JPM-RDP Farms, LLC v. United States Department of Agriculture-Risk Management Agency et al

Filing 37

OPINION AND ORDER adopting and incorporating 30 Report and Recommendations; overruling 31 Objections; denying oral argument; denying 22 Motion for summary judgment; granting 26 Cross-Motion. The Clerk shall enter judgment in favor of respondent and against petitioner affirming the Director Review Determination, terminate all pending motions and deadlines, and close the file. Signed by Judge John E. Steele on 3/6/2018. (RKR)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
JPM-RDP
FARMS,
LLC,
Florida corporation,

a

Petitioner,
v.

Case No:

2:17-cv-85-FtM-99CM

UNITED STATES DEPARTMENT OF
AGRICULTURE-RISK MANAGEMENT
AGENCY,
FEDERAL
CROP
INSURANCE CORPORATION,
Defendant.
OPINION AND ORDER
This matter is before the Court on consideration of a Report
and

Recommendation

(Doc.

#30),

filed

on

December

8,

2017,

recommending that petitioner’s Motion for Summary Judgment and
Request for Oral Argument (Doc. #22) be denied, and respondent’s
Cross-Motion to Uphold the RMA’s Final Agency Determination (Doc.
#26) be granted.

Petitioner filed Rule 72(b) Objections (Doc.

#31) on December 21, 2017, and the United States filed a Response
(Doc. #36) on January 12, 2017.
This case requires the Court to determine whether a government
agency properly rejected petitioner’s crop insurance claims for
the loss of its 2014-15 fresh market tomato crops.

The final

decision of the agency found the losses were not the result of a
covered cause under the insurance policy, and therefore denied

petitioner’s claims.

For the reasons set forth below, the final

decision of the agency is affirmed.
I.
As

discussed

below,

the

Court

reviews

the

Report

and

Recommendation de novo but reviews the final agency decision under
deferential standards of review.
After conducting a careful and complete review of the findings
and recommendations, a district judge may accept, reject or modify
the magistrate judge’s report and recommendation.

28 U.S.C. §

636(b)(1); United States v. Powell, 628 F.3d 1254, 1256 (11th Cir.
2010).

A district judge “shall make a de novo determination of

those portions of the report or specified proposed findings or
recommendations
636(b)(1).

to

which

objection

is

made.”

28

U.S.C.

§

See also United States v. Farias-Gonzalez, 556 F.3d

1181, 1184 n.1 (11th Cir. 2009).

This requires that the district

judge “give fresh consideration to those issues to which specific
objection has been made by a party.”

Jeffrey S. v. State Bd. of

Educ. of Ga., 896 F.2d 507, 512 (11th Cir. 1990) (quoting H.R.
1609, 94th Cong., § 2 (1976)).

The district judge reviews legal

conclusions de novo, even in the absence of an objection.

See

Cooper-Houston v. Southern Ry. Co., 37 F.3d 603, 604 (11th Cir.
1994).
Under the Administrative Procedures Act, 5 U.S.C. § 701 et
seq., a federal court shall set aside an agency decision that is

- 2 -

“arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” Id. § 706(2)(A). “The arbitrary and
capricious standard is exceedingly deferential.”

Jones Total

Health Care Pharmacy, LLC v. Drug Enf’t Admin., 881 F.3d 823, 829
(11th Cir. 2018) (citation omitted).
its

judgment

for

that

of

the

A Court may not substitute

agency

so

long

as

the

agency

conclusions are rational and based on the evidence before it.
Miccosukee Tribe of Indians of Fla. v. United States, 566 F.3d
1257, 1264 (11th Cir. 2009).

“[E]ven in the context of summary

judgment, an agency action is entitled to great deference.” Mahon
v. U.S. Dep’t of Agric., 485 F.3d 1247, 1253 (11th Cir. 2007)
(citation omitted).
A court must also consider whether the final agency decision
was supported by “substantial evidence” in the record.

5 U.S.C.

§ 706(2)(E). The substantial evidence test is similar to the
arbitrary and capricious standard, but it applies to factual
findings.

Fields v. Dep’t of Labor Admin. Review Bd., 173 F.3d

811, 813 (11th Cir. 1999). Substantial evidence is “such relevant
evidence as a reasonable mind might accept as adequate to support
a conclusion.” Stone & Webster Constr., Inc. v. United States DOL,
684 F.3d 1127, 1133 (11th Cir. 2012) (citation omitted). The fact
that the record may support a contrary conclusion is not enough to
undermine the existence of substantial evidence.

DeKalb Cty. v.

United States DOL, 812 F.3d 1015, 1020 (11th Cir. 2016).

- 3 -

II.
Enacted in 1938, the Federal Crop Insurance Act (the “Act” or
“FCIA”), 7 U.S.C. § 1501 et seq., is designed to “promote the
national

welfare

by

improving

the

economic

stability

of

agriculture through a sound system of crop insurance and providing
the means for the research and experience helpful in devising and
establishing such insurance.”
Act,

Congress

created

the

Id. § 1502(a).

Federal

Crop

To carry out the

Insurance

Corporation

(“FCIC”), a government-owned corporation which acts as an “agency
of and within the Department” of Agriculture (“USDA”).

Id. §

1503. The USDA Office of Risk Management, commonly referred to as
the Risk Management Agency (“RMA”), 7 C.F.R. § 400.701, supervises
the FCIC and administers all programs authorized under the FCIA.
7 U.S.C. § 6933(a), (b)(1)-(3).
crop insurance program.

One such program is a nationwide

7 U.S.C. § 1508.

Since 1980, the FCIC both directly insures producers of
agricultural commodities grown in the United States and provides
reinsurance for private companies which insure such producers.

7

U.S.C. § 1508(a)(1); Williams Farms of Homestead, Inc. v. Rain &
Hail Ins. Servs., Inc., 121 F.3d 630, 633 (11th Cir. 1997).

This

is done “under 1 or more plans of insurance determined by the
Corporation

to

be

adapted

to

the

concerned.”

7 U.S.C. § 1508(a)(1).

agricultural

commodity

“To qualify for coverage

under a plan of insurance, the losses of the insured commodity

- 4 -

must be due to drought, flood, or other natural disaster (as
determined by the Secretary).”

7 U.S.C. § 1508(a)(1).

To qualify for reinsurance through the FCIC, the policies
must comply with the FCIA and its accompanying regulations.
C.F.R. §§ 457.2(b), 457.7.

7

In effect, the FCIA establishes the

terms and conditions of such re-insurance policies.

A “Common

Crop Insurance Policy” standard throughout the industry is used by
insurers when the FCIC provides reinsurance.

7 C.F.R. § 457.8.

Specific provisions relating to fresh market tomato (Dollar Plan)
crop insurance are found at 7 C.F.R. §457.139.

See generally

Davis v. Producers Agric. Ins. Co., 762 F.3d 1276, 1284–85 (11th
Cir. 2014).
III.
Petitioner purchased crop insurance for the 2015 crop year,
and ultimately filed three claims seeking indemnity for losses of
its fresh market tomato crops.

The FCIC claim determination

process is fully described in the Report and Recommendation, which
is adopted and incorporated herein.
denied

the

claim;

a

United

(Doc. #30, pp. 3-6.)

States

Department

of

The RMA

Agriculture

National Appeals Division (NAD) Administrative Judge (AJ) reversed
the RMA denial; and the Director of NAD subsequently reversed the
Administrative Judge’s decision and reinstated the RMA decision
denying the claims.

Petitioner now seeks judicial review of that

final agency decision.

- 5 -

A. Underlying Facts
The Court accepts and adopts the facts as set forth by the
Magistrate Judge (Doc. #30, pp. 6-14) 1.

In sum:

Petitioner JPM-RDP Farms, LLC (JPM) is a farming entity that
grows fresh

market

tomatoes

in

Hendry

County,

Florida.

JPM

purchased crop insurance for 259.9 acres of its 2014-15 (2015 crop
year) fresh market tomato crops from Rural Community Insurance
Service (the “Insurance Company”), an approved insurance provider
reinsured by RMA, for a premium in excess of $220,000.00.

This

is a named peril policy which only covers losses caused by the
perils identified in the policy.
JPM

filed

three

notices

of

Between January and March 2015,

loss

with

the

Insurance

Company,

reporting that excess rain and/or freeze caused its tomato crops
to fail.

JPM asserted that it was entitled to indemnities in

excess of $1 million.
JPM uses crop-scouting services to monitor and assess the
health

of

its

tomato

plants

by

severity of insects and disease.

assessing

the

occurrence

and

Between November 2014 and March

2015, scouts visited JPM’s farms twice weekly and created written
reports as to the health status of the crops and the recommended

1

While most of the record citations are contained in the
Report and Recommendation and will not be repeated here, the Court
will cite to portions of the administrative record as “AR” followed
by the page number. The Administrative Record is found at Doc.
#18.

- 6 -

control measures.

Beginning December 17, 2014, these reports

documented the presence of Late Blight and Tomato Yellow Leaf Curl
Virus (“Yellow Leaf”) spreading to JPM’s tomatoes.
On January 15, 2015, a loss adjuster conducted a pre-harvest
appraisal on the first and second ages of the winter crop, and
reported that the first age had severe virus affecting over 50% of
the plants and the second age planting had less virus and bacteria
pressure.

On January 16, 2015, scouts detected late blight, and

petitioner was advised to use a fungicidal spray rotation of
Previcur

Flex,

Forum,

and

Curzate

to

combat

its

spread.

Petitioner continued to spray its fields with protective fungicide
products.

Due to a high number of days of heavy fog, dew, and

frequent rain, the late blight continued to develop on the leaves,
reaching medium to high levels.
Between

January

19

and

February

conducted two harvests of its winter crop.

19,

2015,

petitioner

On the last day of the

second harvest, petitioner observed the continued breakdown of the
tomatoes and determined that it could not harvest any more of the
crop.

Petitioner requested permission to destroy the crop, which

required the RMA’s approval.

On February 19, 2015, temperatures

at the farm ranged from 28 to 32 degrees Fahrenheit for longer
than 5 hours.

On February 20, 2015, the scouting report showed

moderate sporulation was producing on the first and second age
plantings of the winter crop.

On February 23, 2015, petitioner

- 7 -

filed a second Notice of Loss of its winter crop due to freeze
damage.
A February 24, 2015, scouting report showed that the first
age of the winter crop was drying, and there was no sporulation
visible.

The

second

age

showed

active

fungus

with

high

sporulation, indicating that new infections were occurring, and
there

were

new

lesions

and

some

spread.

The

scout

advised

petitioner to continue rotating fungicides, but rainfall hindered
petitioner from making applications quickly.
Also on February 24, 2015, the loss adjuster conducted a field
inspection

and

saw

yellowing

softness, and chlorotic veins.

and

blanching

of

the

tomatoes,

The marketable tomatoes remaining

on the vines after two harvests were beyond salvage.
again requested permission to destroy the crop.

Petitioner

Based on the

extent of the damage, the loss adjuster contacted the RMA, which
elected to participate in the loss adjustment of the claims.
From February to mid-March 2015, a wet weather environment
escalated the diseases.

Fungus developed on leaves faster and the

sprays were not preventing the spread.

On March 3, 2015, the RMA

issued a certification to destroy the first age of petitioner’s
winter

crop.

Additional

scouting

reports

in

March

showed

continued spread of disease in the crops.
On April 6, 2015, the adjuster, a certified crop advisor, and
a

RMA

representative

conducted

a

- 8 -

field

inspection.

The

RMA

confirmed the presence of late blight, Tomato Yellow Leaf Curl
Virus, and possible bacterial infection.

After inspecting the

second age of the spring crop, it was estimated that it would be
100% infected within a week.

An RMA official notified petitioner

that disease for which control measures exist is not an insurable
cause of loss, but that damage due to disease for which weather
events make control measures ineffective is an insurable cause of
loss if the producer followed recommended good farming practices.
At the end of April 2015, the RMA visited a comparative farm
6 to 10 miles away, and then visited petitioner’s farm to conduct
post-harvest appraisals of the second and third ages of the spring
crop.

The RMA found no marketable tomatoes.

The certified crop

advisor reviewed the scouting reports and spray records.

The crop

advisor determined that petitioner was unable to control the
disease due to the weather conditions, and that petitioner had
done everything within its control to conquer the pest pressure,
but the combination of diseases was overwhelming and the rainfall
played a significant part in the problem.

The RMA reviewed the

scouting reports and spray records and found that petitioner had
not followed the recommended publication guidelines on control
measures.
B. RMA’s Denial of Insurance Claims
On July 22, 2015, the RMA issued a decision denying JPM’s
insurance claims.

(AR 5-95.)

The RMA determined that the primary

- 9 -

cause for the loss of the winter crop was late blight; the primary
cause of the loss for the spring crop was Yellow Curl; effective
control measures existed to control both diseases; but that JPM
did

not

follow

diseases.

the

recommended

(AR 6-13.)

guidelines

to

control

these

The RMA concluded that “[JPM’s] tomato

crop was damaged by disease, an uninsured cause of loss; therefore,
there is no payable indemnity for [JPM’s] 2015 crop year fresh
market tomato claim.”

(AR 13.)

On August 17, 2015, JPM appealed the RMA’s decision to the
NAD.
C. Administrative Judge Decision
An Administrative Judge heard testimony on three days, and on
August 5, 2016, issued an Appeal Determination (AR 89-102) finding
the RMA’s decision was “in error.”

(AR 90.)

The Administrative Judge stated the issue as whether the RMA
had

followed

its

rules

and

regulations

when

it

denied

JPM’s

indemnity claim for losses to its fresh market tomato crop, and
identified six sub-issues.

(AR 90-91.)

After setting forth

Findings of Fact (AR 91-97), the Administrative Judge resolved the
six sub-issues she had identified.
the Administrative Judge held:

(AR 97-102.)

Specifically,

(1) the RMA had utilized the wrong

burden of proof standard, requiring JPM to establish its case
beyond

a

preponderance

preponderance

of

the

of

the

evidence;

evidence
(2)

- 10 -

the

instead
RMA

of

by

a

“cherry-picked”

particular facts and improperly dismissed relevant evidence which
supported JPM’s contention; (3) rainy weather conditions made the
virus conducive to the spread of disease, and made JPM’s use of
recognized and accepted control measures less effective; (4) JPM
promptly requested permission to destroy is first winter plantings
to protect adjacent plantings from virus and disease; (5) the RMA
did not have a clear understanding of JPM’s tomato operation or of
the cultural practices and technical aspects of growing fresh
farmed tomatoes, and was unclear as to the rules and regulations
that applied to JPM’s claim; and (6) the RMA failed to select an
adequate comparative farm which met the requirements of the Loss
Adjustment Manual, and did not comply with the procedures to
establish the date of interest to accrue for controversial claims.
The Administrative Judge determined that JPM had met its
preponderance of the evidence burden to prove that the RMA’s
adverse decision was erroneous.

(AR 102.)

Both the RMA and JPM requested review of the Administrative
Judge’s decision by the Director of the NAD.

(AR 110-17; 121-35.)

D. Director’s Decision
On February 1, 2017, the Director Review Determination (AR
139-56) by the Director of the National Appeals Division reversed
the Administrative Judge and reinstated the RMA’s decision denying
JPM’s insurance claims because the losses were due to an ineligible
cause of loss, i.e., disease.

(AR 154.)

- 11 -

The Director stated that the issue on appeal was “whether RMA
properly denied Appellant’s indemnity claims in connection with
its 2015 winter and spring fresh market tomato crops because
Appellant’s loses were due to an ineligible cause of loss.”
139.)

(AR

The Director reviewed the facts in the record in some detail

(AR 139-43), all of which were consistent with the findings of the
Administrative Judge.

The Director stated that he was tasked with

conducting “a review of the Administrative Judge’s determination
using the entire case record in order to determine if the decision
is supported by substantial evidence . . . [and] is consistent
with the laws and regulations of the agency, and with the generally
applicable interpretations of such laws and regulations.”

(AR

144.)
On appeal, the RMA argued, among other things, that JPM’s
crop losses were caused by disease, an uninsured cause of loss,
and that the Administrative Judge erred by relying on the provision
of the RMA’s Loss Adjustment Manual and disregarding the actual
provisions of JPM’s crop insurance policy.
other

things,

that

the

Administrative

JPM responded, among
Judge’s

decision

was

consistent with the laws and regulations of the agency and was
supported by substantial evidence.

JPM asserted that its crop

losses were covered under the policy because no effective control
measure existed for the disease and insect infestation of the crops
at

issue.

JPM

also

relied

upon

- 12 -

the

statement

of

RMA’s

representative that the circumstances of these crops could be
considered an insurable cause of loss if recommended good farming
practices were followed.

(AR 144-47.)

The Director stated that the key issue in the case was
the proper legal interpretation of the Causes
of Loss provisions for the [Dollar Plan]
insurance policy codified at 7 C.F.R. §
457.139. Among the covered causes of loss for
fresh market tomatoes under the Dollar Plan
are excess rain and freeze. 7 C.F.R. §
457.139, Para. 11(a)(l) and (3). Among the
causes of loss excluded by these provisions
are disease or insect infestation, unless no
effective control measure exists for such
disease or insect infestation. Id. at § 11
(b)(1).
(AR 148) (emphasis added in original).

The first policy provision

cited by the Director provides:
(a) In accordance with the provisions of
section 12 of the Basic Provisions, insurance
is provided only against the following causes
of loss that occur during the insurance
period:
(1) Excess rain
. . . .
7 C.F.R. § 457.139, ¶ 11(a)(1).

“Excess rain” is defined as “[a]n

amount of precipitation sufficient to directly damage the crop.”
7 C.F.R. § 457.139, ¶ 1.

The second policy provision cited by the

Director provides:
(b) In addition to the causes of loss excluded
in section 12 of the Basic Provisions, we will
not insure against any loss of production due
to:

- 13 -

(1) Disease or insect infestation, unless no
effective control measure exists for such
disease or insect infestation;
. . . .
7 C.F.R. § 457.139, ¶ 11(b)(1).
(1)

Excess Rain

The Director noted that while JPM argued on appeal that excess
rain was the cause of the loss, its position was actually more
nuanced.

“Specifically, Appellant contends that a confluence of

weather events, including rain, combined to create conditions
particularly conducive to the development of late blight and Tomato
Yellow Leaf Curl Virus.

Appellant further contends that these

weather patterns rendered ineffective the control measures it
employed to combat the onset and spread of the diseases, ultimately
leading to its crop losses.”
this

argument

asserted

an

(AR 149).
indirect

The Director noted that

relationship

between

the

weather and the crop losses, which was consistent with factual
testimony from the agency hearing.

(Id.)

The Director found that the circumstances described in the
agency hearing 2 were “too attenuated to qualify for coverage under

2

The Director noted the testimony at the agency hearing
established that excess rain did not directly harm JPM’s crops,
but instead indirectly contributed to JPM’s crop losses by creating
the environment conducive to the spread of crop disease.
The
testimony was that “a unique combination of rain, dense fog,
humidity, and dew that contributed to the onset and spread of
[L]ate [B]light and [Yellow Leaf] in [JPM’s] crops.” (AR 149.)
Petitioner’s expert testified it was not simply large amounts of

- 14 -

7 C.F.R. § 457.139, Para. 11(a)(1).” [i.e., as a loss caused by
“excess rain”].
Policy

plan’s

(AR 150.)
definition

The Director focused on the Dollar
of

“excess

rain,”

(“[a]n

precipitation sufficient to directly damage the crop.”
§ 457.139 Para. 1).

amount

of

7 C.F.R.

Based on this definition, the Director

concluded “it is reasonable for RMA to cover only those claims in
which an insured party is able to establish that it suffered crop
losses directly as a result of excess rain in the absence of any
intervening cause that is not identified in the policy.”
(emphasis added).

(AR 150)

Accordingly, the Director did “not find error

in RMA’s determination that Appellant’s loss claims do not qualify
for coverage pursuant to 7 C.F.R. § 457.139, Para. 11(a).”
(2)

(Id.)

Disease; Effective Control Measure

Because the claims did not qualify for coverage under the
“excess rain” provision, the Director next considered whether the
claims qualified under 7 C.F.R. 457.139, paragraph(b)(1).

This

policy provision provides:
(b) In addition to the causes of loss excluded
in section 12 of the Basic Provisions, we will
not insure against any loss of production due
to:
(1) Disease or insect infestation, unless no
effective control measure exists for such
disease or insect infestation;

rain that led to the damage, but the timing and persistence of
rain, which contributed to an environment conducive to the spread
of disease. (AR 149.)

- 15 -

. . . .
7 C.F.R. § 457.139, ¶ 11(b)(1).
parties

had

completely

The Director noted that the

different

interpretations

of

this

provision.
The RMA asserted that the meaning of the phrase “unless no
effective control measure exists” “is fixed in nature and not
dependent on individual circumstances. . . . [O]nce an effective
control measure is developed or found for an identified type of
disease or insect infestation, it immutably ‘exists’ within the
meaning of the regulations and insurance coverage for such disease
or insect infestation is no longer available under the Dollar Plan
policy.”

(AR 150.)

Petitioner, on the other hand, contended that

“the existence of an effective control measure is conditional in
nature. . . . [A] control measure that is effective under some
circumstance

may

not

be

considered

effective

under

other

circumstances . . . insurance coverage is available under the
Dollar Plan policy in cases in which control measures exist but
are proven ineffective based on individual circumstances.”
The Director adopted the RMA’s interpretation.

(Id.)

The Director

was unpersuaded that the rulemaking history supported petitioner’s
interpretation.
Loss

Adjustment

The Director also found that a provision in the
Manual

and

the

statement

made

by

a

RMA

representative did not support petitioner’s interpretation of the
provision because both related to the Guaranteed Production Plan,

- 16 -

not the Dollar Plan at issue in this case. (AR 152-53.)
Director

found

no

error

in

the

RMA’s

determination

The
that

petitioner’s loss claims did not qualify for coverage under §
457.139, Para. 11(b)(1).

(AR 153.)

The Director reversed the

Administrative Judge’s decision, and reinstated the RMA’s decision
denying JPM’s indemnity claims because the losses were due to an
ineligible cause of loss.

(Id.)

E. Petition for Judicial Review
In its Petition for Judicial Review (Doc. #1), JPM asserts
that the final decision by the Director was unlawful because the
conclusions reached by the Director were arbitrary and capricious,
and the facts were not supported by any competent evidence or
testimony in the record.

More specifically, petitioner asserts

the following errors were made by the Director:
exceeded

his

scope

of

review

when

he

(1) the Director

determined

(a)

“it

is

reasonable for RMA to cover only those claims in which an insured
party is able to establish that it suffered crop losses directly
as a result of excess rain in the absence of any intervening cause
that is not identified in the policy,” and (b) that excess rain as
defined in the Dollar Plan policy did not cause JPM’s crop losses;
and (2) the Director’s interpretation of the phrase “unless no
effective control measure exists” contradicts a plain reading of
the provision in the Dollar Plan policy’s provision.

- 17 -

F. Report and Recommendation
The Magistrate Judge found that that the Director did not
exceed

his

scope

of

review,

and

recommended

upholding

Director’s interpretation of the Dollar Plan policy.

the

Ultimately,

the Magistrate Judge recommended that “the final agency decision
was not arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law because the Director examined the
relevant data, articulated a satisfactory explanation for his
decision and came to a rational conclusion.”

(Doc. #30, p. 27.)

IV.
Petitioner

raises

four

specific

objections

(with

sub-

arguments) to the Report and Recommendation (Doc. #31).

All

matters subject to an objection are reviewed de novo.
A. Objections 1 and 2: Scope of Director’s Review; “Excess Rain”
Determination
The Court addresses the first two objections by JPM together,
since they both relate to the same overarching issue.
The Petition alleges that the Director exceeded the scope of
his review authority by determining that excess rain did not cause
the crop losses.

In recommending a finding that the Director did

not exceed his scope of review, the Report and Recommendation
states, without objection:

“JPM correctly argues the Director did

not dispute the AJ’s factual findings.”

(Doc. #30, p. 16.)

The

Report and Recommendation then continues with the objected-to

- 18 -

sentence:
legal

“Instead, as JPM concedes, the Director considered the

interpretation

of

the

Dollar

Plan

policy’s

provision:

whether ‘excess rain’ as defined in the policy caused JPM’s crop
losses.”

(Id.)

Petitioner
Director

did

provision,

objects

not

but

make

rather

to
a

this

legal

sentence,

made

arguing

interpretation

independent

supported by substantial evidence.

of

factual

that
the

the

policy

findings

not

Petitioner states that “[t]he

uncontradicted, substantial evidence in the record shows that the
proximate and primary cause of loss to JPM’s tomato crops was
excess rain, an insurable cause of loss under the policy,” Doc.
#31 at 12, and that the Administrative Judge made such a factual
finding, id. at 10-11.

JPM argues that the offending sentence in

the Report and Recommendation fails to recognize that the Director
was

improperly

making

a

finding

interpretation of a policy term.

of

fact

and

not

a

legal

(Id.)

Similarly, the second objection is to the magistrate judge’s
recommended finding that “the Director did not exceed his scope of
review in deciding that excess rain was not the cause of JPM’s
crop losses.” (Doc. #30, p. 17.)

Again, petitioner asserts that

the Director improperly turned a question of fact into a new
definition of “excess rain.”

(Doc. #31, pp. 13-15.)

Both objections are overruled.

Despite arguments to the

contrary, the record establishes that the Administrative Judge did

- 19 -

not make a factual finding that the crop losses were caused by
“excess rain” within the meaning of the policy.

The Director

properly accepted the factual determinations of the Administrative
Judge, and determined that these circumstances did not qualify as
“excess rain” as that phrase is defined in the regulation.
The Administrative Judge began her Appeal Determination by
noting that the RMA had denied petitioner’s claims based upon its
determination that JPM’s loses “were due to uninsurable causes of
loss; specifically, late blight and Tomato Yellow Leaf Curl (YLC)
Virus.”

(AR 89.)

The Administrative Judge then stated that

petitioner argued that “late blight and Tomato YLC Virus were
secondary to its primary cause of loss of excess rain, which is an
insurable cause of loss.

Appellant argues that despite its use

of control measures, the rainy weather conditions made the virus
and disease conducive in spreading over its winter and spring
plantings.”

(Id.)

before

was

her

The Administrative Judge stated that the issue

“whether

the

Agency

followed

its

rules

and

regulation when it denied Appellant’s 2015 indemnity claim for
losses

to

its

fresh

market

tomato

crop.”

(AR

90.)

The

Administrative Judge concluded that the RMA had not done so, and
that its adverse decision was “erroneous.”

(AR 102.)

Other than citing excess rain as a basis for coverage, the
Administrative Judge did not cite to the regulatory definition of
“excess rain,” or discuss its meaning, or state that the facts

- 20 -

fell within the definition.

Petitioner relies upon a single

sentence in the fourteen page Appeal Determination for its position
that the Administrative Judge made a factual finding of “excess
rain.”

To support her finding that the RMA failed to consider all

the facts, the Administrative Judge stated:

“The Agency dismissed

the weather events supported by Appellant’s experts showing that
excess rain, excess moisture, and other weather events [] came
before the onset of disease on Appellant’s farm.”

(AR 97.)

But

saying that the RMA failed to consider such evidence does not mean
the Administrative Judge found the evidence satisfied the Policy
definition of “excess rain”, or that it caused the loss.
The Administrative Judge found that the agency “erred” in
finding the crop losses were caused by disease.

Concluding an

agency erred in finding disease was the cause is not the equivalent
of a finding that excess rain was the cause of the losses.

Indeed,

the Administrative Judge was precise in her findings, which did
not include a finding of excess rain as the direct cause of the
crop losses.

What the Administrative Judge did find, however, was

that disease, made uncontrollable because of rainfall, caused the
loss.

See (AR 96, ¶ 19) (“Appellant did everything within its

control to conquer these problems; however, the combination of
disease was overwhelming, and the rainfall was a significant part
of this late blight pressure.”); (AR 99) (“Appellant responded
promptly with the appropriate fungicides to control late blight

- 21 -

but despite this, Appellant was unable to control the disease due
to the weather conditions.”); (Id.) (“Despite Appellant’s efforts,
the disease took over and crippled its farm.

Based on the record,

the rainy weather conditions made Appellant’s use of control
measures ineffective causing disease to spread over its tomato
crop.”).
In the appeal to the Director, JPM again asserted that “excess
rain” was the cause of its losses.

The Director properly accepted

the findings of the Administrative Judge, looked to the regulatory
definition

of

“excess

rain”

(“[a]n

amount

of

precipitation

sufficient to directly damage the crop,” 7 C.F.R. § 457.139, Para.
1.), and concluded that the rain did not directly damage JPM’s
crop and therefore the loss was not caused by “excess rain” within
the meaning of the regulations.

The Director made no error in

this regard.
Contrary to JPM’s current argument (Doc. #31, pp. 12-13), the
Administrative Judge made no finding regarding whether JPM had
engaged

in

recommended

farming

practices.

Both

JPM

and

the

Director had previously noted the lack of such a finding by the
Administrative Judge.

(AR 146.)

The Director did not review any

such issue, so it formed no part of his determination. (AR 153.)
Petitioner

also

argues

that

the

Director

erred

in

interpreting the meaning of the term “excess rain” because 7 C.F.R.
§ 400.768(a) precludes the Director from interpreting terms in a

- 22 -

specific

factual

situation

or

case.

(Doc.

#31,

pp.

13-14.)

Petitioner is incorrect.
The

FCIC

has

prescribed

regulations

and

criteria

“for

obtaining a final agency determination of the interpretation of
any

provision

thereunder.”

of

the

Act

or

the

regulations

7 C.F.R. § 400.765(a).

promulgated

A requester submits a

written request which comports with certain requirements.
C.F.R. § 400.767.

7

“Requesters may seek interpretations of those

provisions of the Act and the regulations promulgated thereunder
that are in effect for the crop year in which the request under
this subpart is being made and the three previous crop years.”
C.F.R. § 400.765(b).

7

“All final agency determinations issued by

FCIC, and published in accordance with § 400.768(f), will be
binding on all participants in the Federal crop insurance program.”
7 C.F.R. § 400.765(c).

The FCIC, however, “will not interpret any

specific factual situation or case.”

7 C.F.R. § 400.768(a).

JPM

did not make any such request, and this case does not involve any
such request, so these regulations are simply inapplicable.

See

Davis v. Producers Agric. Ins. Co., 762 F.3d at 1284-85.
In contrast, the administrative appeal process of an agency
decision

contains

specific

determinations

appellate
Judge.

capacity

no

such

restrictions,

and

the

when

by

reviewing

a

Director
decision

by

indeed

an

acting

requires
in

his

Administrative

“In making a determination on the appeal, Hearing Officers

- 23 -

and the Director shall ensure that the decision is consistent with
the laws and regulations of the agency, and with the generally
applicable interpretations of such laws and regulations.”

7

C.F.R. § 11.10(b).
Petitioner also argues the Director inserted an arbitrary
quantitative measure into his interpretation of “excess rain”.
(Doc.

#31,

p.

14.)

This

is

incorrect.

The

Director’s

determination makes no reference to a quantitative amount which is
necessary for rain to be “excess”, but instead focuses on the
“directly” requirement of the regulatory definition.
Petitioner further argues that the record does not support
the Director’s statement that the RMA representative was confusing
the Dollar Plan policy with the Guaranteed Production Plan.
# 31, p. 15.)

(Doc.

The Court finds that the Director’s discussion of

the Guaranteed Production Plan (AR 152-53) was supported by the
administrative record, and reasonable inferences from the record.
Finally,

petitioner

argues

that

the

Report

and

Recommendation’s position that an employee or loss adjustor cannot
waive or modify the terms of the policy does not address the value
or circumstance of their comment, which both persons felt was
important enough to memorialize in a report.

At the least,

petitioner argues, the comment is indicative of the indemnity
history of the Dollar Plan policy archived on the RMA website.
(Doc. #31, p. 15.)

- 24 -

The statements in the Report and Recommendation are correct.
The opinions of employees or adjustors as to the meaning of
regulations are neither binding upon the agency nor relevant to an
inquiry as to the legal meaning of a regulation.

Federal Crop

Ins. Corp. v. Merrill, 332 U.S. 380 (1947); OPM v. Richmond, 496
U.S.

414

(1990).

Neither

had

the

authority

to

speak

authoritatively as to the meaning of the regulations, and neither’s
opinion is material to the indemnity history of the Dollar Plan
policy.

The

opinions

have

no

value

towards

the

proper

interpretation of the regulation or its reasonableness.
After de novo review, the Court overrules all objections and
arguments in Objections 1 and 2.

The Appeal Determination of the

Director holding that the crop losses were not caused by “excess
rain” within the meaning of the regulation is affirmed.
B. Objections 3 and 4: Agency Interpretation of “No Effective
Control Measure Exists” Regulation; Loss Adjustment Manual
Both Objection 3 and 4 relate to the Director’s interpretation
of the phrase “no effective control measure exists” as it pertains
to disease as a cause of loss.
Director’s

interpretation

Petitioner contends that the

violates

the

plain

meaning

of

the

regulation and that the Director made a variety of errors in
reaching his position.
The regulation at issue provides:
(b) In addition to the causes of loss excluded
in section 12 of the Basic Provisions, we will

- 25 -

not insure against any loss of production due
to:
(1) Disease or insect infestation, unless no
effective control measure exists for such
disease or insect infestation;
. . . .
7 C.F.R. § 457.139, ¶ 11(b)(1).

Phrased in the affirmative, the

Dollar Plan policy will insure against any loss of production due
to disease or insect infestation for which no effective control
measure exists.

Identical provisions exist for fresh market

pepper crops, 7 C.F.R. § 457.148, Para. 11(b)(1), and nursery
crops,

7

regulation

C.F.R.
was

§

457.162,

issued

Para.

utilizing

11(b)(1).
the

Because

this

“notice-and-comment”

procedure, it has the force and effect of law.

Perez v. Mortgage

Bankers Ass’n, 135 S. Ct. 1199, 1203 (2015).
Unlike the “excess rain” regulation, the phrase “no effective
control measure exists” is not further defined in the regulation.
The Director adopted the agency position that the phrase “no
effective control measure exists” was “fixed in nature and not
dependent on individual circumstances. . . . once an effective
control measure is developed or found for an identified type of
disease or insect infestation, it immutably ‘exists’ within the
meaning of the regulations and insurance coverage for such disease
or insect infestation is no longer available under the Dollar Plan
policy.”

(AR 150.)

Finding it undisputed that late blight and

- 26 -

Tomato Yellow Leaf Curl Virus were not new diseases and were wellunderstood

diseases

that

can

be

controlled

with

available

chemicals (AR 151), the Director found there was no covered loss
under the disease provision of the Dollar Plan policy.
As the Magistrate Judge correctly stated, the Director held
that “once an effective control measure for a type of disease or
insect

infestation

infestation

no

provision.”

is

longer

Magistrate

(Doc.

#30,

Judge’s

interpretation

of

developed,
qualifies
p.

for

18.)

portion

disease
coverage

or

objects

to

the

of

uphold
the

Dollar

insect

under

Petitioner

recommendation
this

such

this

to

the

Director’s
Plan

policy

regulation.
Petitioner objects to the Magistrate Judge’s statement that
the

“issue

here

is

the

agency’s

interpretation

of

its

own

regulations, not a question of insurance contract interpretation
as characterized by JPM.”

(Doc. #30, p. 21; Doc. #31, p. 15.)

The objected-to sentence in the Report and Recommendation is quite
accurate.

The Dollar Plan policy is not the usual contract subject

to the usual rules of contract construction.

Rather, it is an

agreement whose terms are largely mandated by federal regulation,
and it is the meaning of two such regulations which is at the heart
of this case.

By law, state or local laws or rules do not apply

to the extent they are inconsistent with the regulations of the
FCIC.

7

U.S.C.

§

1506(l).

Petitioner’s

- 27 -

objection

to

this

sentence in the Report and Recommendation is overruled.

The issue

is indeed the propriety of the agency’s interpretation of its own
regulation.
To determine the meaning of a regulation, the first step is
to determine whether the language “has a plain and unambiguous
meaning by referring to the language itself, the specific context
in which that language is used, and the broader context of the
statute as a whole.”

Sec. & Exch. Comm'n v. Levin, 849 F.3d 995,

1003 (11th Cir. 2017).

If the regulation's meaning is plain and

unambiguous, there is no need for further inquiry. Id.
The

Court

concludes

that

the

meaning

of

the

phrase

“no

effective control measure exists” is not plain and unambiguous.
Both sides have proffered competing meanings which are plausible,
but

not

compelled,

regulation

provides

by
no

the

language

further

of

the

definition,

regulation.
the

text

The
itself

provides no more definitive reading, the context of the phrase
does not point to a plain meaning, and the broader context of the
regulation, and the similar regulations in which the phrase is
used, do not compel any particular meaning.
When a regulation is ambiguous, the agency’s interpretation
of its own regulation is entitled to deference.

Auer v. Robbins,

519 U.S. 452, 461 (1997)); Sec'y, United States DOL v. Action Elec.
Co., 868 F.3d 1324, 1329 (11th Cir. 2017). “In situations in which
the meaning of [regulatory] language is not free from doubt, the

- 28 -

reviewing court should give effect to the agency’s interpretation
so

long

as

it

is

‘reasonable,’

that

is,

so

long

as

the

interpretation sensibly conforms to the purpose and wording of the
regulations.”

Martin v. Occupational Safety & Health Review

Comm'n, 499 U.S. 144, 149–51 (1991) (internal citations omitted).
“It is well established that an agency's interpretation need not
be the only possible reading of a regulation—or even the best one—
to prevail.” Decker v. Northwest Envtl. Def. Ctr., 568 U.S. 597,
613 (2013).
The agency has not interpreted the regulation in a legislative
rule after notice-and-comment procedures, and has not issued an
interpretative rule, i.e., a rule “issued by an agency to advise
the public of the agency’s construction of the statutes and rules
which it administers.”
omitted).

Obviously,

interpretations.
interpretation

Perez, 135 S. Ct. at 1204 (citation
no

deference

is

due

to

nonexistent

But deference is generally due to an agency’s

of

a

regulation

made

during

an

administrative

proceeding, Martin, 499 U.S. at 157; Action Elec. Co., 868 F.3d at
1331.

Here,

it

is

clear

from

the

record

that

during

the

administrative process the agency advanced the interpretation of
the

regulation

ultimately

adopted

by

the

Director.

Indeed,

petitioner accurately summarized the agency’s position in its
appeal request to the Director:

“The Agency argues that once a

control measure is deemed to be effective for (in this case) white

- 29 -

fly transmitted tomato yellow leaf curling virus and/or late blight
in any given year, then white fly transmitted tomato yellow leaf
curling virus and/or late blight can never, under any circumstances
be an insured cause of loss.”

(AR 123.)

The Court concludes that the RMA’s interpretation of this
regulation is reasonable because it sensibly conforms to the
purpose and wording of the regulation.

While not the only possible

interpretation, it is a reasonable interpretation, and therefore
defining

the

phrase

in

the

manner

found

by

the

Director

is

affirmed.
The Director relied primarily on the regulatory history for
this particular regulation, addressing an amendment promulgated in
1996-97.

As the Report and Recommendation accurately summarizes,
. . . On December 30, 1996, the FCIC proposed
specific crop provisions for the Dollar Plan
policy, which excluded coverage for disease or
insect infestation. Dollar Plan Provisions, 61
Fed. Reg. 68,682-01, 68,686 (proposed Dec. 30,
1996). In response to this proposed rule, the
crop insurance industry submitted one comment
seeking
to
remove
disease
and
insect
infestation as uninsured causes of loss.
Dollar Plan Provisions, 62 Fed. Reg. at
14,777.
The industry “suggested disease and
insects should be an insured cause of loss if
a producer exhausts all reasonable means to
protect the crop. This would provide coverage
for new diseases and insects that cannot
presently be controlled by the chemicals that
are available.” Id. The FCIC responded
“coverage should be available for damage due
to disease and insect infestation for which no

- 30 -

effective
control
measure
exists.”
Id.
Accordingly, the FCIC amended the proposed
provision to state that disease or insect
infestation is not covered, unless “no
effective control measure exists for such
disease or insect infestation.” Id.; see 7
C.F.R. § 457.139.
(Doc. #30, pp. 18-19.)

As the Magistrate Judge correctly stated:

“The Director found this history does not support JPM’s position
that the provision is designed to cover ‘a loss caused by a disease
for which available chemicals were not effective due to specific
weather conditions.’”

(Id. p. 19.)

The Director made a fair

reading of the relatively sparse regulatory history.
Deference to an agency’s interpretation of its own ambiguous
regulation, however, is not always warranted.
justified,

for

example,

when

the

No deference is

interpretation

is

“plainly

erroneous or inconsistent with the regulation”, “there is reason
to suspect that the agency’s interpretation does not reflect the
agency’s fair and considered judgment on the matter in question,”
when the interpretation conflicts with a prior interpretation, or
the interpretation is nothing more than a “convenient litigating
position”

or

a

“post

hoc

rationalization.”

Christopher

v.

SmithKline Beecham Corp., 567 U.S. 142, 154-55 (2012) (citations
omitted.)
Petitioner makes several arguments as to the interpretation
and

the

reasonableness

interpretation.

of

the

Petitioner

agency’s
argues

- 31 -

(and
that

the

Director’s)

the

Director’s

interpretation is undermined by payment data in the agency’s own
website, which shows payments for disease and insect infestation
causes of loss.

Petitioner asserts that the administrative record

establishes that 175 indemnities were paid in the region from 2004
through 2016 under the same policy, and 45 indemnities were paid
for losses caused by disease and insects (i.e., over 25%).
#31, pp. 15-20.)

(Doc.

Petitioner argues that this payment history

suggests “a post-hoc contrived rationale for the denial” of its
claims, which undermines the validity and reasonableness of the
agency’s interpretation of its regulation, and does not “reflect
the

agency’s

question.”

fair

and

considered

judgment

on

the

matter

in

(Doc. #31, p. 19) (quoting Talk Am, Inc. v. Mich. Bell

Tel Co., 564 U.S. 50, 59 (2011)).
There are several problems with this argument.

First, the

Dollar Plan policy at issue here was only effective for the 2013
and succeeding crop years.

7 C.F.R. § 457.139.

Thus, data from

2004 through parts of 2012 cannot literally be for the same policy.
Second,

the

data

reflect

payments

made

by

private

insurance

companies, which were reported to the MRA using codes which did
not identify the specific disease at issue and did not distinguish
between disease loss and insect infestation loss.

Thus, there is

no record evidence that a private insurance company paid for the
two diseases at issue in this case at a time when the diseases
were effectively controlled.

Additionally, even such payments

- 32 -

would not necessarily establish that the Director’s interpretation
of the regulation was erroneous, only that a claim was erroneously
paid by a private insurer without discovery or remediation by the
RMA.
Petitioner

also

argues

that

this

payment

history

is

inconsistent the FCIC’s obligation to establish standards “to
ensure that all claims for losses are adjusted, to the extent
practicable, in a uniform and timely manner.”

7 U.S.C. § 1508(j).

Petitioner asserts that the RMA’s refusal to acknowledge the
payment history summarized above is capricious and a violation of
FCIA.

As discussed above, however, the payment history record is

not such that the decision by the Director is rendered capricious
or a violation of FCIA.
Petitioner also objects to the Report and Recommendation’s
endorsement of the Director’s position that paragraph 281A of the
Loss Adjustment Manual (LAM) does not apply to the Dollar Plan,
asserting

that

the

substantial evidence.

Director’s

position

is

not

supported

by

Petitioner argues that the Manual itself

and a cross-reference to the Loss Adjustment Standards Handbook
demonstrates that the Director’s interpretation was erroneous and
that the LAM was applicable to the Dollar Plan policy.

Petitioner

asserts that the Director’s position that the LAM paragraph did
not apply to the Dollar Plan was the cornerstone of his erroneous
interpretation of the regulation.

(Doc. #31, pp. 20-22.)

- 33 -

What governs this case is the regulation, not an internal
manual.

The Director did not interpret the meaning of the Loss

Adjustment Manual, but rather determined its (non)applicability to
the Dollar Plan.

Further, the decision to ignore petitioner’s

interpretation of the Loss Adjustment Manual and its application
is consistent with guidance from the Loss Adjustment Manual itself,
which specifically provides that the Dollar Plan takes precedence
over the Loss Adjustment Manual.

(Doc. #36, p. 5.)

After a careful and complete de novo review of the findings
and recommendations, the Court adopts as set forth above the Report
and Recommendation of the magistrate judge and overrules the
objections.

For the reasons set forth above, the Director Review

Determination is affirmed.
Accordingly, it is now
ORDERED:
1. The Report and Recommendation (Doc. #30) is hereby adopted
and incorporated herein to the extent set forth above.
2. Petitioner's

Rule

72(b)

Objections

(Doc.

#31)

are

overruled.
3. Petitioner’s Request for Oral Argument (Doc. #22) is denied
as the Court finds that oral argument is not warranted,
and a decision can be made on the papers.
4. Petitioner’s Motion for Summary Judgment (Doc. #22) is
denied.

- 34 -

5. Respondent's Cross-Motion to Uphold the RMA’s Final Agency
Determination (Doc. #26) is granted.
6. The Clerk shall enter judgment in favor of respondent and
against

petitioner

Determination,

affirming

terminate

all

the

Director

pending

Review

motions

and

deadlines, and close the file.
DONE and ORDERED at Fort Myers, Florida, this
March, 2018.

Copies:
Hon. Carol Mirando
All Parties of Record

- 35 -

6th

day of