Bottoms Farm Partnership v. Sonny Perdue

United States Court of Appeals
For the Eighth Circuit
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No. 17-2164
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Bottoms Farm Partnership; Bell Family Partnership; Bell Planting Co.; Nez Farms,
Inc.
Plaintiffs - Appellants
v.
Sonny Perdue, Secretary, United States Department of Agriculture; Risk
Management Agency; Federal Crop Insurance Corporation
Defendants - Appellees
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Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
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Submitted: March 15, 2018
Filed: July 17, 2018
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Before WOLLMAN, SHEPHERD, and ERICKSON, Circuit Judges.
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ERICKSON, Circuit Judge.
Bottoms Farm Partnership, Bell Family Partnership, Bell Planting Company,
and Nez Farms, Inc. (“Appellants” or “farm entities”) appeal from a grant of summary
judgment by the district court1 deferring to an insurance policy interpretation made
by the Federal Crop Insurance Corporation (“FCIC”) and a determination regarding
the FCIC’s authority made by the Risk Management Agency (“RMA”). We affirm.
I. Background
The Appellants are rice farmers in southeast Missouri. They each planted rice
in Stoddard County during the 2012 crop year. The rice crops were insured under
federally-reinsured multi-peril crop insurance policies purchased from Rural Crop
Insurance Services (“RCIS”). The insurance policy was provided under the auspices
of the Federal Crop Insurance Act (“FCIA” or “Act”), which is administered by the
FCIC and the RMA.
After the farm entities purchased the insurance and planted the 2012 crop, their
rice crops were damaged by excessive rainfall in Stoddard County. The farm entities
filed claims for indemnity with RCIS. RCIS denied the claims on the ground that the
crops were not insurable under the policy because levees were not surveyed and
constructed immediately after seeding the rice and levee gates were not immediately
installed and butted as required by a special provision in the policy. The special
provision states:
In addition to the definition of Planted Acreage specified in section 1 of
the Crop Provisions, the following must have occurred immediately
following seeding. If these activities have not occurred, the acreage will
be considered “acreage seeded in any other manner” and will not be
insurable:
1. levees are surveyed and constructed;
2. levee gates are installed and butted; and
1
The Honorable Shirley Padmore Mensah, United States Magistrate Judge for
the Eastern District of Missouri, sitting by consent of the parties pursuant to 28
U.S.C. § 636(c) and Fed. R. Civ. P. 73(a).
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3. the irrigation pump is operable, ready to be started in the
event sufficient rainfall has not been received, and turned
on to provide sufficient water for the purposes of
germination or elimination of soil crusting.
When the farm entities’ claims were denied, they sought arbitration with RCIS
as was mandated by the Basic Provisions of the policy. In their arbitration request,
they each stated their proposed interpretation for consideration. After considering the
arguments of the parties, the FCIC agreed with RCIS’s interpretation and provided
the following explanation:
Any time a term is not defined in the policy, its common meaning is
used and that is found in any standard dictionary. The Merriam-Webster
dictionary defines “immediately” as “without any delay.” This means
the listed activities must occur right after planting has ended, weather
permitting, without any delay. If weather prevents these activities, they
must commence as soon as the weather permits.
Therefore, FCIC does not agree with the [Appellant]’s interpretation that
the Special Provisions only require that such levees, levee gates, and
irrigation pumps as are required to enable the producer to put sufficient
water on the field in the event it is needed for purposes of germination
or the elimination of soil crusting, be in place immediately following
seeding. FCIC also does not agree that interior levees do not have to be
installed immediately following planting in order for the acreage to be
insurable.
The Special Provisions statement specifies what activities must occur
immediately following seeding[.] . . . .
These are specific activities that must occur on the insurable acreage
each year. These are not requirements that only need to occur if the
situation arises that requires the irrigation. The requirement is to
conduct these activities immediately after planting and are not governed
by the requirement that the producer follow good farming practice. This
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is a condition of insurability, not an issue of whether the producer
followed good farming practices.
The farm entities requested a review of the FCIC’s interpretation to the RMA.
The RMA found no error in the FCIC’s interpretation. The National Appeals division
concluded that RMA’s written interpretation was not appealable. With their
administrative remedies exhausted, the farm entities filed a complaint in district court,
which gives rise to this appeal. On appeal, the farm entities ask us to reverse the
district court and to set aside the FCIC’s interpretation. In the alternative, they seek
to set aside the RMA’s determination that the FCIC had authority to issue a binding
interpretation of the special provision. We have searchingly reviewed the record and,
giving due deference to the expert authority of the FCIC and the RMA, we affirm.
II. Discussion
A. Standard of Review and Statutory Guidance
“We review the district court’s judgment de novo.” Clark v. United States
Dep’t of Agriculture, 537 F.3d 934, 939 (8th Cir. 2008) (citing Central South Dakota
Co-op. Grazing Dist. v. Sec’y of the U.S. Dep’t of Agriculture, 266 F.3d 889, 894
(8th Cir. 2001)). Like the district court, we have limited authority to review
decisions of administrative agencies. 5 U.S.C. § 706(2). We may set aside the
decisions of the FCIC and the RMA only if we find them to be “arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with law” or “in excess of
statutory jurisdiction, authority, or limitations, or short of statutory right.” 5 U.S.C.
§ 706(2)(A), (C); Clark, 537 F.3d at 939.
When we review “an agency’s construction of the statute which it administers,”
we confront two questions:
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First, always, is the question whether Congress has directly spoken to
the precise question at issue. If the intent of Congress is clear, 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. If, however, the
court determines Congress has not directly addressed the precise
question at issue, the court does not simply impose its own construction
on the statute, as would be necessary in the absence of an administrative
interpretation. Rather, if the statute is silent or ambiguous with respect
to the specific issue, the question for the court is whether the agency’s
answer is based on a permissible construction of the statute.
Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-
43 (1984). “Where Congress has established a clear line, the agency cannot go
beyond it; and where Congress has established an ambiguous line, the agency can go
no further than the ambiguity will fairly allow.” City of Arlington v. F.C.C., 569 U.S.
290, 307 (2013). “If ‘the agency’s answer is based on a permissible construction of
the statute,’ that is the end of the matter.” Id. (citing Chevron, 467 U.S. at 842).
Congress established the federal crop insurance program in 1938 to “improv[e]
the economic stability of agriculture.” United States v. Hawley, 619 F.3d 886, 888-
89 (8th Cir. 2010) (quoting 7 U.S.C. § 1502(a)). “The Federal Crop Insurance Act
(FCIA), 7 U.S.C. § § 1501-1524,” provided that the crop insurance program would
be “administered and regulated by the FCIC,” a wholly owned government
corporation within the United States Department of Agriculture. Ace Property and
Casualty Ins. Co. v. Federal Crop Ins. Corp., 440 F.3d 992, 994 (8th Cir. 2006) (citing
7 U.S.C. § 1503); Hawley, 619 F.3d at 889 (citing § 1502(a) and 7 C.F.R. §
400.701). The RMA “administers the federal crop insurance program on behalf of
the FCIC.” Hawley, 619 F.3d at 889; 7 U.S.C. § 6933.
The FCIA provides that the management of the FCIC “shall be vested in a
Board of Directors subject to the general supervision of the Secretary” of Agriculture.
7 U.S.C. § 1505(a)(1). The Act specifies what types of expertise must be represented
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in the Board’s composition. 7 U.S.C. § 1505(a)(2). The Act provides for “[e]xpert
review of policies, plans of insurance, and related material.” 7 U.S.C. § 1505(e).
Congress allocated to the FCIC “such powers as may be necessary or appropriate for
the exercise of the powers . . . specifically conferred upon” it by the FCIA “and all
such incidental powers as are customary in corporations generally.” 7 U.S.C. §
1506(k).
Congress allocated to the FCIC powers that are customarily vested in
corporations. In describing the Corporation’s authority to offer insurance, Congress
specified: “If sufficient actuarial data are available (as determined by the
Corporation), the Corporation may insure, or provide reinsurance for insurers of,
producers of agricultural commodities grown in the United States under 1 or more
plans of insurance determined by the Corporation to be adapted to the agricultural
commodity concerned.” 7 U.S.C. § 1508(a)(1). The Act specifies the administrative
process for resolving issues of “good farming practices” that may arise under a
federal crop insurance policy. 7 U.S.C. § 1508(a)(3)(B). An administrative decision
regarding whether a producer failed to follow good farming practices “may not be
reversed or modified as the result of judicial review unless the determination is found
to be arbitrary or capricious.” 7 U.S.C. § 1508(a)(3)(B)(iii)(II).
Congress requires the FCIC to offer “[s]pecial provisions for . . . rice.” 7
U.S.C. § 1508(a)(8). Specifically, the Act requires: “Notwithstanding any other
provision of this subchapter, beginning with the 2001 crops of . . . rice, the
Corporation shall offer plans of insurance, including prevented planting coverage and
replanting coverage, under this subchapter that cover losses of . . . rice resulting from
failure of irrigation water supplies due to drought and saltwater intrusion.” Id.
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B. FCIC Interpretation of Special Policy Language
The clear language of the FCIA indicates that Congress intended the
Corporation to have extensive and broad authority. Under the Act judicial review
is available but limited. Given the Act’s broad grant of authority to the Corporation,
and the specific authority over the provisions of insurance and insurance contracts
found in 5 U.S.C. §§ 1505 and 1506, we conclude that we must give substantial
deference to the FCIC’s interpretation of the special provision. Rain & Hail Ins.
Service, Inc. v. Federal Crop Ins. Corp., 426 F.3d 976, 979-80 (8th Cir. 2005) (giving
substantial deference to an agency’s interpretation because of the agency’s delegated
authority).
The FCIC’s interpretation of the special provision is consistent with the plain
reading of the policy, which indicates that the activities listed must “have occurred
immediately following seeding” or the acreage will be considered to be uninsurable.
The FCIC’s decision that the language provided a condition for insurability and was
not subject to an analysis of good farming policy is not plainly erroneous. Id. at 979.
Further, the interpretation is not “‘arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law,’ 5 U.S.C. § 706(2)(A), especially in view of
the substantial deference we give to the [FCIC] in this circumstance.” Id. at 980
(citations omitted). The interpretation is based on a permissible construction of the
policy language which was promulgated by the Corporation under its statutory
authority.
C. RMA Determination of FCIC Authority
The plain language of section 20(a)(1) of the farm entities’ crop insurance
policy required that the parties’ dispute in this matter be subject to mediation and
arbitration. The policy required the parties to present their disagreement over the
interpretation of policy language to the FCIC. Section 20(a)(1)(i) specifically states:
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“Any interpretation by FCIC will be binding in any mediation or arbitration.”
Considering the plain language of the insurance contract and the deference we must
give the RMA in its role of supervisor of the FCIC, we conclude that the RMA’s
determination that the FCIC was required to provide an interpretation of the special
provision to the arbitrating parties was not clearly erroneous, “arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. §
706(2)(A). Rain & Hail, 426 F.3d at 979-80.
III. Conclusion
We affirm the judgment of the district court.
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