Court Opinion

ID: 2997526
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:37:09.248722+00
Date Added: 2024-06-11T09:32:31.109479
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                         ____________

Nos. 04-2948 & 04-2909
HORN FARMS, INC.,
                                              Plaintiff-Appellee,
                                               Cross-Appellant,
                                v.

MIKE JOHANNS, Secretary of Agriculture, et al.,
                                    Defendants-Appellants,
                                          Cross-Appellees.
                         ____________
       Appeals from the United States District Court for the
        Northern District of Indiana, South Bend Division.
          No. 3:02 CV-0831 AS—Allen Sharp, Judge.
                         ____________
   ARGUED JANUARY 3, 2005—DECIDED FEBRUARY 2, 2005
                     ____________

  Before BAUER, EASTERBROOK, and WOOD, Circuit Judges.
  EASTERBROOK, Circuit Judge. Farmers who convert
wetlands to agricultural use lose eligibility for federal
agricultural subsidies. The initial version of this statute, 16
U.S.C. §§ 3821-24, enacted in 1985 and dubbed
“Swampbuster,” made the loss proportional to the amount
of wetland converted. An amendment in 1990 provided that
converting any wetland would cause the farmer to lose all
agricultural payments. A further amendment in 1996 added
an exception for wetlands that had been drained and
2                                  Nos. 04-2948 & 04-2909

farmed, had reverted to wetland status, and then were
restored to agricultural use. We must interpret and apply
the 1996 exception.
  In 1998 Horn Farms drained about 6.2 acres of wet-
lands. A system of tiles under that ground showed that this
was not its first conversion to farm use, but well before
1998 the system had broken down and the parcel had
reverted to wetland. The district conservationist concluded,
from the age of trees and other vegetation, that the ground
probably had become saturated again during the 1970s, and
certainly no later than 1981. This led local agricultural
officials to deem Horn Farms ineligible for the exception,
which covers: “A wetland previously identified as a con-
verted wetland (if the original conversion of the wetland
was commenced before December 23, 1985), but that the
Secretary determines returned to wetland status after that
date as a result of—(i) the lack of maintenance of drainage,
dikes, levees, or similar structures; (ii) a lack of manage-
ment of the lands containing the wetland; or (iii) circum-
stances beyond the control of the person.” 16 U.S.C.
§3822(b)(2)(D). The date on which the ground “returned to
wetland status” could not be determined with certainty, but
it preceded December 23, 1985—so much Horn Farms
concedes. Because the Department of Agriculture reads the
phrase “after that date” to refer to December 23, 1985, its
immediate antecedent, Horn Farms was ineligible for the
exception and lost all federal agricultural subsidies. (The
statute restores the subsidies if the farmer restores the
wetlands, but Horn Farms has declined to do this, and the
parties could not agree on the adequacy of its offer to
mitigate the loss in other ways. See 16 U.S.C. §3822(i).)
  Horn Farms contends that “that date” is the date of the
original conversion, so that any wetland converted to farm
use before December 23, 1985, always may be farmed again
without any loss of federal subsidy, no matter how long it
had been a wetland before the second conversion and no
Nos. 04-2948 & 04-2909                                      3

matter what its status on December 23, 1985. A federal
district court agreed with this position and directed the
Department to resume Horn Farms’ subsidy payments. 319
F. Supp. 2d 902 (N.D. Ind. 2004). The judge rejected Horn
Farms’ request that he declare the legislation unconstitu-
tional as a misuse of Congress’ spending power, so Horn
Farms remains at risk of losing federal support again if it
converts any wetland that had not been drained and farmed
some time before December 23, 1985. Both sides have
appealed; the Department of Agriculture also asks us to
review two other parts of the district court’s opinion that we
describe later.
   Because the district court remanded to the Secretary,
we must consider whether the judgment is appealable as a
“final decision” under 28 U.S.C. §1291. It is not clear what
the Secretary is supposed to do on remand; the judgment
omits all details. The remand appears to be the result of
careless drafting. The district court did not want the
Department of Agriculture to take more evidence and make
a fresh decision; instead the court contemplated that the
Department would restore Horn Farms’ subsidy. Yet if by
ordering a remand rather than a concrete remedy the judge
has made his decision non-final, an appeal is impermissi-
ble—though an application under Fed. R. Civ. P. 60(a)
might be in order to conform the disposition to the opinion’s
rationale. Given the rationale of Sullivan v. Finkelstein, 496
U.S. 617 (1990), and Forney v. Apfel, 524 U.S. 266 (1998),
however, the order is a “final decision” as it stands. Nothing
that the Secretary could do in the future would lead to a
fresh administrative order that the federal government
could take back to district court (and this independent of
the fact that the Department cannot petition for judicial
review of its own orders). It is thus now or never for an
appeal. Although Finkelstein and Forney concerned a
provision in the Social Security act rather than §1291, we
applied them to §1291 in Perlman v. Swiss Bank Corp., 195
4                                    Nos. 04-2948 & 04-2909

F.3d 975, 979 (7th Cir. 1999): “If the district court finds that
the decision was erroneous and enters a judgment wrapping
up the litigation, that decision is appealable even if extra-
judicial proceedings lie ahead; but if the court postpones
adjudication until after additional evidence has been
analyzed, then it has not made a final decision.” The district
court concluded that the Secretary’s decision was erroneous
and awarded Horn Farms all financial relief that it sought,
so the order is appealable now.
   Section 3822(b)(2)(D) is ambiguous. The referent of
“that date” could be December 23, 1985, as the Secretary
contends, but it also could be the date on which the wetland
was “previously identified” or the date on which the
“original conversion . . . was commenced”. Several contex-
tual elements support the Secretary’s reading. First,
December 23, 1985, is the last antecedent of “that date”. See
Barnhart v. Thomas, 540 U.S. 20, 26 (2003). Second, the
date on which a wetland was “previously identified” is
meaningless for land converted before December 1985, as
the statute’s approach to “identifying” wetlands did not
come into existence until then. Third, the date of orig-
inal conversion is an implausible candidate for the anteced-
ent, because then the phrase “before that date” and much
of the remaining language would serve no function. It would
be as if the statute exempted: “A wetland converted before
December 23, 1985, that the Secretary determines returned
to wetland status after that date as a result of . . .”. Any
reading that makes so much of a statute surplusage has
little to recommend it. Fourth, when “that date” is under-
stood to be December 23, 1985, the subsection is a non-
degradation clause: the legislation protects wetlands as
they actually existed on the date of its enactment, penaliz-
ing withdrawals without attempting to restore lands then
under agricultural production. Reading “that date” to be the
time of original conversion would allow net reductions in
wetlands after the legislation’s enactment—and would
Nos. 04-2948 & 04-2909                                      5

allow them in ways that are difficult to police, because
there would be few records to show the date of original
conversion, so farmers who drained wetlands after 1985
could make hard-to-refute claims that they were just going
back to some long-forgotten state of affairs.
  So the Secretary’s interpretation not only is reason-
able but also is the most sensible understanding of the
legislation. Moreover, because the interpretation is ex-
pressed in regulations adopted after notice and opportunity
for comment, see 7 C.F.R. §§ 12.2(7), 12.2(8), and concerns
the Secretary’s administration of a federal program, it
receives all of the deference contemplated by Chevron
U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837 (1984). Yet the district court concluded that a
solitary statement by one of the legislation’s sponsors
overrode all of this. The judge relied on an exchange that
took place in the House Agriculture Committee and was
summarized (though not reported verbatim) in the commit-
tee report:
    Mr. Daschle was recognized to offer a clarify-
    ing amendment to the previously adopted
    Swampbuster provisions. Mr. Daschle briefly
    explained the provisions of the amendment. Mr.
    Lewis offered an amendment to the amendment to
    clarify that the definition of wetlands would not
    include simply wet soils. Mr. Daschle said he would
    accept the amendment. The Committee agreed to
    the Lewis amendment by voice vote. Mr. Daschle
    and Mr. Lewis discussed the question of cropland
    that has been flooded and later reclaimed. Mr.
    Daschle stressed that the amendment would not
    affect the use of this land because if production was
    underway at any time in the past, the land would
    be grandfathered.
H.R. Rep. 99-271 (Pt. 1) at 419, 99th Cong. 1st Sess. (1985).
This implies that Rep. Daschle thought that the version of
the statute under consideration in 1985 allowed previously
6                                    Nos. 04-2948 & 04-2909

converted wetlands to be re-converted later without penalty.
What that has to do with the interpretation of an amend-
ment 11 years later is a mystery. The 1985 legislation
lacked any counterpart to §3822(b)(2)(D); Rep. Daschle
could not have been trying to pin down the antecedent of
“that date” in a bill whose drafting lay far in the future. The
district judge also did not explain why one representative’s
view would trump that of the Cabinet official to whom
administration has been delegated. If agencies and legisla-
tors read ambiguous language differently, the agency wins
under Chevron. When Congress delegates to the Executive
Branch a power of interpretation, it surrenders any oppor-
tunity to rule the outcome via statements in committee.
See, e.g., American Hospital Ass’n v. NLRB, 499 U.S. 606
(1991). Cf. United States v. Mead Corp., 533 U.S. 218
(2001). Thus the Secretary’s reading would prevail even had
the statement been contemporaneous with the statute’s
enactment. Cf. Continental Can Co. v. Chicago Truck
Drivers Pension Fund, 916 F.2d 1154 (7th Cir. 1990).
  This conclusion brings to the fore Horn Farms’ contention
that Congress lacks authority to make subsidies contingent
on preserving wetlands. Such a tie between the agricultural
subsidy and leaving wetlands alone is impermissibly
coercive, Horn Farms insists, and oversteps Congress’
authority under Article I §8 cl. 1 of the Constitution. He
relies principally on Justice O’Connor’s conclusion in South
Dakota v. Dole, 483 U.S. 203, 212-18 (1987) (dissenting
opinion), that the spending power may not be used in a way
that coerces states to surrender fundamental attributes of
their sovereignty. Beyond the fact that Justice O’Connor
wrote for herself alone is the fact that Horn Farms is not a
governmental body and lacks any sovereignty that can be
trampled upon. Anyway, if it is unduly “coercive” to link
agricultural subsidies to how the farmer uses (or misuses)
agricultural land, it must be unduly “coercive” to link the
subsidy to the agricultural product. A farmer can’t get
Nos. 04-2948 & 04-2909                                      7

federal payments for growing (or not growing) soybeans,
without actually growing the soybeans or allowing the land
to lie fallow. The sort of argument Horn Farms presses
would demolish, not the Swampbuster legislation, but
the whole system of agricultural subsidies, and indeed
all federal legislation (including tax credits and deductions)
linking financial rewards to the satisfaction of conditions.
Horn Farms could not gain from such a decision.
  The majority in South Dakota identified three potential
limitations on the spending power: conditions set on
expenditures must (i) promote the general welfare, (ii) be
unambiguous (at least when they affect states), and (iii)
relate to a legitimate federal interest. 483 U.S. at 207-08.
The first and third of these come to the same thing and
don’t help Horn Farms, which does not deny that preserva-
tion of wetlands (which support migratory birds and
other wildlife) promotes a legitimate federal interest
and thus a plausible conception of the general welfare—
a subject on which the legislature’s assessment is all but
conclusive. See McCulloch v. Maryland, 17 U.S. (4 Wheat.)
316 (1819). As for the second: the statute is as clear as
can be. Even the scholars most skeptical of Congress’ use of
conditional spending to achieve substantive goals would not
think this legislation problematic. See Laurence Claus,
“Uniform Throughout the United States”: Limits on Taxing
as Limits on Spending, 18 Const. Commentary 517 (2001);
Lynn A. Baker, Conditional Federal Spending After Lopez,
95 Colum. L. Rev. 1911 (1995). No surprise, then, that we
thought this legislation to be within national power the last
time it was challenged. See United States v. Dierckman, 201
F.3d 915, 922-23 (7th Cir. 2000). Horn Farms developed the
conditional-spending point more fully than did the parties
in Dierckman (our treatment there was correspondingly
succinct), but a more elaborate argument does not affect our
resolution. This makes it unnecessary to determine whether
the legislation could be supported at any event by the
8                                    Nos. 04-2948 & 04-2909

national commerce power. See Wickard v. Filburn, 317 U.S.
111 (1942).
   What we have said so far fully resolves the parties’
disputes. But the district court went further; actually
the district court began with a constitutional decision
that did not affect its judgment. The district court stated
that the Swampbuster legislation offends the due proc-
ess clause of the fifth amendment because it does not afford
farmers adequate opportunities for administrative review
of the district conservationist’s conclusion that particular
wetlands had been converted to farm use on particular
dates. 319 F. Supp. 2d at 912-16. The judge did not explain
why he considered a constitutional issue first, when
challenges to statutes’ validity should be entertained only
as a last resort. See Jean v. Nelson, 472 U.S. 846, 854
(1985); ISI International, Inc. v. Borden Ladner Gervais
LLP, 256 F.3d 548, 552 (7th Cir. 2001). As the judge later
determined that the dates of conversion, reversion, and
reconversion do not matter (provided that the original
conversion occurred before December 23, 1985), it was
unnecessary, on his understanding of §3822(b)(2)(D), to
consider the adequacy of the procedures used to determine
those dates. Constitutional adjudication is unnecessary on
our view of that statute as well: the timing question is
whether the converted ground was a wetland on December
23, 1985. This, too, is uncontested. So the agency did not
need to offer Horn Farms any procedures to find facts, for
there were no material disputes. A hearing was no more
essential before the agency than it was in the district
court—which granted summary judgment without offering
an evidentiary hearing. So we let the due process issue pass
without further analysis. The Secretary contends that the
district judge misunderstood how state and federal agencies
determine contested factual issues under the Swampbuster
legislation, but this topic we need not explore. It is enough
to say that the district court’s constitutional analysis in this
litigation lacks any precedential force.
Nos. 04-2948 & 04-2909                                      9

  At the close of its opinion, the district judge stated that
the Secretary’s removal of Horn Farms’ subsidy violated
5 U.S.C. §558, a part of the Administrative Procedure
Act, because it deprived Horn Farms of a “license” with-
out the procedures required by that subsection. 319
F. Supp. 2d at 921-23. On the district court’s view this was
irrelevant, because Horn Farms is entitled to prevail
independent of any procedural shortcomings. Moreover, the
district court’s understanding of §558 made its constitu-
tional ruling doubly gratuitous, because the court purported
to invalidate a set of procedures that, given its conclusion
about §558, did not apply to Horn Farms in the first place.
Because we have sided with the Secretary on substance,
however, §558 might offer an alternative ground for
relief—if not an award of the subsidy that Horn Farms
wants, at least for a remand at which it would be given an
“opportunity to demonstrate or achieve compliance with all
lawful requirements.” 5 U.S.C. §558(c)(2).
   It is not clear to us that Horn Farms wants that oppor-
tunity, which would mean a chance to turn the 6.2 acres
back into wetlands. Since the Swampbuster legislation itself
offers that opportunity, see 16 U.S.C. §1622(i), which Horn
Farms spurned, it is hard to see what role §558 could serve.
But, just in case, we add that the district judge’s under-
standing of §558 is mistaken. It deals with procedures to be
followed in connection with any “application . . . for a
license required by law”. Horn Farms did not “apply” for a
“license.” It wants a check drawn on the Treasury, not a
license—for it does not need any federal official’s permission
under Swampbuster either to engage in farming or to drain
wetlands. It is free to do as much of either as it wants
(subject to other legal constraints). Procedures to be used
for resolving disputes about whether land was wetlands,
and when conversions occurred, are provided in the
Swampbuster legislation and the implementing regulations,
independent of the APA.
10                                  Nos. 04-2948 & 04-2909

  That a farmer’s acts have financial consequences no more
makes a subsidy a “license” than it would make sense to say
that, because a taxpayer cannot claim the child-care credit
without actually having a child, the United States has
established a “licensing” requirement to bear or raise
children. Similarly the fact that a mortgage-interest
deduction becomes unavailable if the IRS concludes that the
taxpayer no longer has a mortgage does not mean that one
needs a license to borrow money on the security of real
estate. Doubtless §558 should be read so that it encom-
passes all situations in which federal approval is required
to undertake some act—even if the document is called a
“permit” or “certificate of public interest, convenience, and
necessity” rather than a “license.” See 5 U.S.C. §551(8)
(defining a “license” as “the whole or a part of an agency
permit, certificate, approval, registration, charter, member-
ship, statutory exemption or other form of permission”); see
also, e.g., Bullwinkel v. Department of Transportation, 787
F.2d 254, 256 (7th Cir. 1986) (pilots’ medical certificates);
Gallagher & Ascher Co. v. Simon, 687 F.2d 1067, 1072 n.5
(7th Cir. 1982) (“term special permits” required to import
certain merchandise); Anchestegui v. Department of Agricul-
ture, 257 F.3d 1124, 1129 (9th Cir. 2001) (cattle grazing
permit). But when no agency stands as a gatekeeper to a
proposed private activity, there is no “license” either.
 The judgment is reversed, and the case is remanded
with instructions to enter judgment against Horn Farms.

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit

                    USCA-02-C-0072—2-2-05