Center for Environmental Health v. Vilsack

          ORDER

          JACQUELINE SCOTT CORLEY, United States Magistrate Judge

         Three environmental nonprofits contend that the United States Department of Agriculture ("USDA") violated the Administrative Procedures Act ("APA") by issuing a guidance document without providing public notice and comment. Plaintiffs insist that formal rulemaking was required because the document amended existing national organic food regulations to permit certified organic producers to use compost materials that contain synthetic pesticides. The parties' cross-motions for summary judgment are now pending before the Court. (Dkt. Nos. 57 & 59.) Having considered the parties' submissions, and having had the benefit of oral argument on May 26, 2016, the Court GRANTS Plaintiffs' motion and DENIES Defendants' cross-motion.^[1] The guidance document at issue is a legislative rule subject to the APA's notice and comment requirements.

         STATUTORY AND REGULATORY FRAMEWORK

         The Organic Foods Production Act, 7 U.S.C. § 6501 et seq., ("the Organic Foods Act") required the Secretary of Agriculture to "establish an organic certification program for producers and handlers of agricultural products that have been produced using organic methods." 7 U.S.C. § 6503. The certification program is known as the National Organic Program or NOP. 7 C.F.R. § 205 et seq.

         The Organic Foods Act established standards an agricultural product must satisfy to be sold or labeled as organic. See 7 U.S.C. § 6504. Specifically, the agricultural product must:

(1) have been produced and handled without the use of synthetic chemicals, except as otherwise provided in this chapter;

(2) except as otherwise provided in this chapter and excluding livestock, not be produced on land to which any prohibited substances, including synthetic chemicals, have been applied during the 3 years immediately preceding the harvest of the agricultural products; and

(3) be produced and handled in compliance with an organic plan agreed to by the producer and handler of such product and the certifying agent.

Id. The Organic Foods Act also directed the establishment of a "National List" of approved and prohibited synthetic substances for use in organic production. 7 U.S.C. § 6517(a) & (b); 7 C.F.R. § 205.601. National Organic Program regulations specifically prohibit use of "[a]ny fertilizer or composted plant and animal material that contains a synthetic substance not included on the National List of synthetic substances allowed for use in organic crop production." 7 C.F.R. § 205.203(e)(1).

         Compliance with the National Organic Program is monitored pursuant to a USDA program which accredits individuals and state officials as agents "for the purpose of certifying a farm or handling operation as a certified organic farm or handling operation." 7 U.S.C. § 6514(a). Producers seeking organic certification must demonstrate their compliance with the Organic Program requirements to these certifying agents, subject to appeal. See 7 C.F.R. §§ 205.400-205.406, 205.681. The certifying agents may also investigate compliance with National Organic Program regulations. See 7 C.F.R § 205.661.

         BACKGROUND

         The California Department of Food and Agriculture (CDFA) is the California agency certified to administer the National Organic Program. See Cal. Food & Agric. Code § 46000(a). In August through October 2009, CDFA inspectors found detectable levels of bifenthrin-a residential insecticide-in three compost products listed for use in organic agriculture. (Administrative Record ("AR") 726-27, 927.) As bifenthrin is not on the National List of approved synthetic substances, and National Organic Program regulations prohibit any compost used in organic production from containing a synthetic substance not on the National List, 7 C.F.R. § 205.203(e)(1), the CDFA banned all three compost products from use in organic production. (Id.)

         Nortech Waste LLC ("Nortech"), a producer of one of the banned composts, thereafter contacted the National Organic Program to ask whether the National Organic Program was going to "back the action of the [CDFA]". (AR 659-60.) Mark Bradley, Chief of National Organic Program Accreditation, responded that "[b]ifenthrin is a synthetic substance which is not on the NOP National List of Allowed and Prohibited Substances. We have consulted with the State of California on this issue and concur that compost containing the substance bifenthrin is not eligible for use in organic farming operations." (AR 662.) Nortech replied that "[b]ifenthrin in compost is going to become a nationwide problem and just saying that contaminated compost can not be used in organic agriculture is not the answer." (AR 661.) Mr. Bradley responded that he had advised the new Deputy Administrator of the National Organic Program of the situation. (Id.)

         Several months later, the USDA issued the guidance document at issue in this lawsuit- NOP 5016. NOP 5016, entitled "Guidance Allowance of Green Waste in Organic Production Systems, " states that its purpose is to "provide[] clarification on the allowance of green waste and green waste compost in organic production systems under the National Organic Program (NOP) regulations." (AR 1103.) It recites the regulation's requirement that "[t]he producer must not use: (1) Any fertilizer or composted plant and animal material that contains a synthetic substance not included on the National List of synthetic substances allowed for use in organic crop production." (AR 1104 (citing 7 C.F.R. § 205.203(e).) The Guidance then notes:

However, the NOP regulations were established with recognition that background levels of synthetic pesticides may be present in the environment and, therefore, may be present in organic production systems. This is referred to as unavoidable residual environmental contamination (UREC) in the regulations. Furthermore, the NOP standards are process based and do not mandate zero tolerance for synthetic pesticide residues in inputs, such as compost. Compost that is produced from the approved feedstocks, listed above, is acceptable for use in organic production, provided that any residual pesticide levels do not contribute to the contamination of crops, soil or water.

Green waste and green waste compost that is produced from approved feedstocks, such as, non-organic crop residues or lawn clippings may contain pesticide residues. Provided that the green waste and green waste compost (i) is not subject to any direct application or use of prohibited substances (i.e. synthetic pesticides) during the composting process, and (ii) that any residual pesticide levels do not contribute to the contamination of crops, soil or water, the compost is acceptable for use in organic production.

(Id.)

         PROCEDURAL HISTORY

         Plaintiffs filed this lawsuit nearly five years later contending that NOP 5016 "changed the legal status of bifenthrin and other pesticides that are prohibited for use in organic production but are now being allowed in green waste used in organic production." (Dkt. No. 1 ¶ 54.) Plaintiffs allege that Defendants, the USDA and various governmental officials and agencies (collectively "Defendants" or "the Agency") violated the APA by issuing NOP 5016 without first providing the notice and comment period required by the APA's rulemaking provisions. Plaintiffs seek remand and vacatur of NOP 5016 until the proper procedures are followed.

         Defendants responded to the complaint by moving to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) on the grounds that Plaintiffs lacked standing and that the challenged decision was exempt from APA rulemaking as either a general statement of policy or as an interpretive rule. (Dkt. No. 24.) The Court denied Defendants' motion. (Dkt. No. 41.)

         The now pending cross-motions for summary judgment followed. (Dkt. Nos. 57 & 59.) The day after the last brief on the cross-motions was filed, the Western Growers Association moved for leave to appear as amicus curiae and file a brief in support of Defendants. (Dkt. No. 63.) Nearly a week later, the California Certified Organic Farmers and the Organic Trade Association asked to appear as amici curiae and submit declarations joining in the Western Grower's Association brief. (Dkt. No. 72.) Plaintiffs objected to both requests as untimely, prejudicial, and as not useful to the Court. (Dkt. Nos. 70 & 73.) The Court subsequently granted in part the motions to appear as amici in connection with the appropriate remedy should the Court find an APA violation. (Dkt. No. 75.)

         LEGAL STANDARD

         The APA provides for judicial review of final agency decisions. 5 U.S.C. §§ 702, 706. Courts routinely resolve APA challenges to agency administrative decisions by summary judgment. Nw. Motorcycle Ass'n v. U.S. Dept. of Agric., 18 F.3d 1468, 1481 (9th Cir. 1994). "Because the presence of the administrative record, which the parties have stipulated to, usually means there are no genuine disputes of material fact, it allows the Court to decide whether to set aside the agency determination on summary judgment without a trial." Sodipo v. Rosenberg, 77 F.Supp. 3d 997, 1001 (N.D. Cal. 2015) (citing Camp v. Pitts, 411 U.S. 138, 142 (1973) (per curiam)).

         Under the APA, a court may set aside an agency's final action if the action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). This is a "highly deferential" standard under which there is a presumption that the agency's action is valid "if a reasonable basis exists for its decision." Kern Cnty. Farm Bureau v. Allen, 450 F.3d 1072, 1076 (9th Cir. 2006). A reviewing court may also "hold unlawful and set aside agency action, findings, and conclusions" that are "without observance of procedure required by law, " or "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right." 5 U.S.C. § 706(2)(C), (D). Unlike substantive challenges, "review of an agency's procedural compliance is exacting, yet limited." Kern Cty. Farm Bureau, 450 F.3d at 1076. The reviewing court determines "the adequacy of the ...