For Immediate Release                                                 Contact David Ferch

May 1, 2000                                                                            (802) 229-1941





WASHINGTON, D.C. -- The US Supreme Court today rejected an appeal by a group of dairy processors that argued the Northeast Dairy Compact Commission does not have the right to regulate certain milk.

“The conclusion of this case is vital to the Compact’s existence. The courts have ruled on the Compact Commission’s authority to regulate milk sold in New England which was produced and processed outside of the region and they have consistently found that the Commission has exercised its authority in a permissible manner,” said Kenneth Becker, executive director of the Northeast Dairy Compact Commission.

            This case – New York State Dairy Foods Inc. et al v Northeast Dairy Compact Commission et al – was first filed when the Compact went into effect in 1997. As the case has wended its way through the legal system, each court in succession has unequivocally upheld the Constitutionality of the Compact.

            The plaintiffs asserted that the Compact violates the Commerce Clause, the Compact Clause and the Due Process provisions of the U.S. Constitution. The Supreme Court decision not to take up this matter upholds the decisions of the lower courts, which have used broad language to strike down each of these claims.

            The "Commerce Clause challenge is ultimately based on little more than shifting sand," wrote Senior Circuit Judge Bownes in his November 1999 decision for the First Circuit Court of Appeals in Boston. The appeals court also concluded that "There can be no dispute in this case that Congress expressly consented to the Compact" and that "there is no legal or factual basis for finding a due process violation." The appeals court decision provides unqualified affirmation that the Compact Commission is operating well within the bounds of Constitutional law and Congressional authorization. In short, it is doing what it was designed to do.

The processors claimed the Compact does not have the right to regulate milk produced outside the Compact region but sold within the region. They claimed this violates the Commerce Clause of the Constitution by depriving them of a natural competitive advantage. However, the court found that the Compact's design, or pooling mechanism, which ensures all dairy farmers who supply milk for New England consumers receive the

benefit of the Compact payments, whether they farm in New England or outside New England, is clearly authorized by Congress and the Constitution. "The pool payment mechanism … does not bar the entry of milk from outside the Compact region," the Court ruled. “Rather, by allowing for payments back to the out-of-compact producers for Class 1 milk distributed inside the Compact region, the over-order price could be said to encourage the entry of such milk.”

Commission Vice Chair Mae Schmidle said the Court’s ruling is welcome. “We’re extremely pleased with the outcome of this and it certainly indicates the Northeast Dairy Compact is progressing in the right direction and in compliance with all the mandates of the federal government and the courts,” Mrs. Schmidle said.

Mr. Becker said this ruling should allay concerns about the Compact from other regions of the country. “Furthermore, the courts’ decisions mean it’s ok for the Commission to pay farmers from outside the region for the milk they ship here to supply this market. The First Circuit decision is the final decision in this matter. It means that the design of this commission that includes the participation of dairy farmers as part of diverse state delegations on the Compact Commission does not violate due process under the Compact structure.”

The remaining plaintiffs are New York State Dairy Foods, Inc., an association of processors, Cumberland Farms, Inc., and Elmhurst Dairy, Inc.


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