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Wildfires and Hurricanes Indemnity Program

OIG evaluated FSA’s administration and oversight of WHIP, a USDA disaster assistance program.

Audit Report: 03702-0002-31
Published: 09/28/2020
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Fast Facts

The Department of Agriculture’s (USDA) Farm Service Agency (FSA) administers the delivery of farm loan, commodity, conservation, disaster assistance, and related programs.  One such program, the 2017 Wildfires and Hurricanes Indemnity Program (WHIP), provides payments to eligible producers to offset losses from hurricanes and wildfires that occurred in the 2017 calendar year.  The Bipartisan Budget Act of 2018 (BBA) provided $2.36 billion for disaster assistance for necessary expenses related to crop, tree, bush, and vine losses related to the consequences of Hurricanes Harvey, Irma, Maria, and other hurricanes and wildfires that occurred in 2017.  Of the $2.36 billion available under BBA, the Secretary directed FSA to provide nearly $2 billion in assistance to eligible producers through WHIP.  Approximately $340 million of the available $2.36 billion was provided to the State of Florida through a block grant to address the consequences of Hurricane Irma, including losses to citrus production expected during the 2018, 2019, and 2020 crop years.

Each eligible producer that requested WHIP benefits was subject to either a $125,000 or a $900,000 payment limitation, depending upon their average adjusted gross income (AGI).  The payment limit was $125,000 if less than 75 percent of the person’s or legal entity’s average AGI came from farming.  The payment limit was $900,000 if 75 percent or more of the average AGI of the person or legal entity came from farming.  Both insured and uninsured producers were eligible to apply for WHIP.  However, all producers receiving WHIP payments were required to purchase crop insurance and/or Noninsured Crop Disaster Assistance Program coverage, at the 60 percent coverage level or higher, for the next 2 available crop years, to meet statutory requirements.

The deadline to apply for WHIP was November 16, 2018.  Due to heavy demand and workload, county offices had the option of using a register to accommodate producers applying for WHIP.  FSA uses registers to list producers who, due to extenuating circumstances, are permitted to be processed after the signup deadline has passed.  FSA guidance allows county offices to send a request to their State office to use a register, which would allow participants who have not completed the signup process to be processed after the deadline.  The register was considered closed as of the close of business on November 16, 2018, and producers could not be added to the register after that date.

In order to apply for WHIP, producers had to submit a completed WHIP application to their administrative FSA county office.  After a producer submits a WHIP application, the FSA county office ensures that:

  • the application fully complies with all WHIP provisions;
  • the applicant has initialed and dated all modifications to applicant-provided data;
  • a second-party reviews the application before payments are issued; and
  • producers receive complete and accurate program information.

OBJECTIVE
Our objective was to evaluate FSA’s administration and oversight of WHIP.

WHAT OIG FOUND
The Department of Agriculture’s (USDA) Farm Service Agency (FSA) administers the delivery of farm loan, commodity, conservation, disaster assistance, and related programs. One such program, the 2017 Wildfires and Hurricanes Indemnity Program (WHIP), provided payments to eligible producers to offset losses from hurricanes and wildfires that occurred in the 2017 calendar year.  We found that over 1,160 producers were placed on registers, which allowed applicants to have their applications processed after the deadline, and more than 1,650 producers’ applications were initiated in a quasi-register without documented approval to do so.  This occurred because the FSA National office reportedly granted a blanket approval to use registers, which deviated from established procedure without adequate documentation.  As a result, FSA issued more than $103 million in WHIP payments to producers in Florida and Georgia who did not submit signed applications by the designated deadline.

During our review, we identified issues on 39 out of 73 sampled applications, including issues with eligibility documentation, payment calculations, and producer certifications.  This occurred because of inadequate guidance and oversight.  For example, while FSA guidance requires a second-party review on all applications prior to payment, the guidance does not detail what the review should include.  As a result, we identified over $8 million in improper payments in Florida and Georgia.  Until FSA improves its guidance and oversight, there is a continued and increased risk that county offices will not be able to properly administer the program.

FSA concurred with our findings and recommendations, and we accepted management decision for two of the five recommendations.