[Federal Register Volume 63, Number 16 (Monday, January 26, 1998)]
[Proposed Rules]
[Pages 3667-3670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1813]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 63, No. 16 / Monday, January 26, 1998 /
Proposed Rules
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part(s) 1001, 1002, 1004, 1005, 1006, 1007, 1012, 1013, 1030,
1032, 1033, 1036, 1040, 1044, 1046, 1049, 1050, 1064, 1065, 1068,
1076, 1079, 1106, 1124, 1126, 1131, 1134, 1135, 1137, 1138, and
1139.
[Docket No. AO-14-A68, et al.; DA-98-01]
Milk in the New England and Other Marketing Areas; Notice of
Hearing on Proposed Amendments to Tentative Marketing Agreements and
Orders
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7 CFR part Marketing area AO Nos.
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1001............. New England.................... AO-14-A68
1002............. New York-New Jersey............ AO-71-A83
1004............. Middle Atlantic................ AO-160-A72
1005............. Carolina....................... AO-388-A10
1006............. Upper Florida.................. AO-356-A33
1007............. Southeast...................... AO-366-A39
1012............. Tampa Bay...................... AO-347-A36
1013............. Southeastern Florida........... AO-286-A43
1030............. Chicago Regional............... AO-361-A33
1032............. Southern Illinois-Eastern AO-313-A42
Missouri.
1033............. Ohio Valley.................... AO-166-A66
1036............. Eastern Ohio-Western AO-179-A60
Pennsylvania.
1040............. Southern Michigan.............. AO-225-A47
1044............. Michigan Upper Peninsula....... AO-299-A30
1046............. Louisville-Lexington-Evansville AO-123-A68
1049............. Indiana........................ AO-319-A43
1050............. Central Illinois............... AO-355-A30
1064............. Greater Kansas City............ AO-23-A63
1065............. Nebraska-Western Iowa.......... AO-86-A52
1068............. Upper Midwest.................. AO-178-A50
1076............. Eastern South Dakota........... AO-260-A34
1079............. Iowa........................... AO-295-A46
1106............. Southwest Plains............... AO-210-A56
1124............. Pacific Northwest.............. AO-368-A26
1126............. Texas.......................... AO-231-A64
1131............. Central Arizona................ AO-271-A34
1134............. Western Colorado............... AO-301-A25
1135............. Southwestern Idaho-Eastern AO-380-A16
Oregon.
1137............. Eastern Colorado............... AO-326-A29
1138............. New Mexico-West Texas.......... AO-335-A40
1139............. Great Basin.................... AO-309-A34
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AGENCY: Agricultural Marketing Service, USDA.
ACTION: Notice of public hearing on proposed rulemaking.
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SUMMARY: A public hearing is being held in response to industry
requests to consider flooring the level of the basic formula price for
the purpose of determining Class I and Class II prices through December
1998. Mid-America Dairymen, Inc., the proponent of the proposed
amendment, has requested
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that this issue be handled on an emergency basis.
DATES: The hearing will convene at 9:30 a.m. on February 17, 1998.
ADDRESSES: The hearing will be held at the Jefferson Auditorium, South
Agriculture Building, 1400 Independence Avenue, S.W., Washington, D.C.
20250.
FOR FURTHER INFORMATION CONTACT: Constance M. Brenner, Marketing
Specialist, Order Formulation Branch, USDA/AMS/Dairy Division, Room
2971, South Building, P.O. Box 96456, Washington, D.C. 20090-6456,
(202) 720-2357, e-mail address Connie__M__Brenner@usda.gov.
SUPPLEMENTARY INFORMATION: This administrative action is governed by
the provisions of sections 556 and 557 of Title 5 of the United States
Code and, therefore, is excluded from the requirements of Executive
Order 12866.
Notice is hereby given of a public hearing to be held at the
Jefferson Auditorium, South Agriculture Building, 1400 Independence
Avenue S.W., Washington, D.C. 20250, beginning at 9:30 a.m., on
Tuesday, February 17, 1998, with respect to proposed amendments to the
tentative marketing agreements and to the orders regulating the
handling of milk in the New England and other marketing areas.
The hearing is called pursuant to the provisions of the
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), and the applicable rules of practice and procedure governing the
formulation of marketing agreements and marketing orders (7 CFR Part
900).
The purpose of the hearing is to receive evidence with respect to
the economic and marketing conditions which relate to the proposed
flooring of the basic formula price, with the proposed amendments set
forth hereinafter, and any appropriate modifications thereof, to the
tentative marketing agreements and to the orders. In addition to
considering the specific proposal submitted by Mid-America Dairymen,
Inc. (now part of Dairy Farmers of America), testimony should be
addressed as to whether the $13.50 level proposed or some alternative
level would be more appropriate.
The proposed amendment, if adopted through December 1998, should be
considered an interim action because the entire pricing structure of
the Federal milk order program is under consideration as part of the
Federal order reform process required by the 1996 Farm Bill.
Evidence also will be taken to determine whether emergency
marketing conditions exist that would warrant omission of a recommended
decision under the rules of practice and procedure (7 CFR 900.12(d))
with respect to the proposal. Since this proposal will be heard on an
urgent basis, it is necessary to provide interested parties with less
than 15 days notice of the public hearing to ensure that the proposed
amendments, if found to be appropriate, will be effective as soon as
possible.
Initial Regulatory Flexibility Analysis
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601 et seq.), the Agricultural
Marketing Service (AMS) has considered the economic impact of the
proposed amendment on small entities and has prepared this initial
regulatory flexibility analysis. The RFA provides that when preparing
such analysis an agency shall address: the reasons, objectives, and
legal basis for the anticipated proposed rule; the kind and number of
small entities which would be affected; the projected recordkeeping,
reporting, and other requirements; and federal rules which may
duplicate, overlap, or conflict with the proposed rule. Finally, any
significant alternatives to the proposal should be addressed. This
initial regulatory flexibility analysis considers these points and the
impact of this proposed regulation on small entities.
The cooperative association requesting the hearing observes that
per capita milk production is declining in many states with the
greatest declines in areas with high Class I utilization, that the
number of dairy farms continues to decline at a rapid rate, and the
milk-feed price relationships have dropped dramatically. The
cooperative states that the price floor is needed to maintain
productive capacity sufficient to meet current and anticipated future
needs of milk for Class I and Class II uses.
After receiving a hearing request and determining that the proposed
amendment would not violate the provisions of the Act and that the
issues raised for consideration warrant a public hearing, AMS is
authorized to hold a public hearing to consider adoption of the
proposed amendment.
This Act seeks to ensure that, within the statutory authority of a
program, the regulatory and informational requirements are tailored to
the size and nature of small businesses. For the purpose of the Act, a
dairy farm is a ``small business'' if it has an annual gross revenue of
less than $500,000, and a dairy products manufacturer is a ``small
business'' if it has fewer than 500 employees. For the purposes of
determining which dairy farms are ``small businesses,'' the $500,000
per year criterion was used to establish a production guideline of
326,000 pounds per month. Although this guideline does not factor in
additional monies that may be received by dairy producers, it should be
an inclusive standard for most ``small'' dairy farmers. For purposes of
determining a handler's size, if the plant is part of a larger company
operating multiple plants that collectively exceed the 500-employee
limit, the plant will be considered a large business even if the local
plant has fewer than 500 employees.
USDA has identified as small businesses approximately 80,000 of the
83,000 dairy producers (farmers) that have their milk pooled under a
Federal order. Thus, small businesses represent approximately 96
percent of the dairy farmers in the United States. On the processing
side, there are over 1,200 plants associated with Federal orders, and
of these plants, approximately 700 qualify as ``small businesses,''
representing about 55 percent of the total.
During August 1997, there were 524 fully regulated handlers, 134
partially regulated handlers and 111 producer-handlers submitting
reports under the Federal milk marketing order program. This volume of
milk pooled under Federal orders represents 69 percent of all milk
marketed in the U.S. and 72 percent of the milk of bottling quality
(Grade A) sold in the country. Producer deliveries of milk used in
Class I products (mainly fluid milk products) totaled 45.5 billion
pounds--43.5 percent of total Federal order producer deliveries. More
than 200 million Americans reside in Federal order marketing areas--77
percent of the total U.S. population.
In order to accomplish the goal of imposing no additional
regulatory burdens on the industry, a review of the current reporting
requirements was completed pursuant to the Paperwork Reduction Act of
1995 (44 U.S.C. Chapter 35). In light of this review, it was determined
that this proposed amendment would have little or no impact on
reporting, recordkeeping, or other compliance requirements because
these would remain identical to the current Federal order program. No
new forms have been proposed, and no additional reporting would be
necessary.
This notice does not require additional information collection that
requires clearance by the OMB beyond the currently approved information
collection. The primary sources of data used to complete the forms are
routinely
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used in most business transactions. Forms require only a minimal amount
of information which can be supplied without data processing equipment
or a trained statistical staff. Thus, the information collection and
reporting burden is relatively small. Requiring the same reports for
all handlers does not significantly disadvantage any handler that is
smaller than industry average.
No other burdens are expected to fall upon the dairy industry as a
result of overlapping Federal rules. This proposed rulemaking does not
duplicate, overlap or conflict with any existing Federal rules.
To ensure that small businesses are not unduly or
disproportionately burdened based on this proposed amendment,
consideration was given to mitigating negative impacts. Flooring the
BFP should not have any special impact on small handler entities.
Handlers similarly located would be subject to the same minimum Class I
prices, regardless of the size of their operations, and all handlers
would be subject to the same minimum prices for Class II milk. Such
handlers would also be subject to the same minimum prices to be paid to
producers. These features of minimum pricing should not raise barriers
to the ability of small handlers to compete in the marketplace. It is
similarly expected that small producers would not experience any
particular disadvantage to larger producers as a result of this
proposed amendment.
Interested parties are invited to present evidence on the probable
regulatory and informational impact of the hearing proposals on small
businesses. Also, parties may suggest modifications of these proposals
for the purpose of tailoring their applicability to small businesses.
Preliminary Cost-Benefit Analysis
To help fulfill the objectives of a Regulatory Impact Analysis, a
preliminary cost-benefit analysis follows:
The BFP is used as the basis for establishing class prices paid by
handlers for milk in all Federal order markets and varies month-to-
month depending on market conditions for milk and milk products. The
BFP is the average price paid for manufacturing grade (Grade B) milk in
Minnesota and Wisconsin in the base month updated to the current month
with a cheese-butter-nonfat dry milk product price formula. The Class I
price is the BFP plus a Class I price differential that reflects the
added value needed to attract milk to fluid milk processing plants, as
well as the additional costs of producing and marketing milk for fluid
use. As a result, Class I prices vary among markets, being generally
higher in southern markets and lower in midwestern markets. The Class
II price, like the Class I price, is based on the BFP with a
differential of only thirty cents in all orders. The result of
establishing a floor under the BFP for purposes of computing the Class
I and II prices would be to maintain these prices at a level they
otherwise might not reach.
Dairy producers are expected to fare about the same in 1998 as they
did in 1997, according to recent estimates of the Dairy Interagency
Commodity Estimates Committee (ICEC). The 1998 all-milk price was
projected in November 1997 to be slightly lower than the 1997 all-milk
price; $13.10 per hundredweight in 1998 compared with $13.35 in 1997.
This preliminary analysis was based on the $13.10 estimate. However,
the 1998 estimate was updated in January 1998 to $13.35. As a result,
the actual impact of a floor under the BFP could be expected to be less
than shown in this preliminary analysis. Further analysis will be based
on more recent price estimates.
A BFP floor for computing Class I and II prices would apply only to
the 70 percent of the milk marketed in the United States that is
marketed under Federal milk orders. USDA's preliminary analysis
indicated that flooring Class I and Class II prices with a $13.50
minimum BFP would increase the U.S. all-milk price by $0.40 to $0.50
per hundredweight. Prices to producers delivering to Federal order
markets could increase by an average of $0.60 to $0.75 per
hundredweight.
Producers delivering to markets with higher Class I use, such as
the three Florida markets and the Southeast market, would benefit more
(as much as $1.10-$1.30 per hundredweight) than those delivering to
markets with lower Class I utilization. The attached table provides
estimates of change in the all-milk prices for all Federal order
markets, assuming BFP floors of $13.50 and $12.83 per hundredweight
(the October 1997 BFP).
Change in the All-Milk Price.--Alternatives Flooring BFP at $13.50 or
$12.83 for Class I and Class II Pricing Calendar Year 1998
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Change in all-milk price per
hundredweight
Marketing area -------------------------------
$13.50 Floor $12.83 Floor
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New England............................. $0.20 $0.11
New York-New Jersey..................... .74 .40
Middle Atlantic......................... .81 .45
Carolina................................ 1.28 .70
Louis.-Lex.-Evans....................... 1.22 .67
Southeast............................... 1.21 .66
Upper Florida........................... 1.18 .64
Tampa Bay............................... 1.28 .70
Southeastern Florida.................... 1.30 .71
Michigan Upper Peninsula................ 1.13 .62
Southern Michigan....................... .90 .49
E. Ohio--W. Pennsylvania................ .88 .48
Ohio Valley............................. 1.14 .63
Indiana................................. 1.20 .66
Chicago Regional........................ .29 .16
Upper Midwest........................... .26 .14
Iowa.................................... .50 .27
Nebraska-Western Iowa................... .64 .35
Eastern South Dakota.................... .93 .51
Central Illinois........................ 1.09 .60
S. Illinois-E. Missouri................. 1.05 .57
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Southwest Plains........................ .75 .41
Eastern Colorado........................ .72 .39
Greater Kansas City..................... 1.10 .60
Texas................................... .89 .48
New Mexico-West Texas................... .42 .23
Southwestern Idaho-E. Oregon............ .11 .06
Great Basin............................. .60 .33
Western Colorado........................ 1.23 .67
Central Arizona......................... .65 .35
Pacific Northwest....................... .42 .23
Federal Order Average................... .65-.75 .35-.45
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In addition to increasing income to dairy producers, adoption of a
BFP floor would also result in increased prices of fluid milk products
to consumers. Increased Class I milk prices would be reflected in
retail prices for fluid milk, which may result in reduced per capita
consumption and an increase in total consumer expenditures for dairy
products.
Legislative and Background Requirements
The amendments to the rules proposed herein have been reviewed
under Executive Order 12988, Civil Justice Reform. They are not
intended to have a retroactive effect. If adopted, the proposed
amendments would not preempt any state or local laws, regulations, or
policies, unless they present an irreconcilable conflict with this
rule.
The Agricultural Marketing Agreement Act provides that
administrative proceedings must be exhausted before parties may file
suit in court. Under section 8c(15)(A) of the Act, any handler subject
to an order may request modification or exemption from such order by
filing with the Secretary a petition stating that the order, any
provision of the order, or any obligation imposed in connection with
the order is not in accordance with the law. A handler is afforded the
opportunity for a hearing on the petition. After a hearing, the
Secretary would rule on the petition. The Act provides that the
district court of the United States in any district in which the
handler is an inhabitant, or has its principal place of business, has
jurisdiction in equity to review the Secretary's ruling on the
petition, provided a bill in equity is filed not later than 20 days
after the date of the entry of the ruling.
Request for Public Input
Interested parties who wish to introduce exhibits should provide
the Presiding Officer at the hearing with 6 copies of such exhibits for
the Official Record. Also, it would be helpful if additional copies are
available for the use of other participants at the hearing.
List of Subjects in 7 CFR Parts 1001 through 1139
Milk marketing orders.
The authority citation for 7 CFR Parts 1001 through 1139 continues
to read as follows:
Authority: 7 U.S.C. 601-674.
The proposed amendments, as set forth below, have not received the
approval of the Secretary of Agriculture.
Proposed by Mid-America Dairymen, Inc.:
Proposal No. 1: Through December 1998, amend the introductory text
of Sec. ____.51 of 7 CFR Parts 1001 through 1139 to read as follows:
Sec. ____.51 Basic formula price.
* * * For the purpose of computing the Class I and Class II prices,
the resulting price shall be not less than $13.50.
* * * * *
Proposed by Dairy Programs, Agricultural Marketing Service:
Proposal No. 2: Make such changes as may be necessary to make the
entire marketing agreements and the orders conform with any amendments
thereto, that may result from this hearing.
Copies of this notice of hearing and the orders may be procured
from the Market Administrator of each of the aforesaid marketing areas,
or from the Hearing Clerk, Room 1083, South Building, United States
Department of Agriculture, Washington, D.C. 20250, or may be inspected
there.
Copies of the transcript of testimony taken at the hearing will not
be available for distribution through the Hearing Clerk's Office. If
you wish to purchase a copy, arrangements may be made with the reporter
at the hearing.
From the time that a hearing notice is issued and until the
issuance of a final decision in a proceeding, Department employees
involved in the decisionmaking process are prohibited from discussing
the merits of the hearing issues on an ex parte basis with any person
having an interest in the proceeding. For this particular proceeding,
the prohibition applies to employees in the following organizational
units:
Office of the Secretary of Agriculture
Office of the Administrator, Agricultural Marketing Service
Office of the General Counsel
Dairy Programs, Agricultural Marketing Service (Washington office) and
the Offices of all Market Administrators.
Procedural matters are not subject to the above prohibition and may
be discussed at any time.
Dated: January 21, 1998.
Enrique E. Figueroa,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 98-1813 Filed 1-23-98; 8:45 am]
BILLING CODE 3410-02-U
