Mark Mittelstadt v. Sonny Perdue ( 2019 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 17-2447
MARK MITTELSTADT,
Plaintiff-Appellant,
v.
SONNY PERDUE, Secretary of Agriculture,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Western District of Wisconsin.
No. 3:15-cv-00725-wmc — William M. Conley, Judge.
____________________
ARGUED SEPTEMBER 28, 2018 — DECIDED JANUARY 15, 2019
____________________
Before RIPPLE, SYKES, and SCUDDER, Circuit Judges.
RIPPLE, Circuit Judge. Mark Mittelstadt owned a tract of
land in Richland County, Wisconsin, that was enrolled in the
Conservation Reserve Program (“CRP”), administered by the
United States Department of Agriculture (“USDA”), from
1987 to 2006. Participants in the CRP agree to remove environ-
mentally sensitive land from agricultural production in return
for annual rental payments from the USDA. In 2006, the
agency denied Mr. Mittelstadt’s application to reenroll his
2 No. 17-2447
land in the CRP. After exhausting his administrative appeals,
he brought this action against the Secretary of the USDA (“the
Secretary”). He asserted one claim under Section 702 of the
Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et seq.,
challenging the Secretary’s final decision denying reenroll-
ment, and one common law claim for breach of contract.
Mr. Mittelstadt moved for summary judgment in the district
court, seeking an order directing reenrollment of his land in
the CRP and awarding monetary relief for the alleged breach
of contract. The district court denied his motion for summary
judgment, affirmed the Secretary’s rulings, and entered judg-
ment in favor of the Secretary on Mr. Mittelstadt’s APA and
breach of contract claims. Mr. Mittelstadt now appeals the
district court’s decision.
Under the regulations governing the CRP, the USDA has
broad discretion to evaluate offers of enrollment in the pro-
gram on a competitive basis by considering the environmen-
tal benefits of a producer’s land relative to its costs. Given the
agency’s wide latitude, we conclude that the Farm Services
Agency (“FSA”) did not abuse its discretion when it denied
reenrollment of Mr. Mittelstadt’s land. Moreover, because he
never entered a new contract with the agency, there was no
breach of contract. We therefore affirm the judgment of the
district court.
I
A.
In 1988, Mr. Mittelstadt purchased a tract of land in Rich-
land County, Wisconsin (“Tract 9073”), that was subject to a
CRP contract for the period 1987 through 1996. To comply
with a revised conservation plan, Mr. Mittelstadt planted
No. 17-2447 3
white pine, walnut, and red oak trees on the land in 1989. A
CRP review later that year determined that Mr. Mittelstadt
had completed all items in the conservation plan. Another
CRP maintenance inspection in 1995 found no problems with
the land. In 1996, the Commodity Credit Corporation
(“CCC”) extended the existing CRP contract for one year, to
run from October 1, 1996, through September 30, 1997.
In 1997, Mr. Mittelstadt applied to reenroll his land in the
program, stating on the application that Tract 9073 had a con-
servation practice of CP11, or “vegetative cover—trees—al-
ready established.”1 Relying on the information in his appli-
cation, the FSA assigned his land an environmental benefits
index (“EBI”) score of fifty points.2 This EBI score meant that
the conservation practices on the land included “[p]ine estab-
lished 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.”3 The
FSA approved the new contract (“Contract 653”), to be effec-
tive from 1998 to 2007. A 2002 field status review of the prop-
erty found no violations, noting, “Trees are growing and look-
ing good.”4
In 2006, Mr. Mittelstadt began the reenrollment process by
paying for a spot-check inspection of Tract 9073. The inspec-
tion found no violations, noting “62.9 CP11 Tre[es] … already
1 R.16-5 at 2.
2 The FSA relies on a national EBI to rank offers for enrollment in the CRP
based on their estimated environmental benefits and costs. See R.16-1 at
679.
3 R.16-5 at 3.
4 Id.4 No. 17-2447
est” and “good.”5 The Natural Resources Conservation Ser-
vice (“NRCS”) sent Mr. Mittelstadt Contract 1710, a form CRP
contract for the term October 1, 2007, to September 30, 2017,
which Mr. Mittelstadt signed on July 26, 2006.6 On August 19,
2006, Mr. Mittelstadt signed a revised version of the contract,
amended to reflect the correct acreage of Tract 9073.
In August 2006, the NRCS sent Mr. Mittelstadt a conserva-
tion plan for Tract 9073. The plan “identified the conservation
practice as CP11, a ‘mixed stand (2 species) of hardwoods best
suited for wildlife in the area.’”7 Mr. Mittelstadt signed the
plan on August 24, 2006, and, on September 1, 2006, the Rich-
land County Conservation Department approved it. The
NRCS signed off on the plan on September 5, 2006, as did the
FSA on September 13, 2006.
B.
On or around September 13, 2006, Jared Reuter, the
County Executive Director of the Richland County FSA,
signed the amended version of Contract 1710 on behalf of the
CCC. Reuter’s signature was later whited out,8 however, and
Mr. Mittelstadt never received a countersigned copy of Con-
tract 1710. On September 14 and 16, 2006, Reuter conducted
two maintenance inspections of Mr. Mittelstadt’s land. By let-
ter dated September 21, 2006, the FSA County Committee
5 Id.6 The CCC never countersigned the original version of Contract 1710.
7 R.16-5 at 3.
8 The Secretary contends that Reuter likely whited out his signature after
inspecting Mr. Mittelstadt’s property and discovering CRP violations on
Tract 9073. Appellee’s Br. 8 n.2.
No. 17-2447 5
notified Mr. Mittelstadt that the inspections revealed CRP vi-
olations on Tract 9073. Aerial photos taken in 2005 showed
that three areas of the acreage had “suffered tree loss that the
field reporter did not originally report during the re-enroll-
ment compliance check.”9 Reuter also found that very few red
oak trees “were present from the original planting,” and
“[o]ne area with the most red oak present had less than 100
planted red oak trees present.”10 The letter warned that “[v]io-
lations of this type can result in termination of the acreage in-
volved” and that Mr. Mittelstadt’s “re-enrollment/extension
offer cannot be approved until this issue is settled.”11
At a hearing on October 25, 2006, the FSA County Com-
mittee discussed the issues raised by the inspections, and the
next day, the committee sent Mr. Mittelstadt a letter terminat-
ing Contract 653. The committee explained that, in 1997,
Mr. Mittelstadt’s acreage did not have “a ‘mixed hardwood
stand of trees (more than one species of hardwood trees)’ be-
cause of the ‘failed population of red oak.’”12 As a result, the
FSA had assigned incorrectly an EBI score of fifty points upon
reenrollment of the land in the CRP. Further, to “be eligible to
be placed in the CRP,” land must qualify under a covered cat-
egory, such as “[a]creage enrolled in CRP during the final
year of the CRP contract.” 7 C.F.R. § 1410.6(a). Because
Mr. Mittelstadt’s land was enrolled improperly under
9 R.16-5 at 3.
10 R.19 at 103 (Letter from Reuter to Mr. Mittelstadt (Sept. 21, 2006)).
11 Id. at 103–04.
12 R.16-5 at 4.
6 No. 17-2447
Contract 653 in 1997, the committee also found it was not eli-
gible for reenrollment under Contract 1710 in 2006.
Mr. Mittelstadt appealed the County Committee’s deci-
sion to the Wisconsin State FSA Committee. By letter dated
August 13, 2007, the State FSA Committee upheld the County
Committee’s decision, finding that “[t]here are no areas of the
contract that qualify as ‘mixed hardwoods.’”13 The State Com-
mittee concluded that “the scoring of the contract offer in 1997
was incorrect,” and that the land was “also ineligible for
re-enrollment through the re-enrollment and extension pro-
cess that was conducted in 2006 because the current contract
was not in compliance.”14
C.
Mr. Mittelstadt sought review from the USDA’s National
Appeals Division, where the parties stipulated that the sole
issue on appeal was the propriety of the eligibility determina-
tion with respect to Contract 653 that had been made in 1997.
The Hearing Officer upheld the State Committee’s decision,
but, on further review, the Deputy Director reversed the de-
cision. Because “the preponderance of the evidence show[ed]
that the placement of trees on Appellant’s land satisfied the
‘mixed hardwoods established’ requirement for a CP11 prac-
tice and warranted the assigned EBI score of fifty points,” the
Deputy Director ordered the FSA to reinstate Contract 653.15
However, the Deputy Director found no error with respect to
the FSA’s denial of reenrollment under Contract 1710. Given
13 R.19 at 38.
14 Id.15 R.16-5 at 7.
No. 17-2447 7
that Mr. Mittelstadt’s land “may not meet new standards such
as a new definition of mixed hardwood stand or FSA other-
wise may have a legitimate reason for not extending re-enroll-
ment,” the decision “was supported by applicable regulations
and substantial evidence in the record.”16
Mr. Mittelstadt sought reconsideration of the Deputy Di-
rector’s decision, which the FSA Director denied. The Director
explained that “agency regulations at 7 C.F.R. § 1410.31(a)
provide that acceptance or rejection of any offer of land by an
owner for CRP participation shall be in the sole discretion of
the CCC and offers may be rejected for any reason as deter-
mined to accomplish the goals of the program.”17 According
to the Director, “[w]hile not cited in the determination, this
regulation was the basis” for the Deputy Director’s decision.18
Thus, “[o]nce FSA concluded that the property no longer had
as high an EBI score as it once did, FSA could use that score
to decide that funding a continuation of enrollment of the
property was not as high a priority as funding other CRP con-
tracts.”19
D.
Having exhausted his administrative appeals, Mr. Mittel-
stadt filed a complaint in the district court. He asserted a
claim under the APA, contending that the decision denying
16 Id.17 R.16-6 at 1.
18 Id.19 Id.8 No. 17-2447
his application for reenrollment under Contract 1710 was ar-
bitrary, capricious, and unlawful. In the alternative, he set out
a common law claim, asserting that the agency breached its
obligations under Contract 1710. He later moved for sum-
mary judgment on both counts of the complaint.
The district court denied Mr. Mittelstadt’s motion for
summary judgment and affirmed the agency’s final decision.
First, the district court rejected Mr. Mittelstadt’s contention
that the Deputy Director of the National Appeals Division
had abused his discretion by upholding the denial of reenroll-
ment under Contract 1710 despite the parties’ stipulation that
the sole issue on appeal was the propriety of the 1997 eligibil-
ity determination. Second, the district court rejected Mr. Mit-
telstadt’s assertion that the USDA had abused its discretion
by denying reenrollment of his land in 2007 based on a con-
servation standard adopted in 2006. Third, the district court
dismissed Mr. Mittelstadt’s common law claim for breach of
contract, determining that no contract existed to support that
claim. The district court then entered judgment in favor of the
Secretary on Mr. Mittelstadt’s APA and breach of contract
claims. Mr. Mittelstadt timely sought review of the district
court’s decision.20
20 The district court had jurisdiction over this case under the judicial re-
view provision of the APA, which waives sovereign immunity for actions
“seeking relief other than money damages and stating a claim that an
agency or an officer or employee thereof acted or failed to act in an official
capacity or under color of legal authority.” 5 U.S.C. § 702. For purposes of
§ 702, the Supreme Court has held that the mere “fact that a judicial rem-
edy may require one party to pay money to another is not a sufficient rea-
son to characterize the relief as ‘money damages.’” Bowen v. Massachusetts,
487 U.S. 879, 893 (1988). Instead, the critical question is whether the plain-
tiff seeks substitute or specific relief. Whereas “[d]amages are given to the
No. 17-2447 9
II
DISCUSSION
We review the district court’s decision on summary judg-
ment de novo. Stable Invs. P’ship v. Vilsack, 775 F.3d 910, 915
(7th Cir. 2015). In “an action for review of final action taken
by a federal administrative agency, the ultimate question is
whether that action is ‘arbitrary, capricious, an abuse of dis-
cretion, or otherwise not in accordance with the law.’” Id. (ci-
tation omitted) (quoting 5 U.S.C. § 706(2)). To “answer[] that
question, we rely on the same administrative record that was
plaintiff to substitute for a suffered loss,” specific remedies “attempt to
give the plaintiff the very thing to which he was entitled.” Id. at 895 (quot-
ing Maryland Dep’t of Human Res. v. Dep’t of Health & Human Servs., 763
F.2d 1441, 1446 (D.C. Cir. 1985)) (emphasis in original). Here, Mr. Mittel-
stadt’s request for an order directing the Secretary “to pay all amounts due
and owing under Contract 1710,” R.3 ¶ 152, was not a request for “money
damages” because Mr. Mittelstadt sought payments “not as compensation
for [the Secretary’s] failure to perform some other obligation,” but as “the
very thing to which he was entitled” under the CRP. Columbus Reg’l Hosp.
v. FEMA, 708 F.3d 893, 896 (7th Cir. 2013) (quoting Bowen, 487 U.S. at 895).
Mr. Mittelstadt’s APA claim challenging the Secretary’s decision denying
reenrollment seeks “relief other than money damages,” and is “therefore
within the waiver of sovereign immunity in section 702.” Maryland Dep’t
of Human Res. v. Dep’t of Health & Human Servs., 763 F.2d 1441, 1448 (D.C.
Cir. 1985) (quoting 5 U.S.C. § 702). Additionally, because his breach of con-
tract claim is, at base, an alternative request for administrative relief di-
recting the Secretary to make the payments to which Mr. Mittelstadt
would have been entitled under Contract 1710, this claim is simply a dif-
ferent way of characterizing his request for “the very thing to which he
was entitled” under the CRP. Columbus Reg’l Hosp., 708 F.3d at 896 (quot-
ing Bowen, 487 U.S. at 895). Jurisdiction over Mr. Mittelstadt’s breach of
contract claim was therefore proper under § 702. We have jurisdiction over
this appeal from the district court’s entry of summary judgment under 28
U.S.C. § 1291.
10 No. 17-2447
before the district court and render an independent judgment
as to whether the agency acted unreasonably.” Id. Under this
“deferential standard,” we “will uphold a decision of less
than ideal clarity if the agency’s path may reasonably be dis-
cerned.” St. Clair v. Sec’y of Navy, 155 F.3d 848, 851 (7th Cir.
1998) (internal quotation marks omitted).
A.
We begin with an examination of the governing statutory
scheme. As part of the Food Security Act of 1985,21 Congress
established the CRP. This program incentivizes landowners
to remove environmentally sensitive land from agricultural
production in return for annual rental payments from the
USDA. S. Rep. 99-145, at 1971 (1985). The impetus for the de-
velopment of the CRP was an increased concern about soil
erosion. Id. In 1982, the National Resources Inventory22 had
determined that almost fifty percent of erosion occurred on
only ten percent of cropland in the United States. Id. The Soil
Conservation Service projected that the CRP would “reduce
wind and water erosion on these acres by an average of nearly
20 tons per acre per year.” Id. (capitalization omitted). Ac-
cordingly, Congress directed the Secretary to “formulate and
carry out” the CRP by awarding contracts to encourage land-
owners “to conserve and improve the soil, water, and wildlife
resources of such land and to address issues raised by State,
21 Pub. L. No. 99-198, §§ 1201, 1231–1236, 99 Stat. 1354, 1504–05, 1509–14
(codified as amended at 16 U.S.C. §§ 3801, 3831–3836).
22 Administered by the NRCS, the National Resources Inventory is a “sta-
tistically-based survey” designed to “assess conditions and trends of soil,
water, and related resources on nonfederal lands in the United States.” 7
C.F.R. § 601.1(f)(1)(v).
No. 17-2447 11
regional, and national conservation initiatives.” 16 U.S.C.
§ 3831(a).
The USDA oversees the CRP, with funding provided by
the CCC, an entity owned and operated by the government.
16 U.S.C. § 3841(a). Together with the FSA, the CCC is respon-
sible for implementing the regulations governing the CRP. 7
C.F.R. § 1410.1(a). The Agricultural Stabilization and Conser-
vation Service, which operates through state and county com-
mittees, administers the CRP on behalf of the CCC.
The FSA and the Agricultural Stabilization and Conserva-
tion Service also have issued, for use by the state and county
committees, handbooks detailing the procedures and require-
ments for implementing and participating in the CRP. These
handbooks, which were not published in the Federal Register
and therefore were not promulgated according to the require-
ments of the APA, are interpretive only and do not have the
force or effect of official regulations.23
The statute limits the type and total acreage of land that
can be enrolled in the CRP. Land eligible for enrollment in-
cludes certain highly erodible cropland, marginal pasture
land, grasslands, and, at the Secretary’s determination, other-
wise ineligible cropland that poses an environmental threat.
16 U.S.C. § 3831(b). During fiscal year 2018, the Secretary
could maintain no more than twenty-four million acres of
land in the program. Id. § 3831(d)(1)(E). Additionally, the
23 See Westcott v. U.S. Dep’t of Agric., 765 F.2d 121, 122 (8th Cir. 1985) (per
curiam); see also Thomas v. Cty. Office Comm. of Cameron Cty., 327 F. Supp.
1244, 1253 (S.D. Tex. 1971); Graham v. Lawrimore, 185 F. Supp. 761, 764
(E.D.S.C. 1960); Hawkins v. State Agric. Stabilization & Conservation Comm.,
149 F. Supp. 681, 686 (S.D. Tex. 1957).
12 No. 17-2447
Secretary cannot enroll more than twenty-five percent of the
cropland in any county unless he determines that enrolling a
larger percentage “would not adversely affect the local econ-
omy.” 16 U.S.C. § 3844(f).
Landowners who wish to participate in the CRP must en-
gage in a bid system. According to the legislative history, the
statute utilizes this system because “the competitive bid sys-
tem is the most cost-effective means of identifying our least
productive and most erosion prone acreage, while at the same
time minimizing cost to the U.S. Treasury.” S. Rep. 99-145, at
1971 (capitalization omitted). Congress determines, for a
given year, the maximum acreage permitted to be enrolled in
the CRP each time it amends the authorizing statute.24 Indi-
vidual rental payments are capped at $50,000 per year. 16
U.S.C. § 3834(g)(1).
To participate in the bidding process, landowners submit
offers to the CCC indicating “the amounts they are willing to
accept as rental payments to enroll their acreage in the CRP.”
7 C.F.R. § 1410.31(a). The CCC may evaluate offers “on a com-
petitive basis in which the offers selected will be those where
the greatest environmental benefits relative to cost are gener-
ated.” Id. In evaluating offers, the agency employs a national
EBI, which “provides a relative ranking of estimated environ-
mental benefits and cost for land offered for CRP.”25 “Ac-
ceptance or rejection of any offer” is “in the sole discretion of
the CCC[,] and offers may be rejected for any reason as
24 See Agriculture Improvement Act of 2018, Pub. L. No. 115-334, §
2201(c)
(amending 16 U.S.C. § 3831(d)); Agricultural Act of 2014, Pub. L. No.
113-79, § 2001(d) (same).
25 R.16-1 at 679.
No. 17-2447 13
determined needed to accomplish the goals of CRP.” 7 C.F.R.
§ 1410.31(a). When evaluating contract offers, the CCC may
consider such factors as soil erosion, water quality, wildlife
benefits, soil productivity, the “[l]ikelihood that enrolled land
will remain in non-agriculture use beyond the contract pe-
riod,” air quality, and the cost of enrolling the land in the CRP.
Id. § 1410.31(b). Offers to enroll in the CRP are “irrevocable
for such period as is determined and announced by the Dep-
uty Administrator” of the FSA. 7 C.F.R. § 1410.32(c)(2). If an
applicant revokes his offer during the irrevocable period, he
may be liable to the CCC for liquidated damages. Id.Following CCC approval, the USDA awards CRP con-
tracts for terms between ten and fifteen years, depending on
the type of land involved. 16 U.S.C. § 3831(e)(1).26 In return
for converting their land to less intensive uses, landowners
receive annual rental payments. 16 U.S.C. § 3833(a)(2). The
amounts of these payments are determined when the land-
owners submit bids for CRP contracts. 16 U.S.C.
§ 3834(d)(2)(A)(i).
Participants in the CRP must obtain and implement a con-
servation plan outlining required conservation practices for
the enrolled land. The conservation plan is considered part of
the CRP contract, 7 C.F.R. § 1410.20(a)(2), and must be ap-
proved by the conservation district in which the land is
26 Specifically, “[c]ontracts with land devoted to hardwood trees, shelter-
belts, windbreaks, or wildlife corridors will be for a term of 10 years to 15
years, as requested by the applicant.” 7 C.F.R. § 1410.7(a). By contrast,
“[o]ther general and continuous signup contracts … will be for a term of
10 to 15 years, as determined by the Deputy Administrator.” Id.§ 1410.7(b). “Grassland signup contracts will be for a term of 15 years.” Id.
§ 1410.7(c).
14 No. 17-2447
located, 7 C.F.R. §§ 1410.3(b), 1410.22(a). Landowners must
“[e]stablish and maintain” the required vegetative cover and
the required practices on the enrolled land, and must “take
other actions that may be required by CCC to achieve the de-
sired environmental benefits and to maintain the productive
capability of the soil throughout the contract period.” 7 C.F.R.
§ 1410.20(a)(6). All conservation plans and revisions to such
plans are subject to the approval of the Deputy Administrator
of the FSA. 7 C.F.R. § 1410.22(e). Subject to fund availability,
the CCC must “[s]hare up to 50 percent of the cost” of estab-
lishing conservation practices with CRP participants. 7 C.F.R.
§ 1410.21(a). Rental payments combined with cost-sharing are
designed to assure landowners of a return on the land with-
out having to risk large sums of money to adopt conservation
practices.27
The CCC retains the authority to modify or terminate an
existing CRP contract. Specifically, the CCC can modify a CRP
contract if the Deputy Administrator determines that,
through no fault of the participant, the “installed practice
failed to adequately provide for the desired environmental
benefit” or “deteriorated,” and that “[a]nother practice will
achieve at least the same level of environmental benefit.” 7
C.F.R. § 1410.33(b). Additionally, the CCC can terminate a
CRP contract before expiration of the term if, among other
grounds, “[t]he participant is not in compliance with the
terms and conditions of the contract,” “[t]he CRP practice fails
or is not established after a certain time period,” the “contract
was approved based on erroneous eligibility determina-
tions,” or “[t]he Deputy Administrator determines that such
27See Michael W. Strain, Student Survey, The Conservation Reserve: A Bold
Step Towards the Future, 31 S.D. L. Rev. 523, 529 (1986).
No. 17-2447 15
a termination is needed in the public interest, or is otherwise
necessary and appropriate to further the goals of CRP.” 7
C.F.R. § 1410.32(f).
This statutory and regulatory scheme places considerable
discretion over CRP participation in the hands of the FSA. The
implementing regulations afford the agency broad discretion
to evaluate offers for enrollment and reenrollment in the pro-
gram:
[O]ffers may, to the extent practicable, be evalu-
ated on a competitive basis in which the offers
selected will be those where the greatest envi-
ronmental benefits relative to cost are gener-
ated … . Acceptance or rejection of any offer,
however, shall be in the sole discretion of the
CCC and offers may be rejected for any reason
as determined needed to accomplish the goals
of CRP.
7 C.F.R. § 1410.31(a). Although we have had no occasion to
describe the scope of discretion under this particular regula-
tion, our cases involving other statutory and regulatory
grants of “sole discretion” confirm that this language confers
wide latitude upon the relevant actor.28
28 See, e.g., Mahler v. U.S. Forest Serv., 128 F.3d 573, 577–78 (7th Cir. 1997)
(concluding, where the Rescissions Act of 1995 required the Secretary of
Agriculture to prepare an environmental assessment and a biological eval-
uation “at the sole discretion of the Secretary concerned and to the extent
that the Secretary concerned considers appropriate and feasible,” that
“this language clearly authorize[d] the Secretary to permit a shorter pe-
riod for public comment than that usually required under the Public Par-
ticipation Law” (emphasis added)).
16 No. 17-2447
B.
With this statutory and regulatory background in mind,
we turn first to Mr. Mittelstadt’s contention that the agency
abused its discretion because it had not defined “mixed hard-
woods” when it considered his application for reenrollment
under Contract 653 in 1997 or under Contract 1710 in 2006.
We also consider his related argument that the agency’s ap-
plication of a new interpretation of “mixed hardwoods,”
adopted in 2006, when it denied his request for reenrollment
under Contract 1710 was an abuse of discretion.
Here, the Secretary “readily acknowledge[d] that,
throughout the entire relevant time period, there was never a
published definition of ‘mixed hardwoods’ in FSA’s Hand-
book, in the regulations, or elsewhere.”29 Nevertheless, to
evaluate Mr. Mittelstadt’s 2006 application for reenrollment,
the agency interpreted “mixed hardwoods” to mean “two
species of hardwoods planted together in the same rows.”30
Given the great discretion vested in the Secretary to obtain
optimal environmental return for every dollar appropriated
for the CRP, the FSA clearly had the capability to tighten the
definition of “mixed hardwoods” for new contract periods.31
The very nature of the program affords the Secretary the au-
thority to change the terms and conditions of participation in
29 Appellee’s Br. 35.
30 R.9 ¶ 70.
31 Cf. Paragon Health Network, Inc. v. Thompson, 251 F.3d 1141, 1147 (7th Cir.
2001) (noting that “Congress is presumed to have delegated the primary
power to fill regulatory ambiguities to the agency, and courts owe defer-
ence to agency decisions that clarify a regulation regardless of the fact that
the agency waited to exercise this power”).
No. 17-2447 17
order to achieve, given the resources available, the most ad-
vantageous result. The USDA’s policy, therefore, was to
maintain a competitive program that allowed the Secretary to
select, based on currently available funding, the best land
available to attain the goals of the program. The agency did
not have to contract for the same conservation measures at the
same price upon each reenrollment.
The Secretary’s decision to limit program participation to
land with a different pattern of hardwoods, a pattern that he
deemed more favorable to the conservation ends of the pro-
gram, cannot be characterized fairly as the reversal of an
agency policy. Because there was no previous specific defini-
tion applicable to all future contracts set forth in the regula-
tions or even in the FSA Handbook, the Secretary did not re-
verse a governing policy.32 For the same reason, the 2006 re-
quirement cannot be characterized as such “a sudden and un-
expected change in agency policy” as to be arbitrary, capri-
cious, or an abuse of discretion.33 The new requirement is
grounded firmly in the governing statutes and regulations
and implements the Secretary’s decision that such a criterion
32 Cf. Friends of the Boundary Waters Wilderness v. Dombeck, 164 F.3d 1115,
1123 (8th Cir. 1999) (holding that, since no prior Forest Service or USDA
plans provided a definition of the term “guest” for purposes of motorboat
use restrictions, the definition newly provided by the Forest Service to
avoid abuses of the motorboat use quota system could not “be considered
as reversing a prior agency policy” and was entitled to deference).
33 See id. (observing that “‘the mere fact that an agency interpretation con-
tradicts a prior agency position is not fatal,’ unless the new position is a
sudden and unexpected change in agency policy that can be characterized
as arbitrary, capricious, or an abuse of discretion” (quoting Smiley v. Citi-
bank (S.D.), N.A., 517 U.S. 735, 742 (1996)).
18 No. 17-2447
will ensure that the available government funds are imple-
mented in the most effective manner.34
Mr. Mittelstadt conceded that “there were never areas of
[his] acreage planted to more than one species of hard-
wood.”35 He had understood that “the terminology ‘mixed
hardwoods’ mean[t] only 1 hardwood species ‘mixed’ with
pine.”36 Accordingly, in 1989, he planted three sections of
trees on his land: (1) walnut and white pine trees, (2) red oak
and white pine trees, and (3) solely white pine trees.37 Pine
trees are softwoods, whereas walnut and red oak trees are
hardwoods, so that no section he planted had more than one
species of hardwood tree mixed with pine. It follows that, by
2006, his acreage did not meet the FSA’s new requirement,
which required that “there be at least 2 species of hardwoods
34 Mr. Mittelstadt asserts that the FSA was “affirmatively required” to in-
form him of the new interpretation of “mixed hardwoods” and to “help[]
him craft a new plan that would elevate [Tract 9073’s] EBI score by chang-
ing the arrangement of hardwood species.” Appellant’s Br. 32. He relies
on the FSA Handbook, which states that the “FSA will review EBI scoring
parameters with the producers and encourage the planting of cover types
and conservation measures, if appropriate, that will provide higher envi-
ronmental benefits.” R.16-1 at 679. However, the agency did not discover
that Mr. Mittelstadt’s land did not meet the new requirement for “mixed
hardwoods” until he began the reenrollment process, at which point the
maintenance inspections revealed CRP violations. The agency informed
him that, to reenroll his land, he could cure the violations by planting two
or more species of hardwood trees mixed with a softwood tree. The FSA
Handbook, which does not confer a legal right on Mr. Mittelstadt to par-
ticipate in the program, did not require more.
35 R.19 at 36–37.
36 Id. at 37.
37 Id. at 28.
No. 17-2447 19
mixed into the rows of hardwoods.”38 The FSA therefore did
not abuse its discretion when it determined that Mr. Mittel-
stadt’s land did not satisfy the 2006 requirement of “mixed
hardwoods.”39
C.
38 Id. at 37. Relatedly, Mr. Mittelstadt submits that it was error for the FSA
not to recalculate the EBI score for Tract 9073 using its new interpretation
of “mixed hardwoods.” At multiple stages of the review process, how-
ever, the agency concluded that there were “no areas of the contract that
qualify as ‘mixed hardwoods’” under the 2006 requirement. R.19 at 38; see
also R.16-4 at 5. Nor does Mr. Mittelstadt contend that he engaged in other
conservation practices that would contribute to Tract 9073’s EBI score. Ac-
cordingly, no formal recalculation was needed to conclude that, under the
new interpretation, Tract 9073 “no longer had as high an EBI score as it
once did.” R.16-6 at 1. The FSA’s failure to formally recalculate the EBI
score for Tract 9073 was not an abuse of discretion.
39 Mr. Mittelstadt’s claim that complying with the FSA’s new interpreta-
tion of “mixed hardwoods” would have brought him in violation of the
existing conservation plan under either Contract 653 or Contract 1710 is
unsubstantiated. The 1997 conservation plan for Contract 653 instructed:
CRP-CP11. The existing tree planting will not be man-
aged for Christmas trees and will be protected from fire
and from grazing by domestic livestock for the duration
of the CRP contract.
R.19-2 at 13. Similarly, the 2006 conservation plan for Contract 1710 stated:
CRP-CP11. Vegetative Cover, Trees Already Estab-
lished. … The existing tree planting will not be managed
for Christmas trees and will be protected from fire and
from grazing by livestock for the duration of the CRP con-
tract. Spot treat for weed and brush control … .
R.19-1 at 39. Nothing in either conservation plan suggests that Mr. Mittel-
stadt would have violated those terms by planting “two species of hard-
woods … together in the same rows.” R.9 ¶ 70.
20 No. 17-2447
We turn next to Mr. Mittelstadt’s contention that the FSA
erroneously relied on 7 C.F.R. § 1410.31(a) to uphold the
CCC’s denial of reenrollment under Contract 1710. According
to Mr. Mittelstadt, this provision “has nothing to do with the
post-award process through which Tract 9073 was disquali-
fied from Contract 1710,” and “instead describes the
pre-award process” through which Contract 1710 was
awarded.40 We cannot accept this argument because it is
premised on a nonexistent temporal distinction.
The FSA Handbook instructs that, “[w]hen the producer
is ready to submit an offer, County Offices shall provide … to
the producer” Form CRP-1.41 Once a producer submits an
40 Appellant’s Br. 35–36.
41 R.16-1 at 179. As an alternative theory of recovery, Mr. Mittelstadt as-
serts that, when the agency sent him Form CRP-1 for Contract 1710, it had
accepted his offer of reenrollment, and there was a binding contract. But
that argument ignores the FSA’s express description of Form CRP-1 as a
form document that constitutes the producer’s “offer” of enrollment in the
CRP, not the agency’s acceptance of that offer. Further, the FSA Handbook
states that “[p]roducers withdrawing CRP-1 during the irrevocable period
shall be subject to liquidated damages,” id., and Form CRP-1 reiterates
that, by signing the form, the participant “agrees to pay such liquidated
damages … if the Participant withdraws prior to CCC acceptance or rejec-
tion.” R.19-1 at 45. These provisions confirm that Form CRP-1 constitutes
an offer to be considered by the CCC, not a binding contract. Given that
the regulations similarly require that a producer pay liquidated damages
to the CCC if he “revokes an offer during the period in which the offer is
irrevocable,” 7 C.F.R. § 1410.32(c)(2) (emphases added), the prospect of
having to pay liquidated damages provides no support to Mr. Mittel-
stadt’s position that a binding contract existed. Finally, the FSA Handbook
requires that Form CRP-1 “be signed and dated by all required signato-
ries,” R.16-2 at 183, but Mr. Mittelstadt never received a countersigned
No. 17-2447 21
offer on Form CRP-1, the FSA County Committee “shall sub-
mit all offers … to the national level for review and evalua-
tion.”42 The regulation at issue, 7 C.F.R. § 1410.31(a), confers
“sole discretion” upon the CCC to evaluate offers of enroll-
ment in the CRP “on a competitive basis in which the offers
selected will be those where the greatest environmental ben-
efits relative to cost are generated.” The regulations further
provide that, “[i]n order to be eligible to be placed in the CRP,
land must” qualify under an enumerated eligibility category,
such as “[a]creage enrolled in CRP during the final year of the
CRP contract.” 7 C.F.R. § 1410.6(a).
In 2006, when the FSA County Committee concluded that
the 1997 eligibility determination had been incorrect and ter-
minated Contract 653, Tract 9073 no longer qualified as eligi-
ble “[a]creage enrolled in CRP.” Id. However, when the Dep-
uty Director of the National Appeals Division reversed that
determination and reinstated Contract 653, the effect of his or-
der was only to reinstate Tract 9073’s ground for eligibility
under 7 C.F.R. § 1410.6(a)(3).43 Mr. Mittelstadt’s bid to
copy of Contract 1710. Because there was no binding contract, Mr. Mittel-
stadt cannot state a claim for breach.
42 R.16-1 at 185 (emphasis omitted).
43 Mr. Mittelstadt further contends that the Deputy Director’s ruling on
the reenrollment of Contract 1710 was improper because, at the pre-hear-
ing before the Hearing Officer, “the parties stipulated that the sole issue
on appeal was the erroneous eligibility determination that was made in
1997.” R.16-5 at 4. The Hearing Officer found that the “FSA correctly de-
termined that Appellant did not establish a mixed stand of hardwood
trees on the contract acreage” and that “Appellant based his request for
CRP reenrollment under contract 1710 on the same inaccurate EBI scoring
used in CRP contract 653.” R.16-4 at 5–6. Accordingly, the Hearing Officer
determined both that “FSA correctly terminated contract 653 because of
22 No. 17-2447
reenroll was still subject to the CCC’s discretion to evaluate
his offer based on its relative competitiveness, see 7 C.F.R.
§ 1410.31(a), and actual reenrollment required CCC approval.
The FSA Director recognized precisely this degree of discre-
tion when he denied Mr. Mittelstadt’s request for reconsider-
ation, explaining that “agency regulations at 7 C.F.R.
§ 1410.31(a) provide that acceptance or rejection of any offer
of land by an owner for CRP participation shall be in the sole
discretion of the CCC and offers may be rejected for any rea-
son as determined to accomplish the goals of the program.”44
According to the Director, “[w]hile not cited in the determi-
nation, this regulation was the basis” for the Deputy Direc-
tor’s decision.45 It was no abuse of discretion for the FSA to
rely on 7 C.F.R. § 1410.31(a) to uphold the CCC’s decision.
Relatedly, Mr. Mittelstadt claims that the agency was first
required to change his conservation plan to comply with its
new interpretation of “mixed hardwoods” and that, if he “re-
fused to conform Tract 9073 to the corrected Conservation
an inaccurate EBI score” and that FSA “correctly denied Appellant’s reen-
rollment request under CRP contract 1710.” Id. at 6. Thus, the Deputy Di-
rector’s review of the Hearing Officer’s decision necessarily encompassed
both the Hearing Officer’s findings with regard to the termination of Con-
tract 653 and the reenrollment under Contract 1710, which were “based”
on “the same inaccurate EBI scor[e].” Id. The district court correctly con-
cluded that “the parties’ stipulation … ma[de] little practical sense on its
face,” R.25 at 18, given that the Deputy Director could not properly review
the Hearing Officer’s decision without considering the grounds for that
decision in full.
44 R.16-6 at 1.
45 Id.No. 17-2447 23
Plan, the Tract would then be in violation.”46 But Mr. Mittel-
stadt confuses the order of procedure required. The FSA
Handbook instructs that, “[i]f [an] offer is determined ac-
ceptable,” then “a conservation plan must be developed by
NRCS … and approved by the Conservation District before
CRP-1 can be approved” by the FSA County Committee.47 Be-
cause the FSA never accepted Mr. Mittelstadt’s offer to reen-
roll his land, the agency was under no obligation to develop
a new conservation plan for Tract 9073 before denying reen-
rollment. The FSA’s course of proceeding simply was not an
abuse of discretion.
Conclusion
For the foregoing reasons, we affirm the judgment of the
district court.
AFFIRMED
46 Appellant’s Br. 49 (emphasis in original).
47 R.16-1 at 186.