Lane v. U.S. Dept. of Agriculture

• Decision Date: 14 July 1997
• Docket Number: No. 96-3285,96-3285
• Citation: 120 F.3d 106
• Parties: Darvin R. LANE; Dwight Lane, Appellants, v. UNITED STATES DEPARTMENT OF AGRICULTURE; Daniel Glickman, Secretary of the U.S. Department of Agriculture; National Appeals Division of the USDA, also known as National Appeals Staff of the USDA; Norman G. Cooper, Director of the National Appeals Division of the U.S. Department of Agriculture; Office of General Counsel USDA; James Gilliand, General Counsel of the U.S. Department of Agriculture Consolidated Farm Service Agency; Grant Buntrock, acting Adminisrator of the Consolidated Farm Service Agency of the U.S. Department of Agriculture, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 106

120 F.3d 106

Darvin R. LANE; Dwight Lane, Appellants, v. UNITED STATES DEPARTMENT OF AGRICULTURE; Daniel Glickman,

Secretary of the U.S. Department of Agriculture; National

Appeals Division of the USDA, also known as National Appeals

Staff of the USDA; Norman G. Cooper, Director of the

National Appeals Division of the U.S. Department of

Agriculture; Office of General Counsel USDA; James

Gilliand, General Counsel of the U.S. Department of

Agriculture Consolidated Farm Service Agency; Grant

Buntrock, acting Adminisrator of the Consolidated Farm

Service Agency of the U.S. Department of Agriculture, Appellees.

No. 96-3285.

United States Court of Appeals,

Eighth Circuit.

Submitted March 10, 1997.

Decided July 14, 1997.

John T. Koppel, U.S. Department of Justice, Washington, DC, argued (William Kanter, on the brief), for appellants.

Duane G. Elness, Cavalier, ND, argued, for appellees.

Before WOLLMAN and BEAM, Circuit Judges, and LAUGHREY, ¹ District Judge.

LAUGHREY, District Judge.

This is an appeal from the District Court's order that Plaintiffs, Darvin and Dwight Lane ("Lanes"), are entitled to recover their attorney fees from the United States Department of Agriculture ("Agency") pursuant to the Equal Access to Justice Act ("EAJA"), 5 U.S.C. § 504. We affirm in part, reverse in part, and remand for further proceedings.

The Lanes are brothers who borrowed money through the Farmers Home Administration ("FmHA"). The FmHA denied them delinquent farmer loan servicing and the Lanes appealed to the National Appeals Division ("NAD"). The Lanes won the appeal and then sought their attorney fees under the EAJA, which provides that a United States agency which conducts an adversary adjudication must pay the fees and other expenses incurred by the prevailing party unless the agency's position is substantially justified or there are special circumstances that make such an award unjust. 5 U.S.C. § 504(a)(1). An "adversary adjudication" is defined in relevant part as an adjudication under § 554 of the Administrative Procedure Act ("APA"), so long as the government is represented by counsel or otherwise. 5 U.S.C. § 504(b)(1)(C). The APA § 554 applies to all adjudications "required by statute to be determined on the record after opportunity for an agency hearing." 5 U.S.C. § 554(a).

The NAD hearing officer denied the Lanes' EAJA applications, finding that NAD proceedings are not under § 554 of the APA and, therefore, the EAJA did not apply. The hearing officer did not consider the merits of the application for fees because he found the EAJA inapplicable. The Lanes sought judicial review of the agency ruling. The district court granted the Lanes' Motions for Summary Judgment, finding that NAD proceedings are under § 554 of the APA, the EAJA did apply and the Lanes were entitled to recover their fees and other expenses because the NAD hearing officer did not make a finding that the government's position was substantially justified. The district court's order granting summary judgment is reviewed de novo. Donaho v. FMC Corp., 74 F.3d 894, 897 (8th Cir.1996)(citing LeBus v. Northwestern Mut. Life Ins. Co., 55 F.3d 1374, 1376 (8th Cir.1995)).

We find that the EAJA is under § 554 of the APA because all three prerequisites for coverage have been satisfied. NAD proceedings are: 1) adjudications; 2)there is an opportunity for a hearing; and 3) the hearing must be on the record. We reject the agency's argument that the NAD statute is not under § 554 of the APA but rather is a separate, comprehensive statutory scheme which supersedes § 554 of the APA. The APA cannot be superseded by a subsequent statute "except to the extent that it does so expressly." 5 U.S.C. § 559. There is no express language in the NAD statute modifying or superseding the APA. Finally, on remand, the NAD hearing officer will be permitted to consider the merits of the Lanes' application for EAJA fees. The agency's failure to consider the merits of the application was because of its finding that the EAJA did not apply to NAD proceedings. The absence of a finding on the agency's justification for its position does not automatically entitle the Lanes to recover their attorney's fees.

A. APPLICABILITY OF THE EAJA TO NAD PROCEEDINGS

For the EAJA to be applicable to NAD proceedings, the Lanes must establish that a NAD hearing is an adjudication under § 554 of the APA "in which the position of the United States is represented by counsel or otherwise." 5 U.S.C. § 504(b)(1)(C)(i). An adjudication is under the APA if it is governed by § 554 of the APA. Ardestani v. I.N.S., 502 U.S. 129, 135, 112 S.Ct. 515, 519, 116 L.Ed.2d 496, 116 L.Ed.2d 496 (1991). See also, St. Louis Fuel & Supply Co., Inc. v. F.E.R.C., 890 F.2d 446, 450-51 (D.C.Cir.1989). The question, then, is whether NAD proceedings are governed by § 554 of the APA.

The APA § 554 states that it applies to all adjudications "required by statute to be determined on the record after opportunity for an agency hearing." 5 U.S.C. § 554(a). An adjudication is defined as an "agency process for the formulation of an order." 5 U.S.C. § 551(7). The review of agency determinations by NAD clearly meets the definition of an adjudication. There is a procedure for hearing facts in dispute, after which the hearing officer or Director must issue a determination. 7 U.S.C. § 6997. The NAD statute also meets the APA § 554 requirement that there be an opportunity for a hearing. Such a hearing is mandatory once requested by a participant. 7 U.S.C. § 6997(b). See, Smedberg Mach. & Tool, Inc. v. Donovan, 730 F.2d 1089, 1092 (7th Cir.1984).

The only remaining requirement is that NAD proceedings must be on the record. The NAD statute does not expressly require the hearing to be on the record; nonetheless, Congress' intent is clear. "Although Section 554 specifies that the governing statute must satisfy the 'on the record' requirement, those three magic words need not appear for a court to determine that formal hearings are required." City of West Chicago, Ill. v. U.S. Nuclear Regulatory Comm'n, 701 F.2d 632, 641 (7th Cir.1983). Congress need only "clearly indicate its intent to trigger the formal, on-the-record hearing provisions of the APA." Id. See also, Moore v. Madigan, 990 F.2d 375, 378 (8th Cir.1993), cert. denied, 510 U.S. 823, 114 S.Ct. 83, 126 L.Ed.2d 51 (1993).

The NAD statute provides that a participant who appeals an adverse decision shall be given an evidentiary hearing. 7 U.S.C. § 6996(a). The evidentiary hearing consists of a procedure in which the hearing officer has the power to administer oaths and to subpoena witnesses and evidence. 7 U.S.C. § 6997(a)(2). The hearing officer and outside parties are prohibited from ex parte communications. 7 U.S.C. § 6997(a)(2)(A)(B). The hearing officer is not bound by prior factual findings. 7 U.S.C. § 6997(c)(2). The appellant carries the burden of proving that the agency's decision was erroneous, 7 U.S.C. § 6997(c)(4), and the hearing officer must leave the record open for additional information in response to new facts and evidence presented at the hearing. 7 U.S.C. § 6997(c)(3). The appellant or the agency may request that the Director review the hearing officer's determination. 7 U.S.C. § 6998(a). The Director's review is based on the case record (all material related to the adverse decision), 7 U.S.C. § 6991(4), the record from the evidentiary hearing under 7 U.S.C. § 6997 and any other arguments or evidence the Director chooses to accept. 7 U.S.C. § 6998(b). Judicial review is available upon issuance of a final determination. 7 U.S.C. § 6999.

The repeated references to the record in the NAD statute and its provision for trial-type procedures make it clear that Congress intended for NAD proceedings to be governed by § 554 of the APA. Furthermore, the government admits that NAD proceedings are "on the record," stating, "We do not dispute that ... 7 U.S.C. §§ 6996-6998 required the hearing officer's decisions to be on the record." (Gov't. Br. at 12).

The agency argues that even if NAD proceedings appear to meet the coverage requirements of the APA, it is not "under" the APA but rather supersedes it. The agency claims that the NAD statutes are a separate, comprehensive statutory scheme that contain express procedures for conducting hearings. In essence, the agency is arguing that the NAD statutes have amended by implication the provision that makes § 554 of the APA applicable to all adjudications required by statute to be determined on the record after an opportunity for an agency hearing.

The primary flaw in the agency's argument is that the APA specifically states that a "subsequent statute may not be held to supersede or modify this subchapter ... except to the extent that it does so expressly." 5 U.S.C. § 559. There is nothing in the NAD statutes which expressly states that the APA is inapplicable. By adopting § 559, Congress made it clear that the APA would apply unless there was some expression by Congress that the APA was being superseded. This is a logical approach given the variety of issues and forums covered by the APA and the possibility that Congress would inadvertently adopt a provision that conflicted with the APA or repeat a provision contained in the APA.

We find unpersuasive the agency's reliance on Marcello v. Bonds, 349 U.S. 302, 75 S.Ct. 757, 99 L.Ed. 1107 (1955), in which the Supreme Court held that the APA did not apply to Immigration and Naturalization Service deportation hearings. Congress, in the Immigration and Nationality Act ("INA"), had elaborately adapted the APA to the deportation process, creating a complete and distinct set of procedures. Marcello, 349 U.S. at 310, 75 S.Ct. at 761. The NAD statutes contain some variations on the APA but those variations deal primarily with subjects not contained in the APA. Nor are there direct conflicts between the APA and the NAD statutes. Compare 5 U.S.C. §§ 554-557 with 7 U.S.C. §§...