by each plaintiff did not exceed $ 10,000. However, the constitutional claim, asserted against the state official only, could be brought under 28 U.S.C. § 1343(3), and the plaintiffs relied on pendent party jurisdiction to assert the claim of breach of federal regulations against the local official. Judge Friendly, writing for the panel, indicated that § 1343(3) vested the court with authority over the pendent as well as the constitutional claim.
In his treatise, Professor Moore states that Almenares is still "eminently sound" after the Aldinger case. 3A J. Moore, Federal Practice P 20.07(5.-1) at 20-80 (1978). He adds that a congressional intention to force plaintiffs to split claims based on federal law between state and federal courts because of jurisdictional amount problems "should not be lightly supposed. . . ." Id.
The court concludes that § 1331(a) grants authority to a federal court to hear a claim against a non-federal defendant that fails to meet the $ 10,000 jurisdictional amount, where that claim is pendent to a claim against a federal agency, and both claims involve federal law issues. Having determined there is authority to hear the pendent claim, the court must also decide whether to exercise its discretion to do so. Gibbs, 383 U.S. at 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 . Use of pendent jurisdiction here is surely reasonable since only federal law issues are involved, and this is the only forum where both sets of defendants can be sued. Pendent party jurisdiction will be exercised over the claim against the state defendants, and their motion to dismiss is denied.
III. Ripeness for Review
The federal defendants contend that this case is not ripe for judicial review, and should therefore be dismissed without consideration of the substantive issues.
They argue that the General Counsel's letter is simply an advisory opinion by a subordinate agency official, and that USDA never sought reimbursement from the state for those lunches which the state initially paid the Haddon school board, nor otherwise specifically refused to fund take-home lunches.
The criteria for determining ripeness were established in the case of Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967). The reviewing court must examine "the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." 387 U.S. at 149, 87 S. Ct. at 1515. The fitness criterion encompasses two inquiries: whether the case presents a crystalized legal question suitable for judicial resolution, and whether the ruling is a "final agency action" within the meaning of § 10(c) of the APA, 5 U.S.C. § 704. Ibid.
The issues here are certainly fit for judicial decision. The primary questions involve statutory interpretation of the School Lunch Act and the APA. See A. O. Smith Corp. v. Federal Trade Commission, 530 F.2d 515, 521 (3rd Cir. 1976). There are no facts in dispute, and the court need only consider the law and legislative history. See National Automatic Laundry and Cleaning Council v. Schultz, 143 U.S.App.D.C. 274, 443 F.2d 689, 695 (1971). Unlike the case of New York Stock Exchange v. Bloom, 183 U.S.App.D.C 217, 562 F.2d 736 (1977), Cert. denied, 435 U.S. 942, 98 S. Ct. 1520, 55 L. Ed. 2d 538 (1978), which found an issue unfit, there is no need to present the agency with further evidence. See 562 F.2d at 741. Here the General Counsel, once familiar with the simple factual premise of the Riverton program, based his decision entirely on the statute and its regulations.
The court also believes that USDA's letter constituted final agency action. The finality concept was further refined by the Supreme Court in the case Port of Boston Marine Terminal Association v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 91 S. Ct. 203, 27 L. Ed. 2d 203 (1970). The Court stated that "the relevant considerations . . . are whether the process of administrative decisionmaking has reached a stage where judicial review will not disrupt the orderly process of adjudication and whether rights or obligations have been determined or legal consequences will flow from the action." 400 U.S. at 71, 91 S. Ct. at 209.
There is no contention that a court determination now will disrupt the federal administrative process; indeed USDA concedes that plaintiffs have no avenue of review of the General Counsel's determination. While the federal government has not made any specific denial of reimbursements to the state under the Act as a consequence of its determination, as long as the state continues to deny reimbursement to the school boards based on the USDA opinion letter, the question of federal funding of take-home lunches will never be directly faced by the Department of Agriculture. The agency did, in theory, match the state monies paid to Haddon Township for the first seven months of its program, but there is nothing in the record to indicate that USDA knew that its monies were used in that way.
The General Counsel's opinion letter, however, was directly addressed to the situation at Riverton. Although USDA has never specifically threatened to deny federal monies or take any other sanction against New Jersey if it were to pay for take-home lunches, federal officials are aware, if only because of this litigation, that New Jersey is following the federal agency's interpretation of the law and has refused reimbursement for take-home lunches. USDA regulations state:
S (Food and Nutrition Service) may terminate a State agency's participation in the Program in whole, or in part, whenever it is determined that the State agency has failed to comply with the conditions of the Program . . . . A state agency . . . shall terminate a school's participation in the Program by written notice whenever it is determined by FNS or the State agency that the school has failed to comply with the conditions of the Program. When participation in the Program has been terminated for cause, any payments made to the State agency or a school or any recoveries by FNS from the State agency or school shall be in accordance with the legal rights and liabilities of the parties. 7 C.F.R. § 210.19(a)(2) (1978).
Regulations also prohibit school boards from joining the program unless they have the "necessary facilities for . . . serving food." 7 C.F.R. § 210.8(e) (12) (1978). The court concludes that the rights of plaintiffs have effectively been determined by the opinion letter; legal consequences may not flow directly from the USDA ruling, but the indirect result is certain.
The informal nature of the letter opinion does not preclude the required finality. In National Automatic Laundry the court held that an opinion stated in a letter of the agency administrator presented a ruling ripe for review. It was noted that the agency decision was neither based on a hypothetical situation, nor subject to certain reconsideration. 443 F.2d at 699-701. Similarly, here the USDA ruling was based on the existence of the Riverton program and, as was indicated previously, there is no further review of the letter within the agency. The major decision in this circuit holding a ruling unripe, West Penn Power Co. v. Train, 522 F.2d 302 (3rd Cir. 1975), Cert. denied, 426 U.S. 947, 96 S. Ct. 3165, 49 L. Ed. 2d 1183 (1976), can be distinguished on this basis. In West Penn the Court of Appeals found that a notice of violation of environmental standards was not final agency action because it only preceded enforcement procedures, which were at the discretion of the agency administrator. 522 F.2d at 310-11.
The court also finds a letter from the USDA General Counsel sufficiently authoritative to be final agency action. In National Automatic Laundry the court found that a letter from the Administrator of the Wage and Hour Division of the Department of Labor constituted a final ruling. In the case here the Administrator of the Food and Nutrition Service did not issue the letter; rather, he specifically requested a ruling from the Office of General Counsel for the entire Department. The response is signed by an assistant general counsel, and not the General Counsel, Ms. Weddington. However, the government has indicated the letter will not be reviewed within the Department and that the agency stands by its conclusion. Therefore the letter must be taken as sufficiently authoritative for judicial review.
The General Counsel's ruling has the requisite finality, and the legal conclusion therein is quite fit for judicial review. The ruling also meets the second major criterion of Abbott Laboratories as denial of judicial review would work a hardship on all plaintiffs. USDA has indicated it will not make any further determinations based on the Haddon or Audubon programs, which present the identical question posed by the Riverton program. Thus, the three plaintiffs have no other legal redress as long as the state chooses to follow the USDA's ruling. They must either forgo state and federal money by continuing the take-home program, or take the costly step of building cafeteria facilities to adhere to what they believe to be an incorrect policy. The impact of the USDA ruling is "direct and immediate," compliance is expensive and noncompliance engenders serious penalties. See Abbott Laboratories, 387 U.S. at 136 at 152-54, 87 S. Ct. 1507, 18 L. Ed. 2d 681 .
The Supreme Court's ripeness criteria are fully satisfied here. USDA's ruling is ripe for judicial review of its procedure and substance, to which the court now turns.
IV. USDA Procedures
Plaintiffs' primary argument is that the School Lunch Act mandates reimbursement for nutritionally adequate lunches provided by the school no matter where they are consumed, and that defendants' actions therefore violate the statute. In the alternative plaintiffs maintain that the USDA ruling was illegally issued and is invalid regardless of the Act's specific mandate.
The school boards challenge USDA's procedures for failure to provide notice in the Federal Register and opportunity for interested persons to comment, as required for all substantive rulings by § 4 of the APA, 5 U.S.C. § 553. Defendants believe these procedures were not required because the ruling was interpretative rather than substantive and therefore exempted from the § 553 requirements. See § 553(b)(A).
As the Supreme Court recently stated, "(t)he central distinction among agency regulations found in the . . . (APA) is that between "substantive rules' on the one hand and "interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice' on the other." Chrysler Corp. v. Brown, 441 U.S. 281, 301, 99 S. Ct. 1705, 1717, 60 L. Ed. 2d 208 (1979). The basic differences between substantive and interpretative rule were summarized in Batterton v. Francis, 432 U.S. 416, 425 n. 9, 97 S. Ct. 2399, 2405, 53 L. Ed. 2d 448 (1977):
Legislative, or substantive, regulations are issued by an agency pursuant to statutory authority and . . . implement the statute . . . . Such rules have the force and effect of law. . . . By way of contrast, a court is not required to give effect to an interpretative regulation.