Mittelstadt v. Perdue, 17-2447
| Decision Date | 15 January 2019 |
| Docket Number | No. 17-2447,17-2447 |
| Citation | 913 F.3d 626 |
| Parties | Mark MITTELSTADT, Plaintiff-Appellant, v. Sonny PERDUE, Secretary of Agriculture, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Frank Jablonski, Attorney, PROGRESSIVE LAW GROUP, Madison, WI, for Plaintiff - Appellant.
Richard Davis Humphrey, Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Madison, WI, for Defendant - Appellee.
Before Ripple, Sykes, and Scudder, Circuit Judges.
Mark Mittelstadt owned a tract of land in Richland County, Wisconsin, that was enrolled in the Conservation Reserve Program ("CRP"), administered by the United States Department of Agriculture ("USDA"), from 1987 to 2006. Participants in the CRP agree to remove environmentally sensitive land from agricultural production in return for annual rental payments from the USDA. In 2006, the agency denied Mr. Mittelstadt’s application to reenroll his land in the CRP. After exhausting his administrative appeals, he brought this action against the Secretary of the USDA ("the Secretary"). He asserted one claim under Section 702 of the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq., challenging the Secretary’s final decision denying reenrollment, and one common law claim for breach of contract. Mr. Mittelstadt moved for summary judgment in the district court, seeking an order directing reenrollment of his land in the CRP and awarding monetary relief for the alleged breach of contract. The district court denied his motion for summary judgment, affirmed the Secretary’s rulings, and entered judgment in favor of the Secretary on Mr. Mittelstadt’s APA and breach of contract claims. Mr. Mittelstadt now appeals the district court’s decision.
Under the regulations governing the CRP, the USDA has broad discretion to evaluate offers of enrollment in the program on a competitive basis by considering the environmental benefits of a producer’s land relative to its costs. Given the agency’s wide latitude, we conclude that the Farm Services Agency ("FSA") did not abuse its discretion when it denied reenrollment of Mr. Mittelstadt’s land. Moreover, because he never entered a new contract with the agency, there was no breach of contract. We therefore affirm the judgment of the district court.
In 1988, Mr. Mittelstadt purchased a tract of land in Richland County, Wisconsin ("Tract 9073"), that was subject to a CRP contract for the period 1987 through 1996. To comply with a revised conservation plan, Mr. Mittelstadt planted white pine, walnut, and red oak trees on the land in 1989. A CRP review later that year determined that Mr. Mittelstadt had completed all items in the conservation plan. Another CRP maintenance inspection in 1995 found no problems with the land. In 1996, the Commodity Credit Corporation ("CCC") extended the existing CRP contract for one year, to run from October 1, 1996, through September 30, 1997.
In 1997, Mr. Mittelstadt applied to reenroll his land in the program, stating on the application that Tract 9073 had a conservation practice of CP11, or "vegetative cover—trees—already established."1 Relying on the information in his application, the FSA assigned his land an environmental benefits index ("EBI") score of fifty points.2 This EBI score meant that the conservation practices on the land included "[p]ine established with less than 500 trees per acre with strips of native herbaceous and shrub plantings best suited for wildlife in the area, mixed hardwoods established, or longleaf pine."3 The FSA approved the new contract ("Contract 653"), to be effective from 1998 to 2007. A 2002 field status review of the property found no violations, noting, "Trees are growing and looking good."4
In 2006, Mr. Mittelstadt began the reenrollment process by paying for a spot-check inspection of Tract 9073. The inspection found no violations, noting "62.9 CP11 Tre[es] ... already est" and "good."5 The Natural Resources Conservation Service ("NRCS") sent Mr. Mittelstadt Contract 1710, a form CRP contract for the term October 1, 2007, to September 30, 2017, which Mr. Mittelstadt signed on July 26, 2006.6 On August 19, 2006, Mr. Mittelstadt signed a revised version of the contract, amended to reflect the correct acreage of Tract 9073.
In August 2006, the NRCS sent Mr. Mittelstadt a conservation plan for Tract 9073. The plan "identified the conservation practice as CP11, a ‘mixed stand (2 species) of hardwoods best suited for wildlife in the area.’ "7 Mr. Mittelstadt signed the plan on August 24, 2006, and, on September 1, 2006, the Richland County Conservation Department approved it. The NRCS signed off on the plan on September 5, 2006, as did the FSA on September 13, 2006.
On or around September 13, 2006, Jared Reuter, the County Executive Director of the Richland County FSA, signed the amended version of Contract 1710 on behalf of the CCC. Reuter’s signature was later whited out,8 however, and Mr. Mittelstadt never received a countersigned copy of Contract 1710. On September 14 and 16, 2006, Reuter conducted two maintenance inspections of Mr. Mittelstadt’s land. By letter dated September 21, 2006, the FSA County Committee notified Mr. Mittelstadt that the inspections revealed CRP violations on Tract 9073. Aerial photos taken in 2005 showed that three areas of the acreage had "suffered tree loss that the field reporter did not originally report during the re-enrollment compliance check."9 Reuter also found that very few red oak trees "were present from the original planting," and "[o]ne area with the most red oak present had less than 100 planted red oak trees present."10 The letter warned that "[v]iolations of this type can result in termination of the acreage involved" and that Mr. Mittelstadt’s "re-enrollment/extension offer cannot be approved until this issue is settled."11
At a hearing on October 25, 2006, the FSA County Committee discussed the issues raised by the inspections, and the next day, the committee sent Mr. Mittelstadt a letter terminating Contract 653. The committee explained that, in 1997, Mr. Mittelstadt’s acreage did not have "a ‘mixed hardwood stand of trees (more than one species of hardwood trees)’ because of the ‘failed population of red oak.’ "12 As a result, the FSA had assigned incorrectly an EBI score of fifty points upon reenrollment of the land in the CRP. Further, to "be eligible to be placed in the CRP," land must qualify under a covered category, such as "[a]creage enrolled in CRP during the final year of the CRP contract." 7 C.F.R. § 1410.6(a). Because Mr. Mittelstadt’s land was enrolled improperly under Contract 653 in 1997, the committee also found it was not eligible for reenrollment under Contract 1710 in 2006.
Mr. Mittelstadt appealed the County Committee’s decision to the Wisconsin State FSA Committee. By letter dated August 13, 2007, the State FSA Committee upheld the County Committee’s decision, finding that "[t]here are no areas of the contract that qualify as ‘mixed hardwoods.’ "13 The State Committee concluded that "the scoring of the contract offer in 1997 was incorrect," and that the land was "also ineligible for re-enrollment through the re-enrollment and extension process that was conducted in 2006 because the current contract was not in compliance."14
Mr. Mittelstadt sought review from the USDA’s National Appeals Division, where the parties stipulated that the sole issue on appeal was the propriety of the eligibility determination with respect to Contract 653 that had been made in 1997. The Hearing Officer upheld the State Committee’s decision, but, on further review, the Deputy Director reversed the decision. Because "the preponderance of the evidence show[ed] that the placement of trees on Appellant’s land satisfied the ‘mixed hardwoods established’ requirement for a CP11 practice and warranted the assigned EBI score of fifty points," the Deputy Director ordered the FSA to reinstate Contract 653.15 However, the Deputy Director found no error with respect to the FSA’s denial of reenrollment under Contract 1710. Given that Mr. Mittelstadt’s land "may not meet new standards such as a new definition of mixed hardwood stand or FSA otherwise may have a legitimate reason for not extending re-enrollment," the decision "was supported by applicable regulations and substantial evidence in the record."16
Mr. Mittelstadt sought reconsideration of the Deputy Director’s decision, which the FSA Director denied. The Director explained that "agency regulations at 7 C.F.R. § 1410.31(a) provide that acceptance or rejection of any offer of land by an owner for CRP participation shall be in the sole discretion of the CCC and offers may be rejected for any reason as determined to accomplish the goals of the program."17 According to the Director, "[w]hile not cited in the determination, this regulation was the basis" for the Deputy Director’s decision.18 Thus, "[o]nce FSA concluded that the property no longer had as high an EBI score as it once did, FSA could use that score to decide that funding a continuation of enrollment of the property was not as high a priority as funding other CRP contracts."19
Having exhausted his administrative appeals, Mr. Mittelstadt filed a complaint in the district court. He asserted a claim under the APA, contending that the decision denying his application for reenrollment under Contract 1710 was arbitrary, capricious, and unlawful. In the alternative, he set out a common law claim, asserting that the agency breached its obligations under Contract 1710. He later moved for summary judgment on both counts of the complaint.
The district court denied Mr. Mittelstadt’s motion for summary judgment and affirmed the agency’s final decision. First, the district court rejected Mr. Mittelstadt’s contention that the Deputy Director of the National Appeals Division had abused his discretion by upholding the denial of reenrollment under Contract 1710 despite the parties’ stipulation that...
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