Subject: Definition of "Prevented Planting" under 7 C.F.R. § 457.8
On January 18, 2002, the Risk Management Agency (RMA) was asked for a final agency determination for the 2001 and succeeding crop years, regarding the interpretation of the definition of "prevented planting" contained in section 1 of the Basic Provisions. The request is pursuant to 7 C.F.R. part 400, subpart X. The portion of the definition of "prevented planting" contained in section 1 of the Basic Provisions pertinent to the request reads as follows:
Prevented Planting - Failure to plant the insured crop . . . by the final
planting date designated in the Special Provisions for the insured crop
in the county. . . You must have been prevented from planting the
insured crop due to an insured cause of loss that is general in the
surrounding area and that prevents other producers from planting acreage
with similar characteristics.
The requestor's interpretation of the definition is as follows:
Final Agency Determination
- In FAD-008, which interpreted section 17(d)(1) of the Basic Provisions, RMA stated that to qualify for a prevented planting payment due to drought that acreage had to be in an area where other producers with acreage with similar characteristics were also prevented from planting their crop. The requestor considers this statement to constitute an interpretation of the definition of "prevented planting" that is applicable to all prevented planting claims regardless of the specific cause of loss.
- Because the term "area," as used in the definition of prevented planting, is subject to multiple reasonable interpretations, the requestor considers the term to be vague and ambiguous. Therefore, in arbitration, an arbitrator is likely to interpret "area" in favor of the policyholder. Nonetheless, the requestor believes that "area" is not amenable to a one-size-fits-all definition or bright line test. Rather, what constitutes an "area" will vary on a case-by-case basis. In this connection, the requestor regards all acreage sharing similar characteristics as constituting an area.
- With respect to the meaning of "acreage with similar characteristics," the requestor considers parcels of land to have similar characteristics if such land, for example, has comparable geography, topography, soil types, exposure to the elements, and suffers from the same cause of loss. Whether the acreage is insured and the ownership of the acreage are, in the requestor's opinion, irrelevant to determining the existence of similar characteristics.
- The requestor believes that evaluation of a policyholder's prevented planting claim is based simply on whether the farmer physically could plant the crop by the final planting date, assuming that planting the crop does not constitute a poor farming practice. Economic and business related factors, such as, the existence of insurance, the level of coverage, and outstanding loan obligations, are not relevant to the question of whether a policyholder was prevented from planting.
- RMA agrees that to qualify for a prevented planting payment due to any insured cause of loss, the acreage must be located in an area where other producers with acreage with similar characteristics are also prevented from planting their crop. This requirement is in the definition of "prevented planting" in the Basic Provisions of the policy.
- RMA agrees that the term "area" is subject to multiple reasonable interpretations, and the determination of "area" may vary from case to case. However, RMA believes that the area must be defined by the cause of loss. For example, all acreage that has been affected by a flood or drought would be included in the area. Once this area is defined, acreage with similar characteristics within the area would be compared to determine whether producers are prevented from planting.
- RMA also agrees that acreage would be considered to have similar characteristics if it had comparable geography, topography, soil types and the same weather conditions and exposure. RMA agrees that ownership of the acreage or whether it is insured should not be considered when determining whether acreage has similar characteristics.
- RMA does not fully agree with the requestor's interpretation provided in paragraph
4 above. In some cases, such as drought, it may be physically possible to plant the acreage even though soil moisture and weather conditions are such that there is insufficient soil moisture for germination of seed and progress toward crop maturity due to a prolonged period of dry weather. The decision by some producers to plant in
conditions where the crop could not germinate and make normal progress toward maturity may not preclude other producers in the area with acreage with similar characteristics from receiving prevented planting payments. A determination would need to be made whether planting in dry conditions constitutes a poor farming practice, which would not be insurable under the terms of the policy. If planting would constitute a poor farming practice, producers in the area with acreage with similar characteristics could receive prevented planting payments. RMA agrees that factors such as existence of insurance, level of insurance coverage, or the financial position of the producer should not be considered when evaluating whether a producer was prevented from planting.
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 insurance program for the 2001 and succeeding crop years.
Date of Issue: February 27, 2002