Final Agency Determination: FAD-051

Subject: Request dated April 15, 2005, requesting a Final Agency Determination for the 2004 crop year regarding the interpretation of section 17(e)(1) 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) of the Basic Provisions states, as here pertinent:

Section 17. Prevented Planting

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(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….

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The requestor interprets section 17(e)(1) of the Basic Provisions to mean that prevented planting acres reported by an insured may not be used to determine the number of acres for which a successor insured may be "eligible" for prevented planting. The requestor believes that procedure contained in section 4C(12) of the 2004 Crop Insurance Handbook (CIH) does not permit a transfer of prevented planting acres.

Section 4C(12) of the 2004, CIH provides, in pertinent part:

Transfer of APH Data. If an insured has an approved APH yield and turns the operation or some of the operation, over to another person/entity who has participated (managed, performed the physical activities necessary to produce the crop, or received a share of the crop) in the operation and establishment of the approved APH (actual production history) yield, the Insurance Provider may approve transferring all the years of APH yield history (not including non-actual yields and assigned yields which break continuity of records for this purpose) for the acreage being transferred to the person/entity taking over the operation….

The requestor provided an example to explain the context of the interpretation as follows:

In 2002, insured A, a partnership, submits an acreage report for 300 acres of prevented planting for cotton. Insured B, a partner in insured A, assumed control of the farming operation in 2004 and transferred actual production history.

In 2004, insured B, submitted an acreage report claiming cotton was prevented from being planted on 300 acres. Insured B had no history of prevented planting in the subject county.

For purposes of determining the prevented planting payment, if any, due insured B under section 17 of the Basic Provisions, the requestor believes the maximum number of acres for which insured B may be eligible for a prevented planting payment should not consider the prevented planting acres claimed by insured A, because Section 4(C)(12) of the 2004 CIH does not permit such records to transfer to a successor in interest.

The Federal Crop Insurance Corporation (FCIC) does not fully agree with the interpretation as submitted. Section 17(e)(1) of the Basic Provisions clearly states that the total number of acres that may be eligible for prevented planting is the "number of acres of cropland in your farming operation". Under this provision it is immaterial how the insured acquired the acreage or whether it had a previous history of prevented planting. If the acreage qualifies as cropland and is included in the insured's farming operation, it may be included in the total number of acres eligible for prevented planting.

The actual amount of eligible acreage for each insured crop is determined by the table in section 17(e)(1)of the Basic Provisions. This means that under the example provided by the submitter, for the 2004 crop year, the total number of acres of insured B's that are eligible for prevented planting is 300 acres because they are now in his farming operation. However, the determination of how many of those 300 acres are actually eligible for a prevented planting payment for cotton is determined in accordance with the table in section 17(e)(1).

FCIC agrees that the 2002 prevented planting acreage of insured A could not be used to establish the eligible prevented planting acreage for the cotton under the table in section 17(e)(1) because such history would not transfer to insured B. However, if cotton was planted in any of the last four years by insured A on the 300 acres, then the acreage would be eligible for prevented planting for cotton for the 2004 crop year for insured B because that history would transfer.

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: July 13, 2005