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LUCIO v. YEUTTER

August 27, 1992

JOE LUCIO, Plaintiff,
v.
CLAYTON YEUTTER, et al., Defendants.



The opinion of the court was delivered by: JOHN H. PRATT

 This case concerns a far ranging Department of Agriculture entitlement program that paid farmers to leave dairy farming for five years. Specifically, plaintiff seeks to recover payment for 64 cows which he purchased as replacements for heifers that he sold before the program regulations were published. *fn1" Before this Court are Defendants' Motion to Dismiss, or in the Alternative for Summary Judgment, With Respect to Claims in Plaintiff's Amended Complaint Against Defendants Individually; Plaintiff's Motion for Partial Summary Judgment; and Defendant's Motion for Summary Judgment. For the reasons that follow, we dismiss the claims against the individual defendants; grant Plaintiff's Motion for Partial Summary Judgment; and grant Defendants' Motion for Summary Judgment as to any constitutional violations.

 I. Background

 Congress passed the Dairy Termination Program ("DTP") as part of the Food Security Act of 1985. Pub. L. No. 99-198, 99 Stat. 1354 (1985). The DTP goal was to permanently reduce the amount of commercially marketed milk. The DTP provided payments to farmers who agreed to destroy their herd and leave the dairy business for five years. See 7 U.S.C. § 1446(d)(3)(A). The program was administered by the Commodity Credit Corporation ("CCC") through the Agricultural Stabilization and Conservation Service ("ASCS") State and County Committees. See 7 C.F.R. § 1430.451(a). Under the program, dairy producers prepared a bid that they would accept per hundred weight of milk. The amount of reimbursement was calculated by multiplying the prior milk production base by the bid per hundred weight. The producer's preliminary base was calculated according to the lesser of the total quantities of milk commercially marketed for the two twelve-month periods ending June 30, 1985 and December 31, 1985. 7 C.F.R. § 1430.455(a). The regulations also provided that the preliminary base was to be reduced by 20,000 lbs. for each head of dairy cattle transferred from the herd between January 1, 1986 and the producer's bid date. 7 C.F.R. § 1430.455(c)(1).

  Plaintiff Joe Lucio, a dairy farmer in Pala, California, attended an informational meeting in Chino, California on February 20, 1986 at which a representative of ASCS met with area farmers to explain the DTP. *fn2" It is Lucio's recollection that several farmers asked what they should do if they had sold cattle after January 1, 1986 and the same cattle were not available for repurchase. Mr. Lucio understood the representative to say that they should try to repurchase the same cattle, but if not possible, to repurchase cattle of the same kind and quality. Plaintiff's Statement of Material Facts As to Which There is No Genuine Issue ("Pl.'s Facts") P 10. On March 3 and 4, 1986, Lucio says he purchased 264 cattle to replace the 294 he had sold to a cattle broker in January 1986. *fn3"

 On March 5, 1986, Lucio submitted his application. On the same date, he also appealed to the San Diego County Committee for relief from the regulation which restricted buyback to the identical cows. The appeal letter mistakenly indicated that he purchased 200 cows to replace the 294 cows he had sold. USDA Administrative Record ("AR") at 172. His participation in DTP was conditional on the outcome of the appeal: if his appeal was granted, he was required to participate, but if it was not, Lucio had the option of withdrawing his participation or participating in accord with the appeal determination. AR at 171. Lucio's application was approved on March 10, 1986. His preliminary base was approved for 12,819,659 pounds at a bid price of $ 14.80 per hundred weight. AR at 1. On March 10, 1986, the ASCS Committee met to review the application and documentation. Both the County and State Committees recommended that Lucio be allowed to include the replacement cattle in his base. *fn4" AR at 169-170. On July 1, 1986, Defendant Thomas Von Garlem, acting as the Assistant Deputy Administrator, State and County Operations ("DASCO"), approved plaintiff's participation in DTP with respect to the repurchased heifers. However, he only credited Lucio with 200 heifers. *fn5"

 There then followed several months of correspondence between plaintiff and the ASCS. On July 7, 1986 the ASCS County Executive Director for San Diego sent plaintiff a letter telling him that his preliminary base would be reduced by the 94 heifers sold and not repurchased. On July 9, 1986, Lucio wrote to DASCO explaining that he had actually purchased 264 cattle and not 200 and submitting documentation. AR at 159. On July 28, 1986, plaintiff received a letter from Von Garlem denying payment for any of the 264 cows. AR at 156. The letter indicated that the additional information Lucio provided raised additional questions, *fn6" and indicated that Lucio could request reconsideration within 15 days. Plaintiff requested a reconsideration on August 3, 1986 and submitted an explanation and certified statements on August 8, 1986 that indicated he had purchased 264 cattle. On August 19, 1986, a telephone hearing was held. *fn7" On August 22, 1986, plaintiff's business consultant submitted additional information. AR at 124. On September 28, 1986, Von Garlem responded to Lucio's appeal. He reinstated Lucio's eligibility for payment for 200 of the cows, but denied it for the other 64. In addition, the letter stated:

 Information furnished by you at various times is both inconsistent and questionable. It is highly unlikely that such can be satisfactorily resolved without a formal investigation by the USDA Office of the Inspector General.

 AR at 123. In a letter of January 5, 1987, plaintiff suggested that the Office of the Inspector General ("OIG") conduct an investigation, AR at 118, and on March 4, 1987, plaintiff went further and requested a formal investigation. AR 110-111. DASCO declined to join in the request for investigation, indicating that Lucio "provided no significantly new information that was not already contained in the file and considered in our determination of September 26, 1986." AR at 63. On December 22, 1987, the ASCS County Committee sent a memo to the State Committee indicating that they would like to recommend that the State Committee grant relief for all 264 head purchased. On April 27, 1988, Lucio requested an investigation from the OIG.

 The OIG conducted an investigation and issued a formal report. The report concluded that Lucio had purchased the 64 additional heifers, and indicated that Greg Tonkinson, a county employee, had altered one of plaintiff's receipts. AR at 34. On February 9, 1989, defendant Earle Bedenbaugh, DASCO, told OIG regional director Floyd Cotton that there was nothing in the report to warrant additional relief. AR at 23. Cotton's response of April 17, 1989 indicated that "there is no evidence that Joe Lucio altered any of the sales receipts, trucking receipts or weight tickets." AR at 18-19. The letter also recommended that the agency thoroughly review the matter "to assure that Mr. Lucio is not unfairly penalized due to errors propounded by ASCS." Id. On May 24, 1989, the agency wrote to Lucio, again denying relief and indicating that there was no significantly new information that would warrant a change in the September 26, 1986 determination. AR at 6.

 Plaintiff then filed this suit seeking DTP participation in the amount of $ 189,440 for the 64 cows. *fn8" Plaintiff seeks declaratory judgment and an order remanding the case to the Secretary with instructions to permit full participation in the program and a trial and damages on his constitutional claim. Plaintiff seeks judicial review under section 706(2) of the Administrative Procedure Act (APA). He claims that the Secretary's action must be set aside as an action taken arbitrarily and capriciously, in violation of law, and as an abuse of discretion.

 Specifically, plaintiff claims that the Secretary violated ASCS procedures for conducting appeals. He claims that DASCO failed to order an investigation by OIG even though DASCO itself indicated that the dispute could not be satisfactorily resolved without a formal investigation. He argues that ASCS did not prepare a written record containing a clear, concise statement of material facts as required by 7 C.F.R. § 780.8(b). Finally, plaintiff claims that DASCO failed to allow plaintiff to correct errors in forms although such correction is permitted by the DTP handbook. Plaintiff also alleges that the Secretary violated the Fifth Amendment by denying his right to due process and that the agency's action constitutes a taking without compensation.

 Defendants argue that this case is unreviewable because the agency's actions were equitable and not committed to its discretion under law.

 Lucio has sued the Secretary of the Department of Agriculture, Clayton Yeutter, in his official capacities; Earle Bedenbaugh, the DASCO for the ASCS, in his official and individual capacities; and Thomas Von Garlem, the ...


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