Steve Bass v. Tom Vilsack

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1017
STEVE BASS; TERRY H. BASS,
Plaintiffs – Appellants,
v.
TOM VILSACK, Secretary United States Department of
Agriculture,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Wilmington. Malcolm J. Howard,
Senior District Judge. (7:11-cv-00239-H)
Argued: October 30, 2014 Decided: December 31, 2014
Before SHEDD, AGEE, and WYNN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Thomas A. Lawler, LAWLER & SWANSON, Parkersburg, Iowa,
for Appellants. Matthew Fesak, OFFICE OF THE UNITED STATES
ATTORNEY, Raleigh, North Carolina, for Appellee. ON BRIEF:
Thomas G. Walker, United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Raleigh, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
The “Swampbuster” provision of the Food Security Act, 16
U.S.C. § 3821, prohibits persons who participate in programs
administered by the United States Department of Agriculture
(“USDA” or “the agency”) from converting wetlands to
agricultural use without authorization. Appellants Steve and
Terry Bass (collectively “the Basses”) seek judicial review of a
final decision of the USDA finding them in violation of this
provision. Because we agree with the district court that the
agency conformed with controlling statutes and did not commit a
clear error of judgment in its decision, we affirm.
I.
This case centers around a piece of farmland in Sampson
County, North Carolina, referred to as Farm 3188, Tract 8355,
Field UN2 (“Field UN2”). Joe Bass, the original owner of this
tract, filed an application in 1994 with the USDA seeking a
wetland determination in anticipation of clearing Field UN2 for
agricultural crop production. The National Resources
Conservation Service (“NRCS”), the division of the USDA
responsible for making wetland determinations, concluded that
2
Field UN2 contained approximately 38 acres of wetlands. 1 Joe
Bass was properly notified of this determination and informed
that clearing, draining, or altering these areas to make
possible the planting of a commodity crop would render him
ineligible for most USDA farm programs. Joe Bass took no
further administrative action regarding the NRCS determination,
which thus became final.
In 2004, Joe Bass again filed an application seeking to
convert Field UN2 to farmland, falsely representing that he had
not “previously received a wetland determination or delineation
on this tract from [NRCS.]” (J.A. 103.) Apparently unaware of
the 1994 wetland determination, an NRCS wetland specialist
completed an on-site inspection of Field UN2, which resulted in
another NRCS wetland determination, issued March 23, 2005,
concluding that the tract contained at least 28 acres of
wetlands.
NRCS informed Joe Bass that this determination would become
final unless he requested further review or mediation within
thirty days. However, the NRCS letter did not include, as
required by USDA regulations, a notice that he could also appeal
to the USDA’s National Appeals Division (“NAD”). This defect
1
NRCS was then known as the Soil Conservation Service. For
ease of reference, we refer to this division and its
predecessors as NRCS.
3
rendered the 2005 determination procedurally deficient.
Nonetheless, Joe Bass did not pursue an appeal and he later
died. His interest in Field UN2 passed to the Basses.
NRCS was required and did notify the U.S. Army Corps of
Engineers (“USACE”) of its 2005 wetlands determination, which
prompted the USACE to issue a letter to the Basses advising that
it might also have jurisdiction over Field UN2 under the Clean
Water Act. The USACE letter recommended having the property
inspected. The Basses then hired a private consultant, the Land
Management Group, Inc. (“LMG”), to provide wetland mapping for
the tract. LMG prepared a report finding no wetlands on Field
UN2, but its evaluation did not meet any of NRCS’s requirements
for determining the presence of wetlands under the Food Security
Act.
In response to the LMG report, the USACE conducted a site
visit and found waters of the United States over which it had
jurisdiction along the southern boundary of Field UN2. The
USACE then notified the Basses that this determination only
“applies to Section 404 of the Clean Water Act,” and that it
“may or may not be valid for identifying wetlands or waters
subject to the rules of the Food Security Act.” (J.A. 434.)
Without contacting or seeking any information from NRCS,
the Basses drastically altered Field UN2 by removing the natural
forest and woody vegetation through logging, stump removal,
4
drainage, and disking to prepare the tract for agricultural use.
The Basses sought a cropland acreage determination from the
USDA, which triggered an investigation by NRCS to determine if
the Food Security Act was violated by the alteration of the
tract.
NRCS conducted an on-site inspection and determined that
Field UN2 contained wetland hydrology prior to its alteration.
As part of its investigation, NRCS also examined whether the
Basses could qualify for a minimal effects exemption under 16
U.S.C. § 3822(f), which permits alteration of a wetland if the
changes have only a “minimal effect on the functional
hydrological and biological value of the wetlands in the
area[.]” Id. The exemption did not apply because NRCS
determined that the effects of the wetland conversion were
greater than minimal.
NRCS then worked with the Basses to determine the
feasibility of mitigating the converted wetlands on Field UN2,
but those efforts proved unsuccessful. Consequently, NRCS
issued a final technical determination in June 2010 finding that
Field UN2 contained at least 13.5 acres of converted wetlands.
The Basses were then declared ineligible for programs or
benefits administered by the USDA.
The Basses timely filed an administrative appeal with the
NAD, which held a lengthy evidentiary hearing. In a written
5
decision, the NAD affirmed NRCS’s final determination that Field
UN2 contained converted wetlands in violation of 16 U.S.C. §
3821. The hearing officer found that NRCS had met its burden of
proving that wetlands were present on Field UN2 prior to its
alteration, and it now contained at least 13.5 acres of
converted wetlands. In addition, the hearing officer found
NRCS’s evidence and testimony more credible, specifically
observing that the Basses’ private consultant did not complete
its wetland survey in compliance with the applicable guidelines.
Pertinent here, the Basses attempted to argue that no
wetlands existed on Field UN2 prior to their conversion
activities. The hearing officer found this issue barred under 7
C.F.R. § 12.30(c)(4), which provides that once a final wetland
determination has been made any appeal regarding a potential
conversion is “limited to the determination that the wetland was
converted[.]” Id. Noting the absence of any evidence that NRCS
had rescinded its 1994 determination or that the property’s
prior owner had appealed that determination, the hearing officer
precluded the Basses from presenting evidence that the property
did not contain wetlands.
The Basses then filed this lawsuit seeking judicial review
of the USDA’s final action. Their complaint raised several
claims, but only two are now at issue on appeal: (1) did the NAD
hearing officer err by limiting their appeal in the manner noted
6
above; and (2) did NRCS incorrectly perform a minimal effects
determination in compliance with 16 U.S.C. § 3822(f)?
The district court granted the USDA’s motion for summary
judgment, finding no error in the hearing officer’s decision to
preclude the Basses from re-litigating the question of whether
wetlands ever existed on Field UN2. Specifically, the court
held:
[T]here was at least one valid prior
certified wetland determination in existence
at the time of the plaintiffs’ conversion of
Field UN2. In such circumstances, the
review of the agency’s 2010 determination
that conversion occurred is properly limited
to that question of conversion on appeal
before the agency, and thus to this court as
well. . . .
. . . .
. . . The agency reasonably interpreted its
own regulations by limiting the scope of
review to whether a conversion took place,
thus the court must defer to the agency.
(J.A. 62-64.) The district court also held that it lacked
jurisdiction over the minimal effects claim because the Basses
never pursued this argument during the administrative process
and thus “failed to exhaust their administrative remedies[.]”
(J.A. 64.)
The Basses timely appealed, and this Court has jurisdiction
pursuant to 28 U.S.C. § 1291.
7
II.
We review the district court’s ruling on summary judgment
de novo. See Holly Hill Farm Corp. v. United States, 447 F.3d
258, 262 (4th Cir. 2006). However, this Court, like the
district court, reviews the underlying decision from the USDA
pursuant to the Administrative Procedures Act (“APA”), under
which the agency’s decision must be upheld unless “arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law[.]” 5 U.S.C. § 706(2)(A); see also Holly
Hill Farm Corp., 447 F.3d at 262-63 (applying APA judicial
review to a final determination of the NAD). Following this
narrow standard, we are “not empowered to substitute [our]
judgment for that of the agency.” Md. Dep’t of Human Res. v.
U.S. Dep’t of Agric., 976 F.2d 1462, 1475 (4th Cir. 1992)
(citation and internal quotation marks omitted). Rather, our
task is “to determine whether the agency conformed with
controlling statutes,” and “whether the agency has committed a
clear error of judgment.” Id. (citations and internal quotation
marks omitted).
A.
The NAD hearing officer limited the Basses’ appeal pursuant
to 7 C.F.R. § 12.30(c)(4), which provides that if a prior
wetlands determination exists for purportedly converted
8
property, any administrative appeal is limited to the issue of
whether wetlands were converted. After remarking that the 2005
wetland determination was deficient, the hearing officer found
that the 1994 determination was a final, certified decision for
purposes of this regulation.
The Basses argue that the NAD hearing officer contravened
16 U.S.C. § 3822(a)(4) in reaching that conclusion, citing the
statutory language that provides “[a] final [wetland]
certification . . . shall remain valid and in effect . . . until
such time as the person affected by the certification requests
review of the certification by the Secretary.” 16 U.S.C. §
3822(a)(4). Relying on this provision, the Basses contend that
the 1994 wetland determination was made void when Joe Bass
requested a new wetland determination in 2004. They conclude
that, because the 1994 determination was invalid at the time of
their appeal, “7 C.F.R. § 12.30(c)(4)’s limitation [could] not
apply [and] [t]he hearing officer’s ruling to the contrary is an
error of law.” (Opening Br. 21.)
We find this argument to lack merit. By its plain terms, §
3822(a)(4) ends the validity of an existing wetland
determination only when an aggrieved landowner “requests review”
of that decision. We agree with the USDA’s position (regardless
of the deference applied) that Joe Bass’s actions in 2004 were
9
not a request for review, making this provision inapplicable. 2
Accordingly, the NAD hearing officer did not act contrary to law
in concluding that the 1994 determination was a valid wetland
decision that limited the Basses’ appeal.
Furthermore, even assuming the hearing officer erred in the
manner alleged, the result in this case would be unaffected
because the evidence was overwhelming that Field UN2 contained
wetlands prior to its conversion. Any error on the part of the
USDA was therefore harmless, and the Basses’ argument fails.
See Ngarurih v. Ashcroft, 371 F.3d 182, 190 n.8 (4th Cir. 2004)
(noting that the harmless-error doctrine is available in
judicial review of administrative actions).
2
Citing to SEC v. Chenery, 332 U.S. 194 (1947), the Basses
contend that this argument is unavailable because it was not
relied upon by the NAD hearing officer in the administrative
decision below. While generally a reviewing court may only
judge the propriety of an agency decision on the grounds invoked
by the agency, see id. at 196-97, the court is not so bound
when, as here, the issue in dispute is the interpretation of a
federal statute. See N.C. Comm’n of Indian Affairs v. U.S.
Dep’t of Labor, 725 F.2d 238, 240 (4th Cir. 1984) (“We do not .
. . perceive there to be a Chenery problem in the instant case
because the question of interpretation of a federal statute is
not ‘a determination or judgment which an administrative agency
alone is authorized to make.’” (citation omitted)).
10
B.
The Basses next claim that NRCS did not correctly perform a
minimal effects determination under 16 U.S.C. § 3822(f). The
district court determined it lacked jurisdiction to adjudicate
this claim because the Basses never raised it during their
administrative appeal. While we agree that the Basses are
foreclosed from pursuing this claim on appeal, we reach that
result on a different basis than the district court.
The Supreme Court has long held that it is inappropriate
for courts to consider arguments not developed before an
administrative agency because doing so usurps the agency’s
function. See Woodford v. Ngo, 548 U.S. 81, 88-91 (2006);
United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 36–
37 (1952); see also Pleasant Valley Hosp., Inc. v. Shalala, 32
F.3d 67, 70 (4th Cir. 1994) (“As a general matter, it is
inappropriate for courts reviewing appeals of agency decisions
to consider arguments not raised before the administrative
agency involved.”). As explained by the Supreme Court,
orderly procedure and good administration
require that objections to the proceedings
of an administrative agency be made while it
has opportunity for correction in order to
raise issues reviewable by the courts. . . .
[C]ourts should not topple over
administrative decisions unless the
administrative body not only has erred but
has erred against objection made at the time
appropriate under its practice.
11
L.A. Tucker Truck Lines, Inc., 344 U.S. at 37.
In Sims v. Apfel, 530 U.S. 103 (2000), the Supreme Court
further explained that the need for issue exhaustion is, first
and foremost, a question of statutory construction and that
agencies generally have the power to adopt regulations requiring
issue exhaustion. Id. at 107–08. Where the relevant statutes
and regulations do not clearly require exhaustion, however, a
court-imposed issue exhaustion requirement may be appropriate.
Id. at 108. “[T]he desirability of a court imposing a
requirement of issue exhaustion depends on the degree to which
the analogy to normal adversarial litigation applies in a
particular administrative proceeding.” Id. at 109. Where the
parties are expected to fully develop the dispute during the
course of an adversarial proceeding, the rationale for requiring
issue exhaustion is at its strongest. Id. at 110. Conversely,
where an administrative proceeding is not adversarial, the
reasons for requiring issue exhaustion are much weaker. Id.There is no statute or regulation that mandates issue
exhaustion in this case. See Mahon v. U.S. Dep’t of Agric., 485
F.3d 1247, 1256 (11th Cir. 2007) (“[T]here is no express issue
exhaustion requirement in the NAD regulations[.]”). However,
the regulations that describe the review process before the USDA
reflect that this process is adversarial and that issue
exhaustion should be required. Id. (“The NAD’s procedures
12
provide an adversarial system in which parties are given a full
and fair opportunity to make their arguments and present
evidence, and, as a corollary, to attempt to challenge the
arguments and evidence presented by the agency.”); see also
Downer v. U.S. Dep’t of Agric., 97 F.3d 999, 1005 (8th Cir.
1996) (noting that a general exhaustion of remedies is
insufficient in the context of a wetlands determination, and
specific issue exhaustion is required). Indeed, every court to
address this question has found that issue exhaustion applies to
similar proceedings before the USDA. See, e.g., Ballanger v.
Johanns, 495 F.3d 866, 868-71 (8th Cir. 2007); Care Net
Pregnancy Ctr. of Windham Cnty. v. U.S. Dep’t of Agric., 896 F.
Supp. 2d 98, 110 (D.D.C. 2012). Finding these cases persuasive,
we agree that an issue exhaustion requirement applies.
The Basses had ample opportunity to raise the minimal
effects claim at each phase of the administrative proceeding and
before the NAD, yet they failed to do so. Instead, the Basses
focused their administrative appeal on arguing that Field UN2
did not contain wetlands prior to its conversion. This course
of action denied the USDA an opportunity to exercise its
discretion and expertise in considering any minimal effects
claim. On these facts, preclusion is appropriate. See Mahon,
485 F.3d at 1256-57 (precluding claims raised for the first time
13
in federal court and never presented to the NAD during the
plaintiffs’ administrative appeal).
Although the district court incorrectly viewed the
foregoing as a jurisdictional bar, see Pleasant Valley Hosp.,
Inc., 32 F.3d at 70 (“[T]his general rule is not a strict
jurisdictional bar, it is a prudential one[.]”), it was
ultimately correct in its decision to forego review of this
claim. Accordingly, we find the district court’s decision
without reversible error. 3
III.
For the foregoing reasons, the judgment of the district
court is
AFFIRMED.
3
Apparently forecasting this hurdle, the Basses argue that
plain error would result if we decline to consider this claim.
Under this doctrine, as applied in our civil jurisprudence, we
will correct an error not raised previously if it is “‘plain’
and our refusal to consider it would result in a miscarriage of
justice.” Nat’l Wildlife Fed’n v. Hanson, 859 F.2d 313, 318
(4th Cir. 1988) (citation omitted). Plain error analysis, in
the noncriminal context, is very rarely available, and then only
to correct particularly egregious errors. See In re Under Seal,
749 F.3d 276, 285-86 (4th Cir. 2014). It is not at all evident
that NASD erred in its minimal effects determination in the
manner alleged. Moreover, this type of error does not
constitute a “miscarriage of justice” as defined in our case
law. See Holly Hill Farm Corp., 447 F.3d at 268; see also In re
Celotex Corp., 124 F.3d 619, 631 (4th Cir. 1997). We therefore
find this doctrine inapplicable.
14