Summary of a Recent
Judicial
Development in
Administrative Law
USDA Reorganization Act of 1994: Administrative
Remedies Do Not Need to be Exhausted
Jeffrey A. PetersonNational AgLaw Center Research Associate
In Ace Property and Casualty Insurance Co. v. Federal Crop Insurance Corp., 440 F.3d 992 (8th Cir. 2006), thirteen insurance companies (Insurance Providers) alleged that the Federal Crop Insurance Corporation (FCIC) breached a 1998 Standard Reinsurance Agreement (SRA) and filed an action in federal district court without exhausting all available administrative remedies under the governing administrative provisions of the Federal Crop Insurance Reform and Department of Agriculture Act of 1994, Pub. L. 103-354, 7 U.S.C. §§ 6901-7014 (1994), also known as the Department of Agriculture Reorganization Act of 1994 (Act). Id. at 994. The Eighth Circuit held that the applicable administrative provisions of the Act are non-jurisdictional and, if excused under common law, do not require all administrative remedies to be exhausted. Id. at 1000.
The FCIC reinsures private insurance providers for federal crop insurance provided to producers through a SRA agreement. See id. at 994. The Act mandates and governs the administrative appeals process for SRA disputes. See id. at 995. Under the Act, a party may request a final agency determination, which may be appealed to the Department of Agriculture Board of Contract Appeals (Board), with exclusive jurisdiction to the federal district courts after all administrative remedies have been exhausted. See id.
In Weinberger v. Salfi, 422 U.S. 757 (1975) the Supreme Court stated that a statute requiring the exhaustion of administrative remedies may be either jurisdictional (requiring exhaustion of administrative remedies) or non-jurisdictional (the statute merely codifies the common law exhaustion principle which is excusable by exception), depending on the intent of Congress. 440 F.3d at 996-97 (citing Salfi, 422 U.S. at 757 (language of jurisdictional statute is "sweeping and direct"); Chelette v. Harris, 229 F.3d 684, 687 (8th Cir.2000) (language must indicate either that "there is no federal jurisdiction prior to exhaustion" or that exhaustion is "an element of the underlying claim"); Avocados Plus Inc. v. Veneman, 370 F.3d 1243, 1248 (D.C. Cir. 2004) (exhaustion is presumed to be non-jurisdictional "unless Congress states in clear, unequivocal terms that the judiciary is barred from hearing an action until the administrative agency has come to a decision")). Further, The Court concluded that the Act (and more specifically, § 6912(e)) is nothing more than "a codified requirement of administrative exhaustion" and is thus not jurisdictional and may be excused by the exceptions to the common law exhaustion principle. 440 F.3d at 999.
Section 6912(e) provides that:
[n]otwithstanding any other provision of law, a person shall exhaust all administrative appeal procedures established by the Secretary or required by law before the person may bring an action in a court of competent jurisdiction against (1) the Secretary; (2) the Department; or (3) an agency, office, officer, or employee of the Department. Id.
In McBride Cotton and Cattle Corp. v. Veneman, the Ninth Circuit held that "the exhaustion requirement of § 6912(e) is not jurisdictional "because it contains no language expressly conditioning federal question jurisdiction on exhaustion of administrative remedies." Id. (citing McBride Cotton and Cattle Corp., 290 F.3d 973, 976 (9th Cir. 2002)); but see Bastek v. Fed. Crop Ins. Corp., 145 F.3d 90, 94-95 (2d Cir. 1998) (holding that "the statutory provision mandating exhaustion in 7 U.S.C. § 6912(e) is explicit" and failure to exhaust administrative remedies "deprived [plaintiffs] of the opportunity to obtain relief in the district court."). The Eighth Circuit concluded that § 6912(e) is nothing more than "a codified requirement of administrative exhaustion" and is thus non-jurisdictional. Id. at 999.
A party may be excused from exhausting administrative remedies if a legitimate constitutional claim, if exhaustion would cause irreparable harm, if further administrative procedures would be futile (if there is doubt about whether the agency could grant effective relief), or if the issues to be decided are primarily legal (which are not suitable for administrative resolution and are more properly resolved by the courts) rather than factual. Id. at 1000. The Insurance Providers claimed that the futility and legal issue exceptions applied. Id. The court concluded that the Insurance Providers did not demonstrate that their administrative remedies within the agency would be futile because the Board had jurisdiction over the dispute and the power to award monetary relief. Id. at 1000-01. Furthermore, even though some of the issues involved were legal, the court concluded that the legal issues exception is extremely narrow and should only be invoked if the issues involved are ones in which the agency has no expertise or which call for factual determinations. Id. at 1001 (citing Jewel Companies, Inc. v. Fed. Trade Comm'n, 432 F.2d 1155, 1159 (7th Cir. 1970)).
The case was decided on March 16, 2006.