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Page 1 –MILK INNOVATION GROUP’S BRIEF AND PROPOSED CONCLUSIONS OF LAW 

DAVIS WRIGHT TREMAINE LLP 

1301 K Street NW, Ste. 500 East 

Washington, D.C. 20005 

(202) 973-4200 main  (202) 973-4499 fax 

Charles M. English Jr. (D.C. Bar #386572) 

charlesenglish@dwt.com 

DAVIS WRIGHT TREMAINE LLP 

1301 K Street NW, Suite 500 East 

Washington, D.C. 20005 

Telephone: 202-973-4200 

Facsimile: 202-973-4499 

Ashley L. Vulin (Oregon Bar No. 145454) 

ashleyvulin@dwt.com 

DAVIS WRIGHT TREMAINE LLP 

1300 S.W. Fifth Avenue, Suite 2400 

Portland, Oregon 97201-5610 

Telephone: 503-241-2300 

Facsimile: 503-778-5299 

Attorneys for Fluid Milk Innovation Group 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

AGRICULTURAL MARKETING SERVICE 

In re:

Milk in the Appalachian, Southeast, and 

Florida Marketing Areas 

7 CFR Parts 1005, 1006, and 1007 

Docket No. 23-J-0019 (AMS-DA-23-0003) 

BRIEF AND PROPOSED CONCLUSIONS OF LAW 

SUBMITTED BY 

MILK INNOVATION GROUP 

Charles M. English 

Ashley L. Vulin 

1301 K Street NW 

Suite 500 East 

Washington, D.C. 20005 

Attorneys for Milk Innovation Group 

April 19, 2023 

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Page 2 –MILK INNOVATION GROUP’S BRIEF AND PROPOSED CONCLUSIONS OF LAW 

DAVIS WRIGHT TREMAINE LLP 

1301 K Street NW, Ste. 500 East 

Washington, D.C. 20005 

(202) 973-4200 main  (202) 973-4499 fax 

I. INTRODUCTION 

This Brief and Conclusions of Law is submitted on behalf the Milk Innovation Group. The 

Milk Innovation Group is a group of fluid processors and producers. The seven members are: 

Anderson Erickson Dairy, Aurora Organic Dairy, Danone North America, Fairlife, HP Hood, 

Organic Valley / CROPP Cooperative, and Shamrock Foods. Organic Valley / CROPP 

Cooperative and Shamrock Foods are handlers regulated by Federal Milk Marketing Order 

(FMMO) 5. 

II. ASSEMBLY CREDITS 

The Milk Innovation Group supports allocating more Class I “dollars” to the producers that 

supply and serve Class I plants. In concept, establishing an assembly credit furthers this aim and 

has sound precedent and policy support. However, the proposals here do not accomplish the aims 

they claim—of supporting Class I. Rather, with no support in either the economic or policy 

justifications, the proposals seek to create an even greater burden on Class I processors. Given the 

price-enhancing nature of provisions at issue here and the continued decline in fluid milk sales, 

the Milk Innovation Group cannot support Proposals 6, 7, and 8, and neither should USDA. 

Instead, a better model for an assembly credit is the Upper Midwest Order, FMMO 30. In 

the Upper Midwest, the assembly credit is funded by the pool and does not enhance Class I prices. 

The same justification for the assembly credit in the Upper Midwest exists here: to compensate 

producers that actually supply Class I plant. Notably, Proponents supported this concept of an 

assembly credit for this reason: 

[P]roducer milk delivering to distributing plants should receive 

compensation over and above that producer milk pooled on the 

order, but not delivering to distributing plants. 

Dennis Tonak, Prairie Farms, Hr’g Tr. vol. 5, at 498:4–7. 

“So, in effect, there[ are] two market-wide benefits, one to the local 

producers to encourage them to increase milk production; and 

secondly, along with the potential differences in uniform price or 

Class I price, to encourage those producers to maintain milk 

production and move it to the plant where it is needed. 
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Page 3 –MILK INNOVATION GROUP’S BRIEF AND PROPOSED CONCLUSIONS OF LAW 

DAVIS WRIGHT TREMAINE LLP 

1301 K Street NW, Ste. 500 East 

Washington, D.C. 20005 

(202) 973-4200 main  (202) 973-4499 fax 

Id. at 538:5–11. The Milk Innovation Group likewise believes that farmers undertaking the costs 

of serving the Class I market should be incentivized to continue supplying the Class I market and 

then compensated for that work. However, efforts to achieve this compensation should not be at 

the expense of further harm to the Class I market as a whole. 

III. CLASS I MARKET CONDITIONS 

Efforts to increase regulated minimum prices for Class I milk in an environment 

where fluid milk sales continue to decline precipitously will only further weaken the industry. As 

demonstrated by USDA’s own data, Class I has been on a steep downward trajectory for years 

now. 
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Page 4 –MILK INNOVATION GROUP’S BRIEF AND PROPOSED CONCLUSIONS OF LAW 

DAVIS WRIGHT TREMAINE LLP 

1301 K Street NW, Ste. 500 East 

Washington, D.C. 20005 

(202) 973-4200 main  (202) 973-4499 fax 

See USDA, Per Capita Consumption of Selected Dairy Products, Marketing Service Bulletin, 

Central Marketing Area, (Oct. 2022), https://www.fmmacentral.com/PDFdata/ 

msb202210.pdf. 

Federal Milk Marketing Orders do not—and cannot—serve to enhance producer prices, 

but rather operate to set the minimum price necessary to avoid disorderly marketing and ensure a 

sufficient supply of fluid milk. However, time and again during discussion of Class I over-order 

charges / premiums with the USDA, the cooperatives disingenuously ask the USDA to do their 

price negotiation work for them. 

Proponents fail to consider the impact of their Proposals on processors, viewing it only 

from the lens of producers seeking to extract more and more money from some mythical, 

bottomless source. But Class I is not a golden goose, and USDA must reject processor’s improper 

use of FMMO’s to enhance their own prices at the expense of processor. By their own admission, 

that is what they seek to do here: 

[The credit] provides a reimbursement system superior to over-order 

prices, which are challenging to maintain and even more challenging 

to increase. 

Elvin Hollon, Dairy Cooperative Marketing Association, Hr’g Tr. vol. 3, at 275:17–19. 

[I]t's a whole lot easier to do it on the regulated side of [the Class I 

price] than it is on the over-order premium. 

Jason Smith, Maryland and Virginia Milk Producers Cooperative, Hr’g Tr. vol. 4, at 394:16–19. 

It is very difficult to recover some of the costs through the 

marketplace. 

Dennis Tonak, Prairie Farms, Hr’g Tr. vol. 5, at 534:3–4. 

The cooperatives also fail to consider the impact on consumers when they seek to increase 

Class I prices without justification or support. Ultimately higher Class I prices increase consumer 

prices for a gallon of milk. During a time of rapid inflation, particularly at the grocery store, the 
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Page 5 –MILK INNOVATION GROUP’S BRIEF AND PROPOSED CONCLUSIONS OF LAW 

DAVIS WRIGHT TREMAINE LLP 

1301 K Street NW, Ste. 500 East 

Washington, D.C. 20005 

(202) 973-4200 main  (202) 973-4499 fax 

USDA should not be enacting unjustified regulatory changes that will raise consumer prices. That 

is why USDA should use the Upper Midwest model for assembly credits, since it is not price 

enhancing. 

Cooperatives proffered no meaningful defense to this inevitable conclusion of increased 

consumer prices. When asked about the increase to consumer prices, the cooperatives obfuscated: 

Fair question. In this particular situation, I guess I would answer that 

question by saying the [goal] is to try to keep as much local milk in 

the market producing milk. And so, I think the three dairy farmer 

witnesses, one of the things they spoke about was the number of 

dairies that they knew of that were near their farm who were no 

longer there, and to the extent that we can help the farm in the area 

grow or remain in business or maybe even come into business is 

going to provide the most economic milk supply for the processors 

in the southeastern Orders and ultimately for consumers, that’s 

always a hard argument to follow all the way through the chain, but 

it speaks to be true. So every farm that goes out of business gets 

replaced by a supplemental milk load that costs a whole lot more. 

Elvin Hollon, Dairy Cooperative Marketing Association, Hr’g Tr. vol. 3, at 336:20–337:9. 

IV. CONCLUSION 

Class I needs help, not higher prices. And consumers need choices, not more of the same 

at ever higher cost. While the Milk Innovation Group supports the idea of an assembly 

performance credit as a way to improve the health of Class I, the misguided Proposals 6, 7, and 8 

will have the opposite impact. USDA should reject the Proposals. 

DATED this 19th day of April, 2023. 

DAVIS WRIGHT TREMAINE LLP

By /s/ Ashley L. Vulin

Charles M. English, D.C. Bar No. 386572 

charlesenglish@dwt.com

Ashley L. Vulin, Oregon Bar No. 145454 

ashleyvulin@dwt.com 

Telephone: 202-973-4200 

Facsimile: 202-973-4499 

Attorneys for Fluid Milk Innovation Group 
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Page 1 - CERTIFICATE OF SERVICE 

DAVIS WRIGHT TREMAINE LLP 

1301 K Street NW, Ste. 500 East 

Washington, D.C. 20005 

(202) 973-4200 main  (202) 973-4499 fax

CERTIFICATE OF SERVICE 

I hereby certify that on the date set forth below I served a copy of the foregoing MILK 

INNOVATION GROUP’S BRIEF AND PROPOSED CONCLUSIONS OF LAW on: 

SM.OHA.HearingClerks@usda.gov

Marvin Beshore, Esq. 

JOHNSON, DUFFIE, STEWART & WEIDNER 

301 Market Street 

P.O. Box 109 

Lemoyne, PA 17043 

Telephone: 717-761-4540 

Facsimile: 717-761-3015 

Email: mbeshore@johnsonduffie.com 

Attorneys for Dairy Cooperative Marketing Association 

Ryan Miltner, Esq. 

MILTNER REED LLC 

201 East Auglaize Street, Ste. 1 

Wapakoneta, OH 45895 

Telephone: 866-740-5219 

Email: ryan@miltner-reed.com

Attorneys for Select Milk Producers

Erin Taylor, Director (Order Formulation & Enforcement Division) 

Email: erin.taylor@usda.gov

Brian Hill, Esq. (Senior Counsel, USDA) 

Email: brian.hill@usda.gov 

Michelle McMurtray, Esq. (Attorney Advisor, USDA) 

Email: michelle.mcmurtray@usda.gov 

Lauren Becker, Esq. (Dairy Marketing Specialist) 

Email: lauren.becker@usda.gov 

Rebecca Dickerson (Dairy Marketing Specialist) 

Email: Rebecca.dickerson@usda.gov 

OFFICE OF THE GENERAL COUNSEL 

MARKETING, REGULATORY & FOOD SAFETY 

1400 Independence Avenue Southwest 

Washington, D.C. 20250 

Staff and Attorneys for USDA AMS Dairy Program

 by mailing a copy thereof in a sealed, first-class postage prepaid envelope, 

addressed to said attorney’s last-known address and deposited in the U.S. mail at Portland, Oregon; 
4863-1178-5049v.8 0120701-000001

Page 2 - CERTIFICATE OF SERVICE 

DAVIS WRIGHT TREMAINE LLP 

1301 K Street NW, Ste. 500 East 

Washington, D.C. 20005 

(202) 973-4200 main  (202) 973-4499 fax

 by emailing a copy thereof to said attorneys’ last-known email address as set forth 

above; 

 by emailing a copy thereof in Word format to said attorney’s last-known email 

address as set forth above, pursuant to Oregon Local Rules. 

 by causing a copy thereof to be hand-delivered to said attorney’s last-known 

address as shown above; 

 by sending a copy thereof via overnight courier in a sealed, prepaid envelope, 

addressed to said attorney’s last-known address; or 

 by faxing a copy thereof to said attorney’s last-known facsimile number; 

Dated this 19th day of April, 2023. 

DAVIS WRIGHT TREMAINE LLP

By /s/ Ashley L. Vulin

Charles M. English, D.C. Bar No. 386572 

charlesenglish@dwt.com 

Ashley L. Vulin, Oregon Bar No. 145454 

ashleyvulin@dwt.com 

Attorneys for Fluid Milk Innovation Group