Opinion ID: 184408
Heading Depth: 3
Heading Rank: 1

Heading: The Secretary's Finding is Agency Action Reviewable Under the APA

Text: 33 As a threshold matter, the Secretary argues that his finding is not agency action reviewable under the APA, but rather merely [a] determin[ation] that conditions in the Compact region met the condition set by Congress for implementation of the Compact. Brief for Appellee Secretary at 30. This is a distinction without a difference. The APA defines agency action to include agency rules, see 5 U.S.C. § 551(13), and defines an agency rule as the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy.... 5 U.S.C. § 551(4). The Secretary neither disputes that the APA's procedural requirements for informal rulemaking were satisfied, see 5 U.S.C. § 553, nor explains why his Amplified Decision should not be understood as a rule implementing congressional policy. We see no meaningful distinction between the delegation at issue here and the many acts of contingent legislation passed by Congress over recent decades. Through such contingent legislation, Congress enacts a policy (in this case, consent to the Compact), which is to be implemented upon the Executive's finding of the conditions specified by Congress (in this case, a compelling public interest in the Compact region). Clearly, the Secretary's finding and his corresponding authorization of the Compact is a rule reviewable under the APA's arbitrary and capricious standard. 34 2. The Secretary's Finding of a Compelling Public Interest in the Compact Region is Not Arbitrary and Capricious 35 Under familiar and well-established principles, the Secretary's finding must be upheld as long as the Secretary examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a 'rational connection between the facts found and the choice made.'  State Farm, 463 U.S. at 43, 103 S.Ct. at 2866 (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 246, 9 L.Ed.2d 207 (1962)); Republican Nat'l Comm. v. Fed. Election Comm'n, 76 F.3d 400, 407 (D.C.Cir.1996) (APA's arbitrary and capricious standard of review is satisfied if the agency enables us to see what major issues of policy were ventilated ... and why the agency reacted to them as it did) (internal quotations omitted), cert. denied, --- U.S. ----, 117 S.Ct. 682, 136 L.Ed.2d 607 (1997). To meet this standard, the factors undergirding the Secretary's finding must be appropriate to the relevant context. In the instant case, four aspects of the relevant context are particularly noteworthy. 36 First, the Secretary was required to find a compelling public interest in the Compact region. See 7 U.S.C. § 7256 (Supp.1996). Thus, contrary to Appellant's arguments, how the situation of dairy farmers in New England compares to that of dairy farmers in the remainder of the country is largely irrelevant. Rather, an appropriate inquiry must focus on the Compact region measured in absolute, not relative, terms. 37 Second, it is significant here that Congress' consent to the Compact is for a very limited duration. Consent expires upon the completion of pending reforms of the federal scheme for regulating milk prices nationwide, rendering the Compact a transitional, interim measure. See id. (providing that Congress' consent shall terminate concurrent with the Secretary's implementation of the dairy pricing and Federal milk marketing order consolidation and reforms under section 7253 of this title). 38 Third, it is also important to bear in mind that, under the disputed legislation, the Secretary is not authorized to implement any particular regulatory measure, but, rather, to determine whether the Compact Commission should be allowed to regulate milk prices in the Compact region. Appellant argues that the Secretary erred in failing to give due weight to the possibility that increased milk prices might burden low-income families in the Compact region. However, any weighing of this factor must take into account the governance structure of the Commission, for it will be the Commission's actions, not the Secretary's, that will affect consumer prices. Significantly, the Commission is composed of equal numbers of representatives from each Compact state--those which are primarily dairy-consuming states as well as those which are primarily dairy-producing states. Compact art. III, § 4. In addition, at least one representative from each state must be a consumer representative, id., a two-thirds vote of the Commission is required to raise farm-gate prices, and each state is subject to a Compact regulation increasing farm-gate prices only if the state's delegation votes for the measure. Compact art. III, § 5. 39 Finally, the record clearly identifies a strong consensus within the Compact states that the preservation of family dairy farms is of vital importance to the region's economic and environmental interests in a number of ways. Thus, although the availability of a sufficient supply of milk from large-scale farmers--even in the event that local family farmers go out of business--is a relevant inquiry in assessing whether there is a compelling public interest, it must be balanced against this countervailing factor of a strong regional desire to maintain family dairy farms. 40 Within this overall context, the Secretary's finding of a compelling public interest within the Compact region was reasonably supported by the following key factors: (1) a principal objective of the Compact is to preserve family farms in the Compact region; (2) family dairy farmers in the region are under severe financial stress; and (3) the Compact will effectively preserve family dairy farms during the transitional period pending reform of the national scheme for regulating milk prices, at which time congressional consent will expire. These factors, in turn, were reasonably supported by the record before the Secretary. See MIF II, 967 F.Supp. at 571 n. 8 (citing portions of the record supporting key factors relied on by the Secretary). 41 Prior to this case, the Secretary, in reviewing milk prices pursuant to his authority under the AMAA, found that it would not be in the public interest to raise farm-gate prices in New England. See 58 Fed.Reg. 12,634 (1993). Appellant argues that this prior decision cannot be squared with the decision under attack here. We disagree. First, the question addressed by the Secretary in the instant case is not whether farm-gate prices should be increased, but whether the Compact Commission should be authorized to raise prices during the transitional period pending reform of the national price-regulation scheme. Notably, the factors relevant to a price determination in a federal milk marketing order under the AMAA and those considered by the Commission under the Compact are not identical. Compare 7 U.S.C. §§ 602, 608c(18) (1994) with Compact arts. I, IV, §§ 1, 9(e), (f). Moreover, individual states already possess the authority to regulate prices above the AMAA floor. See United Dairy Farmers, 335 F.Supp. at 1013. In a region in which individual state regulation is impracticable because of the small geographic area and the interrelationships among neighboring states, the Compact simply gives the New England region similar authority. Thus, permitting state governments to collaborate in setting farm-gate prices above the AMAA price floor is hardly incompatible with the objectives of the AMAA. In any event, even if the Secretary were deciding directly whether prices should be raised, it is well-established that he would not be bound by his prior decision, so long as the decision under review is well-reasoned. See, e.g., DIRECTV, Inc. v. FCC, 110 F.3d 816, 826 (D.C.Cir.1997); National Audubon Soc'y v. Hester, 801 F.2d 405, 408 (D.C.Cir.1986). 42 Furthermore, the fact that the Secretary considered possible negative consequences of authorizing the Compact does not render his finding invalid; rather, this merely demonstrates that the Secretary realized that the compelling public interest standard is a high hurdle and weighed factors on every side. In particular, the Secretary's concern that the Compact might result in higher retail prices for fluid milk in the Compact region does not invalidate his finding. The Secretary noted this concern, but, while expressing some uncertainty as to how the Commission would implement the Compact, he ultimately assumed that the Commission would be sensitive to consumer needs and thus that any rise in milk prices would not be so great as to offset the compelling public interests warranting authorization of the Compact. See Amplified Decision, 62 Fed.Reg. at 14,880. The reasonableness of this assumption is amply supported by the Compact's structural requirements designed to protect consumer interests, described above. As an additional safeguard to ensure that the Compact is implemented with sensitivity to all affected persons and interests, the Secretary offered the Commission the assistance of the Department of Agriculture to achieve this goal. Id. 43 Finally, the Secretary's initial emphasis on a perceived authority to revoke the Compact, followed by his acknowledgment that he lacks such revocation authority, is not determinative of the question before us. The Secretary first stated, in his Amplified Decision, that, [g]iven the shifting nature of the compelling interest test, the Department strongly believes that the authority to withdraw or revoke its authorization is an essential element of any decision which finds that a compelling public interest exists. 62 Fed.Reg. at 14,880. In an Addendum to that decision, published approximately one week later, the Secretary recognized that he may have inadvertently created the impression that it would have been impossible for [him] to authorize implementation in the absence of revocation authority and clarified that, [i]n fact, ... [his] finding of compelling public interest was based on a broad array of factors which [he] discussed in [the Amplified Decision and] was not contingent upon the existence of revocation authority. 62 Fed.Reg. at 16,539. 44 The Secretary's mistaken belief that he could revoke authorization of the Compact, should he determine that changing conditions warranted revocation, does not render his decision invalid in light of the demanding compelling public interest standard. In his Amplified Decision, the Secretary concluded that given current conditions authorization of the Compact was in the compelling public interest of the Compact region. 62 Fed.Reg. at 14,880. Rather than attempt to predict precisely how relevant conditions might play out in the future, the Secretary simply planned to revoke his authorization should changing conditions warrant. See id. (Facts and circumstances that may currently justify authorization may subsequently change to the extent that a compelling public interest no longer exists in the Compact region.). However, when pushed to clarify whether--even without revocation authority and without being able to predict with certainty how relevant conditions might change--he anticipated that authorization nevertheless would be in the compelling public interest of the Compact region, the Secretary clarified that authorization was still warranted. See Addendum, 62 Fed.Reg. at 16,539. On the record at hand, we have no good reason to question this predictive judgment. 45 Under the arbitrary and capricious standard of review, an agency's predictive judgments about areas that are within the agency's field of discretion and expertise are entitled to particularly deferential review, as long as they are reasonable. International Ladies' Garment Workers' Union v. Donovan, 722 F.2d 795, 821-22 (D.C.Cir.1983) (citations omitted). The question of whether permitting the Compact Commission to override federal farm-gate prices pending the reform of the national milk pricing scheme would be in the compelling public interest of the Compact region implicates the Secretary's expertise in the regulation of milk prices. We find that the Secretary's predictive judgment on this point is reasonable, notwithstanding his confusion over the authority to revoke.