Summary of a Recent
Judicial Development in
Administrative Law

D.C. Circuit Vacates, Remands Challenge
to Dairy Assistance Program

Harrison M. Pittman
Staff Attorney

Summary of Decision

In Milk Train, Inc. v. Veneman, 310 F.3d 747 (D.C. Cir. 2002), the D.C. Circuit held that a federal district court lacked subject matter jurisdiction to consider a challenge to the manner in which the USDA Secretary implemented a dairy subsidy program because the Secretary's action was "committed to agency discretion by law" in accordance with § 701(a)(2) of the Administrative Procedures Act (APA). The D.C. Circuit further held that another of the operations' challenges to the Secretary's action was not precluded from judicial review by the federal district court because the authorizing statute "affords a 'statutory reference point' by which the court is able to review the Secretary's determination . . . ." Milk Train, 310 F.3d at 752.

Background

In 1999 Congress appropriated 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,'" of which $200 million was to be made available to dairy producers "'in a manner determined by the Secretary.'" Id. at 749 (citations omitted). The Secretary issued regulations that directed each farm's payment under the 1999 legislation to be based on its 1997 or 1998 milk production and that capped the maximum eligible production level at 26,000 cwt. See id. The 26,000 cwt production cap caused the bulk of the funds to be directed at smaller dairy farms. See id. In 2000 Congress appropriated $125 million in assistance to dairy producers "'to compensate producers for economic losses incurred during 1999'" and directed the Secretary to disburse the funds "'in a manner determined by the Secretary.'" Id. (citations omitted). In implementing the 2000 legislation, the Secretary extended the regulations issued to implement the 1999 legislation and "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 . . . [the 1999 legislation] do not need to reapply. Additional payments will be issued based upon the original application.'" Id. (citation omitted). Several large dairy operations (Milk Train) brought an action in federal district court challenging the Secretary's regulations that implemented the 2000 legislation. See id. at 750. The district court rejected Milk Train's challenge, and Milk Train appealed to the D.C. Circuit. See id.

Arguments

Milk Train raised two principle arguments before the D.C. Circuit. First, it argued 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." Id. Second, Milk Train argued that the Secretary's implementation of the 2000 legislation was in error because the Secretary used the same production data to disburse funds under the 2000 legislation as she did to disburse funds under the 1999 legislation, an action that contradicted the legislative requirement that producers be compensated "for economic losses incurred during 1999." Id. at 752.

Analysis and Holdings

The D.C. Circuit explained that APA § 701(a)(2) "exempts agency action from judicial review 'to the extent that [it] is committed to agency discretion by law.'" Id. at 751. It also explained that in Lincoln v. Vigil, 508 U.S. 182 (1993), the Court held that "an agency's decision to cease allocating funds from a lump-sum appropriation, which contained no restrictions on use of the funds, for a program not mentioned in a statute or the agency's regulations, was committed to agency discretion and likewise unreviewable." Id. (citation omitted). It further explained that in Lincoln, "[t]he Court defined the scope of review precluded under § 701(a)(2) as turning on whether the statute 'is drawn so that a court would have no meaningful standard against which to judge the agency's exercise of discretion.'" Id. (citations omitted).

The court stated the following:

The Secretary maintains that the principle set forth in Lincoln . . . is not limited to lump-sum appropriations and would apply if the express conferral of discretion on the Secretary, as well as other characteristics of the administrative decision at issue, bring the funding for the . . . [2000 legislation] within § 701(a)(2). Insofar as Congress has left to the Secretary's sole judgment the determination of the manner for providing assistance to dairy farmers, we hold that the district court lacked jurisdiction to review Milk Train's challenge to the 26,000 cwt cap on eligible production. . . . [T]he plain language in the 2000 . . . Act indicates that Congress left to the Secretary the decision about how the moneys for 1999 economic losses could best be distributed consistent with its general policy to provide emergency assistance to dairy farmers "[a]s soon as practicable." The statute thus provides no relevant "statutory reference point" for the court other than the decisionmaker's own views of what is an "appropriate" manner of distribution to compensate for 1999 losses. . . . Accordingly, we vacate the district court's opinion on the issue of the 26,000 cwt cap for lack of subject matter jurisdiction.

Id. (citations omitted).

Turning to Milk Train's second argument, the court stated that

By providing in the 2000 Appropriations Act that the moneys are for 'economic losses incurred during 1999,' . . . Congress limited the Secretary's authority to disburse funds. This limitation affords a 'statutory reference point' by which producers are eligible to receive funds under the 1999 program. Hence, we hold that the district had jurisdiction of Milk Train's base-year challenge.

Id.

Stating that it could not adjudicate this issue based on the insufficiency of the administrative record, the court instructed the district court to remand the matter to the Secretary. See id. at 755-76.

The case was decided on November 15, 2002; this summary was posted May 17, 2004.