Opinion ID: 567988
Heading Depth: 2
Heading Rank: 2

Heading: FmHA's New Offset Regulations

Text: 23 Approximately a year and a half after the moratorium on the use of administrative offsets and the passage of the Agricultural Credit Act, FmHA issued a new proposed rule concerning implementation of administrative offsets. See Administrative Offset, FmHA Proposed Rule, 54 Fed.Reg. 34,773 (1989). After receiving comments, FmHA published final regulations on March 26, 1990. Administrative Offset, FmHA Final Rule, 55 Fed.Reg. 11,000 (1990) (to be codified at 7 C.F.R. Part 1951). FmHA acknowledged that pursuant to the stipulation in this case, it had rescinded all pending FmHA form letter 1951-3 notices sent under the old regulations to the ASCS requesting the offset of payments due North Dakota farmers. 11 The Moseankos and the Dockters thus are no longer subject to any offset request issued under the old regulations, and any future offset action by FmHA must conform to the procedures set forth in the new regulations. 24 These new regulations provide many of the protections which plaintiffs sought to compel the agency to provide. The new regulations 1) eliminate the use of the emergency offsets, which were used to immediately offset the farm program payments due to the Dockters in 1987; 2) provide all farmer-borrowers with prior notice of the FmHA's intent to use administrative offsets; 3) give farmer-borrowers the right to present any reasons why administrative offset should not be used, including that the use of administrative offset would create an extreme hardship; 4) give farmer-borrowers the right to a face-to-face meeting with an FmHA decision-making official prior to any offset being implemented; and 5) give farmer-borrowers the right to appeal the offset decision to an independent FmHA National Appeals Staff. Id. 55 Fed.Reg. at 11,006-07 (to be codified at 7 C.R.F. § 1951.104). The new regulations also specifically exempt from offset initial payments for planting expenses under the Conservation Reserve Program, and allow for similar exemptions where the offset would substantially interfere with or defeat the purpose of the government program. Id. 55 Fed.Reg. at 11,002, 11,005-06 (to be codified at 7 C.F.R. § 1951.103(e)). 12 25 With regard to the farmer-borrowers whose farm program payments were offset under the initial regulations prior to the moratorium, the new regulations provide a right to request a hearing if any farmer-borrower believes the previous offset action by FmHA was contrary to this Administrative offset regulation. Id. 55 Fed.Reg. at 11,007 (to be codified at 7 C.F.R. § 1951.104(j)). The district court found that this provision sufficiently cured any problems inherent in the 1986 regulations, and hence dismissed as moot the Dockters' request for the return of their corn deficiency payment. The court also rejected plaintiffs' request for attorney's fees under the Equal Access to Justice Act. The court found that plaintiffs were prevailing parties because their suit had been the catalyst for both the moratorium on the use of the challenged regulations and the promulgation of new regulations. The court nonetheless concluded the government's defense of the old regulations was substantially justified because the new regulations primarily added procedural protections for farmer-borrowers.