[Congressional Record Volume 142, Number 74 (Thursday, May 23, 1996)]
[Senate]
[Pages S5613-S5614]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 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.

[[Page S5614]]

  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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