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Published January 10, 2012, 03:08 PM

AG-VOCATE FOR AG: Regulations, statutes and the Finality Rule

BISMARCK, N.D. — There are likely few farmers and ranchers who are not well-acquainted with the myriad of federal farm programs. Most are aware that they can seek reconsideration from the county committee of an adverse decision under these programs. Not all may be aware that they also have the option of appealing an adverse decision through the U.S. Department of Agriculture’s National Appeals Division.

By: Derrick Braaten, Agweek

BISMARCK, N.D. — There are likely few farmers and ranchers who are not well-acquainted with the myriad of federal farm programs. Most are aware that they can seek reconsideration from the county committee of an adverse decision under these programs. Not all may be aware that they also have the option of appealing an adverse decision through the U.S. Department of Agriculture’s National Appeals Division. A farmer or rancher can also request review by the director of the NAD after a NAD appeal.

Within 2011, NAD issued 57 decisions dealing with what is called the Finality Rule. Seventeen have been related to alleged overpayments under the Supplemental Revenue Assistance Payments Program (SURE). The Finality Rule applies to alleged overpayments in other programs as well. The victories won by farmers and ranchers with regard to this rule are significant.

The Finality Rule provides that a decision of a state, county or area committee (or an employee of such a committee) that is made in good faith in the absence of misrepresentation, false statement, fraud or willful misconduct shall be final not later than 90 days after the date of filing of the application for benefits, unless the decision, before the end of the 90-day period, is appealed or modified by the Farm Service Agency administrator (or other applicable USDA official). Once the decision becomes final, no action may be taken to recover amounts found to have been disbursed as a result of a decision in error unless the participant had reason to think that the decision was erroneous.

In the various decisions I referenced, the USDA agency (typically FSA) has attempted to recover payments it had issued beyond this 90-day period. There had been no fraud, false statements or misconduct, and the farmer or rancher had no reason to think that the payment had been issued in error (or in some cases, it simply had not been issued in error). Nonetheless, the agency tried to recoup the payment, and only after a successful NAD appeal, or even a subsequent request for director review, was the farmer or rancher vindicated.

A more subtle issue to be aware of with respect to the Finality Rule is an alleged waiver of the rule. In some of the recent NAD appeals, FSA has required farmers signing up for SURE to sign a document saying they are “waiving” their rights related to the Finality Rule. This waiver, however, has been determined to be invalid in many cases. The reason requires an explanation of the difference between a regulation or rule, which is promulgated by the agency, and a statute passed by Congress. The agency may be able to require a farmer or rancher to waive rights under a rule, but it has no authority to require or even obtain a waiver of rights under a statute. The Finality Rule appears both in a statute and in some regulations. Even if you have waived your rights under a “regulatory” finality rule, do not be too quick to concede defeat; the NAD director has made it clear that you cannot waive your rights under the statutory Finality Rule. It is not unreasonable for a farmer or rancher to rely on the accuracy of a payment made by a USDA agency under a USDA program, and the statutory Finality Rule agrees with common sense in this case. If you find yourself faced with a demand for repayment, be sure that the agency has a right to it before opening your checkbook.

Editor’s Note: Derrick Braaten is a partner in Baumstark Braaten Law Partners of Bismarck, N.D. He welcomes input and comments on his columns. He can be reached at his office at 701-221-2911 or by email

at derrick@baumstarkbraaten.com.

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