Document: 370 U.S. 76 82 S.Ct. 1168 8 L.Ed.2d 345 LEHIGH VALLEY COOPERATIVE FARMERS, INC., et al., Petitioners,v.UNITED STATES al. No. 79. Argued Jan. 17 and 18, 1962. Decided June 4, Willis F. Daniels, Harrisburg, Pa., for petitioners. Alan S. Rosenthal, Washington, D.C., respondents. Mr. Justice HARLAN delivered the opinion of Court. 1 Petitioners, operating milk processing plants in Pennsylvania, challenge validity certain 'compensatory payment' provisions included marketing orders affecting New York-New Jersey area, which were promulgated by Secretary Agriculture under authority granted him § 8c Agricultural Marketing Agreement Act 1937, 7 U.S.C. 608c, U.S.C.A. 608c. That section permits to issue regional regulations governing, various enumerated respects, agricultural commodities, among is milk. This provision question requires those who buy elsewhere bring it into region sale as fluid pay farmers supply a fixed amount payment.' measured difference between minimum price set Market Administrator surplus The judgment Court Appeals Third Circuit, 287 F.2d 726, upholding here attack,1 conflicted with an earlier decision rendered Second Kass v. Brannan, 196 791. To resolve this conflict we certiorari. 366 957, 81 1919, 6 1251. I. General Scheme Milk Regulation. 2 order around present controversy centers, now titled Order 2, CFR §§ 1002.1 seq.,2 though somewhat more complex than others, its general outline representative pattern regulation established promotion orderly conditions industry preservation prices farmers. Pursuant 8c(5)(A),3 classifies that sold within area 'in accordance form or purpose used.' contains 3% 5% butterfat—the usual proportion ordinary liquid milk—and consumption assigned Class used cream (sweet sour), half half, drinks containing less butterfat classified II. remainder—milk be stored substantial period dairy products such butter cheese—is grouped III. 1002.37. 3 classification reflects relative usually commanded different forms Thus, highest are paid consumption, lowest processed cheese. Since always greater demands fluid-milk market, excess must channeled desirable, lower-priced outlets. It avoid destructive competition producers premium outlets statute authorizes devise method whereby uniform handlers all received, regardless leaves plant ultimate use. Adjustments then made so each eventually pays out-of-pocket equal actual utilization value he has bought. 4 Under primarily whose located regularly regulated. All receive distribute required submit monthly reports Administrator, listing quantity they have handled use was sold. But only 'pool plants'—i.e., meet standards out 1002.25—1002.294—must from whom Administrator. calculated month on basis submitted. After determining pursuant formulas 1002.40, computes average 'pool' during month. figure reached first multiplying disposed class class, adding payments' nonpool minor adjustments made, sum divided total market quotient 'blend price.' With some reflect transportation expenses, maintaining plants. 1002.66. 5 way 'Producer Settlement Fund,' handler contributes his 'use value'5 over producer. Handlers value' purchase price' may withdraw fund. net effect at would had been earmarked outset ultimately put. farmer produces protected effects since automatically allotted proportional share 'use' markets. Compensatory Payment Provision. will thus seen system contemplates economic controls 'pool-handler' their account Producer Fund. If limited recounted above, regulatory scheme not affect brought engaged supplying other area. Some do undertake any 'outside' 'other source' milk.6 quite obvious circumstances necessary. Accordingly, 8c(7)(D) Act, 608c(7)(D), 608c(7) (D), include regulating incidental terms expressly authorized effectuate order.' A brings outside disrupt least two respects: (1) Pool find selling undercut dealing purchased unregulated price. 9 (2) Producers depends how much relatively constant demand given month, occupying portion displacing forcing rewarding uses, diminishing payable producers. 10 In effort cope these disruptive forces, devised plan. essence plan imposes special monetary exactions introducing months when there market.7 11 Of 68 establish marketwide pools,8 64 contain one kind another. before us typical 23 orders.9 provides sells pool's producers, through Fund, classifications prevailing words, hundredweight non-pool I payment III seller 12 Purpose Effect Payment. 13 Circuit held compensatory requirement (then 27) 'penalty,' Cir., 791, 795, conducted extensive hearings determine whether should retained. His findings, appear 18 Fed.Reg. 8444—8454, explain most satisfactory means imposing 'a suitable charge unpriced sufficient neutralize, compensate eliminate artificial advantage necessarily created pricing pooling pool Id., 8448. There seems little doubt assessment I-Class differential would, but rare instances, nullify competitive could have: if cost profitable wholly partially 'compensatory'—i.e., puts 'on substantially similar positions (ibid.) exceeds make economically unfeasible 14 Agriculture's determination rested upon what was, effect, irrebuttable presumption rate commensurate 'surplus' (Class III) See Fed.Reg., 8448.10 based turn supposition worth where shipped apparent denied access areas prohibitive assessed depreciate levels. For can freely regulated, command higher 15 Indeed, facts case demonstrate shortcomings Secretary's reasoning. One petitioners, Suncrest Farms, Inc., purchases Pennsylvania Control Commission. September 1957, sought sell Area, $6.40 per cwt. Pennsylvania. Area $2.78 assessed, actually forced $9.18 while price, $6.23 August 1957.11 16 parity objective 'compensatory' regulation, show result achieved without unnecessary hardships, virtually 'trade barriers' instance just given,12 milk.13 considering however, principal concern becomes apparent. As noted (370 U.S., p. 82, S.Ct., 1172, supra), displaces might otherwise outlet. area's computed reference milk, entry drive down close examination workings reveals preserve benefit blend physically excluded alone needs every never entered once use.14 therefore, subsidize insulate impact caused recognized 'designed loss * protect area.' F.2d, 730. impose trade barriers received sustained 'necessary effectuate' Order. IV. Section 8c(5)(G). 19 8c(5)(G) taken light legislative history, indicates imposed sort Congress intended forbid. provides: 20 'No agreement applicable shall prohibit manner limit, product thereof produced production United States.' 21 enacted law part Adjustment 1935, 49 Stat. 750, amending 1933, 48 31. re-enacted 50 246, reaffirmed 1935 after tax struck unconstitutional States Butler, 297 1, 56 312, 80 L.Ed. 477. 22 Along enumerating powers 'delegation' problems recent Schechter Poultry Corp. States, 295 495, 55 837, 79 1570, limit prevent establishing barriers.' Midwestern legislators particularly concerned possibility. When reported bill contained no like came floor House Representatives, Representative Andresen Minnesota suggested 'stop free flow commerce products.' He assurance Jones, Chairman Committee Agriculture, require anything coming 'comply same distributors comply region.' Cong.Rec. 9462.15 An amendment clarifying position offered Sauthoff Wisconsin, 9493,16 action proposal. On next day, proposed forerunner 9572. took following form: 24 '(g) No 25 objection addition language, Jones remarking '(i)t simply clarifying.' Ibid. change substituting words 'limit tend limit' 'prohibit,' objected ground necessary protection own 'tend introduction areas.17 26 bill, language added Andresen's amendment, went Senate. Accompanying S.Rep.No. 1011, 74th Cong., 1st Sess., stated, 11: 27 'To assaults structure sporadic importation new producing areas, permitting natural expansion provide regular delivery, payments theretofore covered classification. limitation producers—wherever located—into remain effective specified 3-month period.' (Emphasis added.)18 28 Senate amended, objection, 11655, read: 29 '(G) except provided subsection (d), States.'19 30 emerged conference form. report explained differences versions resolved (H.R.Rep.No. 1757, Sess. 21): 31 '* retains respect prohibitions both also denies (butter, cheese, cream, etc.) anywhere States. adopted does refer negative applicability manufacturing purposes, relating fixing, adjustment, etc.' 32 House, again 8c(5)(G), together 8c(5)(D), meant (79 13022): 33 'Mr. SNELL. understand exactly means, products,' forth. 34 JONES. applies You cannot cheese another, applied equality about 1/2 months. 35 How situation law? 36 particular enable being swamped outside, bought old instance, you run trouble ran York cases, Hampshire lower broke your agreements. York, anyone compelled producer requirements take manufacturer's added.) 37 history discloses rather confined, Judge Learned Hand 800, practices aimed exclusion eastern markets, compendiously setting up, guise price-fixing barriers, products. Whenever attempt broaden (G) encompass 'limitations' well 'prohibitions,' opposing pointed fact 'limit' read including type fixing (D)—i.e., allowing manufacturing-use period—or attempts put footing Although limit,' taken, context referring products, likewise makes clear regards word 'prohibit' refers merely absolute quota physical restrictions, encompasses effected subsidies called provision. V. 38 Invalidity Present 39 conclude fall inconsistent policy expressed section.20 Because conflicts justified 8c(7)(D), prevents inclusion express statutory provisions. Nor clause saved circumstance instances fortuitously operate par. (note 13, available achieving result, affording almost insuperable restrictions 40 Government contends considered cited petitioners administrative proceeding Department Agriculture. even Government's premise unauthorized upheld because prohibiting attacked, presents instance. petition filed alleged amounted 'to tariffs interfering across state lines,' prohibition 41 addition, choice joining market-wide pool, subject Their election stay argued, bars attack consequences choice. However, 'election' surely illusory. wherever Fund voluntary Booth Fisheries Co. Industrial Comm'n, 271 208, 211, 46 491, 492, 70 908. coercive and, indeed, all. 42 Whether full permissible need reach case. chooses consequence handler's involve considerations us. regard issue, exceeded entrusted Congress. 43 course remains protect, consistent statute, against resulting We decide directed end apply retrospectively, whether, validly applied, presently impounded funds resorted pro tanto effectuation. Cf. Morgan, 307 183, 59 83 1211. 'What further proceedings see fit our decision, determinations District relation proceedings, matters forecast hypothetically decide.' Morgan 304 23, 26, 58 773, 999, 1000, 1001, 1129. 44 reversed remanded opinion. ordered. 45 Judgment FRANKFURTER 47 WHITE consideration BLACK, dissenting. impossible agree Court's holding 1936, Butler,1 temporarily paralyzed national farm recovery program important parts 1933 casting grave doubts remainder passed bottom Great Depression alleviating desperate plight American farmer. Following Congress, unusual promptness another reaffirming broad comprehensive previously develop plans raising income farmers.2 philosophy later Sherman governmental original National Recovery host contemporaneous Acts, designed raise purchasing power workers Today years Butler projects itself path reading Congress' 1937 reenactment encourage help strikes vital element many up clouds confusion uncertainty others. blow devastating inflicted think harmful decisions differ degree. my belief faithful adherence Act's precisely opposite depressing prices. reap profits regret say bound expense themselves—for passed. Certainly true $700,000 today allow necessity come pockets basic features 19353 near depression country receiving These themselves amendments spell clearly extent add correct 'severe increasing disparity commodities' 'the farmers' stabilizing 'agricultural assets supporting credit structure.'4 51 causes low led grant were, details operation business itself, incredibly complex. main, widely attributed vicious sales did butter, products.5 pushing wall, gave specific could, Government, fix uses proceeds put.6 'parity'—a level insure generally get open, beyond this, above high enough products.8 sure 'Incidental him.9 Thus thereby abandoning competition. 52 proceeded regions number pools, York-Northern jeopardized today.10 chosen leave unregulated. Obviously large regulated pools levels, significant complicated involved place single pool. Among serious can, left unregulated, advantages bearing burdens members bear. And shown record reduce Secretary, properly think, acting powers, times displacement reduction fund cause consequent diminution key feature barrier' prohibited limits ability profit. 53 major dump highly prices, barrier barrier.' 8c(5) says nothing guaranteeing handlers, cross purposes aim government designated only: 54 States.'11 arrangement limiting Court, goes great lengths try really no-limitation wants said thereof.' that. whole persuades me knew saying that, forbid making blanket whatever guarantee them unprofitable.12 Outside clearest indication proper interpretation defeated deleted Conference.13 arguments architects program, show, conclusively, understanding successful: 57 Chairman, adoption gentleman Wisconsin absolutely wreck program. away terrific prevailed That, measure, shipment, yet gentleman, am sure, want interfere Then universal custom classify This, way, limitation. 'I perfectly willing adopt (the 8c(5)(G)), treats alike, someone long complied prescribed area; limitations required, destroy vestige milk.'14 rejected Conference Report discussion Hope, member conferees, conferee. shows fix: 60 permit governing producers? 61 HOPE. No; regulate bringing milk-shed, limited. in? 62 correct. 63 prescribe limitations? Yes; 65 66 Then, far concerned, but, protected. 67 correct.'15 last comments concerning finally adopted. 69 possibly operations desire lacks appropriate integrity fix. believe hand other. today,16 completely defenseless onslaught discriminatory bears none despite intimates alternative satisfy exacting lays today. My reason formula expanded unfair bear pool.17 Secondly, possible technical knowledge formulate sound substitute down—a represents quarter century daily practical experience administering congressional Thirdly event vague intimations valid hardly furnish guidance compete 'free riders.' 71 subjected riders' precise inform requirements. remand approve, direct possession. offer having already collected handlers. Such followed Morgan,18 equity good conscience why here. enjoined party challenging court compliance found valid. defective nevertheless ordered return fund, million dollars. contrary, strong dissents urging future, retained until findings enter stating that: 72 'Due discharge court's responsibility litigants public exercise discretion facilitate administration retention district time due expedition, final pending him.'19 73 hearings, order, according Morgan20 one-half-million-dollar distributed. 74 Despite purports pass either requiring membership future meets question,21 failing follow procedure rules questions. refusal specifically questions standing made. claims section22 complain. unless elect payments. contention down, here, applies. By remanding ruled adversely claim point effectively trying free-riding treating dispute. 75 failure valid, fixed, likely unjust inequitable windfall windfalls involving countless thousands dollars similarly situated guess.23 familiar guess, abhorrent affirm below Secretary. instituted filing petitions 8c(15)(A) 608c(15)(A), 608c(15)(A). Hearing Examiner petitioners' contentions Judicial Officer, behalf dismissed petitions. Petitioners review ruling 8c(15)(B) Act. consolidated enforcement actions 8a(6) relying supra, invalid. 183 F.Supp. 80. Appeals. 726. reorganization Chapter IX Title Code Federal Regulations past year resulted redesignation orders. 927. references contents quoted throughout January 8c(5)(A) '(5) products; 'In issued conditions, (except (7) section) others: '(A) Classifying used, providing pay, associations volume, differentials customarily grade quality purchased, (3) locations delivery thereof, handlers.' 608c(5)(A), 608c(5)(A). performance insuring continues periods short supply. main qualify 'pool.' 'Use rates, reflecting disposition. 1034 (Dayton-Springfield), 1037 (North Central Ohio), 1038 (Rockford-Freeport), 1074 (Southwest Kansas). 1002.83 volume 15% establishment individual pools. latter buys, uniformity Consequently, 1004 (Philadelphia), 1005 (Tri-State), 1010 (Wilmington), 1039 (Milwaukee), 1041 (Toledo), 1044 (Michigan Upper Peninsula), 1078 Iowa), 1096 (Northern Louisiana), 1097 (Memphis), 1102 (Fort Smith), 1129 (Austin-Waco), 1130 (Corpus Christi), 1134 (Western Colorado). Compare 1001.65 (Greater Boston), 1003.62 (Washington, D.C.), 1006.65 (Springfield, Mass.), 1007.65 (Worcester), 1008.54 (Wheeling), 1009.54 (Clarksburg, W. Va.), 1011.62 (Appalachian), 1014.46 (Southeastern England), 1015.46 (Connecticut), 1016.62 (Upper Chesapeake Bay), 1030.61 (Chicago), 1031.70(b) (South Bend-LaPorte-Elkhart), 1036.84(b) (Northeastern 1048.54 Youngstown-Warren), 1061.54 (St. Joseph), 1068.70(b) (Minneapolis-St. Paul), 1071.62(b) (Neosho Valley), 1072.55 (Sioux Falls-Mitchell), 1106.55 (Oklahoma), 1125.70 (Puget Sound), 1126.70(d) Texas), 1133.70(b) (Inland Empire). 'As stated herein, associated Conversely, enters originates sufficiently primary interests markets specialized frequently purposes. 'dumped' use, (have) health approval. operator using (ordinarily manufacture products) sending uses. compare respective returns naturally select alternative, yield return. absence pricing, cost, source, disposition I—A II) disposes III). 'If favor origin removed, be, treated evaluated is, namely milkshed. surplus, derive value. 'opportunity cost' subtrahend compensation order. 'The payable, value, closely approximates Northeast manufacture. 'It therefore dependable indicator source. handler, reasons, choses sends underwrite outbid shown.' paying room suggestion 'windfall' adjudged entitled returned litigation, embracing approximately four years, $617,000 Lehigh Valley $108,000 Suncrest. Several 1042.60 (Muskegon), 1128.62(b) (Central West Texas). deals permitted milk-surplus 1013.62 Florida), 1033.61 Cincinnati), 1035.63 (Columbus, 1040.66 (Southern Michigan), 1043.84 (Upstate 1045.83 Wisconsin), 1047.62 Wayne), 1064.61 Kansas City), 1065.62 (Nebraska-Western 1067.61 (Ozarks), 1069.62 (Duluth-Superior), 1073.62 (Wichita), 1094.62 (New Orleans), 1098.92 (Nashville), 1103.62 Mississippi), 1105.62 (Mississippi Delta), 1107.61 Gulf Coast), 1131.62 Arizona), 1135.62 (Colorado Springs-Pueblo), 1136.62 (Great Basin), 1137.62 (Eastern Other orders, assess introduced Where accepted measure done lowest. spring summer exacted. 1032.55(b) (Suburban St. Louis, August-February), 1046.55(b) (Ohio Valley, August-March), 1049.55(b) (Indianapolis, 1062.55(b) Louis 1063.63(b) (Quad Cities-Dubuque, July-November), 1066.57(a) City, 1070.63(b) (Cedar Rapids-Iowa 1075.63(b) (Black Hills, July-March), 1076.63(b) South Dakota, July-February), 1079.63(b) (Des Moines, 1090.54(b) (Chattanooga, 1095.70(e)(2) (Louisville-Lexington, October—December), 1099.62(a) (Paducah, August—March), 1101.93(b) (Knoxville, February), 1104.53(b) (Red River August-January), 1108.54(b), Arkansas, 1127.65(b) (San Antonio, August), 1132.63(b) (Texas Panhandle, July-February). buys may, chooses, Stark Wickard, 321 288, 291, 559, 562, 88 733, still manner, able justify milk's price,' question. Hutt, Restrictions Free Movement Fluid Orders, U.Det.L.J. 525, 564—577 (1960). methods because, equalize utilization' demonstrably unsound. Insofar handlers' neither nor 'equalize' relates suggest easier exaction I-blend discourage (which paid). assertion 'carries burden mistaken reasoning underlies retain supra. pp. 84—86, 1173—1174, simplified illustration serves clarify effect: date $6 $3 cwt., 2,000 consumed utilized computation follows: Table A. I...................... x 6.00 equals 12,000 III.................... 3.00 6,000 Totals...................... 4,000 18,000 Blend Price............... $4.50 500 drop (since constant): B. 1,500 9,000 2,500 7,500 16,500 $4.125 $.375 stayed altogether. distributing (through handlers) multiplied I, deficit restored. C. (Nonpool I) minus ClassIII) (Loss outlet) .375 formula, accomplishes restoring lost occupation outlet 1002.66, achieves indirect fashion. Instead computing includes list minimum-price obligations 1002.66(c). dividing 'milk producers,' i.e., D. (nonpool milk) Totals (pool milk).......... Price................. credits larger ANDRESEN. Is gives stop products? authorize crossing region. sanitary regulations? Sanitary regulations; keep out. Members inquired feature, wanted fair distribution. place, give barriers. second enables regions, developing issues, 'region' possible. Those that.' 'Sec.—(b) agreement, term preventing hindering commodity subsidizing depress therein BOILEAU. ask distinguished chairman committee else restrict States? tendency sections rules. HULL. subordinate shipment State amended (Mr. Sauthoff) harm. three Minnesota, Iowa, produce percent interested matter yield? yield. Would object Chicago dealers price? Not certainly limit.' '3-month period' referred 8c(5)(D) surplus-use version introductory reduced 'Subsection (d)' 8c(5)(D). note While point, difficulty concluding, precluded, themselves, promulgation 601 seq., seq. 750. Nebbia 291 502, 515—518, 530, 505, 506—508, 513, 78 940; Rock Royal Co-operative, 533, 548—550, 993, 1001 1002, 1446. 247, 608c(18), 608c(18). 757, 608c(7)(D). 8c(11)(C) exercised whenever practicable: 'All shall, practicable, terms, finds recognition areas.' 759, 608c(11)(C), 608c(11)(C). 8c(11)(A). 608c(11)(A), 608c(11)(A). 755, 608c(5)(G), 608c(5)(G). supplied.) Bailey Farm Dairy Anderson, 157 87, 96; 800 (L. Hand, J., dissenting). indicated italics: 11655. wording attempted explanation omitted analysis. construe (limitation) (D).' very construction Consequently rejecting refusing omitting effective, Report, H.R.Rep. 21: extended (§ 8c(5)(G)) permitted. (but) 13022. At year. wipe sustaining Officer relied reasons: '(T)he existing 27, carries longtime seasonal reserves numerous secondary Northeastern percentage considerably 27. utilization, course, results procurement draw supplies. Furthermore, utilization.' payment, suggests, obviously fluid-surplus ratio due, Only gets narrow has. defect fluid-blend payment. 573—576, 220. Inland Steel 306 153, 415, 557. 198, 803. 313 409, 85 1429. citation 1129, purported justification avoidance appropriate, fear prophetic. case, wandered courts eight trips 1002.29(d). suit Cleveland court. Lawson Benson, 187 66, appeal pending.

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