Summary of a Recent
Judicial Development in
Administrative Law

Milk Handlers' and Producer's
Claims Dismissed

Gaby R. Jabbour
National AgLaw Center Research Assistant

Summary of Decision

In Northwest Independent Producers Ass'n v. Veneman, 312 F.Supp.2d 23 (D. D.C. 2004), the United States District Court for the District of Columbia held it lacked subject matter jurisdiction over claims brought by milk handlers because the handlers failed to exhaust their administrative remedies in accordance with the Agricultural Marketing Agreement Act of 1937 (AMAA), 7 U.S.C. §§ 601-614, 671-674. The court also held that it lacked subject matter jurisdiction over claims brought by a milk producer. See id. at 26.

Background

Four cooperatives of dairy farmers and the Northwest Independent Producers Association (NWI) challenged a regulatory action of the Secretary of the United States Department of Agriculture that altered "the mechanism by which price values for various classes of milk are determined under the . . . [AMAA] . . . ." Id. at 24. The dairy cooperatives also acted as milk "handlers." See id. NWI was a milk producer and did not own or operate any milk processing facilities. See id.

Arguments

The Secretary argued the dairy cooperatives were precluded from seeking judicial review because they had failed to exhaust their administrative remedies. See id. The Secretary also argued that the district court lacked subject matter jurisdiction over NWI because the AMAA does not provide producers a right of judicial review. See id. The dairy cooperatives asserted that they had exhausted their administrative remedies since an administrative proceeding would have been "'chimerical and futile.'" Id. at 25 (citation omitted).

Analysis and Holdings

The court first considered whether the dairy cooperatives' claims should be dismissed for failure to exhaust administrative remedies. See id. It explained that the AMAA "requires handlers to petition the Secretary, have a hearing, and receive a ruling from the Secretary" before seeking judicial review. See id. The court determined that the dairy cooperatives' assertion that they had exhausted their administrative remedies was without merit. See id. It added that in Block v. Community Nutrition Institute, 467 U.S. 340 (1984) the Supreme Court stated that "'Congress unequivocally directed handlers first to complain to the Secretary'" and that it was "'clear that Congress intended judicial review of market orders issued under the Act ordinarily be confined to suits brought by handlers in accordance with . . . [the AMAA].'" Id. (citation omitted). The court further stated that

Community Nutrition Institute involved a suit by consumers, but the Supreme Court's rationale that "[a]llowing consumers to sue the Secretary would severely disrupt this complex and delicate administrative scheme [and] would provide handlers with a convenient device for evading the statutory requirement that they first exhaust their administrative remedies" applies equally here. In this case, handlers attempt to circumvent the plain statutory language by joining with a producer even they have not exhausted their administrative remedies. Plaintiffs freely admit this is the case . . . . This attempt to bootstrap the claims of handlers who have failed to exhaust to the claims of another party is precisely at issue in Commodity Nutrition Institute and is prohibited. The . . . handler plaintiffs' claims must be dismissed for lack of subject matter jurisdiction.

Id. (citations omitted).

The court next considered whether it had subject matter jurisdiction over NWI's claim. See id. at 26. The court explained that this issue was also determined in large measure by Community Nutrition Institute. See id. It stated that

the Supreme Court observed that Congress channelled [sic] disputes concerning marketing orders to the Secretary in the first instance because it believed that only he has the expertise necessary to illuminate and resolve questions about them. Had Congress intended to allow consumers to attack provisions of marketing orders, it surely would have required them to pursue the administrative remedies provided in . . . [the AMAA] as well. The restriction of the administrative remedy to handlers strongly suggests that Congress intended a similar restriction of judicial review of market orders.

Id. (citations omitted).

The court stated that this rationale applied to producers as well and that "the inclusion of producers in the administrative process but their exclusion from the provisions enabling judicial review is the type of omissions that indicate a specific Congressional intent to omit." Id. It added that

[t]his omission is attributed to Congressional intent that handlers be "relied upon to challenge agency disregard of the law." In the present case, this would be sufficient to determine that NWI cannot seek judicial review. NWI is joined by four handlers, showing a clear interest by those parties intended by Congress to challenge the agency's actions.

Id. (citations omitted). See also id. at 26-27 (discussing applicability of Stark v. Wickard, 321 U.S. 288 (1944) plaintiffs' claims)).

The case was decided on April 6, 2004; this summary was posted July 14, 2004.