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Mittelstadt v. Vilsack

United States District Court, W.D. Wisconsin

June 14, 2017



          WILLIAM M. CONLEY District Judge.

         Plaintiff Mark Mittelstadt brings this action under the judicial review provision of the Administrative Procedure Act, (“APA”), 5 U.S.C. § 702, challenging a final decision of Tom Vilsack, then Secretary of the U.S. Department of Agriculture (“USDA”), which upheld the denial of re-enrollment of his land in a conservation program administered by the USDA's Farm Services Agency (“FSA”).[1] Before the court is plaintiff's motion for summary judgment, seeking an order directing re-enrollment and awarding monetary relief for “breach” of an alleged, binding contract. (Dkt. #18.) For the reasons explained below, the court will not only deny summary judgment to plaintiff, but will affirm the Secretary's rulings. As for his remaining contract claim, plaintiff will be given an opportunity at trial to respond to the court's conclusion that judgment should be entered against him on the undisputed material facts pursuant to Fed.R.Civ.P. 56(f).


         A. Enrollment in Conservation Resource Program

         The Conservation Resource Program (“CRP”) is a land conservation program administered by the FSA allowing farmers to enter into ten- to fifteen-year contracts to “remove environmentally sensitive land from agricultural production and [to] plant species that will improve environmental health and quality.” (Pl.'s Opening Br. (dkt. #15) at 4.) In exchange, farmers receive a yearly payment. Plaintiff Mark Mittelstadt owns land in Richland County, Wisconsin, which had been enrolled in the CRP continuously from 1987 through 2006.

         B. 1998 Re-enrollment -- Contract 653

         Before 1998, Mittelstadt managed the land consistent with a 1990 “‘Managed Forest Law Management Plan' that identified mandatory practices that [he] had to complete, as well as a hand-drawn site map that showed the location of and types of trees that [he] had planted.” (Decl. of Frank Jablonski, Ex. 5 [hereinafter “Deputy Director Decision”] (dkt. #16-5) at 2.) In March 1997, Mittelstadt submitted an offer to re- enroll all 62.9 acres of his land in the CRP, indicating “that the acreage had a conservation practice of CP11, or ‘vegetative cover - trees - already established.'” (Id.)

         Based on the information in Mittelstadt's 1997 application, the FSA gave his land an Environmental Benefits Index (“EBI”) score of 50, which corresponded to a designation of “Pine established with less than 500 trees per acre with strips of native herbaceous and shrub plantings best suited for wildlife in the area, mixed hardwoods established, or longleaf pine.” (Id. at 2-3 (emphasis added).) The FSA approved re-enrollment of Mittelstadt's CRP land in Contract 653, which was effective between 1998 and 2007.

         C. 2007 Re-enrollment -- Contract 1710

         In February 2006, the FSA notified Mittelstadt about the opportunity to re-enroll Tract 9073 in the CRP for another 10 years. (Id. at 3.) Tract 9073 was eligible for re-enrollment in the CRP because it was still enrolled during the final year of Contract 653. 7 C.F.R. § 1410.6(a)(3).[3] The process for re-enrollment is set forth in the FSA's “Handbook for the Agricultural Resource Conservation Program” (“Handbook”). (Decl. of Frank Jablonski, Ex. 1 [hereinafter “Handbook”] (dkt. #16-1).) According to the Handbook, after the applicant submits an “offer” to participate in the CRP, the county FSA office must first complete an eligibility review, and then the state office must review the offer's “detail and summary reports.” (Pl.'s Opening Br. (dkt. #15) at 9.) After those steps are completed, the Conservation and Environmental Programs Division (“CEPD”), a division of the FSA, reviews and ranks the offers for CRP re-enrollment.

         In response to the FSA's notification, Mittelstadt indicated to the Richland County FSA office that he would like to re-enroll. To begin the re-enrollment process, Mittelstadt paid for a “spot-check” inspection of Tract 9073 in March 2006. A representative of the Richland County FSA office inspected Tract 9073 in May 2006. The inspection revealed no violations, finding “62.9 CP11 Tre[es] already est” and “good.” (AR 168-69.) Those findings were consistent with an earlier “Status Review” conducted by a “district conservationist, ” who noted, “Trees are growing [and] looking good. No violations.” (AR 179.)

         Following the May 2006 inspection, CEPD determined that Tract 9073 was acceptable for re-enrollment. Mittelstadt was then sent “Contract 1710, ” a form CRP contract from the USDA's Commodity Credit Corporation (“CCC”), which identified Tract 9073 with a CP11 conservation practice. Mittelstadt signed that contract on July 26, 2006, but it was never countersigned by the CCC. Instead, Mittlestadt signed a revised version of Contract 1710 on August 19, 2006, which was amended to reflect accurately the acreage of Tract 9073. Although Jared Reuter, the County Executive Director of the Richland County FSA, did sign this amended version of Contract 1710 on behalf of the CCC on or around September 13, 2006, his signature was later “whited-out, ” apparently by someone at CCC. As a result, Mittelstadt never received a countersigned copy of that agreement either.[4] (Def.'s Opp'n Br. (dkt. #20) at 7-8; AR 160.)

         Along with the amended Contract 1710, another agency of the USDA, the Natural Resources Conservation Service (“NRCS”), sent Mittelstadt a conservation plan for Tract 9073 in August 2006. That plan identified the conservation practice as CP11, a “mixed stand (2 species) of hardwoods best suited for wildlife in the area.'” (Deputy Director Decision (dkt. #16-5) at 3.) The cover letter attached to the plan stated, “There are no management practices required. You are responsible for removing trees or brush from the CRP land if it was not planted as part of the original[] planting.” (AR 153.) Mittelstadt signed the plan on August 24, 2006, and the Richland County Land Conservation Department approved it on September 1, 2006. The two involved USDA agencies signed off on the plan shortly after that: NRCS on September 5, 2006, and FSA on September 13, 2006.

         D. Cancellation of Contract 653

         As FSA's County Executive Director, Reuter conducted two so-called “maintenance inspections” of Tract 9073 on the 14th and 16th of September 2006.[5](Deputy Director Decision (dkt. #16-5) at 3.) A letter to Mittelstadt dated September 21, 2006, followed, advising that “it was observed on the 2005 aerial photo that three areas of your CRP appeared to have suffered tree loss that the field reporter did not originally report during the re-enrollment compliance check.” (AR 99.) After listing findings from the inspection, the letter further warned:

Violations of this type can result in termination of the acreage involved which will require refunds of all annual payments, cost-sharing, interest from the date of disbursement and assessment of liquidated damages. If the County Committee (COC) determines good faith in relation to the violation, a payment reduction will be assessed on the acreage involved and by a date by which the acreage must be back in compliance will be established.

(Id. at 99-100.) The September 21 letter also noted that the COC would discuss the issues raised by the inspections at their next meeting, then closed with a final warning to Mittelstadt that his “re-enrollment/extension offer cannot be approved until this issue is settled.” (Id. at 100.)

         The COC discussed the findings of the inspection at a hearing on October 25, 2006. The following day, the COC sent Mittelstadt a letter terminating Contract 653. In support of the termination, the COC explained, in relevant part:

The remaining acreage left on the contract has a failed population of red oak which has been determined through documentation received from the appellant and statements made during the appeal hearing. Due to the failed red oak the score of 50 points under the N1a scoring factor for a mixed hardwood stand of trees (more than one species of hardwood trees) was erroneous at the time of sign-up in 1997.

(Id. at 74 (emphasis added).) The letter further explained that that “re-enrollment of this land is no longer eligible for the offered ten year contract as the land is no longer considered CRP due to the termination based on the erroneous enrollment.” (Id.)

         D. Appeals

         Mittelstadt appealed the COC's determination to the Wisconsin State FSA Committee, which upheld the decision by letter dated August 13, 2007. In reaching its decision, the State Committee determined that “[t]here are no areas of the contract that qualify as ‘mixed hardwoods.'” (Id. at 35.) In support of that finding, the State Committee referenced the 1990 Managed Forest Law Management Plan and attached map, concluding, “This document clearly shows there was not a mixed stand of hardwoods planted. It shows single species of hardwoods in the two largest areas (pines used as trainer trees) were planted and that the smallest area was planted solely with white pines.”[6] (Deputy Director Decision (dkt. #16-5) at 4 (citing AR 25).) Consistent with the COC's determination, the State Committee also concluded that: (1) “the scoring of the contract in 1997 was incorrect”; and (2) “[t]he acreage is also ineligible for re-enrollment through the re-enrollment and extension process that was conducted in 2006 because the current contract was not in compliance.” (AR 35.)

         Mittelstadt next appealed to the USDA's National Appeals Division (“NAD”). At a prehearing conference, the “parties stipulated that the sole issue on appeal was the erroneous eligibility determination that was made in 1997.” (Deputy Director Decision (dkt. #16-5) at 4.) At the appeal hearing itself, the FSA representative further acknowledged that the FSA's “interpretation” of “mixed hardwoods established” with respect to the CP11 conservation practice differed from Mittelstadt's, and he also conceded that the FSA had never developed a written definition for that term. (Id. at 4-5.) In a written decision, the NAD hearing officer upheld the State Committee's determination, finding again that Contract 653 received an incorrect EBI score in 1997 because Tract 9073 did not satisfy the mixed hardwood trees requirement. (Decl. of Frank Jablonski Ex. 4 (dkt. #16-4) at 6.)

         Mittelstadt then sought “Director Review” of the hearing officer's decision, which resulted in a written decision dated October 14, 2009. In that decision, NAD Deputy Director M. Terry Johnson reversed the hearing officer's decision as to the FSA's termination of Mittelstadt's existing Contract 653 running from 1997 to 2007. Since Mittelstadt had relied on repeated assurances that Tract 9073 satisfied the agency's unwritten interpretation of the mixed hardwood requirement “for at least nine, if not twenty, years, ” and the FSA had never published a contrary definition, Deputy Director Johnson held the retroactive application of a definition created in 2006 or 2007 was outside the FSA's authority. Accordingly, he found by:

the preponderance of the evidence shows that the placement of trees on Appellant's land satisfied the “mixed hardwoods established” requirement for a CP 11 practice and warranted the assigned EBI score of fifty points. Thus, FSA must reinstate CRP contract number 653.

(Deputy Director Decision (dkt. #16-5) at 7.)

         In contrast, Deputy Director Johnson declined “to find that FSA erred with respect to re-enrollment” of Tract 9073 under Contract 1710. Although Johnson found that Appellant Mittelstadt “did meet minimal eligibility standards until ...

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