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INTER-STATE MILK PRODUCERS COOP. v. BUTZ

March 26, 1974

INTER-STATE MILK PRODUCERS' COOPERATIVE
v.
Earl L. BUTZ, Secretary of Agriculture of the United States of America


Gorbey, District Judge.


The opinion of the court was delivered by: GORBEY

GORBEY, District Judge.

This is an action brought pursuant to § 8c(15) (B) of the Agricultural Marketing Agreement Act of 1937 (7 U.S.C. § 608c(15) (B)), seeking review of a final determination by a judicial officer of the Department of Agriculture which dismissed plaintiff's petition. Plaintiff sought to overturn a decision by the Market Administrator to reclassify certain milk shipped by plaintiff. The defendant has moved this court to grant summary judgment in its favor. Both parties and this court agree that there are no facts in dispute. For the reasons stated in the following memorandum, we will deny defendant's motion for summary judgment, and since there are no facts in dispute, we will treat the case as though plaintiff has filed a cross motion for summary judgment, which motion is granted. See 6 Moore's Federal Practice, § 56.12.

 This case concerns a dispute over the enforcement by the Department of Agriculture of Milk Marketing Order No. 16 (7 C.F.R. part 1016) which had been duly promulgated and issued by the Secretary. This order was effective January 1, 1960, and continuing through the months in question of January, February and March, 1969. *fn1" It covered milk handling in the upper Chesapeake Bay area. Specifically, it contains provisions which (a) classify milk; (b) establishes a minimum price for each use classification; (c) provides a method for distribution of the total value of all milk received by all handlers among all producers at a uniform blended or average price, computed each month by the Market Administrator in accordance with the provisions of the order; and (d) other miscellaneous provisions identifying the market area to be regulated, the milk to be priced, the persons (handlers) to be regulated, the method of reporting receipts and uses of milk by all regulated handlers, and establishing an agency known as the Market Administrator to administer the order. *fn2"

 Each handler's minimum obligation for milk is determined by multiplying the quantity of milk used by him in each of the classes established by the order, times the minimum price for each class. These prices are subject to certain differentials not at issue in this case. Plaintiff in this case is admittedly a handler as defined in Order No. 16. For the months January, February and March, 1969, plaintiff reported certain quantities of milk as being used in Class II as defined in the Order. After audit and investigation, the Market Administrator concluded that the milk should have been reported as Class I. He so notified the plaintiff and charged it with the difference between its value as originally reported (i.e., Class II) and its value as Class I. In reclassifying this milk, the Market Administrator relied on § 1016.44 of the Order, which provides:

 
"§ 1016.44 Transfers.
 
Skim milk and butterfat in the form of a fluid milk product shall be classified : . . . .
 
(c) As Class I, if transferred or diverted in bulk to a nonpool plant that is . . . located 300 miles or more from the City Hall in Baltimore, Md.;
 
(d) As Class I milk, if transferred or diverted in bulk to a nonpool plant that is . . . located less than 300 miles by the shortest hard-surfaced highway distance as determined by the market administrator from the City Hall in Baltimore, Md., unless all the requirements of subparagraphs (1) and (2) of this paragraph are met, in which case the skim milk and butterfat so transferred or diverted shall be classified in accordance with the assignment resulting from subparagraph (3) of this paragraph:
 
(1) The transferring or diverting handler claims classification pursuant to . . . subparagraph (3) . . ..
 
(2) The operator of such nonpool transferee plant maintains books and records showing the utilization of all skim milk received at such plant which are made available if requested by the market administrator for the purpose of verification;
 
(3) The skim milk and butterfat so transferred shall be classified on the basis of the following assignment of utilization at such nonpool plant. . ."
 
[emphasis added.]

 During the period of time in question, there was a glut in the local milk market. Plaintiff was, pursuant to the terms of Order No. 16, the handler of certain milk which ordinarily went to pool-plants of its customer, Lancaster Milk Company. Pursuant to arrangements between Lancaster Milk Company and Kirk Milk Products, Inc., during the months of January, February and March, 1969, the milk went instead from the farms of petitioner's members to receiving stations of Kirk Milk Products, Inc. in Lemoyne, Pennsylvania, and Hagerstown, Maryland, where it was reloaded in the same form of bulk fluid milk product and transported to processing plants of Pet Milk Company, in Abingdon, Virginia and the Borden Company, in Chester, South Carolina. None of the plants involved, other than that of the Lancaster Milk Company, was a pool plant. The receiving stations of Kirk were located within 300 miles of the Baltimore City Hall, and the Pet and Borden plants were more than 300 miles distant. Under paragraph (d) of § 1016.44, milk transferred to nonpool plants within 300 miles is classified on the basis of proven actual "utilization at such nonpool plant". Since the milk in question was eventually transferred to a nonpool plant in excess of 300 miles from the City Hall in Baltimore, the Market Administrator ruled that pursuant to paragraph (c), the milk should be classified as Class I, irrespective of its eventual use.

 There is no dispute that the milk in question was in fact utilized as Class II milk. However, the Secretary maintains that the clear import of the language of Order No. 16 precludes any investigation as to the ultimate use so long as the milk was transferred to a nonpool plant in excess of the 300 miles. As a result of the Administrator's reclassification, plaintiff's liability to the producer's settlement fund was ...


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