On July 9, 2020, the Risk Management Agency (RMA) issued MGR-20-020, providing additional relief to approved insurance providers (AIPs) and producers as a result of COVID-19. https://www.rma.usda.gov/Policy-and-Procedure/Bulletins-and-Memos/2020/MGR-20-020. RMA states that it issued Managers Bulletin MGR-20-015 on May 28, 2020, to authorize additional crop insurance relief following Farm Service Agency (FSA) Notice CP-757, which waived late filing fees for a FSA acreage report (FSA-578) when filed within 30 days of the acreage reporting date. https://www.rma.usda.gov/Policy-and-Procedure/Bulletins-and-Memos/2020/MGR-20-015
RMA states that MGR-20-015 extended the correction time period for an acreage report, or other forms due by the acreage reporting date, an additional 30 days. RMA states that if the AIP or producer determines that an error exists on the acreage report or other forms due by the acreage reporting date, the AIP may correct the error up to 60 days following the acreage reporting date in the current crop year, provided the correction does not obtain, enhance or increase the insurance guarantee or indemnity if there is an existing cause of loss for the crop.
RMA states that additional consideration is being given for relief of appraisal requirements to determine whether a cause of loss has been incurred that would limit any increased liability associated with the reconciliation. RMA states that the Common Crop Insurance Policy Basic Provisions (Basic Provisions) state that planted acreage cannot be revised after the acreage reporting date without the AIP’s consent and consent can only be provided when no cause of loss has occurred or an appraisal has determined that the insured crop will produce at least 90 percent of the yield used to determine its guarantee or the amount of insurance for the unit.
RMA states that now AIPs may consent to revise an acreage report after the acreage reporting date when no cause of loss has occurred or the acreage of the crop being added will produce at least 90 percent of the yield used to determine its guarantee or the amount of insurance, based upon an appraisal of only the added acreage. RMA states that at the AIP’s discretion, modifications for acreage within a field that is the lessor of 10 acres or 10 percent of the total acreage in the field do not require an appraisal. RMA states that AIPs may also use their discretion as to whether modifications to existing reported acreage, such as a crop type, practice, share, etc., warrants an appraisal, including modified acreage that increases the liability. RMA states that this authority is only authorized for reconciliation to the FSA-578 due to the extenuating circumstances regarding COVID-19 and in accordance with MGR-20-015.
ANALYSIS – One change is that it appears that consent of the AIP to revise the acreage report is based on only the appraisal of added land producing at least 90 percent of the yield used to determine the guarantee or amount of insurance. According the the Basic Provisions, consent can be provided if the insured crop will produce at least 90 percent of the yield used to determine its guarantee or the amount of insurance for the unit. This change appears to be significant and appears to be limited to situations where there is added land. If there is no added land, it is unclear whether an appraisal must be done. It is also not clear what happens if the acreage other than the added land would not have appraised at 90 percent. This change could affect program integrity by allowing changes in the acreage report even if the potential for a loss could have been known.
RMA is apparently also adding a 10 acre/10 percent de minimis amount of acreage where no appraisal would be required. This de minimis amount applies to the total acreage in the field. It is not clear how this provision interacts with the prior provision that only requires on appraisal on added land.
It also appears that RMA is allowing the AIPs discretion whether to conduct appraisals for modifications, such as changes to crop type, practice, share, etc., even if such modified acreage increases the liability. However, MGR-20-020 also states that reconciliations must be done in accordance with MGR-20-015, which states “the AIP may correct the error up to 60 days following the ARD in the current crop year, provided the correction does not obtain, enhance or increase the insurance guarantee or indemnity if there is an existing cause of loss for the crop.” The key to reconciling the provisions may be whether there is an existing cause of loss, which would be grounds to deny consent so no appraisal is necessary, but the provisions are ambiguous.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.