Epp v. Natural Res. Conservation Serv.

• Decision Date: 22 November 2019
• Docket Number: 4:18CV3166
• Citation: 425 F.Supp.3d 1142
• Parties: 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.
• Court: U.S. District Court — District of Nebraska

425 F.Supp.3d 1142

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.

4:18CV3166

United States District Court, D. Nebraska.

Signed November 22, 2019

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").¹ 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.").

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")² 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.

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...