Source: https://en.wikisource.org/wiki/Zuber_v._Allen/Opinion_of_the_Court
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Matched Legal Cases: ['§ 601', '§ 8', '§ 608', '§ 1001', '§ 1001', '§ 8', '§ 4', '§ 4', '§ 8', '§ 1002', '§ 4', '§ 1001', '§ 8', '§ 1001', '§ 8', '§ 1', '§ 4', '§ 4', '§ 608']

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Zuber v. Allen/Opinion of the Court
< Zuber v. Allen
935881Zuber v. Allen — Opinion of the Court
Argued: Oct. 16, 1969. --- Decided: Dec 9, 1969
This action was brought by respondent Vermont dairy farmers, 'country' milk producers, seeking a judgment invalidating as contrary to the Agricultural Marketing Agreement Act of 1937, as amended, 50 Stat. 246, 7 U.S.C. § 601 et seq. (1964 ed. and Supp. IV) the so-called farm location differential provided for by order of the Secretary of Agriculture. [1] The effect of that order is to require milk distributors to pay to milk producers situated at certain distances from milk marketing areas, 'nearby' farmers, higher prices than are paid to producers located at greater distances from such areas. The District Court issued a preliminary injunction on January 16, 1967, against further payments and on respondents' motion for summary judgment transformed its decree into a permanent injunction on June 15, 1967. The Court of Appeals for the District of Columbia Circuit affirmed. 131 U.S.App.D.C. 109, 402 F.2d 660 (1968). We granted certiorari to resolve the important issue of statutory construction involved in this aspect of the administration of the federal milk regulation program. 394 U.S. 958, 89 S.Ct. 1302, 22 L.Ed.2d 559 (1969).
Once again this Court must traverse the labyrinth of the federal milk marketing regulation provisions. [2] While previous decisions have outlined the operation of the statute and the pertinent regulations, a brief odyssey through the economic and regulatory background is essential perspective for focusing the issue now before the Court.
Milk has essentially two end uses: as a fluid staple of daily consumer diet, and as an ingredient in manufactured dairy products such as butter and cheese. Milk used in the consumer market has traditionally commanded a premium price, even though it is of no higher quality than milk used for manufacture. While cost differences account for part of the discrepancy in price, they do not explain the entire gap. At the same time the milk industry is characterized by periods of seasonal overproduction. The winter months are low in yield and conversely the summer months are fertile. In order to meet fluid demand which is relatively constant, sufficiently large herds must be maintained to supply winter needs. The result is oversupply in the more fruitful months. The historical tendency prior to regulation was for milk distributors, 'handlers,' to take advantage of this surplus to obtain bargains during glut periods. Milk can be obtained from distant sources and handlers can afford to absorb transportation costs and still pay more to outlying farmers whose traditional outlet is the manufacturing market. [3] To maintain income farmers increase production and the disequilibrium snowballs.
To protect against market vicissitudes, farmers in the early 1920's formed co-operatives. These cooperatives were effective in eliminating the self- defeating overproduction by pooling the milk supply and refusing to deal with handlers except on a collective basis. [4] During the 1920's era of relative market stability the nearby farmers enjoyed premium prices for their product. These favorable prices were apparently attributable to reduced transportation costs and also the nearby farmer's historic position as a fluid supplier. [5]
Under the licensing system base-rating plans not unlike the private arrangements that obtained in the 1920's were adopted. [6] Producers were assigned bases which fixed the percent of their output that they would be permitted to sell at the Class I price that was paid for fluid milk. [7] The viability of the licensing scheme was jeopardized, however, by judicial decisions disapproving a similarly broad delegation of power under the National Industrial Recovery Act provisions, 48 Stat. 195. A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570 (1935). With its agricultural marketing program resting on quicksand, Congress moved swiftly to eliminate the defect of overbroad delegation and to shore up the void in the agricultural marketing provisions. Section 8(3) of the 1933 Act was amended in 1935 and the pertinent language has been carried forward without significant change into § 8c of the present Act. Agricultural Marketing Agreement Act of 1937, 50 Stat. 246, as amended, 7 U.S.C. § 608c (1964 ed. and Supp. IV). [8]
The present system, which differs little in substance from the shceme conceived in 1937 for regulating the Boston market, [9] provides for a uniform market price payable to all producers by all handlers. [10] Prices are established for Class I and Class II uses. The total volume of milk channeled into the market in each category is multiplied by the appropriate coefficient price and the two results are totaled and then divided by the total number of pounds sold. The result represents the average value of milk sold in the marketing area and is the basic 'uniform' price. Were all producers to receive this price they would share on an equal basis the profits of Class I marketing and assume equally the costs of disposting of the economic surplus in the Class II market. The actual price to the producer is, however, the 'blended' price which is computed by adding and subtracting certain special differentials provided for by statute and order. See 7 CFR § 1001.64 (1969). The deduction for differential payments withheld for the benefit of nearby producers reduces the uniform 'blended' price to those producers ineligible to collect this particular adjustment. [11] The provision is contained in § 1001.72 of the order and provides:
The foundation of the statutory scheme is to provide uniform prices to all producers in the marketing area, subject only to specifically enumerated adjustments. The question before the Court, stated most simply, is whether payment of farm location differentials, set forth above, is a permissible adjustment under § 8c(5)(B) to the general requirement of uniformity of price. [12]
We are reluctant to attribute such intent to Congress and, simply in the name of administrative expertise, to follow a path not marked by the language of the statute. Indeed, such signposts as may be discerned from the legislative history point in a very different direction. The legislative history strongly suggests that 'market differentials,' as well as all the other differentials, contemplated particular understood economic adjustments. The House Report, in discussing the allowable adjustments characterizes the market differential as a payment over and above the transportation costs, i.e., a location differential, for delivery to the primary market. [13] Thus farmers would share with handlers the savings from by-passing country-station processing and handling the milk only at the city plant.
The significance of the legislative history emerges upon study of the subsequent administrative practice. The original Boston order obscures the market differential payment by providing in place of a labeled adjustment a two-price structure which allowed an additional 18¢ per cwt. for city-delivered milk over and above the costs of transporting the milk from the country plant. However, the testimony of Mr. Aplin for the Market Administrator erases any doubt that those responsible for administering the Act fully understood the meaning of the Committee's explanation of market differential. [14]
Subsequent orders have combined the country station handling adjustment, properly the market differential, and the location-transportation differential into the so-called zone differential. [15]
The statute before us does not contain a mandate phrased in broad and permissive terms. Congress has spoken with particularity and provided specifically enumerated differentials, which negatives the conclusion that it was thinking only in terms of historical considerations. The prefatory discussion in the House Report emphasizes the congressional purpose to confine the boundaries of the Secretary's delegated authority. [16] In these circumstances an administrator does not have 'broad dispensing power.' See Addison v. Holly Hill Fruit Products Co., 322 U.S. 607, 617, 64 S.Ct. 1215, 1221, 88 L.Ed. 1488, 153 A.L.R. 1007 (1944). The congressional purpose is further illumined by the character of the other statutory differentials for 'volume,' 'grade or quality,' 'location,' and 'production,' [17] all of which compensate or reward the producer for providing an economic service of benefit to the handler. [18]
Legislative silence is a poor beacon to follow in discerning the proper statutory route. For here the light illumines two different roads. If nearby payments had the notoriety and significance in the milk distribution industry attributed to them by the dissent, Congress could have given its blessing by carving out another specific exception to the uniform price requirement. In an Act whose very purpose was to avoid the infirmity of overbroad delegation and to set forth with particularity the details for a comprehensive regulatory scheme, it would have been a simple matter to include in a list of enumerated differentials, 'nearby' payments, or at least allude to them in the report of the draftsmen. It is clear that Congress was not conferring untrammeled discretion on the Secretary and authorizing him to proceed in a vacuum. This was the very evil condemned by the courts that the 1935 amendments sought to eradicate. [19] It would be perverse to assume that congressional drafters, in eliminating ambiguity from the old Act, [20] were careless in listing their exceptions and selecting the illustrations from the committee report from which their words would ultimately derive content. [21]
We consider our conclusions in no way undermined by the colloquy on the floor between Senator Copeland and Senator Murphy upon which the dissent places such emphasis. A committee report represents the considered and collective understanding of those Congressmen involved in drafting and studying proposed legislation. Floor debates reflect at best the understanding of individual Congressmen. It would take extensive and thoughtful debate to detract from the plain thrust of a committee report in this instance. There is no indication, however, that the question of nearby differentials and the meaning of 'market * * * differentials customarily applied' were precisely considered in the floor dialogue. The exchange is not only brief but also inconclusive as to meaning. [22] Indeed, Senator Murphy apparently acquiesced in Senator Copeland's implied criticism of the statute for providing uniform prices for distant and nearby producers within the marketing region. When Senator Copeland pursued his inquiry, asking whether the Act recognized the higher cost for taxes on nearby lands, Senator Murphy merely recited the differential provisions of the Act and suggested that they 'adopt the present practice of business,' but conspicuously lacking is an affirmative statement that any specific differential covered these costs. This is not impressive legislative history especially in light of Senator Murphy's earlier agreement with Senator Copeland's statement that '(t)he provisions of the equalization * * * provide that a producer who is producing his milk on farms near to cities would receive the same price for his product as a farmer who produces his milk, say, 40 or 50 miles away from the same community,' and the specific business illustrations of the House Report.
While market differentials customarily applied need not be restricted to the sole illustration in the House Report, that illustration, taken in conjunction with the discussion of all the statutory differentials, suggests that the permissible adjustments are limited to compensation for rendering an economic service. [23] The challenged nearby differentials do not fall into this category. [24]
Nor has the Secretary advanced any economic justification for these differential payments. It is plain from the administrative record that the nearby differential was included in the original Boston order as a recognition of the favored position of nearby producers in the fluid market and as an inducement to nearby farmers to approve the Secretary's order. (J.A. 237 [25].) The only sense in which the handler may be said to gain economically is by virtue of the elimination of the nearby producer as a potential competitor. While this factor is mentioned in the findings accompanying the 1937 order, it has not been emphasized in the 1964 findings and the testimony at the 1963 hearings suggests that support in the record is indeed scant. That entry of the nearbys into the distribution market would bring unwanted competition, is irrelevant if it does not jeopardize market stability. We think the analysis of the court below was correct: if there is any economic benefit here, producers should receive their compensation directly from the handlers and not out of the marketwide pool. 131 U.S.App.D.C., at 114, 402 F.2d, at 665.
While petitioner nearby farmers do not concede so readily the absence of economic foundation for the differential, no justifications are advanced that find any substantial support in the record. The allusion to the evenness of production on nearby farms would not justify the exclusive payment of this differential to nearby farmers. If the Secretary intended a production differential, all producers who qualify would be eligible. Some amici and petitioners point to higher taxes on nearby lands and opportunity costs as reason for retaining the differential. These are, admittedly, additional costs of nearby production, but they are of no concern to handlers who seek only to obtain reliably milk at the cheapest price. See Kessel, Economic Effects of Federal Regulation of Milk Markets, 10 J.Law & Econ. 51 (1967). This Court has been slow to attribute to Congress an intent to compensate for inefficient allocation of economic resources. Cf. West Ohio Gas Co. v. Public Utilities Comm'n, 294 U.S. 63, 72, 55 S.Ct. 316, 321, 79 L.Ed. 761 (1935). While petitioners argue that the differential is a necessary inducement to keep the nearby farmers in business, the record does not reveal that the Secretary acted out of concern that the nearby farmers would quit the market, nor is there any evidence demonstrating the present necessity for nearby producers. In an era where efficient transportation is available this may be of nominal concern. At most this may have been an unspoken consideration in 1937. [26]
Since the Secretary made no findings to that effect, the Court need not consider whether they would justify payment of the nearby differential in view of the legislative history indicating that the statute contemplates adjustments primarily for economic costs to handlers that are absorbed or reduced by the producers. Further if the representations of respondents are correct-and they are not without support in the record-it appears that the elimination of the 40-mile zone nearby differential payments of 46 , even with the suspension of the intermediate differential payments of 23¢, would result in a higher uniform price to those farmers now receiving the 23¢ differential. [27]
While this Court has announced that it will accord great weight to a departmental construction of its own enabling legislation, especially a contemporaneous construction, see Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965); Power Reactor Development Co. v. International Union of Elec., etc., 367 U.S. 396, 408, 81 S.Ct. 1529, 1535, 6 L.Ed.2d 924 (1961); it is only one input in the interpretational equation. Its impact carries most weight when the administrators participated in drafting and directly made known their views to Congress in Committee hearings. See Power Reactor Development Co. v. International Union of Elec., etc., supra; United States v. American Trucking Assns., 310 U.S. 534, 539, 60 S.Ct. 1059, 1061 1062, 84 L.Ed. 1345 (1940). In such circumstances, absent any indication that Congress differed with the responsible department, a court should resolve any ambiguity in favor of the administrative construction, if such construction enhances the general purposes and policies underlying the legislation. See American Power & Light Co. v. SEC, 329 U.S. 90, 112-114, 67 S.Ct. 133, 145-146, 91 L.Ed. 103 (1946).
The Court may not, however, abdicate its ultimate responsibility to construe the language employed by Congress. Those props that serve to support a disputable administrative construction are absent here. There is no suggestion in the findings, nor have the parties explained, how the present differential contributes to the broad, general purpose of eliminating crippling competition. Nor in the present case has the Court's attention been drawn to any hearings that suggest that Congress acted with the particular administrative construction before it in either 1935 or 1937. And if those administrators who participated in drafting the 1935 Act understood market differentials to encompass the farm location differential, they obviously failed to communicate their understanding to the drafters of the committee report. It is also evident that the 1937 re-enactment of the 1935 amendments was routine and did not follow a comprehensive review of the issues that had been explored in detail by the 1935 draftsmen who wrote the committee reports. [28]
It is true that a report from the Federal Trade Commission set forth the computations employed under the 1936 Boston order which apparently provided for a nearby differential. [29] But the stark figures, set forth in the appendix to the report without explication, can hardly be said to have given the administrative construction the 'notoriety' that this Court found persuasive in Udall v. Tallman, 380 U.S., at 18, 85 S.Ct., at 802. In Udall the Court was impressed by the fact that the Secretary's interpretation had 'been a matter of public record and discussion.' Id., at 17, 85 S.Ct., at 802. Even despite active congressional involvement in reviewing certain administrative action in connection with particular leases, the Court noted that it would not attribute ratification to Congress. Udall v. Tallman, supra. Nor can petitioners put flesh on this argument by citing § 4 of the 1937 re-enactment, 50 Stat. 249, [30] and the committee report, H.R.Rep. No. 468, 75th Cong., 1st Sess., 4 (1937), which merely states in the language of the Act that § 4 purports to ratify, legalize, and confirm all action taken pursuant to the agreement and order provisions under the 1935 statute. [31]
Petitioners allude to the fact that the orders in question have been specifically approved by the farmers concerned as required by § 8c(9)(B)(i) and (ii) of the Act. [32] While the contention is adumbrated, the argument appears to run as follows: since provision is made for approval of orders by the regulated subjects, the Secretary's discretion should be generously interpreted. If provision for such approval could ever legitimize a regulation not authorized by statute, the provision has no significance in the case before us, in light of the considerations already discussed. It is the Secretary, not the farmers, who is responsible for administering the statute and initiating orders. [33]
^1 The Secretary has promulgated comprehensive regulations to govern the marketing of milk, 7 CFR § 1002.1 et seq. (1969), pursuant to the Agricultural Marketing Agreement Act. The provisions relevant to this cause are set forth in Part I of this opinion, at 178, infra.
^2 See, e.g., Lehigh Valley Cooperative v. United States, 370 U.S. 76, 82 S.Ct. 1168, 8 L.Ed.2d 345 (1962); Brannan v. Stark, 342 U.S. 451, 72 S.Ct. 433, 96 L.Ed. 497 (1952); Stark v. Wickard, 321 U.S. 288, 64 S.Ct. 559, 88 L.Ed. 733 (1944); United States v. Rock Royal Co-op., 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446 (1939); H. P Hood & Sons v. United States, 307 U.S. 588, 59 S.Ct. 1019, 83 L.Ed. 1478 (1939). The lower courts have also been plagued by the milk problem. See especially Judge Frank's lament, Queensboro Farm Prods. v. Wickard, 137 F.2d 969 (C.A.2d Cir. 1943); see also Blair v. Freeman, 125 U.S.App.D.C. 207 ,370 F.2d 229 (1966); Green Valley Creamery v. United States, 108 F.2d 342 (C.A.1st Cir. 1939).
^3 For fluid use, milk must be transported in its natural state and as such is a bulky and highly perishable commodity. Thus cost of shipment to a consumer market is greater than transporting an equal supply to a manufacturing plant. These factors, combined with more rigid sanitary requirements for plants distributing the fluid product, see Agricultural Adjustment Administration Report, May 1933-Feb. 1934, p. 154, explain part of the disparity between the price for Class I (fluid milk) and Class II (other uses) milk. Nearby producers, given equilibrium of supply and demand, are logical fluid suppliers to the urban areas. See generally J. Cassels, A Study of Fluid Milk Prices (1937).
^4 The cooperative system amounted to a pooling arrangement wherein participating producers would bargain collectively with the handlers and threaten to withhold their milk if the handlers refused to agree to purchase a certain minimum percentage of their Class I fluid milk from the pool. Without this supply the handlers would be unable to meet their winter requirements.
The second aspect of the arrangement was the division of the profits among the producer members of the cooperative. Frequently employed was a base-rating plan whereby each producer would be assigned a percentage of his milk for which he could claim payment at the Class I fluid price. For the remaining production he would be paid at the Class II rate. Apparently bases were assigned according to the anticipated participation of the producer in the fluid market. As a result, nearby producers received more favorable bases in view of their historical role as fluid suppliers in an equilibrium market. For descriptions of the cooperative systems see Cassels, supra, n. 3, at 56-70; J. Black, The Dairy Industry and the AAA 49-51 (1935).
^5 Because they were historically fluid suppliers the nearby producers apparently maintained at all times production sufficient to service the consumer fluid market. In addition their close proximity enabled them to deliver to small retailers. As such they were potential competitors.
^6 See Agricultural Adjustment Administration Report, supr, n. 3, at 159-161; G. Barnhart, The Development of the Licenses and Order Regulating the Handling of Milk in the Greater Boston, Massachusetts, Marketing Area, Nov. 3, 1933-June 1, 1946 (unpublished dissertation on file with Department of Agriculture and Harvard University).
^7 License 38 for the Boston area provided more favorable bases for the nearby producers. See Barnhart, supra, n. 6, at 95 96.
^8 (5) 'Milk and its products; terms and conditions of orders.
^9 The Boston order of 1937, 2 Fed.Reg. 1331, established uniform prices for all producers at $3.19 and $3.01 per cwt. of milk, depending on the place of delivery, with a further adjustment for transportation to the handler's plant in the marketing area. Article VIII, § 4(1) also provided for an adjustment based on the cost of transporting milk from outlying plants to the primary Boston market. The present regulations calculate price with reference to the purchasing power of milk based on the 1958 cost-of-living index. No transportation adjustment is provided for in calculation of the uniform price under § 1001.62 of the order. Differentials to compensate for zone of delivery are retained as separate adjustments. See infra.
^10 The Secretary has three alternative modes of proceeding under the Act. He may establish 'use' prices which all handlers must pay to all producers according to the actual amount of milk used in each category, § 8c(5)(A); individual handler pools where all producers or co-operatives selling to an individual handler shall be paid a uniform price for milk delivered to that handler; or a marketwide pool where all handlers must pay all producers a uniform price for all milk delivered irrespective of end use.
^11 Also included is an adjustment for delivery to a nearby plant. The location of handler plants is classified by zones. 7 CFR § 1001.62. Delivery to a plant located nearby the consumer market is, of course, advantageous to the handler and the producer is compensated for this service. The handler also saves the cost of handling and processing at his country plant in addition to saving transportation cost. Conversely, depositing milk at handlers' plants in outlying districts results in a negative adjustment.
^12 Section 8c(5)(B)(ii) requires all uniform prices to be paid 'irrespective of the uses made of such milk by the individual handler to whom it is delivered.' Respondents contend that the nearby differ-
ential is merely a disguised payment for the nearby suppliers' greater share of fluid milk sales. Such was apparently the case in the New Jersey order invalidated by the Court of Appeals in Blair v. Freeman, supra, where the payment of the differential was explicitly linked to the percentage of nearby milk actually supplied to the fluid market. We share respondents' skepticism and our doubts are reinforced by the explicit connection of differential payments with the share of fluid milk supplied in the 1936 Boston order. Further cause for skepticism is found in the present zone differential structure which undercompensates the handlers for transportation from outlying districts and thus encourages them to buy from nearby farmers. See Kessel, Economic Effects of Federal Regulation of Milk Markets, 10 J.Law & Econ. 51, 64-65 (1967). Here, however, unlike the situation in Blair v. Freeman, supra, the producer receives the differential irrespective of the use to which his milk is ultimately put. Since the nearby differential in the present order is not directly tied to the percentage of fluid milk sales, although the order limits differential payments to 46¢ or the Class I price, whichever is higher, we accept the Government's contention that, as a matter of strict logic, the payment of differentials based on the historical position of nearby producers as fluid suppliers, is not inconsistent with the irrespective-of-end-use requirement.
^13 'The market differential is a differential which is given to the producer to compensate him for delivering his milk to a city market instead of to a country plant. These differentials vary with the markets and cannot be qualified as a 'location' differential, because of the fact that location is usually determined on the distance from a primary market whereas market differentials are usually paid in secondary markets.' H.R.Rep. No. 1241, 74th Cong., 1st Sess., 10 (1935).
^14 The relevant excerpts from the hearing are included in the Joint Appendix and appear at 258-259:
^15 See Barnhart, supra, n. 6, at 620.
^16 'To eliminate questions of improper delegation of legislative authority raised by the decisions in Schechter et al. v. United States, the provisions relating to orders enumerate the commodities to which orders issued by the Secretary of Agriculture may be applicable, prescribe fully the administrative procedure to be followed by the Secretary in issuing, enforcing, and terminating orders, and specify the terms which may be included in orders dealing with the enumerated commodities.' H.R.Rep., No. 1241, supra, at 8. See Brannan v. Stark, 342 U.S. 451, 465, 72 S.Ct. 433, 440, 96 L.Ed. 497 (1952).
^17 In this connection it should be noted that the production differential authorized for maintaining an adequate supply for fluid use during the lean winter months is not, strictly speaking, a handler cost but a general cost of the market. It is, however, an essential cost that cannot be eliminated by looking to an alternative supplier. Viewed in this context, it is of course a cost to the handler; for in a nonregulated equilibrium market, a handler would be forced to pay a premium during the winter months when supply is limited and demand constant.
^18 'The volume differential is a differential which is paid when the operations of several country plants are consolidated into one plant. The inconvenience which is caused to producers by closing up plants to which they have been delivering and requiring that all of their milk be handled by one plant, is compensated by an additional payment to the producers. The production differential is the differential which is paid to a producer, compensating him for keeping his farm and milk qualified for a city market even though his milk may actually be going into manufactured use. * * * The production differential is a payment to the farmer for performing this function in the market.' (Emphasis supplied.) H.R.Rep. No. 1241, supra, at 9-10.
^19 See Brannan v. Stark, supra.
^20 'The proposed amendments, insofar as they relate to marketing agreements and orders, are primarily intended to implement and spell out in more detail and with greater freedom from ambiguity the powers which were provided for in the original act. The present language of the statute is, unfortunately, subject to serious misconstruction. This has given rise to obstacles in connection with the enforcement of the marketing agreements and licenses which have seriously endangered their successful operation.' H.R.Rep., No. 1241, supra, at 7.
^21 The verdict of quiescent years cannot be invoked to baptize a statutory gloss that is otherwise impermissible. This Court has many times reconsidered statutory constructions that have been passively abided by Congress. Congressional inaction frequently
^22 The floor exchange is reported at 79 Cong.Rec. 11139 11140.
"Such prices shall be uniform as to all handlers, subject only to adjustments for (1) volume, market, and production differentials customarily applied by the handlers subject to such order-'
'They adopt the present practice of business-
^23 The market differential does not, strictly speaking, compensate the producer for absorbing a cost to the handler for it may be no additional cost to the producer to deliver to a city plant. A nearby farmer, for example, would not incur additional costs by delivering to a preferred city plant as opposed to a country station. The savings to the handler are nevertheless plain and the market differential should properly be viewed as an adjustment that permits the producer to share in the handler's profits resulting from reduced costs.
^24 See Kessel, supra, n. 12, at 65-66 (1967). After criticizing the present undercompensation for transportation costs from far-away zones as a disguised subsidy to nearby producers, resulting in an inefficient allocation of economic resources, the author draws a comparison with the nearby differential lamenting, 'However weak the case for zone differentials that fail to depict transportation costs, it is infinitely stronger than the case for location differentials.'
^25 The Secretary's 1964 findings include provisions under the present New England orders should be continued under the Massachusetts-Rhode Island order and the Connecticut order.
There is no reason to dispute the Secretary's finding that the differentials have no disruptive effect on the market. The issue, however, is whether the provisions are authorized by statute. The Secretary's order is devoid of any economic justification and relies solely on the historical factor of the nearby producer's favorable share of the fluid use market. See also Report to the Secretary of Agriculture by the Federal Milk Order Study Committee 74-75 (1962).
^26 See Report to the Secretary of Agriculture by the Federal Milk Order Study Committee, supra, n. 25, at 75.
^27 See J.A. 455 reporting excerpts from the Secretary's decision of October 21, 1958, accompanying the order for the Southeastern New England marketing area.
^28 Judge Frank expressed the view in Queensboro Farm Prods. v. Wickard, 137 F.2d 969 (C.A.2d Cir. 1943), that Congress intended to adopt the intervening administrative interpretation of the 'use' language of § 8c(5)(A) by its 1937 reenactment. The construction of the 'use' provision may well have caused more concern than the interpretation of the 8c(5)(B) differentials. In any event, Judge Frank's assumption that Congress gave 'careful consideration * * * in connection with a re-enactment,', 137 F.2d, at 977, is not supported by citation to specific legislative history that would indicate that Congress had in mind specific problems in connection with the administration of the marketing provisions.
^29 The 1936 order provided for payment of a uniform price subject to adjustments and with a special exception for 'any producer, whose farm is located within forty (40) miles of the State House in Boston and who delivers milk to such handler at a plant located within forty at $3.30 per hundredweight for that quantity at $3,30 per hundredweight for that quantity of milk delivered by such producer not in excess of the base of such producer.' (Emphasis supplied.) Art. VIII, § 1(2).
^30 Section 4 of the Act provided:
^31 To the extent that Congress could be said to have acted against the background of the 1936 order, the Court must reject petitioners' argument. The 1936 order was superseded by the 1937 order which differed in approach. The provision for nearby differentials in the 1936 order was obscured by allowing a more favorable total price to nearby producers. See n. 29, supra. The 21¢ differential incorporated in the 1937 order for the benefit of intermediate nearby zones was not included in the 1936 order. The 21¢ differential provided in Art. VIII, § 4(2), of the 1936 order could have been viewed as a true market differential since its payment depended on delivery to a handler within a 40-mile zone from a producer beyond a 40-mile zone. Further, as noted by the court below, § 4 is typical of statutory boilerplate traditionally included in legislative re-enactments, to avoid breaks in regulatory continuity. 131 U.S.App.D.C., at 119, 402 F.2d, at 670.
^32 Section 8c(9) of the Act, 7 U.S.C. § 608c(9) provides that no order shall become effective until the Secretary determines:
^33 Lower courts have, in some circumstances, permitted an agency to rely on the approval of those affected by an action as evidence that the action is in the 'public interest.' Compare Citizens for Allegan County v. FPC, 134 U.S.App.D.C. 229, 414 F.2d 1125 (1969), with Marine Space Enclosures, Inc. v. FMC, 137 U.S.App.D.C. 9, 420 F.2d 577 (1969). We need not consider what scope, if any, may be given to these principles.
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