With the uncertainty of USDA contracts and funding while federal programs are being reviewed by the new administration and some programs being canceled, it is important for producers and organizations to understand their rights and key timelines. Farm Commons has recently published a resource aimed at helping producers navigate this situation. Key points from this resource are summarized below.
If you haven’t received communication from the USDA but suspect your contract is affected, then it is recommended that you reach out to your program contact with USDA to learn more. Farmers can also submit an inquiry letter directly to the USDA that requests additional clarification. Letter templates can be found HERE.
Do I Have a Legal Claim?
Many USDA contracts can include statements that allow them to cancel the contract “in the public interest.” However, this clause has been challenged in the past. If the government does not fulfill its obligations and halts contract payments, then they could be in breach of contract.
Should I Still Honor My Obligation Without Payment?
Unless payment is secured in writing from federal contracts, farmers may be facing the issue of “Impossibility of Performance.” This happens when one party (USDA) makes it impossible for the other party (the farmer) to comply, and it could be used as a basis to terminate a contract.
To prepare for this, it is recommended that producers collect all vendor contracts, receipts, and any other relevant information in writing that can demonstrate how the funding freeze is making it impossible for them to fulfill their obligation.
I Have Decided to Challenge the Freeze - Things to Consider
USDA contracts have to be reviewed by the National Appeals Division (NAD) before a decision will be made. Here are some key things to consider as you work through the process:
Have you received an “adverse decision” from the USDA?
An adverse decision can be formal (a termination letter) or informal (an email stating delayed payment).
Once a producer receives an adverse decision, they will have 30 days to submit the appeal.
Starting the NAD process:
To start the NAD process, the adverse decision must be presented to a producer in writing. The 30 day timeline only starts once a written adverse decision has been received by a producer.
If you have only received verbal feedback indicating there will be a delay in payment, then an inquiry letter should be submitted to the USDA requesting clarification for any contracts.
Gather documentation:
Collect any documents that pertain to the contract in question. This includes any financial documents that clearly demonstrate the negative financial impact that canceling (or delaying) a contract will have on the farm business.
Document and save all conversations from USDA staff. It is also important to track if responses from federal employees have taken longer than 14 days. If employees do not respond within 14 days, then producers may still be able to appeal on the basis of inaction.
Filing an NAD Appeal or Inquiry Letter: Steps and What to Expect
Should you choose to move forward, there are two pathways of further action:
Pathway 1: File a NAD Appeal
Why?: Filing a NAD appeal may be important to protect your legal rights after receiving an adverse decision from the USDA. You must file within 30 days to avoid waiving your right to appeal.
Steps:
Gather documents, including the USDA contract and any correspondence related to the decision.
Write a detailed letter explaining why you disagree with the USDA’s decision, providing evidence of harm.
Fill out the USDA National Appeals Division (NAD) Appeal Request Form.
Sign and submit the appeal by mail or through the NAD website.
Prepare for a hearing if requested, and reach out for resources if necessary.
What to Expect: The NAD will confirm your appeal and assign a judge. You may have a pre-hearing conference, followed by either a hearing or a decision based on written documents. The judge’s decision will come within 30 days of the hearing or closing of the record. If the decision is unfavorable, you can appeal further.
Pathway 2: Send an Inquiry Letter to Your USDA Contract Administrator
Why?: Sending an inquiry letter can help ensure the USDA will clarify your contract status. If the response is unfavorable or delayed, you can file a NAD appeal.
Steps:
Gather your contract and supporting documents, including logs of prior conversations with the USDA.
Draft a detailed letter asking for clarification on your contract status and potential extensions.
Send the letter via certified mail to your contract administrator and the agency Director.
If no response or an unfavorable response is received within 7 days, consider filing a NAD appeal.
What to Expect: You will likely receive a formal response from the USDA. If the response is unfavorable or if no response is given in a timely manner, you can then proceed to file a NAD appeal within 30 days.
If you have questions about USDA contract freezes, feel free to reach out to KCARD at (859) 550-3972 or kcard@kcard.info for assistance. Additionally, Farm Commons offers valuable resources, including templates for inquiry letters and more detailed guidance HERE.