Gettler v. Lyng, s. 87-2178

• Decision Date: 22 September 1988
• Docket Number: Nos. 87-2178,87-2265,s. 87-2178
• Citation: 857 F.2d 1195
• Parties: Danny and Carene GETTLER; H.S. and Maxine Lovett; Robert S. and Hope Mendenhall; Tom and Linda Watkins; Danny Gettler; H.S. Lovett; Tom Watkins; and Hope Mendenhall, Appellants, v. Richard LYNG, Secretary of the United States Department of Agriculture; The United States Department of Agriculture, an agency of the United States Government, Appellees. Danny and Carene GETTLER; H.S. and Maxine Lovett; Robert S. and Hope Mendenhall; Tom and Linda Watkins, Appellants, v. Richard LYNG, Secretary of the United States Department of Agriculture; The United States Department of Agriculture, an agency of the United States Government, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1195

857 F.2d 1195

Danny and Carene GETTLER; H.S. and Maxine Lovett; Robert

S. and Hope Mendenhall; Tom and Linda Watkins;

Danny Gettler; H.S. Lovett; Tom

Watkins; and Hope Mendenhall, Appellants, v. Richard LYNG, Secretary of the United States Department of

Agriculture; The United States Department of

Agriculture, an agency of the United

States Government, Appellees.

Danny and Carene GETTLER; H.S. and Maxine Lovett; Robert

S. and Hope Mendenhall; Tom and Linda Watkins, Appellants, v. Richard LYNG, Secretary of the United States Department of

Agriculture; The United States Department of

Agriculture, an agency of the United

States Government, Appellees.

Nos. 87-2178, 87-2265.

United States Court of Appeals Eighth Circuit.

Submitted June 15, 1988.

Decided Sept. 22, 1988.

Brent R. Appel, Des Moines, Iowa, for appellants.

Wendy M. Keats, Dept. of Justice, Washington, D.C., for appellees.

Before WOLLMAN and BEAM, Circuit Judges, and LARSON, ^* Senior District Judge.

WOLLMAN, Circuit Judge.

The Gettlers, Lovetts, Mendenhalls, and Watkinses (collectively the Gettlers) appeal that portion of the district court's ¹ judgment rejecting their challenge to the validity of regulations promulgated by the Secretary of Agriculture (the Secretary) to implement the Special Disaster Payment Program (the SDPP), 7 U.S.C. Sec. 1444d(b)(2) (1982). We affirm.

I.

The Gettlers are grain and livestock producers in southern Iowa who suffered economic loss from a severe drought in 1983. In 1984, they joined in a suit commenced by the State of Iowa to force the Secretary to implement various relief programs, including the SDPP. The Secretary contended that promulgation of regulations to implement the SDPP was entirely discretionary. The district court agreed and dismissed the action. We reversed. See Iowa ex rel. Miller v. Block, 771 F.2d 347, 351-52 (8th Cir.1985), cert. denied, 478 U.S. 1012, 106 S.Ct. 3312, 92 L.Ed.2d 725 (1986). We held that the Secretary had a duty to promulgate regulations, and remanded the case to the district court. Id. at 355. The district court remanded to the agency for "promulgation and implementation of regulations consistent with the intent of Congress in enacting" the SDPP. The Secretary, after full notice and comment, approved final regulations on June 9, 1986. 51 Fed.Reg. 21,326 (1986) (codified at 7 C.F.R. Sec. 1476.120-.127 (1987)). The Gettlers then amended their complaint to allege that various aspects of the new rules were invalid as arbitrary, capricious, an abuse of discretion, or otherwise contrary to law. The district court, with two exceptions, rejected the Gettlers' challenges, and this appeal followed.

In 1980, Congress expanded federal all-risk crop insurance into all agricultural counties, see Federal Crop Insurance Act of 1980, Pub.L. No. 96-365, Sec. 105, 94 Stat. 1312, 1314 (codified at 7 U.S.C. Sec. 1508 (1982)) (the 1980 Act), intending that the insurance be agricultural producers' primary protection against natural disaster. To encourage broad participation in the insurance program, the 1980 Act directed the Federal Crop Insurance Corporation to pay thirty percent of each producer's premiums. See 7 U.S.C. Sec. 1508(b)(3); see also H.R.Rep. No. 430, 96th Cong., 2d Sess. 7 (1979), reprinted in 1980 U.S.Code Cong. & Admin.News 3068, 3069. In addition, Congress determined that phaseout of the disaster payments program was "necessary for the proper functioning and acceptance of the new Federal crop insurance program." H.R.Rep. No. 430, supra, at 13, 1980 U.S. Code Cong. & Admin.News 3075.

Recognizing that the expansion of the insurance program might not reach every producer immediately and that insurance indemnity payments might be insufficient to alleviate some emergencies, Congress included the SDPP in the Agricultural Food Act of 1981, Pub.L. No. 97-98, Sec. 401, 95 Stat. 1213, 1229-30 (codified at 7 U.S.C. Sec. 1444d(b)(2) (1982)) (the 1981 Act), as a limited free disaster payment program. The 1981 Act directs the Secretary to make specified payments to producers of feed grains when a natural disaster prevents planting or reduces yields. See 7 U.S.C. Sec. 1444d(b)(2)(A) & (B). Producers who have federal crop insurance available to them, however, are not eligible for these payments. See 7 U.S.C. Sec. 1444d(b)(2)(C). The 1981 Act also authorizes the Secretary to make disaster payments to producers, notwithstanding the availability of federal crop insurance,

whenever the Secretary determines that--

(i) as the result of drought, flood, or other natural disaster, or other condition beyond the control of the producers, producers on a farm have suffered substantial losses of production either from being prevented from planting feed grains or other nonconserving crop or from reduced yields, and that such losses have created an economic emergency for the producers;

(ii) Federal crop insurance indemnity payments and other forms of assistance made available by the Federal Government to such producers for such losses are insufficient to alleviate such economic emergency, or no crop insurance covered the loss because of transitional problems attendant to the Federal crop insurance program; and

(iii) additional assistance must be made available to such producers to alleviate the economic emergency.

The Secretary may make such adjustments in the amount of payments made available under this subparagraph with respect to individual farms so as to assure the equitable allotment of such payments among producers taking into account other forms of Federal disaster assistance provided to the producers for the crop involved.

7 U.S.C. Sec. 1444d(b)(2)(D).

The regulations promulgated by the Secretary after our decision in Miller primarily define when a natural disaster has caused losses of production that create an economic emergency for the producer, and when federal crop insurance indemnity payments and other forms of federal assistance available for such losses are insufficient to alleviate the economic emergency. On appeal, the Gettlers challenge the following aspects of the regulations: (1) the definition of economic emergency as "a loss of 60 percent or more of the value of all crop production," 7 C.F.R. Sec. 1476.120(b)(1) (1987); (2) the inclusion of available federal crop insurance indemnity payments, regardless of whether the farmer actually enrolled in the program, in determining whether other forms of federal assistance are insufficient to alleviate the economic emergency, 7 C.F.R. Secs. 1476.120(b)(2)(ii), 1476.125(b)(3)(iv)(A); (3) the inclusion, in that determination, of Farmers Home Administration (FmHA) loans made available for the loss, 7 C.F.R. Sec. 1476.125(b)(3)(iv)(C); and (4) the failure to consider both the potentially greater impact of the disaster on producers who feed their grain to livestock and the impact of successive natural disasters. These provisions, the Gettlers argue, make recovery impossible and constitute an unlawful "back-pocket veto." ²

II.

We may invalidate agency regulations promulgated under informal rulemaking procedures only upon determining that the agency action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. Sec. 706(2)(A) (1982); see Motor Vehicle Mfrs. Ass'n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 41, 103 S.Ct. 2856, 2865, 77 L.Ed.2d 443 (1983); Arkansas Pharmacists Ass'n v. Harris, 627 F.2d 867, 870 (8th Cir.1980). "While the courts will not hesitate to strike down regulations that are unauthorized or illegally promulgated, they will not attempt to substitute their judgment for that of the administrative agency." Arkansas Pharmacists Ass'n, 627 F.2d at 870 (citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 824, 28 L.Ed.2d 136 (1971)); see Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. at 2866.

Normally, an agency rule would be 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.

Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. at 2867. We find that the Secretary's actions are not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.

A.

The Gettlers first assert that the "value" of the crop loss is an irrational indicator of a producer's financial situation and contend that the rule instead should focus on the drought's overall impact on a producer's financial posture. Congress, however, expressed no intent to provide relief beyond the loss in crop production. The 1981 Act focuses on emergencies caused by substantial losses of production from prevented plantings or from reduced yields. We cannot find it arbitrary or capricious to base the definition of an economic emergency caused by loss of production on the objectively determined value of that loss.

The Gettlers also argue that a loss in crop value of sixty percent is an unreasonably high eligibility requirement. They rely on the statement of Agriculture Under Secretary Frank Naylor that a thirty percent crop loss is "a major significant natural disaster." Problems Caused by the Drought Situation: Hearings Before the House Comm. on Agriculture, 98th Cong., 1st Sess. 8 (1983) [hereinafter Hearings ]. Under Secretary Naylor, however, was discussing designation of disaster areas for FmHA emergency loan eligibility. The SDPP statutory requirements are more extensive, and the SDPP is intended only as the relief of last resort.

In explaining the SDPP's sixty percent loss figure, the Secretary stated that " '[e]conomic emergency' suggests the occurrence of conditions much more severe than...