B-129167, JANUARY 16, 1957, 36 COMP. GEN. 507

B-129167, JANUARY 16, 1957, 36 COMP. GEN. 507

AGRICULTURE - SOIL BANK CONTRACTS - MISTAKES - REFORMATION - REGULATIONS ACREAGE RESERVE CONTRACTS WHICH, DUE TO HASTE IN ESTABLISHMENT OF THE SOIL BANK PROGRAM, CONTAIN MISTAKES RESULTING IN RATES AND PAYMENTS LESS THAN THOSE PRESCRIBED IN THE REGULATIONS ISSUED UNDER THE SOIL BANK ACT MAY BE REFORMED TO PROVIDE RATES AND PAYMENTS IN ACCORDANCE WITH THE REGULATIONS; HOWEVER, CONTRACTS WHICH CONTAIN MISTAKES RESULTING IN RATES AND PAYMENTS IN EXCESS OF THOSE IN THE REGULATIONS MAY NOT BE HONORED. EVEN THOUGH THE SOIL BANK ACT VESTS IN THE SECRETARY OF AGRICULTURE BROAD AUTHORITY TO PRESCRIBE THE TERMS AND CONDITIONS OF THE ACREAGE RESERVE PROGRAM, THIS AUTHORITY DOES NOT PERMIT THE SECRETARY TO IGNORE THE REGULATIONS WHICH HAVE BEEN ISSUED. UNDER THE BROAD AUTHORITY OF THE SOIL BANK ACT, THE SECRETARY OF AGRICULTURE MAY AMEND THE REGULATIONS TO EXTEND THE CLOSING DATE FOR SIGNING ACREAGE RESERVE AGREEMENTS, TO MAKE "NEW FARM" ALLOTMENTS ELIGIBLE, AND TO ELIMINATE THE MAXIMUM AND MINIMUM ACREAGE REQUIREMENTS PROVIDED THE AMENDMENTS HAVE GENERAL APPLICATION TO ALL EXISTING AGREEMENTS.

TO THE SECRETARY OF AGRICULTURE, JANUARY 16, 1957:

YOUR LETTER OF JANUARY 4, 1957, REQUESTS OUR DECISION WHETHER YOU MAY LEGALLY TAKE CERTAIN PROPOSED ACTIONS CONCERNING SOME OF THE 1956 ACREAGE RESERVE AGREEMENTS ENTERED INTO UNDER THE SOIL BANK ACT, PUBLIC LAW 540, APPROVED MAY 28, 1956, 70 STAT. 188, 7 U.S.C. 1801 NOTE.

THE LETTER INDICATES THAT, AS A RESULT OF THE DELAY IN THE PASSAGE OF THE SOIL BANK LEGISLATION, THERE WAS INSUFFICIENT TIME WITHIN WHICH TO EXPLAIN THE PROGRAM TO PRODUCERS ADEQUATELY AND STILL CARRY OUT THE MANDATE OF CONGRESS TO PUT THE PROGRAM INTO EFFECT FOR 1956. THE PROGRAM WAS THUS INAUGURATED WITHOUT AMPLE OPPORTUNITY TO ACQUAINT THE FIELD STAFF FULLY WITH THE REQUIREMENTS OF THE PROGRAM. THE LETTER INDICATES FURTHER THAT, BECAUSE OF THE LACK OF COMPLETE INFORMATION IN THE FIELD, THE PRESSURE TO MEET THE DEADLINE FOR SIGNING AGREEMENTS, AND THE NECESSITY IN MANY CASES OF USING INEXPERIENCED FIELD PERSONNEL, MISTAKES AND ERRORS WERE MADE BY BOTH PRODUCERS AND FIELD PERSONNEL IN EXECUTING MANY OF THE AGREEMENTS UNDER THE PROGRAM.

ALSO, YOU LETTER STATES THAT THE SOIL BANK PROGRAM DEPENDS UPON VOLUNTARY PARTICIPATION BY PRODUCERS AND IF THE PROPOSED ACTIONS ARE NOT TAKEN, GENERAL DISSATISFACTION ON THE PART OF PRODUCERS, WHO ACTED IN GOOD FAITH, WOULD IN YOUR JUDGMENT JEOPARDIZE YOUR ABILITY TO OBTAIN SUFFICIENT PARTICIPATION IN FUTURE YEARS TO ACHIEVE THE PURPOSES OF THE PROGRAM. YOU, THEREFORE, HAVE DETERMINED THAT YOUR PROPOSED ACTIONS ARE NECESSARY TO FACILITATE THE PRACTICAL ADMINISTRATION OF THE ACREAGE RESERVE PROGRAM.

THE VARIOUS TYPES OF CASES WHERE MISTAKES WERE MADE, AND YOUR PROPOSED ACTIONS, ARE SUMMARIZED, AS FOLLOWS:

1. SECTION 485.115 OF THE REGULATIONS GOVERNING THE 1956 ACREAGE RESERVE PROGRAM (21 FED. REG. 4383), WHICH REGULATIONS WERE INCORPORATED BY REFERENCE AS A PART OF THE AGREEMENT, PROVIDES THAT THE RATE OF COMPENSATION PER ACRE IS TO BE DETERMINED BY MULTIPLYING THE BASE UNIT RATE FOR THE COMMODITY BY THE APPLICABLE YIELD FACTOR. IN THE CASE OF REDUCTION OF ACREAGE BY UNDERPLANTING, THE APPLICABLE YIELD FACTOR IS GENERALLY THE NORMAL YIELD PER ACRE FOR THE FARM (SEE SECTION 485.117 (A) OF THE REGULATIONS, 21 FED. REG. 4383, AS AMENDED BY 21 FED. REG. 5205). IN SOME CASES IN COMPUTING THE RATE OF COMPENSATION PER ACRE AN INCORRECT FIGURE WAS USED, THROUGH ERROR, AS THE NORMAL YIELD FOR THE FARM. CASES WHERE THE ERROR RESULTED IN SETTING OUT IN THE AGREEMENT A LOWER RATE PER ACRE THAN THAT TO WHICH THE PRODUCER WAS ENTITLED UNDER THE REGULATIONS, YOU PROPOSED TO REFORM THE AGREEMENT TO SHOW THE CORRECT RATE PER ACRE AND MAKE PAYMENT ACCORDINGLY. YOUR GENERAL COUNSEL EXPRESSES THE VIEW THAT UNDER THE REGULATIONS THE PRODUCER WOULD BE ENTITLED TO THE AMOUNT YOU PROPOSE TO PAY AND THAT THE GOVERNMENT INTENDED THAT THE PRODUCER RECEIVE COMPENSATION ON THE BASIS PROVIDED IN THE REGULATIONS. BY THE SAME TOKEN AN INTENT MAY NOT BE IMPLIED ON THE PART OF THE PRODUCER TO RECEIVE AN AMOUNT OTHER THAN THAT TO WHICH HE WAS ENTITLED UNDER THE REGULATIONS.

2. IN CASES WHERE THE ERROR MENTIONED IN PARAGRAPH NO. 1 RESULTED IN SETTING OUT IN THE AGREEMENT A HIGHER RATE PER ACRE YOU PROPOSE TO PAY THE PRODUCER ON THE BASIS OF THE RATE OF COMPENSATION PER ACRE SET FORTH IN THE AGREEMENT.

3. SECTION 485.109 OF THE REGULATIONS GOVERNING THE PROGRAM (21 FED. REG. 4382) PROVIDES THAT PRODUCERS ARE NOT ELIGIBLE FOR PARTICIPATION IN THE ACREAGE RESERVE PROGRAM ON FARMS WHICH RECEIVED 1956 ALLOTMENTS AS "NEW FARMS.' THE PRINCIPAL PURPOSE OF THAT PROVISION IS TO FORECLOSE APPLICATIONS FROM PRODUCERS WHO WOULD OBTAIN "NEW FARM" ALLOTMENTS SOLELY IN ORDER TO PARTICIPATE IN THE ACREAGE RESERVE PROGRAM. WHERE FIELD PERSONNEL ERRONEOUSLY PERMITTED PRODUCERS WHO HAD OBTAINED "NEW FARM" ALLOTMENTS TO ENTER INTO AGREEMENTS AND SUCH PRODUCERS HAVE CARRIED OUT THE TERMS AND CONDITIONS OF THE AGREEMENT, YOU PROPOSE TO HONOR THE AGREEMENT, NOTWITHSTANDING THAT SUCH AGREEMENTS ARE NOT IN ACCORD WITH THE REGULATIONS.

4. SECTION 485.108 OF THE REGULATIONS (21 FED. REG. 4381) PRESCRIBES CERTAIN MINIMUM AND MAXIMUM ACREAGE FOR A COMMODITY WHICH MAY BE PLACED IN THE ACREAGE RESERVE. WHERE THE AGREEMENTS COVER LESS THAN THE MINIMUM ACREAGE OR MORE THAN THE MAXIMUM ACREAGE SPECIFIED IN THE REGULATIONS AND THE PRODUCERS HAVE CARRIED OUT THE TERMS OF THE AGREEMENTS, YOU PROPOSE TO HONOR THE AGREEMENTS AS WRITTEN WITHOUT REGARD TO THE MINIMUM AND MAXIMUM ACREAGE LIMITATIONS.

5. SECTION 485.117 (A) OF THE REGULATIONS (21 FED. REG. 4383) PROVIDES THAT, IN THE CASE OF REDUCTION OF ACREAGE BY UNDERPLANTING, THE NORMAL YIELD FOR THE TRACT OF LAND DESIGNATED AS THE ACREAGE RESERVE WAS TO BE THE APPLICABLE YIELD FACTOR IF LOWER THAN THE NORMAL YIELD FOR THE FARM. WHERE THE NORMAL YIELD FOR THE FARM WAS USED AS THE APPLICABLE YIELD FACTOR TO DETERMINE THE RATES OF COMPENSATION PER ACRE TO INCLUDE IN THE AGREEMENT EVEN THOUGH THE NORMAL YIELD FOR THE DESIGNATED ACREAGE RESERVE WAS LESS THAN THE NORMAL YIELD FOR THE FARM, YOU PROPOSE TO PAY THE PRODUCER ON THE BASIS OF THE RATE OF COMPENSATION PER ACRE SET FORTH IN THE AGREEMENT.

6. SECTION 485.117 (C) OF THE REGULATIONS (21 FED. REG. 4383) PROVIDES THAT, IN THE CASE OF REDUCTION OF ACREAGE BY DESTRUCTION OF SUBNORMAL CROPS, THE YIELD FACTOR SHALL BE THE APPRAISED YIELD FOR THE FIELD ON WHICH DESTRUCTION OR ADJUSTMENT OF ACREAGE TAKES PLACE. IN CASES WHERE THE REDUCTION IN ACREAGE IS BY ADJUSTMENT OR DESTRUCTION AND THE RATE OF COMPENSATION PER ACRE SET FORTH IN THE AGREEMENT IS MORE THAN THAT TO WHICH THE PRODUCER IS ENTITLED UNDER THE REGULATIONS BECAUSE OF ITS HAVING BEEN COMPUTED ON THE BASIS OF NORMAL YIELD RATHER THAN APPRAISED YIELD, AND CASES WHERE THE RATE PER ACRE IN THE AGREEMENT EXCEEDED THE MAXIMUM RATE PER ACRE SPECIFIED IN THE REGULATIONS, YOU INTEND TO PAY THE PRODUCER ONLY THE AMOUNT TO WHICH HE IS ENTITLED UNDER THE REGULATIONS.

IT IS A WELL KNOWN PRINCIPLE OF LAW THAT A WRITTEN AGREEMENT NOT IN CONFORMITY WITH THE ACTUAL INTENTION OF THE PARTIES BECAUSE OF A MUTUAL MISTAKE REGARDING A MATERIAL FACT MAY BE REFORMED IN ACCORDANCE WITH SUCH ACTUAL INTENT. IT IS UNDER THAT PRINCIPLE OF LAW THAT THE ACCOUNTING OFFICERS LONG HAVE, UNDER CERTAIN CONDITIONS, REFORMED OR AUTHORIZED THE REFORMATION OF SUCH AGREEMENTS EXECUTED BY UNITED STATES CONTRACTING OFFICERS. 30 COMP. GEN. 220; 26 ID. 899; 20 ID. 782; 15 ID. 238. IN VIEW OF THE NATURE OF THE ACREAGE RESERVE PROGRAM, THE HASTY MANNER IN WHICH THE PROGRAM HAD TO BE INAUGURATED, THE BROAD AUTHORITY VESTED IN YOU BY THE SOIL BANK ACT, AND THE IMPRACTICABILITY OF TRANSMITTING EACH CONTRACT HERE FOR OUR CONSIDERATION, YOU MAY REFORM THE AGREEMENTS SET OUT IN PARAGRAPH NO. 1 TO CONFORM WITH THE REGULATIONS IN EFFECT AT THE TIME THE AGREEMENTS WERE EXECUTED AND MAKE PAYMENTS ACCORDINGLY. AS EXPLAINED BELOW, WE KNOW OF NO LEGAL BASIS TO PAY THE PRODUCERS INVOLVED IN PARAGRAPHS NOS. 2 AND 5 ANY AMOUNT IN EXCESS OF THE MAXIMUM PERMITTED UNDER THE REGULATIONS. MOREOVER, THERE APPEARS NO REASON WHY THE ARGUMENT ADVANCED REGARDING THE CASES INVOLVED IN PARAGRAPH NO. 1 SHOULD NOT BE APPLIED TO THE CASES COVERED UNDER PARAGRAPH NO. 2. THAT IS, THE GOVERNMENT INTENDED THAT THE PRODUCER RECEIVE COMPENSATION ON THE BASIS PROVIDED IN THE REGULATIONS AND THERE CANNOT BE IMPLIED AN INTENT ON THE PART OF THE PRODUCER TO RECEIVE AN AMOUNT OTHER THAN THAT TO WHICH HE WAS ENTITLED UNDER THE REGULATIONS.

IN THE CASE SET OUT IN PARAGRAPHS NOS. 3 AND 4, YOU PROPOSE TO MAKE PAYMENTS IN ACCORDANCE WITH THE TERMS OF AGREEMENTS EVEN THOUGH THE PAYMENTS WOULD BE IN EXCESS OF THE AMOUNTS PERMITTED BY THE REGULATIONS ISSUED UNDER THE AUTHORITY OF THE SOIL BANK ACT AND DULY PUBLISHED IN THE FEDERAL REGISTER. YOU ENCLOSED WITH YOUR LETTER AN OPINION OF YOUR GENERAL COUNSEL WHEREIN HE CONCLUDES THAT YOU MAY TAKE THE ACTION PROPOSED NOTWITHSTANDING THE DECISION OF THE UNITED STATES SUPREME COURT IN THE CASE OF FEDERAL CROP INSURANCE CORPORATION V. MERRILL, 332 U.S. 380 (1947).

IN THE MERRILL CASE, THE FEDERAL CROP INSURANCE CORPORATION PROMULGATED AND PUBLISHED IN THE FEDERAL REGISTER REGULATIONS SPECIFYING THE CONDITIONS ON WHICH IT WOULD INSURE WHEAT CROPS, INCLUDING A PROVISION MAKING INELIGIBLE FOR INSURANCE,"SPRING WHEAT WHICH HAD BEEN RESEEDED ON WINTER WHEAT ACREAGES.' WITHOUT ACTUAL KNOWLEDGE OF THIS PROVISION A WHEAT GROWER APPLIED TO THE CORPORATION'S LOCAL AGENT FOR INSURANCE ON HIS WHEAT CROP, INFORMING THE LOCAL AGENT THAT MOST OF IT WAS BEING RESEEDED ON WINTER WHEAT ACREAGES.' WITHOUT ACTUAL KNOWLEDGE OF THIS PROVISION A WHEAT GROWER APPLIED TO THE CORPORATION'S LOCAL AGENT FOR INSURANCE ON HIS WHEAT CROP, INFORMING THE LOCAL AGENT THAT MOST OF IT WAS BEING RESEEDED ON WINTER WHEAT ACREAGE. THIS INFORMATION WAS NOT, HOWEVER, INCLUDED IN THE WRITTEN APPLICATION. THE CORPORATION ACCEPTED THE APPLICATION SUBJECT TO THE TERMS OF ITS REGULATIONS. THE SUPREME COURT HELD THAT THE CORPORATION WAS NOT LIABLE FOR LOSS ON THE RESEEDED ACREAGE, SINCE SUCH ACREAGE WAS NOT ELIGIBLE UNDER THE ANNOUNCED TERMS OF THE PROGRAM. IN SO HOLDING, THE SUPREME COURT STATED:

WHATEVER THE FORM IN WHICH THE GOVERNMENT FUNCTIONS, ANYONE ENTERING INTO AN ARRANGEMENT WITH THE GOVERNMENT TAKES THE RISK OF HAVING ACCURATELY ASCERTAINED THAT HE WHO PURPORTS TO ACT FOR THE GOVERNMENT STAYS WITHIN THE BOUNDS OF HIS AUTHORITY. THE SCOPE OF THIS AUTHORITY MAY BE EXPLICITLY DEFINED BY CONGRESS OR BE LIMITED BY DELEGATED LEGISLATION, PROPERLY EXERCISED THROUGH THE RULE-MAKING POWER. AND THIS IS SO EVEN THOUGH, AS HERE, THE AGENT HIMSELF MAY HAVE BEEN UNAWARE OF THE LIMITATIONS UPON HIS AUTHORITY. * * *

ACCORDINGLY, THE WHEAT CROP INSURANCE REGULATIONS WERE BINDING ON ALL WHO SOUGHT TO COME WITHIN THE FEDERAL CROP INSURANCE ACT, REGARDLESS OF ACTUAL KNOWLEDGE OF WHAT IS IN THE REGULATIONS OR OF THE HARDSHIP RESULTING FROM INNOCENT IGNORANCE. * * *

WHILE YOUR GENERAL COUNSEL ATTEMPTS TO DISTINGUISH THE MERRILL CASE FROM THE CASES HERE INVOLVED, WE DO NOT SEE THAT THE DIFFERENCES POINTED OUT BY HIM WOULD HAVE CAUSED THE SUPREME COURT TO HAVE REACHED ANY OTHER CONCLUSION. THE LAW AND FACTS INVOLVED IN THE MERRILL CASE ARE SO SIMILAR TO THE LAW AND FACTS HERE INVOLVED THAT WE FEEL WE HAVE NO ALTERNATIVE BUT TO FOLLOW THE MERRILL CASE. AS YOU KNOW, EVEN IF WE COULD CONCLUDE THAT THE MERRILL CASE--- WHICH WOULD PRECLUDE THE PAYMENTS PROPOSED IN PARAGRAPHS 2 THROUGH 5--- IS NOT APPLICABLE, IT STILL WOULD BE OUR DUTY TO DENY SUCH PROPOSED PAYMENTS AS BEING CASES WHERE SUBSTANTIAL DOUBT EXISTS AS TO THE ACTION WHICH A COURT OF COMPETENT JURISDICTION MIGHT TAKE. SEE LONGWILL V. UNITED STATES, 17 C.1CLS. 288, 291; CHARLES V. UNITED STATES, 19 ID. 316, 319.

YOUR GENERAL COUNSEL CONTENDS FURTHER THAT, EVEN ASSUMING THAT THE AGREEMENTS ARE NOT BINDING ON THE GOVERNMENT, YOU WOULD BE AUTHORIZED UNDER THE BROAD PROVISIONS OF THE SOIL BANK ACT TO MAKE THE PROPOSED PAYMENTS. IT IS TRUE THAT YOU ARE AUTHORIZED UNDER SECTION 103 (A) OF THAT ACT, 7 U.S.C. 1821, TO INCLUDE IN THE ACREAGE RESERVE PROGRAM SUCH TERMS AND CONDITIONS AS YOU DETERMINE ARE DESIRABLE TO EFFECTUATE THE PURPOSES OF THE ACT AND TO FACILITATE THE PRACTICAL ADMINISTRATION OF THE ACREAGE RESERVE PROGRAM, BUT THAT AUTHORITY DOES NOT AUTHORIZE YOU TO IGNORE THE PROVISIONS OF THE REGULATIONS YOU PREVIOUSLY HAVE ISSUED WHICH, UNDER THE WELL-ESTABLISHED PRINCIPLES RESTATED IN THE MERRILL CASE, HAVE THE FORCE AND EFFECT OF LAW. SEE SHERIDAN-WYOMING COAL CO. V. KRUG, 172 F.2D 282, WHEREIN THE COURT HELD THAT A REGULATION ISSUED BY THE SECRETARY OF THE INTERIOR WAS BINDING UPON HIM AND PRECLUDED HIM FROM GRANTING ANY EXCEPTION THERETO UNTIL IT WAS REPEALED OR MODIFIED.

LASTLY, YOUR GENERAL COUNSEL PROPOSES THAT YOU, BY APPROPRIATE REGULATIONS, EXTEND THE CLOSING DATE FOR SIGNING AGREEMENTS AND AMEND OTHER PROVISIONS OF THE REGULATIONS TO MAKE "NEW FARM" ALLOTMENTS ELIGIBLE AND TO ELIMINATE THE MAXIMUM AND MINIMUM ACREAGE REQUIREMENT. IN VIEW OF THE BROAD PROVISIONS OF THE SOIL BANK ACT, THE NATURE OF THE ACREAGE RESERVE PROGRAM, AND YOUR DETERMINATION THAT SUCH ACTION IS NECESSARY TO FACILITATE THE PRACTICAL ADMINISTRATION OF THE PROGRAM, IT IS OUR OPINION THAT SUCH ACTION WOULD BE AUTHORIZED, PROVIDED THAT THE AMENDMENTS APPLY TO ALL EXISTING AGREEMENTS COVERING "NEW FARM" ALLOTMENTS OR ACREAGE LESS THAN THE MINIMUM OR IN EXCESS OF THE MAXIMUM. THE PAYMENTS PROPOSED IN PARAGRAPHS NOS. 3 AND 4 WOULD THEN BE AUTHORIZED.

OF COURSE, THERE IS NO OBJECTION TO THE PROPOSAL IN PARAGRAPH NO. 6 TO PAY ONLY THE AMOUNT AUTHORIZED UNDER THE REGULATIONS.