Final Agency Determination: FAD-040

Subject: Request dated November 16, 2004, requesting a Final Agency Determination for the 2004 crop year, regarding the interpretation of section 17(e)(1)(i)(A) 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.

Section 17(e)(1)(i)(A) of the Basic Provisions states, as here pertinent:

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). The eligible acres for each insured crop will be determined in accordance with the following table.

Eligible acres if, in any of the 4 most recent crop years, you have planted any crop in the county for which prevented planting insurance was available or have received a prevented planting insurance guarantee

(i) The crop is not required to be contracted with a processor to be insured:

(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 second crop unless you meet the double cropping requirements in section 17(f)(4)). The number of acres determined above for a crop may be increased by multiplying it by the ratio of the total cropland acres that you are farming this year (if greater) to the total cropland acres that you farmed in the previous year, provided that you submit proof to us that for the current crop year you have purchased or leased additional land or that acreage will be released from any USDA program which prohibits harvest of a crop. Such acreage must have been purchased, leased, or released from the USDA program, in time to plant it for the current crop year using good farming practices. No cause of loss that will or could prevent planting may be evident at the time the acreage is purchased, leased, or released from the USDA program.

* * * * *

The requestor indicated that the specific question posed by this request is related to the increase of the number of acres eligible for prevented planting ("prevented planting database") by virtue of the added land ratio discussed in the policy provisions quoted above. Specifically, the requestor asks whether an increase in non-irrigated acreage in the current crop year can be used to increase the prevented planting database for a crop insured under an irrigated practice if that crop is not insurable in the county under a non-irrigated practice. The requestor provided the following example:

Assume an insured has only 300.0 acres of irrigated potatoes in his or her 4-year prevented planting database. The insured had 300.0 acres in his or her farming operation the prior year, all of which were capable of being irrigated and on which the insured raised irrigated potatoes.

For the current crop year, the insured retains the 300 irrigated acres and also adds another 600 acres to his or her farming operation. None of the added 600.0 acres are capable of being irrigated. The insured intended to raise non-irrigated wheat on the new acreage.

In accordance with section 17(e)(1)(i)(A), the "added land" ratio would be 3.0 (900 acres divided by 300 acres). Potatoes are not insurable in this county under a non-irrigated practice.

The requestor also stated that the following provisions contained in section 17(f)(10) of the Basic Provisions may arguably be applicable:

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:

(10) Based on an irrigated practice production guarantee or amount of insurance unless adequate irrigation facilities were in place to carry out an irrigated practice on the acreage prior to the insured cause of loss that prevented you from planting. Acreage with an irrigated practice production guarantee will be limited to the number of acres allowed for that practice under sections 17(e) and (f);

The requestor interprets the above policy provisions to mean only that an insured cannot apply for a prevented planting payment for a crop based on an irrigated practice if adequate irrigation facilities are not in place on the land claimed to have been prevented from planting. For instance, an insured is not allowed to claim prevented planting potatoes on an irrigated basis if the land on which he or she intended to plant the potatoes lacks adequate irrigation facilities. The requestor does not believe section 17(f)(10) has any application to the establishment of the maximum number of acres eligible for prevented planting coverage determined in accordance with section 17(e)(1)(i)(A).

The requestor also stated that section 17(e)(1)(i)(A) speaks only to crops and total cropland acres and does not in any way reference to or make any distinction based on a practice such as irrigated or non-irrigated. Based on the policy language, the requestor does not believe there is any basis which would prevent the application of the "added land" ratio to an irrigated practice in this instance." Therefore, the requestor's interpretation is that the added land ratio (based on an increase of non-irrigated acreage) should be used to increase a crop's irrigated prevented planting database in instances where the crop is not insurable under a non-irrigated practice.

The Federal Crop Insurance Corporation (FCIC) disagrees with the requested interpretation. The requestor is correct that section 17(e)(1) of the Basic Provisions would permit a total of 900 acres to be eligible for prevented planting. However, once the total number of eligible acres is determined, there must be a determination of the eligible acres for each "insured crop."

Based on the scenario presented by the requestor, the insured crop is limited to irrigated potatoes because non-irrigated potatoes are not insurable in the county. Therefore, there must be a determination of how many acres of irrigated potatoes are eligible for prevented planting.

Contrary to the assertion of the requestor, section 17(f)(10) of the Basic Provisions is applicable in making this determination. Section 17(f)(10) states that acreage with a irrigated production guarantee will be limited to the number of acres allowed for that practice under sections 17(e) and (f). This means the database is limited to the acreage eligible for the practice. With respect to an irrigated practice, under section 17(f)(10), the prevented planting acreage is limited to the number of acres where there is adequate irrigation facilities in place to carry out an irrigated practice.

In the scenario presented by the requestor, the producer only has irrigation facilities for 300 of the 900 acres. Therefore, the number of acres eligible for prevented planting under an irrigated practice would be limited to 300 acres.

The request asked that the Final Agency Determination explicitly provide that the decision is applicable to the provisions of Crop Revenue Coverage (04-CRC-Basic) and Revenue Assurance (04-RA) since the language is identical or nearly identical. Even though 7 C.F.R. part 400, subpart X is only applicable to provisions of the Federal Crop Insurance Act and the regulations promulgated thereunder, and the CRC and RA have not yet been codified in the C.F.R., to the extent these provisions are identical or nearly identical, the Final Agency Determination applies accordingly to assure consistent, uniform, and equitable treatment to all producers insured under the same policy provisions.

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 2004 crop year. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: February 14, 2005