Deaf Smith County Grain Processors, Inc. v. Glickman

• Decision Date: 29 December 1998
• Docket Number: No. 98-5021,98-5021
• Citation: 162 F.3d 1206
• Parties: DEAF SMITH COUNTY GRAIN PROCESSORS, INC., Appellant, v. Dan GLICKMAN, Secretary, United States Department of Agriculture, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1206

162 F.3d 1206

333 U.S.App.D.C. 299

DEAF SMITH COUNTY GRAIN PROCESSORS, INC., Appellant, v. Dan GLICKMAN, Secretary, United States Department of Agriculture, Appellee.

No. 98-5021.

United States Court of Appeals District of Columbia Circuit.

Argued Nov. 16, 1998.

Decided Dec. 29, 1998.

Alexander J. Pires, Jr. argued the cause and filed the briefs for appellant.

Anthony M. Alexis, Assistant U.S. Attorney, argued the cause for appellee. With him on the brief were Wilma A. Lewis, U.S. Attorney, Mark E. Nagle and R. Craig Lawrence, Assistant U.S. Attorneys, and Margaret Breinholt, Counsel, U.S. Department of Agriculture.

Before: EDWARDS, Chief Judge, SILBERMAN and TATEL, Circuit Judges.

Opinion for the Court filed by Chief Judge HARRY T. EDWARDS.

HARRY T. EDWARDS, Chief Judge:

In this appeal, Deaf Smith County Grain Processors, Inc. ("Deaf Smith" or "appellant") contests the District Court's grant of summary judgment in favor of the United States Department of Agriculture ("USDA" or "appellee") on Deaf Smith's claim that it has not received the farm subsidy and disaster relief payments to which it is allegedly entitled under USDA regulations. Our review in this case is identical to that of the District Court; that is, we uphold the agency action so long as it was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. We agree with the District Court that the USDA acted reasonably in denying Deaf Smith the payments it requests. Accordingly, we affirm the grant of summary judgment in favor of the agency.

I. BACKGROUND

A. Regulatory Background

The USDA administers the nation's major agricultural commodity programs through a wholly-owned Government corporation called the Commodity Credit Corporation ("CCC"). See 15 U.S.C. § 714c (1994). The day-to-day operations of the CCC are performed by local chapters of the Farm Service Agency ("FSA"), formerly known as the Agricultural Stabilization and Conservation Service ("ASCS"). Two CCC programs are at issue in this case: the Production Adjustment Program ("PAP") and the Disaster Assistance Program ("DAP").

The goal of the Production Adjustment Program is to reduce the total nationwide acreage of farmland devoted to the production of certain crops. To achieve this goal, the CCC pays farmers to limit their production of those crops. In order to participate in the PAP, and thereby receive payments from the CCC, farmers enter into annual contracts with the CCC, pursuant to which they agree to limit their cropland acreage and devote a certain amount of their land to conservation uses approved by the USDA. See 7 C.F.R. § 1421.5 (1998). In exchange, the CCC provides price support in the form of "deficiency" payments and nonrecourse loans. The amount of these payments is determined by the amount of farmland that the farmer agrees to withhold from crop harvest. A farm's eligible acreage for farming a particular crop is called the crop acreage base ("CAB"). Each year, the USDA determines a percentage of the CAB on which farmers participating in the PAP are restricted from growing crops, and calculates its deficiency payments accordingly. As a result, the higher a particular farmer's CAB, the greater the payments are from the CCC.

The Disaster Assistance Program provides relief for farmers whose crops have been destroyed by natural disasters. When struck by a natural disaster, a farmer may file an application for disaster credit with the CCC. The USDA, through the local branch of the FSA, then establishes benchmark crop "yields" and "rates" in order to calculate a particular farmer's disaster payments. See 7 C.F.R. § 1477.5 (1988). The purpose of the "yields" and "rates" is to approximate the value of the crops lost by estimating what the farmer's crop would have been absent the disaster. A percentage of the estimated value of the lost crops is then paid to the farmer in the form of disaster relief.

B. Factual Background

Appellant is a large farming enterprise that does business in the southwestern United States. During the 1980s, appellant participated in both the PAP and the DAP, in connection with its farms in Colfax County and Union County, New Mexico. Appellant's two claims are essentially unrelated to each other.

1. Appellant's PAP Claim

Appellant bought the land at issue in this case in 1986. In 1982, however, the Colfax County ASCS erroneously designated 3005.1 acres of this land "non-cropland," thus significantly diminishing the land's CAB for the purposes of calculating payments under the PAP. The parties now agree that this 3005.1 acres was cropland, and was therefore potentially "eligible" for consideration in calculating the land's total CAB. Appellant concedes that when it bought the land, it knew that the CCC's "data on Appellant's cropland acreage was much less and inconsistent with the cropland actually on the farm." Brief for Appellant at 5.

When appellant bought the land in 1986, and every year thereafter through 1989, it entered into a PAP contract with the CCC. Each time it entered into a new annual contract, the CCC provided notice of the CAB calculated for the land, and informed appellant of its right to appeal this calculation within fifteen days of receipt of the notice. It is undisputed that appellant never formally appealed the CAB figure assigned to its land, even though it knew that the figure was inaccurate. Appellant did complain orally to local ASCS officials about the erroneous CAB. Appellant claims, however, that it was discouraged from filing formal appeals, because the local officials represented that the documents needed to clarify the mistake had been inadvertently destroyed. See Brief for Appellant at 5-8. Appellant eventually filed a Freedom of Information Act ("FOIA") request for the relevant documents. The documents had not been destroyed, and they vindicated appellant's assertion that the 3005.1 acres was, indeed, cropland.

Appellant argues that it is entitled to retroactive payments for the years 1986 through 1989 to reflect the payments that should have been made had the proper CAB been used during those years. Appellee responds that appellant was aware of its actual cropland acreage when it entered into the contracts with the CCC each year, and that both parties fully performed in accordance with those contracts. Appellee contends that these contracts "cannot be performed retroactively," and that the court should not construct "implied in law" contracts to reflect hypothetical contracts that the parties might have entered into had the proper CAB been used. Brief for Appellee at 24. Furthermore, appellee points out that appellant has not established that the disputed acres were in fact devoted to conservation during 1986 through 1989; since the Colfax County ASCS had designated the land "non-cropland," those 3005.1 acres were theoretically "freed up ... for other uses." Id. at 21.

2. Appellant's DAP Claim

Appellant farmed wheat grass in New Mexico from 1986 to 1989. When wheat grass farmers in that region experienced severe droughts in 1988 and 1989, Congress activated the DAP to provide relief for those farmers. The USDA established wheat grass yields and payment rates to calculate the disaster payments for wheat grass farmers in New Mexico. Appellant applied for disaster relief and was awarded payments based on those yields and rates.

Appellant contends, however, that the selected yields and rates were too low, precluding the CCC from realistically approximating the value of the crops destroyed by the droughts. Specifically, appellant challenges the yield selected because the USDA relied upon data that was admittedly seventeen to thirty-one years old, see Appendix for Appellant ("A.A.") 73, and failed to use data from Colorado farms that arguably would have better reflected appellant's crop growth potential see id. at 39. Appellant also challenges the payment rate selected, primarily on the basis of affidavits from other farming enterprises, which suggest that the USDA's rate was lower than rates that were used elsewhere. See, e.g., id. at 79.

Appellee responds that the use of the disputed data was necessary and reasonable given the fact that wheat grass "was not a common crop in New Mexico" and no better data was readily available. Brief for Appellee at 25. Indeed, appellant points to no other data for New Mexico. Furthermore, according to appellee, it was proper for the USDA to use the New Mexico data, as opposed to data collected in Colorado, because appellant's farm is, in fact, in New Mexico. As for the rate selected, appellee maintains that as long as the rate selected is reasonable, appellant "may not complain merely because there are other rates which also may be reasonable." Id. at 31.

C. Procedural History

1. The Office of Inspector General Report

At the USDA's request, the USDA Office of Inspector General ("OIG") reviewed appellant's PAP and DAP complaints. The OIG issued its report on May 3, 1990. See A.A. 37-42. With respect to appellant's PAP claim, the OIG concluded that the Colfax County ASCS had indeed "understated" appellant's cropland, resulting in an "inadvertent[]" miscalculation of appellant's CAB. Id. at 41. The OIG suggested that, in response to this error, "[a]pplicable program payments should ... be corrected as necessary." Id. at 42. With respect to appellant's DAP claim, the OIG "recognize[d] the Disaster Program was implemented under tight time constraints and difficult conditions," but nevertheless "question[ed] whether it was proper to use 17- to 31-year-old data." Id. at 40. The OIG also noted that the "Colorado yields may more closely reflect [appellant's] growth potential." Id. As for the rate selected, the OIG found "no basis for questioning the [USDA's] payment rate since it is similar to Colorado's ... rate and was based on rates obtained from New Mexico seed companies." Id.

Despite the statements favorable to appellant in...