256 F.3d 830 (D.C. Cir. 2001)
Kirby Produce Company, Inc., Petitionerv.United States Department of Agriculture and United States of America, Respondents
No. 99-1505
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 9, 2000Decided August 3, 2001

On Petition for Review of an Order of the  United States Department of Agriculture
Paul T. Gentile argued the cause for petitioner.  With him  on the briefs was Kevin P. Claffey.
Stephen M. Reilly, Attorney, U.S. Department of Agriculture, argued the cause for respondents.  With him on the  brief were James Michael Kelly, Associate General Counsel,  U.S. Department of Agriculture, and Margaret M. Breinholt,  Acting Assistant General Counsel.
Before:  Williams and Garland, Circuit Judges, and  Silberman, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge Garland.
Garland, Circuit Judge:


1
Kirby Produce Company, Inc.  petitions for review of an order of the Department of Agriculture, which revoked its license as a merchant of perishable  agricultural products for not promptly paying for fruit and  vegetable shipments, in violation of the Perishable Agricultural Commodities Act (PACA), 7 U.S.C.  499a et seq.  The  Agriculture Department revoked Kirby's license without a  hearing, concluding that there was no dispute of material fact  warranting a hearing.  Because the grounds upon which the  Department made that conclusion were arbitrary and capricious, we grant the petition and remand for further proceedings.


2
* PACA regulates "the shipment of perishable agricultural  commodities in interstate and foreign commerce through a  system of licensing and administrative supervision of the  conduct of licensees."  Quinn v. Butz, 510 F.2d 743, 746 (D.C.  Cir. 1975).  Every "commission merchant" of such commodities must be licensed by the Secretary of Agriculture.  See 7  U.S.C.  499c.1  PACA licensees are forbidden to engage in  specified unfair practices, including the failure to "make full  payment promptly in respect of any transaction" in a perishable agricultural commodity.  7 U.S.C.  499b(4).  "Full,  prompt payment" means payment within ten days after the  date the produce is accepted, unless otherwise agreed to in  writing before the time of sale.  7 C.F.R.  46.2(aa)(5), (11). If the Secretary determines that a licensee has violated the  prompt payment requirement, the Secretary may suspend the  offender's PACA license, and, if the violation was flagrant or  repeated, may revoke it.  7 U.S.C.  499h(a).


3
Although the Secretary is statutorily authorized to revoke a  license for flagrant violations, Department of Agriculture  policy during the relevant time period permitted a licensee to  avoid revocation by making full payment prior to the date set  for a hearing on the violations.  Such payment would convert  a "no-pay" case into a "slow-pay" case, and would result in  license suspension rather than revocation.  See In re Kirby  Produce Co., 58 Agric. Dec. 1011 (1999) (citing In re Gilardi  Truck & Transp., 43 Agric. Dec. 118 (1984)).2


4
In March 1996, various creditors, including PACA creditors, filed suit against Kirby in the United States District  Court for the Eastern District of Tennessee, seeking payment  for produce debts worth $2.3 million.  In June 1996, the  district court issued an order, consented to by all parties, that  established a payment arrangement and claims procedure. The order did not require payment by a date certain.  See  Brown's Produce v. Kirby Produce Co., No. 3:96-cv-526  (E.D. Tenn. June 25, 1996).


5
On October 20, 1997, the Agriculture Department's Agricultural Marketing Service (the "Service") filed an administrative complaint, charging Kirby with violating PACA by failing  promptly to make full payment for approximately $1.6 million  in fruits and vegetables from August 1995 through July 1996. The complaint sought revocation of Kirby's license for willful,  flagrant, and repeated violations.  Kirby's amended answer  denied the complaint's material allegations, and the Service  requested a hearing.  The Administrative Law Judge (ALJ)  scheduled one for January 13, 1999.


6
On November 10, 1998, Kirby's attorney filed a motion with  the ALJ, seeking an adjournment of the hearing until Kirby  paid its judgment creditors pursuant to the June 1996 order  in the Brown case.  The motion advised the ALJ of the  Brown order and attached a copy.  It also noted that "the  payment of all produce debt prior to the hearing substantially  reduces the potential sanction which may be imposed upon  the Respondent," and concluded that "[f]ailure to grant this  motion for adjournment will frustrate the order ... and  prejudice Respondent's position at the time of the hearing." App. at 20.


7
Shortly thereafter, the Agricultural Marketing Service filed  a motion with the ALJ, seeking a decision on its complaint  without a hearing.  The Service contended that Kirby's consent to the Brown order constituted an admission of all  material facts in the complaint.  It argued that this admission, coupled with Kirby's apparent inability to pay prior to  the hearing date, justified a decision without a hearing. Kirby objected on the grounds that the Brown order was an  admission of nonpayment only as of June 1996, and that it  still had the right to demonstrate full payment before the  January 1999 hearing date.


8
On December 31, 1998, the ALJ canceled the hearing and  revoked Kirby's license, concluding that Kirby's motion and  attachments had admitted "all the material allegations of fact  contained in the complaint."  On May 28, 1999, Kirby appealed to the Agriculture Department's Judicial Officer, to whom  the Secretary has delegated authority for final decisionmaking in adjudicatory proceedings.  See 7 C.F.R.  2.35.  Kirby  contended, inter alia, that it had in fact made full payment by  January 13, 1999, the date for which the hearing had been  scheduled.  Notwithstanding that it had violated PACA by  failing to pay promptly, Kirby argued that its full payment by  the date of the hearing converted the case into a slow-pay  case for which revocation was unwarranted.


9
The Judicial Officer issued his decision on July 12, 1999. He began by "agree[ing] with Respondent's contention that if  Respondent paid all of its produce sellers by the date of the  hearing, this case would be a 'slow-pay' case," and Kirby  would suffer suspension rather than revocation.  In re Kirby  Produce Co., 58 Agric. Dec. at 1011. However, instead of  adjudicating whether Kirby had in fact paid by January 13,  1999, the Officer determined that Kirby's consent to the  Brown order constituted an admission that it had failed to pay promptly, and that Kirby's motion for a continuance of  the hearing constituted an admission that the company would  not be able to pay by the hearing date.  The Judicial Officer  concluded that these admissions eliminated any issue of material fact and justified revocation of Kirby's license without a  hearing.  Thereafter, Kirby sought reconsideration, which the  Judicial Officer denied.  Kirby now petitions for review of the  order revoking its license.  See 28 U.S.C.  2342(2).

II

10
We review final decisions in PACA cases under the deferential standard of the Administrative Procedure Act, 5 U.S.C.   706(2)(A), (E).  Under that standard, we must "uphold the  Judicial Officer's decision unless we find it to be arbitrary,  capricious, an abuse of discretion, not in accordance with law,  or unsupported by substantial evidence."  JSG Trading Corp.  v. USDA, 176 F.3d 536, 541 (D.C. Cir. 1999).


11
Kirby concedes that it failed promptly to pay creditors for  its PACA debts.  But the company contends that it was able  to pay in full--and in fact did pay in full--by the January 13,  1999 scheduled hearing date, and it denies that its November  10, 1998 motion was an admission to the contrary.  Accordingly, Kirby argues that there was an issue of material fact as  to its qualification for slow-pay status, and that the Department's decision to revoke its license without a hearing was  arbitrary and capricious.


12
PACA states that upon issuing a PACA complaint, the  Secretary shall "afford [the respondent] an opportunity for a  hearing thereon before a duly authorized examiner of the  Secretary."  7 U.S.C.  499f(c)(2).  Although a hearing is not  required if there is no genuine factual dispute, see Veg-Mix,  Inc. v. USDA, 832 F.2d 601, 607-08 (D.C. Cir. 1987), the  Agriculture Department's regulations require a hearing "[i]f  any material issue of fact is joined by the pleadings."  7  C.F.R.  1.141(b).  In its briefs and at oral argument, the  Department conceded that if there had been an issue of  material fact regarding Kirby's ability to pay by the scheduled hearing date, revocation without a hearing would have  been improper.


13
The Judicial Officer based his conclusion that there was no  material dispute on two grounds.  The first was that Kirby's  consent to the Brown order constituted an admission that the  company had not promptly paid its PACA creditors.  That  point is correct and undisputed, but it is also plainly insufficient to eliminate dispute as to whether Kirby could have  made full payment by January 13, 1999.


14
The Officer's second ground was that Kirby's November 10,  1998 motion for an indefinite adjournment constituted an  admission that the company would not be able to pay by  January 13 of the following year.  The Judicial Officer did not  explain why it regarded Kirby's motion as an admission. Indeed, the Judicial Officer reached that conclusion without  adjudicating Kirby's claim that it had in fact made full  payment by January 13, and despite acknowledging that if  Kirby actually had paid by that date, revocation could have  been avoided.  See In re Kirby Produce Co., 58 Agric. Dec. at  1011.


15
Kirby's motion for adjournment stated:  "[T]he payment of  all produce debt prior to the hearing substantially reduces the  potential sanction....  Failure to grant this motion for adjournment will ... prejudice Respondent's position at the  time of the hearing."  App. at 20 (emphasis added).  At oral  argument, the Agriculture Department asserted that the  term "prejudice" referred to Kirby's classification as a no-pay  violator and that, by using the verb "will" rather than "could,"  Kirby implicitly admitted that its PACA debts could not  possibly be paid by the time of the hearing.  But under  Agriculture Department precedent, an implicit or equivocal  admission is insufficient to remove a fact from material  dispute.  See In re H. Schnell & Co., 57 Agric. Dec. 1722  (1998) (holding that before a hearing may be dispensed with,  oral statements of a respondent's attorney "must clearly  constitute an admission of the material allegations of the  complaint") (emphasis added).  That rule is especially apt in  this circumstance.  Litigants that move to extend deadlines  often lament the harm likely to result if their motions are denied.  To construe such a statement as admitting default,  however, confuses prediction of risk with confession of impossibility.  Kirby clearly intended to emphasize the risk that its  payments could not be made before January 13, but it was  not reasonable to infer that Kirby intended to admit that nonpayment was certain.


16
The Judicial Officer's unadorned statement, that Kirby's  request for a continuance of the hearing "constitutes an  admission" that Kirby would not be able to make full payment  by the date of the hearing, did not represent analysis;  it  merely expressed a conclusion.  Such a conclusion was particularly unreasonable in light of Kirby's protestations that it  had intended no such admission.  And it was doubly so in  light of the Judicial Officer's refusal to determine whether  Kirby had in fact paid by January 13, after the Officer  acknowledged that if Kirby had actually met that deadline,  revocation could have been avoided.  See In re Kirby Produce  Co., 58 Agric. Dec. at 1011.  Indeed, in his decision denying  reconsideration, the Judicial Officer only added to the arbitrariness of his reasoning.  There, in the face of Kirby's  representation that full payment had been made prior to  January 13, 1999, and again without determining whether  that representation was correct, the Judicial Officer ruled  that Kirby's "admission" that it "would not be able to" pay  removed any issue of material fact as to whether it actually  did pay by that date.  In re Kirby Produce Co., 58 Agric.  Dec. 1032 (1999).


17
At oral argument, the Department offered to provide this  court with an inspector's affidavit attesting that, as of October  31, 2000, Kirby still had not paid $1.1 million of its PACA  debt.  After argument, Kirby submitted a declaration by its  chief executive officer, made under penalty of perjury, that  the company had in fact paid in full prior to January 13, 1999. Although both statements obviously cannot be true, it is just  as clear that this court is not the proper authority to make  the necessary factual determination.  That is a task for the  agency upon remand.  See Veg-Mix, Inc., 832 F.2d at 609.

III

18
In revoking Kirby's license without a hearing, the Judicial  Officer relied upon his conclusion that the company had  admitted that it could not make payment by the date that had  been scheduled for that hearing.  That conclusion was arbitrary and capricious.  We therefore grant Kirby's petition for  review and remand the case for further proceedings consistent with this opinion.



Notes:


1
  A "commission merchant" is "any person engaged in the  business of receiving in interstate or foreign commerce any perishable agricultural commodity for sale, on commission, or for or on  behalf of another."  7 U.S.C.  499a(5).


2
  The Department has since changed its standard for no-pay  cases.  For all complaints filed after January 25, 1999, a case is  deemed no-pay if the alleged debts remain unpaid by the earlier of: (a) the hearing date, or (b) 120 days after the filing of the complaint. See In re Scamcorp, Inc., 57 Agric. Dec. 527, 562 n.13 (1998).


