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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 7, 2008 Decided April 3, 2009

No. 07-5403

HEIN HETTINGA, ET AL.,

APPELLANTS

v.

UNITED STATES OF AMERICA,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 06cv01637)

Alfred W. Ricciardi argued the cause for appellants. With

him on the briefs was John F. Cooney.

Nicholas Bagley, Attorney, U.S. Department of Justice,

argued the cause for appellee. With him on the brief were

Gregory G. Katsas, Acting Assistant Attorney General, Jeffrey

A. Taylor, U.S. Attorney, and Michael S. Raab, Attorney. R.

Craig Lawrence, Assistant U.S. Attorney, entered an

appearance.

Charles M. English Jr. was on the brief for amici curiae

Dairy Institute of California, et al. in support of appellee.

USCA Case #07-5403 Document #1174029 Filed: 04/03/2009 Page 1 of 13
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Before: ROGERS, TATEL, and KAVANAUGH, Circuit Judges.

Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge: Hein and Ellen Hettinga, owners of

Sarah Farms, and co-owners with their son Gerben of GH Dairy,

appeal the dismissal of their complaint challenging the

constitutionality of two amendments to the Agricultural

Marketing Agreement Act (“AMAA”). The Hettingas alleged

that the amendments, which subjected certain large producerhandlers of milk to contribution requirements applicable to milk

handlers, were invalid as a bill of attainder and a violation of

equal protection and due process. The question on appeal is

whether the Hettingas were required to exhaust administrative

remedies before filing suit against the United States. We hold

that exhaustion was neither jurisdictionally nor prudentially

required. The plain text of the exhaustion requirement in the

AMAA does not apply to constitutional challenges to the

AMAA itself, as distinct from challenges to regulatory orders

and attendant obligations. Because the Hettingas’ objections do

not involve an alleged defect in a marketing order and the

Secretary lacks the power to provide a remedy, requiring

exhaustion as a prudential matter would not protect

administrative agency authority or advance judicial efficiency.

Accordingly, we reverse.

I.

The milk business is highly regulated by the Secretary of

Agriculture pursuant to the AMAA, 7 U.S.C. §§ 601-674. See

Edaleen Dairy, LLC v. Johanns, 467 F.3d 778, 779 (D.C. Cir.

2006). The Secretary issues milk marketing orders that regulate

payments made from milk handlers (processors and distributors)

to milk producers (farmers). Id. In order to protect producers

from variations in prices, handlers are required to pay into a pool

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for milk bought from producers; the funds in the pool are

distributed on a pro rata basis to the producers. Id.; Block v.

Cmty. Nutrition Inst., 467 U.S. 340, 341-43 (1984).

Until 2005, the Secretary had exempted “producerhandlers” — i.e., dairy farms that produce, process, and

distribute milk within a single vertically-integrated operation —

from the pooling requirements and pricing restrictions of milk

marketing orders. See Edaleen Dairy, 467 F.3d at 780. This

gave market power to the producer-handlers who could afford

to undercut the prices charged by participants in the pooling

system, but most producer-handlers were small family

operations that had little effect on the market. Id. Some

producer-handlers grew quite large, however, and the Secretary

initiated a formal rulemaking to determine whether to change

the status of producer-handlers in two regions, including the

Arizona-Las Vegas marketing area in which Sarah Farms is

located. Id. As a result, in 2006 the Secretary promulgated a

rule requiring producer-handlers that produced over 3 million

pounds of fluid milk per month within a marketing area to pay

into the producer settlement fund if they sold milk at a price

higher than that paid by handlers to producers. Id.; Milk in the

Pacific Northwest and Arizona-Las Vegas Marketing Areas:

Order Amending the Orders, 71 Fed. Reg. 9430 (Feb. 24, 2006)

(codified at 7 C.F.R. §§ 1124.10, 1124.71, 1131.10, 1131.71).

Sarah Farms is a producer-handler. Its owners, the

Hettingas, are also partners with their son, Gerben, in GH Dairy,

a handler dairy in Arizona that sells milk exclusively in

California. On March 15, 2006, the Hettingas sought an

injunction from the district court in the Northern District of

Texas against enforcement of the new rule, alleging that it was

arbitrary and capricious and that the Secretary lacked authority

over producer-handlers that sell only milk produced from their

own cows. Another large producer-handler sought an injunction

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1

 The MREA amended section 608c(5) of the AMAA to add,

as relevant here, subparagraphs M and N. Subparagraph M,

“Minimum Milk Prices for Handlers,” provides:

 (i) Application of minimum price requirements. –

Notwithstanding any other provision of this section,

a milk handler described in clause (ii) shall be subject

to all of the minimum and uniform price requirements

of a Federal milk marketing order issued pursuant to

this section applicable to the county in which the

plant of the handler is located, at Federal order class

prices, if the handler has packaged fluid milk product

route dispositions, or sales of packaged fluid milk

products to other plants, in a marketing area located

in a State that requires handlers to pay minimum

prices for raw milk purchases.

Exempted from Clause (i): is

from the district court of the District of Columbia, alleging the

Secretary lacked authority to promulgate the rule, and on appeal

this court held the producer-handler must first exhaust

administrative remedies. Edaleen Dairy, 467 F.3d at 783.

Before the Texas district court heard arguments in the Hettingas’

case, Congress amended the AMAA.

The Milk Regulatory Equity Act of 2005, Pub. L. No. 109-

215, 120 Stat. 328 (2006) (codified at 7 U.S.C. § 608c)

(“MREA”), codified the Secretary’s revocation of the exemption

for large producer-handlers in the Arizona-Las Vegas marketing

area, but not the Pacific Northwest area, and also made subject

to regulation producers like GH Dairy that are located in the

marketing area and sell milk to areas that are unregulated by

marketing orders, such as California. 7 U.S.C. § 608c(5)(M),

(N), note (2006) (“the Amendments”).1

 On September 22, 2006,

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(II) a producer-handler . . . for any month during

which the producer-handler has route dispositions,

and sales to other plants, of packaged fluid milk

products equally less than 3,000,000

pounds of milk . . . .

Subparagraph (N) provides:

Notwithstanding any other provision of this section,

no handler with distribution of Class I milk products

in the marketing area described in Order No. 131

shall be exempt during any month from any

minimum price requirement established by the

Secretary under this subsection if the total

distribution of Class I products during the preceding

month of any such handler’s own farm production

exceeds 3,000,000 pounds.

the Hettingas filed a complaint in the district court here alleging

that the Amendments are unconstitutional as a bill of attainder

and a denial of due process and equal protection because only

the Hettingas are subject to them. The district court dismissed

the complaint for lack of subject matter jurisdiction upon ruling

that “any challenge to the validity of the [Amendments] is

essentially a challenge to [an] order by the Secretary,” and the

Hettingas were therefore required to exhaust administrative

remedies. Hettinga v. United States, 518 F. Supp. 2d. 58, 61

(D.D.C. 2007). The Hettingas appeal, and our review is de

novo. Munsell v. Dep’t of Agric., 509 F.3d 572, 578 (D. C. Cir.

2007).

II.

Parties have long been required to exhaust administrative

remedies before seeking relief from federal courts, McCarthy v.

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Madigan, 503 U.S. 140, 144-45 (1992), either as a matter of

congressional command or to protect the authority of the agency

and to promote judicial efficiency, id. at 145. “Where Congress

specifically mandates, exhaustion is required. But where

Congress has not clearly required exhaustion, sound judicial

discretion governs.” McCarthy, 503 U.S. at 144 (1992)

(citations omitted). “Whether a statute is intended to preclude

initial judicial review is determined from the statute’s language,

structure, and purpose, its legislative history, and whether the

claims can be afforded meaningful review.” Thunder Basin

Coal Co. v. Reich, 510 U.S. 200, 207 (1994) (citation omitted).

Where exhaustion is required, there still is a separate

question whether the requirement is jurisdictional, and thus nonwaivable, or non-jurisdictional. In Avocados Plus Inc. v.

Veneman, 370 F.3d 1243 (D.C. Cir. 2004), this court, in

observing that the distinction between jurisdictional and nonjurisdictional exhaustion “is purely a question of statutory

interpretation,” id. at 1247, set a high bar for determining that a

statute requiring exhaustion is jurisdictional: “In order to

mandate exhaustion, a statute must contain ‘“[s]weeping and

direct” statutory language indicating that there is no federal

jurisdiction prior to exhaustion, or the exhaustion requirement

is treated as an element of the underlying claim.’” Id. at 1248

(quoting Weinberger v. Salfi, 422 U.S. 749, 757 (1975)). This

court will “presume exhaustion is non-jurisdictional unless

Congress states in clear, unequivocal terms that the judiciary is

barred from hearing an action until the administrative agency

has come to a decision.’” Id. (quoting I.A.M. Nat’l Pension

Fund Benefit Plan C v. Stockton Tri Indus., 727 F.2d 1204, 1208

(D.C. Cir. 1984)). 

Prudential exhaustion, in turn, “serves the twin purposes of

protecting administrative agency authority and promoting

judicial efficiency.” McCarthy, 503 U.S. at 145. Prudential

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2

 The AMAA provides in relevant part:

(A) Any handler subject to a[] [milk marketing] order

may file a written petition with the Secretary of

Agriculture, stating that any such order or any

provision of any such order or any obligation

imposed in connection therewith is not in accordance

with law and praying for a modification thereof or to

be exempted therefrom.

7 U.S.C. § 608c(15)(A).

exhaustion is not required where: (1) it would occasion undue

prejudice to subsequent assertion of a court action, for example

through excessive delay; (2) an agency may not be empowered

to grant relief, for example “because it lacks institutional

competence to resolve the particular type of issue presented,

such as the constitutionality of a statute” or because “an agency

may be competent to adjudicate the issue presented, but still lack

authority to grant the type of relief requested”; or (3) the agency

is biased. Id. at 146-49. 

A.

Section 608c(15)(A)2

 of the AMAA imposes a mandatory

administrative exhaustion requirement on milk handlers

“seeking to challenge the provisions of a milk marketing order.”

Edaleen Dairy, 467 F.3d at 782; see Block, 467 U.S. at 343;

United States v. Ruzicka, 329 U.S. 287 (1946). There is no

similar requirement for producers because the AMAA affords

them no administrative remedy. See Stark v. Wickard, 321 U.S.

288, 309 (1944); see also Ruzicka, 329 U.S. at 295. Where a

producer-handler sues in its capacity as a handler, as it does in

challenging the Secretary’s order subjecting it to price-pooling

obligations, it must exhaust. Edaleen Dairy, 467 F.3d at 783.

Thus, were the Hettingas challenging the Secretary’s milk

marketing order for the Arizona-Las Vegas area, they would be

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required to exhaust administrative remedies before filing a

lawsuit challenging those orders. Block, 467 U.S. at 346;

Ruzicka, 329 U.S. at 290; Edaleen Dairy, 467 F.3d at 782. The

Hettingas’ complaint, however, is directed at the Amendments

to the AMAA, not a milk marketing order. The complaint

alleges that “[t]he MREA, as adopted, contained provisions that

singled out and punished the Hettingas,” citing subparagraphs M

and N. Compl. ¶ 27. 

 The government advances two arguments that the Hettingas

are nonetheless challenging a milk marketing order rather than

the MREA, but neither is persuasive. First, the government

maintains that only such orders, and not the MREA, impose

affirmative obligations to pay fees. The MREA, in fact,

provides that large producer-handlers located in states regulated

by milk marketing orders that sell milk in unregulated states

“shall be subject” to the price and pooling obligations of the

marketing orders. 7 U.S.C. § 608c(5)(M). It further provides

that “no” large producer-handler in Arizona “shall be exempt”

from the relevant milk marketing order. Id. § 608(5)(N). The

price and pooling obligations for large handlers in the ArizonaLas Vegas milk marketing area preexisted enactment of the

MREA, and the MREA imposed those obligations on large

producer-handlers. To suggest, as the government offers, that

the MREA does not subject formerly exempt producer-handlers

to such obligations ignores the inexorable consequences of the

Amendments. The district court suggested that those

consequences are not inexorable because the Secretary could

relieve such obligations for the entire milk marketing area by

terminating the relevant order. Putting aside the unrealistic

nature of the premise, the Secretary could only repeal the

marketing order upon determining it no longer tends to

effectuate the policy of the AMAA. See 7 U.S.C. § 608c(4).

There is nothing to indicate that the Secretary considers the

marketing order to have outlived its purpose. Instead the

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Secretary’s promulgation of a rule abolishing prior exemptions

is consistent with imposing the marketing order obligations on

more producers, not fewer. In any event, the Hettingas are not

asserting that the marketing order is not effective in most

instances, only that they should be exempted from it. Under the

MREA, the Secretary no longer has authority to provide such an

exemption. It follows that the Hettingas are challenging

provisions of the MREA amending the AMAA and not the

underlying marketing order.

Second, the government maintains the MREA requires

implementation by the Secretary in order to become effective,

and therefore the Hettingas are challenging the Secretary’s

administrative action in effecting this implementation, rather

than provisions of the MREA. Section 2(d) of the MREA

provides:

EFFECTIVE DATE AND IMPLEMENTATION. —

The amendments made by this section take effect on

the first day of the first month beginning more than 15

days after the date of the enactment of this Act. To

accomplish the expedited implementation of these

amendments, effective on the date of the enactment of

this Act, the Secretary of Agriculture shall include in

the pool distributing plant provisions of each Federal

milk marketing order . . . a provision that a handler

described in subparagraph (M) of such section . . . will

be fully regulated by the order in which the handler's

distributing plant is located.

7 U.S.C. § 608c note. As an initial matter, the MREA only

requires addition of “a provision” in marketing orders with

regard to subparagraph (M), not subparagraph (N), which the

Hettingas also challenge. More importantly, section 2(d) does

not demonstrate that to become effective the MREA requires the

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Secretary first to issue an order. Instead, its text provides that

the MREA took effect on a precise date shortly after its

enactment. Id. Congress included the requirement that the

Secretary add “a provision” to marketing orders making clear

that large producer-handlers are subject to the orders in order to

“accomplish the expedited implementation of the[]

amendments,” and not to make those amendments take effect.

Id. Hence, the statutory text does not suggest the MREA has no

force and effect on its own. Rather, section 2(d) reflects that

large producer-handlers were automatically subject to the

marketing order on a date certain, and that the Secretary was to

ensure the rapid and smooth implementation of the MREA by

making clear to affected parties the obligations created by

operation of law upon enactment of the MREA. 

Although the AMAA exhaustion requirement is mandatory,

see Block, 467 U.S. at 344; Ruzicka, 329 U.S. at 290, and the

court has refused to excuse it, see Edaleen Dairy, 467 F.3d at

782, the court has never decided whether exhaustion is a

jurisdictional requirement inexcusable under any circumstances

or merely a mandatory requirement inexcusable under most. See

generally Munsell, 509 F.3d at 579. The court’s opinion in

Avocados Plus, 370 F.3d at 1248-50, holding that similar text in

a different statute failed to create a jurisdictional requirement,

perhaps suggests that AMAA exhaustion is best described only

as mandatory and not as something more. We need not reach

that question, however, because it is clear that the AMAA does

not create a jurisdictional exhaustion requirement for challenges

to the AMAA itself. 

The AMAA’s exhaustion requirement, supra n.2, plainly

is aimed only at marketing orders and attendant obligations, not

at challenges to the statute. The government’s suggestion that

the MREA is an “obligation imposed in connection” with an

order is resourceful but unpersuasive. The context of the

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reference to “any obligation imposed in connection” with

marketing orders indicates Congress was referring to obligations

imposed by the Secretary in the marketing orders, not a more

general statutory obligation to be subject to such administrative

orders. In Ruzicka, 329 U.S. at 289, for example, a handler

challenged the amount set by an order of the Secretary directing

payment into the producer settlement fund, according to terms

in a marketing order, as distinct from a challenge to the

marketing order itself. That is the situation captured by the

phrase “obligation imposed in connection” with a milk

marketing order. By contrast, the Hettingas challenge neither a

marketing order nor an attendant obligation but rather

Congress’s determination of which entities shall be subject to

the preexisting administratively determined obligations.

Because the AMAA’s exhaustion requirement does not apply to

such statutory challenges “in clear, unequivocal terms,”

Avocado Plus, 370 F.3d at 1248, the Hettingas’ constitutional

challenges to the Amendments were not subject to exhaustion as

a jurisdictional matter.

B.

Whether exhaustion should be required as a prudential

matter depends on “the structure of the statutory scheme, its

objectives, its legislative history, and the nature of the

administrative action involved.” Block, 467 U.S. at 345.

Moreover, “[n]otwithstanding [the institutional interests in

exhaustion], federal courts are vested with a ‘virtually

unflagging obligation’ to exercise the jurisdiction given them.”

McCarthy, 503 U.S. at 146 (quoting Colorado River Water

Conservation Dist. v. United States, 424 U.S. 800, 817-818

(1976)).

Requiring exhaustion of the Hettingas’ statutory challenges

would neither “protect[] administrative agency authority” nor

“promot[e] judicial efficiency.” Id. at 145. As the Supreme

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Court has observed, it would make little sense to require

exhaustion where an agency “lacks institutional competence to

resolve the particular type of issue presented, such as the

constitutionality of a statute” or where “an agency may be

competent to adjudicate the issue presented, but still lack[s]

authority to grant the type of relief requested.” Id. at 147-48.

Both conditions apply here. The Secretary lacks the power

either to declare provisions of the MREA unconstitutional, or to

exempt the Hettingas from the requirements of the milk

marketing order as imposed by the MREA. A constitutional

challenge to a statute “has generally been thought beyond the

jurisdiction of administrative agencies,” even if courts have

sometimes made exceptions to that rule. Thunder Basin, 510

U.S. at 215. Although the government suggests administrative

proceedings would provide the court with the benefit of the

Secretary’s expertise in the technical arena of milk pricing and

develop an appropriate administrative record, it is unclear what

benefit the Secretary could provide. The Hettingas’ complaint

relies on the structure of the MREA and its legislative history.

The discrete factual question of whether other parties are subject

to the Arizona-Las Vegas marketing order could as easily be

addressed in the district court. And whatever insight the

Secretary could provide regarding how the MREA furthers the

AMAA’s purposes does not directly address Congress’s goals

in enacting the MREA. 

A remand for the district court to conduct the “intensely

practical” balancing inquiry outlined in McCarthy is

unnecessary, for unlike in Avocados Plus and the cases it cited,

370 F.3d at 1251 (citing Montgomery v. Rumsfeld, 572 F.2d 250,

254 (9th Cir 1978); Ogden v. Zuckert, 298 F.2d 312, 317 (D.C.

Cir. 1961)), the issue of exhaustion has been briefed by the

parties and the suggestions favoring exhaustion are

unpersuasive. Accordingly, we reverse and remand the case to

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the district court for further proceedings on the Hettingas’

complaint.

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