Alta Verde Industries, Inc. v. United States

18 Cl. Ct. 595, 1989 U.S. Claims LEXIS 233, 1989 WL 136422
CourtUnited States Court of Claims
DecidedNovember 15, 1989
DocketNo. 2-88 C
StatusPublished
Cited by2 cases

This text of 18 Cl. Ct. 595 (Alta Verde Industries, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Alta Verde Industries, Inc. v. United States, 18 Cl. Ct. 595, 1989 U.S. Claims LEXIS 233, 1989 WL 136422 (cc 1989).

Opinion

OPINION

RADER Judge.

Alta Verde Industries (plaintiffs) claim to represent a class consisting of all ranchers who sold beef in the United States between March 28, 1986 and September 30, 1986. Plaintiffs contend that the United States Department of Agriculture (USDA) caused serious economic harm to the beef industry by failing to comply with statutory requirements designed to protect meat prices during the Dairy Termination Program (DTP). Plaintiffs contend that USDA regulations did not protect meat prices as contemplated by the DTP. When these regulations issued, the beef futures market suffered an unprecedented collapse. This market collapse depressed the price of beef and reduced the value of plaintiffs’ cattle. Plaintiffs seek compensatory damages under the Food Security Act of 1985 (the Act), the fifth amendment to the Constitution, and the doctrine of unjust enrichment.

[596]*596Defendant moves to dismiss pursuant to RUSCC 12(b)(1) because the United States Claims Court lacks jurisdiction over plaintiffs’ claims. Plaintiffs oppose the motion to dismiss and move instead for partial summary judgment.

After oral argument, this court grants defendant’s motion to dismiss the complaint for lack of subject, matter jurisdiction. Therefore this court need not address plaintiffs’ cross-motion for partial summary judgment.

FACTS

In an effort to reduce federal dairy price support payments, Congress enacted the DTP in 1985. 7 U.S.C. § 1446(d)(3) (1988). To reduce over-production of milk, Congress permitted dairy farmers to enter into contracts with USDA. Under these contracts, the farmers agreed to dispose of their dairy cattle and not produce milk for at least five years. In exchange, USDA agreed to offer an incentive payment and also to allow the dairy farmers to retain the proceeds from the sale of cattle.

Congress recognized that the slaughter of dairy cattle could increase the supply of beef on the market and reduce beef prices. A decline in meat prices would affect beef, pork, lamb, and poultry producers. Therefore, in addition to requiring the Secretary of USDA to “take all feasible steps to minimize” harm to beef producers, 7 U.S.C. § 1446(d)(3)(C), Congress included several provisions circumscribing USDA’s implementation of the program.1 Congress required USDA to:

specify [by regulation] marketing procedures to ensure that greater numbers of dairy cattle slaughtered ... shall be slaughtered in each of the periods of April through August 1986, and March through August 1987 than for the other months of the program. Such procedures also shall ensure that such sales of dairy cattle for slaughter shall occur on a basis estimated by the Secretary that maintains historical seasonal marketing patterns ... the Secretary shall limit the total number of dairy cattle marketed for slaughter under the program in excess of the historical dairy herd culling rate to no more than 7 percent of the national dairy herd per calendar year.

7 U.S.C. § 1446(d)(3)(A)(iii)(II). Congress also instructed USDA to purchase and distribute 400,000,000 pounds of red meat in addition to those quantities normally purchased. 7 U.S.C. § 1446, note at pp. 671-72 (1988).

The 1985 Act thus required USDA to spread the slaughter of dairy cattle over a longer period of time. The Act specifically mentioned three time frames. The Act ensured slaughter of more cattle in the first (April-August 1986) and third (March-August 1987) periods than during the interim period of six months (September 1986-Feb-ruary 1987). By reducing slaughtering during the interim period, Congress hoped to ease the effect of this dairy cattle disposal program on the beef market.

The beef market experienced no significant changes upon Congressional approval of the DTP in December 1985. Beef prices, however, began an unprecedented and precipitous decline four months later. On March 28, 1986, USDA announced regulations implementing disposal of cattle. Beef prices plummeted almost immediately. The futures market in Chicago actually closed down for days, making trade impossible. The market for beef remained unstable for months after the announcement.

Plaintiffs attribute the collapse of the beef market, and their subsequent loss of profits, to USDA’s alleged failure to follow the standards set forth by Congress in the Food Security Act of 1985. Specifically, plaintiffs allege that USDA’s regulations exercised too little control over the timing of the slaughters. USDA regulations, according to plaintiffs, did not ensure the slaughter of greater numbers of dairy cattle in the first and third disposal periods than in the second. According to plaintiffs, these inadequacies in the USDA regula[597]*597tions precipitated the panic which drove down meat prices.

USDA regulations permitted milk producers to slaughter their cattle any time within the five-or six-month disposal period specified in their contract. 7 C.F.R. § 1430-458. In addition, the regulations allowed dairy farmers to sell all of their heifers and calves and up to half of their cows before the beginning of the specified disposal period. Id. Consequently, under USDA regulations, plaintiffs charge that dairy farmers could have slaughtered 89.7% of their eligible dairy cattle in the first few days of the program. According to plaintiffs, this possibility triggered the collapse of the beef market.

As in fact implemented, the bids accepted by USDA for the first disposal period involved 65.5% of the total cattle covered by the bids, 11.4% for the second disposal period, and 23.1% for the third. Thus, slaughtering in the first and third periods exceeded slaughtering in the second time frame. In operation, USDA regulations fulfilled the literal requirements of the 1985 Act with regard to timing of the slaughtering.

Plaintiffs also argue that USDA regulations did not maintain historical marketing patterns. USDA instructed county officers to accept bids for the earlier disposal period when a milk producer submitted identical bids for more than one period. USDA Agricultural Stabilization and Conservation Service, Accepting DTP bids, (Notice LD-257) (March 28, 1986). This policy “front-end loaded” the program. Historically, however, the first period occurred during a season of the year when the marketing of beef for slaughter is low. Plaintiffs nonetheless contend that this policy violated the historical pattern provision of the 1985 law.

Finally, plaintiffs charge that USDA failed to cap the number of dairy cattle slaughtered at 7% of the national dairy herd per calendar year. Plaintiffs cited these policies as further reasons that beef futures investors abandoned the market.

A few days after USDA’s March 28,1986 announcement, seven beef producers’ and three cattle producers’ associations instituted a suit in the United States District Court for the Northern District of Texas to enjoin the regulations. Shelton v. United States Dept. of Agric., Civ.A. No. CA-5-86-81 (N.D.Tx.). The Texas District Court granted a preliminary injunction within one month.

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18 Cl. Ct. 595, 1989 U.S. Claims LEXIS 233, 1989 WL 136422, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alta-verde-industries-inc-v-united-states-cc-1989.