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Nick Koretoff, D/B/A Nick Koretoff Ranches, et al v. Thomas Vilsack

January 18, 2012

NICK KORETOFF, D/B/A NICK KORETOFF RANCHES, ET AL., PLAINTIFFS,
v.
THOMAS VILSACK, SECRETARY, UNITED STATES DEPARTMENT OF AGRICULTURE, DEFENDANT.



The opinion of the court was delivered by: Ellen Segal Huvelle United States District Judge

MEMORANDUM OPINION

In 2007, in response to Salmonella outbreaks in 2001 and 2004 that were linked to raw almonds, the United States Department of Agriculture (USDA) promulgated a rule requiring that almonds produced domestically be pasteurized or chemically treated against the bacteria. Almonds Grown in California; Outgoing Quality Control Requirements, 72 Fed. Reg. 15,021, 15,034 (Mar. 30, 2007) (codified at 7 C.F.R. § 91.442(b)) (the "Salmonella Rule"). Plaintiffs, California almond producers, brought suit against the Secretary of Agriculture in 2008 to challenge the Salmonella Rule. (Complaint, Aug. 9, 2008 [Dkt. No. 1]; First Amended Complaint, Dec. 5, 2008 [Dkt. No. 9].)

Pending before the Court are plaintiffs' and defendant's cross-motions for summary judgment. (See Plaintiffs' Motion for Summary Judgment, Aug. 8, 2011 [Dkt. No. 46] ("Pls.' Mot."); Defendant's Motion for Summary Judgment and Opposition to Plaintiffs' Motion for Summary Judgment, Sept. 15, 2011 [Dkt. No. 47] ("Def.'s Mot."); Plaintiffs' Opposition to Defendant's Motion for Summary Judgment and Reply in Support of Plaintiffs' Motion for Summary Judgment, Oct. 31, 2011 [Dkt. No. 51] ("Pls.' Response"); Defendant's Reply in Support of Defendant's Motion for Summary Judgment, Nov. 18, 2011 [Dkt. No. 54] ("Def.'s Reply").) For the reasons stated below, the Court will deny plaintiffs' motion for summary judgment and grant defendant's motion for summary judgment.*fn1

BACKGROUND

In a prior decision in this matter, the D.C. Circuit described the relevant background:

This case involves the Agricultural Marketing Agreement Act of 1937, a landmark piece of legislation that arose out of the farming catastrophe during the Great Depression. The AMAA authorizes the Secretary of Agriculture to promulgate marketing orders that regulate the production and sale of agricultural commodities. 7 U.S.C. §§ 601--674. It seeks to "avoid unreasonable fluctuations in supplies and prices" of various farm commodities. Id. § 602(4). The AMAA is currently applied to about three dozen agricultural commodities, such as milk, avocados, oranges, and peanuts. Agricultural marketing orders may dictate the "total quantity" of a regulated commodity sold in a particular region, as well as the "grade, size, or quality thereof." Id. § 608c(6)(A). . . .

In 1950, acting pursuant to the AMAA, the Secretary of Agriculture promulgated the California Almond Marketing Order, 7 C.F.R. pt. 981. The Almond Order has been amended often in the 60 years since. Among other things, the Order sets quality standards for commercially sold almonds and regulates the quantity of almonds that may be sold in a given year.

In the wake of two [S]almonella outbreaks in 2001 and 2004, the Secretary in 2007 issued [the Salmonella Rule] under the Almond Order.

The [Salmonella Rule] required the use of one of several approved methods for reducing [S]almonella bacteria in almonds, all involving either pasteurization or chemical treatment of nearly all almonds sold. 7 C.F.R. § 981.442(b). . . .

The current dispute arises primarily because the [Salmonella Rule] had the effect of largely eliminating the domestic raw almond market. [Plaintiffs] are California almond producers who grew raw almonds for domestic U.S. consumption. Because the [Salmonella Rule] devastated the market for domestic raw almonds, those producers allege that they lost both their expected profits from the premium price paid for raw almonds and the return on investments they had made in production equipment.

Koretoff v. Vilsack, 614 F.3d 532, 534--35 (D.C. Cir. 2010) ("Koretoff II") (emphasis added; citation omitted).

Plaintiffs' First Amended Complaint alleges that the Secretary exceeded his authority under the AMAA and the Almond Order when promulgating the Salmonella Rule (first and third causes of action); that the Salmonella Rule is void because it was promulgated by notice and comment rulemaking without a hearing and without being subject to a vote by almond producers (second cause of action); and that the Salmonella Rule is void because the Almond Order, under which the Rule was issued, was itself not lawfully promulgated (fifth cause of action).*fn2

STANDARD OF REVIEW

The Administrative Procedure Act, 5 U.S.C. §§ 701 et seq. ("APA"), "establishes a cause of action for those 'suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action.'" Id. at 536 (quoting 5 U.S.C. § 702). As relevant here, the APA requires a reviewing court to "hold unlawful and set aside agency action, findings, and conclusions" that are in excess of statutory authority, 5 U.S.C. § 706(2)(C), or "without observance of procedures required by law." Id. § 706(2)(D).

Under the APA, summary judgment "serves as the mechanism for deciding, as a matter of law, whether agency action is . . . consistent with the APA standard of review." Sierra Club v. Mainella, 459 F. Supp. 2d 76, 90 (D.D.C. 2006) (citing Richards v. INS, 554 F.2d 1173, 1177 & n.28 (D.C. Cir. 1977)). Accordingly, "when a party seeks review of agency action under the APA," the usual summary judgment standard does not apply and "the district judge" instead "sits as an appellate tribunal." Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001).*fn3

ANALYSIS

I. WAIVER

A central tenet of administrative law requires those who challenge agency action to raise their claims before the agency prior to bringing them in court. Nat'l Wildlife Fed'n v. EPA, 286 F.3d 554, 562 (D.C. Cir. 2002) ("[T]here is a near absolute bar against raising new issues- factual or legal-on appeal in the administrative context."). Where, as here, the challenged agency action followed notice and comment rulemaking, "issues not raised in comments before the agency are waived and this Court will not consider them." Id. There is no exception for lawsuits alleging that an agency has exceeded its statutory authority or committed a procedural error. See Lake Carriers' Ass'n v. EPA, 652 F.3d 1, 7 (D.C. Cir. 2011) ("'failure to raise a particular question of statutory construction before an agency constitutes waiver of the argument in court'" (collecting cases) (quoting Natural Resources Defense Council v. EPA, 25 F.3d 1063, 1074 (D.C. Cir. 1994)); Orion Reserves Ltd. P'ship v. Salazar, 553 F.3d 697, 707 (D.C. Cir. 2009) (reciting "'the well-settled premise that objections to agency proceedings must be presented to the agency in order to raise issues reviewable by the courts'" (some internal quotation marks ...


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