FEDERAL CROP INSURANCE ACT, AS AMENDED

EXPLANATORY NOTE

The Federal Crop Insurance Act, which was enacted as title V of the Agricultural Adjustment Act of 1938 (52 Stat. 72), established the Federal Crop Insurance Corporation to insure producers of wheat against unavoidable losses in production resulting from adverse weather conditions, disease, insect infestation and other hazards. In 1941, the Act was amended to authorize the Corporation to insure cotton as well as wheat (55 Stat. 255). The Congress did not provide funds for insurance on crops harvested in 1944 but in December 1944, the insurance program was reinstated as to wheat and cotton and extended to permit the insuring of flax on a national basis and other commodities on an experimental basis (58 Stat. 918). In 1947, the Congress made a number of basic changes in the nature and scope of the crop insurance program the more important of which (1) placed crop insurance entirely on an experimental basis by restricting the number of commodities for which the Corporation could write insurance and the number of counties in which insurance could be offered; and (2) limited the level of insurance that could be provided to the general cost of producing the insured crop (61 Stat. 718). The Act was again amended in 1949 to permit the Corporation to expand through 1953 and to operate more efficiently the experimental program initiated by the 1947 legislation (63 Stat. 663). A 1953 amendment permits continued expansion by authorizing insurance in 100 additional counties each year (67 Stat. 575). The Act of August 3, 1956, 70 Stat. 1034, authorized the Corporation to consider certain costs as non-administrative and to use premium income for administrative expenses within limits prescribed by applicable legislation. Pub. L. 85-111, 71 Stat. 309, July 23, 1957 added a new subsection (b) to section 508 to provide reinsurance in Puerto Rico under certain conditions.

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PART V

FEDERAL CROP INSURANCE ACT, AS AMENDED

SHORT TITLE AND APPLICATION OF OTHER PROVISIONS

SEC. 501. This title may be cited as the "Federal Crop Insurance Act." Except as otherwise expressly provided the provisions in titles I to IV, inclusive, shall not apply with respect to this title, and the term "Act" wherever it appears in such titles shall not be construed to include this title.1 (7 U. S. C. 1501)

DECLARATION OF PURPOSE

SEC. 502. It is the purpose of this title to promote the national welfare by improving the economic stability of agriculture through & sound system of crop insurance and providing the means for the research and experience helpful in devising and establishing such insurance. (7 U. S. C. 1502)

SEC. 503. To carry out the purposes of this title, there is hereby created as an agency of and within the Department of Agriculture a body corporate with the name "Federal Crop Insurance Corporation" (herein called the Corporation). The principal office of the Corporation shall be located in the District of Columbia, but there may be established agencies or branch offices elsewhere in the United States under rules and regulations prescribed by the Board of Directors. (7 U. S. C. 1503)

CAPITAL STOCK

SEC. 504. (a) The Corporation shall have a capital stock of $100,000,000 subscribed by the United States of America, payment for which shall, with the approval of the Secretary of Agriculture, be subject to call in whole or in part by the Board of Directors of the Corporation. (7 U. S. C. 1504 (a))

(b) There is hereby authorized to be appropriated such sums as are necessary for the purpose of subscribing to the capital stock of the Corporation. (7 U. S. C. 1504 (b))

(c) Receipts for payments by the United States of America for or on account of such stock shall be issued by the Corporation to the Secretary of the Treasury and shall be evidence of the stock ownership by the United States of America. (7 U. S. C. 1504 (c))

MANAGEMENT OF CORPORATION

SEC. 505. (a) The management of the Corporation shall be vested in a Board of Directors (hereinafter called the "Board") subject to

1 The Federal Crop Insurance Act was enacted as title V of the Agricultural Adjustment Act of 1938.

the general supervision of the Secretary of Agriculture. The Board shall consist of the manager of the Corporation, two other persons employed in the Department of Agriculture, and two persons experienced in the insurance business who are not otherwise employed by the Government. The Board shall be appointed by, and hold office at the pleasure of the Secretary of Agriculture, who shall not, himself, be a member of the Board. (7 U. S. C. 1505 (a))

(b) Vacancies in the Board so long as there shall be three members in office shall not impair the powers of the Board to execute the functions of the Corporation, and three of the members in office shall constitute a quorum for the transaction of the business of the Board. (7 U. S. C. 1505 (b))

(c) The Directors of the Corporation who are employed in the Department of Agriculture shall receive no additional compensation for their services as such Directors, but may be allowed necessary traveling and subsistence expenses when engaged in business of the Corporation, outside of the District of Columbia. The members of the Board who are not employed by the Government shall be paid such compensation for their services as directors as the Secretary of Agriculture shall determine, but such compensation shall not exceed $50 per day each when actually employed and transportation expenses plus not to exceed $10 per diem in lieu of subsistence expenses when on business of the Corporation away from their homes or regular places of business. (7 U. S. C. 1505 (c))

(d) The manager of the Corporation shall be its chief executive officer, with such power and authority as may be conferred upon him by the Board. He shall be appointed by, and hold office at the pleasure of, the Secretary of Agriculture. (7 U. S. C. 1505 (d))

GENERAL POWERS

SEC. 506. The Corporation

(a) shall have succession in its corporate name; (7 U. S. C. 1506 (a))

(b) may adopt, alter, and use a corporate seal, which shall be judicially noticed; (7 U. S. C. 1506 (b))

(c) may make contracts and purchase or lease and hold such real and personal property as it deems necessary or convenient in the transaction of its business, and may dispose of such property held by it upon such terms as it deems appropriate; (7 U. S. C. 1506 (c)) (d) subject to the provisions of section 508 (c), may sue and be sued in its corporate name in any court of record of a State having general jurisdiction, or in any United States district court, and jurisdiction is hereby conferred upon such district court to determine such controversies without regard to the amount in controversy: Provided, That no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Corporation or its property; (7 U. S. C. 1506 (d))

(e) may adopt, amend, and repeal bylaws, rules, and regulations governing the manner in which its business may be conducted and the powers granted to it by law may be exercised and enjoyed; 7 U. S. C. 1506 (e))

(f) shall be entitled to the free use of the United States mails in the same manner as the other executive agencies of the Government; (7 U. S. C. 1506 (f)

(g) with the consent of any board, commission, independent establishment, or executive department of the Government, including any field service thereof, may avail itself of the use of information, services, facilities, officials, and employees thereof in carrying out the provisions of this title; (7 U. S. Č. 1506 (g))

(h) may conduct researches, surveys, and investigations relating to crop insurance and shall assemble data for the purpose of establishing sound actuarial bases for insurance on agricultural commodities; (7 U. S. C. 1506 (h))

(i) shall determine the character and necessity for its expenditures under this title and the manner in which they shall be incurred, allowed, and paid, without regard to the provisions of any other laws governing the expenditure of public funds and such determinations shall be final and conclusive upon all other officers of the Government; (7 U. S. C. 1506 (i))

(j) shall have such powers as may be necessary or appropriate for the exercise of the powers herein specifically conferred upon the Corporation and all such incidental powers as are customary in corporations generally. (7 U. S. C. 1506 (j))

PERSONNEL

SEC. 507. (a) The Secretary shall appoint such officers and employees as may be necessary for the transaction of the business of the Corporation pursuant to civil-service laws and regulations, fix their compensation in accordance with the provisions of the [Classification Act of 1949 (5 U. S. C. 1071-1153], define their authority and duties, delegate to them such of the powers vested in the Corporation as he may determine, require bond of such of them as he may designate, and fix the penalties and pay the premiums of such bonds: Provided, That personnel paid by the hour, day, or month when actually employed, and county crop insurance committeemen may be appointed and their compensation fixed without regard to civil-service laws and regulations or the [Classification Act of 1949]. (7 U. S. C. 1507 (a))

(b) Insofar as applicable, the benefits of the Act entitled "An Act to provide compensation for employees of the United States suffering injuries while in the performance of their duties, and for other purposes," approved September 7, 1916, as amended, shall extend to persons given employment under the provisions of this title, including the employees of the committees and associations referred to in subsection (c) of this section and the members of such committees. (7 U. S. C. 1507 (b))

(c) The Board may establish or utilize committees or associations of producers in the administration of this title and make payments to such committees or associations to cover the estimated administrative expenses to be incurred by them in cooperating in carrying out this title and may provide that all or part of such estimated expenses may be included in the insurance premiums provided for in this title. (7 U. S. C. 1507 (c))

(d) The Secretary of Agriculture may allot to bureaus and offices of the Department of Agriculture or transfer to such other agencies of the State and Federal Governments as he may request to assist in carrying out this title any funds made available pursuant to the provisions of section 516 of this Act, except that employees or agencies responsible for administering this Act in each county shall be selected and designated by the Corporation and shall be responsible directly to the Corporation without the intervention of any intermediate office or agency. (7 U. S. C. 1507 (d))

(e) In carrying out the provisions of this title the Board may, in its descretion, utilize producer-owned and producer-controlled cooperative associations. (7 U. S. C. 1507 (e))

CROP INSURANCE

SEC. 508. To carry out the purposes of this title the Corporation is authorized and empowered

(a) Commencing with crops planted for harvest in 1948, for the purpose of determining the most practical plan, terms, and conditions of insurance for agricultural commodities, if sufficient actuarial data are available, as determined by the Board, to insure, or to reinsure insurers of, producers of such agricultural commodities under any plan or plans of insurance determined by the Board to be adapted to any such commodity. Such insurance shall be against loss of the insured commodity due to unavoidable causes, including drought, flood, hail, wind, frost, winterkill, lightning, fire, excessive rain, snow, wildlife, hurricane, tornado, insect infestation, plant disease, and such other unavoidable causes as may be determined by the Board: Provided, That, except in the case of tobacco, such insurance shall not extend beyond the period the insured commodity is in the field. In 1948 insurance shall be limited to not more than seven agricultural commodities (including wheat, cotton, flax, corn, and tobacco) and to not more than three additional agricultural commodities in each year thereafter: Provided, That other agricultural commodities may be included in multiple crop insurance (insurance on two or more agricultural commodities under one contract with a producer). Beginning with crops planted for harvest in 1954, crop insurance may be offered each year in not to exceed 100 counties in addition to the number of counties in which such insurance was offered in the preceding year. In determining the new counties in which such insurance is to be offered and the commodities to be insured, the Corporation shall take into consideration the demand of farmers for such insurance, the extent to which such insurance is available to commercial producers of insured commodities, and the anticipated risk of loss to the Corporation. Reinsurance for private insurance companies shall be limited to not to exceed twenty counties which may be selected without regard to the other county limitations specified herein. Any insurance offered against loss in yield shall not cover in excess of 75 per centum of the recorded or appraised average yield of the commodity on the insured farm for a representative period subject to such adjustments as the Board may prescribe to the end that the average yields fixed for farms in the same area, which are subject to the same conditions, may be fair and