Moore v. Madigan

• Decision Date: 05 May 1993
• Docket Number: No. 92-2272,92-2272
• Citation: 990 F.2d 375
• Parties: Jackie MOORE, individually and as the operator of Joplin Regional Stockyards; Joplin Regional Stockyards, Inc., a Missouri Corporation, Plaintiffs-Appellants, v. Edward MADIGAN, Secretary of the United States Department of Agriculture, and the United States, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 375

990 F.2d 375

Jackie MOORE, individually and as the operator of Joplin

Regional Stockyards; Joplin Regional Stockyards, Inc., a Missouri Corporation, Plaintiffs-Appellants, v. Edward MADIGAN, Secretary of the United States Department of

Agriculture, and the United States, Defendants-Appellees.

No. 92-2272.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 13, 1993.

Decided April 1, 1993.

Rehearing Denied May 5, 1993.

Gerard D. Eftink (argued), Kansas City, MO, for plaintiffs-appellants.

Alleen S. Castellani (argued), Kansas City, MO, for defendants-appellees.

Before MORRIS SHEPPARD ARNOLD, Circuit Judge, FLOYD R. GIBSON and REAVLEY, ^* Senior Circuit Judges.

REAVLEY, Circuit Judge (sitting by designation).

The Animal and Plant Health Inspection Service of the United States Department of Agriculture (USDA) suspended the "specifically-approved stockyard status" (SASS) of Joplin Regional Stockyards, Inc. (JRS). USDA reached its decision after conducting an informal hearing at which a hearing officer found that various people repeatedly violated USDA's brucellosis regulations on JRS's premises. JRS and its legally-responsible operator, Jackie Moore, sued USDA for declaratory and injunctive relief. On cross-motions for summary judgment, the district court held that USDA's governing statute and regulations permitted the informal hearing procedure that USDA adopted for this case and that USDA accorded Moore a pre-sanction opportunity to correct violations. But the court also held that the facts of this case did not justify the penalty selected by USDA, and accordingly reduced JRS's suspension period from five years to six months. Only Moore appeals. We affirm.

I. BACKGROUND

Moore and his family formed JRS in 1986, and JRS purchased Missouri real estate that had long been used as a stockyard (the stockyard). JRS earns money for each animal traded at the stockyard. Four livestock commission companies broker sales at the stockyard for additional fees, but only Joplin Livestock Commission Company (JLCC) is owned by Moore and his family. The three other companies lease space from JRS.

JRS can facilitate trade in Missouri cattle without federal permission. But to attract trade in out-of-state animals, JRS must secure SASS from USDA. See 9 C.F.R. §§ 78.5, 78.9-.12. USDA grants SASS to stockyards that agree to participate in USDA's program to eradicate brucellosis. Brucellosis is an infectious disease that inhibits both procreation and milk production in cattle. USDA classifies states according to the incidence of brucellosis that USDA detects in each state. This case concerns activities during 1988 and 1989, when USDA classified Missouri as an "A" state and Oklahoma as a "B" state.

To combat brucellosis, USDA requires stockyard operators to 1) maintain sanitary conditions and 2) identify and separate cattle according to the brucellosis classification of the state from which the cattle arrive for sale. ¹ USDA only grants SASS to stockyards that designate an individual as "operator" to be legally responsible for the fulfillment of these requirements. See id. § 78.44. Jackie Moore executed a SASS agreement (the Agreement) with USDA in February 1987.

On October 13, 1988, Dr. Charles Dake, a district veterinarian for the Missouri Department of Agriculture who USDA charged with inspecting stockyards for compliance with USDA regulations, found that the stockyard did not meet USDA sanitation requirements and that "numerous Oklahoma [class B] cattle shipments have been run through this market as class A animals." Dake warned in his report that "this is a serious problem which is a direct challenge to Missouri's class A status," and delivered this report to Raymond McDowell, a JRS manager. On at least three occasions before this adverse inspection report, JLCC sold class B Oklahoma cattle as class A Missouri animals. Dr. Stephen Short, who tested animals for brucellosis at the stockyards, testified that class A animals usually bring a higher price than class B animals.

On May 18, 1989, USDA inspector Walter Waddell toured the stockyards and again found sanitation and identification violations. In September 1989, USDA sent Moore a letter alleging the sanitation and identification infractions as breaches of the Agreement and proposing to withdraw the stockyard's SASS. Moore denied the allegations and requested a hearing. USDA provided an informal hearing, which Moore challenged as inadequate under USDA regulations.

After considering testimony and exhibits from Moore and USDA, a USDA hearing officer found that Moore breached the Agreement because 1) the stockyards did not meet USDA's sanitation standards and 2) on ten occasions (eight before October 13, 1988 and two more before May 18, 1989), class B cattle were sold as class A animals at the stockyard. A USDA deputy administrator recited these findings and ordered that SASS be removed from JRS and affiliated individuals and companies for five years. Moore and JRS exercised their statutory right to sue USDA for declaratory and injunctive relief from this order, see 5 U.S.C. §§ 702-03, and USDA stayed its order pending outcome of this litigation.

On cross-motions for summary judgment, the district court held, inter alia, that 1) the informal hearing granted Moore by USDA did not contravene USDA's governing statute or regulations and 2) USDA accorded Moore any required opportunity to correct infractions at the stockyard before suffering a SASS suspension. Moore v. Madigan, 789 F.Supp. 1479, 1485 (W.D.Mo.1992). While the court upheld USDA's decision that Moore violated the Agreement, the court found that USDA's penalty was "unduly harsh" and reduced the SASS suspension from five years to six months. Id. at 1488.

II. ANALYSIS

Only Moore appeals, so we do not reach the propriety of the district court's penalty reduction. Only some of the many issues that Moore raises on appeal merit explicit discussion.

A. FACT-FINDING PROCEDURE

USDA advised Moore in a September 1989 letter that it planned to withdraw SASS from JRS, and that Moore could request an informal hearing if he disputed the factual basis for the withdrawal. With USDA's letter, Moore received rules that USDA adopted to govern the informal hearing procedure. Moore claims that he was entitled to a formal hearing before an administrative law judge, with a panoply of discovery and subpoena rights.

First, Moore argues that Congress accorded him a formal hearing. But when Congress mandates a formal hearing before an agency in a statute, it either employs the term of art "on the record" or it indicates its intent to trigger the formal hearing procedures of the Administrative Procedure Act (APA), 5 U.S.C. § 551 et seq. See City of West Chicago, Ill. v. United States Nuclear Regulatory Comm'n, 701 F.2d 632, 641 (7th Cir.1983); Webster Groves Trust Co. v. Saxon, 370 F.2d 381, 384-386 (8th Cir.1966). USDA claims authority to establish its brucellosis eradication program under 21 U.S.C. § 111, which permits USDA to "make such regulations and take such measures as [the Secretary of Agriculture] may deem proper to prevent the introduction or dissemination of the contagion of any ... communicable disease of animals...." No statute refers to SASS or agreements with stockyard operators, let alone withdrawal proceedings; these are creatures of regulations that USDA promulgated pursuant to section 111. There being no evidence of congressional intent to provide a formal hearing for the withdrawal of SASS, the district court correctly dismissed this argument. Moore, 789 F.Supp. at 1485.

Next, Moore claims that USDA regulations require a formal hearing before SASS withdrawal. USDA cited the following regulation to Moore in advising him of his right to an informal hearing:

Before [USDA] withdraws approval from a specifically approved stockyard based upon a failure to maintain or operate the stockyard in accordance with the standards specified in the agreement, the operator of the stockyard will be informed in writing of the reasons for the proposed withdrawal of approval and, upon request, shall be afforded an opportunity for a hearing with respect to the merits or validity of the action to withdraw approval if there is a dispute regarding any material fact, in accordance with rules of practice which shall be adopted for the proceeding.

9 C.F.R. § 78.44(b)(2) (emphasis added). USDA interprets this regulation to permit latitude in its selection of hearing procedure for SASS withdrawal. Moore argues that section 78.44(b)(2) must be read in conjunction with 7 C.F.R. § 1.131, where USDA guarantees a formal hearing under specific circumstances. ² Proceedings to withdraw SASS are conspicuously absent from the detailed list in section 1.131. From this fact, we know that USDA possesses a convenient means to guarantee a formal hearing, and USDA has not done so for SASS-withdrawal proceedings. In "an administrative proceeding as to which Congress has not explicitly required any given type of procedure[, an agency may interpret its own regulations] within very broad limits." City of St. Louis v. Department of Transportation, 936 F.2d 1528, 1534-35 n. 1 (8th Cir.1991). Given our understanding of section 1.131, USDA's interpretation of section 78.44 is logical and reasonable. We thus agree with the district court that section 78.44 permits the informal hearing accorded Moore.

Finally, Moore cites Air Transport Ass'n of America v. Department of Transportation, 900 F.2d 369 (D.C.Cir.1990), vacated on other grounds, 498 U.S. 1077, 111 S.Ct. 944, 112 L.Ed.2d 1033 (1991), in support of his argument that USDA violated 5 U.S.C § 553 by adopting informal hearing rules for his SASS withdrawal without first providing notice and an opportunity for public comment on those rules. But the Air Transport court took "no position on whether parties whose cases have reached a final determination under [procedural rules adopted without...