Production Marketing v. Commodity Credit Corp., No. 99-A-1453-N.

CourtUnited States District Courts. 11th Circuit. Middle District of Alabama
Writing for the CourtAlbritton
Citation108 F.Supp.2d 1294
Decision Date08 August 2000
Docket NumberNo. 99-A-1453-N.
PartiesPRODUCTION MARKETING, L.L.C., Plaintiff, v. COMMODITY CREDIT CORPORATION, Defendant.
108 F.Supp.2d 1294
PRODUCTION MARKETING, L.L.C., Plaintiff,
v.
COMMODITY CREDIT CORPORATION, Defendant.
No. 99-A-1453-N.
United States District Court, M.D. Alabama, Northern Division.
August 8, 2000.

Page 1295

George W. Walker, Montgomery, AL, for plaintiff.

Randolph Neeley, Montgomery, AL, Terry Jackson, Washington, DC, Thomas Millet, Washington, DC, defendant.

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MEMORANDUM OPINION

ALBRITTON, Chief Judge.


I. INTRODUCTION

This case comes before the court on a review of the Defendant Commodity Credit Corporation's ("CCC")1 denial of payments on five applications of the Plaintiff Production Marketing, L.L.C. ("Production Marketing") under the Upland Cotton User Marketing Certificate Program ("Upland Cotton Program" or "the Program").2 This court has jurisdiction over this case as provided by 7 U.S.C. § 6999: "A final determination of the [National Appeals] Division shall be reviewable and enforceable by any United States district court of competent jurisdiction in accordance with Chapter 7 of Title 5," (the Administrative Procedure Act, 5 U.S.C. §§ 701, et seq.). This case appears to be the only appeal of its kind in the nation.

The Federal Agricultural Improvement and Reform Act of 1996, as amended ("the Act"), created the Upland Cotton Program. See 7 U.S.C. § 7236(a). The Upland Cotton Program was offered through CCC but administered by the Kansas City Commodity Office ("KCCO") of the Farm Service Agency ("FSA"), a branch of the United States Department of Agriculture ("USDA").3 The Program provides for payments in the form of commodity certificates or cash to eligible exporters of upland cotton who have entered into an Upland Cotton Domestic User/Exporter Agreement with the CCC.

Having reviewed the administrative record, the court cannot say that the Agency's decision was arbitrary, capricious, or an abuse of discretion. Further, there is substantial evidence to support the Agency's decision. The court's analysis follows.

II. STANDARD OF REVIEW

A. Parties' Arguments

The parties disagree on the standard of review that should be applied by the court.

Production Marketing argues that the court should apply a de novo standard of review to the decision because the essential question raised on appeal is a matter of contract law. See P.M. Br. at 6 (relying on Burgin v. Office of Personnel Management, 120 F.3d 494, 497-98 (4th Cir.1997) (noting "the essential question is one of the interpretation of the contract's language, a question of law clearly within the competence of courts ... and which we review de novo....")). Furthermore, Production Marketing contends that if the court must make any factual determinations, then the court should apply the arbitrary and capricious standard of review. See id. at 7.

CCC argues that de novo review is inappropriate in this case. See CCC Br. at 13. CCC alleges that Production Marketing's reliance on Burgin is misplaced, as Burgin is a case brought not under the APA, but for benefits under a health insurance plan. See id. CCC contends that de novo review under the APA is "extremely limited," and is "appropriate only where there are inadequate factfinding proceedings in an adjudicatory proceeding, or where judicial proceedings

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are brought to enforce certain administrative actions." See id. (citing Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973) (citation omitted)). Further, CCC notes that "in cases where Congress has simply provided for review, without setting forth the standards to be used or the procedures to be followed, [the Court] has held that consideration is to be confined to the administrative record and that no de novo proceeding may be held." See id. at 14 (citing United States v. Carlo Bianchi and Co. Inc., 373 U.S. 709, 715, 83 S.Ct. 1409, 10 L.Ed.2d 652 (1963)). Finally, CCC argues that this appeal does not concern a pure question of law, but rather the "appeal concerns the agency's interpretation of its regulations and the provision of its Agreement with the plaintiff." See id. According to CCC, the appropriate standard of review for the agency's reason and policy choices is the highly deferential "arbitrary and capricious" standard. See id. at 11.4

B. Discussion5

It is unquestioned that this review of the Agency's action is brought pursuant to the Administrative Procedure Act ("APA"), 5 U.S.C. § 701, et seq. "Under the APA, agency actions should be reversed if they are found to be `arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law.'" Sierra Club v. Martin, 168 F.3d 1, 3 (11th Cir.1999) (reviewing Forest Service's approval of timber sales); 5 U.S.C. § 706(2)(A). The scope of review of agency action under the APA is relatively narrow, and generally is limited to the administrative record on which the decision was made. See Camp, 411 U.S. 138, 93 S.Ct. 1241, 36 L.Ed.2d 106.

The APA provides different standards of review depending on the type of decision the court is reviewing. According to the statute, a reviewing court shall:

hold unlawful and set aside agency action, findings, and conclusions found to be —

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;

(D) without observance of procedure required by law;

(E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of any agency hearing provided by statute; or

(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.

In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.

5 U.S.C. § 706(2). The parties dispute which subsection, A, E, or F, applies to the present case.

First, the court finds that de novo review is inappropriate in the present case.6

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The Supreme Court's decision in Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), makes it quite clear that de novo review is appropriate only where there are inadequate fact finding procedures in an adjudicatory proceeding, or when issues that were not before the agency are raised in a proceeding to enforce non-adjudicatory agency action. See id. at 415, 91 S.Ct. 814. Neither situation applies here.7

Second, the arbitrary and capricious standard8 is the default standard of review in most APA cases. Thus, in order to determine whether it applies, the court must first determine if the substantial evidence test does not apply.

The court turns to the text of § 706 to determine whether the substantial evidence test applies. According to § 706, the substantial evidence test applies in cases subject to § 556 and § 557 of Title 7. Turning to these sections, § 557 applies only when a hearing is required under § 556. See 7 U.S.C. § 557(a) ("This section applies, according to the provisions thereof, when a hearing is required to be conducted in accordance with section 556 of this title."). Section 556 discusses the conduct of agency hearings. This section "sets forth in particular who shall preside at hearings, their powers and duties, who has the burden of proof, and the types of evidence which may or may not be received." Taylor v. District Engineer, U.S. Army Corps of Engineers, 567 F.2d 1332, 1335 (5th Cir.1978).9 Section 556, however, only applies to "hearings required by section 553 or 554...." 7 U.S.C. § 556(a). Thus, the court must look to § 553 and § 554 to determine whether the substantial evidence test applies. Section 553 applies to rule making, which is not involved in the present case. Section 554 notes that "[t]his section applies ... in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing...." 7 U.S.C. § 554(a). Consequently, to determine if a § 556 hearing is required, the court must examine the statutes that are implicated in this case.

The present case revolves around 7 U.S.C. § 7236, entitled "Special marketing loan provisions for upland cotton." This statute makes no reference to any right to a hearing; however, the Program is subject to the Department of Agriculture's review statutes. See 7 U.S.C. §§ 6991-7000 (discussing the National Appeals Division of the Department of Agriculture). According to § 6994, a participant in a Department of Agriculture program has a right to a notice and opportunity for a hearing when the agency makes an adverse decision. See 7 U.S.C. § 6994. Section 6996 discusses appeals to the Division for a hearing and the time requirements for such. See 7 U.S.C. § 6996. Finally, § 6997 explains the general power of the Director and hearing officer over such an

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appeal and details the requirements for the hearing. See 7 U.S.C. § 6997. From these sections, the court has determined that the National Appeals Division does allow for a hearing under the Upland Cotton Program. Because it allows for this type of hearing, these proceedings are governed by § 554 and § 556 and thus, ultimately require that the court apply the substantial evidence test, under § 706(E).10 Accordingly, the court will apply the substantial evidence standard of review when considering the administrative record in this case.

C. Substantial Evidence Standard

As the Supreme Court has explained in the context of the APA, substantial evidence review is conducted on the record considered as a whole. See Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951); see also Greater Orlando Aviation Auth. v. F.A.A., 939 F.2d 954, 958 (11th Cir.1991). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate...

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