BULLETIN NO.: MGR-96-031

TO:       All Reinsured Companies
          All Risk Management Field Offices
          FSA Headquarters, Program Delivery and Field Operations

FROM:     Kenneth Ackerman
          Acting Administrator

SUBJECT:  Implementing Provisions of the Federal Agriculture Improvement 
          and Reform Act of 1996

BACKGROUND:

The Food Security Act of 1985 contains provisions that restrict a producer's 
eligibility for crop insurance if an insurable commodity is produced on any 
acreage which is classified as predominantly highly erodible land or 
converted wetland.  These restrictions, commonly referred to as sodbuster 
and swampbuster provisions, apply to commodities planted in any crop year 
after the date of enactment of the Food Security Act of 1985, unless 
expressly exempted.

The Federal Agriculture Improvement and Reform Act of 1996 (1996 Act) amends 
the sodbuster and swampbuster provisions so that they no longer affect a 
producer's eligibility for crop insurance.  Since these changes are effective 
90 days after the April 4, 1996, enactment of the 1996 Act, they take effect 
on July 3, 1996.

ACTION:

Effective on July 3, 1996, crops produced on highly erodible land or 
converted wetland are eligible for crop insurance.  Since this amendment 
occurs in the middle of the crop year, the following applies:

(1)  For losses that occur on a unit on or before July 3, 1996:

     (a)  Producers are still required to be in compliance with the sodbuster 
          and swampbuster provisions until July 3, 1996. 

     (b)  Insurance providers are required to verify compliance with the 
          sodbuster and swampbuster provisions.  Producers who falsely 
          certify to compliance with the sodbuster and swampbuster provisions 
          are subject to administrative or criminal penalties.   

     (c)  Producers not in compliance with sodbuster or swampbuster on the 
          date that the cause of loss occurs on a unit, will not be eligible 
          for an indemnity payment on that unit.  No premium will be due for 
          any unit that is ineligible for an indemnity under these 
          circumstances.   After such a loss, the producer will have the 
          option of canceling the policy for the crop year or maintaining 
          the policy to be eligible for an indemnity for losses on any other 
          unit that may occur after July 3, 1996. 

     (d)  Insurance premiums will be due and payable on any unit eligible 
          for an indemnity.  

(2)  For any loss that occurs after July 3, 1996, the producer will be 
     eligible for an indemnity regardless of whether the producer was out of 
     compliance with the sodbuster or swampbuster provisions at any time 
     during the crop year.

Insurance providers will be required to verify the dates of all causes of 
loss.

The Controlled Substance Provision of the Food Security Act of 1985 was 
unaffected by the 1996 Act, therefore, the policy provisions related to 
controlled substance violations remain in effect.