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City of Milwaukee v. Block

decided: July 14, 1987.

CITY OF MILWAUKEE, ET AL., PLAINTIFFS-APPELLANTS,
v.
JOHN R. BLOCK, SECRETARY OF AGRICULTURE, ET AL., DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Eastern District of Wisconsin, No. 85 C 1509, Robert W. Warren, Judge.

Author: Flaum

Before WOOD, JR. and FLAUM, Circuit Judges, and GRANT, Senior District Judge.*fn*

FLAUM, Circuit Judge.

In Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970), the Supreme Court stated that parties have standing to challenge the legality or constitutionality of federal agency actions if they assert interests "arguably within the zone of interest to be protected or regulated by the statute or constitutional guarantee in question," id. at 153. Our cases have interpreted this statement as a strict limitation on standing. Applying our previous decisions, the district court dismissed the present lawsuit for lack of standing. In light of the Supreme Court's recent decision in Clarke v. Securities Industry Association, 479 U.S. 388, 107 S. Ct. 750, 93 L. Ed. 2d 757 (1987), however, we conclude that our prior cases do not correctly reflect the Supreme Court's teaching in Data Processing, and that the judgment of the district court must, therefore, be reversed.

I.

Title II of the Agricultural Trade Development and Assistance Act of 1954, 7 U.S.C. § 1721 (1982), established a program under which the United States government donates agricultural commodities to needy foreign nations. These commodities are purchased by the Commodity Credit Corporation (CCC), a federally-chartered corporation, and shipped abroad from ports throughout the United States. The Title II program is subject to the provisions of the Cargo Preference Act, 46 U.S.C. § 1241(b)(1) (1982), which requires that a significant portion of these commodities be shipped on United States-flag vessels.*fn1 The Title II program is also subject to CCC regulations governing the awarding of contracts for the purchase and shipment of the commodities.

The plaintiffs, who represent various interests involved in shipping Title II cargo from ports on the Great Lakes,*fn2 claim that the government defendants, who are responsible for administering the Title II program, have violated the Cargo Preference Act, the CCC regulations, and the Port Preference Clause of the United States Constitution, U.S. Const. Art. I § 9 cl. 6.*fn3 They brought this action, seeking both declaratory and injunctive relief. Five maritime defendants, who operate United States-flag vessels which serve ports outside the Great Lakes region, and who represent workers employed on these vessels, were later allowed to intervene.

THE CARGO PREFERENCE ACT

The plaintiffs claim that the defendants have violated the Cargo Preference Act. The Act requires that, whenever the federal government contracts to purchase and transport agricultural commodities to overseas nations, as it does in the Title II program, the federal agencies involved (in this case the CCC) are to make certain that a minimum percentage of the commodities will be transported on "privately owned United States-flag commercial vessels, to the extent such vessels are available at fair and reasonable rates," 46 U.S.C. § 1241(b)(1) (1982) (emphasis added). At the time that this lawsuit was filed, the minimum percentage was 50 % of the gross tonnage of all commodities donated by the federal government. See id.

The meaning of the words "to the extent such vessels are available" -- the so-called Availability Clause -- is at the center of this lawsuit. Private United States-flag commercial vessels do not serve the Great lakes ports. The plaintiffs contend that because United States-flag ships are not "available" at the Great Lakes ports, these ports are exempt from the statutory minimum. They argue that the statutory minimum applies only at ports served by United States-flag vessels. The plaintiffs, therefore, seek to have the defendants ship the Title II commodities from ports in the Great Lakes region using foreign-flag shippers.

The government defendants have interpreted the Cargo Preference Act in a different manner. They contend that the Act's minimum percentage applies on a nationwide basis. In their view, if United States-flag ships are not available at the Great Lakes ports, then a sufficient amount of Title II commodities must be shipped through other domestic ports that are served by United States-flag ships in order to achieve the cargo preference percentage on a nationwide basis. As a result of their interpretation of the Act, the defendants have shipped less Title II cargo through the Great Lakes ports than they would have had they followed the plaintiffs' interpretation.

In December 1985, Congress amended the Cargo Preference Act. This amendment increased the portion of donated commodities to be shipped by United States-flag ships from 50 % to 75 %, with the increase to be phased in over a three-year period. See 46 U.S.C. § 1241f(a) (West Supp. 1987). The legislation also provided that, despite the required increase in the use of United States-flag ships, the government was to maintain either the percentage share or the metric tonnage of Title II commodities shipped through the Great Lakes ports at its 1984 level. See id. at 1241f(c).

CCC REGULATIONS

In addition to their statutory claim, the plaintiffs assert that, in administering the Title II program, the defendants have not complied with the regulations promulgated by the CCC governing the awarding of contracts for the purchase and shipment of Title II commodities. At the time this suit was filed, these regulations provided that the CCC would award contracts based on the "lowest landed cost." The agency defined this as the lowest combined cost of purchasing the commodities, transporting them to a specific port, and shipping them to the recipient nation. See 7 C.F.R. 1496.5(a) (1986). In 1984, the CCC specifically stated that Title II cargo allocated to the Great Lakes ports under the lowest landed cost method would not be diverted to other ports in order to meet the Cargo Preference Act percentage on a nationwide basis.

The plaintiffs contend that the defendant CCC has violated its own regulations. According to the plaintiffs, in August and September of 1985, the CCC diverted commodities, which under the lowest landed cost formula would have gone to the Great Lakes ports, to other ports. The agency allegedly diverted cargo in two ways. First, the agency purchased commodities outside the Great Lakes region, even though less expensive commodities were available within the region. These commodities were then shipped abroad from ports outside the Great Lakes region. Second, the agency purchased commodities within the Great Lakes region, transported them by rail to ports ...


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