Final Agency Determination: FAD-217

Subject: Two requests dated March 28, 2014, and April 4, 2014, to the Risk Management Agency (RMA) requesting a Final Agency Determination for the 2012 crop year regarding the interpretation of section 14( e )( 4 )(iii) 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 1 of the Basic Provisions states, in relevant part:

1. Definitions.
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Prevented planting - Failure to plant the insured crop by the final planting date designated in the Special Provisions for the insured crop in the county, or within any applicable late planting period, due to an insured cause of loss that is general to the surrounding area and that prevents other producers from planting acreage with similar characteristics. Failure to plant because of uninsured causes such as lack of proper equipment or labor to plant acreage, or use of a particular production method, is not considered prevented planting.
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Section 14( e )( 4 )(iii) of the Basic Provisions states, in relevant part:

14. Duties in the Event of Damage, Loss, Abandonment, Destruction, or Alternative Use of Crop or Acreage.
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(e) Claims:
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( 4) To receive any indemnity (or receive the rest of an indemnity in the case of acreage that is planted to a second crop), prevented planting payment or replant payment, you must, if applicable:
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(iii)Establish:
(A) The total production or value received for the insured crop on the unit;
(B) That any loss occurred during the insurance period;
(C) That the loss was caused by one or more of the insured causes specified in the Crop Provisions; and
(D)That you have complied with all provisions of this policy.
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Section 17(f)(8) of the Basic Provisions states, in relevant part:

(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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2012 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.

Interpretation Submitted

Two interpretations were submitted in this joint FAD request.

First requestor' s interpretation:

The first requestor interprets section 14(e)(4)(iii) of the Basic Provisions as being applicable to prevented planting claims as well as regular production loss claims. Moreover, based on section 14( e )( 4 )(iii) of the Basic Provisions, it is the first requestor' s position that it is the policyholder who bears the burden of proof to prove that he or she satisfies each and every element or requirement of a Federal crop insurance claim. These requirements include those specifically established for prevented planting claims in both the Basic Provisions and the Special Provisions.

The elements of a prevented planting claim for which the policyholder bears the burden of proof include, but are not necessarily limited to, the following:

1. The policyholder failed to plant on or before the final planting date (or late planting period, if applicable) due to an insured cause of loss.
2. The insured cause of loss occurred during the prevented planting insurance period.
3. The insured cause of loss was general to the surrounding area and prevented other farmers from planting land with similar characteristics.
4. The acreage for which prevented planting is claimed is physically available for planting, including all requirements set forth in the Special Provisions.

The first requestor believes its interpretation to be consistent with the statement made by the FCIC in FAD-179, published on RMA's website, January, 8, 2013. In that FAD, FCIC stated in part:

"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."

Second reguestor' s interpretation:

The second requestor believes the policy or prior F ADs have interpreted the burden of proof allocation for prevented planting claims and determined the portions of section 14( e )( 4)(iii) are applicable to prevented planting claims.

The second requestor agrees with the first requestor that in accordance with the definition of "prevented planting" in section 1 of the Basic Provisions and section 14(e)(4)(iii), the policyholder carries the burden in establishing the following elements of a prevented planting claim:

1. The policyholder was unable to plant the insured crop by the final planting date (or late planting period, if applicable) due to an insured cause of loss.
2. The insured cause of loss occurred during the prevented planting period.
3. The insured cause of loss was general to the surrounding area and prevented other producers from planting acreage with similar characteristics.

However, the second requestor disagrees that the language of section 14( e )( 4 )(iii) requires that the policyholder establish that "the acreage for which prevented (sic) planting is claimed is physically available for planting, including all requirements set forth in the Special Provisions." FCIC has previously addressed the issue of the burden of proof with respect to prevented planting and whether acreage is "physically available" for planting as defined by the Special Provisions for the Prairie Pothole National Priority Area in FAD-119, FAD-201, and Informational Memorandum IS-12-004. In orderto deny prevented planting on the basis that acreage is not available for planting, the approved insurance provider (AIP) must prove that policyholder's inability to plant was not due to an insured cause ofloss and that the only time the acreage is available for planting is when the area is abnormally dry. See F AD-119 ("To deny prevented planting because the acreage is not available for planting, it must be established that the inability to plant was not due to an insured cause of loss and that the only time the acreage is available for planting is when the area is abnormally dry."); IS-12-004 ("If the AIP establishes that the only time the acreage is available for planting is when the area is abnormally dry then the acreage is not available for prevented planting."); FAD-201 ("[I]fthe approved insurance provider establishes that the only time the acreage is available for planting is when the area is abnormally dry then the acreage is not eligible for prevented planting.") (Emphasis added).

The requestor believes FAD-201, which was issued after FAD-179, reinforces and reasserts the specific directive that the AIP carries the burden of justifying a denial that claimed acreage is unavailable for planting. "In accordance with FAD-179 and IS-12-004 published on RMA's website on August 7, 2012, each of the six criteria must be evaluated separately, and the approved insurance provider (AIP) must determine eligibility for prevented planting coverage on a case-by-case basis" ... "If the approved insurance provider establishes that the only time the acreage is available for planting is when the area is abnormally dry then the acreage is not eligible for prevented planting." FAD-201 (Emphasis added).

The plain language of the Special Provisions supports RMA's application of the burden as set forth in FAD-119, FAD-201, and IS-12-004 and the impracticability of placing the burden on the policyholder.

The Special Provisions define land "physically available for planting," but also set forth a list, including but not limited to, six situations in which acreage is not available for planting. (Emphasis added). One of these criteria includes a broad catch-all of "acreage that has any other condition, as determined by us [the AIP], that would prevent the proper and timely planting of the crop when the weather and other conditions are normal for the area in which the acreage is located." Special Provisions, part 6. Thus, in order for the policyholder to challenge an unsubstantiated denial of coverage, the first requestor's position would require the policyholder to prove the non-existence of the six situation set out in the Special Provisions and the nonexistence of any additional perceived situations that the AIP may conceive of as a basis for denial of coverage. As a practical matter, such requirement is nonsensical and presents an insurmountable obstacle in the way of the policyholder who challenges a denial of coverage. The AIP is responsible for determining eligibility for prevented planting coverage, and logically is also responsible for proving the facts supporting its denial of eligibility.

The only reasonable interpretation of section 14( e )( 4 )(iii), section 17, and the Special Provisions for the Prairie Pothole National Priority Area is that set forth by FCIC previously, that the policyholder carries the burden of establishing that the policyholder was unable to plant the insured crop by the final planting date due to an insurable cause of loss within the insurance period that is general to the surrounding area and that prevents other producers from planting acreage with similar characteristics. Once the policyholder has met its burden, the burden shifts to the AIP to prove its basis for denial of coverage by demonstrating that the claimed acres are not available for planting under the Special Provisions and that the policyholder's inability to plant is not due to an insured cause of loss.

Final Agency Determination

FCIC agrees with the first requestor. FCIC agrees that section 14(e)(4)(iii) of the Basic Provisions is applicable to prevented planting claims as well as regular production loss claims. Moreover, based on section 14(e)(4)(iii) of the Basic Provisions, it is the policyholder who bears the burden of proof to prove that they satisfy each requirement for completing a Federal crop insurance claim. Section 14 of the Basic Provisions contains both "Your Duties" and "Our Duties" in the event of damage or loss with "Your Duties" being that of the policyholder and "Our Duties" being that of the AIP. Under section 14(e)(4)(D), the policyholder has the burden to establish that the subject acreage satisfies all conditions imposed by the Basic Provisions and the Special Provisions relating to prevented planting coverage. One of the requirements of the Basic Provisions is that acreage for which prevented planting is claimed is physically available for planting. Therefore, the burden rests with the producer to establish that it met this requirement to qualify for prevented planting. The FAD' s referenced by the second requestor do discuss the "determinations" and findings "established" by the AIP but this is in recognition of the AIP's duty to assure that the policyholder's compliance with policy terms and conditions has been verified by the adjuster in accordance with section 3B(6) of the 2012 Prevented Planting Loss Adjustment Handbook. Nothing in these F ADs was intended to, or can, change the burden of proof established in the Basic 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 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: June 27, 2014