Opinion
4:18CV3166
2019-11-22
Richard EPP, Plaintiff, v. NATURAL RESOURCES CONSERVATION SERVICE and Sonny Perdue, in his official capacity as Secretary of the United States Department of Agriculture, Defendants.
Stephen D. Mossman, Mattson Ricketts Law Firm, Lincoln, NE, for Plaintiff. Robert L. Homan, U.S. Attorney's Office, Omaha, NE, for Defendants.
Stephen D. Mossman, Mattson Ricketts Law Firm, Lincoln, NE, for Plaintiff.
Robert L. Homan, U.S. Attorney's Office, Omaha, NE, for Defendants.
MEMORANDUM AND ORDER
Richard G. Kopf, Senior United States District Judge
The Food Security Act of 1985 contains "Swampbuster provisions authoriz[ing] the [United States Department of Agriculture ("USDA") ] to make determinations as to whether certain lands qualify as wetlands and whether wetlands that have been manipulated qualify as converted wetlands." Foster v. Vilsack , 820 F.3d 330, 331-32 (8th Cir. 2016) (quoting Clark v. U.S. Dep't of Agric. , 537 F.3d 934, 935 (8th Cir. 2008) ). "Significantly, ‘a person determined to have converted wetlands may become ineligible to receive farm program payments’ from the federal government." Id. at 332 (quoting Clark , 537 F.3d at 935 ). A person who plants crops on a previously converted wetland may also become ineligible for benefits. See 7 C.F.R. § 12.4(a). However, "the law provides for exemptions, namely wetlands that were converted before December 23, 1985—the effective date of the law. Land meeting this exemption can be maintained as it was prior to the effective date of the Act [and used to produce agricultural products] without loss of federal benefits." Barthel v. U.S. Dep't of Agric. , 181 F.3d 934, 936 (8th Cir. 1999) (internal citation and footnotes omitted).
Plaintiff, Richard Epp ("Epp"), claims wetlands on two tracts of land he farms in Hamilton County, Nebraska, were converted before December 23, 1985, as evidenced by a September 4, 1990 determination that was made by USDA's Soil Conservation Service ("SCS"), the predecessor agency of Defendant, Natural Resources Conservation Service ("NRCS"). On August 10, 2017, NRCS notified Epp that the 1990 determination does not meet the criteria for a "certified wetland determination" under sections 514.1(A)(1) and 514.1(B)(iii) of the National Food Security Act Manual ("NFSAM"). A certified wetland determination is used to determine ineligibility for program benefits, but can also provide certain protections to an owner or operator of the land. See, e.g. , 7 C.F.R. § 12.5(b)(6)(i). ("A person shall not be ineligible for program benefits as a result of taking an action in reliance on a previous certified wetland determination by NRCS.").
Subpart A of NFSAM Part 514 (Fifth Ed., Amend 4, Jan. 2017) is available online at https://directives.sc.egov.usda.gov/viewerFS.aspx?hid=40307 and, in part, at pages 57-66 of the "Agency Record." (Filing 20-2, pp. 60-69)
Following unsuccessful mediation, Epp appealed the August 10, 2017 decision to USDA's National Appeals Division ("NAD"). On November 9, 2018, the administrative judge ("AJ") issued a final determination finding (1) NAD did not have jurisdiction to hear the appeal and (2) even if jurisdiction did exist, NRCS's decision was not plainly erroneous or inconsistent with regulations.
Applicable statutes and regulations refer to a "hearing officer," but "[t]he duty title was changed to administrative judge to more accurately reflect the duties and responsibilities of these positions." U.S. Dep't of Agriculture, Common Appeal-Related Questions (FAQ), available online at https://nad.usda.gov/content/common-appeal-related-questions.
Epp appealed NAD's decision by filing this action on December 10, 2018. The matter is now before the court on cross-motions for summary judgment. (Filings 25, 29)
Upon careful consideration of the administrative record and the parties' briefs, the court finds the AJ's decision that NAD did not have jurisdiction to hear the appeal is arbitrary and capricious, and contrary to law, and also finds that the AJ's alternative decision on the merits, concluding that NRCS correctly decided that the 1990 wetland determination is not a "certified wetland determination," should be set aside and the case remanded for further proceedings consistent with the court's opinion. Accordingly, Epp's motion for summary judgment will be granted, while Defendants' motion for summary judgment will be denied.
I. STANDARD OF REVIEW
"In the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994, Pub. L. 103-354, Congress created a detailed and comprehensive statutory scheme providing private parties with the right of administrative review of adverse decisions made by particular agencies within the Department of Agriculture." St. Bernard Parish Gov't v. United States , 916 F.3d 987, 991 (Fed. Cir. 2019) ; see 7 U.S.C. § 6991 et seq. The specified agencies include NRCS. 7 U.S.C. § 6991(2)(F). "The 1994 statute established the National Appeals Division (‘NAD’) in the Department of Agriculture to conduct formal administrative appeals in the case of disputes covered by the statute. 7 U.S.C. §§ 6991 - 7002. The statute provided for formal appeals as well as informal hearings. See id. §§ 6994-96. The statute set out, in some detail, the procedures to be followed in appeals before the NAD, including the right to a hearing before a hearing officer, id. § 6997, and the right to review of any decision of a hearing officer by the Director of the Division, id. § 6998." St. Bernard Parish Gov't , 916 F.3d at 991.
"Following the enactment of the 1994 statute, the Department of Agriculture promulgated regulations implementing the administrative review procedures. Tracking the statute, the regulations are specifically made applicable to the NRCS, see 7 C.F.R. §§ 11.1(4), 614.3(a)(2)(ii), and they set out the procedures to be followed in both formal and informal hearings. Id. §§ 11.3-11.12; 614.4-614.16. The regulations further provide for judicial review in a district court, conditioned on the exhaustion of administrative remedies within the Department. See id. § 11.13 (‘A final determination of the [NAD] shall be reviewable and enforceable by any United States District Court of competent jurisdiction in accordance with [the APA],’ and ‘[a]n appellant may not seek judicial review of any agency adverse decision appealable under this part without receiving a final determination from the [NAD] pursuant to the procedures of this part.’); see also id. § 614.17 (‘A participant must receive a final determination from NAD pursuant to 7 CFR part 11 prior to seeking judicial review in any U.S. District Court of competent jurisdiction.’)." Id. at 992.
NAD "is an organization within [USDA], ... which is independent from all other agencies and offices of the Department ...." 7 C.F.R. § 11.2(a). Importantly, it is the "final determination of [NAD]," rather than the underlying decision of NRCS in this case, which "shall be reviewable ... in accordance with [the APA]. 7 U.S.C. § 6999 ; 7 C.F.R. §§ 11.13. See Foster v. Vilsack, No. CIV. 13-4060-KES, 2014 WL 5512905, at *3 (D.S.D. Oct. 31, 2014) (citing cases), aff'd , 820 F.3d 330 (8th Cir. 2016).
Under the APA, judicial review of an agency decision is limited to determining whether the agency action is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Foster , 820 F.3d at 333 (quoting 5 U.S.C. § 706(2)(A) ). The plaintiff bears the burden of proving the agency's action was arbitrary and capricious. United States v. Massey , 380 F.3d 437, 440 (8th Cir. 2004).
"An agency decision is arbitrary or capricious if: the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Simmons v. Smith , 888 F.3d 994, 998 (8th Cir. 2018), cert. denied , ––– U.S. ––––, 139 S. Ct. 807, 202 L.Ed.2d 575 (2019) (quoting Nat'l Parks Conserv. Ass'n v. McCarthy , 816 F.3d 989, 994 (8th Cir. 2016) ). "Under this narrow standard, a court is not to substitute its judgment for that of the agency, yet the agency must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts and the choice made." Id. (quoting Nat'l Parks Conserv. Ass'n , 816 F.3d at 994 ).
"When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, 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. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc. , 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (footnotes omitted).
"[A] court must give effect to an agency's regulation containing a reasonable interpretation of an ambiguous statute." Christensen v. Harris Cty. , 529 U.S. 576, 586, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000). However, "[i]nterpretations such as those in opinion letters—like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law—do not warrant Chevron -style deference. Id. "Instead, interpretations contained in formats such as opinion letters are ‘entitled to respect’ ..., but only to the extent that those interpretations have the ‘power to persuade[.]’ " Id. (quoting Skidmore v. Swift & Co. , 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944) ).
Just as a court will defer to an agency's reasonable interpretations of the statute when it issues regulations in the first instance, the agency is entitled to further deference when it adopts a reasonable interpretation of regulations it has put in force. Fed. Exp. Corp. v. Holowecki, 552 U.S. 389, 397, 128 S.Ct. 1147, 170 L.Ed.2d 10 (2008). Under Auer v. Robbins , 519 U.S. 452, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997), the agency's position is accepted unless it is "plainly erroneous or inconsistent with the regulation." Id. , at 461, 117 S.Ct. 905 (quoting Robertson v. Methow Valley Citizens Council , 490 U.S. 332, 359, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989) ). Recently, in Kisor v. Wilkie , ––– U.S. ––––, 139 S. Ct. 2400, 204 L.Ed.2d 841 (2019), the Supreme Court clarified the application of Auer deference. First, Auer deference applies only if a regulation is genuinely ambiguous. Id. at 2415. To determine whether a regulation is genuinely ambiguous, courts must exhaust all the "traditional tools" of construction. Id. If genuine ambiguity persists, courts will defer to an agency's reading only if it is reasonable. Id. at 2415-16. In addition, the interpretation must be the agency's "authoritative" or "official position," not an ad hoc statement, and the interpretation must in some way implicate the agency's substantive expertise. Id. at 2416-17. Finally, an agency's reading must reflect its "fair and considered judgment." Id. at 2417.
The factual findings of the administrative judge will be sustained if they are supported by "substantial evidence." See Syverson v. U.S. Dep't of Agric. , 601 F.3d 793, 800 (8th Cir. 2010) 5 U.S.C. § 706(2)(E). "That phrase does not mean a large or considerable amount of evidence, but rather ‘such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’ " Pierce v. Underwood , 487 U.S. 552, 564-65, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) (quoting Consolidated Edison v. NLRB , 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) ). "Evidence may be substantial even when two inconsistent conclusions might have been drawn from it." Syverson , 601 F.3d at 800. "A reasonable decision is one supported by substantial evidence, which is more than a scintilla but less than a preponderance." Hillery v. Metro. Life Ins. Co. , 453 F.3d 1087, 1090 (8th Cir. 2006).
"Summary judgment is an appropriate procedure for resolving a challenge to a federal agency's administrative decision when review is based upon the administrative record." Simmons v. Jarvis , No. 8:13CV98, 2016 WL 4742256, at *10 (D. Neb. Sept. 12, 2016), aff'd sub nom. Simmons v. Smith , 888 F.3d 994 (8th Cir. 2018) (quoting Fulbright v. McHugh , 67 F. Supp. 3d 81, 89 (D.D.C. 2014), aff'd sub nom. Fulbright v. Murphy , 650 Fed.Appx. 3 (D.C. Cir. 2016) ). However, "the standard set forth in Rule 56(a) [of the Federal Rules of Civil Procedure] does not apply because of the court's limited role in reviewing the administrative record." Id. (quoting Coe v. McHugh , 968 F.Supp.2d 237, 239 (D.D.C. 2013) ). "In an APA case like this one, summary judgment ‘serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review.’ " Friends of Animals v. Ross , 396 F.Supp.3d 1 (D.D.C. 2019) (quoting Sierra Club v. Mainella , 459 F. Supp. 2d 76, 90 (D.D.C. 2006) ).
II. FACTUAL AND PROCEDURAL BACKGROUND
The court finds there is substantial evidence to support the following findings of fact, which are set forth in 12 numbered paragraphs in the AJ's decision:
1. Appellant [Richard Epp] grew up on a farm in Aurora, Nebraska, and has been farming since 1995. During the time that he has been farming, the Appellant has worked with the Farm Service Agency (FSA) to enroll his farm in several USDA farm programs and he is familiar with the requirement to certify compliance with the Highly Erodible Land (HEL)/Wetland Conservation (WC) rules to maintain eligibility for USDA programs. [Footnote 11: A producer certifies HEL/WC compliance by completing a Form AD-1026, "Highly Erodible Land and Wetland Conservation Certification" (Form AD-1026). ] Appellant has also worked with the Agency on various projects, including shelter belts, irrigation pits, and cost-share projects.
2. Appellant's current farming operation includes Farm Numbers 5972 (T-735) and 5973 (T-736). Each tract contains approximately 80 acres and the Appellant has farmed them since 2002. The RH Trust owns T-735 and the LS Trust owns T-736. In 1990, the tracts were part of one tract, T-1890, that was farmed by Previous Producer [Fred Goertzen]. At that time, T-1890 was
See 7 C.F.R. § 12.7(a)(2) ("The person applying for or receiving the benefits must certify in writing on Form AD-1026 that such person will not produce an agricultural commodity on highly erodible land, or designate such land for conservation use; or plant an agricultural commodity on a converted wetland; or convert a wetland to make possible the production of an agricultural commodity during the crop year in which the person is seeking such benefits, unless such actions are exempt, under §§ 12.5 or 12.13 from the provisions of § 12.4 of this part [12.]"). This "self-certification" requirement should not be confused with a "certified wetland determination," which is made by the agency.
"T-35" and "T-36" are the administrative judge's shorthand designations for Tracts 11735 and 11736, respectively.
The AJ determined that the owners were not third parties whose rights might be adjudicated in the appeal. See 7 C.F.R. § 11.15. (Filing 20-1, p. 75, n. 1)
owned by a trust that had been set up for the benefit of Previous Producer's mother, and the tract consisted of approximately 160 acres.
3. "The Food Security Act of 1985" established HEL/WC compliance as a condition of continued eligibility for USDA program benefits. As a result of "the Food Security Act of 1985," producers of agricultural commodities who want to participate in USDA programs are required to submit a Form AD-1026 in advance of intended program participation so that the appropriate HEL or WC determination can be completed in a timely manner. The requirement for a "certified wetland determination" was introduced by "the 1990 Farm Bill" [Food, Agriculture, Conservation, and Trade Act of 1990]. As of November 28, 1990, the effective date of "the 1990 Farm Bill," the Agency [NRCS or SCS] was required to certify wetland determinations to ensure they were accurately delineated. The requirement for "certified wetland determinations" was incorporated into 7 C.F.R. Part 12, which contains the regulations governing HEL/WC compliance. The Agency uses a Form CPA-26 to record certifications. Another consequence of "the 1990 Farm Bill" was that appeal rights granted to recipients of "certified wetland determinations" were more formalized and incorporated into an amended version of the Form CPA-26. The Agency interpreted and implemented the requirement for wetland determinations to be certified through the National Food Security Act Manual (NFSAM) and incorporation of the NFSAM into the Agency's program manual.
4. On January 1, 1987, Previous Producer submitted a Form AD-1026 to the Agricultural Stabilization and Conservation Service (ASCS) for T-1890. [Footnote 12: ASCS is the predecessor agency to FSA.] Item 10b of the form was checked to indicate that a determination needed to be done before January 1, 1990. On June 25, 1987, the ASCS forwarded the Form AD-1026 to the Agency requesting that the Agency conduct HEL and WC determinations for the tract. The Agency conducted an in-office review of available records and determined that T-1890 contained no HEL acres but had hydric (wetland) soils in Field Number 1. The Agency issued its determination on July 30, 1987, and hand delivered a copy of the determination to ASCS.
5. In early 1990, the Agency "reviewed soil maps, aerial photography and other data" to identify any wetlands on land Previous Producer farmed, including T-1890. As a result of the Agency's review, on March 28, 1990, the Agency determined that Field 1 of T-1890 contained 2.3 acres of farmed wetlands (FW) and 155 acres of non-wetland (NW). [Footnote 13: FW is a wetland that prior to December 23, 1985, was manipulated and used to produce an agricultural commodity, and on December 23, 1985, did not support woody vegetation and met inundation or saturation criteria. See 7 C.F.R. § 12.2 (definition of FW). ] The Agency notified Previous Producer of the determination by letter dated May 14, 1990. Upon receiving a copy of the letter, Previous Producer notified the Agency that he believed the determination was wrong. In his letter to the Agency, Previous Producer stated that he "leveled [the acres] in the fall of 1984" and that he currently "farm[ed] through it."
6. In response to Previous Producer's letter, the Agency met with Previous Producer in the field. Because of the field visit, the Agency changed its wetland
The parties dispute whether the field visit was limited to the 2.3 acres identified as farmed wetlands or whether it covered all 160 acres. The administrative judge did not make a specific finding of fact on this issue.
determination as to the 2.3 acres identified as FW. Instead, the Agency decided that the acres were prior converted wetlands (PC). [Footnote 14: PC is a converted wetland where the conversion occurred prior to December 23, 1985; an agricultural commodity had been produced at least once before December 23, 1985; and as of December 23, 1985, the converted wetland did not support woody vegetation and met certain inundation or saturation criteria. See 7 C.F.R. § 12.2 (definition of PC). ] The Agency notified Previous Producer of the Agency's decision by letter dated September 5, 1990. In the notification letter, the Agency notified Previous Producer that he had the right to appeal the decision to the Agency Area Conservationist within 45 days. Previous Producer did not appeal the Agency's determination.
7. After Previous Producer's mother died, Previous Producer's sister inherited T-1890. In 2016, Previous Producer's sister sold T-1890 to RH Trust and LS Trust [split into two parcels], T-735 (80 acres) to RH Trust and T-736 (80 acres) to LS Trust. The two 80-acre parcels were assigned new farm and tract numbers, with the 2.3 acres that had been identified as PC located on T-736.
8. Because of the split, the FSA asked the Agency to conduct HEL determinations for the new tracts. No one asked the Agency to complete new wetland determinations for the tracts. When the Agency received the Form AD-1026 requesting HEL determinations, it completed HEL determinations and wetland determinations for both tracts. On December 1, 2016, the Agency issued preliminary wetland technical determinations for the tracts. The Agency determined that T-735 contained 0.32 acres of FW and 78.09 acres of NW, and that T-736 contained 1.48 acres of FW and 75.74 acres of NW.
9. Upon receiving the preliminary technical determinations, Appellant initially requested a field review and reconsideration of the determinations. In his requests, the Appellant stated that "previous preliminary and final technical determinations made by [the Agency] did not find any FW." On January 20, 2017, the Agency acknowledged the Appellant's requests and notified the Appellant that an Agency Resource Soil Scientist would be assigned to the case and
Although the letter was dated September 5, 1990, the "PC" determination was made on September 4, 1990. (Filing 20-2, pp. 16-17)
On May 4, 2016, FSA notified Epp of the reconstitution and enclosed FSA-156EZ forms and FSA maps of the farms, explaining that "[t]he FSA-156EZ provides an overview of all FSA program acreage and ARC-PLC program election data applicable to the farm(s)," while "[t]he map identifies all field boundaries, acreage, and NRCS determinations regarding whether fields are highly erodible or have associated wetland determinations." (Filing 20-1, pp. 208, 211, 218, 228; Filing 20-2, pp. 100, 103, 110, 120). Epp was advised that "[i]f you do not appeal timely to the County Committee, these determinations will become final and no further consideration on the matter will be given." (Ibid. ) On the FSA-156EZ form for Tract 11735, the "HEL Status" is shown as "NHEL: No agricultural commodity planted on undetermined fields," and the "Wetland Status" is shown as "Tract does not contain a wetland." (Filing 20-1, pp. 214, 221; Filing 20-2, pp. 106, 113) The same entries are shown on the FSA-156EZ form for Tract 11736. (Filing 20-1, p. 210; Filing 20-2, p. 102) The maps for Tract 11735 (Filing 20-1, p. 222; Filing 20-2, p. 114) and Tract 11736 (Filing 20-1, p. 231; Filing 20-2, p. 123) likewise identify the farmland as "NHEL" and do not show any wetland identifiers. The forms and maps show Tract 11735 as containing 78.36 acres of farmland and Tract 11736 as containing 77.17 acres of farmland. (Ibid. )
that the Soil Scientist would be contacting the Appellant to schedule a field visit.
10. On February 7, 2017, the Appellant sent a letter to the Agency notifying the Agency that it appeared that there had been no request from FSA for wetland determinations on the tracts. In his letter, the Appellant stated that he believed the preliminary technical determinations were unwarranted in the absence of any request for such determinations, and he asked for an explanation why the farm reconstitutions into separate farms and tracks required new wetland determinations. Because no one had requested wetland determinations for T-735 and T-736, the Agency decided to rescind the preliminary technical determinations. On April 25, 2017, the Agency notified the Appellant that both preliminary technical determinations were rescinded.
NRCS's preliminary technical determinations were each accompanied by an "Appeal Process Worksheet," which advised Epp that the determination would become "final" after 30 days unless he requested a field review and reconsideration or mediation. (Filing 20-1, pp. 191, 197) See 7 C.F.R. § 614.7(a) ("A preliminary technical determination is limited to those determinations made pursuant to the HELC/WC provisions (16 U.S.C. 3801, et seq. ) and becomes final 30 days after the participant receives the decision, unless the participant files an appeal with the appropriate NRCS official as indicated in the decision notice ....").
On April 28, 2017, FSA sent Epp "an updated map and FSA-156EZ with the changes you requested for your farm(s)." (Filing 20-1, pp. 233, 237; Filing 20-2, pp. 125, 129) The cover letters indicate the only changes made were "redeterminations" that Tract 11735 contained "78.36 acres of non-highly erodible soil (NHEL)" and that Tract 11736 contained "77.17 acres of non-highly erodible soil (NHEL)." (Ibid. ) The FSA-156EZ forms for both tracts again show the "HEL Status" as "NHEL: No agricultural commodity planted on undetermined fields." (Filing 20-1, pp. 236, 241; Filing 20-2, pp. 128, 133) However, the "Wetland Status" for both tracts is changed to "Wetland determinations not complete." (Ibid. ) On October 3, 2017, FSA sent Epp a letter in response to his contacting the local office "regarding the recent change of the wetland status on Form FSA-156EZ to ‘Wetland Determination Not Complete’ " on Tracts 11735 and 11736. (Filing 20-1, pp. 215, 242; Filing 20-2, pp. 107, 134) The letter stated, "This change was due to a correction of the wetland status by FSA to align with procedure in FSA Handbook 6-CP, subparagraph 422D." (Ibid. )
The letter further explained:
Prior to this correction, the wetland status on these tracts was set to "Tract Does Not Contain a Wetland." This status was not correct under FSA procedure since NRCS had not evaluated the entirety of each specific tract for wetlands or farmed wetlands under their applicable certified wetland determination rules, and determined that no wetlands exist anywhere on the tract. In order for the wetland status to correctly be set to "Tract Does Not Contain a Wetland," an NRCS determination must exist which was completed under their certified wetland determination rules, evaluating the entire tract, and concluding that no wetlands or farmed wetland exist on the property.
(Ibid. ) The letter informed Epp that "[s]uch correction is not an adverse decision" and that he did not meet the definition of "participant" within the context of the appeal regulations because "FSA has not denied you the opportunity to participate in or receive benefits under any FSA program." (Ibid. ) On October 24, 2017, Epp sent a letter to FSA's Acting State Executive Director, requesting "an appeal and/or an appealability review." (Filing 20-1, p. 216; Filing 20-2, p. 108) See 7 C.F.R. § 780.5 (b) ("A participant directly affected by an adverse decision [of FSA] that is determined not to be subject to appeal under this part may request an appealability review of the determination by the State Executive Director ...."). On October 30, 2017, the FSA's Acting State Executive Director affirmed there was no "adverse decision" within the meaning of 7 C.F.R., Part 780. (Filing 20-1, p. 248; Filing 20-2, p. 140) On November 14, 2017, Epp sent a request for "an appeal and/or an appealability review" to NAD. (Filing 20-1, pp. 249-50; Filing 20-2, pp. 141-42) See 7 C.F.R. § 780.5(c) ("Decisions that FSA renders under this part may be reviewed by NAD under part 11 of this title to the extent otherwise allowed by NAD under its rules and procedures. An appealability determination of the State Executive Director in an administrative review is considered by FSA to be a new decision."). On December 20, 2017, NAD's Acting Deputy Director made a final determination that "FSA's October 30, 2017, letter is not appealable because it does not meet the regulatory definition of an adverse decision." She explained that "FSA's decision is not adverse to you at this time," while acknowledging that "these status changes could eventually lead to adverse impacts for you." (Filing 20-1, pp. 251-53; Filing 20-2, pp. 143-45) This final determination was not appealable, see 7 C.F.R. § 11.6(a)(3), and is not directly at issue in this case.
11. Prior to making the wetland preliminary technical determinations, the Agency reviewed the existing file to determine whether there were any older documents that qualified as a "certified wetland determination." The Agency reviewed documentation pertaining to the September 5 [sic ], 1990 wetland determination and determined that the documentation did not constitute a "certified wetland determination."
12. On August 10, 2017, the Agency issued its decision. The Agency determined that the September 4, 1990 wetland determination was not a "certified wetland determination." ... Appellant timely appealed the Agency's decision to NAD.
Epp's appeal to NAD was filed on February 12, 2018 (Filing 20-1, p. 15), but he previously requested mediation. The mediation opened on August 14, 2017, and closed on January 18, 2018. (Filing 20-1, pp. 25, 29) The 30-day appeal period was tolled during this time. See 7 C.F.R. § 11.5(c)(1).
(Filing 20-1, pp. 78-81) (citations to agency record, exhibits, and testimony omitted)
In a paragraph 12 above, the AJ also made the following finding of fact regarding the content of the August 10, 2017 decision:
In its decision, the Agency stated that a wetland determination completed after November 28, 1990 and before July 3, 1996 could be considered a "certified wetland determination" if certain criteria were met. However, the wetland determination at issue was completed before November 28, 1990 and therefore could not be considered a "certified wetland determination."
(Filing 20-1, p. 81) The court finds this statement is not supported by substantial evidence, as the document speaks for itself. The decision, which was issued in the form of a letter signed by NRCS's Acting State Conservationist, reads as follows:
NRCS has reviewed your documentation associated with form SCS-CPA-026 (5-89 version) and for which at that time was Tract number 1890 and a request date of 9-4-1990. The purpose of the review was to decide if the 1990 documentation met the criteria for qualification as a "certified wetland determination".
Documentation review utilized Title 180, National Food Security Act Manual, Subpart A—Wetland Determination and Delineation, Part 514.1 Certification, A Certification of Wetland Determinations and also B Evaluation of Previously Issued Wetland Determinations.
NFSAM part 514.1(A)(1) states: Determinations made prior to July 3, 1996 are considered certified if they met the procedural (appeal rights) and quality mandates as provided in 7 CFR Section 12, as detailed in paragraph B.
NFSAM Part 514.1(B)(iii) states: All wetland determinations made after November 28, 1990, and before July 3, 1996, are considered certified if all of the following apply:
• The determination was issued to the participant as noted on the NRCS-CPA-026 or SCS-CPA-026.
• The NRCS-CPA-026 or SCS-CPA-026 was signed by NRCS (formerly
known as SCS). The SCS-CPA-026 (version dated June 1991- see exhibit at section 514.8B and later versions of the NRCS-CPA-026 contain a valid producer notification statement in block 29 and appeal rights were provided on the back of the "Person Copy." If a different version of the SCS-CPA-026 was used (other than the June 1991 version) to issue the determination, there must also be evidence that the producer was informed the determination was certified and provided appeal rights;
• The determination map document meets the quality mandate "of sufficient quality to make a determination of ineligibility for program benefits" ( 7 CFR Section 12.30(c)(1). "Sufficient quality" means that the map document is legible to the extent that the location of designated wetlands in relation to other ground features can be determined. For example, the map document is of sufficient quality to be able to see reference ground features such as wooded areas, field boundaries, or roads, which then can be used as a reference for determining a wetland location.
After review of your historical documentation, it was determined that the documentation did not qualify as a "certified wetland determination" since the SCS-CPA-026 was a version dated May 1989 and not June 1991 or later. Also, there was not sufficient evidence that the producer was informed the determination was certified and provided appeal rights. Attached is an Appeal Process Worksheet if you disagree with the program decision.
The "Appeal Process Worksheet" enclosed with the decision informed Epp that he had "the right to appeal when there is a question of fact or when there is some dispute as to the correct application of a rule, regulation, or generally applicable provision," and that he had 30 days in which to request mediation, appeal to the FSA county committee, or appeal directly to NAD. (Filing 20-1, pp. 11-14; Filing 20-2, pp. 7-10) Specifically, Epp was advised that he could appeal this "program decision" within 30 calendar days by requesting mediation, by requesting an informal hearing before the FSA county committee, or appealing directly to NAD. Alternatively, he could waive his right to appeal by doing nothing, in which case the program decision would stand and he would receive no further notifications. (Ibid. ) See 7 C.F.R. § 614.9 (describing program decision appeal procedures).
(Filing 20-1, pp. 11-12; Filing 20-2, pp. 7-8)
III. ANALYSIS
A. NAD's Jurisdiction
The administrative judge's determination that NAD lacked jurisdiction to hear Epp's appeal from NRCS's August 10, 2017 decision is subject to judicial review under 7 U.S.C. § 6999. See, generally, Covey v. Sinclair , No. 12-CV-1393, 2013 WL 12123324, at *5 (C.D. Ill. May 2, 2013) (reviewing whether NAD's determination that it was without jurisdiction was arbitrary, capricious, or not in accordance with the law). The starting point for this analysis is 7 U.S.C. § 6996(a), which provides that "a participant shall have the right to appeal an adverse decision to the [National Appeals] Division for an evidentiary hearing by a hearing officer ...."
"The term ‘adverse decision’ means an administrative decision made by an officer, employee, or committee of an agency that is adverse to a participant." 7 U.S.C. § 6991(1) ; 7 C.F.R. § 11.1. "The term ‘participant’ shall have the meaning given that term by the Secretary by regulation." Id. , subsec. (2). The Secretary has defined "participant" to mean "any individual or entity who has applied for, or whose right to participate in or receive, a payment, loan, loan guarantee, or other benefit in accordance with any program of an agency to which the regulations in this part apply is affected by a decision of such agency." 7 C.F.R. § 11.1. USDA's regulations also provide some non-exclusive examples of appealable decisions:
Because the regulation defines "adverse decision" using the same language as the statute, an agency interpretation of the regulation would not be entitled to Auer deference. See Kisor , 139 S. Ct. at 2417 n. 5 ("[T]his Court has denied Auer deference when an agency interprets a rule that parrots the statutory text."); Gonzales v. Oregon , 546 U.S. 243, 257, 126 S.Ct. 904, 163 L.Ed.2d 748 (2006) ("An agency does not acquire special authority to interpret its own words when, instead of using its expertise and experience to formulate a regulation, it has elected merely to paraphrase the statutory language.")
The regulations contained in are applicable to adverse decisions made by an agency, including, for example, those with respect to:
(1) Denial of participation in, or receipt of benefits under, any program of an agency;
(2) Compliance with program requirements;
(3) The making or amount of payments or other program benefits to a participant in any program of an agency; and
(4) A determination that a parcel of land is a wetland or highly erodible land.
The AJ determined that jurisdiction was lacking based on his own interpretation of 7 U.S.C. § 6991(1) and 7 C.F.R. § 11.1, which accorded with arguments that were presented by NRCS during the appeal. He stated:
During the processing of this appeal, including during the in-person hearing, the Agency argued that the Agency's August 10, 2017 decision was not an "adverse decision," and that NAD does not have jurisdiction to hear this appeal. See, [Agency Post-Hearing Exhibit (Ag PH Ex) ] 8; Testimony of Agency Representative, Hearing Audio (HA), Track 1, 1:22:50-1:25:40. Although the Agency offered the Appellant appeal options when it sent Appellant the August 10, 2017 letter, including the option of to appeal to NAD, the Agency did so because this was the first time the Agency faced a challenge to a decision that a pre-November 28, 1990 wetland determination was not a "certified wetland determination," and the Agency was uncertain of the appropriate procedure. See Testimony of Agency Representative, HA, Track 1, 1:24:44-1:25:40.
Under these circumstances, I find it appropriate to determine whether NAD has jurisdiction to consider this appeal. To resolve this issue, I must determine whether the Agency's August 10, 2017 decision that the September 5, 1990 wetland determination was not a "certified wetland determination" was an "adverse decision" within the meaning of Title Seven of the United States Code (7 U.S.C.) § 6991(1), which is appealable to NAD pursuant to 7 U.S.C. § 6992(d). See also 7 C.F.R. Part 11.
* * *
In this case, the Agency presented evidence, and I find as fact, that the August 10, 2017 Agency decision did not deny or otherwise adversely affect the Appellant's right to participate in, or receive a payment, loan, loan guarantee, or other USDA program benefit. See Ag PH Ex 8; Testimony of Agency Representative, HA, Track 1, 1:22:50-1:25:40. Therefore, the Appellant is not a "participant" who received an "adverse decision" from the Agency, because he has not applied for a USDA program benefit that has been affected by the Agency's decision, nor has his right to participate in or receive a payment, loan, loan guarantee, or other USDA program benefit
been affected by the Agency's decision. See 7 U.S.C. § 6991(9) ; 7 C.F.R. § 11.1 (definition of "participant"). Accordingly, I find that NAD lacks jurisdiction to consider this appeal.
(Filing 20-1, pp. 76-77) (footnotes omitted)
Approximately 3 months before issuing his decision, the AJ had reopened the case record to give the parties the opportunity to respond to the question of whether NRCS's August 10, 2017 decision is an "adverse decision." In the written notice of reopening, the AJ stated:
During the May 4, 2018 in-person hearing, the Agency's representative (Mr. Richard Vaughn) in effect testified that the Natural Resources Conservation Service (Agency) questioned whether its August 10, 2017 decision (i.e., the decision at issue in this appeal) is an "adverse decision." In response, Mr. Richard Epp's (the Appellant's) representative (Mr. Stephen Mossman) objected to the testimony on the basis that the testimony raised a "new issue of jurisdiction." See Testimony of Agency's representative, Hearing Audio (HA), Track 1, 1:22:57-1:25:40 and 2:12:46-2:24:32; and Response of Appellant's representative, HA, Track 1, 2:12:46-2:24:32. I did not rule on the objection and the matter was basically dropped at that point. However, the Appellant again raised the issue during his rebuttal testimony.
* * *
In this case, while I have made no decision in this matter, it appears that the Agency's decision did not, and has not, affected the Appellant's right to apply for, or participate in or receive, any USDA program benefit. If so, the decision does not appear to be an "adverse decision" and NAD may lack jurisdiction to hear this appeal. Because the question of whether the Agency's decision is an "adverse decision" is fundamental to whether NAD has jurisdiction in this case, I find it appropriate to request responses from the parties on the issue of NAD jurisdiction.
(Filing 20-1, pp. 70-71)
Agency Post-Hearing Exhibit 8, which is referenced in the AJ's decision, is a letter from NRCS's representative, Richard Vaughn, agreeing with the AJ's tentative ruling and pointing out that NAD's Acting Deputy Director had reached to same conclusion after Epp attempted to appeal FSA's October 3, 2017 letter explaining the change of wetland status on the FSA-156EZ forms. (Filing 20-1, p. 164; Filing 20-3, p. 1) Epp's attorney also responded to the reopening notice (Appellant's Post-Hearing Exhibit L (Filing 20-3, pp. 88-169)), pointing out that the AJ's interpretation only encompassed one of the four examples of "adverse decisions" that are listed in the regulations, i.e., a decision "den[ying] participation in, or receipt of benefits under, any program of an agency." 7 C.F.R. § 11.3(a)(1). Mr. Mossman argued that NRCS's August 10, 2017 decision adversely affected his client's "[c]ompliance with program requirements," id. at § 11.3(a)(2), and was also a decision made with respect to the certified status of a 1990 wetland determination, see id. at § 11.3(a)(4).
The definition of "participant" with respect to FSA programs is substantially similar to 7 C.F.R. § 11.1. See 7 C.F.R. § 780.2 ("Participant means any individual or entity who has applied for, or whose right to participate in or receive, a payment, loan, loan guarantee, or other benefit in accordance with any program of FSA to which the regulations in this part apply is affected by a decision of FSA.") However, the definition of "adverse decision" contains additional descriptive language. Compare id. ("Adverse decision means a program decision by an employee, officer, or committee of FSA that is adverse to the participant. The term includes any denial of program participation, benefits, written agreements, eligibility, etc., that results in a participant receiving less funds than the participant believes should have been paid or not receiving a program benefit to which the participant believes the participant was entitled.") with 7 C.F.R. § 11.1, which mirrors the language of 7 U.S.C. § 6991(1). The appealability determination that was made by NAD's Acting Deputy Director on December 20, 2017, emphasized that "NAD's regulations codified at 7 C.F.R. § 11.3(a)(1) make clear that the term ‘adverse decision’ is intended to include administrative decisions made by an agency denying participation in, or receipt of benefits under, any program of an agency," and that "FSA's October 30, [sic ] 2017, letter does not meet this criterion." (Filing 20-1, p. 252; Filing 20-2, p. 144)
Mr. Vaughn replied to this submission, stating: "The NRCS has not documented any violation of conservation compliance regulations. As far as NRCS is concerned, Mr. Epp is believed to be a participant in good standing and currently participating in farm programs." (Agency Post-Hearing Exhibit 10 (Filing 20-1, p. 179; Filing 20-3, p. 59)) Mr. Vaughn further stated: "NRCS contacted FSA and are not aware of anything that would make Mr. Epp ineligible for USDA benefits." (Ibid. ) He also attached an email from an FSA program specialist, dated October 2, 2018, which states:
According to our eligibility system, Mr. Epp remains fully eligible for applicable USDA benefits as such eligibility relates to compliance with conservation compliance provisions.
Specifically, producers who are INELIGIBLE for USDA benefits are those who have 1) Planted an ag commodity on a wetland converted 1985 or later, 2) converted a wetland to make production of an ag commodity possible 1990 or later, or 3) failed to apply a conservation plan or system on land determined to be highly erodible.
I am not aware that NRCS has made any technical determinations in regards to items 1-3 above that would make Mr. Epp ineligible for USDA benefits. In addition, if NRCS has made those determinations and FSA made aware of those determinations, FSA would have provided Mr. Epp with a very specific letter outlining his ineligibility for USDA benefits and providing applicable appeal rights.
(Agency Post-Hearing Exhibits 11 (Filing 20-1, p. 182; Filing 20-3, p. 62))
In reviewing the AJ's determination that NAD lacked jurisdiction to consider Epp's appeal, the first question to be answered is whether 7 U.S.C. § 6996(a)'s language that "a participant shall have the right to appeal an adverse decision" is ambiguous. See Chevron , 467 U.S. at 842-43, 104 S.Ct. 2778. Chevron deference "is premised on the theory that a statute's ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps." Smith v. Berryhill , ––– U.S. ––––, 139 S. Ct. 1765, 1778, 204 L.Ed.2d 62 (2019) (quoting King v. Burwell , ––– U.S. ––––, 135 S.Ct. 2480, 2488, 192 L.Ed.2d 483 (2015) ).
Congress has defined the term "adverse decision" to mean "an administrative decision made by an officer, employee, or committee of an agency that is adverse to a participant." 7 U.S.C.A. § 6991(1). Congress has also given the NAD Director authority to determine on a case-by-case basis whether an agency decision "is adverse to the individual participant and thus appealable or is a matter of general applicability and thus not subject to appeal." 7 U.S.C. § 6992(d).
"The phrase ‘person adversely affected or aggrieved’ is a term of art used in many statutes to designate those who have standing to challenge or appeal an agency decision, within the agency or before the courts." Dir., Office of Workers' Comp. Programs, Dep't of Labor v. Newport News Shipbuilding & Dry Dock Co. , 514 U.S. 122, 126, 115 S.Ct. 1278, 131 L.Ed.2d 160 (1995) ). To be "adversely affected," a person must suffer an "injury in fact." See Nat'l Credit Union Admin. v. First Nat. Bank & Tr. Co. , 522 U.S. 479, 504, 118 S.Ct. 927, 140 L.Ed.2d 1 (1998) ; Air Courier Conference of Am. v. Am. Postal Workers Union AFL-CIO , 498 U.S. 517, 523, 111 S.Ct. 913, 112 L.Ed.2d 1125 (1991) ; see also United States v. Students Challenging Regulatory Agency Procedures (SCRAP) , 412 U.S. 669, 690 n. 14, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973) (" ‘Injury in fact’ reflects the statutory requirement that a person be ‘adversely affected’ or ‘aggrieved,’ and it serves to distinguish a person with a direct stake in the outcome of a litigation—even though small—from a person with a mere interest in the problem."). The injury-in-fact test requires a plaintiff to prove "an invasion of a legally protected interest which is (a) concrete and particularized ... and (b) actual or imminent, not conjectural or hypothetical." Am. Legion v. Am. Humanist Ass'n , ––– U.S. ––––, 139 S. Ct. 2067, 2098, 204 L.Ed.2d 452 (2019) (quoting Lujan v. Defenders of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).
Congress has not defined "participant," but has instead expressly delegated that task to the Secretary. See 7 U.S.C. § 6991(9). The regulatory definition provides in relevant part:
Participant means any individual or entity who has applied for, or whose right to participate in or receive, a payment, loan, loan guarantee, or other benefit in accordance with any program of an agency to which the regulations in this part apply is affected by a decision of such agency.
The AJ made a finding of fact that "the August 10, 2017 Agency decision did not deny or otherwise adversely affect the Appellant's right to participate in, or receive a payment, loan, loan guarantee, or other USDA program benefit," and therefore determined as a matter of law that Epp "is not a ‘participant’ who received an ‘adverse decision’ from the Agency, because he has not applied for a USDA program benefit that has been affected by the Agency's decision, nor has his right to participate in or receive a payment, loan, loan guarantee, or other USDA program benefit been affected by the Agency's decision." (Filing 20-1, p. 77) Essentially, the AJ concluded that Epp could not appeal NRCS's decision because he was not declared ineligible to receive USDA program benefits. The court finds this determination to be arbitrary and capricious, and contrary to law.
In response to counsel's argument that the decision was within the scope of 7 C.F.R. § 11.3(a)(2) (i.e., "adverse decisions made by an agency ... with respect to ... [c]ompliance with program requirements"), the AJ stated in a footnote: "I have carefully reviewed the existing record and I am unclear as to how the Agency's decision that the 1990 wetland determination is not a ‘certified wetland determination’ has caused the Appellant to be in violation of HEL/WC rules. Further, insufficient evidence has been presented to establish that the Agency's decision had any adverse effect on the Appellant's right to apply for, participate in, or receive any USDA program benefit." (Filing 20-1, p. 77) The AJ did not specifically address counsel's argument that there was also an adverse decision within the scope of 7 C.F.R. § 11.3(a)(4) (i.e., "adverse decisions made by an agency ... with respect to ... [a] determination that a parcel of land is a wetland or highly erodible land.").
The jurisdictional issue in this case is very similar to the issue that was presented in NAD Case No. 2011E000117. The appellant in that case had requested NRCS to review a certified wetland determination for a tract of land the appellant had recently purchased. NRCS determined as a result of its review that the wetland designation was correct. On appeal to NAD, the hearing officer decided that jurisdiction was lacking, using the same rationale as the AJ in the present case. He stated:
NAD decisions are available online at https://nad.usda.gov.
Appellant argues he is the person affected by the Agency wetland determination because it affects the use he may make of the land and still remain eligible for United States Department of Agriculture Programs and benefits. Appellant admits he was not the owner of the property at the time Agency issued the final certified wetland determination, and the owner did not appeal the final certified wetland determination. Appellant further argues that Agency in issuing a "Review Determination," and sending it certified mail saying it upheld the final certified wetland determination was in essence issuing an adverse decision, and is appealable to NAD.
NAD does not have jurisdiction to conduct a hearing on this issue. The controlling regulations in this matter are published at Parts 11 and 12 of Title 7 of the Code of Federal Regulations (7 C.F.R.). Program participants may appeal an agency adverse decision to NAD. A "participant" is defined as an individual who has applied for, or whose right to participate in or receive, a payment, loan, loan guarantee or other benefit in accordance with any program of an agency to which the regulations in this part apply is affected by a decision of such agency See 7 C.F.R. § 11.1 (definition of participant). An "adverse decision" is defined as an administrative decision made by an officer, employee, or committee of an agency that is adverse to a participant. See 7 C.F.R. § 11.1 (definition of adverse decision). Appellant's request for Agency to review a previously issued wetland determination does not meet the regulatory definition of a participant. Appellant purchased the property in question subject to Agency's final certified wetland determination. Appellant's request for a review is not an application for program benefits nor has Appellant's right to participate in or receive, a payment, loan, loan guarantee or other benefits been additionally adversely affected. Agency's affirmation of its final certified wetland determination does not constitute a new adverse decision.
NAD Case No. 2011E000117, Hearing Officer Decision (Jan. 19, 2011). However, this decision was reversed on Director Review, see 7 C.F.R. § 11.9, with Deputy Director M. Terry Johnson remanding the case to the hearing officer for further proceedings. The Deputy Director wrote:
I conclude that the Hearing Officer erred and I therefore reverse his determination and remand the appeal to a Hearing Officer for further proceedings, because NAD does have jurisdiction to hear this case. In arriving at this decision, I have reviewed the applicable laws and regulations; the case record; Appellant's request for review; and NRCS's response thereto.
Appellant purchased a tract of land for which NRCS had issued a final certified wetland determination (wetland determination) on August 22, 2008. The reason the wetland determination was a "final certified" one was because the previous owner had been notified of his right to appeal it and had not done so. On October 10, 2010, Appellant requested that NRCS review the wetland determination. NRCS wrote him a letter dated October 26, 2010 that stated that its review concluded that the wetland designation was correct. Appellant filed a NAD appeal of NRCS's letter. NRCS countered that NAD did not have jurisdiction
because its letter was not an "adverse decision" as defined in NAD's governing statute and regulations since Appellant had not filed an application for benefits. NRCS also contended that Appellant purchased the property knowing it was subject to the wetland determination and was thus not adversely affected within the meaning of the regulations. On January 19, 2011, the Hearing Officer held in favor of NRCS.
On review, Appellant argues that the statute and regulations governing wetlands permit him to challenge a final certified wetland determination. Appellant contends that NRCS's rejection of that challenge constitutes an adverse decision because the wetland classification limits his use of the land. NRCS repeats its earlier arguments and asks that I affirm the Hearing Officer's determination.
I agree with Appellant. The wetland statute provides that a final certification shall remain valid and in effect as long as the area is devoted to an agricultural use or until such time as the person affected by the certification requests review of the certification by the Secretary. 16 U.S.C. § 3822(a)(4). The regulation interpreting this provision 7 C.F.R. § 12.30(c)(6) states:
As long as the affected person is in compliance with the wetland conservation provision of this part, and as long as the area is devoted to the use and management of the land for production of food, fiber, or horticultural crops, a certification made under this section will remain valid and in effect until such time as the person affected by the certification requests review of the certification by NRCS. A person may request review of a certification only if a natural event alters the topography or hydrology of the subject land to the extent that the final certification is no longer a reliable indication of site conditions, or if NRCS concurs with an affected person that an error exists in the current wetland determination.
Both these provisions recognize that, as Appellant argues, wetland certification has an effect on a person owning property that is subject to it. Both authorize such a person to request a review that, by implication, might reverse or modify the certification. Thus, it is obvious that NRCS's denial of Appellant's review request has an adverse effect or impact on the person who made the request and is therefore an adverse decision. I therefore reject NRCS's argument that NAD lacks jurisdiction because, strictly speaking, Appellant's review request is not an application for program benefits or a denial of a right to participate in or receive a payment, loan, loan guarantee or other benefit. See 7 C.F.R. § 11.1.
NAD Case No. 2011E000117, Director Review Determination (June 30, 2011); see also NAD Case No. 2018E000234, Appealability Decision (Feb. 22, 2018) (NRCS's denial of request for review of existing certified wetland determination under § 12.30(c)(6) was appealable because "NAD's regulations codified at 7 C.F.R. § 11.3(a)(4) make clear that the term ‘adverse decision’ is intended to include a determination that a parcel of land is a wetland or highly erodible land.").
In addition, the regulations provide that "[a]ny person who has been or who would be denied program benefits in accordance with § 12.4 as the result of any determination made in accordance with the provisions of this part ["Highly Erodible Land Conservation and Wetland Conservation"] may obtain a review of such determination in accordance with the administrative appeals procedures of the agency which rendered such determination." 7 C.F.R. § 12.12 (emphasis supplied). Thus, it was held in another NAD case that there was "no support for NRCS's argument that the right of [the landowners] to request a NAD appeal [from a final technical wetland determination] would only occur at the time they are denied USDA program benefits." NAD Case No. 2010S000728, Hearing Officer Decision (Mar. 10, 2011); see also NAD Case No. 2018W000348, Administrative Judge Decision (Apr. 25, 2019) ("Because of the effects, or potential effects, an adverse HEL technical determination could have on a person, a person who receives such a determination may appeal the determination" under § 12.12.) (emphasis supplied).
Part 614 "sets forth the informal appeal procedures under which a participant may appeal adverse technical determinations or program decisions made by officials of the Natural Resources Conservation Service (NRCS), an agency under the Department of Agriculture (USDA) .... Once a decision is rendered final by NRCS, participants may appeal to the National Appeals Division (NAD) as provided for under 7 CFR part 11, or to the Farm Service Agency (FSA) county committee pursuant to 7 CFR part 780 for decisions rendered under Title XII of the Food Security Act of 1985, as amended, 16 U.S.C. 3801 et seq. (Title XII)." 7 C.F.R. § 614.1. "Adverse decision means the final technical determination or the program decision issued by NRCS that is adverse to the individual participant and not a matter of general applicability." 7 C.F.R. § 614.2.
"The NAD jurisdiction regulatory standard related to whether a person is a ‘participant’ is not worded in a restrictive way that requires the Agency decision to only be limited to decisions about program eligibility or program payment. Rather, the regulation includes decisions that affect a person's ability to participate in an Agency program." NAD Case Nos. 2019W000177, 2019W000190, and 2019W000191, Administrative Judge Decision (October 7, 2019) (emphasis in original) (rejecting NRCS's argument that farm owners could not appeal from the denial of their requests to transfer farm records to a single county because there was no "adverse decision" and appellants were not "participants").
In the present case, NRCS's decision came about because the agency was asked by FSA to determine whether Tracts 11735 and 11736 contained highly erodible land. On its own initiative, NRCS also made preliminary wetland technical determinations for these tracts (which were later rescinded) after concluding that the 1990 wetland determination for Tract 1890 (which comprised Tracts 11735 and 11736) did not qualify as a "certified wetland determination." As a result of this decision, FSA made a "correction" to the wetland status for Tracts 11735 and 11736 on its Form FSA-156EZ "since NRCS had not evaluated the entirety of each specific tract for wetlands or farmed wetlands under their applicable certified wetland determination rules, and determined that no wetlands exist anywhere on the tract." (Filing 20-1, pp. 215, 242; Filing 20-2, pp. 107, 134)
NRCS representatives are responsible for determining whether land has a wetland type or a converted wetland as identified in accordance with part 12. See 7 C.F.R. § 12.6(c)(2).
On April 25, 2017, a few days before FSA sent Epp copies of the revised FSA-156EZ forms, NRCS notified Epp that it was rescinding the preliminary wetland determinations for Tracts 11735 and 11736, and recommended that he request a certified determination before planting crops or taking other action on the properties. NRCS's notices stated:
In response to your request letter dated February 7, 2017. The Natural Resources
Conservation Service with concurrence from the Farm Service Agency is rescinding the December 2, 2016, Certified Wetland Determination[s] for Tract 11735 [and Tract 11736] in Hamilton County. Also in response to your letter dated January 20, 2017, we reviewed the September 4, 1990 determination. This 1990 determination is found to not be a certified determination according to the Food Security Act policy since specific procedures and appeal rights were not associated with that determination.
Based on these findings and rescinding the 2016 determination[s], Tract 11735 [and Tract 11736] currently do[ ] not have a Certified Wetland Determination. Prior to starting or planning any manipulation in or near the field it is encouraged that you request a Certified Determination so wetland conservation compliance can be addressed prior to any action being taken. If a manipulation or alteration of any wetlands occurs, then the current information in your file regarding wetlands present will be used in determining your eligibility for USDA program benefits such as cost-share programs, disaster programs, production programs, farm loans, and other existing or potential USDA programs.
In his January 20, 2017 letter, Epp requested that NRCS's "preliminary determination for Tracts #11736 and #11736 be revoked or updated to match the current certified determination for Tract #1890." (Filing 20-2, p. 15) Epp enclosed with the letter "a copy of the CPA-026 on file in the Aurora USDA office dated 9-4-90" and referenced delineation maps he had enclosed in previous correspondence. (Ibid. ) Epp stated his "understanding that the determination dated 9-4-90 meets all of the NRCS criteria necessary to be considered a ‘certified’ determination" and complained that "NRCS does not have the authority to issue a new certified wetland determination ... unless I requested it by filing a form CPA-038, which I have not." (Ibid. ) In his February 7, 2017 letter, Epp stated his "understanding that the wetland determination was unwarranted since neither I nor the FSA office requested the new wetland determination," and he requested NRCS to issue "a statement to the effect that the preliminary wetland determination was made in error." (Filing 20-1, p. 207; Filing 20-2, p. 99) Epp also indicated he wanted "the appeal case ceased." (Ibid. ) The "appeal" had been initiated by Epp on December 17, 2016, when he requested a field review and reconsideration of the preliminary wetland determinations. (See Filing 20-1, pp. 199-203; Filing 20-2, pp. 91-95)
(Filing 20-3, pp. 97, 99)
A person who produces an agricultural commodity on a wetland that was converted after December 23, 1985, or who converts a wetland after November 28, 1990, "shall be ineligible for all or a portion of USDA program benefits." 7 C.F.R. § 12.4(a)(2),(3). "For the purpose of paragraph (a) of this section, a person shall be determined ... to have produced an agricultural commodity on converted wetland, or to have converted a wetland if ... (1) NRCS has determined that ... [a]ll or a portion of the field is converted wetland; and (2) FSA has determined that the person is or was the owner or operator of the land ...; and (3) [w]ith regard to the provisions of paragraph ... (a)(2) of this section, FSA has determined that the land is or was planted to an agricultural commodity ... during the year for which the person is requesting benefits." Id. , § 12.4(f).
"[A] determination of ineligibility for benefits ... will be made by the agency of USDA to which the person has applied for benefits," except that "[e]ligibility for federal crop insurance premium subsidies will be based on final determinations made by NRCS and FSA." Id. , § 12.6(a). "A person shall not be ineligible for program benefits as a result of taking an action in reliance on a previous certified wetland determination by NRCS." Id. , § 12.5(b)(6)(i).
NRCS's decision that Tracts 11735 and 11736 do not have certified wetland determinations clearly is adverse to Epp's interests and affects his right to apply for and to receive benefits. "In order for a person to be determined to be eligible for any of the benefits specified in § 12.4 ... "[t]he person applying for or receiving the benefits must certify in writing on Form AD-1026 that such person will not ... plant an agricultural commodity on a converted wetland ... or convert a wetland to make possible the production of an agricultural commodity during the crop year in which the person is seeking such benefits, unless such actions are exempt, ...." Id. , § 12.7
NRCS's reasons for making this adverse decision were communicated to Epp on August 10, 2017, in what was described in the letter as a "program decision." (Filing 20-1, p. 12; Filing 20-3, p. 8) A "program decision" is defined as "a written decision by NRCS concerning eligibility for program benefits, program administration, or program implementation and based upon applicable regulations and program instructions and not a technical determination made solely for the HELC/WC provisions." 7 C.F.R. § 614.2. Program decisions are final upon their receipt the participant, who then has the following options for appeal of the program decision:
(1) An informal hearing before NRCS as provided for in paragraph (b) through paragraph (d) of this section;
(2) Mediation as provided for in § 614.11;
(3) An informal hearing before the FSA county committee pursuant to 7 CFR part 780 if the program decision is made under Title XII; or
(4) A hearing before NAD pursuant to 7 CFR part 11.
The August 10, 2017 letter advised Epp of his right to appeal the program decision using any of these methods, and he opted to pursue mediation initially. Although the AJ concluded that NRCS gave Epp bad advice, the court concludes the agency's program decision was "adverse to the individual participant and not a matter of general applicability," 7 C.F.R. § 614.2, and was therefore appealable under 7 U.S.C. § 6996(a).
Had NRCS not told Epp the August 10, 2017 decision was appealable, Epp could have requested an appealability decision from the NAD Director. See 7 C.F.R. § 614.13 ("If NRCS states that a decision is not adverse to the individual participant, and thus, no right to appeal exists, NRCS will notify the participant that he may seek review of that determination from the NAD Director."); see also 7 C.F.R. § 11.6(a)(2) ("The Director shall determined [sic ] whether the decision is adverse to the individual participant and thus appealable or is a matter of general applicability and thus not subject to appeal, and will issue a final determination notice that upholds or reverses the determination of the agency. This final determination is not appealable. If the Director reverses the determination of the agency, the Director will notify the participant and the agency of that decision and inform the participant of his or her right to proceed with an appeal.").
The AJ's conclusion that the decision was not adverse to Epp because he is not a "participant," because the decision "did not deny or otherwise adversely affect [Epp's] right to participate in, or receive a payment, loan, loan guarantee, or other USDA program benefit" (Filing 20-1, p. 77) (emphasis supplied), is the product of fallacious, circular reasoning. The definition of "participant" in 7 C.F.R. § 11.1 does not use the phrase "adversely affected" and cannot reasonably be read to impose the heightened standing requirement that the AJ applied in this case. Because NAD had jurisdiction over Epp's appeal, the court must next decide whether the AJ erred in determining that NRCS's decision was not plainly erroneous or inconsistent with regulations.
B. NAD's Decision on the Merits
The AJ's affirmance of NRCS's decision was based solely upon a statement in an agency manual (NAFSAM), which the AJ characterized as a "policy decision," that wetland determinations made prior to November 28, 1990, are not considered "certified." The AJ's decision on the merits reads as follows:
Basic regulations and provisions governing HEL/WC issues are found in 7 C.F.R. Part 12, and the NFSAM (as incorporated into Agency Manual Title 180, "Conservation Planning and Application," Parts 510-520) (hereafter referred to as Agency Manual 180). NAD regulations at 7 C.F.R. Part 11 govern the appeal process.
Did the Agency correctly decide that the 1990 wetland determination is not a "certified wetland determination"? Yes.
The purpose of wetland conservation rules in "the Food Security Act of 1985" ("the Act") is to remove certain incentives for persons to produce agricultural commodities on converted wetlands. The rules do this by linking eligibility for USDA program benefits to farming practices on wetlands. [Footnote 15: See Pub. L. 99-198, 99 Stat. 1354 (December 23, 1985); Title 16 of the United States Code (16 U.S.C.) §§ 3801 and 3821 - 3824. ] Prior to "the 1990 Farm Bill," there was no specific requirement that a wetland determination be certified. See "the Act"; 7 C.F.R. § 12.1 (a) (1987) (a copy of which can be found at " Highly Erodible Land and Wetland Conservation," 52 Fed.Reg. 35194 (Final Rule Sept. 17, 1987) ).
"The 1990 Farm Bill" created the requirement that the Secretary (acting through the Agency) delineate wetlands on wetland delineation maps and certify such maps "as sufficient for the purposes of making determinations of ineligibility for program benefits." See "the 1990 Farm Bill,"§ 1422; 16 U.S.C. § 3822(a) ; 7 C.F.R. § 12.30(b) and (c) (1-1-92 Edition). The Agency was authorized to certify wetland determinations only after providing notice to the affected owner or operator and giving the owner or operator the opportunity to appeal. An exception to the requirement to provide appeal rights was if the wetland determination was completed prior to enactment of "the 1990 Farm Bill" and was unchanged, and there was an appeal of the prior determination with an on-site evaluation. See "the 1990 Farm Bill,"§ 1422; 16 U.S.C. § 3822(a) ; 7 C.F.R. § 12.30(c) (1-1-92 Edition).
Agency Manual 180 contains USDA and Agency policies and operating procedures for implementing the HEL/WC regulations at 7 C.F.R. Part 12. See Agency Manual 180 § 510.0(C). Regarding evaluations of previously issued wetland determinations, Manual 180 clearly states that wetland determinations made prior to November 28, 1990, are not considered "certified." See Agency Manual 180 § 514.1 (B)(vi). Thus, the USDA and Agency have made a policy decision that wetland determinations made prior to November 28, 1990, are not of sufficient quality to decide ineligibility for USDA program benefits. Since the wetland determination at issue in this appeal was made on September 5, 1990, it is not considered a "certified wetland determination." [FOF 6]. While I understand that Appellant disagrees with the Agency's policy and believes the September 5, 1990 wetland determination should be considered a "certified wetland
determination," the Agency's interpretation of its regulations (i.e., regulations at 7 C.F.R. Part 12) is entitled to deference unless the Agency's interpretation is plainly erroneous or inconsistent with the regulations. See NAD Case No. 2016W000093 (Dir. Rev. December 12, 2016).
The Agency has established a cut-off date of November 28, 1990, beyond which the Agency is not prepared to certify that a wetland determination completed prior to that date is of sufficient quality to enable the Agency to decide ineligibility for USDA program benefits. The November 28, 1990 cut-off date is almost 28 years ago, and at the time of the Agency's August 2017 decision was over 27 years ago. Given the potential variance in the amount of information available for separate pre-November 28, 1990 determinations, and the likelihood of significant differences in the quality of individual determinations made before the cut-off date, I cannot say that the Agency's interpretation and implementation of HEL/WC regulations is plainly erroneous or inconsistent with the regulations.
(Filing 20-1, pp. 81-82).
NAD administrative judges must ensure that their decisions are consistent with the laws and regulations of the agency, and with the generally applicable interpretations of such laws and regulations. 7 C.F.R. § 11.10(b). The determination on appeal shall be based on information from the case record, laws applicable to the matter at issue, and applicable regulations published in the Federal Register and in effect on the date of the adverse decision or the date on which the acts that gave rise to the adverse decision occurred, whichever date is appropriate. 7 U.S.C. § 6998(c) ; 7 C.F.R. § 11.10(c).
"NAD ordinarily will defer to an agency's interpretation of its regulations unless the interpretation is plainly erroneous or inconsistent with the regulation; however, NAD will not defer to agency handbook guidance that imposes a substantive requirement not intended by the express language of the regulation. " NAD Case No. 2016W000093, National Director Review (Dec. 12, 2016) (emphasis supplied). Statutory interpretations contained in policy statements, agency manuals, and enforcement guidelines lack the force of law and do not warrant Chevron -style deference. Christensen , 529 U.S. at 586, 120 S.Ct. 1655. A policy statement interpreting a regulation is entitled to deference unless it is "plainly erroneous or inconsistent with the regulation," Auer , 519 U.S. at 461, 117 S.Ct. 905, but Auer deference applies only if a regulation is "genuinely ambiguous." Kisor , 139 S. Ct. at 2415.
A useful overview of the statutory and regulatory scheme is provided in USDA's discussion of an interim rule that went into effect on December 7, 2018, amending various provisions of 7 C.F.R. Part 12:
Title XII of the Food Security Act of 1985, as amended (the 1985 Act), encourages participants in USDA programs to adopt land management measures by linking eligibility for USDA program benefits to farming practices on highly erodible land and wetlands. In particular, the highly erodible land conservation (HELC) provisions of the 1985 Act provide that after December 23, 1985, a program participant is ineligible for certain USDA program benefits for the production of an agricultural commodity on a field in which highly erodible land is predominant. Additionally, the wetland conservation (WC) provisions of the 1985 Act provide that after December 23, 1985, a program participant is ineligible for certain USDA program benefits for the production of an agricultural commodity on a converted wetland, or after November 28, 1990,
for the conversion of a wetland that makes the production of an agriculture commodity possible. The Agricultural Act of 2014 amended the 1985 Act to expand the HELC/WC requirements to encompass crop insurance benefits, and thus, producers obtaining Federally reinsured crop insurance must be in compliance with an NRCS-approved conservation plan for all highly erodible land; not plant or produce an agricultural commodity on a wetland converted after February 7, 2014; and not have converted a wetland after February 7, 2014, to make possible the production of an agricultural commodity. The 1985 Act, however, affords relief to program participants who meet certain conditions identified under the 1985 Act by exempting such actions from the ineligibility provisions.
The USDA regulations implementing the HELC and WC provisions of the 1985 Act are found at 7 CFR part 12. The regulations at 7 CFR part 12 list actions that may result in a determination of ineligibility, the program benefits that are at risk, and the conditions under which these activities can occur without losing program eligibility. The regulations are divided into three subparts. Subpart A [ sections 12.1 through 12.13 ] describes the terms of ineligibility, USDA programs encompassed by its terms, the list of exemptions from ineligibility, the agency responsibilities, and conditions that apply when persons adversely affected by an agency determination request an appeal. Subpart B [sections 12.20 through 12.23] describes in greater detail the technical aspects of the HELC provisions, including the technical criteria for identification of highly erodible lands, criteria for highly erodible field determinations, and requirements for the development of conservation plans and conservation systems. Subpart C [ sections 12.30 through 12.33 ] describes in greater detail the technical aspects of the WC provisions, including the criteria for determining a wetland, the criteria for determining a converted wetland, and the uses of wetlands and converted wetlands that can be made without losing program eligibility.
83 Fed. Reg. 63046, 62046, 2018 WL 6422366 (Dec. 7, 2018).
Also informative is USDA's discussion of "wetland determination certification" in this same document:
NRCS began making wetland determinations subsequent to the enactment of the 1985 Act and the interim final rule for 7 CFR part 12 promulgated in 1986. These wetland determinations were completed utilizing soil surveys, U.S. Fish and Wildlife Service National Wetland Inventory maps, and USDA aerial imagery or site visits. Producers were provided appeal rights with these determinations. In the 1990 Farm Bill, the concept of certification of wetland determinations was incorporated into the WC provisions. In particular, as described in the Manager's Report to the 1990 Farm Bill:
[T]he certification process is to provide farmers with certainty as to which of their lands are to be considered wetlands for purposes of Swampbuster. The Managers note that the current USDA wetland delineation process involves the use of substantial materials to make an initial determination in the field office, developed in consultation with other appropriate Federal and State agencies. Wetlands identified in this process are delineated on maps which are then mailed to producers for review. If the producer finds such map to be in error, and the USDA agrees that an error has been made, then the map is corrected. If
the USDA does not agree that there is an error in the map, and the producer continues to believe so, then the producer may appeal such determination. The Managers find that this process is adequate for certification of any new maps delineated after the date of enactment of this Act. For maps completed prior to the date of enactment of this Act, the Managers intend for producers to be notified that their maps are to be certified and that they have some appropriate time for appeal. In this circumstance, producers who had not already been mailed their maps should be given a map for their review.
The changes made to 7 CFR part 12 in 1991 included the following incorporation of certification at § 12.30(c) (1991):
SCS determinations of wetland status and any applicable exemptions granted under this part shall be delineated on a map of the farm or tract. Notification of the wetland determination, a copy of the wetland delineation and the SCS appeal procedures shall be provided to each person who completes a Form AD-1026. The wetland determination and wetland delineation shall be certified as final by the SCS official 45 days after providing the person notice or, if appeal is filed with SCS, after a final appeal decision is made by SCS.
By statute, as clarified in the 1990 Conference Managers Report, determinations made pursuant to the 1991 rule are certified determinations when the producer was provided a copy of the determination and had been provided appeal rights. The producer was not required to appeal the determination for the determination to become certified. In June of 1991, USDA issued a revised CPA-026 form that included certification language in the agency signature block and contained the applicable appeal rights on the back side of the person copy.
The certification provisions were further strengthened in the 1996 Farm Bill, due in part to a moratorium that had been placed on wetland determinations by the Secretary of Agriculture in 1995. In response to these changes, in the 1996 interim final rule USDA identified that all wetland determinations made after its effective date of July 3, 1996, would be considered a certified wetland determination. A final certification remains valid and in effect as long as the area is devoted to an agricultural use or until such time as the person, affected by the review, requests review of the certification if "a natural event alters the topography or hydrology of the subject land to the extent that the final certification is no longer a reliable indication of site conditions, or if NRCS concurs with an affected person that an error exists in the current wetland determination." 7 CFR 12.30(c)(6).
NRCS, program participants, farm organizations, conservation organizations, and others have long focused upon the certification process for NRCS wetland determinations because of the certainty that such determinations provide to program participants regarding future business decisions. Through this rulemaking, USDA is adding further guidance in the WC regulation to improve clarity on the statutory concept of certification, particularly for those certified determinations issued between 1990 and 1996.
Id. , at 63050.
While USDA states that the 1990 Conference Managers Report "clarified" the statutory language to provide that "determinations made pursuant to the 1991 rule are certified determinations when the producer was provided a copy of the determination and had been provided appeal rights," the 1990 Conference Manager Report also expressly stated that wetland determinations made prior to the effective date of the 1990 Farm Bill would be certified if the maps were unchanged and there had been an appeal with an on-site visit. Thus, the Conference Managers Report states, immediately before and after the language quoted above in USDA's discussion:
The Conference substitute adopts the House provision [for wetland delineation] with amendments. The House requirement for the review of all lands mapped for wetland delineation purposes prior to enactment of this Act is deleted. All maps will be certified as required in the House provision, and such maps may be appealed, but no appeal will be allowed on maps completed prior to the date of enactment of this Act that had not been changed, and where such maps had already been appealed and for which an on-site visit had been conducted. (Section 1602)
* * *
... As stated in the Conference substitute, the Secretary shall not be required to provide an opportunity for an appeal on maps completed prior to the date of enactment of this Act where such maps have not been changed, and have already been appealed and for which an on-site visit had been conducted. After the appropriate length of time for allowing an appeal has expired, the Managers intend for the Department to certify the maps.
(Filing 20-3, p. 147) The actual statutory language was as follows:
Section 1222 of the Food Security Act of 1985 ( 16 U.S.C. 3822 ) is amended to read as follows:
"SEC. 1222. DELINEATION OF WETLANDS; EXEMPTIONS.
"(a) DELINEATION OF WETLANDS.—
"(1) WETLAND DELINEATION MAPS.—The Secretary shall delineate wetlands on wetland delineation maps. The Secretary shall make a reasonable effort to make an on-site wetland determination whenever requested by an owner or operator, prior to such delineation.
"(2) CERTIFICATION.—Upon providing notice to affected owners or operators, the Secretary shall certify each such map as sufficient for the purpose of making determinations of ineligibility for program benefits under section 1221 and shall, in accordance with section 1243, provide an opportunity to appeal such delineations to the Secretary prior to making such certification final. In the case of an appeal, the Secretary shall review and certify the accuracy of the mapping of all lands subject to the appeal mapped prior to the date of enactment of the Food, Agriculture, Conservation, and Trade Act of 1990 for the purpose of wetland delineations to ensure that wetland on such lands has been accurately delineated. Prior to rendering a decision on any such appeal, the Secretary shall conduct an on-site inspection of the subject land. The Secretary shall not be required to provide an opportunity for an appeal of delineations completed prior to the enactment of this subsection that are not changed, and for which an appeal had already occurred and, in connection with such previous appeal, an on-site determination had been conducted.
"(3) PUBLIC LIST.—The Secretary shall maintain a public listing of all such certifications that have been completed.
"(4) PERIODIC REVIEW AND UPDATE.—The Secretary shall provide by regulation a process for the periodic
review and update of such wetland delineations as the Secretary deems appropriate. No person shall be adversely affected because of having taken an action based on a previous determination by the Secretary.
Food, Agriculture, Conservation, and Trade Act of 1990, § 1422, PL 101-624, 104 Stat 3359 (Nov. 28, 1990) (emphasis supplied). (Filing 20-3, p. 20)
In fact, the 1991 version of 7 C.F.R. § 12.30, which is partially quoted in USDA's discussion above, expressly stated that "[w]etland determinations made prior to November 28, 1990 shall be considered to be final and certified if they meet the criteria of § 12.31." 56 Fed. Reg. 18630, 1991 WL 312243 (April 23, 1991) (emphasis supplied). (Filing 20-3, p. 160) Section 12.31 provided that "SCS shall identify hydric soils through the use of published soil maps which reflect soil surveys completed by SCS. If a published soil map is unavailable for a given area, SCS may use unpublished soil maps which were made according to the specifications of the National Cooperative Soil Survey or may conduct an on-site evaluation of the land." 52 Fed. Reg. 35194, 1987 WL 140302 (Sept. 17, 1987).
The AJ states in his decision that "the USDA and Agency have made a policy decision that wetland determinations made prior to November 28, 1990, are not of sufficient quality to decide ineligibility for USDA program benefits" (Filing 20-1, p. 82), but there is not substantial evidence this was the rationale behind the cut-off date used in the agency manual. More importantly, on September 4, 1990, an on-site evaluation was made of the 2.3 acres on Tract 1890 that appeared as farmed wetland on the soil map, and it was concluded that the wetland had been converted prior to December 23, 1985. Owners and operators of this converted wetland are therefore clearly eligible for program benefits under the terms of the statute. See 16 U.S.C. § 3822(b)(1)(A) ("No person shall become ineligible under section 3821 of this title for program loans or payments ... [a]s the result of the production of an agricultural commodity on ... [a] converted wetland if the conversion of the wetland was commenced before December 23, 1985.").
The 1996 legislation amended Section 1222 of the Food Security Act of 1985 ( 16 U.S.C. § 3822 ) by striking subsection (a) and inserting the following:
"(a) DELINEATION BY THE SECRETARY.—
"(1) IN GENERAL.—Subject to subsection (b) [exemptions] and paragraph (6), the Secretary shall delineate, determine, and certify all wetlands located on subject land on a farm.
"(2) WETLAND DELINEATION MAPS.—The Secretary shall delineate wetlands on wetland delineation maps. On the request of a person, the Secretary shall make a reasonable effort to make an on-site wetland determination prior to delineation.
"(3) CERTIFICATION.—On providing notice to affected persons, the Secretary shall—
"(A) certify whether a map is sufficient for the purpose of making a determination of ineligibility for program benefits under section 1221; and
"(B) provide an opportunity to appeal the certification prior to the certification becoming final.
"(4) DURATION OF CERTIFICATION.—A final certification made under paragraph (3) shall remain valid and in effect as long as the area is devoted to an agricultural use or until such time as the person affected by the certification requests review of the certification by the Secretary.
"(5) REVIEW OF MAPPING ON APPEAL.—In the case of an appeal of the Secretary's certification, the Secretary shall review and certify the accuracy of the mapping of all land subject to the appeal to ensure that the subject land has been accurately delineated. Prior to rendering a decision on the appeal, the Secretary shall conduct an on-site inspection of the subject land on a farm.
"(6) RELIANCE ON PRIOR CERTIFIED DELINEATION.—No person shall be adversely affected because of having taken an action based on a previous certified wetland delineation by the Secretary. The delineation shall not be subject to a subsequent wetland certification or delineation by the Secretary, unless requested by the person under paragraph (4). "
Federal Agriculture Improvement and Reform Act of 1996, § 322, PL 104-127, 110 Stat 888 (Apr. 4, 1996) (emphasis supplied). This language remains unchanged.
The version of 7 C.F.R. § 12.30(c) that was in effect on August 10, 2017, when NRCS's adverse "program decision" was made, provided:
(1) Certification of a wetland determination means that the wetland determination is of sufficient quality to make a determination of ineligibility for program benefits under § 12.4 of this part. NRCS may certify a wetland determination without making a field investigation. NRCS will notify the person affected by the certification and provide an opportunity to appeal the certification prior to the certification becoming final. A not-inventoried designation within a certified wetland is subject to change when the soil, hydrology, and vegetation evaluation is completed and identified as to type of wetland or as a non-wetland. This change from a not-inventoried designation to an approved wetland designation will be done at the request of the landowner or during a formal investigation of a potential violation.
(2) The wetland determination and wetland delineation shall be certified as final by the NRCS official 30 days after providing the person notice of certification or, if an appeal is filed with USDA, after the administrative appeal procedures are exhausted.
(3) In the case of an appeal, NRCS will review and certify the accuracy of the determination of all lands subject to the appeal to ensure that the subject lands have been accurately delineated. Prior to a decision being rendered on the appeal, NRCS will conduct an on-site investigation of the subject land.
(4) Before any benefits are withheld, an on-site investigation of a potential wetland violation will be made by NRCS. The affected person will be provided an opportunity to appeal the on-site determination to USDA if the on-site determination differs from the original determination. Such action by NRCS shall be considered a review of the prior determination and certification of the delineation. If the prior determination was a certified wetland determination, an appeal of the NRCS on-site determination shall be limited to the determination that the wetland was converted in violation of this part.
(5) A copy of the information from the final certified wetland determination and the wetland delineation shall be recorded on official USDA aerial photography, digital imagery, or other graphic representation of the area.
(6) As long as the affected person is in compliance with the wetland conservation provision of this part, and as long as the area is devoted to the use and management of the land for production of food, fiber, or horticultural crops, a certification made under this section will remain valid and in effect until such
time as the person affected by the certification requests review of the certification by NRCS. A person may request review of a certification only if a natural event alters the topography or hydrology of the subject land to the extent that the final certification is no longer a reliable indication of site conditions, or if NRCS concurs with an affected person that an error exists in the current wetland determination.
61 Fed. Reg. 47019, 1996 WL 500954 (Sept. 6, 1996) ; 61 Fed. Reg. 53491, 1996 WL 500954 (Oct. 11, 1996) ; 76 Fed. Reg. 22785, 2011 WL 1527160 (Apr. 25, 2011). (Filing 20-2, p. 72)
The current version of 7 C.F.R. § 12.30(c)(1), which was not yet in effect when the AJ rendered his decision on November 9, 2018, provides:
Certification of a wetland determination means that the wetland determination is of sufficient quality to make a determination of ineligibility for program benefits under § 12.4. In order for a map to be of sufficient quality to determine ineligibility for program benefits, the map document must be legible to the extent that areas that are determined wetland can be discerned in relation to other ground features. NRCS may certify a wetland determination without making a field investigation. NRCS will notify the person affected by the certification and provide an opportunity to appeal the certification prior to the certification becoming final. All wetland determinations made after July 3, 1996, will be done on a field or sub-field basis and will be considered certified wetland determinations. Determinations made after November 28, 1990, and before July 3, 1996, are considered certified if the determination was issued on the June 1991 version of form NRCS-CPA-026 or SCS-CPA-026, the person was notified that the determination had been certified, and the map document was of sufficient quality to determine ineligibility for program benefits. If issued on a different version of the form, a determination will be considered certified if there is other documentation that the person was notified of the certification, provided appeal rights, and the map document was of sufficient quality to make the determination.
83 Fed. Reg. 63046, 62046, 2018 WL 6422366 (Dec. 7, 2018) (emphasis supplied).
The final two sentences in the current version of § 12.30(c)(1) are generally consistent with NFSAM § 514.1(B)(iii), upon which NRCS based its August 10, 2017 adverse decision. (Filing 20-1, pp. 11-12; Filing 20-2, pp. 7-8, 66) However, unlike NFSAM § 514.1(B)(vi), the regulation does not state that "[w]etland determinations made prior to November 28, 1990, are not considered certified."
The AJ's reliance upon § 514.1(B)(vi)'s cut-off date is erroneous because NRCS's August 10, 2017 decision did not reference § 514.1(B)(vi) or state that the reason the September 4, 1990 wetland determination was not considered "certified" was because it was made prior to November 28, 1990. The decision merely indicated that the September 4, 1990 converted wetland determination could not be "certified" because "there was not sufficient evidence that the producer was informed the determination was certified and provided appeal rights." (Filing 20-1, pp. 11-12; Filing 20-2, pp. 7-8) Such evidence was considered necessary under § 514.1(B)(iii) because the signature block on the wetland determination form did not contain a "producer notification statement" and the back of the form did not have updated appeal information. NRCS's April 25, 2017 letters to Epp also made no mention of a November 28, 1990 cut-off date for certification, but simply stated: "This 1990 determination is found to not be a certified determination according to the Food Security Act policy since specific procedures and appeal rights were not associated with that determination." (Filing 20-3, pp. 97, 99)
The "producer notification statement" in Block 29 of the June 1991 version of the SCS-CPA-026 "Highly Erodible Land and Wetland Conservation Determination" form stated: "I certify that the above determination is correct and adequate for use in determining eligibility [sic ] for USDA program benefits, and that wetland hydrology, hydric soils, and hydrophytic vegetation under normal circumstances exist on all areas outlined as Wetlands, Farmed Wetlands, and Farmed Wetlands Pasture." (Filing 20-3, p. 34) The back of the "Person Copy" of the June 1991 SCS-CPA-026 form is not in evidence, but is available online at https://directives.sc.egov.usda.gov/40306.wba as an exhibit to Subpart A of NFSAM Part 514. See supra note 1. The back of the "Person Copy" of the form explains which agency is responsible for determining various matters and states:
You should request reconsideration by the person or committee of the agency making the initial determination.
Appeal within 15 days (30 days for FmHA, and 45 days for SCS) of the mailing of the determination. Appeals of adverse decisions may be made to the next level of appeal within 15 days (30 for FmHA, and 45 days for SCS) of the mailing of the decision. Decisions by the highest listed authority in each agency are final and there are no further administrative appeal rights. The succession of levels for appeal following reconsideration by the person or committee making the initial determination are: [listings omitted]
It is "a simple but fundamental rule of administrative law ... that a reviewing court, in dealing with a determination or judgment which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency." Sec. & Exch. Comm'n v. Chenery Corp. , 332 U.S. 194, 196, 67 S.Ct. 1760, 91 L.Ed. 1995 (1947). "[A] reviewing court may not uphold an agency decision based on reasons not articulated by the agency itself in its decision." Mages v. Johanns , 431 F.3d 1132, 1146 (8th Cir. 2005) (quoting Mayo v. Schiltgen , 921 F.2d 177, 179 (8th Cir. 1990) ). The same holds true for NAD, when it reviews an agency decision. See NAD Case No. 2019E000316, Administrative Judge Decision (Sept. 26, 2019) (declining to consider new arguments raised by FSA that were not part of adverse decision); NAD Case No. 2017E000304, Administrative Judge Decision (Feb. 22, 2019) (declining to consider new arguments raised on appeal, because "[i]t is not the duty of NAD to amend or rewrite the adverse decision."); NAD Case No. 2017W000230, National Director Review (Oct. 11, 2017) (declining to consider additional reasons presented by FSA for denial of loan application, stating that "FSA should have either fully articulated the reasons for denying Appellant's application at the time the adverse decision was issued, or rescinded the adverse decision when it found it deficient and issued a more detailed decision fully expressing FSA's reasons for denying Appellant's loan application."); NAD Case No. 2011W000490, National Director Review (Dec. 31, 2012) (dismissing issues not raised in the adverse decision, including new arguments raised by the agency on appeal to justify its denial of the appellant's claim). In this case, the AJ abused his discretion in affirming the NRCS's adverse decision based on § 514.1(B)(vi) of "Agency Manual 180" (NAFSAM).
Even if the AJ could properly consider this new argument that was raised by NRCS in defense of Epp's appeal, the manual's interpretation of 7 C.F.R. § 12.30 is not entitled to any deference because it "imposes a substantive requirement not intended by the express language of the regulation," NAD Case No. 2016W000093, National Director Review (Dec. 12, 2016), namely, that the wetland determination must have been made on or after the effective date of the 1990 Farm Bill in order to be "certified." Moreover, this interpretation is contrary to law, because the 1990 Farm Bill clearly provided that wetland delineations made prior to its effective date would be considered certified, and landowners and farm operators would not need to be notified of their appeal rights, if an appeal had already been taken and an on-site investigation had been conducted, which is precisely what happened in this case.
On May 14, 1990, the Soil Conservation Service ("SCS") sent the owner of Tract 1890 a letter stating that it had "recently reviewed soil maps, aerial photography and other data to identify wetland on your farm," and that "the enclosed ‘Highly Erodible Conservation Determination for [sic ] SCS 0026, indicates your farm has ... wetland as identified on the enclosed aerial photos." (Filing 20-2, p. 19) The enclosed SCS-CPA-026 form (1-88 version) is dated March 26, 1990, and shows that an office determination was made that Tract 1890 contained 2.3 acres of wetland. (Filing 20-2, p. 21) This wetland area is clearly delineated on the enclosed aerial map and is labeled farmed wetland ("FW"). (Filing 20-2, p. 22) The letter also informed Mr. Goertzen that the determination could be appealed, and that appeal information was on the back of the determination form. (Filing 20-2, p. 19) Mr. Goertzen did appeal, stating that he believed the FW designation was wrong because he "leveled it in the fall of 1984." (Filing 20-2, p. 20)
On September 5, 1990, SCS notified Mr. Goertzen that "[a]fter visiting your farm, ... it has been determined that it is now considered prior converted," and that "the use, management, drainage, and alterations of prior converted wetlands (PC) are not subject to FSA unless the area reverts to wetland as a result of abandonment." (Filing 20-2, p. 16) The enclosed SCS-CPA-026 form (5-89 version), dated September 4, 1990, and signed by SCS's District Conservationist, likewise stated that Tract 1890 contained "prior converted [wetland] after field visit." (Filing 20-2, p. 17) The letter again informed Mr. Goertzen of his right to appeal a wetland determination, and provided specifics:
If you choose to appeal this decision further, you must, within 45 days of the date of this letter, send your written appeal to:
Stuart N. Simpson, Area Conservationist
USDA Soil Conservation Service
Federal Building, Room 515
Lincoln, NE 68508
You also have the right to request an informal hearing or meeting with the Area Conservationist should you decide to appeal to the area office.
(Filing 20-2, p. 16)
NRCS's August 10, 2017 adverse decision that the September 4, 1990 wetland determination "did not qualify as a ‘certified wetland determination’ since the SCS-CPA-026 was a version dated May 1989 and not June 1991 or later," and "there was not sufficient evidence that the producer was informed the determination was certified and provided appeal rights" (Filing 20-1, p. 12; Filing 20-2, p. 8), is indefensible. The 1990 determination resulted from an appeal and was fully favorable to the landowner. Although the letter did not use the term "certified," Mr. Goertzen was informed that he was not limited in the use, management, drainage, or alteration of the prior converted wetland, unless the area reverted to a wetland through abandonment. Whether Mr. Goertzen was informed of his appeal rights from this fully favorable decision is irrelevant, since he had no reason to appeal, but the letter shows on its face that he was. In fact, Mr. Goertzen was even given an address for filing an appeal, which is not information that is provided on the back side of the "Person Copy" of the June 1991 SCS-CPA-026 form.
Defendants also argue there is not sufficient evidence that an in-field inspection of all 160 acres of Tract 1890 was performed, but this was not a requirement of the 1990 Farm Bill. That legislation required USDA to "delineate wetlands on wetland delineation maps," to "certify each such map as sufficient for the purpose of making determinations of ineligibility for program benefits," and to "provide an opportunity to appeal such delineations ... prior to making such certification final." 16 U.S.C. § 3822(a)(2) (Nov. 28, 1990). Unless an appeal was filed, the law did not require any onsite inspection for certification. See 7 C.F.R. § 12.30(c) (Apr. 23, 1991) ("SCS determinations of wetland status and any applicable exemptions granted under this part shall be delineated on a map of the farm or tract. Notification of the wetland determination, a copy of the wetland delineation and the SCS appeal procedures shall be provided to each person who completes a Form AD-1026. The wetland determination and wetland delineation shall be certified as final by the SCS official 45 days after providing the person notice or, if appeal is filed with SCS, after a final appeal decision is made by SCS.")
Food, Agriculture, Conservation, and Trade Act of 1990, § 1422, PL 101-624,104 Stat 3359 (Nov. 28, 1990).
56 Fed. Reg. 18630, 1991 WL 312243 (Apr. 23, 1991).
In the event of an appeal, USDA was required to "review and certify the accuracy of the mapping of all lands subject to the appeal mapped prior to the date of enactment of the Food, Agriculture, Conservation, and Trade Act of 1990 for the purpose of wetland delineations to ensure that wetland on such lands has been accurately delineated," and, "[p]rior to rendering a decision on any such appeal," to "conduct an on-site inspection of the subject land. " 16 U.S.C. § 3822(a)(2) (Nov. 28, 1990) (emphasis supplied). The "subject land" unambiguously refers to the area which has been delineated as a wetland, and not to the entire farm tract. This is confirmed by the implementing regulation, which provided: "An on-site investigation of a wetland or converted wetland site will be made by SCS before any benefits are withheld and the person shall be provided an opportunity to appeal the on-site determination to SCS if the on site determination differs from the original determination, or the person was not provided an opportunity to appeal the original determination."). 7 C.F.R. § 12.30(d) (Apr. 23, 1991) (emphasis supplied).
The law further provided that USDA "shall not be required to provide an opportunity for an appeal of delineations completed prior to the enactment of this subsection that are not changed, and for which an appeal had already occurred and, in connection with such previous appeal, an on-site determination had been conducted." 16 U.S.C. § 3822(a)(2) (Nov. 28, 1990). To the extent Defendants are contending that an appeal completed before November 28, 1990, would require a more extensive on-site investigation than an appeal taken after that date, such an argument finds no support in the statutes or regulations. USDA was only required to make an on-site investigation if a landowner disagreed with a wetland delineation and appealed. Otherwise, USDA only had to "make a reasonable effort to make an on-site wetland determination whenever requested by an owner or operator, prior to such delineation." 16 U.S.C. § 3822(a)(1) (Nov. 28, 1990).
The 1990 Farm Bill contemplated "periodic review and update of such wetland delineations," id. , but subsequent legislation in 1996 specified that a "previous certified wetland delineation by the Secretary ... shall not be subject to a subsequent wetland certification or delineation by the Secretary, unless requested by the person" affected by the delineation. 16 U.S.C. § 3822(a)(6) (Apr. 4, 1996). This provision is still in effect, and Epp is entitled to its protections.
Federal Agriculture Improvement and Reform Act of 1996, § 322, PL 104-127, 110 Stat 888 (Apr. 4, 1996).
The Supreme Court has held that "[w]hen an administrative agency has made an error of law, the duty of the Court is to ‘correct the error of law committed by that body, and after doing so remand the case to the agency so as to afford it the opportunity of examining the evidence and finding the facts as required by law.’ " N.L.R.B. v. Enterprise Ass'n of Steam, Hot Water, Hydraulic Sprinkler, Pneumatic Tube, Ice Machine & Gen. Pipefitters of New York, Local Union No. 638 , 429 U.S. 507, 522 n. 9, 97 S.Ct. 891, 51 L.Ed.2d 1 (1977) (quoting I.C.C. v. Clyde S.S. Co. , 181 U.S. 29, 32-33, 21 S.Ct. 512, 45 L.Ed. 729 (1901) ); see Nat'l Wildlife Fed'n v. Harvey , 574 F. Supp. 2d 934, 956 (E.D. Ark. 2008) ; see also Ramirez-Peyro v. Gonzales , 477 F.3d 637, 641 (8th Cir. 2007) ("Generally speaking, a court of appeals should remand a case to an agency for decision of a matter that statutes place primarily in agency hands.") (quoting INS v. Ventura , 537 U.S. 12, 16, 123 S.Ct. 353, 154 L.Ed.2d 272 (2002) (remand appropriate even where court of appeals regarded facts as clearly supporting applicant)).
IV. CONCLUSION
NRCS's August 10, 2017 decision was appealable to NAD under 7 U.S.C. § 6996. For the reasons stated above, the administrative judge's determination that such decision was not plainly erroneous or contrary to regulations must be set aside as being arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, and, to the extent the determination is based on certain findings of fact, as not being supported by substantial evidence. See 5 U.S.C. § 706(2)(A) and (E).
Accordingly,
IT IS ORDERED:
1. Plaintiff's motion for summary judgment (filing 25) is granted.
2. Defendants' motion for summary judgment (filing 29) is denied.
3. The final determination made by USDA's National Appeals Division ("NAD") on November 9, 2018, in NAD Case No. 2018W000170, is set aside and the case is remanded to NAD for further proceedings consistent with this opinion.
4. Judgment shall be entered by separate document.