Subject: Request dated September 2, 2003, for Final Agency
Determination of section 15(f)(2)(ii) of the Common Crop Insurance Policy Basic Provisions
(Basic Provisions), published as a Final Rule on June 25, 2003, 68 Fed. Reg. 37697, applicable
for the 2004 and subsequent crop years, unless such provisions are revised. This request was
submitted pursuant to 7 C.F.R. part 400, subpart X.
Section 15(f)(2)(ii) of the Basic Provisions states:
15. Production Included in Determining an Indemnity and Payment Reductions.
(f) With respect to acreage where you were prevented from planting the first
insured crop in the crop year, except in the case of double cropping described in section
. . .
(2) If a second crop is planted on the same acreage for harvest in the same
crop year (you will pay the full premium and, if there is an insurable loss to the second
crop, receive the full amount of indemnity that may be due for the second crop, regardless
of whether there is a subsequent crop planted on the same acreage) and:
. . .
(ii) Be responsible for a premium for the first insured crop that is commensurate
with the amount of the prevented planting payment paid for the first insured crop.
The term "commensurate" in section 15(f)(2)(ii) is interpreted to mean 35 percent as it
relates to the percent of the payment for the first insured crop, which means 35 percent of
the premium due, and not the percent of liability. The requestor of the FAD states ". . . if
an insured plants and insures a second crop and receives a full indemnity on that second crop,
the insured is liable on the second crop for the full premium and on the first crop for a
premium that is 35 percent of the full premium."
Final Agency Determination
The Federal Crop Insurance Corporation agrees that the use of the term "commensurate"
means 35 percent of the producer-paid premium for the first insured crop is applicable when
the prevented planting payment for the first insured crop is 35 percent of the prevented
planting guarantee. However, your interpretation creates the impression that the reduction
in the prevented planting payment and premium for the first crop only applies if the second
crop is insured and receives a full indemnity. This is not correct. Unlike section 508A(a)
of the Federal Crop Insurance Act (Act) that refers to the consequences if there is no loss
to the second crop, section 508A(b) of the Act, relating to prevented planting, contains no
similar provision. Therefore, the reduction in the prevented planting to 35 percent of the
prevented planting guarantee and in the premium to 35 percent of the producer-paid premium is
applicable whenever the producer plants a second crop on acreage that had been prevented from
being planted. It is immaterial whether the second crop is insured or has a loss.
In accordance with 7 C.F.R. § 400.765(c), this constitutes the Final Agency Determination
and is binding on all participants in the Federal crop insurance program for the 2004 and
subsequent crop years, unless such provisions are revised.
Date of Issue: November 24, 2003