Rosenau v. Farm Service Agency

Citations: 395 F. Supp. 2d 868; 2005 U.S. Dist. LEXIS 8779; 2005 WL 1123621Docket: A1-02-01

Court: District Court, D. North Dakota; May 11, 2005; Federal District Court

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The United States District Court in North Dakota granted the Plaintiffs, Thad and Troy Rosenau, a Renewed Motion for Summary Judgment while denying the Defendant, Farm Service Agency (FSA), a Motion for Summary Judgment. This case arose after the Natural Resources Conservation Service (NRCS) and the FSA determined that the Rosenaus had converted wetlands on rented farmland, specifically Farm No. 1106, Tract 560, making them ineligible for certain USDA federal farm program benefits. 

The dispute began with a report of a potential wetland violation following the Rosenaus' plowing of the land after heavy rainfall in May 1999. An inspection by the NRCS led to a determination that 20.9 acres of the tract were converted wetlands. Subsequently, the FSA Committee ruled that the Rosenaus acted in bad faith, resulting in a recommendation to deny them $6,000 in benefits. 

In response, the Rosenaus sought a review, which included a field assessment that ultimately found only 10.4 acres as converted wetlands, leading to a revision of the NRCS’s earlier determination. Despite this, on June 7, 2000, the State FSA Committee escalated the issue, recommending the Rosenaus be declared ineligible for $46,960 in benefits. An evidentiary hearing was held on October 18, 2000, where both sides presented evidence. The Court's ruling favored the Rosenaus despite the ongoing disputes regarding the wetland conversions and eligibility for benefits.

On November 17, 2000, the Hearing Officer's "Appeal Determination" found that the Agency erred in concluding that the Appellants converted eight wetlands and deemed the NRCS's determination regarding the Appellants' qualification for a minimal effect exemption inconclusive due to reliance on an unapproved Hydrogeomorphic model. The County Committee's finding of lack of good faith was also deemed flawed due to incomplete information from NRCS. Following this, on December 13, 2000, the FSA sought a review by the USDA's National Appeals Division (NAD), which on January 22, 2001, reversed the Hearing Officer’s decision. The Rosenaus requested reconsideration, which was denied on February 13, 2001. They initiated the current action for review on January 7, 2002, and both parties filed motions for summary judgment on September 3, 2002. 

On February 6, 2003, the Court ruled that the Agency's actions were lawful regarding the NRCS's determination of wetland conversion and the FSA's good faith decision, but it remanded for a new minimal effect exemption calculation based on a functional assessment per 7 C.F.R. 12.30(a)(3). In response, the Defendant adopted three assessment models in May 2003. A letter dated November 3, 2003, from the Defendant's attorney clarified that no further hearings would be held, and a new calculation would be made based on the existing record. Subsequently, on January 10, 2004, NRCS issued a minimal effect determination based on the specified functional assessment model, reaffirming that certain wetlands did not qualify for a minimal effect exemption. On November 11, 2004, the Rosenaus renewed their summary judgment motion, asserting entitlement to a minimal effect exemption calculation per the required functional assessment model.

The Defendant lacked a functional assessment model at the time of the alleged conversion, preventing the Rosenaus from qualifying for the minimal effect exemption. The Rosenaus request the Court to reinstate USDA farm benefits totaling $23,480 plus interest. The Defendant filed a motion for summary judgment, claiming it had adopted a hydrogeomorphic assessment model by May 2003, as required by 7 C.F.R. 12.30, and used this model to determine the Rosenaus' ineligibility for the exemption. 

The Court's review is limited to assessing whether the agency's decision was arbitrary, capricious, or an abuse of discretion, following precedents that entail a careful de novo review of the administrative record. The Court examines if the agency considered relevant factors, neglected significant aspects, or if the decision lacked a rational connection to the facts. The agency must provide a reasoned basis for its actions, which the Court cannot substitute with its own judgment, especially in areas of agency expertise involving scientific judgments.

It is established that the Defendant must comply with 7 C.F.R. 12.6(c)(2)(v), which mandates the NRCS to assess whether an individual's actions regarding wetland conversion would minimally impact wetlands' functions and values. Such determinations must be based on a functional assessment of the wetlands and require an on-site evaluation per 7 C.F.R. 12.31(d). The NRCS is responsible for making or approving these functional assessments, as articulated in 7 C.F.R. 12.30(a)(3). The Court previously noted that there was no determination that the Guidebook was either made or approved by the NRCS as required by the regulations.

The Director's acceptance of the Agency's unsubstantiated claims regarding the appropriateness of a guidebook for minimal effect determinations constituted an abuse of discretion, lacking proper analysis as required by 7 C.F.R. 12.30(a)(3). This decision was further undermined by the Director's failure to address the extensive disclaimer in the Guidebook. Following a February 6, 2003 Court Order, the Defendant approved three hydrogeomorphic assessment models in May 2003, including the Guidebook used to reassess the Rosenaus' minimal effect exemption for alleged violations from 1999. The Rosenaus contended that this retroactive application of the Guidebook was unlawful. The Court emphasized that retroactive application of agency rules is generally disfavored, especially when the negative impact on affected parties outweighs the public interest. It found the Defendant's retroactive use of the Guidebook an abuse of discretion and not compliant with the law, violating both the Court's prior order and statutory requirements. Consequently, the Court ruled that the Plaintiffs are legally entitled to the minimal effect exemption due to the Defendant's failure to properly recalculate it as mandated by law.

Defendants can only declare a person ineligible for USDA farm program benefits after determining their eligibility for a minimal effect exemption, as outlined in 7 C.F.R. 12.4(g) and 7 C.F.R. 12.5(b)(1)(v). The Court determined that the Defendant's actions hindered the Plaintiffs' eligibility assessment for the exemption, and thus the Defendant cannot benefit from its failure to comply with regulations. Consequently, the Court ruled that the Plaintiffs are entitled to the reinstatement of their USDA farm benefit program benefits, amounting to $23,480 plus interest as mandated by law. 

The Court granted the Plaintiffs' Renewed Motion for Summary Judgment and denied the request for oral argument as moot. Additionally, the Court denied the Defendant's Motion for Summary Judgment. The Plaintiffs' benefits are to be reinstated with interest calculated from February 24, 2000, to May 11, 2005, specifically for both Troy Rosenau and Thad Rosenau. The judgment is to be entered accordingly. Further, the Court's earlier order implicitly required the Defendant to reassess the minimal effect exemption using an approved functional model in compliance with 7 C.F.R. 12.30 at the time of the alleged violation.