338 U.S. 604 (1950), 27, Secretary of Agriculture v. Central Roig Refining Co.

Docket Nº:No. 27
Citation:338 U.S. 604, 70 S.Ct. 403, 94 L.Ed. 381
Party Name:Secretary of Agriculture v. Central Roig Refining Co.
Case Date:February 06, 1950
Court:United States Supreme Court

Page 604

338 U.S. 604 (1950)

70 S.Ct. 403, 94 L.Ed. 381

Secretary of Agriculture


Central Roig Refining Co.

No. 27

United States Supreme Court

Feb. 6, 1950

Argued October 17, 1949




1. Section 205(a) of the Sugar Act of 1948 authorizes the Secretary of Agriculture to make allotments of sugar quotas which may be marketed in the United States, and requires that he do so "in such manner and in such amounts as to provide a fair, efficient, and equitable distribution" of the quota, "by taking into consideration" (1) processings to which proportionate shares pertained, (2) past marketings, and (3) ability to market. In issuing Puerto Rico Sugar Order No. 18, which allotted among the various Puerto Rican refineries the 1948 quota of Puerto Rican refined sugar which could be marketed on the mainland, the Secretary took as the measure of "past marketings" the average of the highest five years of marketings during the 1935-1941 period; took as the measure of "ability to market" the highest marketings of any year during the 1935-1947 period; gave equal weight to these factors, and considered, but concluded to give no weight to, processings to which proportionate shares pertained.

Held: he did not act arbitrarily or exceed the authority granted him by the Act. Pp. 605-614.

2. The Sugar Act of 1948, as applied in Puerto Rico Sugar Order No. 18, is a valid exercise of the power of Congress under the Commerce Clause, and does not violate the Due Process Clause of the Fifth Amendment. Pp. 614-619.

3. In view of the conclusion reached on the constitutional issues, which had to be met apart from any jurisdictional question, it is unnecessary in this case to decide the question of Puerto Rico's standing to sue. Pp. 619-620.

84 U.S.App.D.C. 161, 171 F.2d 1016, reversed.

On appeals from an order issued by the Secretary of Agriculture under the Sugar Act of 1948, the Court of

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Appeals reversed the order as not authorized by the Act. 84 U.S.App.D.C. 161, 171 F.2d 1016. This Court granted certiorari. 336 U.S. 959. Nos. 27 and 30 reversed; No. 32 dismissed, p. 620.

FRANKFURTER, J., lead opinion

MR. JUSTICE FRANKFURTER delivered the opinion of the Court.

These three cases bring before us the validity of an order of the Secretary of Agriculture, issued by him on the basis of the Sugar Act of 1948. It is claimed that the Secretary disobeyed the requirements of that Act. If it be found that the Secretary brought himself within the Act, the power of Congress to give him the authority he exercised is challenged. By a series of enactments, Congress addressed itself to what it found to be serious evils

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resulting from an uncontrolled sugar market. The central aim of this legislation was to rationalize the mischievous fluctuations of a free sugar market by the familiar device of a quota system. The Jones-Costigan Act of 1934, 48 Stat. 670, the Sugar Act of 1937, 50 Stat. 903, and the Sugar Act of 1948, 61 Stat. 922, 7 U.S.C. (Supp. II, 1949), §§ 1100-1160.

The volume of sugar moving to the continental United States market was controlled to secure a harmonious relation between supply and demand.1 To adapt means to the purpose of the sugar legislation, the Act of 1948 defines five domestic sugar producing areas: two in the continental United States and one each in Hawaii, Puerto Rico, and the Virgin Islands. To each area is allotted an annual quota of sugar, specifying the maximum number of tons which may be marketed on the mainland from that area. § 202(a). A quota is likewise assigned to the Philippines. § 202(b). The balance of the needs of consumers in the continental United States, to be determined each year by the Secretary, § 201, is met by importation from foreign countries, predominantly from Cuba, of the requisite amount of sugar. § 202(c).

The quotas thus established apply to sugar in any form, raw or refined. In addition, § 207 of the Act establishes fixed limits on the tonnage of "direct consumption," or refined, sugar2 which may be marketed annually on the mainland from the [70 S.Ct. 405] offshore areas as part of their total

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sugar quotas. But mainland refiners are not subject to quota limitations upon the marketing of refined sugar.

The Puerto Rican quota for "direct consumption" sugar is 126,033 tons. This figure had its genesis in the Jones-Costigan Act of 1934, which provided that the quota for each offshore area was to be the largest amount shipped to the mainland in any one of the three preceding years. 48 Stat. 670, 672-73. In the case of Puerto Rico, this was computed by the Secretary at 126,033 tons. General Sugar Quota Regulations, Ser. 2, Rev. 1, p. 4, August 17, 1935. By the Sugar Acts of 1937 and 1948, Congress embedded this amount in legislation. All the details for the control of a commodity like sugar could not, of course, be legislatively predetermined. Administrative powers are an essential part of such a regulatory scheme. The powers conferred by § 205(a) upon the Secretary of Agriculture raise some of the serious issues in this litigation. By that section, Congress authorized the Secretary to allot the refined sugar quota as well as the inclusive allowance of a particular area among those marketing the sugar on the mainland from that area.3 The section provides that

Allotments shall be

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made in such manner and in such amounts as to provide a fair, efficient, and equitable distribution of such quota or proration thereof by taking into consideration

three factors: (1) "processings of sugar . . . to which proportionate shares . . . pertained;"4 (2) past marketings, and (3) ability to market the amount allotted.

On January 21, 1948, the Secretary issued Puerto Rico Sugar Order No. 18, 13 Fed.Reg. 310, allotting the 1948 Puerto Rican refined sugar quota among the various refineries of the island. Having satisfied himself of the need for an allotment, the Secretary, in conformity with the procedural requirements of § 205(a), apportioned the quota among the individual refiners, [70 S.Ct. 406] setting forth in appropriate findings the manner in which he applied the three statutory standards for allotment.

As to "past marketings," he found that the proper measure was the average of the highest five years of marketings during the seven-year period of 1935-1941. While

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recognizing that ordinarily the most recent period of marketings furnished the appropriate data, he concluded that the period 1942-1947 was unrepresentative, in that the war needs made those years abnormal, and not a fair basis for purposes of the economic stabilization which was the aim of the 1948 Act. Shortages as to transportation, storage, and materials, caused by the war, led to special government control. These circumstances resulted in hardships or advantages in varying degrees to different refiners, quite unrelated to a fair system of quotas for the post-war period.

Likewise, as to "the ability . . . to market," the Secretary recognized that marketings during a recent period ordinarily furnished the best measure. But again, he found that the derangements of the war years served to make that measure abnormal. He therefore concluded that a fairer guide to his judgment came from the highest marketings of any year during the 1935-1947 period, using, however, present plant capacity as a corrective.

The Secretary duly considered "the processings of sugar" to which proportionate shares pertained, but concluded that this factor could not fairly be applied. This was so because it referred to processings of raw sugar from sugar cane, whereas the three largest Puerto Rican refining concerns restricted themselves to refining raw sugar after it had already been processed. He felt bound therefore to give no weight to this factor in the sum he finally struck, and gave equal weight to past marketings and ability to market.

Availing themselves of § 205(b), respondents, Central Roig Refining Company and Western Sugar Refining Company, two of the three largest refiners in Puerto Rico, appealed from the Secretary's order to the Court of Appeals for the District of Columbia. They charged the Secretary with disregard of the standards which Congress imposed by § 205(a) for his guidance in making

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allotment of quotas; they challenged the validity of the Act itself under the Due Process Clause of the Fifth Amendment. Porto Rican American Sugar Refinery, Inc., petitioner in No. 30, the largest of the Puerto Rican refiners, intervened to defend the Secretary's order against the statutory attack. The Government of Puerto Rico, petitioner in No. 32, intervened to urge the unconstitutionality of the statute, which the American Sugar Refining Company and other mainland refiners intervened to meet this attack. Being of opinion that the Secretary's order was not authorized by the Act, the Court of Appeals reversed it. 84 U.S.App.D.C. 161, 171 F.2d 1016. Since the order failed on statutory grounds, a majority of that court did not deem it proper to decide the constitutional question. Because of the obvious importance of the decision below in the administration of the Sugar Act, we granted certiorari. 336 U.S. 959.

I. In making quota allotments, the Secretary of Agriculture must, of course, keep scrupulously within the limits set by the Sugar Act of 1948. In devising the framework of control, Congress fixed the flat quotas for the sugar producing areas. Congress could not itself, as a practical matter, allot the area quotas among individual marketers. The details on which fair judgment must be based are too shifting, and judgment upon them calls for too specialized understanding, to make direct congressional determination feasible. Almost inescapably, the function of allotting the area quotas among individual marketers becomes an administrative...

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