ND couple wins CRP payment limit appeal
FORMAN, N.D. — A deal's a deal, but maybe it's not if the U.S. Department of Agriculture makes it, say Danny "Dan" Zirnhelt and his wife, Sherry Zirnhelt.
The retired farmers and custom grain harvesters from Forman, N.D., successfully appealed a Conservation Reserve Program contract payment dispute to the USDA's National Appeals Division. The Zirnhelts won partial victory but still lost $15,000.
It all started in August 2015, when the Zirnhelts signed a 15-year contract.
Laurie Bischof, a "cordial" and experienced technician in the Sargent County Farm Service Agency office, calculated their signup bonus, which indicated a $75,000 payment to be paid Oct. 17, 2016.
The Zirnhelt's agreement included a per-acre rent payment and a cost-share for seeding at 85 to 95 percent. The USDA's Farm Service Agency promised a payment limit of $50,000 per person — $100,000 for the couple — on annual rent payments. The technician said the FSA was to pay the signup bonus and then the cost-share.
A year later — "the day the rental payment to be paid came" — Bischof called them. It was a "sorry," they wouldn't be getting what they were "expecting," or what their signed contract said.
In a meeting at the office, Bischof told Dan that the FSA couldn't pay more because the payment limitation rules require including the bonuses and cost-share. They would be paid $17,000 — $57,333 short of what the contract promised.
And the kicker — due to an unfortunate Bischof illness, the paperwork hadn't been completed until two months after it was supposed to have been. Documents show the the October and November rent payment for that year would be deleted, costing about $15,000.
Shocked, the Zirnhelts appealed the case to the Sargent County FSA committee and won. "They agreed we had been misled," Dan says.
The FSA appealed it to the state committee. The Zirnhelts won again.
Finally, the FSA appealed it to national agency officials. This time the Zirnhelts lost without a hearing. A new FSA county director informed Dan about a National Appeals Division — essentially a third-party arbiter of FSA decisions.
Dan called a lawyer in Bismarck, N.D., who said she'd have to charge $20,000 to take their case "win or lose." But she also told him they could probably represent themselves.
At 10 a.m., May 18, 2017, in Jamestown, N.D., they went before Ted Hinesley, an administrative judge. Arguing for the FSA was Brad Olson, the same state program specialist who had advised the state committee, where they had prevailed. Now, Olson argued that the Zirnhelts were responsible and should have known the signup bonus and 40 percent of the crop seeding costs were subject to payment limits.
The Zirnhelts argued they were never told that. They didn't receive the fine print in an "appendix" until the moment of signing, and the appendix they were provided was published in a 2003 version and not the updated 2015 version they should have received.
"There was no bad information given to you — in writing" Olson said, in the recorded hearing. Olson acknowledged the Zirnhelts were quoted a rate and the number of acres that would qualify, but the agency had never in print given them a "grand total" of what they would be paid.
In the end, the NAD director in Washington, D.C., found that the FSA calculated correctly but had erred in what they told the Zirnhelts.
"Of the $57,333 we didn't get the day we thought we are getting it, we are getting $30,000," Dan says.
The Zirnhelts say the whole payment limit would have been avoided by splitting the contract start dates across two separate years.
Dan, 68, and Sherry, 67, had counted on the CRP payments to ease their retirement from a stressful occupation.
Dan grew up a mile away from where they now live. Sherry, grew up 10 miles away at Cogswell, N.D. They Zirnhelts met at 4-H camp in their early teens. After high school, Dan joined his father's grain and livestock farm.
In 1978, they started a custom-harvesting business. Traveling with four young children, they cut wheat from Kansas to North Dakota. Skipping 1979 to install a grain dryer, they resumed harvesting in 1980 and went farming on their own that same year.
The Zirnhelts farmed up to 2,000 acres, owning 800 acres. During the farm credit crisis, they paid 19 percent interest on operating loans.
For a couple of winters, Sherry worked in a local retirement home. Dan worked in repair shops and did welding. In 1991 Dan and Sherry started working winters in a local factory, in addition to harvesting and farming. Through those years, Dan was on the school board, the elevator board and the fire department.
In 1997, they quit farming actively and rented out the land. They expanded into harvesting, running up to three combines and going farther south and north. To save money for retirement, they took a job team-driving semi-trucks for the manufacturer.
In 2000, Dan quit the harvest run in favor of the full-time trucking job. They rented their land out in 2001.
In 2015, the renters' three-year contract was set to expire.
"Rents had changed considerably, and they were changing their farming operations," Dan says. They didn't make a bid, so the Zirnhelts were looking for new renters.
A coffee buddy urged Dan to check out the CRP rates.
Sherry had resisted a CRP contract, saying she "wanted farmers to farm my land." But Dan argued that it was a "no brainer" because the cash rent rates could decline over 15 years. Cash rent was running $100 to $120 an acre. The CRP was offering $130 per acre annual payment, plus a $100 per acre starting bonus.
Sherry was skeptical but Dan re-checked and double-checked the figures "numerous times." In the end, they sold 440 acres to pay off other parcels to be debt-free. They put the rest into the CRP — four quarters deeded to each of their four children in a lifetime estate.
"We kept a fifth quarter out just for us, in case we needed to sell something in retirement," Dan says.
They never imagined it would lead to the appeal saga that ended Aug. 31, 2017.
The NAD director determined the Zirnhelts were to be paid in October. The check arrived Nov. 30, 2017.
During their fight, the Zirnhelts, by chance, found that a neighbor had the same problem with the same technician. He hadn't challenged it, but they urged him to appeal, too, and he received a partial settlement. Dan wonders whether others may have been short-changed.
"I can't imagine that there aren't," he says.