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decided: April 18, 1979.


Appeal from the Order of the Pennsylvania Milk Marketing Board in case of In Re: Establishing Two Separate Zones for the Southeastern Milk Marketing Area, Area No. 1, Official General Order No. A-813.


Wayne M. Thomas, with him David H. Weinstein; Kohn, Savett, Marion & Graf ; and, of counsel, Sheldon A. Weiss, for petitioner.

Daniel T. Flaherty, Chief Counsel, with him Harold Swope, and Daniels and Swope, for respondents.

Judges Wilkinson, Jr., Mencer and Blatt, sitting as a panel of three. Opinion by Judge Wilkinson, Jr.

Author: Wilkinson

[ 42 Pa. Commw. Page 93]

On December 2, 1976, the Suburban Philadelphia Milk Dealers Association and six individual dairies (hereafter collectively referred to as respondents) petitioned the Pennsylvania Milk Marketing Board (Board) to conduct hearings on the question of whether

[ 42 Pa. Commw. Page 94]

    the Southeastern Milk Marketing Area 1 (hereafter simply Area 1) should be subdivided into two marketing zones. Hearings were held on April 19 and 20, May 20 and June 21, 1977. Thereafter, the Board issued the adjudication and General Order No. A-813 here in question which established two zones in Area 1, Zone 1 consisting of Philadelphia and Delaware Counties and those portions of Bucks and Montgomery Counties south of the Pennsylvania Turnpike and Zone 2, consisting of Chester County and those areas of Bucks and Montgomery Counties north of the Pennsylvania Turnpike. Historically General Order No. A-813 amends General Order No. A-793 established a year earlier which had expanded Area 1 to include all five counties into one marketing area and reverts back to pre-A-793 orders which had established a separate marketing area for Chester and portions of Bucks and Montgomery Counties, albeit along geographical lines different from the Pennsylvania Turnpike.

Petitioner, which operates 22 convenience stores selling dairy products in Area 1, eleven of which are located in Zone 2, filed the instant appeal, contending the Board's findings lack sufficient specificity for adequate appellate review, that the Board exceeded its statutory authority in creating the new zones and that there was insufficient evidence to support the Board's order.*fn1 Having examined the record, we conclude that the Board's General Order No. A-813 must be affirmed.

[ 42 Pa. Commw. Page 95]

A total of seven witnesses testified at the hearings before the Board; they included: a representative of respondents' association who testified favoring the creation of two zones, specifically proposing using the Pennsylvania Turnpike as a natural dividing line; three witnesses opposing the creation of two zones, a statistician, petitioner's sales manager and a milk marketing expert; the executive secretary of the Board; and two staff members of the Board. Respondents' witness presented the results of a number of statistical studies showing a substantial dissimilarity between costs and cost differentials to dealers within Area 1 as between the metropolitan and suburban counties and a substantial similarity in those statistics between the suburban counties in Area 1 and Milk Marketing Area 2. This witness also testified that within the year suburban milk dealers had been included in Area 1, those dealers showed a net operating loss in controlled sales of $189,500, and a net operating profit of $183,000 in non-controlled sales. This evidence also indicated that the milk dealers proposing the zones represented 33.1 percent of the total sales in the proposed Zone 2 and 6.5 percent of the total sales in Area 1. Petitioners' witnesses testified as to the similarities within Area 1, the advantages of combining urban and suburban markets to allow increased competition and reduced prices in consumer sales through volume sales and lower costs to consumers achieved through milk sales in supermarkets, all marketing techniques which were available and in use throughout Area 1. A staff report submitted by the audit supervisor of the Board detailed the history of the creation of Area 1, and while not recommending the adoption of any boundary line, noted the substantial degree of difference in the suburban and urban areas of Area 1 and the substantial degree of similarity with Area 2 and the suburban

[ 42 Pa. Commw. Page 96]

    counties of Area 1. On cross-examination the audit supervisor testified that while county lines were the traditional means of defining areas or zones for the purpose of milk marketing, they were not necessarily ...

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