On February 14, 2020, RMA issued a series of Informational Memorandum for Missouri, Iowa, Kansas and Nebraska involving the determination of actuarial rates as a result of breeched levees in those states. https://www.rma.usda.gov/-/media/RMAweb/Regional-Offices/Topeka-KS/Underwriting-Guidelines/Actuarial-Rates-Resulting-from-Breached-Levees-Nebraska-2-14-2020.ashx; https://www.rma.usda.gov/-/media/RMAweb/Regional-Offices/Topeka-KS/Underwriting-Guidelines/Actuarial-Rates-Resulting-from-Breached-Levees-Missouri-2-14-2020.ashx; https://www.rma.usda.gov/-/media/RMAweb/Regional-Offices/Topeka-KS/Underwriting-Guidelines/Actuarial-Rates-Resulting-from-Breached-Levees-Kansas-2-14-2020.ashx; https://www.rma.usda.gov/-/media/RMAweb/Regional-Offices/St-Paul-MN/Underwriting/Actuarial-Rates-Resulting-from-Breached-Levees-Iowa—2020.ashx. Each Informational Memorandum quotes the Breeched Levee Statement in the Special Provisions, which states that the premium rate is based on the condition of the levee as of the latter of the sales closing date or the earliest planting date. If the levee has not been repaired to prior specifications or the damaged soil has not been restored to at least the same crop yield potential as prior to the flood, the land is classified as high-risk. If the levee is repaired to prior specifications and the soil has the same crop yield potential as before the flood, the land has the same classification as shown in the actuarial map. If the levee has been temporarily repaired but not to prior specifications and the soil has at least the same yield potential as before the flood, RMA can adjust the rates to be consistent with the risk by written agreement.
The counties affected in Nebraska were Nemaha and Otoe; Missouri were Atchison, Boone, Buchanan, Callaway, Carroll, Chariton, Clark, Cole, Cooper, Franklin, Gasconade, Holt, Howard, Jackson, Lewis, Lincoln, Marion, Moniteau, Osage, Pike, Platte, Ray, Saline, St. Charles, St. Genevieve, St. Louis County, and Warren; Kansas were Atchison, Doniphan, Leavenworth, and Wyandotte; Iowa were Fremont, Mills, and Pottawattamie. The Memoranda also discusses the requirements for a certification of the levee system repair.
From the information provided by RMA, as of February 14, 2020, no levee had been repaired or certified as repaired in Nebraska. In Missouri, the Pike Grain #3 and Kissinger levees in Pike County and the Foley, Cap Au Gris, Winfield and Winfield Pin Oak levees in Lincoln Counties have been certified repaired to prior specifications. In Kansas, no levee has been repaired or certified as repaired. In Iowa, no levee has been repaired or certified as repaired. RMA states approved insurance providers are responsible to ensure the stipulations in the Breeched Levee Statement are followed. RMA states that the Regional Offices should be able to obtain the necessary certifications of repair from the U.S. Army Corps of Engineers but for all other levee systems, the Regional Office needs to be provided a signed and sealed certification from a professional engineer who is currently licensed and registered in the state where the levee is located.
ANALYSIS – From the information provided by RMA it appears that few of the damaged levees have been repaired to prior specification by February 14, 2020, which will impose a hardship on producers in the form of higher premiums but RMA has no real choice since the premium must be sufficient to cover the risk and when levees are not repaired to prior specifications, the risk is increased. However, there is a question regarding the certifications from engineers. RMA states they must be signed and sealed. It is unclear what is meant by sealed because that usually occurs with government agencies affixing a seal to a document for authentication purposes. It is not clear whether private engineers have a seal or the authority to provide a seal. The other question is whether there is a type of engineer who can make the certification or any professional engineer licensed and registered in the state. It is not clear whether a structural engineer for buildings is qualified to judge the repairs of a levee. This may be clarified elsewhere but there is no reference in the Memoranda.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.