John Marshall Harlan II

“ Without the benefit of government muscle to eliminate crippling price warfare in the summer months, neither nearby nor country producers could share in the monopoly-type profits that accrue from fluid milk sales. ”

“ The legislative history strongly suggests that 'market differentials,' as well as all the other differentials, contemplated particular understood economic adjustments. The House Report, in discussing the allowable adjustments characterizes the market differential as a payment over and above the transportation costs, i.e., a location differential, for delivery to the primary market. ”

“ Indeed, Senator Murphy apparently acquiesced in Senator Copeland's implied criticism of the statute for providing uniform prices for distant and nearby producers within the marketing region. When Senator Copeland pursued his inquiry, asking whether the Act recognized the higher cost for taxes on nearby lands, Senator Murphy merely recited the differential provisions of the Act and suggested that they 'adopt the present practice of business,' but conspicuously lacking is an affirmative statement that any specific differential covered these costs. ”

“ In order to meet fluid demand which is relatively constant, sufficiently large herds must be maintained to supply winter needs. The result is oversupply in the more fruitful months. The historical tendency prior to regulation was for milk distributors, 'handlers,' to take advantage of this surplus to obtain bargains during glut periods. Milk can be obtained from distant sources and handlers can afford to absorb transportation costs and still pay more to outlying farmers whose traditional outlet is the manufacturing market. ”

“ While petitioner nearby farmers do not concede so readily the absence of economic foundation for the differential, no justifications are advanced that find any substantial support in the record. The allusion to the evenness of production on nearby farms would not justify the exclusive payment of this differential to nearby farmers. If the Secretary intended a production differential, all producers who qualify would be eligible. Some amici and petitioners point to higher taxes on nearby lands and opportunity costs as reason for retaining the differential. ”

“ To maintain income farmers increase production and the disequilibrium snowballs.
To protect against market vicissitudes, farmers in the early 1920's formed co-operatives. These cooperatives were effective in eliminating the self- defeating overproduction by pooling the milk supply and refusing to deal with handlers except on a collective basis. [4] During the 1920's era of relative market stability the nearby farmers enjoyed premium prices for their product. ”

“ The present system, which differs little in substance from the shceme conceived in 1937 for regulating the Boston market, [9] provides for a uniform market price payable to all producers by all handlers. [10] Prices are established for Class I and Class II uses. The total volume of milk channeled into the market in each category is multiplied by the appropriate coefficient price and the two results are totaled and then divided by the total number of pounds sold. The result represents the average value of milk sold in the marketing area and is the basic 'uniform' price. ”

“ While market differentials customarily applied need not be restricted to the sole illustration in the House Report, that illustration, taken in conjunction with the discussion of all the statutory differentials, suggests that the permissible adjustments are limited to compensation for rendering an economic service. ”

“ While petitioners argue that the differential is a necessary inducement to keep the nearby farmers in business, the record does not reveal that the Secretary acted out of concern that the nearby farmers would quit the market, nor is there any evidence demonstrating the present necessity for nearby producers. In an era where efficient transportation is available this may be of nominal concern. ”

“ It is, however, an essential cost that cannot be eliminated by looking to an alternative supplier. Viewed in this context, it is of course a cost to the handler; for in a nonregulated equilibrium market, a handler would be forced to pay a premium during the winter months when supply is limited and demand constant.↑ 'The volume differential is a differential which is paid when the operations of several country plants are consolidated into one plant. ”

“ While cost differences account for part of the discrepancy in price, they do not explain the entire gap. At the same time the milk industry is characterized by periods of seasonal overproduction. The winter months are low in yield and conversely the summer months are fertile. ”

“ A nearby farmer, for example, would not incur additional costs by delivering to a preferred city plant as opposed to a country station. The savings to the handler are nevertheless plain and the market differential should properly be viewed as an adjustment that permits the producer to share in the handler's profits resulting from reduced costs.↑ See Kessel, supra, n. ”

“ If provision for such approval could ever legitimize a regulation not authorized by statute, the provision has no significance in the case before us, in light of the considerations already discussed. It is the Secretary, not the farmers, who is responsible for administering the statute and initiating orders. [33]
Although the Secretary does not press the point, the private petitioners argue that this Court should at the very least reverse for a trial on the merits or alternatively reverse with instructions to remand to the Secretary for further consideration. ”

“ The general language of the committee report indicating that Congress intended to carry forward the basic regulatory approach adopted under the 1933 Act, following the precedent of the 1920's, is stressed by the dissent to this opinion. This committee language, it is argued, reinforces the continuity connotations of the 'customarily applied' language, a thrust that is not blunted by any specific language indicating a legislative purpose to treat all farmers equally.
Legislative silence is a poor beacon to follow in discerning the proper statutory route. ”

“ Nor has the Secretary advanced any economic justification for these differential payments. It is plain from the administrative record that the nearby differential was included in the original Boston order as a recognition of the favored position of nearby producers in the fluid market and as an inducement to nearby farmers to approve the Secretary's order. (J.A. 237 [25] .) The only sense in which the handler may be said to gain economically is by virtue of the elimination of the nearby producer as a potential competitor. ”

“ No transportation adjustment is provided for in calculation of the uniform price under § 1001.62 of the order. Differentials to compensate for zone of delivery are retained as separate adjustments. See infra.↑ The Secretary has three alternative modes of proceeding under the Act. He may establish 'use' prices which all handlers must pay to all producers according to the actual amount of milk used in each category, § 8c (5) (A) ; individual handler pools where all producers or co-operatives selling to an individual handler shall be paid a uniform price for milk delivered to that handler ”

“ Without this supply the handlers would be unable to meet their winter requirements.↑ Because they were historically fluid suppliers the nearby producers apparently maintained at all times production sufficient to service the consumer fluid market. In addition their close proximity enabled them to deliver to small retailers. As such they were potential competitors.↑ See Agricultural Adjustment Administration Report, supr, n. 3, at 159-161; G. Barnhart, The Development of the Licenses and Order Regulating the Handling of Milk in the Greater Boston, Massachusetts, Marketing Area, Nov. ”