Hedge v. Lyng

• Citation: 689 F. Supp. 898
• Decision Date: 03 March 1988
• Docket Number: Civ. No. 4-86-610.
• Parties: Sam HEDGE, Jim Stengrim, William Decker, Lowell Nelson, individually, on behalf of themselves and others similarly situated, Plaintiffs, v. Richard E. LYNG, Secretary of the United States Department of Agriculture; Vance Clark, Administrator of the Farmers Home Administration; Russ Bjorhud, Minnesota State Director of the Farmers Home Administration, Defendants.
• Court: U.S. District Court — District of Minnesota

689 F. Supp. 898

Sam HEDGE, Jim Stengrim, William Decker, Lowell Nelson, individually, on behalf of themselves and others similarly situated, Plaintiffs, v. Richard E. LYNG, Secretary of the United States Department of Agriculture; Vance Clark, Administrator of the Farmers Home Administration; Russ Bjorhud, Minnesota State Director of the Farmers Home Administration, Defendants.

Civ. No. 4-86-610.

United States District Court, D. Minnesota, Fourth Division.

March 3, 1988.

Juliet M. Tomkins, and James T. Massey, Farmers' Legal Action Group, St. Paul, Minn. for plaintiffs.

William Robert Irvin, Dept. of Justice, Civil Div., Washington, D.C. for defendants.

MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

Farmers Sam Hedge, Jim Stengrim, William Decker, and Lowell Nelson bring this action as representatives of a class of farmers. They seek injunctive and declaratory relief against the Secretary of Agriculture and the Administrator and Minnesota State Director of the Farmers Home Administration (FmHA). Plaintiffs challenge the legitimacy of regulations governing FmHA County Commissioner elections and 1986 elections held under those regulations. The second amended complaint alleges violations of the Food Security Act of 1985, the Administrative Procedures Act (APA), FmHA regulations, and of constitutional rights to equal protection and freedom of association. Jurisdiction is alleged pursuant to 28 U.S.C. §§ 1331, 1361, and 2201.

This matter has been before the court on previous occasions. A motion by defendants to dismiss was denied last June. See Memorandum Opinion and Order, 689 F.Supp. 877 (D.Minn.1987). In that same month the court also denied plaintiffs' motion for a preliminary injunction, permitted them to file a second amended complaint, certified a class action, and deferred ruling on plaintiffs' motion for summary judgment. See Memorandum Opinion and Order, 689 F.Supp. 884 (D.Minn.1987). Then in August the court ruled that plaintiffs might bring their claims on behalf of a class defined as:

All farmers in the State of Minnesota who are eligible to vote in FmHA county committee elections, but ineligible to run for county committee membership under 7 C.F.R. § 2054.1104(d) and (f).

Memorandum Opinion and Order, 689 F.Supp. 884 (D.Minn.1987).

The matters now under consideration are cross motions for summary judgment and plaintiffs' motion to amend the class. Defendants move for summary judgment on all claims. Plaintiffs initially sought summary judgment on all claims except portions of claims one and two which challenge the exclusion of "politically active persons" from candidacy for the FmHA county committees. Plaintiffs now assert that disputed facts may also preclude summary judgment on the "borrower exclusion" portions of claims one and two. Numerous memoranda have been submitted by each side and oral argument has been held.

I.

The background facts are substantially undisputed. FmHA is a federal agricultural and rural development agency. It is the lender of last resort for farmers and ranchers seeking to finance their operations or improve their property. 7 U.S.C. §§ 1921-2000. Wherever FmHA operates its farm loan programs, it must establish a three member "county committee." 7 U.S. C. § 1982(a) (1982). These committees have numerous functions, including determining eligibility for certain types of loans; making recommendations regarding "problem cases" and applications for compromise, adjustment or cancellation of debts; and advising the FmHA county supervisor on certain matters. 7 C.F.R. § 2054.1103(a). Certification by the county committee is a prerequisite for obtaining certain loans. See, e.g., 7 C.F.R. §§ 1941.33 and 1943.33 (1987).

Before 1985, the Secretary of Agriculture (the "Secretary") appointed all three members of each county committee. 7 U.S. C. § 1982 (amended 1985). Under the Food Security Act of 1985, Pub.L. 99-198, 99 Stat. 1354, however, two of the three county committee members are to be elected by the farming community:

In each county or area in which activities are carried out under this chapter, there shall be a county committee composed of three members. Two members shall be elected, from among their number, by farmers deriving the principal part of their income from farming who reside within the county or area, and one member, who shall reside within the county or area, shall be appointed by the Secretary for a term of three years. At the first election of county committee members under this subsection, one member shall be elected for a term of one year and one member shall be elected for a term of two years. Thereafter, elected members of the county committee shall be elected for a term of three years. The Secretary, in selecting the appointed member of the county committee, shall ensure that, to the greatest extent practicable, the committee is fairly representative of the farmers in the county or area. The Secretary may appoint an alternate for each member of the county committee. Appointed and alternate members of the county committee shall be removable by the Secretary for cause. The Secretary shall issue such regulations as are necessary relating to the election and appointment of members and alternate members of the county committees.

7 U.S.C. § 1982(a) (1985).

As required by statute, the Secretary, acting through FmHA, developed regulations. He did not, however, comply with the general APA procedure, which requires a notice of proposed rulemaking and a comment period before final regulations are published.¹ Rather, without notice, the Secretary published interim final regulations on May 22, 1986. The regulations were effective on May 28, 1986 and provided for a post hoc thirty day notice and comment period following publication.

Under these regulations, FmHA borrowers and their spouses and dependent children were not eligible to hold committee positions. 7 C.F.R. § 2054.1104(f) (1987). Political party officers or employees, or persons "active in the management or affairs of any political club organization, or committee" were also ineligible to be committee members. 7 C.F.R. § 2054.1104(d) (1987).

The interim final regulations also provided that the county committee elections must be held in June, § 2054.1105(a) (1987), and that the period for nominating by petition "should begin 45 days and end 20 days before election." § 2054.1111(b)(1) (1987). The opportunity to nominate had to be announced at least in local publications of general circulation. § 2054.1111(b)(2) (1987). Nominating petitions required three signatures, but nominees could sign their own petitions. § 2054.1111(b)(4) (1987). No one could sign more than one nominating petition. Id.

On May 28, 1986, the Administrator of FmHA (the "Administrator") issued a "Procedure Notice" adopting the May 22 regulations and setting a calendar for the 1986 county committee elections. The county supervisors were to publish notice of the nominating period by Thursday, June 5, 1986, but to accept petitions only until Tuesday, June 10, 1986. The June 1986 elections were held pursuant to the interim final rules. Minnesota elections were held for each of 57 county committees.

The plaintiffs' complaint challenges numerous aspects of these 1986 elections and the regulations under which they were conducted. Plaintiffs claim first that the exclusion of FmHA borrowers and their spouses and dependent children (the "borrower exclusion") from eligibility to serve on county committees violates the APA because it is arbitrary and capricious (Claim 1) and violates the farmers' and electorate's right to equal protection under the Constitution (Claim 2). Plaintiffs also claim that the exclusion of farmers involved in partisan political activities (the "politically active" exclusion) violates the APA (Claim 1), and violates the excluded farmers' and the electorate's right to equal protection (Claim 2) and free association (Claim 3). Plaintiffs further claim that the defendants violated their own 1986 interim final regulations by allowing only a five day nominating period (Claim 4), and violated the APA notice and comment requirements in the promulgation of the 1986 interim final regulations (Claim 5). Finally, plaintiffs allege that the FmHA violated its interim final regulations through procedural irregularities in the conduct of the 1986 elections (Claim 6).

After the initial memoranda had been filed for the cross motions for summary judgment, the FmHA replaced the interim final regulations with final regulations. 52 Fed.Reg. 30889-30898 (effective August 18, 1987) to be codified at 7 C.F.R. 2054.1101 et seq. (1988) (final regulations). The final regulations slightly revise the interim final regulations. Most notably, they provide that the "borrower" and "politically active" exclusions do not attach to mere candidates, so long as the candidate certifies that he or she will meet the qualifications for committee membership if elected. 52 Fed.Reg. 30893 (Aug. 18, 1987), (to be codified at 7 C.F.R. § 2054.1111(c)(4) (1988)).² The preliminary comments to the final regulations also attempt to explain the "politically active" exclusion: "County committee members are intermittent Federal employees and as such are covered by the provisions of the Hatch Act which circumscribe activities in partisan politics." 52 Fed.Reg. 30890 (Aug. 18, 1987). The final regulations also revise the "borrower" exclusion by barring borrowers, their spouses, or family members living in the same household from participating as committee members, 52 Fed.Reg. 30895 (Aug. 18, 1987) (to be codified at 7 C.F.R. § 2054.1104(g) (1988)).

The final rules were adopted after the Administrator considered comments received during the 30 day comment period provided. The final regulations state that the Administrator considered the comments, and modified the regulations in response to some. See Supplementary Information, 52 Fed.Reg. 30889-30893 (...