Final Agency Determination: FAD-105

FAD-105

Subject: Request dated November 24, 2009, requesting a Final Agency Determination for the 2005 through 2009 crop years regarding the interpretation of section 1 definition of “prevented planting” 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.

The submitter requests the Risk Management Agency (RMA) provide an interpretation of the definition of prevented planting to clarify the factors considered in determining whether acreage has “similar characteristics.”

Section 1 definition of “prevented planting” states, as here pertinent:

1. Definitions

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Prevented planting- Failure to plant the insured crop with proper equipment by the final planting date designated in the Special Provisions for the insured crop in the county. You may also be eligible for a prevented planting payment if you failed to plant the insured crop with the proper equipment within the late planting period. You must have been prevented from planting the insured crop due to an insured cause of loss that is general in the surrounding area and that prevents other producers from planting acreage with similar characteristics. (Emphasis added.)

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The requestor interprets the definition of prevented planting to mean a producer’s chosen production method should not be a factor in considering whether acreage has “similar characteristics.” In many instances, a producer will take the position that his land should not be compared to that of neighboring producers because he is a no-till producer while his neighbors generally use a minimum till or conventional till practice. The requestor does not believe this position is consistent with the Federal Crop Insurance Corporation (FCIC) policy or procedure.

The requestor states a producer’s tillage practice is a farm management decision made by the producer. It is not a characteristic of the land. FCIC procedure does not include a producer’s management decision as to tillage practice within the concept of “acreage with similar characteristic.” FCIC addressed this issue in a Final Agency Determination (FAD)-012. FAD-012 clearly limits “characteristics” of the land to those items intrinsic to the soil itself, (i.e., geography, topography, and soil type). A management decision is not a “characteristic” of the land. The requestor interprets FCIC policy to mean a producer is not entitled to a prevented planting payment if the reason he was prevented from planting was due to his management decision to employ a no-till farming practice.

The requestor stated that identical or nearly identical language is set forth in the Crop Revenue Coverage (CRC) and the Revenue Assurance (RA) insurance policies. Accordingly, they request this Final Agency Determination explicitly be made applicable to the CRC and RA policies as well.

FCIC agrees with the requestor’s interpretation that a farm management decision to no-till acreage is not a “characteristic” of the acreage or a factor considered when determining if the acreage has characteristics similar to other acreage in the area.

RMA posted FAD-012 on its website on February 27, 2002. In FAD-012, RMA interpreted the term “area” to be the area affected by the cause of loss. Once the area is determined, acreage with similar characteristics within the area would be compared to determine whether the producer is prevented from planting. RMA also stated in FAD-012 that acreage would be considered to have similar characteristics if it had comparable geography, topography, soil types, the same weather conditions and exposure. Therefore, the management decision to no-till the acreage is not a “characteristic” of the acreage.

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 hereunder, and the CRC and RA policies have not yet been codified in the Code of Federal Regulations, to the extent those provisions are identical or nearly identical, this 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 2005 through 2009 crop years. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: Jan 7, 2010