US v. Sunny Cove Citrus Ass'n

• Decision Date: 18 April 1994
• Docket Number: No. CV-F-91-311 OWW,CV-F-91-202 OWW and CV-F-92-5253 OWW.,CV-F-91-311 OWW
• Parties: UNITED STATES of America, Plaintiff, v. SUNNY COVE CITRUS ASS'N, Defendant. DIST. I INDEPENDENT HANDLERS, Plaintiffs, v. Edward MADIGAN, Secretary of Agriculture, Defendant. SUNNY COVE CITRUS ASS'N et al., Plaintiffs, v. Michael ESPY, Secretary of Agriculture, Defendant.
• Court: U.S. District Court — Eastern District of California

854 F. Supp. 669

UNITED STATES of America, Plaintiff, v. SUNNY COVE CITRUS ASS'N, Defendant.

DIST. I INDEPENDENT HANDLERS, Plaintiffs, v. Edward MADIGAN, Secretary of Agriculture, Defendant.

SUNNY COVE CITRUS ASS'N et al., Plaintiffs, v. Michael ESPY, Secretary of Agriculture, Defendant.

Nos. CV-F-91-311 OWW, CV-F-91-202 OWW and CV-F-92-5253 OWW.

United States District Court, E.D. California.

April 18, 1994.

Catherine E. Basham, Asst. U.S. Atty., Fresno, CA, for U.S. Dept. of Agriculture, Clayton Yeutter, Secretary of Agriculture, Jack Parnell, Deputy Secretary of Agriculture, Jo Ann Smith, Asst. Secretary of Agriculture, Dan Haley, Administrator, Agricultural Marketing Services.

Daniel Bensing, Asst. U.S. Atty., Fresno, CA, for U.S., USA ex rel. Sequoia Orange Co.

Thomas E. Campagne, Clifford C. Kemper, The Law Firm of Thomas E. Campagne, Fresno, CA, for Sunny Cove Citrus Ass'n, District I Independent Handlers, Wileman Bros., Bee Sweet, Kings River Packing, Golden Farms Express, Inc., Douglas Hazeltine, Keith Gardner, David Hines.

James A. Moody, Washington, DC, for District I Independent Handlers, Abe-El Produce, Associated Citrus, Cal Valley Citrus, Citrus Producers, Inc., Dimare Co., Ecology Sound Farms, Fancher Creek Packing, J.C. Packing, Johnston Farms, Pandol Bros. Packing, Pleasant Valley Ranch, Rancho Del Sol, Sequoia Orange Co., Tanner Citrus, Valley Cove Ranch, Vista Del Mar Packing, Sun West, Lisle Babcock, Marvin L. Wilson, Carl A. Pescosolido, Jr., Sequoia Enterprises, Exeter Orange.

Brian C. Leighton, Clovis, CA, for District I Independent Handlers, Carol Mawood, Cecelia Packing, Eco Farms, M and CP Farms, Randolph Marketing, Suntreat Growers & Shippers, Johnston Farms, Dennis Johnston, Don Johnston, Jerry J. Johnston, World Wide Citrus, Bob Mawood, Stephen C. Biswell, Stanley Gillette, Stephen W. Miller, Lisle Babcock, Sequoia Orange Co., Saticoy Lemon Ass'n, Martin L. Wilson, Carl A. Pescosolido, Jr., Sequoia Enterprises, Sequoia Orange Co., Exeter Orange Co.

Robert Wilkinson, Donald R. Fischbach, Kendall Manock, Douglas M. Larsen, Lisa Marie Martin, Baker, Manock & Jensen, Fresno, CA, for Defendants Sunland Packing House Co., San Joaquin Citrus, Central Valley Citrus, Grand View Heights Citrus Assn., Lindsay Fruit Ass'n, Ivanhoe Citrus Ass'n, Tri County Citrus Ass'n, H & R Citrus, Baird-Neece Packing Corp., Sierra Citrus Ass'n, Klink Citrus Ass'n, Golden State Citrus, Magnolia Citrus Ass'n, Visalia Citrus Ass'n, Strathmore Co-op. Assn., Harding & Leggett, Inc., and Dole Citrus, Dick Isreal, Vernon Noell, M.L. Thompson, Eldon Smith, Amos Fonville, Paul Storey, Robert Miller, Richard Peltzer, Blue Banner Citrus, Sunkist Growers, Helen Nicholas, Richard Nicholas, Frank Cement, Ronald Patterson, Ernest Thiesse, Tony Giefer, Harding & Leggett, Inc., Orange Cove-Sanger Citrus Ass'n, Porterville Citrus Assn., Inc.

Hilary Ann Chittick, Gerald D. Vinnard, Thomas, Snell, Jamison, Russell & Asperger, Fresno, CA, for Millwood Packing, Inc., David Krause, Sunland Packing House, Stark Packing Corp.

Steven R. Williams, Crowe, Williams, Jordan & Richey, Visalia, CA for Suntreat Growers & Shippers, Inc., Thomas A. Roberts, Ted Dinkler, Jr., William Slattery, Chester Stansell, Baker Brothers Sunkist Packing House, Oxnard Lemon Co., Kaweah Citrus Assn.

Dale V. Cunningham, Sunkist Growers, Inc., Sherman Oaks, CA, Sunkist Growers, Inc.

Ronald C. Peterson, Heller, Ehrman, White & McAuliffe, Los Angeles, CA, Sunkist Growers, Inc.

Michael H. Bierman, Jeffrey D. Wexler, Tuttle & Taylor, Los Angeles, CA, for Sunkist Growers, Inc., H & R Citrus Assn., Helen Nicholas, Richard Nicholas.

Harold A. Malkin, U.S. Dept. of Justice, Civil Div., Washington, DC, for USA ex rel. Sequoia Orange Co.

James S. Krzyminski, Washington, DC, for National Council of Farmers Cooperatives.

Robert M. Dowd, Griswold, LaSalle, Cobb, Dowd & Gin, Hanford, CA, for Orange Cove-Sanger Citrus Assn.

Richard J. Papst, Chain, Younger, Lemucchi, Cohn & Stiles, Bakersfield, CA, for Cal Citrus Packing Co., David Gauntlett, H.A. Luallen, Frank Rector.

MEMORANDUM OPINION AND ORDER RE SUNNY COVE'S MOTIONS FOR SUMMARY JUDGMENT

WANGER, District Judge.

I. PROCEEDINGS

On September 1, 1993, Sunny Cove Citrus Ass'n ("SC") filed the present motions for summary judgment in each of the above unconsolidated cases.¹ SC contends that certain marketing orders, 7 C.F.R. §§ 907 & 908, governing California navel and Valencia oranges, and the facilitating regulations are invalid because the Secretary of Agriculture ("the Secretary") failed to comply with the requirements of the Administrative Procedure Act ("APA") in promulgating amendments to and regulations authorized by those marketing orders.

The U.S. filed its opposition on October 25, 1993. SC replied on November 8, 1993. On November 15, 1993, the Court heard oral argument on the motions and requested supplemental briefs on the following three issues: (1) the Secretary's source of authority for promulgation of disputed regulations for the 1985-1992 period; (2) the history and effect of the Secretary's rule making procedures in amending the marketing orders; and (3) whether harmless error applies.

Supplemental briefs were filed on November 22, 1993. In addition, the Orange Cove-Sanger Citrus Association filed an Amicus Curiae brief.

II. INTRODUCTION

A review of the applicable administrative law principles and unique statutory scheme under which these disputes arise is necessary to decide these motions.

Procedural Requirements of the Administrative Procedure Act

Under the APA, if a statute authorizes an agency to issue regulations which affect the legal rights of parties, the agency is required to follow the informal rule making procedures of 5 U.S.C. § 553. See Rodway v. United States Dep't of Agriculture, 514 F.2d 809, 813-14 (D.C.Cir.1975) ("Rodway"). Informal rule making often is referred to as "notice and comment" rule making. Section 553(b) provides:

(b) General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law. The notice shall include —

(1) a statement of the time, place, and nature of the public rule making proceedings;

(2) reference to the legal authority under which the rule is proposed; and

(3) either the terms or substance of the proposed rule or a description of the subjects and issues involved.

Section 553(c) provides:

(c) After notice required by this subsection, the agency shall give interested persons an opportunity to participate in the rule making through submissions of written data, views, or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise statement of their basis and purpose.

5 U.S.C. § 553; see Rodway, 514 F.2d at 817 ("after consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose" that justifies the rules in light of the comments received).

An exception to these notice and comment procedures applies when "notice and public procedure ... are impracticable, unnecessary, or contrary to the public interest." 5 U.S.C. § 553(b)(3)(B). To invoke this exception, an agency must incorporate a brief statement of its reasons for avoiding public participation in the final rule.

However, under 553(c), when the delegating statute requires that rules be made on the record after opportunity for an agency hearing, the agency must proceed under §§ 556 & 557 with formal rule making, the equivalent of trial. See generally, K. Davis, ADMINISTRATIVE LAW OF THE EIGHTIES § 6.3 ("ADMINISTRATIVE LAW"). Formal rule making may be required even if a hearing "on the record" is not expressly called for by the delegating statute. See generally id. at pp. 456-57. Conversely, a delegating statute that calls for a hearing does not necessarily require a trial-type proceeding under §§ 556 & 557. See, e.g., United States v. Florida East Coast Ry., 410 U.S. 224, 93 S.Ct. 810, 35 L.Ed.2d 223 (1973) (statute that provided an agency "may, after hearing" issue rules, did not trigger formal rule making).

Under § 557(b), the agency may omit the initial or recommended decision and issue a tentative agency decision for public comment. See ADMINISTRATIVE LAW § 6.3; § 557(b). Under 556(d), the agency may substitute written submissions for oral testimony. See ADMINISTRATIVE LAW § 6.3; § 553(d).

Apart from the specific APA rule making procedures, intermediate rule making procedural models have developed which permit effective public participation while avoiding trial-type formal rule making proceedings. See E. Gellhorn and R. Levin, ADMINISTRATIVE LAW AND PROCESS IN A NUTSHELL, p. 330. This type of rule making is referred to as hybrid rule making. However, courts should not impose rule making procedures beyond those provided for by statute. See Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978).

Judicial Review of Agency Action

5 U.S.C. § 706 of provides:

To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of the agency action. The reviewing court shall:

(1) compel agency action unlawfully withheld or unreasonably delayed; and

(2) hold unlawful and set aside agency action, findings, and conclusions found to be —

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;

(D) without

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