I
106TH CONGRESS
1ST SESSION
H. R. 1536
To amend the Federal Crop Insurance Act to encourage the broadest possible
participation of producers in the Federal crop insurance program and
to ensure the continued availability of affordable crop insurance for
producers.
IN THE HOUSE OF REPRESENTATIVES
APRIL 22, 1999
Mr. POMEROY (for himself, Mr. THUNE, Mr. MINGE, and Mr. BOSWELL) in-
troduced the following bill; which was referred to the Committee on Agri-
culture
A BILL
To amend the Federal Crop Insurance Act to encourage
the broadest possible participation of producers in the
Federal crop insurance program and to ensure the con-
tinued availability of affordable crop insurance for pro-
ducers.
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 Improvement Act of 1999’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Establishment or approval of expected market price for each agricul-
tural commodity for which insurance is offered.
Sec. 3. Fixing adequate premium amounts for additional coverage.
Sec. 4. Payment of portion of crop insurance premium by Corporation.
Sec. 5. Effect of disaster declaration on determination of producer’s actual pro-
duction history.
Sec. 6. Assigned yields for newly acquired lands and new crops.
Sec. 7. Cost of production risk protection pilot project.
Sec. 8. Rating methodologies pilot project.
Sec. 9. Livestock coverage pilot project.
Sec. 10. Board of directors of Corporation.
SEC. 2. ESTABLISHMENT OR APPROVAL OF EXPECTED
MARKET PRICE FOR EACH AGRICULTURAL
COMMODITY FOR WHICH INSURANCE IS OF-
FERED.
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 new paragraph:
‘‘(5) EXPECTED MARKET PRICE.—
‘‘(A) ESTABLISHMENT
OR
APPROVAL.—
For the purposes of this title, the Corporation
shall establish or approve the price level (re-
ferred to in this title as the ‘expected market
price’) of each agricultural commodity for which
insurance is offered.
‘‘(B) AMOUNT
GENERALLY.—Except as
provided in subparagraphs (C) and (D), the ex-
pected market price of an agricultural com-
modity shall be not less than the projected mar-
ket price of the agricultural commodity, as de-
termined by the Corporation, but the expected
market price may be based on the actual mar-
ket price of the agricultural commodity at the
time of harvest, as determined by the Corpora-
tion.
‘‘(C) REVENUE AND SIMILAR PLANS.—In
the case of revenue and other similar plans of
insurance, the expected market price of an agri-
cultural commodity shall be the actual market
price of the agricultural commodity, as deter-
mined by the Corporation.
‘‘(D) COST OF PRODUCTION AND SIMILAR
PLANS.—In the case of cost of production or
similar plans of insurance, the expected market
price of an agricultural commodity shall be the
projected cost of producing the agricultural
commodity, as determined by the Corporation.’’.
SEC. 3. FIXING ADEQUATE PREMIUM AMOUNTS FOR ADDI-
TIONAL COVERAGE.
Section 508(d)(2) of the Federal Crop Insurance Act
(7 U.S.C. 1508(d)(2)) is amended—
(1) in subparagraph (B), by striking ‘‘under all
policies with that level of coverage’’ after ‘‘antici-
pated losses’’; and
(2) by striking subparagraph (C) and inserting
the following new subparagraphs:
‘‘(C) In the case of additional coverage at
greater than or equal to 65 percent of the re-
corded or appraised average yield indemnified
at 100 percent of the expected market price, or
an equivalent coverage, but less than 75 percent
of the recorded or appraised average yield in-
demnified at 100 percent of the expected mar-
ket price, or an equivalent coverage, the amount
of the premium shall—
‘‘(i) be sufficient to cover anticipated
losses under all policies with that level of
coverage 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 percentage of the amount of the
premium used to define loss ratio.
‘‘(D) In the case of additional coverage
equal to or greater than 75 percent of the re-
corded or appraised average yield indemnified
at 100 percent of the expected market price, or
an equivalent coverage, the amount of the pre-
mium shall—
‘‘(i) be sufficient to cover anticipated
losses under all policies with that level of
coverage 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 percentage of the amount of the
premium used to define loss ratio.’’.
SEC. 4. PAYMENT OF PORTION OF CROP INSURANCE PRE-
MIUM BY CORPORATION.
(a) PAYMENT REQUIRED.—Section 508(e) of the
Federal Crop Insurance Act (7 U.S.C. 1508(e)) is
amended—
(1) by striking paragraph (1) and inserting the
following new paragraph:
‘‘(1) IN GENERAL.—
‘‘(A) MANDATORY
PAYMENTS.—For the
purpose of encouraging the broadest possible
participation of producers in the crop insurance
plans of insurance authorized to be insured or
reinsured under subsections (b) and (c), the
Corporation shall pay a part of the premium in
the amounts determined under this subsection.
‘‘(B) DISCRETIONARY PAYMENTS.—In the
case of a plan of insurance approved by the
Corporation under subsection (h), the Corpora-
tion may pay a part of the premium in the
amounts not to exceed the amounts determined
under this subsection.’’; and
(2) in paragraph (2), by striking subparagraphs
(B) and (C) and inserting the following new sub-
paragraphs:
‘‘(B) In the case of additional coverage less
than 65 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 equal to the sum
of—
‘‘(i) 45 percent of the amount of the
premium 
established 
under 
subsection
(d)(2)(B) to satisfy the requirements of
clause (i) of such subsection; and
‘‘(ii) the amount of operating and ad-
ministrative expenses included under sub-
section (d)(2)(B)(ii).
‘‘(C) In the case of coverage at greater
than or equal to 65 percent of the recorded or
appraised average yield indemnified at 100 per-
cent of the expected market price, or an equiva-
lent coverage, but less than 75 percent of the
recorded or appraised average yield indemnified
at 100 percent of the expected market price, or
an equivalent coverage, the amount shall be
equal to the sum of—
‘‘(i) 50 percent of the amount of the
premium 
established 
under 
subsection
(d)(2)(C) to satisfy the requirements of
clause (i) of such subsection; and
‘‘(ii) the amount of operating and ad-
ministrative expenses included under sub-
section (d)(2)(C)(ii).
‘‘(D) In the case of coverage equal to or
greater than 75 percent of the recorded or ap-
praised average yield indemnified at 100 per-
cent of the expected market price, or an equiva-
lent coverage, the amount shall be equal to the
sum of—
‘‘(i) 55 percent of the amount of the
premium 
established 
under 
subsection
(d)(2)(D) to satisfy the requirements of
clause (i) of such subsection for coverage
at 75 percent of the recorded or appraised
average yield indemnified at 100 percent of
the expected market price; and
‘‘(ii) the amount of operating and ad-
ministrative expenses included under sub-
section (d)(2)(D)(ii).’’.
(d) CONFORMING AMENDMENT.—Section 508(h)(2)
of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(2))
is amended by striking the second sentence.
SEC. 5. EFFECT OF DISASTER DECLARATION ON DETER-
MINATION OF PRODUCER’S ACTUAL PRODUC-
TION HISTORY.
(a) DEFINITION OF DESIGNATED DISASTER AREA.—
Section 502(b) of the Federal Crop Insurance Act (7
U.S.C. 1502(b)) is amended—
(1) by redesignating paragraphs (6), (7), and
(8) as paragraphs (7), (8), and (9), respectively; and
(2) by inserting after paragraph (5) the fol-
lowing new paragraph:
‘‘(6) DESIGNATED DISASTER AREA.—The term
‘designated disaster area’ means an area—
‘‘(A) covered by a Presidential declaration
of major disaster issued under section 401 of
the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5170); or
‘‘(B) determined to be a disaster area by
the Secretary under subpart A of part 1945 of
title 7, Code of Federal Regulations.’’.
(b) YIELD DETERMINATIONS.—Section 508(g) of
such Act (7 U.S.C. 1508(g)) is amended by striking para-
graph (3) and inserting the following new paragraph (3):
‘‘(3) EXCLUSION
OF
ONE
OR
MORE
CROP
YEARS.—In establishing the actual production his-
tory of a producer for a crop under paragraph
(2)(A) or using the producer’s actual production
records for any other purpose under this subsection,
the Corporation shall exclude any crop year of the
crop at the producer’s election if, at any time during
the crop year, the county in which the crop was
grown (or an adjacent county) was included in a
designated disaster area declared as a result of dam-
aging weather.’’.
SEC. 6. ASSIGNED YIELDS FOR NEWLY ACQUIRED LANDS
AND NEW CROPS.
Section 508(g)(2)(B) of the Federal Crop Insurance
Act (7 U.S.C. 1508(g)(2)(B)) is amended by adding at
the end the following new sentence: ‘‘However, if the lack
of satisfactory yield evidence is the result of the recent
acquisition of land by the producer, the conversion of
noncrop land to production, or the conversion of cropland
to a different crop, as determined by the Corporation, then
at the election of the producer, the Corporation shall as-
sign the producer a yield for that land that is equal to
100 percent of the average transitional yield for the com-
modity involved in the county in which the land is lo-
cated.’’.
SEC. 7. COST OF PRODUCTION RISK PROTECTION PILOT
PROJECT.
Section 508(h)(6) of the Federal Crop Insurance Act
(7 U.S.C. 1508(h)(6)) is amended—
(1) in subparagraph (A), by striking ‘‘, to the
extent practicable,’’;
(2) in subparagraph (B)(i), by striking ‘‘1996
and 1997 crop years’’ and inserting ‘‘2000 through
2004 crop years’’; and
(3) by striking subparagraph (C) and inserting
the following new subparagraph:
‘‘(C) COVERAGE LEVEL; DETERMINATION
OF COST OF PRODUCTION.—A producer electing
to participate in the pilot project may select a
coverage level not to exceed 90 percent of the
applicable cost of production determined by the
Office of Risk Management for the county or
an area of the county in which the producer’s
farm is located. The cost of production coverage
determined by the Office shall be based on cost
of production data prepared and published by
the land-grant college or university for the
State in which the producer’s farm is located.’’.
SEC. 8. RATING METHODOLOGIES PILOT PROJECT.
(a) IN GENERAL.—Section 508(h) of the Federal
Crop Insurance Act (7 U.S.C. 1508(h)) is amended by
striking paragraph (8) and inserting the following new
paragraph:
‘‘(8) 
RATING
METHODOLOGIES
PILOT
PROJECT.—Not later than September 30, 2000, the
Office of Risk Management shall—
‘‘(A) review the methodologies that are
used to rate plans of insurance under this title;
and
‘‘(B) enter into a contract with a person in
the private sector to develop new methodologies
for rating plans of insurance under this title
that take into account the lower risk pool of—
‘‘(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) CONFORMING AMENDMENT.—Section 507(c) of
the Federal Crop Insurance Act (7 U.S.C. 1507(c)) is
amended in the last sentence by striking ‘‘Nothing’’ and
inserting ‘‘Except as provided in section 508(h)(8), noth-
ing’’.
SEC. 9. LIVESTOCK COVERAGE PILOT PROJECT.
Section 508(h) of the Federal Crop Insurance Act (7
U.S.C. 1508(h)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(11) LIVESTOCK COVERAGE PILOT PROJECT.—
Notwithstanding section 518, the Corporation shall
carry out a pilot project in a limited number of
counties, to be selected by the Corporation, under
which a producer of livestock may elect to receive
federally reinsured coverage under this title.’’.
SEC. 10. BOARD OF DIRECTORS OF CORPORATION.
Section 505 of the Federal Crop Insurance Act (7
U.S.C. 1505) is amended by striking subsection (a) and
inserting the following new subsection:
‘‘(a) BOARD OF DIRECTORS.—
‘‘(1) IN
GENERAL.—The management of the
Corporation shall be vested in a Board subject to the
general supervision of the Secretary.
‘‘(2) COMPOSITION.—The Board shall consist
of—
‘‘(A) 2 members who are active agricul-
tural producers with or without crop insurance;
‘‘(B) 1 member who is active in the crop
insurance business;
‘‘(C) 1 member who is active in the rein-
surance business;
‘‘(D) the Under Secretary for Farm and
Foreign Agricultural Services;
‘‘(E) the Under Secretary for Rural Devel-
opment; and
‘‘(F) the Chief Economist of the Depart-
ment of Agriculture.
‘‘(3) APPOINTMENT
AND
TERMS
OF
PRIVATE
SECTOR MEMBERS.—The members of the Board de-
scribed in subparagraphs (A), (B), and (C) of para-
graph (2)—
‘‘(A) shall be appointed by, and hold office
at the pleasure of, the Secretary;
‘‘(B) shall not be otherwise employed by
the Federal Government;
‘‘(C) shall be appointed to staggered 4-year
terms, as determined by the Secretary; and
‘‘(D) shall serve not more than 2 consecu-
tive terms.
‘‘(4) CHAIRPERSON.—The Board shall select a
member of the Board described in subparagraph
(A), (B), or (C) of paragraph (2) to serve as Chair-
person of the Board.’’.
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