Elbert v. United States Department of Agriculture

Background

The plaintiffs purchased the Dry Bean Revenue Endorsement, which provided additional revenue coverage for dark red kidney beans. The coverage was intended to protect against a decline between the spring projected price and the fall harvest price. For the 2015 crop year, there was not enough published price data to establish a harvest price for dark red kidney beans in Minnesota. The Risk Management Agency announced that the harvest price would therefore equal the projected price under the Endorsement. Because the two prices were equal, the plaintiffs received no payment for the price decline and their revenue coverage effectively became yield protection.

The Federal Crop Insurance Corporation’s Board had approved a proposed pulse-crop policy in 2012. The approved policy and accompanying handbook provided that, if price data was insufficient, the agency would determine and announce the harvest price. After approval, however, the relevant provision was rewritten to state that the harvest price would equal the projected price. The Endorsement sold to the plaintiffs contained the rewritten language.

Procedural History

The plaintiffs sued the United States Department of Agriculture, the Risk Management Agency, and the Federal Crop Insurance Corporation under the Administrative Procedure Act. They argued that the agencies acted arbitrarily and improperly by allowing the Endorsement to convert revenue coverage into yield protection. Both sides moved for summary judgment.

On August 21, 2020, the court granted summary judgment to the defendants. The court later allowed the plaintiffs to seek reconsideration because the earlier decision had relied on regulatory language that was not in effect when the Endorsement was created and because important facts about the post-approval changes had been presented late in the case.

Analysis

The court granted reconsideration and concluded that the Board had approved a policy under which the agency would determine and announce the harvest price, not a policy under which the harvest price would automatically equal the projected price. The court found that changing the pricing mechanism affected the method used to calculate coverage, the amount of coverage available to farmers, the farmers’ interests, and the amount of any loss payment. Under the regulations in effect at the relevant time, the change was therefore “significant” and required resubmission to the Board and additional procedures. Those procedures did not occur.

The court also rejected the defendants’ argument that the Risk Management Agency could independently approve the changes under the Board’s delegation of authority. The court found that the changes were not merely technical and that the record did not show that the Board-approved language was legally insufficient. The court further stated that the changes could not be treated as appropriate terms or conditions under the Federal Crop Insurance Act because converting revenue protection into yield protection did not adequately protect an insured who paid an additional premium for revenue coverage.

The court held that the agencies acted without following procedures required by law and acted arbitrarily and capriciously, violating the Administrative Procedure Act.

Disposition

The court’s order expressly provided that the plaintiffs’ Motion to Reconsider was GRANTED. As a result, the plaintiffs’ Motion for Summary Judgment was GRANTED, and the defendants’ Motion to Dismiss and Motion for Summary Judgment was DENIED. The court reversed its earlier decision and ordered simultaneous briefs on the appropriate remedy, to be filed 45 days after entry of the order. The opinion did not itself determine the remedy.