Final Agency Determination: FAD-017

FAD-017

Subject: Interpretation of section 17(e)(1)(i)(A) of the Common Crop Insurance Policy Basic Provisions in the Code of Federal Regulations (C.F.R.) at 7 C.F.R. 457.8, pursuant to 7 C.F.R., part 400, subpart X.

On April 17, 2003, the Risk Management Agency was asked for a Final Agency Determination for the 2002 crop year, regarding the interpretation of section 17(e)(1)(i)(A) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions) at 7 C.F.R. 457.8. This request is pursuant to 7 C.F.R. part 400, subpart X. Section 17(e)(1)(i)(A) of the Basic Provisions states, in part:

17. Prevented Planting.

. . . (e) The maximum number of acres that may be eligible for a prevented planting payment for any crop will be determined as follows:

(1) The total number of acres eligible for prevented planting coverage for all crops cannot exceed the number of acres of cropland in your farming operation for the crop year, unless you are eligible for prevented planting coverage on double cropped acreage in accordance with section 17(f)(4) or (5). The eligible acres for each insured crop will be determined in accordance with the following table.

. . .
(i) . . .

(A) The maximum number of acres certified for APH purposes or reported for insurance for the crop in any one of the 4 most recent crop years (not including reported prevented planting acreage that was planted to a substitute crop other than an approved cover crop). . . .

The phrase "reported for insurance" in section 17(e)(1)(i)(A) is interpreted as only the number of reported acres that are determined to be insurable in the applicable crop year, and not the number of acres identified by the insured on the acreage report. For example, if an insured reported 5,000 acres on the acreage report, of which only 3,000 were determined to be eligible for insurance, only 3,000 acres could be used to determine the number of acres eligible for prevented planting coverage.

The Federal Crop Insurance Corporation agrees with the interpretation submitted. Section 6 (c)(1) of the Basic Provisions requires the producer to report separately, insurable and not insurable acreage. But for the purposes of insurance, only insurable acreage is used to calculate the guarantee, premium, and indemnity. Therefore, in the example provided, the policy requires the over-reported acreage to be reduced, and the reduced acreage (3,000 acres) would be considered to be the number of acres reported for insurance.

Further, section 6 allows the insurance provider to base insurance on the actual number of insurable acres, not the number reported. Under these provisions, the interpretation that only insurable acreage be considered as "reported for insurance" is correct.

In accordance with 7 C.F.R. 400.765(c), this constitutes the Final Agency Determination and is binding on all participants in the Federal crop insurance program for crop year 2002.

Date of Issue: : June 16, 2003