II

106TH CONGRESS

1ST SESSION S. 1580

To amend the Federal Crop Insurance Act to assist agricultural producers

in managing risk, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 13, 1999

Mr. ROBERTS (for himself, Mr. KERREY, Mr. CRAIG, Mr. BURNS, Mr. BAUCUS, Mr. GRASSLEY, Mr. SANTORUM, Mr. CRAPO, Mr. JOHNSON, Mr.

THOMAS, Mr. BROWNBACK, Mr. HAGEL, Mr. DASCHLE, Mr. HARKIN,

Mr. ENZI, Mr. INHOFE, and Mr. CONRAD) introduced the following bill;

which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry

A BILL

To amend the Federal Crop Insurance Act to assist agricultural producers in managing risk, 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 ‘‘Risk Management for the 21st Century Act’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—CROP INSURANCE COVERAGE
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Sec. 101. Prevented planting.

Sec. 102. Alternative rating methodologies.

Sec. 103. Quality adjustment.

Sec. 104. Catastrophic risk protection.

Sec. 105. Payment of portion of premium by Corporation.

Sec. 106. Additional premium subsidy for risk management activities.

Sec. 107. Assigned yields.

Sec. 108. Multiyear disaster actual production history adjustment.

Sec. 109. Noninsured crop disaster assistance program.

TITLE II—PILOT PROGRAMS

Sec. 201. Administration and expansion of gross revenue pilot programs for

specialty crops.

Sec. 202. Low-risk producer pilot program.

Sec. 203. Revenue insurance pilot program for hog and cattle producers.

Sec. 204. Pilot program for coverage of specialty crops and uninsured commodities and livestock through whole farm revenue insurance.

Sec. 205. Options pilot program for cattle and hog producers.

Sec. 206. Funding for pilot programs.

TITLE III—ADMINISTRATION

Sec. 301. Board of Directors of Corporation.

Sec. 302. Office of Risk Management.

Sec. 303. Office of Private Sector Partnership.

Sec. 304. Penalties for false information.

Sec. 305. Regulations.

Sec. 306. Program compliance.

Sec. 307. Specialty crops.

Sec. 308. Adequate coverage for agricultural commodities.

Sec. 309. Limitation on double insurance.

Sec. 310. Consultation with State committees of Farm Service Agency.

Sec. 311. Fees for plans of insurance.

Sec. 312. Reinsurance agreements.

TITLE IV—MISCELLANEOUS

Sec. 401. Definitions.

Sec. 402. Effective date.

1 TITLE I—CROP INSURANCE

2 COVERAGE

3 SEC. 101. PREVENTED PLANTING.

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

5 Crop Insurance Act (7 U.S.C. 1508(a)) is amended by

6 adding at the end the following:

7 ‘‘(7) PREVENTED PLANTING.—
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1 ‘‘(A) EQUAL COVERAGE.—For each agri2 cultural commodity for which prevented plant3 ing coverage is available, the Corporation shall

4 offer an equal percentage level of prevented

5 planting coverage.

6 ‘‘(B) AREA CONDITIONS REQUIRED FOR

7 PAYMENT.—The Corporation shall limit pre8 vented planting payments to producers to situa9 tions in which producers in the area in which

10 the farm is located are generally affected by the

11 conditions that prevent an agricultural com12 modity from being planted.

13 ‘‘(C) SUBSTITUTE COMMODITY.—

14 ‘‘(i) AUTHORITY TO PLANT.—Subject

15 to clause (iv), a producer that has pre16 vented planting coverage and is eligible to

17 receive an indemnity under such coverage

18 may plant an agricultural commodity,

19 other than the commodity covered by the

20 prevented planting coverage, on the acre21 age originally prevented from being plant22 ed.

23 ‘‘(ii) NONAVAILABILITY OF INSUR24 ANCE.—A substitute agricultural com25 modity planted under clause (i) for harvest
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1 in the same crop year shall not be eligible

2 for coverage under a policy or plan of in3 surance under this title or for noninsured

4 crop disaster assistance under section 196

5 of the Agricultural Market Transition Act

6 (7 U.S.C. 7333). For purposes of para7 graph (7) of subsection (b), the substitute

8 commodity shall be deemed to have at least

9 catastrophic risk protection so as to satisfy

10 the requirements of that paragraph.

11 ‘‘(iii) EFFECT ON ACTUAL PRODUC12 TION HISTORY.—If a producer plants a

13 substitute agricultural commodity under

14 clause (i) for a crop year, the Corporation

15 shall assign the producer a recorded yield,

16 for that crop year for the commodity that

17 was prevented from being planting, equal

18 to 60 percent of the producer’s actual pro19 duction history for that commodity for

20 purposes of determining the producer’s ac21 tual production history for subsequent crop

22 years.

23 ‘‘(iv) EFFECT ON PREVENTED PLANT24 ING PAYMENT.—If a producer plants a

25 substitute agricultural commodity under
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1 clause (i) before the latest planting date

2 established by the Corporation for the agri3 cultural commodity prevented from being

4 planted, the Corporation shall not make a

5 prevented planting payment with regard to

6 the commodity prevented from being plant7 ed.’’.

8 (b) EFFECTIVE DATE.—The amendment made by

9 subsection (a) shall be reflected in the rates for applicable

10 plans of insurance not later than crop year 2001.

11 SEC. 102. ALTERNATIVE RATING METHODOLOGIES.

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

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

14 by adding at the end the following:

15 ‘‘(8) ALTERNATIVE RATING METHODOLOGIES.—

16 ‘‘(A) IN GENERAL.—Not later than Sep17 tember 30, 2000, the Corporation shall develop

18 and implement alternative methodologies for

19 rating plans of insurance under subsections (b)

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

21 that take into account—

22 ‘‘(i) producers that elect not to par23 ticipate in the Federal crop insurance pro24 gram established under this title; and
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1 ‘‘(ii) producers that elect only to ob2 tain catastrophic risk protection under

3 subsection (b).

4 ‘‘(B) REVIEW AND ADJUSTMENT.—Effec5 tive for the 2001 and subsequent crop years,

6 the Corporation shall review and make any nec7 essary adjustments to methodologies and rates

8 established under this paragraph, based on (as

9 determined by the Corporation)—

10 ‘‘(i) expected future losses, with ap11 propriate adjustment of any historical data

12 used in rating to remove—

13 ‘‘(I) the impact of adverse selec14 tion; and

15 ‘‘(II) data that no longer reflects

16 the productive capacity of the area;

17 ‘‘(ii) program errors; and

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

19 errors in methodologies and rates.

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

21 implementing, and adjusting rating methodolo22 gies and rates under this paragraph, the Cor23 poration shall—

24 ‘‘(i) use methodologies for rating

25 plans of insurance under subsections (b)
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1 and (c) that result in the lowest premiums

2 payable by producers of an agricultural

3 commodity in a geographic area, as deter4 mined by the Corporation; and

5 ‘‘(ii) update the manner in which

6 rates are applied at the individual producer

7 level, as determined by the Corporation.

8 ‘‘(D) PRIORITY.—In developing, imple9 menting, and adjusting alternative methodolo10 gies for rating plans of insurance under sub11 sections (b) and (c) for agricultural commod12 ities, the Corporation shall provide the highest

13 priority to agricultural commodities with (as de14 termined by the Corporation)—

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

16 ‘‘(ii) the lowest percentage of pro17 ducers that purchased coverage under sub18 section (c).’’.

19 SEC. 103. QUALITY ADJUSTMENT.

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

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

22 by adding at the end the following:

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

24 Corporation shall offer, only as an endorsement to a

25 policy, coverage that permits a reduction in the
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1 quantity of production of an agricultural commodity

2 produced during a crop year, or any similar adjust3 ment, that results from the agricultural commodity

4 not meeting the quality standards established in the

5 policy.’’.

6 SEC. 104. CATASTROPHIC RISK PROTECTION.

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

8 (7 U.S.C. 1508(b)(2)) is amended—

9 (1) in subparagraph (A), by striking ‘‘subpara10 graph (B)’’ and inserting ‘‘subparagraphs (B) and

11 (C)’’; and

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

13 ‘‘(C) RERATING.—The Office of Risk Man14 agement shall rerate the levels of catastrophic

15 risk protection offered for each of the 2000

16 spring crop year, 2001 fall crop year, and sub17 sequent crop years.’’.

18 SEC. 105. PAYMENT OF PORTION OF PREMIUM BY COR19 PORATION.

20 (a) EXPECTED MARKET PRICE.—Section 508(c) of

21 the Federal Crop Insurance Act (7 U.S.C. 1508(c)) is

22 amended by striking paragraph (5) and inserting the fol23 lowing:

24 ‘‘(5) EXPECTED MARKET PRICE.—
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1 ‘‘(A) IN GENERAL.—For the purposes of

2 this title, the Corporation shall establish or ap3 prove the price level (referred to in this title as

4 the ‘expected market price’) of each agricultural

5 commodity for which insurance is offered.

6 ‘‘(B) AMOUNT.—The expected market

7 price of an agricultural commodity—

8 ‘‘(i) except as otherwise provided in

9 this subparagraph, shall be not less than

10 the projected market price of the agricul11 tural commodity, as determined by the

12 Corporation;

13 ‘‘(ii) may be based on the actual mar14 ket price of the agricultural commodity at

15 the time of harvest, as determined by the

16 Corporation;

17 ‘‘(iii) in the case of revenue and other

18 similar plans of insurance, shall be the ac19 tual market price of the agricultural com20 modity, as determined by the Corporation;

21 or

22 ‘‘(iv) in the case of cost of production

23 or similar plans of insurance, shall be the

24 projected cost of producing the agricultural
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1 commodity, as determined by the Corpora2 tion.’’.

3 (b) PREMIUM AMOUNTS.—Section 508(d)(2) of the

4 Federal Crop Insurance Act (7 U.S.C. 1508(d)(2)) is

5 amended by striking subparagraph (C) and inserting the

6 following:

7 ‘‘(C) In the case of additional coverage at

8 greater than or equal to 65 percent of the re9 corded or appraised average yield indemnified

10 at 100 percent of the expected market price, or

11 an equivalent coverage, but less than 75 percent

12 of the recorded or appraised average yield in13 demnified at 100 percent of the expected mar14 ket price, or an equivalent coverage, the amount

15 of the premium shall—

16 ‘‘(i) be sufficient to cover anticipated

17 losses and a reasonable reserve; and

18 ‘‘(ii) include an amount for operating

19 and administrative expenses, as determined

20 by the Corporation, on an industry-wide

21 basis as a percentage of the amount of the

22 premium used to define loss ratio.

23 ‘‘(D) In the case of additional coverage

24 equal to or greater than 75 percent of the re25 corded or appraised average yield indemnified
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1 at 100 percent of the expected market price, or

2 an equivalent coverage, the amount of the pre3 mium shall—

4 ‘‘(i) be sufficient to cover anticipated

5 losses and a reasonable reserve; and

6 ‘‘(ii) include an amount for operating

7 and administrative expenses, as determined

8 by the Corporation, on an industry-wide

9 basis as a percentage of the amount of the

10 premium used to define loss ratio.’’.

11 (c) PAYMENT OF PORTION OF PREMIUM BY COR12 PORATION.—Section 508(e) of the Federal Crop Insurance

13 Act (7 U.S.C. 1508(e)) is amended—

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

15 following:

16 ‘‘(1) IN GENERAL.—

17 ‘‘(A) MANDATORY PAYMENTS.—For the

18 purpose of encouraging the broadest possible

19 participation of producers in the crop insurance

20 plans of insurance authorized to be insured or

21 reinsured under subsections (b) and (c), the

22 Corporation shall pay a part of the premium in

23 the amounts determined under this subsection.

24 ‘‘(B) DISCRETIONARY PAYMENTS.—In the

25 case of a plan of insurance approved by the
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1 Corporation under subsections (a)(7) and (h),

2 the Corporation may pay a part of the premium

3 in the amounts not to exceed the amounts de4 termined under this subsection.’’; and

5 (2) in paragraph (2), by striking subparagraphs

6 (B) and (C) and inserting the following:

7 ‘‘(B) In the case of additional coverage less

8 than or equal to 50 percent of the recorded or

9 appraised average yield indemnified at 100 per10 cent of the expected market price, or an equiva11 lent coverage, the amount shall be equal to the

12 sum of—

13 ‘‘(i) 55 percent of the amount of the

14 premium established under subsection

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

16 ‘‘(ii) the amount of operating and ad17 ministrative expenses determined under

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

19 ‘‘(C) In the case of additional coverage at

20 greater than 50 percent, but less than 65 per21 cent, of the recorded or appraised average yield

22 indemnified at 100 percent of the expected mar23 ket price, or an equivalent coverage, the amount

24 shall be equal to the sum of—
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1 ‘‘(i) 45 percent of the amount of the

2 premium established under subsection

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

4 ‘‘(ii) the amount of operating and ad5 ministrative expenses determined under

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

7 ‘‘(D) In the case of coverage at greater

8 than or equal to 65 percent of the recorded or

9 appraised average yield indemnified at 100 per10 cent of the expected market price, or an equiva11 lent coverage, but less than 75 percent of the

12 recorded or appraised average yield indemnified

13 at 100 percent of the expected market price, or

14 an equivalent coverage, the amount shall be

15 equal to the sum of—

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

17 premium established under subsection

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

19 ‘‘(ii) the amount of operating and ad20 ministrative expenses determined under

21 subsection (d)(2)(C)(ii).

22 ‘‘(E) In the case of coverage equal to or

23 greater than 75 percent of the recorded or ap24 praised average yield indemnified at 100 per25 cent of the expected market price, or an equiva-
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1 lent coverage, the amount shall be equal to the

2 sum of—

3 ‘‘(i) 55 percent of the amount of the

4 premium established for coverage at 75

5 percent of the recorded or appraised aver6 age yield indemnified at 100 percent of the

7 expected market price under subsection

8 (d)(2)(D)(i); and

9 ‘‘(ii) the amount of operating and ad10 ministrative expenses determined under

11 subsection (d)(2)(D)(ii).’’.

12 (d) CONFORMING AMENDMENT.—Section 508(h)(2)

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

14 is amended by striking the second sentence.

15 SEC. 106. ADDITIONAL PREMIUM SUBSIDY FOR RISK MAN16 AGEMENT ACTIVITIES.

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

18 U.S.C. 1508(e)) is amended—

19 (1) in paragraph (2), by striking ‘‘The amount’’

20 and inserting ‘‘Subject to paragraph (5), the

21 amount’’; and

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

23 ‘‘(5) RISK MANAGEMENT ACTIVITIES.—The

24 amount of the premium payable by the Corporation

25 for a plan of insurance issued to a producer for a
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1 covered year under paragraph (2) shall be increased

2 by an amount equal to 5 percent of the premium

3 payable by the producer if the producer obtains or

4 uses for the covered year at least 2 of the following

5 risk management practices:

6 ‘‘(A) FUTURE OR OPTION.—The producer

7 may hedge price, revenue, or production risk by

8 entering into at least 1 standard exchange-trad9 ed contract for a future or option on a principal

10 agricultural commodity produced on the farm.

11 ‘‘(B) CASH FORWARD OR OTHER MAR12 KETING CONTRACT.—The producer may cover

13 at least 20 percent of the value of a principal

14 agricultural commodity produced on the farm

15 with a cash forward or other type of marketing

16 contract.

17 ‘‘(C) AGRICULTURAL MARKETING AND

18 RISK MANAGEMENT EDUCATION.—The producer

19 may attend an agricultural marketing or risk

20 management class, including a seminar or class

21 conducted by a broker licensed by a futures ex22 change.

23 ‘‘(D) AGRICULTURAL TRADE OPTION.—

24 The producer may hedge price, revenue, or pro25 duction risk on at least 10 percent of the value
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1 of a principal agricultural commodity produced

2 on the farm by purchasing an agricultural trade

3 option.

4 ‘‘(E) TRUST.—The producer may make a

5 deposit of at least 10 percent of the payments

6 of the producer under the Agricultural Market

7 Transition Act (7 U.S.C. 7201 et seq.) into a

8 trust authorized by statute for eligible farming

9 businesses that may be established to accept tax

10 deductible contributions.

11 ‘‘(F) FINANCIAL RISK REDUCTION.—The

12 producer may reduce farm financial risk by re13 ducing debt in an amount that reduces leverage

14 or by increasing liquidity, as determined by the

15 Secretary.’’.

16 SEC. 107. ASSIGNED YIELDS.

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

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

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

20 ‘‘assigned—

21 ‘‘(i) a yield’’;

22 (2) by striking the period at the end and insert23 ing ‘‘; or’’; and

24 (3) by adding at the end the following:
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1 ‘‘(ii) a yield determined by the Cor2 poration, in the case of—

3 ‘‘(I) a person that has not been

4 actively engaged in farming for a

5 share of the production of the insured

6 crop for more than 2 crop years, as

7 determined by the Secretary;

8 ‘‘(II) a producer that produces

9 an agricultural commodity on land

10 that has not been farmed by the pro11 ducer; and

12 ‘‘(III) a producer that rotates a

13 crop produced on a farm to a crop

14 that has not been produced on the

15 farm.’’.

16 SEC. 108. MULTIYEAR DISASTER ACTUAL PRODUCTION HIS17 TORY ADJUSTMENT.

18 Section 508(g) of the Federal Crop Insurance Act (7

19 U.S.C. 1508(g)) is amended by adding at the end the fol20 lowing:

21 ‘‘(4) TRANSITIONAL ADJUSTMENT FOR DISAS22 TERS.—

23 ‘‘(A) DEFINITION OF A PRODUCER THAT

24 HAS SUFFERED A MULTIYEAR DISASTER.—In

25 this paragraph, the term ‘a producer that has
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1 suffered a multiyear disaster’ means a producer

2 that has suffered a natural disaster during at

3 least 3 of the immediately preceding 5 crop

4 years that resulted in a cumulative reduction of

5 at least 25 percent in the actual production his6 tory of the crop of an agricultural commodity.

7 ‘‘(B) ELIMINATION OF CERTAIN YEARS OF

8 PRODUCTION HISTORY.—Effective beginning

9 with the 2000 crop year, for the purpose of cal10 culating the actual production history for a crop

11 of an agricultural commodity, a producer that

12 has suffered a multiyear disaster with respect

13 to the crop may exclude 1 year of production

14 history for each 5 years included in the actual

15 production history calculation of the crop for

16 which the producer purchased crop insurance.

17 ‘‘(C) CORPORATION’S SHARE OF CHANGED

18 COSTS.—In the case of an exclusion under sub19 paragraph (B), in addition to any other author20 ity to pay any portion of premium, the Corpora21 tion shall pay—

22 ‘‘(i) the portion of the premium that

23 represents the increase in premium associ24 ated with the exclusion;
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1 ‘‘(ii) all additional indemnities associ2 ated with the exclusion; and

3 ‘‘(iii) any amounts that result from

4 the difference in the administrative and op5 erating expenses owed to an approved in6 surance provider as the result of an adjust7 ment in actual production history under

8 this paragraph.

9 ‘‘(D) INCREASE IN ACTUAL PRODUCTION

10 HISTORY AFTER EXCLUSIONS.—In the case of a

11 producer that has received an exclusion under

12 subparagraph (B), the Corporation shall not

13 limit the increase of the actual production his14 tory based on the producer’s actual production

15 of the crop of an agricultural commodity in suc16 ceeding crop years until the actual production

17 history for the producer reaches the level for

18 the crop year immediately preceding the first

19 year of the multiyear disaster.

20 ‘‘(E) TERMINATION OF EXCLUSION AU21 THORITY.—The authority to apply this para22 graph to a producer shall terminate with re23 spect to the first crop year in which crop insur24 ance is available to the producer that ade25 quately insures against natural disasters that
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1 occur in multiple crop years, as determined by

2 the Corporation.’’.

3 SEC. 109. NONINSURED CROP DISASTER ASSISTANCE PRO4 GRAM.

5 (a) OPERATION AND ADMINISTRATION OF PRO6 GRAM.—Section 196(a)(2) of the Agricultural Market

7 Transition Act (7 U.S.C. 7333(a)(2)) is amended by add8 ing at the end the following:

9 ‘‘(C) COMBINATION OF SIMILAR TYPES OR

10 VARIETIES.—At the option of the Secretary, all

11 types or varieties of a crop or commodity de12 scribed in subparagraph (A) or (B) may be con13 sidered to be a single eligible crop under this

14 section.’’.

15 (b) RECORDS.—Section 196(b) of the Agricultural

16 Market Transition Act (7 U.S.C. 7333(b)) is amended—

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

18 following:

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

20 under this section, on payment of the service fee, a

21 producer shall provide annually to the Secretary

22 records of crop acreage, acreage yields, and produc23 tion for each crop, as required by the Secretary.’’;

24 and
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1 (2) in paragraph (3), by inserting ‘‘annual’’

2 after ‘‘shall provide’’.

3 (c) LOSS REQUIREMENTS.—Section 196 of the Agri4 cultural Market Transition Act (7 U.S.C. 7333) is amend5 ed by striking subsection (c) and inserting the following:

6 ‘‘(c) LOSS REQUIREMENTS.—

7 ‘‘(1) DISASTER.—To be eligible for assistance

8 under this section, a producer of an eligible crop

9 shall have suffered a loss of a noninsured commodity

10 as the result of a natural disaster described in sub11 section (a)(3).

12 ‘‘(2) ASSISTANCE.—On the declaration of a

13 natural disaster described in subsection (a)(3), the

14 Secretary shall make assistance under this section to

15 producers of an eligible crop that have suffered a

16 loss as a result of the disaster.

17 ‘‘(3) AREA TRIGGER.—The Secretary may pro18 vide assistance to individual producers without any

19 requirement of an area loss.’’.

20 (d) NEW ELIGIBLE CROPS.—Section 196 of the Agri21 cultural Market Transition Act (7 U.S.C. 7333) is

22 amended—

23 (1) in subsection (d)(1)—

24 (A) by inserting ‘‘(except as provided in

25 subsection (j))’’ after ‘‘percent’’; and
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1 (B) by inserting ‘‘determined under sub2 section (e)’’ after ‘‘for the crop’’;

3 (2) by redesignating subsection (j) as sub4 section (l); and

5 (3) by inserting after subsection (i) the fol6 lowing:

7 ‘‘(j) NEW ELIGIBLE CROPS.—

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

9 if a producer produces an eligible crop that is new

10 to an area (as determined by the Secretary), a pay11 ment for the producer shall be computed by sub12 stituting the following percentages of yields for the

13 percentages of yields specified in subsection (d)(1):

14 ‘‘(A) In the case of the first crop year of

15 the eligible crop produced by the producer, 35

16 percent of the established yield for the crop de17 termined under subsection (e).

18 ‘‘(B) In the case of each of the second

19 through fourth years of the eligible crop pro20 duced by the producer—

21 ‘‘(i) 45 percent of the established yield

22 for the crop determined under subsection

23 (e); or

24 ‘‘(ii) if the producer received a pay25 ment under this section for the first crop
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1 year of the eligible crop produced by the

2 producer, 35 percent of the established

3 yield for the crop determined under sub4 section (e).

5 ‘‘(2) TEMPORARY INELIGIBILITY.—If a pro6 ducer of an eligible crop described in paragraph (1)

7 receives a payment under this section in both the

8 first and second crop years of the eligible crop, the

9 producer shall be ineligible for a payment under this

10 section until the producer has successfully produced

11 the crop for at least 3 consecutive crop years with

12 no loss reported, as determined by the Secretary.’’.

13 (e) SERVICE FEE.—Section 196 of the Agricultural

14 Market Transition Act (7 U.S.C. 7333) (as amended by

15 subsection (d)) is amended by inserting after subsection

16 (j) the following:

17 ‘‘(k) SERVICE FEE.—

18 ‘‘(1) IN GENERAL.—To be eligible to receive as19 sistance for an eligible crop for a crop year under

20 this section, a producer shall pay to the Secretary a

21 service fee for each eligible crop in an amount that

22 is equal to the per policy fee for catastrophic risk

23 protection otherwise available under section 508(b)

24 of the Federal Crop Insurance Act (7 U.S.C.

25 1508(b)).
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1 ‘‘(2) USE.—The Secretary shall use service fees

2 collected under this subsection to offset the adminis3 trative and operating expenses of carrying out this

4 section.’’.

5 TITLE II—PILOT PROGRAMS

6 SEC. 201. ADMINISTRATION AND EXPANSION OF GROSS

7 REVENUE PILOT PROGRAMS FOR SPECIALTY

8 CROPS.

9 Section 507(g) of the Federal Crop Insurance Act (7

10 U.S.C. 1507(g)) is amended by adding at the end the fol11 lowing:

12 ‘‘(4) ADMINISTRATION AND EXPANSION OF

13 GROSS REVENUE PILOT PROGRAMS FOR SPECIALTY

14 CROPS.—

15 ‘‘(A) ADMINISTRATION.—The Specialty

16 Crops Coordinator shall administer the gross

17 revenue pilot programs that are in effect for

18 specialty crops.

19 ‘‘(B) EXPANSION.—For crop year 2000,

20 the pilot programs shall be expanded to include

21 any additional counties in the States of Ari22 zona, California, Florida, Georgia, Idaho,

23 Maine, Michigan, New Mexico, New York,

24 North Carolina, Oregon, and Texas and other

25 States that are determined by the Specialty
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1 Crops Coordinator to be appropriate for inclu2 sion.’’.

3 SEC. 202. LOW-RISK PRODUCER PILOT PROGRAM.

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

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

6 by adding at the end the following:

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

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

9 through 2003 crop years, the Corporation shall

10 carry out a pilot program that is designed to

11 encourage participation in the Federal crop in12 surance program established under this title by

13 producers who rarely suffer insurable losses.

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

15 out the pilot program in at least 40 counties

16 that are determined by the Corporation to be

17 adequate to provide a comprehensive evaluation

18 of the feasibility, effectiveness, and demand

19 among producers for a low-risk producer pro20 gram.

21 ‘‘(C) PREMIUM REFUND.—Notwith22 standing section 506(o) and subsection (d)(1),

23 if a producer participating in the pilot program

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

25 than 10 percent but not more than 35 percent
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1 of the yield determined under subsection (g),

2 the Corporation shall—

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

4 by the Corporation, of the premium that

5 was paid by the producer for a plan of in6 surance for the crop that incurred the

7 qualifying loss; or

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

9 under clause (i) against the premium pay10 able by the producer for equivalent cov11 erage for the subsequent crop year.

12 ‘‘(D) REGULATIONS.—The Corporation

13 shall promulgate such regulations as are nec14 essary to carry out the pilot program.’’.

15 SEC. 203. REVENUE INSURANCE PILOT PROGRAM FOR HOG

16 AND CATTLE PRODUCERS.

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

18 U.S.C. 1508(a)) (as amended by section 202) is amended

19 by adding at the end the following:

20 ‘‘(11) REVENUE INSURANCE PILOT PROGRAM

21 FOR HOG AND CATTLE PRODUCERS.—

22 ‘‘(A) IN GENERAL.—The Secretary shall

23 carry out a pilot program in a limited number

24 of counties under which an eligible producer of

25 hogs or cattle described in subparagraph (B)
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1 may elect to receive insurance, through ap2 proved insurance providers with reinsurance

3 provided through futures markets, against loss

4 of revenue.

5 ‘‘(B) ELIGIBLE PRODUCERS.—The Sec6 retary shall offer revenue insurance under this

7 paragraph to—

8 ‘‘(i) hog producers in Hardin, Scott,

9 and Warren counties of the State of Iowa;

10 and

11 ‘‘(ii) cattle producers in Sioux, Jack12 son, and Wayne counties in the State of

13 Iowa.

14 ‘‘(C) COVERAGE.—Under the pilot pro15 gram, a participating producer may elect cov16 erage that is based on the expected gross profit

17 of the producer from the sale of slaughter-ready

18 hogs or cattle during a covered year.

19 ‘‘(D) WHOLE FARM COVERAGE.—The Sec20 retary shall permit a participating producer

21 that produces corn or soybeans to—

22 ‘‘(i) combine coverage for the corn or

23 soybeans under this title and coverage for

24 hogs or cattle under this paragraph; and
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1 ‘‘(ii) obtain a lower rate of premium

2 for the combined coverage.

3 ‘‘(E) FUNDING.—From funds made avail4 able to carry out this title, the Secretary shall

5 use not more than $200,000 to carry out this

6 paragraph.’’.

7 SEC. 204. PILOT PROGRAM FOR COVERAGE OF SPECIALTY

8 CROPS AND UNINSURED COMMODITIES AND

9 LIVESTOCK THROUGH WHOLE FARM REV10 ENUE INSURANCE.

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

12 U.S.C. 1508(a)) (as amended by section 203) is amended

13 by adding at the end the following:

14 ‘‘(12) PILOT PROGRAM FOR COVERAGE OF SPE15 CIALTY CROPS AND UNINSURED COMMODITIES AND

16 LIVESTOCK THROUGH WHOLE FARM REVENUE IN17 SURANCE.—The Secretary shall carry out (directly

18 or by contract) a pilot program in a limited number

19 of counties, as determined by the Secretary, to de20 termine the feasibility of using whole farm revenue

21 insurance to insure—

22 ‘‘(A) specialty crops that are insured under

23 this title; and

24 ‘‘(B) commodities and livestock that are

25 not insured under this title.’’.
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1 SEC. 205. OPTIONS PILOT PROGRAM FOR CATTLE AND HOG

2 PRODUCERS.

3 Section 191 of the Agricultural Market Transition

4 Act (7 U.S.C. 7331) is amended—

5 (1) in the first sentence of subsection (a), by in6 serting ‘‘and cattle and hogs’’ after ‘‘under this

7 title’’; and

8 (2) in subsection (c)(1), by inserting before the

9 semicolon the following: ‘‘, except that this para10 graph shall not apply to a cattle or hog producer’’.

11 SEC. 206. FUNDING FOR PILOT PROGRAMS.

12 Section 516(b) of the Federal Crop Insurance Act (7

13 U.S.C. 1516(b)) is amended by adding at the end the fol14 lowing:

15 ‘‘(3) PILOT PROGRAMS.—

16 ‘‘(A) IN GENERAL.—Except as provided in

17 subparagraph (B), from funds made available

18 to carry out this title, the Secretary shall use

19 not more than $50,000,000 for any fiscal year

20 to carry out pilot programs under this title.

21 ‘‘(B)) REVENUE INSURANCE PILOT PRO22 GRAM FOR HOG AND CATTLE PRODUCERS.—

23 Subparagraph (A) shall not apply to the rev24 enue insurance pilot program for hog and cattle

25 producers carried out under section

26 508(a)(11).’’.
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1 TITLE III—ADMINISTRATION

2 SEC. 301. BOARD OF DIRECTORS OF CORPORATION.

3 Section 505 of the Federal Crop Insurance Act (7

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

5 inserting the following:

6 ‘‘(a) BOARD OF DIRECTORS.—

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

8 Corporation shall be vested in a Board subject to the

9 general supervision of the Secretary.

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

11 of—

12 ‘‘(A) 4 members who are active agricul13 tural producers with or without crop insurance,

14 with 1 member appointed from each of the 4 re15 gions of the United States (as determined by

16 the Secretary);

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

18 insurance business;

19 ‘‘(C) 1 member who is active in the rein20 surance business;

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

22 Foreign Agricultural Services;

23 ‘‘(E) the Under Secretary for Rural Devel24 opment; and
31

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1 ‘‘(F) the Chief Economist of the Depart2 ment of Agriculture.

3 ‘‘(3) APPOINTMENT AND TERMS OF PRIVATE

4 SECTOR MEMBERS.—The members of the Board de5 scribed in subparagraphs (A), (B), and (C) of para6 graph (2)—

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

8 at the pleasure of, the Secretary;

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

10 the Federal Government;

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

12 terms, as determined by the Secretary; and

13 ‘‘(D) shall serve not more than 2 consecu14 tive terms.

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

16 member of the Board described in subparagraph

17 (A), (B), or (C) of paragraph (2) to serve as Chair18 person of the Board.

19 ‘‘(5) STAFF.—The Board shall employ or con20 tract with 1 or more individuals who are knowledge21 able and experienced in quantitative mathematics

22 and actuarial rating to assist the Board in reviewing

23 and approving policies and materials with respect to

24 plans of insurance authorized or submitted under

25 section 508.’’.
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1 SEC. 302. OFFICE OF RISK MANAGEMENT.

2 Section 226A of the Department of Agriculture Reor3 ganization Act of 1994 (7 U.S.C. 6933) is amended—

4 (1) by redesignating subsections (a) through (d)

5 as subsections (b) through (e), respectively;

6 (2) by inserting after the section heading the

7 following:

8 ‘‘(a) DEFINITION OF SPECIALTY CROP.—In this sec9 tion, the term ‘specialty crop’ has the meaning given the

10 term in section 502(b) of the Federal Crop Insurance Act

11 (7 U.S.C. 1502(b)).’’;

12 (3) by striking subsection (b) (as so redesig13 nated) and inserting the following:

14 ‘‘(b) ESTABLISHMENT.—The Secretary shall estab15 lish and maintain in the Department an Office of Risk

16 Management, which shall be under the direction of the

17 Board of Directors of the Federal Crop Insurance Cor18 poration.’’;

19 (4) in subsection (c) (as so redesignated)—

20 (A) by striking paragraph (1) and insert21 ing the following:

22 ‘‘(1) Assistance to the Board in developing, re23 viewing, and recommending plans of insurance under

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

25 (7 U.S.C. 1508(a)(7)) to ensure that each agricul-
33

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1 tural commodity (including each new or specialty

2 crop) is adequately served by plans of insurance.’’;

3 (B) in paragraph (3), by inserting before

4 the period at the end the following: ‘‘, except

5 that the Office shall not impose a limitation on

6 the quantity of livestock that may be covered by

7 any whole farm revenue insurance pilot pro8 gram conducted by the Office’’;

9 (C) by redesignating paragraph (4) as

10 paragraph (5); and

11 (D) by inserting after paragraph (3) the

12 following:

13 ‘‘(4) Administration of the research and devel14 opment programs of the Office (directly or by con15 tract) for each of the 2001 and subsequent crop

16 years, including—

17 ‘‘(A) as 1 of the 3 highest research and de18 velopment priorities of the Office, development

19 of a pasture, range, and forage program to pro20 mote land stewardship; and

21 ‘‘(B) the use of at least 50 percent of the

22 funds used by the Office for each fiscal year for

23 research and development programs on research

24 and development activities related to specialty

25 crops, with at least 50 percent of the funds ex-
34

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1 pended each fiscal year for the activities by en2 tering into contracts.’’; and

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

4 ‘‘(f) PARTNERSHIPS FOR RISK MANAGEMENT DE5 VELOPMENT AND IMPLEMENTATION.—

6 ‘‘(1) PURPOSE.—The purpose of this subsection

7 is to authorize the Risk Management Agency to

8 enter into partnerships with public and private enti9 ties for the purpose of increasing the availability of

10 risk management tools for specialty crop producers.

11 ‘‘(2) AUTHORITY.—The Risk Management

12 Agency is authorized to use for each fiscal year not

13 more than $20,000,000 of funds made available

14 under section 516(b)(2) of the Federal Crop Insur15 ance Act (7 U.S.C. 1516(b)(2)) to enter into part16 nerships with the Cooperative State Research, Edu17 cation, and Extension Service, the Agricultural Re18 search Service, the National Oceanic and Atmos19 pheric Administration, and other appropriate public

20 and private entities with demonstrated capabilities in

21 developing and implementing risk management and

22 marketing options for specialty crops.

23 ‘‘(3) OBJECTIVES.—The Risk Management

24 Agency may enter into a partnership under para25 graph (2) to—
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1 ‘‘(A) enhance the notice and timeliness of

2 notice of weather conditions that could nega3 tively affect specialty crop yields, quality, and

4 final product use in order to allow producers to

5 take preventive actions to increase end-product

6 profitability and marketability and to reduce

7 the possibility of crop insurance claims;

8 ‘‘(B) develop a multifaceted approach to

9 pest management to decrease inputs, decrease

10 the development of pest resistance, and increase

11 the effectiveness of pest prevention applications;

12 ‘‘(C) develop a multifaceted approach to

13 fertilization to decrease inputs, decrease exces14 sive nutrient loading to the environment, and

15 increase application efficiency;

16 ‘‘(D) develop or improve techniques for

17 planning, breeding, growing, maintaining, har18 vesting, storage, and shipping that will address

19 quality and quantity challenges for specialty

20 crops and livestock associated with year-to-year

21 and regional variations;

22 ‘‘(E) clarify labor requirements and assist

23 producers in complying with requirements that

24 allow specialty crop producers to better meet

25 the physically intense and time-compressed
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1 planting, tending, and harvesting requirements

2 associated with specialty crop production;

3 ‘‘(F) provide assistance to State foresters

4 or equivalent officials for the prescribed use of

5 burning on private forest land for the preven6 tion, control, and suppression of fire; and

7 ‘‘(G) develop other risk management tools

8 that specialty crop producers can use to further

9 increase their economic and production sta10 bility.’’.

11 SEC. 303. OFFICE OF PRIVATE SECTOR PARTNERSHIP.

12 (a) IN GENERAL.—The Federal Crop Insurance Act

13 is amended by inserting after section 507 (7 U.S.C. 1507)

14 the following:

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

16 ‘‘(a) ESTABLISHMENT.—Not later than 90 days after

17 the date of enactment of this section, the Secretary shall

18 establish and maintain in the Department an Office of

19 Private Sector Partnership, which shall be under the di20 rection of the Board.

21 ‘‘(b) FUNCTIONS.—The Office shall—

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

23 Board on crop insurance issues, which shall be based

24 on comments received from producers, approved in-
37

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1 surance providers, and other sources that the Office

2 considers appropriate;

3 ‘‘(2)(A) review policies and materials with re4 spect to—

5 ‘‘(i) subsidized plans of insurance author6 ized under section 508; and

7 ‘‘(ii) unsubsidized plans of insurance sub8 mitted to the Board under section 508(h); and

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

10 respect to approval of the policies and materials, in11 cluding recommendations with respect to the dis12 approval of any policies and materials that contain

13 terms or conditions that promote fraud;

14 ‘‘(3) make recommendations to the Board to

15 encourage cooperation between United States attor16 neys, the Corporation, and approved insurance pro17 viders to minimize fraud in connection with an in18 surance plan or policy under this title;

19 ‘‘(4) administer the reinsurance functions de20 scribed in section 508(k) on behalf of the Corpora21 tion;

22 ‘‘(5) review and make recommendations to the

23 Board with respect to methodologies for rating plans

24 of insurance under this title; and
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1 ‘‘(6) perform such other functions as the Board

2 considers appropriate.

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

4 by an Administrator who shall be appointed by the Sec5 retary.

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

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

8 necessary for the administration of the Office, including

9 employees who have commercial reinsurance, actuarial,

10 and specialty crop experience.’’.

11 (b) FUNDING.—Section 516 of the Federal Crop In12 surance Act (7 U.S.C. 1516) is amended—

13 (1) in subsection (a)(2)—

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

15 ‘‘and’’ at the end;

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

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

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

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

20 Private Sector Partnership.’’; and

21 (2) in subsection (b)(1)—

22 (A) in subparagraph (B), by striking ‘‘;

23 and’’ and inserting a semicolon;
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1 (B) in subparagraph (C), by striking the

2 period at the end and inserting a semicolon;

3 and

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

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

6 Private Sector Partnership, but not to exceed

7 $5,000,000 for each fiscal year; and’’.

8 SEC. 304. PENALTIES FOR FALSE INFORMATION.

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

10 (7 U.S.C. 1506(n)(1)) is amended—

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

12 claim’’ after ‘‘$10,000’’; and

13 (2) in subparagraph (B), by striking ‘‘non14 insured assistance’’ and inserting ‘‘any loan, pay15 ment, or benefit described in section 1211 of the

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

17 SEC. 305. REGULATIONS.

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

19 U.S.C. 1506(p)) is amended—

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

21 the following:

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

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

24 ‘‘(2) TERMS OF INSURANCE.—
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1 ‘‘(A) IN GENERAL.—Regulations issued by

2 the Secretary and the Corporation specifying

3 the terms of insurance under section 508 shall

4 be issued without regard to—

5 ‘‘(i) the notice and comment provi6 sions of section 553 of title 5, United

7 States Code;

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

9 Secretary of Agriculture effective July 24,

10 1971 (36 Fed. Reg. 13804), relating to no11 tices of proposed rulemaking and public

12 participation in rulemaking; and

13 ‘‘(iii) chapter 35 of title 44, United

14 States Code (commonly known as the ‘Pa15 perwork Reduction Act’).

16 ‘‘(B) CONGRESSIONAL REVIEW OF AGENCY

17 RULEMAKING.—In carrying out this paragraph,

18 the Secretary shall use the authority provided

19 under section 808 of title 5, United States

20 Code.’’.

21 SEC. 306. PROGRAM COMPLIANCE.

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

23 U.S.C. 1506(q)) is amended—

24 (1) by redesignating paragraph (2) as para25 graph (6); and
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1 (2) by striking paragraph (1) and inserting the

2 following:

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

4 after the date of enactment of the Risk Management

5 for the 21st Century Act, the Corporation shall es6 tablish a program for monitoring compliance with

7 this title by all Federal crop insurance participants,

8 including producers, agents, adjusters, and approved

9 insurance providers.

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

11 consult with approved insurance providers in devel12 oping the compliance program.

13 ‘‘(3) OVERSIGHT OF LOSS ADJUSTMENT.—As

14 part of the compliance program, the Corporation

15 shall provide for a mechanism to independently re16 view the performance of loss adjusters.

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

18 days after the date of enactment of the Risk Man19 agement for the 21st Century Act, the Corporation

20 shall submit to the Board and the Office of Private

21 Sector Partnership for their review the proposed

22 compliance program under this subsection.

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

24 year 2001, the Corporation shall submit an annual

25 report to the Committee on Agriculture of the House
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1 of Representatives, the Committee on Agriculture,

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

3 and the Office of Private Sector Partnership con4 cerning the compliance program established under

5 this subsection, including any recommendations for

6 legislative or administrative changes that could fur7 ther improve program compliance.’’.

8 SEC. 307. SPECIALTY CROPS.

9 (a) IN GENERAL.—Section 507(g) of the Federal

10 Crop Insurance Act (7 U.S.C. 1507(g)) (as amended by

11 section 201) is amended by adding at the end the fol12 lowing:

13 ‘‘(5) RESEARCH AND OTHER ASSISTANCE FOR

14 NEW OR REVISED CROP INSURANCE POLICIES FOR

15 SPECIALTY CROPS.—To encourage the development

16 of new or revised crop insurance policies and other

17 materials for specialty crops and submission of those

18 insurance policies and other materials to the Cor19 poration under section 508(h), the Specialty Crops

20 Coordinator may—

21 ‘‘(A) make grants on a competitive basis

22 for the research and development of insurance

23 policies for underserved specialty crops;

24 ‘‘(B) reimburse research costs associated

25 with product development;
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1 ‘‘(C) enter into contracts for the research

2 and development of insurance policies for un3 derserved specialty crops; and

4 ‘‘(D) enter into contracts and reimburse

5 costs associated with the reassessment and re6 formatting of existing insurance policies for

7 specialty crops.

8 ‘‘(6) TIME PERIODS FOR PURCHASE OF COV9 ERAGE FOR SPECIALTY CROPS.—

10 ‘‘(A) SALES CLOSING DATE.—Subject to

11 subparagraph (B), the sales closing date for ob12 taining coverage for a specialty crop under this

13 title may not expire before the end of the 120-

14 day period beginning on the date of the final re15 lease of materials for policies from the Risk

16 Management Agency and the Specialty Crops

17 Coordinator.

18 ‘‘(B) RELEASE OF PRODUCT DELAYED TO

19 FOLLOWING CROP YEAR.—If the date of release

20 of an insurance product for a specialty crop for

21 a crop year does not allow sufficient time for

22 the dissemination of policies and related mate23 rials or jeopardizes the integrity and actuarial

24 soundness of the crop insurance program for

25 specialty crops, the Board shall delay the re-
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1 lease and offering of the product until the fol2 lowing crop year.

3 ‘‘(C) PURCHASE DURING INSURANCE PE4 RIOD.—A producer of a specialty crop may pur5 chase new coverage for the specialty crop, or in6 crease coverage levels, at any time during the

7 insurance period, subject to a 30-day waiting

8 period for the coverage to take effect to permit

9 an inspection to verify acceptability by the in10 surance provider.’’.

11 (b) STUDY OF NEW SPECIALTY CROP INSURANCE

12 POLICIES.—

13 (1) IN GENERAL.—The Federal Crop Insurance

14 Corporation and the Specialty Crops Coordinator

15 shall jointly study the feasibility of developing new

16 insurance policies for specialty crops, including poli17 cies based on the cost of production or adjusted

18 gross income, quality-based policies, or an inter19 mediate base program with a higher coverage and

20 cost than catastrophic risk protection offered on the

21 date of enactment of this Act.

22 (2) SUBMISSION OF RESULTS.—Not later than

23 1 year after the date of enactment of this Act, the

24 Corporation and the Specialty Crops Coordinator
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1 shall submit to Congress a report containing the re2 sults of the study required by this subsection.

3 SEC. 308. ADEQUATE COVERAGE FOR AGRICULTURAL COM4 MODITIES.

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

6 U.S.C. 1508(a)) (as amended by section 204) is amended

7 by adding at the end the following:

8 ‘‘(13) ADEQUATE COVERAGE FOR AGRICUL9 TURAL COMMODITIES.—

10 ‘‘(A) REVIEW.—The Board shall review

11 the plans of insurance that are offered by ap12 proved insurance providers under this Act to

13 determine if each agricultural commodity (in14 cluding each new or specialty crop) is ade15 quately served by the plans.

16 ‘‘(B) RECOMMENDATIONS.—If the Board

17 determines that an agricultural commodity (in18 cluding a new or specialty crop) is not ade19 quately served by the plans, the Board may rec20 ommend to the Office of Risk Management that

21 the Office—

22 ‘‘(i) develop or (through the Corpora23 tion) contract to develop plans of insurance

24 for the agricultural commodity; and
46

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1 ‘‘(ii) provide the plans to approved in2 surance providers, to be offered for sale to

3 producers.

4 ‘‘(C) PARTICIPATION PERCENTAGES.—

5 ‘‘(i) IN GENERAL.—The Secretary

6 shall annually review the participation per7 centage of eligible acreage insured under

8 this Act with respect to each State and

9 county and with respect to each agricul10 tural commodity.

11 ‘‘(ii) DETERMINATION.—If the Sec12 retary determines that the participation

13 percentage in a State or county for an ag14 ricultural commodity is more than 75 per15 cent below the aggregate national average

16 participation percentage for the agricul17 tural commodity, and the Secretary deter18 mines that there is no acceptable reason

19 for the disparity, the Secretary shall imple20 ment program changes necessary to adjust

21 the participation percentage in the State or

22 county to not less than 75 percent below

23 the national average.
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1 ‘‘(iii) AUTHORITY.—The Secretary

2 shall carry out this subparagraph without

3 regard to any other provision of law.’’.

4 SEC. 309. LIMITATION ON DOUBLE INSURANCE.

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

6 U.S.C. 1508(a)) (as amended by section 308) is amended

7 by adding at the end the following:

8 ‘‘(14) LIMITATION ON DOUBLE INSURANCE.—

9 The Corporation may offer plans of insurance or re10 insurance for only 1 agricultural commodity on spe11 cific acreage during a crop year, unless—

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

13 double-cropping in an area, as determined by

14 the Corporation;

15 ‘‘(B) the additional plan of insurance is of16 fered with respect to an agricultural commodity

17 that is customarily double-cropped in the area;

18 and

19 ‘‘(C) the producer has a history of double

20 cropping or the acreage has historically been

21 double-cropped.’’.
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1 SEC. 310. CONSULTATION WITH STATE COMMITTEES OF

2 FARM SERVICE AGENCY.

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

4 U.S.C. 1508(a)) (as amended by section 309) is amended

5 by adding at the end the following:

6 ‘‘(15) CONSULTATION WITH STATE COMMIT7 TEES OF FARM SERVICE AGENCY.—The Corporation

8 shall establish a mechanism under which State com9 mittees of the Farm Service Agency are consulted

10 concerning policies of insurance offered in a State

11 under this title.’’.

12 SEC. 311. FEES FOR PLANS OF INSURANCE.

13 (a) IN GENERAL.—Section 508(h)(5) of the Federal

14 Crop Insurance Act (7 U.S.C. 1508(h)(5))) is amended—

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

16 following:

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

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

19 ‘‘(B) FEES FOR EXISTING PLANS OF IN20 SURANCE.—

21 ‘‘(i) IN GENERAL.—Effective begin22 ning with the 2000 reinsurance year, if an

23 approved insurance provider elects to sell a

24 plan of insurance that was developed by

25 another approved insurance provider and

26 the plan of insurance was approved by the
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1 Board before January 1, 1999, the ap2 proved insurance provider that developed

3 the plan of insurance shall have the right

4 to receive a fee from the approved insur5 ance provider that elects to sell the plan of

6 insurance.

7 ‘‘(ii) AMOUNT.—The amount of the

8 fee that is payable by an approved insur9 ance provider for a plan of insurance

10 under clause (i) shall be—

11 ‘‘(I) for each of the first 5 crop

12 years that the plan is sold, $2.00 for

13 each policy under the plan that is sold

14 by the approved insurance provider;

15 ‘‘(II) for each of the next 3 crop

16 years that the plan is sold, $1.00 for

17 each policy under the plan that is sold

18 by the approved insurance provider;

19 and

20 ‘‘(III) for each crop year there21 after that the plan is sold, 50 cents

22 for each policy under the plan that is

23 sold by the approved insurance pro24 vider.
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1 ‘‘(C) FEES FOR NEW PLANS OF INSUR2 ANCE.—

3 ‘‘(i) IN GENERAL.—Effective begin4 ning with the 2000 reinsurance year, if an

5 approved insurance provider elects to sell a

6 plan of insurance that was developed by

7 another approved insurance provider, the

8 plan of insurance was approved by the

9 Board on or after January 1, 1999, and

10 the plan of insurance was not available at

11 the time the plan of insurance was ap12 proved by the Board, the approved insur13 ance provider that developed the plan of

14 insurance shall have the right to receive a

15 fee from the approved insurance provider

16 that elects to sell the plan of insurance.

17 ‘‘(ii) AMOUNT.—

18 ‘‘(I) IN GENERAL.—Subject to

19 subclause (II), the amount of the fee

20 that is payable by an approved insur21 ance provider for a plan of insurance

22 under clause (i) shall be an amount

23 that is—
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1 ‘‘(aa) determined by the ap2 proved insurance provider that

3 developed the plan; and

4 ‘‘(bb) approved by the

5 Board.

6 ‘‘(II) APPROVAL.—The Board

7 shall not approve the amount of a fee

8 under clause (i) if the amount of the

9 fee unnecessarily inhibits the use of

10 the plan of insurance, as determined

11 by the Board.

12 ‘‘(D) PAYMENTS.—The Corporation shall

13 annually—

14 ‘‘(i) collect from an approved insur15 ance provider the amount of any fees that

16 are payable by the approved insurance pro17 vider under subparagraphs (B) and (C);

18 and

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

20 to an approved insurance provider under

21 subparagraphs (B) and (C).

22 ‘‘(E) EXCEPTIONS.—In the case of a policy

23 developed by an approved insurance provider

24 that does not conduct business in a State—
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1 ‘‘(i) the approved policy may be mar2 keted in the State by another approved in3 surance provider if the approved insurance

4 provider marketing the policy pays any fee

5 for marketing the policy imposed by the

6 developing provider; and

7 ‘‘(ii) the developing provider shall not

8 deny payment of a fee by another provider

9 to maintain full marketing rights of the

10 approved policy.’’.

11 (b) FUNDING.—Section 516 of the Federal Crop In12 surance Act (7 U.S.C. 1516) (as amended by section

13 303(b)(2)) is amended—

14 (1) in subsection (b)(1), by adding at the end

15 the following:

16 ‘‘(E) payment of fees in accordance with

17 section 508(h)(5)(C).’’; and

18 (2) in subsection (c)(1), by inserting ‘‘and fees’’

19 after ‘‘premium income’’.

20 SEC. 312. REINSURANCE AGREEMENTS.

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

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

23 inserting the following:

24 ‘‘(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 may 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 TITLE IV—MISCELLANEOUS

15 SEC. 401. DEFINITIONS.

16 Section 502(b) of the Federal Crop Insurance Act (7

17 U.S.C. 1502(b)) is amended—

18 (1) by redesignating paragraphs (7) and (8) as

19 paragraphs (8) and (10), respectively;

20 (2) by inserting after paragraph (6) the fol21 lowing:

22 ‘‘(7) PROGRAM CROP.—The term ‘program

23 crop’ has the meaning given the term ‘loan com24 modity’ in section 102 of the Agricultural Market

25 Transition Act (7 U.S.C. 7202).’’; and
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1 (3) by inserting after paragraph (8) (as so re2 designated) the following:

3 ‘‘(9) SPECIALTY CROP.—

4 ‘‘(A) IN GENERAL.—The term ‘specialty

5 crop’ means an agricultural commodity other

6 than a program crop.

7 ‘‘(B) INCLUSIONS.—The term ‘specialty

8 crop’ includes fruits, nuts, vegetables, green9 house and nursery plants, timber, and

10 turfgrass.’’.

11 SEC. 402. EFFECTIVE DATE.

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

13 (b), this Act and the amendments made by this Act take

14 effect on the date of enactment of this Act.

15 (b) EXCEPTIONS.—The amendments made by sec16 tions 101, 103, 105, 106, 108, 109, 201, 202, 203, 204,

17 205, 206, 302(f), and 307 take effect on October 1, 2000.

Æ