II
Calendar No. 552
103D CONGRESS
2D SESSION
H. R. 4217
IN THE SENATE OF THE UNITED STATES
AUGUST 10 (legislative day, AUGUST 8), 1994
Received; read twice and placed on the calendar
AN ACT
To reform the Federal crop insurance program, and for
other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE, TABLE OF CONTENTS, AND DEFI-
NITIONS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Federal Crop Insurance Reform Act of 1994’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title, table of contents, and definitions.
Sec. 2. Members of Board of Directors of Federal Crop Insurance Corporation.
Sec. 3. General powers of Corporation.
Sec. 4. Personnel.
Sec. 5. General authority to offer crop insurance.
Sec. 6. Catastrophic risk protection, buy-up levels, premiums, and yield deter-
minations.
HR 4217 PCS
Sec. 7. Preparation of policies, claims, and reinsurance.
Sec. 8. Authorization of appropriations and crop insurance fund.
Sec. 9. Advisory Committee.
Sec. 10. Noninsured crop disaster assistance.
Sec. 11. Crop insurance requirements under price support programs.
Sec. 12. Elimination of gender references.
Sec. 13. GAO crop insurance provider study.
Sec. 14. Effective date.
(c) DEFINITIONS.—Section 502 of the Federal Crop
Insurance Act (7 U.S.C. 1502) is amended—
(1) by striking the section heading and ‘‘SEC.
502.’’ and inserting the following:
‘‘SEC. 502. PURPOSE AND DEFINITIONS.
‘‘(a) PURPOSE.—’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) DEFINITIONS.—For purposes of this title:
‘‘(1) SECRETARY.—The term ‘Secretary’ means
the Secretary of Agriculture.
‘‘(2) CORPORATION.—The term ‘Corporation’
means the Federal Crop Insurance Corporation es-
tablished under section 503.
‘‘(3) BOARD.—The term ‘Board’ means the
Board of Directors of the Corporation established
under section 505(a).
‘‘(4) LOSS RATIO.—The term ‘loss ratio’ means
the ratio of all sums paid by the Corporation as in-
demnities under all crop insurance policies to that of
the premiums designated for anticipated losses and
HR 4217 PCS
a reasonable reserve, not including the portion of the
premiums designated for operating and administra-
tive expenses.
‘‘(5) TRANSITIONAL YIELD.—The term ‘transi-
tional yield’ means the maximum average production
per acre or equivalent measure that is assigned to
acreage for a crop year by the Corporation in ac-
cordance with its regulations whenever the producer
fails—
‘‘(A) to certify that acceptable documenta-
tion of production and acreage for that crop
year is in the producer’s possession; or
‘‘(B) to present such acceptable docu-
mentation upon the demand of the Corporation
or an insurance company reinsured by the Cor-
poration.’’.
(d) CONFORMING AMENDMENTS.—The Federal Crop
Insurance Act (7 U.S.C. 1501 et seq.) is amended—
(1) in section 503 (7 U.S.C. 1503), by striking
‘‘(herein called the Corporation)’’; and
(2) in section 505(a) (7 U.S.C. 1505(a)), by
striking ‘‘(hereinafter called the ‘Board’)’’.
HR 4217 PCS
SEC. 2. MEMBERS OF BOARD OF DIRECTORS OF FEDERAL
CROP INSURANCE CORPORATION.
Section 505(a) of the Federal Crop Insurance Act (7
U.S.C. 1505(a)) is amended in the second sentence—
(1) by striking ‘‘or Assistant Secretary’’ the
first place it appears; and
(2) by striking ‘‘the Under Secretary or Assist-
ant Secretary of Agriculture responsible for the farm
credit programs of the Department of Agriculture’’
and inserting ‘‘one additional Under Secretary of
Agriculture (as designated by the Secretary of Agri-
culture)’’.
SEC. 3. GENERAL POWERS OF CORPORATION.
(a) CLAIMS SETTLEMENT.—Section 506 of the Fed-
eral Crop Insurance Act (7 U.S.C. 1506) is amended—
(1) by redesignating subsections (j), (k), (l),
(m), and (n) as subsections (k), (l), (m), (n), and
(o), respectively; and
(2) by inserting after subsection (i) the follow-
ing new subsection:
‘‘(j) CLAIMS SETTLEMENT.—The Corporation shall
have the authority to make final and conclusive settlement
and adjustment of any claims made by or against the Cor-
poration or the accounts of its fiscal officers.’’.
(b) REGULATIONS; PREEMPTION.—Subsection (e) of
such section is amended—
HR 4217 PCS
(1) by striking ‘‘governing’’ and inserting ‘‘to
carry out this title and to govern’’; and
(2) by adding at the end the following new sen-
tence: ‘‘State and local laws or rules shall not apply
to rules and regulations adopted by the Corporation
to the extent that such rules and regulations so pro-
vide or to the extent that State and local laws or
rules are inconsistent with such rules and regula-
tions.’’.
(c) DEFINITION OF SUBSTANTIAL BENEFICIAL IN-
TEREST.—Subsection (m) of such section (as redesignated
by subsection (a)(1)) is amended in paragraph (4) by
striking ‘‘5 percent’’ and inserting ‘‘10 percent’’.
(d) PENALTY
FOR
FALSE
INFORMATION.—Sub-
section (n) of such section (as redesignated by subsection
(a)(1)) is amended in paragraph (1) by striking subpara-
graph (B) and inserting the following new subparagraph:
‘‘(B) disqualify the person—
‘‘(i) from purchasing catastrophic risk
protection under section 508(b) or partici-
pating in the noninsured assistance pro-
gram under section 519 for a period not to
exceed 2 years; and
HR 4217 PCS
‘‘(ii) from receiving any other benefit
under this title for a period not to exceed
10 years.’’.
(e) ACTUARIAL SOUNDNESS.—Subsection (o) of such
section (as redesignated by subsection (a)(1)) is amend-
ed—
(1) in paragraph (1), by striking ‘‘beginning
farmers from obtaining adequate Federal crop insur-
ance, as determined by the Corporation’’ and insert-
ing ‘‘beginning farmers, as determined by the Sec-
retary, from obtaining Federal crop insurance’’;
(2) in paragraph (3), by striking ‘‘and’’ at the
end of the paragraph;
(3) by redesignating paragraph (4) as para-
graph (5); and
(4) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4) establishing a database that contains social
security numbers or employee identification numbers
of insurance agents and adjusters and using the
numbers to identify agents and adjusters who are
high risk for actuarial purposes, and for other pur-
poses permitted by law; and’’.
HR 4217 PCS
(f) REGULATORY AND PAPERWORK REDUCTION.—
Such section is further amended by adding at the end the
following new subsection:
‘‘(p) REGULATORY AND PAPERWORK REDUCTION.—
‘‘(1) CATASTROPHIC RISK PROTECTION.—In de-
veloping and carrying out the policies and proce-
dures for catastrophic risk protection under section
508(b), the Corporation shall minimize, to the maxi-
mum extent practicable, the paperwork required and
the complexity and costs of procedures governing the
application for, and the processing and servicing of,
catastrophic risk protection.
‘‘(2) OTHER PLANS.—To the extent that the
policies and procedures developed under paragraph
(1) may be applied to other plans of insurance of-
fered under this title without jeopardizing the actu-
arial soundness or integrity of the crop insurance
program under this title, the Corporation shall apply
the policies and procedures to the other plans of in-
surance within a reasonable period of time (as deter-
mined by the Corporation) after the effective date of
this paragraph.
‘‘(3) SOLICITATION OF COST INFORMATION AND
COST-REDUCTION PROPOSALS.—
HR 4217 PCS
this title, the Corporation shall include in the
report required under paragraph (3) a plan to
reduce the average cost per policy incurred by
private insurance providers and agents to com-
ply with requirements, regulations, procedures,
and processes under this title. To the extent
practicable, the Corporation shall set a target
percentage by which such costs should be re-
duced.
‘‘(B) IMPLEMENTATION
OF
PLAN.—Not
later than 60 days after submitting the report
required under paragraph (3), and in accord-
ance with the plan contained in the report, the
Corporation shall adopt such measures consist-
ent with maintaining the integrity of the crop
insurance program under this title as the Cor-
poration determines are appropriate—
‘‘(i) to improve Corporation liaison
with policyholders and private insurance
providers; and
‘‘(ii) to reduce the average cost per
policy to meet the target percentage set by
the Corporation.’’.
HR 4217 PCS
(g) IMPROVED PROGRAM COMPLIANCE.—Such sec-
tion is further amended by inserting after subsection (p)
(as added by subsection (f)) the following new subsection:
‘‘(q) PROGRAM COMPLIANCE.—
‘‘(1) TIMELINESS.—The Corporation shall work
actively with private insurance providers to address
program compliance and integrity issues as such is-
sues develop.
‘‘(2) NOTIFICATION
OF
COMPLIANCE
PROB-
LEMS.—The Corporation shall notify in writing any
private insurance provider with whom the Corpora-
tion has an agreement under this title of any error,
omission, or failure to follow Corporation regulations
or procedures for which the private insurance pro-
vider may be responsible and which may result in a
debt owed the Corporation. Such notice shall be
given within 3 years of the end of the insurance pe-
riod during which the error, omission, or failure is
alleged to have occurred, except that such time limit
shall not apply with respect to errors, omissions, or
procedural violations that are willful or intentional.
The failure to timely provide the notice required
under this subsection shall relieve the private insur-
ance provider from the debt owed the Corporation.’’.
HR 4217 PCS
SEC. 4. PERSONNEL.
Section 507 of the Federal Crop Insurance Act (7
U.S.C. 1507) is amended—
(1) in subsection (a), by striking ‘‘, and county
crop insurance committeemen’’;
(2) in subsection (c), by striking ‘‘, in which
case the agent or broker’’ in the first sentence and
all that follows through the period at the end of the
second sentence and inserting the following: ‘‘, ex-
cept that the rate established by the Board to reim-
burse approved insurance providers and agents for
their administrative and operating costs shall not ex-
ceed, for the 1997 crop year, 29 percent of the pre-
mium used to define loss ratio under section 502,
and for the 1998 and 1999 crops, such reimburse-
ment rate shall not exceed 28 percent of the pre-
mium used to define loss ratio under section 502.
Consistent with the provisions of section 506(p), the
Board shall provide regulatory relief to such ap-
proved insurance providers and agents in an amount
proportional to the reduction in the reimbursement
rate established by the Board for the 1997, 1998,
and 1999 crop years. No action shall be taken which
would jeopardize program integrity, enhance oppor-
tunities for fraud or abuse, hinder program expan-
sion or diminish quality of service to customers.’’;
HR 4217 PCS
(3) in subsection (d), by striking ‘‘, except
that’’ and all that follows through the period at the
end of the subsection and inserting a period; and
(4) by adding at the end the following new sub-
section:
‘‘(g) SPECIALTY CROPS COORDINATOR.—The Cor-
poration shall establish a senior-level position to be known
as the Specialty Crops Coordinator. The Specialty Crops
Coordinator shall have primary responsibility for address-
ing the needs of specialty crop producers and for providing
information and advice in connection with the Corpora-
tion’s activities to improve and expand the insurance pro-
gram for specialty crops. In carrying out such responsibil-
ity, the Specialty Crops Coordinator shall act as the Cor-
poration’s liaison with representatives of specialty crop
producers and provide the Corporation with the producers’
knowledge, expertise, and familiarity with risk manage-
ment and production issues pertaining to specialty crops.
The Specialty Crops Coordinator shall also use informa-
tion collected from Corporation field office directors in
States in which specialty crops have a significant economic
effect and from other sources, including the extension
service and colleges and universities.’’.
HR 4217 PCS
SEC. 5. GENERAL AUTHORITY TO OFFER CROP INSURANCE.
(a) GENERAL AUTHORITY TO OFFER INSURANCE.—
Subsection (a) of section 508 of the Federal Crop Insur-
ance Act (7 U.S.C. 1508) is amended to read as follows:
‘‘(a) AUTHORITY TO OFFER INSURANCE.—
‘‘(1) GENERAL AUTHORITY AND LOSSES COV-
ERED.—If sufficient actuarial data are available, as
determined by the Board, the Corporation may in-
sure (or provide reinsurance for insurers of) produc-
ers of agricultural commodities grown in the United
States under any plan or plans of insurance deter-
mined by the Board to be adapted to the agricul-
tural commodity involved. To qualify for coverage
under these plans of insurance, the losses of the in-
sured commodity shall be due to drought, flood, or
other natural disaster, as determined by the Sec-
retary.
‘‘(2) PERIOD
OF
COVERAGE.—Except in the
case of tobacco, insurance shall not extend beyond
the period the insured commodity is in the field. For
the purpose of the foregoing sentence, in the case of
aquacultural species, the term ‘field’ means the envi-
ronment in which the commodity is produced.
‘‘(3) EXCLUSIONS.—Insurance provided under
this section shall not cover losses—
HR 4217 PCS
‘‘(A) due to the neglect or malfeasance of
the producer;
‘‘(B) due to the failure of the producer to
reseed to the same crop in those areas and
under such circumstances where it is customary
to reseed; or
‘‘(C) due to the failure of the producer to
follow good farming practices, as determined by
the Corporation.
‘‘(4) EXPANSION TO OTHER AREAS OR SINGLE
PRODUCERS.—
‘‘(A) AREA EXPANSION.—The Corporation
may offer plans of insurance or reinsurance for
production of agricultural commodities in the
Commonwealth of Puerto Rico, the Virgin Is-
lands of the United States, Guam, American
Samoa, the Commonwealth of the Northern
Mariana Islands, and the Trust Territory of the
Pacific Islands in the same manner as provided
in this section for production of agricultural
commodities in the United States.
‘‘(B) PRODUCER EXPANSION.—In areas in
the United States or specified in subparagraph
(A) where crop insurance is not available for a
particular agricultural commodity, the Corpora-
HR 4217 PCS
tion may offer to enter into a written agree-
ment with an individual producer operating in
that area for insurance coverage under this title
if the producer has actuarially sound data relat-
ing to the producer’s production of that com-
modity and such data is acceptable to the Cor-
poration.
‘‘(5) DISSEMINATION OF CROP INSURANCE IN-
FORMATION.—The Corporation shall make available
to producers through local offices of the Department
of Agriculture—
‘‘(A) current and complete information on
all aspects of Federal crop insurance; and
‘‘(B) a listing of insurance agents and
companies offering to sell crop insurance in
their area.
‘‘(6) ADDITION
OF
NEW
AND
SPECIALTY
CROPS.—
‘‘(A) DATA COLLECTION.—Not later than
6 months after the date of the enactment of
this paragraph, the Secretary shall issue guide-
lines for publication in the Federal Register for
data collection to assist the Corporation in for-
mulating crop insurance policies for new and
specialty crops.
HR 4217 PCS
‘‘(B) ADDITION OF NEW CROPS.—Not later
than 1 year after the date of the enactment of
this paragraph, and annually thereafter, the
Corporation shall report to Congress on the
progress and expected timetable for expanding
crop insurance coverage under this title to new
and specialty crops.
‘‘(C) ADDITION OF DIRECT SALE PERISH-
ABLE CROPS.—Not later than 1 year after the
date of the enactment of this paragraph, the
Corporation shall report to Congress on the fea-
sibility of offering a crop insurance program de-
signed to meet the needs of specialized produc-
ers of vegetables and other perishable crops who
market through direct marketing channels.’’.
(b) REPORT
ON IMPROVING DISSEMINATION
OF
CROP
INSURANCE
INFORMATION.—Not later than 6
months after the date of the enactment of this Act, the
Federal Crop Insurance Corporation shall submit a report
to Congress containing a plan to implement a sound pro-
gram for producer education regarding the crop insurance
program and for the dissemination of crop insurance infor-
mation to producers, as required by section 508(a)(5) of
the Federal Crop Insurance Act. Subsequent reports on
HR 4217 PCS
the progress of the implementation of the program shall
be submitted to Congress in 1996 and 1997.
SEC. 6. CATASTROPHIC RISK PROTECTION, BUY-UP COV-
ERAGE, PREMIUMS, AND YIELD DETERMINA-
TIONS.
(a) IN GENERAL.—Section 508 of the Federal Crop
Insurance Act (7 U.S.C. 1508) is amended—
(1) by striking subsections (c), (e), (f), (g), (h),
(i), (l), (m), and (n);
(2) by redesignating subsections (b) and (d) as
subsections (h) and (i), respectively; and
(3) by inserting after subsection (a) the follow-
ing new subsections:
‘‘(b) CATASTROPHIC RISK PROTECTION.—
‘‘(1) CATASTROPHIC
RISK
PROTECTION
RE-
QUIRED.—The Corporation shall offer to producers
of agricultural commodities grown in the United
States a catastrophic risk protection plan to indem-
nify a producer for crop losses due to loss of yield
or prevented planting resulting from drought, flood,
or other natural disaster, as determined by the Sec-
retary, if the producer is unable to plant other crops
for harvest on that acreage for that crop year.
‘‘(2) AMOUNT OF COVERAGE.—
HR 4217 PCS
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), under catastrophic risk protection,
the Corporation shall offer producers—
‘‘(i) coverage equal to 50 percent loss
in yield (determined on an area or individ-
ual yield basis as described in subsection
(g)) indemnified at 60 percent of the ex-
pected market price of the commodity (as
determined by the Corporation); or
‘‘(ii) other coverage established by the
Corporation that is comparable to the cov-
erage described in clause (i).
‘‘(B) REDUCTION IN ACTUAL PAYMENT.—
The amount paid to a producer on a claim
under catastrophic risk protection may reflect a
reduction that is proportional to the out-of-
pocket expenses that are not incurred by the
producer as a result of not planting, growing,
or harvesting the crop for which the claim is
made, as determined by the Corporation.
‘‘(3) YIELD AND LOSS BASIS.—Producers shall
have the option of purchasing catastrophic risk pro-
tection based on either an individual yield and loss
basis or on an area yield and loss basis, as described
HR 4217 PCS
in subsection (g), when both options are offered by
the Corporation.
‘‘(4) APPLICATION.—To participate in cata-
strophic risk protection, producers shall submit an
application at the local office of the Department of
Agriculture or to a private insurance provider ap-
proved by the Corporation.
‘‘(5) ADMINISTRATIVE FEE.—
‘‘(A) FEE
REQUIRED.—Producers shall
pay an administrative fee for catastrophic risk
protection. The administrative fee for each pro-
ducer shall be $50 per crop per county, but not
to exceed $200 per producer per county up to
a maximum of $600 per producer for all coun-
ties in which a producer has insured crops. The
administrative fee shall be paid by the producer
at the time the producer applies for cata-
strophic risk protection.
‘‘(B) WAIVER OF FEE.—The Corporation
shall waive the administrative fee for limited re-
source farmers, as defined by the Corporation.
‘‘(C) USE OF FEES.—There are authorized
to be appropriated from fees required under
subparagraph (A) such sums as may be nec-
essary for operating and administrative ex-
HR 4217 PCS
penses incurred for the delivery of catastrophic
risk protection.
‘‘(6) COVERAGE OF ALL CROPS.—To be eligible
for benefits under any commodity price support, pro-
duction adjustment, or conservation program admin-
istered by the Department of Agriculture, or for the
farmer loan programs of the Farmers Home Admin-
istration or any successor of that agency, a producer
must obtain at least catastrophic risk protection for
each crop of economic significance produced on each
farm in any county in which the producer has an in-
terest, if insurance is available in the county for
those crops. For purposes of this paragraph, the
term ‘crop of economic significance’ means a crop
that has contributed, or is expected to contribute, 10
percent or more of the total expected value of all
crops grown by the producer.
‘‘(7) COVERAGE UNDER ONE POLICY.—If a pro-
ducer applies for catastrophic risk protection for a
crop produced by the producer in a county, the pro-
ducer shall be required to secure such protection
under a single policy.
‘‘(8) AUTHORITY TO LIMIT CATASTROPHIC RISK
PROTECTION.—The Board may limit the availability
of catastrophic risk protection in any county or area,
HR 4217 PCS
or on any farm, on the basis of the insurance risk
involved.
‘‘(9) TRANSITIONAL
COVERAGE
FOR
1995
CROPS.—Effective only for the 1995 crops and for
which the sales period for crop insurance expires be-
fore the date of the enactment of the Federal Crop
Insurance Reform Act of 1994, the Corporation
shall allow producers of such crops until at least the
end of the 6-month period beginning on such date
to obtain catastrophic risk protection for such crops.
Upon the enactment of such Act, producers who
made timely purchases of a crop insurance policy be-
fore the date of the enactment of such Act, under
the provisions then in effect, shall be eligible for the
same benefits to which a producer would be entitled
under comparable buy-up coverage under subsection
(c).
‘‘(c) COVERAGE LEVELS GREATER THAN CATA-
STROPHIC RISK PROTECTION.—
‘‘(1) BUY-UP
COVERAGE
GENERALLY.—The
Corporation shall offer to producers of agricultural
commodities grown in the United States plans of
crop insurance providing levels of coverage greater
than that available under catastrophic risk protec-
tion under subsection (b). Plans of insurance under
HR 4217 PCS
‘‘(B) EXCEPTION.—If a producer elects to
purchase buy-up coverage for a crop equal to
65 percent or more of the recorded or appraised
average yield indemnified at 100 percent of the
expected market price, or an equivalent cov-
erage, the producer shall not be subject to the
administrative fee required by this paragraph or
subsection (b)(5). If the producer has already
paid the administrative fee for a lower level of
coverage for that crop, the administrative fee
shall be refunded to the producer unless the re-
fund would reduce to less than $200 the total
amount of the administrative fees paid by the
producer for 2 or more crops in the same coun-
ty for which a lower level of coverage is ob-
tained.
‘‘(3) YIELD AND LOSS BASIS.—Producers shall
have the option of purchasing buy-up coverage based
on either an individual yield and loss basis or on an
area yield and loss basis, as described in subsection
(g), when both options are offered by the Corpora-
tion.
‘‘(4) YIELD ELECTIONS.—Yield coverage shall
be made available to the producer on the basis of
any yield election that equals or is less than 85 per-
HR 4217 PCS
cent of the individual yield or 95 percent of the area
yield, as determined by the Corporation.
‘‘(5) PRICE LEVELS.—
‘‘(A) IN GENERAL.—The Corporation shall
establish a price level for each commodity on
which buy-up coverage is offered that—
‘‘(i) shall not be less than the ex-
pected market price for the commodity, as
determined by the Corporation; or
‘‘(ii) at the discretion of the Corpora-
tion, may be based on the actual market
price at the time of harvest, as determined
by the Corporation.
‘‘(B) SPECIAL RULE FOR MALTING BAR-
LEY.—For malting barley covered by a contract
between a producer and a processor, the Cor-
poration may offer a plan of insurance that al-
lows the producer to select the contract price as
the price election if—
‘‘(i) the contract is definite as to the
quantity and the price;
‘‘(ii) the producer submits a copy of
the contract with the application for insur-
ance prior to the sales closing date for the
crop;
HR 4217 PCS
‘‘(iii) coverage does not exceed the
quantity contained in the contract;
‘‘(iv) the contracted quantity does not
exceed the production guarantee;
‘‘(v) the contract is usual and cus-
tomary in form and content for the area;
‘‘(vi) the processor is completely inde-
pendent from the producer; and
‘‘(vii) the processor does not have an
insurable interest in the crop.
‘‘(6) PRICE ELECTIONS.—Subject to paragraph
(10), insurance coverage shall be made available to
the producer on the basis of any price election that
equals or is less than that established by the Board.
‘‘(7) LEVEL OF COVERAGE.—Not later than the
beginning of the 1996 crop year, the level of cov-
erage shall be quoted in terms of dollars per acre.
‘‘(8) REDUCTION IN ACTUAL PAYMENT.—The
amount paid to a producer on a claim under buy-up
coverage may reflect a reduction that is proportional
to the out-of-pocket expenses that are not incurred
by the producer as a result of not planting, growing,
or harvesting the crop for which the claim is made,
as determined by the Corporation.
HR 4217 PCS
‘‘(9) FIRE AND HAIL COVERAGE.—For levels of
buy-up coverage equal to 65 percent or more of the
recorded or appraised average yield indemnified at
100 percent of the expected market price, or an
equivalent coverage, the producer may elect to delete
from the buy-up coverage any coverage against dam-
age caused by fire and hail if the producer obtains
an equivalent or greater dollar amount of coverage
for damage caused by fire and hail from a private
insurance provider. Upon written notice of such elec-
tion to the company issuing the policy providing
buy-up coverage and submission of evidence of sub-
stitute coverage on the commodity insured, the pro-
ducer’s premium shall be reduced by an amount de-
termined by the Corporation to be actuarially appro-
priate, taking into account the actuarial value of the
remaining coverage provided by the Corporation. In
no event shall the producer be given credit for an
amount of premium determined to be greater than
the actuarial value of the protection against losses
caused by fire and hail that is included in the buy-
up coverage for the crop.
‘‘(10) LIMITATIONS ON BUY-UP COVERAGE.—
The Board may limit the availability of buy-up cov-
erage under this subsection in any county or area,
HR 4217 PCS
or on any farm, on the basis of the insurance risk
involved. The Board shall not offer buy-up coverage
equal to less than 50 percent of the recorded or ap-
praised average yield indemnified at 100 percent of
the expected market price, or an equivalent coverage.
‘‘(d) PREMIUMS.—
‘‘(1) PREMIUMS REQUIRED.—The Corporation
shall fix adequate premiums for all its plans of in-
surance at such rates as the Board deems actuari-
ally sufficient to attain an expected loss ratio of not
greater than 1.1.
‘‘(2) 
PREMIUM
AMOUNTS.—The 
premium
amounts for catastrophic risk protection under sub-
section (b) and buy-up coverage under subsection (c)
shall be fixed as follows:
‘‘(A) In the case of catastrophic risk pro-
tection, the amount of the premium shall be
sufficient to cover anticipated losses and a rea-
sonable reserve.
‘‘(B) In the case of buy-up coverage below
65 percent of the recorded or appraised average
yield indemnified at 100 percent of the expected
market price, or an equivalent coverage, but
greater than 50 percent of the recorded or ap-
praised average yield indemnified at 100 per-
HR 4217 PCS
cent of the expected market price, or an equiva-
lent coverage, the amount of the premium
shall—
‘‘(i) be sufficient to cover anticipated
losses and a reasonable reserve; and
‘‘(ii) include an amount for operating
and administrative expenses, as determined
by the Corporation, that is less than the
amount established for coverage at 65 per-
cent of the recorded or appraised average
yield indemnified at 100 percent of the ex-
pected market price, or an equivalent cov-
erage.
‘‘(C) In the case of buy-up coverage equal
to or greater than 65 percent of the recorded
or appraised average yield indemnified at 100
percent of the expected market price, or an
equivalent coverage, the amount of the premium
shall—
‘‘(i) be sufficient to cover anticipated
losses and a reasonable reserve; and
‘‘(ii) include an amount for operating
and administrative expenses, as determined
by the Corporation, on an industry-wide
basis as a percent of the amount of the
HR 4217 PCS
‘‘(B) The combined policy shall include
area yield coverage that is offered by the Cor-
poration or similar area coverage, as deter-
mined by the Corporation.
‘‘(C) The Corporation shall provide rein-
surance on the area yield portion of the com-
bined policy at the request of the provider, ex-
cept that the provider shall agree to pay to the
producer any portion of the area yield and loss
indemnity payment received from the Corpora-
tion or a commercial reinsurer that exceeds the
individual indemnity payment made by the pro-
vider to the producer.
‘‘(D) The Corporation shall pay a part of
the premium equivalent to—
‘‘(i) the amount authorized under sub-
section (e)(2) (except provisions regarding
operating and administrative expenses);
and
‘‘(ii) the amount of operating and ad-
ministrative expenses authorized by the
Corporation for the area yield coverage
portion of the combined policy.
‘‘(E) The provider shall provide all under-
writing services for the combined policy, includ-
HR 4217 PCS
ing the determination of individual yield cov-
erage premium rates, the terms and conditions
of the policy, and the acceptance and classifica-
tion of applicants into risk categories, subject to
subparagraph (F).
‘‘(F) The Corporation shall approve the
combined policy unless the Corporation deter-
mines that the policy is not actuarially sound or
that the interests of producers are not ade-
quately protected.’’.
‘‘(e) PAYMENT OF PORTION OF PREMIUM BY COR-
PORATION.—
‘‘(1) IN GENERAL.—For the purpose of encour-
aging the broadest possible participation of produc-
ers in the catastrophic risk protection provided
under subsection (b) and the buy-up coverage pro-
vided under subsection (c), the Corporation shall pay
a part of the premium in the amounts provided in
this subsection.
‘‘(2) AMOUNT OF PAYMENT.—The amount of
the premium to be paid by the Corporation shall be
as follows:
‘‘(A) In the case of catastrophic risk pro-
tection, the amount shall be equivalent to the
HR 4217 PCS
premium established for catastrophic risk pro-
tection under subsection (d)(2)(A).
‘‘(B) In the case of coverage below 65 per-
cent of the recorded or appraised average yield
indemnified at 100 percent of the expected mar-
ket price, or an equivalent coverage, but greater
than 50 percent of the recorded or appraised
average yield indemnified at 100 percent of the
expected market price, or an equivalent cov-
erage, the amount shall be equivalent to the
amount of premium established for catastrophic
risk protection coverage and the amount of op-
erating and administrative expenses established
under subsection (d)(2)(B).
‘‘(C) In the case of coverage equal to or
greater than 65 percent of the recorded or ap-
praised average yield indemnified at 100 per-
cent of the expected market price, or an equiva-
lent coverage, on an individual or area basis,
the amount shall be equivalent to an amount
equal to the premium established for 50 percent
loss in yield indemnified at 75 percent of the
expected market price and the amount of oper-
ating and administrative expenses established
under subsection (d)(2)(C).
HR 4217 PCS
‘‘(3) 
STATE
SUBSIDY
AUTHORIZED.—The
Board may enter into agreements with any State or
agency of a State under which the State or agency
may pay to the approved insurance provider an addi-
tional premium subsidy to further reduce the portion
of the premium paid by producers in the State.
‘‘(f) ELIGIBILITY REQUIREMENTS.—
‘‘(1) PERSONS ELIGIBLE.—Except as otherwise
provided in this title, no producer may be denied in-
surance under this section if the producer meets the
definition of person, as defined by the Secretary. In
the case of plans of insurance under this title other
than catastrophic risk protection, the definition of
person shall include a producer who is over 18 years
of age or older and has a bona fide insurable inter-
est in a crop as an owner, owner-operator, landlord,
tenant, or sharecropper.
‘‘(2) SALES CLOSING DATE.—A producer who
desires to obtain catastrophic risk protection under
subsection (b) or buy-up coverage under subsection
(c) for a crop shall submit an application by the
sales closing date for the crop. The Corporation
shall establish sales closing dates to maximize con-
venience to producers in obtaining benefits under
commodity price support and production adjustment
HR 4217 PCS
programs of the Department whenever feasible; ex-
cept that, in establishing such dates, the Corporation
shall ensure that the goal of actuarial soundness for
the crop insurance program under this title is met.
Beginning with the 1995 crop year, the Corporation
shall establish for each insurable crop a sales closing
date that is 30 days earlier than the corresponding
sales closing date that was established for the 1994
crop year.
‘‘(3) RECORDS
AND
REPORTING.—To obtain
catastrophic risk protection under subsection (b) or
buy-up coverage under subsection (c), a producer
shall—
‘‘(A) provide, to the extent required by the
Corporation, records acceptable to the Corpora-
tion of historical acreage and production of the
crops for which the insurance is sought or ac-
cept a yield determined by the Corporation; and
‘‘(B) report acreage planted and prevented
from planting by the designated acreage report-
ing date for that crop and location as estab-
lished by the Corporation.
‘‘(4) LIMITATION ON MULTIPLE BENEFITS FOR
SAME LOSS.—If a producer who is eligible to receive
benefits under catastrophic risk protection under
HR 4217 PCS
subsection (b) or noninsured crop disaster assistance
under section 519 is also eligible to receive assist-
ance for the same loss under any other program ad-
ministered by the Secretary, the producer shall be
required to elect whether to receive benefits under
this title or under such other program, but not both.
A producer who purchases buy-up coverage under
subsection (c) may also receive assistance for the
same loss under other programs administered by the
Secretary, except that the amount received for the
loss under the buy-up coverage together with the
amount received under such other programs may not
exceed the amount of the producer’s actual loss.
‘‘(g) YIELD COVERAGE DETERMINATIONS.—
‘‘(1) IN GENERAL.—The Corporation shall im-
plement crop insurance underwriting rules that en-
sure that yield coverage, as specified in this sub-
section, is provided to eligible producers obtaining
catastrophic risk protection under subsection (b) or
buy-up coverage under subsection (c).
‘‘(2) INDIVIDUAL YIELD BASIS.—
‘‘(A) ACTUAL PRODUCTION HISTORY.—The
Corporation shall determine yield coverage
using the producer’s actual production history
over a period of not less than the 4 previous
HR 4217 PCS
consecutive crop years and not more than 10
consecutive crop years. Subject to subparagraph
(B), the yield for insurance purposes for the
year for which insurance is sought shall be
equal to the average of the producer’s actual
production history during the period considered.
‘‘(B) ASSIGNMENT OF YIELD.—Except as
provided in subparagraphs (C) and (D), if a
producer does not submit adequate documenta-
tion of production history to determine crop
yield under subparagraph (A), the Corporation
shall assign to the producer a yield equal to not
less than 65 percent of the transitional yield of
the producer (adjusted to reflect actual produc-
tion reflected in the records acceptable to the
Corporation for continuous years), as specified
in regulations issued by the Corporation based
on production history requirements.
‘‘(C) 
PILOT
PROGRAM
OF
ASSIGNED
YIELDS FOR NEW PRODUCERS.—
‘‘(i) PROGRAM REQUIRED.—For each
of the 1995 and 1996 crop years, the Cor-
poration shall carry out a pilot program to
assign to eligible new producers higher as-
signed yields than would otherwise be as-
HR 4217 PCS
signed to such producers under subpara-
graph (B). The Corporation shall include
in the pilot program 30 counties that are
determined by the Corporation to be ade-
quate to provide a comprehensive evalua-
tion of the feasibility, effectiveness, and de-
mand among new producers for increased
assigned yields.
‘‘(ii) INCREASED ASSIGNED YIELDS.—
In the case of an eligible new producer
participating in the pilot program, the Cor-
poration shall assign to the new producer
a yield equal to not less than 110 percent
of the transitional yield otherwise estab-
lished by the Corporation.
‘‘(iii) ELIGIBLE
NEW
PRODUCER.—
The Secretary shall establish a definition
of new producer for purposes of determin-
ing eligibility to participate in the pilot
program.
‘‘(D) ALTERNATIVE ASSIGNED YIELDS FOR
PRODUCERS OF FEED OR FORAGE.—
‘‘(i) FEED OR FORAGE YIELDS.—For
the first crop year for which an eligible
producer described in clause (ii) obtains
HR 4217 PCS
catastrophic risk protection under sub-
section (b) or buy-up coverage under sub-
section (c) for a feed or forage crop, the
Corporation shall assign to the producer a
yield equal to not less than 80 percent of
the transitional yield established by the
Corporation (adjusted to reflect the actual
production history of the producer) if the
producer does not provide satisfactory evi-
dence of the yield under subparagraph (A).
For not more than three additional years,
the Corporation shall provide the producer
with a yield based on the greater of—
‘‘(I) the producer’s actual pro-
duction history for the preceding year
(or years if available); and
‘‘(II) the assigned yield deter-
mined under this clause.
‘‘(ii) ELIGIBLE PRODUCERS.—An eli-
gible producer referred to in clause (i) is a
producer that, as determined by the Sec-
retary—
‘‘(I) grows the insured feed or
forage crop primarily for on-farm use
HR 4217 PCS
in a livestock, dairy, or poultry oper-
ation; and
‘‘(II) derives over 50 percent of
the producer’s gross farm income
from the livestock, dairy, or poultry
operation.
‘‘(iii) TERMINATION OF AUTHORITY.—
The authority provided by this subpara-
graph shall apply only during the 1995
through 1998 crop years.
‘‘(3) AREA YIELD BASIS.—The Corporation may
offer a crop insurance plan based on an area yield
that allows an insured producer to qualify for an in-
demnity if a loss occurs in an area, as specified by
the Corporation, in which the farm of the producer
is located. Under an area yield plan, an insured pro-
ducer shall be allowed to select the level of area pro-
duction at which an indemnity will be paid consist-
ent with the terms and conditions established by the
Corporation.
‘‘(4) 
COMMODITY-BY-COMMODITY
BASIS.—A
producer may choose between either individual yield
or area yield coverage, where available, on a com-
modity-by-commodity basis.’’.
(b) CONFORMING AMENDMENTS.—
HR 4217 PCS
(1) REPEAL
OF
EXISTING
CROP
INSURANCE
YIELD
COVERAGE.—Section 508A of the Federal
Crop Insurance Act (7 U.S.C. 1508A) is repealed.
(2) PREEMPTION.—Section 511 of such Act (7
U.S.C. 1511) is amended by adding at the end the
following sentence: ‘‘The Corporation’s contracts of
insurance and the contracts of insurance reinsured
by the Corporation shall be exempt from taxation
imposed by any State, municipality, or local taxing
authority.’’.
(3) PERSONS UNDER 21 YEARS OF AGE.—Sec-
tion 520 of such Act (7 U.S.C. 1520) is repealed.
SEC. 7. PREPARATION OF POLICIES, CLAIMS, AND REIN-
SURANCE.
(a) SUBMISSION OF POLICIES.—Subsection (h) of
section 508 of the Federal Crop Insurance Act (7 U.S.C.
1508), as redesignated by section 6(a)(2), is amended—
(1) in paragraph (1), by striking ‘‘subsection
(a)’’ and inserting ‘‘subsection (c)’’; and
(2) by striking paragraphs (2), (3), and (4) and
inserting the following new paragraphs:
‘‘(2) SUBMISSION
OF
POLICIES.—A policy or
other material submitted to the Board under this
subsection may be prepared without regard to the
limitations contained in this title, including the re-
HR 4217 PCS
quirements concerning the levels of coverage and
rates and the requirement that a price level for each
commodity insured must equal the expected market
price for the commodity as established by the Board.
In the case of such a policy, the payment by the
Corporation of a portion of the premium of the pol-
icy may not exceed the amount that would otherwise
be authorized under subsection (e).
‘‘(3) REVIEW AND APPROVAL BY THE BOARD.—
A policy or other material submitted to the Board
under this subsection shall be reviewed by the Board
and, if the Board finds that the interests of produc-
ers are adequately protected and that any premiums
charged to such producers are actuarially appro-
priate, shall be approved by the Board for reinsur-
ance and for sale to producers as an additional
choice at actuarially appropriate rates and under ap-
propriate terms and conditions. The Corporation
may enter into more than one reinsurance agree-
ment with the private insurance provider simulta-
neously to facilitate the offering of such new policies.
‘‘(4) GUIDELINES
FOR
SUBMISSION
AND
RE-
VIEW.—The Corporation shall issue regulations to
establish guidelines for the submission and Board
review of policies or other material submitted to the
HR 4217 PCS
Board under this subsection. At a minimum, the
guidelines shall ensure the following:
‘‘(A) Proposals submitted to the Board
under this subsection shall be considered as
confidential commercial or financial information
for purposes of section 552(b)(4) of title 5,
United States Code, until approved by the
Board. Proposals disapproved by the Board
shall remain confidential commercial or finan-
cial information.
‘‘(B) The Board shall provide an applicant
with the opportunity to present the proposal to
the Board in person if the applicant so desires.
‘‘(C) The Board shall provide an applicant
with notification of intent to disapprove a pro-
posal not later than 30 days prior to taking
such action. An applicant that receives such no-
tification may modify such application, and
such modification shall be considered an origi-
nal application for purposes of this paragraph.
‘‘(D) Specific guidelines shall deal with the
timing of submission of proposals under this
subsection and timely consideration by the
Board so that any approved proposal may be
made available to all persons reinsured by the
HR 4217 PCS
Corporation in a manner permitting them to
participate, if they so desire, in offering such a
proposal in the first crop year in which it is ap-
proved by the Board for reinsurance, premium
subsidy, or other support offered by this title.
‘‘(5) REQUIRED
PUBLICATION.—Any policies,
provisions of policies, and rates approved under this
subsection shall be published as a notice in the Fed-
eral Register and made available to all persons con-
tracting with or reinsured by the Corporation under
the same terms and conditions as between the Cor-
poration and the person originally submitting the
policy or other material.’’.
(b) CLAIMS FOR LOSSES AND REINSURANCE.—Sec-
tion 508 of the Federal Crop Insurance Act (7 U.S.C.
1508) is further amended—
(1) by redesignating subsections (j) and (k) as
subsections (l) and (m), respectively; and
(2) inserting after subsection (i), as redesig-
nated by section 6(a)(2), the following new sub-
sections:
‘‘(j) CLAIMS FOR LOSSES.—
‘‘(1) IN GENERAL.—Under rules prescribed by
the Corporation, the Corporation may provide for
adjustment and payment of claims for losses. The
HR 4217 PCS
rules prescribed by the Corporation shall establish
standards to ensure that all claims for losses are ad-
justed, to the extent practicable, in a uniform and
timely manner.
‘‘(2) DENIAL OF CLAIMS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), if a claim for indemnity is denied by
the Corporation, an action on the claim may be
brought against the Corporation or Secretary
only in the United States district court for the
district in which the insured farm is located.
‘‘(B) STATUTE OF LIMITATIONS.—A suit
on the claim may be brought not later than 1
year after the date on which written notice of
denial of the claim is provided to the claimant.
‘‘(3) INDEMNIFICATION.—The Corporation shall
provide private insurance providers with indemnifica-
tion, including costs and reasonable attorney fees in-
curred by the private insurance provider, due to er-
rors or omissions on the part of the Corporation.
‘‘(k) REINSURANCE.—Notwithstanding any other
provision of this title, the Corporation shall, to the maxi-
mum extent practicable, provide reinsurance to insurers
approved by the Corporation that insure producers of any
agricultural commodity under a plan or plans acceptable
HR 4217 PCS
to the Corporation. Such reinsurance shall be provided
upon such terms and conditions as the Board may deter-
mine to be consistent with subsections (b) and (c) and
sound reinsurance principles. The Corporation’s reinsur-
ance agreements with the reinsured companies shall re-
quire the reinsured companies to bear a sufficient share
of any potential loss under such agreement so as to ensure
that the reinsured company will sell and service policies
of insurance in a sound and prudent manner, taking into
consideration the financial condition of the reinsured com-
panies and the availability of private reinsurance.’’.
(c) CROSS REFERENCES.—
(1) CLAIMS
FOR
LOSSES.—Section 506(d) of
the Federal Crop Insurance Act (7 U.S.C. 1506(d))
is amended in the first sentence by striking ‘‘section
508(f)’’ and inserting ‘‘section 508(j)’’.
(2) SUBMISSION OF MATERIALS TO BOARD.—
Section 507(c) of such Act (7 U.S.C. 1507(c)) is
amended in the last sentence by striking ‘‘section
508(b)’’ and inserting ‘‘section 508(h)’’.
(3) DEFINITION OF AGRICULTURAL COMMOD-
ITY.—Section 518 of such Act (7 U.S.C. 1518) is
amended by striking ‘‘or (k)’’ and inserting ‘‘or
(m)’’.
HR 4217 PCS
SEC. 8. AUTHORIZATION OF APPROPRIATIONS AND CROP
INSURANCE FUND.
Section 516 of the Federal Crop Insurance Act (7
U.S.C. 1516) is amended to read as follows:
‘‘SEC. 516. FUNDING.
‘‘(a) AUTHORIZATION OF APPROPRIATIONS FOR COR-
PORATION SALARIES AND AGENT COMMISSIONS.—There
are hereby authorized to be appropriated such sums as
are necessary to cover the salaries and administrative ex-
penses of the Corporation and the administrative and op-
erating expenses of the Corporation for the sales commis-
sions of agents.
‘‘(b) CROP INSURANCE FUND.—
‘‘(1) ESTABLISHMENT.—There is hereby estab-
lished an insurance fund for deposit of premiums
collected under section 508(d), income from reinsur-
ance operations, and appropriations made available
under paragraph (2).
‘‘(2) AUTHORIZATION
OF
APPROPRIATIONS.—
There are hereby authorized to be appropriated such
sums as may be necessary to carry out the purposes
of the insurance fund.
‘‘(c) PURPOSES OF INSURANCE FUND.—In such ag-
gregate amount as is provided in advance in appropria-
tions Acts, the Corporation may use amounts in the insur-
ance fund to pay the following:
HR 4217 PCS
‘‘(1) Beginning with the 1998 crop year, the
administrative and operating expenses of approved
insurance providers, other than expenses for which
funds are authorized to be appropriated under sub-
section (a).
‘‘(2) All other expenses of the Corporation
(other than expenses for which funds are authorized
to be appropriated under subsection (a)), including
all premium subsidies and indemnities.
‘‘(3) For the 1995, 1996, and 1997 crop years,
all administrative and expense reimbursements due
under a reinsurance agreement with an approved
private insurance provider.
‘‘(4) Expenses incurred by the Corporation to
carry out research and development.
‘‘(d) PURCHASE OF AMERICAN-MADE EQUIPMENT
AND PRODUCTS.—
‘‘(1) SENSE OF CONGRESS.—It is the sense of
the Congress that, to the greatest extent practicable,
all equipment and products purchased by the Cor-
poration using funds made available to the Corpora-
tion should be American-made.
‘‘(2) NOTICE REQUIREMENT.—In providing fi-
nancial assistance to, or entering into any contract
with, any entity for the purchase of equipment and
HR 4217 PCS
products to carry out this title, the Corporation, to
the greatest extent practicable, shall provide to such
entity a notice describing the statement made in
paragraph (1) by the Congress.’’.
SEC. 9. ADVISORY COMMITTEE.
The Federal Crop Insurance Act is amended by in-
serting after section 514 (7 U.S.C. 1514) the following
new section:
‘‘SEC. 515. ADVISORY COMMITTEE FOR FEDERAL CROP IN-
SURANCE.
‘‘(a) ESTABLISHMENT
AND
TERMINATION.—The
Secretary may establish within the Department of Agri-
culture an advisory committee to be known as the Advisory
Committee for Federal Crop Insurance. If established, the
Advisory Committee shall remain in existence until Sep-
tember 30, 1998.
‘‘(b) PRIMARY RESPONSIBILITY.—The primary re-
sponsibility of the Advisory Committee shall be to advise
the Secretary on the implementation of this title and on
other issues related to crop insurance, as determined by
the Manager.
‘‘(c) MEMBERSHIP.—The Advisory Committee shall
be composed of the Manager of the Corporation, the Sec-
retary (or a designee of the Secretary), and not less than
12 members representing organizations and agencies in-
HR 4217 PCS
volved in the provision of crop insurance under this title.
Not less than 3 of the members of the Advisory Committee
shall be representatives of the specialty crops industry.
The organizations or agencies represented by members on
the Advisory Committee may include insurance companies,
insurance agents, farm producer organizations, experts on
agronomic practices, and banking and lending institutions.
‘‘(d) ADMINISTRATIVE PROVISIONS.—
‘‘(1) TERMS.—Members of the Advisory Com-
mittee shall be appointed by the Secretary for a
term of up to 2 years from nominations made by the
organizations and agencies specified in subsection
(c). The terms of the members shall be staggered.
‘‘(2) CHAIRPERSON.—The Advisory Committee
shall be chaired by the Manager of the Corporation.
‘‘(3) MEETINGS.—The Advisory Committee
shall meet at least annually. The meetings of the
Advisory Committee shall be publicly announced in
advance and shall be open to the public. Appropriate
records of the activities of the Advisory Committee
shall be kept and made available to the public on re-
quest.
‘‘(e) REPORTS.—Not later than June 30 of each year,
the Advisory Committee shall submit to the Secretary a
HR 4217 PCS
report specifying its conclusions and recommendations re-
garding—
‘‘(1) the progress toward implementation of the
provisions of this title;
‘‘(2) the actuarial soundness of the Federal
crop insurance program;
‘‘(3) the rate of producer participation in both
catastrophic risk protection under section 508(b)
and buy-up coverage under section 508(c); and
‘‘(4) the progress toward improved crop insur-
ance coverage for new and specialty crops.’’.
SEC. 10. NONINSURED CROP DISASTER ASSISTANCE.
(a) IN GENERAL.—Section 519 of the Federal Crop
Insurance Act (7 U.S.C. 1519) is amended to read as fol-
lows:
‘‘SEC. 519. NONINSURED CROP DISASTER ASSISTANCE PRO-
GRAM.
‘‘(a) ESTABLISHMENT OF PROGRAM.—
‘‘(1) ESTABLISHMENT.—In the case of an eligi-
ble crop described in paragraph (2), the Corporation
shall establish a noninsured crop disaster assistance
program to provide coverage equivalent to the cata-
strophic risk protection otherwise available under
section 508(b).
‘‘(2) ELIGIBLE CROPS.—
HR 4217 PCS
‘‘(A) IN GENERAL.—For purposes of this
section, the term ‘eligible crop’ means each
commercial crop or other agricultural commod-
ity (except livestock)—
‘‘(i) for which catastrophic risk pro-
tection under section 508(b) is not avail-
able; and
‘‘(ii) which is produced for food or
fiber.
‘‘(B) CROPS
SPECIFICALLY
INCLUDED.—
The term ‘eligible crop’ shall include floricul-
tural, ornamental nursery, and Christmas tree
crops and turfgrass sod.
‘‘(3) CAUSE OF LOSS.—To qualify for assist-
ance under this section, the losses of the noninsured
commodity shall be due to drought, flood, or other
natural disaster, as determined by the Secretary.
‘‘(b) APPLICATION FOR NONINSURED CROP DISAS-
TER ASSISTANCE.—
‘‘(1) TIMELY APPLICATION.—To be eligible for
assistance under this section, producers shall submit
an application for noninsured crop disaster assist-
ance at a local office of the Department of Agri-
culture. The application shall be in such form, con-
HR 4217 PCS
tain such information, and be submitted at such
time as the Corporation may require.
‘‘(2) RECORDS
AND
REPORTS.—To obtain
noninsured crop disaster assistance, a producer
shall—
‘‘(A) provide records acceptable to the Cor-
poration of historical acreage and production of
the eligible crops for which assistance is sought
or accept a yield determined by the Corpora-
tion; and
‘‘(B) report acreage planted and prevented
from planting by the designated acreage report-
ing date for that crop and location as estab-
lished by the Corporation.
‘‘(3) EXCLUSIONS.—Noninsured crop disaster
assistance under this section shall not cover losses
due to—
‘‘(A) the neglect or malfeasance of the pro-
ducer;
‘‘(B) the failure of the producer to reseed
to the same crop in those areas and under such
circumstances where it is customary to reseed;
or
HR 4217 PCS
‘‘(C) the failure of the producer to follow
good farming practices, as determined by the
Corporation.
‘‘(4) REVENUE LIMITATION.—A person who has
qualifying gross revenues in excess of $2,000,000
annually, as determined by the Secretary, shall not
be eligible to receive any noninsured crop disaster
assistance payments. For purposes of this section,
the term ‘qualifying gross revenues’ means—
‘‘(A) if a majority of the person’s gross
revenue is received from farming, ranching, and
forestry operations, the gross revenue from the
person’s farming, ranching, and forestry oper-
ations; and
‘‘(B) if less than a majority of the person’s
gross revenue is received from farming, ranch-
ing, and forestry operations, the person’s gross
revenue from all sources.
‘‘(c) LOSS REQUIREMENTS.—
‘‘(1) REQUIRED AREA LOSS.—A producer of an
eligible crop shall not receive noninsured crop disas-
ter assistance unless the average yield for that crop,
or an equivalent measure in the event yield data are
not available, in an area falls below 65 percent of
HR 4217 PCS
the expected area yield, as established by the Cor-
poration.
‘‘(2) PREVENTED PLANTING.—Subject to para-
graph (1), the Corporation shall make a prevented
planting noninsured crop disaster assistance pay-
ment if the producer is prevented from planting
more than 35 percent of the acreage intended for
the eligible crop because of drought, flood, or other
natural disaster, as determined by the Secretary.
‘‘(3) REDUCED YIELDS.—Subject to paragraph
(1), the Corporation shall make a reduced yield
noninsured crop disaster assistance payment if the
total quantity of the eligible crop that a producer is
able to harvest on any farm is, because of drought,
flood, or other natural disaster as determined by the
Secretary, less than 50 percent of the expected indi-
vidual yield for the crop, as determined by the Cor-
poration, factored for the producer’s interest for the
crop.
‘‘(d) PAYMENTS.—
‘‘(1) REDUCED YIELDS.—If the producer is eli-
gible for reduced yield noninsured crop disaster as-
sistance, payments shall be made for farm losses in
excess of 50 percent of the established farm yield for
the eligible crop indemnified at 60 percent of the av-
HR 4217 PCS
erage market price for that crop, or a comparable
coverage as determined by the Corporation. Any eli-
gible crop that is produced with significant and vari-
able, post-planting expenses, the payment shall be
reduced to reflect reduced production costs and har-
vesting costs if the crop is not harvested.
‘‘(2) PREVENTED PLANTING.—If the producer
is eligible for a prevented planting payment under
this section, the amount paid to the producer on a
claim under this section may reflect a reduction that
is proportional to the out-of-pocket expenses that are
not incurred by the producer as a result of not
planting, growing, or harvesting the crop for which
the claim is made, as determined by the Corpora-
tion.
‘‘(e) YIELD DETERMINATIONS.—
‘‘(1) ESTABLISHMENT.—The Corporation shall
establish farm yields for purposes of providing
noninsured crop disaster assistance under this sec-
tion.
‘‘(2) ACTUAL PRODUCTION HISTORY.—The Cor-
poration shall determine yield coverage using the
producer’s actual production history over a period of
not less than the 4 previous consecutive crop years
and not more than 10 consecutive crop years. Sub-
HR 4217 PCS
ject to paragraph (3), the yield for the year in which
noninsured crop disaster assistance is sought shall
be equal to the average of the producer’s actual pro-
duction history during the period considered.
‘‘(3) ASSIGNMENT
OF
YIELD.—If a producer
does not submit adequate documentation of produc-
tion history to determine a crop yield under para-
graph (2), the Corporation shall assign to the pro-
ducer a yield equal to not less than 65 percent of
the transitional yield of the producer (adjusted to re-
flect actual production reflected in the records ac-
ceptable to the Corporation for continuous years), as
specified in regulations issued by the Corporation
based on production history requirements.
‘‘(4) PROHIBITION
ON
ASSIGNED
YIELDS
IN
CERTAIN COUNTIES.—If the acreage of a crop in a
county has increased by more than 100 percent
since the 1987 crop year, a producer who produces
that crop on a farm located in that county may not
obtain an assigned yield under paragraph (3). In-
stead, the producer must provide detailed docu-
mentation of production costs, acres planted, and
yield (as required by the Corporation) to become eli-
gible for a noninsured assistance payment.
HR 4217 PCS
‘‘(5) LIMITATION ON RECEIPT OF SUBSEQUENT
ASSIGNED YIELD.—A producer who receives an as-
signed yield for the current year of a natural disas-
ter because required production records were not
submitted to the local office of the Department shall
not be eligible for an assigned yield for the year of
the next natural disaster unless the required produc-
tion records of the previous 1 or more years (as ap-
plicable) are provided to the local office.
‘‘(6) YIELD
VARIATIONS
DUE
TO
DIFFERENT
FARMING PRACTICES.—The Corporation shall ensure
that noninsured crop disaster assistance accurately
reflects significant yield variations due to different
farming practices, such as between irrigated and
nonirrigated acreage.
‘‘(f) 
PAYMENT
OF
LOSSES.—Payments 
for
noninsured crop disaster assistance losses under this sec-
tion shall be made from the insurance fund established
under section 516. Such losses shall not be included in
calculating the premiums charged to producers for insur-
ance under section 508.
‘‘(g) PAYMENT LIMITATIONS.—The total amount of
payments that a person shall be entitled to receive annu-
ally under this section may not exceed $100,000. For pur-
poses of applying this limitation, the Secretary shall issue
HR 4217 PCS
regulations defining the term ‘person’ that shall conform,
to the extent practicable, to the regulations defining ‘per-
son’ issued under section 1001 of the Food Security Act
of 1985 (7 U.S.C. 1308).’’.
(b) CONFORMING AMENDMENTS.—
(1) EXISTING EMERGENCY CROP LOSS ASSIST-
ANCE PROGRAM.—Effective July 1, 1995, chapter 3
of subtitle B of title XXII of the Food, Agriculture,
Conservation, and Trade Act of 1990 (7 U.S.C.
1421 note) is amended by striking subchapter A.
(2) EMERGENCY
APPROPRIATIONS.—Effective
July 1, 1995, the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended—
(A) in section 251(b)(2)(D)(i) (2 U.S.C.
901(b)(2)(D)(i)), by adding at the end the fol-
lowing new sentence: ‘‘The preceding sentence
shall not apply to appropriations to cover agri-
cultural crop disaster assistance.’’; and
(B) in section 252(e) (2 U.S.C. 902(e)), by
adding at the end the following new sentence:
‘‘The preceding sentence shall not apply to di-
rect spending provisions to cover agricultural
crop disaster assistance.’’.
HR 4217 PCS
SEC. 11. CROP INSURANCE REQUIREMENTS UNDER PRICE
SUPPORT PROGRAMS.
(a) RICE.—Section 101B(c) of the Agricultural Act
of 1949 (7 U.S.C. 1441–2(c)) is amended—
(1) by striking paragraph (1)(F); and
(2) by striking paragraph (2) and inserting in
lieu thereof the following:
‘‘(2) CROP INSURANCE REQUIREMENT.—As a
condition of receiving any benefit (including pay-
ments) under this section, a producer must obtain at
least catastrophic risk protection insurance coverage
under section 508(b) of the Federal Crop Insurance
Act for the crop and crop year in which the benefit
is sought, if such coverage is offered by the Federal
Crop Insurance Corporation.’’.
(b) EXTRA LONG STAPLE COTTON.—Section 103(h)
of the Agricultural Act of 1949 (7 U.S.C. 1444(h)) is
amended—
(1) by redesignating paragraph (16) as para-
graph (17) and moving the margin 2 ems to the left;
and
(2) by inserting after paragraph (15) the fol-
lowing new paragraph:
‘‘(16) CROP INSURANCE REQUIREMENT.—As a con-
dition of receiving any benefit (including payments) under
this section, a producer must obtain at least catastrophic
HR 4217 PCS
risk protection insurance coverage under section 508(b)
of the Federal Crop Insurance Act for the crop and crop
year in which the benefit is sought, if such coverage is
offered by the Federal Crop Insurance Corporation.’’.
(c) UPLAND COTTON.—Section 103B(c) of the Agri-
cultural Act of 1949 (7 U.S.C. 1444–2(c)) is amended—
(1) by striking paragraph (1)(F); and
(2) by striking paragraph (2) and inserting in
lieu thereof the following:
‘‘(2) CROP INSURANCE REQUIREMENT.—As a
condition of receiving any benefit (including pay-
ments) under this section, a producer must obtain at
least catastrophic risk protection insurance coverage
under section 508(b) of the Federal Crop Insurance
Act for the crop and crop year in which the benefit
is sought, if such coverage is offered by the Federal
Crop Insurance Corporation.’’.
(d) FEED GRAINS.—Section 105B(c) of the Agricul-
tural Act of 1949 (7 U.S.C. 1444f(c)) is amended—
(1) by striking paragraph (1)(G); and
(2) by striking paragraph (2) and inserting in
lieu thereof the following:
‘‘(2) CROP INSURANCE REQUIREMENT.—As a
condition of receiving any benefit (including pay-
ments) under this section, a producer must obtain at
HR 4217 PCS
least catastrophic risk protection insurance coverage
under section 508(b) of the Federal Crop Insurance
Act for the crop and crop year in which the benefit
is sought, if such coverage is offered by the Federal
Crop Insurance Corporation.’’.
(e) TOBACCO.—Section 106 of the Agricultural Act
of 1949 (7 U.S.C. 1445) is amended by striking sub-
section (e) and inserting in lieu thereof the following:
‘‘(e) CROP INSURANCE REQUIREMENT.—As a condi-
tion of receiving any benefit (including payments) under
this section, a producer must obtain at least catastrophic
risk protection insurance coverage under section 508(b)
of the Federal Crop Insurance Act for the crop and crop
year in which the benefit is sought, if such coverage is
offered by the Federal Crop Insurance Corporation.’’.
(f) WHEAT.—Section 107B(c) of the Agricultural Act
of 1949 (7 U.S.C. 1444b–3a(c)) is amended—
(1) by striking paragraph (1)(G); and
(2) by striking paragraph (2) and inserting in
lieu thereof the following:
‘‘(2) CROP INSURANCE REQUIREMENT.—As a
condition of receiving any benefit (including pay-
ments) under this section, a producer must obtain at
least catastrophic risk protection insurance coverage
under section 508(b) of the Federal Crop Insurance
HR 4217 PCS
Act for the crop and crop year in which the benefit
is sought, if such coverage is offered by the Federal
Crop Insurance Corporation.’’.
(g) PEANUTS.—Section 108B of the Agricultural Act
of 1949 (7 U.S.C. 1445c–3) is amended—
(1) by redesignating subsection (h) as sub-
section (i); and
(2) by inserting after subsection (g) the follow-
ing new subsection:
‘‘(h) CROP INSURANCE REQUIREMENT.—As a condi-
tion of receiving any benefit (including payments) under
this section, a producer must obtain at least catastrophic
risk protection insurance coverage under section 508(b)
of the Federal Crop Insurance Act for the crop and crop
year in which the benefit is sought, if such coverage is
offered by the Federal Crop Insurance Corporation.’’.
(h) OILSEEDS.—Section 205 of the Agricultural Act
of 1949 (7 U.S.C. 1446f) is amended—
(1) by redesignating subsection (n) as sub-
section (o); and
(2) by inserting after subsection (m) the follow-
ing new subsection:
‘‘(n) CROP INSURANCE REQUIREMENT.—As a condi-
tion of receiving any benefit (including payments) under
this section, a producer must obtain at least catastrophic
HR 4217 PCS
risk protection insurance coverage under section 508(b)
of the Federal Crop Insurance Act for the crop and crop
year in which the benefit is sought, if such coverage is
offered by the Federal Crop Insurance Corporation.’’.
(i) SUGAR.—Section 206 of the Agricultural Act of
1949 (7 U.S.C. 1446g) is amended—
(1) by redesignating subsection (j) as sub-
section (k); and
(2) by inserting after subsection (i) the follow-
ing new subsection:
‘‘(j) CROP INSURANCE REQUIREMENT.—As a condi-
tion of receiving any benefit (including payments) under
this section, a producer must obtain at least catastrophic
risk protection insurance coverage under section 508(b)
of the Federal Crop Insurance Act for the crop and crop
year in which the benefit is sought, if such coverage is
offered by the Federal Crop Insurance Corporation.’’.
(j) HONEY.—Section 207 of the Agricultural Act of
1949 (7 U.S.C. 1446h) is amended—
(1) by redesignating subsection (j) as sub-
section (k); and
(2) by inserting after subsection (i) the follow-
ing new subsection:
‘‘(j) CROP INSURANCE REQUIREMENT.—As a condi-
tion of receiving any benefit (including payments) under
HR 4217 PCS
this section, a producer must obtain at least catastrophic
risk protection insurance coverage under section 508(b)
of the Federal Crop Insurance Act for the crop and crop
year in which the benefit is sought, if such coverage is
offered by the Federal Crop Insurance Corporation.’’.
(k) DISASTER PAYMENTS.—Section 208 of the Agri-
cultural Act of 1949 (7 U.S.C. 1446i) is repealed.
SEC. 12. ELIMINATION OF GENDER REFERENCES.
(a) MANAGEMENT OF CORPORATION.—Section 505
of the Federal Crop Insurance Act (7 U.S.C. 1505) is
amended—
(1) in subsection (a), by striking the third sen-
tence and inserting ‘‘The Board shall be appointed
by, and hold office at the pleasure of, the Secretary.
The Secretary shall not be a member of the Board.’’;
and
(2) in subsection (d)—
(A) by striking ‘‘upon him’’; and
(B) by striking ‘‘He shall be appointed
by,’’ and inserting ‘‘The manager shall be ap-
pointed by,’’.
(b) PERSONNEL.—Section 507 of such Act (7 U.S.C.
1507) is amended—
(1) in subsection (a), by striking ‘‘as he may
determine: Provided, That’’ and inserting ‘‘as the
HR 4217 PCS
Secretary may determine appropriate. However,’’;
and
(2) in subsection (d), by striking ‘‘as he may re-
quest’’ and inserting ‘‘that the Secretary requests’’.
(c) INDEMNITIES EXEMPT FROM LEVY.—Section
509 of such Act (7 U.S.C. 1509) is amended by striking
‘‘or his estate’’ and inserting ‘‘or the estate of the in-
sured’’.
SEC. 13. GAO CROP INSURANCE PROVIDER STUDY.
(a) The General Accounting Office shall, within 2
years of enactment, investigate the contractual relation-
ships between the Federal Crop Insurance Corporation
and approved insurance providers to determine the qual-
ity, costs and efficiency of the provision of multiperil crop
insurance to producers of agricultural commodities cov-
ered under the Federal Crop Insurance Act. The study
shall be completed in two parts. The first, to be completed
within one year of enactment, shall examine the currently
available data to make the determinations required by this
section. The second part shall examine the changes that
occur because of the expansion of the program as partici-
pation increases.
(b) This study shall include, but not be limited to,
an investigation of providers’ actual cost of delivery of
multiperil crop insurance for which providers receive reim-
HR 4217 PCS
bursement from the Corporation, cost differences for dif-
ferent provider firm sizes, and changes in cost resulting
from the expansion of the program. The study shall also
compare delivery costs of multiperil crop insurance to
other insurance coverage that the provider may sell and
identify any cross-subsidization from federally reimbursed
delivery to delivery costs of other insurance coverage.
(c) The study shall assess, to the extent practicable,
alternative methods of reimbursing delivery costs to pro-
viders. In addition, the study shall identify unnecessary
expenditures, if any, required by the Corporation for com-
pliance and program integrity.
(d) In addition, the study shall include, but not be
limited to, the provisions of the standard reinsurance
agreement between the Corporation and approved provid-
ers, including the risk transferred to the Corporation
under the terms of the agreement, the return on providers’
capital, a determination of the return on capital relative
to differences in provider firm size, and a determination
of the return on providers’ capital in multiperil crop insur-
ance relative to other insurance coverage.
(e) The study shall assess, to the extent practicable,
the potential for provider firm concentration in the
multiperil crop insurance industry and any economic dis-
tortions that might occur from such concentration.
HR 4217 PCS
(f) In conducting this study, the General Accounting
Office shall maintain the privacy of provider proprietary
information. The General Accounting Office shall have full
powers to subpoena any required information from any
provider firm.
SEC. 14. EFFECTIVE DATE.
Except as provided in section 10(b) and section 13,
this Act and the amendments made by this Act shall take
effect on the date of the enactment of this Act and shall
apply to the provision of crop insurance under the Federal
Crop Insurance Act (7 U.S.C. 1501 et seq.) beginning
with the 1995 crop year. With respect to the 1994 crop
year, the Federal Crop Insurance Act (as in effect on the
day before the date of the enactment of this Act) shall
continue to apply.
Passed the House of Representatives August 5,
1994.
Attest:
DONNALD K. ANDERSON,
Clerk.
HR 4217 PCS——2
HR 4217 PCS——3
HR 4217 PCS——4
HR 4217 PCS——5