*District Judge of the Western District of Texas, sitting by

designation. 

1

United States Court of Appeals,

Fifth Circuit.

No. 94-40818.

Bill YOUNG and Floyd Sherman, Petitioners,

v.

UNITED STATES DEPARTMENT OF AGRICULTURE, Respondent.

June 7, 1995.

Petition for Review of an Order of United States Department of

Agriculture.

Before REAVLEY and EMILIO M. GARZA, Circuit Judges, and PRADO*,

District Judge.

REAVLEY, Circuit Judge:

Bill Young and Floyd Sherman petition for review of a decision

and order of the United States Department of Agriculture concluding

that they entered or allowed entry of a "sored" Tennessee Walking

horse in a show in violation of the Horse Protection Act.

BACKGROUND

The Horse Protection Act of 1970 (the "HPA"), 15 U.S.C. § 1821

et seq., prohibits the practice of "soring" the legs of a Tennessee

Walking horse through the use of chemicals or mechanical devices.

Soring causes the horse to step more quickly and extend his legs

farther, enhancing the type of gait prized in a Walking horse. The

HPA prohibits the entry into exhibitions, or the "allowing" of

entry of any horse that is sore and provides civil and criminal

penalties. 15 U.S.C. § 1824(2)(A)-(D), § 1825. The HPA defines
2

"sore" as the following:

(3) [t]he term "sore" when used to describe a horse means

that—

(A) an irritating or blistering agent has been applied,

internally or externally, by a person to any limb of a horse,

(B) any burn, cut, or laceration has been inflicted by a

person on any limb of a horse,

(C) any tack, nail, screw, or chemical agent has been

injected by a person into or used by a person on any limb of

a horse, or

(D) any other substance or device has been used by a

person on any limb of a horse or a person has engaged in a

practice involving a horse,

and, as a result of such application, infliction, injection,

use, or practice, such horse suffers, or can reasonably be

expected to suffer, physical pain or distress, inflammation,

or lameness when walking, trotting or otherwise moving....

15 U.S.C. § 1821.

The United States Department of Agriculture (the "USDA")

implements the HPA. Designated Qualified Persons ("DQPs"),

employed by the USDA, examine horses to determine if they are fit

for exhibition at a show. The USDA also employs veterinarians

called Veterinary Medical Officers ("VMOs") to oversee the DQPs and

examine some horses.

Floyd Sherman owned and Bill Young trained a horse named "A

Mark for Me." During the pre-show inspection at the Tennessee

Walking Horse National Celebration on August 31, 1990 a DQP

rejected "A Mark for Me." At this time the USDA's sole technique

for determining whether a horse was sore in violation of the HPA

was digital palpation (digital palpation consists of pressing the

ball of the thumb into the horse's forelimbs to test for pain).
3

The DQP testified that "A Mark for Me" did not show a strong

reaction to palpation but that in 1990 the standard for prohibiting

a horse from showing was "just about any movement." The DQP

testified that while "A Mark for Me" exhibited "sensitivity," he

did not believe the horse to be sore. Two VMOs immediately

examined the horse and concluded that in their opinion the horse

was sore. "A Mark for Me" was disqualified and the USDA filed a

complaint against Young and Sherman under the HPA.

An Administrative Law Judge ("ALJ") dismissed the complaint,

finding that an encounter with another horse en route to the

pre-show inspection area caused the horse to be highly agitated and

explained its reaction to palpation. The USDA appealed to a

Judicial Officer ("JO") who reversed. The JO ordered Young and

Sherman each to pay a civil penalty of $2000 and disqualified Young

and Sherman for one year from the exhibition of horses. Sherman

and Young appeal. We reverse.

DISCUSSION

Sherman and Young contend that the USDA's decision that they

sored "A Mark for Me" was not supported by substantial evidence.

The JO's conclusion was based almost solely on the affidavits of

the two VMOs and a USDA form entitled "Summary of Alleged

Violations" filled out by the two VMOs after their inspection of "A

Mark for Me" at the show. The two USDA VMOs recorded their

observations of "A Mark for Me" on the summary report the night of

the inspection and in individual affidavits completed the next day.

These documents indicated that the VMOs concluded that "A Mark for
4

Me" was sore because the horse experienced pain when its hoof areas

were palpated. The VMOs testified before the ALJ regarding their

conclusions. Their testimony was based on their general practices

regarding this type of inspection. Neither VMO had any independent

memory regarding their inspection of "A Mark for Me."

Sherman and Young contend that these documents do not

constitute substantial evidence because they are unreliable

hearsay. They essentially contend that the documents are

unreliable because: 1) they were created with a bias towards the

Government's position; and 2) the conclusions reached in them are

based on an unreliable method of determining whether a horse has

been sored.

The Horse Protection Act states that the "findings of the

Secretary shall be set aside if found to be unsupported by

substantial evidence." 15 U.S.C. § 1825(b)(2). Substantial

evidence is such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion. Universal Camera Corp.

v. N.L.R.B., 340 U.S. 474, 476-78, 71 S.Ct. 456, 459, 95 L.Ed. 456

(1951). This court has held that in determining whether hearsay

can constitute substantial evidence "we must look to those factors

which "assure underlying reliability and probative value' ... to

determine whether the hearsay in the present case constitutes

substantial evidence." School Bd. v. H.E.W., 525 F.2d 900, 906

(5th Cir.1976) (citing Richardson v. Perales, 402 U.S. 389, 402, 91

S.Ct. 1420, 1428, 28 L.Ed.2d 842 (1971)).

 There is significant evidence in the record indicating that
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the evidence relied on by the JO and the USDA to support a finding

of soreness is lacking in probative value and reliability. See

Universal Camera Corp., 340 U.S. at 488, 71 S.Ct. at 464 (holding

that in determining whether an administrative order is based on

substantial evidence, the reviewing court must consider "whatever

in the record fairly detracts from [the] weight" of the evidence).

The VMO's testimony in this case revealed that as a general

practice VMOs prepare summary reports and affidavits only when

administrative proceedings are anticipated. See Palmer v. Hoffman,

318 U.S. 800, 63 S.Ct. 757, 87 L.Ed. 1163 (1943) (holding that an

accident report prepared by a railroad did not carry the indicia of

reliability of a routine business record because it was prepared at

least partially in anticipation of litigation); United States v.

Stone, 604 F.2d 922, 925-26 (5th Cir.1979) (holding that an

affidavit prepared by an official of the United States Treasury

Department was unreliable because it was prepared in anticipation

of litigation). More important, the VMOs admitted that they only

included observations indicating that a horse was sore and did not

include evidence indicating that a horse was not sore. The VMOs

also indicated that they were given instructions regarding how to

prepare the documents by USDA attorneys so that the documents would

support a USDA complaint under the HPA. Thus, although the authors

of the documents may have been objective in forming their opinion

(as the JO found), the documents themselves admittedly recorded a

biased account of the results of the inspection. We conclude that

their probative value is limited.
 

1The JO pointed out that the experts' testimony and the

protocol stated that factors other than a negative response to

palpation must be observed before a sore diagnosis can be made. 

He concludes that these other factors would require the examiner

to look for signs such as redness, swelling, heat or interference

with function which the JO contends would amount to a rewriting

of the HPA by requiring symptoms of soring other than a

reasonable expectation of pain. The expert testimony and

protocol indicate that the other observations should be made in

order to determine whether the horse has propensity for pain and

are indicia of pain or repercussions of pain as well as

additional symptoms of soring. 

6

The reliability of the veterinarians' conclusions recorded in

the hearsay documents, based almost exclusively on the results of

digital palpation, are also called into question by significant

evidence presented at the hearing supporting the conclusion that an

observed reaction to digital palpation alone is not a reliable

indicator of a sore horse. Several highly qualified expert

witnesses for the petitioners testified that soring could not be

diagnosed through palpation alone. Petitioners also offered a

written protocol signed by a group of prominent veterinarians

coming to the same conclusion. The JO's basis for rejecting this

evidence seems to be simply that it is contrary to the agency's

policies and the agency's prior decisions.1 The JO does not point

to scientific or medical data supporting the agency's chosen

diagnostic technique. See Veal v. Bowen, 833 F.2d 693, 699 (7th

Cir.1987) (holding that "[w]here diagnoses are not supported by

medically acceptable clinical and laboratory diagnostic techniques,

this court need not accord such diagnoses great weight").

Petitioners also point out that Congress noted its

disapproval, in an appropriation bill, of soring diagnoses based
 

2In a recent opinion, the D.C. Circuit rejected the argument

that palpation alone is not an accurate diagnostic technique, and

that therefore, summary reports by USDA VMOs do not constitute

substantial evidence. Crawford v. Dept. of Agriculture, 50 F.3d

46 (D.C.Cir.1995). That court noted that the fact that horse

owners subsequently succeeded in convincing Congress that digital

palpation is unreliable is not relevant to the question of

whether the USDA appropriately relied on palpation as a technique

in the past. In the present case, however, the petitioners also

offer medical evidence—expert testimony and a written protocol—to

support the conclusion that digital palpation is not a reliable

diagnostic technique. 

 

3In cases rejecting the appeals of trainers and owners

contesting a soreness finding on the grounds that VMO affidavits

and summary reports cannot constitute substantial evidence, both

the Third and Sixth Circuits found it important that the

petitioners in the cases before them presented no

counter-evidence, aside from the petitioner's own testimony,

showing that the horse in question was not sore. Gray v.

U.S.D.A., 39 F.3d 670, 676 (6th Cir.1994); Wagner v. Dept. of

7

solely on palpations. See Pub.L. No. 102-341, 106 Stat. 873, 881-

882 (1992); see also H.R.Rep. No. 617, 102d Cong., 2d Sess. 48

(1992); S.Rep. No. 334, 102d Cong.2d Sess. 49 (1992). Congress'

new dictates do not retroactively bind an ALJ or a JO, but they do

support a conclusion that a diagnoses based solely on palpation and

recorded only in documents constituting hearsay where no

significant cross-examination can be done do not constitute

reliable evidence.2

It is important to note that in reviewing an administrative

decision, this court must look to the evidence in "the record

considered as a whole, not just evidence supporting the [agency's]

findings." N.L.R.B. v. Pinkston-Hollar Constr. Serv., Inc., 954

F.2d 306, 309 (5th Cir.1992) (citation omitted). In this case the

petitioners also presented substantial evidence indicating that the

horse was not sore.3 The petitioners offered the testimony of two
Agriculture, 28 F.3d 279, 282-83 (3d Cir.1994). 

 

4The JO discounts this testimony stating that there is a

possibility that an anesthetic had been applied to the horse's

leg before the examination. His basis for this conclusion is

pure speculation. There is no evidence in the record indicating

that an anesthetic was used and the JO even admits that the

evidence shows that it would be difficult for one to have been

applied out of public sight. 

8

private veterinarians and one off-duty DQP who examined "A Mark for

Me" immediately after inspection by the VMOs. All three testified

that they did not find soring.4 Indeed, the testimony of the

Government's DQP that he did not believe the horse to be sore also

supports the conclusion that the horse was not sore.

In cases where the Secretary of an agency does not accept the

findings of the ALJ, this court " "has an obligation to examine the

evidence and findings of the [JO] more critically than it would if

the [JO] and the ALJ were in agreement.' " Pinkston-Hollar Const.

Services, Inc., 954 F.2d at 309-310 (citation omitted); Garcia v.

Secretary of Labor, 10 F.3d 276, 280 (5th Cir.1993) (stating that

"[a]lthough this heightened scrutiny does not alter the substantial

evidence standard of review, it does require us to apply it with a

particularly keen eye, especially when credibility determinations

are in issue....). The ALJ specifically found petitioners'

witnesses' testimony to be more credible than the VMOs' testimony

as reported in the summary report and affidavits. The JO made the

opposite credibility determination essentially because he concluded

that the private veterinarians could not be unbiased since their

livelihoods' depended on their being in horse owners' good favor.

If this rationale were accepted, a trainer or owner would never be
 

5Sherman also argued that even if the finding that the horse

was sore is correct, he should not be found liable without a

showing that he knew that the horse was sore. Our determination

with respect to the soreness finding makes it unnecessary for us

to address this issue. 

9

able to counter a Government veterinarian's conclusion with the

conclusion of a private veterinarian because private practitioners

will always be dependent, in some way, on horse owners. We

therefore reject the JO's basis for finding the petitioners'

witnesses lacking in credibility.

The question regarding the credibility of the Government's

witnesses is not whether their testimony on the stand should be

found credible, because they could not testify as to whether "A

Mark for Me" was sore at that time. Both VMOs admitted that they

did not have a current recollection of the inspection. The

question is whether the documentary evidence of soreness presented

by the Government was credible. We hold that in light of the

significant evidence calling into question the probative value and

reliability of that documentary evidence where we are required to

apply stricter scrutiny to the JO's conclusions which contradict

the ALJ and in light of the substantial counter-evidence indicating

that the horse was not sore, the JO's determination was not

supported by substantial evidence and his decision should be

reversed and judgment should be rendered in favor of Young and

Sherman.5

REVERSED AND RENDERED.

EMILIO M. GARZA, Circuit Judge, dissenting:

The only question before us is not whether "A Mark for Me" was
 

1See Crawford v. U.S. Dep't of Agriculture, 50 F.3d 46

(D.C.Cir.1995) (noting that the relevant standard was the law at

the time of the events at issue, and holding that "we have no

legitimate basis to reject digital palpation as a diagnostic

technique, whether used alone or not, prior to the passage of the

[new law]" that rejected digital palpation as a sole diagnostic

method). 

10

in fact sore, but whether there is substantial evidence to support

the USDA's decision that the horse was sore. Based on the two

VMO's "objective" opinions, see maj. op. at 6 (acknowledging

objectivity of VMOs), I would hold that there is substantial

evidence,1 and, accordingly, I respectfully dissent.