UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT M&T FARMS, a California General No. 23-15837 Partnership, D.C. No. Plaintiff-Appellant, 5:21-cv-09590- SVK v. FEDERAL CROP INSURANCE OPINION CORPORATION, a wholly-owned government corporation that administers the Federal Crop Insurance Program; RISK MANAGEMENT AGENCY, the United States Department of Agriculture’s agency that manages the FCIC and administers federal crop insurance policies,

Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California Susan G. Van Keulen, Magistrate Judge, Presiding*

* The parties consented to proceed before a magistrate judge. See 28 U.S.C. § 636(c). 2 M&T FARMS V. FCIC

Argued and Submitted April 5, 2024 San Francisco, California

Filed June 4, 2024

Before: Milan D. Smith, Jr., Andrew D. Hurwitz, and Anthony D. Johnstone, Circuit Judges.

Opinion by Judge Hurwitz

SUMMARY**

Administrative Procedure Act / Auer Deference

The panel affirmed the district court’s summary judgment in favor of the Federal Crop Insurance Corporation (“FCIC”) in an action by M&T Farms challenging an official interpretation of an FCIC insurance policy. M&T Farms is a California general partnership between two farmers. MT&T Farms and a third farmer sell farm commodities through a storefront, B&T Farms, which owns their business name and goodwill and is also a California general partnership. M&T Farms purchased crop insurance under the Whole-Farm Revenue Protection Pilot Policy (the “WFRP Policy”) from Producers Agriculture Insurance Company (“ProAg”), an insurer approved and reinsured by the FCIC.

** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. M&T FARMS V. FCIC 3

M&T Farms filed a claim seeking the full policy amount, which ProAg denied. After M&T instituted arbitration, the parties sought interpretations of the WFRP Policy from the FCIC, which concluded that the WFRP Policy does not allow a partner who files taxes on a fractional share of farming activity conducted by a partnership to be eligible for WFRP coverage for the fractional share of that farming activity. M&T Farms challenged the FCIC’s decision that a partnership “holding the business name and good will of [others] (i.e., marketing and selling the commodities produced)” is engaged in “farming activity” under section 3(a)(4) of the WFRP Policy, and that therefore, any entity reporting a fractional share of the partnership’s activity on its tax returns is ineligible for WFRP Policy coverage. Applying the arbitrary and capricious standard of review under the Administrative Procedure Act, the panel held that the WFRP Policy contained an ambiguity regarding the definition of “farming activity.” In light of this ambiguity, the FCIC’s conclusion that a partnership selling its partners’ products and holding their goodwill and business name was engaged in “farming activity” under section 3(a)(4) of the policy had a reasonable basis and was also reasonable as a matter of policy. Because the FCIC’s interpretation of “farming activity” in the WFRP Policy was reasonable, it survived APA arbitrary and capricious review. Applying deference to an agency interpretation of its regulation under the framework announced in Auer v. Robbins, 519 U.S. 452 (1997), the panel held that the term “farming activity” in the WFRP policy was genuinely ambiguous, the FCIC’s conclusion had a reasonable basis, 4 M&T FARMS V. FCIC

and the FC