Harmon v. United States Department of Agriculture
666 F. App'x 698
| 9th Cir. | 2016Background
- Harmon, an individual farmer, received FSA farm program payments for 2005–2008; USDA FSA later determined he was ineligible and sought repayment.
- FSA applied the regulatory definition of "person" (7 C.F.R. § 1400.3 (2005)) requiring an individual to be a "separate person" (separate interest, responsibility, and funds/accounts) to receive program payments.
- FSA found Harmon was not separate from Little Muddy LLC due to numerous unexplained transfers/loans and commingled funds between Harmon and the LLC.
- Harmon argued he and Little Muddy only made combined purchases and that he reimbursed Little Muddy; he also argued he did not exceed per-person payment limits and raised finality and timeliness defenses.
- The agency denied Harmon equitable relief for lack of good-faith compliance; Harmon appealed the agency decision and the district court affirmed, granting summary judgment for the United States.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FSA may require an applicant to show separate-person status under § 1400.3 to be eligible for payments | Harmon: only must show "actively engaged in farming"; separate-person requirement not applicable | USDA: § 1400.3 applies to Part 1400 and requires separate-person showing for individuals seeking payments | Court: Agency interpretation reasonable and entitled to deference; separate-person requirement applies |
| Whether substantial evidence supports finding Harmon was not separate from Little Muddy | Harmon: transfers were reimbursements for shared bulk purchases, not commingling or loans | USDA: unexplained transfers/loans and lack of documentation show commingling and blurred separateness | Court: Substantial evidence supports agency finding of lack of separateness |
| Whether Harmon could keep payments because he did not exceed per-person payment limits | Harmon: did not receive more than statutory payment limits, so should not have to refund | USDA: eligibility, not just amount limits, controls retention; ineligible recipients cannot retain funds | Court: Agency lawfully required return of funds; no entitlement absent established eligibility |
| Whether finality rule, NAD delay, or missed statutory deadline barred agency action | Harmon: finality rule or late NAD/director action voids agency determination; statute's 30-day deadline for director requires remedy | USDA: finality rule has exceptions for misrepresentation or reason to know error; delayed director decision lacked statutory remedy but does not void action | Court: Exceptions to finality rule apply due to misinformation; late director decision does not create judicially enforceable sanction; agency action stands |
Key Cases Cited
- Pauly v. U.S. Dep’t of Agric., 348 F.3d 1143 (9th Cir. 2003) (agency interpretations of its regulations entitled to deference unless plainly erroneous)
- United States v. James Daniel Good Real Prop., 510 U.S. 43 (U.S. 1993) (courts should not judicially craft remedies for agency noncompliance absent statutory indication)
- Idaho Farm Bureau Fed’n v. Babbitt, 58 F.3d 1392 (9th Cir. 1995) (agency failure to act within statutory timeframe does not necessarily bar later agency action)