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July 17, 2009

Hearing Clerk, OALJ

U.S. Department of Agriculture

South Building, Room 1031

1400 Independence Ave. SW

Washington, DC 20250-9203

Re:

Hoaring Docket Ao-14-478 et seq, Producer-Handler hearings.

Dear Sir or Madam:

Enclosed for f?ling with the Hearing Clerk is an original and three copies of posthearing brief on behalf of American Independent Dairy Allianoe.

Respectfully yours,

-Vlt,'n1

Nancy Bryson

cc:

The Honorable

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Jill Clifton and Interested Parties (vie email attachment only).

Holland & HartltP Attorneyr at Law

Phone (202) 393-6500 Fax (202) 393-6551 wvew.ho[.ndhart.con

975 F Street NW Sulte 900 Washlngton, D.C, 20004

As?¨º? Bllllngs Bolsc Boulder C?rson Clty Chcyeon¨º Colo?rdo Sprl?os O.nv¨ºr D¨ºnv?, Tcch CGl|t¨º. ?actson Hotc

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Vcg?s Re?o Satt Lake Ctty Sartr Fe W?6hln9ton, D.C.

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UNITED STATES DEPARTMENT OF AGRICULTURE

BEFORE THE SECRETARY OF AGRICULTURE

IN RE MILK IN THE NORTHEAST

AND OTHER MARKETING AREAS

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Docket Nos. AO-14-A78, A0-388-423,

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A0-356-A44, A0-366-452, Ac,-361-A44,

AO-313-A53, A0-166-A73,A0-368-440,

AO-231-A72, AO-271-A44

BRIEF OF A]VIERICAN INDEPENDENT DAIRY ALLIANCE

AND PROPOSED FINDINGS AND CONCLUSIONS

t----?-?

I.Introduction..'............ffi-.................l

II.

III.

AIDA

Membership..............

........................3

The Proponents of Proposals I and26 Have Not Met Their Burden of Introducing

Substantial Evidence to Show that The Producer-Handler Regulations Must Be Amended As A

...............4

Matter of National

Policy.......

IV.

"Disorderly Marketing" is not about pool payments or competition by producer-handlers.

Rather, it encompasses only those situations where the consuming public is denied a sufficient

............... 6

supply of fluid milk at reasonable

prices.

V.

NMPF's stated bases for the adoption of Proposals

record

1 and

26

evidence.

A.

are

not supported by actual

................12

Producer-handlers' cost of milk is the cost of production, not a theoretical transfer price

.....14

or regulatory statistical

reference

1.

The arbitrary assignment of a transfer price at the blend price does not reflect the

..................... 15

economic reality of any producer-handler's

2.

3.

operation.

The cost of production for a producer-handler exceeds the Class I price. ....................,17

A pool payment assessed to a producerhandler premised on anything except the actual

cost of production at the producer-handler's own farm would place them at a fuither price

.................24

disadvantage to regulated handlers, in contravention of the AMAA.

4. Regulated handlers can and do successfully compete with producer-handlers for

..................27

customers.

a.

b.

c.

d.

B.

The increasing size of dairy farms and speculation about what might happen cannot be a

...........42

basis for changing the regulatory status of

C.

D.

producer-handlers...

Producer-Handlers bear the burden of balancing their milk supplies and demands. .....47

Producer-Handlers have increased in size commensurately with the size of handlers and

producers, and have not grown relative to the overall consolidation in the industry................ 51

E.

The reasoning for adoption of producer-handler regulations under the former Agricultural

Adjustment Act is irrelevant to the current dairy

.......52

industry.............

F.

The lack of pool participation by producer-handlers provides no justification for the

adoption of Proposals 1 and

............54

VI.

A.

26.............

Congress Has Not Authorized USDA To Regulate

Producer-Handlers...

....... 59

The Secretary's authority under the AMAA is limited to the regulation of handlers who

purchase milk from

........ 59

1.

2.

producers.

Caselaw Does Not Support the Regulation of Producer-Handlers. .......... .....................62

Two appeals cases in particular, addressed the instance of producers who were also

handlers, but were not producer-handlers who utilized only their own farm production. .... 63

B.

Repeated Congressional statements, culminating in the Milk Regulatory Equity Act,

affirmatively instructed the Secretary that the regulatory status of producer-handlers may not

changed

..................... 65

VII. USDA Policy Should Support Producer-Handlers as A Vital Economic Organizational

Model

..............68

A. The Option of Becoming a Producer-Handler Benefits Consumers and Producers...... 68

B. The continued viability of Producer-Handlers is consistent with Secretary Vilsack's

........72

stated policy goals.

1. Producer-Handlers provide a safe, sustainable, and nutritious supply of milk. .............73

2. Producer Handlers provide economic opportunities for Rural Communities................ 74

3. Producer-handlers provide diverse opportunities for the long-term viability of dairy

farms.

.......76

VIII. AIDA Proposals 23,24, and25 constitute rational and less-burdensome altematives to

the restriction or elimination of producer-handler status.

........77

A. AIDA supports the two variations in Proposal23, which would exempt the own-farm

produced milk of all handlers from pricing and pooling.....

..................77

B. AIDA Supports Proposal 24,which would exempt retail sales by producer-handlers

from pricing and pooling.....

............ 80

C. AIDA supports the adoption of individual handler pooling as an alternative to

marketwide pooling.

....... 81

be

D.

AIDA

competitive

supports the expansion of exenrpt plant limitations, but at a level reflective

inequities

...................... 83

proposals.

Proposed Findings and Conclusions..........

Proposed Findings...

Proposed Conclusions

X. Conclusion

E.

IX.

AIDA

of

opposes all other

111

............ 85

..................86

...... 87

..................... 87

........... 103

 ................
................

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