Blair v. Freeman, No. 19801.

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Writing for the CourtDANAHER, McGOWAN and LEVENTHAL, Circuit
Citation370 F.2d 229,125 US App. DC 207
Decision Date18 November 1966
Docket NumberNo. 19801.
PartiesLorton BLAIR et al., Appellants, v. Orville FREEMAN, Secretary of Agriculture of the United States, Appellee.

125 US App. DC 207, 370 F.2d 229 (1966)

Lorton BLAIR et al., Appellants,
v.
Orville FREEMAN, Secretary of Agriculture of the United States, Appellee.

No. 19801.

United States Court of Appeals District of Columbia Circuit.

Argued March 21, 1966.

Decided November 18, 1966.


370 F.2d 230
COPYRIGHT MATERIAL OMITTED
370 F.2d 231
Mr. Charles Patrick Ryan, Washington, D. C., and Mr. C. Wayne Smyth, Troy, Pa., of the bar of the Supreme Court of Pennsylvania, pro hac vice, by special leave of court, for appellants

Mr. Edward Berlin, Atty., Dept. of Justice, with whom Asst. Atty. Gen. John W. Douglas, Messrs. David G. Bress, U. S. Atty., Neil Brooks, Asst.

370 F.2d 232
Gen. Counsel, Dept. of Agriculture, and Alan S. Rosenthal, Atty., Dept. of Justice, were on the brief, for appellee. Mr. Morton Hollander, Atty., Dept. of Justice, also entered an appearance for appellee

Mr. Lawrence D. Hollman, Washington, D. C., filed a brief on behalf of New England Milk Producers' Assn., Connecticut Milk Producers Assn., Local Dairymen's Cooperative Assn., Inc., and Producers Dairy Co. as amici curiae, urging affirmance.

Mr. John A. Cardon, Washington, D. C., filed a brief on behalf of Dairymen's League Cooperative Assn., Inc., and United Milk Producers' Cooperative Assn. of New Jersey as amici curiae, urging affirmance.

Before DANAHER, McGOWAN and LEVENTHAL, Circuit Judges.

LEVENTHAL, Circuit Judge:

Appellants are Pennsylvania dairy farmers who brought this action against the Secretary of Agriculture for themselves and for other milk producers similarly situated, seeking declaratory relief and an injunction restraining his enforcement of the so-called "nearby differential" provision1 in the milk marketing regulation governing the New York-New Jersey Milk Marketing Area. The District Court, after a hearing, found the challenged provision within the power of the Secretary and supported by substantial evidence, and consequently granted the Secretary's motion to dismiss the complaint.

A court's deference to administrative expertise rises to zenith in connection with the intricate complex of regulation of milk marketing. Any court is chary lest its disarrangement of such a regulatory equilibrium reflect lack of judicial comprehension more than lack of executive authority. In this case, however, continued reflection and diligent study have strengthened rather than shaken our conclusion that the Secretary's order is an invalid departure from the statutory scheme established by Congress.

We shall first set forth the reasons why we think the judgment of the District Court must be reversed and then turn to questions concerning the appropriate judgment.

I

Since the mid-1930's, Congress has provided for the comprehensive regulation of the marketing of various agricultural commodities, including milk and milk products, in the metropolitan areas of this country. The basic plan for this sweeping economic program derives from the Agricultural Marketing Agreement Act of 1937, as amended, hereafter the Act.2 This law confers upon the Secretary of Agriculture the primary responsibility for establishing and maintaining "such orderly marketing conditions for agricultural commodities in interstate commerce as will establish, as the prices to farmers, parity prices * * *."3

Difficult and peculiar problems afflicting the milk industry have long prompted attempts to smooth out the erratic fortunes of milk marketing through the regulation of prices and production.4 Consumer demand for milk as a beverage in the form of "fluid milk" is relatively constant throughout the year, but the productivity of cows reflects marked seasonal fluctuation. Maintenance of herds large enough to satisfy the demand in the fall and winter months results in huge surpluses in fluid milk during the flush spring and summer season. The fluid milk surpluses move into cream, butter, cheese, ice cream, milk powder, and other more or less nonperishable milk products. But these milk products are in competition with similar

370 F.2d 233
dairy products produced in other areas. Hence the prices for the surplus milk absorbed by these secondary commodity markets must necessarily be competitive with low-cost production areas far removed from the metropolitan centers. Lest all producers seek to channel their milk into the most profitable fluid milk market, with the inevitable consequence of ruinous price competition and unstable farm incomes,5 Congress has authorized the Secretary to normalize the harsh consequences of milk cycles insofar as possible by apportioning the benefits and burdens of market variables

The regulation being challenged here arose under § 8c of the Act, empowering the Secretary to issue orders applicable to producers and handlers of the agricultural commodities specified.6 Beginning in 1938, the Secretary has exercised this power to regulate the handling of milk in New York City and three suburban counties (Westchester, Nassau and Suffolk). In 1957 the order was amended and extended to certain additional counties in New York and to northern New Jersey, in Order Number 2, the New York-New Jersey Milk Marketing Order.7 Because this market touches the national milk market and because, as the Secretary has found, the needs of the area demand that milk from at least 400 miles away be regularly supplied,8 this Order directly affects dairy farmers like the appellants whose facilities are located in still other states. The segment of the economy here involved embraces a billion dollar industry, billions of pounds of milk annually, and over 50,000 milk producers serving the market.

The essence of the regulation is an effort to avoid the feverish competition by producers for the limited, but premium priced, fluid milk market by fixing a "blended" or average minimum price payable to all producers irrespective of the use to which their particular milk is ultimately put.9 A producer settlement fund is operated by the official market administrator,10 and a handler11 makes payments into or withdrawals from the fund depending on the extent to which the use value of the milk he handled exceeds or falls short of the uniform blended price. While the handlers thus pay into the fund varying amounts geared to the use of the milk, every producer receives a uniform minimum price for the milk he sells regardless of use.12 Grant v. Benson, 97 U.S.App. D.C. 191, 193, 229 F.2d 765, 767 (1955), cert. denied, 350 U.S. 1015, 76 S.Ct. 658, 100 L.Ed. 875 (1956). However, the Act provides that this uniform minimum price is subject to adjustments for differentials authorized by the Act for quality, location, or other market variations.

Section 8c(5) of the Act in pertinent part directs that milk marketing orders "shall contain one or more of the following terms and conditions, and (except as provided in subsection (7) of this section) no others: * * *." Among the provisions includable are those —

(B) Providing:
(i) for the payment to all producers and associations of producers delivering milk to the same handler
370 F.2d 234
of uniform prices for all milk delivered by them * * *;
(ii) for the payment to all producers and associations of producers delivering milk to all handlers of uniform prices for all milk so delivered, irrespective of the uses made of such milk by the individual handler to whom it is delivered;
subject, in either case, only to adjustments for (a) volume, market, and production differentials customarily applied by the handlers subject to such order, (b) the grade or quality of the milk delivered, (c) the locations at which delivery of such milk is made * * *.

Relying on clause (c), the Secretary has incorporated in the Order three variables which he has generally denominated "location differentials":13 (a) One is a "transportation differential" precisely reflective of the terms of the Act, under which an amount per unit is added to or subtracted from the uniform minimum price payable to the producer varying with the place of the delivery to the handler. This is related to proximity of the delivery to the core of the market area, with consequent savings in transshipment costs. (b) Second is the "nearby differential." (c) Third is the "direct delivery differential" payable to producers who make direct delivery to a handler's plant located within 70 miles of specified market centers. This differential is based on factors other than transportation costs; it is payable by the individual handlers in consideration of the trouble and expenses they are saved, and is not charged to the producer settlement fund. It is not challenged in this action.

The disputed "nearby differential" provided by § 1002.71(b) contains two elements that are notable. (1) The differential is calculated on the basis of the zone in which the producer's farm is located, with the band from 1-50 miles from Columbus Circle in New York City receiving the highest premium, with diminution in each subsequent ten mile arc. There are eight zones. With irrelevant exceptions no producer located more than 120 miles away may qualify for this nearby differential. However, the Secretary has decreed that "all farms located in the State of New Jersey shall be considered to be in the 1-50 mile zone."14 (2) Moreover, and revealingly, the amount of the nearby differential is highest when Class I (fluid milk) utilization in the marketing area is lowest, and decreases as fluid milk utilization increases marketwide, measured by the data for the preceding 12-month period. At the point when 80% of the marketed milk has been used as fluid milk, no "nearby differential" is available as an adjustment.

Appellants, Pennsylvania dairy producers not eligible for the "nearby differential" due to location of their farms outside the 120-mile area, have standing to present their claim that the nearby differential provision exceeded the statutory power of the Secretary.15 Since we agree with this contention we find it unnecessary...

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54 practice notes
  • Williams v. Washington Metropolitan Area Transit Com'n, No. 20200
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • October 8, 1968
    ...between the parties requires." Restatement, Restitution, ch. 8 at 596 (1937). 107 Blair v. Freeman, 125 U.S.App.D.C. 207, 217-218, 370 F.2d 229, 239-240 (1966); see United States v. Morgan, supra note 108 Atlantic Coastline R.R. v. State of Florida, supra, note 97, 295 U.S. at 315, 55 ......
  • Arkansas Dairy Co-Op Ass'n v. U.S. Dept. of Agr., No. 08-5406.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 24, 2009
    ...receive for their milk. This court reaffirmed the standing of producers to challenge certain milk marketing orders in Blair v. Freeman, 370 F.2d 229 (D.C.Cir.1966). In Blair, a group of Pennsylvania producers who sold milk into the New York-New Jersey Milk Marketing Area challenged an order......
  • American Dairy of Evansville, Inc. v. Bergland, No. 77-1926
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 1, 1980
    ...equilibrium reflect lack of judicial comprehension more than lack of executive authority. Blair v. Freeman, 125 U.S.App.D.C. 207, 210, 370 F.2d 229, 232 In addition to the argument that this interim relief is justified by similarity of the two classes of milk, my colleagues point to the tim......
  • U.S. v. Johnson, No. CA
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 29, 1980
    ...offense doctrine "does not extend beyond the right of the prosecutor." Olais-Castro, 416 F.2d at 1159 n. 9 (quoting Kelly, 370 F.2d at 229). We treated the subject of included offenses more recently in United States v. Crutchfield, 547 F.2d 496, 500 (9th Cir. 1977). Since all part......
  • Request a trial to view additional results
54 cases
  • Williams v. Washington Metropolitan Area Transit Com'n, No. 20200
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • October 8, 1968
    ...justice between the parties requires." Restatement, Restitution, ch. 8 at 596 (1937). 107 Blair v. Freeman, 125 U.S.App.D.C. 207, 217-218, 370 F.2d 229, 239-240 (1966); see United States v. Morgan, supra note 108 Atlantic Coastline R.R. v. State of Florida, supra, note 97, 295 U.S. at 315, ......
  • Arkansas Dairy Co-Op Ass'n v. U.S. Dept. of Agr., No. 08-5406.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 24, 2009
    ...receive for their milk. This court reaffirmed the standing of producers to challenge certain milk marketing orders in Blair v. Freeman, 370 F.2d 229 (D.C.Cir.1966). In Blair, a group of Pennsylvania producers who sold milk into the New York-New Jersey Milk Marketing Area challenged an order......
  • American Dairy of Evansville, Inc. v. Bergland, No. 77-1926
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 1, 1980
    ...equilibrium reflect lack of judicial comprehension more than lack of executive authority. Blair v. Freeman, 125 U.S.App.D.C. 207, 210, 370 F.2d 229, 232 In addition to the argument that this interim relief is justified by similarity of the two classes of milk, my colleagues point to the tim......
  • U.S. v. Johnson, No. CA
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 29, 1980
    ...included offense doctrine "does not extend beyond the right of the prosecutor." Olais-Castro, 416 F.2d at 1159 n. 9 (quoting Kelly, 370 F.2d at 229). We treated the subject of included offenses more recently in United States v. Crutchfield, 547 F.2d 496, 500 (9th Cir. 1977). Since all parti......
  • Request a trial to view additional results

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