Block v. Community Nutrition Institute

• Decision Date: 04 June 1984
• Docket Number: No. 83-458,83-458
• Citation: 104 S.Ct. 2450,81 L.Ed.2d 270,467 U.S. 340
• Parties: John R. BLOCK, Secretary of Agriculture, et al., Petitioners, v. COMMUNITY NUTRITION INSTITUTE et al
• Court: U.S. Supreme Court

467 U.S. 340

104 S.Ct. 2450

81 L.Ed.2d 270

John R. BLOCK, Secretary of Agriculture, et al., Petitioners,

v COMMUNITY NUTRITION INSTITUTE et al.

No. 83-458.

Supreme Court of the United States

Argued April 24, 1984.

Decided June 4, 1984.

Syllabus

To bring destabilizing competition among dairy farmers under control, the Agricultural Marketing Agreement Act of 1937 (Act) authorizes the Secretary of Agriculture (Secretary) to issue milk market orders setting the minimum prices that handlers (those who process dairy products) must pay to producers (dairy farmers) for their milk products. Pursuant to this authority, the Secretary issued market orders under which handlers are required to pay for "reconstituted milk" (milk manufactured by mixing milk powder with water) the minimum price for Class II milk (raw milk used to produce such products as dry milk powder) rather than the higher price covering Class I milk (raw milk processed and bottled for fluid consumption). The orders assume that handlers will use the reconstituted milk to manufacture surplus milk products, but for any portion of reconstituted milk not so used handlers must make a "compensatory payment" equal to the difference between Class I and Class II milk product prices. Respondents—three individual consumers of fluid dairy products, a handler regulated by the market orders, and a nonprofit organization—brought suit in Federal District Court, contending that the compensatory payment requirement makes reconstituted milk uneconomical for handlers to process. The District Court held, inter alia, that the consumers had no standing to challenge the orders. The Court of Appeals disagreed, holding that the consumers had suffered injury-in-fact, their injuries were redressable, and they were within the zone of interests protected by the Act, and that the Act's structure and purposes did not reveal the type of "clear and convincing evidence of congressional intent needed to overcome the presumption in favor of judicial review."

Held: The individual consumers may not obtain judicial review of the milk market orders in question. Pp. 24542458.

(a) It is clear from the structure of the Act that Congress intended that judicial review of market orders ordinarily be confined to suits by handlers in accordance with the provisions of the Act expressly entitling them to such review in a federal district court after exhausting their administrative remedies. Allowing consumers to sue the Secretary would severely disrupt the Act's complex and delicate administrative scheme. Pp. 24542456.

(b) The presumption favoring judicial review of administrative action does not control in cases such as this one, where the congressional intent to preclude consumer suits is "fairly discernible" in the detail of the legislative scheme. The Act contemplates a cooperative venture among the Secretary, producers, and handlers; consumer participation is not provided for or desired under that scheme. Stark v. Wickard, 321 U.S. 288, 64 S.Ct. 559, 88 L.Ed. 733, distinguished. Pp. 24562458.

225 U.S.App.D.C. 387, 698 F.2d 1239 (1983), reversed.

Kathryn A. Oberly, Washington, D.C., for petitioners.

Ronald L. Plesser, Washington, D.C., for respondents.

Justice O'CONNOR delivered the opinion of the Court.

This case presents the question whether ultimate consumers of dairy products may obtain judicial review of milk market orders issued by the Secretary of Agriculture (Secretary) under the authority of the Agricultural Marketing Agreement Act of 1937 (Act), ch. 296, 50 Stat. 246, as amended, 7 U.S.C. § 601 et seq. We conclude that consumers may not obtain judicial review of such orders.

I

A.

In the early 1900's, dairy farmers engaged in intense competition in the production of fluid milk products. See Zuber v. Allen, 396 U.S. 168, 172176, 90 S.Ct. 314, 317319, 24 L.Ed.2d 345 (1969). To bring this destabilizing competition under control, the 1937 Act authorizes the Secretary to issue milk market orders setting the minimum prices that handlers (those who process dairy products) must pay to producers (dairy farmers) for their milk products. 7 U.S.C. § 608c. The "essential purpose [of this milk market order scheme is] to raise producer prices," S.Rep. No. 1011, 74th Cong., 1st Sess., 3 (1935), and thereby to ensure that the benefits and burdens of the milk market are fairly and proportionately shared by all dairy farmers. See Nebbia v. New York, 291 U.S. 502, 517518, 54 S.Ct. 505, 507, 78 L.Ed. 940 (1934).

Under the scheme established by Congress, the Secretary must conduct an appropriate rulemaking proceeding before issuing a milk market order. The public must be notified of these proceedings and provided an opportunity for public hearing and comment. See 7 U.S.C. § 608c(3). An order may be issued only if the evidence adduced at the hearing shows "that [it] will tend to effectuate the declared policy of this chapter with respect to such commodity." 7 U.S.C. § 608c(4). Moreover, before any market order may become effective, it must be approved by the handlers of at least 50% of the volume of milk covered by the proposed order and at least two-thirds of the affected dairy producers in the region. 7 U.S.C. §§ 608c(8), 608c(5)(B)(i). If the handlers withhold their consent, the Secretary may nevertheless impose the order. But the Secretary's power to do so is conditioned upon at least two-thirds of the producers consenting to its promulgation and upon his making an administrative determination that the order is "the only practical means of advancing the interests of the producers." 7 U.S.C. § 608c(9)(B).

The Secretary currently has some 45 milk market orders in effect. See 7 CFR pts. 10011139 (1984). Each order covers a different region of the country, and collectively they cover most, though not all, of the United States. The orders divide dairy products into separately priced classes based on the uses to which raw milk is put. See 44 Fed.Reg. 65990 (1979). Raw milk that is processed and bottled for fluid consumption is termed "Class I" milk. Raw milk that is used to produce milk products such as butter, cheese, or dry milk powder is termed "Class II" milk.¹

For a variety of economic reasons, fluid milk products would command a higher price than surplus milk products in a perfectly functioning market. Accordingly, the Secretary's milk market orders require handlers to pay a higher order price for Class I products than for Class II products. To discourage destabilizing competition among producers for the more desirable fluid milk sales, the orders also require handlers to submit their payments for either class of milk to a regional pool. Administrators of these regional pools are then charged with distributing to dairy farmers a weighted average price for each milk product they have produced, irrespective of its use. See 7 U.S.C. § 608c(5)(B)(ii).

In particular, the Secretary has regulated the price of "reconstituted milk"—that is, milk manufactured by mixing milk powder with water—since 1964. See 29 Fed.Reg. 9002, 9010 (1964); see also 34 Fed.Reg. 16548, 16551 (1969). The Secretary's orders assume that handlers will use reconstituted milk to manufacture surplus milk products. Handlers are therefore required to pay only the lower Class II minimum price. See 44 Fed.Reg. 65989, 65990 (1979). However, handlers are required to make a "compensatory payment" on any portion of the reconstituted milk that their records show has not been used to manufacture surplus milk products. 7 CFR §§ 1012.44(a)(5)(i), 1012.60(e) (1984). The compensatory payment is equal to the difference between the Class I and Class II milk product prices. Handlers make these payments to the regional pool, from which moneys are then distributed to producers of fresh fluid milk in the region where the reconstituted milk was manufactured and sold. § 1012.71(a)(1).

B

In December 1980, respondents brought suit in District Court, contending that the compensatory payment requirement makes reconstituted milk uneconomical for handlers to process.² Respondents, as plaintiffs in the District Court, included three individual consumers of fluid dairy products, a handler regulated by the market orders, and a nonprofit organization. The District Court concluded that the consumers and the nonprofit organization did not have standing to challenge the market orders. In addition, it found that Congress had intended by the Act to preclude such persons from obtaining judicial review. The District Court dismissed the milk handler's complaint because he had failed to exhaust his administrative remedies.

The Court of Appeals affirmed in part and reversed in part, and remanded the case for a decision on the merits. 225 U.S.App.D.C. 387, 698 F.2d 1239 (1983). The Court of Appeals agreed that the milk handler and the nonprofit organization had been properly dismissed by the District Court. But the court concluded that the individual consumers had standing: they had suffered an injury-in-fact their injuries were redressable, and they were within the zone of interests arguably protected by the Act. The Court also concluded that the statutory structure and purposes of the Act did not reveal "the type of clear and convincing evidence of congressional intent needed to overcome the presumption in favor of judicial review." Id., at 400, and n. 75, 698 F.2d, at 1252, and n. 75. The Court of Appeals expressly refused to follow the decision of the Ninth Circuit in Rasmussen v. Hardin, 461 F.2d 595, cert. denied sub nom. Rasmussen v. Butz, 409 U.S. 933, 93 S.Ct. 229, 34 L.Ed.2d 188 (1972), which had held consumers precluded by statute from seeking judicial review.

We granted certiorari to resolve the conflict in the Circuits. 464 U.S. 991, 104 S.Ct. 480, 78 L.Ed. 678 (1983). We now reverse the judgment of the Court of Appeals in this case.

II

Respondents filed this suit under the Administrative Procedure Act (APA), 5 U.S.C. § 701 et seq. The APA confers a...