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Published February 01, 2011, 09:19 AM

Montana farmers study ACRE appeal denial

FARGO, N.D. — Sheridan County, Mont., farmers who appealed with the Farm Service Agency to get out of the Average Crop Revenue Election program on durum in 2009 have been denied their appeal at the county level, based on the state committee denying the county committee’s request for relief on behalf of those producers. The state denial was based on a newly released audit report from an Office of Inspector General.

By: Mikkel Pates, Agweek

FARGO, N.D. — Sheridan County, Mont., farmers who appealed with the Farm Service Agency to get out of the Average Crop Revenue Election program on durum in 2009 have been denied their appeal at the county level, based on the state committee denying the county committee’s request for relief on behalf of those producers. The state denial was based on a newly released audit report from an Office of Inspector General.

The state FSA says the issue in that county involves up to $2.7 million in federal cost. ACRE is an alternative revenue-based program, compared with the Direct and Counter-Cyclical Payment Program or DCP. ACRE was new under the 2008 farm bill and first implemented in 2009.

Of the 23 farmers who appealed, 22 remain in the case. They allege two things — they were misinformed about how loan deficiency payments were calculated under the ACRE program and the county FSA mishandled a “signup register,” giving some — not all — farmers extra time to back out of ACRE.

The OIG audit report, in its Dec. 10, 2010, report, says the Sheridan County FSA office did in fact mishandle the signup register. But the OIG says its investigators couldn’t confirm the appellants been given false information about their LDP rates under the program.

Montana state director Bruce Nelson, backed by six other FSA officials from California to Washington, all met in a phone teleconference with an Agweek reporter for nearly two hours Jan. 21, 2011, to offer an update on the case. Agweek reported on the case (“Hosed! ACRE program snafu costs Montana growers millions”) on Jan. 4, 2010.

Nelson confirms that producers could appeal the misinformation issue at the state or more likely at the national level. Curiously, he says neither the county nor state committees have authority to let individuals out of ACRE program anyway. He says there even is a question “whether even the secretary of agriculture” has authority to let producers out of ACRE “even if there is a basis for it” because the statute says “the ACRE election is irrevocable.”

Nelson and others decline to confirm whether a county FSA technician who handled the case is or to comment on whether her departure may be connected to the findings of mishandling the register. The FSA officials advised Agweek of Freedom of Information request rights.

Farmers in the case say they are considering their options.

The OIG report impact

Nelson says he and others had requested the OIG audit because he had experience with the agency’s impartiality and thoroughness. He says the OIG had reviewed 40,000 e-mails, among other things. This guided the state committee and county actions.

In letters to appellants dated Jan. 12, 2011, Donna Hilyard, Sheridan County FSA executive director, saying the county FSA committee had declined their request to withdraw from the program. She told them they had 30 days to initiate appeals to the state FSA and informed them of their mediation or National Appeals Division rights. In the same letter, Hilyard reminded farmers they’d failed to file “discrimination” complaints, based on the register complaints.

More than a year earlier, Hilyard, in a Nov. 5, 2009, letter, had written to the farmers, saying they could appeal the register handling by contacting the USDA Office of Adjudication and Compliance in Washington.

Nelson acknowledges there “isn’t necessarily a timeframe on that” discrimination issue, and “they could possibly still do that.” The normal timeframe is six months, but that the FSA can waive the time limit.

Dick Deschamps, an administrative officer with the Montana FSA office, acknowledges producers may have been “discouraged from filing” about their perceived “disparate treatment” by the office, but that they might not have seen it as discrimination based on a classical definition dealing with race, or other some other basis.

Separately, Terry Angvick, one of the farmer appellants, says he and others didn’t think “discrimination” fit their case.

Angvick says he knows of one producer who called the Washington office on the discrimination issue, but when officials there asked him whether it was “race-related discrimination,” that producer didn’t follow up. The rest think the register complaint already was registered through the general appeal. They eventually knew the OIG was investigating the issue, but didn’t know that the investigation was not intended to have an affect on their appeal.

Nelson emphasizes that his request for an OIG for an inquiry into the register matter was not to determine a basis for the farmers’ appeals. It was because “we wanted to know if our county office people were doing things correctly” and “how to correct” mishandling. It was important that the agency provided producers “an avenue” of to pursue discrimination complaints.

LDP misinformation?

The OIG could not confirm that the FSA gave proper information about how the loan deficiency payments would be calculated, when a person signed up in the ACRE program.

According to OIG, several producers claimed the Sheridan County FSA Office gave incorrect information about the program in meetings on Feb. 26, Feb. 27 and March 2 of 2009.

One of those producers in those meetings was Angvick, who then was Sheridan County Extension Service agent, who also repeated to growers what he claimed was misinformation from the FSA. (Angvick since has retired from his Extension Service position.) Despite this, in the letters denying appeals, Hilyard said the FSA was partly denying claims because the producers had shown a “lack of specificity has to who had provided misinformation.”

Angvick and others say that in those meeting, they had asked Hilyard how the LDP calculation would work for ACRE enrollees and that she said she thought their LDPs would be reduced by 30 percent.

Hilyard acknowledged she was asked in the first meeting if “LDP payments would be reduced like direct payments and loan rates;” she “claimed to have answered that she did not believe so but would check with the state office for clarification.” She e-mailed the state office and received the correct response, which was forwarded to office staff. Other officials couldn’t remember the issue coming up in meetings again. Angvick denies this, too.

Angvick says a county program technician who was assigned to the ACRE signup repeated the misinformation in meetings with her in April and late July 2009. According to the report, the technician says Angvick knew the correct information in those meetings, an assertion he denies.

The OIG says there are “no existing FDA documents which contain inaccurate information” but that the documents “do not directly address LDP calculations” but rather ACRE triggers.

OIG interviewed 21 producers enrolled in ACRE, including 18 who had appealed their election. Of the 21 enrollees, 16 said the technician “did not misinform them prior to enrollment,” a claim that Angvick disputes. The OIG said it “could not corroborate” claims of the other five.

On Dec. 8, 2009, the Sheridan County program technician wrote to the Sheridan County FSA Committee, “stating that she provided incorrect information and that she also did not provide the CCC-509 Appendix dated April 29, 2009, to ACRE enrollees at the time of their enrollment.” The CCC-509 Appendix includes the contract details.

The OIG found that the technician’s “treatment of the CCC-509 Appendix, dated April 29, 2009, was inconsistent.” The technician said amended CCC-509s were “thrown out,” but some producers had copies that were initialed and dated, so she changed her story to say she “did not always” provide producers with the amended appendix.

Tossed documents

The technician said she made presentations to the county executive director and the county committee with incorrect information on the LDP calculations, but was not corrected. None of the officials remembered “discussion on how to calculate an LDP for an ACRE producer.”

The OIG reported that the Montana State University Extension Service created an “ACRE calculator.” This computer tool correctly described how LDPs would work under ACRE. Angvick says it was based on an “all wheat” loan rate of $2.75 per bushel, which didn’t show an LDP being triggered. Durum later was separated out in May or June, but the Extension Service didn’t update the calculator specifically for durum.

MSU professors conducted an ACRE informational meeting March 2. Nearly 60 producers attended. The MSU officials didn’t provide an example of how an LDP would be affected, and they weren’t asked any questions on the issue. Angvick says he asked about the 30 percent LDP reduction, but the all-wheat loan rate wouldn’t have triggered for durum at that time.

Nelson noted that no other county had claims of misinformation about how the LDPs would be calculated under ACRE.

Not included in the OIG report, Angvick says, was testimony that some farmers in the ACRE program had gone to the Sheridan County office to calculate their LDPs in September and that neither the technician nor the county director, Hilyard, then could explain why they didn’t qualify for a reduced LDPs, as they’d been informed, but that the state officials had to correct them on the way it was calculated, four months after the informational meetings.

Register roulette

According to the OIG report, 27 farmers in Sheridan County were enrolled in ACRE by the Aug. 14 deadline.

Later, 23 of those farmers appealed to reverse this enrollment, saying they were improperly informed about how much they’d give up in LDPs and that the FSA office improperly handled a “signup register” that allowed other farmers an extra 45 days to decide whether they’d sign up for ACRE. By the end of September 2009, the durum price had dropped, triggering loan deficiency payments for durum wheat, the main crop in the county.

The OIG report says 36 were placed on a signup register, giving them the extra six weeks until Sept. 30 to opt out. Only three out of the 36 producers used the register to enroll in ACRE. One of those three later appealed his enrollment.

To find out if the register was mishandled, the OIG interviewed 12 out of the 36 people on the register. Of the 12 on the register, eight “were not aware of being placed on the register, nor did they request to be.” Of the eight, six had enrolled in ACRE. Of the six, three had enrolled after the Aug. 14 deadline. Of the three, two didn’t know they were placed on the register.

Also of the 12, the OIG says, nine didn’t use the register it to sign up for ACRE. These nine included six who didn’t enroll and three who enrolled some of their farm units before Aug. 14, but not on the units in question. The ACRE program technician said she “informed them that they could use the additional time to decide whether to enroll in ACRE.” Of the six, two said they didn’t complete their enrollment because LDPs had triggered. Also of the six, one said he was informed about the ACRE signup register before the deadline.

The OIG says some producers who were on the register, and had initiated the process, had applications on file on Aug. 14, but the technician shredded those applications later, which is against the rules.

One of the producers told the OIG that he had “called into the county office a couple of days before the deadline” to say he’d be in Aug. 14 to “make his decision on signing up for ACRE” but that the technician told him she could place his name on the register “because she knew that he was busy with harvest and he could come into the county office to sign up for ACRE when it rained.” In an e-mail to the county executive director, this same producer said the technician told him that “if he left one signature off” on the ACRE paperwork that he could have until Sept. 30 to finalize it. “It was his understanding that producers who signed ACRE contracts before Aug. 7, 2009, were not informed of this option,” the report says.

The technician “admitted during her interview that she placed producers on the register without their knowledge.” She said she placed them on the register “in order to allow time to secure necessary signature.” But the OIG found that 24 of the 36 on the register “either had power of attorney or were landowners themselves and thus could have signed the application.”

Another producer among the six said the technician told him the same thing but to “ensure that the (land) owners did not sign ACRE contracts and send them to the county office, or the farm would be enrolled in ACRE.”

She said she told the producers they would have until Sept. 30, 2009, to decide whether to enroll “so long as they ensured that they did not obtain all signatures before the August 14, 2009, deadline.”

One e-mail from “a key member” of the Montana Grain Growers Association, said he’d known about the register on Aug. 7, though it wasn’t “supposed to become available” until the Aug. 14 deadline. A county committee member said the technician asked him if he’d like to be placed on the ACRE register before the Aug. 14 deadline.

The technician later admitted that “she herself drafted appeal letters to be submitted to FSA, which she provided to producers, including the extension agent. Those (draft) appeal letters claim that the program technician misinformed producers and the county office misused the register.” Later, she told OIG investigators that she had misinformed maybe 20 percent of those who were claiming misinformation.

One of the producers submitted a “verbatim” copy of the technician’s appeal letter to the county office, but later denied he’d been misinformed about the LDPs. The OIG found that the technician communicated with Angvick through personal e-mails, not office e-mails.

Nelson says the case has sparked discussion in Washington about whether it is appropriate to use registers in the ACRE program at all. Registers have been used effectively over the years to handle workload in the final days of a signup. It is not to be used to extend a program deadline, but ACRE programs are different than others because variables continue to change during the register period.

“As time goes by, you know more about whether it might be a good thing to do, or not,” he says, which is not true in all programs.

Typically, the registers are approved and then are allowed to go into place the day of a signup. In 2009, the FSA expanded ways producers can request being placed on a register — in person, by phone or by fax. There is no official record of when or how the person does that, however. The register authority was in effect in 2010 but was not used.