# Appendix — South Carolina v. Block > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_1152%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1984 - **Citation:** 465 U.S. 1080 ## Text 21 IN THE SUPREME COURT OF THE UNITED STATES October Term, 1983 STATE OF SOUTn CAROLINA, et al., Petitioners, Ve JOHN R. BLOCK, SECRETARY OF THE UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT APPENDICES DONALD M. BARNES D. PAUL ALAGIA, JR. COUNSEL OF RECORD RICHARD A. GLADSTONE SALVATORE A. ROMANO COUNSEL OF RECORD JOYCE L. BARTOO SYDNEY J. RUTLER ARENT, FOX, KINTNER' BARNETT & ALAGIA PLOTKIN & KAHN 1000 Thomas Jefferson 1050 Connecticut St., N.W. Ave., N.W. Washington D.C. 20007 Washington, D.C. (202) 342-0342 29036 (202) 857-6000 Counsel for Counsel for Petitioner Assoc- Petitioners Suncoast iated Milk Milk Producers Producers, Inc. Cooperative, Inc. et. al. Additional Counsel Listed on Inside Cover T. TRAVIS MEDLOCK Attorney General CLIFFORD O. KOON, JR. Assistant Attorney General JOSEPH A. WILSON IT Chief Deputy Attorney General COUNSEL OF RECORD State of South Carolina Rembert Dennis Bldg., Rm. 642 1000 Assembly St. Columbia, South Carolina 29211 (803) 758-2072 RAYMON E. RUSSELL W. TEMPLETON LARK, JR. COUNSEL OF RECORD Assistant 1 Monckton Blvd. Consumer Advocate Columbia, S.C. 29206 COUNSEL OF RECORD (803) 782-0235 2801 Divine St. P.O. Box 5757 Counsel for Peti- Columbia, S.C. tioners South 29205 Carolina (803) 758-5011 Farm Bureau Counsel for and Frank Flowers, W. Charles McGinnis Petitioner South and Lawrence Carolina Department of fairs Consumer Af Weathers Apoendix A la UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 83-1426 No. =1s State of South Carolina ex rel Leslie E. Tindal, Com- missioner of Agriculture; Steven W. Hamm, as South Carolina Consumer Advocate; South Carolina Farm Bureau; Frank Flowers; W. Charles McGinnis; Lawrence Weathers; Suncoast Milk Producers Cooperative; Independent Dairy Farmers Association, Inc.; Tampa Independent Dairy Farmers' Association, Inc.; "Upper Florida Milk Producers Association; Georgia Milk Producers, Incec.; Coble Dairy Products Cooperative, Inc.; Inter-State Milk Producers Cooperative; Dairymen, Inc.; Associated Milk Producers, Inc., Ve John R. Block, Secretary of the United States Depart- Appellees, 2a ment of Agriculture, United States Department of Agri- culture and Commodity Credit Corporation, Appellants. State of Minnesota, Amicus Pennsylvania Farmers Union, Amicus Dairy Farmer Distributors of America and Gustafson, Amicus State of New York and Upstate Milk Cooperatives, Inc. Amicus Appeal from the United States Curiae. Curiae. Curiae. Curiae. District Court for the District of South Carolina, at Columbia. Matthew J. Perry, Judge. Arqued: July 12, 1983 District Decided: September 9, 1983 3a Before PHILLIPS, SPROUSE and ERVIN, Circuit Judges. Douglas Letter (Leonard Schaitman, Nicholas Zeppos, Sarah Greenberg, Appel- late Staff, Civil Division, Dept. of Justice; J. Paul McGrath, Assistant Attorney General; Henry Dargan McMaster, United States Attorney on brief) for Appellants; Morgan Hollander (D. Paul Alagia, Jr., Richard A. Gladstone, Sydney J. Butler, Paul S. Davidson, Barnett & Alagia; Donald M. Barnes, Salvatore A. Romano, Joyce L. Bartoo, Arent, Fox, Kintner, Plotkin & Kahn; T. Travis Medlock, Attorney General, Clifford oO. Koon, Jr., Assistant Attorney General; Russell H. Putnam, Jr.; Russell WwW. Templeton; Hubert E. Long, tong Boukniqht, Nicholson & Mavis; Venable Vermont on brief) for Appellees; (Hubert H. Humphrey, III, Attorney General, Jon K. Murphy, Special Assistant Attorney General, Catharine F. Haukendahl, Special Assistant Attorney General on brief) for Amicus Curiae. SPROUSE, Circuit Judge: John R. Block, the Secretary of the United States Department of Agriculture 4a (the Secretary), appeals from the judq- ment of the district court enjoining him from implementing his decision to impose a 50-cent deduction on the proceeds of all milk sold commercially. The Secre- tary officially announced his decision by issuing a “notice of determination," which incorporated, amonq other thinas, regulations for implementing the deci- sion._/ This action was taken pursu- 1/ 48 Fed. Req. 11,253 (March 17, 1983). The deduction applies to the proceeds of milk sold during the period April 16, 1983, through September 30, 1983. Id. Collection procedures are set forth fn the "final rule" published on November 30, 1983. 7 C.P.R. § 1430.291 et seq. (1983). The party responsible For collecting the deduction may be the milk producer or purchaser, depending on the circumstances. To the extent a pro- ducer markets his own milk directly to consumers, he is responsible to remit to the Commodity Credit Corporation (CCC) 50 cents ver hundredweight of milk sold. To the extent a producer sells his milk to nonconsumers, the purchaser is' respon- Sible to deduct 50 cents per hundred- FOOTNOTE CONT'D ON NEXT PAGE 5a ant to a recent congressional amendment to section 201 of the Agriculture Act of 1949,2/ which generally established the present structure of the milk price support program. The purposes of the deduction, as described by both Conaress and the Secretary, are to encourage dairy farmers to reduce milk production and to offset a portion of the cost of the milk price support program.2/ The Secre- tary is not required by law to impose the deduction, but is authorized by Congress to take that action in his discretion if he believes it will encourage a reduction FOOTNOTE CONT'D FROM PREVIOUS’ PAGE weight of milk bought from the producer proceeds and remit the collections to the ccc. 7 U.S.C. § 1446(4)(4)3 7 C.P.R. § 1430.295 (1983). 2/ Pub. t. NO. 97-253, § 101, 96 Stat. 763 (Sept. 8, 1982) (amending 7 U.S.C. § 1446). 3/ See 7 U.S.C. © 1446(d)(2); 48 Fed. Req. 3764, 3766 (Jan. 27, 1983); see also note 9 infra. a 6a in milk production. It is conceded that the deduction will reduce the gross income of farmers by approximately 4 percent A/ The State of South Carolina, several dairy farmers and a number of intervenina 4/ 7 U.S.C. § 1446(d)(2). Conaress First orovided in the amendment that the Secretary shall support the price of milk at not less than $13.10 per hundred- weight, allowing the Secretary to increase that level in his discretion Id. § 1446(d)(1). The Secretary has set the price support level for the fiscal year October 1, 1982, through September 30, 1983, at the statutory minimum. 47 Fed. Req. 42,128 (Sept. 24, 1982). The amendment further gave the Secretary discretion to impose two 5)-cent deduc- tions if CCC purchases of surplus milk products were projected to exceed certain levels. 7 U.S.C. § 144 6(4)(2), (3)- The Secretary estimated that a 50-cent per hundredweight deduction represented about 4 percent of a farmer's aqross income. 48 Fed. Req. 3764, 3765 (Jan. 27, 1983). By imposing both deductions, the Secretary would reduce a farmer's income by about 8 percent. Td. The Secretary to date has imposed only one of the 50-cent deductions, which is the deduction challenged in this litigation. Ja agricultural qroups (hereinafter collec- tively referred to as “dairy parties") filed this suit in district court alleq- ing administrative law and constitutional violations, and seeking injunctive relief preventing implementation of the deduc- tion program. Following an evidentiary hearing, the court found that the Secre- tary had violated the Administrative Procedure Act (APA) in its rulemakina proceedings .2/ It then issued a pre- $/ South Carolina v. Block, C/A No. 82=3172-0 (D.5.C. June 3, 1983) (3lock II). The court, having found administrative law violations, did not address the constitutional claims. District courts in several other circuits recently considered some of the Same issues before the district court, and all refused to issue injunctions. Pennsylvania Farmers Union, Inc. v. oc , - . = “lelve Pa . April 28, 1983); National Farmers' Orqaniza- tion, Inc. v. Block, 501! Ff. Supp. 1201 ceD. Wis. 1983); Mulroy v. Block, C/A FOOTNOTE CONT'D ON NEXT PAGE liminary injunction on June 3, 1983, enjoining further collections of the deduction and ordering the return of all monies collected pursuant to the requla- tion.£/ We hold that the Secretary complied with the APA and that the legis- lation aranting him discretion to act does not violate any provision of the Constitution, and vacate the district court's order. Te Conaress, in section 291 of the Agriculture Act, authorizes and directs FOOTNOTE CONT'D FROM PREVIOUS PAGE Larsen v. Block, C/A No. NC=-82-0222W (D. Ntan March 28, 1983); Yaworth v. Block, C/A No. 82-4187 (D. Idaho March 5, 1983). 6 / The order was stayed by this court on June 13, 1983, pending appeal, and Chief Justice Burger, on June 27, 1983, denied a motion to dissolve the Stay . 9a the Secretary to support the price of milk. 7 U.S.C. § 1446. The express purposes of the dairy price support legislation are “to assure an adequate supply of pure and wholesome milk to meet Current needs, reflect changes in the cost of production, and assure a level of farm income adequate to maintain produc- tive capacity sufficient to meet antici- pated future needs." Id. § 1446(c). The Secretary is not authorized to pay direct subsidies to producers, but sup- ports the price of milk by standing ready to purchase unlimited quantities of milk products at announced prices. Id.; 48 Fed. Reg. 11,253. The Commodity Credit Corporation (CCC), a federal corporate entity within the United States Depart- ment of Agriculture ,./ removes excess milk from the market through purchases of Surplus butter, cheese, and nonfat dry milk. This program effectively creates a floor for the prices of the products purchased and, indirectly, a floor for the price of all milk and milk products. In recent years, milk production has greatly exceeded consumer demand. In each of the past two dairy marketing years, the CCC purchased the equivalent of 10 percent of all milk produced in the United States. See 48 Fed. Req. at 3766. This has created massive inventories of hundreds of millions of pounds each of butter, cheese, and dry milk, with cur- rent annual storage costs of around $50 million. In 1982, the federal government / This corporation is created in 15 -S.C. § 714. J U spent approximately $2.3 billion on the milk price support program, °/ Id. at 3785. Congress, responding to the problems of milk overproduction and the increasing cost of the dairy support program,2/ enacted the amendment in issue as part of 8/ In 1982, the CCC purchased approximately 68 percent of all nonfat dry milk, 30 percent of all butter and 22 percent of all American cheese produced in this country. As of November 12, 1982, the CCC had inventories of over 400 million pounds of butter, 790 million pounds of cheese, and 1.2 billion pounds of nonfat dry milk. See National Farmers' Organization Inc. v. Block, FPF. Supp. at 1203. 9/ See 7 U.S.C. § 1446(d)(2) ("the Secretary may provide a deduction of 50 cents . . . to offset a portion of the cost of the price support program."); H.R. Rep. No. 97-687, 97th Cona., 2d Sess. at 8 (1982) (the House Committee on Aqriculture revorted favorably on a pro- gram designed “to achieve supply adjust- ments by alleviating surpluses which, in the case of the dairy program, have resulted in excessive government costs"); S. Rep. No. 97-504, 97th Cona., 2° Sess. at 83-84. 12a the Omnibus Budget Reconciliation Act of 198210/ (the 1982 amendment). The amendment modifies the price support Statute in three respects. Pirst, it established the price at which milk shall be supported at not less than $13.10 per hundredweight during the period October 1, 1982, until September 30, 1984, and mandated that .this price level be main- tained at a comparable percentage of paritytl/ for the fiscal year 1984,12/ Second, Congress authorized the 50-cent deduction challenaed in this Suit. That portion of the amendment 10/ Pub. LL. NO. 97-253, 6 101, 96 Stat. 763. The Omnibus Budaet Reconcili- ation Act of 1982 sought "to achieve + « « @ramatic reductions in Federal spending . . . to wage an effective hat- tle aqainst Federal deficits." S. Ren. No. 97-504, 97th Cong., 2d Sess. at 4. 11/ See 7 U.S.C. §§ 602, 608c(18), Ol(a). 12/ 7 U.S.C. § 1446(d)(1). provides: 13a Effective for the period beginning October 1, 1982, and ending September 30, 1985, the Secretary may orovide for a deduction of 50 cents per hundredweight from the proceeds of eeie OF «11. milk marketed commercially by producers to be remitted to the Com- modity Credit Corpor- ation to offset a portion of the cost of the milk price support program. Authority for requir- ing such deductions shall not aoply for any fiscal year for which the Secretary estimates that net price support pur- chases of milk or the products of milk would be less than 5 billion pounds”) milk equivalent. 7 U.S.C. § 1446(d)(2). Third, authorized additional Congress the Secretary to impose an 50-cent deduction effective 14a April 1, 1983, that would be refundable to producers who reduce their commercial marketings.13/ The Secretary, on September 22, 1982, projected that for the fiscal year beginning October 1, 1982, the net price support purchases of milk products would be 12.6 billion pounds. The Secretary then published a “notice of determina- tion" in the federal reqister establish- ing the price support level at $13.10 for fiscal year October 1, 1982, and imposing the first 50-cent deduction beginning on December 1, 1982. He also published a “_ 13/ Id. § 1446(d)(3). This second deduction can be imposed only if esti- mated CCC purchases of milk products exceeds 7.5 billion pounds. While the Secretary has projected that CCC pur- chases will exceed that amount for fiscal year 1983, he has not yet imposed that deduction. This appeal concerns only the exercise by the Secretary of his discre- tion to impose the first deduction. 15a proposed procedure for implementing the deduction program, and invited public comments on “whether the dairy collection plan should be implemented in the manner set forth in this proposed rule. ..." 47 Fed. Reg. 42,112 (Sept. 24, 1982). The final rule detailing the collection plan was published on November 30, 1982, and was essentially the same as the pro- posed rule, The plaintiffs in the district court challenged the Secretary's imposition of the deduction on two qrounds: that the legislation was unconstitutional and that the Secretary did not comply with the Administrative Procedure Act in issuing the determination. The district court entered its first preliminary injunction against the deduction on January 11, 1983. The court, considering only the 16a administrative law challenges, found that the Secretary failed to comply with the Administrative Procedure Act, and that his action imposing the deduction was therefore illegal. State of South Carolina v. Block, 558 F. Supp. 1004 (D.S.C. 1983) (Block I). The court spe- cifically found, among other things, that: (1) the appellants’ determination of September 24, 1982, constituted sub- Stantive rulemaking under the Administra- tive Procedure Act, 5 U.S.C. § 551(4); (2) the 1982 amendment vested in the appellants the discretion to impose the 50-cent deduction, but did not require the imposition of the assessment; (3) the Secretary had acted to impose the assess- ment without complying with the notice and comment provisions of the Administra- 4 tive Procedure Act; (4) dairy farmers 17a would be irreparably harmed by the Secre- tary's action, while the government would not suffer undue harm due to issuance of an injunction; and (5) that issuance of a preliminary injunction was in the public interest. Id. The Secretary did not appeal the January 11 district court order. Instead, he published another notice designed to remedy the notice and comment defects found by the district court..4/ 48 Fed. Reg. 3764 (Jan. 27, 1983). The notice included a "Summary of Preliminary Regulatory Impact Analysis" and an “Initial Requlatory Flexibility Impact Analysis." Id. at 3765-66. The notice further invited the submission of comments, and stated that the comments 14/ The Secretary at this time esti- mated CCC purchases for fiscal year 1983 at 14.2 billion pounds. 18a submitted in response to the September 24 "notice of determination"15/ would be considered in determining whether to impose the new deduction requirement. Id. at 3764. The Secretary allowed a 30-day period to receive comments ,16/ and then published a final rule imposing the first S0-cents per hundredweight deduction, beqinning on April 16, 1983, and extending through September, 1983. 48 Fed. Req. 11,253 (March 17, 1983) ¢l2/ In its final determination, 15/ Some 25,900 comments were sub- mitted, and a number of petitions were received containing 23,900 siqnatures. Virtually all comments were against the deduction. 16/ Approximately 5000 comments and petitions containing in excess of 500 Signatures were received with regard to the second proposed determination. 17/ The final rule states that the deduction "is to be collected in accor- dance with the regulations published on November 30, 1982 (47 Fed. Req. 53,831) [7 C.FP.R. © 1430.291 et seg. (1983))." 48 Ped. Reg. at 11,254. 19a the Secretary responded to the public comments and provided a "Summary of Final Regulatory Impact Analysis." Id. at 1254-55. The plaintiffs aqain challenged the program contending that the statutory amendment was unconstitutional, and con- tending that the Secretary's second attempt to implement the deduction also violated the Administrative Procedure Act. The district court aqain did not address the constitutional claims, stat- ing that “the problems concerning admin- istrative law are so grave that these alone resolve the case aaqainst defen- dants.”" Block II, slip op. at 13. The court essentially found that the Secre- tary's second action in promulgatina the rule for the deduction was arbitrary and capricious in three critical respects: 20a (1) the Secretary did not comply with his Statutory resvonsibility under the Aaqri- cultural Act by failing to consider such Factors as: the cost of production, returns to producers and the _ support prices of other commodities; (2) the Secretary had failed to consider impor- tant and relevant factors prerequisite to a reasoned decision such as: the impact on dairy farmers, the impact on the economy dependent on dairy farmers, and the regional impact of the program on dairy production; and (3) the Secretary violated the notice and comment require- ments of the Administrative Procedure Act, 5 U.S.C. § 553, by failing to fairly apprise interested parties of the issues involved in the proposed proqram, by failing meaningfully to consider impor- tant and substantive comments on the proposed action, and by failing to explain his decision adequately. The district court issued the preliminary injunction!8/ against the Secretary involved in this appeal, but declined to 18/ In support of its preliminary Injunction, the district court further found that: (1) the plaintiffs have estab- lished a strong showing that, unless they are allowed injunc- tive relief by this court, they will suffer injuries of a sort which cannot be adequately compensated by a later return of the monies in question; (2) the defendants have failed to show that an injunction will cause them hariship of a level comparable to the harm that the plaintiffs will suffer if no injunction is issued; (3) the public interest strongly favors an injunction to prohibit the collection of this deduction. Block II, slip. op. at 118, See ackwelder Furniture Co. v. SeiTi tT. 22a grant permanent injunctive relief statina that “the matter is not yet ripe for final resolution." Block II, slip op. at 13. The Secretary on appeal insists that he complied with the APA, The dairy parties, however, relying on the same three objections Successfully raised below, argue that: he failed to consider factors required by the Agricultural Act ,L9/ that he failed to consider Other factors which, although not speci- fied by the *qricultural Act, were cri- tically relevant to his decision, and third, that he violated the notice and comment requirements of the Administra- tive Procedure Act. The dairy parties' contentions, 19/ See 7 U.S C. 66 1421(b), T946(c), 1446b. 23a however, are misplaced. Congress, in passing the controlling legislation, narrowly defined the factors which the Secretary must consider in exercising his discretion, and the record shows that the Secretary considered those factors. The record also reveals that he complied with the notice and comment requirements. His published notice clearly delineates the proposed rule and we feel he suffi- ciently considered the comments submitted in response to the notice. Normally, we would not consider the constitutional arauments raised but not considered in the district court. The government contends, however, and we agree, that the record is fully developed and the constitutional questions are ripe for review. Since we feel that the answers to the constitutional questions 24a are obvious, a remand for initial deter- mination by the district court would be a needless burden on judicial resources. Tt would also impose needless delays in the final resolution of this matter, which is of crucial and immediate impor- tance to dairy farmers and others in the industry, as well as the govern- ment .20/ We therefore hold that the legislation in issue2!/ and the Secre- tary's action pursuant to it22/ are not violative of any provision of the constitution. We thus remand with instructions that the complaint be dismissed. 20/ See Allstate Ins. Co. Vv. McNeill, 382 F.20 84 (4th Cir. 196); Furwitz v. Directors Guild, 364 F.2d 67 Cede COEt. en e 385 U.S. 971 (1966). 21/7 U.S C. © 1446(4)(2). 22/48 Fed. Req. 11,253. 25a II. The critical provision of the Agri- culture Act in this litiqation is sec- tion 1446, which defines the price sup- port level for several commodities, including milk. The basic price support scheme contained in that section has heen in place since 1949, Prior to the 1982 amendments, section 1446, with reaard to dairy products, merely authorized the Secretary to support the price of milk through purchases of milk and milk prod- ucts at announced prices. The price Support level, which has been periodic- ally adjusted by Congress, generally has been expressed as a price above a sneci- fied minimum level or as Falling within a certain range based on the Parity price. The Secretary determines the precise Support level for a particular year. One 26a of the dairy parties’ attacks is that the Secretary, in determining to impose the deduction vel non, must act upon the same economic considerations that he is required to consider in fixing the milk price support level. The factors which the Secgetary must consider in fixina the Support level are specifically contained in section 1446 and other provisions of the Agricultural Act. See, @.9., 7 U.S.C. §§ 1421(b), 1446b. Section 1446, as amended by the Omnibus Budget Reconciliation Act of 1982, provides in pertinent part: The Secretary is authorized and directed to make available .. . wrice support to producers SOS «as MAR 6 6. as follows: (c) The price of milk shall be supported at such level not in excess of 90 per : 27a centum nor less than 75 per centum of the parity price therefor as the Secretary determines necessary in order to assure an adequate supply of pure and wholesome milk to meet current needs, reflect changes in the cost of production, and assure a level of farm income adequate to maintain produc- tive capacity suffi- cient to meet antici- pated future needs. Such price support shall be provided through the purchase of milk and products of milk. (dad) Notwithstanding any other provision of law-- (1)(A) Effective for the period beginning October 1, 1982, and ending September 30, 1984, the price of milk shall be sup- ported at not less than $13.10 oer hundredweiaqht of milk containing 3.67 per centum milkfat. 28a (Cc) The price of milk shall be sup- ported through the purchase of milk and the products of milk. (2) E€ fective for the period heqinning October 1, 1982, and ending September 30, 1985, the Secretary may provide for a deduction of 59 cents per hundredweight from the proceeds of sale of all milk marketed commercially by ovro- ducers to be remitted to the Commodity Credit Corporation to offset a portion of the cost of the milk price support proqram., Authority for requir- ing such deductions shall not apply for any fiscal year for which the Secretary estimates that net price support pur- chases of mil« or the products of milk would be less than 5 billion pounds milk eauiva- lent. If at any time during a fiscal year the Secretary should estimate that such net price support pur- chases during that 29a fiscal year would be less than 5 billion pounds, the authority for requiring such deduction shall not apply for the balance of the year. (3) (A) Effective for the period beginning April 1, 1983, and ending September 30, 1985, the Secretary may orovide for a deduction of 59 cents per hundredweight, in addition to the deduc- tion referred to in paragraph (2), from the proceeds of sale of all milk marketed commercially by oro- ducers to be remitted to the Corporation. The deduction autho- rized by this subpara- graph shall be imple- mented only if the Secretary establishes a program whereby the funds resulting from such deductions would be refunded in the manner provided in this maragraph to producers who reduce their commercial mar- ketings from such marketinas during the base period. 30a To reiterate, Congress again, in this 1982 Omnibus amendment, adjusted the price support level, o»roviding for a minimum level of $13.10 throuah September 30, 1984, Significantly, Congress departed from the historical anvproach it had pursued in this area of aaricultural legislation. In the past, conaressional action sinply concerned fixing the price level at which milk products would be supported. In the 1982 amendment, the Secretary was given authority to require dairy farmers to deduct and remit to the Secretary fifty cents from the price they received for each hundredweight of milk. Tt is this discretion given the Secretary which is central to the issues in this aopeal. That discretion to impose the 59-cent deduction is contingent on the Secretary's projection of milk purchases by the CCC exceedina a snecified amount. 7 U.S.C. § 1446(d)(2). Such authority was given to the Secretary for the period October 1, 1982, through September 30, 1985. Id. Congress never before under the dairy support program had authorized the Secretary to reduce the income of dairy farmers or to affect the price of milk except by fixing the price support level. A. The dairy ovoarties concede that Congress, hy aranting the Secretary authority to impose the 50-cent deduc- tion, departed from the historical 3truc- ture of the Agriculture Act. They never- theless insist that all of the historical provisions of the Act aoply to and con- 32a trol the Secretary's discretion in impos- ing the deduction. Specifically, they contend, and the district court held, that sections 1421(a), 1445(c), and 1446b describe "factors" which the Secretary must consider in exercising his discre- tion to impose the deduction vel non .23/ Section 1446(c) is quoted above. Section 1421(b) describes factors which the Secretary must consider in determining orice supoort. It provides in part: (5) Except as other- wise provided in this Act, the amounts, terms, and conditions of price sunvdport operations and the extent to which such 23/ The district court also held that 7 U.S.C. § 1441a applied to the Secretary's determination to impose the deduction. That section, however, nerely gives the Secretary the qeneral duty to conduct ongoing studies on the cost of production of certain commodities. Id. 33a operations are car- ried, shall be deter- mined or approved by the Secretary. The Following factors shall be taken into consideration in determining, ... in the case of any com- modity for which price support is mandatory [such as milk], the level of Support in excess of the minimum level prescribed for such commodity: (1) the supply of the commod- ity in relation to the demand therefor, (2) the price levels at which other com- modities are heing supported, . . .- (3) the availability of funds, (4) the per- ishability of the commodity, (5) the importance of the commodity to agricul- ture and the national economy, (6) the ability to dispose of stocks acquired throuqh a oprice- support ovneration, (7) the need for offsetting temporary losses of export markets, (2) the 34a ability and willing- ness of producers to keep supplies in line with demand. 1446b provides: The oroduction and use of abundant sup- plies of high quality milk and dairy »orod- ucts are essential to the health anda general welfare of the Nation; a devend- able domestic source of supply of these foods in the form of high grade dairy herds and modern, Sanitary dairy eauip- ment is important to the national defense; and an economically sound dairy industry affects beneficially the economy of the country as a whole, It is the policy of Congress to assume a Stabilized annual production of ade- quate supodlies of milk and dairy orod- ucts; to promote the increased use of these essential foods; to imorove the domestic source of supply of milk and 35a butterfat by encour- aging dairy farmers to develop efficient production units consisting of high- grade, disease-free cattle and modern Sanitary equipment; and to stabilize the economy of dairy farmers at a level which will provide a fair return for their labor and investment when compared with the cost of thinas that farmers buy. Contrary to the dairy ovarties' conten- tions, however, it seems clear that what Congress intended in enacting section 1446(4)(2) was a self-contained, tempor- ary change in the dairy support proqram in resoonse to the immediate problems of increasing overproduction and the bur- geoning cost of the orice support pro- gram. Conaress prefaced section 1446(d) with the phrase "([n]otwithstanding any other orovision of law." It then articu- 36a lated in section 1446(d)(2) specific factors the Secretary must consider in deciding to impose the first 5%-cent deduction: the overproduction of milk; the cost of the milk price support pro- gram; the expected amount of CCC pur- chases; and the relevant time periods. The legislative hnistory shows that Congress considered the effects on the economy of imposing the 50-cent deduc- tion, the government bhudaetary problems and the individualized hardishins it would imvose on dairy farmers. After consider- ing these factors in hearings and debates, it vrovided the Secretary with a narrowly-defined discretionary authority to implement the deduction. The statu- tory parameters of his discretion were set forth in section 1446(4)(2), which provides that the Secretary has such 37a authority for only three fiscal years, October 1, 1982 through Senotember 30, 1985, that such authority applies only if the Secretary estimates that the Ccc will purchase in excess of 5 billion pounds of milk products, and the proceeds must be “remitted to the CCC to offset a portion of the cost of the milk price support program." There is no indication that Conaress intended for the Secretary to consider factors contained in other pro- visions of the Agriculture Act. The substance of all the statutory provisions which the dairy parties would have the Secretary apply in exercising his discretion to impose the deduction waS in place long before the 1982 amend- ment became law. Section 1421(6) speci- fically states that it applies to the Secretary's actions under the milk 38a proqram only for purposes of “determining » « « the level of support in excess of the minimum level porescribed for [milk].”" Section 1446(c), in listing the factors to be considered by the Secretary, specifically states that they are to he considered in setting the price support level for milk. Section 1446h is entitled “Promotion of increased use of dairy products," a concern of little relevance to the ovurposes of section 1446(d) (2) .24.24/ Indeed, most, if not all, of the factors listed in the above provisions were considered by Con- gress in enactina the deduction portion of the 1982 amendment. See Schweiker v. Gray Panthers, 453 U.S. 34, 50 n.22 24/ In decidina to exercise his discretion, however, the Secretary did consider many of the factors listed in section 1446b. See 48 Fed. Req. at 11,255. ra. 39a (1981). We conclude that the statutory factors reflecting congressional policy contained in 7 U.S.C. §§ 1421(6), 1446(c) and 1446b apply only to the Secretary's resvonsibility in fixing the price sup- port level, not to his responsibility in determinina whether. to impose the deduction. QO the contrary, Conaress narrowly defined the factors he should consider in exercising this latter dis- cretion: whether surplus milk production would exceed five billion pounds) and whether this deduction proaram would lower the qovernment milk support costs. The record reflects that the Secretary considered the statutory requirements imposed upon him by Congress. Tf Statutory requirements are satisfied, a court cannot set aside an administrative decision simply because it "is unhappv with the result reached." Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U .S. 519, 558 (1978). The Secretary orojected milk produc- tion and CCC purchases with and without imposition of the 50-cent deduction for fiscal year 1983 as shown in his “Summary Of Final Regulatory Impact Analysis" as follows: With price sup- port at $13.19 per hundredweight, oro- duction is projected to he 138.6 billion pounds for fiscal year 1983 if there is no deduction program, up 3.6 billion pounds From fiscal year 1932. Relatively low feed prices, result- ing from record crop production, will keep milk feed price rela- tionships favorable for increased produc- tion. Commercial consumption is pro- jected to increase 41a 1.9 billion pounds to 124.9 billion pounds, milk equivalent , because of relatively Stable retail prices and increased popula- tion. te is estimated that TCC removals in fiscal year 1983 will he 14.7 billion pounds, up about 0.9 billion pounds or about 38.5 percent more than a year earlier. Nes- pite the upward trend in consumption, 2%ur- chases would continue to exceed disposi- tions and ccc stocks would continue to build--a condition that has existed Since October 1979. Even with imple- mentation of a 590 = cents per hundred- weight deduction on April 16, 1983, milk production in fiscal year 1983 is likely to increase from the fiscal year 1982 level by 3.2 billion pounds. Implementa- tion of a $1.90 per hundredweiqht deduc- tion would result in production increasing eee 42a by 2.8 billion pounds. Neither of the two deduction programs would have a great downward effect upon milk production this fiscal year because they would not hecome effective until the season of highest milk produc- tion has begun. Net orice sup- port purchases durina fiscal year 1983 are projected to he 14.3 billion nounds, at a cost of $2,375 mil- lion if a 50-cent per hundredweiaht deduc- tion is imposed on April 16, 1983 and 13.9 billion pounds, at a cost of $2,314 million if the deduc- tion is $1.90 per hundredweigqht. Net outlays before deduc- tions, are projected to he $2,433 million with a 5N-cent per hundredweight deduc- tion and $2,372 mil- lion with a $1.90 per hundredweight deduc- tion. NDurina the period April 16, cx eo throudganh September 30, 1983, a 43a 50-cent per hundred- weight deduction will likely total $324 million and $1.90 per hundredweight 4deduc- tion will total %3646 million. Therefore, net CCC outlays for the fiscal year, after deductions, are projected to be $2,109 million assum- ing a 50-cent deduc- tion and $1,726 mil- lion assuming a $1.90 deduction. These fiqures compare with an estimated purchase cost of $2,282 mil- lion and a net outlay Of $2,438 million for fiscal year 1982, and an estimated ourchase cost of $2,438 and a net outlay of $2,496 million for fiscal year 19383 if there is no deduction. 48 Fed. Reg. at 11,254-55. The Secretary also determined that the 50-cent deduc- tion would help to reduce the overvro- duction of milk, as shown in his “Initial Regulatory Flexibility Impact Analysis" as follows: 44a Failure to implement any deduc- tion would fail to accomplish ecc's Stated objectives and would result in a continuation of the present Situation where milk production exceeds commercial consumption and Com- modity Credit Corpo- ration Purchases larqe amounts of dairy products under the milk price sun- port oroqram at great expense, Neither of the two deduction pro- grams will have a great downward effect upon milk production during this fiscal year because they would not hecome effective until the season of highest milk productions (the flush) has bhegqun. The effect upon milk production will beaqin to be felt after the Flush in the summer months as pastures begin to deteriorate, and later in the fall when cows are taken 45a off pasture and moved into barns. 48 Fed. Req. at 37466. Moreover, althouagh the Secretary was reguired to consider only the three stat- utory factors, he in fact ranaed over a broader spectrum of considerations in decidina to exercise his discretion to impose the 50-cent deduction. The Secre- tary's impact analysis is illustrative where he states: The proposal will assure an adequate supply of milk and dairy products and will encourage effi- cient oroduction units consisting of high-grade, disease- free cattle and modern sanitary equipment. Tt also will assure dairy farmers as a whole of a fair return for their labor and investment while assuring an adequate supply of oure and wholesome milk to 46a meet current needs. The vroposal will assure a level of farm income adeauate to maintain produc- tive capacity suffi- cient to meet antici- pated future needs. The proposal also reflects the recent reduction in the cost of feed and increased efficiency in produc- tion. Some marginal Operators may not be able to owrofit under the provosal but the Statute does not guarantee each and every dairy farmer a profit while requir- ing the accumulation of huge CCC stocks of surolus dairy oroducts 48 Fed. Req at 3765-64. See 7 U.S.C. § 1446b. We conclude, therefore, that the Secretary did not act in an arbitrary and capricious manner by failing to consider additional factors contained in other provisions of the Agriculture Act in implementing the 59%-cent deduction. He not only considered the specific factors Congress leaislatively required of hin, but also considered other qeneral poli- cies underlying the national economy and the price support program. B. The district court held that the Secretary was reauired by the Adminis- trative Procedure Act not only to con- Sider the legislative factors previously listed, but other general factors nowhere explicitly mentioned in the controlling legislation. 5 U.S.C. © 796(2). It spe- cifically found, among other thinas, that the Secretary improperly failed to con- sider in determining to impose the deduc- tion: (1) the immact on dairy farmers; (2) the impact on the economy dependent 48a on dairy farmers; (3) the regional impact on the dairy industry; and (4) the imnact on milk production, The district court fell into the Same error in making these findings as it did in concluding that additional sec- tions of the Aqriculture Act must he considered. Again, Conaress snecifical- ly, and we think emphatically, aranted the Secretary discretion to decide whether to impose the deduction. Tt directed him to project whether CCC our- chases would exceed 5 hillion pounds and whether the deduction program would lower the cost to the government of the support program.23/ As already noted, the Secretary properly considered these fac- tors. Courts are not free to add sub- Stantive or pvrocedural hurdles for aaen- 25/7 68.0. © 1446(4) (2). 49a cies to overcome if Congress has not established such reauirements. See Baltimore Gas & Elec Co. v. NRDC, 76 L.@4. 437 (1983). Having met those requirements, it cannot be said that the Secretary's actions were arbitrary and capricious for failure to consider the factors which a court miaqaht feel are appropriate but which were either con- sidered and rejected by Conaress, or simply not included by Congress as fac- tors which the administrative agency must consider. The finding that the Secretary failed to comply with the notice and comment requirements of the APA, 5 U.S.C. § 553, was also in erroc. The district court held first that the information made available to the public was criti- cally deficient in that it did not reveal 50a the information animating the defendant's prownosal to a sufficient degree to allow effective public comment; second, that the Secretary did not adequately respond to comments; and third, that he failed adequately to exolain his decision. We consider these district court findinags in that sequential order. First, section 553(5)(3) pvwrovides that a “notice” shall include “either the terms or substance of the proposed rule Or a description of the subjects and issues involved." The notice requirement is to fairly appraise interested parties of the issues involved in the rulemaking proceedings. Spartan Radiocasting Co. v. PCC, 619 F.2G 314, 32 t: (D.C. | Cived, GREt. denied, 434 U.S. S29 CUSTT ke There is no requirement for the Secretary to dis- cuss every fact or opinion contained in the public comments. General Telephone Co. v. United States, 449 F.2d 846, %62 (5th Cir. 1971); diatt-Grain-& Feed, Inc. v. Beraland, 446 F. Supp. 457, 484 (D. 53a Kan 1978), aff'd, 4692 F.2d 919 (10th Cir. 1979), cert. denied, 444 ¥J.S. 1073 (1980). Instead, the Secretary is obli- gated to identify and comment on only the relevant and significant issues raised during the proceeding. Home Box Office, 567 F.2d at 35 n.58; Community Nutrition Institute v. Bergland, 493 F.Supp. 488, 492-93 (D.C. 1980). The Secretary enumerated all of the comments he had received with reqard to the proposed deduction rules, and stated that “all comments bearing on the deter- mination have been considered " 48 Fed. R¢g. at 11,254. He responded specifical- ly to a number of comments, such as ones Stating that the deduction would not reduce milk production, that it would not balance sunply and demand, that larae numbers of small farmers would be put out S4a of business, and other comments sugqest- ing increased donations of dairy prod- ucts, a reduction in the support price, termination of the milk price support program, and an exemption from the deduc- tion for producer-handlers. Id. Most of the comments concerned alternatives to the deduction program outside the scope of the Secretary's authority, or con- cerned factors and issues irrelevant to implementation of the deduction or which had already been considered by Congress in enacting the deduction amendment. See Schweiker v. Gray Panthers, 453 U.S. 34, 50 netd (7981). Having resnonded to the comments concerning the major factors relevant to a decision to implement the deduction and a number of others, the Secretary did not violate the comment requirement contained in 5 U.S.C. 55a § 553(c). Third, the district court ruled that the Secretary's explanation of the final rule did not enable the court to discern the agency's reasoning, and thus frus- trated judicial review 5 .S.C. § 553(c). We feel that the Secretary adequately explained his decision to impose the first 50-cent deduction. The APA does not require an exhaus- tive explanation of an administrator's reasoning for adopting a rule. Required is "a concise general statement [of the regulation's] basis and purpose.” Appalachian Power Co. v. EPA, 579 F.2d 846, 854 (4th Cir 1978), quotina United States v. Alleaheny-Ludlum Steel Corp , 406 0.8. 742, 758 (1972). There is no Obliaation to make references in the agency explanation “to all the specific 56a issues raised in comments." Appalachian Power Co., 579 F.2d at 854, quoting Kennecott Copper Corp v. EPA, 462 F.24 846, 850 (D.C. Cir. 1972); Consumers Union of U.S., Inc. v. Consumer Product Safety Comm'n, 491 F.2d 810, $12 (2d Cir. 1974). The agency's explanation must simply enable a reviewing court "to see what major issues of policy were venti- lated by the informal proceedings and why the agency reacted to them the way it did.” General Telephone Co. v. United States, 449 F.2d 846, 862 (5th Cir. 1971), quoting Automotive Parts & Accessories Ass'n v. Boyd, 407 F.2d 330, 338 (D.C. Cir. 1968). See also Amoco Oil Co. v. EPA, 501 F.2d 722, 739 (D.C. Cir. 1974). The facts and policy concerns relied on by the Secretary are clearly set forth 57a in the statement of basis and purpose in the final rule. [In his “Summary of Final Regulatory Impact Analvsis," the Secre- tary demonstrates that milk production is expected to increase; that CCC purchases will continue to increase despite a deduction program; and that without a deduction program, the CCC will have to spend accelerating amounts to support the price of dairy products. The Secretary also projected that CCC purchases would greatly exceed 5 billion pounds in fiscal year 1983, and that imposing the 50-cent deduction would reduce the amount the government would have to spend in that fiscal year. The Secretary thus articu- lated an adequate factual basis for his decision to impose a 50-cent deduction and clearly explained that decision. 58a III. The constitutional contentions merit little discussion. As we previously indicated, we normally would not enter- tain these issues since they were not considered by the district court and the resolution of the constitutional ques- tions are not necessary to support our decision to reverse the action of the district court issuing the preliminary injunction. Tf we ruled solely on the district court's holding relating to violation of the APA, however, the con- Stitutional issues surely would be raised again on remand with attendant delays of hearing and appeal. Since we have decided the administrative law issues adversely to the dairy parties, only their constitutional claims remain. No factual issues inhibit our full under 59a standing of those claims, and the asserted constitutional principles are well settled, The development of those issues in district court would provide us with little assistance in disposing of the constitutional arguments. Therefore, with some hesitancy in departing from our well-established and trusted rule that we not meet constitutional problems unless necessary to the resolution of the appeal, we briefly consider the fully developed facts under well established principles of constitutional law. The dairy parties first arque that the deduction, which is to be imposed by the Secretary, violates the constitu- tional provisions qoverninag the taxina power. They specifically argue that it violates Art. I, § 7, el. 1, in that it is a tax not oriqinating in the House of 60a Representatives. They further argue that the deduction violates Art. TI, § 8, cl. 1, because Conqress cannot delegate the “power to lay and collect taxes," and because the funds generated by the deduc- tion do not go to the United States Trea- sury for the "general welfare." The deduction, however, is not a tax. The mere fact a statute raises revenue does not imprint upon it the characteristics of a law by which the taxing power is exercised. Head Money Cases, 112 U.S 580 (1884). The imposi- tion of assessments have long been held to be a legitimate means of requlating commerce. See, @a , Wickard v. Filburn, 317 U.S. 111 (1942). T& regulation is the primary purpose of a Statute, revenue raised under the statute will he consid- ered a fee rather than a tax. Mnited fila States v. Stangland, 242 F.2d 843, 848 (7th Cir. 1957); Rodgers v. United States, 138 F.2d 992, 994 (6th Cir. 1943). The clear language and structure of the 1982 amendment indicates that its primary purpose is regulation. The stat- ute's regulatory ourpose is to reduce overproduction of milk and shift some of the financial burden of the price support program. Accordingly, the dairy amend- ment bears the indelible imprimatur of the commerce power and is not an uncon- Stitutional exercise of the taxing power. There likewise is no merit to the contention that the involved statute unconstitutionally delegates leqislative power to the Secretary. The leqislative history of section 1446(d)(2) reveals 62a that Congress clearly delineated the policy objectives of reducing milk prod- uction and reducing the increasing cost of the milk price support program. The Statute clearly describes the effective dates during which the deduction may he implemented, the specific amount of the deduction, and requires a minimum level of expected government purchases before the deduction can he imposed. Conaress thus clearly delineated “tne qeneral policy, the public agency which will apply it, and the boundaries of the dele- gated authority." Electric Power & Light Corp v. SEC, 329 J.S. 90, 105 (1946). The dairy parties finally contend that section 1446(d)(2) is not a valid exercise under the commerce clause, Art. 1, © 8, el. 3. The test of this issue is simply stated by the Supreme 43a Court ruling in Hodel v. Indiana , 452 U.S 314 (1981): "A court may invalidate legislation under the commerce clause only if it is clear that there is no rational basis between the regulatory means selected and the asserted ends.” Id. at 323-24. The dairy oarties them- selves are reaching for the irrational, contending that there exists no rational basis hetween the means -- lowering the financial rate on milk -- and the ends sought by Congress -- a decrease in milk production and a contribution by milk suppliers to the cost of the support program. Indeed, the milk support program, which has been in effect for many years without challenge, is premised on the link between profitability and 64a product ion.28/ IV. We may well consider the tool qiven the Secretary to be blunt, and its use by the Secretary to effectively drive some producers “out-of-business" to he harsh as it applies to small dairy opera- tions. Tt is clear, however, that Con- gress was aware of the possibility of harsh results to some small farmers. The Secretary, on appeal, admits that reduc- tion to qross income by 4 percent will force some dairy families to cease their 26/ The dairy industry also Alleged that section 1446(d)(2) as imposed violates the equal protection and due orocess requirements of the fifth amendment. These claims are clearly without merit. See Reed v. Reed, 404 U.S. 71, 75 -76 (T9571); Williamson v. Lee Optical Coy, 348 U.S. 483 (1955); Larsen v. Block, C/A No. NC=87-9222w (Nn. Ntan March 28, 19 83). 65a farming operations. The current unprece- dented high expense of farming, the inherent cost inefficiency of operating a family farm, and the resulting small percentage of gross income ultimately realized as a profit, makes this some- times cruel prospect a stark reality. Were we the Secretary, we might well have searched long for a more humane alterna- tive, but our judicial task is not to Substitute our judqment for that of the administrative agency. We are limited in Our review to determining whether the Secretary acted constitutionally under a constitutional statute, followed the mandate of Conqress, and in accordance with the APA, The Secretary's actions implementing the 50-cent deduction authorized in sec- tion 1446(d)(2) were not, under our 66a standard of review, arbitrary or capri- cious, nor in excess of statutory authority or limitations. 5 uU.S C. § 706(2). We further hold that section 1446(d)(2) and its application withstand constitutional scrutiny. The order of the district court, therefore, is vacated and remanded for dismissal of the complaint. VACATED AND REMANDED. 67a IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA COLUMBIA DIVISION STATE OF SOUTH CAROLINA, ex rel D. LESLIE TINDAL, Commissioner of Aqriculture, STEVEN W. HAMM, as South Carolina Consumer Advocate, SOUTH CAROLINA FARM BUREAU, FRANK FLOWERS, W. CHARLFS McGINNIS, LAWRENCE WEATHERS CIVIL ACTION NO. 32-3172-0 Plaintiffs, SUNCOAST MILK PRODUCERS COOPERATIVE 1009 S7th Street East Bradenton, FL 33508 INDEPENDENT DAIRY FARMERS ASSOCIATION, INC. 4400 Southeast 36th Street Fort Lauderdale, FL 33314 PRELIMINRY INJUNCTION TAMPA INDEPENDENT DAIRY FARMERS'ASSOCTATION, INC. 501 East Kennedy Boulevard J ] ] } J } ] ] ] } ] } ] ] J ] ] J ] ] ] ] } ] ] | ] Tampa, FL 33601 ] 68a UPPER FLORIDA MILK PRODUCERS ASSOCIATION 5654 Dunn Avenue Jacksonville, FL 32218 GEORGIA MILK PRODUCERS, INC. 177 Washington Street, S.W. Atlanta, GA 30303 COBLE DAIRY PRODUCTS COOPERATIVE, INC. North Main Street Lexington, NC 27292 INTER-STATE MILK PRODUCERS COOPERATIVE, INC. 1225 Industrial Highway Southampton, PA 18966 DAIRYMEN, INC. 19140 Linn Station Road Louisville, KY 40223 ASSOCIATED MILK PRODUCERS, INCORPORATED, Wedgewood Prof. Bldg. 6609 Blanco Road San Antonio, TX 78216 Plaintiffs-Intervenors, JOHN R. BLOCK, Secretary of the Vnited States Department of Agriculture, UNITED STATES DEPARTMENT OF AGRICULTURE, and COMMODITY CREDIT CORP, Defendants. a a a ee a a ee ee ee ee ed For the reasons set forth in the Memorandum Opinion and Order separately filed this date in this action, It is hereby Ordered that, vending further order of this Court, the defen- dants John R. Block, Secretary of the United States Department of Agriculture, the United States Department of Agricul- ture, and the Commodity Credit Corpora- tion, and all persons, firms and agencies acting in concert with them, he and each of them is preliminarily enjoined from implementing the Determination made and announced by the Secretary of Agriculture on March 17, 1983, 48 Fed. Rea. 1062332 (1983), by collection or requiring the deduction of fifty cents per hundred- weiaht from the sale of milk marketed commercially in the United States. 70a Further, the defendants are hereby Ordered to return forthwith any and all sums of money heretofrom collected under the authority of tte MNetermination announced by the Secretary of Agriculture of March 17, 1983. IT IS SO ORDERED. /s/ MATTHEW J. PERRY UNITED STATES DISTRICT JUDGE Columbia, South Carolina June 3, 1983 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA COLUMBIA DIVISION STATE OF SOUTH CAROLINA, ex rel D. LESLIE TINDPAL, 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 1009 57th Street East Bradenton, FL 33508 INDEPENDENT DAIRY FARMERS ASSOCIATION, INC. 4400 Southeast 36th Street Fort Lauderdale, FL 33314 TAMPA INDEPENDENT DAIRY FARMERS'ASSOCIATION, INC. 501 East Kennedy Boulevard ] Tampa, *L 33601 ] J ) ] ] ] } } J ] ] ] ] ] } J ] J ] 1 J } ] J | CIVIL ACTION NO. 82-3172-0 MEMORANDUM OPINION AND ORDER 72a UPPER FLORIDA MILK PRODUCERS ASSOCIATION 5654 Dunn Avenue Jacksonville, FL 32213 GEORGIA MILK PRODUCERS, INC. 177 Washington Street, S.W. Atlanta, GA 30303 COBLE DAIRY PRODUCTS COOPERATIVE, INC. North Main Street Lexington, NC 27292 INTER-STATE MILK PRODUCERS COOPERATIVE, INC. 1225 Industrial Highway Southampton, PA 18966 DAIRYMEN, INC. 19140 Linn Station Road Louisville, KY 40223 ASSOCIATED MILK PRODUCERS, INCORPORATED, Wedgewood Prof. Bldg. 6609 Blanco Road San Antonio, TX 78216 Plaintiffs-Intervenors, JOHN R. BLOCK, Secretary of the United States Department of Agriculture, UNITED STATES DEPARTMENT OF AGRICULTURE, and a a ae a ee ee i 73a COMMODITY CREDIT CORP. } Defendants. } INTRODUCTION This matter is before the Court pursuant to motions by the plaintiffs and the plaintiffs-intervenors for an injunction against implementation by the defendants of a second “determination” by the Secretary of Aqriculture of the United States requiring a deduction of fifty cents per hundredweight from the proceeds of milk marketed commercially in the United States. A decision by the Secretary to impose ae previously announced deduction was enjoined by this Court on January 11, 1983. State of South Carolina ex rel Patrick v. Block, 74a 558 F. Supp. 1004 (D9. S.C. 1983). There- after, on March 17, 1983, the Secretary promulgated the determination which precipitated the filing of the instant motions. The plaintitfs and the inter- venors claim the right to relief as to this determination for all of the reasons which they advanced in their original pleadings concerning the Secretary's previous determination. Those alleqa- tions were summarized in the January 11, 1983 opinion and order of this Court. See, 558 F. Supp. at 1006, 1007, The defendants contend inter alia that the Secretary has now complied with all of the requirements of the Administrative Procedure Act, 5 U.S.C. § 551 et seq. in promulgating this regulation and that, moreover, contrary to contentions made by the intervenors, imposition of the 75a fifty cents per hundredweight deduction is not an unconstitutional tax. Additionally, the parties have filed cross motions for summary judqment as to all pending issues, A hearing on pending motions was held on April 12-14, 1983. The Court granted plaintiffs' motions for change of counsel, for change o€ relator and to supplement the complaint. The Court also granted the motion of Associated Milk Producers, Inc. (AMPI) to intervene as a Marty plaintiff. AMPI had anpeared in the prior heading in the cases as amicus curiae. The Court has also received, and has granted, vnetitions for leave to submit memoranda from the Commonwealth of Puerto Rico and the Pennsylvania Farms Union, Inc, as amicus curiae. As previously noted 558 F. Supp. at 1007, collectively, the plaintiffs, the intervenors and the amicus curiae represent a substantial seament o€ the dairy farmers of America. During the hearing on April 12, 1983, the Court heard from several wit- nesses for plaintiffs and plaintiffs- intervenors. On April 13, the defendants were oermitted to present a previously undisclosed witness, “r. Mawson Ahat, Acting Deputy Undersecretary for Inter- national Affairs and Commodity Programs. Prior to Mr. Ahalt's testimony, the defendants presented the testimony of Dr. Charles Shaw, Leader of the Dairy/ Sweetners Groun, Analysis Division of the Agriculture Stabilization and Conserva- tion Service of the Department of Aqri- Culture. Or. Shaw had previously testi- fied at the hearing of January 3-4. The 77a Court also received from the defendants the “administrative record" a hox of photocopied materials, primarily official Department of Agriculture publications, an estimated 5,990 pages, gross weight: 41 pounds ../ The Court also took 1/ Prom the cover letter explainina these materials: The enclosed documents are arranged by "“books" as follows: (a) Book 1--All official documents and related press releases produced in con- nection with the March 17, 1983 determi- nation; (5) Book 2--the July 1980 through March 1982 issue of Dairy Situation, an official Department of Agriculture (USDA) dairy report; (c) Book 3--miscellanous current statistical summaries, includina estimates orepared by USDA's Dairy Inter- agency Estimates Committee; (4) Books 4 and S5--copies of the January 1982 and subsequent issues of Dairy Market News, a weekly bulletin of dairy market develop- ments; (@) Book 4--copies of recent issues of 'SDA's Dairy Products and Milk Production (statistical publications relating to dairy oroduction); (f) Book 7--copies of the Agricultural Supply and Demand Estimates; (2) 300K 8%--coples of the 1on0-H. issues of 'SDA' Cold Storage, report of nationwide cold storage data; and (hn) Rook 9--the monthly issues from May 1981 through December 1982 of USDA's FOOTNOTE CONT'D ON NEXT PAGE — ia 78a judicial notice of the record of the earlier proceedings in this case. At the close of the hearina, the Court indicated its views. Tt appeared to the Court at the time that the defen- dants had complied with at least the Salient features of notice and comment rulemaking under 5 U.S.C. § 553, and the course of conduct did not appear to ‘be arbitrary or capricious. The Court therefore did mot at the time, aqrant the motions for injunctive relief, takina the matter under advisement. At that juncture, this Court was deeply troubled by this case and sua- gested at the close of the hearing that it appeared that the key questions were FOOTNOTE CONT'D FROM PREVIOUS PAGE Agricultural prices, a report of aaricul- ture prices for a number of commodities and the 1980 and 1981 annual summaries of the same publication, 79a constitutional. Subsequently, in bringing order to the complex and voluminous record in this case, my suspicions of a breakdown were borne out: I find unavoidable the con- Clusion that the Secretary is acting contrary to the applicable law. T have found, however, that the violations were Of administrative law rather than consti- tutional law. By May 5, although not prepared to respond fully to the many complex ques- tions raised in the case, the Court was convinced that the Secretary, in imposina the fifty-cents per hundredweiqht deduc- tion, had violated the Administrative Procedure Act. Aware ‘that the actual collection process, the takina of money, was about to commence for grade 8B milk producers, the Court on May 5 issued a 80a Temporary Restraining Order barring col- lection of the deduction pending issuance of this Opinion. That Temporary Restraining Order was stayed on May 13, by an Order of the Court of Appeals for the Fourth Circuit, nending issuance of this opinion. Having carefully considered the issues in this case, this Court adheres to the position suagested by the Temporary Restraining Order of May 5. The Secretary has violated the Adminis- trative Procedure Act, 5 U.S.C. § 551 et Therefore, under 5 U.S.C. § 706, 1) |® Q the fifty-cents per hundredweiaht deduc- tion on the commercial sale of milk is held unlawful; the Secretary's imposition of the deduction requirement is set aside; all further collection under the Secretary's determination is enjoined; and the Secretary is ordered to return forthwith all monies previously col- lected. T. THE FACTS On September 8, 1982, the President siqned into law the Omnibus 3udaet Recon- Ciliation Act of 1982. One section of that multi-faceted act, § 1091, concerns the dairy support price system. Inder that section, now codified as 7 U.S.C. §§ 1446(c) & (d), the Congress deleqated to the Secretary of Agriculture the dis- cretionary authority to impose two fifty- cents per hundredweight deductions on all commercial sales of milk. See P.L. 97- 253. On September 24, 1983, by a Notice 82a of Determination published in the Federal Reqister, the Secretary of Aqriculture announced the imposition of the first deduction requirement authorized by sec- tion 191. 47 Fed. Req. 42,128 (Sept. 24, 1982). Subsequently, the plaintiffs herein brought an action in this Court to enjoin the collection of this deduction. The Plaintiffs contended that the defendants had failed to observe the leqal mandates of the Administrative Procedure Act, 5 U.S.C. § 551 et seg., and specifically had failed to provide for notice-and- comment in informal rulemaking as is required by that statute. The action came on for an initial hearing on December 21, 1982. At that time, the Court entered a temporary restraining order, barring the collection 83a pending a more comprehensive hearina. The matter came on for hearing on January 3-4, 1983. During that hearing, this Court heard a thorough presentation of evidence and arqument by all sides. At the close of the hearing, the Court took the matter under advisement, continuina its temporary restraining order. On January 10, 1983, this Court issued an injunction against the collec- tion of the deduction requirement pro- mulqated in the Notice of Determination of September 24, 1982. In an opinion and Order issued on January 11, 1983, the Court discussed at length the various claims concerning the deduction require- ment, finding that the imnosition of this deduction requirement is rulemaking as defined by the Administrative Procedure Act, 5 ¥Y.S.C. § 551, and is therefore R4a Subject to the requirements of 5 U.S.C. § 553; that the Secretary of Agriculture has waived the "benefits" exception and cannot take advantage of this exemption to the notice and comment procedures required by 5 U.S.C. § 553; that there was no “good cause" excusing the Secre- tary from the notice and comment require- ment of 5 U.S.C. § 553(0)(B); and that the Secretary's actions in imposing the deduction did not constitute "substantial compliance,” but were rather an eqgqreqious violation of the Administrative Procedure Act. State of South Carolina ex rel. Patrick v. Block, 558 F. Supp. 1094 (D. S.C. 1983). Based on these findings, this Court concluded that the plaintiffs in the January action had established an over- whelming likelihood of success on the 85a merits. 558 F. Supp. at 1022-23. The Court also found that the plaintiffs had made a substantial showing that the implementation of the deduction reauire- ment would cause irreparable injury; that the defendants had not shown that the imposition of a preliminary injunction would cause them irreparable injury, so that the balance of hardship favored the issuance of an injunction for the plain- tiffs; and that the public interest, and particularly the need to hold the defen- dants to a close observance of the law favored issuance of an injunction. Following the issuance of the preli- minary injunction the defendants’ took no appeal. Rather, on January 21, the defendants Secretary of Agriculture announced that the qovernment would issue a proposed rulemaking under which R6a it would proposed to implement both the first and the second fifty-cents per hundredweight deductions authorized by the Omnibus Budqet Reconciliation Act. On January 27, 1983, there appeared in the Federal Register a Notice of Proposed Determination (48 Fed. Req. 3,764 (Jan. 27, 1983)). 3y this Notice: Commodity Credit Corporation provoses » 2 « enet $1.00 per hundredweight to he deducted from the proceeds of sale of all milk marketed commercially by producers during the period April 1, 1983 through September 30, 1983, with 50-cents per hundredweiaqht being refuned to producers who reduce their commercial milk marketings by 10.3 percent from mar- ketinqgs during a designated based period. 48 Fed. Req. at eee 87a 3,764. This Notice invited the submission of comments, and promised that comments submitted in response to the September 24 Notice of Determination would also be considered in determining whether or not to impose the new deduction requirement. See 48 Fed. Reg. at 3,764 (1983). On February 15, counsel for the plaintiffs-intervenors, Suncoast Milk Producers Cooperative, et l1., hand- carried to the Department a letter reauesting that they be provided with certain underlying studies which they viewed as pertinent to an evaluation of the proposed deduction requirement. The defendants have never responded to this letter. On February 28, 1983, the Secretary met with a delegation of farmers from upstate New York who had come to Washington, 0.C., to orotest the deduc- tion requirement. Tn meeting with these dairy farmers, the Secretary made state- ments indicating his determination to impose the deduction.2/ On March 16, 1983, the defendants announced that the first fFifty-cents per hundredweight assessment would be imposed, effective April 16. Explaining the reason for the imposition of the deduction requirement, the Secretary —— 2/ The defendants have objected to this Court's consideration of these Statements by the Secretary, citina as authority Hiatt Grain Feed, Incorporated v. Bergland, 446 F. Supp. 457, 453-54 (D. Kan. 1975). MIpon reading that case, I find it is totally inapposite to this situation. The statements complained of in that case were general statements made before Mr. Bergland ever took his posi- tion as Secretary of Agriculture, and certainly never had any specific relation to a rulemaking which he was considering at the time the statement were made. Stated: 89a We have no choice but tO aqain implement the first assessment ee [W]e really have no other alter- native, That is the Only option Congress has given to us, and it would be fiscally irresponsible to ignore a tool which will save up to s60 million per month of the taxpayers’ money. Block said the first assessment would be maintained from April 16 until new leqisla- tion hecomes effec- tive. "If sufficient resolution is not Forthcoming hy Auq. 1, we will he forced tO look again to implementation of the second 50-cent assessment. .. =," Press Release, at 1 1983). Yet we at the Depart- ment had no choice in the matter. The assessment was the Only tool that Con- (Mar. 16, 9Na gress handed to us that would bring down program costs. It wasn't a mandatory assessment, but it might as well have been, Congress actually took credit for the savings in the budget. Dairy Policy Statement by Agricul- ture Secretary John R. Block at 4 (Mar. 16, 1983). [(Tlhis was the only tool given to us by Congress. Something had to be done ¢t9 keep the cost to the taxpayers down, .. . Id. at 5. First, we have no choice but to imple- ment the first 50- cent assessment. That is the only option Congress has given to us, and it would be fiscally irresponsible to iqnore a tool which will save up to $40 million per month of the tax payers' Gla money. For that rea- son, T have directed that the first 50- cent assessment he implemented, effec- tive April 16. Id. at 8. The following day, the Secretary published in the Federal Register a Notice of Determination statina: The Commodity Credit Corporation cccCc) hereby determines that as part of the milk price support program, 50-cents per hundredweiqht shall be deducted from the proceeds of sale of all milk marketed commercially by pro- ducers during the period of April 16, 198 3 through Septmeber 30, 1983. 48 Fed. Req. 11, 253 (Mar. 17, 1983). Discussing the impact of this Aeduc- tion requirement, the Notice stated: Some individual pro- Nhs — 92a ducers will be more seriously affected by the deduction than others, The price Support program, however, does not guarantee profit to every dairy farmer. * * ® [Tlhe first of the two statutory conditions that must be met hefore a deduction of $1.90 per hundredweight on commercial milk mar- keting is imposed has been satisfied. However, the statute also requires that there be a program for refunding S50-cent Of *t*net -37:.808--eo5 producers who reduce commercial marketing by a prescribed amount. The Depart- ment published, on January 27, 1983, a Proposal for the implementation of a $1.90 per hundred weight deduction and a refund program, but no final requlation establishing a refund program has been published, There- fore, only a 50-cent, not the proposed 93a $1.90, ner hundred- weight deduction may be imposed at this time * * * Relatively low feed oprices, resulting from record crop production, will keep milk-feed price relationships favor- able for increased production. 48 Fed. Reg. at "(E]very nilk pro- ducer in the United States who markets milk commercially will he affected by the program. A 50- cent deduction reore- sents less than 4 percent of producers gross income from milk and a $1.90 deduction represents less than 8 percent of producers gross income from milk. Since this determina- tion is effective only for the period April 14, 1983, through September 30, 1983, this effective will be approximately halved for producers’ income during fiscal year 1983, 11,254. 94a 48 Fed. Req. at 11,255. In response to this Notice, the plaintiffs and plaintiffs-intervenors moved for suoplemental preliminary injunctive relief. The matter came on for hearing on April 12-14, 1983. Muring the April 12 taking of evidence, the plaintiffs and plaintiff-intervenors introduced evidence, both in the form of documentary exhibits and in the form of the testimony of an expert witness, evi- dence pointina to deficiencies in the various impact statements which had been proffered to the Court as ovart of the defendants’ administrative record. At the close of the hearina on April 14 this Court took the matter under advisement to consider the many questions which this case presented. As with the January litigation, these questions can 95a be broadly grouped under two dqeneral headings: Constitutional law and administrative law. Although in initially appeared to this Court that the vore-eminent questions were those concerning the constitu- tionality of § 191 of the Omnibus Budget Reconciliation Act, on thorough consi- deration, T have determined that the oroblems concerning administrative law are so grave that these alone resolve the case against the defendants. Therefore, the Court confines its resolution to these questions. Further, I believe the matter is not yet ripe for final resolu- tion via summary judgment, and will therefore, for the time being deny the cross-motions for summary judqment, with all parties having leave to renew these motions in the future. 96a II. ON INJUNCTIONS In this cfrcuit, the leading case expounding the requirements for the issuance of a preliminary injunction is Blackwelder Furniture Company of States- ville, Incorporated v. Seiling Manufac- turing Company, 550 F.2d 189 (4th Cir. 977) As the Court therein indicated, the proper test for resolving a motion for preliminary injunction involves the flexible interpnvlay of four factors: 1) the possibility of irreparable harm to the plaintiffs if injunctive relief is deined; 2) the apparent strength of the plaintiffs' case on the merits; 3) the potential harm to the defendant if the preliminary injunctive relief does issue; 97a and 4) the public interest. The court in Blackwélder, and many othe courts speaking to this question, have emphasized that all four of these factors are to be considered in decidina whether a preliminary injunction should issue pending a full trial on the merits of the controversy. Turther, the courts have stressed the need for a flexible interplay among these four factors, the goal in any case being the preservation of the status quo pending full litiga- tion. See, @.g., Federal Leasinag, Inc. v. Underwriters at Lloyd's, 650 F.2d 495 (4th Cir. 1981); Telvest, Inc. v. Bradshaw, 613 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); Virainia Petroleum Jobbers 98a Assoc. v. Federal Power Commission, 259 F.2d 921 (D.C. Cir. 1985) [sic]; 0. Fiss, Injunctions 168 (1972). In this case, as in the January litigation in this controversy, the leading factor is the strength of the plaintiffs' case on the merits. While this Court has not heard a full trial on the merits, and has not received a full administrative record, there has been a very extensive presentation of evidence, particularly of the documents which entered into the Secretary's decision to impose the fifty-cents per hundredweight deduction, This evidence clearly indi- cates the merits of the plaintiffs’ and plaintiffs-intervenors' case, If this matter were to proceed to a full trial on the merits, the defendants could undoubtedly augment the record. 99a This Court, however, has aqrave doubts that the defendants could produce evi- dence which would counter the strona showing which the plaintiffs have made that the Secretary has imposed this deduction requirement through a course of action which involves serious violations of the law. The determination is there- fore a nullity. Because of the importance which I give to the plaintiffs' showing on the merits, I will turn to this matter first. T would emphasize however, that I believe that the plaintiffs' showing on each of the four factors involved in the deter- mination of the injunction question is quite strong. 100a III. REVIEWABILITY The Administrative Procedure Act, 5 U.S.C. SS 701(a) renders administrative actions reviewable subject to two narrow exceptions: This chapter applies, according to the provisions thereof, except to the extent that-- (1) Statutes preclude judicial review; or (2) agency action is committed to agency discretion by law. The defendants argue that the Secretary's action taken under § 101 of the Omnibus Budget Reconciliation Act, now 7 U.S.C. § 1446(c) & (da), is unreviewable because 101a of 7 U.S.C. § 1429.2/ To establish unreviewability, the defendant must carry a heavy burden. The case law requires proof of unreviewabi- lity by clear and convincing evidence. Dunlop v. Bachowski, 421 U.S. 560, 567 (1975); Citizen to Preserve Overton Park, Incorporated v. Volpe, 401 U.S. 402 (1971); Abbott Laboratories v. Gardner, 387 U.S. 136, 139 (1967); Rusk v. Cort, 369 U.S. 367-80 (1962); Shaughnessy v. Pedreiro, 349 U.S. 48, 51 (1955); Heikkila v. Barber, 345 U.S. 229 (1953); National Corn Growers Association v. Bergland, 471 °. Supp. 1199, 1205-06 3/ That section provides: Determinations made by the Secretary under this Act shall be final and conclusive; Provided, That the scope and nature of such determinations shall not be inconsistent with the provisions of the Commodity Credit Corporation Charter Act. 102a (S.D. Towa 1974), app. dismissed, 611 F.2d 730 (8th Cir. 1980). The construc- tion of statutes under which an aqency claims its actions are unreviewable is a question for the courts rather than the administrative agency. Barlow v. Collins, 397 U.S. 159, 165 (1970), see also Texas Gas Transmission Corporation v. Shell Oil Company, 363 U.S. 263, 268-70 (1960); Yardin v. Kentucky Uti- lities Company, 390 U.S. 1, 14 (1968) (Harlan, J., daissenting). Preclusion must appear on the face of the act, and Cannot be established from a mere failure to specifically allow review. OMDunlop v. Bachowski, supra; Citizens to Preserve Overton Park, supra; Wirtz v. Bottle Blowers Association, 389 U.S. 463, 468 (1968); Abbott Laboratories v. Gardner, supra; National Corn Growers Association, 103a Supra; Legislative History, S. Doc. No. 248, 79th Cong., 2d Sess., 212, 275, quoted in Heikkila v. Barber, supra, 345 U.S. at 232. Ambiquous'9 language referring to “finality” will be construed as desiaqnating administrative finality and ripeness for review rather than preclusion of judicial review. Johnson v. Robinson, 415 U.S. 361 (1974); Harmon vv. Brucker, 355 U.S. $79 (1958); Shaughnessy v. Pedreiro, supra; Ralpho v. Bell, 569 F.2d 607 (D.C. Cir. 1977); Arlington Oil Mills, Incorporated v. Knebel, 543 F.2d 1092, 1098-99 (Sth Cir. 1976). By contrast, the generous provisions aranting reviewability are to be hospitably construed. Nunlop v. Bachowski, supra; Abbott Laboratories v. Gardner, supra; Shaughnessy v. Pedreiro, Supra; cf. American School of Magnetic 104a Healing v. McAnnulty, 187 J.S. 94 (1902). Particularly where the party seeking review is the beneficiary of the statute in question, there is a stronq presump- tion that Congress intended reviewability to insure that its statutory objectives would be realized. Barlow v. Collins, supra, 397 U.S. at 167; see also id. 397 U.S. at 174-75 (separate opinion of Brennan, J.). The intent of the Congress which enacted 7 U.S.C. § 1429 is an academic question.4/ The Conaqress which enacted the Omnibus Budget Reconciliation Act of 1982 unquestionably did not intend 77 Two courts have spoken to its, finding reviewability. Ganzale Vv. Greeman, 334 F.2d 579 (D.C. Cir. LEI National Corn Growers Association v. Bergland, 471 F. Supp. 1199, 1205-06 (S.). lowa 1974); appeal dismissed, 411 F.2d 730 (8th Cir. TSB0), vacated on other grounds, 484 F.Supp. 13427 (s.0. Towa 1980). 105a to make action under § 101 thereof unreviewable../ Paragraph (d)(6)(A) 5/ section 191, naragraph (d)(6) (6)(A) The district courts of the United States are vested with jurisdiction specifically to enforce, and to pre- vent and restrain any person from violating any provision of this subsection or any requlation issued under this subsec- tion. Any such civil action authorized to be brought under this subsection shall he referred to the Attorney General for appropriate action. Nothing in this sub- section may be con- strued as requiring the Secretary to refer to the Attorney General minor viola- tions of this subsec- tion whenever the Secretary believes that the administra- tion and enforcement of this subsection FOOTNOTE CONT'D ON NEXT PAGE 106a of § 101 qrants the Secretary access to this Court for actions to prevent and FOOTNOTE CONT'D FROM PREVIOUS PAGE would be adequately served by suitable written notice or warning to any person committing such violation. (B) Any person who willfully violates any provision of this subh- section or any requla- tion issued under this subsection, or who willfully fails or refuses to remit any amounts due thereunder shall be liable, in addition to payment of the full amount due plus interest, for a civil penalty (to be assessed by the Secretary) of not more than $1,900 for each such violation which shall accrue to the nited States and may be recovered in a civil suit brought by the United States. (C) The remedies pro- vided in subparagraphs FOOTNOTE CONT'D ON NEXT PAGE 1N7a restrain any violation of § 101 of the Omnibus Budget Reconciliation Act. There is no evidence Congress intended this court to re entertain such actions while precluded from inquiring into their legality of the underlying deduction. Paragraph (d)(6)(B) creates a quasi- Criminal action for violation of the deduction plan. There is no evidence that Congress intended this Court to entertain such while precluded from exam- ining the legality of the requlation being violated. Paraqraph (6)(c) unequi- vocally indicates the availability of equitable remedies. A lona-established canon of statu- FOOTNOTE CONT'D FROM PREVIOUS PAGE (A) and (B) shall be in addition to, and not exclusive of, remedies otherwise provided at law or in equity. tory construction requires that this Court construe § 101 of the Omnibus Bud- get Reconciliation Act as a whole. Weinberger v. Hynson, Westcott & Dunnina, Incorporated, 412 U.S. 609, 633-34 (1973); °ederal Trade Commission v..- Manacer, Retail Credit Company, 515 F.2d 645, 652-53 (4th Cir. 1974); D'Antoni, Incorporated v. Great Atlantic & Pacific Tea Company, 496 F.2d 1378 (5th Cir. 1974); City of New York v. Train, 494 F.2d 1033, 1049-50 (D.C. Cir. 1974), aff'd. 420 U.S. 35 (1975); 3.S.V. Phar- maceutical Corporation v. Richardson, 461 F.223, 227 (9th Cir. 1972), aff'd. 412 U.S. 655 (1973); "Inited States v. Hunter, 459 F.2d 205, 210-11 (4th Cir.), cert. denied, 409 U.S. 934 (1972), reh'a denied, 413 U.S. 923 (1973); Cardno v. Finch, 311 F.Supp. 251 (E.9. La. 1970). 109a As applied to § 191 of the Omnibus Budget Reconciliation Act, this principal requires that the availability of equit- able remedies be extended to all portions of that section, now codified at 7 U.S.C. § 1446(C) & (d). Additionally the determination by the Secretary which is the subiect of this action, 48 Fed. Req. 11,253 (March 17, 1983), replaces of the earlier deter- mination of September 24, 1983, 47 Fed. Req. 42,128 (1982). Collection of the determination of September 24, 1982 was enjoined by this Court's Order of January 11, 19863. Because of the relationship between this action and this Court's Order of January 11, this Court has the power to review the Secretary's determi- nation as part of its inherent contempt power. 110a * * *® the power of a court to make an order carries with it the equal power to punish for a disobedience of that order, and the inquiry as to the question of disobe- dience has been, from time immemorial, the special function of the court. And this is no technical rule. In order that a court may compel obedience to its orders it must have the right to inquire whether there has been any disobe- dience thereof. llla In re Debs, 158 U.S. 564, 594-95 (1895). This Court finds its inherent power quite sufficient to sustain its review of the Secretary's determination. Shillitani v. United States, 384 U.S. 364, 370-71 (1966); McComb v. Jacksonville Paper Company, 336 U.S. 187, 193 (1949); Penfield Company v. Securities and Exchange Commission, 330 U.S. 585, 593-94, reh'g. denied, 331 U.S. 865 (1947); Ex parte Robinson, 86 U.S. (19 Wall.) 505 (1873); United States v. Fidanian, 465 F.2d 755, 757-58 (5th Cir.), cert. denied, 409 U.S. 1044 (1972); United States v. Dickinson, 465 P.246 496, $10 (Sth Cir. 1972); In re Russo, 53 F.R.D. 564, 573 (C.D. Cal. 1971); In re Williams, 306 F.Supp. 617 112a (D.0.C. 1969); Rhodes v. Houston 202 F.Supp. 624, 630 (D. Neb.) aff'd 309 F.959 (8th Cir. 1962). This Court concludes that the actions of the defendant Secretary under § 101 of the Omnibus Budget Reconcilia- tion Act, now 7 U.S.C. S&S 1446(c) & (d) are judicially reviewable, IV. COMPLIANCE WITH THE ORDER OF JANUARY 11, 1983 The defendants may regard the mention of the contempt power as mere ritual invocation. In the Motion to Stay filed with the United States Court of Appeals for this circuit, the defendants assert: We are unaware of any indication in the record or elsewhere that the Secretary 113a will refuse to obey the final decision by the courts regarding this program. Defendants' Motion for an Immediate Stay Pending Appeal And, In The Alternative, A Petition for a Writ of Mandamus at 18, This Court, however, has a very serious question: have the defendants, in good faith obeyed the final decision of the courts regarding their program of September-January, 1982. In this Order of January 11, 1983, this Court Summarized its conclusions of law, saying: a ) The Secretary's "“determ- ination" imposing the deduction was sub- Stantive rule-making, and thus came within the purview of 5 U.S.C. $ $53. b) The Department of Agriculture has waived the “benefits” excep- 114a tion, and thus cannot take advantage of the exemption of 5 U.S.C. § 553(a)(2). c) There was no "good cause" which would excuse the Secretary from the notice and comment requirements of 5 U.S.C. § 553(b(B). Order at 45-46, 558 F.Supp. at 1022. The Notice of Determination for 1982-83 Milk Price Support Program, 48 Fed. Req. 11,253 (Mar. 17, 1983), announced a deduction requirement legally identical to that voided by the Order of January 11, 1983. The record shows that it is normal Department procedure that all material for publication in the Federal Register is reviewed by the General Counsel of the Department of Agriculture before publication. See Hearing of April 115a 12-14, Tr. 276 (Shaw); Transcript of Preliminary Injunction Proceedings, Jan 3, 1983, Tr. 219-20, testimony of Dr. Charles N. Shaw responding to questions by the Court. Over the signature of the defendant Secretary of Agriculture there appears the statement: The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) is not applficabf[e to this notice of deter- mination since CCC is not required by 5 UeoeCe 953 OF any other provision of law to publish a notice of proposed rulemaking with respect to the sub- ject matter of this notice. While the seeretary of Agriculture has determined that CCC will voluntarily comoly with the pro- visions of 5 U.S.C, 553(b) and (c), the Regulatory Flexibil- ity Act does not 116a apply in the case of voluntar agency compliance with pro- posed rulemaking requirements. 48 Ped. Reg. at 11,253. (emphasis added). This statement indicates that the Secretary's compliance with the notice and* comment requirements of 5 U.S.C. § 553 is not required, is voluntary. This issue was fully discussed in this Court's Order of January 11. See Order, esp. 12-49, 553 F.Supo. at 1010-22. The question of whether or not the Secretary was required to adhere to the notice and comment requirements of 5 U.S.C. 6 553 was resolved emphatically against the defendants. The Secretary is required to comply. This Court has discovered only one item expanding on this statement of the \ \ \ \ | ‘ ' | 117a Secretary's power to dispense with the rulemaking requirements of 5 U.S.C. § 553. This is an introductory phrase to a headnote and a footnote to the headnote in the defendants’ Memorandum to this Court, filed April 11, 1983, The head- note begins: Assuming That The APA Procedural Require- ments Are Applic-~ able, .., Defendane gs ° Memorandum at 34. The footnote reads: In opposing the initial motion for a Preliminary injunc- tion, defendants took the position that the rulemaking require- ments of the APA were inapplicable to the Secretary's September 24, 1982, determina- tion implementing the 59 cent deduction because it "related to" a "grant* or "benefit*" under 5 U.8.C. € 553(a)(2). 118a Defendants also argued that although former Secretary of Agriculture Clifford M. Hardin had announced on July 20, iS fk 2 that the Department would as a "matter of policy" voluntarily utilize the APA's notice and comment procedures, such a policy state- ment did not consti- tute binding law. The defendants have not abandonded these positions and accordingly incor- porated herein by reference those arqu- ments. See Defen- dants' Memorandum Of Points and Authori- ties in Opposition to Motion for Prelimin- ary Injunction, pp. 29-34. However, in view of the uncontro- verted facts set out below showing that the Secretary has fully and literally complied with the APA's rulemaking requirements, with regard to the deter- mination to impose the 50-cent deduction 119a as of April 16, and because the Secretary has decided to make no attempt to seek legal approval to collect the deduction based on the September 24, 1982 determination, the Secretary does not urge those arguments at this juncture. Defendants’ Memorandum, foot- note at 34. In the Order of January 11, 1983, this Court addressed the position advanced in the ahove-quoted footnote, at 14-20, 558 F.Supp. 1010-13. This material speaks with sufficient force and Clarity that I reproduce a substantial portion verbatim: {beainning of quotation] [T)]he Administrative Conference of the United States recommended that agencies afford the public the opportun- ity to participate in rule-making bearing 120a on matters mentioned in 5 U.S.C. § 553(a) (2), the exemptions of that pro- vision notwithstanding. On July 24, 1971, the Secretary of Agriculture publis.ied an announcement that, effective that date, the Department of Agriculture would follow the reauirements of 5 U.S.C. § 553(b) and (c). 36 Fed. Rea. 13,804 (July 24, 1971) 5/ In their brief, the defendants con- tend that this was merely a voluntary undertaking, a general statement of policy, which "does not impose any rights and obligation. ..- +" De fendants' Memorandum of Law at 33, quoting Texaco 67 “The Secretary did state that the Department would continue to use the "good cause" exceptions provided by 5 U.S.C. § 553(5)(3), Dut pledaed that the Department would use these sparingly, only when there was substantial basis for their use, and observing full procedural formalities involved in their use. 36 Ped. Req. 13,804 (July 24, 1971). 121a Inc. v. Federal Power Commission, 412 F.2d 740, 744 (3d Cir. 1969). While a general statement of policy does not impose riahts or obliaations, I find that the waiver made by the Secretary of Agriculture in 1971 does create rights and obligations. Thus, as with the Notice of Determination in the instant case, it is the substance of the Secretary's action rather than the label given his action which controls. Columbia Broadcasting Systems, Inc. v. United States, supra; Cerro Metal Products v. Marshall, 620 F.2d 964, 981 (3d Cir. 1980); 3rown Express, Inc. v. United States, 607 F.2d 695, 700 (5th Cir. 979); Lewis-Monta v. Secretary of Labor, 469 F.2d 478, 481 (2d Cir. 1972); Texaco, Inc. v. Federal Power Commission, 412 *.2d 740, 744 (30 Cir. 1969); City of 122a New York v. Diamond, 379 Ff. Supp. 503, 518 (S.NO.N.Y. 1974); Pharmceutical Manufactures Association v. Finch, 307 F. Supp. 858, 863 (D. Del. 1970). The substantive impact of 36 Fed, Req. 13,804 (1971), was; decided by the District of Columbia Court of Appeals in the case of Rodway v. -United States Department of Agriculture, 514 F.2d 809 [Bale CaP. 19735) Therein, Judqe J, Skelly Wright stated: On July 24, 1971, however, as a result of a recommendation of the Administrative Conference of the United States, "SDA promulgated a regqula- tion making ‘the pro- cedural requirements of Section 4 of the APA [5 U.S.C. § 533] applicable to all of its rule-makina relating to ‘public property, loans, benefits, or con- tracts.’ The requla- tion was effective 123a immediately. 36 Fed. Reg. 13,804. | eS of course, well settled that validly issued administrative regulations have the force and effect of law [Citations omitted. ] Thus, the regulation fully bound the Secretary to comply thereafter with the procedural demands of the APA. 514 F.2d at 814. While the defendants contend that the holding and the reasoning of Rodway is in error, it is endorsed by courts in the Second, Be 4 the Third,2/ the Pifth,2/ and the Ninth 7/ Tyson v. Maher, 523 F.2d 972, 375 _6 744 Cir. 1975) 8 / Reyes v. Klein, 411 F.Supp. 7241 (D.N.J. 1976). 9/ Arlington Oil Mills Inc. Vv. Knebel, 543 F.2d 1092 (5th Cir. 1976); See also Crown Zellerbach Corporation v. Marshall, 441 F.Supp. 1110, TITS (E.0. )(similar waiver of § 553(a)(2) FOOTNOTE CONT* D ON NEXT PAGE Pi2ze O68 (SCS. Cite. 7197333 Environmental Defense Fund v. Corps of Engineers, United States Army, 412 U.S. 931 (1973); Alabama Power Company v. Federal Power Commission, 450 F.2d 716, 721 (D.C. Cir. 1971); WAIT Radio v. Federal Communications Commission, 418 F.2d 1153, 1156 (D.C. Cir. 1969); City of Chicaqo v. Federal Power Commission, 385 F.2d 629 (D.C. Cir. 1967), cert. denied, 390 U.S. 945 (1968). This does not mean that the defendants are required to give the same 264a weight to these factors as the plaintiffs and intervenors do. See Hanly v. Mitchell, 460 F.2d 640, 648 (2d Cir), cert. denied sub nom. Hanly v. Kleindienst, 409 U.S. 990 (1972). But this standard unquestionably does not permit the defendants to dismiss relevant factors without serious consideration. In this case, the defendants have submitted an administrative record. It consists overwhelmingly of documents published by the United States Department of Agriculture. Many have little if any bearing on the deduction which is the subject of this action. Further, there is no indication in the record that any decision-making within the Department of Agriculture considered all or any part of these published studies in decidina whether to impose this deduction. 265a On the other hand, the defendants have withheld from this Court memoranda to which there has been considerable testimony. See e.g., hearing of April 13, 1983, Tr. 445-46 (Ahalt). These have not been provided to this Court. This Court looks askance on the defendants’ refusal to provide this Court with a complete administrative record while burdening the Court with a hox weiqhing 41 pounds, filled with a 17 and 3/4 inch thick pile of papers which has virtually no use in these proceedings. The defendants "may not unilaterally determine what shall constitute the administrative record and thereby limit the scope of this Court's inquiry." Tenneco Oil Company v. Department of Energym [sic], 475 F.Supp. 299 (D. Del. 1979). The defendants have supplemented the administrative record with the testimony of Mr. Dawson Ahalt and Dr. Charles Shaw. This Court is deeply troubled by the defendants' reliance on post facto rationalization to make up for the deficiencies in the administrative record. Even assuming that the testimony of these witnesses was of unquestionable veracity, it comes’ too late. The purpose of an administrative record is not merely to impress this court. It is to demonstrate to the public and all interested parties a reasoned, discipline decision-making process. The benefit of this process is sorely undercut, and with it the faith that the public has in the process and the decision-maker, where critical links in the chain of reasoning are revealed 267a only after-the-fact and only to those who focus their attention on this Court. Further, this Court cannot overlook the highly susvect nature of post facto rationalizations offered through the testimony of officials who are obviously interested in securing this Court's approval of their actions. While I recognize that there is authority which allows the explanation of an administra- tive record, see, e.q., Hiatt Grain & Feed Company v. Bergland, 446 F.Supp. 457, 480 (D. Kan. 1978), I note that the cases are clear: what is permitted is explanation, not auqmentation. "(T]he Focal point for judicial review should be the administrative record already in existence, not some new record made ini- tially in the reviewing court." Camp v. Pitts, 411 U.S. 138, 142 (1973). T 268a find that the testimony of the defen- dants' witnesses goes beyond any limits Of explanation and constitutes a sweeping expansion of the administrative record. As such, it must be viewed with aqrave suspicion, and I note that in many courts, it would not he considered at all. [T]he agency may not Support its decision by reference to facts outside the adminis- trative record or a course of reasoning disclosed for the first time in judi- cial proceedings. Williams v. Robinson, 432 F.2d 637, 642 (D.C. Cir. 1970) When action is taken on a record the department cannot then present testi- mony in court to remedy the qaps in the record, any more than arquments of 269a counsel on review can substitute for an agency's failure to make findings or to give reasons. Zuber v. Allen, 396 U.S. 168, 196 (1969); accrod [sic], Federal Power Commission v. Texaco, 417 U.S. 380, 397 (1974); National Labor Relations Board v. Metropolitan Life Insurance Company, 380 U.S. 438 (1965); Burlington Truck Lines v. United States, 371 U.S. 156 (1962); Securities & Exchanae Commission v. Chenery Corporation, 318 U.S. 80, 93-94 (1943); Louisiana-Pacific Corporation v. Block, 694 F.2d 1205 (9th Cie. 1982); Columbus & Southern Ohio Electric Company v. Costle, 638 *.2d 910, 912 ($tn Cis 1980); 32684 Lines, Incorporated v. Federal Maritime Commission, 584 *.2d 519 (D.C. Cir. 1978) American Iron &-Steel Institute v. Envi- ronmental Protection Agency, 568 F.2d 284, 296-97 (ed [sic] Cir. 1977); Tabor v. Joint Board for Enrollment of Actuaries, 566 F.2d 705 (D.C. Cir. 1977); Tanners' Council of America, Incorporated v. Train, 540 F.2d 1188, 1193 n. 13 (4th Cir. 1975). This Court is particularly disin- clined to accept post hoc rationali- zations from agency witnesses when these witness are repeatedly less than com- pletely frank in their responses to questions. See, hearing of April 12-14, Tr. 260-61, 266, 279, 291-92, 305-06, 319-20, 342, 372-73 (Shaw); 443-48, 454-56 (Anhalt). Turning then to the administrative record which the Department of Agricul- ture has presented to this Court, I find that there has been no serious consider- 27 1a ation of fair return to labor and invest- ment as required by 7 U.S.C. §& 1446b. This fact is made quite apparent from the defendants' refusal to undertake any analysis of the impact of the 50-cent per hundredweiqht deduction other than on gross returns bases. The witnesses for the defendants insist that the use of gross returns is quite adequate to allow analysis of costs of production and return to producers. This Court does not agree. The necessity of using “net" Figures is made quite clear from the defendants' attempt to explain how the deduction requirement will succeed. That explanation cannot be undertaken without using net costs. In the Notice of Deter- mination of March 17, 1983, in the Sum- mary OF Final Regulatory Impact Analysis, at 48 Ped. Reg. at 11,255, the Secretary used the term "“net" five times in four column-inches. Removing the word “net” would render that discussion unintelli- gible. Further, the concept of net costs is so fundamental to any economic or accounting analysis that the exclusion of this concept without explanation is unthinkable. Net returns are normally included in analyses prepared by the Department of Agriculture. See Hearing of Apr. 12-14, tr. 405 (Ahalt). There was no sound reason for excluding them from the analysis. Id. 279-80, 283 (Shaw) Yet they were excluded entirely from these analyses. That the conceot of net is fundamen- tal to economic analysis cannot be seri- ously doubted. ne cannot even halance a checkbook without using net fiaqures. The 273a deduction requirement is an unprecedented program, which will take sixty million dollars per month from dairy farmers. The defendants suggest that analyses done with an arithmetic methodology so crude that it could not halance a simple check- book are adequate. This Court disagrees: assessments based solely on aross returns are not adequate, This Court finds that the defendants have not considered returns to dairy farmers for their labor and investment when compared with the cost of things that farmers buy. Because this consider- ation is mandated by 7 U.S.C. § 1446b, the decision to impose this deduction Cannot stand, As to the price levels at which other commodities are being supvorted, this Court has carefully reviewed the impact statements prepared by the Depart- ment of Agriculture with respect to both the decision to impose the 59-cent over hundredweiqht deduction on milk and the Payment-in-Kind program. After careful consideration, I find that the analyses which the Department has rendered with respect to effect of the Payment-in-Xind program are “astonishingly inadequate. There is no analysis at all there." (Hearing of April 122-14, Tr. 138 (Motes)). As to the cost of production, Mr. Dawson Ahalt testified that in analyzing the proposal to impose the 50-cent per hundredweight deduction, he did not rely on cost of production data. He places little stock in the cost of production analyses because of the difficulties of apportioning fixed costs and overhead into these studies. Though acknowledging that the law requires the Department of Agriculture to produce cost-of-production analyses, Mr. Ahalt puts little faith in these studies. He contends that they are, at hest, averaaqes. (Hearing of April 12-14, Tr. 403-04 (Ahalt).) Pur- ther, Mr. Ahalt has found that the use of cost of production figures in analyses leads to giving these figures too much credence, so that the goals which the Department o€ Agriculture regards as important are disregarded. (Id. at 405 (Ahalt).) The Congress has specifically direc- ted the Secretary to consider cost of production in dairy price supvort decis- ions. Even assuming that studies done without cost of production are somehow "better," the defendants are not at lib- erty to alter or disregard the mandate of Congress because they believe they have a better way. That decision is for the Congress to make. The Congress has made that decision, and has directed the defendants to carry that decision out. Minimally, if the defendants believe that they have a policy better than that adopted by the Congress, they should take their policy before the Congress for consideration and possible approval. TO implement their own vision of policy while pretending to carry out that which Congress has adopted is not merely irresponsible, it is illeqal. This Court Finds cost of production has not heen considered. Because consideration of cost of production is mandated by 7 U.S.C.~. § 1446(¢c), the decision to impose the deduction cannot stand. 277a Turning finally to the defendants' consideration of impact, this Court finds that the impact of the 50-cent per nundredweight deduction has not heen adequately considered. " The frequently advised course of culling cows has not been analyzed. Hearing of Apr. 12-14, tr. 265 (Shaw). q No document which has been shown to this Court contains any analysis of net returns to producers. Id. at 275, 281-82 (Shaw). « The "multiplier effect," although a Standard element of economic analysis, was not included in any study undertaken concerning this deduction. Id. at 299-300 (Shaw). " There have been no studies done on the impact of this deduction on the qen- eral economy. Id. at 301 (Shaw); 665-[sic] (Ahalt). q There has been ahsolutely no study undertaken concerning the number of per- sons who will be driven out of business because of the imposition of this deduc- tion. Id. at 286-88 (Shaw); 438 (Ahalt). q No official within the Department of Agriculture has ever even asked for any analysis of impact. Id. at 364 (Shaw). « Although the Secretary has suqqested refinancing as a way cover the cost of this deduction, there has been no exami- nation of any document concerning the financial situation of dairy farmers. Id. at 288-89 (Shaw). q No document has been brought to this Court's attention showing seasonal costs Or any consideration thereof. « No document has been brought to this 279a Court's attention showing that the alter- ation of feed rations is a viable cost-cutting method. « No document has been brought to this Court's attention showing what changes farmers will make in their production in response to this program. q No document has been brought to this Court's attention showing any analysis of whether this deduction will decrease or will actually increase production. q No document has been brought to this Court's attention showing consideration of the possible effects of this deduction program on “responsible persons." q No document has been brought to this Court's attention concerning the poten- tial costs of dairy farmers going out of business. The defendants assert that the con- Sideration of impact in the various im- pact statements and in the Notice of Determination of March 17, 1983, 48 Fed. Reg. 11,253 (1983), are [sic] sufficient. This Court has reviewed these various impact statements, and finds them filled with superficial generalizations, unsupported assertions, cursory dismissals. These documents lack the analysis which is essential to the responsible implementation of a program of this magnitude, This Court finds as a fact that the defendants have not considered the impact of the 50-cent per hundredweight deduc- tion on the commercial sale of milk. Each of these factors is relevant to the Secretary's decision to impose this deduction. Returns to dairy farmers, the Support levels of other commodities, and 281a costs of production are made specifically relevant by statutes. The impact is inherently relevant to the entire dairy price support program. Failure to con- sider any one of these would render the Secretary's decision suspect. Failure to consider all of them renders the Secre- tary's decision to impose this deduction Clearly at odds with the intent of the Conaress. The decision to impose this deduction is therefore void. Federal Election Commission v. Democratic Senato- rial Campaign Committee, 454 J.S. 27, 31-32 (1981); Ernst & Ernst Ve. Hochfelder, 425 U.S. 185, 212-14 (1976); Federal Maritime Commission v. Seatrain Lines, Incorporated, 411 U.S. 726, 745-46 (1973); Volkswagenwerk Aktiengesellschaft v. Federal Maritime Commission, 390 U.S. 261, 272 ('968); Dixon v. United States, 381 U.S. 68, 74 (1965); Manhattan General Equipment Company v. Commissioner of Internal Revenue, 297 U.S. 129, 134 (1936); Miller v. United States, 294 U.S. 435, 440 (1935); United States v. Doe, 701 F.2d 819, 823 (9th Cir. 1983); State Farm Mutual Automobile Insurance Company v. Department of Transportation, 680 F.2d 206, 222 (D.C. Cir. 1982); Pacific Gas & Electric Company v. United States, 4664 F.2d 1133, 1135 (9th Cir. 1981); Commit- tee for an Independent P-I v. Smith, 549 F. Supp. 985, 989 (W.D. Wash. 1982); Wiggin Brothers, Incorporated v. Depart- ment of Energy, 548 F.Supp. 547, 549 (N.D. Tex. 1982);Jnited States v. Firestone Tire & Rubber Company, 513 P.Supo. 1021, 1033 (N.D. Ohio 1981). Therefore, to summarize the major EFindinas which this Court has made in 283a this action: 1. The action of the Secretary of Aqriculture in imposing the fifty-cent per hundredweight deduction requirement is fully judically reviewable. 2. The defendants have not shown full good-faith compliance with this Court's Order of January 11, 1983. 3. This Court, and not the Secre- tary, is the proper authority to construe of [sic] § 101 of the Omnibus Budget Reconciliation Act. 4. The defendants have miscon- strued the Congressional intent of § 101 of the Omnibus Budget Reconciliation Act in that they have iqnored the Congres- sional mandate to consider cost of pro- duction. S. The defendants have not ade- quately observed the requirements of notice and comment rulemaking under 5 U.S.C. § 553 in that they have neither made available to interested persons studies and information necessary for informed comment on the proposed deduc- tion requirement nor shown any consider- ation of the substantive comments made in response to the proposed determination. 6. The defendants have not consid- ered factors relevant to the determi- nation: the defendants have failed to consider returns to producers; the defen- dants have failed to consider the poten- tial impact of other price support pro- grams, including but not limited to the Payment-in-Kind program; the defendants have failed to consider the cost of pro- duction in the dairy industry; the defen- dants have failed to consider the impact of this program. In view of these findings, and the various additional factors discussed in this opinion, this Court concludes that the defendant Secretary of Aqriculture has failed to comply with the mandatory requirements of the Administrative Proce- dure Act, 5 U.S.C. § 551 et seq. There- fore, under 5 U.S.C. § 706(2), the defen- dants' action in imposing the Determi- nation announced March 17, 1983 must he and hereby is held unlawful and set aside. IX POTENTIAL IRRFPARABLE INJURY _ TO PLAINTIFFS In discussing the possibility of harm to the plaintiffs, the defendants have continually insisted that the only possible harm to the plaintiffs is a loss of income, which the aovernment stands ready to repay. In the January Order, this Court discussed the potential consequences which this Court perceived would follow from this deduction. While the authorities on which the defen- dants rely in this regard are all well reasoned, I find that they are inapplicable because the possible injury which con- fronts the plaintiffs goes beyond a loss of income. As the evi- dence in this case whose, modern farming is a business invol- ving hiahly sophisti- cated financial arrangements. Each of the five dairy farmers who testified before this Court Stated that he was under a heavy burden of debt. Periodic refinancing is an experience which each of these men face, as do each of the six 287a dairy farmers whose affidavits have been submitted to this Court. Doubtlessly, there are few farmers in this nation who could operate their farms without credit arrangements, Those farmers who have testified in Court have indicated emohatically that the daring [sic] on their cash flow which will follow from the imposition of the Secretary's Fifty cents per hudredweight deduction will cause more than a loss of income. For many it will require refi- nancing arrangements, the forced sale of non-liquid assets, and quite possible bankruptcy. This same situation is shown by the affida- vits of the indi- vidual farmers and by those of the various officers of dairy cooperatives and other marketing associations which have been filed with this Court. 288a The evidentiary materials which the Court has received present many .. . examples of persons in the dairy farming industry who report that the Secretary's deduction requirement will force them out of business if it is not enjoined. Nor is the Court unaware of the general state of dairy farming in the nation as a whole. These are very bleak economic times for these people. The defendants have pointed out that many of the witnesses who have testified are persons who report substantial net worth. Based on an examination of the financial statements of the dairy farmers who have appeared as witnesses for the plaintiffs, the Court does not disagree. Net worth, however, is an inadequate mea- sure for determining 289a the likely impact of the Secretary's de- duction. The bulk of the assets which make up the farmers' net worth are nonliquid. Further, qiven the depressed state of the general economy, for these farmers to liquidate large blocks of their as- sets in order to meet the immediate demands of the Secretary's deduction would’ be a very costly matter. Tt would probably produce case returns far below the stated "paper" value of their capital assets, Further, qiven the necessity of on-qoing financing mentioned above, the results of the deduction will doubtlessly include a tightening of the credit arrangements which these farmers must maintain. Aware of the Secretary of Agriculture's inten- tion to impose the deduction of fifty cent omer hundred- weight and of the 290a drain on farmers' cash flow which this deduction will cause, investors will doubt- lessly adjust their credit terms with farmers. Given the tight credit situa- tions which many dairy farmers already face, such an antici- patory adjustment in credit could have sweeping and precipi- tous consequences. Based on a careful consideration of the evidence which has been presented, this Court cannot accept the defendants’ con- tention that the likely harm which the plaintiffs face from the deduction requirement is limi- ted to a loss of income. This Court finds that the imposition of the fifty cents per hundredweight deduc- tion will have the likely effect of placing severe and immediate strains on Gairy farmers’ cash flow situations. The 291a Court further finds that the imposition of the deductions will have the likely effect of forcing dairy farmers to liquidate capital assets under forced and disadvantaqeous circumstances, The Court further’ finds that the imposition of the deduction will have the likely effect of causing creditors to tighten their credit arrange- ments with dairy farmers. From the evidence and from the above-stated facts, this Court finds that the imposition of this assessment will have the likely effect of forcina many dairy farmers Out of business, Fed [sic] R. Civ. P. 52. These are injuries which qo beyond those which will be compen- sated by the refund- ing of the deduction which the defendants seek to collect from the dairy farmers. They are of a sort 292a which may well be incalculable, and they are of a sort which will not be recompensated through awards of money dama- ges, even assuming that such awards are as a practical matter tical matter avail- able, Particularly in view of the very strong showing that the plaintiffs have made with respect to the merits of this controversy, they are of the sort which courts have found to be irreparable and warranting injunctive relief to maintain the status quo ante pendente Litum. Federal Leasing, Inc. v. Underwriters at Lloyd's, 650 F.2d 495 (4th ee 1981); Blackwelder Furniture Sey oy erIzy e at - 3 New York Pathological and X-Ray Labora- tories, Inc. v. Immi- gration and Naturali- zation Service, 523 Festa Fe taa €it. 1975); International Controls Corporation v. Vesco, 490 F.2d The defendants have made no specific response to “this portion of the January Order. Rather they contend that because, in their 293a 1334, 1344 (2d Cir. 1974); Semmes Motors, Inc. v. Ford Motor Company, 429 F.2d 1157, t05 (2G Cir. 1970); Amoco Oil Company v. Zarb, 402 F. Supp. 10071 (D.0.C. 1975)3 Assaf v. University of Texas System, 399 F. Supp. ER 1257 (S.D. TeX. 1975)+3 American Federation of Govern- ment Employees, Local 1858 v. Callaway, 398 F. Supp. 1/76, 194-95 (M.D. Alas. . 1975): Srennan Petroleum Products Co., Inc. v. Pasco Petroleum Co., Inc., 3/3 F. Supp. T312, 1316 (D. Ariz. 1974); Bucks County Cable TV, BnGe Vo United States, 299 F. Supp. 1325 (E.N. Penn. 1969). 558 F. Supp. at 1024, 1025-26 view, there is no possibility 294a that the plaintiffs will prevail on the merits, the balancing of the relevant factors now renders the plaintiffs' injury inconsequential. This Court dis- agrees with the defendants' assessment of the merits and with their calculation of the injury. Clearly, given the overwhelming case on the merits which the plaintiffs had established in the January litigation, they needed to show very little injury. The defendants appear to regard the show- ing made in January as having been min- imal. This Court believe [sic] that showing was quite strong. This Court also does not overlook the fact that the Department has con- ducted this rulemaking under the miscon- ception that they had no duty to consider impact, and in fact, have been manifestly 295a deficient in considering the potential impact of this deduction requirement. The defendants’ response has taken the Form of superficial, eonclusory Statements, marked by a failure to analyze impact. Further, this Court does not reaard the defendants' assertion that full review will be completed before there is a change in the status quo as a realistic assessment of the gravity or difficulty of this case. Finally, the Secretary has indicated that he intends to continue this deduc- tion until he receives substantial con- cessions of authority from the Congress. Mr. Ahalt concedes a bureaucratic program Once established, is quite difficult to remove. See Hearing of April 12-14, tr. 438 (Ahalt). Given the Secretary's 296a statements, this Court has no doubt that a ruling will for the Secretary would [sic] be reqarded as precedent for a continuation of this deduction beyond September. This Court cannot avoid the con- Clusion that to qive approval of the defendants’ action now will fundamentally alter the status quo. The plaintiffs made a substantial showing in the January hearina, and have augmented that showing in the hearing of April 12-14, In view of the defendants' Failure to rebut the plaintiffs' showina Of possibly irreparable injury; in view of the defendants' failure to adequately consider the impact of the program; and in view of the strength of the plain- tiffs' showing with respect to the merits in this litigation, this Court finds the 297a the balance of interest strongly favors issuance of an injunction. x INJURY TO THE DEFENDANTS The defendants claims [sic] that they will be injured if the collection of the deduction is enjoined or delayed in any way. This Court has considered these claims carefully, and finds that they are little more than expansions on the [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_1152%3A2. Public record. Not legal advice.