Callaway v. Block

• Decision Date: 21 June 1985
• Docket Number: No. 84-8433,84-8433
• Citation: 763 F.2d 1283
• Parties: W.E. CALLAWAY, Jr., et al., Plaintiffs-Appellants, v. John R. BLOCK, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1283

763 F.2d 1283

W.E. CALLAWAY, Jr., et al., Plaintiffs-Appellants, v. John R. BLOCK, et al., Defendants-Appellees.

No. 84-8433.

United States Court of Appeals Eleventh Circuit.

June 21, 1985.

Martha A. Miller, Atlanta, Ga., James B. Franklin, Statesboro, Ga., for plaintiffs-appellants.

Charles Rothfeld, U.S. Dept. of Justice, Solicitor General's Office, Washington, D.C., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Georgia.

Before RONEY and HILL, Circuit Judges, and TUTTLE, Senior Circuit Judge.

JAMES C. HILL, Circuit Judge:

Appellants/plaintiffs, eight Georgia peanut farmers, appeal a district court order denying their request for a preliminary injunction barring implementation of the regulations currently promulgated as 7 C.F.R. Part 729 ("the 1984 regulations"). These regulations were adopted by the Secretary of Agriculture in 1984 to implement the provisions of the Agriculture and Food Act of 1981, Pub.L. 97-98, 95 Stat. 1213, ("the 1981 Act"), that authorize a reduction of the national peanut quota. We affirm the district court's order, and also reach the merits of some of appellants' claims, holding that the regulations are not inconsistent with the 1981 Act and that implementation of the regulations does not violate due process. ¹

I. BACKGROUND

A. The 1981 Act and Implementing Regulations

For some time, the United States has had a national peanut quota. Peanut farmers throughout the country are given allotments of the quota, based primarily on the peanut production history of their land. The federal government provides guaranteed price supports for these quota peanuts, in an effort to provide peanut farmers with some income protection and consumers with consistent prices.

The 1981 Act amended prior acts governing peanut quotas by, among other provisions, reducing the national peanut quota in measured steps from 1982 through 1985. Specifically, the quota was to be reduced from 1,440,000 tons for 1981 to 1,200,000 tons for 1982, 1,167,300 tons for 1983, 1,134,700 tons for 1984, and 1,100,000 tons for 1985. 7 U.S.C. Sec. 1358(k). In the Act, Congress directed the Secretary of Agriculture ("the Secretary") to accomplish these yearly reductions by "insofar as practicable and on such fair and equitable basis as the Secretary may by regulation prescribe" reducing the allotments made to the following peanut farms: (1) those that have not produced their allotted quota because of inadequate tillable land ("category I farms"); (2) those that, during two of the three previous years, did not produce their allotted quota for any reason other than natural disaster ("category II farms"); and (3) those where the quota was produced but by another operator on a farm to which the allotted quota was transferred by lease two of the previous three years ("category III farms"). ² Id. Sec. 1358(l )(2)(A) (emphasis added). The Act also states that to achieve the reduction, "reductions ... shall be made first under clause (i) [which deals with category I farms] ... and, if necessary, under clause (ii) (I) [which deals with category II farms] and then clause (ii)(II) [which deals with category III farms]...." Id. If these reductions are not sufficient to meet the mandatory quota reductions for any given year, the Act directs that the balance be made up "by such further reduction in ... quotas for farms ... as the Secretary determines to be fair and equitable." Id. Sec. 1358(l )(2)(C). Those farms falling into this catch-all category, which covers potentially all peanut farms, are referred to herein as category IV farms.

In March 1982, the Secretary proposed regulations to implement that year's reduction. These regulations adopted what appellants call a "category-by-category" reduction plan. Under that plan, the quota allotments of category I farms were reduced first, then those of category II farms, then category III farms, and if further reduction were still required to meet that year's reduction goal, then category IV farms (i.e., all other peanut farms). Pursuant to this plan, many category III farmers would have lost their quota allotments entirely.

Members of the congressional conference committee that had reviewed the 1981 Act objected to these proposed regulations. They maintained the regulations did not implement the reductions on a "fair and equitable basis," as required by the 1981 Act, since placement in category III would have to be based on the 1979-81 crop years. Because placement would thus be based on pre-Act crop activity, farmers who leased their quotas prior to passage of the Act had no opportunity to preserve their 1982 allotments by farming their quota allotments on their own land in two of the three years prior to 1982. For this reason, members of Congress urged that category III farmers be given some sort of special treatment, at least for 1982. The Secretary ultimately agreed that it would not be "fair and equitable" to implement the category-by-category approach in 1982, and he withdrew the proposed regulations.

The regulations finally adopted in 1982 provided that reductions be made from category I farms first, then category II farms, and then, if further reduction were necessary, the remaining reductions would be taken across-the-board from categories III and IV farms combined, so that the loss would be spread evenly among farmers in both categories.

In 1983, the Secretary again initially proposed regulations adopting the category-by-category approach, only to withdraw them and actually implement regulations adopting the across-the-board scheme. The Secretary decided, in the end, it would not be "fair" and "equitable" to adopt the category-by-category approach in 1983 either, since, inter alia, the statutory categorization scheme for 1983 was based on 1980-82 crop activity and thus farmers who leased their quotas prior to enactment of the 1981 Act had no opportunity to preserve their quota allotments in 1983 by farming their quota allotments on their own farms two of the three years prior to 1983.

The regulations promulgated in 1984--which are the subject of this lawsuit--adopted the category-by-category approach for crop years 1984 and 1985. The Secretary explained that the previous special treatment given category III farmers had not been "intended to abrogate the clear statutory schedule of priorities for reduction of poundage quotas as set forth in [the 1981 Act]," 49 Fed.Reg. 14283, and that the justification for the special treatment no longer existed:

[b]ecause 'category 3' quotas were not broken out separately for reduction purposes for two crop years [that is, 1982, and 1983], no reductions in 'category 3' quotas will now result strictly from cropping activities which preceded the enactment in 1981 of the statutory provisions with respect to quota reductions.... Also, the effect of quota losses on local communities where there are high concentrations of 'category 3' quotas is reduced since the amount of quotas considered to be in 'category 3' for the 1984 crop is considerably less in all major peanut growing regions than at the time the policy with respect to the 1982 and 1983 quota reductions was adopted.

Id. The Secretary also concluded that a continuation of the 1982-1983 across-the-board approach "would clearly be inequitable to quota holders in 'Category 4' " because "under the priorities set forth [in the 1981 Act] quota holders in 'Category 4' were in the most protected category...." Id.

Category III farmers were never given personal notice that the category-by-category approach would be implemented in 1984 and 1985. However, the Secretary indicated in the 1982 and 1983 regulations that the across-the-board approach applied for those years only. ³

B. District Court Proceedings

Appellants, who are all category III farmers, faced drastic reductions in or elimination of their quota allotments under the 1984 regulations. They filed suit in the United States District Court for the Southern District of Georgia against the United States, the Department of Agriculture and various federal officials. They claimed that (1) the Secretary abused his discretion in promulgating the 1984 regulations because the regulations conflict with the 1981 Act; and (2) under the 1984 regulations, their peanut quota allotments would be taken without due process of law in violation of the fifth amendment. They asked the district court to set aside the 1984 regulations, and enjoin the Secretary from making any reductions in peanut quota allotments until a "fair and equitable" method for implementing the regulations could be devised and until the Secretary provided personal notice of the planned reductions.

Appellants moved for a temporary restraining order barring implementation of the 1984 regulations or any other regulations that would "reduce the peanut quota allotments in a manner which is void for conflict with the statute." Record at 85. The district court treated the motion as one for a preliminary injunction, and held a hearing on the motion. He denied the request, holding that plaintiffs were not likely to succeed on the merits because (1) the Secretary did not abuse his discretion; and (2) there is no due process violation since plaintiffs do not have a protected property interest in the peanut quota allotments and, even if they did, publication of the regulations in the Federal Register provided adequate notice to satisfy due process. The court also held that appellants failed to establish that they would suffer irreparable harm should a preliminary injunction not be granted, and that a preliminary injunction against implementation of the 1984 regulations would run counter to the important public policy of reducing the peanut price support program.

II. DISCUSSION

To obtain a preliminary injunction, appellants must show that (1) there is a substantial likelihood that they will prevail on the merits at trial; (2) they...