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Peterson v. United States Department of Agriculture

United States District Court, D. North Dakota, Southeastern Division

September 26, 2014

Leonard Peterson, Plaintiff,
United States Department of Agriculture, Defendant.


RALPH R. ERICKSON, Chief District Judge.

I. Introduction

Before the Court are cross motions for summary judgment.[1] Plaintiff Leonard Peterson seeks judicial review of a final determination of the United States Department of Agriculture's National Appeals Division ("USDA"). The Farm Service Agency ("FSA") determined that Peterson violated the Swampbuster provisions by deepening natural drains on farmland that he operated in LaMoure County, North Dakota in 2006 and 2009. Peterson has exhausted his administrative appeal rights. Because the Agency misapplied the law, Peterson's motion for summary judgment is GRANTED and the agency's decision is REVERSED. The USDA's motion for summary judgment is DENIED.

II. Factual Background

Peterson leases and farms land designated as Farm Serial Number 6490, Tract 2135 on the SE 1/4, ยง15, T.135N, R 61W ("Tract 2135"). While the agency has determined that Peterson converted wetlands in both 2006 and 2009, this case came about because of Peterson's actions in 2009. Heavy rains in 2009 caused washouts to form on Tract 2135. Peterson maintains that he contacted District Conservationist Darin Hirschkorn about smoothing over the rough top edges of the natural drains because he risked damaging his equipment when passing between the non-wetland portions of the land and the wetland portions. Peterson asserts that Hirschkorn advised him that he could smooth out the edges so long as he did not deepen them. Hirschkorn denies making this statement.

In August 2009, Peterson hired a neighbor to use a grader to scrape the rough raised edges, i.e. "pull the shoulders". Peterson contends that the grader operator consulted with Hirschkorn about what work would be acceptable, and complied with his directions. While the grader was scraping the drains, Hirschkorn visited the site in response to a complaint. When the grader operator saw Hirschkorn, he drove toward Hirschkorn attempting to talk to him but Hirschkorn drove away before the grader operator got there. The grader operator contacted Peterson and Peterson told him to stop work until he had a chance to talk to Hirschkorn. Peterson contacted Hirschkorn the next day about the grading work. Peterson asserts that Hirschkorn did not identify a problem or direct him to stop the grading work.

On November 30, 2009, Peterson received notice of a potential violation. In December 2009, the LaMoure County Natural Resource Conservation Service ("NRCS") began a Wetland Conservation compliance review on Tract 2135. When Peterson discovered NRCS inspectors had dug 25 to 50 holes on less than 25 acres of planted winter wheat, he asked them to leave out of concern that the further digging would cut off the roots and kill the wheat. The NRCS notified FSA of a potential violation for denial of access to the property. The FSA, in turn, notified Peterson that he was ineligible for farm program benefits for 2009 and succeeding crop years due to his denial of access. Peterson appealed the FSA's determination of ineligibility.

The LaMoure County FSA Committee ("COC") reviewed Peterson's case and restored Peterson's eligibility for farm program benefits in a February 5, 2010 letter. On March 3, 2010, the Executive Director notified Peterson that the state FSA office overruled the COC and determined Peterson remained ineligible for benefits.

After inspections in September 2010, the NRCS determined Peterson violated Wetlands Conservation rules and was ineligible for farm program benefits. Peterson has been unsuccessful in his administrative appeals. From 2008 through 2010, Peterson has been deprived of $135, 959.00 in payments withheld by the FSA. In addition, the FSA claims it is entitled to seek reimbursement of $175, 504.00 of program payments made to Peterson during 2006 and subsequent crop years; however, it appears the FSA has not actively pursued reimbursement.

III. Standard of Review

Section 6999 of Title 7, of the United States Code, provides: "a final determination of the [National Appeals] Division shall be reviewable and enforceable by any United States District Court of competent jurisdiction."[2] The Administrative Procedures Act allows for judicial review of decisions of the Farm Service Agency.[3] Under the Administrative Procedures Act, the standard of review is whether the action of the agency is "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law;"[4] or whether the decision is "without observance of procedure required by law;"[5] or whether the decision is "unsupported by substantial evidence in a case... reviewed on the record of an agency hearing provided by statute."[6] A court reviewing an agency decision should not interfere with the decision unless it is arbitrary, capricious, an abuse of discretion, not in accord with the law, or unsupported by the evidence. The reviewing court is not free to conjure up a reasoned basis for the agency decision that has not been offered by the agency itself.[7] The standard imposed on the reviewing court is not a strenuous one - an agency action is to be invalidated only if it is not rational, or is not based on a consideration of relevant factors.[8] In reaching its decision, the district court must be searching and careful, but it is not empowered to substitute its judgment for that of the agency. Equally as narrow is the standard of review under the substantial evidence test. A reviewing court must uphold the agency's decision if it is supported by "substantial evidence."[9] "Substantial evidence" is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion."[10]

The reviewing court must also give deference to the agency's interpretation of its rules and regulations as long as that interpretation is not "plainly erroneous" or "inconsistent with the regulation."[11] The more technical and complex the regulatory area is, the more the courts defer to the expertise of the agency as a matter of public policy.[12] The agency need not adopt the most natural or most reasonable interpretation, all that is required is that the interpretation be a reasonable one.[13]

IV. Analysis

Peterson contends the agency erred in its determinations because: (1) he acted in good faith reliance on Hirschkorn's instructions; (2) he did not convert wetlands; (3) the hearing officer and deputy director issued decisions that are arbitrary, capricious, an abuse of discretion, and not in accordance with ...

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