White Eagle Co-Op. Ass'n v. Conner, No. 07-3545.

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtRipple
Citation553 F.3d 467
PartiesWHITE EAGLE COOPERATIVE ASSOCIATION, et al., Plaintiffs-Appellants, v. Charles F. CONNER, Acting Secretary, United States Department of Agriculture, et al., Defendants-Appellees.
Docket NumberNo. 07-3545.
Decision Date12 January 2009
553 F.3d 467
WHITE EAGLE COOPERATIVE ASSOCIATION, et al., Plaintiffs-Appellants,
v.
Charles F. CONNER, Acting Secretary, United States Department of Agriculture, et al., Defendants-Appellees.
No. 07-3545.
United States Court of Appeals, Seventh Circuit.
Argued May 15, 2008.
Decided January 12, 2009.

[553 F.3d 469]

John H. Vetne (argued), Raymond, NH, for Plaintiffs-Appellants.

Marvin Beshore (argued), Harrisburg, PA, John H. Lloyd, IV, Plews, Shadley, Racher & Braun, South Bend, IN, Daniel L. Bella, Office of the United States Attorney, Hammond, IN, Samantha Chaifetz (argued), Department of Justice, Washington, DC, Charles M. English, Jr. (argued), Ober, Kaler, Grimes & Shriver, for Defendants-Appellees.

Before RIPPLE, KANNE and WILLIAMS, Circuit Judges.

RIPPLE, Circuit Judge.


The plaintiffs brought this action against the United States Department of Agriculture ("USDA" or "the Government"), challenging the USDA's rulemaking process and a resulting amendment to the Mideast Milk Marketing Order. The plaintiffs alleged violations of the Agricultural Marketing Agreement Act of 1937, 7 U.S.C. § 601 et seq.; the USDA's rules of practice, 7 C.F.R. § 900.1 et seq.; the Administrative Procedure Act, 5 U.S.C. § 551 et seq.; the Regulatory Flexibility Act, 5 U.S.C. § 601 et seq.; and the Fifth Amendment's Due Process Clause. A number of dairy producers who supported the regulatory changes intervened to defend the amended rule and the adoption process. The district court granted summary judgment to the USDA and the intervenors on all counts. For the reasons set forth in this opinion, we affirm the judgment of the district court.

I
BACKGROUND

White Eagle Cooperative Association is a cooperative made up of milk producers. Together with the other milk producers (collectively, "White Eagle"), they challenge the USDA's rulemaking process and the resulting change to the Mideast Milk Marketing Order. At the outset, in order to assist our readers in understanding White Eagle's challenges, we must discuss briefly the dairy industry and its market forces as well as the relevant regulatory structure.1

A. The Dairy Industry

In the dairy industry, dairy farmers, also referred to as "producers," sell raw

553 F.3d 470

milk to "handlers." Handlers, in turn, prepare the milk product for resale to consumers or serve as intermediaries to those who do. Consumer dairy products, such as fluid milk beverages, ice cream and cheese, can all be produced from "Grade A" or "fluid grade" raw milk. In the consumer market, however, milk beverages generally command a higher price than non-fluid products, which are known also as "manufactured dairy products." Consequently, the market into which dairy farmers sell their product values more highly (and pays a premium price for) Grade A milk ultimately used to produce beverage milk. This market premium based on end use creates an incentive among producers to divert their Grade A product to fluid milk handlers. Were this incentive not controlled, lower market prices would result from the increased supply, thereby harming milk production revenues.2

The dairy industry also is characterized by daily and seasonal fluctuations in supply and demand. Consumer demand fluctuates significantly on a daily basis, primarily due to consumer buying patterns. On the other hand, milk production, while relatively constant on a daily basis, does vary seasonally: In fall and winter months, less milk is produced; in spring and summer months, more milk is produced. Consequently, to meet consumer demand in the winter, producers must maintain large herds, but these herds result in a surplus of milk in the summer months. Given the perishable nature of milk, handlers historically were able to obtain summer supplies at bargain prices.

B. The Regulatory Scheme

In the wake of the Great Depression, in an attempt to address these unique industry characteristics, Congress enacted various provisions governing the dairy industry as part of the Agricultural Marketing Agreement Act of 1937 ("the AMAA"). The driving purpose of the AMAA was "to remove ruinous and self-defeating competition among the producers and permit all farmers to share the benefits of fluid milk profits according to the value of goods produced and services rendered." Zuber v. Allen, 396 U.S. 168, 180-81, 90 S.Ct. 314, 24 L.Ed.2d 345 (1969). The AMAA, as amended, thus ensures that producers receive a uniform minimum price for their product, regardless of the end use to which it is put.

To accomplish this objective, the statute contains several mechanisms. First, it authorizes the Secretary to classify milk according to its end use and to establish minimum prices for each end-use classification. See 7 U.S.C. § 608c(5)(A). Second, it authorizes the Secretary to establish a uniform minimum price, termed the "blend price," based on a weighted average of all units of production of classes of milk sold to handlers associated with a marketing area. See id. Third, it requires handlers to pay producers the blend price, regardless of the end use to which the milk will be put. See id. § 608c(5)(B). Fourth, it authorizes a method for adjustments in payments among handlers so that the final amount paid by each handler equals the value of the milk that the handler has purchased, according to the minimum prices established. See id. § 608c(5)(C). As we shall explain more precisely in the following paragraphs, the provisions attempt to promote orderly milk-marketing by maintaining minimum prices for producers

553 F.3d 471

and limiting the competitive effects of excess supply of Grade A milk.

Although it protects producers, the AMAA regulates handlers only. Pursuant to the AMAA directives, the Secretary has classified milk into the following classes of utilization: Class I milk includes fluid milk processed and bottled as a beverage; Class II milk includes soft milk products such as cottage cheese, sour cream, yogurt and ice cream; Class III includes hard cheese and cream cheese; and Class IV includes raw milk used for butter and dry milk powder. As directed by the AMAA, the Secretary has established a uniform pricing scheme for each of these classes of milk, as well as the average blend price. Handlers governed by milk-marketing orders must pay producers this uniform blend price. The process of blending the prices of the different classes of milk on a monthly basis has come to be known as "pooling."

This uniform minimum pricing is intended to reduce the incentive that producers otherwise would have to divert all fluid milk to Class I handlers and, literally, to flood that market. As the system operates, dairy producers within a marketing area receive the guaranteed uniform blend price for their milk, regardless of the end use to which it is put. Because the uniform price is a weighted average, some handlers pay producers less for the milk they purchase than its market value while other handlers pay more. Handlers who pay less to producers must make compensating payments into the producer settlement fund; handlers who pay more to producers may withdraw compensating payments from the fund. Thus, within the regulatory scheme, handlers ultimately pay an amount equal to the utilization value of the milk they purchase. This simplified example of the regulatory scheme by the United States District Court for the District of Connecticut is helpful:

Suppose Handler A purchases 100 units of Class I (fluid) milk from Producer A at the minimum value of $3.00 per unit. Assume further that Handler B purchases 100 units of Class II (soft milk products) milk from Producer B at the minimum value of $2.00 per unit, and that Handler C purchases 100 units of Class III (hard milk products) milk from Producer C at $1.00 per unit. Assuming that this constitutes the entire milk market for a regulatory district, during this period the total price paid for milk is $600.00, making the average price per unit of milk $2.00. Thus, under the regulatory scheme, Producers A, B, and C all receive $200.00 for the milk they supplied, irrespective of the use to which it was put. However, Handler A must, in addition to the $200.00 that it must tender to Producer A, pay $100.00 into the settlement fund because the value of the milk it purchased exceeded the regulatory average price. Along the same vein, Handler C will receive $100.00 from the settlement fund because it will pay Producer C more than the milk it received was worth.

Stew Leonard's v. Glickman, 199 F.R.D. 48, 50 (D.Conn.2001). The system of compensating payments into and out of the settlement fund thereby fulfills the AMAA requirement that "the total sums paid by each handler shall equal the value of the milk purchased by him at the prices fixed." 7 U.S.C. § 608c(5)(C).

The country is divided into regional milk-marketing areas, which are governed by different milk-marketing orders. White Eagle is part of the USDA's Mideast Milk Marketing Order ("Mideast Order"), which includes portions of Indiana, Ohio, Michigan, West Virginia, Kentucky and Pennsylvania. Milk marketing orders

553 F.3d 472

provide the details for fixing and enforcing minimum classified prices that regulated plants and handlers must pay for the milk they buy on a monthly basis. A marketing order defines "pool plants" in order to identify the plants that must pay classified prices and contribute to the revenue pool. See 7 C.F.R. § 1033.7. Similarly, marketing orders define "producer" and "producer milk" in order to identify the producers and the farm milk that may share in the market's blend price. See 7 C.F.R. §§ 1033.12, 1033.13. These rules are termed collectively "pooling standards." These standards determine whether a particular milk supply should be included in the calculation of the blend price and, relatedly, whether the producer of that milk supply is entitled to receive the blend price.

The regulation at issue here concerns, inter alia, "diversion limits." A...

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50 practice notes
  • Carlin v. Dairyamerica, Inc., No. 10–16448.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 11, 2013
    ...for the Agricultural Marketing Service (“AMS”). 7 C.F.R. § 2.79(a)(8)(viii) (2011); see also White Eagle Coop. Ass'n v. Conner, 553 F.3d 467, 482 (7th Cir.2009). As to each operative FMMO, there is a “market administrator” selected by the Secretary who is empowered, inter alia, to: (1) “[a]......
  • Carlin v. Dairyamerica, Inc., No. 10–16448.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 7, 2012
    ...the Agricultural Marketing Service (“AMS”). 7 C.F.R. § 2.79(a)(8)(viii) (2011); see also [688 F.3d 1121]White Eagle Coop. Ass'n v. Conner, 553 F.3d 467, 482 (7th Cir.2009). As to each operative FMMO, there is a “market administrator” selected by the Secretary who is empowered, inter alia, t......
  • Dominguez v. Quigley's Irish Pub Inc., No. 09–cv–2583.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • May 24, 2011
    ...and is therefore waived. See e.g., United States v. Collins, 604 F.3d 481, 488, n. 2 (7th Cir.2010); White Eagle Co-op. Ass'n v. Conner, 553 F.3d 467, 476 n. 6 (7th Cir.2009) (collecting cases); Fabriko Acquisition Corporation v. Prokos, 536 F.3d 605, 609 (7th Cir.2008); Thakore v. Universa......
  • US Citrus Sci. Council v. U.S. Dep't of Agric., Case No. 1:17–cv–00680–LJO–SAB
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • February 27, 2018
    ...small entities do not have statutory authority to challenge an agency action under the RFA. See White Eagle Co-op. Ass'n v. Conner , 553 F.3d 467, 477–81 (7th Cir. 2009) ; Cement Kiln Recycling Coal. v. EPA , 255 F.3d 855, 868–69 (D.C. Cir. 2001). In each of those cases, the Court concluded......
  • Request a trial to view additional results
49 cases
  • Carlin v. Dairyamerica, Inc., No. 10–16448.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 11, 2013
    ...for the Agricultural Marketing Service (“AMS”). 7 C.F.R. § 2.79(a)(8)(viii) (2011); see also White Eagle Coop. Ass'n v. Conner, 553 F.3d 467, 482 (7th Cir.2009). As to each operative FMMO, there is a “market administrator” selected by the Secretary who is empowered, inter alia, to: (1) “[a]......
  • Carlin v. Dairyamerica, Inc., No. 10–16448.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 7, 2012
    ...the Agricultural Marketing Service (“AMS”). 7 C.F.R. § 2.79(a)(8)(viii) (2011); see also [688 F.3d 1121]White Eagle Coop. Ass'n v. Conner, 553 F.3d 467, 482 (7th Cir.2009). As to each operative FMMO, there is a “market administrator” selected by the Secretary who is empowered, inter alia, t......
  • Dominguez v. Quigley's Irish Pub Inc., No. 09–cv–2583.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • May 24, 2011
    ...and is therefore waived. See e.g., United States v. Collins, 604 F.3d 481, 488, n. 2 (7th Cir.2010); White Eagle Co-op. Ass'n v. Conner, 553 F.3d 467, 476 n. 6 (7th Cir.2009) (collecting cases); Fabriko Acquisition Corporation v. Prokos, 536 F.3d 605, 609 (7th Cir.2008); Thakore v. Universa......
  • US Citrus Sci. Council v. U.S. Dep't of Agric., Case No. 1:17–cv–00680–LJO–SAB
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • February 27, 2018
    ...small entities do not have statutory authority to challenge an agency action under the RFA. See White Eagle Co-op. Ass'n v. Conner , 553 F.3d 467, 477–81 (7th Cir. 2009) ; Cement Kiln Recycling Coal. v. EPA , 255 F.3d 855, 868–69 (D.C. Cir. 2001). In each of those cases, the Court concluded......
  • Request a trial to view additional results

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