act of 1996 (7

U.S.C. 7333) and specialty and underserved commodity producers.

‘‘(B) AUTHORITY.—Subject to subparagraphs (D) and (E), the Corporation

may enter into partnerships with the Cooperative State Research, Education, and Extension Service, the Agricultural Research Service, the National Oceanic Atmospheric Administration, and other appropriate public

and private entities with demonstrated capabilities in developing and implementing risk management and marketing options for specialty crops and

underserved commodities.

‘‘(C) OBJECTIVES.—The Corporation may enter into a partnership under

subparagraph (B)—

‘‘(i) to enhance the notice and timeliness of notice of weather conditions that could negatively affect crop yields, quality, and final product

use in order to allow producers to take preventive actions to increase

end-product profitability and marketability and to reduce the possibility of crop insurance claims;

‘‘(ii) to develop a multifaceted approach to pest management and fertilization to decrease inputs, decrease environmental exposure, and increase application efficiency;

‘‘(iii) to develop or improve techniques for planning, breeding, planting, growing, maintaining, harvesting, storing, shipping, and marketing

that will address quality and quantity challenges associated with yearto-year and regional variations;

‘‘(iv) to clarify labor requirements and assist producers in complying

with requirements to better meet the physically intense and time-compressed planting, tending, and harvesting requirements associated with

the production of specialty crops and underserved commodities;

‘‘(v) to provide assistance to State foresters or equivalent officials for

the prescribed use of burning on private forest land for the prevention,

control, and suppression of fire;

‘‘(vi) to provide producers with training and informational opportunities so that they will be better able to use financial management, crop

insurance, marketing contracts, and other existing and emerging risk

management tools; and

‘‘(vii) to develop other risk management tools to further increase economic and production stability.

‘‘(D) FUNDING SOURCE.—If the Corporation determines that the entire

amount available to provide reimbursement payments under subsection (h)

and contract payments under paragraph (4) (in this subparagraph referred

to as ‘reimbursement and contract payments’) for a fiscal year is not needed

for such purposes, the Corporation may use a portion of the excess amount

to carry out this paragraph, subject to the following:

‘‘(i) During fiscal years 2001 through 2004, amounts available for reimbursement and contract payments may be used to carry out this

paragraph only if the total amount to be used for reimbursement and

contract payments is less than $44,000,000 for fiscal year 2001,

$47,000,000 for fiscal year 2002, $50,000,000 for fiscal year 2003, and

$52,000,000 for fiscal year 2004.

‘‘(ii) During fiscal years 2001 through 2004, the total amount used to

carry out this paragraph for a fiscal year may not exceed the difference

between the amount specified in clause (i) for that fiscal year and the

amount actually used for reimbursement and contract payments.
15

‘‘(E) DELAYED AUTHORITY.—The Corporation may not enter into a partnership under the authority of this paragraph before October 1, 2000.’’.

SEC. 304. FUNDING FOR REIMBURSEMENT AND RESEARCH AND DEVELOPMENT.

(a) EXPENDITURES.—Section 508(h)(6) of the Federal Crop Insurance Act (7 U.S.C.

1508(h)(6)), as added by section 302(a) of this Act, is amended by adding at the end

the following new subparagraph:

‘‘(E) EXPENDITURES.—

‘‘(i) SPECIALTY CROPS.—Of the total amount made available to provide

payments under this paragraph and subsection (m)(4)(B) for a fiscal

year, $25,000,000 shall be reserved for research and development contracts under subsection (m)(4)(B). The Corporation may use a portion

of the reserved amount for other purposes under this paragraph, with

priority given to underserved commodities, if the Corporation determines that the entire amount is not needed for such contracts. If the

reserved amount is insufficient for a fiscal year, the Corporation may

use amounts in excess of the reserved amount for such contracts.

‘‘(ii) LIMITATION.—In providing payments under this paragraph and

subsection (m)(4)(B), the Corporation shall not obligate or expend more

than $55,000,000 during any fiscal year.’’.

(b) FUNDING.—

(1) AUTHORIZATION OF APPROPRIATIONS.—Section 516(a)(2) of the Federal Crop

Insurance Act (7 U.S.C. 1516(a)(2)) is amended by adding at the end the following new subparagraph:

‘‘(D) Costs associated with the reimbursement for research, development,

and maintenance costs of approved policies and other materials provided

under section 508(h)(6) and contracting for research and development under

section 508(m)(4)(B).’’.

(2) USE OF INSURANCE FUND.—Section 516(b)(1) of the Federal Crop Insurance

Act (7 U.S.C. 1516(b)(1)) is amended by adding at the end the following new

subparagraph:

‘‘(E) Reimbursement for research, development, and maintenance costs of

approved policies and other materials provided under section 508(h)(6) and

contracting for research and development under section 508(m)(4)(B).’’.

SEC. 305. BOARD CONSIDERATION OF SUBMITTED POLICIES AND MATERIALS.

(a) PERSONS AUTHORIZED TO SUBMIT.—Section 508(h)(1) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(1)) is amended by inserting after ‘‘a person’’ the following: ‘‘(including an approved insurance provider, a college or university, a cooperative or trade association, or any other person)’’.

(b) SALE BY APPROVED INSURANCE PROVIDERS.—Section 508(h)(3) of the Federal

Crop Insurance Act (7 U.S.C. 1508(h)(3)) is amended by inserting after ‘‘for sale’’ the

following: ‘‘by approved insurance providers’’.

(c) TIME PERIODS FOR APPROVAL OR DISAPPROVAL.—Section 508(h)(4)(A) of the

Federal Crop Insurance Act (7 U.S.C. 1508(h)(4)(A)), as amended by section 105(c),

is amended—

(1) in clause (iii), as redesignated by section 105(c), by striking ‘‘of the applicant.’’ and all that follows through the end of the clause and inserting ‘‘, and

such application, as modified, shall be considered by the Board in the manner

provided in clause (iv) within the 30-day period beginning on the date the modified application is submitted. Any notification of intent to disapprove a policy

or other material submitted under this subsection shall be accompanied by a

complete explanation as to the reasons for the Board’s intention to deny approval.’’; and

(2) by striking clause (iv), as redesignated by section 105(c), and inserting the

following new clause:

‘‘(iv) Not later than 120 days after a policy or other material is submitted under this subsection, the Board shall make a determination to

approve or disapprove such policy or material. Any determination by

the Board to disapprove any policy or other material shall be accompanied by a complete explanation of the reasons for the Board’s decision to deny approval. In the event the Board fails to make a determination within the prescribed time period, the submitted policy or

other material shall be deemed approved by the Board for the initial

reinsurance year designated for the policy or material, except in the

case where the Board and the applicant agree to an extension.’’.

(d) FUNDING TO EXPEDITE CONSIDERATION.—Effective October 1, 2000, section

516(b)(2) of the Federal Crop Insurance Act (7 U.S.C. 1516(b)(2)) is amended—
16

(1) by striking ‘‘RESEARCH AND DEVELOPMENT EXPENSES.—’’ and inserting

‘‘POLICY CONSIDERATION EXPENSES.—’’; and

(2) in subparagraph (A), by striking ‘‘research and development expenses of

the Corporation’’ and inserting ‘‘costs associated with considering for approval

or disapproval policies and other materials under subsections (h) and (m)(4) of

section 508, costs associated with implementing such subsection (m)(4), and

costs to contract out for assistance in considering such policies and other materials’’.

SEC. 306. CONTRACTING FOR RATING OF PLANS OF INSURANCE.

Section 507(c)(2) of the Federal Crop Insurance Act (7 U.S.C. 1507(c)(2)) is

amended—

(1) by striking ‘‘actuarial, loss adjustment,’’ and inserting ‘‘actuarial services,

services relating to loss adjustment and rating plans of insurance,’’; and

(2) by inserting after ‘‘private sector’’ the following: ‘‘and to enable the Corporation to concentrate on regulating the provision of insurance under this title

and evaluating new products and materials submitted under section 508(h)’’.

SEC. 307. ELECTRONIC AVAILABILITY OF CROP INSURANCE INFORMATION.

Section 508(a)(5) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)(5)) is

amended—

(1) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii) and

moving such clauses 2 ems to the right;

(2) by striking ‘‘The Corporation’’ and inserting the following:

‘‘(A) AVAILABLE INFORMATION.—The Corporation’’; and

(3) by adding at the end the following new subparagraph:

‘‘(B) USE OF ELECTRONIC METHODS.—The Corporation shall make the information described in subparagraph (A) available electronically to producers and approved insurance providers. To the maximum extent practicable, the Corporation shall also allow producers and approved insurance

providers to use electronic methods to submit information required by the

Corporation.’’.

SEC. 308. FEES FOR USE OF NEW POLICIES AND PLANS OF INSURANCE.

Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) is amended

by adding at the end the following new paragraph:

‘‘(11) FEES FOR NEW POLICIES AND PLANS OF INSURANCE.—

‘‘(A) AUTHORITY TO IMPOSE FEE.—Effective beginning with Fiscal Year

2001, if a person develops a new policy or plan of insurance and does not

apply for reimbursement of research, development, and maintenance costs

under paragraph (6), the person shall have the right to receive a fee from

any approved insurance provider that elects to sell the new policy or plan

of insurance. Notwithstanding paragraph (5), once the right to collect a fee

is asserted with respect to a new policy or plan of insurance, no approved

insurance provider may offer the new policy or plan of insurance in the absence of a fee agreement with the person who developed the policy or plan.

‘‘(B) DEFINITION.—For purposes of this paragraph only, the term ‘new policy or plan of insurance’ means a policy or plan of insurance that was approved by the Board on or after October 1, 2000, and was not available at

the time the policy or plan of insurance was approved by the Board.

‘‘(C) AMOUNT.—The amount of the fee that is payable by an approved insurance provider to offer a new policy or a plan of insurance under subparagraph (A) shall be an amount that is determined by the person that developed the new policy or plan of insurance, subject to the approval of the

Board under subparagraph (D).

‘‘(D) APPROVAL.—The Board shall approve the amount of a fee determined

under subparagraph (C) for a new policy or plan of insurance unless the

Board can demonstrate that the fee amount—

‘‘(i) is unreasonable in relation to the research and development costs

associated with the new policy or plan of insurance; and

‘‘(ii) unnecessarily inhibits the use of the new policy or plan of insurance.’’.

SEC. 309. CLARIFICATION OF PRODUCER REQUIREMENT TO FOLLOW GOOD FARMING PRACTICES.

Section 508(a)(3)(C) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)(3)(C)) is

amended by inserting after ‘‘good farming practices’’ the following: ‘‘, including scientifically sound sustainable and organic farming practices’’.
17

SEC. 310. REIMBURSEMENTS AND RENEGOTIATION OF STANDARD REINSURANCE AGREEMENT.

(a) REIMBURSEMENT RATE CHANGES.— (1) CAT LOSS ADJUSTMENT.—Section 508(b)(11) of the Federal Crop Insurance

Act (7 U.S.C. 1508(b)(11)) is amended by striking ‘‘11 percent’’ and inserting ‘‘8

percent’’.

(2) REIMBURSEMENT FOR ADMINISTRATIVE AND OPERATING COSTS.—Section

508(k)(4)(A)(ii) of the Federal Crop Insurance Act (7 U.S.C. 1508(k)(4)(A)(ii)) is

amended by striking ‘‘24.5 percent’’ and inserting ‘‘24 percent’’.

(3) APPLICATION OF AMENDMENTS.—The amendments made by this subsection

shall apply with respect to the 2001 and subsequent reinsurance years.

(b) RENEGOTIATION.—Effective for the 2002 reinsurance year, the Federal Crop Insurance Corporation may renegotiate the Standard Reinsurance Agreement.

BRIEF EXPLANATION

H.R. 2559, the Agricultural Risk Protection Act of 1999, contains

three titles aimed at increasing participation; improving program

administration, including new procedures for approving policies

and plans of insurance; and bolstering the compliance and enforcement program of the Risk Management Agency (RMA).

Title I expands the levels of coverage offered to agricultural producers by providing greater federal assistance in buying better coverage and provides an adjustment in actual production history for

producers who have suffered multiple losses in the 1990s. Section

102 provides the same percentage of premium assistance for insurance policies in addition to multi-peril insurance, including revenue

insurance products. Title I also for the first time authorizes pilot

programs to be developed for livestock risk management plans.

Title II seeks to improve the operations of the federal crop insurance program. Beginning in crop year 2000, the Secretary is directed to use the field staff of the Farm Service Agency (FSA) to

assist the Federal Crop Insurance Corporation (FCIC) in maintaining program integrity. Generally, this assistance will be accomplished through monitoring and auditing the federal crop insurance

program in the field. Increased sanctions for false information are

included in the bill as well as new requirements for record keeping

and reporting of crop acreage, acreage yields and production.

Finally, Title III reorganizes the FCIC board of directors and

makes other improvements in the administration of the federal

crop insurance program. These improvements include a monetary

reimbursement for the development of new policies, and the FCIC

is authorized to reimburse persons for maintaining these commercially viable contracts. The bill authorizes the FCIC to enter contracts for the development of new insurance products whenever the

FCIC determines a crop to be inadequately served. FCIC also is

placed under strict time limits for the approval or disapproval of

policies or plans of insurance that are submitted by private organizations or individuals.

PURPOSE AND NEED

Since expansion of the federal crop insurance program in 1980,

Congress has amended the Federal Crop Insurance Act numerous

times attempting to end the need for costly and unanticipated legislation to assist agricultural producers through weather and related disasters. With passage of the Federal Crop Insurance Reform Act of 1994, Congress began to contend seriously with the
18

lack of producer participation, which was the main concern

throughout the 1980s. Disaster bills in 1986, 1988, 1989, and 1991

were difficult to administer and generally required emergency declarations under the budget act to authorize spending.

Producer acceptance and use of crop insurance are critical to an

industry totally dependent on weather, especially knowing that

Congress usually has provided disaster assistance through ad hoc

legislation. Producer acceptance also requires RMA to encourage

the development of new policies and insurance plans for producers

who now grow crops that cannot now obtain insurance protection

or are purchasing what they believe is inadequate insurance protection. Finally, producer acceptance requires providing RMA with

the resources to find waste, fraud and abuse in the crop insurance

program and to punish violators with meaningful penalties.

Although in some years after 1980 participation may have

reached 40 to 45 percent, national participation more generally

hovered around 30 to 35 percent of the total acreage planted to the

major field crops. Therefore, any wide-spread, national disasters

created a need for assisting agricultural producers. So far, Congress has met that need in some fashion, but after each disaster

assistance bill was finished, Congress looked for a better way to assist farmers in helping themselves manage the risks inherent in

farming and ranching.

Following the major reforms in 1994, the crop insurance program

was modified in the Federal Agriculture Improvement and Reform

Act of 1996, and further modifications, including major budgetary

offsets, were made in the Agricultural Research, Extension, and

Education Reform Act of 1998. Participation increased dramatically

from 38 percent of crops insured in 1994 to 67 percent insured in

1998. Many producers obviously recognized the value of crop insurance since this rate has been maintained even though the purchase

of insurance is no longer mandatory.

While participation increases occurred in program crops, the

same is not universally the case for many specialty crops. Increasing the attractiveness of crop insurance to specialty crop growers

was a goal of the 1994 legislation, but progress has not been satisfactory. Both the details of policy design and the slow pace of program expansion are continuing concerns. Where specialty crop

growers do participate, they often neglect any coverage levels above

catastrophic. The Committee responds to these needs by increasing

RMA’s research and development resources and dedicating a portion to underserved crops like specialty crops. The Committee expects that the bill’s provision facilitating producer association purchases of insurance on behalf of their members will lead to improved levels of participation in the program.

With a high percentage of agricultural producers wanting to insure their crops against the multiple perils of farming, producers

now began to tell their congressional representatives they needed

a more responsive crop insurance program, including the availability of insurance plans or policies for livestock risk management.

They also expressed a need for an equalization of government assistance in revenue insurance policies; currently, producers who

purchase, for instance, crop revenue coverage policies do not re-
19

ceive the same level of premium assistance received by those buying multi-peril policies.

While producers had many different ideas about risk management programs that would be beneficial to their specific agricultural operations or regions of the country, a consensus among producers developed that two specific improvements were needed as

soon as possible. The first was to provide a greater and more affordable level of coverage. The second was to remedy a fact of insurance: producers suffering numerous, consecutive disasters have

seen their insurable yields erode drastically.

The best buy for most producers around the country has been the

65–100 multi-peril crop insurance policy. Under the current program, producers can insure 65 percent of their actual production

history at 100 percent of the price offered by FCIC. The price election is based on futures market prices. At this coverage level, FCIC

pays about 42 percent of the total premium. Coverage levels higher

than the 65–100 policy are subsidized at the same dollar amount

as 65–100, and thus, the cost to producers rises because the subsidy level is effectively frozen. In addition, rates for coverage above

65 percent rise rapidly with the likelihood of increased indemnities

at levels of 75–100 or 80–100.

Private insurance companies deliver various crop insurance products, most of which are reinsured by FCIC. Even though Congress

was assured that insurance companies expected to bring more producers into the program at high levels of coverage, it appears about

one-quarter of eligible acres still are insured under catastrophic

risk protection policies (CAT). CAT coverage is at a basic level, a

50–55 plan of coverage, which covers a loss of one-half of a producer’s actual production history. About 40 percent of eligible acres

are covered by so-called buy-up coverage, which is described as any

coverage greater than CAT.

Responding to producers’ requests for better plans of insurance,

the Committee has significantly increased the premium assistance

compared to current law. For example, FCIC under current law

provides 42 percent of the premium costs on a 65–100 policy.

Under the bill, FCIC will now provide 59 percent of the producer’s

cost of such coverage. Premium assistance also is increased at each

level of coverage beginning at the 50–100 coverage level. Premium

levels are described in the section-by-section analysis.

The bill also assists a producer with multiple year losses, which

have reduced the producer’s APH to an extent the producer cannot

obtain adequate insurance coverage at any affordable price. To address this problem, the bill provides for a yield floor at 60 percent

of the applicable transitional yield in a county. If producers agree,

this yield ‘‘plug’’ may be substituted retrospectively for each of

those years when yields fell below 60 percent of the transitional

yield. This plug will apply prospectively as well. The transitional

yield is based on the historical yields established by USDA’s National Agricultural Statistics Service.

By law, FCIC has been prohibited from offering livestock producers insurance plans or policies even though livestock are subject

to weather-related disasters and other risks. The bill specifically

mandates RMA to conduct pilot programs for livestock, including
20

cattle, sheep, swine, goats and poultry. Pilot programs may begin

in 2001.

The Committee has been concerned for some time about the integrity of the crop insurance program. Anecdotal evidence suggests

the program has significant levels of fraud and abuse; however, the

RMA compliance program appears insufficiently focused on finding

abusive and fraudulent practices and enforcing the crop insurance

statute and its regulations. Whether or not there is an inadequate

response by RMA to fraud and abuse in the program, the Committee believes the Secretary can do more to improve the RMA

compliance effort.

The bill requires the use of the Farm Service Agency field staff

to audit and monitor the program; increases sanctions for filing or

dispensing false information; requires records and reports to be

filed; and protects confidential information.

Finally, the Committee intends that RMA’s management of the

program be streamlined. Again, RMA’s lack of responsiveness to

new ideas in risk management and innovative insurance policies

fills the public record established by the Committee. New policies

are submitted to RMA and not processed in a timely manner. For

example, the crop revenue coverage program, which has become a

hugely successful crop insurance product, languished within RMA

for an excessive period of time before it was finally approved on a

limited basis.

Criticism of the policies and procedures of the FCIC board of directors also has been heard from many persons familiar with the

workings of the board.

The Committee intends to correct many of these deficiencies by

taking away some of RMA’s discretion in the development and approval of new policies and insurance plans. For instance, beginning

in fiscal year 2001, FCIC is no longer authorized to conduct its own

research and development for new policies. The bill does encourage

private organizations to become involved in researching and developing new policies to meet their specific needs and reimburses organizations or individuals for developing successful plans of insurance.

SECTION BY SECTION ANALYSIS AND REPORT LANGUAGE

Sec. 1. Short Title; Table of Contents

This Act may be cited as the Agricultural Risk Protection Act of

1999.

TITLE I—STRENGTHENING THE FARM SAFETY NET

Sec. 101. Premium schedule for additional coverage

Section 101 strikes duplicative language in the law establishing

premium amounts. The section establishes a new premium assistance schedule, as illustrated in the table below. The section also

provides that the amount of premium assistance available is determined by coverage level selected at any price election. Finally, the

section requires that every policy bear the amount of premium paid

by the federal government. This section is applicable beginning for

the 2000 crop year.
21

Under this section, premium assistance is determined based on

the percentage of total premium used to define loss ratio rather

than on a fixed dollar amount. The Committee intends that the

Federal Crop Insurance Corporation (FCIC) make continuous coverage levels available to producers as opposed to limiting producer

choices to coverage levels offered in 5 percent increments. The

Committee expects FCIC to provide continuous coverage levels for

all policies of insurance offered under the Federal Crop Insurance

Act as soon as practicable. In addition, under this section premium

assistance is determined solely on the percentage of yield a producer elects to insure without regard to the price election selected

by the producer.

[in percent]

Coverage level 50/100 55/100 60/100 65/100 70/100 75/100 80/100 85/100

Current Law ................................................................ 55 46.10 37.80 41.70 31.90 23.50 17.30 13

Committee Plan .......................................................... 67 64 64 59 59 54 40.6 30.6

Sec. 102. Premium schedule for other plans of insurance

Section 102 requires that the percentage of premium assistance

under section 101 apply to similar levels of coverage under policies

offered for sale to producers pursuant to section 508(h) and

508(m)(4). The section also limits the amount of administrative and

operating expenses paid to an insurance provider for all policies to

no more than the amount the provider would receive for a traditional multi-peril policy with a similar level of coverage. This section is applicable beginning for the 2000 crop year.

This section is intended to make all policies of insurance more

affordable, including new and existing policies of insurance that

protect producers from revenue or price loss. The Committee intends that the level of coverage selected is the only relevant factor

in determining that a policy of insurance offered pursuant to sections 508(h) or 508(m)(4) is a ‘‘similar level of coverage’’ to a policy

offered under section 508(e) when determining premium assistance.

The fact that a policy offered pursuant to sections 508(h) or

508(m)(4) offers some higher level of protection or guarantee than

a policy with a ‘‘similar level of coverage’’ under section 508(e) is

not relevant in determining the amount of premium assistance.

Sec. 103. Adjustment in actual production history to establish insurable yields

Section 103 requires FCIC to permit producers to elect to exclude

the recorded yield for an agricultural commodity in any crop year

where the yield is below 60 percent of the transitional yield and to

replace that yield with 60 percent of the transitional yield. The section further requires the Corporation to develop a methodology for

adjusting a producer’s actual production history that reflects effective efforts to retard plant diseases and pests. This section is applicable beginning for the 2000 crop year.

The Committee intends for producers to have maximum flexibility in determining whether to exclude eligible yields under this

section, as well as which and how many eligible yields to exclude.

The Committee further intends that a producer may reverse any

decision made under this section relative to a given crop year in
22

establishing insurable yields for a subsequent crop year. Finally,

the Committee expects FCIC to ensure that producers understand

the implications of any election under this section relative to the

impact, if any, on insurable yields and premiums.

Sec. 104. Review and adjustment in rating methodologies

Section 104 requires FCIC to periodically review rating methodologies employed in setting premium rates. The section also requires FCIC to analyze the rating and loss history of approved policies for agricultural commodities by area and adjust premium rates

in time for the 2000 crop year or as soon as practicable where they

are found to be excessive.

Specifically, the Committee is aware that FCIC has already conducted or is in the process of conducting two studies relative to rating methodologies applicable for cotton as well as corn and soybeans in the Midwest and have found premium rates to be excessive. The Committee expects FCIC to provide a downward adjustment in premium rates beginning in the 2000 crop year for agricultural commodities and regions where such a determination has

been made.

Sec. 105. Conduct of pilot programs, including livestock

Section 105 repeals two obsolete pilot program authorities. The

section authorizes FCIC to conduct pilot programs on a regional,

whole-State, or national basis after consideration of the interests of

affected farmers and the Corporation. The section further provides

that FCIC may offer the pilot programs for up to 3 years and that

the pilot programs can be modified or extended where appropriate.

Section 105 also requires FCIC to promulgate regulations for the

consideration of new policies, plans of insurance, and other material submitted for approval, including pilot programs (See section

305 for general submissions). The section provides for an expedited

approval process for pilot programs that are limited in scope and

duration and involve a reduced level of liability to the Federal government and greater risk to the approved insurance provider offering the pilot program. The section also provides that not later than

90 days after submission of a pilot program, the Board of FCIC

shall approve or disapprove. If no determination is made, the pilot

program is approved for the initial reinsurance year.

Section 105 requires FCIC to conduct one or more livestock pilot

programs, including futures and option contracts and policies and

plans of insurance. The section authorizes FCIC to assist producers

in purchasing futures and options as well as policies or plans of insurance offered. The section requires that the pilot programs be

conducted in numerous counties and that any producer of cattle,

sheep, swine, goats, or poultry is eligible to participate if the program is offered in the county and serves that particular type of

livestock. The section requires livestock pilot programs to be conducted beginning in fiscal year 2001 and limits expenditures to $20

million in FY2001, $30 million in FY2002, $40 million in FY2003,

and $55 million in FY2004 and each of the following fiscal years.

Finally, the section provides that any livestock pilot program offered is not intended to be subject to the jurisdiction of the SEC

or the CFTC.
23

In carrying out this section, the Committee expects FCIC to conduct the greatest number and variety of livestock pilot programs in

order to test the effectiveness of each risk management tool and to

determine which are best suited to protect the financial interests

of livestock producers. While assistance to purchase futures and option contracts is authorized under this section, the Committee does

not intend to limit the assistance offered to livestock producers for

these risk management tools. Policies and plans of insurance are

also authorized to be offered and subsidized under this section.

The Committee further intends that, with respect to the general

pilot program authority provided under this section, FCIC may extend the time period for pilot programs, including programs for

California and Florida citrus, for additional periods for reasons as

determined appropriate by FCIC. Such reasons include, but are not

limited to, the need for the collection of additional data or the continuation of coverage while the pilot program is being promulgated

through the rule making process. Finally, the Committee intends

that FCIC may extend the pilot program authorized under section

508(h)(9) under this authority.

Sec. 106. Cost of production as a price election

Section 106 authorizes FCIC to provide a price election under a

policy or plan of insurance based on the projected cost of producing

the covered commodity. Under the section, estimated cost of production would be determined by FCIC.

Sec. 107. Premium discounts for good performance

Section 107 authorizes FCIC to provide performance-based discounts to producers of a commodity who have good insurance or

production experience relative to other producers in the same area.

The section also authorizes FCIC to provide a premium discount in

the 2000 crop year to producers of wheat, barley, oats, or rye where

those crops have been subject to a discounted price due to scab or

vomitoxin damage.

The Committee expects FCIC to implement both provisions of

section 107 in a way that is consistent with the law relative to the

actuarial soundness requirements set forth in section 508(d). The

Committee intends that good performance discounts be made available to producers who have participated in the program and who

have low claims or otherwise consistent production experience relative to other producers of the same agricultural commodity in the

area. The Committee further intends that good performance discounts be made available to producers who are first time program

participants and who can demonstrate consistent production experience, through records acceptable to FCIC, relative to other producers of that commodity in the area.

The Committee encourages USDA to consider the benefits of particular farming practices in lowering the likelihood of the occurrence of insured events. The Department should consider examining the extent to which conservation-based farming systems have

such an effect.
24

Sec. 108. Options for catastrophic risk protection

Section 108 requires FCIC to provide producers an alternative to

catastrophic risk protection insurance coverage. The section provides that the alternative coverage shall be based on an area yield

and loss basis, offer a higher combination of yield and price protection, and at the determination of FCIC be equivalent to catastrophic coverage insured on an individual yield and loss basis.

The Committee intends that FCIC offer an alternative catastrophic risk protection insurance policy that is based on an area

yield and loss basis but that provides coverage at a greater combination of yield and price protection than is offered under the traditional catastrophic risk protection policy. The Committee further

expects that the coverage level made available under the alternative catastrophic risk protection policy be implemented on a uniform, national basis providing all producers, areas, and agricultural

commodities with the same level of coverage. The Committee acknowledges that there may be insufficient data in some areas to

make such an alternative policy immediately available to producers

operating in such areas. Nevertheless, the Committee fully expects

FCIC to diligently work to ensure that the necessary data is collected for these areas in order to make the alternative catastrophic

risk protection required under this section available to producers in

such areas.

Sec. 109. Authority for nonprofit associations to pay fees on behalf

of producers

Section 109 authorizes cooperatives and other nonprofit trade associations to pay the fees for catastrophic insurance coverage on behalf of their producer members.

The section clarifies that any licensing fees paid to cooperatives

or trade associations by approved insurance providers shall not be

considered to be rebates as long as producer members are notified

of the fees.

The section further provides that nothing in this section is to be

construed as limiting a producer’s ability to choose any licensed insurance agent or approved insurance provider of the producer’s

choice or refuse coverage under this arrangement. The section provides that all policies must be delivered through a licensed agent

or an approved insurance provider. The section also provides that

cooperative associations or trade associations shall encourage producer members to elect appropriate coverage levels to best manage

their risks.

The Committee intends this section to authorize cooperative associations or nonprofit trade associations to pay the fees required

for the purchase of catastrophic risk protection insurance. The

Committee further intends that any fees received by a cooperative

association or nonprofit trade association in connection with the

purchase of catastrophic or additional coverage is not to be treated

as a rebate. The Committee expressly requires in law that such

fees received by a cooperative association or trade association as a

result of the purchase of catastrophic or additional coverage by producer members are not to be construed as a rebate, notwithstanding any regulation of FCIC or any state law. The intention of

the Committee with respect to the issue of rebates is clear and is
25

not altered or affected in any way by the enactment of clause (i)

of this section.

The Committee expects that any regulations promulgated by

FCIC relative to this section be kept to a minimum so as not to

impose an undue burden on those persons or entities authorized to

engage in the activities authorized under the section.

Sec. 110. Elections regarding prevented planting coverage

Section 110 allows producers to opt out of coverage for prevented

planting and requires FCIC to provide a corresponding discount in

producer premiums. The section requires FCIC to provide equal

coverage with respect to prevented planting for all commodities.

The section further provides that prevented planting payments to

a producer should be limited to situations where producers in the

area are generally affected by the same conditions that prevent the

producer from planting.

The section provides that for producers who take prevented

planting coverage and receive and indemnity, a subsequent crop

may be planted on the failed acreage but the subsequent crop will

not be eligible for any federal crop insurance policy or noninsured

disaster assistance. However, a producer who plants a substitute

commodity before the latest planting date for the commodity prevented from being planted shall not receive a prevented planting

payment. Finally, for purposes of determining a producer’s actual

production history for the commodity on which a prevented planting indemnity was received, FCIC shall use 60 percent of the producer’s APH for such commodity for that crop year.

The Committee recognizes that producers should not be required

by FCIC to idle productive land that could otherwise yield a crop

and provide critical farm income. However, the Committee also recognizes that allowing producers to plant a second crop after a prevented planting indemnity was collected on a first crop could foster

fraud, waste, and abuse. The Committee expects any fraud, waste,

and abuse presented as a result of this change in law to be substantially mitigated, if not eliminated, by the four limitations in

this section. However, the Committee expects FCIC to implement

such limitations in a way that does not undermine the intention of

the Committee to eliminate the so-called black dirt policy imposed

by FCIC. Specifically, the Committee is concerned that FCIC does

not implement this paragraph, particularly subparagraph (C), in a

manner that results in hardship or inequity to producers attempting to avail themselves of the protections supposed to be afforded

under prevented planting coverage.

Sec. 111. Limitations under noninsured crop disaster assistance

program

Section 111 modifies the eligibility provisions for noninsured disaster assistance to be available to producers with $2,000,000 or less

of adjusted gross income annually.

The Committee intends that $2,000,000 in adjusted gross income

be defined as income after all farm expenses are paid. In addition,

the Committee expects the Secretary to reexamine the manner in

which subsection (c)(1) of section 196 of the Federal Agriculture

Improvement and Reform Act is implemented to take full advan-
26

tage of the broad flexibility Congress intended to provide. The

Committee would underscore the fact that area is not defined

under section 196 but is reserved for the Secretary to define. Accordingly, the Committee strongly encourages the Secretary to

make the necessary adjustments in the current definition of area

that is being used by the Department and develop a definition that

is more tenable in practice to ensure that the crop loss needs of

producers are met.

Sec. 112. Quality grade loss adjustment

Section 112 requires FCIC to analyze quality loss adjustment

procedures and make adjustments to better reflect local quality discounts applied to agricultural commodities.

The Committee expects that FCIC will implement any changes

relative to quality grade loss adjustments in a fashion that does not

foster fraud, waste, and abuse. The Committee further expects that

any such adjustments will be made consistent with actuarial

soundness requirements of the title.

Sec. 113. Application of amendments

Section 113 requires that unless otherwise specified, the amendments made by this Act shall be applicable for the 2000 crop year.

TITLE II—IMPROVING PROGRAM EFFICIENCIES

Sec. 201. Limitation on double insurance

Section 201 prohibits the issuing of more than one insurance policy on the same acreage during a crop year unless such coverage

is limited to catastrophic risk protection insurance. An exception is

made for areas with customary and established double-cropping

patterns.

The Committee recognizes that it is a legitimate farming practice

to double-crop certain crops in specific regions of the country. However, unless the outlined exceptions are applicable, it is the Committee’s intention to limit coverage to catastrophic risk protection

on the additional crop.

Since it is possible for the same crop to be planted on a farm and

subject to different plans of insurance, the Committee intends that

FCIC ensure the crop acreage and production of the same crop that

is insured under different plans of insurance is separately reported,

maintained, and identified. It is not the Committee’s intention that

the acreage or production may be prorated between the same crop

with different plans of insurance.

It is the intention of the Committee that in determining when

the additional agricultural commodity is customarily doublecropped in the area with the first agricultural commodity, that

FCIC consider whether it is customary to double-crop the acreage

considering the farming and irrigation practices applicable to the

crops in the area.

The Committee intends that to qualify for the double-cropping

exception, both the first and additional agricultural commodities be

normally harvested within the same crop year on the same acreage.

The disposition of the first agricultural commodity, including the

loss or failure of such commodity, should not affect the determina-
27

tion of whether the first and additional crop qualifies for the double-cropping exception.

Sec. 202. Improving program compliance and integrity

Section 202 requires the Secretary to improve crop insurance

program compliance and integrity. Specifically, beginning in the

2000 crop year, the Secretary is directed to use the field infrastructure of FSA in five activities that are described below.

1.—Annual reconciliation of producer data and information between FCIC and the FSA. Currently, FCIC and FSA collect and

maintain a significant amount of data that are useful to both FCIC

and FSA but are independently collected and separately maintained by each agency. To enhance compliance and oversight activities, the Committee intends that FCIC and FSA share and reconcile this information. Relevant data that should be reconciled include but are not limited to crop acreage and production reports,

producer shares information, and producer identification numbers.

The Committee intends for the data provided to FCIC and FSA to

be reconciled not less than once each crop year. The reconciliation

of individual datum should be conducted in a timely manner in

order to identify potential discrepancies early in the reporting

cycle. In addition, the acreage and producer share reconciliation

should be completed shortly after the final reporting dates for the

crop; and other data reconciliation should occur at appropriate

dates.

The Committee expects FCIC and FSA will find discrepancies in

the applicable data as a result of the reconciliation. The Committee

intends that corrective action be taken to resolve the discrepancies;

FCIC and FSA should determine if any overpayments or underpayments result from the reconciliation and take appropriate action.

The Committee intends that FCIC and FSA improve their data collection methods to ensure that, to the maximum extent possible,

automated data processing, will be utilized to perform the reconciliation.

2.—Implementation of an ongoing monitoring and auditing program of FCIC programs. The Committee is concerned that FCIC

and insurance providers have not made sufficient progress in controlling program abuse, waste and fraud. The personnel resources

of FCIC do not appear adequate to carry out meaningful oversight

and compliance activities. In that regard, FSA has significant field

resources that are properly distributed, and the Committee intends

that these resources be utilized to strengthen FCIC’s oversight and

compliance activities, including identifying program vulnerabilities.

The Committee intends for FSA field office employees to collect and

report information pertaining to allegations of fraud by producers,

adjusters, agents and companies, either at the request of FCIC, or

on its own initiative after consulting with FCIC. The inclusion of

these additional resources will help FCIC make timely field inspections, assist in identifying and monitoring situations that have the

potential to lead to program fraud or abuse and provide a local contact point where allegations of fraud and abuse may be reported.

The Committee intends that FSA personnel have the authority to

make on farm inspections to ensure that good farming practices

have been used on the insured crops. The Committee believes the
28

Secretary should find other program and compliance activities in

which FSA personnel may be used as this coordinated auditing and

monitoring program between FCIC and FSA progresses and experience is gained.

The Committee intends that FSA employees assist FCIC in the

auditing of claims, including work completed by adjusters, agents

and companies. This could include but is not limited to random audits of crop loss appraisals, and applicable documents completed by

adjusters, agents and companies resulting from a loss claim. The

Committee intends that the Secretary exercise this authority so

that reviews and audits are completed in a timely manner, especially those pertaining to adjusters and agents. The Committee intends that deficiencies as well as errors resulting from the audit

are reported to FCIC, and FCIC take appropriate action to act on

the findings of the review or audit.

The Committee intends that FCIC retain regulatory authority for

all activities pertaining to program compliance and integrity.

3.—Proper training for FSA employees for responsibilities under

this section. The Committee intends that FSA field employees are

provided immediately with the proper training to carry out the responsibilities associated with improving program compliance and

integrity. Any training provided by FCIC of adjusters should also

be available to FSA employees. It is intended for FSA employees

to be an additional resource for use by FCIC in compliance and

oversight activities.

The audits and reviews carried out by FSA should supplement

any activities required of the companies, agents or adjusters by

FCIC, and nothing in this section affects the responsibility of approved insurance providers to conduct audits or other program reviews required by FCIC. The Committee does not intend that the

audit and program review standards required of the insured providers by FCIC are reduced because of the actions of FSA. In an

effort to deal with suspected program misrepresentation, fraud, and

abuse, the bill requires that no later than 90 days after notice is

provided of such potential activity, FCIC will provide a written response to the insurance provider. The Committee encourages FCIC

to issue the report as promptly as possible to avoid unnecessary

delays that would compromise the findings. Waiting the full 90

days to issue a response should be the exception rather than the

rule. The Committee intends, that at a minimum, the report outlines the suspected activity and the findings of FCIC with respect

to such report.

4.—Consultation with FSA state committees regarding plans of

insurance offered in a state. The Committee expects FCIC to provide ample opportunity to state committees for the review of existing and proposed crop insurance policies. The state committees are

expected to provide meaningful suggestions to FCIC that strengthen program integrity, oversight and program vulnerability. The review should concentrate on the potential problems with crop insurance administration and should ask such questions as: Do the offered policies insure crops that have a reasonable chance of being

harvested in the county or region? Is it practicable to produce nonirrigated crop acreage of such crop in the county or region? Are the

insurance transitional yields feasible in the county or region? Does
29

the insurance policy enhance the likelihood of insurance abuse or

fraud? In addition, FSA state committees should be used to ascertain the adequacy and usefulness of new policies or plans of insurance developed under Sec. 303 of the bill.

5.—Annual report to the House and Senate Agriculture Committees with regard to activities and findings under this section.

Sec. 203. Sanctions for false information

Section 203 clarifies that a covered ‘‘person’’ includes a producer,

agent, loss adjuster, approved insurance provider, or any other person.

The section provides that, with respect to providing false information, FCIC is authorized to levy the following sanctions:

Monetary sanctions equal to the higher of the amount of the pecuniary gain by the person or $10,000.

For producers, disqualification for up to 5 years from all federal

farm programs, including crop insurance, farm programs, farm

credit programs, and conservation cost share assistance programs,

in addition to forfeiting premiums paid for providing materially

false information.

For people other than producers, disqualification for up to 5

years of participating in or receiving benefits under FCIA.

Finally, the section requires FCIC to include information regarding sanctions in a prominent manner on all crop insurance policies

and plans of insurance.

This section provides a substantially enhanced range of sanctions

for FCIC to impose against persons who provide false information

where such information results in program fraud, waste, or abuse.

The Committee recognizes that all violations are not equal and intends for FCIC to administer this section in a fair and equitable

fashion where the punishment fits the offense.

Sec. 204. Protection of confidential information

Section 204 prohibits the Secretary, any officer of USDA or its

agencies, any approved insurance provider or its employees or contractors, or any other person from disclosing any producer-provided

information to the public, unless the information supplied is in aggregate form that prevents individual producers from being identified. The section provides penalties consistent with the 1985 Food

Security Act.

The Committee is concerned that information provided by a producer to receive benefits under this title be protected. The Committee believes that producers have every right to expect that the

information they provide to authorized persons and entities under

this title remain confidential. The Committee expects FCIC to safeguard producer-provided information through the vigorous enforcement of this section. The Committee would note that the prohibition on the disclosure of any information that would reveal the

identity of a producer is absolute. As such, the Committee intends

that the protections afforded under this section may not be waived.

However, the Committee does not intend that this section interfere

in any way with the legitimate use and dissemination of information pursuant to section 205 of this legislation, including the use
30

by Federal and State agencies in carrying out their agricultural

programs and related responsibilities.

Sec. 205. Records and reporting

Section 205 requires producers participating in the crop insurance program to each year provide records regarding crop acreage,

acreage yields, and production. The section also requires the Secretary to ensure coordination of records received for crop insurance

purposes and those received for purposes of NAP to eliminate duplication of record-keeping. Such records shall be available to all

agencies and local offices of the Department as well as appropriate

State and Federal agencies to carry out program responsibilities

under this title, section 196 of the FAIR Act, and other agricultural

programs and related responsibilities. The section further requires

annual submission of crop acreage, acreage yields, and production

information to be eligible for NAP.

The Committee intends for insured producers participating in the

crop insurance program to provide records regarding crop acreage,

acreage yields, and production to the Secretary. Producers currently report crop and yield information to both FCIC and FSA. Inconsistent data have been reported to FCIC and FSA and benefits

have been paid on inconsistent data. The Committee intends for insured producers to report crop acreage, yield, production and other

records in a manner that may be easily reconciled, ensuring program and insurance benefits are paid on consistent data.

The records collected under this authority should be available at

no cost to all federal and state agencies, including state subdivisions, for use in carrying out activities, including assisting state organizations in carrying out general agricultural programs that

have a federal component (for example, boll weevil eradication activities).

The Committee intends for producers requesting noninsured crop

disaster assistance program benefits to file annually, crop acreage

reports, acreage yields and production for each crop eligible for assistance. The annual collection of this information should enhance

information available for the development of future insurance policies. As a result of producers filing annual reports, USDA will have

the information provided at a time that insures appropriate program oversight and integrity.

Sec. 206. Compliance with state licensing requirements

This section clarifies that any person who sells or solicits the

purchase of a policy under the Federal Crop Insurance Act be licensed and qualified to do business in that state.

TITLE III—ADMINISTRATION

Sec. 301. Board of directors of corporation

Effective 30 days after enactment, this section modifies the composition of the FCIC Board of Directors to consist of the following

members:

The Manager of FCIC (ex officio only).

The Under Secretary of Agriculture responsible for crop insurance.
31

An additional Under Secretary designated by the Secretary.

The Chief Economist.

One person with crop insurance business experience.

One person with insurance regulation experience.

4 active farmers representing different geographic regions and a

cross-section of agricultural commodities who are insured producers, including one producer of a specialty crop.

The section also provides that the Secretary is responsible for appointing the Members of the Board. Current Board Members are

allowed to continue to serve until new Board Members are appointed or for six months, whichever is earlier. The Board will elect

a chairperson from among the members. The committee expects the

Secretary to follow established selection guidelines with regard to

diversity.

Sec. 302. Promotion of new policies and related materials

Section 302 requires FCIC to reimburse applicants for research,

development, and maintenance costs associated with insurance

policies that are approved and, where applicable, offered for sale to

producers. Maintenance costs are limited to no more than four

years, after which FCIC becomes responsible for maintenance, provided that the policy is commercially viable. This section is applicable beginning in the 2001 fiscal year.

Any payment under this section shall be considered as payment

in full for all research and development associated with an insurance policy or material, including associated property rights. FCIC

is directed to determine reimbursement amounts based on policy

complexity and the size of the area in which the policy or material

would be applicable. Regulations implementing this section are required to be completed by October 1, 2000.

The promotion of new and innovative policies is a key objective

in this legislation and the reimbursement provisions are critically

important toward achieving this end. In implementing the regulations concerning reimbursement, the Committee expects FCIC to

consult with and take into consideration the views of parties likely

to seek reimbursement under this section.

Sec. 303. Research and development, including contracts regarding

underserved commodities

Section 303 provides that whenever FCIC determines that a commodity, including a specialty crop, is not being adequately served

by existing plans of insurance or submissions under section 302,

FCIC may contract with any person or entity having experience

with crop insurance or risk management for research and development activities. Policies researched and developed under this provision, like those submitted for approval under section 302, are prepared without regard to the traditional limitations imposed on policies under the FCIA. Requires FCIC to contract for the research

and development of specific types of policies under this section.

This section is applicable beginning in the 2001 fiscal year.

The section also provides that, effective October 1, 2000, FCIC is

no longer authorized to conduct its own research and development

for policies or plans of insurance under this title. Nothing in the

Federal Crop Insurance Act, including the provisions in paragraphs
32

(1) or (5) of section 508(m) may be construed to permit FCIC to engage in such research and development. However, this prohibition

does not affect the validity and continued availability of policies

and plans approved prior to that date.

In carrying out this section, the Committee expects FCIC to ensure that State Committees of the Farm Service Agency are consulted consistent with section 202 of this legislation. The Committee further expects FCIC to consult with affected commodity

groups with respect to any policies, including revenue policies,

being developed.

The Committee expects FCIC to complete the Citrus Canker Tree

Indemnity policy in time for the 2000 crop year, using appropriate

loss calculation methodology and ensuring the program is actuarially sound. The Committee further intends that FCIC treat all

trees ordered destroyed or quarantined by Federal order as losses

under the policy. In addition, the Committee urges FCIC to revise

the cause of loss for Florida citrus designated ‘‘hurricane’’ to ‘‘sustained winds in excess of 74 miles per hour’’, and consider lost that

citrus fruit that is unmarketable due to hail.

The Committee expects FCIC to reinstate the use of the Grower’s

Standard Wholesale Price List for price determination with confirmation by insurance providers and compliance oversight by

FCIC. To encourage the purchase of additional levels of coverage,

separate coverage for Field Grown and Container Grown Nursery

Stock should be considered and, to the extent practicable, implemented beginning with the 2000 crop year.

The Committee intends that FCIC, in consultation with affected

commodity groups, take into consideration the priority list provided

as follows in order to ensure that specific insurance needs are met:

aquaculture, citrus, forage, honey, nursery, rice, tree fruit, milk,

peaches, peanuts, sugar, tobacco, and tropical tree fruit (including

limes, mangoes, avocados, and carambolas).

The Committee urges FCIC to study the feasibility of allowing

optional units on peanut acres and encourages FCIC to examine

differentiating between irrigated and non-irrigated practices on

policies for peanuts, tobacco and other commodities. The Committee encourages the development of policies that insure against

losses to pasture, range and forage used for grazing due to drought,

flooding, or other natural disasters.

The Committee encourages the Department in rating and policy

design to consider whether farming practices that satisfy specialized market niches—such as organic farming practices—justify the

creation of policies or policy options not currently available.

The Committee encourages FCIC to initiate a pilot program to

indemnify producers of timber for loss of yield or prevented planting due to drought, floods, fire, or other natural disaster.

Finally, the Committee urges FCIC to annually review the percentage of eligible acres insured by state, county, and crop. In

areas where participation is substantially below the aggregate national average, the Committee would encourage FCIC to use its existing authorities as well as the new authorities offered under this

legislation to increase participation without compromising actuarial

soundness.
33

The Committee expects FCIC will continue and expand the pilot

project currently in effect for whole farm revenue insurance and

other similar programs.

Sec. 304. Funding for reimbursement and research and development

Section 304 provides that funding for research and development of specialty crops and under-served commodities is set at $25 million annually. If FCIC determines such funding is insufficient, additional funding is available. If such funding is not fully utilized,

the excess funds shall be available for reimbursements under section 302 with priority given to specialty crops.

The section further provides that the maximum expenditures in any year for sections 302 and 303 may not exceed $55 million. This

section is applicable beginning in the 2001 fiscal year.

The Committee intends that policy submissions under section

508(h) of the Federal Crop Insurance Act and reimbursements

under section 302 of this legislation are to be the main avenues for

augmenting the number and variety of policies available to producers. The contracting authority provided under section 303 of

this legislation is to be exercised only when a specialty crop or

other commodity is determined to be under-served. While the Committee does not intend to hamstring FCIC in its determination of

when to avail itself of this contract authority, the Committee is

concerned that such authority is used appropriately so as not to

come at the expense of reimbursement needs. In this regard, the

Committee would point out that approval of policies under section

508(h) is not discretionary where the objective conditions expressed

in law are met. Where such policies are approved and offered for

sale, FCIC is required to provide appropriate reimbursement to the

party that submitted the policy. Together, these provisions present

a legal obligation on the part of FCIC.

Sec. 305. Board consideration of new policies and materials

Section 305 clarifies who can submit policies and plans for approval by the FCIC Board to include an approved insurance provider, a college or university, a cooperative or trade association, or

any other person.

The section also requires absolute time limits for the Board to

approve or disapprove submitted plans or policies at 120 days. If

the Board fails to meet this deadline, then the policy or plan of insurance is approved for the initial reinsurance year.

The Committee is aware of the chronic problems associated with

the approval process now in place relative to policies submitted

under section 508(h). The Committee would point out that section

508(h) sets forth straightforward and objective standards to be met

by policies and other material submitted for approval. Specifically,

section 508(h) requires the Board to consider whether the interests

of producers are adequately protected and whether the premiums

charged to the producers are actuarially appropriate. Where this

two-prong test is met, the law requires FCIC to approve the policy

to be offered at actuarially appropriate rates and under appropriate

terms and conditions. The Committee does not intend to suppress

constructive efforts by FCIC to assist applicants in the preparation

of their policies to meet the criteria in law. However, the Com-
34

mittee does expect FCIC to carry out the policy approval process

as a regulator rather than measure each policy submitted by how

the regulators believe they might have designed the policy better.

Sec. 306. Contracting for rating of plans of insurance

Section 306 requires the Corporation to contract, to the maximum extent practicable, for rating plans of insurance. Clarifies

that the purpose of contracting for services with the private sector

is to enable FCIC to concentrate on regulating insurance providers

and evaluating new products and materials.

The Committee does not intend to entirely preclude FCIC from

engaging in its own rating of policies or plans of insurance. The

Committee only intends to re-enforce the strong preference already

in the Federal Crop Insurance Act that FCIC commit more time

and resources toward regulating insurance and approving new policies and less time and resources creating and re-creating what can

be best achieved by the private sector. The Committee intends that

contracting for services with the private sector also be used to assist in the evaluation of new products and materials to both expedite and strengthen the approval process.

Sec. 307. Electronic availability of crop insurance information

Section 307 requires FCIC to make general insurance information electronically available to producers and approved insurance

providers. Also requires, to the maximum extent practicable, that

FCIC allow producers and approved insurance providers to supply

information to FCIC electronically.

The Committee would encourage the Secretary to study the feasibility of establishing a National Center for Agribusiness Excellence

and Agribusiness Risk Management Analysis.

Sec. 308. Fees for use of new policies and plans of insurance

Section 308 permits an approved insurance provider that develops a policy or plan of insurance to receive a fee from another approved insurance provider in order for the latter to use that policy

or plan of insurance. In order to receive a fee, the approved insurance provider must waive the right to receive reimbursement under

section 302, and the fee required to be paid may not, at the determination of FCIC, be unreasonable or unnecessarily inhibit the use

of the policy. This section is applicable for the 2000 reinsurance

year.

Sec. 309. Clarification of producer requirement to follow good farming practices

The section provides that scientifically sound sustainable and organic farming practices shall be considered to be good farming

practices under the Federal Crop Insurance Act.

The Committee expects FCIC to establish specific guidelines defining what constitutes good farming practices relative to producers

engaged in scientifically sound sustainable and organic farming

practices.
35

Sec. 310. Reimbursements and renogotiation of standard reinsurance agreement

Section 310 adjusts reimbursement levels for approved insurance

providers for loss adjustment under the catastrophic risk protection

policy and for operating and administrative expenses for additional

levels of coverage. The adjustments are applicable for the 2001 reinsurance year.

In addition, the section authorizes FCIC to renegotiate the terms

of the Standard Reinsurance Agreement codified under the Agricultural Research Act of 1998 in the 2001 reinsurance year.

The Committee intends for RMA to review, and, if appropriate,

renegotiate the standard reinsurance agreement (SRA). A re-negotiation should commence upon a determination by the Agency that

participating companies are able to retain greater risk, or are unable to adequately deliver and service polices, under the SRA as indicated by the profit and loss experience under the existing agreement and the availability of private reinsurance to support company retention levels.

COMMITTEE CONSIDERATION

I—HEARINGS

The Subcommittee on Risk Management, Research and Specialty

Crops hosted crop insurance forums for the purposes of receiving

input from producers, providers and agents regarding improvements to the federal crop insurance program.

The Subcommittee commenced forums on February 16, 1999 in

Perry, Georgia (Serial 106–3); on February 16, 1999 in Douglas,

Georgia (Serial 106–3); on February 18, 1999 in Laurinburg, North

Carolina (Serial 106–3); on March 10, 1999 in Washington, D.C.

(Serial 106–3, Part II): on May 3, 1999 in Lexington, Kentucky (Serial 106–3, Part III). It should also be noted that the Subcommittee

previously held a crop insurance forum on November 12, 1998 in

Sioux Falls, South Dakota (Serial 105–67).

Issues discussed at the crop insurance forums included: increasing crop insurance premium subsidies to the farmer; adjustment of

rating policies; development of livestock policies; incentives to encourage private development of risk management products; equalization of administrative and operating subsidies across the board

for products; allocation of premium discounts to producers who

demonstrate a history of participation without incurring losses; improving program enforcement; development of cost of production

policies; and APH modifications to address multi-year disaster

losses.

II—SUBCOMMITTEE CONSIDERATION

Chairman Ewing called the meeting to order for the purpose of

considering H.R. 2559, the Agricultural Risk Protection Act of

1999, sponsored by Mr. Combest, et al., to amend the Federal Crop

Insurance Act in order to strengthen the safety net for agricultural

producers by providing greater access to more affordable risk management tools and improved protection from production and income
36

loss and to improve the efficiency and integrity of the Federal crop

insurance program.

Subcommittee Chairman Ewing recognized full Committee

Chairman Combest, for opening remarks. Chairman Combest

thanked all involved for the work that has been done to work to

provide a better risk management program. Chairman Combest

noted that the bill did not have an official budget score from the

Congressional Budget Office, but that the final bill reported by the

Committee would have to be within the revenue constraints of the

bill. Chairman Combest stated that the full Committee would consider H.R. 2559 on Tuesday, July 27, 1999, and that he hoped the

bill would be considered on the House Floor before the August recess.

Subcommittee Ranking Minority Member Condit was recognized

for an opening statement and indicated that he hoped to broaden

the bill in the area of specialty crops.

Chairman Ewing placed H.R. 2559 before the Subcommittee for

consideration and noted that it would be open for amendment at

any point.

Counsel was recognized for a brief explanation of H.R. 2559, and

the Administrator of the Risk Management Agency was recognized

for brief comments on the bill.

Mr. Dooley expressed concern over the funding of the bill and

that there was no cost estimate at this time. Chairman Combest

assured Mr. Dooley that he would work with him to ensure that

the bill would be within the limits of the budget resolution.

Mr. Condit was recognized to offer and explain an amendment to

Sec. 109, Authority for Nonprofit Associations to Pay Fees on Behalf of Producers. Mr. Condit indicated that the amendment would

make the provision more usable for cooperatives. Discussion occurred on the amendment, and Mr. Condit acknowledged that the

amendment may need to be revised before full Committee to make

it as workable as possible, and by a voice vote, the amendment was

adopted.

Mr. Smith was then recognized to offer and explain an amendment regarding premium adjustment for rates that are determined

to be high relative to the anticipated losses of an agricultural commodity before the 2000 crop year. Discussion occurred on the

amendment, and USDA representatives indicated that the amendment would be more acceptable if certain clarifications were made

to it. Without objection, Mr. Smith withdrew his amendment.

Mr. Bishop was recognized to offer and explain an amendment

that would provide authority for the Secretary to provide whistleblower type incentives to producers who bring forth evidence of

fraud that is actually used by the Department to recover civil fines.

Discussion occurred on the amendment, and Mr. Chambliss and

Mr. Everett indicated that the issue of fraud and abuse in the program was an issue that they heard repeatedly when they spoke to

their producers. Mr. Everett was concerned about how confidentiality could be provided to the producer whistleblower. USDA representatives pointed out that the amendment would need a reference to the actuarial soundness requirement of the overall law to

achieve the intent of the amendment.
37

Full Committee Chairman Combest indicated his support for the

intent of Mr. Bishop’s amendment, and that he would like to cosponsor the amendment at full Committee after the issues of confidentiality and actuarial soundness had been addressed. Mr.

Bishop agreed to withdraw his amendment and offer a revised

amendment at full Committee. Without objection, the amendment

was withdrawn.

Mr. Chambliss was then recognized to offer and explain an

amendment on recordkeeping to require coordination and to avoid

duplication of the records used by the Federal Crop Insurance Corporation and the Farm Service Agency for NAP, purchasing CAT,

and buy-up coverage. Discussion occurred on the amendment with

Subcommittee Chairman Ewing expressing concern that producers

would not have to reprove historical records. USDA representatives

indicated they thought the amendment gave the Department the

flexibility it needed to better coordinate the information collected

from the different agencies. By voice vote, the amendment was

adopted.

Mr. Condit was recognized to offer and an amendment that

would mandate that of the $55,000,000 provided for research and

development contracts, $25,000,000 would be reserved for specialty

crops. Subcommittee Chairman Ewing noted that H.R. 2559 did not

define the term ‘‘underserved commodities.’’ Mr. Chambliss asked

Mr. Condit if he could work with him before full Committee markup of H.R. 2559 to refine the amendment to ensure that specialty

crop producers are the recipients of the amendment. By unanimous

consent, Mr. Condit requested that a technical change be made to

his amendment, and that the page citation be ‘‘46’’ rather than

‘‘44’’. By voice vote, the amendment, as amended, was adopted.

Mr. LaHood was then recognized to offer and explain an amendment to mandate the electronic availability of crop insurance information. Mr. Ewing explained that this was a reduced version of his

bill, H.R. 852, the Freedom to E-File Act, which had been the subject of a hearing before the Subcommittee on Department Operations, Oversight, Nutrition, and Forestry on June 17, 1999. Brief

discussion occurred, and Mr. Baldacci expressed his concern that

the confidentiality of the information would be ensured. Mr.

LaHood indicated that he would work to perfect the amendment

before full Committee markup to ensure that this concern was met.

By voice vote, the amendment was adopted.

Mr. Pomeroy was then recognized to offer and explain an en bloc

amendment on behalf of himself and Mr. Thune. Subcommittee

Chairman Ewing noted that the amendment was an en bloc

amendment and that a division of the amendment and separate

votes could be requested on the different parts of the amendment.

Mr. Pomeroy explained his amendment and noted the organizations supporting his amendment listed in a letter dated July 20,

1999. Mr. Pomeroy explained the four issues addressed in his

amendment: (1) level of premium subsidy for coverage; (2) calculation of actual production history; (3) continuation of a provision in

the disaster bill to provide an additional 20 percent premium subsidy for crops afflicted with vomitoxin, scab and aflatoxin; and (4)

quality grade loss adjustment.
38

Full Committee Chairman Combest said that he supported the

subsidy levels in the Pomeroy-Thune amendment, but he requested

that the Members work together to come up with the maximum

amount of assistance to be provided to the farmer and to work

through the question of Actual Production History (APH). Mr. Pomeroy indicated that he would insist on retroactive adjustments, and

Chairman Combest noted there were retroactive provisions in H.R.

2559.

Lengthy discussion occurred on the amendment. Mr. Everett

thanked Mr. Pomeroy for the inclusion of aflatoxin in his amendment, but Mr. Everett noted that the APH provision in the Pomeroy-Thune amendment would devastate his cotton farmers. Mr.

Thune explained the amendment’s importance to South Dakota and

indicated his hope to make crop insurance the centerpiece of the

farm safety net.

Mr. Riley questioned the premium subsidy for aflatoxin in the

amendment and what years would be covered. There was a discussion on whether the amendment should be crop specific, and the

USDA representative stated that the provision would be more helpful if it were not crop specific. Full Committee Chairman Combest

cautioned the Members that this provision likely would receive considerable discussion at the full Committee level because other

Members would be looking for special consideration. Mr. Ewing expressed concern about including additional insurance premiums for

certain diseases and having no money left for premium increases.

Mr. Pomeroy requested that he change his amendment and take

out aflatoxin, and that this issue would be debated at full Committee. Mr. Pomeroy also requested other changes to his bill, and

Mr. Smith requested that the amendment be rewritten in order for

Members to understand the changes better.

Full Committee Chairman Combest again requested that Mr.

Pomeroy work with him on the amendment to come to some agreement before full Committee consideration. Without objection, Mr.

Pomeroy withdrew his amendment in order to revise it and bring

before Members later.

Mr. Lucas was then recognized to offer and explain an amendment regarding fees for use of new policies and plans of insurance.

Mr. Lucas explained that his amendment was cost-neutral and that

it would encourage private sector development of products. Mr.

Moran associated himself with the remarks of Mr. Lucas in support

of the amendment, and by voice vote, the amendment was adopted.

Mr. Condit was recognized to offer and explain an amendment

concerning limitation on authority to plant substitute commodities

and requested by unanimous consent that it be included as report

language to the bill. Without objection, it was accepted.

Mr. Condit then reserved the right to offer, at the full Committee, an amendment concerning partnerships for risk management development and implementation.

Mr. Condit was also recognized to offer and explain an amendment mandating that at least one active specialty crop producer be

on the Board of Directors of the Federal Crop Insurance Corporation. By voice vote, the amendment was adopted.

Mr. Smith was then recognized to offer and explain an amendment that had been revised with Departmental assistance con-
39

cerning premium adjustment to rates that are determined to be

high relative to anticipated losses of an agricultural commodity in

a certain area. By voice vote, the amendment was adopted.

Mr. Smith also offered and explained an amendment that mandated the Federal Crop Insurance Corporation to enter into a contract for research and development on revenue coverage plans. Discussion occurred and by a voice vote, the amendment was adopted.

Mr. Pomeroy was then recognized to offer and explain a revised

en bloc on behalf of himself and Mr. Thune. Mr. Pomeroy asked

Department officials to comment on the increased costs related to

the revised APH provision. Mr. Chambliss expressed his opposition

until he had a chance to review the amendment more carefully,

and Mr. Dooley indicated his opposition because of the unknown

costs associated with the amendment. By voice vote, the Pomeroy

amendment failed. A roll call vote was requested, and by a vote of

15 yeas-7 nays, the Pomeroy-Thune amendment was adopted. (See

Roll Call Vote #1.)

Mr. Condit then moved that H.R. 2559, as amended, be reported

favorably to the full Committee. By voice vote, the bill, H.R. 2559,

as amended, was ordered favorably reported to the full Committee.

Mr. Gutknecht announced his intent to work with Members and

staff before full Committee markup to come up with report language concerning effective new risk management products for milk.

Chairman Ewing thanked everyone for their hard work on the

bill and indicated that the hard decisions really would begin when

the cost figures were available on the bill.

Without objection, staff was given permission to make such technical, clarifying or conforming changes as are appropriate without

changing the substance of the legislation and Chairman Ewing adjourned the meeting to reconvene at the call of the Chair.

III—FULL COMMITTEE

The Committee on Agriculture met, pursuant to notice, with a

quorum present, on July 30, 1999, to consider H.R. 2559 as approved by the Subcommittee on Risk Management, Research, and

Specialty Crops on July 21, 1999.

Chairman Combest announced that the Committee would recess

at an appointed hour for the memorial service of the Honorable

George E. Brown, Jr., who served as a member of the House Agriculture Committee until his death on July 16, 1999.

Chairman Combest thanked all the Members and staff for the

countless time and effort invested in this bill. He further explained

that H.R. 2559 and the en bloc amendment that he would offer had

been carefully crafted to lie within the budget restraints of H. Con.

Res. 68, the Budget Resolution for FY 2000, and to provide the

greatest amount of benefit to the greatest number of farmers in

every region of the country. Chairman Combest stated that the bill

had been scored by the Congressional Budget Office at $5.998 billion for the FY 2001 to FY 2004 period, just under the $6.0 billion

allocated under the budget resolution. The Chairman indicated

that he would oppose amendments that would upset the balance

provided for in the bill or cause cost overruns that would make

H.R. 2559 subject to a point of order on the Floor of the House.
40

Ranking Minority Member Stenholm made opening comments

and indicated that he appreciated all the hard work and the regular order that the legislation had taken. Mr. Stenholm pointed out

that the budget resolution provided for the funds to be made available for income assistance or risk management, and that he intended to offer an amendment that would address the total revenue

for program crops.

Without objection, the bill, H.R. 2559, as amended by the Subcommittee on Risk Management, Research, and Specialty Crops,

was placed before the Committee for consideration and was open

for amendment at any point.

Chairman Combest then offered the en bloc amendment that

would make changes to the bill under consideration that would

bring the bill into conformance with the budget restraints.

Discussion occurred on the en bloc amendment and Mr. Stenholm

announced his support for the amendment, but he noted that there

were still problems with the FY 2000 budget numbers in the bill.

Chairman Combest said that he was looking at many options to resolve the problems associated with the CBO scoring of the budget

costs for FY 2000. The Chairman also noted that this problem

would have to be addressed before the bill would be taken to the

House Floor. By voice vote, the en bloc amendments were adopted.

Mr. Stenholm was recognized to offer and explain an amendment

regarding the Supplemental Income Payment (SIP) Program and

two amendments that would pay for the SIP amendment. Without

objection, Mr. Stenholm was allowed to offer the three amendments

en bloc and to explain.

Chairman Combest asked Mr. Stenholm about CBO scoring of

his amendment. Mr. Stenholm indicated that the SIP amendment

had not been scored by CBO, but it was an estimate provided by

USDA using methodology similar to CBO. Mr. Stenholm indicated

that CBO had scored the cost savings amendments that totaled

$550 million: $75 million from the incremental requirement

changes and $475 million from the changes in the crop revenue

coverage.

Chairman Combest stated his appreciation for Mr. Stenholm’s

concept, and that he thought the issue should be addressed at a future time. The Chairman did indicate that he had concerns about

considering the SIP proposal on a crop insurance bill. Lengthy discussion occurred and by a voice vote, the amendment failed.

Mr. Chambliss was then recognized to offer and explain an

amendment that would allow a second crop to be planted on the

same acreage for which the producer had received a prevented

planting indemnity. Mr. Chambliss stated that the amendment

would make true reform in the program by giving farmers more

flexibility in making decisions regarding risk management.

Lengthy discussion occurred on the amendment and by a voice vote

the amendment was adopted.

Mr. Bishop was recognized to offer and explain a ‘‘Producer

Whistleblower’’ amendment that would authorize the Secretary to

provide whistleblower-type incentives to producers who bring forth

evidence of fraud that is actually used by the Risk Management

Agency Compliance Division, the USDA Office of Inspector General

or the Office of General Counsel to recover civil fines. Mr. Bishop
41

explained that he had revised his amendment to address the concerns of confidentiality and actuarial soundness that had been

raised at the Subcommittee markup.

Discussion occurred and several Members expressed concern that

this amendment would provide an incentive for farmers to turn in

another producer, and that this could lead to malicious complaints

and by a voice vote the amendment failed.

A recess occurred in order to allow Members to attend the memorial service for Congressman Brown. Soon after the Committee reconvened, Chairman Combest announced that the House would be

adjourning soon after the last vote of the day, which was scheduled

for approximately 1:15 p.m. The Chairman then adjourned the

meeting at 1:31 p.m., to reconvene at 9:30 a.m., on Tuesday, August 3, 1999.

On August 3, 1999, Chairman Combest called the meeting to

order for the continued consideration of H.R. 2559, as amended.

Shortly after, Mr. Chambliss was recognized to offer and explain

an amendment to refine his amendment adopted by the Committee

on July 30, 1999, regarding prevented planting payments. Mr.

Chambliss stated that he had worked with USDA and others to revise his amendment to prevent opportunities for fraud and abuse.

Mr. Chambliss explained that in his revised amendment a producer

may receive a prevented planting payment and plant a substitute

crop on the same acreage if certain tightened conditions were met.

Mr. Chambliss also indicated that his refined amendment would

change the Congressional Budget Office (CBO) scoring of $115 million for his original amendment accepted on July 30, 1999, to $0.

Mr. Chambliss requested by unanimous consent to strike section

110(c)(iv), Funding Source, which had been adopted in his amendment by the Committee on July 30, 1999. Without objection, the

Chambliss amendment was revised and by a voice vote, the

Chambliss amendment, as amended, was adopted.

Mr. Condit requested by unanimous consent to have the $115

million savings from the Chambliss amendment applied to section

109, Authority for Nonprofit Associations to Pay Fees on Behalf of

Producers. An objection was heard, and the Condit unanimous consent request was denied.

Mr. Minge was then recognized to offer and explain an amendment concerning clarification of producer requirements to follow

good farming practices to include scientifically sound sustainable

and organic farming practices. Discussion occurred and by a voice

vote, the amendment was adopted.

Mr. LaHood was recognized to offer and explain an amendment

that would restrict livestock pilot programs to those programs offering insurance protection that are not generally available from

private companies. Discussion occurred and by a voice vote, the

amendment was adopted.

Mr. Minge was recognized to offer and explain an amendment

mandating a favorable level of crop insurance production protection

for beginning farmers and placing a limitation of payments under

catastrophic risk protection of $300,000. Mr. Minge explained his

amendment and acknowledged that the amendment did not have

a CBO score.
42

Lengthy discussion occurred on the amendment with Mr. Minge

expressing his desire to help beginning farmers and that he

thought payments under catastrophic risk protection could come

under criticism if there were not a limitation placed on them. Administration officials indicated that the Department did not have

a formal position on the beginning farmer provision. Mr. Stenholm

noted that there had been serious problems with the definition of

‘‘beginning farmer’’ under the loan program and by a voice vote, the

amendment failed.

Mr. Thune was then recognized to offer and explain an amendment on behalf of himself and Mr. Pomeroy that would mandate

compliance with State licensing requirements and mandate compliance with all State regulation of sales and solicitation activities.

Discussion occurred on the amendment with Department officials

stating that under current law, the Federal government preempts

State law to provide for a uniform program in all 50 States. It was

noted that provisions listed through line 10 of the amendment

would codify current law and would be helpful. However, the Department had concerns about the remainder of the amendment.

Mr. Goode suggested that language could be added to clarify the

scope of the Thune-Pomeroy amendment. Counsel stated that there

still would be some ambiguity over the exact meaning of the

amendment. Mr. Thune requested by unanimous consent that the

amendment be withdrawn, and without objection, it was withdrawn.

Mr. Thune was then recognized to offer and explain an amendment on behalf of himself and Mr. Pomeroy regarding compliance

with State licensing requirements. This amendment struck the objectionable language from their previous amendment. By voice vote,

the Thune-Pomeroy amendment was adopted.

Mr. Stenholm was then recognized and asked if anyone in the

Committee who had voted ‘‘no’’ on his SIP amendment on July 30,

1999, would request that the vote on that amendment be reconsidered. Mr. Stenholm stated that he thought it was a rare opportunity to provide some income protection for farmers and producers.

Mr. Pomeroy was recognized to offer and explain an amendment

authorizing renegotiation of the standard reinsurance agreement.

Discussion occurred on the amendment and Chairman Combest indicated that there seemed to be some dispute about whether the

amendment would be scored (by CBO) or not, but that he did support the amendment. Chairman Combest noted once again that because of the ambiguous reports from CBO that there could be a

need to have a Manager’s Amendment when the bill goes to the

Floor to get the costs of the bill within the constraints of the budget resolution. By voice vote, the amendment was adopted.

Mr. Stenholm was then recognized to offer and explain an

amendment concerning actual production history (APH) adjustment

to reflect participation in major pest control efforts. Mr. Stenholm

stated that his amendment would address areas where there were

now increased yields from successful pest control efforts, such as in

bollweevil eradication efforts.

Mr. Peterson offered a clarifying amendment to the Stenholm

amendment. Mr. Stenholm indicated his support for the Peterson
43

second-degree amendment and said that it did not change the

structure of his amendment and that it would be a nonscored

amendment. By voice vote, the Peterson amendment to the Stenholm amendment was adopted.

By voice vote, the Stenholm amendment, as amended, was adopted.

Mrs. Clayton was recognized and requested that the provision regarding the composition of the Board of Directors of the Federal

Crop Insurance Corporation include a requirement for diversity of

gender and race. Chairman Combest requested that Mrs. Clayton

work with staff to adopt appropriate report language on this issue.

Mr. Condit was then recognized to offer and explain an amendment that would use the funding source for section 109, Authority

for Nonprofit Association to Pay Fees on Behalf of Producers, from

funds otherwise available for loss adjustment expenses of $115 million. Mr. Condit stated that this was the $115 million budget offset

that was available when Mr. Chambliss refined his amendment

concerning prevented planting payments.

Chairman Combest noted that when the Committee received the

final CBO score, that some refinements might have to be made to

the Condit amendment regarding budget offsets. By voice vote, the

Condit amendment was accepted.

Mr. Condit offered and explained another amendment authorizing the Federal Crop Insurance Corporation to enter into partnerships for risk management development and implementation. The

Department stated their support for the amendment. However,

Chairman Combest noted for the record that if there were CBO

scoring problems with any of the accepted amendments that the

Chairman would work with the author of the amendment to work

out acceptable language for a Manager’s Amendment when the bill

goes to the House Floor.

By voice vote, the Condit amendment was adopted.

Mr. Barrett was then recognized and moved that the bill,

H.R. 2559, as amended, be favorably reported to the House with

the recommendation that it do pass. Mr. Barrett’s motion was

agreed to by a voice vote and in the presence of a quorum.

Mr. Barrett also moved, pursuant to clause 1 of rule XX, that the

Committee authorize the Chairman to offer such motions as may

be necessary in the House to go to conference with the Senate on

the bill H.R. 2559, or any similar Senate bill.

Mr. Stenholm noted his intention to file dissenting views regarding the absence of a Supplemental Income Plan to the Committee

report. Chairman Combest requested all Members to file as quickly

as possible any additional views to the Committee report accompanying the bill.

Mr. Stenholm clarified that the FY 2000 budget problems with

the bill had yet to be resolved and Chairman Combest assured the

Members that efforts and discussions were ongoing attempting to

resolve the FY 2000 budget problems with the bill so that

H.R. 2559 could be taken to the House Floor.

Without objection, the usual instructions were given to staff to

make any technical, clarifying, or conforming changes as were appropriate without changing the substance of the legislation.
44

Chairman Combest thanked all the Members for their attentiveness and good work and adjourned the meeting subject to the call

of the Chair.

REPORTING THE BILL—ROLLCALL VOTES

In compliance with clause 3(b) of rule XIII of the House of Representatives, the Committee sets forth the record of the following

rollcall votes taken with respect to H.R. 2559.

ROLLCALL NO. 1

Summary: En bloc amendment regarding actual production history.

Offered By: Mr. Pomeroy on behalf of himself and Mr. Thune on

July 21, 1999.

Results: The amendment was adopted with 15 yeas, 7 nays, and

9 not voting.

Yeas

Mr. Smith, Mr. Moran, Mr. Thune, Mr. Gutknecht, Mr. Walden,

Mr. Simpson, Mr. Ose, Mr. Condit, Mr. Pomeroy, Mr. Baldacci, Mr.

Goode, Ms. Stabenow, Mr. Etheridge, Mr. Boswell, and Mr. Ewing.

Nays

Mr. Everett, Mr. Chambliss, Mr. Riley, Mr. Hayes, Mr. Fletcher,

Mr. Dooley, and Mr. John.

Not voting

Mr. Barrett, Mr. Lucas, OK, Mr. LaHood, Mr. Jenkins, Mr. Hilliard, Mr. Bishop, Mr. McIntyre, Mr. Lucas, KY, and Mr. Thompson,

CA.

CONGRESSIONAL BUDGET OFFICE ESTIMATE, AND UNFUNDED

MANDATES STATEMENT

The Congressional Budget Office estimate and unfunded mandate analysis required by clause 3(c)(3) of rule XIII of the Rules of

the House of Representatives and sections 402 and 423 of the Congressional Budget Act of 1974 were not available from the Congressional Budget Office as of the date of filing of this report. The Congressional Budget Office estimate and accompanying materials will

be contained in a supplemental report.

NEW BUDGET AUTHORITY AND COMMITTEE COST ESTIMATE

Based on preliminary estimates by the Congressional Budget Office and in accordance with clause 3(d) of House Rule XIII, the

Committee estimates that enactment of H.R. 2559 would result in

no costs in fiscal year 1999. For fiscal years 2000 through 2004, the

Committee estimates the costs associated with H.R. 2559 at $7.077

billion in budget authority; $6.106 in budget outlays. For purposes

of section 204 of H. Con. Res. 68, the Committee estimates the

costs associated with H.R. 2559 for fiscal years 2001 through 2004

to be $5.997 billion in budget authority; $5.635 billion in budget

outlays. Specifically, for fiscal years 2000 through 2004, the Committee estimates the budget authority associated with H.R. 2559 to
45

be $1.080, $1.366, $1.435, $1.512, and $1.684 billion, respectively.

For fiscal years 2000 through 2004, the Committee estimates the

budget outlays associated with H.R. 2559 to be $471 million,

$1.191, $1.393, $1.468, and $1.583 billion, respectively.

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House

of Representatives, the Committee finds the Constitutional authority for this legislation in Article I, clause 8, section 18, that grants

Congress the power to make all laws necessary and proper for carrying out the powers vested by Congress in the Government of the

United States or in any department or officer thereof.

OVERSIGHT STATEMENT

No summary of oversight findings and recommendations made by

the Committee on Government Reform, as provided for in clause

3(c)(4) of rule XIII of the Rules of the House of Representatives,

was available to the Committee with reference to the subject matter specifically addressed by H.R. 2559, as amended.

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House

of Representatives, the Committee on Agriculture’s oversight findings and recommendations are reflected in the body of this report.

ADVISORY COMMITTEE STATEMENT

No advisory committee within the meaning of section 5(b) of the

Federal Advisory Committee Act was created by this legislation.

APPLICABILITY TO THE LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the

terms and conditions of employment or access to public services or

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act (Public Law 104–1).

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the

House of Representatives, changes in existing law made by the bill,

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic,

existing law in which no change is proposed is shown in roman):

FEDERAL CROP INSURANCE ACT

* * * * * * *

SEC. 502. PURPOSE AND DEFINITIONS.

(a) * * *

* * * * * * *

(c) PROTECTION OF CONFIDENTIAL INFORMATION.—
46

(1) AUTHORIZED DISCLOSURE.—In the case of information furnished by a producer to participate in or receive any benefit

under this title, the Secretary, any other officer or employee of

the Department or an agency thereof, an approved insurance

provider and its employees and contractors, and any other person may not disclose the information to the public, unless the

information has been transformed into a statistical or aggregate

form that does not allow the identification of the person who

supplied particular information.

(2) VIOLATIONS; PENALTIES.—Subsection (c) of section 1770 of

the Food Security Act of 1985 (7 U.S.C. 2276) shall apply with

respect to the release of information collected in any manner or

for any purpose prohibited by paragraph (1).

* * * * * * *

øMANAGEMENT OF CORPORATION

øSEC. 505. (a) The management of the Corporation shall be

vested in a Board subject to the general supervision of the Secretary. The Board shall consist of the manager of the Corporation,

the Under Secretary responsible for the Federal crop insurance program, one additional Under Secretary of Agriculture (as designated

by the Secretary of Agriculture), one person experienced in the crop

insurance business who is not otherwise employed by the Federal

Government, and three active farmers who are not otherwise employed by the Federal Government. The Board shall be appointed

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

shall not be a member of the Board. The Secretary, in appointing

the three active farmers who are not otherwise employed by the

Federal Government, shall ensure that such members are policy

holders and are from different geographic areas of the United

States, in order that diverse agricultural interests in the United

States are at all times represented on the Board.¿

SEC. 505. MANAGEMENT OF CORPORATION.

(a) BOARD OF DIRECTORS.—

(1) ESTABLISHMENT.—The management of the Corporation

shall be vested in a Board of Directors subject to the general supervision of the Secretary.

(2) COMPOSITION.—The Board shall consist of only the following members:

(A) The manager of the Corporation, who shall serve as

a nonvoting ex officio member.

(B) The Under Secretary of Agriculture responsible for

the Federal crop insurance program.

(C) One additional Under Secretary of Agriculture (as

designated by the Secretary).

(D) The Chief Economist of the Department of Agriculture.

(E) One person experienced in the crop insurance business.

(F) One person experienced in the regulation of insurance.

(G) Four active producers who are policy holders, are

from different geographic areas of the United States, and
47

represent a cross-section of agricultural commodities grown

in the United States. At least one of the four shall be a specialty crop producer.

(3) APPOINTMENT OF PRIVATE SECTOR MEMBERS.—The members of the Board described in subparagraphs (E), (F), and (G)

of paragraph (2)—

(A) shall be appointed by, and hold office at the pleasure

of, the Secretary; and

(B) shall not be otherwise employed by the Federal Government.

(4) CHAIRPERSON.—The Board shall select a member of the

Board to serve as Chairperson.

* * * * * * *

SEC. 506. GENERAL POWERS.

(a) * * *

* * * * * * *

(h) DATA COLLECTION.—øThe Corporation¿

(1) IN GENERAL.—The Corporation shall assemble data for

the purpose of establishing sound actuarial bases for insurance

on agricultural commodities.

(2) COORDINATION AND USE OF RECORDS.—

(A) COORDINATION BETWEEN AGENCIES.—The Secretary

shall ensure that recordkeeping and reporting requirements

under this title and section 196 of the Federal Agriculture

Improvement and Reform Act of 1996 (7 U.S.C. 7333) are

coordinated by the Corporation and the Farm Service Agency to avoid duplication of such records, to streamline procedures involved with the submission of such records, and to

enhance the accuracy of such records.

(B) USE OF RECORDS.—Notwithstanding section 502(c),

records submitted in accordance with this title and section

196 of the Federal Agriculture Improvement and Reform

Act of 1996 (7 U.S.C. 7333) shall be available to agencies

and local offices of the Department, appropriate State and

Federal agencies and divisions, and approved insurance

providers for use in carrying out this title and such section

196 as well as other agricultural programs and related responsibilities.

* * * * * * *

(n) øPENALTIES¿ SANCTIONS FOR VIOLATIONS.—

ø(1) FALSE INFORMATION.—If a person willfully and intentionally provides any false or inaccurate information to the

Corporation or to any insurer with respect to an insurance

plan or policy under this title, the Corporation may, after notice and an opportunity for a hearing on the record—

ø(A) impose a civil fine of not to exceed $10,000 on the

person; and

ø(B) disqualify the person from purchasing catastrophic

risk protection or receiving noninsured assistance for a period of not to exceed 2 years, or from receiving any other

benefit under this title for a period of not to exceed 10

years.¿
48

(1) FALSE INFORMATION.—If a producer, an agent, a loss adjuster, an approved insurance provider, or any other person

willfully and intentionally provides any false or inaccurate information to the Corporation or to an approved insurance provider with respect to a policy or plan of insurance under this

title, the Corporation may, after notice and an opportunity for

a hearing on the record, impose one or more of the sanctions

specified in paragraph (2).

(2) AUTHORIZED SANCTIONS.—The following sanctions may be

imposed for a violation under paragraph (1):

(A) The Corporation may impose a civil fine for each violation not to exceed the greater of—

(i) the amount of the pecuniary gain obtained as a

result of the false or inaccurate information provided;

or

(ii) $10,000.

(B) If the violation is committed by a producer, the producer may be disqualified for a period of up to 5 years

from—

(i) participating in, or receiving any benefit provided

under this title, the noninsured crop disaster assistance

program under section 196 of the Federal Agriculture

Improvement and Reform Act of 1996 (7 U.S.C. 7333),

the Agricultural Market Transition Act (7 U.S.C. 7201

et seq.), the Agricultural Act of 1949 (7 U.S.C. 1421 et

seq.), the Commodity Credit Corporation Charter Act

(15 U.S.C. 714 et seq.), or the Agricultural Adjustment

Act of 1938 (7 U.S.C. 1281 et seq.);

(ii) receiving any loan made, insured, or guaranteed

under the Consolidated Farm and Rural Development

Act (7 U.S.C. 1921 et. seq.);

(iii) receiving any benefit provided, or indemnity

made available, under any other law to assist a producer of an agricultural commodity due to a crop loss

or a decline in commodity prices; or

(iv) receiving any cost share assistance for conservation or any other assistance provided under title XII of

the Food Security Act (16 U.S.C. 3801 et seq.).

(C) If the violation is committed by an agent, loss adjuster, approved insurance provider, or any other person

(other than a producer), the violator may be disqualified for

a period of up to 5 years from participating in, or receiving

any benefit provided under this title.

(D) If the violation is committed by a producer, the Corporation may require the producer to forfeit any premium

owed under the policy, notwithstanding a denial of claim

or collection of an overpayment, if the false or inaccurate

information was material.

ø(2)¿ (3) ASSESSMENT OF øPENALTY¿ SANCTION.—In øassessing penalties¿ imposing a sanction under this subsection, the

Corporation shall consider the gravity of the violation.

(4) DISCLOSURE OF SANCTIONS.—Each policy or plan of insurance under this title shall prominently indicate the sanctions

prescribed under paragraph (2) for willfully and intentionally
49

providing false or inaccurate information to the Corporation or

to an approved insurance provider.

* * * * * * *

(q) PROGRAM COMPLIANCE.— (1) PURPOSE.—The purpose of this subsection is to improve

compliance with the Federal crop insurance program and to improve program integrity.

ø(1)¿ (2) TIMELINESS.—The Corporation shall work actively

with approved insurance providers to address program compliance and integrity issues as the issues develop.

ø(2)¿ (3) NOTIFICATION OF COMPLIANCE PROBLEMS.—The Corporation shall notify in writing any approved insurance provider with whom the Corporation has an agreement under this

title of any error, omission, or failure to follow Corporation regulations or procedures for which the approved insurance provider may be responsible and which may result in a debt owed

the Corporation. The notice shall be given within 3 years of the

end of the insurance period during which the error, omission,

or failure is alleged to have occurred, except that this time

limit shall not apply with respect to errors, omissions, or procedural violations that are willful or intentional. The failure to

timely provide the notice required under this subsection shall

relieve the approved insurance provider from the debt owed

the Corporation.

(4) RECONCILING PRODUCER INFORMATION.—The Secretary

shall develop and implement a coordinated plan for the Corporation and the Administrator of the Farm Service Agency to

reconcile all relevant information received by the Corporation or

the Farm Service Agency from a producer who obtains crop insurance coverage under this title. Beginning with the 2000 crop

year, the Secretary shall require that the Corporation and the

Farm Service Agency reconcile such producer-derived information on at least an annual basis in order to identify and address any discrepancies.

(5) IDENTIFICATION AND ELIMINATION OF FRAUD, WASTE, AND

ABUSE.—

(A) FSA MONITORING PROGRAM.—The Secretary shall develop and implement a coordinated plan for the Farm Service Agency to assist the Corporation in the ongoing monitoring of programs carried out under this title, including—

(i) conducting fact finding relative to allegations of

program fraud, waste, and abuse, both at the request

of the Corporation or on its own initiative after consultation with the Corporation;

(ii) reporting any allegation of fraud, waste, and

abuse or identified program vulnerabilities to the Corporation in a timely manner; and

(iii) assisting the Corporation and approved insurance providers in auditing a statistically appropriate

number of claims made under any policy or plan of insurance under this title.

(B) USE OF FIELD INFRASTRUCTURE.—The plan required

by this paragraph shall use the field infrastructure of the

Farm Service Agency, and the Secretary shall ensure that
50

relevant Farm Service Agency personnel are appropriately

trained for any responsibilities assigned to them under the

plan. At a minimum, such personnel shall receive the same

level of training and pass the same basic competency tests

as required of loss adjusters of approved insurance providers.

(C) MAINTENANCE OF PROVIDER EFFORT; COOPERATION.— The activities of the Farm Service Agency under this paragraph do not affect the responsibility of approved insurance

providers to conduct any audits of claims or other program

reviews required by the Corporation. If an insurance provider reports to the Corporation that it suspects intentional

misrepresentation, fraud, waste, or abuse, the Corporation

shall make a determination and provide a written response

within 90 days after receiving the report. The insurance

provider and the Corporation shall take coordinated action

in any case where misrepresentation, fraud, waste, or abuse

has occurred.

(6) CONSULTATION WITH STATE COMMITTEES.—The Corporation shall establish a mechanism under which State committees

of the Farm Service Agency are consulted concerning policies

and plans of insurance offered in a State under this title.

(7) ANNUAL REPORT ON COMPLIANCE EFFORTS.—The Secretary

shall submit to the Committee on Agriculture of the House of

Representatives and the Committee on Agriculture, Nutrition,

and Forestry of the Senate an annual report containing findings relative to the efforts undertaken pursuant to paragraphs

(4) and (5). The report shall identify specific occurrences of

waste, fraud, and abuse and contain an outline of actions that

have been or are being taken to eliminate the identified waste,

fraud, and abuse.

* * * * * * *

PERSONNEL

SEC. 507. (a) * * *

* * * * * * *

(c) In the administration of this title, the Board shall, to the

maximum extent possible, (1) establish or use committees or associations of producers and make payments to them to cover the administrative and program expenses, as determined by the Board,

incurred by them in cooperating in carrying out this title, (2) contract with private insurance companies, private rating bureaus,

and other organizations as appropriate for øactuarial, loss adjustment,¿ actuarial services, services relating to loss adjustment and

rating plans of insurance, and other services to avoid duplication

by the Federal Government of services that are or may readily be

available in the private sector and to enable the Corporation to concentrate on regulating the provision of insurance under this title

and evaluating new products and materials submitted under section

508(h), and reimburse such companies for the administrative and

program expenses, as determined by the Board, incurred by them,

under terms and provisions and rates of compensation consistent

with those generally prevailing in the insurance industry, and (3)
51

encourage the sale of Federal crop insurance through licensed private insurance agents and brokers and give the insured the right

to renew such insurance for successive terms through such agents

and brokers, in which case the agent or broker shall be reasonably

compensated from premiums paid by the insured for such sales and

renewals recognizing the function of the agent or broker to provide

continuing services while the insurance is in effect: Provided, That

such compensation shall not be included in computations establishing premium rates. The Board shall provide such agents and

brokers with indemnification, including costs and reasonable attorney fees, from the Corporation for errors or omissions on the part

of the Corporation or its contractors for which the agent or broker

is sued or held liable, except to the extent the agent or broker has

caused the error or omission. Nothing in this subsection shall permit the Corporation to contract with other persons to carry out the

responsibility of the Corporation to review and approve policies,

rates, and other materials submitted under section 508(h).

* * * * * * *

SEC. 508. CROP INSURANCE.

(a) AUTHORITY TO OFFER INSURANCE.—

(1) * * *

* * * * * * *

(3) EXCLUSIONS.—Insurance provided under this subsection

shall not cover losses due to—

(A) * * *

* * * * * * *

(C) the failure of the producer to follow good farming

practices, including scientifically sound sustainable and organic farming practices (as determined by the Secretary).

* * * * * * *

(5) DISSEMINATION OF CROP INSURANCE INFORMATION.—øThe

Corporation¿

(A) AVAILABLE INFORMATION.—The Corporation shall

make available to producers through local offices of the

Department—

ø(A)¿ (i) current and complete information on all aspects of Federal crop insurance; and

ø(B)¿ (ii) a listing of insurance agents and companies offering to sell crop insurance in the area of the

producers.

(B) USE OF ELECTRONIC METHODS.—The Corporation

shall make the information described in subparagraph (A)

available electronically to producers and approved insurance providers. To the maximum extent practicable, the

Corporation shall also allow producers and approved insurance providers to use electronic methods to submit information required by the Corporation.

* * * * * * *

(7) REVIEW AND ADJUSTMENT OF RATES.—

(A) REVIEW REQUIRED.—To maximize participation in the

Federal crop insurance program and to ensure equity for
52

producers, the Corporation shall periodically review the

methodologies employed for rating plans of insurance

under this title consistent with section 507(c)(2).

(B) PREMIUM ADJUSTMENT.—The Corporation shall analyze the rating and loss history of approved policies and

plans of insurance for agricultural commodities by area. If

the Corporation makes a determination that premium rates

are excessive for an agricultural commodity in an area relative to the requirements of subsection (d)(2)(B) for that

area, then, in the 2000 crop year or as soon as practicable

after the determination is made, the Corporation shall

make appropriate adjustments in the premium rates for

that area for that agricultural commodity.

(8) PREVENTED PLANTING COVERAGE.—

(A) ELECTION NOT TO RECEIVE COVERAGE.—

(i) ELECTION.—A producer may elect not to receive

coverage for prevented planting of an agricultural commodity.

(ii) REDUCTION.—In the case of an election under

clause (i), the Corporation shall provide a reduction in

the premium payable by the producer for a plan of insurance in an amount equal to the premium for the

prevented planting coverage, as determined by the Corporation.

(B) EQUAL COVERAGE.—For each agricultural commodity

for which prevented planting coverage is available, the Corporation shall offer an equal percentage level of prevented

planting coverage.

(C) AREA CONDITIONS REQUIRED FOR PAYMENT.—The Corporation shall limit prevented planting payments to producers to those situations in which producers in the area

in which the farm is located are generally affected by the

conditions that prevent an agricultural commodity from

being planted.

(D) SUBSTITUTE COMMODITY.—

(i) AUTHORITY TO PLANT.—Subject to clause (iv), a

producer who has prevented planting coverage and

who is eligible to receive an indemnity under such coverage may plant an agricultural commodity, other than

the commodity covered by the prevented planting coverage, on the acreage originally prevented from being

planted.

(ii) NONAVAILABILITY OF INSURANCE.—A substitute

agricultural commodity planted as authorized by

clause (i) for harvest in the same crop year shall not

be eligible for coverage under a policy or plan of insurance under this title or for noninsured crop disaster assistance under section 196 of the Federal Agriculture

Improvement and Reform Act of 1996 (7 U.S.C. 7333).

For purposes of subsection (b)(7) only, the substitute

commodity shall be deemed to have at least catastrophic risk protection so as to satisfy the requirements of that subsection.
53

(iii) EFFECT ON ACTUAL PRODUCTION HISTORY.—If a

producer plants a substitute agricultural commodity as

authorized by clause (i) for a crop year, the Corporation shall assign the producer a recorded yield, for that

crop year for the commodity that was prevented from

being planting, equal to 60 percent of the producer’s actual production history for such commodity for purposes of determining the producer’s actual production

history for subsequent crop years.

(iv) EFFECT ON PREVENTED PLANTING PAYMENT.—If a

producer plants a substitute agricultural commodity as

authorized by clause (i) before the latest planting date

established by the Corporation for the agricultural

commodity prevented from being planted, the Corporation shall not make a prevented planting payment with

regard to the commodity prevented from being planted.

(9) QUALITY GRADE LOSS ADJUSTMENT.—Consistent with subsection (m)(4), by the 2000 crop year, the Corporation shall

enter into a contract to analyze its quality loss adjustment procedures and make such adjustments as may be necessary to

more accurately reflect local quality discounts that are applied

to agricultural commodities insured under this title, taking into

consideration the actuarial soundness of the adjustment and

the prevention of fraud, waste and abuse.

(10) LIMITATION ON DOUBLE INSURANCE.—

(A) RESTRICTED TO CATASTROPHIC RISK PROTECTION.—

Except for situations covered by subparagraph (B), no policy or plan of insurance may be offered under this title for

more than one agricultural commodity planted on the same

acreage in the same crop year unless the coverage for the

additional crop is limited to catastrophic risk protection

available under subsection (b).

(B) EXCEPTION FOR DOUBLE-CROPPING.—A policy or plan

of insurance may be offered under this title for an agricultural commodity and for an additional agricultural commodity when both agricultural commodities are normally

harvested within the same crop year on the same acreage

if the following conditions are met:

(i) There is an established practice of double-cropping in the area and the additional agricultural commodity is customarily double-cropped in the area with

the first agricultural commodity, as determined by the

Corporation.

(ii) A policy or plan of insurance for the first agricultural commodity and the additional agricultural commodity is available under this title.

(iii) The additional commodity is planted on or before the final planting date or late planting date for

that additional commodity, as established by the Corporation.

(b) CATASTROPHIC RISK PROTECTION.—

(1) * * *

* * * * * * *
54

ø(3) YIELD AND LOSS BASIS.—A producer shall have the option of basing the catastrophic coverage of the producer on an

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

basis, if both options are offered by the Corporation.¿

(3) ALTERNATIVE CATASTROPHIC COVERAGE.—Beginning with

the 2000 crop year, the Corporation shall offer producers of an

agricultural commodity the option of selecting either of the following:

(A) The catastrophic risk protection coverage available

under paragraph (2)(A).

(B) An alternative catastrophic risk protection coverage

that—

(i) indemnifies the producer on an area yield and

loss basis if such a plan of insurance is offered for the

agricultural commodity in the county in which the

farm is located;

(ii) provides, on a uniform national basis, a higher

combination of yield and price protection than the coverage available under paragraph (2)(A); and

(iii) the Corporation determines is comparable to the

coverage available under paragraph (2)(A) for purposes

of subsection (e)(2)(A).

* * * * * * *

(5) ADMINISTRATIVE FEE.—

(A) * * *

* * * * * * *

(F) PAYMENT OF FEES ON BEHALF OF PRODUCERS.— (i) PAYMENT AUTHORIZED.—Notwithstanding any

other subparagraph of this paragraph, a cooperative

association of agricultural producers or a nonprofit

trade association may pay to the Corporation, on behalf of a member of the association who consents to be

insured under such an arrangement, all or a portion of

the fees imposed under subparagraphs (A) and (B) for

catastrophic risk protection.

(ii) TREATMENT OF LICENSING FEES.—A licensing fee

or other payment made by the insurance provider to

the cooperative association or trade association in connection with the issuance of catastrophic risk protection

or additional coverage under this section to members of

the cooperative association or trade association shall

not be considered to be a rebate to the members if the

members are informed in advance of the fee or payment.

(iii) SELECTION OF PROVIDER; DELIVERY.—Nothing in

this subparagraph shall be construed so as to limit the

ability of a producer to choose the licensed insurance

agent or other approved insurance provider from whom

the member will purchase a policy or plan of insurance

or to refuse coverage for which a payment is offered to

be made under clause (i). A policy or plan of insurance

for which a payment is made under clause (i) shall be
55

delivered by a licensed insurance agent or other approved insurance provider.

(iv) ADDITIONAL COVERAGE ENCOURAGED.—Cooperatives and trade associations and any approved insurance provider with whom a licensing fee or other arrangement under this subparagraph is made shall encourage producer members to purchase appropriate levels of additional coverage in order to meet the risk

management needs of such member producers.

* * * * * * *

(11) LOSS ADJUSTMENT.—The rate for reimbursing an approved insurance provider or agent for expenses incurred by

the approved insurance provider or agent for loss adjustment

in connection with a policy of catastrophic risk protection shall

not exceed ø11 percent¿ 8 percent of the premium for catastrophic risk protection that is used to define loss ratio.

(c) GENERAL COVERAGE LEVELS.—

(1) * * *

* * * * * * *

(5) PRICE LEVEL.—øThe Corporation shall establish a price¿

For purposes of this title, the Corporation shall establish or approve a price level for each commodity on which insurance is

offered that—

(A) shall not be less than the projected market price for

the commodity (as determined by the Corporation); øor¿

(B) at the discretion of the Corporation, may be based on

the actual market price at the time of harvest (as determined by the Corporation)ø.¿; or

(C) in the case of cost of production or similar plans of

insurance, shall be the projected cost of producing the agricultural commodity (as determined by the Corporation).

* * * * * * *

(d) PREMIUMS.—

(1) * * *

* * * * * * *

(2) PREMIUM AMOUNTS.—The premium amounts for catastrophic risk protection under subsection (b) and additional

coverage under subsection (c) shall be fixed as follows:

(A) * * *

ø(B) In the case of additional coverage below 65 percent

of the recorded or appraised average yield indemnified at

100 percent of the expected market price, or an equivalent

coverage, but greater than 50 percent of the recorded or

appraised average yield indemnified at 100 percent of the

expected market price, or an equivalent coverage, the

amount of the premium shall—

ø(i) be sufficient to cover anticipated losses and a

reasonable reserve; and

ø(ii) include an amount for operating and administrative expenses, as determined by the Corporation.

ø(C) In the case of additional coverage equal to or greater than 65 percent of the recorded or appraised average
56

yield indemnified at 100 percent of the expected market

price, or an equivalent coverage, the amount of the premium shall—

ø(i) be sufficient to cover anticipated losses and a

reasonable reserve; and

ø(ii) include an amount for operating and administrative expenses, as determined by the Corporation, on

an industry-wide basis as a percentage of the amount

of the premium used to define loss ratio.¿

(B) In the case of additional coverage equal to or greater

than 50 percent of the recorded or appraised average yield

indemnified at not greater than 100 percent of the expected

market price, or an equivalent coverage, the amount of the

premium shall—

(i) be sufficient to cover anticipated losses and a reasonable reserve; and

(ii) include an amount for operating and administrative expenses, as determined by the Corporation, on an

industry-wide basis as a percentage of the amount of

the premium used to define loss ratio.

(3) PREMIUM DISCOUNTS.—

(A) PERFORMANCE-BASED DISCOUNT.—The Corporation

may provide a performance-based premium discount for a

producer of an agricultural commodity who has good insurance or production experience relative to other producers of

that agricultural commodity in the same area, as determined by the Corporation.

(B) DISCOUNT FOR REDUCED PRICE FOR CERTAIN COMMODITIES.—A producer who insured wheat, barley, oats, or

rye during at least 2 of the 1995 through 1999 crop years

may be eligible to receive an additional 20 percent premium

discount on the producer-paid premium for any 2000 crop

policy if the producer demonstrates that the producer’s

wheat, barley, oats, or rye crop was subjected to a discounted price due to Scab or Vomitoxin damage, or both,

during any 2 years of that period. The 2000 insured crop

or crops need not be wheat, barley, oats, or rye to qualify

for the discount under this subparagraph. The 2 years of

insurance and the 2 years of discounted prices need not be

the same.

(e) PAYMENT OF PORTION OF PREMIUM BY CORPORATION.—

(1) * * *

(2) AMOUNT OF PAYMENT.—The amount of the premium to be

paid by the Corporation shall be as follows:

(A) * * *

ø(B) In the case of coverage below 65 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an equivalent coverage, but greater than 50 percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an equivalent coverage, the

amount shall be equivalent to the amount of premium established for catastrophic risk protection coverage and the
57

amount of operating and administrative expenses established under subsection (d)(2)(B).

ø(C) In the case of coverage equal to or greater than 65

percent of the recorded or appraised average yield indemnified at 100 percent of the expected market price, or an

equivalent coverage, on an individual or area basis, the

amount shall be equivalent to an amount equal to the premium established for 50 percent loss in yield indemnified

at 75 percent of the expected market price and the amount

of operating and administrative expenses established

under subsection (d)(2)(C).¿

(B) In the case of additional coverage equal to or greater

than 50 percent, but less than 55 percent, of the recorded

or appraised average yield indemnified at not greater than

100 percent of the expected market price, or an equivalent

coverage, the amount shall be equal to the sum of—

(i) 67 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage

level selected; and

(ii) the amount determined under subsection

(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

(C) In the case of additional coverage equal to or greater

than 55 percent, but less than 65 percent, of the recorded

or appraised average yield indemnified at not greater than

100 percent of the expected market price, or an equivalent

coverage, the amount shall be equal to the sum of—

(i) 64 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage

level selected; and

(ii) the amount determined under subsection

(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

(D) In the case of additional coverage equal to or greater

than 65 percent, but less than 75 percent, of the recorded

or appraised average yield indemnified at not greater than

100 percent of the expected market price, or an equivalent

coverage, the amount shall be equal to the sum of—

(i) 59 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage

level selected; and

(ii) the amount determined under subsection

(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

(E) In the case of additional coverage equal to or greater

than 75 percent, but less than 80 percent, of the recorded

or appraised average yield indemnified at not greater than

100 percent of the expected market price, or an equivalent

coverage, the amount shall be equal to the sum of—

(i) 54 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage

level selected; and
58

(ii) the amount determined under subsection

(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

(F) In the case of additional coverage equal to or greater

than 80 percent, but less than 85 percent, of the recorded

or appraised average yield indemnified at not greater than

100 percent of the expected market price, or an equivalent

coverage, the amount shall be equal to the sum of—

(i) 40.6 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage

level selected; and

(ii) the amount determined under subsection

(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

(G) Subject to subsection (c)(4), in the case of additional

coverage equal to or greater than 85 percent of the recorded

or appraised average yield indemnified at not greater than

100 percent of the expected market price, or an equivalent

coverage, the amount shall be equal to the sum of—

(i) 30.6 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage

level selected; and

(ii) the amount determined under subsection

(d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

* * * * * * *

(5) PREMIUM PAYMENT DISCLOSURE.—Each policy or plan of

insurance under this title shall prominently indicate the dollar

amount of the portion of the premium paid by the Corporation

under this subsection or subsection (h)(2).

* * * * * * *

(f) ELIGIBILITY.—

(1) * * *

* * * * * * *

(3) RECORDS AND REPORTING.—To obtain catastrophic risk

protection under subsection (b) or additional coverage under

subsection (c), a producer shall—

(A) øprovide, to the extent required by the Corporation,

records acceptable to the Corporation of historical acreage

and production of the crops for which the insurance is

sought¿ provide annually records acceptable to the Secretary regarding crop acreage, acreage yields, and production for each agricultural commodity insured under this

title or accept a yield determined by the Corporation; and

* * * * * * *

(g) YIELD DETERMINATIONS.— (1) * * *

* * * * * * *

(4) ADJUSTMENT IN ACTUAL PRODUCTION HISTORY TO ESTABLISH INSURABLE YIELDS.—
59

(A) APPLICATION.—This paragraph shall apply whenever

the Corporation uses the actual production history of the

producer to establish insurable yields for an agricultural

commodity for the 2000 and subsequent crop years.

(B) ELECTION TO USE PERCENTAGE OF TRANSITIONAL

YIELD.—If, for one or more of the crop years used to establish the producer’s actual production history of an agricultural commodity, the producer’s recorded or appraised yield

of the commodity was less than 60 percent of the applicable

transitional yield, as determined by the Corporation, the

Corporation shall, at the election of the producer—

(i) exclude any of such recorded or appraised yield;

and

(ii) replace each excluded yield with a yield equal to

60 percent of the applicable transitional yield.

(5) ADJUSTMENT TO REFLECT INCREASED YIELDS FROM SUCCESSFUL PEST CONTROL EFFORTS.—

(A) SITUATIONS JUSTIFYING ADJUSTMENT.—The Corporation shall develop a methodology for adjusting the actual

production history of a producer when each of the following

apply:

(i) The producer’s farm is located in an area where

systematic, area-wide efforts have been undertaken

using certain operations or measures, or the producer’s

farm is a location at which certain operations or measures have been undertaken, to detect, eradicate, suppress, or control, or at least to prevent or retard the

spread of, a plant disease or plant pest, including a

plant pest covered by the definition in section 102 of

the Department of Agriculture Organic Act of 1944 (7

U.S.C. 147a).

(ii) The presence of the plant disease or plant pest

has been found to adversely affect the yield of the agricultural commodity for which the producer is applying

for insurance.

(iii) The efforts described in clause (i) have been effective.

(B) ADJUSTMENT AMOUNT.—The amount by which the

Corporation adjusts the actual production history of a producer of an agricultural commodity shall reflect the degree

to which the success of the systematic, area-wide efforts described in paragraph (1)(A), on average, increases the yield

of the commodity on the producer’s farm, as determined by

the Corporation.

* * * * * * *

(h) SUBMISSION OF POLICIES AND MATERIALS TO BOARD.—

(1) IN GENERAL.—In addition to any standard forms or policies that the Board may require be made available to producers under subsection (c), a person (including an approved

insurance provider, a college or university, a cooperative or

trade association, or any other person) may prepare for submission or propose to the Board—
60

(A) * * *

* * * * * * *

(2) SUBMISSION OF POLICIES.—øA policy¿

(A) PREPARATION.—A policy or other material submitted

to the Board under this subsection may be prepared without regard to the limitations contained in this title, including the requirements concerning the levels of coverage and

rates and the requirement that a price level for each commodity insured must equal the expected market price for

the commodity as established by the Board. øIn the case

of such a policy, the payment by the Corporation of a portion of the premium of the policy may not exceed the

amount that would otherwise be authorized under subsection (e).¿

(B) PREMIUM SCHEDULE.—In the case of a policy offered

under this subsection (except paragraph (10)) or subsection

(m)(4), the Corporation shall pay a portion of the premium

of the policy that shall be equal to—

(i) the percentage, specified in subsection (e) for a

similar level of coverage, of the total amount of the premium used to define loss ratio; and

(ii) the dollar amount of the administrative and operating expenses that would be paid by the Corporation

under subsection (e) for a similar level of coverage.

(3) REVIEW AND APPROVAL BY THE BOARD.—A policy or other

material submitted to the Board under this subsection shall be

reviewed by the Board and, if the Board finds that the interests

of producers are adequately protected and that any premiums

charged to the producers are actuarially appropriate, shall be

approved by the Board for reinsurance and for sale by approved

insurance providers to producers as an additional choice at actuarially appropriate rates and under appropriate terms and

conditions. The Corporation may enter into more than 1 reinsurance agreement with the approved insurance provider simultaneously to facilitate the offering of the new policies.

(4) GUIDELINES FOR SUBMISSION AND REVIEW.—øThe Corporation¿

(A) GUIDELINES REQUIRED.—Not later than 180 days

after the date of the enactment of the Agricultural Risk Protection Act of 1999, the Corporation shall issue regulations

to establish guidelines for the submission, and Board review, of policies or other material submitted to the Board

under this subsection. At a minimum, the guidelines shall

ensure the following:

ø(A)¿ (i) A proposal submitted to the Board under

this subsection shall be considered as confidential

commercial or financial information for purposes of

section 552(b)(4) of title 5, United States Code, until

approved by the Board. A proposal disapproved by the

Board shall remain confidential commercial or financial information.

ø(B)¿ (ii) The Board shall provide an applicant with

the opportunity to present the proposal to the Board

in person if the applicant so desires.
61

ø(C)¿ (iii) The Board shall provide an applicant with

notification of intent to disapprove a proposal not later

than 30 days prior to making the disapproval. An applicant that receives the notification may modify the

application øof the applicant. Any modification shall

be considered an original application for purposes of

this paragraph.¿, and such application, as modified,

shall be considered by the Board in the manner provided in clause (iv) within the 30-day period beginning

on the date the modified application is submitted. Any

notification of intent to disapprove a policy or other

material submitted under this subsection shall be accompanied by a complete explanation as to the reasons

for the Board’s intention to deny approval.

ø(D) Specific guidelines shall prescribe the timing of

submission of proposals under this subsection and

timely consideration by the Board so that any approved proposal may be made available to all persons

reinsured by the Corporation in a manner permitting

the persons to participate, if the persons so desire, in

offering such a proposal in the first crop year in which

the proposal is approved by the Board for reinsurance,

premium subsidy, or other support offered by this

title.¿

(iv) Not later than 120 days after a policy or other

material is submitted under this subsection, the Board

shall make a determination to approve or disapprove

such policy or material. Any determination by the

Board to disapprove any policy or other material shall

be accompanied by a complete explanation of the reasons for the Board’s decision to deny approval. In the

event the Board fails to make a determination within

the prescribed time period, the submitted policy or

other material shall be deemed approved by the Board

for the initial reinsurance year designated for the policy or material, except in the case where the Board and

the applicant agree to an extension.

(B) EXPEDITED CONSIDERATION OF PROPOSED PILOT PROGRAMS.—The regulations required by subparagraph (A)

shall include streamlined guidelines for the submission,

and Board review, of pilot programs that the Board determines are limited in scope and duration and involve a reduced level of liability to the Federal Government, and an

increased level of risk to approved insurance providers participating in the pilot program, relative to other policies or

materials submitted under this subsection. The streamlined

guidelines shall be consistent with the guidelines established under subparagraph (A), except as follows:

(i) Not later than 60 days after submission of the

proposed pilot program, the Corporation shall provide

an applicant with notification of its intent to recommend disapproval of the proposal to the Board.

(ii) Not later than 90 days after the proposed pilot

program is submitted to the Board, the Board shall
62

make a determination to approve or disapprove the

pilot program. Any determination by the Board to disapprove the pilot program shall be accompanied by a

complete explanation of the reasons for the Board’s decision to deny approval. In the event the Board fails to

make a determination within the prescribed time period, the pilot program submitted shall be deemed approved by the Board for the initial reinsurance year

designated for the pilot program, except in the case

where the Board and the applicant agree to an extension.

* * * * * * *

ø(6) PILOT COST OF PRODUCTION RISK PROTECTION PLAN.— ø(A) IN GENERAL.—The Corporation shall offer, to the extent practicable, a cost of production risk protection plan

of insurance that indemnifies producers (including new

producers) for insurable losses as provided in this paragraph.

ø(B) PILOT BASIS.—The cost of production risk protection

plan shall—

ø(i) be established as a pilot project for each of the

1996 and 1997 crop years; and

ø(ii) be carried out in a number of counties that is

determined by the Corporation to be adequate to provide a comprehensive evaluation of the feasibility, effectiveness, and demand among producers for the

plan.

ø(C) INSURABLE LOSS.—An insurable loss shall be incurred by a producer if the gross income of the producer

(as determined by the Corporation) is less than an amount

determined by the Corporation, as a result of a reduction

in yield or price resulting from an insured cause.

ø(D) DEFINITION OF NEW PRODUCER.—As used in this

paragraph, the term ‘‘new producer’’ means a person that

has not been actively engaged in farming for a share of the

production of the insured crop for more than 2 crop years,

as determined by the Secretary.¿

(6) REIMBURSEMENT OF RESEARCH, DEVELOPMENT, AND MAIN- TENANCE COSTS.— (A) REIMBURSEMENT PROVIDED.—Subject to the conditions of this paragraph, the Corporation shall provide a

payment to reimburse an applicant for research, development, and maintenance costs directly related to a policy or

other material that is—

(i) submitted to, and approved by, the Board under

this subsection for reinsurance; and

(ii) if applicable, offered for sale to producers.

(B) DURATION.—Payments under subparagraph (A) may

be made available beginning in fiscal year 2001. Payments

with respect to the maintenance of an approved policy or

other material may be provided for a period of not more

than 4 reinsurance years following Board approval. Upon

the expiration of that 4-year period, or earlier upon the

agreement of the Corporation and the person receiving the
63

payment, the Corporation shall assume responsibility for

maintenance of a successful policy, as determined by the

Corporation based on the market share attained by the policy, the total number of policies sold, the total amount of

premium paid, and the performance of the policy in the

States where the policy is sold.

(C) TREATMENT OF PAYMENT.—Payments made under

subparagraph (A) for a policy or other material shall be

considered as payment in full for the research and development conducted with regard to the policy or material and

any property rights to the policy or material.

(D) REIMBURSEMENT AMOUNT.—The Corporation shall

determine the amount of the payment under subparagraph

(A) for an approved policy or other material based on the

complexity of the policy or material and the size of the area

in which the policy or material is expected to be used.

(E) EXPENDITURES.—

(i) SPECIALTY CROPS.—Of the total amount made

available to provide payments under this paragraph

and subsection (m)(4)(B) for a fiscal year, $25,000,000

shall be reserved for research and development contracts under subsection (m)(4)(B). The Corporation may

use a portion of the reserved amount for other purposes

under this paragraph, with priority given to underserved commodities, if the Corporation determines that

the entire amount is not needed for such contracts. If

the reserved amount is insufficient for a fiscal year, the

Corporation may use amounts in excess of the reserved

amount for such contracts.

(ii) LIMITATION.—In providing payments under this

paragraph and subsection (m)(4)(B), the Corporation

shall not obligate or expend more than $55,000,000

during any fiscal year.

* * * * * * *

ø(8) PILOT PROGRAM OF ASSIGNED YIELDS FOR NEW PRODUCERS.—

ø(A) PROGRAM REQUIRED.—For each of the 1995 and

1996 crop years, the Corporation shall carry out a pilot

program to assign to eligible new producers higher assigned yields than would otherwise be assigned to the producers under subsection (g). The Corporation shall include

in the pilot program 30 counties that are determined by

the Corporation to be adequate to provide a comprehensive

evaluation of the feasibility, effectiveness, and demand

among new producers for increased assigned yields.

ø(B) INCREASED ASSIGNED YIELDS.—In the case of an eligible new producer participating in the pilot program, the

Corporation shall assign to the new producer a yield that

is equal to not less than 110 percent of the transitional

yield otherwise established by the Corporation.

ø(C) ELIGIBLE NEW PRODUCER.—The Secretary shall establish a definition of new producer for purposes of determining eligibility to participate in the pilot program.¿
64

(8) GENERAL REQUIREMENTS APPLICABLE TO PILOT PRO- GRAMS.—In conducting any pilot program of insurance or reinsurance authorized or required by this title, the Corporation—

(A) may offer the pilot program on a regional, whole

State, or national basis after considering the interests of affected producers and the interests of and risks to the Corporation;

(B) may operate the pilot program, including any modifications thereof, for a period of up to 3 years; and

(C) may extend the time period for the pilot program for

additional periods, as determined appropriate by the Corporation.

* * * * * * *

ø(10) TIME LIMITS FOR RESPONSE TO SUBMISSION OF NEW

POLICIES.— ø(A) IN GENERAL.—The Board shall establish a reasonable time period within which the Board shall approve or

disapprove a proposal from a person regarding a new policy submitted in accordance with this subsection.

ø(B) EFFECT OF FAILURE TO MEET TIME LIMITS.—Except

as provided in subparagraph (C), if the Board fails to provide a response to a proposal described in subparagraph

(A) in accordance with subparagraph (A), the new policy

shall be deemed to be approved by the Board for purposes

of this subsection for the initial reinsurance year designated for the new policy in the request.

ø(C) EXCEPTIONS.—Subparagraph (B) shall not apply to

a proposal submitted under this subsection if the Board

and the person submitting the request agree to an extension of the time period.¿

(10) LIVESTOCK PILOT PROGRAMS.— (A) PROGRAMS REQUIRED.—The Corporation shall conduct one or more pilot programs to evaluate the effectiveness of risk management tools for livestock producers, including the use of futures and options contracts and policies and plans of insurance that provide livestock producers

with reasonable protection from the financial risks of price

or income fluctuations inherent in the production and marketing of livestock, provide protection for production losses,

and otherwise protect the interests of livestock producers.

To the maximum extent practicable, the Corporation shall

evaluate the greatest number and variety of such programs

to determine which of the offered risk management tools

are best suited to protect livestock producers from the financial risks associated with the production and marketing of

livestock.

(B) IMPLEMENTATION; ASSISTANCE.—The Corporation

shall begin conducting livestock pilot programs under this

paragraph during fiscal year 2001, and any policy or plan

of insurance offered under this paragraph may be prepared

without regard to the limitations contained in this title. As

part of such a pilot program, the Corporation may provide

assistance to producers to purchase futures and options

contracts or policies and plans of insurance offered under
65

that pilot program. However, no action may be undertaken

with respect to a risk under this paragraph if the Corporation determines that insurance protection for livestock producers against the risk is generally available from private

companies.

(C) LOCATION.—The Corporation shall conduct the livestock pilot programs under this paragraph in a number of

counties that is determined by the Corporation to be adequate to provide a comprehensive evaluation of the feasibility, effectiveness, and demand among producers for the

risk management tools evaluated in the pilot programs.

(D) ELIGIBLE PRODUCERS; LIVESTOCK.—Any producer of a

type of livestock covered by a pilot program under this

paragraph who owns or operates a farm or ranch in a

county selected as a location for that pilot program shall be

eligible to participate in that pilot program. In this paragraph, the term ‘‘livestock’’ means cattle, sheep, swine,

goats, and poultry.

(E) RELATION TO OTHER LAWS.—The terms and conditions of any policy or plan of insurance offered under this

paragraph that is reinsured by the Corporation is not subject to the jurisdiction of the Commodity Futures Trading

Commission or the Securities and Exchange Commission or

considered as accounts, agreements (including any transaction which is of the character of, or is commonly known

to the trade as, an ‘‘option’’, ‘‘privilege’’, ‘‘indemnity’’, ‘‘bid’’,

‘‘offer’’, ‘‘put’’, ‘‘call’’, ‘‘advance guaranty’’, or ‘‘decline guaranty’’), or transactions involving contracts of sale of a commodity for future delivery, traded or executed on a contract

market for the purposes of the Commodity Exchange Act (7

U.S.C. 1 et seq.). Nothing in this subparagraph is intended

to affect the jurisdiction of the Commodity Futures Trading

Commission or the applicability of the Commodity Exchange Act to any transaction conducted on a designated

contract market (as that term is used in such Act) by an approved insurance provider to offset the provider’s risk under

a plan or policy of insurance under this paragraph.

(F) LIMITATION ON EXPENDITURES.—The Corporation

shall conduct all livestock programs under this title so that,

to the maximum extent practicable, all costs associated

with conducting the livestock programs (other than research and development costs covered by paragraph (6) or

subsection (m)(4)) are not expected to exceed the following:

(i) $20,000,000 for fiscal year 2001.

(ii) $30,000,000 for fiscal year 2002.

(iii) $40,000,000 for fiscal year 2003.

(iv) $55,000,000 for fiscal year 2004 and each subsequent fiscal year.

(11) FEES FOR NEW POLICIES AND PLANS OF INSURANCE.—

(A) AUTHORITY TO IMPOSE FEE.—Effective beginning with

Fiscal Year 2001, if a person develops a new policy or plan

of insurance and does not apply for reimbursement of research, development, and maintenance costs under paragraph (6), the person shall have the right to receive a fee
66

from any approved insurance provider that elects to sell the

new policy or plan of insurance. Notwithstanding paragraph (5), once the right to collect a fee is asserted with respect to a new policy or plan of insurance, no approved insurance provider may offer the new policy or plan of insurance in the absence of a fee agreement with the person who

developed the policy or plan.

(B) DEFINITION.—For purposes of this paragraph only,

the term ‘‘new policy or plan of insurance’’ means a policy

or plan of insurance that was approved by the Board on or

after October 1, 2000, and was not available at the time the

policy or plan of insurance was approved by the Board.

(C) AMOUNT.—The amount of the fee that is payable by

an approved insurance provider to offer a new policy or a

plan of insurance under subparagraph (A) shall be an

amount that is determined by the person that developed the

new policy or plan of insurance, subject to the approval of

the Board under subparagraph (D).

(D) APPROVAL.—The Board shall approve the amount of

a fee determined under subparagraph (C) for a new policy

or plan of insurance unless the Board can demonstrate that

the fee amount—

(i) is unreasonable in relation to the research and development costs associated with the new policy or plan

of insurance; and

(ii) unnecessarily inhibits the use of the new policy or

plan of insurance.

* * * * * * *

(k) REINSURANCE.—

(1) * * *

* * * * * * *

(4) RATE.—

(A) IN GENERAL.—Except as provided in subparagraph

(B), the rate established by the Board to reimburse approved insurance providers and agents for the administrative and operating costs of the providers and agents shall

not exceed—

(i) * * *

(ii) for each of the 1999 and subsequent reinsurance

years, ø24.5 percent¿ 24 percent of the premium used

to define loss ratio.

* * * * * * *

(m) RESEARCH.—

(1) * * *

ø(2) EXCEPTION.—No action¿

(2) EXCEPTIONS.—

(A) PRIVATE AVAILABILITY.—No action may be undertaken with respect to a risk under paragraph (1) if insurance protection against the risk is generally available from

private companies.

(B) PROHIBITED RESEARCH AND DEVELOPMENT BY CORPORATION.—Notwithstanding paragraphs (1) and (5), on
67

and after October 1, 2000, the Corporation shall not conduct research and development for any new policy or plan

of insurance for an agricultural commodity offered under

this title. Any policy or plan of insurance developed by the

Corporation under this title before that date shall, at the

discretion of the Corporation, continue to be offered for sale

to producers.

* * * * * * *

(4) PRIVATE RESEARCH AND DEVELOPMENT OF POLICIES AND

OTHER MATERIALS.— (A) USE OF REIMBURSEMENT AUTHORITY.—To encourage

and promote the necessary research and development for

policies, plans of insurance, and related materials, including policies, plans, and materials under the livestock pilot

programs under subsection (h)(10), the Corporation shall

make full use of private resources by providing payment for

research and development for approved policies and plans

of insurance, and related materials, pursuant to subsection

(h)(6).

(B) CONTRACTS FOR UNDERSERVED COMMODITIES.— (i) DEVELOPMENT OF PRODUCTS AND RELATED MATE- RIALS.—In the event the Corporation determines that

an agricultural commodity, including a specialty crop,

is not adequately served by policies and plans of insurance and related materials submitted under subsection

(h) or any other provision of this title, the Corporation

may enter into a contract, under procedures prescribed

by the Corporation, directly with any person or entity

with experience in crop insurance or farm or ranch risk

management, including universities, providers of crop

insurance, and trade and research organizations, to

carry out research and development for policies and

plans of insurance and related materials for that agricultural commodity without regard to the limitations

contained in this title.

(ii) TYPES OF CONTRACTS.—A contract under this

subparagraph may provide for research and development regarding new or expanded policies and plans of

insurance and related materials, including policies

based on adjusted gross income, cost-of-production,

quality losses, and an intermediate base program with

a higher coverage and cost than catastrophic risk protection.

(iii) DELAYED EFFECTIVE DATE FOR CONTRACTS.—A

contract entered into under this subparagraph may not

take effect before October 1, 2000.

(iv) USE OF RESULTING POLICIES AND PLANS.—The

Corporation may offer any policy or plan of insurance

developed under this subparagraph that is approved by

the Board.

(C) CONTRACT FOR REVENUE COVERAGE PLAN.—The Corporation shall enter into a contract for research and development regarding one or more revenue coverage plans designed to enable producers to take maximum advantage of
68

fluctuations in market prices and thereby maximize revenue

realized from the sale of a crop. Such a plan may include

market instruments currently available or may involve the

development of new instruments to achieve this goal. Not

later than 15 months after the date of the enactment of this

paragraph, the Corporation shall submit to Congress a report containing the results of the contract.

(5) PARTNERSHIPS FOR RISK MANAGEMENT DEVELOPMENT AND

IMPLEMENTATION.— (A) PURPOSE.—The purpose of this paragraph is to authorize the Corporation to enter into partnerships with public and private entities for the purpose of increasing the

availability of loss mitigation, financial, and other risk

management tools for crop producers, with priority given to

risk management tools for producers of agricultural commodities covered by section 196 of the Federal Agriculture

Improvement and Reform Act of 1996 (7 U.S.C. 7333) and

specialty and underserved commodity producers.

(B) AUTHORITY.—Subject to subparagraphs (D) and (E),

the Corporation may enter into partnerships with the Cooperative State Research, Education, and Extension Service,

the Agricultural Research Service, the National Oceanic

and Atmospheric Administration, and other appropriate

public and private entities with demonstrated capabilities

in developing and implementing risk management and

marketing options for specialty crops and underserved commodities.

(C) OBJECTIVES.—The Corporation may enter into a partnership under subparagraph (B)—

(i) to enhance the notice and timeliness of notice of

weather conditions that could negatively affect crop

yields, quality, and final product use in order to allow

producers to take preventive actions to increase endproduct profitability and marketability and to reduce

the possibility of crop insurance claims;

(ii) to develop a multifaceted approach to pest management and fertilization to decrease inputs, decrease

environmental exposure, and increase application efficiency;

(iii) to develop or improve techniques for planning,

breeding, planting, growing, maintaining, harvesting,

storing, shipping, and marketing that will address

quality and quantity challenges associated with yearto-year and regional variations;

(iv) to clarify labor requirements and assist producers in complying with requirements to better meet

the physically intense and time-compressed planting,

tending, and harvesting requirements associated with

the production of specialty crops and underserved commodities;

(v) to provide assistance to State foresters or equivalent officials for the prescribed use of burning on private forest land for the prevention, control, and suppression of fire;
69

(vi) to provide producers with training and informational opportunities so that they will be better able to

use financial management, crop insurance, marketing

contracts, and other existing and emerging risk management tools; and

(vii) to develop other risk management tools to further increase economic and production stability.

(D) FUNDING SOURCE.—If the Corporation determines

that the entire amount available to provide reimbursement

payments under subsection (h) and contract payments

under paragraph (4) (in this subparagraph referred to as

‘‘reimbursement and contract payments’’) for a fiscal year is

not needed for such purposes, the Corporation may use a

portion of the excess amount to carry out this paragraph,

subject to the following:

(i) During fiscal years 2001 through 2004, amounts

available for reimbursement and contract payments

may be used to carry out this paragraph only if the

total amount to be used for reimbursement and contract payments is less than $44,000,000 for fiscal year

2001, $47,000,000 for fiscal year 2002, $50,000,000 for

fiscal year 2003, and $52,000,000 for fiscal year 2004.

(ii) During fiscal years 2001 through 2004, the total

amount used to carry out this paragraph for a fiscal

year may not exceed the difference between the amount

specified in clause (i) for that fiscal year and the

amount actually used for reimbursement and contract

payments.

(E) DELAYED AUTHORITY.—The Corporation may not

enter into a partnership under the authority of this paragraph before October 1, 2000.

* * * * * * *

(o) COMPLIANCE WITH STATE LICENSING REQUIREMENTS.—Any

person who sells or solicits the purchase of a policy or plan of insurance under this title, including catastrophic risk protection, in any

State shall be licensed and otherwise qualified to do business in

that State.

* * * * * * *

SEC. 516. FUNDING.

(a) AUTHORIZATION OF APPROPRIATIONS.—

(1) * * *

(2) MANDATORY EXPENSES.—There are authorized to be appropriated such sums as are necessary to cover for each of the

1999 and subsequent reinsurance øyears—¿ years the following:

(A) øthe¿ The administrative and operating expenses of

the Corporation for the sales commissions of agentsø;

and¿.

(B) øpremium¿ Premium subsidies, including the administrative and operating expenses of an approved insurance

provider for the delivery of policies with additional coverage.
70

(C) Costs associated with the conduct of livestock pilot

programs carried out under section 508(h)(10), subject to

subparagraph (F) of such section.

(D) Costs associated with the reimbursement for research,

development, and maintenance costs of approved policies

and other materials provided under section 508(h)(6) and

contracting for research and development under section

508(m)(4)(B).

(b) PAYMENT OF CORPORATION EXPENSES FROM INSURANCE

FUND.—

(1) EXPENSES GENERALLY.—For each of the 1999 and subsequent reinsurance years, the Corporation may pay from the insurance fund established under subsection (c) all expenses of

the Corporation (other than expenses covered by subsection

(a)(1) and expenses covered by paragraph (2)(A)),

øincluding—¿ including the following:

(A) øpremium¿ Premium subsidies and indemnitiesø;¿. (B) øadministrative¿ Administrative and operating expenses of the Corporation necessary to pay the sales commissions of agentsø; and¿.

* * * * * * *

(D) Costs associated with the conduct of livestock pilot

programs carried out under section 508(h)(10), subject to

subparagraph (F) of such section.

(E) Reimbursement for research, development, and maintenance costs of approved policies and other materials provided under section 508(h)(6) and contracting for research

and development under section 508(m)(4)(B).

(2) øRESEARCH AND DEVELOPMENT EXPENSES.—¿ POLICY CONSIDERATION EXPENSES.—

(A) IN GENERAL.—For each of the 1999 and subsequent

reinsurance years, the Corporation may pay from the insurance fund established under subsection (c) øresearch

and development expenses of the Corporation¿ costs associated with considering for approval or disapproval policies

and other materials under subsections (h) and (m)(4) of section 508, costs associated with implementing such subsection (m)(4), and costs to contract out for assistance in

considering such policies and other materials, but not to

exceed $3,500,000 for each fiscal year.

(B) * * *

* * * * * * *

AGRICULTURAL COMMODITY

SEC. 518. ‘‘Agricultural commodity’’, as used in this title,

means wheat, cotton, flax, corn, dry beans, oats, barley, rye, tobacco, rice, peanuts, soybeans, sugar beets, sugar cane, tomatoes,

grain sorghum, sunflowers, raisins, oranges, sweet corn, dry peas,

freezing and canning peas, forage, apples, grapes, potatoes, timber

and forests, nursery crops, citrus, and other fruits and vegetables,

nuts, tame hay, native grass, aquacultural species (including, but

not limited to, any species of finfish, mollusk, crustacean, or other

aquatic invertebrate, amphibian, reptile, or aquatic plant propa-
71

gated or reared in a controlled or selected environment), or any

other agricultural commodity, excluding ølivestock and¿ stored

grain, determined by the Board under subsection (a) or (m) of section 508 of this title, or any one or more of such commodities, as

the context may indicate.

* * * * * * *

SECTION 196 OF THE FEDERAL AGRICULTURE

IMPROVEMENT AND REFORM ACT OF 1996

SEC. 196. ADMINISTRATION AND OPERATION OF NONINSURED CROP

ASSISTANCE PROGRAM.

(a) * * *

(b) APPLICATION FOR NONINSURED CROP DISASTER ASSISTANCE.—

(1) * * *

ø(2) RECORDS.—A producer shall provide records, as required

by the Secretary, of crop acreage, acreage yields, and production.¿

(2) RECORDS.—To be eligible for assistance under this section,

a producer shall provide annually to the Secretary, acting

through the Agency, records of crop acreage, acreage yields, and

production for each eligible crop.

(3) ACREAGE REPORTS.—A producer shall provide annual reports on acreage planted or prevented from being planted, as

required by the Secretary, by the designated acreage reporting

date for the crop and location as established by the Secretary.

* * * * * * *

(i) PAYMENT AND INCOME LIMITATIONS.—

(1) DEFINITIONS.—In this subsection:

(A) * * *

(B) QUALIFYING øGROSS REVENUES¿ ADJUSTED GROSS IN- COME.—The term ‘‘qualifying øgross revenues¿ adjusted

gross income’’ means—

(i) if a majority of the øgross revenue¿ adjusted

gross income of the person is received from farming,

ranching, and forestry operations, the øgross revenue¿

adjusted gross income from the farming, ranching, and

forestry operations of the person; and

(ii) if less than a majority of the øgross revenue¿ adjusted gross income of the person is received from

farming, ranching, and forestry operations, the øgross

revenue¿ adjusted gross income of the person from all

sources.

* * * * * * *

ø(4) INCOME LIMITATION.—A person who has qualifying gross

revenues in excess of the amount specified in section 2266(a)

of the Food, Agriculture, Conservation, and Trade Act of 1990

(7 U.S.C. 1421 note) (as in effect on November 28, 1990) during

the taxable year (as determined by the Secretary) shall not be

eligible to receive any noninsured assistance payment under

this section.¿
72

(4) LIMITATION.—A person who has qualifying adjusted gross income in excess of $2,000,000 during the taxable year shall not

be eligible to receive any noninsured crop disaster assistance

payment under this section.

* * * * * * *
(73)

ADDITIONAL VIEWS

H.R. 2559 as reported by the Agriculture Committee is a defective effort in at least two respects: (1) its scope is too modest in the

context of the problems American agriculture faces today, and (2)

it overspends considerably when compared to the amount allotted

to the Committee under the terms of the Congressional Budget

Resolution. We believe that a tremendous opportunity to address

the needs of agriculture comprehensively and responsibly is being

wastefully squandered with the approach taken in this bill.

The clear purpose of H.R. 2559 is to exploit the authority provided under the Budget Resolution for the Agriculture Committee

to report increases in agriculture spending. The Resolution specifically provides for an increase in the Agriculture Committee’s allocation of budget authority when it reports a bill providing risk

management or income assistance. The allocation is increased as

long as the bill does not provide a net increase in budget authority

in fiscal year 2000, does not provide more than $6 billion total in

fiscal years 2001 through 2004, and does not increase budget authority in any one of those years by more than 42 billion.

In spite of the very broad purposes permitted under the resolution—for example, income assistance alone could justify changes in

nearly any agriculture program—the Committee has chosen to

limit the increase in spending entirely to an expansion of the crop

insurance program. Within the crop insurance program, nearly all

of the effort will be dedicated to yield protection rather than more

comprehensive farm revenue protection.

During the past year, Congress has recognized that our current

mix of farm programs and risk management tools are simply not

adequate. In the Agriculture Appropriations bill for fiscal year 1999

(included as part of the Omnibus Appropriations Bill), Congress

provided $6 billion in emergency assistance to farm and ranch producers. Of the emergency fund provided, $2.375 billion were made

available for producers who lost crops in 1998 or over the course

of multiple years. As such, they constituted the kind of emergency

aid that Congress has traditionally provided to meet the needs

caused by natural disasters. Most of the remaining funds were provided (in an unprecedented manner) ostensibly as emergency compensation for the low prices that were having such a devastating

impact on the incomes of producers throughout the nation—including areas not affected by weather-related disasters. These funds

came in the form of supplemental Agricultural Market Transition

Act (AMTA) payments. Since the AMTA contract does not require

a producer to plant a crop, it is likely that a significant portion

went to individuals not producing the commodity for which the assistance was being provided.

During field hearings held by the Subcommittee on Risk Management, Research, and Specialty Crops regarding risk management
74

programs, witnesses made clear that the problems are broader

than crop insurance. During his testimony, Phil Cyre, who operates

a diversified 3,000 acre farm in South Dakota, testified of his ‘‘belief in the need for risk management insurance,’’ and stated:

‘‘We have before us the FAIR Act, which in my opinion can best

be related as the current version of the Titanic. It’s a beautiful

ship. * * * But it doesn’t have enough lifeboats on it because there

are a lot of people who think it’s unsinkable. I was present when

the Agriculture Committee did not pass the FAIR Act. It didn’t

pass that day, and I doubt seriously in its present form and under

our current conditions that it world pass today without some modification. I encourage this committee to share with us and to agree

perhaps with me that crop insurance in its truest form is designed

to provide insurance when we fail to produce. It is a very difficult

challenge then to encompass in that in an actuarially sound manner coverage for when we overproduce, or when world economies

fail and falter.’’

Billy Griggs, a cotton farmer in Dooly County, Georgia, offered

the following testimony:

‘‘Finally, what do we believe we must do to keep American agriculture alive until such time as we can address the trade agreements and the farm bill with more position long-term solution?

First, this Nation and its leaders must recognize the tremendous

benefits of providing a safety net for agriculture that works. Obviously what we have today is not working, and if allowed to continue as is then this Nation and its leaders will surely see the tremendous cost of this inaction.’’

In his testimony, Roy Baxley of North Carolina said:

‘‘Under the current farm law that we have now we basically have

no safety net.’’

As a general matter, Congress has often followed ad hoc weatherrelated disaster spending with an effort to reform and improve the

crop insurance program. The theory is that taxpayers and producers are better off if they don’t have to rely on after-the-fact, unpredictable levels of assistance when disasters occur. H.R. 2559,

coming as it does after Congress provided $2.375 billion in yieldrelated emergency assistance, attempts to improve the crop insurance program and to stave off the future need for emergency assistance.

The bill as reported by the Committee, however, ignores the fact

that to the same degree that last year’s yield emergency aid points

to the need for improvements in the crop insurance program, the

emergency aid to compensate for the price disaster also points to

the need for improvements in our basic farm income assistance programs.

We also note that when Congress passed the 1996 Farm Bill,

there was much concern in the countryside. The House leadership

promised that the bill’s provisions would be revisited if Congress

failed to take action to open world markets, to reduce dramatically

regulations on agricultural production, and to provide deep tax relief to agricultural producers. Since that time, no action has been

taken to authorize U.S. participation in multilateral trade negotiations that are needed if markets are to be opened, the tax relief

provided has been modest at best, and no apparent effort has been
75

made to provide the promised regulatory relief. To the contrary, in

some instances, such as the Food Quality Protection Act (FQPA),

Congress provided the Environmental Protection Agency with even

more discretion to restrict production practices that are required by

our producers competing in a global marketplace. On the whole,

our current farm policy is backed by broken promises, and there is

no indication that agriculture’s unmet needs will be addressed anytime soon.

In this regard, when Congress put the Freedom to Farm Act in

place, cautions were raised that the needs of producers and the

food security of our nation would not be met if prices fell. The need

for emergency assistance last year bore out those concerns. Unfortunately, it appears we are once again facing a similar situation.

Our nation deserves a long-term, reliable farm policy. Taxpayers

and agricultural producers alike should be able to know up front

what kind of assistance can be expected and what the rules will be

for distributing it. In terms of yield insurance, this bill makes some

progress. Higher subsidy rates, for example, will lead to higher levels of participation in crop insurance, and better indemnity performance for the producers who participate. This will help take

care of needs that otherwise would most likely be met annually

through disaster legislation.

Absent from H.R. 2559 is the other half of the picture. Last year,

U.S. farm programs left producers overexposed to price and weather disasters. This bill pushes the Committee toward addressing

yield disaster, but what about price disaster? How much more will

our government spend on ad hoc, supplemental payments before we

realize that a more rational, predictable policy needs to be in force?

During the Committee’s debate on H.R. 2559, an amendment offered by Representative Stenholm would have addressed the shortfalls under our current farm program. It would establish a program

of Supplemental Income Payments (SIP) for producers of wheat,

feed grains, cotton, rice, and oilseeds.

Under that program, a producer who plants a crop would receive

a payment for a crop year if national revenue for the crop falls significantly below the most recent five-year average level. Payouts

could occur if national prices are low or if national production is

low.

A Supplemental Income Payment program can work for our producers and for taxpayers as well. It is a simple program under

which payments would go directly to actual producers in times of

need. It’s the kind of long-term approach we should be using to address agriculture’s cyclical problems. If adopted, the program would

serve as the key policy for managing the risk associated with dramatic revenue declines that affect producers from year to year, and

would complement programs currently in effect. This approach also

lends itself to expansion as a safety net for livestock and specialty

crops as needs arise—commodities otherwise left behind by current

approaches to farm revenue disaster. The following illustrates how

the program would work in a particular situation:

SIP versus Crop Revenue Coverage (CRC) with lower subsidy

Consider a Mclean, Illinois corn farm insured with CRC. The insured yield is 120 bushels per acre and the CRC price is $2.40. At
76

65% coverage, the farmer’s revenue guarantee is $187.20 per acre.

He would pay a premium of $4.11 per acre for that coverage under

the bill. With the Stenholm amendment, his premium is $5.47,

$1.36 higher, but still less than the $7.40 cost paid in 1998 or the

$6.20 cost paid in 1999. A recent futures close for December corn was $2.11 per bushel.

If this were the harvest time price under the CRC contract and

there was no reduction or increase in yield, the harvest time CRC

revenue per acre would be $253.20, and no indemnity would be

paid. In fact, the futures price would have to decline to $1.56, if

yield doesn’t change, before any revenue indemnities would be

paid.

With SIP, using the latest USDA supply and demand estimates of a season average corn price of $1.85 per bushel, the payment per

bushel will be 23 cents. Multiplied by a 120 bushel yield, the payment would be $27.60 per acre. This is the gain from the increased

CRC cost of $1.36 per acre.

Because the Committee turned down the Stenholm amendment,

the House is presented with a Committee bill that only addresses

half of the problem exposed in 1998. This flaw will become acutely

apparent in the weeks ahead as Congress and the Administration

once again scramble to appropriate emergency ad hoc assistance to

meet commodity price conditions that continue to devastate farm

income. It is unwise to move this bill forward, virtually guaranteeing that Congress will be forced to continue to respond to price

disasters with off-budget emergency spending. Every missed opportunity to correct our farm income policy will lead to more disaster

spending and greater uncertainty for producers and taxpayers

alike.

In addition to failing to address the long-term needs of agriculture, the Committee has reported a bill that violates the requirements of the Concurrent Resolution on the Budget and of the

Congressional Budget Act. The Budget Resolution specifically prohibits the Agriculture Committee from bringing to the House floor

a bill that increases net budget authority in fiscal year 2000. While

the Committee adopted an amendment designed to meet the $6 billion limit on the bill’s spending over 4 years, no effort was made

to address the FY 2000 restriction. As a result, the bill contains approximately $1 billion of budget authority for FY 2000 in violation

of this restriction. This is another unwise element of the bill and

is of great concern from our point of view. We believe that the

Committee should have addressed the restriction head-on, rather

than reporting the bill and hoping for a cure to materialize. In

years when the Agriculture Committee was called upon to reduce

spending under budget reconciliation instructions, it never failed to

do so. In this situation, the Committee should have been able to

restrain new spending in a manner that was in compliance with

the Budget Resolution and the Congressional Budget Act.

By engaging in piecemeal spending that is over budget or off

budget through emergency designations or budget waivers, we are

doing a disservice not only to our farmers but to all of our rural

citizens. To the extent we do not adhere to budget discipline, programs that serve all of rural America, such as Social Security and

Medicare, are endangered. Because our aging population is dis-
77

proportionately represented in rural America, rural areas will be

disproportionately hurt by over-budget spending that short-changes

our ability to put these programs on a sound footing.

While we feel strongly about or concerns with the omissions of

H.R. 2559, we are not opposed to its overall approach to making

short-term improvements in crop insurance. We believe that continued consideration of the bill will provide Congress with the chance

to embrace opportunities ignored by the Agriculture Committee.

We intend to continue to work towards broadening the scope of the

bill to address more broadly the needs of our agricultural producers, and to do so in a manner that is fiscally sound and in compliance with budget rules.

CHARLES W. STENHOLM.

MARION BERRY.

CHRISTOPHER JOHN.

MIKE MCINTYRE.

LEONARD L. BOSWELL.

BOB ETHERIDGE.

JOHN ELIAS BALDACCI.

GARY A. CONDIT.

SANFORD D. BISHOP, Jr.

BENNIE G. THOMPSON.

CALVIN M. DOOLEY.

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