## United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 97-1902

___________ Appley Brothers; Appley Farms, * Inc.; Kevin Beerman; Tom Curry; * Dakota Eastern, Ltd.; Hayes & * Hayes, Inc.; Sam Hatton; Robert * Hebeler; Dean Hebeler; Heckathorn * Farms, Inc.;Curt Jervik; Dennis * Kjose; Gordon Kleihauer; David * Larsen; Morris Larsen; Todd Larsen; * Lyle Lawrensen; Eldean Lykken; * Lawrence McInerney; Martin * Appeal from the United States McInerney; Daniel O'Connor; Kelly * District Court for the O'Connor; Owen Quall; Burnette * District of South Dakota. Quam; Mark Quam; Lyle Wagner; * Kaylor Grain Co.; Viborg Coop * Elevator; Hurley Elevator; * * Plaintiffs - Appellees, * * v. * * United States of America, * * Defendant - Appellant. *

___________ Submitted: December 11, 1997 Filed: January 15, 1999

___________The appellees are farmers, farm corporations, and grain elevators who sold or 1 stored grain at Bird Grain Company: Appley Brothers; Appley Farms, Inc.; Kevi n Beerman; Tom Curry; Dakota Eastern, Ltd.; Hayes & Hayes, Inc.; Sam Hatton; Robert Hebeler; Dean Hebeler; Heckathorn Farms, Inc.; Curt Jervik; Dennis Kjose; Gordon Kl eihauer; David Larsen; Morris Larsen; Todd Larsen; Lyle Lawrensen; Eldea n Lykken; Lawrence McInerney; Daniel O'Connor; Kelly O'Connor; Martin McInerney; Owen Quall; Burnette Quam; Mark Quam; Lyle Wagner; Kaylor Grain Co., Inc. ; Viborg Coop Elevator; and Hurley Elevator. For convenience, we will refer to them collectively as Appley Brothers.
-2- Before MCMILLIAN, JOHN R. GIBSON, and MAGILL, Circuit Judges.

___________ JOHN R. GIBSON, Circuit Judge.
This Fed eral Torts Claims Act case based on negligent inspection of a grai n wareh ouse is before us for the second time. In Appley Brothers v. United States , 7 F.3d 720 (8th Cir. 1993) ( Appley Brothers I ) , we reversed the district court's dismissal of Appley Bro thers' suit. We ruled that Appley Brothers' claim was based on th e 1 U.S.D.A.'s breach of a mandatory duty, and therefore jurisdiction of the suit was not barred by the discretionary f unction exception to the F.T.C.A. We remanded the case to the distr ict court and, after developing a factual record inconsistent with the fact s befor e us on the motion to dismiss, the government moved for summary judgment , again arguing that the suit was barre d by the discretionary function exception. Appley Brothers also moved for partial summary judgment. The district court denied th e government's motion for summary judgment and granted summary judgment on th e merits i n favor of Appley Brothers. Appley Brothers v. United States , 924 F. Supp

. 944 (D. S. D. 1996). The court held, on the expanded record, that the mandatory duty on which we based our ruling in Appley Brothers I was not applicable. Nevertheless, the cour t held that the U.S.D.A. breached a different mandatory duty that cause d Appley Brothers' losses . The court awarded damages of $516,479.69. On appeal, the government argues the court erred in concluding that the discretionary functionWe will refer to this inspection as the April 1 inspection. 2
-3- exception did not apply and in determining that U.S.D.A. owed Appley Brothers a duty of care based on the "Good Samaritan" doctrine. We affirm.
Appley Br others deposited its grain for sale or storage with Bird Grai n Com pany, a warehouse licensed by the Department of Agriculture under the Unite d States Warehouse Act , 7 U.S.C. §§ 241-273 (1994). U.S.D.A. inspectors discovered massive grain shortages at Bird Grain in November 1988. The U.S.D.A. suspended Bird Grain's license on November 18, 1988. Bird Grain was not able to satisfy th e cla ims against it, and Appley Brothers received a pro rata distribution. Apple y Brothers sued the United States alleging that the U.S.D.A. inspection of August 5 , 1988, should have revealed the grain shortages, and that if the U.S.D.A. ha d dis covered the shortages earlier, it would have revoked Bird Grain's license an d prevented Appley Brothers from delivering grain to Bird Grain after that date.
U.S.D.A. inspectors conducte d inspections of Bird Grain on three occasions in 1988: March 29 through April 1; August 5; and November 15. 2

The U.S.D.A. handbooks define four distinct types of examinations, with di ffering purposes and scopes. An "original" examination is performed on a wa rehouse to determine whether it meets the standards for licensing under th e Warehouse Act. After a warehouse is licensed, the U.S.D.A. regularly schedule s "subsequent examinations" to determine th at the warehouse is operating in compliance with t he Act and regulations. These subsequent examinations include an attempt t o
asc ertain that the warehouse has sufficient quantities of grain on hand to meet it s obligati ons to its customers. The U.S.D.A.'s goal is to conduct subsequen t
ex aminations twice a year at licensed warehouses, on a surprise basis. A "specia l exami nation" is defined in the U.S.D.A.'s Grain Warehouse Examiner's Handbook as
a lim ited examination to obtain specific information, to be scheduled as needed. A special examination would be-4-

conducte d upon request of the "Washington, national, area, or ASCS Commodit y Office." The requesting office would specify the information desired, the service t o be rendered, the form of report to be submitted, and the degree of urgency. Finally, an "amendment ex amination" is an examination made in connection with a change in the warehouse's license, for instance, adding or deleting a storage bunker to be covered by the license.

If an ins pector noticed a deficiency in the warehouse's compliance with th e li censing requirements that he believed should be corrected, he could issue th e warehouse a Form WA-125, a "Memora ndum of Adjustment." Supervisory personnel would then review the WA-1 25, together with the warehouseman's response to it, and decide whether and what further action is warranted.

The April 1 examination included a routine "subsequent" examination of Bir d Grain's permanent storage facilities. This exam ination included a review of warehouse records and a physical inventory of the grain in stock. John Iten, the examiner, issued a Form WA-125 citing Bird Grain for four violations: deferred payment contracts that had not been signed by the grain prod ucer; "show short positions" (storage obligations exceede d stocks) that occurred within the last year; a quality deficiency in cor n inventory; and a quantity deficiency in soybean inventory. Bird Grain's president and general manager, Den nis Bird, responded to the WA125 form, addressing each item:

Deferred payments contracts are from landlords whom [sic] live a lon g ways away. I will get the tenant to sign for them. All short positions were covered instantly as soon as we realized we were in a short position. I normally watch this very carefully so as to keep us out of a short position. Al loff grade Corn was replaced while examiner was here. Soybea n inventories have been reduced as of date examiner left.-5-

924 F. Supp. at 950.
John Lamborn, the supervisor in t he Kansas City Commodities office, reviewed the WA-125 and Bird's response. He determined that the onl y serious deficiency in the group was the "show-short positions," which were past events that had already bee n corrected by the time of the April examin ation. The quality deficiency in corn was not
a serious problem, because the deficit was less than one percent of Bird Grain's total stoc ks, and thus considered by the U.S.D.A. to be "operational", in other words , slippage that occurs in the normal course of business. The soybean deficiency wa s fixed during the examination by simply reducing the amount of "company-owne d stocks, " or soybeans the warehouse credited to its own account. Lamborn accepte d Bird's explanation of the unsigned contracts and his plan to rectify the irregularity

. Therefore, Lamborn did not schedule a follow-up exa mination for the main warehouse, but simply dispos ed of the WA-125 as "Next Exam will verify," which meant that the examinerwould check that the conditions had really been corrected at the nex t "subsequent" examination.
Also during the April inspection, Iten condu cted "special rollover" examinations of two temporary storage bunkers, XX and YY, which were about a mile away from the main w arehouse, but were in use because of a grain surplus. It was necessary for the temporary bunkers to be relicensed yearly, and the special rollover examination s we re required for relicensing. These bunkers accounted for 716,000 bushels o f licensed space, and on April 1 actually held more than th eir licensed space: Bird Grain loaded 316,000 bushels of corn into XX in August of 1986, and 419,000 bushels o f corn into YY in November 1986. Iten found deficiencies and issued WA-125s on each of t he bunkers. Iten noted that "[t]he protective covering [on Bunker XX] has hole s in it that need to be repaired." Iten also noted in Bunker XX "insects injurious t o grain" and a "hard spot," which is a condition that indicates the grain is deteriorating. It en concluded: "Continuation of the bunker as approved storage space would b e contin gent

upon action taken to comply with WA-125 issued 4-1-88." Dennis Bir d agreed to-6-

remedy the se problems. Iten also issued a WA-125 for Bunker YY directing Bir d Grain to repair the tarp covering the grain stored there. Bird a greed to repair or replace the tarp.
Lamborn was satisfied with Bird's response and disposed of the WA-125s on the temporar y bunkers as "Next Exam will verify." However, Steve Mikkelsen, of th e Li censing Authority Branch, reviewed the WA-125s from the rollover examinatio n without kn owing of Dennis Bird's response or of Lamborn's disposition of the WA

125s. Mikkelse n therefore caused the Warehouse Examination Division to conduct a special examination to ch eck on the status of the WA-125s on the temporary bunkers. Iten c onducted the special examination on August 5, 1988. The examination wa s limited to the conditions noted in the previous WA-125s on the temporary bunkers ; it did not extend to the conditions noted in the WA-125 fo r the subsequent examination
cover ing the permanent warehouse and did not entail a physical inventory. Iten' s report on the special examination stated:
Special examination completed to check complianc e with WA-125 issued 4-1-88: Section XX has been emptied at this time. Se ction YY is in the process of being emptied (just started). WA-12 5 issued to move to other approved storage space as tarp is in state o f disrepair & heavy infestation of in sects noted. Corn stored here is still in good condition & would grade #2YC now.
Iten issued a new WA-125 requiring Bird to move the corn stored in YY. The same day, at B ird's request, Iten conducted an amendment examination to delete th e te mporary storage bunkers as licensed storage space, which reduced Bird Grain' s licensed storage capacity to 631,000 bushels.
The parties agree that after the April subsequent examination, Bird Grain started loading out grain without reducing obligations, and that by the end of May it had a-7-

deficiency of 440,238 bushels. By Septemb er the deficiency had hit a high of 475,689 bushels.
When the U.S.D.A. conducted the next subsequent examination in November 1988, the examiners discovered the huge grain deficiencies. On November 18, th e U.S.D. A. suspended Bird Grain's license. The U.S.D.A. took over operation of th e warehou se and liquidated the remaining inventories. Appley Brothers sued, claiming that U.S.D.A.'s negligent inspection of the warehouse delayed the closing of th e warehouse and damaged the depositors.

The dis trict court granted the government's motion to dismiss for lack o f jurisdiction, concluding the suit was barred by the discretionary function, 28 U.S.C

. § 2680(a ), and misrepresentation, 28 U.S.C. § 2680(h), exceptions to the F.T.C.A

. This court reversed the dismissal, holding that neither exception applied. Apple y Brothers I , 7 F.3d at 721. We held that the discretionary function exception did not apply, because the inspector conducting the August special examination had a mand atory duty to determine whether Bird Grain had corrected the grain shortage s noted during the April subsequent examination. We reasoned that a provision in th e U.S.D.A. handbook required the inspector to issue a new "TW-125 " if the old WA-125 had not been cleared, and since the inspector performing the August examination did not check for correction of the inventory shortages noted during the April subsequent examination, he breached that duty. Id. at 723-26.

We remanded the case to the district court . The parties conducted additiona l dis covery. The government then moved for dismissal or summary judgment, arguing that the undisputed facts developed in discover y showed the claims were barred by the discretionary function exception.

The distric t court held that the "undisputed evidence now paints an entirel y different pict

ure" from the record before this court in Appley Brothers I , and that our-8-

court "likely w ould not have ruled the same way had it had before it the facts no w before this Court." 924 F. Supp. at 955. Under the facts now before the court, th e purpose o f the August special examination was limited to following up on the tw o WA-1 25's citing deficiencies in the temporary storage bunkers; it did not include a dire ctive to follow up on grain shortages noted in the broader "subsequent " examination of the entire Bird Grain operation. Id. at 949 , 955. Thus, contrary to our understanding of the facts in Appl ey Brothers I , Iten had no duty in the August special examinat ionto check for correction of the grain shortages noted in the Apri l subse quent

examination. Nevertheless, the district court concluded that th e discretionary function exception did not bar Appley Brothers' suit. The court
co ncludedthat the inspector violated a different mandatory directive, labele d "Deterioration and Out-of-Condition Grain." That directi ve provided that the "[r]eport must also be specific regarding quantities and locations (within the storage facilities) of out-of-condition commodities." The court held that Iten was required to investigate the "whereabouts or the condition of" the out-of-condition grain noted in the WA-125
on the temporary bunkers, and that if he had done so, it was "highly likely" that h e would have discovered the massive grain shortages. Id. at 960.

Havi ng decided that the suit was not barred by the discretionary functio n exception, the court con sidered whether the U.S.D.A.'s negligence would give rise to
a cause of a ction under state law, which is incorporated as the standard for liabilit y under the F.T.C.A. 924 F. Supp. at 961 (citing 28 U.S.C.A. §§ 1346(b), 2674). The court concluded that So uth Dakota law imposed a duty of care on the U.S.D.A. under the Good Samaritan

doctrine. Id. at 962-63. The court held that a primary purpose of the Wareho use Act inspections was to protect the warehouse's depositors such a s Appley Brothers, and that Appley Brothers relied on the U.S.D.A.'s inspections. Id

. This would establish a Good Samaritan duty. Id. Based on a stipulation as to damages, the court awarded $516,479.69 in dama ges to Appley Brothers. The government appeals.-9- I. The government argues that the new facts sho w Appley Brothers' claim is based on conduct protected by the discretionary function exception to the F.T.C.A. If a claim falls w ithin the discretionary function exception, the court has no subject matte r jurisdiction over the case. Dykstra v. United States , 140 F.3d 791, 795 (8th Cir. 1998). Since subject mat

ter jurisdiction is a threshold consideration, "the district court has broader power to decide its own right to hear the case . . . ." Bellecourt v. Unite d States , 994 F.2d 427, 430 (8t h Cir. 1993) (quoting Osborn v. United States , 918 F.2d 724, 729 (8t h Cir. 1990)), cert. denied , 510 U.S. 1109 (1994). In determining it s jurisdiction, a district court may make findings of fact, which we review for clear error. Bellecou rt, 994 F.2d at 430. See Wessels, Arnold & Henderson v. National Med

. Waste, Inc. , 65 F.3d 1427, 1431 (8th Cir. 1995); Osborn , 918 F.2d at 729-30

. However, i n this case, both parties filed motions for summary judgment and agree d that the facts were undisputed. Likewi se, the district court concluded that the material facts were not disputed and theref ore did not purport to make findings of fact. 924 F. Supp. at 949. Accordingly, we review the record to determine "whether those facts are indeed undi sputed." Osborn , 918 F.2d at 730. By contrast, we review the distric t court's application of the law de novo. Id.
The F.T.C.A. authorizes suits against the United States for damages:

forinjury o r loss of property, or personal injury or death caused by th e neglig ent or wrongful act or omission of any employee of th e Government while

acting withing the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred. 28 U.S.C. § 1346(b)(1).
This broad waiver of sovereign immunity is subject to the discretionary function-10-

exception, which provides that the United States shall not be liable for:
[a] ny claim . . . based upon the exercise or performance or the failure to ex ercise or perform a discretionary function or duty on the part of a fed eral agency or an employee of the Government, whether or not th e discretion involved be abused.
28 U.S.C. § 2680(a).

Our initial inquiry then is "whether the challenged actions were . . . controlled by mandat ory statutes or regulations" or whether they were discretionary in nature

. Unit ed States v. Gaubert , 499 U.S. 315, 328 (1991). If the duty was mandatory, and if the government empl oyee violated such a duty, the discretionary function exception will not provide immunity because there is no room for choice and no discretio n involved. Id. at 324.
If the government employee's action was not g overned by a mandatory duty, but involved an element of choice, we must then determine whether that judgment is of the kind that the

discretionary function exception was designed to shield. See Berkovitz
v. Unite d States , 486 U.S. 531, 536 (1988). The purpose of the exception is t o "prevent judicial 'second-guessing' of legislative and administrative decisions grounded in so cial, economic, and political policy through the medium of an action in tort. " United States v. Varig Airlines , 467 U.S. 797, 814 (1984).

The gove rnment argues that the district court erred in interpreting one sectio n of the U .S.D.A. handbook to require an expanded search of the entire Bird Grai n complex , whereas the special examination ordered was actually limited to th e temporary bunkers. The gov ernment argues that finding a duty to track down the outof-condition grain fo rmerly in Bunker XX is contrary to the handbook's conception of a special examination and to the instructions Iten received from his superiors, and that it makes no sense in light of the realities of grain storage.-11-

The district court generally recognized that Iten's marchin g orders for the August examinat ionwere quite circumscribed, and the court refused by and large to charg e Iten with a duty to ascertain the overall health of the Bird Grain warehouse:

Plai ntiffs assert that "[e]ven a cursory visual inspection at the mai n facility would have uncovered the shortages." . . .
Examiner Iten was not sent to Bird Grain to conduct a complete physical inventory. He had no reason to believe from Bird Grain's Daily Position Record that he should conduct a physical inventory.
924 F. Supp. at 959. However, the court concluded that one paragraph in th e handboo k

section on special examinations did oblige Iten to go beyond reporting o n the tem porary bunkers, and that if he had obeyed that paragraph, it is highly likely he would have disc overed the massive shortages. The district court based its holding on Part IV of the Grain Wareho use Examiner's Handbook, titled "Special Examinations," which states:

Dete rioration or Out-of-Condition Grain -- In making an examination o f this nature [i.e., a special examin ation directed to out-of-condition grain], the e xaminer is primarily concerned with the commodity and conditio n s p ecified in the assignment. However, he should not fail to report other obvious de ficiencies noted during his examination. Examination reports on out -of-condition commodities should clearly describe the type an d extent of damage involved and should assess the warehouseman' s capability, or inability, to condition the commodity. The report must also be spec ific regarding quantities and locations (within the storag e facilities) of out-of-condition commodities.
Id. at 959.

The district court held that this handbook provision constituted a mandator y regulation requiring Iten to determine Bird Grain's disposition of out-of-conditio n grain previously stored in section XX. Id. The court reasoned:-12-

Ite n's April 1, 1988, WA-125 regarding section XX, although not a s specific as the handbook required, leaves no doubt that at least some of the corn stored in section XX was out-of-condition grain. . . . Iten could not simpl y ignore the fact that section XX, which had contained out-of-condition corn, wa s compl etely empty. In accordance with the instructions set out in the handbook, Ite n had a responsibility to determine whether any of the out-of-condition corn from section XX remained "within the storage facilities." Storage facilities is plural, so at leas t inquiry should have been made to see if the 300,000 bushels of corn, or some part of it, was elsewhere in the storage facilities. Iten admits that he did not ask Dennis Bird what had happened to the corn in section XX or otherwise in vestigate whether any part of it was sold or remained within the elevator. . . . Through invest

igating the whereabouts or the condition of the more than 300,000 bushels of corn removed from section XX, it is highly likely that Iten would have discovered the massive shortages at Bird Grain.

Id. at 960 (citations omitted).
The government argues that all Iten was expected to do was inspect Bunker XX;
once he lea rned that the corn had been moved from XX, he had only to report tha t Bunker XX was empty, which he did. The government states that Iten had n o obligation to trace the whereabouts of the corn or conduct a physical inventory t o determine if any of the corn re mained within "the storage facilities." The government presented the affidavit of Supervisor Steven Mikkelsen stating that an attempt to trace the w hereabouts of the corn after it had been moved from Bunker XX would b e meaningless:

Grain is a fungible product generally stored on a commingled basis . . . . Once grain is moved from one location to another, it effectively looses whatever "identity" it had while stored at a particular location.

. . . ExaminerI ten was not required to trace Bird Grain's disposition of th e cor n formerly in bunker XX. There are no requirements by statute , regulation or procedure for tracing the particular disposition of a-13-

particular lot of grain. The governm

ent also produced Lamborn's affidavit stating that Iten was not required to check on the disposition of the corn which had been previously stored in bunker XX. Lamborn explaine d that in many cases, merely moving the corn would recondition it, and that in other cases, mingling it with good condition corn would bring the mixture within th e standards for number two yellow corn. Therefore, the governmen t
e mphasizes that once the corn was moved, it may well have lost its status as "out-ofcondition" or "deteriorating" corn, and the provision relied on by the district court did not apply.

Th e shortcoming of the government's argument, however, is that the distric t court did not say that the handbook required a physical tracing of the corn. Indeed, the court determined that the handbook required, at the very least, an inquiry as to th e whereabouts of the corn. The statement in the handbook emphasizes: "The report must also be specific regarding quantities and locations (within the storage facilities) of out-of-condition commodities." The requirement that the report be specific in these respects e stablishes, at the very minimum, a duty to investigate. The direction t o follow up on out-of-condition commodities is consistent with other provisions in th e U.S.D.A. handbooks. The Handbook identifies one purpose of the specia l exami nation is to "check quality deterioration of stocks." The Grain Warehous e Examiner's Handbook requires the examiner "in all instanc es where a previously issued Form TW-125 [memoran dum of adjustments] has not been completely cleared, . . . to issue a new Form TW-125 listing those conditions which remain uncorrected at th e time of the special examination."

Had Iten conducted any investigation about the disposition of the previousl y repor ted deteriorating corn, the discretionary exception would likely protect Iten' s dec isions in conducting that investigation. Here, however, Iten conducted n o investigation at all. The district court specifically stated: "Since Iten did not check or-14-

inquire to see i f any corn from XX remained in the elevator or storage facilities he, of
course, did nothing to see if the out-of-condition corn had been reconditioned, or if it had deteriorated further." 924 F. Supp. at 960.

Our reasoning also disposes of the government's argument that even if th e handbook required some follow-up investigation as to the whereabouts of the corn, the di scretionary function exception bars this suit because the handbook does not clearly and specifically define what Ite n was supposed to do. The government points out that this court has consistently required t hat the regulation at issue dictate a specific course of conduct in order for the conduct to rise to the level of a mandatory duty. See , e.g. , Mc Michael v. United States , 856 F.2d 1026, 1033 (8th Cir. 1988) (evacuation i f lightning); cf. C.R.S. v. United States , 11 F.3d 791, 799 (8th Cir. 1993) (agenc y gui delines suggest that those charged with policy's implementation retained wid e latitude regarding its execution).

In Tracor/MBA, Inc. v. United States , 933 F.2d 663 (8th Cir. 1991), we held that the government had discretion in conducting a safety inspe ction. We reasoned that the inspection was similar to the inspection in Varig Airlines , in that the safet y checklist d id not prescribe a course of action for the inspector to follow in checkin g compliance or taki ng action should a problem exist. Here, although the inspector had discretion in selec ting how he would investigate the status of previously reported outof-condition grain, he had no discretion not to undertake some investigation. Cf

. also Deuser v. Vecera , 139 F.3d 1190, 1194-9 5 (8th Cir. 1998) (no policy set forth for terminating an arrest). It is undisputed that Iten did no thing to investigate the condition
or wherea bouts of the previously reported out-of-condition corn, as he was require d to do by the manual. Thus, this case is much closer to McMichael than Tracor

. See McMichael , 856 F.2d at 1030-34.

Likewi se, the First Circuit recently determined that the discretionary functio n exception foreclosed a claim based on a negligent OSHA inspection in Irving v. United-15-

States , No. 96-2368, 1998 WL 869672, at *6-15 (1st Cir. Dec. 18, 1998). The court concludedthat the OSHA inspection did not require the inspectors to examine every
ma chine in a plant and was akin to the "spot check" inspection process, "squarel y withinthe Varig Airlines regime." Id. at *12-13. Irving differs from our case in that the Irving plaintiff complained about the negligent way the OSHA inspector s conducted their inspectio n. Here, the Appley Brothers' complaint centers on a lack of investigation required by a mandatory U.S.D.A. directive.

Mi kkelsen's statement that there are no requirements by statute, regulation, o r procedure for tracing the disposition of the corn does not create a genuine factual issue
as to whether Iten had a mandatory duty to investigate the whereabouts of the corn

. We recognize that when a government agency has administrative authority over a regu lation or procedure, we are obliged to accord great deference to the agency' s reasonab le interpretation thereof. See Chevron, U.S.A., Inc. v. Natural Resourc e Defens e Council, Inc. , 467 U.S. 837, 844-45 (1983). Here, however, Mikkelsen' s st atement is directly contrary to the plain language of the handbook. His statemen t does not create a genuine issue of fact as to the nature of the duty imposed by th e handbook. See Bowles v. Seminole Rock & Sand Co. , 325 U.S. 410, 414 (1945 ) (admin istrative interpretation is controlling unless "plainly erroneous or inconsisten t with th e regulation"). The "Deterioration or Out-of-Condition Grain" provisio n permittedthe district court to conclude that the USDA inspector had no discretion to make an independent policy judgment as to whether he should check on the status of previously reported out-of-condition grain.

Because th ere was no mandatory directive to physically trace the corn, th e go vernment

contends that the discretionary function exception cannot apply, as an y disco very of the shortfall would have been purely coincidental. The government , however, does not contest the fact that at the time of the August 5 inspection, th e warehouse was short 358,011 bushels of corn, representing 43% of the warehouse' s outstanding obligations.-16-

The gove rnment's argument that merely asking about the whereabouts of th e
corn would not have led to the discrepancy is speculative, as Iten made no inquiry

. The government's theory simply does not diminish the district court's statement tha t had Iten i nvestigated the whereabouts or the condition of the more than 300,00 0 bushe ls of corn removed from XX, it is highly likely he would have discovered th e massive shortages of grain. See 924 F. Supp. at 960. If this statement of the district court strays into an area beyond t hat of undisputed facts, and perhaps it does, then our standard of review permits us to decide whether such a finding is clearly erroneous

. Se e Bellecourt , 994 F.2d at 1431 (disputed factual findings used to determin e juris diction reviewed under clearly erroneous standard); Wessels, Arnold & Henderson , 65 F.3d at 143 1 . As stated, the record establishes that Bird Grain began cleari ng out the storage facilities shortly after the April 1 inspection, and that o n August 5 the facility was short over 350,000 bushels of corn, close to half of its total obl igations. Thus, the determination that a reasonable inspection would have led t o discover the massive grain shortages is supported by un disputed facts in the record and is no t clearly erroneous. See United States v. United States Gypsum Co. , 333 U.S

. 364, 394 (1948) (inferences drawn from documents or undisputed facts should not be setaside unless they are clearly erroneous). Accordingly, the district court correctly conclu ded that Iten had a mandatory duty to investigate the status of the corn note d during the Au gust 5 inspection. The discretionary function exception does not bar this claim.

II.

Under t he Federal Tort Claims Act, the United States is only liable when " a private pe rson[] would be liable to the claimant in accordance with the law of th e place: where the allegedly tortious act or omis sion occurred." 28 U.S.C. § 1346(b)(1). The district court determined that the U.S.D.A. had a common law duty under th e "Good Samaritan" doctrine. South Dakota courts, following the Restatement (Second) of Torts § 324A, have recognized that:-17-

One who undertakes, gratuitouslyor for consideration, to render services to another which he should recognize as necessary for the protection of a third p erson or his things, is subject to liability to the third person fo r physical harm resulting from his failure to exercise reasonable care t o protect his undertaking, if (a) his failure to exercise reasonable c are increases the risk of such harm, or (b) he has undertaken to perform a duty owed by the other to the third person, or (c) the harm is suffered because of relian ce of the other or the third person upon the undertaking. Schoenwald v. Farmers Co-op. Ass'n , 474 N.W.2d 519, 521-22 (S.D. 1991).
The government first argues that no duty was imposed under the Goo d Samaritan doctrine because the U.S.D.A. did not perform a "direct service to particular persons." The government argues that the U.S.D.A.'s mandate under the Warehouse Act is to facilitate interstate commerce in agricultural goods by establishing unifor m standard s for federally-licensed warehouses, and that the U.S.D.A. did not undertake to ren der a service to the farmers which was "necessary" for their protection. Th e government contends that the U.S.D.A.'s actio ns were undertaken to further regulatory goals, and that the farmers who stored grain at the federally licensed warehouses were only incidental beneficiaries of the U.S.D.A.'s enforcement activities.

In Schoenwald , the South Dakota Supreme Court affirmed a finding that a n insuranc e company which performed an inspection of its insured had no duty under § 324A of t he Restatement to perform the inspection non-negligently. 474 N.W.2d a t 521-22. The court rea soned that the insurance company did not undertake to perform
a duty o f providing a safe work environment. Id. at 522. "Merely because a n individual or a company performs an inspection does not, in and of itself, create an-18-

obligation to perform suc h inspection in a non-negligent manner." Id. at 520. Central to t his conclusion was evidence that the insured had no expectation that the insure r performe d the inspection for its benefit. Id. at 522. Benefit to the insured from th e insurer's insp ections by way of comment of observations on safety problems does not establ ishan intent to perform a duty of providing a safe working environment o n behalf of the insured. See id. ; accord Schultz v. Mills Mut. Ins. Group , 474 N.W.2d 522, 526 (S.D. 1991).
By contrast, the U.S.D.A. inspections were for the purpose of protecting th e interests of the farmers who stored grain at Bi rd Grain. That purpose is set forth in the Warehouse Examiner's Handbook:

to protect the interests of depositors and their pledgees. In examining a fed erally-licensedwarehouse, we represent the interest of a great man y depositors and holders of federal warehouse receipts. . . . The Handbook explains:

An individual depositor, other than the Commodity Credit Corporation , cannot ordinarily make the kind of tests or examinations necessary t o as sure himself that a warehouse operation as a whole is sound an d solvent. He lacks the authority, the means, and the knowledge required to make a complete examination, and withou t a complete examination, he cannot be certain that his interests are fully protected. Legislative history related to the Warehouse Act specifically discusse s examinations at licensed warehouses:
The information developed is of primary be nefit to sellers and depositors, the owners of stored inventory, who individually are not in a position to determine whether their interests are being properly safeguarded. Senate Comm. on Agriculture, Nutrition, and Forestry, Legislative History of the-19-

Omnibus Bu dget Reconciliation Act of 1981, S. Rep. No. 97-35, at 42 (1981) , reprinted in

1981 U.S.C.C.A.N. 396, 432. More recent amendments to the Warehouse Act and its supporting regulations emphasize that one of the objectives of th e Warehou se Act is to protect producers and others who store their property in publi c war ehouses. Cotton Warehouses; Definitions, Financial statement, Bonding and Net Asset Requirements, Warehouse Bonds and Transfer of Stored Cotton, 53 Fed. Reg. 27,147, 27,148 (1988) (amending regulations at 7 C.F.R. Part 735). Thus, the reason for the warehouse inspections makes clear that the U.S.D.A. did "undertake to render a service" which was "necessary" for the protection of those who stored grain at Bird Grain.

We also reject the government's argument that plaintiffs did not detrimentall y rely on the U.S. D.A.'s August 5 special examination. The government points out that under the Act, the warehouseman bears the responsibility for complying with the Act and its regulations and U.S.D.A. inspections do not relieve the warehouseman of this resp onsibility. The government further argues that merely knowing that Bird Grai n was a federally-licensed warehouse is insufficient to prove reliance on the U.S.D.A

. inspection.

In Dorking Genetics v. United States , 76 F.3d 1261 (2d Cir. 1996), the Second Circuit held that certain cattle buyers could not prove reliance on the United States' s negligent inspection of cattle. Id. at 1268. In that case, a foreign cattle buyer asserted that the United States had a duty to the Zimbabw ean government to prohibit the export of cattle whic h did not meet the country's health requirements. Id. at 1267. Th e Sec ondCircuit disagreed, pointing out that Zimbabwe did not dispense with its ow n insp ection program in reliance on the United States' prohibition of the export o f infected catt le. Id. at 1268. The reason for the inspection in Dorking Genetics wa s differ ent from the reason for the inspection procedure here. The testimony of th e plaintiffs who stored grain at the warehouse, as well as the evidenc e about the purposes underl ying the Warehouse Act, show that the farmers did not and could not perfor m their own-20-

inspec tions of Bird Grain, and that they reasonably relied on the U.S.D.A. inspection process. Cf. Florida Auto Auction v. United States , 74 F.3d 498, 505 (4th Cir. 1996) (no evide nce that automobile auctioneers relied on customs officials to enforc e regulation requiring presentation of certi ficates of title before allowing the exportation of automobiles); Myers v. United States , 17 F.3d 890, 904 (6th Cir. 1994) (primar y responsibility for mine safety lay with mine owners and miners; injured miners could not reasonably rely on inspection b y Mine Safety and Health Administration). We are therefore persuaded that if the United States were a private person, it would be liable to Appley Brothers under South Dakota law.
We affirm the judgment of the district court.
A true copy.

Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.