United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 7, 2009 Decided July 24, 2009
No. 08-5406
ARKANSAS DAIRY COOPERATIVE ASSOCIATION, INC., ET AL.,
APPELLANTS
v.
UNITED STATES DEPARTMENT OF AGRICULTURE, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:08-cv-01426-EGS)
Benjamin F. Yale argued the cause for appellants. With him
on the briefs was Ryan K. Miltner.
John H. Vetne and Steven J. Rosenbaum argued the cause
for appellees Agri-Mark, Inc., et al. and International Dairy
Foods Association. Susan C. Silber entered an appearance.
Kelsi Brown Corkran, Attorney, U.S. Department of Justice,
argued the cause for federal appellee. With her on the brief
were Gregory G. Katsas, Assistant Attorney General, and
Michael S. Raab, Attorney.
Before: ROGERS, TATEL and GRIFFITH, Circuit Judges.
2
Opinion for the Court by Circuit Judge ROGERS.
Opinion by Circuit Judge GRIFFITH dissenting in part and
concurring in the judgment in part.
ROGERS, Circuit Judge: The Secretary of Agriculture
establishes formulas to calculate the minimum prices that dairy
handlers (processors, manufacturers, and distributors) must pay
dairy producers (farmers) for milk. 7 U.S.C. § 608c(5). As part
of those formulas, the Secretary sets “make allowances,” which
represent the costs to handlers in making certain forms of dairy
products. In July 2008, the Secretary promulgated an interim
rule amending milk marketing orders to increase make
allowances, thereby reducing the minimum price paid to
producers. Several producers and producer cooperatives
challenged the increases principally on the ground that the
Secretary had failed to determine and consider their food and
fuel costs, which they maintain was required by the Agricultural
Marketing Agreement Act (“AMAA”), 7 U.S.C. §§ 601, et seq.
The district court ruled the producers lacked standing for want
of a cause of action and, alternatively, denied their motion for a
preliminary injunction. We hold that the producers have
standing to challenge the interim rule under the Administrative
Procedure Act and that the Secretary was obliged under the
AMAA to consider their feed and fuel costs. Because the
Secretary met that obligation, however, the producers fail to
show likelihood of success on the merits, and we affirm the
denial of injunctive relief. Furthermore, in reaching that
decision, we hold certain of their claims must be dismissed.
I.
The milk industry is highly regulated by the Secretary of
Agriculture pursuant to the Agricultural Marketing Agreement
Act of 1937, 7 U.S.C. §§ 601, et seq. (“AMAA”). See Hettinga
3
v. United States, 560 F.3d 498, 501 (D.C. Cir. 2009). At least
two factors create variations in the supply and demand of milk.
First, the dairy market values milk more highly when sold in
fluid form than when used for dairy products like butter or
cheese, which would encourage dairy farmers in an unregulated
market to sell their milk for the premium fluid prices. See Zuber
v. Allen, 396 U.S. 168, 172-73 (1969). Second, cows naturally
produce more milk in the spring and summer, such that a herd
size sufficient to generate an adequate supply during the fall and
winter generates surpluses during the spring and summer,
leading to the potential for further price swings in an
unregulated market. See id. To prevent “destabilizing
competition” among dairy farmers as a result, Congress enacted
the AMAA. Block v. Cmty. Nutrition Inst., 467 U.S. 340, 341-
42 (1984). “The ‘essential purpose [of the scheme put in place
by the AMAA is] to raise producer prices,’ and thereby to
ensure that the benefits and burdens of the milk market are fairly
and proportionately shared by all dairy farmers.” Id. (quoting S.
REP. NO. 74-1011, at 3 (1935)).
The AMAA and its implementing regulations use two
regulatory mechanisms: price fixing and payment pooling. The
minimum prices that handlers must pay vary according to the
end use of the milk, as categorized in four classes. See 7 U.S.C.
§ 608c(5)(A); 7 C.F.R. § 1000.40 (Class I milk is sold in fluid
form, Class II milk is used to make ice cream, soft cheeses, and
related products, Class III milk is used to produce harder
cheeses, and Class IV milk is used to make butter and related
products.). Instead of setting specific prices to be paid for each
Class, the Secretary has established a formula by which the price
for each Class is determined monthly based on the average
nationwide wholesale prices from the previous month. See 7
C.F.R. § 1000.50; Milk in the Northeast and Other Marketing
Areas; Notice of Proposed Rulemaking and Tentative Partial
Final Decision, 73 Fed. Reg. 35,306, 35,308 (June 20, 2008)
4
(“Tentative Decision”). The formulas for Class III and IV milk
are based on the nationwide average prices for butter, nonfat dry
milk, cheese, and dry whey, minus a set dollar amount for each
of those products, multiplied by a “yield factor.” 7 C.F.R. §
1000.50)(l)-(o). Class I and II prices are derived from the Class
III and IV prices but Class I prices are adjusted for the location
of the handler so that handlers pay different prices in different
geographic areas. See 7 C.F.R. §§ 1000.50, 1000.52. The
amounts subtracted from the average sale prices of Class III and
IV products, known in the milk industry as “make allowances”
or “manufacturing allowances,” are intended to represent the
costs to the handlers of making the end dairy products from raw
milk. Tentative Decision, 73 Fed. Reg. at 35,308. In essence,
handlers retain from the average wholesale price the amount set
by the make allowance and transfer the balance to producers.
The second major component of dairy market regulation is
payment pooling. Under this system, handlers pay prices
according to the end use of milk, but all the producers in a
geographic area receive the same monthly average or “blended”
price per unit of milk sold, regardless of the use to which their
milk is put. See 7 U.S.C. § 608(c)(5)(B); 7 C.F.R. §§ 1000.70,
1000.76. This payment equalization is accomplished through
the “producer settlement fund” into which handlers pay, or from
which handlers withdraw, according to whether their blend-price
payments to producers are less or greater than the end-use-value
of the milk they have purchased. C.F.R. §§ 1000.70, 1000.76.
Again, the effect of this regime is that handlers make payments
which vary according to the market value of the milk they use
(as reflected in minimum prices), while all producers in an area
receive the same average, or blended, price per unit of milk.
Different geographic areas of the United States are
regulated under slightly different conditions, although the
formulas used to set prices of Class III and IV milk are the same
5
in all areas. See 7 C.F.R. § 1000.50. Each of eleven areas,
generally known as a “marketing area” or “milk marketing
area,” is governed by a different “Order” of the Secretary. See,
e.g., 7 U.S.C. § 608c(5)(A); 7 C.F.R. § 1001.2. Before going
into effect, the Secretary’s orders must be approved by two-
thirds of the producers or the producers of two-thirds of the milk
volume in the affected area, as well as by the handlers of a
majority of the milk volume in the area covered by the order,
although the Secretary can put an order into effect without
handler approval if the order is “the only practical means of
advancing the interests of the producers.” 7 U.S.C. § 608c(8)-
(9).
Make allowances, unlike the wholesale prices used in the
minimum price formulas for Class III and IV products, do not
vary with market conditions. They are set as constants in a
formula and can only be raised or lowered through a
rulemaking. Tentative Decision, 73 Fed. Reg. at 35,323.
Several events converged to shape the issues in the instant case.
First, in January 2006, the Secretary issued notice of a hearing
on a proposal in which the handler Agri-Mark advocated an
increase in make allowances. See Milk in the Northeast and
Other Marketing Areas; Notice of Hearing on Proposed
Amendments to Tentative Marketing Agreements and Orders, 71
Fed. Reg. 545 (Jan. 5, 2006). In December 2006, after a hearing
and the required producer approval, the Secretary promulgated
an interim final rule increasing the make allowances. See Milk
in the Northeast and Other Marketing Areas; Interim Order
Amending the Orders, 71 Fed. Reg. 78,333 (Dec. 29, 2006). A
number of producers sought an injunction in the district court for
the Northern District of Ohio, on the ground that the Secretary
had failed to consider their feed prices and feed supplies when
adjusting the make allowance, as they argued was required by
the AMAA, 7 U.S.C. § 608c(18), infra note 7. The district court
set forth conflicting interpretations, noting, for example, that the
6
Sixth Circuit had held in Lansing Dairy, Inc. v. Espy, 39 F.3d
1339, 1355 (6th Cir. 1994), that the statute and legislative
history were ambiguous. The district court found it unnecessary
to decide whether § 608c(18) required the Secretary to consider
such feed costs when amending make allowances because the
Secretary’s final decision showed he had, in fact, “given [these
factors] appropriate consideration” under the product-price
formulas. Bridgewater Dairy, LLC v. USDA, No. 3:07-cv-104,
2007 WL 634059, at *4-6 (N.D. Ohio Feb. 22, 2007).
Second, in 2008 Congress amended the AMAA to require
the Secretary, as “part of any hearing” to adjust make
allowances, to “determine” and “consider” producers’ feed and
fuel costs.1 See 2008 Act, Pub. L. 110-246, § 1504, 122 Stat at
1721-72 (codified at 7 U.S.C. § 608c(17)(G)), see page 22. The
amendment addressed ambiguities in § 608c(18) noted by the
district court in Bridgewater Dairy. Under the amendment, the
requirement to consider producers’ costs explicitly applied when
the Secretary was adjusting make allowances, and the Secretary
was required to consider recent price in determining producers’
monthly costs in the market area.
Third, the Secretary, on June 20, 2008, after a series of
hearings, proposed further increases in make allowances and
changes in the butter fat yield factor used in Class III and Class
1
On May 22, and June 18, 2008, Congress enacted two
statutes, together known as the Food, Conservation, and Energy Act
of 2008, Pub. L. 110-234, 122 Stat. 923; Pub. L. No. 110-246, 122
Stat. 1651 (“2008 Act”). Section 1504 of Pub. L. No. 110-246, which
contains the requirement relevant in the instant case, became effective
on the earlier of its enactment or the enactment of “H.R. 2419 of the
110th Congress.” See 2008 Act § 4(b), 122 Stat. at 1664. H.R. 2419,
which became Pub. L. No. 110-234, was enacted earlier, on May 22,
2008. See 2008 Act, 122 Stat. at 923.
7
IV product-price formulas on an interim basis. Tentative
Decision, 73 Fed. Reg. 35,323.2 As relevant, the Secretary
found that handlers’ costs had increased since the make
allowances were last set. Id. at 35,324. The Secretary pointed
out that “because make allowances account for manufacturing
costs in the Class III and Class IV price formulas but do not
change as those costs change, increasing make allowances is the
only reasonable way by which those increased costs can be
recovered,” id. at 35,323. The Secretary also cited testimony
indicating that a 2006 study had attempted to correct the
understatement of processing costs in a 2005 study used in the
previous rulemaking, and the 2006 study showed the need to
update make allowances to reflect changes in manufacturing
costs. Id. at 35,309. The Secretary proposed increased make
allowances for Classes III and IV based on national
manufacturing cost averages. Id. at 35,325–26. In the course of
the rulemaking, the Secretary addressed a number of objections
from producers, including that make allowances were already
set too high and that producers have also seen increased costs
due to higher energy and feed costs. Id. at 35,324. The
Secretary responded that objections based on producer costs “are
not valid arguments for opposing how make allowance should
be determined or what levels make allowances need to be,”
because current make allowances were not reflective of
handlers’ costs and, unlike producers’ costs, could not be
recaptured in the marketplace. Id.
After producer approval of the Tentative Decision, the
Secretary promulgated an interim rule amending milk marketing
2
The Secretary explained in promulgating an interim rule
that “[a] separate decision [will address] the collection of
manufacturing cost information, the use of an energy cost adjustor and
providing for a cost add-on feature to Class III and Class IV product-
pricing formulas . . . ..” Tentative Decision, 73 Fed. Reg at 35,306.
8
orders to increase the make allowances. See Milk in the
Northeast and Other Marketing Areas; Interim Order Amending
the Orders, 73 Fed. Reg. 44,617 (July 31, 2008) (“Interim
Rule”). The required majority of handlers did not approve, but
the Secretary exercised his override authority on the ground that
the Interim Rule was necessary to effect the policy of the
AMAA of advancing producer interests. Id. at 44,618. Neither
the Tentative Decision nor the Interim Rule explicitly addressed
the requirements of the 2008 Act.
Two weeks later, appellant-producers sued the Department
of Agriculture, seeking declaratory and injunctive relief on the
ground that the Interim Rule was arbitrary, capricious, and
contrary to law, not supported by substantial evidence, and
constituted a denial of substantive due process. The producers
premised the district court’s jurisdiction on the AMAA,
including the amendment in the 2008 Act, and the
Administrative Procedure Act (“APA”), 5 U.S.C. § 701, et seq.
They alleged that the Interim Rule would have an adverse
“direct, penny for penny, impact on the prices” producers would
receive for their milk, specifically that it would lead to a
“permanent loss of income.” Compl. ¶¶ 15-17, 26. Among
other grounds, they argued the Secretary had failed to determine
and consider their feed and fuel costs as required by the AMAA
under §§ 608c(17)(G) and 608c(18). They also filed a motion
for a temporary restraining order and/or preliminary injunction.
The district court ruled the producers lacked standing
because the AMAA impliedly precluded APA review, and thus
they had no cause of action. Ark. Dairy Coop., Inc., v. USDA,
576 F. Supp. 2d 147, 154 (D.D.C. 2008). Alternatively, the
district court denied their motion for a preliminary injunction,
assuming the motion was properly before it, on the grounds that
the producers had little chance of success on the merits because
§ 608c(18) did not require the Secretary to consider feed and
9
fuel costs when adjusting a make allowance; the requirement in
§ 608c(17)(G) did not go into effect until after the hearing on
proposals resulting in the Secretary’s Tentative Decision had
concluded; and the Secretary had in fact determined and
considered producer costs by using product-pricing formulas
that accounted for those factors. Id. at 156-60.
II.
The producers appeal, see 28 U.S.C. § 1292(a)(1),
contending they have demonstrated their entitlement to a
preliminary injunction of the Interim Rule. They contend they
have a judicially protectable right in the benefits guaranteed by
the AMAA and that the Secretary failed to comply with §
608c(17)(G) mandating the determination and consideration of
their feed and fuel costs in adjusting make allowances, and §
608c(18) mandating the consideration of the enumerated
economic factors in each marketing area. They further contend
they have demonstrated irreparable harm and that an injunction
in their favor is in the public interest in preventing unauthorized
administrative action and direct injury to them.
In deciding whether to grant a preliminary injunction, the
district court must evaluate whether: (1) the plaintiff has a
substantial likelihood of success on the merits; (2) the plaintiff
would suffer irreparable injury were an injunction not granted;
(3) an injunction would substantially injure other interested
parties; and (4) the grant of an injunction would further the
public interest. Serono Labs., Inc. v. Shalala, 158 F.3d 1313,
1318 (D.C. Cir. 1998). This court “review[s] the district court’s
weighing of the preliminary injunction factors under the abuse
of discretion standard, and its findings of fact under the clearly
erroneous standard. To the extent the district court’s decision
hinges on questions of law, however, this court’s review is
essentially de novo.” Id. at 1318 (citations and internal
10
quotations omitted). There are three such questions here: (1)
whether the producers have a cause of action under the APA and
thus have standing; (2) if so, whether the Secretary’s statutory
obligations are as the producers contend; and (3) if so, whether
the Secretary complied with those obligations in promulgating
the Interim Rule.
The threshold issue is whether the producers have a cause
of action by which they can challenge the Interim Rule
amending the Secretary’s milk marketing orders to increase
make allowances. Our inquiry here is not whether the producers
have standing under Article III of the Constitution, which is
undisputed and clear, but whether Congress has provided for or
precluded judicial review. See Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 96-97 (1998).
The AMAA provides for handlers to petition for judicial
review of the Secretary’s orders after exhausting their
administrative remedies.3 No provision of the AMAA provides
3
Section 608(c)(15) provides:
(A) Any handler subject to an order may file a written
petition with the Secretary of Agriculture, stating that such
order . . . is not in accordance with law and praying for a
modification thereof or to be exempted therefrom. He shall
thereupon be given an opportunity for a hearing . . . . After
such hearing, the Secretary shall make a ruling upon the
prayer of the petition which shall be final, if in accordance
with law.
(B) The District Court[s] . . . in any district in which
such handled is an inhabitant, or has his principal place of
business, are hereby vested with jurisdiction in equity to
review such ruling . . . .
11
for judicial review by producers. However, the producers also
bring their claims under the APA, which provides judicial
review to persons “suffering legal wrong because of [final]
agency action, or adversely affected or aggrieved by [final]
agency action within the meaning of a relevant statute,” 5 U.S.C.
§§ 702, 704, except where such review precluded by statute, id
§ 701(a)(1). The Department and some intervenor producer-
handlers maintain the AMAA is such a statute, relying on Block
v. Community Nutrition Institute, 467 U.S. 340 (1984). The
district court agreed. Ark. Dairy, 576 F. Supp. 2d at 154-55.
Such an approach, however, reads Block too broadly and Stark
v. Wickard, 321 U.S. 288 (1944), on which the producers rely,
too narrowly, and thus fails to conform to this court’s precedent
on producer standing.
In Block, individual milk consumers challenged a milk
marketing order that had the effect of raising the price
consumers would pay for reconstituted milk. Id. at 343-44. The
Supreme Court held the consumers lacked standing to challenge
the order. Id. at 352-53. The Court instructed that in
determining whether a statute “precludes judicial review,” a
court must examine not only the statutory text, “but also . . . the
structure of the statutory scheme, its objectives, its legislative
history, and the nature of the administrative action involved,” id.
at 346, under a general presumption in favor of judicial review
which “may be overcome by specific language or specific
legislative history that is a reliable indicator of congressional
intent,” id. at 349. Employing this structural analysis, the Court
focused on the fact that the AMAA explicitly provides handlers,
but not consumers, a right to petition for review in court. The
AMAA’s “statutory scheme . . . [thus] makes . . . clear
7 U.S.C. § 608(c)(15).
12
Congress’ intention to limit the classes entitled to participate in
the development of market orders.” Id. at 346.
Because the AMAA does not provide a right of judicial
review to producers, the Department seizes on Block as
precluding producer standing in a cause of action under the APA
as well. However, this approach reads Block too broadly, for the
Supreme Court did not concentrate simply on the presence or
absence of an explicit right of appeal in the AMAA, but instead
noted that in the “complex scheme” of the AMAA, there was no
provision for consumer participation of any kind. Id. “The
omission of such a provision is sufficient reason to believe that
Congress intended to foreclose consumer participation in the
regulatory process.” Id. Importantly, the Court contrasted this
with the role of handlers and producers:
The [AMAA] contemplates a cooperative venture
among the Secretary, handlers, and producers the
principal purposes of which are to raise the price of
agricultural products and to establish an orderly system
for marketing them. Handlers and producers — but not
consumers — are entitled to participate in the adoption
and retention of market orders. The [AMAA] provides
for agreements among the Secretary, producers, and
handlers, for hearings among them, and for votes by
producers and handlers.
Id. at 346-47. In short, “[t]he structure of th[e] [AMAA]
indicates that Congress intended only producers and handlers,
and not consumers, to ensure that the statutory objectives would
be realized.” Id. at 347. Because the AMAA contemplates this
active role for producers during the rulemaking process, they
occupy a different status under the AMAA from that of
consumers.
13
The Supreme Court’s analysis of the purpose of the AMAA
is also instructive. It observed that “preclusion of consumer
suits will not threaten realization of the fundamental objectives
of the statute” because “[h]andlers, like consumers, are
interested in obtaining reliable supplies of milk at the cheapest
possible prices.” Id. at 352. It contrasted this alignment of
consumer and handlers interests with the interests of producers,
which would not be represented by handlers. Id. Because
producer interests would otherwise go unvindicated, the Court
noted, courts have found suits by producers “necessary to ensure
achievement of the [AMAA]’s most fundamental objectives —
to wit, the protection of the producers of milk and milk
products.” Id. See also Cmty. Nutrition Inst. v. Block, 698 F.2d
1239, 1257 (D.C. Cir. 1983) (Scalia, J., dissenting) (“The direct
beneficiaries of milk marketing orders under the [AMAA] are
milk producers. Even before adoption of the APA, the courts
found a congressional intent to permit them to sue. But where,
as in the present case, [consumers’] grievance is entirely
derivative of [that of handlers,] then the statutory review
provision does suggest that the more remote group was not
meant to have standing to sue.”). “The right of judicial review
is ordinarily inferred where congressional intent to protect the
interests of the class of which the plaintiff is a member can be
found; in such cases, unless members of the protected class may
have judicial review the statutory objectives might not be
realized.” Barlow v. Collins, 397 U.S. 159, 167 (1970). Unlike
the consumers whose interests were coextensive with those of
handlers in Block, 467 U.S. at 532, the producers are the only
party with an interest in ensuring that the price paid them is not
reduced by too large a make allowance paid to handlers.
Admittedly, some discussion in Block seems to sweep
broadly enough to exclude producer challenges to milk
marketing orders. The Supreme Court stated, for example,
“[W]e think it clear that Congress intended that judicial review
14
of market[ing] orders issued under the [AMAA] ordinarily be
confined to suits brought by handlers in accordance with 7
U.S.C. § 608c(15).” Id. at 348 (emphasis added). In context,
the Court’s primary concern seems to have been that allowing
consumer suits would permit a handler to bring suit — either in
its own capacity as a consumer or through other consumers with
whom its interests were aligned — without first exhausting the
administrative remedy required by § 608c(15). See id. Because
producer and handler interests are normally adverse, however,
there is no such objection to producer suits because handlers
“ordinarily” could not induce producers to sue on their behalf.4
Furthermore, reading Block broadly to bar producer suits
like the instant one would leave no room for the Supreme
Court’s holding in Stark , 321 U.S. at 302, 311, that the district
court had jurisdiction over producers’ challenge to a milk
marketing order claimed to exceed the Secretary’s powers.
Like the Interim Rule, the milk marketing order challenged in
Stark computed the blend price owed to producers by first
computing the use value of milk purchased by handlers (based
on the minimum price and quantity for the classes of milk used),
and then computing blend price as a weighted average of that
use value. Id. at 300. The order directed that certain
“adjustments” be deducted from the use value before computing
the blend price. Id. at 301. All of these adjustments were
eventually paid to producers, except for a “cooperative
adjustment,” which was a set amount per hundredweight of milk
paid to producer cooperatives. Id. Because this adjustment was
4
In fact, this court has anticipated and resolved any such risk.
Where a single entity acts as a vertically-integrated “producer-
handler,” it must exhaust before bringing suit in its capacity as a
handler, but not when bringing suit in its capacity as a producer. See
Hettinga, 560 F.3d at 504; Edaleen Dairy, LLC, v. Johanns, 467 F.3d
778, 783 (D.C. Cir. 2007).
15
deducted from the total use value before the blend price was
computed, the adjustment “reduce[d] pro tanto the amount
actually received by the producers for their milk.” Id. at 302.
Producers who were not members of cooperatives challenged
the order on the grounds that the AMAA did not authorize the
Secretary to deduct a sum from the minimum price to be paid
only to cooperatives. Id. at 301. Although no statute provided
an explicit cause of action and the APA had not yet been
enacted, the Supreme Court held that “[t]he authority for a
judicial examination of the validity of the Secretary’s action is
found in the existence of courts and the intent of Congress as
deduced from the statutes and precedents.” Id. at 307-08. In
particular, the Court concluded that the producers had a “definite
and personal claim” because the AMAA assured them
“minimum prices” for milk, in this instance the prices set by the
use value computations without subtractions for cooperatives.
Id. at 305. In other words, in a milk marketing order scheme
like the one underlying the rule challenged in the instant case,
producers had standing to obtain judicial review of an order that
reduced the amount they would receive for their milk.
This court reaffirmed the standing of producers to challenge
certain milk marketing orders in Blair v. Freeman, 370 F.2d 229
(D.C. Cir. 1966). In Blair, a group of Pennsylvania producers
who sold milk into the New York-New Jersey Milk Marketing
Area challenged an order that provided a price increase for
producers located close to New York City, but not for those
located farther away. Id. at 234. This selective price increase
was paid out of the producer settlement fund, and had the effect
of reducing the pool of money to be divided as the blend price
paid to all producers. Id. at 234 n.15; see also Milk in New York
Metropolitan Marketing Area and in Northern New Jersey:
Decision with Respect to Proposed Amendments to Tentative
Marketing Agreement and to Order, 22 Fed. Reg. 4194, 4212-14
(June 14, 1957). Because this practice, like that challenged in
16
Stark, reduced “pro tanto the amount actually received” by the
producers who brought the suit, this court held the producers
had “standing to invoke the protection of equity to insure that
their statutory right to minimum price protection is not being
improperly diminished” by an order which “exceeded the
statutory power of the Secretary.” Blair, 370 F.2d at 234 & n.15
(citing Stark, 321 U.S. at 290).
The parallels to the instant case are apparent. As in Stark
and Blair, the producers challenge a rule deducting funds from
the value of milk before calculating the blend price guaranteed
to producers, thus reducing, “dollar for dollar,” the minimum
price producers are guaranteed for their milk products. Also like
the producers in Stark and Blair, the producers allege not that
the Secretary has misjudged what prices are appropriate, but
rather that the Secretary’s Interim Rule deducts funds, and thus
reduces the blend price, in a way the Secretary is not authorized
to do, namely by reducing the blend price without considering
factors as he was statutorily obliged to address. As the Supreme
Court stated in Stark, “It is because every dollar of deduction
comes from the producer that he may challenge the use of the
fund. The [producers’] complaint is not that their blended price
is too low, but that the blended price has been reduced by a
misapplication of money deducted from the producers’
minimum price,” i.e., from the price computed based on the use
value of the milk sold. 321 U.S. at 308-09.
The Department, and some intervenor handlers, suggest that
Stark and Blair are distinguishable because the money in the
instant case is diverted from the producers at a different point in
the payment stream than occurred in Stark and Blair. In those
cases, the money was diverted from the producer settlement
fund after the value of milk was calculated and after the handlers
had paid for it, but before the blend price was calculated. Here,
the funds are also deducted before the blend price is calculated,
17
but, by contrast, under the Interim Rule the deduction occurs in
the process of calculating the price owed by handlers, before the
handlers pay the producers or the producer settlement fund. The
importance of this difference, which the district court also
emphasized, eludes us. As in Stark and Blair, the producers
claim that the “minimum prices” they are owed, i.e., the value
of the milk, is being reduced unlawfully under the Interim Rule.
It is this interest which the Supreme Court in Stark held
sufficiently “definite and personal” to permit the producers to
challenge its diminution. 321 U.S. at 305. Although the
producers in Stark and Blair complained of diminution of the
blend price through deductions from the producer settlement
fund, there is no indication that either opinion hinged on that
fact. Certainly there is no indication that a diminution at a
different point in the payment-calculation chain would be an
alleged wrong that the APA could not address because the
AMAA had impliedly precluded such a suit.
It is also unavailing for the intervenor handlers and our
dissenting colleague to suggest that because the AMAA requires
approval by the majority of producers before the Secretary’s
orders go into effect, the AMAA must be read impliedly to
preclude all other avenues of redress, including suits alleging an
order is not in accordance with law.
[W]here as here the issue is statutory power to make
the deduction required by the Order, . . . a mere hearing
or opportunity to vote cannot protect minority
producers against unlawful exactions which might be
voted upon them by majorities. It can hardly be said
that opportunity to be heard on matters within the
Secretary’s discretion would foreclose an attack on the
inclusion in the Order of provisions entirely outside of
the Secretary’s delegated powers.
18
Stark, 321 U.S. at 307.5
All but one of the circuit courts of appeal to have considered
the issue have also concluded that producers can challenge milk
marketing orders under the APA, even where the challenge is not
premised on a deduction from the producer settlement fund. The
Sixth Circuit reasoned that “[T]he purpose of the statutory
scheme — raising the price that milk producers receive for their
milk — would be undermined if producers could not challenge
regulations of this type in federal court . . . .” Farmers Union
Milk Mktg. Coop. v. Yeutter, 930 F.2d 466, 467 (6th Cir. 1991).
Similarly, the Seventh Circuit held that producers, as “the very
group the milk marketing law seeks to protect,” “can seek
5
The dissent would read the AMAA to preclude all producer
suits that do not explicitly allege that an order unfairly advantages
some producers at the expense of others, on the theory that producers’
right to vote on orders adequately protects them in other situations.
The effect of this regime would be that when two-thirds of producers
approve an order that is contrary to law but treats all producers alike,
the remaining third of producers must submit to that order without
judicial redress. There is no evidence Congress intended such a
regime, and no court has advanced such a theory before. Instead, the
quotation from Stark, especially the conclusion in the final sentence,
evidences a focus on ensuring a judicial forum for producers who
allege they are harmed by an illegal order, regardless of their right to
vote on that order. See Alto Dairy v. Veneman, 336 F.3d 560, 565 (7th
Cir. 2003) (describing Stark as holding producers “could challenge .
. . an order if in issuing it the Agriculture Department had exceeded
the authority delegated to it by Congress and in doing so had infringed
a definite right of the producer”). Similarly, in Block the Supreme
Court states that judicial review of producer suits is necessary to
ensure the AMAA’s “fundamental objectives” of “the protection of
producers,” 467 U.S. at 351, without limiting this to the protection of
some producers from an abusive majority of other producers. This
limitation is read into Block by the dissent. Dis. Op. at 4.
19
judicial review of milk marketing orders that pinch them,” Alto
Dairy v. Veneman, 336 F.3d 560, 566, 569 (7th Cir. 2003). See
Dairylea Coop., Inc. v. Butz, 504 F.2d 80, 83 (2d Cir. 1974);
Suntex Dairy v. Bergland, 591 F.2d 1063, 1067 (5th Cir. 1979);
Minn. Milk Producers Assoc. v. Madigan, 956 F.2d 816, 818 (8th
Cir. 1992).6 Only the Ninth Circuit has read Block as broadly as
the Department urges, stating in Pescosolido v. Block, 765 F.2d
827, 831 (9th Cir. 1985), that “We believe that [Block] can be
interpreted generally to foreclose judicial review sought by
anyone other than handlers . . . .” In two recent cases addressing
handler exhaustion of administrative remedies, this court has
arguably assumed, without directly addressing the issue, that
producers can bring suits challenging the Secretary’s orders. See
Hettinga, 560 F.3d at 503-504; Edaleen Dairy, 467 F.3d at 783;
supra note 4.
It is true, as the Department and intervenor handlers point
out, that a decade before Blair, in Benson v. Schofield, 236 F.2d
6
As with Stark and Block, the dissent limits the holdings of
other circuits to fit a new line in the sand. In Alto Diary, for example,
a group of producers made the choice not to participate in a
rulemaking and later complained that the promulgated rule differed so
greatly from the proposal that they did not receive adequate notice.
336 F.3d at 570. They alleged no systemic failure in the referendum
process nor oppression by a producer majority, only a procedural
shortcoming. In those cases that did involve disputes among
producers, nothing in the courts’ opinions indicates that the
determination of whether producers had a cause of action hinged on
that fact. See, e.g., Minn. Milk Producers, 956 F.2d at 817 (finding
standing for producers alleging violation of the Secretary’s obligation
under AMAA); Farmers Union, 930 F.2d at 473 (“The purpose of the
AMAA strongly favors judicial review of aspects of market orders that
concern producers in lawsuits brought by producers.”); Dairylea
Coop., 504 F.2d at 83 (“The Supreme Court . . . has held that this
silence [as to judicial remedies] does not bar producers . . . .”).
20
719 (D.C. Cir. 1956), this court affirmed the dismissal of a
complaint by dairy producer-handlers challenging a milk
marketing order that extended the limits of a milk marketing
area. In that case, the court addressed the merits of the claims
that the rulemaking was procedurally defective for lack of notice
to producers and an opportunity for them to attend hearings, id.
at 722-23, but further concluded they were not seeking to
vindicate “a statutory privilege protected by judicial remedies,”
and thus “lack[ed] a legal right.” Id. at 723 (citing Stark, 321
U.S. at 306). Benson is inapposite for a number of reasons.
First, in Benson the court was not addressing a diminution of
producers’ statutorily-guaranteed blend prices, as in Stark, Blair,
and the instant case, but rather an order that increased the
boundaries of a marketing area to cover a greater number of
handlers, an action the court held did not infringe any statutory
right possessed by the producers because only handlers were
affected, id. at 723. Second, the suit in Benson was not brought
under the APA, and the court did not hold that the AMAA
impliedly precluded producer suits, only that the AMAA did not
itself provide a cause of action for the claimed grievance
regarding a marketing area. Given also that Blair, which
presented a situation more analogous to the instant case, was
decided after Benson and acknowledged a cause of action for
producers challenging orders as beyond the Secretary’s power,
Benson is easily distinguishable.
Accordingly, we hold that the producers can bring suit under
the APA to challenge the Interim Rule, which directly affects
their blend prices through increased make allowances, even
though the milk marketing orders will not directly affect the
producer settlement fund. The producers are aggrieved, within
the meaning of the APA, by the alleged diminution of their
personal rights secured under the AMAA, the Interim Rule they
challenge constitutes final agency action, and they seek non-
monetary injunctive relief. 5 U.S.C. §§ 702, 704. We therefore
21
turn to the merits of the producers’ contention that the Secretary
was statutorily required to determine and consider producers’
feed and fuel costs in seeking to change a make allowance and
failed to do so.
III.
In seeking to enjoin the Interim Rule on the ground that the
Secretary failed to carry out mandated responsibilities, the
producers rely on AMAA §§ 608c(18), enacted in 1937, and on
§ 608c(17)(G), the 2008 Act amendment to the AMAA.
Section 608c(18) requires the Secretary, in initially setting
dairy prices, to ensure that those prices reflect a variety of
factors. 7 U.S.C. § 608c(18).7 The parties disagree about which
7
Section 608(c)(18), “Milk prices,” provides in relevant part:
The Secretary of Agriculture, prior to prescribing any term in
any marketing agreement or order, or amendment thereto,
relating to milk or its products, if such term is to fix minimum
prices to be paid to producers . . ., or prior to modifying the
price fixed in any such terms, shall ascertain the parity prices
of such commodities. The prices . . . shall . . . be adjusted to
reflect the price of feeds, the available supplies of feeds, and
other economic conditions, which affect market supply and
demand for milk or its products in the market area to which
the contemplated marketing agreement, or, or amendment
relates. Whenever the Secretary finds, upon the basis of the
evidence adduced at the hearing required by section 608b . .
. that the parity prices of such commodities are not reasonable
in view of the price of feeds, the available supplies of feeds,
and other economic conditions which affect market supply
and demand for milk and its products in the marketing area to
which the contemplated agreement, order, or amendment
relates, he shall fix such pries as he finds will reflect such
22
of § 608c(18)’s requirements apply to rulemakings like this one,
in which the Secretary readjusts rather than initially sets prices.
We need not decide the issue because even if all of § 608c(18)’s
requirements apply, they impose no obligation relevant here
beyond that imposed by § 608c(17)(G).
Section 608c(17)(G) provides:
Monthly feed and fuel costs for make allowances
As part of any hearing to adjust make allowances under
marketing orders commencing prior to September 30,
2012, the Secretary shall–
(i) determine the average monthly prices of feed and
fuel incurred by dairy producers in the relevant
marketing area;
(ii) consider the most recent monthly feed and fuel price
data available; and
(iii) consider those prices in determining whether or not
to adjust make allowances.
factors, insure a sufficient quantity of pure and wholesome
milk, and be in the public interest. Thereafter, as the
Secretary finds necessary on account of changed
circumstances, he shall after due notice and opportunity for a
hearing, make adjustments in such prices.
7 U.S.C. § 608(c)(18) (emphasis added). The “parity price” of
commodities is a statistical measure of prices adjusted for certain
historical and efficiency factors. Id. § 1301(a)(1). In the Interim Rule
the Secretary found that parity prices were not reasonable in view of
the statutory factors. 73 Fed. Reg. at 44,613 [JA 122/2].
23
7 U.S.C. § 608c(17)(G) (emphasis added). The 2008 amendment
to the AMAA thus plainly requires the Secretary, in adjusting
make allowances, to consider producers’ feed and fuel prices, and
thus there is no occasion to decide if § 608c(18) also imposes
such obligations.
The Department maintains the 2008 Act did not apply to the
Interim Rule because the amendment to the AMAA took effect
too late. The 2008 Act went into effect May 22, 2008, see supra
note 1, and directs the Secretary to determine and consider certain
costs “[a]s part of any hearing to adjust make allowances,” 7
U.S.C. § 608(c)(17)(G). The final public hearing on the proposed
order took place almost a year earlier, on July 11, 2007. Because
the 2008 Act was not then in effect, the Department concludes the
Secretary was under no obligation to determine and consider
producers’ costs “as part of” that hearing. This is true only if, as
the Department maintains, the meaning of the word “hearing” in
§ 608c(17)(G) can only refer to “that part of the proceeding
which involves the submission of evidence,” as the Department’s
regulations in effect now and at the time of enactment of the 2008
Act provide. See 7 C.F.R. § 900.2(h). Such a definition,
however, is incompatible with the plain text of § 608c(17)(G),
which requires the Secretary “as part of any hearing” to
“determine” feed and fuel costs and to “consider” those costs
when changing make allowances. If the word “hearing” referred
only to the proceeding in which an Administrative Law Judge
(“ALJ”) receives evidence, then Congress’ directions to the
Secretary would make no sense. The Secretary can only
“determine” costs after the evidence has been received. By then,
according to the Department’s reading of the 2008 Act, it is too
late because the “hearing” has already concluded. Likewise, the
Secretary could not “consider” costs “as part of [the] hearing” as
the Department defines it because those costs would not yet have
been determined. It would be impossible to comply with the
2008 Act because the Secretary would need to do at once steps
24
that logically must follow sequentially. The Department’s
regulations also make clear that the Secretary reaches decisions
on the basis of the completed evidentiary record. See 7 C.F.R. §
900.13a (“After due consideration of the record the Secretary
shall render a decision.”).
In context, the term “hearing” in § 608c(17)(G) must mean
more than the proceeding during which evidence is submitted to
the Secretary. It must also include the portions of the rulemaking
process during which the Secretary analyzes the evidence in the
rulemaking record and reaches conclusions, because only then
can the Secretary “determine” and “consider” costs. Indeed,
another provision of the 2008 Act amendment to the AMAA
seems to contemplate a broader understanding of “hearing,”
including within “Hearing timeframes” events that take place
after the close of an evidentiary hearing, such as the submission
of post-hearing briefs. See 7 U.S.C. § 608c(17)(C). This
interpretation of “hearing” admittedly is at odds with the
Department’s regulation, see 7 C.F.R. § 900.2(h), and courts
“generally presume that Congress is knowledgeable about
existing law pertinent to the legislation it enacts,” Goodyear
Atomic Corp. v. Miller, 486 U.S. 174, 184 (1988); see United
States v. Wilson, 290 F.3d 347, 357 (D.C. Cir. 2002). However,
as the Supreme Court observed in Block in regard to a different
canon of construction, the presumption that Congress was aware
of the background law “is just that — a presumption[, which,]
like all presumptions used in interpreting statutes, may be
overcome by specific language . . . that is a reliable indicator of
congressional intent.” 467 U.S. at 349. Here, the presumption
that Congress was aware of and incorporated the Department’s
definition of “hearing” would lead to the absurd result that
Congress intended to impose a requirement with which the
Secretary could not comply. Courts, “in interpreting the words
of a statute, [have] ‘some scope for adopting a restricted rather
than a literal or usual meaning of its words where acceptance of
25
that meaning would lead to absurd results . . . or would thwart
the obvious purpose of the statute . . . .’” In re Trans Alaska
Pipeline Rate Cases, 436 U.S. 631, 643 (1978) (quoting Comm’r
v. Brown, 380 U.S. 563, 571 (1965)); see Secretary of Labor,
Mine Safety & Health Admin. v. National Cement Co. of Cal.,
Inc., 494 F.3d 1066, 1069 (D.C. Cir. 2007); Engine Mfrs. Ass’n
v. EPA, 88 F.3d 1075, 1088 (D.C. Cir. 1996). For the same
reason, the court owes no deference to the Department’s
interpretation of § 608c(17)(G) in this litigation; even had it been
set forth by the Secretary as part of the rulemaking, it fails at
Chevron step one. Applying “traditional tools of statutory
construction” the court must reject the construction as contrary to
clear congressional intent. Chevron, 467 U.S. at 842-43.
In order to avoid the absurd result of an impossible
instruction to the Secretary, § 608c(17)(G) must be read to allow
the Secretary an opportunity to determine and consider
producers’ feed and fuel costs after the evidentiary record is
closed. The rulemaking record for the Interim Rule does not
indicate when the Secretary’s review and deliberation took place,
but for § 608c(17)(G) to be implemented in a reasoned manner,
a “hearing” would be tied to the conclusion of the rulemaking,
marked here by June 20, 2008 publication of the Tentative
Decision. So understood, because the Secretary had not
concluded the rulemaking for the Interim Rule when the 2008 Act
went into effect on May 22, 2008, the Secretary was obligated to
follow the requirements of § 608c(17)(G).
IV.
The 2008 amendment to the AMAA requires the Secretary
to (i) determine the average monthly feed and fuel costs of dairy
producers “in the relevant marketing area;” (ii) “consider the
most recent monthly feed and fuel price data available” in
arriving at that determination; and (iii) “consider those prices in
26
determining whether or not to adjust make allowances.” 7 U.S.C.
§ 608c(17)(G)(i)-(iii). Here, we part ways with the producers.
Their contention that the Secretary failed to carry out these
obligations is belied by the rulemaking record.
A. The record shows that the Secretary determines monthly
feed and fuel costs (as well producers’ other major costs) as a
matter of course. During the evidentiary hearing, the ALJ took
official notice of Agricultural Prices reports stretching back
several years and up to the date of the hearing. These monthly
and annual reports, prepared by the Department’s National
Agricultural Statistics Service, use extensive sampling to
compute the nationwide average prices paid by and to farmers for
the inputs and outputs of farming. See, e.g., NAT’L AGRIC.
STATISTICS SERV., DEPT. OF AGRIC., AGRIC. PRICES 26 (May
2008).8 Included are the prices paid for feed, fuel, and a variety
of other inputs such as machinery and rent, as well as a ratio of
the cost of feed to milk. Id. 28. These categories are broken
down into subcategories and compared to previous months, years,
and baseline and parity costs. Id. 28-29. Given these extensive
computations by the Department in the rulemaking record, there
can be no doubt the Secretary determined producers’ feed and
fuel costs, even though the proposed rule did not explicitly
purport to do so in fulfillment of the requirements of
§ 608c(17)(G)(i), or indeed mention that provision at all. See
also Interim Rule, 73 Fed. Reg. 35,307 (citing AGRIC. MKTG.
SERV., U.S. DEP’T OF AGRIC., ECONOMIC ANALYSIS: CLASS III
AND IV PRICING FORMULAS (2008)).
The Secretary complied as well with his obligation to
determine those costs in “the relevant marketing area,”
§ 608c(17)(G)(i). That provision is ambiguous because it does
8
Available at http://usda.mannlib.cornell.edu/MannUsda/
viewDocumentInfo.do?documentID=1002.
27
not define “relevant.” The Department determines the
nationwide average for producers’ monthly feed and fuel costs in
the Agricultural Prices reports. The producers contend that
cannot satisfy the Secretary’s obligations to determine costs “in
the relevant marketing area,” and the Secretary must instead
compute separate costs for each national marketing area as those
areas are defined in Department regulations. See, e.g., 7 C.F.R.
§ 1001.1 (2008) (defining “Northeast Marketing Area” to include
certain states and counties of other states). However, as the
Department points out, the Secretary determined years ago that
Class III and IV “dairy products can and do compete on a
national market basis,” and the value of milk used for Class III
and IV products is thus driven by this national market. Milk in
the New England and Other Marketing Areas: Amplified
Decision, 59 Fed. Reg. 42,422, 42,424 (Aug. 17, 1994). In the
Tentative Decision, the Secretary reiterated that because those
products “compete in a national marketplace,” the data
considered in setting make allowances must likewise be
nationwide in scope. 73 Fed. Reg. 35,325. In using the term
“relevant marketing area,” Congress did not indicate an intention
to forbid that long-standing practice, but instead to invoke the
Secretary’s expertise. Given the broad statutory phrase, it was
reasonable for the Secretary to determine producer costs on a
nationwide basis, where he has determined the nationwide market
is the relevant area.
The text of § 608c(18) differs very slightly in structure on
this point from that of § 608c(17)(G). It provides the Secretary
must fix prices to reflect costs and conditions “in the market area
to which the . . . [milk marketing order or amendment] . . relates.”
See supra note 7. Assuming that obligation extends to this
rulemaking, the Secretary has complied for the same reasons he
has complied with § 608(17)(G)(i).
28
B. The Secretary also met his obligation to consider “the
most recent” price data available when determining the
producers’ costs. 7 U.S.C. § 608c(17)(G)(ii). The ALJ took
official notice of the monthly Agricultural Prices reports either
through the end of 2007 or up through the date of the post-
hearing briefing – in either event up to or past the close of the
evidentiary record. The producers contend this data was too old
to qualify as “the most recent monthly . . . data available,” id.,
because the evidentiary hearing concluded about one year before
the Tentative Decision was published. However,
§ 608c(17)(G)(ii) does not define “most recent monthly feed and
fuel price data available.” The court would normally defer to a
reasonable definition by the Secretary, see Chevron, 467 U.S. at
843, but the Secretary did not advance an interpretation in the
rulemaking, nor address the issue in his brief to this court. The
court may readily conclude, upon reading § 608c(17)(G) as a
whole, see supra at [24-25], that the most reasonable
interpretation is that when “determining” feed and fuel costs, the
Secretary must use the most recent data available as of the close
of the evidentiary record. So read, the Secretary complied by
using up-to-date data in compiling the figures in Agricultural
Prices, see, e.g., AGRIC. PRICES 26 (May 2008), and in taking
official notice of the most recent issue of that report as of the
close of the evidentiary period.
The producers offer a different reading of the statute which
would require the Secretary to consider “the most recent . . . data
available” as of the time the proposed rule is published (here, the
Tentative Decision of June 20, 2008). But § 608c(17)(G)(ii)
requires consideration of the most recent data “available,” not the
most recent data conceivable, and at some point the Secretary
must stop receiving new evidence and review the rulemaking
record. Time is also required to draft and publish the proposed
rule. This is true even though the producers point out that the
Secretary accepted a report from the state of California in
29
November 2007, after the record had closed. See Tentative
Decision, 73 Fed. Reg. at 35,324 n.1. That the Secretary chose
to reopen the record to accept new evidence on a single point
does not indicate that he would be obliged to do so by
§ 608c(17)(G)(ii) in order to have the most recent data
“available.” Nothing in the 2008 Act indicates Congress intended
to impose an unworkable obligation on the Secretary to reopen
the record repeatedly to receive new data during the process of
“determin[ing]” and “consider[ing].” As there must be a cutoff,
the court has no basis on this record to fault a cutoff date of the
close of the evidentiary record, one year before the Interim Rule
was issued. Although it is conceivable that delay in publishing
a proposed rule until long after the record closed could be
inconsistent with the requirement to consider the “most recent
data available,” the producers show no prejudice as a result of the
Secretary’s failure to consider cost data available on June 20,
2008. See City of Portland v. EPA, 507 F.3d 706, 717 (D.C. Cir.
2007); 5 U.S.C. § 706.
C. With regard to the Secretary’s obligation to “consider
[producers’ feed and fuel] prices in determining whether or not
to adjust make allowances,” 7 U.S.C. § 608c(17)(G)(iii), the
Secretary explicitly addressed these costs in promulgating the
Interim Rule:
In the aggregate, the costs of producing milk are
reflected in the supply and demand conditions for the
dairy products. When the supply of milk is insufficient
to meet the demand for Class III and Class IV products,
the prices for these products increase as do regulated
minimum milk prices paid to dairy farmers because the
milk is more valuable and this greater milk value is
captured in the pricing formulas. Dairy farmers face no
regulatory minimums in their costs and face no
30
regulated minimum payment obligation in the way that
regulated handlers must pay dairy farmers for milk.
73 Fed. Reg. at 35,324. The Secretary contrasted these producers
costs, reflected in market pricing, with handlers’ costs of
manufacturing:
The ability of a manufacturer to offset cost increases are
limited by the level of make allowances in the Class III
and Class IV price formulas. Manufacturing processors
are charged the [Federal Milk Marketing Order]
minimum price for producer milk used to produce Class
III and Class IV products. However, plant
manufacturing cost increases may not be recovered
because Class III and Class IV product-price formulas
use make allowances that are fixed regardless of market
conditions and change only by regulatory action.
Simply put, when manufacturing cost increases result in
costs higher than those provided by the formula make
allowance factors, the value of milk used to make those
products may be over-valued.
Id. at 35,323. The Secretary concluded that it was therefore
necessary to increase make allowances to reflect increases in the
manufacturing costs incurred by handlers as shown in the record
evidence. Id. at 35,323-4.
In sum, the Secretary considered the costs to producers, but
reasoned that those costs could be recouped through market
mechanisms. The make allowances, by contrast, represent the
costs of handlers and are the only mechanism through which
manufacturers’ costs can be recouped under the pricing formulas.
The Secretary concluded it was necessary to increase make
allowances to reflect handlers’ increased costs. Although the
Secretary increased make allowances and thereby decreased the
31
amount received by producers for a given market price, his well-
reasoned analysis in the rulemaking record constitutes
“consider[ing producers’ feed and fuel] prices in determining
whether or not to adjust make allowances,” § 608c(17)(G)(iii).
V.
Although we hold that the producers may challenge the
Secretary’s decision in the Interim Rule to increase make
allowances under the APA, and they correctly contend the
Secretary was required to consider their costs for feed and fuel in
deciding whether or not to amend make allowances, for the
reasons set forth in Part IV they have shown no likelihood of
success on the merits of their contention the Secretary exceeded
his powers by failing to consider those costs. Thus, this court
need not proceed to review the other three preliminary injunction
factors and the district court’s balancing of factors. See Apotex,
Inc. v. FDA, 449 F.3d 1249, 1253-54 (D.C. Cir. 2006). The
denial of the preliminary injunction is therefore affirmed.
On interlocutory review of petitions for injunctive relief, this
court may reach the merits of a claim “inextricably bound up”
with the issues on appeal. Hartman v. Duffey, 19 F.3d 1459,
1464 (D.C. Cir. 1994) (quoting 16 CHARLES A. WRIGHT ET AL.,
FEDERAL PRACTICE AND PROCEDURE § 3921 p.17 (1977)). As
the Supreme Court has observed, “Review of a preliminary
injunction ‘is not confined to the act of granting [or denying] the
injunctio[n], but extends as well to determining whether there is
any insuperable objection, in point of jurisdiction or merits, to the
maintenance of [the] bill, and if so, to direct a final decree
dismissing it.’” Munaf v. Geren, 128 S. Ct. 2207, 2219 (2008)
(quoting City and County of Denver v. N.Y. Trust Co., 229 U.S.
123, 136 (1913)) (all but first alternations in original); see also
Deckert v. Independence Shares Corp., 311 U.S. 282, 287 (1940).
Because there is an “insuperable objection” to the producers’
32
claims predicated on the Secretary’s alleged failure to consider
feed and fuel costs under the AMAA, 7 U.S.C. §§ 608c(17)(G)
and 608c(18), those claims in their complaint must be dismissed
for failure to state a claim. Munaf, 128 S. Ct. at 2220. We
remand the case to the district court for further proceedings
consistent with this opinion.
GRIFFITH, Circuit Judge, dissenting in part and
concurring in the judgment in part: I write separately because
I believe the Agricultural Marketing Agreement Act of 1937,
Pub. L. No. 75-137, 50 Stat. 246, precludes judicial review of
the producers’ claims.
The Administrative Procedure Act grants a cause of
action to “[a] person suffering legal wrong because of agency
action, or adversely affected or aggrieved by agency action
within the meaning of a relevant statute.” 5 U.S.C. § 702
(2006). It withdraws that cause of action “to the extent that
. . . statutes preclude judicial review.” Id. § 701(a)(1).
Preclusion may be found in the express language of a statute
or in “the structure of the statutory scheme, its objectives, its
legislative history, and the nature of the administrative action
involved.” Block v. Cmty. Nutrition Inst., 467 U.S. 340, 345
(1984). “[W]hen a statute provides a detailed mechanism for
judicial consideration of particular issues at the behest of
particular persons, judicial review of those issues at the behest
of other persons may be found to be impliedly precluded.” Id.
at 349.
The Act expressly provides only to handlers, and no one
else, a right to petition the Secretary of Agriculture for review
of a marketing order and to obtain judicial review of the
Secretary’s ruling in response. 7 U.S.C. § 608c(15) (2006).
The majority concludes nevertheless that producers have a
right to judicial review because, unlike the consumers in
Block, they play an “active role . . . during the rulemaking
process,” Maj. Op. at 12. But that does not mean Congress
intended producers to be afforded judicial review for any
complaint they might have with a marketing order.1 To the
1
The majority purports to limit its grant of judicial review to cases
where producers claim a violation of their definite and personal
rights. See Maj. Op. at 15, 20. But the fact that producers have a
“definite and personal” right at stake in the contested order, as they
2
contrary, their important role at the agency level explains why
Congress withheld judicial review from them. No marketing
order or amendment may issue without the approval of two-
thirds of the affected producers (measured either by number
or by volume of milk produced). See 7 U.S.C. § 608c(8)–(9).
Producers can veto a proposed order for any reason; a court
can only overturn an order if the Secretary has acted
arbitrarily, capriciously, or contrary to law, see 5 U.S.C.
§ 706. The producer referendum is a far more powerful tool to
challenge an action by the Secretary than the deferential
review of a judicial forum. Ordinarily, producer interests will
not, as the majority fears, “go unvindicated” without the
availability of judicial review, Maj. Op. at 13. By contrast,
Congress gave handlers a judicial remedy because they may
vote on, but cannot block, a marketing order. An order or
amendment may issue if fifty percent of the affected handlers
vote to approve it. But if the handler referendum fails, the
Secretary can nonetheless issue the order if he determines that
the handlers’ disapproval prevents the effectuation of the
Act’s policy and that the order is necessary to implement that
no doubt have in this case, tells us only that they have statutory (as
well as constitutional) standing. It does not tell us whether
Congress has precluded them from enforcing this definite and
personal right in court. See Stark v. Wickard, 321 U.S. 288, 306
(1944) (“[E]ven where a complainant possesses a claim to
executive action beneficial to him . . . it does not necessarily follow
that actions of administrative officials, deemed by the owner of the
right to place unlawful restrictions upon his claim, are cognizable
in appropriate federal courts of first instance.”); Block, 467 U.S. at
351 (explaining that the Stark producers’ “definite and personal
rights” gave them “standing to object to the administration of the
settlement fund,” but that this “standing could not by itself ensure
judicial review of the Secretary’s action at their behest”); id. at 353
n.4 (finding no need to address the constitutional and statutory
“standing issues” because judicial review was precluded).
3
policy. See 7 U.S.C. § 608c(8)–(9). No similar override is
available if the producers vote down the proposed order.
In some cases, however, the producer referendum is not
an adequate forum in which to challenge unlawful actions of
the Secretary. As the Court noted in Stark v. Wickard, 321
U.S. 288 (1944), the producers’ veto power “cannot protect
minority producers against unlawful exactions which might
be voted upon them by majorities.” Id. at 307. If the
Secretary’s proposed action would benefit some producers at
the expense of others, there is a risk that the majority
producers will exploit the referendum process to approve
measures in marketing orders that discriminate against
minority producers. In these instances, judicial review is
available for the minority producers. For example, the
minority producers in Stark challenged a provision that
required the market administrator to deduct a certain amount
from the money paid by milk handlers before distributing it to
producers. The deducted amount would then be paid only to
producers who were members of cooperatives. See id. at 300–
01. By sanctioning higher payments to producer cooperatives
and lower payments to independent producers, this provision
threatened the statutory objective of producer equality.
Because the producer cooperatives had sufficient voting
power to control the outcome of the referendum regardless of
the lawfulness of the provision, there was no adequate forum
in which the minority producers could challenge the provision
as unlawful. And without judicial review for their claim, no
group could be “relied upon to challenge agency disregard of
the law,” Block, 467 U.S. at 351.
The majority reads Stark to require judicial review of all
claims by producers. But Block emphasized that the structure
of the Act demonstrates Congress’s intent “that judicial
review of market orders issued under the Act ordinarily be
4
confined to suits brought by handlers,” 467 U.S. at 348. The
Court viewed the result in Stark as a limited exception
applicable in “certain” cases, id. at 351, when judicial review
is “necessary to ensure achievement of the Act’s most
fundamental objectives,” id. at 351–52. When divergent
producer interests threaten the ability of minority producers to
use the forum provided by the Act—the referendum—judicial
review is permitted to safeguard the primary statutory
objective: “to ensure that the benefits and burdens of the milk
market are fairly and proportionately shared by all dairy
farmers,” id. at 342; see also 7 U.S.C. § 602 (declaration of
statutory policy). Judicial review of orders and amendments
that discriminate between producers ensures that the
destabilizing producer competition targeted by the Act, see
Block, 467 U.S. at 343, does not infect the milk marketing
orders themselves.
Permitting judicial review of producers’ claims in this
narrow set of circumstances is consistent with our precedent
and that of other circuits. The cases cited by the majority in
support of a more general grant of judicial review for
producers each involved divergent producer interests
comparable to the circumstances in Stark. See Alto Dairy v.
Veneman, 336 F.3d 560 (7th Cir. 2003) (Wisconsin producers
who sold milk in Mideast region challenged amendment of
Mideast pooling provision adopted without notice to them);
Minn. Milk Producers Ass’n v. Madigan, 956 F.2d 816 (8th
Cir. 1992) (producers outside marketing area, who could not
vote on the challenged order, argued that it stimulated
overproduction in other areas); Farmers Union Milk Mktg.
Coop. v. Yeutter, 930 F.2d 466 (6th Cir. 1991) (rural
producers challenged location adjustments that favored
producers closest to cities); Suntex Dairy v. Bergland, 591
F.2d 1063 (5th Cir. 1979) (independent milk producers
challenged bloc voting by large producer cooperative);
5
Dairylea Coop., Inc. v. Butz, 504 F.2d 80 (2d Cir. 1974)
(recent market entrant challenged provision resulting in lower
prices for newly entering producers); Blair v. Freeman, 370
F.2d 229 (D.C. Cir. 1966) (distant producers challenged
“nearby differential” in price that advantaged producers
closest to New York City); cf. Pescosolido v. Block, 765 F.2d
827 (9th Cir. 1985) (prohibiting judicial review of orange
growers’ claim that Secretary was not ensuring parity prices,
an interest common to all growers).
The difference between this case and those—the one that
“eludes” the majority, Maj. Op. at 17—is that the producers
here had an adequate forum in which to challenge the
Secretary’s actions because the new make allowances treat all
producers uniformly. Because the producers’ interests here
are all aligned in the same direction, the risk that existed in
Stark of larger producers capturing the referendum process to
unlawfully disadvantage the minority is not present. The
producer referendum thus served its purpose as a check on the
Secretary’s statutory authority. Judicial review is not
necessary to vindicate the objectives of the Act, and we
should defer to the congressional preference—expressed in
the Act’s structure—to preclude that review. I would affirm
the district court’s ruling that judicial review is precluded and
remand with direction to dismiss the producers’ claims.