Morrow v. Clayton , 326 F.2d 36 ( 1963 )

PHILLIPS, Circuit Judge

(dissenting).

7 U.S.C.A. § 1388(a) provides that the Secretary in administering the provisions of the Act “shall * * * utilize the same local, county, and State committees as are utilized under” the Soil Conservation and Domestic Allotment Act (16 U.S.C.A. § 590(a) et seq.). The State and County Committees here involved are those so to be utilized. 7 U.S.C.A. § 1375(b) authorizes the Secretary to “prescribe such regulations as are necessary for the enforcement of” the Act.

Pursuant to the authority granted to the Secretary by 7 U.S.C.A. § 1375(b), supra, the Director, ASCS, promulgated an amendment to 7 CFR 719.12(d) (2) on February 17, 1961, (26 F.R. 1396) for the stated purpose of making “the procedures for the transfer of allotment from the pool under 7 U.S.C. 1378 more effective in preventing the sale of allotments from the pool or the transfer of allotments from the pool for the benefit of some person other than the displaced owner.” Such amendment provides in part as follows:

“Upon written application by the displaced owner * * * to the county committee of the county in which the farm which is to receive allotment from the pool is located, the county committee shall determine whether the transaction by which the displaced owner claims to have acquired the farm to which it is requested that the allotment be transferred and the requested transfer is for the purpose of reestablishing the farming operations of the displaced owner or is a scheme or device to sell the allotment or to transfer the allotment for the benefit of some person other than the displaced owner. The application for transfer shall contain a certification by the applicant that he has made no side agreement with any person for the purpose of obtaining an allotment from the allotment pool for a person other than himself. Before an application is acted upon by the county committee the applicant shall personally appear before the county committee after reasonable notice and bring with him all pertinent documents for examination by the committee and answer all pertinent questions bearing on the proposed transfer, * * *. If an allotment is transferred hereunder and it is later determined by the county committee that the transfer was obtained by misrepresentation by or on behalf of the applicant the allotment for the farm shall be reduced by the amount of the transfer for each year the transfer purportedly was in effect * * *. The action of the county committee in approving or disapproving an application or in reducing the allotment for misrepresentation shall be effective only upon approval of the State committee or its representative and the issuance of an appropriate allotment notice under the applicable commodity regulations.” (Italics supplied.)

By issuing this regulation the Administrator, ASCS, in behalf of the Secretary, carried out the direction of 7 U.S. C.A. § 1388(a), supra, by utilizing the County Committees to make the initial determination of whether applications for transfers are made in good faith for a proper purpose and further by utilizing such County Committees to make later determinations of whether such transfers were obtained by misrepresentation.

In the instant case, the County Committee, when requested by the State Committee to reduce to zero all transferred allotments in cases where the operators of farms having such transferred allotments were previous owners, made the determination it was directed to make by the regulation. The fact that such determination was contrary to the apparent determination made by the State Committee is of no moment, since the regulation does not give the State Committee power to make such initial determination for purposes of reducing the allotment by the amount of the transfer.

The State Committee contends that the Secretary of Agriculture and the duly designated subordinate officials of his department have authority to cancel transfers of allotments for fraud, error or failure to comply with regulations under the general power of the Secretary respecting agricultural programs and that the exercise of authority by an agent does not divest the principal of his authority.

What authority the Secretary might have had prior to the promulgation of the amendment to 7 CFR 719.12(d) (2), is not here material. By such amendment the Secretary took away from himself and his subordinates, other than the County Committees, the authority to make initial determinations that transferred allotments were obtained by misrepresentation.¹

“ [R] egulations validly prescribed by a government administrator are binding upon him as well as the citizen,” ² and the Secretary and his subordinates are bound to follow the procedure set forth in 7 CFR 719.12(d) (2), supra. The State Committee did not follow such procedure when it caused revised notices of acreage allotments reducing the allotments on the Whitener and Duncan farms by the amount of the transfer “because requirements of Section 719.12 of the Regulations (26 FR 1396) issued February 17, 1961, have not been met.” The State Committee cites numerous regulations which give it, the Secretary, the Assistant Secretary, or the Administrator, authority to revise or correct determinations of the County Committee or to make such determinations in the first instance. None of these are applicable to the factual determination here made by the County Committee. 7 CFR 722.-531(b) and (c) relate to revisions of determinations made under 7 CFR 721.517 to 7 CFR 722.528. 7 CFR 722.431(b) relates to revisions of detex-minations made under 7 CFR 722.417 to 7 CFR 722.428. 7 CFR 722.431(c) relates to initial determinations made under 7 CFR 722.411 to 7 CFR 722.431(b). And 7 CFR 722.46(c) relates to initial determinations made under 7 CFR 722.1 to 7 CFR 722.51.

Counsel have not cited and we have not found any regulations which authorize anyone other than the County Committee to make a determination that transferred allotments were obtained by misrepresentation for purposes of reducing the allotment by the amount of the transfer. But if such authority did rest in the Secretary of Agricultux*e or in any of his subordinates, it was not validly exercised in the instant case, in my opinion. After the County Committee had refused to “reduce all transferred allotments in cases where operators of farms of pooled allotments were previous owners to zero,” or to find at the request of the State Committee, its officers, and the representative of the Department of Agx-iculture that the transfers were “obtained by misrepresentation by or on behalf of the” applicants and by reason thereof to reduce the allotments for the farms by the amount of the transfer for each year the transfer was in effect, the representative of the Department of Agriculture and the State Committee and its officers, without any notice to Clayton and Walker-, and without any hearing or opportunity for a hearing being accorded Clayton and Walker, proceeded to attempt to cancel the transferred allotments of Clayton and Walker. Surely, administrative power, if it existed, could not be exercised in any such manner on the ground of misrepresentation by or on behalf of the applicants. For these reasons, I think the judgment below should be affirmed and respectfully dissent.

1 . United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 267, 74 S.Ct. 499, 98 L.Ed. 681.

2 . Service v. Dulles, 354 U.S. 363, 372, 77 S.Ct. 1152. 1157. 1 L.Ed.2d 1403: See also: Accardi v. Shaughnessy, 347 U.S. 260, 266, 267, 74 S.Ct. 499, 98 L.Ed. 681; Sangamon Valley Television Corp. v. United States, 106 U.S.App.D.C. 30, 269 E.2d 221, 224.