City of Milwaukee, Wis. v. Block

• Decision Date: 30 April 1986
• Docket Number: No. 85-C-1509.,85-C-1509.
• Citation: 634 F. Supp. 760
• Parties: CITY OF MILWAUKEE, WISCONSIN, et al., Plaintiffs, v. John R. BLOCK, in his capacity as Secretary of the United States Department of Agriculture and as Chairman of the USDA's Commodity Credit Corporation, et al., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

634 F. Supp. 760

CITY OF MILWAUKEE, WISCONSIN, et al., Plaintiffs, v. John R. BLOCK, in his capacity as Secretary of the United States Department of Agriculture and as Chairman of the USDA's Commodity Credit Corporation, et al., Defendants.

No. 85-C-1509.

United States District Court, E.D. Wisconsin.

April 30, 1986.

Robert E. Jensen, George D. Baker and John J. McMackin, Jr., Williams & Jensen, P.C., Washington, D.C., for plaintiffs.

Mark Pogue, Dept. of Justice, Civil Div., Washington, D.C., for defendants.

Jonathan Blank, and Kathryn P. Broderick, Preston, Thorgrimson, Ellis & Holman, Washington, D.C., for intervenors.

DECISION AND ORDER

WARREN, District Judge.

Plaintiffs commenced this action on October 28, 1985, seeking declaratory judgment and injunctive relief against the government defendants' allegedly unlawful and unconstitutional interpretation and application of the Cargo Preference Act of 1954, as amended, 46 U.S.C. § 1241(b) (West Supp.1985) ("the CPA"), and their failure to follow their own regulations, rules and policies governing the CPA's application to Title II of the Agricultural Trade Development and Assistance Act of 1954, as amended, 7 U.S.C. §§ 1721-1726 (1970 West Supp.1985) ("Title II" or "Title II, P.L. 480"). Pursuant to the requests of all parties, the Court on December 13, 1985, established an expedited schedule for the briefing and argument of the parties' cross motions for summary judgment. Finally, on February 7, 1986, after hearing argument and over the plaintiffs' objection, the Court granted the motion to intervene as defendants submitted by five parties asserting interests in the U.S. maritime industry ("Defendant-Intervenors").

Rule 56(c) of the Federal Rules of Civil Procedure provides for the granting of summary judgment where there exists "no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." As more fully described below, the Court hereby finds that there exists no factual issue regarding plaintiffs' lack of standing to bring this action thereby entitling defendants to judgment as a matter of law.

BACKGROUND

I. The Parties.

The eighteen plaintiffs in this action include four operators of Great Lakes ports, six labor unions representing longshoremen working the harbor facilities of various Great Lakes ports, four stevedoring service and terminal operating companies servicing various Great Lakes ports and one trade association representing ports, stevedores, terminal and warehousing companies, and steamship lines and agents involved in commercial ocean shipping in the Great Lakes.

The nine government defendants are officials of various federal agencies, sued in their official capacities, responsible for administering the provisions of Title II at issue in this case.

The five defendant-intervenors consist of four companies operating United States-flag vessels or organizations with member companies operating such vessels, and one labor union representing seamen working aboard United States-flag vessels engaged in the United States foreign and domestic shipping trade.

II. Statutory and Regulatory Background.

A. The Cargo Preference Act.

This lawsuit stems primarily from the parties' differing positions regarding the proper interpretation of the CPA. The CPA was enacted to foster and preserve a strong United States merchant marine by aiding United States-flag operators in their competition with lower cost foreign-flag vessels.¹ H.R.Rep. No. 2329, 83 Cong., 2d Sess. 1 (1954), U.S.Code Cong. & Admin. News, 1954 p. 3173. The CPA seeks to achieve this purpose by requiring as follows:

Whenever the United States shall procure, contract for, or otherwise obtain for its own account, or shall furnish to or for the account of any foreign nation without provision for reimbursement, any ... commodities, within or without the United States, or shall advance funds or credits or guarantee the convertibility of foreign currencies in connection with the furnishing of such ... commodities, the appropriate agencies shall take such steps as may be necessary and practicable to assure that at least 50 percentum of the gross tonnage of such ... commodities ... which may be transported on ocean vessels shall be transported on privately owned United States-flag commercial vessels, to the extent such vessels are available at fair and reasonable rates for United States-flag commercial vessels, in such manner as will insure a fair and reasonable participation of United States-flag commercial vessels in such cargoes by geographic areas....

46 U.S.C. § 1241(b)(1).

The CPA remained substantially unchanged for 30 years following its enactment until December 23, 1985—seven weeks after this lawsuit's commencement —when the President of the United States signed legislation, formally known as the "Food Security Act of 1985", amending the CPA. Pub.L. 99-198 (1985). Four provisions in this legislation pertain to this litigation. Specifically, in summarized fashion, these four provisions are as follows:

i) The U.S.-flag participation goal for donated agricultural commodities is increased from 50 to 75 percent. The increase is to be phased in over a period of three years. Sec. 901(b)(a)(2).

ii) The required level of U.S.-flag participation must be achieved in each 12-month period beginning April 1, 1986. Thus, the compliance year now begins when the Great Lakes' shipping season begins. Sec. 901(b)(c)(2)(A); Complaint ¶ 59.

iii) The Secretary of Transportation is required, during the period 1986-1989, to take "such steps as may be necessary and practicable without detriment to any port range" to preserve the percentage share or metric tonnage of donated commodities exported from Great Lakes ports in 1984. Sec. 901(b)(C)(2)(B).

iv) Congress has established a detailed scheme for financing the increased ocean freight charges which may result from the increased utilization of relatively expensive U.S.-flag vessels mandated by the CPA. Sec. 901(b)(d)-(f).

Title XI, Subtitle C of Pub.L. 99-198 (1985) ("The 1985 Amendments").

B. Title II, P.L. 480.

Title II, P.L. 480 embodies a foreign food donation program by which the United States donates agricultural commodities overseas to curb famine, combat malnutrition, and promote economic and community development in friendly developing countries. See 7 U.S.C. § 1721(a). The President of the United States is authorized to carry out the Title II, P.L. 480 program. Id. Section 1-201 of Executive Order 12220 delegates the Title II, P.L. 480 functions vested in the President to the Director of the United States International Development Cooperation Agency ("IDCA"). 45 Fed.Reg. 44245 (June 27, 1980). The IDCA has internally redelegated these functions to the Agency for International Development ("AID") who, in conjunction with the Commodity Credit Corporation ("CCC"),² administers the Title II, P.L. 480 program. In the Title II, P.L. 480 program, the CCC provides requested commodities for donation and pays the costs of acquiring, processing, packaging and transporting the donated commodities from the commodity supplier's plant to the foreign destination. 7 U.S.C. §§ 1721(a), 1723.

The CPA applies to the Title II, P.L. 480 program. Indeed, this litigation concerns whether the government defendants are properly applying the CPA in administering Title II, P.L. 480.

C. CCC Procurement and Port Allocation Regulations.

The CCC's procedure used in procuring and allocating to ports the donated Title II, P.L. 480 commodities is published at 7 C.F.R. Part 1496. These regulations provide that, as a general principle, contracts for the procurement and allocation to ports will be awarded on the basis of "lowest landed cost." 7 C.F.R. § 1496.5(a). "Lowest landed cost" is defined as the lowest combined total cost of acquiring the commodities and transporting them to the port of export, plus shipping them across the ocean to the discharge port. 7 C.F.R. § 1496.3(g). However, the following "additional factors" may be considered in awarding contracts: the availability of ocean service, the adequacy of ocean service, port performance, and transit time. Regarding the availability of ocean service, 7 C.F.R. § 1496.5(b)(5) provides that:

Available service will be analyzed to ensure that the port or coastal range selected for exportation has available ocean transportation service that will provide maximum compliance with the stated policy of AID with regard to the utilization of U.S. and other flag vessels to carry commodities shipped under Title II, Pub.L. 480.

In late 1985, at the time when defendants are accused of unlawfully diverting Title II, P.L. 480 commodities from Great Lakes ports, the stated policy of AID regarding "the utilization of U.S. and other flag vessels" was expressed in an August 3, 1984 letter from M. Peter McPherson, Administrator of AID, to Merril D. Marxman, Deputy Director for Commodity Operations, United States Department of Agriculture. This letter articulated the following AID policy:

We now request that you follow a policy of attempting to ensure that an absolute fifty percentum of all Title II cargo will be shipped on U.S.-flag vessels on a calendar year basis. This should be done by attempting to make up at other port ranges all tonnage shipped out of the Great Lakes, for which U.S.-flag ships were not available ... Cargo purchase and port allocation decisions will continue to be based on lowest landed cost, however, and cargo allocated to the Great Lakes will not be diverted to other coastal ranges.

III. The Challenged Cargo Diversions.

The underpinnings of this litigation stem from the decision of companies operating U.S.-flag vessels not to service the Great Lakes ports. Consequently, most shipments from Great Lakes ports are transported on foreign-flag vessels. The parties agree that if U.S.-flag vessels would choose to service these ports, they would be entitled to at least 50%...