Summary of a Recent
Judicial Development in
Administrative Law

"Reporting Units" Under the Agricultural Marketing Agreement Act
Include "Handlers" of Milk Products

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In Lanco Dairy Farms Cooperative v. Secretary of Agriculture, 572 F. Supp. 2d 633, 2008 WL 3914908 (D. Md. 2008), the United States District Court for the District of Maryland affirmed the Secretary of Agriculture's administrative determination that the term "reporting unit" as used in the Agricultural Marketing Agreement Act (7 U.S.C. § 608 et seq.) included 7 C.F.R. § 1001.9(c) "handlers" of milk products.

Background

Milk producers must meet the standards set forth in Milk Marketing Orders created under the Agricultural Marketing Agreement Act, 7 U.S.C. § 608 et seq., to qualify for the "blended" or average minimum price for their milk. Id. at *2. Lanco Dairy Farms Cooperative (Lanco), an association representing dairy farmers, brought suit against the Secretary of Agriculture, challenging his administrative determination that Lanco was a "reporting unit" as defined by 7 C.F.R. § 1001.13(b)(2) and therefore subject to certain shipping standards in order for its members to be eligible to receive the minimum blended price. Id. at *1. Lanco claimed that, because of the Secretary's determination, it had to incur several thousands of dollars in expenses to meet the shipping standards set forth in 7 C.F.R. § 1001.7(c), and sought compensation. Id. at *2.

Arguments

Lanco challenged the Secretary's administrative determination that it was a "reporting unit" as defined by 7 C.F.R. § 1001.13(b)(2), and also argued that the Secretary, in making the determination, violated 5 U.S.C. § 557(c) by failing to show the ruling on each finding, conclusion, or exception presented. Id.

Analysis and Holdings

Each "reporting unit" must satisfy the shipping standards specified for a supply plant pursuant to 37 C.F.R. § 1001.7(c). Id. (citing 37 C.F.R. § 1001.13(b)). Under the regulations, Lanco was a "handler," a cooperative association that "markets milks for its producer members." Id. at *2. The issue before the court was whether the term "reporting unit" was exclusive or inclusive of "handlers" like Lanco. Id. at *3. The court found that the definition of "reporting unit" was ambiguous, and thus accorded substantial deference to the Secretary's interpretation of the term. Id. The court added that Lanco's interpretation of the term would explicitly place additional burdens only onto the shoulders of out-of-area handlers, which would essentially impose economic trade barriers in violation of the Agricultural Marketing Agreement Act. Id. at *4. Therefore, the court affirmed the Secretary's interpretation and held that Lanco, as a "reporting unit," had comply with the shipping standards in 7 C.F.R. § 1001.7(c). Id.

The case was decided on August 5, 2008.