Filed: Oct. 15, 1997
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals, Fifth Circuit. No. 95-50902. WINTERS RANCH PARTNERSHIP, a Texas partnership; David W. Winters; Sara F. Winters; Thomas D. Winters; John C. Winters, Plaintiffs-Counter Defendants-Appellees, v. Roger C. VIADERO, Inspector General, U.S. Department of Agriculture, Defendant-Counter Claimant-Appellant. Oct. 1, 1997. Appeal from the United States District Court for the Western District of Texas. Before GARWOOD, BARKSDALE and DENNIS, Circuit Judges. DENNIS, Circuit Judge
Summary: United States Court of Appeals, Fifth Circuit. No. 95-50902. WINTERS RANCH PARTNERSHIP, a Texas partnership; David W. Winters; Sara F. Winters; Thomas D. Winters; John C. Winters, Plaintiffs-Counter Defendants-Appellees, v. Roger C. VIADERO, Inspector General, U.S. Department of Agriculture, Defendant-Counter Claimant-Appellant. Oct. 1, 1997. Appeal from the United States District Court for the Western District of Texas. Before GARWOOD, BARKSDALE and DENNIS, Circuit Judges. DENNIS, Circuit Judge:..
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United States Court of Appeals,
Fifth Circuit.
No. 95-50902.
WINTERS RANCH PARTNERSHIP, a Texas partnership; David W.
Winters; Sara F. Winters; Thomas D. Winters; John C. Winters,
Plaintiffs-Counter Defendants-Appellees,
v.
Roger C. VIADERO, Inspector General, U.S. Department of
Agriculture, Defendant-Counter Claimant-Appellant.
Oct. 1, 1997.
Appeal from the United States District Court for the Western
District of Texas.
Before GARWOOD, BARKSDALE and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
Appellant, the Inspector General (of the United States
Department of Agriculture (USDA)) ("IG"), seeks summary enforcement
of administrative subpoenas duces tecum issued to Appellees,
Winters Ranch Partnership and its individual partners
(collectively, "the WRP group"). The WRP group contends that the
subpoenas were issued pursuant to an investigation which exceeds
the IG's statutory authority under the Inspector General Act and
are, therefore, unenforceable. The district court granted WRP's
motion for summary judgment and denied the IG's motion for summary
judgment, holding that the subpoenas were not issued for a purpose
within the statutory authority of the IG and denying the
enforcement of the subpoenas. Winters Ranch Partnership v.
Viadero, 901 F. Supp. 237, 242 (W.D.Tex.1995). We determine that
the IG issued the subpoenas for a purpose within the IG's statutory
authority, viz, to test the efficiency of the Consolidated Farm
Service Agency's implementation of payment limitations in the wool
and mohair price support programs. Accordingly, we reverse the
district court's judgment and render summary judgment ordering
enforcement of the subpoenas.
I. Factual Background
Plaintiffs-Appellees, Winters Ranch Partnership ("WRP") and
its individual partners, David W. Winters, his wife Sarah R.
Winters, and their children Thomas D. Winters and John C. Winters
(collectively, "the WRP group") have interests in a sheep and goat
ranch that produces wool and mohair. Based on their
representations that each partner was an active producer of wool
and mohair, all of the WRP partners received price support payments
under the federal wool and mohair price support programs for
marketing years 1991, 1992, and 1993. The Consolidated Farm
Service Agency ("CFSA") is the federal agency statutorily
authorized to administer the price support program. In 1993, the
Inspector General formulated a plan to investigate and audit the
CFSA's implementation of the payment limitation and eligibility
requirements for participation in federal wool and mohair support
programs. In connection with this investigation, the IG selected
a sample of six price support recipients out of the total number of
recipients and proceeded to investigate these subjects to test
whether the agency's administration of the program effectively
prevented violations of payment limitation and eligibility
requirements. The WRP group was one of the six producer-recipients
selected for the investigation. The IG began by requesting
information to determine whether the WRP group's farming operation
was carried out in 1991 and 1992 as represented to the CFSA. The
WRP group cooperated for several months by producing the documents
requested. The IG's review of the documents submitted by the WRP
group revealed that the partners actual participation in the
farming operations for marketing years 1991, 1992, and 1993 were
different from that represented to the CFSA. The IG notified the
CFSA of these discrepancies and recommended that the CFSA initiate
its own investigation. On December 16, 1994, the CFSA began its
own review to determine if WRP farming operations were as
represented to the CFSA for program payment limitation and payment
eligibility requrements. On January 4, 1995, the WRP group
informed the IG that it would no longer respond to the IG's
requests for information and instead would cooperate only with the
CFSA. On February 1, 1995, the IG issued administrative subpoenas
seeking information relating to the WRP group's eligibility for
price support payments in 1991 through 1993.
The WRP group refused to comply with the subpoenas and filed
this action for declaratory judgment that the subpoenas were not
issued for a purpose within the IG's statutory authority. The IG
filed a counterclaim seeking enforcement of the subpoenas.
Subsequently, the adverse parties filed cross motions for summary
judgment. The district court granted summary judgment in favor of
the WRP group and denied the IG's motion for summary judgment. The
IG appealed from the district court's judgment.
II. Legal Principles
A. Administrative Subpoenas
When called upon to enforce an administrative subpoena, a
court's role is limited to evaluating whether (1) the subpoena was
issued for a lawful purpose within the statutory authority of the
issuing agency; (2) the documents requested are relevant to that
purpose; and (3) the subpoena demand is reasonable and not unduly
burdensome. See, e.g., Oklahoma Press Publ. Co. v. Walling, 327
U.S. 186, 209,
66 S. Ct. 494, 506,
90 L. Ed. 614 (1946); Endicott
Johnson Corp. v. Perkins,
317 U.S. 501, 509,
63 S. Ct. 339, 343,
87
L. Ed. 424 (1942); Burlington N. R.R. Co. v. Office of Inspector
Gen., R.R. Retirement Bd.,
983 F.2d 631, 637 (5th Cir.1993) (citing
United States v. Morton Salt Co.,
338 U.S. 632, 652,
70 S. Ct. 357,
368-69,
94 L. Ed. 401 (1950); United States v. Westinghouse Elec.
Corp.,
788 F.2d 164, 166 (3d Cir.1986); Federal Election Comm'n v.
Florida for Kennedy Comm.,
681 F.2d 1281, 1284 (11th Cir.1982);
United States v. Powell,
379 U.S. 48, 58,
85 S. Ct. 248, 255,
13
L. Ed. 2d 112 (1964)); United States v. Security State Bank & Trust,
473 F.2d 638, 641 (5th Cir.1973); see also RTC v. Walde,
18 F.3d
943, 946 (D.C.Cir.1994); Linde Thomson Langworthy Kohn & Van Dyke,
P.C. v. RTC,
5 F.3d 1508, 1513 (D.C.Cir.1993); F.T.C. v. Texaco,
555 F.2d 862, 872 (D.C.Cir.1977) (en banc) (citations omitted).
The WRP group principally contends that the subpoenas were not
issued for a purpose within the IG's authority. The WRP group did
not vigorously raise or address the issues of whether the subpoenas
sought irrelevant information or were unduly broad or burdensome.1
1
In the final pages of its brief, the WRP group raises, in a
cursory fashion, arguments that the administrative subpoenas are
unenforceable because they are irrelevant and burdensome. See
Appellee's Brief p. 36-37. No summary judgment evidence supports
a finding that the information sought by the IG was either
irrelevant or burdensome. See infra at III (discussing the
undisputed facts). In fact the information directly relates to the
The district court's ruling was restricted to the authority of the
IG to issue the subpoenas.
B. Inspector General Act
The Office of Inspector General of the United States
Department of Agriculture was established by the Inspector General
Act. Inspector General Act of 1978, Pub.L. No. 95-452 (codified in
5 U.S.C. app. 3 §§ 1-12). Congress created the Office of Inspector
General for the express purpose of combating "fraud, waste, abuse,
and mismanagement in the programs and operations of the federal
government." S.REP. NO. 95-1071, at 1, reprinted in 1978
U.S.C.C.A.N. 2676, 2676. An office of Inspector General is
established in executive departments and executive agencies to act
as an independent and objective unit "(1) to conduct and supervise
audits and investigations relating to the programs and operations
of [the agency]," (2) to recommend policies for "activities
designed (A) to promote economy, efficiency, and effectiveness" in
the agency's programs and operations, and "(B) to prevent and
detect fraud and abuse" therein, and (3) to provide a means to keep
the agency head and Congress informed of problems and deficiencies
in the agency's programs and operations and to recommend corrective
action. 5 U.S.C. app. 3 § 2. Each Inspector General, in carrying
out the provisions of the Act, is authorized "to make such
investigations and reports relating to the administration of the
programs and operations of [the agency] as are, in the judgment of
the Inspector General, necessary or desirable," and "to require by
purpose of the audit and encompasses documents not requested by the
CFSA.
subpena [sic] the production of all information, documents,
reports, answers, records, accounts, papers, and other data and
documentary evidence necessary in the performance of the functions
assigned" by the Act. Id. § 6(a)(2), (4).
In short, Congress conferred very broad audit, investigatory,
and subpoena powers on each Inspector General, as an independent
and objective unit of the department or agency, to help promote
efficiency and prevent fraud, waste, abuse, and mismanagement in
federal government programs; Congress also prohibited any
government agency from transferring its program operating
responsibilities to an Inspector General. See Burlington N. R.R.
Co., 983 F.2d at 634-35.
C. Wool and Mohair Act
The National Wool Act of 1954 created price support programs
for the production of wool and mohair and designated the Secretary
of Agriculture to administer the programs. 7 U.S.C.S. §§ 1782-1785
(Supp.1996). Beginning in the 1991 marketing year, the Food,
Agriculture, Conservation, and Trade Act of 1990 imposed ceilings
on the amount of price support payments received by any one
"person". 7 U.S.C.S. § 1783(b) (Supp.1996) (repealed 1996).
Payments to any "person" were limited to (a) $200,000 for the 1991
marketing year; (b) $175,000 for the 1992 marketing year, and (c)
$150,000 for the 1993 marketing year. 7 U.S.C.S. § 1783(b)
(Supp.1996) (repealed 1996). For payment limitation purposes, a
"person" is any individual or organizational entity actively
participating in farming operations, provided they have a separate
and distinct interest in the land or crop involved, exercise
separate responsibility for their interests, and maintain separate
funds or accounts. 7 C.F.R. §§ 1497.7, 1497.9 (1990).
USDA regulations charge the CFSA with determining program
eligibility, payment limitation compliance, and participants'
general compliance with all program requirements. See 7 C.F.R. §§
1468.102, 1472.1502 (1990). According to the USDA handbook on
payment limitation enforcement, the CFSA is responsible for
conducting compliance reviews, termed "end-of-year reviews," as
part of its program administration responsibilities. U.S. DEPT. OF
AGRICULTURE, ASCS HANDBOOK, PAYMENT LIMITATION FOR STATE AND COUNTY OFFICES 1-
PL (Revision 1), P. 7-1 (Jan. 23, 1992). The purpose of
end-of-year reviews is "to maintain the integrity of payment
limitation and payment eligibility provisions" and to "ascertain
that farming operations were carried out as represented when
initial determinations were made." Id.
D. Appellate Review Standards
An appellate court applies the same standard in reviewing the
grant or denial of a summary judgment motion as that used by the
trial court initially. Melton v. Teachers Ins. & Annuity Ass'n of
Am., 114 F.3d 557, 559 (5th Cir.1997); Dawkins v. Sears Roebuck
and Co.,
109 F.3d 241, 242 (5th Cir.1997) (citing Cockerham v.
Kerr-McGee Chem. Corp.,
23 F.3d 101, 104 (5th Cir.1995)); Waymire
v. Harris County, Tex.,
86 F.3d 424, 427 (5th Cir.1996) (citing
Robertson v. Bell Helicopter Textron, Inc.,
32 F.3d 948, 950 (5th
Cir.1994)); Jurgens v. E.E.O.C.,
903 F.2d 386, 388 (5th Cir.1990)
(citing Waltman v. International Paper Co.,
875 F.2d 468, 474 (5th
Cir.1989)); McCrae v. Hankins,
720 F.2d 863, 865 (5th Cir.1983)
(citations omitted). Under Rule 56(c), a summary judgment is
proper when it appears that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law. FED.R.CIV.P. 56(c).
III. Discussion
A. There is no dispute as to any material fact.
In support of the IG's motion for summary judgment to enforce
the subpoenas, the IG filed numerous exhibits including: (1) a
declaration under penalty of perjury by Melinda S. Wenzl, Auditor,
Office of the IG of the U.S. Dept. of Ag., Auditor-in-Charge of the
audit of the Wool and Mohair Payment Limitations; (2) the IG's
Survey Program providing instructions and guidance for conducting
a survey of the 1991 and 1992 wool and mohair payment limitations
administered by the Agricultural Stabilization and Conservations
Service [predecessor of the CFSA], dated July 15, 1993; (3) copies
of correspondence between the office of the IG and the WRP group;
(4) copies of the subpoenas duces tecum issued to the WRP group;
(5) a copy of IG's correspondence to the CFSA recommending a review
of WRP operations; and (6) a copy of the CFSA's letter to WRP
announcing its end-of-year review of WRP.
In support of its motion for summary judgment, the WRP group
submitted a number of exhibits primarily including: (1) a July 9,
1994 fax transmittal from Melinda Wenzl, IG Auditor, to David
Winters of WRP requesting certain documents necessary for the IG's
review of WRP's 1991 and 1992 payment limitations; and (2) copies
of correspondence between the IG and the WRP group, the CFSA and
the WRP group, and the IG and the WRP group's attorney.
The exhibits submitted by the WRP group are consistent with
and partially duplicate the IG's filings. A review of the parties'
exhibits reveals that the following material facts are undisputed.
Wool and mohair producers are eligible under the National Wool
Act of 1954 for price support payments when the yearly average
price received for wool or mohair is below the established support
price. The USDA makes price support payments through its component
agencies, one of which is the CFSA. The CFSA is responsible for
determining producers' eligibility for payments and compliance with
program requirements. To enforce these eligibility and program
requirements, the CFSA is charged with the responsibility of
conducting end-of-the-year reviews to ascertain that participation
in farming operations are carried out as represented.
Beginning with the 1991 marketing year, price support payments
to federal producer recipients were subject to limits. The payment
limitations restrict the total amount of price support that each
person may receive for a particular marketing year. The payment
limitations per person were $200,000 for the 1991 marketing year;
$175,000 for 1992; $150,000 for 1993; and $125,000 for 1994. For
payment limitations purposes, a "person" is an individual or entity
who has a separate and distinct interest in the land or crop
involved, exercises separate responsibility for such interest, and
maintains funds or accounts separate from that of any other
individual or entity. Any person who participates in a scheme or
device to evade the payment limitations is not eligible for CFSA
program payments.
The IG decided to test the efficiency of the CFSA's
administration of the wool and mohair price support programs to
determine whether payments for the 1991, 1992, and 1993 marketing
years were properly made to a sample of producers who had
represented that they met eligibility requirements, or whether
producers had developed schemes or devices to evade payment
limitations. After studying payment limitations records for 1989
and 1990 and comparing them with records for 1991, 1992, and 1993,
the IG determined to select for independent IG investigation those
producers who had received payments in excess of $200,000 in 1989
and 1990 and new producers who had received more than $50,000 in
1991. WRP was one of the six producers who fell into this category
because: prior to 1991, only plaintiff David Winters of the WRP
group participated in the programs and he received $424,715.27 for
1989 and $595,689.61 for 1990. David Winters, his wife Sara
Winters, and their two children formed WRP after payment
limitations were imposed effective in the 1991 marketing year.
Based on representations by the WRP group, the CFSA approved their
classification as four "persons" actively engaged in farming during
the 1991, 1992, and 1993 marketing years. The combined wool and
mohair payments to the WRP group for 1991, 1992, and 1993 were
$670,200.62, $755,687.71 and $695,120.32, respectively. The IG
examined operations and financial transactions of the WRP group and
five other producers to determine the incidence, if any, of
misrepresentation or non-compliance with program eligibility and
limitation requirements.
At first the WRP group responded to the IG's request for
information and documents. The IG's preliminary review uncovered
discrepancies between the WRP group's actual farming operations and
financial records and those represented to the CFSA as meeting the
requirements of eligibility for price support payments. As
required by the Act, the IG reported these findings to the CFSA and
recommended an end-of-year review of the WRP group. The CFSA, on
December 16, 1994, notified the WRP group that it was conducting an
end-of-year review of WRP's operations and payment eligibility for
1991, 1992, and 1993. On January 4, 1995, the WRP group's counsel
notified the IG that they would no longer respond to the IG's
request for information, but that they would cooperate only with
the CFSA.
The IG renewed the request for additional documentation
pointing out that the IG's authority to conduct independent,
objective audits is separate and distinct from the CFSA's authority
to conduct end-of-year reviews. The WRP group again refused to
respond.
The IG determined that the information requested was essential
to a complete review of the enforcement of laws and regulations
with respect to the WRP group's operations and the completion of
the IG's survey program. Accordingly, the IG issued administrative
subpoenas to the WRP group seeking the data on February 1, 1995.
The WRP group responded by filing the instant action on February
21, 1995.
Although the CFSA has provided the IG with information and
documents it recovered in its end-of-year review, the IG still has
not received all of the information which it sought. Based on the
partial information, the IG has determined, in conjunction with the
CFSA, that the WRP group received payments for which they were
ineligible in each of the marketing years 1991 through 1993. The
remainder of the information that the IG requested, however, is
indispensable to the IG's audit and investigation of the
enforcement of program requirements with respect to the WRP group
and to its survey testing of USDA price support programs. The
following information was requested by the IG but has not been
supplied: (1) explanations of abbreviations and codes contained in
WRP's ledgers and account books; (2) loan documents, including
promissory notes, security agreements, and transaction histories;
(3) copies of David Winters's 1991 through 1993 accounting records;
(4) information relating to offsets noted in WRP's general ledgers;
(5) employer identification numbers for livestock or ranching
operations in which David Winters had an interest; and (6) copies
of sales documents for mohair sales records on WRP's general
ledgers for 1992.
From the undisputed material evidentiary facts, we find that
the IG issued the administrative subpoenas for two purposes. The
immediate purpose was to obtain information relevant to whether
each member of the WRP group met program eligibility requirements;
whether any member of the group had received support payments in
excess of that for which he or she was eligible; and whether the
group or any of its members had participated in a scheme or device
to evade price support limitations. The ultimate purpose of the
subpoenas was to obtain information to complete the IG's survey
program designed to determine whether the agency's procedures for
detecting and preventing fraud and abuse were effective and whether
deficiencies were prevalent in the agency's price support programs,
and, if so, to determine the scope, patterns, and possible
antidotes for the problem, and to enable the IG to make
recommendations as to necessary or desirable remedial measures to
the head of the agency and to Congress.
B. The Inspector General is entitled to judgment as a matter of
law.
The subpoenas were issued for a lawful purpose within the
statutory authority of the IG as the issuing agency. The Inspector
General Act clearly authorizes an IG to require by subpoena
information from persons who receive federal funds in connection
with a federal agency program or operation for the purpose of
evaluating the agency's programs in terms of their management,
efficiency, rate of error, and vulnerability to fraud, abuses, and
other problems.
The purpose of the Act in establishing an IG office in each
agency is to effect independent and objective audits and
investigations of the programs and operations of each agency, to
promote economy, efficiency, and effectiveness and to prevent fraud
and abuse in the agency's programs, and to keep the agency head and
Congress apprised of problems and deficiencies in the programs. 5
U.S.C. app. 3 § 2(1)-(3).
To achieve this purpose, the Act imposes duties and
responsibilities on each IG to conduct, supervise, and coordinate
audits and investigations relating to the programs and operations
of the agency. Id. § 4(a)(1). The Act also charges the IG to keep
the agency and Congress informed of fraud, abuses, and serious
problems in programs financed or administered by the agency.
Id.
§ 4(a)(5).
To fulfill these duties, the Act gives the IG additional
powers. The IG is authorized "to make such investigations and
reports relating to the administration of the programs and
operations of the agency as are, in the judgment of the [IG],
necessary or desirable." Id. § 6(a)(2). The IG is authorized "to
have access to all records, reports, audits, reviews, documents,
papers, recommendations, or other material available to [the
agency] which relate to programs and operations with respect to
which that [IG] has responsibilities."
Id. § 6(a)(1). The IG is
authorized "to request such information or assistance" necessary
"to carrying out the [IG's] duties and responsibilities from any
Federal, State, or local government agency."
Id. The IG is
authorized to require by subpoena from any person or entity, except
federal agencies, "the production of all information, documents,
reports, answers, records, accounts, papers, and other data and
documentary evidence necessary" to its functions.
Id. § 6(a)(4).
"Procedures other than subpoenas shall be used by the IG to obtain
documents and information from federal agencies."
Id. The IG is
authorized "to administer to or take from any person an oath,
affirmation, or affidavit, whenever necessary in the performance"
of the IG's functions.
Id. § 6(a)(5).
In the present case the district court concluded the following
about the purpose of the IG's investigation: that it was "of a
regulatory, rather than oversight, nature;" that it was not " "to
promote economy, efficiency and effectiveness in the administration
of and to prevent and detect fraud and abuse in and relating to the
programs and operations of' " the CFSA; and that it was "a payment
limitation compliance review to be conducted pursuant to a
long-term regulatory plan." Winters Ranch Partnership, 901 F. Supp.
at 241. In reaching these conclusions, the district court fell
into error, evidently because it applied an incorrect
interpretation of the provisions of the Inspector General Act to a
clearly erroneous inference from the undisputed evidentiary facts
of record.
The district court erred in concluding that the Act prevents
the IG from using investigative techniques similar to the agency's
end-of-year reviews as a means of executing the IG's functions.
The Act establishes and protects the IG's independent, objective
judgment in designing the scope, methodology, and focus of audits
and investigations of the administration of agency programs and
operations. The IG is specifically authorized to make such
investigations as are, in the judgment of the IG, necessary or
desirable. Id. §§ 2, 6(a)(2); see also Burlington
Northern, 983
F.2d at 641. Although the IG is under the general supervision of
the head of the agency, neither the head officer nor any other
person may "prevent or prohibit [the IG] from initiating, carrying
out, or completing any audit or investigation, or from issuing" any
investigative subpoena.
Id. § 3(a). The independence and
objectivity of the IG is enhanced because the IG is appointed by
the President, by and with the advice and consent of the Senate,
and may be removed only by the President, who is required to
explain the removal to both Houses of Congress.
Id. § 3(a), (b).
The district court evidently based its decision in part on a
misinterpretation of § 9(a) of the Inspector General Act. That
Section provides:
§ 9. Transfer of functions.
(a) There shall be transferred—
(1) to the Office of Inspector General—[subsections (A)
through (V) list pre-existing internal audit and
investigative units of various agencies that shall be
transferred]
(2) such other offices or agencies, or functions, powers,
or duties thereof, as the head of the [agency] involved
may determine are properly related to the functions of
the Office and would, if so transferred, further the
purposes of this Act,
except that there shall not be transferred to an Inspector
General under paragraph (2) program operating
responsibilities.
Section 9(a)(2) authorizes the head of an agency to transfer agency
offices, functions, powers, or duties to the Office of the
Inspector General if they are properly related to the functions of
the IG and their transfer would further the purposes of the
Inspector General Act. Correlatively, Section 9(a)(2) adds that
program operating responsibilities shall not be transferred to an
IG. Thus, the agency head cannot convey to the IG any of the
agency's congressionally-delegated program operating
responsibility. See Burlington Northern, 983 F.2d at 642. The
transfer of such responsibility would not be properly related to or
compatible with the function of the IG as an independent, objective
inspector of the agency's operations; and such a transfer would
thwart, not further, the statutory design to establish the IG as a
separate, independent, and objective auditor and investigator of
agency operations. See
id.
The district court's apparent interpretation of Section
9(a)(2) as prohibiting an IG from using the agency's investigatory
techniques in conducting an independent IG investigation is simply
incorrect. Section 9(a)(2) prohibits the transfer of "program
operating responsibilities," and not the duplication of functions
or the copying of techniques. No transfer of operating
responsibility occurs and the IG's independence and objectivity is
not compromised when the IG mimics or adapts agency investigatory
methods or functions in the course of an independent audit or
investigation. In fact, no transfer of function can occur simply
because the IG emulates a function normally performed by the agency
as part of the IG's own independent investigation. In order for a
transfer of function to occur, the agency would have to relinquish
its own performance of that function. See, e.g., Burlington
Northern, 983 F.2d at 642.
As we have explained, the Act authorizes and enables the IG to
make independent decisions as to how and when to investigate the
agency's operation of its programs; it does not withdraw any
legitimate investigatory technique from the IG's repertoire, and it
does not dictate any particular manner in which the IG must deploy
or orchestrate the available devices of inquiry. See 5 U.S.C. app.
3 § 6(a)(2); see also Burlington Northern, 983 F.2d at 641 (noting
that the Inspector General Act gives Inspectors General "broad—not
limited—investigatory and subpoena powers"); United States v.
Newport News Shipbuilding & Dry Dock Co.,
837 F.2d 162, 170 (4th
Cir.1988) ("[W]here the interests of the government require broad
investigations into the efficiency and honesty of a defense
contractor, the Inspector General is equipped for this task."). As
a practical matter, it is difficult to see how the IG could
evaluate the accuracy and effectiveness of the agency's eligibility
and compliance procedures without performing some of the same or
similar procedures in at least a sample or limited number of cases
and comparing the IG's findings and evaluations with that of the
agency.
There is no justification in the undisputed factual record for
the district court's inference that the IG's investigation is a
"long-term regulatory plan," rather than an independent IG
investigation " "to prevent and detect fraud and abuse in and
relating to the programs and operations of the' " agency. The IG,
based on reasonable criteria, selected a sample of six wool and
mohair producers for a survey to determine to what extent, if any,
fraud, misrepresentation, and evasion schemes had circumvented
price support limitations during three marketing years. The WRP
group was one of the producers selected because the previous
history and subsequent characteristics of their support payments
met or fell within reasonable and objective investigatory criteria.
The IG used, as part of its investigation, methods similar to those
that the agency uses at times to determine whether a producer
misrepresented any material facts in demonstrating the producer's
eligibility for price support payments during a particular
marketing year. When the IG detected discrepancies between the WRP
group's representations of facts to the agency and the true facts
uncovered by the IG's investigation, the IG turned this information
over to the agency, which promptly conducted its own investigation
and found that the group was, in fact, not eligible for all of the
support payments received. The record plainly does not support the
district court's inferences that the IG's investigation usurped the
agency's program operating responsibilities, was long-term, or was
not being conducted for legitimate purposes under the Act as
represented by the IG.
Our decision in Burlington Northern v. Office of Inspector
General, 983 F.2d 631 (5th Cir.1993), supports the conclusion that
the subpoenas here were issued for a purpose within the IG's
statutory authority and should be enforced. Burlington Northern
recognized and applied the same principles we do but reached the
opposite result on crucially different facts.
In Burlington Northern the agency, the Railroad Retirement
Board (RRB), had never exercised its statutory duty to investigate
whether railroad companies' properly paid taxes to the Railroad
Unemployment Insurance Account. The IG assumed the agency's
primary duty, formed an alliance with the IRS, and was conducting
regular tax collection audits of substantially all major railroads
on a continuing, long-term basis. The IG was not merely conducting
"spot checks" of railroads' records to test the effectiveness of
the RRB's duty to investigate and audit railroad employers—the RRB
had never performed this duty. The IG issued subpoenas to the
Burlington Northern Railroad for payroll records pursuant to the
IG's assumption of the RRB's statutory duty. The district court
denied enforcement. We affirmed, holding that the IG lacked
statutory authority to assume the agency's primary operating
responsibilities by conducting, as part of a long-term, continuing
plan, regular tax collection audits of the railroad companies'
records. Id. at 642. Under the Railroad Unemployment Insurance
Act, this court stated, the RRB, not the IG, is charged with
ensuring that railroad employers are accurately reporting taxable
compensation and properly paying taxes.
Id. at 643. Further, and
highly significant to the present case, this court added:
We are not holding that, under all circumstances, the
Inspector General of the RRB lacks statutory authority to
investigate or audit railroad employers' compensation
reporting. The Inspector General of the RRB may well be able
to do so as part of a plan to test the effectiveness of the
RRB's summary reconciliation procedures or where he suspects
fraud and abuse on the part of such employers. We hold only
that, based on the district court's findings concerning the
nature of this particular audit of Burlington Northern, the
Inspector General exceeded his statutory authority.
Id. at 643 (italics original) (underscoring added).
In the present case, the IG did not assume, and the CFSA did
not cede, any of the agency's program operating responsibilities.
The IG adopted a survey plan to "spot check" the records of six
producers for three marketing years. The IG did not adopt a
long-term, continuing plan to fill a void left by the CFSA in
primary agency program administration. The purpose of the IG's
investigation was to test the effectiveness of the agency's
discharge of a program operating responsibility as the Act
authorizes and as this court clearly indicated an IG may do in
Burlington Northern. See id.
For the reasons assigned, the judgment of the district court
is REVERSED, summary judgment is granted in favor of the IG
ordering that the subpoenas issued by the IG shall be enforced, and
the case is REMANDED to the district court for further proceedings
consistent with this opinion.
