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Published August 24, 2010, 08:22 AM

Paying for costs of ‘war’

Farmers and ranchers trudging through U.S. Department of Agriculture appeals procedures recently have been given a much-needed break — a chance to receive reimbursement for their attorney’s fees and other expenses.

By: Derrick Braaten, Special to Agweek

Farmers and ranchers trudging through U.S. Department of Agriculture appeals procedures recently have been given a much-needed break — a chance to receive reimbursement for their attorney’s fees and other expenses. The Department of Agriculture amended the USDA’s National Appeals Division rules of procedure Nov. 6, 2009, to apply the Equal Access to Justice Act to its administrative proceedings. Under the EAJA, an agency must pay the individual’s costs if it does not prevail and if the agency cannot show that its position was “substantially justified.” Costs covered by the act include anything from attorney’s fees (generally up to $125 an hour) to expert witness expenses, costs for conducting surveys, tests, reports, projects or any other analysis necessary to prepare the party’s case.

Although “substantially justified” is a fuzzy standard, courts have taken a common-sense approach to the definition. A position is substantially justified if it would “satisfy a reasonable person” or if it is “well-founded in law and fact; solid though not necessarily correct.” For example, in Aageson Grain v. USDA, our firm’s attorney, Beth Baumstark, successfully challenged the Montana FSA’s across-the-board policy of denying benefits for first-year perennial grasses as a substantially unjustified basis for denial.

Originally, USDA took the position that the EAJA was not applicable to NAD proceedings and denied requests for reimbursement unless required by judicial rulings. This meant, for example, that a farmer who was denied benefits under an FSA program, who challenged the denial of benefits in an administrative proceeding and won, still would have to bear all the costs of pursuing the appeal and preparing for the hearing.

The recent change came in response to judicial rulings declaring that the EAJA was applicable to NAD proceedings and requiring payment of fees. The trend began with a 1997 North Dakota case, Lane v. USDA. In this case, the court found that farmers who won an NAD appeal of a decision denying their application for delinquent loan servicing were entitled to attorney’s fees under the EAJA. Despite this ruling, USDA maintained its position that NAD’s proceedings were not subject to the EAJA and refused to grant requests unless required by court order. However, since 2007, the 9th, 7th and 5th circuits also have issued opinions declaring farmers were entitled to reimbursement under the EAJA after prevailing in administrative appeals challenging the denial of benefits under various federal farm programs. In light of these rulings, USDA has at last amended its regulations and applied the protections of the EAJA universally to NAD appeals.

Attorney’s fee cap

Another recent development with EAJA is a July 2010 USDA proposal to amend regulations regarding the cap on attorney’s fees. In 1996, Congress first amended the act by raising the maximum rate for attorney’s fees from $75 to $125 an hour. This maximum rate could be increased only where special factors, such as cost-of-living calculations or limited availability of qualified attorneys, justified a higher fee. Now, USDA is proposing to raise the current $125 cap to $150 an hour. The proposal states, “The USDA does recognize that inflation has eroded the value of the $125.00 per hour fee set by Congress in 1996.” Not only will this amendment benefit farmers, it will make these cases more attractive to attorneys as well.

Although USDA doesn’t view the EAJA application or the fee increase as “significant regulatory action,” both certainly are significant to the farmer who has battled his or her way through an administrative nightmare, come out on the other side victorious and now can send the costs of war on to the agency that started the unfair battle in the first place.

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