H.R. 2559 (106^th): Agricultural Risk Protection Act of 2000

HR 2559 IH

To amend the Federal Crop Insurance Act to strengthen the safety net for agricultural producers by providing greater access to more affordable risk management tools and improved protection from production and income loss, to improve the efficiency and integrity of the Federal crop insurance program, and for other purposes.

July 20, 1999

Mr. COMBEST (for himself, Mr. EWING, Mr. BARRETT of Nebraska, Mr. BLUNT, Mr. CANADY of Florida, Mr. WHITFIELD, Mr. BEREUTER, Mr. SESSIONS, and Mr. HAYES) introduced the following bill; which was referred to the Committee on Agriculture

To amend the Federal Crop Insurance Act to strengthen the safety net for agricultural producers by providing greater access to more affordable risk management tools and improved protection from production and income loss, to improve the efficiency and integrity of the Federal crop insurance program, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the ‘Agricultural Risk Protection Act of 1999’.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I--STRENGTHENING THE FARM SAFETY NET

Sec. 101. Premium schedule for additional coverage.

Sec. 102. Premium schedule for other plans of insurance.

Sec. 103. Adjustment in actual production history to establish insurable yields.

Sec. 104. Review and adjustment in rating methodologies.

Sec. 105. Conduct of pilot programs, including livestock.

Sec. 106. Cost of production as a price election.

Sec. 107. Premium discounts for good performance.

Sec. 108. Options for catastrophic risk protection.

Sec. 109. Authority for nonprofit associations to pay fees on behalf of producers.

Sec. 110. Elections regarding prevented planting coverage.

Sec. 111. Sales closing date.

Sec. 112. Area loss requirements to trigger assistance for noninsured crop disaster assistance program.

Sec. 113. Limitations under noninsured crop disaster assistance program.

Sec. 114. Application of amendments.

TITLE II--IMPROVING PROGRAM INTEGRITY

Sec. 201. Limitation on double insurance.

Sec. 202. Improving program compliance and integrity.

Sec. 203. Sanctions for false information.

Sec. 204. Protection of confidential information.

TITLE III--ADMINISTRATION

Sec. 301. Board of Directors of Corporation.

Sec. 302. Promotion of submission of policies and related materials.

Sec. 303. Research and development, including contracts regarding underserved commodities.

Sec. 304. Funding for reimbursement and research and development.

Sec. 305. Board consideration of submitted policies and materials.

Sec. 306. Contracting for rating of plans of insurance.

TITLE I--STRENGTHENING THE FARM SAFETY NET

SEC. 101. PREMIUM SCHEDULE FOR ADDITIONAL COVERAGE.

(a) PREMIUM AMOUNTS- Section 508(d)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(d)(2)) is amended by striking subparagraphs (B) and (C) and inserting the following new subparagraph:

‘(B) In the case of additional coverage equal to or greater than 50 percent of the recorded or appraised average yield indemnified at not greater than 100 percent of the expected market price, or an equivalent coverage, the amount of the premium shall--

‘(i) be sufficient to cover anticipated losses and a reasonable reserve; and

‘(ii) include an amount for operating and administrative expenses, as determined by the Corporation, on an industry-wide basis as a percentage of the amount of the premium used to define loss ratio.’.

(b) PAYMENT SCHEDULE- Section 508(e)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(e)(2)) is amended by striking subparagraphs (B) and (C) and inserting the following new subparagraphs:

‘(B) In the case of additional coverage equal to or greater than 50 percent, but less than 65 percent, of the recorded or appraised average yield indemnified at not greater than 100 percent of the expected market price, or an equivalent coverage, the amount shall be equal to the sum of--

‘(i) 65 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage level selected; and

‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

‘(C) In the case of additional coverage equal to or greater than 65 percent, but less than 70 percent, of the recorded or appraised average yield indemnified at not greater than 100 percent of the expected market price, or an equivalent coverage, the amount shall be equal to the sum of--

‘(i) 60 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage level selected; and

‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

‘(D) In the case of additional coverage equal to or greater than 70 percent, but less than 75 percent, of the recorded or appraised average yield indemnified at not greater than 100 percent of the expected market price, or an equivalent coverage, the amount shall be equal to the sum of--

‘(i) 55 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage level selected; and

‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

‘(E) In the case of additional coverage equal to or greater than 75 percent, but less than 80 percent, of the recorded or appraised average yield indemnified at not greater than 100 percent of the expected market price, or an equivalent coverage, the amount shall be equal to the sum of--

‘(i) 52 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage level selected; and

‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

‘(F) In the case of additional coverage equal to or greater than 80 percent, but less than 85 percent, of the recorded or appraised average yield indemnified at not greater than 100 percent of the expected market price, or an equivalent coverage, the amount shall be equal to the sum of--

‘(i) 40 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage level selected; and

‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.

‘(G) Subject to subsection (c)(4), in the case of additional coverage equal to or greater than 85 percent of the recorded or appraised average yield indemnified at not greater than 100 percent of the expected market price, or an equivalent coverage, the amount shall be equal to the sum of--

‘(i) 35 percent of the amount of the premium established under subsection (d)(2)(B)(i) for the coverage level selected; and

‘(ii) the amount determined under subsection (d)(2)(B)(ii) for the coverage level selected to cover operating and administrative expenses.’.

(c) PREMIUM PAYMENT DISCLOSURE- Section 508(e) of the Federal Crop Insurance Act (7 U.S.C. 1508(e)) is amended by adding at the end the following new paragraph:

‘(5) PREMIUM PAYMENT DISCLOSURE- Each policy or plan of insurance under this title shall prominently indicate the dollar amount of the portion of the premium paid by the Corporation under this subsection or subsection (h)(2).’.

SEC. 102. PREMIUM SCHEDULE FOR OTHER PLANS OF INSURANCE.

Section 508(h)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(2)) is amended--

(1) by striking ‘A policy’ and inserting the following:

‘(A) PREPARATION- A policy’;

(2) by striking the second sentence; and

(3) by adding at the end the following new subparagraph:

‘(B) PREMIUM SCHEDULE- In the case of a policy offered under this subsection (except paragraph (10)) or subsection (m)(4), the Corporation shall pay a portion of the premium of the policy that shall be equal to--

‘(i) the percentage, specified in subsection (e) for a similar level of coverage, of the total amount of the premium used to define loss ratio; and

‘(ii) the dollar amount of the administrative and operating expenses that would be paid by the Corporation under subsection (e) for a similar level of coverage.’.

SEC. 103. ADJUSTMENT IN ACTUAL PRODUCTION HISTORY TO ESTABLISH INSURABLE YIELDS.

Section 508(g) of the Federal Crop Insurance Act (7 U.S.C. 1508(g)) is amended by adding at the end the following new paragraph:

‘(4) ADJUSTMENT IN ACTUAL PRODUCTION HISTORY TO ESTABLISH INSURABLE YIELDS-

‘(A) APPLICATION- This paragraph shall apply whenever the Corporation uses the actual production history of the producer to establish insurable yields for an agricultural commodity.

‘(B) EXCLUSION OF YIELDS FOR PRODUCERS WITH 10-YEAR PRODUCTION HISTORY- If, by the 2000 crop year, the producer has an established actual production history of 10 consecutive crop years for which an agricultural commodity was produced, the Corporation shall--

‘(i) exclude for the 2000 crop year, at the election of the producer, any 2 years of production history for that commodity selected by the producer from that 10-year history; and

‘(ii) continue the exclusion of the years of production history selected under clause (i) for the subsequent applicable crop years.

‘(C) EXCLUSION OF YIELD FOR PRODUCERS WITH 5-YEAR PRODUCTION HISTORY- If, by the 2000 crop year, the producer has an established actual production history of at least 5 consecutive crop years for which an agricultural commodity was produced, but less than 10 years, the Corporation shall--

‘(i) exclude for the 2000 crop year, at the election of the producer, any 1 year of production history for that commodity selected by the producer from that history; and

‘(ii) continue the exclusion of the year of production history selected under clause (i) for the subsequent applicable crop years.

‘(D) PERCENTAGE LIMITATION ON REDUCTION- Beginning with the 2000 crop year, the Corporation may not reduce the producer’s actual production history for an agricultural commodity by more than 5 percent from one year to the next as a result of a decrease in the production of that agricultural commodity in a crop year.’.

SEC. 104. REVIEW AND ADJUSTMENT IN RATING METHODOLOGIES.

Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) is amended by adding at the end the following:

‘(7) REVIEW AND ADJUSTMENT OF RATES-

‘(A) REVIEW REQUIRED- To maximize participation in the Federal crop insurance program and to ensure equity for producers, the Corporation shall periodically review the methodologies employed for rating plans of insurance under this title consistent with section 507(c)(2).

‘(B) ADJUSTMENT- If, before the 2000 crop year, the Corporation determines that premium rates are excessive for an agricultural commodity relative to the requirements of subsection (d)(2)(B), the Corporation shall make appropriate adjustments in the premium rates for that area for that agricultural commodity in time for the 2000 crop year.’.

SEC. 105. CONDUCT OF PILOT PROGRAMS, INCLUDING LIVESTOCK.

(a) REPEAL OF OBSOLETE PILOT PROGRAMS- Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) is amended by striking paragraphs (6) and (8).

(b) GENERAL REQUIREMENTS- Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) is amended by inserting after paragraph (7) the following new paragraph:

‘(8) GENERAL REQUIREMENTS APPLICABLE TO PILOT PROGRAMS- In conducting any pilot program of insurance or reinsurance authorized or required by this title, the Corporation--

‘(A) may offer the pilot program on a regional, whole State, or national basis after considering the interests of affected producers and the interests of and risks to the Corporation;

‘(B) may operate the pilot program, including any modifications thereof, for a period of up to 3 years; and

‘(C) may extend the time period for the pilot program for additional periods, as determined appropriate by the Corporation.’.

(c) EXPEDITED CONSIDERATION- Section 508(h)(4) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(4)) is amended--

(1) by redesignating subparagraphs (A), (B), (C), and (D) as clauses (i), (ii), (iii), and (iv), respectively;

(2) by moving the text of the clauses (as so designated) 2 ems to the right;

(3) by striking ‘The Corporation’ in the first sentence and inserting the following:

‘(A) GUIDELINES REQUIRED- Not later than 180 days after the date of the enactment of the Agricultural Risk Protection Act of 1999, the Corporation’; and

(4) by adding at the end the following new subparagraph:

‘(B) EXPEDITED CONSIDERATION OF PROPOSED PILOT PROGRAMS- The regulations required by subparagraph (A) shall include streamlined guidelines for the submission, and Board review, of pilot programs that the Board determines are limited in scope and duration and involve a reduced level of liability to the Federal Government, and an increased level of risk to approved insurance providers participating in the pilot program, relative to other policies or materials submitted under this subsection. The streamlined guidelines shall be consistent with the guidelines established under subparagraph (A), except as follows:

‘(i) Not later than 60 days after submission of the proposed pilot program, the Corporation shall provide an applicant with notification of its intent to recommend disapproval of the proposal to the Board.

‘(ii) Not later than 90 days after the proposed pilot program is submitted to the Board, the Board shall make a determination to approve or disapprove the pilot program. Any determination by the Board to disapprove the pilot program shall be accompanied by a complete explanation of the reasons for the Board’s decision to deny approval. In the event the Board fails to make a determination within the prescribed time period, the pilot program submitted shall be deemed approved by the Board for the initial reinsurance year designated for the pilot program, except in the case where the Board and the applicant agree to an extension.’.

(d) LIVESTOCK PILOT PROGRAMS-

(1) PROGRAMS REQUIRED- Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) is amended by striking paragraph (10) and inserting the following new paragraph:

‘(10) LIVESTOCK PILOT PROGRAMS-

‘(A) PROGRAMS REQUIRED- The Corporation shall conduct one or more pilot programs to evaluate the effectiveness of risk management tools for livestock producers, including futures and options contracts and policies and plans of insurance that provide livestock producers with reasonable protection from the financial risks of price or income fluctuations inherent in the production and marketing of livestock, provide protection for production losses, and otherwise protect the interests of livestock producers. To the maximum extent practicable, the Corporation shall evaluate the greatest number and variety of such programs to determine which of the offered risk management tools are best suited to protect livestock producers from the financial risks associated with the production and marketing of livestock.

‘(B) IMPLEMENTATION; ASSISTANCE- The Corporation shall begin conducting livestock pilot programs under this paragraph during fiscal year 2001, and any policy or plan of insurance offered under this paragraph may be prepared without regard to the limitations contained in this title. As part of such a pilot program, the Corporation may provide assistance to producers to purchase futures and options contracts or policies and plans of insurance offered under that pilot program.

‘(C) LOCATION- The Corporation shall conduct the livestock pilot programs under this paragraph in a number of counties that is determined by the Corporation to be adequate to provide a comprehensive evaluation of the feasibility, effectiveness, and demand among producers for the risk management tools evaluated in the pilot programs.

‘(D) ELIGIBLE PRODUCERS; LIVESTOCK- Any producer of a type of livestock covered by a pilot program under this paragraph who owns or operates a farm or ranch in a county selected as a location for that pilot program shall be eligible to participate in that pilot program. In this paragraph, the term ‘livestock’ means cattle, sheep, swine, goats, and poultry.

‘(E) RELATION TO OTHER LAWS- The terms and conditions of any policy or plan of insurance offered under this paragraph that is reinsured by the Corporation is not subject to the jurisdiction of the Commodity Futures Trading Commission or the Securities and Exchange Commission or considered as accounts, agreements (including any transaction which is of the character of, or is commonly known to the trade as, an ‘option’, ‘privilege’, ‘indemnity’, ‘bid’, ‘offer’, ‘put’, ‘call’, ‘advance guaranty’, or ‘decline guaranty’), or transactions involving contracts of sale of a commodity for future delivery, traded or executed on a contract market for the purposes of the Commodity Exchange Act (7 U.S.C. 1 et seq.). Nothing in this subparagraph is intended to affect the jurisdiction of the Commodity Futures Trading Commission or the applicability of the Commodity Exchange Act to any transaction conducted on a designated contract market (as that term is used in such Act) by an approved insurance provider to offset the provider’s risk under a plan or policy of insurance under this paragraph.

‘(F) LIMITATION ON EXPENDITURES- The Corporation shall conduct all livestock programs under this title so that, to the maximum extent practicable, all costs associated with conducting the livestock programs (other than research and development costs covered by paragraph (6) or subsection (m)(4)) are not expected to exceed $55,000,000 for any fiscal year.’.

(2) CONFORMING AMENDMENT TO DEFINITION OF AGRICULTURAL COMMODITY- Section 518 of the Federal Crop Insurance Act (7 U.S.C. 1518) is amended by striking ‘livestock and’ after ‘commodity, excluding’.

(e) FUNDING OF LIVESTOCK PILOT PROGRAMS-

(1) AUTHORIZATION OF APPROPRIATIONS- Section 516(a)(2) of the Federal Crop Insurance Act (7 U.S.C. 1516(a)(2)) is amended--

(A) by striking ‘years--’ and inserting ‘years the following:’;

(B) by capitalizing the first letter of the first word of each subparagraph;

(C) by striking ‘; and’ at the end of subparagraph (A) and inserting a period; and

(D) by adding at the end the following new subparagraph:

‘(C) Costs associated with the conduct of livestock pilot programs carried out under section 508(h)(10).’.

(2) USE OF INSURANCE FUND- Section 516(b)(1) of the Federal Crop Insurance Act (7 U.S.C. 1516(b)(1)) is amended--

(A) by striking ‘including--’ and inserting ‘including the following:’;

(B) by capitalizing the first letter of the first word of each subparagraph;

(C) by striking the semicolon at the end of subparagraph (A) and inserting a period;

(D) by striking ‘; and’ at the end of subparagraph (B) and inserting a period; and

(E) by adding at the end the following new subparagraph:

‘(D) Costs associated with the conduct of livestock pilot programs carried out under section 508(h)(10).’.

SEC. 106. COST OF PRODUCTION AS A PRICE ELECTION.

Section 508(c)(5) of the Federal Crop Insurance Act (7 U.S.C. 1508(c)(5)) is amended--

(1) by striking ‘The Corporation shall establish a price’ in the matter preceding subparagraph (A) and inserting ‘For purposes of this title, the Corporation shall establish or approve a price’;

(2) by striking ‘or’ at the end of subparagraph (A);

(3) by striking the period at the end of subparagraph (B) and inserting ‘; or’; and

(4) by adding at the end the following--

‘(C) in the case of cost of production or similar plans of insurance, shall be the projected cost of producing the agricultural commodity (as determined by the Corporation).’.

SEC. 107. PREMIUM DISCOUNTS FOR GOOD PERFORMANCE.

Section 508(d) of the Federal Crop Insurance Act (7 U.S.C. 1508(d)) is amended by adding at the end the following new paragraph:

‘(3) PREMIUM DISCOUNTS- The Corporation may provide a performance-based discount for a producer of an agricultural commodity who has good insurance or production experience relative to other producers of that agricultural commodity in the same area, as determined by the Corporation, except that any such discount shall be consistent with section 506(o)(2).’.

SEC. 108. OPTIONS FOR CATASTROPHIC RISK PROTECTION.

Section 508(b) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)) is amended by striking paragraph (3) and inserting the following new paragraph:

‘(3) ALTERNATIVE CATASTROPHIC COVERAGE- Beginning with the 2000 crop year, the Corporation shall offer producers of an agricultural commodity the option of selecting either of the following:

‘(A) The catastrophic risk protection coverage available under paragraph (2)(A).

‘(B) An alternative catastrophic risk protection coverage that--

‘(i) indemnifies the producer on an area yield and loss basis if such a plan of insurance is offered for the agricultural commodity in the county in which the farm is located;

‘(ii) provides, on a uniform national basis, a higher combination of yield and price protection than the coverage available under paragraph (2)(A); and

‘(iii) the Corporation determines is equivalent to the coverage available under paragraph (2)(A).’.

SEC. 109. AUTHORITY FOR NONPROFIT ASSOCIATIONS TO PAY FEES ON BEHALF OF PRODUCERS.

Section 508(b)(5) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)(5)) is amended by adding at the end the following new subparagraph:

‘(F) PAYMENT OF FEES ON BEHALF OF PRODUCERS-

‘(i) PAYMENT AUTHORIZED- Notwithstanding any other subparagraph of this paragraph, a cooperative association of agricultural producers or a nonprofit trade association may pay, on behalf of a member of the association who consents to be insured under such an arrangement, all or a portion of the fees imposed under subparagraphs (A) and (B) for catastrophic risk protection. At the election of the member, the amount that would be paid on behalf of the member for catastrophic risk protection may be used by the member to purchase additional coverage under this title.

‘(ii) TREATMENT OF LICENSING FEES- A licensing fee or other payment made by the insurance provider to the cooperative association or trade association

in connection with the issuance of catastrophic risk protection or additional coverage under this section to members of the cooperative association or trade association shall not be considered to be a rebate to the members under any reinsurance agreement between the Corporation and the insurance provider if the members are informed in advance of the fee or payment. The amount of any such licensing fee or other payment in excess of the amount paid by the cooperative association or trade association under clause (i) shall be distributed to the producers whose participation in the Federal crop insurance program prompted the licensing fee or other payment to be made.

‘(iii) SELECTION OF PROVIDER; DELIVERY- Nothing in this subparagraph shall be construed so as to limit the ability of a producer to choose the licensed insurance agent or other approved insurance provider from whom the producer will purchase a policy or plan of insurance or to refuse coverage for which a payment is offered to be made under clause (i). A policy or plan of insurance for which a payment is made under clause (i) shall be delivered by a licensed insurance agent or other approved insurance provider.

‘(iv) ADDITIONAL COVERAGE ENCOURAGED- Cooperatives and trade associations and any approved insurance provider with whom a licensing fee or other arrangement under this subparagraph is made shall encourage producer members to purchase appropriate levels of additional coverage in order to meet the risk management needs of such member producers.’.

SEC. 110. ELECTIONS REGARDING PREVENTED PLANTING COVERAGE.

Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) is amended by inserting after paragraph (7), as added by section 104, the following new paragraph:

‘(8) PREVENTED PLANTING COVERAGE-

‘(A) ELECTION NOT TO RECEIVE COVERAGE-

‘(i) ELECTION- A producer may elect not to receive coverage for prevented planting of an agricultural commodity.

‘(ii) DISCOUNT- In the case of an election under clause (i), the Corporation shall provide a discount in the premium payable by the producer for a plan of insurance in an amount equal to the premium for the prevented planting coverage, as determined by the Corporation.

‘(B) EQUAL COVERAGE- For each agricultural commodity for which prevented planting coverage is available, the Corporation shall offer an equal percentage value of prevented planting coverage.

‘(C) SUBSTITUTE COMMODITY-

‘(i) AUTHORITY TO PLANT- A producer who has prevented planting coverage and who is eligible to receive an indemnity under such coverage may plant an agricultural commodity, other than the commodity covered by the prevented planting coverage, on the acreage originally prevented from being planted.

‘(ii) NONAVAILABILITY OF INSURANCE- A substitute agricultural commodity planted as authorized by clause (i) for harvest in the same crop year shall not be eligible for coverage under a policy or plan of insurance under this title or for noninsured crop disaster assistance under section 196 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333).

‘(iii) EFFECT ON ACTUAL PRODUCTION HISTORY- If a producer plants a substitute agricultural commodity as authorized by clause (i) for a crop year, the Corporation shall assign the producer a recorded yield for that crop year for the commodity covered by the prevented planting coverage equal to 60 percent of the producer’s actual production history for the original commodity for purposes of determining the producer’s actual production history for the original commodity for subsequent crop years.’.

SEC. 111. SALES CLOSING DATE.

Section 508(f)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508 (f)(2)) is amended by striking the last sentence.

SEC. 112. AREA LOSS REQUIREMENTS TO TRIGGER ASSISTANCE FOR NONINSURED CROP DISASTER ASSISTANCE PROGRAM.

Section 196(c)(1) of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333(c)(1)) is amended by striking paragraph (1) and inserting the following new paragraph:

(1) by striking ‘A producer’ and inserting the following:

‘(A) REDUCED AREA YIELD- Except as provided in subparagraph (B), a producer’; and

(2) by adding at the end the following new subparagraph:

‘(B) DISASTER DECLARATION- A producer of an eligible crop may also receive noninsured crop disaster assistance if the producer’s affected crop acreage is located in an area where eligible crops were substantially affected by a natural disaster resulting in a Presidential declaration of major disaster issued under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170) or a designation as a disaster area by the Secretary under subpart A of part 1945 of title 7, Code of Federal Regulations.’.

SEC. 113. LIMITATIONS UNDER NONINSURED CROP DISASTER ASSISTANCE PROGRAM.

(b) LIMITATION- Section 196(i) of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333(i)) is amended--

(1) in paragraph (1)(B)--

(A) by striking ‘GROSS REVENUES’ in the subparagraph heading and inserting ‘ADJUSTED GROSS INCOME’; and

(B) by striking ‘gross revenue’ each place it appears and inserting ‘adjusted gross income’; and

(2) by striking paragraph (4) and inserting the following new paragraph--

‘(4) LIMITATION- A person who has qualifying adjusted gross income in excess of $2,000,000 during the taxable year shall not be eligible to receive any noninsured crop disaster assistance payment under this section.’.

SEC. 114. APPLICATION OF AMENDMENTS.

Except where the context specifically provides otherwise, the amendments made by this title shall apply beginning with the 2000 crop year.

TITLE II--IMPROVING PROGRAM EFFICIENCIES

SEC. 201. LIMITATION ON DOUBLE INSURANCE.

Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) is amended by inserting after paragraph (8), as added by section 110, the following new paragraph:

‘(9) LIMITATION ON DOUBLE INSURANCE-

‘(A) RESTRICTED TO CATASTROPHIC RISK PROTECTION- Except for situations covered by subparagraph (B), no policy or plan of insurance may be offered under this title for more than one agricultural commodity planted on the same acreage in the same crop year unless the coverage for the additional crop is limited to catastrophic risk protection available under subsection (b).

‘(B) EXCEPTION FOR DOUBLE-CROPPING- A policy or plan of insurance may be offered under this title for an agricultural commodity and for an additional agricultural commodity when both agricultural commodities are normally harvested within the same crop year on the same acreage if the following conditions are met:

‘(i) There is an established practice of double-cropping in the area and the additional agricultural commodity is customarily double-cropped in the area with the first agricultural commodity, as determined by the Corporation.

‘(ii) A policy or plan of insurance for the first agricultural commodity and the additional agricultural commodity is available under this title.

‘(iii) The additional commodity is planted on or before the final planting date or late planting date for that additional commodity, as established by the Corporation.’.

SEC. 202. IMPROVING PROGRAM COMPLIANCE AND INTEGRITY.

(a) ADDITIONAL METHODS- Section 506(q) of the Federal Crop Insurance Act (7 U.S.C. 1506(q)) is amended--

(1) by redesignating paragraphs (1) and (2) as paragraphs (2) and (3);

(2) by inserting after the subsection heading the following new paragraph (1):

‘(1) PURPOSE- The purpose of this subsection is to improve compliance with the Federal crop insurance program and to improve program integrity.’; and

(3) by adding at the end the following new paragraphs:

‘(4) RECONCILING PRODUCER INFORMATION- The Secretary shall develop and implement a coordinated plan for the Corporation and the Administrator of the Farm Service Agency to reconcile all relevant information received by the Corporation or the Farm Service Agency from a producer who obtains crop insurance coverage under this title. Beginning with the 2000 crop year, the Secretary shall require that the Corporation and the Farm Service Agency reconcile such producer-derived information on at least an annual basis in order to identify and address any discrepancies.

‘(5) IDENTIFICATION AND ELIMINATION OF FRAUD, WASTE, AND ABUSE-

‘(A) FSA MONITORING PROGRAM- The Secretary shall develop and implement a coordinated plan for the ongoing monitoring by the Farm Service Agency of programs carried out under this title, including--

‘(i) conducting fact finding relative to allegations of program fraud, waste, and abuse, both at the request of the Corporation or on its own initiative after consultation with the Corporation;

‘(ii) reporting any allegation of fraud, waste, and abuse or identified program vulnerabilities to the Corporation in a timely manner; and

‘(iii) assisting the Corporation and approved insurance providers in auditing a statistically appropriate number of claims made under any policy or plan of insurance under this title.

‘(B) USE OF FIELD INFRASTRUCTURE- The plan required by this paragraph shall use the field infrastructure of the Farm Service Agency, and the Secretary shall ensure that relevant Farm Service Agency personnel are appropriately trained for any responsibilities assigned to them under the plan. At a minimum, such personnel shall receive the same level of training and pass the same basic competency tests as required of loss adjusters of reinsured

companies under the standard reinsurance agreement.

‘(C) MAINTENANCE OF PROVIDER EFFORT; COOPERATION- The activities of the Farm Service Agency under this paragraph do not affect the responsibility of approved insurance providers to conduct any audits of claims or other program reviews required by the Corporation. If an insurance provider reports to the Corporation that it suspects intentional misrepresentation, fraud, waste, or abuse, the Corporation shall make a determination and provide a written response within 90 days after receiving the report. The insurance provider and the Corporation shall take coordinated action in any case where misrepresentation, fraud, waste, or abuse has occurred.

‘(6) CONSULTATION WITH STATE COMMITTEES- The Corporation shall establish a mechanism under which State committees of the Farm Service Agency are consulted concerning policies and plans of insurance offered in a State under this title.

‘(7) ANNUAL REPORT ON COMPLIANCE EFFORTS- The Secretary shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate an annual report containing findings relative to the efforts undertaken pursuant to paragraphs (4) and (5). The report shall identify specific occurrences of waste, fraud, and abuse and contain an outline of actions that have been or are being taken to eliminate the identified waste, fraud, and abuse.’.

(b) TECHNICAL CORRECTION- Paragraph (3) of section 506(q) of the Federal Crop Insurance Act (7 U.S.C. 1506(q)), as redesignated by subsection (a), is amended by striking ‘this subsection’ and inserting ‘this paragraph’.

SEC. 203. SANCTIONS FOR FALSE INFORMATION.

(a) CLARIFICATION OF PERSONS COVERED- Section 506(n)(1) of the Federal Crop Insurance Act (7 U.S.C. 1506(n)) is amended by striking ‘If a person’ and inserting ‘If a producer, an agent, a loss adjuster, an approved insurance provider, or any other person’.

(b) AUTHORIZED SANCTIONS- Section 506(n) of the Federal Crop Insurance Act (7 U.S.C. 1506(n)) is amended--

(1) in the subsection heading, by striking ‘PENALTIES’ and inserting ‘SANCTIONS FOR VIOLATIONS’;

(2) in paragraph (1), by striking ‘on the record--’ and all that follows through the end of the paragraph and inserting ‘on the record, impose one or more of the sanctions specified in paragraph (2).’;

(3) by redesignating paragraph (2) as paragraph (3) and, in such paragraph, by striking ‘PENALTY’ and ‘assessing penalties’ and inserting ‘SANCTION’ and ‘imposing a sanction’, respectively; and

(4) by inserting after paragraph (1) the following new paragraph:

‘(2) AUTHORIZED SANCTIONS- The following sanctions may be imposed for a violation under paragraph (1):

‘(A) The Corporation may impose a civil fine for each violation not to exceed the greater of--

‘(i) the amount of the pecuniary gain obtained by the person as a result of the false or inaccurate information provided; or

‘(ii) $10,000.

‘(B) If the violation is committed by a producer, the producer may be disqualified for a period of up to 5 years from--

‘(i) participating in, or receiving any benefit provided under this title, the noninsured crop disaster assistance program under section 196 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333), the Agricultural Market Transition Act (7 U.S.C. 7201 et seq.), the Agricultural Act of 1949 (7 U.S.C. 1421 et seq.), the Commodity Credit Corporation Charter Act (15 U.S.C. 714 et seq.), or the Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.);

‘(ii) receiving any loan made, insured, or guaranteed under the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et. seq.);

‘(iii) receiving any benefit provided, or indemnity made available, under any other law to assist a producer of an agricultural commodity due to a crop loss or a decline in commodity prices; or

‘(iv) receiving any cost share assistance for conservation or any other assistance provided under title XII of the Food Security Act (16 U.S.C. 3801 et seq.).

‘(C) If the violation is committed by an agent, loss adjuster, approved insurance provider, or any other person (other than a producer), the violator may be disqualified for a period of up to 5 years from participating in, or receiving any benefit provided under this title.

‘(D) If the violation is committed by a producer, the Corporation may require the producer to forfeit any premium owed under the policy, notwithstanding a denial of claim or collection of an overpayment, if the false or inaccurate information was material.’.

(c) DISCLOSURE OF SANCTIONS- Section 506(n) of the Federal Crop Insurance Act (7 U.S.C. 1506(n)) is amended by adding at the end the following new paragraph:

‘(4) DISCLOSURE OF SANCTIONS- Each policy or plan of insurance under this title shall prominently indicate the sanctions prescribed under paragraph (2) for willfully and intentionally providing false or inaccurate information to the Corporation or to any insurer.’.

SEC. 204. PROTECTION OF CONFIDENTIAL INFORMATION.

Section 502 of the Federal Crop Insurance Act (7 U.S.C. 1502) is amended by adding at the end the following new subsection:

‘(c) PROTECTION OF CONFIDENTIAL INFORMATION-

‘(1) AUTHORIZED DISCLOSURE- In the case of information furnished by a producer to participate in or receive any benefit under this title, the Secretary, any other officer or employee of the Department or an agency thereof, an approved insurance provider and its employees and contractors, and any other person may not disclose the information to the public, unless the information has been transformed into a statistical or aggregate form that does not allow the identification of the person who supplied particular information.

‘(2) VIOLATIONS; PENALTIES- Subsection (c) of section 1770 of the Food Security Act of 1985 (7 U.S.C. 2276) shall apply with respect to the release of information collected in any manner or for any purpose prohibited by paragraph (1).’.

TITLE III--ADMINISTRATION

SEC. 301. BOARD OF DIRECTORS OF CORPORATION.

(a) CHANGE IN COMPOSITION- Section 505 of the Federal Crop Insurance Act (7 U.S.C. 1505) is amended by striking the section heading, ‘SEC. 505.’, and subsection (a) and inserting the following:

‘SEC. 505. MANAGEMENT OF CORPORATION.

‘(a) BOARD OF DIRECTORS-

‘(1) ESTABLISHMENT- The management of the Corporation shall be vested in a Board of Directors subject to the general supervision of the Secretary.

‘(2) COMPOSITION- The Board shall consist of only the following members:

‘(A) The manager of the Corporation, who shall serve as a nonvoting ex officio member.

‘(B) The Under Secretary of Agriculture responsible for the Federal crop insurance program.

‘(C) One additional Under Secretary of Agriculture (as designated by the Secretary).

‘(D) The Chief Economist of the Department of Agriculture.

‘(E) One person experienced in the crop insurance business.

‘(F) One person experienced in the regulation of insurance.

‘(G) Four active farmers who are policy holders and who are from different geographic areas of the United States.

‘(3) APPOINTMENT OF PRIVATE SECTOR MEMBERS- The members of the Board described in subparagraphs (E), (F), and (G) of paragraph (2)--

‘(A) shall be appointed by, and hold office at the pleasure of, the Secretary; and

‘(B) shall not be otherwise employed by the Federal Government.

‘(4) CHAIRPERSON- The Board shall select a member of the Board to serve as Chairperson.’.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect 30 days after the date of the enactment of this Act.

(c) EFFECT ON EXISTING BOARD- A member of the Board of Directors of the Federal Crop Insurance Corporation on the effective date specified in subsection (b) may continue to serve as a member of the Board until the earlier of the following:

(1) The date the replacement Board is appointed.

(2) The end of the 180-day period beginning on the effective date specified in subsection (b).

SEC. 302. PROMOTION OF SUBMISSION OF POLICIES AND RELATED MATERIALS.

(a) REIMBURSEMENT AUTHORITY- Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)), as amended by section 105(a) of this Act, is amended by inserting after paragraph (5) the following new paragraph:

‘(6) REIMBURSEMENT OF RESEARCH, DEVELOPMENT, AND MAINTENANCE COSTS-

‘(A) REIMBURSEMENT PROVIDED- Subject to the conditions of this paragraph, the Corporation shall provide a payment to reimburse an applicant for research, development, and maintenance costs directly related to a policy or other material that is--

‘(i) submitted to, and approved by, the Board under this subsection for reinsurance; and

‘(ii) if applicable, offered for sale to producers.

‘(B) DURATION- Payments under subparagraph (A) may be made available beginning in fiscal year 2001. Payments with respect to the maintenance of an approved policy or other material may be provided for a period of not more than 4 reinsurance years following Board approval. Upon the expiration of that 4-year period, or earlier upon the agreement of the Corporation and the person receiving the payment, the Corporation shall assume responsibility for maintenance of a successful policy, as determined by the Corporation based on the market share attained by the policy, the total number of policies sold, the total amount of premium paid, and the performance of the policy in the States where the policy is sold.

‘(C) TREATMENT OF PAYMENT- Payments made under subparagraph (A) for a policy or other material shall be considered as payment in full for the research and development conducted with regard to the policy or material and any property rights to the policy or material.

‘(D) REIMBURSEMENT AMOUNT- The Corporation shall determine the amount of the payment under subparagraph (A) for an approved policy or other material based on the complexity of the policy or material and the size of the area in which the policy or material is expected to be used.’.

(b) ISSUANCE OF REGULATIONS- Not later than October 1, 2000, the Corporation shall issue final regulations to carry out the amendment made by subsection (a).

SEC. 303. RESEARCH AND DEVELOPMENT, INCLUDING CONTRACTS REGARDING UNDERSERVED COMMODITIES.

(a) SUPPORT FOR PRIVATE RESEARCH AND DEVELOPMENT- Section 508(m) of the Federal Crop Insurance Act (7 U.S.C. 1508(m)) is amended by adding at the end the following new paragraph:

‘(4) PRIVATE RESEARCH AND DEVELOPMENT OF POLICIES AND OTHER MATERIALS-

‘(A) USE OF REIMBURSEMENT AUTHORITY- To encourage and promote the necessary research and development for policies, plans of insurance, and related materials, including policies, plans, and materials under the livestock pilot programs under subsection (h)(10), the Corporation shall make full use of private resources by providing payment for research and development for approved policies and plans of insurance, and related materials, pursuant to subsection (h)(6).

‘(B) CONTRACTS FOR UNDERSERVED COMMODITIES- In the event the Corporation determines that an agricultural commodity, including a specialty crop, is not adequately served by policies and plans of insurance and related materials submitted under subsection (h) or any other provision of this title, the Corporation may enter into a contract with any person or entity with experience in crop insurance or farm or ranch risk management, including universities, providers of crop insurance, and trade and research organizations, to carry out research and development for policies and plans of insurance and related materials for that agricultural commodity without regard to the limitations contained in this title. A contract entered into under this subparagraph may not take effect before October 1, 2000.

‘(C) USE OF RESULTING POLICIES AND PLANS- The Corporation may offer any policy or plan of insurance developed under subparagraph (B) that is approved by the Board.’.

(b) RELIANCE ON PRIVATE DEVELOPMENT OF NEW POLICIES- Section 508(m)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(m)(2)) is amended--

(1) by striking ‘EXCEPTION- No action’ and inserting--

‘(2) EXCEPTIONS-

‘(A) PRIVATE AVAILABILITY- No action’; and--

(2) by adding at the end the following new subparagraph:

‘(B) PROHIBITED RESEARCH AND DEVELOPMENT BY CORPORATION- Notwithstanding paragraph (1), on and after October 1, 2000, the Corporation shall not conduct research and development for any new policy or plan of insurance for an agricultural commodity offered under this title. Any policy, plan of insurance, or other material developed by the Corporation under paragraph (1) before that date shall, at the discretion of the Corporation, continue to be offered for sale to producers consistent with paragraph (4), except that such policies, plans of insurance, or other material shall be considered to have satisfied the private contracting requirements of such paragraph.’.

SEC. 304. FUNDING FOR REIMBURSEMENT AND RESEARCH AND DEVELOPMENT.

(a) EXPENDITURES- Section 508(h)(6) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(6)), as added by section 302(a) of this Act, is amended by adding at the end the following new subparagraph:

‘(E) EXPENDITURES-

‘(i) UNDERSERVED COMMODITIES- Of the total amount made available to provide payments under this paragraph and subsection (m)(4)(B) for a fiscal year, $10,000,000 shall be reserved for research and development contracts under subsection (m)(4)(B). The Corporation may use a portion of the reserved amount for other purposes under this paragraph if the Corporation determines that the entire amount is not needed for such contracts or, if the reserved amount is insufficient for a fiscal year, may use amounts in excess of the reserved amount for such contracts.

‘(ii) LIMITATION- In providing payments under this paragraph and subsection (m)(4)(B), the Corporation shall not obligate or expend more than $55,000,000 during any fiscal year. ’.

(b) FUNDING-

(1) AUTHORIZATION OF APPROPRIATIONS- Section 516(a)(2) of the Federal Crop Insurance Act (7 U.S.C. 1516(a)(2)) is amended by adding at the end the following new subparagraph:

‘(D) Costs associated with the reimbursement for research, development, and maintenance costs of approved policies and other materials provided under section 508(h)(6) and contracting for research and development under section 508(m)(4)(B).’.

(2) USE OF INSURANCE FUND- Section 516(b)(1) of the Federal Crop Insurance Act (7 U.S.C. 1516(b)(1)) is amended by adding at the end the following new subparagraph:

‘(E) Reimbursement for research, development, and maintenance costs of approved policies and other materials provided under section 508(h)(6) and contracting for research and development under section 508(m)(4)(B).’.

SEC. 305. BOARD CONSIDERATION OF SUBMITTED POLICIES AND MATERIALS.

(a) PERSONS AUTHORIZED TO SUBMIT- Section 508(h)(1) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(1)) is amended by inserting after ‘a person’ the following: ‘(including an approved insurance provider, a

college or university, a cooperative or trade association, or any other person)’.

(b) SALE BY APPROVED INSURANCE PROVIDERS- Section 508(h)(3) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(3)) is amended by inserting after ‘for reinsurance’ the following: ‘by approved insurance providers’.

(c) TIME PERIODS FOR APPROVAL OR DISAPPROVAL- Section 508(h)(4)(A) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(4)(A)), as amended by section 105(c), is amended--

(1) in clause (iii), as redesignated by section 105(c), by striking ‘of the applicant.’ and all that follows through the end of the clause and inserting ‘, and such application, as modified, shall be considered by the Board in the manner provided in clause (iv) within the 30-day period beginning on the date the modified application is submitted. Any notification of intent to disapprove a policy or other material submitted under this subsection shall be accompanied by a complete explanation as to the reasons for the Board’s intention to deny approval.’; and

(2) by striking clause (iv), as redesignated by section 105(c), and inserting the following new clause:

‘(iv) Not later than 120 days after a policy or other material is submitted under this subsection, the Board shall make a determination to approve or disapprove such policy or material. Any determination by the Board to disapprove any policy or other material shall be accompanied by a complete explanation of the reasons for the Board’s decision to deny approval. In the event the Board fails to make a determination within the prescribed time period, the submitted policy or other material shall be deemed approved by the Board for the initial reinsurance year designated for the policy or material, except in the case where the Board and the applicant agree to an extension.’.

(d) FUNDING TO EXPEDITE CONSIDERATION- Effective October 1, 2000, section 516(b)(2) of the Federal Crop Insurance Act (7 U.S.C. 1516(b)(2)) is amended--

(1) by striking ‘RESEARCH AND DEVELOPMENT EXPENSES- ’ and inserting ‘(2) POLICY CONSIDERATION EXPENSES- ’; and

(2) in subparagraph (A), by striking ‘research and development expenses of the Corporation’ and inserting ‘costs associated with considering for approval or disapproval policies and other materials under subsections (h) and (m)(4) of section 508, costs associated with implementing such subsection (m)(4), and costs to contract out for assistance in considering such policies and other materials’.

SEC. 306. CONTRACTING FOR RATING OF PLANS OF INSURANCE.

Section 507(c)(2) of the Federal Crop Insurance Act (7 U.S.C. 1507(c)(2)) is amended--

(1) by striking ‘actuarial, loss adjustment,’ and inserting ‘actuarial services, services relating to loss adjustment and rating plans of insurance,’; and

(2) by inserting after ‘private sector’ the following: ‘and to enable the Corporation to concentrate on regulating the provision of insurance under this title and evaluating new products and materials submitted under section 508(h)’.

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