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Sequoia Orange Co. v. Yeutter

filed: August 21, 1992.

SEQUOIA ORANGE CO., PLAINTIFF-APPELLEE,
v.
CLAYTON YEUTTER, DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Eastern District of California. D.C. No. CV-F-89-632-EDP. Edward D. Price, District Judge, Presiding.

Before: Betty B. Fletcher, Cecil F. Poole, and Melvin Brunetti, Circuit Judges. Opinion by Judge Brunetti.

Author: Brunetti

BRUNETTI, Circuit Judge:

The Secretary of Agriculture appeals the district court's decision to invalidate amendments to a marketing order because the Secretary did not comply with the Administrative Procedures Act. We affirm.

FACTS

Under the Agricultural Marketing Agreement Act ("AMAA") the Secretary of Agriculture has authority to implement marketing orders regulating the sale and delivery of certain agricultural products. 7 U.S.C. § 601 et seq. Since 1954 the Secretary has enforced marketing orders for the sale of Valencia oranges (and navel oranges) in Arizona and California. Part of the order imposes a quota on the number of oranges producers of Valencia oranges ("growers") may sell each week. The regulatory scheme under the AMAA requires that amendments to the order be favored by at least 75% of the growers or by growers producing at least two-thirds of the total volume of oranges. 7 U.S.C. § 608c(8)-(9).

In March of 1983, the agency responsible for administering the AMAA announced that it was considering amending the Valencia Marketing Order.*fn1 48 Fed. Reg. 11276 (March 17, 1983) The AMAA specifically requires a notice and hearing before considering marketing orders. 7 U.S.C. § 608c(3). A notice was published in the Federal Register. The notice included all the proposals to be considered, called the action a "Public hearing on proposed rulemaking," and stated that "this administrative action is governed by the provisions of" the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 556, 557. 48 Fed. Reg. at 11276-77. Written comments were received on the proposed amendments, including several that took positions on how the proposals should be voted on in the referendum.

On July 18, 1984, the Secretary issued a proposed rule, suggesting many amendments to the order. According to the Secretary's brief, "In an effort to ensure that all the amendments were adopted, the Secretary ordered that the referendum would provide for a vote on the entire order as amended. Thus, a vote against the referendum would lead to a termination of the entire order and complete deregulation of the orange industry." The published notice stated that "the referendum ballot shall provide only for the approval or disapproval of the orders as amended and as hereby proposed to be amended." 49 FR 29071, 29088 (July 18, 1984). The notice included a "tendency finding" required by the AMAA, 7 U.S.C. § 608c(4), that "said order, as amended and as hereby further amended, . . . will tend to effectuate the declared policy of the act." 49 Fed. Reg. at 29088 (emphasis added).

In mid-July the Secretary sent out a news release noting that, "Producers will vote on the entire order, including the proposed amendments, as a package." Some growers (notably Sunkist Growers, Inc.) apparently feeling they were being put in an unfair position by the package voting, lobbied the Secretary and Congress intensively for different voting procedures.*fn2 An initial ballot was mailed out allowing only for a vote in favor of the amended order in its entirety or in favor of terminating the marketing order.

In late July, the Secretary reversed his position and sent out a notice amending the referendum order "to permit producers to vote on each of the proposed amendments." 49 FR 32080 (Aug. 10, 1984). Regardless of the votes on each amendment "the marketing orders [would be] continued." Id. New ballots were mailed. The growers ratified 13 of the 21 amendments.

The appellant, Sequoia Orange Co., a handler of Valencia oranges,*fn3 filed a petition with the Secretary challenging the validity of the amended marketing order. An administrative law Judge ruled that the amendment to the referendum order changing the voting procedures was invalid because "it was not based on stated reasons showing its purpose" and was tainted by "improper considerations." The final rule that resulted from the referendum therefore also was invalid. A Judicial Officer for the Secretary reversed, believing that the referendum procedure was a discretionary matter of agency procedure.

Sequoia filed suit in district court claiming that the amended order was invalid because (1) separate voting on the amendments violated the AMAA; (2) the voting scheme was unconstitutional; (3) the decision to change the voting procedures was arbitrary and capricious; and (4) the new voting procedures did not comply with the requirements of the APA. On cross-motions for summary judgment, the district court ruled that the amended order was invalid because the change in referendum procedures was made without complying with the APA. The court left it to the Secretary to decide how to proceed.

Discussion

The basis for the district court's jurisdiction and the grant of summary judgment are reviewed de novo. KOLA, Inc. v. United States, 882 F.2d 361, 363 (9th Cir. 1989). We must determine if the district court correctly applied the relevant law. See Guaranty Nat'l Ins. Co. v. Gates, 916 F.2d 508, 511 (9th Cir. 1990). However, a correct result may be affirmed on alternative grounds. KOLA, 882 F.2d at 363.

We agree with the simple approach of the district court in this complex case. The basic question is whether the Secretary's action of changing the procedure for approving the amendments was ...


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