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 permitted continued expansion by authorizing insurance in 100 additional counties each year (67 Stat. 575); however in 1964, the number was increased to 150 counties by Pub. L. 88-589 (78 Stat. 933). 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 in applicable appropriations. Pub. L. 85-111, 71 Stat. 309, July 23, 1957, added a new subsection (f) to section 508 to provide reinsurance in Puerto Rico under certain conditions. In 1959, the Federal Crop Insurance Act was further amended by the enactment of Pub. L. 86-131, 73 Stat. 278, approved August 4, 1959, which provided that insurance shall not be provided for any agricultural commodity in any county in which the Board determines that income therefrom is an unimportant part of the total agricultural income of the county. Pub. L. 92-357, 86 Stat. 501, approved July 28, 1972, added section 520, which made insurance available to persons under eighteen years of age. The Federal Crop Insurance Act of 1980, Pub. L. 96-365, 94 Stat. 1312, approved September 26, 1980, substantially revised the crop insurance program. The major revisions were: (1) the expansion of crop insurance from an experimental program to a nationwide program covering all crops; (2) the requirement that FCIC utilize private insurance companies, private agents, producer and cooperative associations, and other governmental agencies in the administration of the program; (3) the offering of reinsurance to private insurance companies, state agencies and others providing crop insurance to producers; (4) the inclusion of a premium subsidy for producers; and (5) the phasing out of disaster payments authorized by the Agriculture Act of 1949, as amended.

FEDERAL CROP INSURANCE ACT1

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. (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 a 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. 504.2 (a) The Corporation shall have a capital stock of $500,000,000 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).)

(d)3 Within thirty days after the date of enactment of the Federal Crop Insurance Act of 1980, the Secretary of the Treasury shall cancel, without consideration, receipts for payments for or on account of the stock of the Federal Crop Insurance Corporation outstanding on such date of enactment and such receipts shall cease to be liabilities of the Corporation. (7 U.S.C. 1504 (d).)

The Federal Crop Insurance Act was enacted as title V of the Agricultural Adjustment Act of 1938, P.L. 430, 75th Congress, 52 Stat. 31, Feb. 16, 1938.

2 The Capital stock of the Corporation was increased from $100,000,000 to $200,000,000 by P.L. 95-181, 91 Stat. 1373, Nov. 15, 1977, and increased again to $500,000,000 by P.L. 96-365, 94 Stat. 1312, Sept. 26, 1980.

3 Subsection (d) was added by P.L. 96-365, 94 Stat. 1312, Sept. 26, 1980.

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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 the general supervision of the Secretary of Agriculture. The Board shall consist of the manager of the Corporation, the Under Secretary or Assistant Secretary of Agriculture responsible for the Federal crop insurance program, the Under Secretary or Assistant Secretary of Agriculture responsible for the farm credit programs of the Department 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 of Agriculture, who shall not, himself, 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. (7 U.S.C. 1505(a).)

(b)5 Vacancies in the Board so long as there shall be four members in office shall not impair the powers of the Board to execute the functions of the Corporation, and four 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)6 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 Directors of the Corporation who are not employed by the Federal Government shall be paid such compensation for their services as Directors as the Secretary of Agriculture shall determine, but such compensation shall not exceed the daily equivalent of the rate prescribed for grade GS-18 under section 5332 of title 5 of the United States Code when actually employed, and actual necessary traveling and subsistence expenses, or a per diem allowance in lieu of subsistence expenses, as authorized by section 5703 of title 5 of the United States Code for persons in Government service employed intermittently, when on the 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).)

Subsection (a) was amended by P.L. 96-365, 94 Stat. 1312, Sept. 26, 1980, to enlarge the Board of Directors from 5 to 7 members and designate the two under secretaries or assistant secretaries as members. The amendment also added the requirement of 3 active farmers from different geographic areas who are also policyholders.

Subsection (b) was amended by P.L. 96-365, 94 Stat. 1312, Sept. 26, 1980, increasing to four the number of Board members required for a quorum.

Subsection (c) was amended by P.L. 96-365, 94 Stat. 1312, Sept. 26, 1980, to increase the amount of compensation to those Board members who are not employed by the Federal Government.

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 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, but no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Corporation or its property. The district courts of the United States, including the district courts of the District of Columbia and of any territory or possession, shall have exclusive original jurisdiction, without regard to the amount in controversy, of all suits brought by or against the Corporation. The Corporation may intervene in any court in any suit, action, or proceeding in which it has an interest. Any suit against the Corporation shall be brought in the District of Columbia, or in the district wherein the plaintiff resides or is engaged in business. (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 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.C. 1506(g).)

(h)10 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; and (7 U.S.C. 1506(j).)

7 The words "make contracts and" were deleted by P.L. 96-365, 94 Stat. 1312, Sept. 26, 1980.

* Subsection (d) was amended by P. L. 96-365, 94 Stat. 1312, Sept. 26, 1980, to remove state court jurisdiction and to require that suits be brought in the District of Columbia or in the District where the Plaintiff resides or does business. The word "free" before the word "use" was deleted from subsection (f) by P. L. 96-365, 94 Stat. 1312, Sept. 26, 1980. 10 The phrase "may conduct researches, surveys and investigations relating to crop insurance and" were deleted from subsection (h) by P.L. 96-365, 94 Stat. 1312, Sept. 26, 1980.

(k)11 may enter into and carry out contracts or agreements necessary in the conduct of its business, as determined by the Board. State and local laws or rules shall not apply to contracts or agreements of the Corporation or the parties thereto to the extent that such contracts or agreements provide that such laws or rules shall not apply, or to the extent that such laws or rules are inconsistent with such contracts or agreements. (7 U.S.C. 1506(k).)

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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. Chapter 51 and Chapter 53, subchapter III)] define their authority and duties 12 and delegate to them such of the powers vested in the Corporation as he may determine: 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 (5 U.S.C. Chapter 8, subchapter I), 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)13 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 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 omis

11 Subsection (k) was added by P.L. 96-365, 94 Stat. 1312, Sept. 26, 1980.

12 The words "require bond of such of them as he may designate, and fix the penalties and pay the premiums of such bonds" were deleted by P. L. 92-310, 86 Stat. 205, June 6, 1972.

13 Subsection (c) was substantially amended by P. L. 96–365, 94 Stat. 1312, Sept. 26, 1980, to add sections (2) and (3).