District Appeals Court Allows Producer Challenge to AMS Raw Almonds Ban
Reversing prior limitations on the ability of food producers to challenge rulings of the Agricultural Marketing Service, the U.S. Court of Appeals for the District of Columbia Circuit (CADC) has allowed California almond producers to proceed with a challenge to an AMS rule on bacteria reduction requirements that largely ended the marketing of domestically produced raw almonds.
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AMS 2007 Rule Required Elimination of Most Bacteria
Effective September 1, 2007, the AMS required handlers (distributors, wholesalers, packagers) to reduce bacteria counts in raw almonds by at least a factor of 10,000 (an increment referred to as a “4-log” factor: pasteurization labeling requires a 5-log reduction). The rule, FV06-981-1FR, affects only domestically produced almonds, not imports, a point raised by California growers and noted by the appeals court.
Government Argued Producers Could not Challenge Rules Under AMAA
Raw almonds producers sued, but a district court agreed with the government’s arguments that the Agricultural Marketing Agreement Act of 1937 (AMAA) bars producers from obtaining judicial review of most agency rules on food commodity marketing, to discourage continual litigation following the passage of new rules, which must first be approved by two-thirds of the industry, measured either in number of producers or by volume. However, the appeals court reasoned that precedent cases involving the rights of milk producers show that the AMAA does not, in fact, preclude producer suits challenging rules and orders issued under the AMAA.
Court Finds Milk Producer Challenges to AMAA Relevant to Almonds Case
Government attorneys sought to differentiate the milk producer precedent cases by arguing that in the almond industry, unlike the dairy industry, handlers’ interests coincide with producers’ interests, and since handlers are explicitly allowed to sue under the AMAA, the almond producers’ interests are protected by the legal rights of the handlers. The appeals court dismissed this argument, pointing out the two types of businesses inevitably have separate interests.
Aggrieved Parties Can Challenge Agency Actions, Court Reasons
The court also found the government’s argument to be “inconsistent with bedrock tenets of administrative law,” according to which an aggrieved party can bring an action against an administering agency, and therefore reversed the lower court and ordered that the producers’ challenge to the 2007 order be allowed to proceed.
‘Producers with Retail Operations Are Handlers and Must Proceed via the AMS
Three out of the 10 almond producers bringing suit are also retailers who sell directly to consumers, and thus qualify as handlers. Therefore, the court reasoned, the three producer-retailers must complete all available appeal processes for handlers (“exhaust all administrative remedies”) at the AMS under AMAA procedures, before suing.
(See ITT’s Online Archives or 08/28/07 news, 07082825, for BP summary of AMS final rule).