Case Title: VITA-RICH DAIRY INC v DEPT OF

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State: montana

Court: Montana Supreme Court

Date: 1976-08-16T00:00:00Z

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No. 13186 I N T H E SUPREME C O U R T O F T H E STATE O F M O N T A N A 19 7 6 VITA-RICH DAIRY, INC., a corporation, and BEATRICE F O O D S C O M P A N Y , a corporation, P e t i t i o n e r s and Appellants, DEPARTMENT O F BUSINESS REGULATION O F THE STATE O F M O N T A N A , and BOARD O F MILK C O N T R O L O F T H E STATE O F M O N T A N A , a d i v i s i o n of t h e Department of Business Regulation, Respondents and Respondents. Appeal from: D i s t r i c t Court of t h e F i r s t J u d i c i a l D i s t r i c t , Honorable Peter G. Meloy, Judge presiding. Counsel of Record: For Appellants : Burton and Coder, Great F a l l s , Montana Howard C. Burton argued, Great F a l l s , Montana For Respondents: Harrison, Loendorf and Poston, Helena, Montana James T. Harrison, Jr. argued, Helena, Montana - - - Submitted: June 2, 1976 Decided: G f 6 1976 Filed : &U i 6 197p M r . J u s t i c e John Conway Harrison delivered t h e Opinion of t h e Court. This is an appeal from t h e d e n i a l of a p e t i t i o n f o r injunctive r e l i e f , j u d i c i a l review, and declaratory judgment by t h e d i s t r i c t c o u r t , Lewis & Clark County. Appellants, Vita-Rich Dairy, Inc., Beatrice Foods Co., Clover Leaf Jersey Dairy, Inc., and James R. Hansen d/b/a Hansen's A l l S t a r Dairy, were p e t i t i o n e r s i n t h e d i s t r i c t court. They o b j e c t t o c e r t a i n paragraphs of r u l e s adopted by the Board of Milk Control (Board), a d i v i s i o n of t h e Department of Business Regulation of t h e S t a t e of Montana. Appellants make t h r e e s p e c i f i c objections: (1) They a l l e g e t h e Board d i d not have t h e power t o r e g u l a t e t h e t r a n s p o r t a t i o n of f l u i d milk p r i o r t o an amendment t o s e c t i o n 27-405, R.C.M. 1947, e f f e c t i v e April 7 , 1975, and since t h e r u l e s were adopted and promulgated p r i o r t o t h a t d a t e , t h e e n t i r e administrative process must be redone. ( 2 ) The Milk Control Board by regulating t h e manner of termination of a milk producer's c o n t r a c t destroyed t h e mutuality of c o n t r a c t between processors and producers and thereby deprived them of t h e i r freedom of contract. Appellants a l s o argue t h a t t h e f a c t t h e procedure f o r a producer t o terminate h i s c o n t r a c t with a processor is d i f f e r e n t from t h e procedure f o r a processor t o terminate h i s c o n t r a c t with a producer c o n s t i t u t e s a v i o l a t i o n of t h e equal protection clause. ( 3 ) The r u l e s which r e q u i r e a processor t o pay f o r a l l milk received from a producer amount t o an e x t r a formula milk p r i c e increase, w e r e not promulgated with t h e proper adminis- t r a t i v e procedure. This appeal i s from an administrative decision. A c o u r t reviewing an administrative decision must consider t h r e e basic p r i n c i p l e s i n determining what the scope of t h a t review should be : F i r s t , The Court recognizes t h a t limited j u d i c i a l review strengthens t h e a d m i n i s t r a t i v e process. Limited review encourages t h e f u l l and complete presentation of evidence t o t h e agency by t h e p a r t i c i p a n t s i n t h e a d m i n i s t r a t i v e process by penalizing those who attempt t o add new evidence o r new l i n e s of argument a t t h e j u d i c i a l review l e v e l . A de novo review encourages t h e p a r t i c i p a n t s t o save t h e i r evidence u n t i l it r e a l l y counts and present it f i r s t t o t h e reviewing c o u r t r a t h e r than t o t h e agency which has t h e knowledge and experience i n t h e f i e l d it r e g u l a t e s . The r e s u l t i s t h a t t h e agency which has t h e knowledge and experience i n i t s substantive f i e l d does n o t hear a l l t h e evidence, making it d i f f i c u l t t o make a proper decision. I t a l s o r e s u l t s i n t h e decision being made by a reviewing c o u r t which does n o t have t h e s p e c i a l i z e d knowledge o r experience i n t h e a r e a . Appellants recognize t h i s i n t h e i r b r i e f , when they p o i n t o u t : "Proceedings before t h e Board of Milk Control might, t o t h e casual observer, appear t o s t a r t i n t h e middle and produce only vague testimony. This r e s u l t s from t h e f a c t t h a t t h e members of t h e Board and nearly a l l persons appearing be- f o r e t h e Board a r e thoroughly knowledgeable concerning t h e operation of t h e milk industry. - I n consequence, t h e b a s i c s a r e skipped s i n c e it is assumed t h a t everyone involved i s aware of them. Some members of t h e Court may not be so knowledgeable concerning t h e operation of t h e milk industry." (Emphasis supplied.) 4 Davis ~ d m i n i s t r a t i v e Law, § 28.21 p o i n t s o u t : " * * * Experience has now proved t h a t j u d i c i a l review impairs an a d m i n i s t r a t i v e program only when t h e review involves undue s u b s t i t u t i o n of j u d i c i a l f o r a d m i n i s t r a t i v e judgment on prob- lems within t h e agency's s p e c i a l competence." Second. J u d i c i a l economy r e q u i r e s t h a t t h e various functions involved i n t h e a d m i n i s t r a t i v e process must be divided on t h e b a s i s of comparative a b i l i t i e s and q u a l i f i c a t i o n s of each body. Courts a r e s p e c i a l i s t s i n c o n s t i t u t i o n a l i s s u e s , stat- utory i n t e r p r e t a t i o n , t h e requirements of a f a i r hearing, and t h e determination t h a t a finding is supported by s u b s t a n t i a l evidence. The agency is a s p e c i a l i s t i n t h e substantive matter t h a t t h e l e g i s l a t u r e delegated t o it t o r e g u l a t e . Third. The agency's a c t i o n s need a balancing check. In t h e absence of a body w i t h i n t h e agency which is separated from t h e a c t u a l d e c i s i o n and i n which a l l p a r t i e s have confidence, a limited j u d i c i a l inquiry t o see ( a ) t h a t a f a i r procedure w a s used, (b) t h a t questions of law were properly decided and, ( c ) t h a t t h e decision i s supported by s u b s t a n t i a l evidence, is neces- sary. It i s t h e s e p r i n c i p l e s which u n d e r l i e t h e Montana Admin- i s t r a t i v e Procedure Act, s e c t i o n 82-4216, R.C.M. 1947, providing f o r j u d i c i a l review of contested cases. However, t h i s s e c t i o n d i d not narrow t h e scope of review i f t h e o r i g i n a l enacting stat- u t e which created t h e agency provided f o r broader review. Section 82-4216(1) provides i n p e r t i n e n t p a r t : "This s e c t i o n does not l i m i t u t i l i z a t i o n of o r t h e scope of j u d i c i a l review a v a i l a b l e under o t h e r means of review, r e d r e s s , r e l i e f , o r t r i a l de novo provided by s t a t u t e . " The comments t o t h e 1961 Uniform Law Commissioners' Revised Model S t a t e Administrative Procedure Act on Section 1 5 ( a ) [ J u d i c i a l Review of Contested Cases.] which i s i d e n t i c a l t o s e c t i o n 82- 4 2 1 6 (1) , R.C.M. 1947, s t a t e : "An important question t h a t a r i s e s under sub- s e c t i o n (a) i s whether o r not t h e review pro- v i s i o n s should be made exclusive and a l l o t h e r review provisions on t h e s t a t u t e books should be repealed. Each s t a t e w i l l have t o d e a l with t h i s matter a s t h e l o c a l circumstances d i c t a t e . O n t h e one hand, i f t h e r e i s but one mode and scope of review, t h e s t a t e procedural s t r u c t u r e is g r e a t l y simplified. O n t h e o t h e r hand, l o c a l considerations, including p r a c t i c a l considerations connected with obtaining adoption of t h e Model Act, may i n d i c a t e o r even r e q u i r e t h e r e t e n t i o n , a t l e a s t f o r t h e moment, of pre- e x i s t i n g methods of j u d i c i a l review." A t t h e time of enactment t h e Montana l e g i s l a t u r e l e f t t h e pre- e x i s t i n g j u d i c i a l review s t a t u t e s i n t a c t . However, t h e Milk Control Board's review provision, s e c t i o n 27-428, R.C.M. 1947, was repealed e f f e c t i v e J u l y 1, 1975. This appeal was taken p r i o r t o t h a t t i m e , t h e r e f o r e s e c t i o n 27-428 a p p l i e s t o t h i s c a s e , allowing f o r a broader scope of j u d i c i a l review. The language of s e c t i o n 27-428, R.C.M. 1947, provides t h e procedure f o r an appeal t o t h e d i s t r i c t court. By inference, t h e s e c t i o n allows t h e d i s t r i c t c o u r t a broader scope of review. The Mon- tana Administrative Procedure Act l i m i t s review t o t h e record and allows a d d i t i o n a l evidence only where need i s shown t o t h e c o u r t and then allows t h a t evidence t o be taken only before t h e agency. The Milk Board review provisions of s e c t i o n 27-428, R.C.M. 1947, allow evidence t o be presented t o t h e c o u r t . I n t h i s case, however, no a d d i t i o n a l evidence was taken before t h e c o u r t . The e f f e c t , f o r t h i s case, is t h a t t h e scope of review is limited t o t h e record, no o t h e r evidence having been offered. Clearly, within t h e scope of j u d i c i a l review is appel- l a n t s ' f i r s t contention t h a t t h e Board had no power t o r e g u l a t e t h e hauling r a t e s charged producers by t h e processors. This is a matter of s t a t u t o r y i n t e r p r e t a t i o n . The t r a n s c r i p t of t h e hearing held September 1 0 , 1974, before t h e Milk Control Board explains by testimony t h e reason t h e Board was involved i n t h e r e g u l a t i o n of hauling r a t e s . I n t h e middle 1960's "some of t h e producers g o t t h e idea t h a t possibly each t i m e t h e Board granted t h e producers an increase, a corresponding r a i s e i n t h e hauling r a t e s ensued * * *." The processor charges t h e producer for hauling t h e producer's milk t o t h e p r o c e s s o r ' s p l a n t ; t h i s charge is o f f s e t a g a i n s t t h e amount t h e processor pays t h e producer f o r h i s milk; and, i f each p r i c e i n c r e a s e granted t o t h e producer i s matched by an increase i n t h e amount o f f s e t by t h e processor f o r hauling, t h e n e t e f f e c t would be t h a t t h e producer would g e t no i n c r e a s e and t h e Board would be powerless t o set t h e p r i c e paid t o producers f o r t h e i r milk. The Board i n its next p r i c e o r d e r (#721, e f f e c t i v e May 1, 1972) e s t a b l i s h e d t h i s presumption: "Any s u b s t a n t i a l o r s i g n i f i c a n t r a i s i n g of t h e r a t e s charged producers f o r hauling t h e i r milk from farm-to-plant a f t e r t h e e f f e c t i v e d a t e of t h i s o f f i c i a l o r d e r and without good cause shown, w i l l be presumed t o be a d i l u t i o n of t h e p r i c e t o be paid s a i d producers f o r t h e i r C l a s s I milk, and a v i o l a t i o n of t h i s o f f i c i a l o r d e r . " Appellants argue t h i s o r d e r and a l l subsequent o r d e r s , including t h e one b e f o r e t h e Court which e s t a b l i s h e s a s t a t e w i d e uniform method f o r determining hauling rates, exceed t h e Board's power. The s e c t i o n of t h e Milk Control A c t which enumerates t h e Board's g e n e r a l powers is s e c t i o n 27-405, R.C.M. 1947, which p r i o r t o amendment e f f e c t i v e A p r i l 7 , 1975, provided: "The Board i s hereby v e s t e d w i t h t h e powers, and it s h a l l be its duty t o s u p e r v i s e , r e g u l a t e and c o n t r o l t h e milk i n d u s t r y of t h e s t a t e of Montana, including t h e production, t r a n s p o r t a - t i o n , processing, s t o r a g e , d i s t r i b u t i o n and s a l e of milk i n t h e s t a t e of Montana f o r con- sumption w i t h i n t h e s t a t e * * *." The amendment, Laws of 1975, Chap. 267, e f f e c t i v e A p r i l 7 , 1975 is e n t i t l e d : "AN A C T CLARIFYING T H E AUTHORITY O F THE DEPARTMENT O F BUSINESS REGULATION O V E R MILK TRANSPORTATION RATES; AMENDING SECTION 27-405, R.C.M. 1947; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE." This amendment added t h i s c l a u s e a f t e r t h e word " t r a n s p o r t a t i o n " : " * * * including t r a n s p o r t a t i o n r a t e s which d i s t r i b u t o r s , c o n t r a c t h a u l e r s , and o t h e r s charge producers * * *." Standing a l o n e t h e s t a t u t e , even i n its pre-amendment form, i s c l e a r . The Board has t h e power t o " s u p e r v i s e , r e g u l a t e and c o n t r o l t h e milk i n d u s t r y of t h e state of Montana, i n c l u d i n g * * * t r a n s p o r t a t i o n * * *." The 1975 amendment makes e x p r e s s r e f e r e n c e t o t h e type of rate r e g u l a t i o n i n d i s p u t e here, t o c l a r i f y t h a t t h e Board had power over t h e s e r a t e s . Appellants argue t h a t a subsequent s e c t i o n of t h e Milk Control Act clouds t h e c l e a r mandate of s e c t i o n 27-405, R.C.M. 1947. F i r s t , s i n c e t h e s t a t u t e p r i o r t o i t s 1971 r e v i s i o n includ- ed hauling and handling a s f a c t o r s t o be considered i n s e t t i n g t h e p r i c e of milk, t h a t once t h e Board had compensated t h e pro- ducer f o r hauling c o s t s , t h e Board was powerless t o f u r t h e r reg- u l a t e hauling r a t e s . Second, they argue s e c t i o n 27-407 (11) , R.C.M. 1947, of t h e Milk Control A c t has t h e e f f e c t of removing from t h e Board t h e power t o r e g u l a t e farm-to-plant hauling rates. That s e c t i o n provides : "No allowance f o r f r e i g h t , o t h e r than f r e i g h t f o r t r a n s p o r t a t i o n of milk from t h e farm t o p l a n t , s h a l l be charged t o a producer by a d i s - t r i b u t o r o r d e a l e r unless it i s found and ordered by t h e board, a f t e r n o t i c e and hearing i n t h e manner hereinbefore s p e c i f i e d , t h a t such an a d d i t i o n a l f r e i g h t allowance i s necessary t o permit t h e movement of milk i n t h e public i n t e r e s t . " Appellants r e l y on t h e c l a u s e "other than f r e i g h t f o r t r a n s - p o r t a t i o n of milk from farm t o p l a n t " arguing t h a t t h i s excepts farm-to-plant hauling r a t e s from t h e Board's power t o r e g u l a t e . Dealing with a p p e l l a n t s ' second argument f i r s t , t h i s Court has o f t e n s a i d i n construing l e g i s l a t i v e i n t e n t s t a t u t e s must be read and considered i n t h e i r e n t i r e t y and l e g i s l a t i v e i n t e n t may not be gained from t h e wording of any p a r t i c u l a r s e c t i o n o r sentence, but only from a consideration of t h e whole. Home Bldg. & Loan v. Board of Equalization, 1 4 1 Mont. 113, 375 P.2d 312; Teamsters v. Cascade Co. School D i s t r i c t N o . 1, 162 Mont. 277, 280, 511 P. 2d 339. O n t h e whole s e c t i o n 27-407 (11) , R.C.M. 1947, speaks t o t h e procedure and requirements f o r allow- ing of i n t e r p l a n t hauling charges. It r e q u i r e s t h a t t h e s e charges be allowed only a f t e r a f u l l hearing and a showing t h a t t h e i n t e r p l a n t movement is i n t h e public i n t e r e s t . The normal farm-to-plant r a t e s a r e excepted from t h e heavy burden of having t o make such a showing, but they a r e not exempt from t h e power of t h e Board t o r e g u l a t e . Before amendment i n 1 9 7 1 , t h e requirement t h a t "hauling, handling" charges be considered i n s e t t i n g t h e p r i c e of milk was replaced by s e c t i o n 27-407(5), R.C.M. 1947, which r e q u i r e s t h a t among t h e f a c t o r s t o be considered i n e s t a b l i s h i n g t h e milk p r i c e formula is: " ( h ) The need, i f any, f o r f r e i g h t o r transpor- t a t i o n charges t o be deducted by d i s t r i b u t o r s from producer p r i c e s f o r bulk milk * * *." This s e c t i o n does not r e q u i r e t h a t t r a n s p o r t a t i o n r a t e s be in- cluded i n t h e p r i c e of milk, it only r e q u i r e s t h a t t h e Board consider i f a deduction i s proper. This s e c t i o n can i n no way be construed t o p r o h i b i t t h e Board from r e g u l a t i n g t h e r a t e s charged t o producers f o r hauling t h e i r milk. Upon c a r e f u l examination, w e f i n d nothing i n t h e Milk Control Act which i n any way l i m i t s t h e power granted i n c l e a r and unequivocal t e r m s i n s e c t i o n 27-405, R.C.M. 1947, t o t h e Milk Control Board t o "supervise, r e g u l a t e and c o n t r o l t h e milk industry of t h i s s t a t e , including * * * t r a n s p o r t a t i o n * * *." The Board was within i t s power t o e s t a b l i s h r u l e s , as it did here, c r e a t i n g a statewide uniform method of s e t t i n g hauling r a t e s . Next, a p p e l l a n t s o b j e c t t o t h e s e Regulations, Sections 2 1 , 2 2 , 23, of MAC 8-2.12(1)-S1200: " ( 2 1 ) I n f e r i o r q u a l i t y o r non-compliance with t h e lawful Regulations of duly c o n s t i t u t e d h e a l t h o r s a n i t a t i o n agencies s h a l l be reasons f o r t h e r e j e c t i n g of producer milk. I n a l l cases t h e r e j e c t i o n of t h e milk must be sup- ported by a statement t o t h e producer s e t t i n g f o r t h t h e r e a s o n ( s ) f o r which t h e milk was re- jected. A copy of s a i d statement must be mailed t o t h e Department. " ( 2 2 ) Except f o r p e r s i s t e n t r e p e t i t i o n of t h e cases s e t f o r t h i n paragraph (21) hereof, no producer's c o n t r a c t o r purchasing agreement, whether express o r implied, may be terminated by a d i s t r i b u t o r except f o r cause a f t e r n o t i c e and hearing by t h e Department of Business Regulation i n accordance with t h e r u l e s and procedures prescribed by t h e Montana Adminis- t r a t i v e Procedure A c t . " ( 2 3 ) N o producer s h a l l terminate h i s c o n t r a c t o r s e l l i n g agreement with any d i s t r i b u t o r except by giving a t l e a s t t h i r t y (30) days' WRITTEN n o t i c e t o t h e d i s t r i b u t o r and t o t h e Department h i s i n t e n t i o n t o terminate; PROVIDED, however, t h a t nothing h e r e i n s h a l l prevent a d e a l e r and producer from providing by WRITTEN c o n t r a c t o r agreement f o r a s h o r t e r o r longer period of n o t i c e , PROVIDED, FURTHER, however, t h a t t h e producer must be paid i n f u l l by t h e 1 5 t h day of t h e month following t h e month of such termin- a t i o n . " Appellants o b j e c t t o t h e s e r e g u l a t i o n s on two c o n s t i t u t i o n a l grounds. F i r s t , t h e s e r e g u l a t i o n s v i o l a t e t h e p a r t i e s "freedom of c o n t r a c t " and second, t h e d i f f e r e n t treatment of processors and producers v i o l a t e s t h e equal p r o t e c t i o n c l a u s e . This Court held t h e Milk Control A c t t o be c o n s t i t u t i o n a l i n Milk Control Board v. Rehberg, 141 Mont. 149, 376 P.2d 508. There t h e Court discussed t h e leading United S t a t e s Supreme Court milk r e g u l a t i o n c a s e , Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.ed 940. I n answering a s i m i l a r equal p r o t e c t i o n a t - t a c k Nebbia set f o r t h t h e b a s i c test. I t r e q u i r e s t h a t i f t h e l e g i s l a t u r e has t h e power t o c o n t r o l t h e a r e a , Rehberg i n d i c a t e s t h a t under Montana law it does, t h e c l a s s i f i c a t i o n made must n o t be a r b i t r a r y o r unreasonable, t h e r e must be d i s t i n c t i o n s which j u s t i f y t h e d i f f e r e n c e of treatment. This test i s e q u a l l y a p p l i - c a b l e whether t h e l e g i s l a t u r e o r an agency c r e a t e d by t h e l e g i s - lature makes the c l a s s i f i c a t i o n . There was testimony before t h e Board t o t h e e f f e c t " i n t h e good o l d days a f e l l o w with a few cows and a shed barn could go i n t o t h e production of milk". Today, however, e n t r y i n t o t h e d a i r y farming business r e q u i r e s a l a r g e investment. Consider- ing t h e problem before us, t h e r e a r e a number of problems t h a t t h e producer f a c e s i n o r d e r t o s t a y i n business. Most pro- d u c e r s depend on a s i n g l e processor who buys a l l of t h a t pro- d u c e r ' s milk. I f a producer w a s terminated, t h e s o l e source of t h e revenue needed t o recoup h i s l a r g e investment and t o provide support f o r him and h i s family would be gone. The producers can go t o t h e Board t o g e t p r o t e c t i o n a g a i n s t t h e economic c a t a s t r o p h e which would r e s u l t from termination with- o u t cause. The processor who d e a l s w i t h s e v e r a l producers would s u f f e r a good d e a l less harm when h i s c o n t r a c t w i t h a producer was terminated than would a producer terminated by t h e only processor i n t h e a r e a . It would be less d i f f i c u l t f o r a processor t o f i n d another producer than f o r a producer t o f i n d another processor. These a r e t h e d i s t i n c t i o n s which j u s t i f y t h e d i f f e r e n c e i n treatment. The evidence before t h e Board shows t h e d i f f e r e n c e i n treatment i s n o t a r b i t r a r y and i s a reasonable d i s t i n c t i o n . Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505,78 L.ed 940, 948, 950, 951, d e a l s w i t h t h e freedom of c o n t r a c t argument, t h e Court pointed o u t : "Under our form of government t h e u s e of p r o p e r t y and t h e making of c o n t r a c t s a r e normally m a t t e r s of p r i v a t e and n o t of p u b l i c concern. The g e n e r a l r u l e i s t h a t both s h a l l be f r e e of governmental i n t e r f e r e n c e . But n e i t h e r p r o p e r t y r i g h t s nor c o n t r a c t r i g h t s a r e a b s o l u t e ; f o r government cannot e x i s t i f t h e c i t i z e n may a t w i l l u s e h i s p r o p e r t y t o t h e d e t r i m e n t of h i s f e l l o w s , o r e x e r c i s e h i s freedom o f c o n t r a c t t o work them harm. Equally fundamental with t h e p r i v a t e r i g h t i s t h a t of t h e p u b l i c t o r e g u l a t e it i n t h e common i n t e r e s t . "The F i f t h Amendment, i n t h e f i e l d of f e d e r a l a c t i v i t y , and t h e Fourteenth, a s r e s p e c t s S t a t e a c t i o n , do n o t p r o h i b i t governmental r e g u l a t i o n f o r t h e p u b l i c welfare. They merely c o n d i t i o n t h e e x e r t i o n of t h e admitted power, by securing t h a t t h e end s h a l l be accomplished by methods c o n s i s t e n t w i t h due process. And t h e guaranty o f due process, as has o f t e n been held, demands only t h a t t h e law s h a l l n o t be unreasonable, a r b i t r a r y o r c a p r i c i o u s , and t h a t t h e means s e l e c t e d s h a l l have a r e a l and s u b s t a n t i a l r e l a t i o n t o t h e o b j e c t sought t o be a t t a i n e d . "The C o n s t i t u t i o n does n o t guarantee t h e u n r e s t r i c t - ed p r i v i l e g e t o engage i n a business o r t o conduct it a s one p l e a s e s . * * *" The d i s c u s s i o n above shows t h e r u l e is reasonable and n o t a r b i t r a r y . The o b j e c t i v e of t h e Board was t o minimize t h e apprehension on t h e p a r t of producers t h a t they might be t e r m i - nated without cause and t h u s t o encourage them t o remain i n t h e milk production business. The goal of t h e Milk Board i s t o maintain a healthy milk i n d u s t r y i n Montana. The manner i n which t h e Board seeks t o achieve i t s o b j e c t i v e i s by providing f o r a hearing and allowing termination t o be f o r cause o n l y i s f a i r t o both p a r t i e s . The hearing provides t h e p a r t i e s a chance t o a i r t h e controversy and t h e Board i s a n i m p a r t i a l e x p e r t body, which is i d e a l f o r making a f a i r and knowledgeable d e c i s i o n . Appellants' l a s t i s s u e is t o t h a t r e g u l a t i o n which r e q u i r e s them t o pay f o r a l l f l u i d milk they r e c e i v e from t h e producers. Before t h e 1971 amendment s e c t i o n 27-403, R.C.M. 1947, required t h a t t h e processor pay t h e Class 111 p r i c e f o r a l l skim milk "used". The 1971 amendment eliminated t h i s language. The new r u l e s r e f l e c t t h e change. Appellants argue t h a t s i n c e they must pay f o r a l l milk received and a r e no longer allowed t o deduct a f i x e d percentage f o r shrinkage, t h e milk producer w i l l r e c e i v e a l a r g e r t o t a l payment f o r t h e milk he s u p p l i e s t h e processor. This, they contend, amounts t o a n e x t r a formula milk p r i c e i n c r e a s e n o t i n conformity with t h e proper a d m i n i s t r a t i v e procedure, t h e r e f o r e t h e a d m i n i s t r a t i v e procedure must be redone. F i r s t , t h e r e w a s no e x t r a formula milk p r i c e i n c r e a s e . ~t is conceded t h a t t h e r u l e change here challenged has t h e same e f f e c t a s would a milk p r i c e i n c r e a s e whether e x t r a formula o r not, it g i v e s t h e producer more money f o r h i s milk. This w a s n o t t h e o b j e c t of t h e r u l e , only an i n c i d e n t a l r e s u l t . The producers sought t h i s r u l e f o r two reasons, 1) they f e l t t h a t t h e i r milk i s an i t e m of value, 2 ) they f e l t i f processors had t o pay f o r a l l milk they receive, they would be more e f f i c i e n t and c a r e f u l with it than i f they d i d not have t o pay f o r milk they waste. The p a r t i e s involved i n t h i s appeal received t h e d e t a i l e d n o t i c e which c l e a r l y s t a t e d t h e n a t u r e of t h e proposed r u l e changes. Counsel f o r a p p e l l a n t s w a s p r e s e n t a t t h e hearing and argued a g a i n s t t h e changes and following t h e hearing submitted a b r i e f t o t h e Milk Control Board opposing t h e changes. There w a s no d e f e c t i n t h e due process requirement of n o t i c e , no s u r p r i s e , nor any o t h e r procedural unfairness which would r e q u i r e t h a t t h e a d m i n i s t r a t i v e process be repeated. Appellants knew of t h e r u l e changes and t h e i r e f f e c t and made t h e i r o b j e c t i o n s known t o t h e Board. Based on t h e evidence before it, t h e Board decided t o prom- u l g a t e t h e r u l e s . There i s no c o n s t i t u t i o n a l i n f i r m i t y and no c l a i m t h a t t h e agency exceeded its s t a t u t o r y a u t h o r i t y . This Court f i n d s t h a t a f a i r procedure w a s used, and t h e d e c i s i o n was based on t h e evidence. The order of t h r i c t c o u r t is affirmed. We concur: / Hon. Edward T. Dussault, D i s t r i c t Judge, s i t t i n g i n place of M r . Chief J u s t i c e James T. Harrison. - 1 2 -