Final Agency Determination: FAD-042

Subject: Request dated November 16, 2004, requesting a Final Agency Determination for the 2004 crop year, regarding the interpretation of section 17(h) 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(h) of the Basic Provisions states, as here pertinent:

17. Prevented Planting.

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(h) If you are prevented from planting a crop for which you do not have an adequate base of eligible prevented planting acreage, as determined in accordance with section 17(e)(1), your prevented planting production guarantee or amount of insurance, premium, and prevented planting payment will be based on the crops insured for the current crop year, for which you have remaining eligible prevented planting acreage. The crops used for this purpose will be those that result in a prevented planting payment most similar to the prevented planting payment that would have been made for the crop that was prevented from being planted.

(1) For example, assume you were prevented from planting 200 acres of corn and have 100 acres eligible for a corn prevented planting guarantee that would result in a payment of $40 per acre. You also had 50 acres of potato eligibility that would result in a $100 per acre payment, 90 acres of grain sorghum eligibility that would result in a $30 per acre payment, and 100 acres of soybean eligibility that would result in a $25 per acre payment. Your prevented planting coverage for the 200 acres would be based on 100 acres of corn ($40 per acre), 90 acres of grain sorghum ($30 per acre), and 10 acres of soybeans ($25 per acre).

(2) Prevented planting coverage will be allowed as specified in this section (17(h)) only if the crop that was prevented from being planted meets all policy provisions, except for having an adequate base of eligible prevented planting acreage. Payment may be made based on crops other than those that were prevented from being planted even though other policy provisions, including but not limited to, processor contract and rotation requirements, have not been met for the crop on which payment is being based.

The specific question posed by this request is whether a prevented planting claim submitted for a crop on non-irrigated acreage could roll to crop with an irrigated practice if the crop claimed on non-irrigated acreage had no remaining eligible acres and the crop with the irrigated practice is the only crop with remaining eligible acres and this crop is not insurable under a non-irrigated practice.

For example: An insured only has irrigated potatoes in his four-year prevented planting database. The insured purchases or leases new land in crop year 2004, and none of it has any irrigation facilities in place. The insured intends to plant non-irrigated wheat on the new acreage in crop year 2004 and is prevented from doing so by an insured cause of loss occurring within the prevented planting insurance period. Since the insured has no wheat acreage in the insured's prevented planting database, the claim must roll to another crop; in this case, potatoes. Does section 17(h) preclude the claim from rolling to irrigated potatoes (the only crop and practice in the database) when irrigated potatoes are not insurable in the county under a non-irrigated practice?

The requestor interprets section 17(h) to mean that a reinsured company should roll the claim to the irrigated crop and practice for payment.

The Federal Crop Insurance Corporation (FCIC) agrees that in this situation, section 17(h) would not preclude the wheat claim from rolling to irrigated potatoes since irrigated potatoes is the only crop in the prevented planting database and potatoes are not insurable under a non-irrigated practice.

The requestor 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 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.

Date of Issue: February 14, 2005