Petition — Block v. Community Nutrition Institute

Supreme Court brief1983

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» 2 Office -S: Premie Court, US.

Poe a: 2

No. SEP 16 i983

gu the Supreme Court uf the 4 ALAM iste Sto

OCTOBER TERM, 1983

JOHN R. BLOCK, SECRETARY OF AGRICULTURE, and

UNITED STATES DEPARTMENT OF AGRICULTURE,

PETITIONERS

COMMUNITY NUTRITION INSTITUTE, ET AL.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

REx E. LEE

Solicitor General

J. PAUL MCGRATH

Assistant Attorney General

KENNETH S. GELLER

Deputy Solicitor General

KATHRYN A. OBERLY

Assistant to the Solicitor General

LEONARD SCHAITMAN

SUSAN SLEATER

Attorneys

Department of Justice

Washington, D.C. 20580

(202) 633-2217

ORES ATOR Nh ae meme, meena emcee

QUESTIONS PRESENTED

The Agricultural Marketing Agreement Act of

1937 provides that a handler regulated by a market

order issued pursuant to the Act may challenge that

order in an administrative proceeding before the Sec-

retary of Agriculture (7 U.S.C. 608c(15)(A)). The

Act further provides that if a handler is dissatisfied

with the Secretary’s decision, he may then obtain

judicial review of that decision in the appropriate

federal district court (7 U.S.C. 608&¢(15)(B)). The

questions presented are:

1. Whether this statutory scheme for reviewing

market orders precludes judicial review of milk mar-

ket orders at the behest of ultimate consumers of milk

products, who are neither regulated handlers nor pro-

ducers, the direct beneficiaries of the market orders.

2. Whether ultimate consumers of milk products,

who assert interests that are either antithetical to the

interests Congress sought to promote in the Act or

are not implicated by the market orders challenged in

this litigation, lack standing to maintain this lawsuit.

(1)

PARTIES TO THE PROCEEDING

In addition to the parties shown by the caption,

Deborah Harrell, Ralph Desmarais, Zy Weinberg, and

Joseph Oberweis were plaintiffs in the district court

and appellants in the court of appeals, and are re-

spondents here. The National Milk Producers Federa-

tion, the Associated Milk Producers, Inc., and the Cen-

tral Milk Producers Cooperative were granted leave

to intervene as defendants in the district court, ap-

peared as appellees in the court of appeals, and, pur-

suant to Rule 19.6 of the Rules of this Court, are re

spondents in this Court.

TABLE OF CONTENTS

I I Pacetcsatieseshietrencnnndanneniomocianiakenatesentbslicbnigadsons

Jurisdiction

Statutory provisions involved ...............2.....-ccccee: seseeeeeeeeeee

Statement ...

Reasons for granting the petition —.......00000000.0eecee

Conclusion ...

Appendix A

Appendix B

Appendix C

Appendix D

Appendix E

Appendix F

Appendix G

Appendix H

Cases:

SOreeeee errr reer terre i ee i eee ir eee eee ee

errr Pree eee rier rr rr errr rt eee

PPereerrr tree re Pree rere rr irr rr errr ere eee tet es

PPreerre errr eee reer rir errr eee eee ee ee ee eee eee

OPPer rrr errr rr Ceti eee eee ieee eer reer ree eee ed

TABLE OF AUTHORITIES

Associated General Contractors of California, Inc.

v. California State Council of Carpenters, No. 81-

a ede

Association of Data Processing Service Organiza-

tions, Inc. v. Camp, 397 U.S. 150 .....2000000..c ee.

Barlow V. Collins, 397 U.S. 159 ................-:ccccseceeeeeee

US. 820 soi dieeaichtcheppineneenichinin

eee

Great American Federal Savings & Loan Ass’n v.

BEDOUIN, GE Tile WUE ncniccinsitiskevatialicenhinticestadisislaiituetpions

H.P. Hood & Sons, Inc. vy. Du Mond, 386 U.S. 525..

(m1)

non NO SS

Cases—Continued : Page

Illinois Brick Co. v. Illinois, 431 U.S. 720 ................ 19

Morris Vv. Gressette, 482 U.S. 491 0.0.0.2... 19

Nebbia v. New York, 291 U.S. 502 .......................... 3

Rasmussen V. Hardin, 461 F.2d 595, cert. denied,

Sls UE cinakeerabncroons 8, 9, 11-12, 14, 15, 19, 20, 23

South Carolina v. Block, Nos, 83-1426 and 83-1511

DE is Th, SII ekictiicectenatidlids crncetbensetaloesas 28

Stark v. Wickard, $21 U.S. 288 ......................-c0-<2-- 20

Suntex Dairy v. Bergland, 591 F.2d 1068 ........ 8, 12, 15, 27

Switchmen’s Union of North America v. National

Mediation Board, 320 U.S. 297 ....2..........cccceceeeeeee 19

Taz Analysts & Advocates v. Blumenthal, 566 F.2d

180, cert. denied, 434 U.S. 1086 -..............000....... 10

Train V. Colorado Public Interest Research Group,

ey Ee ee SE ee 26

United Siates v. American Trucking Associations,

NS Ea a ieee ye 26

United States v. Rock Royal Co-operative, Inc., 307

AN MI coorraete anak ceadigeciahdasicin:demiidistcig thes baishuccanndoiienumahiaetin 3

United States v. Ruzicka, 329 U.S. 287 ....12, 18, 17, 18, 19

Valley Forge Christian College v. Americans United

for Separation of Church and State, Inc., 454

OE A ESS OR Neate rene ELS 9 21, 22, 29

Warth v. Seldin, 422 U.S. 490 ...2........0....:ccccccceeeeee 21, 27, 28

Zuber Vv. Allen, 806 U.S. 168 .............-cc..eccccsccccecccssee 8, 12

Constitution, statutes, regulation and rule:

oP 2 RR AA ee ere ener 22, 30

Agricultural Marketing Agreement Act of 1937,

7 U.S.C. 601 et seq. ............ pace i alscciek chearuassionmesiieiil 2

1 _CRESIRRRPEEER Raen Seaetes SCC el 29, 69a

Ss | Re en eee CRE .24, 69a

A eS IIE caicsiscsensseeracieciactehinncnneentseeanctinsticbigal 23, 24, 69a

i * 7 (5 | | REO Rao eeaeeme sebceel 25, 26, 70a

jf He Oe 2, 3, 23, 71a

eo Ue. EOE siatincsntisigilabesibaaale 16, 71a

Be Be I cietetnihitcncrernnntesntiiltioiplinanteenanints 6, 73a

Fe I ihe kdiceconvsiesienniiedinssieenbabeiingiteledain 6, 74a

7 U.S.C. 608c(5) (A) ......... 4, 74a

ek | | Renee Bannan eer 4, 27, Tba

7 U.S.C. 608 (8) 6, 23, 84a

Constitution, statutes, regulation and rule—Continued: Page

Oe a acccseneroammetaicl 6, 23, 87a

i 9, 90a

he Ee 7, 18, 90a

ho EE a SA 7. 18, 90a

Oe is I oi oceseccpeceninecstinacemseone 6, 9la

Oe Re IE CIID irecteceeteesensecenssevecnetcrnnes 6, 23, 9la

a semsenadeinnboupanuns 27

cece 3

Sup. Ct, R.:

I en ceennnienenmin 7

REE SR a a 2

Miscellaneous:

ee 4

eS OE. eae 4

irs ts I COD csc cceesncacecscecceceneenents 3, 4, 5,7

45 Fed. Reg. (1980):

I cmenieeueicinnslabn 8, 30

SRE RE Oe a 6

8 ENS tS a a A 30

NESS a ee 80

4 )__ 5 vee 28

H.R. Rep. No. 1241, 74th Cong., Ist Sess. (1935) .... 26, 27

H.R. Rep. No. 1927, 88d Cong., 2d Sess. (1954)...... 29

S. Rep. No. 1011, 74th Cong., 1st Sess. (1935)......3, 18, 23

Iu the Supreme Court of the United States

OCTOBER TERM, 1983

No.

JOHN R. BLOCK, SECRETARY OF AGRICULTURE, and

UNITED STATES DEPARTMENT OF AGRICULTURE,

PETITIONERS

COMMUNITY NUTRITION INSTITUTE, ET AL.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

The Solicitor General, on behalf of the Secretary of

Agriculture and the United States Department of

Agriculture, petitions for a writ of certiorari to re-

view the judgment of the United States Court of Ap-

peals for the District of Columbia Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals (App. A, infra,

la-44a) is reported at 698 F.2d 1239. The opinion of

the district court (App. G, infra, 53a-67a) is unre-

ported.

JURISDICTION

The judgment of the court of appeals (App. B,

infra, 45a-46a) was entered on January 21, 1983. A

petition for rehearing was denied on April 19, 1983

(App. E, infra, 50a).' On July 8, 19838, the Chief

1The government’s petition for rehearing was denied on

March 28, 1983 (App. C, infra, 47a). The time for filing a

(1)

Justice extended the time for filing a petition for a

writ of certiorari to and including September 16,

1983. The jurisdiction of this Court is invoked under

28 U.S.C. 1254(1).

STATUTORY PROVISIONS INVOLVED

The relevant provisions of the Agricultural Mar-

keting Agreement Act of 1937, 7 U.S.C. 601 et sey.,

are set forth in Appendix H, infra, 69a-95a.

STATEMENT

This case concerns the jurisdiction of a federal dis-

trict court to entertain a challenge to market orders

by unregulated ultimate consumers of milk products

who are nowhere included in the statutory scheme for

administrative and judicial review of market orders

and whose asserted interests are antithetical to the

interests Congress sought to promote in the statute.

1. a. Section 8c of the Agricultural Marketing

Agreement Act of 1987 (“AMAA”), 7 U.S.C. 608c,

authorizes the regulation of numerous agricultural

commodities and products, including milk. One of

Congress’ primary purposes in enacting the AMAA

was to end destructive price competition in the dairy

industry, the structure of which “is so eccentric that

economic controls have been found at once necessary

and difficult.” H.P. Hood & Sons, Inc. v. Du Mond,

336 U.S. 525, 529 (1949).

The ruinous competition among dairy farmers that

concerned Congress centered on fluid milk sales be-

cause such sales bring higher prices than do sales of

milk for “surplus” use, i.e., use in manufacturing

petition for a writ of certiorari did not begin to run, however,

until the court of appeals denied the petition for rehearing

filed by the intervenor-appellees. See Rule 20.4 of the Rules

of this Court.

butter, cheese, and other milk products. See Zuber v.

Allen, 396 U.S. 168, 172-176 (1969); United States

v. Rock Royal Co-operative, Inc., 307 U.S. 533, 548-

550 (1939); Nebbia v. New York, 291 U.S. 502, 515-

518, 530 (1934).* One of the principal tools Congress

used to correct this problem and to guard against its

recurrence was the market order system authorized

by 7 U.S.C. 608¢. The “essential purpose of [the mar-

ket orders regulating commodities is] to raise pro-

ducer prices.” S. Rep. No. 1011, 74th Cong., 1st Sess.

3 (1935). With respect to milk, such orders provide

a method by which the benefits of the desirable fluid

milk market and the burdens of the surplus milk mar-

ket are fairly and proportionally shared among all

dairy farmers supplying a given market. See Nebbia

v. New York, supra, 291 U.S. at 517-518.

Under the authority of the Act, the Secretary has

issued 46 milk market orders, each encompassing a

different region of the country (see 7 C.F.R. Parts

1001-1139). The orders establish minimum prices

that handlers (those who process the raw milk) must

pay to producers (dairy farmers). The prices are de-

termined according to a classification system based on

the end use to which the raw milk is put by the han-

dlers. See 44 Fed. Reg. 65990 (1979). If the milk is

used in hard manufactured products such as cheese,

? Fluid milk must be consumed relatively quickly after it is

produced because it is a naturally fertile field for the growth

of bacteria. If it cannot be marketed quickly in fluid form, it

must be manufactured into cheese, butter, powder, or other

milk products that can be stored for longer periods. Milk

that cannot be disposed of in fluid form is referred to in the

trade as “surplus,” and it commands a lower price than fluid

milk because it is manufactured into products that compete

directly with similar products from across the nation. See

App. A, infra, 8a.

Ree

butter, dry whole milk, or nonfat dry milk, a handler

pays at least the Class II minimum price (ibid.).°

For milk used as fluid milk, a handler pays the

higher, Class I minimum price (ibid.). Under all but

three of the market orders, all handlers’ payments for

regulated milk used in the different classes are pooled,

and farmers are paid from the pool on the basis of

the weighted average price received for milk in all

uses—the “blend price” (ibid.). Thus, handlers pay

according to use, as required by 7-U.S.C. 608¢(5) (A).

Farmers, on the other hand, receive a uniform, blend

price, as required by 7 U.S.C. 608¢c(5)(B), and no

longer have to engage in counterproductive competi-

tion for fluid milk sales.

b. Reconstituted or recombined milk is manufac-

tured by mixing milk powder with water. See 44 Fed.

Reg. 65990 (1979). Consumers can purchase milk

powder and reconstitute it themselves by mixing it

with water. Such milk powder is not the subject of

this litigation. Instead, respondents brought this ac-

tion to challenge the market order regulation of milk

that a handler reconstitutes into fluid milk.

Since 1964, the Secretary has treated handler re-

constituted fluid milk as a Class I product in order to

ensure the integrity of the end use classification sys-

tem. See 29 Fed. Reg. 9010 (1964). The Secretary

reconsidered the issue in 1968 and again determined

that regulation of reconstituted milk was required to

assure uniform and adequate minimum prices and to

prevent the recurrence of destructive competition

among farmers. The Secretary explained (34 Fed.

Reg. 16883 (1969) ):

* Some market orders contain a three-class pricing system.

For all practical purposes, however, this case concerns only

the difference between Class I and Class II prices (see App.

A, infra, 3a n.7).

Primarily the problem relates to the conversion

by a handler of a product, such as nonfat dry

milk, normally priced as a surplus use into an-

other product for Class I use. In addition, the

possible entrance into the market of reconsti-

tuted products from unregulated sources enlarges

the problem.

The potential of these conditions for disruptive

influence on the market for producer milk is ex-

tremely serious because disposition of a product

for a Class I use but pricing it in a surplus price

class undermines the classified pricing system.

* e * * .

The objectives of classified pricing are uniform-

ity of pricing according to form or use and pro-

viding an adequate return to producers for the

fluid market. Therefore, the widespread disposi-

tion of filled milk made from reconstituted skim

milk, if the skim milk were not subject to some

“equalizing” payment, could lead to total defeat

of such objectives. Certainly, the classification

and pricing plan should protect the Class I mar-

ket from the potential effects of competition with

products produced from the market’s own sur-

plus or similar products produced elsewhere at a

manufacturing price when used in filled milk.

In this case payment to the producer-settlement

fund at the difference between the Class I price

and surplus price is necessary not only to assure

competitive equity among handlers but also to

insure the integrity of the classified pricing sys-

tem as a means of assuring reasonable prices to

producers.

Accordingly, each of the regional milk market or-

ders defines reconstituted milk that is used for drink-

ing purposes as “fluid milk,” thereby including it in

Class I (see 44 Fed. Reg. 65990 (1979)). Under this

system, handlers pay at least the minimum Class I

price for all milk products used for fluid consumption.

Thus, if a handler dries the raw milk received from

a producer, then reconstitutes it and uses it as fluid

milk, it is priced as a Class I product. If, however, the

handler dries producer milk into powder and stores

or sells it as powder, the powder is priced to him as a

Class II or Class III product.*

2. The Secretary issues a market order only after

rulemaking proceedings that include public notice and

the opportunity for a hearing (7 U.S.C. 608¢(3) and

(4)). The evidence introduced at the hearing must

show “that the issuance of such [proposed] order and

all of the terms and conditions thereof will tend to

effectuate the declared policy of this chapter with

respect to such commodity” (7 U.S.C. 608¢(4)). But

before a milk market order can become effective, it

must be approved by the handlers of at least 50% of

the volume of milk covered by the proposed order and

two-thirds of the dairy producers in the affected re-

gion (7 U.S.C. 608¢(8)). If the handlers withhold

consent, the Secretary may nevertheless impose the

order if he determines that it is “the only practical

means of advancing the interests of the producers”

and two-thirds of the producers consent (7 U.S.C.

608c(9)(B)). An order may be terminated by the

Secretary (7 U.S.C. 608¢(16)(A)) or by a majority

of the producers in an order area (7 U.S.C.

608¢(16) (B)).

Because this statutory scheme gives handlers con-

siderably less control than producers over the adop-

*In part, this pricing system is accomplished through a

series of assumptions and adjustments known as “down al-

locations” and “compensatory payments” (see 45 Fed. Reg.

75956-75957 (1980); App. A, infra, 4a-5a). The operational

details of the pricing system are not relevant to the issues

raised at this threshold stage of the litigation.

tion and retention of market orders, the Act expressly

provides for administrative and judicial review of

market orders at the behest of handlers. Specifically,

7 U.S.C. 608¢(15) (A) provides that “[a]ny handler

subject to an order may file a wri‘ten petition with

the Secretary of Agriculture, stating that any such

order or any provision of any such order or any obli-

gation imposed in connection therewith is not in ac-

cordance with law and praying for a modification

thereof or to be exempted therefrom.” If dissatisfied

with the Secretary’s ruling on the administrative peti-

tion, the handler may seek judicial review of “such

ruling” in the appropriate district court (7 U.S.C.

608c(15)(B)). The Act contains no other provisions

for the review of market orders.

3. In December 1980, respondents’ commenced

this action in the United States District Court for the

District of Columbia, seeking a declaration that all of

the milk market orders, insofar as they apply to re-

constituted milk products and milk powder used to

make reconstituted milk products, are invalid, and an

injunction prohibiting petitioners from “implement-

ing” the regulations (which have been in effect since

964) (C.A. App. 29). The plaintiffs, who included

three individual consumers of fluid dairy products,

sought to have the Secretary amend the milk market

orders so that reconstituted milk would no longer be

deemed a Class I product, regardless of its end use

by a handler.* In their complaint, the individual con-

* As used in this petition, “respondents” refers to the plain-

tiffs in the district court and does not include the intervenor-

defendants who are respondents in this Court by virtue of

Rule 19.6 of the Rules of this Court.

* Prior to filing suit, respondents had petitioned the Secre-

tary to hold a rulemaking hearing on the same proposal (see

44 Fed. Reg. 65990 (1979)). The Secretary published a No-

tice of Request for Hearing and asked for comments (idid.).

sumers alleged that “[t]he existing regulations have

denied them the opportunity to purchase a lower price

reconstituted milk product in lieu of raw fluid milk”

(C.A. App. 21)." Joseph Oberweis, a handler regu-

lated by one of the market orders, and the Community

Nutrition Institute, a self-described “nonprofit char-

itable organization” (id. at 20-21), joined the individ-

ual consumers as plaintiffs.

Ruling on cross-motions for summary judgment,

the district court dismissed the complaint for lack of

jurisdiction (App. G, infra, 58a-67a). Citing Ras-

mussen v. Hardin, 461 F.2d 595, 599 (9th Cir.), cert.

denied, 409 U.S. 9383 (1972), and Suntex Dairy v.

Bergland, 591 F.2d 1068, 1067 n.3 (5th Cir. 1979),

the district court concluded that Congress intended to

Subsequently, the Secretary published a preliminary impact

analysis of respondents’ proposal and invited comments (45

Fed. Reg. 75956 (1980)). Respondents filed this action shortly

thereafter. Later, on April 7, 1981, the Secretary determined

not to hold a rulemaking hearing because respondents’ pro-

posal would not further the purposes of the Act and could

harm the dairy industry (C.A. App. 170). As a result of this

action by the Secretary, the court of appeals held that that

portion of respondents’ complaint challenging the Secretary’s

“inaction” on their rulemaking request (id, at 20) had be

come moot (App. A, infra, 32a n.98). In its present posture,

the case is limited to respondents’ right to challenge the mar-

ket orders on their merits.

7 The complaint described the individual consumers as fol-

lows (C.A. App. 21):

Plaintiffs Harrell, Desmarais and Weinberg are con-

sumers of fluid dairy products. Due to inflation, they

have become extremely cost-conscious and routinely seek

to decrease food expenditures without sacrificing taste or

the nutritional value of their diet. The existing reg. ija-

tions have denied them the opportunity to purchase a

lower priced reconstituted milk product in lieu of raw

fluid milk. If such lower priced milk were available they

would purchase it.

preclude ultimate consumers from seeking judicial

review of milk market orders (App. G, infra, 65a-

66a). The district court also held that the consumers

lacked standing because, even if the regulations were

changed, too many other variables could affect the

prices paid by consumers for reconstituted milk; thus,

the court concluded that “any benefit to the [con-

sumer] plaintiffs from the proposed changes in the

regulations is [too] hypothetical and speculative” to

confer standing (id. at 61a). In addition, the district

court concluded that the interest asserted by the con-

sumers—lower prices for one type of fluid milk—was

outside the zone of interests protected by the AMAA.

The relevant provisions of the statute, the court

noted, were intended to protect consumers only

against rapid or excessive price increases and against

prices above the parity level (id. at 62a-64a). Be-

cause those interests were not implicated in this case,

the court held that the statute did not confer stand-

ing on these consumers (id. at 64a). Finally, the dis-

trict court dismissed the milk handler because he had

failed to exhaust his administrative remedies under 7

U.S.C. 608¢(15) (App. G, infra, 66a-67a).

4. A divided panel of the court of appeals affirmed

in part and reversed in part, and remanded the case

for a decision on the merits. The court of appeals

agreed with the district court’s dismissal of the milk

handler and the nutrition organization (App. A,

infra, 27a-33a). The majority held, however, that

the district court had erred in dismissing the com-

plaint of the individual consumers (id. at 12a-26a).

With respect to preclusion of review, the court of

appeals declined to follow Rasmussen v. Hardin,

supra, concluding that the Ninth Circuit’s analysis of

the statutory structure of the AMAA and its pur-

poses did not reveal “the type of clear and convincing

evidence of congressional intent needed to overcome

the presumption in favor of judicial review” (App.

A, infra, 27a n.75). As for standing, the court con-

cluded that the individual consumers had satisfac-

torily alleged injury in fact by claiming that the

regulations deprive them of a lower priced alternative

to whole milk and that the absence of manufacturer

reconstituted milk results in seasonal shortages in the

milk supply (id. at 14a). The majority repeatedly

questioned whether the consumers’ allegations of in-

jury and redressability were capable of proof, but it

concluded that they were sufficient to require a trial

on the merits (id. at 14a, 16a, 17a-19a).

The court of appeals also held that the concerns of

the individual consumers in this case were within the

zone of interests protected by the AMAA, The ma-

jority rejected the district court’s reliance on the

AMAA’s legislative history to determine the zone of

interests arguably protected by the statute, concluding

that plaintiffs are “only required to assert an inter-

est ‘which is arguable from the face of the statute’”’

(App. A, infra, 22a (emphasis in original), quoting

Tax Analysts & Advocates v. Blumenthal, 566 F.2d

130, 142 (D.C. Cir. 1977), cert. denied, 434 U.S.

1086 (1978)), and that the individual consumers

“have clearly done this much” (App. A, infra, 22a).

Thus, the majority not only chastised the district

court for “examining the legislative history in great

detail” (id. at 23a), but in fact declined to examine

it at all. Finally, while noting that the individual

consumers’ asserted injury “is shared by many other

persons, i.e., every othe: cost-conscious consumer of

milk” (id. at 25a), the majority ruled that the con-

sumers’ claim was not barred as a generalized griev-

ance (id. at 25a-26a).

Judge Scalia dissented in part. Judge Scalia con-

cluded that the individual consumers lacked standing,

and thus he would have affirmed the judgment of the

district court in its entirety (App. A, infra, 35a-44a).

In his view, the consumers’ interests fall outside the

zone of interests arguably protected by the AMAA.

Judge Scalia placed considerable weight on the fact

that the individual consumers are “indirect general

beneficiaries” of the AMAA (id. at 38a) and ob-

served that “where there is a direct and immediate

beneficiary class which can be relied upon to challenge

agency disregard of the law, the claim of the indirect

general beneficiaries to be congressionally designated

‘private attorneys general’ is weak indeed” (ibid.).

As applied to this case, Judge Scalia thus reasoned

that (id. at 38a-39a) :

The direct beneficiaries of rilk marketing orders

under the Agricultural Marketing Agreement

Act (AMAA) are milk producers. * * * On the

other side of the ledger, the direct beneficiaries

of any limitations upon the Secretary’s authority

with regard to milk marketing orders are the

milk handlers who pay the artificially established

prices. * * * In such a situation, where the

narrow class immediately affected by both agency

excess and agency omission is readily identifi-

able, I do not believe that a more remote bene-

ficiary class as generalized as the one here (viz,

all consumers of fluid milk products—which can-

not exclude many of the nation’s households) can

be found to meet the zone of interests test.

The government and the intervenor-appellees peti-

tioned for rehearing en banc. The petitions were de-

nied over the dissenting votes of Judges MacKinnon,

Bork, and Scalia (Apps. D and F, infra, 48a-49a, 51a-

52a).

REASONS FOR GRANTING THE PETITION

The decision below, in direct conflict with the

Ninth Circuit’s decision in Rasmussen v. Hardin, 461

F.2d 595, cert. denied, 409 U.S. 983 (1972), and with

the views expressed by the Fifth Circuit in Suntex

Dairy v. Bergland, 591 F.2d 1063 (1979), is the first

in the nearly 50-year history of the market order sys-

tem to hold that ultimate consumers of regulated

agricultural commodities have standing and are pro-

per parties to contest market orders. The case thus

presents important questions concerning the orderly

administration and review of commodity market or-

ders issued by the Secretary of Agriculture under the

AMAA. The significance of these questions is height-

ened by the vast scope of the regulatory program at

issue, the complexity of which this Court has often

recognized. See, e.g., Zuber v. Allen, 396 U.S. 168,

172 (1969) ; United States v. Ruzicka, 329 U.S. 287,

292 (1946). The Department of Agriculture advises

us that the value of milk handled under the various

regional market orders exceeds an average of $1 bil-

lion each month. Moreover, it would seem that the

court of appeals’ ruling would logically extend to mar-

ket orders covering other agricultural products, and

approximately $6 billion worth of fruits, vegetables

and specialty crops were handled under those market

orders in 1982. The regulation of these commodities

is so complex that some orders require adjustments to

be made as often as once a week during the market-

ing season.

The court of appeals’ decision appears to sanction

challenges to all of these orders by every milk, fruit

and vegetable consumer in the country. A primary

purpose of the statutory program is to promote mar-

ket stability, but judicial intervention at the behest

of consumers who are strangers to the producer-

handler relationship could result in constant uncer-

tainty about the validity of the orders. Such uncer-

tainty is likely to “engender those subtle forces of

doubt and distrust which so readily dislocate delicate

economic arrangements.” United States v. Ruzicka,

supra, 329 U.S. at 293.

If the decision below is allowed to stand, highly

technical and complex market orders will be subject

to direct attack in the courts without first being re-

viewed in the administrative proceedings contem-

plated by Congress. Consumers acting as “stalking

horses” for handlers, or even handlers suing in their

capacity as alleged consumers, will be able to by-pass

completely the Act’s exclusive procedures for admin-

istrative and judicial review. Thus, in granting ulti-

mate consumers standing to launch direct attacks in

the courts against agricultural market orders, the

court of appeals improperly ignored this Court’s

teachings that the intent of Congress to preclude re-

view, if fairly perceived from the overall statutory

scheme adopted by Congress for regulating the par-

ticular industry in issue, must be respected.

Closely related to the question of preclusion of re-

view is the court of appeals’ erroneous conclusion that

the individual consumers adequately demonstrated

their standing to maintain this action. Of course, if

the Court agrees with our submission that Congress

intended to preclude all consumers from seeking judi-

cial review of market orders, it need not reach the

issue of respondents’ standing. But, at minimum, ex-

amination of the structure and legislative history of

the AMAA clearly indicates that Congress did not in-

tend to protect the interests asserted by the individual

consumers in this litigation; on the contrary, their

interest in lower prices for reconstituted fluid milk is

inconsistent with Congress’ primary purpose in enact-

ing the statute, while their interest in ensuring stable

supplies of fluid milk products simply is not impli-

cated by the regulations at issue in this case. Accord-

ingly, review by this Court is warranted to resolve

the conflict among the circuits on the question of pre-

clusion of review and to correct the court of appeals’

manifest error with respect to consumer standing.

1. a. The decision below squarely conflicts with

the Ninth Circuit’s decision in Rasmussen v. Hardin.

In that case, the Ninth Circuit held that consumers of

a filled milk product were barred from seeking review

of the milk market order provisions that effectively

raised the price of the product in the same mamner

that the market order provisions at issue in this case

effectively raise the price of manufacturer reconsti-

tuted fluid milk. The court held that “clear and con-

vineing evidence” of an intent to preclude review by

consumers could: be “inferred from [the statutory]

purpose.” Rasmussen v. Hardin, supra, 461 F.2d at

599, quoting B~»/ow v. Collins, 397 U.S. 159, 166-167

(1970). The court went on to explain (461 F.2d at

599) that:

[It cannot] be said that Congress overlooked con-

sumers, and that therefore it did not intend to

exclude them from obtaining administrative and

judicial review of the Secretary’s orders. The

Act contains some pious platitudes a out the in-

terests of consumers. * * * The primary pur-

pose of the Act, however, is to protect the pur-

chasing power of the farmers and the value of

agricultural assets. * * * The whole scheme of

the Act is to raise the prices of agricultural prod-

ucts to, and keep them at, levels fixed by the Sec-

retary, and to establish “orderly” marketing of

them. Bluntly stated, that means, .n part, mar-

keting freed to a very large extent from price

competition. It is arguable that the immediate,

and possibly the long-run, interests of consumers

are contrary to these goals. * * * [I]t is very

clear that the whole structure of the Act con-

templates a cooperative venture betweer the Sec-

retary, the producers, and handlers. Nowhere in

the Act can we find an express provision for par-

ticipation by consumers in any proceeding. We

are convinced that this is no accident.

The Fifth Circuit has suggested that it would reach

the same result if confronted with a case squarely

presenting the issue. In Suntex Dairy v. Bergland,

supra, 591 F.2d at 1067 n.3, the court upheld pro-

ducers’ standing to challenge a milk market order

but distinguished consumer interests :

We find the generalized interests of consumers in

a marketing order totally different from the in-

terests of producers. The statute goes to great

lengths to guard the interests of producers by

providing for administrative hearings and a

ratification referendum. No such Congressional

deference was shown consumers.

In Rasmussen, the Ninth Circuit also noted that

consumer suits would be particularly anomalous be-

cause the statute contains no requirement for con-

sumers to exhaust administrative remedies, whereas

handlers, who are given an express right of judicial

review, must first exhaust administrative remedies.

Consumer suits would thus mean that handlers could

evade the exhaustion requirement by latching on to

consumer “front-men.” See Rasmussen v. Hardin, su-

pra, 461 F.2d at 600. This case vividly demonstrates

the potential for such abuse of the legislative scheme.

Respondent Oberweis was dismissed for failure to ex-

haust his administrative remedies as a handler (App.

A, infra, 3la-33a; App. G, infra, 66a-67a). Yet as a

result of the majority’s decision to allow the individ-

ual consumers to maintain this action, Oberweis will

still have his claims adjudicated without first invok-

ing the administrative process. Indeed, it would not

be at all surprising if Oberweis were a “cost-conscious

consumer,” as well as a milk handler, and the decision

below would appear to allow for amendment of the

complaint to add Oberweis in his new-found capacity

as a consumer plaintiff.

This Court has expressly disapproved of analogous

efforts to frustrate carefully constructed congres-

sional schemes for orderly administrative and judicial

review. See, e.g., Great American Federal Savings &

Loan Ass’n y. Novotny, 442 U.S. 366, 375-876 (1979)

(“If a violation of Title VII could be asserted through

§ 1985(3), * * * the complainant could completely

bypass the administrative process, which plays such a

crucial role in the scheme established by Congress in

Title VII”); Brown v. General Services Administra-

tion, 425 U.S. 820, 832-883 (1976) (“The balance,

completeness, and structural integrity of § 717 are

inconsistent with the petitioner’s contention that the

judicial remedy afforded by § 717(c) was designed

merely to supplement other putative judicial relief.

* * * Under the petitioner’s theory, by perverse op-

eration of a type of Gresham’s law, § 717, with its

rigorous administrative exhaustion requirements and

time limitations, would be driven out of currency

were immediate access to the courts under other, less

demanding statutes permissible.” ).

Similarly, authorizing consumer litigants to chal-

lenge market orders issued under the AMAA offers the

potential for considerable mischief. Congress had

sound reasons for concluding that attacks on market

orders should be considered by the Secretary in the first

instance. The questions raised in such attacks are

often complex, and their resolution requires an inti-

mate knowledge of the economic and technical factors

underlying the marketing of the various agricultural

products subject to regulation—e.g., milk, nuts, fruits,

vegetables, and hops (7 U.S.C. 608¢c(2)). It is thus

desirable that, before judicial intervention is sought,

these questions be presented to the Secretary, who

possesses the requisite expertise to illuminate and re-

solve them. See, e.g., Blair v. Freeman, 370 F.2d 229,

232 (D.C. Cir. 1966) (‘A court’s deference to ad-

ministrative expertise rises to zenith in connection

with the intricate complex of regulation of milk mar-

keting.’’).

This Court recognized the importance of these con-

siderations in United States v. Ruzicka, supra. In re-

jecting an effort by a handler to attack for the first

time the validity of an order of the Secretary of Agri-

culture as a defense to a judicial enforcement pro-

ceeding brought by the Secretary, the Court stressed

the purposes of the statutory review provisions (329

U.S. at 294):

Congress has provided a special procedure for

ascertaining whether such an order is or is not

in accordance with law. The questions are not,

or may not be, abstract questions of law. Even

when they are formulated in constitutional

terms, they are questions of law arising out of,

or entwined with, factors that call for under-

standing of the milk industry. And so Congress

has provided that the remedy in the first instance

must be sought from the Secretary of Agricul-

ture. It is on the basis of his rulings, and of the

elucidation which he would presumably give to

his ruling, that resort may be had to the courts."*!

* Respondents’ petition for a rulemaking hearing (see pages

7-8 note 6, supra) is no substitute for the administrative

procedures mandated by the statute and available only to han-

diers. As the court of appeals noted (App. A, infra, 32a-33a;

emphasis in original), the complaint in this case ‘“challenge[s]

the Secretary’s authority to adopt the compensatory payment

regulation in the first place; [the] complaint did not attack

his subsequent refusal to correct that alleged wrong.” Thus,

the issues raised in the lawsuit were not decided by the Secre-

Ruzicka articulated another important reason for

requiring handlers to exhaust the statutorily-pre-

scribed administrative remedies when it stressed the

disruptive potential of premature litigation (329 U.S.

at 293) :

Failure by handlers to meet their obligations

promptly would threaten the whole [regulatory]

scheme. * * * To make the vitality of the whole

arrangement depend on the contingencies and

inevitable delays of litigation, no matter how

alertly pursued, is not a result to be attributed to

Congress unless support for it is much more

manifest than we here find. That Congress

avoided such hazards for its policy is persua-

sively indicated by the procedure it devised for

the careful administrative and judicial consider-

ation of a handler’s grievance.

Consumer suits would effectively nullify Congress’ in-

tent, recognized by this Court in Ruzicka (329 U.S.

at 293-294 & n.3), to “establish an equitable and ex-

peditious procedure for testing the validity of orders,

without hampering the Government’s power to enforce

compliance with their terms.” S. Rep. No. 1011, sw-

pra, at 14. Consumer litigants could seek injunctions

against the operation of market orders that Congress

intended to remain in effect pending the completion

of full administrative and judicial proceedings brought

by handlers. Such a result cannot be squared with

Ruzicka, or with the limitations on judicial review at

the behest of handlers contained in 7 U.S.C. 608¢(15)

(B).

tary’s denial of the petition for a rulemaking hearing. More-

over, as explained by Judge Scalia (id. at 4la-44a), the ad-

ministrative proceeding required by 7 U.S.C. 608¢(15) (A) as

a prerequisite to judicial review is an entirely different type

of proceeding from the informal rulemaking hearing that re-

spondents sought.

b. The court of appeals clearly erred in its dis-

regard for the statutory scheme and in its insistence

(App. A, infra, 27a n.75) on express statutory lan-

guage foreclosing actions by ultimate consumers.

This Court has already held that preclusion of review

may be implied as well as expressed. “A clear com-

mand of the statute will preclude review; and such a

command of the statute may be inferred from its pur-

pose.” Barlow vy. Collins, supra, 397 U.S. at 166-167;

accord, Morris v. Gressette, 482 U.S. 491, 501

(1977). Moreover, the stringent standards normally

required to demonstrate congressional intent to pre-

clude review are less appropriate when the issue is

not whether judicial review is entirely foreclosed but

instead whether review at the behest of the par-

ticular plaintiff is precluded. See, e.g., United States

v. Ruzicka, supra, 329 U.S. at 293-294; see also

Associated General Contractors of California, Inc.

v. California State Council of Carpenters, No. 81-

334 (Feb. 22, 1983), slip op. 23; Morris v. Gres-

sette, supra, 432 U.S. at 505-507 & n.21; Illinois

Brick Co. v. Illinois, 431 U.S. 720, 746 (1977); Bar-

low v. Collins, supra, 397 U.S. at 175 n.9 (Brennan,

J., concurring and dissenting) ; Switchmen’s Union of

North America v. National Mediation Board, 320

U.S. 297, 300 (1943).

It is thus extremely significant in this case that

the Act does grant handlers an express right to judi-

cial review. Handlers serve as spokespersons for in-

terests shared with the general public,’ and granting

an exclusive right of review to<handlers strikes the

® That consumer interests are truly deprivative of handler

interests—consumers complain that they pay more because

handlers pay more—is shown by the fact that handlers and

consumers asserted identical claims both in the instant case

and in Rasmussen Vv. Hardin, supra. See App. A, infra, 39a-

40a (Scalia, J., dissenting).

necessary balance between the need for stability in

the functioning of the progam and the importance of

providing a forum for the redress of grievances. See

page 18, supra. Adding consumers to the category

of persons entitled to sue, when, as the Ninth Cir-

cuit found, Congress did not overlook consumers

but instead necessarily intended to exclude them

(Rasmussen v. Hardin, supra, 461 F.2d at 599),

quite clearly upsets this balance. Under these circum-

stances, the majority erred in requiring more explicit

evidence of congressional intent to preclude review.

ce. Although the court of appeals relied (App. A,

infra, 27a n.75) on this Court’s decision in Stark v.

Wickard, 321 U.S. 288 (1944), that case is plainly

distinguishable. There milk producers challenged cer-

tain deductions that were made from the so~alled

“producers settlement fund” established in connec-

tion with a milk market order. In granting standing

to the producers, even though Congress failed to give

them an administrative remedy or the right to judi-

cial review, the Court pointed out that they had a

proprietary interest in the fund, and that it “is be-

cause every dcllar of reduction comes from the pro-

ducer that he may challenge the use of the fund”

(321 U.S. at 308). The Court also noted that the

statute gives producers “definite personal rights,”

rights that are “not possessed by the people gener-

ally” (id. at 304, 309). Clearly, the proprietary in-

terest asserted in Stark could not be adequately

represented by some other party. By contrast, as al-

ready noted (see page 19 note 9, supra), and as

Judge Scalia pointed out in dissent (App. A, infra,

88a-40a), the consumer interests in this case are

merely derivative of, and protected by, the more

specific interests of handlers.”

ing out of a producer suit such as that authorized in Stark

2. Assuming arguendo that Congress did not pre-

clude all consumer suits under the AMAA, neverthe-

less the court of appeals erred in concluding that the

consumer respondents in this case have standing to

maintain their challenge to the market order provi-

sions at issue. The various elements of the standing

doctrine were thoroughly set forth in Valley Forge

Christian College v. Americans United for Separation

of Church and State, Inc., 454 U.S. 464 (1982).

There the Court held that “at an irreducible mini-

mum, Art. III requires the party who invokes the

court’s authority to ‘show that he personally has suf-

fered some actual or threatened injury as a result

of the putatively illegal conduct of the defendant,’

Gladstone, Realtors v. Village of Bellwood, 441 U.S.

91, 99 (1979), and that the injury ‘fairly can be

traced to the challenged action’ and ‘is likely to be

redressed by a favorable decision,’ Simon v. Eastern

Kentucky Welfare Rights Org., 426 U.S. 26, 38, 41

(1976).” Valley Forge, supra, 454 U.S. at 472 (foot-

note omitted). In addition, the Court has adhered

to a number of prudential considerations bearing on

the question of standing. Thus, “the Court has re-

frained from adjudicating ‘abstract questions of wide

public significance’ which amount to ‘generalized

grievances,’ pervasively shared and most appropri-

ately addressed in the representative branches.” Id.

at 475, quoting Warth v. Seldin, 422 U.S. 490, 499-

500 (1975). And “the Court has required that the

is far less than the disruption likely to be caused by consumer

suits of the type sanctioned by the decision below. Milk mar-

ket orders only become and remain effective with the agree-

ment of a majority of the producers (see page 6, supra),

and thus producer suits challenging such orders will be rela-

tively infrequent. Consumers, on the other hand, could con-

ceivably assert an “interest” in challenging every market or-

der because, by legislative desig, they would have played no

formal role in devising the orders.

plaintiff’s complaint fall within ‘the zone of interests

to be protected or regulated by the statute or consti-

tutional guarantee in question.’” Valley Forge,

supra, 454 U.S. at 475, quoting Association of Data

Processing Service Organizations, Inc. v. Camp, 397

U.S. 150, 153 (1970). The consumer respondents

failed to satisfy a number of these requirements.

Respondents alleged two injuries in their com-

plaint. First, they claimed that the market orders

deprive them of a nutritious, low-cost substitute for

regular fluid milk. Second, they claimed that, by

making reconstituted fluid milk uneconomical for

handlers to produce, the orders deprive consumers of

a “stabilizing market influence” that could operate to

offset seasonal fluctuations in the supply of regular

fluid milk." Respondents’ first asserted injury lies

outside the zone of interests arguably protected by the

AMAA, while the second asserted injury fails to sat-

isfy the constitutional requirement of injury in fact.

Moreover, the complaint as a whole fails to satisfy the

Article III requirement of redréssability and the pru-

11 Specifically, respondents described their alleged injuries

as follows (C.A, App. 25-26):

28. The economic barriers to marketing reconstituted

milk created by the existing Orders deprive plain-

tiffs Weinberg, Harrel, and Desmarais and other con-

sumers of access to a nutritious dairy beverage at a

lower price than fresh drinking milk.

31. The existing Orders deprive producers and consumers

of a stabilizing market influence. A reconstituted

fluid product could quickly expand the fiuid milk sup-

ply when seasonable changes result in a reduction

of the whole fluid milk supply. Tight fluid markets

and rising fluid prices could be avoided and the size

of the reserve fresh whole Grade A milk needed to

provide the fluid market could be reduced if such

adjustments were possible.

dential prohibition against the litigation of general-

ized grievances.

a. Respondents’ allegation that the market order

provisions at issue deprive them of a low-cost sub-

stitute for regular fluid milk fails to satisfy the zone

of interests requirement. The primary purpose of the

AMAA is to protect dairy farmers; the express

purpose of the market order provision (7 U.S.C.

608¢c) is “to raise producer prices.”” S. Rep. No. 1011,

supra, at 3 (emphasis added). Thus, as the Ninth

Circuit noted in Rasmussen v. Hardin, supra, 461

F.2d at 599, consumers’ interests in lower prices not

only are not within the scope of Congress’ concern,

but are actually contrary to the legislative design.

The court below totally disregarded Congress’ pur-

pose in enacting the AMAA when it held that con-

sumers’ interests in lower prices for reconstituted

fluid milk fall within the Act’s zone of interests. The

court of appeals’ error was twofold—first, it relied on

isolated statutory references to consumers that, when

analyzed, do not support the court’s conclusion, and,

second, it eschewed any resort to the legislative his-

tory to elucidate the statute’s meaning.

The court of appeals’ conclusion on the zone of in-

terests issue rested on policy sections of the AMAA

that merely reference consumers. For example, 7

U.S.C. 602(2) provides that it is the policy of

Congress:

#2 Confirmation of Congress’ solicitude for farmers is ap-

parent from the Act’s requirement that at least two-thirds of

the dairy farmers in an affected region must approve a pro-

posed market order before it may take effect (7 U.S.C.

608c(8)). This requirement operates even in the face of op-

position from affected handlers if “such order is the only

practical means of advancing the interests of the producers” (7

U.S.C. 608¢(9) (B)). Moreover, if producers become dissatis-

fied with an order they, unlike handlers, may require the Sec-

retary to terminate it (7 U.S.C. 608c(16) (B)).

[t]o protect the interest of the consumer by

(a) approaching the level of prices which it is

declared to be the policy of Congress to establish

in subsection (1) of this section by gradual cor-

rection of the current level at as rapid a rate as

the Secretary of Agriculture deems to be in the

public interest and feasible in view of the cur-

rent consumptive demand in domestic and for-

eign markets, and (b) authorizing no action un-

der this chapter which has for its purpose the

maintenance of prices to farmers above the level

which it is declared to be the policy of Congress

to establish in subsection (1) of this section.

It is difficult to understand how this section’s refer-

ence to consumers supports the result reached by the

court of appeals. In the quoted section, Congress

acted to protect the interest of consumers only to the

extent that that interest was consistent with the pric-

ing policy for farmers established in 7 U.S.C. 602(1).

That section’s declared policy is to establish parity

prices for farmers. As the court of appeals itself

noted, 7 U.S.C. 602(2) “expresses Congress’ intent

to protect consumers against unwarrantably rapid or

excessive price increases by limiting the Secretary’s

authority to fix prices at parity and no higher” (App.

A, infra, 20a; emphasis added; footnote omitted).

Clearly, that legislative intent to ensure price stability

has nothing to do with consumers’ asserted interest in

lowering prices for reconstituted fluid milk.”

1% The Department of Agriculture advises us that through-

out the entire history of the AMAA, the blend prices paid to

producers under the market orders have rarely, if ever,

reached parity. For at least the last several years, the blend

prices paid under all orders have been below parity. Thus,

even the limited protection that Congress may have intended

for consumers is not implicated by the realities of the regula-

tory program.

The court of appeals also relied on 7 U.S.C. 602

(4), which expresses a policy of protecting producers

and consumers against “unreasonable fluctuations in

supplies and prices.” See App. A, infra, 22a-23a.

Again, this section does not support the interest in

lower prices asserted by the consumer respondents.

Moreover, the consumers have never alleged that the

challenged market order provisions subject them to

unreasonable fluctuations in prices. Equally impor-

tant, as pointed out by the district court, Section

602(4) was enacted in 1954 as an amendment to the

AMAA, in response to totally different problems from

those addressed by Congress in 1937 (App. G, infra,

62a-63a; emphasis added) :

The 1954 amendments were enacted to counter

the falling farm prices caused by the surplus of

commodities after the Korean Conflict. H.R.

Rep. No. 1927, 83rd Cong., 2d Sess., reprinted in

[1954] U.S. Code Cong. & Ad. News 3399, 3401.

The amendments dealt primarily with price sup-

ports and parity pricing. Jd. at 3399-3400. * * *

Nowhere in the House Report is the interest

of consumers mentioned in relation to Orders

regulating commodities. Indeed, the Orders are

not even a significant part of the 1954 Act. The

comments on consumers in the legislative history

seem primarily aimed at dispelling the miscon-

ception that the flexible price-support program

embodied in the bill would materially lower con-

sumer prices. See House Report, supra, at 3404.

Therefore, the statute’s mere mention of consumers

is insufficient to bring the consumer respondents in

this case within the zone of interests to be pro-

tected by the AMAA. Careful analysis of the statu-

tory purposes, erroneously eschewed by the court of

appeals, reveals that lower prices for consumer prod-

ucts was simply not an interest that Congress acted

to protect.

Finally, the court of appeals,clearly erred in dis-

regarding the statute’s legislative history (App. A,

infra, 2la-23a). As this Court has_ recognized,

“ ‘there certainly can be no “rule of law” which for-

bids [reference to legislative history], however clear

the words may appear on “superficial examina-

tion.” ’” Train vy. Colorado Public Interest Research

Group, Ine., 426 U.S. 1, 10 (1976), quoting United

States v. American Trucking Associations, Inc., 310

U.S. 534, 548-544 (1940). Here, “superficial exami-

nation” of the statute does indeed show that ‘“‘con-

sumers” are mentioned in the Act; but closer analysis

of the structure of the statute and examination of the

legislative history demonstrate that the interests as-

serted by the consumers in this litigation were never

within the contemplation of Congress. The court of

appeals’ contrary conclusion, based only on the fact

that the statutory text mentions “consumers,” should

be corrected.

b. The court of appeals also erred in concluding

that the consumer respondents satisfactorily estab-

lished their standing to maintain this suit through

their allegation that the market order provisions at

issue “deprive producers and consumers of a stabiliz-

ing market influence” (C.A. App. 26). Ensuring

stable market conditions is an express purpose of

the statute (see 7 U.S.C. 602(4)), and thus re-

spondents’ asserted injury is arguably within the

Act’s zone of interests."* The problem here, however,

4 The legislative history indicates, however, that, as with

prices, Congress’ intention to promote market stability was

meant to protect farmers rather than consumers. See H.R.

Rep. No. 1241, 74th Cong., Ist Sess. 10 (19385) (emphasis

added) (“In order to eliminate, so far as possible, violent sea-

sonal fluctuations in the available milk supply with their at-

tendant disturbing effect upon returns to producers, and to

encourage a uniform Volume of production throughout the

is that respondents essentially did no more than

parrot the language of the statute. Even then, their

allegation of ‘injury was entirely speculative and

hypothetical; they asserted that “[a] reconstituted

fluid product could quickly expand the fluid milk

supply * * *” (C.A. App. 26; emphasis added).

Plainly, this is insufficient to demonstrate the consti-

tutionally-required injury in fact. Respondents did

not allege that they (or, for that matter, any other

consumers) have ever been or are likely to be sub-

jected to seasonal shortages in milk supply. This is a

fatal defect. See Warth v. Seldin, swpra, 422 U.S. at

498-499, 504.

Moreover, any allegation that the consumer re-

spondents have in fact suffered or are likely to suffer

from seasonal shortages would be untenable. There

are indeed seasonal fluctuations in the production of

milk, but a number of regulatory mechanisms operate

to prevent those fluctuations from affecting ultimate

consumers.” Under these circumstances, respondents

year, an adjustment in payments to producers” may be mr ‘e.).

See also Suntex Dairy v. Bergland, supra, 591 F.2d at 1064-

1065 (emphasis added) (“The blend price mechanism estab-

lished by a milk marketing order acts as a stabilizing influ-

ence that insulates farmers from the buffeting of prices

that would otherwise accompany differences in consumer

demand.”’).

Many market orders establish a “base” system for al-

locating payments from handlers to producers. See 7 U.S.C.

608c(5) (B); H.R. Rep. No. 1241, 74th Cong., 1st Sess. 9-10

(1935). Adjustments to the base system may authorize higher

payments for milk produced during seasonal low periods and

thus provide incentives to counteract fluctuating production

levels. Id. at 10. Second, the price paid to rural producers

may include a premium to provide them with an incentive to

ship their milk to city markets whenever necessary, /d. at

9-10. Third, the price support system, an entirely separate

system regulating milk production (see 7 U.S.C. 1421-1449),

were required to come forward with facts supporting

their claimed injury. They utterly failed to do so

with respect to their market stabilization claim, and

that claim must therefore be disregarded. See Warth

v. Seldin, supra, 422 U.S. at 501-502.

c. While recognizing that the interests asserted by

the consumer respondents in this case are widely

shared (App. A, infra, 25a), the court of appeals

concluded that dismissal of the suit on “generalized

grievance” grounds would mean that consumer suits

would never be justiciable (ibid.). In the context of

this case, the court was clearly wrong. As stressed

by Judge Scalia in dissent (id. at 38a-40a), consumer

interests in milk market orders are entirely deriva-

tive of handlers’ interests and can be fully protected

by handlers’ suits (brought after proper exhaustion

of administrative remedies). Moreover, Congress,

when it chooses, can and does overcome prudential

limitations on standing such as the generalized griev-

ance doctrine by extending standing to any person

adversely affected or aggrieved by the challenged ac-

tion. See, e.g., Gladstone, Realtors vy. Village of Bell-

wood, 441 U.S. 91, 100 (1979). As we have already

demonstrated, however, Congress has not chosen to

do so in the AMAA. On the contrary, granting stand-

keeps the supply of milk high year round because it ensures

a market for dairy products even in the months when flush

production outstrigs consumer demand. In fact, since the

fall of 1979, there has been a dramatic increase in milk pro-

duction without a concomitant increase in demand. See South

Carolina v. Block, Nos. 83-1426 and 83-1511 (4th Cir. Sept. 9,

1983), slip op. 6; 48 Fed, Reg. 34948 (1983). During fiscal

year 1982, the government purchased nearly $845 million in

surplus milk products under the price support system. As a

result of these various factors, there is no experience within

general knowledge or subject to judicial notice of a shortage

of milk at the consumer level.

ing to consumers whose interests are indirect and

shared in common with nearly every household in the

nation undermines the statutory scheme enacted by

Congress and threatens to disrupt a massive program

that has stability as a primary goal. See, eg., 7

U.S.C. 601. Such a dramatic change in a regulatory

program of nearly 50 years’ duration is “most appro-

priately addressed in the representative branches.”

Valley Forge, supra, 454 U.S. at 475.

d. Finally, respondents failed to show that the

interests they seek to advance are redressable by a

favorable judicial decision in this action. Congress

has recognized that retail prices paid by consumers

are largely independent of the wholesale prices paid

to farmers. H.R. Rep. No. 1927, 88d Cong., 2d Sess.

7, 9 (1954). Thus, it is entirely speculative and be-

yond the control of the Secretary whether changes in

the market orders would bring about the lower retail

prices that the consumer respondents seek. As the

district court explained (App. G, infra, 61a):

There are too many variables which would

have an effect on consumer prices if the Market

Orders were changed. These variables include:

whether handlers pass the cost savings an to con-

sumers; whether the change causes a substantial

market dislocation, leading to higher overall milk

prices; whether increased demand for milk pow-

der will increase its price; whether handlers

would dry milk merely to evade the regulations.

This situation is, as the Preliminary Impact

Statement, 45 Fed. Reg. 75,956 (1980), indi-

cates, extremely complex, and any benefit to the

plaintiffs from the proposed changes in the regu-

lations is hypothetical and speculative.

The court of appeals disagreed with these observa-

tions based solely on the Department of Agriculture’s

preliminary impact analysis, 45 Fed. Reg. 75956

(1980), which the court read as showing that the im-

mediate (i.e., within three years) impact of adopting

respondents’ proposal would be to save consumers na-

tionwide $186 million annually (App. A, infra, 17a).

But the court misunderstood the impact analysis. In

fact, the analysis offers no evidence regarding the

likely behavior of the many nonregulated parties in-

tervening between producers and ultimate consumers,

whose actions necessarily determine the redressability

of respondents’ grievance, Rather, for purposes of

studying respondents’ proposal, the impact analysis

assumed that all factors would operate to consumers’

benefit because it was impossible to measure those

factors (see 45 Fed. Reg. 75960, 75963 (1980)).

Thus, the assumption that a change in the market

orders would benefit consumers remains entirely

speculative and cannot satisfy the Article III re

quirement of redressability.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

REX E. LEE

Solicitor General

J. PAUL MCGRATH

Assistant Attorney General

KENNETH S. GELLER

Deputy Solicitor General

KATHRYN A, OBERLY

Assistant to the Solicitor General

LEONARD SCHAITMAN

SUSAN SLEATER

Attorneys

SNPTEMBER 1983

APPENDIX A

UNITED STATES COURT OF APPEALS

DISTRICT OF COLUMBIA CIRCUIT

No, 81-2191

COMMUNITY NUTRITION INSTITUTE,

ET AL, APPELLANTS,

Vv.

JOHN R. BLOCK, Secretary, United States

Department of Agriculture, ET AL.

Argued 4 Oct. 1982

Decided 21 Jan. 1983

Appeal from the United States District Court

for the District of Columbia

(D.C, Civil Action No, 80-03077)

Before TAMM, WILKEY and SCALIA, Circuit Judges.

Opinion for the Court filed by Circuit Judge

WILKEY.

Opinion concurring in part and dissenting in part

filed by Circuit Judge SCALIA.

WILKEY, Circuit Judge:

Appellants, three individual consumers of milk, a

non-profit consumer organization and a handler of

milk products, have joined forces to challenge the

manner in which reconstituted milk is regulated un-

der forty-seven milk market orders adopted pursuant

to the Agricultural Marketing Agreement Act

(AMAA).' The district court dismissed their com-

17 U.S.C, §§ 601-624 (1976 & Supp. V 1981).

plaint, holding that the individual consumers and the

organization lacked standing and that the handler

failed to exhaust his administrative remedies. We

reverse the district court’s decision with respect to

the individual consumers and remand the case for a

decision on the merits.

I. BACKGROUND

A. The Regulatory Scheme

The Secretary of Agriculture (the Secretary) has

regulated the milk industry through the use of milk

market orders since 1937.* These orders, issued pur-

suant to section 608c of the AMAA,* regulate the

price milk producers‘ receive for their dairy prod-

ucts. The orders are effective on a regional basis and

cover most, but not all, of the United States. Under

the orders, dairy products are divided into separate

classes, based on the use to which the raw milk is

ultimately put. Raw milk which is processed and

bottled for fluid consumption is Class I milk.* Raw

milk which is used to produce manufactured milk

? The conditions leading to the enactment of the AMAA

have been chronicled in previous judicial decisions. See, e.g.,

Zuber v, Allen, 396 U.S. 168, 172-76, 90 S.Ct. 314, 317-19, 24

L.Ed.2d 345 (1969); Shepps Dairy, Inc. v. Bergland, 628 F.2d

11, 18-15 (D.C. Cir. 1979).

*7 U.S.C. § 608c (1976 & Supp. V 1981).

*A producer is “any person who produces milk in compli-

ance with the inspection requirements of a duly constituted

health authority, which milk is received at a pool plant or

diverted . . . from a pool plant to a non-pool plant.” 7 C.F.R.

§ 1012.12 (1982) (Tampa Bay Marketing Order).

7 C.F.R. §§ 1001-1139 (1982).

* See, e.g., Id., § 1012.40(a).

products such as butter, cheese, or dry milk powder

is classified as Class II milk.’

Class I milk must be consumed rather quickly after

it is produced because it is a fertile field for bacteria.

It is therefore sold mostly on a regional basis. Class

II milk products, on the other hand, can be stored for

a longer period of time and therefore compete directly

with similar products from across the nation. As a

result of this increased competition, Class II milk

commands a lower price on the market than fluid

milk,

In order to provide dairy farmers with the stability

needed to prevent a recurrence of the ruinous com-

petition that devastated the milk industry during the

depression,* section 608c authorizes the Secretary to

issue milk market orders ensuring that producers

receive uniform prices for their raw milk irrespective

of the use to which it is put.* Thus, under current

milk market orders “handlers” * (who buy the milk

from the producers) pay a minimum price for Class

I milk and a lower minimum price for Class II milk.

The handlers make all payments into a regional pool,

and producers are then paid out of the pool on the

T See, e.g., Id., § 1012.40(b). Under many orders milk is

divided into three classes. However, for purposes of this case,

all milk other than milk used for fluid purposes will be re-

ferred to as Class II milk.

® See note 2 supra.

*7 U.S.C. § 608c (5) (B) (ii) (1976).

1 Handlers are “processors, associations of producers, and

others engaged in the handling of any agricultural commodity

or product.” 7 U.S.C. § 608¢(1) (1976).

basis of the average price received for milk in all

uses,"

Reconstituted milk products are fluid products

manufactured by combining water with whole milk

powder or nonfat powder.” Reconstituted milk was

not regulated under the milk market orders for nearly

thirty years, but in 1964 the Secretary issued the

regulations which are the subject of this dispute.”

Under these regulations, a handler who purchases

milk péwder from outside the order area and manu-

factures it into a reconstituted milk product pays the

Class II price and reports the purchase to the order

area administrator."* The reconstituted milk product

is then regulated as though it were fresh milk com-

ing into the area from an unregulated area (an area

not subject to a milk market order). It is assumed

that the handler will use the reconstituted milk to

manufacture Class II products,”* but if the handler’s

records show that he has not manufactured enough

Class II products to account for all the reconstituted

milk, he is required to make a compensatory payment

4 This average price is referred to as the “uniform price”

or “blend price.” The method for computing this price is set

out in 7 C.F.R. § 1012.61 (1982).

12 Butterfat or nondairy fats such as coconut oil may also

be added. The milk is then considered to be “filled” milk.

1328 Fed. Reg. 11,848 (1963) ; 28 Fed. Reg. 11,956, 12,000

(1963); 29 Fed. Reg. 9,002, 9,110, 9,214 (1964). In 1969 the

regulations were expanded to cover “filled” milk. 34 Fed. Reg.

16,548 (1969).

47 C.F.R. § 1012.80(a) (b) (1982).

% Id., § 1012.14{c).

16 See, e.g., Id., § 1012.44(a) (5) (i).

on the remainder.’’ The compensatory payment is

equal to the difference between the Class I and Class

II prices and is put into the regional pool for dis-

tribution, not to the seller of the milk powder, but to

the local producers of fresh milk."* It is undisputed

that the compensatory payment requirement raises

the handler’s cost of producing reconstituted fluid

milk and it is this aspect of the various milk market

orders which appellants challenge.

B. The Present Litigation

On 23 August 1977 appellants petitioned the Sec-

retary of Agriculture to eliminate the compensatory

payment requirement from the various milk market

orders. Nineteen months later, having failed to re-

ceive a response to their petition, appellants filed the

present action in federal district court, claiming that

the regulation requiring compensatory payments ex-

ceeded the Secretary’s authority under the AMAA

and violated the provision of the AMAA prohibiting

economic trade barriers on milk and milk products,

and that his refusal to act on their petition was arbi-

trary and capricious. Appellants asked the court to

invalidate, and enjoin the enforcement of, the com-

pensatory payment provisions of the various milk

market orders.

On 7 April 1981, four months after this suit was

filed, the Secretary denied appellant’s petition. This

decision was made after “a careful and thorough re-

view of the issues,” based on public comments and “a

17 Id., § 1012.60(e).

18 Td., § 1012.71 (a) (1).

comprehensive preliminary economic impact state-

ment” developed by the agency.”®

On 29 September 1981 the district court granted

appellees’” motion to dismiss appellants’ complaint.

The court first held that the individual consumers

and the Community Nutrition Institute (CNI) lacked

standing, concluding that they had not shown the req-

uisite injury in fact, that their interests were not

within the zone of interests arguably protected by the

relevant statute, and that, in any event, Congress in-

tended to preclude consumers from challenging milk

market orders in court. The court dismissed the milk

handler as well, noting that although he had standing

(since the AMAA specifically authorizes judicial re-

view for handlers) ,* he could not be allowed to prose-

cute the present litigation because he had not com-

plied with the procedural requirements outlined in the

statute, thereby failing to exhaust his administrative

remedies. This appeal followed.

” Letter from William T. Manley, Deputy Administrator,

Marketing Program Operations, to Community Nutrition In-

stitute, 7 April 1981 (USDA Decision Letter) at 1, reprinted

in Joint Appendix (JA) at 170.

* Appellees include the Secretary of Agriculture and the

United States Department of Agriculture (the Secretary) and

the National Milk Producers Federation, Associated Milk

Producers, Inc., and Central Milk Producers Cooperati.e

(Producers).

™ 7 U.S.C. § 608c(15) (1976).

II. STANDING

A. General Principles

In the last decade the Supreme Court has addressed

the issue of standing in a variety of contexts.” This

increased activity has not resulted in a complete

clarification of the law;™ nevertheless, some discern-

able guidelines have been laid down. It will be help-

ful to examine these guidelines before applying them

to the specific facts of the case at hand.

It is clear that “[t]he term ‘standing’ subsumes a

blend of constitutional requirements and prudential

considerations.” * It is now also clear that there are

at least three elements a plaintiff must establish in

2 E.g., Valley Forge Christian College v. Americans United

for Separation of Church and State, 454 U.S. 464, 102 S.Ct.

752, 70 L.Ed.2d 700 (1982); Gladstone, Realtors v. Village of

Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 60 L.Ed.2d 66 (1979);

Duke Power Co. Vv. Carolina Environmental Study Group, Inc.,

488 U.S. 59, 98 S.Ct. 2620, 57 L.Ed.2d 595 (1978); Simon v.

Eastern Kentucky Welfare Rights Organization, 426 U.S. 26,

96 S.Ct. 1917, 48 L.Ed.2d 450 (1976); Warth v. Seldin, 422

U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 348 (1975); Schlesinger

v. Reservists Committee to Stop the War, 418 U.S. 208, 94

S.Ct. 2925, 41 L.Ed.2d 706 (1974) ; United States v. SCRAP,

412 U.S. 669, 98 S.Ct. 2405, 87 L.Ed.2d 254 (1973); Linda

R.S. v. Richard D., 410 U.S. 614, 98 S.Ct. 1146, 35 L.Ed.2d 536

(1978).

% See, ¢.g.. Sedier, Standing and the Burger Court: An

Analysis and Some Proposals for Legislative Reform, %0

Rurcers L.Rev. 868 (1977); Davis, Standing 1976, 72 Nw.L.

Rev. 69 (1977); Chayes, The Role of the Judge in Public Law

Litigation, 89 Harv.L.Rev. 1281, 1304-06 (1976).

™ Valley Forge Christian College v. Americans United for

Separation of Church and State, 454 U.S. at 471, 102 S.Ct.

at 758.

order to satisfy the constitutionally imposed standing

requirements.

[A]t an irreducible minimum, Art. III re

quires the party who invokes the court’s author-

ity to “show [1] that he personally has suffered

some actual and threatened injury as a result of

the putatively illegal conduct of the defendant,”

... and [2] that the injury “fairly can be traced

to the challenged action” and [3] “‘is likely to be

redressed by a favorable decision.” *

Establishing the first element (injury in fact) re-

quires the plaintiff to allege facts demonstrating a

definable and discernable injury and an adequate con-

nection between that injury and himself. The re-

quirements of the second and third elements, how-

ever, have not always been as clear. Some confusion

has arisen because the Supreme Court has used lan-

guage which seems to indicate that the “fairly trace-

-able causation” requirement and the “redressability”

requirement are interchangeable.* However, the

Court’s articulation of the Art. III standing limits in

% Id, at 472, 102 S.Ct. at 758 (quoting Gladstone, Realtors

v. Village of Bellwood, 441 U.S. 91, 99, 99 S.Ct. 1601, 1607,

60 L.Ed.2d 66 (1979) and Simon v. Eastern Kentucky Welfare

Rights Organization, 426 U.S. 26, 38, 41, 96 S.Ct. 1917, 1924,

1925, 48 L.Ed.2d 450 (1976)). See also Consumers Union Vv.

Federal Trade Commision, 691 F.2d 575, 577 n. 9 (D.C.Cir.

1982) (en banc),

* For example, in Duke Power Co. v. Carolina Environmen-

tal Study Group, Inc., 488 U.S. 59, 98 S.Ct. 2620, 57 L.Ed.2d

595 (1978), the Court stated: “The more difficult step in the

standing inquiry is establishing that these injuries ‘fairly can

be traced to the challenged action of the defendant,’ .. . or put

otherwise, that the exercise of the Court’s remedial powers

would redress the claimed injuries.” Jd. at 74, 98 S.Ct. at

2631 (quoting Eastern Kentucky, 426 U.S. at 41, 96 S.Ct. at

Valley Forge recognizes that the two considerations

are not necessarily the same.” The fairly-traceable

causation inquiry is directed toward the connection

between the injury and the defendant’s actions. The

redressability inquiry, on the other hand, focuses on

the connection between the injury and the action re-

quested of the court. The fairly traceable causation

requirement is therefore generally based on past or

present occurrences (the effect of the defendant’s

actions), while the redressability requirement is

based on future probabilities (the effect of the court’s

decision). Of course, there is a correlation between

the two elements. As the connection between the al-

leged injury and the defendant’s actions becomes

more direct, the likelihood that requiring the defend-

ant to change his behavior will redress that injury

increases. However, it is important to keep the two

inquiries separate, lest the confusion continue.”

Therefore, in order to satisfy the Art. III require-

ments of standing a plaintiff must show three things:

1925) (emphasis added). Similarly, in Warth v. Seldin, 422

U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975), the Court

observed that Art, III required a plaintiff to establish that

“the asserted injury was the consequence of the defendant’s

actions [fairly traceable causation], or that prospective relief

will remove the harm [redressability].” Jd. at 505, 95 S.Ct. at

2208 (emphasis added).

2? The Court stated that Art. III requires a plaintiff to show

that he has suffered a personal injury and that the injury

“ ‘fairly can be traced to the challenged action, and ‘is likely

to be redressed by a favorable decision.’” Valley Forge, 454

U.S. at 472, 102 S.Ct. at 758 (quoting Eastern Kentucky Wel-

fare Rights, 426 U.S. at 38, 41, 96 S.Ct. at 1924, 1925) (em-

phasis added).

2* A good example of the difference between the “fairly

traceable causation” and the “redressability” requirements can

be found in the facts involved in Duke Power Co. v. Carolina

Environmental Study Group, Inc., 488 U.S. 59, 98 S.Ct. 2620,

10a

(1) that he has suffered an actual or threatened in-

jury (an adequate connection between a definable

and discernable injury and the plaintiff); (2) that

the injury fairly can be traced to the challenged ac-

tion (an adequate connection between the alleged in-

jury and the defendant’s actions) ; and (3) that the

injury is likely to be redressed by a favorable deci-

sion (an adequate connection between the alleged in-

jury and the action requested of the court).

Once a plaintiff has met the constitutionally im-

posed requirements of standing he may still be pre-

vented from prosecuting his suit if prudential consid-

erations” dictate that the court stay its hand. Of

57 L.Ed.2d 595 (1978). In Duke Power plaintiffs challenged

the Price-Anderson Act, which established a limit on the liabil-

ity of nuclear power plant operators. The alleged injuries

consisted of the adverse environmental and aesthetic conse

quences of the thermal pollution caused by Duke Power’s

nuclear power plants. Thus, in order to determine whether the

injury could fairly be traced to the federal government, the

Court was required to determine whether the existence of the

Price-Anderson Act was a cause of the decision to construct

the nuclear power plant (which was in turn the more im-

mediate cause of the alleged injuries). However, assuming the

power plant was substantially completed or already opera-

tional, the court would have to determine whether invalidating

the Act would cause the plant to shut down in order to deter-

mine redressability. This is an entirely different consideration

because once a company has expended funds to construct a

plant, the absence of a liability limitation may not be as im-

portant. See Nichol, Causation as a Standing Requirement:

The Unprincipled Use of Judicial Restraint, 69 Ky.L.J. 185,

199-201 (1980).

2» In a prior opinion this court explained the meaning of the

term prudential consideration.

We believe that the fact that the [non-constitutional]

limitations of the standing doctrine... are termed “pru-

lla

particular concern to this litigation are the require-

ment that the plaintiff’s complaint be “arguably

within the zone of interests to be protected or regu-

lated by the statute... in question,”*® and the

reluctance of federal courts to adjudicate “ ‘abstract

questions of wide public significance’ which amount

to ‘generalized grievances,’ pervasively shared and

most appropriately addressed in the representative

branches.” ** These prudential considerations also

focus on the connection between the alleged injury

dential limitations” does not mean that the lower courts

have discretion as to whether to apply these limitations

or not, The Supreme Court has announced these pruden-

tial limitations in its supervisory capacity over the fed-

eral judiciary and, in the context of cases such as the one

now before us, we believe there is a nondiscretionary duty

to apply the limitations. This duty to apply the standards

does not detract from the discretion involved in deter-

ming whether the standard has been satisfied.

Taz Analysts & Advocates v. Blumenthal, 566 F.2a 130, 137

n. 87 (D.C. Cir. 1977), cert. denied, 434 U.S. 1086, 98 S.Ct.

1280, 55 L.Ed.2d 791 (1978) (emphasis added).

» Association of Data Processing Service Organizations,

Inc, v. Camp, 397 U.S. 150, 158, 90 S.Ct. 827, 829, 25 L.Ed.2d

184 (1970). See also Valley Forge, 454 U.S. at 475, 102 S.Ct.

at 760; Gladstone, Realtors, 441 U.S. at 100 n. 6, 99 S.Ct. at

1608 n. 6; Eastern Kentucky Welfare Rights, 426 U.S. at 39

n. 19, 96 S.Ct. at 1924 n. 19,

| Valley Forge, 454 U.S. at 475, 102 S.Ct. at 760 (quoting

Warth v. Seldin, 422 U.S. at 499-500, 95 S.Ct. at 2205-06).

The Supreme Court has observed that another prudential

consideration is embodied in the general rule that a “ ‘plaintiff

generally must assert his own legal rights and interests, and

cannot rest his claim to relief on the legal rights or interests

of third parties.’” Id. 454 U.S. at 474, 102 S.Ct. at 759-60

(quoting Warth v. Seldin, 422 U.S. at 499, 95 S.Ct. at 2205).

That consideration is not a concern in this litigation.

12a

and various aspects of the suit. The zone of interests

requirement focuses on the connection between the

alleged injury and the relevant statute, while the gen-

eralized grievance limit seems “ to require an inquiry

into the connection between the alleged injury and

the public in general.

Thus, in order to withstand the present motion to

dismiss for lack of standing, appellants must allege a

definable and discernible injury and then establish

the proper connection between that injury and them-

selves, the Secretary’s actions, the requested relief,

the relevant statute, and the public in general. We

hold that the individual consumers have met this bur-

den, while CNI has not.

B. Individual Consumer Standing

Deborah Harrell, Ralph Desmarais, and Zy Wein-

berg (Consumers) are, according to their allegations,

consumers of fluid dairy products who seek to de-

crease their food expenditures without sacrificing

taste or the nutritional value of their diet.** The dis-

trict court dismissed them from the present litiga-

tion, holding that they had failed to establish either

the constitutional or prudential elements of standing.

Applying the analysis outlined above, we must

reverse.

* The exact nature of the generalized grievance restriction

is far from clear. See note 74 infra,

* Plaintiffs’ Complaint for Declaratory Action and Injunc-

tive Reliéf (Plaintiffs’ Complaint) at 7, reprinted in JA

at 20.

13a

1. Art. III Considerations

a. Injury in fuct (connection between definable and

discernable injury and the plaintiff)

In order to establish the required injury, a plaintiff

need not allege facts establishing a substantial injury,

“an identifiable trifle will suffice.” * However, the in-

jury must be definable and discernable and, in order

to establish the proper connection to the plaintiff, it

must be specific. Consumers have alleged Just such

an injury.

Consumers allege that the existing reconstituted

milk regulations injure them in two ways. First, they

claim they are precluded from purchasing “a nutri-

tious dairy beverage at a lower price than fresh drink-

ing milk.” ** Second, they allege that they are de-

prived “of a stabilizing market influence,” since “[a]

reconstituted fluid preduct could quickly expand the

fluid milk supply when [seasonal] changes result in a

reduction of the whole fluid milk supply.” Appel-

lees maintain that these injuries fail to meet the con-

stitutional standard of concreteness. They argue that

since milk powder is available to Consumers at retail

markets, Consumers could buy the powder and recon-

stitute the milk themselves at less than the price of

whole milk. Thus, appellees contend, the injury as-

serted by Consumers is merely an objection to the

taste of reconstituted milk from products presently

™ Public Citizen v. Lockheed Aircraft Corp., 565 F.2d 708,

714 (D.C.Cir, 1977) (citing United States v. SCRAP, 412

U.S. 669, 689 n. 14, 93 S.Ct. 2405, 2417 n. 14, 837 L.Ed.2d 254

(1978) ).

% Id, at 715.

* Plaintiffs’ Complaint at { 28, reprinted in JA at 25-26.

37 Id. at { 31, JA at 26.

l4a

marketed at retail. This, they claim, is not a defina-

ble and discernible injury. However, even assuming

appellees are correct in asserting that undesirable

taste is an insufficient injury,” their argument is still

unpersuasive.

In determining whether a plaintiff has alleged a

definable and discernable injury, the focus is on the

plaintiff’s allegations, not on the availability of alter-

native remedies. Consumers allege that they are being

deprived of a lower priced alternative to whole milk.

If these allegations are true, as we must assume, Con-

sumers have been injured economically, even if they

could ameliorate this injury by purchasing some al-

ternative product. Further, if as Consumers allege,

the absence of manufacturer reconstituted milk re-

sults in seasonal shortages in the milk supply, they

have sustained a further injury. At the trial Con-

sumers may be unable to prove that they have

actually sustained these injuries, but their allegations

meet the constitutional requirement of injury in fact.”

b. Causation (connection between the alleged in-

jury and the defendant’s actions)

In order to establish the second constitutional ele-

ment of standing, a plaintiff must show that the in-

*8 Although we do not decide the issue, such an injury may

be sufficient since “ ‘[a]esthetic and environmental well-being,

. . . are important ingredients in the quality of life in our

society.’”’ Duke Power, 488 U.S. at 74 n. 18, 98 S.Ct. at 2631

n. 18 (quoting Sierra Club v. Morton, 405 U.S. 727, 734, 92

8.Ct. 1361, 1866, 31 L.Ed.2d 686 (1972)) (emphasis added).

* There is no dispute over the adequacy of the connection

between the alleged injury and Consumers. Nor could there

be since Consumers allege that they have been deprived of a

lower cost milk alternative and of the stabilizing influence that

product would bring to the dairy market.

l5a

jury “ ‘fairly can be traced to the challenged ac-

tion.’”*” Although this requirement has not been

applied consistently in all cases,“ it is met if the

plaintiff alleges a fairly traceable connection between

the defendant’s action and the alleged injury. A

plaintiff need only make a reasonable showing that

“but for’ defendant’s action the alleged injury would

not have occurred.“ Consumers have sufficiently es-

tablished this connection.

Consumers allege that when the compensatory pay-

ment is added to the other costs incurred by a handler

in producing reconstituted milk, the resulting price

makes reconstituted milk products uncompetitive with

fresh milk.“ They claim that “but for” the regula-

tion, handlers would be able to market reconstituted

milk for less than fresh milk and that, as a result,

reconstituted milk would be available at a lower re-

tail price than whole milk. Appellees dispute the fac-

tual basis of Consumers’ allegations. According to

appellees, the market structure of the dairy industry

is so complex that it is impossible to determine

whether lower handler costs would have been passed

on to Consumers. Thus, appellees argue, it cannot be

said with any certainty that the challenged regulation

is the cause of Consumers’ injury. Again, however,

appellees’ argument misses the mark.

Valley Forge, 454 U.S. at 472, 102 S.Ct. at 758 (quoting

Eastern Kentucky Welfare Rights, 426 U.S. at 41, 96 S.Ct. at

1925).

*! See Nichol, supra note 28 at 196; Note, The Generalized

Grievance Restriction: Prudential Restraint or Constitutional

Mandate?, 70 Gro.L.J. 1157, 1158 n. 7 (1982).

“ Duke Power, 488 U.S. at 74-75, 98 S.Ct. at 2680-81.

* Plaintiffs’ Complaint ac 26, JA at 25.

léa

It may well be that the structure of the dairy mar-

ket is so complex that a reduction in handler costs

does not inevitably result in lower consumer prices.

Nonetheless, Consumers are not required to prove that

lower prices will result, they are only required to as-

sert a fairly traceable causal connection between the

challenged action and the alleged injury. Consumers’

contention that if handlers were not required to make

a compensatory payment they would pass the savings

on to the consumer is a reasonable one. Nothing more

is required. If standing depended on a plaintiff's

ability to allege uncontrovertible facts, there would be

very few plaintiffs who could establish standing in a

lawsuit of any complevity. Having alleged a reason-

able connection between the challenged regulations

and their alleged injuries, Consumers are entitled to

a trial on the merits to determine what the facts

really are.“

c. Redressability (connection between the alleged

injury and the action requested of the court)

The third element of the Art. III limit on standing

is met when a plaintiff establishes that his alleged in-

jury “ ‘is likely to be redressed by a favorable deci-

“ Had Consumers’ allegations been insufficient to establish

the requisite causal link, the defect would have been corrected

by Consumers’ proffered evidence that in those areas not cov-

ered by federal milk market orders reconstituted milk had

been and was being manufactured and sold to consumers for

less than the price of fresh milk, JA at 66, and by affidavits

of milk hanulers indicating that the regulations raised the

price of reconstituted milk so as to make it uneconomical to

produce, CNI v. Block, No. 80-8077, slip op. at 6 (D.D.C. 29

Sept. 1981).

17a

sion.’””“* The degree of likelihood required is not

completely clear.“ However, because the relevant in-

quiry is directed to the effect of a future act (the

court’s grant of the requested relief) it would be un-

reasonable to require the plaintiff to prove that grant-

ing the requested relief is certain to alleviate his in-

jury. Furthermore, as cases such as the present one

show, litigation often “present[s] complex interrela-

tionships between private and government activity

that make difficult absolute proof that the harm will

be removed.” “* Thus, a court should be careful not to

require too much from a plaintiff attempting to show

redressability, lest it abdicate its responsibility of

granting relief to those injured by illegal governmen-

tal action.

Consumers argue that they have established the re-

quired likelihood of redress by producing a United

States Department of Agriculture Impact Statement

which predicts that if the compensatory payment re-

quirement were eliminated, consumers nationwide

would save $186 million annually within three years,”

and by offering evidence that handlers in non-regulated

areas have manufactured and marketed lower-priced

reconstituted milk.” The district court found this

“ Valley Forge, 454 U.S. at 472, 102 S.Ct. at 758 (quoting

Eastern Kentucky Welfare Rights, 426 U.S. at 38, 96 S.Ct. at

1924). See also Gladstone, Realtors, 441 U.S. at 180, 99 S.Ct.

at 1608; Village of Arlington Heights v. Metropolitan Housing

Development Corp., 429 U.S. 252, 262, 97 S.Ct. 555, 561, 50

L.Ed.2d 450 (1977).

* See Nichol, supra note 28, at 201-13.

*" Td, at 215.

*8 45 Fed. Reg. 75,956, 75,971 (1980), reprinted in JA at 77.

Td, at 75,960, JA at 66.

18a

showing inadequate because the same USDA state-

ment relied upon by Consumers estimated that elimi-

nation of the compensatory payment requirement

would cost milk producers $576 million. The court

observed that this drop in producer earnings ‘‘might

interfere with the public’s access to an adequate sup-

ply of milk and might result in higher prices for milk

products.” ” The court concluded that since the struc-

ture of the dairy industry is so complex, “any benefit

to the plaintiffs from the proposed changes in the reg-

ulations is hypothetical and speculative.” *' We con-

clude that the district court required too much of

Consumers.

Admittedly, it is hard to predict the effect of re-

moving the compensatory payment requirement, but

Consumers produced evidence indicating that the im-

mediate result of removing the contested regulation

will be increased savings for all consumers. The pos-

sibility that the change would also harm producers is

relevant to the standing issue only in that such a

harm might cause market disruptions which might

ultimately harm Consumers. Whether the potential

long term deleterious effects of the requested change

outweigh the potential immediate benefits is a ques-

tion the court will have to resolve in order to deter-

mine the validity of the regulation. However, Con-

sumers should not be required to prove that the poten-

tially harmful effects will not occur in order to estab-

lish standing. As the Supreme Court has observed, a

plaintiff is not required to negate every “speculative

and hypothetical possibilit[y] ... in order to demon-

strate the likely effectiveness of judicial relief.” Re-

“1 Jd,

* Duke Power, 488 U.S. at 78, 98 S.Ct. at 2638.

19a

quiring Consumers to show more than they did in this

case forces them to prove their case in order to ac-

quire standing. This is not what the Constitution re-

quires. The redressability element of Art. III is de-

signed to bar disputes which will not be resolved by

judicial action. It does not prevent a court from

hearing a case which may ultimately be unsuccessful.

2. Prudential Considerations

As noted above,™ there are valid nonconstitutional

requirements which a plaintiff may be required to

meet in order to establish standing. The district court

found that one of these, the zone of interests require-

ment, had not been met by Consumers. On appeal, ap-

pellees point to another nonconstitutional standing

requirement which they claim Consumers have not

satisfied—the requirement that the alleged injury be

more than a generalized grievance. We hold that

Consumers have satisfied both of these requirements.

a. Zone of Interests (connection between the al-

leged injury and the relevant statute)

The Supreme Court has stated that a plaintiff may

be dismissed for lack of standing if his alleged injury

is not “arguably within the zone of interests protected

or regulated by the statute ... in question.”™

Whether Consumers’ alleged injuries are arguably

within the zone of interests protected by the relevant

statute in this case depends on which statutes are

relevant.

%3 See text at notes 29-32 supra.

* Association of Data Processing Service, 396 U.S. at 158,

90 S.Ct. at 829.

Consumers point to two portions of the AMAA pol-

icy section which indicate an intent to pretect con-

sumers from the type of injuries they have allegedly

incurred. Section 602(2) expresses Congress’ intent

to protect consumers against unwarrantably rapid or

excessive price increases by limiting the Secretary’s

authority to fix prices at parity and no higher. Sec-

tion 602(4) expresses the policy of protecting con-

sumers from “unreasonable fluctuations in supplies

and prices.”™ The district court, relying on this

‘court’s opinion in Tax Analysts and Advocates v.

* In full section 602(2) provides:

It is declared to be the policy of Congress—

(2) To protect the interest of the consumer by (a)

approaching the level of prices which it is declared to be

the policy of Congress to establish in subsection (1) of

this section by gradual correction of the current level at

as rapid a rate as the Secretary of Agriculture deems to

be in the public interest and feasible in view of the cur-

rent consumptive demand in doinestic and foreign mar-

kets, and (b) authorizing no action under this chapter

which has for its purpose the maintenance of prices to

farmers above the level which it is declared to be the

policy of Congress to establish in subsection (1) of this

section.

7 U.S.C. § 602(2) (1976).

*7 U.S.C. §602(4) (1976). The entire section provides:

It is declared to be the policy of Congress—.

(4) Through the exercise of the powers conferred upon

the Secretary of Agriculture under this chapter, to estab-

lish and maintain such orderly marketing conditions for

any agricultural commodity enumerated in section 608c (2)

of this title as will provide, in the interests of producers

and consumers, an orderly flow of the supply thereof to

market throughout its normai marketing season to avoid

unreasonable fluctuations in supplies and prices.

2la

Blumenthal," held that these sections were not rele-

vant to the present suit, pointing out that the chal-

lenged regulations were issued pursuant to section

608¢ which does not mention consumers.

In Tax Analysts we held that the general policy

section of a statute may be read in conjunction with

the challenged portion only if the two parts of the

statute share “an identity of purpose.” ** The district

court ruled that section 608¢ and sections 602(2) and

(4) do not share this identity of purpose. The court

noted that section 608c was enacted as part of the

original AMAA in the 1930’s and that it dealt solely

with milk market orders.” Section 602(4), on the

other hand, was added to the AMAA in 1954. Rely-

ing extensively on legislative history,” the court con-

cluded that the 1954 amendment was designed to

counter the falling farm prices caused by the surplus

of commodities after the Korean War and that the

expressed intent to protect consumers was limited to

situations involving price supports and parity pricing.

Thus, in the district court’s view, section 602(4) was

not a “relevant statute” since it was enacted at a

different time, in response to a different problem than

section 608¢c. The court also found section 602(2)

irrelevant since it dealt with parity pricing and not

milk market orders. However, the district court’s ap-

57586 F.2d 130 (D.C. Cir. 1977), cert. denied, 484 U.S.

1086, 98 S.Ct. 1280, 55 L.Ed.2d 791 (1978).

** Td. at 141.

* Section 608c gives the Secretary authority to issue market

orders for a variety of agricultural commodities, but milk is

the only one with which this litigation is concerned.

@ H.R. Rep. No. 1927, 88rd Cong., 2d Sess., reprinted in

1954 U.S. Copg Conc. & AD. NEws 3399.

22a

proach in analyzing the identity of purpose issue, al-

though undeniably thorough in its own right, was not

consistent with the reasoning we utilized in Tax Ana-

lysts. As a result, the district court failed to reach

the correct result.

In Tax Analysts we stressed the “generous nature”

of the zone of interests test." In particular we noted

that a plaintiff was only required to assert an interest

“which is arguable from the face of the statute.” ®

Consumers have clearly done this much. Although

section 608¢ deals exclusively with the Secretary’s au-

thority to issue market orders, it is not immunized

from the effect of the general policy sections. Section

608c(4) requires the Secretary to find that an order

“will tend to effectuate the declared policy of this

chapter” before he issues that order.“ The declared

policies of the AMAA are contained in section 602.

Section 602(4) clearly expresses the policy that the

Secretary use “the powers conferred . . . under this

chapter . . . as will provide in the interests of pro-

ducers and consumers, an orderly supply [of milk]

... to avoid unreasonable fluctuations in supplies and

prices.””* Since Consumers allege that the challenged

“ 566 F.2d at 142.

@ Jd. (emphasis added).

* 7 U.S.C. § 608¢(4) (1976).

“7 U.S.C. § 602(4) (1976) (emphasis added).

The dissent argues that the references to consumer interests

are mere “pious platitudes” which have “no real bearing” on

the issue of standing. Dissent at [40a, infra]. The references

to consumers may be pious, but Congress expressly directed the

Secretary to take those “platitudes” into account when issuing

a milk market order, 7 U.S.C. § 608¢(4) (1976), and to ter-

minate any order that does not effectuate them. Jd. § 608c

(16) (A).

23a

portion of the milk market orders prohibits the sale

of reconstituted milk, resulting in higher milk prices

and seasonal shortages, they have asserted an inter-

est which is at least “arguably” within the zone of

protected interests.* The district court’s efforts to

distinguish the two sections by examining the legisla-

tive history in great detail is simply inconsistent with

the purposes behind the zone of interests test.”

b. Generalized Grievance

The Supreme Court has noted that even when a

plaintiff meets the Art. III standing requirements, a

federal court may refrain from adjudicating issues

which “amount to ‘generalized grievances,’ perva-

sively shared and most appropriately addressed in the

® In almost any regulatory scheme some interests will be

more directly affected than others. However, contrary to the

dissent’s argument, this does not require us to dismiss those

whose interests may be less directly affected. As this court

has observed, ‘the chailenging party need only show that it is

an intended beneficiary of the statute not necessarily the

primary one.” Constructores Civiles de Centroamerica, S.A.

v. Hannah, 459 F.2d 1183, 1189 (D.C, Cir. 1972).

* As we noted in Taz Analysts:

[A] full-scale examination of legislative history pre

sents the distinct possibility that the generous nature of

the zone test, which results from the language of the test

itself, will be undermined. Such an approach may

lead to a requirement that there be affirmative evidence

that the Congress intended that a plaintiff situated pre-

cisely as the plaintiff then standing before the court be

regulated or protected. Any tendency to move in this

direction would detract from the flexibility of the zone

standard provided by the requirement that the plaintiffs’

interest be only “arguably” within the zone.

566 F.2d at 142.

24a

representative branches.” Appellees argue that

Consumers’ injury falls into this category since it is

an injury suffered in “some indefinite way in com-

mon with people generally.” ** However, a review of

the cases relied on by appellees ® and an examination

of the argument they advance” make it apparent

that they confuse this prudential consideration with

the constitutional requirement of injury in fact.” As

* Valley Forge, 454 U.S. at 475, 102 S.Ct. at 760 (quoting

Warth v. Seldin, 422 U.S. at 499-500, 95 S.Ct.: 2205-06).

* Frothingham V. Mellon, 262 U.S. 447, 488, 43 S.Ct. 597,

601, 67 L.Ed. 1078 (1923).

675, 38 L.Ed.2d 674 (1974) (“Abstract injury is not enough’’);

Public Citizen v. Lockheed Aircraft Corp., 565 F.2d 706, 715

(D.C.Cir. 1978) (the injury “must be perceptible, concrete,

specific....’”’).

7 It is in this section of his brief that the Secretary makes

the argument that Consumers’ injury amounts to no more

than an “objection to the taste of reconstituted milk from

powder presently marketed at retail... .” Fed. Appellees

Brief at 25. Cf. text at note 38, supra.

71 Appellees’ confusion is understandable given the Supreme

Court’s failure consistently to articulate whether the general-

ized grievance restriction is a prudential or a constitutional

limit. See Note, The Generalized Grievance Restriction: Pru-

dential Restraint or Constitutional Mandate, 70 Geo.L.J. 1157

(1982). Indeed, the Supreme Court contributed to this con-

fusion in Valley Forge by clearly labeling the generalized

grievance as a prudential consideration in one part of the

opinion, 454 U.S. at 474-75, 102 S.Ct. at 759-60, and then

later noting that the “ ‘case or controversy aspect of standing

is unsatisfied ‘where a taxpayer seeks to employ a federal] court

as a forum in which to air his generalized grievances about the

conduct of government or the allocation of power in the Fed-

eral System.’” /d. at 479, 102 S.Ct. at 762 (quoting Flast v.

Cohen, 392 U.S. 88, 106, 88 S.Ct. 1942, 1955, 20 L.E.2d 947

(1968) ) (emphasis added).

25a

we have already noted,” Consumers’ alleged injury is

sufficiently definable and discernable to meet the con-

stitutional requirement and appellees’ efforts to liti-

gate this issue under a new title must be rejected.

Consumers’ injury is a generalized grievance only

in the sense that it is shared by many other persons,

i.é., every other cost-conscious consumer of milk. It

may be argued that the widespread nature of the in-

jury requires us to dismiss the claim as a generalized

grievance. However, we refuse to believe that the

mere fact that a plaintiff’s injury is shared by many

people requires a court to dismiss his complaint. If

dismissal were required in such cases, consumer in-

, Juries would never be justiciable because ‘“[c]on-

sumer injuries, by their very nature tend to be

shared in common by many other similarly situated

individuals.” * Although it is not clear what the

limits of the generalized grievance restriction are,”

72 See text at notes 34-39 supra.

™ Cutler v. Kennedy, 475 F.Supp. 838, 848 n. 23 (D.D.C.

1979).

It is not clear whether the restriction has ever been

applied as a nonconstitutional limit. Supreme Court cases

relying on the generalized grievance restriction as a ground

for denying standing seem to have been decided on constitu-

tional grounds. See, e.g., Schlesinger v. Reservists Committee

to Stop the War, 418 U.S. 208, 227, 94 S.Ct. 2925, 2935, 41

L.Ed.2d 706 (1974) (“Such a generalized interest .. . is too

abstract to constitute a ‘case or controversy’... .”); United

States v. Richardson, 418 U.S. 166, 179-80, 94 S.Ct. 2940,

2947-48, 41 L.Ed.2d 678 (1974) (“to invoke judicial power

the claimant must have a ‘personal stake in the outcome,’ .. .

or a ‘particular, concrete injury’ .. . or ‘a direct injury,’ ... in

short, something more than a generalized grievance.”) (cita-

tions omitted). The cases in which the generalized grievance

restriction has been clearly labeled az a prudential consider-

26a

we hold that the mere fact that the injury may be

shared by many consumers does not require us to

dismiss this complaint on that ground.

Finding that neither constitutional nor prudential

considerations prevent Consumers from bringing the

present action, we reverse the district court and hold

that Consumers have standing.”

ation have not used it as a ground for decision. Warth, 422

U.S. at 499, 95 S.Ct. at 2205; Gladstone, Realtors, 441 U.S.

at 100, 99 S.Ct. at 1608. Therefore, the scope of the restriction

as a nonconstitutional limit is not clear.

It is also unclear whether the restriction serves an inde-

pendent purpose, In Warth the Court noted that prudential

limitations like the generalized grievance restriction were

required because otherwise “the courts would be called upon

to decide abstract questions of wide public significance even

though other governmental institutions may be more com-

petent to address the questions and even though judicial inter-

vention may be unnecessary to protect individual rights.” 422

U.S, at 500, 95 S.Ct. at 2306. See also Valley Forge, 454 U.S.

at 475, 102 S.Ct. at 780. If a question is abstract, the consti-

tutional limits on standing require dismissal. If on the other

hand, the concern is that other governmental institutions are

more competent to address the question, the political ques-

tion doctrine, a prudential consideration, would appear to

require dismissal. See Baker v. Carr, 369 U.S. 186, 82 S.Ct.

691, 7 L.Ed.2d 663 (1962).

™% We also reject appellees’ argument that Congress has

impliedly precluded consumers from challenging milk market

orders, Appellees rely on Rasmussen v. Hardin, 461 F.2d 595

(9th Cir.), cert. denied, 409 U.S. 938, 93 S.Ct. 230, 34 L.Ed.2d

188 (1972), in which the 9th Circuit held that Congress had

precluded judicial review of consumer challenges to milk

market orders, In Rasmussen the court noted that while the

AMAA provides a special review procedure for handlers

affected by a milk market order, it does not provide a similar

procedure for consumers. The court found that this omission

was deliberate because: (1) “the whole structure of the Act

27a

C. CNI’s Organizational Standing

Community Nutrition Institute (CNI) is a non-

profit charitable organization specializing in food and

nutrition issues. CNI seeks to establish standing as

an organization in its own right. The district court

held that CNI failed to meet the standing require-

ments and accordingly, dismissed the organization.

contemplates a cooperative venture between the Secretary, the

producers, and the handlers,” id. at 599; (2) to grant standing

to consumers would defeat Congress’ intent that all challenges

be initially considered by the agency rather than the courts,

id, at 599-600; and (3) granting standing to consumers would

encourage handlers to bypass the agency by finding a consumer

who would lend his name to a suit challenging the order. /d.

at 600.

We conclude that this does not constitute the type of clear

and convincing evidence of congressional intent needed to

overcome the presumption in favor of judicial review, see, e.g.,

Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S.Ct.

1507, 1511, 18 L.Ed.2d 681 (1977), especially since no legis-

lative history or statutory language is cited. See National

Association of Home Health Agencies Vv. Schweiker, 690 F.2d

932, 942 (D.C. Cir. 1982). The mere fact that review is ex-

pressly provided for handlers is not conclusive. See Stark v.

Wickard, 321 U.S. 288, 64 S.Ct. 559, 88 L.Ed. 783 (1944)

(producers can challenge the administration of a milk market

fund, even though there was an express judicial review pro-

vision for handlers but not for producers). Moreover, if Con-

gress intended to channel all challenges through the agency,

producers should also be required to follow that route. Yet,

several courts have concluded that challenges by producers

may be heard by courts without first being considered by the

Secretary. Dairylea Cooperative, Inc. v. Butz, 504 F.2d 80,

83 (2d Cir. 1974); Jones v. Bergland, 456 F.Supp. 635, 641-

42 (E.D.Pa. 1978). Finally, the Ninth Circuit’s concern over

handler-consumer collusion is an inadequate basis for inferring

congressional intent. In the absence of some evidence that

Congress at least considered the issue, we refuse to hold that

Congress intended to leave consumers without a remedy.

28a

Because we conclude that CNI has not met the con-

stitutional requirements of standing, we affirm the

district court on this issue.

1. Injury in fact

CNI alleges that it has suffered two injuries as a

result of the allegedly illegal compensatory payment

requirement: (1) the requirement obstructs CNI’s in-

stitutional interest in “seeing that consumers” have

nutritious fluid dairy products available at the lowest

possible price; and (2) it prevents CNI from fully

achieving its educational objective of informing !ow-

income individuals about sources of low-cost nutri-

tional food.” Only the later allegation satisfies the

injury in fact requirement.

An obstruction of an organization’s interest in

“seeing” that consumers have nutritious fluid prod-

ucts available at the lowest possible price is not the

type of definable and discernible injury that permits

an organization to establish standing. In Simon v.

Eastern Kentucky Welfare Rights Organization ™ the

Supreme Court held that an organization interested

in seeing that poor people had access to health serv-

ices, “could not establish . . . standing on the basis

of that goal.” The Court, citing Sierra Club v.

Morton,” noted that “an organization’s abstract con-

cern with a subject that could be affected by an ad-

7 Appellants’ Brief at 23. See also Plaintiffs’ Complaint at

75, JA at 21.

™ Id.

78 426 U.S. 26, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1978).

7 Id. at 39-40, 96 S.Ct. at 1924-25.

29a

judication does not substitute for the concrete injury

required by Art. III.” In Sierra Club the Court

held that an injury to the Sierra Club’s institutional

interest in seeing that the nation’s natural resources

were protected from man’s degradation was not a

sufficient basis for establishing standing.” CNI’s in-

terest in “seeing” that consumers have the nutrition

they need at the lowest possible price is the same type

of abstract interest which the Supreme Court held

was insufficient in Eastern Kentucky Welfare Rights

and Sierra Club.

CNT cites CNI v. Bergland ® as support for its con-

tention that its alleged injury is sufficient to establish

standing. In Bergland the court held that CNI had

standing as a representative of consumers to chal-

lenge regulations implementing the National School

Lunch and Breakfast program. The court noted that

CNI had standing because it was an organization

“sneaking for individuals, whose health and nutrition

interests are affected by the Secretary’s action.” In

the present case CNI seeks to establish standing on

the basis of its institutional interests. It is not acting

as a spokesman for individual consumers.”

CNI further seeks to shore up its argument by cit-

ing Havens Realty Corp. v. Coleman.” In Havens

Realty the Supreme Court held that a plaintiff orga-

1 426 U.S. at 40, 96 S.Ct. at 1925 (citations omitted).

* 405 U.S. at 739-741, 92 S.Ct. at 1368-69.

83 493 F.Supp. 488 (D.D.C. 1980).

* Td. at 492 (emphasis added).

85 CNI has not alleged that its members have been injured

as a result of the challenged action. Cf. Warth, 422 U.S. at

511, 95 S.Ct. at 2211.

* 455 U.S. 363, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982).

80a

nization had institutional standing because it alleged

that defendant’s racial steering practices frustrated

“its efforts to assist equal access to housing through

counseling and other referral services.” CNI

argues that their alleged injury is identical to that

alleged by the organization in Havens Realty. How-

ever, the Court in Havens Realty noted that the de-

fendant’s actions interfered with the “organization’s

activities,” distinguishing those activities from the

“organization’s abstract social interests.” In the

present case CNI claims it has an interest in “seeing”

that consumers receive dairy products at the lowest

possible price, It does not allege that it assists them

in doing this, nor does it allege that the contested

regulation impedes it from assisting consumers. It

seeks standing on the basis of its abstract interest in

seeing that consumers achieve this goal. Such an in-

jury is not sufficiently concrete to establish standing.

CNI’s second alleged injury does meet the injury in

fact requirement, If, as CNI alleges, it has been pre-

vented from informing low-income individuals about

sources of low-cost food, it has suffered a definable

and discernible injury because it would be prevented

from carrying out one of its primary activities.”

However, this alleged injury cannot be the basis for

establishing standing in this case because CNI has

failed to establish any connection between the alleged

injury and the challenged regulation.

* Id. at 879, 102 S.Ct. at 1124.

** Jd. (emphasis added).

*® See Scientists’ Institute for Public Information, Inc. Vv.

Atomic Energy Commission, 481 F.2d 1079, 1086 n. 28 (D.C.

Cir. 1978).

8la

2. Causation

CNI alleges that the challenged regulation inter-

feres with its efforts to inform low-income individuals

about the sources of low cost food. However, CNI

fails to assert any reasonable connection between that

injury and the Secretary’s actions. Nothing in the

challenged regulation affect CNI’s ability to inform

consumers about sources of low cost food. Thus, this

case is distinguishable from Scientists’ Institute for

Public Information, Inc. v, Atomic Energy Commis-

sion,” on which CNI relies. In Scientists’ Institute

this court held that an association’s educational ac-

tivities were impaired by the AEC’s refusal to pre-

pare an impact statement. In the present case the

Secretary has made a study of the effect of removing

the contested portion of the milk market orders and

has made that information available to the public.

The contested regulation has no impact on the avail-

ability of information which CNI seeks to dissemi-

nate, It may limit the availability of low-priced dairy

products, but that is not the injury of which CNI

complains. CNI has failed to establish any connec-

tion between the Secretary’s action and an injury to

its educational activities. Having failed to satisfy the

constitutional requirements of standing, CNI is pre-

cluded from litigating the issues on the merits.

III. EXHAUSTION OF ADMINISTRATIVE REMEDIES

Appellant Joseph Oberweis is a handler of milk

products. It is undisputed that he has standing to

bring the present suit.*' Nevertheless, the district

court dismissed Oberweis, holding that he failed to

* See 7 U.S.C. § 608c¢(15) (A) (1976).

82a

exhaust his administrative remedies. Oberweis ad-

mits that he has not meticulously followed the statu-

tory procedures for filing a “handler petition” under

section 608¢c(15) (A), but he argues that he should

not be required to file another petition because he has

substantially complied with the requirements of that

section. We must reject that argument, however, be-

cause of te context in which the present action

arose.

The present action is not an appeal from the Secre-

tary’s decision denying the petition filed by Oberweis

and the other appellants in 1979. The complaint in

this action was filed 2 December 1980, four months

before the Secretary acted on the 1979 petition. In

the complaint appellants asked the court, inter alia,

to hold that the Secretary’s refusal to act on the peti-

tion was arbitrary and capricious,” but they did not

82 Td.

In full the section provides:

Any handler subject to an 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 there-

of or to be exempted therefrom, He shall thereupon be

given an opportunity for a hearing upon such petition, in

accordance with regulations made by the Secretary of

Agriculture, with the approval of the President. After

such hearing, the Secretary shall make a ruling upon the

prayer of such petition which shall be final, if in accord-

ance with law.

Section 608¢c(15)(B) vests federal district courts with

jurisdiction to review the Secretary’s ruling on a section

15(A) petition. Jd., § 608c(15) (B).

*8 Since the Secretary ultimately acted on the petition, appel-

lants’ complaint concerning his refusal to act is now moot.

83a

seek review of the decision itself. Appellants chal-

lenge the Secretary’s authority to adopt the compen-

satory payment regulation in the first place; their

complaint did not attack his subsequent refusal to

correct that alleged wrong. Thus, Oberweis’ argu-

ment that he substantially complied with section

15(A) by joining the other appellants in filing a peti-

tion in 1979 is misguided since he is not seeking a

review of the Secretary’s decision with respect to that

petition. If Oberweis wants a court to decide whether

his 1979 petition substantially complies with the ex-

haustion requirements of section 15(A) he will have

to challenge the Secretary’s decision on that petition.

We express no opinion on the validity of Oberweis’

argument in that respect because the present case

does not involve that petition.

Since Oberweis is not appealing from a ruling in

which he first petitioned the Secretary for relief, we

hold that he has not exhausted his administrative

remedies as required by the statute.™

* Unlike Oberweis, Consumers are not required to follow

the procedures outlined in section 15(A) because they are

not covered by that section, which deals with handlers only.

Nor is there any basis for inferring that Consumers should be

subject to the same requirements, Section 15(A) was de

signed to prevent a handler (who is the only party subject to

liability for violating a milk market order) from needlessly

interrupting enforcement proceedings initiated by the Secre-

tary agai t the handler. See United States v. Ruzicka, 329

U.S. 287, 67 S.Ct. 207, 91 L.Ed. 290 (1946). The exhaustion

requirement of section 15(A) thus establishes “an equitable

and expeditious procedure for testing the validity of orders,

without hampering the Government’s power to enforce compli-

ance with their terms.” H.Rep. No. 1241, 74 Cong., Ist Sess.

14 (1935) (emphasis added). Since a suit by a group of con-

sumers will not directly interfere with any pending enforce-

8ia

IV. CONCLUSION

The individual consumers in this case established a

definable and discernible injury and the proper con-

nection between that injury and the various aspects of

the suit. The district court’s insistence that they prove

more than they did was improper. A plaintiff is not

required to prove his case in order to acquire stand-

ing. The district court did, however, correctly con-

clude that CNI failed to satisfy the constitutional

elements of standing. An organization cannot estab-

lish standing on the basis of its abstract interest in

seeing that justice prevails. The district court was

also correct in its decision to dismiss Oberweis.” Ac-

cordingly, the district court’s opinion is affirmed in

part and reversed in part, and the case is remanded

to the district court for a decision on the merits.

It is so ordered.

ment proceedings, there is no reason to stretch section 15(A)

beyond its express limits. Cf. Dairylea Cooperative, Inc. V.

Butz, 504 F.2d 80, 88 (2d Cir. 1974) (producer allowed to

challenge milk market order without first petitioning the

Secretary for relief); Jones v. Bergland, 456 F.Supp. 635,

641-42 (E.D.Pa. 1978) (producer not required to exhaust ad-

ministrative remedies because he had no remedies to exhaust).

* Because this action is not an appeal from a ruling under

7 U.S.C, § 608c(15) (A), the district court’s jurisdiction will

exist under 28 U.S.C, § 1381, rather than 7 U.S.C. § 608

(15) (B). Nevertheless, the district court’s scope of review

is still somewhat limited. The compensatory payment regu-

lation should be sustained if it is within the Secretary's

granted power, issued pursuant to proper procedure, and sup-

ported by adequate evidence and reason when adopted.

Dairylea Cooperative, Inc. v. Butz, 504 F.2d 80, 84 (2d Cir.

1974). See generally K. Davis ADMINISTRATIVE LAW TREATISE

§ 5.08, at 299 (19568).

85a

SCALIA, Circuit Judge, concurring in part and

dissenting in part:

I join Part II C of the Court’s opinion, which

affirms dismissal of Community Nutrition Institute

for lack of standing. I concur in the result of Part

III, affirming the dismissal of Oberweis, but would

rest dismissal upon the ground assigned by the dis-

trict court: the failure to exhaust administrative

remedies. I dissent from the Court’s action in re-

versing the district court’s dismissal of the individ-

ual consumers, who in my view were correctly found

to lack standing.

THE INDIVIDUAL CONSUMERS

This suit challenging federal agency action invokes

the “generous review provisions” * of the Administra-

tive Procedure Act (APA), 5 U.S.C. §§ 701-706

(1976), which have “greatly expanded the availabil-

ity of judicial review,”* conferring standing where

preexisting “prudential limitations” would exclude

it. The zone of interest test was originally formu-

lated to describe the application of these statutory

provisions.* Although it has subsequently been used

in non-APA cases, to describe one of the prudential

1 Shaughnessy Vv. Pedreiro, 349 U.S. 48, 51, 75 S.Ct. 591,

594, 99 L.Ed. 868 (1955).

* Heillika v. Barber, 345 U.S. 229, 232, 73 S.Ct. 608, 604, 97

L.Ed. 972 (1953).

* See Sierra Club v. Morton, 405 U.S. 727, 788, 92 S.Ct.

1361, 1865, 31 L.Ed.2d 686 (1972).

*See id. (citing Association of Data Processing Service

Organizations Vv. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d

184 (1970), and Barlow v. Collins, 397 U.S. 159, 90 S.Ct.

832, 256 L.Ed.2d 192 (1970)).

86a

limitations upon standing in general," its application

in that context is not likely the same. The Supreme

Court’s most recent recitation of the ‘arguably with-

in the zone of interests” formula in a non-APA case

omits the word “arguably.” *

In a suit such as this, however, seeking review of

action by a federal agency, the original formulation

in all its liberality applies. When interpreting its

meaning, one must bear in mind that the test repre-

sents not an independent judicial prescription, but a

judicial attempt to ascertain legislative intent. It is

supposed to indicate when Congress intended to make

a particular litigant “a proper party to request an

adjudication of a particular issue.”” In the context

of suits challenging agency action it is meant to de-

termine whether Congress intended the plaintiff to

serve as a “private attorney general,” * “to bring to

the attention of the appellate court errors of law” by

the Executive branch.’

The test becomes a progressively weaker indication

of such intent as the breadth of the zone of interests

within which the plaintiff claims his interests lies is

® See, e.g., Gladstone, Realtors v. Village of Bellwood, 441

USS. 91, 100 n. 6, 99 S.Ct. 1601, 1608 n. 6, 60 L.Ed.2d 66 (1979);

Boston Stock Exchange v. State Tax Comm'n, 429 U.S. 318,

$20-21 n. 3, 97 S.Ct. 599, 602-08 n. 8, 50 L.Ed.2d 514 (1977).

* Valley Forge Christian College v. Americans United for

Separation of Church and State, Inc., 454 U.S. 464, 475, 102

S.Ct. 752, 760, 70 L.Ed.2d 700 (1982).

t Sierra Club v. Morton, supra note 8, 405 U.S. at 782 n. 3,

92 S.Ct. at 1864 n. 8 (quoting Flast v. Cohen, 392 U.S. 83,

100, 88 S.Ct. 1942, 1952, 80 L.Ed.2d 947 (1968)).

* Association of Data Processing Service Organizations Vv.

Camp, supra note 4, 396 U.S. at 154, 90 S.Ct. at 830.

* FCC v. Sanders Brothers Radio Station, 309 U.S. 470,

477, 60 S.Ct. 698, 698, 84 L.Ed. 869 (1940).

87a

increased. Thus, in Data Processing, swpra note 4, it

was eminently reasonable to conclude that Congress

intended a proscription against the Comptroller Gen-

eral’s allowance of competition to be enforceable in

the courts by one of the injured competitors. It would

be less reasonable, however, to conclude that a legisla-

tive directive to the Comptroller General to audit all

banking institutions displays a congressional intent

to permit suit by all bank depositors. The reason for

the difference is the same as the reason underlying the

“generalized grievance” thread of judicially imposed

limitations upon standing *®: Governmental mischief

whose effects are widely distributed is more readily

remedied through the political process, and does not

call into play the distinctive function of the courts as

guardians against oppression of the few by the many.

Thus, for such matters it is less likely that Congress

intended the creation of private attorneys general to

supplement, through the courts, the President’s pri-

mary responsibility to “take care that the laws be

faithfully executed.” U.S. Const. art. II, § 3.

Even so, where the statute in question seeks to pro-

tect nothing but generalized interests, a “hospitable”

interpretation of the APA may justify placing that

entire class within its expanded prescription of stand-

ing. That was the case, for example, with the Na-

tional Environmental Policy Act, which was directed

not to the protection of any narrow group or class,

but to the preservation of the environment for the

benefit of the entire country. The Supreme Court

found that anyone who used the natural resources as-

See, e.g., Schlesinger Vv. Reservists Committee to Stop the

War, 418 U.S. 208, 217-20, 94 S.Ct. 2925, 2930-81, 41 L.Ed.2d

706 (1974); United States v. Richardson, 418 U.S. 166, 176-80,

94 S.Ct. 2940, 2946-48, 41 L.Ed.2d 678 (1974); Ez parte

Levitt, 302 U.S. 633, 634, 58 S.Ct. 1, 82 L.Ed. 498 (1987).

88a

sertedly affected by disregard of the Act had standing

to sue." It is quite another matter, however, when a

statutory provision benefits generalized interests

through the protection of more particularized inter-

ests to which it is immediately directed. Almost any

statute has generalized indirect benefits; ultimate im-

provement of the society at large is the whole theo-

retical justification for heeding the requests of “spe-

cial interests.” But where there is a direct and

immediate beneficiary class which can be relied upon

to challenge agency disregard of the law, the claim of

the indirect general beneficiaries to be congressionally

designated ‘‘private attorneys general” is weak in-

deed. In such circumstances the whole premise of the

liberalized standing provisions no longer applies:

The right of judicial review is ordinarily in-

ferred where congressional intent to protect the

interests of the class of which the plaintiff is a

member can be found; in such cases, unless mem-

bers of the protected class may have judicial re-

view the statutory objectives might not be real-

ized.*”

The consumer plaintiffs in the present case are in-

direct general beneficiaries. The direct beneficiaries

of milk marketing orders under the Agricultural

Marketing Agreement Act (AMAA) are milk pro-

ducers. Even before adoption of the APA, the courts

found a congressional intent to permit them to sue.”

11 United States v. Students Challenging Regulatory Ayency

Procedures (SCRAP), 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d

254 (1973).

12 Barlow Vv. Collins, supra note 4, 897 U.S. at 167, 90 S.Ct.

at 838.

4 Stark v. Wickard, 321 U.S. 288, 64 S.Ct. 559, 88 L.Ed.

733 (1944).

89a

On the other side of the ledger, the direct benefici-

aries of any limitations upon the Secretary’s author-

ity with regard to milk marketing orders are the

milk handlers who pay the artificially established

prices. Congress expressly gave them standing to ob-

tain judicial review in the AMAA itself. 7 U.S.C.

§ 608c(15)(B) (1976). In such a situation, where

the narrow class immediately affected by both agency

excess and agency omission is readily identifiable, I

do not believe that a more remote beneficiary class as

generalized as the one here (viz, all consumers of

fluid milk products—which cannot exclude many of

the nation’s households) can be found to meet the

zone of interests test.

Consumer interests with regard to milk marketing

orders can be consequential to either milk handlers’

interests (as in the present case) or producers’ inter-

ests. The latter would be the situation if not high

prices (or, what ultimately amounts to the same, the

unavailability of a ready substitute to augment fluid

milk supplies at the retail level) but rather inade-

quacy of production were the gravamen of the com-

plaint. In my view, consumers would have standing

in neither situation, but their case is particularly

weak in the former, where the primary vindicator

of the generalized interest in question is specifically

designated by judicial review provisions of the stat-

ute itself. It is true enough, as Stark v. Wickard,

supra note 13, amply demonstrates,“ that explicit

provision for review by one class of interests does not

necessarily imply an absence of intent to provide re-

view to other interests whose grievance is quite dis-

tinct. But where, as in the present case, the second

14 See the dissent of Frankfurter, J., 321 U.S. at 317, 64

S.Ct. at 574.

40a

grievance is entirely derivative of the first—where

consumers complain that they will have to pay more

because milk handlers will have to pay more—then

the statutory review provision does suggest that the

more remote group was not meant to have standing

to sue.

My conclusion is unaffected by the allusions to con-

sumer interests in the general purpose section of the

act, 7 U.S.C. § 602(2), (4) (1976). With regard to

an interest so generalized, they seem to me to repre-

sent, if not (as the Ninth Circuit said in a case con-

tradicting the majority’s holding here) “pious plati-

tudes,” * then at least no more than a recital of the

ultimate purpose of the statutory scheme which has

no real bearing upon who was expecetd to enforce it.

APPELLANT OBERWEIS

I concur in affirming the district court’s dismissal

of the milk handler’s suit. I would base the affirm-

ance, however, upon the ground used by the district

court: failure to exhaust administrative remedies.

Before us and the district court, Oberweis makes

the same claim as the other appellants, that the milk

marketing order was invalid. He does not seek to

appeal denial of the 1979 petition for rulemaking,

in which he joined the other appellants in alleging,

among other things, invalidity of the order; but he

asserts that the filing and denial of that petition

satisfied the requirement that he exhaust his § 608c

(15) (A) remedies—a requirement that does not ap-

ply to the other appellants. If I understand the ma-

jority opinion correctly, its dismissal of Oberweis’s

complaint is based upon the proposition that when

1% Rasmussen V. Hardin, 461 F.2d 595, 599 (9th Cir.), cert.

denied, 409 U.S. 933, 98 S.Ct. 230, 34 L.Ed.2d 188 (1972).

4la

a requirement of exhaustion of administrative reme-

dies exists, appeal must be taken from the agency

denial that constitutes the exhaustion, and the griev-

ance cannot be brought to court in any other fashion.

That may be correct, but I have some doubt, since

it seems a most rigid application of a doctrine that

is generally quite flexible—so that, for example, ex-

haustion is excused entireiy when it would obviously

- be unavailing.** I prefer, therefore, to rest my dis-

position of this aspect of the case upon what seems

to me surer ground: that Oberweis’s petition could

not in any event comply with the exhaustion re

quirement.

As the majority opinion notes, Oberweis is forced

to admit that he “has not meticulously followed the

statutory procedures for filing a ‘handler petition’.”

(Maj. Op. at [82a, infra].) That admission is an un-

derstatement. The real problem is not how Oberweis

framed his demand, out what he demanded and was

provided. He was entitled to ask for and receive a

formal adjudicatory hearing that would produce a

ruling on the legality of the challenged order. That

proceeding would be conducted before an adminis-

trative law judge, and the relative merits of Ober-

weis’s assertions and the Secretary’s position would

be tested and reviewed on the basis of record evi-

dence.” What Oberweis sought, however, was a hear-

ing of quite a different sort inquiring into quite a

different question—an informal rulemaking proceed-

ing to decide whether the order should be revised.

18 See American Federation of Government Employees v.

Acree, 475 F.2d 1289 (D.C.Cir. 19738); Wolff v. Selective

Service Local Board, 372 F.2d 817 (2d Cir. 1967).

177 U.S.C. § 608c(15) (A) (1976) ; 7 C.F.R. § 900.50-900.71

(1982). See 5 U.S.C. §§ 554, 556-557 (1976 & Supp. IV 1980).

42a

There the decisionmaker would not be limited to rec-

ord evidence, assertions would not be tested by cross-

examination, and (evidently of some importance to

those with whom Oberweis made common cause)

persons other than producers and handlers would be

permitted full participation. In fact, to be entirely

accurate Oberweis sought even less than this—namely,

merely consideration of whether such a rulemaking

proceeding would be desirable. The situation is thus

quite different from that in cases such as Joseph v.

FCC, 404 F.2d 207 (D.C.Cir. 1968), in which a be-

lated request for public hearing was held to be the

equivalent of a motion for reconsideration. There the

nature of the consideration which the agency would

be compelled to give the two requests was substan-

tially identical ; here it is not.

The Secretary gave Oberweis no more than the

type of consideration and the scope of determination

he requested—which was less than he was required

to seek before applying to this court. One can hardly

blame the Secretary for not treating the request as

(what it clearly was not) a demand for a § 608c

(15) (A) proceeding. The first sentence of the peti-

tion stated that it was filed “pursuant to” 5 U.S.C.

§ 558, the general rulemaking provision of the APA

and 7 C.F.R. § 1.28, the provision of the agency reg-

ulations addressing the filing of petitions for rule-

making. Moreover, the petition was joined by the

consumer plaintiffs who had no standing to partici-

pate in a § 608c(15)(A) proceeding. Oberweis was

not misled regarding the agency’s treatment of the

petition, since his attorney was advised that, insofar

as claims of illegality were concerned, “§ 608c(15)

48a

(A) and (B), provides the means through which any

handler . . . may seek legal recourse.” *

It might be asserted, I suppose, that the agency

was too generous in entertaining Oberweis’s peti-

tion; and that if it did not insist upon the exclusive-

ness of his § 608¢c(15) (A) remedy in the administra-

tive proceedings it cannot now do so before the courts.

In fact, however, the agency is not asserting that

his § 608c(15)(A) remedy is exclusive—only that

it must be pursued before an attack upon the mar-

keting order itself may be taken to the courts. Noth-

ing prohibits a handler from petitioning for a rule-

making if he wishes, but that petition may, within

what has hitherto been considered the broadest dis-

cretion, be denied. What the doctrine of exhaustion

requires is that in order to challenge the substance

of the marketing order the handler must resort—

before or after the denial of this discretionary relief

—to the much more categorical claim he has upon

the agency’s attention, namely his right to obtain a

full-dress adjudicatory hearing resulting in a ruling

on the validity of the order. No such hearing has

been requested or held,” and no such ruling has

issued.”

18 Letter from Sec. Bergland to Ronald L. Plesser (Aug. 11,

1980), reprinted in Jt.App. at 60.

19 Indeed, not even an informal public hearing was held,

though that was requested and considered. See Letter from

Ronald L. Plesser (appellants’ attorney) to Sec. Bergland

(July 1, 1980), reprinted in Jt.App. at 57; Letter from William

T. Manley, Dep. Administrator, Marketing Program Opera-

tions, to Ellen Haas and Thomas B, Smith (CNI) (Apr. 7,

1981), reprinted in Jt. App. at 170.

The agency’s final response denying the petition speci-

fied that “in reviewing the petition for rulemaking purposes,

44a

The situation might be different if the denial of

the petition for rulemaking were clear indication that

the adjudicatory hearing could be of no avail. It is

not. Different procedures are prescribed not for their

own sake, but for the different effects which they

are likely to have upon the outcome. Even if the Sec-

retary’s action in denying Oberweis’s petition at the

conclusion of the informal proceeding could properly

be regarded as a determination that the marketing

order is valid, it is not certain that the same deter-

mination would have been made in the formal pro-

ceeding which Oberweis should have demanded.

For the above reasons, I would affirm in all re

spects the decision of the district court.

we have not directed our attention” to “[c]laims that the

present regulatory treatment of reconstituted milk is not in

accordance with law.” Letter from William T. Manley, supra

note 19, at 175.

45a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

September Term, 1982

Civil Action No. 80-03077

No. 81-2191

COMMUNITY NUTRITION INSTITUTE, ET AL.,

APPELLANTS

JOHN R. BLOCK, Secretary, United States Department

of Agriculture, ET AL.

Appeal from the United States District Court

for the District of Columbia

Before: Tamm, Wilkey and Scalia, Circuit Judges

[Filed Jan. 21, 1983]

JUDGMENT

THIS CAUSE came on to be heard on the record

on appeal from the United States District Court for

the District of Columbia, and was argued by counsel.

ON CONSIDERATION THEREOF It is ordered

and adjudged by this Court that the judgment of the

District Court appealed from in this cause is hereby

affirmed in part, reversed in part, and the case is

46a

remanded to the District Court for a decision on the

merits, all in accordance with the opinion of this

Court filed herein this date.

Per Curiam

For the Court

/s/ George A. Fisher

GEORGE A. FISHER

Clerk

Date: January 21, 1983.

Opinion for the Court filed by Circuit Judge Wilkey.

Opinion concurring in part and dissenting in part

filed by Circuit Judge Scalia.

47a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

September Term, 1982

Civil Action No. 80-03077

No. 81-2191

COMMUNITY NUTRITION INSTITUTE, ET AL.,

APPELLANTS

JOHN R. BLOCK, Secretary, United States Department

of Agriculture, ET AL.

ARGUED 10-4-82

BEFORE: Tamm, Wilkey and Scalia, Circuit Judges

[Filed Mar. 28, 1983]

ORDER

On consideration of the Federal Appellees’ peti-

tion for rehearing, filed March 7, 1983, it is

ORDERED by the Court that the aforesaid peti-

tion is denied.

Per Curiam

FOR THE COURT:

GEORGE A. FISHER,

Clerk

BY: /s/ Robert A. Bonner

ROBERT A. BONNER

Chief Deputy Clerk

Circuit Judge Scalia would grant the petition for

rehearing.

48a

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

September Term, 1982

Civil Action No. 80-03077

No, 81-2191

COMMUNITY NUTRITION INSTITUTE, ET AL.,

APPELLANTS

JOHN R. BLOCK, Secretary, United States Department

of Agriculture, ET AL.

ARGUED 10-4-82

BEFORE: Robinson, Chief Judge, Wright, Tamm,

MacKinnon, Wilkey, Wald, Mikva, Ed-

wards, Ginsburg, Bork and Scalia, Cir-

cuit Judges

[Filed Mar. 28, 1983]

49a

ORDERED by the Court en bane that the afore-

said suggestion is denied.

Per Curiam

FOR THE CouRT:

GEORGE A, FISHER,

Clerk

BY: /s/ Robert A. Bonner

ROBERT A. BONNER

Chief Deputy Clerk

Cireuit Judges MacKinnon, Bork and Scalia would

grant the suggestion for rehearing en bance.

50a

APPENDIX E

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

September Term, 1982

Civil Action No. 80-03077

No, 81-2191

COMMUNITY NUTRITION INSTITUTE, ET AL.,

APPELLANTS

JOHN R. BLOCK, Secretary, United States Department

of Agriculture, ET AL.

ARGUED 10-4-82

BEFORE: Tamm, Wilkey and Scalia, Circuit Judges

[Filed Apr. 19, 1983]

ORDER

On consideration of the petition for rehearing of

intervenors-defendants-appellees, filed March 25, 1983,

it is

ORDERED by the Court that the aforesaid peti-

tion is denied.

Per Curiam

FOR THE COURT:

GEORGE A. FISHER,

Clerk

BY: /s8/ Robert A. Bonner

Rosert A, BONNER

Chief Deputy Clerk

Cireuit Judge Scalia would grant the petition for

rehearing.

5la

APPENDIX F

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

September Term, 1982

Civil Action No. 80-03077

No. 81-2191

COMMUNITY NUTRITION INSTITUTE, ET AL.,

APPELLANTS

JOHN R. BLOCK, Secretary, United States Department

of Agriculture, ET AL.

ARGUED 10-4-82

BEFORE: Robinson, Chief Judge; Wright, Tamm,

MacKinnon, Wilkey, Wald, Mikva, Ed-

wards, Ginsburg, Bork and Scalia, Cir-

cuit Judges

[Filed Apr. 19, 1983]

ORDER

Intervenors-defendants-appellees’ suggestion for re-

hearing en banc has been circulated to the full Court

and a majority of the Court has not voted in favor

thereof. On consideration of the foregoing, it is

52a

ORDERED by the Court en banc that the afore-

said suggestion is denied.

Per Curiam

FOR THE COURT:

GEORGE A. FISHER,

Clerk

BY: /s/ Robert A. Bonner

ROBERT A. BONNER

Chief Deputy Clerk

Circuit Judges MacKinnon, Bork and Scalia would

grant the suggestion for rehearing en banc.

53a

APPENDIX G

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 80-3077

COMMUNITY NUTRITION INSTITUTE, ET AL.,

PLAINTIFFS

Vv.

JOHN R. BLOCK, ET AL., DEFENDANTS

[Filed Sep. 29, 1981]

MEMORANDUM

This suit against the Secretary of Agriculture and

the United States Department of Agriculture seeks

the invalidation of certain provisions of the Federal

Milk Market Orders (“Orders”). 7 C.F.R. § 1000

et seg. (1981). The challenged Orders require the

“down allocation” of reconstituted milk products‘ and

the payment of compensatory payments on those pred-

ucts to regional producers of fresh milk products.

This action also asks the Court to compel the De-

partment to hold a hearing on the plaintiffs’ petition

for a rulemaking concerning the provisions of the

Orders that are at issue. Because plaintiffs Harrell,

Desmarais, Weinberg, and Community Nutrition In-

stitute do not have standing in this case and because

plaintiff Oberweis has not exhausted his administra-

tive remedies, the complaint must be dismissed for

lack of subject matter jurisdiction.

* Reconstituted milk is made by combining dried milk

powder, water, and butterfat.

I. Background.

The Agricultural Marketing Agreement Act

(“AMAA”) was enacted to correct the “disruption

of the orderly exchange of commodities in interstate

commerce.” 7 U.S.C. § 601 (1976).? Pursuant to the

AMAA, Milk Market Orders have been issued and

adopted in forty-seven regions of the United States.

7 C.F.R. §§ 1001-1139 (1981). These Orders are de-

signed to ensure that producers within a given re-

gion receive a uniform minimum price for their

grade A milk whether it is consumed in fluid form or

manufactured into milk products. See 7 U.S.C.

§ 608c(5) (1976). The Orders divide milk into

classes: Class I milk is sold to consumers for drink-

ing; Class II milk or “surplus” is manufactured into

various products.* Handlers pay a higher price for

Class I milk than they do for Class II milk. Cf. 7

C.F.R. §§ 1012.50(a) ; 1012.40(b).

Producers within an Order Area receive a “blend

price,” a uniform price based upon how much milk

in the area is sold for Class I or Class II purposes.

The blend price is the total value of all milk used by

all handlers in the three classes, divided by the total

volume of milk used. See United States v. Rock Royal

Co-op, 307 U.S. 538, 555 (1939). The greater the

amount of milk in Class I the higher the blend price.

2 The complex provisions of the AMAA have been explained

elsewhere. See United States v. Rock Royal Co-op, 307 U.S.

588 (1989); Queensboro Farm Products, Inc. v. Wickard, 187

F.2d 969 (2d Cir. 1948). However, a brief review of the rele-

vant provisions is necessary for an understanding of the back-

ground of this case.

* Some orders divide surplus or manufactured milk into

for convenience both classes will be

55a

See Grant v. Benson, 229 F.2d 765, 767 (D.C. Cir.

1955), cert. denied, 351 U.S. 934 (1956). Each

handler whose total use value of milk for a particular

reporting period (i.e., each month) exceeds his pay-

ments to producers at the blend price must make a

payment to the producer-settlement fund for this ex-

cess.* Conversely, handlers whose use value is below

the blend price are paid from the fund.

Mi! produced outside an Order Area but sold by

handlers in the area is classified as “other source

milk.” 7 C.F.R. §§ 1012.14, 1079.14 (1981). If this

milk is received in bulk form and produced by dairies

subject to another Order, it is allocated into classes

and priced in the same proportion as locally produced

milk. Jd. § 1012.44. If received in packaged form,

other source milk is treated as Class I milk. Jd.

§§ 1012.44(a) (2), 1079.44(a) (3). Milk from areas

with no Order is “down allocated” or presumed to be

used for Class II purposes, even if actually used in

Class I. Id. §§ 1012.44(a)(5)(i), 1079.44(a) (8).

Thus, local producers receive credit for a Class I

price, and the blend price is raised. Moreover, han-

dlers who receive this milk must also make a “com-

pensatory payment” to the producer settlement fund.

This payment generally equals the difference between

the Class I prive and the blend price. 7d. $§ 1012.71

(a) (2) (ii), 1079.60, 1079.71 (a) (2) (ii).

Reconstituted milk products were unregulated prior

to 1964. After notice and a series of hearings, the

Secretary issued the current regulations which treat

reconstituted milk as “other source” fresh fluid milk.

* For instance, a handler who supplies only whole milk for

consumer consumption will have a use value that exceeds the

blend price that he pays to producers and must pay the dif-

ference into the fund.

7 C.F.R. §§1012.14(c), 1079.14(c) (1981). This

milk is assumed to have displaced local milk from

lass I, and the entire volume is down allocated to

the lower value uses. As a result, a comparable volume

of local milk is moved into Class I from lower classes.

This raises the blend price. Cf. id. §§ 1012.44,

1079.44. If a handler has not manufactured enough

Class II or Class III products to account for all the

reconstituted milk he produced, the deficit is assigned

to Class I, and the handler must make a compensa-

tory payment to the local settlement fund equal to

the difference between the lower class price and the

Class I price. Jd. §§ 1012.60(e), 1079.60(d).

On August 23, 1979, the plaintiffs filed a petition

with the Secretary asking for repeal of the provisions

of the regulations that deal with reconstituted milk.

The Secretary published a Notice of Request for

Hearing and asked for comments on November 16,

1979. 44 Fed. Reg. 65,989 (1979). Eleven months

after the petition was filed, the plaintiffs advised the

Secretary that if no action were taken they would

consider their petition denied. Subsequently, the Sec-

retary published an economic impact analysis of the

petition and invited comments. Preliminary Impact

Statement, 45 Fed. Reg. 75,956 (1980). This suit

was filed on December 2, 1980, and on April 7, 1981,

the Secretary denied the petition.

II. Discussion.

A. Standing.

The Supreme Court has formulated a three-part

test to determine whether particular clon have

standing to bring suit: (1) the

etiam tush enune or Gansten comms He ae

57a

injury in fact; (2) the alleged injuries must be argu-

ably within the zone of interests sought to be pro-

tected by the relevant statute; (3) the relevant stat-

ute must not preclude judicial review. Barlow v.

Collins, 397 U.S. 159, 164-65 (1970); Association of

Data Processing Organizations, Inc. v. Camp, 397

U.S. 150, 152-57 (1970). The plaintiffs must also

demonstrate that their injuries are capable of redress

through the remedy requested and that their injuries

are caused by the challenged action of the agency de-

fendant. Simon v. Eastern Ky. Welfare Rights Orga-

nization, 426 U.S. 26, 38 (1976).

1. Injury tn Fact.

Injury in fact is the threshold issue in every fed-

eral case because it determines whether the court has

power to entertain the suit. Warth v. Seldin, 422

U.S. 490, 498 (1975). This aspect of standing de-

mands that “the plaintiff has ‘alleged such a personal

stake in the outcome of the controversy’ as to warrant

his invocation of federal-court jurisdiction” (empha-

sis in original). Jd. (quoting Baker v. Carr, 369 U.S.

186, 204 (1962)). The injury need not be substan-

tial, United States v. SCRAP, 412 U.S. 669, 689 n.14

(1973); Public Citizen v. Lockheed Aircraft Corp.,

565 F.2d 708, 714 (D.C. Cir. 1977), but the injury

must be “distinct and palpable,” and a “generalized

grievance” is not enough. Warth v. Seldin, supra,

422 U.S. at 499. Although indirect harm to a plain-

tiff will not preclude standing, it will make it more

difficult to establish injury in fact by making it more

difficult to establish that the injury was a conse-

quence of the defendant’s actions and that prospective

relief will remove the harm. Id. at 505.

58a

In considering a motion to dismiss, the Court must

accept as true all material allegations in the com-

plaint and must construe the complaint in favor of

the plaintiffs. Warth v. Seldin, supra, 422 U.S. at

502. Mere allegations are usually sufficient, but if

the defendant controverts the allegations, the plain-

tiff must demonstrate facts supporting his allega-

tions. Public Citizen v. Lockheed Aircraft Corp.,

supra, 565 F.2d at 714 n.20; Sierra Club v. Morton,

514 F.2d 856, 870 n.20 (D.C. Cir. 1975), rev’d on

other grounds sub nom. Kleppe v. Sierra Club, 427

U.S. 390 (1976). If, after the court provides the

plaintiff an opportunity to support its allegations,

“the plaintiff’s standing does not adequately appear

from all materials of record, the complaint must be

dismissed.” Warth v. Seldin, supra, 422 U.S. at

501-02.

The question of injury in fact in this case is con-

trolled by the test established by the Supreme Court

in Warth v. Seldin, supra, and Simon v. Eastern Ky.

Welfare Rights Organization, 426 U.S. 26 (1976);

and by the Court of Appeals for this Circuit in Public

Citizen, supra. In essence, this test requires that the

plaintiff demonstrate a substantial probability that

the requested relief will benefit him in some percepti-

ble and tangible fashion. See Simon, supra, 426 U.S.

at 38; Public Citizen, swpra, 565 F.2d at 715. The

possibility of relief may not be speculative, Simon,

426 U.S. at 44 “remote,” Warth, 422 U.S. at 507,

or “conjectural or hypothetical,” California Bankers

Association v. Schultz, 416 U.S. 21, 69 (1974) ; Public

Citizen, 565 F.2d at 715.

Individual plaintiffs Harrell, Desmarais, and Wein-

berg allege that they are cost-conscious consumers

of fluid dairy products who “routinely seek to de-

59a

crease food expenditures without sacrificing taste or

the nutritional value of their diet.” Complaint, § 7.

They further allege that the existing regulations have

denied them the opportunity to purchase a lower

priced reconstituted milk instead of raw fluid milk.

Id. Plaintiff Community Nutrition Institute is a non-

’ profit charitable organization specializing in food and

nutrition issues. It seeks to further the needs of low

income consumers.

The complaint alleges that “[i]n some areas of the

United States, the cost of manufacturing reconsti-

tuted milk may be substantially less than the cost

of fresh fluid milk.” Complaint, § 23. Similarly,

“Ta] reconstituted fluid product could quickly ex-

pand the fluid milk supply when seasonable changes

result in a reduction of the whole fluid milk supply.”

Id. § 31 (emphasis added). Other allegations are

merely conclusory: “The economic barriers to market-

ing reconstituted milk created by the existing Orders

deprive plaintiffs . . . and other consumers of access

to a nutritious dairy beverage at a lower price than

fresh drinking milk.” Jd. § 28; and “Elimination of

the regulations could result in substantial savings to

consumers.” Jd. {38 (emphasis added). Clearly,

the statements in the complaint are not enough to

establish injury in fact.

The plaintiffs, however, do provide affidavits and

other information in support of their allegations. The

affidavit of plaintiff Oberweis states: “Absent the

compensatory payment, I could manufacture recon-

stituted milk for less than the price I pay for Class I

milk.” Affidavit of Joseph J. Oberweis, { 6. The affi-

davits of Thomas B. Smith demonstrate that the

orders do significantly raise the cost of producing

reconstituted milk products and make it uneconomic

60a

for handlers to do so under present conditions. See

Supplemental Affidavit of Thomas B. Smith, { 9. Yet

these statements do not demonstrate that a change

of this situation would probably benefit consumers.

Indeed, the most persuasive statement on this point

in the Smith affidavit is a quotation from the Justice

Department’s comments to the CNI petition: “If local

handlers could economically turn to reconstituted

milk they would substantially undermine the potential

market power of local producers and limit their abil-

ity to extract premium prices.” Jd. 14. This is the

only statement that goes even indirectly to the possi-

ble benefit to consumers from a change in the Orders.

The plaintiffs also rely heavily on the letter sent

to them by the USDA, denying their petition to amend

the Orders. Exhibit A to Plaintiffs’ Cross-Motion

for Summary Judgment. The letter does state that

plaintiffs’ proposed changes in the Orders would “re-

duce consumer expenditures by $186 million” and

does admit that the availability of a reconstituted

milk product “could be expected to make major in-

roads on the current sales of fresh milk from the

southern and eastern districts.”

This letter, however, goes on to say that the change

in the Orders would cost producers an estimated $576

million dollars and would produce “a radical change

in the Dairy industry.” This change, according to

the letter, might interfere with the public’s access

to an adequate supply of milk and might result in

higher prices for milk products, including milk pow-

der. Thus, the USDA letter does not, when viewed as

a whole, demonstrate a substantial probability: that

the consumer plaintiffs in this case, or, for that

matter any consumers, would benefit from a change

in the Milk Market Orders.

6la

There are too many variables which would have

an effect on consumer prices if the Market Orders

were changed. These variables include: whether

handlers pass the cost savings on to consumers;

whether the change causes a substantial market dis-

location, leading to higher overall milk prices; whether

increased demand for milk powder will increase its

price; whether handlers would dry milk merely to

evade the regulations. This situation is, as the Pre-

liminary Impact Statement, 45 Fed. Reg. 75,956

(1980) ,,indicates, extremely complex, and any benefit

to the plaintiffs from the proposed changes in the

regulations is hypothetical and speculative. ‘Thus, the

plaintiffs cannot demonstrate injury in fact and do

not have standing.

2. The Zone of Interests Test.

The problem of whether consumers are within the

zone of interests arguably protected by the cited por-

tions of the AMAA involves a complex matter of

statutory construction. The statutory provisions for

Orders regulating commodities are in 7 U.S.C. § 608c,

which nowhere mentions the interests of consumers.

The plaintiffs, however, point to an earlier section

of the AMAA which provides that the Secretary will

exercise his power “as will provide, in the interests

of producers and consumers, an orderly flow of the

supply [of the commodity] to market... .” 7 U.S.C.

§ 602(4) (1976). The plaintiffs urge the Court to

read this section in connection with § 608¢(3) and

(4), which provide

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