For Immediate Release, November 3, 1998

Contact: Tina Wisell, (802) 229-1941

U.S. District Court Judge Patti B. Saris on Monday ruled in favor of the Northeast Dairy Compact Commission in a challenge brought by New York State Dairy Foods, Inc. et al. The lawsuit, which was filed by five New York-based fluid milk processors in federal district court in Boston, challenged the Compact Commission's authority to regulate milk that is produced and processed outside the region but distributed within New England. Secondly, the plaintiffs challenged the administrative assessment imposed under the Compact pricing regulation. Finally, the plaintiffs claimed that producer and processor participation on the Commission violates the Due Process Clauses of the Constitution.

The processors initially filed a request for a preliminary injunction seeking to enjoin the Commission from collecting certain over-order obligations from these processors, but the district court denied this motion in August 1997. The case was then briefed by both sides and argued before the court on April 1, 1998. In its ruling on Monday, the court denied the challenges brought by the processors and granted the motion for summary judgment filed by the Compact Commission.

Compact Commission Executive Director Ken Becker said, "The court's decision clears yet another legal hurdle for the Compact Commission. The court has found that the work of the Commission is firmly and legally grounded in the authority granted by Congress to the states under the 'Compact Clause' of the Constitution and in the rules and regulations promulgated by the Commission under the authority granted in the Compact."

The court denied the processors' challenge that the Commission lacked the authority to regulate Class I (fluid) milk produced, processed and packaged outside of New England but distributed within New England. Judge Saris said Congress' consent to the Northeast Interstate Dairy Compact gave the Commission the authority to promulgate provisions governing the pricing and pooling of partially regulated plants (milk plants not located in the regulated area but having fluid milk sales within such an area or receipts from farmers located in such an area).

 The court also denied a challenge by the processors that the Commission did not have the authority to charge a 3.2 cent administrative assessment per hundred pounds of milk on fluid milk handlers regardless of the source of the milk they process, if they distribute their milk in New England. To the plaintiffs' claim that the administrative assessment violates the equal protection clause of the federal and state constitutions because it should also apply to the distributions of manufactured milk products, Judge Saris stated, "This is sour milk." She noted that the Commission has no regulatory authority over non-Class I distributions. Judge Saris concluded, "…it is rational for the Commission to assess the costs of administering the over-order regulation -- an assessment to which Congress consented -- on all those who distribute Class I milk in the regulated area 'as a cost of doing business in the market.'"

The plaintiffs had also charged that the participation in certain Commission activities by Compact Commission members who were New England producer or processor representatives violated the Due Process Clause of the Constitution because these members had a direct interest in the milk pricing. The court, however, denied this challenge, stating that individuals from a particular industry typically serve on administrative bodies with regulatory authority over that industry. Judge Saris said, "The inclusion of dairy farmers on the Commission reflects a deliberate judgement by the participating Compact states -- a judgement approved by Congress -- to account for dairy farmer expertise within each state delegation." She added that the Commission also represents diverse interests, including consumers, not solely those of New England producers and processors.