Final Agency Determination: FAD-112

FAD-112

Subject: Request dated December 23, 2009, requesting a Final Agency Determination for the 2008 and subsequent crop years regarding the interpretation of section 17(b)(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 17 of the Basic Provisions states, in relevant part:

17. Prevented Planting.

(b) The actuarial documents may contain additional levels of prevented planting coverage that you may purchase for the insured crop:
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(4) You may not increase your elected or assigned prevented planting coverage level for any crop year if a cause of loss that will or could prevent planting is evident prior to the time you wish to change your prevented planting coverage level.
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The Risk Management Agency (RMA) is requested to provide an interpretation that clarifies what standards are to be applied to identify whether a cause of loss that "could" prevent planting is evident and whether an approved insurance provider (AIP) is suppose to determine a single cause of loss or if multiple events are to be considered when determining a producer’s eligibility for additional prevented planting coverage.

Regarding the producer's opportunity to increase prevented planting coverage, the requestor interprets section l7(b)(4) of the Basic Provisions as prohibiting a producer from increasing their prevented planting coverage level if a single cause of loss occurs prior to the date the producer elected such coverage that would prevent planting from taking place.

For example, in a producer's county, excessive rain caused a general harvest delay in the fall (September - October). The wet fall ended with an early freeze followed by a long and early winter where a significant amount of snow fell (November - March). The producer elects additional prevented planting coverage in early March prior to Sales Closing because it is common for the fall and winter conditions to be mitigated by a warm and dry spring. However, the wet fall is followed by a wet and cool spring (April- May). Because, in March, the producer could not have predicted that a wet and cool spring would not mitigate the fall and winter conditions, the requestor does not believe that there is a single cause of loss that occurred prior to the time the additional prevented planting coverage level was elected that could be deemed as a cause that could prevent planting. Under such circumstance, the requestor does not interpret section l7(b)(4) of the Basic Provisions to prohibit a producer from increasing prevented planting coverage levels.

The Federal Crop Insurance Corporation (FCIC) does not agree with the requestor’s interpretation that section l7(b)(4) of the Basic Provisions means a producer is prohibited from increasing their prevented planting coverage level if “a single cause of loss” occurs prior to the date the producer elected such coverage that would prevent planting from taking place. The heading of the Common Crop Insurance Policy published at 7 C.F.R. 457.8 states that, “Unless the context indicates otherwise, use of the plural form of a word includes the singular and use of the singular form of the word includes the plural.” Therefore, the provisions contained in section 17(b)(4) of the Basic Provisions mean the prevented planting coverage level cannot be increased if a single cause of loss is evident, or multiple causes of loss are evident, prior to the time the producer requests the increased prevented planting coverage level, and such cause or causes will or could prevent planting.

If the effects of one or more causes of loss are evident at the time the producer requests the increased prevented planting coverage level and it can be established that if normal weather conditions were to occur after the time the producer requested the increased prevented planting coverage level it would allow the acreage to be planted, the producer’s request to increase their coverage level should be accepted. For example, if prior to the request to increase coverage, there is an unusually heavy snow storm early in the winter season but the early snowstorm is unlikely to affect planting if normal weather continues into the spring, then the request to increase the prevented planting coverage level may be granted. However, if it is unlikely, or questionable, as to whether normal weather conditions could mitigate events that occurred prior to the time the producer requested the increased prevented planting coverage level, the producer’s request must be denied. For example, if excessive precipitation that occurred throughout the previous fall is followed by a long and early winter, where significantly more than normal snowfall occurred, these events could result in the inability to plant a spring crop even if normal spring weather conditions were to occur and therefore, the request to increase prevented planting coverage should be denied.

Section 17(b)(4) of the Basic Provisions does not require the AIP to determine, at the time the producer requests the additional prevented planting coverage level, whether or not a cause of loss that previously occurred “will” ultimately prevent planting. Instead the AIP should prohibit the increased coverage if the cause of loss will or “could” prevent planting. At the time the increased coverage is requested, it may be impossible to determine whether the acreage will actually be prevented from being planted several months later, since other intervening events could change the outcome. Therefore, if a cause of loss has occurred that may “or could” prevent planting, the request must be denied.

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 2008 and subsequent crop years. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: Mar 9, 2010