N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT

W AGNER

HAR M ON, Pla i ntiff-Appe lla

nt,

v. UNITED STATES DEPAR TM ENT OF AGR IC ULTUR E ,

De fe nda n t-Appe l le e . No. 14-35228 D.C . No. 4:12-c v-00094-SEH

M EM O R ANDUM *

Appe a l from

the Unite d

Sta t e s Distric t C ourt for the Distric t of M o nta

na Sa m E. Ha ddon, Distric t

Judge , Pre siding A rgue d a nd Subm itte d

August 31, 2016 Se a ttle , W a s hington B e fore : HAW KINS, M c KEOW N, a nd DAVIS, ** C irc uit Judge s. In this Adm inistra

tive Proc e dure Ac t c a s e, W a gne r Ha rm on (“ Ha rm on” )

a ppe a ls the distric t c ourt’ s gra nt of sum m a ry judgm e nt to t

he Unite d Sta te s, a ffirm ing the de c ision of t

h e U.S. De pa

rtm e nt of Agric u lture Fa rm Se rvic e Age nc y (“ FSA” ) tha t



# FIL ED
DEC 22 2016 M OLLY C. DW Y ER, CLERK U

. S. CO URT O F APPEALS

* This disposition is not ap p r o pr iate for public a tion a nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.

* * The Honora

ble Andre M . Da v is, Se nior Unite d Sta te s C i rc uit Judge for the U .S. C ourt of Appe a ls for the Fourth C irc u it, sitting by de signa tion.Ha rm o n wa s ine l igible for fa rm progra m pa y m e nts he ha d re c e ive d from 2 005 through 2008 a nd m ust re fund those pa

y m e nts. 1 Unde r the de finitions se t forth i n the re gula tions tha t we re in for c e a t the tim e Ha rm o n file d his a

pplic a tion a s a n individua l, the a ge nc y de te rm ine d

tha t in orde r to be “ a p e rson who is e ligible to re c e ive pa y m e nts with re spe c t to a

pa rtic ula r fa rm ing ope ra t ion,” Ha rm o n ne e de d to not only de m onstra te tha t he wa s “ a c tive ly e nga ge d in fa rm ing,” 7 C .F.R

. § 1400.201(a ) (2005), but a lso tha t he qua l ifie d a s a “ s ep a ra te pe rson” a s de fine d in subse c tion 2 of the de finition of “ pe rson” in 7 C .F.R . § 1400.3 (2005). 2 An a ge nc y ’ s inte rpre ta tion of its own re gula tions is e n title d to de fe re nc e unle ss it is “ pla inly e rrone ous, i n co n s i s te nt with t he re gula tion, or ba se d on a n

1 W e gra nt Ha

rm on’ s unoppose d M otion to Ta k e Judic ia l Notic e . 2 Tha t subse c tion provide s: In orde r for a n i n dividua l or e ntity , othe r tha n a n individua l or e ntity tha t is a m e m be r of a joint op er at ion, to b e c onside re d a se pa ra te pe rson for the purpose s of this pa

rt, in a ddition to othe

r provisions of this pa

rt, the individua l or e ntity

m ust: (i) Ha ve a se pa

ra te a nd distinc t inte re st in the la n d or the c rop involve d; (ii) Exe rc ise se pa

ra te re sponsibility

for suc h inte re st; a

nd (iii) M a inta in funds or a c c o unts se pa ra t e from tha t of a ny ot h er individua l or e ntity

for suc h inte re st.

2im

pe rm issible c o nstruc tion o f t h e gove rning sta t ute .” Pauly v . U

.S. De p ’t of Agric

. , 348 F.3d 1143, 1148 (9th C ir. 2003). H er e, the de finition of “ pe rson” in § 1400.3

e xpre s sly a

pplie s to a ll of pa

rt 1 400 (Pa y m e nt Lim ita

tion a nd Pa y m e nt E ligibility ), 7 C .F.R

. § 1400.3(b), a nd 7 C .F.R

. § 1400.101(a ) (2005) c a n re a sona bly be re a d not to
ove rride the re quire m e nts spe lle d out the re . T h e a ge nc y ’ s inte rpre ta tion is thus

c onsiste n t with the re gula tions a nd not pla inly

e rrone ous. In a ddition, the a ge nc y ’ s de te rm ina t ion tha t H a rm o n h a d not shown tha t he wa s
a s epa ra te pe rson from Little M uddy LLC (“ Little M uddy ” ) wa s supporte d by substa nti al e vide nc e . Ha rm on c la im s tha t he a nd Little M uddy m e re ly m a de

c om bine d p urc ha se s toge the r to t a ke a dva nta ge of Little M u ddy ’ s b u l k p u r c ha se disc o un t an d tha t he re im burse d Little M uddy for his sha re of the purc ha se s. Howe ve r, the re c ord re fle c ts a la rge num ber o f une xpla ine d tra nsfe rs or l oa ns ba c k

a nd forth be twe e n Ha rm on a nd Little M uddy a t ra ndom i n t er v al s a nd without

a c c om pa ny ing doc um e nta tion, whic h strongly sugge sts a c om i ngling of funds a n d

m a king ope ra t ing loa

ns to one a nothe r, so blurring the line s b e twe e n t he t wo a s to

m a ke it im

possible to de t e rm i ne the true a sse ts a nd lia bilitie s of e ithe r. The a ge nc y ’ s de te rm ina t ion tha t Ha rm on’ s fa i lure t o m a inta in se pa ra te ne ss
re quire d a re t

urn of progra m funds, e ve n though he did not re c e ive m ore tha n the pe rpe rson pa y m e nt lim i ta tions of 7 C .F.R

. § 1400.1(g) (2005) , w a s n ot a rbitra ry a n d

3c a

pric ious. N o t hi n g i n the sta t ute or re gula

tions a uthoriz e s a pe rson to re ta in funds for whic h he or she n e ve r e sta blishe d e l igibility in the first pla c e . R a the r, Ha rm on h a d t h e opportunity t o m a ke this a rgum e nt in s e e k ing e quita ble re l ie f from the dire c tor, 7 U.S.C

. § 7996(b), who c onside re d the re q ue st b ut ultim a te ly de nie d it b ecau s e he de te rm i ne d Ha rm on ha d not m a de a good fa i th e ffort to c om ply

. W e l a c k jurisdic tion to re vie w tha

t disc re tiona

ry de c ision. Id. § 7996(f). The “ fina lity rule ,” whic h provide s tha t a n y de te rm ina tion by a sta te or c ounty FSA be c om e s “ fina l

. . . a nd binding 90 da y s from the da te the a

pplic a tion for be ne fits ha s be e n fi l ed,” 7 C

. F.R

. § 7 18.306(a ), did not pre ve nt the FSA from e va lua ting Ha rm o n’ s p r o g r a m e ligibility

. The fina lity rule c onta ins e xc e ptions if the de te rm i na tion wa s ba se d on m isre pre se n ta tions or fa lse sta te m e nts or if the re c ipie nt ha d re a s on to know the de te rm ina tion wa s e rrone ous. Id. § 7 18.306(a )(2), (4). The se
e xc e ptions do not re quire tha t the pa rtic ipa nt a c te d m a lic iously or with an i n t e n t to de c e ive , only tha t inc o rre c t i nfo r m at i on wa s supplie d t ha t le d to the e rrone ous de te rm i na tion. He re , the a pplic a tion inc lude d m isinform a tion t ha t H a rm on provide d 100% o f c a

pita l a n d la

bor o n his fa rm a nd t

ha t he d id not re c e ive a ny ope ra ting loa ns from re la te d e ntitie s. Fina lly , t he la te ne ss of the NAD dire c tor’ s de te rm ina tion doe s not re nde r it void

a nd pe rm it Ha

rm on to ke e p the funds. Although t he dire c tor did not m e e t

the thirty

4da

y de a d line in the sta

tute for issuing a de te rm ina tion, 7 U .S.C

. § 6998(b)(2), the sta tute c onta ins no re m e dy for a fa i lure to c om ply . In suc h insta

n c e s , c ourts will not fa shion the ir o w n sa

nc tion or pe na lty for nonc om plia nc e . Se e Unite d State

s v . J ame s Danie l Good Re al P r o

p . , 5 10 U.S. 43, 63-64 (1993); c f. Idaho Farm Bure au Fe d’n

v . Babbitt , 58 F.3d 1 392, 1400 (9th C ir. 1995) (“ [F] a ilure of a n a ge nc y to a c t within

a sta tutory tim e fra m e doe s not ba r subse que nt a ge nc y a c t ion a bse nt a spe c ific indic a tion tha

t C ongre s s inte nde d the tim e fra m e to se rve a s a ba r.” ). AFFIRM E D.

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