Final Agency Determination: FAD-85

FAD-85

Subject: Request dated November 8, 2007, requesting a Final Agency Determination for the 2006 and succeeding crop years regarding the interpretation of section 3(e) of the GRP Wheat Crop Insurance Provisions, published at 7 C.F.R. 407.17. This request is pursuant to 7 C.F.R. part 400, subpart X.

Section 3(e) of the GRP Wheat Crop Insurance Provisions states, as here pertinent:

3. Payment.

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(e) The payment will not be recalculated even though the NASS yield may be subsequently revised.

The requestor is requesting an interpretation of section 3(e) of the GRP Wheat Crop Insurance Provisions to mean that if NASS revises or in any way changes its yield after its initial issue (including changes NASS may construe as a correction of current year data), an insured’s indemnity payment will not be recalculated. Hence, a revision or other change in the NASS yield will not result in either an insured being paid additional indemnity or the generation of an overpaid indemnity payment. Therefore, if an insured was not entitled to a payment under the originally issued NASS yield, that insured will not be entitled to a payment using the revised or changed NASS yield. Conversely, if an indemnity payment has been made, a correction or revision of the NASS yield will not require the repayment by the insured of an indemnity (or any portion thereof) that has been previously issued to the insured.

The Federal Crop Insurance Corporation (FCIC) agrees in part with the requestor’s interpretation that in accordance with section 3(e) of the GRP Wheat Crop Insurance Provisions the payment will not be recalculated even though the NASS yield may be subsequently revised. NASS has a policy of reviewing data the year after initial publication. Based on new data, States may revise the county data. These changes are made at the same time the "current year" data are prepared. Additionally, following the Census of Agriculture, every five years, NASS reviews the data for intervening years and “revises” data when appropriate. Generally, any “revisions” are minor and for a limited number of States and years for any commodity, but those “revisions” are not reissued.

FCIC disagrees with the requestor’s interpretation that language in section 3(e) also covers NASS “corrections” of data. There is nothing in section 3(e) to preclude the correction of data. Corrections are the fixing of mistakes. FCIC agrees that this must be distinguished from the normal revision process. However, there may be situations where there are mathematical or other errors, such as transposition of numbers or double counting of data. The distinction is whether there are errors in the calculation of the yields that requires correction.

Thus, if a producer was not entitled to a payment under the originally issued NASS yield and NASS subsequently “corrects” the yield, resulting in a lower yield, the producer may be entitled to a payment using the “corrected” NASS yield. If an indemnity payment has been made, and NASS subsequently “corrects” the originally issued NASS yield, resulting in a higher yield, the producer will be required to repay any overpaid indemnity.

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 the 2006 and succeeding crop years. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: February 13, 2008