§ 1523. — Pilot programs.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC1523]
TITLE 7--AGRICULTURE
CHAPTER 36--CROP INSURANCE
Sec. 1523. Pilot programs
(a) General provisions
(1) Authority
Except as otherwise provided in this section, the Corporation
may conduct a pilot program submitted to and approved by the Board
under section 1508(h) of this title, or that is developed under
subsection (b) of this section or section 1522 of this title, to
evaluate whether a proposal or new risk management tool tested by
the pilot program is suitable for the marketplace and addresses the
needs of producers of agricultural commodities.
(2) Private coverage
Under this section, the Corporation shall not conduct any pilot
program that provides insurance protection against a risk if
insurance protection against the risk is generally available from
private companies.
(3) Covered activities
The pilot programs described in paragraph (1) may include pilot
programs providing insurance protection against losses involving--
(A) reduced forage on rangeland caused by drought or insect
infestation;
(B) livestock poisoning and disease;
(C) destruction of bees due to the use of pesticides;
(D) unique special risks related to fruits, nuts,
vegetables, and specialty crops in general, aquacultural
species, and forest industry needs (including appreciation);
(E) after October 1, 2001, wild salmon, except that--
(i) any pilot program with regard to wild salmon may be
carried out without regard to the limitations of this
chapter; and
(ii) the Corporation shall conduct all wild salmon
programs under this chapter so that, to the maximum extent
practicable, all costs associated with conducting the
programs are not expected to exceed $1,000,000 for fiscal
year 2002 and each subsequent fiscal year.
(4) Scope of pilot programs
The Corporation may--
(A) approve a pilot program under this section to be
conducted on a regional, State, or national basis after
considering the interests of affected producers and the
interests of, and risks to, the Corporation;
(B) operate the pilot program, including any modifications
of the pilot program, for a period of up to 4 years;
(C) extend the time period for the pilot program for
additional periods, as determined appropriate by the
Corporation; and
(D) provide pilot programs that would allow producers--
(i) to receive a reduced premium for using whole farm
units or single crop units of insurance; and
(ii) to cross State and county boundaries to form
insurable units.
(5) Evaluation
(A) Requirement
After the completion of any pilot program under this
section, the Corporation shall evaluate the pilot program and
submit to the Committee on Agriculture of the House of
Representatives and the Committee on Agriculture, Nutrition, and
Forestry of the Senate a report on the operations of the pilot
program.
(B) Evaluation and recommendations
The report shall include an evaluation by the Corporation of
the pilot program and the recommendations of the Corporation
with respect to implementing the program on a national basis.
(b) Livestock pilot programs
(1) Definition of livestock
In this subsection, the term ``livestock'' includes, but is not
limited to, cattle, sheep, swine, goats, and poultry.
(2) Programs required
Subject to paragraph (7), the Corporation shall conduct two 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 protect
the interests of livestock producers and that provide--
(A) livestock producers with reasonable protection from the
financial risks of price or income fluctuations inherent in the
production and marketing of livestock; or
(B) protection for production losses.
(3) Purpose of programs
To the maximum extent practicable, the Corporation shall
evaluate the greatest number and variety of pilot programs described
in paragraph (2) 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.
(4) Timing
The Corporation shall begin conducting livestock pilot programs
under this subsection during fiscal year 2001.
(5) Relation to other limitations
Any policy or plan of insurance offered under this subsection
may be prepared without regard to the limitations of this chapter.
(6) Assistance
As part of a pilot program under this subsection, the
Corporation may provide reinsurance for policies or plans of
insurance and subsidize the purchase of futures and options
contracts or policies and plans of insurance offered under the pilot
program.
(7) Private insurance
No action may be undertaken with respect to a risk under this
subsection if the Corporation determines that insurance protection
for livestock producers against the risk is generally available from
private companies.
(8) Location
The Corporation shall conduct the livestock pilot programs under
this subsection 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.
(9) Eligible producers
Any producer of a type of livestock covered by a pilot program
under this subsection that 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.
(10) Limitation on expenditures
The Corporation shall conduct all livestock programs under this
chapter so that, to the maximum extent practicable, all costs
associated with conducting the livestock programs (other than
research and development costs covered by section 1522 of this
title) are not expected to exceed the following:
(A) $10,000,000 for each of fiscal years 2001 and 2002.
(B) $15,000,000 for fiscal year 2003.
(C) $20,000,000 for fiscal year 2004 and each subsequent
fiscal year.
(c) Revenue insurance pilot program
(1) In general
Subject to section 1522(e)(4) of this title, the Secretary shall
carry out a pilot program in a limited number of counties, as
determined by the Secretary, for crop years 1997 through 2001, under
which a producer of wheat, feed grains, soybeans, or such other
commodity as the Secretary considers appropriate may elect to
receive insurance against loss of revenue, as determined by the
Secretary.
(2) Administration
Revenue insurance under this subsection shall--
(A) be offered through reinsurance arrangements with private
insurance companies;
(B) offer at least a minimum level of coverage that is an
alternative to catastrophic crop insurance;
(C) be actuarially sound; and
(D) require the payment of premiums and administrative fees
by an insured producer.
(d) Premium rate reduction pilot program
(1) Purpose
The purpose of the pilot program established under this
subsection is to determine whether approved insurance providers will
compete to market policies or plans of insurance with reduced rates
of premium, in a manner that maintains the financial soundness of
approved insurance providers and is consistent with the integrity of
the Federal crop insurance program.
(2) Establishment
(A) In general
Beginning with the 2002 crop year, the Corporation shall
establish a pilot program under which approved insurance
providers may propose for approval by the Board policies or
plans of insurance with reduced rates of premium--
(i) for one or more agricultural commodities; and
(ii) within a limited geographic area, as proposed by
the approved insurance provider and approved by the Board.
(B) Determination by Board
The Board shall approve a policy or plan of insurance
proposed under this subsection that involves a premium reduction
if the Board determines that--
(i) the interests of producers are adequately protected
within the pilot area;
(ii) rates of premium are actuarially appropriate, as
determined by the Board;
(iii) the size of the proposed pilot area is adequate;
(iv) the proposed policy or plan of insurance would not
unfairly discriminate among producers within the proposed
pilot area;
(v) if the proposed policy or plan of insurance were
available in a geographic area larger than the proposed
pilot area, the proposed policy or plan of insurance would--
(I) not have a significant adverse impact on the
crop insurance delivery system;
(II) not result in a reduction of program integrity;
(III) be actuarially appropriate; and
(IV) not place an additional financial burden on the
Federal Government; and
(vi) the proposed policy or plan of insurance meets
other requirements of this chapter determined appropriate by
the Board.
(C) Time limitations and procedures
The time limitations and procedures of the Board established
under section 1508(h) of this title shall apply to a proposal
submitted under this subsection.
(e) Adjusted gross revenue insurance pilot program
(1) In general
The Corporation shall carry out, through at least the 2004
reinsurance year, the adjusted gross revenue insurance pilot program
in effect for the 2002 reinsurance year.
(2) Additional counties
(A) In general
In addition to counties otherwise included in the pilot
program, the Corporation shall include in the pilot program for
the 2003 reinsurance year at least 8 counties in the State of
California and at least 8 counties in the State of Pennsylvania.
(B) Selection criteria
In carrying out subparagraph (A), the Corporation shall work
with the respective State Departments of Agriculture to
establish criteria to determine which counties to include in the
pilot program.
(Feb. 16, 1938, ch. 30, title V, Sec. 523, as added Pub. L. 106-224,
title I, Sec. 132(a), June 20, 2000, 114 Stat. 383; amended Pub. L. 107-
171, title X, Sec. 10004, May 13, 2002, 116 Stat. 487.)
Amendments
2002--Subsec. (e). Pub. L. 107-171 added subsec. (e).
Effective Date
Section effective Oct. 1, 2000, see section 171(b)(1)(A) of Pub. L.
106-224, set out as an Effective Date of 2000 Amendment note under
section 1501 of this title.
Section Referred to in Other Sections
This section is referred to in sections 1507, 1508, 1516 of this
title.
