Court Opinion

ID: 6973931
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:07:34.014227+00
Date Added: 2024-06-11T16:08:53.423212
License: Public Domain

LOKEN, Circuit Judge,
concurring.
I agree that the district court’s injunction must be reversed, but I arrive at this conclusion by a somewhat different path.
In November 1975, the President’s Antitrust Immunities Task Force undertook to study the effects of government regulation of the dairy industry. The Task Force’s 1977 final report urged reduced Class I differentials and phased deregulation of milk marketing, observing:
[F]ederal milk orders are a significant deviation from a free-market economy, which deviation creates substantial undesirable economic effects. The system as administered has succeeded to a startling extent in maintaining milk markets as they existed in the 1930s.... The goal of an adequate supply for local consumption needs has been achieved; however, the need frequently is inappropriately supplied from local production, to the substantial detriment of consumers and some produc-ers_ The order system and cooperative monopolization have cost consumers and society millions of dollars each year in overcharges, deadweight losses, and transfer payments. Some farmers (grade B and Minnesota and Wisconsin grade A) actually lose income to other farmers (all other grade A). It is difficult to imagine that Congress intended this result.
U.S. DEPARTMENT OF JUSTICE, FEDERAL MILK MARKETING ORDERS AND PRICE SUPPORTS 139-41 (Paul W. MacAvoy ed.1977). Congress nonetheless went in the other direction in 1985, mandating higher Class I differentials for at least two years. By March 1990, industry concerns had prompted the Secretary to announce “a national hearing on milk marketing orders to ‘determine whether reasons exist to change current Federal milk orders,’ ” with particular emphasis on the Class I differentials. Milk in the New England and Other Marketing Areas [etc.], 58 Fed.Reg. 12634, 12635 (1993).
This appeal concerns the final agency action in that proceeding. There is substantial evidence that the existing Class I differentials do not reflect current supply/demand conditions in the various local milk marketing areas.7 Faced with this evidence, the district court was understandably frustrated at the Secretary’s continuing inability to justify differentials that he decided to retain at the end of a lengthy proceeding he had initiated. Nonetheless, I conclude the court’s decision to declare the Secretary’s action arbitrary and capricious and to enjoin its implementation should be reversed because of overriding recent events.
In the Agricultural Market Transition Act of 1996, Congress acknowledged the need for reform and directed the Secretary to amend milk marketing orders, using an expedited informal rulemaking procedure and focusing specifically on the issue of “multiple basing *648points for the pricing of fluid milk.” 7 U.S.C. § 7253(a)(3)(A). Acting pursuant to this new authority, the Secretary promulgated proposed amendments to the marketing orders in January 1998, some two months after the district court issued its injunction. Using a computer simulator designed at Cornell University, the Secretary advanced two options to replace the current Class I differentials, both intended to better correlate regulated milk prices and existing market conditions. See Proposed Amendments to Marketing Agreements and Orders, 63 Fed.Reg. 4802, 4904-15 (1998) (to be codified at 7 C.F.R. pts. 1000 et seq.). The second option, which the Secretary describes as “preferred,” will “move the dairy industry into a more market-determined pricing system” and “reduce! ] the government presence in establishing minimum Class I prices” by setting prices according to a mathematical estimate of transportation costs and by giving “dairy farmers and, processors more freedom to negotiate fluid milk price levels.” Id. at 4913-15. In other words, the Secretary now has in progress, with the express endorsement of Congress, a new administrative proceeding explicitly addressing the deficiencies the district court has identified in existing milk marketing orders. The Secretary is required to complete this proceeding and to implement amended marketing orders by April 4, 1999. See 7 U.S.C. § 7253(b)(2)(B).
Milk marketing orders are the product of complex legislation and are administered by an agency of the executive branch'chosen by Congress and subject to congressional oversight arid control. As the court has explained, the judiciary has a meaningful but limited role in reviewing whether the agency has acted consistently with its legislative mandate. Regulatory reform is a difficult, time consuming task best conducted by Congress and the Executive, the branches of government directly responsible to the electorate. In the midst of a long, politically sensitive debate over how to reform an antiquated regulatory regime, Congress has now intervened in decisive fashion, and the Secretary has begun implementing this new mandate. It is time for the judiciary to stay its hand. Accordingly, while I have substantial sympathy for the Minnesota Milk Producers Association’s position and the district court’s response to the issues it was presented, I concur.

. For example, a study using computer generated, revenue-neutral differentials based on 1995 data concluded that the differential in Minneapolis was $.77/cwt too low, while differentials for Dallas, Denver, and Phoenix were more than $.60/cwt too high: See PRATT ET AL„ ESTIMATION OF REGIONAL DIFFERENCES IN CLASS I MILK VALUES ACROSS U.S. MILK MARKETS 5 (1998). A study based on 1993 data reached similar conclusions. See NOVAKO-VIC, CORNELL PROGRAM ON DAIRY MARKETS AND POLICY BRIEFING PAPER NO. 22: TESTIMONY ON FEDERAL MILK MARKETING ORDER POLICY 5-6 (1995).