Final Agency Determination: FAD-173

FAD-173

Subject: Request dated October 5, 2012, requesting a joint Final Agency Determination for the 2011 and succeeding crop years, regarding the interpretation of section 17(f) 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.

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

17. Prevented Planting

(e) The maximum number of acres that may be eligible for a prevented planting payment for any crop will be determined as follows:

(1) The total number of acres eligible for prevented planting coverage for all crops cannot exceed the number of acres of cropland in your farming operation for the crop year, unless you are eligible for prevented planting coverage on double cropped acreage in accordance with section 17(f)(4). The eligible acres for each insured crop will be determined as follows:

(i) If you have planted any crop in the county for which prevented planting insurance was available (you will be considered to have planted if your APH database contains actual planted acres) or have received a prevented planting insurance guarantee in any one or more of the four most recent crop years, and the insured crop is not required to be contracted with a processor to be insured:

(A) The number of eligible acres will be the maximum number of acres certified for APH purposes, or insured acres reported, for the crop in any one of the four most recent crop years (not including reported prevented planting acreage that was planted to a second crop unless you meet the double cropping requirements in section 17(f)(4).

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(f) Regardless of the number of eligible acres determined in section 17(e), prevented planting coverage will not be provided for any acreage:

(1) That does not constitute at least 20 acres or 20 percent of the insurable crop acreage in the unit, whichever is less (If the crop is in a whole-farm unit, the 20 acre or 20 percent requirement will be applied separately to each crop in the whole-farm unit). Any prevented planting acreage within a field that contains planted acreage will be considered to be acreage of the same crop, type, and practice that is planted in the field unless:

(i) The acreage that was prevented from being planted constitutes at least 20 acres or 20 percent of the total insurable acreage in the field and you produced both crops, crop types, or followed both practices in the same field in the same crop year within any one of the four most recent crop years;

(ii) You were prevented from planting a first insured crop and you planted a second crop in the field (There can only be one first insured crop in a field unless the requirements in section 17(f)(1)(i) or (ii) are met); or

(iii) The insured crop planted in the field would not have been planted on the remaining prevented planting acreage (e.g., where rotation requirements would not be met or you already planted the total number of acres specified in the processor contract);

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Two interpretations were submitted in this joint FAD request. The first requestor states the applicability of the term “or” in section 17(f)(1)(i) of the Basic Provisions is as follows:

Any prevented planting acreage within a field that contains planted acreage will be considered to be acreage of the same crop, type, and practice that is planted in the field unless the acreage that was prevented from being planted constitutes at least 20 acres or 20 percent of the total insurable acreage in the field and you produced both crops or crop types;

OR

Any prevented planting acreage within a field that contains planted acreage will be considered to be acreage of the same crop, type, and practice that is planted in the field unless you followed both practices in the same field in the same crop year within any one of the four most recent crop years.

The first requestor believes the policy clearly states the policyholder must meet the 20/20 rule in the field and must have produced both crops. The policy requires the policyholder must meet the 20/20 rule and have produced both crops OR have followed both practices in the same field and crop year. The policy does not require the 20/20 rule AND production of both crops AND following both practices in the same field and crop year. The term “and” cannot be substituted for the “or” in the policy.

The second requestor interprets section 17(f) of the Basic Provisions to disqualify prevented planting coverage for any acreage that does not constitute at least 20 acres or 20 percent of the insurable crop acreage in the unit, whichever is less. However, the application of this policy provision is FIRST subject to the remaining criteria in section 17(f)(1)(i)-(iii) of the policy. Accordingly, a claimed prevented planting crop (including the respective type and practice) cannot be different than the crop (including the respective type and practice) that is actually planted in the field if the two separate crop/type/practices have never been planted together in the same field in at least one of the four most recent crop years.

The second requestor states without a demonstrated two-crop planting history in a field, any claimed prevented planting in a field must be evaluated on the basis of the crop/type/practice planted in the same field, and the acreage qualified/disqualified for prevented planting eligibility accordingly.

The second requestor does not believe that a policyholder can plant one crop in a field and claim the prevented planting as a second, different crop when the policyholder does not have history of planting the two crops in the same field in the same crop year unless section 17(f)(1)(ii) or (iii) of the Basic Provisions were applicable.

Final Agency Determination

The Federal Crop Insurance Corporation (FCIC) agrees with the second requestor’s interpretation of 17(f)(1)(i) of the Basic Provisions. Prevented planting coverage will not be provided unless the acreage claimed is at least the lesser of 20 acres or 20 percent of the insurable crop acreage in the unit. Additionally, a policyholder cannot plant one crop on a portion of a field and claim prevented planting for a different crop (or type or practice) on the remainder of the field unless the policyholder has a history of planting both crops (or types or practices) in the same field in the same crop year, within any one of the four most recent crop years, unless section 17(f)(1)(ii) or (iii) apply. If the policyholder does not have a history of planting both crops (or types or practices) in the same field in the same crop year, the acreage that was prevented from planting is considered to be the crop (or type or practice) as the planted acreage.

For example, a policyholder has a 30 acre field and plants corn on 10 acres. On the remaining 20 acres the policyholder plans to plant soybeans. However, due to an insurable cause of loss during the prevented planting insurance period for soybeans, and provided all other policy provisions are met, the policyholder is prevented from planting the 20 acres of soybeans in the field. The policyholder does not have a history of producing both corn and soybeans in the same field in the same crop year. Therefore, the 20 acres of prevented planting soybeans must be considered prevented planting corn because 10 acres of corn are planted in the same field.

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 2011 and any 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: Nov 13, 2012