Zuber v. Allen/Dissent Black

by Hugo Black

United States Supreme Court

396 U.S. 168

Zuber  v.  Allen

 Argued: Oct. 16, 1969. --- Decided: Dec 9, 1969

Mr. Justice BLACK, with whom Mr. Justice WHITE joins, dissenting.

The central question in this cause is whether a provision in the Secretary of Agriculture's Boston milk market regulation which provides that farmers close to Boston will receive a higher price for their milk than farmers farther away is valid under the Agricultural Marketing Agreement Act of 1937, as amended, 50 Stat. 246, 7 U.S.C. § 601 et seq. (1964 ed. and Supp. IV). The majority concludes that this higher payment can be sustained only if it represents 'compensation for rendering an economic service,' ante, at 188, and then holds that since the Secretary has not provided such an economic justification for this payment, it is invalid. The effect of affirming the judgment below is that challenged payments which have been placed in a special fund since June 1967 and now amount to over $8,000,000 will be distributed to all farmers selling milk in the Boston market instead of only those located near Boston. This represents a drastic change in the distribution of the income from the sale of milk since only the nearby farmers have received these additional payments for at least 30 years. My study of the legislative history convinces me beyond any doubt that this result is wrong and in direct conflict with the intent of Congress as expressed in the Agricultural Marketing Agreement Act and its predecessors. In my opinion Congress intended to permit the Secretary to regulate the milk industry in accordance with the practices that had developed in that industry prior to the first federal regulation in 1933 and did not intend to eliminate the economic advantages that specific groups had enjoyed in the past. Since it is clear beyond a doubt that farmers near Boston received more for their milk than did other farmers prior to federal regulation, I would reverse the judgment below and hold this provision of the Boston milk order valid.

In order to understand the purpose of the 1937 Act, it is necessary to go back to the 1920's at a time prior to any federal regulation. As the majority correctly points out, the economics of the milk industry at that time often led to destructive competition and chaos. Milk producers therefore formed cooperatives for their own protection and sold milk on a collective basis. All the parties in this case agree, and the record conclusively shows, that under the cooperatives at that time farmers close to marketing centers received more for their milk than did farmers farther away. This higher price resulted from many factors, including the greater proportion of milk from nearby farms that was used for fluid purposes, the possibility that those farmers would compete with handlers by selling directly to customers, smaller seasonal variation in the volume of milk produced, and higher costs-such as taxes and land values-incurred in farming close to the cities. ^[1] As long as economic conditions remained generally stable, the cooperatives succeeded in protecting all farmers from the dangers of overproduction and excessive competition. Then the depression set in and milk farmers, like so many other Americans, were unable to maintain stable prices by self-regulation. Congress reacted to this situation by passing the Agricultural Adjustment Act of 1933 (A.A.A.), 48 Stat. 31, under which the Secretary of Agriculture was given broad powers to regulate the farm economy through licensing. Id., § 8(3), 48 Stat. 35. Very few details or standards describing the Secretary's powers were provided in the 1933 Act, and there was no attention given to specific problems of nearby farmers in the milk industry. Under the provisions of that Act the Secretary issued a license for the Boston market in 1933 and this first license included provisions that effectively maintained the historical price advantage of producers close to Boston. ^[2] In 1935 bills were introduced in Congress to amend the A.A.A. ^[3] and hearings were held on those bills in February and March of that year. ^[4] In May 1935 this Court held in Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947, that provisions of the National Industrial Recovery Act, 48 Stat. 195, were unconstitutional, in part because that Act delegated powers to an administrative agency without providing adequate standards and guidelines. The congressional committees considering the amendments immediately recognized that the Schechter decision cast considerable doubt on the validity of the A.A.A. and they therefore reported out a completely amended bill which set forth detailed descriptions of the powers and standards that the Secretary was to employ. ^[5] As reported and passed by Congress, that bill contained specific provisions concerning the milk industry, and it is those provisions that are involved in the present case. ^[6] The committee reports accompanying that bill make it abundantly clear that a primary purpose of the bill was to 'eliminate questions of improper delegation of legislative authority raised by the decision in Schechter * * *.' ^[7] There is no indication that when Congress passed those amendments it intended to cut back on or limit the authority the Secretary had actually exercised in regulating milk under the 1933 Act, but rather the purpose was to avoid judicial invalidation resulting from the absence of constitutionally sufficient standards. History and the legislative record make it quite clear that Congress in 1935 was concerned, not about limiting an excessively aggressive Secretary, but about overcoming the limitations imposed by a Court that was frustrating the congressional purpose by holding laws unconstitutional. Pursuant to the 1935 Act, the Secretary issued a new order in 1936 for the Boston market which, like the 1933 order, contained provisions for additional payments to nearby farmers. In issuing this order he explicitly relied on the historical, economic factors which justified these additional payments. (J.A. 224) The effectiveness of the 1935 amendments was also jeopardized by court decisions, ^[8] and Congress again acted by passing a new law, the Agricultural Marketing Agreement Act of 1937, 50 Stat. 246. This statute reenacted the milk marketing provisions of the 1935 Act in substantially the same form and further provided that all market orders issued under that Act were 'expressly ratified, legalized, and confirmed.' 50 Stat. 249. Proceeding under the new Act the Secretary reinstated the 1936 Boston order including the additional payments to farmers located nearer the city, and that order and the 1937 Act have remained in substantially the same form until this time. With this general historical picture in mind, it is easier to answer the central legal question in this case which is whether the 1937 Act authorizes the Secretary of Agriculture to provide that nearby farmers will receive more for their milk than farmers farther away.

The Act provides that the Secretary shall establish by order certain basic prices for milk delivered by producers and allows him to adjust that basic price to reflect 'volume, market, and production differentials customarily applied by the handlers subject to such order * * *.' 7 U.S.C. § 608c(5)(B), cl. (a) (1964 ed., Supp. IV). ^[9] The Secretary here argues that the payment of additional sums to farmers close to Boston is an authorized 'market differential.' The argument cannot be settled simply on the basis of the statutory language since there is no definition of the term 'market.' However the legislative history makes it clear beyond any doubt that this provision was designed to allow the Secretary broad leeway in regulating the milk industry in accordance with prior practices and differentials in the unregulated market. The committee reports in both Houses said that the milk order provisions in the Act were designed to 'follow the methods employed by cooperative associations of producers prior to the enactment of the Agricultural Adjustment Act and the provisions of licenses issued pursuant to the present section 8(3) of the Agricultural Adjustment Act.' ^[10] The only discussion of these provisions during the congressional floor debates fully supports this statement. Senator Copeland, a former commissioner of health in New York City and a man well acquainted with the milk industry in New England, asked Senator Murphy, the floor manager for the bill, about the possibility that farmers near the cities would receive the same price for milk as farmers farther away. Senator Murphy's initial answer indicated this would be so, but when Senator Copeland pressed the inquiry further, stating that not all factors had been considered, Senator Murphy indicated that the provisions for specific differentials 'adopt the present practice of business.' ^[11] To me that reply indicates that nearby differentials would be permissible, if they were part of the business practice-as they were. The majority diminishes the importance of this discussion by saying that it represents the views of only two men, not those of the committee, but anyone acquainted with the realities of the United States Senate knows that the remarks of the floor manager are taken by other Senators as reflecting the views of the committee itself. This history makes it clear that Congress did not intend to limit the authorized differentials to any specific payments, but rather intended to permit the Secretary to employ whatever practices, consistent with the history of the unregulated market, he found necessary to achieve stability in the milk industry.

Applying these considerations it becomes plain that the additional payments to nearby farmers are authorized as a 'differential customarily applied.' Nearby farmers had always obtained a higher price for their milk than farmers farther away and the Secretary's regulations in 1933 and 1936 reflected this historical fact. Reinstatement of the nearby differentials after passage of the 1937 Act merely continued this prior administrative practice, based on the earlier economic realities, of paying more for milk produced on farms close to Boston. Had Congress intended to eliminate this feature of the prior practice, it would have been easy to say so, but there is absolutely nothing in the statute or in the legislative history that demonstrates a desire to alter the advantage nearby farmers had always enjoyed.

My conclusion that this differential is authorized is buttressed by the actions of Congress and the Secretary since 1937. There has always been a healthy controversy among farmers about this differential, and extensive hearings in 1963 brought forth strong arguments against continuing it. (J.A. 360-599.) Yet Congress, even though it amended the statute in 1965, 79 Stat. 1187, still has not in any way indicated that the nearby differential was unauthorized by the 1937 Act or that it should be eliminated at this time. Similarly the Secretary has continually reviewed this provision and refused to eliminate it, the most recent time being 1964. (J.A. 346, 349.) Since Congress, in my view, intended in 1933, 1935, and 1937 to authorize payments like the nearby differential and since it has not altered this authorization in the past 32 years, I cannot agree that this Court should or properly can eliminate the payment, ostensibly through a process of statutory interpretation.

This interpretation is not based on a theory of legislative silence as the majority seems to imply. To me the legislative history speaks clearly in saying that Congress intended the Secretary to regulate the industry in accordance with prior practices, and the statutory language, statements in committee reports, and floor debates do not 'illumine(s) two different roads,' ante, at 185. I see only one path that is marked by the legislative record, and the only silence I perceive is the striking absence of any statements in the statute or the legislative history that support the majority's interpretation.

My conclusion that the location differential is authorized by the Act finds support in other judicial decisions. In United States v. Rock Royal Co-op., 307 U.S. 533, 59 S.Ct. 9993, 83 L.Ed. 1446 (1939), certain milk handlers made a broadside attack on the New York order issued under the 1937 Act. This Court rejected that challenge. One part of the argument was that the nearby differential provision of that order was invalid. This Court noted that '(t)he Act authorizes such an arrangement,' citing the provision for market differentials customarily applied. Id., at 567, 59 S.Ct. at 1010. Although that provision was promulgated under § 8c(5)(A) of the Act, the identical language supporting that conclusion is found in § 8c(5)(B), and it is that latter section which is involved in the present case. The majority attempts to distinguish that case by noting that it was a suit brought by the Government against handlers, but it is difficult to see what difference that makes. It does not matter who sues, if the Court decides an issue of statutory interpretation that decision hould remain the same even if the litigants change. ^[12]

The nearby differential of the Boston order involved here was also approved by the First Circuit in Green Valley Creamery, Inc. v. United States, 108 F.2d 342 (1939). The majority's dismissal of that case on the conclusion the handlers did not have standing to raise this issue is irrelevant. The First Circuit there found the differential valid and then stated that '(f)urthermore' the handlers lacked standing. Id., at 346. It does not matter to me whether the decision on the validity of the location differential is classified as dictum or a holding. The point remains that the First Circuit considered these payments and found them expressly provided for by the language of § 8c(5)(B). Ibid.

The majority disagrees with the interpretation of the statute set forth above and instead finds that the foundation of the portion of 1937 Act involved here was to provide uniform prices to all producers, with adjustments to that uniform price only as 'compensation for rendering an economic service.' Ante, at 188. This interpretation, as I understand it, would require the Secretary to disregard the historical price advantage nearby producers had in the sale of their milk, and to consider only whether there is a present economic justification for particular payments. I respectfully submit that this interpretation cannot be supported by the language of the Act considered as a whole or by the relevant expressions of congressional intent found in the legislative history. The theory of this Act adopted by the majority is clearly not that of Congress, but one created by the Court itself.

The conclusion that each of the differentials specified in the Act represents only 'compensation for rendering an economic service' finds no support whatsoever in the language of the Act or the legislative history. None of the adjustments described in the Act is defined in terms of any 'economic service.' The majority does not refer to any legislative history that indicates such a definition was intended. It may well be possible for an analyst to fit the language of the Act, the committee reports, and the floor debates into a coherent pattern of economic services, but had Congress desired to require this as a touchstone for the authorized differentials, it would have been easy for it to have said so. Congress did not choose to do so in 1933, 1935, or 1937, and it has not done so in the intervening 32 years. Moreover, if there is any pattern into which all the differentials clearly fit that is fully supported by express legislative history, it is the clear pattern of allowing the Secretary to incorporate provisions reflecting the customary practices of the milk industry itself. ^[13]

Even if the majority's statutory interpretation were correct, I do not understand why it would lead to the conclusion that the judgment below should be affirmed and the challenged payments distributed at this time to all farmers. Until this Court's decision the Secretary had no reason to know that he had to justify the provisions of this order as 'compensation for rendering an economic service,' and his failure to have provided such a defense does not necessarily mean it is unavailable. Indeed the Court apparently would approve this same provision were the Secretary to issue it again, but only if it were then accompanied by an economic study that this Court composed of lawyers, not economic or agricultural experts-finds acceptable. If such a justification is present, the differential is in fact lawful at this time, and it would not seem to matter that the Secretary has not yet incanted the proper magic words.

I do not see what harm would follow if this Court were simply to vacate the judgment below, remand the cases to the Secretary for appropriate study, and continue to place the payments in the special fund pending ultimate resolution of the controversy. If the Secretary cannot make the proper economic justification, the only result would be to postpone the day when the accumulating funds, which now amount to over $8,000,000, would be distributed. If, on the other hand, he is able to show that these payments compensate for an economic service, then the Court would not have unnecessarily given the accumulated millions to farmers who are not legally entitled to receive them.

My conviction that the Act was designed to permit the Secretary to include adjustments that reflected the prior practice of the milk industry does not mean that he can act with unlimited abandon and approve a payment simply because historically it was provided for prior to federal regulation. The statute requires that the Secretary issue orders which 'will tend to effectuate the declared policy of (the Act) * * *.' 7 U.S.C. § 608c(4). Those policies are specifically set forth, 7 U.S.C. § 602, and in general provide that orders should establish and maintain orderly marketing conditions and parity prices for milk producers. In his latest promulgation of the Boston order the Secretary specifically refused to eliminate the nearby differentials (J.A. 349-357) and found that the order 'will tend to effectuate the declared policy of the Act.' 29 Fed.Reg. 12236. That finding cannot be disturbed, nor the nearby differential invalidated, unless it is shown that the order is not supported by substantial evidence in the administrative record considered in its entirety. Cf. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951). In this action the Court of Appeals did not make a specific finding on the substantiality of the evidence, and the respondents argue that it is insubstantial, but a review of the entire record in light of the appropriate legal standards indicates that the nearby differential in the Boston order is fully supported by substantial evidence.

In reaching this conclusion, it must be remembered that the Secretary is required to find only two things. First, that the proposed provision represents a payment customarily applied in the milk market, and second, that inclusion of the proposed provision will further the policies of the Act. The first of these questions is essentially a factual one, and there is no real argument in this action that the Secretary was wrong in finding as a matter of historical fact that nearby farmers received additional payments which are reflected in the location differential. The respondents do not really deny the historical existence of this higher price, but rather attack its legality under the Act. The Court of Appeals, moreover, specifically recognized the historical fact that such differentials existed, but accepted the respondents' argument that they were illegal. 131 U.S.App.D.C., at 112-114, 118, 402 F.2d at 663-665, 669. An independent review of the record confirms the conclusion that such differentials had been customary in the market. It is thus easy to conclude that the factual finding required by the Act has been supported by substantial evidence in the administrative record.

The second required finding, that the provision will further the policies of the Act, is a mixed question of fact and administrative policy. The Secretary has held extensive hearings in the past on the provisions of the Boston milk order (J.A. 233 247, 257-302, 305-330, 360-651), and he has repeatedly found that the nearby location differential furthers the policies of the Act. Since this is essentially a question of administrative discretion and will be set aside only on a strong showing by the parties that the finding is without support in the basic facts on which the Secretary has relied, it is proper to say on this record that this second finding is adequately supported. Nothing in the respondents' arguments indicates that the nearby differential does not further the policies of the Act, but rather they argue only that elimination of the differential would better serve those policies. But this question is one for the Secretary, not for the parties or for this Court, to decide.

What is involved here is simply a question of interpreting and following the will of Congress. Over 30 years ago Congress decided that milk producers needed governmental assistance in stabilizing their income, but it also decided that this stabilization should be accomplished with a minimal amount of change in the industry's prior practices. Congress therefore authorized the Secretary of Agriculture to regulate the industry and left most of the details to him. For over 30 years he has used his authority to regulate the Boston milk market, and has consistently found it desirable to provide higher prices for milk produced on farms close to Boston. It may well be that this decision is not the best or the most economically sound one that he could make in light of changed economic conditions in 1968, but that decision is one Congress has committed to the Secretary alone. In my view this Court and the Court of Appeals in this litigation effectively substitute their will for the will of Congress and their views of economics and wise administration for those of the Secretary whom Congress selected to carry out its will. The Court indicates that its decision will avoid a 'windfall.' Ante, at 197. In fact the Court itself creates a windfall of over $8,000,000 which is siphoned out of the pockets of farmers close to Boston and bestowed like a Christmas present on those farther away. This the Court does contrary to the informed judgment of the Secretary who, faithful to the Act, has declared for years that distant farmers are not eligible for such a bonus. I am unable to agree that this is a proper function for the Court to perform and I therefore dissent.

Notes

1. The majority implies, ante, at 181, that this higher price in the 1920's was an economic 'distortion.' There has been no such finding by the Secretary or any of the courts below, nor was any evidence taken that was directed at this issue. This Court is poorly equipped to pass judgment on the economic validity or invalidity of this higher price, surely not as well equipped as the Secretary and the economists who advise him. It is the Secretary, not this Court, to whom Congress has delegated the task of fixing the prices producers will be paid for their milk and of making the underlying economic judgments.
2. This license adopted a somewhat complicated base-rating plan similar to that used by the milk cooperatives. See n. 4, ante, at 173-174. There is general agreement among the parties that these licenses effectively resulted in higher milk prices to nearby farmers, and the Court of Appeals recognized this fact. 131 U.S.App.D.C. 109, 113-114, 402 F.2d 660, 664-665.
3. H.R. 5585, S. 1807, 74th Cong., 1st Sess.
4. Hearing on H.R. 5585 before the House Committee on Agriculture, 74th Cong., 1st Sess.; Hearings on S. 1807 before the Senate Committee on Agriculture and Forestry, 74th Cong., 1st Sess.
5. H.R. 8492, 74th Cong., 1st Sess.
6. These provisions of the 1935 amendments have been carried forward, virtually without change, into the present statute.
7. S.Rep. No. 1011, 74th Cong., 1st Sess., 8; H.R.Rep. No. 1241, 74th Cong., 1st Sess., 8.
8. In United States v. Butler, 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914 (1936), this Court declared the processing tax provisions of the A.A.A. invalid, and some district courts then held that the entire Act was invalid. E.g., United States v. David Buttrick Co., 15 F.Supp. 655 (D.C.Mass.1936), rev'd, 91 F.2d 66 (C.A.1st Cir.), cert denied, 302 U.S. 737, 58 S.Ct. 140, 82 L.Ed. 570 (1937).
9. This language was first enacted in the 1935 amendments to the A.A.A., but was re-enacted in the 1937 Agricultural Marketing Agreement Act without change. There is no relevant legislative history for the 1937 Act, but the parties all agree that the history of the 1935 amendments also applies to the 1937 Act. The discussion of legislative history in the text is based on the 1935 legislative record.
10. S.Rep. No. 1011, 74th Cong., 1st Sess., 9; H.R.Rep. No. 1241, 74th Cong., 1st Sess., 9. This basic purpose is reflected in the fact that Congress provided the Secretary with three different schemes of regulation, each of which followed a variety of regulations used by the milk cooperatives. See n. 10, ante, at 177. In 1965 Congress followed this same basic purpose when it amended the Act to make explicit the Secretary's power to employ base-rating plans, described in n. 4, ante, at 173-174. See 79 Stat. 1187, 7 U.S.C. § 608c(5) (B), cl. (d), (1964 ed., Supp. IV).
11. The full discussion is set out in n. 22, ante, at 186-187.
12. The majority also seems to imply, ante, at 191-192, that Rock Royal did not decide this issue since the handlers did not have standing to raise it. It seems to me that the Court there did decide that the handlers, who argued that the nearby differential reduced their own profits, could raise this issue.
13. In a footnote, n. 18, ante, at 184, the majority implies that there is support for this novel interpretation in our prior decision in Brannan v. Stark, 342 U.S. 451, 72 S.Ct. 433, 96 L.Ed. 497 (1952), which held invalid a provision in the Boston milk order that distributed certain sums to producer cooperatives. That case specifically held that such payments were not authorized by the catchall provision in the Act permitting provisions in milk orders '(i)ncidental to, and not inconsistent with, the terms and conditions specified in (other sections) and necessary to effectuate the other provisions of such order.' 7 U.S.C. § 608c(7)(D); Brannan, at 457-458, 72 S.Ct. at 436-437. It is true that the majority there did decide that the challenged payments did not represent compensation for an economic benefit received by all producers, but regardless of the validity of that decision, it is irrelevant to the decision in this case. It may be that payments that are sought to be justified solely on the basis of the 'necessary provisions' section require independent economic justification, but that certainly does not mean that where the Secretary relies on a specific adjustment set forth in the Act, as he does here, he must also defend it on economic grounds.