II. Procedural Claims
This Court has jurisdiction under 28 U.S.C. § 1331 to review the Secretary's final decision. See Esch v. Yeutter, 876 F.2d 976, 985 (D.C. Cir. 1989); Vandervelde v. Yeutter, 774 F. Supp. 645, 648-649 (D.D.C. 1991).
Summary judgment pursuant to Federal Rule of Civil Procedure 56 is appropriate when there are no genuine issues of material fact. Summary judgment is especially appropriate in cases such as this where the Court is called on to review a decision of an administrative agency. In these cases, which are numerous, what is often at issue are not the facts, but whether the agency erred in applying the law. See, e.g., 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2733 at 366-67 (2d ed. 1983). The standards to be applied are well settled. Decisions of administrative agencies are subject to review in federal court under a standard that examines whether the decision was arbitrary and capricious. See Motor Vehicles Manufacturers Association v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43 (1983); Administrative Procedure Act, 5 U.S.C. § 706(2). "The scope of review under the 'arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency." 463 U.S. at 43. A de novo review of the facts underlying the decision is not appropriate although the court must "'consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.'" Motor Vehicles, 463 U.S. at 43 (quoting Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 286, 42 L. Ed. 2d 447 , 95 S. Ct. 438 (1974)); Cooperative Services, Inc. v. United States Department of Housing & Urban Development, 562 F.2d 1292, 1295 (D.C. Cir. 1977). The agency's interpretation of its own regulation is subject to a great deal of deference. See United States v. Larionoff, 431 U.S. 864, 872, 53 L. Ed. 2d 48 , 97 S. Ct. 2150 (1977); Transcanada Pipelines Ltd. v. Federal Energy Regulatory Comm'n, 878 F.2d 401, 411 (D.C. Cir. 1989); Stuart-James Co. v. Securities & Exchange Commission, 857 F.2d 796, 800 (D.C. Cir. 1988), cert. denied, 490 U.S. 1098 (1989).
It is also well established that an agency must follow its own regulations. The ASCS decisions in this and other cases are subject to a three-tier review process, with a hearing and a de novo determination at each level. 7 C.F.R. Part 780 sets out the appeal process for programs administered by ASCS including the DTP. See 7 C.F.R. § 1430.466. A participant can request that the County Committee reconsider its initial determination and obtain an informal hearing of the County Committee's initial determination if the participant believes that the determination was not made in accord with the applicable regulations or that all of the facts were not considered. Upon reconsideration, the participant can obtain a review of the County Committee's determination by filing a written appeal with the State Committee and can ask for a reconsideration of the State Committee's decision. If still unsatisfied, a participant can seek review from DASCO. The hearing shall be conducted in the manner determined by CCC or ASCS "to most likely obtain the facts relevant to the matter at issue." 7 C.F.R. § 780.9(b). All documents are to be made available to the participant upon request. 7 C.F.R. § 780.9(c). A "clear, concise statement of the facts as asserted by the participant and material facts found by the reviewing authority" is to be prepared before the hearing by the reviewing authority. Id. at § 780.9(d). The participant must be notified in writing of the agency's determination and such notification "shall clearly set forth the basis for the determination." Id. at § 780.17(a). With these principles in mind, we turn to the case before us.
It is clear that the agency failed miserably in following its procedural appeal requirements. Specifically, the agency failed to employ the means "most likely to obtain the facts relevant to the matter at issue". DASCO indicated that the facts could not "satisfactorily be resolved without a formal investigation by the USDA Office of Inspector General"
and yet the agency did not request one, even after plaintiff himself requested it. Further, DASCO neither prepared a formal statement of issues, nor a written record containing a clear, concise statement of material facts as required by 7 C.F.R. 780.9(d).
Although plaintiff and the County and State Committees appear to believe that DASCO had approved plaintiff's use of replacement cattle in his base and the only question was how many cattle were actually purchased, see plaintiff Lucio's Summary Judgment Ex. C, DASCO now seems to be arguing that there was no such agreement and the allowance of 200 cattle was purely discretionary. DASCO contends that whether or not plaintiff actually purchased the other 64 is immaterial. See, e.g., Memorandum of Points and Authorities in Opposition to Plaintiff's Motion for Partial Summary Judgment and in Support of Defendants' Cross Motion for Summary Judgment at 15. The lack of a formal statement of facts and issues hinders the Court's review process and illustrates why such a procedural requirement is necessary.
After the OIG and the County Committee determined that plaintiff had actually purchased 264 heifers, and not 200, DASCO refused to acknowledge those findings with anything more than a comment that the report did not provide any significant new information. Plaintiff was never allowed to remedy his forms to indicate the correct number of cows that he purchased. DASCO never interviewed any potential witnesses. The agency never responded to plaintiff's clarifications of the "inconsistencies" or "questions" that the agency indicated had been raised. DASCO even intimated that plaintiff had acted fraudulently and threatened a formal investigation, but when the investigation cleared plaintiff, the agency refused to respond.
Defendants argue that the matter is unreviewable, because the Secretary's decision to grant plaintiff partial relief by giving him credit for 200 cows purchased after January 1, 1986 was equitable in nature, and was committed to agency discretion by law. This argument cannot stand. Although the contours of the program were left to the agency to determine, it cannot be that the agency was given unfettered discretion to arbitrarily choose an amount of compensation after the contract was signed. This is not what discretionary means. An equitable decision must be grounded on a reasonable basis.
As our Court of Appeals noted in a slightly different posture
in Esch v. Yeutter, "the validity of the procedures utilized in reaching a determination, including the consistency of those procedures with agency regulations, are open to judicial exploration." 876 F.2d 976, 991 (D.C. Cir. 1989) (citations omitted). DASCO is not free to grant any relief it wants based purely on the whim and caprice of the agent. If it decides to permit the repurchase of cows due to the farmer's misunderstanding of the regulation, it must then take into account the cows that were actually repurchased.
Defendants contend that the decision of "Von Garlem and Bedenbaugh was completely discretionary." See Defendants' Motion to Dismiss at 15. We disagree. The agency is authorized pursuant to 7 C.F.R. § 1430.467 and 7 C.F.R. § 790.2 to grant permissive relief to provide fair and equitable treatment. The agency is also permitted to develop informal policies to respond to unexpected aspects of the program administration. However, this does not mean that the agency is free to disregard its appeal and review process or to dispense money at whim. The regulations provide a series of procedural protections to assure that the decisions made are founded on fact and that the farmers have an adequate means to present and to protect their interests. Although the agency did not have to permit Lucio to purchase different cows, once it did,
it was bound to be consistent and compensate him for all of the cows which plaintiff purchased. The agency suggested that plaintiff was trying to defraud the government and that only an investigation by the OIG would clarify "the truth"; when plaintiff requested such an investigation, the agency chose to disregard his vindication. The agency here was slapdash in its review of plaintiff's claims and disregarded findings by the OIG. It is not clear that there ever was a serious examination of plaintiff's claims nor a statement of facts. Defendants cannot now hide behind an argument that any relief was completely discretionary.
In this case, the agency disregarded its own appeal regulations, and after two investigations cleared plaintiff of any wrongdoing and found that he had in fact repurchased 264 heifers, the agency continued to maintain -- against all evidence -- that he only repurchased 200 heifers. Accordingly, we have no problem in finding that the agency's determination is arbitrary and capricious and unsupported by the evidence. Therefore we remand to the agency for reconsideration in light of the results of the OIG investigation.
III. Constitutional Arguments
Plaintiff also claims that defendants breached his Fifth Amendment rights by taking property from citizens without adequate compensation and due process of law. We do not believe that the obvious flaws in the administrative review process which we have previously pointed out rise to the level of a constitutional violation.
In any case, it is well settled that a court should avoid addressing constitutional issues if there is some other way of resolving the dispute. In this case, since we have found that the agency's procedural deficiencies have produced an arbitrary and capricious result, we are satisfied that plaintiff's complaint about lack of due process should and will be adequately redressed by the reconsideration of the issue by the agency.
Accordingly, we grant defendant's motion for summary judgment in this regard.
IV. Motion to Dismiss Claims against Individual Defendants
Defendants have moved to dismiss the claims against Earle Bedenbaugh and Thomas Von Garlem in their individual capacities. Because we find that plaintiff failed to meet the heightened pleading standard and because these defendants have a qualified immunity from suit, we grant defendants' motion.
Qualified immunity from suit ordinarily attaches to government officials performing discretionary functions. Siegert v. Gilley, 895 F.2d 797, 801 (D.C. Cir. 1990), aff'd 114 L. Ed. 2d 277, 111 S. Ct. 1789 (1991). If they are immunized from suit, they have a "positive right" not to be forced to trial. Siegert, 895 F.2d at 800; Mitchell v. Forsyth, 472 U.S. 511, 526-27, 86 L. Ed. 2d 411 , 105 S. Ct. 2806 (1985). To overcome the immunity, a plaintiff must show "that the defendant violated 'clearly established statutory or constitutional rights of which a reasonable person would have known'", Siegert, 895 F.2d at 801 (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, 73 L. Ed. 2d 396 , 102 S. Ct. 2727 (1982)). "The contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right." Anderson v. Creighton, 483 U.S. 635, 640, 97 L. Ed. 2d 523 , 107 S. Ct. 3034 (1987); Harlow v. Fitzgerald, 457 U.S. 800, 818, 73 L. Ed. 2d 396 , 102 S. Ct. 2727 (1982). Furthermore, the plaintiff must plead that no reasonable official in the position of the defendants could have believed their actions to be lawful, in light of clearly established law. Siegert, 895 F.2d at 802; Anderson, 483 U.S. at 641. Plaintiff has failed to sufficiently plead in order to survive a qualified immunity challenge.
Plaintiff has not shown that the individual defendants violated any clearly established right. Lucio contends that once the OIG found that he had actually repurchased 264 cattle and not just 200, the refusal of Bedenbaugh and Von Garlem to compensate plaintiff for those 64 cattle amounted to a constitutional violation. But there is no statute or regulation which entitles farmers to purchase different cattle to substitute cattle mistakenly sold after January 1, 1986 in the DTP program. Plaintiff has not shown that no reasonable official in defendants' position could have believed that the decision to permit plaintiff to repurchase 200 different cattle and not 264 was lawful. Nor are we aware of any statute or regulation that requires DASCO to accept the findings of the OIG where relevant. Accordingly, since the officials hold a qualified immunity in their individual capacity from this type of suit, we grant defendants' motion to dismiss them from the case.
We remand to the agency for a new determination in accord with this opinion. The agency agreed to allow Lucio to include repurchased cattle in his base. As the OIG found that the Lucio actually purchased 264 cows and not 200, DASCO should have little trouble in granting plaintiff participation for his full complement of cows. All further proceedings shall be conducted in accordance with the DTP statute, 7 U.S.C. § 1446(d) and regulations, 7 C.F.R. § 1430.450 et seq in accord with the ASCS appeal regulations, 7 C.F.R. Part 780. Specific findings of fact should be made concerning the number of heifers plaintiff purchased as replacement for cattle sold on January 16, 1986 prior to March 5, 1986, and plaintiff's applicable base shall be adjusted accordingly.
An Order consistent with the foregoing is entered this day.
JOHN H. PRATT
United States District Judge
DATE: 27 Aug 92
ORDER - August 27, 1992, Filed
In accordance with the Memorandum Opinion filed this day, it is by the Court, this 27th day of August, 1992, hereby
ORDERED that Plaintiff's Motion for Partial Summary Judgment is granted; and it is
ORDERED that any claims against defendants Earle Bedenbaugh and Thomas Von Garlem in their individual capacities are dismissed; and it is
ORDERED that all claims alleging constitutional violations are dismissed; and it is
FURTHER ORDERED that this matter is remanded to the Deputy Administrator, State and County Operations for further proceedings in accordance with the accompanying Memorandum Opinion; and it is
FURTHER ORDERED that this case is dismissed, with prejudice.
JOHN H. PRATT
United States District Judge