Also at the initiation of the price regulation, the two principal processors of organic milk in New England, Horizon Organic Farms and The Organic Cow, each petitioned the Commission for exemption.[1] Both made claims based on the uniqueness of the organic milk market. The Organic Cow also made a constitutional argument, claiming that the over-order pricing regulation impaired its contracts with organic dairy farmers in violation of the Contracts Clause of the Constitution, and furthermore argued that it particularly needed an exemption because it was in danger of going out of business.[2] The hearing panel assigned by the Commission rejected both sets of arguments. The full Commission adopted the hearing panel’s decision.
Organic Cow filed an appeal from the Commission’s decision in federal court. (Horizon did not appeal.) In The Organic Cow, LLC v. Northeast Dairy Compact Comm’n,[3] the District Court for the District of Vermont reversed the Commission’s decision and remanded for further hearings on Organic Cow’s petition. Judge Sessions agreed with the Commission that the over-order pricing regulation was constitutional under the Contracts Clause and the Fifth Amendment’s Due Process Clause.[4] The Court held, however, that the Commission’s decision on Organic Cow’s non-constitutional claims was not adequately supported by references to the administrative record, and instructed the Commission on remand to make more detailed findings.[5]
The Commission went through another review process on remand and on June 7, 2000 again rejected Organic Cow’s petition.[6] It concluded that costs of producing organic milk did not so differ from those of producing other milk as to require an exemption;[7] that separate treatment of organic milk would give organic milk processors an unfair competitive advantage against other milk processors;[8] and that federal precedent permitted the treatment of organic milk similarly with other milk.[9] The panel also concluded that Organic Cow’s claims of economic hardship were a “general description of financial difficulties” rather than a specific problem caused by the Commission’s regulations, and that in any event Organic Cow had already ceased processing milk and sold its assets.[10] The panel then denied Organic Cow’s petition, and the full Commission later adopted the panel’s decision. Organic Cow has filed another appeal to the district court; the case awaits decision by the Court.
[1] In re The Organic Cow, LLC, No. HEP-97-006 (N.E. Dairy Compact Comm’n Mar. 31, 1998), rev’d and remanded, 46 F. Supp. 2d 298 (D. Vt. 1999); In re Horizon Organic Dairy, Inc., No. HEP-97-009 (N.E. Dairy Compact Comm’n Jan. 1999).
[2] Organic Cow, pt. II.
[3] 46 F. Supp. 2d 298, 308 (D. Vt. 1999)
[4] Id. at 303–06.
[5] Id. at 306-07.
[6] In re The Organic Cow, LLC, No. HEP-97-006 (N.E. Dairy Compact Comm’n June 7, 2000).
[7] Id. at pts. II.A.1, II.A.2. It also noted the increased administrative costs of treating organic milk separately from other milk. Id. at pt. II.A.1.
[8] Id. at pt. II.A.2.a.
[9] Id. at pt. II.A.3.
[10] Id. at pt. II.B. The panel also addressed some narrowly procedural claims raised by Organic Cow. See id. at pts. II.C, II.D, II.E.