Final Agency Determination: FAD-103

FAD-103

Subject: Request dated July 31, 2009, requesting a Final Agency Determination for the 2009 and succeeding crop years regarding the interpretation of section 15(h)(4) 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 15 of the Basic Provisions states, as here pertinent:

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

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(h) You may receive a full indemnity, or a full prevented planting payment for a first insured crop when a second crop is planted on the same acreage in the same crop year, regardless of whether or not the second crop is insured or sustains an insurable loss, if each of the following conditions are met:
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(4) You provide records acceptable to us of acreage and production that show you have double cropped acreage in at least two of the last four crop years in which the first insured crop was planted, or that show the applicable acreage was double cropped in at least two of the last four crop years in which the first insured crop was grown on it; and

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Section 21 of the Basic Provisions states, as here pertinent:

21. Access to Insured Crop and Records, and Record Retention.

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(b) You must retain, and provide upon our request, or the request of any employee of USDA authorized to investigate or review any matter relating to crop insurance:

(1) Complete records of the planting, replanting, inputs, production, harvesting, and disposition of the insured crop on each unit for three years after the end of the crop year (This requirement also applies to all such records for acreage that is not insured); and

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The Risk Management Agency (RMA) is requested to provide an interpretation to clarify whether or not the requirement to provide acreage and production records to prove double cropping history contained in section 15(h)(4) of the Basic Provisions is intended to require an approved insurance provider (AIP) to obtain actual records of acreage and production records beyond the three year record retention standard outlined in section 21(b)(1) of the Basic Provisions.

Regarding the "records acceptable to us of acreage and production" referenced above, the requestor interprets section 15(h)(4) of the Basic Provisions as requiring AIPs to obtain verifiable historical evidence of production from two of the last four years for both the first and second crops. As regards production records, the requestor interprets section 15 of the Basic Provisions to require more than a review of the insured's Actual Production History (APH) and Form FSA-578. More specifically, an AIP must obtain and verify actual, third party production records. In this regard, there is a different reporting and documentation standard for verifying eligibility for double cropping as opposed to APH. However, as regards acreage records, the requestor interprets section 15 of the Basic Provisions to permit the use of Form FSA-578s.

However, section 21(b)(1) of the Basic Provisions requires "complete records of the planting, replanting, inputs, production, harvesting, and disposition of the insured crop on each unit for three years after the end of the crop year." The requestor interprets the combination of these two sections to mean an AIP is required to obtain actual verification of acreage and production if the documents are within the three year record retention standard. In addition, the requestor interprets the three-year standard to be three calendar years following the end of the crop year period. Therefore, if the successful double-crop production was from more than three calendar years ago, an insured is no longer required to retain the complete records. Consequently, in the instance of any acreage and production documentation more than three years old, an AIP may rely solely on the insured's APH records.

For example, in the scenario outlined below, the insured can demonstrate double-cropping for crop years (CY) 2002, 2003, 2006, and 2008, the last four years of wheat planting. However, since the insured is only required to retain complete records for three calendar years following the end of the crop-year, when determining double-crop eligibility the requestor interprets the required documentation to be the 2008 CY APH, FSA-578 and verifying records (i.e., Sales Records or independent crop appraisal) and only the APH and FSA-578 for the 2003 CY.

An alternate scenario would be as detailed below. If an insured's double-crop records were as follows, the applicable successful production records for the last two of four years would be CYs 2002 and 2003. However, based on section 21(b)(1) of the Basic Provisions an insured would not have been required to retain the complete records for CYs 2002 and 2003 beyond calendar year 2006 and 2007 respectfully. Therefore, since the record retention policy does not require documents beyond three years, the requestor interprets verification solely through the APH as acceptable.

The Federal Crop Insurance Corporation (FCIC) does not agree with the requestor’s interpretation. To prove double-cropping history, the provisions in section 15(h)(4) require records of acreage and production, which are acceptable to the AIP, for at least two of the last four years in which the first insured crop was planted. Such records must be provided for both the first insured crop and the crop subsequently planted. In accordance with section 4.D(8)(c)4 of the Crop Insurance Handbook, acceptable records that may be used to support past double-cropping include, but are not limited to:

• Elevator ledger sheets showing the amount of production from double-cropped acreage (using farm management or trucking records, producers can designate which loads were from double-cropped acreage if production from both double-cropped and single cropped acreage is on the same ledger);
• Crop insurance records, including records used for APH, claims, appraisals, bin measurements, etc.
• FSA documents, maps, or bin measurements showing the amounts of production or acreage that was double-cropped;

Section 1 of the Basic Provisions states:

Production report - A written record showing your annual production and used by us to determine your yield for insurance purposes (see section 3). The report contains yield information for previous years, including planted acreage and harvested production. This report must be supported by written verifiable records from a warehouseman or buyer of the insured crop or by measurement of farm-stored production, or by other records of production approved by us on an individual case basis.

7 C.F.R. 400.52 (Definitions) states:

(q) Verifiable records-Contemporaneous records of acreage and production provided by the insured, which may be verified by FCIC through an independent source, and which are used to substantiate the acreage and production that have been reported on the production report.

Therefore, in accordance with section 15(h)(4) of the Basic Provisions and section 4.D(8)(c)4 of the Crop Insurance Handbook, the production report may be considered acceptable documentation of acreage and production to prove a double cropping history, provided the producer retains written verifiable records supporting the production report. Such supporting records must be provided upon request. However, such records can only be used to prove double-cropping history if they include only production from acreage that was double-cropped (certain exceptions may be allowed as provided in FAD-101). If the record contains a combination of acreage/production for double-cropped acreage and acreage that was not double-cropped, other records must be provided to separate it.

Provisions in section 21(b)(1) of the Basic Provisions require a producer to keep complete records of planting, production, etc. for three years after the end of the crop year. Under the basic tenets of statutory and regulatory interpretation, the provisions must be reconciled to the extent possible. With respect to sections 21(b)(1) and 15(h)(4), these provisions are reconciled by interpreting the record keeping requirement as normally three years unless additional years of records are necessary to satisfy the requirements of section 15(h)(4). This means that if records from more than three crop years ago are necessary to establish that the producer double cropped in at least two of the last four years crop years, such records must be retained and provided or the producer will not qualify for double cropping. As stated above, if the record being used is a production report, the producer must retain written verifiable records supporting the production report and such records must be provided upon request. Therefore, in each of the scenarios presented above, the same type of records that qualify as acceptable in accordance with the procedures are required for each of the years the producer is using to establish double cropping.

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 2009 and succeeding crop years. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: November 16, 2009