High Court Upholds Dairy Compact

May 9, 2000

The U.S. Supreme Court has ruled against a group of dairy processors who had argued that the Northeast Dairy Compact Commission does not have the right to regulate milk produced outside the compact region but sold within the region. Compact Executive Vice President Kenneth Becker said the ruling should allay any concerns from other regions of the country where similar compacts are being considered.

Plaintiffs had claimed the compact violates the commerce clause, the compact clause and the due process provisions of the U.S. constitution. The case has been wending its way through the courts since the compact went into effect in 1997. Each court has upheld the constitutionality of the compact.

The processors claimed the compact does not have the right to regulate milk produced outside the compact region but sold within the region, saying this violates the commerce clause by depriving them of a natural competitive advantage. However, the court found that the compact’s design, or pooling mechanism, which ensures all dairy farmers who supply milk for New England receive the benefit of the compact payments whether they farm in New England or not, is authorized both by Congress and the constitution.

Commission Vice Chair Mae Schmidle said, "We’re extremely pleased with the outcome of this, and it certainly indicates the Northeast Dairy Compact is progressing in the right direction and in compliance with all the mandates of the federal government and the courts."

Plaintiffs are the New York State Dairy Foods, Inc., an association of processors, Cumberland Farms, Inc., and Elmhurst Dairy Inc.