Final Agency Determination: FAD-041
Subject: Request dated November 16, 2004, requesting a Final Agency Determination for the 2004 crop year, regarding the interpretation of section 17(f)(10) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions), published at 7 C.F.R. 457.8. This request is pursuant to 7 C.F.R. part 400, subpart X.
Section 17(f)(10) of the Basic Provisions states, as here pertinent:
17. Prevented Planting.
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(f) Regardless of the number of eligible acres determined in section 17(e), prevented planting coverage will not be provided for any acreage:
(10) Based on an irrigated practice production guarantee or amount of insurance unless adequate irrigation facilities were in place to carry out an irrigated practice on the acreage prior to the insured cause of loss that prevented you from planting. Acreage with an irrigated practice production guarantee will be limited to the number of acres allowed for that practice under sections 17(e) and (f);
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The requestor interprets section 17(f)(10) to mean only that an insured cannot apply for a prevented planting payment for a crop based on an irrigated practice if adequate irrigation facilities are not in place on the land claimed to have been prevented from planting. For instance, an insured is not allowed to claim prevented planting potatoes on an irrigated basis if the land on which he intended to plant the potatoes lacks adequate irrigation facilities. The requestor does not believe section 17(f)(10) has any application to the "rolling" of crops for the purpose of payment of a prevented planting claim.
For example: The only crop in the insured's 4-year prevented planting database is irrigated potatoes. The producer purchases or leases new land in crop year 2004, none of which has any irrigation facilities in place. The farmer intends to plant non-irrigated wheat on the added land in crop year 2004 and is prevented from doing so by an insured cause of loss occurring within the prevented planting insurance period for 2004 crop year. The producer turns in a claim for prevented planting wheat. Since the producer has no wheat in his or her prevented planting database, the claim must obviously roll to another crop. In this case, it must be potatoes, but potatoes are not insurable in this county under a non-irrigated practice. The requestor does not believe section 17(f)(10) would preclude the claim from rolling to irrigated potatoes (the only crop and practice in the database) even though the land on which prevented planting is claimed has no irrigation facilities in place. It is the requestor's position that the claim, under the circumstances described, should roll to and be paid on the basis of the irrigated crop and practice.
Final Agency Determination
The Federal Crop Insurance Corporation (FCIC) agrees in part with the interpretation. However, FCIC disagrees that section 17(f)(10) of the Common Crop Insurance Policy Basic Provisions, published at 7 C.F.R. 457.8 means only that an insured cannot apply for a prevented planting payment for a crop based on an irrigated practice if adequate irrigation facilities are not in place on the land claimed to have been prevented from planting (see FAD-040). The second sentence of section 17(f)(10) states: "Acreage with an irrigated practice production guarantee will be limited to the number of acres allowed for that practice under sections 17(e) and (f)." This means the acres for which a prevented planting payment based on an irrigated practice can be made are limited.
Provisions contained in section 17(h) of the Basic Provisions state, "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."
Additionally, provisions contained in section 17(h)(2) of the Basic Provisions state, "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."
Therefore, FCIC agrees that if a producer was prevented from planting non-irrigated wheat and only had irrigated potato acreage eligible for prevented planting coverage based on his or her prior 4-year database, the non-irrigated wheat prevented planting acreage would be paid based on the irrigated potato acreage eligible for prevented planting coverage, even though the wheat acreage that was prevented from being planted did not have irrigation facilities in place. However, as stated in FAD-040, the number of acres for which the non-irrigated wheat would be eligible for prevented planting would be limited to the number of irrigated acres eligible for prevented planting in accordance with section 17(f)(10). This means the number of acres could not be increased by adding non-irrigated acreage to the farming operation.
The request asked that the Final Agency Determination explicitly provide that the decision is applicable to the provisions of Crop Revenue Coverage (04-CRC-Basic) and Revenue Assurance (04-RA) since the language is identical or nearly identical. Even though 7 C.F.R. part 400, subpart X is only applicable to provisions of the Federal Crop Insurance Act and the regulations promulgated thereunder, and CRC and RA have not yet been codified in the C.F.R., to the extent these provisions are identical or nearly identical, the Final Agency Determination applies accordingly to assure consistent, uniform, and equitable treatment to all producers insured under the same policy provisions.
In accordance with 7 C.F.R. 400.765(c), this Final Agency Determination is binding on all participants in the Federal crop insurance program for the 2004 crop year. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).
Date of Issue: February 14, 2005