                                    ___________

                                    No. 95-2540
                                    ___________

Leslie Downer,                          *
                                        *
              Appellant,                *
                                        *
     v.                                 *   Appeal from the United States
                                        *   District Court for the
United States of America,               *   District of South Dakota.
acting by and through the               *
United States Department of             *         [PUBLISHED]
Agriculture and Soil                    *
Conservation Service,                   *
                                        *
              Appellee.

                                    ___________

                     Submitted:     December 11, 1995

                           Filed:   September 19, 1996
                                    ___________

Before McMILLIAN, JOHN R. GIBSON, and BEAM, Circuit Judges.
                               ___________

PER CURIAM.


     Leslie Downer was denied crop subsidy payments for his 1989 crop
after the United States Department of Agriculture (USDA), acting through
the Soil Conservation Service (SCS) and the Agricultural Stabilization and
Conservation Service (ASCS),1 determined that Downer had violated the
Swampbuster provisions of the Food Security Act, 16 U.S.C. §§ 3821-3824
(1994).   Downer exhausted his administrative appeals and filed suit in
federal district court, contesting the agency decision as arbitrary and




     1
     We will refer to these entities collectively as "the agency,"
except where clarity requires specificity.
capricious.      The district court granted summary judgment to the agency.
Downer appeals, and we affirm.


                                         I.


        Downer farms land in Edmunds County, South Dakota, including two
tracts that contained manmade "dugouts," or water holes.           In 1988 and 1989,
Downer participated in the Price Support and Production Adjustment Program,
under which he received payments from the government.            Under Swampbuster,
persons who plant agricultural commodities on converted wetlands in
violation of Swampbuster become ineligible for government price support
payments.   16 U.S.C. §§ 3821(a)(1), 3801(a)(4)(A).          Downer filled the two
man-made dugouts and the surrounding area during the period between the
1988 and 1989 growing seasons, and planted agricultural commodities over
the dugouts and the surrounding area.          The agency concedes that filling a
manmade dugout in itself is permissible.         16 U.S.C. § 3822(b)(2).      However,
the SCS determined that the dugouts had been situated in wetlands, and that
Downer had spread fill over wetland areas beyond the boundaries of the
dugouts.


        Downer appealed through the SCS the determination that his filling
activity violated Swampbuster, but the SCS Chief ultimately determined that
the areas in question were converted wetlands.               Downer then appealed
through the ASCS administrative processes, asking for reconsideration of
the SCS's technical determination or for a finding that his violation was
mitigated or excused under the good faith exception to Swampbuster.                 See
16 U.S.C. § 3822 (h)(i).       He was again unsuccessful.


        On May 26, 1993, Downer refunded to the ASCS the $4,624 in price
support payments he had received in 1989.         He sought review in the district
court    under   5   U.S.C.   §§   702-706,    claiming   that   the   SCS   and   ASCS
determinations were wrong, and arbitrary and capricious, and denied him due
process of law.




                                         -2-
                                                  II.


       A.    Standard of Review


       Four of the questions Downer raises are classic examples of factual
disputes implicating substantial agency expertise: 1) whether the areas in
question were wetlands; 2) whether such wetlands were converted; 3) whether
the conversion was commenced before December 23, 1985; and 4) whether the
areas were artificial rather than natural wetlands.                          Our review of these
questions, as the parties agree, is limited to a determination of whether
the decisions were "arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law."                  5 U.S.C. § 706(2)(A).           This narrow
review      entails    a     "searching     and     careful"      de    novo     review       of   the
administrative record presented to determine "whether the decision was
based on a consideration of the relevant factors and whether there has been
a clear error of judgment."          Marsh v. Oregon Natural Resources Council, 490
U.S. 360, 378 (1989).


       To    perform   this     review      the    court      looks    to    whether    the    agency
considered those factors Congress intended it to consider; whether the
agency considered factors Congress did not intend it to consider; whether
the agency failed entirely to consider an important aspect of the problem;
whether the agency decision runs counter to the evidence before it; or
whether there is such a lack of a rational connection between the facts
found and the decision made that the disputed decision cannot "be ascribed
to a difference in view or the product of agency expertise."                                   Motor
Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983).      If the agency itself has not provided a reasoned basis for its
action, the court may not supply one.                   Id.


       Nonetheless, the reviewing court may not substitute its judgment for
that   of    the   agency      and   must    give       substantial         deference    to    agency
determinations.        Id.     This deference is particularly




                                                  -3-
appropriate when the agency determination in issue concerns a subject
within the agency's own area of expertise.     Marsh, 490 U.S. at 377-78.      An
agency making fact-based determinations in its own field of expertise,
particularly where those determinations are wrapped up with scientific
judgments, must be permitted "to rely on the reasonable opinions of its own
qualified experts even if, as an original matter, a court might find
contrary views more persuasive."      Id. at 378.


     B.     Substantive Due Process


     For Downer to lose his eligibility for USDA crop price supports, the
agency must have determined that the land in issue was a wetland, that
Downer converted the wetland, that the conversion did not start before
December 23, 1985, and that Downer planted an agricultural commodity on the
converted    wetland.2   Downer   does   not   dispute   that   he   planted   an
agricultural commodity on the land in issue; he argues, however, that the
agency findings on all the other points were arbitrary and capricious.


             1. Wetland Determination


     Under Swampbuster, the term "wetland" refers to land that

     (A)   has a predominance of hydric soils;
     (B)   is inundated or saturated by surface or groundwater at a
     frequency and duration sufficient to support a prevalence of
     hydrophytic vegetation typically adapted for life in saturated
     soil conditions; and

     (C)   under normal circumstances does support a prevalence of
     such vegetation.




     2
      Downer also argues that the agency had to determine that the
wetland was not artificially created in the first place.        The
agency argues this step is irrelevant and need not be performed.
Because of our discussion in Part II. B.4. we need not resolve this
issue.

                                      -4-
16 U.S.C. § 3801 (a)(16).   The administrative record establishes that the
agency considered all three factors.       The SCS took soil samples from the
areas in dispute and used those samples to determine that the areas had a
predominance of hydric soils.    A series of annual aerial photographs, taken
in July and August, the hot, dry months of summer, was examined to
determine the saturation or inundation history of the areas in question.
Because the soil was heavily worked, the SCS visited sites it deemed
comparable to the areas in question to determine whether the sites
supported or would have supported a prevalence of hydrophytic vegetation
before Downer's alterations.


     Downer complains that while the agency considered all three factors,
the agency's evidence and methodology does not support its conclusions as
to factors (B) and (C).     Specifically, he complains of the use of aerial
photography   and   comparison   sites.     The   agency   responds   that   such
methodology is standard in its field of expertise and soil conservation.
Agency   regulations bear out the agency's contention.           See 7 C.F.R.
§ 12.31(b)(2)(ii)(1995).    Downer presents no evidence aside from the bald
assertion that the agency method is unacceptable or flawed.             We must
therefore reject his complaints.


     There is also no evidence that the agency considered any factors
Congress did not intend it to consider in making its determination, nor is
there any indication that the agency failed to consider an important aspect




                                     -5-
of   the   wetlands   determination   problem.3   The   agency's   technical


      3
      Downer argues that 16 U.S.C. § 3822(a), which instructs the
Secretary of Agriculture to create wetland delineation maps, should
be applied retroactively to his case. The amendment was enacted in
1990, while Downer, having exhausted his local and state reviews,
was appealing the agency determination through the national
administrative process.    Retroactive application of statutes is
disfavored in the absence of clear congressional intent to the
contrary. See Miller v. Federal Emergency Management Agency, 57
F.3d 687, 689 (8th Cir. 1995). Congress clearly indicated those
subsections of section 3822 which it intended to have retroactive
effect. See National Wildlife Fed'n v. ASCS, 955 F.2d 1199, 1204-
05 (8th Cir. 1992).     It did not give any indication that the
mapping subsection was to be retroactive.

     Further, Congress is presumed to know the legal background in
which it is legislating. See, e.g., Fogerty v. Fantasy, Inc., 114
S. Ct. 1023, 1033 (1994); Astoria Fed. Sav. & Loan Ass'n v.
Solimino, 501 U.S. 104, 108 (1991). This background includes not
only the convention that retroactivity must be clearly intended,
but also the convention that federal benefits and subsidies are
generally fixed according to the law in effect at the time of the
grant. Bennett v. New Jersey, 470 U.S. 632, 638 (1985). If these
provisions   applied   retroactively,   they   would  require   the
reexamination of five years' worth of decisions.          In these
circumstances, we interpret as intentional Congress's silence on
the subject of retroactivity. It is telling that Congress not only
did not make the subsection retroactive, it specifically disallowed
the subsection's retroactive application to mapping appeals. 16
U.S.C. § 3822(a)(2).     It is clear that Congress was trying to
soften the penalties and fine tune the focus of Swampbuster through
section 3822, while causing as little administrative disruption as
possible.

     Finally, the managing agency, the USDA, which has the
responsibility for implementing the Food Security Act and
Swampbuster statutory scheme, has construed subsection (a) not to
apply retroactively, while construing certain other subsections of
section 3822 to do so (subsections providing for mitigation through
restoration, graduated withholding of subsidies depending on the
gravity of the violation, and Swampbuster errors made in reliance
on the agency's own errors). 7 C.F.R. § 12.5(b)(6)-(8). Even if
there were any question as to the retroactivity of subsection (a),
the USDA's policy of retroactivity for the provisions softening
penalties and nonretroactivity for provisions modifying the way we
determine the underlying violations is a reasonable construction of
the Swampbuster statutory scheme. See Chevron U.S.A. v. Natural

                                      -6-
determination is squarely within




Resources Defense Council, Inc., 467 U.S. 837, 843-45 (1984);
Sullivan v. Everhart, 494 U.S. 83, 89 (1990).

                                   -7-
its field of expertise and was made in reliance on its own qualified
experts' examination of the sites and other relevant data.    The decision
was rational and does not run counter to the evidence: tests showing hydric
soils; photographic evidence showing a history of wet conditions; evidence
of buried hydrophytic vegetation at the sites; and evidence of hydrophytic
vegetation at




                                   -8-
comparable but undisturbed sites.         Thus, the dispute is within the realm
of agency expertise, and not the result of arbitrary and capricious
decision-making.


           2.   Agency Determination of Wetland Conversion


     Under Swampbuster, a wetland has been converted when it has been:


     drained, dredged, filled, leveled, or otherwise manipulated
     (including any activity that results in impairing or reducing
     the flow, circulation, or reach of water) for the purpose or to
     have the effect of making the production of an agricultural
     commodity possible if--

           (i) such production would not have been possible but
           for such action; and

           (ii) before such action--

                   (I) such land was wetland; and

                (II) such land was neither highly erodible land
      nor highly erodible cropland.


16 U.S.C. § 3801(a)(4)(A).


     The administrative record shows that the agency determined, through
soil tests and field observations, that Downer's filling of the dugouts
extended onto the surrounding wetland area and that Downer's activity had
made it possible to produce agricultural commodities on land where such
commodities   could   not   have   been    regularly   produced   before.   Downer
vigorously disputes these findings, asserting that he only filled the
dugouts, not the surrounding areas.        He also disputes that his actions have
fundamentally changed the characteristics of the surrounding wetlands.




                                          -9-
      There is no question that Downer filled the dugouts, just a dispute
as to the extent and effect of the fill.      Agency soil scientists took test
bores and found that Downer's fill job extended beyond the boundaries of
the dugouts onto the surrounding wetlands and that the fill had been
contoured to enhance drainage.      Relying on site visits by its experts and
aerial photography, the agency also determined that ditching had been
enhanced at one of the sites.      Downer, in turn, presented his own expert's
soil tests to show that the fill job was tailored to the dugouts and did
not substantially extend beyond those boundaries.


      While there is evidence in the record cutting both ways, the agency
was entitled to rely on the tests and observations made by its own experts.
The aerial photographic records show wetlands surrounding the dugouts
before Downer's manipulation of those areas, and site visits established
that the areas were being used to produce agricultural commodities after
the   wetlands   were   drained,   covered,   and   recontoured.    The   agency's
determination of conversion is supported by the evidence and is not
arbitrary and capricious.


            3. Agency Determination of Date of Conversion


      There is no loss of crop subsidies when a farmer produces an
agricultural commodity on converted wetlands if the conversion of those
wetlands commenced before December 23, 1985.         16 U.S.C. §   3822(b)(1)(A).
Downer argues that digging the dugouts in the first place constituted
"manipulating" the wetlands; therefore, the "manipulation" began before
1985 and Downer was merely continuing an ongoing process by his activities
in 1989.   He also argues that he dug a drainage ditch in 1983 in one of the
wetlands, and that the 1989 activity was a continuation of that ongoing
wetland conversion.




                                       -10-
       So, the question boils down to what "commenced" means.           The agency
has interpreted "commenced" to mean "active pursuit" in that "efforts
toward the completion of the conversion activity have continued on a
regular basis . . . except for delays due to circumstances beyond the
person's control."       7 C.F.R. § 12.5(b)(5)(ii).     The farmer has the burden
to show that he falls within this exception and thus should not be
disqualified.    Id.


       Here, there is a photographic record showing saturated conditions
from   1980    through    1988.    The   only    activity   between   the   pre-1980
construction of the dugouts and the subsequent filling of the wetlands is
a ditch constructed in 1983, and the aerial record shows that it did not
change the existing characteristics of the wetland areas until the actual
conversion six years later.       The administrative record more than supports
the agency determination that Downer did not begin the "active pursuit" of
conversion until 1989.


              4. Artificial Wetlands


       Downer argues that it was the construction of the dugouts that
created the wetlands surrounding the dugouts, and that 16 U.S.C. § 3822(b)
exempts from ineligibility those who convert artificially created wetlands.
Downer states that the wetlands "were obviously created by excavating
and/or diking the land to collect and retain water for purposes such as
water for livestock."       Downer cites nothing in the record to support his
assertion that the wetlands are artificial.         In fact, Downer affirmatively
states that there is no evidence on the issue in the record before the
agency.    His brief states:        the "USDA utterly failed to consider or
determine whether natural wetlands existed in these areas prior to, or in
the absence of, the artificial dugouts.         There is no evidence in the record
to address this issue."       (emphasis added).




                                         -11-
     This statement dooms Downer's argument for two reasons.      First, it
is an admission that he failed to present the point before the agency.   We
need not consider arguments the parties failed to raise before the agency.
See Texarkana Metro. Area Manpower Consortium v. Donovan, 721 F.2d 1162,
1164 (8th Cir. 1983).


     Second, Downer has admitted that he failed to carry his burden of
proof.   The regulations specifically assign the burden of proof on this
issue to Downer.   7 C.F.R. § 12.5(9).   Section 12.5(9) states explicitly:
"It is the responsibility of the person seeking an exemption related to
converted wetlands under this section to provide evidence such as receipts,
crop history data, drawings, plans or similar information, for purposes of
determining whether the conversion or other action is exempt in accordance
with this section."   Downer has not, however, established the facts to show
that he would fall within the exemption, but relies only on the extremely
general assertion quoted above.    He has pointed to nothing in the record
to demonstrate the basis for the exemption applying to him.   The agency has
stated that Downer was notified that he must inform the local agricultural
authorities of any plans to convert wetlands, but he did not do so.      The
burden rests with Downer not only to establish facts warranting the
exemption before the agency, but also to demonstrate to this court where
in the record those facts may be found.     We have examined the record in
vain for such evidence, but in the end the burden is not on this court to
search the record for error.    Wilson v. Jotori Dredging, Inc., 999 F.2d
370, 372 (8th Cir. 1993) (citing United States v. Cohen, 738 F.2d 287, 290
(8th Cir. 1984)); Holt v. Sarver, 442 F.2d 304, 307 (8th Cir. 1971).


     No one contends that the filling of dugouts was a Swampbuster
violation; the issue before us concerns the filling of wetlands surrounding
the dugouts.   The record made clear that after December 23, 1985 Downer
filled wetlands outside the dugout areas with four




                                    -12-
to ten inches of foreign fill, and reworked the drainage ditch that
provided positive drainage to the road culvert.              Further, the filling of
the dugouts, while permissible in and of itself, affected the wetland basin
or drainage of the sites, as the district court stated.                     The agency
cogently argues that there is thus a rational connection between the
evidence in this case and the decision of the SCS, so that it was not an
arbitrary and capricious determination.


       In all there were nine separate hearings and reconsiderations as part
of the agency determination.         On the basis of this record, we can only
conclude that the district court, in a painstaking analysis of the
administrative     record,     did   not    err    in   concluding    Downer   violated
Swampbuster and was not entitled to an exemption.


       C.    Procedural Due Process


              1. Notice


       Downer also argues that he was deprived of due process because he did
not receive notice before his activities that conversion of wetland could
render him ineligible for crop subsidy payments.4              Regardless of whether
the USDA, rather than the applicant for subsidy, has the duty to insure
that   the    applicant   be   informed     of    the   program's    restrictions,   the
administrative record shows that Downer's assertion that he did not receive
notice is baseless.       Downer was specifically alerted to the presence of
wetland     areas on his farms and warned not to convert them without
consulting the




       4
      Downer includes a vagueness argument as part of his lack of
notice theory. "A noncriminal statute is not unconstitutionally
vague . . . where its terms are such that the ordinary person
exercising common sense can sufficiently understand and fulfill its
prescriptions." Horn v. Burns and Roe, 536 F.2d 251, 254 (8th Cir.
1976). We consider the prescriptions of Swampbuster very detailed
and not in the least ambiguous.        Thus, the statute is not
impermissibly vague.

                                           -13-
agency, at the risk of losing his eligibility.      On forms filed April 8,
1987, March 9, 1988, and March 20, 1989, Downer certified that he would not
produce an agricultural commodity on converted wetlands without first
consulting with the USDA.    In 1988, the SCS notified Downer that wetlands
might be present and if conversion of a wetland area was planned, an on
site SCS investigation should be requested before any conversion.      The SCS
communication also stated that there were wetlands and hydric soils on
Downer's farm.    Downer planted agricultural commodities in the two areas
which were determined by the SCS to be converted wetlands.        There is no
showing that he consulted with the SCS before doing so, a fact on which the
SCS relied in its National Appeals Division determination dated March 3,
1994.    Thus, Downer had adequate notice.


             2. Hearing


        Downer also contests the adequacy of his hearing.    After he acted in
the face of the warnings described above, Downer was given extensive
process before he was required to refund the $4,624 in issue.     His case was
reviewed at the local, state, and national levels; at least seven agency
experts and scientists visited the sites in question; and additional agency
scientists reviewed those tests and determinations.         Downer was present
during at least two site visits, and presented his case either in person
or in writing at the various levels of agency review.   Downer's claim that
he was not given an adequate hearing is wholly without merit.


                                     III.


        We affirm the judgment of the district court.




                                     -14-
BEAM, Circuit Judge, concurring and dissenting.


I. BACKGROUND


       The factual background to this appeal is set out in some detail in
the district court opinion and accompanying administrative record.                 See
Downer v. United States, CIV 93-1005 (S.D. filed Apr. 11, 1995).                     In
essence, Downer filled two man-made dugouts during the period between the
1988 and 1989 growing seasons.          The SCS determined that the dugouts had
been sited in "wetlands" as defined by Swampbuster and that fill had been
spread over "wetland" area beyond the boundaries of the dugouts.                    The
agency concedes that filling a man-made dugout in itself is permissible.
See 16 U.S.C. § 3822(b)(2).       The issue is whether Downer went beyond that
and altered the surrounding "wetland," and if so, whether Downer's actions
fall into one of the exemptions to Swampbuster.          If Downer's actions amount
to "conversion" of the surrounding "wetland," and do not fall into an
exemption, he has violated Swampbuster.            See 16 U.S.C. §§ 3821(a)(1);
3801(a)(4)(A).       A violator who then farms the converted "wetland" becomes
ineligible     for    price   support   payments   for    that   crop    year.     Id.
§ 3821(a)(1).    A determination that the violator acted in good faith and/or
that the violator has taken certain remedial actions may, however, result
in   complete or partial restoration of farm program subsidies.                    Id.
§ 3822(h)(1) & (2).


      Downer appealed, through the SCS's many layers of administrative
process, the SCS determination that his filling activity had violated
Swampbuster.     He was unsuccessful.       He then appealed, through the ASCS
administrative       processes,   for   reconsideration    of    the    SCS   technical
determination and/or for a finding that his violation was mitigated or
excused under the good faith exception to Swampbuster.                   He was again
unsuccessful.    On May 26, 1993, Downer refunded to the ASCS the $4,624 in
price support payments which he had received in 1989.                  He then sought
review in




                                         -15-
the   district    court,   under     5     U.S.C.   §§     704-706,    claiming    that   the
determinations     by   the    SCS   and    ASCS    were    wrong,    were    arbitrary   and
                                                             5
capricious, and denied him due process of law.


II.   DISCUSSION


      I concur in Parts II.A, II.B.1, II.B.2, II.B.3, and II.C. of the
court's opinion.        In my view, the result reached by the court in Part
II.B.4 (Artificial Wetlands) is both unfair to Downer and validates an
incorrect and unlawful construction of 16 U.S.C. § 3822(b) and 7 C.F.R.
§ 12.5(9) by the SCS.         Thus, I dissent.


      Downer argues that it was the pre-1980 construction of the dugouts
in dry areas that created the wet areas in the first place, and thus he is
exempted from ineligibility by 16 U.S.C. § 3822(b).               Subsection (b) exempts
from ineligibility those who farm or convert "wetland created by excavating
or diking nonwetland to collect and retain water."                    Id.    Specifically,


      No person shall become ineligible under section 3821 of this
      title for program loans, payments, and benefits--

            (1) as the result of the production of an agricultural
      commodity on--

            . . .

                 (B) an artificial lake, pond, or wetland created by
            excavating or diking nonwetland to collect and retain
            water for purposes such as water for livestock . . . or
            flood control;

            . . .

            or;




      5
      There is some overlap in the chronology of procedural events.
Downer filed the initial suit before the last ASCS determination of
no good faith, and refunded the price support payments only after
the government counterclaimed for them.        These overlaps are,
however, irrelevant for purposes of this appeal.

                                            -16-
               (2) for the conversion of--

                    (A) an artificial lake, pond, or wetland created by
               excavating or diking nonwetland to collect and retain
               water for purposes such as water for livestock . . . or
               flood control.


Id.    Downer complains that the agency has not shown that the "wetlands" at
issue predate the dugouts.          The agency maintains that once it shows that
the area became a "wetland" and was "converted" as those terms are defined
in sections 3801(a)(4)(A) & (a)(16), see supra at 4-5 & 7, it need not show
how or when the "wetland" came about.            The agency asserts that section
3822(b) permits filling of and production of agricultural commodities on
artificial lakes and dugouts, but not the filling of and production of
agricultural commodities on any "wetlands," however or whenever created.6
The agency gives no basis or rationale for this assertion which is, of
course, contrary to the plain language and import of section 3822(b).           This
assertion is also contrary to the agency's own regulations which exempt
production of agricultural commodities on artificially created "wetlands."
7 C.F.R. § 12.5(b).       Because the regulation merely reiterates, verbatim,
the statutory exemption for artificially created "wetlands," it is the
statute to which I turn.


           While I must defer to a reasonable agency statutory interpretation,
see Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467
U.S.    837,    843   (1984),   I   cannot   defer   to   obtuse   interpretation   or
noninterpretation.      The agency has, in fact, failed to interpret sections
3822(b)(1)(B) and (2)(A) at all.        The agency does not point out, as it well
might, that subsection (b)(1)(B), which exempts production of agricultural
commodities on




       6
      I note that the district court did not consider the question
of whether the "wetlands" were artificially created to be
irrelevant. Rather, that court, in addressing the question, seems
to have assumed the answer rather than find it in the agency
record. See Downer v. United States, CIV 93-1005, mem. op. at 15
(S.D. filed Apr. 11, 1995).

                                         -17-
artificially created "wetlands," was included in the original Swampbuster
enacted in 1985; but subsection (b)(2)(A), which explicitly exempts
"conversion" of artificial "wetlands," was added by the 1990 amendments.
The district court applied the later, 1990, version of section 3822(b) when
it considered the issue, evidently because the agency failed to alert that
court that there had been a change.        Compare Food Security Act, § 1222(a),
Pub. L. No. 99-198, 99 Stat. 1508 (1985) (codified at 16 U.S.C. § 3822
(Supp. IV 1986)) with Food and Agriculture Act, § 1422, Pub. L. No. 101-
624, 104 Stat. 3573 (1990) (codified as amended at 16 U.S.C. § 3822 (Supp.
III 1991)).7      The version of the exemption for artificial "wetlands" in
effect at the time of Downer's production of agricultural commodities was
thus, perhaps, not as explicit as after the 1990 elucidation.                 However,
even   without   the    1990    exposition,    the   original    section    3822    makes
abundantly     clear   that    whether   the   "wetlands"   in   question    here    were
artificially created is relevant indeed.


       Had the agency interpreted the statute, or even its own regulations
(which, as noted, merely replicate, verbatim, the version of subsection (b)
in effect at the time of their issue),8 we would have the benefit of their
expertise in considering whether




       7
      I realize that the notes to 16 U.S.C.A. § 3822 state that the
1990 amendment of that section did not change subsection (b) other
than relettering. Examination of the U.S. Code, however, shows
those notes to be in error.
       8
      USDA's regulations reproduce the exemptions for artificially
created "wetlands." First, 7 C.F.R. § 12.5(b)(1)(iv)(A) (1995)
explicitly exempts a farmer from any penalty from an SCS finding of
"conversion of wetland . . . [i]f the area is . . . artificial
. . . wetland," making the agency's claim of irrelevance all the
more puzzling.    The older version of the regulation, 7 C.F.R.
§ 12.5(d)(1)(ii) (1989), reproduces the original statute's
proscription against a determination of ineligibility "as the
result of the production of an agricultural commodity on . . . [a]n
artificial . . . wetland," which also puts artificiality clearly in
issue.    The agency does not address or even mention these
regulations in its assertion of irrelevance.

                                         -18-
subsection (b)(1)(B) (the exemption permitting production of agricultural
commodities       on    artificially          created     lakes,    ponds,   and    "wetlands")
necessarily implies an exemption for the conversion which permits that
production.            Or,     if   not,      whether      subsection     (b)(2)(A)       applies
retroactively.          However, because subsection (b)(1)(B) obligatorily, if
impliedly, exempts the "conversion" of an artificially created "wetland,"
the retroactivity of the clarification provided by subsection (b)(2)(A)
need not concern us.


        "Agricultural commodities" are defined as "any agricultural commodity
planted and produced . . . by annual tilling of the soil."                              16 U.S.C.
§ 3801(a)(1)(A).             Such production, therefore, necessarily requires the
filling of an artificially created lake or pond.                    This the agency concedes.
I see no reason why the third listed exempted entity, an artificially
created "wetland," would be subject to any different interpretation.                            The
plain       language    of    section     3822(b)(1)(B)        exempts    "production      of   an
agricultural commodity on . . . an artificial lake, pond, or wetland."
(Emphasis      added).         Section     3822(b)      has   always    contained   a    separate
exemption for production of agricultural commodities on "wetlands," of any
origin, when such production is made possible by entirely natural events
such as drought.9            16 U.S.C. § 3822(b)(1)(D).             Thus, the production of
agricultural       commodities       exempted        in   subsection      (b)(1)(B)      must   be
production       made    possible        by    manipulation        of   artificially      created
"wetlands."      Otherwise, the inclusion of "wetland" in subsection (b)(1)(B)
is mere surplusage.


        Congress must be presumed to be using the definitions it provides for
a statutory scheme.           Here, Congress clearly exempted the "production of an
agricultural commodity" on artificially created "lake[s], pond[s], or
wetland[s]," and at the same time provided the definitions and penalties
for "conversion" of




        9
      This alternate exemption is present in section 3822 both as
originally passed, and as amended.

                                                -19-
"wetlands."   Thus the mere determination of "wetland" and "conversion" is
not enough.   There must be a determination that the "wetlands" in question
were naturally occurring.10     To find otherwise would render Congress's
exemption of those who "produce an agricultural commodity" on artificial
"wetlands" nugatory and meaningless.        Such an interpretation cannot be
correct.


     While the evidence in the administrative record as to soil type may
be sufficient for an expert determination that the "wetlands" predated the
dugouts, we are not authorized or qualified to make such a determination.
There also may be aerial photographs existent which show that the wet areas
predated the dugouts, but no such photographs are in this record.      Or it
may be that the agency scientists implicitly determined that the "wetlands"
were naturally occurring and predated the construction of the dugouts.     I
do not know and the other members of the panel cannot know because the
agency has given us no guidance.


     When the agency has neither argued nor addressed an important issue,
we may not do it for them.    See Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43.
If the agency itself has not provided a reasoned basis for its action, the
court may not supply one.      Id.   We may not substitute our judgment for
theirs, and here the agency, relying on a clearly erroneous statutory
interpretation, has apparently made no judgment as to the issue at all.
Rather, it




     10
      Section 3801(a)(4)(B) further confirms the necessity of such
a determination. That subsection directs that there shall be no
finding of "converted wetland[s]" if "production of an agricultural
commodity" is possible due to a natural occurrence such as drought
and "is not assisted by an action of the producer that destroys
natural wetland characteristics." Id. (emphasis added).

     We, of course, do not make any finding on what "naturally
occurring" means, or on the interplay between that and
"artificially created."    Perhaps "artificial" "wetlands" become
"natural" after the passage of long periods of time. These are the
sorts of interpretive nuances which Congress committed to the
agency's expertise in the first instance.

                                     -20-
relies on the bald assertion that the possible artificial origin of the
"wetlands" is irrelevant.        That assertion is simply wrong.          An agency
interpretation and application of a statutory scheme must incorporate, or
at least deal with, the statutory exemptions embedded within that scheme.
I find no place in the administrative record where the question of
artificial creation is explicitly considered or addressed, and the agency
does not direct us to any such determination.        Because the agency has not
addressed an important aspect of the problem in any way, I would find the
agency's determination that Downer's conversion of "wetlands" rendered him
ineligible for crop subsidy payments to be arbitrary, capricious, and not
otherwise in accordance with law.      Id.


     The court simply chooses to ignore this statutory dereliction by the
agency.     It accomplishes this by first asserting that Downer "failed to
present the point" before the agency.       Supra at 10.   This is error.     While
Downer conceded that no evidence on the point was offered by either party,
he has asserted this legal issue from the inception of this dispute.


     Next, the court assigns to Downer the burden of proof of the facts
necessary to establish this essential legal element of the agency's claim
against Downer.      This is also error.     The statute says that "[n]o person
shall become ineligible [for price support payments] . . . as the result
of production . . . on . . . an artificial . . . wetland created by
excavating or diking nonwetland . . . or for the conversion of . . . an
artificial lake, pond, or wetland. . . ."       16 U.S.C. §    3822(b).   It is the
agency    who   is   asserting   Downer's     ineligibility;    thus,     proof   of
ineligibility should be the burden of the government.            According to the
court, all the agency must do is assert ineligibility.                  This, then,
according to the court, shifts to Downer the burden of affirmatively
refuting this bald legal conclusion, even in the face of an agency
assertion that is based upon an erroneous statutory construction.                 I
disagree.




                                      -21-
     The court points to an agency regulation, 7 C.F.R. §     12.5(b)(9), a
regulation not applicable to the procedures in play in this matter.    And,
even if arguably applicable, the regulation violates the underlying statute
that defines ineligibility.    The regulation states in pertinent part:


     (9)    It is the responsibility of the person seeking an
     exemption related to converted wetlands under [section 12.5] to
     provide evidence, such as receipts, crop history data,
     drawings, plans or similar information, for purposes of
     determining whether the conversion or other action is exempt in
     accordance with [section 12.5].


7 C.F.R. § 12.5(b)(9) (emphasis added).


     Here, as in 16 U.S.C. § 3822(b)(1)(B) and (2)(A), the issue is
whether or not the land in question is, indeed, naturally occurring
"wetlands" regulated by the statute at all.   The point is, there has to be
an initial determination, at the burden of the agency, that the land upon
which the production occurs is within the purview of the Swampbuster
legislation.   If it is, then the burden of establishing an exemption falls
upon the producer shown to be ineligible.   Use of 7 C.F.R. § 12.5(b)(9) to
throw this first responsibility upon Downer violates the statutory scheme
and, perhaps, due process.     The government has contended throughout this
proceeding, and in its brief to the court, that a man-made "dugout" or
"water hole" produces a regulated "wetland" subject to a declaration of
ineligibility under the Act.    This interpretation, however, clearly flies
in the face of the plain, unambiguous language of 16 U.S.C. § 3822(b)(1)(B)
and (2)(A).


     We review an administrative decision de novo.       Von Eye v. United
States, No. 95-3034, slip op. at 6 (8th Cir. Aug. 9, 1996) (citing Lockhart
v. Kenops, 927 F.2d 1028, 1032 (8th Cir.), cert. denied, 502 U.S. 863
(1991)).   We must uphold the agency decision "unless it is `arbitrary,
capricious, an abuse of discretion, or




                                    -22-
otherwise not in accordance with law.'"             Von Eye, slip op. at 6 (quoting
5 U.S.C. § 706(2)(A)) (emphasis added).


       Given the agency's overreaching and erroneous interpretation of the
statute, its decision cannot be "in accordance with law."                  Further, any
regulation that purports to relieve the agency of its obligation to follow
the    law   as   enacted   by   Congress    is    either   inapplicable    or    must   be
disregarded.      See, e.g., Newton v. Chater, No. 96-1096, slip op. at 9-11
(8th Cir. Aug. 9, 1996).


III.    CONCLUSION


       Because      the     agency,    relying       on     unsupportable        statutory
interpretation, failed to properly establish whether the land in question
is regulatable "wetlands," or not, I would reverse the determination of
ineligibility as arbitrary, capricious and not in accordance with the law.
I would remand this tempest to the agency teapot for consideration of this
important issue.


       A true copy.


              Attest:


                     CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                            -23-
