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Anderson v. Farm Service Agency: INSURANCE | AGRICULTURE - yield / payment rates for crop loss: individual vs. county rate; near-equity reasoning

1The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota.
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 07-2843
___________
Harlan Anderson, *
*
Appellant, **
Appeal from the United States
v. * District Court for the District
* of Minnesota.
Farm Service Agency of the *
United States Department *
of Agriculture, *
*
Appellee. *
___________
Submitted: May 15, 2008
Filed: July 18, 2008
___________
Before LOKEN, Chief Judge, BEAM, and BYE, Circuit Judges.
___________
BEAM, Circuit Judge.
Harlan Anderson appeals the district court's1 ruling affirming the Farm Service
Agency's (FSA) decision regarding his crop disaster payments. Because the agency's
action was not arbitrary, capricious, or otherwise contrary to law, we affirm.
2Although the record is hazy on the matter, the parties appear to concede that
Anderson applied for, and received, insurance benefits from the group plan based on
the 2002 crop misfortunes.
-2-
I. BACKGROUND
Anderson is a Wright County, Minnesota, farmer who sustained weather-related
losses to his 2002 alfalfa crop. During the 2002 season, Anderson carried group risk
insurance, which was reinsured by the Federal Crop Insurance Corporation (FCIC).
Anderson switched to the group plan for the 2001 year. In previous years, he was
insured through multiple peril crop coverage. Multiple peril insurance is designed to
protect against each individual's loss. When Anderson purchased multiple peril
insurance, he had to keep individual yearly yield records of his actual production
history (APH). If he had not kept such records and suffered a loss, he would have
been paid based on a yield assigned by the FCIC. In contrast, the Group Risk Plan is
not designed to protect against individual loss and does not require the same
paperwork. When he switched from multiple (individual) peril to group protection,
Anderson signed a disclaimer noting that the new plan was different from a multiple
peril/actual production history policy because it did not insure against individual loss
and instead, payments would be based upon county-wide yields. The disclaimer
suggested that he should continue to maintain his production history in the event that
he wished to switch back to a production history/multiple peril plan in the future.
Anderson did, apparently, keep such APH records even while he participated in the
group plan, which did not require this information.
In July or August 2003, after the 2002 weather problem, Anderson applied for
benefits from the FSA under the 2002 Crop Disaster Program.2 In his application,
Anderson argued that his benefits should be calculated according to his insurancerelated
APH, which he listed as 4.8 tons per acre, at a rate of 1 per ton, for a total
of ,948.82. The FSA approved his application generally, but a dispute arose about
3These smaller FSA figures emerge from the United States Department of
Agriculture's (USDA) 2002 Minnesota ALL Crop Records Report for Wright County.
-3-
the amount of paymentspecifically, whether or not Anderson was entitled to an
adjustment for diminished quality under the Quality Loss Program. In February 2004,
the FSA informed Anderson that he was entitled to ,169 in benefits under the
disaster program for the losses. In calculating this amount, the FSA used a county
average yield of 3.7 tons per acre rather than the 4.8 tons per acre amount that
Anderson advocated. Additionally, the FSA used what it describes as a statewide
payment rate of per ton, rather than the 1 rate that Anderson submitted.3
After a series of appeals and remands that are not relevant to this case,
Anderson exhausted his administrative remedies with the agency and the National
Appeals Division, and filed a petition for review with the district court. The district
court denied the petition, finding that the FSA did not act arbitrarily and capriciously
or commit an error of law in setting the yield at 3.7 tons per acre and the payment rate
at per ton. Anderson v. Farm Serv. Agency, 502 F. Supp. 2d 924, 929-30 (D.
Minn. 2007).
II. DISCUSSION
We review the agency's factual determinations for substantial evidence in the
record, and will reverse if the decision is arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with the law. Farmers Bank v. U.S. Dep't of Agric.,
495 F.3d 559, 563 (8th Cir. 2007). As long as the agency provides a rational
explanation for its decision, a reviewing court will not disturb it. South Dakota v.
Ubbelohde, 330 F.3d 1014, 1031-32 (8th Cir. 2003). If a statute is silent with respect
to a specific issue, "there is an express delegation of authority to the agency to
elucidate a specific provision of the statute by regulation." Chevron, U.S.A. Inc. v.
Natural Res. Def. Council, Inc., 467 U.S. 837, 843-44 (1984). Unless there is a clear
4There is sparse legislative history on the Agricultural Assistance Act of 2003.
In the Act, Congress directed the secretary to use the same administrative authority
for determining loss thresholds as in the 2000 disaster assistance act. Pub. L. No.
108-7, 202(b)(1). The 2000 act, in turn, refers to the 1999 act. Agricultural, Rural
Development, Food and Drug Administration, and Related AgenciesAppropriations
Act, Title VIII, Pub. L. No. 106-387, 815, 114 Stat. 1549A-55 (2000). At any rate,
the legislative history that we have found for the various years' crop disaster programs
directs the department to avoid compensating farmers based on artificially inflated
price fluctuations, and to reduce the time necessary for processing applications. E.g.,
H.R. Rep. No. 106-948, at 148 (2000), as reprinted in 2000 U.S.C.C.A.N. 1451. It
does not delve into the minutiae of whether to use a county, state, or national rate for
yield and price figures. Furthermore, we see nothing in the regulations that is
arbitrary, capricious, or contrary to the statute, and afford them deference.
-4-
expression of congressional intent, regulations are given controlling weight unless
arbitrary, capricious, or contrary to the statute. Hess v. Citibank, (S.D.), N.A., 459
F.3d 837, 842 (8th Cir. 2006).
In the Agricultural Assistance Act of 2003, Congress directed the Secretary of
Agriculture to provide funds from the Commodity Credit Corporation "to make
emergency financial assistance available to producers on a farm that have incurred
qualifying losses for the . . . 2002 crop of an agricultural commodity . . . due to
damaging weather or related condition, as determined by the Secretary." Agricultural
Assistance Act of 2003, Title II, Pub. L. No. 108-7, 202, 117 Stat. 538 (2003). The
statute, relatively brief and general in nature, gives the USDA authority to promulgate
regulations to implement the statute. Chevron, 467 U.S. at 843-44. The USDA's
regulations setting forth the terms and conditions of this program were codified at 7
C.F.R. Part 1480 (2004).4 The regulations provided that the 2002 Crop Disaster
Program would be carried out in the field by FSA. 7 C.F.R. 1480.2(a). The
regulations permitted any party dissatisfied with the FSA's decisions to
administratively appeal the determination. 7 C.F.R. 1480.8(e). Additional guidance
regarding the 2002 Crop Disaster Program was provided in the FSA Crop Disaster
Program "5-DAP Handbook."
5These particular regulations, in turn, define "Approved APH yield" as one that
is calculated by officials and used to determine the production guarantee that triggers
insurance indemnity payments. 7 C.F.R. 400.52(e).
-5-
There is no dispute that Anderson is entitled to receive some sort of crop
disaster payment for his 2002 alfalfa crop. The 2002 crop disaster regulations
provided that producers of an eligible crop were entitled to 2002 crop disaster
payments. 7 C.F.R. 1480.1. And an "eligible crop" was defined as one that was
insured by the Federal Crop Insurance Corporation. 7 C.F.R. 1480.3. Anderson's
2002 alfalfa crop fits within this definition. The only dispute in this case is how much
money Anderson is entitled to receive. As earlier noted, the two issues that impact
this amount are the yield per acre amount and the payment rate.
The FSA Handbook provides that yield per acre amounts were to be based on
whether producers had an "approved" APH yield for the 2002 alfalfa crop. According
to the handbook, parties with an approved APH could use that figure as their yield for
purposes of crop disaster payments. Parties without an approved APH were required
to be paid according to the county average yield. "Approved yield" was defined in the
regulations as follows:
Approved yield means the amount of production per acre, computed in
accordance with FCIC's Actual Production History Program (7 CFR part
400, subpart G)[5] . . . . Only the approved yields based on production
evidence submitted to FSA prior to the 2003 Act will be used for
purposes of the . . . 2002 CDP. Other yields may be assigned when an
eligible approved yield is not available.
7 C.F.R. 1480.3 (emphasis added).
Anderson argues that he did have an approved yield because even though his
group rate insurance plan did not pay according to individual yield, he actually kept
APH yield records as suggested by the group plan disclaimer. The agency, on the
-6-
other hand, argues that because Anderson participated in the group plan, he has no
"approved" yield, and must rely on county average, whether or not Anderson
gratuitously kept those personal records. The agency points out that Anderson did
not have an officially calculated yield for his 2002 alfalfa crop, because this figure
was immaterial to his group plan of indemnity insurance, which paid according to
county yields.
Although a close question, the agency did not act arbitrarily or capriciously by
interpreting its regulations in a manner that precluded Anderson from using his
(personally maintained) APH yield, and instead assigning the county yield for the
2002 crop disaster payments. Although one has to carefully connect several dots
found respectively in the handbook, C.F.R. part 1480, and C.F.R. part 400 to get to
where the agency wants to go, it can be done. As noted, section 1480.3 defined
"approved yield" with reference to the insurance programs set forth in part 400. Part
400, in turn, defined approved yield as one that is calculated by county officials for
purposes of the insurance payment. 7 C.F.R. 400.52(e). County officials did not
calculate an individual approved yield for Anderson in 2002 because it was not needed
for his participation in the group rate plan.
Anderson goes to great pains to convince the court that it should divorce the
issue of crop insurance from the crop disaster calculation. But, a view of the 2003
Act, prior statutes, and legislative histories, makes it abundantly clear that Congress
intended that there be a link between the two for disaster program purposes. As one
example, in the 2003 Act, claimants received higher benefits if they were covered by
crop insurance and were precluded from receiving benefits unless they agreed to
purchase insurance for the next two crops. Pub. L. No. 108-7, 202, 117 Stat. 538-
39. Anderson purchased crop insurance for the 2002 crop year, of course, and the
statute's carrot and stick provisions with regard to crop insurance are not in play here.
The point is, it was not arbitrary and capricious for the agency to create a regulatory
link between the two when Congress has done so as well. We thus affirm the agency's
6Nor does the fact that Anderson received this rate for his crop insurance
evidence a nationwide, as opposed to a county, rate. As explained earlier, the group
plan that Anderson participated in paid according to county yields. More importantly,
there is no discernible connection between the insurance actuarial table referenced by
Anderson and the disaster payment legislation and regulations.
-7-
decision to use the county rate of 3.7 tons per acre in calculating Anderson's crop
disaster payments.
On the other hand, the agency encourages us to separate crop insurance and
crop disaster payments with regard to the payment rate. Although not a model of
clarity, the FSA handbook basically provides that disaster payment rates should be
based on a nationwide rate if there is one, and if not, then a statewide calculation
should be used. In this case, FSA determined that there was not a nationwide rate, and
calculated Anderson's payments based on a Minnesota statewide rate of per ton.
Anderson argues that there was a nationwide rate, and it was 1 per ton. Anderson
points to the fact that his insurance benefits under the Group Rate Plan were paid
based on the 1 rate.
The evidence in the record shows that for insurance purposes 1 per ton was
the county payment rate for Wright County, Minnesota. Anderson argues that the
same document listing a 1 per ton rate for the county shows that this is necessarily
the national rate because the rate was established by the National Agricultural
Statistics Service (NASS). But as Anderson recognizes, the same document clearly
says that the rate was calculated by dividing the county production estimates by
county harvest estimates. This evidences a county, not nationwide rate, despite the
fact that a national service calculated the number. There is no evidence in the record
suggesting that the 1 rate was used on a nationwide basis.6 Interestingly,
Anderson contends that the agency failed to prove that was the correct rate either,
pointing out that the two documents in the record purporting to show that is the
statewide rate are lacking in this regard. One of these documents, as earlier noted, is
-8-
a printout from a USDA intranet site, entitled "2002 Minnesota ALL Crop Records
Report" that simply has a table with numbers plugged into it, and under the price
column, the number 74 appears in every box. The other is a table with admittedly
more text in it, but the key textshowing the statewide alfalfa rate to be is
handwritten, and is the only handwritten note on a page full of otherwise type-written
words.
Suffice it to say that the quality and quantity of proof on this issue is deficient,
and both sides have failed to enlighten the court. It, however, was Anderson's burden
to do so on appeal. Ballanger v. Johanns, 495 F.3d 866, 870 (8th Cir. 2007); 7 C.F.R.
11.8(e). Anderson certainly carried his burden in establishing a county rate through
the NASS figures. But the figures that he produced only reference Wright County and
not a national calculation. Although we are not overwhelmed with the agency's
"proof," we find that it nonetheless suffices because Anderson has failed to otherwise
establish an alternative applicable rate.
III. CONCLUSION
We think the FSA's actions in this dispute leave much to be desired. Indeed,
the agency treads precipitously close to the arbitrary and capricious line. On the other
hand, we detect an element of overreaching on Anderson's part, especially on the
price-per-ton dispute. Accordingly, we find that the line was not crossed, and thus
affirm.
______________________________
 

 
 
 

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