Final Agency Determination: FAD-143

FAD-143

Subject: A joint request for a Final Agency Determination was submitted by two parties, along with their separate interpretations of the same policy provision. This joint request by Submitter One and Submitter Two is dated May 13, 2011, requesting a Final Agency Determination (FAD) for the 2009 crop year regarding Section 9(a)(2)(iii) of the Guaranteed Production Plan of Fresh Market Tomato Crop Provisions, published at 7 C.F.R. 457.128. This request is pursuant to 7 C.F.R. part 400, subpart X.

Background:

Section 9(a)(2)(iii) of the Guaranteed Production Plan (GPP) of Fresh Market Tomato Crop Provisions states:

9. Insurable Acreage.

(a) In addition to the provisions of section 9 (Insurable Acreage) of the Basic Provisions:

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(2) We do not insure any acreage of tomatoes:

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(iii) On which tomatoes, peppers, eggplants, or tobacco have been grown within the previous two years unless the soil was fumigated or nematicide was applied before planting the tomatoes, except that this limitation does not apply to a first planting in Pennsylvania or if otherwise specified in the Special Provisions; or

A statement in the Special Provisions for GPP Fresh Market Tomatoes in Bradley County, Arkansas, additionally states:

"In regards to the policy provisions, fumigation is not required if a valid Nematode Analysis Test is on file with the Insurance Provider and confirms that the planted acreage is not infested to a concentration exceeding 75 root knot nematodes per pint of soil. Test samples must be taken while the plants are actively growing between fruit set and end of production in accordance with Cooperative Extension Service guidelines during the immediately preceding crop year and tested by the Nematode Diagnostic Clinic, University of Arkansas, SW Research and Extension Center."

Interpretations Submitted

As indicated above the joint request for a Final Agency Determination was submitted by two parties. Both parties submitted their interpretation of the provision as follows:

Submitter One interprets Section 9(a)(2)(iii) to mean "this crop provision may be applied to deny insurability and coverage only for nematode-caused losses. That is, if a producer suffers a loss that is not attributable to nematodes, the producer's failure to meet the fumigation or nematicide requirement set forth in this crop provision or the alternative testing requirement set forth in the Special Provisions for Bradley County, Arkansas will not preclude insurability or indemnity coverage. The intended aim of this regulation is to address only problems associated with nematode infestation. As such, the regulation should be construed to preclude insurability and coverage only for nematode-related losses." Submitter Two interprets Section 9(a)(2)(iii) to mean "this crop provision applies regardless of the specific cause of loss. This provision is clear and unambiguous. It states that acreage on which tomatoes (or the other specified crops) have been grown within the two previous years is not insurable unless: (1) the soil was fumigated or a nematicide was applied prior to transplanting the crop to the field; or (2) the producer has obtained a valid nematode analysis test under the terms set forth in the Special Provisions. Uninsurable acreage is not covered under the policy, meaning that it is not covered for any cause of loss."

Final Agency Determination

The Federal Crop Insurance Corporation (FCIC) agrees with the interpretation of Submitter Two and disagrees with the interpretation of Submitter One.

Section 9(a)(2) specifies when acreage is not insurable. It makes it very clear that the acreage is not insurable if tomatoes, peppers, eggplants, or tobacco have been grown within the previous two years but it provides several exceptions. One exception is that the soil is fumigated or a nematicide is applied before planting the tomatoes. Another exception is provided in the Special Provisions for Bradley County, Arkansas, which allows insurance of the acreage in which tomatoes, peppers, eggplants, or tobacco were planted within two year if there is valid Nematode Analysis Test on file that confirms that the planted acreage is not infested to a concentration exceeding 75 root knot nematodes per pint of soil. There is nothing in section 9(a)(2) of the Special Provisions that ties the insurability to a specific cause of loss. Once the acreage is not insurable because the requirements have not been met, no cause of loss is covered.

In accordance with the 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 2009 crop year. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: June 17, 2011