CA: USDA Takes Steps to Cure the Problem Causing Delay of Release of California FMMO

Geoff Vanden Heuvel

Geoffrey Vanden Heuvel
Geoff Vanden Heuvel

A week ago, USDA announced what sounded like an indefinite delay in the release of a California FMMO decision. USDA said they were going to wait until the Supreme Court ruled on the Lucia vs. Security and Exchange Commission case, which they expected by the end of June 2018. USDA stated that the case called into question the legality of the current process of appointment for Administrative Law Judges (ALJ). The implication being that an unfavorable ruling by the Supreme Court could invalidate the legitimacy of the Hearing Record created under the supervision of Judge Jill Clifton who was the ALJ in the California FMMO hearing.

As I reported last week, this announcement of an indefinite delay of the California FMMO caused great concern with California producers. All three trade associations and the three major cooperatives sent letters to Agriculture Secretary Sonny Perdue urging him to find a way to expedite the release of a California FMMO. Our political representatives also weighed in and last week I shared a video of Congressman Jim Costa’s exchange with Secretary Perdue during an Ag Committee hearing.

USDA held a public phone call on Feb. 13 (which you can hear here) where the USDA attorney explained in detail the legal issues involved in the Lucia case and how they could impact the California FMMO rulemaking. Mr. Vaden, the USDA attorney, characterized the chances at 50/50 that the whole Hearing Record upon which a California FMMO would be based could be invalidated by a disqualification of the Judge who oversaw the creation of the record. If that were to happen, the whole process would have to start over again. BUT, he explained, USDA had found a legal cure to the problem of the questionable legitimacy of the ALJ.

Because a final California FMMO decision had not yet been released, another USDA official, this one legally appointed could review the entire Hearing Record and under his authority legally certify it. There is no legal cloud over the authority of USDA’s Judicial Officer and so this cure will be able to get the process back on track. It will take some time for the new official to review the thousands of pages of material that make-up the official hearing record. But it was estimated by USDA’s attorney that if all is well with the record it should only add one month additional time to the potential implementation of a California FMMO.

The process going forward then is a review and certification of the formal hearing record by a USDA legally appointed Judicial Officer, then a release of the Final Decision and then a producer vote. Assuming producers vote in favor of an FMMO, there will be a couple of months of transition and the formal launch of a California FMMO. USDA’s attorney said that best case would see the start of a California FMMO on November 1, 2018.

This call was unprecedented for its clarity and transparency. It is extremely encouraging to see how responsive and flexible USDA can be when motivated. The law is the law, and apparently there is a problem with how Administrative Law Judges are appointed by the government. USDA was prudent in evaluating the risks and making the rational decision that these risks required alternative action. We now clearly have a commitment to produce a California FMMO within the timeframe they have announced. Hopefully, there will be no more delays.

Editor’s note:  The author, a dairyman in Chino, Calif., is a board member and economics consultant for the Milk Producers Council.