Final Agency Determination: FAD-036

FAD: 036

Subject: This issuance replaces FAD-036 placed on the RMA website on December 1, 2004. The revised issuance is needed to correct the final agency determination regarding the planting of a cover crop prior to the end of the late planting period (final planting date if no late planting period is applicable) and harvesting a crop for grain, seed, etc. when it was previously designated as only being a cover crop. The original version of FAD-036 stated that if a cover crop was planted prior to the end of the late planting period (final planting date if no late planting period is applicable), no prevented planting coverage is provided. This is clearly not in accordance with section 17(f)(5)(i) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions), which allows prevented planting coverage when a cover crop is planted in this time frame. The original request dated August 16, 2004, requested a Final Agency Determination for the 2004 and succeeding crop years regarding the interpretation of section 15(f)(2) and 17(f)(5)(i) of the Basic Provisions, published at 7 C.F.R. 457.8. This request was submitted pursuant to 7 C.F.R. part 400, subpart X.

Section 15(f)(2) of the Basic Provisions states, as here pertinent:

15. Production Included in Determining an Indemnity and Payment Reductions.

(f) With respect to acreage where you were prevented from planting the first insured crop in the crop year, except in the case of double cropping described in section 15(h):
(2) If a second crop is planted on the same acreage for harvest in the same crop year (you will pay the full premium and, if there is an insurable loss to the second crop, receive the full amount of indemnity that may be due for the second crop, regardless of whether there is a subsequent crop planted on the same acreage) and:
(i) Provided the second crop is not planted on or before the final planting date or during the late planting period (as applicable) for the first insured crop, you may collect a prevented planting payment that is 35 percent of the prevented planting payment for the first insured crop; and

Section 17(f)(5)(i) of the Basic Provisions states:

17. Prevented Planting.

(f) Regardless of the number of eligible acres determined in section 17(e), prevented planting coverage will not be provided for any acreage:
(5) On which the insured crop is prevented from being planted, if:
(i) Any crop is planted within or prior to the late planting period or on or prior to the final planting date if no late planting period is applicable, unless you meet the double cropping requirements in section 17(f)(4), or unless the crop planted was a cover crop; or

The requestor interprets section 17(f)(5)(i) to mean that acreage is not eligible for prevented planting coverage if a crop is planted during the late planting period, if applicable, or prior to the final planting date unless the crop planted was a cover crop.

The requestor interprets section 15(f)(2)(i) to mean that if, after being prevented from planting a first insured crop, an insured plants a second crop the prevented planting payment on the first insured crop is reduced to 35 percent provided the second crop is not planted on or before the final planting date or during the late planting period. The requestor understands this to mean that an insured who submits a prevented planting claim may not plant a second crop, including a cover crop, for harvest before the final planting date or during the late planting period without forfeiting a prevented planting payment for the first insured crop.

The request further stated that in conjunction with one another the two policy sections mean that if an insured submits a prevented planting claim on a first insured crop, and plants a cover crop on or before the final planting date or during the late planting period and ultimately hays, grazes or otherwise harvests it, then the insured is not entitled to a prevented planting payment for the first insured crop.

The Federal Crop Insurance Corporation (FCIC) agrees in part with the interpretation. Section 17 (f)(5)(i) involves the insurability of acreage for prevented planting coverage. Section 15 involves the amount of a prevented planting payment for eligible prevented planting acreage. FCIC also agrees that section 15(f)(2)(i) provides for a 65 percent reduction in a prevented planting payment, except in the case of double cropping, when a second crop is planted after the end of the late planting period (final planting date if no late planting period is applicable) for a first insured crop that was prevented from being planted. Section 15(g)(3) clarifies that this reduction also applies when a cover crop is hayed or grazed on the same acreage in the same crop year after the late planting period (or after the final planting date if a late planting period is not applicable) for the insured crop that was prevented from being planted.

However, the reduction in the prevented planting payment for haying or grazing a cover crop only applies if the cover crop is hayed or grazed in the same crop year. FCIC has determined that since harvest is generally completed by November 1, cover or volunteer crops hayed or grazed after that date would not be considered harvested in the same crop year. Therefore, the prevented planting payment is not reduced if a cover crop is hayed or grazed on or after November 1 of the crop year in which the insured crop was prevented from being planted.

Section 17(f)(5)(ii) states no prevented planting payment coverage is available for an insured crop if any volunteer or cover crop is hayed, grazed or otherwise harvested within or prior to the late planting period or on or prior to the final planting date if no late planting period is applicable for the insured crop.

In conjunction, these provisions mean:

1. If a cover crop is planted prior to the end of the late planting period (final planting date if no late planting period is applicable) for an insured crop that is prevented from being planted, prevented planted coverage may be provided for the insured crop.
   
2. If a cover crop is hayed or grazed prior to the end of the late planting period (final planting date if no late planting period is applicable) for an insured crop that is prevented from being planted, no prevented planting coverage is available.
   
3. If a cover crop is planted after the late planting period (final planting date if no late planting period is applicable) for an insured crop that is prevented from being planted, but is not hayed or grazed prior to November 1, the prevented planting payment will not be reduced.
   
4. If a cover crop is hayed or grazed after the late planting period (final planting date if no late planting period is applicable) for an insured crop that is prevented from being planted and prior to November 1 of the crop year, the prevented planting payment will be reduced by 65 percent.
   
5. If a cover crop is hayed or grazed after November 1 of the crop year in which an insured crop is prevented from being planted, the prevented planting payment will not be reduced.
   
6. A crop harvested for grain, seed, etc. is presumed not to have been grown for conservation or soil improvement purposes and the policy provisions for second crops or crops planted prior to the end of the late planting period, as applicable, will apply.
   

In accordance with 7 CFR 400.765 (c) this constitutes the Final Agency Determination and is binding on all participants in the Federal crop insurance program for the 2004 and subsequent crop years, unless such provisions are revised.

Date of Issue: December 14, 2004