53 Agric. Dec. 1004 Plant means the land, buildings, facilities, and equipment constituting a single operating unit or establishment at which milk or milk products (including filled milk) are received, processed, or packaged. Separate facilities without stationary storage tanks which are used only as a reload point for transferring bulk milk from one tank truck to another or separate facilities used only as a distribution point for storing packaged fluid milk products in transit for route disposition shall not be a plant under this definition. The single issue before the Court is whether or not the Secretary's ruling was "in accordance with law." 7 U.S.C. § 608c(15)(B). The scope of review by federal courts is limited; it is not a trial de novo, but a review of the administrative record to determine if the Secretary's decision was "arbitrary and capricious, an abuse of.discretion, or otherwise not in accordance with law," 5 U.S.C. § 706(2)(A), or "unsupported by substantial evidence," 5 U.S.C. § 706(2)(E). Suntex Dairy, 666 F.2d at 162; Chiglades Farm, LTD. v. Butz, 485 F.2d 1125, 1129 (5th Cir. 1973), cert. denied sub nom. Bramson v. Butz, 417 U.S. 968, 94 S. Ct. 3170, 41 L. Ed. 2d 1138 (1974); Lewes Dairy, Inc. v. Freeman, 401 F.2d at 315; Freeman v. Hygeia Dairy Co., 326 F.2d 271, 273 (5th Cir. 1964). The "arbitrary and capricious" standard permits a reviewing court merely to consider whether the agency decision "was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Suntex Dairy, 666 F.2d at 162, citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S. Ct. 814, 82324, 28 L. Ed. 2d 136 (1971). The "substantial evidence" standard requires the reviewing court to determine whether the agency findings are supported by "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Id., citing Consolidated Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 59 S. Ct. 206, 217, 83 L.Ed. 126 (1939). In its review, however, the district court is not free to draw its own independent inferences and conclusions from the record. Lewes Dairy, 401 F.2d at 317; see also Sterling Davis Dairy v. Freeman, 253 F. Supp. 80, 82 (D.N.J. 1965) ("Once [substantial evidence supporting the agency's decision] is found... the court cannot exercise an independent judgment so as to overrule or modify the decision of a Congressionally empowered administrator"). The wisdom of the Secretary's choice of alternatives is not cognizable in this review; only the legality of his choice is in issue. Id. at 319. "The fact that regulation may be achieved that is equally as efficacious for the purpose of the Act with less expense to [the petitioner] does not render illegal the application of the Order to [him]." Id. Magistrate Judge's Report and Recommendation, pp.1-8. In support of the Market Administrator's interpretation, both the ALJ and Judicial Officer point to a letter from W.H. Blanchard, Director of the Dairy Division of the United States Department of Agriculture ("USDA"), (CAR, Tab 5, Exhibit PX-4), as the reason for the interpretation. The portions of the letter relied upon stated the following: The [HEB] complex is one entity that is connected by pipelines and conveyors for the movement of raw and finished products. It has been treated as a plant since it began operating in 1976. Milk, cream, and other dairy products are moved between the fluid milk processing room, ice cream processing section, and the bakery. Also, the vault and milk processing room are joined with common conveyors. There are no separate facilities, such as branch coolers, that are used only as distribution points for storing packaged fluid milk products. Moreover, there is no clear delineation between the milk vault and the rest of the cooler that makes up the warehouse, known as the Perishable Goods [sic] Center. In effect, the Center is the handler's cooler. Treatment of the entire complex as a plant is necessary to have adequate control over the accounting of all milk products that are processed and handled by H.E.B. Because of the physical structure of the entire complex, any functional delineation would be arbitrary, at best, compared to treating the entire complex as one entity. In this regard, the current plant definition [in the Order] encompasses "the land, buildings, facilities, and equipment constituting a single operating unit or establishment at which milk or milk products are received, processed, or packaged." Also, the exclusion of distribution points from the plant definition is not applicable in this case since the 53 Agric. Dec. 1004 warehouse is not separate and the products are not in transit for (CAR Tab 9 at 4 and Tab 16 at 7-8). Magistrate's Report and Recommendation, pp. 9-10. The Magistrate Judge concludes that the interpretation given to the term "plant" by the Market administrator "was not only contrary to the great preponderance of the relevant evidence presented at the administrative hearing, . . . but it was also contrary to the policy of the Agency (not to regulate producer-handlers) and the purposes of the Act (to establish, maintain, and avoid disruption of orderly marketing conditions." Magistrate Judge's Report and Recommendation, p. 19. The Magistrate Judge then recommends that this action be remanded to the Secretary for a ruling accordance with those findings. Having reviewed the record and the argument of counsel, the Court is persuaded that the Magistrate Judge's findings should be partially adopted, but that the Magistrate Judge's recommendation should not be adopted. While a court may believe that a different interpretation of a statute should apply, this does not render an administrative agency's interpretation incorrect so long as there is "substantial evidence" in the record to uphold that interpretation. "The court need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding." Chevron, U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843 n. 11 (1984). The factual findings made by the Magistrate Judge persuade the Court that there was substantial evidence to uphold the Secretary's interpretation. The cooler at the H.E.B. complex was not physically or functionally separate from its other facilities because it was contained within the same building and was used to store milk from H.E.B's milk plant as well as milk to be distributed to its retail stores. In light of the forgoing, it is ORDERED that the Magistrate Judge's factual findings are partially ADOPTED but his recommendation is NOT ADOPTED. It is further ORDERED that the Defendant's Motion for Summary Judgment is GRANTED and the Plaintiff's Motion for Summary Judgment is DENIED. It is further ORDERED that any motions not previous ruled upon by the Court are DENIED. ARKANSAS DAIRY COOPERATIVE ASSOCIATION v. ESPY. Civil No. LR-C-93-615. Filed November 15, 1994. Producers Policy Base-excess plan - Termination - Arbitrary and The district court found that the Secretary's termination of the base-excess plan of milk marketing order regulating handling of milk in central Arkansas was not arbitrary, capricious or unlawful. Order terminating base-excess plan did not "amend" or "fix minimum prices" to be paid by handlers; therefore, formal, on-the-record hearing not required. Secretary found that base-excess plan provisions no longer tended to effectuate their purpose since no cooperatives were paying milk producers according to the plan. Thus, decision was rational and based on the evidence. Notice of proposed termination adequately advised interested parties of subject matter and substance of proposed action. Before: George Howard, Jr., District Judge. IN THE UNITED STATES DISTRICT COURT MEMORANDUM OPINION AND ORDER Plaintiff, Arkansas Dairy Cooperative Association, Inc. ("ADCA") seeks judicial review of the Secretary of Agriculture's ("Secretary") order terminating the "base-excess plan" of the federal milk marketing order regulating the handling of milk in Central Arkansas. The parties have submitted cross motions for summary judgment. ADCA contends that the Secretary's July 1, 1993, order terminating the "base-excess plan" of the Federal milk order (7 C.F.R. 1108, also referred to as "Order 108"), violates the requirements of the Agricultural Marketing Agreement Act, as amended, 7 U.S.C. §601 et seq. ("AMAA") and the Administrative Procedure Act, 5 U.S.C. § 551 et seq. ("APA") in that the Order was entered without a formal rulemaking hearing and it was arbitrary, capricious, an abuse of discretion and not in accordance with the law. 53 Agric. Dec. 1012 STATUTORY AND REGULATORY SCHEME Not only are consumers concerned with the price of milk. Milk pricing has been the subject of much litigation. The statutory and regulatory scheme dealing with milk prices resembles the most complex of labyrinths. See Zuber v. Allen, 396 U.S. 168, 172 (1969) ("Once again this Court must traverse the labyrinth of the federal milk marketing regulation provisions.") In order to understand the nature of the dispute, the Court must briefly discuss the statutory and regulatory scheme as well as the underlying policies of the AMAA. The AMAA authorizes the Secretary to regulate the minimum prices paid to producers of raw milk by issuing marketing orders for particular geographic areas. West Lynn Creamery, Inc. v. Healy, 114 S.Ct. 2205, 2209 (1994). The main purpose of the milk market order scheme is to raise producer prices, "and thereby to ensure that the benefits and burdens of the milk market are fairly and proportionately shared by all dairy farmers." Block v. Community Nutrition Institute, 104 S.Ct. 2450, 2454 (1984). In addition, the AMAA is intended to "provide, in the interests of producers and consumers, an orderly flow of the supply [of regulated commodities] to market throughout its normal marketing season to avoid unreasonable fluctuations in supplies and prices." 7 U.S.C. §602(4). The Secretary implements the statutory objectives by use of a program that establishes the minimum prices that milk processors (also called "handlers") must pay for milk and the minimum price that dairy farmers ("producers") are entitled to receive. The program is based upon a system of "classified pricing." The federal orders, including Order 108, classify raw milk in accordance with the form in which or the purpose for which milk is used. Class I is primarily fluid "bottled" milk; Class II includes soft milk products such as yogurt, ice. cream and cottage cheese; and Class III includes butter, dry milk powder and certain hard cheeses. See, e.g., 7 C.F.R. §1108.40. Each class is assigned a specific minimum price, with Class I having the highest price and Class III the lowest price. Each handler pays a minimum price based upon its own class of utilization. Each dairy farmer subject to a Federal Order receives the same minimum price for his/her milk, regardless of the class in which the milk was utilized. The handler accounts monthly to the market administrator for the amount of raw milk used or disposed of in each use classification to enable the market administrator to compute the handler's "pool obligation" and the monthly minimum "uniform" or "blend price" to be paid producers. 7 C.F.R. §1108.61, |