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Ausmus v. Perdue

United States Court of Appeals, Tenth Circuit

November 16, 2018

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

          Appeal from the United States District Court for the District of Colorado (D.C. No. 1:16-CV-01984-RBJ)

          Lowell V. Sturgill, Attorney, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC (Chad A. Readler, Acting Assistant Attorney General, United States Department of Justice, Washington, DC; Bob Troyer, United States Attorney, Office of the United States Attorney for the District of Colorado, Denver, Colorado; Charles W. Scarborough and Thais-Lyn Trayer, Attorneys, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, on the briefs), appearing for Appellants.

          Jeremiah L. Buettner (Jeff L. Todd, with him on the brief), McAfee & Taft A Professional Corporation, Oklahoma City, Oklahoma, appearing for Appellees.

          Before BRISCOE, BACHARACH, and CARSON, Circuit Judges.

          BRISCOE, CIRCUIT JUDGE.

         This is an Administrative Procedure Act challenge to the Federal Crop Insurance Corporation's implementation of the Farm Crop Insurance Act, 7 U.S.C. §§ 1501-1524. Plaintiffs are winter wheat farmers from Colorado who were denied the Actual Production History yield exclusion when they purchased crop insurance for the 2015 crop year. Plaintiffs unsuccessfully sought review of the denial through the United States Department of Agriculture's administrative appeals process, and then appealed to the district court. The district court reversed the USDA's decision because it concluded that the text of the FCIA unambiguously entitled Plaintiffs to the APH yield exclusion. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we AFFIRM.

         I

         A. Statutory Background

         "The Federal Crop Insurance Act was enacted in 1938 as part of President Franklin Delano Roosevelt's New Deal legislation to rescue and preserve agriculture in order to restore it to its previous position of strength in the national economy." Kansas ex rel. Todd v. United States, 995 F.2d 1505, 1507 (10th Cir. 1993). The Act "promote[s] 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." 7 U.S.C. § 1502(a). Congress created the Federal Crop Insurance Corporation to accomplish these goals. Id. § 1503. If the FCIC determines that "sufficient actuarial data are available," the FCIC "may insure, or provide reinsurance for insurers of, producers of agricultural commodities grown in the United States." Id. § 1058(a)(1).

         As is relevant to this appeal, winter wheat farmers can purchase insurance to protect against below-average harvests. The policies at issue here offered yield protection, which is "insurance that only provides protection against a production loss" due to "unavoidable, naturally occurring events." 7 C.F.R. § 457.8 (Common Crop Insurance Policy Basic Provisions, Definition & Causes of Loss Sections). The amount of coverage available for purchase is "determined by multiplying the production guarantee by [the] projected price." Id. (Definition Section). A "projected price" is calculated by the FCIC for each crop for each crop year. Id. The production guarantee is "[t]he number of . . . bushels" of wheat insured, and is "determined by multiplying the approved yield per acre by the coverage level percentage" elected by the farmer. Id. The coverage level percentage is the percentage of a farmer's expected harvest that he wishes to insure. Id.; 7 U.S.C. § 1508(c)(4)(A). The "approved yield" is "[t]he actual production history (APH) yield, calculated . . . by summing the yearly . . . yields and dividing the sum by the number of yields." 7 C.F.R. § 457.8 (Definition Section).

         Therefore, when a winter wheat farmer decides to purchase a yield protection policy, he must choose what percentage of his expected harvest he wants to insure. The FCIC then calculates his APH yield and the projected price for winter wheat for that crop year. The amount of coverage available for purchase, on a per acre basis, is the product of these three figures: the projected price, the coverage level percentage, and the APH yield. For example, if a farmer wants to insure 75% of his harvest, has historically grown an average of 60 bushels of wheat per acre, and the projected price is $3.40 per bushel, the value of the coverage is $153.00 per acre. See 7 C.F.R. § 457.101 ¶ 11 (Small grains crop insurance provisions). Given this method for calculating insurance coverage, a farmer's actual production history is important. The higher a farmer's actual production history, the more insurance a farmer can purchase.

         A farmer's actual production history is a simple average of between four and ten years of his production data. 7 U.S.C. § 1508(g)(2)(A); 7 C.F.R. § 457.8 (Definition Section). Therefore, if production is abnormally low in one of those years, a farmer's APH will be depressed until that data point falls out of the APH calculation. In 2000, Congress amended the FCIA to allow the FCIC to adjust a farmer's actual production history when a farmer had experienced an especially poor harvest. See Agricultural Risk Protection Act of 2000, Pub. L. No. 106-224, § 105(b), 114 Stat. 358, 366-67 (codified at 7 U.S.C. § 1508(g)(4)). This yield exclusion applied when the FCIC used a farmer's "actual production history for an agricultural commodity for any of the 2001 and subsequent crop years." 7 U.S.C. § 1508(g)(4)(A).

         In February 2014, Congress amended § 1508(g)(4), the yield exclusion that was enacted in 2000, to add the APH yield exclusion. See Agricultural Act of 2014, Pub. L. No. 113-79, § 11009, 128 Stat. 649, 957 (codified at 7 U.S.C. § 1508(g)(4)(C)). The APH yield exclusion allows a farmer to exclude a yield from the FCIC's APH calculation when "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." 7 U.S.C. § 1508(g)(4)(C)(i). The 2014 Farm Bill made no other substantive changes to § 1508(g)(4), which states:

(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.
. . .
(D) Premium adjustment
In the case of a producer that makes an election under subparagraph (B) or (C), the Corporation shall adjust the premium to reflect the risk associated with the adjustment made in the actual production history of the producer.

7 U.S.C. § 1508(g)(4).

         B. Procedural Background

         On July 1, 2014, the FCIC published an interim rule to implement the 2014 Farm Bill. General Administrative Regulations; Catastrophic Risk Protection Endorsement; Area Risk Protection Insurance Regulations; and the Common Crop Insurance Regulations, Basic Provisions, 79 Fed. Reg. 37, 155. In that interim rule, the FCIC warned that the APH yield exclusion "may not be implemented upon publication" because "[p]roduction data availability and intensive data analysis may limit FCIC's ability to authorize exclusions of yields for all APH crops in all counties." Id. at 37, 158. Therefore, the FCIC amended the Common Crop Insurance Policy (CCIP) Basic Provisions-the actual terms of the insurance policy offered for sale-"to allow the actuarial documents to specify when insureds may elect to exclude any recorded or appraised yield." Id. The revised CCIP Basic Provisions stated that farmers "may elect" the APH yield exclusion "[i]f provided in the actuarial documents." 7 C.F.R. § 457.8 (Insurance Guarantees, Coverage Levels, and Prices Section). In effect, the interim rule made farmers eligible for the APH yield exclusion on a rolling basis as the FCIC updated its actuarial documents to add newly eligible crops.

         The deadline for winter wheat farmers to purchase insurance for the 2015 crop year was September 30, 2014. App'x at 89. When Plaintiffs purchased insurance, they elected to use the APH yield exclusion. Supp. App'x at 1, 16, 31, 33, 35, 43, 51, 53. But in a letter dated October 31, 2014, the USDA notified insurance providers that the APH Yield Exclusion would not be available for winter wheat for the 2015 crop year. App'x at 76. The letter stated that insurance providers could respond to farmers' elections by pointing them to the USDA's "actuarial documents," which did not yet "reflect that such an election is available." Id.

         Plaintiffs sought review of this denial through the USDA's administrative appeals process. Id. at 86. An administrative judge determined that she lacked jurisdiction over Plaintiffs' challenge because the October 2014 letter to insurance providers was not an adverse agency decision. Id. at 96. Plaintiffs then appealed to the Director of the National Appeals Division. Id. at 105. The Director found that the October 2014 letter was an adverse agency decision, but affirmed the FCIC's decision not to make the APH yield exclusion available to winter wheat farmers for the 2015 crop year. Id. at 119. The Director afforded Chevron deference to the FCIC's interpretation of 7 U.S.C. § 1508(g)(4)(C) and concluded that the FCIC reasonably denied winter wheat farmers the APH yield exclusion for the 2015 crop year. Id. at 118.

         Plaintiffs appealed the Director's decision to the United States District Court for the District of Colorado. Id. at 125. The district court reversed the Director's decision and remanded the case to the FCIC with instructions to retroactively apply the APH yield exclusion to Plaintiffs' 2015 crop year insurance policies. Id. at 120- 31. The district court reasoned that the statute unambiguously made the APH yield exclusion available to all farmers on the day the 2014 Farm Bill was enacted. Id. at 131. Defendants timely filed a notice of appeal. Id. at 134.

         II

         We first briefly address our jurisdiction because the district court remanded the matter for the FCIC to retroactively apply the APH yield exclusion. Id. at 131. "Remand by a district court to an administrative agency for further proceedings is ordinarily not appealable because it is not a final decision." New Mexico ex rel. Richardson v. Bureau of Land Mgmt., 565 F.3d 683, 697 (10th Cir. 2009) (alteration omitted). But sometimes "the nature of [the agency's] proceeding and the character of the [district court's] decision below indicate that viewing that decision as a 'remand' would strain common sense." Id. at 699. In those circumstances, we treat "the district court's order . . . not [as] an administrative remand, but rather [as] a final order that we have jurisdiction to review under 28 U.S.C. § 1291." Id. Such is the case here. The district court's order was a final decision because the FCIC "appeared in the district court as a ...


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