FAD-160

Subject: Request dated February 8, 2012, requesting a Final Agency Determination for the 2011 crop year regarding the interpretation of section 2(b)(6)(i) and (ii) 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.

Background:

Section 2 of the Basic Provisions states, in relevant part:

(b) With respect to your application for insurance:

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(6) With respect to persons with a substantial beneficial interest in you:

(i) The insurance coverage for all crops included on your application will be reduced proportionately by the percentage interest in you of persons with a substantial beneficial interest in you (presumed to be 50 percent for spouses of individuals) if the SSNs or EINs of such persons are included on your application, the SSNs or EINs are correct, and the persons with a substantial beneficial interest in you are ineligible for insurance;

(ii) Your policies for all crops included on your application, and for all applicable crop years, will be void if the SSN or EIN of any person with a substantial beneficial interest in you is incorrect or is not included on your application and:

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Interpretation Submitted

The requestor interprets that an applicant for a Multiple Peril Crop Insurance Policy reinsured by the Federal Crop Insurance Corporation (FCIC) under the Standard Reinsurance Agreement (SRA) must provide their own social security number (SSN), employer identification number (EIN), or RMA assigned number (RAN), and they must also provide the SSNs, EINs, or RANs of all parties holding a substantial beneficial interest as defined under the Federal Crop Insurance Act.

It is furthermore the requestor's interpretation that the requirement to provide the SSNs, EINs, or RANs of parties holding a substantial beneficial interest creates an automatic default requirement that any party holding such an interest must also actually be eligible for an SSN, EIN, or RAN, actually have one, and that failing to have such a number due to ineligibility for assignment of an SSN, EIN, or RAN is an automatic prohibition on participation in the Federal Crop Insurance Program.

Final Agency Determination

FCIC agrees with the requestor's interpretation. FCIC agrees that an applicant must provide the applicant's and any person with a substantial beneficial interest (SBI) in the applicant's SSN or EIN by the sales close date (SCD). If the applicant or the applicant's SBI holder does not otherwise qualify for a SSN or EIN, then section 2(b)(10) of the Basic Provisions provides that the applicant may request an assigned number by the SCD. The failure to provide the applicable identification number or request a RAN by the SCD results in policy voidance.

FCIC also agrees that the requirement to provide the SSN, EIN, or RAN creates an automatic default requirement in that any SBI holder must also be eligible to receive a SSN, EIN, or RAN. The program has always been premised on the fact that participants must be eligible for crop insurance under the Federal Crop Insurance Act and other applicable laws. That includes being eligible to receive an SSN, EIN, or RAN. FCIC agrees that if a person is not eligible to receive a SSN, EIN, or RAN, the person is not eligible to participate in the crop insurance program.

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 crop years the policy provisions are in effect. Any appeal of this decision must be in accordance with 7 C.F.R. § 400.768(g).

Date of Issue: May 7, 2012