Final Agency Determination: FAD-209 -- (Revised June 3, 2014)

Subject: Request submitted on December 18, 2013, to the Risk Management Agency (RMA) requesting a Final Agency Determination for the 2013 crop year regarding the interpretation of sections 17(f)(4) and (5) 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:

Sections 17(f)(4) and (5) 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:

*****

(4) On which the insured crop is prevented from being planted, if you or any other person receives a prevented planting payment for any crop for the same acreage in the same crop year, excluding share arrangements, unless:

(i) It is a practice that is generally recognized by agricultural experts or organic agricultural experts in the area to plant the insured crop for harvest following harvest of the first insured crop, and additional coverage insurance offered under the authority of the Act is available in the county for both crops in the same crop year;

(ii) For the insured crop that is prevented from being planted, you provide records acceptable to us of acreage and production that show, in at least two of the last four crop years:

(A) You have double cropped acreage on which the insured crop that is prevented from being planted in the current crop year was grown (You may apply your history of double cropping to any acreage of the insured crop in the county (e.g., if you have double cropped 100 acres of wheat and soybeans in the county and you acquire an additional 100 acres in the county, you can apply that history of double cropped acreage to any of the 200 acres in the county as long as it does not exceed 100 acres)); or

(B) The acreage you are prevented from planting in the current crop year was double cropped with the insured crop that is prevented from being planted (You may only use the history of double cropping for the same physical acres from which double cropping records were provided (e.g., if a neighbor has double cropped 100 acres of wheat and soybeans in the county and you acquire your neighbor’s 100 double cropped acres and an additional 100 acres in the county, you can only apply your neighbor’s history of double cropped acreage to the same 100 acres that your neighbor double cropped)); and

(iii) The amount of acreage you are double cropping in the current crop year does not exceed the number of acres for which you provided the records required in section 17(f)(4)(ii);

(5) On which the insured crop is prevented from being planted, if:

(i) Any crop is planted within or prior to the late planting period or on or prior to the final planting date if no late planting period is applicable, unless:

(A) You meet the double cropping requirements in section 17(f)(4);

(B) The crop planted was a cover crop; or

(C) No benefit, including any benefit under any USDA program, was derived from the crop; or

(ii) Any volunteer or cover crop is hayed, grazed or otherwise harvested within or prior to the late planting period or on or prior to the final planting date if no late planting period is applicable;

*****

Section 5C(5) of the 2013 Prevented Planting Loss Adjustment Standards Handbook (PP LASH) states, in relevant part:

5. PP PAYMENT REDUCTION DUE TO SECOND CROP, COVER CROP, OR VOLUNTEER CROP

*****

C. PP PAYMENT AS IT RELATES TO DOUBLE-CROPPING HISTORY

*****

(5) EXAMPLES OF DOUBLE-CROPPING ELIGIBILITY

Example 5:

*****

Section 11D(3) of the 2013 Prevented Planting Loss Adjustment Standards Handbook (PP LASH) states, in relevant part:

11. VERIFYING ELIGIBLE PP ACREAGE

*****

D. EXAMPLES OF REMAINING ELIGIBLE PP ACREAGE WHEN THERE IS PLANTED AND PP ACREAGE

*****

(3) EXAMPLE 3:

Total cropland 2545.9:

In 2012, the insured planted, reported, and harvested 399.9 acres of insured winter (fall-planted) wheat. For 2012, the insured reported the following acres of spring crops:

Question: Based on the following history, are the 226.0 reported FAC PP soybean acres eligible for a PP soybean payment for the 2012 crop year?

***

Answer: No, 226.0 acres exceed the maximum FAC acres eligible for the 2012 crop year. However, the eligible remaining FAC acres for the 2012 crop year are 32.9 after the 74.0 planted FAC soybean acres for 2012 are deducted from the maximum eligible acres.

***

***

Reason: There are double cropping records for soybeans after wheat for three of the past four crop years in which soybeans were grown. Per the double crop history (FAC) above, 106.9 FAC acres is the maximum number of soybean acres that have been double cropped in at least two of the last four crop years in which the crop prevented from being planted (soybeans) was grown. The maximum double-crop acres is not 341.3 acres because 341.3 acres have not been double-cropped for two of those last four crop years, but 106.9 acres have been; i.e., 106.9 acres were double cropped in 2010, and 341.3 acres were double cropped in 2011. Since the insured planted 74.0 acres of (FAC) soybeans in 2012, the 74.0 acres would have to be subtracted from the 106.9 maximum soybean DC acres leaving 32.9 soybean DC acres eligible for PP.

*****

The requestor states the issue presented is whether double-cropped acres (i.e. “following another crop,” or “FAC,” acres) may be rolled to acres that are not double-cropped (i.e. “not following another crop,” or “NFAC,” acres) for purposes of determining available prevented planting acres for a particular crop.

The requestor states FAC acres may not be rolled to NFAC acres for purposes of determining the maximum number of available prevented planting acres for a particular crop. Section 17(f) of the Basic Provisions appears to limit the number of acres available for prevented planting under a FAC practice. Specifically, section 17(f)(5) states, “[r]egardless of the number of eligible acres determined in 17(e), prevented planting coverage will not be provided for any acreage … [o]n which the insured crop is prevented from being planted, if … [a]ny crop is planted within or prior to the late planting period or on or prior to the final planting date if no late period is applicable, unless … You meet the double cropping requirements in section 17(f)(4).” While this section includes additional exceptions for cover crops, volunteer crops, and crops for which no USDA benefit is received, none of these exceptions would apply if the first crop was planted for harvest and insurable. This means prevented planting coverage will be provided for a FAC practice only to the extent that the second crop meets the double cropping requirements, as contained in subpart (4). These requirements are: (i) the FAC practice is generally recognized in the area by agricultural experts; (ii) the policyholder has provided acceptable records showing that “in at least two of the last four crop years … You have double cropped acreage on which the insured crop that is prevented from being planted in the current crop year was grown” or “[t]he acreage you are prevented from planting in the current crop year was double cropped with the insured crop that is prevented from being planted”; and (iii) “[t]he amount of acreage you are double cropping in the current crop year does not exceed the number of acres for which you provided the records required [under item (ii)].” It thus follows that the number of acres meeting the double cropping requirements, as specified in section 17(f)(4), is the maximum acreage that will qualify for prevented planting under a FAC practice. Therefore, even if the policyholder has eligible prevented planting acres for the same crop under a NFAC practice (as determined under section 17(e)), the policyholder cannot include any of those NFAC acres as a basis for calculating FAC prevented planting acres.

This interpretation is supported by examples in the PP LASH. In Example 5, contained on page 44 of the 2013 PP LASH, the insured does not have double cropping records for at least two of the four preceding crop years but does have records for NFAC soybeans in two of the previous four years. Under this scenario, the PP LASH states: “The insured is not eligible for a prevented planting soybean payment since the insured does not have records of two years of double-cropped soybeans.” While the insured in Example 5 has zero double cropping history, the same outcome would seemingly apply once the insured has exhausted eligible FAC prevented planting acres. Also instructive is Exhibit 3, found on page 75 of the PP LASH. In this example, the insured’s records show a FAC practice in three of the previous four crop years, with the most FAC acreage in any two of those years being 106.9. The insured’s records also show NFAC soybeans ranging from 816.7 acres to 979.1 acres over the previous four crop years. The insured reports 226.0 FAC prevented planting soybean acres and 74.0 FAC planted soybean acres for 2012. The PPLASH indicates that only 32.9 of the 226.0 FAC prevented planting acres are eligible because the maximum number of FAC prevented planting acres is 106.9, and this number must be reduced by the 74.0 FAC planted soybean acres. Based on these examples, it does not appear that a policyholder can roll to NFAC acres in order to collect a prevented planting payment for FAC acres.

The Federal Crop Insurance Corporation (FCIC) disagrees with the requestor’s interpretation. In accordance with section 17(f)(5), a policyholder cannot receive a prevented planting payment on second crop acreage unless they meet the double cropping requirements in section 17(f)(4). The terms “double crop” and “FAC” do not necessarily mean the same thing so the terms cannot be used interchangeably.

“FAC” and “NFAC” are considered cropping practices listed in the actuarial documents used to determine the insurability of a crop following another crop that meets certain conditions specified in the Special Provisions. A crop may be designated as FAC if it is planted following a cover crop that meets the conditions in the Special Provisions, but is not considered double cropping. Soybeans following wheat can be either FAC or NFAC depending upon the stage of growth the wheat reached. For example, wheat is planted and insured in the fall of 2012 for harvest during the 2013 crop year. During the year, the wheat was damaged by freeze prior to heading and an appraisal was made to the damaged wheat with the acreage released to go to another crop. Soybeans were planted as the second insured crop on the acreage; however, soybeans would qualify as NFAC in accordance with the Special Provisions because the wheat had not reached the heading stage. Conversely, in a subsequent crop year, the appraised acreage of wheat where production was lost due to insured causes of loss used for the claim settlement would be an acceptable record for determining double cropped acreage (even though the acreage was designated as NFAC). Therefore, FAC and NFAC designations alone cannot be used to determine double cropped acreage.

Section 17(e) of the Basic Provisions states that eligible acres for prevented planting are determined on a crop basis, which means all types and practices for a crop are totaled to determine eligible prevented planting acres for a crop. Section 17(f) of the Basic Provisions provides exceptions that limit eligibility to a specific type or practice within a crop basis (e.g., irrigated acreage and types with different price elections). There are no policy provisions that limit eligible prevented planting acres for FAC and NFAC practices. Therefore, eligible prevented planting acres are determined by totaling all the FAC and NFAC practices (e.g., 50 acres FAC soybeans and 50 acres NFAC soybeans equaling 100 acres soybean eligibility).

However, while the acreage may be totaled for the purposes of determining the amount of eligible prevented planting acreage, prevented planting payments cannot be made unless all the conditions stated above have been met. For example, to claim prevented planting for soybeans following another crop the insured must prove they have planted soybeans following a crop that was planted and harvested or appraised in two of the previous four years in which soybeans were planted¹. The number of double crop soybean acres available for prevented planting cannot exceed the maximum number of acres the insured can prove they have double cropped for at least two of the previous four years in which soybeans were planted.

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).

Revised Date of Issue: June 3, 2014

¹This FAD revised June 3, 2014, to remove the word “insured” from this sentence that was incorrectly placed between “planted, and harvested".