[Congressional Record Volume 145, Number 75 (Monday, May 24, 1999)]
[Senate]
[Pages S5853-S5859]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COCHRAN (for himself, Mrs. Lincoln, Mr. Coverdell, Mr. 
        Sessions, Mr. Cleland, Mr. Hollings, Mr. Shelby, Mr. Robb, and 
        Mr. Hutchinson):
  S. 1108. A bill to amend the Federal Crop Insurance Act to improve 
crop insurance coverage and administration, and for other purposes; to 
the Committee on Agriculture, Nutrition, and Forestry.


                   crop insurance equity act of 1999

  Mr. COCHRAN. Mr. President, I am pleased to be joined today by my 
colleague from Arkansas, Mrs. Lincoln, in introducing the Crop 
Insurance Equity Act of 1999 to reform the federal crop insurance 
program. The other cosponsors of the bill are: Mr. Coverdell, Mr. 
Sessions, Mr. Cleland, Mr. Hollings, Mr. Shelby, Mr. Robb, and Mr. 
Hutchinson.
       The Crop Insurance Equity Act of 1999 is based on several 
     principles. First, we do not believe that the crop insurance 
     program should be the next iteration of a farm bill. 
     Therefore, this bill maintains the current policy with regard 
     to federal subsidy for revenue insurance products.
       We developed this bill with the intent of addressing the 
     reasons farmers in our states have found crop insurance to be 
     impractical. We believe that farmers from Washington to 
     Florida and Maine to California will find this bill worthy of 
     their support.
       Our bill establishes a process under which the current 
     rates and rating methods and procedures will be re-evaluated 
     by USDA to examine factors not currently considered. This may 
     lower crop insurance rates for some commodities. However, 
     because all current rating methodologies are actuarially 
     sound, if the re-evaluation would result in an increased 
     rate, the current method must remain in place.
       This bill also establishes a fixed percentage as the 
     federal contribution to a farmer's crop insurance premium. 
     Current law provides higher contributions for lower levels of 
     coverage. This bill would treat all farmers fairly.
       We believe that one of the simplest ways to make crop 
     insurance more attractive is to make it operate more like 
     other common forms of insurance, such as homeowners or auto 
     insurance. This bill establishes a process of discounts and a 
     menu of policy options from which farmers can choose. These 
     include discounts for coverage of larger, less risky units of 
     production, employment of technologically advanced 
     agricultural management practices, and the reinstatement of 
     good experience discounts. In addition, farmers will be able 
     to choose whether to purchase specific coverages for 
     prevented planting, quality losses, and cost of production 
     coverage.
       Mr. President, this bill raises the basic coverage level 
     for the lowest crop insurance unit--catastrophic coverage--so 
     that all farmers will benefit from this legislation. For the 
     same minimal fee as established in current law, this bill 
     will provide catastrophic coverage for sixty percent of a 
     farmer's historical production at seventy percent of the 
     market price.
       Our bill also makes other important changes to the program. 
     It protects new farmers or those who rent new land or produce 
     new crops by ensuring they are assigned a fair yield until 
     they generate adequate actual production data.
  The legislation improves the management and oversight of the crop 
insurance program by establishing the Farm Service Agency as the sole 
agency for acreage and yield record keeping within USDA. It 
restructures the board of directors of the Federal Crop Insurance 
Corporation to include more farmers, and establishes a new office to 
work with private sector companies who develop new crop insurance 
products.
  One of the major complaints that I have heard about crop insurance is 
the abuse and fraud that exists in the current program. To address this 
complaint, our bill also improves the monitoring of agents and 
adjusters to combat fraud, and strengthens the penalties available to 
USDA for companies, agents, and producers who engage in fraudulent 
activities.
  I believe that we have developed a sound proposal which Senators will 
find good reason to support.
  Mr. President, I ask unanimous consent that the bill and a summary of 
the legislation be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1108

       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 Equity Act of 1999''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                    TITLE I--CROP INSURANCE COVERAGE

Sec. 101. Prevented planting.
Sec. 102. Alternative rating methodologies.
Sec. 103. Quality adjustment.
Sec. 104. Low-risk producer pilot program.
Sec. 105. Catastrophic risk protection.
Sec. 106. Loss adjustment.
Sec. 107. Cost of production plans of insurance.
Sec. 108. Discounts.
Sec. 109. Adjustments to subsidy levels.
Sec. 110. Sales closing dates.
Sec. 111. Assigned yields.
Sec. 112. Actual production history adjustment for disasters.
Sec. 113. Payment of portion of premium.
Sec. 114. Limitation on premiums included in underwriting gains.

                        TITLE II--ADMINISTRATION

Sec. 201. Board of Directors of Corporation.
Sec. 202. Office of Risk Management.
Sec. 203. Office of Private Sector Partnership.
Sec. 204. Penalties for false information.
Sec. 205. Regulations.
Sec. 206. Program compliance.
Sec. 207. Payments by cooperative associations.
Sec. 208. Limitation on double insurance.
Sec. 209. Consultation with State committees of Farm Service Agency.
Sec. 210. Records and reporting.
Sec. 211. Fees for plans of insurance.
Sec. 212. Flexible subsidy pilot program.
Sec. 213. Reinsurance agreements.
Sec. 214. Funding.

                    TITLE I--CROP INSURANCE COVERAGE

     SEC. 101. PREVENTED PLANTING.

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

[[Page S5854]]

       ``(7) Prevented planting.--
       ``(A) In general.--The Corporation shall offer coverage for 
     prevented planting of an agricultural commodity only as an 
     endorsement to a policy.
       ``(B) Equal coverage.--For each agricultural commodity for 
     which prevented planting coverage is available, the 
     Corporation shall offer an equal level of prevented planting 
     coverage.
       ``(C) Planting of substitute agricultural commodities.--In 
     the case of prevented planting coverage that is offered under 
     this paragraph, the Corporation shall allow producers that 
     have the coverage, and that are eligible to receive a 
     prevented planting indemnity, to plant an agricultural 
     commodity, other than the commodity covered by the prevented 
     planting coverage, on the acreage that the producer has been 
     prevented from planting to the original agricultural 
     commodity.
       ``(D) Ineligibility for coverage.--A substitute 
     agricultural commodity described in subparagraph (C) shall 
     not be eligible for coverage under a plan of insurance under 
     this title.''.

     SEC. 102. ALTERNATIVE RATING METHODOLOGIES.

       Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 
     1508(a)) (as amended by section 101) is amended by adding at 
     the end the following:
       ``(8) Alternative rating methodologies.--
       ``(A) In general.--Not later than September 30, 2000, the 
     Corporation shall develop and implement alternative 
     methodologies for rating plans of insurance under subsections 
     (b) and (c), and rates for the plans of insurance, that take 
     into account--
       ``(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) Review and adjustment.--Effective for the 2001 and 
     subsequent crop years, the Corporation shall review and make 
     any necessary adjustments to methodologies and rates 
     established under this paragraph, based on (as determined by 
     the Corporation)--
       ``(i) expected future losses, with appropriate adjustment 
     of any historical data used in rating to remove--

       ``(I) the impact of adverse selection; and
       ``(II) data that no longer reflects the productive capacity 
     of the area;

       ``(ii) program errors; and
       ``(iii) any other factor that can cause errors in 
     methodologies and rates.
       ``(C) Implementation.--In developing, implementing, and 
     adjusting rating methodologies and rates under this 
     paragraph, the Corporation shall--
       ``(i) use methodologies for rating plans of insurance under 
     subsections (b) and (c) that result in the lowest premiums 
     payable by producers of an agricultural commodity in a 
     geographic area, as determined by the Corporation; and
       ``(ii) update the manner in which rates are applied at the 
     individual producer level, as determined by the Corporation.
       ``(D) Priority.--In developing, implementing, and adjusting 
     alternative methodologies for rating plans of insurance under 
     subsections (b) and (c) for agricultural commodities, the 
     Corporation shall provide the highest priority to 
     agricultural commodities with (as determined by the 
     Corporation)--
       ``(i) the largest average acreage; and
       ``(ii) the lowest percentage of producers that purchased 
     coverage under subsection (c).''.

     SEC. 103. QUALITY ADJUSTMENT.

       Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 
     1508(a)) (as amended by section 102) is amended by adding at 
     the end the following:
       ``(9) Quality adjustment policies.--The Corporation shall 
     offer, only as an endorsement to a policy, coverage that 
     permits a reduction in the quantity of production of an 
     agricultural commodity produced during a crop year, or any 
     similar adjustment, that results from the agricultural 
     commodity not meeting the quality standards established in 
     the policy.''.

     SEC. 104. LOW-RISK PRODUCER PILOT PROGRAM.

       Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 
     1508(a)) (as amended by section 103) is amended by adding at 
     the end the following:
       ``(10) Low-risk producer pilot program.--
       ``(A) In general.--For each of the 2000 through 2003 crop 
     years, the Corporation shall carry out a pilot program that 
     is designed to encourage participation in the Federal crop 
     insurance program established under this title by producers 
     who rarely suffer insurable losses.
       ``(B) Scope.--The Corporation shall carry out the pilot 
     program in at least 40 counties that are determined by the 
     Corporation to be adequate to provide a comprehensive 
     evaluation of the feasibility, effectiveness, and demand 
     among producers for a low-risk producer program.
       ``(C) Premium refund.--Notwithstanding section 506(o) and 
     subsection (d)(1), if a producer participating in the pilot 
     program incurs a yield loss in any crop year that is more 
     than 10 percent but not more than 35 percent of the yield 
     determined under subsection (g), the Corporation shall--
       ``(i) refund all or part, as determined by the Corporation, 
     of the premium that was paid by the producer for a plan of 
     insurance for the crop that incurred the qualifying loss; or
       ``(ii) apply the amount to be refunded under clause (i) 
     against the premium payable by the producer for equivalent 
     coverage for the subsequent crop year.
       ``(D) Regulations.--The Corporation shall promulgate such 
     regulations as are necessary to carry out the pilot 
     program.''.

     SEC. 105. CATASTROPHIC RISK PROTECTION.

       Section 508(b)(2)(A) of the Federal Crop Insurance Act (7 
     U.S.C. 1508(b)(2)(A)) is amended--
       (1) in clause (i), by striking ``and'' at the end;
       (2) in clause (ii)--
       (A) by striking ``each of the 1999 and subsequent crop 
     years'' and inserting ``the 1999 crop year''; and
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (3) by adding at the end the following:
       ``(iii) in the case of each of the 2000 and subsequent crop 
     years, catastrophic risk protection shall offer a producer 
     coverage for a 60 percent loss in yield, on an individual 
     yield or area yield basis, indemnified at 70 percent of the 
     expected market price, or a comparable coverage (as 
     determined by the Corporation).''.

     SEC. 106. LOSS ADJUSTMENT.

       Section 508(b)(11) of the Federal Crop Insurance Act (7 
     U.S.C. 1508(b)(11)) is amended by striking ``11 percent'' and 
     all that follows through the end of the paragraph and 
     inserting ``$50 for each claim that is adjusted under this 
     subsection.''.

     SEC. 107. COST OF PRODUCTION PLANS OF INSURANCE.

       (a) In General.--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; or
       ``(iii) 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) Conforming Amendments.--Section 508(h) of the Federal 
     Crop Insurance Act (7 U.S.C. 1508(h)) is amended--
       (1) by striking paragraph (9); and
       (2) by redesignating paragraph (10) as paragraph (9).

     SEC. 108. DISCOUNTS.

       Section 508(d) of the Federal Crop Insurance Act (7 U.S.C. 
     1508(d)) is amended by adding at the end the following:
       ``(3) Discounts.--
       ``(A) In general.--Notwithstanding section 506(o) and 
     paragraph (1), the Corporation shall provide a discount in 
     the premium payable by the producer for a plan of insurance 
     under subsections (b) and (c) for an agricultural commodity 
     in a county if the producer--
       ``(i) during each of the preceding 5 consecutive crop 
     years--

       ``(I) has obtained insurance under this title for the 
     agricultural commodity; and
       ``(II) has not filed any claim under the insurance;

       ``(ii) if offered by the Corporation, elects to have unit 
     coverage that reduces the risk of loss below the risk of loss 
     that is expected for a unit comprised of all insurable 
     acreage of the agricultural commodity in the county; or
       ``(iii) implements innovative farming management practices 
     that reduce the risk of insurable loss, as determined by the 
     Corporation.
       ``(B) Amount.--
       ``(i) In general.--Subject to clause (ii), the amount of 
     the discount provided to a producer for a crop year under 
     subparagraph (A) shall be determined by the Corporation.
       ``(ii) No claim discount.--The amount of the discount 
     provided to a producer for a crop year under subparagraph 
     (A)(i) shall increase for each additional consecutive crop 
     year for which the producer is eligible for a discount under 
     subparagraph (A)(i).''.

     SEC. 109. ADJUSTMENTS TO SUBSIDY LEVELS.

       (a) In General.--Section 508(e)(2) of the Federal Crop 
     Insurance Act (7 U.S.C. 1508(e)(2)) is amended by striking 
     subparagraphs (B) and (C) and inserting the following:
       ``(B) In the case of additional coverage below 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) 50 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).

[[Page S5855]]

       ``(C) In the case of additional 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 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).''.
       (b) Application.--The amendment made by subsection (a) 
     applies beginning with the 2000 crop year.

     SEC. 110. SALES CLOSING DATES.

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

     SEC. 111. 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. 112. ACTUAL PRODUCTION HISTORY ADJUSTMENT FOR DISASTERS.

       Section 508(g)(2) of the Federal Crop Insurance Act (7 
     U.S.C. 1508(g)(2)) is amended by adding at the end the 
     following:
       ``(E) Substitution of transitional yield.--Effective 
     beginning with the 2000 crop year, if the producer's yield of 
     an agricultural commodity in any crop year is less than 85 
     percent of the transitional yield established by the 
     Corporation for the agricultural commodity, the Corporation 
     shall, at the option of the producer, consider the producer's 
     yield for the crop year to be 85 percent of the transitional 
     yield for the purpose of calculating the actual production 
     history for a crop of an agricultural commodity under 
     subparagraph (A).
       ``(F) Corporation's share of costs.--In the case of any 
     yield substitution under subparagraph (E), in addition to any 
     other authority to pay any portion of the premium and 
     indemnity, the Corporation shall pay--
       ``(i) the portion of the premium or indemnity that 
     represents the increase in premium associated with the 
     substitution of the transitional yield under subparagraph 
     (E);
       ``(ii) all additional indemnities associated with the 
     substitution; 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 the substitution.''.

     SEC. 113. PAYMENT OF PORTION OF PREMIUM.

       Section 508(h)(2) of the Federal Crop Insurance Act (7 
     U.S.C. 1508(h)(2)) is amended in the second sentence by 
     inserting before the period at the end the following: ``, 
     except that the Corporation shall not pay any portion of the 
     premium for any plan of insurance that offers coverage for 
     losses associated with a change in price''.

     SEC. 114. LIMITATION ON PREMIUMS INCLUDED IN UNDERWRITING 
                   GAINS.

       Section 508(k) of the Federal Crop Insurance Act (7 U.S.C. 
     1508(k)) is amended by adding at the end the following:
       ``(8) Limitation on premiums included in underwriting 
     gains.--Notwithstanding any other provision of law, the 
     reinsurance agreements of the Corporation shall require that 
     not more than 50 percent of any premium for catastrophic risk 
     protection under subsection (b) be included in the 
     calculation of gains or losses of an approved insurance 
     provider unless the loss ratio for catastrophic risk 
     protection exceeds 1.0.''.

                        TITLE II--ADMINISTRATION

     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) 4 members who are active agricultural producers with 
     or without crop insurance, with 1 member appointed from each 
     of the 4 regions of the United States (as determined by the 
     Secretary);
       ``(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.
       ``(5) Staff.--The Board shall employ or contract with 1 or 
     more individuals who are knowledgeable and experienced in 
     quantitative mathematics and actuarial rating to assist the 
     Board in reviewing and approving policies and materials with 
     respect to plans of insurance authorized or submitted under 
     section 508.''.

     SEC. 202. OFFICE OF RISK MANAGEMENT.

       (a) Establishment.--Section 226A(a) of the Department of 
     Agriculture Reorganization Act of 1994 (7 U.S.C. 6933(a)) is 
     amended 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''.
       (b) Functions.--Section 226A(b) of the Department of 
     Agriculture Reorganization Act of 1994 (7 U.S.C. 6933(b)) is 
     amended 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.

       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;
       ``(4) review and make recommendations to the Board with 
     respect to methodologies for rating plans of insurance under 
     this title; and
       ``(5) 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.''.

     SEC. 204. PENALTIES FOR FALSE INFORMATION.

       Section 506(n)(1) of the Federal Crop Insurance Act (7 
     U.S.C. 1506(n)(1)) is amended--
       (1) in subparagraph (A), by inserting ``for each claim'' 
     after ``$10,000''; and
       (2) in subparagraph (B), by striking ``noninsured 
     assistance'' and inserting ``any loan, payment, or benefit 
     described in section 1211 of the Food Security Act of 1985 
     (16 U.S.C. 3811)''.

     SEC. 205. REGULATIONS.

       Section 506(p) of the Federal Crop Insurance Act (7 U.S.C. 
     1506(p)) is amended--
       (1) by striking ``The Secretary'' and inserting the 
     following:
       ``(1) In general.--The Secretary''; and
       (2) by adding at the end the following:
       ``(2) Terms of insurance.--
       ``(A) In general.--Regulations issued by the Secretary and 
     the Corporation specifying the terms of insurance under 
     section 508 shall be issued without regard to--
       ``(i) the notice and comment provisions of section 553 of 
     title 5, United States Code;
       ``(ii) the Statement of Policy of the Secretary of 
     Agriculture effective July 24, 1971 (36 Fed. Reg. 13804), 
     relating to notices of proposed rulemaking and public 
     participation in rulemaking; and
       ``(iii) chapter 35 of title 44, United States Code 
     (commonly known as the `Paperwork Reduction Act').
       ``(B) Congressional review of agency rulemaking.--In 
     carrying out this paragraph, the Secretary shall use the 
     authority provided under section 808 of title 5, United 
     States Code.''.

     SEC. 206. PROGRAM COMPLIANCE.

       Section 506(q) of the Federal Crop Insurance Act (7 U.S.C. 
     1506(q)) is amended--
       (1) by redesignating paragraph (2) as paragraph (6); and
       (2) by striking paragraph (1) and inserting the following:
       ``(1) In general.--Not later than 180 days after the date 
     of enactment of the Crop Insurance Equity Act of 1999, the 
     Corporation

[[Page S5856]]

     shall establish a program for monitoring compliance with this 
     title by all Federal crop insurance participants, including 
     producers, agents, adjusters, and approved insurance 
     providers.
       ``(2) Consultation.--The Corporation shall consult with 
     approved insurance providers in developing the compliance 
     program.
       ``(3) Oversight of loss adjustment.--As part of the 
     compliance program, the Corporation shall provide for a 
     mechanism to independently review the performance of loss 
     adjusters.
       ``(4) Program review.--Not later than 90 days after the 
     date of enactment of the Crop Insurance Equity Act of 1999, 
     the Corporation shall submit to the Board and the Office of 
     Private Sector Partnership for their review the proposed 
     compliance program under this subsection.
       ``(5) Annual reports.--Beginning with fiscal year 2001, the 
     Corporation shall submit an annual report to the Committee on 
     Agriculture of the House of Representatives, the Committee on 
     Agriculture, Nutrition, and Forestry of the Senate, the 
     Board, and the Office of Private Sector Partnership 
     concerning the compliance program established under this 
     subsection, including any recommendations for legislative or 
     administrative changes that could further improve program 
     compliance.''.

     SEC. 207. PAYMENTS BY COOPERATIVE ASSOCIATIONS.

       Section 507(e) of the Federal Crop Insurance Act (7 U.S.C. 
     1507(e)) is amended--
       (1) by striking ``(e) In'' and inserting the following:
       ``(e) Cooperative Associations.--
       ``(1) In general.--In''; and
       (2) by adding at the end the following:
       ``(2) Payments.--A cooperative association described in 
     paragraph (1) that is licensed and acts as an agent or 
     approved insurance provider with respect to any plan of 
     insurance offered under this title may provide to the members 
     of the association all or part of any funds received from the 
     Corporation under this title.''.

     SEC. 208. LIMITATION ON DOUBLE INSURANCE.

       Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 
     1508(a)) (as amended by section 104) is amended by adding at 
     the end the following:
       ``(11) Limitation on double insurance.--The Corporation may 
     offer plans of insurance or reinsurance for only 1 
     agricultural commodity on specific acreage during a crop 
     year, unless--
       ``(A) there is an established practice of double-cropping 
     in an area, as determined by the Corporation;
       ``(B) the additional plan of insurance is offered with 
     respect to an agricultural commodity that is customarily 
     double-cropped in the area; and
       ``(C) the producer has a history of double cropping or the 
     acreage has historically been double-cropped.''.

     SEC. 209. CONSULTATION WITH STATE COMMITTEES OF FARM SERVICE 
                   AGENCY.

       Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 
     1508(a)) (as amended by section 208) is amended by adding at 
     the end the following:
       ``(12) Consultation with state committees of farm service 
     agency.--The Corporation shall establish a mechanism under 
     which State committees of the Farm Service Agency are 
     consulted concerning policies of insurance offered in a State 
     under this title.''.

     SEC. 210. RECORDS AND REPORTING.

       (a) Catastrophic Risk Protection.--Section 508(f)(3)(A) of 
     the Federal Crop Insurance Act (7 U.S.C. 1508(f)(3)(A)) is 
     amended by striking ``provide, to the extent required by the 
     Corporation,'' and inserting ``to the extent required by the 
     Corporation, provide to the Secretary, acting through the 
     Farm Service Agency,''.
       (b) Noninsured Crop Disaster Assistance Program.--Section 
     196(b) of the Agricultural Market Transition Act (7 U.S.C. 
     7333(b)) is amended--
       (1) by striking paragraph (2) and inserting the following:
       ``(2) Records.--To be eligible for assistance under this 
     section, a producer shall provide annually to the Secretary, 
     acting through the Farm Service Agency, records of crop 
     acreage, acreage yields, and production for each eligible 
     crop.''; and
       (2) in paragraph (3), by inserting ``annual'' after ``shall 
     provide''.

     SEC. 211. FEES FOR PLANS OF INSURANCE.

       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 new plans of insurance.--
       ``(i) In general.--If an approved insurance provider elects 
     to sell a plan of insurance that was developed by another 
     approved insurance provider after the date of enactment of 
     this subparagraph and the plan of insurance offered coverage 
     that was not available for any crop at the time the plan of 
     insurance was approved by the Board (as determined by the 
     Corporation), 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.

       ``(C) 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 subparagraph (B); and
       ``(ii) credit any fees that are payable to an approved 
     insurance provider under subparagraph (B).''.

     SEC. 212. 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.''.

     SEC. 213. REINSURANCE AGREEMENTS.

       Section 508(k) of the Federal Crop Insurance Act (7 U.S.C. 
     1508(k)) is amended by striking paragraph (3) and inserting 
     the following:
       ``(3) Reinsurance agreements.--
       ``(A) Share of risk.--Each reinsurance agreement of the 
     Corporation with a reinsured company shall require the 
     reinsured company to bear a sufficient share of any potential 
     loss under the 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 company and the 
     availability of private reinsurance.
       ``(B) Compliance.--To promote program compliance and 
     integrity, the Corporation, after notice and an opportunity 
     for a hearing on the record--
       ``(i)(I) shall assess civil fines in an amount not to 
     exceed $10,000 per violation against agents, loss adjusters, 
     and approved insurance providers that are determined by the 
     Corporation to have recurring compliance problems; and
       ``(II) may deposit any civil fines collected under 
     subclause (I) in the insurance fund established under section 
     516(c); and
       ``(ii) shall disqualify the agents, loss adjusters, and 
     approved insurance providers described in clause (i)(I) from 
     participation in the Federal crop insurance program for a 
     period not to exceed 5 years.
       ``(C) Review of agreements.--As soon as practicable after 
     the date of enactment of this subparagraph and regularly 
     thereafter, in consultation with the Office of Private Sector 
     Partnership, the Corporation shall review the Standard 
     Reinsurance Agreement issued by the Corporation to ensure 
     that the allocation of risk between the Corporation and the 
     reinsured companies is equitable, as determined by the 
     Corporation.''.

     SEC. 214. 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.'';
       (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;
       ``(E) administrative expenses of collecting information 
     under section 508(f)(3); and
       ``(F) payment of fees in accordance with section 
     508(h)(5)(B).''; and
       (3) in subsection (c)(1), by inserting ``, fees under 
     section 508(h)(5)(B), civil fines under section 
     508(k)(3)(B)(i)(II),'' after ``premium income''.
                                  ____


               Crop Insurance Equity Act of 1999--Summary

       Sec. 101--Prevented Planting. Ensures that producers have 
     the ability to reduce premium cost by giving them the option 
     whether to choose prevented planting coverage for a 
     commodity. Ensures that prevented planting coverage offered 
     under the crop insurance program is equivalent among all 
     commodities. Also eliminates current ``black dirt'' 
     requirement by allowing producers who are prevented from 
     planting their insured commodity to receive the prevented 
     planting indemnity but still plant another, uninsured crop on 
     the same acreage without penalty. Amendment ensures that 
     productive crop land is not idled because of crop insurance 
     requirement.
       Sec. 102--Alternative Rating Methodologies. The preliminary 
     conclusions from a review of current rating methodologies 
     indicates that many of FCIC's rates and rating procedures 
     need to be changed. The bill directs FCIC to develop and 
     implement alternative methodologies for rating insurance

[[Page S5857]]

     plans by September 30, 2000, that takes into account (1) 
     producers that elect not to participate in the Federal crop 
     insurance program, and (2) producers that elect only to 
     obtain catastrophic coverage. FCIC is also directed to review 
     and make adjustments to methodologies and rates by the 2001 
     crop year, based on expected future losses (adjusted to 
     correct for adverse selection and old data), program errors 
     and other factors that can cause errors in methodologies and 
     rates. The bill requires FCIC to implement the rating 
     methodologies in a manner that results in the lowest premium 
     payable by producers of a commodity in a particular 
     geographic area. Priority will be given to those commodities 
     with the lowest level of participation in buy-up coverage 
     plans.
       Sec. 103--Quality Adjustment. Ensures that quality 
     adjustment coverage is offered as optional coverage.
       Sec. 104--Low-risk producer pilot program. Establishes a 
     pilot program designed to encourage participation in crop 
     insurance by producers who rarely suffer insurable losses. 
     Participating producers would receive a reduction in their 
     payable premium if they incur a yield loss greater than 10%, 
     but not great enough to trigger an indemnity.
       Sec. 105--Catastrophic risk protection. Increases the 
     coverage level for catastrophic coverage to 60% of APH at 70% 
     of the price. Other parts of the bill address excessive 
     underwriting gains and unearned loss adjustment expenses 
     being generated as a result of CAT coverages.
       Sec. 106--Loss adjustment. Reduces the fees for loss 
     adjustments with respect to catastrophic coverage.
       Sec. 107--Cost of production plans of insurance. Provides 
     permanent authority for the Federal Crop Insurance 
     Corporation to provide cost of production and revenue 
     insurance coverage.
       Sec. 108--Discounts. The bill requires FCIC to reinstate 
     good experience discounts and to provide discounts for 
     production practices that reduce the risk of loss and for 
     insurance that is issued on larger, more cost-effective 
     insurable units.
       Sec. 109--Adjustment to Subsidy Levels. The bill provides 
     for 50% subsidization of all levels of buy-up coverage.
       Sec. 110--Sales Closing Dates. The bill restores 
     flexibility to FCIC in determining sales closing dates.
       Sec. 111--Assigned Yields. Ensures that beginning farmers 
     or farmers who rent new land or produce new crops will be 
     assigned a fair yield.
       Sec. 112--Actual production history adjustment for 
     disasters. Requires FCIC to adjust APH yields for producers 
     who suffer multi-year disasters by directing FCIC to assign a 
     yield equal to 85% of the county transition yield for any 
     year in which a producer's yield falls below that 85% level.
       Sec. 113--Payment of Portion of Premium. Prohibits FCIC 
     from subsidizing revenue or price insurance policies.
       Sec. 114--Limitation on Underwriting Gains. The bill limits 
     the amount of underwriting gains companies can make on 
     catastrophic policies to 50 percent of the premium.


                                title ii

       Sec. 201--Board of Directors of Corporation. Expands the 
     board to include 4 producers from 4 regions of the United 
     States, 1 person engaged in the crop insurance business, 1 
     person engaged in reinsurance, the Undersecretary for Farm 
     and Foreign Agricultural Services, the Under Secretary for 
     Rural Development and the Chief Economist of the Department 
     of Agriculture.
       Sec. 202--Office of Risk Management. Clarifies that the 
     FCIC board of directors shall have direct oversight of RMA.
       Sec. 203--Office of Private Sector Partnership. Establishes 
     the Office of Private Sector Partnership, reporting directly 
     to the FCIC board. The OPSP will have the authority to review 
     and make recommendations on both privately and RMA-
     developed policies. It will also have the authority to 
     approve reinsurance and review and make recommendations 
     concerning subsidy for new crop policies and, with board 
     concurrence, approve new rating structures.
       Sec. 204--Penalities for false information. Allows anyone 
     convicted of providing false information in connection with 
     any crop insurance claim to be disbarred from all USDA 
     programs.
       Sec. 205--Regulations. Allows certain RMA rulemaking 
     activities to be exempted from the Administrative Procedures 
     Act and other federal statutes.
       Sec. 206--Program Compliance. The bill enhances the 
     compliance authority of FCIC by 1) requiring FCIC to develop 
     and implement an effective program for monitoring program 
     compliance by all crop insurance participants; and 2) 
     requiring regular oversight of loss adjusters.
       Sec. 207--Payment of rebates to cooperative associations. 
     Allows the payment of rebates to cooperatives who engage in 
     the sale of crop insurance.
       Sec. 208--Limitation on Double Insurance. Prohibits 
     purchasing insurance for two crops for the same acreage in a 
     year, except where there is an established practice of 
     double-cropping.
       Sec. 209--Consultation with state committees of farm 
     service agency. Requires FCIC to consult with state FSA 
     committees on the feasibility of polices of insurance being 
     offered in their state.
       Sec. 210--Records and reporting. The bill strengthens 
     requirements for accurate recordkeeping and reporting of crop 
     production by participants and non-participants in crop 
     insurance.
       Sec. 211--Fees for plans of insurance. Establishes a system 
     of payment for the sale of policies developed by other 
     companies.
       Sec. 212--Flexible subsidy pilot program. Allows for the 
     creation of a flexible subsidy pilot program for the 2000-
     2002 crop years.
       Sec. 213--Reinsurance Agreements. Provides tougher 
     sanctions for agents and reinsured companies that have 
     recurring compliance difficulties, and requires a regular 
     review of the Standard Reinsurance Agreement.
       Sec. 214--Funding. Makes necessary adjustments in funding 
     provisions to take into account the establishment of the 
     Office of Private Sector Partnership.

  Mrs. LINCOLN. Mr. President, I am pleased to be here today with my 
colleague from Mississippi, Senator Cochran, to introduce the Crop 
Insurance Equity Act of 1999. We believe this bill makes fundamental 
changes to the existing Federal Crop Insurance Program that are 
necessary to make crop insurance more workable and affordable for 
producers across the country.
  As we all know, the government's role in farm programs has changed. 
The 1996 Farm Bill phased out traditional support for our farmers, and 
current farm programs require producers to assume more risk than ever 
before. Due to the Ag economic crisis, there has been much discussion 
lately on the issue of the ``safety net'' for our nation's producers. 
On that point I would like to be perfectly clear. Crop insurance is a 
risk management tool to help producers guard against yield loss. It was 
not created and was never intended to be the end all be all solution 
for the income needs of our nation's producers. As the crop insurance 
reform debate proceeds, I am hopeful that my colleagues will be 
cognizant of the various needs in the agriculture community and 
recognize that while crop insurance is an important part of the 
``safety net,'' it is not and should not be the only income guard for 
our nation's farmers.
  Congress has been attempting to eliminate the ad hoc disaster program 
for years because it is not the most efficient way of helping our 
farmers who suffer yield losses. Senator Cochran and I have been 
working over the last few months with individuals involved in crop 
insurance delivery, major commodity organizations, and most 
importantly, farmers, to craft a comprehensive bill that addresses the 
various reform needs of the crop insurance program. We feel that this 
legislation takes a significant step toward providing a crop insurance 
program that is equitable, affordable, and effective.
  In response to the outcry we have heard from producers in Arkansas, 
Mississippi, and across the nation, we have attempted to make the crop 
insurance program more cost effective for our farmers. In Arkansas, the 
last estimates I heard indicated that 1% of our cotton producers were 
participating in the buy-up program this year. Buy-up coverage for all 
commodities in Akansas historically is around 12%. That tells me that 
producers at home don't think that crop insurance is currently 
providing the kind of help they need. Our bill establishes a process 
for re-evaluating crop insurance rates for all crops and for lowering 
those rates if warranted. By making the crop insurance program more 
affordable, additional producers will be encouraged to participate in 
the program and protect themselves against the unforeseeable factors 
that will be working against them once they put a crop into the ground.
  This legislation directs USDA to establish ``good experience'' 
premium discounts for producers who have not filed claims in the last 
years. This simply makes sense. If you have car insurance and you 
haven't had a wreck or a ticket over a significant period of time, then 
your premium is reduced. Crop insurance should not be any different.
  The bill also provides for a more equitable subsidy method by setting 
the subsidy for crop insurance premiums at a flat rate, regardless of 
the level of coverage a producer purchases. Current law provides higher 
levels of federal subsidy to producers who purchase the lowest levels 
of coverage.
  In an attempt to improve the record keeping process within USDA, this 
legislation establishes the Farm Service Agency (FSA) as the central 
repository for all acreage and yield record keeping. Current USDA 
record keeping, split between FSA and RMA, is redundant and 
insufficient. By including

[[Page S5858]]

both crop insurance program participants and non-program participants 
in the process, we hope to enhance the agricultural data held by the 
agency and make acreage and yield reporting less of a hassle for 
already overburdened producers.
  In addition, this bill establishes a role for consultation with state 
FSA committees in the introduction of new coverage to a state. The need 
for this provision was made abundantly clear to Arkansas' rice 
producers this spring. A private insurance policy was offered to 
farmers at one rate, only to have the company reduce the rate once the 
amount of potential exposure was realized. In my discussions with 
various executives from the company on this issue it became apparent 
that their knowledge of the rice industry was fairly minimal. Had they 
consulted with local FSA committees who had a working knowledge of the 
rice industry before introduction of the policy, the train wreck that 
occurred might have been stopped in its tracks.
  Many of the problems associated with the crop insurance program have 
been addressed in previous reform measures, however, fraud and abuses 
are still present to some degree. This bill strengthens the monitoring 
of agents and adjusters to combat fraud and enhances the penalties 
available to USDA for companies, agents and producers who engage in 
fraudulent activities. There is simply no room for bad actors that 
recklessly cost the taxpayers money.
  While this bill was crafted with the input of producers from Arkansas 
and Mississippi, there is no preferential treatment toward any 
commodity or geographic region. We have attempted to include provisions 
that will make the crop insurance program more effective across the 
nation. We hope that we have achieved this goal and look forward to 
working with our colleagues to address any measures that will make the 
crop insurance reform effort more effective.
  Mr. President, I ask unanimous consent that letters of support for 
this bill be included in the Record from the following commodity 
organizations: The National Cotton Council, USA Rice Federation, 
American Sugar Cane League, the Southern Peanut Farmers Federation, and 
the Alabama Farmers Federation.
  These organizations have been very helpful in the crafting of this 
bill and we certainly appreciate the input they have provided.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                        American Sugar Cane League


                                           of the U.S.A., Inc.

                                      Thibodaux, La, May 19, 1999.
     Hon. Thad Cochran,
     Russell Senate Office Building,
     Washington, DC
     Hon. Blanche Lincoln,
     Hart Senate Office Building,
     Washington, DC
       Dear Senators Cochran and Lincoln: On behalf of the 
     American Sugar Cane League of the U.S.A., Inc., which 
     represents the entire sugar producing and processing industry 
     in the state of Louisiana, I offer to you our full support of 
     your efforts to improve crop insurance with the introduction 
     of the Crop Insurance Equity Act of 1999. Agriculture in this 
     great country has been in a crisis mode for the last several 
     years and the federal crop insurance program, as it is 
     presently structured, is of limited or no utility to our 
     growers.
       In particular, we are pleased with the language which 
     directs the Federal Crop Insurance Corporation (FCIC) to 
     review the rating methodologies, giving high priority to 
     those commodities with the lowest level of participation. Due 
     to the inherent problems with the program, as presently 
     structured, sugarcane growers in Louisiana have not 
     considered crop insurance an affordable or viable management 
     tool. Again, it is with great enthusiasm that we support this 
     bill which we hope will benefit the entire agricultural 
     community and our industry, and allow us the opportunity to 
     have available to us a viable risk management tool that is 
     affordable.
       We appreciate tremendously your initiative with this bill 
     language which seeks to make crop insurance more useful for 
     southern commodities. The Louisiana sugarcane industry will 
     continue to review the reasons that crop insurance has not 
     worked thus far and would like to reserve the option to make 
     additional suggestions to you as the process moves forward. 
     Thanks again for taking on a challenge that stands to give 
     American agriculture what the rest of the manufacturing and 
     business community of this country has always had, a viable 
     and affordable risk management tool.
       Sincerely,
                                              Charles J. Melancon,
     President and General Manager.
                                  ____



                           National Cotton Council of America,

                                                     May 18, 1999.
     Hon. Thad Cochran,
     Hon. Blanche Lincoln,
     U.S. Senate, Washington, DC.
       Dear Senators Cochran and Lincoln: On behalf of the 
     National Cotton Council, I would like to convey our sincere 
     appreciation and strong support for your efforts to improve 
     the Federal crop insurance program. The legislation that you 
     are about to introduce, The Crop Insurance Equity Act of 
     1999, makes many needed changes to the program, improves 
     compliance, and should increase participation as well.
       The profitability crisis we are experiencing in American 
     agriculture and the policy direction we have chosen on farm 
     programs has greatly increased the cotton industry's interest 
     in more sound risk management tools to help weather the tough 
     times. Your legislation takes a very comprehensive approach 
     towards improving the current system. We are especially 
     pleased with your provisions that will result in a reformed 
     rating process, significantly improved record keeping 
     requirements through the Farm Service Agency, equitable 
     prevented planting coverage for all crops, and a streamlined 
     private product approval process.
       Finally, we appreciate the efforts of Hunt Shipman and Ben 
     Noble on your staffs who worked tirelessly with the cotton 
     industry to include provisions that would make the program 
     more equitable for all commodities. They are both an asset to 
     your offices.
       Thank you again for your efforts and all you do to help the 
     cotton industry. We look forward to working with you any way 
     we can to insure passage of your bill.
           Sincerely,
     Ron Rayer,
       President, National Cotton Council,
     Allen Helms,
       Chairman, American Cotton Producers Association.
                                  ____



                                          USA Rice Federation,

                                                      May 19, 1999
     Hon. Blanche Lambert Lincoln,
     U.S. Senate, Washington, DC.
       Dear Senator Lincoln: On behalf of the USA Rice Federation, 
     which represents producers of over 80 percent of America's 
     rice crop and virtually all U.S. rice millers, I would like 
     to express our appreciation for the leadership that you and 
     Senator Cochran have provided on the issue of reforming 
     Federal crop insurance. Specifically, we want to express our 
     strong support for the Crop Insurance Equity Act of 1999 
     which represents a positive step towards addressing the 
     concerns that U.S. rice producers have had with the existing 
     crop insurance program.
       As you probably are aware, most rice producers have 
     traditionally not participated in the Federal crop insurance 
     program because premiums have been viewed as too high 
     relative to the minimal coverage the program offers. For 
     example, during the 1998 crop year, only 43 percent of 3 
     million acres planted to rice was covered by catastrophic 
     policies while only another 20 percent of the acreage was 
     covered by buy-up policies. In general, the low level of 
     participation by U.S. rice farmers has occurred because: CAT 
     coverage offers farmers minimal coverage and buy-up policies 
     are too expensive; serious problems exist with the actuarial 
     data used to calculate premiums and coverage; and rice 
     farmers, who traditionally experience relatively low levels 
     of yield variability, want price/revenue protection versus 
     traditional yield coverage. We believe that the Crop 
     Insurance Equity Act begins to seriously address each of 
     these three major issues.
       Again, Senator Lincoln, we want to thank you and your staff 
     for working so closely with the USA Rice Federation during 
     the development of this important bill. We are proud to 
     support this bill and look forward to working with you to 
     enact the legislation in 1999.
           Sincerely,
                                                A. Ellen Terpstra,
     President and Chief Executive Officer.
                                  ____

                                                 The Redding Firm,


                313 Massachusetts Avenue, N.E., Washington, DC

       We are very appreciative of Senators Cochran and Lincoln 
     taking the lead on reforming the Federal Crop Insurance 
     Program. Growers in the Southeast want sound product options 
     at a reasonable price. The Cochran-Lincoln bill moves crop 
     insurance in this direction. Disaster bills do not adequately 
     address the problems growers face in a bad crop year. Crop 
     insurance has to be reformed where growers can plan and 
     address difficult financial times.
     Southern Peanut Farmers Federation.
                                  ____



                                                 ALFA FARMERS,

                                                     May 18, 1999.
     Senator Blanche Lincoln,
     Hart Senate Office Building, Washington, DC.
       Dear Senator Lincoln: On behalf of over 398,000 members of 
     the Alabama Farmers Federation, I am writing in support of 
     this bill which you and Senator Cochran are introducing 
     titled the Crop Insurance Equity Act of 1999. This crop 
     insurance reform bill goes a long way toward addressing the 
     inequities southern producers face under the current federal 
     crop insurance program. While producers do not want the 
     government to guarantee them a profit, real crop insurance 
     reform is needed to ensure farmers have

[[Page S5859]]

     adequate risk management tools for years when a disaster does 
     occur.
       We are pleased that the Crop Insurance Equity Act addresses 
     the so-called ``ratings'' issue in which southern producers 
     are unfairly penalized by a flawed rating system. As you 
     know, the current 20-year historical actuarial database being 
     used to determine probability of loss and establish premium 
     levels does not accurately reflect real risk (particularly in 
     the Southeast).
       In addition, Alabama farmers want increased emphasis on 
     oversight by the federal government and private insurers to 
     prevent fraud. The Federation is pleased that the oversight 
     provisions were included in your bill by making crop 
     insurance more affordable for good farmers and eliminating 
     abuses by those who would take advantage of it, thereby 
     increasing producer participation.
       The Federation is also pleased to note that your bill 
     restores the provision in law that enables producers with 
     good experience to receive premium discounts, as well as 
     eliminating ``black dirt'' and replant provisions which have 
     unfairly penalized cotton growers in the current federal crop 
     insurance program.
       Furthermore, it is important to note that premium subsidies 
     are shifted to the higher levels of coverage in your bill, as 
     well as recognizing that your provision concerning the 
     multiple year disasters remedies the problem that producers 
     who experience multiple years of disaster currently face. 
     These provisions should make higher coverage more affordable, 
     as well as encourage greater producer participation.
       Again, we thank you and Senator Cochran for your leadership 
     for southern agriculture, and we look forward to working 
     toward a reasonable crop insurance program that is truly a 
     risk management tool for producers of all areas of the 
     country.
           Sincerely,
                        G. Keith Gray, Director, National Affairs.
                                 ______