PILOT PROGRAMS.

SEC. 132. PILOT PROGRAMS. (a) Authority.—The Federal Crop Insurance Act (7 U.S.C. 1501 et seq.), as amended by section 131, is amended by adding at the end the following: “SEC. 523. PILOT PROGRAMS “(a) General Provisions.— “(1) Authority.—Except as otherwise provided in this section, the Corporation may conduct a pilot program submitted to and approved by the Board under section 508(h), or that is developed under subsection (b) or section 522, 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— 114 STAT. 384 “(A) reduced forage on rangeland caused by drought or insect infestation; “(B) livestock poisoning and disease; “(C) destruction of bees due to the use of pesticides; “(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 title; and “(ii) the Corporation shall conduct all wild salmon programs under this title so that, to the maximum extent practicable, all costs associated with conducting the programs are not expected to exceed $1,000,000 for fiscal year 2002 and each subsequent fiscal year. “(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 “(D) provide pilot programs that would allow producers— “(i) to receive a reduced premium for using whole farm units or single crop units of insurance; and “(ii) to cross State and county boundaries to form insurable units. “(5) Evaluation.— “(A) Requirement.—After the completion of any pilot program under this section, the Corporation shall evaluate the pilot program and submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report on the operations of the pilot program. “(B) Evaluation and recommendations.—The report shall include an evaluation by the Corporation of the pilot program and the recommendations of the Corporation with respect to implementing the program on a national basis. “(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 “(B) protection for production losses. 114 STAT. 385 “(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. “(4) Timing.—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 title. “(6) Assistance.—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. “(8) Location.—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 title so that, to the maximum extent practicable, all costs associated with conducting the livestock programs (other than research and development costs covered by section 522) are not expected to exceed the following: “(A) $10,000,000 for each of fiscal years 2001 and 2002. “(B) $15,000,000 for fiscal year 2003. “(C) $20,000,000 for fiscal year 2004 and each subsequent fiscal year. “(c) Revenue Insurance Pilot Program.— “(1) In general.—Subject to section 522(e)(4), 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. “(2) Administration.—Revenue insurance under this subsection shall— “(A) be offered through reinsurance arrangements with private insurance companies; “(B) offer at least a minimum level of coverage that is an alternative to catastrophic crop insurance; “(C) be actuarially sound; and 114 STAT. 386 “(D) require the payment of premiums and administrative fees by an insured producer. “(d) Premium Rate Reduction Pilot Program.— “(1) Purpose.—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. “(2) Establishment.— “(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— “(i) for one or more agricultural commodities; and “(ii) within a limited geographic area, as proposed by the approved insurance provider and approved by the Board. “(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— “(i) the interests of producers are adequately protected within the pilot area; “(ii) rates of premium are actuarially appropriate, as determined by the Board; “(iii) the size of the proposed pilot area is adequate; “(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— “(I) not have a significant adverse impact on the crop insurance delivery system; “(II) not result in a reduction of program integrity; “(III) be actuarially appropriate; and “(IV) not place an additional financial burden on the Federal Government; and “(vi) the proposed policy or plan of insurance meets other requirements of this title determined appropriate by the Board. “(C) Time limitations and procedures.—The time limitations and procedures of the Board established under section 508(h) shall apply to a proposal submitted under this subsection.”. (b) Conforming Amendments.—Section 518 of the Federal Crop Insurance Act (7 U.S.C. 1518) is amended— (1) by striking “livestock and” after “commodity, excluding”; and (2) by striking “under subsection (a) or (m) of section 508 of this title”.