[House Report 106-300]
[From the U.S. Government Publishing Office]



                                                                       
106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    106-300

======================================================================



 
                AGRICULTURAL RISK PROTECTION ACT OF 1999
                                _______


 August 5, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Combest, from the Committee on Agriculture, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 2559]

    The Committee on Agriculture, to whom was referred the bill 
(H.R. 2559) to amend the Federal Crop Insurance Act to 
strengthen the safety net for agricultural producers by 
providing greater access to more affordable risk management 
tools and improved protection from production and income loss, 
to improve the efficiency and integrity of the Federal crop 
insurance program, and for other purposes, having considered 
the same, report favorably thereon with an amendment and 
recommend that the bill as amended do pass.

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Agricultural Risk 
Protection Act of 1999''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

               TITLE I--STRENGTHENING THE FARM SAFETY NET

Sec. 101. Premium schedule for additional coverage.
Sec. 102. Premium schedule for other plans of insurance.
Sec. 103. Adjustment in actual production history to establish 
insurable yields.
Sec. 104. Review and adjustment in rating methodologies.
Sec. 105. Conduct of pilot programs, including livestock.
Sec. 106. Cost of production as a price election.
Sec. 107. Premium discounts for good performance.
Sec. 108. Options for catastrophic risk protection.
Sec. 109. Authority for nonprofit associations to pay fees on behalf of 
producers.
Sec. 110. Elections regarding prevented planting coverage.
Sec. 111. Limitations under noninsured crop disaster assistance 
program.
Sec. 112. Quality grade loss adjustment.
Sec. 113. Application of amendments.

                 TITLE II--IMPROVING PROGRAM INTEGRITY

Sec. 201. Limitation on double insurance.
Sec. 202. Improving program compliance and integrity.
Sec. 203. Sanctions for false information.
Sec. 204. Protection of confidential information.
Sec. 205. Records and reporting.
Sec. 206. Compliance with State licensing requirements.

                       TITLE III--ADMINISTRATION

Sec. 301. Board of Directors of Corporation.
Sec. 302. Promotion of submission of policies and related materials.
Sec. 303. Research and development, including contracts regarding 
underserved commodities.
Sec. 304. Funding for reimbursement and research and development.
Sec. 305. Board consideration of submitted policies and materials.
Sec. 306. Contracting for rating of plans of insurance.
Sec. 307. Electronic availability of crop insurance information.
Sec. 308. Fees for use of new policies and plans of insurance.
Sec. 309. Clarification of producer requirement to follow good farming 
practices.
Sec. 310. Reimbursements and negotiation of standard reinsurance 
agreement.

               TITLE I--STRENGTHENING THE FARM SAFETY NET

SEC. 101. PREMIUM SCHEDULE FOR ADDITIONAL COVERAGE.

  (a) Premium Amounts.--Section 508(d)(2) of the Federal Crop Insurance 
Act (7 U.S.C. 1508(d)(2)) is amended by striking subparagraphs (B) and 
(C) and inserting the following new subparagraph:
                  ``(B) In the case of additional coverage equal to or 
                greater than 50 percent of the recorded or appraised 
                average yield indemnified at not greater than 100 
                percent of the expected market price, or an equivalent 
                coverage, the amount of the premium shall--
                          ``(i) be sufficient to cover anticipated 
                        losses and a reasonable reserve; and
                          ``(ii) include an amount for operating and 
                        administrative expenses, as determined by the 
                        Corporation, on an industry-wide basis as a 
                        percentage of the amount of the premium used to 
                        define loss ratio.''.
  (b) Payment Schedule.--Section 508(e)(2) of the Federal Crop 
Insurance Act (7 U.S.C. 1508(e)(2)) is amended by striking 
subparagraphs (B) and (C) and inserting the following new 
subparagraphs:
                  ``(B) In the case of additional coverage equal to or 
                greater than 50 percent, but less than 55 percent, of 
                the recorded or appraised average yield indemnified at 
                not greater than 100 percent of the expected market 
                price, or an equivalent coverage, the amount shall be 
                equal to the sum of--
                          ``(i) 67 percent of the amount of the premium 
                        established under subsection (d)(2)(B)(i) for 
                        the coverage level selected; and
                          ``(ii) the amount determined under subsection 
                        (d)(2)(B)(ii) for the coverage level selected 
                        to cover operating and administrative expenses.
                  ``(C) In the case of additional coverage equal to or 
                greater than 55 percent, but less than 65 percent, of 
                the recorded or appraised average yield indemnified at 
                not greater than 100 percent of the expected market 
                price, or an equivalent coverage, the amount shall be 
                equal to the sum of--
                          ``(i) 64 percent of the amount of the premium 
                        established under subsection (d)(2)(B)(i) for 
                        the coverage level selected; and
                          ``(ii) the amount determined under subsection 
                        (d)(2)(B)(ii) for the coverage level selected 
                        to cover operating and administrative expenses.
                  ``(D) In the case of additional coverage equal to or 
                greater than 65 percent, but less than 75 percent, of 
                the recorded and appraised average yield indemnified at 
                not greater than 100 percent of the expected market 
                price, or an equivalent coverage, the amount shall be 
                equal to the sum of--
                          ``(i) 59 percent of the amount of the premium 
                        established under subsection (d)(2)(B)(i) for 
                        the coverage level selected; and
                          ``(ii) the amount determined under subsection 
                        (d)(2)(B)(ii) for the coverage level selected 
                        to cover operating and administrative expenses.
                  ``(E) In the case of additional coverage equal to or 
                greater than 75 percent, but less than 80 percent, of 
                the recorded or appraised average yield indemnified at 
                not greater than 100 percent of the expected market 
                price, or an equivalent coverage, the amount shall be 
                equal to the sum of--
                          ``(i) 54 percent of the amount of the premium 
                        established under subsection (d)(2)(B)(i) for 
                        the coverage level selected; and
                          ``(ii) the amount determined under subsection 
                        (d)(2)(B)(ii) for the coverage level selected 
                        to cover operating and administrative expenses.
                  ``(F) In the case of additional coverage equal to or 
                greater than 80 percent, but less than 85 percent, of 
                the recorded or appraised average yield indemnified at 
                not greater than 100 percent of the expected market 
                price, or an equivalent coverage, the amount shall be 
                equal to the sum of--
                          ``(i) 40.6 percent of the amount of the 
                        premium established under subsection 
                        (d)(2)(B)(i) for the coverage level selected; 
                        and
                          ``(ii) the amount determined under subsection 
                        (d)(2)(B)(ii) for the coverage level selected 
                        to cover operating and administrative expenses.
                  ``(G) Subject to subsection (c)(4), in the case of 
                additional coverage equal to or greater than 85 percent 
                of the recorded or appraised average yield indemnified 
                at not greater than 100 percent of the expected market 
                price, or an equivalent coverage, the amount shall be 
                equal to the sum of--
                          ``(i) 30.6 percent of the amount of the 
                        premium established under subsection 
                        (d)(2)(B)(i) for the coverage level selected; 
                        and
                          ``(ii) the amount determined under subsection 
                        (d)(2)(B)(ii) for the coverage level selected 
                        to cover operating and administrative 
                        expenses.''.
  (c) Premium Payment Disclosure.--Section 508(e) of the Federal Crop 
Insurance Act (7 U.S.C. 1508(e)) is amended by adding at the end the 
following new paragraph:
          ``(5) Premium payment disclosure.--Each policy or plan of 
        insurance under this title shall prominently indicate the 
        dollar amount of the portion of the premium paid by the 
        Corporation under this subsection or subsection (h)(2).''.

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

  Section 508(h)(2) of the Federal Crop Insurance Act (7 U.S.C. 
1508(h)(2)) is amended--
          (1) by striking ``A policy'' and inserting the following:
                  ``(A) Preparation.--A policy'';
          (2) by striking the second sentence; and
          (3) by adding at the end the following new subparagraph:
                  ``(B) Premium schedule.--In the case of a policy 
                offered under this subsection (except paragraph (10)) 
                or subsection (m)(4), the Corporation shall pay a 
                portion of the premium of the policy that shall be 
                equal to--
                          ``(i) the percentage, specified in subsection 
                        (e) for a similar level of coverage, of the 
                        total amount of the premium used to define loss 
                        ratio; and
                          ``(ii) the dollar amount of the 
                        administrative and operating expenses that 
                        would be paid by the Corporation under 
                        subsection (e) for a similar level of 
                        coverage.''.

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

  (a) Use of Percentage of Transitional Yield.--Section 508(g) of the 
Federal Crop Insurance Act (7 U.S.C. 1508(g)) is amended by adding at 
the end the following new paragraph:
          ``(4) Adjustment in actual production history to establish 
        insurable yields.--
                  ``(A) Application.--This paragraph shall apply 
                whenever the Corporation uses the actual production 
                history of the producer to establish insurable yields 
                for an agricultural commodity for the 2000 and 
                subsequent crop years.
                  ``(B) Election to use percentage of transitional 
                yield.--If, for one or more of the crop years used to 
                establish the producer's actual production history of 
                an agricultural commodity, the producer's recorded or 
                appraised yield of the commodity was less than 60 
                percent of the applicable transitional yield, as 
                determined by the Corporation, the Corporation shall, 
                at the election of the producer--
                          ``(i) exclude any of such recorded or 
                        appraised yield; and
                          ``(ii) replace each excluded yield with a 
                        yield equal to 60 percent of the applicable 
                        transitional yield.''.
  (b) APH Adjustment to Reflect Participation in Major Pest Control 
Efforts.--Section 508(g) of the Federal Crop Insurance Act (7 U.S.C. 
1508(g)) is amended by inserting after paragraph (4), as added by 
subsection (a), the following new paragraph:
          ``(5) Adjustment to reflect increased yields from successful 
        pest control efforts.--
                  ``(A) Situations justifying adjustment.--The 
                Corporation shall develop a methodology for adjusting 
                the actual production history of a producer when each 
                of the following apply:
                          ``(i) The producer's farm is located in an 
                        area where systematic, area-wide efforts have 
                        been undertaken using certain operations or 
                        measures, or the producer's farm is a location 
                        at which certain operations or measures have 
                        been undertaken, to detect, eradicate, 
                        suppress, or control, or at least to prevent or 
                        retard the spread of, a plant disease or plant 
                        pest, including a plant pest covered by the 
                        definition in section 102 of the Department of 
                        Agriculture Organic Act of 1944 (7 U.S.C. 
                        147a).
                          ``(ii) The presence of the plant disease or 
                        plant pest has been found to adversely affect 
                        the yield of the agricultural commodity for 
                        which the producer is applying for insurance.
                          ``(iii) The efforts described in clause (i) 
                        have been effective.
                  ``(B) Adjustment amount.--The amount by which the 
                Corporation adjusts the actual production history of a 
                producer of an agricultural commodity shall reflect the 
                degree to which the success of the systematic, area-
                wide efforts described in paragraph (1)(A), on average, 
                increases the yield of the commodity on the producer's 
                farm, as determined by the Corporation.''.

SEC. 104. REVIEW AND ADJUSTMENT IN RATING METHODOLOGIES.

  Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) 
is amended by adding at the end the following:
          ``(7) Review and adjustment of rates.--
                  ``(A) Review required.--To maximize participation in 
                the Federal crop insurance program and to ensure equity 
                for producers, the Corporation shall periodically 
                review the methodologies employed for rating plans of 
                insurance under this title consistent with section 
                507(c)(2).
                  ``(B) Premium adjustment.--The Corporation shall 
                analyze the rating and loss history of approved 
                policies and plans of insurance for agricultural 
                commodities by area. If the Corporation makes a 
                determination that premium rates are excessive for an 
                agricultural commodity in an area relative to the 
                requirements of subsection (d)(2)(B) for that area, 
                then, in the 2000 crop year or as soon as practicable 
                after the determination is made, the Corporation shall 
                make appropriate adjustments in the premium rates for 
                that area for that agricultural commodity.''.

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

  (a) Repeal of Obsolete Pilot Programs.--Section 508(h) of the Federal 
Crop Insurance Act (7 U.S.C. 1508(h)) is amended by striking paragraphs 
(6) and (8).
  (b) General Requirements.--Section 508(h) of the Federal Crop 
Insurance Act (7 U.S.C. 1508(h)) is amended by inserting after 
paragraph (7) the following new paragraph:
          ``(8) General requirements applicable to pilot programs.--In 
        conducting any pilot program of insurance or reinsurance 
        authorized or required by this title, the Corporation--
                  ``(A) may offer the pilot program on a regional, 
                whole State, or national basis after considering the 
                interests of affected producers and the interests of 
                and risks to the Corporation;
                  ``(B) may operate the pilot program, including any 
                modifications thereof, for a period of up to 3 years; 
                and
                  ``(C) may extend the time period for the pilot 
                program for additional periods, as determined 
                appropriate by the Corporation.''.
  (c) Expedited Consideration.--Section 508(h)(4) of the Federal Crop 
Insurance Act (7 U.S.C. 1508(h)(4)) is amended--
          (1) by redesignating subparagraphs (A), (B), (C), and (D) as 
        clauses (i), (ii), (iii), and (iv), respectively;
          (2) by moving the text of the clauses (as so designated) 2 
        ems to the right;
          (3) by striking ``The Corporation'' in the first sentence and 
        inserting the following:
                  ``(A) Guidelines required.--Not later than 180 days 
                after the date of the enactment of the Agricultural 
                Risk Protection Act of 1999, the Corporation''; and
          (4) by adding at the end the following new subparagraph:
                  ``(B) Expedited consideration of proposed pilot 
                programs.--The regulations required by subparagraph (A) 
                shall include streamlined guidelines for the 
                submission, and Board review, of pilot programs that 
                the Board determines are limited in scope and duration 
                and involve a reduced level of liability to the Federal 
                Government, and an increased level of risk to approved 
                insurance providers participating in the pilot program, 
                relative to other policies or materials submitted under 
                this subsection. The streamlined guidelines shall be 
                consistent with the guidelines established under 
                subparagraph (A), except as follows:
                          ``(i) Not later than 60 days after submission 
                        of the proposed pilot program, the Corporation 
                        shall provide an applicant with notification of 
                        its intent to recommend disapproval of the 
                        proposal to the Board.
                          ``(ii) Not later than 90 days after the 
                        proposed pilot program is submitted to the 
                        Board, the Board shall make a determination to 
                        approve or disapprove the pilot program. Any 
                        determination by the Board to disapprove the 
                        pilot program shall be accompanied by a 
                        complete explanation of the reasons for the 
                        Board's decision to deny approval. In the event 
                        the Board fails to make a determination within 
                        the prescribed time period, the pilot program 
                        submitted shall be deemed approved by the Board 
                        for the initial reinsurance year designated for 
                        the pilot program, except in the case where the 
                        Board and the applicant agree to an 
                        extension.''.
  (d) Livestock Pilot Programs.--
          (1) Programs required.--Section 508(h) of the Federal Crop 
        Insurance Act (7 U.S.C. 1508(h)) is amended by striking 
        paragraph (10) and inserting the following new paragraph:
          ``(10) Livestock pilot programs.--
                  ``(A) Programs required.--The Corporation shall 
                conduct one or more pilot programs to evaluate the 
                effectiveness of risk management tools for livestock 
                producers, including the use of futures and options 
                contracts and policies and plans of insurance that 
                provide livestock producers with reasonable protection 
                from the financial risks of price or income 
                fluctuations inherent in the production and marketing 
                of livestock, provide protection for production losses, 
                and otherwise protect the interests of livestock 
                producers. To the maximum extent practicable, the 
                Corporation shall evaluate the greatest number and 
                variety of such programs to determine which of the 
                offered risk management tools are best suited to 
                protect livestock producers from the financial risks 
                associated with the production and marketing of 
                livestock.
                  ``(B) Implementation; assistance.--The Corporation 
                shall begin conducting livestock pilot programs under 
                this paragraph during fiscal year 2001, and any policy 
                or plan of insurance offered under this paragraph may 
                be prepared without regard to the limitations contained 
                in this title. As part of such a pilot program, the 
                Corporation may provide assistance to producers to 
                purchase futures and options contracts or policies and 
                plans of insurance offered under that pilot program. 
                However, no action may be undertaken with respect to a 
                risk under this paragraph if the Corporation determines 
                that insurance protection for livestock producers 
                against the risk is generally available from private 
                companies.
                  ``(C) Location.--The Corporation shall conduct the 
                livestock pilot programs under this paragraph in a 
                number of counties that is determined by the 
                Corporation to be adequate to provide a comprehensive 
                evaluation of the feasibility, effectiveness, and 
                demand among producers for the risk management tools 
                evaluated in the pilot programs.
                  ``(D) Eligible producers; livestock.--Any producer of 
                a type of livestock covered by a pilot program under 
                this paragraph who owns or operates a farm or ranch in 
                a county selected as a location for that pilot program 
                shall be eligible to participate in that pilot program. 
                In this paragraph, the term `livestock' means cattle, 
                sheep, swine, goats, and poultry.
                  ``(E) Relation to other laws.--The terms and 
                conditions of any policy or plan of insurance offered 
                under this paragraph that is reinsured by the 
                Corporation is not subject to the jurisdiction of the 
                Commodity Futures Trading Commission or the Securities 
                and Exchange Commission or considered as accounts, 
                agreements (including any transaction which is of the 
                character of, or is commonly known to the trade as, an 
                `option', `privilege', `indemnity', `bid', `offer', 
                `put', `call', `advance guaranty', or `decline 
                guaranty'), or transactions involving contracts of sale 
                of a commodity for future delivery, traded or executed 
                on a contract market for the purposes of the Commodity 
                Exchange Act (7 U.S.C. 1 et seq.). Nothing in this 
                subparagraph is intended to affect the jurisdiction of 
                the Commodity Futures Trading Commission or the 
                applicability of the Commodity Exchange Act to any 
                transaction conducted on a designated contract market 
                (as that term is used in such Act) by an approved 
                insurance provider to offset the provider's risk under 
                a plan or policy of insurance under this paragraph.
                  ``(F) Limitation on expenditures.--The Corporation 
                shall conduct all livestock programs under this title 
                so that, to the maximum extent practicable, all costs 
                associated with conducting the livestock programs 
                (other than research and development costs covered by 
                paragraph (6) or subsection (m)(4)) are not expected to 
                exceed the following:
                          ``(i) $20,000,000 for fiscal year 2001.
                          ``(ii) $30,000,000 for fiscal year 2002.
                          ``(iii) $40,000,000 for fiscal year 2003.
                          ``(iv) $55,000,000 for fiscal year 2004 and 
                        each subsequent fiscal year.''.
          (2) Conforming amendment to definition of agricultural 
        commodity.--Section 518 of the Federal Crop Insurance Act (7 
        U.S.C. 1518) is amended by striking ``livestock and'' after 
        ``commodity, excluding''.
  (e) Funding of Livestock Pilot Programs.--
          (1) Authorization of appropriations.--Section 516(a)(2) of 
        the Federal Crop Insurance Act (7 U.S.C. 1516(a)(2)) is 
        amended--
                  (A) by striking ``years--'' and inserting ``years the 
                following:'';
                  (B) by capitalizing the first letter of the first 
                word of each subparagraph;
                  (C) by striking ``; and'' at the end of subparagraph 
                (A) and inserting a period; and
                  (D) by adding at the end the following new 
                subparagraph:
                  ``(C) Costs associated with the conduct of livestock 
                pilot programs carried out under section 508(h)(10), 
                subject to subparagraph (F) of such section.''.
          (2) Use of insurance fund.--Section 516(b)(1) of the Federal 
        Crop Insurance Act (7 U.S.C. 1516(b)(1)) is amended--
                  (A) by striking ``including--'' and inserting 
                ``including the following:'';
                  (B) by capitalizing the first letter of the first 
                word of each subparagraph;
                  (C) by striking the semicolon at the end of 
                subparagraph (A) and inserting a period;
                  (D) by striking ``; and'' at the end of subparagraph 
                (B) and inserting a period; and
                  (E) by adding at the end the following new 
                subparagraph:
                  ``(D) Costs associated with the conduct of livestock 
                pilot programs carried out under section 508(h)(10), 
                subject to subparagraph (F) of such section.''.

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

  Section 508(c)(5) of the Federal Crop Insurance Act (7 U.S.C. 
1508(c)(5)) is amended--
          (1) by striking ``The Corporation shall establish a price'' 
        in the matter preceding subparagraph (A) and inserting ``For 
        purposes of this title, the Corporation shall establish or 
        approve a price'';
          (2) by striking ``or'' at the end of subparagraph (A);
          (3) by striking the period at the end of subparagraph (B) and 
        inserting ``; or''; and
          (4) by adding at the end the following--
                  ``(C) in the case of cost of production or similar 
                plans of insurance, shall be the projected cost of 
                producing the agricultural commodity (as determined by 
                the Corporation).''.

SEC. 107. PREMIUM DISCOUNTS FOR GOOD PERFORMANCE.

  Section 508(d) of the Federal Crop Insurance Act (7 U.S.C. 1508(d)) 
is amended by adding at the end the following new paragraph:
          ``(3) Premium discounts.--
                  ``(A) Performance-based discount.--The Corporation 
                may provide a performance-based premium discount for a 
                producer of an agricultural commodity who has good 
                insurance or production experience relative to other 
                producers of that agricultural commodity in the same 
                area, as determined by the Corporation.
                  ``(B) Discount for reduced price for certain 
                commodities.--A producer who insured wheat, barley, 
                oats, or rye during at least 2 of the 1995 through 1999 
                crop years may be eligible to receive an additional 20 
                percent premium discount on the producer-paid premium 
                for any 2000 crop policy if the producer demonstrates 
                that the producer's wheat, barley, oats, or rye crop 
                was subjected to a discounted price due to Scab or 
                Vomitoxin damage, or both, during any 2 years of that 
                period. The 2000 insured crop or crops need not be 
                wheat, barley, oats, or rye to qualify for the discount 
                under this subparagraph. The 2 years of insurance and 
                the 2 years of discounted prices need not be the 
                same.''.

SEC. 108. OPTIONS FOR CATASTROPHIC RISK PROTECTION.

  Section 508(b) of the Federal Crop Insurance Act (7 U.S.C. 1508(b)) 
is amended by striking paragraph (3) and inserting the following new 
paragraph:
          ``(3) Alternative catastrophic coverage.--Beginning with the 
        2000 crop year, the Corporation shall offer producers of an 
        agricultural commodity the option of selecting either of the 
        following:
                  ``(A) The catastrophic risk protection coverage 
                available under paragraph (2)(A).
                  ``(B) An alternative catastrophic risk protection 
                coverage that--
                          ``(i) indemnifies the producer on an area 
                        yield and loss basis if such a plan of 
                        insurance is offered for the agricultural 
                        commodity in the county in which the farm is 
                        located;
                          ``(ii) provides, on a uniform national basis, 
                        a higher combination of yield and price 
                        protection than the coverage available under 
                        paragraph (2)(A); and
                          ``(iii) the Corporation determines is 
                        comparable to the coverage available under 
                        paragraph (2)(A) for purposes of subsection 
                        (e)(2)(A).''.

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

  Section 508(b)(5) of the Federal Crop Insurance Act (7 U.S.C. 
1508(b)(5)) is amended by adding at the end the following new 
subparagraph:
                  ``(F) Payment of fees on behalf of producers.--
                          ``(i) Payment authorized.--Notwithstanding 
                        any other subparagraph of this paragraph, a 
                        cooperative association of agricultural 
                        producers or a nonprofit trade association may 
                        pay to the Corporation, on behalf of a member 
                        of the association who consents to be insured 
                        under such an arrangement, all or a portion of 
                        the fees imposed under subparagraphs (A) and 
                        (B) for catastrophic risk protection.
                          ``(ii) Treatment of licensing fees.--A 
                        licensing fee or other payment made by the 
                        insurance provider to the cooperative 
                        association or trade association in connection 
                        with the issuance of catastrophic risk 
                        protection or additional coverage under this 
                        section to members of the cooperative 
                        association or trade association shall not be 
                        considered to be a rebate to the members if the 
                        members are informed in advance of the fee or 
                        payment.
                          ``(iii) Selection of provider; delivery.--
                        Nothing in this subparagraph shall be construed 
                        so as to limit the ability of a producer to 
                        choose the licensed insurance agent or other 
                        approved insurance provider from whom the 
                        member will purchase a policy or plan of 
                        insurance or to refuse coverage for which a 
                        payment is offered to be made under clause (i). 
                        A policy or plan of insurance for which a 
                        payment is made under clause (i) shall be 
                        delivered by a licensed insurance agent or 
                        other approved insurance provider.
                          ``(iv) Additional coverage encouraged.--
                        Cooperatives and trade associations and any 
                        approved insurance provider with whom a 
                        licensing fee or other arrangement under this 
                        subparagraph is made shall encourage producer 
                        members to purchase appropriate levels of 
                        additional coverage in order to meet the risk 
                        management needs of such member producers.''.

SEC. 110. ELECTIONS REGARDING PREVENTED PLANTING COVERAGE.

  Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) 
is amended by inserting after paragraph (7), as added by section 104, 
the following new paragraph:
          ``(8) Prevented planting coverage.--
                  ``(A) Election not to receive coverage.--
                          ``(i) Election.--A producer may elect not to 
                        receive coverage for prevented planting of an 
                        agricultural commodity.
                          ``(ii) Reduction.--In the case of an election 
                        under clause (i), the Corporation shall provide 
                        a reduction in the premium payable by the 
                        producer for a plan of insurance in an amount 
                        equal to the premium for the prevented planting 
                        coverage, as determined by the Corporation.
                  ``(B) Equal coverage.--For each agricultural 
                commodity for which prevented planting coverage is 
                available, the Corporation shall offer an equal 
                percentage level of prevented planting coverage.
                  ``(C) Area conditions required for payment.--The 
                Corporation shall limit prevented planting payments to 
                producers to those situations in which producers in the 
                area in which the farm is located are generally 
                affected by the conditions that prevent an agricultural 
                commodity from being planted.
                  ``(D) Substitute commodity.--
                          ``(i) Authority to plant.--Subject to clause 
                        (iv), a producer who has prevented planting 
                        coverage and who is eligible to receive an 
                        indemnity under such coverage may plant an 
                        agricultural commodity, other than the 
                        commodity covered by the prevented planting 
                        coverage, on the acreage originally prevented 
                        from being planted.
                          ``(ii) Nonavailability of insurance.--A 
                        substitute agricultural commodity planted as 
                        authorized by clause (i) for harvest in the 
                        same crop year shall not be eligible for 
                        coverage under a policy or plan of insurance 
                        under this title or for noninsured crop 
                        disaster assistance under section 196 of the 
                        Federal Agriculture Improvement and Reform Act 
                        of 1996 (7 U.S.C. 7333). For purposes of 
                        subsection (b)(7) only, the substitute 
                        commodity shall be deemed to have at least 
                        catastrophic risk protection so as to satisfy 
                        the requirements of that subsection.
                          ``(iii) Effect on actual production 
                        history.--If a producer plants a substitute 
                        agricultural commodity as authorized by clause 
                        (i) for a crop year, the Corporation shall 
                        assign the producer a recorded yield, for that 
                        crop year for the commodity that was prevented 
                        from being planting, equal to 60 percent of the 
                        producer's actual production history for such 
                        commodity for purposes of determining the 
                        producer's actual production history for 
                        subsequent crop years.
                          ``(iv) Effect on prevented planting 
                        payment.--If a producer plants a substitute 
                        agricultural commodity as authorized by clause 
                        (i) before the latest planting date established 
                        by the Corporation for the agricultural 
                        commodity prevented from being planted, the 
                        Corporation shall not make a prevented planting 
                        payment with regard to the commodity prevented 
                        from being planted.''.

SEC. 111. LIMITATIONS UNDER NONINSURED CROP DISASTER ASSISTANCE 
                    PROGRAM.

  (b) Limitation.--Section 196(i) of the Federal Agriculture 
Improvement and Reform Act of 1996 (7 U.S.C. 7333(i)) is amended--
          (1) in paragraph (1)(B)--
                  (A) by striking ``gross revenues'' in the 
                subparagraph heading and inserting ``adjusted gross 
                income''; and
                  (B) by striking ``gross revenue'' and ``gross 
                revenues'' each place they appear and inserting 
                ``adjusted gross income''; and
          (2) by striking paragraph (4) and inserting the following new 
        paragraph:
          ``(4) Limitation.--A person who has qualifying adjusted gross 
        income in excess of $2,000,000 during the taxable year shall 
        not be eligible to receive any noninsured crop disaster 
        assistance payment under this section.''.

SEC. 112. QUALITY GRADE LOSS ADJUSTMENT.

  Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) 
is amended by inserting after paragraph (8), as added by section 110, 
the following new paragraph:
          ``(9) Quality grade loss adjustment.--Consistent with 
        subsection (m)(4), by the 2000 crop year, the Corporation shall 
        enter into a contract to analyze its quality loss adjustment 
        procedures and make such adjustments as may be necessary to 
        more accurately reflect local quality discounts that are 
        applied toagricultural commodities insured under this title, 
taking into consideration the actuarial soundness of the adjustment and 
the prevention of fraud, waste and abuse.''.

SEC. 113. APPLICATION OF AMENDMENTS.

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

                TITLE II--IMPROVING PROGRAM EFFICIENCIES

SEC. 201. LIMITATION ON DOUBLE INSURANCE.

  Section 508(a) of the Federal Crop Insurance Act (7 U.S.C. 1508(a)) 
is amended by inserting after paragraph (9), as added by section 112, 
the following new paragraph:
          ``(10) Limitation on double insurance.--
                  ``(A) Restricted to catastrophic risk protection.--
                Except for situations covered by subparagraph (B), no 
                policy or plan of insurance may be offered under this 
                title for more than one agricultural commodity planted 
                on the same acreage in the same crop year unless the 
                coverage for the additional crop is limited to 
                catastrophic risk protection available under subsection 
                (b).
                  ``(B) Exception for double-cropping.--A policy or 
                plan of insurance may be offered under this title for 
                an agricultural commodity and for an additional 
                agricultural commodity when both agricultural 
                commodities are normally harvested within the same crop 
                year on the same acreage if the following conditions 
                are met:
                          ``(i) There is an established practice of 
                        double-cropping in the area and the additional 
                        agricultural commodity is customarily double-
                        cropped in the area with the first agricultural 
                        commodity, as determined by the Corporation.
                          ``(ii) A policy or plan of insurance for the 
                        first agricultural commodity and the additional 
                        agricultural commodity is available under this 
                        title.
                          ``(iii) The additional commodity is planted 
                        on or before the final planting date or late 
                        planting date for that additional commodity, as 
                        established by the Corporation.''.

SEC. 202. IMPROVING PROGRAM COMPLIANCE AND INTEGRITY.

  (a) Additional Methods.--Section 506(q) of the Federal Crop Insurance 
Act (7 U.S.C. 1506(q)) is amended--
          (1) by redesignating paragraphs (1) and (2) as paragraphs (2) 
        and (3);
          (2) by inserting after the subsection heading the following 
        new paragraph (1):
          ``(1) Purpose.--The purpose of this subsection is to improve 
        compliance with the Federal crop insurance program and to 
        improve program integrity.''; and
          (3) by adding at the end the following new paragraphs:
          ``(4) Reconciling producer information.--The Secretary shall 
        develop and implement a coordinated plan for the Corporation 
        and the Administrator of the Farm Service Agency to reconcile 
        all relevant information received by the Corporation or the 
        Farm Service Agency from a producer who obtains crop insurance 
        coverage under this title. Beginning with the 2000 crop year, 
        the Secretary shall require that the Corporation and the Farm 
        Service Agency reconcile such producer-derived information on 
        at least an annual basis in order to identify and address any 
        discrepancies.
          ``(5) Identification and elimination of fraud, waste, and 
        abuse.--
                  ``(A) FSA monitoring program.--The Secretary shall 
                develop and implement a coordinated plan for the Farm 
                Service Agency to assist the Corporation in the ongoing 
                monitoring of programs carried out under this title, 
                including--
                          ``(i) conducting fact finding relative to 
                        allegations of program fraud, waste, and abuse, 
                        both at the request of the Corporation or on 
                        its own initiative after consultation with the 
                        Corporation;
                          ``(ii) reporting any allegation of fraud, 
                        waste, and abuse or identified program 
                        vulnerabilities to the Corporation in a timely 
                        manner; and
                          ``(iii) assisting the Corporation and 
                        approved insurance providers in auditing a 
                        statistically appropriate number of claims made 
                        under any policy or plan of insurance under 
                        this title.
                  ``(B) Use of field infrastructure.--The plan required 
                by this paragraph shall use the field infrastructure of 
                the Farm Service Agency, and the Secretary shall ensure 
                that relevant Farm Service Agency personnel are 
                appropriately trained for any responsibilities assigned 
                to them under the plan. At a minimum, such personnel 
                shall receive the same level of training and pass the 
                same basic competency tests as required of loss 
                adjusters of approved insurance providers.
                  ``(C) Maintenance of provider effort; cooperation.--
                The activities of the Farm Service Agency under this 
                paragraph do not affect the responsibility of approved 
                insurance providers to conduct any audits of claims or 
                other program reviews required by the Corporation. If 
                an insurance provider reports to the Corporation that 
                it suspects intentional misrepresentation, fraud, 
                waste, or abuse, the Corporation shall make a 
                determination and provide a written response within 90 
                days after receiving the report. The insurance provider 
                and the Corporation shall take coordinated action in 
                any case where misrepresentation, fraud, waste, or 
                abuse has occurred.
          ``(6) Consultation with state committees.--The Corporation 
        shall establish a mechanism under which State committees of the 
        Farm Service Agency are consulted concerning policies and plans 
        of insurance offered in a State under this title.
          ``(7) Annual report on compliance efforts.--The Secretary 
        shall submit to the Committee on Agriculture of the House of 
        Representatives and the Committee on Agriculture, Nutrition, 
        and Forestry of the Senate an annual report containing findings 
        relative to the efforts undertaken pursuant to paragraphs (4) 
        and (5). The report shall identify specific occurrences of 
        waste, fraud, and abuse and contain an outline of actions that 
        have been or are being taken to eliminate the identified waste, 
        fraud, and abuse.''.
  (b) Technical Correction.--Paragraph (3) of section 506(q) of the 
Federal Crop Insurance Act (7 U.S.C. 1506(q)), as redesignated by 
subsection (a), is amended by striking ``this subsection'' and 
inserting ``this paragraph''.

SEC. 203. SANCTIONS FOR FALSE INFORMATION.

  (a) Authorized Sanctions.--Section 506(n) of the Federal Crop 
Insurance Act (7 U.S.C. 1506(n)) is amended--
          (1) in the subsection heading, by striking ``Penalties'' and 
        inserting ``Sanctions for Violations'';
          (2) by redesignating paragraph (2) as paragraph (3) and, in 
        such paragraph, by striking ``penalty'' and ``assessing 
        penalties'' and inserting ``sanction'' and ``imposing a 
        sanction'', respectively; and
          (3) by striking paragraph (1) and inserting the following new 
        paragraphs:
          ``(1) False information.--If a producer, an agent, a loss 
        adjuster, an approved insurance provider, or any other person 
        willfully and intentionally provides any false or inaccurate 
        information to the Corporation or to an approved insurance 
        provider with respect to a policy or plan of insurance under 
        this title, the Corporation may, after notice and an 
        opportunity for a hearing on the record, impose one or more of 
        the sanctions specified in paragraph (2).
          ``(2) Authorized sanctions.--The following sanctions may be 
        imposed for a violation under paragraph (1):
                  ``(A) The Corporation may impose a civil fine for 
                each violation not to exceed the greater of--
                          ``(i) the amount of the pecuniary gain 
                        obtained as a result of the false or inaccurate 
                        information provided; or
                          ``(ii) $10,000.
                  ``(B) If the violation is committed by a producer, 
                the producer may be disqualified for a period of up to 
                5 years from--
                          ``(i) participating in, or receiving any 
                        benefit provided under this title, the 
                        noninsured crop disaster assistance program 
                        under section 196 of the Federal Agriculture 
                        Improvement and Reform Act of 1996 (7 U.S.C. 
                        7333), the Agricultural Market Transition Act 
                        (7 U.S.C. 7201 et seq.), the Agricultural Act 
                        of 1949 (7 U.S.C. 1421 et seq.), the Commodity 
                        Credit Corporation Charter Act (15 U.S.C. 714 
                        et seq.), or the Agricultural Adjustment Act of 
                        1938 (7 U.S.C. 1281 et seq.);
                          ``(ii) receiving any loan made, insured, or 
                        guaranteed under the Consolidated Farm and 
                        Rural Development Act (7 U.S.C. 1921 et. seq.);
                          ``(iii) receiving any benefit provided, or 
                        indemnity made available, under any other law 
                        to assist a producer of an agricultural 
                        commodity due to a crop loss or a decline in 
                        commodity prices; or
                          ``(iv) receiving any cost share assistance 
                        for conservation or any other assistance 
                        provided under title XII of the Food Security 
                        Act (16 U.S.C. 3801 et seq.).
                  ``(C) If the violation is committed by an agent, loss 
                adjuster, approved insurance provider, or any other 
                person (other than a producer), the violator may be 
                disqualified for a period of up to 5 years from 
                participating in, or receiving any benefit provided 
                under this title.
                  ``(D) If the violation is committed by a producer, 
                the Corporation may require the producer to forfeit any 
                premium owed under the policy, notwithstanding a denial 
                of claim or collection of an overpayment, if the false 
                or inaccurate information was material.''.
  (b) Disclosure of Sanctions.--Section 506(n) of the Federal Crop 
Insurance Act (7 U.S.C. 1506(n)) is amended by adding at the end the 
following new paragraph:
          ``(4) Disclosure of sanctions.--Each policy or plan of 
        insurance under this title shall prominently indicate the 
        sanctions prescribed under paragraph (2) for willfully and 
        intentionally providing false or inaccurate information to the 
        Corporation or to an approved insurance provider.''.

SEC. 204. PROTECTION OF CONFIDENTIAL INFORMATION.

  Section 502 of the Federal Crop Insurance Act (7 U.S.C. 1502) is 
amended by adding at the end the following new subsection:
  ``(c) Protection of Confidential Information.--
          ``(1) Authorized disclosure.--In the case of information 
        furnished by a producer to participate in or receive any 
        benefit under this title, the Secretary, any other officer or 
        employee of the Department or an agency thereof, an approved 
        insurance provider and its employees and contractors, and any 
        other person may not disclose the information to the public, 
        unless the information has been transformed into a statistical 
        or aggregate form that does not allow the identification of the 
        person who supplied particular information.
          ``(2) Violations; penalties.--Subsection (c) of section 1770 
        of the Food Security Act of 1985 (7 U.S.C. 2276) shall apply 
        with respect to the release of information collected in any 
        manner or for any purpose prohibited by paragraph (1).''.

SEC. 205. RECORDS AND REPORTING.

  (a) Condition of Obtaining Coverage.--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, records 
acceptable to the Corporation of historical acreage and production of 
the crops for which the insurance is sought'' and inserting ``provide 
annually records acceptable to the Secretary regarding crop acreage, 
acreage yields, and production for each agricultural commodity insured 
under this title''.
  (b) Coordination of Records.--Section 506(h) of the Federal Crop 
Insurance Act (7 U.S.C. 1506(h)) is amended--
          (1) by striking ``The Corporation'' and inserting the 
        following:
          ``(1) In general.--The Corporation''; and
          (2) by adding at the end the following new paragraph:
          ``(2) Coordination and use of records.--
                  ``(A) Coordination between agencies.--The Secretary 
                shall ensure that recordkeeping and reporting 
                requirements under this title and section 196 of the 
                Federal Agriculture Improvement and Reform Act of 1996 
                (7 U.S.C. 7333) are coordinated by the Corporation and 
                the Farm Service Agency to avoid duplication of such 
                records, to streamline procedures involved with the 
                submission of such records, and to enhance the accuracy 
                of such records.
                  ``(B) Use of records.--Notwithstanding section 
                502(c), records submitted in accordance with this title 
                and section 196 of the Federal Agriculture Improvement 
                and Reform Act of 1996 (7 U.S.C. 7333) shall be 
                available to agencies and local offices of the 
                Department, appropriate State and Federal agencies and 
                divisions, and approved insurance providers for use in 
                carrying out this title and such section 196 as well as 
                other agricultural programs and related 
                responsibilities.''.
  (c) Noninsured Crop Disaster Assistance Program.--Section 196(b) of 
the Federal Agriculture Improvement and Reform Act of 1996 (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 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. 206. COMPLIANCE WITH STATE LICENSING REQUIREMENTS.

  Section 508 of the Federal Crop Insurance Act (7 U.S.C. 1508) is 
amended by adding at the end the following new subsection:
  ``(o) Compliance With State Licensing Requirements.--Any person who 
sells or solicits the purchase of a policy or plan of insurance under 
this title, including catastrophic risk protection, in any State shall 
be licensed and otherwise qualified to do business in that State.''.

                       TITLE III--ADMINISTRATION

SEC. 301. BOARD OF DIRECTORS OF CORPORATION.

  (a) Change in Composition.--Section 505 of the Federal Crop Insurance 
Act (7 U.S.C. 1505) is amended by striking the section heading, ``Sec. 
505.'', and subsection (a) and inserting the following:

``SEC. 505. MANAGEMENT OF CORPORATION.

  ``(a) Board of Directors.--
          ``(1) Establishment.--The management of the Corporation shall 
        be vested in a Board of Directors subject to the general 
        supervision of the Secretary.
          ``(2) Composition.--The Board shall consist of only the 
        following members:
                  ``(A) The manager of the Corporation, who shall serve 
                as a nonvoting ex officio member.
                  ``(B) The Under Secretary of Agriculture responsible 
                for the Federal crop insurance program.
                  ``(C) One additional Under Secretary of Agriculture 
                (as designated by the Secretary).
                  ``(D) The Chief Economist of the Department of 
                Agriculture.
                  ``(E) One person experienced in the crop insurance 
                business.
                  ``(F) One person experienced in the regulation of 
                insurance.
                  ``(G) Four active producers who are policy holders, 
                are from different geographic areas of the United 
                States, and represent a cross-section of agricultural 
                commodities grown in the United States. At least one of 
                the four shall be a specialty crop producer.
          ``(3) Appointment of private sector members.--The members of 
        the Board described in subparagraphs (E), (F), and (G) of 
        paragraph (2)--
                  ``(A) shall be appointed by, and hold office at the 
                pleasure of, the Secretary; and
                  ``(B) shall not be otherwise employed by the Federal 
                Government.
          ``(4) Chairperson.--The Board shall select a member of the 
        Board to serve as Chairperson.''.
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect 30 days after the date of the enactment of this Act.
  (c) Effect on Existing Board.--A member of the Board of Directors of 
the Federal Crop Insurance Corporation on the effective date specified 
in subsection (b) may continue to serve as a member of the Board until 
the earlier of the following:
          (1) The date the replacement Board is appointed.
          (2) The end of the 180-day period beginning on the effective 
        date specified in subsection (b).

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

  (a) Reimbursement Authority.--Section 508(h) of the Federal Crop 
Insurance Act (7 U.S.C. 1508(h)), as amended by section 105(a) of this 
Act, is amended by inserting after paragraph (5) the following new 
paragraph:
          ``(6) Reimbursement of research, development, and maintenance 
        costs.--
                  ``(A) Reimbursement provided.--Subject to the 
                conditions of this paragraph, the Corporation shall 
                provide a payment to reimburse an applicant for 
                research, development, and maintenance costs directly 
                related to a policy or other material that is--
                          ``(i) submitted to, and approved by, the 
                        Board under this subsection for reinsurance; 
                        and
                          ``(ii) if applicable, offered for sale to 
                        producers.
                  ``(B) Duration.--Payments under subparagraph (A) may 
                be made available beginning in fiscal year 2001. 
                Payments with respect to the maintenance of an approved 
                policy or other material may be provided for a period 
                of not more than 4 reinsurance years following Board 
                approval. Upon the expiration of that 4-year period, or 
                earlier upon the agreement of the Corporation and the 
                person receiving the payment, the Corporation shall 
                assume responsibility for maintenance of a successful 
                policy, as determined by the Corporation based on the 
                market share attained by the policy, the total number 
                of policies sold, the total amount of premium paid, and 
                the performance of the policy in the States where the 
                policy is sold.
                  ``(C) Treatment of payment.--Payments made under 
                subparagraph (A) for a policy or other material shall 
                be considered as payment in full for the research and 
                development conducted with regard to the policy or 
                material and any property rights to the policy or 
                material.
                  ``(D) Reimbursement amount.--The Corporation shall 
                determine the amount of the payment under subparagraph 
                (A) for an approved policy or other material based on 
                the complexity of the policy or material and the size 
                of the area in which the policy or material is expected 
                to be used.''.
  (b) Issuance of Regulations.--Not later than October 1, 2000, the 
Corporation shall issue final regulations to carry out the amendment 
made by subsection (a).

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

  (a) Support for Private Research and Development.--Section 508(m) of 
the Federal Crop Insurance Act (7 U.S.C. 1508(m)) is amended by adding 
at the end the following new paragraph:
          ``(4) Private research and development of policies and other 
        materials.--
                  ``(A) Use of reimbursement authority.--To encourage 
                and promote the necessary research and development for 
                policies, plans of insurance, and related materials, 
                including policies, plans, and materials under the 
                livestock pilot programs under subsection (h)(10), the 
                Corporation shall make full use of private resources by 
                providing payment for research and development for 
                approved policies and plans of insurance, and related 
                materials, pursuant to subsection (h)(6).
                  ``(B) Contracts for underserved commodities.--
                          ``(i) Development of products and related 
                        materials.--In the event the Corporation 
                        determines that an agricultural commodity, 
                        including a specialty crop, is not adequately 
                        served by policies and plans of insurance and 
                        related materials submitted under subsection 
                        (h) or any other provision of this title, the 
                        Corporation may enter into a contract, under 
                        procedures prescribed by the Corporation, 
                        directly with any person or entity with 
                        experience in crop insurance or farm or ranch 
                        risk management, including universities, 
                        providers of crop insurance, and trade and 
                        research organizations, to carry out research 
                        and development for policies and plans of 
                        insurance and related materials for that 
                        agricultural commodity without regard to the 
                        limitations contained in this title.
                          ``(ii) Types of contracts.--A contract under 
                        this subparagraph may provide for research and 
                        development regarding new or expanded policies 
                        and plans of insurance and related materials, 
                        including policies based on adjusted gross 
                        income, cost-of-production, quality losses, and 
                        an intermediate base program with a higher 
                        coverage and cost than catastrophic risk 
                        protection.
                          ``(iii) Delayed effective date for 
                        contracts.--A contract entered into under this 
                        subparagraph may not take effect before October 
                        1, 2000.
                          ``(iv) Use of resulting policies and plans.--
                        The Corporation may offer any policy or plan of 
                        insurance developed under this subparagraph 
                        that is approved by the Board.
                  ``(C) Contract for revenue coverage plan.--The 
                Corporation shall enter into a contract for research 
                and development regarding one or more revenue coverage 
                plans designed to enable producers to take maximum 
                advantage of fluctuations in market prices and thereby 
                maximize revenue realized from the sale of a crop. Such 
                a plan may include market instruments currently 
                available or may involve the development of new 
                instruments to achieve this goal. Not later than 15 
                months after the date of the enactment of this 
                paragraph, the Corporation shall submit to Congress a 
                report containing the results of the contract.''.
  (b) Reliance on Private Development of New Policies.--Section 
508(m)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(m)(2)) is 
amended--
          (1) by striking ``Exception.--No action'' and inserting--
          ``(2) Exceptions.--
                  ``(A) Private availability.--No action''; and
          (2) by adding at the end the following new subparagraph:
                  ``(B) Prohibited research and development by 
                corporation.--Notwithstanding paragraphs (1) and (5), 
                on and after October 1, 2000, the Corporation shall not 
                conduct research and development for any new policy or 
                plan of insurance for an agricultural commodity offered 
                under this title. Any policy or plan of insurance 
                developed by the Corporation under this title before 
                that date shall, at the discretion of the Corporation, 
                continue to be offered for sale to producers.''.
  (c) Partnerships for Risk Management Development and 
Implementation.--Section 508(m) of the Federal Crop Insurance Act (7 
U.S.C. 1508(m)) is amended by inserting after paragraph (4), as added 
by subsection (a), the following new paragraph:
          ``(5) Partnerships for risk management development and 
        implementation.--
                  ``(A) Purpose.--The purpose of this paragraph is to 
                authorize the Corporation to enter into partnerships 
                with public and private entities for the purpose of 
                increasing the availability of loss mitigation, 
                financial, and other risk management tools for crop 
                producers, with priority given to risk management tools 
                for producers of agricultural commodities covered by 
                section 196 of the Federal Agriculture Improvement and 
                Reform Act of 1996 (7 U.S.C. 7333) and specialty and 
                underserved commodity producers.
                  ``(B) Authority.--Subject to subparagraphs (D) and 
                (E), the Corporation may enter into partnerships with 
                the Cooperative State Research, Education, and 
                Extension Service, the Agricultural Research Service, 
                the National Oceanic Atmospheric Administration, and 
                other appropriate public and private entities with 
                demonstrated capabilities in developing and 
                implementing risk management and marketing options for 
                specialty crops and underserved commodities.
                  ``(C) Objectives.--The Corporation may enter into a 
                partnership under subparagraph (B)--
                          ``(i) to enhance the notice and timeliness of 
                        notice of weather conditions that could 
                        negatively affect crop yields, quality, and 
                        final product use in order to allow producers 
                        to take preventive actions to increase end-
                        product profitability and marketability and to 
                        reduce the possibility of crop insurance 
                        claims;
                          ``(ii) to develop a multifaceted approach to 
                        pest management and fertilization to decrease 
                        inputs, decrease environmental exposure, and 
                        increase application efficiency;
                          ``(iii) to develop or improve techniques for 
                        planning, breeding, planting, growing, 
                        maintaining, harvesting, storing, shipping, and 
                        marketing that will address quality and 
                        quantity challenges associated with year-to-
                        year and regional variations;
                          ``(iv) to clarify labor requirements and 
                        assist producers in complying with requirements 
                        to better meet the physically intense and time-
                        compressed planting, tending, and harvesting 
                        requirements associated with the production of 
                        specialty crops and underserved commodities;
                          ``(v) to provide assistance to State 
                        foresters or equivalent officials for the 
                        prescribed use of burning on private forest 
                        land for the prevention, control, and 
                        suppression of fire;
                          ``(vi) to provide producers with training and 
                        informational opportunities so that they will 
                        be better able to use financial management, 
                        crop insurance, marketing contracts, and other 
                        existing and emerging risk management tools; 
                        and
                          ``(vii) to develop other risk management 
                        tools to further increase economic and 
                        production stability.
                  ``(D) Funding source.--If the Corporation determines 
                that the entire amount available to provide 
                reimbursement payments under subsection (h) and 
                contract payments under paragraph (4) (in this 
                subparagraph referred to as `reimbursement and contract 
                payments') for a fiscal year is not needed for such 
                purposes, the Corporation may use a portion of the 
                excess amount to carry out this paragraph, subject to 
                the following:
                          ``(i) During fiscal years 2001 through 2004, 
                        amounts available for reimbursement and 
                        contract payments may be used to carry out this 
                        paragraph only if the total amount to be used 
                        for reimbursement and contract payments is less 
                        than $44,000,000 for fiscal year 2001, 
                        $47,000,000 for fiscal year 2002, $50,000,000 
                        for fiscal year 2003, and $52,000,000 for 
                        fiscal year 2004.
                          ``(ii) During fiscal years 2001 through 2004, 
                        the total amount used to carry out this 
                        paragraph for a fiscal year may not exceed the 
                        difference between the amount specified in 
                        clause (i) for that fiscal year and the amount 
                        actually used for reimbursement and contract 
                        payments.
                  ``(E) Delayed authority.--The Corporation may not 
                enter into a partnership under the authority of this 
                paragraph before October 1, 2000.''.

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

  (a) Expenditures.--Section 508(h)(6) of the Federal Crop Insurance 
Act (7 U.S.C. 1508(h)(6)), as added by section 302(a) of this Act, is 
amended by adding at the end the following new subparagraph:
                  ``(E) Expenditures.--
                          ``(i) Specialty crops.--Of the total amount 
                        made available to provide payments under this 
                        paragraph and subsection (m)(4)(B) for a fiscal 
                        year, $25,000,000 shall be reserved for 
                        research and development contracts under 
                        subsection (m)(4)(B). The Corporation may use a 
                        portion of the reserved amount for other 
                        purposes under this paragraph, with priority 
                        given to underserved commodities, if the 
                        Corporation determines that the entire amount 
                        is not needed for such contracts. If the 
                        reserved amount is insufficient for a fiscal 
                        year, the Corporation may use amounts in excess 
                        of the reserved amount for such contracts.
                          ``(ii) Limitation.--In providing payments 
                        under this paragraph and subsection (m)(4)(B), 
                        the Corporation shall not obligate or expend 
                        more than $55,000,000 during any fiscal 
                        year.''.
  (b) Funding.--
          (1) Authorization of appropriations.--Section 516(a)(2) of 
        the Federal Crop Insurance Act (7 U.S.C. 1516(a)(2)) is amended 
        by adding at the end the following new subparagraph:
                  ``(D) Costs associated with the reimbursement for 
                research, development, and maintenance costs of 
                approved policies and other materials provided under 
                section 508(h)(6) and contracting for research and 
                development under section 508(m)(4)(B).''.
          (2) Use of insurance fund.--Section 516(b)(1) of the Federal 
        Crop Insurance Act (7 U.S.C. 1516(b)(1)) is amended by adding 
        at the end the following new subparagraph:
                  ``(E) Reimbursement for research, development, and 
                maintenance costs of approved policies and other 
                materials provided under section 508(h)(6) and 
                contracting for research and development under section 
                508(m)(4)(B).''.

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

  (a) Persons Authorized To Submit.--Section 508(h)(1) of the Federal 
Crop Insurance Act (7 U.S.C. 1508(h)(1)) is amended by inserting after 
``a person'' the following: ``(including an approved insurance 
provider, a college or university, a cooperative or trade association, 
or any other person)''.
  (b) Sale by Approved Insurance Providers.--Section 508(h)(3) of the 
Federal Crop Insurance Act (7 U.S.C. 1508(h)(3)) is amended by 
inserting after ``for sale'' the following: ``by approved insurance 
providers''.
  (c) Time Periods for Approval or Disapproval.--Section 508(h)(4)(A) 
of the Federal Crop Insurance Act (7 U.S.C. 1508(h)(4)(A)), as amended 
by section 105(c), is amended--
          (1) in clause (iii), as redesignated by section 105(c), by 
        striking ``of the applicant.'' and all that follows through the 
        end of the clause and inserting ``, and such application, as 
        modified, shall be considered by the Board in the manner 
        provided in clause (iv) within the 30-day period beginning on 
        the date the modified application is submitted. Any 
        notification of intent to disapprove a policy or other material 
        submitted under this subsection shall be accompanied by a 
        complete explanation as to the reasons for the Board's 
        intention to deny approval.''; and
          (2) by striking clause (iv), as redesignated by section 
        105(c), and inserting the following new clause:
                          ``(iv) Not later than 120 days after a policy 
                        or other material is submitted under this 
                        subsection, the Board shall make a 
                        determination to approve or disapprove such 
                        policy or material. Any determination by the 
                        Board to disapprove any policy or other 
                        material shall be accompanied by a complete 
                        explanation of the reasons for the Board's 
                        decision to deny approval. In the event the 
                        Board fails to make a determination within the 
                        prescribed time period, the submitted policy or 
                        other material shall be deemed approved by the 
                        Board for the initial reinsurance year 
                        designated for the policy or material, except 
                        in the case where the Board and the applicant 
                        agree to an extension.''.
  (d) Funding To Expedite Consideration.--Effective October 1, 2000, 
section 516(b)(2) of the Federal Crop Insurance Act (7 U.S.C. 
1516(b)(2)) is amended--
          (1) by striking ``Research and development expenses.--'' and 
        inserting ``Policy consideration expenses.--''; and
          (2) in subparagraph (A), by striking ``research and 
        development expenses of the Corporation'' and inserting ``costs 
        associated with considering for approval or disapproval 
        policies and other materials under subsections (h) and (m)(4) 
        of section 508, costs associated with implementing such 
        subsection (m)(4), and costs to contract out for assistance in 
        considering such policies and other materials''.

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

  Section 507(c)(2) of the Federal Crop Insurance Act (7 U.S.C. 
1507(c)(2)) is amended--
          (1) by striking ``actuarial, loss adjustment,'' and inserting 
        ``actuarial services, services relating to loss adjustment and 
        rating plans of insurance,''; and
          (2) by inserting after ``private sector'' the following: 
        ``and to enable the Corporation to concentrate on regulating 
        the provision of insurance under this title and evaluating new 
        products and materials submitted under section 508(h)''.

SEC. 307. ELECTRONIC AVAILABILITY OF CROP INSURANCE INFORMATION.

  Section 508(a)(5) of the Federal Crop Insurance Act (7 U.S.C. 
1508(a)(5)) is amended--
          (1) by redesignating subparagraphs (A) and (B) as clauses (i) 
        and (ii) and moving such clauses 2 ems to the right;
          (2) by striking ``The Corporation'' and inserting the 
        following:
                  ``(A) Available information.--The Corporation''; and
          (3) by adding at the end the following new subparagraph:
                  ``(B) Use of electronic methods.--The Corporation 
                shall make the information described in subparagraph 
                (A) available electronically to producers and approved 
                insurance providers. To the maximum extent practicable, 
                the Corporation shall also allow producers and approved 
                insurance providers to use electronic methods to submit 
                information required by the Corporation.''.

SEC. 308. FEES FOR USE OF NEW POLICIES AND PLANS OF INSURANCE.

  Section 508(h) of the Federal Crop Insurance Act (7 U.S.C. 1508(h)) 
is amended by adding at the end the following new paragraph:
          ``(11) Fees for new policies and plans of insurance.--
                  ``(A) Authority to impose fee.--Effective beginning 
                with Fiscal Year 2001, if a person develops a new 
                policy or plan of insurance and does not apply for 
                reimbursement of research, development, and maintenance 
                costs under paragraph (6), the person shall have the 
                right to receive a fee from any approved insurance 
                provider that elects to sell the new policy or plan of 
                insurance. Notwithstanding paragraph (5), once the 
                right to collect a fee is asserted with respect to a 
                new policy or plan of insurance, no approved insurance 
                provider may offer the new policy or plan of insurance 
                in the absence of a fee agreement with the person who 
                developed the policy or plan.
                  ``(B) Definition.--For purposes of this paragraph 
                only, the term `new policy or plan of insurance' means 
                a policy or plan of insurance that was approved by the 
                Board on or after October 1, 2000, and was not 
                available at the time the policy or plan of insurance 
                was approved by the Board.
                  ``(C) Amount.--The amount of the fee that is payable 
                by an approved insurance provider to offer a new policy 
                or a plan of insurance under subparagraph (A) shall be 
                an amount that is determined by the person that 
                developed the new policy or plan of insurance, subject 
                to the approval of the Board under subparagraph (D).
                  ``(D) Approval.--The Board shall approve the amount 
                of a fee determined under subparagraph (C) for a new 
                policy or plan of insurance unless the Board can 
                demonstrate that the fee amount--
                          ``(i) is unreasonable in relation to the 
                        research and development costs associated with 
                        the new policy or plan of insurance; and
                          ``(ii) unnecessarily inhibits the use of the 
                        new policy or plan of insurance.''.

SEC. 309. CLARIFICATION OF PRODUCER REQUIREMENT TO FOLLOW GOOD FARMING 
                    PRACTICES.

  Section 508(a)(3)(C) of the Federal Crop Insurance Act (7 U.S.C. 
1508(a)(3)(C)) is amended by inserting after ``good farming practices'' 
the following: ``, including scientifically sound sustainable and 
organic farming practices''.

SEC. 310. REIMBURSEMENTS AND RENEGOTIATION OF STANDARD REINSURANCE 
                    AGREEMENT.

  (a) Reimbursement Rate Changes.--
          (1) CAT 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 inserting ``8 percent''.
          (2) Reimbursement for administrative and operating costs.--
        Section 508(k)(4)(A)(ii) of the Federal Crop Insurance Act (7 
        U.S.C. 1508(k)(4)(A)(ii)) is amended by striking ``24.5 
        percent'' and inserting ``24 percent''.
          (3) Application of amendments.--The amendments made by this 
        subsection shall apply with respect to the 2001 and subsequent 
        reinsurance years.
  (b) Renegotiation.--Effective for the 2002 reinsurance year, the 
Federal Crop Insurance Corporation may renegotiate the Standard 
Reinsurance Agreement.

                           Brief Explanation

    H.R. 2559, the Agricultural Risk Protection Act of 1999, 
contains three titles aimed at increasing participation; 
improving program administration, including new procedures for 
approving policies and plans of insurance; and bolstering the 
compliance and enforcement program of the Risk Management 
Agency (RMA).
    Title I expands the levels of coverage offered to 
agricultural producers by providing greater federal assistance 
in buying better coverage and provides an adjustment in actual 
production history for producers who have suffered multiple 
losses in the 1990s. Section 102 provides the same percentage 
of premium assistance for insurance policies in addition to 
multi-peril insurance, including revenue insurance products. 
Title I also for the first time authorizes pilot programs to be 
developed for livestock risk management plans.
    Title II seeks to improve the operations of the federal 
crop insurance program. Beginning in crop year 2000, the 
Secretary is directed to use the field staff of the Farm 
Service Agency (FSA) to assist the Federal Crop Insurance 
Corporation (FCIC) in maintaining program integrity. Generally, 
this assistance will be accomplished through monitoring and 
auditing the federal crop insurance program in the field. 
Increased sanctions for false information are included in the 
bill as well as new requirements for record keeping and 
reporting of crop acreage, acreage yields and production.
    Finally, Title III reorganizes the FCIC board of directors 
and makes other improvements in the administration of the 
federal crop insurance program. These improvements include a 
monetary reimbursement for the development of new policies, and 
the FCIC is authorized to reimburse persons for maintaining 
these commercially viable contracts. The bill authorizes the 
FCIC to enter contracts for the development of new insurance 
products whenever the FCIC determines a crop to be inadequately 
served. FCIC also is placed under strict time limits for the 
approval or disapproval of policies or plans of insurance that 
are submitted by private organizations or individuals.

                            Purpose and Need

    Since expansion of the federal crop insurance program in 
1980, Congress has amended the Federal Crop Insurance Act 
numerous times attempting to end the need for costly and 
unanticipated legislation to assist agricultural producers 
through weather and related disasters. With passage of the 
Federal Crop Insurance Reform Act of 1994, Congress began to 
contend seriously with the lack of producer participation, 
which was the main concern throughout the 1980s. Disaster bills 
in 1986, 1988, 1989, and 1991 were difficult to administer and 
generally required emergency declarations under the budget act 
to authorize spending.
    Producer acceptance and use of crop insurance are critical 
to an industry totally dependent on weather, especially knowing 
that Congress usually has provided disaster assistance through 
ad hoc legislation. Producer acceptance also requires RMA to 
encourage the development of new policies and insurance plans 
for producers who now grow crops that cannot now obtain 
insurance protection or are purchasing what they believe is 
inadequate insurance protection. Finally, producer acceptance 
requires providing RMA with the resources to find waste, fraud 
and abuse in the crop insurance program and to punish violators 
with meaningful penalties.
    Although in some years after 1980 participation may have 
reached 40 to 45 percent, national participation more generally 
hovered around 30 to 35 percent of the total acreage planted to 
the major field crops. Therefore, any wide-spread, national 
disasters created a need for assisting agricultural producers. 
So far, Congress has met that need in some fashion, but after 
each disaster assistance bill was finished, Congress looked for 
a better way to assist farmers in helping themselves manage the 
risks inherent in farming and ranching.
    Following the major reforms in 1994, the crop insurance 
program was modified in the Federal Agriculture Improvement and 
Reform Act of 1996, and further modifications, including major 
budgetary offsets, were made in the Agricultural Research, 
Extension, and Education Reform Act of 1998. Participation 
increased dramatically from 38 percent of crops insured in 1994 
to 67 percent insured in 1998. Many producers obviously 
recognized the value of crop insurance since this rate has been 
maintained even though the purchase of insurance is no longer 
mandatory.
    While participation increases occurred in program crops, 
the same is not universally the case for many specialty crops. 
Increasing the attractiveness of crop insurance to specialty 
crop growers was a goal of the 1994 legislation, but progress 
has not been satisfactory. Both the details of policy design 
and the slow pace of program expansion are continuing concerns. 
Where specialty crop growers do participate, they often neglect 
any coverage levels above catastrophic. The Committee responds 
to these needs by increasing RMA's research and development 
resources and dedicating a portion to underserved crops like 
specialty crops. The Committee expects that the bill's 
provision facilitating producer association purchases of 
insurance on behalf of their members will lead to improved 
levels of participation in the program.
    With a high percentage of agricultural producers wanting to 
insure their crops against the multiple perils of farming, 
producers now began to tell their congressional representatives 
they needed a more responsive crop insurance program, including 
the availability of insurance plans or policies for livestock 
risk management. They also expressed a need for an equalization 
of government assistance in revenue insurance policies; 
currently, producers who purchase, for instance, crop revenue 
coverage policies do not receive the same level of premium 
assistance received by those buying multi-peril policies.
    While producers had many different ideas about risk 
management programs that would be beneficial to their specific 
agricultural operations or regions of the country, a consensus 
among producers developed that two specific improvements were 
needed as soon as possible. The first was to provide a greater 
and more affordable level of coverage. The second was to remedy 
a fact of insurance: producers suffering numerous, consecutive 
disasters have seen their insurable yields erode drastically.
    The best buy for most producers around the country has been 
the 65-100 multi-peril crop insurance policy. Under the current 
program, producers can insure 65 percent of their actual 
production history at 100 percent of the price offered by FCIC. 
The price election is based on futures market prices. At this 
coverage level, FCIC pays about 42 percent of the total 
premium. Coverage levels higher than the 65-100 policy are 
subsidized at the same dollar amount as 65-100, and thus, the 
cost to producers risesbecause the subsidy level is effectively 
frozen. In addition, rates for coverage above 65 percent rise rapidly 
with the likelihood of increased indemnities at levels of 75-100 or 80-
100.
    Private insurance companies deliver various crop insurance 
products, most of which are reinsured by FCIC. Even though 
Congress was assured that insurance companies expected to bring 
more producers into the program at high levels of coverage, it 
appears about one-quarter of eligible acres still are insured 
under catastrophic risk protection policies (CAT). CAT coverage 
is at a basic level, a 50-55 plan of coverage, which covers a 
loss of one-half of a producer's actual production history. 
About 40 percent of eligible acres are covered by so-called 
buy-up coverage, which is described as any coverage greater 
than CAT.
    Responding to producers' requests for better plans of 
insurance, the Committee has significantly increased the 
premium assistance compared to current law. For example, FCIC 
under current law provides 42 percent of the premium costs on a 
65-100 policy. Under the bill, FCIC will now provide 59 percent 
of the producer's cost of such coverage. Premium assistance 
also is increased at each level of coverage beginning at the 
50-100 coverage level. Premium levels are described in the 
section-by-section analysis.
    The bill also assists a producer with multiple year losses, 
which have reduced the producer's APH to an extent the producer 
cannot obtain adequate insurance coverage at any affordable 
price. To address this problem, the bill provides for a yield 
floor at 60 percent of the applicable transitional yield in a 
county. If producers agree, this yield ``plug'' may be 
substituted retrospectively for each of those years when yields 
fell below 60 percent of the transitional yield. This plug will 
apply prospectively as well. The transitional yield is based on 
the historical yields established by USDA's National 
Agricultural Statistics Service.
    By law, FCIC has been prohibited from offering livestock 
producers insurance plans or policies even though livestock are 
subject to weather-related disasters and other risks. The bill 
specifically mandates RMA to conduct pilot programs for 
livestock, including cattle, sheep, swine, goats and poultry. 
Pilot programs may begin in 2001.
    The Committee has been concerned for some time about the 
integrity of the crop insurance program. Anecdotal evidence 
suggests the program has significant levels of fraud and abuse; 
however, the RMA compliance program appears insufficiently 
focused on finding abusive and fraudulent practices and 
enforcing the crop insurance statute and its regulations. 
Whether or not there is an inadequate response by RMA to fraud 
and abuse in the program, the Committee believes the Secretary 
can do more to improve the RMA compliance effort.
    The bill requires the use of the Farm Service Agency field 
staff to audit and monitor the program; increases sanctions for 
filing or dispensing false information; requires records and 
reports to be filed; and protects confidential information.
    Finally, the Committee intends that RMA's management of the 
program be streamlined. Again, RMA's lack of responsiveness to 
new ideas in risk management and innovative insurance policies 
fills the public record established by the Committee. New 
policies are submitted to RMA and not processed in a timely 
manner. For example, the crop revenue coverage program, which 
has become a hugely successful crop insurance product, 
languished within RMA for an excessive period of time before it 
was finally approved on a limited basis.
    Criticism of the policies and procedures of the FCIC board 
of directors also has been heard from many persons familiar 
with the workings of the board.
    The Committee intends to correct many of these deficiencies 
by taking away some of RMA's discretion in the development and 
approval of new policies and insurance plans. For instance, 
beginning in fiscal year 2001, FCIC is no longer authorized to 
conduct its own research and development for new policies. The 
bill does encourage private organizations to become involved in 
researching and developing new policies to meet their specific 
needs and reimburses organizations or individuals for 
developing successful plans of insurance.

            Section by Section Analysis and Report Language


Sec. 1. Short Title; Table of Contents

    This Act may be cited as the Agricultural Risk Protection 
Act of 1999.

               TITLE I--STRENGTHENING THE FARM SAFETY NET


Sec. 101. Premium schedule for additional coverage

    Section 101 strikes duplicative language in the law 
establishing premium amounts. The section establishes a new 
premium assistance schedule, as illustrated in the table below. 
The section also provides that the amount of premium assistance 
available is determined by coverage level selected at any price 
election. Finally, the section requires that every policy bear 
the amount of premium paid by the federal government. This 
section is applicable beginning for the 2000 crop year.
    Under this section, premium assistance is determined based 
on the percentage of total premium used to define loss ratio 
rather than on a fixed dollar amount. The Committee intends 
that the Federal Crop Insurance Corporation (FCIC) make 
continuous coverage levels available to producers as opposed to 
limiting producer choices to coverage levels offered in 5 
percent increments. The Committee expects FCIC to provide 
continuous coverage levels for all policies of insurance 
offered under the Federal Crop Insurance Act as soon as 
practicable. In addition, under this section premium assistance 
is determined solely on the percentage of yield a producer 
elects to insure without regard to the price election selected 
by the producer.

                                                  [in percent]
----------------------------------------------------------------------------------------------------------------
                 Coverage level                   50/100  55/100  60/100  65/100  70/100  75/100  80/100  85/100
----------------------------------------------------------------------------------------------------------------
Current Law.....................................      55   46.10   37.80   41.70   31.90   23.50   17.30      13
Committee Plan..................................      67      64      64      59      59      54    40.6    30.6
----------------------------------------------------------------------------------------------------------------

Sec. 102. Premium schedule for other plans of insurance

    Section 102 requires that the percentage of premium 
assistance under section 101 apply to similar levels of 
coverage under policies offered for sale to producers pursuant 
to section 508(h) and 508(m)(4). The section also limits the 
amount of administrative and operating expenses paid to an 
insurance provider for all policies to no more than the amount 
the provider would receive for a traditional multi-peril policy 
with a similar level of coverage. This section is applicable 
beginning for the 2000 crop year.
    This section is intended to make all policies of insurance 
more affordable, including new and existing policies of 
insurance that protect producers from revenue or price loss. 
The Committee intends that the level of coverage selected is 
the only relevant factor in determining that a policy of 
insurance offered pursuant to sections 508(h) or 508(m)(4) is a 
``similar level of coverage'' to a policy offered under section 
508(e) when determining premium assistance. The fact that a 
policy offered pursuant to sections 508(h) or 508(m)(4) offers 
some higher level of protection or guarantee than a policy with 
a ``similar level of coverage'' under section 508(e) is not 
relevant in determining the amount of premium assistance.

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

    Section 103 requires FCIC to permit producers to elect to 
exclude the recorded yield for an agricultural commodity in any 
crop year where the yield is below 60 percent of the 
transitional yield and to replace that yield with 60 percent of 
the transitional yield. The section further requires the 
Corporation to develop a methodology for adjusting a producer's 
actual production history that reflects effective efforts to 
retard plant diseases and pests. This section is applicable 
beginning for the 2000 crop year.
    The Committee intends for producers to have maximum 
flexibility in determining whether to exclude eligible yields 
under this section, as well as which and how many eligible 
yields to exclude. The Committee further intends that a 
producer may reverse any decision made under this section 
relative to a given crop year in establishing insurable yields 
for a subsequent crop year. Finally, the Committee expects FCIC 
to ensure that producers understand the implications of any 
election under this section relative to the impact, if any, on 
insurable yields and premiums.

Sec. 104. Review and adjustment in rating methodologies

    Section 104 requires FCIC to periodically review rating 
methodologies employed in setting premium rates. The section 
also requires FCIC to analyze the rating and loss history of 
approved policies for agricultural commodities by area and 
adjust premium rates in time for the 2000 crop year or as soon 
as practicable where they are found to be excessive.
    Specifically, the Committee is aware that FCIC has already 
conducted or is in the process of conducting two studies 
relative to rating methodologies applicable for cotton as well 
as corn and soybeans in the Midwest and have found premium 
rates to be excessive. The Committee expects FCIC to provide a 
downward adjustment in premium rates beginning in the 2000 crop 
year for agricultural commodities and regions where such a 
determination has been made.

Sec. 105. Conduct of pilot programs, including livestock

    Section 105 repeals two obsolete pilot program authorities. 
The section authorizes FCIC to conduct pilot programs on a 
regional, whole-State, or national basis after consideration of 
the interests of affected farmers and the Corporation. The 
section further provides that FCIC may offer the pilot programs 
for up to 3 years and that the pilot programs can be modified 
or extended where appropriate.
    Section 105 also requires FCIC to promulgate regulations 
for the consideration of new policies, plans of insurance, and 
other material submitted for approval, including pilot programs 
(See section 305 for general submissions). The section provides 
for an expedited approval process for pilot programs that are 
limited in scope and duration and involve a reduced level of 
liability to the Federal government and greater risk to the 
approved insurance provider offering the pilot program. The 
section also provides that not later than 90 days after 
submission of a pilot program, the Board of FCIC shall approve 
or disapprove. If no determination is made, the pilot program 
is approved for the initial reinsurance year.
    Section 105 requires FCIC to conduct one or more livestock 
pilot programs, including futures and option contracts and 
policies and plans of insurance. The section authorizes FCIC to 
assist producers in purchasing futures and options as well as 
policies or plans of insurance offered. The section requires 
that the pilot programs be conducted in numerous counties and 
that any producer of cattle, sheep, swine, goats, or poultry is 
eligible to participate if the program is offered in the county 
and serves that particular type of livestock. The section 
requires livestock pilot programs to be conducted beginning in 
fiscal year 2001 and limits expenditures to $20 million in 
FY2001, $30 million in FY2002, $40 million in FY2003, and $55 
million in FY2004 and each of the following fiscal years. 
Finally, the section provides that any livestock pilot program 
offered is not intended to be subject to the jurisdiction of 
the SEC or the CFTC.
    In carrying out this section, the Committee expects FCIC to 
conduct the greatest number and variety of livestock pilot 
programs in order to test the effectiveness of each risk 
management tool and to determine which are best suited to 
protect the financial interests of livestock producers. While 
assistance to purchase futures and option contracts is 
authorized under this section, the Committee does not intend to 
limit the assistance offered to livestock producers for these 
risk management tools. Policies and plans of insurance are also 
authorized to be offered and subsidized under this section.
    The Committee further intends that, with respect to the 
general pilot program authority provided under this section, 
FCIC may extend the time period for pilot programs, including 
programs for California and Florida citrus, for additional 
periods for reasons as determined appropriate by FCIC. Such 
reasons include, but are not limited to, the need for the 
collection of additional data or the continuation of coverage 
while the pilot program is being promulgated through the rule 
making process. Finally, the Committee intends that FCIC may 
extend the pilot program authorized under section 508(h)(9) 
under this authority.

Sec. 106. Cost of production as a price election

    Section 106 authorizes FCIC to provide a price election 
under a policy or plan of insurance based on the projected cost 
of producing the covered commodity. Under the section, 
estimated cost of production would be determined by FCIC.

Sec. 107. Premium discounts for good performance

    Section 107 authorizes FCIC to provide performance-based 
discounts to producers of a commodity who have good insurance 
or production experience relative to other producers in the 
same area. The section also authorizes FCIC to provide a 
premium discount in the 2000 crop year to producers of wheat, 
barley, oats, or rye where those crops have been subject to a 
discounted price due to scab or vomitoxin damage.
    The Committee expects FCIC to implement both provisions of 
section 107 in a way that is consistent with the law relative 
to the actuarial soundness requirements set forth in section 
508(d). The Committee intends that good performance discounts 
be made available to producers who have participated in the 
program and who have low claims or otherwise consistent 
production experience relative to other producers of the same 
agricultural commodity in the area. The Committee further 
intends that good performance discounts be made available to 
producers who are first time program participants and who can 
demonstrate consistent production experience, through records 
acceptable to FCIC, relative to other producers of that 
commodity in the area.
    The Committee encourages USDA to consider the benefits of 
particular farming practices in lowering the likelihood of the 
occurrence of insured events. The Department should consider 
examining the extent to which conservation-based farming 
systems have such an effect.

Sec. 108. Options for catastrophic risk protection

    Section 108 requires FCIC to provide producers an 
alternative to catastrophic risk protection insurance coverage. 
The section provides that the alternative coverage shall be 
based on an area yield and loss basis, offer a higher 
combination of yield and price protection, and at the 
determination of FCIC be equivalent to catastrophic coverage 
insured on an individual yield and loss basis.
    The Committee intends that FCIC offer an alternative 
catastrophic risk protection insurance policy that is based on 
an area yield and loss basis but that provides coverage at a 
greater combination of yield and price protection than is 
offered under the traditional catastrophic risk protection 
policy. The Committee further expects that the coverage level 
made available under the alternative catastrophic risk 
protection policy be implemented on a uniform, national basis 
providing all producers, areas, and agricultural commodities 
with the same level of coverage. The Committee acknowledges 
that there may be insufficient data in some areas to make such 
an alternative policy immediately available to producers 
operating in such areas. Nevertheless, the Committee fully 
expects FCIC to diligently work to ensure that the necessary 
data is collected for these areas in order to make the 
alternative catastrophic risk protection required under this 
section available to producers in such areas.

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

    Section 109 authorizes cooperatives and other nonprofit 
trade associations to pay the fees for catastrophic insurance 
coverage on behalf of their producer members.
    The section clarifies that any licensing fees paid to 
cooperatives or trade associations by approved insurance 
providers shall not be considered to be rebates as long as 
producer members are notified of the fees.
    The section further provides that nothing in this section 
is to be construed as limiting a producer's ability to choose 
any licensed insurance agent or approvedinsurance provider of 
the producer's choice or refuse coverage under this arrangement. The 
section provides that all policies must be delivered through a licensed 
agent or an approved insurance provider. The section also provides that 
cooperative associations or trade associations shall encourage producer 
members to elect appropriate coverage levels to best manage their 
risks.
    The Committee intends this section to authorize cooperative 
associations or nonprofit trade associations to pay the fees 
required for the purchase of catastrophic risk protection 
insurance. The Committee further intends that any fees received 
by a cooperative association or nonprofit trade association in 
connection with the purchase of catastrophic or additional 
coverage is not to be treated as a rebate. The Committee 
expressly requires in law that such fees received by a 
cooperative association or trade association as a result of the 
purchase of catastrophic or additional coverage by producer 
members are not to be construed as a rebate, notwithstanding 
any regulation of FCIC or any state law. The intention of the 
Committee with respect to the issue of rebates is clear and is 
not altered or affected in any way by the enactment of clause 
(i) of this section.
    The Committee expects that any regulations promulgated by 
FCIC relative to this section be kept to a minimum so as not to 
impose an undue burden on those persons or entities authorized 
to engage in the activities authorized under the section.

Sec. 110. Elections regarding prevented planting coverage

    Section 110 allows producers to opt out of coverage for 
prevented planting and requires FCIC to provide a corresponding 
discount in producer premiums. The section requires FCIC to 
provide equal coverage with respect to prevented planting for 
all commodities. The section further provides that prevented 
planting payments to a producer should be limited to situations 
where producers in the area are generally affected by the same 
conditions that prevent the producer from planting.
    The section provides that for producers who take prevented 
planting coverage and receive and indemnity, a subsequent crop 
may be planted on the failed acreage but the subsequent crop 
will not be eligible for any federal crop insurance policy or 
noninsured disaster assistance. However, a producer who plants 
a substitute commodity before the latest planting date for the 
commodity prevented from being planted shall not receive a 
prevented planting payment. Finally, for purposes of 
determining a producer's actual production history for the 
commodity on which a prevented planting indemnity was received, 
FCIC shall use 60 percent of the producer's APH for such 
commodity for that crop year.
    The Committee recognizes that producers should not be 
required by FCIC to idle productive land that could otherwise 
yield a crop and provide critical farm income. However, the 
Committee also recognizes that allowing producers to plant a 
second crop after a prevented planting indemnity was collected 
on a first crop could foster fraud, waste, and abuse. The 
Committee expects any fraud, waste, and abuse presented as a 
result of this change in law to be substantially mitigated, if 
not eliminated, by the four limitations in this section. 
However, the Committee expects FCIC to implement such 
limitations in a way that does not undermine the intention of 
the Committee to eliminate the so-called black dirt policy 
imposed by FCIC. Specifically, the Committee is concerned that 
FCIC does not implement this paragraph, particularly 
subparagraph (C), in a manner that results in hardship or 
inequity to producers attempting to avail themselves of the 
protections supposed to be afforded under prevented planting 
coverage.

Sec. 111. Limitations under noninsured crop disaster assistance program

    Section 111 modifies the eligibility provisions for 
noninsured disaster assistance to be available to producers 
with $2,000,000 or less of adjusted gross income annually.
    The Committee intends that $2,000,000 in adjusted gross 
income be defined as income after all farm expenses are paid. 
In addition, the Committee expects the Secretary to reexamine 
the manner in which subsection (c)(1) of section 196 of the 
Federal Agriculture Improvement and Reform Act is implemented 
to take full advantage of the broad flexibility Congress 
intended to provide. The Committee would underscore the fact 
that area is not defined under section 196 but is reserved for 
the Secretary to define. Accordingly, the Committee strongly 
encourages the Secretary to make the necessary adjustments in 
the current definition of area that is being used by the 
Department and develop a definition that is more tenable in 
practice to ensure that the crop loss needs of producers are 
met.

Sec. 112. Quality grade loss adjustment

    Section 112 requires FCIC to analyze quality loss 
adjustment procedures and make adjustments to better reflect 
local quality discounts applied to agricultural commodities.
    The Committee expects that FCIC will implement any changes 
relative to quality grade loss adjustments in a fashion that 
does not foster fraud, waste, and abuse. The Committee further 
expects that any such adjustments will be made consistent with 
actuarial soundness requirements of the title.

Sec. 113. Application of amendments

    Section 113 requires that unless otherwise specified, the 
amendments made by this Act shall be applicable for the 2000 
crop year.

                TITLE II--IMPROVING PROGRAM EFFICIENCIES


Sec. 201. Limitation on double insurance

    Section 201 prohibits the issuing of more than one 
insurance policy on the same acreage during a crop year unless 
such coverage is limited to catastrophic risk protection 
insurance. An exception is made for areas with customary and 
established double-cropping patterns.
    The Committee recognizes that it is a legitimate farming 
practice to double-crop certain crops in specific regions of 
the country. However, unless the outlined exceptions are 
applicable, it is the Committee's intention to limit coverage 
to catastrophic risk protection on the additional crop.
    Since it is possible for the same crop to be planted on a 
farm and subject to different plans of insurance, the Committee 
intends that FCIC ensure the crop acreage and production of the 
same crop that is insured under different plans of insurance is 
separately reported, maintained, and identified. It is not the 
Committee's intention that the acreage or production may be 
prorated between the same crop with different plans of 
insurance.
    It is the intention of the Committee that in determining 
when the additional agricultural commodity is customarily 
double-cropped in the area with the first agricultural 
commodity, that FCIC consider whether it is customary to 
double-crop theacreage considering the farming and irrigation 
practices applicable to the crops in the area.
    The Committee intends that to qualify for the double-
cropping exception, both the first and additional agricultural 
commodities be normally harvested within the same crop year on 
the same acreage. The disposition of the first agricultural 
commodity, including the loss or failure of such commodity, 
should not affect the determination of whether the first and 
additional crop qualifies for the double-cropping exception.

Sec. 202. Improving program compliance and integrity

    Section 202 requires the Secretary to improve crop 
insurance program compliance and integrity. Specifically, 
beginning in the 2000 crop year, the Secretary is directed to 
use the field infrastructure of FSA in five activities that are 
described below.
    1.--Annual reconciliation of producer data and information 
between FCIC and the FSA. Currently, FCIC and FSA collect and 
maintain a significant amount of data that are useful to both 
FCIC and FSA but are independently collected and separately 
maintained by each agency. To enhance compliance and oversight 
activities, the Committee intends that FCIC and FSA share and 
reconcile this information. Relevant data that should be 
reconciled include but are not limited to crop acreage and 
production reports, producer shares information, and producer 
identification numbers. The Committee intends for the data 
provided to FCIC and FSA to be reconciled not less than once 
each crop year. The reconciliation of individual datum should 
be conducted in a timely manner in order to identify potential 
discrepancies early in the reporting cycle. In addition, the 
acreage and producer share reconciliation should be completed 
shortly after the final reporting dates for the crop; and other 
data reconciliation should occur at appropriate dates.
    The Committee expects FCIC and FSA will find discrepancies 
in the applicable data as a result of the reconciliation. The 
Committee intends that corrective action be taken to resolve 
the discrepancies; FCIC and FSA should determine if any 
overpayments or underpayments result from the reconciliation 
and take appropriate action. The Committee intends that FCIC 
and FSA improve their data collection methods to ensure that, 
to the maximum extent possible, automated data processing, will 
be utilized to perform the reconciliation.
    2.--Implementation of an ongoing monitoring and auditing 
program of FCIC programs. The Committee is concerned that FCIC 
and insurance providers have not made sufficient progress in 
controlling program abuse, waste and fraud. The personnel 
resources of FCIC do not appear adequate to carry out 
meaningful oversight and compliance activities. In that regard, 
FSA has significant field resources that are properly 
distributed, and the Committee intends that these resources be 
utilized to strengthen FCIC's oversight and compliance 
activities, including identifying program vulnerabilities. The 
Committee intends for FSA field office employees to collect and 
report information pertaining to allegations of fraud by 
producers, adjusters, agents and companies, either at the 
request of FCIC, or on its own initiative after consulting with 
FCIC. The inclusion of these additional resources will help 
FCIC make timely field inspections, assist in identifying and 
monitoring situations that have the potential to lead to 
program fraud or abuse and provide a local contact point where 
allegations of fraud and abuse may be reported. The Committee 
intends that FSA personnel have the authority to make on farm 
inspections to ensure that good farming practices have been 
used on the insured crops. The Committee believes the Secretary 
should find other program and compliance activities in which 
FSA personnel may be used as this coordinated auditing and 
monitoring program between FCIC and FSA progresses and 
experience is gained.
    The Committee intends that FSA employees assist FCIC in the 
auditing of claims, including work completed by adjusters, 
agents and companies. This could include but is not limited to 
random audits of crop loss appraisals, and applicable documents 
completed by adjusters, agents and companies resulting from a 
loss claim. The Committee intends that the Secretary exercise 
this authority so that reviews and audits are completed in a 
timely manner, especially those pertaining to adjusters and 
agents. The Committee intends that deficiencies as well as 
errors resulting from the audit are reported to FCIC, and FCIC 
take appropriate action to act on the findings of the review or 
audit.
    The Committee intends that FCIC retain regulatory authority 
for all activities pertaining to program compliance and 
integrity.
    3.--Proper training for FSA employees for responsibilities 
under this section. The Committee intends that FSA field 
employees are provided immediately with the proper training to 
carry out the responsibilities associated with improving 
program compliance and integrity. Any training provided by FCIC 
of adjusters should also be available to FSA employees. It is 
intended for FSA employees to be an additional resource for use 
by FCIC in compliance and oversight activities.
    The audits and reviews carried out by FSA should supplement 
any activities required of the companies, agents or adjusters 
by FCIC, and nothing in this section affects the responsibility 
of approved insurance providers to conduct audits or other 
program reviews required by FCIC. The Committee does not intend 
that the audit and program review standards required of the 
insured providers by FCIC are reduced because of the actions of 
FSA. In an effort to deal with suspected program 
misrepresentation, fraud, and abuse, the bill requires that no 
later than 90 days after notice is provided of such potential 
activity, FCIC will provide a written response to the insurance 
provider. The Committee encourages FCIC to issue the report as 
promptly as possible to avoid unnecessary delays that would 
compromise the findings. Waiting the full 90 days to issue a 
response should be the exception rather than the rule. The 
Committee intends, that at a minimum, the report outlines the 
suspected activity and the findings of FCIC with respect to 
such report.
    4.--Consultation with FSA state committees regarding plans 
of insurance offered in a state. The Committee expects FCIC to 
provide ample opportunity to state committees for the review of 
existing and proposed crop insurance policies. The state 
committees are expected to provide meaningful suggestions to 
FCIC that strengthen program integrity, oversight and program 
vulnerability. The review should concentrate on the potential 
problems with crop insurance administration and should ask such 
questions as: Do the offered policies insure crops that have a 
reasonable chance of being harvested in the county or region? 
Is it practicable to produce non-irrigated crop acreage of such 
crop in the county or region? Are the insurance transitional 
yields feasible in the county or region? Does the insurance 
policy enhance the likelihood of insurance abuse or fraud? In 
addition, FSA state committees should be used to ascertain the 
adequacy and usefulness of new policies or plans of insurance 
developed under Sec. 303 of the bill.
    5.--Annual report to the House and Senate Agriculture 
Committees with regard to activities and findings under this 
section.

Sec. 203. Sanctions for false information

    Section 203 clarifies that a covered ``person'' includes a 
producer, agent, loss adjuster, approved insurance provider, or 
any other person.
    The section provides that, with respect to providing false 
information, FCIC is authorized to levy the following 
sanctions:
    Monetary sanctions equal to the higher of the amount of the 
pecuniary gain by the person or $10,000.
    For producers, disqualification for up to 5 years from all 
federal farm programs, including crop insurance, farm programs, 
farm credit programs, and conservation cost share assistance 
programs, in addition to forfeiting premiums paid for providing 
materially false information.
    For people other than producers, disqualification for up to 
5 years of participating in or receiving benefits under FCIA.
    Finally, the section requires FCIC to include information 
regarding sanctions in a prominent manner on all crop insurance 
policies and plans of insurance.
    This section provides a substantially enhanced range of 
sanctions for FCIC to impose against persons who provide false 
information where such information results in program fraud, 
waste, or abuse. The Committee recognizes that all violations 
are not equal and intends for FCIC to administer this section 
in a fair and equitable fashion where the punishment fits the 
offense.

Sec. 204. Protection of confidential information

    Section 204 prohibits the Secretary, any officer of USDA or 
its agencies, any approved insurance provider or its employees 
or contractors, or any other person from disclosing any 
producer-provided information to the public, unless the 
information supplied is in aggregate form that prevents 
individual producers from being identified. The section 
provides penalties consistent with the 1985 Food Security Act.
    The Committee is concerned that information provided by a 
producer to receive benefits under this title be protected. The 
Committee believes that producers have every right to expect 
that the information they provide to authorized persons and 
entities under this title remain confidential. The Committee 
expects FCIC to safeguard producer-provided information through 
the vigorous enforcement of this section. The Committee would 
note that the prohibition on the disclosure of any information 
that would reveal the identity of a producer is absolute. As 
such, the Committee intends that the protections afforded under 
this section may not be waived. However, the Committee does not 
intend that this section interfere in any way with the 
legitimate use and dissemination of information pursuant to 
section 205 of this legislation, including the use by Federal 
and State agencies in carrying out their agricultural programs 
and related responsibilities.

Sec. 205. Records and reporting

    Section 205 requires producers participating in the crop 
insurance program to each year provide records regarding crop 
acreage, acreage yields, and production. The section also 
requires the Secretary to ensure coordination of records 
received for crop insurance purposes and those received for 
purposes of NAP to eliminate duplication of record-keeping. 
Such records shall be available to all agencies and local 
offices of the Department as well as appropriate State and 
Federal agencies to carry out program responsibilities under 
this title, section 196 of the FAIR Act, and other agricultural 
programs and related responsibilities. The section further 
requires annual submission of crop acreage, acreage yields, and 
production information to be eligible for NAP.
    The Committee intends for insured producers participating 
in the crop insurance program to provide records regarding crop 
acreage, acreage yields, and production to the Secretary. 
Producers currently report crop and yield information to both 
FCIC and FSA. Inconsistent data have been reported to FCIC and 
FSA and benefits have been paid on inconsistent data. The 
Committee intends for insured producers to report crop acreage, 
yield, production and other records in a manner that may be 
easily reconciled, ensuring program and insurance benefits are 
paid on consistent data.
    The records collected under this authority should be 
available at no cost to all federal and state agencies, 
including state subdivisions, for use in carrying out 
activities, including assisting state organizations in carrying 
out general agricultural programs that have a federal component 
(for example, boll weevil eradication activities).
    The Committee intends for producers requesting noninsured 
crop disaster assistance program benefits to file annually, 
crop acreage reports, acreage yields and production for each 
crop eligible for assistance. The annual collection of this 
information should enhance information available for the 
development of future insurance policies. As a result of 
producers filing annual reports, USDA will have the information 
provided at a time that insures appropriate program oversight 
and integrity.

Sec. 206. Compliance with state licensing requirements

    This section clarifies that any person who sells or 
solicits the purchase of a policy under the Federal Crop 
Insurance Act be licensed and qualified to do business in that 
state.

                       TITLE III--ADMINISTRATION


Sec. 301. Board of directors of corporation

    Effective 30 days after enactment, this section modifies 
the composition of the FCIC Board of Directors to consist of 
the following members:
    The Manager of FCIC (ex officio only).
    The Under Secretary of Agriculture responsible for crop 
insurance.
    An additional Under Secretary designated by the Secretary.
    The Chief Economist.
    One person with crop insurance business experience.
    One person with insurance regulation experience.
    4 active farmers representing different geographic regions 
and a cross-section of agricultural commodities who are insured 
producers, including one producer of a specialty crop.
    The section also provides that the Secretary is responsible 
for appointing the Members of the Board. Current Board Members 
are allowed to continue to serve until new Board Members are 
appointed or for six months, whichever is earlier. The Board 
will elect a chairperson from among the members. The committee 
expects the Secretary to follow established selection 
guidelines with regard to diversity.

Sec. 302. Promotion of new policies and related materials

    Section 302 requires FCIC to reimburse applicants for 
research, development, and maintenance costs associated with 
insurance policies that are approved and, whereapplicable, 
offered for sale to producers. Maintenance costs are limited to no more 
than four years, after which FCIC becomes responsible for maintenance, 
provided that the policy is commercially viable. This section is 
applicable beginning in the 2001 fiscal year.
    Any payment under this section shall be considered as 
payment in full for all research and development associated 
with an insurance policy or material, including associated 
property rights. FCIC is directed to determine reimbursement 
amounts based on policy complexity and the size of the area in 
which the policy or material would be applicable. Regulations 
implementing this section are required to be completed by 
October 1, 2000.
    The promotion of new and innovative policies is a key 
objective in this legislation and the reimbursement provisions 
are critically important toward achieving this end. In 
implementing the regulations concerning reimbursement, the 
Committee expects FCIC to consult with and take into 
consideration the views of parties likely to seek reimbursement 
under this section.

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

    Section 303 provides that whenever FCIC determines that a 
commodity, including a specialty crop, is not being adequately 
served by existing plans of insurance or submissions under 
section 302, FCIC may contract with any person or entity having 
experience with crop insurance or risk management for research 
and development activities. Policies researched and developed 
under this provision, like those submitted for approval under 
section 302, are prepared without regard to the traditional 
limitations imposed on policies under the FCIA. Requires FCIC 
to contract for the research and development of specific types 
of policies under this section. This section is applicable 
beginning in the 2001 fiscal year.
    The section also provides that, effective October 1, 2000, 
FCIC is no longer authorized to conduct its own research and 
development for policies or plans of insurance under this 
title. Nothing in the Federal Crop Insurance Act, including the 
provisions in paragraphs (1) or (5) of section 508(m) may be 
construed to permit FCIC to engage in such research and 
development. However, this prohibition does not affect the 
validity and continued availability of policies and plans 
approved prior to that date.
    In carrying out this section, the Committee expects FCIC to 
ensure that State Committees of the Farm Service Agency are 
consulted consistent with section 202 of this legislation. The 
Committee further expects FCIC to consult with affected 
commodity groups with respect to any policies, including 
revenue policies, being developed.
    The Committee expects FCIC to complete the Citrus Canker 
Tree Indemnity policy in time for the 2000 crop year, using 
appropriate loss calculation methodology and ensuring the 
program is actuarially sound. The Committee further intends 
that FCIC treat all trees ordered destroyed or quarantined by 
Federal order as losses under the policy. In addition, the 
Committee urges FCIC to revise the cause of loss for Florida 
citrus designated ``hurricane'' to ``sustained winds in excess 
of 74 miles per hour'', and consider lost that citrus fruit 
that is unmarketable due to hail.
    The Committee expects FCIC to reinstate the use of the 
Grower's Standard Wholesale Price List for price determination 
with confirmation by insurance providers and compliance 
oversight by FCIC. To encourage the purchase of additional 
levels of coverage, separate coverage for Field Grown and 
Container Grown Nursery Stock should be considered and, to the 
extent practicable, implemented beginning with the 2000 crop 
year.
    The Committee intends that FCIC, in consultation with 
affected commodity groups, take into consideration the priority 
list provided as follows in order to ensure that specific 
insurance needs are met: aquaculture, citrus, forage, honey, 
nursery, rice, tree fruit, milk, peaches, peanuts, sugar, 
tobacco, and tropical tree fruit (including limes, mangoes, 
avocados, and carambolas).
    The Committee urges FCIC to study the feasibility of 
allowing optional units on peanut acres and encourages FCIC to 
examine differentiating between irrigated and non-irrigated 
practices on policies for peanuts, tobacco and other 
commodities. The Committee encourages the development of 
policies that insure against losses to pasture, range and 
forage used for grazing due to drought, flooding, or other 
natural disasters.
    The Committee encourages the Department in rating and 
policy design to consider whether farming practices that 
satisfy specialized market niches--such as organic farming 
practices--justify the creation of policies or policy options 
not currently available.
    The Committee encourages FCIC to initiate a pilot program 
to indemnify producers of timber for loss of yield or prevented 
planting due to drought, floods, fire, or other natural 
disaster.
    Finally, the Committee urges FCIC to annually review the 
percentage of eligible acres insured by state, county, and 
crop. In areas where participation is substantially below the 
aggregate national average, the Committee would encourage FCIC 
to use its existing authorities as well as the new authorities 
offered under this legislation to increase participation 
without compromising actuarial soundness.
    The Committee expects FCIC will continue and expand the 
pilot project currently in effect for whole farm revenue 
insurance and other similar programs.

Sec. 304. Funding for reimbursement and research and development

    Section 304 provides that funding for research and 
development of specialty crops and under-served commodities is 
set at $25 million annually. If FCIC determines such funding is 
insufficient, additional funding is available. If such funding 
is not fully utilized, the excess funds shall be available for 
reimbursements under section 302 with priority given to 
specialty crops.
    The section further provides that the maximum expenditures 
in any year for sections 302 and 303 may not exceed $55 
million. This section is applicable beginning in the 2001 
fiscal year.
    The Committee intends that policy submissions under section 
508(h) of the Federal Crop Insurance Act and reimbursements 
under section 302 of this legislation are to be the main 
avenues for augmenting the number and variety of policies 
available to producers. The contracting authority provided 
under section 303 of this legislation is to be exercised only 
when a specialty crop or other commodity is determined to be 
under-served. While the Committee does not intend to hamstring 
FCIC in its determination of when to avail itself of this 
contract authority, the Committee is concerned that such 
authority is used appropriately so as not to come at the 
expense of reimbursement needs. In this regard, the Committee 
would point out that approval of policies under section508(h) 
is not discretionary where the objective conditions expressed in law 
are met. Where such policies are approved and offered for sale, FCIC is 
required to provide appropriate reimbursement to the party that 
submitted the policy. Together, these provisions present a legal 
obligation on the part of FCIC.

Sec. 305. Board consideration of new policies and materials

    Section 305 clarifies who can submit policies and plans for 
approval by the FCIC Board to include an approved insurance 
provider, a college or university, a cooperative or trade 
association, or any other person.
    The section also requires absolute time limits for the 
Board to approve or disapprove submitted plans or policies at 
120 days. If the Board fails to meet this deadline, then the 
policy or plan of insurance is approved for the initial 
reinsurance year.
    The Committee is aware of the chronic problems associated 
with the approval process now in place relative to policies 
submitted under section 508(h). The Committee would point out 
that section 508(h) sets forth straightforward and objective 
standards to be met by policies and other material submitted 
for approval. Specifically, section 508(h) requires the Board 
to consider whether the interests of producers are adequately 
protected and whether the premiums charged to the producers are 
actuarially appropriate. Where this two-prong test is met, the 
law requires FCIC to approve the policy to be offered at 
actuarially appropriate rates and under appropriate terms and 
conditions. The Committee does not intend to suppress 
constructive efforts by FCIC to assist applicants in the 
preparation of their policies to meet the criteria in law. 
However, the Committee does expect FCIC to carry out the policy 
approval process as a regulator rather than measure each policy 
submitted by how the regulators believe they might have 
designed the policy better.

Sec. 306. Contracting for rating of plans of insurance

    Section 306 requires the Corporation to contract, to the 
maximum extent practicable, for rating plans of insurance. 
Clarifies that the purpose of contracting for services with the 
private sector is to enable FCIC to concentrate on regulating 
insurance providers and evaluating new products and materials.
    The Committee does not intend to entirely preclude FCIC 
from engaging in its own rating of policies or plans of 
insurance. The Committee only intends to re-enforce the strong 
preference already in the Federal Crop Insurance Act that FCIC 
commit more time and resources toward regulating insurance and 
approving new policies and less time and resources creating and 
re-creating what can be best achieved by the private sector. 
The Committee intends that contracting for services with the 
private sector also be used to assist in the evaluation of new 
products and materials to both expedite and strengthen the 
approval process.

Sec. 307. Electronic availability of crop insurance information

    Section 307 requires FCIC to make general insurance 
information electronically available to producers and approved 
insurance providers. Also requires, to the maximum extent 
practicable, that FCIC allow producers and approved insurance 
providers to supply information to FCIC electronically.
    The Committee would encourage the Secretary to study the 
feasibility of establishing a National Center for Agribusiness 
Excellence and Agribusiness Risk Management Analysis.

Sec. 308. Fees for use of new policies and plans of insurance

    Section 308 permits an approved insurance provider that 
develops a policy or plan of insurance to receive a fee from 
another approved insurance provider in order for the latter to 
use that policy or plan of insurance. In order to receive a 
fee, the approved insurance provider must waive the right to 
receive reimbursement under section 302, and the fee required 
to be paid may not, at the determination of FCIC, be 
unreasonable or unnecessarily inhibit the use of the policy. 
This section is applicable for the 2000 reinsurance year.

Sec. 309. Clarification of producer requirement to follow good farming 
        practices

    The section provides that scientifically sound sustainable 
and organic farming practices shall be considered to be good 
farming practices under the Federal Crop Insurance Act.
    The Committee expects FCIC to establish specific guidelines 
defining what constitutes good farming practices relative to 
producers engaged in scientifically sound sustainable and 
organic farming practices.

Sec. 310. Reimbursements and renogotiation of standard reinsurance 
        agreement

    Section 310 adjusts reimbursement levels for approved 
insurance providers for loss adjustment under the catastrophic 
risk protection policy and for operating and administrative 
expenses for additional levels of coverage. The adjustments are 
applicable for the 2001 reinsurance year.
    In addition, the section authorizes FCIC to renegotiate the 
terms of the Standard Reinsurance Agreement codified under the 
Agricultural Research Act of 1998 in the 2001 reinsurance year.
    The Committee intends for RMA to review, and, if 
appropriate, renegotiate the standard reinsurance agreement 
(SRA). A re-negotiation should commence upon a determination by 
the Agency that participating companies are able to retain 
greater risk, or are unable to adequately deliver and service 
polices, under the SRA as indicated by the profit and loss 
experience under the existing agreement and the availability of 
private reinsurance to support company retention levels.

                        Committee Consideration


                              I--Hearings

    The Subcommittee on Risk Management, Research and Specialty 
Crops hosted crop insurance forums for the purposes of 
receiving input from producers, providers and agents regarding 
improvements to the federal crop insurance program.
    The Subcommittee commenced forums on February 16, 1999 in 
Perry, Georgia (Serial 106-3); on February 16, 1999 in Douglas, 
Georgia (Serial 106-3); on February 18, 1999 in Laurinburg, 
North Carolina (Serial 106-3); on March 10, 1999 in Washington, 
D.C. (Serial 106-3, Part II): on May 3, 1999 in Lexington, 
Kentucky (Serial 106-3, Part III). It should also be noted that 
the Subcommittee previously held a crop insurance forum on 
November 12, 1998 in Sioux Falls, South Dakota (Serial 105-67).
    Issues discussed at the crop insurance forums included: 
increasing crop insurance premium subsidies to the farmer; 
adjustment of rating policies; development of livestock 
policies; incentives to encourage private development of risk 
management products; equalization of administrative and 
operating subsidies across the board for products; allocation 
of premium discounts to producers who demonstrate a history of 
participation without incurring losses; improving program 
enforcement; development of cost of production policies; and 
APH modifications to address multi-year disaster losses.

                     II--Subcommittee Consideration

    Chairman Ewing called the meeting to order for the purpose 
of considering H.R. 2559, the Agricultural Risk Protection Act 
of 1999, sponsored by Mr. Combest, et al., to amend the Federal 
Crop Insurance Act in order to strengthen the safety net for 
agricultural producers by providing greater access to more 
affordable risk management tools and improved protection from 
production and income loss and to improve the efficiency and 
integrity of the Federal crop insurance program.
    Subcommittee Chairman Ewing recognized full Committee 
Chairman Combest, for opening remarks. Chairman Combest thanked 
all involved for the work that has been done to work to provide 
a better risk management program. Chairman Combest noted that 
the bill did not have an official budget score from the 
Congressional Budget Office, but that the final bill reported 
by the Committee would have to be within the revenue 
constraints of the bill. Chairman Combest stated that the full 
Committee would consider H.R. 2559 on Tuesday, July 27, 1999, 
and that he hoped the bill would be considered on the House 
Floor before the August recess.
    Subcommittee Ranking Minority Member Condit was recognized 
for an opening statement and indicated that he hoped to broaden 
the bill in the area of specialty crops.
    Chairman Ewing placed H.R. 2559 before the Subcommittee for 
consideration and noted that it would be open for amendment at 
any point.
    Counsel was recognized for a brief explanation of H.R. 
2559, and the Administrator of the Risk Management Agency was 
recognized for brief comments on the bill.
    Mr. Dooley expressed concern over the funding of the bill 
and that there was no cost estimate at this time. Chairman 
Combest assured Mr. Dooley that he would work with him to 
ensure that the bill would be within the limits of the budget 
resolution.
    Mr. Condit was recognized to offer and explain an amendment 
to Sec. 109, Authority for Nonprofit Associations to Pay Fees 
on Behalf of Producers. Mr. Condit indicated that the amendment 
would make the provision more usable for cooperatives. 
Discussion occurred on the amendment, and Mr. Condit 
acknowledged that the amendment may need to be revised before 
full Committee to make it as workable as possible, and by a 
voice vote, the amendment was adopted.
    Mr. Smith was then recognized to offer and explain an 
amendment regarding premium adjustment for rates that are 
determined to be high relative to the anticipated losses of an 
agricultural commodity before the 2000 crop year. Discussion 
occurred on the amendment, and USDA representatives indicated 
that the amendment would be more acceptable if certain 
clarifications were made to it. Without objection, Mr. Smith 
withdrew his amendment.
    Mr. Bishop was recognized to offer and explain an amendment 
that would provide authority for the Secretary to provide 
whistle-blower type incentives to producers who bring forth 
evidence of fraud that is actually used by the Department to 
recover civil fines. Discussion occurred on the amendment, and 
Mr. Chambliss and Mr. Everett indicated that the issue of fraud 
and abuse in the program was an issue that they heard 
repeatedly when they spoke to their producers. Mr. Everett was 
concerned about how confidentiality could be provided to the 
producer whistleblower. USDA representatives pointed out that 
the amendment would need a reference to the actuarial soundness 
requirement of the overall law to achieve the intent of the 
amendment.
    Full Committee Chairman Combest indicated his support for 
the intent of Mr. Bishop's amendment, and that he would like to 
cosponsor the amendment at full Committee after the issues of 
confidentiality and actuarial soundness had been addressed. Mr. 
Bishop agreed to withdraw his amendment and offer a revised 
amendment at full Committee. Without objection, the amendment 
was withdrawn.
    Mr. Chambliss was then recognized to offer and explain an 
amendment on recordkeeping to require coordination and to avoid 
duplication of the records used by the Federal Crop Insurance 
Corporation and the Farm Service Agency for NAP, purchasing 
CAT, and buy-up coverage. Discussion occurred on the amendment 
with Subcommittee Chairman Ewing expressing concern that 
producers would not have to reprove historical records. USDA 
representatives indicated they thought the amendment gave the 
Department the flexibility it needed to better coordinate the 
information collected from the different agencies. By voice 
vote, the amendment was adopted.
    Mr. Condit was recognized to offer and an amendment that 
would mandate that of the $55,000,000 provided for research and 
development contracts, $25,000,000 would be reserved for 
specialty crops. Subcommittee Chairman Ewing noted that H.R. 
2559 did not define the term ``underserved commodities.'' Mr. 
Chambliss asked Mr. Condit if he could work with him before 
full Committee markup of H.R. 2559 to refine the amendment to 
ensure that specialty crop producers are the recipients of the 
amendment. By unanimous consent, Mr. Condit requested that a 
technical change be made to his amendment, and that the page 
citation be ``46'' rather than ``44''. By voice vote, the 
amendment, as amended, was adopted.
    Mr. LaHood was then recognized to offer and explain an 
amendment to mandate the electronic availability of crop 
insurance information. Mr. Ewing explained that this was a 
reduced version of his bill, H.R. 852, the Freedom to E-File 
Act, which had been the subject of a hearing before the 
Subcommittee on Department Operations, Oversight,Nutrition, and 
Forestry on June 17, 1999. Brief discussion occurred, and Mr. Baldacci 
expressed his concern that the confidentiality of the information would 
be ensured. Mr. LaHood indicated that he would work to perfect the 
amendment before full Committee markup to ensure that this concern was 
met. By voice vote, the amendment was adopted.
    Mr. Pomeroy was then recognized to offer and explain an en 
bloc amendment on behalf of himself and Mr. Thune. Subcommittee 
Chairman Ewing noted that the amendment was an en bloc 
amendment and that a division of the amendment and separate 
votes could be requested on the different parts of the 
amendment.
    Mr. Pomeroy explained his amendment and noted the 
organizations supporting his amendment listed in a letter dated 
July 20, 1999. Mr. Pomeroy explained the four issues addressed 
in his amendment: (1) level of premium subsidy for coverage; 
(2) calculation of actual production history; (3) continuation 
of a provision in the disaster bill to provide an additional 20 
percent premium subsidy for crops afflicted with vomitoxin, 
scab and aflatoxin; and (4) quality grade loss adjustment.
    Full Committee Chairman Combest said that he supported the 
subsidy levels in the Pomeroy-Thune amendment, but he requested 
that the Members work together to come up with the maximum 
amount of assistance to be provided to the farmer and to work 
through the question of Actual Production History (APH). Mr. 
Pomeroy indicated that he would insist on retroactive 
adjustments, and Chairman Combest noted there were retroactive 
provisions in H.R. 2559.
    Lengthy discussion occurred on the amendment. Mr. Everett 
thanked Mr. Pomeroy for the inclusion of aflatoxin in his 
amendment, but Mr. Everett noted that the APH provision in the 
Pomeroy-Thune amendment would devastate his cotton farmers. Mr. 
Thune explained the amendment's importance to South Dakota and 
indicated his hope to make crop insurance the centerpiece of 
the farm safety net.
    Mr. Riley questioned the premium subsidy for aflatoxin in 
the amendment and what years would be covered. There was a 
discussion on whether the amendment should be crop specific, 
and the USDA representative stated that the provision would be 
more helpful if it were not crop specific. Full Committee 
Chairman Combest cautioned the Members that this provision 
likely would receive considerable discussion at the full 
Committee level because other Members would be looking for 
special consideration. Mr. Ewing expressed concern about 
including additional insurance premiums for certain diseases 
and having no money left for premium increases.
    Mr. Pomeroy requested that he change his amendment and take 
out aflatoxin, and that this issue would be debated at full 
Committee. Mr. Pomeroy also requested other changes to his 
bill, and Mr. Smith requested that the amendment be rewritten 
in order for Members to understand the changes better.
    Full Committee Chairman Combest again requested that Mr. 
Pomeroy work with him on the amendment to come to some 
agreement before full Committee consideration. Without 
objection, Mr. Pomeroy withdrew his amendment in order to 
revise it and bring before Members later.
    Mr. Lucas was then recognized to offer and explain an 
amendment regarding fees for use of new policies and plans of 
insurance. Mr. Lucas explained that his amendment was cost-
neutral and that it would encourage private sector development 
of products. Mr. Moran associated himself with the remarks of 
Mr. Lucas in support of the amendment, and by voice vote, the 
amendment was adopted.
    Mr. Condit was recognized to offer and explain an amendment 
concerning limitation on authority to plant substitute 
commodities and requested by unanimous consent that it be 
included as report language to the bill. Without objection, it 
was accepted.
    Mr. Condit then reserved the right to offer, at the full 
Committee, an amendment concerning partnerships for risk 
management development and implementation.
    Mr. Condit was also recognized to offer and explain an 
amendment mandating that at least one active specialty crop 
producer be on the Board of Directors of the Federal Crop 
Insurance Corporation. By voice vote, the amendment was 
adopted.
    Mr. Smith was then recognized to offer and explain an 
amendment that had been revised with Departmental assistance 
concerning premium adjustment to rates that are determined to 
be high relative to anticipated losses of an agricultural 
commodity in a certain area. By voice vote, the amendment was 
adopted.
    Mr. Smith also offered and explained an amendment that 
mandated the Federal Crop Insurance Corporation to enter into a 
contract for research and development on revenue coverage 
plans. Discussion occurred and by a voice vote, the amendment 
was adopted.
    Mr. Pomeroy was then recognized to offer and explain a 
revised en bloc on behalf of himself and Mr. Thune. Mr. Pomeroy 
asked Department officials to comment on the increased costs 
related to the revised APH provision. Mr. Chambliss expressed 
his opposition until he had a chance to review the amendment 
more carefully, and Mr. Dooley indicated his opposition because 
of the unknown costs associated with the amendment. By voice 
vote, the Pomeroy amendment failed. A roll call vote was 
requested, and by a vote of 15 yeas-7 nays, the Pomeroy-Thune 
amendment was adopted. (See Roll Call Vote #1.)
    Mr. Condit then moved that H.R. 2559, as amended, be 
reported favorably to the full Committee. By voice vote, the 
bill, H.R. 2559, as amended, was ordered favorably reported to 
the full Committee.
    Mr. Gutknecht announced his intent to work with Members and 
staff before full Committee markup to come up with report 
language concerning effective new risk management products for 
milk.
    Chairman Ewing thanked everyone for their hard work on the 
bill and indicated that the hard decisions really would begin 
when the cost figures were available on the bill.
    Without objection, staff was given permission to make such 
technical, clarifying or conforming changes as are appropriate 
without changing the substance of the legislation and Chairman 
Ewing adjourned the meeting to reconvene at the call of the 
Chair.

                          III--Full Committee

    The Committee on Agriculture met, pursuant to notice, with 
a quorum present, on July 30, 1999, to consider H.R. 2559 as 
approved by the Subcommittee on Risk Management, Research, and 
Specialty Crops on July 21, 1999.
    Chairman Combest announced that the Committee would recess 
at an appointed hour for the memorial service of the Honorable 
George E. Brown, Jr., who served as a member of the House 
Agriculture Committee until his death on July 16, 1999.
    Chairman Combest thanked all the Members and staff for the 
countless time and effort invested in this bill. He further 
explained that H.R. 2559 and the en bloc amendment that he 
would offer had been carefully crafted to lie within the budget 
restraints of H. Con. Res. 68, the Budget Resolution for FY 
2000, and to provide the greatest amount of benefit to the 
greatest number of farmers in every region of the country. 
Chairman Combest stated that the bill had been scored by the 
Congressional Budget Office at $5.998 billion for the FY 2001 
to FY 2004 period, just under the $6.0 billion allocated under 
the budget resolution. The Chairman indicated that he would 
oppose amendments that would upset the balance provided for in 
the bill or cause cost overruns that would make H.R. 2559 
subject to a point of order on the Floor of the House.
    Ranking Minority Member Stenholm made opening comments and 
indicated that he appreciated all the hard work and the regular 
order that the legislation had taken. Mr. Stenholm pointed out 
that the budget resolution provided for the funds to be made 
available for income assistance or risk management, and that he 
intended to offer an amendment that would address the total 
revenue for program crops.
    Without objection, the bill, H.R. 2559, as amended by the 
Subcommittee on Risk Management, Research, and Specialty Crops, 
was placed before the Committee for consideration and was open 
for amendment at any point.
    Chairman Combest then offered the en bloc amendment that 
would make changes to the bill under consideration that would 
bring the bill into conformance with the budget restraints.
    Discussion occurred on the en bloc amendment and Mr. 
Stenholm announced his support for the amendment, but he noted 
that there were still problems with the FY 2000 budget numbers 
in the bill. Chairman Combest said that he was looking at many 
options to resolve the problems associated with the CBO scoring 
of the budget costs for FY 2000. The Chairman also noted that 
this problem would have to be addressed before the bill would 
be taken to the House Floor. By voice vote, the en bloc 
amendments were adopted.
    Mr. Stenholm was recognized to offer and explain an 
amendment regarding the Supplemental Income Payment (SIP) 
Program and two amendments that would pay for the SIP 
amendment. Without objection, Mr. Stenholm was allowed to offer 
the three amendments en bloc and to explain.
    Chairman Combest asked Mr. Stenholm about CBO scoring of 
his amendment. Mr. Stenholm indicated that the SIP amendment 
had not been scored by CBO, but it was an estimate provided by 
USDA using methodology similar to CBO. Mr. Stenholm indicated 
that CBO had scored the cost savings amendments that totaled 
$550 million: $75 million from the incremental requirement 
changes and $475 million from the changes in the crop revenue 
coverage.
    Chairman Combest stated his appreciation for Mr. Stenholm's 
concept, and that he thought the issue should be addressed at a 
future time. The Chairman did indicate that he had concerns 
about considering the SIP proposal on a crop insurance bill. 
Lengthy discussion occurred and by a voice vote, the amendment 
failed.
    Mr. Chambliss was then recognized to offer and explain an 
amendment that would allow a second crop to be planted on the 
same acreage for which the producer had received a prevented 
planting indemnity. Mr. Chambliss stated that the amendment 
would make true reform in the program by giving farmers more 
flexibility in making decisions regarding risk management. 
Lengthy discussion occurred on the amendment and by a voice 
vote the amendment was adopted.
    Mr. Bishop was recognized to offer and explain a ``Producer 
Whistleblower'' amendment that would authorize the Secretary to 
provide whistleblower-type incentives to producers who bring 
forth evidence of fraud that is actually used by the Risk 
Management Agency Compliance Division, the USDA Office of 
Inspector General or the Office of General Counsel to recover 
civil fines. Mr. Bishop explained that he had revised his 
amendment to address the concerns of confidentiality and 
actuarial soundness that had been raised at the Subcommittee 
markup.
    Discussion occurred and several Members expressed concern 
that this amendment would provide an incentive for farmers to 
turn in another producer, and that this could lead to malicious 
complaints and by a voice vote the amendment failed.
    A recess occurred in order to allow Members to attend the 
memorial service for Congressman Brown. Soon after the 
Committee reconvened, Chairman Combest announced that the House 
would be adjourning soon after the last vote of the day, which 
was scheduled for approximately 1:15 p.m. The Chairman then 
adjourned the meeting at 1:31 p.m., to reconvene at 9:30 a.m., 
on Tuesday, August 3, 1999.
    On August 3, 1999, Chairman Combest called the meeting to 
order for the continued consideration of H.R. 2559, as amended.
    Shortly after, Mr. Chambliss was recognized to offer and 
explain an amendment to refine his amendment adopted by the 
Committee on July 30, 1999, regarding prevented planting 
payments. Mr. Chambliss stated that he had worked with USDA and 
others to revise his amendment to prevent opportunities for 
fraud and abuse. Mr. Chambliss explained that in his revised 
amendment a producer may receive a prevented planting payment 
and plant a substitute crop on the same acreage if certain 
tightened conditions were met. Mr. Chambliss also indicated 
that his refined amendment would change the Congressional 
Budget Office (CBO) scoring of $115 million for his original 
amendment accepted on July 30, 1999, to $0.
    Mr. Chambliss requested by unanimous consent to strike 
section 110(c)(iv), Funding Source, which had been adopted in 
his amendment by the Committee on July 30, 1999. Without 
objection, the Chambliss amendment was revised and by a voice 
vote, the Chambliss amendment, as amended, was adopted.
    Mr. Condit requested by unanimous consent to have the $115 
million savings from the Chambliss amendment applied to section 
109, Authority for Nonprofit Associations to Pay Fees on Behalf 
of Producers. An objection was heard, and the Condit unanimous 
consent request was denied.
    Mr. Minge was then recognized to offer and explain an 
amendment concerning clarification of producer requirements to 
follow good farming practices to include scientifically sound 
sustainable and organic farming practices. Discussion occurred 
and by a voice vote, the amendment was adopted.
    Mr. LaHood was recognized to offer and explain an amendment 
that would restrict livestock pilot programs to those programs 
offering insurance protection that are not generally available 
from private companies. Discussion occurred and by a voice 
vote, the amendment was adopted.
    Mr. Minge was recognized to offer and explain an amendment 
mandating a favorable level of crop insurance production 
protection for beginning farmers and placing a limitation of 
payments under catastrophic risk protection of $300,000. Mr. 
Minge explained his amendment and acknowledged that the 
amendment did not have a CBO score.
    Lengthy discussion occurred on the amendment with Mr. Minge 
expressing his desire to help beginning farmers and that he 
thought payments under catastrophic risk protection could come 
under criticism if there were not a limitation placed on them. 
Administration officials indicated that the Department did not 
have a formal position on the beginning farmer provision. Mr. 
Stenholm noted that there had been serious problems with the 
definition of ``beginning farmer'' under the loan program and 
by a voice vote, the amendment failed.
    Mr. Thune was then recognized to offer and explain an 
amendment on behalf of himself and Mr. Pomeroy that would 
mandate compliance with State licensing requirements and 
mandate compliance with all State regulation of sales and 
solicitation activities. Discussion occurred on the amendment 
with Department officials stating that under current law, the 
Federal government preempts State law to provide for a uniform 
program in all 50 States. It was noted that provisions listed 
through line 10 of the amendment would codify current law and 
would be helpful. However, the Department had concerns about 
the remainder of the amendment.
    Mr. Goode suggested that language could be added to clarify 
the scope of the Thune-Pomeroy amendment. Counsel stated that 
there still would be some ambiguity over the exact meaning of 
the amendment. Mr. Thune requested by unanimous consent that 
the amendment be withdrawn, and without objection, it was 
withdrawn.
    Mr. Thune was then recognized to offer and explain an 
amendment on behalf of himself and Mr. Pomeroy regarding 
compliance with State licensing requirements. This amendment 
struck the objectionable language from their previous 
amendment. By voice vote, the Thune-Pomeroy amendment was 
adopted.
    Mr. Stenholm was then recognized and asked if anyone in the 
Committee who had voted ``no'' on his SIP amendment on July 30, 
1999, would request that the vote on that amendment be 
reconsidered. Mr. Stenholm stated that he thought it was a rare 
opportunity to provide some income protection for farmers and 
producers.
    Mr. Pomeroy was recognized to offer and explain an 
amendment authorizing renegotiation of the standard reinsurance 
agreement. Discussion occurred on the amendment and Chairman 
Combest indicated that there seemed to be some dispute about 
whether the amendment would be scored (by CBO) or not, but that 
he did support the amendment. Chairman Combest noted once again 
that because of the ambiguous reports from CBO that there could 
be a need to have a Manager's Amendment when the bill goes to 
the Floor to get the costs of the bill within the constraints 
of the budget resolution. By voice vote, the amendment was 
adopted.
    Mr. Stenholm was then recognized to offer and explain an 
amendment concerning actual production history (APH) adjustment 
to reflect participation in major pest control efforts. Mr. 
Stenholm stated that his amendment would address areas where 
there were now increased yields from successful pest control 
efforts, such as in bollweevil eradication efforts.
    Mr. Peterson offered a clarifying amendment to the Stenholm 
amendment. Mr. Stenholm indicated his support for the Peterson 
second-degree amendment and said that it did not change the 
structure of his amendment and that it would be a nonscored 
amendment. By voice vote, the Peterson amendment to the 
Stenholm amendment was adopted.
    By voice vote, the Stenholm amendment, as amended, was 
adopted.
    Mrs. Clayton was recognized and requested that the 
provision regarding the composition of the Board of Directors 
of the Federal Crop Insurance Corporation include a requirement 
for diversity of gender and race. Chairman Combest requested 
that Mrs. Clayton work with staff to adopt appropriate report 
language on this issue.
    Mr. Condit was then recognized to offer and explain an 
amendment that would use the funding source for section 109, 
Authority for Nonprofit Association to Pay Fees on Behalf of 
Producers, from funds otherwise available for loss adjustment 
expenses of $115 million. Mr. Condit stated that this was the 
$115 million budget offset that was available when Mr. 
Chambliss refined his amendment concerning prevented planting 
payments.
    Chairman Combest noted that when the Committee received the 
final CBO score, that some refinements might have to be made to 
the Condit amendment regarding budget offsets. By voice vote, 
the Condit amendment was accepted.
    Mr. Condit offered and explained another amendment 
authorizing the Federal Crop Insurance Corporation to enter 
into partnerships for risk management development and 
implementation. The Department stated their support for the 
amendment. However, Chairman Combest noted for the record that 
if there were CBO scoring problems with any of the accepted 
amendments that the Chairman would work with the author of the 
amendment to work out acceptable language for a Manager's 
Amendment when the bill goes to the House Floor.
    By voice vote, the Condit amendment was adopted.
    Mr. Barrett was then recognized and moved that the bill, 
H.R. 2559, as amended, be favorably reported to the House with 
the recommendation that it do pass. Mr. Barrett's motion was 
agreed to by a voice vote and in the presence of a quorum.
    Mr. Barrett also moved, pursuant to clause 1 of rule XX, 
that the Committee authorize the Chairman to offer such motions 
as may be necessary in the House to go to conference with the 
Senate on the bill H.R. 2559, or any similar Senate bill.
    Mr. Stenholm noted his intention to file dissenting views 
regarding the absence of a Supplemental Income Plan to the 
Committee report. Chairman Combest requested all Members to 
file as quickly as possible any additional views to the 
Committee report accompanying the bill.
    Mr. Stenholm clarified that the FY 2000 budget problems 
with the bill had yet to be resolved and Chairman Combest 
assured the Members that efforts and discussions were ongoing 
attempting to resolve the FY 2000 budget problems with the bill 
so that H.R. 2559 could be taken to the House Floor.
    Without objection, the usual instructions were given to 
staff to make any technical, clarifying, or conforming changes 
as were appropriate without changing the substance of the 
legislation.
    Chairman Combest thanked all the Members for their 
attentiveness and good work and adjourned the meeting subject 
to the call of the Chair.

                   Reporting the Bill--Rollcall Votes

    In compliance with clause 3(b) of rule XIII of the House of 
Representatives, the Committee sets forth the record of the 
following rollcall votes taken with respect to H.R. 2559.

                             Rollcall No. 1

    Summary: En bloc amendment regarding actual production 
history.
    Offered By: Mr. Pomeroy on behalf of himself and Mr. Thune 
on July 21, 1999.
    Results: The amendment was adopted with 15 yeas, 7 nays, 
and 9 not voting.

Yeas

    Mr. Smith, Mr. Moran, Mr. Thune, Mr. Gutknecht, Mr. Walden, 
Mr. Simpson, Mr. Ose, Mr. Condit, Mr. Pomeroy, Mr. Baldacci, 
Mr. Goode, Ms. Stabenow, Mr. Etheridge, Mr. Boswell, and Mr. 
Ewing.

Nays

    Mr. Everett, Mr. Chambliss, Mr. Riley, Mr. Hayes, Mr. 
Fletcher, Mr. Dooley, and Mr. John.

Not voting

    Mr. Barrett, Mr. Lucas, OK, Mr. LaHood, Mr. Jenkins, Mr. 
Hilliard, Mr. Bishop, Mr. McIntyre, Mr. Lucas, KY, and Mr. 
Thompson, CA.

 Congressional Budget Office Estimate, and Unfunded Mandates Statement

    The Congressional Budget Office estimate and unfunded 
mandate analysis required by clause 3(c)(3) of rule XIII of the 
Rules of the House of Representatives and sections 402 and 423 
of the Congressional Budget Act of 1974 were not available from 
the Congressional Budget Office as of the date of filing of 
this report. The Congressional Budget Office estimate and 
accompanying materials will be contained in a supplemental 
report.

            New Budget Authority and Committee Cost Estimate

    Based on preliminary estimates by the Congressional Budget 
Office and in accordance with clause 3(d) of House Rule XIII, 
the Committee estimates that enactment of H.R. 2559 would 
result in no costs in fiscal year 1999. For fiscal years 2000 
through 2004, the Committee estimates the costs associated with 
H.R. 2559 at $7.077 billion in budget authority; $6.106 in 
budget outlays. For purposes of section 204 of H. Con. Res. 68, 
the Committee estimates the costs associated with H.R. 2559 for 
fiscal years 2001 through 2004 to be $5.997 billion in budget 
authority; $5.635 billion in budget outlays. Specifically, for 
fiscal years 2000 through 2004, the Committee estimates the 
budget authority associated with H.R. 2559 to be $1.080, 
$1.366, $1.435, $1.512, and $1.684 billion, respectively. For 
fiscal years 2000 through 2004, the Committee estimates the 
budget outlays associated with H.R. 2559 to be $471 million, 
$1.191, $1.393, $1.468, and $1.583 billion, respectively.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the 
Constitutional authority for this legislation in Article I, 
clause 8, section 18, that grants Congress the power to make 
all laws necessary and proper for carrying out the powers 
vested by Congress in the Government of the United States or in 
any department or officer thereof.

                          Oversight Statement

    No summary of oversight findings and recommendations made 
by the Committee on Government Reform, as provided for in 
clause 3(c)(4) of rule XIII of the Rules of the House of 
Representatives, was available to the Committee with reference 
to the subject matter specifically addressed by H.R. 2559, as 
amended.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee on Agriculture's 
oversight findings and recommendations are reflected in the 
body of this report.

                      Advisory Committee Statement

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

FEDERAL CROP INSURANCE ACT

           *       *       *       *       *       *       *



SEC. 502. PURPOSE AND DEFINITIONS.

  (a)  * * *

           *       *       *       *       *       *       *

  (c) Protection of Confidential Information.--
          (1) Authorized disclosure.--In the case of 
        information furnished by a producer to participate in 
        or receive any benefit under this title, the Secretary, 
        any other officer or employee of the Department or an 
        agency thereof, an approved insurance provider and its 
        employees and contractors, and any other person may not 
        disclose the information to the public, unless the 
        information has been transformed into a statistical or 
        aggregate form that does not allow the identification 
        of the person who supplied particular information.
          (2) Violations; penalties.--Subsection (c) of section 
        1770 of the Food Security Act of 1985 (7 U.S.C. 2276) 
        shall apply with respect to the release of information 
        collected in any manner or for any purpose prohibited 
        by paragraph (1).

           *       *       *       *       *       *       *


                       [management of corporation

      [Sec. 505. (a) The management of the Corporation shall be 
vested in a Board subject to the general supervision of the 
Secretary. The Board shall consist of the manager of the 
Corporation, the Under Secretary responsible for the Federal 
crop insurance program, one additional Under Secretary of 
Agriculture (as designated by the Secretary of Agriculture), 
one person experienced in the crop insurance business who is 
not otherwise employed by the Federal Government, and three 
active farmers who are not otherwise employed by the Federal 
Government. The Board shall be appointed by, and hold office at 
the pleasure of, the Secretary. The Secretary shall not be a 
member of the Board. The Secretary, in appointing the three 
active farmers who are not otherwise employed by the Federal 
Government, shall ensure that such members are policy holders 
and are from different geographic areas of the United States, 
in order that diverse agricultural interests in the United 
States are at all times represented on the Board.]

SEC. 505. MANAGEMENT OF CORPORATION.

  (a) Board of Directors.--
          (1) Establishment.--The management of the Corporation 
        shall be vested in a Board of Directors subject to the 
        general supervision of the Secretary.
          (2) Composition.--The Board shall consist of only the 
        following members:
                  (A) The manager of the Corporation, who shall 
                serve as a nonvoting ex officio member.
                  (B) The Under Secretary of Agriculture 
                responsible for the Federal crop insurance 
                program.
                  (C) One additional Under Secretary of 
                Agriculture (as designated by the Secretary).
                  (D) The Chief Economist of the Department of 
                Agriculture.
                  (E) One person experienced in the crop 
                insurance business.
                  (F) One person experienced in the regulation 
                of insurance.
                  (G) Four active producers who are policy 
                holders, are from different geographic areas of 
                the United States, and represent a cross-
                section of agricultural commodities grown in 
                the United States. At least one of the four 
                shall be a specialty crop producer.
          (3) Appointment of private sector members.--The 
        members of the Board described in subparagraphs (E), 
        (F), and (G) of paragraph (2)--
                  (A) shall be appointed by, and hold office at 
                the pleasure of, the Secretary; and
                  (B) shall not be otherwise employed by the 
                Federal Government.
          (4) Chairperson.--The Board shall select a member of 
        the Board to serve as Chairperson.

           *       *       *       *       *       *       *


SEC. 506. GENERAL POWERS.

  (a)  * * *

           *       *       *       *       *       *       *

  (h) Data Collection.--[The Corporation]
          (1) In general.--The Corporation shall assemble data 
        for the purpose of establishing sound actuarial bases 
        for insurance on agricultural commodities.
          (2) Coordination and use of records.--
                  (A) Coordination between agencies.--The 
                Secretary shall ensure that recordkeeping and 
                reporting requirements under this title and 
                section 196 of the Federal Agriculture 
                Improvement and Reform Act of 1996 (7 U.S.C. 
                7333) are coordinated by the Corporation and 
                the Farm Service Agency to avoid duplication of 
                such records, to streamline procedures involved 
                with the submission of such records, and to 
                enhance the accuracy of such records.
                  (B) Use of records.--Notwithstanding section 
                502(c), records submitted in accordance with 
                this title and section 196 of the Federal 
                Agriculture Improvement and Reform Act of 1996 
                (7 U.S.C. 7333) shall be available to agencies 
                and local offices of the Department, 
                appropriate State and Federal agencies and 
                divisions, and approved insurance providers for 
                use in carrying out this title and such section 
                196 as well as other agricultural programs and 
                related responsibilities.

           *       *       *       *       *       *       *

  (n) [Penalties] Sanctions for Violations.--
          [(1) False information.--If a person willfully and 
        intentionally provides any false or inaccurate 
        information to the Corporation or to any insurer with 
        respect to an insurance plan or policy under this 
        title, the Corporation may, after notice and an 
        opportunity for a hearing on the record--
                  [(A) impose a civil fine of not to exceed 
                $10,000 on the person; and
                  [(B) disqualify the person from purchasing 
                catastrophic risk protection or receiving 
                noninsured assistance for a period of not to 
                exceed 2 years, or from receiving any other 
                benefit under this title for a period of not to 
                exceed 10 years.]
          (1) False information.--If a producer, an agent, a 
        loss adjuster, an approved insurance provider, or any 
        other person willfully and intentionally provides any 
        false or inaccurate information to the Corporation or 
        to an approved insurance provider with respect to a 
        policy or plan of insurance under this title, the 
        Corporation may, after notice and an opportunity for a 
        hearing on the record, impose one or more of the 
        sanctions specified in paragraph (2).
          (2) Authorized sanctions.--The following sanctions 
        may be imposed for a violation under paragraph (1):
                  (A) The Corporation may impose a civil fine 
                for each violation not to exceed the greater 
                of--
                          (i) the amount of the pecuniary gain 
                        obtained as a result of the false or 
                        inaccurate information provided; or
                          (ii) $10,000.
                  (B) If the violation is committed by a 
                producer, the producer may be disqualified for 
                a period of up to 5 years from--
                          (i) participating in, or receiving 
                        any benefit provided under this title, 
                        the noninsured crop disaster assistance 
                        program under section 196 of the 
                        Federal Agriculture Improvement and 
                        Reform Act of 1996 (7 U.S.C. 7333), the 
                        Agricultural Market Transition Act (7 
                        U.S.C. 7201 et seq.), the Agricultural 
                        Act of 1949 (7 U.S.C. 1421 et seq.), 
                        the Commodity Credit Corporation 
                        Charter Act (15 U.S.C. 714 et seq.), or 
                        the Agricultural Adjustment Act of 1938 
                        (7 U.S.C. 1281 et seq.);
                          (ii) receiving any loan made, 
                        insured, or guaranteed under the 
                        Consolidated Farm and Rural Development 
                        Act (7 U.S.C. 1921 et. seq.);
                          (iii) receiving any benefit provided, 
                        or indemnity made available, under any 
                        other law to assist a producer of an 
                        agricultural commodity due to a crop 
                        loss or a decline in commodity prices; 
                        or
                          (iv) receiving any cost share 
                        assistance for conservation or any 
                        other assistance provided under title 
                        XII of the Food Security Act (16 U.S.C. 
                        3801 et seq.).
                  (C) If the violation is committed by an 
                agent, loss adjuster, approved insurance 
                provider, or any other person (other than a 
                producer), the violator may be disqualified for 
                a period of up to 5 years from participating 
                in, or receiving any benefit provided under 
                this title.
                  (D) If the violation is committed by a 
                producer, the Corporation may require the 
                producer to forfeit any premium owed under the 
                policy, notwithstanding a denial of claim or 
                collection of an overpayment, if the false or 
                inaccurate information was material.
          [(2)] (3) Assessment of [penalty] sanction.--In 
        [assessing penalties] imposing a sanction under this 
        subsection, the Corporation shall consider the gravity 
        of the violation.
          (4) Disclosure of sanctions.--Each policy or plan of 
        insurance under this title shall prominently indicate 
        the sanctions prescribed under paragraph (2) for 
        willfully and intentionally providing false or 
        inaccurate information to the Corporation or to an 
        approved insurance provider.

           *       *       *       *       *       *       *

  (q) Program Compliance.--
          (1) Purpose.--The purpose of this subsection is to 
        improve compliance with the Federal crop insurance 
        program and to improve program integrity.
          [(1)] (2) Timeliness.--The Corporation shall work 
        actively with approved insurance providers to address 
        program compliance and integrity issues as the issues 
        develop.
          [(2)] (3) Notification of compliance problems.--The 
        Corporation shall notify in writing any approved 
        insurance provider with whom the Corporation has an 
        agreement under this title of any error, omission, or 
        failure to follow Corporation regulations or procedures 
        for which the approved insurance provider may be 
        responsible and which may result in a debt owed the 
        Corporation. The notice shall be given within 3 years 
        of the end of the insurance period during which the 
        error, omission, or failure is alleged to have 
        occurred, except that this time limit shall not apply 
        with respect to errors, omissions, or procedural 
        violations that are willful or intentional. The failure 
        to timely provide the notice required under this 
        subsection shall relieve the approved insurance 
        provider from the debt owed the Corporation.
          (4) Reconciling producer information.--The Secretary 
        shall develop and implement a coordinated plan for the 
        Corporation and the Administrator of the Farm Service 
        Agency to reconcile all relevant information received 
        by the Corporation or the Farm Service Agency from a 
        producer who obtains crop insurance coverage under this 
        title. Beginning with the 2000 crop year, the Secretary 
        shall require that the Corporation and the Farm Service 
        Agency reconcile such producer-derived information on 
        at least an annual basis in order to identify and 
        address any discrepancies.
          (5) Identification and elimination of fraud, waste, 
        and abuse.--
                  (A) FSA monitoring program.--The Secretary 
                shall develop and implement a coordinated plan 
                for the Farm Service Agency to assist the 
                Corporation in the ongoing monitoring of 
                programs carried out under this title, 
                including--
                          (i) conducting fact finding relative 
                        to allegations of program fraud, waste, 
                        and abuse, both at the request of the 
                        Corporation or on its own initiative 
                        after consultation with the 
                        Corporation;
                          (ii) reporting any allegation of 
                        fraud, waste, and abuse or identified 
                        program vulnerabilities to the 
                        Corporation in a timely manner; and
                          (iii) assisting the Corporation and 
                        approved insurance providers in 
                        auditing a statistically appropriate 
                        number of claims made under any policy 
                        or plan of insurance under this title.
                  (B) Use of field infrastructure.--The plan 
                required by this paragraph shall use the field 
                infrastructure of the Farm Service Agency, and 
                the Secretary shall ensure that relevant Farm 
                Service Agency personnel are appropriately 
                trained for any responsibilities assigned to 
                them under the plan. At a minimum, such 
                personnel shall receive the same level of 
                training and pass the same basic competency 
                tests as required of loss adjusters of approved 
                insurance providers.
                  (C) Maintenance of provider effort; 
                cooperation.--The activities of the Farm 
                Service Agency under this paragraph do not 
                affect the responsibility of approved insurance 
                providers to conduct any audits of claims or 
                other program reviews required by the 
                Corporation. If an insurance provider reports 
                to the Corporation that it suspects intentional 
                misrepresentation, fraud, waste, or abuse, the 
                Corporation shall make a determination and 
                provide a written response within 90 days after 
                receiving the report. The insurance provider 
                and the Corporation shall take coordinated 
                action in any case where misrepresentation, 
                fraud, waste, or abuse has occurred.
          (6) Consultation with state committees.--The 
        Corporation shall establish a mechanism under which 
        State committees of the Farm Service Agency are 
        consulted concerning policies and plans of insurance 
        offered in a State under this title.
          (7) Annual report on compliance efforts.--The 
        Secretary shall submit to the Committee on Agriculture 
        of the House of Representatives and the Committee on 
        Agriculture, Nutrition, and Forestry of the Senate an 
        annual report containing findings relative to the 
        efforts undertaken pursuant to paragraphs (4) and (5). 
        The report shall identify specific occurrences of 
        waste, fraud, and abuse and contain an outline of 
        actions that have been or are being taken to eliminate 
        the identified waste, fraud, and abuse.

           *       *       *       *       *       *       *


                               personnel

      Sec. 507. (a)  * * *

           *       *       *       *       *       *       *

      (c) In the administration of this title, the Board shall, 
to the maximum extent possible, (1) establish or use committees 
or associations of producers and make payments to them to cover 
the administrative and program expenses, as determined by the 
Board, incurred by them in cooperating in carrying out this 
title, (2) contract with private insurance companies, private 
rating bureaus, and other organizations as appropriate for 
[actuarial, loss adjustment,] actuarial services, services 
relating to loss adjustment and rating plans of insurance, and 
other services to avoid duplication by the Federal Government 
of services that are or may readily be available in the private 
sector and to enable the Corporation to concentrate on 
regulating the provision of insurance under this title and 
evaluating new products and materials submitted under section 
508(h), and reimburse such companies for the administrative and 
program expenses, as determined by the Board, incurred by them, 
under terms and provisions and rates of compensation consistent 
with those generally prevailing in the insurance industry, and 
(3) encourage the sale of Federal crop insurance through 
licensed private insurance agents and brokers and give the 
insured the right to renew such insurance for successive terms 
through such agents and brokers, in which case the agent or 
broker shall be reasonably compensated from premiums paid by 
the insured for such sales and renewals recognizing the 
function of the agent or broker to provide continuing services 
while the insurance is in effect: Provided, That such 
compensation shall not be included in computations establishing 
premium rates. The Board shall provide such agents and brokers 
with indemnification, including costs and reasonable attorney 
fees, from the Corporation for errors or omissions on the part 
of the Corporation or its contractors for which the agent or 
broker is sued or held liable, except to the extent the agent 
or broker has caused the error or omission. Nothing in this 
subsection shall permit the Corporation to contract with other 
persons to carry out the responsibility of the Corporation to 
review and approve policies, rates, and other materials 
submitted under section 508(h).

           *       *       *       *       *       *       *


SEC. 508. CROP INSURANCE.

  (a) Authority To Offer Insurance.--
          (1)  * * *

           *       *       *       *       *       *       *

          (3) Exclusions.--Insurance provided under this 
        subsection shall not cover losses due to--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (C) the failure of the producer to follow 
                good farming practices, including 
                scientifically sound sustainable and organic 
                farming practices (as determined by the 
                Secretary).

           *       *       *       *       *       *       *

          (5) Dissemination of crop insurance information.--
        [The Corporation]
                  (A) Available information.--The Corporation 
                shall make available to producers through local 
                offices of the Department--
                          [(A)] (i) current and complete 
                        information on all aspects of Federal 
                        crop insurance; and
                          [(B)] (ii) a listing of insurance 
                        agents and companies offering to sell 
                        crop insurance in the area of the 
                        producers.
                  (B) Use of electronic methods.--The 
                Corporation shall make the information 
                described in subparagraph (A) available 
                electronically to producers and approved 
                insurance providers. To the maximum extent 
                practicable, the Corporation shall also allow 
                producers and approved insurance providers to 
                use electronic methods to submit information 
                required by the Corporation.

           *       *       *       *       *       *       *

          (7) Review and adjustment of rates.--
                  (A) Review required.--To maximize 
                participation in the Federal crop insurance 
                program and to ensure equity for producers, the 
                Corporation shall periodically review the 
                methodologies employed for rating plans of 
                insurance under this title consistent with 
                section 507(c)(2).
                  (B) Premium adjustment.--The Corporation 
                shall analyze the rating and loss history of 
                approved policies and plans of insurance for 
                agricultural commodities by area. If the 
                Corporation makes a determination that premium 
                rates are excessive for an agricultural 
                commodity in an area relative to the 
                requirements of subsection (d)(2)(B) for that 
                area, then, in the 2000 crop year or as soon as 
                practicable after the determination is made, 
                the Corporation shall make appropriate 
                adjustments in the premium rates for that area 
                for that agricultural commodity.
          (8) Prevented planting coverage.--
                  (A) Election not to receive coverage.--
                          (i) Election.--A producer may elect 
                        not to receive coverage for prevented 
                        planting of an agricultural commodity.
                          (ii) Reduction.--In the case of an 
                        election under clause (i), the 
                        Corporation shall provide a reduction 
                        in the premium payable by the producer 
                        for a plan of insurance in an amount 
                        equal to the premium for the prevented 
                        planting coverage, as determined by the 
                        Corporation.
                  (B) Equal coverage.--For each agricultural 
                commodity for which prevented planting coverage 
                is available, the Corporation shall offer an 
                equal percentage level of prevented planting 
                coverage.
                  (C) Area conditions required for payment.--
                The Corporation shall limit prevented planting 
                payments to producers to those situations in 
                which producers in the area in which the farm 
                is located are generally affected by the 
                conditions that prevent an agricultural 
                commodity from being planted.
                  (D) Substitute commodity.--
                          (i) Authority to plant.--Subject to 
                        clause (iv), a producer who has 
                        prevented planting coverage and who is 
                        eligible to receive an indemnity under 
                        such coverage may plant an agricultural 
                        commodity, other than the commodity 
                        covered by the prevented planting 
                        coverage, on the acreage originally 
                        prevented from being planted.
                          (ii) Nonavailability of insurance.--A 
                        substitute agricultural commodity 
                        planted as authorized by clause (i) for 
                        harvest in the same crop year shall not 
                        be eligible for coverage under a policy 
                        or plan of insurance under this title 
                        or for noninsured crop disaster 
                        assistance under section 196 of the 
                        Federal Agriculture Improvement and 
                        Reform Act of 1996 (7 U.S.C. 7333). For 
                        purposes of subsection (b)(7) only, the 
                        substitute commodity shall be deemed to 
                        have at least catastrophic risk 
                        protection so as to satisfy the 
                        requirements of that subsection.
                          (iii) Effect on actual production 
                        history.--If a producer plants a 
                        substitute agricultural commodity as 
                        authorized by clause (i) for a crop 
                        year, the Corporation shall assign the 
                        producer a recorded yield, for that 
                        crop year for the commodity that was 
                        prevented from being planting, equal to 
                        60 percent of the producer's actual 
                        production history for such commodity 
                        for purposes of determining the 
                        producer's actual production history 
                        for subsequent crop years.
                          (iv) Effect on prevented planting 
                        payment.--If a producer plants a 
                        substitute agricultural commodity as 
                        authorized by clause (i) before the 
                        latest planting date established by the 
                        Corporation for the agricultural 
                        commodity prevented from being planted, 
                        the Corporation shall not make a 
                        prevented planting payment with regard 
                        to the commodity prevented from being 
                        planted.
          (9) Quality grade loss adjustment.--Consistent with 
        subsection (m)(4), by the 2000 crop year, the 
        Corporation shall enter into a contract to analyze its 
        quality loss adjustment procedures and make such 
        adjustments as may be necessary to more accurately 
        reflect local quality discounts that are applied to 
        agricultural commodities insured under this title, 
        taking into consideration the actuarial soundness of 
        the adjustment and the prevention of fraud, waste and 
        abuse.
          (10) Limitation on double insurance.--
                  (A) Restricted to catastrophic risk 
                protection.--Except for situations covered by 
                subparagraph (B), no policy or plan of 
                insurance may be offered under this title for 
                more than one agricultural commodity planted on 
                the same acreage in the same crop year unless 
                the coverage for the additional crop is limited 
                to catastrophic risk protection available under 
                subsection (b).
                  (B) Exception for double-cropping.--A policy 
                or plan of insurance may be offered under this 
                title for an agricultural commodity and for an 
                additional agricultural commodity when both 
                agricultural commodities are normally harvested 
                within the same crop year on the same acreage 
                if the following conditions are met:
                          (i) There is an established practice 
                        of double-cropping in the area and the 
                        additional agricultural commodity is 
                        customarily double-cropped in the area 
                        with the first agricultural commodity, 
                        as determined by the Corporation.
                          (ii) A policy or plan of insurance 
                        for the first agricultural commodity 
                        and the additional agricultural 
                        commodity is available under this 
                        title.
                          (iii) The additional commodity is 
                        planted on or before the final planting 
                        date or late planting date for that 
                        additional commodity, as established by 
                        the Corporation.
  (b) Catastrophic Risk Protection.--
          (1)  * * *

           *       *       *       *       *       *       *

          [(3) Yield and loss basis.--A producer shall have the 
        option of basing the catastrophic coverage of the 
        producer on an individual yield and loss basis or on an 
        area yield and loss basis, if both options are offered 
        by the Corporation.]
          (3) Alternative catastrophic coverage.--Beginning 
        with the 2000 crop year, the Corporation shall offer 
        producers of an agricultural commodity the option of 
        selecting either of the following:
                  (A) The catastrophic risk protection coverage 
                available under paragraph (2)(A).
                  (B) An alternative catastrophic risk 
                protection coverage that--
                          (i) indemnifies the producer on an 
                        area yield and loss basis if such a 
                        plan of insurance is offered for the 
                        agricultural commodity in the county in 
                        which the farm is located;
                          (ii) provides, on a uniform national 
                        basis, a higher combination of yield 
                        and price protection than the coverage 
                        available under paragraph (2)(A); and
                          (iii) the Corporation determines is 
                        comparable to the coverage available 
                        under paragraph (2)(A) for purposes of 
                        subsection (e)(2)(A).

           *       *       *       *       *       *       *

          (5) Administrative fee.--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (F) Payment of fees on behalf of producers.--
                          (i) Payment authorized.--
                        Notwithstanding any other subparagraph 
                        of this paragraph, a cooperative 
                        association of agricultural producers 
                        or a nonprofit trade association may 
                        pay to the Corporation, on be-half of a 
member of the association who consents to be insured under such an 
arrangement, all or a portion of the fees imposed under subparagraphs 
(A) and (B) for catastrophic risk protection.
                          (ii) Treatment of licensing fees.--A 
                        licensing fee or other payment made by 
                        the insurance provider to the 
                        cooperative association or trade 
                        association in connection with the 
                        issuance of catastrophic risk 
                        protection or additional coverage under 
                        this section to members of the 
                        cooperative association or trade 
                        association shall not be considered to 
                        be a rebate to the members if the 
                        members are informed in advance of the 
                        fee or payment.
                          (iii) Selection of provider; 
                        delivery.--Nothing in this subparagraph 
                        shall be construed so as to limit the 
                        ability of a producer to choose the 
                        licensed insurance agent or other 
                        approved insurance provider from whom 
                        the member will purchase a policy or 
                        plan of insurance or to refuse coverage 
                        for which a payment is offered to be 
                        made under clause (i). A policy or plan 
                        of insurance for which a payment is 
                        made under clause (i) shall be 
                        delivered by a licensed insurance agent 
                        or other approved insurance provider.
                          (iv) Additional coverage 
                        encouraged.--Cooperatives and trade 
                        associations and any approved insurance 
                        provider with whom a licensing fee or 
                        other arrangement under this 
                        subparagraph is made shall encourage 
                        producer members to purchase 
                        appropriate levels of additional 
                        coverage in order to meet the risk 
                        management needs of such member 
                        producers.

           *       *       *       *       *       *       *

          (11) Loss adjustment.--The rate for reimbursing an 
        approved insurance provider or agent for expenses 
        incurred by the approved insurance provider or agent 
        for loss adjustment in connection with a policy of 
        catastrophic risk protection shall not exceed [11 
        percent] 8 percent of the premium for catastrophic risk 
        protection that is used to define loss ratio.
  (c) General Coverage Levels.--
          (1)  * * *

           *       *       *       *       *       *       *

          (5) Price level.--[The Corporation shall establish a 
        price] For purposes of this title, the Corporation 
        shall establish or approve a price level for each 
        commodity on which insurance is offered that--
                  (A) shall not be less than the projected 
                market price for the commodity (as determined 
                by the Corporation); [or]
                  (B) at the discretion of the Corporation, may 
                be based on the actual market price at the time 
                of harvest (as determined by the 
                Corporation)[.]; or
                  (C) in the case of cost of production or 
                similar plans of insurance, shall be the 
                projected cost of producing the agricultural 
                commodity (as determined by the Corporation).

           *       *       *       *       *       *       *

  (d) Premiums.--
          (1)  * * *

           *       *       *       *       *       *       *

          (2) Premium amounts.--The premium amounts for 
        catastrophic risk protection under subsection (b) and 
        additional coverage under subsection (c) shall be fixed 
        as follows:
                  (A)  * * *
                  [(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, but greater than 50 percent of the 
                recorded or appraised average yield indemnified 
                at 100 percent of the expected market price, or 
                an equivalent coverage, the amount of the 
                premium shall--
                          [(i) be sufficient to cover 
                        anticipated losses and a reasonable 
                        reserve; and
                          [(ii) include an amount for operating 
                        and administrative expenses, as 
                        determined by the Corporation.
                  [(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 of the premium 
                shall--
                          [(i) be sufficient to cover 
                        anticipated losses and a reasonable 
                        reserve; and
                          [(ii) include an amount for operating 
                        and administrative expenses, as 
                        determined by the Corporation, on an 
                        industry-wide basis as a percentage of 
                        the amount of the premium used to 
                        define loss ratio.]
                  (B) In the case of additional coverage equal 
                to or greater than 50 percent of the recorded 
                or appraised average yield indemnified at not 
                greater than 100 percent of the expected market 
                price, or an equivalent coverage, the amount of 
                the premium shall--
                          (i) be sufficient to cover 
                        anticipated losses and a reasonable 
                        reserve; and
                          (ii) include an amount for operating 
                        and administrative expenses, as 
                        determined by the Corporation, on an 
                        industry-wide basis as a percentage of 
                        the amount of the premium used to 
                        define loss ratio.
          (3) Premium discounts.--
                  (A) Performance-based discount.--The 
                Corporation may provide a performance-based 
                premium discount for a producer of an 
                agricultural commodity who has good insurance 
                or production experience relative to other 
                producers of that agricultural commodity in the 
                same area, as determined by the Corporation.
                  (B) Discount for reduced price for certain 
                commodities.--A producer who insured wheat, 
                barley, oats, or rye during at least 2 of the 
                1995 through 1999 crop years may be eligible to 
                receive an additional 20 percent premium 
                discount on the producer-paid premium for any 
                2000 crop policy if the producer demonstrates 
                that the producer's wheat, barley, oats, or rye 
                crop was subjected to a discounted price due to 
                Scab or Vomitoxin damage, or both, during any 2 
                years of that period. The 2000 insured crop or 
                crops need not be wheat, barley, oats, or rye 
                to qualify for the discount under this 
                subparagraph. The 2 years of insurance and the 
                2 years of discounted prices need not be the 
                same.
  (e) Payment of Portion of Premium by Corporation.--
          (1)  * * *
          (2) Amount of payment.--The amount of the premium to 
        be paid by the Corporation shall be as follows:
                  (A)  * * *
                  [(B) In the case of coverage below 65 percent 
                of the recorded or appraised average yield 
                indemnified at 100 percent of the expected 
                market price, or an equivalent coverage, but 
                greater than 50 percent of the recorded or 
                appraised average yield indemnified at 100 
                percent of the expected market price, or an 
                equivalent coverage, the amount shall be 
                equivalent to the amount of premium established 
                for catastrophic risk protection coverage and 
                the amount of operating and administrative 
                expenses established under subsection 
                (d)(2)(B).
                  [(C) In the case of coverage equal to or 
                greater than 65 percent of the recorded or 
                appraised average yield indemnified at 100 
                percent of the expected market price, or an 
                equivalent coverage, on an individual or area 
                basis, the amount shall be equivalent to an 
                amount equal to the premium established for 50 
                percent loss in yield indemnified at 75 percent 
                of the expected market price and the amount of 
                operating and administrative expenses 
                established under subsection (d)(2)(C).]
                  (B) In the case of additional coverage equal 
                to or greater than 50 percent, but less than 55 
                percent, of the recorded or appraised average 
                yield indemnified at not greater than 100 
                percent of the expected market price, or an 
                equivalent coverage, the amount shall be equal 
                to the sum of--
                          (i) 67 percent of the amount of the 
                        premium established under subsection 
                        (d)(2)(B)(i) for the coverage level 
                        selected; and
                          (ii) the amount determined under 
                        subsection (d)(2)(B)(ii) for the 
                        coverage level selected to cover 
                        operating and administrative expenses.
                  (C) In the case of additional coverage equal 
                to or greater than 55 percent, but less than 65 
                percent, of the recorded or appraised average 
                yield indemnified at not greater than 100 
                percent of the expected market price, or an 
                equivalent coverage, the amount shall be equal 
                to the sum of--
                          (i) 64 percent of the amount of the 
                        premium established under subsection 
                        (d)(2)(B)(i) for the coverage level 
                        selected; and
                          (ii) the amount determined under 
                        subsection (d)(2)(B)(ii) for the 
                        coverage level selected to cover 
                        operating and administrative expenses.
                  (D) In the case of additional coverage equal 
                to or greater than 65 percent, but less than 75 
                percent, of the recorded or appraised average 
                yield indemnified at not greater than 100 
                percent of the expected market price, or an 
                equivalent coverage, the amount shall be equal 
                to the sum of--
                          (i) 59 percent of the amount of the 
                        premium established under subsection 
                        (d)(2)(B)(i) for the coverage level 
                        selected; and
                          (ii) the amount determined under 
                        subsection (d)(2)(B)(ii) for the 
                        coverage level selected to cover 
                        operating and administrative expenses.
                  (E) In the case of additional coverage equal 
                to or greater than 75 percent, but less than 80 
                percent, of the recorded or appraised average 
                yield indemnified at not greater than 100 
                percent of the expected market price, or an 
                equivalent coverage, the amount shall be equal 
                to the sum of--
                          (i) 54 percent of the amount of the 
                        premium established under subsection 
                        (d)(2)(B)(i) for the coverage level 
                        selected; and
                          (ii) the amount determined under 
                        subsection (d)(2)(B)(ii) for the 
                        coverage level selected to cover 
                        operating and administrative expenses.
                  (F) In the case of additional coverage equal 
                to or greater than 80 percent, but less than 85 
                percent, of the recorded or appraised average 
                yield indemnified at not greater than 100 
                percent of the expected market price, or an 
                equivalent coverage, the amount shall be equal 
                to the sum of--
                          (i) 40.6 percent of the amount of the 
                        premium established under subsection 
                        (d)(2)(B)(i) for the coverage level 
                        selected; and
                          (ii) the amount determined under 
                        subsection (d)(2)(B)(ii) for the 
                        coverage level selected to cover 
                        operating and administrative expenses.
                  (G) Subject to subsection (c)(4), in the case 
                of additional coverage equal to or greater than 
                85 percent of the recorded or appraised average 
                yield indemnified at not greater than 100 
                percent of the expected market price, or an 
                equivalent coverage, the amount shall be equal 
                to the sum of--
                          (i) 30.6 percent of the amount of the 
                        premium established under subsection 
                        (d)(2)(B)(i) for the coverage level 
                        selected; and
                          (ii) the amount determined under 
                        subsection (d)(2)(B)(ii) for the 
                        coverage level selected to cover 
                        operating and administrative expenses.

           *       *       *       *       *       *       *

          (5) Premium payment disclosure.--Each policy or plan 
        of insurance under this title shall prominently 
        indicate the dollar amount of the portion of the 
        premium paid by the Corporation under this subsection 
        or subsection (h)(2).

           *       *       *       *       *       *       *

  (f) Eligibility.--
          (1)  * * *

           *       *       *       *       *       *       *

          (3) Records and reporting.--To obtain catastrophic 
        risk protection under subsection (b) or additional 
        coverage under subsection (c), a producer shall--
                  (A) [provide, to the extent required by the 
                Corporation, records acceptable to the 
                Corporation of historical acreage and 
                production of the crops for which the insurance 
                is sought] provide annually records acceptable 
                to the Secretary regarding crop acreage, 
                acreage yields, and production for each 
                agricultural commodity insured under this title 
                or accept a yield determined by the 
                Corporation; and

           *       *       *       *       *       *       *

  (g) Yield Determinations.--
          (1)  * * *

           *       *       *       *       *       *       *

          (4) Adjustment in actual production history to 
        establish insurable yields.--
                  (A) Application.--This paragraph shall apply 
                whenever the Corporation uses the actual 
                production history of the producer to establish 
                insurable yields for an agricultural commodity 
                for the 2000 and subsequent crop years.
                  (B) Election to use percentage of 
                transitional yield.--If, for one or more of the 
                crop years used to establish the producer's 
                actual production history of an agricultural 
                commodity, the producer's recorded or appraised 
                yield of the commodity was less than 60 percent 
                of the applicable transitional yield, as 
                determined by the Corporation, the Corporation 
                shall, at the election of the producer--
                          (i) exclude any of such recorded or 
                        appraised yield; and
                          (ii) replace each excluded yield with 
                        a yield equal to 60 percent of the 
                        applicable transitional yield.
          (5) Adjustment to reflect increased yields from 
        successful pest control efforts.--
                  (A) Situations justifying adjustment.--The 
                Corporation shall develop a methodology for 
                adjusting the actual production history of a 
                producer when each of the following apply:
                          (i) The producer's farm is located in 
                        an area where systematic, area-wide 
                        efforts have been undertaken using 
                        certain operations or measures, or the 
                        producer's farm is a location at which 
                        certain operations or measures have 
                        been undertaken, to detect, eradicate, 
                        suppress, or control, or at least to 
                        prevent or retard the spread of, a 
                        plant disease or plant pest, including 
                        a plant pest covered by the definition 
                        in section 102 of the Department of 
                        Agriculture Organic Act of 1944 (7 
                        U.S.C. 147a).
                          (ii) The presence of the plant 
                        disease or plant pest has been found to 
                        adversely affect the yield of the 
                        agricultural commodity for which the 
                        producer is applying for insurance.
                          (iii) The efforts described in clause 
                        (i) have been effective.
                  (B) Adjustment amount.--The amount by which 
                the Corporation adjusts the actual production 
                history of a producer of an agricultural 
                commodity shall reflect the degree to which the 
                success of the systematic, area-wide efforts 
                described in paragraph (1)(A), on average, 
                increases the yield of the commodity on the 
                producer's farm, as determined by the 
                Corporation.

           *       *       *       *       *       *       *

  (h) Submission of Policies and Materials to Board.--
          (1) In general.--In addition to any standard forms or 
        policies that the Board may require be made available 
        to producers under subsection (c), a person (including 
        an approved insurance provider, a college or 
        university, a cooperative or trade association, or any 
        other person) may prepare for submission or propose to 
        the Board--
                  (A)  * * *

           *       *       *       *       *       *       *

          (2) Submission of policies.--[A policy]
                  (A) Preparation.--A policy or other material 
                submitted to the Board under this subsection 
                may be prepared without regard to the 
                limitations contained in this title, including 
                the requirements concerning the levels of 
                coverage and rates and the requirement that a 
                price level for each commodity insured must 
                equal the expected market price for the 
                commodity as established by the Board. [In the 
                case of such a policy, the payment by the 
                Corporation of a portion of the premium of the 
                policy may not exceed the amount that would 
                otherwise be authorized under subsection (e).]
                  (B) Premium schedule.--In the case of a 
                policy offered under this subsection (except 
                paragraph (10)) or subsection (m)(4), the 
                Corporation shall pay a portion of the premium 
                of the policy that shall be equal to--
                          (i) the percentage, specified in 
                        subsection (e) for a similar level of 
                        coverage, of the total amount of the 
                        premium used to define loss ratio; and
                          (ii) the dollar amount of the 
                        administrative and operating expenses 
                        that would be paid by the Corporation 
                        under subsection (e) for a similar 
                        level of coverage.
          (3) Review and approval by the board.--A policy or 
        other material submitted to the Board under this 
        subsection shall be reviewed by the Board and, if the 
        Board finds that the interests of producers are 
        adequately protected and that any premiums charged to 
        the producers are actuarially appropriate, shall be 
        approved by the Board for reinsurance and for sale by 
        approved insurance providers to producers as an additional 
        choice at actuarially appropriate rates and under appropriate 
        terms and conditions. The Corporation may enter into more 
        than 1 reinsurance agreement with the approved insurance 
        provider simultaneously to facilitate the offering of the new 
        policies.
          (4) Guidelines for submission and review.--[The 
        Corporation]
                  (A) Guidelines required.--Not later than 180 
                days after the date of the enactment of the 
                Agricultural Risk Protection Act of 1999, the 
                Corporation shall issue regulations to 
                establish guidelines for the submission, and 
                Board review, of policies or other material 
                submitted to the Board under this subsection. 
                At a minimum, the guidelines shall ensure the 
                following:
                          [(A)] (i) A proposal submitted to the 
                        Board under this subsection shall be 
                        considered as confidential commercial 
                        or financial information for purposes 
                        of section 552(b)(4) of title 5, United 
                        States Code, until approved by the 
                        Board. A proposal disapproved by the 
                        Board shall remain confidential 
                        commercial or financial information.
                          [(B)] (ii) The Board shall provide an 
                        applicant with the opportunity to 
                        present the proposal to the Board in 
                        person if the applicant so desires.
                          [(C)] (iii) The Board shall provide 
                        an applicant with notification of 
                        intent to disapprove a proposal not 
                        later than 30 days prior to making the 
                        disapproval. An applicant that receives 
                        the notification may modify the 
                        application [of the applicant. Any 
                        modification shall be considered an 
                        original application for purposes of 
                        this paragraph.], and such application, 
                        as modified, shall be considered by the 
                        Board in the manner provided in clause 
                        (iv) within the 30-day period beginning 
                        on the date the modified application is 
                        submitted. Any notification of intent 
                        to disapprove a policy or other 
                        material submitted under this 
                        subsection shall be accompanied by a 
                        complete explanation as to the reasons 
                        for the Board's intention to deny 
                        approval.
                          [(D) Specific guidelines shall 
                        prescribe the timing of submission of 
                        proposals under this subsection and 
                        timely consideration by the Board so 
                        that any approved proposal may be made 
                        available to all persons reinsured by 
                        the Corporation in a manner permitting 
                        the persons to participate, if the 
                        persons so desire, in offering such a 
                        proposal in the first crop year in 
                        which the proposal is approved by the 
                        Board for reinsurance, premium subsidy, 
                        or other support offered by this 
                        title.]
                          (iv) Not later than 120 days after a 
                        policy or other material is submitted 
                        under this subsection, the Board shall 
                        make a determination to approve or 
                        disapprove such policy or material. Any 
                        determination by the Board to 
                        disapprove any policy or other material 
                        shall be accompanied by a complete 
                        explanation of the reasons for the 
                        Board's decision to deny approval. In 
                        the event the Board fails to make a 
                        determination within the prescribed 
                        time period, the submitted policy or 
                        other material shall be deemed approved 
                        by the Board for the initial 
                        reinsurance year designated for the 
                        policy or material, except in the case 
                        where the Board and the applicant agree 
                        to an extension.
                  (B) Expedited consideration of proposed pilot 
                programs.--The regulations required by 
                subparagraph (A) shall include streamlined 
                guidelines for the submission, and Board 
                review, of pilot programs that the Board 
                determines are limited in scope and duration 
                and involve a reduced level of liability to the 
                Federal Government, and an increased level of 
                risk to approved insurance providers 
                participating in the pilot program, relative to 
                other policies or materials submitted under 
                this subsection. The streamlined guidelines 
                shall be consistent with the guidelines 
                established under subparagraph (A), except as 
                follows:
                          (i) Not later than 60 days after 
                        submission of the proposed pilot 
                        program, the Corporation shall provide 
                        an applicant with notification of its 
                        intent to recommend disapproval of the 
                        proposal to the Board.
                          (ii) Not later than 90 days after the 
                        proposed pilot program is submitted to 
                        the Board, the Board shall make a 
                        determination to approve or disapprove 
                        the pilot program. Any determination by 
                        the Board to disapprove the pilot 
                        program shall be accompanied by a 
                        complete explanation of the reasons for 
                        the Board's decision to deny approval. 
                        In the event the Board fails to make a 
                        determination within the prescribed 
                        time period, the pilot program 
                        submitted shall be deemed approved by 
                        the Board for the initial reinsurance 
                        year designated for the pilot program, 
                        except in the case where the Board and 
                        the applicant agree to an extension.

           *       *       *       *       *       *       *

          [(6) Pilot cost of production risk protection plan.--
                  [(A) In general.--The Corporation shall 
                offer, to the extent practicable, a cost of 
                production risk protection plan of insurance 
                that indemnifies producers (including new 
                producers) for insurable losses as provided in 
                this paragraph.
                  [(B) Pilot basis.--The cost of production 
                risk protection plan shall--
                          [(i) be established as a pilot 
                        project for each of the 1996 and 1997 
                        crop years; and
                          [(ii) be carried out in a number of 
                        counties that is determined by the 
                        Corporation to be adequate to provide a 
                        comprehensive evaluation of the 
                        feasibility, effectiveness, and demand 
                        among producers for the plan.
                  [(C) Insurable loss.--An insurable loss shall 
                be incurred by a producer if the gross income 
                of the producer (as determined by the 
                Corporation) is less than an amount determined 
                by the Corporation, as a result of a reduction 
                in yield or price resulting from an insured 
                cause.
                  [(D) Definition of new producer.--As used in 
                this paragraph, the term ``new producer'' means 
                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.]
          (6) Reimbursement of research, development, and 
        maintenance costs.--
                  (A) Reimbursement provided.--Subject to the 
                conditions of this paragraph, the Corporation 
                shall provide a payment to reimburse an 
                applicant for research, development, and 
                maintenance costs directly related to a policy 
                or other material that is--
                          (i) submitted to, and approved by, 
                        the Board under this subsection for 
                        reinsurance; and
                          (ii) if applicable, offered for sale 
                        to producers.
                  (B) Duration.--Payments under subparagraph 
                (A) may be made available beginning in fiscal 
                year 2001. Payments with respect to the 
                maintenance of an approved policy or other 
                material may be provided for a period of not 
                more than 4 reinsurance years following Board 
                approval. Upon the expiration of that 4-year 
                period, or earlier upon the agreement of the 
                Corporation and the person receiving the 
                payment, the Corporation shall assume 
                responsibility for maintenance of a successful 
                policy, as determined by the Corporation based 
                on the market share attained by the policy, the 
                total number of policies sold, the total amount 
                of premium paid, and the performance of the 
                policy in the States where the policy is sold.
                  (C) Treatment of payment.--Payments made 
                under subparagraph (A) for a policy or other 
                material shall be considered as payment in full 
                for the research and development conducted with 
                regard to the policy or material and any 
                property rights to the policy or material.
                  (D) Reimbursement amount.--The Corporation 
                shall determine the amount of the payment under 
                subparagraph (A) for an approved policy or 
                other material based on the complexity of the 
                policy or material and the size of the area in 
                which the policy or material is expected to be 
                used.
                  (E) Expenditures.--
                          (i) Specialty crops.--Of the total 
                        amount made available to provide 
                        payments under this paragraph and 
                        subsection (m)(4)(B) for a fiscal year, 
                        $25,000,000 shall be reserved for 
                        research and development contracts 
                        under subsection (m)(4)(B). The 
                        Corporation may use a portion of the 
                        reserved amount for other purposes 
                        under this paragraph, with priority 
                        given to underserved commodities, if 
                        the Corporation determines that the 
                        entire amount is not needed for such 
                        contracts. If the reserved amount is 
                        insufficient for a fiscal year, the 
                        Corporation may use amounts in excess 
                        of the reserved amount for such 
                        contracts.
                          (ii) Limitation.--In providing 
                        payments under this paragraph and 
                        subsection (m)(4)(B), the Corporation 
                        shall not obligate or expend more than 
                        $55,000,000 during any fiscal year.

           *       *       *       *       *       *       *

          [(8) Pilot program of assigned yields for new 
        producers.--
                  [(A) Program required.--For each of the 1995 
                and 1996 crop years, the Corporation shall 
                carry out a pilot program to assign to eligible 
                new producers higher assigned yields than would 
                otherwise be assigned to the producers under 
                subsection (g). The Corporation shall include 
                in the pilot program 30 counties that are 
                determined by the Corporation to be adequate to 
                provide a comprehensive evaluation of the 
                feasibility, effectiveness, and demand among 
                new producers for increased assigned yields.
                  [(B) Increased assigned yields.--In the case 
                of an eligible new producer participating in 
                the pilot program, the Corporation shall assign 
                to the new producer a yield that is equal to 
                not less than 110 percent of the transitional 
                yield otherwise established by the Corporation.
                  [(C) Eligible new producer.--The Secretary 
                shall establish a definition of new producer 
                for purposes of determining eligibility to 
                participate in the pilot program.]
          (8) General requirements applicable to pilot 
        programs.--In conducting any pilot program of insurance 
        or reinsurance authorized or required by this title, 
        the Corporation--
                  (A) may offer the pilot program on a 
                regional, whole State, or national basis after 
                considering the interests of affected producers 
                and the interests of and risks to the 
                Corporation;
                  (B) may operate the pilot program, including 
                any modifications thereof, for a period of up 
                to 3 years; and
                  (C) may extend the time period for the pilot 
                program for additional periods, as determined 
                appropriate by the Corporation.

           *       *       *       *       *       *       *

          [(10) Time limits for response to submission of new 
        policies.--
                  [(A) In general.--The Board shall establish a 
                reasonable time period within which the Board 
                shall approve or disapprove a proposal from a 
                person regarding a new policy submitted in 
                accordance with this subsection.
                  [(B) Effect of failure to meet time limits.--
                Except as provided in subparagraph (C), if the 
                Board fails to provide a response to a proposal 
                described in subparagraph (A) in accordance 
                with subparagraph (A), the new policy shall be 
                deemed to be approved by the Board for purposes 
                of this subsection for the initial reinsurance 
                year designated for the new policy in the 
                request.
                  [(C) Exceptions.--Subparagraph (B) shall not 
                apply to a proposal submitted under this 
                subsection if the Board and the person 
                submitting the request agree to an extension of 
                the time period.]
          (10) Livestock pilot programs.--
                  (A) Programs required.--The Corporation shall 
                conduct one or more pilot programs to evaluate 
                the effectiveness of risk management tools for 
                livestock producers, including the use of 
                futures and options contracts and policies and 
                plans of insurance that provide livestock 
                producers with reasonable protection from the 
                financial risks of price or income fluctuations 
                inherent in the production and marketing of 
                livestock, provide protection for production 
                losses, and otherwise protect the interests of 
                livestock producers. To the maximum extent 
                practicable, the Corporation shall evaluate the 
                greatest number and variety of such programs to 
                determine which of the offered risk management 
                tools are best suited to protect livestock 
                producers from the financial risks associated 
                with the production and marketing of livestock.
                  (B) Implementation; assistance.--The 
                Corporation shall begin conducting livestock 
                pilot programs under this paragraph during 
                fiscal year 2001, and any policy or plan of 
                insurance offered under this paragraph may be 
                prepared without regard to the limitations 
                contained in this title. As part of such a 
                pilot program, the Corporation may provide 
                assistance to producers to purchase futures and 
                options contracts or policies and plans of 
                insurance offered under that pilot program. 
                However, no action may be undertaken with 
                respect to a risk under this paragraph if the 
                Corporation determines that insurance 
                protection for livestock producers against the 
                risk is generally available from private 
                companies.
                  (C) Location.--The Corporation shall conduct 
                the livestock pilot programs under this 
                paragraph in a number of counties that is 
                determined by the Corporation to be adequate to 
                provide a comprehensive evaluation of the 
                feasibility, effectiveness, and demand among 
                producers for the risk management tools 
                evaluated in the pilot programs.
                  (D) Eligible producers; livestock.--Any 
                producer of a type of livestock covered by a 
                pilot program under this paragraph who owns or 
                operates a farm or ranch in a county selected 
                as a location for that pilot program shall be 
                eligible to participate in that pilot program. 
                In this paragraph, the term ``livestock'' means 
                cattle, sheep, swine, goats, and poultry.
                  (E) Relation to other laws.--The terms and 
                conditions of any policy or plan of insurance 
                offered under this paragraph that is reinsured 
                by the Corporation is not subject to the 
                jurisdiction of the Commodity Futures Trading 
                Commission or the Securities and Exchange 
                Commission or considered as accounts, 
                agreements (including any transaction which is 
                of the character of, or is commonly known to 
                the trade as, an ``option'', ``privilege'', 
                ``indemnity'', ``bid'', ``offer'', ``put'', 
                ``call'', ``advance guaranty'', or ``decline 
                guaranty''), or transactions involving 
                contracts of sale of a commodity for future 
                delivery, traded or executed on a contract 
                market for the purposes of the Commodity 
                Exchange Act (7 U.S.C. 1 et seq.). Nothing in 
                this subparagraph is intended to affect the 
                jurisdiction of the Commodity Futures Trading 
                Commission or the applicability of the 
                Commodity Exchange Act to any transaction 
                conducted on a designated contract market (as 
                that term is used in such Act) by an approved 
                insurance provider to offset the provider's 
                risk under a plan or policy of insurance under 
                this paragraph.
                  (F) Limitation on expenditures.--The 
                Corporation shall conduct all livestock 
                programs under this title so that, to the 
                maximum extent practicable, all costs 
                associated with conducting the livestock 
                programs (other than research and development 
                costs covered by paragraph (6) or subsection 
                (m)(4)) are not expected to exceed the 
                following:
                          (i) $20,000,000 for fiscal year 2001.
                          (ii) $30,000,000 for fiscal year 
                        2002.
                          (iii) $40,000,000 for fiscal year 
                        2003.
                          (iv) $55,000,000 for fiscal year 2004 
                        and each subsequent fiscal year.
          (11) Fees for new policies and plans of insurance.--
                  (A) Authority to impose fee.--Effective 
                beginning with Fiscal Year 2001, if a person 
                develops a new policy or plan of insurance and 
                does not apply for reimbursement of research, 
                development, and maintenance costs under 
                paragraph (6), the person shall have the right 
                to receive a fee from any approved insurance 
                provider that elects to sell the new policy or 
                plan of insurance. Notwithstanding paragraph 
                (5), once the right to collect a fee is 
                asserted with respect to a new policy or plan 
                of insurance, no approved insurance provider 
                may offer the new policy or plan of insurance 
                in the absence of a fee agreement with the 
                person who developed the policy or plan.
                  (B) Definition.--For purposes of this 
                paragraph only, the term ``new policy or plan 
                of insurance'' means a policy or plan of 
                insurance that was approved by the Board on or 
                after October 1, 2000, and was not available at 
                the time the policy or plan of insurance was 
                approved by the Board.
                  (C) Amount.--The amount of the fee that is 
                payable by an approved insurance provider to 
                offer a new policy or a plan of insurance under 
                subparagraph (A) shall be an amount that is 
                determined by the person that developed the new 
                policy or plan of insurance, subject to the 
                approval of the Board under subparagraph (D).
                  (D) Approval.--The Board shall approve the 
                amount of a fee determined under subparagraph 
                (C) for a new policy or plan of insurance 
                unless the Board can demonstrate that the fee 
                amount--
                          (i) is unreasonable in relation to 
                        the research and development costs 
                        associated with the new policy or plan 
                        of insurance; and
                          (ii) unnecessarily inhibits the use 
                        of the new policy or plan of insurance.

           *       *       *       *       *       *       *

  (k) Reinsurance.--
          (1)  * * *

           *       *       *       *       *       *       *

          (4) Rate.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the rate established by the 
                Board to reimburse approved insurance providers 
                and agents for the administrative and operating 
                costs of the providers and agents shall not 
                exceed--
                          (i)  * * *
                          (ii) for each of the 1999 and 
                        subsequent reinsurance years, [24.5 
                        percent] 24 percent of the premium used 
                        to define loss ratio.

           *       *       *       *       *       *       *

  (m) Research.--
          (1)  * * *
          [(2) Exception.--No action]
          (2) Exceptions.--
                  (A) Private availability.--No action may be 
                undertaken with respect to a risk under 
                paragraph (1) if insurance protection against 
                the risk is generally available from private 
                companies.
                  (B) Prohibited research and development by 
                corporation.--Notwithstanding paragraphs (1) 
                and (5), on and after October 1, 2000, the 
                Corporation shall not conduct research and 
                development for any new policy or plan of 
                insurance for an agricultural commodity offered 
                under this title. Any policy or plan of 
                insurance developed by the Corporation under 
                this title before that date shall, at the 
                discretion of the Corporation, continue to be 
                offered for sale to producers.

           *       *       *       *       *       *       *

          (4) Private research and development of policies and 
        other materials.--
                  (A) Use of reimbursement authority.--To 
                encourage and promote the necessary research 
                and development for policies, plans of 
                insurance, and related materials, including 
                policies, plans, and materials under the 
                livestock pilot programs under subsection 
                (h)(10), the Corporation shall make full use of 
                private resources by providing payment for 
                research and development for approved policies 
                and plans of insurance, and related materials, 
                pursuant to subsection (h)(6).
                  (B) Contracts for underserved commodities.--
                          (i) Development of products and 
                        related materials.--In the event the 
                        Corporation determines that an 
                        agricultural commodity, including a 
                        specialty crop, is not adequately 
                        served by policies and plans of 
                        insurance and related materials 
                        submitted under subsection (h) or any 
                        other provision of this title, the 
                        Corporation may enter into a contract, 
                        under procedures prescribed by the 
                        Corporation, directly with any person 
                        or entity with experience in crop 
                        insurance or farm or ranch risk 
                        management, including universities, 
                        providers of crop insurance, and trade 
                        and research organizations, to carry 
                        out research and development for 
                        policies and plans of insurance and 
                        related materials for that agricultural 
                        commodity without regard to the 
                        limitations contained in this title.
                          (ii) Types of contracts.--A contract 
                        under this subparagraph may provide for 
                        research and development regarding new 
                        or expanded policies and plans of 
                        insurance and related materials, 
                        including policies based on adjusted 
                        gross income, cost-of-production, 
                        quality losses, and an intermediate 
                        base program with a higher coverage and 
                        cost than catastrophic risk protection.
                          (iii) Delayed effective date for 
                        contracts.--A contract entered into 
                        under this subparagraph may not take 
                        effect before October 1, 2000.
                          (iv) Use of resulting policies and 
                        plans.--The Corporation may offer any 
                        policy or plan of insurance developed 
                        under this subparagraph that is 
                        approved by the Board.
                  (C) Contract for revenue coverage plan.--The 
                Corporation shall enter into a contract for 
                research and development regarding one or more 
                revenue coverage plans designed to enable 
                producers to take maximum advantage of 
                fluctuations in market prices and thereby 
                maximize revenue realized from the sale of a 
                crop. Such a plan may include market 
                instruments currently available or may involve 
                the development of new instruments to achieve 
                this goal. Not later than 15 months after the 
                date of the enactment of this paragraph, the 
                Corporation shall submit to Congress a report 
                containing the results of the contract.
          (5) Partnerships for risk management development and 
        implementation.--
                  (A) Purpose.--The purpose of this paragraph 
                is to authorize the Corporation to enter into 
                partnerships with public and private entities 
                for the purpose of increasing the availability 
                of loss mitigation, financial, and other risk 
                management tools for crop producers, with 
                priority given to risk management tools for 
                producers of agricultural commodities covered 
                by section 196 of the Federal Agriculture 
                Improvement and Reform Act of 1996 (7 U.S.C. 
                7333) and specialty and underserved commodity 
                producers.
                  (B) Authority.--Subject to subparagraphs (D) 
                and (E), the Corporation may enter into 
                partnerships with the Cooperative State 
                Research, Education, and Extension Service, the 
                Agricultural Research Service, the National 
                Oceanic and Atmospheric Administration, and 
                other appropriate public and private entities 
                with demonstrated capabilities in developing 
                and implementing risk management and marketing 
                options for specialty crops and underserved 
                commodities.
                  (C) Objectives.--The Corporation may enter 
                into a partnership under subparagraph (B)--
                          (i) to enhance the notice and 
                        timeliness of notice of weather 
                        conditions that could negatively affect 
                        crop yields, quality, and final product 
                        use in order to allow producers to take 
                        preventive actions to increase end-
                        product profitability and marketability 
                        and to reduce the possibility of crop 
                        insurance claims;
                          (ii) to develop a multifaceted 
                        approach to pest management and 
                        fertilization to decrease inputs, 
                        decrease environmental exposure, and 
                        increase application efficiency;
                          (iii) to develop or improve 
                        techniques for planning, breeding, 
                        planting, growing, maintaining, 
                        harvesting, storing, shipping, and 
                        marketing that will address quality and 
                        quantity challenges associated with 
                        year-to-year and regional variations;
                          (iv) to clarify labor requirements 
                        and assist producers in complying with 
                        requirements to better meet the 
                        physically intense and time-compressed 
                        planting, tending, and harvesting 
                        requirements associated with the 
                        production of specialty crops and 
                        underserved commodities;
                          (v) to provide assistance to State 
                        foresters or equivalent officials for 
                        the prescribed use of burning on 
                        private forest land for the prevention, 
                        control, and suppression of fire;
                          (vi) to provide producers with 
                        training and informational 
                        opportunities so that they will be 
                        better able to use financial 
                        management, crop insurance, marketing 
                        contracts, and other existing and 
                        emerging risk management tools; and
                          (vii) to develop other risk 
                        management tools to further increase 
                        economic and production stability.
                  (D) Funding source.--If the Corporation 
                determines that the entire amount available to 
                provide reimbursement payments under subsection 
                (h) and contract payments under paragraph (4) 
                (in this subparagraph referred to as 
                ``reimbursement and contract payments'') for a 
                fiscal year is not needed for such purposes, 
                the Corporation may use a portion of the excess 
                amount to carry out this paragraph, subject to 
                the following:
                          (i) During fiscal years 2001 through 
                        2004, amounts available for 
                        reimbursement and contract payments may 
                        be used to carry out this paragraph 
                        only if the total amount to be used for 
                        reimbursement and contract payments is 
                        less than $44,000,000 for fiscal year 
                        2001, $47,000,000 for fiscal year 2002, 
                        $50,000,000 for fiscal year 2003, and 
                        $52,000,000 for fiscal year 2004.
                          (ii) During fiscal years 2001 through 
                        2004, the total amount used to carry 
                        out this paragraph for a fiscal year 
                        may not exceed the difference between 
                        the amount specified in clause (i) for 
                        that fiscal year and the amount actually 
                        used for reimbursement and contract payments.
                  (E) Delayed authority.--The Corporation may 
                not enter into a partnership under the 
                authority of this paragraph before October 1, 
                2000.

           *       *       *       *       *       *       *

  (o) Compliance With State Licensing Requirements.--Any person 
who sells or solicits the purchase of a policy or plan of 
insurance under this title, including catastrophic risk 
protection, in any State shall be licensed and otherwise 
qualified to do business in that State.

           *       *       *       *       *       *       *


SEC. 516. FUNDING.

  (a) Authorization of Appropriations.--
          (1)  * * *
          (2) Mandatory expenses.--There are authorized to be 
        appropriated such sums as are necessary to cover for 
        each of the 1999 and subsequent reinsurance [years--] 
        years the following:
                  (A) [the] The administrative and operating 
                expenses of the Corporation for the sales 
                commissions of agents[; and].
                  (B) [premium] Premium subsidies, including 
                the administrative and operating expenses of an 
                approved insurance provider for the delivery of 
                policies with additional coverage.
                  (C) Costs associated with the conduct of 
                livestock pilot programs carried out under 
                section 508(h)(10), subject to subparagraph (F) 
                of such section.
                  (D) Costs associated with the reimbursement 
                for research, development, and maintenance 
                costs of approved policies and other materials 
                provided under section 508(h)(6) and 
                contracting for research and development under 
                section 508(m)(4)(B).
  (b) Payment of Corporation Expenses From Insurance Fund.--
          (1) Expenses generally.--For each of the 1999 and 
        subsequent reinsurance years, the Corporation may pay 
        from the insurance fund established under subsection 
        (c) all expenses of the Corporation (other than 
        expenses covered by subsection (a)(1) and expenses 
        covered by paragraph (2)(A)),
        [including--] including the following:
                  (A) [premium] Premium subsidies and 
                indemnities[;].
                  (B) [administrative] Administrative and 
                operating expenses of the Corporation necessary 
                to pay the sales commissions of agents[; and].

           *       *       *       *       *       *       *

                  (D) Costs associated with the conduct of 
                livestock pilot programs carried out under 
                section 508(h)(10), subject to subparagraph (F) 
                of such section.
                  (E) Reimbursement for research, development, 
                and maintenance costs of approved policies and 
                other materials provided under section 
                508(h)(6) and contracting for research and 
                development under section 508(m)(4)(B).
          (2) [Research and development expenses.--] Policy 
        consideration expenses.--
                  (A) In general.--For each of the 1999 and 
                subsequent reinsurance years, the Corporation 
                may pay from the insurance fund established 
                under subsection (c) [research and development 
                expenses of the Corporation] costs associated 
                with considering for approval or disapproval 
                policies and other materials under subsections 
                (h) and (m)(4) of section 508, costs associated 
                with implementing such subsection (m)(4), and 
                costs to contract out for assistance in 
                considering such policies and other materials, 
                but not to exceed $3,500,000 for each fiscal 
                year.
                  (B)  * * *

           *       *       *       *       *       *       *


                         agricultural commodity

      Sec. 518. ``Agricultural commodity'', as used in this 
title, means wheat, cotton, flax, corn, dry beans, oats, 
barley, rye, tobacco, rice, peanuts, soybeans, sugar beets, 
sugar cane, tomatoes, grain sorghum, sunflowers, raisins, 
oranges, sweet corn, dry peas, freezing and canning peas, 
forage, apples, grapes, potatoes, timber and forests, nursery 
crops, citrus, and other fruits and vegetables, nuts, tame hay, 
native grass, aquacultural species (including, but not limited 
to, any species of finfish, mollusk, crustacean, or other 
aquatic invertebrate, amphibian, reptile, or aquatic plant 
propagated or reared in a controlled or selected environment), 
or any other agricultural commodity, excluding [livestock and] 
stored grain, determined by the Board under subsection (a) or 
(m) of section 508 of this title, or any one or more of such 
commodities, as the context may indicate.

           *       *       *       *       *       *       *

                              ----------                              


 SECTION 196 OF THE FEDERAL AGRICULTURE IMPROVEMENT AND REFORM ACT OF 
                                  1996

SEC. 196. ADMINISTRATION AND OPERATION OF NONINSURED CROP ASSISTANCE 
                    PROGRAM.

  (a)  * * *
  (b) Application for Noninsured Crop Disaster Assistance.--
          (1)  * * *
          [(2) Records.--A producer shall provide records, as 
        required by the Secretary, of crop acreage, acreage 
        yields, and production.]
          (2) Records.--To be eligible for assistance under 
        this section, a producer shall provide annually to the 
        Secretary, acting through the Agency, records of crop 
        acreage, acreage yields, and production for each 
        eligible crop.
          (3) Acreage reports.--A producer shall provide annual 
        reports on acreage planted or prevented from being 
        planted, as required by the Secretary, by the 
        designated acreage reporting date for the crop and 
        location as established by the Secretary.

           *       *       *       *       *       *       *

  (i) Payment and Income Limitations.--
          (1) Definitions.--In this subsection:
                  (A)  * * *
                  (B) Qualifying [gross revenues] adjusted 
                gross income.--The term ``qualifying [gross 
                revenues] adjusted gross income'' means--
                          (i) if a majority of the [gross 
                        revenue] adjusted gross income of the 
                        person is received from farming, 
                        ranching, and forestry operations, the 
                        [gross revenue] adjusted gross income 
                        from the farming, ranching, and 
                        forestry operations of the person; and
                          (ii) if less than a majority of the 
                        [gross revenue] adjusted gross income 
                        of the person is received from farming, 
                        ranching, and forestry operations, the 
                        [gross revenue] adjusted gross income 
                        of the person from all sources.

           *       *       *       *       *       *       *

          [(4) Income limitation.--A person who has qualifying 
        gross revenues in excess of the amount specified in 
        section 2266(a) of the Food, Agriculture, Conservation, 
        and Trade Act of 1990 (7 U.S.C. 1421 note) (as in 
        effect on November 28, 1990) during the taxable year 
        (as determined by the Secretary) shall not be eligible 
        to receive any noninsured assistance payment under this 
        section.]
          (4) Limitation.--A person who has qualifying adjusted 
        gross income in excess of $2,000,000 during the taxable 
        year shall not be eligible to receive any noninsured 
        crop disaster assistance payment under this section.

           *       *       *       *       *       *       *


                            Additional Views

    H.R. 2559 as reported by the Agriculture Committee is a 
defective effort in at least two respects: (1) its scope is too 
modest in the context of the problems American agriculture 
faces today, and (2) it overspends considerably when compared 
to the amount allotted to the Committee under the terms of the 
Congressional Budget Resolution. We believe that a tremendous 
opportunity to address the needs of agriculture comprehensively 
and responsibly is being wastefully squandered with the 
approach taken in this bill.
    The clear purpose of H.R. 2559 is to exploit the authority 
provided under the Budget Resolution for the Agriculture 
Committee to report increases in agriculture spending. The 
Resolution specifically provides for an increase in the 
Agriculture Committee's allocation of budget authority when it 
reports a bill providing risk management or income assistance. 
The allocation is increased as long as the bill does not 
provide a net increase in budget authority in fiscal year 2000, 
does not provide more than $6 billion total in fiscal years 
2001 through 2004, and does not increase budget authority in 
any one of those years by more than 42 billion.
    In spite of the very broad purposes permitted under the 
resolution--for example, income assistance alone could justify 
changes in nearly any agriculture program--the Committee has 
chosen to limit the increase in spending entirely to an 
expansion of the crop insurance program. Within the crop 
insurance program, nearly all of the effort will be dedicated 
to yield protection rather than more comprehensive farm revenue 
protection.
    During the past year, Congress has recognized that our 
current mix of farm programs and risk management tools are 
simply not adequate. In the Agriculture Appropriations bill for 
fiscal year 1999 (included as part of the Omnibus 
Appropriations Bill), Congress provided $6 billion in emergency 
assistance to farm and ranch producers. Of the emergency fund 
provided, $2.375 billion were made available for producers who 
lost crops in 1998 or over the course of multiple years. As 
such, they constituted the kind of emergency aid that Congress 
has traditionally provided to meet the needs caused by natural 
disasters. Most of the remaining funds were provided (in an 
unprecedented manner) ostensibly as emergency compensation for 
the low prices that were having such a devastating impact on 
the incomes of producers throughout the nation--including areas 
not affected by weather-related disasters. These funds came in 
the form of supplemental Agricultural Market Transition Act 
(AMTA) payments. Since the AMTA contract does not require a 
producer to plant a crop, it is likely that a significant 
portion went to individuals not producing the commodity for 
which the assistance was being provided.
    During field hearings held by the Subcommittee on Risk 
Management, Research, and Specialty Crops regarding risk 
management programs, witnesses made clear that the problems are 
broader than crop insurance. During his testimony, Phil Cyre, 
who operates a diversified 3,000 acre farm in South Dakota, 
testified of his ``belief in the need for risk management 
insurance,'' and stated:
    ``We have before us the FAIR Act, which in my opinion can 
best be related as the current version of the Titanic. It's a 
beautiful ship. * * * But it doesn't have enough lifeboats on 
it because there are a lot of people who think it's unsinkable. 
I was present when the Agriculture Committee did not pass the 
FAIR Act. It didn't pass that day, and I doubt seriously in its 
present form and under our current conditions that it world 
pass today without some modification. I encourage this 
committee to share with us and to agree perhaps with me that 
crop insurance in its truest form is designed to provide 
insurance when we fail to produce. It is a very difficult 
challenge then to encompass in that in an actuarially sound 
manner coverage for when we overproduce, or when world 
economies fail and falter.''
    Billy Griggs, a cotton farmer in Dooly County, Georgia, 
offered the following testimony:
    ``Finally, what do we believe we must do to keep American 
agriculture alive until such time as we can address the trade 
agreements and the farm bill with more position long-term 
solution? First, this Nation and its leaders must recognize the 
tremendous benefits of providing a safety net for agriculture 
that works. Obviously what we have today is not working, and if 
allowed to continue as is then this Nation and its leaders will 
surely see the tremendous cost of this inaction.''
    In his testimony, Roy Baxley of North Carolina said:
    ``Under the current farm law that we have now we basically 
have no safety net.''
    As a general matter, Congress has often followed ad hoc 
weather-related disaster spending with an effort to reform and 
improve the crop insurance program. The theory is that 
taxpayers and producers are better off if they don't have to 
rely on after-the-fact, unpredictable levels of assistance when 
disasters occur. H.R. 2559, coming as it does after Congress 
provided $2.375 billion in yield-related emergency assistance, 
attempts to improve the crop insurance program and to stave off 
the future need for emergency assistance.
    The bill as reported by the Committee, however, ignores the 
fact that to the same degree that last year's yield emergency 
aid points to the need for improvements in the crop insurance 
program, the emergency aid to compensate for the price disaster 
also points to the need for improvements in our basic farm 
income assistance programs.
    We also note that when Congress passed the 1996 Farm Bill, 
there was much concern in the countryside. The House leadership 
promised that the bill's provisions would be revisited if 
Congress failed to take action to open world markets, to reduce 
dramatically regulations on agricultural production, and to 
provide deep tax relief to agricultural producers. Since that 
time, no action has been taken to authorize U.S. participation 
in multilateral trade negotiations that are needed if markets 
are to be opened, the tax relief provided has been modest at 
best, and no apparent effort has been made to provide the 
promised regulatory relief. To the contrary, in some instances, 
such as the Food Quality Protection Act (FQPA), Congress 
provided the Environmental Protection Agency with even more 
discretion to restrict production practices that are required 
by our producers competing in a global marketplace. On the 
whole, our current farm policy is backed by broken promises, 
and there is no indication that agriculture's unmet needs will 
be addressed anytime soon.
    In this regard, when Congress put the Freedom to Farm Act 
in place, cautions were raised that the needs of producers and 
the food security of our nation would not be met if prices 
fell. The need for emergency assistance last year bore out 
those concerns. Unfortunately, it appears we are once again 
facing a similar situation.
    Our nation deserves a long-term, reliable farm policy. 
Taxpayers and agricultural producers alike should be able to 
know up front what kind of assistance can be expected and what 
the rules will be for distributing it. In terms of yield 
insurance, this bill makes some progress. Higher subsidy rates, 
for example, will lead to higher levels of participation in 
crop insurance, and better indemnity performance for the 
producers who participate. This will help take care of needs 
that otherwise would most likely be met annually through 
disaster legislation.
    Absent from H.R. 2559 is the other half of the picture. 
Last year, U.S. farm programs left producers overexposed to 
price and weather disasters. This bill pushes the Committee 
toward addressing yield disaster, but what about price 
disaster? How much more will our government spend on ad hoc, 
supplemental payments before we realize that a more rational, 
predictable policy needs to be in force?
    During the Committee's debate on H.R. 2559, an amendment 
offered by Representative Stenholm would have addressed the 
shortfalls under our current farm program. It would establish a 
program of Supplemental Income Payments (SIP) for producers of 
wheat, feed grains, cotton, rice, and oilseeds.
    Under that program, a producer who plants a crop would 
receive a payment for a crop year if national revenue for the 
crop falls significantly below the most recent five-year 
average level. Payouts could occur if national prices are low 
or if national production is low.
    A Supplemental Income Payment program can work for our 
producers and for taxpayers as well. It is a simple program 
under which payments would go directly to actual producers in 
times of need. It's the kind of long-term approach we should be 
using to address agriculture's cyclical problems. If adopted, 
the program would serve as the key policy for managing the risk 
associated with dramatic revenue declines that affect producers 
from year to year, and would complement programs currently in 
effect. This approach also lends itself to expansion as a 
safety net for livestock and specialty crops as needs arise--
commodities otherwise left behind by current approaches to farm 
revenue disaster. The following illustrates how the program 
would work in a particular situation:

SIP versus Crop Revenue Coverage (CRC) with lower subsidy

    Consider a Mclean, Illinois corn farm insured with CRC. The 
insured yield is 120 bushels per acre and the CRC price is 
$2.40. At 65% coverage, the farmer's revenue guarantee is 
$187.20 per acre. He would pay a premium of $4.11 per acre for 
that coverage under the bill. With the Stenholm amendment, his 
premium is $5.47, $1.36 higher, but still less than the $7.40 
cost paid in 1998 or the $6.20 cost paid in 1999.
    A recent futures close for December corn was $2.11 per 
bushel. If this were the harvest time price under the CRC 
contract and there was no reduction or increase in yield, the 
harvest time CRC revenue per acre would be $253.20, and no 
indemnity would be paid. In fact, the futures price would have 
to decline to $1.56, if yield doesn't change, before any 
revenue indemnities would be paid.
    With SIP, using the latest USDA supply and demand estimates 
of a season average corn price of $1.85 per bushel, the payment 
per bushel will be 23 cents. Multiplied by a 120 bushel yield, 
the payment would be $27.60 per acre. This is the gain from the 
increased CRC cost of $1.36 per acre.
    Because the Committee turned down the Stenholm amendment, 
the House is presented with a Committee bill that only 
addresses half of the problem exposed in 1998. This flaw will 
become acutely apparent in the weeks ahead as Congress and the 
Administration once againscramble to appropriate emergency ad 
hoc assistance to meet commodity price conditions that continue to 
devastate farm income. It is unwise to move this bill forward, 
virtually guaranteeing that Congress will be forced to continue to 
respond to price disasters with off-budget emergency spending. Every 
missed opportunity to correct our farm income policy will lead to more 
disaster spending and greater uncertainty for producers and taxpayers 
alike.
    In addition to failing to address the long-term needs of 
agriculture, the Committee has reported a bill that violates 
the requirements of the Concurrent Resolution on the Budget and 
of the Congressional Budget Act. The Budget Resolution 
specifically prohibits the Agriculture Committee from bringing 
to the House floor a bill that increases net budget authority 
in fiscal year 2000. While the Committee adopted an amendment 
designed to meet the $6 billion limit on the bill's spending 
over 4 years, no effort was made to address the FY 2000 
restriction. As a result, the bill contains approximately $1 
billion of budget authority for FY 2000 in violation of this 
restriction. This is another unwise element of the bill and is 
of great concern from our point of view. We believe that the 
Committee should have addressed the restriction head-on, rather 
than reporting the bill and hoping for a cure to materialize. 
In years when the Agriculture Committee was called upon to 
reduce spending under budget reconciliation instructions, it 
never failed to do so. In this situation, the Committee should 
have been able to restrain new spending in a manner that was in 
compliance with the Budget Resolution and the Congressional 
Budget Act.
    By engaging in piecemeal spending that is over budget or 
off budget through emergency designations or budget waivers, we 
are doing a disservice not only to our farmers but to all of 
our rural citizens. To the extent we do not adhere to budget 
discipline, programs that serve all of rural America, such as 
Social Security and Medicare, are endangered. Because our aging 
population is disproportionately represented in rural America, 
rural areas will be disproportionately hurt by over-budget 
spending that short-changes our ability to put these programs 
on a sound footing.
    While we feel strongly about or concerns with the omissions 
of H.R. 2559, we are not opposed to its overall approach to 
making short-term improvements in crop insurance. We believe 
that continued consideration of the bill will provide Congress 
with the chance to embrace opportunities ignored by the 
Agriculture Committee. We intend to continue to work towards 
broadening the scope of the bill to address more broadly the 
needs of our agricultural producers, and to do so in a manner 
that is fiscally sound and in compliance with budget rules.

                                   Charles W. Stenholm.
                                   Marion Berry.
                                   Christopher John.
                                   Mike McIntyre.
                                   Leonard L. Boswell.
                                   Bob Etheridge.
                                   John Elias Baldacci.
                                   Gary A. Condit.
                                   Sanford D. Bishop, Jr.
                                   Bennie G. Thompson.
                                   Calvin M. Dooley.

                                  
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