Sunrise Coop., Inc. v. U.S. Dep't of Agric.
| Decision Date | 04 June 2018 |
| Docket Number | No. 17-3807,17-3807 |
| Citation | 891 F.3d 652 |
| Parties | SUNRISE COOPERATIVE, INC., an Ohio cooperative association, Plaintiff-Appellant, v. UNITED STATES DEPARTMENT OF AGRICULTURE; Risk Management Agency, an agency of the United States Department of Agriculture; Federal Crop Insurance Corporation, an agency and body corporate of the United States Department of Agriculture, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
COUNSEL ARGUED: David C. Barrett, Jr., BARRETT, EASTERDAY, CUNNINGHAM & ESELGROTH, LLP, Dublin, Ohio, for Appellant. Jody L. King, UNITED STATES ATTORNEY’S OFFICE, Toledo, Ohio, for Appellees. ON BRIEF: David C. Barrett, Jr., Troy A. Callicoat, Amanda Stacy Hartman, BARRETT, EASTERDAY, CUNNINGHAM & ESELGROTH, LLP, Dublin, Ohio, for Appellant. Jody L. King, UNITED STATES ATTORNEY’S OFFICE, Toledo, Ohio, for Appellees.
Before: COLE, Chief Judge; WHITE and BUSH, Circuit Judges.
When Congress speaks clearly, administrative agencies must listen. Congress spoke clearly in the 2008 Farm Bill when it said "an entity that was approved" to provide rebates to its members may continue to do so "in a manner consistent with the payment plan approved." But an agency, under the guise of interpretation, nevertheless imposed additional eligibility requirements on approved entities that are unmoored from the statute. We hold that the agency’s interpretation is foreclosed by the statute and reverse the judgment below.
Sunrise is an Ohio agricultural cooperative with members in Ohio, Michigan, and, more recently, Indiana. Sunrise also owns one-third of Lund and Smith Insurance Services, a company that sells crop insurance. In exchange for its members’ buying insurance from Lund and Smith, Sunrise pays "patronage" to those members based on how much crop insurance they buy. A patronage payment is, in essence, a rebate tethered to the amount of insurance purchased. Sunrise is authorized to pay patronage only in Ohio and Michigan and pays patronage to its members only in those states.
These types of payments fall within the ambit of three federal agencies. The Risk Management Agency ("RMA") is an agency within the United States Department of Agriculture ("USDA") that is tasked with administering the programs of the Federal Crop Insurance Corporation ("FCIC").
Patronage payments were prohibited until 2000, when Congress authorized some rebating if permitted under state law. But this authorization was short-lived. Congress changed course in 2008 and prohibited patronage payments (again) with three exceptions. One of those exceptions is a grandfather clause that allows entities that were already approved to pay patronage to continue to make those payments. 7 U.S.C. § 1508(a)(9)(B)(iii). In describing what entities could pay patronage after 2008, Congress spoke clearly:
7 U.S.C. § 1508(a)(9).
The Conference Report to the Bill explained the exception’s purpose was to " ‘grandfather in’ entities that have previously been approved by the [FCIC] to make payments in accordance with subsection (b)(5)(B) as in effect on the day before the date of enactment." H.R. Rep. No. 110-627, at 955, 2008 WL 2038610, *H3659 (2008) (Conf. Rep.). The Report also said:
It is undisputed that from 2008 until 2016, Sunrise was approved to pay patronage to its members as a "grandfathered" entity. But in 2016, another farming cooperative, Trupointe Cooperative, merged into Sunrise. Trupointe was a cooperative association with approximately 4100 members, operating in Ohio and Indiana. Trupointe did not own an entity that sold crop insurance, and, unlike Sunrise, it was not eligible to pay patronage to its members.
The RMA asked Sunrise to request its view on whether Sunrise would remain eligible to pay patronage after the merger. Sunrise complied, and in its formal inquiry, it explained that Trupointe was merging into Sunrise. Sunrise cited principles of Ohio corporate law and federal tax law, explaining that when one company merges into another, the surviving company is the same entity that existed before the merger. In its view, it would qualify for the grandfather exception because, after the merger, it would be the same eligible "entity" as before.
The RMA disagreed. It acknowledged that "Trupointe members ... would become Sunrise members after the merger" but still found that the merger would make Sunrise ineligible to pay patronage. Administrative Record, R. 12-2, PageID 131. To justify this view, it interpreted the same-entity exception to apply only to "those cooperative associations approved for the stated years with the same entity structure." Id. at PageID 133.
Sunrise responded, and the RMA refined its interpretation in a final decision denying Sunrise the grandfather exception in May 2016. The RMA argued that because "entity" is not defined in the statute, it had discretion to define the term. It interpreted "entity" to mean an entity that was approved for any of the 2005–2007 reinsurance years, and it added two sets of conditions: (1) the entity must remain "the same structure and relative size"; and (2) "any mergers, sales, acquisitions, etc. will be considered a different entity." Id. at PageID 141. The RMA said:
Sunrise then filed an action against the RMA, the USDA, and the FCIC. It alleged violations of the Administrative Procedure Act and sought a declaratory judgment that its merger with Trupointe did not impact its eligibility to pay patronage. 5 U.S.C. §§ 701 – 706 ; 28 U.S.C. § 2201.
The district court found that Congress had not spoken directly to whether a grandfathered cooperative is "an entity that was approved by the Corporation to make [premium-rebate] payments" following its merger with a non-grandfathered cooperative. Order, R. 25, PageID 557–58. Finding the statute ambiguous, it accorded Chevron deference to the RMA’s interpretation and granted summary judgment to the defendants and against Sunrise.
Sunrise now appeals.
We review de novo the denial or grant of a motion for summary judgment "based solely upon legal grounds." McMullen v. Meijer, Inc. , 355 F.3d 485, 489 (6th Cir. 2004). We analyze this matter under the doctrine enshrined in Chevron , and we conclude that the RMA’s interpretation is unambiguously foreclosed by the statute. Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc. , 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ; see also Esquivel-Quintana v. Sessions , ––– U.S. ––––, 137 S.Ct. 1562, 1572, 198 L.Ed.2d 22 (2017).
Under Chevron , courts defer to agencies’ reasonable readings of ambiguous statutes. The first step of Chevron instructs courts to analyze whether Congress has "directly spoken to the precise question at issue." Chevron , 467 U.S. at 842, 104 S.Ct. 2778. If it has, "that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842–43, 104 S.Ct. 2778. We employ "traditional tools of statutory construction" to determine whether Congress has "spoken to the precise question at issue." Id. at 842, 843 n.9, 104 S.Ct. 2778. If the statute is unambiguous, then Congress has spoken to the precise question at issue. See id. at 843, 104 S.Ct. 2778. In other words, if a construction of a statute "follows from the unambiguous terms of the statute," the statute "leaves no room for agency discretion." Nat’l Cable & Telecomm. Ass’n v. Brand-X Internet Servs. , 545 U.S. 967, 982, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005). If a statute is ambiguous, the interpretation might nevertheless be unreasonable under Chevron ’s second step, which asks whether "the agency’s [interpretation] is based on a permissible construction of the statute." Chevron , 467 U.S. at 843, 104 S.Ct. 2778.
Congress expressly said who was eligible to pay patronage after 2008: (1) an entity approved to pay patronage in 2005, 2006, or 2007 that is (2) seeking to pay patronage under the same approved plan. 7 U.S.C. § 1508(a)(9)(B)(iii). Sunrise was an "entity ... approved" to pay patronage in 2005, 2006, and 2007, and Sunrise is still seeking to pay under the same approved plan. Nothing about Trupointe’s merging into Sunrise has altered Sunrise’s eligibility under these criteria. Sunrise is the same "entity ... approved" before the merger as after the merger.
To start, Sunrise’s reading is consistent with the ordinary meaning of "entity." While Congress did not define "e...
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