Summary of a Recent
Judicial
Development in
Administrative Law
Agency's Findings Must Be Consistent
with the Record
Marne A. CoitNational AgLaw Center Graduate Assistant
In Harts v. Johanns, 433 F.Supp.2d 1251, (D. Kansas 2006), the United States District Court for the District of Kansas held that the Farm Service Agency's (FSA) failure to recognize the date plaintiff received notice of agency action, as stated in the record, constituted arbitrariness and an abuse of discretion by the agency.
Plaintiff Larry Harts entered into a Shared Appreciation Agreement (SAA) with the FSA on or about May 15, 1989, under the terms of which plaintiff agreed to give FSA fifty percent of the appreciation of the land value that accrued over ten years in exchange for a reduction of his debt. See id. at 1253-54. In December of 1998 the FSA conducted an appraisal of the land in order to determine the amount of shared appreciation that would be recaptured under the SAA and plaintiff objected to this appraisal when he saw it on January 11, 1999. See id. at 1254. Plaintiff called the FSA on two additional occasions to notify them of his objection and the FSA responded with a letter stating the amount to be recaptured and ways to dispute the appraisal. See id. The letter from FSA was mailed on February 3, 1999, and plaintiff received it on February 5, 1999; however, the letter was incorrectly dated January 12, 1999. See id. On March 8, 1999, plaintiff was told by an FSA agent that it was too late to appeal the appraisal. See id.
Plaintiff subsequently entered into three consecutive one-year agreements with the FSA for the years 1999, 2000 and 2001 to suspend repayment of the appreciation and on October 28, 2003, the FSA sent plaintiff a notice of debt acceleration. See id. Plaintiff appealed the FSA's action to the National Appeals Division (NAD) which held that plaintiff was not entitled to appeal the 1998 appraisal and this finding was upheld by the Director. See id. Plaintiff then claimed that the agency's decision was based on a misstatement of fact, as the Director had found plaintiff received notice of how to appeal the appraisal on January 12, 1999. See id. at 1258. The Director's finding was in direct conflict with the record and with the Hearing Officers' findings, which stated that plaintiff had received notice on February 5, 1999. See id. The District Court found the agency's action to be arbitrary and capricious, and not harmless to plaintiff as "[k]nowing when these rights expired is an important consideration when deciding how to resolve [sic] misleading statement made to Plaintiff on March 8, 1999. . . " and remanded this issue to the agency. Id.
The case was decided on June 7, 2006; this summary was posted September 27, 2007.