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United States v. Markgraf

*fn*: June 15, 1984.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
EUGENE T. MARKGRAF AND NANCY J. MARKGRAF, DEFENDANTS-APPELLANTS.



Appeal from the United States District Court for the Eastern District of Wisconsin. No. 81 C 1448 -- Myron L. Gordon, Judge.

Author: Flaum

Before BAUER, COFFEY, and FLAUM, Circuit Judges.

FLAUM, Circuit Judge. This appeal from a judgment of foreclosure entered against appellants Eugene and Nancy Markgraf raises several issues regarding the Secretary of Agriculture's duties under 7 U.S.C. ยง 1981a (1982). Section 1981a provides generally that the Secretary may permit deferral of repayment or may forego foreclosure on loans granted by the Farmers Home Administration (FmHA). The district court held that the Secretary was not required to implement section 1981a at all. Thus, the Secretary did not have to consider whether to defer repayment before foreclosing FmHa loans. We affirm the entry of the judgment of foreclosure, although for reasons different from those stated by the district court.*fn1

I.

Between 1976 and 1979, the Markgrafs obtained a series of loans from the FmHA. These loans varied in purpose, amount, and terms. In May 1978, the Markgrafs began to default on their loans. The Markgrafs have not made any payments on any of their loans since March 31, 1980.

In April 1979, the FmHA district director prepared a problem case report on the Markgrafs after reviewing their account. The district director concluded that the Markgrafs' account probably would require liquidation if they failed to repay a 1979 loan. The Markgrafs failed to repay this loan.

In March 1980, the Markgrafs discussed the status of their loans with their FmHA county supervisor and requested further financing for 1980. The supervisor told the Markgrafs that he would not recommend further financing.

By letter dated August 15, 1980, the FmHA notified the Markgrafs that it was accelerating the unpaid balance of their loans.*fn2 It is undisputed that the Markgrafs never received notice of the availability of relief under section 1981a. The United States instituted foreclosure proceedings in November 1981.

The district court entered summary judgment of foreclosure against the Markgrafs. The district court held that the Secretary's authority to implement section 1981a was discretionary. Given that the Secretary did not have to implement the statute at all, the court ruled that he did not have to provide personal written notice of the availability of section 1981a or promulgate regulations embodying procedural and substantive standards to be used in applying section 1981a.

On appeal, the Markgrafs argue that the FmHA is required to implement section 1981a. They contend that Congress intended the Secretary of Agriculture's discretion under section 1981a to extend only to whether to grant relief in individual cases. The Markgrafs assert that the FmHA must provide each borrower with personal written notice of the availability of relief under section 1981a before it decides to accelerate or foreclose on a loan. They further argue that section 1981a requires the Secretary to promulgate regulations providing procedural and substantive guidelines to be used in determining whether to grant section 1981a relief in an individual case. The Markgrafs assert that because they never received notice of the availability of relief under section 1981a and because the Secretary has not promulgated regulations, judgment of foreclosure was improper.

The United States argues that section 1981a is permissive, and therefore, the Secretary does not have to implement it. The government principally relies on the fact that the statute uses the permissive term "may." Thus, the government argues, regulations and written notice are not required. If regulations are required under section 1981a, the government maintains that existing regulations satisfy these requirements. Therefore, the United States argues, judgment of foreclosure was proper.

II.

The first issue we address is whether the Secretary of Agriculture must implement section 1981a. It is not clear under what circumstances an administrative agency properly may determine not to implement statutory powers given it by Congress. Company Rank v. Nimmo, 677 F.2d 692, 700-01 (9th Cir.), cert. denied, 459 U.S. 107 (1982) with id. at 702-06 (Reinhardt, J., dissenting). We need not delineate here the precise scope of agency discretion on this issue. It is clear that an agency must implement its statutory powers where the statute itself or the legislative history indicates that Congress intended to require implementation. Id. at 701 (citations omitted). Our task, then, is the same as it is in any case involving statutory interpretation: to determine congressional intent. In determining this intent, courts customarily look to several factors: the language of the statute; the legislative history; and the interpretation given by the administrative agency charged with enforcing the statute. See Director, Office of Workers' Compensation Programs v. Forsyth Energy, Inc., 666 F.2d 1104, 1107 (7th Cir. 1981).

We begin, as we must, with the language of the statute itself. Howe v. Smith, 452 U.S. 473, 480 (1981). Section ...


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