USDA Did Not Have the Discretion to Implement New Program That Benefited Farmers: When Does The Agency Have Discretion to Implement a New Program?

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Combine unloading wheat into a semi truck in a harvested field.  Photo by Shannon Dizmag via flickr.com

The article is not a substitute for legal advice. 

Many of us are paying attention to the debate over the new Farm Bill and looking at how changes to existing programs and potential new programs. One issue that may come up after passing a new Farm Bill is how quickly USDA must implement the program changes or new programs. In Ausmus v. Perdue, a group of Colorado wheat farmers recently won after selecting to utilize a new crop insurance product before USDA’s Risk Management Agency (RMA) had implemented the product for wheat. The court ruled that although it might conflict with other duties had under federal law, RMA had to allow producers the ability to use the program after the effective date of the 2014 Farm Bill and not when RMA had implemented the regulations.

Background

In 2015, Colorado wheat farmers provided their crop insurance agents with written requests electing to exclude all eligible crop years in calculating their actual production histories (APH). The crop insurance agents reached out to RMA seeking guidance on how to proceed with this request. RMA responded with guidance that RMA authorized APH Yield Exclusion for the 2015 crop year for most crops, but winter wheat. Based on this guidance, the crop insurance agents denied the requests for APH Yield Exclusion on winter wheat in 2015.

The Colorado wheat farmers filed an appeal with the National Appeals Division (NAD). On appeal, the NAD hearing officer determined that NAD did not have jurisdiction (aka the ability) to hear the appeal. The wheat farmers requested a review by the NAD Director. The NAD Director reversed the hearing officer finding NAD did have jurisdiction but also found that RMA had the discretion on the appropriate time to implement Yield Exclusion for winter wheat. The farmers appealed this decision.

APH Yield Exclusion

Before we discuss the court’s ruling, let’s take a moment to review what APH Yield Exclusion is. APH Yield Exclusion allows producers to exclude specific yields from eligible years from their actual production histories (APH). This exclusion can have an impact on producers’ APHs and crop insurance premiums. To learn more about APH Yield Exclusion, see here (http://go.umd.edu/YEAPH).

Wheat in Loveland, CO

Ripe wheat in Loveland, Co.  Image by Erin (lance_mountain) via flickr.com

Court’s Decision

On appeal, the federal district had only one issue before it: was APH Yield Exclusion immediately available to farmers upon passage of the 2014 Farm Bill or did RMA have the discretion to determine the timing of implementing APH Yield Exclusion?

To answer this question, the court looked to determine if Congress was silent on the issue in the Farm Bill or been ambiguous on this issue. RMA agreed that Congress spoke directly on APH Yield Exclusion being immediately available upon passage (February 7, 2014), but RMA argued that the statute be ambiguous on the implementation date of APH Yield Exclusion.

The court reviewing the APH Yield Exclusion text and found that the Congress had been silent on an implementation date. The court found this lack of including an implementation date to favor the farmers and not RMA. Turning to other laws impacting the crop insurance program, Congress had a history of providing RMA with an implementation date. Because Congress was silent in the case of APH Yield Exclusion meant that Congress wanted the provision immediately available.

Another argument raised by RMA was the Federal Crop Insurance Act requires that RMA establish underwriting rules for new products, use sufficient actuarial data before offering new crop insurance coverage, and operate crop insurance products in an actuarially sound manner. The court was not swayed by this argument and found the court had to apply the statute as written even if it did create substantial logistic issues for RMA.

Why Care?

We are seeing a debate on a new farm bill currently going on in Congress. This new farm bill will create new programs that USDA will need to implement. This decision highlights that many of those new programs may become available on the effective date of the new farm bill. USDA may not have to implement these new programs before finalizing requirements under existing federal laws.

References

Ausmus v. Perdue, 289 F.Supp.3d 1227 (D. Colo. 2018).

 

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