Final Agency Determination: FAD-158

FAD-158

Subject: Two requests dated March 1, 2012, and March 15, 2012 were received, requesting a Final Agency Determination for the 2009 crop year regarding the interpretation of section 11(a)(2) 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 11(a)(2) of the Basic Provisions states, in relevant part:

11. Insurance Period.

(a) Except for prevented planting coverage (see section 17), coverage begins on each unit or part of a unit at the later of:

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(2) The date the insured crop is planted; or

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This request relates to the timing of attachment of coverage for planted acreage.

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

Interpretation Submitted

The first requestor interprets section 11(a)(2) of the Basic Provisions to mean that coverage attaches to insured crop acreage as that acreage is planted. Planting some acreage on a specific unit does not trigger attachment of coverage to all acres in the unit that may thereafter be planted.

The first requestor provides an example to illustrate. Assume that a unit, including an enterprise unit, contains 500.0 acres available to be planted. The policyholder plants 100.0 acres on May 1, another 250.0 acres on May 3, and the remaining 150.0 acres on May 10. It is the requestor's interpretation of the policy that coverage would attach to the acres on the unit as they are planted. That is, coverage would attach to 100.0 acres on May 1. On May 3, coverage would attach to the next 250.0 acres that are planted. Coverage would not attach to the remaining 150.0 acres until they are planted on May 10. The planting of 100.0 acres on May 1 does not operate to attach coverage to all 500.0 potential acres on the unit that day. Rather, coverage attaches to the acres as they are planted.

The second requestor interprets section 11(a)(2) of the Basic Provisions to mean insurance attaches to an entire basic unit at the time that planting begins on the basic unit.

The second requestor provides the following example. Assume that Farmer A has one basic unit containing 320 acres on which he intends to plant corn. On April 25 Farmer A begins planting on the basic unit and plants 160 acres of corn. On April 29 Famer A plants an additional 40 acres of corn on the basic unit. On May 1 Farmer A plants an additional 10 acres of corn on the basic unit. On May 5 Farmer A plants an additional 23 acres of corn on the basic unit. On May 7 Farmer A plants an additional 19 acres of corn on the basic unit. On May 15 Farmer A plants the remaining 61 acres of corn on the basic unit. The requestor interprets that coverage attaches to the entire basic unit on April 25, the date that planting began on the basic unit.

Final Agency Determination

The Federal Crop Insurance Corporation (FCIC) agrees with the first requestor's interpretation. Section 11(a) of the Basic Provisions specifies that insurance can attach on "each unit or part of a unit." This means that insurance does not necessarily attach to all acreage in the unit at the same time. Section 11(a)(2) of the Basic Provisions states that coverage attaches the date the insured crop is planted. When read together, the provisions mean that insurance attaches to the acreage on the date the insured crop is planted. This means that if 10 acres in the unit are planted on May 15, insurance attaches to those acres on May 15. If 20 acres in the unit are planted on May 18, then insurance attaches on this part of the unit on May 18. To interpret this provision in any other manner would effectively render the provision "each unit or part of a unit" moot. FCIC cannot interpret any provision in a manner that renders any provision ineffective or moot.

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 policyholders 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 2009 and succeeding 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