Ausmus et al v. Vilsack et al

Filing 41

ORDER REVERSING AND REMANDING USDA'S DECISION by Judge R. Brooke Jackson on 10/13/17. (jdyne, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No 16-cv-01984-RBJ
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

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

*

In accordance with Rule 25(d) of the Federal Rules of Civil Procedure, Sonny Perdue is substituted for
Thomas Vilsack as the Secretary of Agriculture.

**

Heather Manzano is similarly substituted for Brandon Willis as the Acting Administrator of the Risk
Management Agency and Manager of the Federal Crop Insurance Corporation. Fed. R. Civ. P. 25(d).

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(“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

1

Pub. L. No. 113–79, 128 Stat. 956, signed into law on February 7, 2014.

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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

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Plaintiffs’ Reply Brief notes that The Honorable Sam R. Cummings of the United States District Court
for the Northern District of Texas recently issued a decision regarding the precise issue before this Court.
See Adkins v. Vilsack, No. 1:15-CV-0169 (N.D. Tex. May 12, 2017) (currently on appeal), a copy of
which was provided at ECF No. 38-1. In that order, following a de novo review, the court adopted the
findings and conclusions in the Report and Recommendation of United State Magistrate Judge E. Scott
Frost, a copy of is found at ECF 38-3. I have found Magistrate Judge Frost’s Recommendation, including
his discussion of the history of the Federal Crop Insurance Act and the Farm Bill, to be quite helpful in
understanding the background that led to the present dispute.

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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
3

The Farm Bill also amended § 1508(g)(4) by re-designating subparagraph (C) to (D), and adding “or
(C)” after “(B)” to the re-designated (D). See Pub. L. No. 113–79, sec. 11009, § 508(g), 128 Stat. 956,
957.

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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. Procedural History.
Plaintiffs wished to insure their 2015 winter wheat crop. Believing that they were
eligible to invoke the APH Yield Exclusion, Plaintiffs gave their crop insurance agents letters
electing to exclude all eligible crop years for purposes of calculating their coverage. ECF No. 36
at ¶ 6. After receiving these letters from Plaintiffs and other crop producers, crop insurance
providers contacted the Risk Management Agency requesting guidance on how to handle the
APH Yield Exclusion elections concerning the 2015 winter wheat crop. See A.R. at 547–49. On
October 31, 2014 the Risk Management Agency provided guidance that although it had
authorized the APH Yield Exclusion for most crops for 2015, it did not authorize the APH Yield
Exclusion for winter wheat. See id. at 562. Therefore, the Agency directed insurance providers
to deny winter wheat producers’ requests for the APH Yield Exclusion. Id.
Plaintiffs challenged the directive as an adverse decision appealable to NAD. Id. at 38–
43. On January 12, 2015, the NAD Hearing Officer conducted a telephone hearing. Id. at 121–
1395. On March 12, 2015, the NAD Hearing Officer issued a Determination that NAD did not
have jurisdiction over the matter and did not reach the merits. Id. at 140-158. Plaintiffs then
requested NAD Director Review of the Hearing Officer’s Determination pursuant to 7 C.F.R. §
11.9. Id. at 160–212. On August 5, 2015, the NAD Director issued the “Director
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Determination,” which reversed the Hearing Officer’s determination as to jurisdiction. Id. at
242–267. Additionally, the NAD Director held that the Risk Management Agency had
discretion to determine the appropriate time to implement the APH Yield Exclusion with regard
to 2015 winter wheat, effectively affirming the Agency’s decision not to authorize the exclusion.
Id. Plaintiffs timely appealed to this Court pursuant to 7 C.F.R. § 11.13(a).
STANDARD OF REVIEW
Persons adversely affected by a decision of an agency within the USDA may appeal to
the National Appeals Division. See 7 U.S.C. § 6996. An adverse NAD decision may be
appealed to the NAD Director. See id. § 6998. Pursuant to 7 U.S.C. § 6999 and 7 C.F.R. §
11.13(a), the United States District Courts may review and enforce final determinations of NAD
in accordance with Chapter 7 of Title 5 of the United States Code.
Under 5 U.S.C. § 706, “the reviewing court shall decide all relevant questions of law,
interpret constitutional and statutory provisions, and determine the meaning or applicability of
the terms of an agency action.” Agency actions are presumed valid, and the burden of proof lies
with plaintiffs who challenge such actions. Citizens’ Comm. to Save Our Canyons v. Krueger,
513 F.3d 1169, 1176 (10th Cir. 2008). Reviewing courts shall “hold unlawful and set aside
agency action, findings, and conclusions found to be . . . 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
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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 ascribed to a difference in view or the
product of agency expertise.
Id.
When an agency interprets its own ambiguous regulation, it is entitled to deference. Auer
v. Robbins, 519 U.S. 452 (1997). However, when an agency interprets a statute, reviewing
courts follow the two-step Chevron analysis to determine how much deference to afford the
agency. United States v. Mead Corp., 533 U.S. 218 (2001) (referencing Chevron, U.S.A., Inc. v.
Nat. Res. Def. Council, Inc., 467 U.S. 837, 842–43 (1984)). First, Courts will assess whether
Congress’ intent is clear. Courts will not give an agency deference if “Congress has directly
spoken to the precise question at issue,” because it is the jurisdiction of neither courts nor
agencies to question Congress’ unambiguous intent. Chevron, 467 U.S. at 842–43.
If Congress’ intent is not clear––in circumstances where the statute is silent or
ambiguous––“the question for the court is whether the agency’s answer is based on a permissible
construction of the statute.” NISH v. Rumsfeld, 348 F.3d 1263, 1266-67 (10th Cir. 2003) (citing
Chevron, 467 U.S. at 843). In answering that question, courts defer to reasonable administrative
interpretations and accord “considerable weight . . . to an executive department’s construction of
a statutory scheme it is entrusted to administer.” Chevron at 844–45. “If a statute is ambiguous,
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and if the implementing agency’s construction is reasonable, Chevron requires a federal court to
accept the agency’s construction of the statute, even if the agency’s reading differs from what the
court believes is the best statutory interpretation.” Nat’l Cable & Telecomms. Ass’n v. Brand X
Internet Servs., 545 U.S. 967, 980 (2005).
ANALYSIS
The sole issue in this case is whether NAD properly determined that the APH Yield
Exclusion was not immediately available to Plaintiffs upon the passage of the Farm Bill but was
instead subject to the Risk Management Agency’s discretion as to the timing of implementation.
Because NAD’s decision was based on statutory interpretation, this Court will engage in the twostep Chevron analysis to determine how much deference to give NAD’s determination. See
Mead Corp., 533 U.S. at 236.
Under Chevron, the Court’s first task is to determine whether the statute is silent or
ambiguous concerning the issue before the Court. 467 U.S. at 842–843. Pointing to the
applicability provision, § 1508(g)(4)(A), Plaintiffs contend that there can be no reasonable
dispute that Congress spoke directly to the issue of the APH Yield Exclusion’s application to the
2015 crop year. ECF No. 36 at 5. Defendants concede that Congress spoke directly to the APH
Yield Exclusion’s application date and agree that it was “effective immediately.” Id. at 13.
However, Defendants argue that there is a difference between the date on which the APH Yield
Exclusion became effective under the application provision (February 7, 2014) and the date on
which the agency need implement the APH Yield Exclusion (a reasonable date in the future at
the agency’s discretion). See id. Defendants thus contend that the statute does not clearly speak
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to when the APH Yield Exclusion need be implemented, and therefore the agency’s
interpretation that it could implement the APH Yield Exclusion at its discretion should be given
deference.
Plaintiffs counter that Defendants’ attempt to delineate the “application date” from an
“implementation date” is nothing more than crafty legal gobbledygook. Plaintiffs contend that
Congress did not explicitly address implementation in the APH Yield Exclusion, and therefore
Congress intended it to be implicit within the “Application” provision. Accordingly, this case
comes down to whether Congress intended that the APH Yield Exclusion’s effective date as
provided in § 1508(g)(4)(A) be distinct from its implementation date.
After reviewing the APH Yield Exclusion’s “statutory language, the design of the statute
as a whole and [] its object and policy,” I conclude that Defendants’ attempt to differentiate
statutory effectiveness from implementation here is without merit. Crandon v. United States,
494 U.S. 152, 158 (1990). Therefore, the APH Yield Exclusion was a statutory benefit available
to Plaintiffs for their 2015 winter wheat crop, and the agency’s decision to deny them this benefit
was not in accordance with the law. My reasoning is explained below.
A. The Text.
Defendants argue that there is no express language within the statute mandating
implementation by the 2015 crop year. ECF No. 37 at 11. Therefore, they argue that the statute
“is not conclusive on whether it is self-executing.” Id. at 16; see also Black’s Law Dictionary
1566 (10th Ed. 2014) (defining self-executing as “effective immediately without the need of any
type of implementing action.”).
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It is true that the APH Yield Exclusion does not include the word “implementation” or
expressly denote an “implementation date.” But this fact cuts in Plaintiffs’ favor rather than
Defendants’. “[C]ourts must presume that a legislature says in a statute what it means and means
in a statute what it says there.” Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253–54
(1992). “It is well established that, absent a clear direction by Congress to the contrary, a law
takes effect on the date of its enactment.” Gozlon-Peretz v. United States, 498 U.S. 395, 404
(1991). There is no clear direction in this statute indicating that it would take effect other than
on the date of its enactment. Congress’s silence on the issue thus is not helpful to defendants’
position here. See id.
Congress is experienced in providing that a statute be implemented on a date different
than the effective date. For example, when Congress amended the FCIA in 2000, it made the
amendments generally effective on the date of enactment but also made an exception in 14
provisions, where it explicitly allowed the agency flexibility in deciding when to implement the
provisions. See Agricultural Risk Protection Act of 2000, Pub. L. No. 106–224, sec. 171, 114
Stat. 358 (note to 7 U.S.C. § 1501) (listing implementation dates other than the general effective
date of “the beginning of the 2001 fiscal year,” the “the beginning of the 2001 crop year,” and
the “the beginning of the 2001 reinsurance year”). But Congress did not insert any language into
the APH Yield Exclusion indicating that it intended a separate implementation date. In
accordance with Gozlon-Peretz, this Court views Congress’ silence as an expression that
Congress meant the APH Yield Exclusion to be immediately available to producers on the date
the Farm Bill was signed into law. Id. at 404.
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B. Statutory Context and Legislative History.
Because this Court concludes that the text of the statute clearly and unambiguously
decides the issue, it is unnecessary to analyze the statutory context and legislative history to
decide the case. See Zuni Pub. Sch. Dist. No. 89 v. Dep't of Educ., 550 U.S. 81, 93 (2007)
(referencing Chevron, 467 U.S., at 842–43) (“[I]f the intent of Congress is clear and
unambiguously expressed by the statutory language at issue, that would be the end of our
analysis.”). Nevertheless, I will briefly respond to Defendants’ arguments concerning statutory
context and legislative history.
Defendants argue that viewing the APH Yield Exclusion as immediately implementable
cannot be squared with other FCIA requirements that the agency establish underwriting rules,
use sufficient actuarial data before offering insurance coverage, and operate the crop insurance
program in an actuarially sound manner. ECF No. 37 at 15 (referencing § 1508(g)(1), §
1508(a)(1), § 1506(n)). While immediate implementation of the APH Yield Exclusion
undoubtedly created substantial logistical difficulties for the agency, the Court nevertheless must
apply the statute as written. The Adkins court summarized this well:
The administrative record reflects that the agency had much to do to prepare for
the 2015 crop year, but that does not permit the Court to re-write the statute to
permit the delay sought by the agency in this case. It is the role of Congress, not
the courts, to write and enact statutory provisions. The Court’s role is one of
interpretation and enforcement, and in this instance, the Court [finds] legal error
in the agency’s decision with respect to the APH Yield Exclusion set out in §
1508(g)(4)(C).
Adkins, at *2.

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Further, Defendants point to a few statements within the legislative history to support
their contention that the APH Yield Exclusion was meant to be implemented on a date later than
the effective date. ECF No. 37 at 16. The Court acknowledges that the legislative history cuts
both ways in this case. However, courts turn to legislative history for guidance only if the text of
the statute is ambiguous, and here it is not.
Based upon this Court’s review of the plain text, I find that Congress directly spoke to the
issue presented. The agency’s decision to delay implementation of the APH Yield Exemption
without clear Congressional direction constitutes legal error. The agency viewed Congressional
silence as creating ambiguity, but this stands in direct opposition to Gozlon-Peretz’s binding
precedent that silence with respect to an enactment date is a clear statement of immediate
effectiveness. The APH Yield Exclusion should have been applied in time for Plaintiffs’ 2015
winter wheat crop, and therefore Plaintiffs were wrongly denied a benefit to which they were
entitled under § 1508(g)(4)(C).
ORDER
The Court REVERSES the National Appeals Division Director’s decision and
REMANDS for proper application of the APH Yield Exclusion.
DATED this 13th day of October, 2017.
BY THE COURT:

___________________________________
R. Brooke Jackson
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