Nick Koretoff v. Tom Vilsack

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 7, 2012 Decided February 22, 2013

No. 12-5075

NICK KORETOFF, DOING BUSINESS AS NICK KORETOFF
RANCHES, ET AL.,
APPELLANTS

v.

TOM VILSACK, SECRETARY, UNITED STATES DEPARTMENT OF
AGRICULTURE,
APPELLEE

Appeal from the United States District Court
for the District of Columbia
(No. 1:08-cv-01558)

John H. Vetne argued the cause for appellants. With him
on the briefs was Susan Silber.

David A. Nauheim and James S. Turner were on the brief
for amici curiae Alliance for Natural Health USA, et al. in
support of appellants.

Michael P. Abate, Attorney, U.S. Department of Justice,
argued the cause for appellee. With him on the brief were
Stuart F. Delery, Acting Assistant Attorney General, Ronald
C. Machen Jr., U.S. Attorney, Michael S. Raab, Attorney, and
Andrew R. Varcoe, Attorney, U.S. Department of Agriculture.
 2

Before: TATEL and BROWN, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed PER CURIAM.

Concurring opinion filed by Senior Circuit Judge
WILLIAMS.

PER CURIAM: Appellants, California almond producers,
claim that the Secretary of Agriculture, seeking to prevent the
spread of salmonella, exceeded his authority in requiring
California almonds sold domestically to be treated with heat
or chemicals. The district court granted summary judgment
for the Secretary. Finding that appellants have waived their
claims by failing to raise them during the rulemaking process,
we affirm.

I.
Under the Agricultural Marketing Agreement Act of
1937, 7 U.S.C. §§ 601–74 (“AMAA”), the Secretary of
Agriculture may issue marketing orders binding “handlers” of
commodities such as almonds. 7 U.S.C. § 608c(1)–(2). While
“producers” grow commodities, commodity handlers are
“processors, associations of producers, and others engaged in
the handling” of commodities. Id. § 608c(1). As relevant here,
marketing orders may provide “terms and conditions . . .
[l]imiting, or providing methods for the limitation of, the total
quantity of any such commodity or product, or of any grade,
size, or quality thereof.” Id. § 608c(6)(A). For a marketing
order to become effective, the handlers responsible for at least
half the volume of the commodity in the covered area must
approve it. Id. § 608c(8). The Secretary, however, may
impose a marketing order without handler consent if, among
other things, he finds that the order is “the only practical
 3
means of advancing the interests of the producers.” Id. §
608c(9).

California almond handlers are subject to the California
Almond Marketing Order, 7 C.F.R. pt. 981. The Almond
Order provides for “quality control” of almonds, allowing the
Secretary to approve “such minimum quality and inspection
requirements applicable to almonds to be handled . . . as will
contribute to orderly marketing or be in the public interest.” 7
C.F.R. § 981.42(b).

After two salmonella outbreaks were linked to almonds
grown in California, the Secretary published in the Federal
Register a proposed rule requiring handlers to treat almonds
sold domestically with heat or chemicals. Almonds Grown in
California; Outgoing Quality Control Requirements and
Request for Approval of New Information Collection, 71 Fed.
Reg. 70,683 (Dec. 6, 2006). Every California almond
producer was mailed a brochure that explained the proposed
rule and encouraged producers to “take part in the public
process.” After receiving comments and modifying the
proposal somewhat to address issues raised, the Secretary
adopted the treatment rule as a “quality control” requirement
under the Almond Order. Almonds Grown in California;
Outgoing Quality Control Requirements, 72 Fed. Reg. 15,021,
15,021–22, 15,029–33 (Mar. 30, 2007) (“Treatment Rule”).

Several almond producers challenged the treatment rule
under the Administrative Procedure Act. The producers
claimed that the treatment rule exceeded the Secretary’s
authority under both the AMAA and the Almond Order.
Although conceding that the Secretary may prohibit the sale
of contaminated almonds under his authority to limit almond
quality, the producers contended that the Secretary lacks
authority to require the treatment of all almonds irrespective
 4
of whether they are contaminated. The producers also claimed
that almond handlers withdrew their support for the Almond
Order in 1996 and that the Secretary never determined that the
treatment rule is “the only practical means of advancing the
interests of the producers,” as the AMAA requires for orders
lacking handler support. 7 U.S.C.
§ 608c(9)(B). The district court, finding that the Secretary had
authority to issue the rule and that the producers had waived
their claim about the “only practical means” determination,
granted summary judgment for the Secretary. Koretoff v.
Vilsack, 841 F. Supp. 2d 1 (D.D.C. 2012). The producers now
appeal, reiterating the arguments they made in the district
court.

II.
The Secretary argues that the producers have waived all
their claims by failing to raise them during notice and
comment. See Advocates for Highway & Auto Safety v.
FMCSA, 429 F.3d 1136, 1150 (D.C. Cir. 2005) (“[A] party
will normally forfeit an opportunity to challenge an agency
rulemaking on a ground that was not first presented to the
agency for its initial consideration.”). Although these
particular producers did not participate in the rulemaking
process, they nonetheless insist that their arguments about the
Secretary’s authority to issue the rule are preserved for two
reasons.

First, the producers argue that an exception to the waiver
doctrine applies because “[t]he issues were presented to (and
resolved by) the agency.” Appellants’ Reply Br. 7. Although
conceding that none of the producers who did comment made
this argument during the rulemaking, the producers maintain
that “the question of agency authority to issue a mandatory
processing rule was expressly raised early in the rule
development process,” pointing to a meeting attended by a
 5
Department of Agriculture representative in which “it was
asked if [the Secretary] has authority to mandate a kill step
process.” Appellants’ Reply Br. 7–8, 8 n.4 (emphasis added).
The representative replied that the Department was
“investigating the issue” and reported back a week later that
“there is legal authority under the Marketing Order” to
“implement a mandatory treatment or ‘pasteurization’
program.” Appellants’ Reply Br. 8 n.4.

Under our case law, this was insufficient to preserve the
issue. Nothing in the record suggests that the Secretary
considered the producers’ specific argument, i.e., that
although the Secretary may prohibit the sale of contaminated
almonds, he lacks authority to require the treatment of all
almonds irrespective of whether they are contaminated. We
require “the argument [petitioner] advances here” to be raised
before the agency, not merely the same general legal issue.
Nuclear Energy Institute, Inc. v. EPA, 373 F.3d 1251, 1291
(D.C. Cir. 2004) (per curiam). “While there are surely limits
on the level of congruity required between a party’s
arguments before an administrative agency and the court,
respect for agencies’ proper role in the Chevron framework
requires that the court be particularly careful to ensure that
challenges to an agency’s interpretation of its governing
statute are first raised in the administrative forum.” NRDC v.
EPA, 25 F.3d 1063, 1074 (D.C. Cir. 1994). Furthermore, as
the producers themselves make clear in their brief, the issue
considered at the meeting related only to the Secretary’s
authority under the Almond Order, not the statute.

Second, the producers argue that the Secretary was
“obligated under the APA to address [his] statutory authority
sua sponte,” whether “raised by a commenter or not.”
Appellants’ Reply Br. 7–9. It is certainly true that agencies
are required to ensure that they have authority to issue a
 6
particular regulation. See 5 U.S.C. § 553(b)(2) (“The notice
[of proposed rulemaking] shall include . . . reference to the
legal authority under which the rule is proposed . . . .”). But as
we have repeatedly made clear, agencies have no obligation to
anticipate every conceivable argument about why they might
lack such statutory authority. See, e.g., Ohio v. EPA, 997 F.2d
1520, 1528–29 (D.C. Cir. 1993) (finding waived argument
that rule violated statute). Here, the Secretary expressly stated
that he was issuing the treatment rule under his AMAA and
Almond Order authority to regulate almond quality.
Treatment Rule, 72 Fed. Reg. at 15,021–22 (“This rule adds
outgoing quality control requirements under the
administrative rules and regulations of the California almond
marketing order . . . . The order is effective under the
[AMAA] . . . .”). Absent a comment arguing otherwise, he
had no further obligation.

Finally, we agree with the district court that the producers
waived their argument that the Secretary needed to determine
that the Almond Order was “the only practical means of
advancing the interests of the producers.” According to the
producers, they had no way to raise the Secretary’s failure to
make an “only practical means” determination because such
determinations “are first made by the Secretary, if at all, only
in the final rulemaking document.” Appellants’ Br. 64. But
the Secretary never considered whether an “only practical
means” determination was necessary for one simple reason:
no one suggested during the rulemaking that such a
determination was required. If the producers believed that an
“only practical means” determination was necessary because
the Almond Order has lacked handler support since 1996,
they had ample opportunity to alert the Secretary before he
issued the treatment rule.
 7
III.
For the reasons stated above, we affirm the district
court’s grant of summary judgment for the Secretary. In doing
so, we emphasize that nothing in this opinion affects the
producers’ ability to raise their statutory arguments if and
when the Secretary applies the rule. See Murphy Exploration
& Production Co. v. U.S. Department of Interior, 270 F.3d
957, 958 (D.C. Cir. 2001) (“Nothing . . . prevents [plaintiff]
from pursuing its claim in a second forum, i.e., apart from the
original rulemaking, if such a forum is otherwise available.
As we have held before, such a forum is available to a party
when a rule is brought before this court for review of further
agency action applying it.” (internal quotation marks
omitted)).

So ordered.
 WILLIAMS, Senior Circuit Judge, concurring: I concur in
the opinion of the court. I write separately primarily to note
that in the realm of judicial review of agency rules, much of
the language of our opinions on “waiver” has been a good
deal broader than the actual pattern of our holdings, and that
that pattern itself may unfairly disadvantage parties that
generally are not well represented by interest groups.

Some of our cases suggest that parties seeking review of
an agency rule issued through notice-and-comment
rulemaking may raise only those issues that they presented to
the agency in the rulemaking. For example: “It is well
established that issues not raised in comments before the
agency are waived and this Court will not consider them.”
Nat’l Wildlife Fed’n v. EPA, 286 F.3d 554, 562 (D.C. Cir.
2002) (per curiam). But see City of Seabrook v. EPA, 659
F.2d 1349, 1360-61 (5th Cir. 1981) (refusing to impose any
such requirement on objections to EPA approval of a state
implementation plan).1 Indeed, the government’s brief in this

1
Seabrook’s own fate has wobbled. The Fifth Circuit followed
it in American Forest & Paper Ass’n v. EPA, 137 F.3d 291 (5th Cir.
1998), noting that it “remains valid.” But in BCCA Appeal Group
v. EPA, 355 F.3d 817, 828-29 & n.10 (5th Cir. 2003), the court
accepted the government’s argument that a party waived its
objections to a state implementation plan by failing to comment
during the administrative proceedings. The court distinguished
Seabrook as involving a “purely legal” determination of whether the
agency properly made the findings required by statute, whereas
BCCA involved “an obligation [not] expressly imposed by the
[Clean Air Act].” Id. at 829 n.10. The court also criticized
Seabrook on its merits, explaining that “in recent years the court has
stepped back from Seabrook’s holding on waiver, and has even
applied the waiver doctrine to bar its consideration of claims that
were not raised before the EPA in similar situations as the present
dispute.” Id. (citing cases).
 2

case stretched the principle still further, throwing into the
hopper a case involving an adjudication rather than a
rulemaking, Orion Reserves Ltd. P’ship v. Salazar, 553 F.3d
697 (D.C. Cir. 2009), even though parties to a litigation
obviously have a far clearer burden to speak up to protect their
interests than do all of the potentially millions of persons that
may be affected by a rulemaking.

These broad statements disregard one context where they
are flatly wrong. As the court’s opinion notes, we have
distinguished between a direct challenge to a rule on
enactment and a challenge to the rule when applied. Murphy
Exploration & Prod. Co. v. U.S. Dep’t of Interior, 270 F.3d
957, 958 (D.C. Cir. 2001). In Murphy we stated the waiver
rule in terms of “the incontrovertible proposition that one may
not present an argument on appeal without having first raised
it below, i.e., in the proceedings from which the litigant
appeals.” Id. Thus a party that has objected in the rulemaking
can raise its claim in a facial challenge in court, and a party
attacking the rule in the agency’s own application proceedings
can similarly extend the attack on appeal from the agency. In
explaining why failure to raise a claim in the rulemaking was
not a bar to an application challenge, we drew an analogy to
our cases holding that a party’s missing a statutory deadline
for facial review of a regulation would not bar its challenge on
“review of further [agency] action applying it.” Id. (emphasis
added) (citing Functional Music, Inc. v. FCC, 274 F.2d 543,
546-47 (D.C. Cir. 1958)). For other cases applying the

This tension between the Fifth Circuit’s cases has been noted,
see, e.g., Fleming Cos. v. USDA, 322 F. Supp. 2d 744, 753-54 (E.D.
Tex. 2004), but apparently not resolved. Some other circuits have
also declined to follow Seabrook. See, e.g., Universal Health
Servs., Inc. v. Thompson, 363 F.3d 1013, 1020 n.3 (9th Cir. 2004);
1000 Friends of Md. v. Browner, 265 F.3d 216, 228 n.7 (4th Cir.
2001).
 3

principle as to missed statutory deadlines, see Independent
Community Bankers of America v. Board of Governors of the
Federal Reserve System, 195 F.3d 28, 33-35 (D.C. Cir. 1999)
(citing cases), and NLRB Union v. Federal Labor Relations
Authority, 834 F.2d 191, 195-99 (D.C. Cir. 1987) (citing
cases). Of course where a statute specifically precludes even
an application challenge if the claim was not timely raised
before the agency, we necessarily honor the statute unless the
challenger poses a valid constitutional objection. See, e.g.,
Eagle-Picher Indus., Inc. v. EPA, 759 F.2d 905, 911, 914
(D.C. Cir. 1985).2

Thus a party is barred from making facial claims that
were not raised in the rulemaking process,3 even ones that are
ripe within the meaning of Abbott Laboratories v. Gardner,
387 U.S. 136 (1967); but a timely objection at the application
stage preserves the party’s rights. The upshot is that, with
limited exceptions—for example, in cases where an agency
may act without affording a pre-deprivation hearing and the
affected party can and does immediately challenge the action
in court, see, e.g., James Madison Ltd. v. Ludwig, 82 F.3d

2
That principle is subject to an exception based on ripeness
concepts. See Clean Air Implementation Project v. EPA, 150 F.3d
1200, 1204 (D.C. Cir. 1998) (noting that, notwithstanding the time
limit in the Clean Air Act’s review provision, 42 U.S.C. § 7607(b),
it is a “necessary corollary” of the ripeness doctrine that if issues
that were unripe on direct challenge “later become justiciable, as a
result for instance of an enforcement action, the petitioner may then
raise those issues”).
3
This formulation of the matter assumes, as is normally the
case, that the waiver rule would not bar a facial challenge if the
agency has actually addressed the issue, either sua sponte or at the
behest of another party. See, e.g., Ohio v. EPA, 997 F.2d 1520,
1529 (D.C. Cir. 1993).
 4

1085, 1092-95 (D.C. Cir. 1996); Holiday CVS, LLC v. Holder,
839 F. Supp. 2d 145 (D.D.C. 2012), or in cases such as
McKart v. United States, 395 U.S. 185 (1969)—courts do not
hear claims that the agency has had no opportunity to respond
to or perhaps, to adapt to or adopt. This tends to economize
on effort on the part of courts, agencies and to some extent
even parties, including reducing the need for shuttling cases
back to the agency for an explanation of its choices. See
generally SEC v. Chenery Corp., 318 U.S. 80, 87-88 (1943).
It further increases the potential benefits of the notice-and-
comment process itself.

Generally speaking, then, the price for a ticket to facial
review is to raise objections in the rulemaking. This system
probably operates quite well for large industry associations
and consumer or environmental groups (and the firms and
individuals thus represented). But for some the impact is
more severe. Firms filling niche markets, for example, as
appellants appear to be, may be ill-represented by broad
industry groups and unlikely to be adequately lawyered-up at
the rulemaking stage. As the Fifth Circuit observed, we
presumably do not want to “require everyone who wishes to
protect himself from arbitrary agency action not only to
become a faithful reader of the notices of proposed
rulemaking published each day in the Federal Register, but a
psychic able to predict the possible changes that could be
made in the proposal when the rule is finally promulgated.”
City of Seabrook, 659 F.2d at 1360-61. For expressions of
similar doubts from this circuit, see Gage v. United States
Atomic Energy Commission, 479 F.2d 1214, 1218-19 (D.C.
Cir. 1973); see also 32 Charles A. Wright & Charles H. Koch,
Jr., Federal Practice & Procedure § 8174 (2012 ed.)
(explaining that “[m]any may be affected in various degrees
by numerous rulemaking efforts” but “[c]itizens cannot
participate in all the rulemakings which might affect us”).
 5

A decision of our court has suggested a principle that
would open the door to facial challenges by such mavericks.
In Murphy Exploration & Production Co. v. U.S. Department
of Interior, 252 F.3d 473 (D.C. Cir. 2001), predecessor of the
Murphy referred to earlier, we said that where a party had
participated in the rulemaking, “it made sense to speak of [the
party’s] failure to raise [its argument] below.” Id. at 478. But
that could not rightly be said where there was no indication
that the plaintiff had participated in the rulemaking in any
way. Id. Thus we found no waiver.

Such a principle would provide facial review for parties
who don’t bother to participate in the rulemaking—probably a
group largely coincident with parties who fail to anticipate its
inflicting serious costs on their interests. (Of course there
would be some risk that the rule might induce strategic
behavior expanding that group: non-participation in order to
get facial review without disclosing one’s position to the
agency. It’s not clear that such a strategy presents many
advantages.) The argument for allowing facial review under
these circumstances is of course at its strongest where the
issue posed cannot require a remand to the agency (e.g., a
claim under Chevron’s “first step”) and the hardship to the
plaintiff from delay (see Abbott Labs, 387 U.S. at 148-49,
153) is especially acute.

The first Murphy decision (cited immediately above) is,
however, not binding circuit law. After the opinion was
issued, the government submitted evidence that the challenger
had, in fact, participated in the rulemaking proceeding, and
the panel—in the Murphy decision cited earlier—vacated the
relevant part of the opinion. See Murphy, 270 F.3d at 958.
The panel’s reasoning, of course, remains available to future
panels.
 6

In this case, however, it seems appropriate to follow the
general principle that we “take the dispute as the parties frame
it.” Creighton Ltd. v. Gov’t of Qatar, 181 F.3d 118, 125 (D.C.
Cir. 1999). I agree with the panel that appellants in this case
did not frame the dispute in any of the terms set forth above,
so it would be inappropriate to resolve such possible
variations of the waiver doctrine in this case.