30-Day Rule For Filing Administrative Appeals Tested in Recent NAD Cases
By Phillip L. Fraas, Stinson, Morrison, Hecker, LLP, Washington, DC.
In 2009, a number of Florida sugarcane growers applied to participate in the Biomass Crop Assistance Program (BCAP), a program operated by the Farm Service Agency (FSA) that pays growers for providing biomass for use in renewable energy production. [BCAP was established by section 9001 of the Food, Conservation, and Energy Act of 2008 (the 2008 farm bill) which added the BCAP provisions to title IX of the Farm Security and Rural Investment Act of 2002 (the 2002 farm bill) as section 9011 (122 Stat. 2089-2093).]
BCAP documents issued in 2009 and 2010 indicated that sugarcane bagasse (the residue of the cane after sugar is extracted) supplied to renewable energy producers would be eligible for the program. [See, e.g., FSA Notice BCAP-7, Exh. 1 (Nov. 27, 2009); FSA Notice BCAP 9, Exh. 1 (Jan. 26, 2010); 75 Fed. Reg. 6269 (Feb. 8, 2010)(proposed FSA regulations to implement BCAP).] However, as described in the findings of facts made by a National Appeals Division (NAD) hearing officer in one of the cases discussed here, it took a concerted effort for sugarcane growers supplying bagasse to Florida BCAP facilities to receive BCAP payments. See Findings of Fact 13-21 in the Hearing Officer Appeal Determination in NAD Case No. 2011S000807 4-6 (Dec. 22, 2011). [NAD decisions can be found at http://www.nad.usda.gov/public_search.html.]
What happened was that, after much internal debate within FSA over the course of almost a year, the agency switched gears in September 2010 and decided that bagasse should have been excluded from BCAP. So, that month, Florida FSA county offices sent letters out to sugarcane growers who had applied for participation in 2009 and early 2010, denying the growers’ applications for BCAP payments. Id. A number of the growers who received these adverse decisions quickly filed administrative appeals with NAD. [The National Appeals Division considers appeals from adverse decisions made by the following USDA agencies: Farm Service Agency, Commodity Credit Corporation, Federal Crop Insurance Corporation, Natural Resources Conservation Service, Risk Management Agency, Rural Business-Cooperative Service, Rural Development, Rural Housing Service, Rural Utilities Service (except for its electrification and telephone programs), and state, county, and local FSA committees. See the definitions of “adverse decision” and “agency” in 7 C.F.R. section 11.1.] In response, FSA in December 2010 rescinded the denial letters, and in January 2011 granted these growers equitable relief to allow them finally to receive BCAP payments for their 2009 and early 2010 bagasse deliveries. Id.
However, 17 sugarcane growers (including 14 who filed their NAD appeals as a group) did not seek relief from the FSA adverse decision until many months later. For 15 of these growers, relief has been denied because they did not appeal the FSA adverse decision within the 30 days required under FSA and NAD regulations; but in the two other cases, the growers overcame the 30-day rule by arguing effectively that they had not received the adverse decision letters when mailed in September 2010. This article examines the 30-day rules and how their application played out in these NAD appeals.
The two administrative appeal processes subject to 30-day filing requirements
Applicants for FSA farm program benefits that are turned down, and participants in FSA programs that receive an adverse decision on some aspect of their program participation, can seek an informal FSA review of that determination (7 C.F.R. § 780.4(b)) and then, if the adverse decision is not reversed on FSA informal review, file administrative appeals with NAD (7 C.F.R. § 11.6(b)). In some cases, the farmers can choose to skip the FSA informal review and go directly to NAD (see 7 C.F.R. § 11.5(b)); however, FSA informal review is required as a precondition to filing a NAD appeal for non-credit adverse decisions at the FSA field service level (7 C.F.R. § 11.5(a)).
FSA informal review can consist either of reconsideration by the decision-maker or an informal appeal to the decision maker’s superior. 7 C.F.R. § 780.6(a). See also 7 C.F.R. § 780.2 (definitions of FSA “reconsideration” and “appeal”).
Also, it might begin with a review of whether the adverse decision is even appealable; and this can be a starting step in NAD appeals as well. FSA regulations specify that certain decisions and rules of general applicability are not appealable. 7 C.F.R. § 780.5(a). The NAD regulations similarly state that matters of general applicability are not subject to appeal. 7 C.F.R. § 11.6(a)(2). In many cases, FSA takes the position that the adverse decision is a matter of general applicability, requiring “appealability” to be determined as a threshold matter in those cases.
NAD administrative appeals consist of a hearing to gather evidence and hear arguments on the adverse decision, and a determination by the hearing officer on whether the adverse decision was correctly rendered. 7 C.F.R. § 11.8. After that, either party can request a review of the hearing officer decision by the NAD Administrator. 7 C.F.R. § 11.9.
The 30-day filing requirements
In both cases—informal review within FSA and direct administrative appeal to NAD— the farmer must file his or her request for relief, or for a preliminary “appealability” determination, within 30 days after learning of or having reason to have learned of the adverse decision. 7 C.F.R. § 780.15 (b) and (c) (FSA informal review) and 7 C.F.R. § 11.6(a) and (b)(1) (NAD appeals). And, when an appellant seeks Director review of the hearing officer’s determination, the request for review must be made within 30 days after receipt of the determination. 7 C.F.R. § 11.9(a)(1). The agency, if it seeks Director review, has a different deadline; it must make its request within 15 business days after receipt of the determination. 7 C.F.R. § 11.9(a)(2).
When there is an FSA informal review and the agency confirms its prior adverse decision or issues a modified decision that is still adverse to the farmer, the 30-day window of opportunity for appealing the matter to NAD starts when the farmer receives notice of the outcome of the FSA informal review. “This is because each decision in an agency’s informal review process, whether mandatory or optional, is deemed a new ‘adverse decision’ triggering a new 30-day time period for requesting a NAD appeal.” [Karen R. Krub, USDA’s National Appeals Division Procedures and Practice 26 (2003), citing 60 Fed. Reg. 67,298, 67,302 (1995) (prefatory comments to interim final NAD rules).] See also 7 C.F.R. § 780.7(g), which provides that a decision on reconsideration is a new decision that restarts applicable time limitations for both further FSA informal review and NAD appeals.
Further, USDA considers the 30-day requirement for filing a NAD appeal to be jurisdictional in nature, and the hearing officer will determine compliance with the requirement before proceeding with the appeal, even if the government does not object to the late-filed appeal. 60 Fed. Reg. 67,298, 67,303(1995) (prefatory comments to interim final NAD procedural rules. “These  comments suggest that NAD will itself raise the question of timeliness of the appeal request, even if the agency and participant agree that the appeal should proceed. Reports from actual cases indicate that this is NAD’s practice.” [Krub at 26.]
The NAD Regional Assistant Director and the hearing officer assigned to the appeal are responsible for determining whether the appeal is timely. National Appeals Division, The National Appeals Division Guide 20 (2008).
Compliance with the 30-day deadlines is critical because, if either of them is missed and the administrative appeal of the adverse decision is foreclosed, the farmer then runs into exhaustion of remedies problems. First, when the case involves an FSA decision at the field office level (except for farm credit decisions), FSA review is required before NAD will accept an appeal on the decision (7 C.F.R. § 11.5(a)); and then, when the appellant wishes to pursue the matter in federal court, access to the federal court requires prosecution of a NAD appeal before seeking judicial review. 7 U.S.C. § 6912(e) (“Notwithstanding any other provision of law, a person shall exhaust all administrative appeal procedures established by the Secretary [of Agriculture] or required by law before the person may bring an action in a court of competent jurisdiction against (1) the Secretary; (2) the Department [of Agriculture]; or (2) an agency, office, officer, or employee of the Department”), and 7 C.F.R. § 11.13(b) (“An appellant may not seek judicial review of any agency adverse decision appealable under this part without receiving a final determination from [NAD] pursuant to the provisions of this part”).
The good news is that FSA’s adverse determination letters notify the farmers that they have but 30 days to file for an informal review or a NAD appeal, so they should not be caught unaware. Unfortunately, the same does not hold true when the issue is FSA’s failure to act—there will be no adverse determination letter with a notice of the 30-day filing requirement.
When does the 30-day clock start?
To answer this question, one has to address either of two situations: (i) an adverse decision is actually made, or (ii) FSA fails to act and that failure morphs into a constructive adverse decision.
The latter question is faced only when considering NAD appeals, as 7 C.F.R. pt. 780 does not envision or require informal reviews when FSA has failed to act on an application. [Compare the definitions of “adverse decision” in 7 C.F.R. § 780.2 and 7 C.F.R. § 11.1; and see Krub at 34 (“Most internal agency regulations providing for informal review contemplate review only of affirmative acts of decision making by the agency. The NAD rule similarly does not address informal review in cases of adverse decisions resulting from an agency’s failure to act on a participant request. A reasonable conclusion would therefore seem to be that informal review of an agency’s failure to act is not mandatory, assuming such review would even be available.”)]
As to the first situation—when an adverse decision has been made—the request for FSA informal review must be made no later than 30 days after the farmer “receives written notice” of the decision. 7 C.F.R. § 780.15(c). The request for NAD Director review of an agency determination that the adverse decision is not appealable must be made no later than 30 days from the day the participant “receives” the adverse decision. 7 C.F.R. § 11.6(a)(1). The direct request for NAD appeal review of the agency’s adverse decision must be made not later than 30 days after the farmer first “received notice” of the adverse decision. 7 C.F.R. § 11.6(b)(1).
In the second scenario—where there is no adverse decision—the NAD appeal must be requested no later than 30 days from the time the participant “knew or reasonably should have known” that the agency had not acted within the time frames specified by regulations or, where no time frame is specified, no later than 30 days after the participant “reasonably should have known” of the agency’s failure to act. Id.
Exceptions to the 30-day filing requirement
There is an exception for the 30-day filing rule applicable to informal FSA review: the FSA regulations, at 7 C.F.R. § 780.15(d), allow the FSA reviewing authority to accept a late filing if exceptional circumstances warrant such action. FSA’s in-house handbook on appeals, Program Appeals, Mediation, and Litigation, 1-APP (rev. 2)[This and other FSA handbooks can be found at http://www.fsa.usda.gov/FSA/webapp?area=home&subject=lare&topic=hbk.],in ¶ 16.F generally limits the authority for acceptance of late-filed appeals to ones that are not more than 14 days late.
While there is no comparable “exceptional circumstances” exception applicable to the NAD appeals in 7 C.F.R. pt. 11, there is NAD case law providing for a “good cause” exception to the 30-day rule in that the NAD Director has allowed NAD to consider whether good cause exists for filing an appeal late. The Director’s Review Determination in NAD Case No. 2010W000573 (Dec. 22, 2010) states that “the issue of whether NAD should accept Appellant’s appeal is not resolved by simple resort to the calendar. The 30-day requirement only defines when a participant must file an appeal, but it does not bar NAD from accepting an appeal that is late, if the participant shows good cause.” Id. at 5. In that case, the Director went on to find that the appellant had not been diligent in pursuing the appeal, and turned down his request for a “good cause” waiver of the strict application of the 30-day rule. Id.
Also, there is authority for NAD appellants to correct errors in appeal filings after the 30-day deadline. The National Appeals Division Guide, at, 20, provides that “[t]he Regional Assistant [NAD] Director may deem an appeal filed on a timely basis if any defects or oversights are corrected within a reasonable time, as established by the Regional Assistant Director.”
The BCAP 30-day rule decisions
In the real world, how does a farmer fare when he or she does not file the NAD appeal until six months or more after the adverse decision or failure to act on the application? Based on four 30-day rule NAD decisions handed down this year to Florida BCAP applicants, it appears that if the farmer can make a credible factual case that he or she never received the adverse decision letter that would trigger the 30-day clock, NAD is willing to find for the farmer, but other defenses to the application of the 30-day filing rule might have a harder go of it.
In the future, it is likely that arguments premised on the farmer’s claim of not having received the adverse decision might be much harder to make than in the past. It is reported that, as a result of the NAD rulings in the BCAP cases discussed below, FSA is adopting a new policy of sending all adverse decision letters via certified mail.
NAD Case No. 2011S000807
In this NAD case, the primary issue was whether the sugarcane grower’s filing of a request for FSA informal review (in the form of reconsideration) of the September 2010 adverse decision on the eligibility of bagasse was timely under the 30-day rule; and there are both a hearing officer appeal determination on the issue (Dec. 22, 2011), and a later NAD Director’s determination in review of the hearing officer’s ruling (Apr. 2, 2012).
The pertinent facts here were that the adverse decision letter denying the grower the right to receive BCAP payments on bagasse was dated September 28, 2010, and FSA claimed that the letter was mailed out at that time. The grower offered evidence that it was unaware of the adverse decision until 2011. On February 24, 2011, the grower’s lawyer attended a meeting of other growers where they discussed having received adverse decisions in September 2010, the rescission of those letters in December 2010, and having received letters granting equitable relief from the adverse decision in January 2011. The lawyer conveyed the information on these developments to the grower in this case, who then contacted its local FSA office to find out if it was in the same boat and, in doing so, obtained a copy of the September 28 letter on March 11, 2011. Dir. Rev. Determ. 4.
Having not also gotten notice of a rescission of the September 28 letter or a letter granting equitable relief from its application, the grower sought reconsideration of the adverse decision in a letter to FSA sent on March 24, 2011, which was less than 30 days after receiving a copy of the letter on March 11. Id. FSA denied the reconsideration request on August 19, 2011, on the ground that it was not timely filed. Id. at 5.
The hearing officer took a position in agreement with FSA—that the grower had received the letter in September 2010—based on a statement made by the grower in the narrative it provided to FSA in May 2011 in support of its March 24, 2011, application for reconsideration. However, he did not rule in favor of the agency; instead he ruled for the grower, because he also found that the evidence supported a conclusion that the adverse decision for this grower had been rescinded in December 2010 like the adverse decisions sent to the scores of other sugarcane growers who had applied for BCAP payments, thus removing any requirement that the reconsideration request had to be made within 30 days of receiving the adverse determination letter in September. Hrng. Off. App. Determ. 7-9.
While discussing the hearing officer’s determination, it is worth noting that one of FSA’s main arguments in the appeal was that 7 C.F.R. § 780.15(e)(2) creates a conclusive presumption of receipt of a mailed letter seven days after mailing because it provides that, “[t]he date when an adverse decision or other notice pursuant to these rules is deemed received is . . . 7 calendar days following deposit of delivery by regular mail” (emphasis added). The grower argued, however, that the presumption raised by this regulation was only a rebuttable presumption, citing two federal court decisions that addressed the “mailing” rule in different contexts. The hearing officer agreed that the presumption is only rebuttable, which could have allowed consideration of the grower’s evidence that it never found out about the letter until March 2011 but for the “admission” of receipt made by the grower in his May 2011 communication with FSA. Id. at 8.
The NAD Director, on review of the hearing officer’s ruling, reversed the finding that the September 28 letter had been rescinded, but still found for the grower by also reversing the hearing officer finding that the grower had admitted receiving the letter in September 2010. Dir. Rev. Determ. 7. The Director’s ruling pointed out that this issue had not been addressed by the parties during the hearing process, and that it was only after the hearing officer consideration phase of the case—at the Director review stage—that the grower had explained how the supposed admission had been a clerical mix-up in the drafting of the May 2011 back-up material for the reconsideration requests of several growers by a person who represented all those growers. Id. The Director then found that the preponderance of the evidence supported a finding that in fact the grower never received the letter until March 11, 2011, as claimed (id.), making the grower’s March 24, 2011, request for reconsideration timely filed (id. at 1) .
NAD Case No. 2011S000808
Although not related to NAD Case No. 2011S000807, this appeal was filed at the same time as that appeal, the fact patterns in the two cases were much the same, and the issue on appeal was identical—the validity of FSA’s claim that the appeal is barred for the grower’s failure to file its request for FSA informal review (in the form of reconsideration) within 30 days after receiving the adverse decision.
Here, the adverse decision letter denying the grower the right to receive BCAP payments for its bagasse shipments was issued on September 24, 2010, and FSA claimed that the letter was mailed out at that time. Hrng. Off. App. Determ. 3-4 (Jan. 24, 2012). The grower offered evidence that it never received a copy of the letter until February 24, 2011, when its president attended the same growers’ meeting that the grower’s lawyer in NAD Case No. 2011S000807 attended. At the meeting, this grower too learned that adverse decision letters had gone out in September 2010, and immediately contacted the local FSA office and retrieved a copy of his letter. Id. at 4. The grower sought reconsideration of the adverse decision in a letter sent to FSA on March 24, 2011 (28 days after receiving the copy, thus within the 30-day time limit); FSA denied the request in a letter dated August 19, 2011; and the grower filed the appeal on September 19, 2011 (which also was within the 30-day limit because the grower didn’t receive the letter until several days after August 19). Id.
There is only a hearing officer’s appeal determination in this case, issued on January 24, 2012, as neither party requested a NAD Director review of the determination. The grower won the case as the hearing officer found that the grower’s evidence of non-receipt was strong and that FSA did not provide convincing evidence of deposit of the adverse decision letter with the Postal Service. Id. at 6. Further, the hearing officer found, even if FSA had proven that the letter was mailed, the fact of delivery once mailed is only a rebuttable presumption that appellant successfully defeated. Id.
NAD Case No. 2012S000364
There is only a hearing officer appeal determination (dated September 7, 2012) reported in this case, and the issue is the grower’s right to pursue an appeal of an adverse decision to NAD if the appeal is not timely filed under the 30-day rule. Here, the adverse decision letter denying the grower the right to receive BCAP payments was dated September 28, 2010, but the hearing officer found that the grower never received a copy of the letter at that time and later sought the BCAP payments in March of 2011. Hrng. Off. App. Determ. 3. The grower also learned in August 2011 that other Florida sugarcane growers were receiving BCAP payments, and on the following October 4 requested an update on the situation from FSA and set an October 14 deadline for FSA to act on its March request for payments. Id. The grower repeated its request for payment and set another deadline for action in March 2012. Getting no response from FSA, on April 13, 2012, the grower filed its NAD appeal. Id. at 4.
Parenthetically, while one might wonder about the coincidence of three growers not receiving their BCAP letters, it appears that the operation of the program in Florida was beset with problems. FSA itself, in the letters it sent in January 2011 notifying certain growers that it would grant them equitable relief and make the BCAP payments, said that “FSA did not always process BCAP applications in a timely manner or send notification letters and related information to applicants and FSA made other mistakes as well.” NAD Case No. 2011S000807, Hrng. Off. App. Determ. 6. Further, in the NAD hearing in that case, the grower introduced an affidavit from another grower that he inadvertently had received the adverse decision letters meant for other growers. Id. at 8.
Returning to Case No. 2012S000364, the hearing officer’s ruling in the appeal was a case of good news/bad news for the grower. The good news was that the hearing officer found for the grower that it had not received the adverse decision letter, noting that FSA offered no evidence to rebut grower’s claim and evidence on the issue. Hrng. Off. App. Determ. 4 However, the bad news was that the hearing officer still ruled against the grower because she also found that at a later point in time the grower reasonably should have known that FSA had adversely decided against it—given FSA’s failure to act on either the grower’s March or October 2011 demand letters. The hearing officer concluded that grower had reached this “should have known” point on October 15, 2011, when the deadline for action it established in its October 4 demand letter elapsed without any action by FSA. Thus, the hearing officer found, the April 13, 2012, appeal was filed long after the NAD 30-day filing clock had run. Id. at 4 & 5.
The hearing officer did consider whether the facts of this case justified the application of the “good cause” exception for failures to file on time, but ruled against the grower. The hearing officer, having determined that the grower should have known FSA was never going to pay on its BCAP application on October 15, 2011, found nothing occurring after that time to justify the grower holding off on filing its NAD appeal until April 2012, noting that just repeating the request or demand for payment five months after the constructive denial does not in and of itself start a new 30-day clock ticking. Id. at 5-6.
Finally, the grower had included in its appeal a request for equitable relief, which the NAD Director is authorized to provide under 7 U.S.C. §§ 6998(d) and 7996, and 7 C.F.R. § 11.9(e). The grower argued that the 30-day filing rule does not apply to equitable relief requests. Id. at 1. The hearing officer found to the contrary—noting that, because the grower missed the 30-day appeal filing deadline, NAD had no authority to consider any of the facts related to the matter. Without the ability to consider the facts of the case, she reasoned, NAD had no ability to consider whether equitable relief was justified. Id. at 6.
NAD Cases No. 2012S000416-000429
These 14 cases were filed jointly and argued on the same set of facts, so the hearing officer’s appeal determination on July 5, 2012, against the growers applied equally to all 14 growers. Here, the growers appealed FSA’s failure to respond to March 22, 2012, letters requesting BCAP payments on their bagasse shipments; and FSA asserted as its defense that the request letters were too late because it had denied the applications in September 2010 and thus the NAD appeals filed in 2012 were not timely. Hrng. Off. App. Determ. 1.
The growers did not claim in these appeals that they had not received the September 2010 adverse decision letters, but asserted that the letters had been rescinded, offering as support for their position the hearing officer’s rulings in NAD Cases No. 2011S000807 and 2011S000808 (discussed above). Id. at 4. Also, at the pre-hearing conference on the appeals, the growers’ representative testified that the growers became aware by the end of 2011 that FSA had failed to act on the BCAP payment applications. Id. at 5. The growers then, on March 22, 2012, sent letters to FSA demanding the BCAP payments, and appealed FSA’s failure to act on those letters on May 8, 2012. Id. at 3.
The hearing officer rejected the rescission argument, citing (i) the Director’s review decision in NAD Case No. 2011S000807 reversing the hearing officer and finding that only growers who had filed appeals at the time got rescission letters, not the grower in that case, and (ii) the ultimate NAD rulings in both the other appeals that the growers never actually received the September 2010 mailings, not that the letters had been rescinded. Id. at 4.
The hearing officer went further and found that, even if the letters had been rescinded in December of 2010, the growers knew or reasonably should have known at the end of 2011 when they learned of FSA’s failure to act on their BCAP applications that FSA did not intend to honor their 2009 BCAP applications, which made their May 8, 2012, NAD appeal filings run afoul of the NAD 30-day rule. Id. at 5. The hearing officer also noted that, if she were to consider March 22, 2012, date of the demand letter as the day that the growers “knew” of FSA’s failure to act on their applications, the May 8, 2012, filing still would be untimely in relation to March 22. Id.
The growers here, as in NAD Case. No. 2012S000364, also sought equitable relief, arguing that the 30-day filing rule does not apply to equitable relief requests. The hearing officer disagreed, noting that where the right to equitable relief is concurrent with actions at law, equity jurisdiction is subject to statutes of limitations (referring to this as the “Concurrent Remedy Doctrine”). Id. at 6.
The 30-day filing rules and the NAD cases applying them demonstrate that those who wish to dispute adverse decisions in USDA farm programs are subject to a very, very short 30-day statute of limitations at the administrative appeal stage And, while the strict application of the 30-day rules sometimes can be avoided, they can be a snare for the farmer who ignores them, and an added complication for the lawyer representing a farmer dealing with an FSA failure-to-act constructive adverse determination.
[i] BCAP was established by section 9001 of the Food, Conservation, and Energy Act of 2008 (the 2008 farm bill), which added the BCAP provisions to title IX of the Farm Security and Rural Investment Act of 2002 (the 2002 farm bill) as section 9011 (122 Stat. 2089-2093).
[ii] See, e.g., FSA Notice BCAP-7, Exh. 1 (Nov. 27, 2009); FSA Notice BCAP 9, Exh. 1 (Jan. 26, 2010); 75 Fed. Reg. 6269 (Feb. 8, 2010) (proposed FSA regulations to implement BCAP).
[iii] The National Appeals Divisions considers appeals from adverse decisions made by the following USDA agencies: Farm Service Agency, Commodity Credit Corporation, Federal Crop Insurance Corporation: Natural Resources Conservation Service, Risk Management Agency, Rural Business-Cooperative Service, Rural Development, Rural Housing Service, Rural Utilities Service (except for its electrification and telephone programs), and state, county, and local FSA committees. See the definitions of “adverse decision” and “agency in 7 C.F.R. § 11.1.
[iv] This and other FSA handbooks can be found at http://www.fsa.usda.gov/FSA/webapp?area=home&subject=lare&topic=hbk.