Fitch v. United States

• Decision Date: 20 May 2022
• Docket Number: 1:20-cv-513-RAH [WO]
• Parties: AMY FITCH, Appellant, v. UNITED STATES OF AMERICA, et al., Appellees.
• Court: U.S. District Court — Middle District of Alabama

AMY FITCH, Appellant,
v.
UNITED STATES OF AMERICA, et al., Appellees.

No. 1:20-cv-513-RAH [WO]

United States District Court, M.D. Alabama, Southern Division

May 20, 2022

MEMORANDUM OPINION AND ORDER

R. AUSTIN HUFFAKER, JR., UNITED STATES DISTRICT JUDGE.

Amy Fitch appeals from the final determination of the Director of the United States Department of Agriculture's (USDA or the Agency) National Appeals Division that upheld the hearing officer's decision to retroactively deny Fitch's claim for benefits under the Noninsured Crop Disaster Assistance Program (NAP). The issues have been fully briefed, and each party has moved for summary judgment. For the reasons below, Fitch's motion is DENIED, the USDA's motion is GRANTED, and the Director's decision is affirmed.

I. BACKGROUND

Fitch Family Farms is a commercial vegetable family farm located in Houston County, Alabama, run by Lee and Amy Fitch and their company, River Road Farms, Inc. (RRF). Amy Fitch owns 40% of RRF and is a guarantor on a loan procured by RRF from Servis1st Bank to fund its operations.

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For the 2016 crop year, Fitch, in her individual capacity, enrolled a tomato crop in NAP that was to be grown on land owned by RRF. By enrolling individually and because she could qualify as a socially disadvantaged farmer, Fitch saved money, including an administrative fee and half of the NAP premium. This financial benefit was unavailable to RRF, which was already separately enrolled in NAP.

Ultimately, the tomato crop failed, and therefore Fitch filed a claim for payment in July 2016 with the Farm Service Agency (FSA) of the USDA. The loss was adjusted, and the claim was approved for payment by the local Houston County FSA committee in September 2016. The claim was paid, and Fitch apparently reenrolled and received NAP payments in 2017 and 2018.

Not too long after the 2016 crop season, the Office of the Inspector General (OIG) began investigating fraud by the Houston County FSA committee for the claims it had approved during the 2016 crop year. The OIG found complicity by the committee in approving fraudulent claims in 2016, which resulted in a review of claims approved by the committee in 2016. Fitch's 2016 claim was one of the claims reviewed.

After reviewing Fitch's claim, on May 9, 2019, the USDA0F^[1] reversed the Houston County FSA committee's September 2016 claim decision, finding that

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Fitch had been ineligible for the 2016 NAP payment because, among others, Fitch had made misrepresentations (that she shared in 100% of the tomato crop as a producer) concerning her eligibility for payment. As to Fitch's eligibility, the USDA concluded that Fitch was not a “producer” as defined under NAP because Fitch “did not share in the risk of producing the crop” and was not entitled to share in the crop available for marketing. (Doc. 28-3 at 27.) Therefore, Fitch was deemed retroactively ineligible for the 2016 NAP payment, and as a further sanction, she was also deemed ineligible for program payments in the two successive years of 2017 and 2018. All told, the USDA sought a refund from Fitch for all three years of NAP payments, totaling approximately $85, 000.

Fitch appealed to the National Appeals Division, 1F^[2] and a hearing officer was assigned and conducted an in-person evidentiary hearing over three days in October, November, and December 2019. On February 19, 2020, the hearing officer issued his appeal determination. Of the numerous issues raised, the hearing officer found in Fitch's favor on all, except for two-that Fitch was an eligible producer and that NAP's Finality Rule applied. As applicable to the producer issue, the hearing officer concluded:

...the information presented by Appellant fails to show that she was

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operating as an individual. The land that Appellant grew her tomatoes on is owned by River Road Farms. The only input receipt in the record is for River Road Farms. All evidence shows that River Road Farms, not Appellant, had a risk in growing the crop and was entitled to share in the crop had the crop been produced. While Appellant argues that it is a normal farming operation to operate within an entity of a family farming operation, Appellant did not sign up for NAP coverage for River Road Farms and, in fact, River Road Farms had its own NAP coverage in 2016. Appellant's failure to show how her interest in the crop was separate and distinct from River Road Farms does not justify a separate payment to Appellant, when Appellant was clearly operating under the pretense of River Road Farms. Appellant is not an eligible producer who was eligible for NAP benefits and she misrepresented that she is a producer who shares in the risk of producing the crop and who is entitled to share in the crop had the crop been produced

(Doc. 23-3 at 103.)

And as to the Finality Rule, the hearing officer concluded that the “misrepresentation” exception applied because “Appellant misrepresented that she is a producer who shares in the risk of producing the crop and who is entitled to share in the crop had the crop been produced.” (Doc. 23-3 at 104.)

Fitch then appealed to the Director of NAD, challenging the hearing officer's decision and requesting equitable relief. Upon reviewing the record and the parties' submissions, the Director concluded that the hearing officer's decision was “supported by substantial evidence” and that the “county committee's decision approving her NAP program claim was erroneous.” (Doc. 23-3 at 123-24.) And as to the Finality Rule, the Director concluded that the rule, because of Fitch's misrepresentations about her status as an eligible producer, did not bar the USDA

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from, after the fact, seeking a refund of the NAP payments made to Fitch in 2016, 2017, and 2018. Finally, as to Fitch's claim for equitable relief, the Director denied the request, concluding that Fitch had failed to show that her ineligibility stemmed from erroneous actions or misrepresentations by an agency official. Instead, the Director concluded that Fitch's predicament stemmed from her choice to enroll in NAP individually. This decision constituted the USDA's final decision under 7 U.S.C. § 6999.

II. STANDARD OF REVIEW

Summary Judgment is particularly appropriate in cases in which a district court is asked to review a decision rendered by a federal administrative agency. Mahon v. United States Dep't of Agric., 485 F.3d 1247, 1253 (11th Cir. 2007). However, even in the context of summary judgment, an agency action is entitled to great deference. Id.

Judicial review of a final agency determination is governed by the Administrative Procedure Act, which provides in part that a court may set aside an agency's “action, findings, and conclusions” if they are arbitrary, capricious, an abuse of discretion, otherwise not in accordance with the law, or unsupported by substantial evidence. Id. (citing 5 U.S.C. § 706). See also 7 U.S.C. § 6999; Payton v. United States Dep 't of Agric., 337 F.3d 1163, 1167 (10th Cir. 2003).

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“To determine whether an agency decision was arbitrary and capricious, the reviewing court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” N. Buckhead Civic Ass'n v. Skinner, 903 F.2d 1533, 1538 (11th Cir. 1990) (internal quotations omitted). The arbitrary and capricious standard is exceedingly deferential, Fund for Animals, Inc. v. Rice, 85 F.3d 535, 541 (11th Cir. 1996), and “[t]he reviewing court is not authorized to substitute its judgment for that of the agency concerning the wisdom or prudence of the” decision, N. Buckhead, 903 F.2d at 1539. “Rather, the ‘task of the reviewing court is to apply the appropriate ... standard of review ... to the agency decision based on the record the agency presents to the reviewing court.” Pres. Endangered Areas of Cobb's History, Inc. v. United States Army Corp of Eng'rs, 87 F.3d 1242, 1246 (11th Cir. 1996) (quoting Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985)) (internal quotation marks omitted).

III. DISCUSSION

The parties have filed opposing summary judgment motions that address three issues-Fitch's status as an eligible producer under NAP, NAP's Finality Rule, and Fitch's entitlement to equitable relief.

To begin, NAP provides financial assistance to producers of non-insurable crops to protect against natural disasters that result in lower yields or crop losses or

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prevent crop planting. The program is administered under the general supervision of the Commodity Credit Corporation and is carried out by the local state and county committees of the FSA. See Mahon v. United States Dep't of Agric., 485 F.3d 1247, 1253 (11th Cir. 2007); 7 C.F.R § 718.2. Eligible producers must apply for NAP coverage using form CCC-471 and pay a service fee and a premium.

Pertinent to the issues on appeal here are several defined terms under NAP - “producer, ” “person, ” and “operator.” The relevant regulations define a “producer” as “an owner, operator, landlord, tenant, or sharecropper, who shares in the risk of producing a crop and who is entitled to share in the crop available for marketing from the farm, or would have shared had the crop been produced.” 7 C.F.R § 718.2; 7 U.S.C. § 7202(12) (emphasis added). A “person” is defined as someone who must “(1) Have a separate and distinct interest in the land or the crop involved; (2) Exercise separate responsibility for such interest; and (3) Be responsible for the cost of farming related to such interest from a fund or account separate from that of any other individual or entity.” 7 C.F.R. § 718.2. Finally, NAP regulations define an “operator” as “an individual, entity, or joint operation who is determined by the FSA county committee to be in control of the farming operations on the farm.” Id.

A. The USDA did not act arbitrarily or capriciously in...