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Hixson v. U.S. Department Of Agriculture

United States District Court, D. Colorado

June 13, 2017

JILLANE HIXSON, on behalf of Hixson Farms, Plaintiff,
v.
U.S. DEPARTMENT OF AGRICULTURE, SONNY PERDUE, [*] Secretary, U.S. Department of Agriculture, STEVEN C. SILVERMAN, [**] Director, National Appeals Division, JENNY PETERSON, [***] Acting State Executive Director, Colorado USDA Farm Service Agency, and NATALIE BOND, [****] County Executive Director, Prowers County Farm Service Agency, Defendants.

          ORDER REVERSING AND REMANDING USDA'S DECISION

          R. Brooke Jackson, Judge

         The Supplemental Revenue Assistance Payments Program (“SURE”) is a federal crop insurance program operated by the United States Department of Agriculture (“USDA”) under the authority of the Food, Conservation, and Energy Act of 2008, Pub. L. No. 110-246, § 531, 122 Stat. 1651, 2156 (2008) (codified as amended at 7 U.S.C. § 1531(b)). To be eligible for SURE's disaster assistance payments, an applicant must timely report its “failed acreage.” 7 C.F.R. § 760.621.

         Hixson Farms, LLC (“Hixson”) operates a farm in Prowers County, Colorado. In late 2008 or early 2009 it sustained a loss of planted wheat due to wind and drought. In March 2009 Hixson submitted an insurance claim to Producers Agriculture Insurance Company on 961.7 acres of insured wheat. R. 110. An adjuster made a field inspection, verified the loss, and processed the claim. In April 2009 the wheat was destroyed with the adjuster's consent, and Hixson planted uninsured grain sorghum on 622.3 acres of the failed wheat. Id.

         On May 19, 2009 Hixson filed a Form CCC-576, “Notice of Loss and Application for Payment Noninsured Crop Disaster Assistance Program, ” with the Prowers County Farm Service Agency (“FSA”) Committee in support of a claim under the 2009 SURE program. R. 55. Although the form is for noninsured losses, the form is stamped “NOT FOR NAP, ” meaning that it relates to insured losses.[1] For reasons unknown to the Court, the Not for NAP notice, which is the subject of the present appeal, declared the affected acreage to be the 622.3 replanted acres rather than all 961.7 acres covered by the insurance claim. Id.

         The Prowers County FSA Committee called Hixson's insurance agent, Crop Risk Advisors LLC, and requested documentation to verify Hixson's loss, but “[n]o response was received by September and the committee felt action needed to be completed.” R. 461. The FSA never requested this information from Hixson directly or informed it that Crop Risk Advisors had not responded to its document request. See R. 111, 461. Consequently, on September 15, 2009 Hixson's notice of failed acreage was “disapproved.” R. 55. The disapproval was noted on the CCC-576 form merely by checking a “disapproved” box without explanation. Id. However, a letter mailed on September 18, 2009 by the Prowers County FSA Committee informing Hixson of the disapproval of the Not for NAP claim explained that the notice was disapproved because the committee concluded that “[t]his crop was destroyed and replanted prior to any notification to the Farm Service Agency that it was planted and failed.” R. 32.[2] The letter advised Hixson of its right to appeal to the Colorado State FSA Committee within 30 days. Id. Accordingly, the FSA updated its record of Hixson's failed acreage, form CCC-578, replacing the 622.3 “reported” acres with zero “determined” acres. See R. 461, 529- 31, 547-53.

         The problem is, Hixson insists that it never received the September 18, 2009 disapproval letter. In any event Hixson did not appeal. Oddly, Hixson did nothing for more than two years after submitting its application until a month before the 2009 SURE program's deadline for claims. See R. 112; FSA Handbook 1-SURE, at ¶ 198(A). On June 30, 2011 Hixson inquired about the status of its failed acreage notice and was faxed a copy of the disapproval letter. R. 112. On July 8, 2011 Hixson brought the Prowers County FSA Committee the insurance agent's documentation of its failed wheat acres. R. 113, 461. On July 26, 2011 Hixson sent the FSA a letter seeking to appeal the September 15, 2009 decision due to alleged factual errors. R. 56. Among other things this letter cites Producers Agriculture Insurance's verification of the loss in March 2009. Id. It also emphasized that Hixson would have appealed if it had received the September 18, 2009 letter.

         On July 28, 2011, a day before the 2009 SURE program's application deadline, Hixson filed an application for payment on an FSA-682 form, referencing its July 26, 2011 letter of appeal in support. R. 39-41. On August 26, 2011 the SURE application was approved, but the benefits were calculated as “zero” based on the September 15, 2009 determination that Hixson had no failed acreage. R.113. Hixson was notified of its right to appeal from that denial. R. 58.

         Hixson appealed (requested “reconsideration”), but on October 4, 2011 the Prowers County FSA Committee notified Hixson that it was denying the appeal because under the SURE program's rules “it is not possible to overturn decisions that have become administratively final, ” namely the September 15, 2009 decision. R. 45. On October 25, 2011 the FSA sent Hixson a letter clarifying that “[s]ince your 2009 SURE Application was approved [for $0, ] the only appeal rights a participant has is when there is a question in fact or factual dispute, ” such as the “amount of production, acres, etc. or [an] assertion about correctly applying a rule, regulation, or generally applicable provision according to FSA Handbook procedure found in 1-SURE Par. 11 A.” R. 5.

         Hixson appealed to the Colorado State FSA Committee. However, before that appeal proceeded, it withdrew the appeal in favor of a direct appeal to the USDA's National Appeals Division (“NAD”). R. 9. An NAD hearing officer held an evidentiary hearing on February 17, 2012. ECF No. 31-2.

         On May 2, 2012 the NAD hearing officer determined that the Prowers County FSA Committee's decision was not erroneous because Hixson's attempt to appeal the September 15, 2009 disapproval of its reported failed acreage was untimely. See generally R. 108-20. The hearing officer found that the FSA had “followed its usual mailing procedures when it mailed the 2009 Adverse Decision, ” and that Hixson “fail[ed] to prove the 2009 Adverse Decision was not mailed to [it] or not received by [it].” R. 115-16. Accordingly, the hearing officer concluded that the Prowers County FSA Committee's September 2009 determination was final, so the FSA had properly calculated Hixson's SURE benefit as $0. R. 118. The hearing officer also denied Hixson's request for equitable relief because only the Director of the NAD or Secretary of Agriculture could provide such relief. R. 119.

         Hixson then appealed to the Director of the NAD. R. 232. On August 28, 2012 NAD Deputy Director James Murray, on delegation by the Director, upheld the hearing officer's determination and denied the request for equitable relief. R. 248-50.

         In this action, Hixson seeks judicial review of the USDA's treatment of its SURE application. Jurisdiction is proper under 5 U.S.C. § 702 and 7 U.S.C. § 6999.

         STANDARD OF REVIEW

         Under the Administrative Procedure Act (“APA”), the Court must set aside an agency's decision if, after reviewing the administrative record, the Court finds that the decision was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). “The scope of review under the ‘arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency.” Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). “Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.'” Id. (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)). An agency action is arbitrary and capricious if

the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ...

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