On November 22, 2019, the Risk Management Agency (RMA) issued Final Agency Determination: FAD-291 providing an interpretation of section 15(e)(2) of the Common Crop Insurance Policy Basic Provisions (7 C.F.R. 457.8) (Basic Provisions) for the 2018 crop year. Section 15(e)(2) contains the consequences of planting a second crop on the same acreage for harvest in the same year as the first insured crop.
The requestor interprets the provision to mean that if the producer does not comply with all the requirements of section 15(h) of the Basic Provisions, the indemnity payments on the first crop is limited to 35 percent when a second crop is planted and insured for harvest in the same crop year. The requestor states that this is true even if the first crop was planted and insured under a different plan of insurance, such as Annual Forage Crop Provisions, with less restrictive language on double cropping. The requestor states that section 6(k)(4) of the Rainfall and Vegetation Index Plan Common Crop Policy requires the insured to have a documented history of planting two crops on the same acreage for harvest in the same year. The requestor states that this is consistent with sections 15(g) and 15(h)(5) of the Basic Provisions, and 7 U.S.C. 1508(d)(3) [correct reference is section 1508A(d)(3)]. The requestor states that the language in the Crop Provisions typically takes precedence over the conflicting language in the Basic Provisions. The requestor acknowledges that 7 U.S.C. 1508A(d) allows exceptions to the limitation on double insurance but the exception is predicated on all four conditions being met, including the requirement that the insured provide a history of planting two crops on the same acreage for harvest in the same year.
RMA disagreed with the requestor’s interpretation. RMA states that section 15(h) of the Basic Provisions do not contain the double cropping provisions for all crops and that the double cropping rules are contained in individual crop policies. RMA states that for any crop the policy is made up of different documents, such as Basic Provisions, Crop Provisions, Special Provisions, etc., and all these documents must be read collectively but do not include provisions from other crop policies. RMA states that it is possible to have two insured crop with different double cropping rules and each crop must follow its own policy rules to determine if double cropping requirements have been met. RMA states that the Basic Provisions and the Rainfall and Vegetation Index Plan Policy are separate and have different double cropping rules. RMA disagreed with the requestor that the language in the Crop Provisions typically takes precedence over conflicting language in the Basic Provisions on the grounds that they are separate policies. Since the Rainfall and Vegetative Index Plan Policy does not reference the Basic Provisions, there can be no conflict.
RMA states that the Annual Forage Crop Provisions modify the Rainfall and Vegetative Index Plan Policy by excluding the records requirement to prove a history of double cropping because it is impractical and unreasonable to expect insureds to keep records of production associated with certain farming practices on annual forage acreage. RMA states it is not practical to measure production that is grazed by livestock. RMA states “the less stringent documentation requirements specific to the temporal nature of forage govern instead of the more general language in section 15(h)” of the Basic Provisions. RMA states that approved insurance providers must review all applicable policy documents to determine if the double cropping rules apply, to which specific crops, and which rules apply. RMA states if Annual Forage is one of the crops involved in the double cropping scenario, the approved insurance provider must review the Annual Forage Crop Provisions and follow those provisions.
ANALYSIS – First, RMA is correct that the Basic Provisions published at 7 C.F.R. 457.8 do not apply to Annual Forage. RMA offers several different plans of insurance, such as revenue protection and yield production under the Basic Provisions, area protection under the Area Risk Protection Insurance Policy, actual revenue history under the Actual Revenue Protection Pilot Endorsement, whole farm coverage under Whole Farm Revenue Protection Pilot Policy, etc. If more than one crop is covered under the plan of insurance there are generally basic provisions applicable to all and then specific crop provisions, special provisions and other policy documents. However, all plans of insurance contain a priority of provisions and to the extent that there is a conflict between the basic provisions applicable to a crop and the crop provisions for that crop, the provisions in the crop provisions usually prevail.
Second, RMA is correct that two crops could have separate double cropping rules based on unique characteristics of the crop and that the policy provisions applicable to the crop must be used to determine whether the double cropping exception applies. However, ALL crops must comply with the four conditions stated in section 7 U.S.C 1508A(d) to qualify for the double cropping exception and this takes precedence over any basic or crop provisions. To the extent that there is a conflict, the policy documents make it clear that the Federal Crop Insurance Act prevails.
RMA suggests that annual forage excludes the record requirements for proving a history of double cropping. A review the policy shows that section 4(e) of the Annual Forage Crop Provisions states that section 6(k)(4) of the Rainfall and Vegetative Index Plan Policy is not applicable. Section 6(k)(4) states “You provide records acceptable to us of acreage and production that show you have double cropped acreage in at least two of the last four crop years in which the first insured crop was planted, or that show the applicable acreage was double cropped in at least two of the last four crop years in which the first insured crop was grown on it.” Section 6(k)(4) simply provides the number of records from a specific timeframe to show the producer has a history of double cropping. RMA can certainly waive the number of records or the years from which they must be provided. However, RMA does not have the authority to waive the statutory requirement in 7 U.S.C 1508A(d)(3) that “The producer has a history of planting two or more crops for harvest in the same crop year or the applicable acreage has historically had two or more crops planted for harvest in the same crop year.” The requestor is correct that this condition must still be met before the double cropping exception can apply.
RMA’s rational for excluding section 6(k)(4) of the Rainfall and Vegetative Index Plan Policy is that it is not practical for producers to maintain production records for grazed acreage. RMA is correct that section 6(k)(4) requires producers provide records of acreage and production. It seems impractical for producers to have production records of grazed production so this requirement can be properly waived because it is not required by 7 U.S.C. 1508A(d). The problem is that RMA went way beyond this and eliminated the requirement that producers provide records that the producer has double cropped an annual forage crop or that the acreage in which the annual forage was planted has a history of double cropping. It would be difficult to understand why an annual forage producer could not provide such records the same as any other crop. This requirement is statutorily mandated and cannot be waived by RMA. RMA may want to revise the Annual Forage Crop Provisions to be consistent with the law.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.