I

106TH CONGRESS

1ST SESSION H. R. 2239

To amend the Federal Crop Insurance Act to improve crop insurance coverage

and administration, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 16, 1999

Mr. CHAMBLISS (for himself, Mr. BERRY, Mr. PICKERING, Mr. BISHOP, Mr.

COOKSEY, Mr. HAYES, Mr. KINGSTON, Mr. BOYD, Mr. EVERETT, Mr.

NORWOOD, and Mr. SHOWS) introduced the following bill; which was referred to the Committee on Agriculture

A BILL

To amend the Federal Crop Insurance Act to improve crop

insurance coverage and administration, and for other

purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Crop Insurance Equalization Act of 1999’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.
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TITLE I—CROP INSURANCE COVERAGE

Sec. 101. Prevented planting.

Sec. 102. Alternative rating methodologies.

Sec. 103. Quality adjustment.

Sec. 104. Low-risk producer pilot program.

Sec. 105. Catastrophic risk protection.

Sec. 106. Loss adjustment.

Sec. 107. Cost of production plans of insurance.

Sec. 108. Discounts.

Sec. 109. Adjustments to subsidy levels for catastrophic risk protection and additional coverage.

Sec. 110. Sales closing dates.

Sec. 111. Assigned yields.

Sec. 112. Actual production history adjustment for disasters.

Sec. 113. Payment of portion of premium.

Sec. 114. Limitation on premiums included in underwriting gains.

Sec. 115. Noninsured crop assistance program.

TITLE II—ADMINISTRATION

Sec. 201. Board of Directors of Corporation.

Sec. 202. Office of Risk Management.

Sec. 203. Office of Private Sector Partnership.

Sec. 204. Penalties for false information.

Sec. 205. Regulations.

Sec. 206. Program compliance.

Sec. 207. Payments by cooperative associations.

Sec. 208. Limitation on double insurance.

Sec. 209. Consultation with State committees of Farm Service Agency.

Sec. 210. Records and reporting.

Sec. 211. Fees for plans of insurance.

Sec. 212. Flexible subsidy pilot program.

Sec. 213. Reinsurance agreements.

Sec. 214. Funding.

1 TITLE I—CROP INSURANCE

2 COVERAGE

3 SEC. 101. PREVENTED PLANTING.

4 Section 508(a) of the Federal Crop Insurance Act (7

5 U.S.C. 1508(a)) is amended by adding at the end the fol6 lowing:

7 ‘‘(7) PREVENTED PLANTING.—

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

9 offer coverage for prevented planting of an agri-
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1 cultural commodity only as an endorsement to

2 a policy.

3 ‘‘(B) EQUAL COVERAGE.—For each agri4 cultural commodity for which prevented plant5 ing coverage is available, the Corporation shall

6 offer an equal level of prevented planting cov7 erage.

8 ‘‘(C) PLANTING OF SUBSTITUTE AGRICUL9 TURAL COMMODITIES.—In the case of prevented

10 planting coverage that is offered under this

11 paragraph, the Corporation shall allow pro12 ducers that have the coverage, and that are eli13 gible to receive a prevented planting indemnity,

14 to plant an agricultural commodity, other than

15 the commodity covered by the prevented plant16 ing coverage, on the acreage that the producer

17 has been prevented from planting to the origi18 nal agricultural commodity.

19 ‘‘(D) INELIGIBILITY FOR COVERAGE.—A

20 substitute agricultural commodity described in

21 subparagraph (C) shall not be eligible for cov22 erage under a plan of insurance under this

23 title.’’.
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1 SEC. 102. ALTERNATIVE RATING METHODOLOGIES.

2 Section 508(a) of the Federal Crop Insurance Act (7

3 U.S.C. 1508(a)) (as amended by section 101) is amended

4 by adding at the end the following:

5 ‘‘(8) ALTERNATIVE RATING METHODOLOGIES.—

6 ‘‘(A) IN GENERAL.—Not later than Sep7 tember 30, 2000, the Corporation shall develop

8 and implement alternative methodologies for

9 rating plans of insurance under subsections (b)

10 and (c), and rates for the plans of insurance,

11 that take into account—

12 ‘‘(i) producers that elect not to par13 ticipate in the Federal crop insurance pro14 gram established under this title; and

15 ‘‘(ii) producers that elect only to ob16 tain catastrophic risk protection under

17 subsection (b).

18 ‘‘(B) REVIEW AND ADJUSTMENT.—Effec19 tive for the 2001 and subsequent crop years,

20 the Corporation shall review and make any nec21 essary adjustments to methodologies and rates

22 established under this paragraph, based on (as

23 determined by the Corporation)—

24 ‘‘(i) expected future losses, with ap25 propriate adjustment of any historical data

26 used in rating to remove—
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1 ‘‘(I) the impact of adverse selec2 tion; and

3 ‘‘(II) data that no longer reflects

4 the productive capacity of the area;

5 ‘‘(ii) program errors; and

6 ‘‘(iii) any other factor that can cause

7 errors in methodologies and rates.

8 ‘‘(C) IMPLEMENTATION.—In developing,

9 implementing, and adjusting rating methodolo10 gies and rates under this paragraph, the Cor11 poration shall—

12 ‘‘(i) use methodologies for rating

13 plans of insurance under subsections (b)

14 and (c) that result in the lowest premiums

15 payable by producers of an agricultural

16 commodity in a geographic area, as deter17 mined by the Corporation; and

18 ‘‘(ii) update the manner in which

19 rates are applied at the individual producer

20 level, as determined by the Corporation.

21 ‘‘(D) PRIORITY.—In developing, imple22 menting, and adjusting alternative methodolo23 gies for rating plans of insurance under sub24 sections (b) and (c) for agricultural commod25 ities, the Corporation shall provide the highest
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1 priority to agricultural commodities with (as de2 termined by the Corporation)—

3 ‘‘(i) the largest average acreage; and

4 ‘‘(ii) the lowest percentage of pro5 ducers that purchased coverage under sub6 section (c).’’.

7 SEC. 103. QUALITY ADJUSTMENT.

8 Section 508(a) of the Federal Crop Insurance Act (7

9 U.S.C. 1508(a)) (as amended by section 102) is amended

10 by adding at the end the following:

11 ‘‘(9) QUALITY ADJUSTMENT POLICIES.—The

12 Corporation shall offer, only as an endorsement to a

13 policy, coverage that permits a reduction in the

14 quantity of production of an agricultural commodity

15 produced during a crop year, or any similar adjust16 ment, that results from the agricultural commodity

17 not meeting the quality standards established in the

18 policy.’’.

19 SEC. 104. LOW-RISK PRODUCER PILOT PROGRAM.

20 Section 508(a) of the Federal Crop Insurance Act (7

21 U.S.C. 1508(a)) (as amended by section 103) is amended

22 by adding at the end the following:

23 ‘‘(10) LOW-RISK PRODUCER PILOT PROGRAM.—

24 ‘‘(A) IN GENERAL.—For each of the 2000

25 through 2003 crop years, the Corporation shall
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1 carry out a pilot program that is designed to

2 encourage participation in the Federal crop in3 surance program established under this title by

4 producers who rarely suffer insurable losses.

5 ‘‘(B) SCOPE.—The Corporation shall carry

6 out the pilot program in at least 40 counties

7 that are determined by the Corporation to be

8 adequate to provide a comprehensive evaluation

9 of the feasibility, effectiveness, and demand

10 among producers for a low-risk producer pro11 gram.

12 ‘‘(C) PREMIUM REFUND.—Notwith13 standing section 506(o) and subsection (d)(1),

14 if a producer participating in the pilot program

15 incurs a yield loss in any crop year that is more

16 than 10 percent but not more than 35 percent

17 of the yield determined under subsection (g),

18 the Corporation shall—

19 ‘‘(i) refund all or part, as determined

20 by the Corporation, of the premium that

21 was paid by the producer for a plan of in22 surance for the crop that incurred the

23 qualifying loss; or

24 ‘‘(ii) apply the amount to be refunded

25 under clause (i) against the premium pay-
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1 able by the producer for equivalent cov2 erage for the subsequent crop year.

3 ‘‘(D) REGULATIONS.—The Corporation

4 shall promulgate such regulations as are nec5 essary to carry out the pilot program.’’.

6 SEC. 105. CATASTROPHIC RISK PROTECTION.

7 Section 508(b)(2)(A) of the Federal Crop Insurance

8 Act (7 U.S.C. 1508(b)(2)(A)) is amended—

9 (1) in clause (i), by striking ‘‘and’’ at the end;

10 (2) in clause (ii)—

11 (A) by striking ‘‘each of the 1999 and sub12 sequent crop years’’ and inserting ‘‘the 1999

13 crop year’’; and

14 (B) by striking the period at the end and

15 inserting ‘‘; and’’; and

16 (3) by adding at the end the following:

17 ‘‘(iii) in the case of each of the 2000

18 and subsequent crop years, catastrophic

19 risk protection shall offer a producer cov20 erage for a 60 percent loss in yield, on an

21 individual yield or area yield basis, indem22 nified at 70 percent of the expected market

23 price, or a comparable coverage (as deter24 mined by the Corporation).’’.
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1 SEC. 106. LOSS ADJUSTMENT.

2 Section 508(b)(11) of the Federal Crop Insurance

3 Act (7 U.S.C. 1508(b)(11)) is amended by striking ‘‘11

4 percent’’ and all that follows through the end of the para5 graph and inserting ‘‘$50 for each claim that is adjusted

6 under this subsection.’’.

7 SEC. 107. COST OF PRODUCTION PLANS OF INSURANCE.

8 (a) IN GENERAL.—Section 508(c) of the Federal

9 Crop Insurance Act (7 U.S.C. 1508(c)) is amended by

10 striking paragraph (5) and inserting the following:

11 ‘‘(5) EXPECTED MARKET PRICE.—

12 ‘‘(A) IN GENERAL.—For the purposes of

13 this title, the Corporation shall establish or ap14 prove the price level (referred to in this title as

15 the ‘expected market price’) of each agricultural

16 commodity for which insurance is offered.

17 ‘‘(B) AMOUNT.—The expected market

18 price of an agricultural commodity—

19 ‘‘(i) except as otherwise provided in

20 this subparagraph, shall be not less than

21 the projected market price of the agricul22 tural commodity, as determined by the

23 Corporation;

24 ‘‘(ii) may be based on the actual mar25 ket price of the agricultural commodity at
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1 the time of harvest, as determined by the

2 Corporation; or

3 ‘‘(iii) in the case of cost of production

4 or similar plans of insurance, shall be the

5 projected cost of producing the agricultural

6 commodity, as determined by the Corpora7 tion in consultation with land-grant col8 leges and universities.’’.

9 (b) CONFORMING AMENDMENTS.—Section 508(h) of

10 the Federal Crop Insurance Act (7 U.S.C. 1508(h)) is

11 amended—

12 (1) by striking paragraph (9); and

13 (2) by redesignating paragraph (10) as para14 graph (9).

15 SEC. 108. DISCOUNTS.

16 Section 508(d) of the Federal Crop Insurance Act (7

17 U.S.C. 1508(d)) is amended by adding at the end the fol18 lowing:

19 ‘‘(3) DISCOUNTS.—

20 ‘‘(A) IN GENERAL.—Notwithstanding sec21 tion 506(o) and paragraph (1), the Corporation

22 shall provide a discount in the premium payable

23 by the producer for a plan of insurance under

24 subsections (b) and (c) for an agricultural com25 modity in a county if the producer—
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1 ‘‘(i) during each of the preceding 5

2 consecutive crop years—

3 ‘‘(I) has obtained insurance

4 under this title for the agricultural

5 commodity; and

6 ‘‘(II) has not filed any claim

7 under the insurance;

8 ‘‘(ii) if offered by the Corporation,

9 elects to have unit coverage that reduces

10 the risk of loss below the risk of loss that

11 is expected for a unit comprised of all in12 surable acreage of the agricultural com13 modity in the county;

14 ‘‘(iii) implements innovative farming

15 management practices that reduce the risk

16 of insurable loss, as determined by the

17 Corporation; or

18 ‘‘(iv) provides to the Corporation evi19 dence that another producer willfully and

20 intentionally provided false or inaccurate

21 information to the Corporation or to any

22 insurer with respect to an insurance plan

23 or policy under this title, and the Corpora24 tion assesses a civil penalty under section
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1 506(n) based at least in part on that evi2 dence.

3 ‘‘(B) AMOUNT.—

4 ‘‘(i) IN GENERAL.—Subject to clause

5 (ii), the amount of the discount provided to

6 a producer for a crop year under subpara7 graph (A) shall be determined by the Cor8 poration.

9 ‘‘(ii) NO CLAIM DISCOUNT.—The

10 amount of the discount provided to a pro11 ducer for a crop year under subparagraph

12 (A)(i) shall increase for each additional

13 consecutive crop year for which the pro14 ducer is eligible for a discount under sub15 paragraph (A)(i).’’.

16 SEC. 109. ADJUSTMENTS TO SUBSIDY LEVELS FOR CATA17 STROPHIC RISK PROTECTION AND ADDI18 TIONAL COVERAGE.

19 Section 508(e) of the Federal Crop Insurance Act (7

20 U.S.C. 1508(e)) is amended by striking paragraph (2) and

21 inserting the following:

22 ‘‘(2) AMOUNT OF PAYMENT.—Beginning with

23 the 2000 crop year, the amount of the premium to

24 be paid by the Corporation shall be as follows:
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1 ‘‘(A) In the case of catastrophic risk pro2 tection, the amount shall be equal to a percent3 age of the premium established for catastrophic

4 risk protection under subsection (d)(2)(A), as

5 follows:

6 ‘‘(i) For the 2000 crop year, 100 per7 cent.

8 ‘‘(ii) For the 2001 crop year, 75 per9 cent.

10 ‘‘(iii) For the 2002 and subsequent

11 crop years, 50 percent.

12 ‘‘(B) In the case of additional coverage

13 below 65 percent of the recorded or appraised

14 average yield indemnified at 100 percent of the

15 expected market price, or an equivalent cov16 erage, the amount shall be equal to the sum

17 of—

18 ‘‘(i) 50 percent of the amount of the

19 premium established under subsection

20 (d)(2)(B)(i); and

21 ‘‘(ii) the amount of operating and ad22 ministrative expenses determined under

23 subsection (d)(2)(B)(ii).

24 ‘‘(C) In the case of additional coverage

25 equal to or greater than 65 percent of the re-
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1 corded or appraised average yield indemnified

2 at 100 percent of the expected market price, or

3 an equivalent coverage, the amount shall be

4 equal to the sum of—

5 ‘‘(i) 50 percent of the amount of the

6 premium established under subsection

7 (d)(2)(C)(i); and

8 ‘‘(ii) the amount of operating and ad9 ministrative expenses determined under

10 subsection (d)(2)(C)(ii).’’.

11 SEC. 110. SALES CLOSING DATES.

12 Section 508(f)(2) of the Federal Crop Insurance Act

13 (7 U.S.C. 1508(f)(2)) is amended by striking the last sen14 tence.

15 SEC. 111. ASSIGNED YIELDS.

16 Section 508(g)(2)(B) of the Federal Crop Insurance

17 Act (7 U.S.C. 1508(g)(2)(B)) is amended—

18 (1) by striking ‘‘assigned a yield’’ and inserting

19 ‘‘assigned—

20 ‘‘(i) a yield’’;

21 (2) by striking the period at the end and insert22 ing ‘‘; or’’; and

23 (3) by adding at the end the following:

24 ‘‘(ii) a yield determined by the Cor25 poration, in the case of—
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1 ‘‘(I) a person that has not been

2 actively engaged in farming for a

3 share of the production of the insured

4 crop for more than 2 crop years, as

5 determined by the Secretary;

6 ‘‘(II) a producer that produces

7 an agricultural commodity on land

8 that has not been farmed by the pro9 ducer; and

10 ‘‘(III) a producer that rotates a

11 crop produced on a farm to a crop

12 that has not been produced on the

13 farm.’’.

14 SEC. 112. ACTUAL PRODUCTION HISTORY ADJUSTMENT

15 FOR DISASTERS.

16 Section 508(g)(2) of the Federal Crop Insurance Act

17 (7 U.S.C. 1508(g)(2)) is amended by adding at the end

18 the following:

19 ‘‘(E) SUBSTITUTION OF TRANSITIONAL

20 YIELD.—Effective beginning with the 2000 crop

21 year, if the producer’s yield of an agricultural

22 commodity in any crop year is less than 85 per23 cent of the transitional yield established by the

24 Corporation for the agricultural commodity, the

25 Corporation shall, at the option of the producer,
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1 consider the producer’s yield for the crop year

2 to be 85 percent of the transitional yield for the

3 purpose of calculating the actual production

4 history for a crop of an agricultural commodity

5 under subparagraph (A).

6 ‘‘(F) CORPORATION’S SHARE OF COSTS.—

7 In the case of any yield substitution under sub8 paragraph (E), in addition to any other author9 ity to pay any portion of the premium and in10 demnity, the Corporation shall pay—

11 ‘‘(i) the portion of the premium or in12 demnity that represents the increase in

13 premium associated with the substitution

14 of the transitional yield under subpara15 graph (E);

16 ‘‘(ii) all additional indemnities associ17 ated with the substitution; and

18 ‘‘(iii) any amounts that result from

19 the difference in the administrative and op20 erating expenses owed to an approved in21 surance provider as the result of the sub22 stitution.’’.

23 SEC. 113. PAYMENT OF PORTION OF PREMIUM.

24 Section 508(h)(2) of the Federal Crop Insurance Act

25 (7 U.S.C. 1508(h)(2)) is amended in the second sentence
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1 by inserting before the period at the end the following:

2 ‘‘, except that the Corporation shall not pay any portion

3 of the premium for any plan of insurance that offers cov4 erage for losses associated with a change in price’’.

5 SEC. 114. LIMITATION ON PREMIUMS INCLUDED IN UNDER6 WRITING GAINS.

7 Section 508(k) of the Federal Crop Insurance Act (7

8 U.S.C. 1508(k)) is amended by adding at the end the fol9 lowing:

10 ‘‘(8) LIMITATION ON PREMIUMS INCLUDED IN

11 UNDERWRITING GAINS.—Notwithstanding any other

12 provision of law, the reinsurance agreements of the

13 Corporation shall require that not more than 50 per14 cent of any premium for catastrophic risk protection

15 under subsection (b) be included in the calculation

16 of gains or losses of an approved insurance provider

17 unless the loss ratio for catastrophic risk protection

18 exceeds 1.0.’’.

19 SEC. 115. NONINSURED CROP ASSISTANCE PROGRAM.

20 (a) INCLUSION OF ISOLATED PRODUCERS.—Sub21 section (b) of section 196 of the Agricultural Market

22 Transition Act (7 U.S.C. 7333) is amended by adding at

23 the end the following:

24 ‘‘(4) INCLUSION OF ISOLATED PRODUCERS.—

25 The Secretary may not declare a producer to be in-
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1 eligible for assistance under this section for an eligi2 ble crop because of an lack of other production of

3 the same crop in the producer’s area if the success4 ful harvest of the eligible crop in the area for at

5 least 2 years has been proven or demonstrated.’’.

6 (b) WAIVER OR REDUCTION OF REQUIRED AREA

7 LOSS THRESHOLD.—Subsection (c)(1) of such section is

8 amended by adding at the end the following: ‘‘The Sec9 retary may completely waive application of this paragraph

10 or reduce the required area loss imposed as a condition

11 on the provision of assistance under this section to pro12 ducers otherwise satisfying paragraph (2) or (3).’’.

13 (c) CHANGE IN REQUIRED INDIVIDUAL LOSS

14 THRESHOLD.—Subsection (c)(3) and subsection (d)(1) of

15 such section are both amended by inserting ‘‘(or, begin16 ning with the 2000 crop year, 60 percent)’’ after ‘‘50 per17 cent’’.

18 (d) INCREASE IN PERCENTAGE OF MARKET

19 PRICE.—Subsection (d)(2) of such section is amended—

20 (1) by striking ‘‘or’’ at the end of subparagraph

21 (A);

22 (2) in subparagraph (B)—

23 (A) by striking ‘‘each of the 1999 and sub24 sequent crop years’’ and inserting ‘‘the 1999

25 crop year’’; and
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1 (B) by striking ‘‘; by’’ and inserting ‘‘; or’’;

2 and

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

4 ‘‘(C) in the case of each of the 2000 and subse5 quent crop years, 70 percent of the average market

6 price for the crop (or any comparable coverage de7 termined by the Secretary); by’’.

8 (e) GROSS INCOME LIMITATION.—Subsection (i)(4)

9 of such section is amended by striking ‘‘the amount speci10 fied in section 2266(a) of the Food, Agriculture, Conserva11 tion, and Trade Act of 1990 (7 U.S.C. 1421 note) (as

12 in effect on November 28, 1990)’’ and inserting

13 ‘‘$4,000,000’’.

14 TITLE II—ADMINISTRATION

15 SEC. 201. BOARD OF DIRECTORS OF CORPORATION.

16 Section 505 of the Federal Crop Insurance Act (7

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

18 inserting the following:

19 ‘‘(a) BOARD OF DIRECTORS.—

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

21 Corporation shall be vested in a Board subject to the

22 general supervision of the Secretary.

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

24 of—
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1 ‘‘(A) 4 members who are active agricul2 tural producers with or without crop insurance,

3 with 1 member appointed from each of the 4 re4 gions of the United States (as determined by

5 the Secretary);

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

7 insurance business;

8 ‘‘(C) 1 member who is active in the rein9 surance business;

10 ‘‘(D) the Under Secretary for Farm and

11 Foreign Agricultural Services;

12 ‘‘(E) the Under Secretary for Rural Devel13 opment; and

14 ‘‘(F) the Chief Economist of the Depart15 ment of Agriculture.

16 ‘‘(3) APPOINTMENT AND TERMS OF PRIVATE

17 SECTOR MEMBERS.—The members of the Board de18 scribed in subparagraphs (A), (B), and (C) of para19 graph (2)—

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

21 at the pleasure of, the Secretary;

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

23 the Federal Government;

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

25 terms, as determined by the Secretary; and
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1 ‘‘(D) shall serve not more than 2 consecu2 tive terms.

3 ‘‘(4) CHAIRPERSON.—The Board shall select a

4 member of the Board described in subparagraph

5 (A), (B), or (C) of paragraph (2) to serve as Chair6 person of the Board.

7 ‘‘(5) STAFF.—The Board shall employ or con8 tract with 1 or more individuals who are knowledge9 able and experienced in quantitative mathematics

10 and actuarial rating to assist the Board in reviewing

11 and approving policies and materials with respect to

12 plans of insurance authorized or submitted under

13 section 508.’’.

14 SEC. 202. OFFICE OF RISK MANAGEMENT.

15 (a) ESTABLISHMENT.—Section 226A(a) of the De16 partment of Agriculture Reorganization Act of 1994 (7

17 U.S.C. 6933(a)) is amended by striking ‘‘independent Of18 fice of Risk Management’’ and inserting ‘‘Office of Risk

19 Management, which shall be under the direction of the

20 Board of Directors of the Federal Crop Insurance Cor21 poration’’.

22 (b) FUNCTIONS.—Section 226A(b) of the Depart23 ment of Agriculture Reorganization Act of 1994 (7 U.S.C.

24 6933(b)) is amended by striking paragraph (1) and insert25 ing the following:
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1 ‘‘(1) Assistance to the Board in developing, re2 viewing, and recommending plans of insurance under

3 section 508(a)(7) of the Federal Crop Insurance Act

4 (7 U.S.C. 1508(a)(7)) to ensure that each agricul5 tural commodity (including each new or speciality

6 crop) is adequately served by plans of insurance.’’.

7 SEC. 203. OFFICE OF PRIVATE SECTOR PARTNERSHIP.

8 The Federal Crop Insurance Act is amended by in9 serting after section 507 (7 U.S.C. 1507) the following:

10 ‘‘SEC. 507A. OFFICE OF PRIVATE SECTOR PARTNERSHIP.

11 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab12 lish and maintain in the Department an Office of Private

13 Sector Partnership, which shall be under the direction of

14 the Board.

15 ‘‘(b) FUNCTIONS.—The Office shall—

16 ‘‘(1) provide at least monthly reports to the

17 Board on crop insurance issues, which shall be based

18 on comments received from producers, approved in19 surance providers, and other sources that the Office

20 considers appropriate;

21 ‘‘(2)(A) review policies and materials with re22 spect to—

23 ‘‘(i) subsidized plans of insurance author24 ized under section 508; and
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1 ‘‘(ii) unsubsidized plans of insurance sub2 mitted to the Board under section 508(h); and

3 ‘‘(B) make recommendations to the Board with

4 respect to approval of the policies and materials;

5 ‘‘(3) administer the reinsurance functions de6 scribed in section 508(k) on behalf of the Corpora7 tion;

8 ‘‘(4) review and make recommendations to the

9 Board with respect to methodologies for rating plans

10 of insurance under this title; and

11 ‘‘(5) perform such other functions as the Board

12 considers appropriate.

13 ‘‘(c) ADMINISTRATOR.—The Office shall be headed

14 by an Administrator who shall be appointed by the Sec15 retary.

16 ‘‘(d) STAFF.—The Administrator shall appoint such

17 employees pursuant to title 5, United States Code, as are

18 necessary for the administration of the Office, including

19 employees who have commercial reinsurance and actuarial

20 experience.’’.

21 SEC. 204. PENALTIES FOR FALSE INFORMATION.

22 Section 506(n)(1) of the Federal Crop Insurance Act

23 (7 U.S.C. 1506(n)(1)) is amended—

24 (1) in subparagraph (A), by inserting ‘‘for each

25 claim’’ after ‘‘$10,000’’; and
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1 (2) in subparagraph (B), by striking ‘‘non2 insured assistance’’ and inserting ‘‘any loan, pay3 ment, or benefit described in section 1211 of the

4 Food Security Act of 1985 (16 U.S.C. 3811)’’.

5 SEC. 205. REGULATIONS.

6 Section 506(p) of the Federal Crop Insurance Act (7

7 U.S.C. 1506(p)) is amended—

8 (1) by striking ‘‘The Secretary’’ and inserting

9 the following:

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

11 (2) by adding at the end the following:

12 ‘‘(2) TERMS OF INSURANCE.—

13 ‘‘(A) IN GENERAL.—Regulations issued by

14 the Secretary and the Corporation specifying

15 the terms of insurance under section 508 shall

16 be issued without regard to—

17 ‘‘(i) the notice and comment provi18 sions of section 553 of title 5, United

19 States Code;

20 ‘‘(ii) the Statement of Policy of the

21 Secretary of Agriculture effective July 24,

22 1971 (36 Fed. Reg. 13804), relating to no23 tices of proposed rulemaking and public

24 participation in rulemaking; and
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1 ‘‘(iii) chapter 35 of title 44, United

2 States Code (commonly known as the ‘Pa3 perwork Reduction Act’).

4 ‘‘(B) CONGRESSIONAL REVIEW OF AGENCY

5 RULEMAKING.—In carrying out this paragraph,

6 the Secretary shall use the authority provided

7 under section 808 of title 5, United States

8 Code.’’.

9 SEC. 206. PROGRAM COMPLIANCE.

10 Section 506(q) of the Federal Crop Insurance Act (7

11 U.S.C. 1506(q)) is amended—

12 (1) by redesignating paragraph (2) as para13 graph (6); and

14 (2) by striking paragraph (1) and inserting the

15 following:

16 ‘‘(1) IN GENERAL.—Not later than 180 days

17 after the date of enactment of the Crop Insurance

18 Equalization Act of 1999, the Corporation shall es19 tablish a program for monitoring compliance with

20 this title by all Federal crop insurance participants,

21 including producers, agents, adjusters, and approved

22 insurance providers.

23 ‘‘(2) CONSULTATION.—The Corporation shall

24 consult with approved insurance providers in devel25 oping the compliance program.
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1 ‘‘(3) OVERSIGHT OF LOSS ADJUSTMENT.—As

2 part of the compliance program, the Corporation

3 shall provide for a mechanism to independently re4 view the performance of loss adjusters.

5 ‘‘(4) PROGRAM REVIEW.—Not later than 90

6 days after the date of enactment of the Crop Insur7 ance Equalization Act of 1999, the Corporation shall

8 submit to the Board and the Office of Private Sector

9 Partnership for their review the proposed compliance

10 program under this subsection.

11 ‘‘(5) ANNUAL REPORTS.—Beginning with fiscal

12 year 2001, the Corporation shall submit an annual

13 report to the Committee on Agriculture of the House

14 of Representatives, the Committee on Agriculture,

15 Nutrition, and Forestry of the Senate, the Board,

16 and the Office of Private Sector Partnership con17 cerning the compliance program established under

18 this subsection, including any recommendations for

19 legislative or administrative changes that could fur20 ther improve program compliance.’’.

21 SEC. 207. PAYMENTS BY COOPERATIVE ASSOCIATIONS.

22 Section 507(e) of the Federal Crop Insurance Act (7

23 U.S.C. 1507(e)) is amended—

24 (1) by striking ‘‘(e) In’’ and inserting the fol25 lowing:
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1 ‘‘(e) COOPERATIVE ASSOCIATIONS.—

2 ‘‘(1) IN GENERAL.—In’’; and

3 (2) by adding at the end the following:

4 ‘‘(2) PAYMENTS.—A cooperative association de5 scribed in paragraph (1) that is licensed and acts as

6 an agent or approved insurance provider with re7 spect to any plan of insurance offered under this

8 title may provide to the members of the association

9 all or part of any funds received from the Corpora10 tion under this title.’’.

11 SEC. 208. LIMITATION ON DOUBLE INSURANCE.

12 Section 508(a) of the Federal Crop Insurance Act (7

13 U.S.C. 1508(a)) (as amended by section 104) is amended

14 by adding at the end the following:

15 ‘‘(11) LIMITATION ON DOUBLE INSURANCE.—

16 The Corporation may offer plans of insurance or re17 insurance for only 1 agricultural commodity on spe18 cific acreage during a crop year, unless—

19 ‘‘(A) there is an established practice of

20 double-cropping in an area, as determined by

21 the Corporation;

22 ‘‘(B) the additional plan of insurance is of23 fered with respect to an agricultural commodity

24 that is customarily double-cropped in the area;

25 and
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1 ‘‘(C) the producer has a history of double

2 cropping or the acreage has historically been

3 double-cropped.’’.

4 SEC. 209. CONSULTATION WITH STATE COMMITTEES OF

5 FARM SERVICE AGENCY.

6 Section 508(a) of the Federal Crop Insurance Act (7

7 U.S.C. 1508(a)) (as amended by section 208) is amended

8 by adding at the end the following:

9 ‘‘(12) CONSULTATION WITH STATE COMMIT10 TEES OF FARM SERVICE AGENCY.—The Corporation

11 shall establish a mechanism under which State com12 mittees of the Farm Service Agency are consulted

13 concerning policies of insurance offered in a State

14 under this title.’’.

15 SEC. 210. RECORDS AND REPORTING.

16 (a) CATASTROPHIC RISK PROTECTION.—Section

17 508(f)(3)(A) of the Federal Crop Insurance Act (7 U.S.C.

18 1508(f)(3)(A)) is amended by striking ‘‘provide, to the ex19 tent required by the Corporation,’’ and inserting ‘‘to the

20 extent required by the Corporation, provide to the Sec21 retary, acting through the Farm Service Agency,’’.

22 (b) NONINSURED CROP DISASTER ASSISTANCE PRO23 GRAM.—Section 196(b) of the Agricultural Market Transi24 tion Act (7 U.S.C. 7333(b)) is amended—
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1 (1) by striking paragraph (2) and inserting the

2 following:

3 ‘‘(2) RECORDS.—To be eligible for assistance

4 under this section, a producer shall provide annually

5 to the Secretary, acting through the Farm Service

6 Agency, records of crop acreage, acreage yields, and

7 production for each eligible crop.’’; and

8 (2) in paragraph (3), by inserting ‘‘annual’’

9 after ‘‘shall provide’’.

10 SEC. 211. FEES FOR PLANS OF INSURANCE.

11 Section 508(h)(5) of the Federal Crop Insurance Act

12 (7 U.S.C. 1508(h)(5)) is amended—

13 (1) by striking ‘‘Any policy’’ and inserting the

14 following:

15 ‘‘(A) IN GENERAL.—Any policy’’; and

16 (2) by adding at the end the following:

17 ‘‘(B) FEES FOR NEW PLANS OF INSUR18 ANCE.—

19 ‘‘(i) IN GENERAL.—If an approved in20 surance provider elects to sell a plan of in21 surance that was developed by another ap22 proved insurance provider after the date of

23 enactment of this subparagraph and the

24 plan of insurance offered coverage that was

25 not available for any crop at the time the
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1 plan of insurance was approved by the

2 Board (as determined by the Corporation),

3 the approved insurance provider that devel4 oped the plan of insurance shall have the

5 right to receive a fee from the approved in6 surance provider that elects to sell the plan

7 of insurance.

8 ‘‘(ii) AMOUNT.—

9 ‘‘(I) IN GENERAL.—Subject to

10 subclause (II), the amount of the fee

11 that is payable by an approved insur12 ance provider for a plan of insurance

13 under clause (i) shall be an amount

14 that is—

15 ‘‘(aa) determined by the ap16 proved insurance provider that

17 developed the plan; and

18 ‘‘(bb) approved by the

19 Board.

20 ‘‘(II) APPROVAL.—The Board

21 shall not approve the amount of a fee

22 under clause (i) if the amount of the

23 fee unnecessarily inhibits the use of

24 the plan of insurance, as determined

25 by the Board.
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1 ‘‘(C) PAYMENTS.—The Corporation shall

2 annually—

3 ‘‘(i) collect from an approved insur4 ance provider the amount of any fees that

5 are payable by the approved insurance pro6 vider under subparagraph (B); and

7 ‘‘(ii) credit any fees that are payable

8 to an approved insurance provider under

9 subparagraph (B).’’.

10 SEC. 212. FLEXIBLE SUBSIDY PILOT PROGRAM.

11 Section 508(h) of the Federal Crop Insurance Act (7

12 U.S.C. 1508(h)) is amended by adding at the end the fol13 lowing:

14 ‘‘(11) FLEXIBLE SUBSIDY PILOT PROGRAM.—

15 For each of the 2000 through 2002 crop years, the

16 Corporation shall carry out a pilot program under

17 which flexible subsidies are provided under this title

18 to encourage private sector innovation through ex19 clusive marketing rights and premium rate competi20 tion.’’.

21 SEC. 213. REINSURANCE AGREEMENTS.

22 Section 508(k) of the Federal Crop Insurance Act (7

23 U.S.C. 1508(k)) is amended by striking paragraph (3) and

24 inserting the following:

25 ‘‘(3) REINSURANCE AGREEMENTS.—
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1 ‘‘(A) SHARE OF RISK.—Each reinsurance

2 agreement of the Corporation with a reinsured

3 company shall require the reinsured company to

4 bear a sufficient share of any potential loss

5 under the agreement so as to ensure that the

6 reinsured company will sell and service policies

7 of insurance in a sound and prudent manner,

8 taking into consideration the financial condition

9 of the reinsured company and the availability of

10 private reinsurance.

11 ‘‘(B) COMPLIANCE.—To promote program

12 compliance and integrity, the Corporation, after

13 notice and an opportunity for a hearing on the

14 record—

15 ‘‘(i)(I) shall assess civil fines in an

16 amount not to exceed $10,000 per viola17 tion against agents, loss adjusters, and ap18 proved insurance providers that are deter19 mined by the Corporation to have recur20 ring compliance problems; and

21 ‘‘(II) may deposit any civil fines col22 lected under subclause (I) in the insurance

23 fund established under section 516(c); and

24 ‘‘(ii) shall disqualify the agents, loss

25 adjusters, and approved insurance pro-
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1 viders described in clause (i)(I) from par2 ticipation in the Federal crop insurance

3 program for a period not to exceed 5 years.

4 ‘‘(C) REVIEW OF AGREEMENTS.—As soon

5 as practicable after the date of enactment of

6 this subparagraph and regularly thereafter, in

7 consultation with the Office of Private Sector

8 Partnership, the Corporation shall review the

9 Standard Reinsurance Agreement issued by the

10 Corporation to ensure that the allocation of risk

11 between the Corporation and the reinsured

12 companies is equitable, as determined by the

13 Corporation.’’.

14 SEC. 214. FUNDING.

15 Section 516 of the Federal Crop Insurance Act (7

16 U.S.C. 1516) is amended—

17 (1) in subsection (a)(2)—

18 (A) in subparagraph (A), by striking

19 ‘‘and’’ at the end;

20 (B) in subparagraph (B), by striking the

21 period at the end and inserting ‘‘; and’’; and

22 (C) by adding at the end the following:

23 ‘‘(C) salaries and expenses of the Office of

24 Private Sector Partnership.’’;

25 (2) in subsection (b)(1)—
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1 (A) in subparagraph (B), by striking ‘‘;

2 and’’ and inserting a semicolon;

3 (B) in subparagraph (C), by striking the

4 period at the end and inserting a semicolon;

5 and

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

7 ‘‘(D) salaries and expenses of the Office of

8 Private Sector Partnership, but not to exceed

9 $5,000,000 for each fiscal year;

10 ‘‘(E) administrative expenses of collecting

11 information under section 508(f)(3); and

12 ‘‘(F) payment of fees in accordance with

13 section 508(h)(5)(B).’’; and

14 (3) in subsection (c)(1), by inserting ‘‘, fees

15 under section 508(h)(5)(B), civil fines under section

16 508(k)(3)(B)(i)(II),’’ after ‘‘premium income’’.

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