II

103D CONGRESS

2D SESSION S. 2092

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

IN THE SENATE OF THE UNITED STATES

MAY 10 (legislative day, MAY 2), 1994

Mr. HEFLIN introduced the following bill; which was read twice and referred

to the Committee on Agriculture, Nutrition, and Forestry

A BILL

To reform the Federal crop insurance program, and for

other purposes.

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

3 SECTION 1. SHORT TITLE; REFERENCES.

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

5 ‘‘The Farmers’ Risk Management Act of 1994’’.

6 (b) REFERENCES TO FEDERAL CROP INSURANCE

7 ACT.—Except as otherwise expressly provided, whenever

8 in this Act an amendment or repeal is expressed in terms

9 of an amendment to, or repeal of, a section or other provi10 sion, the reference shall be considered to be made to a
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1 section or other provision of the Federal Crop Insurance

2 Act (7 U.S.C. 1501 et seq.).

3 SEC. 2. CROP INSURANCE AMENDMENTS.

4 (a) MANAGEMENT OF CORPORATION.—The second

5 sentence of section 505(a) (7 U.S.C. 1505(a)) is amend6 ed—

7 (1) by striking ‘‘program, the Under Secretary’’

8 and inserting ‘‘program, 1 additional Under Sec9 retary’’; and

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

11 programs of the Department of Agriculture’’ and in12 serting ‘‘, as designated by the Secretary of Agri13 culture (referred to in this title as the ‘Secretary’)’’.

14 (b) GENERAL POWERS.—Section 506 (7 U.S.C.

15 1506) is amended—

16 (1) by redesignating subsections (j) through (n)

17 as subsections (k) through (o), respectively;

18 (2) by inserting after subsection (i) the follow19 ing new subsection:

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

21 the authority to make final and conclusive settlement and

22 adjustment of any claim by or against the Corporation or

23 a fiscal officer of the Corporation.’’;

24 (3) in subsection (l) (as so redesignated)—
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1 (A) in the first sentence, by inserting ‘‘,

2 and issue regulations,’’ after ‘‘agreements’’; and

3 (B) in the second sentence, by striking

4 ‘‘contracts or agreements’’ each place it appears

5 and inserting ‘‘contracts, agreements, or regula6 tions’’;

7 (4) in subsection (n)(1) (as so redesignated), by

8 striking subparagraph (B) and inserting the follow9 ing new subparagraph:

10 ‘‘(B) disqualify the person from purchasing

11 catastrophic risk protection or receiving

12 noninsured assistance for a period of not to ex13 ceed 2 years, or from receiving any other bene14 fit under this title for a period of not to exceed

15 10 years.’’;

16 (5) in subsection (o)(1) (as so redesignated), by

17 striking ‘‘from obtaining adequate Federal crop in18 surance, as determined by the Corporation’’ and in19 serting ‘‘(as defined by the Secretary) from obtain20 ing Federal crop insurance’’; and

21 (6) by adding at the end the following new sub22 section:

23 ‘‘(p) REGULATIONS.—The Secretary and the Cor24 poration are each authorized to issue such regulations as

25 are necessary to carry out this title.’’.
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1 (c) PERSONNEL.—Section 507 (7 U.S.C. 1507) is

2 amended—

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

4 crop insurance committeemen’’;

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

6 case the agent or broker’’ and all that follows

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

8 or omission’’; and

9 (3) in subsection (d), by striking ‘‘of this Act,’’

10 and all that follows through ‘‘agency’’.

11 (d) CROP INSURANCE.—Section 508 (7 U.S.C. 1508)

12 is amended—

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

14 following new subsection:

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

16 ‘‘(1) IN GENERAL.—If sufficient actuarial data

17 are available (as determined by the Board), the Cor18 poration may insure, or provide reinsurance for in19 surers of, producers of agricultural commodities

20 grown in the United States under 1 or more plans

21 of insurance determined by the Board to be adapted

22 to the agricultural commodity concerned. To qualify

23 for coverage under a plan of insurance, the losses of

24 the insured commodity shall be due to drought,
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1 flood, or other natural disaster (as determined by

2 the Secretary).

3 ‘‘(2) PERIOD.—Except in the case of tobacco,

4 insurance shall not extend beyond the period during

5 which the insured commodity is in the field. As used

6 in the preceding sentence, in the case of

7 aquacultural species, the term ‘field’ means the envi8 ronment in which the commodity is produced.

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

10 this subsection shall not cover losses due to—

11 ‘‘(A) the neglect or malfeasance of the pro12 ducer;

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

14 to the same crop in such areas and under such

15 circumstances as it is customary to so reseed;

16 or

17 ‘‘(C) the failure of the producer to follow

18 good farming practices (as determined by the

19 Corporation).’’;

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

21 (n);

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

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

24 (n), respectively;
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1 (4) by inserting after subsection (a) the follow2 ing new subsections:

3 ‘‘(b) CATASTROPHIC RISK PROTECTION.—

4 ‘‘(1) IN GENERAL.—The Corporation shall offer

5 a catastrophic risk protection plan to indemnify pro6 ducers for crop loss due to loss of yield and pre7 vented planting when the producer is unable, be8 cause of drought, flood, or other natural disaster (as

9 determined by the Secretary), to plant other crops

10 for harvest on the acreage for the crop year.

11 ‘‘(2) AMOUNT OF COVERAGE.—Catastrophic

12 risk protection shall offer a producer 50 percent loss

13 in yield coverage, on an individual yield or area yield

14 basis, indemnified at 60 percent of the expected

15 market price, or a comparable coverage (as deter16 mined by the Corporation).

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

18 have the option of basing the catastrophic coverage

19 of the producer on an individual yield and loss basis

20 or on an area yield and loss basis, if both options

21 are offered by the Corporation.

22 ‘‘(4) ADMINISTRATIVE FEE.—

23 ‘‘(A) IN GENERAL.—As a condition of cat24 astrophic risk protection, a producer shall pay

25 an administrative fee. The administrative fee
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1 shall be $50 per crop per county, but not to ex2 ceed $100 per producer per county. The admin3 istrative fee shall be paid at the service point,

4 at the local office of the United States Depart5 ment of Agriculture (referred to in this title as

6 the ‘Department’), or to the approved private

7 insurance provider, at the time of application.

8 ‘‘(B) FEE WAIVERS.—The administrative

9 fee shall be waived—

10 ‘‘(i) for farmers of limited resources

11 (as defined by the Corporation); or

12 ‘‘(ii) if the producer elects to purchase

13 additional protection at 65 percent or more

14 of the recorded or appraised average yield

15 and 100 percent of the expected market

16 price, or an equivalent coverage, offered by

17 an approved crop insurance provider.

18 ‘‘(C) USE OF FEES COLLECTED.—Funds

19 collected as administrative fees shall be avail20 able, subject to appropriations, for salaries and

21 expenses of the Corporation.

22 ‘‘(5) PARTICIPATION REQUIREMENT.—A pro23 ducer may obtain a catastrophic risk coverage plan

24 for a crop of the producer on land in the county only

25 if the producer obtains such a plan for the crop of
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1 the producer on all insurable land of the producer in

2 the county.

3 ‘‘(6) ELIGIBILITY FOR DEPARTMENT PRO4 GRAMS.—

5 ‘‘(A) IN GENERAL.—To be eligible for any

6 price support, production adjustment, or con7 servation program administered by the Sec8 retary for any crop, or for loans under any pro9 gram of the Farmers Home Administration or

10 any successor agency, the producer must obtain

11 at least the catastrophic level of insurance for

12 each crop of economic significance grown on

13 each farm in the county in which the producer

14 has an interest, if insurance is available in the

15 county for the crop.

16 ‘‘(B) DEFINITION.—As used in this para17 graph, the term ‘crop of economic significance’

18 means a crop that has contributed, or is ex19 pected to contribute, 10 percent or more of the

20 total expected value of all crops grown by the

21 producer.

22 ‘‘(7) LIMITATION DUE TO RISK.—The Board

23 may limit insurance in any county or area, or on any

24 farm, on the basis of the insurance risk concerned.

25 ‘‘(c) GENERAL COVERAGE LEVELS.—
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1 ‘‘(1) IN GENERAL.—The Corporation shall offer

2 plans of insurance that provide levels of coverage

3 that are greater than the level available under cata4 strophic risk protection under subsection (b). A pro5 ducer may purchase such a plan only from an ap6 proved private insurance provider, if the private in7 surance is available. Nothing in this paragraph re8 stricts the Corporation from offering insurance plans

9 if coverage from private insurance providers is un10 available.

11 ‘‘(2) TRANSFER OF INSURANCE FILES.—If a

12 producer has already applied for catastrophic risk

13 protection at the local office of the Department and

14 elects to purchase additional coverage—

15 ‘‘(A) the insurance file for the producer

16 shall be transferred to the approved private in17 surance provider servicing the additional cov18 erage policy; and

19 ‘‘(B) the administrative fee for the crop for

20 which additional coverage at 65 percent or more

21 of the recorded or appraised average yield and

22 100 percent of the expected market price, or an

23 equivalent coverage, is obtained shall be re24 funded to the producer.
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1 ‘‘(3) YIELD AND LOSS BASIS.—A producer shall

2 have the option of purchasing additional coverage

3 based on an individual yield and loss basis or on an

4 area yield and loss basis, if both options are offered

5 by the Corporation.

6 ‘‘(4) LEVEL OF COVERAGE.—The level of cov7 erage shall be dollar denominated and may be pur8 chased at any level not to exceed 85 percent of the

9 individual yield or 95 percent of the area yield (as

10 determined by the Corporation).

11 ‘‘(5) PRICE LEVEL.—The Corporation shall es12 tablish a price level for each commodity on which in13 surance is offered that—

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

15 market price for the commodity (as determined

16 by the Corporation); or

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

18 may be based on the actual market price at the

19 time of harvest (as determined by the Corpora20 tion).

21 ‘‘(6) PRICE ELECTIONS.—

22 ‘‘(A) IN GENERAL.—Subject to subpara23 graph (B), insurance coverage shall be made

24 available to the producer on the basis of any

25 price election that equals or is less than the
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1 price election established by the Board. The

2 coverage shall be quoted in terms of dollars per

3 acre.

4 ‘‘(B) MINIMUM PRICE ELECTIONS.—The

5 Corporation may establish minimum price elec6 tions below which levels of insurance shall not

7 be offered.

8 ‘‘(7) SUBSTITUTE COVERAGE FOR FIRE AND

9 HAIL.—

10 ‘‘(A) IN GENERAL.—For levels of coverage

11 65 percent or more of the recorded or appraised

12 average yield and 100 percent of the expected

13 market price, or an equivalent coverage, the

14 producer may elect to delete from the insurance

15 coverage provided under this title coverage

16 against damage caused by fire and hail, if an

17 equivalent or greater dollar amount of coverage

18 for damage caused by fire and hail is obtained

19 from a private fire or hail insurance provider.

20 ‘‘(B) CREDIT FOR SUBSTITUTE COV21 ERAGE.—Upon written notice of an election

22 under subparagraph (A) to the company issuing

23 the policy providing coverage under this title

24 and submission of evidence of substitute cov25 erage on the commodity insured, the premium
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1 of the producer shall be reduced by an amount

2 determined by the Corporation to be actuarially

3 appropriate, taking into account the actuarial

4 value of the remaining coverage provided by the

5 Corporation. The producer shall not be given a

6 reduction for an amount of premium deter7 mined to be greater than the actuarial value of

8 the protection against losses caused by fire and

9 hail that is included in the coverage under this

10 title for the crop.

11 ‘‘(8) STATE PREMIUM SUBSIDIES.—The Board

12 may enter into agreements with any State or agency

13 of a State under which the State or agency may pay

14 to the approved insurance provider an additional

15 premium subsidy to further reduce the portion of the

16 premium paid by farmers in the State.

17 ‘‘(9) LIMITATION DUE TO RISK.—The Board

18 may limit or refuse insurance in any county or area,

19 or on any farm, on the basis of the insurance risk

20 concerned.

21 ‘‘(d) PREMIUMS.—

22 ‘‘(1) RATES.—

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

24 fix adequate premiums for all the plans of in25 surance of the Corporation at such rates as the
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1 Board determines are actuarially sufficient to

2 attain an expected loss ratio of not greater than

3 1.1.

4 ‘‘(B) CATASTROPHIC RISK PROTECTION.—

5 For catastrophic risk protection coverage, the

6 amount of premium shall be sufficient to cover

7 anticipated losses and a reasonable reserve.

8 ‘‘(C) ADDITIONAL COVERAGE.—For levels

9 of coverage below 65 percent of the recorded or

10 appraised average yield and 100 percent of the

11 expected market price, or an equivalent cov12 erage, but greater than catastrophic risk protec13 tion coverage, the amount of premium shall be

14 sufficient to cover anticipated losses, a reason15 able reserve, and an amount for operating and

16 administrative expenses (as determined by the

17 Corporation) that is less than the amount es18 tablished for coverage at 65 percent and 100

19 percent of the expected market price, or an

20 equivalent coverage.

21 ‘‘(D) HIGH COVERAGE.—For levels of cov22 erage of at least 65 percent of the recorded or

23 appraised average yield and 100 percent of the

24 expected market price, or an equivalent cov25 erage, the amount of premium shall be suffi-
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1 cient to cover anticipated losses, a reasonable

2 reserve, and an amount to pay the operating

3 and administrative expenses (as determined by

4 the Corporation on an industrywide basis as a

5 percentage of the total premium).

6 ‘‘(2) PAYMENT OF PART OF PREMIUM.—For the

7 purpose of encouraging the broadest possible partici8 pation, the Corporation shall pay a part of the pre9 mium equivalent to—

10 ‘‘(A) for catastrophic risk protection cov11 erage, an amount equal to the premium estab12 lished under paragraph (1)(B);

13 ‘‘(B) for levels of coverage below 65 per14 cent of the recorded or appraised average yield

15 and 100 percent of the expected market price,

16 or an equivalent coverage, but greater than cat17 astrophic risk protection, an amount equal to

18 sum of the amount of premium established for

19 catastrophic risk protection coverage, a reason20 able reserve, and the amount for operating and

21 administrative expenses established under para22 graph (1)(C); and

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

24 than 65 percent of the recorded and appraised

25 yield and 100 percent of the expected market
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1 price, or an equivalent coverage, on an individ2 ual or area basis, an amount equal to the sum

3 of the premium established for 50 percent loss

4 in yield indemnified at 75 percent of the ex5 pected market price, a reasonable reserve, and

6 the amount for operating and administrative ex7 penses established under paragraph (1)(D).

8 ‘‘(3) REDUCTIONS BY PRIVATE PROVIDERS.—If

9 a private insurance provider determines that the

10 provider may provide insurance more efficiently than

11 the expense reimbursement amount set by the Cor12 poration, the private insurance provider may, with

13 the approval of the Board, reduce the premium

14 charged the insured by the amount of the efficiency.

15 A reduction pursuant to the preceding sentence shall

16 be subject to such rules, limitations, and procedures

17 as are established by the Corporation.

18 ‘‘(e) ELIGIBILITY.—

19 ‘‘(1) IN GENERAL.—To participate in cata20 strophic risk protection coverage under this section,

21 a producer shall submit an application at the local

22 office of the Department or to an approved private

23 crop insurance provider.

24 ‘‘(2) SALES CLOSING DATE.—For coverage

25 under this title, each producer shall purchase crop
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1 insurance on or before the sales closing date for the

2 crop by providing the required information and exe3 cuting the required documents. Subject to the goal

4 of ensuring actuarial soundness for the crop insur5 ance program, the sales closing date shall be estab6 lished by the Corporation to maximize convenience

7 to producers in obtaining benefits under price and

8 production adjustment programs of the Department.

9 ‘‘(3) RECORDS.—For coverage under this title,

10 each producer shall provide records, acceptable to

11 the Corporation, of previous acreage and production

12 or accept a yield determined by the Corporation.

13 ‘‘(4) REPORTING.—For coverage under this

14 title, each producer shall report acreage planted and

15 prevented from planting by the designated acreage

16 reporting date for the crop and location as estab17 lished by the Corporation.

18 ‘‘(f) YIELD DETERMINATIONS.—

19 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

20 the Corporation shall implement crop insurance un21 derwriting rules that ensure that yield coverage is

22 provided to all producers participating in the Fed23 eral crop insurance program.

24 ‘‘(2) YIELD COVERAGE PLANS.—
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1 ‘‘(A) IN GENERAL.—Subject to subpara2 graph (B), the crop insurance yield for a farm

3 for a crop of a commodity produced during a

4 crop year shall be based on, as determined by

5 the producer—

6 ‘‘(i) if the crop was produced on the

7 farm during each of the 4 crop years im8 mediately preceding the crop year, the ac9 tual yield per harvested acre for the crop

10 on the basis of the average of the yield per

11 harvested acre for the crop for the farm

12 for each of the 10 crop years immediately

13 preceding the crop year, excluding the crop

14 year with the highest yield per harvested

15 acre, the crop year with the lowest yield

16 per harvested acre, and any crop year in

17 which the crop was not planted on the

18 farm; or

19 ‘‘(ii) in the case of a program crop (as

20 defined in section 502(3) of the Agricul21 tural Act of 1949 (7 U.S.C. 1462(3)), the

22 farm program payment yield for the farm

23 for the crop determined under section 505

24 of such Act (7 U.S.C. 1465).
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1 ‘‘(B) ASSIGNED YIELD.—If the producer

2 does not provide satisfactory evidence of the

3 yield of a commodity under subparagraph (A),

4 the producer shall be assigned, as the crop in5 surance yield of the producer, not less than 65

6 percent of the transitional yield of the producer

7 (adjusted to reflect actual production reflected

8 in the records acceptable to the Corporation for

9 continuous years), as specified in regulations is10 sued by the Corporation based on production

11 history requirements.

12 ‘‘(C) AREA YIELD.—The Corporation may

13 offer a crop insurance plan based on an area

14 yield that allows an insured producer to qualify

15 for an indemnity if a loss has occurred in an

16 area (as specified by the Corporation) in which

17 the farm of the producer is located. Under an

18 area yield plan, an insured producer shall be al19 lowed to select the level of area production at

20 which an indemnity will be paid consistent with

21 such terms and conditions as are established by

22 the Corporation.

23 ‘‘(D) COMMODITY-BY-COMMODITY BASIS.—

24 A producer may choose between individual yield
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1 or area yield coverage, if available, on a com2 modity-by-commodity basis.

3 ‘‘(3) NOTICE.—The Corporation shall ensure

4 that producers are given adequate notice of the yield

5 coverage provisions of this section in advance of the

6 crop insurance application period for the crops to

7 which the provisions first will apply.’’;

8 (5) in subsection (g) (as so redesignated)—

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

10 and inserting ‘‘(c)’’;

11 (B) by striking paragraph (2) and insert12 ing the following new paragraph:

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

14 other material submitted to the Board under this

15 subsection may be prepared without regard to the

16 limitations specified in this title, including the re17 quirements concerning the levels of coverage and

18 rates and the requirement that a price level for each

19 commodity insured shall equal the projected market

20 price for the commodity as established by the Board.

21 The policy may be subsidized only at an amount

22 equivalent to coverage authorized under this title.’’;

23 (C) in paragraph (3)—
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1 (i) in the first sentence, by striking

2 ‘‘taking into consideration the risks cov3 ered by the policy or other material’’; and

4 (ii) in the second sentence, by insert5 ing ‘‘with a private insurance provider’’

6 after ‘‘reinsurance agreement’’; and

7 (D) by striking paragraph (4) and insert8 ing the following new paragraph:

9 ‘‘(4) REQUIRED PUBLICATION.—Any policy,

10 provision of a policy, or rate approved under this

11 subsection shall be published as a notice in the Fed12 eral Register and made available to each person who

13 contracts with or is reinsured by the Corporation

14 under the same terms and conditions as are applica15 ble between the Corporation and the submitting per16 son.’’;

17 (6) by striking subsection (i) (as so redesig18 nated) and inserting the following new subsection:

19 ‘‘(i) CLAIMS FOR LOSSES.—

20 ‘‘(1) IN GENERAL.—The Corporation may pro21 vide for adjustment and payment of claims for losses

22 as provided under subsection (a) under rules pre23 scribed by the Board. The rules prescribed by the

24 Board shall establish standards to ensure that all
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1 claims for losses are adjusted, to the extent prac2 ticable, in a uniform and timely manner.

3 ‘‘(2) DENIAL OF CLAIMS.—

4 ‘‘(A) IN GENERAL.—Subject to subpara5 graph (B), if a claim for indemnity is denied by

6 the Corporation, an action on the claim may be

7 brought against the Corporation and the insur8 ance provider in the United States District

9 Court for the district in which the insured farm

10 is located.

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

12 on the claim may be brought not later than 1

13 year after the date on which written notice of

14 denial of the claim is provided to the claim15 ant.’’;

16 (7) by striking subsection (j) (as so redesig17 nated) and inserting the following new subsection:

18 ‘‘(j) REINSURANCE.—Notwithstanding any other pro19 vision of this title, the Corporation shall, to the maximum

20 extent practicable, provide reinsurance, on such terms and

21 conditions as the Board determines to be consistent with

22 subsections (b) and (c) and sound reinsurance principles,

23 to insurers (as defined by the Corporation) that insure

24 producers of any agricultural commodity under 1 or more

25 plans acceptable to the Corporation. Each reinsurance
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1 agreement of the Corporation with a reinsured company

2 shall require the reinsured company to bear a sufficient

3 share of any potential loss under the agreement so as to

4 ensure that the reinsured company will sell and service

5 policies of insurance in a sound and prudent manner, tak6 ing into consideration the availability of private reinsur7 ance.’’;

8 (8) in subsection (k) (as so redesignated), by

9 striking ‘‘provide’’ and inserting ‘‘offer plans of’’;

10 (9) by striking subsection (n) (as so redesig11 nated) and inserting the following new subsection:

12 ‘‘(n) INFORMATION COLLECTION ON CROP INSUR13 ANCE.—The Corporation shall make available to produc14 ers through local offices of the Department—

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

16 aspects of Federal crop insurance; and

17 ‘‘(2) a listing of insurance agents for the crop

18 insurance.’’; and

19 (10) by adding at the end the following new

20 subsection:

21 ‘‘(o) COST OF PRODUCTION INSURANCE.—The Cor22 poration shall make available to producers crop insurance

23 that is based on the actual cost of production of the pro24 ducer. The insurance shall be otherwise comparable to the

25 other insurance made available under this section.’’.
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1 (e) CROP INSURANCE YIELD COVERAGE.—Section

2 508A (7 U.S.C. 1508a) is repealed.

3 (f) TAX EXEMPTION.—Section 511 (7 U.S.C. 1511)

4 is amended by inserting after ‘‘The Corporation, includ5 ing’’ the following: ‘‘the contracts of insurance of the Cor6 poration and premiums on the contracts, whether insured

7 directly or reinsured by the Corporation,’’.

8 (g) FUNDING.—Section 516 (7 U.S.C. 1516) is

9 amended to read as follows:

10 ‘‘SEC. 516. FUNDING.

11 ‘‘(a) AUTHORIZATION OF APPROPRIATIONS.—There

12 are authorized to be appropriated such sums as are nec13 essary, including funds collected as administrative fees

14 under section 508(b), to cover the administrative and op15 erating expenses of the Corporation.

16 ‘‘(b) INSURANCE FUND.—

17 ‘‘(1) IN GENERAL.—The Corporation shall es18 tablish an insurance fund for the deposit of premium

19 income, income from reinsurance operations, and ap20 propriations made available under this title. The

21 Corporation shall pay amounts due under reinsur22 ance agreements of the Corporation under section

23 508(j) with private insurance providers, including

24 premium subsidies, from the fund.
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1 ‘‘(2) SOURCE OF FUNDING.—There are appro2 priated, without fiscal year limitation, such sums as

3 are necessary to carry out the insurance fund estab4 lished under paragraph (1).’’.

5 (h) PRODUCER ELIGIBILITY.—Section 520 (7 U.S.C.

6 1520) is amended to read as follows:

7 ‘‘SEC. 520. PRODUCER ELIGIBILITY.

8 ‘‘Except as otherwise provided in this title, a pro9 ducer shall not be denied insurance under this title if—

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

11 coverage, the producer is a person (as defined by the

12 Secretary); and

13 ‘‘(2) for purposes of any other plan of insur14 ance, the producer is 18 years of age and has a bona

15 fide insurable interest in a crop as an owner-opera16 tor, landlord, tenant, or sharecropper.’’.

17 SEC. 3. ADVISORY COMMITTEE FOR FEDERAL CROP INSUR18 ANCE.

19 The Act is amended by inserting after section 514

20 (7 U.S.C. 1514) the following new section:

21 ‘‘SEC. 515. ADVISORY COMMITTEE FOR FEDERAL CROP IN22 SURANCE.

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

24 within the Department a committee to be known as the

25 ‘Advisory Committee for Federal Crop Insurance’ (re-
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1 ferred to in this section as the ‘Advisory Committee’),

2 which shall remain in existence until September 30, 1998.

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

4 be composed of—

5 ‘‘(1) the Manager of the Corporation;

6 ‘‘(2) the Secretary or a designee; and

7 ‘‘(3) not fewer than 10 representatives of orga8 nizations or agencies involved with the Federal crop

9 insurance program, which may include insurance

10 companies, insurance agents, farm producer organi11 zations, experts on agronomic practices, and banking

12 and lending institutions.

13 ‘‘(c) ADMINISTRATIVE PROVISIONS.—

14 ‘‘(1) TERMS.—Members of the Advisory Com15 mittee shall be appointed by the Secretary for a

16 term of not more than 2 years from nominations

17 made by the participating organizations and agen18 cies referred to in subsection (b). The terms of the

19 members shall be staggered.

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

21 shall be chaired by the Manager of the Corporation.

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

23 shall meet at least annually. The meetings of the

24 Advisory Committee shall be publicly announced in

25 advance and shall be open to the public. Appropriate
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1 records of the activities of the Advisory Committee

2 shall be kept and made available to the public on re3 quest.

4 ‘‘(d) PRIMARY RESPONSIBILITY.—The primary re5 sponsibility of the Advisory Committee shall be to advise

6 the Secretary on the implementation of this title and on

7 other issues related to crop insurance (as determined by

8 the Manager of the Corporation).

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

10 the Advisory Committee shall prepare, and submit to the

11 Secretary, a report specifying the conclusions of the Advi12 sory Committee on—

13 ‘‘(1) the progress toward implementation of this

14 title;

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

16 crop insurance program; and

17 ‘‘(3) the rate of participation in the cata18 strophic and the additional coverage programs under

19 this title.’’.

20 SEC. 4. NONINSURED ASSISTANCE PROGRAM.

21 The Act (7 U.S.C. 1501 et seq.) is amended by add22 ing at the end the following new section:

23 ‘‘SEC. 521. NONINSURED ASSISTANCE PROGRAM.

24 ‘‘(a) ELIGIBILITY.—
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1 ‘‘(1) IN GENERAL.—The Corporation shall es2 tablish a noninsured assistance program to provide

3 coverage equivalent to the catastrophic risk protec4 tion insurance described in section 508(b) for crops

5 for which catastrophic risk protection insurance is

6 not available. Crops covered shall include all com7 mercial crops and commodities for which cata8 strophic risk protection coverage is not available and

9 that are produced for food or fiber on a commercial

10 basis but shall not include livestock. Noninsured as11 sistance shall not cover losses due to—

12 ‘‘(A) the neglect or malfeasance of the pro13 ducer;

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

15 to the same crop in such areas and under such

16 circumstances as it is customary to so reseed;

17 or

18 ‘‘(C) the failure of the producer to follow

19 good farming practices (as determined by the

20 Corporation).

21 ‘‘(2) APPLICATIONS.—To be eligible for assist22 ance under this section, a producer shall make a

23 timely application for noninsured assistance at the

24 local office of the Department.
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1 ‘‘(3) RECORDS.—A producer shall provide

2 records, acceptable to the Corporation, of previous

3 crop acreage and production, or the producer shall

4 accept a yield determined by the Corporation.

5 ‘‘(4) ACREAGE REPORTS.—A producer shall re6 port acreage planted and prevented from being

7 planted by the designated acreage reporting date for

8 the crop and location as established by the Corpora9 tion.

10 ‘‘(5) AREA AVERAGE YIELD.—A producer of a

11 nonprogram crop shall not be eligible for noninsured

12 assistance unless the area (as determined by the

13 Corporation) average yield, or an equivalent measure

14 if yield data are not available, for the crop is less

15 than 65 percent of the expected area yield estab16 lished by the Corporation.

17 ‘‘(6) PREVENTED PLANTING PAYMENTS.—The

18 Corporation shall make a prevented planting

19 noninsured assistance payment if the producer is

20 prevented from planting more than 35 percent of the

21 acreage intended for the crop because of drought,

22 flood, or other natural disaster (as determined by

23 the Secretary).

24 ‘‘(7) REDUCED YIELD PAYMENTS.—If, because

25 of drought, flood, or other natural disaster (as deter-
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1 mined by the Secretary), the total quantity of the

2 crop that a producer is able to harvest on any farm

3 is less than 50 percent of the expected area yield for

4 the crop (as determined by the Corporation) factored

5 for the interest of the producer for the crop, the

6 Corporation shall make a reduced yield noninsured

7 assistance payment.

8 ‘‘(8) INCOME LIMITATION.—

9 ‘‘(A) IN GENERAL.—A person who has

10 qualifying gross revenues in excess of

11 $2,000,000 during the taxable year (as deter12 mined by the Secretary) shall not be eligible to

13 receive any noninsured assistance payment

14 under this section in the year.

15 ‘‘(B) DEFINITION.—As used in this para16 graph, the term ‘qualifying gross revenues’

17 means—

18 ‘‘(i) if a majority of the gross revenue

19 of the person is received from farming,

20 ranching, and forestry operations, the

21 gross revenue from the farming, ranching,

22 and forestry operations of the person; and

23 ‘‘(ii) if less than a majority of the

24 gross revenue of the person is received

25 from farming, ranching, and forestry oper-
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1 ations, the gross revenue of the person

2 from all sources.

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

4 noninsured assistance under this section, payments shall

5 be made for losses in excess of 50 percent of the estab6 lished yield for the crop at 60 percent of the average mar7 ket price for the crop, or any comparable coverage (as de8 termined by the Corporation).

9 ‘‘(c) FARM YIELDS.—

10 ‘‘(1) IN GENERAL.—The Corporation shall es11 tablish noninsured assistance program farm yields

12 for crops for the purposes of this section.

13 ‘‘(2) ACTUAL YIELD.—

14 ‘‘(A) IN GENERAL.—Subject to subpara15 graph (B), the crop insurance yield for a farm

16 for a crop of a commodity produced during a

17 crop year shall be based on, as determined by

18 the producer—

19 ‘‘(i) if the crop was produced on the

20 farm during each of the 4 crop years im21 mediately preceding the crop year, the ac22 tual yield per harvested acre for the crop

23 on the basis of the average of the yield per

24 harvested acre for the crop for the farm

25 for each of the 10 crop years immediately
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1 preceding the crop year, excluding the crop

2 year with the highest yield per harvested

3 acre, the crop year with the lowest yield

4 per harvested acre, and any crop year in

5 which the crop was not planted on the

6 farm; or

7 ‘‘(ii) in the case of a program crop (as

8 defined in section 502(3) of the Agricul9 tural Act of 1949 (7 U.S.C. 1462(3)), the

10 farm program payment yield for the farm

11 for the crop determined under section 505

12 of such Act (7 U.S.C. 1465).

13 ‘‘(B) ASSIGNED YIELD.—If the producer

14 does not provide satisfactory evidence of the

15 yield of a commodity under subparagraph (A),

16 the producer shall be assigned, as the crop in17 surance yield of the producer, not less than 65

18 percent of the transitional yield of the producer

19 (adjusted to reflect actual production reflected

20 in the records acceptable to the Corporation for

21 continuous years), as specified in regulations is22 sued by the Corporation based on production

23 history requirements.

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

25 noninsured assistance losses under this section shall be
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1 made from the insurance fund established under section

2 516(b) and shall be reimbursed from appropriations made

3 available under this title. The losses shall not be included

4 in calculating the premiums charged to producers for in5 surance.

6 ‘‘(e) PAYMENT LIMITATION.—

7 ‘‘(1) IN GENERAL.—The total amount of pay8 ments that a person shall be entitled to receive an9 nually under this section may not exceed $100,000.

10 ‘‘(2) DEFINITION OF PERSON.—The Corpora11 tion shall issue regulations defining the term ‘per12 son’, which shall conform, to the extent practicable,

13 to the regulations defining the term ‘person’ issued

14 under section 1001 of the Food Security Act of

15 1985 (7 U.S.C. 1308).’’.

16 SEC. 5. CONFORMING AMENDMENTS.

17 (a) PRICE SUPPORT PROGRAMS.—

18 (1) RICE.—Section 101B(c) of the Agricultural

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

20 (A) in paragraph (1), by striking subpara21 graph (F); and

22 (B) by striking paragraph (2) and insert23 ing the following new paragraph:

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

25 condition of receiving any benefit (including pay-
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1 ments) under this section, the producer must obtain

2 at least catastrophic risk protection insurance cov3 erage for the crop and crop year in which the benefit

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

5 Crop Insurance Corporation.’’.

6 (2) COTTON.—Section 103(h) of such Act (7

7 U.S.C. 1444(h)) is amended by adding at the end

8 the following new paragraph:

9 ‘‘(17) As a condition of receiving any benefit (includ10 ing payments) under this section, the producer must ob11 tain at least catastrophic risk protection insurance cov12 erage for the crop and crop year in which the benefit is

13 sought, if the coverage is offered by the Federal Crop In14 surance Corporation.’’.

15 (3) UPLAND COTTON.—Section 103B(c) of such

16 Act (7 U.S.C. 1444–2(c)) is amended—

17 (A) in paragraph (1), by striking subpara18 graph (F); and

19 (B) by striking paragraph (2) and insert20 ing the following new paragraph:

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

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

24 at least catastrophic risk protection insurance cov25 erage for the crop and crop year in which the benefit
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1 is sought, if the coverage is offered by the Federal

2 Crop Insurance Corporation.’’.

3 (4) FEED GRAINS.—Section 105B(c) of such

4 Act (7 U.S.C. 1444f(c)) is amended—

5 (A) in paragraph (1), by striking subpara6 graph (G); and

7 (B) by striking paragraph (2) and insert8 ing the following new paragraph:

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

10 condition of receiving any benefit (including pay11 ments) under this section, the producer must obtain

12 at least catastrophic risk protection insurance cov13 erage for the crop and crop year in which the benefit

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

15 Crop Insurance Corporation.’’.

16 (5) WHEAT.—Section 107B(c) of such Act (7

17 U.S.C. 1445b–3a(c)) is amended—

18 (A) in paragraph (1), by striking subpara19 graph (G); and

20 (B) by striking paragraph (2) and insert21 ing the following new paragraph:

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

23 condition of receiving any benefit (including pay24 ments) under this section, the producer must obtain

25 at least catastrophic risk protection insurance cov-
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1 erage for the crop and crop year in which the benefit

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

3 Crop Insurance Corporation.’’.

4 (6) PEANUTS.—Section 108B of such Act (7

5 U.S.C. 1445c–3) is amended—

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

8 (B) by inserting after subsection (g) the

9 following new subsection:

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

12 this section, the producer must obtain at least catastrophic

13 risk protection insurance coverage for the crop and crop

14 year in which the benefit is sought, if the coverage is of15 fered by the Federal Crop Insurance Corporation.’’.

16 (7) OILSEEDS.—Section 205 of such Act (7

17 U.S.C. 1446f) is amended—

18 (A) by redesignating subsection (n) as sub19 section (o); and

20 (B) by inserting after subsection (m) the

21 following new subsection:

22 ‘‘(n) CROP INSURANCE REQUIREMENT.—As a condi23 tion of receiving any benefit (including payments) under

24 this section, the producer must obtain at least catastrophic

25 risk protection insurance coverage for the crop and crop
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1 year in which the benefit is sought, if the coverage is of2 fered by the Federal Crop Insurance Corporation.’’.

3 (8) SUGAR.—Section 206 of such Act (7 U.S.C

4 1446g) is amended—

5 (A) by redesignating subsection (j) as sub6 section (k); and

7 (B) by inserting after subsection (i) the

8 following new subsection:

9 ‘‘(j) CROP INSURANCE REQUIREMENT.—As a condi10 tion of receiving any benefit under this section, the pro11 ducer must obtain at least catastrophic risk protection in12 surance coverage for the crop and crop year in which the

13 benefit is sought, if the coverage is offered by the Federal

14 Crop Insurance Corporation.’’.

15 (9) HONEY.—Section 207 of such Act (7

16 U.S.C. 1446h) is amended—

17 (A) by redesignating subsection (j) as sub18 section (k); and

19 (B) by inserting after subsection (i) the

20 following new subsection:

21 ‘‘(j) CROP INSURANCE REQUIREMENT.—As a condi22 tion of receiving any benefit (including payments) under

23 this section, the producer must obtain at least catastrophic

24 risk protection insurance coverage for the crop and crop
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1 year in which the benefit is sought, if the coverage is of2 fered by the Federal Crop Insurance Corporation.’’.

3 (10) DISASTER PAYMENTS.—Section 208 of

4 such Act (7 U.S.C. 1446i) is repealed.

5 (b) EMERGENCY DISASTER ASSISTANCE.—Subtitle B

6 of title XXII of the Food, Agriculture, Conservation, and

7 Trade Act of 1990 (7 U.S.C. 1421 note) is amended by

8 striking chapter 3.

9 (c) EMERGENCY APPROPRIATIONS.—Section

10 251(b)(2)(D)(i) of the Balanced Budget and Emergency

11 Deficit Control Act of 1985 (2 U.S.C. 901(b)(2)(D)(i)) is

12 amended by adding at the end the following new sentence:

13 ‘‘The preceding sentence shall not apply to appropriations

14 to cover agricultural crop disaster assistance.’’.

15 (d) CROSS-REFERENCES.—

16 (1) The first sentence of section 506(d) (7

17 U.S.C. 1506(d)) is amended by striking ‘‘508(f)’’

18 and inserting ‘‘508(i)’’.

19 (2) The last sentence of section 507(c) (7

20 U.S.C. 1507(c)) is amended by striking ‘‘508(b)’’

21 and inserting ‘‘508(g)’’.

22 (3) Section 518 (7 U.S.C. 1518) is amended by

23 striking ‘‘(i)’’ and inserting ‘‘(k)’’.
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1 SEC. 6. EFFECTIVE DATES.

2 (a) IN GENERAL.—Except as provided in subsection

3 (b), this Act and the amendments made by this Act shall

4 become effective on the date of enactment of this Act.

5 (b) EXCEPTIONS.—The amendments made by sec6 tions 2 through 4 shall become effective beginning with

7 the crop year immediately following the date of enactment

8 of this Act.

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