Agricultural Act of 2014 Conservation Compliance and Crop Insurance Premium Subsidy Eligibility - FAQ

 

This FAQ is very extensive, and hopefully answers any questions you may have about the conservation compliance presented in the 2014 Farm Bill.  This is an extensive list of questions and is fairly dense, take your time to read through them and feel free to contact us with any questions you may still have.   

 

01

Does the new law change existing compliance provisions associated with the loss of program payments, conservation programs, credit programs, etc?

 

Conservation compliance changes in the Agricultural Act of 2014 address linkage of crop insurance premium subsidies and conservation compliance. Existing conservation compliance requirements for commodity programs, conservation programs, credit programs, etc... were not changed and remain in effect.

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Who will be covered by the new conservation compliance requirements for crop insurance premium subsidies?

 

The new provisions pertaining to crop insurance premium subsidies will apply to producers who are growing annually tilled crops on Highly Erodible Lands or who have wetlands on their operation. Most of these producers are already subject to conservation compliance requirements due to past program participation. The USDA Economic Research Service projects that less than 5 percent of wheat acres, and 3 percent of corn and soybean acres will be newly subject to conservation compliance, meaning the vast majority of farmland is being managed according to what will be required under the new law.

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How will crop insurance premium assistance be affected by conservation compliance?

 

If a producer is out of compliance, there is no impact on crop insurance premium assistance in the year of the violation. The penalty is imposed in the following year rather than the current year. There would be no denial of premium assistance until all USDA appeals are exhausted and no claw back on previous years' premium assistance, but no premium assistance for future years until back into compliance.

05

What does this mean for producers who have never been subject to conservation compliance?

 

HEL and wetland compliance for land newly (after February 7, 2014-date of enactment of the Agricultural Act of 2014) covered land due to from the linkage with insurance should be handled the same way as under current compliance-with a five year period to develop and apply a conservation plan for HEL, and an immediate ban on draining wetlands. However, those newly covered by this provision only, who drain wetlands after February 7, 2014, would have a two year period (rather than the standard one year period) to begin the mitigation process to retain eligibility for premium assistance. This two-year time period for mitigation is limited to new "crop insurance only" participants and is not available to retain eligibility for other program payments.

06

I have a conservation plan. What documents must I complete to retain premium assistance eligibility?

Producers with HEL fields used to produce an annual crop or with wetlands wishing to receive premium assistance must have a current Highly Erodible Land Conservation and Wetland Certification (AD-1026) on file with the Farm Service Agency to self-certify they are not changing anything in their operation affecting compliance as is done for current program eligibility with existing conservation plans. Producers that have not previously participated in covered programs with USDA will be required to complete an AD-1026 prior to purchasing their insurance, effective immediately. If USDA fails to evaluate the AD-1026 in a timely fashion, the producer is held harmless. If the producer fails to file an AD-1026, or self-certifies compliance and later is found in violation, the producer would be fined for the period of violation, but not to exceed the total value of the premium assistance that accrued during all years the producer was in violation that period. If USDA fails to evaluate the properly filed AD-1026 in a timely fashion, the producer is held harmless for a violation for the period of evaluation.

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How will violations, appeals and corrective actions be handled?

Rules and enforcement procedures for insurance assistance should be done the same way as it is currently and by the same agencies, including self-certification with AD-1026, good faith and similar provisions. However, the insurance provision differs from current compliance in that there are no provisions to recover past years' premium assistance. Violations must be mitigated in accordance with current law, with one year to initiate an approved HEL conservation plan or wetland mitigation plan. Failure to come into compliance or meet conditions for a waiver or exemption would result in ineligibility for premium assistance the following year and going forward until corrected. In addition, if the producer fails to file an AD-1026, or self-certifies compliance and later is found in violation, the producer would be fined for the period of violation, but not to exceed the total value of the premium assistance that accrued during all years the producer was in violation.

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Would loss of premium assistance apply to the whole farm?

Yes. HEL violations would continue to apply to the whole farm as in existing law. Intentional violations would result in loss of premium assistance on the whole farm as with current law on program benefits. However, current law does allow for wetland conversion with mitigation as required by law. The 2014 Farm Bill creates If the producer prefers, a very limited special mitigation allowance applicable only for restoring crop insurance premium assistance and only for conversions less than five acres of wetlands per farm. This special mitigation allowance has been created to allow a producer to pay into an USDA program for wetland restoration a contribution equal to restitution of 150% of the cost to mitigate the wetland loss. to be paid into an USDA program for wetland restoration. This special allowance can only be allowed on up to five acres of wetlands per farm and only applies to the new crop insurance provisions of swampbuster. Failure to adhere to the wetland conservation compliance would result in loss of premium assistance for the whole farm the following crop year and until corrected.

10

How are producers working leased HEL or wetlands handled under the agreement?

A tenant farming on land with HEL or wetlands found in violation may would have ineligibility for premium assistance limited only to the farm that is the basis for the ineligibility, provided the tenant demonstrates: 1) a good faith effort s to meet all conservation compliance requirements are made, 2) the landlord on the farm has refused to meet compliance requirements, and 3) USDA determines there is no evidence of no scheme or device or fraud to avoid compliance is evident.

11

Who will enforce compliance violations associated with crop insurance premium assistance?

Compliance linkage to crop insurance should be administered the same way as currently with compliance with FSA and NRCS carrying out their respective roles. Current protections and enforcement procedures, including appeals, good faith, status reviews, and data sharing between agencies will be applicable to any newly covered persons and land. Crop insurance agents will have no enforcement responsibilities. Existing USDA enforcement mechanisms would apply through the Ineligible Tracking System managed by FSA, which is updated on a weekly basis for use by agencies.

12

Is there technical and financial assistance available for farmers newly covered by compliance?

Producers newly covered by compliance will receive priority for NRCS conservation technical assistance and financial assistance in developing and applying a conservation plan. If conservation treatment is necessary to address HEL compliance on newly covered lands, NRCS will place a priority on assisting with HEL related conservation practices through financial assistance programs as in the past. State NRCS offices should also receive added resources to respond to producer requests associated with AD-1026 filings.

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Does this in any way limit crop insurance eligibility based on income or financial status?

No. Means testing or payment limitations will not apply to crop insurance premiums or indemnities. Similarly, any reduction in premium assistance rates would be opposed. Any efforts to limit, weaken, or restrict current standard and "crop insurance only" conservation compliance would be opposed.

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How will I know if I have HEL or wetlands?

When you file an AD-1026, FSA will let you know if previous certified determinations have been made on your cropland fields. If there are fields that have never had an HEL, or certified wetlands determination, FSA will refer the AD-1026 to NRCS for determinations. Until the determinations are completed, you will remain eligible for premium assistance. This will include the period of all technical reviews and appeals, if you chose to appeal the determinations.

I do not have any HEL or wetlands on my farm. Am I subject to conservation compliance?

No. If you have certified determinations confirming that you have no HEL or wetlands on your farm, you are not subject to conservation compliance requirements. Compliance applies only to HEL used to produce an annually tilled crop and to wetlands. However, if you have wetland or soil conservation easements on your farm, you are subject to the conservation requirements in your easement contract.

17

What constitutes a wetland?

Wetlands must meet all three of these criteria under normal conditions under normal conditions-the presence of hydric soils, the presence of hydrophytic (water tolerant) vegetation and the presence of hydrology that would or could support hydrophytic vegetation. Presence of water by itself does not constitute a wetland. Similarly, the temporary absence of water due to dry conditions or the temporary absence of hydrophytic vegetation due to manipulation do not constitute a non-wetland.

18

I purchase crop insurance directly from an insurance agent. I do not receive anything from USDA. Do I have to file an AD-1026?

Yes if you wish to receive premium assistance from USDA you will need to have a current AD-1026 on file with FSA. If you have HEL and/or wetlands, you will need to file updates designating any changes you plan to, or have made to your HEL fields or wetlands. USDA provides premium assistance for your operation directly to the crop insurance company. Without that assistance, your premium would be higher.

Will I lose premium assistance for basic management activities on my farm such as cleaning an existing drainage ditch?

leaning and maintaining drainage systems is allowed as long as the activity does not further impact the wetlands as it existed prior to December 23, 1985. By current practice, most farmers would be advised to file an AD-1026 prior to cleaning existing drainage ditches so that loss of premium assistance and other program payments, as well as wetland benefits can be avoided.

What if we have another drought like recent years. Will that cause me to be out of compliance?

Not likely. There are a number of provisions in current law that offers protection for non-compliance due to natural disasters and these same protections would be applicable to crop insurance premium assistance. For example, many states affected by drought used variances or waivers for situations that were due to the drought itself and not a result of any intent by the producer.

What does this agreement mean for pastureland?

Producers pasturing fields that are HEL would have the same requirements as current law. They would only be required to obtain and implement a conservation plan if they plant an annually tilled crop on their pasture. Pasture fields with wetlands would require the producer to file an updated AD-1026 to ensure appropriate steps are taken to avoid loss of farm bill program eligibility including crop insurance premium assistance if they are taking any action that would drain the wetland or manipulate woody vegetation on a wetland that could make production of an agriculture commodity feasible.