Final Agency Determination: FAD-039
Subject: Request dated November 5, 2004, for a Final Agency Determination for the 2004 and succeeding crop years regarding the interpretation of section 17(h)(2) of the Basic Provisions, published at 7 C.F.R. 457.8. This request was submitted pursuant to 7 C.F.R. part 400, subpart X
Section 17(h)(2) of the Basic Provisions (applicable for the 2005 crop year for crops with a contract change date on or after August 31, 2004) states:
17. Prevented Planting.
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(h) If you are prevented from planting a crop for which you do not have an adequate base of eligible prevented planting acreage, as determined in accordance with section 17(e)(1), your prevented planting production guarantee or amount of insurance, premium, and prevented planting payment will be based on the crops insured for the current crop year, for which you have remaining eligible prevented planting acreage. The crops used for this purpose will be those that result in a prevented planting payment most similar to the prevented planting payment that would have been made for the crop that was prevented from being planted.
(1) * * *
(2) Prevented planting coverage will be allowed as specified in this section (17(h)) only if the crop that was prevented from being planted meets all policy provisions, except for having an adequate base of eligible prevented planting acreage. Payment may be made based on crops other than those that were prevented from being planted even though other policy provisions, including but not limited to, processor contract and rotation requirements, have not been met for the crop on which payment is being based. However, if you were prevented from planting any non-irrigated crop acreage and you do not have any remaining eligible acreage for that crop and you do not have any other crop remaining with eligible acres under a non-irrigated practice, no prevented planting payment will be made for the acreage.
The requestor interprets the italicized portion of section 17(h)(2) to mean a prevented planting payment can not be made on non-irrigated crop acreage if the insured person does not have remaining eligible acres for that non-irrigated crop or any other non-irrigated crop. In other words, a prevented planting payment for a non-irrigated crop may not be based on an irrigated crop.
The requestor provided an example in which an insured claims prevented planting on non-irrigated corn but does not have remaining eligible acreage for non-irrigated corn and the insured's only remaining eligible acres are for irrigated corn or another irrigated crop. The requestor states that in this situation no prevented planting payment can be made for the non-irrigated corn. The requestor further states that to be entitled to a prevented planting payment in this scenario, the insured must have eligible acres for a non-irrigated crop.
Final Agency Determination
The Federal Crop Insurance Corporation (FCIC) can not provide an interpretation for the 2004 crop year as requested because the specific provision in question is effective only for crop policies with contract change dates on or after August 31, 2004. The following interpretation is provided for crops with a contract change date on or after this date:
FCIC agrees a prevented planting payment can not be made when a producer has no remaining eligible acres for the crop that is prevented from being planted or for other crops. However, in the example provided, FCIC does not agree a payment could not be made for non-irrigated corn acreage when there are remaining eligible acres for corn on an irrigated basis. Based on the example provided, it appears the requestor may be misinterpreting the manner in which eligible crop acres are determined.
Section 17(e)(1)(i)(A) of the Basic Provisions states eligible acres for an insured crop (corn in the example provided) is the maximum number of acres certified for APH purposes, or insured acres reported for corn in any one of the four most recent crop years (not including reported prevented planting acreage that was planted to a second crop unless double cropping requirements are met). This provision has no limitations based on practice. Therefore, eligible acres on a crop basis includes both irrigated and non-irrigated acreage. For example, if a producer has 50 acres of non-irrigated corn and 50 acres of irrigated corn in one of the past four crop years, the producer would have 100 eligible corn acres. However, because of the limitation contained in section 17(f)(10) of the Basic Provisions regarding irrigated practices, there would be only 50 eligible corn irrigated acres.
The italicized portion of section 17(h)(2) means payment for non-irrigated acreage can not be based on an irrigated practice. For example, as stated above, if there is a history of 50 acres of non-irrigated corn acreage and 50 acres of irrigated corn acreage, the producer has 100 acres eligible for a prevented planting payment based on corn. If a producer is prevented from planting corn on 150 non-irrigated acres, the prevented planting payment would be based on 100 acres of non-irrigated corn and 50 acres of another insured non-irrigated crop (whichever non-irrigated crop provides the most similar payment amount to the insured crop) with remaining eligible acres under a non-irrigated practice. If there are no remaining eligible acres for other crops with a non-irrigated production guarantee, no prevented planting payment will be made for the remaining 50 acres.
In accordance with 7 CFR 400.765 (c) this constitutes the Final Agency Determination and is binding on all participants in the Federal crop insurance program for the 2005 crop year for crops with a contract change date on or after August 31, 2004 and for subsequent crop years, unless such provisions are revised. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).
Date of Issue: February 11, 2005