Matzke v. Block

• Citation: 564 F. Supp. 1157
• Decision Date: 06 May 1983
• Docket Number: No. 82-1075.,82-1075.
• Parties: Alvin MATZKE, et al., Plaintiffs, v. John BLOCK, Individually and in his capacity as Secretary of the United States Department of Agriculture; et al., Defendants.
• Court: U.S. District Court — District of Kansas

564 F. Supp. 1157

Alvin MATZKE, et al., Plaintiffs, v. John BLOCK, Individually and in his capacity as Secretary of the United States Department of Agriculture; et al., Defendants.

No. 82-1075.

United States District Court, D. Kansas.

May 6, 1983.

COPYRIGHT MATERIAL OMITTED

Donald B. Clark, Wichita, Kan., Thomas D. Kershaw, Jr., American Constitutional Rights Ass'n, Klamath Falls, Or., for plaintiffs.

Jim J. Marquez, U.S. Atty., Jackie Williams, Asst. U.S. Atty., Wichita, Kan., Dick Sherbondy, U.S. Dept. of Ag., Office of Gen. Counsel, Kansas City, Mo., for defendants.

MEMORANDUM AND ORDER

CROW, District Judge.

Plaintiffs are seeking injunctive relief and declaratory relief for themselves and other similarly situated Kansas farmers against John Block, Secretary of Agriculture and the Administrator and other subordinate officers of the Farmers Home Administration (FmHA), an agency of the United States. The class of plaintiffs consists of

all persons in Kansas who have farm operating, ownership, or emergency loans financed under the Consolidated Farm and Rural Development Act, P.L. 87-128 whose loans were, are or will be held by the Farmers Home Administration of the United States Department of Agriculture, and whose farm loans have been foreclosed, are in foreclosure, and who shall be foreclosed upon.

Matzke v. Block, No. 82-1075, unpublished order (D.Kan. Jan. 14, 1983). The court's jurisdiction is based upon 28 U.S.C. § 1331 or § 1361.

Plaintiffs allege the Secretary and the FmHA accelerated delinquent loan accounts and made demand for payment without affording due process of law under the Fifth Amendment. Plaintiffs further allege that the Secretary illegally refuses to provide administrative due process hearings to delinquent borrowers contrary to the express intention of Congress under the Agricultural Credit Act of 1978, Pub.L. No. 95-334, § 122, 92 Stat. 427 (codified at 7 U.S.C. § 1981a) hereinafter referred to as section 1981a. Section 1981a amended the authority of the Secretary of Agriculture under the Consolidated Farm and Rural Development Act, Pub.L. No. 87-128, 75 Stat. 307 (1961) (codified as amended at 7 U.S.C. §§ 1921 et seq.) Section 1981a provides

in addition to any other authority that the Secretary may have to defer principal and interest and forego foreclosure, the Secretary may permit, at the request of the borrower, the deferral of principal and interest on any outstanding loan made, insured, or held by the Secretary under this chapter, or under the provisions of any other law administered by the Farmers Home Administration, and may forego foreclosure of any such loan, for such period as the Secretary deems necessary upon a showing by the borrower that due to circumstances beyond the borrowers control, the borrower is temporarily unable to continue making payments of such principal and interest when due without unduly impairing the standard of living of the borrower. The Secretary may permit interest that accrues during the deferral period on any loan deferred under this section to bear no interest during or after such period: Provided, that if the security instrument securing such loan is foreclosed such interest as is included in the purchase price at such foreclosure shall become part of the principal and draw interest from the date of foreclosure at the rate prescribed by law.

7 U.S.C. § 1981a.

The government's position is that the statute in question merely clarifies the Secretary's authority to grant deferrals of principal and interest without requiring the implementation of a loan moratorium program. Further, the government contends that section 1981a should be construed so as to leave the Secretary free to choose whether to implement a program under the statute.

The case is presented for decision on countermotions for summary judgment. The parties previously introduced testimony and exhibits in a motion for preliminary injunction heard on April 30, 1982, see Matzke v. Block, 542 F.Supp. 1107 (D.Kan. 1982) hereinafter referred to as Matzke I, and in a motion for class certification heard on November 8, 1982, see Matzke v. Block, No. 82-1075, unpublished order (D.Kan. Jan. 14, 1983). Viewing the evidence in this case in the light most favorable to the government, the court finds that there are no issues of material fact in dispute, and that plaintiffs are entitled to summary judgment as a matter of law. Accordingly, plaintiffs' motion for summary judgment is sustained and defendant's motion for summary judgment is overruled. The findings which support this decision are fully set out below.

In the interests of brevity, the court will dispense with a description of the mission of the Department of Agriculture and the FmHA in the administration of farm credit programs. The parties are familiar with the record and the interested reader is referred to descriptions contained in Curry v. Block, 541 F.Supp. 506, 509-14 (S.D.Ga. 1982); Matzke I, supra at 1111-12 and J. Juergensmeyer and J. Wadley, 1 Agricultural Law § 14-3 (1982).

This is a class action alleging refusal of the Secretary of Agriculture (Secretary) to implement a loan moratorium program pursuant to section 1981a. Defendant contends that the statute vests discretion in the Secretary to determine what loan servicing options should be extended to delinquent FmHA-borrowers. Defendant's Memorandum Brief in Support of Motion for Summary Judgment, Dk. # 52 filed February 15, 1983, at pp. 1-5. Defendant further contends that the administration of farmer program loans requires close supervision by county supervisors who apply their expertise to individual circumstances in order to determine whether deferral is warranted under existing authority. Defendant's Memorandum Brief in Support of Motion for Summary Judgment, Dk. # 52, filed February 15, 1983, at p. 13. Defendant also argues that informal decision-making at the county and state level of the agency is essential to the operation of the program because loans are based on farm plans developed at the local level, loans often involve complex security agreements and frequent visits are made by county supervisors to program borrowers. Id., See also Defendant's Response to Plaintiffs' Motion for Summary Judgment, Dk. # 53, filed March 7, 1983, at p. 4.

Defendant's arguments are misplaced. The court previously recognized that the decision whether to defer principal and interest pursuant to section 1981a is discretionary. Matzke I, 542 F.Supp. at 1114. The essence of the government's argument is that the Secretary's discretionary authority is non-reviewable. See Saferstein, Non-reviewability: A Functional Analysis of `Committed to Agency Discretion,' 82 Harv.L.Rev. 367, 380 (1968). However, the crux of plaintiffs' complaint is that the Secretary has a clear statutory duty to afford administrative due process consisting of notice and an opportunity to be heard prior to exercising his discretion. The issue of the administrative procedures used by the agency is separable from the issue of what review, if any, is available for the ultimate decision whether to grant a deferral. Id. at 395. That issue is not before the court in this litigation. Agency expertise does not weigh in favor of non-reviewability simply because the court is being asked to compare the performance of the agency with the statutory and constitutional framework to determine whether the actions complained of are indeed within the scope of discretion which Congress granted to the agency. Informal decision-making is not a sufficient reason, by itself, to preclude review.

The court has not been directed to any statute which precludes review of the agency decision, nor is the statute involved drawn in such broad terms that there is no law to apply. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410, 416, 91 S.Ct. 814, 820, 823, 28 L.Ed.2d 136, 150 (1971). Neither do we interpret the permissive language of section 1981a as an express prohibition of review. See Barlow v. Collins, 397 U.S. 159, 165-66, 90 S.Ct. 832, 836-37, 25 L.Ed.2d 192, 198-99 (1970). Therefore, the court will look to the Administrative Procedure Act (APA) for guidance. Diamond Ring Ranch, Inc. v. Morton, 531 F.2d 1397, 1406 (10th Cir.1976).

The APA provides that "a person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof." 5 U.S.C. § 702. The court's scope of review is governed by 5 U.S.C. § 706(1), which provides

to the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall

(1) compel agency action unlawfully withheld or unreasonably delayed ....

The appropriate review of agency inaction under section 706(1) of the APA consists of analysis of either of two issues: (1) whether the agency violated its statutory mandate by failing to act, or (2) whether the agency's delay in acting is unreasonable. Environmental Defense Fund v. Costle, 657 F.2d 275, 283 (D.C.Cir.1981). See also Health Systems Agency of Oklahoma v. Norman, 589 F.2d 486, 492 (10th Cir.1978). Since there is no allegation of unreasonable delay, the court will consider whether the agency violated a statutory mandate by failing to act.

The inquiry which the court must make under section 706(1) of the APA is the same as for an action in mandamus under 28 U.S.C. § 1361. See Carpet, Linoleum & Resilient Tile Layers, Local Union No. 419 v. Brown, 656 F.2d 564, 567 (10th Cir.1981). The court must study the statute and relevant legislative history to determine whether statutory standards exist delimiting the scope or manner in which agency discretion is to be exercised. Id. at 566. If the court concludes that the defendant officials...