                         RECOMMENDED FOR FULL-TEXT PUBLICATION
                             Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                    File Name: 18a0104p.06

                  UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT



 SUNRISE COOPERATIVE, INC., an Ohio cooperative        ┐
 association,                                          │
                              Plaintiff-Appellant,     │
                                                       │
                                                       │
       v.                                               >      No. 17-3807
                                                       │
                                                       │
 UNITED STATES DEPARTMENT OF AGRICULTURE; RISK         │
 MANAGEMENT AGENCY, an agency of the United            │
 States Department of Agriculture; FEDERAL CROP        │
 INSURANCE CORPORATION, an agency and body             │
 corporate of the United States Department of          │
 Agriculture,                                          │
                             Defendants-Appellees.     │
                                                       ┘

                        Appeal from the United States District Court
                         for the Northern District of Ohio at Toledo.
                     No. 3:16-cv-01297—James G. Carr, District Judge.

                                  Argued: March 6, 2018

                              Decided and Filed: June 4, 2018

             Before: COLE, Chief Judge; WHITE and BUSH, Circuit Judges.
                                    _________________

                                        COUNSEL

ARGUED:       David C. Barrett, Jr., BARRETT, EASTERDAY, CUNNINGHAM
& ESELGROTH, LLP, Dublin, Ohio, for Appellant. Jody L. King, UNITED STATES
ATTORNEY’S OFFICE, Toledo, Ohio, for Appellees. ON BRIEF: David C. Barrett, Jr., Troy
A. Callicoat, Amanda Stacy Hartman, BARRETT, EASTERDAY, CUNNINGHAM
& ESELGROTH, LLP, Dublin, Ohio, for Appellant. Jody L. King, UNITED STATES
ATTORNEY’S OFFICE, Toledo, Ohio, for Appellees.
 No. 17-3807         Sunrise Cooperative, Inc. v. United States Dep’t of Agric., et al.   Page 2


                                        _________________

                                              OPINION
                                        _________________

         COLE, Chief Judge. When Congress speaks clearly, administrative agencies must listen.
Congress spoke clearly in the 2008 Farm Bill when it said “an entity that was approved” to
provide rebates to its members may continue to do so “in a manner consistent with the payment
plan approved.”      But an agency, under the guise of interpretation, nevertheless imposed
additional eligibility requirements on approved entities that are unmoored from the statute.
We hold that the agency’s interpretation is foreclosed by the statute and reverse the judgment
below.

                                        I. BACKGROUND

         Sunrise is an Ohio agricultural cooperative with members in Ohio, Michigan, and, more
recently, Indiana.     Sunrise also owns one-third of Lund and Smith Insurance Services, a
company that sells crop insurance. In exchange for its members’ buying insurance from Lund
and Smith, Sunrise pays “patronage” to those members based on how much crop insurance they
buy. A patronage payment is, in essence, a rebate tethered to the amount of insurance purchased.
Sunrise is authorized to pay patronage only in Ohio and Michigan and pays patronage to its
members only in those states.

         These types of payments fall within the ambit of three federal agencies. The Risk
Management Agency (“RMA”) is an agency within the United States Department of Agriculture
(“USDA”) that is tasked with administering the programs of the Federal Crop Insurance
Corporation (“FCIC”).

         Patronage payments were prohibited until 2000, when Congress authorized some rebating
if permitted under state law. But this authorization was short-lived. Congress changed course in
2008 and prohibited patronage payments (again) with three exceptions. One of those exceptions
is a grandfather clause that allows entities that were already approved to pay patronage to
continue to make those payments. 7 U.S.C. § 1508(a)(9)(B)(iii). In describing what entities
could pay patronage after 2008, Congress spoke clearly:
 No. 17-3807       Sunrise Cooperative, Inc. v. United States Dep’t of Agric., et al.       Page 3


       (B) Exceptions
       Subparagraph (A) [prohibiting patronage payments] does not apply with respect
       to . . .
               (iii) a patronage dividend, or similar payment, that is paid—
                         (I) by an entity that was approved by the [FCIC] to make such
                         payments for the 2005, 2006, or 2007 reinsurance year, in
                         accordance with subsection (b)(5)(B) as in effect on the day before
                         the date of enactment of this paragraph; and
                         (II) in a manner consistent with the payment plan approved in
                         accordance with that subsection for the entity by the [FCIC] for the
                         applicable reinsurance year.

7 U.S.C. § 1508(a)(9).

       The Conference Report to the Bill explained the exception’s purpose was to “‘grandfather
in’ entities that have previously been approved by the [FCIC] to make payments in accordance
with subsection (b)(5)(B) as in effect on the day before the date of enactment.” H.R. Rep. No.
110-627, at 955, 2008 WL 2038610, *H3659 (2008) (Conf. Rep.). The Report also said:

       The Managers [of the Bill] expect the [FCIC] to exercise strict oversight to ensure
       that these entities are operating consistent with federal and state law and the
       payment plan submitted and approved. The Managers understand through
       discussions with RMA that the parties covered by the grandfather clause represent
       the universe of parties engaged in this activity. The Managers also understand
       from RMA that, while two submissions are still under review, no further requests
       are pending or expected from additional parties seeking to engage in the activities
       of those parties covered by the grandfather clause.

Id.

       It is undisputed that from 2008 until 2016, Sunrise was approved to pay patronage to its
members as a “grandfathered” entity. But in 2016, another farming cooperative, Trupointe
Cooperative, merged into Sunrise. Trupointe was a cooperative association with approximately
4100 members, operating in Ohio and Indiana. Trupointe did not own an entity that sold crop
insurance, and, unlike Sunrise, it was not eligible to pay patronage to its members.

       The RMA asked Sunrise to request its view on whether Sunrise would remain eligible to
pay patronage after the merger. Sunrise complied, and in its formal inquiry, it explained that
 No. 17-3807         Sunrise Cooperative, Inc. v. United States Dep’t of Agric., et al.      Page 4


Trupointe was merging into Sunrise. Sunrise cited principles of Ohio corporate law and federal
tax law, explaining that when one company merges into another, the surviving company is the
same entity that existed before the merger. In its view, it would qualify for the grandfather
exception because, after the merger, it would be the same eligible “entity” as before.

          The RMA disagreed.       It acknowledged that “Trupointe members . . . would become
Sunrise members after the merger” but still found that the merger would make Sunrise ineligible
to pay patronage.       Administrative Record, R. 12-2, PageID 131.         To justify this view, it
interpreted the same-entity exception to apply only to “those cooperative associations approved
for the stated years with the same entity structure.” Id. at PageID 133.

          Sunrise responded, and the RMA refined its interpretation in a final decision denying
Sunrise the grandfather exception in May 2016. The RMA argued that because “entity” is not
defined in the statute, it had discretion to define the term. It interpreted “entity” to mean an
entity that was approved for any of the 2005–2007 reinsurance years, and it added two sets of
conditions: (1) the entity must remain “the same structure and relative size”; and (2) “any
mergers, sales, acquisitions, etc. will be considered a different entity.” Id. at PageID 141.
The RMA said:

          [F]or the purposes of section 508(a)(5)(9), [the RMA] interprets “entity” to mean
          the same entity that it approved for any of the 2005-2007 reinsurance years, with
          the same structure and relative size and any mergers, sales, acquisitions, etc. will
          be considered a different entity, regardless of what it is named or how it is taxed.

Id.

          Sunrise then filed an action against the RMA, the USDA, and the FCIC. It alleged
violations of the Administrative Procedure Act and sought a declaratory judgment that its merger
with Trupointe did not impact its eligibility to pay patronage. 5 U.S.C. §§ 701–706; 28 U.S.C.
§ 2201.

          The district court found that Congress had not spoken directly to whether a grandfathered
cooperative is “an entity that was approved by the Corporation to make [premium-rebate]
payments” following its merger with a non-grandfathered cooperative. Order, R. 25, PageID
 No. 17-3807       Sunrise Cooperative, Inc. v. United States Dep’t of Agric., et al.      Page 5


557–58.    Finding the statute ambiguous, it accorded Chevron deference to the RMA’s
interpretation and granted summary judgment to the defendants and against Sunrise.

       Sunrise now appeals.

                                         II. ANALYSIS

       We review de novo the denial or grant of a motion for summary judgment “based solely
upon legal grounds.” McMullen v. Meijer, Inc., 355 F.3d 485, 489 (6th Cir. 2004). We analyze
this matter under the doctrine enshrined in Chevron, and we conclude that the RMA’s
interpretation is unambiguously foreclosed by the statute. Chevron, U.S.A., Inc. v. Nat. Res. Def.
Council, Inc., 467 U.S. 837 (1984); see also Esquivel-Quintana v. Sessions, 137 S. Ct. 1562,
1572 (2017).

       Under Chevron, courts defer to agencies’ reasonable readings of ambiguous statutes. The
first step of Chevron instructs courts to analyze whether Congress has “directly spoken to the
precise question at issue.” Chevron, 467 U.S. at 842. If it has, “that is the end of the matter; for
the court, as well as the agency, must give effect to the unambiguously expressed intent of
Congress.” Id. at 842–43. We employ “traditional tools of statutory construction” to determine
whether Congress has “spoken to the precise question at issue.” Id. at 842, 843 n.9. If the statute
is unambiguous, then Congress has spoken to the precise question at issue. See id. at 843. In
other words, if a construction of a statute “follows from the unambiguous terms of the statute,”
the statute “leaves no room for agency discretion.” Nat’l Cable & Telecomm. Ass’n v. Brand-X
Internet Servs., 545 U.S. 967, 982 (2005). If a statute is ambiguous, the interpretation might
nevertheless be unreasonable under Chevron’s second step, which asks whether “the agency’s
[interpretation] is based on a permissible construction of the statute.” Chevron, 467 U.S. at 843.

       A. The Statute is Not Ambiguous
       Congress expressly said who was eligible to pay patronage after 2008: (1) an entity
approved to pay patronage in 2005, 2006, or 2007 that is (2) seeking to pay patronage under the
same approved plan. 7 U.S.C. § 1508(a)(9)(B)(iii). Sunrise was an “entity . . . approved” to pay
patronage in 2005, 2006, and 2007, and Sunrise is still seeking to pay under the same approved
 No. 17-3807       Sunrise Cooperative, Inc. v. United States Dep’t of Agric., et al.        Page 6


plan. Nothing about Trupointe’s merging into Sunrise has altered Sunrise’s eligibility under
these criteria. Sunrise is the same “entity . . . approved” before the merger as after the merger.

       To start, Sunrise’s reading is consistent with the ordinary meaning of “entity.” While
Congress did not define “entity,” the term is not ambiguous. When Congress does not define a
statutory term, “courts assume that Congress adopts the customary meaning.” United States v.
Detroit Med. Ctr., 833 F.3d 671, 674 (6th Cir. 2016). That is why “[m]ost cases of verbal
ambiguity in statutes involve . . . a selection between accepted alternative meanings shown as
such by many dictionaries.” MCI Telecomm. Corp. v. Am. Tel. & Tel. Co., 512 U.S. 218, 227
(1994); Vander Boegh v. EnergySolutions, Inc., 772 F.3d 1056, 1060 (6th Cir. 2014) (“When no
statutory definition exists, a court may consult a dictionary definition for guidance in discerning
the plain meaning of a statute’s language.”).

       In everyday speech, an “entity” is “an organization (such as a business or governmental
unit) that has an identity separate from those of its members.” Merriam-Webster’s Collegiate
Dictionary (11th ed. 2004). Another dictionary similarly defines entity as “[t]he existence of
something considered apart from its properties.” American Heritage Dictionary (5th ed. 2018).
Or as yet another puts it, it is “[a]n organization (such as a business or a governmental unit) that
has a legal identity apart from its members or owners.” Black’s Law Dictionary (10th ed. 2014).

       Because we can discern the meaning of “entity” as used in the statute, this is not a case
where Congress’s intent is unclear. Cf. Zurich Am. Ins. Grp. v. Duncan, 889 F.3d 293, 298–99
(6th Cir. 2018). To the contrary, these definitions share a common thread: an “entity” is an
organization separate from—indeed, “considered apart from”—its constituent members. Yet the
RMA has defined “entity” precisely by reference to changes in the size of its membership. The
RMA’s “functional” reading of “entity,” under which it considers, “in a practical sense,” an
increase in membership “and the attendant increase in premium-rebating that comes with the
expanded membership” contravenes the ordinary meaning of “entity.” Order, R. 25, PageID 11.

       Principles of corporate law also foreclose the RMA’s interpretation.             One tenet of
corporate law is that when one company merges into another company, the surviving company is
the same “entity” before the merger as after the merger. As a leading treatise explains, “a
 No. 17-3807       Sunrise Cooperative, Inc. v. United States Dep’t of Agric., et al.       Page 7


corporate merger consists of a combination whereby one of the constituent corporations remains
in existence, absorbing in itself all the other constituent corporations, which cease to exist as
separate corporate entities.” 15 William Meade Fletcher et al., Fletcher Cyclopedia of the Law
of Private Corporations § 7082.        Here, Sunrise “remains in existence,” having absorbed
Trupointe, which “cease[d] to exist as a separate corporate entity.” Id. (emphasis added); see
also Merger, Black’s Law Dictionary (10th ed. 2014) (Merger: “The absorption of one
organization (esp. a corporation) that ceases to exist into another that retains its own name and
identity and acquires the assets and liabilities of the former.” (emphasis added)). Indeed, the
RMA’s functional reading is contrary to the “basic purpose” of incorporation: “to create a
distinct legal entity, with legal rights, obligations, powers, and privileges different from those of
the natural individuals who created it, who own it, or whom it employs.” Cedric Kushner
Promotions, Ltd. v. King, 533 U.S. 158, 163 (2001).

       B. The RMA’s Counterarguments Lack Merit

       The RMA points to no dictionary definitions or the like to identify an ambiguity in the
statute. See MCI, 512 U.S. at 227. In fact, the RMA’s interpretation reads less as though it were
resolving an ambiguity about “entity” and more like it has imposed new requirements on
patronage eligibility that are found nowhere in the statute. None of the reasons the RMA offers
to find an ambiguity has merit.

       The RMA’s strongest argument is that its interpretation is consistent with the statute’s
purpose and legislative history. But as we have explained, “[w]hen a statute is unambiguous,
resort to legislative history and policy considerations is improper.” In re Koening Sporting
Goods, Inc., 203 F.3d 986, 988 (6th Cir. 2000).          Congress intended to curtail patronage
payments, but Congress also intended to permit entities that were paying patronage to continue
to pay patronage. The best way to give effect to the purpose of Congress is to give effect to the
words of the statute.

       Even if we dived into the legislative history, the RMA reads more into it than it can bear.
As the managers of the 2008 Bill saw it, the Bill’s purpose was to “‘grandfather in’ entities that
have previously been approved” to pay patronage. H.R. Rep. No. 110-627, at 955, 2008 WL
 No. 17-3807       Sunrise Cooperative, Inc. v. United States Dep’t of Agric., et al.      Page 8


2038610, *H3659 (2008) (Conf. Rep.). Permitting Sunrise, an entity “that ha[d] previously been
approved” to pay patronage, to continue to pay patronage is consistent with this purpose. And
while it is true the managers of the Bill expected the FCIC to exercise “strict oversight,” context
makes plain this “strict oversight” is “to ensure that . . . [grandfathered] entities are operating
consistent with federal and state law and the payment plan submitted and approved.”             Id.
Finally, although the Bill’s managers “underst[oo]d . . . that the parties covered by the
grandfather clause represent the universe of parties engaged in this activity,” the “universe” of
entities remains the same even after Trupointe merged into Sunrise. Id.

       The RMA concedes that if Trupointe’s farm-members had simply left Trupointe and
joined Sunrise, that would have been a form of “ordinary business growth,” and “ordinary
business growth” is permitted by the RMA’s interpretation of the statute. Appellees’ Br. 21. But
this argument just begs the question of why a merger, which is hardly unordinary, is not itself a
form of “ordinary business growth.” And nothing in the legislative history evinces any purpose
to turn eligibility to pay patronage on such hair-splitting distinctions as whether a member is
acquired through a merger or through “ordinary business growth.”

       The RMA’s other arguments are unavailing.

       First, the RMA claims that because the term “entity” is part of a grandfather clause that
makes an exception to a general rule, the clause should be construed narrowly. Tiebreakers like
this may come into play when a statute is ambiguous, but this statute is not. See NLRB v. Dole
Fresh Vegetables, Inc., 334 F.3d 478, 485 (6th Cir. 2003) (deferring to an agency’s narrow
interpretation of a statutory exception to “resol[ve] . . . the statutory ambiguity”) (citation
omitted); cf. United States v. Santos, 553 U.S. 507, 514 (2008) (applying rule of lenity only after
finding a criminal statute ambiguous); Heimer v. Companion Life Ins. Co., 879 F.3d 172, 176
(6th Cir. 2018) (canon to construe a contract against its drafter is invoked if the contract is
ambiguous).

       Second, the RMA argues that Sunrise’s interpretation would render the exception
superfluous.   In the RMA’s view, Sunrise’s interpretation would permit non-grandfathered
entities to merge with grandfathered entities nationwide, permitting unfettered expansion. But
 No. 17-3807        Sunrise Cooperative, Inc. v. United States Dep’t of Agric., et al.      Page 9


besides the “entity” requirement, the statute restricts patronage payments to “a manner consistent
with the payment plan approved” by the RMA in the past. 7 U.S.C. § 1508(a)(9)(B)(iii). And
Sunrise concedes that while it may pay patronage to its members in Ohio and Michigan, it cannot
pay patronage to any of its members in Indiana it acquired in its merger with Trupointe.
Appellant’s Reply Br. 5 (“Appellant was approved to pay crop insurance patronage only in Ohio
and Michigan before the merger and will retain the same geographical limitations after the
merger.”). In any event, to the extent that this is a loophole, the statute created the loophole.
The RMA may not distort the statute’s ordinary meaning to close it.

         Third, the RMA claims that it is not interpreting the term “entity,” but the whole phrase
“entity . . . approved” to pay patronage. But statutory terms are always read in context, and
nothing here suggests “entity” can bear the meaning offered by the RMA.

         That leaves just one obstacle: the statute defines the term “legal entity,” but it does not
define “entity” standing alone. Sunrise argues that these terms should have the same meaning,
but we agree with the RMA that the “presumption that a given term is used to mean the same
thing throughout a statute” applies only when the term at issue is the same. Brown v. Gardner,
513 U.S. 115, 118 (1994). “Entity” (undefined) and “legal entity” (defined) are not. And the
statute confirms the implication under the like-manner canon that these two terms bear different
meanings. See Detroit Med. Ctr., 833 F.3d at 678. It defines “legal entity” to mean “an entity
that is created under Federal or State law” and either “owns land or an agricultural commodity”
or “produces an agricultural commodity.”          7 U.S.C. § 1308(a)(3).      These ownership-or-
production requirements for a “legal entity” have no bearing on the meaning of “entity” standing
alone.

         Though it is just icing on the cake, we have reason to doubt the sincerity of the RMA’s
view that its reading of the statute is consistent with its plain meaning. At oral argument, the
RMA argued that the statute permits mergers of two grandfathered entities, yet prohibits mergers
of one grandfathered entity with one non-grandfathered entity. It is hard to divine any basis in
the statute’s text for this reading.
 No. 17-3807       Sunrise Cooperative, Inc. v. United States Dep’t of Agric., et al.   Page 10


                                      III. CONCLUSION

       We reverse the judgment of the district court and remand for further proceedings
consistent with this opinion.
