proceeding be enlarged to include consideration of the performance criteria for the device and that the agency issue an appropriate notice setting forth the new scope of the proceeding. (4) Notwithstanding the agency's acceptance of petitioner's position that the scope of the proceeding should be enlarged, the agency did not issue a third notice of proposed rulemaking and published instead a new standard for the automotive device which modified the permissible failure rates for the device and substantially downgraded the performance criteria. As stated, the court agreed with petitioner's argument that the agency was required to issue a third notice including a proposed amendment to modify the performance criteria for the device.
In contrast, the agency record in the instant case reflects the following: (1) The Secretary issued a notice of hearing for Federal Order 2 which was published in the Federal Register and contained in part proposals for adjustments of certain location and transportation differentials in Federal Order 2. As stated, plaintiffs' representative fully participated in the hearing. (2) Subsequent to the rulemaking hearing, plaintiffs and other interested parties filed proposed findings and conclusions and written arguments or briefs.
(3) Thereafter a recommended partial decision including the contested amendment which reduced the Class I price add-on was published in the Federal Register. (42 F.R. 18950). Interested parties were again afforded another opportunity to comment upon the proposed amendment to the marketing order by way of filing exceptions and supporting briefs to the proposed amendment. Plaintiffs' representative in fact filed exceptions and supporting briefs. (4) The final partial decision proposing, Inter alia, a reduction in the Order 2 Class I price add-on was published in the Federal Register. (42 F.R. 41582). The decision also provided that a referendum of producers in Order 2 would be conducted to determine whether they favored issuance of the proposed amended order. Approximately 80 producer members of the cooperatives belonging to plaintiff Pennmarva participated in the referendum and over 75 per cent of these producers voted in favor of the proposed marketing order. Over 92 per cent of all producers voting voted in favor of the proposed marketing order.
Clearly, then, interested parties in the instant case were given four opportunities to comment in some form upon proposed amendments to the marketing order; they were given two opportunities to comment upon the marketing order as finally amended. Moreover, interested parties were vested with the sweeping power to veto the Secretary's action. In contrast, interested parties in the Wagner case were not given a single opportunity to comment upon the rule therein as finally promulgated.
The thrust of plaintiffs' argument relative to notice is that agency failure to include in the notice of hearing every precise proposal adopted in the regulation as finally promulgated renders such notice invalid. In the course of reviewing orders of the Federal Communications Commission, the Ninth Circuit noted, "Title 5 U.S.C. § 553(b)(3), formerly 5 U.S.C. § 1003(a)(3), does not require an agency to publish in advance every precise proposal which it may ultimately adopt as a rule." California Citizens Band Association v. United States, 375 F.2d 43, 48 (9th Cir. 1967), cert. denied, 389 U.S. 844, 88 S. Ct. 96, 19 L. Ed. 2d 112 (1967). The Sixth Circuit, in reviewing an order of the National Traffic Safety Administration, stated, "It is clear that an administrative rule as adopted need not be identical to the proposed version of the rule." Chrysler Corporation v. Department of Transportation, 515 F.2d 1053, 1061 (6th Cir. 1975). A contrary rule would lead to the absurd result that in rulemaking under the Administrative Procedure Act, an agency could draw upon the comments tendered at a rulemaking hearing only at the peril of starting a new procedural round of commentary. South Terminal Corporation v. Environmental Protection Agency, 504 F.2d 646, 659 (1st Cir. 1974). Accordingly, the alleged variation between the noticed proposals and the amended order as finally adopted does not invalidate the notice of hearing in the instant case.
Compliance with the notice requirements of the Administrative Procedure Act is had where the rule as finally adopted does not differ substantially from the proposed rule. See Chrysler Corporation v. Department of Transportation, supra; South Terminal Corporation v. Environmental Protection Agency, supra. In view of the fact that the reduction of the Class I price add-on had substantially the same effect on the Order 2 blend price and the volume of Class I sales in Order 2 that several of the noticed proposals would have had on such price and sales, the absence of reference to a possible reduction in the Class I price add-on in the notice of hearing was neither fatal nor prejudicial. In this regard, it is important to note that certain testimony elicited by plaintiffs' representative was explicitly to the effect that a transportation credit in Order 2, a noticed proposal, would result in a reduction of the Order 2 blend price. (Tr. 173-179 Vol. A (N.Y.)).
Plaintiffs' reliance on Mohawk Airlines, Inc. v. Civil Aeronautics Board, 412 F.2d 8 (2d Cir., 1969) is also misplaced. The petitioner in Mohawk sought judicial review of an action by the Board which awarded authority for three non-stop airline routes to petitioner's competitor, Allegheny Airlines. Petitioner claimed that the Board did not provide it with adequate notice that non-stop authority for the airline routes would be at issue in the rulemaking proceeding. Additionally, petitioner claimed that it suffered substantial prejudice as a result of the lack of notice because the non-stop traffic on the routes in question was not large enough to support more than one airline. The Second Circuit found the notice inadequate in view of its failure to even hint that non-stop route authority in contention would be included in the investigation. The court based its finding as to the inadequacy of the notice in part on its conclusion that petitioner "suffered substantial prejudice as a result because it was prevented from seeking timely comparative consideration of its own qualifications for such authority with those of Allegheny in accordance with its Ashbacker rights." Mohawk Airlines, Inc. v. Civil Aeronautics Board, supra, 412 F.2d at 16. The Ashbacker doctrine also weighed heavily on the Court's decision to rule the notice invalid. Under Ashbacker Radio Corporation v. Federal Communication Commission, 326 U.S. 327, 66 S. Ct. 148, 90 L. Ed. 108 (1945), if an agency's award of one application for operating authority would be mutually exclusive as a matter of fact with the award of others before the agency, the competing applications must be considered contemporaneously. We note that in the instant matter, we have determined for reasons already stated that plaintiffs have not suffered prejudice in any form as a result of the absence of reference to a proposal regarding the Class I add-on in the notice of hearing. We underscore the fact that plaintiffs' views were before the Secretary by virtue of their exceptions and supporting memoranda to the proposed amended order. See page 649, Infra.
THE SUBSTANTIAL EVIDENCE ISSUE
The Agricultural Adjustment Act clearly provides that the Secretary is bound to issue an order on the basis of evidence adduced at a hearing. 7 U.S.C. § 608c(4).
The courts invariably read this provision of the Act in conjunction with a relevant provision of the Administrative Procedure Act which requires that reviewing courts hold unlawful and set aside agency action found to be unsupported by substantial evidence: 5 U.S.C. § 706. Fairmont Foods Co. v. Hardin, 143 U.S.App.D.C. 40, 45, 442 F.2d 762, 767 (1971); Lewes Dairy, Inc. v. Freeman, 401 F.2d 308, 315 (3rd Cir. 1968), cert. den. 394 U.S. 929, 89 S. Ct. 1187, 22 L. Ed. 2d 455 (1969); Abbotts Dairies Div. of Fairmont Foods Co. v. Butz, 389 F. Supp. 1, 7 (E.D.Pa.1975); Abbotts Dairies Div. of Fairmont Foods, Inc. v. Hardin, 351 F. Supp. 561, 564 (E.D.Pa.1972). Accordingly, the function of this court is to determine whether on the record as a whole there is substantial evidence to support the Secretary's decision and amended order. We note, however, that the Third Circuit has cautioned the District Courts in this regard, stating that such courts "(are) not free to draw (their) own independent inferences and conclusions from the record." Lewes Dairy, Inc. v. Freeman, supra, 401 F.2d at 317. Additionally, District Courts are not to decide questions of credibility. Lamont v. Finch, 315 F. Supp. 59, 61 (W.D.Pa.1970).
Substantial evidence has been defined as relevant evidence that a reasonable person might accept to support a conclusion. Consolo v. Federal Maritime Commission, 383 U.S. 607, 619-620, 86 S. Ct. 1018, 1026, 16 L. Ed. 2d 131, 140 (1966). The mere possibility of drawing two inconsistent conclusions from the evidence does not prevent an agency's finding from being supported by substantial evidence. National Labor Relations Board v. Nevada Consolidated Copper Corp., 316 U.S. 105, 106, 62 S. Ct. 960, 961, 86 L. Ed. 1305, 1307 (1942).
The Third Circuit determined in Lewes Dairy, Inc., supra, that the burden of proving that an agency determination is unsupported by substantial evidence in the record falls on the party challenging the agency determination because there attaches to the determination of an administrative agency a presumption of the existence of facts justifying the determination. Id., at 316. Applying this standard to the instant action, it was incumbent upon plaintiffs to demonstrate the absence of substantial evidence in the record in support of the Secretary's determination. After careful examination of the administrative hearing record and analysis of the evidence therein in accordance with the teachings of the aforesaid cases regarding substantial evidence, this court finds that there is in fact relevant evidence that a reasonable person might consider adequate to support the Secretary's determination. Accordingly, plaintiffs have failed to sustain their burden of proof on the question of substantial evidence.
Plaintiffs vigorously argue that there is neither substantial nor any record evidence in support of the Secretary's action. In plaintiffs' view, all of the evidence at the hearing concerned a problem of dealing with increased costs of assembling and transporting supply plant milk in Order 2, which milk incurs reload costs not incurred by milk which is shipped directly to the plant without reloading.
Generally speaking, defendant and intervenor-defendants would appear to accept this characterization of the evidence introduced at the hearing. It is noted that in the Order 4 market, producer milk is priced at the location of the plant where the milk is first received. Under this pricing arrangement, the cost of hauling the milk to the plant of first receipt by the handlers is borne by Order 4 producers. Therefore, Order 4 handlers' minimum costs under the order are not affected by these hauling costs, or any increase in such costs. See the affidavit of Herbert L. Forest, Director, Dairy Division, Agricultural Marketing Service, United States Department of Agriculture, dated October 12, 1977 P 8 at pages 5-6.
Plaintiffs claim that the problem of increased costs of assembling and transporting supply plant milk in Order 2 was discussed for the alleged reason that Order 2 handlers were competing with Order 4 handlers in North Jersey.
We note that mere competition among handlers of different marketing orders or among producers of different orders does not contravene the declared policy of the Agricultural Adjustment Act; a finding that there exists disorderly marketing conditions in an order does in fact contravene the policy of the Act. See 7 U.S.C. § 602. The Secretary found such conditions to exist in Order 2 on the basis of the evidence adduced at the hearing; such a finding requires corrective action. The record reflects that plaintiffs have significantly understated the evidence on the issue of "competition" among Order 2 handlers and handlers in other marketing orders for Class I sales in North Jersey. Richard Redmond, President of Dairylea Cooperative and Director of NEDCO, appearing as a policy witness on behalf of Dairylea and NEDCO, intervenors herein, stated at the administrative hearing:
Under existing circumstances, Order # 2 handlers are operating at a competitive disadvantage with those handlers making sales in the Order # 2 marketing area from other Federal order markets. Costs to Order # 2 handlers for fluid milk are as much as 46 (cents) per cwt., or 1 (cent) per quart, over their competition. In the manufacturing class their costs exceed those in other markets by about 11 (cents) per cwt.
Because of this fluid milk price disparity, there has been a steady increase in the sale of packaged fluid milk into the Order # 2 marketing area. Most of this milk is from Order # 4, but in the last 12 months, Order # 15 has also shown a fairly large increase. (Tr. 86 Vol. A. (N.Y.))