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Final Agency Determination: FAD-167

FAD-167

Final Agency Determination: FAD-167

Subject: Request dated July 11, 2012, and resubmitted to the Risk Management Agency (RMA) on August 3, 2012, requesting a Final Agency Determination for the 2011 crop year regarding the interpretation of section 17(d)(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. 400, subpart X.

Background:

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

17. Prevented Planting.

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(d) Prevented planting coverage will be provided against:

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(2) Causes other than drought, failure of the irrigation water supply, failure or breakdown of the irrigation equipment or facilities, or your inability to prepare the land for irrigation using your established irrigation method, provided the cause of loss is specified in the Crop Provisions. However, if it is possible for you to plant on or prior to the final planting date when other producers in the area are planting and you fail to plant, no prevented planting payment will be made.

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Interpretation Submitted

The requestor interprets section 17(d)(2) of the Basic Provisions to require that the insured acreage be planted if it is possible for the insured to plant on or prior to the final planting date and one or more producers in the area (land surrounding the insured acreage with geographic characteristics, topography, soil types, and climatic conditions similar to the insured acreage) planted. If the insured does not plant by the final planting date when one or more producers in the area (land surrounding the insured acreage with geographic characteristics, topography, soil types and climatic conditions similar to the insured acreage) are planting, no prevented planting payment can be made. In other words, for causes other than drought, a prevented planting payment will not be made if others in the area planted and the producer making the claim for indemnity failed to plant during the planting [period].

Final Agency Determinations similar to the one requested herein by the requestor were set forth in FAD-141 and FAD-145. FAD-141, posted on RMA's website on May 10, 2011, states, in relevant part:

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Section 1 of the Basic Provisions defines "area" as "Land surrounding the insured acreage with geographic characteristics, topography, soil types and climatic conditions similar to the insured acreage." Therefore, a prevented planting claim will be denied in the event a policyholder fails to plant when other producers with land surrounding the insured acreage with geographic characteristics, topography, soil types, climatic conditions and exposure similar to the insured acreage were able to plant. Further, a policyholder must have been prevented from planting because of an insured cause of loss general to the surrounding area which also prevents other producers from planting acreage with similar characteristics. Therefore, all of these conditions must be examined so eligibility for a prevented planting payment must be determined on a case-by-case basis.

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Similarly, FAD-145, posted on RMA's website on July 12, 2011, states, in relevant part:

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Section 17(a)(1) of the Basic Provisions addresses those situations when a policyholder may have been able to plant the insured crop on some or all of the days earlier in the planting period but elected to wait towards the end of the planting period to plant and adverse weather then prevented the policyholder from planting. A policyholder's decision to wait to plant the crop when other producers in the area were planting is a farm management decision, not an insured cause of loss. The fact that an insured cause of loss prevented planting the last few days of the planting period does not negate the fact that but for the producer's election not to plant on those days where planting was possible, the acreage would have been planted during the planting period.

Further, the definition of "prevented planting" in the Basic Provisions provides that a policyholder must have been prevented from planting the insured crop due to an insured cause of loss that is general in the surrounding area which also prevents other producers from planting acreage with similar characteristics. If other producers in the area with acreage with similar characteristics planted, the definition of "prevented planting" would not be met. Therefore, a prevented planting claim will be denied in the event a policyholder fails to plant when other producers in the area were planting.

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While the current policy language has been somewhat modified, the requestor believes that the basic intent of the policy language has not changed and therefore a similar result of that of FAD-141 and FAD-145 should be reached herein. The requestor believes that FAD-012 is inapplicable because it involves drought as a cause of loss.

Final Agency Determination

FCIC agrees with the requestor’s interpretation that section 17(d)(2) of the Basic Provisions requires the insured acreage to be planted if it is possible for the policyholder to plant on or prior to the final planting date and other producers in the area (land surrounding the insured acreage with geographic characteristics, topography, soil types, and climatic conditions similar to the insured acreage) planted (except for a drought cause of loss). In addition to causes of loss other than drought, this requirement applies to failure of the irrigation water supply, failure of the irrigation equipment or facilities, or the inability to prepare land for irrigation. However, similar to FAD-141, all of the conditions of the area must be examined and eligibility for a prevented planting payment must be determined on a case-by-case basis.

FCIC also agrees with the requestor that although the 2011 Basic Provisions (11-BR) language is somewhat modified from the 2005 Basic Provisions (05-BR) the basic meaning has not changed with respect to insured causes of loss other than drought, failure of the irrigation water supply, failure of the irrigation equipment or facilities, or the inability to prepare land for irrigation and a similar interpretation is provided. As stated above, the insured acreage must be planted if it is possible for the producer to plant on or prior to the final planting date and other producers in the area have planted. However, unlike in FAD-145 and FAD-149, the requirements of section 17(d)(2) do not apply if the cause of loss is drought, failure of the irrigation water supply, failure of the irrigation equipment or facilities, or the inability to prepare land for irrigation. Therefore, while the basic interpretation is the same in this FAD, FAD-149, and FAD-145, the policy provisions have changed when the requirement to plant is applicable.

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: Sep 14, 2012