BULLETIN NO.: MGR-95-011 TO: All Reinsured Companies CFSA Headquarters, Program Delivery and Field Operations All Risk Management Field Offices FROM: Kenneth D. Ackerman Acting Deputy Administrator SUBJECT: Revisions and Clarifications for Wheat, Citrus, Tobacco, and Pea Insurance Due to the Implementation of the Federal Crop Insurance Reform Act of 1994 ISSUE: Questions have been raised regarding specific implementation issues for the above crops due to the Federal Crop Insurance Reform Act of 1994 (Act). The following information answers these questions and, in some cases, will result in amendments to the catastrophic risk protection endorsement published in the Federal Register as an interim rule. DISCUSSION: 1. Issue: Some counties have both a fall and spring sales closing date for wheat. Winter wheat and spring wheat are insurable in these counties. Will wheat producers, in counties which have both a fall and spring sales closing date, who are now applying for catastrophic risk protection (CAT) for their winter wheat be able to choose between the CAT, limited, or additional coverage levels for their spring wheat? Clarification: Producers in these counties, who did not purchase limited or additional coverage on or prior to the fall sales closing date and are now obtaining CAT coverage for their winter wheat, will be limited to CAT coverage on their spring wheat. Separate levels of coverage are not available for spring and winter wheat. 2. Issue: Is CAT coverage available for winter wheat planted in a county that has only a spring sales closing date? Clarification: If wheat is a crop of economic significance both winter and spring acreage must be insured to maintain eligibility for certain other Department of Agriculture (USDA) program benefits. Both winter and spring wheat are insurable for the 1995 crop year under CAT, limited, and additional coverage in counties which have only a spring sales closing date. The small grains crop provisions require the insured to notify the insurer that coverage is desired for winter wheat. Notification is required by the spring sales closing date designated in the special provisions. Due to confusion regarding the requirements to request insurance for winter wheat in spring only counties, Insurance Providers may consider requests for winter wheat coverage received by April 28, 1995, as meeting the notification requirements. The small grains crop provisions also require the insurer to agree, in writing, that the winter wheat acreage has an adequate stand in the spring to produce at least the approved actual production history (APH) yield. Due to the large amount of acreage involved, insurers may elect to make this determination based on an area wide analysis of damage and signify acceptance of winter wheat acreage by sending notification of acceptance to the insureds who requested such coverage. Failure of the acreage to be accepted for insurance purposes due to crop damage will not affect the linkage requirements of the producer. 3. Issue: A producer has elected the winter coverage endorsement under limited or additional coverage for winter wheat, the wheat is subsequently damaged, and the insured elects to accept an appraisal of the remaining potential production. The producer may elect to plant the acreage to spring wheat. The spring wheat may be insured separately from the winter wheat. Since the spring wheat is planted on the same acreage for the same crop year as the winter wheat, does it have to be insured for linkage requirements? Clarification: The spring wheat would need to be insured for linkage requirements if all wheat planted in the county is a crop of "economic significance." 4. Issue: Do dry peas and green peas each require separate administrative fees? Clarification: Dry peas and green peas are currently insured under the pea crop insurance policy. Dry peas and green peas are two separate crops which may be insured independently of each other and at different coverage levels. Each crop requires a separate administrative fee. 5. Issue: The CAT endorsement subsection 1.(g) states: "County - The county or other political subdivision shown on your accepted application including land in an adjoining county, provided such land is part of a field that extends into the adjoining county and the county boundary is not readily discernable. For peanuts and quota tobacco, the county will also include any land identified by a CFSA farm serial number for the county but physically located in another county." Clarification: Tobacco is insured under the guaranteed or the quota plan of insurance. Tobacco insured under the quota plan is sold under a quota marketing system. Most tobacco insured under the guaranteed plan of insurance is also sold under a quota marketing system. The quota amount is established by the Consolidated Farm Service Agency (CFSA) for each applicable farm serial number. Tobacco insured under the guaranteed plan which is planted on land identified by a CFSA farm serial number for a county but that is physically located in another county requires a separate policy according to the current definition of "county" in the CAT endorsement. All tobacco, whether insured under the quota or guaranteed plan, should be included in the definition of county. This would allow land in another county to be considered a part of the county in which the farm serial number is administered to prevent splitting the quota within each CFSA farm serial number. The catastrophic risk protection endorsement has been published in the Federal Register as an interim rule. FCIC intends to amend this regulation to delete the word "quota" in the definition of "county" before the regulation is published as final rule in the Federal Register. 6. Issue: Can a producer maintain linkage requirements when an insurable crop was planted but a zero acreage report was filed? Clarification: A producer who has planted a crop but submitted a zero acreage report has violated the terms of the insurance policy by willfully and intentionally providing false or inaccurate information, as referenced in the applicable policy. Therefore, the producer will not be eligible for certain other USDA program benefits. 7. Issue: Can a producer maintain linkage requirements when an insurable crop was planted but a unit of the crop was not reported or the acreage within a unit was under-reported? Clarification: Insureds may meet linkage requirements for certain other USDA programs if inaccurate reporting is determined to be unintentional. If it is determined that a producer has knowingly adopted a material scheme or device to obtain benefits to which he/she is not entitled, the producer shall be ineligible to receive all benefits applicable to the crop year for which the scheme or device was adopted. 8. Issue: If an uninsured producer buys land after the sales closing date, can the producer apply for a late filed application and if not will the producer meet linkage requirements with certain other USDA programs? Clarification: The producer may purchase CAT up to the acreage reporting date with written justification, etc., as specified on page 19 of the CAT handbook slip sheet issued February 15, 1995. The insurance provider may approve such application at their discretion. If the producer did not obtain the land by the sales closing date and insurance is not obtained, the issue of linkage should not be in question. The producer would not have to request CAT and the insurance provider does not have to approve the late filed application for eligibility to be maintained. 9. Issue: The Native American Lessor Agreement appearing in the CAT Service Office Handbook does not properly address the needs of the policyholders, insurers, or CFSA for catastrophic risk protection coverage. Clarification: See attachment 1 for further information. ACTION: Effective immediately, the issues contained herein are to be administered in accordance with the contents of this bulletin. =========================================================================== Attachment 1 The Federal Crop Insurance Corporation (FCIC) has determined that the Bureau of Indian Affairs (BIA) and Tribal Councils can be issued crop insurance contracts in the BIA or Tribal Council name to insure their share of a crop which is farmed by a tenant. The BIA as the lessor leases land that is under trust with the BIA for a tribe or a portion of a tribe. This land is leased by allotment, which is a portion of land owned by a number of members of a tribe. Allotments may qualify for separate unit division as each allotment generally is owned by different tribal members. All of the crop insurance regulations and procedures concerning Catastrophic Risk Protection (CAT), Limited Coverage and Additional coverage apply to the issuance of these contracts. The Federal regulations pertaining to gathering Social Security (SSN) or Tax Identification (TIN) numbers for those with a Significant Beneficial Interest will apply to the lessee and individual Indian lessors that lease land outside of the BIA trust. The BIA as a Federal agency will not provide such numbers. The Consolidated Farm Service Agency (CFSA) in place of transmission of the SSN or TIN for the BIA will transmit the code identifying the county and state. For companies, the FCIC code for state and county will be transmitted. The last four digits will be generated internally and then transmitted by CFSA and companies to further identify the entity. In the event the BIA or Tribal Council requires the producer (lessee) to purchase coverage for them, a Power of Attorney needs to be executed providing the lessee all of the rights to complete an application for the lessor and execute any necessary crop insurance documents. When insurance is required to cover the lessor's interest in the crop by the lease, the policy will be issued in the name of the lessor. The Native American Lessor Agreement and Indian Lessor Agreements are now obsolete. Changes to the Service Office Handbook, Catastrophic Risk Service Office Handbook and Manual 13 are now being made to accommodate these changes. Policies that are currently in force with the Native American Lessor Agreement can remain in effect for the current crop year. The following crop year the coverage must be rewritten in accordance with these instructions.