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COMPARISON OF SENATE-PASSED AMENDMENT OF H.R. 2559 ("Risk Management for the 21st Century Act") TO THE ORIGINAL H.R. 2559

Topic

Senate-passed version
View full text (03/23/00): HTML | PDF

House-passed version
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Prevented planting
Sec. 102. Identical to House.
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Sec. 110. Allows producers to opt out of prevented planting coverage. Premium would be adjusted accordingly. Allows producers, if area qualifies, to receive a prevented planting payment and to plant another crop on the same acreage after latest planting date established by the Corporation. Second crop is not insurable. APH is adjusted if prevented planting payment is taken (60% of APH plug). Requires the Corporation to provide equal prevented planting coverage for all commodities.
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Special provision for rice Sec. 107. Requires the Corporation to offer policies that cover rice losses resulting from failure of irrigation water supplies due to drought and saltwater intrusion.
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No similar provision.
Cuts to the delivery system None. Sec. 310. Reduces the A&O payment for buy-up policies to 24% of premium from 24.5% and reduces the A&O payment for catastrophic coverage from 11% of imputed premium to 8%. Cuts revenue policy reimbursement.
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Renegotiation of the SRA  None. Sec. 310. Allows for renegotiation of the SRA for the 2001 reinsurance year.
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Rating
Sec. 202. Requires the Corporation to enter into a contract to study and develop alternative methods for rating. Gives priority to commodities with low rates of buy-up participation.
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Sec. 104. Directs the Corporation to rate policies on a regular basis and requires an adjustment to rates found to be excessive by the 2000 crop year or as soon as possible.
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Additional assistance for farmers

Sec. 103. Defines expected market price three ways: (1) projected market price, (2) actual market price, (3) projected cost of production.

Sets subsidy levels at:

 CAT  No change
 50% coverage  60 percent
 55% coverage  45 percent
 60% coverage  45 percent
 65% coverage  50 percent
 70% coverage  50 percent
 75% coverage  55 percent
 80% coverage  38 percent
 85% coverage  28 percent

Equalizes premium subsidies for 508h and 508e products. Continues current 5% increments for coverage levels.
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Sec.'s 101, 102, and 106. Premium assistance is calculated as a percent of total imputed premium.

Sets subsidy levels at:

 CAT  No change
 50% coverage  67 percent
 55% coverage  64 percent
 60% coverage  64 percent
 65% coverage  59 percent
 70% coverage  59 percent
 75% coverage  54 percent
 80% coverage  40.6 percent
 85% coverage  30.6 percent

Equalizes premium subsidies in percentage terms for 508h and 508e products. Equalizes dollar amount for A&O for 508h and 508e products. Allows coverage level selection at any increment.
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Additional premium subsidy for risk management activities None. Sec. 107. Allows the Corporation to provide performance-based discounts also permits a 20% discount for scab or vomitoxin for the 2000 crop year.
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Adjustments in APH to assist farmers affected by disasters Sec .105. Defines a multi-year disaster as a cumulative 25% decline in the APH in 3 out of the past 5 years. For producers that qualify, they can drop 1 out of every 5 years for the APH calculation. The Corporation is authorized to pay all additional costs associated with the dropping of 1 out of 5 years.
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Sec. 103. Allows producers to replace any recorded yield in the APH that is below 60% of the t-yield with a yield equal to 60% of the t-yield.
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Noninsured crop assistance Sec. 106. Eliminates the area trigger. Limits payments for crops new to the area of production. Establishes a fee equal to the CAT fee.
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Sec.'s 111 and 205. Changes the qualifying income limitation to $2 million in gross income from gross revenue. To be eligible, producers must provide crop, acreage, yield, and production reports to the Secretary.
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Livestock coverage Sec. 201. Authorizes livestock as an insurable cause of loss and authorizes the Corporation to conduct pilots and studies.
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Sec. 105. Strikes the livestock exclusion under current law and directs the Corporation to dedicate funds to conduct pilot program for livestock, starting in 2001 at $20 million and increasing to $55 million by 2004.
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General RMA Pilot authorities Sec.'s 201 and 202. Provide general pilot authorities to RMA and require RMA to contract with outside parties for this work. Funding is not to exceed $10 million in 2001, $30 million in 2002, $50 million in 2003, and $60 million in 2004.
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Sec. 105. Specifies authority to conduct pilot programs for insurance on a regional, state, or nationwide basis. Provides expedited consideration for low-risk pilots and limits pilots to 3 years in duration. Continues existing revenue pilots.
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Extension of Dairy Options Pilot Program Sec. 204. Extends and expands the existing Dairy Options Pilot Program until 2004. Funding is provided from sec. 203.
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No similar provision.
Education and research Sec. 206. Requires the Corporation to establish education and research programs in states where participation is historically low and where the Secretary determines the state is underserved. Education may include an insurance provider recruitment program. Funding is provided from sec. 203.
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No similar provision.
Choice of risk management options Sec. 203. Establishes a 3-year pilot at $500 million (2002-2004). No more than $200 million can be spent in any 1 year. Pilot is national in scope and commodity-by-commodity. Farmers choose between a risk management payment or crop insurance (cannot get both). Payment rate capped, but most other criteria left to the Secretary to decide. The $500 million becomes effectively $359 million after offsets from other pilots. Fifteen percent of the payments are targeted to states with historically low participation rates.
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No provision.
Risk Management Innovation and Competition Pilot Sec. 205. Establishes a pilot program to determine what incentives are necessary to encourage approved insurance providers to develop, rate, and competitively market risk management products. Pilot authority provides reinsurance to new products, but no subsidy.
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No similar provision.
Change to CAT None. Sec. 108. Requires the Corporation to make GRP available at an equal subsidy rate as CAT for the same fee amount.
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Authority for non-profit associations to pay fees for producers No provision. Sec. 109. Allows the payment of CAT policy fees by qualified associations or coops.
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Adequate coverage for states Sec. 305. Requires the Board to review plans of insurance to determine why some states have low participation rates and to make recommendations to Congress on how to improve participation.
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No provision.
Limitation on double insurance Sec. 308. Producers may purchase buy-up coverage for more than one crop planted on the same acreage if double-cropping practices are established. Otherwise, the second crop is not insurable.
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Sec. 201. Similar to Senate, except the producer may purchase CAT coverage on second crop.
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Program compliance Sec.'s 303 and 304. Provides for penalties for companies, agents, loss adjusters, and producers for noncompliance and fraud. Requires the Corporation to establish a program for annual review of agents and loss adjusters and report to Congress on the review.
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Sec.'s 202 and 203. Requires the Secretary to direct FSA and RMA to reconcile all relevant producer-supplied data, including acreage reports and actual yield information. Directs FSA to conduct field and paper audits of suspect cases and on a random basis. Requires FSA state committees to review policies for appropriateness. Provides penalties for persons who provide inaccurate and false statements.
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Records and reporting Sec. 306. Requires the Secretary to coordinate records between the Corporation and FSA to avoid duplication and enhance the accuracy of records and reports. Records are available for use by USDA state and local offices and other appropriate state and Federal agencies and approved insurance providers.
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Sec. 205. Producers provide records on the crop insurance program to the Secretary. The Secretary is suppose to coordinate the use of these records between FSA and RMA. Records are available for use by USDA state and local offices and other appropriate State and Federal agencies.
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FCIC re-organization Sec. 301. Increases FCIC board members from 7 to 9. Requires that the Board shall have its own staff (Executive Director with a budget). Requires that the Chairman of the Board be elected from the 6 private board members. The FCIC manager would no longer be a board member.
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Sec.'s 301 and 303. Increases FCIC board members from 7 to 9. At least one of the four farmer representatives shall be a specialty crop producer.

FCIC manager shall serve as a non-voting (ex officio) member of the Board. Board chairman is elected from the 9 members and remains subject to the general supervision of the Secretary. Removes RMA's authority, but not its responsibility for R&D for new products.
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New product development Sec.'s 201 and 301. Retains RMA authority to conduct R&D but encourages contracting outside of RMA. Establishes new product approval process for 508h products.
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Sec.'s 302, 303, and 304. Removes RMA authority to conduct R&D for new products.
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Specialty crops Sec. 309. Provides $20 million a year to RMA to enter in partnerships with public and private entities to conduct R&D for specialty crop insurance policies.
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Sec.'s 302, 303, and 304. If RMA determines a commodity has not been adequately served, it may enter into a contract with qualified entities for the development of products. $25 million of $55 million (annually) shall be reserved for contracts for specialty crops. RMA may enter in partnerships with public and private entities to conduct R&D for specialty crop insurance policies.
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508h product reimbursement Sec. 307. For products approved by the Board prior to 01/01/99, the developer may charge a fee to other companies using the product in an amount equal to $2 per policy sold (for 5 years) and then $1 per policy (for the next 3 years_ and $.5 thereafter. Fees for plans of insurance approved after 1/1/99 are not limited, but subject to Board approval. RMA would collect the fees owed and credit them to the product developer. Exclusive marketing rights are prohibited if a fee is paid.
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Sec.'s 303, 304, and 308. RMA is authorized to reimburse R&D and maintenance for products approved through the 508h process. The product becomes the property of RMA after 5 years.

If a product developer chooses, it can charge a fee and forgo the Federal reimbursement. The developer has and retains exclusive rights to the product.
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Federal Crop Insurance Improvement Commission Sec. 310. Creates a new commission to review aspects of the crop insurance program and make a report to Congress on its findings. Funding for the commission is subject to appropriations.
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No similar provision.
Projected loss ratio Sec. 312. Lowers the projected loss ratio from 1.075 to 1.00 beginning with the 2002 crop year.
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No similar provision.
Compliance with state licensing requirements Sec. 313. Requires persons that sell or solicit the purchase of insurance under the act to comply with all state regulations as required by the appropriate insurance regulator of the state.
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No similar provision.
Improved risk management education Sec. 401. Establishes Risk Management Education Coordinating Centers in 5 regions of the U.S. as determined by the Secretary. Funding is subject to appropriations at $30 million annually.
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No similar provision.
Sense of the Senate

Sec. 402. Is a Sense of the Senate regarding the Federal Crop Insurance Program. It acknowledges the role farmer-owned cooperatives play in achieving the purposes of the Act.

Sec. 403. Is a Sense of the Senate on the Rally for Rural America and Rural Crisis. It commends the participants of the Rally and urges Congress to respond to the crisis affecting rural America today.
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 N/A
Effective Dates Sec.'s 501 and 202. Most provisions are effective for the 2001 through 2004 crop years. Board changes are permanent, as well as the provision on double insurance. The bill also voids the RMA manager's bulletin relating to the lowering of the 1999 durum wheat price.
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While there is no similar section in the bill, most provisions are effective for the 2001 through 2004 crop years. Like the Senate Ag. Committee bill, the limitation on double insurance and board changes are permanent.
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A&O = Administrative and operating. APH = Actual Production History. Board = Federal Crop Insurance Corporation Board of Directors. CAT = Catastrophic Risk Protection. Corporation = Federal Crop Insurance Corporation. FSA = Farm Service Agency. GRP = Group Risk Plan. R&D = Research and development. RMA = Risk Management Agency. SRA = Standard Reinsurance Agreement. USDA = U.S. Department of Agriculture.

Courtesy of Agriculture Law.


Last Modified: 10/01/2012
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