Written by M. Sean High – Staff Attorney
On December 3, 2015, both houses of Congress voted to pass surface transportation legislation titled Fixing America’s Surface Transportation (FAST) Act (H.R. 22). Of importance to the agricultural industry, the legislation contained a provision that would repeal a $3 billion dollar cut to crop insurers included in the recently enacted Budget Act of 2015.
Under sec. 201 of the Budget Act of 2015, the overall rate of return for crop insurance providers was capped at 8.9% (a decrease from the previous overall rate of return capped at 14.5%). Significantly, the 8.9% capped rate would have resulted in a cut to crop insures of $300 million annually and $3 billion over ten years. Nevertheless, under sec. 32205 of FAST, sec. 201 of the Budget Act of 2015 is to be repealed and the overall rate of return for insurance providers capped rate is to be restored to the previous rate of 14.5%.
Prior to the December 3 votes, House Agricultural Committee Chairman Mike Conaway expressed his pleasure that through FAST, sec. 201 of the Budget Act of 2015 would be repealed. The Chairman stated that restoring the previous rates was necessary for “ensuring that crop insurance continues to be available, affordable, and accessible to America’s farmers and ranchers.”
Echoing Chairman Conaway, the Crop Insurance and Reinsurance Bureau (CIRB), American Association of Crop Insurers (AACI) and the National Crop Insurance Service (NCIS) issued a joint statement that declared:
The crop insurance industry fully supports efforts to return crop insurance to where it was before the budget bill was passed. The budget bill contained a disastrous provision that would have devastated crop insurance as we know it today, harming U.S. farmers and taxpayers alike.
Crop insurance is a successful public-private partnership that has already sustained $12 billion in cuts since 2008. The likely result of additional cuts would be increased industry consolidation, reduced choice in insurance providers for all farmers, and a dramatic decline in the availability and service of policies. Make no mistake - this cut would jeopardize effective private-sector delivery of crop insurance and take risk management for farmers in the wrong direction.
The final votes to approve FAST were 359-65 in the House of Representatives and 83-16 in the Senate. As a result of the December 3 votes, FAST now moves to the President’s desk for final approval.