[Federal Register Volume 64, Number 84 (Monday, May 3, 1999)]
[Rules and Regulations]
[Pages 23532-23538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10967]
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NORTHEAST DAIRY COMPACT COMMISSION
7 CFR Parts 1307 and 1308
Over-Order Price Regulation
AGENCY: Northeast Dairy Compact Commission.
ACTION: Final rule.
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SUMMARY: The Northeast Dairy Compact Commission amends the method for
determining the amount of the administrative assessment charged to milk
handlers. The amended rule gives the Commission discretion, in any
given month, to waive the administrative assessment entirely, or to set
the rate at the current rate of 3.2 cents, or less, per hundredweight
of fluid milk. The Commission also promulgates a new rule that requires
handlers to make payment to the Compact Commission by electronic funds
transfer, if the total amount due is greater than $25,000.
EFFECTIVE DATES: The amendments to part 1308 are effective July 1,
1999. The amendments to part 1307 are effective May 13, 1999.
ADDRESSES: Northeast Dairy Compact Commission, 34 Barre Street, Suite
2, Montpelier, Vermont 05602.
FOR FURTHER INFORMATION CONTACT: Kenneth M. Becker, Executive Director,
Northeast Dairy Compact Commission at the above address or by telephone
at (802) 229-1941, or by facsimile at (802) 229-2028.
SUPPLEMENTARY INFORMATION:
I. Background
The Northeast Dairy Compact Commission (``Commission'') was
established under authority of the Northeast Interstate Dairy Compact
(``Compact''). The Compact was enacted into law by each of the six
participating New England states as follows: Connecticut--Pub. L. 93-
320; Maine--Pub. L. 89-437, as amended, Pub. L. 93-274; Massachusetts--
Pub. L. 93-370; New Hampshire--Pub. L. 93-336; Rhode Island--Pub. L.
93-106; Vermont--Pub. L. 93-57. In accordance with Article I, Section
10 of the United States Constitution, Congress consented to the Compact
in Pub. L. 104-127 (FAIR Act), Section 147, codified at 7 U.S.C. 7256.
Subsequently, the United States Secretary of Agriculture, pursuant to 7
U.S.C. 7256(1), authorized implementation of the Compact.
Pursuant to its rulemaking authority under Article V, Section 11 of
the Compact, the Commission concluded an informal rulemaking process
and voted to adopt a compact over-order price regulation on May 30,
1997.1 The Commission subsequently amended and extended the
compact over-order price regulation.2 In 1998, the
Commission further amended specific provisions of the over-order price
regulation.3 The current compact over-order price regulation
is codified at 7 CFR Chapter XIII.
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\1\ 62 FR 29626 (May 30, 1997).
\2\ 62 FR 62810 (Nov. 25, 1997).
\3\ 63 FR 10104 (Feb. 27, 1998); 63 FR 46385 (Sept. 1, 1998);
and 63 FR 65517 (Nov. 27, 1998).
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On November 27, 1998, the Commission issued a notice of proposed
rulemaking proceedings on several subjects and issues, including
whether the amount of, or method for determining, the administrative
assessment should be amended.4 The Commission held a public
hearing to receive testimony on December 11, 1998 in Boxborough,
Massachusetts and comments were received until 5:00 p.m. on December
31, 1998.
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\4\ 63 FR 65563 (Nov. 27, 1998).
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On January 13, 1999, the Commission held its deliberative meeting,
pursuant to 7 CFR 1361.8, to consider all oral and written comments
received at the public hearing and the additional comments received by
the Commission's published comment deadline of December 31, 1998, and
to deliberate and act on the proposed subjects and issues rulemaking
regarding whether the
[[Page 23533]]
amount of, or method for determining, the administrative assessment
should be amended.5
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\5\ 64 FR 533 (Jan. 5, 1999).
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Based on the oral testimony and written comments received in that
proceeding, the Commission proposed to amend the method for determining
the amount of the administrative assessment charged to milk handlers
and also proposed to add a new rule that would require handlers to make
payment to the Commission by electronic funds transfer, if the total
amount due is greater than $25,000.6 The Commission held a
public hearing in Concord, New Hampshire on March 3, 1999 and accepted
written comments until March 17, 1999. The Commission held its
deliberative meeting on April 7, 1999 to consider all the comments and
testimony received regarding the administrative assessment regulation,
including all testimony and comments previously received in the
December 1998 proceeding.7 Based on the December 1998 and
March 1999 rulemaking records, the Commission amends the administrative
assessment regulation, 7 CFR Part 1308, to give the Commission
discretion, in any given month, to waive the administrative assessment
entirely, or to set the rate at the current flat rate of 3.2 cents, or
less, per hundredweight of fluid milk.
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\6\ 64 FR 4353 (Jan. 28, 1999).
\7\ 64 FR 4353, 4355 (Jan. 28, 1999), 64 FR 14943 (March 29,
1999) and Transcript of March 3, 1999 public hearing at 9.
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In addition to the amendments to the administrative assessment
regulation, the Commission also promulgates a new rule at 7 CFR Part
1307, to require milk handlers to make payment to the Compact
Commission by electronic funds transfer, if the total amount due is
greater than $25,000.
Article V, Section 11 of the compact delineates the administrative
procedure the Commission must follow in deciding whether to adopt or
amend a price regulation. That section requires the Commission to
conduct an informal rulemaking proceeding governed by section four of
the federal Administrative Procedures Act (``APA''), as amended, 5
U.S.C. 553, to provide interested persons with an opportunity to
present data and views. The informal rulemaking proceeding must include
public notice and opportunity to participate in a public hearing and to
present written comment. In addition, section 553(d) of the APA
provides that ``publication or service of a substantive rule shall be
made not less than 30 days before its effective date,'' subject to
several enumerated exceptions, including situations where the agency
finds ``good cause'' for dispensing with this requirement. See, 5
U.S.C. 553(d)(3).
The Commission finds that there is good cause for dispensing with
the 30-day waiting period of Sec. 553(d), with regard to only the new
rule at section 1307 requiring payment by electronic funds transfer,
because compliance is impracticable, unnecessary, and contrary to the
public interest. The Commission emphasizes that the new rule requiring
payment by electronic funds transfer was adopted by the Commission
after a comprehensive administrative process, including public hearing
and notice-and-comment rulemaking.8 The Commission received
no public comments regarding the electronic funds transfer rule. The
Commission has provided actual notice of this new rule to all effected
milk handlers no later than April 13, 1999 and the first day of
required compliance with this new rule will be May 18, 1999.
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\8\ 64 FR 4353 (Jan. 28, 1999).
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II. Summary and Analysis of Issues and Comments
Administrative Assessment
The Commission received oral and written testimony and comments
from the Commission's Regulations Administrator, Carmen Ross, and eight
commenters in the December 1998 subjects and issues rulemaking
proceeding, regarding whether the amount of, or method for determining,
the administrative assessment should be amended.9 In the
subsequent March 1999 proposed rule proceedings, the Commission
received oral testimony from Mr. Ross and written comments from two
commenters.10 The Commission confirms its published analysis
of the testimony and written comments received in the December 1998
proceeding.11 Therefore, the Commission herein supplements
that analysis by reviewing the testimony and comments received in the
March 1999 proceedings.
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\9\ Carmen L. Ross, Transcript (``Tr.'') at 4; Charles Arbing,
Tr. at 30; Diane Bothfeld Tr. at 54 and Written Comment (``WC'') at
32; Leon J. Berthiaume, WC 13 ; Robert D. Wellington, WC 16; Edward
W. Gallagher, WC 18; Sally J. Beach, WC 21; Michael L. Altman, WC
25; and Leon Graves, WC 34;
\10\ Ross, Record (``R.'') at 9; Michael L. Altman, on behalf of
Suiza GTL, LLC, H.P. Hood, Inc. and the Stop & Shop supermarket
Companies, Inc., R. at 38-42; Diane Bothfeld, R. 43.
\11\ 64 FR 4353 (Jan. 28, 1999).
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Mr. Ross opened his testimony on March 3, 1999 by repeating the
main points of his testimony of December 11, 1998. Mr. Ross reiterated
that the Compact authorizes the Commission to impose an assessment on
milk handlers to cover the costs of the administration and enforcement
of the over-order price regulation. He explained the principle of milk
market regulation that the milk handlers, not the dairy farmers, are
assessed to pay the costs of the administration and enforcement of the
milk market regulation and that this assessment is a cost of doing
business in the milk market.12
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\12\ Ross, R. at 15.
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Mr. Ross also explained that the Compact requires the Commission to
establish a reserve for the ongoing operating expenses.13
The current administrative assessment is a flat rate of 3.2 cents per
hundredweight and results in a variance in income of up to 13% per
month.14 Mr. Ross stated that the Commission regulation is,
in all material respects, the same as corresponding provisions of the
Federal Order #1 regulations.15
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\13\ Ross, R. at 10; See also, Compact Article IV, Section 10(9)
and Article VII, Section 18(a).
\14\ Ross, R. at 14-15.
\15\ Ross, R. at 11-12.
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Mr. Ross explained that under the Federal Market Order #1
regulation, ``the federal market order [Administrator] can, when
conditions warrant it, reduce or even waive the administrative
assessment.'' 16 Under Federal Market Administrator
Instruction 207, the United States Department of Agriculture
Dairy Division (USDA) recommends that budgeted operating reserves be
maintained within a range of 80% to 120% of the designated reserve
level.17
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\16\ Ross, R. at 16.
\17\ Market Administrator Instruction #207, December 1998
rulemaking record, WC at 3-11, and referenced in March 1999
rulemaking record, R. at 17.
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At the subjects and issues hearing in December 1998, a milk
processor testified in support of an amendment to the Commission's
administrative assessment regulation that would recognize the
Commission's budget process, impose a limitation on the Commission's
reserves and provide for an adjustment or waiver of the administrative
assessment based on the budget and the reserves.18 As is
explained in more detail below, the Commission adopts this commenter's
recommendations in all material respects.
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\18\ Arbing, Tr. at 53-53 (December 1998 rulemaking record).
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Of the two commenters who participated in the March 1999 public
hearing and comment part of this rulemaking proceeding, one commenter
supported the proposed rule to allow
[[Page 23534]]
the Commission to adjust the administrative assessment rate, upward or
downward, as needed.19
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\19\ Bothfeld, R. at 43.
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The other commenter,20 on behalf of the three major
fluid milk handlers in New England, generally supported the
Commission's proposal to permit it the discretion to adjust or waive
the administrative assessment rate and further reiterated his two main
objections (as submitted in the December 1998 subjects and issues
proceeding) 21 to the Commission's administrative assessment
regulation: (1) That the Commission should not use the funds generated
by the administrative assessment for any purpose other than the actual
costs of computing, announcing, collecting or distributing the over-
order obligation; and (2) that the administrative assessment is an
unfair burden on the milk handlers. The Commission has carefully
considered these arguments and respectfully disagrees.
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\20\ Altman, R. at 38-42.
\21\ Altman, December 1998 rulemaking record, WC at 26-30; See
also, Commission analysis of these comments at 64 FR 4354-4355 (Jan.
28, 1999).
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In making his first main objection, this commenter relies on a
narrow, and inaccurate, reading of the language of the Compact to argue
the Commission must only use the assessment to administer the over-
order obligation provisions of the Compact Over-order Price Regulation.
The commenter asserts that the Compact restricts the administrative
assessment provision of Article VII, Section 18(a) to the
administration of the over-order obligation only.22 However,
the full sentence, of which the commenter quotes only a portion,
plainly and clearly references the over-order price regulation. The
section of the Compact in question provides, in relevant part, as
follows: ``In addition, if regulations establishing an over-order price
or a compact marketing order are adopted, they may include an
assessment for the specific purpose of their administration. These
regulations shall provide for establishment of a reserve for the
commission's ongoing operating expenses.'' The Commission concludes
that the language of the Compact itself is clear and for this reason
respectfully rejects the commenter's suggested interpretation.
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\22\ Altman, R. at 41.
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In addition to the plain language of the Compact, accepted
principles of statutory interpretation also compel rejection of this
commenter's suggested reading of Section 18(a), because to do so would
render other provisions of the Compact meaningless. The commenter's
restrictive interpretation of the language of the Compact would, for
example, render meaningless the provisions of Article IV, Section 10.
That section provides eleven separate paragraphs of provisions that the
Commission is specifically authorized to include in a compact over-
order price.23 Those provisions are not restricted to the
physical activities of computing, announcing, collecting or
distributing the over-order obligation, as the commenter's narrow
interpretation of Section 18(a) would require. ``[L]egislative
enactments should not be construed to render their provisions mere
surplusage.'' Dunn v. Commodity Futures Trading Comm'n, 117 S.Ct. 913,
917 (1997). In light of the plain language of the Compact, reinforced
by application of accepted principles of statutory construction, the
Commission respectfully rejects this commenter's interpretation of the
Compact.
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\23\ In authorizing the Compact, Congress specifically
prohibited the Commission from including a provision in the over-
order price regulation for compensatory payments, as included in
Section 10(6). 7 U.S.C. 7256(7).
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The Commission also declines to accept the narrow interpretation of
Section 18(a) of the Compact advanced by the commenter because his
interpretation would lead to such illogical results as to leave the
Commission without the funds to carry out its obligations and
responsibilities under the Compact and the Over-order Price Regulation
as a whole.24 For example, the commenter's suggestion that
the administrative assessment be used only for the direct costs
associated with the actual computing, announcing, collecting or
distributing the over-order obligation,25 would leave the
Commission without funds for amending the over-order price regulation,
as authorized by Compact Article V, for providing handler exemption
petition proceedings, as required by Compact Article VI, Section 16, or
for conducting and administering the activities authorized, or required
by, Articles I, II, IV, or VII of the Compact.26
Furthermore, as explained below, the Compact is designed to have the
administration and enforcement activities of the Commission supported
by assessments on handlers. Article VII, Section 18(b) specifically
prohibits the Commission from pledging the credit of any participating
state, or the United States. Although the Commission may, at times,
obtain funding from other sources, such funds cannot be obtained with
any predictability, and Section 18 does not compel any state to
contribute funds to support the activities of the Commission. However,
if the receipt of such unanticipated funds are sufficient, the
amendments to the administrative assessment rule will allow the
Commission to reduce or waive the assessment on handlers.
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\24\ See, e.g. Green v. Bock Laundry Machine Co., 490 U.S. 504,
509-10 (1989); In re Pacific-Atlantic Trading Co., 64 F.3d 1292,
1303 (9th Cir. 1995) (``Legislative enactments should never be
construed as establishing statutory schemes that are illogical,
unjust or capricious.'') (internal citations omitted). In addition,
for the reasons discussed more fully below, the Compact producer-
settlement funds are not used for administrative purposes and
principles of milk market regulation assess the costs of the
administration of milk price regulation to handlers, as a cost of
doing business in the milk marketplace, not to farmers or to
cooperatives, as suggested by the commenter.
\25\ Altman, R. at 42.
\26\ See also, 64 FR 4354-55 (Jan. 28, 1999).
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Therefore, the Commission reaffirms its interpretation of its
authority under the Compact that the administrative assessment may be
used to fund all administration and enforcement activities to implement
the entire over-order price regulation and to effectuate its
obligations and responsibilities under the Compact.27
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\27\ 64 FR 4354-4355 (Jan. 28, 1999); See also, Ross, R. at 12-
14.
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The core of this commenter's second main argument is that the
administrative assessment places an unfair burden on milk handlers. The
commenter suggests that the Commission should fund its statutory and
regulatory activities through voluntary contributions of states,
cooperatives and handlers. However, that interpretation is contrary to
the underlying principles of milk market regulation, which establishes
the handler's cost of raw milk, including the amount that must be paid
to producers and the cost of administration of the federal regulation,
the compact regulation and even the cost of fluid milk
promotion.28 The interpretation is also contrary to the
design of the Compact, which specifies that the Commission should fund
its administration and enforcement costs through an administrative
assessment on milk handlers. Compact Article IV, Section 10(9) and
Article VII, Section 18(a). Carmen Ross explained the ``regulatory
techniques historically associated with milk marketing,'' 29
as they specifically relate to the administrative assessment component
of the milk regulation principle, as follows:
\28\ Ross, R. at 15-16, 27-29.
\29\ Compact Article II, Section 3(b).
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As I just stated, the Compact administration assessment
regulation is consistent with the Federal Market Order #1 regulation
in its applicability to fluid milk
[[Page 23535]]
handlers. The principle is that the milk handlers, not the dairy
farmer, pay for the administration and enforcement of the milk price
regulation. This is a cost of doing business in the milk market. The
same as all other costs associated with the assembly and receipts of
milk at the plant.
The cost of milk includes the announced Federal Order Class I
price, Federal Order Administrative Assessment, Federal Order
Processor Assessment, Federal Order differential, Federal Order
plant zone, hauling, handling, farmer or cooperative premiums, plant
loss and the Compact over-order obligation and the Compact
administrative assessment.
The total of all the above is the handler's cost of raw milk. To
this cost, a handler will add the processing cost, container cost,
delivery cost and margins to arrive at the handler's sale price. The
Compact assessment is only one of the many components that is
included to arrive at the sale price of milk. The Compact
administrative assessment, like all other costs, are ultimately paid
by the market, the consumer, not the handler.30
\30\ Ross, R. at 15-16.
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The Federal Market Administrator announces the raw milk price on
the fifth day of the month preceding the month the announced price will
be applied. This advance price announcement allows the milk handlers to
set their prices accordingly and to recover those costs from the milk
marketplace. If, after receiving advance notice of the price, a handler
does not choose to include a particular component in his selling price,
that is the handler's decision and not within the control of either the
Federal Market Order Administrator or the Compact Commission.
Therefore, the administrative assessment, as well as all other costs
associated with milk market regulation, is a cost of doing business in
the milk market.31 The regulation does not require the
assessment to come from the handler's profit line and the advance price
announcement allows the handlers the opportunity to pass the costs on
in setting their sale price for the milk. Therefore, the consumer, and
not the milk handler, is paying the incremental cost of administering
the Compact Over-order Price Regulation.32 Accordingly, the
Commission respectfully disagrees with the commenter's assertion that
the Compact administrative assessment portion of the regulated milk
price places an unfair burden on milk handlers.
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\31\ Ross, R. at 15-16 and 28-29.
\32\ Ross, R. at 16 and 28-29.
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Contrary to this commenter's 33 broad complaints, the
Commission seeks to, and indeed does, incorporate the interests of all
the affected constituencies in its regulatory decisions. The Commission
is itself made up of state officials, consumers, producers and
processors. The delegation members to the Commission are appointed, as
provided in the Compact, as passed by all six participating states and
approved by Congress. Compact, Article III, Section 4. Two of the
states specifically require processors to be a part of the state
delegation. Vermont, 6 V.S.A. 1823 (``A fourth voting member shall be a
milk handler'') and New Hampshire, RSA 184-A:2 (``One owner or officer
of a fluid milk processing or distribution plant.'') Two other states
have appointed members to the delegation who are associated with fluid
milk processors. Therefore, the interests of milk processors are
clearly, and actively, represented and protected through membership in
the state delegations to the Compact Commission.
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\33\ Altman, R. at 39-42.
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In addition, the Commission always provides the opportunity for
regulated handlers to participate in each of its rulemaking proceedings
through attending and testifying at the public hearings and/or
submitting written comments and testimony.34
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\34\ As always, the Commission encourages and welcomes full
participation by all those affected by the Commission's regulations.
The Commission notes, however, that although this commenter has
submitted written arguments, he has not availed himself of the
opportunity to attend either of the public hearings held in December
1998 or March 1999 by the full Commission regarding the
administrative assessment regulation. The opportunity for
interactive discourse with the full Commission, offered in the
public hearing forum, is very beneficial to and instructive for the
Commission and such participation significantly advances the
rulemaking proceeding. Indeed, as discussed above, the final rule
adopted by the Commission includes major elements proposed in the
testimony of one commenter, a processor, in the December 1998
hearing. Arbing, Tr. at 53-54 (December 1998 rulemaking record).
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After careful review of both the December 1998 and March 1999
rulemaking records relating to the administrative assessment
regulation, the Commission concludes that the model used by the USDA is
an appropriate standard for the Commission to use in the establishment
of its administrative assessment rate. Therefore, the Commission amends
the administrative assessment provision of the over-order price
regulation to give the Commission discretion, in any given month, to
waive the administrative assessment entirely, or to set the rate at the
current flat rate of 3.2 cents, or less, per hundredweight of fluid
milk. In establishing this rate-setting flexibility, the Commission's
goal is to maintain a reserve account in the range of 80% to 120% of
four-months operating expenses, as determined to be necessary in the
budget approved by the Commission. This range is not binding on the
Commission and the Commission at all times retains the discretion
whether to waive or adjust the rate of the administrative assessment.
The Commission also sought testimony and comment on whether the
administrative assessment regulation should be amended to permit the
Commission to adjust the rate upward, from the current rate of 3.2
cents, in exceptional circumstances. The Commission's Regulations
Administrator, Carmen Ross, testified that there may be times that the
Commission needs to increase the assessment rate to ``cover operating
expenses because of unknown extraordinary or exceptional
circumstances.'' 35 One commenter supported the proposal to
allow the Commission the flexibility to increase the administrative
assessment rate ``to maintain the solvency of the Compact so it can
maintain its operations and fulfill the responsibilities as established
under the law.'' 36
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\35\ Ross, R. at 18-19.
\36\ Bothfeld, R. at 43.
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The Commission carefully considered this option and concluded that
it is not necessary at this time to amend the administrative assessment
rule to permit an increase over the current rate of 3.2 cents. The
Commission income from the administrative assessment is sufficient to
cover the anticipated and budgeted expenses. Although, as explained
above, the Commission disagrees with some processors' assertions that
the administrative assessment constitutes an unfair burden on milk
handlers, the Commission is nevertheless sensitive to the concerns of
these processors. Accordingly, the Commission chooses not to add a rate
increase provision to the regulation in cognizance of some processors'
perception of the Commission's administrative assessment.
Method of Payment
The Commission also promulgates a new regulation which requires
milk handlers to make payment of the over-order obligation and
administrative assessment to the Commission by electronic transfer of
funds if the aggregate total due for the month is greater than $25,000.
The Commission adds this rule in order to best ensure the efficient and
timely transfer of funds into the producer-settlement fund and the
corresponding timely distribution of funds from the producer-settlement
[[Page 23536]]
fund.37 Based on the experience of the Commission in
administering the producer-settlement fund, most handlers already use
electronic transfer of funds. The Commission also uses electronic
transfer of funds for distribution to handlers of monies from the
producer-settlement fund.38 The Commission received no
comments on this proposed rule.
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\37\ Ross, R. at 19-26.
\38\ Ross, R. at 24-25.
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III. Summary and Explanation of Findings
Article V, Section 12 of the Compact directs the Commission to make
four findings of fact before an amendment of the Over-order Price
Regulation can become effective. Each required finding is discussed
below.
a. Whether the Public Interest Will Be Served by the Amendments to the
Over-Order Price Regulation
The first finding considers whether the amendments to the Compact
Over-order Price Regulation serves the public interest. The Commission
determines that the public interest is served by allowing the
Commission discretion to waive entirely or set the administrative
assessment at the current rate of 3.2 cents, or less, per hundredweight
of fluid milk, in any given month, to support the Commission's
administration and enforcement of the Over-order Price Regulation, as
authorized by Article VII, Section 18(a) of the Compact.
The Commission also determines that the public interest is served
by requiring all regulated milk handlers to make payment to the
Commission by electronic funds transfer, if the total amount due is
greater than $25,000. This rule ensures the Commission's timely
processing of the monthly pool, when payments are received and
distributed within two business days.
b. The Impact on the Price Level Needed To Assure a Sufficient Price to
Producers and an Adequate Local Supply of Milk
The amendments to the Compact Over-order Price Regulation adopted
in this rulemaking proceeding are related to the administration of the
Over-order Price Regulation and do not affect the local supply of milk
or price received by producers, other than through ensuring timely
receipt of payment by adoption of the electronic funds transfer rule.
c. Whether the Major Provisions of the Order, Other Than Those Fixing
Minimum Milk Prices, Are in the Public Interest and Are Reasonable
Designed To Achieve the Purposes of the Order
The Commission concludes that, for the same reasons identified in
the first finding, the amendments adopted in this rulemaking proceeding
are in the public interest. The Commission further concludes that the
Over-order Price Regulation, as hereby amended, remains in the public
interest in the manner contemplated by this finding.
d. Whether the Terms of the Proposed Amendments Are Approved by
Producers
The fourth finding, requiring the determination of whether the
amendment has been approved by producer referendum pursuant to Article
V, Section 13 of the Compact is invoked in this instance given that the
amendment will affect the level of the price regulation on the producer
side. In this final rule, as in the previous final rules, the
Commission makes this finding premised upon certification of the
results of the producer referendum. The procedure for the producer
referendum and certification of the results is set forth in 7 CFR Part
1371.
Pursuant to 7 CFR 1371.3 and the referendum procedure certified by
the Commission, a referendum was held during the period of April 16
through April 26, 1999. All producers who were producing milk pooled in
Federal Order #1 or for consumption in New England, during December
1998, the representative period determined by the Commission, were
deemed eligible to vote. Ballots were mailed to these producers on or
before April 16, 1999 by the Federal Order #1 Market Administrator. The
ballots included an official summary of the Commission's action.
Producers were notified that, to be counted, their ballots had to be
returned to the Commission offices by 5:00 p.m. on April 26, 1999. The
ballots were opened and counted in the Commission offices on April 27,
1999 under the direction and supervision of Commission Chair Mae S.
Schmidle, designated ``Referendum Agent.''
Twelve Cooperative Associations were notified of the procedures
necessary to block vote by letter dated April 9, 1999. Cooperatives
were required to provide prior written notice of their intention to
block vote to all members on a form provided by the Commission, and to
certify to the Commission that (1) timely notice was provided, and (2)
that they were qualified under the Capper-Volstead Act. Cooperative
Associations were further notified that the Cooperative Association
block vote had to be received in the Commission office by 5:00 p.m. on
April 26, 1999. Certified and notarized notification to its members of
the Cooperative's intent to block vote or not to block vote had to be
mailed by April 20, 1999 with notice mailed to the Commission offices
no later than April 22, 1999.
Notice
On April 27, 1999, the duly authorized referendum agent verified
all ballots according to procedures and criteria established by the
Commission. The ballots cast on the administrative assessment amendment
and the electronic funds transfer amendment were separately reviewed
and counted. A total of 3987 ballots were mailed to eligible producers.
All producer ballots and cooperative block vote ballots received by the
Commission were opened and counted. Producer ballots and cooperative
block vote ballots were verified or disqualified based on criteria
established by the Commission, including timeliness, completeness,
appearance of authenticity, appropriate certifications by cooperative
associations and other steps taken to avoid duplication of ballots.
Ballots determined by the referendum agent to be invalid were marked
``disqualified'' with a notation as to the reason.
Block votes cast by Cooperative Associations were then counted.
Producer votes against their cooperative associations block vote were
then counted for each cooperative association. These votes were
deducted from the cooperative association's total and were counted
appropriately. Ballots returned by cooperative members who cast votes
in agreement with their cooperative block vote were disqualified as
duplicative of the cooperative block vote.
Votes of independent producers not members of any cooperative
association were then counted.
The referendum agent then certified the following for the ballot on
the administrative assessment amendment:
A total of 3,987 ballots were mailed to eligible producers.
A total of 3,010 ballots were returned to the Commission.
A total of 34 ballots were disqualified--late, incomplete or
duplicate.
A total of 2,976 ballots were verified.
A total of 2,960 verified ballots were cast in favor of the
administrative assessment amendment.
[[Page 23537]]
A total of 16 verified ballots were cast in opposition to the
administrative assessment amendment.
Accordingly, notice is hereby provided that of the 2,976 verified
ballots cast, 2,960, 99.5 %, or, a minimum of two-thirds were in the
affirmative.
The referendum agent then certified the following for the ballot on
the electronic funds transfer amendment:
A total of 3,987 ballots were mailed to eligible producers.
A total of 3,010 ballots were returned to the Commission.
A total of 35 ballots were disqualified--late, incomplete or
duplicate.
A total of 2,975 ballots were verified.
A total of 2,967 verified ballots were cast in favor of the
electronic funds transfer amendment.
A total of 8 verified ballots were cast in opposition to the
electronic funds transfer amendment.
Accordingly, notice is hereby provided that of the 2,975 verified
ballots cast, 2,967, 99.7%, or, a minimum of two-thirds were in the
affirmative.
Therefore, the Commission concludes that the terms of the
administrative assessment and electronic funds transfer amendments are
approved by producers.
IV. Good Cause for Effective Date Within 30 Day Notice Period
The Administrative Procedure Act, 5 U.S.C. 553(d), requires that
the Compact Commission publish a substantive rule not less than 30 days
before its effective date, except that this time period is not required
for a substantive rule as otherwise provided by the agency for good
cause found and published with the rule. The Commission concludes that,
to the extent that the electronic funds transfer rule is a substantive
rule, the Commission nevertheless finds that there is good cause for
non-compliance with the 30-day advance publication provision of 553(d)
and publishes this final rule on May 3, 1999, with an effective date of
May 13, 1999.
In promulgating this new regulation, the Commission specifically
finds good cause to set an effective date within thirty days of
publication in the Federal Register. As described by Carmen Ross, the
Commission's Regulations Administrator, the time line for the
Commission to receive funds from milk handlers on the 18th of the month
and make payments from the producer-settlement fund on the 20th of the
month places a tremendous burden on the Commission to clear the pool in
two business days.39 If a handler makes payment by check,
the funds, although received by the Commission on the 18th of the
month, are not always available to be paid out on the 20th of the
month.40 The Commission disburses funds through electronic
transfer and must have the funds available to make the payments out of
the producer settlement fund.41
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\39\ Ross, R. at 20.
\40\ Ross, R. at 21.
\41\ Ross, R. at 24-25.
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If the payments received from handlers by check exceed the
Commission's reserve amount in the producer-settlement account, the
Commission can uniformly reduce payments back to handlers or establish
a line of credit with the bank.42 As Mr. Ross stated in his
testimony: ``Reducing payments to the handlers would create havoc since
all handlers would have already included the anticipated amount due
from the Commission on their payroll and handlers would face a shortage
of funds.'' 43 Alternatively, either the producer-settlement
fund or the Commission administrative fund would have to incur the cost
of establishing a line of credit.44 Based on the price
announcement on March 5, 1999 for April milk, the Commission will be
faced with the possibility of confronting this problem during the pool
to be run on May 18 through 20. In order to ensure timely receipt of
available funds to the producer-settlement fund, and the timely
distribution from that fund, the Commission finds good cause, to the
extent necessary, to set an effective date of this new regulation of
May 13, 1999.
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\42\ Ross, R. at 25.
\43\ Ross, R. at 25.
\44\ Ross, R. at 26.
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The Commission determines that, in promulgating the electronic
funds transfer rule, compliance with the 30-day waiting period, in this
instance, is excused for three separate reasons: it is (1)
impracticable, (2) unnecessary, and (3) contrary to the public
interest. See, e.g., Service Employees Intern Union, Local 102 v.
County of San Diego, 60 F.3rd 1346 (9th Cir. 1994) (good cause
exemption to Sec. 553(d) includes situations where compliance is
impracticable, unnecessary, or contrary to the public interest);
Buschmann v. Schweiker, 676 F. 2d 352 (9th Cir. 1982) (same).
1. It would be impracticable to provide the thirty-day interval
because, based on the April price of milk announced by the Federal
Market Administrator on March 5, 1999, the Commission will run its
largest pool ever on May 18 through 20, and the anticipated over-order
obligation of several handlers will exceed the Commission's reserve
fund. The Commission must have access to the handlers' payments by May
20 in order to distribute the funds for payment to producers. Although
the Commission began this proceeding by published notice on January 28,
1999, and voted to adopt the rule on April 7, 1999, Article V, Section
21 requires the Commission to conduct a producer referendum before
issuing the final rule. Based on the Commission's producer referendum
procedure, the earliest publication date is May 3, 1999. Therefore, the
thirty-day notice interval is impracticable and compliance with that
rule would impair the Commission's ability to clear the pool on May 20,
1999.
2. The full thirty-day post-publication notice period is
unnecessary because the Commission provided actual notice, by certified
mail, return receipt, to all affected handlers no later than April 13,
1999.
3. In this instance, the full thirty-day notice requirement is
contrary to the public interest. Based on the anticipated volume of
milk in the pool to be run on May 18 through 20, several handlers will
owe sums in excess of the reserve balance in the producer-settlement
fund. If just one of those handlers makes payment by check that does
not clear by May 20, the Commission will be forced to uniformly reduce
payments out of the producer-settlement fund to all handlers, thereby
interfering with those handlers already prepared payments to producers.
The public interest requires that producers receive their payments in a
timely manner. Most of the handlers already make payment by electronic
funds transfer, and the Commission disburses funds by electronic
transfer. This rule will only affect a few handlers, but failure to
implement this rule prior to May 18, 1999 could result in an otherwise
unnecessary reduction in the producer payments to all producers
supplying the New England milk market. The Commission emphasizes that
it received no comments opposing promulgation of this requirement.
Therefore, the Commission concludes that the thirty-day notice period
is not in the public interest.
Finally, the purpose of the procedural requirement that a rule be
published thirty days prior to its effective date is to permit those
affected by the amendment a reasonable amount of time to prepare to
take whatever action is prompted by the final rule. As noted above, all
affected handlers have received actual notice of the action required by
the rule in excess of thirty
[[Page 23538]]
days of the date the action is first required, May 18, 1999.
Accordingly, for all the reasons described above, the Commission
concludes that the full thirty-day post-publication notice period is
not required.
V. Required Findings of Fact
Pursuant to Compact Article V, Section 12, the Compact Commission
hereby finds:
1. That the public interest continues to be served by establishment
of minimum milk prices to dairy farmers under Article IV, as amended
to: (1) permit the Commission discretion, in any given month, to waive
entirely or to set the rate of the administrative assessment at the
current rate of 3.2 cents, or less, per hundredweight of fluid milk;
and (2) require handlers make payment to the Commission by electronic
funds transfer, if the total amount due is greater than $25,000.
2. That the previously established level price of $16.94 (Zone 1)
to dairy farmers under Article IV, is unaffected by these amendments,
and will continue to assure that producers supplying the New England
market receive a price sufficient to cover their costs of production
and will elicit an adequate supply of milk for the inhabitants of the
regulated area and for manufacturing purposes.
3. That the major provisions of the order, other than those fixing
minimum milk prices, are and continue to be in the public interest and
are reasonably designed to achieve the purposes of the order.
4. That the terms of the proposed amendments are approved by
producers pursuant to a producer referendum required by Article V,
Section 13.
List of Subjects in 7 CFR Parts 1307 and 1308
Milk.
Codification in Code of Federal Regulations
For reasons set forth in the preamble, the Northeast Dairy Compact
Commission amends 7 CFR parts 1307 and 1308 as follows:
PART 1307--PAYMENTS FOR MILK
1. The authority citation for part 1307 continues to read as
follows:
Authority: 7 U.S.C. 7256.
Sec. 1307.4 [Redesignated]
2. Section 1307.4 is redesignated as Sec. 1307.5.
3. A new Sec. 1307.4 is added to read as follows:
Sec. 1307.4 Method of payment.
If the combined total of the handler's producer-settlement fund
debit for the month as determined under Sec. 1307.2(a) and the
handler's obligation for the month as determined under Sec. 1308.1 of
this chapter is greater than $25,000, then the handler must make
payment to the compact commission by electronic transfer of funds on or
before the 18th day after the end of the month.
PART 1308--ADMINISTRATIVE ASSESSMENT
1. The authority citation for part 1308 continues to read as
follows:
Authority: 7 U.S.C. 7256.
2. Section 1308.1 is amended by revising the introductory text to
read as follows:
Sec. 1308.1 Assessment for pricing regulations administration.
On or before the 18th day after the end of the month, each handler
shall pay to the compact commission his pro rata share of the expense
of administration of this pricing regulation. The payment shall be at
the rate of 3.2 cents per hundredweight. The compact commission may
waive, or set the rate at an amount less than 3.2 cents, pursuant to
Sec. 1308.2. The payment shall apply to:
* * * * *
3. A new Sec. 1308.2 is added to read as follows:
Sec. 1308.2 Method to waive or change the administrative assessment.
The compact commission may waive or change the assessment for
pricing regulation administration to maintain the operating reserve in
the range of 80% to 120% of four months operating expenses, as
determined in the budget approved by the compact commission. The
compact commission will announce, pursuant to Sec. 1305.2 of this
chapter, the waiver or change in rate of assessment.
Dated: April 27, 1999.
Kenneth M. Becker,
Executive Director.
[FR Doc. 99-10967 Filed 4-30-99; 8:45 am]
BILLING CODE 1650-01-P
