Federal regulations governing how milk prices are set and subsidies are distributed have come under legal challenge from an organic milk processor, which claims the current system forces it to subsidize conventional dairy producers without receiving any benefit in return. The lawsuit was filed by Cooperative Regions of Organic Producer Pools, doing business as CROPP Cooperative, in the United States District Court for the Western District of Wisconsin on April 24, 2026, naming Brooke C. Rollins in her official capacity as Secretary of Agriculture and the United States Department of Agriculture (USDA) as defendants.
According to the complaint, CROPP Cooperative operates as an organic milk handler—purchasing organic milk from cooperative associations and independent dairy farmers, processing it, and packaging it for sale to consumers. The company challenges USDA’s Federal Milk Marketing Orders (FMMOs), issued under the Agricultural Marketing Agreement Act of 1937 (AMAA), alleging they constitute an unlawful taking without compensation, violate due process rights, and breach the nondelegation doctrine with respect to certified organic milk.
The filing outlines that under FMMOs, when organic processors like CROPP purchase organic milk from farmers, they are compelled by USDA regulations to divert a portion of payments into a “producer settlement fund.” These funds are then redistributed primarily for the benefit of conventional (non-organic) handlers and farmers. The complaint states: “Plaintiff receives no benefit from the FMMOs because the FMMOs only advance the interests of the numerically superior conventional dairy farmers who improperly exercise delegated regulatory power to benefit themselves at Plaintiff’s expense.”
CROPP Cooperative asserts that this system is discriminatory because it compels organic handlers to pay millions in subsidies while providing them no corresponding benefits or support for ensuring adequate supplies of certified organic milk. The plaintiff highlights that about 55% of organic milk is used for fluid consumption (Class I), compared to only 26% for conventional milk. This results in a higher proportion of mandatory payments into producer settlement funds by organic handlers than their conventional counterparts.
The complaint details multiple efforts over more than a decade by CROPP Cooperative and industry groups to seek relief or exemptions from these requirements through administrative petitions and participation in rulemaking processes. In particular, during a major amendment process in 2023-2024 known as Federal Milk Order Reform, proposals specifically seeking exemptions or different treatment for certified organic milk were excluded from consideration by USDA officials. The agency justified its refusal by stating such proposals did not fall within the scope of its hearing on pricing provisions—a position challenged by CROPP Cooperative throughout administrative proceedings.
After exhausting available administrative remedies—including appeals before an Administrative Law Judge (ALJ) and USDA’s Judicial Officer—the plaintiff now brings its claims before federal court within statutory deadlines. The complaint argues that revised FMMO rules set to take effect June 1, 2025 will further increase burdens on organic Class I handlers like CROPP Cooperative by raising required payments while decreasing those owed by manufacturers using other classes of dairy products.
CROPP Cooperative alleges three main legal violations: first, that mandatory payments into producer settlement funds constitute an unconstitutional taking without just compensation; second, that allowing conventional farmers—who directly benefit from these payments—to approve or veto FMMO provisions via referendum violates due process; third, that delegating such authority to private parties contravenes constitutional limits on legislative delegation.
The cooperative seeks several forms of relief: a declaration that FMMOs are unlawful and unenforceable as applied to them; just compensation for all payments made into producer settlement funds during relevant periods; attorneys’ fees under applicable statutes; costs; expenses; and any further relief deemed appropriate by the court.
Attorneys representing CROPP Cooperative include Sarah A. Zylstra (Boardman & Clark LLP), Ashley L. Vulin and Chris Swift (Davis Wright Tremaine LLP), and Charles English (Davis Wright Tremaine LLP). The case is identified as Civil Action No. 26-cv-376.
