E. DEAN JAGERS; TOM JACOBS; STANLEY KRIEGER; MATT ROSENGRANTS; SAND ARROYO RANCH, INC., Plaintiffs - Appellants,
FEDERAL CROP INSURANCE CORPORATION, Defendant - Appellee and GLEN R. AUSMUS; RUSSELL L. AUSMUS, Plaintiffs,
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO. (D.C. No. 1:10-CV-00956-RPM).
Jeff L. Todd (Jeremiah L. Buettner with him on the briefs) of McAfee & Taft, Oklahoma City, Oklahoma, for Plaintiffs - Appellants.
Michael C. Johnson, Assistant United States Attorney (John F. Walsh, United States Attorney, with him on the brief), Denver, Colorado, for Defendant - Appellee.
Before KELLY, McKAY, and MATHESON, Circuit Judges.
McKAY, Circuit Judge.
In this appeal, we consider whether Appellee Federal Crop Insurance Corporation acted arbitrarily or capriciously in denying federal crop insurance coverage for corn that Appellants planted in 2008 on newly broken, non-irrigated acreage in Baca County, Colorado. The agency determined that coverage should be denied because Appellants failed to follow good farming practices by planting on this newly broken land without first allowing a fallow period. After they each received an unfavorable good farming practices determination, Appellants filed the instant action in the district court. The district court affirmed the agency's unfavorable GFP determinations as to Appellants, and this appeal followed.
Appellants are five farmers who planted corn on newly broken, non-irrigated acreage in Baca County, Colorado, in the spring of 2008. Some of this land had previously been subject to the USDA Conservation Reserve Program, while other land had previously been utilized for a grass crop. Before planting corn on this newly broken land, Appellants each applied for Group Risk Income Protection coverage.
Under the Federal Crop Insurance Act, GRIP policies are issued by private insurance companies approved by the Federal Crop Insurance Corporation. These Approved Insurance Providers are reinsured by the FCIC, which is thus the indemnitor for any covered losses. In this case, Heartland Crop Insurance was the AIP for Appellants E. Dean Jagers, Matt Rosengrants, and Sand Arroyo Ranch, while Agro National Incorporated Insurance
Company was the AIP for Appellants Tom Jacobs and Stanley Krieger.
Under a GRIP policy, the insured is indemnified if the county average per-acre revenue for the insured crop falls below the insured's trigger revenue. This trigger revenue is determined by multiplying the expected county revenue by the insured's chosen coverage level, with the expected county revenue being determined based on expected prices and historical county average yields published by the National Agricultural Statistics Service. Some GRIP crop insurance policies--" specified practice" policies--specify whether the insured crop must be produced by irrigated or non-irrigated practices, and the expected county yield is based on NASS production data for the specified practice. However, the GRIP policies for Baca County in 2008 were " no practice specified" policies, which do not limit the production method and which calculate the expected county yield based on a blended yield of total county production for both irrigated and non-irrigated practices.
As required by the applicable statute and regulations, Appellants' GRIP policies provided that the insurer would not insure any acreage where the insured had failed to follow " good farming practices," which are defined as " [t]he production methods utilized to produce the insured crop and allow it to make normal progress toward maturity, which are . . . for conventional or sustainable farming practices, those generally recognized by agricultural experts for the area." (Appellants' App. at 69.)
In May 2008, the Risk Management Agency--the agency tasked with supervising the FCIC and administering all programs authorized under the Federal Crop Insurance Act--received an email from an AIP agent which stated in part:
It has come to my attention that some farmers in Baca County Colorado think they have a way to milk crop insurance out of a fortune using the GRIP program for corn in their county. . . . The rumor is that they are breaking out pasture land ...