REVISED JANUARY 23, 2003
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
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No. 01-60573
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CHARLES DAVIDSON, doing business as Davidson Farms,
Plaintiff - Appellant,
versus
ANN VENEMAN, Secretary Department of Agriculture,
Defendant - Appellee.
Appeal from the United States District Court
For the Southern District of Mississippi
January 22, 2003
Before KING, Chief Judge, JONES and EMILIO M. GARZA, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
This is the second appeal to this court by the plaintiff Charles Davidson, doing business as
Davidson Farms (Davidson). Davidson previously appealed a grant of summary judgment in favor
of the Farm Services Agency (FSA) that prohibited revision of his farm acreage report for 1994, thus
preventing him from receiving disaster assistance from the FSA. Davidson v. Glickman, 169 F.3d
996 (5th Cir. 1999). We vacated and remanded because the FSA based its position on a legislative
rule that did not meet the notice and comment requirements of the Administrative Procedure Act
(APA). Id. at 999. Davidson then filed a “motion for fees and other expenses and costs” in the
district court. In addition, both parties moved to have the case remanded to the FSA for a revised
administrative determination in light of our holding. The district court granted that motion and stayed
Davidson’s motion for fees and expenses pending the completion of the administrative proceedings.
On remand to the FSA, the agency paid Davidson’s claims for 1994 Disaster Assistance
Program (DAP) payments based on the revised acreage report, but denied his request for attorney’s
fees and interest. Davidson next filed a “motion for summary judgment awarding interest” in the
district court, as well as a supplemental motion for attorney’s fees under the Equal Access to Justice
Act (EAJA). The district court denied Davidson’s motion for fees, holding that the Government’s
position was substantially justified, and Davidson appealed. While that appeal was pending, the
district court denied Davidson’s motion for summary judgment on the interest issue. The FSA did
not file a cross-motion for summary judgment on the interest issue and the district court did not enter
judgment for either party. In addition, Davidson did not file a second notice of appeal (NOA), but,
within thirty days, the parties filed a joint motion to stay the first appeal, supplement the record on
appeal, and revise the briefing schedule. The parties also sought approval to waive “any further
notice of appeal.” The clerk of this court granted the joint motion. The parties did not seek, nor did
the district court enter, a separate, final judgment on the interest issue.
After hearing oral argument, we held that we did not have jurisdiction over the interest issue
because the district court’s denial of Davidson’s “motion for summary judgment awarding interest,”
was not a final judgment under 28 U.S.C. § 1291. We then made a limited remand to the district
court, directing it to decide the interest issue and enter a final judgment. On remand, the district court
denied Davidson interest and rendered judgment for the Government on this issue. Now that the
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district court has disposed of all issues, and a final judgment has been entered, we have jurisdiction
under § 1291.
I
Davidson first appeals the district court’s denial of attorney’s fees. We employ an abuse of
discretion standard to review a district court’s decision under the EAJA that the Government’s
position was substantially justified, although underlying conclusions of law are subject to de novo
review and factual conclusions are reviewed for clear error. Aguilar-Ayala v. Ruiz, 973 F.2d 411,
416 (5th Cir. 1992) (citations omitted). After reviewing the circumstances of this case, we hold that
the district court did not abuse its discretion in finding the Government was substantially justified in
its position and we thus affirm the denial of attorney’s fees.
The EAJA, 28 U.S.C. § 2412(d)(1)(A), requires an award of attorney’s fees to a claimant
against the Government if: (1) the claimant is a “prevailing party”; (2) the Government’s position was
not “substantially justified”; and (3) there are no special circumstances making the award unjust. Sims
v. Apfel, 238 F.3d 597, 599-600 (5th Cir. 2001). As a threshold matter, a plaintiff is a “prevailing
party” under the EAJA “if [he] succeed[s] on any significant issue in litigation which achieves some
of the benefit [he] sought in bringing suit. Id. (citation omitted). In the present case, the FSA’s
administrative award to Davidson renders him a prevailing party.
Next, the Government’s position is “substantially justified” if it is “justified in substance or
in the main—that is, justified to a degree that could satisfy a reasonable person.” Id. at 602 (citing
Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988)). Substantial
justification is a higher burden then that of sanctions for frivolousness; the Government’s position
must have a “reasonable basis both in law and fact.” Pierce, 487 U.S. at 565, 108 S.Ct. 2541. This
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standard is not overly stringent, however, and the position of the government will be deemed to be
substantially justified “if there is a ‘genuine dispute’ . . . or ‘if reasonable people could differ as [to
the appropriateness of the contested action].’”1 Id.
The burden of proving substantial justification falls to the Government. Herron v. Bowen, 788
F.2d 1127, 1130 (5th Cir. 1986). It must show, based on the record (including the record with
respect to the decisions of the agency upon which the civil action is based), that it acted reasonably
at all stages of the litigation. 28 U.S.C. § 2412(d)(2)(D); SEC v. Fox, 855 F.2d 247, 248, 251-52
(5th Cir. 1988); Herron, 788 F.2d at 1130.
Davidson argues the district court’s denial of fees was error because the FSA’s refusal to
allow him to revise his farm acreage report was arbitrary and capricious, and thus not substantially
justified. In chief, he claims it was unreasonable for the Government to rely on an FSA Handbook
provision that it knew conflicted with the applicable regulation and had not been adopted pursuant
to the notice and comment requirements of the APA. A summary of the Government’s position is
necessary to evaluate this argument.
At the time Davidson sought the disaster relief payments at issue, the federal regulation
provided that reports of acreage could be revised “at any time for all crops and land uses.” 7 C.F.R.
§ 718.24 (1994). Rule 2-CP § 83 of the FSA Handbook, however, prohibited revision when the
farmer would benefit from the revised report, so the FSA denied Davidson’s request for disaster
1
Davidson contends that, in order for the government to meet its burden of substantial
justification, it must show: (a) a reasonable basis in truth for the facts alleged; (b) a reasonable basis
in law for the theory it propounded; and (c) a reasonable connection between the facts alleged and
theory propounded. Hanover Potato Prods., Inc. v. Shalala, 989 F.2d 123, 128 (3d Cir. 1993). This
formal three-step system has not been adopted by this circuit. Rather, the government is tasked
simply with showing reasonableness, as defined by Pierce. See Aguilar-Ayala, 973 F.2d at 416.
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assistance. See Davidson, 169 F.3d at 998. According to the Government, the regulation was
designed to allow prospective revisions of acreage reports but was not intended to allow farmers to
later reap the rewards of retrospective disaster assistance, and the Handbook provision was designed
to prevent this outcome. Throughout the administrative appeal process and ensuing litigation, the
Government consistently argued for the rule in the Handbook because it was the only interpretation
that prevented farmers from receiving windfalls.
Davidson emphasizes that the Government did not cite any case holding that the Handbook
prevails in a conflict with a regulation. He reasons the Government knew the regulation was
dominant, and thus the Government could not have been substantially justified in enforcing the
Handbook provision instead. In this regard, Davidson misunderstands the Government’s position.
In part, the Go vernment maintained the FSA Handbook was not in conflict with the applicable
regulation because it was instead only an interpretation of that regulation. Such an interpretation was
practical and necessary, from the Government’s perspective, to prevent farmers from filing revisions
solely to qualify for disaster assistance. Moreover, interpretative rules are not required to meet the
notice and comment provisions of the APA, 5 U.S.C. § 553(b)(A), so the method by which the
Handbook was adopted does not undermine the Government’s position. While we did not accept the
Government’s argument that the Handbook provision was interpretative, that does not mean the
Government was unreasonable in its belief that there was no conflict between the Handbook and the
regulation.2
2
Davidson contends that our reversal of the district court’s judgment in the first appeal shows
that the government’s position was arbitrary and capricious. Nowhere in our prior decision did we
hold that the government acted in an arbitrary and capricious manner. Moreover, even if we had
found the government’s actions to be arbitrary and capricious, this would not “necessarily mean that
the government acted without substantial justification.” Spawn v. W. Bank–Westheimer, 989 F.2d
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Likewise, the Government was unable to cite a case in support of its argument because the
issue was one of first impression, and therefore novel. This fact alone weighs in favor of substantial
justification. See Baker v. Bowen, 839 F.2d 1075, 1081 (5th Cir. 1988); Herron, 788 F.2d at 1132.
The substantial justification standard should not be used t o prevent the government from making
novel arguments. Rather, the “standard was designed to allow the government to advance ‘in good
faith . . . novel but credible . . . interpretations of the law that often underlie vigorous enforcement
efforts.’” Fox, 855 F.2d at 252 (quoting Russell v. Nat’l Mediation Bd., 775 F.2d 1284, 1290 (5th
Cir. 1985)).
The Government’s success in the early stages of the dispute is also relevant. Although not
all the administrative rulings were in the Government’s favor, we note that at least two reviewing
officers found for the Government on the basis of the Handbook. In addition, the district court
granted the Government’s motion for a summary judgment on this issue. Davidson is correct in
arguing that the district court’s judgment in favor of the Government is not sufficient, in and of itself,
to show that the Government’s position was substantially justified. Nonetheless, the district court’s
ruling is a factor weighing in favor of the Government. Spawn, 989 F.2d at 840.
In sum, nothing in the record indicates that the district court abused its discretion in finding
the Government’s position was reasonable. Because we affirm the district court’s holding that the
government was substantially justified, we need not address the “special circumstances” prong of the
EAJA.
830, 840 (5th Cir. 1993) (quoting Griffon v. United States Dep’t of Health & Human Servs., 832
F.2d 51, 52 (5th Cir. 1987)). In fact, in Spawn, we explicitly rejected the argument that our
interpretation of the law o n appeal was dispositive on the issue of whether the Government was
substantially justified. Id. at 840.
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II
Davidson also challenges the district court’s denial of his motion for summary judgment
seeking an award of interest. We review a grant or denial of summary judgment de novo, using the
same criteria employed by the district court. Mongrue v. Monsanto Co., 249 F.3d 422, 428 (5th Cir.
2001). Summary judgment is proper if, drawing all inferences in favor of the non-moving party, there
is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.
Id.; FED. R. CIV. P. 56(c).
Interest is not recoverable in suits against the United States unless there is an express waiver
of sovereign immunity with regard to an award of interest. Gore, Inc. v. Glickman, 137 F.3d 863,
870 (5th Cir. 1998). The Prompt Payment Act, 31 U.S.C. § 3902, operates as such a waiver in
specific, enumerated circumstances. Under § 3902(h)(2)(A), a farmer is entitled to interest for any
delay of “a payment to which producers . . . are entitled under the terms of an agreement entered into
under the Agricultural Act of 1949 (7 U.S.C. § 1421 et seq.).” Davidson contends the 1994 DAP
payments he sought fall within this provision because the payments were authorized by the
Agricultural Act of 1949 (“the ‘49 Act”). It is undisputed that the source legislation for the payments
was the Agricultural Rural Development and Related Agencies Appropriations Act of 1995, Pub. L.
No. 103-330, 108 Stat. 2448 (1994) (“the ‘94 Act”). The ‘94 Act provides, in pertinent part:
[s]uch sums as may be necessary from the Commodity Credit Corporation shall be
available, through July 15, 1995, to producers under the same terms and conditions
authorized in chapter 3, subtitle B, title XXII of Public Law 101-624 for 1994
crops . . . affected by natural disasters . . . .
108 Stat. at 2448-49. The key inquiry is whether the ‘94 Act, through this language, creates a
payment to which Davidson is entitled “under the terms of an agreement entered into” under the ‘49
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Act.3
The district court found that Davidson was not entitled to summary judgment on this issue
because he failed to establish that the DAP payments fell within the ‘49 Act, as required by the
Prompt Payment Act, and thus he was not entitled to interest as a matter of law. At this stage of the
proceedings, Davidson makes a variety of arguments, some new and some recycled, to support his
assertion that the ‘94 Act falls within the ‘49 Act, but we find none of them persuasive. First,
Davidson argues that the disaster relief payments fall under the ‘49 Act because the relevant disaster
relief statutes are cited in the notes to 7 U.S.C. § 1421, which is the initial provision of the codified
version of the ‘49 Act. Davidson is correct that Congress officially designated various disaster relief
bills as notes to this provision (the statutes were not codified because of their temporary nature), but
it is unclear that Congress made that decision for anything other than organizational reasons and we
decline to take that designation as proof positive of legislative intent.
Next, Davidson suggests that an 1987 appropriations bill, Pub. L. No. 100-202, 101 Stat.
1329 (1987), supports his case because it notes that the Commodity Credit Corporation (CCC) must
pay an interest penalty under the Prompt Payment Act on all payments for obligations incurred after
January 1, 1998. Davidson reasons that since the DAP payments are administered by the CCC and
were owed to him in 1994, they necessarily fell within the Prompt Payment Act. This argument
ignores the actual language of the bill, however, which provides that the CCC “shall pay an interest
3
Davidson argues that the Government is precluded from arguing that the ‘49 Act does not
apply because it did not assert this argument at the administrative level. He cites Christopher M. v.
Corpus Christi Indep. Sch. Dist., 933 F.2d 1285 (5th Cir. 1991), to support this proposition. In
Christopher M., we simply held that an amicus curiae cannot raise issues already waived by the
parties or issues not raised by either party unless exceptional circumstances existed. Id. at 1292-93.
Christopher M. is not apposite here.
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penalty, determined on the basis of the provisions of the Prompt Payment Act, on . . . all payments
. . . .” 101 Stat. at 1329-336. This wording does not suggest that Congress intended to modify the
scope or conditions of the Prompt Payment Act; rather, it seems Congress was simply reiterating that
the CCC was only obligated to pay interest when the terms of the Prompt Payment Act were met.
Davidson also cites Doane v. Espy, 873 F. Supp. 1277 (W.D. Wis. 1995), and Huntsman
Farms, Inc. v. Espy, 928 F. Supp. 1451 (E.D. Ark. 1996), in support of his construction of the
relevant laws. Neither decision is applicable to this case. In Doane, the court allowed interest under
the Prompt Payment Act for corn deficiency payments, but noted, in dictum, that disaster relief
payments made pursuant to the Disaster Assistance Act of 1988, Pub. L. No. 100-387, 102 Stat. 924
(1988) (“the ‘88 Act”), were not covered by § 3902(h) of the Prompt Payment Act. In other words,
the court reasoned that at least some disaster relief payments are not covered by the very same
provision of the Prompt Payment Act at issue in this case because the payments do not fall under the
‘49 Act. Doane, 873 F. Supp. at 1278-79. In Huntsman Farms, the payments at issue were
deficiency payments, a type of agricultural price support clearly covered by the Prompt Payment Act.
Huntsman Farms, 928 F. Supp. at 1453-54, 1462; see also 31 U.S.C. § 3902(h)(2)(B)(vi) (referring
specifically to deficiency payments).4
Likewise, the legislative history to the Prompt Payment Act Amendments of 1988, Pub. L.
No. 100-496, 102 Stat. 2455 (1988), does not clearly support Davidson’s position. Although
Congress refers to “payments under the various support programs of the CCC” and the “various
agricultural support programs administered by the CCC,” there is no clear indication that this general
4
Davidson cites two other cases, Doty v. United States, 109 F.3d 746 (Fed. Cir. 1997), and
Gutz v. United States, 45 Fed. Cl. 291 (Fed. Cl. 1999), but they are also inapplicable and we decline
to discuss them in this opinion.
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language enco mpasses disaster relief payments. See H.R. REP. NO. 100-784, at 21, 36 (1988),
reprinted in 1990 U.S.C.C.A.N. 3036, 3049, 3064. In fact, if any meaning can be taken from this
statute, the result cuts against Davidson’s position. Prior to 1988, § 3902(h) of the Prompt Payment
Act, the provision at issue here, did not exist. During the amendment process, Congress added this
section, as well as specific provisions, codified at 31 U.S.C. § 3902(h)(2)(B)(i)-(vii), governing the
calculation of interest for various types of agricultural price support payments. Land diversion
payments, deficiency payments, and loan agreements are all explicitly mentioned, among others, but
there is no provision governing the calculation of interest for DAP payments or any other type of
disaster relief payment. To compensate for this gap, Davidson asserts that his period of interest
should be governed by § 3902(h)(2)(B)(vi), which governs “deficiency payments,” but offers no
explanation as to why that is the appropriate provision. “Deficiency payments” are not simply
untimely, or otherwise lacking, payments by the Government, but are a specific type of farm support
payment, discussed in part at 7 U.S.C. § 1445j. We see no obvious connection between deficiency
payments and disaster relief payments. To the extent Congress did not provide a formula for
calculating interest on such ad hoc disaster relief payments, the obvious conclusion is that no such
interest was intended.
Finally, Davidson cites 7 C.F.R. Part 777, noting that it refers to the ‘49 Act as the
authorizing legislation for implementation of a USDA Disaster Payment Program. For example, 7
C.F.R. § 777.1 states that it implements
a Disaster Payment Program for the 1990 crop year provided by section 201(k) of the
Agricultural Act of 1949, as amended, and Dire Emergency Supplemental
Appropriations Act for Fiscal year 1990. The purpose of the program is to make
disaster payments to eligible producers . . . who have suffered a loss of
production . . . as the result of a natural disaster in 1989.
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Id. This language mirrors the language of the authorizing statute, the Dire Emergency Supplemental
Appropriation and Disaster Assistance Spending Act of 1990, Pub. L. No. 101-302, 104 Stat. 213,
214 (1990) (“the ‘90 Spending Act”), and it does give us pause. Section 201(k), the provision of the
‘49 Act referred to, was originally created by the Food Security Act of 1985, Pub. L. No. 99-198,
99 Stat. 1354 (1985) (“the ‘85 Act”), and was codified at 7 U.S.C. § 1446(k). While it is clear that
the ‘85 Act explicitly amended the ‘49 Act, the terms of the ‘85 Act only applied to the 1985 to 1990
crop years, not the 1994 crop at issue here. And the ‘90 Spending Act did nothing more than
designate appropriations for this limited purpose and time period. Indeed, 7 U.S.C. § 1446(k) was
dropped from the Code after it expired in 1990.
Furthermore, the ‘90 Spending Act is not a precursor of the ‘94 Act at issue in this case. The
‘94 Act, cited supra, refers explicitly to the Food, Agriculture, Conservation, and Trace Act of 1990,
Pub. L. No. 101-624, 104 Stat. 3359 (1990), which, in turn, states in § 2244 that disaster payments
are available “to the extent that assistance was not made available under the Disaster Assistance Act
of 1989.” 104 Stat. at 3967. The relevant provisions of the Disaster Assistance Act of 1989, Pub.
L. No. 101-82, 103 Stat. 564 (1989) (“the ‘89 Act”), including § 104, do not refer to any previous
legislation, and, in particular, give no indication that they amend or supplement the ‘49 Act. In sum,
the ‘90 Spending Act seems to fall outside of a chain of disaster relief legislation passed during that
period, and we are unable to conclude that any of the links in that chain are substantively connected
to the ‘49 Act.
In the absence of a clearer connection between the ‘49 Act and the DAP payments at issue
here, we hold that the payments fall outside the limited terms of the Prompt Payment Act, as
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embodied in 31 U.S.C. § 3902(h). We cannot award interest unless there is an express waiver of
sovereign immunity, and we find no such waiver for this type of payment. To conclude otherwise
would be beyond our judicial authority.
For the foregoing reasons, we find that the district court properly ruled that Davidson was
not entitled to attorney’s fees under the EAJA or interest under the Prompt Payment Act and we
AFFIRM.
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