7 U.S. Code § 1523 - Pilot programs
(a) General provisions
Except as otherwise provided in this section, the Corporation may, at the sole discretion of the Corporation, 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—
(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 subchapter; and
(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
(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
(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.
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 subchapter.
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.
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 subchapter 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:
(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.
Revenue insurance under this subsection shall—
(B) offer at least a minimum level of coverage that is an alternative to catastrophic crop insurance;
(d) Premium rate reduction pilot program
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.
(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—
(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—
(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—
(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.
(f) Camelina pilot program
(1) In general
(2) Determination by Board
The Board shall approve a policy or plan of insurance proposed under paragraph (1) if, as determined by the Board, the policy or plan of insurance—
(g) Sesame insurance pilot program
(1) In general
In addition to any other authority of the Corporation, the Corporation shall establish and carry out a pilot program under which a producer of nondehiscent sesame under contract may elect to obtain multiperil crop insurance, as determined by the Corporation.
(2) Terms and conditions
The multiperil crop insurance offered under the sesame insurance pilot program shall—
(h) Grass seed insurance pilot program
(1) In general
In addition to any other authority of the Corporation, the Corporation shall establish and carry out a grass seed pilot program under which a producer of Kentucky bluegrass or perennial rye grass under contract may elect to obtain multiperil crop insurance, as determined by the Corporation.
(2) Terms and conditions
The multiperil crop insurance offered under the grass seed insurance pilot program shall—
The grass seed insurance pilot program shall be carried out only in each of the States of Minnesota and North Dakota.
(i) Underserved crops and regions pilot programs
(1) Definition of livestock commodity
In this subsection, the term “livestock commodity” includes cattle, sheep, swine, goats, and poultry, including pasture, rangeland, and forage as a source of feed for that livestock.
Notwithstanding subsection (a)(2), the Corporation may conduct 2 or more pilot programs to provide producers of underserved specialty crops and livestock commodities with index-based weather insurance, subject to the requirements of this section.
(3) Review and approval of submissions
(A) In general
The Board shall approve 2 or more proposed policies or plans of insurance from approved insurance providers if the Board determines that the policies or plans provide coverage as specified in paragraph (2), and meet the conditions described in this paragraph
To be eligible for approval under this subsection, the approved insurance provider shall have—
(i) adequate experience underwriting and administering policies or plans of insurance that are comparable to the proposed policy or plan of insurance;
(ii) sufficient assets or reinsurance to satisfy the underwriting obligations of the approved insurance provider, and possess a sufficient insurance credit rating from an appropriate credit rating bureau, in accordance with Board procedures; and
(C) Review requirements
In reviewing applications under this subsection, the Board shall conduct the review in a manner consistent with the standards, rules, and procedures for policies or plans of insurance submitted under section 1508 (h) of this title and the actuarial soundness requirements applied to other policies and plans of insurance made available under this subchapter.
(4) Payment of premium support
(A) In general
The Corporation shall pay a portion of the premium for producers that purchase a policy or plan of insurance approved pursuant to this subsection.
The premium subsidy shall provide a similar dollar amount of premium subsidy per acre that the Corporation pays for comparable policies or plans of insurance reinsured under this subchapter, except that in no case shall the premium subsidy exceed 60 percent of total premium, as determined by the Corporation.
The premium subsidy, as determined by the Corporation, shall be calculated as—
Subject to subparagraphs (B) and (C), the premium subsidy under this subsection shall be paid by the Corporation in the same manner and under the same terms and conditions as premium subsidy for other policies and plans of insurance.
(E) Operating and administrative expense payments
(i) In general Subject to clause (ii), operating and administrative expense payments may be made for policies and plans of insurance approved under this subsection in an amount that is commensurate with similar policies and plans of insurance reinsured under this subchapter, on the condition that the operating and administrative expenses are not included in premiums.
(F) Approved insurance providers
Any policy or plan of insurance approved under this subsection may be sold only by the approved insurance provider that submits the application and by any additional approved insurance provider that—
(i) agrees to pay maintenance fees or other payments to the approved insurance provider that submitted the application in an amount agreed to by the applicant and the additional approved insurance provider, on the condition that the fees or payments shall be reasonable and appropriate to ensure that the policies or plans of insurance may be made available by additional approved insurance providers; and
The Corporation shall develop and publish procedures to administer policies or plans of insurance approved under this subsection that—
(A) require each approved insurance provider to report sales, acreage and claim data, and any other data that the Corporation determines to be appropriate, to allow the Corporation to evaluate sales and performance of the product; and
(A) In general
(7) Ineligible purposes
In no case shall a policy or plan of insurance made available under this subsection provide coverage substantially similar to privately available hail insurance.
(A) Limitation on expenditures
Notwithstanding any other provision in this subsection, of the funds of the Corporation, the Corporation shall use to carry out this section not more than $12,500,000 for each of fiscal years 2015 through 2018, to remain available until expended.
 See References in Text note below.
Source(Feb. 16, 1938, ch. 30, title V, § 523, as added Pub. L. 106–224, title I, § 132(a),June 20, 2000, 114 Stat. 383; amended Pub. L. 107–171, title X, § 10004,May 13, 2002, 116 Stat. 487; Pub. L. 110–234, title XII, §§ 12025(a), 12033(c)(2)(B),May 22, 2008, 122 Stat. 1389, 1405; Pub. L. 110–246, § 4(a), title XII, §§ 12025(a), 12033(c)(2)(B),June 18, 2008, 122 Stat. 1664, 2151, 2167; Pub. L. 113–79, title XI, §§ 11025, 11026,Feb. 7, 2014, 128 Stat. 974.)
References in Text
Section 1522 (e)(4) of this title, referred to in subsec. (c)(1), was repealed by Pub. L. 113–79, title XI, § 11022(b)(3),Feb. 7, 2014, 128 Stat. 973.
The date of enactment of this subsection, referred to in subsecs. (f)(3), (g)(4), and (h)(4), is the date of enactment of Pub. L. 110–246, which was approved June 18, 2008.
Pub. L. 110–234and Pub. L. 110–246made identical amendments to this section. The amendments by Pub. L. 110–234were repealed by section 4(a) ofPub. L. 110–246.
2014—Subsec. (a)(1). Pub. L. 113–79, § 11025(1), inserted “, at the sole discretion of the Corporation,” after “the Corporation may”.
Subsec. (a)(5). Pub. L. 113–79, § 11025(2), struck out par. (5) which related to evaluation of the pilot program.
Subsec. (i). Pub. L. 113–79, § 11026, added subsec. (i).
2008—Subsecs. (a), (b), (d). Pub. L. 110–246, § 12033(c)(2)(B), substituted “this subchapter” for “this chapter” wherever appearing.
Subsec. (f). Pub. L. 110–246, § 12033(c)(2)(B), substituted “this subchapter” for “this chapter”.
Pub. L. 110–246, § 12025(a), added subsec. (f).
Subsecs. (g), (h). Pub. L. 110–246, § 12025(a), added subsecs. (g) and (h).
2002—Subsec. (e). Pub. L. 107–171added subsec. (e).
Effective Date of 2008 Amendment
Amendment of this section and repeal of Pub. L. 110–234by Pub. L. 110–246effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 ofPub. L. 110–246, set out as an Effective Date note under section 8701 of this title.