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“DISTRICT COURT RULING SHOULD SPUR SECRETARY OF AGRICULTURE TO REFORM CLASSIFIED PRICES” mentioning the U.S. Dept of Agriculture was published in the Senate section on pages S5613-S5614 on May 23, 1996.
The publication is reproduced in full below:
DISTRICT COURT RULING SHOULD SPUR SECRETARY OF AGRICULTURE TO REFORM
CLASSIFIED PRICES
Mr. FEINGOLD. Mr. President, on Monday, Minnesota District Court Judge David Doty released a decision holding that class I prices used in the Federal milk marketing order system are arbitrary and capricious. I rise today to applaud that ruling. It is the second such ruling by the district court in 2 years. It is my hope that the combination of this most recent ruling and Secretary of Agriculture Dan Glickman's commitment to restore equity in Federal orders will finally be enough to change this discriminatory pricing system for good.
Mr. President, class I prices, prices that farmers receive for fluid milk, increase at a rate of 21 cents for every 100 miles a farmer lives from Eau Claire, WI. This systematic discrimination against Wisconsin dairy farmers has never been adequately defended by the Department of Agriculture which has great administrative latitude to set these prices. Department officials have chosen to continue the discriminatory pricing scheme when they had the authority to change it and the knowledge that it should be changed.
Mr. President, this most recent ruling comes more than 5 years after a group of Minnesota dairy farmers filed a class action lawsuit against then-Secretary of Agriculture Clayton Yeutter charging that class I prices were unlawful under the basic authorities of the authorizing statute. The plaintiffs also charged that the system had caused the loss of thousands of Upper Midwest dairy farms as the excessive prices provided to other regions stimulated surplus production driving down prices to farmers in our region. Since this lawsuit was initiated, Wisconsin has lost more than 6,000 family dairy farms who simply could not compete with the mega-dairies in other regions who were enjoying the artificially high fluid milk prices under the Federal order system. As a Wisconsin State senator at that time, I was able to secure funding for the State of Wisconsin to participate in the lawsuit as an amicus curiae. Since that lawsuit was filed, and since I have been a Member of the U.S. Senate, I and other members of the Upper Midwest congressional delegation have taken all steps possible to push for reform of this system. Legislative reform of class I prices has proved nearly impossible as Senators from regions benefiting from this system have rejected all suggestions for reform.
Two years ago, a different district court judge directed then-
Secretary Espy to issue an amplified decision properly justifying a 1993 final rule on Federal orders which failed to reform class I prices. One-hundred and twenty days later on August 12, 1994, an amplified decision was issued by the Secretary. That decision, devoid of substance, was an insult to Wisconsin dairy farmers who have suffered from the Department's approach to this issue.
Following the issuance of that amplified decision, the Minnesota Milk Producers Association filed another motion for summary judgment charging that Secretary Espy's amplified decision was arbitrary and capricious because it was unsupported by evidence and inconsistent with the mandates of the authorizing statute.
On Monday, three Secretaries of Agriculture and four sessions of Congress after the initiation of this legal proceeding, the District Court of Minnesota agreed with the plaintiffs. The court concluded that
``the Secretary has wholly failed to provide an explanation of his decision consistent with the requirements of the Agricultural Marketing Agreement Act.'' With respect to the use of Eau Claire, WI, as the reference point from which most fluid milk prices are determined, the court chided the Department for claiming it does not use Eau Claire as a basing point, despite evidence to the contrary. Judge Doty stated,
``The Secretary may not enforce what is clearly a single basing-point system without explaining how it reflects reasoned consideration of the statutory factors. If Eau Claire is to be the basing point, then the Secretary must explain why, for each market to which a contemplated order relates, distance from Eau Claire is a relevant consideration.''
The court stopped short of finding class I prices illegal but found that they have never been adequately justified by the Department of Agriculture and as such, the decision to maintain them was arbitrary and capricious. Judge Doty remanded the decision to Secretary Glickman for 120 days after which the Secretary is to issue an amplified decision on class I prices that reflects the factors mandated by the authorizing statute.
It is my hope that in 120 days our current Secretary of Agriculture will do the right thing and announce comprehensive changes to the classified pricing system with class I prices based upon the economic factors required by the statute--supply-and-demand factors, prices of feeds, other inputs to production, and the public interest.
Interestingly, this time frame coincides with USDA's Federal order consolidation process required in the 1996 farm bill. I have always said, Mr. President, that reform of these discriminatory class I prices and the elimination of Eau Claire, WI, as the single basing point for milk prices could be accomplished through the legislative process, the administrative process or the judicial process. The recently enacted 1996 farm bill and Monday's district court ruling represent the confluence of these three processes.
The Congress, through the 1996 farm bill, has directed the Secretary to consolidate the number of Federal orders from the current 33 to between 10 and 14. Implicit in that directive is administrative reform of the pricing structure for those new orders--an authority which the Secretary holds under the Agricultural Marketing Agreement Act. Secretary of Agriculture Dan Glickman has publicly admitted, both to dairy farmers and to Congress, that class I prices are unfair to the Upper Midwest and have produced ``regional inequities.'' He has committed to reduce class I differentials in the reform process. Now the district court ruling has provided a clear ruling that the Secretary shall follow the economic criteria of the original authorizing statute in setting those prices rather than bowing to political pressures from those regions that benefit from this discriminatory pricing system.
The Secretary has two choices.
He can comply with the court's order by reforming class I prices to bring them more in line with the economic realities in 1996. He can do that both in issuing an amplified decision that complies with the statute as required by the court as well as by implementing pricing reform as part of Federal milk marketing order reform required by 1996 farm bill.
Or he can continue to fight the Upper Midwest in this lawsuit by seeking to delay the process further, rubber-stamping bad decisions by previous Secretaries, causing the loss of even more dairy farms in the Upper Midwest and imposing huge costs on our rural communities that depend on a thriving dairy industry.
I hope Dan Glickman chooses the first option.
This has been a long fight, Mr. President. It is time for it to end. It is time for the Secretary and the administration to do the right thing. I will work with them to make that happen.
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