Court Opinion

ID: 2765990
Source: CourtListenerOpinion
Date Created: 2014-12-31 20:00:40.669845+00
Date Added: 2024-06-11T10:45:27.327754
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                              No. 14-1017

STEVE BASS; TERRY H. BASS,

                 Plaintiffs – Appellants,

           v.

TOM   VILSACK,    Secretary   United     States     Department   of
Agriculture,

                 Defendant - Appellee.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Wilmington. Malcolm J. Howard,
Senior District Judge. (7:11-cv-00239-H)

Argued:   October 30, 2014               Decided:    December 31, 2014

Before SHEDD, AGEE, and WYNN, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Thomas A. Lawler, LAWLER & SWANSON, Parkersburg, Iowa,
for Appellants.    Matthew Fesak, OFFICE OF THE UNITED STATES
ATTORNEY, Raleigh, North Carolina, for Appellee.        ON BRIEF:
Thomas G. Walker, United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Raleigh, North Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

     The “Swampbuster” provision of the Food Security Act, 16

U.S.C. § 3821, prohibits persons who participate in programs

administered    by   the   United     States     Department      of    Agriculture

(“USDA”   or     “the      agency”)      from       converting        wetlands    to

agricultural use without authorization.                   Appellants Steve and

Terry Bass (collectively “the Basses”) seek judicial review of a

final decision of the USDA finding them in violation of this

provision.     Because we agree with the district court that the

agency conformed with controlling statutes and did not commit a

clear error of judgment in its decision, we affirm.

                                       I.

     This case centers around a piece of farmland in Sampson

County, North Carolina, referred to as Farm 3188, Tract 8355,

Field UN2 (“Field UN2”).         Joe Bass, the original owner of this

tract, filed an application in 1994 with the USDA seeking a

wetland determination in anticipation of clearing Field UN2 for

agricultural     crop      production.              The    National      Resources

Conservation    Service       (“NRCS”),       the    division     of     the     USDA

responsible    for   making    wetland       determinations,     concluded       that

                                         2
Field UN2 contained approximately 38 acres of wetlands. 1                                  Joe

Bass was properly notified of this determination and informed

that       clearing,    draining,       or     altering      these      areas      to     make

possible      the   planting      of    a    commodity    crop       would       render    him

ineligible      for    most     USDA    farm      programs.       Joe    Bass      took     no

further administrative action regarding the NRCS determination,

which thus became final.

       In 2004, Joe Bass again filed an application seeking to

convert Field UN2 to farmland, falsely representing that he had

not “previously received a wetland determination or delineation

on this tract from [NRCS.]”                 (J.A. 103.)        Apparently unaware of

the    1994    wetland     determination,           an   NRCS     wetland        specialist

completed an on-site inspection of Field UN2, which resulted in

another      NRCS     wetland    determination,          issued      March       23,    2005,

concluding      that     the    tract       contained     at    least       28    acres     of

wetlands.

       NRCS informed Joe Bass that this determination would become

final unless he requested further review or mediation within

thirty      days.      However,    the       NRCS   letter     did    not    include,       as

required by USDA regulations, a notice that he could also appeal

to the USDA’s National Appeals Division (“NAD”).                             This defect

       1
       NRCS was then known as the Soil Conservation Service.                               For
ease of reference, we refer to this division and                                           its
predecessors as NRCS.

                                              3
rendered        the   2005      determination      procedurally     deficient.

Nonetheless, Joe Bass did not pursue an appeal and he later

died.    His interest in Field UN2 passed to the Basses.

        NRCS was required and did notify the U.S. Army Corps of

Engineers (“USACE”) of its 2005 wetlands determination, which

prompted the USACE to issue a letter to the Basses advising that

it might also have jurisdiction over Field UN2 under the Clean

Water Act.        The USACE letter recommended having the property

inspected.       The Basses then hired a private consultant, the Land

Management Group, Inc. (“LMG”), to provide wetland mapping for

the tract.       LMG prepared a report finding no wetlands on Field

UN2, but its evaluation did not meet any of NRCS’s requirements

for determining the presence of wetlands under the Food Security

Act.

       In response to the LMG report, the USACE conducted a site

visit and found waters of the United States over which it had

jurisdiction      along   the   southern    boundary   of   Field   UN2.     The

USACE    then    notified    the   Basses   that   this   determination     only

“applies to Section 404 of the Clean Water Act,” and that it

“may or may not be valid for identifying wetlands or waters

subject to the rules of the Food Security Act.”               (J.A. 434.)

       Without contacting or seeking any information from NRCS,

the Basses drastically altered Field UN2 by removing the natural

forest    and    woody    vegetation   through     logging,    stump   removal,

                                        4
drainage, and disking to prepare the tract for agricultural use.

The   Basses    sought       a    cropland     acreage        determination        from    the

USDA, which triggered an investigation by NRCS to determine if

the Food Security Act was violated by the alteration of the

tract.

      NRCS conducted an on-site inspection and determined that

Field UN2 contained wetland hydrology prior to its alteration.

As part of its investigation, NRCS also examined whether the

Basses could qualify for a minimal effects exemption under 16

U.S.C. § 3822(f), which permits alteration of a wetland if the

changes      have     only       a     “minimal       effect     on       the     functional

hydrological        and    biological         value      of    the    wetlands      in     the

area[.]”       Id.         The       exemption     did    not    apply      because        NRCS

determined     that       the    effects      of   the    wetland         conversion       were

greater than minimal.

      NRCS     then       worked       with    the     Basses        to    determine       the

feasibility of mitigating the converted wetlands on Field UN2,

but   those    efforts          proved   unsuccessful.               Consequently,         NRCS

issued a final technical determination in June 2010 finding that

Field UN2 contained at least 13.5 acres of converted wetlands.

The   Basses    were       then       declared       ineligible       for       programs    or

benefits administered by the USDA.

      The Basses timely filed an administrative appeal with the

NAD, which held a lengthy evidentiary hearing.                              In a written

                                              5
decision, the NAD affirmed NRCS’s final determination that Field

UN2 contained converted wetlands in violation of 16 U.S.C. §

3821.       The hearing officer found that NRCS had met its burden of

proving that wetlands were present on Field UN2 prior to its

alteration,      and        it     now    contained     at     least        13.5    acres   of

converted      wetlands.            In    addition,    the    hearing        officer    found

NRCS’s       evidence       and     testimony       more      credible,         specifically

observing that the Basses’ private consultant did not complete

its wetland survey in compliance with the applicable guidelines.

       Pertinent      here,        the    Basses    attempted          to   argue    that   no

wetlands       existed       on     Field     UN2     prior       to    their      conversion

activities.      The hearing officer found this issue barred under 7

C.F.R. § 12.30(c)(4), which provides that once a final wetland

determination has been made any appeal regarding a potential

conversion is “limited to the determination that the wetland was

converted[.]”         Id.        Noting the absence of any evidence that NRCS

had    rescinded      its        1994    determination       or    that     the    property’s

prior owner had appealed that determination, the hearing officer

precluded the Basses from presenting evidence that the property

did not contain wetlands.

       The Basses then filed this lawsuit seeking judicial review

of    the    USDA’s   final        action.      Their      complaint        raised    several

claims, but only two are now at issue on appeal: (1) did the NAD

hearing officer err by limiting their appeal in the manner noted

                                               6
above; and (2) did NRCS incorrectly perform a minimal effects

determination in compliance with 16 U.S.C. § 3822(f)?

     The district court granted the USDA’s motion for summary

judgment, finding no error in the hearing officer’s decision to

preclude the Basses from re-litigating the question of whether

wetlands ever existed on Field UN2.             Specifically, the court

held:

           [T]here   was  at  least   one  valid  prior
           certified wetland determination in existence
           at the time of the plaintiffs’ conversion of
           Field UN2.      In such circumstances, the
           review of the agency’s 2010 determination
           that conversion occurred is properly limited
           to that question of conversion on appeal
           before the agency, and thus to this court as
           well. . . .

           . . . .

           . . . The agency reasonably interpreted its
           own regulations by limiting the scope of
           review to whether a conversion took place,
           thus the court must defer to the agency.

(J.A.   62-64.)      The   district   court   also   held   that   it   lacked

jurisdiction over the minimal effects claim because the Basses

never pursued this argument during the administrative process

and thus “failed to exhaust their administrative remedies[.]”

(J.A. 64.)

     The Basses timely appealed, and this Court has jurisdiction

pursuant to 28 U.S.C. § 1291.

                                      7
                                              II.

         We review the district court’s ruling on summary judgment

de novo.        See Holly Hill Farm Corp. v. United States, 447 F.3d

258,     262     (4th     Cir.     2006).        However,       this       Court,       like    the

district court, reviews the underlying decision from the USDA

pursuant       to   the     Administrative            Procedures      Act    (“APA”),        under

which the agency’s decision must be upheld unless “arbitrary,

capricious,         an     abuse     of     discretion,         or        otherwise      not    in

accordance with law[.]”                  5 U.S.C. § 706(2)(A); see also Holly

Hill     Farm    Corp.,      447    F.3d    at        262-63    (applying         APA   judicial

review to a final determination of the NAD).                                  Following this

narrow     standard,        we     are    “not       empowered       to    substitute        [our]

judgment for that of the agency.”                        Md. Dep’t of Human Res. v.

U.S.     Dep’t      of    Agric.,     976    F.2d       1462,    1475      (4th     Cir.     1992)

(citation and internal quotation marks omitted).                                   Rather, our

task      is    “to       determine       whether       the     agency       conformed         with

controlling statutes,” and “whether the agency has committed a

clear error of judgment.”                 Id. (citations and internal quotation

marks omitted).

                                                 A.

         The NAD hearing officer limited the Basses’ appeal pursuant

to   7    C.F.R.      §    12.30(c)(4),       which       provides         that    if    a   prior

wetlands         determination            exists        for     purportedly             converted

                                                 8
property, any administrative appeal is limited to the issue of

whether wetlands were converted.           After remarking that the 2005

wetland determination was deficient, the hearing officer found

that the 1994 determination was a final, certified decision for

purposes of this regulation.

      The Basses argue that the NAD hearing officer contravened

16 U.S.C. § 3822(a)(4) in reaching that conclusion, citing the

statutory     language       that   provides       “[a]     final      [wetland]

certification . . . shall remain valid and in effect . . . until

such time as the person affected by the certification requests

review of the certification by the Secretary.”                    16 U.S.C. §

3822(a)(4).    Relying on this provision, the Basses contend that

the   1994   wetland   determination       was   made    void   when   Joe   Bass

requested a new wetland determination in 2004.                   They conclude

that, because the 1994 determination was invalid at the time of

their appeal, “7 C.F.R. § 12.30(c)(4)’s limitation [could] not

apply [and] [t]he hearing officer’s ruling to the contrary is an

error of law.”    (Opening Br. 21.)

      We find this argument to lack merit.              By its plain terms, §

3822(a)(4)     ends    the      validity     of     an     existing     wetland

determination only when an aggrieved landowner “requests review”

of that decision.      We agree with the USDA’s position (regardless

of the deference applied) that Joe Bass’s actions in 2004 were

                                      9
not a request for review, making this provision inapplicable. 2

Accordingly, the NAD hearing officer did not act contrary to law

in concluding that the 1994 determination was a valid wetland

decision that limited the Basses’ appeal.

     Furthermore, even assuming the hearing officer erred in the

manner    alleged,   the    result   in   this   case   would   be   unaffected

because the evidence was overwhelming that Field UN2 contained

wetlands prior to its conversion.           Any error on the part of the

USDA was therefore harmless, and the Basses’ argument fails.

See Ngarurih v. Ashcroft, 371 F.3d 182, 190 n.8 (4th Cir. 2004)

(noting    that   the      harmless-error    doctrine     is    available   in

judicial review of administrative actions).

     2
       Citing to SEC v. Chenery, 332 U.S. 194 (1947), the Basses
contend that this argument is unavailable because it was not
relied upon by the NAD hearing officer in the administrative
decision below.    While generally a reviewing court may only
judge the propriety of an agency decision on the grounds invoked
by the agency, see id. at 196-97, the court is not so bound
when, as here, the issue in dispute is the interpretation of a
federal statute.    See N.C. Comm’n of Indian Affairs v. U.S.
Dep’t of Labor, 725 F.2d 238, 240 (4th Cir. 1984) (“We do not .
. . perceive there to be a Chenery problem in the instant case
because the question of interpretation of a federal statute is
not ‘a determination or judgment which an administrative agency
alone is authorized to make.’” (citation omitted)).

                                      10
                                           B.

       The Basses next claim that NRCS did not correctly perform a

minimal effects determination under 16 U.S.C. § 3822(f).                                The

district court determined it lacked jurisdiction to adjudicate

this   claim     because    the    Basses       never   raised      it    during   their

administrative         appeal.     While    we     agree     that    the    Basses      are

foreclosed from pursuing this claim on appeal, we reach that

result on a different basis than the district court.

       The Supreme Court has long held that it is inappropriate

for    courts     to    consider    arguments       not      developed      before      an

administrative         agency    because    doing       so   usurps      the     agency’s

function.        See    Woodford   v.   Ngo,      548   U.S.   81,       88-91    (2006);

United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 36–

37 (1952); see also Pleasant Valley Hosp., Inc. v. Shalala, 32

F.3d   67,   70    (4th    Cir.    1994)    (“As    a    general      matter,      it   is

inappropriate for courts reviewing appeals of agency decisions

to    consider    arguments       not   raised      before     the       administrative

agency involved.”).         As explained by the Supreme Court,

             orderly procedure and good administration
             require that objections to the proceedings
             of an administrative agency be made while it
             has opportunity for correction in order to
             raise issues reviewable by the courts. . . .
             [C]ourts     should     not    topple   over
             administrative     decisions    unless   the
             administrative body not only has erred but
             has erred against objection made at the time
             appropriate under its practice.

                                           11
L.A. Tucker Truck Lines, Inc., 344 U.S. at 37.

      In Sims v. Apfel, 530 U.S. 103 (2000), the Supreme Court

further explained that the need for issue exhaustion is, first

and   foremost,       a    question     of   statutory        construction     and     that

agencies generally have the power to adopt regulations requiring

issue exhaustion.            Id. at 107–08.         Where the relevant statutes

and regulations do not clearly require exhaustion, however, a

court-imposed issue exhaustion requirement may be appropriate.

Id.     at    108.        “[T]he     desirability        of    a    court    imposing      a

requirement of issue exhaustion depends on the degree to which

the   analogy        to    normal     adversarial    litigation         applies       in   a

particular administrative proceeding.”                    Id. at 109.         Where the

parties are expected to fully develop the dispute during the

course of an adversarial proceeding, the rationale for requiring

issue exhaustion is at its strongest.                    Id. at 110.         Conversely,

where    an    administrative          proceeding    is       not    adversarial,       the

reasons for requiring issue exhaustion are much weaker.                         Id.

      There     is    no     statute    or    regulation       that    mandates       issue

exhaustion in this case.              See Mahon v. U.S. Dep’t of Agric., 485

F.3d 1247, 1256 (11th Cir. 2007) (“[T]here is no express issue

exhaustion requirement in the NAD regulations[.]”).                             However,

the regulations that describe the review process before the USDA

reflect       that    this        process    is   adversarial         and    that     issue

exhaustion      should       be    required.       Id.    (“The      NAD’s    procedures

                                             12
provide an adversarial system in which parties are given a full

and     fair    opportunity            to     make     their     arguments       and     present

evidence,      and,     as   a     corollary,           to    attempt      to   challenge     the

arguments      and    evidence         presented         by    the    agency.”);       see    also

Downer v. U.S. Dep’t of Agric., 97 F.3d 999, 1005 (8th Cir.

1996)     (noting       that       a        general      exhaustion        of    remedies      is

insufficient in the context of a wetlands determination, and

specific issue exhaustion is required).                          Indeed, every court to

address this question has found that issue exhaustion applies to

similar proceedings before the USDA.                            See, e.g., Ballanger v.

Johanns,       495    F.3d       866,       868-71      (8th     Cir.      2007);      Care   Net

Pregnancy Ctr. of Windham Cnty. v. U.S. Dep’t of Agric., 896 F.

Supp. 2d 98, 110 (D.D.C. 2012).                        Finding these cases persuasive,

we agree that an issue exhaustion requirement applies.

      The      Basses    had      ample        opportunity       to     raise    the     minimal

effects claim at each phase of the administrative proceeding and

before the NAD, yet they failed to do so.                              Instead, the Basses

focused their administrative appeal on arguing that Field UN2

did not contain wetlands prior to its conversion.                                 This course

of    action     denied      the       USDA       an    opportunity        to   exercise      its

discretion      and     expertise            in   considering        any    minimal      effects

claim.      On these facts, preclusion is appropriate.                              See Mahon,

485 F.3d at 1256-57 (precluding claims raised for the first time

                                                  13
in   federal     court      and    never     presented        to   the    NAD   during       the

plaintiffs’ administrative appeal).

      Although        the     district          court     incorrectly           viewed      the

foregoing as a jurisdictional bar, see Pleasant Valley Hosp.,

Inc.,     32   F.3d   at    70     (“[T]his      general      rule    is    not    a    strict

jurisdictional        bar,        it    is   a       prudential      one[.]”),         it    was

ultimately      correct      in    its    decision       to   forego      review       of   this

claim.         Accordingly,        we    find    the     district        court’s   decision

without reversible error. 3

                                             III.

      For the foregoing reasons, the judgment of the district

court is

                                                                                   AFFIRMED.

      3
       Apparently forecasting this hurdle, the Basses argue that
plain error would result if we decline to consider this claim.
Under this doctrine, as applied in our civil jurisprudence, we
will correct an error not raised previously if it is “‘plain’
and our refusal to consider it would result in a miscarriage of
justice.”   Nat’l Wildlife Fed’n v. Hanson, 859 F.2d 313, 318
(4th Cir. 1988) (citation omitted).    Plain error analysis, in
the noncriminal context, is very rarely available, and then only
to correct particularly egregious errors. See In re Under Seal,
749 F.3d 276, 285-86 (4th Cir. 2014). It is not at all evident
that NASD erred in its minimal effects determination in the
manner alleged.      Moreover, this type of error does not
constitute a “miscarriage of justice” as defined in our case
law. See Holly Hill Farm Corp., 447 F.3d at 268; see also In re
Celotex Corp., 124 F.3d 619, 631 (4th Cir. 1997). We therefore
find this doctrine inapplicable.

                                                14