(a) This subpart specifies the terms and conditions of ADD PAY II.

(b) 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.

ADD PAY II means Additional Payment II Program.

Annual settlement means the settlement of accounts between the Company and FCIC for the reinsurance year, beginning with the October monthly transaction cutoff date following the end of the subsequent reinsurance year and continuing monthly thereafter, as necessary.

A&O Subsidy means the subsidy for the administrative and operating expenses. The subsidy is paid by FCIC on behalf of the policyholder to the Company for additional coverage level crop insurance contracts in accordance with section 508(k)(4) of the Federal Crop Insurance Act (7 U.S.C. 1508(k)(4)).

Approved Insurance Provider (AIP) means a legal entity (also referred to as “the Company”) which has entered into a Standard Reinsurance Agreement (SRA) with FCIC for the applicable reinsurance year.

Crop Provisions means the part of the policy that contains the specific provisions of insurance for each insured crop.

Eligible crop insurance contract means an insurance contract with an eligible producer:

(1) Covering an agricultural commodity authorized to be insured under the Federal Crop Insurance Act and approved for sale by FCIC;

(2) With terms and conditions in effect as of the applicable contract change date;

(3) That is sold and serviced in accordance with the Federal Crop Insurance Act, FCIC regulations, FCIC procedures, and the SRA; and

(4) That has a sales closing date within the reinsurance year.

FCIC means the Federal Crop Insurance Corporation, a wholly owned Government Corporation of USDA that administers the Federal Crop Insurance Program.

Liability means total amount of insurance, value of production guarantee, or revenue protection guarantee for the unit determined in accordance with the Settlement of Claim provisions of the applicable Crop Provisions.

Net book premium means the premium amount established by FCIC for eligible crop insurance contracts in accordance with section 508(d)(2) of the Federal Crop Insurance Act (7 U.S.C. 1508(d)(2)), less any amount for A&O subsidy.

Qualifying crop insurance contract means an eligible crop insurance contract for a 2022 or 2023 reinsurance year specialty crop.

Reinsurance year means the term of the SRA beginning July 1 and ending on June 30 of the following year and, for reference purposes, identified by the year containing June.

RMA means the Risk Management Agency, USDA.

Specialty crop means agricultural commodities described in section 101 of Title I of the Specialty Crops Competitiveness Act of 2004 (7 U.S.C. 1621 note), including fruits and vegetables, tree nuts, dried fruits, horticulture nursery crops, and other crops listed on the RMA specialty crops website at https://www.rma.usda.gov/about-crop-insurance/highlighted-initiatives-plans/specialty-crops, or a successor website.

Standard Reinsurance Agreement (SRA) means the agreement between an AIP and FCIC by which the insurer transfers to FCIC certain liabilities arising from the insurer's sales of insurance policies in return for a portion of premium monies and administrative expense reimbursements.

USDA means United States Department of Agriculture.

To be eligible for additional payment under ADD PAY II, the participant must be an AIP who administered one or more eligible crop insurance contracts for specialty crops for the 2022 or 2023 reinsurance years.

(a) The total funding available for ADD PAY II is $30 million.

(b) Funds from Title I of Division B of the American Relief Act, 2025 (Pub. L. 118-158) will be used for ADD PAY II.

(a) 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 on those specialty crop contracts that were subject to the reduction described in section III(a)(2)(G) of the SRA known as the A&O cap, less any A&O subsidy already paid to the AIP per the SRA. Contracts that were not subject to the reduction will not receive a payment.

(b) If the total additional payment sum of $30 million for ADD PAY II is reached or may be reached, the RMA Administrator will prorate ADD PAY II amounts due 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 for qualifying crop insurance contracts.

(c) 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 and will not be altered based on any subsequent updates to premium or liability of qualifying crop insurance contracts made after that date.

(d) Specifically, RMA will calculate the additional payment amounts under ADD PAY II as follows:

(1) For each qualifying crop insurance contract subject to a reduction described in section III(a)(2)(G) of the SRA, calculate 17.5 percent of net book premium;

(2) If the result of paragraph (d)(1) of this section is greater than the actual A&O subsidy paid for the qualifying crop insurance contract:

(i) Subtract the actual A&O subsidy paid from the result of paragraph (d)(1) of this section; and

(ii) Calculate total liability for the contract;

(3) Sum the results of paragraph (d)(2)(i) of this section by AIP;

(4) Sum the results of paragraph (d)(3) of this section across all AIPs;

(5) If the result of paragraph (d)(4) of this section is less than or equal to $30 million, then pay each AIP their respective amount from paragraph (d)(3) of this section; and

(6) If the result of paragraph (d)(4) of this section is greater than $30 million, then:

(i) Sum the results of paragraph (d)(2)(ii) of this section by AIP;

(ii) Sum the results of paragraph (d)(6)(i) of this section across all AIPs;

(iii) Divide paragraph (d)(6)(i) of this section by paragraph (d)(6)(ii) of this section to establish each AIP's proportion of total liability;

(iv) Multiply $30 million by the result of paragraph (d)(6)(iii) of this section for each AIP; and

(v) Pay each AIP their respective amount from paragraph (d)(6)(iv) of this section.