[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 529 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 529

   To amend the Federal Crop Insurance Act to improve crop insurance 
  coverage, to make structural changes to the Federal Crop Insurance 
  Corporation and the Risk Management Agency, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 4, 1999

Mr. Roberts (for himself, Mr. Kerrey, Mr. Craig, Mr. Burns, Mr. Hagel, 
   Mr. Daschle, Mr. Conrad, Mr. Baucus, Mr. Harkin, Mr. Dorgan, Mr. 
  Grassley, and Mr. Johnson) introduced the following bill; which was 
read twice and referred to the Committee on Agriculture, Nutrition, and 
                                Forestry

_______________________________________________________________________

                                 A BILL


 
   To amend the Federal Crop Insurance Act to improve crop insurance 
  coverage, to make structural changes to the Federal Crop Insurance 
  Corporation and the Risk Management Agency, 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 ``Crop Insurance for 
the 21st Century Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                    TITLE I--CROP INSURANCE COVERAGE

Sec. 101. Payment of portion of premium by Corporation.
Sec. 102. Assigned yields.
Sec. 103. Multiyear disaster actual production history adjustment.
Sec. 104. Increasing coverage policy.
Sec. 105. Rating methodologies pilot program.
Sec. 106. Livestock insurance.
TITLE II--FEDERAL CROP INSURANCE CORPORATION AND RISK MANAGEMENT AGENCY

Sec. 201. Board of Directors of Corporation.
Sec. 202. Office of Risk Management.
Sec. 203. Office of Private Sector Partnership.
Sec. 204. Adequate coverage for agricultural commodities.
Sec. 205. Fees for plans of insurance.
Sec. 206. Flexible subsidy pilot program.

                    TITLE I--CROP INSURANCE COVERAGE

SEC. 101. PAYMENT OF PORTION OF PREMIUM BY CORPORATION.

    (a) Expected Market Price.--Section 508(c) of the Federal Crop 
Insurance Act (7 U.S.C. 1508(c)) is amended by striking paragraph (5) 
and inserting the following:
            ``(5) Expected market price.--
                    ``(A) In general.--For the purposes of this title, 
                the Corporation shall establish or approve the price 
                level (referred to in this title as the `expected 
                market price') of each agricultural commodity for which 
                insurance is offered.
                    ``(B) Amount.--The expected market price of an 
                agricultural commodity--
                            ``(i) except as otherwise provided in this 
                        subparagraph, shall be not less than the 
                        projected market price of the agricultural 
                        commodity, as determined by the Corporation;
                            ``(ii) may be based on the actual market 
                        price of the agricultural commodity at the time 
                        of harvest, as determined by the Corporation;
                            ``(iii) in the case of revenue and other 
                        similar plans of insurance, shall be the actual 
                        market price of the agricultural commodity, as 
                        determined by the Corporation; or
                            ``(iv) 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.''.
    (b) Premium Amounts.--Section 508(d)(2) of the Federal Crop 
Insurance Act (7 U.S.C. 1508(d)(2)) is amended by striking subparagraph 
(C) and inserting the following:
                    ``(C) In the case of additional coverage at greater 
                than or equal to 65 percent of the recorded or 
                appraised average yield indemnified at 100 percent of 
                the expected market price, or an equivalent coverage, 
                but less than 75 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 
                        percentage of the amount of the premium used to 
                        define loss ratio.
                    ``(D) In the case of additional coverage equal to 
                or greater than 75 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 
                        percentage of the amount of the premium used to 
                        define loss ratio.''.
    (c) Payment of Portion of Premium by Corporation.--Section 508(e) 
of the Federal Crop Insurance Act (7 U.S.C. 1508(e)) is amended--
            (1) by striking paragraph (1) and inserting the following:
            ``(1) In general.--
                    ``(A) Mandatory payments.--For the purpose of 
                encouraging the broadest possible participation of 
                producers in the crop insurance plans of insurance 
                authorized to be insured or reinsured under subsections 
                (b) and (c), the Corporation shall pay a part of the 
                premium in the amounts determined under this 
                subsection.
                    ``(B) Discretionary payments.--In the case of a 
                plan of insurance approved by the Corporation under 
                subsections (a)(7) and (h), the Corporation may pay a 
                part of the premium in the amounts not to exceed the 
                amounts determined under this subsection.''; and
            (2) in paragraph (2), by striking subparagraphs (B) and (C) 
        and inserting the following:
                    ``(B) In the case of additional coverage 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 amount shall be 
                equal to the sum of--
                            ``(i) 45 percent of the amount of the 
                        premium established under subsection 
                        (d)(2)(B)(i); and
                            ``(ii) the amount of operating and 
                        administrative expenses determined under 
                        subsection (d)(2)(B)(ii).
                    ``(C) In the case of coverage at greater than or 
                equal to 65 percent of the recorded or appraised 
                average yield indemnified at 100 percent of the 
                expected market price, or an equivalent coverage, but 
                less than 75 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 equal to the sum of--
                            ``(i) 50 percent of the amount of the 
                        premium established under subsection 
                        (d)(2)(C)(i); and
                            ``(ii) the amount of operating and 
                        administrative expenses determined under 
                        subsection (d)(2)(C)(ii).
                    ``(D) In the case of coverage equal to or greater 
                than 75 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 
                equal to the sum of--
                            ``(i) 55 percent of the amount of the 
                        premium established for coverage at 75 percent 
                        of the recorded or appraised average yield 
                        indemnified at 100 percent of the expected 
                        market price under subsection (d)(2)(D)(i); and
                            ``(ii) the amount of operating and 
                        administrative expenses determined under 
                        subsection (d)(2)(D)(ii).''.
    (d) Conforming Amendment.--Section 508(h)(2) of the Federal Crop 
Insurance Act (7 U.S.C. 1508(h)(2)) is amended by striking the second 
sentence.

SEC. 102. ASSIGNED YIELDS.

    Section 508(g)(2)(B) of the Federal Crop Insurance Act (7 U.S.C. 
1508(g)(2)(B)) is amended--
            (1) by striking ``assigned a yield'' and inserting 
        ``assigned--
                            ``(i) a yield'';
            (2) by striking the period at the end and inserting ``; 
        or''; and
            (3) by adding at the end the following:
                            ``(ii) a yield determined by the 
                        Corporation, in the case of--
                                    ``(I) a person that has not been 
                                actively engaged in farming for a share 
                                of the production of the insured crop 
                                for more than 2 crop years, as 
                                determined by the Secretary;
                                    ``(II) a producer that produces an 
                                agricultural commodity on land that has 
                                not been farmed by the producer; and
                                    ``(III) a producer that rotates a 
                                crop produced on a farm to a crop that 
                                has not been produced on the farm.''.

SEC. 103. MULTIYEAR DISASTER ACTUAL PRODUCTION HISTORY ADJUSTMENT.

    Section 508(g) of the Federal Crop Insurance Act (7 U.S.C. 1508(g)) 
is amended by adding at the end the following:
            ``(4) Transitional adjustment for disasters.--
                    ``(A) Definition of a producer that has suffered a 
                multiyear disaster.--In this paragraph, the term `a 
                producer that has suffered a multiyear disaster' means 
                a producer that has suffered a natural disaster during 
                at least 3 of the immediately preceding 5 crop years 
                that resulted in a cumulative reduction of at least 25 
                percent in the actual production history of the crop of 
                an agricultural commodity.
                    ``(B) Elimination of certain years of production 
                history.--Effective beginning with the 2000 crop year, 
                for the purpose of calculating the actual production 
                history for a crop of an agricultural commodity, a 
                producer that has suffered a multiyear disaster with 
                respect to the crop may exclude 1 year of production 
                history for each 5 years included in the actual 
                production history calculation of the crop for which 
                the producer purchased crop insurance.
                    ``(C) Corporation's share of changed costs.--In the 
                case of an exclusion under subparagraph (B), in 
                addition to any other authority to pay any portion of 
                premium, the Corporation shall pay--
                            ``(i) the portion of the premium that 
                        represents the increase in premium associated 
                        with the exclusion;
                            ``(ii) all additional indemnities 
                        associated with the exclusion; and
                            ``(iii) any amounts that result from the 
                        difference in the administrative and operating 
                        expenses owed to an approved insurance provider 
                        as the result of an adjustment in actual 
                        production history under this paragraph.
                    ``(D) Increase in actual production history after 
                exclusions.--In the case of a producer that has 
                received an exclusion under subparagraph (B), the 
                Corporation shall not limit the increase of the actual 
                production history based on the producer's actual 
                production of the crop of an agricultural commodity in 
                succeeding crop years until the actual production 
                history for the producer reaches the level for the crop 
                year immediately preceding the first year of the 
                multiyear disaster.
                    ``(E) Termination of exclusion authority.--The 
                authority to apply this paragraph to a producer shall 
                terminate with respect to the first crop year in which 
                crop insurance is available to the producer that 
                adequately insures against natural disasters that occur 
                in multiple crop years, as determined by the 
                Corporation.''.

SEC. 104. INCREASING COVERAGE POLICY.

    Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) 
is amended by striking paragraph (6) and inserting the following:
            ``(6) Increasing coverage policy.--In the case of a plan of 
        insurance that includes coverage for that percentage of 
        coverage that is not covered under other crop insurance plans 
        offered under this title, the Corporation may pay a portion of 
        the premium of the policy in an amount not to exceed the sum 
        of--
                    ``(A) the cost of administrative and operating 
                expenses, as determined by Corporation; and
                    ``(B) the amount authorized under subsection 
                (e)(2)(D)(i).''.

SEC. 105. RATING METHODOLOGIES PILOT PROGRAM.

    (a) In General.--Section 508(h) of the Federal Crop Insurance Act 
(7 U.S.C. 1508(h)) is amended by striking paragraph (8) and inserting 
the following:
            ``(8) Rating methodologies pilot program.--Not later than 
        September 30, 2000, the Office of Risk Management shall--
                    ``(A) review the methodologies that are used to 
                rate plans of insurance under this title; and
                    ``(B) enter into a contract with a person in the 
                private sector to develop new methodologies for rating 
                plans of insurance under this title that take into 
                account the lower risk pool of--
                            ``(i) producers that elect not to 
                        participate in the Federal crop insurance 
                        program established under this title; and
                            ``(ii) producers that elect only to obtain 
                        catastrophic risk protection under subsection 
                        (b).''.
    (b) Conforming Amendment.--Section 507(c) of the Federal Crop 
Insurance Act (7 U.S.C. 1507(c)) is amended in the last sentence by 
striking ``Nothing'' and inserting ``Except as provided in section 
508(h)(8), nothing''.

SEC. 106. LIVESTOCK INSURANCE.

    Section 518 of the Federal Crop Insurance Act (7 U.S.C. 1518) is 
amended by striking ``livestock and''.

TITLE II--FEDERAL CROP INSURANCE CORPORATION AND RISK MANAGEMENT AGENCY

SEC. 201. BOARD OF DIRECTORS OF CORPORATION.

    Section 505 of the Federal Crop Insurance Act (7 U.S.C. 1505) is 
amended by striking subsection (a) and inserting the following:
    ``(a) Board of Directors.--
            ``(1) In general.--The management of the Corporation shall 
        be vested in a Board subject to the general supervision of the 
        Secretary.
            ``(2) Composition.--The Board shall consist of--
                    ``(A) 2 members who are active agricultural 
                producers with or without crop insurance;
                    ``(B) 1 member who is active in the crop insurance 
                business;
                    ``(C) 1 member who is active in the reinsurance 
                business;
                    ``(D) the Under Secretary for Farm and Foreign 
                Agricultural Services;
                    ``(E) the Under Secretary for Rural Development; 
                and
                    ``(F) the Chief Economist of the Department of 
                Agriculture.
            ``(3) Appointment and terms of private sector members.--The 
        members of the Board described in subparagraphs (A), (B), and 
        (C) of paragraph (2)--
                    ``(A) shall be appointed by, and hold office at the 
                pleasure of, the Secretary;
                    ``(B) shall not be otherwise employed by the 
                Federal Government;
                    ``(C) shall be appointed to staggered 4-year terms, 
                as determined by the Secretary; and
                    ``(D) shall serve not more than 2 consecutive 
                terms.
            ``(4) Chairperson.--The Board shall select a member of the 
        Board described in subparagraph (A), (B), or (C) of paragraph 
        (2) to serve as Chairperson of the Board.''.

SEC. 202. OFFICE OF RISK MANAGEMENT.

    Section 226A of the Department of Agriculture Reorganization Act of 
1994 (7 U.S.C. 6933) is amended--
            (1) in subsection (a), by striking ``independent Office of 
        Risk Management'' and inserting ``Office of Risk Management, 
        which shall be under the direction of the Board of Directors of 
        the Federal Crop Insurance Corporation''; and
            (2) in subsection (b), by striking paragraph (1) and 
        inserting the following:
            ``(1) Assistance to the Board in developing, reviewing, and 
        recommending plans of insurance under section 508(a)(7) of the 
        Federal Crop Insurance Act (7 U.S.C. 1508(a)(7)) to ensure that 
        each agricultural commodity (including each new or speciality 
        crop) is adequately served by plans of insurance.''.

SEC. 203. OFFICE OF PRIVATE SECTOR PARTNERSHIP.

    (a) In General.--The Federal Crop Insurance Act is amended by 
inserting after section 507 (7 U.S.C. 1507) the following:

``SEC. 507A. OFFICE OF PRIVATE SECTOR PARTNERSHIP.

    ``(a) Establishment.--The Secretary shall establish and maintain in 
the Department an Office of Private Sector Partnership, which shall be 
under the direction of the Board.
    ``(b) Functions.--The Office shall--
            ``(1) provide at least monthly reports to the Board on crop 
        insurance issues, which shall be based on comments received 
        from producers, approved insurance providers, and other sources 
        that the Office considers appropriate;
            ``(2)(A) review policies and materials with respect to--
                    ``(i) subsidized plans of insurance authorized 
                under section 508; and
                    ``(ii) unsubsidized plans of insurance submitted to 
                the Board under section 508(h); and
            ``(B) make recommendations to the Board with respect to 
        approval of the policies and materials;
            ``(3) administer the reinsurance functions described in 
        section 508(k) on behalf of the Corporation; and
            ``(4) perform such other functions as the Board considers 
        appropriate.
    ``(c) Administrator.--The Office shall be headed by an 
Administrator who shall be appointed by the Secretary.
    ``(d) Staff.--The Administrator shall appoint such employees 
pursuant to title 5, United States Code, as are necessary for the 
administration of the Office, including employees who have commercial 
reinsurance and actuarial experience.''.
    (b) Funding.--Section 516 of the Federal Crop Insurance Act (7 
U.S.C. 1516) is amended--
            (1) in subsection (a)(2)--
                    (A) in subparagraph (A), by striking ``and'' at the 
                end;
                    (B) in subparagraph (B), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following:
                    ``(C) salaries and expenses of the Office of 
                Private Sector Partnership.''; and
            (2) in subsection (b)(1)--
                    (A) in subparagraph (B), by striking ``; and'' and 
                inserting a semicolon;
                    (B) in subparagraph (C), by striking the period at 
                the end and inserting a semicolon; and
                    (C) by adding at the end the following:
                    ``(D) salaries and expenses of the Office of 
                Private Sector Partnership, but not to exceed 
                $5,000,000 for each fiscal year; and''.

SEC. 204. ADEQUATE COVERAGE FOR AGRICULTURAL COMMODITIES.

    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) Adequate coverage for agricultural commodities.--
                    ``(A) Review.--The Board shall review the plans of 
                insurance that are offered by approved insurance 
                providers under this Act to determine if each 
                agricultural commodity (including each new or 
                speciality crop) is adequately served by the plans.
                    ``(B) Recommendations.--If the Board determines 
                that an agricultural commodity (including a new or 
                specialty crop) is not adequately served by the plans, 
                the Board shall recommend to the Office of Risk 
                Management that the Office--
                            ``(i) develop or (through the Corporation) 
                        contract to develop plans of insurance for the 
                        agricultural commodity; and
                            ``(ii) provide the plans to approved 
                        insurance providers, to be offered for sale to 
                        producers.''.

SEC. 205. FEES FOR PLANS OF INSURANCE.

    (a) In General.--Section 508(h)(5) of the Federal Crop Insurance 
Act (7 U.S.C. 1508(h)(5))) is amended--
            (1) by striking ``Any policy'' and inserting the following:
                    ``(A) In general.--Any policy''; and
            (2) by adding at the end the following:
                    ``(B) Fees for existing plans of insurance.--
                            ``(i) In general.--Effective beginning with 
                        the 2000 reinsurance year, if an approved 
                        insurance provider elects to sell a plan of 
                        insurance that was developed by another 
                        approved insurance provider and the plan of 
                        insurance was approved by the Board before 
                        January 1, 1999, the approved insurance 
                        provider that developed the plan of insurance 
                        shall have the right to receive a fee from the 
                        approved insurance provider that elects to sell 
                        the plan of insurance.
                            ``(ii) Amount.--The amount of the fee that 
                        is payable by an approved insurance provider 
                        for a plan of insurance under clause (i) shall 
                        be--
                                    ``(I) for each of the first 5 crop 
                                years that the plan is sold, $2.00 for 
                                each policy under the plan that is sold 
                                by the approved insurance provider;
                                    ``(II) for each of the next 3 crop 
                                years that the plan is sold, $1.00 for 
                                each policy under the plan that is sold 
                                by the approved insurance provider; and
                                    ``(III) for each crop year 
                                thereafter that the plan is sold, 50 
                                cents for each policy under the plan 
                                that is sold by the approved insurance 
                                provider.
                    ``(C) Fees for new plans of insurance.--
                            ``(i) In general.--Effective beginning with 
                        the 2000 reinsurance year, if an approved 
                        insurance provider elects to sell a plan of 
                        insurance that was developed by another 
                        approved insurance provider, the plan of 
                        insurance was approved by the Board on or after 
                        January 1, 1999, and the plan of insurance was 
                        not available at the time the plan of insurance 
                        was approved by the Board, the approved 
                        insurance provider that developed the plan of 
                        insurance shall have the right to receive a fee 
                        from the approved insurance provider that 
                        elects to sell the plan of insurance.
                            ``(ii) Amount.--
                                    ``(I) In general.--Subject to 
                                subclause (II), the amount of the fee 
                                that is payable by an approved 
                                insurance provider for a plan of 
                                insurance under clause (i) shall be an 
                                amount that is--
                                            ``(aa) determined by the 
                                        approved insurance provider 
                                        that developed the plan; and
                                            ``(bb) approved by the 
                                        Board.
                                    ``(II) Approval.--The Board shall 
                                not approve the amount of a fee under 
                                clause (i) if the amount of the fee 
                                unnecessarily inhibits the use of the 
                                plan of insurance, as determined by the 
                                Board.
                    ``(D) Payments.--The Corporation shall annually--
                            ``(i) collect from an approved insurance 
                        provider the amount of any fees that are 
                        payable by the approved insurance provider 
                        under subparagraphs (B) and (C); and
                            ``(ii) credit any fees that are payable to 
                        an approved insurance provider under 
                        subparagraphs (B) and (C).''.
    (b) Funding.--Section 516 of the Federal Crop Insurance Act (7 
U.S.C. 1516) (as amended by section 203(b)(2)) is amended--
            (1) in subsection (b)(1), by adding at the end the 
        following:
                    ``(E) payment of fees in accordance with section 
                508(h)(5)(C).''; and
            (2) in subsection (c)(1), by inserting ``and fees'' after 
        ``premium income''.

SEC. 206. FLEXIBLE SUBSIDY PILOT PROGRAM.

    Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) 
is amended by adding at the end the following:
            ``(11) Flexible subsidy pilot program.--For each of the 
        2000 through 2002 crop years, the Corporation shall carry out a 
        pilot program under which flexible subsidies are provided under 
        this title to encourage private sector innovation through 
        exclusive marketing rights and premium rate competition.''.
                                 <all>