Milk Train, Inc. v. Veneman

• Decision Date: 15 November 2002
• Docket Number: No. 01-5310.,01-5310.
• Citation: 310 F.3d 747
• Parties: MILK TRAIN, INC., et al., Appellants, v. Ann M. VENEMAN, Secretary, United States Department of Agriculture, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 747

310 F.3d 747

MILK TRAIN, INC., et al., Appellants, v. Ann M. VENEMAN, Secretary, United States Department of Agriculture, Appellee.

No. 01-5310.

United States Court of Appeals, District of Columbia Circuit.

Argued October 10, 2002.

Decided November 15, 2002.

Appeal from the United States District Court for the District of Columbia (No. 00cv01121).

Benjamin F. Yale argued the cause for appellants. With him on the briefs were Kristine H. Reed, Donald M. Barnes, and Lowell H. Patterson III.

H. Thomas Byron III, Attorney, U.S. Department of Justice, argued the cause for appellee. With him on the brief were Roscoe C. Howard, Jr., U.S. Attorney, and Mark B. Stern, Attorney, U.S. Department of Justice.

Before: SENTELLE, ROGERS and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

Dissenting opinion filed by Circuit Judge SENTELLE.

ROGERS, Circuit Judge:

The question in this appeal is whether the Secretary of Agriculture's implementation of a 1999 subsidy program for milk producers was inconsistent with the statutory requirement that payments be made "for economic losses incurred during 1999." Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act 2000, Pub.L. No. 106-78, § 805, 113 Stat. 1135, 1179 (1999) [hereinafter "2000 Appropriations Act"]. The Secretary's regulations defined "eligible production" for purposes of determining how much money a producer could receive as "milk produced by cows in the United States and marketed commercially in the United States anytime during the 1997 and or 1998 calendar year subject to a maximum of 26,000 [hundred-weight ("cwt")] per dairy operation." 7 C.F.R. § 1430.502. Milk Train, Inc. and others representing thirty-one large milk producers in several states, appeal the grant of summary judgment upholding the Secretary's regulations. Milk Train contends that the regulations are contrary to a clear statutory mandate and that the Secretary arbitrarily denied assistance for losses attributable to production in excess of 26,000 cwt. Insofar as Milk Train challenges the 26,000 cwt cap, we vacate the district court opinion on that issue for lack of jurisdiction; otherwise we reverse and remand the case to the district court with instructions to remand the case to the Secretary.

I.

In the last three fiscal years (FY 1999 — FY 2001), Congress has appropriated money to be distributed by the Secretary of Agriculture to compensate dairy producers for losses they have sustained. We refer to the moneys appropriated as a milk producers' subsidy in the 1999 Appropriations Act as the 1998 Program; we refer to the moneys appropriated in the 2000 Appropriations Act as the 1999 program.

In the first year, Congress provided over $3 billion "for assistance to owners and producers on a farm ... to partially compensate [them] for the loss of markets for the 1998 crop of a commodity." Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Pub.L. No. 105-277, Division A, § 101(a), Tit. XI, § 1111(a), 112 Stat. 2681, 2681-44 (1998) [hereinafter "1999 Appropriations Act"]. In particular, Congress directed that $200 million of the moneys "shall be available to provide assistance to dairy producers in a manner determined by the Secretary." Id. § 1111(d). For the 1998 program, the Secretary promulgated regulations whereby the amount of each farm's payment would be based on 1997 or 1998 milk production, with a cap on the maximum eligible production level, approximately equivalent to a herd of 150 cows (or 26,000 cwt, which represents 2,600,000 pounds of milk). See 7 C.F.R. §§ 1430.502, .504,.506. A cost benefit analysis prepared by the Farm Service Agency ("FSA") on December 21, 1999, indicated that 76,771 milk producers that were in production at some time during the period October 2, 1998, through December 31, 1998, were sent checks in June 1999 based on a payment rate of 22.47897 cents per cwt, with a maximum single payment of $5,845.

In the second year, at issue here, Congress appropriated $325 million more to benefit livestock and dairy producers, again directing that the funds be disbursed "in a manner determined appropriate by the Secretary." 2000 Appropriations Act § 805. Congress directed that no less than $125 million (minus administrative expenses of $2.3 million) be in the form of assistance to dairy producers "to compensate producers for economic losses incurred during 1999." Id. §§ 825, 822. Waiving the notice and comment requirement for implementing regulations, Congress directed that the payments be made "as soon as practicable." Id. § 824(a). For the 1999 program, the Secretary extended the regulations for the 1998 program; she specifically extended sign-up for the subsidy program through February 28, 2002, with the proviso that "[d]airy operations that applied for and received payments under the [1998 program] do not need to reapply. Additional payments will be issued based upon the original application." 1999 Crop and Market Loss Assistance, 65 Fed.Reg. 7942, 7945 (Feb. 16, 2000). According to the FSA's cost-benefit analysis, the sign-up was extended to permit the 1,100 eligible commercial operations that did not enroll in the 1998 program to enroll in the 1999 program. Payments under the 1999 program for producers who had signed up for the 1998 program (or were eligible for that program) were based on the 1997 or 1998 production figures used for the 1998 program. 65 Fed.Reg. at 7945. Thus, producers who had signed up or were otherwise eligible for the 1998 program could receive 1999 funds, even if they did not produce in 1999. The final payment per cwt under the 1999 program was approximately $0.1405, with a maximum single payment of about $3,653.

Milk Train filed suit challenging the regulations for the 1999 program as arbitrary and capricious under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706(2)(A), and violative of the Non-Delegation, Takings, and Equal Protection Clauses of the Constitution. The district court, addressing cross-motions for summary judgment, viewed "[t]he essence of this controversy [to be] whether the Secretary exceeded her statutory authority by capping at 26,000 cwt the amount of milk production that would be eligible for financial assistance, the consequence of which was to bestow the bulk of the funding on smaller dairy farmers." The court granted judgment for the Secretary. As relevant here, the court ruled that it had jurisdiction because the 2000 Appropriations Act appropriating moneys for the 1999 program was not within the lump-sum appropriations exception to APA jurisdiction under Lincoln v. Vigil, 508 U.S. 182, 113 S.Ct. 2024, 124 L.Ed.2d 101 (1993), and contained intelligible principles, including Congress' general policy "to compensate dairy farmers suffering from declining milk prices." The court rejected Milk Train's argument that the Secretary's 26,000 cwt cap was arbitrary and capricious. The court did not expressly address Milk Train's argument that the Secretary's use of data from an earlier year to allocate payment of 1999 moneys was arbitrary and capricious.

II.

On appeal, Milk Train contends that the Secretary's regulations are invalid because they ignore the clear statutory mandate to compensate dairy producers for "economic losses incurred during 1999" and arbitrarily denied assistance for losses attributable to production in excess of 26,000 cwt. Pointing to the different statutory language that Congress used in appropriating funds for the 1999 program (referring to "producers" rather than "owners and producers" and to "economic losses" rather than "market losses," and to a different year), Milk Train contends that while Congress did not reinstate the 1998 program the Secretary did, by extending the regulations for the 1998 program, with the result that payments for 1999 economic losses were based on the same production data and paid to the same producers who qualified for the 1998 program rather than to those who operated in 1999. As to the 26,000 cwt cap, Milk Train contends that the phrase "in the manner authorized by the Secretary" was "not an expression in the alternative to compensation for the producers' 1999 economic losses" and did not authorize the Secretary "to deny compensation on substantial portions of the economic losses incurred in 1999 by some producers in order to increase the amounts received by others."

A.

We first address the district court's jurisdiction to review the Secretary's regulations. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 95, 118 S.Ct. 1003, 1012-13, 140 L.Ed.2d 210 (1998). According to the Secretary, her determination of the manner of providing the moneys to dairy producers is not qualified "in any way," Appellee's Br. at 15, and reflects a congressional judgment that the Agriculture Department, as the expert agency charged with implementing the nation's farm policy, is best suited to determine how the moneys should be used to provide assistance to the nation's dairy farmers. Whether viewed as agency action committed to agency discretion by law under the APA, 5 U.S.C. § 701(a)(2), or as an express delegation to make all decisions necessary to carry out Congress' broad purpose, the Secretary contends that judicial review of the Secretary's implementation decision is "extremely circumscribed."

Section 701(a)(2) of the APA exempts agency action from judicial review "to the extent that [it] is committed to agency discretion by law." The Supreme Court in Heckler v. Chaney, 470 U.S. 821, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985), held that an agency decision not to institute enforcement proceedings was unreviewable. Id. at 831, 105 S.Ct. at 1655-56. Such a decision, the Court explained, involved a "complicated balancing of a number of factors which are peculiarly within [an agency's] expertise." Id. Drawing on Heckler, the Court held in Lincoln v. Vigil that an agency...