UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 98-60030
CHARLES DAVIDSON, doing business as Davidson Farms,
Plaintiff - Appellant,
VERSUS
DAN GLICKMAN,
Defendant - Appellee.
Appeal from the United States District Court
for the Southern District of Mississippi
March 31, 1999
Before JOLLY, DUHÉ, and EMILIO M. GARZA, Circuit Judges.
DUHÉ, Circuit Judge:
Charles Davidson appeals the grant of summary judgment in
favor of the Farm Services Agency (“FSA”) prohibiting revision of
his farm acreage report for 1994. We vacate and remand, because
the FSA based its denial on a legislative rule not subjected to the
notice and comment requirements in the Administrative Procedure Act
(“APA”). Davidson also appeals the grant of summary judgment to
the FSA denying his 1995 crop insurance claim. We affirm, because
Davidson had no insurable interest in the crop at the time of loss.
Standard of Review
We review a grant of summary judgment de novo, viewing the
facts and inferences in the light most favorable to the nonmovant.
See Hall v. Gillman, Inc., 81 F.3d 35, 36-37 (5th Cir. 1996).
Summary judgment is appropriate if the record discloses “that there
is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Fed. R. Civ.
P. 56(c); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986).
1994 Crop
Davidson leased from the U.S. Fish and Wildlife Service
approximately 4065 acres identified as Agricultural Stabilization
and Conservation Service (“ASCS”) Farm Serial Number (“FSN”) 131.
The lease permitted planting soybeans on all but certain designated
acreage within that tract. Davidson also leased an additional 336
acres identified as FSN 68 for planting soybeans. He began
planting on or near June 1, and finished planting on June 29. High
water prevented planting on over one-half of FSN 131 and one-third
of FSN 68.
Davidson timely signed and filed ASCS-578, Report of Acreage
(“acreage report”), for FSN 68 showing 306 acres of soybeans and 30
acres of “conserving use,” and for FSN 131, showing 1717 acres of
2
soybeans and 3388 acres of “conserving use.”1 The acreage reports
did not indicate that flooding prevented Davidson from planting the
acres classified as “conserving use.” On December 27, Davidson
filed ASCS-574, Request for Acreages/Disaster Credit (“disaster
assistance”) on FSN 131 and FSN 38 for low-yield and inability to
plant (“prevented planting”). The Adams County FSA (“County FSA”)
disapproved the disaster assistance request, because the acreage
reports on file reflected “conserving use” for the relevant acres,
not “prevented planting.” The County FSA would not permit Davidson
to revise the acreage reports, because Handbook 2-CP § 83 prohibits
revision when the producer would benefit from the revision.2 After
fully utilizing the agency review and appeal process, Davidson
sought judicial review of the agency’s final ruling prohibiting
revision.3 Both Davidson and the FSA agreed no facts are disputed
1
Handbook 2-CP § 79(A) and (B) require producers to file ASCS-
578 for each crop or land use by the final reporting dates listed
in attached exhibits, with extended reporting time when the
producer makes a timely request for a measurement service. See
Handbook 2-CP (Rev. 14) Amend. 41 § 79(A), (B). Davidson filed
the acreage report on FSN 68 on July 11; he filed the acreage
report on FSN 131 on August 31, within five days of receiving the
measurement report.
2
See infra n.4 (citing the specific language of the Handbook
provision).
3
Davidson requested reconsideration, and the Adams County FSA
granted reconsideration and reversed, permitting Davidson to revise
the acreage report and to receive disaster assistance. On appeal,
the State FSA reversed the County FSA, finding for the FSA based on
the Handbook provision. A hearing officer with the National
Appeals Division (NAD) reversed the State FSA, finding for Davidson
on equitable grounds. The FSA requested a final review before the
NAD director, who reversed the hearing officer, finding for the FSA
3
and moved for summary judgment. The district court granted the
FSA’s motion and denied Davidson’s motion. Davidson appeals.
The government contends that the Handbook provision does not
permit Davidson to revise his acreage report, because he will
benefit from the revision through eligibility for the disaster
assistance program.4 Davidson contends that the agency’s
regulation permitting revision “at any time for all crops and land
uses,” 7 C.F.R. § 718.24 (1994), governs rather than the Handbook
provision.5
based on the Handbook provision.
4
Under the Handbook, “[the acreage report] may be revised after
the final reporting date to . . . [c]hange the intended use of a
crop for land use if the change does not provide additional
benefits from payments, P &CP and eligibility for other programs.”
Handbook 2-CP (Rev. 14) Amend. 41 § 83.
5
The regulation states:
[t]he farm operator may revise a report of acreage to
change the acreage reported. Revised reports shall be
filed in accordance with instructions issued by the
Deputy Administrator and shall be accepted:
(a) At any time for all crops and land uses if evidence
exists for inspection and determination of
(1) The existence of the crop.
(2) The use made of the crop
(3) The lack of crop, or
(4) A disaster condition affecting the crop . . . .
7 C.F.R. § 718.24. The regulation has since been revised.
See 7 C.F.R. § 718.24 (1995) (stating that “[t]he farm
operator may revise a report of acreage to change the acreage
reported if the country committee determines that the revision
does not have an adverse impact on the program.”);7 C.F.R. §
718.104 (1996) (stating that “the farm operator may revise a
report of acreage with respect to 1996 and subsequent years to
change the acreage reported if the county committee determines
that the revision does not have an adverse impact on the
program and acreage has not already been determined by FSA.”).
4
A rule is “an agency statement of general or particular
applicability . . . designed to . . . implement, interpret, or
prescribe law or policy . . . .” APA, 5 U.S.C.A. § 551(4) (West
1996). Rule making is the “agency process for formulating,
amending, or repealing a rule.” Id. § 551(5). An agency must
provide notice of rule making in the Federal Register, and must
allow comment by interested parties. See id. § 553(b)-(c). “[A]
person may not in any manner be . . . adversely affected by[] a
matter required to be published in the Federal Register and not so
published.” Id. § 552(a)(1). Interpretive rules are exempt from
the notice and comment requirements. Id. § 553 (b) (A).
Davidson contends that the Handbook provision is a legislative
rule subject to the notice and comment requirements of the APA.
The FSA does not challenge that the Handbook provision is a rule to
which the APA applies. Rather, the FSA contends that the
“[r]evised [acreage] reports shall be filed in accordance with
instructions issued by the Deputy Administrator” language in 7
C.F.R. § 718.24 satisfies the notice and comment requirements.
Notice must be published in the Federal Register not less than
thirty days before the effective date of the proposed rule. See
id. § 553(d). After publishing notice, the agency must give
interested parties the opportunity to participate in the rule
making by submitting data, views, or arguments. See id. § 553(c).
The “[r]evised [acreage] reports shall be filed in accordance with
5
instructions issued by the Deputy Administrator” language satisfies
neither the notice nor comment requirement.
The FSA also contends that the Handbook provision is an
interpretive rule, exempt from APA notice and comment requirements.
Interpretive rules state what the administrative officer thinks the
statute or regulation means, see Brown Express, Inc. v. United
States, 607 F.2d 695, 700 (5th Cir. 1979) (internal quotation and
citation omitted), while legislative rules “affect[] individual
rights and obligations,” see Chrysler Corp. v. Brown, 441 U.S. 281,
301-02 (1979) (internal quotation and citation omitted), and create
law, see Brown Express, Inc., 607 F.2d at 700. The Handbook
provision imposes conditions on the revision of acreage reports
beyond those required by the regulation, thereby qualifying as a
legislative rule by “affecting individual rights” and creating new
law. The FSA cannot use § 83, which does not satisfy the APA
notice and comment requirements, to adversely affect Davidson. We
therefore vacate the district court’s grant of summary judgment,
and remand for further proceedings.
1995 Crop
Davidson leased acreage from the U.S. Fish and Wildlife
Service for planting soybeans, and insured the soybean crop through
the County FSA. Prior to planting, Davidson performed services and
purchased and applied chemicals worth about $6,511.50. Backwater
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flooding of the Mississippi River until after the recommended final
planting date for soybeans prevented planting. Davidson filed a
claim for insurance benefits with the County FSA. The County FSA
denied coverage because Davidson did not have a share in the crop
at the time of the loss. After fully utilizing the agency review
and appeal process, Davidson sought judicial review of the agency’s
final ruling denying coverage.6 Both Davidson and the FSA moved
for summary judgment. The district court granted the FSA’s motion
and denied Davidson’s motion. Davidson appeals.
A producer’s crop insurance policy consists of several
documents, including the Crop Insurance Provisions, the Common Crop
Insurance Policy, and any special provisions.7 Milo and soybeans
are insured under the Coarse Grains Crop Insurance Provisions. See
7 C.F.R. § 457.113 (1)(a) (1995). Under the Coarse Grains Crop
Insurance Provisions, an insurable crop is a coarse grain crop in
which the producer has a share. See id. § 457.113(6)(a)(1). The
Common Crop Insurance Policy defines “share” as a “percentage of
interest in the insured crop as . . . [producer] at the time the
coverage begins.” Id. § 457.8(1)(nn). However, for indemnity
purposes, the producer’s share is limited to his share at the
6
On appeal, a NAD hearing officer upheld the County FSA’s
denial of the claim. The NAD director upheld the NAD hearing
officer’s denial of the claim.
7
See, e.g., 7 C.F.R. § 457.1 et seq. (Crop Insurance
Provisions); § 457.8 (Common Crop Insurance Policy); § 457.113
(Coarse Grains Crop Insurance Provisions).
7
earlier of the time of the loss or the beginning of the harvest.
See id.
Davidson contends that, under applicable Mississippi law, he
had a share in the soybean crop at the time of loss.8 The agency
counters that, under the lease, Davidson had no share in the crop
at the time of loss. The agency reasons as follows. The lease
lists the number of acres potentially available to plant, but
specifically adjusts that number based on the actual acres planted
after accounting for prevented planting from backwater flooding.
In other words, the number of acres actually planted or prevented
from being planted for reasons other than backwater flooding will
determine the actual number of acres in which Davidson has a
share.9 The parties agree that backwater flooding prevented
8
See Southeastern Fidelity Ins. Co. v. Gann, 340 So.2d 429,
433-34 (Miss. 1976) (“anyone has an insurable interest in property
who derives a benefit from its existence or would suffer loss from
its destruction.”); Fry v. Jordan Auto Co., 80 So.2d 53, 57 (Miss.
1955) (noting that both a lessor and lessee have an insurable
interest in the leased premises). Davidson also relies on Parks v.
Federal Crop Ins. Corp., 416 F.2d 833, 839 (7th Cir. 1969) (noting
in a case defining “producer” for crop insurance purposes that
“one has an insurable interest in property by the existence of
which he receives a benefit, or by the destruction of which he
suffers a loss, regardless of whether he has title to the
property.”).
9
The relevant lease provision reads as follows:
[Davidson’s] rent for soybean ground will be based on a
75%-25% share basis. The government’s share of 25% of the
total acreage planted will be compensated by planting
designated crops for the refuge or providing services for
the refuge or both. . . . The total farmable acreage under
this agreement will be approximately 3,000 acres. The
maximum government share on the 3,000 acres would be 750
8
planting. Davidson planted zero acres, leaving Davidson with a
share in zero acres. Since he had no share, he had no insurable
interest.
Under the APA, we review questions of law de novo, without
deference to the agency’s conclusions. See APA, 5 U.S.C.A. § 706
(1996); Institute for Tech. Dev. v. Brown, 63 F.3d 445, 450 (5th
Cir. 1995) (noting that courts review agencies’ legal conclusions
de novo). The agency’s interpretation of Davidson’s lease is a
matter of law which we review de novo. See Exxon Corp. v. Crosby-
Mississippi Resources, Ltd., 154 F.3d 202, 205 (5th Cir. 1998)
(noting that contract interpretation is a matter of law reviewed de
novo). Our de novo review establishes that the FSA correctly
interpreted Davidson’s lease provision; Davidson had no insurable
interest at the time of loss. The lease terms limited the number
of acres in which Davidson had an interest to those acres actually
planted or prevented from being planted for reasons other than
backwater flooding. Since zero acres were planted or prevented
from being planted for reasons other than backwater flooding,
Davidson had a share in zero acres. We therefore affirm the
district court’s grant of summary judgment to the FSA.
acres (25%). [Davidson] will provide the refuge with 150
acres of milo to be planted at specific locations around
the refuge. The remaining share of 600 acres . . . will
be taken in specified services amounting to 15,000 dollars
(600 acres X 25 dollars per acre). . . . NOTE: Adjustments
in acreage will need to be made according to the amount of
acreage actually planted due to the backwater flooding.
9
VACATED and REMANDED in part; AFFIRMED in part.
10