Mark Mittelstadt v. Sonny Perdue

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.