Financial Eligibility Requirements and Attorneys’ Fees Awards


Most farmers have probably received federal farm program payments, and possibly, program payment denials over the years.  I wrote a different blog post titled “Fighting the Man” in which I outlined the process for challenging such denials through the USDA’s National Appeals Division, and eventually up to the federal district courts.  This process applies to farm program payment denials, wetland determinations, and numerous other decisions related to USDA programs.

In that post, I did not discuss the fact that if you are successful in a challenge, you may be entitled to have the government reimburse your attorneys’ fees.  This is obviously something to consider if and when you disagree with a decision made by USDA.  The basic test is whether the government can prove that its decision was “substantially justified,” or in other words, “justified to a degree that could satisfy a reasonable person.”  I have found that farmers generally are eminently reasonable people, so if you think the USDA is acting unreasonably with you, I recommend you consider challenging the decision.

I also want to explain a more specific issue related to obtaining an attorneys’ fees award after a successful challenge.  Under the Equal Access to Justice Act (“EAJA”), there are financial eligibility requirements which limit awards of fees to “an individual whose net worth did not exceed $2,000,000” or “any owner of an unincorporated business, or any partnership, corporation, … the net worth of which did not exceed $7,000,000” at the time the appeal was filed.

Our firm has encountered a specific issue regarding this language in a couple of disputes with USDA recently, and I want to make sure farmers and their attorneys are aware of it.  The higher net worth level does not only apply to formally organized businesses such as corporations; both sole proprietorships and partnerships qualify.  There are no formal filing requirements for either of these entities.  I wrote recently about how many farmers are in legal partnerships even if they do not realize that they are.  The same goes for a sole proprietorship.  For example, if John Doe runs a farm called Doe Farms, he is running a sole proprietorship. 

More importantly, many farmers are doing business as a sole proprietorship (unless they are partners), and the fact that a farmer files an appeal from an adverse USDA action under his own name (or is doing business under his own name) does not mean that he is not a sole proprietor.  The government has also on numerous occasions attempted to force farmers to include the net worth of family members in the calculation, but courts have also found this inappropriate if the farmer submits a sworn statement that he is the sole owner of the unincorporated business. The sole proprietor will, however, have to disclose net worth information for his personal net worth and that of the sole proprietorship.

A court in a case our firm handled noted that the “objective of EAJA is to eliminate financial disincentives to challenging unreasonable governmental conduct.”  The requirements of EAJA are intended to be interpreted in favor of the person applying for an award, and should not be viewed in an overly technical way that denies relief to qualified people.

(Posted by Derrick Braaten)

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