Bos Dairy LC, et al v. US Dept of Agri

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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m 99-50873
Summary Calendar
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BOS DAIRY, L.C.; DESERT VIEW DAIRY, L.C.; RIO GRANDE DAIRY, L.C.,
Plaintiffs-Appellants,
VERSUS
UNITED STATES DEPARTMENT OF AGRICULTURE,
Defendant-Appellee.
_________________________
Appeal from the United States District Court
for the Western District of Texas
_________________________
May 1, 2000
Before SMITH, BARKSDALE, and
PARKER, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Bos Dairy, L.C., Desert View Dairy, L.C.,
and Rio Grande Dairy, L.C. (collectively
“Dairy Producers”) appeal a summary
judgment in favor of the United States
Department of Agriculture (“USDA”). We
affirm.
I.
Dairy Producers, who operate farms in El
Paso County, Texas, contest the district
court’s interpretation of two repealed statutory
sections, the Dairy Price Reduction Program
of 7 U.S.C. § 1446e(h)(2) (1996) and the
Dairy Refund Provisions of id. § 1446e(h)(3)
(1996).1 Under § 1446e, the USDA supported
the domestic dairy industry by acting as a
1 These provisions were repealed in 1996. See
Pub. L. No. 104-127, tit. I, § 141(g), 110 Stat. 915
(1996).

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buyer of last resort for storable dairy products2
and, to offset the cost of the program, assessed
producers on the milk they produced, then
refunded part or all of that assessment to those
producers that did not increase their
marketings from year to year. See § 1446e.
In 1995, Dairy Producers marketed a
portion of their milk production in Mexico.
They did not report this milk for purposes of
the assessment, and they applied for and
received a refund by not including the milk in
their overall 1995 marketings. When USDA
learned of the milk marketed in Mexico, it
requested a return of the refund and assessed
Dairy Producers for that milk.
Dairy Producers sought administrative re-
lief, arguing that milk marketed outside the
United States is not relevant to either program.
Failing to achieve an administrative remedy,
Dairy Producers sought relief in district court,
which entered summary judgment in favor of
USDA.
II.
We review a summary judgment de novo,
employing the same standards as did the
district court. See Urbano v. Continental
Airlines, Inc., 138 F.3d 204, 205 (5th Cir.),
cert. denied, 119 S. Ct. 509 (1998). The
district court found the contested statutory
language to be unambiguous. If, using
traditional tools of statutory construction, a
statute is unambiguous, we give effect to that
unambiguous interpretation. See Chevron,
U.S.A., Inc., v. NRDC, Inc., 467 U.S. 837,
842-43 (1984); Rublee v. Fleming, 160 F.3d
213, 215 (5th Cir. 1998).
Section 1446e provided:
(a) In general
During the period beginning on Janu-
ary 1, 1991, and ending on Decem-
ber 31, 1996, the price of milk produced
in the 48 contiguous States shall be sup-
ported as provided in this section.
. . .
(g) Excess purchases
(1) In general
In order to offset any cost to the
Commodity Credit Corporation
associated with the purchase . . . of milk
and the products of milk in excess of
7,000,000,000 pounds . . . the Secretary
shall, if necessary, provide for a
reduction to be made in the price
received by producers for all milk
produced in the 48 contiguous States
and marketed by producers for
commercial use.
(2) Calculation
. . . [T]he amount of reduction in the
price received by producers in such fol-
lowing calendar year shall be an amount
per hundredweight calculated by
dividingSS
2 While cows produce more milk in the spring,
and less in the fall, demand for milk follows an
opposite trend. Therefore, sufficient fall supplies
equate to excess spring supplies. Milk perishes too
quickly to store, but it can be stored by conversion
into butter, powder, and cheese. In the
Agricultural Act of 1949, 63 Stat. 1051, Congress
began to support the domestic dairy industry by
becoming the buyer of last resort at fixed prices for
butter, powder, and cheese.

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(A) the cost of the purchases . . . in
excess of 7,000,000,000 pounds . . . by
(B) the total quantity of hundredweights
of milk the Secretary estimates will be
produced and marketed in the United
States for commercial use in such
following calendar year.
. . .
(h) Reduction in price received
(1) In general
Beginning January 1, 1991, the
Secretary shall provide for a reduction in
the price received by producers for all
milk produced in the 48 contiguous
States and marketed by producers for
commercial use, in addition to any
reduction in price required under
subsection (g) of this section.
(2) Amount
The amount of the reduction under para-
graph (1) . . . shall beSS
. . .
(3) Refund
The Secretary shall provide a refund of
the entire reduction under paragraph (2)
. . . if the producer provides evidence
that the producer did not increase
marketings in the calendar year that such
reduction was in effect when compared
to the immediately preceding calendar
year.
III.
USDA contends that milk produced in the
forty-eight contiguous states and marketed
outside the United States is included in “milk
produced in the 48 contiguous States and mar-
keted by producers for commercial use.”
7 U.S.C. § 1446e(h)(1) (1996). The relevant
USDA Regulations reflect this interpretation.
See 7 C.F.R. §§ 1430.340-.341 (1998). Dairy
Producers disagree, arguing that the language
should be considered to read “milk produced
and marketed for commercial use in the 48
contiguous States.” The parties likewise dis-
pute the meaning of “marketings” in
subsection (h)(3), which provides a refund of
the subsection (h) assessment for those
producers that do not increase their
marketings above that of the preceding year.
A literal reading of the contested subsection
(h)(1) phrase unambiguously favors USDA's
interpretation, because Dairy Producers’ inter-
pretation requires relocating a portion of the
statutory text. Dairy Producers therefore ar-
gue that their interpretation is supported by a
holistic interpretation including subsection (g).
In that subsection, an additional assessment
is structured to offset costs from predicted ex-
cess government purchases of dairy products.
The predicted excess cost is offset by a “re-
duction to be made in the price received by
producers for all milk produced in the 48 con-
tiguous States and marketed by producers for
commercial use.” 7 U.S.C. § 1446e(g)(1)
(1996). Thus, this reduction applies to the
same group affected by the contested
subsection (h) reduction.
The amount of the subsection (g) reduction,
however, is calculated using “the total quantity
. . . of milk the Secretary estimates will be
produced and marketed in the United States
for commercial use in such following calendar

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year.” 7 U.S.C. § 1446e(g)(2)(B). Thus, for
purposes of the subsection (g) calculation,
Dairy Producers’ milk marketed in Mexico is
irrelevant.
This distinction does not alter the
unambiguous nature of the subsection (h)
language. Because the subsection (g)
assessment is meant to predict and directly
offset excess USDA purchases of milk
products, the calculation of the amount of that
assessment does not include milk products
predicted to be marketed outside the United
States. The subsection (g) assessment is still
levied on such milk, however, because, as
subsection (a) notes and USDA persuasively
argues, § 1446e supported the production of
all milk produced in the continental United
States wherever it might be sold.
By setting a price floor for milk products
sold within the contiguous states, the USDA
gave producers the option, irrespective of
whether they exercised it, of making milk into
products that would be purchased by the
USDA. Therefore, consideration of
subsection (g) does not alter the plain meaning
of the subsection (h) language. Further, the
use of the phrase “produced and marketed in
the United States” in subsection (g)
demonstrates that when it wanted to, Congress
knew how to designate solely milk marketed in
the United States. See Russello v. United
States, 464 U.S. 16, 23 (1983).
Dairy Producers further contend that
USDA has taken inconsistent positions on this
issue when interpreting similar text in related
statutory provisions. Not only do Dairy
Producers fail to produce any credible
evidence of such inconsistency,3 but they fail
to refute USDA’s evidence that it has
consistently interpreted the disputed statutory
language to include milk marketed outside the
United States.
A previous price reduction program
instructed the Secretary of Agriculture to
“provide for a reduction to be made in the
price received by producers for all milk
produced in the United States and marketed by
producers for commercial use.” 7 U.S.C. §
1446(d)(2)(A) (1988). In language identical
to that currently adopted by USDA, its
regulations implementing this reduction
included marketing outside the United States.
See 7 C.F.R. § 1430.341(j)(2)(ii) (1988).
When Congress enacted § 1446e(h) in
1990, it used language identical to that the
Secretary had previously interpreted as
applying to milk marketed outside the United
States. This implicit Congressional acceptance
is consistent with our conclusion that USDA’s
interpretation of the disputed statutory
provisions is correct. See United States v.
Rutherford, 442 U.S. 544, 554 n.10 (1979).
We therefore decide that the language “all
milk produced in the 48 contiguous States and
marketed by producers for commercial use,”
§ 1446e(h)(1), and “the producer did not
3 Dairy Producers’ argument concerning the
Dairy Termination Program, which allowed
farmers to contract out of the dairy producing
business, is irrelevant. Permanently exporting
one’s cattle is markedly different from exporting
milk produced by that cattle. The former
permanently removes the government’s burden of
support, while the latter indirectly takes advantage
of the price floor that
support maintains.

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increase marketings,” § 1446e(h)(3), required
Dairy Producers to include milk marketed in
Mexico in determining the price reduction for
which Dairy Producers were assessed pursuant
to § 1446e(h)(1), and should have been
included in determining whether Dairy
Producers qualified for a § 1446e(h)(1)
assessment refund pursuant to § 1446e(h)(3).
IV.
The district court awarded USDA interest
on Dairy Producers’ debts. Because USDA
regulations permit the agency to waive such
interest on debts that are appealed, see
7 C.F.R. § 1403.10(b), Dairy Producers argue
that such interest may not be assessed without
a hearing. Not only did Dairy Producers fail to
make this argument before the district court,
but the argument is made without legal citation
and has no merit. That an agency has
discretion to waive interest logically does not
mean that such agency must conduct a hearing
before not waiving that interest.
AFFIRMED.

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