The opinion of the court was delivered by: ABRUZZO
ABRUZZO, Dirstrict Judge.
This is a motion for summary judgment in favor of the defendant under Rule 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. Simultaneously therewith, the plaintiff filed a cross-motion for summary judgment in its favor.
This action arises out of a ruling by the Secretary of Agriculture upon a petition filed by the plaintiff pursuant to Section 8c(15) (A) of the Agricultural Marketing Agreement Act of 1937, 7 U.S.C.A. § 608c (15) (A). The plaintiff, dissatisfied with the ruling in question, filed the complaint herein for the purpose of reviewing that ruling, pursuant to Section 8c(15) (B) of the Act aforesaid.
It is conceded that the issue is one of law only. The essential facts as presented before the administrative agency are not in dispute.
The jurisdiction of this forum to entertain the present proceeding is conferred by Section 8c(15) (B) of the Agricultural Marketing Agreement Act of 1937, 7 U.S.C.A. § 608c(15) (B). Neither party contests the fact that this suit is properly before this Court for the purpose of determining whether or not the ruling of the Secretary of Agriculture is in accordance with law.
The statute involved is the Act of May 12, 1933, 48 Stat. 31, as amended May 9, 1934, 48 Stat. 670, 675, as further amended and re-enacted by the Agricultural Marketing Agreement Act of 1937, 50 Stat. 246, 7 U.S.C.A. § 601 et seq., hereinafter referred to as the Act.
The order involved is Order No. 27 regulating the handling of milk in the New York Metropolitan milk marketing area, and the order, as amended, regulating the handling of milk in the same area, both of which were issued by the Secretary of Agriculture pursuant to the powers invested in him by the Act. Order No. 27 was originally effective September 1, 1938; and the order, as amended, was issued effective May 1, 1940.
Order No. 27 and the same order, as amended, are binding upon the plaintiff and many other handlers of milk similarly situated.
To obtain a clear view of the point at issue, it will be of value to briefly describe the marketing conditions existing prior to the Act in the New York milk marketing area and to summarize the history of milk regulation up until that time, in order to understand the problem which the New York milk marketing order was designed to solve.
Regulation of the milk produced for the New York milk market began during the lean year of 1935 with the institution of the State Milk Control. Opposition to the State Act culminated in the "Nebbia case" (Nebbia v. People of State of New York, 291 U.S. 502, 54 S. Ct. 505, 78 L. Ed. 940, 89 A.L.R. 1469) in which state control of milk prices to producers was upheld by the Supreme Court of the United States. Due to the availability of large supplies of milk from other states, flowing into New York by way of interstate commerce, it was impossible for the New York Milk Control to effectively regulate the intrastate milk, causing the interposition of the Federal Government and the issuance of the order in question, effective September 1, 1938.
The public hearings held before the issuance of the order disclosed that the production and distribution of milk for the New York milk market constitutes one of the most complex distributing mechanisms in the United States. About sixty thousand producers produce milk which is delivered twice daily to approximately four hundred milk receiving stations. From there, the milk flows in an infinite variety of channels to emerge finally in a vast number of different products, which in turn pass through the hands of numerous operators before finally reaching the ultimate consumer.
One of the very uneconomic practices shown was the unnecessary movement of milk and cream from plant to plant and operator to operator. Furthermore, the system of classification gave rise to attempts on the part of some handlers to manipulate the distribution of milk and cream so as to be able to claim its use in products to which a lower price attached, whereas in fact the products were actually in classes to which much higher prices were applicable.
After considering all of the evidence submitted, the Secretary of Agriculture decided that a use classification scheme which would make it possible for all handlers to secure milk products for use in a particular classification at the same cost as their competitors and which would prevent unnecessary movement of milk and cream from plant to plant would facilitate the effectuating of the declared policy of the Act. The classification scheme described in Order No. 27 is the result of that decision. Under it, handlers who desire to purchase milk for Class I purposes can purchase it from any country receiving plant and have such milk shipped directly to him. If these plants are located in the marketing area, the order requires its classification into Class I. If the plants are situated outside the marketing area, the milk may be classified in accordance with the form in which it leaves such second plant. In other words, an operator desiring to manufacture ice cream, evaporated milk or other products made from milk or cream, may purchase his milk or cream from a plant receiving milk from producers and manufacture it into any product he chooses, and have that product properly classified in the class into which it falls.
It must be borne in mind that nowhere is there a milk market to compare with the vastness of the New York milk market.The amount of fluid milk needed in the market is so great that the seasonal variation in deliveries of milk of producers brings about an immense volume of milk in excess of fluid requirements at certain times of the year. In order to take advantage of economies of specialization in plant operation, this volume prompted plant operators to become specialists in converting the fluid milk into a particular product, which was sold to other operators who in turn converted that product into another form. This resulted in the establishing of assembly lines in the processing of milk, with each plant operator ...