Opinion ID: 199150
Heading Depth: 2
Heading Rank: 1

Heading: Federal Regulation.

Text: 4 More than six decades ago, the Agricultural Marketing Agreement Act of 1937 (AMAA), now codified, as amended, at 7 U.S.C. 601-626, authorized the Secretary of Agriculture (the Secretary) to set minimum prices for milk. Id. 608c(1) & (2). To this end, the Secretary divided the country into regions, each of which is known as a federal order milk marketing area. 2 7 C.F.R. 1001-1135. In each area, a milk marketing order sets minimum prices that handlers must pay producers. The Northeast Marketing Area includes five New England states (Connecticut, Massachusetts, New Hampshire, Rhode Island, and Vermont), Delaware, New Jersey, the District of Columbia, and portions of Maryland, New York, Pennsylvania, and Virginia. 7 C.F.R. 1001.2. Maine is not part of this, or any other, federal order milk marketing area. See 64 Fed. Reg. 16,056 (1999). 5 Although Maine is not within a federal order area, certain aspects of the federal paradigm are pertinent to an understanding of the present problem. First, the federal system takes account of the fact that the value of milk varies according to use. See West Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 189 n.1 (1994). Before federal regulation came upon the scene, producers vied to sell their milk for processing as fluid milk (the use that fetched the highest price). Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1343 (6th Cir. 1994). The federal order system obviated the need for such cutthroat competition. Under it, raw milk is classified into four use categories: Class I (fluid milk); Class II (soft dairy products, e.g., yogurt and cottage cheese); Class III (spreadable and hard cheese); and Class IV (butter and powdered milk). 7 C.F.R. 1000.40. Each class of milk commands a different price. Id. 1000.50. Though handlers pay for raw milk based on the uses to which they put it, id. 1001.60, 1001.71, producers ultimately receive a uniform blend price based on the percentage of milk used in each class throughout the marketing area, id. 1001.72-1001.73. The purpose of this pooling mechanism is to ensure that all producers selling milk into a particular federal order area receive a uniform minimum price for their milk regardless of the milk's end use. See 7 U.S.C. 608c(5)(B)(ii); see also West Lynn, 512 U.S. at 189 n.1 (discussing computation of blend price). 6 Another important aspect of the federal order system relates to geography. The minimum price is subject to an adjustment based on the location of the handler's plant. See 7 C.F.R. 1000.52 (table of price differentials arranged by county). These location adjustments recognize the fact that handlers holding milk near areas of high consumption have a more valuable commodity than handlers holding milk out in the boondocks (who must underwrite the cost of transporting their milk to population centers). Lansing Dairy, 39 F.3d at 1344-45. Thus, for example, in the Northeast Marketing Area, handlers near Boston pay more for raw milk than handlers in outlying rural communities. 7