Final Agency Determination: FAD-016

FAD-016

Subject: Interpretation of section 9 of the Common Crop Insurance Policy Basic Provisions in the Federal Code of Regulations (C.F.R.) at 7 C.F.R. 457.8

In a letter dated February 20, 2003, the Risk Management Agency was asked to make a Final Agency Determination for the 2001 crop year, regarding section 9 of the Basic Provisions, which state, in part:

9. Insurable Acreage

(a) Acreage planted to the insured crop in which you have a share is insurable except acreage:

(1) That has not been planted and harvested within one of the 3 previous crop years, unless:

(i) Such acreage was not planted . . .

(C) Due to an insurable cause of loss that prevented planting; or . . . .

The interpretation submitted is that crop acreage would be insurable under a 2001 policy if that land and crop were prevented from being planted due to an insurable cause of loss in crop year 1998, 1999, or 2000, irrespective of whether or not it was insured in one or more of those years. This interpretation assumes that the acreage in question was planted in 1997 to the same crop that was insured in 2001. The provision is interpreted as applying to "insurable" causes of loss as opposed to "insured" causes of loss. Consequently, the provision is not interpreted to require that the prevented planting contemplated by section 9(a)(1)(i)(C) occur while covered under a policy in order for that acreage and crop to be insurable in 2001.

The Federal Crop Insurance Corporation disagrees with the submitted interpretation. Under that interpretation, the use of the term "insurable" instead of "insured" cause of loss means that the acreage that was prevented from being planted did not need to be insured in 1 or more of the previous 3 crop years. The interpretation is contrary to the definition of "prevented planting."

Section 1 of the Basic Provisions defines "prevented planting" as "Failure to plant the insured crop with proper equipment by the final planting date designated in the Special Provisions for the insured crop in the county. You [the producer] may also be eligible for a prevented planting payment if you failed to plant the insured crop with the proper equipment within the late planting period. 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 prevents other producers from planting acreage with similar characteristics." (Emphasis added.)

There is no ambiguity with respect to this definition. Only an insured crop can qualify for prevented planting. Therefore, in the example presented, acreage in the 2001 crop year would only be insurable if it was not planted but was insured and prevented from being planted in at least one of the 1998, 1999, or 2000 crop years.

There is no practical way to determine whether or not the acreage was genuinely prevented from being planted if the acreage was not insured. The submitted interpretation would allow a person to simply state he or she was prevented from planting in 1 of the last 3 years to qualify for insurance. This would allow insurance on acreage never previously eligible to be insured and would increase program vulnerabilities and increase premium rates.

In accordance with 7 C.F.R. section 400.765(c), this constitutes the Final Agency Determination and is binding on all participants in the Federal crop insurance program for the 2001 crop year.

Date of Issue: May 16, 2003
Slight Typographical Modification: May 30, 2003