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Kesselring provides FAST Legal Fund report

(Editor’s Note: The following report is new this week and reflective of the previous year as it relates to the FAST Legal Fund. It was written and provided for publishing by Dr. Kasey Kesselring.)

The conclusion of 2017, unfortunately, does not mark the end of the walking horse industry’s legal issues with the USDA and APHIS, but it does mark a year with some successes, and provides some encouraging prospects for 2018. 

As the year began, the industry had succeeded in 2015 in the Fifth Circuit in Contender Farms v. USDA, by invalidating the USDA’s 2012 regulations requiring minimum suspensions be imposed by HIOs. This was followed by a 2016 lawsuit, Contender II, in which FAST supported a lawsuit filed against the USDA for its use of its FOIA-E Reading Room to post official warnings for the public, in which it misleadingly identified approximately 15,000 people as “violators” of the HPA, even though there had never been charges filed or adjudications held to determine a violation. 

By the end of February 2017, APHIS changed its policies, and took down all the remaining lists. Contender II was voluntarily dismissed by the plaintiffs. The USDA’s new policies resulted in two lawsuits challenging the new policies, both brought by animal advocacy organizations against the USDA seeking to compel it to put  the information back on its website. 

The California lawsuit was dismissed by the district court, and the USDA defended its position on the grounds asserted in our lawsuit; that decision is on appeal. The D.C. district court lawsuit, filed by PETA and others, is still awaiting a final decision, but the USDA has made the arguments it made in the California case, which the industry made in the Fort Worth case, and we expect the USDA to prevail. 

Unfortunately, and possibly as a result of Contender I and Contender II, and just before the new administration took office, APHIS filed approximately 200 administrative enforcement proceedings against individuals whose horses VMOs had “failed” at the 2016 Celebration. Lawyers representing the respondents in these cases asserted various defenses, including a challenge to the use of Administrative Law Judges and the Judicial Officer to try and decide the cases. 

The challenge to the USDA’s enforcement procedures arose from similar challenges to the use of ALJs in other agencies, particularly the SEC. The SEC challenges were in the D.C. Circuit Court of Appeals and the Tenth Circuit Court of Appeals in Denver. The Denver court decided the appointment of the ALJs was unlawful. The D.C. Court of Appeals decided SEC ALJs were lawfully appointed. 

The Celebration and SHOW HIO supported the petitioners’ efforts in D.C., in Lucia v. SEC, to have the entire court change the three-judge panel’s decision against Lucia and to agree with the Denver decision in Bandimere v. SEC. An amicus brief was filed supporting Lucia, and pointed out that the USDA system likewise was unconstitutional. Unfortunately, the judges tied five-five, so Lucia did not prevail. 

Lucia asked the Supreme Court to reverse the D.C. Court’s decision, while the SEC asked the Supreme Court to reverse the Denver Court’s decision. On November 29, 2017, the government, through the Solicitor General and Department of Justice, filed a brief agreeing the Supreme Court should hear the cases, and informing the Court that the government had changed its position, and agreed that the SEC’s ALJ acted as inferior officers, but their appointment did not meet constitutional requirements. 

Depending on how the two cases develop, FAST may support the filing of an amicus brief in the Supreme Court in 2018, if the attorneys conclude it will further the interests of the industry. 

Fortunately, the interests of the industry in its challenge to the USDA’s use of ALJs and the Judicial Officer is going to be decided in five cases that have been appealed to the D.C. Circuit from five ALJ default decisions and the JO’s affirming the decisions. 

All those cases challenged the constitutionality of the use of the ALJs and JO, and now that the government has agreed that the SEC ALJs are not constitutionally appointed, this increases the probability that the USDA’s enforcement proceedings will be found unconstitutional. While success on this issue will not resolve the pending enforcement cases in the USDA, it will result in changes to the USDA system, which we hope will be fairer to the respondents in enforcement proceedings.

These five appeals also raise other issues that have industry-wide implications, and FAST will provide limited support to assist in seeking favorable outcomes. One issue of importance is ALJs’ and JO’s policy of imposing maximum penalties on those who do not enter consent decisions, or who try their cases because a disqualification will put them out of business, particularly trainers. 

There are two aspects to this argument. First, the ALJs and JO consistently ignore the mitigating factors Congress mandated be considered in assessing a penalty. Second, APHIS always requests, and gets, a disqualification against participants who have not previously had a final order entered assessing a fine under §1825(b). This violates the express provision in HPA §1825(c) that a disqualification can be assessed only against a person who has had a fine assessed by the Secretary in a final order issued under §1825(b). 

On December 12, 2017, the D.C. Circuit Court of Appeals ordered all five appeals consolidated, and entered an order abating activity in the cases until the Supreme Court has resolved the Lucia and Bandimere cases. The abatement will possibly last until June 2018, so nothing will be happening in court during this period. The attorneys will have considerable time to prepare the briefs and record. 

FAST supports these appeals as to issues having industry-wide implications. The individuals in these appeals had their own attorneys in the proceedings before the USDA. They have their attorneys on the appeal, and if the cases are remanded to the USDA, they will be responsible for their own defenses. 

FAST has committed limited resources to the issues on appeal affecting the industry, and with the attorneys who represented the industry in Contender I and II, we believe the prospects are positive for improving the USDA’s enforcement proceedings under the HPA. 

On behalf of the FAST Board of Directors, I extend our gratitude to you, the industry, for your continued support of our efforts to preserve and protect the Tennessee Walking Show Horse for future generations.  The dedication and commitment of time and resources by our Board and by many industry constituents has and will continue to make a difference in shaping our industry for future sustainability.
We wish all of you a healthy, happy and prosperous New Year!


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