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62 Agric. Dec. 440

owed, the FSA began with the standard calculation (709.8 acres x $7 COC established rate x 3 = $14,906). It found this to be plaintiff's "second maintenance default violation," and applied the rule that "the producer is assessed a payment reduction not to exceed 50% of the farm's total PFC payment" for the year. It then assessed approximately two-thirds of half the total PFC payments for 2001 in accordance with plaintiff's 2/3 ownership of the farm (half of $34,343 = $17,172 x .6667 share $11,448).

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Soon thereafter, plaintiff remedied the problem and no further payment reductions were made. Plaintiff appealed the FSA's decision to reduce her payments to the Kansas State Farm Service Agency Committee. That committee affirmed the decision that plaintiff was in violation for failing to control weeds, but found the amount of her payment reduction should be $14,9062. This amount is greater than that assessed by the County because the state committee found that the amount of the payment reduction should not have been reduced by one-third to reflect plaintiff's 2/3 ownership of the farm. ®. at 16-17.)

Plaintiff appealed the state agency's decision to the National Appeals Division, where the hearing officer affirmed the state agency's decision and the assessment of a payment reduction of $14,906. ®. at 844-850.) Thereafter, plaintiff appealed the hearing officer's decision to the Director of the National Appeals Division, but without success. ®. at 840-843.) Plaintiff filed this case seeking judicial review of the Director's final order that she had failed to control weeds, that she had thereby violated the contract, and that her payments pursuant to the PFC should thus be reduced by $14,906 for 2001.

SCOPE OF REVIEW

This court has jurisdiction to review the agency action in this case. See 7 U.S.C. § 6999; Payton v. U.S. Dept. of Agriculture, 337 F.3d 1163 (10th Cir.2003). This court's review is governed by the Administrative Procedure Act, 5 U.S.C. § 706(2)(A), which authorizes this court to set aside agency action which is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The duty of a court reviewing agency action under

2 Payment reduction for a second violation is fixed at three times the cost to maintain an acre. Here, the cost to maintain weeds in plaintiff's county was determined to be $7.00 per acre. ($21 x 709.8 acres = $14,906.00)

the "arbitrary or capricious" standard is to determine whether the agency examined the relevant evidence and articulated a rational connection between the facts found and the decision made. Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983); Olenhouse v. Commodity Credit Corp., 42 F.3d 1560, 1574 (10th Cir.1994)." Payton, 337 F.3d at 1168-69.

An agency's factual determinations will be set aside only if they are unsupported by substantial evidence. "The substantial-evidence standard does not allow a court to displace the [Agencies'] choice between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo." Trimmer v. United States Dep't of Labor, 174 F.3d 1098, 1102 (10th Cir.1999) (quotation marks and citations omitted). The appellant bears the burden of proof that an agency's factual determinations are not supported by substantial evidence. Payton, 337 F.3d at 1168-69.

Matters of law are reviewed de novo. Trimmer, 174 F.3d at 1102. When reviewing an agency's interpretation and implementation of the relevant Act, the court gives strict effect to the unambiguous intent of Congress if Congress has clearly spoken to the issue before the court. However, if Congress is silent on the issue and has delegated authority over the subject matter to the agency, the court defers to the agency's construction, unless, in context of the Act, its construction is unreasonable or impermissible. Wyoming Farm Bureau Federation v. Babbitt, 199 F.3d 1224, 1232 (10th Cir.2000) (citing cases).

STATUTORY CONTEXT

PFC contracts are "seven-year contracts, administered by the Commodity Credit Corporation on behalf of the USDA, under which participants agree to subject eligible cropland to certain conservation and land-use restrictions in exchange for annual contract payments. 7 U.S.C. § 7211." McBride Cotton and Cattle Corp. v. Veneman, 290 F.3d 973, 977 (9th Cir.2002).

...

Congress enacted the Federal Agriculture Improvement and Reform Act of 1996 ("FAIR Act"), Pub. L. No. 104-127, 110 Stat. 888, which replaced most crop subsidy programs under previous statutes with a new production flexibility contract ("PFC") payment program. Under the PFC program, the USDA pays fixed but declining amounts to eligible producers for a

62 Agric. Dec. 440

seven-year period. Under the FAIR Act, the USDA does not have discretion to withhold PFC payments or otherwise use those payments to control the... decisions of farmers. The Act requires that the payments be made so long as the statutory prerequisites have been satisfied. See 7 U.S.C. § 7211(a). Sierra Club v. Glickman, 156 F.3d 606, 611 (5th Cir.1998).

The stated purpose of this law is:

to authorize the use of binding production flexibility contracts between the United States and agricultural producers to support farming certainty and flexibility while ensuring continued compliance with farm conservation and wetland protection requirements.

7 U.S.C.A. § 7201(b)(1).

The Secretary of the USDA published regulations governing the policy and regulatory implementation for PFCs, the authority for which was delegated by Congress. Therefore, the regulations have "the force and effect of law." Batterton v. Francis, 432 U.S. 416, 425 n. 9, 97 S.Ct. 2399, 53 L.Ed.2d 448 (1977).

The regulations in effect during 2001 required producers who did not plant a crop on contract acreage to protect any such land from weeds and erosion. Specifically, the regulation in effect at the time provided:

§ 1412.401--Contract violations.

Producers who do not plant a crop on contract acreage must protect any such land from weeds and erosion, including providing sufficient cover if determined necessary by the county committee. The first violation of this provision by a producer will result in a reduction in the producer's payment for the farm by an amount equal to 3 times the cost of maintenance of the acreage, but not to exceed 50 percent of the payment for the farm for that fiscal year. The second violation of this provision will result in a reduction in the payment for the farm by an amount equal to 3 times the cost of maintenance of the acreage, not to exceed the payment for the farm for that fiscal year.

§ 1412.401(b)(2)(c), 61 FR 37544, 37580, July 18, 1996, as corrected at 61 FR 49049, 49050, Sept. 18, 1996.

ARGUMENTS

Plaintiff contends that the Director erred in many respects, including failing

to find that 1) the PFC contracts were void for vagueness; 2) the enforcement was discriminatory or in retaliation for her having previously reported the person who reported her violation; 3) the payment reduction constituted an illegal penalty; and 4) the payment reduction was unjust because this was her first violation on this farm or contract, and she had already paid the cost to remedy it.

Void for vagueness

Plaintiff claims that the regulations underlying the PFC contract are void for vagueness in failing to define terms such as "weeds" and to specify how to control them. The government claims that this issue is beyond the court's scope of review.

The court agrees. The void for vagueness doctrine raises a constitutional challenge. See e.g., In re Stewart, 175 F.3d 796 (10th Cir.1999).

It is generally considered that the constitutionality of Congressional enactments is beyond the jurisdiction of administrative agencies. Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975); Johnson v. Robison, 415 U.S. 361, 368, 94 S.Ct. 1160, 39 L.Ed.2d 389 (1974).

Further, the regulations governing the procedures for National Appeals Division (NAD) for the USDA preclude challenges to the statutes. See 7 CFR § 11.3(b) ("The procedures contained in this part may not be used to seek review of statutes or USDA regulations issued under Federal Law.") Accordingly, as the NAD Division Director advised plaintiff in his decision, NAD procedures may not be used to challenge a statute or regulation as void for vagueness. See R. at 842.

Because the posture of this case is on appeal from the decision of the NAD, the court's scope of review is narrow, as stated above. Any determination that the statute is void for vagueness is beyond this court's review of the action taken by the agency.

Retaliation/Discrimination

Plaintiff next contends that she was selectively prosecuted in retaliation for her previously having turned in a member of the county committee for a

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violation. As above, the government contends that this issue is beyond the court's scope of review, and notes that the national hearing officer advised plaintiff of the fact that discrimination claims are not within the scope of the agency's authority.

The hearing officer's decision states:

the Appellant contends she is a victim of discriminatory and unequal enforcement since she was the only producer sited (sic) for not controlling weeds in 2001. Allegations of discrimination are beyond the scope of the hearing Officer's authority. However, if the Appellant and her representative wish to pursue these allegations, they should contact in writing the address indicated at the end of this determination.

R. at 845.

The end of the decision not only stated an address where plaintiff could file a complaint of discrimination, but also stated the policy of the USDA prohibiting discrimination in all its programs and activities.

The court finds that issues of retaliation and discrimination were not within the issues properly before the agency, and they are thus are beyond this court's scope of review on appeal. See Payton, 337 F.3d at 1169-70 (the court has no basis for questioning the agency action on issues not presented in the agency proceeding).

Payment Reduction as Penalty

Plaintiff additionally asserts that the payment reduction is not a reasonable damages provision, but rather is an unenforceable penalty provision. Plaintiff's contention is that the amount she was assessed is cost- based, because it is determined based upon the "normal cost per acre in the county of the necessary action to correct the default" times three, times the number of acres involved. ®. at 564). Because plaintiff controlled the weeds on her land soon after her violations and paid the cost to do so herself, she believes that any reduction of her payments constitutes an illegal penalty.

The court disagrees. This is not a penalty provision. See Varney Business Services, Inc. v. Pottroff, 275 Kan. 20, 59 P.3d 1003 (2002) (a penalty is to

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