State of SC ex rel. Patrick v. Block

• Decision Date: 10 February 1983
• Docket Number: Civ. A. No. 82-3172-0.
• Court: U.S. District Court — District of South Carolina
• Parties: STATE OF SOUTH CAROLINA ex rel. G. Bryan PATRICK, Commissioner of Agriculture, Steven W. Hamm, as South Carolina Consumer Advocate, South Carolina Farm Bureau, Frank Flowers, W. Charles McGinnis, Lawrence Weathers, Plaintiffs, Suncoast Milk Producers Cooperative, Independent Dairy Farmers Association, Inc., Tampa Independent Dairy Farmers' Association, Inc., Upper Florida Milk Producers Assn., Georgia Milk Producers, Inc., Coble Dairy Products Cooperative, Inc., Inter-State Milk Producers Cooperative, Inc., Dairymen, Inc., Plaintiffs-Intervenors, v. John R. BLOCK, Secretary of the United States Department of Agriculture, United States Department of Agriculture and Commodity Credit Corporations, Defendants.

558 F. Supp. 1004

STATE OF SOUTH CAROLINA ex rel. G. Bryan PATRICK, Commissioner of Agriculture, Steven W. Hamm, as South Carolina Consumer Advocate, South Carolina Farm Bureau, Frank Flowers, W. Charles McGinnis, Lawrence Weathers, Plaintiffs Suncoast Milk Producers Cooperative, Independent Dairy Farmers Association, Inc., Tampa Independent Dairy Farmers' Association, Inc., Upper Florida Milk Producers Assn., Georgia Milk Producers, Inc., Coble Dairy Products Cooperative, Inc., Inter-State Milk Producers Cooperative, Inc., Dairymen, Inc., Plaintiffs-Intervenors, v. John R. BLOCK, Secretary of the United States Department of Agriculture, United States Department of Agriculture and Commodity Credit Corporations, Defendants.

Civ. A. No. 82-3172-0.

United States District Court, D. South Carolina, Columbia Division.

February 10, 1983.

COPYRIGHT MATERIAL OMITTED

Clifford O. Koon, Jr., Asst. Atty. Gen., Columbia, S.C., for State of S.C. and G. Bryan Patrick, Com'r of Agriculture.

Russell H. Putnam, Jr., Natalie J. Moore, S.C. Consumer Advocate Staff Attys., Columbia, S.C., for Steven W. Hamm, S.C. Consumer Advocate.

Russell W. Templeton, Columbia, S.C., for S.C. Farm Bureau, Flowers, McGinnis and Weathers.

Venable Vermont, Spartanburg, S.C., D. Paul Alagia, Jr., Richard A. Gladstone, Sydney J. Butler, Washington, D.C., for plaintiffs-intervenors.

J. Paul McGrath, Asst. U.S. Atty. Gen., Arthur R. Goldberg, Stephen E. Hart, Dept. of Justice, Civ. Div., Washington, D.C., Henry Dargan McMaster, U.S. Atty., John B. Grimball, Asst. U.S. Atty., Columbia, S.C., for defendants.

Robert B. Broughton, Raleigh, N.C., for amicus curiae N.C. Farm Bureau Federation.

Sydney Berde, Berde & Hagstrom, P.A., St. Paul, Minn., for amicus curiae Associated Milk Producers, Inc.

Robert S. Bomar, Sr. Asst. Atty. Gen., Atlanta, Ga., for amicus curiae Tommy T. Irvin, Com'r of Agriculture of State of Ga.

MEMORANDUM OPINION AND ORDER

MATTHEW J. PERRY, Jr., District Judge.

In this action the plaintiffs seek a declaratory judgment that a "determination" made by the Secretary of Agriculture of the United States on September 24, 1982 which requires a deduction of 50 cents per hundredweight from the proceeds of sales of all milk marketed commercially in the United States is in fact a regulation, promulgated without prior notice and without opportunity for public comment as required by the Administrative Procedure Act, 5 U.S.C. § 551 et seq. and is therefore violative of the Due Process Clause of the Fifth Amendment to the United States Constitution. Plaintiffs also seek preliminary and permanent injunctions against implementation of that determination. On December 21, 1982, this Court entered its Order temporarily restraining the defendants from collecting the 50 cents per hundredweight from milk producers and scheduled a hearing on the plaintiffs' motion for a preliminary injunction for January 3, 1983, the first business day following expiration of the temporary restraining order.¹ Prior to that hearing the Court granted a motion made on behalf of dairy farming organizations located in Kentucky, Pennsylvania, North Carolina, Georgia and Florida to intervene as plaintiffs. The intervenors joined in the contention that the Secretary's determination is unlawful for the reasons urged by the original plaintiffs and also contended that it violates the Regulatory Flexibility Act, 5 U.S.C. § 601 et seq. and Executive Order No. 12291 thus depriving them of their property without due process of law. The intervenors also contend that Title I of the Omnibus Budget Reconciliation Act of 1982, which provided inter alia that the Secretary of Agriculture may provide for the deduction of 50 cents per hundredweight of milk sales when he estimates that net price support purchases of milk products well exceed 5 billion pounds milk equivalent, is an unconstitutional delegation to the Secretary of the legislative power of Congress and thus violative of the separation of powers doctrine. The Court also has permitted the appearances as amicus curiae of the State of Georgia, the North Carolina Farm Bureau Federation and the Associated Milk Producers Incorporated. Collectively, the plaintiffs, the intervenors and the amicus curiae represent a substantial segment of the dairy farmers of America. At the hearing, witnesses for the plaintiffs, the intervenors and the Secretary testified concerning the price support program which has been in effect since 1949 and the impact which the Secretary's determination will have upon milk producers. Upon the completion of that hearing the Court extended the temporary restraining order through January 10, 1983 to permit further consideration of the issues and the preparation of this opinion. For the reasons that follow, the motion for a preliminary injunction is granted.

I.

In this circuit, the leading case expounding the requirements for the issuance of a preliminary injunction is Blackwelder Furniture Company of Statesville, Inc. v. Seilig Manufacturing Company, Inc., 550 F.2d 189 (4th Cir.1977). Therein, the Court indicated that the proper test involves the flexible interplay of four factors: the possibility of irreparable harm to the plaintiffs if the relief is denied; the apparent strength of plaintiffs' case on the merits; the potential harm to the defendants if the preliminary injunction does issue; and the public interest. As the court emphasized, this Court is to weigh all four factors together to determine if an injunction should issue pending a full trial on the merits of the controversy.

I note that the courts of this circuit have stressed the need for flexible interplay among these four factors. In Maryland Undercoating Company, Inc. v. Payne, 603 F.2d 477 (4th Cir.1977), for example, the court indicated that a strong showing of a likelihood of irreparable injury would substantially lessen the plaintiff's need to show likelihood of success on the merits. Other cases from this and other circuits endorse this idea of flexible interplay of these factors, looking toward preserving the status quo ante pendente litem. See e.g., Federal Leasing, Inc. v. Underwriters at Lloyd's, 650 F.2d 495 (4th Cir.1981); Telvest, Inc. v. Bradshaw, 618 F.2d 1029, 1032 (4th Cir. 1980); Jacksonville Port Authority v. Adams, 556 F.2d 52 (D.C.Cir.1977); Banks v. Trainor, 525 F.2d 837, 841 (7th Cir.1975); Virginia Petroleum Jobbers Assoc. v. Federal Power Commission, 259 F.2d 921 (D.C. Cir.1985); O. Fiss, Injunctions 168 (1972).

In the instant case, the controlling factor is the strength of the plaintiffs' case on the merits. While the hearing of January 3 and 4 was not a full trial on the merits, there has been a full presentation of evidence, particularly the documents bearing on the Secretary's publication of his decision to impose the fifty cent per hundredweight deduction. This evidence clearly establishes the merits of the plaintiffs' case. No doubt, were this matter to proceed to a full trial, the defendants could augment the materials now in the record, but I have grave doubt that they could rebut the showing which the plaintiffs and intervenors have made that this deduction was imposed in violation of law and is therefore a nullity. Because of the importance which I give to the plaintiffs' showing on the merits, it is this factor to which I will turn first. As will hereafter appear, I believe that the other factors follow from this.

II.

A. THE MILK SURPLUS PROBLEM.

All parties agree that this nation suffers a problem of chronic over-production of dairy products. Milk production for 1982 is estimated to have been some 133 billion pounds milk equivalent. This supply far exceeds demand, so that in recent years to maintain milk prices at or near their current, legislatively mandated levels, the Secretary of Agriculture, acting through the Commodity Credit Corporation, has had to buy huge quantities of milk products. Department of Agriculture officials, testifying before this Court, indicate that the Commodity Credit Corporation currently purchases some 30% of the butter produced in this country, some 22% of the cheese, and some 68% of the non-fat dry milk. The storage costs alone for these purchases is some fifty million dollars per year. The total cost of the milk price support program has now reached some $2.2 billion per year, and estimates are that under the current system of price supports, the surplus will continue to grow.

Faced with this increasingly costly program, the federal government has come under growing pressure to control these costs. The deduction which the plaintiffs challenge by this action stems from a congressional response to the problem.

B. THE 1982 LEGISLATION.

The basic issue in this matter is the validity of the fifty cent per hundredweight deduction requirement imposed by the Secretary. This deduction was authorized by Congress as part of Public Law 97-253, enacted September 8, 1982, commonly referred to as the Omnibus Budget Reconciliation Act. Section 101 of the Omnibus Act amended the Agriculture and Food Act of 1981 (7 U.S.C. § 1446), enacting three provisions which are relevant to this matter. First, the Congress altered the mandate for price support levels for milk and milk products by prescribing a minimum dollar level of 13.10.²

The second substantive change, the provision which is at the center of this controversy, is the language, to be codified as 7 U.S.C. § 1446(d)(2):

Effective for the period beginning October 1, 1982, and ending September 30, 1985, the Secretary may provide for a deduction of 50 cents per hundred weight from the proceeds of sale of all milk marketed commercially by producers to be remitted to the Commodity Credit Corporation to offset a portion of the cost of the milk price support program. Authority for requiring such deductions shall not apply for any fiscal year for which the Secretary estimates that net price support purchases of milk or the products of milk

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