[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4217 Engrossed in House (EH)]

103d CONGRESS
  2d Session
                                H. R. 4217

_______________________________________________________________________

                                 AN ACT


 
 To reform 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, AND DEFINITIONS.

    (a) Short Title.--This Act may be cited as the ``Federal Crop 
Insurance Reform Act of 1994''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title, table of contents, and definitions.
Sec. 2. Members of Board of Directors of Federal Crop Insurance 
                            Corporation.
Sec. 3. General powers of Corporation.
Sec. 4. Personnel.
Sec. 5. General authority to offer crop insurance.
Sec. 6. Catastrophic risk protection, buy-up levels, premiums, and 
                            yield determinations.
Sec. 7. Preparation of policies, claims, and reinsurance.
Sec. 8. Authorization of appropriations and crop insurance fund.
Sec. 9. Advisory Committee.
Sec. 10. Noninsured crop disaster assistance.
Sec. 11. Crop insurance requirements under price support programs.
Sec. 12. Elimination of gender references.
Sec. 13. GAO crop insurance provider study.
Sec. 14. Effective date.
    (c) Definitions.--Section 502 of the Federal Crop Insurance Act (7 
U.S.C. 1502) is amended--
            (1) by striking the section heading and ``Sec. 502.'' and 
        inserting the following:

``SEC. 502. PURPOSE AND DEFINITIONS.

    ``(a) Purpose.--''; and
            (2) by adding at the end the following new subsection:
    ``(b) Definitions.--For purposes of this title:
            ``(1) Secretary.--The term `Secretary' means the Secretary 
        of Agriculture.
            ``(2) Corporation.--The term `Corporation' means the 
        Federal Crop Insurance Corporation established under section 
        503.
            ``(3) Board.--The term `Board' means the Board of Directors 
        of the Corporation established under section 505(a).
            ``(4) Loss ratio.--The term `loss ratio' means the ratio of 
        all sums paid by the Corporation as indemnities under all crop 
        insurance policies to that of the premiums designated for 
        anticipated losses and a reasonable reserve, not including the 
        portion of the premiums designated for operating and 
        administrative expenses.
            ``(5) Transitional yield.--The term `transitional yield' 
        means the maximum average production per acre or equivalent 
        measure that is assigned to acreage for a crop year by the 
        Corporation in accordance with its regulations whenever the 
        producer fails--
                    ``(A) to certify that acceptable documentation of 
                production and acreage for that crop year is in the 
                producer's possession; or
                    ``(B) to present such acceptable documentation upon 
                the demand of the Corporation or an insurance company 
                reinsured by the Corporation.''.
    (d) Conforming Amendments.--The Federal Crop Insurance Act (7 
U.S.C. 1501 et seq.) is amended--
            (1) in section 503 (7 U.S.C. 1503), by striking ``(herein 
        called the Corporation)''; and
            (2) in section 505(a) (7 U.S.C. 1505(a)), by striking 
        ``(hereinafter called the `Board')''.

SEC. 2. MEMBERS OF BOARD OF DIRECTORS OF FEDERAL CROP INSURANCE 
              CORPORATION.

    Section 505(a) of the Federal Crop Insurance Act (7 U.S.C. 1505(a)) 
is amended in the second sentence--
            (1) by striking ``or Assistant Secretary'' the first place 
        it appears; and
            (2) by striking ``the Under Secretary or Assistant 
        Secretary of Agriculture responsible for the farm credit 
        programs of the Department of Agriculture'' and inserting ``one 
        additional Under Secretary of Agriculture (as designated by the 
        Secretary of Agriculture)''.

SEC. 3. GENERAL POWERS OF CORPORATION.

    (a) Claims Settlement.--Section 506 of the Federal Crop Insurance 
Act (7 U.S.C. 1506) is amended--
            (1) by redesignating subsections (j), (k), (l), (m), and 
        (n) as subsections (k), (l), (m), (n), and (o), respectively; 
        and
            (2) by inserting after subsection (i) the following new 
        subsection:
    ``(j) Claims Settlement.--The Corporation shall have the authority 
to make final and conclusive settlement and adjustment of any claims 
made by or against the Corporation or the accounts of its fiscal 
officers.''.
    (b) Regulations; Preemption.--Subsection (e) of such section is 
amended--
            (1) by striking ``governing'' and inserting ``to carry out 
        this title and to govern''; and
            (2) by adding at the end the following new sentence: 
        ``State and local laws or rules shall not apply to rules and 
        regulations adopted by the Corporation to the extent that such 
        rules and regulations so provide or to the extent that State 
        and local laws or rules are inconsistent with such rules and 
        regulations.''.
    (c) Definition of Substantial Beneficial Interest.--Subsection (m) 
of such section (as redesignated by subsection (a)(1)) is amended in 
paragraph (4) by striking ``5 percent'' and inserting ``10 percent''.
    (d) Penalty for False Information.--Subsection (n) of such section 
(as redesignated by subsection (a)(1)) is amended in paragraph (1) by 
striking subparagraph (B) and inserting the following new subparagraph:
                    ``(B) disqualify the person--
                            ``(i) from purchasing catastrophic risk 
                        protection under section 508(b) or 
                        participating in the noninsured assistance 
                        program under section 519 for a period not to 
                        exceed 2 years; and
                            ``(ii) from receiving any other benefit 
                        under this title for a period not to exceed 10 
                        years.''.
    (e) Actuarial Soundness.--Subsection (o) of such section (as 
redesignated by subsection (a)(1)) is amended--
            (1) in paragraph (1), by striking ``beginning farmers from 
        obtaining adequate Federal crop insurance, as determined by the 
        Corporation'' and inserting ``beginning farmers, as determined 
        by the Secretary, from obtaining Federal crop insurance'';
            (2) in paragraph (3), by striking ``and'' at the end of the 
        paragraph;
            (3) by redesignating paragraph (4) as paragraph (5); and
            (4) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) establishing a database that contains social security 
        numbers or employee identification numbers of insurance agents 
        and adjusters and using the numbers to identify agents and 
        adjusters who are high risk for actuarial purposes, and for 
        other purposes permitted by law; and''.
    (f) Regulatory and Paperwork Reduction.--Such section is further 
amended by adding at the end the following new subsection:
    ``(p) Regulatory and Paperwork Reduction.--
            ``(1) Catastrophic risk protection.--In developing and 
        carrying out the policies and procedures for catastrophic risk 
        protection under section 508(b), the Corporation shall 
        minimize, to the maximum extent practicable, the paperwork 
        required and the complexity and costs of procedures governing 
        the application for, and the processing and servicing of, 
        catastrophic risk protection.
            ``(2) Other plans.--To the extent that the policies and 
        procedures developed under paragraph (1) may be applied to 
        other plans of insurance offered under this title without 
        jeopardizing the actuarial soundness or integrity of the crop 
        insurance program under this title, the Corporation shall apply 
        the policies and procedures to the other plans of insurance 
        within a reasonable period of time (as determined by the 
        Corporation) after the effective date of this paragraph.
            ``(3) Solicitation of cost information and cost-reduction 
        proposals.--
                    ``(A) Cost information.--The Corporation shall 
                solicit from private insurance providers and agents 
                information regarding--
                            ``(i) their average cost per policy of 
                        complying with requirements, regulations, 
                        procedures, and processes under this title; and
                            ``(ii) the data upon which such costs are 
                        determined.
                    ``(B) Cost-reduction proposals.--The Corporation 
                shall also solicit from private insurance providers and 
                agents proposals for modifying or altering the 
                requirements, regulations, procedures, and processes 
                under this title to reduce their total average cost per 
                policy.
                    ``(C) Report.--By June 1, 1995, the Corporation 
                shall submit a report to Congress containing the 
                information received under subparagraph (A) and an 
                evaluation of the cost-reduction proposals received 
                under subparagraph (B).
            ``(4) Cost reduction plan.--
                    ``(A) Plan required.--Subject to the condition that 
                the Corporation maintain the integrity of the crop 
                insurance program under this title, the Corporation 
                shall include in the report required under paragraph 
                (3) a plan to reduce the average cost per policy 
                incurred by private insurance providers and agents to 
                comply with requirements, regulations, procedures, and 
                processes under this title. To the extent practicable, 
                the Corporation shall set a target percentage by which 
                such costs should be reduced.
                    ``(B) Implementation of plan.--Not later than 60 
                days after submitting the report required under 
                paragraph (3), and in accordance with the plan 
                contained in the report, the Corporation shall adopt 
                such measures consistent with maintaining the integrity 
                of the crop insurance program under this title as the 
                Corporation determines are appropriate--
                            ``(i) to improve Corporation liaison with 
                        policyholders and private insurance providers; 
                        and
                            ``(ii) to reduce the average cost per 
                        policy to meet the target percentage set by the 
                        Corporation.''.
    (g) Improved Program Compliance.--Such section is further amended 
by inserting after subsection (p) (as added by subsection (f)) the 
following new subsection:
    ``(q) Program Compliance.--
            ``(1) Timeliness.--The Corporation shall work actively with 
        private insurance providers to address program compliance and 
        integrity issues as such issues develop.
            ``(2) Notification of compliance problems.--The Corporation 
        shall notify in writing any private insurance provider with 
        whom the Corporation has an agreement under this title of any 
        error, omission, or failure to follow Corporation regulations 
        or procedures for which the private insurance provider may be 
        responsible and which may result in a debt owed the 
        Corporation. Such notice shall be given within 3 years of the 
        end of the insurance period during which the error, omission, 
        or failure is alleged to have occurred, except that such time 
        limit shall not apply with respect to errors, omissions, or 
        procedural violations that are willful or intentional. The 
        failure to timely provide the notice required under this 
        subsection shall relieve the private insurance provider from 
        the debt owed the Corporation.''.

SEC. 4. PERSONNEL.

    Section 507 of the Federal Crop Insurance Act (7 U.S.C. 1507) is 
amended--
            (1) in subsection (a), by striking ``, and county crop 
        insurance committeemen'';
            (2) in subsection (c), by striking ``, in which case the 
        agent or broker'' in the first sentence and all that follows 
        through the period at the end of the second sentence and 
        inserting the following: ``, except that the rate established 
        by the Board to reimburse approved insurance providers and 
        agents for their administrative and operating costs shall not 
        exceed, for the 1997 crop year, 29 percent of the premium used 
        to define loss ratio under section 502, and for the 1998 and 
        1999 crops, such reimbursement rate shall not exceed 28 percent 
        of the premium used to define loss ratio under section 502. 
        Consistent with the provisions of section 506(p), the Board 
        shall provide regulatory relief to such approved insurance 
        providers and agents in an amount proportional to the reduction 
        in the reimbursement rate established by the Board for the 
        1997, 1998, and 1999 crop years. No action shall be taken which 
        would jeopardize program integrity, enhance opportunities for 
        fraud or abuse, hinder program expansion or diminish quality of 
        service to customers.'';
            (3) in subsection (d), by striking ``, except that'' and 
        all that follows through the period at the end of the 
        subsection and inserting a period; and
            (4) by adding at the end the following new subsection:
    ``(g) Specialty Crops Coordinator.--The Corporation shall establish 
a senior-level position to be known as the Specialty Crops Coordinator. 
The Specialty Crops Coordinator shall have primary responsibility for 
addressing the needs of specialty crop producers and for providing 
information and advice in connection with the Corporation's activities 
to improve and expand the insurance program for specialty crops. In 
carrying out such responsibility, the Specialty Crops Coordinator shall 
act as the Corporation's liaison with representatives of specialty crop 
producers and provide the Corporation with the producers' knowledge, 
expertise, and familiarity with risk management and production issues 
pertaining to specialty crops. The Specialty Crops Coordinator shall 
also use information collected from Corporation field office directors 
in States in which specialty crops have a significant economic effect 
and from other sources, including the extension service and colleges 
and universities.''.

SEC. 5. GENERAL AUTHORITY TO OFFER CROP INSURANCE.

    (a) General Authority to Offer Insurance.--Subsection (a) of 
section 508 of the Federal Crop Insurance Act (7 U.S.C. 1508) is 
amended to read as follows:
    ``(a) Authority To Offer Insurance.--
            ``(1) General authority and losses covered.--If sufficient 
        actuarial data are available, as determined by the Board, the 
        Corporation may insure (or provide reinsurance for insurers of) 
        producers of agricultural commodities grown in the United 
        States under any plan or plans of insurance determined by the 
        Board to be adapted to the agricultural commodity involved. To 
        qualify for coverage under these plans of insurance, the losses 
        of the insured commodity shall be due to drought, flood, or 
        other natural disaster, as determined by the Secretary.
            ``(2) Period of coverage.--Except in the case of tobacco, 
        insurance shall not extend beyond the period the insured 
        commodity is in the field. For the purpose of the foregoing 
        sentence, in the case of aquacultural species, the term `field' 
        means the environment in which the commodity is produced.
            ``(3) Exclusions.--Insurance provided under this section 
        shall not cover losses--
                    ``(A) due to the neglect or malfeasance of the 
                producer;
                    ``(B) due to the failure of the producer to reseed 
                to the same crop in those areas and under such 
                circumstances where it is customary to reseed; or
                    ``(C) due to the failure of the producer to follow 
                good farming practices, as determined by the 
                Corporation.
            ``(4) Expansion to other areas or single producers.--
                    ``(A) Area expansion.--The Corporation may offer 
                plans of insurance or reinsurance for production of 
                agricultural commodities in the Commonwealth of Puerto 
                Rico, the Virgin Islands of the United States, Guam, 
                American Samoa, the Commonwealth of the Northern 
                Mariana Islands, and the Trust Territory of the Pacific 
                Islands in the same manner as provided in this section 
                for production of agricultural commodities in the 
                United States.
                    ``(B) Producer expansion.--In areas in the United 
                States or specified in subparagraph (A) where crop 
                insurance is not available for a particular 
                agricultural commodity, the Corporation may offer to 
                enter into a written agreement with an individual 
                producer operating in that area for insurance coverage 
                under this title if the producer has actuarially sound 
                data relating to the producer's production of that 
                commodity and such data is acceptable to the 
                Corporation.
            ``(5) Dissemination of crop insurance information.--The 
        Corporation shall make available to producers through local 
        offices of the Department of Agriculture--
                    ``(A) current and complete information on all 
                aspects of Federal crop insurance; and
                    ``(B) a listing of insurance agents and companies 
                offering to sell crop insurance in their area.
            ``(6) Addition of new and specialty crops.--
                    ``(A) Data collection.--Not later than 6 months 
                after the date of the enactment of this paragraph, the 
                Secretary shall issue guidelines for publication in the 
                Federal Register for data collection to assist the 
                Corporation in formulating crop insurance policies for 
                new and specialty crops.
                    ``(B) Addition of new crops.--Not later than 1 year 
                after the date of the enactment of this paragraph, and 
                annually thereafter, the Corporation shall report to 
                Congress on the progress and expected timetable for 
                expanding crop insurance coverage under this title to 
                new and specialty crops.
                    ``(C) Addition of direct sale perishable crops.--
                Not later than 1 year after the date of the enactment 
                of this paragraph, the Corporation shall report to 
                Congress on the feasibility of offering a crop 
                insurance program designed to meet the needs of 
                specialized producers of vegetables and other 
                perishable crops who market through direct marketing 
                channels.''.
    (b) Report on Improving Dissemination of Crop Insurance 
Information.--Not later than 6 months after the date of the enactment 
of this Act, the Federal Crop Insurance Corporation shall submit a 
report to Congress containing a plan to implement a sound program for 
producer education regarding the crop insurance program and for the 
dissemination of crop insurance information to producers, as required 
by section 508(a)(5) of the Federal Crop Insurance Act. Subsequent 
reports on the progress of the implementation of the program shall be 
submitted to Congress in 1996 and 1997.

SEC. 6. CATASTROPHIC RISK PROTECTION, BUY-UP COVERAGE, PREMIUMS, AND 
              YIELD DETERMINATIONS.

    (a) In General.--Section 508 of the Federal Crop Insurance Act (7 
U.S.C. 1508) is amended--
            (1) by striking subsections (c), (e), (f), (g), (h), (i), 
        (l), (m), and (n);
            (2) by redesignating subsections (b) and (d) as subsections 
        (h) and (i), respectively; and
            (3) by inserting after subsection (a) the following new 
        subsections:
    ``(b) Catastrophic Risk Protection.--
            ``(1) Catastrophic risk protection required.--The 
        Corporation shall offer to producers of agricultural 
        commodities grown in the United States a catastrophic risk 
        protection plan to indemnify a producer for crop losses due to 
        loss of yield or prevented planting resulting from drought, 
        flood, or other natural disaster, as determined by the 
        Secretary, if the producer is unable to plant other crops for 
        harvest on that acreage for that crop year.
            ``(2) Amount of coverage.--
                    ``(A) In general.--Subject to subparagraph (B), 
                under catastrophic risk protection, the Corporation 
                shall offer producers--
                            ``(i) coverage equal to 50 percent loss in 
                        yield (determined on an area or individual 
                        yield basis as described in subsection (g)) 
                        indemnified at 60 percent of the expected 
                        market price of the commodity (as determined by 
                        the Corporation); or
                            ``(ii) other coverage established by the 
                        Corporation that is comparable to the coverage 
                        described in clause (i).
                    ``(B) Reduction in actual payment.--The amount paid 
                to a producer on a claim under catastrophic risk 
                protection may reflect a reduction that is proportional 
                to the out-of-pocket expenses that are not incurred by 
                the producer as a result of not planting, growing, or 
                harvesting the crop for which the claim is made, as 
                determined by the Corporation.
            ``(3) Yield and loss basis.--Producers shall have the 
        option of purchasing catastrophic risk protection based on 
        either an individual yield and loss basis or on an area yield 
        and loss basis, as described in subsection (g), when both 
        options are offered by the Corporation.
            ``(4) Application.--To participate in catastrophic risk 
        protection, producers shall submit an application at the local 
        office of the Department of Agriculture or to a private 
        insurance provider approved by the Corporation.
            ``(5) Administrative fee.--
                    ``(A) Fee required.--Producers shall pay an 
                administrative fee for catastrophic risk protection. 
                The administrative fee for each producer shall be $50 
                per crop per county, but not to exceed $200 per 
                producer per county up to a maximum of $600 per 
                producer for all counties in which a producer has 
                insured crops. The administrative fee shall be paid by 
                the producer at the time the producer applies for 
                catastrophic risk protection.
                    ``(B) Waiver of fee.--The Corporation shall waive 
                the administrative fee for limited resource farmers, as 
                defined by the Corporation.
                    ``(C) Use of fees.--There are authorized to be 
                appropriated from fees required under subparagraph (A) 
                such sums as may be necessary for operating and 
                administrative expenses incurred for the delivery of 
                catastrophic risk protection.
            ``(6) Coverage of all crops.--To be eligible for benefits 
        under any commodity price support, production adjustment, or 
        conservation program administered by the Department of 
        Agriculture, or for the farmer loan programs of the Farmers 
        Home Administration or any successor of that agency, a producer 
        must obtain at least catastrophic risk protection for each crop 
        of economic significance produced on each farm in any county in 
        which the producer has an interest, if insurance is available 
        in the county for those crops. For purposes of this paragraph, 
        the term `crop of economic significance' means a crop that has 
        contributed, or is expected to contribute, 10 percent or more 
        of the total expected value of all crops grown by the producer.
            ``(7) Coverage under one policy.--If a producer applies for 
        catastrophic risk protection for a crop produced by the 
        producer in a county, the producer shall be required to secure 
        such protection under a single policy.
            ``(8) Authority to limit catastrophic risk protection.--The 
        Board may limit the availability of catastrophic risk 
        protection in any county or area, or on any farm, on the basis 
        of the insurance risk involved.
            ``(9) Transitional coverage for 1995 crops.--Effective only 
        for the 1995 crops and for which the sales period for crop 
        insurance expires before the date of the enactment of the 
        Federal Crop Insurance Reform Act of 1994, the Corporation 
        shall allow producers of such crops until at least the end of 
        the 6-month period beginning on such date to obtain 
        catastrophic risk protection for such crops. Upon the enactment 
        of such Act, producers who made timely purchases of a crop 
        insurance policy before the date of the enactment of such Act, 
        under the provisions then in effect, shall be eligible for the 
        same benefits to which a producer would be entitled under 
        comparable buy-up coverage under subsection (c).
    ``(c) Coverage Levels Greater Than Catastrophic Risk Protection.--
            ``(1) Buy-up coverage generally.--The Corporation shall 
        offer to producers of agricultural commodities grown in the 
        United States plans of crop insurance providing levels of 
        coverage greater than that available under catastrophic risk 
        protection under subsection (b). Plans of insurance under this 
        subsection shall be known as `buy-up coverage'. Producers shall 
        apply to private insurance providers approved by the 
        Corporation for purchase of buy-up coverage if such coverage is 
        available from private insurance providers. If buy-up coverage 
        is unavailable privately, the Corporation may offer buy-up 
        coverage plans of insurance directly to producers. If a 
        producer applies for catastrophic risk protection at an office 
        of the Department of Agriculture but then elects to purchase 
        buy-up coverage under this subsection, the insurance file for 
        that producer shall be transferred to the approved private 
        insurance provider servicing the buy-up coverage policy.
            ``(2) Administrative fee.--
                    ``(A) Fee required.--If a producer elects to 
                purchase buy-up coverage for a crop at a level less 
                than 65 percent of the recorded or appraised average 
                yield indemnified at 100 percent of the expected market 
                price, or an equivalent coverage, the producer shall 
                pay an administrative fee for such buy-up coverage. 
                Subsection (b)(5) shall apply in determining the amount 
                and use of the administrative fee or in determining 
                whether to waive the administrative fee.
                    ``(B) Exception.--If a producer elects to purchase 
                buy-up coverage for a crop equal to 65 percent or more 
                of the recorded or appraised average yield indemnified 
                at 100 percent of the expected market price, or an 
                equivalent coverage, the producer shall not be subject 
                to the administrative fee required by this paragraph or 
                subsection (b)(5). If the producer has already paid the 
                administrative fee for a lower level of coverage for 
                that crop, the administrative fee shall be refunded to 
                the producer unless the refund would reduce to less 
                than $200 the total amount of the administrative fees 
                paid by the producer for 2 or more crops in the same 
                county for which a lower level of coverage is obtained.
            ``(3) Yield and loss basis.--Producers shall have the 
        option of purchasing buy-up coverage based on either an 
        individual yield and loss basis or on an area yield and loss 
        basis, as described in subsection (g), when both options are 
        offered by the Corporation.
            ``(4) Yield elections.--Yield coverage shall be made 
        available to the producer on the basis of any yield election 
        that equals or is less than 85 percent of the individual yield 
        or 95 percent of the area yield, as determined by the 
        Corporation.
            ``(5) Price levels.--
                    ``(A) In general.--The Corporation shall establish 
                a price level for each commodity on which buy-up 
                coverage is offered that--
                            ``(i) shall not be less than the expected 
                        market price for the commodity, as determined 
                        by the Corporation; or
                            ``(ii) at the discretion of the 
                        Corporation, may be based on the actual market 
                        price at the time of harvest, as determined by 
                        the Corporation.
                    ``(B) Special rule for malting barley.--For malting 
                barley covered by a contract between a producer and a 
                processor, the Corporation may offer a plan of 
                insurance that allows the producer to select the 
                contract price as the price election if--
                            ``(i) the contract is definite as to the 
                        quantity and the price;
                            ``(ii) the producer submits a copy of the 
                        contract with the application for insurance 
                        prior to the sales closing date for the crop;
                            ``(iii) coverage does not exceed the 
                        quantity contained in the contract;
                            ``(iv) the contracted quantity does not 
                        exceed the production guarantee;
                            ``(v) the contract is usual and customary 
                        in form and content for the area;
                            ``(vi) the processor is completely 
                        independent from the producer; and
                            ``(vii) the processor does not have an 
                        insurable interest in the crop.
            ``(6) Price elections.--Subject to paragraph (10), 
        insurance coverage shall be made available to the producer on 
        the basis of any price election that equals or is less than 
        that established by the Board.
            ``(7) Level of coverage.--Not later than the beginning of 
        the 1996 crop year, the level of coverage shall be quoted in 
        terms of dollars per acre.
            ``(8) Reduction in actual payment.--The amount paid to a 
        producer on a claim under buy-up coverage may reflect a 
        reduction that is proportional to the out-of-pocket expenses 
        that are not incurred by the producer as a result of not 
        planting, growing, or harvesting the crop for which the claim 
        is made, as determined by the Corporation.
            ``(9) Fire and hail coverage.--For levels of buy-up 
        coverage equal to 65 percent or more of the recorded or 
        appraised average yield indemnified at 100 percent of the 
        expected market price, or an equivalent coverage, the producer 
        may elect to delete from the buy-up coverage any coverage 
        against damage caused by fire and hail if the producer obtains 
        an equivalent or greater dollar amount of coverage for damage 
        caused by fire and hail from a private insurance provider. Upon 
        written notice of such election to the company issuing the 
        policy providing buy-up coverage and submission of evidence of 
        substitute coverage on the commodity insured, the producer's 
        premium shall be reduced by an amount determined by the 
        Corporation to be actuarially appropriate, taking into account 
        the actuarial value of the remaining coverage provided by the 
        Corporation. In no event shall the producer be given credit for 
        an amount of premium determined to be greater than the 
        actuarial value of the protection against losses caused by fire 
        and hail that is included in the buy-up coverage for the crop.
            ``(10) Limitations on buy-up coverage.--The Board may limit 
        the availability of buy-up coverage under this subsection in 
        any county or area, or on any farm, on the basis of the 
        insurance risk involved. The Board shall not offer buy-up 
        coverage equal to less than 50 percent of the recorded or 
        appraised average yield indemnified at 100 percent of the 
        expected market price, or an equivalent coverage.
    ``(d) Premiums.--
            ``(1) Premiums required.--The Corporation shall fix 
        adequate premiums for all its plans of insurance at such rates 
        as the Board deems actuarially sufficient to attain an expected 
        loss ratio of not greater than 1.1.
            ``(2) Premium amounts.--The premium amounts for 
        catastrophic risk protection under subsection (b) and buy-up 
        coverage under subsection (c) shall be fixed as follows:
                    ``(A) In the case of catastrophic risk protection, 
                the amount of the premium shall be sufficient to cover 
                anticipated losses and a reasonable reserve.
                    ``(B) In the case of buy-up coverage below 65 
                percent of the recorded or appraised average yield 
                indemnified at 100 percent of the expected market 
                price, or an equivalent coverage, but greater than 50 
                percent of the recorded or appraised average yield 
                indemnified at 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, that is less than the amount 
                        established for coverage at 65 percent of the 
                        recorded or appraised average yield indemnified 
                        at 100 percent of the expected market price, or 
                        an equivalent coverage.
                    ``(C) In the case of buy-up coverage equal to or 
                greater than 65 percent of the recorded or appraised 
                average yield indemnified at 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 
                        percent of the amount of the premium used to 
                        define loss ratio under section 502.
            ``(3) Premium reduction.--If a private insurance provider 
        determines that it may provide insurance more efficiently than 
        the expense reimbursement amount established by the 
        Corporation, the private insurance provider may reduce, subject 
        to the approval of the Corporation, the premium charged the 
        insured by an amount corresponding to such efficiency. The 
        private insurance provider shall apply to the Corporation for 
        authority to reduce the premium before making such a reduction, 
        and the reduction shall be subject to the rules, limitations, 
        and procedures established by the Corporation.
            ``(4) Individual and area crop insurance coverage.--The 
        Corporation shall allow approved insurance providers to offer 
        to producers a plan of insurance that combines both individual 
        yield coverage and area yield coverage at a premium rate 
        determined by the provider, subject to the following 
        conditions:
                    ``(A) The individual yield coverage shall be equal 
                to or greater than catastrophic risk protection, as 
                described in subsection (b).
                    ``(B) The combined policy shall include area yield 
                coverage that is offered by the Corporation or similar 
                area coverage, as determined by the Corporation.
                    ``(C) The Corporation shall provide reinsurance on 
                the area yield portion of the combined policy at the 
                request of the provider, except that the provider shall 
                agree to pay to the producer any portion of the area 
                yield and loss indemnity payment received from the 
                Corporation or a commercial reinsurer that exceeds the 
                individual indemnity payment made by the provider to 
                the producer.
                    ``(D) The Corporation shall pay a part of the 
                premium equivalent to--
                            ``(i) the amount authorized under 
                        subsection (e)(2) (except provisions regarding 
                        operating and administrative expenses); and
                            ``(ii) the amount of operating and 
                        administrative expenses authorized by the 
                        Corporation for the area yield coverage portion 
                        of the combined policy.
                    ``(E) The provider shall provide all underwriting 
                services for the combined policy, including the 
                determination of individual yield coverage premium 
                rates, the terms and conditions of the policy, and the 
                acceptance and classification of applicants into risk 
                categories, subject to subparagraph (F).
                    ``(F) The Corporation shall approve the combined 
                policy unless the Corporation determines that the 
                policy is not actuarially sound or that the interests 
                of producers are not adequately protected.''.
    ``(e) Payment of Portion of Premium by Corporation.--
            ``(1) In general.--For the purpose of encouraging the 
        broadest possible participation of producers in the 
        catastrophic risk protection provided under subsection (b) and 
        the buy-up coverage provided under subsection (c), the 
        Corporation shall pay a part of the premium in the amounts 
        provided in this subsection.
            ``(2) Amount of payment.--The amount of the premium to be 
        paid by the Corporation shall be as follows:
                    ``(A) In the case of catastrophic risk protection, 
                the amount shall be equivalent to the premium 
                established for catastrophic risk protection under 
                subsection (d)(2)(A).
                    ``(B) In the case of coverage below 65 percent of 
                the recorded or appraised average yield indemnified at 
                100 percent of the expected market price, or an 
                equivalent coverage, but greater than 50 percent of the 
                recorded or appraised average yield indemnified at 100 
                percent of the expected market price, or an equivalent 
                coverage, the amount shall be equivalent to the amount 
                of premium established for catastrophic risk protection 
                coverage and the amount of operating and administrative 
                expenses established under subsection (d)(2)(B).
                    ``(C) In the case of coverage equal to or greater 
                than 65 percent of the recorded or appraised average 
                yield indemnified at 100 percent of the expected market 
                price, or an equivalent coverage, on an individual or 
                area basis, the amount shall be equivalent to an amount 
                equal to the premium established for 50 percent loss in 
                yield indemnified at 75 percent of the expected market 
                price and the amount of operating and administrative 
                expenses established under subsection (d)(2)(C).
            ``(3) State subsidy authorized.--The Board may enter into 
        agreements with any State or agency of a State under which the 
        State or agency may pay to the approved insurance provider an 
        additional premium subsidy to further reduce the portion of the 
        premium paid by producers in the State.
    ``(f) Eligibility Requirements.--
            ``(1) Persons eligible.--Except as otherwise provided in 
        this title, no producer may be denied insurance under this 
        section if the producer meets the definition of person, as 
        defined by the Secretary. In the case of plans of insurance 
        under this title other than catastrophic risk protection, the 
        definition of person shall include a producer who is over 18 
        years of age or older and has a bona fide insurable interest in 
        a crop as an owner, owner-operator, landlord, tenant, or 
        sharecropper.
            ``(2) Sales closing date.--A producer who desires to obtain 
        catastrophic risk protection under subsection (b) or buy-up 
        coverage under subsection (c) for a crop shall submit an 
        application by the sales closing date for the crop. The 
        Corporation shall establish sales closing dates to maximize 
        convenience to producers in obtaining benefits under commodity 
        price support and production adjustment programs of the 
        Department whenever feasible; except that, in establishing such 
        dates, the Corporation shall ensure that the goal of actuarial 
        soundness for the crop insurance program under this title is 
        met. Beginning with the 1995 crop year, the Corporation shall 
        establish for each insurable crop a sales closing date that is 
        30 days earlier than the corresponding sales closing date that 
        was established for the 1994 crop year.
            ``(3) Records and reporting.--To obtain catastrophic risk 
        protection under subsection (b) or buy-up coverage under 
        subsection (c), a producer shall--
                    ``(A) provide, to the extent required by the 
                Corporation, records acceptable to the Corporation of 
                historical acreage and production of the crops for 
                which the insurance is sought or accept a yield 
                determined by the Corporation; and
                    ``(B) report acreage planted and prevented from 
                planting by the designated acreage reporting date for 
                that crop and location as established by the 
                Corporation.
            ``(4) Limitation on multiple benefits for same loss.--If a 
        producer who is eligible to receive benefits under catastrophic 
        risk protection under subsection (b) or noninsured crop 
        disaster assistance under section 519 is also eligible to 
        receive assistance for the same loss under any other program 
        administered by the Secretary, the producer shall be required 
        to elect whether to receive benefits under this title or under 
        such other program, but not both. A producer who purchases buy-
        up coverage under subsection (c) may also receive assistance 
        for the same loss under other programs administered by the 
        Secretary, except that the amount received for the loss under 
        the buy-up coverage together with the amount received under 
        such other programs may not exceed the amount of the producer's 
        actual loss.
    ``(g) Yield Coverage Determinations.--
            ``(1) In general.--The Corporation shall implement crop 
        insurance underwriting rules that ensure that yield coverage, 
        as specified in this subsection, is provided to eligible 
        producers obtaining catastrophic risk protection under 
        subsection (b) or buy-up coverage under subsection (c).
            ``(2) Individual yield basis.--
                    ``(A) Actual production history.--The Corporation 
                shall determine yield coverage using the producer's 
                actual production history over a period of not less 
                than the 4 previous consecutive crop years and not more 
                than 10 consecutive crop years. Subject to subparagraph 
                (B), the yield for insurance purposes for the year for 
                which insurance is sought shall be equal to the average 
                of the producer's actual production history during the 
                period considered.
                    ``(B) Assignment of yield.--Except as provided in 
                subparagraphs (C) and (D), if a producer does not 
                submit adequate documentation of production history to 
                determine crop yield under subparagraph (A), the 
                Corporation shall assign to the producer a yield equal 
                to not less than 65 percent of the transitional yield 
                of the producer (adjusted to reflect actual production 
                reflected in the records acceptable to the Corporation 
                for continuous years), as specified in regulations 
                issued by the Corporation based on production history 
                requirements.
                    ``(C) Pilot program of assigned yields for new 
                producers.--
                            ``(i) Program required.--For each of the 
                        1995 and 1996 crop years, the Corporation shall 
                        carry out a pilot program to assign to eligible 
                        new producers higher assigned yields than would 
                        otherwise be assigned to such producers under 
                        subparagraph (B). The Corporation shall include 
                        in the pilot program 30 counties that are 
                        determined by the Corporation to be adequate to 
                        provide a comprehensive evaluation of the 
                        feasibility, effectiveness, and demand among 
                        new producers for increased assigned yields.
                            ``(ii) Increased assigned yields.--In the 
                        case of an eligible new producer participating 
                        in the pilot program, the Corporation shall 
                        assign to the new producer a yield equal to not 
                        less than 110 percent of the transitional yield 
                        otherwise established by the Corporation.
                            ``(iii) Eligible new producer.--The 
                        Secretary shall establish a definition of new 
                        producer for purposes of determining 
                        eligibility to participate in the pilot 
                        program.
                    ``(D) Alternative assigned yields for producers of 
                feed or forage.--
                            ``(i) Feed or forage yields.--For the first 
                        crop year for which an eligible producer 
                        described in clause (ii) obtains catastrophic 
                        risk protection under subsection (b) or buy-up 
                        coverage under subsection (c) for a feed or 
                        forage crop, the Corporation shall assign to 
                        the producer a yield equal to not less than 80 
                        percent of the transitional yield established 
                        by the Corporation (adjusted to reflect the 
                        actual production history of the producer) if 
                        the producer does not provide satisfactory 
                        evidence of the yield under subparagraph (A). 
                        For not more than three additional years, the 
                        Corporation shall provide the producer with a 
                        yield based on the greater of--
                                    ``(I) the producer's actual 
                                production history for the preceding 
                                year (or years if available); and
                                    ``(II) the assigned yield 
                                determined under this clause.
                            ``(ii) Eligible producers.--An eligible 
                        producer referred to in clause (i) is a 
                        producer that, as determined by the Secretary--
                                    ``(I) grows the insured feed or 
                                forage crop primarily for on-farm use 
                                in a livestock, dairy, or poultry 
                                operation; and
                                    ``(II) derives over 50 percent of 
                                the producer's gross farm income from 
                                the livestock, dairy, or poultry 
                                operation.
                            ``(iii) Termination of authority.--The 
                        authority provided by this subparagraph shall 
                        apply only during the 1995 through 1998 crop 
                        years.
            ``(3) Area yield basis.--The Corporation may offer a crop 
        insurance plan based on an area yield that allows an insured 
        producer to qualify for an indemnity if a loss occurs in an 
        area, as specified by the Corporation, in which the farm of the 
        producer is located. Under an area yield plan, an insured 
        producer shall be allowed to select the level of area 
        production at which an indemnity will be paid consistent with 
        the terms and conditions established by the Corporation.
            ``(4) Commodity-by-commodity basis.--A producer may choose 
        between either individual yield or area yield coverage, where 
        available, on a commodity-by-commodity basis.''.
    (b) Conforming Amendments.--
            (1) Repeal of existing crop insurance yield coverage.--
        Section 508A of the Federal Crop Insurance Act (7 U.S.C. 1508A) 
        is repealed.
            (2) Preemption.--Section 511 of such Act (7 U.S.C. 1511) is 
        amended by adding at the end the following sentence: ``The 
        Corporation's contracts of insurance and the contracts of 
        insurance reinsured by the Corporation shall be exempt from 
        taxation imposed by any State, municipality, or local taxing 
        authority.''.
            (3) Persons under 21 years of age.--Section 520 of such Act 
        (7 U.S.C. 1520) is repealed.

SEC. 7. PREPARATION OF POLICIES, CLAIMS, AND REINSURANCE.

    (a) Submission of Policies.--Subsection (h) of section 508 of the 
Federal Crop Insurance Act (7 U.S.C. 1508), as redesignated by section 
6(a)(2), is amended--
            (1) in paragraph (1), by striking ``subsection (a)'' and 
        inserting ``subsection (c)''; and
            (2) by striking paragraphs (2), (3), and (4) and inserting 
        the following new paragraphs:
            ``(2) Submission of policies.--A policy or other material 
        submitted to the Board under this subsection may be prepared 
        without regard to the limitations contained in this title, 
        including the requirements concerning the levels of coverage 
        and rates and the requirement that a price level for each 
        commodity insured must equal the expected market price for the 
        commodity as established by the Board. In the case of such a 
        policy, the payment by the Corporation of a portion of the 
        premium of the policy may not exceed the amount that would 
        otherwise be authorized under subsection (e).
            ``(3) Review and approval by the board.--A policy or other 
        material submitted to the Board under this subsection shall be 
        reviewed by the Board and, if the Board finds that the 
        interests of producers are adequately protected and that any 
        premiums charged to such producers are actuarially appropriate, 
        shall be approved by the Board for reinsurance and for sale to 
        producers as an additional choice at actuarially appropriate 
        rates and under appropriate terms and conditions. The 
        Corporation may enter into more than one reinsurance agreement 
        with the private insurance provider simultaneously to 
        facilitate the offering of such new policies.
            ``(4) Guidelines for submission and review.--The 
        Corporation shall issue regulations to establish guidelines for 
        the submission and Board review of policies or other material 
        submitted to the Board under this subsection. At a minimum, the 
        guidelines shall ensure the following:
                    ``(A) Proposals submitted to the Board under this 
                subsection shall be considered as confidential 
                commercial or financial information for purposes of 
                section 552(b)(4) of title 5, United States Code, until 
                approved by the Board. Proposals disapproved by the 
                Board shall remain confidential commercial or financial 
                information.
                    ``(B) The Board shall provide an applicant with the 
                opportunity to present the proposal to the Board in 
                person if the applicant so desires.
                    ``(C) The Board shall provide an applicant with 
                notification of intent to disapprove a proposal not 
                later than 30 days prior to taking such action. An 
                applicant that receives such notification may modify 
                such application, and such modification shall be 
                considered an original application for purposes of this 
                paragraph.
                    ``(D) Specific guidelines shall deal with the 
                timing of submission of proposals under this subsection 
                and timely consideration by the Board so that any 
                approved proposal may be made available to all persons 
                reinsured by the Corporation in a manner permitting 
                them to participate, if they so desire, in offering 
                such a proposal in the first crop year in which it is 
                approved by the Board for reinsurance, premium subsidy, 
                or other support offered by this title.
            ``(5) Required publication.--Any policies, provisions of 
        policies, and rates approved under this subsection shall be 
        published as a notice in the Federal Register and made 
        available to all persons contracting with or reinsured by the 
        Corporation under the same terms and conditions as between the 
        Corporation and the person originally submitting the policy or 
        other material.''.
    (b) Claims for Losses and Reinsurance.--Section 508 of the Federal 
Crop Insurance Act (7 U.S.C. 1508) is further amended--
            (1) by redesignating subsections (j) and (k) as subsections 
        (l) and (m), respectively; and
            (2) inserting after subsection (i), as redesignated by 
        section 6(a)(2), the following new subsections:
    ``(j) Claims for Losses.--
            ``(1) In general.--Under rules prescribed by the 
        Corporation, the Corporation may provide for adjustment and 
        payment of claims for losses. The rules prescribed by the 
        Corporation shall establish standards to ensure that all claims 
        for losses are adjusted, to the extent practicable, in a 
        uniform and timely manner.
            ``(2) Denial of claims.--
                    ``(A) In general.--Subject to subparagraph (B), if 
                a claim for indemnity is denied by the Corporation, an 
                action on the claim may be brought against the 
                Corporation or Secretary only in the United States 
                district court for the district in which the insured 
                farm is located.
                    ``(B) Statute of limitations.--A suit on the claim 
                may be brought not later than 1 year after the date on 
                which written notice of denial of the claim is provided 
                to the claimant.
            ``(3) Indemnification.--The Corporation shall provide 
        private insurance providers with indemnification, including 
        costs and reasonable attorney fees incurred by the private 
        insurance provider, due to errors or omissions on the part of 
        the Corporation.
    ``(k) Reinsurance.--Notwithstanding any other provision of this 
title, the Corporation shall, to the maximum extent practicable, 
provide reinsurance to insurers approved by the Corporation that insure 
producers of any agricultural commodity under a plan or plans 
acceptable to the Corporation. Such reinsurance shall be provided upon 
such terms and conditions as the Board may determine to be consistent 
with subsections (b) and (c) and sound reinsurance principles. The 
Corporation's reinsurance agreements with the reinsured companies shall 
require the reinsured companies to bear a sufficient share of any 
potential loss under such agreement so as to ensure that the reinsured 
company will sell and service policies of insurance in a sound and 
prudent manner, taking into consideration the financial condition of 
the reinsured companies and the availability of private reinsurance.''.
    (c) Cross References.--
            (1) Claims for losses.--Section 506(d) of the Federal Crop 
        Insurance Act (7 U.S.C. 1506(d)) is amended in the first 
        sentence by striking ``section 508(f)'' and inserting ``section 
        508(j)''.
            (2) Submission of materials to board.--Section 507(c) of 
        such Act (7 U.S.C. 1507(c)) is amended in the last sentence by 
        striking ``section 508(b)'' and inserting ``section 508(h)''.
            (3) Definition of agricultural commodity.--Section 518 of 
        such Act (7 U.S.C. 1518) is amended by striking ``or (k)'' and 
        inserting ``or (m)''.

SEC. 8. AUTHORIZATION OF APPROPRIATIONS AND CROP INSURANCE FUND.

    Section 516 of the Federal Crop Insurance Act (7 U.S.C. 1516) is 
amended to read as follows:

``SEC. 516. FUNDING.

    ``(a) Authorization of Appropriations for Corporation Salaries and 
Agent Commissions.--There are hereby authorized to be appropriated such 
sums as are necessary to cover the salaries and administrative expenses 
of the Corporation and the administrative and operating expenses of the 
Corporation for the sales commissions of agents.
    ``(b) Crop Insurance Fund.--
            ``(1) Establishment.--There is hereby established an 
        insurance fund for deposit of premiums collected under section 
        508(d), income from reinsurance operations, and appropriations 
        made available under paragraph (2).
            ``(2) Authorization of appropriations.--There are hereby 
        authorized to be appropriated such sums as may be necessary to 
        carry out the purposes of the insurance fund.
    ``(c) Purposes of Insurance Fund.--In such aggregate amount as is 
provided in advance in appropriations Acts, the Corporation may use 
amounts in the insurance fund to pay the following:
            ``(1) Beginning with the 1998 crop year, the administrative 
        and operating expenses of approved insurance providers, other 
        than expenses for which funds are authorized to be appropriated 
        under subsection (a).
            ``(2) All other expenses of the Corporation (other than 
        expenses for which funds are authorized to be appropriated 
        under subsection (a)), including all premium subsidies and 
        indemnities.
            ``(3) For the 1995, 1996, and 1997 crop years, all 
        administrative and expense reimbursements due under a 
        reinsurance agreement with an approved private insurance 
        provider.
            ``(4) Expenses incurred by the Corporation to carry out 
        research and development.
    ``(d) Purchase of American-Made Equipment and Products.--
            ``(1) Sense of congress.--It is the sense of the Congress 
        that, to the greatest extent practicable, all equipment and 
        products purchased by the Corporation using funds made 
        available to the Corporation should be American-made.
            ``(2) Notice requirement.--In providing financial 
        assistance to, or entering into any contract with, any entity 
        for the purchase of equipment and products to carry out this 
        title, the Corporation, to the greatest extent practicable, 
        shall provide to such entity a notice describing the statement 
        made in paragraph (1) by the Congress.''.

SEC. 9. ADVISORY COMMITTEE.

    The Federal Crop Insurance Act is amended by inserting after 
section 514 (7 U.S.C. 1514) the following new section:

``SEC. 515. ADVISORY COMMITTEE FOR FEDERAL CROP INSURANCE.

    ``(a) Establishment and Termination.--The Secretary may establish 
within the Department of Agriculture an advisory committee to be known 
as the Advisory Committee for Federal Crop Insurance. If established, 
the Advisory Committee shall remain in existence until September 30, 
1998.
    ``(b) Primary Responsibility.--The primary responsibility of the 
Advisory Committee shall be to advise the Secretary on the 
implementation of this title and on other issues related to crop 
insurance, as determined by the Manager.
    ``(c) Membership.--The Advisory Committee shall be composed of the 
Manager of the Corporation, the Secretary (or a designee of the 
Secretary), and not less than 12 members representing organizations and 
agencies involved in the provision of crop insurance under this title. 
Not less than 3 of the members of the Advisory Committee shall be 
representatives of the specialty crops industry. The organizations or 
agencies represented by members on the Advisory Committee may include 
insurance companies, insurance agents, farm producer organizations, 
experts on agronomic practices, and banking and lending institutions.
    ``(d) Administrative Provisions.--
            ``(1) Terms.--Members of the Advisory Committee shall be 
        appointed by the Secretary for a term of up to 2 years from 
        nominations made by the organizations and agencies specified in 
        subsection (c). The terms of the members shall be staggered.
            ``(2) Chairperson.--The Advisory Committee shall be chaired 
        by the Manager of the Corporation.
            ``(3) Meetings.--The Advisory Committee shall meet at least 
        annually. The meetings of the Advisory Committee shall be 
        publicly announced in advance and shall be open to the public. 
        Appropriate records of the activities of the Advisory Committee 
        shall be kept and made available to the public on request.
    ``(e) Reports.--Not later than June 30 of each year, the Advisory 
Committee shall submit to the Secretary a report specifying its 
conclusions and recommendations regarding--
            ``(1) the progress toward implementation of the provisions 
        of this title;
            ``(2) the actuarial soundness of the Federal crop insurance 
        program;
            ``(3) the rate of producer participation in both 
        catastrophic risk protection under section 508(b) and buy-up 
        coverage under section 508(c); and
            ``(4) the progress toward improved crop insurance coverage 
        for new and specialty crops.''.

SEC. 10. NONINSURED CROP DISASTER ASSISTANCE.

    (a) In General.--Section 519 of the Federal Crop Insurance Act (7 
U.S.C. 1519) is amended to read as follows:

``SEC. 519. NONINSURED CROP DISASTER ASSISTANCE PROGRAM.

    ``(a) Establishment of Program.--
            ``(1) Establishment.--In the case of an eligible crop 
        described in paragraph (2), the Corporation shall establish a 
        noninsured crop disaster assistance program to provide coverage 
        equivalent to the catastrophic risk protection otherwise 
        available under section 508(b).
            ``(2) Eligible crops.--
                    ``(A) In general.--For purposes of this section, 
                the term `eligible crop' means each commercial crop or 
                other agricultural commodity (except livestock)--
                            ``(i) for which catastrophic risk 
                        protection under section 508(b) is not 
                        available; and
                            ``(ii) which is produced for food or fiber.
                    ``(B) Crops specifically included.--The term 
                `eligible crop' shall include floricultural, ornamental 
                nursery, and Christmas tree crops and turfgrass sod.
            ``(3) Cause of loss.--To qualify for assistance under this 
        section, the losses of the noninsured commodity shall be due to 
        drought, flood, or other natural disaster, as determined by the 
        Secretary.
    ``(b) Application for Noninsured Crop Disaster Assistance.--
            ``(1) Timely application.--To be eligible for assistance 
        under this section, producers shall submit an application for 
        noninsured crop disaster assistance at a local office of the 
        Department of Agriculture. The application shall be in such 
        form, contain such information, and be submitted at such time 
        as the Corporation may require.
            ``(2) Records and reports.--To obtain noninsured crop 
        disaster assistance, a producer shall--
                    ``(A) provide records acceptable to the Corporation 
                of historical acreage and production of the eligible 
                crops for which assistance is sought or accept a yield 
                determined by the Corporation; and
                    ``(B) report acreage planted and prevented from 
                planting by the designated acreage reporting date for 
                that crop and location as established by the 
                Corporation.
            ``(3) Exclusions.--Noninsured crop disaster assistance 
        under this section shall not cover losses due to--
                    ``(A) the neglect or malfeasance of the producer;
                    ``(B) the failure of the producer to reseed to the 
                same crop in those areas and under such circumstances 
                where it is customary to reseed; or
                    ``(C) the failure of the producer to follow good 
                farming practices, as determined by the Corporation.
            ``(4) Revenue limitation.--A person who has qualifying 
        gross revenues in excess of $2,000,000 annually, as determined 
        by the Secretary, shall not be eligible to receive any 
        noninsured crop disaster assistance payments. For purposes of 
        this section, the term `qualifying gross revenues' means--
                    ``(A) if a majority of the person's gross revenue 
                is received from farming, ranching, and forestry 
                operations, the gross revenue from the person's 
                farming, ranching, and forestry operations; and
                    ``(B) if less than a majority of the person's gross 
                revenue is received from farming, ranching, and 
                forestry operations, the person's gross revenue from 
                all sources.
    ``(c) Loss Requirements.--
            ``(1) Required area loss.--A producer of an eligible crop 
        shall not receive noninsured crop disaster assistance unless 
        the average yield for that crop, or an equivalent measure in 
        the event yield data are not available, in an area falls below 
        65 percent of the expected area yield, as established by the 
        Corporation.
            ``(2) Prevented planting.--Subject to paragraph (1), the 
        Corporation shall make a prevented planting noninsured crop 
        disaster assistance payment if the producer is prevented from 
        planting more than 35 percent of the acreage intended for the 
        eligible crop because of drought, flood, or other natural 
        disaster, as determined by the Secretary.
            ``(3) Reduced yields.--Subject to paragraph (1), the 
        Corporation shall make a reduced yield noninsured crop disaster 
        assistance payment if the total quantity of the eligible crop 
        that a producer is able to harvest on any farm is, because of 
        drought, flood, or other natural disaster as determined by the 
        Secretary, less than 50 percent of the expected individual 
        yield for the crop, as determined by the Corporation, factored 
        for the producer's interest for the crop.
    ``(d) Payments.--
            ``(1) Reduced yields.--If the producer is eligible for 
        reduced yield noninsured crop disaster assistance, payments 
        shall be made for farm losses in excess of 50 percent of the 
        established farm yield for the eligible crop indemnified at 60 
        percent of the average market price for that crop, or a 
        comparable coverage as determined by the Corporation. Any 
        eligible crop that is produced with significant and variable, 
        post-planting expenses, the payment shall be reduced to reflect 
        reduced production costs and harvesting costs if the crop is 
        not harvested.
            ``(2) Prevented planting.--If the producer is eligible for 
        a prevented planting payment under this section, the amount 
        paid to the producer on a claim under this section may reflect 
        a reduction that is proportional to the out-of-pocket expenses 
        that are not incurred by the producer as a result of not 
        planting, growing, or harvesting the crop for which the claim 
        is made, as determined by the Corporation.
    ``(e) Yield Determinations.--
            ``(1) Establishment.--The Corporation shall establish farm 
        yields for purposes of providing noninsured crop disaster 
        assistance under this section.
            ``(2) Actual production history.--The Corporation shall 
        determine yield coverage using the producer's actual production 
        history over a period of not less than the 4 previous 
        consecutive crop years and not more than 10 consecutive crop 
        years. Subject to paragraph (3), the yield for the year in 
        which noninsured crop disaster assistance is sought shall be 
        equal to the average of the producer's actual production 
        history during the period considered.
            ``(3) Assignment of yield.--If a producer does not submit 
        adequate documentation of production history to determine a 
        crop yield under paragraph (2), the Corporation shall assign to 
        the producer a yield equal to not less than 65 percent of the 
        transitional yield of the producer (adjusted to reflect actual 
        production reflected in the records acceptable to the 
        Corporation for continuous years), as specified in regulations 
        issued by the Corporation based on production history 
        requirements.
            ``(4) Prohibition on assigned yields in certain counties.--
        If the acreage of a crop in a county has increased by more than 
        100 percent since the 1987 crop year, a producer who produces 
        that crop on a farm located in that county may not obtain an 
        assigned yield under paragraph (3). Instead, the producer must 
        provide detailed documentation of production costs, acres 
        planted, and yield (as required by the Corporation) to become 
        eligible for a noninsured assistance payment.
            ``(5) Limitation on receipt of subsequent assigned yield.--
        A producer who receives an assigned yield for the current year 
        of a natural disaster because required production records were 
        not submitted to the local office of the Department shall not 
        be eligible for an assigned yield for the year of the next 
        natural disaster unless the required production records of the 
        previous 1 or more years (as applicable) are provided to the 
        local office.
            ``(6) Yield variations due to different farming 
        practices.--The Corporation shall ensure that noninsured crop 
        disaster assistance accurately reflects significant yield 
        variations due to different farming practices, such as between 
        irrigated and nonirrigated acreage.
    ``(f) Payment of Losses.--Payments for noninsured crop disaster 
assistance losses under this section shall be made from the insurance 
fund established under section 516. Such losses shall not be included 
in calculating the premiums charged to producers for insurance under 
section 508.
    ``(g) Payment Limitations.--The total amount of payments that a 
person shall be entitled to receive annually under this section may not 
exceed $100,000. For purposes of applying this limitation, the 
Secretary shall issue regulations defining the term `person' that shall 
conform, to the extent practicable, to the regulations defining 
`person' issued under section 1001 of the Food Security Act of 1985 (7 
U.S.C. 1308).''.
    (b) Conforming Amendments.--
            (1) Existing emergency crop loss assistance program.--
        Effective July 1, 1995, chapter 3 of subtitle B of title XXII 
        of the Food, Agriculture, Conservation, and Trade Act of 1990 
        (7 U.S.C. 1421 note) is amended by striking subchapter A.
            (2) Emergency appropriations.--Effective July 1, 1995, the 
        Balanced Budget and Emergency Deficit Control Act of 1985 is 
        amended--
                    (A) in section 251(b)(2)(D)(i) (2 U.S.C. 
                901(b)(2)(D)(i)), by adding at the end the following 
                new sentence: ``The preceding sentence shall not apply 
                to appropriations to cover agricultural crop disaster 
                assistance.''; and
                    (B) in section 252(e) (2 U.S.C. 902(e)), by adding 
                at the end the following new sentence: ``The preceding 
                sentence shall not apply to direct spending provisions 
                to cover agricultural crop disaster assistance.''.

SEC. 11. CROP INSURANCE REQUIREMENTS UNDER PRICE SUPPORT PROGRAMS.

    (a) Rice.--Section 101B(c) of the Agricultural Act of 1949 (7 
U.S.C. 1441-2(c)) is amended--
            (1) by striking paragraph (1)(F); and
            (2) by striking paragraph (2) and inserting in lieu thereof 
        the following:
            ``(2) Crop insurance requirement.--As a condition of 
        receiving any benefit (including payments) under this section, 
        a producer must obtain at least catastrophic risk protection 
        insurance coverage under section 508(b) of the Federal Crop 
        Insurance Act for the crop and crop year in which the benefit 
        is sought, if such coverage is offered by the Federal Crop 
        Insurance Corporation.''.
    (b) Extra Long Staple Cotton.--Section 103(h) of the Agricultural 
Act of 1949 (7 U.S.C. 1444(h)) is amended--
            (1) by redesignating paragraph (16) as paragraph (17) and 
        moving the margin 2 ems to the left; and
            (2) by inserting after paragraph (15) the following new 
        paragraph:
    ``(16) Crop Insurance Requirement.--As a condition of receiving any 
benefit (including payments) under this section, a producer must obtain 
at least catastrophic risk protection insurance coverage under section 
508(b) of the Federal Crop Insurance Act for the crop and crop year in 
which the benefit is sought, if such coverage is offered by the Federal 
Crop Insurance Corporation.''.
    (c) Upland Cotton.--Section 103B(c) of the Agricultural Act of 1949 
(7 U.S.C. 1444-2(c)) is amended--
            (1) by striking paragraph (1)(F); and
            (2) by striking paragraph (2) and inserting in lieu thereof 
        the following:
            ``(2) Crop insurance requirement.--As a condition of 
        receiving any benefit (including payments) under this section, 
        a producer must obtain at least catastrophic risk protection 
        insurance coverage under section 508(b) of the Federal Crop 
        Insurance Act for the crop and crop year in which the benefit 
        is sought, if such coverage is offered by the Federal Crop 
        Insurance Corporation.''.
    (d) Feed Grains.--Section 105B(c) of the Agricultural Act of 1949 
(7 U.S.C. 1444f(c)) is amended--
            (1) by striking paragraph (1)(G); and
            (2) by striking paragraph (2) and inserting in lieu thereof 
        the following:
            ``(2) Crop insurance requirement.--As a condition of 
        receiving any benefit (including payments) under this section, 
        a producer must obtain at least catastrophic risk protection 
        insurance coverage under section 508(b) of the Federal Crop 
        Insurance Act for the crop and crop year in which the benefit 
        is sought, if such coverage is offered by the Federal Crop 
        Insurance Corporation.''.
    (e) Tobacco.--Section 106 of the Agricultural Act of 1949 (7 U.S.C. 
1445) is amended by striking subsection (e) and inserting in lieu 
thereof the following:
    ``(e) Crop Insurance Requirement.--As a condition of receiving any 
benefit (including payments) under this section, a producer must obtain 
at least catastrophic risk protection insurance coverage under section 
508(b) of the Federal Crop Insurance Act for the crop and crop year in 
which the benefit is sought, if such coverage is offered by the Federal 
Crop Insurance Corporation.''.
    (f) Wheat.--Section 107B(c) of the Agricultural Act of 1949 (7 
U.S.C. 1444b-3a(c)) is amended--
            (1) by striking paragraph (1)(G); and
            (2) by striking paragraph (2) and inserting in lieu thereof 
        the following:
            ``(2) Crop insurance requirement.--As a condition of 
        receiving any benefit (including payments) under this section, 
        a producer must obtain at least catastrophic risk protection 
        insurance coverage under section 508(b) of the Federal Crop 
        Insurance Act for the crop and crop year in which the benefit 
        is sought, if such coverage is offered by the Federal Crop 
        Insurance Corporation.''.
    (g) Peanuts.--Section 108B of the Agricultural Act of 1949 (7 
U.S.C. 1445c-3) is amended--
            (1) by redesignating subsection (h) as subsection (i); and
            (2) by inserting after subsection (g) the following new 
        subsection:
    ``(h) Crop Insurance Requirement.--As a condition of receiving any 
benefit (including payments) under this section, a producer must obtain 
at least catastrophic risk protection insurance coverage under section 
508(b) of the Federal Crop Insurance Act for the crop and crop year in 
which the benefit is sought, if such coverage is offered by the Federal 
Crop Insurance Corporation.''.
    (h) Oilseeds.--Section 205 of the Agricultural Act of 1949 (7 
U.S.C. 1446f) is amended--
            (1) by redesignating subsection (n) as subsection (o); and
            (2) by inserting after subsection (m) the following new 
        subsection:
    ``(n) Crop Insurance Requirement.--As a condition of receiving any 
benefit (including payments) under this section, a producer must obtain 
at least catastrophic risk protection insurance coverage under section 
508(b) of the Federal Crop Insurance Act for the crop and crop year in 
which the benefit is sought, if such coverage is offered by the Federal 
Crop Insurance Corporation.''.
    (i) Sugar.--Section 206 of the Agricultural Act of 1949 (7 U.S.C. 
1446g) is amended--
            (1) by redesignating subsection (j) as subsection (k); and
            (2) by inserting after subsection (i) the following new 
        subsection:
    ``(j) Crop Insurance Requirement.--As a condition of receiving any 
benefit (including payments) under this section, a producer must obtain 
at least catastrophic risk protection insurance coverage under section 
508(b) of the Federal Crop Insurance Act for the crop and crop year in 
which the benefit is sought, if such coverage is offered by the Federal 
Crop Insurance Corporation.''.
    (j) Honey.--Section 207 of the Agricultural Act of 1949 (7 U.S.C. 
1446h) is amended--
            (1) by redesignating subsection (j) as subsection (k); and
            (2) by inserting after subsection (i) the following new 
        subsection:
    ``(j) Crop Insurance Requirement.--As a condition of receiving any 
benefit (including payments) under this section, a producer must obtain 
at least catastrophic risk protection insurance coverage under section 
508(b) of the Federal Crop Insurance Act for the crop and crop year in 
which the benefit is sought, if such coverage is offered by the Federal 
Crop Insurance Corporation.''.
    (k) Disaster Payments.--Section 208 of the Agricultural Act of 1949 
(7 U.S.C. 1446i) is repealed.

SEC. 12. ELIMINATION OF GENDER REFERENCES.

    (a) Management of Corporation.--Section 505 of the Federal Crop 
Insurance Act (7 U.S.C. 1505) is amended--
            (1) in subsection (a), by striking the third sentence and 
        inserting ``The Board shall be appointed by, and hold office at 
        the pleasure of, the Secretary. The Secretary shall not be a 
        member of the Board.''; and
            (2) in subsection (d)--
                    (A) by striking ``upon him''; and
                    (B) by striking ``He shall be appointed by,'' and 
                inserting ``The manager shall be appointed by,''.
    (b) Personnel.--Section 507 of such Act (7 U.S.C. 1507) is 
amended--
            (1) in subsection (a), by striking ``as he may determine: 
        Provided, That'' and inserting ``as the Secretary may determine 
        appropriate. However,''; and
            (2) in subsection (d), by striking ``as he may request'' 
        and inserting ``that the Secretary requests''.
    (c) Indemnities Exempt From Levy.--Section 509 of such Act (7 
U.S.C. 1509) is amended by striking ``or his estate'' and inserting 
``or the estate of the insured''.

SEC. 13. GAO CROP INSURANCE PROVIDER STUDY.

    (a) The General Accounting Office shall, within 2 years of 
enactment, investigate the contractual relationships between the 
Federal Crop Insurance Corporation and approved insurance providers to 
determine the quality, costs and efficiency of the provision of 
multiperil crop insurance to producers of agricultural commodities 
covered under the Federal Crop Insurance Act. The study shall be 
completed in two parts. The first, to be completed within one year of 
enactment, shall examine the currently available data to make the 
determinations required by this section. The second part shall examine 
the changes that occur because of expansion of the program as 
participation increases.
    (b) This study shall include, but not be limited to, an 
investigation of providers' actual cost of delivery of multiperil crop 
insurance for which providers receive reimbursement from the 
Corporation, cost differences for different provider firm sizes, and 
changes in cost resulting from expansion of the program. The study 
shall also compare delivery costs of multiperil crop insurance to other 
insurance coverage that the provider may sell and identify any cross-
subsidization from federally reimbursed delivery to delivery costs of 
other insurance coverage.
    (c) The study shall assess, to the extent practicable, alternative 
methods of reimbursing delivery costs to providers. In addition, the 
study shall identify unnecessary expenditure, if any, required by the 
Corporation for compliance and program integrity.
    (d) In addition, the study shall include, but not be limited to, 
the provisions of the standard reinsurance agreement between the 
Corporation and approved providers including the risk transferred to 
Corporation under the terms of the agreement, the return on providers' 
capital, a determination of the return on capital relative to 
differences in provider firm size, and a determination of the return on 
providers' capital in multiperil crop insurance relative to other 
insurance coverage.
    (e) The study shall assess, to the extent practicable, the 
potential for provider firm concentration in the multiperil crop 
insurance industry and any economic distortions that might occur from 
such concentration.
    (f) In conducting this study, the General Accounting Office shall 
maintain the privacy of provider proprietary information. The General 
Accounting Office shall have full powers to subpoena any required 
information from any provider firm.

SEC. 14. EFFECTIVE DATE.

    Except as provided in section 10(b) and section 13, this Act and 
the amendments made by this Act shall take effect on the date of the 
enactment of this Act and shall apply to the provision of crop 
insurance under the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.) 
beginning with the 1995 crop year. With respect to the 1994 crop year, 
the Federal Crop Insurance Act (as in effect on the day before the date 
of the enactment of this Act) shall continue to apply.

            Passed the House of Representatives August 4, 1994.

            Attest:






                                                                 Clerk.
103d CONGRESS

  2d Session

                               H. R. 4217

_______________________________________________________________________

                                 AN ACT

 To reform the Federal crop insurance program, and for other purposes.