United States District Court, D. Colorado
ORDER REVERSING AND REMANDING USDA'S
Brooke Jackson, Judge
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.
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.
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. 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.
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. 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,
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.
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.
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.
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.
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.
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.
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.
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 ...