912 F.3d 455
8th Cir.2018Background
- The USDA in December 2016 issued an interim final rule (Farmer Fair Practices Rules) and two proposed regulations under the Packers and Stockyards Act (PSA) declaring that proof of adverse competitive effect was not always required to find violations of 7 U.S.C. § 192(a)–(b).
- Those regulatory changes reversed the agency’s prior practice of pursuing claims only when conduct harmed competition; USDA said codifying its view might prompt courts to reexamine circuit precedent.
- The incoming administration delayed the interim rule, solicited further comment, and on October 18, 2017 withdrew the interim final rule and decided to take no further action on the two proposed regulations.
- Petitioners (Organization for Competitive Markets and members) challenged USDA’s withdrawal as arbitrary and capricious under 5 U.S.C. § 706(2)(A) and also argued USDA unlawfully withheld or unreasonably delayed rulemaking in violation of 5 U.S.C. § 706(1) and a 2008 Farm Bill mandate to promulgate criteria for § 202(b).
- The Eighth Circuit reviewed whether USDA’s withdrawal and decision not to finalize the proposed rules were unreasonable, and whether USDA had failed to perform a discrete, mandatory duty under the 2008 Farm Bill.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether USDA’s withdrawal of the interim final rule and abandonment of the proposed regs was arbitrary and capricious (APA § 706(2)(A)) | USDA’s reversal lacked reasoned analysis and unlawfully abandoned a policy that expanded enforcement without proof of competitive harm | USDA provided rational, documented reasons: conflict with circuit precedent, risk of litigation, need for fuller notice and comment, and preference for case-by-case enforcement | Denied. Court found USDA’s reasons rational and decision to retain prior enforcement permissibly reasoned |
| Whether USDA unlawfully withheld or unreasonably delayed rulemaking required by the 2008 Farm Bill (APA § 706(1)) | USDA failed to promulgate mandatory regulations establishing criteria for § 202(b) within two years as Congress required | USDA had proposed rules within two years, issued final regs on three of four mandated subjects, solicited and considered extensive comment, and ambiguity in “promulgate” permits USDA’s course | Denied. Court concluded no discrete, unperformed mandatory duty; agency action not unlawfully withheld or warranting mandamus |
| Whether courts must compel agency action whenever a statutory deadline exists | Petitioners: statutory deadline mandates judicial compulsion | USDA: statute ambiguous; context shows Congress expected rulemaking process, not necessarily final rules within two years | Denied. Court emphasized limits on mandamus and the need for a discrete, mandatory duty |
| Whether agency deserved deference for its change of course | Petitioners: prior USDA interpretation was correct and should have been codified; courts should compel it | USDA: change of administration, substantial public comment, litigation risk, and procedural considerations justified withdrawal | Held for USDA. Court applied deferential review to agency’s decision and accepted its stated rationales |
Key Cases Cited
- Stafford v. Wallace, 258 U.S. 495 (1922) (PSA’s regulatory purpose under Commerce Clause)
- Wheeler v. Pilgrim’s Pride Corp., 591 F.3d 355 (5th Cir. 2009) (PSA requires proof of competitive harm)
- Been v. O.K. Indus., Inc., 495 F.3d 1217 (10th Cir. 2007) (PSA construed to require adverse effect on competition)
- London v. Fieldale Farms Corp., 410 F.3d 1295 (11th Cir. 2005) (same)
- FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009) (requirements for reasoned agency change of course)
- Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S. 29 (1983) (arbitrary and capricious standard)
- Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55 (2004) (§ 706(1) review limited to discrete agency actions Congress compelled)
- TRAC v. FCC, 750 F.2d 70 (D.C. Cir. 1984) (mandamus-style review for agency delay)