On August 27, 2020, the Risk Management Agency (RMA) issued Product Management Bulletin: PM-20-056, the Rainfall Index Plan Common Policy Basic Provisions (Basic Provisions), the Rainfall Index Pasture, Rangeland, Forage Crop Provisions (PRF), the Rainfall Index Apiculture Crop Provisions (Apiculture), and the Rainfall Index Insurance Standards Handbook effective for the 2021 crop year. https://www.rma.usda.gov/en/Policy-and-Procedure/Bulletins-and-Memos/2020/PM-20-056, https://www.rma.usda.gov/-/media/RMAweb/Policies/Rainfall-Index/2021/Rainfall-Index-Plan-Common-Policy-21-RI.ashx, https://www.rma.usda.gov/-/media/RMAweb/Policies/Rainfall-Index/2021/Rainfall-Index-Pasture-Rangeland-Forage-Crop-Provisions-21-RI-PRF.ashx, https://www.rma.usda.gov/-/media/RMAweb/Policies/Rainfall-Index/2021/Rainfall-Index-Apiculture-Crop-Provisions-21-RI-API.ashx, https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Coverage-Plans—18000/Rainfall-and-Vegetation-Index—18150/2021-18150–Rainfall-and-Vegetation-Index-Handbook.ashx.
According to PM-20-056, the modifications were:
- Provided guidance on how to determine the total insurable colonies requirements in Section 4 of the policy.
- Added records requirements to clarify that records are required to maintain for a period of three years.
- Added flexibility for types of documentation a producer can provide to verify a lease.
- Added a Verifiable Records definition.
Basic Provision Changes (Both Programs):
- Revised to allow insurance for grids that cross the U.S. border or are along the ocean. The insured may now insure the grid closest to the point of reference.
- Added additional language to address when an insured misreports information on the acreage report.
- Clarified what will happen when NOAA Climate Prediction Center makes changes to data after RMA publishes.
- Revised lease certification documentation requirements.
- Removed all references to the Vegetation Index Policy.
- Other minor editorial edits to be consistent with other policies.
- Clarified that a separate point of reference is required for non-contiguous acreage.
- Minor editorial edits.
ANALYSIS – The description of the changes in PM-20-056 is vague. There is no explanation for the basis for the changes. Further, the policies do not contain any summary of changes so one has to go through the policy line-by-line to determine what modifications were made. With respect to Apiculture, RMA did add a definition of “verifiable records” that appears consistent with other policies. It appears that RMA tried to add a record keeping requirement of three years but the policy actually reads “there years”. RMA also states that it added flexibility for the types of documents to verify a lease but it is unclear where this was done. The only reference to leave and verification is in section 8, which states: “In addition to section 16(a)(3) of the Basic Provisions, if the lease certification form is used and cannot be verified, no indemnity will be due for the crop year such failure occurred for those colonies with a unverifiable lease, and premium is still owed.” There is no reference to documentation. Section 4 does contain limits on the total number of colonies that can be insured.
With respect to the Basic Provisions, RMA revised the provisions to allow insurance for grids that cross the U.S. border or are along the ocean. However, the policy states: “If your point of reference is in a grid ID that crosses the U.S. border or is along the ocean where no insurance offer is available for that grid ID, you may elect to insure in the grid ID that is closest to your point of reference.” It is unclear whether the producer is insuring the grid with the reference point or another grid that is closest to the reference point. RMA states that it has clarified what happens if the NOAA Climate Prediction Center makes changes to the data after it is published by RMA. The policy states that if the NOAA Climate Prediction Center makes an error, that error can be corrected if RMA is notified in writing of an error in the data RMA published, RMA’s Administrator reviews the circumstances of the error and determines a change is warranted, and less than one year has elapsed from the date the final index was published.
RMA states that it is revising the lease certification documentation requirements. If the producer cannot produce a lease, the policy allows the use of a lease certification form if the content of the form can be verified. The policy states: ” If we are unable to verify the information on the lease certification form, or it was determined the information on the form was inaccurate or false and no lease existed, you will be subject to section 16(d) and premium is still owed.” It is still unclear what documentation requirements were changed.
With respect to PRF, RMA stated that it clarified that a separate point of reference is required for non-contiguous acreage. However, the term non-contiguous is not used in PRF nor is there any reference to “a separate point of reference.” Therefore, it is unclear how RMA effectuated this change.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.