Final Agency Determination: FAD-044

Subject: Request dated March 16, 2005, requesting a Final Agency Determination for the 2005 crop year (for crops with a contract change date of August 31, 2004, or later) and subsequent crop years, regarding the interpretation of section 20(d)(1) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions), published at 7 C.F.R. 457.8 and section 508(a)(3) of the Federal Crop Insurance Act (Act). This request is pursuant to 7 C.F.R. part 400, subpart X.

Section 20(d)(1) of the Basic Provisions titled "Mediation, Arbitration, Appeal, Reconsideration, and Administrative and Judicial Review states:

(d) If you do not agree with any determination made by us or FCIC regarding whether you have used a good farming practice … you may request reconsideration by FCIC of this determination in accordance with the reconsideration process established for this purpose ….

(1) You must complete reconsideration before filing suit against FCIC and any such suit must be brought in the United States district court for the district in which the insured farm is located.

This suggests an insured must exhaust all administrative remedies, including reconsideration, before bringing suit against the Federal Crop Insurance Corporation (FCIC).

However, the above identified section is in conflict with section 508(a)(3) of the Act, which does not require an insured to use all administrative remedies before bringing suit.

Section 508(a)(3) of the Federal Crop Insurance Act states:

(B) Good Farming Practices

(i) Informal Administrative Review

A producer shall have the right to a review of a determination regarding good farming practices made under subparagraph (A)(iii) in accordance with an informal administrative process to be established by the Corporation.

* * * * *

(iii) Judicial Review

(I) Right to Review

A producer shall have the right to judicial review of the determination without exhausting any right to a review under clause (i).

Interpretation Submitted

The requestor interprets section 20(d)(1) of the Basic Provisions to be contrary to the Act and, therefore, void and of no legal effect. Accordingly, an insured who disputes a determination concerning good farming practices made by FCIC may bring legal action against FCIC without first seeking a reconsideration under section 20(d)(1).

Final Agency Determination

FCIC agrees with the interpretation that section 20(d)(1) of the Basic Provisions is in conflict with section 508(a)(3) of the Act. Further, we agree that section 508(a)(3)(B)(iii) of the Act allows a producer to bring legal action against FCIC without first seeking a reconsideration under section 20(d)(1).

In accordance with 7 C.F.R. 400.765(c), this constitutes the Final Agency Determination and is binding on all participants in the Federal crop insurance program for the 2005 crop year (for crops with a contract change date of August 31, 2004 or later) and succeeding crop years.

Date of Issue: April 18, 2005