Final Agency Determination: FAD-134

FAD-134

Subject: Request dated November 29, 2010, requesting a Final Agency Determination for the 2008 crop year regarding the interpretation of section 6(g)(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.

Background

Section 6 of the Basic Provisions states, as here pertinent:

6. Report of Acreage.

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(g) You must provide all required reports and you are responsible for the accuracy of all information contained in those reports. You should verify the information on all such reports prior to submitting them to us.

(1) If you submit information on any report that is different than what is determined to be correct and such information results in:

(i) A lower liability than the actual liability determined, the production guarantee or amount of insurance on the unit will be reduced to an amount consistent with the reported information (In the event the insurable acreage is under-reported for any unit, all production or value from insurable acreage in that unit will be considered production or value to count in determining the indemnity); or

(ii) A higher liability than the actual liability determined, the information contained in the acreage report will be revised to be consistent with the correct information.

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The Risk Management Agency (RMA) is requested to provide an interpretation to clarify how an Approved Insurance Provider (AIP) must establish liability when there is a conflict between an insured producer's acreage report and the correct acreage as determined by the AIP.

Interpretation Submitted

The requestor interprets section 6(g)(1) "Report of Acreage" of the Basic Provisions to state a policyholder is the party responsible for the accuracy of the information submitted in their acreage report. Additionally, the requester interprets this section to state if the information submitted by the policyholder results in a lower liability under the policy than information determined to be correct by the AIP, the AIP must establish liability based on the information submitted by the policyholder. Conversely, if the information submitted by the policyholder results in a higher liability under the policy than the information determined to be correct by the AIP, liability under the policy must be established based on the information found to be correct by the AIP.

The requestor states 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.

Final Agency Determination

FCIC agrees with the requestor's interpretation that the policyholder is responsible for the information certified on their acreage report. FCIC further agrees if a policyholder has reported fewer acres than the actual acres determined by the AIP, then the liability will be limited to those acres reported. If a policyholder has reported more acres than the actual acres determined by the AIP, the liability will be limited to the actual acres.

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 are not 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 2008 crop year. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: February 15, 2011