Subject: Request dated May 11, 2011, requesting a Final Agency Determination for the 2010 crop year regarding the interpretation of section 17(a)(1) 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, as here pertinent:
17. Prevented Planting.
(a) Unless limited by the policy provisions, a prevented planting payment may be made to you for eligible acreage if:
(1) You were prevented from planting the insured crop (Failure to plant when other producers in the area were planting will result in the denial of the prevented planting claim) by an insured cause that occurs:
Section 4C(1)(b) of the 2008 Prevented Planting Loss Adjustment Standards Handbook (PP LASH) states, as here pertinent:
C. CRITERIA FOR PP PAYMENTS
(1) Unless limited by other policy provisions, PP payments are provided for eligible PP acreage, if due to an insured cause of loss:
(b) The cause of loss is general in the surrounding area and prevents other producers from planting acreage with similar characteristics (Failure to plant when other producers in the area were planting will result in denial of the PP claim.); AND
1 EXAMPLE/QUESTION 1: One producer chooses to start planting two to three days prior to the FPD for the insured crop, while other producers in the area planted two to three weeks prior to the FPD. How does that affect a PP payment for the producer who chose to plant 2-3 days prior to the FPD but was prevented from planting because of excess precipitation occurring late in the planting season?
ANSWER TO EXAMPLE/QUESTION 1: If conditions are such that other producers in the area planted two to three weeks prior to the FPD for the insured crop, the producer who chose to start planting two to three days prior to the FPD but was prevented from planting because of an insured cause of loss, would not be eligible for PP.
The Risk Management Agency is requested to provide an interpretation to clarify the obligation of a policyholder to plant his crop during the times in which other producers in the area are planting for purposes of a prevented planting claim.
The requestor states that identical or nearly identical language is set forth in the Crop Revenue Coverage (CRC) and Revenue Assurance (RA) policies and requests this Final Agency Determination (FAD) be made applicable to both policies.
The requestor interprets section 17(a)(1) of the Basic Provisions to mean that in order for the policyholder to be eligible for a prevented planting payment, the policyholder must plant on days when other producers in the area are planting. Otherwise the policyholder's prevented planting claim must be denied. For example, if a prevented planting claimant fails to plant during days on which other producers in the area are planting, the claimant will not be eligible for a prevented planting payment and the claimant's prevented planting claim must be denied.
The requestor believes this interpretation is consistent with section 4C(1)(b) of the 2008 PP LASH.
Final Agency Determination
The Federal Crop Insurance Corporation (FCIC) agrees with the requestor's interpretation.
Section 17(a)(1) of the Basic Provisions addresses those situations when a policyholder may have been able to plant the insured crop on some or all of the days earlier in the planting period but elected to wait towards the end of the planting period to plant and adverse weather then prevented the policyholder from planting. A policyholder's decision to wait to plant the crop when other producers in the area were planting is a farm management decision, not an insured cause of loss. The fact that an insured cause of loss prevented planting the last few days of the planting period does not negate the fact that but for the producer's election not to plant on those days where planting was possible, the acreage would have been planted during the planting period.
Further, the definition of "prevented planting" in the Basic Provisions provides that a policyholder must have been prevented from planting the insured crop due to an insured cause of loss that is general in the surrounding area which also prevents other producers from planting acreage with similar characteristics. If other producers in the area with acreage with similar characteristics planted, the definition of "prevented planting" would not be met. Therefore, a prevented planting claim will be denied in the event a policyholder fails to plant when other producers in the area were planting.
Even though 7 C.F.R. part 400, subpart X is only applicable to provisions of the Federal Crop Insurance Act and the regulations promulgated hereunder, and the Crop Revenue Coverage and RA policies are not codified in the Code of Federal Regulations, to the extent those provisions are identical or nearly identical, this Final Agency Determination applies accordingly to assure consistent, uniform, and equitable treatment to all policyholders insured under the same policy 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 2010 crop year. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).
Date of Issue: July 12, 2011