Milk Industry Foundation v. Glickman, Civil Action No. 96-2027 (PLF).

• Citation: 949 F.Supp. 882
• Decision Date: 11 December 1996
• Docket Number: Civil Action No. 96-2027 (PLF).
• Parties: MILK INDUSTRY FOUNDATION, Plaintiff, v. Daniel R. GLICKMAN, Secretary, United States Department of Agriculture, Defendant, Northeast Dairy Compact Commission, Defendant-Intervenor.
• Court: U.S. District Court — District of Columbia

Page 882

949 F.Supp. 882

MILK INDUSTRY FOUNDATION, Plaintiff, v. Daniel R. GLICKMAN, Secretary, United States Department of Agriculture, Defendant, Northeast Dairy Compact Commission, Defendant-Intervenor.

Civil Action No. 96-2027 (PLF).

United States District Court, District of Columbia.

December 11, 1996.

COPYRIGHT MATERIAL OMITTED

Steven J. Rosenbaum, Covington & Burling, Washington, DC, for Plaintiff.

Marcia Sowles, U.S. Dept. of Justice, Civil Division, Federal Programs Branch, Washington, DC, for Defendant.

Clifford M. Sloan, Wiley Rein & Fielding, Washington, DC, for Defendant-Intervenor.

OPINION

PAUL L. FRIEDMAN, District Judge.

In creating the Union, the Framers acknowledged the inherent right of the states to make compacts and agreements with each other subject only to the limitation that Congress must consent to such compacts: "No State shall, without the Consent of Congress ... enter into any Agreement or Compact with another State...." U.S. Const., Art. I, sec. 10, cl. 3. A compact accorded congressional consent "is more than a supple device for dealing with interests confined within a region.... [I]t ... also [can be] a means of safeguarding the national interest...." West Virginia ex rel. Dyer v. Sims, 341 U.S. 22, 27, 71 S.Ct. 557, 560, 95 L.Ed. 713 (1951). "Once given, `congressional consent transforms an interstate compact ... into a law of the United States.'" Texas v. New Mexico, 462 U.S. 554, 564, 103 S.Ct. 2558, 2565, 77 L.Ed.2d 1 (1983) (quoting Cuyler v. Adams, 449 U.S. 433, 438, 101 S.Ct. 703, 707, 66 L.Ed.2d 641 (1981)).

In 1993, the six New England states — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont — agreed to form the Northeast Interstate Dairy Compact, a compact enabling them to raise the minimum milk prices that dairy processors must pay to dairy farmers in their region for milk processed and consumed in fluid form.¹ Congress consented to the Compact through a bill signed into law on April 4, 1996. Plaintiff, the Milk Industry Foundation, a trade association whose members process, market and distribute fluid milk and fluid milk products nationwide, maintains that Congress did not "consent" to the Northeast Dairy Compact but instead impermissibly delegated this constitutional responsibility to the Secretary of Agriculture. It challenges this act of Congress as an unconstitutional delegation of legislative power and also maintains that, even if Congress had the authority to make such a delegation, the Secretary of Agriculture exercised his delegated authority arbitrarily and capriciously in violation of the Administrative Procedure Act. Plaintiff filed this action for declaratory and injunctive relief against the Secretary of Agriculture and seeks a preliminary injunction.²

I. BACKGROUND

In a response to the disruption of agriculture product pricing during the Great Depression that had an injurious effect on farmers, including a severe drop in milk prices, Congress passed the Agricultural Marketing Agreement Act ("AMAA") in 1937. 7 U.S.C. § 601 et seq. See Cumberland Farms, Inc. v. Lyng, Civ. No. 88-2406 (CSF), 1989 WL 52697 (D.N.J. May 15, 1989). By this Act, Congress, inter alia, initiated the federal program for the regulation of minimum milk prices that milk processors must pay to dairy farmers, and it delegated to the Secretary of Agriculture the authority to set minimum milk prices nationwide. These national prices are to reflect

the available supplies of feeds, and other economic conditions which affect market supply and demand for milk and its products in the marketing area ...; [the need to] insure a sufficient quantity of pure and wholesome milk to meet current needs; [the need to] assure a level of farm income adequate to maintain productive capacities sufficient to meet anticipated future needs, and be in the public interest.

7 U.S.C. § 608c(18). The proceeds of milk sales by all processors subject to the Secretary's regulations are pooled and later distributed in accordance with a weighted average to all dairy farmers who have provided milk at the federally set price. 7 U.S.C. § 608c(5)(B)(ii). Under the AMAA, the states retain the authority to establish milk prices above the federally established floor set by the Secretary. See United Dairy Farmers Cooperative Ass'n v. Milk Control Comm'n, 335 F.Supp. 1008, 1013-15 (M.D.Pa.) (three-judge court), aff'd without opinion, 404 U.S. 930, 92 S.Ct. 280, 30 L.Ed.2d 244 (1971).

In 1988, Vermont began considering the possibility of regulating milk prices beyond its own state borders by forming an interstate compact to be comprised of the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. By 1993, all six of the New England state legislatures had approved the formation of the Northeast Interstate Dairy Compact, and all six of the states' governors had signed resolutions supporting it. The Compact states agreed to establish a Commission to administer the Compact. The Commission was to consist of three to five persons from each state, with at least one person from each state being a dairy producer and another a consumer representative. Compact Art. III § 4.³

Under the Compact, the Commission would have the authority to (1) review and propose changes in state laws and regulations pertaining to milk and dairy products, (2) review and recommend changes in the existing structure of milk assembly and distribution, (3) investigate costs and charges for milk hauling, processing and other services, (4) examine the economic forces affecting milk production, consumption and prices, and (5) establish an "over-order" price to producers, a price up to $1.50 over the federal order minimum price for milk used in fluid products, including the authority to require that all handlers, except producer-handlers, pay producers the over-order price for milk used in fluid products. Compact Art. IV, §§ 8, 9(a), 9(b). The Commission's price setting powers purport to extend to processing plants located both within and without the New England Compact region with respect to milk the processors sell in New England. Compact Art. II, § 2(7), Art. IV, § 9(d).

The Compact states first sought congressional approval of the Compact with a bill introduced in both houses of the 103d Congress, S. 2069 in the Senate and H.R. 4560 in the House. Neither bill was enacted. An effort to include congressional approval of the Compact in the Balanced Budget Reconciliation Act of 1995, H.R. 2491, in the 104th Congress also failed, as did the attempt to pass a Senate Resolution, providing for Compact approval. S.J.Res. 28, 104th Cong. § 1(b) (1995).

Compact proponents then turned to the Federal Agricultural Improvement and Reform Act of 1996 (the "Farm Bill" or "FAIRA"), which touched a variety of critical agricultural issues. When first introduced, FAIRA contained no provision relating to the Northeast Dairy Compact in either the House or the Senate. The House bill, H.R. 2854, was passed on February 29, 1996, still without any provision relating to the Compact. On the Senate side, Compact proponents introduced proposed Amendment 3184 to S. 1541 which added a provision to the Farm Bill consenting to the Compact. 142 CONG.REC. S999 (1996); Pl.'s Mot. for Prelim. Injunction, Ex. 16. A vote on the Senate floor resulted in the defeat of the amendment, and the Senate passed the Farm Bill without a provision consenting to the Compact. 142 CONG.REC. S1001-36, S1191-1262 (1996); Pl.'s Mot. for Prelim. Injunction, Exs. 17, 18.

The House and Senate Farm Bills then went to a House-Senate Conference Committee. The Committee voted to include a provision in the bill, Section 147, that would constitute Congress' consent to the Compact. No written record of the Conference Committee deliberations was made, and the Conference Report merely recites the language of Section 147 without any explanation for its inclusion. H.R. Conf. Rep. No. 104-494, 104th Cong. at 339 (1996); Pl.'s Mot. for Prelim. Injunction, Ex. 19. There therefore is no legislative history that explains the reasoning behind the decision of Congress to add Section 147 to the Farm Bill. The Conference Report on the Farm Bill, including Section 147, was passed by both the House and the Senate on March 28, 1996. It was signed by the President and became law on April 14, 1996, as the Federal Agricultural Improvement and Reform Act of 1996, Pub.L. No. 104-127, § 147, 110 Stat. 888, 919-20 (1996). See Pl.'s Mot. for Prelim. Injunction, Ex. 22.

Section 147 of FAIRA provides:

Congress hereby consents to the Northeast Interstate Dairy Compact entered into among the States of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont as specified in section 1(b) Senate Joint Resolution 28 of the 104th Congress, as placed on the calendar of the Senate, subject to the following conditions:

(1) FINDING OF COMPELLING PUBLIC INTEREST. — Based upon a finding by the Secretary [of Agriculture] of a compelling interest in the Compact region, the Secretary may grant the States that have ratified the Northeast Interstate Dairy Compact, as of the date of enactment of this title, the authority to implement the Northeast Interstate Dairy Compact.

FAIRA, Pub.L. No. 104-127, § 147, 110 Stat. 888, 919 (1996). See Pl.'s Mot. for Prelim. Injunction, Ex. 22.⁴

On May 3, 1996, the Secretary of Agriculture began the process of making the required compelling public interest finding through a Federal Register Notice soliciting public comments on whether there exists a "compelling public interest in the Compact region." 61 FED.REG. 19,904 (1996); Pl.'s Mot. for Prelim. Injunction, Ex. 23. As a result, over 1,600 comments were filed with the Secretary, both for and against Compact approval. Def.'s Mem. in Opp'n at 8; Intervenor's Mem. in Opp'n at 39. Those groups opposing approval included several Midwestern states, consumer groups and dairy farmer...