# Petition for Writ of Certiorari — Riverbend Farms, Inc. v. Madigan > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1259%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1992 - **Citation:** 506 U.S. 999 ## Text ores of pe ce IN THE Siygireme Court of the United States OCTOBER TERM, 1992 RIVERBEND FARMS, INC., a California Corporation; SUNNY COVE CITRUS ASSOCIATION, a California Cooperative Corporation; BELRIDGE PACKING Co., a California Cor- poration; SEQUOIA ORANGE COMPANY, INC., a California Corporation; and EXETER ORANGE COMPANY, INC., a California Corporation, Petitioner, v. EDWARD R. MADIGAN, Secretary, Department of Agriculture, Respondents, Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit PETITION FOR A WRIT OF CERTIORARI JAMES A. Moopy Suite 600 2300 N. Street, N.W. Washington, D.C. 20037 September 8, 1992 (202) 663-9011 WILSON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001 QUESTIONS PRESENTED In response to alleged disorderly marketing conditions, USDA imposed discretionary quotas on the shipment of navel oranges grown in California and Arizona pursuant to marketing order 907 issued under the Agricultural Marketing Agreement of 1937. USDA claimed the “good cause” exception of informal notice-and-comment rule- making under the APA. The Ninth Circuit agreed with the District Court that USDA’s claimed “emergencies” were unjustified. But the Ninth Circuit invoked the “prejudicial error” doctrine to preserve the enforceability of the quotas, departing from decisions of every other ap- pellate court and this Court holding that an agency’s failure to abide by a required procedural safeguard ren- dered the resulting rule void and unenforceable. The questions presented are: 1. Whether regulations found by the Court to have been issued in violations of the APA’s procedural safe- guards can nevertheless have the “force of law’ by virtue of the “prejudicial error” doctrine? 2. Assuming, arguendo, that the procedural error was harmless, did the reviewing courts abdicate their judi- cial function by failing to examine the substance of the quota rules to determine if they were arbitrary, capri- cious, or an abuse of discretion, thereby requiring re- mand for the lower courts to perform this essential task? (i) TABLE OF CONTENTS tie 8 Ey 3 8” 1s | ea TABLE OF CONTENTS ............ f char A EELS PP pe gt i yy st. ae ae I ci casnendaneninns STATUTES AND REGULATIONS 000. eee STATEMENT OF THE CASE..................... saidesdnniihianionale —, SERRISEEFCE GE SES Spi Se a OS ae ea )# bo Review should be granted because the Ninth Circuit has decided an important question of federal law contrary to all prior decisions of this by Rial SERIE Aa ae Review should be granted to prevent the “preju- dicial error” doctrine from becoming the excep- tion that swallows the “rule” of procedural safe- ELE 0 REE a. The decision will encourage agencies to evade procedural safeguards and avoid judicial re- (att Re b. By abandoning a bright line test, the decision will embroil the courts in ad hoc case-by-case review of agency procedures and challengers actions in order to determine if there is enough prejudice to warrant invalidation of ee ieaiaieneks The decision ignores Congressional intent that procedural safeguards be strictly enforced by courts and the original narrow construction given to the “prejudicial error” rule... (ili) 10 14 iv TABLE OF CONTENTS—Continued Page 4. Review should be granted to resolve the split in the circuits created by this decision. ..................... 21 5. The decision should be summarily reversed in order to permit the lower courts to perform the required task upon judicial review of agency ac- tion to determine substantively whether it was arbitrary, capricious, or an abuse of discretion... 24 6. Review should be granted because the decision will impact dozens of other cases. . ee 28 APPENDIX: Ninth Circuit Opinion Affirming in Part, Reversing in Part, and Remanding, March 17, 1992 la Ninth Circuit Order Denying Rehearing, June 9, ROU © ceiecccicteibaicentessccuiciasiata ematstoun, Buea etme cece 17a District Court Opinion Denying USDA Motion for Reconsideration, March 22, 1990 _....... 19a District Court Opinion Granting Plaintiffs’ Motion for Summary Judgment, May 31, 1989 22a I oan een panes eee eweccs ae pee Rete TRL eee . 60a USDA August 25, 1992 press release _... mens a Vv TABLE OF AUTHORITIES Cases: Action on Smoking and Health v. CAB, 713 F.2d 795 (D.C. Cir. 1983), subsequent appeal, 724 Fae Shh Ce Toe BE oe American Horse Protection Assn. v. Lyng, 812 F.2d 1 (D.C. Cir. 1987), review after remand, 681 FP. Supp. 969 (D.D.C. 1968)... American Textile Mfgrs. Inst. v. Donovan, 452 U.S. cot Cb 8 ReaD sie a RE AE AROSE OO Rn REO Anderson v. Butz, 550 F.2d 459 (9th Cir. 1977) .... Arlington Oil Mills v. Knebel, 543 F.2d 1092 (5th = Rieti Peet ne bi a Bowen v. Georgetown Univ ersity Hospital, 488 U.S. SO ET a ee eee ee Bowman Transportation, Inc. v. Arkansas-Best Freight Systems, 419 U.S. 281 (1974)... Burlington Truck Lines v. United States, 371 U.S. Me 2. j SORestlecR nial RRC pur es erm A) ey Ra ABln aie Oy 5 Desa ae RIN SEPTATE Ce PMP M ARN ERS EIS HD AL aN Chocolate Mfgrs. Assn. of U.S. v. Block, 755 F.2d Se, TP es es ROE kek Chrysler Corp. v. Brown, 441 U.S. 281 (1979) ...... Citizens to Preserve Overton Park v. Volpe, 401 SPs SEE SPREE settee cue ee eee City of Brookings Mut. Tel. Co. v. FCC, 822 F.2d Sa WI BED rece County of Del Norte v. U.S., 732 F.2d 1462 (9th Cir. 1984) ....... saeuguabipetbnbsiiinacianaoiomseniaae abate ena Georgetown University Hospital v. Bowen, 821 F.2d 750 (D.C. Cir. 1987), affirmed, 488 U.S. moe, 166 &. CA. OS 11988)... ......... Independent US Tanker Owners Committee v. Dole, 809 F.2d 847 (D.C. Cir. 1987), cert. den., 108 ee ee ee ee ee Levesque v. Block, 723 F.2d 175 (1st Cir. 1983).. Lionz v. Heckler, 800 F.2d 871 (9th Cir. 1986). Mada-Luna v. Fitzpatrick, 813 F.2d 1006 (9th Re IEE selec eee aa ea POI a SNIDER RS Page vi TABLE OF AUTHORITIES—Continued Page Market Street Ry. v. Cal. Railroad Commission, 324 pf Be, |) RRR eeai eet eal eons saree 21 McKesson v. Div. of Alcoholic Beverages and To- bacco, Dept. of Bus. Regulation of Florida, 496 ry ae NR es eet seek cieeaie aa ieeskioaes 28 McLouth Steel Products Corp. v. Thomas, 838 F.2d SET ie Fs Ri iaiaiideeettaksinstenanicetcmntsoccsacaas 15, 21 Morton v. Ruiz, 415 U.S. 199 (1974) ......................... 8 Motor Vehicle Mfgrs. Assn. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1988) ..................... 15, 18, 24 National Farmers Org. v. Lyng, 695 F. Supp. 1207 CST gli | BEAN een PR A 5 48 ELIE REN IMOE 25 NBC v. United States, 319 U.S. 190 (1948) _........... 8 New Jersey v. EPA, 626 F.2d 1038 (D.C. Cir. I Ra eee ARES OSS TIENT Sex Lk ULE een 22 NLRB v. Wyman-Gordon Co., 394 U.S. 759 (1969) .. 7-8 P.A.M. News Corp. v. Hardin, 440 F.2d 255 (D.C. RR RIED ccacconicanceinsvadenmashiesakinaeean nas aaeaaa ne bec anancaes 23 Pickus v. U.S. Bd. of Parole, 507 F.2d 1107 (D. C. + \ rN One IN Ae De 0 TI 15 Rivera v. Patino, 524 F. Supp. 136 (N.D. Cal. BUT Dc nccsson ces tecacidgn sesicdaciababsceusa ia aaneni seein lindane 2 Rodway v. USDA, 514 F.2d 809 (D.C. Cir. 1975) .. 22 Riverbend Farms v. Madigan, 958 F.2d 1479 (9th ee, GE on cca ace passim Sagebrush Rebellion, Inc. v. Hodel, 790 F.2d 760 (ge) | Sa NCAR ieee PY tere Pep tan ii re 9 San Diego Air Sports Center v. FAA, 887 F.2d 966 Co A __, SARRRRR NE a Bh oN rnd neat ots 8 22 Sharon Steel Corp. v. EPA, 597 F.2d 377 (3d Cir. UPPTIR sissinrniciincinchanishldinopehbilesetia akc teen neta ee aunnseas iatical 21 Shell Oil Co. v. EPA, 950 F.2d 741 (D.C. Cir. 1991) ...... POE nem AGadenkee et 9 LI toe ee 23 Shelton v. Marsh, 902 F.2d 1201 (6th Cir. 1990) __. 9 Small Refiner Lead Phase-Down Task Force v. EPA, 706 F.2d 506 (D.C. Cir. 1983) ..................... 21, 23 Southern California Aerial Advertisers’ Associa- tion v. FAA, 881 F.2d 672 (9th Cir. 1989) _..... 22 State of Alaska v. U.S. Dept. of Transportation, Pf BE Rete: | Pern 22 Vii TABLE OF AUTHORITIES—Continued Page State of South Carolina ex rel. Patrick v. Block, 558 F. Supp. 1004 (D.S.C. 1983), rev’d on other grounds, 717 F.2d 874 (4th Cir. 1983), cert. den., WD Tits BOO CRD voviccdvckciesccescecss cc 23 Texaco v. FPC, 412 F.2d 740 (3d Cir. 1969)... 23 U.S. Steel Corp. v. EPA, 595 F.2d 207, rehearing and clarification denied, 598 F.2d 915 (5th Cir. i | eRe snsth iailsiidadigalbcGamsaeadnadin teak aici eter de rene 22 United States v. Nova Scotia Food Products Corp., _ 568 F.2d sia ol Cir. gS FERRE A tesa a ee ene 18 1989) aauinessbldsridetiadabekete tel aeiceoasaamadnikc sae ta eet ae 22 United States v. Reinis, 794 F.2d 506 (9th Cir. 2 SSCA See ee ct Namah le Ue ROE RA oe 22 Vermont Yankee Nuclear Power Corp. v. NRDC, BUF SF HR COTE cenicsnseemreccnenbnncs ee es 7,15 W.C. v. Bowen, 807 F.2d 1502 (9th Cir. 1987), rehearing denied and opinion amended, 819 F.2d zo? (1968) .............. ETE EDIT os ~ N Bede EMD 22 Walter A. Holm & Co. v. Hardin, 449 F.2d 1009 Sate Sie ROPER Rc een 10. 15, 22, 25 Weyerhauser v. Costle, 590 F.2d 1011 (D.C. Cir. 2 RR RUS CEI EE SR ADs Scare ee EEC RIN ara RSME TE 22 Statutes: 5 U.S.C. § 5 U.S.C. § 55 5 U.S.C. §§ “tid | SOR Sia ites DA Aa eae Bet Bie 5 U.S.C. § 5 U.S.C. § 553(b) (3) (B) SRN inn 2 DL Paseo as 4,14 Sp tie ee Ny ee tn 18 P areeea Oe Ce 24 5 U.S.C. § 706(2) (A) and (D) 5 U.S.C. § 706 (2) (D) ...... Be BRON iS ba oe as ka Aa ONE Soe EE ike 7 U.S.C. § 601, et seq. ................. eT MOR ea ns Te I ok ee ey | 7 U.S.C. § NNN NK DY RP DLO > 7 U.S.C. § 602 (4) ........ wie AAR Ren ONS ADEN ae NOR AE 7 U.S.C. § Viii TABLE OF AUTHORITIES—Continued Page De I econticrihncsinenicinsocenpgninstccennceee Sohne eee 28 FF Ee ite NE GD iccticciestneniecosseccterinreictneteinscanacenmmnnts 2,4 eee ED siveticistcicicomstnitnneonnentierinntloacnnanton 2 Fe ee CE ici iis cinecesceescncetnennncnitccansanes 17 IE soci csnasccacikane> cenisawchaibemecinaansnnnniniensein 2 (Bos Poh so Te S eens Sates 2 kin Ff 5) ence enn EET 1 31 U.S.C. § 3729, et seq. (False Claims Act) -............ 29 Regulations: Le Sk SPIN ARTES eee dunt cep ana Pe nt nuenen 2 nc acrseeteaneipniaoiacesiecnawnad 3 fk © 33s 5 RRR RRR senvenNe ce enema COR 8, 27 /fo8 5 +: 2) 1 RRR een eppsteernerceerrer yess 27 Bo sinecchersstscinesipdonseciodtetaaapssabsinndineonietinas 2 ree I ies ccerad cass acennenesiuhiensnecnninirineniateonsiont 2 Be ii cetectianhashsesasmitntctanterscninennwe 3 44 Fed. Reg. 28474, 28479 (May 15, 1979) ............-.-. 11 45 Fed. Reg. 31953 (May 15, 1980) ........................-.-. 11 45 Fed. Reg. 75454, 75455, 75457 (Nov. 14, 1980) -_.. 11 46 Fed. Reg. 23872, 23873 (Apr. 28, 1981) ................ 11 49 Fed. Reg. 29071, 19076 (July 18, 1984) —........... eh 11 49 Fed. Reg. 48265 (Dec. 12, 1984) ........................---- 26 3 me Th S| Eee nenerere 26 50 Fed. Reg. 39132 (Sept. 27, 1985) -.......................--. 5 51 Fed. Reg. 35517 (Oct. 6, 1986) ...........................---. 5 52 Fed. Reg. 38431 (Oct. 16, 1987) ........................----- 5 52 Fed. Reg. 41602 (Oct. 30, 1987) ...................-----.. ; 5 53 Fed. Reg. 45309 (Nov. 9, 1988) ........................------ 5 53 Fed. Reg. 49649 (Dec. 9, 1988) ........................-.---- 5 54 Fed. Reg. 42966 (Oct. 19, 1989) .........................-..- 5 54 Fed. Reg. 46359 (Nov. 3, 1989) ..........................---- 5 55 Fed. Reg. 36653 (Sept. 6, 1990) ...........................-- 5 55 Fed. Reg. 50157 (Dec. 5, 1990) _............... eer ee 5 56 Fed. Reg. 49432 (Sept. 30, 1991) _..........--...--..-.....- 5, 13 56 Fed. Reg. 61109 (Dec. 2, 1991) .........................-...-. 14 56 Fed. Reg. 64188 (Dec. 9, 1991) .............2..-2...22.22.--- 14 56 Fed. Reg. 66341 (Dec. 23, 1991)..........................--- 14 57 Fed. Keg. 1216 (Jan. 13, 1992) ............................... 14 57 Fed. Reg. 4691 (Feb. 7, 1992).................-------cesee00+- 5,13 ix TABLE OF AUTHORITIES—Continued Legislative: Administrative Procedure, Hearings Before a Sub- committee of the Committee on the Judiciary, United States Senate, on S. 674, S. 675, and S. 918, 77th Cong., 1st Sess. at 1506-07, 1514-15 (1941) (statement of Ashley Sellers, USDA, Office of the Solicitor) 000000 Law (Pike & Fisher) 3d, Desk Book at 3-104 em Bee Ted ne hci ntnicns aotaniiaciigiee iene Other: Agribusiness Associates, Economic Analysis of Vol- ume Controls, California-Arizona Navel Orange Marketing Order (1985) sits General Accounting Office, The Role of Federal Marketing Orders in Establishing and Maintain- ing Orderly Marketing Conditions. [RCED 85- or) (duly $1, 1906) bly APR ST Jesse & Johnson [Agric. Econ. Rpt. No. 471, Tr. Ex. 41], Effectiveness of Federal Marketing Or- ders for Fruits and Vegetables |) ee Kozinski, “The Dark Lessons of Utopia,” 58 U. Chi. L. Rev. 575, 585 (1991)... and Marketing Order Policy for Fresh Navel Oranges,” 60 American Journal of Agricultural Economics 502-09 (August, ie 11 21 20 20 27 27 27 19 27 x TABLE OF AUTHORITIES—Continued Office of Management and Budget. “Agricultural Marketing Orders” (2/18/82) ..................-.---------- Powers, “Prices and Shipments During Prorate and Prorate Suspension for the California- Arizona Navel Orange Federal Marketing Or- der,” Citrus Fruits Situation and Outlook (Feb. DIGBY acces saceeatinasccoencanenssencentouscesasersnsensmnsmsanenqsnebentensast Shepard, “Cartelization of the California-Arizona Orange Industry 1934-81,” 29 Journal of Law and Economics 83-123 (1986) ...................--..--++++++- Thor & Jesse [Tech. Bull. 1664, Tr. Exs. 39 & 40], Economic Effects of Terminating Federal Mar- keting Orders for California-Arizona Oranges ¢ | ) EE USDA, Agricultural Marketing Service, (“Study Team Report”) [Agric. Econ. Rpt. No. 477], A Review of Federal Marketing Orders for Fruits, Vegetables, and Specialty Crops—Economic Effi- ciency and Welfare Implications (1981) ............... USDA, Guidelines for Fruit, Vegetable and Spe- cialty Crop Marketing Orders (Jan. 25, 1982 May 8, 1983), reprinted in, General Accounting Office, The Role of Federal Marketing Orders in Establishing and Mantaining Orderly Marketing Conditions. [RCED 85-57] (July 31, 1985) USDA August 25, 1989 press release ........... En . Page 27 27 27 27 bo +] PETITION FOR A WRIT OF CERTIORARI Petitioners Riverbend, Belridge, Sunny Cove, Sequoia and Exeter, all shippers of navel oranges grown in Cali- fornia, pray that a writ of certiorari issue to review the decision and judgment of the U.S. Court of Appeals for the Ninth Circuit issued in this case on March 17, 1992. OPINIONS BELOW The unpublished May 31, 1989 opinion granting Peti- tioners’ motions for summary judgment of Judge Price, Eastern District of California, may be found at App. 22a-33a. Judge Price’s unpublished March 22, 1990 opin- ion denying USDA’s motion for reconsideration may be found at App. 19a-2la. The Ninth Circuit’s March 17, 1992 opinion affirming in part, reversing in part, and remanding the case to Judge Price is reported at 958 F.2d at 1479, and may be found at App. la-18a. JURISDICTIONAL STATEMENT The Ninth Circuit’s judgment was entered on March 17, 1992. A timely petition for rehearing and suggestion for rehearing en bane was denied on June 9, 1992. This Court has jurisdiction to hear this petition for a writ of certiorari pursuant to 28 U.S.C. § 1254/1). STATUTES AND REGULATIONS The regulations challenged by Petitioners are navel orange shipment quotas imposed during the 1975-85 sea- sons. These quotas, a typical example being 50 Fed. Reg. ® (Jan. 2, 1985), App. 50a-52a, were imposed by the Sec- retary of Agriculture under Marketing Order .907, 7 C.F.R. § 907 (“Order”), App. 40a-49a, which was issued under the Agricultural Marketing Agreement Act of 1937, 7 U.S.C. § 601, et seg. (“AMAA”). App. 36a-40a. The Ninth Circuit found that the Secretary violated the ‘Pursuant to Rule 14.1(b). all parties in the court below are listed in the caption. Pursuant to Rule 29 1, none of the corporations listed in the caption has a parent and none has any subsidiaries that are not wholly-owned. 2 procedural safeguards in the Administrative Procedure Act (“APA”), 5 U.S.C. $$ 553(b), (c), App. 34a-35a. The judicial review authority is found in $§ 706(2) (A) and (D) of the APA, App. 35a-36a. The “prejudicial error” rule is found at § 706(F), App. 36a. Limitations on the Secretary’s exercise of discretion to impose quotas are found at 7 U.S.C. § 608¢(16) (required termination of ineffective or obstructionist regulations), § 608¢(6) (C) (quotas must be equitable and imposed under a uniform rule) ; and § 608¢c(11)(C) (quotas must account for re- gional differences in production and marketing condi- tions), App- 38a-40a. STATEMENT OF THE CASE Congress authorized the Secretary to issue regulations called marketing orders containing a variety of regula- tory tools designed to deal with various forms of market failure. The navel Order authorizes seasonal and weekly quotas on the quantity of oranges each handler may ship to the domestic market, including Canada. Both the quotas and the Order itself are discretionary. The Secre- tary may only impose quotas if he finds they are neces- sary to restore order to a disrupted market, i.e., a market characterized by “unreasonable fluctuations in supplies and prices.” 7 U.S.C. § 602(4), 7 C.F.R. § 907.52. If used, quotas must also improve growers’ economic well- being, i.e. restore them to “parity” with other sectors in the economy, 7 U.S.C. § 602(1), at a rate that “protect(s| the interest of consumer|s]” by “gradual correction” of prices, 7 U.S.C. § 602(2). In evaluating the potential for “unreasonable fluctuations in supplies and prices,” 7 U.S.C. § 602(4), the Secretary must consider “the inter- ests of producers and consumers.” And in assessing the potential for the “disruption of the orderly marketing,” 7 U.S.C. § 602(5), of navel oranges, his decision to regu- late or not must be measured against a “public interest” standard. Quotas must not be imposed if not needed to restore order'y marketing, or if their use would actually impair the order'y functioning of an unregulated market. 7 U.S.C. § 608¢(16) (A) ; 7 C.F.R. § 907.83 (b). 3 The Order establishes a private-sector Navel Orange Administrative Committee to assist the Secretary which is controlled by Sunkist Growers, Inc., Petitioners’ larg- est competitor. NOAC filed its annual recommendation for quotas, called a marketing policy, 7 C.F.R. § 907.50, prior to the beginning of each season. These contained a seasonal quota, § 907.50(a) (2), a shipping schedule that apportioned the quota on a weekly basis, § 907.50(a) (3), and a formula that allocated the weekly quota among regions in California and Arizona, called districts under the Order, 7 C.F.R. § 907.110. During the seasons at issue in this case, the Secretary approved these recom- mendations prior to the beginning of each season. Modi- fications to the weekly quotas set forth in NOAC’s mar- keting policy and approved in USDA’s position paper were sometimes proposed by NOAC at its Tuesday meet- ings (in the range of 1-5%) and always approved the next day by USDA. Season-long quotas have been used continuously since the 1936-37 season. There were no quotas during the 1952-53 season because the industry was in the process of separating the quota program for oranges into separate programs for navel (winter) oranges (Order 907) and Valencia (summer) oranges (Order 908). Starting in 1975 the Secretary began phasing out quotas in Southern and Northern California and in Arizona. By the 1982-83 season, there were no quotas in these areas. The only remaining regulated area was the San Joaquin Valley. Oranges produced elsewhere in the country (Texas and Florida) and imported from abroad have never been sub- ject to shipment quotas. Starting in the late 1970’s, an increasing number of independent shippers began to doubt the continued efficacy of shipment quotas, believing they simultaneously caused over-production and under-marketing, that they reduced rather than increased growers’ revenue and stimulated competition from areas outside the Order, that they dis- criminated against independents in the San Joaquin Val- ley, and they were no longer needed to maintain “order” 4 in the market because of significant changes in produc- tion and marketing conditions since the Depression. The first administrative petition was filed October 29, 1980. Following an administrative trial in October, 1985, the Chief ALJ issued his April 23, 1987 decision, Ninth Circuit Ex. Rec. Tab 1, finding that the Secretary vio- lated the notice-and-comment provisions of the APA by improperly claiming the § 553(b) (3) (B) “good cause” exception in issuing quotas during the 1975-76 through 1984-85 seasons, and that the Secretary acted arbitrarily and capriciously by failing to explain his continued im- position of rigid quotas in the San Joaquin Valley while phasing them out elsewhere. Following the Secretary’s January 29, 1988 reversal of this decision, Ninth Circuit Ex. Rec. Tab 2. Petitioners filed suit in district court. The District Court agreed with the ALJ that the Secre- tary had violated the procedural safeguards of the APA, but rejected Petitioners’ statutory challenge that the quotas violated the “equity” and “uniform” rule require- ments of 7 U.S.C. § 608¢(6) (C). Both Petitioners and USDA appealed. The Ninth Cir- cuit affirmed the District Court: We thus conclude that the Secretary’s rulemaking fails to satisfv the APA’s requirements because he has not demonstrated good cause for failing to give sufficient notice in the Federal Register of the weekly NOAC meeting and failing to allow the public to com- ment by means other than personal participation at the NOAC meeting. App. lla. The legal consequence of the Court’s conclusion should have been to void the quotas pursuant to the Congressional imperative to judges in the APA that “|t]he reviewing court shall... hold unlawful and set aside agency action _.. found to be... without observance of procedures re- quired by law.” 5 U.S.C. § 706(2)(D). Contrary to the teachings of this Court, Congressional intent, and deci- sions from other circuits, the Court held that the quotas remained enforceable. App. 1la-13a. 5 The Court mistakenly focussed on the conduct of Peti- tioners in excusing USDA noncompliance with the APA despite the fact that agency rules carry the “force of law” only if the agency has complied (which the Court cor- rectly found it had not) with all the substantive and pro- cedural requirements imposed by Congress. The Court relied on three considerations: (1) USDA’s long-standing practice of imposing quotas without § 553 public partici- pation; (2) invalidation of past quotas would permit Peti- tioners to succeed in forfeiture proceedings brought against them by the Secretary for allegedly exceeding the quotas; and (3) Petitioners had a chance to participate in weekly NOAC meetings. The Secretary never followed the notice-and-comment provisions of § 553(b) until just prior to the administra- tive trial in this case.” These initial comment opportuni- ties were illusory because USDA specificaliy disavowed * the APA-guaranteed right to “participation” in the rule- making process, i.e. the rights to have comments consid- ered by and responded to by the decisionmaker. It wasn’t until after the March 22, 1990 District Court denial of USDA’s motion for reconsideration that the Secretary finally began complying with the participation and rea- soned decisonmaking requirements of § 553(c).4 “50 Fed. Reg. 39132 (Sept. 27, 1985). Despite over 1200 weekly “emergencies” over the previous 40 seasons, USDA sought public comment for the first time. While the litigation was continuing, USDA continued to seek public comment for the next four seasons. 51 Fed. Reg. 35517 (Oct. 6, 1986); 52 Fed. Reg. 38431 (Oct. 16, 1987); 53 Fed. Reg. 45309 (Nov. 9, 1988); 54 Fed. Reg. 42966 (Oct. 19, 1989). In fact, for the 1987-88 through 1989-90 navel sea- sons, USDA even issued the first weekly quota regulation as an interim final rule with an additional request for comments. 52 Fed. Reg. 41602 (Oct. 30, 1987); 53 Fed. Reg. 49649 (Dec. 9, 1988); 54 Fed. Reg. 46359 (Nov. 3, 1989). 3“Publication of this summary of the marketing policy does not create any legal obligations, either substantive or procedural.” E.g., 50 Fed. Reg. 39132 (Sept. 27, 1985). 155 Fed. Reg. 36653 (Sept. 6, 1990) (proposed rule), 50157 (Dec. 5, 1990) (final rule) ; 56 Fed. Reg. 49432 (Sept. 30, 1991) (proposed rule), 57 Fed. Reg. 4691 (Feb. 7, 1992) (final rule). eT 6 ARGUMENT 1. Review shou'd be granted because the Ninth Circuit has decided an important question of federal law contrary to all prior decisions of this Court that regulations carry the “force of law” only if promulgated according to pro- cedures required by law. This Court has never ruled on the applicability of the “prejudicial error” escape clause to agency failures to comply with the procedural safe- guards in $553 of the APA. On numerous instances it has indicated that compliance with the minimum require- ments of $553 is a necessary condition precedent to agency regulations having the “foree of law.” This case presents the Court with the opportunity to draw a clear line distinguishing enforceable rules from those which are void ab initio and unenforceable in instances such as this case where the agency did not follow § 553 proce- dures. A clear statement from this Court will protect the efficacy of rules promulgated in compliance with § 553 and will also ensure that the procedural safeguards es- tablished by Congress are not unduly eroded by an excep- tion swallowing the rule. “It has been established in a variety of contexts that properly promulgated, substantive agency regulations have the ‘force and effect of law.’”’ Chrysler Corp. v. Brown, 441 U.S. 281 (1979). This Court held that a rerulation authorizing the disclosure of records otherwise exempt under the Freedom of Information Act was invalid be- cause it was not issued pursuant to authority delegated by Congress and because it was infected by a procedural defect, failure to publish the rule and provide for com- ment as required by § 553 of the APA: In order for a regulation to have the “force and effect of law,” it must have certain substantive character- istics and be the product of certain procedural requi- sites... . That an agency regulation is “substan- tive,” however, does not by itself give it the “force and effect of law.’ The legislative power of the United States is vested in the Congress, and the exer- cise of quasi-legislative authority by governmental de- 7 partments and agencies must be rooted in a grant of such power by the Congress and subject to limitations which that body imposes. ... Likewise, the promul- gation of these regulations must conform with any procedural requirements imposed by Congress. For agency discretion is limited not only by substan- tive, statutory grants of authority, but also by the procedural requirements which “assure fairness and mature consideration of rules of general application.” NLRB v. Wyman-Gordon Co., 394 U.S. 759, 764 (1969). The pertinent procedural limitations in this case are those found in the APA. Id. at 301-03. Comparing the failure to publish the disclosure rule at issue with the court-imposed procedures found unlawful in Vermont Yankee Power Corp. v. NRDC, 435 U.S. 519 (1978), this Court observed: It is within an agency’s discretion to afford parties more procedure, but it is not the province of the courts to do so.... Courts upset that balance [“ ‘be- tween opposing social and political forces,’ ”’ Vermont Yankee, 435 U.S. at 547, quoting Wong Yang Sung v. McGrath, 339 U.S. 33, 40 (1950)] when they over- ride informed choice of procedures and impose obli- gations not required by the APA. By the same token, courts are charged with maintaining the balance: en- suring that agencies comply with the “outline of minimal essential rights and procedures” set out in the APA. H.R. Rep. No. 1980, 79th Cong., 2d Sess. 16 (1946)... . Certainly regulations subject to the APA cannot be afforded the “force and effect of law” if not promulgated pursuant to the statutory proce- dural minimum found in that Act Id. at 313. Under Vermont Yankee, courts may not im- pose additional procedural requirements,® but under 5“'Niothing in the APA .. . entitled the court to review and overturn the rulemaking proceeding on the basis of the procedural devices employed (or not employed) ... so long as the [agency | employed at least the statutory minima... .” 435 U.S. at 549. “Of course, the court must determine whether the agency complied with the procedures mandated by the relevant statute.” Jd. n.21. 8 Chrysler, courts must insist on agency adherence to the minimum requirements specified by Congress. Together, these cases teach that courts must insist on strict com- pliance with the APA procedural safeguards. The agency had argued that the disclosure regulation was an interpretative rule and therefore exempt from public participation under § 553(b) (3) (A). This Court said it didn’t matter whether the rule was interpretative or substantive because it could not have the “force of law” because it was not promulgated with public par- ticipation: It is enough that such regulations are not properly promulgated as substantive rules, and therefore not the product of procedures which Congress prescribed as necessary prerequisites to giving a regulation the binding effect of law... . With the [agency] consid- eration that is the necessary and intended conse- quence of such procedures, [the agency] might have decided that a different accommodation was more ap- propriate. Id. at 315-16 (citations omitted). Cf. Morton v. Ruiz, 415 U.S. 199, 232 (1974) (eligibility requirement published in staff manual cannot have the “force of law’ because not published in accord with APA); NLRB v. Wyman- Gordon Co., 394 U.S. 759, 764 (1969) (agency cannot impose legislative rule through adjudication); see also, e.g., NBC v. United States, 319 U.S. 190, 224-25 (1943) (upholding “chain broadcasting” rules in part because “there |was] no basis for any claim that the Commis- sion failed to observe procedural safeguards required by law.”’). This Court implicitly rejected a “no prejudicial error” defense in Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988). The agency, HHS, reissued in 1984 a rule concerning Medicare cost reimbursement methodology that had previously been invalidated for failure to comply with notice-and-comment procedures. This Court struck down HH§’s attempt to make the new validly-promulgated rule retroactive to 1981 for lack of Congressional au- 9 thorization and because the APA normally limits rules to prospective application. HHS argued that it was not un- fair to make the rule retroactive because it simply cured a procedural defect and the earlier invalidated rule pro- vided “‘ample notice” to hospitals of the standard that would be applied. Correctly focussing on the agency’s “mistake” rather than fairness to or knowledge of the parties (as did the Ninth Circuit in this case), Justice Sealia explained that judicial acceptance of HHS’s “cure” would eviscerate the APA: I fully agree with District of Columbia that accept- ance of the Secretary’s position would “make a mock- ery ... of the APA,” since ‘agencies would be free to violate the rulemaking requirements of the APA with impunity if, upon invalidation of a rule, they were free to ‘reissue’ that rule on a retroactive basis.” Id. at 225 (Scalia, J., concurring), quoting Georgetown University Hospital v. Bowen, 821 F.2d 750, 758 (D.C. Cir. 1987). This case provides the Court with the opportunity to explicitly state that agency compliance with Congression- ally mandated procedural safeguards is a condition prece- dent to a rule having the “force of law,” and that such compliance cannot be conditioned, undermined, or excused by a judicially-created requirement that challengers prove prejudice beyond denial of the statutory right.* 2. Failure to grant review would leave a clearly erron- eous, indeed dangerous, decision in place. Such an escape ® An explicit holding requiring that rules issued without follow- ing the procedural safeguards of § 553, as in the present case, are invalid and do not have the “force of law” would not read the “prejudicial error” rule out of the APA, and would not threaten the holdings in cases upholding rules when there was a mere techni- cal noncompliance, i.e. when th. record demonstrates that the pur- poses of § 553 were met through other means. See, e.g., Shelton v. Marsh, 902 F.2d 1201 (6th Cir. 1990) ; Sagebrush Rebellion, Inc. v. Hodel, 790 F.2d 760 (9th Cir. 1986); County of Del Norte v. US., 732 F.2d 1462 (9th Cir. 1984). The purposes of advance notice were served in each of these cases because public participation was a reality, i.e. comments were received by and responded to the agency. 10 clause would encourage agencies to erode, if not ignore, procedural safeguards in the hope that their rules would be less subject to judicial scrutiny and reversal. The agency’s obligation in the first instance is to justify the resulting rule by complying with the procedures and sub- stance of reasoned decisionmaking. The Ninth Circuit’s decision turns this obligation on its head. This decision places a burden on challengers to prove to a reviewing court that the result an agency reached would have been different. With the procedural safeguards effectively evis- cerated by the Ninth Circuit, the balance struck in the APA is upset. Because courts are overworked, this de- cision will encourage agencies to be quite inventive in their descent to minimal compliance, or, as in this case, noncompliance with procedural safeguards. App. lla. By blurring the bright line of which regulations have the “force of law,” the decision will increase uncertainty and litigation, and will render compliance and enforcement more difficult. USDA’s extreme bad faith in the present case illustrates the risks to the efficacy of the decision- making process if this erroneous decision is allowed to stand. a. Congress intended agencies to strictly comply with procedural safeguards. This decision will further encour- age agencies to engage in all manner and variety of “forms of indirection.’’ Congress admonished the courts to prevent such actions which have a powerful tendency to avoid or diminish public participation and evade mean- ingful judicial review. This case graphically demonstrates the extremes to which an agency will go to evade substantive scrutiny by avoiding procedural safeguards. The harm done by USDA may also be demonstrated by its flagrant and re- peated disregard of procedures it knew were required by law. See Walter A. Holm v. Hardin, 449 F.2d 1009 (D.C. Cir. 1971). Like an ostrich, USDA struck its head in the sand and deliberately avoided creating a record for ju- dicial review because it knew that quotas could no longer be justified in light of changed production, marketing and 11 competitive conditions since the quota program began in 1935. When Congress passed the APA, it refused USDA’s request for a blanket exemption from the APA’s notice requirements.’ In its request, USDA even cited the orange quota program at issue here. USDA’s annual pre-season approval of the quotas* was designated a “major ule” which, under USDA’s internal regulation (Secretary’s Memorandum 1512-1) and Executive Order 12044, 12291, and 12498, required heightened public participation and analytical requirements.” USDA did provide public par- ticipation for all volume control programs except for the three Western Citrus orders. The Secretary finally con- ceded '’ that public participation was required prior to approving each season’s quota program, but, at least until 7 Administrative Procedure, Hearings Before a Subcommittee of the Committee on the Judiciary, United States Senate, on S. 674, S. 675, and S. 918, 77th Cong., Ist Sess. at 1506-07, 1514-15 (1941) (statement of Ashley Sellers, USDA, Office of the Solicitor, com- ments 4 and 11). 8 App. 3a, 10a n.5, 13a, 25a. See, e.g., November 18, 1981 letter from Secretary Block to NOAC Chairman Canham (Trial Ex, 379) (“I have approvad the marketing program for Order No. 907 for the 1981-82 season, including the prorate feature provided for in Order 907.) ; see also Tr. 1745-46, 1797, 1838. 9 See, e.g., 44 Fed. Reg. 28474, 28479 (May 15, 1979) (designation of USDA’s approval of 1979-80 marketing policy as significant rule- making action, but comments never solicited thereon) ; 45 Fed. Reg. 75454, 75455, 75457 (Nov. 14, 1980) (1980-81 quota program, same): 46 Fed, Reg. 23872, 23873 (Apr. 28, 1981) (weekly quota regulation noting completion of approval process); 45 Fed. Reg. 31953 (May 15, 1980) (noting designation of 1979-80 marketing policy approval as “significant” under provisions of E.O. 12044); USDA annual position papers approving annual quota program (Trial Exs. 694-701: Ninth Circuit Ex. Rec. at Tab 4) (approving annual quota programs without public participation). 10 49 Fed. Reg. 29071, 29076 (July 18, 1984) (“[T]he purpose of publishing a summary of the marketing policy is to gather informa- tion from the public to aid the Depar‘ment in evaluating the mar- keting policy. Public comment on the published marketing policy summary will be requested well in advance of the beginning of the shipping season. The Department intends to compete its analysis of the marketing policy, and any public comment thereon, prior to the beginning of the season.’’). 12 the 1990-91 season, he has ignored all such input as evi- denced by not one mention of it in the Federal Register quota notices. USDA adopted Guidelines in January, 1982, and May, 1983, calling for a gradual reduction of season-long quotas, but all subsequent Federal Register quota notices were completely silent as to compliance with these Guidelines. The record is replete with examples (all ignored by the Ninth Circuit) of comments and data sub- mitted by Petitioners to which USDA never responded." It would be hard to imagine a case less appropriate for the “prejudicial error” rule. Not only would the proce- dures used by USDA have been different had USDA not illegally invoked the “good cause” exception, but the sub- stance of the quota decisions reached would assuredly "See, e.g., Trial Exs. 111-113, 118-121, 159-66, 187-90, 301-02, 304-05, 436-437, 438, 445-50 and 758 (noting unexplained change in definition of “normal marketing season” from seven to nine months) ; 758, attachment (quotas inconsistent with AMAA policy in that they have failed to achieve and maintain parity prices, reduced per capita consumption, increased diversion to unprofitable byproducts and increased inequity among growers). These were all letters and studies sent to USDA by Petitioner Sequoia, even though USDA had not published notice or asked for comments, seeking data on which the quota proposals were based, definiiton of key regulatory terms and decision criteria such as the level of price and supply fluctuations deemed “unreasonable,” citing studies and data showing the harm caused by quotas, demanding public participation, and opposing specific aspects of the quota program. Perhaps one of the most revealing letters is Sequoia’s 9/23/85 letter to the Fruit Branch Chief. It compared the production and marketing factors for the upcoming season with the season just ended. It cited the conclusion of a USDA study that the eliminatton of quotas during the second half of the 1984-85 season did not disrupt markets. The letter also sought the right to participate in USDA’s approval of the 1985-86 marketing policy. USDA marked the letter (received during pre- trial discovery) ‘no reply necessary,” and provided absolutely no response to comments on 1985-86 quota plan. These unresponded to comments are discussed in more detail by the Chief ALJ in his deci- sion granting relief, ALJ. Dec. (Ninth Circuit Ex. Rec., Tab 1) at 29-43, and in the Secretary’s decision denying relief, J.O. Dec. (Ninth Circuit Ex. Rec., Tab 2) at 191-99. These comments were completely ignored by the Ninth Circuit in its haste to excuse the Secretary’s noncompliance with the APA. 13 have been different. First, USDA would have had to con- sider and respond to the comments. Second, USDA would have had to analyze the studies and data in its own files. These show that quotas were not needed and had effects contrary to the interests of growers. USDA began requesting comments on the annual mar- keting policies for the 1985-86 season, coincident with the October, 1985 trial in this case. The fact that quotas have been imposed during significantly fewer weeks since that date demonstrates that real public participa- tion prior to 1985 would have made a difference in USDA’s “result, thus undermining any contention that the procedural error was “harmless.” There has been both an increase in total domestic fresh sales ‘* and in- dustry revenue."* For the 1991-92 navel season, USDA requested comments on the need for quotas, the domestic fresh allocation, shipping schedule, and the formulae for allocating quota among districts. 56 Fed. Reg. 49432 (Sept. 30, 1991). In response to overwhelming criticism of quotas in the comments, including the Justice Depart- ment, the Small Business Administration, consumer groups, and nearly all independent shippers, USDA in- creased the weekly quota recommended by NOAC during four weeks, albeit without any explanation or analysis." 12 During the 1985-86 through 1991-92 seasons, excluding the 1990- 91 freeze season, quotas were imposed on District 1 during an aver- age of 18 weeks, six weeks less than the average during the 1979-80 throuch 1984-85 seasons, a reduction of 25%. 13 During the 1985-86 through 1991-92 seasons, excluding the 1990- 91 freeze season, domestic fresh sales averaged 47,917,000 cartons, 4,877,000 cartons greater than the average during the 1979-80 through 1984-85 seasons of 43,040,000 cartons, an increase of 11%. 4 During the 1985-86 through 1991-92 seasons, excluding the 1990-91 freeze season, industry domestic fresh revenue averaged $350,903,000, $87,064,000 greater than the average during the 1979- 80 through 1984-85 seasons of $263,839,000, an increase of 33%. 1 The February 14, 1992 termination of quotas only one week after issuance of the final rule, 57 Fed. Reg. 4691 (Feb. 7, 1992), more than three months earlier than recommended by NOAC, is further evidence that comments are performing their intended func- a 14 56 Fed. Reg. 61109 ‘Dec. 2, 1991), 64188 (Dec. 9, 1991), 66341 (Dec. 23, 1991), 57 Fed. Reg. 1215 (Jan. 13, 1992!. No quotas have been imposed on Valencia oranges since the 1986 season. Following the first bona fide re- quest for comments on the need for lemon quotas, quotas have not been imposed since January, 1991. b. The Ninth Cireuit’s abrupt and unexplained depar- ture from the “bright line” test in Buschman v. Schivei- ker, 676 F.2d 352 (9th Cir. 1982),’* will embroil the courts on a case-by-case basis in a fact-specifie party- dependent romp through complex records and increasingly disparate agency decisionmaking processes in order to de- termine if there was enough “prejudice” to invalidate the challenged rules. App. 9a. The erroneous decision in this case demonstrates the folly of dragging the courts into rebalancing this portion of the government-society rela- tionship already decided upon by Congress when it con- ditioned agency rulemaking on observance of the proce- dural safeguards in § 553. The Court first assumed that the shippers had actual notice of the preposed quotas and that they “knew the ground rules.” '* App. 13a. There is no evidence in the record that the shippers knew about USDA’s pre-season approval process, and of course none that they were al- lowed to participate in that process, as the APA man- dates." At the 1985 trial, USDA introduced no evidence tion of educating decisionmakers as to the harmful! effects of quotas. 57 Fed. Reg. 5975 (Feb. 19, 1992) (“The Department has con- cluded that at this time, regulation is not necessary to effectuate the declared policy of the Agricultural Marketing Agreement Act of 1937.""). '® The Court invalidated welfare calculation methedology because HHS improperly relied on “good cause” exception in § 553(b)(3)(B). “In light of the importance of the notice & comment procedure,” failure to provide it can never be harmless error. 676 F.2d at 356-58. ~The Supreme Court rejected a similar contention in Bowen v. Georgetown University Hospital, 488 U.S. 204, 225 (1988) (Scalia. J., concurring). '’ The Court correctly concludes that USDA approved each sea- son’s quota program prior to the beginning of the season. App. 3a, 15 whatsoever. Even if there had been adequate notice, such notice is just the beginning of the public participation process, which includes ‘all absent in the present case) the opportunity to infiuence the decisionmakers (1.e., USDA, not NOAC), and reasoned consideration of com- ments and alternatives by the decisionmakers, as demon- strated by the agency explanation and justification in the basis and purpose statement.’’ Just because there were NOAC meetings, it was not de jure a foregone conclusion that there would be quotas. There was no evidence that anything said at a NOAC meeting was “before” or con- sidered by the actual decisionmakers. It would be even more damning for the quotas if such comments were ac- tually “before” the decisionmakers becaus they were “ever responded to in the final rules, either by the Secretary or NOAC. But actual notice is no substitute for the public participation required by the APA.’ Attendance at NOAC was irrelevant because NOAC was not the deci- sionmaker. The trial record showed that no comments by any party other than commenter NOAC were even re- sponded to, considered by, or even presented to USDA’s decisionmakers. Furthermore, no formal record was made of NOAC meetings or placed before USDA’s decisonmak- ers. This case creates a split with the D.C. Cireuit’s de- cision in Walter A. Holm & Co. v. Hardin, 449 F.2d 1009 10a, n.5, 13a, 25a. However, the Court’s harmless error analysis en- tirely overlooked the legal consequences of this fact, ie. that shippers and the general public were entirely denied (until the 1990-91 season) their public participation rights with respect to these deduc- tions. See, e.g., Mada-Luna v. Fitzpatrick, 813 F.2d 1006, 1013-14, 1016 (9th Cir. 1987); McLouth Steel, 888 F.2d at 1320, Pickus v. U.S. Bd. of Parole, 507 F.2d 1107, 1112-13 (D.C. Cir. 1974). '¥ See, e.g., Motor Vehicle Mfgrs. Assn. v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 46-57 (1983): Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (1971); Independent US Tanker Owners Committee v. Dole, 809 F.2d 847 (D.C. Cir. 1987), cert. den., 108 S. Ct. 76 (1987). ““USDA can’t subvert the APA by substituting NOAC meetings for the public participation required by the APA. See, e.g., Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519 (1978). 16 (D.C. 1971), which required comments to and considera- tion and decision by the Secretary, not the industry’s ad- ministrative committee. Opposing and dissenting views were common at NOAC meetings, and many alternatives were frequently offered. Neither the Court nor USDA cited even a single Federal Register quota regulation in which these comments and alternatives were discussed by USDA. Indeed, there was never an instance where anything except the NOAC rec- ommendation was even mentioned. Most importantly there was never any consideration in any of the quota regulations of the alternative “no quotas.” The second factor apparently relied upon by the Court is the longevity of USDA’s illegal practices, i.e., “[tihis system of regulation existed for decades without chal- lenge.” App. 18a. The proposition that the legality of USDA’s quota regulations can somehow be saved by the longevity of USDA’s illegal actions is simply preposterous. If this were so, Rosa Parks would still be riding in the back of the bus. Oliver Brown’s grandchildren would be attending segregated schools. Jeffrey Dalmer could ex- pect a lighter sentence because he killed so frequently. The purpose of the APA’s public participation require- ment is to ensure that views at variance from the agen- cy’s proposal are placed before the agency, meaningfully considered by the agency, and available to reviewing courts as a measure by which they may test the correct- ness of the agency’s decision. Absent compliance with procedural safeguards, it is no wonder that there have been few substantive challenges. USDA employed a scheme intended to frustrate participation and dissent by the 30 companies that were not NOAC members, and by the public at large, giving total deference to com- menter NOAC. . Another purpose is to ensure that the agency discloses the data it relies upon, the assumption and expertise im- plicit in its regulatory choices, and the expected results of its regulations. Had USDA disclosed the economic im- pact of the quota regulations (e.g., reduced per capita 17 consumption, increased misallocation of resources, in- creased competition from unregulated oranges, increased diversion of fresh-quality oranges to unprofitable byprod- ucts, and reduced grower revenue), the comment record would have contained opposition and dissent (as it does for the 1990-91 and 1991-92 seasons) that would now be available to this Court. It wasn’t until the late 1970’s when the quota program finally became so intolerable (e.g., phasing out shipment quotas on many of Petition- ers’ competitors) that Petitioners had to demand either its justification or termination. As a threshold matter, Petitioners had to first demand the Secretary’s compliance with procedural safeguards so that he would have to con- sider the economic harm done by the quotas and respond to alternatives and criticism. Finally, challenges to marketing order regulations must overcome an unusual roadblock. Challengers must ex- haust administrative remedies through USDA’s “kanga- roo court.” 7 U.S.C. § 608¢(15) (A). USDA is the only agency where challenges to its legislative rulemaking de- cisions must be “laundered” by the agency itself. This process is almost endless (this case was filed on October 29, 1980).°! This “laundering” procedure is a practical *1 The Court’s opinion is cloaked with a troubling inference that a generous harmless error standard to USDA was applied because alleged cheaters shouldn’t be let off the hook on mere technicalities because they have clever counsel. “If we invalidate past volume restrictions, plaintiffs would obviously succeed in the pending for- feiture proceedings brought against them by the Secretary .. [I]t was only after some handlers ran into trouble with the Depart- ment of Agriculture that, in looking for an escape, they came up with this challenge.” App. lla, 18a. The petition was filed on October 29, 1980. USDA sued Sequoia for allegedly violating the quotas in November, 1983. Belridge, Sunny Cove, and Riverbend have never been accused of violating quotas during the 1975-85 period. The lawfulness of USDA’s actions is at issue, not whether handlers violated any regulations. The public participation and rea- soned decisionmaking requirements are the core of the APA. JSDA’s flagrant non-compliance can hardly be characterized as “technical.” Finally, injured parties may challenge rules either at 18 deterrent because highly perishable crops are at stake. It is so expensive, and results in nothing but a massive amount of USDA post hoe rationalization.** The Court appeared to believe that attendance at NOAC meetings was an acceptable substitute for public partici- pation under the APA.** NOAC’s power is limited to making a recommendation, but APA comments must be received and considered by the decisionmaker Even if the post-promulgation pre-enforcement stage, or they may violtae the rule and raise the affirmative defense of its invalidity in an enforcement proceeding. 5 U.S.C. § 703 (“Except to the extent that prior, adequate, and exclusive opportunity for judicial review is provided by law, agency action is subject to judicial review in civil or criminal proceedings for judicial enforcement.”) See, e.g., U.S. v. Nova Scotia Food Products Corp., 568 F.2d 240, 251-52 (2d. Cir. 1977) (in enforcement action FDA rule prescribing time- temperature-salinity requirements for processing of smoked white- fish held procedurally invalid for failure to disclose scientific data that formed basis for rule and substantively invalid for “obscure[ |” basis and purpose statement). 22 The procedural and substantive validity of the quotas can only be upheld, if at all, on the basis of the record before USDA at the time of each quota decision; post hoc rationalizations must be dis- regarded. See, e.g., Motor Vehicle Mfgrs. Assn. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50 (1983); American Textile Mfgrs. Inst. v. Donovan, 452 U.S. 490, 539 (1981). *3 “Most significant is the fact that the Secretary gives interested parties an opportunity to appear and have their say at the weekly NOAC meetings, and that such input is received and considered by the NOAC in making its recommendation to the Secretary. ... We have no difficulty with the Secretary’s decision to rely on the NOAC to filter and digest public comments and to make a recommendation.” App. 7a, 14a. Even though a handful of growers and handlers occa- sionally attended NOAC meetings, the “‘public’’ was not invited and obviously did not participate in USDA’s decisionmaking process in any way. NOAC didn’t “filter” comments for USDA’s benefit. App. 14a. It excluded all views except its own recommendation as evi- denced by the absence of any discussion of criticism or alternatives in USDA’s final rules. 19 NOAC could be trusted ™ to faithfully forward dissenting and opposing views,” and alternatives to Washington, “4 Commenting to NOAC is like the chickens asking the fox to dine elsewhere. NOAC is a government-sponsored cartel committed to a collectivist system of administered supplies and prices. Suppose Judge Kozinski appeared at NOAC with the following statement: “The problem lay not with the implementation of collectivism, but with its central premise. Quite simply, [NOAC] cannot take on the job of making all, or even a substantial number, of the important decisions [for the orange industry]... . People’s talents, needs, aspirations, goals and limitations are too diverse and conflicting for any central authority to take account of... . Concentrating power in one central authority carries with it more palpable dangers as well. ... [T]he state [or NOAC] cannot repeal the laws of eco- nomics; there is no fixed demand for [oranges], and no fixed supply of people willing and able to engage in particular occupations. The only satisfactory way of matching up supply and demand for [oranges] is through a pricing mechanism that allows individuals to take account of opportunity costs when making decisions. Finally, there is a greater danger in placing too much power in the hands of a few individuals [on NOAC]. Honesty and good will can only go so far in preventing abuses of power. The sad experience of the collectivist economies proves what should have been obvious all along; unless a society [or the orange industry] has competing sources of power, those in control will take advantage of their au- thority to promote themselves and their friends at the expense of everyone else.” Kozinski, “The Dark Lessons of Utopia,” 58 U. Chi. L. Rev. 575, 585 (1991). Such a comment, like those of Mr. Pescoso- lido and others who chose to disagree with NOAC’s party line, surely would have fallen on NOAC’s deaf ears. This is precisely why the legal obligation fell to (and was ignored by) USDA, the decisionmaker, to conduct and respond to the public participation, giving reasoned consideration to the recommendations of NOAC, the criticisms of Judge Kozinski, and the comments and alternatives, of others. *5 See, e.g., NOAC 10/4/83 Minutes (Trial Ex. 776) (Mr. Pesco- solido’s questions regarding annual marketing policy forwarded to USDA for its consideration, but never answered: NOAC 10/27/83 Minutes (Trial Ex. 776 (““Mr. Pescosolido stated that he had spent a great deal of his own time and also had help from paid consultants in formulating the questions he had earlier presented. He then questioned as to whether his questions would be answered. Chair- man Canham replied that the extent of the questions and the request that they be considered at this meeting appeared as though intended to prevent adoption of the Marketing Policy. Because of this, response to the questions would not be given at that time.”). 20 there remains the fatal flaw that not a single quota regu- lation discusses the “comments” received at NOAC meet- ings, responds to comments, or considers alternatives to the NOAC recommendation. 3. The Ninth Circuit’s construction of the “prejudicial error” rule requiring challengers to prove prejudice be- yond the mere denial of procedural rights is contrary to Congressional intent. The House Judiciary Committee ex- plained: The requirement that account shall be taken “of the rule of prejudicial error” means that a procedural omission which has been cured prior to finality of the action involved by affording the party the proce- dure to which he was originally entitled is not a reversible error. H.R. Rep. No. 1080, 79th Cong., 2d Sess. 46 (1946) (“House Report”), reprinted in, Administrative Law (Pike & Fisher) 3d, Desk Book at 3-104 (“Desk Book’’) : S. Rep. No. 752, 79th Cong., Ist Sess. 28 (1945) (“Sen- ate Report”), reprinted in, Desk Book at 3-36 (same). The focus is on agency action, i.e. whether it complied with procedural minima. There is absolutely no indica- tion that challengers had to prove actual harm other than that a procedural right due them was ignored. The Ninth Circuit correctly found that the Secretary failed to fol- low a required procedure, and indeed, ordered such com- pliance in the future. App. 16a. It must follow, there- fore, that the conceded “procedural omission” was not “cured prior to the finality” of the quotas. According to Congress, therefore, the Ninth Circuit should have held that the Secretary’s “omission” was “reversible error.” Regarding the judicial duty, Congress found: It will be the duty of reviewing courts to prevent avoidance of the requirements of the bill by any means or form of indirection, .... House Report at 44, Desk Book at 3-102: Senate Report at 31, Desk Book at 3-39. The original construction of the APA by the Attorney General also demonstrates that denial of a guaranteed right is presumptively prejudicial : 21 The last phrase in section 10(e) sums up in succinct fashion the “harmless error” rule applied by the courts in the review of lower court decisions as well as of administrative bodies, namely, that errors which have no substantial bearing on the ultimate rights of the parties will be disregarded. Attorney General’s Manual on the Administrative Pro- cedure Act 110 (1947), reprinted in, Administrative Conference of the United States, Federal Administrative Procedure Sourcebook 51, 159 (1985).2° USDA’s “error” was to improperly claim the “good cause” exception to public participation, a “right”? provided by Congress to Petitioners. This Court should grant review to ensure that the Congressional admonition that courts “prevent avoidance of the requirements of the [APA] by any means or form of indirection” is faithfully followed. 4. Review should be granted to resolve the split in the Circuits created by this decision. Three other circuits that have specifically considered the applicability of the “prejudicial error” rule to instances such as the present case where the agency completely failed to engage in public participation have found the error presumptively prejudicial. See, e.g., McLouth Steel Products Corp. v. Thomas, 838 F.2d 1317, 1323 (D.C. Cir. 1988); Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 547-550 (excessive difference between proposed and final rules found presumptively harmful because there *6 The exemplar case cited by the Attorney General helps illustrate the inapplicability to the “harmless error” rule to situations like the present case where there was no public participation. In Market Street Ry. v. Cal. Railroad Commission, 324 U.S. 548, 561-62 (1945), this Court upheld a rate order which was based in part on extra- record evidence, company reports submitted after the hearing. Since the decision was subject to “substantial evidence” review the Court correctly rejected the challenge because the hearing record, even without the new reports, would have independently supported the rate order. The exclusion from consideration of cumulative evidence could not have changed the result, but the Ninth Circuit could not possibly conclude that the Secretary’s decision to impose quotas would have been the same had he engaged in the required public participation. EEL 22 were no comments, no analysis of comments by EPA, and no reasoned decisionmaking with respect to the particular issue of past ownership restrictions) ; Sharon Steel Corp. v. EPA, 597 F.2d 377, 381 (3d Cir. 1979); U.S. Steel Corp. v. EPA, 595 F.2d 207, 215-16 (5th Cir. 1979) (“Were we to allow EPA to prevail on this point [that post-promulgation comments were an acceptable substi- tute for prior notice and comment opportunity] we would make the provisions of $ 553 virtually unenforceable. An agency that wished to dispense with pre-promulgation notice and comment could simply do so, invite post prom- ulgation comment, and republish the regulation before a reviewing court could act.... Nor can the Agency rest on the doctrine of harmless error. ... Here, the Aqency’s error plainly affected the procedure used, and we cannot assume that there was no prejudice to petitioners. Ab- sence of such prejudice must be clear for harmless error to be applicable.) (emphasis added), rehearing and clar- ification denied, 598 F.2d 915 (emphasizing that invali- dated rules cannot be applied by EPA). Most courts fac- ing the problem of agency noncompliance with one or more of APA’s procedural safeguards have simply in- validated the rules without pause to even consider the possibility that such errors might not be prejudicial.** 27 See, e.g., San Diego Air Sports Center v. FAA, 887 F.2d 966 (9th Cir. 1990) ; Southern California Aerial Advertisers’ Association v. FAA, 881 F.2d 672 (9th Cir. 1989); United States v. Picciotto, 875 F.2d 345 (D.C. Cir. 1989); State of Alaska v. U.S. Dept. of Transportation, 868 F.2d 441 (D.C. Cir. 1989); Georgetown Uni- versity Hospital v. Bowen, 821 F.2d 750 (D.C. Cir. 1987) ; affirmed, 488 U.S. 204, 109 S. Ct. 468 (1988); W.C. v. Bowen, 807 F.2d 1502 (9th Cir. 1987), rehearing denied and opinion amended, 819 F.2d 237; Lionz. v. Heckler, 800 F.2d 871 (9th Cir. 1986); United States v. Reinis, 794 F.2d 506 (9th Cir. 1986); Chocolate Mfgrs. Assn. of US v. Block, 755 F.2d 1098 (D.C. Cir. 1985); Levesque v. Block, 723 F.2d 175, 184 (1st Cir. 1983); Action on Smoking and Health v. CAB, 713 F.2d 795 (D.C. Cir. 1983), subsequent appeal, 724 F.2d 211 (D.C. Cir. 1984); New Jersey v. EPA, 626 F.2d 1038, 1045 (D.C. Cir. 1980); Weyerhauser v. Costle, 590 F.2d 1011, 1028-29 (D.C. Cir. 1978); Anderson v. Butz, 550 F.2d 459, 463 (9th Cir. 1977) ; Arlington Oil Mills v. Knebel, 543 F.2d 1092 (5th Cir. 1976) ; Rodway v. USDA, 514 F.2d 809 (D.C. Cir. 1975); Walter A. Holm 23 In Shell Oil Co. v. EPA, 950 F.2d 741 (D.C. Cir. 1991), the Court invalidated broad definitions of hazardous waste that exceeded the scope of the notice. The Court rejected EPA’s argument that comments provided sufficient ac- tual notice: Even if the ... rules had been widely anticipated, comments by members of the public would not in themselves constitute adequate notice. Under the standards of the APA, “notice necessarily must come if at all—-frcm the Agency.” Id. at 751, quoting, Small Refiner Lead Phase-Down Task Force, 705 F.2d at 549. The Court flatly rejected EPA’s argument that there was no prejudice because it had con- sidered and repected all arguments raised by challengers: While petitioners must show that they would have submitted new arguments to invalidate rules in the ease of certain procedural defects, such as an agency’s failure to provide access to supplemental studies, petitioners have no such duty when an agency has entirely failed to comply with notice-and- comment requirements. Id. at 752 (citations omitted; emphasis added). EPA also failed to give adequate notice of a groundwater monitor- ing requirement. Regarding prejudicial error, EPA ar- gued that it nevertheless carefully evaluated each im- pediment to the leachate monitoring requirement, that none presented were insurmountable, and that post- promulgation comments did not identify any technical problems manifestly different from those already con- sidered and rejected by EPA. Again, the Court rejected any suggestion that prejudice be shown: As we noted in our discussion of the mixture and de- rived from rules, however, the Agency has completely v. Hardin, 449 F.2d 1009 (D.C. Cir. 1971); P.A.M. News Corps v. Hardin, 440 F.2d 255 (D.C. Cir. 1971): Texdco v. FPC, 412 F.2d 740 (3d Cir. 1969) ; State of South Carolina ex rel. Patrick v. Block, 558 F. Supp. 1004 (D.S.C. 1983), rev’d on other grounds, 717 F.2d 874 (4th Cir. 1983), cert. den., 465 U.S. 1080 (1984); Rivera v. Patino, 524 F. Supp. 136 (N.D. Cal. 1981). 24 failed to comply with the APA’s notice-and-comment requirements and thus cannot demand that |potential commenter| show pre judice. Furthermore, the [com- menter}] has already submitted numerous comments, including comments that relate specifically to leachate monitoring at land treatment facilities. to which it has received no response. Because the EPA has failed to demonstrate that it received any relevant pre-promulgation comments, its claim that it can learn nothing new on remand is unacceptable. Id, at 761 (emphasis added). 5. Although not as dangerous as the Ninth Circuit’s expansion of the “prejudicial error’ rule into an escape clause for agency noncompliance with APA procedures, there is one other important issue that justifies considera- tion by this Court. Both the Ninth Circuit and the Dis- trict Court completely failed to perform the substantive component of judicial review, 5 U.S.C. § 706(2) (A), to determine whether the Secretary’s decisions to impose quotas were the product of “reasoned decisionmaking.” App. 2a, 16a, 33a (challenge to procedure, not substance). See, e.g., Motor Vehicle Mfqrs. Assn. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (agency chang- ing course has obligation to provide reasoned analysis beyond that required for original action; agency must examine relevant data and factors and articulate a sufficient basis for its action: agency must cogently ex- plain why it has exercised its discretion in given man- ner); Bowman Transportation, Inc. v. Arkansas-Best Freight. Systems, 419 U.S. 281, 285 (1974); Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 414-16 (1974): Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962). Both courts have so far departed from their judicial review responsibilities that this Court should exercise its supervisory power and summarily re- verse this case and remand it for further proceedings. Part II of the Court’s opinion concludes thta the quotas were the product of “reasoned decisionmaking,’ but the Court examined only the procedures of decisionmaking 25 and not its substance. This conclusion is based on the reasonableness of relying on NOAC to collect data and make recommendations and on the de jure independence of the Secretary’s decision from NOAC. App. 13a-14a. While de facto independence of the decisionmaker is a factor in substantive review of regulations, it is only one of many factors, the rest of which were all over- looked by the Court. The record doesn’t even support the de facto independence of USDA from NOAC,** be- cause of USDA’s refusal to “receive’ comments from any other source besides NOAC. There is no evidence to show that a single quota regulation recommended by NOAC was not approved by USDA.** This may mean nothing more than that NOAC recommendations were always reasonable. But, in consideration with all factors, this Court cannot find that USDA exercised the requisite independence. The most glaring failure of the quota de- cisions to substantively demonstrate reasoned decisionmak- ing was that quotas were phased out in all other re- gions of Californin and Arizona except the San Joaquin Valley, Petitioners’ district. Yet there is not one word of explanation or justification in the regulations, a typical “8 See, e.g., Ciiy of Brookings Mut. Tel. Co. v. FCC, 822 F.2d 1153, 1165 (D.C. Cir. 1987); American Horse Protection Assn. v. Lyng, 812 F.2d 1 (D.C. Cir. 1987), review after re mand, 681 F. Supp. 949 (D.D.C. 1988): Holm v. Hardin, 449 F.2d 1009 (D.C. Cir. 1971) ; National Farmers Org. v. Lyng, 695 F. Supp. 1207 (D.D.C. 1988). “" Once USDA started soliciting comments, however, NOAC rec- ommendations for quotas were turned down by USDA during the spring of 1985 and 1992. Tr. Ex. 775, 1985 NOAC minutes, 1/22, 1/29, 2/26, 3/5, and 3/12. NOAC recommendations were increased by USDA four weeks during the 1991-92 season. The Cost of Living Council ordered USDA to increase NOAC-recommended quotas for ten weeks during the spring of 1974. The first NOAC 1981-82 quota recommendation was not approved because USDA had not yet approved the annual marketing policv. Tr. Ex. 778, 1981 NOAC Minutes, 12/8/81 (reference to week ending 11/12/81). In one in- stance, NOAC wanted to continue quotas bayond the end of the quota period approved at the beginning of the season by USDA. Tr. 1817-18. 26 example of which can be found at App. 50a-52a, as to why quotas were imposed on District 1 only, and why these shippers were not afforded the same deregulatory relief granted their competitors in other districts, who were allowed “unlimited” shipments. This alternative ground for invalidation of the quotas (ALJ Dee. (Ninth Circuit Ex. Rec., Tab 1) at 74-77) was also not addressed by the District Court. App. 32a-33a. Furthermore, there was never consideration or discus- sion of any alternatives, especially the option of not using quotas. There was never any response to Sequoia’s letters criticizing the quotas. The trial record contains the un- rebutted testimony that the manv dissenting views ex- pressed at NOAC meetings were never “upstreamed”’ (Tr. 1633) to decisionmakers. Both the Federal Register notices and testimony showed that there were no deci- sional criteria by which USDA could evaluate NOAC’s recommendations. The senior USDA officials responsible for this program testified (Tr. 1818-19) that the NOAC recommendations were routinely “rubber stamped,” that the quota decisions were not made (Tr. 1881-82, 1888) with sufficient “deliberate thought,” that they did not have enough information (Tr. 1750-51, 1765, 1799, 1842, 1846, 1873-78) from which to conclude that the quotas effectuated the purposes of the AMAA, and that he transferred personnel (Tr. 1873, 1877-78) in an at- tempt to obtain required data and analysis. Decisionmaker independence is but the beginning of the judicial inquiry into the substantive validity of the quotas. The regulations (typical examples appearing at 49 Fed. Reg. 48265 (Dec. 12, 1984) and 50 Fed. Reg. 5 (Jan. 2, 1985), App. 50a-52a) must also be examined against established judicial and statutory standards to determine whether they are otherwise arbitrary, capri- cious, or an abuse of discretion. Even a cursory exami- nation of the quota regulations reveals almost every cate- gory of arbitrariness, caprice, and abused discretion. There was no discussion of alternatives, especially the most obvious alternative of not using quotas. There was 27 no explanation why some districts were given “unlimited” quotas while others were given quotas far below their actual requests. There was no nexus between the facts found and the decision to impose quotas, and no analysis of the factors set forth in 7 C.F.R. §§ 907.50(a), .51(a), especially the impact of competing unregulated citrus. Key regulatory terms were not defined, including “or- derly marketing,” and “reasonable” versus “unreasonable fluctuations in supplies and prices.” Critical data was not disclosed, such as the economic model on which the quotas were allegedly based, the “market situation” cur- rently confronting the industry, and “other available in- formation.” The quotas did not show compliance with the January, 1982 and May, 1983 Guidelines (Tr. Ex. 42, Tr. 1398-1401). The published decisions ignored key studies in USDA’s own files *® which contained adverse 4° See, e.g., Nelson & Robinson, “Retail and Wholesale Demand and Marketing Order Policy for Fresh Navel Oranges,” 60 American Journal of Agricultural Economics, 502-09 (August, 1978) (study of increased quotas ordered during spring of 1974 showed that demand for naval organges was elastic, i.e. that industry revenue would increase as quotas were relaxed, contrary to claims of NOAC); Thor & Jesse [Tech. Bull. 1664, Tr. Exs. 39 & 40], Eco- nomie Effects of Terminating Federal Marketing Orders for Cali- fornia-Arizona Oranges (1981) (econometric model showed that long-term effects of terminating use of prorate are more fresh sales, reduced byproducts diversions, increased grower revenue, no in- crased price or shipment variability, and reduced byproducts process- ing capacity); AMS (Study Team) [Agric. Econ. Rpt. No. 477], A Review of Federal Marketing Orders for Fruits, Vegetables, and Specialty Crops—Economic Efficiency and Welfare Implications (1981) (excessively restrictive navel quotas has caused chronic over- production and resource misallocation; efficiency losses from mis- allocation are likely to exceed any stabilization benefits); Jesse & Johnson [Agric. Econ. Rpt. No. 471, Tr. Ex. 41]; Effectiveness of Federal Marketing Orders for Fruits and Vegetables (1981) (no evidence that order commodity prices were higher, either in absolute terms or as a percent of partity, or more stable than comparable non- order commodities) ; Office of Management and Budget, Agricultural Marketing Orders (1982) (prices for unregulated citrus more stable than citrus subject to quotas); Office of Management and Budget, “Agricultural Marketing Orders” (2/18/82) (Tr. Ex. 738); US. Dept. of Justice (Tr. Ex. 737), Post-Hearing Brief and Exceptions 28 findings and ignored data in USDA’s files that tended to show that the quotas had adverse economic impact or that quotas weren't needed in response to some perceived market disruption. 6. The Ninth Circuit’s decision will cause significant short-run harm as well as its disastrous potential to inflict long-run damage to the decisionmaking process, Even through the Court granted prospective relief in the form of an injunction requiring the Secretary to comply with the public participation requirements of the APA with respect to any future quotas, the Court’s decision leaves Petitioners without any remedy for the past violations of the APA. Cf. McKesson v. Div. of Alcoholic Beverages & Tobacco, Dept. of Bus. Reg. of Florida, 496 U.S. 18 (1990). One enforcement case is currently pending against Petitioners Sequoia and Exeter in which the United States is seeking approximately $3.2 million in forfeitures under 7 U.S.C. § 608a(5) for alleged quota overshipments during the 1978-82 seasons. As the Ninth Circuit correctly recognized, App. lla, invalidation of the to Recommended Decision (1984) (favoring elimination of quotas because resource misallocation, harm to growers, and lack of demon- strated need); General Accounting Office, The Role of Federal Marketing Orders in Establishing and Maintaining Orderly Market- ing Conditions. [RCED 85-57] (1985) (USDA lacked objective eco- nomie criteria by which to measure marketing order performance in light of Congressional objectives); Agribusiness Associates, Eeo- nomic Analysis of Volume Controls, California-Arizona Navel Orange Marketing Order (1985) (navel quotas have reduced pro- ducer and handler revenue) ; Powers, “Prices and Shipments During Prorate and Prorate Suspension for the California-Arizona Navel Orange Federal Marketing Order,” Citrus Fruits: Situation and Outlook (Feb. 1986) (following Feb, 1, 1985 navel prorate suspen- sion, Wholesale prices were more stable, domestic fresh shipments increased, shipments to byproducts decreased significantly, and ship- ment variability decreased) ; Shepard, “Cartelization of the Cali- fornia-Arizona Orange Industry: 1934-81" 29 Journal of Law and Economies 83-123 (1986) (navel quotas have reduced grower returns by one-half; “The market allocation cum price discrimination pro- gram enforced by the marketing orders thus begets long-run market responses that are hostile to the very objectives that underlie the marketing orders.”’). 29 quotas in this case would provide a successful affirmative defense in pending enforcement cases. In addition, USDA claims to have settled several cases, App. 58a (USDA August 25, 1989 press release), and is demanding pay- ments in at least 39 other cases totalling in excess of $12 million. Finally, there are 31 cases pending against shippers under the False Claims Act, 31 U.S.C. $ 3729, et seq., for violations of orange and lemon quotas totalling over $60 million in forfeitures and damages. The en- forceability of past quotas notwithstanding USDA’s APA violations will be an affirmative defense in all of these cases. This count does not include an unknown number of violation cases pending under USDA’s other marketing orders. All of the controversial supply control programs are located within the Ninth Circuit, so this decision will undoubtedly impact these cases also. CONCLUSION The Ninth Circuit begins its opinion with the pious observation that: |[p|rocedure, not substance, is what most distin- guishes our government from others. In the not- so-distant past, a government agency in the Soviet Union could impose controls on the production of commodities without bothering to involve the public in the decisionmaking process. By contrast, a gov- ernment agency in the United States must usually give notice to, and accept comment from, the public before undertaking to place manacles on the invisible hand. App. 2a. The far more important difference is that we adhere to the Rule of Law, under which government ac- tion taken without required procedures must be voided by reviewing courts. Without diligent exercise of this obligation by the courts, our guarantees of substantive and procedural safeguards against government abuse would be no more useful than the former Soviet Union’s guarantees of free speech, press, and ballot. The Ninth Circuit correctly found that the challenged quotas were 30 imposed without the procedural safeguards in § 553 of the APA. It must follow, therefore, that they do not have the “force of law.”’ For the foregoing reasons, Petitioners ask that this Court grant certiorari to review the errone- ous and dangerous’ decision of the Ninth Circuit. Respectfully submitted, JAMES A. Moopy Suite 600 2300 N. Street, N.W. Washington, D.C. 20037 September 8, 1992 (202) 6638-9011 APPENDICES la APPENDIX UNITED STATES COURT OF APPEALS NINTH CIRCUIT Nos. 90-15505, 90-15781 RIVERBEND FARMS, INC., a California Corporation; SUNNY COVE CITRUS ASSOCIATION, a California cooperative corporation; BELRIDGE PACKING Co., a California cor- poration; SEQUOIA ORANGE COMPANY, INC., a California corporation; and EXETER ORANGE COMPANY, ING., a California corporation, Plaintiffs-A ppellants, Vv. EDWARD R. MADIGAN, Secty Dept. of Agriculture, Defendant-A ppellee. Appeal from the United States District Court for the Eastern District of California Argued and Submitted Sept. 12, 1991 Decided March 17, 1992 James Moody, Washington, D.C., and Thomas E. Cam- pagne, A Professional Corporation, Fresno, Cal., for plaintiffs-appellees-appellants. Mark W. Pennack, U.S. Dept. of Justice, Washington, D.C., for defendant-appellant-appellee. 2a Before CANBY and KOZINSKI, Circuit Judges, and CARROLL,** District Judge. KOZINSKI, Circuit Judge. Procedure, not substance, is what most distinguishes our government from others. In the not-so-distant past, a government agency in the Soviet Union could impose controls on the production of commodities without bother- ing to involve the public in the decisionmaking process. By contrast, a government agency in the United States must usually give notice to, and accept comments from, the public before undertaking to place manacles on the invisible hand. 5 U.S.C. § 553. In this case, we address some of the details of this notice and comment require- ment. Background Plaintiffs are domestic “handlers” of navel oranges: they buy, sell, consign, transport, ship, or by other means place oranges in the current of commerce. 7 C.F.R. § 907.10 (1991). They challenge the procedure used by the Secretary of Agriculture to regulate the navel orange market. Plaintiffs contend that the regulatory system: (1) neither complies with the Administrative Procedure Act’s notice and comment requirements nor falls within the good cause exception to those requirements; (2) evis- cerates the requirement that the Secretary engage in reasoned decisionmaking; and (3) denies plaintiffs equity in marketing opportunity. The Agricultural Marketing Agreement Act, 7 U.S.C. § 601 et seg., authorizes the Secretary of Agriculture to issue marketing orders limiting the quantity of com- modities shipped into markets identified by the Secretary, thus protecting prices for producers and maintaining orderly marketing conditions. 7 U.S.C. § 602(1). Pur- ** The Honorable Ear! H. Carroll, United States District Judge, District of Arizona, sitting by designation. 3a suant to the AMAA, the Secretary promulgated regula- tions in 1954 (Marketing Order 907, 7 C.F.R. Part 907) to govern the shipment of navel oranges from California and Arizona.’ For the most part, the regulations promul- gated in this marketing order still govern the navel orange market. The regulations divide California and Arizona into four districts and authorize the Secretary to limit the quantity of navel oranges shipped from these districts to points in the continental United States or Canada during the navel orange marketing season, which generally runs from the middle of fall until the middle of spring. Pursuant to the regulations, the Navel Orange Admin- istrative Committee (NOAC), an eleven-member commit- tee composed of ten representatives of growers, handlers or cooperative marketing organizations and one non- industry representative, develops its annual Marketing Policy before the start of each season. See 7 C.F.R. $§ 907.-20-.34; id. §§ 907.50-.51; Judicial Officer’s Opin- ion, Finding of Fact No. 9(a), at 45-46. As part of this process, the NOAC notifies all handlers by letter and places advertisements in the newspaper before holding a public meeting concerning the proposed Policy. JO, Find- ing of Fact No. 14(d), at 70. The Policy estimates the weekly volume restrictions that will probably be needed during the upcoming navel orange season. JO, Finding of Fact No. 9(a), at 46. The Secretary then analyzes the NOAC recommendations in the Policy and issues a Posi- tion Paper indicating whether he intends to impose volume restrictions in the forthcoming year and what he intends those restrictions to be for each week during the season. JO, Finding of Fact No. 16, at 71-79. Each Tuesday during the season, the NOAC holds a meeting to settle on a recommendation to give the Secre- tary for the following week’s volume restrictions. Before ! Plaintiffs do not challenge the validity of the marketing order. 4a each meeting, NOAC members usually notify growers and handlers of navel oranges in order to obtain their general views on market conditions. JO at 190. At the meeting, growers, handlers and any other members of the public may participate. JO, Finding of Fact No. 17, at 79. After the meeting, the NOAC makes a recommendation to the Secretary as to the volume of oranges he should au- thorize for shipment into the domestic market for the week beginning that Friday. Jd. After making its recom- mendation, the NOAC provisionally calculates the quan- tity of oranges that may be handled by each district, and by each handler within the district, during the coming week, 7 C.F.R. § 907.54(a), and informs the handlers of their scheduled allotment. The Secretary then issues the actual rule, which seldom varies from the NOAC’s recommendation. JO, Finding of Fact No. 20, at 86. The rule is published in the Federal Register on Friday and sets the volume restrictions for the upcoming week. When the Secretary issues the rule, he includes a finding that states: “It is further found that it is impracticable and contrary to the public interest to give preliminary notice, engage in public rulemaking, and postpone the effective date until 30 days after publication in the Federal Regis- ter.’ ALJ Decision, Finding of Fact No. 4(c), at 206. Discussion I A. The Administrative Procedure Act ensures that the massive federal bureaucracy remains tethered to those it governs—or so the theory goes. When an agency de- cides to issue a rule, it must first publish a notice of proposed rulemaking in the Federal Register, which is the guide for those members of the public—usually spe- cial interest groups—who want to participate in the rule- making process. The notice must contain “‘(1) a state- ment of the time, place, and nature of public rule making proceedings; (2) reference to the legal authority under ] 5a which the rule is proposed; and (3) either the terms or substance of the proposed rule or a description of the sub- jects and issues involved.” 5 U.S.C. § 553(b). Although the APA mandates no minimum comment period, some window of time, usually thirty days or more, is then allowed for interested parties to comment. Petry v. Block, 737 F.2d 1193, 1201 (D.C.Cir.1984). The public may comment “through submission of written data, views, or arguments with or without opportunity for oral presenta- tion.” 5 U.S.C. § 553(c). After “consideration of the relevant matter presented,” the agency publishes the final rule, accompanied by a “concise general statement of [its] basis and purpose,” in the Register. Id. The gestation period from initial notice to final rule can be a couple of months, and often much longer depend- ing on the time the agency allows for comments and the time it takes to digest those comments. In addition to the time required for the notice and comment procedures to run their course, an additional thirty days ordinarily -must pass between the time the final rule is published and the time it takes effect. 5 U.S.C. § 553(d). B. The APA contains a few exceptions to the notice and comment requirements for informal rulemaking. One of these is the good cause exception, which applies when an agency “for good cause finds... that notice and public procedure thereon are impracticable, unnecessary, or con- trary to the public interest.” 5 U.S.C, § 553(b) (B). The Secretary of Agriculture has relied on this exception for several decades and has never fully complied with the APA’s notice and comment requirements before issuing weekly navel orange volume restrictions. Plaintiffs, currently defendants in forfeiture proceed- ings for allegedly violating volume restrictions, argue that past volume restrictions are invalid because they were promulgated without observing the APA’s notice and comment requirements. Plaintiffs argue that the good 6a cause exception cannot justify the wholesale abandonment of the APA’s requirements week in and week out, year in and year out, for the entire life of a regulatory pro- gram. The Secretary counters that the regulatory process simply could not be carried out if he were required to follow APA procedures (which often take weeks or months) for rules that must be put into effect almost immediately and that have an effective life of exactly one week. We agree with both parties. The Secretary certainly has the better of the argument when he points out that he has made a substantive regu- latory decision that volume restrictions must be issued on a weekly basis, and that we and plaintiffs are bound by that decision. The APA was intended to impose pro- cedural requirements on the adoption of rules; it is not a device by which an agency may be forced to adopt a less effective regulatory program in order to more ef- fectively comply with notice and comment procedures. The existence of the good cause exception is proof that Con- gress intended to let agencies depart from normal APA procedures where compliance would jeopardize their as- signed missions. Levesque v. Block, 723 F.2d 175, 184 (1st Cir,1983).° 2 Under the good cause exception, notice and opportunity for com- ment is not required when doing so would be: (1) impracticable ; (2) unnecessary; or (3) contrary to the public interest. Notice and comment is “impracticable” when the agency cannot “both follow section 553 and execute its statutory duties.” Levesque, 723 F.2d at 184. Notice and comment is “unnecessary” when “the regulation is technical or minor.” Jd. Furthermore, ‘contrary to the public interest” supplements these terms and “requires that public rule- making procedures shall not prevent an agency from operating.” Id. (quoting S.Rep. No. 752, 79th Cong., Ist Sess. 14 (1945), re- printed in Senate Judiciary Committee, 79th Cong., 2d Sess., Ad- ministrative Procedure Act Legislative History 185, 200 (1946)). See generally Jordan, The Administrative Procedure Act’s “Good Cause” Exemption, 36 Admin.L.Rev. 113, 120-52 (1984); Comment, Agency Discretion to Accept Comment in Informal Rulemaking: Ta At the same time, the good cause exception goes only as far as its name implies: It authorizes departures from the APA’s requirements only when compliance would interfere with the agency’s ability to carry out its mis- sion. The agency thus must minimize conflict with the APA by complying with those APA requirements it is capable of complying with. The procedures the Secretary has adopted do not, in fact, depart radically from those contemplated by the APA. Most significant is the fact that the Secretary gives interested parties an opportunity to appear and have their say at the weekly NOAC meetings, and that such input is received and considered by the NOAC in making its recommendation to the Secretary. The proce- dure departs from normal APA practice in only three respects: First, the Secretary does not publish a Federal Register notice of the proposed weekly volume restriction, which would advise the public that it could comment at the NOAC meeting to be held the Tuesday before the week in question. Second, there appears to be no oppor- tunity for written comments—or indeed any comments other than by persons attending the NOAC meetings. Finally, the volume restrictions go into effect immedi- ately, bypassing the normal 30-day delay in the effective date of a final rule. The last of these departures is the easiest to justify. To analyze it, we must first recognize that the APA con- tains two good cause exceptions: One, as we have noted, excuses failure to abide by the notice and comment re- quirements, and the other allows an agency to forego the 30-day waiting period between publication of the final What Constitutes “Good Cause’ Under the Administrative Pro- cedure Act?, 1980 B.Y.U.L.Rev. 93, 100-01. Emergencies, though not the only situations constituting good cause, are the most common. See Northern Arapahoe Tribe v. Hodel, 808 F.2d 741, 751 (10th Cir.1987); Buschmann v. Schweile r, 676 F.2d 352, 357 (9th Cir.1982). 8a rule and its effective date. See 5 U.S.C. § 553(b) (B) & (d) (3). Althouch some courts have failed to distinguish the two good cause exceptions, commentators and some courts have correctly recognized that different policies underlie the exceptions, and that they can be invoked for different reasons, See U.S. Steel Corp. v. EPA, 605 F.2d 283. 289-90 (7th Cir.1979) (good cause more easily found as to 30-day waiting period), cert. denied, 444 U.S. 1035. 100 S.Ct. 710, 62 L.Ed.2d 672 (1980); Comment, 1980 B.Y.U.L.Rey., at 97 (30-day waiting period “in no way relates to the notice and comment requirement, but the federal courts have not always been careful to main- tain the distinction”) ; G. Edles & J. Nelson, Federal Regu- latory Process: Agency Practices and Procedures § 4.2.1TI, at 68 (2d ed. 1991) (two good cause exceptions are “con- ceptually different”), Unlike the notice and comment requirements, which are designed to ensure publie participation in rulemaking, the 30-day waiting period is intended to give affected parties time to adjust their behavior before the final rule takes effect. This is sensible; until the final rule is pub- lished, the public is not sure of what the rule will be or when the rule will actually be promulgated. In addition, a window of time usualy causes no harm. Neither of these reasons for the waiting period is ap- plicable to the navel orange regulatory system. The pub- lie knows the rule will take effect on Friday of the week in question and is given accurate, advance notice of what the rule is likely to be. See JO, Finding of Fact No. 18, at 83.2 More importantly, requiring this 30-day waiting period would cause great harm: It would force the Secre- tary to predict weekly volume restrictions more than thirty days in advance. The record convincingly estab- 3 The NOAC notifies handlers on Tuesday of its recommendation to the Secretary, and the Secretary has accepted this recommenda- tion without change over 90°% of the time. JO, Finding of Fact No, 18, at 83. ! 9a lishes the impossibility of accomplishing that feat with any degree of accuracy: The NOAC is constantly revis- ing projections right up until, and occasionally even dur- ing, the week in question. See JO, Finding of Fact No. 12(a), at 60; id. No. 18(a), at 67; id, No. 18, at 83. We cannot impose a 30-day waiting period, in essence requiring the Secretary to predict market and weather conditions more than a month in advance, without throw- ing the entire regulatory program out of kilter. We therefore hold that the Secretary has shown good cause for making the weekly restriction effective upon publica- tion in the Federal Register. More problematic are the Secretary’s other two devia- tions from normal APA procedures. While the Secretary argues persuasively that interested parties have actual notice of the weekly meetings, such notice is defective in two ways. First, the APA contemplates notice to all mem- bers of the public—regardless of whether individual mem- bers have a particularized interest in the regulatory pro- gram—by means of publication in the Federal Register. While Federal Register publication may be unnecessary or duplicative in some, if not many, cases, its prophylactic effect ensures that agencies and reviewing courts need not make the difficult and necessarily ad hoe determinations of who has a sufficient interest (i.e., would they comment if given notice?) in a proposed rule. Second, any notice given to interested parties does not contain anything akin to a proposed rule: The Secretary gives no indica- tion of the proposed volume restriction for that week. It is a fundamental tenet of the APA that the public must be given some indication of what the agency proposes to do so that it might offer meaningful comment thereon. 5 U.S.C. § 553(b) (3); K. Davis, 1 Administrative Law Treatise § 6.25, at 571 (2d ed. 1978). The Secretary has not demonstrated that it would be impracticable to publish a notice in the Federal Register a few days before the NOAC meeting, advising the public 10a of the time and place of the meeting, the legal authority for the proposed volume restrictions‘ and the proposed volume restrictions.*° The Secretary would not, of course, be bound by a proposed volume restriction—the purpose of notice and comment is to help the agency make an in- formed decision—but the agency would be required to give its best estimate based on the avaiiable information at the time the notice is published.* The third deviation from the APA’s normal practice is as troubling as the second: The Secretary allows only oral comments from those who attend the NOAC meet- ings. There may be persons interested in the naval orange market who are unable to attend, or have a representa- tive attend, the weekly NOAC meeting, yet the Secre- tary has suggested no reason why he cannot accommodate the normal APA procedure of allowing the submission of written comments before promulgating weekly volume restrictions. It’s clear that given even a few days notice, members of the public would have sufficient opportunity to submit written comments to the NOAC before the weekly meeting. 4This, of course, would simply require brief reference to the AMAA and Marketing Order 907. 5 Given that the Secretary's annual position paper sets forth the planned weekly volume restrictions, the Secretary cannot seriously contend that it would be impracticable to include proposed figures in the notice. If, at the time the notice is published, it’s too early to tell what the actual figures might be, the Secretary can say so in the notice and replicate the figures that were allotted for the week in question in the position paper. ®There is no requirement that the rule contained in the notice of proposed rulemaking be the same as the final rule: “Parties have no right to insist that a rule remain frozen in its vestigial form.” South Terminal Corp. v. EPA, 504 F.2d 646, 659 (1st Cir.1974) ; see also AFL-CIO v. Donovan, 757 F.2d 330, 338 (D.C.Cir.1985) (“It is. of course, elementary that a final rule need not be identical to the original proposed rule.’’). = ll lla We thus conclude that the Secretary’s rulemaking fails to satisfy the APA’s requirements because he has not demonstrated good cause for failing to give sufficient no- tice in the Federal Register of the weekly NOAC meet- ing and failing to allow the public to comment by means other than personal participation at the NOAC meeting. This conclusion, though important for how the Secre- tary must regulate the naval orange markets in the fu- ture, does not answer the question of most concern to the parties in this case: the remedy. We must decide what effect the Secretary’s failure to comply with notice and comment requirements carries for past weekly volume restrictions. If we invalidate past volume restrictions, plaintiffs would obviously succeed in the pending forfeit- ure proceedings brought against them by the Secretary. It’s to that question we now turn, C. The APA requires that we take “due account” of the harmless error rule. See 5 U.S.C. § 706. It’s true, as plaintiffs argue, that we must exercise great caution in applying the harmless error rule in the administrative rulemaking context. The reason is apparent: Harmless error is more readily abused there than in the civil or criminal trial context. An agency is not required to adopt a rule that conforms in any way to the comments pre- sented to it. So long as it explains its reasons, it may adopt a rule that all commentators think is stupid or unnecessary. Thus, if the harmless error rule were to look solely to result, an agency could always claim that it would have adopted the same rule even if it had com- plied with the APA procedures. To avoid gutting the APA’s procedural requirements, harmless error anaysis in administrative rulemaking must therefore focus on the process as well as the result. We have held that the fail- ure to provide notice and comment is harmless only where the agency’s mistake “clearly had no bearing on the pro- cedure used or the substance of decision reached.” Sage- brush Rebellion, Inc, v. Hodel, 790 F.2d 760, 764-65 (9th Cir.1986) (quoting Braniff Airways v. CAB, 379 F.2d 12a 453, 461 (D.C.Cir.1976)); see also County of Del Norte v. United States, 732 F.2d 1462, 1466-67 (9th Cir.1984) (applying harmless error rule in context of administra- tive rulemaking), cert. denied, 469 U.S. 1189, 105 S.Ct. 958, 83 L.Ed.2d 864 (1985); cf. Buckley v. Valeo, 424 U.S. 1, 142, 96 S.Ct. 612, 693, 46 L.Ed.2d 659 (1976) (upholding past administrative actions of Federal Elec- tion Commission though Commissioners were selected in violation of constitutional principle of separation of powers) .* Sagebrush exemplifies proper application of the harm- less error rule. There, plaintiffs challenged the Secretary of the Interior’s failure to give notice and hold hearings as required by the Federal Land Policy and Manage- ment Act (FLPMA). The Secretary had, however, held hearings pursuant to the National Environmental Policy Act. We agreed with the plaintiffs that “the notices did not comply in every respect with the terms of [the FLPMA]. However, we |found| the error harmless since the purposes of FLPMA’s notice requirement were fully satisfied.” 790 F.2d at 764. As to opportunity for com- ment, we similarly held that although the hearings were not in technical compliance with the statutory require- ments the error was harmless because the hearings never- theless ‘“‘afforded the public a full and fair opportunity to be heard.” Id. at 769. Although Sagebrush dealt with the notice and com- ment requirements of the FLPMA, we find its reasoning 7 Other circuits (including the D.C. Circuit, which handles ad- ministrative cases with numbing regularity) have also applied the harmless error rule to administrative rulemaking. For example, in Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 549 (D.C.Cir.1983), the court held that “even if the agency has not given notice in the statutorily prescribed fashion, actual notice will render the error harmless.” See also Shelton v. Marsh, 902 F.2d 1201, 1206 (6th Cir.1990) (“cases specifically exploring the effect of failure to follow notice procedures have held that the doctrine applies where there is sufficient actual notice’). 13a dispositive here. As we explained earlier, all parties be- fore us knew the ground rules: that there would be an annual position paper setting proposed weekly volume re- strictions; that the NOAC would meet every Tuesday during the season;* that the starting point for debate at those Tuesday meetings would be the figure listed for that week in the annual position paper (or in the NOAC’s updated versions of it’) ; that there would be opportunity for public comment at the Tuesday meetings; and that the final volume restrictions would be issued by the Sec- retary soon afterwards. This system of regulation existed for decades without challenge; it was only after some handlers ran into trouble with the Department of Agricul- ture that, in looking for an escape, they came up with this challenge. While they are right that the Secretary must comply with some of the APA’s technical require- ments, ther belated challenge is evidence of the lack of prejudice resulting from the Secretary’s failure to do so in the past thirty-five days. If the procedural error here is not harmless, it’s hard to imagine a case where it would be. While some may argue that would be all for the good, we cannot and will not presume that Congress intended the APA’s harmless error rule to be a nullity. The Secretary’s failure to com- ply with the specific dictates of the APA’s notice and com- ment requirements is harmless, and we therefore will not invalidate the volume restrictions issued in the past by the Secretary. II Some courts have held that agency action is arbitrary and capricious if “the agency has not really taken a ‘hard look’ at the salient problems and has not genuinely en- * Plaintiffs do not claim they were unaware of the Tuesday meetings. _ ®* The NOAC has occasionally issued a revised schedule of esti- mated weekly restrictions to supplement or replace the original schedule. JO at 163. l4a gaged in reasoned decision-making.” Greater Boston Tele- vision Corp. v. FCC, 444 F.2d 841, 851 (D.C.Cir.1970) (footnote omitted), cert. denied, 403 U.S. 923, 91 S.Ct. 2233, 29 L.Ed.2d 701 (1971). Plaintiffs argue that all: volume regulations for the years in question must be set aside because the Secretary did not engage in reasoned decision-making. Plaintiffs base their argument on the fact that the Secretary regularly relied on the NOAC to collect data from the growers and make recommendations for the weekly volume restrictions. The parties agree that the Secretary normally adopts NOAC’s recommendation, al- though he does not always do so. See JO, Finding of Fact No. 20, at 86-87. We have no difficulty with the Secretary’s decision to rely on the NOAC to filter and digest public comments and to make a recommendation. Subject to the require- ments of the APA, the Federal Advisory Committee Act, 5 U.S.C.App. 2, and other procedural requirements, the Secretary is free to seek advice from whatever sources he deems appropriate, so long as he or his delegate in the Department retains ultimate authority to issue the regu- lation. See Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 399, 60 S.Ct. 907, 915, 84 L.Ed. 1263 (1940). Here, the record makes it clear that the Secretary does not rubber stamp the NOAC’s recommendations. AlI- though the Secretary normally follows the NOAC’s sug- gestions, he retains the authority to depart from or ignore them altogether. Ill Plaintiffs argue that the Secretary’s exemption of naval oranges shipped to markets outside the continental United States and Canada from the volume restrictions violates the statute’s “uniform rule” requirement. 7 | U.S.C. § 608¢(6) (C). The easy answer to this contention ! is that the statute gives the Secretary discretion to do = a TE 15a precisely what he does: He may designate certain mar- kets to which handlers may ship limited quantities of naval oranges (they’re the continental United States and Canada under the current regulations, see 7 C.F.R. $ 907.18; id. § 907.67) and exempt other markets, thereby leaving them open for handlers to ship unlimited quan- tities. See 7 U.S.C. § 608¢(6)(C) (allowing Secretary to restrict shipments to “any or all markets”). Shipments to markets other than the designated ones are simply ir- relevant in determining whether the rule is uniform. Plaintiffs also argue that the fact that weekly volume restrictions, calculated as percentages of each district’s total crop, occasionally vary among districts is a violation of the uniform rule requirement. But the statute does not require that the Secretary limit every district every week to the same percentage of its crop as other districts. Rather, the Secretary has discretion to adjust allocations among districts during the course of the season; for pur- poses of the statute, the relevant time period is the season as a whole, not the weeks within it. See id. It’s true that during some weeks, and indeed some sea- sons, certain districts have been completely unrestricted. But those districts were obviously not going to, and did not, meet their full seasonal allotment to the continental United States and Canada. As the Judicial Officer con- cluded, “volume regulation may not be imposed in a dis- trict if it is obvious that the handlers in the district will not be able to use all of the allotments that otherwise would have been given to them.” JO Finding of Fact No. 22, at 90. With a couple of de minimis exceptions, during no season has the Secretary allocated to any district a percentage of its total available crop greater than to any other district. Conclusion As governments elsewhere loosen their grip over com- mercial markets, the Secretary of Agriculture forges ahead with a government-mandated system of quantity l6a restrictions adopted nearly four decades ago. Whatever the merits of that policy, our concern is procedure, not substance. Though we disapprove of the Secretary’s con- tinued reliance on the good cause exception to abandon APA procedures altogether, his failure to do so in the past cannot serve to invalidate old volume restrictions. On remand, the district court shall give the Secretary an appropriate period to comply with this opinion—at the latest by the time the Secretary begins imposing weekly volume restrictions for the 1992-93 navel orange season. To summarize, the Secretary must: (1) publish an advance notice of the Tuesday NOAC meetings in the Federal Register, preferably at least a week ahead of time, which should include the time and place of the NOAC meeting, the legal authority for the proposed restriction and a tentative projection of the volume restriction for the week to follow the meeting; and (2) allow parties to submit written comments to the NOAC and the Secretary in lieu of or in addition to per- mitting oral participation at the NOAC meeting. AFFIRMED IN PART; REVERSED IN PART; RE- MANDED FOR FURTHER PROCEEDINGS CONSIST- ENT WITH THIS OPINION. a 17a UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 90-15505 D.C. No. CV-88-0098-EDP RIVERBEND Farms, INC., a_ California Corporation; SEQUOIA ORANGE Co.; EXETER ORANGE Co., a California Corporation, Plaintiffs-A ppellees, v. EDWARD R. MADIGAN, Secretary Department of Agriculture, Defendant-A ppellant. No. 90-15781 D.C. No. CV-88-0098-EDP RIVERBEND FarMS, INC., a California Corporation; SUNNY CovE CITRUS ASSOCIATION, a California coop- erative corporation; BELRIDGE PACKING Co., a Califor- nia corporation; SEQUOIA ORANGE COMPANY, INC., a California corporation; and EXETER ORANGE ComPANy, INC., a California corporation, Plaintiffs-A ppellants, v. EDWARD R. MADIGAN, Secty Dept. of Agriculture, Defendant-A ppellee. | 18a ORDER [Filed Jun 9, 1992] Before: CANBY and KOZINSKI, Circuit Judges, and CARROLL,”* District Judge. The petition for rehearing is denied. The full court has been advised of the suggestion for en banc rehearing and no judge has requested a vote thereon. The suggestion for rehearing en banc is therefore rejected. * The Honorable Earl H. Carroll, United States District Judge, District of Arizona, sitting by designation. ene 19a UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA No. CV F-88-98 EDP RIVERBEND FarMs, INC., a California corporation, SUNNY COVE CITRUS ASSOCIATION, a California coop- erative corp., BELRIDGE PACKING Co., a California corp.; SEQUOIA ORANGE CoMPANY, INC., a California corp.; and EXETER ORANGE COMPANY INC., a California corp. ; Plaintiffs, V. CLAYTON K. YEUTTER,* Secretary of Agriculture of the United States, Defendant. MEMORANDUM DECISION RE: DEFENDANT'S MOTION FOR RECONSIDERATION [Filed Mar. 22, 1990] The Court entered its Memorandum Decision Re: Cross Motions for Summary Judgment. At the hearing on the defendant’s motion for reconsideration, the Court requested the defendant to submit sworn statements ex- plaining when, how and by whom the information upon which the weekly volume regulations under Marketing Order 907 is gathered, and when it becomes first avail- able. "Clayton K. Yeutter succeeded Richard Lyng as Secretary of r re on February 16, 1989, and should be substituted as lant in this suit. No further action is necessary to continue reason of the last sentence of 42 U.S.C. $ 405(¢), and v.P. 25(d). ¢ 20a In reading the materials submitted by the government and reviewing the minutes of the respective Orange Com- mittees on a random basis, the Court is not satisfied that the government has actually answered the Court’s inquiry. The government adequately explains the mechanics by which the Committee seeks to gather the information necessary to issue ther weekly volume regulations. For instance, in item five (5) of Mr. Peightel’s declaration: Item 5—Crop Condition Information. HOW OBTAINED: Visual observations, report from packinghouses and reports from wholesale and retail trade. ORIGIN OF INFORMATION: Field staff, grower members of the committee, handlers, and sales per- sonnel. WHO RECEIVES INFORMATION: Committee members, Secretary (USDA) and Committee man- agement and staff. WHEN INFORMATION IS AVAILABLE: Com- mitee members. Handler members receive reports daily on fruit condition (holding quality, flavor and apearance) from their packers, and from their sources associated with the wholesale and retail trade. Grower members assess the condition of their crops continuously throughout the year. Secretary (USDA). On Tuesday morning of each week— (regularly scheduled meeting time). Committee management & Staff. On a daily basis from field staff, and from conversations with han- dlers. | Mr. Peightal’s declaration is simply a recital of what the present system is. There is no explanation in either | Mr. Peightal’s declaration or in the presentation of the attorneys for the government as to why this information, 2la when received, could not be gathered or correlated on an earlier date. Most fresh fruit is shipped and packed rather promptly without any appreciable holdover at the packing source. Oranges, on the other hand, are held for varying lengths of time until the color of the orange improves to the point that the produce can be entered into commerce. The minutes of the Committee meeting merely reflect the procedure presently being used. They do not contain any information from which the Court can deduce that an emergency existed that justified the disregard of the law. Accordingly, it is the order of the Court that the mat- ter is remanded to the Secretary of Agriculture to enter an order requiring the Orange Administrative Committee to comply with the provisions of 5 U.S.C. § 553(b) or, alternately, when the Orange Committee determines that compliance with that section may be waived in accordance with law, to make findings of fact that justify a waiver of such requirement as provided in 5 U.S.C. § 553(B) (3) (b). DATED: March 22, 1990 /s/ Edward Dean Price EDWARD DEAN PRICE United States District Judge 22a UNITED STATES DISTICT COURT EASTERN DISTRICT OF CALIFORNIA No. Cv F-88-98 EDP RIVERBEND FARMS, INC., a California corporation, SUNNY CovVE CITRUS ASSOCIATION, a California cooperative, corp., BELRIDGE PACKING Co., a California corp.; SE- QUOIA ORANGE COMPANY, INC., a California corp.; and EXETER ORANGE COMPANY, INC., a California corp., Plaintiffs, Vv. CLAYTON K. YEUTTER,* Secretary of Agriculture of the United States, Defendant. MEMORANDUM DECISION RE: CROSS MOTIONS FOR SUMMARY JUDGMENT [Filed May 31, 1989] Plaintiffs commenced this action by petitions filed pur- suant to 7 U.S.C. § 608¢(15) (A), relating to the Federal Marketing Order regulating the marketing of navel oranges grown in Arizona and designated parts of Cali- fornia. See 7 C.F.R. Part 907. It is conceded that plain- tiffs are “handlers” of Navel oranges as that term is de- fined in the Code of Federal Regulations. Plaintiffs con- duct their business within the State of California. *Clayton K. Ceutter succeeded Richard Lyng as Secretary of Agriculture on February 16, 1989, and should be substituted as defendant in this suit. No further action is necessary to continue this suit, by reason of the last sentence of 42 U.S.C. § 405(g), and Fed.R.Civ.P. 25(d). ab iat Seas ites rane pa kA eel: ORO hs ci » ‘ aete 23a Plaintiffs enjoyed some success in the original adminis- trative hearings. The Administrative Law Judge granted plaintiffs petition on the three (3) grounds asserted by plaintiffs in their appeal before this court. The Secretary appealed the decision of the Administra- tive Law Judge. Judicial Officer Campbell reversed the Administrative Law Judge’s decision and dismissed plain- tiffs’ petition. Plaintiffs now appeal the Secretary’s final determination under 7 U.S.C. § 608¢(15) (B) which pro- vides in pertinent part as follows: The District Courts of the United States (includ- ing the Supreme Court of the District of Columbia [District Court of the United States for the District of Columbia]) in any district in which such handler is an inhabitant, or has his principal place of busi- ness, are hereby vested with jurisdiction in equity to review such ruling, provided a bill in equity for that purpose is filed within twenty days from the date of the entry of such ruling. Service of process in such proceedings may be had upon the Secretary by delivering to him a copy of the bill of complaint. If the court determines that such ruling is not in accordance with law, it shall remand such proceed- ings to the Secretary with directions either (1) to make such ruling as the court shall determine to be in accordance with law, or (2) to take such further proceedings as, in its opinion, the law requires. The hearing officer, in rejecting plaintiffs’ appeal, focused in part on the benefit that Sunkist Growers Inc., a cooperative marketing association of orange growers, obtained from the navel orange order. First of all, the hearing officer pointed out that the Senate report on the 1935 Act recognized that cooperative associations would be reinforced by these provisions. ar Next the hearing officer pointed out that the Supreme Court itself had given its blessing to the provisions of the 24a code, namely that 7 U.S.C. $ 608¢(12) gave the coopera- tives an acknowledged edge in being able to vote on be- half of all of its members. Further, the hearing officer rejected some of the con- clusions that plaintiffs drew from the evidence with refer- ence to the relative strength of District 1 as opposed to District 2. I. Notice and Comment Requirements of 5 U.S.C. § 551. ~_—_——— Plaintiffs’ first argue that the Secretary failed to com- ply with the “notice and comment” requirements of 5 U.S.C. § 551-553. Section 553 outlines the procedure to be followed in the agency’s rule-making process. One court held that regula- tions issued pursuant to marketing orders promulgated under 7 U.S.C. § 608¢ are subject to the procedure pro- scribed by this section. See Walter Holm & Company v. Hardin, 449 F.2d 109 (D.C.Cir.1971). The Navel Orange Marketing Order, i.e., Marketing Order 907, was promul- gated in 1953 after the Secretary had given notice and an opportunity for a hearing. The order was submitted to producers and handlers for their approval, and then went into effect. The marketing order only covers the domestic fresh orange market. Oranges that are subject to export are exempted. The orange producing area is divided into prorate dis- tricts. This division occurred because the Secretary recog- nized that there are general differences in maturity dates | and keeping quality of the oranges grown in the various geographical sections. See 7 C.F.R. § 907.66. The pro- duction area subject to the order is divided into four (4) districts. The Central Valley of California, and these plaintiffs. are included in District 1. The marketing order authorizes_the Secretary to impose weekly restrictions on the amount of oranges any dis- Ee = ——— oi Bley etalon 6A We 25a trict may ship. This determination is to be gov [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1259%3A1. Public record. Not legal advice.