Appendix — Sunny Hill Farms Dairy Co. v. Butz

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OPINION OF THE COURT OF APPEALS

United States Court of- Appeals

FOR THE EIGHTH CIRCUIT er

No. 20,201

. Sunny Hill Farms Dairy Co., Inc., )

- Vv, ' United States Dis-

| . Ag _ 4 trict Court for the

Clifford Hardin, Secretary of | Eastern District of

" Agriculture, Paice *. Missouri.

Defendant-#ppellant. } _

ane [August 25, } 1971.]

Before Van OostgRHOUT, Senior Circuit, Judge, Heaney,

Cireuit J ge, and Hanson, District Judge.

Heavey, Circuit Judge. ,

The primary question raised on this appeal is the

validity of an amendment to the St. Louis, Missouri, Milk

Marketing Order. The amendment requires handlers with.

plants in three southern counties of the marketing “area

to pay producers an additional fifteen cents per hundred-

weight for milk. The District Court held that the differ-

ential was not a statutorily permissible one,

Plaintiff-Appellee, | Appeal from the

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The detailed facts are found in 1 the -various-administra-

tive hearings and in the decisien of the District Court.’

We restate only those i necessary to an orderly ex- .

position of the issues.

In May, 1963, various “atnendments to the St. Louis

. Marketing Order were proposed. Sunny Hill Farms Dairy —

Company, a regulated handler with a plant i in Cape Girar- -

deau, Missouri, proposed tliat six new counties be added

to the St. Louis marketing area.* Others proposed that .

a price differential of fwenty- six cents per hundredweight

would be necessary in some of the newly added counties

to align prices in those counties with nearby marketing

areas in Kentucky, Tennessee and Aapenaes, won 3 Hill

took no position ° on this 1 issue. .

_ The hearing examiner recomme ded addition of the

six counties but declined to recommend either a plus or

minus differential for handlers located in any of the new

counties. 29 Fed. Reg: 6630 (1964).

" Interested parties were given an ‘opportunity to‘file ex-

teptions to the proposed findings. None was filed by

Sunny Hill, and it was not notified that exceptions to the -

recommendations with respect - to the differential had been

- filed by. others.*

The Assistant Seeretary of Agiiculture, after reviewing

the record and the exceptions, modified the recommended

* decision with respect to differentials. bea concluded: °

1 Sunny Hill Farms Dairy ‘Coe v. Fredmen, 307 F.Supp.

392 (E. D. Mo. 1969). For an earlier proceeding involving Sunny

_ Hill, see United States v. Sunny Hill Farms Dairy a, 258

F.Supp. 94 (E.D. Mag, 1966).

2 The counties were Cape Girardeau, Bollinger, Jefferson, Perry,

St. F anal and. Ste. Genevieve.’

3 Sumy Hill made a point of this fact at the 1967 administra-.

‘ tive hearings. It contended that.the failure to notify it that excep-

tions had been filed to the examiner’s report was a violation of due

; poocees. This issue has not been raised on this .

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“ees price 15 cents per. hundredweight above the ~

St. Louis price would be more appropriate for the

Cape Girardeau area. Such a price appears necessary

to assure an adequate supply for plants in the area,

and also provide for better alignment of prices be-

' tween orders.

‘At the present time there are no whale located in —

the counties of Perry And Ste. Genevieve. If a ‘plant

_ were to be located-in these counties, the Class I price _

_ should be the same as at Cape Girardeau to assure

proper price alignment with marhete to the. south.’ ”

29 Fed. Reg. 15130, 15139. (1964). -

The. Assistant —ee gave these reasons ~_ his deci-|

- gion:

(1) Unless the existing oie: are ee a location _

differential of minus twenty-two cénts would be applicable

at the Sunny Hill rant.

(2) Producer milk should be priged in. ration to its

location value. Generally, in order to obtain an adequate

_supply of milk, markets south of the surplus milk produc-

tion area in Minnesota and Wisconsin require progres-

sively higher prices corresponding to.the increased cost of

_ transporting milk from such alternative supply areas.*

(3) Cape Girardeau is approximately 120 niles south of

_ St. Louis, and is located near other marketing areas ‘in

which a higher price for milk ‘is paid.

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(4) Sunny Hill had traditionally purchased most of its

milk from producers located in Cape Girardeau County at:

a price approximately fifteen cents per hundredweight

above the minimum prices received by producers.in the

county who supplied regulated handlers i in St. Louis and

the suburban St. Louis market.

*

_ 4 For a discussion of the general validity of this premise, see

Kessel, Economic Effects of Federal — of Milk Markets,

10 J. LAW & ECON. 51 (1967).

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The Assistant Secretary’ 8 order became effective on’

February | F 1965. 29 Fed. Reg. 18049.

Sunny Hill operated under the order for approximately ~

a*year. In January of 1966, it ‘filed a epetition with the

. Secretary of Agriculture, pursuant to 7 U.S.C. §608¢

(15)(A), alleging that it was being damaged because ‘it.

had to compete with other producers in St. Louis paying

_ the lower St. Louis price. It challenged the fifteen-cent

differentiah as being unlawful. because : age e

(1). The differential resulted in ‘the taking of Sunny

. Hill’ s property without due process of law.

(ay The differential constituted an economic trade bar-

rier which limited and discouraged Sunny Hill from selling

processed fluid milk in the city of St. Louis.

(3) The differential applied exclusively - to Sunny Hill,

contravening the Fifth Amendment to the United States

‘Constitution. © :

(4) The differential was arbitrary nat that it did not

tend to effectuate the purpose of the act to encourage a —

sufficient quantity of pure’and wholesome milk.

A hearing was held on these contentions. The kearing

examiner found that Sunny Hill had failed to demonXtrate

‘that the differential was not in accordance with law, and

he accordingly recommended that the petition be dismissed.

He found that:

- (1) The differential could be sustained sider as a loca-

tion adjustment. or as a-market differential customarily

applied, stating:

“There [was] specific statutory authority - for. the

differentials in question. Section 8c(5) of the act au-. *

c. thorizes the use classification of milk and the fixing

; of minimum class prices, which prices ‘shall be uni-

- form as to all handlers, subject only to adjustments

for (1) volume, market ‘and st

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& customarily applied by the handlers subject to such

- * order,. . . and (3) the. locations at whith delivery of

such milk ... . is.made to such handlers.’ 7 U.S.C.

§608¢(5) (A). “fae The Assistant Secretary found

that milk in the three-county area in question [Cape

_ Girardeau, Perry and Ste. Genevieve Counties] has

a higher value than milk in St. Louis, that the differ-

» ential would provide better alignment of prices -be- -

- . tween the St. Louis order and other orders in adjacent

' marketing areas, and that [Sunny Hill] customarily

paid fits] producers about 15 cents more the =

minimum prices applicable at St. Louis. we on)

(2) The fact that Sunny Hill’s profit liad declined ap-.

proximately forty percent during the year because of the

differential did not amount to a taking of its property “

without die process. ; aoe

i, (3) The fact that Siti Hill was the get handlér in

the three-county area did not violate due process, because

it was reasonable to divide the marketing area into two -

zones. Furthermore, the differential was by its terms ap-*

" plicable to any handlers entering the market in the future.

* (4) There was no trade barrier. within the meaning of

the statutory prohibition against such barriers. ;

(5) Sunny, Hill had not challenged the suliiciensy of the

-evidence in support. of the Secretary’s findings that the he

_ Tifferential ‘was necessary to ensure an a supply

of milk for the Cape Girardeau area.

Sunny Hill took exceptions - -to the examiner’s conclu-

sions and again requested an order which would eliminate

_ the fifteen-cent location differential. | ae

The Secretary denied the relief requested by: Sunny Hill A

‘ and dismissed the petition. In re Sunny Hill Farms Dairy, |

AMA: Docket.No. M: 62-2 (U.S. D.A., March 30, 1967).. |

Sunny Hill then commenced this action in the United *.

_ ‘States’ District Court. Motions for summary-.judgment |

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: were made*by Sunny Hill and the Secretary. The District

Court granted Sunny Hill’s motion on the grounds that

the fifteen-cent differential. was not permissible under the

@tatute. It held that the differential was not a ‘location —

- differential,” 3 ting : ~

“* * * Tn the present case, the- differential relied on

\ by the Secretary is.a location differential or-a market ‘—

differential based on location, and the differential can-:

not be sustained as to either.. The -reeord and the

— decision reflecting the facts of the reeord upon

ich it is based clearly-show that as a ‘differential

customarily applied by the-handlers’ it was not based .

on: the location, transpoftation « costs or nature of the

market, but on the use to which milk was previously

_ put by the handler, a prohibited basis for adjustment

to the ‘uniform price. The primary justification for

the Order is price alignment with neighboring mar-

kets. Stich, a differential is hot specifically authorized

by Section 8c(5)(B), but the creation of an orderly’

: market is an objective of the Act. There is no rational.

_. basis for singling out plaintiff as the only. handler

in the entire.marketing area to be a buffer between -

marketing areas when it is undisputed that 69% of

its sales are ig the St. Louis marketing —* > **

Sunny Hill Farms Dairy Company v. Freeman, 307 F.

Supp. 392, 400 (E.D. Mo. 1969). .

The Seeretary of Agricdituae appeals. He sii,

initially that the question of the validity of the differen- \

tial under the statute_was not properly raised in thie ad-_

ministrative proceedings leading to this appeal, and that

the question was improperly considered by the District :

_ Court and cannot now be considered by us.

We’ are not impressed with this. argument. While Sunny

Hill’s petition of January, 1966, may have been inartful

- —+- in challenging the validity of the. order on the grounds

‘that it was discriminatory and in violation of Sunny. Hill’s -

constitutional rights, it would require a highly technical

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_- reading of this record to reach the conclusion that Sunny .

Hill had not also raised the validity of the .Secretary’s:

regulations under the statute. Our review of the entire.

administrative record ‘convinces us that the question of

‘the validity of the Secretary’s action under the statute”

“was very much before, the Secretary in all administrative ©

- proceedings. Furthermore, this question was discussed at ©

length in each of the administrative decisions, including

_ the final deci ion’ of the Secretary.

It is true that Sunny Hill, tS DTnistrative. hina |

ings, did not challenge the sufficiency of the evidence justi-

fying the differential as a permissible one under the stat--

} ute; but Sunny Hill clearly challenged the statutory right

of the Secretary to. impose the differential for the reasons

advanced.

We turn then to the paren of. whether the fifteen-

- cent differential. was statutorily permissible. We helieve

that it was. It not only fits. withjn the literal definition

of a location adjustment permitted by the Act, but. was .

found by the Secretary to be necessary to-assure an ade-::

quate .supply of milk for the plants in the. area and‘to

| ‘provide for better alignment of prices between. orders.

No challenge was lodged as to the sufficiency of. fhe evi-

dence to support these findings.

The District Court relied on Zuber v. Allen, 396 ‘US. -

168 (1969), in finding the differential statutorily imper- *

missible. In Zuber, the Supreme Court held that a, nearby

differential payment to. farmers within a stated radius

of a designated market center was contrary to the provi-

‘sions of Section. 8e(5) (BY. The’ Supreme Court, declared

. that the differential was not a location differential for

the simple reason that it was riot dependent on the. loca-

- tion at which the delivery. of milk to a handler was “made,

but was rather dependent on the location of a producer’s:

- farm with reference to the primary market.

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stated that the diffgrential could diss be justified: if at,all,

- only asa ‘‘market differential customarily applied” ‘s nd

that it could be so justified only if it had as a purpose

providing compensation to. producers: for rendering an

economic .service. The Court held that the. nearby differ-. -

ential could not, be so justified. The Court pointed out that

- the Secretary had failed to,advance any economic justifica-

tion for. the nearby. differential. It further noted that the

differential was included‘in the original order as a recog-

nition of the favored position of nearby producers in the

fluid: market and as an inducement to them to approve the :

order. We-find nothing in Zuber v. Allen, supra, that re-

quires reversal of the case before us. ‘The differential

here is. based on the handler’s location rather than the.

oS producer” s and is not for the purpose of prea bene-

“fits to nearby producers..

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A recent decision of the Contt of Apoiele for’ the Dis-

trict of Columbia is more in point. Fairmont Foods Com-

pany v. Hardin, 442 F.2d 762 (D.C. Cir. 1971). In Fair-

mont, a location differential. was involved. There,’ as here, °

the Secre ry divided a marketing area into three zones. |

Handle fhe central ‘zone «were required to. pay pro-

_ ducers fifteen-cent differential, and handlers in the

western: zone were required to pay producers a forty-cent-

| differential. The. Secretary found that the differential was

necessary to ‘reflect: the cost of moving milk from the

eastern to the central and the Western .zones, and to align

' the prices in the central and western zones: with the

higher prices in the adjacent Colorado and Black Hills

-. marketing areas. On appeal, the. Court held that the differ.

ential could riot be justified under the statute as there ‘was -

“no support in the record for the Secretary’s finding that

| : : ‘higher prices were necessary to reflect the cost of moving

' milk from east to west. It pointed ont | that the record

showed that the basic movement of milk in the Nebraska

marketing area was from the west to the east. It added;

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are there is a slight deficit in the western zones: on.

occasion, due to the Coop’s desire to take advantage

of the higher Colorado prices, .that does not warrant

deviation from the uniform price paydble/y handlers,

which ‘the Act contemplates as the norm eave milk

= marketing orders.’? ~ ight cee af ‘eee

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the disent also found that at thea. no ‘support, in the

recoéd for the Secretary® s fingipg that the ‘higher’ prige

in, the central and western zones was neeessary to avoid-

serious disruption of the eastern Colorado marketing area. _

It noted that in handling this: problem through the Ne-

braska order, the Secretary had imposed the burden of

higher prices on all handlers ‘receiving milk within the

_ central and western zones ‘whether or not they intended

to market that milk in Colorado., The Court further noted

that very, little milk was ‘sold by Nebraska handlers in

- Colorado, and that, to’ the contrary, Colorado handlers

accounted for a substantial share, of milk marketing in

western Nebraska. ‘The Court concluded: by saying:

a gS “Assuming that intra-Order differentials may”

constitute ‘a proper means of dealing with dislocations

between western Nebraska’ and eastern . Colorado,:

_ there was insufficient need in this case for their ap-

plication. ieee : oe

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- Fairmont ean thus’ i, distinguished dicen. this -case. on —~ is

at least three grounds, First, the’ sufficiency | of. the evi- ..

. dence to support the Secretary’s findings was challenged

Ea in Fairmont but was not: challenged here. Second, there .is

* dittle evidence in this record to dispute the Secretary” Ss

finding -that the: order was necessary to maintain a suffi-.

— cient supply of milk in the Cape Girardeau area..On the .

contrary, the record indicates that Sunny Hill paid a

- premium to Cape ‘Girardeau producers. to obtain’ an ade-

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quit: cigely ‘ef ills Wedies i cats ean teas ind

that after the order was issued, it still paid approximately

fifteen cents per hundredweight to producers not covered 2

by the order to obtain an adequate supply of milk during *

some seasons of the year. Third, there is little evidence

to contradict the Secretary’s finding that the fifteen-cent —

differential was necessary, to align the Cape Girardeau

prices with those in Memphis. Indeed, the record shows

’ affirmatively that Sunny Hill sold approximately nineteen

percent of its milk in the Memphis marketing ‘area at a

price in excess of that established for thé Cape Girardeau

zqne. The president of Sunny Hill conceded that, were

the. differential removed, he would have an advantage in

the Memphis area: + se

110 ¢ © ihe Memphio.markel inay.be pat of © com-

petitive disadvantage, and that’s their problem. The

fact that I am put at a competitive disadvantage in®~

the Cape Girardeau market is, my and this

is what I afm trying to ‘work out. So w t or not

A Pi apsed ure Agh ~ageg advantage over the Mem-.

y 6 guctiem,. bet © te ust my

We find that the problem referred t¢ was one for the

Secretary of Agriculture, who-has the responsibi for

The Fairmont Coast stated tn 08 ;

“The Secretary argues, among other things thet the

’ differentials set by this Order are based on the ‘loca-

. tipne at which delivery . . is made to .. . handlers,’

and thus fit within fhe literal defjnition of a location

adjustment permitted by the Act, 7 U.S.C. 460Re(5)

oo. (A)(3). We cannot agree, however, that a mere differ-

ene in location is sufficient reason to require one

handler to pay higher prices than another governed |

’ hy the same Order. There must still be some relation

‘ between the price differential and econdémic benefit.’

Peirmont Foods Company v. Hardin, supra at (67, n. 23.

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. - —Alt—

_ We agree that a differential is-not a-location differential

within fhe meaning of the Act simply because the Secre-

tary calls it one. We also agree that the Secretary is not

free to establish a differential for every lovation .at which

_ milk is delivered to a handler. He ‘always has the addi-

tional burden of establishing that the differential is, in

| fact, based upon the hanidler’s location and that jt is re-

quired to accomplish the ‘broad’ purpéses of ‘the ‘Act. We

feel that the Secretary'has borne both of these burdens

* + heme? .” P

Senay Hill taleis two additional neuse: Grct, thet the’

location differential discriminated against Sunny Hill and, |

second, that it created an impermissible trade barrier.

The District Court found that the differential was un-

lawfully discriminatory because there was no rational

basis for it. The court said: : .

102 5 dies te up snquensd tute for aigpendling oxi i

and distinguishing plaintiff from all other regulated :

handlers in the St. Louis marketing area. * * *”’ .

Suuny Hil Farms Dairy Company v. Freeman, supra at

The egsénce of this argument has been met in the earlier . ~

' sections of this opinion. In our view, there was a reason--

able basis for distinguishing between handlers in Cape

(Hrardeau, Ste. Genevieve and Perry Counties, and han-

diers in fhe remaining markgting area. As we have pointed

out, the Secretary properly- found thgt the milk had ‘a

higher locafion value at Capé Girardeau than it did in

‘St. Louis. . ;

Because the Distriet Court ruled in favor of Sunny Hill

on other grounds, it was not required t6 discuss Sunny r

Hill's contention that the differential constituted an eco- -

& Zuber o. Alien, 6 US. 168 (196): United States t. Rock

Royal Co-ope erative, 307 U.S. 533 (1999); H. P. Hood & Somsw.

United States, 7 U.S. 388 (1939). :

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nomic trade brarrier prohibited by 7 U.S.C. $608¢(5) (G).

Since we have reversed the trial court on the other |

grounds, however, we’ must consider this contention.

Section 8¢(5) (G) provides:

‘‘No marketing agreement or order applicable to milk.

- and its products in any marketing area shall prohibit

or in any manner limit, in the case of products of

milk, the marketing in that area of any milk or prod-

uct thereof produced in any production area in the

United States. - = _ «

The erdbe promulgated by the Secretary obviously does

‘not prohibit Sunny Hill from marketing milk purchased

by it in the St. Louis area or, for that matter,. in the

‘Memphis. or Paducah areas. The order does make it less

. profitable for Sunny Hill to sell in the St. “Lonis market

than it would ‘be were Sunny Hill not required to pay its

_. producers the fifteen-cent differential. But the differen-

' tial is ‘specifically authorized by the Act and reasonable .

under the circumstancés ‘of the ‘ease. It thus cannot be

construed as establishing an illegal trade barrier. If all

* location differentials were to be so @enstrued, nothing

would be left of the Secretary’ s power to promulgate —_

mating orders.

In our “view, neither Lehigh Valley Coop: v. United

States, 370'US. 76 (1962), nor Polar Ice Cream & C. Co.

&

v. Andrews, 375 U. S. 3@1 (1964), indicate a contrary result, _

the former because it involved clearly unreasonable com-

=

pensatory pay ments and the latter’ because it involved ~ .

purchase and allocatign requirements ignposed upon, dis-

tributors by a state government.

In summary, we hold that on the basis of the record

presented to us, the zoning of the St. Louis milk market-

ing area was statutorily and constitutionally permissible.

The- judgment of the District Court granting summary ;

_ judgment to Sunny Hill is reversed. The case is remanded

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to the District Court with directions to ater summers =.

_ judgment in favor of the omety of Agricyitare..

A true copy.

Attést:

Clerk, U.S. Court of Appeals, Eighth Circuit.

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| JUDGMENT OF THE COURT OF APPEALS

United States Courtof Appeals

_ .FOR THE EIGHTH CIRCUIT

| an oe

No. 20,201 NX

September Term, 1970

Sunny Hill Farms Dairy Company, >

ine., Appelle Appeal from the

Sy Ppe’s | United States Dis-

vs. trict Court for tlie

Eastern District of

Clifford Warding, Secretary of Bh onauet

Agriculture, .

: Appellant.’ |

. This Cause came on to be heard on the record from

the United States District Court for the Eastern District

of Missouri and was argued by counedt.

On Consideration Whereof, it is naw here ordered and

adjudged by this Court that the judgment of the said Dis:

-trict Court, in this cause, granting summary judgment to

Sunny> Hill Farms: Dairy Company, . Inc., be and-it is

. hekeby, reversed.

And it is further ordered by ‘this Court that this cause

be and is-hereby remanded to the said District Court with

directions to enter summary judgment. in favor of the

Secretary of Agriculture in conformity with the opinion

of this Court this day filed herein. e.'*

August 25, 1971.-

ora

OPINION OF THE DISTRICT COURT

United States District Court -° as

- a ' Eastern District of Missouri .

Southeastern Division | a —

No. 8 67 € 19 io

Sunny Hill Farms Dairy’ Co., Inc., Plaintiff oe.

Orville Freeman, Secretary of Agriculture, Defendant _

ad

This matter is presenfly before the court on motions ’y

- both plaintiff and def nt for summary judgment pur-

' suant te Rule 56 of the Federal Rules of Civil Procedure. ss

This action instituted by the plaintiff, Sunny Hill Farms 4

Dairy Company, Inc., is a bill in equity to review the ad-

ministrative ruling by the United States Secretary of

“Agriculture dismissing a petition filed by the plaintiff

pursuant ‘to Section 8e(15)(A) of the Agricultural Mar-

keting Agreement Act, as amended (7 U.S.C. § 601 et seq.)

_Athe “‘Act’’). This review proceeding. was comnienced by |

the filing of a complaint pursuant to Section-8e(15) (B) &

of the Act. The Secretary has answered the complaint. and

"filed a certified copy of the ruling together with the record

upon which it is based. ° | +i

. Clifford Hardin, Secretary of Agriculture of the United

States has been substitgted as defendant. for the reason __

' that Orville Freeman-no longer holds that‘office and Clif-

— A-16 — - ‘ a \\

ford. Hardin has- siiatinilels him in office and i is now Sec-:

retary of Agriculture. | ;

The: administrative action which this winsindindl seeks

«to review was brought under Section pur agen the .

Act, wherein Sunny Hill challenged the legality of a loca-

tion differential contained in an amendment of February

2, 1965, to Federal Order Number 62 (‘<Order’’) regulat-

ing. the handling of milk in the marketing ‘area of St.

Louis, Missouri. The location differential provision is re- .

tained in Section 1062.52 of the Order ‘and Sunny Hill

is attacking that portion of the differential that places >

plus factor of fifteeh cents per wenrsiees on milk

purchased by Sunny Hill. Ke

adn 7 proceeding, the function of the court is to doter-

mine Whether the ruling, on the record, is in accordance

with the law. 7 U.S.C.A. § 608(c) (15) (B); United States

yv. Mills, 315 F.2d 828 (4th. Cir. 1963), cert. denied, Mills -

y. Freeman, 375 U.S. 819, 84 S.Ct. 57, 11 L.Ed.2d 54. A

trial de novo cannot be conducted; no new issues may be

injected into this review proceeding. Queensboro Farm

Products v. Wickard, 137 F.2d 969 (2nd Cir. 1943).

Prior to February 2, 1965, Sunny. Hill was not a regu-

lated handler under any Federal Marketing Order. Sunny

; Hill Farins Dairy Company, Inc., is .a Missouri corpora-

.. tion, with, ifs registered office at Cape Girardeau, Missouri.

: The county of Cape Girardeau was not then ‘included in

:- the St. Louis marketing area. In June, 1963, hearings were

held in St. Louis relating te proposed amendments to the

St: Louis marketing order, wherein, Cape Girardeau

County and other Missouri counties between Cape Gir-

ardeau County and the St. Louis marketing area would

be included in the St. Louis, marketing area.

In May, 1964, ti Depgftment of Agriculture iin a.

- recommended decision Th which the Missouri counties qs

proposed were included in the St. Louie‘4narketing area,

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” Tt fete recommended that handlers in ‘es newly - in:

cluded counties pay the same price for milk as the St.

_ Louis handlers, Exceptions were filed to the recommended.

| decision. On. November 5, 1964, the Department of Agri-

culture issued its final decision which modified the recom-

mended decision: The final decision provided for an addi- -

tional fifteen cents per hundredweight above the minimum —

price for milk for handlers in the counties of Cape Gir- .

ardeau, Perry and Ste. Genevieve. It further set up two

zones with mileage to be calculated from either St. Louis

or Cape Girardeau, depending on which one the plant’ was |

closer to. (7 .(.F.R. 1062.52). The Order became effective |

February 1, 1965.

On February 2, 1966, Sunny Hill filed its administrative

proceeding under Section 8(15) (A). In May, 1966, a -

‘hearing was held and ir January, 1967; a recommended —

decision was made dismissing the petition. On appeal to.

the Secretary of Agriculture, the ) Fecommended ee |

was sustained.

“A brief summary of the itt Marketing Order and cer-

tain pertinent facts of the case is in order. Under the

Order, milk is classified according to the use made of it

by milk companies or ‘‘handlers”. Class I milk is fluid

milk and Class IT milk is used to manufacture such prod-

ucts as clieese, butter and ice cream. The Order estab-

lishes a minimum price for each class of milk,

, The purpose and reasons for the milk marketing pro-

gram are fully. described in ‘Judge Frank’ ’s opinion in

Queensboro Farm.Products.v. Wickard, 137 F. 2d 969, 974

'. (2nd ir. 1943). See also United States v. Rock Royal

_ Cooperative, 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446,

and Lewes Dairy, Inc. v. Freeman, 401 F.2d 308 (3rd Cir.

1968). In Lewes, at pp. 311-312, the court summarizes:

‘«These established prices: reflect those which would

usually be paid for milk depending on use value. Be-

>

pig a —

_eause of*-the- price differential in an unregulated

market, whére the supply of fluid milk is greater than

_ the demands of the fluid milk market, chaotic con-

_ditions. often resulted among produters each seeking.

to benefit from the greater use value, and. therefore: 3

nM the higher price paid for milk used jn fluid:'form. One ~~

C . of the major purposes of the Agriculttral Marketing

: - Agreement Act was to create and maintain an orderly

market and, in so doing, assure the dairy farmer an

adequate minimun{ price for the milk he delivered to

the handlers regatdless of how the milk was later

used. To avoid the often destructive competition of +

’* the unregulated market, a method was. devised ©

whereby handlers are required to pay:at least a uni-

form’ ‘blend’ price to the producers regardless of the

« use to which it‘has been put. *.* * In promulgating -

a marketing order tlie~Secretary mist consider the. -

- sppply of milk upon jwhich the market,.* * * regu-

_ larly and normally. boptndd. *+* ¥ The regulatory -

re scheme was designed to affect those plants of handlers ©

_which have substantial’ business ‘in ‘the market area.

* * * The net result of the regulation is that handlers

pay for the milk according to its use value to them

while the producer’ farmers are protected from the

perilous competition for the fluid milk market by the.

automatic allocation to them of the blend price which

_apportions the prefitable fluid milk market and the

burdensome surplus market among all the ——

that serve the marketing area.”’

‘Sunny Hill operates one’ milk plant located in Cape om

Girardeau County, Missouri. Sunny Hill’s sales area in: *

cludes Cape Girardeau and Bollinger Counties (50%) ; St.

- Lonis (19%); Memphis, Tennessee (21%); Paduéah, Ken"

tucky (4%); and unregulated areas (6%). ‘Sales in* the’

existing St. Louis marketing area are, therefore, sixty-,.

nine percent of its total sales. Ninety’* percent. its sales" .

are Class I sales, that “C,. thé sale of fluid milk, ies °

* In the present case anny” Hill is the only untied.’

handler i in’ — Girardeau ae There are no regu- e-

+

ee ow tA. | »

_ lated handlers in Ste. Genévieve-and Perry Counties. The “

_ Order specifically recognizes that fact, hut states that

- -should-there be other regulated handlers in those counties,

/ “ _the same provisions of the Order as apply-to Sunny Hill

fee would be applicable$ Sunny Hill asserts tHat the Order —

is unlawfully discriminatory forthe reason that it is the

only handler in ‘the marketing area that is required to

- pay an additional fifteen cents per hundredweight above .

_ the .mmimum price. Sunny Hill further alleges that the

additional fifteen cents constitutes. an uilawful trade bar-

‘rier. Sunny. Hill seeks relief in the form of the removal

of the fifteen-cent location differential now: required. by

Section 1062.52(a) and the deletion of Cape Girardeau as

. a base for“zoning. | cor Xx |

f).76 ‘The statutory authority for location differentials “is

~ found in 7:U.S.C.A. § 608(c) (5) (A): io: ak

‘*(5) In the case of milk and its products, orders is- _

sued pursuant to this.section shall contain one ‘or more. _,,

- -~” of the following terms and conditions, and (except. -

. as provided in subsection (7) of .this section) no. -—

~~ others: eee Rete ee eh .

‘=a ‘““(A) Classifying milk -in ‘accordance with. the form

in which or the purpose for which it is used, and fix-

- ing, or providing cle oe for fixing, minimum prices .

. for each such use classification: which all handlers

shall pay, and the time when payments shall be mage,

for milk’ purchased from producers or associations of ~~ *

“producers. Such prices shall be. uniform as to all

handlers, subject only to adjustments fer (1) volume, ©

market,. and production differentials customarily ap-—

plied by the handlers subject to such order, (2) the

.gradé or quality of the milk purchased, and-(3) the

locations at which delivery of such milk, or any use _

. classification thereof, is made to such handlers.”’ _

_ The pertinent parts of the order in dispute are as fol-- -

~ lows: °

ie ho

\ ie

“— A-20 —

‘“§ 1062.52 Location Adjustments to. Handlers. (a).

for producer milk which is received at a pool plant

located more than 30 airline miles from the City Hall

in St. Louis, Missouri, which is classified as Class I

‘milk, and for other source milk for which a location

adjustment credit js applicable, the price specified is.

~ § 1062.54(a) shall,’ except as provided -in subpara-—

graphs (1), (2); and (3) of this ‘paragraph, be re-

duced*by 16 cents per hundredweight plus one cent

for each 10 miles or fraction’ thereof that such dis-

" tance exceeds 40. miles. ie

. “(1) At a pool plant located more than ‘30 airline

.’ mniles from the City Hall in St. Louis but located.

in Madison,. Monroe or St: Clair County or in.

Sugar Creek, Looking Glass, ‘St. Rose, Breese or.

Germantown. Township in Clinton County, all in

the State. of Iflinois, the price’.specified in.

§ 1062:51(a)- shall: be redueed 10 cents per hun- —

dredweight ; and

., £4(2) At i pool plant eenhodt in Cape Girardeau,

_Perry, or Ste.’ Genevieve County, Missouri, the

price specified in § 1062.51(a) shall be inereased

15 cents. per hundredweight; and

‘*(3) At-a pool plant outside the counties. of Cape

- @ ardeau, Perry or Ste. ‘Genevieve and more

han’ 30 airline miles from. the City Hall in.Cape

Girardeau but, nearer to the City .Hall. in ‘Cape

' Girardeau than to the City Hall in St. Louis; the’

price spécified in § 1062.51(a) *shall be reduced |.

one cent plus an additional one cent for each 10 ede,

miles or fraction ay ee t such distance ex-

ceeds 40 miles from the City Hall‘in Cape Girar-

_ deau. i Li Se eee

| ‘“(b) For purposes “of exten adjustment,

alT b

transfers between pool plants sh e assigned Class

_ I disposition at the transferee plant, in.excess of the’ -

- sum of 95 percent of the receipts at such plant from

-. producers and cdoperative associations pursuant to

* / 1062.12(d),. and the volume assigned as~Class-I to

receipts from other order. plants and ° unregulated.

country ap seid such assignment to - made first to

\

‘ a

—A2- —

» transferor: plants at : stich: “no Lecaticn: adjustment

’ eredit is applicable and then in sequence beginning

with the plant at which the a location sit ae

would. ‘apply:” oe ?

,The pertinent parts of the final dissin: reflecting the.

facts upon whieh it is based, on November 5, 1964, —_

ing to location differentials i is as ‘follows:

las, Location ‘Mil orentiele. « ee

(a) The St.. Louis order loéation differesitial. provi-

‘sions should be modified by providing for adjustments -

in the Class I and uniform prices of: (1) plus 15 cents

. per, hundredweight* at pool plants loeated in Cape

Girardeau, Perry, or-Ste. Genevieve County, Missoufi;

_and (2). minus 10 cents per hundredweight at pool

plants located more than 30 miles from the City Hall :

in St. Louis’ but located in-Madison, Monroe or St.

Clair County or in’ Sugar Creek, Lookiig Glass, St:

Rose, Breese or Germantown Townshtp-in~Cinton |.

Sounty, all in-the State of Illinois. ‘The City of Cape) ©

_ Girardeau should also be added as’a basing point. |

‘Under the St. Louis order Class I and unifo

_ prices are reduced 16 cents at plants in the 30-40 mi

_ gong and an, additional cent for.each mile. or fracti

thereof beyond: 40 miles from the City Hall in. ‘st

Louis. _ ‘aoe, oe (.

oe

“The expansion of: the marketing area ‘lilanialaa

herein would regulate city plants beyond 40 miles

i. from the City Hall in St. Louis. One. such plant is

— at Cape Girardeau, Missouri, approximately

: 120 miles south of St. Louis. Under the present order °.

-. a location differential of minus 22 cénts would be ap-

\ plicable at this: plant... Several witnesses’ proposed

: \ that. the order provide for a plus: differential ‘of 26¢ -

.cents at Cape Girardeau. ‘The proponents argued the®- .

the plus .differential would: be necessary for. price

alignment with markets in Kentueky,. Tennessee and

‘Arkangas. ~ ee —— ; , :

ae milk” should be priced in ‘cléithion to its”

location value, weceaenes ge in order ty obtain an ade-

~in. Fae

ee eee er pee

+, -milk production area (Minnesota and Wisconsin) re-

- .° Sqqire progressively ifkher prices for milk cocrespond=— ~~"

ing-to the increased. cost of{ransporting milk from

‘such alternative milk supply '

Markets. Milk produted on farms i

of Cape Girardeau (in Scott and M

f ae ties) is purchased by an unregulated

-. month preceding the time of the hearing.

The’ at Cape Girardeau purchases-most of

“his supply, of milk from pyoducers located in Ca

bi pply

and in the Suburban St. Louis market.

“‘The Recommended Decision provided for a price

+ _- at Cape Girardeau equal-to the f. ob. St. -Louis

| | priee. However, after a careful review of the record

in. light of the exceptions to the recommended déci-

sion, it is concluded .that a price 15 cents per hun-

a : dredweight above the St. Louis price would be more

_ #— — ‘appropggte.foP the Tape Girardeau area. Suck a ° |

: price at Cape Girardeau appears necessary to assure

‘ an-adequate supply for plants in the area and ‘also “EY

provide for better alignment of prices betwefn orders. * |

' “At the present time there are no planis located

in the counties of Perry and Ste. Genevieve. If a plar® af s

" were to be located in these sounties, the Clas I p- ©

be thessame as at Cape “Girardeau to a:

price alignment. with markets to the sou‘!

>... y al

——_t ‘ ’ »**

“The City of Cape Girardeau whould also be added

as a basing point for determining location differentials

before tion Sunny “Hill had paid producers about

15.cents per hundredweight above the minimum price.

b

Zuber v. Allen, 131 U.S.Xpp.D.C. 109, 2 F.2d 660, 672.

673 (1967) defines the permissible differentials as follows :

‘But the only ‘location’ differéntial permitted by the

Act is one for ‘the Jocation at which delivery’ of the

*** * * The Committee Reports in respect of the 1935

Aet dre explicit that ‘the market differential is a dif- .

feretitial which-is given to the producer to compensate

af to 0 counter ek ee en et Satan

‘?

"3. VL of to a country plant.’ *-* * (p.

“The purpose of establishing zone differentials is to

. achigve a high degree of uniformity in-prices to all

*

te

——-

handlers f. 0. b. the market for milk which is received °

from

- purpose, the

‘costs generally inc

ts dnd movin

note 39, p. 673.)

Undisputedly, it is the function of the Secretary in,

ipal consumption area. To-achieve this

differentials must closely reflect.

ih receiving milk at country

promulgating marketing orders to provide fot an orderly |

“market. In so‘doing, he may look at all aspects and condi-

tions of the market. ‘And absolute equality is not required

in order that the operation of the. order be ‘sustained.

United States v. Mills, 315 F.2d 828, 888 ‘(4th Cir. 1963) -

cert. denied, Mills v. Freeman, 375 U.S. 882, 84 S.Ct. 57,

11 L.Ed.2d 54 But the: powers of the Secretary are not

unlimited. Blair v.. Freeman,>423 U.S.App.D.C. 207, 370°

#24 229 (1966). In testing the Order here, consideration |

is given to tht narrow confinesof the Secretary’s power

and the determination of the validity of the Order in view

of the purported source of authority and the underlying _

rationale disclosed by the record. - ie

Plaintiff sells approximajely 69°% of its milk in the St.

. Louis marketing area. The remaining gales.are in southern -

markets and unregulatéd areas. Plaintiff enjoys a .price

advantage over handlers in the southern areas. In its

' brief, the Secretary argues that the disadvantage to plain-

tiff in the cost of milk in the St. Louis marketing area is

offset by the advaytage plaintiff receives in its sales of

_ milk in the «southern. markets. We are. not, impressed by

- this rationale.-The Order in this case does not and cannot

regulate sales ip marketing areas governed by other mar-

keting or@ers. If the handlers in southern markets are un-

- duly disadvantaged, the southern market orders are ap-

“propriaté vehicles for. correcting it. Each order’s function’ ”

is to regulate sales of milk within the marketing area

goyerned by it. Sales. within a marketing area of ‘milk -

prought in from, ottside the area can be*proyided- for: by

- ? "

producers at*plants located at various distances —

lants.’’ (Foot-

— A-35 —

the order governing the area where, the sales are made.

See Lehigh Valley Coop. v. United States, 370 U.S. 76, 82

S.Ct. 1168, 8 L.Ed.2d 345 (1962); Fitchett Bros. v. Free-

man, 241 F.Supp. 181 {S.D.N.Y. 1965).

Within the St. Louis markéting area plaintiff suffers &

15 cent per hundredweight didadvantage in the cost of its

milk. This location ‘differential is based upon the location

at which the delivery of the milk is made to the Sunny

‘ Hill plant as required by the terms of Section 8e(5)(A)

of the Act. But, as stated in Zuber, supra, 402 F.2d at

672: ‘Plainly, this exception was designed to recognize

‘differences in transportation costs only.’’ In this conrec- _

*

‘tion there is no evidence in the record to support the

differential. There is no evidence as to the transportation

costs of producers who deliver milk to Sunny Hill’s plant

or producers who deliver milk to other plants in the St.

Louis area. And nothing in the Order or the fal decision

‘of November 5th indicates that the differential was in

recognition of differénees in transportatidn costs. The 15

cent differential. cannot stand as a location differential.

If the diff rential is to be sustained, it is as a market

differential: The market differential is: given to a producer

to compensate him for the distance involved in delivering

his milk. Zuber, supra, at 673. The defendant contends

that the present differential can be sustained since Sunny.

Hill before being regulated, customarily paid producers —

more than the minimurh price. :

Prior to being regulated Sunny: Hill sought to obtain’

- 100% Class I usage, and bought only, milk from its pro-

. duicers to fill its requirements for, Class I _ Sunny

. Hill’s producers had to find other outlets for, their sur-

plus milk. For that reason, Sunny flill paid its producers

a premium on the milk it bought for Class I usage. Since

- becoming regulated, Sunny Hill buys all of its producers’

_ milk and there is no problem of surplus milk. Under the .

/ —A-26—

Order the. producers are guaranteed a minimum ‘price |

_ for their milk and are thus reafizing the full value of their

milk. The premium paid to producers did not give Sunny

Hill’s producers an*‘advantagé ever producers who sold to

regulated handlers. Similarly, removing the differential

under the Order\dbdes. not place Sunny Hill’s ‘producers

at a disadvantage. Rather, there would then be a-‘‘uni-

‘form. price’’ to all producers selliiig milk to regulated

handlers.

: The court. is aware that the Order is based i in- -part “upon

the finding that Sutiny Hill. had customarily paid its pro-_

* ducers a premium for milk, The evidence pertaining to

the premium ‘shows that it was based upon the ‘‘use’’

value of the milk to Sanny Hill—C"ass I usage. A pre-

mium based on the use value of milk is clearly not au-

thorized by the Act. In fact, the use value is a basis that

is prohibited by.the Act. The court-in Blair v. Freeman,

supra, 370 F.2d at 237, said: ‘*We hold that, irrespective

of motive, the Act forbids consideration of .the use to

which the milk of a particular producer or class of pro-

ducers is put, historically or potentially, in adjnsting the

uniform minimum price to be paid to such producers.

_ Thus, while Sunny Hill producers give up the. benefit

of a premium, they obtain the ‘benefit of a uniform or

_ blended price for all of their milk which may be —

‘. than-in the absence of regulation. :

Sunny Hill’s producers still deliver to the.same or in”

Cape Girardeau. The Secretary was authorized to award

a market differential to a prodacer ‘‘to compensate_him

. for delivering his milk to a city market instead of

country: plant,’’ H.R.Rep.No.1241, 74th Cong. 1st Sess.

10 (1935). The premium that had custémarily been paid _

by Sutiny Hi}l prior to regulation was. nét based upon

the nature of the market at which the producers delivered ,

‘their milk, but rather upon the use of the milk by Sunny

Hill in Class I utilizations. As a matter of fact, under the

n

; A fee

> . /

‘are being compensated while delivering to a country plant -

- instead of to a city market—the reverse of the stated ob-

ject of the market differential. The differential cannot be

ae

Order, produces in Cape Girardeau county delivering

milk to handlers located in St. Louis and suburban - St.

‘Louis are not receiving a differential to compensate them

for the added cost of moving the milk from more distant

points to a city market. Rather; Sunny Hill’s producers

sustained as a market differential.

Handlers i? the St. Louis metropolitan “area sell milk

in Cape Girardeau, Ste. Genevieve and Perry Counties.

It can be ‘assumed that the transportation’ costs are the

samie as from those counties to the metropolitan area,

thereby equalizing costs ‘of selling milk in mgtropolitan

- St. Louis and the ‘‘southern fringes”? of the St. Louis mar- *

keting area. The November 5th decision of the’ Secretary .

finds that the differential ‘‘appears necessary to assure

an adequate supply for plants in the drea * * * ” While

_ that fact is a proper one on which to base an onder, merely:

stating it does not establish it as-tfhe. There iF nothing in

the record to indicate that Sunny Hill could not-obtain. an

adequate supply of. milk ata price equal to fhat paid’ by

other regulated handlers in the St. Louis. marketing area,

particularly if the price paid to the producers i is the same

for all regulated handlers.

- The court ch that the 15-cent differential aienndtibe:

. tiovally discriminates against the plaintiff. The fact that

plaintiff is the only member of a potential class affegted

_ by. the provision does not ‘of itself justify a finding of

discrimination, although it should be noted that the Sec-

retary stated. that no other*handlers were expected to be-

come regulated. The findjng of uniawfu! discrimination

is based on the fact that there is no‘rational basis for the

differential. There is no reasoned basis for separating out

.and distinguishing plaintiff from all other regulated .

- handlers in ~~" ‘St. Louis ay area. The eee

° Pa > aad

5 . . - _ J “ .

. - =”

ie ae Sem . 3.9.08 SMA PINE. CR, DS Ga ey ae BS RO SE RNG

. of é : .

% : ° : e a ; .

s 2 - 7

? ‘ . .

? . °

+3 ee - core . >

° a ’

=

: — ‘ Py

¥ . oe a . ;

q ‘differential contained in St. Louis | Marketing Order

§ 1062.52(a) (2) is-wiauthorized and void. It is, therefore,

unnecessary to discuss plaintiff's contention. that it con-

_.. ‘stitutes an*economic trade barrier prohibited by 7 US.

—: C.A."S 608e(5) (G).

* Plaintiff also dttacked the validity of $1062. 52(a) (3)

of the Order. (establishing, Cape Girardeau Bs a base -

ZOnpy- This: contention appears to have been abandoned by

plaintiff inasmuch as plaintiff’ s memorandum. in support

~ of its motion for summary judgnient- makes no clear. ref-

erence to that section and plaintiff. repeatedly asks relief

only in the form of elimination of: the 15-cent differential.

In any event, plaintiff has failed to show a justiciable in-

e terest in adjustments at pool, plants outside the counties

.- of Cape Girardeau, Ste. Genevieve and Perry and ‘more "_

ae 30 miles from the-City Hall in Capé Girardeau, but

earer to such, city hall than to the City Hall in St. Louis

since no plants are presently. in existence or expected to

"come into existenve and, theréfore, no adjustments -alfect-

ing plainfiff in any way have been made or are expected --

to be made. No facts or allegations are urged in support

‘of the attack on the,zone provision save two hypothetical

situations which are not illustrative of § 1062. 52(a): (3).

With respect to § 1062.52(a) - (3) plaintiif has failed, j in \ its

burden of establishing invalidity.

_In enacting the 1935 amendments to the penance Ad-

justment Act of- 1933, Congress carefully attempted to.,

delineate’ and circumscribe the Sectetary’s powers in

order-to avoid the delegation problems noted in A. L. A,

.‘. ~ . Schechter Poultry Corp. v. United States, 295 U.S. 495, 55

a S.Ct. 837, 79 L. Ed. .1570°(1935). Congressional intent is

7 Bh. a clear that the. oily authorized departures from the uni-’

form price are enumerated i in Section 8¢(5) (B). Thus,-a ..

- differential varying the uniform price cannot be. upheld

“unless: it is one of the enumerated adjustments permitted

Pe. under that section. In oe the differential can be.

a \s mee Y

= gar ~weareme

le ARTI AAO ROD

sustained énly if the. Secretary relied upon it as- justifica-

tion when the order was promulgated. In the present case, -

the differential relied on ‘by the Secretary is a location

differential or a market differential based on location, and

’ the differential * cannot -be sustained as to either.. The

record and. the final: decision. reflecting the. facts of. the

_ record upon which it. is based. clearly show that as a

_ ‘‘differential customarily applied*by the handlers’ it was _

not based-on the location, transportation costs or nature

of the market, but on fhe use to which milk was pre-

«. viously put by the handler, a prohibited basis for adjust-.

ment. to the uniform price. The primary justification for

the Order.is price alignment with neighboring . markets.

Such a differential is not specifically ‘authorized by Sec-

. stion 8e(5) (B), but-the creation of an orderly market is

an objective of the Act: Thefe‘is no rational: basis for —

singling out plaintiff as the only ‘handler: in the entire:

marketing area to be a buffer between marketing areas

_ when Jit is undisputed that 69% of its sales are.in the ‘St.

Louis marketing area. In fact, aside from the physical

location of plaintiff’s plant on the-southern fringes of the

St. Louis marketing rea, theré is little to differentiate

plaintiff from the other regulated handlers in the St. Louis

marketing area in terms of market av ‘ailability and sup-

pliers. The differential is ‘not one of “She enumerated |

_ adjustnients - sariacnarace under. 8e(5) (B) to vary the’ uni-

form price.

Accordingly, defendant’s : motion for summary judgment

is denied and the plaintiff’ S motion for summary judgment -

‘will be sustained. The administrative ruling by the United

‘States Secretary of Agriculture is vane’ and set aside .

and the. matter is remanded to the Secretary of Agricul-.

° - ture for such: further proceedings as the law may require’

, and as are consistent with this opinion.

/s/ ROY W; HARPER - _ ;

United States District Judge =

“October 23, 1969 e Pd peer ae ae

a ee

| AO

APPENDIX D

‘Relevant Portions of The ay Marketing -

; "Agreement. Act of 1937 ;

7 U. S.C. §608e. Orders regulating handling of - commodity

—Issuance by. Seeretary

4 US.C. 608e(1)

The Secretary. of Agriculture: shall siiink to the

_ provisions of this section, issue, ‘and from time -to

time amend, orders applicable to processors, associa--

‘tions of producers, and others engaged in‘ the han- -

-dling of any agricultural commodity or product-

thereof specified in subsection (2) of this section.

Such persons are referred to in this chapter as ‘‘han-

_dilers.’’ Such orders shall regulate, in the. manner

hereinafter in-this section: provided, only suc han-

2 .dling of such agr jcultural commodity, or pgpduct.

thereof, as is in thé current of interstate or foreign

*.. commerce, or Which directly burdens, obstructs, or

affects, interstate o foreign. commerce in such com--

, " modity or app oe.

“TUSC, 608e (2)

.. Orders issued pursuant to. this- sgetion all be ap-

plicable -only- to (A). the following agriet tural com-

modities and the products thereof" (except canned or -

frozen grapefruit, cherries, apples, or cranberries, the

F products of naval stores, ahd the products of honey- ar

bees), or to any regional, or market classification. |

any such commodity or product: Milk .

a. . * * £ #£ #© & ©:

.TUSC. 608e(5)

, . In the case of. milk me its products, session fan -

pursuant to this section shall contain one or more of.

- the following térms and conditions, and (except as

; ees: in subsection (7)_of this: section) 1 no others:

JS

—-A-31- —.

(A) Classifying milk in accor dance with the form in

which or the purpose for which it is used, and fixing,

or providing a method for fixing, minimum. “prices —

for each such use. classification ‘which all handlers

‘shall pay, and the time when payments shall be made,

'.for milk. purchased from producers or’ associations

_of producers. Such prices shall be uniform as to all

handlers,’ subject’only to adjustments: for (1) volume,

market, and production di‘ferentials customarily ap-

| plied’ by: the handlers subject -to such order, (2). the

grade or quality of the milk purchased, and (3) the

. locations at which delivery of such milk, or any use

of classification thereof, is made to such handlers.

(B) Providing: —~~ :

(i) for -the payment: to all, scien and associa-

7 _ tions of producers delivering milk to the same han-

dler of uniform price’ for all milk delivered by them:.

Provided, That, except in the case of orders covering

milk products only, such. provision is approved or

- favored by. at least three-fourths’ of the producers

who, during a representative period. etermined » by .

the Secretary of Agricultureg have been. engaged ins -

the production . for imarket.of milk coveréd in such

ordér .or by producers who, during ‘such representa- -

tive period, have produced at least’ three-fourths of

the volume of such milk produced for market during

such period; -the approval’ required hereunder shall

be separate and apart from any other. approval or -

approval provided for by this section; or

- (ii) “for. the payment’ to. all producers and associa-

tions of ‘prodycers délivering milk to all handlers of - .

uniform prices for all milk -so’ delivered, irrespective -

of the uses, made of such milk by’ the individual. han- ly

dler to whom it is delivered; es

‘subject, in either case,’ only to sjasiicaie for (a)

volume, market, an@- ‘pfoduction ‘differentials cus- °.

tomarily applied by the handlers subject to such

order, (b) the grade or quality of the milk delivered, aie

(ce) the loeations at which -delivery of such milk is

made, _ Bog. a further —— -equithply to’ ap-

!

a) eaeegtey Set iar Suis aaa ee ee een als wate MAR res cere les ST PP ESS LA NRE

* @

Pe sere: Gelae se rais Beam he

= AS2 PEAR OME ed <7:

portion the total value of the milk pur¢hased by any’ _

handler, or by all handlers, among. producers and

+ associations of producers, on the basis of their mar-

i U. s, C.. 6086(15)

(A) “Any handler subject to an ie may. file a

- written’ petition with the, Secrftary of Agriculture,

. stating that any such order or any provision ‘of any.

ketings of - milk during a representative sie of

time. a oe. Be ; ;

* :

(C) In order AG pobomailink. the. purposes set? forth

: in. paragraphs (A) and- (B) ‘of this subsection, pro-'

viding a method for making adjustments in payments,

. as among handlers (including producers who aré also.

-- handlers), tolthe. end that the total sums paid by each

handler shall equal. the value of the. milk purchased .~

by him af the prices fixed in accordance with pare, |

. — (A) of this subsection.

Oo

ae i 2 2 © © 9 DY

(G) No matketing agreement or order epi lieable fo

prohibit or i any: manner limit, in the case of the

products of milk; the’ marketing gp the area of any

milk or’ product thereof produce

area ‘in the United States.

*° .% * * eo. -. a

in any production

such order or any obligation §posed in connection

thérewith is not in wecordante’ with law and ‘praying ,

_milk and. its’ preduects in any marketing | area’ shall -

for a modification thereof or’ to be exempted there:

. from. He shall. thereppon be given ali opportunity ~

for a hearing upon such petition, in accordance with

regulations made by the Secretary of Agriculture, ©

_ with the approval of the President. After such heay-.

ing, the Secretary shall make ‘a ruling upon the’prayer ~

of such petition which oar be fal, if in accordance

with law.

_(B) The Dintrict Courts of the ‘Guitea: States in

any distriet’ in which such handler is an inhabitant, or _

has his principal place of. business, are vested with

> jurisdiction in equity to review, such ruling, provided . ©

a Gusaai in mic for that purpose is filed within eT

<a

en dcaee

_ from the date of the joes of such roling. Bary:

- + 4ee of process in such protgedings ‘may be had upon”

the Secretary by delivering to him a copy of the bill . —

of: complaint. Tf the court determines that.such rul-.

' ing. is not in accordance with law, it shall remand

such proceedings to. the’ Secretary with diréctions

- either (1) to .make such Nuling as the court shall de-

termine to. be in accordance th law, or {2) to take”

such further proceedings aly in its opinion, the law -

_ requires. The pendency “of proceedings instituted

-. pursuant to this subsection °(15) shall not impede,

hinder, or delay. the ai States or the Secretary

_of Agriculture from obtaining relief pursuant’to sec-

tion, 608a(6) of this. title.’ Any proceedings brought

pursuant to Section 608a(6)° of this title (except

_ where brought by way of cowtiter¢laim in proceedings +

instituted pursuant to this stibsectioh) shall abate .. -

' . whenever a final decree has been rendered.in ‘proceed:

- ‘ings between the same parties, and covering the same

- subjéct ‘ matter,,. instituted ‘pursuant to this: subsection

(15). | :

3 or =o aig ee

-.+. . APPENDIX E ;

Federal Milk: Marketing Order No. 62;

- OF. oats, et seq.

§ 1062. 3a Location adjustments to handlers.

(a) For: ‘producer milk which js received at a pool plant

located more than 30 airline miles from the City ‘Hall in

-St. Louis, Missouri, which is classified as Class I milk, and

‘for other source milk for which a_location- adjustment.

eredit is applicable, the price specified in § 1062.51 (a) .

- shall, except as provided in subparagraphs (1), (2), and

(3) of this paragraph, be reduced by 16 cents per hundred-

weight plus one cent for each 10 miles or fraction thereof

that such distance, exceeds 40 miles.

(1) At.a pool plant -located more than 30 airline miles ©

from the City Hall in St. Louis but located in Madison,

-. Monroe or St. Glair ‘County or in Sugar Creek, Looking

Glass, St. Rose, Breese or Germantown Township i in Clin-

‘ton County, all in the State of Illinois, the price specified

in § 1062. d1(a) shall be reduced 10 cents pet hundred-

weight; and .

(2) At a pool plant locatéd in Cape Cieaiieen: Perry :

or Ste. Genevieve County, Missouri, the price specified in’

§ 1062. 51(a) shall be. increased 15 cents: 6 ee:

t; pel

(3) At a>peol aliat outside the counties. of Cape Girar-

- deau, Perry or Ste Genevieve and more than 30 airline

miles from the City-Hall in Cape Girardeau but nearer

to thé City Hall in Cape Girardeau tlian to the City Hall

in St. Louis, the price specified in § 1062.51(a) shall be

reduced one cent plus an additional. one cent for each 10

' miles or fraction thereof that such distance exceeds 40

miles from the City Hall in Cape Girardeau.