Final Agency Determination: FAD-157

FAD-157

Subject: Request dated March 9, 2012, requesting a Final Agency Determination for the 2011 crop year regarding the interpretation of section 9(a) 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. 400, subpart X.

Background:

Section 9(a) of the Basic Provisions states, in relevant part:

9. Insurable Acreage.

(a) All acreage planted to the insured crop in the county in which you have a share:

(1) Except as provided in section 9(a)(2), is insurable if the acreage has been planted and harvested or insured (including insured acreage that was prevented from being planted) in any one of the three previous crop years. Acreage that has not been planted and harvested (grazing is not considered harvested for the purposes of section 9(a)(1)) or insured in at least one of the three previous crop years may still be insurable if:

(i) Such acreage was not planted:

(A) In at least two of the three previous crop years to comply with any other USDA program;

(B) Due to the crop rotation, the acreage would not have been planted in the previous three years (e.g., a crop rotation of corn, soybeans, and alfalfa; and the alfalfa remained for four years before the acreage was planted to corn again); or

(C) Because a perennial tree, vine, or bush crop was on the acreage in at least two of the previous three crop years;

(ii) Such acreage constitutes five percent or less of the insured planted acreage in the unit;

(iii) Such acreage was not planted or harvested because it was pasture or rangeland, the crop to be insured is also pasture or rangeland, and the Crop Provisions, Special Provisions, or a written agreement specifically allow insurance for such acreage; or

(iv) The Crop Provisions, Special Provisions, or a written agreement specifically allow insurance for such acreage; or

(2) Is not insurable if:

(i) The only crop that has been planted and harvested on the acreage in the three previous crop years is a cover, hay (except wheat harvested for hay) or forage crop (except insurable silage). However, such acreage may be insurable only if:

(A) The crop to be insured is a hay or forage crop and the Crop Provisions, Special Provisions, or a written agreement specifically allow insurance for such acreage; or

B) The hay or forage crop was part of a crop rotation;

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Section 17(a) of the Basic Provisions states, in relevant part:

17. Prevented Planting.

(a) Unless limited by the policy provisions, a prevented planting payment may be made to you for eligible acreage if:

(1) You are prevented from planting the insured crop on insurable acreage by an insured cause of loss that occurs:

(i) On or after the sales closing date contained in the Special Provisions for the insured crop in the county for the crop year the application for insurance is accepted; or

(ii) For any subsequent crop year, on or after the sales closing date for the previous crop year for the insured crop in the county, provided insurance has been in force continuously since that date. Cancellation for the purpose of transferring the policy to a different insurance provider for the subsequent crop year will not be considered a break in continuity for the purpose of the preceding sentence;

(2) You include on your acreage report any insurable acreage of the insured crop that was prevented from being planted; and

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Section 4F of the 2011 Prevented Planting Loss Adjustment Standards Handbook (PP LASH) states, in relevant part:

4. PP COVERAGE AND ELIGIBLE ACREAGE

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9F. ELIGIBLE ACRES

(1) Acreage eligible for PP must:

(a) Be insurable.

(b) Be available for planting. Available for planting means land is free of trees, rocky outcroppings, or other factors that would prevent proper and timely preparation of the seedbed for planting and harvest of the crop for the crop year. Acreage not considered available for planting includes, but is not limited to, the following:

1 Acreage enrolled in CRP;

2 Perennial crop acreage (i.e., trees or vines visibly on the acreage or not removed from the acreage in a proper or timely manner to allow for planting a crop for the crop year);

3 Acreage where pasture or forage is in place; (Refer to section 17(f)(6) of the Basic Provisions for what constitutes established pasture, rangeland or forage that is in place and section 4 I and 4 K (2) (a) of this handbook.)

4 Acreage that has or recently had marsh vegetation; (e.g., cattails, bulrushes, and pondweeds), coarse emergent plants, or submerged aquatics; or

5 Acreage that has any other condition, as determined by the AIP, that would prevent the proper and timely planting of the crop when weather and other conditions are normal for the area in which the acreage is located. For example, acreage that in normal weather patterns is too wet to plant in the spring may be dry enough to till or plant and even insure a crop in the fall. Such acreage would not be available for planting a spring crop even though such acreage may have been tilled, planted, and/or insured the previous fall.

(c) Not be Uninsurable. The adjuster (and/or other contractor or AIP employee designated by the AIP) must verify that the acreage claimed as PP is NOT uninsurable acreage. Uninsurable acreage includes, but is not limited to, acreage:

1 That has not been planted and harvested or insured (grazing is not considered harvested for the purpose of insurable acres) in any one of the three previous crop years UNLESS:

a The insured can show such acreage was:

(i) Not planted in at least two of the previous three crop years to comply with any other USDA program;

(ii) Not planted because of crop rotation (the acreage would not have been planted in the previous three years; e.g., corn, soybeans, alfalfa; and the alfalfa remained for four years before the acreage was planted to corn again); or

(iii) A perennial tree, vine, or bush crop was on the acreage on at least two of the previous three crop years. (Clarification: forage crops, grass crops, and sod are not considered perennial crops for this purpose.)

b Such acreage constitutes five percent or less of the insured planted acreage in the unit; or

c The CP, SP, or a WA specifically allow insurance for such acreage.

2 On which the only crop that has been planted and harvested in the three previous crop years is a cover, hay, (except wheat harvested for hay) or forage crop (except insurable silage) unless a forage crop is part of the insured's established crop rotation, as described in 4F(1)(c)1a(ii) above. *****

Interpretation Submitted

The requestor interprets section 9(a) to mean that a policyholder's insurable acreage must be planted and harvested or insured in any one of the three previous crop years; however, acreage not meeting this definition may be insurable if the acreage was not planted in two of the last three crop years to comply with another USDA program, the acreage would not have been planted in the previous three years due to crop rotation, or because a perennial tree, vine, or bush crop was on the acreage in at least two of the last three crop years. Such acreage may also be insurable if it constitutes five percent or less of the insured planted acreage in the unit or if such acreage was not planted or harvested because it was pasture or rangeland, the crop to be insured is also pasture and rangeland, and the Crop Provisions, Special Provisions, or a written agreement allow insurance for such acreage. Alternatively, such acreage may still be insurable if the Crop Provisions, Special Provisions, or a written agreement allow for insurance coverage. Such acreage will not be insurable if the only crop that has been planted and harvested in the three previous crop years is a cover, hay (except wheat harvested for hay) or forage crop (except insurable silage); however, such acreage will only be insurable if the crop to be insured is a hay or forage crop and the Crop Provisions, Special Provisions, or a written agreement specifically allow insurance for such acreage or the hay or forage crop was part of a crop rotation.

"Forage" is defined in section 1 of the Forage Production Crop Provisions as "Planted perennial alfalfa, perennial red clover, perennial grasses, or a mixture thereof, or other species as shown in the actuarial documents." The requestor interprets this definition to be applicable to the term forage used in section 9 of the Basic Provisions.

The requestor interprets section 17(a) to require that acreage be insurable acreage before a prevented planting payment can be made. To be insurable, the acreage must meet the requirements in section 9 of the policy.

The requestor interprets section 4F of the PP LASH to mean that acreage that has not been planted and harvested or insured in any one of the three previous crop years is uninsurable and ineligible for a prevented planting payment. Moreover, section 4F of the PP LASH does not change or alter the terms of the policy under any other section cited herein.

Final Agency Determination

FCIC agrees with the requestor's interpretation.

FCIC agrees section 9(a) of the Basic Provisions states acreage is insurable if it has been planted and harvested or insured in one of the three previous years unless one of the exceptions specified in the policy applies (e.g., the acreage was not planted harvested or insured due to crop rotation).

FCIC also agrees since the Basic Provisions do not contain a definition of "forage," the definition of "forage" from section 1 of the Forage Production Crop Provisions is applicable to the term "forage" used in section 9(a)(2)(i). The provisions in section 9(a)(2)(i) specify that acreage is not insurable if the only crop that has been planted and harvested in the past three crop years is a cover, hay or forage crop (unless the crop to be insured is for hay or forage or due to crop rotation), unless a written agreement specifically allows insurance for such acreage.

FCIC agrees section 17(a) requires that acreage be insurable before a prevented planting payment can be made. For the acreage on which a crop is grown to be insurable, it must meet the conditions in section 9 of the Basic Provisions. Further, unless the acreage meets these insurability requirements, it is not eligible for a prevented planting payment. Section 4F of the PP LASH further supports this interpretation.

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 crop years the policy provisions are in effect. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: April 27, 2012