U.S. v. Batson

Decision Date09 June 1983
Docket NumberNos. 81-1242,s. 81-1242
Citation706 F.2d 657
PartiesUNITED STATES of America, Plaintiff-Appellant, v. Glynn BATSON, South Plains Land Corporation, a corporation, and Johnny Lemmons, Defendants-Appellees. UNITED STATES of America, Plaintiff-Appellant, v. Dale LEVERETT, Cletus Leverett and Wayne Leverett, et al., Defendants-Appellees. UNITED STATES of America, Plaintiff-Appellant, v. Lois PRATHER, Defendant-Appellee. UNITED STATES of America, Plaintiff-Appellant, v. T.A. WARTES, Wayne Hicks, Bill Wartes and Gene Irwin, et al., Defendants-Appellees. UNITED STATES of America, Plaintiff-Appellant, v. A. Earl JONES, et al., Defendants-Appellees. UNITED STATES of America, Plaintiff-Appellant, v. Don H. WILSON, et al., Defendants-Appellees. UNITED STATES of America, Plaintiff-Appellant, v. Earl BOWMAN, Ernest L. Bowman, J.E. Aldridge, Don Carmichael and Estate of Everett M. Bowman, et al., Defendants-Appellees. to 81-1248.
CourtU.S. Court of Appeals — Fifth Circuit

Judith Rabinowitz, Atty., Civ. Div., U.S. Dept. of Justice, Washington, D.C., for plaintiff-appellant.

McWhorter, Cobb & Johnson, Jack P. Driskill, Lubbock, Tex., for Lemmons.

John Saleh, Lamesa, Tex., for Batson, Prather and South Plains.

John L. Shepherd, Seminole, Tex., for all defendants-appellees.

Cecil Kuhne, Jas. H. Milam, Lubbock, Tex., for Jones, et al.

Stephen Weeks, Houston, Tex., for Dempsey J. Prappas.

Appeals from the United States District Court for the Northern District of Texas.

Before THORNBERRY, GEE, and GARWOOD, Circuit Judges.

GARWOOD, Circuit Judge:

In this appeal we consider issues arising out of payments made to the defendants-appellees by the Department of Agriculture under the Upland Cotton Price Support Program, 7 U.S.C. Sec. 1444(e), in Gaines County, Texas. In the seven separate suits under consideration in this opinion, the United States sought to recover alleged overpayments made to the forty-six appellees, mostly individuals, under this program. The district court held that the government's suits were barred by the statute of limitations, and, alternatively, that the regulation under which the government sought recovery of several of the payments was unconstitutionally vague and, therefore, invalid. It granted summary judgment on April 3, 1981 in favor of each defendant-appellee.

On appeal, the United States seeks reversal and remand of the summary judgments granted. For the reasons below we reverse the seven judgments rendered in appellees' favor, and remand.


The Upland Cotton Price Support Program in effect in 1972 and 1973 was authorized by 7 U.S.C. Sec. 1444(e). It was one of several price support programs administered by the United States Department of Agriculture ("USDA"). Section 1444(e) authorized the Secretary of the USDA to make loans and subsidy payments, and to require producers to "set aside" cropland, if necessary, to avoid excessive supplies of upland cotton. Section 1444(e) also authorized the Secretary to promulgate regulations to carry out the statutory provisions. Upland cotton loans and subsidy payments were made through the Commodity Credit Corporation ("CCC"), but the program itself was administered in the field by the County and State Committees of the Agricultural Stabilization and Conservation Service ("ASCS"). 1

The ASCS County Committees consisted of three locally elected members. These Committees kept records of crop allotments, 2 yields, and their transfers between farms; approved transfers and payments; and provided the first level of enforcement in the program. The ASCS State Committees' function was to ensure that County Committees administered the program in accordance with the regulations. 7 C.F.R. Sec. 718.4 (1974). In the event that a farmer received an adverse determination from a County Committee with respect to the program, USDA regulations provided for a county level redetermination to be made after an informal hearing, and for the right of appeal, first to the State Committee and then to the Deputy Administrator of the ASCS in Washington, D.C. 7 C.F.R. Secs. 780.3-.5. A producer was also entitled to an informal hearing at these two levels of appeal. In these hearings he was entitled to "a full opportunity to present facts and information relevant to the matter in issue and [to] present oral or documentary evidence." 7 C.F.R. Sec. 780.8. The Agricultural Adjustment Act provided that:

"The facts constituting the basis for any ... payments under the cotton set-aside program ... when officially determined in conformity with the applicable regulations prescribed by the Secretary ... shall be final and conclusive and shall not be reviewable by any other officer or agency of the Government." 7 U.S.C. Sec. 1385.

The payment or subsidy element of the upland cotton program is at issue in this appeal. Sections 1444(e)(2) and (3) of the statute prescribe a formula for determining a sum per pound of upland cotton to be paid to farmers for each crop. The payment is not based on the amount of cotton actually grown in the current year, but on the average of the per acre yield harvested on the farm over the preceding three years. 7 U.S.C. Sec. 1444(e)(3). 3

To be eligible for payments, a producer must first file a "Form 516" with the County Committee which indicates his intention to participate in the upland cotton program. 7 C.F.R. Sec. 722.804(b)(1). A "producer" is defined in the regulations as a "[p]erson who as owner, landlord, tenant or sharecropper, is entitled to share in the crops available for marketing from the farm or in the proceeds thereof ...." 7 C.F.R. Sec. 719.2(s). 4 Before payments are made a producer is also required to file with the County Committee ASCS Form 580 (entitled "Report of Acreage and Certification of Compliance") certifying that he has complied with all of the terms and conditions of the program and requesting payment. 5

Completion of these forms and compliance with all of the program regulations made a producer eligible for a "preliminary payment." This payment provided farmers a calculated estimate of their subsidy, which was paid them "as soon as practicable after July 1 of the year in which the crop [was] harvested," 7 C.F.R. Sec. 722.812(d), presumably to ease their cash flow problems before the regular payment was determined. The initial payments were based on the product of (1) the preliminary payment rate, which in 1973 (the principal year involved here) was fifteen cents per pound; (2) the payment yield (the average production of the past three years in pounds per acre); and (3) the number of acres of cotton allotment actually planted. A "regular payment" rate was calculated following the harvest, but it could not be less than the preliminary rate. The producer was entitled to the excess, if any, of the regular over the preliminary rate. 7 C.F.R. Secs. 722.812(a) and (d).

The preliminary payment rate was set forth in the regulations, but the payment yield and the number of allotments were factors to some degree within the control of individual producers. The regulations allowed farmers to sell and lease their cotton allotments which could in turn be combined with the existing allotments of the lessee or buyer, thus affecting payments, yields and allotment totals. Such transactions were referred to in the regulations as "reconstitutions." 6 When allotments from different farms, having different yields, were combined in a so-called "reconstitution," the yield of the "receiving" farm, as designated by the producer, governed the combined allotments. Therefore, to keep the total For example, assume Farm A has ten acres of cotton allotment with a yield of 400 pounds per acre, which represents 4,000 pounds of cotton, and Farm B has ten acres of cotton allotment with a yield of only 200 pounds per acre, which represents 2,000 pounds of cotton. The two farms thus have between them a total of twenty allotment acres representing 6,000 pounds. In a combination of all these allotments, if Farm B were the receiving farm and if no adjustment were made, the result would be a Farm B having all twenty allotment acres, each with a yield of 200 pounds per acre (the B yield). New Farm B would only represent 4,000 pounds of cotton, and 2,000 pounds would be "lost" in the combination. Similarly, 2,000 pounds would be "gained" if Farm A were designated the receiving farm and no adjustment were made (A would have 8,000 pounds, being twenty allotment acres times A's yield of 400 pounds per acre). Section 722.420(b), however, provides a formula for making the necessary adjustment, which says to

                number of pounds of cotton represented by an allotment the same before and after a reconstitution, the regulations prescribed a "productivity adjustment."    7 C.F.R. 722.420. 7

"[d]ivide the pounds transferred by the payment yield for the receiving farm. The result is the number of acres by which the allotment on the receiving farm is to be increased." 7 C.F.R. Sec. 722.420(b).

Thus, in our example, if Farm B were the receiving farm, 4,000 (the number of pounds transferred from A) is divided by 200 (the pounds per acre yield of B) yielding a quotient of twenty. Accordingly, Farm B's allotment acres are increased by twenty in the combination, giving it a total of thirty acres of allotment with a yield of 200 pounds per acre, a total of 6,000 pounds. If Farm A were the receiving farm, its allotments would increase only by five, giving it a total of fifteen allotment acres having a yield of 400 pounds per acre, again a total of 6,000 pounds. 8

The effect of the adjustment, where high yield acres are transferred to a farm having low yield acres, is to increase the number of the transferred allotments by the proportion by which the productivity of the transferred high yield acres exceeds that of the receiving farm. To provide one more example, if a farmer bought ten allotments with a yield of 400 pounds per acre and...

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