Final Agency Determination: FAD-008
Subject: Section 17(d)(1) of the Basic
Provisions, pursuant to 7 C.F.R. part 400, subpart X.
On June 5, 2001, the Risk Management Agency was asked for a final agency
determination for the 2000 and 2001 crop years, on Section 17(d)(1) of the
Basic Provisions,7 C.F.R. 457.8, which states:
(d) Drought or failure of the irrigation water supply
will be considered to be an insurable cause of loss for the purposes of
prevented planting only if on the final planting date (or within the late
planting period if you elect to try to plant the crop):
(1) For non-irrigated acreage, the area that is prevented from being
planted has insufficient soil moisture for germination of seed and progress
toward crop maturity due to a prolonged period of dry weather. Prolonged
precipitation deficiencies must be verifiable using information collected
by sources whose business it is to record and study weather, including,
but not limited to, local weather reporting stations of the National Weather
Service; or . . .
Final Agency Determination
1. Once insufficient soil moisture has been verified, a prolonged period
of dry weather is automatically assumed.
A. If, due to dry conditions, a National Resources and Conservation
Service (NRCS) advisory has been issued and is in effect on the final planting
date (or the late planting period), indicating that soils should not be
disturbed in order to guard against wind erosion, "insufficient"
will be adequately verified. Prevented planting due to drought will be
considered payable provided all other policy provisions are met and, the
a. The advisory must encompass the area where the affected insured unit
is located, as determined by the provider.
b. The claims representative must verify and document that conditions
on the insured unit are consistent with conditions in the area described
by the NRCS issuance, that drought conditions are general in the surrounding
area, and other producers with similar characteristics are prevented from
B. In the absence of NRCS evidence as cited in "A" above,
and provided all other policy provisions are met, prevented planting due
to drought will be considered payable and sufficiently verified in accordance
with the following documentation:
a. Soil moisture will be considered inadequate if:
i. Local reporting stations of the National Weather Service (NWS) documentation
exists that establishes, to the providers satisfaction, inadequate rainfall
occurred during the soil bank" period to provide sufficient germinating
moisture at the final planting date (or within the Late Planting Period),
ii. Claims representative observations will be considered sufficient
to confirm (provided the claim is annotated accordingly) that conditions
on the insured unit are consistent with:
Drought conditions are general in the surrounding area,
Other producers with similar characteristics are prevented from
iii. At least one documentation source, acceptable to the insurance
provider, establishes conditions on the insured unit are consistent with
i and ii above. Documentation sources may include but are not limited to:
Local rainfall records (local weatherman, farm records, etc.)
Anecdotal documentation (such as newspaper reports)
Written opinion from the Cooperative State Education and Extension
Service (CSREES) stating that there was insufficient soil moisture for
germination of seed and progress toward crop maturity
Soil moisture indices document demonstrating that conditions
in the general area (region) are extremely dry (e.g. Palmer, Crop Moisture
2. Determinations are based upon soil moisture at the final planting
date or within the late planting period, as applicable, without regard
to the rainfall that may subsequently fall, or be expected to fall, on
the insured acreage.
3. A determination to pay prevented planting due to drought for one
producer does not preclude accepting another producer's planted acreage
for insurance when both are located in the same area and have similar characteristics.
The interpretation submitted by the requestor is not in accordance with
the terms of the policy. Under section 17(d)(1) and the definition of "prevented
planting" in the Basic Provisions, to qualify for prevented planting
due to drought, the acreage must (1) have insufficient soil moisture for
germination of seed and progress toward crop maturity; (2) have a prolonged
period of dry weather that is general to the area; and (3) be located in
an area where other producers with acreage with similar characteristics
are also prevented from planting their crop. Each of these elements must
be proven separately.
Therefore, the requestor's conclusion that once insufficient moisture
has been verified, a prolonged period of dry weather is automatically assumed
is incorrect. Reinsured companies must obtain evidence of the prolonged
period of dry weather. Under section 17(d)(1) of the Basic Provisions, such
evidence must be obtained from a source whose business it is to record and
study weather, such as the National Weather Service (NWS).
Further, the requestor states that if a NRCS advisory has been issued,
insufficient soil moisture will be adequately verified. Section 17(d)(1)
of the Basic Provisions states that there must be insufficient moisture
for the germination of the seed and to allow the crop to reach maturity.
Unless the NRCS advisory specifically states that the soil is too dry for
the germination or production of the crop, it cannot be used to verify these
The requestor also alleges that if NRCS evidence is not available, prevented
planting will be considered sufficiently verified if local reporting stations
of the NWS have documentation that inadequate rainfall occurred during the
period preceding the normal planting period in which moisture is normally
accumulated in the soil profile to provide sufficient germinating moisture.
The question of the amount of rainfall needed to permit sufficient soil
moisture to allow germination and crop production is determined by experts
based on the crop, area in which it is grown, and other relevant factors.
Once this amount is known, reinsured companies can use NWS data in the area
to determine whether there was adequate rainfall to provide sufficient soil
Additionally, the requestor claims that documentation sources may include
local rainfall records from local weather forecasters and farm records,
newspaper reports, written opinions from CSREES, and soil moisture indices.
Depending on the element sought to be verified, these sources may or may
not be acceptable. If the reinsured company is seeking to verify that soil
moisture was insufficient for germination, as stated above, once the amount
of rainfall needed for germination and production is known, local NWS data
may be used. Further, the soil moisture indices may be adequate evidence.
The U.S. Drought Monitor should generally show severe drought or worse (D2,
D3, or D4) on the final planting date or during the late planting period.
However, the reinsured company must still verify that the insured acreage
experienced the same drought conditions or level of rainfall.
However, as stated above, to verify whether the dry weather has been
prolonged, section 17(d)(1) of the Basic Provisions explicitly states that
only records from a source whose business it is to record and study the
weather may be used. Therefore, NWS records or records of other entities
that record and study weather, such as universities that record and study
the weather, may be used. However, farm records, written opinions from CSREES,
and the soil moisture indices cannot be used because these sources are not
in the business of recording and studying weather. Certain anecdotal information
may be used, such as reports from local weather forecasters, since their
business is to record and study weather. Reinsured companies need to obtain
the source data of such reports. Newspaper reports should not be used.
The requestor is correct that the reinsured companies must verify that
drought conditions are general to the surrounding area and producers with
acreage with similar characteristics are prevented from planting. Local
NWS rainfall data or soil moisture indices should be used to determine the
area affected by the drought and whether the insured acreage falls within
The requestor is correct that determinations of prevented planting are
based on the soil moisture at the final planting date or within the late
planting period, regardless of whether rain subsequently falls or is expected
Lastly, the requestor states that a determination to pay a prevented
planting claim for one producer does not preclude accepting another producer's
planted acreage for insurance when both are located in the same area and
the acreage has similar characteristics. This is not correct. One of the
elements to be established is that other producers in the area with acreage
with similar characteristics were also prevented from planting. If producers
with acreage in the area with similar characteristics are able to plant,
prevented planting claims should not be paid.
In accordance with 7 C.F.R. § 400.765(c), this constitutes the final
agency determination and is binding on all participants in the Federal crop
Date of Issue: August 9, 2001