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Ausmus v. Perdue

United States District Court, D. Colorado

October 13, 2017

GLENN AUSMUS, RUSSELL L. AUSMUS, DWAYNE FRITZLER, SHIRLEY FRITZLER, BLAKE GOURLEY, FARA GOURLEY, DEAN JAGERS, and JEFF SELF, Plaintiffs,
v.
SONNY PERDUE, [*] Secretary of the United States Department of Agriculture, STEVEN C. SILVERMAN, Director, National Appeals Division, and HEATHER MANZANO, [**] Acting Administrator of the Risk Management Agency and Manager of the Federal Crop Insurance Corporation, Defendants.

          ORDER REVERSING AND REMANDING USDA'S DECISION

          R. BROOKE JACKSON JUDGE

         Pursuant to 7 U.S.C. § 6999, 7 C.F.R. § 11.13, and Chapter 7 of Title 5 of the United States Code, Plaintiffs seek judicial review of a final decision of the National Appeals Division (“NAD”), a division of the United States Department of Agriculture. ECF No. 1 at 3. After considering the arguments, applicable law, and administrative record, the Court reverses the final decision of NAD for the reasons stated herein.

         BACKGROUND

         The factual background is not disputed. Plaintiffs are farmers who produce winter wheat in Baca County, Colorado. ECF No. 1 at ¶¶ 1-8. They seek judicial review of an adverse decision of the Risk Management Agency, which was subsequently affirmed by NAD. The sole issue in this case is one of statutory interpretation. The Court must determine whether NAD properly determined that the Actual Production History (“APH”) Yield Exclusion set out in 7 U.S.C. § 1508(g)(4)(C) was not immediately available to Plaintiffs upon the passage of the Agricultural Act of 2014 (“Farm Bill”), [1] but was instead subject to the Risk Management Agency's discretion as to the timing of implementation of that amendment.

         Section 11009 of the Farm Bill amended subparagraph 1508(g)(4)(C) of the Federal Crop Insurance Act (“FCIA”). ECF No. 36 at ¶ 3. This amended section is commonly known as the APH Yield Exclusion. Id. The APH Yield Exclusion was added to the FCIA to give crop producers the opportunity to exclude uncharacteristically bad crop years from the agency's calculation of how much crop insurance coverage they are entitled to. Id. at ¶¶ 3-4. Plaintiffs sought to invoke the APH Yield Exclusion in time for their 2015 winter wheat crop, but the agency denied their request. Id. at ¶¶ 6-10. Plaintiffs challenge this decision as a wrongful denial of a benefit to which they are entitled under the FCIA. Id. Defendants argue that the agency had not yet fully implemented the APH Yield Exclusion provision, so the denial of Plaintiffs' request to invoke the APH Yield Exclusion was not a denial of any actualized right under the FCIA. ECF No. 37.

         Before this Court assesses the merits of these arguments at greater length, some background in the relevant statutes is necessary.

         A. Federal Crop Insurance Act. [2]

         Congress enacted the FCIA in 1938 to provide crop insurance to farmers because private insurance companies “deemed all-risk crop insurance too great a commercial hazard.” Stewart v. Fed. Crop Ins. Corp., No. 4:09-CV-101, 2010 WL 3341863, at *1 (E.D. Tenn. Aug. 25, 2010) (citing Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380, 383 (1947)). In 1980, Congress amended the FCIA to require the Federal Crop Insurance Corporation (“Corporation”) generally to reinsure policies issued by private insurance companies rather than to issue direct policies. Id.

         A common form of crop insurance is called an APH-based policy. A.R. at 971-1019. These policies base their premium, insurance guaranty, and indemnity on a crop producer's average historical yields (APH). Id. The APH is the simple average of the producer's actual yields derived from four to ten years' worth of yield data. See 7 C.F.R. § 400.55(b). The goal of an APH-based policy is to protect a producer against the effect of yield losses resulting from natural causes (e.g., drought) by using that producer's actual production history as a baseline.

         The Farm Bill amended FCIA § 1508(g)(4) by adding a new subparagraph (C)-the APH Yield Exclusion.[3] The intended effect of the APH Yield Exclusion is to address the disproportionate deflation of a producer's historical yields resulting from crop years where there were catastrophic droughts or other widespread causes of loss. A.R. at 458. Such crop years result in artificially low insurance guarantees and indemnities. Id. By excluding unusually bad years, crop producers no longer have to worry that a natural disaster will reduce their insurance coverage for years to come. Id.

         The language establishing the APH Yield Exclusion reads:

(4) Adjustment in actual production history to establish insurable yields.

         (A) Application. This paragraph shall apply whenever the corporation uses the actual production records of the producer to establish the producer's actual production history for an agricultural commodity for any of the 2001 and subsequent crop years.

. . .

         (C) Election To Exclude Certain History.

(i) In General. Notwithstanding paragraph (2), with respect to 1 or more of the crop years used to establish the actual production history of an agricultural commodity of the producer, the producer may elect to exclude any recorded or appraised yield for any crop year in which the per planted acre yield of the agricultural commodity in the county of the producer was at least 50 percent below the simple average of the per planted acre yield of the agricultural commodity in the county during the previous 10 consecutive crop years.

(ii) Contiguous Counties. In any crop year that a producer in a county is eligible to make an election to exclude a yield under clause (i), a producer in a contiguous county is eligible to make such an election.

7 U.S.C. § 1508(g)(4)(A, C).

         B. Proced ...


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