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Lyng v. Payne

Supreme Court of the United States

March 24, 1986, Argued ; June 17, 1986, Decided

No. 84-1948


 [*927]  [***927]  [**2335]    JUSTICE O'CONNOR delivered the opinion of the Court.

 ] Federal law vests in the Secretary of Agriculture the authority to make emergency loans to farmers who suffer economic losses as a result of a natural disaster.  [**2336]  See Consolidated Farm and Rural Development Act (Act), §§ 321-330, 75 Stat. 311, as amended, 7 U. S. C. §§ 1961-1971.  [*928]  Pursuant to an agency rule, the Secretary [****5]  required loan applicants suffering from disasters occurring between December 26, 1972, and April 20, 1973, to file their applications by April 2, 1974. 39 Fed. Reg. 7569 (1974) (later codified at 7 CFR § 1832.82(a) (1975)). That rule embodied a statutory command to keep the loan program open at least until that date. Pub. L. 93-237, 87 Stat. 1025. The question presented is whether a federal court has the remedial authority to reopen this long-terminated loan program on the basis of its finding that the Secretary, in alleged violation of another rule, failed adequately to notify affected farmers of the program's availability and terms.

In early April 1973 torrential rains struck 13 counties in the northern part of Florida. Initial estimates, which were later sharply reduced, projected that resulting crop and property losses would be in excess of $ 3 million. In light of the scope of these anticipated losses, on May 26, 1973, President Nixon declared the region a major disaster area. 38 Fed. Reg. 14800 (1973). See Disaster Relief Act of 1970, Pub. L. 91-606, 84 Stat. 1744 (repealed or transferred 1974). As a result of this declaration, the [****6]  Secretary of Agriculture came under a statutory obligation to "make loans" to qualifying individuals in the region. 7 U. S. C. § 1961(b) (1970 ed., Supp. III).

At the time of the declaration, the federal disaster relief program, like much of the rest of the Federal Government, had become embroiled in a budgetary dispute between the Executive and Legislative Branches.  In 1972, Congress had passed Pub. L. 92-385, 86 Stat. 554, which authorized emergency loans under terms far more generous than those available under later versions of the Act. Under the 1972 law as implemented by the Secretary, loans carried a 1% interest rate and were not conditioned upon the unavailability of alternative sources of credit. In addition, the Secretary was  [*929]  directed to forgive outright up to $ 5,000 of the principal of the loan. On December 27, 1972, as part of a larger, administrationwide effort to control what were viewed as excessive congressional appropriations, the Secretary directed that regional Farmers Home Administration (FmHA) officials effectively cease processing loan applications. See generally Berends v. Butz, 357 F.Supp. 143  [***928]  (Minn. 1973);  [****7]  Impoundment of Appropriated Funds by the President: Joint Hearings before the Ad Hoc Subcommittee on Impoundment of Funds of the Senate Committee on Government Operations of the Senate Committee on the Judiciary, 93d Cong., 1st Sess., 532 (1973). Aware that the "forgiveness features and low interest rates provided for by Public Law 92-385" had contributed to the unilateral executive decision to curtail the program, Congress attempted to resolve the crisis by repealing those provisions. S. Rep. No. 93-85, p. 1 (1973). Public Law 93-24, 87 Stat. 24, which became effective on April 20, 1973, set the interest rate on emergency loans at 5%, limited the availability of loans to those unable to obtain credit from other sources, and eliminated entirely the provision that had previously allowed for cancellation of a portion of the principal. A grandfather clause provided that the terms of the earlier act, Pub. L. 92-385, would remain applicable to disasters designated between January 1 and December 27, 1972.

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476 U.S. 926 *; 106 S. Ct. 2333 **; 90 L. Ed. 2d 921 ***; 1986 U.S. LEXIS 60 ****; 54 U.S.L.W. 4669



Disposition:  751 F.2d 1191, reversed.


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Administrative Law, Separation of Powers, Legislative Controls, General Overview, Public Health & Welfare Law, Social Services, Emergency Services, Agency Rulemaking, Rule Application & Interpretation, Judicial Review, Reviewability, Questions of Law, Contracts Law, Estoppel, Equitable Estoppel, Governments, Federal Government, Claims By & Against, Healthcare, Consideration, Enforcement of Promises, Contract Formation, Standards of Review, Real Property Law, Financing, Secondary Financing, Lien Priorities