PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NELLIE D. CHAMBLEE,
Plaintiff-Appellant,

v.

MIKE ESPY, Secretary of the United
States Department of Agriculture;
MIKE DUNN, National Administrator
of Farmers Home Administration;
JAMES C. KEARNEY, North Carolina
State Director of Farmers Home
                                                                 No. 95-3050
Administration; CALVIN ASKEW,
Farmers Home Administration
Supervisor for Hertford County,
North Carolina; TERRENCE EVANS, in
his capacity as the duly appointed
commissioner for the sale of the
"Cowan Farm", Hertford County,
North Carolina File Number
94 SP-1,
Defendants-Appellees.

Appeal from the United States District Court
for the Eastern District of North Carolina, at Elizabeth City.
Terrence W. Boyle, District Judge.
(CA-94-45-2-1-BO)

Argued: September 27, 1996

Decided: November 8, 1996

Before NIEMEYER, MICHAEL, and MOTZ, Circuit Judges.

_________________________________________________________________
Reversed and remanded with instructions by published opinion. Judge
Michael wrote the opinion, in which Judge Niemeyer and Judge Motz
joined.

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COUNSEL

ARGUED: Stephen Alan Woodson, LAND LOSS PREVENTION
PROJECT, Ahoskie, North Carolina, for Appellant. Bruce Charles
Johnson, OFFICE OF THE UNITED STATES ATTORNEY,
Raleigh, North Carolina, for Appellees. ON BRIEF: Janice McKen-
zie Cole, United States Attorney, Stephen A. West, Assistant United
States Attorney, Raleigh, North Carolina, for Appellees.

_________________________________________________________________

OPINION

MICHAEL, Circuit Judge:

Nellie D. Chamblee, a family farmer, sued in district court, claim-
ing that her lender, the Farmers Home Administration (FmHA), was
required (under 7 U.S.C. § 1983b, now 7 U.S.C.§ 6991 et seq.) to
provide her an administrative appeal of its determination to suspend
her application to restructure her delinquent loans. The district court,
believing there was no final agency action, granted summary judg-
ment to the agency and dismissed the complaint on the ground that
it was not subject to judicial review. Mrs. Chamblee has appealed the
district court's order. We conclude that FmHA's decisions, as they
applied in Mrs. Chamblee's case, amounted to final agency action that
is reviewable in federal court. And our review of FmHA's action
leads us to reverse and remand with instructions that the Secretary of
Agriculture be ordered to direct his department's National Appeals
Division to hear Mrs. Chamblee's administrative appeal.

I.

The facts and procedural history are not in dispute. Together, Nel-
lie D. Chamblee and her husband, William T. Chamblee, farmed a
103-acre tract of land in Hertford County, North Carolina. The Cham-

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blees had a row crop operation, raising tobacco, peanuts, soybeans
and corn. Over the years, they relied on loans from FmHA to finance
their farming enterprise. Mr. and Mrs. Chamblee were co-obligors on
the notes to FmHA, and the notes were secured by Mr. Chamblee's
farm equipment. FmHA took no deed of trust against the farm, which
Mr. Chamblee and his brother owned as tenants-in-common.

Mr. Chamblee died on December 3, 1987. Under his will Mr.
Chamblee's one-half interest in the farm passed to his wife, and Mrs.
Chamblee continued to farm the land with her son. After Mr. Cham-
blee's death, the encumbered farm equipment was sold and the pro-
ceeds paid to FmHA. The loans were undersecured, however, and
nearly $95,000 was owed to FmHA at the end of 1988. Mrs. Cham-
blee, who was unable to keep up with the payments, soon became a
delinquent borrower.

When a farmer, such as Mrs. Chamblee, is delinquent on an FmHA
loan, Congress (under the Agricultural Credit Act of 1987) authorizes
FmHA to undertake "debt restructuring and loan servicing." See 7
U.S.C. §§ 2001-2006. The objectives of the program are to "ensure
that borrowers are able to continue farming" and to avoid or minimize
losses to the government. Id. § 2001(a). The tools available to FmHA
for restructuring or "servicing" a farmer's loan include (1) consolida-
tion, rescheduling or reamortization, (2) interest rate reduction, and
(3) write down of principal or accumulated interest. See 7 C.F.R.
§ 1951.906 (1996). In November 1988 FmHA mailed what it calls a
"1951-S loan servicing package" to Mrs. Chamblee. The package
notified Mrs. Chamblee that she was "behind with[her] loan pay-
ments" and informed her of the availability of loan restructuring pro-
grams that might allow her to continue farming. Mrs. Chamblee
responded by submitting an application for loan servicing.

Mrs. Chamblee's application for loan servicing revealed that she
owed three other creditors a total of $15,500. FmHA's initial calcula-
tions indicated that Mrs. Chamblee could not develop a feasible plan
of operation if debt restructuring was limited to FmHA; the coopera-
tion of her other creditors was also needed. Accordingly, with Mrs.
Chamblee's consent and pursuant to regulations, see 7 C.F.R.
§ 1951.909(h)(3) (1989), FmHA convened a voluntary meeting of
creditors on June 29, 1989. FmHA discovered at the meeting that Mr.

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Chamblee's estate remained open and that his interest in the farm,
although devised to Mrs. Chamblee, was still available as a debt col-
lection source for FmHA. See N.C. Gen. Stat.§ 28A-15-1 (providing
that decedent's real and personal property are "assets available for the
discharge of debts and other claims against his estate"). In October
1989 FmHA informed Mrs. Chamblee that all action on her loan ser-
vicing application had been suspended until "all possible collections
had been made against [Mr. Chamblee's] estate." In the meantime, the
agency had filed a claim against the estate. The estate could pay
FmHA only if the Chamblee farm was sold, but its sale would mean
that Mrs. Chamblee could not continue farming.

Mrs. Chamblee appealed the decision to suspend loan servicing to
the FmHA National Appeals Staff (NAS).1 The NAS opened an
appeal file but later suspended consideration of Mrs. Chamblee's
appeal pending resolution of FmHA's claim against Mr. Chamblee's
estate.

In January 1994, because of the claim filed by FmHA, Mr. Cham-
blee's executor filed a partition action in state court to divide the
Chamblee farm. The action was filed against Mrs. Chamblee, who
took Mr. Chamblee's one-half undivided interest under his will, and
Mr. Chamblee's brother, who owns the other one-half interest. In
September 1994 the state court entered an order providing for the par-
tition and appointed a commissioner, who is to sell the parcel allotted
to Mrs. Chamblee and pay the net proceeds to Mr. Chamblee's execu-
tor. We were told at oral argument that a sale date has been set in
December 1996.

In October 1994 Mrs. Chamblee brought an action in United States
District Court under 28 U.S.C. § 1331 and the Administrative Proce-
dure Act (APA), 5 U.S.C. § 701 et seq., to seek an order requiring
FmHA to give her "an administrative appeal of the decision to sus-
pend primary loan servicing."2 The district court granted summary
_________________________________________________________________
1 The duties of the NAS are now placed with the United States Depart-
ment of Agriculture (USDA)'s National Appeals Division, pursuant to 7
U.S.C. §§ 6992 & 6993.
2 In her complaint Mrs. Chamblee named, among others, the Secretary
of USDA and various officials of FmHA (now called USDA, Farm Ser-
vice Agency), including FmHA's National Administrator. We refer to
these defendants collectively as "FmHA."

                    4
judgment to FmHA, concluding that there was no final agency action
for a court to review. More specifically, the district court said that
Mrs. Chamblee was "not entitled to an administrative appeal at this
point in the administrative proceedings because loan servicing has
been suspended rather than denied." Mrs. Chamblee appeals.

II.

We turn first to whether the district court could hear Mrs. Cham-
blee's claim under the APA, which provides for judicial review of
"final agency action for which there is no other adequate remedy in
a court." 5 U.S.C. § 704. The "final agency action" requirement is at
issue here. To decide whether a particular agency action is final, we
consider "whether the agency has completed its decisionmaking pro-
cess, and whether the result of that process is one that will directly
affect the parties." Franklin v. Massachusetts, 505 U.S. 788, 797
(1992). In determining the finality of agency action a court should
consider the "practical effect of the [agency's] determination."
Kershaw v. Resolution Trust Corp., 987 F.2d 1206, 1208 (5th Cir.
1993). See First National Bank v. Comptroller of Currency, 956 F.2d
1360, 1364-65 (7th Cir. 1992).

Mrs. Chamblee says that she meets the Franklin test because
FmHA's decisions to suspend consideration of loan servicing and to
suspend her appeal in effect "completed [the] decisionmaking pro-
cess" in a way that "directly affect[ed]" her. We agree, and we believe
that the same undisputed facts satisfy both prongs of Franklin.

FmHA suspended consideration of Mrs. Chamblee's loan servicing
(i.e., loan restructuring) application to pursue collection of the debt
from Mr. Chamblee's estate. The only asset available to the estate to
provide cash for payment is the one-half interest in the farm, which
was willed to Mrs. Chamblee, but which remains subject to Mr.
Chamblee's debts. FmHA's claim forced the executor to file a parti-
tion suit in state court against Mrs. Chamblee and her brother-in-law,
and the court has entered an order providing for partition of the farm
and directing a commissioner to sell the acreage allotted to Mrs.
Chamblee and pay the proceeds to Mr. Chamblee's executor. Mrs.
Chamblee believed that FmHA's suspension of loan servicing was an
"adverse decision" and filed an appeal with FmHA's National

                    5
Appeals Staff. The NAS docketed her appeal but later decided to sus-
pend consideration of it.

FmHA argues that there is simply a pause in the decisionmaking
process, which will be reactivated when its claim against the estate is
disposed of. This argument overlooks the effect of the agency's deci-
sions to suspend consideration of Mrs. Chamblee's application and to
suspend her appeal. FmHA's decisions are forcing the sale of the
farm. If the farm is sold, Mrs. Chamblee has no chance of offering
a feasible plan of farm operation, a requirement for any loan restruc-
turing. Thus, if the farm is sold, Mrs. Chamblee's application for loan
servicing will surely be denied. The practical effect of FmHA's sus-
pension decisions, therefore, was to deny Mrs. Chamblee's applica-
tion for loan servicing. That amounts to final agency action and
makes Mrs. Chamblee's claim subject to judicial review according to
the APA, 5 U.S.C. § 704.

III.

We now consider whether Mrs. Chamblee is entitled to the relief
she seeks -- an order directing the agency to process her administra-
tive appeal.

FmHA argues that it properly suspended Mrs. Chamblee's admin-
istrative appeal under the statute and regulations (in effect at the time)
governing its internal appeals. According to 7 U.S.C. § 1983b(a), a
"borrower . . . who has been directly and adversely affected by a deci-
sion of the Secretary made under this chapter" shall be provided with
"an opportunity for a hearing [i.e., an appeal] with respect to such
decision."3 The regulations used the same language, allowing appeal
to the National Appeals Staff of "[p]rogram administrative decisions
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3 Section 1983b was repealed in 1994 pursuant to a reorganization of
USDA. See Federal Crop Insurance Reform and Department of Agricul-
ture Reorganization Act of 1994, Pub. L. No. 103-354, Title II, §§ 271-
283, 108 Stat. 3178, 3228-3235 (1994). However, those appeals (which
included Mrs. Chamblee's) pending under § 1983b before October 13,
1994, were transferred to the reorganized National Appeals Division. See
7 U.S.C. § 6993. The new statutes provide appeal rights and procedures
similar to those provided in § 1983b. See 7 U.S.C. §§ 6994, 6996.

                    6
of [FmHA] that directly and adversely affect a person." 7 C.F.R.
§ 1900.55(a) (1989). The regulations defined"[d]irectly and adversely
affected" to "mean[ ] having a request for FmHA assistance denied in
whole or in part." Id. § 1900.52(i). FmHA, of course, argues that Mrs.
Chamblee was not directly and adversely affected by its suspension
of loan servicing because the suspension was not the denial of a
request for assistance. We believe, however, that the term "directly
and adversely affected" in the appeals statute and regulations must be
construed the same way as the term "directly affect[ed]" in Franklin
v. Massachusetts, supra. As we said in applying Franklin, see part II,
supra, FmHA's decision to suspend loan servicing was in reality the
denial of Mrs. Chamblee's application. She was thus"directly and
adversely affected" by the decision, and her administrative appeal
should have been heard.4

IV.

We reverse the judgment of the district court and remand with
instructions that the district court enter summary judgment in favor of
Mrs. Chamblee, determining that her administrative appeal should
have been heard and ordering the Secretary of USDA to direct the
department's National Appeals Division to hear Mrs. Chamblee's
administrative appeal.

REVERSED AND REMANDED WITH INSTRUCTIONS
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4 On the merits of the underlying controversy, FmHA contends that,
under the regulations applicable at the time, it was required to pursue
collection from Mr. Chamblee's estate before it considered Mrs. Cham-
blee's application for loan servicing. See 7 C.F.R. § 1962.46(c), (d) & (f)
(1989). Mrs. Chamblee disputes this interpretation and points out that
newer (1991) regulations require FmHA to allow a surviving family
member, who assumes a deceased borrower's farming operation, to pur-
sue loan servicing before the agency seeks liquidation of estate property.
See id. § 1962.46(f) (1992). We do not decide what the regulations
require or which version applies.




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