(CN) - The 7th Circuit upheld the U.S. Department of Agriculture's decision to ramp up milk-marketing regulations designed "to remove ruinous and self-defeating competition" among milk producers.
The White Eagle Cooperative Association and other milk producers challenged the USDA's changes to the Mideast Milk Marketing Order, which covers milk producers in Indiana, Ohio, Michigan, West Virginia, Kentucky and Pennsylvania. The rule changes included:
- A prohibition on the simultaneous pooling of the same milk under a Mideast order and a state order;
- Increased performance standards for supply plants; and
- Lowering diversion limit standards for milk by 10 percentage points seasonally.
Other milk producers joined the lawsuit to defend the proposed changes.
Judge Ripple of the Chicago-based federal appeals court ruled that although the diversion limits decreased the volume of available milk, the USDA is more concerned with protecting the integrity of the milk market than providing positive returns for all milk producers.
"Some producers were taking advantage of the higher Mideast blend price but were actually diverting most of their milk to non-pool plants," Ripple wrote. "As a result, milk supplies that were not reasonably associated with the region were entering the market and driving down the blend price for those producers regularly serving the needs of the market."
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