I
106TH CONGRESS
1ST SESSION
H. R. 2225
To amend the Federal Crop Insurance Act to improve crop insurance coverage
and administration, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 15, 1999
Mr. PICKERING introduced the following bill; which was referred to the
Committee on Agriculture
A BILL
To amend the Federal Crop Insurance Act to improve crop
insurance coverage and administration, and for other
purposes.
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.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Crop Insurance Equity Act of 1999’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—CROP INSURANCE COVERAGE
Sec. 101. Prevented planting.
Sec. 102. Alternative rating methodologies.
Sec. 103. Quality adjustment.
Sec. 104. Low-risk producer pilot program.
Sec. 105. Catastrophic risk protection.
Sec. 106. Loss adjustment.
Sec. 107. Cost of production plans of insurance.
Sec. 108. Discounts.
Sec. 109. Adjustments to subsidy levels.
Sec. 110. Sales closing dates.
Sec. 111. Assigned yields.
Sec. 112. Actual production history adjustment for disasters.
Sec. 113. Payment of portion of premium.
Sec. 114. Limitation on premiums included in underwriting gains.
TITLE II—ADMINISTRATION
Sec. 201. Board of Directors of Corporation.
Sec. 202. Office of Risk Management.
Sec. 203. Office of Private Sector Partnership.
Sec. 204. Penalties for false information.
Sec. 205. Regulations.
Sec. 206. Program compliance.
Sec. 207. Payments by cooperative associations.
Sec. 208. Limitation on double insurance.
Sec. 209. Consultation with State committees of Farm Service Agency.
Sec. 210. Records and reporting.
Sec. 211. Fees for plans of insurance.
Sec. 212. Flexible subsidy pilot program.
Sec. 213. Reinsurance agreements.
Sec. 214. Funding.
TITLE I—CROP INSURANCE
COVERAGE
SEC. 101. PREVENTED PLANTING.
Section 508(a) of the Federal Crop Insurance Act (7
U.S.C. 1508(a)) is amended by adding at the end the fol-
lowing:
‘‘(7) PREVENTED PLANTING.—
‘‘(A) IN GENERAL.—The Corporation shall
offer coverage for prevented planting of an agri-
cultural commodity only as an endorsement to
a policy.
‘‘(B) EQUAL COVERAGE.—For each agri-
cultural commodity for which prevented plant-
ing coverage is available, the Corporation shall
offer an equal level of prevented planting cov-
erage.
‘‘(C) PLANTING OF SUBSTITUTE AGRICUL-
TURAL COMMODITIES.—In the case of prevented
planting coverage that is offered under this
paragraph, the Corporation shall allow pro-
ducers that have the coverage, and that are eli-
gible to receive a prevented planting indemnity,
to plant an agricultural commodity, other than
the commodity covered by the prevented plant-
ing coverage, on the acreage that the producer
has been prevented from planting to the origi-
nal agricultural commodity.
‘‘(D) INELIGIBILITY
FOR
COVERAGE.—A
substitute agricultural commodity described in
subparagraph (C) shall not be eligible for cov-
erage under a plan of insurance under this
title.’’.
SEC. 102. ALTERNATIVE RATING METHODOLOGIES.
Section 508(a) of the Federal Crop Insurance Act (7
U.S.C. 1508(a)) (as amended by section 101) is amended
by adding at the end the following:
‘‘(8) ALTERNATIVE RATING METHODOLOGIES.—
‘‘(A) IN GENERAL.—Not later than Sep-
tember 30, 2000, the Corporation shall develop
and implement alternative methodologies for
rating plans of insurance under subsections (b)
and (c), and rates for the plans of insurance,
that take into account—
‘‘(i) producers that elect not to par-
ticipate in the Federal crop insurance pro-
gram established under this title; and
‘‘(ii) producers that elect only to ob-
tain catastrophic risk protection under
subsection (b).
‘‘(B) REVIEW AND ADJUSTMENT.—Effec-
tive for the 2001 and subsequent crop years,
the Corporation shall review and make any nec-
essary adjustments to methodologies and rates
established under this paragraph, based on (as
determined by the Corporation)—
‘‘(i) expected future losses, with ap-
propriate adjustment of any historical data
used in rating to remove—
‘‘(I) the impact of adverse selec-
tion; and
‘‘(II) data that no longer reflects
the productive capacity of the area;
‘‘(ii) program errors; and
‘‘(iii) any other factor that can cause
errors in methodologies and rates.
‘‘(C) IMPLEMENTATION.—In developing,
implementing, and adjusting rating methodolo-
gies and rates under this paragraph, the Cor-
poration shall—
‘‘(i) use methodologies for rating
plans of insurance under subsections (b)
and (c) that result in the lowest premiums
payable by producers of an agricultural
commodity in a geographic area, as deter-
mined by the Corporation; and
‘‘(ii) update the manner in which
rates are applied at the individual producer
level, as determined by the Corporation.
‘‘(D) PRIORITY.—In developing, imple-
menting, and adjusting alternative methodolo-
gies for rating plans of insurance under sub-
sections (b) and (c) for agricultural commod-
ities, the Corporation shall provide the highest
priority to agricultural commodities with (as de-
termined by the Corporation)—
‘‘(i) the largest average acreage; and
‘‘(ii) the lowest percentage of pro-
ducers that purchased coverage under sub-
section (c).’’.
SEC. 103. QUALITY ADJUSTMENT.
Section 508(a) of the Federal Crop Insurance Act (7
U.S.C. 1508(a)) (as amended by section 102) is amended
by adding at the end the following:
‘‘(9) QUALITY
ADJUSTMENT
POLICIES.—The
Corporation shall offer, only as an endorsement to a
policy, coverage that permits a reduction in the
quantity of production of an agricultural commodity
produced during a crop year, or any similar adjust-
ment, that results from the agricultural commodity
not meeting the quality standards established in the
policy.’’.
SEC. 104. LOW-RISK PRODUCER PILOT PROGRAM.
Section 508(a) of the Federal Crop Insurance Act (7
U.S.C. 1508(a)) (as amended by section 103) is amended
by adding at the end the following:
‘‘(10) LOW-RISK PRODUCER PILOT PROGRAM.—
‘‘(A) IN GENERAL.—For each of the 2000
through 2003 crop years, the Corporation shall
carry out a pilot program that is designed to
encourage participation in the Federal crop in-
surance program established under this title by
producers who rarely suffer insurable losses.
‘‘(B) SCOPE.—The Corporation shall carry
out the pilot program in at least 40 counties
that are determined by the Corporation to be
adequate to provide a comprehensive evaluation
of the feasibility, effectiveness, and demand
among producers for a low-risk producer pro-
gram.
‘‘(C) 
PREMIUM
REFUND.—Notwith-
standing section 506(o) and subsection (d)(1),
if a producer participating in the pilot program
incurs a yield loss in any crop year that is more
than 10 percent but not more than 35 percent
of the yield determined under subsection (g),
the Corporation shall—
‘‘(i) refund all or part, as determined
by the Corporation, of the premium that
was paid by the producer for a plan of in-
surance for the crop that incurred the
qualifying loss; or
‘‘(ii) apply the amount to be refunded
under clause (i) against the premium pay-
able by the producer for equivalent cov-
erage for the subsequent crop year.
‘‘(D) 
REGULATIONS.—The 
Corporation
shall promulgate such regulations as are nec-
essary to carry out the pilot program.’’.
SEC. 105. CATASTROPHIC RISK PROTECTION.
Section 508(b)(2)(A) of the Federal Crop Insurance
Act (7 U.S.C. 1508(b)(2)(A)) is amended—
(1) in clause (i), by striking ‘‘and’’ at the end;
(2) in clause (ii)—
(A) by striking ‘‘each of the 1999 and sub-
sequent crop years’’ and inserting ‘‘the 1999
crop year’’; and
(B) by striking the period at the end and
inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(iii) in the case of each of the 2000
and subsequent crop years, catastrophic
risk protection shall offer a producer cov-
erage for a 60 percent loss in yield, on an
individual yield or area yield basis, indem-
nified at 70 percent of the expected market
price, or a comparable coverage (as deter-
mined by the Corporation).’’.
SEC. 106. LOSS ADJUSTMENT.
Section 508(b)(11) of the Federal Crop Insurance
Act (7 U.S.C. 1508(b)(11)) is amended by striking ‘‘11
percent’’ and all that follows through the end of the para-
graph and inserting ‘‘$50 for each claim that is adjusted
under this subsection.’’.
SEC. 107. COST OF PRODUCTION PLANS OF INSURANCE.
(a) IN GENERAL.—Section 508(c) of the Federal
Crop Insurance Act (7 U.S.C. 1508(c)) is amended by
striking paragraph (5) and inserting the following:
‘‘(5) EXPECTED MARKET PRICE.—
‘‘(A) IN GENERAL.—For the purposes of
this title, the Corporation shall establish or ap-
prove the price level (referred to in this title as
the ‘expected market price’) of each agricultural
commodity for which insurance is offered.
‘‘(B) 
AMOUNT.—The 
expected 
market
price of an agricultural commodity—
‘‘(i) except as otherwise provided in
this subparagraph, shall be not less than
the projected market price of the agricul-
tural commodity, as determined by the
Corporation;
‘‘(ii) may be based on the actual mar-
ket price of the agricultural commodity at
the time of harvest, as determined by the
Corporation; or
‘‘(iii) in the case of cost of production
or similar plans of insurance, shall be the
projected cost of producing the agricultural
commodity, as determined by the Corpora-
tion.’’.
(b) CONFORMING AMENDMENTS.—Section 508(h) of
the Federal Crop Insurance Act (7 U.S.C. 1508(h)) is
amended—
(1) by striking paragraph (9); and
(2) by redesignating paragraph (10) as para-
graph (9).
SEC. 108. DISCOUNTS.
Section 508(d) of the Federal Crop Insurance Act (7
U.S.C. 1508(d)) is amended by adding at the end the fol-
lowing:
‘‘(3) DISCOUNTS.—
‘‘(A) IN GENERAL.—Notwithstanding sec-
tion 506(o) and paragraph (1), the Corporation
shall provide a discount in the premium payable
by the producer for a plan of insurance under
subsections (b) and (c) for an agricultural com-
modity in a county if the producer—
‘‘(i) during each of the preceding 5
consecutive crop years—
‘‘(I) 
has 
obtained 
insurance
under this title for the agricultural
commodity; and
‘‘(II) has not filed any claim
under the insurance;
‘‘(ii) if offered by the Corporation,
elects to have unit coverage that reduces
the risk of loss below the risk of loss that
is expected for a unit comprised of all in-
surable acreage of the agricultural com-
modity in the county; or
‘‘(iii) implements innovative farming
management practices that reduce the risk
of insurable loss, as determined by the
Corporation.
‘‘(B) AMOUNT.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the amount of the discount provided to
a producer for a crop year under subpara-
graph (A) shall be determined by the Cor-
poration.
‘‘(ii) 
NO
CLAIM
DISCOUNT.—The
amount of the discount provided to a pro-
ducer for a crop year under subparagraph
(A)(i) shall increase for each additional