Opinion ID: 757355
Heading Depth: 1
Heading Rank: 5

Heading: the m-w base price

Text: 61 We have before us the further issue of whether the District Court erred in upholding the M-W base price, which was not the subject of the MMPA's suit. We hold that it did not. 62 The issue of the M-W base price entered the litigation through the Secretary's explanation in his first amplified opinion. In that opinion, responding to the Court's question of how the Class I differential reflected local economic factors, the Secretary answered that those factors were accounted for largely by the M-W base price, not the differential, and proceeded to explain the concept and development of that price. In its second remand order, the Court asked specifically for more explanation of the base price, which the Secretary provided in his second amplified opinion. In that opinion, he also indicated that, though the base price had not been addressed at the 1990 rulemaking, there had been a subsequent hearing, in 1992, which had focused on the base price, and he summarized the findings from that hearing. In its final opinion, the Court found that the Secretary's reference to the second administrative hearing, as discussed in the second amplified decision, deals with the § 608c(18) factors and the M-W price. Accordingly, the Court finds that the Secretary has fulfilled his burden with respect to this aspect of the Class I price of milk. District Court Order at 12 (Nov. 3, 1997). 63 Because the concerns about the M-W price were integrally related to--indeed, grew out of--the MMPA's challenge of the differential, the question of its validity was properly before the Court. It is the total Class I price--the two price components together--and not just the differential, that must satisfy the statute. The Secretary explained, 64 [T]he M-W price is the key component in the Class I price, representing the many supply and demand factors referenced in § 608c(18). The M-W price does not, however, reflect one factor uniquely relevant to Class I fluid milk pricing: the cost of transporting milk from alternative supply sources. When the Class I differential, which largely reflects transportation costs, is added to the M-W price, the minimum Class I price in each market is set. 65 Secretary's Decision III at 49086. The question of the lawfulness of the differential could not be resolved without accounting for the effect of the base price. 66 The MMPA contends that because it had not focused on this aspect of the Class I price during the course of litigation, the Court's understanding of the issue was insufficient to support a holding. However, further litigation would not add to the existing administrative record of the Secretary's 1992 hearing. On the basis of that record, we hold that the Secretary's maintenance of the M-W base price was not arbitrary and capricious. We note that, though the use of the M-W base price was not established by statute, the other factors weighing in favor of deferential review of the Class I differentials also apply to a review of the base price. 67 The record supports the Secretary's decision to maintain the M-W base price with minor modification. The hearing encompassed ten proposals, addressing (1) competitive pay prices, (2) product price formulas, (3) cost-of-production formulas, and (4) the price support level. Milk in the New England and Other Marketing Areas; Decision on Proposed Amendments to Tentative Marketing Agreements and Orders, Proposed Rule, 60 Fed.Reg. 7290-91 (1995). The full discussion of these proposals in the Secretary's decision indicates a consideration of relevant factors, after which the Secretary's finding that the economic rationale stated when the M-W was first adopted remains sound today as it was when it was adopted order-by-order from 1961 until universally adopted in 1975, Secretary's Decision III at 49086, was not clear error. The Secretary's decision thus was not arbitrary and capricious.