                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

AAGESON GRAIN & CATTLE; R              
LAND, INC.; FAIRCHILD FARMS, INC.,
                                             No. 05-36172
               Plaintiffs-Appellees,
                v.                            D.C. No.
                                           CV-05-00022-SEH
UNITED STATES DEPARTMENT OF
                                              OPINION
AGRICULTURE,
              Defendant-Appellant.
                                       
        Appeal from the United States District Court
                for the District of Montana
         Sam E. Haddon, District Judge, Presiding

                  Argued and Submitted
           August 8, 2007—Seattle, Washington

                   Filed August 31, 2007

 Before: William C. Canby, Jr., Cynthia Holcomb Hall, and
          Consuelo M. Callahan, Circuit Judges.

                 Opinion by Judge Callahan




                            11163
              AAGESON GRAIN & CATTLE v. USDA             11165


                         COUNSEL

John S. Koppel (argued), William Kanter, Assistant United
States Attorneys for the Civil Appellate Division for appellant
United States Department of Agriculture.

Beth Angus Baumstark (argued), Sarah Voegl Law Firm,
P.C., Bismarck, ND, and Floyd D. Corder, Corder & Allen,
Great Falls, Montana, for appellees Aageson Grain & Cattle,
et. al.


                         OPINION

CALLAHAN, Circuit Judge:

   The United States Department of Agriculture (“USDA”)
appeals the district court’s order remanding this case to the
National Appeals Division (“NAD”) of the USDA to deter-
mine eligibility for an attorney’s fees and costs award under
the Equal Access to Justice Act (“EAJA”). The farmers pre-
vailed in their appeals before the NAD challenging their local
Farm Service Agency’s (“FSA”) denials of claims under the
2003 Noninsured Crop Disaster Assistance Program (“NAP”).
They then applied for attorney’s fees under the EAJA, which
the NAD denied on the ground that the EAJA is inapplicable
to NAD proceedings. The farmers filed a petition for judicial
review, and the district court ruled that the EAJA applies to
NAD proceedings and remanded.
11166         AAGESON GRAIN & CATTLE v. USDA
  We affirm the judgment of the district court.

                           FACTS

   Between March 17, 2004 and May 19, 2004, the Montana
FSA denied the 2003 Noninsured Crop Disaster Assistance
Program claims of Fairchild Farms, Inc., Aageson Grain and
Cattle, and R Land, Inc. because it was Montana’s policy that
all perennial grasses were not covered during their first year.
Each farm filed appeals with the NAD. The NAD consoli-
dated their appeals for a hearing on October 27 and 28, 2004.
At the hearing, the FSA was represented by two program spe-
cialists from the Montana FSA, Leonard McArthur, and Patri-
cia Soares. On November 26, 2004, the Hearing Officer
issued his decision overturning the FSA’s denial of benefits
to the farmers, concluding that the Montana policy “goes
beyond being over-restrictive and actually avoids the require-
ment for NAP coverage.” The FSA did not request review by
the Director of the NAD, making the Hearing Officer’s deci-
sion final on January 11, 2005.

   The farms applied for an award of attorney’s fees and
expenses under the EAJA totaling $17,943.84. The NAD
refused to consider the application, stating that “[i]t is the
position of the Department of Agriculture that EAJA is inap-
plicable to NAD proceedings, except as otherwise required by
judicial decision. Since the U.S. Court of Appeals for the 9th
Circuit has not so required, NAD will not consider your appli-
cation.”

   The farmers filed a petition for judicial review and both the
farmers and the USDA filed cross-motions for summary judg-
ment. The district court granted the farmers’ motion for sum-
mary judgment, concluding that the NAD proceeding was an
“adversary adjudication” under 5 U.S.C. § 504(a)(1) (2000).
After entering judgment, the district court ordered the case
remanded to the NAD for a determination of the proper attor-
ney’s fee and costs awards under the EAJA.
               AAGESON GRAIN & CATTLE v. USDA              11167
                        JURISDICTION

   Although the district court ordered a remand, for the pur-
poses of this appeal, the district court’s order was a final order
under 28 U.S.C. § 1291 because “it determined a separable
legal issue” of whether the EAJA applies. Collord v. Dep’t.
of Interior, 154 F.3d 933, 935 (9th Cir. 1998). Also, if the dis-
trict court was wrong, its order would “result in a wasted pro-
ceeding applying an erroneous rule of law” and “review of the
applicability of the EAJA to the proceeding might be fore-
closed.” Id.

                 STANDARD OF REVIEW

   This court reviews the district court’s decision on the cross-
motions for summary judgment de novo. Parravano v. Bab-
bitt, 70 F.3d 539, 543 (9th Cir. 1995). “On appeal from the
District Court, we review the NAD’s decision de novo, and
will uphold it unless we find it to be ‘arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with
law.’ ” Deaf Smith Cty. Grain Processors, Inc. v. Glickman,
162 F.3d 1206, 1213 (D.C. Cir. 1998) (internal citations omit-
ted).

                        DISCUSSION

   The sole issue in this case is whether the EAJA applies to
administrative hearings before the NAD. The USDA contends
that a proceeding before the NAD is not held “under” the
Administrative Procedure Act (“APA”), therefore the EAJA
does not entitle the farmers to attorney’s fees. The district
court followed the Eighth Circuit’s decision in Lane v. USDA,
120 F.3d 106, 108 (8th Cir. 1997), and found that the EAJA
applied to proceeding before the NAD.

A.     If an administrative adversary adjudication is “under
       section 554” of the APA, the EAJA applies.

     The EAJA states:
11168            AAGESON GRAIN & CATTLE v. USDA
     Except as otherwise specifically provided by statute,
     a court shall award to a prevailing party other than
     the United States fees and other expenses, in addi-
     tion to any costs awarded pursuant to subsection (a),
     incurred by that party in any civil action (other than
     cases sounding in tort), including proceedings for
     judicial review of agency action, brought by or
     against the United States in any court having juris-
     diction of that action, unless the court finds that the
     position of the United States was substantially justi-
     fied or that special circumstances make an award
     unjust.

28 U.S.C. § 2412(d)(1)(A). The EAJA is made applicable to
administrative adjudications through section 504 of the
Administrative Procedure Act (“APA”), which states in rele-
vant part:

     An agency that conducts an adversary adjudication
     shall award, to a prevailing party other than the
     United States, fees and other expenses incurred by
     that party in connection with that proceeding, unless
     the adjudicative officer of the agency finds that the
     position of the agency was substantially justified or
     that special circumstances make an award unjust.

5 U.S.C. § 504(a)(1). The APA defines an adversary adjudica-
tion as “an adjudication under section 554 of this title in
which the position of the United States is represented by
counsel or otherwise.”1 5 U.S.C. § 504(b)(1)(C).
   1
     Section 554 also excludes four specific categories of adjudications that
do not apply to decisions by the NAD. 5 U.S.C. § 504(b)(1)(C)(i-iv). For
the purposes of the APA, an “adjudication” is “agency process for the for-
mulation of an order.” 5 U.S.C. § 551(7). An “order” under the APA is
“the whole or a part of a final disposition, whether affirmative, negative,
injunctive, or declaratory in form, of an agency in a matter other than rule
making but including licensing.” 5 U.S.C. § 551(6).
                 AAGESON GRAIN & CATTLE v. USDA                      11169
   [1] Section 554 of the APA applies “in every case of adju-
dication required by statute to be determined on the record
after opportunity for an agency hearing.”2 5 U.S.C. § 554(a).
A proceeding is “under” § 554 if it is “subject to” or “gov-
erned by” that section.” Ardestani v. INS, 502 U.S. 129, 135
(1991) (internal quotation marks and punctuation omitted).
“Section 554 does not merely describe a type of agency pro-
ceeding; it also prescribes that certain procedures be followed
in the adjudications that fall within its scope.” Id. at 136.

  B.    The NAD is a statutorily created adjudicative body.

   The NAD is the statutorily created means of appealing the
administrative decisions of officers, employees, or commit-
tees of the USDA. See 7 U.S.C. §§ 6992-7002. Congress cre-
ated the NAD in its current form as part of the reorganization
of the USDA in 1994. See Deaf Smith Cty., 162 F.3d at 1212-
1213 (discussing history of the NAD). Within ten (10) work-
ing days after an adverse decision by the USDA, the agency
must provide “written notice of such adverse decision and the
rights available to the participant under this subchapter or
other law for the review of such adverse decision.” 7 U.S.C.
§ 6994. Section 6996 states that “a participant shall have the
right to appeal an adverse decision to the Division for an evi-
dentiary hearing by a hearing officer consistent with section
6997 of this title.” 7 U.S.C. § 6996(a).

   The requirements for conducting an NAD hearing are con-
trolled by § 6997(c), which provides:

      (1) Location
  2
    There are six exceptions to applicability of section 554: 1) trials; 2)
certain employment matters; 3) the results of inspections, tests, or elec-
tions; 4) the conduct of military or foreign affairs functions; 5) where the
agency acts as an agent for a court; and 6) certification of worker repre-
sentatives. See 5 U.S.C. § 554(a)(1-6). None of these exceptions apply in
this case.
11170         AAGESON GRAIN & CATTLE v. USDA
    A hearing on an adverse decision shall be held in the
    State of residence of the appellant or at a location
    that is otherwise convenient to the appellant and the
    Division.

    (2)   Evidentiary hearing

    The evidentiary hearing before a hearing officer
    shall be in person, unless the appellant agrees to a
    hearing by telephone or by a review of the case
    record. The hearing officer shall not be bound by
    previous findings of fact by the agency in making a
    determination.

    (3)   Information at hearing

    The hearing officer shall consider information pres-
    ented at the hearing without regard to whether the
    evidence was known to the agency officer,
    employee, or committee making the adverse decision
    at the time the adverse decision was made. The hear-
    ing officer shall leave the record open after the hear-
    ing for a reasonable period of time to allow the
    submission of information by the appellant or the
    agency after the hearing to the extent necessary to
    respond to new facts, information, arguments, or evi-
    dence presented or raised by the agency or appellant.

    (4)   Burden of proof

    The appellant shall bear the burden of proving that
    the adverse decision of the agency was erroneous.

The parties to an NAD proceeding may appeal the determina-
tion to the Director. 7 U.S.C. § 6998(a). Upon a timely
request, “[t]he Director shall conduct a review of the determi-
nation of the hearing officer using the case record, the record
from the evidentiary hearing under section 6997 of this title,
              AAGESON GRAIN & CATTLE v. USDA              11171
the request for review, and such other arguments or informa-
tion as may be accepted by the Director.” 7 U.S.C. § 6998(b).
Once an agency determination becomes final, it “shall be
reviewable and enforceable by any United States district court
of competent jurisdiction in accordance with chapter 7 of title
5.” 7 U.S.C. § 6999.

  C.     NAD proceedings are “under” APA § 554.

   The USDA argues that the farmer’s contest of the denial of
benefits under the Disaster Assistance Program before the
NAD was not an “adversary adjudication” because it was not
“under” APA § 554, but a freestanding procedure not subject
to the APA. Acknowledging that the Eighth Circuit held, in
Lane v. USDA, that proceedings before the NAD were adver-
sary adjudications governed by the APA, and therefore, that
the EAJA applied, the USDA urges us to find that Lane was
wrongly decided. The USDA concedes that the hearing offi-
cer’s determination was a “final disposition” under APA
§ 551, and that NAD proceedings must be on the record.

    1.   A proceeding before the NAD is an adversary adju-
         dication.

   [2] The position of the USDA was represented before the
NAD by two program specialists. Unlike administrative hear-
ings where the United States does not have a formal position,
such as proceedings before the Social Security Administra-
tion, in this NAD hearing, the Montana FSA defended its pol-
icy by sending two program specialists to testify and justify
its position. Compare Kelly v. Bowen, 862 F.2d 1333, 1335-
36 (8th Cir. 1998) (noting non-adversarial nature of SSA pro-
ceedings, but that proceedings could become adversarial if the
agency takes a position). The legislative history of the EAJA
also supports this position, stating, “[i]f, however, the agency
does take a position at some point in the adjudication, the
adjudication would then become adversarial.” H.R.Rep. No.
1434, 96th Cong., 2d Sess. 23, reprinted in 1980 U.S. Code
11172         AAGESON GRAIN & CATTLE v. USDA
Cong. & Admin. News 5003, 5012. In Mahon v. USDA, the
Eleventh Circuit concluded that, in the case of a challenge to
the denial of benefits under a disaster assistance program, a
proceeding before the NAD was “ ‘adversarial’ in nature.”
485 F.3d 1247, 1256 (11th Cir. 2007). Proceedings before the
NAD are therefore an adversarial adjudication as stated in
APA § 504.

    2.   The statute creating the NAD satisfies the require-
         ments for application of the APA.

   Having determined that NAD proceedings are adversarial
adjudications within the meaning of APA § 504, the remain-
ing question is whether the proceedings are “under” APA
§ 554. Section 554 applies “in every case of adjudication
required by statute to be determined on the record after oppor-
tunity for an agency hearing.” This requirement has three
components: 1) the adjudication must be “required by stat-
ute”; 2) it must be “on the record”; and 3) there must be an
“opportunity for an agency hearing.” 5 U.S.C. § 554; Port-
land Audubon Society v. Western Council of Ind. Workers,
984 F.2d 1534, 1540 (9th Cir. 1993). The USDA does not
contest that NAD hearings must be on the record or that it
must provide an opportunity for an agency hearing. Rather,
the USDA challenges whether application of APA § 554 to
the NAD hearings is mandatory.

   [3] In this case, NAD adjudications are compelled by 7
U.S.C. § 6996(a). The plain language of the statute states that
“a participant shall have the right to appeal an adverse deci-
sion to the Division.” 7 U.S.C. § 6996(a). In Wong Yang Sung
v. McGrath, 339 U.S. 33, 50 (1950) (emphasis added), the
Supreme Court concluded that “the limitation to hearings
‘required by statute’ in § 5 of the Administrative Procedure
Act exempts from that section’s application only those hear-
ings which administrative agencies may hold by regulation,
rule, custom, or special dispensation; not those held by com-
pulsion.” Therefore, the APA generally applies where an
             AAGESON GRAIN & CATTLE v. USDA             11173
administrative hearing is required by statute or the Constitu-
tion. See Collord, 154 F.3d at 936-37 (concluding that the
EAJA applied to hearings held to determine mining rights
under the General Mining Act because the hearings were
required by the Due Process Clause).

   In Portland Audubon, 984 F.2d at 1540, we decided that
the APA “applies whenever the three requirements set forth
in APA § 554(a) are satisfied: The administrative proceeding
must be 1) an adjudication; 2) determined on the record; and
3) after the opportunity for an agency hearing.” After analyz-
ing subsection 7(h)(1)(A) of the Endangered Species Act (16
U.S.C. § 1536(h)(1)(A)), we concluded that all three require-
ments of APA § 554 were met, and therefore the prohibition
of ex parte contacts in APA § 557 applied to proceedings
before the Endangered Species Committee. Id. at 1540-41.

   In this case, the statutes creating and implementing the
NAD mandate each of the three procedural protections in
APA § 554 (stating that the APA applies “in every case of
adjudication required by statute to be determined on the
record after opportunity for an agency hearing.”). Applying
Portland Audubon, the NAD statutes require an adjudication
(7 U.S.C. § 6997), on the record (7 U.S.C. §§ 6997(c),
6998(b)), and an opportunity for a hearing (7 U.S.C. §§ 6994,
6996). Therefore, under our caselaw, the provisions of the
APA apply to proceedings before the NAD, and the EAJA
applies because the proceedings occur “under” APA § 554.

    3.   The statutory scheme creating the NAD did not
         create a free-standing scheme.

   The USDA argues that the NAD statutes create a separate
and exclusive scheme that is excluded from application of the
APA. In Marcello v. Bonds, 349 U.S. 302, 308-10 (1955), the
Supreme Court noted that Congress, by passing the Immigra-
tion and Naturalization Act of 1952 (“INA”), specifically
exempted immigration proceedings from application of the
11174         AAGESON GRAIN & CATTLE v. USDA
APA. The Court concluded that language from section 242(b)
of the INA stating that the proceedings “shall be the sole and
exclusive procedure for determining the deportability of an
alien under this section” showed a clear Congressional intent
to exclude the deportation hearings from application of the
APA. Id. at 309.

   In contrast, nothing in the statutes creating and implement-
ing the NAD states that the NAD shall be the “sole and exclu-
sive” means of adjudicating issues with the USDA. The Court
expressly followed Marcello in Ardestani, holding that the
EAJA did not apply to deportation hearings because they
were “not subject to the APA and thus not governed by the
provisions of § 554.” 502 U.S. at 134. In addition, the Court
held “that the meaning of ‘an adjudication under section 554’
is unambiguous in the context of the EAJA,” and that adjudi-
cations “under section 554” are those that “must be ‘subject
to’ or governed by’ § 554.” Id. at 135. Nothing in Ardestani
precludes us from concluding that NAD is subject to the ADA
because it fulfills the three requirements of APA § 554.

    4.   Lane v. USDA is directly on point and was not
         wrongly decided.

   The only court to consider the specific question presented
in this case, the Eighth Circuit, concluded that the EAJA
applies to proceedings before the NAD. Lane v. USDA, 120
F.3d at 109. The Eighth Circuit based its decision on a finding
“that the EAJA is under § 554 of the APA because all three
prerequisites for coverage have been satisfied. NAD proceed-
ings are: 1) adjudications; 2) there is an opportunity for a
hearing; and 3) the hearing must be on the record.” Id. This
is the same standard applied by this court in Portland Audu-
bon. Compare Portland Audubon, 984 F.2d at 1540 (conclud-
ing that the APA “applies whenever the three requirements set
forth in APA § 554(a) are satisfied: The administrative pro-
ceeding must be 1) an adjudication; 2) determined on the
record; and 3) after the opportunity for an agency hearing.”).
              AAGESON GRAIN & CATTLE v. USDA             11175
Therefore, the district court was correct to follow Lane and
conclude that the EAJA applies to proceedings before the
NAD.

   The court in Lane distinguished Marcello and Ardestani by
noting that APA § 559 states that a subsequent statute may
not be held to supersede or modify this subchapter “except to
the extent that it does so expressly.” 120 F.3d at 109 (quoting
5 U.S.C. § 559). It also cited the Supreme Court’s analysis of
the legislative history, differences between the APA and the
INA provisions, and the express statement that the deportation
hearings would be the “sole and exclusive procedure for
determining the deportability of an alien under this section.”
Id. at 110 (citing Marcello, 349 U.S. at 309). Lane does not
conflict with Marcello or Ardestani because neither case
states that a statute that satisfies the three requirements of
APA § 554 automatically creates a freestanding administra-
tive scheme exempt from the EAJA.

   [4] The EAJA is a waiver of sovereign immunity. Any
waivers of sovereign immunity “must be strictly construed in
favor of the United States.” Ardestani, 502 U.S. at 137. Even
Ardestani acknowledged, however, that the Supreme Court
has “recognized that, once Congress has waived sovereign
immunity over certain subject matter, the Court should be
careful not to ‘assume the authority to narrow the waiver that
Congress intended.’ ” Id. (quoting United States v. Kubrick,
444 U.S. 111, 118 (1979)). The statute creating the NAD, 7
U.S.C. § 6999, provides that “[a] final determination of the
Division shall be reviewable and enforceable by any United
States district court of competent jurisdiction in accordance
with chapter 7 of title 5 [the APA].” By providing for the
three procedural safeguards from APA § 554, and explicitly
providing for judicial review pursuant to the provisions of the
APA, it appears that Congress intended for NAD proceedings
to be “under” the APA, and we shall not assume the authority
to narrow Congress’s waiver of sovereign immunity under the
11176             AAGESON GRAIN & CATTLE v. USDA
EAJA. Therefore, Lane was not wrongfully decided and the
district court properly relied upon it as persuasive precedent.

      5.    The decisions of the D.C. Circuit do not compel a
            different result.

   The USDA relies heavily on St. Louis Fuel & Supply Co.,
Inc. v. FERC, 890 F.2d 446, 448-49 (D.C. Cir. 1989), where
the D.C. Circuit decided that “[w]hat counts is whether the
statute indicates that Congress intended to require full agency
adherence to all section 554 procedural components.” After
analyzing section 7193(c) of the Department of Energy Orga-
nization Act (42 U.S.C. § 7193(c)), which required a “hear-
ing,” on contests of remedial orders, the court concluded that
the statute’s omission of the requirement that hearings be “on
the record” meant that Congress did not intend the APA to
apply.3 Id. The D.C. Circuit also suggested in dicta that a pro-
ceeding is “under” § 554 if it provides all of the procedural
protections in Chapter 5 of Title 5, including notice and
opportunity, the ability to present evidence, and to conduct
cross-examination. Id. at 448. These protections were not
mandated by 42 U.S.C. § 7193(c), however, and some of the
rights were discretionary. See id. (stating right to cross-
examination is discretionary).

  The Supreme Court cited St. Louis Fuel with approval in
Ardestani. Ardestani, 502 U.S. at 135. The D.C. Circuit fol-
lowed St. Louis Fuel in Friends of Earth v. Reilly, 966 F.2d
690, 693 (D.C. Cir. 1992), again concluding that the EAJA
did not apply because the withdrawal proceeding mandated by
  3
   42 U.S.C. § 7193(c) states in relevant part:
      The Commission shall, upon request, afford an opportunity for a
      hearing, including, at a minimum, the submission of briefs, oral
      or documentary evidence, and oral arguments. To the extent that
      the Commission in its discretion determines that such is required
      for a full and true disclosure of the facts, the Commission shall
      afford the right of cross examination.
                  AAGESON GRAIN & CATTLE v. USDA                     11177
Resource Conservation and Recover Act’s 42 U.S.C.
§ 6926(e) did not provide for any process other than a “public
hearing.”4 Furthermore, the D.C. Circuit reiterated its view
that regulations that added “protections matching those of”
the APA are irrelevant to the analysis of whether a proceeding
is “subject to” § 554. St. Louis Fuel, 890 F.2d at 449.

   The fact that 7 U.S.C. §§ 6991-7001 satisfies all three of
the statutory requirements in APA § 544 distinguishes the
NAD proceedings from the less formal proceedings analyzed
in St. Louis Fuel and Friends of Earth. Congress is free to
create informal adjudicatory procedures that do not require
the full procedural protections of the APA, and therefore do
not waive sovereign immunity from attorney’s fees and costs
under the EAJA. See St. Louis Fuel, 890 F.2d at 449 (discuss-
ing legislative history and specific intent of Congress to pro-
vide minimal due process and not the full hearing afforded by
the APA). Congress may also create special dispensations
from the application of the APA, or specify and modify APA
procedures so much that the statutory scheme is not “under”
the APA. See Marcello, 349 U.S. at 308-10; Wong Yang
Sung, 39 U.S. at 50. In the absence of such exceptional con-
gressional action, however, where Congress mandates that an
adjudicative process provide the three procedural protections
stated in APA § 554, we give credence to its statement that
the APA applies when the requirements are met and conclude
that the proceeding is “under” APA § 554.
  4
   42 U.S.C. § 6926(e) states:
      Whenever the Administrator determines after public hearing that
      a State is not administering and enforcing a program authorized
      under this section in accordance with requirements of this sec-
      tion, he shall so notify the State and, if appropriate corrective
      action is not taken within a reasonable time, not to exceed ninety
      days, the Administrator shall withdraw authorization of such pro-
      gram and establish a Federal program pursuant to this subchapter.
      The Administrator shall not withdraw authorization of any such
      program unless he shall first have notified the State, and made
      public, in writing, the reasons for such withdrawal.
11178         AAGESON GRAIN & CATTLE v. USDA
  D.    Application.

   The USDA conceded in the district court that the farmers
were prevailing parties before the NAD. In addition, we note
that the NAD hearing officer found that the Montana FSA’s
policy “goes beyond being over-restrictive and actually
avoids the requirement for NAD coverage” and thus the dis-
trict court correctly found that the position of the United
States was not substantially justified. We affirm the district
court’s order stating that the “Plaintiffs are entitled to an
award of reasonable fees and costs” and ordering this case to
be remanded to the NAD for consideration of the farmers’
requests under 5 U.S.C. § 504.

                       CONCLUSION

   The statutory scheme that creates and implements the NAD
satisfies all three procedural protections stated in APA § 554.
As a result, adversarial proceedings before the NAD are “sub-
ject to” APA § 554, and the EAJA applies. AFFIRMED.
