Additional Payment II Program

<RULE> DEPARTMENT OF AGRICULTURE <SUBAGY>Federal Crop Insurance Corporation</SUBAGY> <CFR>7 CFR Part 460</CFR> <DEPDOC>[Docket ID FCIC-25-0002]</DEPDOC> <RIN>RIN 0563-AC88</RIN> <SUBJECT>Additional Payment II Program</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Crop Insurance Corporation, U.S. Department of Agriculture (USDA). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Risk Management Agency (RMA), on behalf of the Federal Crop Insurance Corporation (FCIC), is issuing this rule to announce the availability of funding under the Additional Payment II Program (ADD PAY II). ADD PAY II is a one-time additional payment to Approved Insurance Providers (AIPs) administering eligible crop insurance contracts for 2022 and 2023 reinsurance year specialty crops. The total funding available for ADD PAY II is $30 million. Funding for ADD PAY II will be distributed to AIPs proportionally based on their respective liabilities for eligible crop insurance contracts for 2022 and 2023 reinsurance year specialty crops. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective on August 11, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> David Zanoni; telephone: (816) 926-6142; email: <E T="03">david.zanoni@usda.gov.</E> Individuals with disabilities who require alternative means for communication should contact the USDA Target Center at (202) 720-2600 (voice and text telephone (TTY mode)) or dial 711 for Telecommunications Relay Service (both voice and text telephone users can initiate this call from any telephone). </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Background</HD> FCIC serves America's agricultural producers through effective, market-based risk management tools to strengthen the economic stability of agricultural producers and rural communities. FCIC is committed to increasing the availability and effectiveness of Federal crop insurance as a risk management tool. AIPs sell and service Federal crop insurance policies in every state through a public-private partnership. FCIC reinsures the AIPs who share the risks associated with catastrophic losses due to major weather events. FCIC's vision is to secure the future of agriculture by providing world class risk management tools to rural America. Title I of the Disaster Relief Supplemental Appropriations Act, 2025 (Division B of the American Relief Act, 2025, (Pub. L. 118-158)) provides funding for an additional payment to AIPs administering eligible crop insurance contracts for specialty crops for the 2022 and 2023 reinsurance years. To administer the funding as mandated by Congress, FCIC is establishing ADD PAY II, similar to the previous Additional Payment Program (ADD PAY). The total funding available for ADD PAY II is $30 million. The original implementation of ADD PAY was through a Notice of Funding Availability published on May 2, 2023. Section 771 of the Consolidated Appropriations Act, 2023, (Pub. L. 117-328) provided funding for an additional payment to AIPs administering eligible crop insurance contracts for specialty crops for the 2021 reinsurance year. Funding for ADD PAY was distributed to AIPs proportionally based on their respective liabilities for eligible crop insurance contracts for 2021 reinsurance year specialty crops. <HD SOURCE="HD1">ADD PAY II</HD> The Risk Management Agency (RMA), on behalf of FCIC, will administer ADD PAY II. ADD PAY II will distribute funding to AIPs proportionally based on their respective liabilities for eligible crop insurance contracts for 2022 and 2023 reinsurance year specialty crops. The total funding available for ADD PAY II is $30 million. Currently, all payments to AIPs are governed by the Standard Reinsurance Agreement (SRA), which is a contract between an AIP and FCIC. The SRA outlines the terms under which FCIC provides reinsurance and subsidies for eligible crop insurance contracts sold by the AIP. The additional funding from ADD PAY II will be allocated based on terms available under the SRA. Under ADD PAY II, AIPs who administered one or more eligible crop insurance contracts for specialty crops for the 2022 or 2023 reinsurance years will be eligible for a one-time additional payment. Each AIP will receive a payment that is equal to a rate of 17.5 percent of the net book premium, less any administrative and operating (A&O) subsidy  <SU>1</SU> <FTREF/> already paid to the AIP as outlined in the SRA, on those specialty crop contracts that were subject to the A&O cap. <SU>2</SU> <FTREF/> Contracts that were not subject to the reduction will not receive a payment. <FTNT> <SU>1</SU>  “A&O subsidy” means the subsidy for the administrative and operating expenses (A&O) paid by FCIC on behalf of the policyholder to the AIP (also referred to as “the Company”) for eligible crop insurance contracts. </FTNT> <FTNT> <SU>2</SU>  “A&O cap” refers to the common name of a reduction described in section III(a)(2)(G) of the SRA. </FTNT> <HD SOURCE="HD1">Payment Calculation</HD> ADD PAY II will be administered based on records maintained by RMA that were used for the settlement of accounts between the AIP and RMA at the time of the October 2024 transaction cutoff date based on the 2022 and 2023 reinsurance year annual settlements. The payment will be final upon receipt by the AIP and will not be altered based on any subsequent updates to premium or liability of qualifying crop insurance contracts made after that date. For example, if an AIP modifies a 2023 reinsurance year policy to decrease the amount of premium and liability after the ADD PAY II payment has been received, it will not affect any ADD PAY II payments. If the total eligible payments under ADD PAY II reach, or may reach, $30 million, the RMA Administrator will prorate the payments so that a total of $30 million is paid. If the payments are prorated, funding for ADD PAY II will be distributed to AIPs proportionally based on their respective liability, which is the total value of insurance provided by AIPs to producers, for qualifying crop insurance contracts. <HD SOURCE="HD1">Notice and Comment and Effective Date</HD> The Administrative Procedure Act (APA, 5 U.S.C. 553) provides that the notice and comment and 30-day delay in the effective date provisions do not apply when the rule involves specified actions, including matters relating to contracts. This rule governs contracts (the reinsurance agreements) between FCIC and AIPs and therefore falls within that exemption. This rule is exempt from the regulatory analysis requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) because it involves matters relating to benefits. The requirements for the regulatory flexibility analysis in 5 U.S.C. 603 and 604 are specifically tied to the requirement for a proposed rule by section 553 or any other law; in addition, the definition of rule in 5 U.S.C. 601 is tied to the publication of a proposed rule. The Office of Management and Budget (OMB) found this rule meets the criteria in 5 U.S.C. 804(2) of the Congressional Review Act (CRA). The CRA, at 5 U.S.C. 808(2) allows an agency to make such regulations effective immediately if the agency finds there is good cause to do so. USDA finds that notice and public procedure are contrary to the public interest because the rule is being implemented as directed by Congress. Therefore, USDA is not required to delay the effective date for 60 days from the date of publication to allow for Congressional review. Accordingly, this rule is effective upon publication in the <E T="04">Federal Register</E> . <HD SOURCE="HD1">Executive Orders 12866, 13563, and 14192</HD> Executive Order 12866, “Regulatory Planning and Review,” and Executive Order 13563, “Improving Regulation and Regulatory Review,” direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasized the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 14192 “Unleashing Prosperity Through Deregulation” announced the Administration policy to significantly reduce the private expenditures required to comply with Federal regulations to secure America's economic prosperity and national security and the highest possible quality of life for each citizen and to alleviate unnecessary regulatory burdens placed on the American people. In line with the Executive Order requirements, the Agency chose this regulatory approach to maximize benefits and minimize burden on American producers. The requirements in Executive Orders 12866 and 13563 for the analysis of costs and benefits apply to rules that are determined to be significant or economically significant. This rule has been designated as not significant and therefore, OMB has not reviewed this rule and analysis of the costs and benefits is not required. <HD SOURCE="HD1">Environmental Review</HD> The environmental impacts of this final rule have been considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347), and because USDA will be making the payments to producers, the USDA regulation for compliance with NEPA (7 CFR part 1b). As specified in 7 CFR 1b.4(b)(4), FCIC is categorically excluded from the preparation of an Environmental Analysis or Environmental Impact Statement unless the FCIC Manager (agency head) determines that an action may have a significant environmental effect. The FCIC Manager has determined thi ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 22k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━