Opinion ID: 757355
Heading Depth: 2
Heading Rank: 3

Heading: The Sufficiency of the Secretary's Explanations

Text: 55 We also believe that the Secretary sufficiently explained his decision to maintain the existing differential system. Because he did not bear the burden of proof, and because of the resulting deferential standard of review due his inaction, the Secretary's burden of explanation was not heavy. 56 In his first decision, the Secretary summarized the 35 proposals for changing the Class I pricing system, and the supporting testimony for each. Secretary's Decision I at 12637--12645. He then analyzed the major concerns reflected by those proposals. Id. at 12645 -12652. We agree with the Secretary that [t]he basic issue is whether a compelling case was made that some other Class I pricing system is needed. After a review of the supply and demand situation in the various markets, it is concluded that no changes are needed. Having concluded that the current Class I pricing system is appropriate and is in accord with the pricing standard in the Act, it is not necessary to then proceed to discuss in detail why each of numerous proposals should not be adopted, id. at 12649, the MMPA's (through the UMFOC) included. 57 Moreover, at the Court's request, the Secretary provided further explanation of the Class I price, in his amplified decisions of 1994 and 1996. In response to the Court's first remand order, the Secretary explained that the other component of the Class I price, the M-W base price, accounted for many of the local market factors listed in § 608c(18): because it reflects the competitive market price for raw milk, it automatically reflects the price and availability of supplies of feed and all other economic factors that affect the supply and demand for milk and dairy products. Secretary's Decision II at 42425. He then explained that the Class I differential is intended to partially reflect the cost of transporting milk ... [and] serves as an incentive to move milk from supply areas to demand centers. Ibid. He acknowledged that [b]ecause some milk is produced just about everywhere, the mix of milk produced near consumption centers with milk shipped from distant areas varies among orders, id. at 42426--a fact on which the MMPA's argument is built--but explained that [a]s the mobility of milk increased, a transition necessarily occurred from considering only isolated local markets to considering a system of regional markets that are linked through class price coordination. Individual markets that previously set class prices based on local supply-demand conditions now are part of larger regional markets whose prices are coordinated through the M-W price.... Ibid. 58 The 1996 amplified decision addressed the further concerns of the Court as to both the differential and base-price components of the Class I price. The Secretary contended with some plausibility that the present differentials are not a single-basing-point system: 59 the mere fact that real-world market forces necessarily yielded, over time, an aligned Class I pricing system that correlates to geography simply does not mean that the enormous reserve quantities of milk in the Upper Midwest relative to other marketing areas (east of the Rocky Mountains) constitute a single basing point. The high degree of correlation between distance from the Upper Midwest, and another area's supply-demand relationship is reflective of this reality. It justifies the current Class I differentials, not the other way around. 60 Id. at 49085. Regarding the Court's question of how the M-W price accounted for local market conditions, the amplified decision explained that the M-W price served the statute's goals by incorporating the fluctuations in supply and demand, as reflected by free market transactions, into classified pricing. Class I pricing therefore responds to, rather than dictates, supply and demand. Ibid.