Final Agency Determination: FAD-179

FAD-179

Subject: Request dated November 21, 2012, requesting a Final Agency Determination for the 2012 and succeeding crop years regarding the interpretation of section 17(f)(8) 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.

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

17. Prevented Planting.

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

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(8) That exceeds the number of eligible acres physically available for planting;

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Special Provisions statement for counties in the Prairie Pothole National Priority Area state:

In accordance with section 17(f)(8) of the Basic Provisions, “physically 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. Additionally, acreage not considered physically 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, rangeland or forage is in place (Refer to section 17(f)(6) of the Basic Provisions for what constitutes established pasture, rangeland or forage acreage that is in place);

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

5. Any acreage not planted to a crop that is insured under the authority of the Federal Crop Insurance Act, that is grown in the county on insurable acreage, and harvested in at least one of the four most recent crop years, using recognized good farming practices, unless such acreage was planted to an insured crop that was damaged by an insured cause of loss and adjusted for purposes of a claim under the Federal crop insurance program; or

6. Acreage that has any other condition, as determined by us, 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 is normally 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.

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The requestor’s position is that the policyholder has the burden under the policy to establish that the subject acreage satisfies all conditions imposed by the Basic Provisions and the Special Provisions relating to eligibility for prevented planting.

Regarding acreage that is not physically available to plant, the requestor states the Special Provisions establish six separate criteria that may disqualify acreage from eligibility to receive a prevented planting payment. Because the conditions are disjunctive, as indicated by the use of the term “or”, if any one of the criteria is applicable, the acreage is not physically available to plant and ineligible for a prevented planting payment. Hence, an approved insurance provider (AIP) must evaluate each of the criteria separately.

The requestor continues, the fifth criteria generally provides that acreage is not available for prevented planting if it is not planted to an insured crop and harvested in at least one of the four most recent crop years. Accordingly, acreage that is planted to an insured crop and harvested in one of the four prior crop years is eligible for prevented planting coverage (provided all other conditions are satisfied). However, it is the requestor’s position that satisfying the fifth prong does not excuse compliance with the other criteria established by the Special Provisions. Thus, the acreage that satisfies the fifth criteria but “has or recently had marsh vegetation” may not be eligible for prevented planting payment. In short, all six of the Special Provisions tests must be passed for acreage to be considered “physically available for planting”.

The requestor provides the fourth requirement of the Special Provisions states: “Acreage not considered physically available for planting includes…acreage that has or recently had marsh vegetation (e.g., cattails, bulrushes, and pondweeds), coarse emergent plants, or submerged aquatics.” The requestor interprets “has or recently had,” as used in the Special Provisions, to be a reference to section 17(a)(1) of the Basic Provisions, which defines the beginning of the insurance period for an insured cause of loss. Therefore, the term “has” in the context of “marsh vegetation” is not to be viewed in the present tense, i.e. at the time of the loss inspection. Instead, the term “has” refers to the beginning of the insurance period for the subject acreage. Accordingly, land that has marsh vegetation present at the time of loss inspection in the summer of 2012 is not automatically ineligible for a prevented planting payment. Rather, for a 2012 carry-over policy, the determination of “has” would relate to the presence of marsh vegetation at the beginning of the insurance period (e.g. March 15, 2011). Concomitantly, the term “recently had” must be viewed as the presence of “marsh vegetation” during the crop year most recent to the beginning of the insurance period. Acreage that had marsh vegetation removed by tillage or other means during the fall of 2010 may still be considered to have “recently had” marsh vegetation for purposes of determining eligibility for prevented planting.

Final Agency Determination

FCIC agrees in part, with the requestor’s interpretation. FCIC agrees that the policyholder has the burden under the policy to establish that the subject acreage satisfies all conditions imposed by the Basic Provisions and the Special Provisions relating to prevented planting coverage. FCIC also agrees that acreage meeting any of the six criteria in the Special Provisions would be considered not “physically available for planting,” and that each of the criteria must be evaluated separately.

FCIC disagrees with the requestor’s interpretation of “has or recently had” in item 4 of the Special Provisions to be a reference to section 17(a)(1) of the Basic Provisions, which defines the beginning of the insurance period for an insured cause of loss. “Recently” in this context means that just before the present, the acreage had marsh vegetation, but now it does not. “Just before the present” means before the acreage was tilled or made ready for planting, or in the case of prevented planting, before the acreage normally would have been tilled or made ready for planting. It is possible for marsh vegetation to be established on acreage prior to the current insurance period’s time for tilling or making the acreage ready to plant. Even if the acreage is dry enough to till the marsh vegetation and remove it from the acreage in time to plant in the current insurance period, the established vegetation is considered to be recently on the acreage because it was on the acreage when it was tilled or made ready for the current year’s planting.

However, there are possible instances where the existence of such vegetation listed in item 4 of the Special Provisions would not prevent acreage from being insurable. For example:

For the 2012 crop year, specific acreage has the following history. A policyholder had been planting and harvesting acreage around a pothole that contained bulrushes through the 2010 crop year, and due to excessive moisture after March 15, 2011 (the sales closing date of the previous crop year) was prevented from planting because it was too wet to plant the previously planted acreage. The policyholder received a prevented planting payment on that acreage. During the 2012 planting season, the previously planted acreage was still flooded because of the excessive moisture that occurred in the spring of 2011 and normal rainfall that occurred for the year. The acreage now has emerging bulrushes because it is adjacent to the pothole and became flooded.

The acreage around the established pothole that had normally been planted and harvested (last occurred in 2010) is eligible for prevented planting coverage in 2012 because the acreage met all requirements of the policy and Special Provisions statement at the start of the current prevented planting insurance period (March 15, 2011). Although the acreage in 2012 had emerging bulrushes, this cannot negate or ignore the cause of loss that prevented planting in 2012 occurred after March 15, 2011. The acreage would have been physically available for planting (would have met Special Provisions item 4) had it not been for the insurable cause of loss.

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: Jan 8, 2013