Twin City Milk Producers Ass'n v. McNutt

• Decision Date: 09 September 1941
• Docket Number: No. 505,505
• Citation: 122 F.2d 564
• Parties: TWIN CITY MILK PRODUCERS ASS'N et al. v. McNUTT, Federal Security Adm'r (AMERICAN DRY MILK INSTITUTE, Inc., et al., Interveners).
• Court: U.S. Court of Appeals — Eighth Circuit

122 F.2d 564 (1941)

TWIN CITY MILK PRODUCERS ASS'N et al. v. McNUTT, Federal Security Adm'r (AMERICAN DRY MILK INSTITUTE, Inc., et al., Interveners).

No. 505, Original.

Circuit Court of Appeals, Eighth Circuit.

September 9, 1941.

Louis E. Hart, of Chicago, Ill. (W. E. Rumble, of St. Paul, Minn., Addison M. Parker, of Des Moines, Iowa, and Charles W. Wilson, of Washington, D. C., on the brief), for petitioners and interveners.

William W. Barron, Atty., Department of Justice, of Washington, D. C. (Wendell Berge, Asst. Atty. Gen., Victor E. Anderson, U. S. Atty., of St. Paul, Minn., and Melva M. Graney, Atty., Marc C. Reno, Atty., Department of Justice, and William Goodrich, Attorney, Federal Security Administration, all of Washington, D. C., on the brief), for respondent.

Before WOODROUGH, JOHNSEN and VAN VALKENBURGH, Circuit Judges.

JOHNSEN, Circuit Judge.

This is a petition to review an order of the Federal Security Administrator, fixing a definition and standard of identity for "dried skim milk, powdered skim milk, skim milk powder", as a human food.¹

The regulation was promulgated under section 401 of the Federal Food, Drug and Cosmetic Act, 52 Stat. 1046, 21 U.S.C.A. § 341, which provides: "Whenever in the judgment of the Secretary of Agriculture such action will promote honesty and fair dealing in the interest of consumers, he shall promulgate regulations fixing and establishing for any food, under its common or usual name so far as practicable, a reasonable definition and standard of identity, a reasonable standard of quality, and/or reasonable standards of fill of container * * *." At the time the order was issued, the authority of the Secretary of Agriculture under the Act had been transferred to the Federal Security Agency.²

The regulation is as follows: "§ 18.540. Dried Skim Milk, Powdered Skim Milk, Skim Milk Powder — Identity. Dried Skim Milk, Powdered Skim Milk, Skim Milk Powder, is the food made by drying sweet skim milk. It contains not more than five per cent of moisture, as determined by the method prescribed in `Official and Tentative Methods of Analysis of the Association of Official Agricultural Chemists', Fourth Edition, 1935, page 282, under the caption `Moisture-Tentative'. The term `skim milk' as used herein means cows' milk from which the milk fat has been separated."³

The first contention of petitioners and interveners is that the order should be declared invalid because it does not show that the regulation was promulgated on the basis or for the purpose authorized by the statute. Under previous declarations of the Supreme Court, there is merit in this contention.

The promulgating authority granted to the Administrator is a quasi-legislative power. The statute authorizes its exercise when, in his judgment, such action will promote honesty and fair dealing in the interest of consumers. Such a judgment is intended to be the foundational basis of his official action. His right to make the judgment is of course equivalent to a discretionary power to act, which cannot be judicially reviewed. United States v. George S. Bush & Co., Inc., 310 U.S. 371, 380, 60 S.Ct. 944, 84 L.Ed. 1259. But where action is undertaken by him, the statute contemplates that he shall not arbitrarily have attempted to exercise his power, but only upon a conscientious judgment derived from a consideration of the facts and conditions in the situation to which the regulation is to be applied. Absent the right to a direct judicial review of the order, the presumption of regularity which ordinarily attaches to official action would probably be conclusive of the question.⁴ But where a court is charged with the duty of reviewing the validity of an administrative agency's order, it has, up to the present time at least, refused the stamp of judicial approval, unless the order affirmatively demonstrated a compliance with all express and implied conditions underlying the exercise of the power. And so here, if it was the Administrator's judgment that his action would promote honesty and fair dealing in the interest of consumers, this fact would be conclusive of his right to exercise the regulatory power; but, for his order to be given affirmative judicial approval, as Congress has required in making provision for a review proceeding, it would have to be indicated that such judgment was actually made the basis of his action.

This requirement is not intended as an arbitrary symbol. The great liberal minds of the Supreme Court, which have declared the need for the prescription, can hardly be accused of being worshippers of mere form. During an evolutionary period, it is a precaution that undoubtedly has aided in fostering public confidence and in winning acceptance for the processes of administrative law. Possibly it has served to safeguard against hasty or arbitrary action, by reminding those, to whom the power has been given, of their necessary responsibility in the exercise of that power. Doubtless, it has assuaged the legalistic conscience, by the assurance that only responsible action has been taken. And, finally, it has facilitated the mechanics of sound and orderly judicial review. Perhaps the time may come when such a judicial precaution will no longer be thought necessary, but the expressions of the Supreme Court down to the present time give us no right to make such a departure in the present case.

In the very recent case of Phelps Dodge Corporation v. National Labor Relations Board, 313 U.S. 177, 197, 61 S.Ct. 845, 853, 85 L.Ed. 1271, 133 A.L.R. 1217, the cause was remanded to the Board on the ground that its order, directing the reinstatement of certain employees who had obtained substantially equivalent employment, did not specifically state that such remedial action was taken to effectuate the policies of the Act. Mr. Justice Frankfurter, speaking for a majority of the Court said: "The administrative process will best be vindicated by clarity in its exercise. Since Congress has defined the authority of the Board and the procedure by which it must be asserted and has charged the federal courts with the duty of reviewing the Board's orders * * *, it will avoid needless litigation and make for effective and expeditious enforcement of the Board's order to require the Board to disclose the basis of its order. We do not intend to enter the province that belongs to the Board, nor do we do so. All we ask of the Board is to give clear indication that it has exercised the discretion with which Congress has empowered it. This is to affirm most emphatically the authority of the Board."

In United States v. Baltimore & Ohio Railroad Co., 293 U.S. 454, 463, 55 S.Ct. 268, 270, 272, 79 L.Ed. 587, where an Act of Congress authorized the Interstate Commerce Commission to prescribe by rule specific devices or changes in equipment, when required to remove "unnecessary peril to life or limb", an order of the Commission which directed the installation of such devices, without any finding that the substitution was required to remove "unnecessary peril to life or limb", was held void. Mr. Justice Brandeis' opinion states: "The power to make the determination whether the proposed device or change is so required, vests in the Commission. But its finding to that effect is essential to the existence of authority to promulgate the rule; and as Congress has made affirmative orders of the Commission subject to judicial review * * * the order may be set aside unless it appears that the basic finding was made."

In United States v. Chicago, Milwaukee, St. Paul & Pacific Railroad Co., 294 U.S. 499, 504, 55 S.Ct. 462, 465, 79 L.Ed. 1023, Mr. Justice Cardozo similarly declared: "This court has held that an order of the Interstate Commerce Commission is void unless supported by findings of the basic or quasi-jurisdictional facts conditioning its power. * * * `In the absence of such findings, we are not called upon to examine the evidence in order to resolve opposing contentions as to what it shows or to spell out and state such conclusions of fact as it may permit.' Florida v. United States 282 U.S. 194, 215, 51 S.Ct. 119, 75 L.Ed. 291."

Mr. Chief Justice Hughes also gave recognition to the...