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MILK INDUS. FOUND. v. GLICKMAN

December 11, 1996

MILK INDUSTRY FOUNDATION, Plaintiff,
v.
DANIEL R. GLICKMAN, Secretary, United States Department of Agriculture, Defendant, NORTHEAST DAIRY COMPACT COMMISSION, Defendant-intervenor



The opinion of the court was delivered by: FRIEDMAN

 In creating the Union, the Framers acknowledged the inherent right of the states to make compacts and agreements with each other subject only to the limitation that Congress must consent to such compacts: "No State shall, without the Consent of Congress . . . enter into any Agreement or Compact with another State. . . ." U.S. Const., Art. I, sec. 10, cl. 3. A compact accorded congressional consent "is more than a supple device for dealing with interests confined within a region. . . . It . . . also [can be] a means of safeguarding the national interest. . . ." West Virginia ex rel. Dyer v. Sims, 341 U.S. 22, 27, 95 L. Ed. 713, 71 S. Ct. 557 (1951). "Once given, 'congressional consent transforms an interstate compact . . . into a law of the United States.'" Texas v. New Mexico, 462 U.S. 554, 564, 77 L. Ed. 2d 1, 103 S. Ct. 2558 (1983) (quoting Cuyler v. Adams, 449 U.S. 433, 438, 66 L. Ed. 2d 641, 101 S. Ct. 703 (1981)).

 [ILLEGIBLE SLIP OP. PAGE 2]

 I. BACKGROUND

 In a response to the disruption of agriculture product pricing during the Great Depression that had an injurious effect on farmers, including a severe drop in milk prices, Congress passed the Agricultural Marketing Agreement Act ("AMAA") in 1937. 7 U.S.C. § 601 et seq. See Cumberland Farms, Inc. v. Lyng, 1989 U.S. Dist. LEXIS 5342, Civ. No. 88-2406 (CSF), 1989 WL 52697 (D.N.J. May 15, 1989). By this Act, Congress, inter alia, initiated the federal program for the regulation of minimum milk prices that milk processors must pay to dairy farmers, and it delegated to the Secretary of Agriculture the authority to set minimum milk prices nationwide. These national prices are to reflect

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

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

 In 1988, Vermont began considering the possibility of regulating milk prices beyond its own state borders by forming an interstate compact to be comprised of the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. By 1993, all six of the New England state legislatures had approved the formation of the Northeast Interstate Dairy Compact, and all six of the states' governors had signed resolutions supporting it. The Compact states agreed to establish a Commission to administer the Compact. The Commission was to consist of three to five persons from each state, with at least one person from each state being a dairy producer and another a consumer representative. Compact Art. III, § 4. *fn3"

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

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

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

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

 Section 147 of FAIRA provides:

 
Congress hereby consents to the Northeast Interstate Dairy Compact entered into among the States of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont as specified in section 1(b) Senate Joint Resolution 28 of the 104th Congress, as placed on the calendar of the Senate, subject to the following conditions:
 
(1) FINDING OF COMPELLING PUBLIC INTEREST. -- Based upon a finding by the Secretary [of Agriculture] of a compelling interest in the Compact region, the Secretary may grant the States that have ratified the Northeast Interstate Dairy Compact, as of the date of enactment of this title, the authority to implement the Northeast Interstate Dairy Compact.

 FAIRA, Pub. L. No. 104-127, § 147, 110 Stat. 888, 919 (1996). See Pl.'s Mot. for Prelim. Injunction, Ex. 22. *fn4"

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

 On August 28, 1996, the Secretary of Agriculture published his finding of compelling public interest in the Federal Register, which read in its entirety:

 
Whereas the State legislatures in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont have approved the Northeast Interstate Dairy Compact, the governor of each Compact State has signed a resolution supporting the Compact, the Congress has consented to the Compact in the Federal Agriculture Improvement and Reform (FAIR) Act of 1996, and approximately ninety-five percent of the comments the Department of Agriculture received regarding the Compact supported its implementation, I hereby find that a compelling public interest in the Compact region exists and authorize the Compact States to implement the Northeast Interstate Dairy Compact. This finding and authorization shall be effective immediately and shall be published in the Federal Register.

 61 FED. REG. 44, 290 (1996); Pl.'s Mot. for Prelim. Injunction, Ex. 24.

 At the same time, the Secretary of Agriculture issued a press statement, also published in the Federal Register, which included the following:

 
While it is unclear what specific actions the Compact Commission will take to implement the Compact, I am concerned about the potential effects of the Compact in several respects. I intend therefore, to monitor closely its implementation. I also encourage Congress to exercise its oversight function and monitor the implementation of the Compact. If my expectations are not met, or if conditions otherwise warrant, I will revoke this authorization to implement the Compact.
 
I expect that the Compact Commission will implement the Compact in a way that does not burden other regions of the country, consistent with the provisions of the FAIR Act and the Compact. I would be greatly concerned if the Commission restricts in any way the ability of producers to ship milk into the Compact region. I will monitor whether the Compact has any adverse effects on the income of dairy producers outside the Compact region as well as the extent to which the Commission utilizes its authority to impose production controls to minimize the effect of the Compact on other dairy producing regions. I also expect the Commission to ensure that its actions are flexible and responsive to changing supply, demand and price conditions in milk markets.
 
Perhaps most significantly, I am deeply concerned about and will closely monitor the effect of the Compact on consumers, especially low-income families, within the Compact region. I expect that the Commission will pay close attention to and monitor the effects of its decisions on consumers before and after it takes any action. I also expect the Commission and Compact States to provide assistance to offset any increased burden on low-income families in the Compact region. I am also concerned about the effect of the Compact on the Department of Agriculture's nutrition programs, and I expect the Commission to exercise its authority to reimburse participants in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) . . . .
 
The Compact is a transitional milk marketing system for the region and will expire when a new nationwide Federal milk marketing order structure is implemented. I believe the approach outlined in this statement offers the best opportunity to strengthen the dairy industry in the Compact region during the ...

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